A message from the chairman – Mpho Makwana

Eighteen months ago, we had no financial model. We now have a detailed, agreed, seven-year funding plan, for the most intensive capital expansion project in South Africa’s history.

A milestone in the funding effort has been the issuing of a bond in the international market in the past few months. Although government guarantees were available, this issue was particularly significant as Eskom was able to issue this bond directly off its balance sheet, indicating its ability to obtain funding independently. The bond issuance generated bids to the value of USD3.9 billion. An amount of USD1.75 billion was taken up by Eskom. The over-subscription demonstrates the confidence that international investors have in Eskom’s ability to manage its affairs in a sustainable and profitable manner.

In addition, we have issued our first ever interim results. Our credit rating outlook is sound and we are fully operational again, with a finance director who has just completed his first year in Eskom’s service – after we were without a finance director for 18 months. We believe that the immediate financial future has now been secured, allowing us to concentrate fully on the enormously challenging capital expenditure programme underway.

This re-tooling of the managerial process, as we see it, has been an essential step in preparing us for the new phase we have entered in Eskom’s rich history. A short review of our recent performance – elaborated on in the 2011 integrated report – reflects the momentous nature of the previous year.

Eskom is organising itself to deliver on its mandate for the decades ahead. We believe we have now positioned the organisation’s three major components – its managerial infrastructure and plans, its people, and the necessary financial resources – to help build South Africa and southern Africa’s exciting future.

A message from the chief executive – Brian Dames

We have embarked on a review of our entire strategy. We must become a high-performance organisation, keep the lights on while reducing our carbon footprint, secure future resources and ensure financial sustainability. We are working with our shareholder to finalise the new strategy and corporate plan.

In 2010, Eskom began transforming its performance, using improved controls and greater organisational discipline. In line with the requirements set out in the shareholder compact by the Department of Public Enterprises, we are making excellent progress in setting up an enterprise performance management system to continually measure performance across the organisation. For example, the chief executive and chairman “dashboards” now provide real-time information on key performance areas, and show true operational performance. Key performance indicators have been identified and aligned throughout the business. Simply put, everyone at Eskom knows what is required of them, and their role in meeting our strategic objectives.

This “line of sight” will allow management to take immediate and targeted action to fix problems. The project can be seen as part of the greater “Back2Basics” programme. The safety and wellbeing of our staff, contractors and the public is paramount, and we need to immediately improve our performance in this area.