kowepo –korea’s leading power generation company

KOWEPOKOWEPO –– Korea’s Leading Power Generation CompanyKorea’s Leading Power Generation Company

Strictly Private and Confidential

Investor PresentationInvestor PresentationApril 2012April 2012

Disclaimer

This presentation has been produced by Korea Western Power Co., Ltd. (the “Company”) solely for information purposes. The information contained in this presentation has not been independently verified. No representation or warranty express orimplied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or any opinion contained herein. The information contained in this presentation should be considered in the context of the circumstances prevailing at the time and will not be updated to reflect material developments that may occur after the date of the presentation. Neither Company nor any of its affiliates, advisors or directors shall have any liability whatsoever (in negligence or otherwise) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.

This presentation does not constitute or form part of an offer, invitation or recommendation to purchase or subscribe for anysecurities and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto.

The presentation may contain statements that reflect Company’s beliefs and expectations about the future. These forward-looking statements are based on a number of assumptions about the future, some of which are beyond Company’s control. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Company does not undertake any obligation to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

All or any part of this presentation may not be taken away, reproduced, redistributed or retransmitted in any manner. The information provided herein shall be kept confidential unless such information is already publicly available.

By attending this presentation, you are agreeing to be bound by the foregoing limitations.

1

This presentation has been produced by Korea Western Power Co., Ltd. (the “Company”) solely for information purposes. The information contained in this presentation has not been independently verified. No representation or warranty express orimplied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or any opinion contained herein. The information contained in this presentation should be considered in the context of the circumstances prevailing at the time and will not be updated to reflect material developments that may occur after the date of the presentation. Neither Company nor any of its affiliates, advisors or directors shall have any liability whatsoever (in negligence or otherwise) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.

This presentation does not constitute or form part of an offer, invitation or recommendation to purchase or subscribe for anysecurities and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto.

The presentation may contain statements that reflect Company’s beliefs and expectations about the future. These forward-looking statements are based on a number of assumptions about the future, some of which are beyond Company’s control. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Company does not undertake any obligation to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

All or any part of this presentation may not be taken away, reproduced, redistributed or retransmitted in any manner. The information provided herein shall be kept confidential unless such information is already publicly available.

By attending this presentation, you are agreeing to be bound by the foregoing limitations.

Table of Contents

Regulatory Environment & IndustryRegulatory Environment & Industry

Operation OverviewOperation Overview

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33

11 Company OverviewCompany Overview

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Financial ManagementFinancial Management

AppendixAppendix

33

44

Company Overview

Company Name Korea Western Power Co. Ltd.

Establishment Date April 2, 2001 (spun off from KEPCO)

Ownership 100% owned by KEPCO (51% owned by the Korean government)

Number of Employees 1,725

Assets KRW 5,287 bn

3

Assets KRW 5,287 bn

Sales KRW 5,208 bn

Capacity of Equipment 8,404 MW, 5 Power plants with 44 units

Power Generation 52,903 GWh

Credit Rating A1 (Moody’s) / A (S&P)

Source: FSS (Financial Supervisory Service in Korea), Bloomberg (as of 2011), “Statistics of Electric Power in Korea”, KEPCO (January 2012)

§ Base load, intermediate load, and peak load accounts for 48%, 17% and 35% respectively in terms of operating generation capacity

§ Over 91% of capacity is within or near the Seoul metropolitan area– Seoul metropolitan areas comprise approximately 40% of total national demand

Power Plants Portfolio

Generation Capacity by Type of Plant

Base Load Intermediate Load Peak Load

4,000MW

2,998MW

Location of Plant Complex

CoalLNGBC OilHydro Solar

Metropolitan AreaPower Plant Region

4

Source: company data (as of 2011) Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”

Base Load Intermediate Load Peak Load

Taean T/P(4,000 MW)

Pyeongtaek T/P(1,400 MW)

Seoincheon C/C(1,800 MW)

PyeongtaekC/C (480 MW)

GunsanC/C (718 MW)

2,998MW

1,400MW Taean

Pyeongtaek

Gunsan

Seoincheon

Samrangjin

Seoul & Gyunggi-do

(MW) (GWh)

KOWEPO’s Market Position - 2011

Others12,51815.8%

KHNP24,02130.3%

EWP8,81511.1%

KOSPO9,23911.6%

KOWEPO8,40410.6%

KOSEP8,39610.6%

KOMIPO7,949 10.0%

Others38,4108.3%

KHNP152,44333.0%

EWP51,12111.1%

KOSPO58,08512.6%

KOWEPO52,90311.4%

KOSEP58,03912.6%

KOMIPO51,355 11.1%

Market Share by Sales VolumeMarket Share by Generation Capacity

5

Total Generation Capacity79,342 MW

Total Electricity Sales462,356 GWh

Source: “Statistics of Electric Power in Korea”, KEPCO (January 2012)

Others12,51815.8%

KHNP24,02130.3%

EWP8,81511.1%

KOSPO9,23911.6%

KOWEPO8,40410.6%

KOSEP8,39610.6%

KOMIPO7,949 10.0%

Others38,4108.3%

KHNP152,44333.0%

EWP51,12111.1%

KOSPO58,08512.6%

KOWEPO52,90311.4%

KOSEP58,03912.6%

KOMIPO51,355 11.1%

§ Constantly growingpower consumption

§ 11.4% of the sales volume share for domestic power market in 2011

§ Strengtheningcompetitivenessthrough domestic &overseas investment

§ Cancelled privatization plans for Gencos

§ Market-oriented publicenterprise

§ Application of the cost-reflecting pricing mechanism

Investment Highlights

§ Continuous cash flows from operations - EBITDA : KRW503bn

§ Balanced and flexible debt portfolio – Well-diversified maturity profile

§ Second lowest debt to equity ratio among Gencos (50.0%)

§ Increasing Capacity Factor

§ Top-tier Capacity Factor with 74.5% in 2011

§ Long-term and medium-term raw material contracts

Industry Dynamics & Market Position

Supportive Regulatory Environment

Cost-Effective Operations Solid Financial Profile

6

§ Constantly growingpower consumption

§ 11.4% of the sales volume share for domestic power market in 2011

§ Strengtheningcompetitivenessthrough domestic &overseas investment

§ Cancelled privatization plans for Gencos

§ Market-oriented publicenterprise

§ Application of the cost-reflecting pricing mechanism

§ Continuous cash flows from operations - EBITDA : KRW503bn

§ Balanced and flexible debt portfolio – Well-diversified maturity profile

§ Second lowest debt to equity ratio among Gencos (50.0%)

§ Increasing Capacity Factor

§ Top-tier Capacity Factor with 74.5% in 2011

§ Long-term and medium-term raw material contracts

Source: Company Data

Table of Contents



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AppendixAppendix

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44

Assets: 94.77Revenues: 43.21

Transmission & Distribution

Holding 100% Ownership of

Gencos

51%

Ownership

100% Ownership

Domestic Power Industry Structure

KEPCO

Public Corporation Act

Electricity Business Law

Basic Plan for Energy

Development

Environmental Policy Law

Strong Government Support

8

Transmission & Distribution

Holding 100% Ownership of

Gencos

91.7% market share of sales

volume

100% Ownership


Thermal &Renewable


Nuclear &Hydro

KHNP


Thermal &Renewable

KOSEP


Thermal &Renewable

KOMIPO


Thermal &Renewable

KOSPO


Thermal &Renewable

EWPKOWEPO

11.4% Sales Volume Share

Gencos

Unit : KRW in trillions

Source: FSS (Financial Supervisory Service in Korea) (as of 2011), “Statistics of Electric Power in Korea”, KEPCO (January 2012)

1999 2000 20022001 2003 2004 2005 2007 20082006 2009

§ MOCIE * announced restructuring plan for power industry

§ Initiation of KOSEP privatization

The power industry restructuring plan delayed and the former privatization plan for Gencos cancelled

2010

§ Gencos were designated as market-oriented public enterprises

§ IPO of KOSEP was delayed

Latest Power Industry Operating Environment

2011

§ Introduction of vesting contracts for Gencos deferred

§ Wholesale competition was put on hold

* MOCIE: Ministry of Commerce, Industry and Energy(currently renamed as MKE (Ministry of Knowledge Economy))

2012

9

1999 2000 20022001 2003 2004 2005 2007 20082006 2009

§ Incorporation of generation companies

§ Cost-based pool bidding (“CBP”) mechanism

§ Plan to separate KEPCO’s distribution sector was halted due to substantial risk and uncertain benefits from the separation plan

Update on Gencos Privatization and Consolidation Plan§ Privatization plan for KEPCO and its Gencos was indefinitely suspended in July 2008§ Gencos have been designated as market oriented public firms by government to create a more efficient

management structure and enhance their competitiveness in 2011

2010

§ Privatization plan for Gencos indefinitely suspended

2011

§ Implementation of TWBP (1) was suspended

2012

Note:

1. TWBP= Two Way Bidding Pool

Nationwide Power Consumption

462482

503521

536551

567582

598612

626640

654

300

400

500

600

700

2012 2015 2020 2024

Power consumption

History of Power Consumption Electricity Demand Forecast

§ Power consumption has continued to rise on the back of strong economic growth at an average rate of 6.0% per annum from 2000 to 2011

§ Power demand is expected to grow at an average rate of 2.9% per annum from 2012 to 2024

(Unit: TWh) (Unit: TWh)

10

Source: “Statistics of Electric Power in Korea”, KEPCO / The Bank of Korea (as of 2011) / “Electricity Supply and Demand Basic Plan #5”, MKE (as of 2011)

462482

503521

536551

567582

598612

626640

654

300

400

500

600

700

2012 2015 2020 2024

Power consumption

§ Power Price ComparisonPrice type Price Remarks

Capacity Payment

(CP)

Base LoadKRW 7.73/kWh

KRW 7.73/kWh as a base price, CP is differentiated by regions, by seasons and by hoursNon Base Load

§ Application of The Adjusted Coefficient of SMPü KOWEPO can pass through 100% of its fuel cost through the energy priceü Electricity Generation Cost Evaluation Committee annually determines The Adjusted Coefficient

Updating on Electricity Pricing Mechanism

11

Capacity Payment

(CP)

Energy Price

Base Load[Max {(SMP-Fuel Cost), 0} x The Adjusted Coefficient + Fuel Cost]

The Adjusted Coefficient (Jan. 2012~ )ü Nuclear : 0.2498 (←0.2086)ü Coal : 0.1560 (←0.1176)ü Anthracite : 0.5000 (←0.2002)ü Others/General : 0.7634 (←0.6602)

Non Base Load

※ SMP : System Marginal Price

Introduction of “The Adjusted Coefficient of SMP” will motivate Gencos to construct base load power plants and lead to fair competition among Gencos. It will increase the efficiency of the power market by stimulating cost reduction

§ Newly raised Adjusted Coefficient will increase KOWEPO’s operating income

Source: company data (as of January 2012)



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AppendixAppendix

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44

KOWEPO operates 44 generation units with total generation capacity of 8,404MW

Power Plant Facilities in Operation

Power Plant Type Fuel Type Number of Units Capacity(MW)

Capacity Factor (%)

Taean

Thermal Bituminous 8 4,000 96.2

Solar - 1 0.1 12.4

Small Hydro - 4 2.2 21.5

PyeongtaekThermal BC Oil 4 1,400 21.3

13

Source: company data (as of 2011)

PyeongtaekCombined Cycle LNG GT (1) : 4

ST (2) : 1320160 35.0

Seoincheon Combined Cycle LNG GT (1) : 8ST (2) : 8

1,200600 76.0

GunsanSolar - 1 0.3 15.4

Combined Cycle LNG GT (1) : 2ST (2) : 1 718 79.6

Samrangjin Solar - 2 3 14.2

TOTAL 44 8,404 74.5

Note: 1. GT: Gas Turbine2. ST: Steam Turbine

Operational Strength

74.5%

83.3%

74.5% 74.6%

69.5%

50%

60%

70%

80%

90%

KOWEPO KOSEP KOMIPO KOSPO EWP

Increasing Historical Capacity Factor Capacity Factor (KOWEPO vs. Comps)

64.6%

74.5%

58.8%

30%

40%

50%

60%

70%

80%

2009 2010 2011

14


74.5%

83.3%

74.5% 74.6%

69.5%

50%

60%

70%

80%

90%

KOWEPO KOSEP KOMIPO KOSPO EWP

64.6%

74.5%

58.8%

30%

40%

50%

60%

70%

80%

2009 2010 2011


§ KOWEPO plans to maintain its strong market position and superb operating performance promoting growth with new plant constructions and new business

New Business - Domestic

Power Plant Type Generation Capacity

Construction Period Remarks

New Plant

Taean IGCC IGCC 380MW Nov. 2011~Nov. 2015

§ Integrated Gasification Combined Cycle§ R&D project supported by Government

Taean #9, #10 Thermal 2,100MW July 2012~Dec. 2016 § Largest unit capacity in Korea

15

Taean #9, #10 Thermal 2,100MW July 2012~Dec. 2016 § Largest unit capacity in Korea

Pyuntaek 2nd Combined Cycle 920MW Oct. 2012~Oct. 2014

§ Emergency power plant to prepare exponential increase in demand in summer of 2013

§ Initiation of Gas Turbine in July 2013

Equity Investment

Garolim Tidal 520MW May 2012~Mar. 2019

§ Consortium With Posco E&C, Daewoo E&C, Lotte E&C§ Project Financing§ KOWEPO to be in charge of construction management,

operation and maintenance

Dongducheon Combined Cycle 1,880MW June 2012~Dec. 2014

§ Consortium with Samsung E&C, Hyundai Development Company§ Project Financing§ KOWEPO to be in charge of construction management,

operation and maintenance

Source: company data (as of March 2012)

§ KOWEPO plans to diversify its revenue through overseas expansion by leveraging its proven experience in operating and maintaining power plants

§ Project financing as a key funding source to minimize financial risk

New Business - Overseas

Power Plant Type Generation Capacity Remarks

Equity Investment

Saudi Arabia Rabigh Thermal 1,204 MW §O&M from KEPCO-ACWA Consortium §KOWEPO to be in charge of O&M

16Source: company data (as of March 2012)

India Maharashtra C/C 388MW §Consortium with PPIL (construction started in Jan. 2012)§Build, Own, Operate & O&M

Laos Xe-Namnoi Hydro 390MW§Consortium with SK E&C, Ratchaburi, LHSE§Build, Own, Operate, Transfer & O&M§Under PPA Negotiation

Indonesia Takalar Thermal 200MW§Consortium with Sambu, Yooho & MSC §Build, Own, Operate & O&M §Tariff approved

Resources Development

Indonesia Mutiara Jawa Floating Loading Facility 8 mil ton/yr §Consortium with KOFT, STX, KORINDO

§Setting up O&M, Ship Building Contracts

Capital Expenditure Schedule

Capital Expenditure Plan

-

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014

Expansion Maintenance Others

Unit : KRW billions

2,014

2,650

3,001

17

Source: company data (as of March 2012)

-

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014

Expansion Maintenance Others

Cost Efficiency

5444 50

86

110

148

129

108107

0

20

40

60

80

100

120

140

160

2009 2010 2011

Coal Heavy Oil Combined(LNG)

Fuel CostUnit : KRW / kWh

§ Fuel costs account for 87.3% of production costs § Long-term supply contracts assure adequate supply

of the raw materials § Hedging risks by adjusting portion of long-term

contracts with market volatility

Coal

Long-term62%

Short-term38%

LNG

Long-term100%

18

Others, 1.3%

Coal, 36.9%

LNG, 53.3%

Oil, 8.5%

Fuel Cost Composition


5444 50

86

110

148

129

108107

0

20

40

60

80

100

120

140

160

2009 2010 2011

Coal Heavy Oil Combined(LNG)

Major Suppliers of CoalUnit : kiloton

Total 13,698 kilotons(1)

Note: 1. Represents fuel costs other than that required to generate electricity, such as fuel required to start up the generating units



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AppendixAppendix

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44

Capital Structure

Capital Structure

Assets

Liability

ShareholdersEquity

§ KRW 5,287 bn- Non-Current Assets/Total

Assets Ratio : 77.6%

§ KRW 2,335 bn

§ KRW 2,952 bn- wholly owned by KEPCO

5,388 5,287

4,482

2,3542,132

2,3352,127

3,2562,952

0

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011

(KR

W b

illion

)

Total Assets Total Shareholders' Equity Total Liability

20

ShareholdersEquity

Revenue

EBITDA

§ KRW 2,952 bn- wholly owned by KEPCO

§ KRW 5,208 bn

§ KRW 503 bn- Net Income : KRW 42 bn

5,388 5,287

4,482

2,3542,132

2,3352,127

3,2562,952

0

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011

(KR

W b

illion

)

Total Assets Total Shareholders' Equity Total Liability

Source: FSS (Financial Supervisory Service in Korea) (as of 2011) Note: 1. Financial data based on non-consolidated K-GAAP accounting standard 2. Financial data based on consolidated K-IFRS accounting standard

(1) (2) (2)

EBITDARevenue

Financial Performance (1)

(KRW billion) (KRW billion)

5,2084,572

3,678

0

2,000

4,000

6,000

2009 2010 2011

496

711

503

0

200

400

600

800

2009 2010 2011

21 Source: company data (as of December 2011)

LeverageInterest Coverage(Times) (%)

5,2084,572

3,678

0

2,000

4,000

6,000

2009 2010 2011

496

711

503

0

200

400

600

800

2009 2010 2011

3.5

1.9

2.72.4

4.9

2.0

0

2

4

6

2009 2010 2011

EBIT/Gross Interest Expense Debt/EBITDA

38.5

28.733.6

50.040.5

62.5

0

20

40

60

80

2009 2010 2011

Debt/Equity Debt/Capital

EBITDA / Revenue

Financial Performance (2)

Debt / EquityEBITDA / Net Interest Expense

(%) (Times) (%)

22Source: FSS, DART Filing (as of 2011)

(KRW billion)

Local88.7%

(KRW 1,124bn)

Foreign11.3%

(KRW 144bn)

Debt Profile

Debt Maturity Profile (1) Local vs. Foreign Currency

242

0

404

10080

220220

0

100

200

300

400

500

2012 2013 2014 2015 2016 2017 2018

23

Fixed vs. Floating Rate Debt


Fixed91.8%

(KRW 1,164bn)

Floating8.2%

(KRW 104bn)

242

0

404

10080

220220

0

100

200

300

400

500

2012 2013 2014 2015 2016 2017 2018

Note: 1. Excludes swap effect of KRW29Bn and short-term borrowings of KRW182Bn



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AppendixAppendix

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Financial Statements

Income Statement(Unit : KRW Billion)

2009(1) 2010(1) 2010(2) 2011(2)

Sales 3,817 4,767 4,572 5,208

Cost of Sales 3,681 4,393 4,277 5,030

Gross Profit 136 374 295 178

SG&A 32 38 39 55

Net Other Operating Income (IFRS adj.) - - 20 (4)

Operating Profit (Loss) 104 335* 276 119

25

Note: 1. Financial data based on non-consolidated K-GAAP accounting standard2. Financial data based on consolidated K-IFRS accounting standard

Operating Profit (Loss) 104 335* 276 119

Non-Operating Income 141 87 47 13

Non-Operating Expense 132 104 81 64

Net Profit from Subs / Affiliates (IFRS adj.) - - (3) (1)

Income Tax Expense (Benefits) 25 72 55 25

Income from Discontinued Operations (Loss) - - 34 -

Net Income (Loss) 88 246 218 42

* decimal difference


2009(1) 2010(1) 2010(2) 2011(2)

Assets

Current Assets 843 815 1,348 1,182

Non-Current Assets 3,639 3,683 4,040 4,105

Total Assets 4,482 4,499* 5,388 5,287

Liabilities

Balance Sheet(Unit : KRW Billion)

26

Current Liabilities 956 765 994 938

Non-Current Liabilities 1,171 1,167 1,138 1,397

Total Liabilities 2,127 1,932 2,132 2,335

Stockholders’ Equity

Capital Stock 176 176 1,443 1,192

Capital Surplus 1,267 1,267 22 2

Retained Earnings 896 1,116 1,791 1,757

Total Stockholders’ Equity 2,354 2,567 3,256 2,952*

Total Liabilities and Stockholders’ Equity 4,482 4,499 5,388 5,287


* decimal difference


Cash Flow Statement(Unit : KRW Billion)

2009(1) 2010(1) 2010(2) 2011(2)

Cash Flows from Operating Activities

Net Income 88 246 218 42

Non-cash Income & Expenses 306 410 546 478

Changes in Assets and Liabilities 98 (38) (52) (167)

Other - - (88) (76)

Net Cash Provided by Operating Activities 492 618 624 277

27

Net Cash Provided by Operating Activities 492 618 624 277

Cash Flows from Investing Activities

Purchase of Fixed Asset (593) (487) (506) (452)

Other, Net (34) (19) (12) 11

Net Cash Used in Investing Activities (627) (506) (518) (441)

Cash Flows from Financing Activities

Cash Inflows 1,234 968 968 721

Cash Outflows (1,014) (1,062) (1,061) (422)

Net Cash Used in Financing Activities 220 (94) (93) 299

Cash and Cash Equiv. at End of Period 131 150 153 285


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