s&p annual review presentation korea western power october 2011

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S&P Annual Review Presentation Korea Western Power October 2011

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Page 1: S&P Annual Review Presentation Korea Western Power October 2011

S&P Annual Review PresentationKorea Western Power

October 2011

Page 2: S&P Annual Review Presentation Korea Western Power October 2011

2

Table of ContentsTable of Contents

Regulatory Environment Regulatory Environment

Operation Overview Operation Overview

Financial Management Financial Management

Financial Forecast Financial Forecast

22

33

44

55

11 Company Overview Company Overview

Page 3: S&P Annual Review Presentation Korea Western Power October 2011

3

Company Overview

Page 4: S&P Annual Review Presentation Korea Western Power October 2011

4

Introduction to KOWEPOIntroduction to KOWEPO

Note : Applied FX rate : KRW 1078.10/USD (Bloomberg as of June 30, 2011)

Inception Inception Inception Inception Spun off from KEPCO in April 2, 2001Spun off from KEPCO in April 2, 2001

OwnershipOwnershipOwnershipOwnership 100% owned by KEPCO (51% owned by Korean Government)100% owned by KEPCO (51% owned by Korean Government)

Generation Generation CapacityCapacity

Generation Generation CapacityCapacity 8,404 MW 8,404 MW

Total AssetsTotal AssetsTotal AssetsTotal Assets 1H 2011 : KRW 4,857 bn (USD 4,505mn)FY2010 : KRW 4,499 bn (USD 4,173mn)

1H 2011 : KRW 4,857 bn (USD 4,505mn)FY2010 : KRW 4,499 bn (USD 4,173mn)

Total RevenueTotal RevenueTotal RevenueTotal Revenue 1H 2011 : KRW 2,620 bn (USD 2,430mn)FY2010 : KRW 4,767 bn (USD 4,422mn)

1H 2011 : KRW 2,620 bn (USD 2,430mn)FY2010 : KRW 4,767 bn (USD 4,422mn)

Net IncomeNet IncomeNet IncomeNet Income 1H 2011 : KRW 52 bn (USD 48mn)FY2010 : KRW 246 bn (USD 228mn)

1H 2011 : KRW 52 bn (USD 48mn)FY2010 : KRW 246 bn (USD 228mn)

Page 5: S&P Annual Review Presentation Korea Western Power October 2011

5

Power Plants PortfolioPower Plants Portfolio

Base load, intermediate load, and peak load account for 48%, 17% and 35% respectively in terms of generation capacity in operation

Over 91% of capacity is located in or near the Seoul and Gyeonggi metropolitan areas

― Seoul and Gyeonggi metropolitan areas comprise approximately 40% of total national demand

Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”, S “Solar”, S/H “Small Hydro”

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Base Load Intermediate Load Peak Load

In Operation

Taean T/P(4,000 MW)

Pyeongtaek T/P(1,400 MW)

4,000MW

Seoincheon C/C(1,800 MW)

PyeongtaekC/C (480 MW)

GunsanC/C (718 MW)

3,004MW

CoalLNGBC OilHydro Solar

1,400MW

Generation Capacity by Type of Plant Location of Plant Complex

Taean

Pyeongtaek

Gunsan

Seoincheon

Seoul and Gyeonggi Metropolitan Area

Samrangjin

Source: company data (as of June 2011)

Taean, Gunsan, Samrangjin S;

Taean S/H (6 MW)

Page 6: S&P Annual Review Presentation Korea Western Power October 2011

6

KOWEPO’s Market Position - 1H 2011KOWEPO’s Market Position - 1H 2011

Generation Capacity Market Share Sales Volume Market Share

(MW) (GWh)

Total Generation Capacity78,810 MW

Total Electricity Sales228,961 GWh

Page 7: S&P Annual Review Presentation Korea Western Power October 2011

7

Regulatory Environment

Page 8: S&P Annual Review Presentation Korea Western Power October 2011

8

Latest Power Industry Operating EnvironmentLatest Power Industry Operating Environment

Introduction of vesting contracts for Gencos deferred

Wholesale competition was put on a hold

1999 2000 20022001 2003 2004 2005 2007 20082006 2009

MOCIE announced restructuring plan for power industry

Incorporation of generation companies

Cost-based pool bidding (“CBP”) mechanism

Initiation of KOSEP privatization

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

2010

Gencos were designated as market-oriented public firms

IPO of KOSEP was delayed

Implementation of TWBP was suspended

Privatization plan for Gencos cancelled

The Power Industry Restructuring Plan Delayed and the Former Privatization Plan for Gencos Cancelled

Update on Gencos Privatization and Consolidation Plan Privatization plan for KEPCO and its Gencos was cancelled 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

2011

Page 9: S&P Annual Review Presentation Korea Western Power October 2011

9

Latest Power Industry Operating Environment (Cont’d)Latest Power Industry Operating Environment (Cont’d)

As a result of the transfer of water pump generator, we expect approximately 10% decrease in asset size, but given profit and generation consists of only 2-4%, the decrease relative to asset size is small

Note: Unit in KRW100mm

Transfer of water pump generators to Korea Hydro Nuclear Power

Genco Generator Power Capacity (kW)

KOSEP Mooju 600,000

KOMIPO Yangyang 1,000,000

KOWEPOSamrangjin

Chungsong

600,000

600,000

KOSPO Chungpyung 400,000

EWP Sanchung 700,000

Total 6 Generators 3,900,000

Electric Power Industry Reorganization - Transfer of Water Pump Generators to KHNP Purpose: Exclude water pump generator from competition and seek stability in electricity system network at the same time

achieving synergy from integration of the water pump generation and water generation

Timeline: all assets have been transferred before 2011

Effect on governance: No change in corporate governance – KEPCO will continue to hold 100% of respective GENCOs

Implication for Korea Western Power

Site Asset Rev (% M/S) Generation (% M/S)

Samrangjin 1,453 658 (1.37%) 298GWh (0.58%)

Chungsong 3,843 1,265 (2.65%) 607GWh (1.18%)

Page 10: S&P Annual Review Presentation Korea Western Power October 2011

10

128147

163182

201 193

240258

278294

312332

349361

385 390

425

214

6.10%

8.50%9.20%

7.00%

5.80%

-6.90%

3.80%

9.50%

4.70%

8.50% 7.20%

2.80%

4.60%4.00%

5.20% 5.10%

2.30%

0.20%

0

50

100

150

200

250

300

350

400

450

1993 1994 1995 1996 1997 2000 2005 2010

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Power consumption GDP growth rate

Nationwide Power ConsumptionNationwide Power Consumption

Power consumption has continued to rise on the back of strong economic growth at an average rate of 5.7% per annum from 1998 to 2010

Continuous increase in power consumption expected

* Source: “Statistics of Electric Power in Korea”, KEPCO / The Bank of Korea (Jan 2011) “Electricity Supply and Demand Basic Plan #5, MKE (Dec 2010)

Power consumption (TWh) (Growth rate)

Page 11: S&P Annual Review Presentation Korea Western Power October 2011

11

612626

640654

425444

462482

503521

536551

567582

598

300

400

500

600

700

2010 2015 2020 2024

Electricity Demand ForecastElectricity Demand Forecast

Korea’s electricity sector is expected to enjoy robust demand growth – Continuous economic growth will be the primary driver of power demand growth

Power demand is expected to grow at a rate of 3.1% per annum from 2010 to 2024

(TWh)

* Source: MKE (Electricity Supply and Demand Basic Plan #5 – Published in Dec 2010)

Page 12: S&P Annual Review Presentation Korea Western Power October 2011

12

Expansion on cost effective base load infrastructure in addition to promotion of environmental friendly energy sources such as renewable energies, following the Government’s Green Growth Plan

By year 2024, the installed capacity for

Nuclear Power : 24.8% (’10) 31.9% (’24)

Coal : 32.1% (’10) 27.9% (’24)

LNG : 25.8% (’10) 20.9% (’24)

Renewable : 2.2% (’10) 4.3% (’24)

Installed Capacity Forecast by different energy sources

Government’s Mid-to-Long Term Energy Strategy Government’s Mid-to-Long Term Energy Strategy

Govt’s Mid-to-Long Term Energy Supply Scheme

* Source: MKE (Electricity Supply and Demand Basic Plan #5 – Published in Dec 2010)

4.6%

Page 13: S&P Annual Review Presentation Korea Western Power October 2011

13

Update on Electricity Pricing MechanismUpdate on Electricity Pricing Mechanism

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

Application of The Adjusted Coefficient of SMP

Abolition of Regulated Market Price (RMP) system

KOWEPO can pass through 100% of its fuel cost through the energy price

Electricity Generation Cost Evaluation Committee annually determines The Adjusted Coefficient

Power Price Comparison

Because the Adjusted Coefficient of Coal decreased and Others/General Increased, Newly lowered Adjusted Coefficient will have not great impact on KOWEPO’s operating income for 6 months (Jul ~ Dec 2011)

※ RMP : Regulated Market Price, SMP : System Marginal Price

Price type Price Remarks

Capacity Payment

(CP)

Base Load

KRW 7.46/kWhKRW 7.46/kWh as a base price, CP is differentiated by regions, by seasons and by hoursNon Base Load

Energy Price

Base Load

[Max {(SMP-Fuel Cost), 0} x

The Adjusted Coefficient + Fuel Cost]

The Adjusted Coefficient (Lowerd in July 2011) Nuclear : 0.2086 (← 0.2597) Coal : 0.1176 (← 0.1881) Anthracite : 0.2002 (← 0.5000) Others/General : 0.6602 (← 0.3033)

Non Base Load

Page 14: S&P Annual Review Presentation Korea Western Power October 2011

14

Operation Overview

Page 15: S&P Annual Review Presentation Korea Western Power October 2011

Note : Taean IGCC (300MW) will be added in Dec 2015

Power Plant Facilities in OperationPower Plant Facilities in Operation

* Source: Company. As of June 30, 2011

KOWEPO Operates 44 Generation Units with Total Generation Capacity of 8,404MW.

Type Fuel Type Number of Units Total Capacity Sales Utilization Rate (%)

Taean Thermal Bituminous 8 4,000 15,533 93.6

Taean Small Hydro 4 2 2 19.57

Taean Solar 1 0.1 0 14.24

Pyeongtaek Thermal Plant Oil 4 1,400 1,614 27.5

Pyeongtaek Combined Cycle LNGGT : 4

ST : 1

320

160968 46.92

Seoincheon Combined Cycle LNGGT : 8

ST : 8

1,200

6006,229 80.51

Samrangjin Solar - 2 3 2 15.56

Gunsan Combined Cycle LNGGT : 2

ST : 1718 2,765 90.12

Gunsan Solar - 1 0.27 - 15.12

TOTAL 44 8404 27,114 64.62

Page 16: S&P Annual Review Presentation Korea Western Power October 2011

16

New Business(1)New Business(1)

KOWEPO plans to maintain its leading market position and superior operating performance promoting growth with new plant constructions and new business

Domestic

Power Plant Type Generation Capacity Completion Remarks

New Plant

Taean IGCC 300MW Nov. 2015Integrated Gasification Combined Cycle

R&D project supported by Government

Taean #9, 10 Thermal Plant 2000MW Dec. 2016 Largest unit capacity in Korea

Pyeongtaek Combined Cycle 920MW Oct. 2014 GT 320 MW * 2 ; ST 280 MW * 1

Equity Investment

Garorim Tidal 520MW Dec. 2015

Consortium With Posco E&C, Daewoo E&C, Lotte E&C

Project Financing

KOWEPO to be in charge of operation and maintenance

Dongducheon Combined Cycle 1500MW Dec. 2014

Consortium with Samsung E&C

Project Financing

KOWEPO to be in charge of operation and maintenance

Page 17: S&P Annual Review Presentation Korea Western Power October 2011

17

New Business(2)New Business(2)

KOWEPO plans to diversify its revenue sources through overseas expansion by leveraging its proven experiences and track records in operating and maintaining power plants

Project financing as a key funding source to minimize the financial risks

Overseas

Power Plant Type Generation Capacity Remarks

Equity Investment

Philippines Kanan Hydro 150MW

Consortium with SK E&C (Korea)

Build, Own, Operate

Project Financing

KOWEPO to be in charge of operation and maintenance

Indonesia Takalar Thermal (Coal) 200MW

Consortium with SAMBU, Yooho and MSC (Indonesia)

Build, Own, Operate

Project Financing

KOWEPO to be in charge of operation and maintenance

Laos Xe-Namnoi Hydro 390MW

Consortium with SK E&C (Korea), Ratchaburi (Thai) and LHSE (Laos)

Build, Own, Operate, Transfer

Project Financing

KOWEPO to be in charge of operation and maintenance

Saudi Arabia Rabigh Thermal (Heavy Oil) 1,204MW

Consortium between KEPCO and ACWA received order for

Build, Own, Operate

Consortium between KOWEPO and NOMAC (Saudi)

received mandate for O&M from KEPCO–ACWA consortium

Page 18: S&P Annual Review Presentation Korea Western Power October 2011

Global Fuel Market TrendGlobal Fuel Market Trend

Recent Fuel Market Trends & Forecasts

COAL OIL

20

50

80

110

140

Jan-08

May-08

Sep-08

Jan-09

May-09

Sep-09

Jan-10

May-10

Sep-10

Jan-11

May-11

Sep-11

Brent WTI Dubai

50

100

150

200

Jan-08

May-08

Sep-08

Jan-09

May-09

Sep-09

Jan-10

May-10

Sep-10

Jan-11

May-11

Sep-11

NEWC RB

(US$) (US$)

After the 2008 global economic crisis, the price of raw material plummeted as the economy stagnated; however, since 2010, due to growing expectation of economic recovery, the price of coal and oil has been continuously increasing.

If the demand from India and China continuously grows, then the increase in fuel price will continue in 2012.

The price of LNG is directly related to the international oil price; therefore, its outlook will be in line with that of international oil price

* Source: Bloomberg; Factset

Page 19: S&P Annual Review Presentation Korea Western Power October 2011

19

Fuel Procurement Strategy & Long – Term Supply ContractsFuel Procurement Strategy & Long – Term Supply Contracts

KOWEPO enters into long-term supply contracts

― To assure an adequate supply of the raw materials for a streamlined operation

― KOWEPO will adjust the portion of long-term supply contracts according to the market price volatility

Short-term30%

Long-term70%

Bituminous Coal

LNG

Long-term

100%

Overseas87%

Domestic13%

Oil

Stable supply of favorable quality fuel

― Long term contract with producer

― Diversification of supply source by country & ports

― Investment & development in overseas coal mine

Economic purchase

― Utilization of spot market

― Open bidding

Page 20: S&P Annual Review Presentation Korea Western Power October 2011

20

Insurance Coverage -1H 2011Insurance Coverage -1H 2011

KOWEPO is fully insured on its facilities under operation or construction and shipment/transportation of fuels and raw materials to refrain from any unexpected accident and subsequent losses.

Asset Comprehensive Insurance

Details

Insurance Type2011 Asset Comprehensive Insurance

Insurer Dong-bu Fire & Marine

Insured Amount KRW 6,364,329mn

Insured Target Generation Facilities

Assembly Insurance

Details

Insurance TypeConstruction works for Taean Site

Insurer Samsung fire & Marine

Insured Amount KRW 162,721mn

Insured TargetFuel Unloading dock and Equipments

Insurance on Cargo

Details

Insurance TypeFuel and Equipment Facilities Comprehensive Insurance on Cargo

Insurer Samsung Fire & Marine

Insured Amount KRW 1,654,969mn

Insured Target Fuel and Equipments

Page 21: S&P Annual Review Presentation Korea Western Power October 2011

21

View on KRW/USD and its ImpactView on KRW/USD and its Impact

Management’s View on USD/KRW

Impact of change in FX rate on KOWEPO

Current 4Q 2011 2012 2013 2014

USD/KRW 1,179 1,100 1,080 1,060 1,040

USD/KRW rate is expected to be gradually stabilized with downward tendency

The precise estimation of USD/KRW rate is difficult given the volatile nature of world’s macro economies

Under the CBP (Cost-Based Pool) system, the fuel price hikes as a result of depreciation of KRW (or appreciation of USD) shall be 100% compensated.

In that reason, KEPCO’s financial condition could be impacted by the FX fluctuation.

The company enters into the cross-currency swaps for all its long-term foreign currency denominated debt, thus neutrally positioned against FX fluctuation.

KOWEPO is putting enormous effort on currency rate risk management through increasing credit line of the company and reviewing to set dollar reserves

Page 22: S&P Annual Review Presentation Korea Western Power October 2011

22

Financial Management

Page 23: S&P Annual Review Presentation Korea Western Power October 2011

23

Capital Structure - 1H 2011Capital Structure - 1H 2011

AssetsKRW 4,857 bn

– Non-Current Assets/Total Assets Ratio : 83.1%

Liability

Shareholders Equity

Revenue

EBITDA

KRW 1,930 bn

– Debt/Capital Ratio : 28.0%

KRW 2,927 bn

– Stake is wholly owned by KEPCO

KRW 2,620 bn

KRW 251 bn

– Net Income : 52 bn

Capital Structure

3,8854,199

4,482 4,499

4,857

2,926.90

1,929.90

3,708

2,302 2,4262,273

2,3542,567

1,932

1,4061,459

1,926

2,127

0

1,000

2,000

3,000

4,000

5,000

6,000

2006 2007 2008 2009 2010 1H2011

Total Assets Total Shareholders' Equity Total Liability

(KRW billion)

Page 24: S&P Annual Review Presentation Korea Western Power October 2011

24

465

273

423

732616

251293 312214 246

394

0

200

400

600

800

2006 2007 2008 2009 2010 1H 2011

Full Year 1H

Financial PerformanceFinancial Performance

Sales revenue has shown a continuous growth rate EBITDA has been stable but we have seen a decline in 2008 resulting from the surge in raw material costsCoverage ratio was deteriorated in 2008 and 1H 2009 due to the sharp increase in raw material costs, but has recovered in 1H 2010Leverage ratio has been deteriorated due to increased debt, but still maintains a stable level

Revenue EBITDA

(KRW billion) (KRW billion)

2,4243,069

3,700 3,8174,767

2,6202,3341,8571,7021,535

1,235

0

2,000

4,000

6,000

2006 2007 2008 2009 2010 1H 2011

Full Year 1H

Coverage Leverage

(Times) (%)

5.7 5.5

-1.6

2.0

6.3

2.64.5

1.83.5

4.7

1.52.2

-3

0

3

6

9

2006 2007 2008 2009 2010 1H 2011

EBIT / Gross Interest Expense Debt/EBITDA

43.656.7 51.4

62.5

38.837.628.033.9

38.536.227.330.4

0

20

40

60

80

2006 2007 2008 2009 2010 1H 2011

Debt/Equity Debt/Capital

Page 25: S&P Annual Review Presentation Korea Western Power October 2011

25

Financial Highlights(1)Financial Highlights(1)

Income Statement

(Unit : KRW bn) 2007 2008 2009 2010 1H 2010 1H 2011

Sales 3,069 3,700 3,817 4,767 2,334 2,620

Cost of Sales 2,769 3,736 3,681 4393 2,074 2,524

Gross Profit 300 (35) 136 374 260 95

SG&A 36 38 32 38 18 22

Operating Income 264 (73) 104 335 242 73

Non-Operating Income 26 197 141 87 56 31

Non-Operating Expense 54 248 132 104 68 42

Income before Tax 236 (125) 113 318 230 62

Tax Expense 61 (22) 25 72 57 10

Net Income 175 (104) 88 246 173 52

Cash & Equivalents 173 43 126 147 308 78

Other Current Asset 434 696 717 60 640 72

Investment Assets 13 46 74 87 79 74

Tangible Assets 3,051 2,999 3,275 3,373 3,441 3,882

Intangible Asset 167 167 161 147 154 21

Other Asset 48 249 128 77 104 57

Total Asset 3,885 4,199 4,482 4,499 4,725 4,857

Current Liabilities 543 740 956 765 944 714

Debenture, net of discount 655 907 809 709 819 659

Long-term Debt 86 93 178 263 266 204

Other L/T Liabilities 175 187 184 458 462 556

Total Liabilities 1,459 1,926 2,127 1,932 2,224 1,930

Total Stockholder's Equities 2,426 2,272 2,354 2,567 2,501 2,927

Balance Sheet

Page 26: S&P Annual Review Presentation Korea Western Power October 2011

26

Financial Highlights(2)Financial Highlights(2)

Cash flowStatement

(Unit : KRW bn) 2007 2008 2009 2010 1H 2010 1H 2011

Cash Flows from Operating Activities

Net Income 174.8 (103.5) 87.9 246.2 173.2 51.7

Non-cash Expense and Income 373.5 371.2 305.9 410.0 171.3 182.9

Depreciation 351.3 345.9 319.4 396.8 152.0 178

Changes in Assets and Liabilities (66.8) (190.3) 97.8 (38) (5.4) (72.6)

Net cash flows provided by operating activities 481.4 77.4 491.6 618.5 339.1 162.0

Cash Flows from Investing Activities

Capex / Purchase of Fixed Assets (282.5) (294.1) (593.1) (380.6) (245.9) (196.8)

Other (1.7) (17.1) (34.3) (125.2) (65.0) 13.1

Net cash flows used in investing activities (284.2) (311.3) (627.4) (505.9) (310.9) (183.7)

Cash flows from Financing Activities

Cash inflows 880.9 1,028.9 1,233.9 968.7 438.2 15.0

Cash outflows (1,069.5) (923.7) (1,013.5) (1,062.5) (284.4) (62.0)

Dividends (51.3) (69.9) (26.4) - - -

Net cash flows used in financing activities (188.7) 105.2 220.4 (93.8) 153.8 (46.9)

NET INCREASE(DECREASE) IN CASH 8.6 (128.7) 84.5 18.8 182.0 (68.7)

CASH, BEGINNING OF THE YEAR 166.9 175.5 46.8 131.3 131.3 131.3

CASH, END OF THE YEAR 175.5 46.8 131.3 150.1 313.3 62.7

Page 27: S&P Annual Review Presentation Korea Western Power October 2011

27

Sales BreakdownSales Breakdown

In 2010, sales increased due to the completion of Gunsan Combined Cycle

Note : Sales unit price includes other revenues associated with power generation

Sales (GWh) 46,987 45,266 43,539 51,207 27,114

Unit Price (KRW/kWh) 66.80 81.39 86.5 93.3 96.4

Revenue Source

KRW billion 2007 2008 2009 2010 1H 2011

LNG 1,223.2 1,596.2 1,056.0 2,020.9 1,272.6

Coal 1,133.3 1,542.5 2,149.6 2,040.5 1,039.9

Oil 569.6 350.5 443.7 520.1 298.5

Pumped Storage 65.3 139.3 113.9 192.5 -

Others 0.2 0.9 1.2 3.0 1.7

TOTAL 2,991.6 3,629.4 3,764.4 4,777.0 2,612.7

Page 28: S&P Annual Review Presentation Korea Western Power October 2011

28

Details on Credit Line Facilities -1H 2011Details on Credit Line Facilities -1H 2011

Bank Overdraft Facilities

Bank Amount Used

NACF KRW 100 billion -

Bill Acceptance Facilities

Bank Amount Used Amount

KEB KRW 284 billion KRW 200 billion

Woori KRW 30 billion KRW 10 billion

Shinhan KRW 100 billion -

Short-term FCY Credit Facilities

Bank Amount Used Amount

KEB USD 18 million -

RBS USD 80 million USD 12 million

BNP Paribas USD 60 million USD 22 million

SC First Bank USD 50 million -

Shinhan USD 30 million -

Page 29: S&P Annual Review Presentation Korea Western Power October 2011

29

Debt Profile(1) –1H 2011Debt Profile(1) –1H 2011

KOWEPO prefers long-term funding of at least 5 year as the plant construction usually takes mid to long term period to complete

The company prefers to borrow 80% to 90% of it total debt in KRW and the remaining in foreign currencies

90.3% of KOWEPO’s debt carries fixed interest rate, while 9.7% is in floating rate

All of total debt is unsecured.

Local Bond67.4%

(KRW 720bn)

Eurobond 13.5%

(KRW 144bn)

Long TermBorrowing

19.1%(KRW 204bn)

Total Debt Profile: 1,068 billion

Currency Distribution Type of Instrument

KRW86.5%

(KRW 924bn)

USD13.5%

(KRW 144bn)

Note: 1. Total debt in 2011 represents the remaining outstanding debt as of June 30, 2011. 2. Total amount of debt is reflected currency swap in case of foreign currency bond.

100

220 220

80

100

244

102

0

50

100

150

200

250

300

'11 '12 '13 '14 '15 '16 '17~

Debt Repayment Schedule

(KRW in billions)

Page 30: S&P Annual Review Presentation Korea Western Power October 2011

30

Debt Profile(2) -1H 2011Debt Profile(2) -1H 2011

Rating Triggers / Financial Covenants

Bond # 5~ 6(KRW)

Bond # 9~15 (KRW)

Rating Trigger

-

Financial Covenants

Liability/Equity ratio 500% or less

Collateral Not permitted

Sales of assetsSales more than 5 trillion KRW are not permitted in the same fiscal year

Maturity

2011.11- 2018.5

Currency Swap

Eurobond

Issue USD 150mn / 5.95%

Currency Swap KRW 143.8bn / 4.95%

Counter Party Barclays / Deutsche Bank

Page 31: S&P Annual Review Presentation Korea Western Power October 2011

31

Capital Expenditure PlanCapital Expenditure Plan

Capital Expenditure Schedule

(KRW bn)

202

1,616

2,2772,596

657

2,014

2,650

3,001

365

302

305

398

35

66

86

3

5

5

7

54

0

500

1000

1500

2000

2500

3000

3500

2011 2012 2013 2014

New Plant Construction Facility Improvement Equity Investment Others 2

Taean #9,10: 30

Taean IGCC: 44

Shin Pyungtaek: 0

Taean #9,10: 103

Taean IGCC: 211

Shin Pyungtaek: 214

Taean #9,10: 441

Taean IGCC: 393

Shin Pyungtaek: 402

Taean #9,10: 1,175

Taean IGCC: 366

Shin Pyungtaek: 290

Page 32: S&P Annual Review Presentation Korea Western Power October 2011

32

Financial Forecast

Page 33: S&P Annual Review Presentation Korea Western Power October 2011

33

Key AssumptionKey Assumption

Capital Expenditure Schedule

(Unit : KRW bn) 2011 2012 2013

Inflation

Domestic 3.00% 3.00% 3.00%

FX rate (KRW/USD) 1,100 1,100 1,100

Oil Price (US$/barrel) 80.00 82.40 84.90

Gross Generation (GWh) 50,161 51,328 50,018

Page 34: S&P Annual Review Presentation Korea Western Power October 2011

34

Financial Statements(1)Financial Statements(1)

Balance Sheet

(Unit : KRW bn) 2011 2012 2013

Assets

Current Assets 802.0 816.8 819.4

Non-Current Assets 4,338.5 5,969.8 8,252.5

Total Assets 5,140.6 6,786.6 9,071.8

Liabilities

Current Liabilities 942.2 884.5 895.4

Non-Current Liabilities 1,050.0 2,122.0 4,211.0

Total Liabilities 1,992.2 3,006.6 5,106.4

Stockholder’s Equity

Capital Stock 213.2 595.1 595.1

Capital Surplus 988.3 988.3 988.3

Retained Earnings 1,943.4 2,193.2 2,378.6

Total Stockholders’ Equity 3,148.3 3,780.0 3,965.5

Total Liabilities and Stockholders’ Equity 5,140.6 6,786.6 9,071.8

Note : Forecast subject to change by year-end

Page 35: S&P Annual Review Presentation Korea Western Power October 2011

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Financial Statements(2)Financial Statements(2)

Income Statement

(Unit : KRW bn) 2011 2012 2013

Sales 5,016.1 5,132.8 5,001.8

Sales of Electric Power 5,007.8 5,124.2 4,993.5

Others 8.3 8.5 8.3

Cost of Sales & SGA 4,802.5 4,737.6 4,603.3

Operating Income 213.6 395.2 398.5

Non-Operating Income 83.2 81.9 84.3

Non-Operating Expense 95.0 97.9 131.4

Income before Tax 201.8 379.1 351.4

Income Tax 48.8 83.4 77.3

Net Income 153.0 295.7 274.1

Dividend 45.9 88.7 82.2

Note : Forecast subject to change by year-end

Plans to declare annual dividend at the level of 30% of net income

Page 36: S&P Annual Review Presentation Korea Western Power October 2011

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Financial Statements(3)Financial Statements(3)

Cash Flow Forecasts

(Unit : KRW bn) 2011 2012 2013

Operating Activities 609.3 733.7 668.9

Net Income 153.0 295.7 274.1

Non-cash Expenses &Incomes 73.0 75.6 77.8

Depreciation 367.6 376.1 372.5

Changes in Assets and Liabilities 90.2 32.3 (30.4)

Investing Activities (185.5) (2,012.3) (2,663.7)

Plant Construction &Facility Improvement 16.7 (1,820.5) (2,477.8)

Others (202.2) (191.8) (185.8)

Financing Activities (539.4) 1,279.8 1,993.4

Cash Balance, Beginning of Year 165.7 50.1 51.2

Net Cash (115.6) 1.2 (1.3)

Cash Balance, End of Year 50.1 51.2 49.9

Page 37: S&P Annual Review Presentation Korea Western Power October 2011

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