Form 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the Month of March 2019

 

 

KOREA ELECTRIC POWER CORPORATION

(Translation of registrant’s name into English)

 

 

55 Jeollyeok-ro, Naju-si, Jeollanam-do, 58217, Korea

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            .

 

 

 


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On March 11, 2019, Korea Electric Power Corporation filed its audit report for the fiscal year 2018 prepared in accordance with Korean International Financial Reporting Standards (K-IFRS) as attached. The financial statements in such report have not been approved by the shareholders of Korean Electric Power Corporation and remain subject to change.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

By:  /s/ Kim, Kab-soon                                                                                          

 

Name: Kim, Kab-soon

Title: Vice President

Date: March 11, 2019


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KOREA ELECTRIC POWER CORPORATION

AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2018

(With Independent Auditors’ Report Thereon)


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INDEX TO FINANCIAL STATEMENTS

 

     Page  

Independent Auditors’ Report

     1  

Consolidated Statements of Financial Position

     5  

Consolidated Statements of Comprehensive Income (Loss)

     7  

Consolidated Statements of Changes in Equity

     9  

Consolidated Statements of Cash Flows

     11  

Notes to the Consolidated Financial Statements

     13  


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Independent Auditors’ Report

Based on a report originally issued in Korean

To the Shareholders and Board of Directors of

Korea Electric Power Corporation:

Opinion

We have audited the consolidated statement of financial statements of Korea Electric Power Corporation and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as of December 31, 2018 and 2017, the consolidated statements of comprehensive income (loss), changes in equity and cash flows for the years then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing (KSAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements as of and for the year ended December 31, 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

(1) Assessment of impairment of property, plant and equipment (“PP&E”) in electricity transmission and distribution business

As discussed in note 3.(18) to the consolidated financial statements, at each reporting date, the Company assesses if any indicator of impairment for its PP&E exists. If there is an impairment indicator for a cash-generating unit (“CGU”), the Company compares recoverable amount of the CGU with its carrying value to determine if the PP&E which are allocated to the respective CGU are impaired.

The Company is comprised of a number of cash-generating units (“CGUs”). In view of the significant difference between the Company’s market capitalization and its consolidated net assets carrying amount, management considered that an indicator of impairment of the Company’s PP&E existed as of December 31, 2018, which is attributed to the CGU of electricity transmission and distribution business.

Management performed impairment assessment of the Company’s PP&E allocated to its electricity transmission and distribution CGU by comparing the carrying amount of the CGU with its value-in-use (VIU) determined based on discounted cash flow forecasts. Preparing the VIU estimation requires management to exercise significant judgment, particularly in relation to estimating future sales volumes, unit sales price, cost of power purchase, and discount rate. We have identified assessment of impairment of PP&E in the electricity transmission and distribution business as a key audit matter because the carrying value of these assets are significant to the consolidated financial statements and also because estimation using a discounted cash flow forecast is complex and involves the exercise of significant management judgment in estimating the variable inputs, which can be inherently uncertain and could be subject to management bias.

 

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The primary audit procedures we performed to address this key audit matter included:

 

   

Testing certain internal controls relating to the Company’s assessment of impairment of PP&E.

 

   

Assessing management’s identification of CGU and the allocation of assets to each CGU with reference to our understanding of the Company’s business and the requirements of the prevailing accounting standards.

 

   

Comparing the forecasts included in discounted cash flow forecasts prepared in prior year with the current year’s performance to assess the Group’s ability to accurately forecast.

 

   

Engaging our internal valuation specialists to assist us in assessing the discount rate applied by management by comparison with our recalculated rate using market data.

 

   

Obtaining the Company’s business plan and external data for major unobservable inputs such as future sales volumes, unit sales price and cost of power purchase, used in estimating VIU, and examine whether there were any indicators of management bias.

 

   

Obtaining from the Company sensitivity analyses on the discount rate applied to the discounted cash flow forecasts and assessing the impact of changes in the key assumptions to the conclusions reached in the impairment assessments and whether there were any indicators of management bias.

(2) Recognition of construction contract revenue

As discussed in note 3.(7) and note 23 to the consolidated financial statements, the Company derives revenue from construction of UAE nuclear power plant business for which the related performance obligation is satisfied over time and revenue is measured based on percentage of completion. In relation to the construction service revenue for the UAE project, we have performed audit procedures over application of input method, estimation of total contract costs, assessment of percentage-of-completion, recoverability of due from customers for contract work and accounting for the variation of construction contract.

The following summarizes the considerations we had in identifying recognition of construction contract revenue as a key audit matter, and the primary audit procedures we performed to address the key audit matter.

(a) Uncertainty of estimated total contract costs

Construction contracts are generally performed over a long term, and the total contract costs are estimated based on estimated future amounts such as material costs, labor costs, outsourcing costs and others which are expected to be incurred during construction period. The actual total contract costs can vary from the Company’s original estimates because of changes in condition. Total estimated contract costs changed by W817,393 million during the year ended December 31, 2018 as described in note 23.(5) to the consolidated financial statements. Considering the high degree of uncertainty on total contract costs and its significant impact on revenue recognized during 2018, we have identified the changes in estimation of total contract costs as a key audit matter.

The primary audit procedures we performed to address this included:

 

   

Testing certain internal controls relating to the Company’s process of estimation of total contract cost.

 

   

Inquiring and inspecting relevant documents regarding the variation on significant and main components of total contract costs.

(b) Accounting for the variation of construction contract

As described in note 23.(5) to the consolidated financial statements, variation of construction contracts occurred during the year ended December 31, 2018 and had significant impact on profits or loss of the construction contract. Therefore, we have identified the accounting for the variation of construction contract as a key audit matter.

The primary audit procedures we performed to address this included:

 

   

Testing certain internal controls relating to the process of changes in construction contracts.

 

   

Inspecting documents supporting the changes in contract for selected samples. In addition, we also assessed on a sample basis whether additional contract costs according to changes in construction work were reflected in the estimated total contract costs by inspecting supporting documents.

 

   

Assessing whether the disclosure of changes in construction contract are made appropriately in the notes to the consolidated financial statements in accordance with K-IFRS.

 

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Other Matter

The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

   

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

   

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

 

   

Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management.

 

   

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

   

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

   

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Ju Han Lee.

 

LOGO

KPMG Samjong Accounting Corp.

Seoul, Korea

March 11, 2019

 

 

This report is effective as of March 11, 2019, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Position

As of December 31, 2018 and 2017

 

In millions of won    Note      2018      2017  

Assets

        

Current assets

        

Cash and cash equivalents

     5,6,7,48      W 1,358,345        2,369,739  

Current financial assets, net

     5,9,12,13,14,15,48        2,359,895        1,958,357  

Trade and other receivables, net

     5,8,17,23,48,49,50        7,793,592        7,928,972  

Inventories, net

     16        7,188,253        6,002,086  

Income tax refund receivables

     44        143,214        100,590  

Current non-financial assets

     18        878,888        753,992  

Assets held-for-sale

     45        22,881        27,971  
     

 

 

    

 

 

 

Total current assets

        19,745,068        19,141,707  
     

 

 

    

 

 

 

Non-current assets

        

Non-current financial assets, net

     5,6,9,10,11,12,13,14,15,48        2,113,613        2,038,913  

Non-current trade and other receivables, net

     5,8,17,48,49,50        1,819,845        1,754,797  

Property, plant and equipment, net

     21,30,52        152,743,194        150,882,414  

Investment properties, net

     22,30        159,559        284,714  

Goodwill

     19        2,582        2,582  

Intangible assets other than goodwill, net

     24,30,49        1,225,942        1,187,121  

Investments in associates

     4,20        4,064,820        3,837,421  

Investments in joint ventures

     4,20        1,813,525        1,493,275  

Deferred tax assets

     44        1,233,761        919,153  

Non-current non-financial assets

     18        327,152        246,818  
     

 

 

    

 

 

 

Total non-current assets

        165,503,993        162,647,208  
     

 

 

    

 

 

 

Total Assets

     4      W 185,249,061        181,788,915  
     

 

 

    

 

 

 

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Position, Continued

As of December 31, 2018 and 2017

 

In millions of won    Note      2018     2017  

Liabilities

       

Current liabilities

       

Trade and other payables, net

     5,25,27,48,50      W 6,405,395       5,999,521  

Current financial liabilities, net

     5,14,26,48,50        7,981,879       9,194,552  

Income tax payables

     44        285,420       508,402  

Current non-financial liabilities

     23,31,32        5,574,041       5,584,308  

Current provisions

     29,48        1,594,798       2,137,498  
     

 

 

   

 

 

 

Total current liabilities

        21,841,533       23,424,281  
     

 

 

   

 

 

 

Non-current liabilities

       

Non-current trade and other payables, net

     5,25,27,48,50        2,941,696       3,223,480  

Non-current financial liabilities, net

     5,14,26,48,50        53,364,911       45,980,899  

Non-current non-financial liabilities

     31,32        8,160,033       8,072,434  

Employee benefits liabilities, net

     28,48        1,645,069       1,483,069  

Deferred tax liabilities

     44        9,617,309       10,415,397  

Non-current provisions

     29,48        16,585,748       16,224,714  
     

 

 

   

 

 

 

Total non-current liabilities

        92,314,766       85,399,993  
     

 

 

   

 

 

 

Total Liabilities

     4      W 114,156,299       108,824,274  
     

 

 

   

 

 

 

Equity

       

Contributed capital

     1,33,48       

Share capital

      W 3,209,820       3,209,820  

Share premium

        843,758       843,758  
     

 

 

   

 

 

 
        4,053,578       4,053,578  

Retained earnings

     34       

Legal reserves

        1,604,910       1,604,910  

Voluntary reserves

        35,906,267       34,833,844  

Unappropriated retained earnings

        14,007,942       16,931,804  
     

 

 

   

 

 

 
        51,519,119       53,370,558  
     

 

 

   

 

 

 

Other components of equity

     37       

Other capital surplus

        1,234,825       1,233,793  

Accumulated other comprehensive loss

        (358,570     (271,457

Other equity

        13,294,973       13,294,973  
     

 

 

   

 

 

 
        14,171,228       14,257,309  
     

 

 

   

 

 

 

Equity attributable to owners of the controlling company

        69,743,925       71,681,445  

Non-controlling interests

     19,36        1,348,837       1,283,196  
     

 

 

   

 

 

 

Total Equity

      W 71,092,762       72,964,641  
     

 

 

   

 

 

 

Total Liabilities and Equity

      W 185,249,061       181,788,915  
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31, 2018 and 2017

 

In millions of won, except per share information    Note      2018     2017  

Sales

     4,38,48,50       

Sales of goods

      W 57,897,804       55,772,548  

Sales of services

        392,867       351,157  

Sales of construction services

     23        1,742,391       3,212,184  

Revenue related to transfer of assets from customers

        594,548       478,973  
     

 

 

   

 

 

 
        60,627,610       59,814,862  
     

 

 

   

 

 

 

Cost of sales

     16,28,46,50       

Cost of sales of goods

        (55,976,628     (48,454,036

Cost of sales of services

        (592,224     (597,423

Cost of sales of construction services

        (1,638,869     (3,047,396
     

 

 

   

 

 

 
        (58,207,721     (52,098,855
     

 

 

   

 

 

 

Gross profit

        2,419,889       7,716,007  

Selling and administrative expenses

     28,39,46,50        (2,627,890     (2,762,855
     

 

 

   

 

 

 

Operating profit (loss)

     4        (208,001     4,953,152  

Other non-operating income

     40        375,346       390,145  

Other non-operating expense

     40        (231,330     (180,055

Other gains (losses), net

     41        (621,124     156,627  

Finance income

     5,14,42        796,870       1,530,618  

Finance expenses

     5,14,43        (2,470,743     (3,127,952

Profit (loss) related to associates, joint ventures and subsidiaries

     4,20       

Share in profit of associates and joint ventures

        473,269       241,537  

Gain on disposal of investments in associates and joint ventures

        5,079       609  

Gain on disposal of investments in subsidiaries

        73       —    

Share in loss of associates and joint ventures

        (110,168     (323,225

Loss on disposal of investments in associates and joint ventures

        (2,183     —    

Impairment loss on investments in associates and joint ventures

     20        (7,907     (27,238
     

 

 

   

 

 

 
        358,163       (108,317
     

 

 

   

 

 

 

Profit (loss) before income tax

        (2,000,819     3,614,218  

Income tax benefit (expense)

     44        826,321       (2,172,824
     

 

 

   

 

 

 

Profit (loss) for the period

      W (1,174,498     1,441,394  

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss), Continued

For the years ended December 31, 2018 and 2017

 

In millions of won, except per share information    Note      2018     2017  

Other comprehensive income (loss)

     5,14,28,34,37       

Items that will not be reclassified subsequently to profit or loss:

       

Remeasurement of defined benefit liability, net of tax

     28,34      W (108,169     170,337  

Share in other comprehensive income (loss) of associates and joint ventures, net of tax

     34        (1,153     10,067  

Net change in fair value of equity investments at fair value through other comprehensive income (loss)

     37        (34,185     —    

Items that are or may be reclassified subsequently to profit or loss:

       

Net change in the unrealized fair value of available-for-sale financial assets, net of tax

     37        —         (7,098

Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax

     5,14,37        211       20,868  

Foreign currency translation of foreign operations, net of tax

     37        (20,717     (134,196

Share in other comprehensive income (loss) of associates and joint ventures, net of tax

     37        57,088       (154,694
     

 

 

   

 

 

 

Other comprehensive loss, net of tax

        (106,925     (94,716
     

 

 

   

 

 

 

Total comprehensive income (loss) for the period

      W (1,281,423     1,346,678  
     

 

 

   

 

 

 

Profit (loss) attributable to:

       

Owners of the controlling company

     47      W (1,314,567     1,298,720  

Non-controlling interests

        140,069       142,674  
     

 

 

   

 

 

 
      W (1,174,498     1,441,394  
     

 

 

   

 

 

 

Total comprehensive income (loss) attributable to:

       

Owners of the controlling company

      W (1,426,477     1,230,194  

Non-controlling interests

        145,054       116,484  
     

 

 

   

 

 

 
      W (1,281,423     1,346,678  
     

 

 

   

 

 

 

Earnings (loss) per share (in won)

     47       

Basic and diluted earnings (loss) per share

      W (2,048     2,023  

See accompanying notes to the consolidated financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

 

In millions of won    Equity attributable to owners of the controlling company     Non-
controlling
interests
       
     Contributed
capital
     Retained
earnings
    Other
components
of equity
    Subtotal     Total
equity
 

Balance at January 1, 2017

   W 4,053,578        53,173,871       14,496,244       71,723,693       1,326,852       73,050,545  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the period

             

Profit for the period

     —          1,298,720       —         1,298,720       142,674       1,441,394  

Items that will not be reclassified subsequently to profit or loss:

             

Remeasurement of defined benefit liability, net of tax

     —          158,991       —         158,991       11,346       170,337  

Share in other comprehensive income of associates and joint ventures, net of tax

     —          10,065       —         10,065       2       10,067  

Items that are or may be reclassified subsequently to profit or loss:

             

Net change in the unrealized fair value of available-for-sale financial assets, net of tax

     —          —         (7,102     (7,102     4       (7,098

Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax

     —          —         19,614       19,614       1,254       20,868  

Foreign currency translation of foreign operations, net of tax

     —          —         (95,103     (95,103     (39,093     (134,196

Share in other comprehensive income (loss) of associates and joint ventures, net of tax

     —          —         (154,991     (154,991     297       (154,694

Transactions with owners of the Company, recognized directly in equity

             

Dividends paid

     —          (1,271,089     —         (1,271,089     (70,252     (1,341,341

Issuance of shares of capital by subsidiaries and others

     —          —         (1,378     (1,378     18,381       17,003  

Changes in consolidation scope

     —          —         —         —         7,337       7,337  

Dividends paid (hybrid securities)

     —          —         —         —         (15,856     (15,856

Repayment of hybrid securities

     —          —         —         —         (99,750     (99,750

Others

     —          —         25       25       —         25  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2017

   W 4,053,578        53,370,558       14,257,309       71,681,445       1,283,196       72,964,641  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity, Continued

For the years ended December 31, 2018 and 2017

 

In millions of won    Equity attributable to owners of the controlling company     Non-
controlling
interests
       
     Contributed
capital
     Retained
earnings
    Other
components
of equity
    Subtotal     Total
equity
 

Balance at January 1, 2018

   W 4,053,578        53,370,558       14,257,309       71,681,445       1,283,196       72,964,641  

Effect of change in accounting policy

     —          71,928       (76,851     (4,923     —         (4,923
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance at January 1, 2018

     4,053,578        53,442,486       14,180,458       71,676,522       1,283,196       72,959,718  

Total comprehensive income (loss) for the period

             

Profit (loss) for the period

     —          (1,314,567     —         (1,314,567     140,069       (1,174,498

Items that will not be reclassified subsequently to profit or loss:

             

Remeasurement of defined benefit liability, net of tax

     —          (100,495     —         (100,495     (7,674     (108,169

Share in other comprehensive income of associates and joint ventures, net of tax

     —          (1,153     —         (1,153     —         (1,153

Net change in fair value of equity investments at fair value through other comprehensive income

     —          —         (34,125     (34,125     (60     (34,185

Items that are or may be reclassified subsequently to profit or loss:

             

Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax

     —          —         (1,140     (1,140     1,351       211  

Foreign currency translation of foreign operations, net of tax

     —          —         (32,086     (32,086     11,369       (20,717

Share in other comprehensive income (loss) of associates and joint ventures, net of tax

     —          —         57,089       57,089       (1     57,088  

Transactions with owners of the Company, recognized directly in equity

             

Dividends paid

     —          (507,152     —         (507,152     (92,741     (599,893

Issuance of shares of capital by subsidiaries and others

     —          —         1,032       1,032       17,183       18,215  

Changes in consolidation scope

     —          —         —         —         9,530       9,530  

Dividends paid (hybrid bond)

     —          —         —         —         (13,385     (13,385
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2018

   W 4,053,578        51,519,119       14,171,228       69,743,925       1,348,837       71,092,762  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

10


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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

 

In millions of won    2018     2017  

Cash flows from operating activities

    

Profit (loss) for the period

   W (1,174,498     1,441,394  
  

 

 

   

 

 

 

Adjustments for:

    

Income tax expense (benefit)

     (826,321     2,172,824  

Depreciation

     9,905,856       9,660,039  

Amortization

     118,938       113,672  

Employee benefit expense

     360,575       391,360  

Bad debt expense

     57,468       126,326  

Interest expense

     1,868,458       1,789,552  

Loss on sale of financial assets

     1       2,343  

Loss on disposal of property, plant and equipment

     60,704       70,514  

Loss on abandonment of property, plant, and equipment

     481,176       424,091  

Loss on impairment of property, plant, and equipment

     710,162       51,067  

Loss on impairment of intangible assets

     8,112       20  

Loss on disposal of intangible assets

     43       183  

Increase to provisions

     1,056,994       1,690,120  

Loss (gain) on foreign currency translation, net

     243,378       (902,878

Gain on valuation of financial assets at fair value through profit or loss

     (8,495     —    

Loss on valuation of financial assets at fair value through profit or loss

     6,616       —    

Valuation and transaction loss (gain) on derivative instruments, net

     (300,500     1,043,628  

Share in loss (income) of associates and joint ventures, net

     (363,101     81,688  

Gain on sale of financial assets

     (1,838     (1,130

Gain on disposal of property, plant and equipment

     (98,077     (48,316

Gain on disposal of intangible assets

     (12     (564

Gain on disposal of associates and joint ventures

     (5,079     (609

Loss on disposal of associates and joint ventures

     2,183       —    

Impairment loss on associates and joint ventures

     7,907       27,238  

Gain on disposal of subsidiaries

     (72     —    

Interest income

     (223,767     (206,143

Dividend income

     (12,777     (11,477

Impairment loss on available-for-sale securities

     —         2,713  

Others, net

     81,317       16,679  
  

 

 

   

 

 

 
     13,129,849       16,492,940  
  

 

 

   

 

 

 

Changes in:

    

Trade receivables

     246,755       (218,328

Non-trade receivables

     154,580       (31,807

Accrued income

     (484,718     577,838  

Other receivables

     (61,961     (1,271

Other current assets

     (148,509     37,576  

Inventories

     (1,771,550     (1,373,438

Other non-current assets

     (54,148     (46,079

Trade payables

     478,744       342,126  

Non-trade payables

     (292,912     (214,704

Accrued expenses

     (361,204     (715,305

Other payables

     —         292  

Other current liabilities

     250,112       (126,323

Other non-current liabilities

     287,488       763,958  

Investments in associates and joint ventures (dividends received)

     175,175       106,983  

Provisions

     (1,132,969     (1,390,606

Payments of employee benefit obligations

     (89,253     (69,489

Plan assets

     (330,064     (325,080
  

 

 

   

 

 

 
   W (3,134,434     (2,683,657
  

 

 

   

 

 

 

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2018 and 2017

 

In millions of won    2018     2017  

Cash generated from operating activities

   W 8,820,917       15,250,677  

Dividends received (financial assets at fair value through other comprehensive income)

     11,182       10,590  

Interest paid

     (1,895,898     (1,886,303

Interest received

     194,221       173,226  

Income taxes paid

     (450,290     (2,298,296
  

 

 

   

 

 

 

Net cash from operating activities

     6,680,132       11,249,894  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Proceeds from disposals of associates and joint ventures

     1,617       10,542  

Acquisition of associates and joint ventures

     (319,425     (206,753

Proceeds from disposals of property, plant and equipment

     234,138       85,801  

Acquisition of property, plant and equipment

     (12,266,870     (12,535,958

Proceeds from disposals of intangible assets

     13       1,072  

Acquisition of intangible assets

     (110,587     (143,887

Proceeds from disposals of financial assets

     2,419,259       5,296,680  

Acquisition of financial assets

     (2,841,651     (4,786,717

Increase in loans

     (188,675     (218,698

Collection of loans

     100,010       120,967  

Increase in deposits

     (299,564     (397,078

Decrease in deposits

     259,930       110,383  

Proceeds from disposals of assets held-for-sale

     18,716       —    

Receipt of government grants

     30,416       55,533  

Net cash inflow from changes in consolidation scope

     2,141       —    

Other cash inflow (outflow) from investing activities, net

     (53,769     1,414  
  

 

 

   

 

 

 

Net cash used in investing activities

     (13,014,301     (12,606,699
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from (repayment of) short-term borrowings, net

     (183,660     370,328  

Proceeds from long-term borrowings and debt securities

     14,251,586       10,098,067  

Repayment of long-term borrowings and debt securities

     (8,095,590     (8,198,882

Payment of finance lease liabilities

     (134,454     (122,919

Settlement of derivative instruments, net

     60,907       33,434  

Change in non-controlling interest

     20,113       23,582  

Repayment of hybrid bond

     —         (99,750

Dividends paid (hybrid bond)

     (17,658     (15,856

Dividends paid

     (599,391     (1,340,387

Other cash outflow from financing activities, net

     (175     (2,023
  

 

 

   

 

 

 

Net cash from financing activities

     5,301,678       745,594  
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents before effect of exchange rate fluctuations

     (1,032,491     (611,211

Effect of exchange rate fluctuations on cash held

     21,097       (70,403
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (1,011,394     (681,614

Cash and cash equivalents at January 1

     2,369,739       3,051,353  
  

 

 

   

 

 

 

Cash and cash equivalents at December 31

   W 1,358,345       2,369,739  
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

December 31, 2018

 

1.

Reporting Entity (Description of the controlling company)

Korea Electric Power Corporation (“KEPCO”), the controlling company as defined in Korean International Financial Reporting Standards (“K-IFRS”) 1110 ‘Consolidated Financial Statements’, was incorporated on January 1, 1982 in accordance with the Korea Electric Power Corporation Act (the “KEPCO Act”) to engage in the generation, transmission and distribution of electricity and development of electric power resources in the Republic of Korea. KEPCO also provides power plant construction services. KEPCO’s stock was listed on the Korea Stock Exchange on August 10, 1989 and KEPCO listed its Depository Receipts (DR) on the New York Stock Exchange on October 27, 1994. KEPCO’s head office is located in Naju, Jeollanam-do.

As of December 31, 2018, KEPCO’s share capital amounts to W3,209,820 million and KEPCO’s shareholders are as follows:

 

     Number of shares      Percentage of
ownership
 

Government of the Republic of Korea

     116,841,794        18.20

Korea Development Bank

     211,235,264        32.90

Other (*)

     313,887,019        48.90
  

 

 

    

 

 

 
     641,964,077        100.00
  

 

 

    

 

 

 

 

(*)

The number of shares held by foreign shareholders are 173,769,250 shares (27.07%) as of December 31, 2018.

In accordance with the Restructuring Plan enacted on January 21, 1999 by the Ministry of Trade, Industry and Energy, KEPCO spun off its power generation divisions on April 2, 2001, resulting in the establishment of six power generation subsidiaries.

 

2.

Basis of Preparation

The consolidated financial statements of Korea Electric Power Corporation and its subsidiaries (the “Company”) were authorized for issuance by the Board of Directors on February 22, 2019, which will be submitted for approval at the shareholders’ meeting held on March 22, 2019.

 

(1)

Statement of compliance

These consolidated financial statements have been prepared in accordance with K-IFRS, as prescribed in the Act on External Audits of Corporations in the Republic of Korea.

 

(2)

Basis of measurement

These consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the consolidated statements of financial position:

 

   

financial assets at fair value through profit or loss

 

   

financial assets at fair value through other comprehensive income

 

   

derivative financial instruments are measured at fair value

 

   

liabilities for defined benefit plans are recognized at the net of the total present value of defined benefit obligations less the fair value of plan assets

 

(3)

Functional and presentation currency

These consolidated financial statements are presented in Korean won (“Won”), which is KEPCO’s functional currency and the currency of the primary economic environment in which the Company operates.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

2.

Basis of Preparation, Continued

 

(4)

Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The followings are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

  (i)

Useful lives of property, plant and equipment, and estimations on provision for decommissioning costs

The Company reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. Management’s assumptions could affect the determination of estimated economic useful lives.

The Company records the fair value of estimated decommissioning costs as a liability in the period in which the Company incurs a legal obligation associated with the retirement of long-lived assets that result from acquisition, construction, development and/or normal use of the assets. The Company is required to record a liability for the dismantling (demolition) of nuclear power plants and disposal of spent fuel and low and intermediate radioactive wastes. The measurement of such liability is subject to change based on change in estimated cash flow, inflation rate and discount rate, and over time.

 

  (ii)

Deferred tax

The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities of each consolidated taxpaying entity. However, the amount of deferred tax assets may be different if the Company does not realize estimated future taxable income during the carryforward periods.

 

  (iii)

Valuations of financial instruments at fair values

The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of K-IFRS including the level in the fair value hierarchy in which such valuation techniques should be classified.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

 

  (iv)

Defined employee benefit liabilities

The Company offers its employees defined benefit plans. The cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. For actuarial valuations, certain inputs such as discount rates and future salary increases are estimated. Defined benefit plans contain significant uncertainties in estimations due to its long-term nature (refer to note 28).

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

2.

Basis of Preparation, Continued

 

(4)

Use of estimates and judgments, continued

 

  (v)

Unbilled revenue

Energy delivered but not metered nor billed is calculated at the reporting date and is estimated based on consumption statistics and selling price estimates. Determination of the unbilled revenues at the end of the reporting period is sensitive to the estimated consumptions and prices based on statistics. Unbilled revenue recognized for the years ended December 31, 2018 and 2017 are W1,671,117 million and W1,672,385 million, respectively.

 

  (vi)

Construction contracts

For each performance obligation satisfied over time, the Company recognizes revenue over time by measuring the progress towards complete satisfaction of that performance obligation. The Company applies a single method of measuring progress for each performance obligation satisfied over time and applies that method consistently to similar performance obligations and in similar circumstances. Revenue and costs are recognized based on the progress towards complete satisfaction of a performance obligation utilizing the cost-based input method at the end of the reporting period. In applying the cost-based input method, it is necessary to use estimates and assumptions related to the Company’s efforts or inputs expected to be incurred in the future, costs incurred which are not related to the performance obligation, changes in the Company’s efforts or inputs due to change of the performance obligation, etc. Total revenue is measured based on an agreed contract price; however, it may fluctuate due to the variation of performance obligations. The measurement of revenue is affected by various uncertainties resulting from unexpected future events.

 

  (vii)

Early closure of Wolsong unit 1 nuclear power plant and changes in new nuclear power plant construction

The 30-year of designed life of Wolsong unit 1 nuclear power plant of the Company had expired on November 20, 2012. On February 27, 2015, however, it was approved by the Nuclear Safety and Security Commission (NSSC) to continue its operation until November 20, 2022.

According to the Eighth Basic Plan for Electricity Supply and Demand announced by the Ministry of Trade, Industry and Energy in 2017, Wolsong unit 1 nuclear power plant is expected to go through a comprehensive evaluation for the feasibility of continuous operation including economic efficiency and acceptability of household and community in 2018 in order to decide whether to shut down early. On June 15, 2018, the board of directors of Korea Hydro & Nuclear Power Co., Ltd. (“KHNP”), a subsidiary of KEPCO, has decided to shut down the Wolsong unit 1 on the grounds that its deficit was increasing and its economic efficiency was low due to the unoptimistic utilization rate. In addition, KHNP has also decided to discontinue the construction of Cheonji unit 1 and 2 and Daejin unit 1 and 2 pursuant to the government policy. For this reason, the Company recognized impairment loss and other expenses as described in note 21, note 40 and note 53.

Among the new nuclear power plants under construction, Shin-Hanwool unit 3 and 4, for which approval for power generation business was previously obtained, are not included in the decision to suspend construction of the board of directors of KHNP. However, considering the decision to shut down Wolsong unit 1 and suspended construction of Cheonji unit 1 and 2 and Daejin unit 1 and 2, it is highly likely that the construction of Shin-Hanwool unit 3 and 4 will be suspended according to the government’s policy. For this reason, the Company recognized impairment loss as described in note 21 and note 53, as the Company believes that there was a significant change in its operating environment during the year ended December 31, 2018.

The Korean government plans to refund to the Company for reasonable expenditures incurred in relation to the phase-out of nuclear power plants in accordance with the energy transformation policy established by Korean government. In doing so, after discussions with relevant government agencies and upon approval by the Congress, the Korean government is considering to use available resource including utilizing relevant fund to make the refund. Also, Korean government has stated that it plans to establish relevant legal basis of providing refund including utilizing available resource, if necessary.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

2.

Basis of Preparation, Continued

 

(5)

Changes in accounting policies

The Company has initially applied K-IFRS 1109 ‘Financial Instruments’ and K-IFRS 1115 ‘Revenue from Contracts with Customers’ from January 1, 2018.

Due to the transition methods chosen by the Company in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards.

 

  (i)

K-IFRS 1109 ‘Financial Instruments’

K-IFRS 1109 sets out requirements for recognizing and measuring financial assets, financial liabilities and certain contracts to buy or sell non-financial items. This standard replaces existing guidance in K-IFRS 1039 ‘Financial Instruments: Recognition and Measurement’.

The Company has taken an exemption not to restate comparative information for prior periods upon adoption of K-IFRS 1109. Accordingly, the information presented for 2017 has not been restated and differences in the carrying amounts of financial instruments resulting from the adoption of K-IFRS 1109 are recognized in retained earnings at January 1, 2018.

LOGO Classification and measurement of financial assets and financial liabilities

K-IFRS 1109 contains three principal classification categories for financial assets: measured at amortized cost, FVOCI and FVTPL. The classification of financial assets under K-IFRS 1109 is generally based on the business model in which a financial assets is managed and its contractual cash flow characteristics. Under K-IFRS 1109, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

The adoption of K-IFRS 1109 has not had a significant effect on the Company’s accounting policies related to financial liabilities and derivative financial instruments (for derivatives that are used as hedging instruments).

The following table reconciles the carrying amounts of financial assets under K-IFRS 1039 to the carrying amounts under K-IFRS 1109 on transition to K-IFRS 1109 on January 1, 2018.

 

In millions of won                   

Original classification

under

K-IFRS 1039

   New classification
under
K-IFRS 1109
   Original carrying
amount under
K-IFRS 1039
     New carrying
amount under
K-IFRS 1109
 

Financial assets at FVTPL

   FVTPL    W 111,512        111,512  

Loans and receivables

   Amortized cost      15,203,663        14,405,570  

Loans and receivables

   FVTPL      —          791,324  

Available-for-sale financial assets

   FVOCI      699,833        471,903  

Available-for-sale financial assets

   FVTPL      —          227,930  

Held-to-maturity investments

   Amortized cost      3,144        3,144  
     

 

 

    

 

 

 

Total financial assets (excluding derivative instruments)

   W 16,018,152        16,011,383  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

2.

Basis of Preparation, Continued

 

(5)

Changes in accounting policies, continued

 

LOGO Impairment of financial assets

K-IFRS 1109 replaces the ‘incurred loss’ model in K-IFRS 1039 with an ‘expected credit loss’ (ECL) model. The new impairment model applies to financial assets measured at amortized cost and debt investments at FVOCI, but not to investments in equity instruments.

The Company has used an exemption not to restate comparative information for prior periods with respect to classification and measurement (including impairment) requirements. Differences in the carrying amounts of financial assets resulting from the adoption of K-IFRS 1109 are recognized in other components of equity and retained earnings as at January 1, 2018 as follows:

 

In millions of won                            

Type

   Equity attributable to owners of the
controlling company
     Non-
controlling
interests
     Total
equity
 
   Retained
earnings
     Other
components
of equity
 

Reclassification of cumulative gain or loss of available-for-sale financial assets

   W 76,851        (76,851      —          —    

Remeasurement of expected credit loss

           

- Trade and other receivables

     (6,769      —          —          (6,769

- Income tax effect

     1,846        —          —          1,846  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 71,928        (76,851      —          (4,923
  

 

 

    

 

 

    

 

 

    

 

 

 

The detailed accounting policies under K-IFRS 1109 are described in note 3.(21).

 

(ii)

K-IFRS 1115 ‘Revenue from Contracts with Customers’

K-IFRS 1115 ‘Revenue from Contracts with Customers’ replaced K-IFRS 1018 ‘Revenue’, K-IFRS 1011 ‘Construction Contracts’, K-IFRS 2031 ‘Revenue-Barter Transactions Involving Advertising Services’, K-IFRS 2113 ‘Customer Loyalty Programs’, K-IFRS 2115 ‘Agreements for the Construction of Real Estate’, K-IFRS 2118 ‘Transfers of Assets from Customers’.

Under K-IFRS 1115, revenue is recognized when a customer obtains control of the goods or services. Determining the timing of the transfer of control at a point in time or over time requires judgment.

The Company has retrospectively applied this standard and recognized the cumulative effect of the adoption of K-IFRS 1115 at the date of initial application (January 1, 2018) and has retrospectively applied K-IFRS 1115 to only those contracts that were not completed as of the date of initial application (January 1, 2018). Accordingly, the Company has not restated the comparative periods.

K-IFRS 1115 did not have a significant impact on the Company’s consolidated financial statements at the date of initial application (January 1, 2018). For additional information about the Company’s accounting policies relating to revenue recognition, see note 3.(7).

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

2.

Basis of Preparation, Continued

 

(6)

Standards issued but not yet effective

A number of new standards are effective for annual periods beginning after January 1, 2018 and earlier application is permitted; however, the Company has not early adopted the new or amended standards in preparing these consolidated financial statements.

 

  (i)

K-IFRS 1116 ‘Lease’

LOGO General information

K-IFRS 1116 replaces existing leases guidance, including K-IFRS 1017 ‘Lease’, K-IFRS 2104 ‘Determining whether an Arrangement contains a Lease’, K-IFRS 2015 ‘Operating Leases – Incentives’ and K-IFRS 2027 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’.

The Company plans to apply K-IFRS 1116 retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application initially on January 1, 2019. Therefore, the cumulative effect of adopting K-IFRS 1116 will be recognized as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at January 1, 2019, with no restatement of comparative information.

For a contract that is, or contains, a lease, and the Company shall account for each lease component within the contract as a lease separately from non-lease components of the contract. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. In addition, as a practical expedient, a lessee may elect, by class of underlying asset, not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.

Lessor accounting remains similar to the existing guidance K-IFRS 1017 ‘Leases’ – i.e. lessors continue to classify leases as finance or operating leases.

LOGO Identifying a lease

The Company assesses whether the contract is, or contains, a lease at inception of a contract and also shall identify whether the contract is, or contains, a lease at the date of initial application.

The definition of this new standard is mainly related to the control model. This standard classifies a lease contract and a service contract based on whether the identified asset is controlled by the customer. If the customer has all of the following rights, right-of-use is transferred to the customer.

 

   

Right to obtain substantially all of the economic benefits from use of the identified asset

 

   

Right to direct the use of the identified asset

The Company believes that the amendment of the definition of a lease will not have a significant impact on the scope of a contract that meets the definition of a lease.

LOGO Lessee accounting

The adoption of K-IFRS 1116 will change the accounting of operating leases, which was previously not included in the consolidated statements of financial position under K-IFRS 1017, and at the date of initial application of K-IFRS 1116, the Company shall account for all leases, except for short-term leases and leases of low-value items, as follows:

 

   

recognizes the present value of the lease payments that are not paid at the date of initial recognition in the consolidated statements of financial position as right-of-use asset and lease liabilities

 

   

recognizes the depreciation charge for right-of-use asset and interest expense on the lease liability in the consolidated statements of comprehensive income

 

   

classifies cash payments for the principal portion (financial activities) and for the interest portion (operating activities) in the consolidated statements of cash flows

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

2.

Basis of Preparation, Continued

 

(6)

Standards issued but not yet effective, continued

 

LOGO Lessor accounting

Under K-IFRS 1116, a lessor continues to classify each of its leases as either a finance leases or an operating leases. However, under K-IFRS 1116, a lessor shall disclose additional information such as the nature of the lessor’s leasing activities and how the lessor manages the risk associated with any rights it retains in underlying assets.

The Company has been analyzing the impact of the adoption of K-IFRS 1116 on its consolidated financial statements. However, it is practically difficult to provide reasonable estimates of the impact until the Company has completed such analysis.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies

The significant accounting policies applied by the Company in preparation of its consolidated financial statements are included below. Except as described in note 2.(5), the accounting policies applied by the Company in these consolidated financial statements are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2017.

 

(1)

Basis of consolidation

The consolidated financial statements are the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity. Subsidiaries are controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Income and expense of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those of the Company.

Transactions within the Company are eliminated during the consolidation.

Changes in the Company’s ownership interests in a subsidiary that do not result in the Company losing control over the subsidiary are accounted for as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

When the Company loses control of a subsidiary, the income or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of the relevant assets (i.e. reclassified to income or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under K-IFRS 1109 ‘Financial Instruments’ or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

 

(2)

Business combinations

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.

The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-related costs are generally recognized in income or loss as incurred.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(2)

Business combinations, continued

 

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date, except that:

 

   

deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured in accordance with K-IFRS 1012 ‘Income Taxes’ and K-IFRS 1019 ‘Employee Benefits’, respectively;

 

   

assets (or disposal groups) that are classified as held for sale in accordance with K-IFRS 1105 ‘Non-current Assets Held for Sale’ are measured in accordance with that standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in income or loss as a bargain purchase gain.

Non-controlling interest that is present on acquisition day and entitles the holder to a proportionate share of the entity’s net assets in an event of liquidation, may be initially measured either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement can be elected on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in other K-IFRSs.

When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is re-measured at subsequent reporting dates in accordance with K-IFRS 1109 ‘Financial Instruments’, or with K-IFRS 1037 ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognized in income or loss.

When a business combination is achieved in stages, the Company’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date (i.e. the date when the Company obtains control) and the resulting gain or loss, if any, is recognized in income or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to income or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.

The assets and liabilities acquired under business combinations under common control are recognized at the carrying amounts recognized previously in the consolidated financial statements of the ultimate parent. The difference between consideration transferred and carrying amounts of net assets acquired is recognized as part of share premium.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(3)

Investments in associates

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not control or joint control over those policies. If the Company holds 20% ~ 50% of the voting power of the investee, it is presumed that the Company has significant influence.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. If the investment is classified as held for sale, in which case it is accounted for in accordance with K-IFRS 1105 ‘Non-current Assets Held for Sale’, any retained portion of an investment in associates that has not been classified as held for sale shall be accounted for using the equity method until disposal of the portion that is classified as held for sale takes place. After the disposal takes place, the Company shall account for any retained interest in associates in accordance with K-IFRS 1109 ‘Financial Instruments’ unless the retained interest continues to be an associates, in which case the entity uses the equity method.

Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Company’s share of the income or loss and other comprehensive income of the associate. When the Company’s share of losses of an associate exceeds the Company’s interest in that associate (which includes any long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in income or loss.

Upon disposal of an associate that results in the Company losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with K-IFRS 1109. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate.

In addition, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate would be reclassified to income or loss on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to income or loss (as a reclassification adjustment) when it loses significant influence over that associate.

The requirements of K-IFRS 1028 ’Investments in Associates and Joint Ventures’ are applied to determine whether it is necessary to recognize any impairment loss with respect to the Company’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with K-IFRS 1036 ‘Impairment of Assets’ as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with K-IFRS 1036 to the extent that the recoverable amount of the investment subsequently increases.

When the Company transacts with its associate, incomes and losses resulting from the transactions with the associate are recognized in the Company’s consolidated financial statements only to the extent of interests in the associate that are not related to the Company.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(4)

Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Joint arrangements are classified into two types - joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint ventures) have rights to the net assets of the arrangement.

If the Company is a joint operator, the Company is to recognize and measure the assets and liabilities (and recognize the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant K-IFRSs applicable to the particular assets, liabilities, revenues and expenses. If the joint arrangement is a joint venture, the Company is to account for that investment using the equity method accounting in accordance with K-IFRS 1028 ‘Investment in Associates and Joint Ventures’ (refer to note 3.(3)), except when the Company is applicable to the K-IFRS 1105 ‘Non-current Assets Held for Sale’.

 

(5)

Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Company is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Company will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

 

(6)

Goodwill

The Company measures goodwill which acquired in a business combination at the amount recognized at the date on which it obtains control of the acquiree (acquisition date) less any accumulated impairment losses. Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergies arising from the business acquired.

The Company assesses at the end of each reporting period and whenever there is an indication that the asset may be impaired. An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

Any impairment identified at the CGU level will first reduce the carrying value of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(7)

Revenue from Contracts with Customers

The Company recognizes revenue by applying the five-step approach (Step 1: Identify the contract(s) with a customer, Step 2: Identify the performance obligations in the contract, Step 3: Determine the transaction price, Step 4: Allocate the transaction price to the performance obligations in the contract, Step 5: Recognize revenue when the entity satisfied a performance obligation). The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, excluding amounts collected on behalf of third parties. Also, the Company recognizes revenue when the Company satisfies a performance obligation by transferring a promised good or service to a customer.

 

  (i)

Identify the performance obligations in the contract

The Company is engaged in the generation, transmission and distribution of electricity and development of electric power resources, and electricity sales revenue accounts for 93.8% of consolidated revenue for the year ended December 31, 2018.

Under K-IFRS 1115, supplying electricity is a series of distinct goods or services identified as a single performance obligation. The Company is also engaged in contracts with customers for transmission and distribution, provision of power generation byproducts, EPC business, O&M, etc. that are identified as different performance obligations for each contract.

 

  (ii)

Variable consideration

The Company may be subject to a variation of consideration paid by the customer due to the progressive electricity billing system, discounts on electricity bills for policy purposes, penalties and delinquent payment, etc. The Company estimates an amount of variable consideration by using the expected value method that the Company expects to better predict the amount of consideration to which it will be entitled, and includes in the transaction price some or all of an amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 

  (iii)

Performance obligations satisfied over time

The Company satisfies its performance obligations for contracts such as EPC business, O&M, etc. over time. The Company recognizes revenue based on the percentage-of-completion on a reasonable basis.

The Company recognizes revenue over time if one of the following criteria is met:

 

  (a)

the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the entity performs;

 

  (b)

the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

 

  (c)

the Company’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(8)

Leases

The Company classifies and accounts for leases as either a finance or operating lease, depending on the terms. Leases where the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

 

  (i)

The Company as lessor

Amounts due from lessees under finance leases are recognized as receivables at the amount of the Company’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

 

  (ii)

The Company as lessee

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in income or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs. Contingent rentals are recognized as expenses in the periods in which they are incurred.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

 

  (iii)

Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(9)

Foreign currencies

Transactions in foreign currencies are translated to the respective functional currencies of the Company entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the reporting date’s exchange rate. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Exchange differences are recognized in profit or loss in the period in which they arise except for:

 

   

Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

 

   

Exchange differences on transactions entered into in order to hedge certain foreign currency risks (refer to note 3.(23) Derivative financial instruments, including hedge accounting); and

 

   

Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to income or loss on disposal or partial disposal of the net investment.

For the purpose of presenting financial statements, the assets and liabilities of the Company’s foreign operations are expressed in Korean won using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity.

When a foreign operation is disposed of, the relevant amount in the translation is transferred to profit or loss as part of the gain or loss on disposal.

 

(10)

Borrowing costs

The Company capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognized in expense as incurred. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are recognized in income or loss in the period in which they are incurred.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(11)

Government grants

Government grants are not recognized unless there is reasonable assurance that the Company will comply with the grant’s conditions and that the grant will be received.

Benefit from a government loan at a below-market interest rate is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

 

  (i)

If the Company received grants related to assets

Government grants whose primary condition is that the Company purchase, construct or otherwise acquire long-term assets are deducted in calculating the carrying amount of the asset. The grant is recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense.

 

  (ii)

If the Company received grants related to income

Government grants which are intended to compensate the Company for expenses incurred are recognized as other income (government grants) in profit or loss over the periods in which the Company recognizes the related costs as expenses.

 

(12)

Employee benefits

When an employee has rendered service to the Company during a period, the Company recognizes the contribution payable to a defined contribution plan in exchange for that service as a liability (accrued expense).

For defined benefit pension plans and other post-employment benefits, the net periodic pension expense is actuarially determined by “Pension Actuarial System” developed by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability. However, if there is not a deep market, market yields on government bonds are used.

Net defined benefit liability’s measurement is composed of actuarial gains and losses, return on plan assets excluding net interest on net defined benefit liability, and any change in the effect of the asset ceiling, excluding net interest, which are immediately recognized in other comprehensive income. The actuarial gains or losses recognized in other comprehensive income which will not be reclassified into net profit or loss for later periods are immediately recognized in retained earnings. Past service cost will be recognized as expenses upon the earlier of the date of change or reduction to the plan, or the date of recognizing termination benefits.

The retirement benefit obligation recognized in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognized actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(13)

Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

 

  (i)

Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

Current tax assets and liabilities are offset only if, the Company:

 

  (a)

has a legally enforceable right to set off the recognized amounts; and

 

  (b)

intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

 

  (ii)

Deferred tax

Deferred tax is recognized, using the asset-liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which they can be utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable income.

The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets or deferred tax liabilities on investment properties measured at fair value, unless any contrary evidence exists, are measured using the assumption that the carrying amount of the property will be recovered entirely through sale.

The Company recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Company recognizes a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries and associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax liabilities and assets, and they relate to income taxes levied by the same tax authority and they intend to settle current tax liabilities and assets on a net basis.

 

  (iii)

Current and deferred tax for the year

Current and deferred tax are recognized in income or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(14)

Property, plant and equipment

Property, plant and equipment are initially measured at cost and after initial recognition, are carried at cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent costs are recognized in the carrying amount of property, plant and equipment at cost or, if appropriate, as separate items if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.

Property, plant and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. For loaded nuclear fuel related to long-term raw materials and spent nuclear fuels related to asset retirement costs, the Company uses the production method to measure and recognizes as expense the economic benefits of the assets.

The estimated useful lives of the Company’s property, plant and equipment are as follows:

 

     Useful lives (years)

Buildings

   8 ~ 40

Structures

   8 ~ 50

Machinery

   2 ~ 32

Vehicles

   3 ~ 8

Loaded heavy water

   30

Asset retirement costs

   18, 30, 40, 60

Finance lease assets

   6 ~ 32

Ships

   9

Others

   4 ~ 15

A component that is significant compared to the total cost of property, plant and equipment is depreciated over its separate useful life.

Depreciation methods, residual values and useful lives of property, plant and equipment are reviewed at the end of each reporting period and if change is deemed appropriate, it is treated as a change in accounting estimate. As a result of such annual review, useful lives of certain structures and machinery were changed during the year ended December 31, 2018. Depreciation expenses decreased by W25,985 million for the year ended December 31, 2018. Depreciation expenses are expected to decrease by W157,333 million and W170,471 million for the years ending December 31, 2019 and 2020, respectively, and to increase by W353,789 million for the years after December 31, 2020.

Property, plant and equipment are derecognized on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of a property, plant and equipment, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in income or loss when the asset is derecognized.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(15)

Investment property

Property held for the purpose of earning rentals or benefiting from capital appreciation is classified as investment property. Investment property is initially measured at its cost. Transaction costs are included in the initial measurement. Subsequently, investment property is carried at depreciated cost less any accumulated impairment losses.

Subsequent costs are recognized in the carrying amount of investment property at cost or, if appropriate, as separate items if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.

Investment property except for land, are depreciated on a straight-line basis over 8 ~ 40 years as estimated useful lives.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in income or loss in the period in which the property is derecognized.

 

(16)

Intangible assets

 

  (i)

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

 

  (ii)

Research and development

Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

 

   

The technical feasibility of completing the intangible asset so that it will be available for use or sale;

 

   

The intention to complete the intangible asset and use or sell it;

 

   

The ability to use or sell the intangible asset;

 

   

How the intangible asset will generate probable future economic benefits;

 

   

The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

 

   

The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. When the development expenditure does not meet the criteria listed above, an internally-generated intangible asset cannot be recognized and the expenditure is recognized in income or loss in the period in which it is incurred.

Internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(16)

Intangible assets, continued

 

The estimated useful lives and amortization methods of the Company’s intangible assets are as follows:

 

     Useful lives (years)    Amortization methods

Usage rights for donated assets

   10 ~ 20    Straight line

Software

   4, 5    Straight line

Industrial rights

   5 ~ 10    Straight line

Development expenses

   5    Straight line

Leasehold rights

   10    Straight line

Others

   3 ~ 50 or indefinite    Straight line

Mining right

   —      Unit of production

 

  (iii)

Intangible assets acquired in a business combination

Intangible assets that are acquired in a business combination are recognized separately from goodwill are initially recognized at their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

 

  (iv)

Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in income or loss when the asset is derecognized.

 

(17)

Greenhouse gas emissions rights (allowances) and obligations

In connection with Enforcement of Allocation and Trading of Greenhouse Gas Emissions Allowances, the Company applies the following accounting policies for greenhouse gas emissions rights and obligations.

 

  (i)

Greenhouse gas emissions rights

Greenhouse gas emissions rights consist of the allowances received free of charge from the government and the ones purchased. The cost of the greenhouse gas emissions rights includes expenditures arising directly from the acquisition and any other costs incurred during normal course of the acquisition.

Greenhouse gas emissions rights are held by the Company to fulfill the legal obligation and recorded as intangible assets. To the extent that the portion to be submitted to the government within one year from the end of reporting period, the greenhouse gas emissions rights are classified as current assets. Greenhouse gas emissions rights recorded as intangible assets are initially measured at cost and substantially remeasured at cost less accumulated impairment losses.

Greenhouse gas emissions rights are derecognized on submission to the government or when no future economic benefits are expected from its use or disposal.

 

  (ii)

Greenhouse gas emissions obligations

Greenhouse gas emissions obligations are the Company’s present legal obligation to submit the greenhouse gas emissions allowances to the government and recognized when an outflow of resources is probable and a reliable estimate can be made of the amount of the obligation. Greenhouse gas emissions obligations are measured as the sum of the carrying amount of the allocated rights that will be submitted to the government and the best estimate of expenditure required to settle the obligation at the end of the reporting period for any excess emission.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(18)

Impairment of non-financial assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets with definite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, to the extent the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 

(19)

Inventories

Inventories are measured at the lower of cost and net realizable value. Cost of inventories for inventories in transit are measured by using specific identification method. Cost of inventories, except for those in transit, are measured under the weighted average method and consists of the purchase price, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, are recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

 

(20)

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(20)

Provisions, continued

 

Where some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement shall be recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

 

  (i)

Provision for employment benefits

The Company determines the provision for employment benefits as the incentive payments based on the results of the individual performance evaluation or management assessment.

 

  (ii)

Provision for decommissioning costs of nuclear power plants

The Company records the fair value of estimated decommissioning costs as a liability in the period in which the Company incurs a legal obligation associated with retirement of long-lived assets that result from acquisition, construction, development and/or normal use of the assets. Accretion expense consists of period-to-period changes in the liability for decommissioning costs resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows.

 

  (iii)

Provision for disposal of spent nuclear fuel

Under the Radioactive Waste Management Act, the Company is levied to pay the spent nuclear fuel fund for the management of spent nuclear fuel. The Company recognizes the provision of present value of the payments.

 

  (iv)

Provision for low and intermediate radioactive wastes

Under the Radioactive Waste Management Act, the Company recognizes the provision for the disposal of low and intermediate radioactive wastes in best estimate of the expenditure required to settle the present obligation.

 

  (v)

Provision for Polychlorinated Biphenyls (“PCBs”)

Under the regulation of Persistent Organic Pollutants Management Act, enacted in 2007, the Company is required to remove PCBs, a toxin, from the insulating oil of its transformers by 2025. As a result of the enactments, the Company is required to inspect the PCBs contents of transformers and dispose of PCBs in excess of safety standards under the legally settled procedures. The Company’s estimates and assumptions used to determine fair value can be affected by many factors, such as the estimated costs of inspection and disposal, inflation rate, discount rate, regulations and the general economy.

 

  (vi)

Provisions for power plant regional support program

Power plant regional support programs consist of scholarship programs to local students, local economy support programs, local culture support programs, environment development programs, and local welfare programs. The Company recognizes the provision in relation to power plant regional support program.

 

  (vii)

Provisions for transmission and transformation facilities-neighboring areas support program

The Company has present obligation to conduct transmission and transformation facilities-neighboring areas support program under Act on assistance to transmission and transformation facilities-neighboring areas. The Company recognizes the provision of estimated amount to fulfill the obligation.

 

  (viii)

Renewable Portfolio Standard (“RPS”) provisions

RPS program is required to generate a specified percentage of total electricity to be generated in the form of renewable energy and provisions are recognized for the governmental regulations to require the production of energies from renewable energy sources such as solar, wind and biomass.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(21)

Financial instruments

The Company recognizes financial assets and financial liabilities in the statement of financial position when the Company becomes a party to the contractual provisions of the instrument. Upon initial recognition, financial assets and financial liabilities are measured at their fair value plus, in the case of a financial asset or financial liabilities not at fair value through profit or loss, transaction costs that are directly attributable to the asset’s acquisition or issuance.

 

  (i)

Classification and measurement of financial assets

The Company classifies financial assets into three principal categories; measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) based on the business model in which assets are managed and their cash flow characteristics. The company assesses the hybrid financial instrument in which derivatives embedded as whole for classification.

 

     Cash flow characteristics

Business model

   Solely payments of
principal and
interest (SPPI)
   Other than SPPI
To collect contractual cash flows    Amortized cost    FVTPL

(*2)

Both collecting contractual cash flows and selling financial assets    FVOCI (*1)
To sell financial assets    FVTPL

 

(*1)

To eliminate or reduce an accounting mismatch, the Company may elect to recognize the amount of change in fair value in profit or loss.

(*2)

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI.

LOGO A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: 1) it is held within a business model whose objective is to hold assets to collect contractual cash flows; and 2) its contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

LOGO A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: 1) it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and 2) its contractual terms of the financial asset give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding.

LOGO All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. On initial recognition of equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in OCI, and will not reclassify (recycle) the those items in OCI to profit or loss subsequently.

 

  (ii)

Classification and measurement of financial liabilities

Financial liabilities are classified as FVTPL or other financial liabilities.

LOGO A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

LOGO A non-derivative financial liability that is not classified as at FVTPL is classified as other financial liabilities. Other financial liabilities are measured initially at its fair value minus transaction costs that are directly attributable to the acquisition or issue. Other financial liabilities are subsequently measured at amortized cost using the effective interest method.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(21)

Financial instruments, continued

 

  (iii)

Impairment: Financial assets and contract assets

The Company applies a forward-looking ‘expected credit loss’ (ECL) model for debt instruments, lease receivables, contractual assets, loan commitments and financial guarantee contracts.

The Company recognizes loss allowances measured on either of the 12-month or lifetime ECL based on the extent of increase in credit risk since inception as shown in the below table.

 

   

Classification

  

Loss allowances

           Stage 1    Credit risk has not increased significantly since the initial recognition    12-month ECL: ECLs that resulted from possible default events within the 12 months after the reporting date
  Stage 2   

Credit risk has increased

significantly since the initial recognition

   Lifetime ECL: ECL that resulted from all possible default events over the expected life of a financial instrument
  Stage 3    Credit-impaired   

Under K-IFRS 1109, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses for trade receivables or contract assets that result from transactions that are within the scope of K-IFRS 1115 and that do not contain a significant financing component in accordance with K-IFRS 1115 and if the trade receivables or contract assets include a significant financing component, the Company may choose as its accounting policy to measure the loss allowance at an amount equal to lifetime expected credit losses.

The Company has chosen to measure the loss allowance at an amount equal to lifetime expected credit losses for the trade receivables, contract assets and lease receivables that contain a significant financing component.

 

  (iv)

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Company enters into transactions whereby it transfers assets recognized in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

The Company derecognizes a financial liability when it contractual obligations are discharged or cancelled, or expire. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

 

(22)

Service Concession Arrangements

The Company recognizes revenues from construction services and operating services related to service concession arrangements in accordance with K-IFRS 1115 ’ Revenue from Contracts with Customers’.

The Company recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset for the construction services and an intangible asset to the extent that it receives a right (license) to charge users of the public service. Borrowing costs attributable to the arrangement are recognized as an expense in the period in which they are incurred unless the Company has a contractual right to receive an intangible asset (a right to charge users of the public service). In this case, borrowing costs attributable to the arrangement are capitalized during the construction phase of the arrangement.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(23)

Derivative financial instruments, including hedge accounting

The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including foreign exchange forward contracts, interest rate swaps and cross currency swaps and others.

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value. The resulting gain or loss is recognized in income or loss immediately unless the derivative is designated and effective as a hedging instrument, in such case the timing of the recognition in income or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognized as a financial asset; a derivative with a negative fair value is recognized as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

 

  (i)

Separable embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and when the host contracts are not measured at FVTPL.

An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivative is part of, is more than 12 months and it is not expected to be realized or settled within 12 months. All other embedded derivatives are presented as current assets or current liabilities.

 

  (ii)

Hedge accounting

The Company designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges or cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

 

  (iii)

Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in income or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The changes in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk relating to the hedged items are recognized in the consolidated statements of comprehensive income.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortized as income or loss as of that date.

 

  (iv)

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in income or loss, and is included in the ‘finance income and expense’.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

3.

Significant Accounting Policies, Continued

 

(23)

Derivative financial instruments, including hedge accounting, continued

 

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to income or loss in the periods when the hedged item is recognized in income or loss, in the same line of the consolidated statement of comprehensive income as the recognized hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in income or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in income or loss.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

4.

Segment, Geographic and Other Information

 

(1)

Segment determination and explanation of the measurements

The Company’s operating segments are its business components that generate discrete financial information that is reported to and regularly reviewed by the Company’s the chief operating decision maker, the Chief Executive Officer, for the purpose of resource allocation and assessment of segment performance. The Company’s reportable segments are ‘Transmission and distribution’, ‘Electric power generation (Nuclear)’, ‘Electric power generation (Non-nuclear)’, ‘Plant maintenance & engineering service’ and ‘Others’; others mainly represent the business unit that manages the Company’s foreign operations.

Segment operating profit (loss) is determined the same way that consolidated operating profit is determined under K-IFRS without any adjustment for corporate allocations. The accounting policies used by each segment are consistent with the accounting policies used in the preparation of the consolidated financial statements. Segment assets and liabilities are determined based on separate financial statements of the entities instead of on a consolidated basis. There are various transactions between the reportable segments, including sales of property, plant and equipment and so on, that are conducted on an arms-length basis at market prices that would be applicable to an independent third-party. For subsidiaries which are in a different segment from that of its immediate parent company, their carrying amount in separate financial statements is eliminated in the consolidating adjustments in the tables below. In addition, consolidation adjustments in the table below include adjustments of the amount of investment in associates and joint ventures from the cost basis amount reflected in segment assets to that determined using equity method in the consolidated financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

4.

Segment, Geographic and Other Information, Continued

 

(2)

Financial information of the segments for the years ended December 31, 2018 and 2017, respectively, are as follows:

 

In millions of won                                                  

2018

 

Segment

   Total
segment
revenue
    Intersegment
revenue
    Revenue
from
external
customers
     Operating
profit
    Depreciation
and
amortization
    Interest
income
    Interest
expense
    Profit related
associates, joint
ventures and
subsidiaries
 

Transmission and distribution

   W 60,271,500       1,393,120       58,878,380        (2,193,268     3,555,158       77,925       708,329       287,268  

Electric power generation (Nuclear)

     8,858,717       8,833,787       24,930        1,116,262       3,088,019       30,422       503,161       9,946  

Electric power generation (Non-nuclear)

     25,204,085       24,389,816       814,269        495,092       3,269,023       29,313       577,441       58,993  

Plant maintenance & engineering service

     2,526,126       2,170,959       355,167        312,113       114,030       12,505       4,126       1,956  

Others

     996,300       441,436       554,864        146,979       55,513       117,878       119,037       —    

Consolidation adjustments

     (37,229,118     (37,229,118     —          (85,179     (56,949     (44,276     (43,636     —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 60,627,610       —         60,627,610        (208,001     10,024,794       223,767       1,868,458       358,163  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
In millions of won                                                  

2017

 

Segment

   Total
segment
revenue
    Intersegment
revenue
    Revenue
from
external
customers
     Operating
profit
    Depreciation
and
amortization
    Interest
income
    Interest
expense
    Profit related
associates, joint
ventures and
subsidiaries
 

Transmission and distribution

   W 59,965,739       2,044,160       57,921,579        1,553,554       3,466,410       49,987       737,971       (105,166

Electric power generation (Nuclear)

     9,415,752       9,359,468       56,284        1,385,765       3,267,510       21,034       487,503       3,637  

Electric power generation (Non-nuclear)

     22,795,816       21,885,251       910,565        1,515,936       2,954,375       18,860       486,176       (6,718

Plant maintenance & engineering service

     2,621,440       2,211,716       409,724        252,534       109,001       10,801       2,967       (70

Others

     655,062       138,352       516,710        63,298       36,001       130,003       103,782       —    

Consolidation adjustments

     (35,638,947     (35,638,947     —          182,065       (59,586     (24,542     (28,847     —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 59,814,862       —         59,814,862        4,953,152       9,773,711       206,143       1,789,552       (108,317
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

4.

Segment, Geographic and Other Information, Continued

 

(3)

Information related to segment assets and segment liabilities as of and for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won       

2018

 

Segment

   Segment
assets
     Investments in
associates and joint
ventures
     Acquisition of
non-current
assets
     Segment
liabilities
 

Transmission and distribution

   W 107,486,379        3,671,897        6,323,504        53,404,610  

Electric power generation (Nuclear)

     55,792,704        43,038        2,187,077        30,484,104  

Electric power generation (Non-nuclear)

     49,296,392        2,114,203        3,435,222        27,558,156  

Plant maintenance & engineering service

     3,431,068        49,207        111,393        1,200,390  

Others

     7,816,885        —          382,978        3,165,286  

Consolidation adjustments

     (38,574,367      —          (62,717      (1,656,247
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated totals

   W 185,249,061        5,878,345        12,377,457        114,156,299  
  

 

 

    

 

 

    

 

 

    

 

 

 
In millions of won       

2017

 

Segment

   Segment
assets
     Investments in
associates and joint
ventures
     Acquisition of
non-current
assets
     Segment
liabilities
 

Transmission and distribution

   W 106,540,154        3,366,309        6,606,512        50,757,798  

Electric power generation (Nuclear)

     55,011,096        11,843        2,083,967        29,252,816  

Electric power generation (Non-nuclear)

     47,938,084        1,904,224        3,250,524        26,337,295  

Plant maintenance & engineering service

     3,273,959        48,320        145,779        1,176,627  

Others

     7,798,400        —          569,447        3,013,743  

Consolidation adjustments

     (38,772,778      —          23,616        (1,714,005
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated totals

   W 181,788,915        5,330,696        12,679,845        108,824,274  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(4)

Geographic information

Electricity sales, the main operations of the Company, are conducted in the Republic of Korea where the controlling company is located. The following information on revenue from external customers and non-current assets is determined by the location of the customers and the assets:

 

In millions of won    Revenue from external customers      Non-current assets (*2)  

Geographical unit

   2018      2017      2018      2017  

Domestic

   W 58,394,539        56,131,780        157,037,428        153,436,810  

Overseas (*1)

     2,233,071        3,683,082        3,299,346        4,497,535  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 60,627,610        59,814,862        160,336,774        157,934,345  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Middle East and other Asian countries make up the majority of overseas revenue and non-current assets. Since the overseas revenue or non-current assets attributable to particular countries are not material, they are not disclosed individually.

(*2)

Amount excludes financial assets and deferred tax assets.

 

(5)

Information on significant customers

There is no individual customer comprising more than 10% of the Company’s revenue for the years ended December 31, 2018 and 2017.

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

5.

Classification of Financial Instruments

 

(1)

Classification of financial assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Financial assets
at fair value
through profit or
loss
     Financial assets
at fair value
through other
comprehensive
income
     Financial assets
at amortized cost
     Derivative assets
(applying hedge
accounting)
     Total  

Current assets

              

Cash and cash equivalents

   W —          —          1,358,345        —          1,358,345  

Current financial assets

              

Current financial assets at fair value through profit or loss

     313,893        —          —          —          313,893  

Current financial assets at amortized costs

     —          —          11,956        —          11,956  

Current derivative assets

     13,936        —          —          28,171        42,107  

Other financial assets

     —          —          1,991,939        —          1,991,939  

Trade and other receivables

     —          —          7,793,592        —          7,793,592  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     327,829        —          11,155,832        28,171        11,511,832  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

              

Non-current financial assets

              

Non-current financial assets at fair value through profit or loss

     607,042        —          —          —          607,042  

Non-current financial assets at fair value through other comprehensive income

     —          399,495        —          —          399,495  

Non-current financial assets at amortized costs

     —          —          2,086        —          2,086  

Non-current derivative assets

     23,695        —          —          36,533        60,228  

Other financial assets

     —          —          1,044,762        —          1,044,762  

Trade and other receivables

     —          —          1,819,845        —          1,819,845  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     630,737        399,495        2,866,693        36,533        3,933,458  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 958,566        399,495        14,022,525        64,704        15,445,290  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

In millions of won    2017  
     Financial assets
at fair value
through profit
or loss
     Loans and
receivables
     Available-for-sale
financial assets
     Held-to-maturity
investments
     Derivative
assets
(applying
hedge
accounting)
     Total  

Current assets

                 

Cash and cash equivalents

   W —          2,369,739        —          —          —          2,369,739  

Current financial assets

                 

Held-to-maturity investments

     —          —          —          5        —          5  

Derivative assets

     12,923        —          —          —          12        12,935  

Other financial assets

     —          1,945,417        —          —          —          1,945,417  

Trade and other receivables

     —          7,928,972        —          —          —          7,928,972  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     12,923        12,244,128        —          5        12        12,257,068  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

                 

Non-current financial assets

                 

Available-for-sale financial assets

     —          —          699,833        —          —          699,833  

Held-to-maturity investments

     —          —          —          3,139        —          3,139  

Derivative assets

     9,097        —          —          —          10,594        19,691  

Other financial assets

     111,512        1,204,738        —          —          —          1,316,250  

Trade and other receivables

     —          1,754,797        —          —          —          1,754,797  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     120,609        2,959,535        699,833        3,139        10,594        3,793,710  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 133,532        15,203,663        699,833        3,144        10,606        16,050,778  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

5.

Classification of Financial Instruments, Continued

 

(2)

Classification of financial liabilities as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Financial liabilities at
fair value through
profit or loss
     Financial liabilities
recognized at

amortized cost
     Derivative liabilities
(applying hedge
accounting)
     Total  

Current liabilities

           

Borrowings

   W —          1,172,624        —          1,172,624  

Debt securities

     —          6,788,824        —          6,788,824  

Derivative liabilities

     13,706        —          6,725        20,431  

Trade and other payables

     —          6,405,395        —          6,405,395  
  

 

 

    

 

 

    

 

 

    

 

 

 
     13,706        14,366,843        6,725        14,387,274  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current liabilities

           

Borrowings

     —          3,258,015        —          3,258,015  

Debt securities

     —          49,815,164        —          49,815,164  

Derivative liabilities

     85,304        —          206,428        291,732  

Trade and other payables

     —          2,941,696        —          2,941,696  
  

 

 

    

 

 

    

 

 

    

 

 

 
     85,304        56,014,875        206,428        56,306,607  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 99,010        70,381,718        213,153        70,693,881  
  

 

 

    

 

 

    

 

 

    

 

 

 
In millions of won    2017  
     Financial liabilities at
fair value through
profit or loss
     Financial liabilities
recognized at

amortized cost
     Derivative liabilities
(applying hedge
accounting)
     Total  

Current liabilities

           

Borrowings

   W —          1,165,985        —          1,165,985  

Debt securities

     —          7,957,300        —          7,957,300  

Derivative liabilities

     51,090        —          20,177        71,267  

Trade and other payables

     —          5,999,521        —          5,999,521  
  

 

 

    

 

 

    

 

 

    

 

 

 
     51,090        15,122,806        20,177        15,194,073  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current liabilities

           

Borrowings

     —          2,434,624        —          2,434,624  

Debt securities

     —          43,189,483        —          43,189,483  

Derivative liabilities

     99,839        —          256,953        356,792  

Trade and other payables

     —          3,223,480        —          3,223,480  
  

 

 

    

 

 

    

 

 

    

 

 

 
     99,839        48,847,587        256,953        49,204,379  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 150,929        63,970,393        277,130        64,398,452  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

5.

Classification of Financial Instruments, Continued

 

(3)

Classification of comprehensive income from financial instruments for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won         2018      2017  

Cash and cash equivalents

  

Interest income

   W 40,704        35,474  

Financial assets at fair value through profit or loss

  

Interest income

     21,713        —    
  

Gain on valuation of derivatives

     34,117        —    
  

Gain on transaction of derivatives

     39,114        —    
  

Gain on valuation of financial assets

     1,879        —    
  

Gain on disposal of financial assets

     1,837        —    

Financial assets at fair value through profit or loss

  

Interest income

     —          290  
  

Loss on valuation of derivatives

     —          (214,100
  

Loss on transaction of derivatives

     —          (37,266
  

Gain on valuation of financial assets

     —          12  

Financial assets at fair value through other comprehensive income

  

Dividends income

     12,777        —    

Available-for-sale financial assets

  

Dividends income

     —          11,477  
  

Impairment loss on available-for-sale financial assets

     —          (2,713
  

Loss on disposal of available-for-sale financial assets

     —          (1,213

Financial assets at amortized cost

  

Interest income

     88        —    

Held-to-maturity investments

  

Interest income

     —          82  

Loans and receivables

  

Interest income

     21,925        30,014  

Trade and other receivables

  

Interest income

     90,390        102,727  

Short-term financial instruments

  

Interest income

     41,025        29,412  

Long-term financial instruments

  

Interest income

     7,920        8,144  

Other financial assets

  

Interest income

     1        —    

Derivative assets (applying hedge accounting)

  

Gain (loss) on valuation of derivatives (profit or loss)

     69,799        (41,129
  

Gain on valuation of derivatives (equity, before tax) (*)

     8,600        2,453  
  

Gain (loss) on transaction of derivatives

     34,152        (58,299

Financial liabilities at fair value through profit or loss

  

Loss on valuation of derivatives

     (4,650      —    
  

Gain on transaction of derivatives

     36,046        —    

Financial liabilities at fair value through profit or loss

  

Loss on valuation of derivatives

     —          (179,879
  

Loss on transaction of derivatives

     —          (27,175

Financial liabilities carried at amortized cost

  

Interest expense of borrowings and debt securities

     (1,320,517      (1,240,727
  

Loss on repayment of financial liabilities

     —          (5
  

Interest expense of trade and other payables

     (42,340      (57,160
  

Interest expense of others

     (505,601      (491,665
  

Gain (loss) on foreign currency transactions and translations

     (356,159      1,075,215  

Derivative liabilities (applying hedge accounting)

  

Gain (loss) on valuation of derivatives (profit or loss)

     53,937        (439,559
  

Gain (loss) on valuation of derivatives (equity, before tax) (*)

     (15,029      29,431  
  

Gain (loss) on transaction of derivatives

     37,985        (46,221

 

(*)

Items are included in other comprehensive income or loss. All other income and gain listed above are included in finance income, and all expense and losses listed above are included in finance expenses in the consolidated statements of comprehensive income.

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

6.

Restricted Deposits

Restricted deposits as of December 31, 2018 and 2017 are as follows:

 

In millions of won         2018      2017  

Cash and cash equivalents

  

Escrow accounts

   W —          53  
  

Deposits for government project

     12,747        15,365  
  

Collateral provided for borrowings

     100,998        79,569  
  

Collateral provided for lawsuit

     3        2  
  

Deposits for transmission regional support program

     4,337        2,320  
  

Decommissioning costs of nuclear power plants

     604        —    

Short-term financial instruments

  

Bidding guarantees

     —          119  
  

Restriction on withdrawal related to ‘win-win growth program’ for small and medium enterprises

     34,000        34,000  

Current financial assets at fair value through profit or loss

  

Decommissioning costs of nuclear power plants

     29,451        —    

Non-current financial assets at fair value through profit or loss

  

Decommissioning costs of nuclear power plants

     498,555        —    

Financial assets at fair value through profit or loss

  

Decommissioning costs of nuclear power plants

     —          108,512  

Non-current available-for-sale financial asset

  

Decommissioning costs of nuclear power plants

     —          214,156  

Long-term financial instruments

  

Escrow accounts

     69        —    
  

Guarantee deposits for checking account

     —          2  
  

Guarantee deposits for banking accounts at oversea branches

     315        302  
  

Decommissioning costs of nuclear power plants

     245,896        337,234  
  

Funds for developing small and medium enterprises (*)

     200,000        200,000  
     

 

 

    

 

 

 
      W 1,126,975        991,634  
     

 

 

    

 

 

 

 

(*)

Deposits for small and medium enterprise at IBK and others for construction of Bitgaram Energy Valley and support for high potential businesses as of December 31, 2018 and December 31, 2017.

 

7.

Cash and Cash Equivalents

Cash and cash equivalents as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Cash

   W 138        132  

Other demand deposits

     927,650        968,966  

Short-term deposits classified as cash equivalents

     211,424        559,239  

Short-term investments classified as cash equivalents

     219,133        841,402  
  

 

 

    

 

 

 
   W 1,358,345        2,369,739  
  

 

 

    

 

 

 

 

44


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

8.

Trade and Other Receivables

 

(1)

Trade and other receivables as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Gross
amount
     Allowance for doubtful
accounts
     Present value
discount
     Book
value
 

Current assets

           

Trade receivables

   W 7,303,065        (215,775      —          7,087,290  

Other receivables

     728,560        (20,231      (2,027      706,302  
  

 

 

    

 

 

    

 

 

    

 

 

 
     8,031,625        (236,006      (2,027      7,793,592  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

     415,318        (93      (448      414,777  

Other receivables

     1,496,464        (84,495      (6,901      1,405,068  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,911,782        (84,588      (7,349      1,819,845  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 9,943,407        (320,594      (9,376      9,613,437  
  

 

 

    

 

 

    

 

 

    

 

 

 
In millions of won    2017  
     Gross
amount
     Allowance for doubtful
accounts
     Present value
discount
     Book
value
 

Current assets

           

Trade receivables

   W 7,499,285        (173,583      —          7,325,702  

Other receivables

     614,212        (9,199      (1,743      603,270  
  

 

 

    

 

 

    

 

 

    

 

 

 
     8,113,497        (182,782      (1,743      7,928,972  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

     449,191        —          (414      448,777  

Other receivables

     1,380,983        (68,809      (6,154      1,306,020  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,830,174        (68,809      (6,568      1,754,797  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 9,943,671        (251,591      (8,311      9,683,769  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

8.

Trade and Other Receivables, Continued

 

(2)

Other receivables as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Gross
amount
     Allowance for
doubtful accounts
     Present value
discount
     Book
value
 

Current assets

           

Non-trade receivables

   W 298,587        (19,940      —          278,647  

Accrued income

     102,023        —          —          102,023  

Deposits

     228,466        —          (2,027      226,439  

Finance lease receivables

     84,688        (291      —          84,397  

Others

     14,796        —          —          14,796  
  

 

 

    

 

 

    

 

 

    

 

 

 
     728,560        (20,231      (2,027      706,302  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Non-trade receivables

     136,432        (77,475      —          58,957  

Deposits

     376,211        —          (6,901      369,310  

Finance lease receivables

     898,658        (842      —          897,816  

Others

     85,163        (6,178      —          78,985  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,496,464        (84,495      (6,901      1,405,068  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,225,024        (104,726      (8,928      2,111,370  
  

 

 

    

 

 

    

 

 

    

 

 

 
In millions of won    2017  
     Gross
amount
     Allowance for
doubtful accounts
     Present value
discount
     Book
value
 

Current assets

           

Non-trade receivables

   W 314,256        (9,199      —          305,057  

Accrued income

     54,002        —          —          54,002  

Deposits

     228,317        —          (1,743      226,574  

Finance lease receivables

     13,067        —          —          13,067  

Others

     4,570        —          —          4,570  
  

 

 

    

 

 

    

 

 

    

 

 

 
     614,212        (9,199      (1,743      603,270  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Non-trade receivables

     112,983        (59,117      —          53,866  

Accrued income

     182        —          —          182  

Deposits

     331,071        —          (6,154      324,917  

Finance lease receivables

     849,554        —          —          849,554  

Others

     87,193        (9,692      —          77,501  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,380,983        (68,809      (6,154      1,306,020  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,995,195        (78,008      (7,897      1,909,290  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(3)

Trade and other receivables are classified as financial assets at amortized cost and are measured using the effective interest method. No interest is accrued for trade receivables related to electricity for the duration between the billing date and the payment due dates. But once trade receivables are overdue, the Company imposes a monthly interest rate of 1.5% on the overdue trade receivables. The Company holds deposits of three months’ expected electricity usage for customers requesting temporary usage and customers with past defaulted payments.

 

46


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

8.

Trade and Other Receivables, Continued

 

(4)

Aging analysis of trade receivables as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Trade receivables: (not overdue)

   W 7,419,648        7,698,604  
  

 

 

    

 

 

 

Trade receivables: (overdue, not impaired)

     —          7,117  
  

 

 

    

 

 

 

Less than 60 days

     —          7,117  
  

 

 

    

 

 

 

Trade receivables: (impairment reviewed)

     298,735        242,755  
  

 

 

    

 

 

 

Less than 60 days

     2,525        —    

60 ~ 90 days

     37,266        39,070  

90 ~ 120 days

     16,033        17,502  

120 days ~ 1 year

     46,204        55,242  

Over 1 year

     196,707        130,941  
  

 

 

    

 

 

 
     7,718,383        7,948,476  

Less: allowance for doubtful accounts

     (215,868      (173,583

Less: present value discount

     (448      (414
  

 

 

    

 

 

 
   W 7,502,067        7,774,479  
  

 

 

    

 

 

 

At the end of each reporting period, the Company assesses whether the credit to trade receivables is impaired. The Company recognizes loss allowances for trade receivables individually when there is any objective evidence that trade receivables are impaired and significant, and classifies the trade receivables that are not individually assessed as the trade receivables subject to be assessed on a collective basis. Also, the Company recognizes loss allowances based on an ‘expected credit loss’ (ECL) model.

 

(5)

Aging analysis of other receivables as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Other receivables: (not overdue)

   W 2,075,601        1,810,075  
  

 

 

    

 

 

 

Other receivables: (overdue, not impaired)

     —          47,532  
  

 

 

    

 

 

 

Less than 60 days

     —          47,532  
  

 

 

    

 

 

 

Other receivables: (impairment reviewed)

     149,423        137,588  
  

 

 

    

 

 

 

Less than 60 days

     24,782        —    

60 ~ 90 days

     1,007        44  

90 ~ 120 days

     10,997        1,017  

120 days ~ 1year

     23,991        11,042  

Over 1 year

     88,646        125,485  
  

 

 

    

 

 

 
     2,225,024        1,995,195  

Less: allowance for doubtful accounts

     (104,726      (78,008

Less: present value discount

     (8,928      (7,897
  

 

 

    

 

 

 
   W 2,111,370        1,909,290  
  

 

 

    

 

 

 

At the end of each reporting period, the Company assesses whether the credit to other receivables is impaired. The Company recognizes loss allowances for other receivables individually when there is any objective evidence that trade receivables are impaired and significant, and classifies the trade receivables that are not individually assessed as the trade receivables subject to be assessed on a collective basis. Also, the Company recognizes loss allowances based on an ‘expected credit loss’ (ECL) model.

 

47


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

8.

Trade and Other Receivables, Continued

 

(6)

Changes in the allowance for doubtful accounts for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Trade
receivables
     Other
receivables
     Trade
receivables
     Other
receivables
 

Beginning balance

   W 173,583        78,008        71,985        87,661  

Effect of change in accounting policy

     6,641        128        —          —    

Loss allowance as at January 1, 2018 under K-IFRS 1109

     180,224        78,136        —          —    

Bad debt expense

     41,498        17,817        126,714        1,778  

Write-off

     (7,696      (244      (32,995      (3,129

Reversal

     (1,726      (143      —          (2,166

Others

     3,568        9,160        7,879        (6,136
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 215,868        104,726        173,583        78,008  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

9.

Financial assets at fair value through profit or loss

 

(1)

Financial assets at fair value through profit or loss as of December 31, 2018 are as follows:

 

In millions of won    2018  
     Current      Non-current  

Financial assets at fair value through profit or loss

     

Listed (*1)

   W 100        320,148  

Unlisted (*1)

     —          5,052  

Other (*2)

     313,793        83,586  
  

 

 

    

 

 

 
     313,893        408,786  
  

 

 

    

 

 

 

Financial assets designated as at fair value through profit or loss

     

Debt with embedded derivatives (*2)

     —          187,483  

Other

     —          10,773  
  

 

 

    

 

 

 
     —          198,256  
  

 

 

    

 

 

 
   W 313,893        607,042  
  

 

 

    

 

 

 

 

(*1)

For the year ended December 31, 2017, the Company had designated the financial assets as available-for-sale (note 2.(5)).

(*2)

For the year ended December 31, 2017, the Company had designated the financial assets as long-term/short-term financial instrument (note 2.(5)).

 

10.

Financial assets at fair value through other comprehensive income

 

(1)

Changes in financial assets at fair value through other comprehensive income for the year ended December 31, 2018 are as follows:

 

In millions of won    2018  
     Beginning
balance
     Effect of
change in

accounting
policy (*)
     Acquisition      Disposal     Valuation     Impairment      Others     Ending
balance
 

Listed

   W —          274,453        —          (1     (63,007     —          (1,389     210,056  

Unlisted

     —          197,450        —          —         (12,070     —          4,059       189,439  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
     —          471,903        —          (1     (75,077     —          2,670       399,495  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Current financial assets at fair value through other comprehensive income

   W —          —          —          —         —         —          —         —    

Non-current financial assets at fair value through other comprehensive income

     —          471,903        —          (1     (75,077     —          2,670       399,495  

 

(*)

As described in note 2.(5), these financial assets were classified as available-for-sale as of December 31, 2017.

 

48


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

10.

Financial assets at fair value through other comprehensive income, Continued

 

(2) Financial assets at fair value through other comprehensive income as of December 31, 2018 are as follows:

 

In millions of won    2018  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Listed

             

Korea District Heating Corp.

     2,264,068        19.55   W 173,201        129,051        129,051  

Ssangyong Motor Co., Ltd.

     38,568        0.03     428        153        153  

Korea Line Corp.

     18        0.00     1        —          —    

Namkwang Engineering & Construction Co., Ltd.

     121        0.00     15        1        1  

Bumyang Construction Co., Ltd.

     35        0.00     2        —          —    

ELCOMTEC Co., Ltd.

     32,875        0.04     217        61        61  

PAN ocean Co., Ltd.

     1,492        0.00     14        7        7  

Dongbu Corporation

     955        0.02     12        7        7  

KSP Co., Ltd.

     22,539        0.08     24        32        32  

STX Heavy Industries Co., Ltd.

     5,057        0.13     191        29        29  

Codes Combine Co., Ltd.

     291        0.00     1        1        1  

PT Adaro Energy Tbk

     480,000,000        1.50     71,554        44,790        44,790  

Energy Fuels Inc.

     1,711,814        1.91     16,819        5,435        5,435  

Baralaba Coal Company Limited

     99,763        0.07     18,445        —          —    

Denison Mines Corp.

     58,284,000        10.42     84,134        30,122        30,122  

Fission 3.0 (*6)

     75,000        0.14     —          13        13  

Fission Uranium Corp.

     800,000        0.16     785        354        354  
       

 

 

    

 

 

    

 

 

 
          365,843        210,056        210,056  
       

 

 

    

 

 

    

 

 

 

Unlisted (*1)

             

Intellectual Discovery Co., Ltd.

     1,000,000        8.81     5,000        954        954  

Hwan Young Steel Co., Ltd.

     10,916        0.14     1,092        97        97  

SAMBO AUTO. Co., Ltd.

     15,066        0.02     38        38        38  

Mobo Co., Ltd.

     504        0.00     14        14        14  

Dae Kwang Semiconductor Co., Ltd.

     589        0.07     6        6        6  

Sanbon Department Store

     828        0.01     124        3        3  

Miju Steel Mfg. Co., Ltd.

     1,097        0.23     50        50        50  

Sungwon Co., Ltd. (*7)

     117        0.07     15        15        15  

Hana Civil Engineering Co., Ltd.

     23        0.00     1        1        1  

KC Development Co., Ltd.

     839        0.02     6        6        6  

IMHWA Corp.

     329        0.11     5        5        5  

DALIM Special Vehicle Co., Ltd.

     58        0.08     10        10        10  

ASA JEONJU Co., Ltd.

     34,846        1.34     697        69        69  

Moonkyung Silica Co., Ltd.

     42        0.56     —          —          —    

Sungkwang Timber Co., Ltd.

     9        0.34     4        4        4  

Yongbo Co., Ltd.

     61        0.20     3        3        3  

HJ Steel Co., Ltd.

     218        0.07     2        2        2  

KS Remicon Co., Ltd.

     12        0.04     3        3        3  

Joongang Platec Co., Ltd.

     3,591        0.75     72        35        35  

Pyungsan SI Ltd.

     434        0.01     9        9        9  

Samgong Development Co., Ltd.

     12        0.01     7        7        7  

Joongang Development Co., Ltd.

     540        0.12     8        8        8  

AJS Co., Ltd.

     12,906        0.23     32        32        32  

SHIN-E B&P Co., Ltd.

     119        0.13     10        —          —    

MSE Co., Ltd.

     429        0.13     9        9        9  

Ilrim Nano Tec Co., Ltd.

     1,520        0.07     15        15        15  

Youngjin Hi-Tech Co., Ltd.

     2,512        0.25     126        21        21  

Buyoung Co., Ltd.

     270        0.00     3        3        3  

Ilsuk Co., Ltd.

     152        0.17     10        10        10  

Dongyang Telecom Co., Ltd.

     1,760        0.01     11        11        11  

Jongwon Remicon Co., Ltd.

     31        0.18     13        13        13  

Zyle Daewoo Motor Sales Co., Ltd.

     22        0.00     —          —          —    

Daewoo Development Co., Ltd.

     8        0.00     —          —          —    

Seyang Inc.

     537        0.05     27        27        27  

 

49


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

10.

Financial assets at fair value through other comprehensive income, Continued

 

(2)

Financial assets at fair value through other comprehensive income as of December 31, 2018 are as follows, continued:

 

 

In millions of won    2018  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Seungri Enterprise Co., Ltd.

     93        0.05   W 3        3        3  

Onggane Food Co., Ltd

     5        0.07     1        1        1  

Shin-E P&C Co., Ltd.

     1,569        0.64     111        3        3  

Ejung Ad Co., Ltd.

     132        0.09     3        3        3  

Solvus Co., Ltd.

     1,056        0.04     3        3        3  

Myung Co., Ltd.

     89        0.05     2        2        2  

Shinil Engineering Co., Ltd.

     887        0.06     3        3        3  

Biwang Industry Co., Ltd

     406        0.04     2        2        2  

Huimun Co., Ltd.

     263        0.26     4        4        4  

Young Sung Co., Ltd.

     89        0.40     26        26        26  

Yuil Industrial Electronics Co., Ltd.

     804        0.32     15        15        15  

DN TEK Inc.

     12,401        0.29     61        5        5  

Kwang Jin Structure Co., Ltd.

     3,072        0.60     31        31        31  

Woojin Industry Corporation

     3        0.00     16        16        16  

Kwang Sung Industry Co., Ltd.

     325        0.35     7        7        7  

Futech Mold Co., Ltd.

     274        0.27     14        14        14  

Woojoo Environment Ind. Co., Ltd.

     101        0.11     13        13        13  

Hyungji Esquire Co., Ltd.

     61        0.02     22        22        22  

Kolmar Pharma Co., Ltd.

     1,426        0.01     52        3        3  

Morado Co., Ltd.

     209        0.04     2        2        2  

Myung Sung Tex Co., Ltd.

     20        0.00     2        2        2  

Kwang Sung Co., Ltd.

     610        0.53     31        31        31  

Seen Business and Technology co., Ltd. (formerly, EverTechno. Co., Ltd.)

     29,424        0.73     148        7        7  

Autowel Co., Ltd.

     260        0.38     14        14        14  

Woobang Construction Co., Ltd.

     8        0.00     8        8        8  

Shin Pyung Co., Ltd.

     6        0.03     3        3        3  

JMC Heavy Industries Co., Ltd.

     2,724        0.10     27        2        2  

Najin Steel Co., Ltd.

     37        0.06     5        5        5  

Sinkwang Industry Co., Ltd.

     1,091        1.68     5        5        5  

Crystal Co., Ltd.

     22        0.07     2        2        2  

Elephant & Friends Co., Ltd.

     563        0.61     3        3        3  

Mireco Co., Ltd.

     109        0.25     11        11        11  

L&K Industry Co., Ltd.

     1,615        0.60     24        24        24  

JO Tech Co., Ltd.

     1,263        0.62     25        25        25  

Kendae Printing Co., Ltd.

     422        0.60     21        21        21  

Dauning Co., Ltd.

     231        0.41     6        6        6  

Korea Trecision Co., Ltd.

     22        0.45     5        5        5  

Ace Track Co., Ltd.

     3,130        1.08     219        59        59  

Yoo-A Construction Co., Ltd.

     105        0.20     11        11        11  

Dung Hwan Co., Ltd.

     531        0.02     5        5        5  

Hurim Biocell Co., Ltd.

     1,021        0.00     5        5        5  

Smart Power Co., Ltd.

     133,333        4.35     200        200        200  

Sunjin Power Tech Co., Ltd.

     4,941        0.92     247        32        32  

Haseung Industries Co., Ltd.

     55        0.62     28        28        28  

Beer Yeast Korea Inc.

     1,388        0.43     7        7        7  

Korea Bio Red Ginseng Co., Ltd.

     194        0.09     10        10        10  

B CON Co., Ltd.

     96        1.16     6        6        6  

SsangMa Machine Co., Ltd.

     4        0.05     1        1        1  

Ace Integration Co., Ltd

     105        0.09     24        24        24  

AceInti Agricultural Co., Ltd.

     16        0.02     5        5        5  

KyungDong Co., Ltd.

     130        0.01     1        1        1  

ChunWon Development Co., Ltd.

     193        0.19     39        39        39  

WonIl Co., Ltd.

     999        0.15     50        50        50  

SungLim Industrial Co., Ltd.

     29        0.03     1        1        1  

Korea Minerals Co., Ltd.

     191        0.05     134        1        1  

HyoDong Development Co., Ltd.

     119        0.15     24        24        24  

 

50


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

10.

Financial assets at fair value through other comprehensive income, Continued

 

(2)

Financial assets at fair value through other comprehensive income as of December 31, 2018 are as follows, continued:

 

 

In millions of won    2018  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Haspe Tech Co., Ltd.

     652        0.55   W 20        20        20  

JoHyun Co., Ltd.

     350        1.56     18        18        18  

KC Co., Ltd.

     5,107        0.17     26        26        26  

SeongJi Industrial Co., Ltd.

     41        0.05     1        1        1  

Dong Yang Metal Co., Ltd.

     2,951        1.97     161        147        147  

Seyang Precision Ind.Co., Ltd.

     829        0.23     41        41        41  

Dooriwon Food System Co., Ltd.

     13        0.27     1        1        1  

ShinShin Co., Ltd

     339        1.12     17        17        17  

Kitorang Co., Ltd.

     165        0.24     49        49        49  

Sung Kwang Co., Ltd.

     23        0.37     6        6        6  

Shinheung petrol. Co. Ltd.

     699        0.14     35        35        35  

Force TEC Co., Ltd.

     3,501        0.02     18        18        18  

Samsung Tech Co., Ltd.

     486        1.28     97        36        36  

Tae Hyung Co., Ltd.

     28        0.43     20        20        20  

Samyangplant Co., Ltd.

     323        0.60     16        16        16  

Younil Metal Co., Ltd.

     41        0.21     21        21        21  

Myungjin Tech Co., Ltd.

     20        0.54     4        4        4  

Hankook Precision Ind Co., Ltd.

     110        0.06     11        11        11  

Borneo International Furniture Co., Ltd. (*4)

     4,000        0.16     97        13        13  

CJ Paradise Co., Ltd

     24        0.02     12        12        12  

Han Young Technology Company Co., Ltd.

     35        0.00     —          —          —    

STX Offshore & Shipbuilding Co., Ltd

     8,622        0.25     1,078        1,078        1,078  

Ptotronics Co., Ltd.

     843        0.42     84        6        6  

NFT Co., Ltd.

     136        0.40     8        8        8  

Echoroba Co., Ltd.

     157        0.02     3        3        3  

Hyundaitech Co., Ltd.

     1,363        0.87     27        27        27  

Dasan Material Co.Ltd.

     29        0.04     22        22        22  

Fish World Co., Ltd.

     47        0.21     2        2        2  

SG Shinsung Engineering and Construction Co., Ltd.

     10        0.00     6        6        6  

Samdo Industry Electric Co., Ltd.

     48        0.02     1        1        1  

Taejung Industries Co., Ltd.

     9,268        0.30     5        5        5  

Shinsei Trading Co., Ltd.

     64        0.72     6        6        6  

Dynamic Co., Ltd.

     111        0.19     3        3        3  

Green Alchemy Co., Ltd.

     38,202        1.48     191        17        17  

Youone TBM Engineering & Construction Co., Ltd.

     615        0.27     31        31        31  

KM Leatech

     1,648        0.98     8        8        8  

Wonil T&I Co., Ltd.

     229        0.17     23        23        23  

Semist Co., Ltd.

     555        0.80     3        3        3  

DS POWER Co., Ltd.

     580,000        2.34     2,900        916        916  

Sewon Bus Co., Ltd

     12        0.00     —          —          —    

Enertec Co., Ltd.

     7,937        0.19     44        44        44  

Sangji Co., Ltd.

     20        0.26     4        4        4  

Bellie Doughnuts Co., Ltd.

     64        0.07     4        4        4  

Possbell Engineering Co., Ltd.

     36        0.64     1        1        1  

AIRTECH Information communication Co., Ltd

     2,379        0.60     12        12        12  

CST co., ltd.

     4,998        0.28     100        100        100  

TN Inc.

     1,416        2.00     71        71        71  

Shin kwang Industrial Co., Ltd.

     884        0.35     55        55        55  

Kiscom Co., Ltd.

     1,493        0.04     1        1        1  

Seil Electronics Co., Ltd.

     2,285        0.41     286        286        286  

Wonil laser Co., Ltd

     157        0.37     16        16        16  

Pyung Hwa Industrial Co., Ltd.

     3,388        3.00     85        85        85  

Navanakorn Electric Co., Ltd. (*2)

     4,442,800        26.93     17,216        17,126        17,126  

PT. Kedap Sayaaq

     671        10.00     18,540        —          —    

Set Holding (*3)

     1,100,220        2.50     229,255        161,983        161,983  

PT. Cirebon Energi Prasarana

     22,420        10.00     2,612        2,507        2,507  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

10.

Financial assets at fair value through other comprehensive income, Continued

 

(2)

Financial assets at fair value through other comprehensive income as of December 31, 2018 are as follows, continued:

 

 

In millions of won    2018  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

KODE NOVUS 1 LLC (*5)

     —          10.00   W —          —          —    

Choheung packing Co., Ltd.

     61        0.13     12        12        12  

Jaewoo Co., Ltd.

     359        0.24     11        11        11  

Wooyang HC Co., Ltd (*8)

     1,375        0.01     159        159        159  

Sungsan Parts Co., Ltd.

     629        0.80     63        63        63  

KMT Co., Ltd.

     1,411        0.93     21        21        21  

TheYeonriji Co., Ltd.

     116        0.10     6        6        6  

Flusys Co., Ltd.

     9        0.08     2        2        2  

DaeSung Frontier Co., Ltd.

     2,203        1.11     221        221        221  

DongSeo Electronics Co., Ltd.

     323        0.07     16        16        16  

Daewoo Display Co., Ltd.

     177        0.03     5        5        5  

Yeong-gwang Remicon Co., Ltd.

     15        0.12     2        2        2  

NTS Co., Ltd.

     143        0.22     36        36        36  

AID CO., LTD.

     1,212        0.57     36        36        36  

Changwon Eco-friendly farming corporation

     3        0.01     —          —          —    

Kumo Hitech Co., Ltd.

     6,697        0.53     100        100        100  

Kyung Pyo Industry Co., Ltd.

     186        0.76     19        19        19  

Daedong Industry Co., Ltd.

     617        0.55     46        46        46  

Doosung Heavy Industries Co., Ltd.

     53        0.06     5        5        5  

Jangback Testiles Co., Ltd.

     494        5.05     49        49        49  

Samjoo Hightech Co., Ltd.

     522        0.08     3        3        3  

Samkwang Chemical Co., Ltd.

     204        1.27     51        51        51  

Taekwang Industry Co., Ltd.

     1,327        0.48     93        93        93  

Taekwang Precision Co., Ltd.

     54        0.47     54        54        54  

SG Corp.

     213        0.54     21        21        21  

Shinseung Chemical Industy Co., Ltd.

     5        0.01     60        60        60  

KJ Alloy Co., Ltd.

     368        0.20     7        7        7  

SM Hi-tech Co., Ltd.

     22        0.39     22        22        22  

Keum Mun Industry Co., Ltd.

     1,320        0.97     330        330        330  

Puruen Environment Co., Ltd.

     967        1.34     19        19        19  

Miretech Co., Ltd.

     9,111        0.27     18        18        18  

SIE Co., Ltd.

     12        0.02     1        1        1  

Soongwon Ind. Co., Ltd.

     150        0.40     53        53        53  

Sejin Hightech Co., Ltd.

     17,980        0.16     18        18        18  

Namcheong Corp.

     7,096        0.28     284        284        284  

Eun Sung Enterprise Co.

     1,131        0.72     17        17        17  

Dongdo Basalt Industry Co., Ltd.

     182        1.50     73        73        73  

Shinyoung Textiles Co., Ltd.

     523        1.01     52        52        52  

Bugook Cast Iron Co.

     135        0.71     14        14        14  

Ilwoo Steel Co., Ltd.

     41        0.28     17        17        17  

Dong-un Tech Co., Ltd.

     1,159        6.28     81        81        81  

Wongwang Door Corp.

     575        1.00     29        29        29  
       

 

 

    

 

 

    

 

 

 
          284,670        189,439        189,439  
       

 

 

    

 

 

    

 

 

 
        W 650,513        399,495        399,495  
       

 

 

    

 

 

    

 

 

 

 

(*1)

The Company used initial cost as their fair value because there was not enough information to determine fair value, and the range of the estimated fair value is wide.

 

(*2)

Although the Company holds more than 20% of the equity shares of these investments, the Company cannot exercise significant influence.

 

(*3)

The Company has estimated the fair value of Set Holding by using the discounted cash flow method and has recognized the difference between its fair value and book value as gain or loss on valuation of financial assets at FVOCI in other comprehensive income or loss during the year ended December 31, 2018.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

10.

Financial assets at fair value through other comprehensive income, Continued

 

(2)

Financial assets at fair value through other comprehensive income as of December 31, 2018 are as follows, continued:

 

(*4)

The number of shares owned has changed due to capital reduction without refund (3:1), consolidation of stocks (10,000:1), and split of stock(1:2,000) during the year ended December 31, 2018

 

(*5)

As described in note 20, this is reclassified to available-for-sale financial assets due to loss of significant influence of the Company.

 

(*6)

The number of shares owned has changed due to the stock merge (4:1) during the year ended December 31, 2018.

 

(*7)

The number of shares owned has changed due to the stock merge (5:1) during the year ended December 31, 2018.

 

(*8)

The number of shares owned has changed due to the stock merge (10:1) during the year ended December 31, 2018.

 

11.

Available-for-sale Financial Assets

 

(1)

Changes in available-for-sale financial assets for the year ended December 31, 2017 are as follows:

 

In millions of won    2017  
     Beginning balance      Acquisition      Disposal
(*1)
    Valuation     Impairment     Others     Ending balance  

Listed

   W 268,171        106        —         8,156       (97     (1,883     274,453  

Unlisted

     746,561        233,179        (461,423     (2,908     (2,616     (87,413     425,380  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 1,014,732        233,285        (461,423     5,248       (2,713     (89,296     699,833  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Short-term available-for-sale financial assets

   W —          —          —         —         —         —         —    

Long-term available-for-sale financial assets

     1,014,732        233,285        (461,423     5,248       (2,713     (89,296     699,833  

 

(*1)

The Company recognized gain and loss on disposal of available-for-sale financial assets amounted to W1,130 million and W2,343 million, respectively, from the partial sales of Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 and others for the year ended December 31, 2017.

 

53


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

11.

Available-for-sale Financial Assets, Continued

 

(2)

Available-for-sale financial assets as of December 31, 2017 are as follows:

 

In millions of won    2017  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Listed

             

Korea District Heating Corp.

     2,264,068        19.55   W 173,201        165,277        165,277  

Ssangyong Motor Co., Ltd.

     38,568        0.03     428        197        197  

Sungjee Construction. Co., Ltd.

     10,530        0.01     49        8        8  

Korea Line Corp.

     18        0.00     1        —          —    

Namkwang Engineering & Construction Co., Ltd.

     46        0.00     15        —          —    

Bumyang Construction Co., Ltd. (*7)

     35        0.00     2        —          —    

ELCOMTEC Co., Ltd.

     32,875        0.04     217        72        72  

PAN ocean Co., Ltd.

     1,492        0.00     14        8        8  

Dongbu Corporation (*6)

     955        0.02     12        10        10  

KSP Co., Ltd.

     6,324        0.08     24        24        24  

STX Heavy Industries Co., Ltd.

     35,749        0.14     191        165        165  

PT Adaro Energy Tbk

     480,000,000        1.50     71,554        70,531        70,531  

Energy Fuels Inc.

     1,711,814        2.38     16,819        3,300        3,300  

Baralaba Coal Company Limited

     99,763        0.07     18,445        22        22  

Denison Mines Corp.

     58,284,000        10.42     84,134        34,292        34,292  

Fission 3.0

     300,000        0.14     —          15        15  

Fission Uranium Corp.

     800,000        0.16     785        532        532  
       

 

 

    

 

 

    

 

 

 
          365,891        274,453        274,453  
       

 

 

    

 

 

    

 

 

 

Unlisted (*1)

             

Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I

     1,758,731,002        14.18     1,752        571        —    

Troika Overseas Resource Development Private Equity Firm

     13,340,012,100        3.66     13,340        1,553        —    

IBK-AUCTUS Green Growth Private Equity Firm

     152        6.29     41        41        —    

Global Dynasty Overseas Resource Development Private Equity Firm

     2,242,437,289        7.46     2,242        2,242        —    

Intellectual Discovery, Ltd.

     1,000,000        8.81     5,000        954        —    

Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1

     4,176,751,013        5.00     4,328        4,328        —    

Construction Guarantee (*2)

     571        0.02     601        833        833  

Plant & Mechanical Contractors Financial Cooperative of Korea

     144        0.03     126        126        —    

Fire Guarantee

     40        0.01     20        20        —    

Korea Software Financial Cooperative

     5,186        1.09     3,301        3,301        —    

Engineering Financial Cooperative

     486        0.05     60        60        —    

Electric Contractors Financial Cooperative

     1,000        0.04     216        216        —    

Korea Specialty Contractor Financial Cooperative

     476        0.01     417        417        —    

Information & Communication Financial Cooperative

     121        0.02     26        26        —    

Korea Electric Engineers Association

     400        0.24     40        40        —    

Samsung investment – Investment Pool for Public funds 1 (*5)

     —          —         53,220        53,739        53,739  

Korea investment – Hanwha KT Master Lease Private Special Investment Trust (*5)

     —          —         26,586        26,591        26,591  

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

11.

Available-for-sale Financial Assets, Continued

 

(2)

Available-for-sale financial assets as of December 31, 2017 are as follows, continued:

 

In millions of won    2017  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Kyobo Royal-Class Repo Plus Fixed Income 1Y 2nd (*5)

     —          —       W 33,000        33,008        33,008  

Kyobo Royal-Class Repo Plus Fixed Income 2Y 1st (*5)

     —          —         50,000        50,399        50,399  

Kyobo Royal-Class Repo Plus A1 ABCP 1Y (*5)

     —          —         50,000        50,419        50,419  

Hwan Young Steel Co., Ltd.

     10,916        0.14     1,092        97        —    

SAMBO AUTO. Co., Ltd.

     15,066        0.02     38        38        —    

Mobo Co., Ltd.

     504        0.00     14        14        —    

Dae Kwang Semiconductor Co., Ltd.

     589        0.07     6        6        —    

Sanbon Department Store

     828        0.01     124        3        —    

Miju Steel Mfg. Co., Ltd.

     99,804        0.23     50        50        —    

Sungwon Co., Ltd.

     589        0.07     15        15        —    

Hana Civil Engineering Co., Ltd.

     23        0.00     1        1        —    

KC Development Co., Ltd.

     839        0.02     6        6        —    

IMHWA Corp.

     329        0.11     5        5        —    

DALIM Special Vehicle Co., Ltd.

     58        0.08     10        10        —    

ASA JEONJU Co., Ltd.

     34,846        1.34     697        69        —    

Moonkyung Silica Co., Ltd.

     42        0.56     —          —          —    

Sungkwang Timber Co., Ltd.

     9        0.34     4        4        —    

Yongbo Co., Ltd.

     61        0.20     3        3        —    

HJ Steel Co., Ltd.

     218        0.07     2        2        —    

KS Remicon Co., Ltd.

     12        0.04     3        3        —    

Joongang Platec Co., Ltd.

     3,591        0.75     72        35        —    

Pyungsan SI Ltd.

     434        0.01     9        9        —    

Samgong Development Co., Ltd.

     12        0.01     7        7        —    

Joongang Development Co., Ltd.

     540        0.12     8        8        —    

AJS Co., Ltd.

     12,906        0.23     32        32        —    

SHIN-E B&P Co., Ltd.

     119        0.13     10        10        —    

MSE Co., Ltd.

     429        0.13     9        9        —    

Ilrim Nano Tec Co., Ltd.

     1,520        0.07     15        15        —    

Youngjin Hi-Tech Co., Ltd.

     2,512        0.25     126        21        —    

Buyoung Co., Ltd.

     270        0.00     3        3        —    

Ilsuk Co., Ltd.

     152        0.17     10        10        —    

Dongyang Telecom Co., Ltd.

     1,760        0.01     11        11        —    

Jongwon Remicon Co., Ltd.

     31        0.18     13        13        —    

Ace Heat Treating Co., Ltd.

     477        1.43     72        72        —    

Zyle Daewoo Motor Sales Co., Ltd.

     22        0.00     —          —          —    

Daewoo Development Co., Ltd.

     8        0.00     —          —          —    

Seyang Inc.

     537        0.05     27        27        —    

Seungri Enterprise Co., Ltd.

     93        0.05     3        3        —    

Onggane Food Co., Ltd

     5        0.07     1        1        —    

Shin-E P&C Co., Ltd.

     12        0.00     1        1        —    

Ejung Ad Co., Ltd.

     132        0.09     3        3        —    

Solvus Co., Ltd.

     1,056        0.04     3        3        —    

Myung Co., Ltd.

     89        0.05     2        2        —    

Shinil Engineering Co., Ltd.

     887        0.06     3        3        —    

Biwang Industry Co., Ltd

     406        0.04     2        2        —    

Huimun Co., Ltd.

     263        0.26     4        4        —    

Young Sung Co., Ltd.

     89        0.40     26        26        —    

Yuil Industrial Electronics Co., Ltd.

     804        0.32     15        15        —    

DN TEK Inc.

     12,401        0.29     61        5        —    

Kwang Jin Structure Co., Ltd.

     3,072        0.60     31        31        —    

Woojin Industry Corporation

     3        0.00     16        16        —    

Kwang Sung Industry Co., Ltd.

     325        0.35     7        7        —    

Futech Mold Co., Ltd.

     274        0.27     14        14        —    

Woojoo Environment Ind. Co., Ltd.

     101        0.11     13        13        —    

CHONGATTI Agricultural Co., Inc.

     57        0.10     4        4        —    

Hyungji Esquire Co., Ltd.

     55        0.02     22        22        —    

 

55


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

11.

Available-for-sale Financial Assets, Continued

 

(2)

Available-for-sale financial assets as of December 31, 2017 are as follows, continued:

 

In millions of won    2017  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Kolmar Pharma Co., Ltd.

     1,426        0.01   W 52        3        —    

Morado Co., Ltd.

     209        0.04     2        2        —    

Myung Sung Tex Co., Ltd.

     20        0.00     2        2        —    

Kwang Sung Co., Ltd.

     610        0.53     31        31        —    

EverTechno. Co., Ltd.

     29,424        0.73     148        7        —    

Autowel Co., Ltd.

     260        0.38     14        14        —    

Woobang Construction Co., Ltd.

     8        0.00     8        8        —    

Shin Pyung Co., Ltd.

     6        0.03     3        3        —    

JMC Heavy Industries Co., Ltd.

     2,724        0.10     27        27        —    

Najin Steel Co., Ltd.

     37        0.06     5        5        —    

Sinkwang Industry Co., Ltd.

     1,091        1.68     5        5        —    

Crystal Co., Ltd.

     22        0.07     2        2        —    

Elephant & Friends Co., Ltd.

     563        0.61     3        3        —    

Mireco Co., Ltd.

     109        0.25     11        11        —    

L&K Industry Co., Ltd.

     1,615        0.60     24        24        —    

JO Tech Co., Ltd.

     1,263        0.62     25        25        —    

Kendae Printing Co., Ltd.

     422        0.60     21        21        —    

Dauning Co., Ltd.

     231        0.41     6        6        —    

Korea Trecision Co., Ltd.

     22        0.45     5        5        —    

Ace Track Co., Ltd.

     3,130        1.08     219        59        —    

Taebok Machinery Co., Ltd.

     109        1.08     11        11        —    

Yoo-A Construction Co., Ltd.

     105        0.20     11        11        —    

Dung Hwan Co., Ltd.

     531        0.02     5        5        —    

Hurim Biocell Co., Ltd.

     113        0.00     5        5        —    

Sunjin Power Tech Co., Ltd.

     4,941        0.92     247        32        —    

Smart Power Co., Ltd.

     133,333        4.83     200        200        —    

Haseung Industries Co., Ltd.

     55        0.62     28        28        —    

Beer Yeast Korea Inc.

     1,388        0.43     7        7        —    

Daeryung Corporation

     207        0.19     10        10        —    

Korea Bio Red Ginseng Co., Ltd.

     194        0.09     10        10        —    

ENH Co., Ltd.

     1,086        0.19     54        54        —    

B CON Co., Ltd.

     96        1.16     6        6        —    

Chunil Metal Co., Ltd.

     11        0.15     4        4        —    

SsangMa Machine Co., Ltd.

     4        0.05     1        1        —    

SinJin Co., Ltd.

     233        0.30     9        9        —    

Ace Integration Co., Ltd

     105        0.09     24        24        —    

AceInti Agricultural Co., Ltd.

     16        0.02     5        5        —    

KyungDong Co., Ltd.

     130        0.01     1        1        —    

ChunWon Development Co., Ltd.

     193        0.19     39        39        —    

WonIl Co., Ltd.

     999        0.15     50        50        —    

SungLim Industrial Co., Ltd.

     29        0.03     1        1        —    

Korea Minerals Co., Ltd.

     191        0.05     134        1        —    

HyoDong Development Co., Ltd.

     119        0.15     24        24        —    

Haspe Tech Co., Ltd.

     652        0.55     20        20        —    

JoHyun Co., Ltd.

     350        1.56     18        18        —    

KC Co., Ltd.

     5,107        0.17     3        3        —    

SeongJi Industrial Co., Ltd.

     41        0.05     1        1        —    

DongKwang SD, Inc.

     524        0.23     13        13        —    

Dong Yang Metal Co., Ltd.

     2,951        1.97     15        15        —    

Seyang Precision Ind.Co., Ltd.

     829        0.23     41        41        —    

Dooriwon Food System Co., Ltd.

     13        0.27     1        1        —    

ShinShin Co., Ltd

     339        1.12     17        17        —    

Kitorang Co., Ltd.

     165        0.24     49        49        —    

Sung Kwang Co., Ltd.

     23        0.37     6        6        —    

Hyundai Metal Co., Ltd.

     3,757        5.60     1,416        1,416        —    

Shinheung petrol. Co. Ltd.

     699        0.14     7        7        —    

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

11.

Available-for-sale Financial Assets, Continued

 

(2)

Available-for-sale financial assets as of December 31, 2017 are as follows, continued:

 

In millions of won    2017  
     Shares      Ownership     Acquisition cost      Book value      Fair value  

Force TEC Co., Ltd.

     3,501        0.02   W 18        18        —    

Haisung TPC Co., Ltd.

     10,751        0.24     54        54        —    

Samsung Tech Co., Ltd.

     486        1.28     97        97        —    

Tae Hyung Co., Ltd.

     28        0.43     20        20        —    

Samyangplant Co., Ltd.

     323        0.60     16        16        —    

Younil Metal Co., Ltd.

     41        0.21     21        21        —    

Myungjin Tech Co., Ltd.

     20        0.54     4        4        —    

Hankook Machine Tools Co., Ltd.

     719        0.14     72        72        —    

Hankook Precision Ind Co., Ltd.

     110        0.06     11        11        —    

Borneo International Furniture Co., Ltd.

     64,037        0.28     97        14        —    

CJ Paradise Co., Ltd

     24        0.02     12        12        —    

Han Young Technology Company Co., Ltd.

     35        0.00     —          —          —    

Jungdo Aluminium Co., Ltd.

     8,527        0.35     128        128        —    

Ilheung Metal Co, Ltd.

     280        0.83     28        28        —    

STX Offshore & Shipbuilding Co., Ltd

     8,622        0.25     1,078        1,078        —    

Ptotronics Co., Ltd.

     151        0.07     2        2        —    

NFT Co., Ltd.

     136        0.40     8        8        —    

Echoroba Co., Ltd.

     157        0.02     3        3        —    

Hyundaitech Co., Ltd.

     1,363        0.87     27        27        —    

Eco Alux Co., Ltd.

     239        0.22     48        48        —    

Daekyung Industry Co., Ltd.

     9,112        0.94     13        13        —    

Dasan Material Co.Ltd.

     29        0.04     —          —          —    

Fish World Co., Ltd.

     47        0.21     2        2        —    

SG Shinsung Engineering and Construction Co., Ltd.

     10        0.00     6        6        —    

Samdo Industry Electric Co., Ltd.

     48        0.02     1        1        —    

Taejung Industries Co., Ltd.

     9,268        0.30     5        5        —    

Shinsei Trading Co., Ltd.

     64        0.72     1        1        —    

Dynamic Co., Ltd.

     111        0.19     3        3        —    

Green Alchemy Co., Ltd.

     38,202        1.48     191        191        —    

IQ Power Asia Inc.

     16,179        0.31     81        81        —    

Youone TBM Engineering & Construction Co., Ltd.

     227,854        0.27     31        31        —    

KM Leatech

     1,648        0.98     8        8        —    

Wonil T&I Co., Ltd.

     229        0.17     23        23        —    

Semist Co., Ltd.

     555        0.80     3        3        —    

DS POWER Co., Ltd. (*8)

     580,000        2.34     2,900        1,223        1,223  

Navanakorn Electric Co., Ltd. (*3)

     4,442,800        26.93     17,216        16,410        —    

PT. Kedap Sayaaq

     671        10.00     18,540        —          —    

Set Holding (*4)

     1,100,220        2.50     229,255        171,242        171,242  

PT. Cirebon Energi Prasarana

     22,420        10.00     2,612        2,401        —    
       

 

 

    

 

 

    

 

 

 
          522,782        425,380        387,454  
       

 

 

    

 

 

    

 

 

 
        W 888,673        699,833        661,907  
       

 

 

    

 

 

    

 

 

 

 

(*1)

Investments in unlisted equity securities held by the Company for which a quoted market price does not exist in an active market and fair value cannot be measured reliably were measured at cost less impairment, if any.

 

(*2)

The Company has estimated the fair value of the investment in Construction Guarantee based upon the price which would be applied when the investment is returned. The Company has recognized the difference between its fair value and book value as a gain or loss on valuation of available-for-sale financial assets in other comprehensive income or loss during the year ended December 31, 2017.

 

(*3)

Although the Company holds more than 20% of the equity shares of these investments, the Company cannot exercise significant influence.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

11.

Available-for-sale Financial Assets, Continued

 

(2)

Available-for-sale financial assets as of December 31, 2017 are as follows, continued:

 

(*4)

The Company has estimated the fair value of Set Holding by using the discounted cash flow method and has recognized the difference between its fair value and book value as gain or loss on valuation of available-for-sale financial assets in other comprehensive income or loss during the year ended December 31, 2017.

 

(*5)

As of December 31, 2017, the Company invested in W214,156 million as beneficiary securities exclusively for payment of decommissioning cost of nuclear power plants. The Company has measured the fair value of the beneficiary securities based on its net asset value.

 

(*6)

The number of shares owned has changed due to the stock merge (9:7) during the year ended December 31, 2017.

 

(*7)

The number of shares increased due to the stock split (5:1).

 

(*8)

As described in note 20, this is reclassified to available-for-sale financial assets due to loss of significant influence of the Company.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

12.

Financial assets at amortized cost

Financial assets at amortized cost as of December 31, 2018 are as follows:

 

In millions of won    2018  
     Financial assets
at amortized cost
     Government
grants
     Allowance for
doubtful accounts
     Others      Book
value
 

Government bonds

   W 3,042        —          —          —          3,042  

Financial bonds

     11,000        —          —          —          11,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 14,042        —          —          —          14,042  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 11,956        —          —          —          11,956  

Non-current

     2,086        —          —          —          2,086  

 

13.

Held-to-maturity Investments

Held-to-maturity investments as of December 31, 2017 are as follows:

 

In millions of won    2017  
     Beginning balance      Acquisition      Disposal     Others     Ending
balance
 

Government bonds

   W 3,244        250        (350     —         3,144  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
   W 3,244        250        (350     —         3,144  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Current

   W 114        —          (113     4       5  

Non-current

     3,130        250        (237     (4     3,139  

 

14.

Derivatives

 

(1)

Derivatives as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Current      Non-current      Current      Non-current  

Derivative assets

           

Currency forward

   W 2,128        12,606        45        —    

Currency swap

     39,979        43,436        12        15,711  

Interest rate swap

     —          2,342        —          2,697  

Others (*1)

     —          1,844        12,878        1,283  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 42,107        60,228        12,935        19,691  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative liabilities

           

Currency forward

   W 1,956        —          7,862        1,278  

Currency swap

     14,881        233,690        61,997        296,098  

Interest rate swap

     1,439        58,042        1,408        59,416  

Others (*2)

     2,155        —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 20,431        291,732        71,267        356,792  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

The Company has a put option to sell shares of DS POWER Co., Ltd. and the fair value of the option is recorded in ‘Others’.

 

(*2)

The Company has an obligation to settle the convertible preferred stock to financial investors pursuant to the settlement contract with Samcheok Eco Materials Co., Ltd. and the fair value of the obligation is recorded in ‘Others’.

 

59


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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

14.

Derivatives, Continued

 

(2)

Currency forward contracts which are not designated as hedging instruments as of December 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies except contract exchange rate information  

Counterparty

                 Contract amounts      Contract
exchange rate
(in won)
 
   Contract
date
     Maturity
date
     Pay      Receive  

KEB Hana Bank

     2014.04.10        2021.07.12      W 55,120        USD        52,000      W 1,060.00  

KEB Hana Bank

     2014.04.28        2021.07.12        50,784        USD        48,000        1,058.00  

Bank of America

     2014.04.29        2021.07.12        105,400        USD        100,000        1,054.00  

KEB Hana Bank

     2014.05.09        2021.07.12        104,600        USD        100,000        1,046.00  

KEB Hana Bank

     2017.12.22        2021.07.12        105,079        USD        100,000        1,050.79  

Korea Development Bank

     2017.12.27        2021.07.12        104,849        USD        100,000        1,048.49  

Mizuho Bank

     2018.11.28        2019.01.02        6,768        USD        6,000        1,127.95  

Mizuho Bank

     2018.12.07        2019.01.11        11,169        USD        10,000        1,116.90  

CCB

     2018.12.11        2019.01.14        11,280        USD        10,000        1,127.96  

Nonghyup Bank

     2018.12.17        2019.01.22        11,295        USD        10,000        1,129.45  

Korea Development Bank

     2018.12.18        2019.01.22        11,279        USD        10,000        1,127.85  

Morgan Stanley

     2018.12.19        2019.01.23        11,233        USD        10,000        1,123.30  

Standard Chartered

     2018.12.19        2019.01.24        11,235        USD        10,000        1,123.50  

Kookmin Bank

     2018.12.20        2019.01.28        11,273        USD        10,000        1,127.25  

Woori Bank

     2018.12.20        2019.01.28        11,272        USD        10,000        1,127.15  

KEB Hana Bank

     2018.12.21        2019.01.29        13,459        USD        12,000        1,121.60  

Morgan Stanley

     2018.12.24        2019.01.30        11,289        USD        10,000        1,128.87  

CCB

     2018.12.26        2019.01.31        11,246        USD        10,000        1,124.60  

Standard Chartered

     2018.12.26        2019.01.31        5,624        USD        5,000        1,124.75  

Nonghyup Bank

     2018.12.27        2019.02.01        5,610        USD        5,000        1,121.90  

KEB Hana Bank

     2018.12.27        2019.02.01        5,606        USD        5,000        1,121.15  

Standard Chartered

     2018.12.28        2019.02.07        5,589        USD        5,000        1,117.80  

KEB Hana Bank

     2018.12.28        2019.02.07        5,584        USD        5,000        1,116.70  

Mizuho Bank

     2018.12.28        2019.02.07        11,172        USD        10,000        1,117.15  

Societe Generale

     2018.11.29        2019.01.04        11,206        USD        10,000        1,120.60  

ING Bank

     2018.12.20        2019.01.15        11,279        USD        10,000        1,127.89  

ING Bank

     2018.12.26        2019.01.23        11,248        USD        10,000        1,124.77  

Nova Scotia

     2018.12.07        2019.01.10        14,518        USD        13,000        1,116.80  

Mizuho Bank

     2018.12.06        2019.01.04        11,167        USD        10,000        1,116.67  

Credit Agricole

     2018.12.27        2019.01.23        11,208        USD        10,000        1,120.75  

Korea Development Bank

     2018.12.13        2019.01.10        4,490        USD        4,000        1,122.60  

Korea Development Bank

     2018.12.24        2019.01.10        13,497        USD        12,000        1,124.74  

Korea Development Bank

     2018.12.21        2019.01.15        10,103        USD        9,000        1,122.50  

Korea Development Bank

     2018.12.27        2019.01.23        11,207        USD        10,000        1,120.68  

Korea Development Bank

     2018.12.28        2019.01.23        13,412        USD        12,000        1,117.64  

Societe Generale

     2018.12.19        2019.01.21        7,853        USD        7,000        1,121.85  

Societe Generale

     2018.12.21        2019.01.28        8,974        USD        8,000        1,121.75  

MUFG

     2018.12.19        2019.01.21        6,730        USD        6,000        1,121.70  

MUFG

     2018.12.28        2019.02.07        8,929        USD        8,000        1,116.15  

Nova Scotia

     2018.12.19        2019.01.22        4,486        USD        4,000        1,121.50  

Nova Scotia

     2018.12.21        2019.01.28        8,976        USD        8,000        1,121.95  

Nova Scotia

     2018.12.27        2019.01.31        7,832        USD        7,000        1,118.90  

Nonghyup Bank

     2018.12.28        2019.02.07        10,041        USD        9,000        1,115.70  

BNP Paribas

     2018.12.28        2019.02.07        8,930        USD        8,000        1,116.30  

CCB

     2018.12.28        2019.02.07        7,812        USD        7,000        1,116.05  

Credit Agricole

     2018.12.28        2019.02.07        7,812        USD        7,000        1,115.95  

KEB Hana Bank

     2018.12.05        2019.01.07        16,697        USD        15,000        1,113.15  

KEB Hana Bank

     2018.12.07        2019.01.07        15,672        USD        14,000        1,119.43  

Busan Bank

     2018.12.28        2019.01.07        6,477        USD        5,800        1,116.70  

Nonghyup Bank

     2018.12.12        2019.01.07        3,380        USD        3,000        1,126.60  

KEB Hana Bank

     2018.12.13        2019.01.15        7,849        USD        7,000        1,121.25  

Shinhan Bank

     2018.12.20        2019.01.22        29,320        USD        26,000        1,127.68  

Nonghyup Bank

     2018.12.28        2019.02.15        53,666        USD        48,000        1,118.05  

Credit Agricole

     2018.11.02        2019.02.07        3,039        USD        2,729        1,113.60  

Credit Agricole

     2018.11.05        2019.02.07        5,564        USD        5,000        1,112.70  

Nova Scotia

     2018.11.07        2019.02.13        5,567        USD        5,000        1,113.40  

Nova Scotia

     2018.11.07        2019.02.13        4,458        USD        4,000        1,114.40  

Societe Generale

     2018.11.29        2019.03.04        5,568        USD        5,000        1,113.50  

Societe Generale

     2018.11.29        2019.03.04        3,674        USD        3,297        1,114.50  

Credit Agricole

     2018.12.03        2019.03.05        256        USD        231        1,109.10  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

14.

Derivatives, Continued

 

(2)

Currency forward contracts which are not designated as hedging instruments as of December 31, 2018 are as follows, continued:

 

In millions of won and thousands of foreign currencies except contract exchange rate information  

Counterparty

   Contract
date
     Maturity
date
     Contract amounts      Contract
exchange rate
(in won)
 
   Pay      Receive  

Nova Scotia

     2018.12.04        2019.03.06      W  5,522        USD        5,000      W 1,104.30  

Nova Scotia

     2018.12.04        2019.03.06        5,527        USD        5,000        1,105.30  

Nova Scotia

     2018.12.20        2019.03.26        5,589        USD        5,000        1,117.80  

Nova Scotia

     2018.12.20        2019.03.26        1,751        USD        1,565        1,118.80  

Nova Scotia

     2018.12.28        2019.04.02        5,565        USD        5,000        1,113.00  

Nova Scotia

     2018.12.28        2019.04.02        5,569        USD        5,000        1,113.80  

Nova Scotia

     2018.12.28        2019.04.02        5,576        USD        5,000        1,115.20  

Nova Scotia

     2018.12.28        2019.04.03        5,553        USD        5,000        1,110.60  

Nova Scotia

     2018.12.28        2019.04.03        5,558        USD        5,000        1,111.60  

Nova Scotia

     2018.12.28        2019.04.03        5,563        USD        5,000        1,112.60  

 

(3)

Currency swap contracts which are not designated as hedging instruments as of December 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies except contract exchange rate information        

Counterparty

   Contract
year
     Contract amount      Contract interest rate     Contract
exchange rate

(in won)
 
   Pay      Receive      Pay     Receive  

Credit Suisse

     2014~2019      W 118,632        CHF        100,000        2.98     1.50   W  1,186.32  

Standard Chartered

     2014~2019        114,903        CHF        100,000        4.00     1.50     1,149.03  

Standard Chartered

     2014~2029        102,470        USD        100,000        3.14     3.57     1,024.70  

Societe Generale

     2014~2024        105,017        USD        100,000        4.92     5.13     1,050.17  

KEB Hana Bank

     2015~2024        107,970        USD        100,000        4.75     5.13     1,079.70  

Credit Agricole

     2015~2024        94,219        USD        86,920        4.85     5.13     1,083.97  

Citibank

     2012~2022        112,930        USD        100,000        2.79     3.00     1,129.30  

JP Morgan

     2012~2022        112,930        USD        100,000        2.79     3.00     1,129.30  

Bank of America

     2012~2022        112,930        USD        100,000        2.79     3.00     1,129.30  

Shinhan Bank

     2016~2022        112,930        USD        100,000        2.79     3.00     1,129.30  

HSBC

     2012~2022        111,770        USD        100,000        2.89     3.00     1,117.70  

KEB Hana Bank

     2012~2022        111,770        USD        100,000        2.87     3.00     1,117.70  

Standard Chartered

     2012~2022        111,770        USD        100,000        2.89     3.00     1,117.70  

Deutsche Bank

     2012~2022        55,885        USD        50,000        2.79     3.00     1,117.70  

HSBC

     2014~2019        105,260        USD        100,000        2.48     2.38     1,052.60  

Standard Chartered

     2014~2019        105,260        USD        100,000        2.48     2.38     1,052.60  

Korea Development Bank

     2016~2019        105,260        USD        100,000        2.48     2.38     1,052.60  

Nomura

     2015~2025        111,190        USD        100,000        2.60     3.25     1,111.90  

Korea Development Bank

     2015~2025        111,190        USD        100,000        2.62     3.25     1,111.90  

Woori Bank

     2015~2025        55,595        USD        50,000        2.62     3.25     1,111.90  

KEB Hana Bank

     2015~2025        55,595        USD        50,000        2.62     3.25     1,111.90  

Woori Bank

     2017~2027        111,610        USD        100,000        2.25     3.13     1,116.10  

Korea Development Bank

     2017~2027        111,610        USD        100,000        2.31     3.13     1,116.10  

KEB Hana Bank

     2017~2027        111,610        USD        100,000        2.31     3.13     1,116.10  

Korea Development Bank

     2018~2028        108,600        HKD        800,000        2.69     3.35     135.75  

Shinhan Bank

     2018~2028        115,387        HKD        850,000        2.66     3.35     135.75  

Korea Development Bank

     2018~2023        170,280        USD        150,000        2.15     3.75     1,135.20  

Woori Bank

     2018~2023        170,280        USD        150,000        2.18     3.75     1,135.20  

KEB Hana Bank

     2018~2023        113,520        USD        100,000        2.17     3.75     1,135.20  

Shinhan Bank

     2018~2023        227,040        USD        200,000        2.17     3.75     1,135.20  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

14.

Derivatives, Continued

 

(4)

Currency swap contracts which are designated as hedging instruments as of December 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies except contract exchange rate information  

Counterparty

   Contract year      Contract amount      Contract interest rate   Contract
exchange rate

(in won)
 
   Pay      Receive      Pay   Receive

HSBC

     2014~2020        W        99,901        AUD        100,000      3.52%   5.75%   W 999.01  

HSBC

     2014~2020           100,482        AUD        100,000      3.48%   5.75%     1,004.82  

Standard Chartered

     2013~2020        USD        117,250        AUD        125,000      3M Libor+1.25%   5.75%     0.94  

Standard Chartered

     2014~2020        W        126,032        USD        117,250      3.55%   3M Libor+1.25%     1,074.90  

Korea Development Bank

     2017~2020           114,580        USD        100,000      1.75%   2.38%     1,145.80  

KEB Hana Bank

     2017~2020           114,580        USD        100,000      1.75%   2.38%     1,145.80  

Export-import bank of Korea

     2017~2020           114,580        USD        100,000      1.75%   2.38%     1,145.80  

JP Morgan

     2014~2019           107,190        USD        100,000      3M Libor+3.25%   2.75%     1,071.90  

Morgan Stanley

     2014~2019           107,190        USD        100,000      3M Libor+3.25%   2.75%     1,071.90  

Deutsche Bank

     2014~2019           107,190        USD        100,000      3M Libor+3.25%   2.75%     1,071.90  

Korea Development Bank

     2016~2021           121,000        USD        100,000      2.15%   2.50%     1,210.00  

Morgan Stanley

     2016~2021           121,000        USD        100,000      3M Libor+2.10%   2.50%     1,210.00  

BNP Paribas

     2016~2021           121,000        USD        100,000      3M Libor+2.10%   2.50%     1,210.00  

Nomura

     2017~2037           52,457        EUR        40,000      2.60%   1.70%     1,311.42  

Nomura

     2017~2037           59,423        SEK        450,000      2.62%   2.36%     132.05  

Credit Agricole

     2013~2019           118,343        CHF        100,000      3.47%   1.63%     1,183.43  

Morgan Stanley

     2013~2019           59,172        CHF        50,000      3.40%   1.63%     1,183.43  

Nomura

     2013~2019           59,172        CHF        50,000      3.47%   1.63%     1,183.43  

Standard Chartered

     2014~2019           104,490        USD        100,000      2.77%   2.63%     1,044.90  

Credit Agricole

     2014~2019           104,490        USD        100,000      2.77%   2.63%     1,044.90  

Morgan Stanley

     2014~2019           104,490        USD        100,000      2.70%   2.63%     1,044.90  

Korea Development Bank

     2018~2023           320,880        USD        300,000      2.03%   3.75%     1,069.60  

KEB Hana Bank

     2018~2021           212,960        USD        200,000      2.10%   3.00%     1,064.80  

Korea Development Bank

     2018~2021           212,960        USD        200,000      2.10%   3.00%     1,064.80  

Credit Agricole

     2014~2020           110,680        USD        100,000      2.29%   2.50%     1,106.80  

Societe Generale

     2014~2020           55,340        USD        50,000      2.16%   2.50%     1,106.80  

KEB Hana Bank

     2014~2020           55,340        USD        50,000      2.16%   2.50%     1,106.80  

KEB Hana Bank

     2014~2020           55,340        USD        50,000      2.21%   2.50%     1,106.80  

Standard Chartered

     2014~2020           55,340        USD        50,000      2.21%   2.50%     1,106.80  

HSBC

     2014~2020           55,340        USD        50,000      2.21%   2.50%     1,106.80  

Nomura

     2014~2020           55,340        USD        50,000      2.21%   2.50%     1,106.80  

BNP Paribas

     2014~2020           55,340        USD        50,000      2.21%   2.50%     1,106.80  

HSBC

     2014~2020           55,340        USD        50,000      2.21%   2.50%     1,106.80  

KEB Hana Bank

     2017~2022           226,600        USD        200,000      1.94%   2.63%     1,133.00  

Korea Development Bank

     2017~2022           113,300        USD        100,000      1.94%   2.63%     1,133.00  

Nomura

     2017~2022           113,300        USD        100,000      1.95%   2.63%     1,133.00  

Woori Bank

     2017~2022           56,650        USD        50,000      1.95%   2.63%     1,133.00  

Kookmin Bank

     2017~2022           56,650        USD        50,000      1.95%   2.63%     1,133.00  

Korea Development Bank

     2018~2023           169,335        USD        150,000      2.26%   3.88%     1,128.90  

Woori Bank

     2018~2023           169,335        USD        150,000      2.26%   3.88%     1,128.90  

Credit Agricole

     2018~2023           112,890        USD        100,000      2.26%   3.88%     1,128.90  

KEB Hana Bank

     2018~2023           56,445        USD        50,000      2.26%   3.88%     1,128.90  

Kookmin Bank

     2018~2023           56,445        USD        50,000      2.26%   3.88%     1,128.90  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

14.

Derivatives, Continued

 

(5)

Interest rate swap contracts which are not designated as hedging instruments as of December 31, 2018 are as follows:

 

In millions of won and thousands of USD                  Contract interest rate per annum

Counterparty

   Contract year      Contract
amount
     Pay   Receive

KEB Hana Bank

     2017~2022      W 100,000      2.01%   3M CD + 0.24%

KEB Hana Bank

     2017~2022        100,000      2.06%   3M CD + 0.27%

Nomura (*1)

     2017~2037        30,000      2.05%   3.08%

KEB Hana Bank

     2017~2021        200,000      2.45%   3M CD + 0.32%

Nomura (*2)

     2018~2038        30,000      2.56%   3.75%

KEB Hana Bank

     2018~2023        200,000      2.15%   3M CD + 0.19%

KEB Hana Bank

     2018~2023        200,000      2.17%   3M CD + 0.19%

KEB Hana Bank

     2018~2023        150,000      2.03%   3M CD + 0.21%

Societe Generale

     2017~2022        200,000      3M Libor+3.44%   3.77%

Export-import bank of Korea

     2015~2031      USD  15,893      2.67%   6M USD Libor

ING Bank

     2015~2031      USD 7,861      2.67%   6M USD Libor

BNP Paribas

     2015~2031      USD 7,861      2.67%   6M USD Libor

 

(*1)

2.05% of the contract paying interest rate is applied for five years from the date of issuance, and 3M CD+0.10% is applied thereafter.

(*2)

2.56% of the contract paying interest rate is applied for five years from the date of issuance, and 3M CD+0.10% is applied thereafter.

 

(6)

Interest rate swap contracts which are designated as hedging instruments as of December 31, 2018 are as follows:

 

In millions of won and thousands of USD                  Contract interest rate per annum

Counterparty

   Contract year      Contract
amount
     Pay   Receive

BNP Paribas

     2009~2027      USD  92,120      4.16%   6M USD Libor

KFW

     2009~2027      USD 92,120      4.16%   6M USD Libor

Credit Agricole

     2018~2033      USD 92,686      3.98%~4.10%   6M USD Libor

SMBC

     2018~2033      USD 121,205      4.05%~4.18%   6M USD Libor

Mizuho Bank

     2016~2019      USD 36,890      1.56%   1.65%

SMBC

     2016~2019      USD 36,890      1.56%   1.65%

Export-import bank of Korea

     2016~2036      USD 2,564      3.00%   4.99%

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

14.

Derivatives, Continued

 

(7)

Gains and losses on valuation and transaction of derivatives for the years ended December 31, 2018 and 2017 are as follows and included in finance income and costs in the consolidated statements of comprehensive income (loss):

 

In millions of won    Net income effects of
valuation gain (loss)
    Net income effects of
transaction gain (loss)
    Accumulated other
comprehensive
income (loss) (*)
 
     2018     2017     2018     2017     2018     2017  

Currency forward

   W 12,632       (41,889     23,991       (28,223     —         —    

Currency swap

     145,088       (843,747     123,670       (137,376     (12,516     26,810  

Interest rate swap

     (2,949     6,909       (364     (3,362     6,087       5,074  

Other derivatives

     (1,568     4,060       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 153,203       (874,667     147,297       (168,961     (6,429     31,884  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

For the year ended December 31, 2018, the net gain on valuation of derivatives applying cash flow hedge accounting of W211 million, net of tax, is included in other comprehensive income or loss.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

15.

Other Financial Assets

 

(1)

Other financial assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Current      Non-current      Current      Non-current  

Loans and receivables

   W 123,657        639,673        244,309        711,069  

Allowance for doubtful accounts

     (12      (4,940      —          (8,948

Present value discount

     (992      (38,712      (976      (39,813

Long-term/short-term financial instruments (*1)

     1,869,286        448,741        1,702,084        542,430  

Financial assets at fair value through profit or loss (*1)

     —          —          —          111,512  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,991,939        1,044,762        1,945,417        1,316,250  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Certain financial assets at fair value previously recognized as other financial assets is reclassified to financial assets at fair value through profit or loss upon the adoption of K-IFRS 1109 ‘Financial Instruments’.

 

(2)

Loans and receivables as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Face value      Allowance for
doubtful accounts
     Present value
discount
     Book value  

Short-term loans and receivables

           

Loans for tuition

   W 33,333        —          (992      32,341  

Loans for housing

     15,572        —          —          15,572  

Fisheries loan

     320        —          —          320  

Other loans

     74,432        (12      —          74,420  
  

 

 

    

 

 

    

 

 

    

 

 

 
     123,657        (12      (992      122,653  
  

 

 

    

 

 

    

 

 

    

 

 

 

Long-term loans and receivables

           

Loans for tuition

     414,893        —          (38,659      376,234  

Loans for housing

     167,723        —          —          167,723  

Loans for related parties

     46,798        (4,930      —          41,868  

Fisheries loan

     640        —          (53      587  

Other loans

     9,619        (10      —          9,609  
  

 

 

    

 

 

    

 

 

    

 

 

 
     639,673        (4,940      (38,712      596,021  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 763,330        (4,952      (39,704      718,674  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

In millions of won    2017  
     Face value      Allowance for
doubtful accounts
     Present value
discount
     Book value  

Short-term loans and receivables

           

Loans for tuition

   W 33,763        —          (976      32,787  

Loans for housing

     14,126        —          —          14,126  

Fisheries loan

     352        —          —          352  

Other loans

     196,068        —          —          196,068  
  

 

 

    

 

 

    

 

 

    

 

 

 
     244,309        —          (976      243,333  
  

 

 

    

 

 

    

 

 

    

 

 

 

Long-term loans and receivables

           

Loans for tuition

     408,803        —          (39,716      369,087  

Loans for housing

     140,452        —          —          140,452  

Loans for related parties

     94,581        (8,948      —          85,633  

Fisheries loan

     960        —          (97      863  

Other loans

     66,273        —          —          66,273  
  

 

 

    

 

 

    

 

 

    

 

 

 
     711,069        (8,948      (39,813      662,308  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 955,378        (8,948      (40,789      905,641  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

15.

Other Financial Assets, Continued

 

(3)

Changes in the allowance for doubtful accounts of loans and receivables for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W 8,948        4,532  

Bad debt expense

     22        2,465  

Other

     (4,018      1,951  
  

 

 

    

 

 

 

Ending balance

   W 4,952        8,948  
  

 

 

    

 

 

 

 

(4)

Long-term and short-term financial instruments as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Current      Non-current      Current      Non-current  

Time deposits

   W 1,602,285        63,358        1,479,034        2  

ABCP

     —          —          145,000        65,600  

CP

     —          —          58,050        —    

CD

     10,000        —          10,000        —    

RP

     —          —          10,000        1,634  

Others

     257,001        385,383        —          475,194  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,869,286        448,741        1,702,084        542,430  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

16.

Inventories

Inventories as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Acquisition cost      Valuation allowance      Book value  

Raw materials

   W 3,886,739        (2,609      3,884,130  

Work-in-progress

     189,907        (1,028      188,879  

Finished goods

     50,526        —          50,526  

Supplies

     1,858,751        (3,907      1,854,844  

Inventories in transit

     1,196,113        —          1,196,113  

Other inventories

     13,761        —          13,761  
  

 

 

    

 

 

    

 

 

 
   W 7,195,797        (7,544      7,188,253  
  

 

 

    

 

 

    

 

 

 
In millions of won    2017  
     Acquisition cost      Valuation allowance      Book value  

Raw materials

   W 3,528,835        (2,829      3,526,006  

Merchandise

     107        —          107  

Work-in-progress

     138,709        (1,028      137,681  

Finished goods

     72,923        (1,517      71,406  

Supplies

     1,581,661        (3,940      1,577,721  

Inventories in transit

     679,358        —          679,358  

Other inventories

     9,807        —          9,807  
  

 

 

    

 

 

    

 

 

 
   W 6,011,400        (9,314      6,002,086  
  

 

 

    

 

 

    

 

 

 

The reversals of the allowance for loss on inventory valuation due to increase in the net realizable value of inventory deducted from cost of sales for the years ended December 31, 2018 and 2017 were W3,723 million and W437 million, respectively.

The amounts of loss from inventory valuation included in other gains or losses for the years ended December 31, 2018 and 2017 were W1,953 million and W3,875 million, respectively.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

17. Finance Lease Receivables

 

(1)

Finance lease contracts

The Company entered into a power purchase agreement (“PPA”) with Jordan Electric Power Company to provide a 373MW level Qatrana gas combined power plant over a 25 year lease term, and accounts for the PPA as a finance lease. Also, the Company has fly-ash pipe conduit finance leases with an average lease term of 7 years. In addition, the Company provides 31 energy storage system installation projects and 44 energy efficiency contracts as finance leases with a lease term of 2 to 10 years. Also, the Company entered into a PPA with the Comision Federal de Electricidad in Mexico to provide for 25 years (December 2013 to November 2038) of all electricity generated from the power plant after completion of its construction and collect rates consisting of fixed costs (to recover the capital) and variable costs during the contracted period.

 

(2)

Finance lease receivables as of December 31, 2018 and 2017 are as follows and included in current and non-current trade and other receivables, net, in the consolidated statements of financial position:

 

In millions of won    2018      2017  
     Minimum lease
payments
     Present value of
minimum lease
payments
     Minimum lease
payments
     Present value of
minimum lease
payments
 

Less than 1 year

   W 124,918        84,688        49,542        13,067  

1 ~ 5 years

     467,518        223,622        381,181        203,990  

More than 5 years

     1,333,016        675,036        1,398,449        645,564  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,925,452        983,346        1,829,172        862,621  
  

 

 

       

 

 

    

Allowance for doubtful accounts

        (1,133         —    
     

 

 

       

 

 

 
      W 982,213           862,621  
     

 

 

       

 

 

 

 

(3)

Changes in the allowance for doubtful accounts of finance lease receivables for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W —          —    

Bad debt expense

     1,133        —    

Write-off

     —          —    

Other

     —          —    
  

 

 

    

 

 

 

Ending balance

   W 1,133        —    
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

18.

Non-Financial Assets

 

  Non-financial

assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
  

 

 

    

 

 

 
     Current      Non-current      Current      Non-current  

Advance payment

   W 156,073        160,628        109,743        43,872  

Prepaid expenses

     290,944        90,449        251,715        90,118  

Others (*1)

     431,871        76,075        392,534        112,828  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 878,888        327,152        753,992        246,818  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Details of others as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
  

 

 

    

 

 

 
     Current      Non-current      Current      Non-current  

Tax refund receivables

   W 82,348        1,276        89,762        1,940  

Greenhouse gas emissions rights

     93,749        —          135,211        —    

Other quick assets (*2)

     255,774        74,799        167,561        110,888  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 431,871        76,075        392,534        112,828  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*2)

The Company has recognized W92,128 million of its rights in connection with the securities of Orano Expansion as non-current non-financial assets as of December 31, 2018 and 2017. The Company has recognized an impairment loss of W87,023 million as it was determined that there is objective evidence of impairment related to its equity interest in and loans to Orano Expansion for the year ended December 31, 2018.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries

 

(1)

Consolidated subsidiaries as of December 31, 2018 and 2017 are as follows:

 

               Percentage of ownership (%)  

Subsidiaries

  

Key operation activities

   Location    2018     2017  

Korea Hydro & Nuclear Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

Korea South-East Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

Korea Midland Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

Korea Western Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

Korea Southern Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

Korea East-West Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

KEPCO Engineering & Construction Company,
Inc. (*1)

   Architectural engineering for utility plant and others    KOREA      65.77     65.77

KEPCO Plant Service & Engineering
Co., Ltd.

   Utility plant maintenance and others    KOREA      51.00     51.00

KEPCO Nuclear Fuel Co., Ltd.

   Nuclear fuel    KOREA      96.36     96.36

KEPCO KDN Co., Ltd.

   Electric power information technology and others    KOREA      100.00     100.00

Garolim Tidal Power Plant Co., Ltd. (*2)

   Power generation    KOREA      49.00     49.00

KEPCO International HongKong Ltd.

   Holding company    HONG KONG      100.00     100.00

KEPCO International Philippines Inc.

   Holding company    PHILIPPINES      100.00     100.00

KEPCO Gansu International Ltd.

   Holding company    HONG KONG      100.00     100.00

KEPCO Philippines Holdings Inc.

   Holding company    PHILIPPINES      100.00     100.00

KEPCO Philippines Corporation

   Operation of utility plant    PHILIPPINES      100.00     100.00

KEPCO Ilijan Corporation

   Construction and operation of utility plant    PHILIPPINES      51.00     51.00

KEPCO Lebanon SARL

   Operation of utility plant    LEBANON      100.00     100.00

KEPCO Neimenggu International Ltd.

   Holding company    HONG KONG      100.00     100.00

KEPCO Shanxi International Ltd.

   Holding company    HONG KONG      100.00     100.00

KOMIPO Global Pte Ltd.

   Holding company    SINGAPORE      100.00     100.00

KEPCO Canada Energy Ltd.

   Resources development    CANADA      —         100.00

KEPCO Netherlands B.V.

   Holding company    NETHERLANDS      100.00     100.00

KOREA Imouraren Uranium Investment Corp.

   Holding company    FRANCE      100.00     100.00

KEPCO Australia Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOSEP Australia Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOMIPO Australia Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOWEPO Australia Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOSPO Australia Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KEPCO Middle East Holding Company

   Holding company    BAHRAIN      100.00     100.00

Qatrana Electric Power Company

   Construction and operation of utility plant    JORDAN      80.00     80.00

KHNP Canada Energy, Ltd.

   Holding company    CANADA      100.00     100.00

KEPCO Bylong Australia Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

Korea Waterbury Uranium Limited Partnership

   Resources development    CANADA      79.64     79.64

Korea Electric Power Nigeria Ltd.

   Operation of utility plant    NIGERIA      100.00     100.00

KEPCO Holdings de Mexico

   Holding company    MEXICO      100.00     100.00

KST Electric Power Company

   Construction and operation of utility plant    MEXICO      56.00     56.00

KEPCO Energy Service Company

   Operation of utility plant    MEXICO      100.00     100.00

KEPCO Netherlands S3 B.V.

   Holding company    NETHERLANDS      100.00     100.00

PT. KOMIPO Pembangkitan Jawa Bali

   Operation of utility plant    INDONESIA      51.00     51.00

PT. Cirebon Power Service (*2)

   Operation of utility plant    INDONESIA      27.50     27.50

KOWEPO International Corporation

   Operation of utility plant    PHILIPPINES      99.99     99.99

KOSPO Jordan LLC

   Operation of utility plant    JORDAN      100.00     100.00

EWP Philippines Corporation

   Holding company    PHILIPPINES      100.00     100.00

EWP America Inc.

   Holding company    USA      100.00     100.00

EWP Renewable Corporation

   Holding company    USA      100.00     100.00

DG Fairhaven Power, LLC

   Power generation    USA      100.00     100.00

DG Whitefield, LLC

   Power generation    USA      100.00     100.00

Springfield Power, LLC

   Power generation    USA      100.00     100.00

KNF Canada Energy Limited

   Holding company    CANADA      96.36     96.36

PT KEPCO Resource Indonesia

   Holding company    INDONESIA      —         100.00

EWP Barbados 1 SRL

   Holding company    BARBADOS      100.00     100.00

California Power Holdings, LLC

   Power generation    USA      100.00     100.00

Gyeonggi Green Energy Co., Ltd.

   Power generation    KOREA      62.01     62.01

PT. Tanggamus Electric Power    

   Power generation    INDONESIA      52.50     52.50

Gyeongju Wind Power Co., Ltd.

   Power generation    KOREA      70.00     70.00

KOMIPO America Inc.

   Holding company    USA      100.00     100.00

EWPRC Biomass Holdings, LLC

   Holding company    USA      100.00     100.00

KOSEP USA, INC.

   Power generation    USA      100.00     100.00

PT. EWP Indonesia

   Holding company    INDONESIA      99.96     99.96

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(1)

Consolidated subsidiaries as of December 31, 2018 and 2017 are as follows, continued:

 

               Percentage of ownership (%)  

Subsidiaries

  

Key operation activities

   Location    2018     2017  

KEPCO Netherlands J3 B.V.

   Holding company    NETHERLANDS      100.00     100.00

Korea Offshore Wind Power Co., Ltd.

   Power generation    KOREA      100.00     100.00

Global One Pioneer B.V.

   Holding company    NETHERLANDS      100.00     100.00

Global Energy Pioneer B.V.

   Holding company    NETHERLANDS      100.00     100.00

Mira Power Limited (*3)

   Power generation    PAKISTAN      76.00     76.00

KOSEP Material Co., Ltd. (*4)

   Recycling fly ashes    KOREA      86.22     86.22

Commerce and Industry Energy Co., Ltd. (*5)

   Power generation    KOREA      59.03     59.03

KEPCO Singapore Holdings Pte., Ltd.

   Holding company    SINGAPORE      100.00     100.00

KOWEPO India Private Limited (*6)

   Holding company    INDIA      —         100.00

KEPCO KPS Philippines Corp.

   Utility plant maintenance and others    PHILIPPINES      51.00     51.00

KOSPO Chile SpA

   Holding company    CHILE      100.00     100.00

PT. KOWEPO Sumsel Operation And Maintenance Services

   Utility plant maintenance and others    INDONESIA      95.00     95.00

HeeMang Sunlight Power Co., Ltd.

   Operation of utility plant    KOREA      100.00     100.00

Fujeij Wind Power Company

   Operation of utility plant    JORDAN      100.00     100.00

KOSPO Youngnam Power Co., Ltd.

   Operation of utility plant    KOREA      50.00     50.00

HI Carbon Professional Private Special Asset

Investment Trust 1

   Holding company    KOREA      96.67     96.67

Chitose Solar Power Plant LLC

   Power generation    JAPAN      80.10     80.10

KEPCO Energy Solution Co. Ltd.

   Energy service    KOREA      100.00     100.00

Solar School Plant Co., Ltd.

   Power generation    KOREA      100.00     100.00

KOSPO Power Services Limitada

   Utility plant maintenance and others    CHILE      65.00     65.00

Energy New Industry Specialized Investment Private Investment Trust

   Holding company    KOREA      99.01     99.75

KOEN Bylong Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOMIPO Bylong Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOWEPO Bylong Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOSPO Bylong Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

EWP Bylong Pty., Ltd.

   Resources development    AUSTRALIA      100.00     100.00

KOWEPO Lao International

   Utility plant maintenance and others    LAOS      100.00     100.00

KEPCO US Inc.

   Holding company    USA      100.00     100.00

KEPCO Alamosa LLC

   Holding company    USA      50.10     50.10

Cogentrix Solar Services, LLC

   Holding company    USA      —         50.10

Solar Investments I, LLC

   Holding company    USA      —         50.10

KEPCO Solar of Alamosa, LLC (formerly, Cogentrix of Alamosa, LLC)

   Power generation    USA      50.10     50.10

KEPCO-LG CNS Mangilao Holdings LLC

   Holding company    USA      70.00     70.00

Mangilao Investment LLC

   Holding company    USA      70.00     70.00

KEPCO-LG CNS Mangilao Solar, LLC

   Power generation    USA      70.00     70.00

Jeju Hanlim Offshore Wind Co., Ltd.

   Power generation    KOREA      68.84     70.22

PT. Siborpa Eco Power

   Construction and operation of utility plant    INDONESIA      55.00     64.71

BSK E-New Industry Fund VII

   Holding company    KOREA      80.86     81.47

e-New Industry LB Fund 1

   Holding company    KOREA      75.36     75.92

Songhyun e-New Industry Fund

   Holding company    KOREA      79.85     80.45

PT. Korea Energy Indonesia

   Utility plant maintenance and others    INDONESIA      95.00     —    

KOLAT SpA

   Utility plant maintenance and others    CHILE      100.00     —    

KEPCO California, LLC

   Holding company    USA      100.00     —    

KEPCO Mojave Holdings, LLC

   Holding company    USA      100.00     —    

Incheon Fuel Cell Co., Ltd.

   Power generation    KOREA      60.00     —    

KOEN Service Co., Ltd.

   Facility maintenance and service    KOREA      100.00     —    

KOMIPO Service Co., Ltd.

   Facility maintenance and service    KOREA      100.00     —    

KOWEPO Service Co., Ltd.

   Facility maintenance and service    KOREA      100.00     —    

KOSPO Service Co., Ltd.

   Facility maintenance and service    KOREA      100.00     —    

EWP Service Co., Ltd.

   Facility maintenance and service    KOREA      100.00     —    

PT. KOMIPO Energy Indonesia

   Utility plant maintenance and others    INDONESIA      95.00     —    

 

(*1)

Considering treasury stocks, the effective percentage of ownership is 66.08%.

(*2)

These subsidiaries are included in the consolidated financial statements as the Company obtained the majority of the voting power through the shareholders’ agreement.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(1)

Consolidated subsidiaries as of December 31, 2018 and 2017 are as follows, continued:

 

(*3)

As of reporting date, the annual reporting period of all subsidiaries is December 31, except for Mira Power Limited which is November 30.

(*4)

The effective percentage of ownership has increased to 86.22% since Long Lasting Value exercised the put option to sell its investment to KOSEP during the year ended December 31, 2017.

(*5)

The Company guarantees a certain return on investment related to Commerce and Industry Energy Co., Ltd. for the financial investors. The financial investors have a right to sell their shares to the Company which can be exercised 84 months after the date of investment. Accordingly, the purchase price including the return on investment is classified as a liability.

(*6)

KOWEPO India Private Limited was in the process of liquidating its business as of December 31, 2018 and has been reclassified to assets held-for-sale, accordingly.

 

(2)

Subsidiaries included in and excluded from consolidation for the year ended December 31, 2018 are as follows:

<Subsidiaries included in consolidation during the year ended December 31, 2018>

 

Subsidiary

  

Reason

PT. Korea Energy Indonesia    Newly established
KOLAT SpA    Newly established
KEPCO California, LLC    Newly established
KEPCO Mojave Holdings, LLC    Newly established
Incheon Fuel Cell Co., Ltd.    Newly established
KOEN Service Co., Ltd.    Newly established
KOMIPO Service Co., Ltd.    Newly established
KOWEPO Service Co., Ltd.    Newly established
KOSPO Service Co., Ltd.    Newly established
EWP Service Co., Ltd.    Newly established
PT. KOMIPO Energy Indonesia    Newly established

<Subsidiaries excluded from consolidation during the year ended December 31, 2018>

 

Subsidiary

  

Reason

KEPCO Canada Energy Ltd.    Liquidated
Cogentrix Solar Services, LLC    Liquidated
Solar Investments I, LLC    Liquidated
PT KEPCO Resource Indonesia    Liquidated
KOWEPO India Private Limited    Liquidating

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won                            

2018

 

Subsidiaries

   Total
assets
     Total
liabilities
     Sales      Profit (loss)
for the period
 

Korea Hydro & Nuclear Power Co., Ltd.

   W 55,792,704        30,484,104        8,858,717        (137,613

Korea South-East Power Co., Ltd.

     9,997,758        4,948,553        5,521,038        25,736  

Korea Midland Power Co., Ltd.

     10,839,218        7,088,013        4,368,467        (38,142

Korea Western Power Co., Ltd.

     9,902,752        5,965,410        4,841,261        (28,157

Korea Southern Power Co., Ltd.

     9,810,985        5,463,721        5,539,793        55,439  

Korea East-West Power Co., Ltd.

     8,744,380        4,092,460        4,933,525        3,345  

KEPCO Engineering & Construction Company, Inc.

     771,480        310,100        433,701        12,937  

KEPCO Plant Service & Engineering Co., Ltd.

     1,275,365        296,428        1,239,604        160,791  

KEPCO Nuclear Fuel Co., Ltd.

     817,416        434,439        230,667        15,835  

KEPCO KDN Co., Ltd.

     566,807        159,423        622,154        60,016  

Garolim Tidal Power Plant Co., Ltd.

     608        345        —          (11

KEPCO International HongKong Ltd.

     140,101        1        —          3,307  

KEPCO International Philippines Inc.

     107,948        1,475        —          52,539  

KEPCO Gansu International Ltd.

     12,047        515        —          (24

KEPCO Philippines Holdings Inc.

     188,551        9,775        —          53,219  

KEPCO Philippines Corporation

     6,394        213        —          54  

KEPCO Ilijan Corporation

     431,444        53,413        99,844        49,631  

KEPCO Lebanon SARL

     1,509        9,686        —          413  

KEPCO Neimenggu International Ltd.

     194,336        —          —          20,829  

KEPCO Shanxi International Ltd.

     519,991        201,732        —          290  

KOMIPO Global Pte Ltd.

     250,456        961        —          11,478  

KEPCO Netherlands B.V.

     130,460        77        —          26,550  

KOREA Imouraren Uranium Investment Corp.

     63,517        171        —          (89,852

KEPCO Australia Pty., Ltd.

     439,719        14        —          49  

KOSEP Australia Pty., Ltd.

     37,057        2,832        20,294        7,315  

KOMIPO Australia Pty., Ltd.

     39,066        4,659        20,294        7,193  

KOWEPO Australia Pty., Ltd.

     39,341        4,702        20,294        7,316  

KOSPO Australia Pty., Ltd.

     36,525        3,585        20,294        9,520  

KEPCO Middle East Holding Company

     101,201        92,862        —          3,043  

Qatrana Electric Power Company

     484,383        326,486        18,766        21,170  

KHNP Canada Energy, Ltd.

     49,776        35        —          (26

KEPCO Bylong Australia Pty., Ltd.

     254,398        315,921        —          (29,573

Korea Waterbury Uranium Limited Partnership

     20,890        142        —          (74

Korea Electric Power Nigeria Ltd.

     112        39        727        (93

KEPCO Holdings de Mexico

     248        57        —          (11

KST Electric Power Company

     535,807        457,867        109,735        10,274  

KEPCO Energy Service Company

     1,940        1,454        5,117        (232

KEPCO Netherlands S3 B.V.

     46,518        38        —          1,226  

PT. KOMIPO Pembangkitan Jawa Bali

     11,405        5,472        20,320        3,925  

PT. Cirebon Power Service

     1,588        273        7,228        177  

KOWEPO International Corporation

     —          8        —          —    

KOSPO Jordan LLC

     16,315        3,432        34,371        1,907  

EWP Philippines Corporation

     1,684        829        —          (11

EWP America Inc. (*1)

     72,525        4,903        29,557        (4,483

KNF Canada Energy Limited

     1,801        20        —          (45

EWP Barbados 1 SRL

     268,033        1,581        688        11,221  

Gyeonggi Green Energy Co., Ltd.

     293,812        185,043        96,442        25,121  

PT. Tanggamus Electric Power

     216,321        187,502        26,832        9,338  

Gyeongju Wind Power Co., Ltd.

     122,303        83,348        21,906        8,803  

KOMIPO America Inc.

     10,092        572        —          (885

KOSEP USA, INC.

     1        4,857        —          4,341  

PT. EWP Indonesia

     7,444        14        —          3,138  

KEPCO Netherlands J3 B.V.

     115,978        77        —          (104

Korea Offshore Wind Power Co., Ltd.

     216,114        36,377        —          (8,473

Global One Pioneer B.V.

     162        87        —          (113

Global Energy Pioneer B.V.

     325        74        —          (102

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won                            

2018

 

Subsidiaries

   Total
assets
     Total
liabilities
     Sales      Profit (loss)
for the period
 

Mira Power Limited

   W 277,525        213,104        —          (980

KOSEP Material Co., Ltd.

     2,862        1,249        3,240        377  

Commerce and Industry Energy Co., Ltd.

     92,872        88,009        27,937        (6,091

KEPCO Singapore Holdings Pte., Ltd.

     582        9        —          (31

KEPCO KPS Philippines Corp.

     7,501        358        4,815        766  

KOSPO Chile SpA

     139,814        57,502        —          1,016  

PT. KOWEPO Sumsel Operation And Maintenance Services

     1,313        394        4,343        (654

HeeMang Sunlight Power Co., Ltd.

     10,915        7,626        146        (192

Fujeij Wind Power Company

     217,796        212,435        —          (1,033

KOSPO Youngnam Power Co., Ltd.

     413,472        325,589        369,669        8,155  

HI Carbon Professional Private Special Asset Investment Trust 1

     3,002        —          —          12  

Chitose Solar Power Plant LLC

     115,505        105,079        15,022        872  

KEPCO Energy Solution Co. Ltd.

     304,103        849        5,584        2,532  

Solar School Plant Co., Ltd.

     204,282        1,366        1,149        2,033  

KOSPO Power Services Limitada

     3,045        596        9,610        1,132  

Energy New Industry Specialized Investment Private Investment Trust (*2)

     66,498        1,014        —          (1,140

KOEN Bylong Pty., Ltd.

     5,544        26        —          (10

KOMIPO Bylong Pty., Ltd.

     5,544        26        —          (25

KOWEPO Bylong Pty., Ltd.

     5,544        26        —          —    

KOSPO Bylong Pty., Ltd.

     5,544        26        —          (25

EWP Bylong Pty., Ltd.

     5,544        16        —          (15

KOWEPO Lao International

     3,800        1,015        2,899        895  

KEPCO US Inc.

     16,640        —          —          6  

KEPCO Alamosa LLC

     32,346        79        750        (688

KEPCO Solar of Alamosa, LLC (formerly, Cogentrix of Alamosa, LLC)

     64,223        48,819        9,015        200  

KEPCO-LG CNS Mangilao Holdings LLC

     25,642        27,197        —          (1,144

Mangilao Investment LLC

     25,641        —          —          —    

KEPCO-LG CNS Mangilao Solar, LLC

     25,406        146        —          (104

Jeju Hanlim Offshore Wind Co., Ltd.

     16,557        328        —          (925

PT. Siborpa Eco Power

     12,363        141        —          (1,771

PT. Korea Energy Indonesia

     1,183        60        1,459        223  

KOLAT SpA

     38,362        474        585        (186

KEPCO California, LLC

     42,171        21        —          (332

KEPCO Mojave Holdings, LLC

     103,189        65,730        —          (3,959

Incheon Fuel Cell Co., Ltd.

     23,626        415        —          (201

KOEN Service Co., Ltd.

     583        31        —          (48

KOMIPO Service Co., Ltd.

     576        17        —          (41

KOWEPO Service Co., Ltd.

     750        227        —          (77

KOSPO Service Co., Ltd.

     576        6        —          (30

EWP Service Co., Ltd.

     667        97        —          (30

PT. KOMIPO Energy Indonesia

     2,236        —          —          —    

 

(*1)

Financial information of EWP America Inc. includes that of six other subsidiaries, EWP Renewable Corporation, DG Fairhaven Power, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

(*2)

Financial information of Energy New Industry Specialized Investment Private Investment Trust includes that of three other subsidiaries, BSK E-New Industry Fund VII, e-New Industry LB Fund 1 and Songhyun e-New Industry Fund.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won                            

2017

 

Subsidiaries

   Total
assets
     Total
liabilities
     Sales      Profit (loss)
for the period
 

Korea Hydro & Nuclear Power Co., Ltd.

   W 55,011,096        29,252,816        9,415,751        854,346  

Korea South-East Power Co., Ltd.

     9,879,577        4,844,184        5,387,846        130,371  

Korea Midland Power Co., Ltd.

     9,893,822        6,148,173        4,167,009        104,591  

Korea Western Power Co., Ltd.

     9,660,426        5,739,534        4,199,079        110,939  

Korea Southern Power Co., Ltd.

     9,648,741        5,401,216        4,397,552        98,817  

Korea East-West Power Co., Ltd.

     8,855,518        4,204,187        4,644,330        217,599  

KEPCO Engineering & Construction Company, Inc.

     762,166        305,134        490,193        21,222  

KEPCO Plant Service & Engineering Co., Ltd.

     1,195,086        294,689        1,232,113        135,482  

KEPCO Nuclear Fuel Co., Ltd.

     792,187        421,088        279,664        4,557  

KEPCO KDN Co., Ltd.

     524,520        155,715        619,470        48,968  

Garolim Tidal Power Plant Co., Ltd.

     619        345        —          (12

KEPCO International HongKong Ltd.

     153,529        1        —          4,380  

KEPCO International Philippines Inc.

     102,323        886        —          47,201  

KEPCO Gansu International Ltd.

     11,567        493        —          (29

KEPCO Philippines Holdings Inc.

     127,922        2,621        —          43,218  

KEPCO Philippines Corporation

     6,293        114        —          2,098  

KEPCO Ilijan Corporation

     474,624        57,801        109,183        66,320  

KEPCO Lebanon SARL

     1,069        9,281        —          (219

KEPCO Neimenggu International Ltd.

     165,937        —          —          500  

KEPCO Shanxi International Ltd.

     497,990        193,309        —          3,796  

KOMIPO Global Pte Ltd.

     225,411        1,497        —          21,858  

KEPCO Canada Energy Ltd.

     132        22        —          (32

KEPCO Netherlands B.V.

     114,911        49        —          17,309  

KOREA Imouraren Uranium Investment Corp.

     151,278        131        —          1,490  

KEPCO Australia Pty., Ltd.

     466,654        569        —          (568

KOSEP Australia Pty., Ltd.

     27,076        333        12,096        1,601  

KOMIPO Australia Pty., Ltd.

     31,441        4,691        12,096        1,133  

KOWEPO Australia Pty., Ltd.

     31,586        4,691        12,096        1,232  

KOSPO Australia Pty., Ltd.

     29,472        4,221        12,096        (2,759

KEPCO Middle East Holding Company

     95,812        90,842        —          2,913  

Qatrana Electric Power Company

     460,206        327,401        18,892        23,310  

KHNP Canada Energy, Ltd.

     51,994        31        —          (92

KEPCO Bylong Australia Pty., Ltd.

     242,364        277,549        —          20,271  

Korea Waterbury Uranium Limited Partnership

     20,886        136        —          (59

Korea Electric Power Nigeria Ltd.

     238        76        2,164        29  

KEPCO Holdings de Mexico

     235        30        —          (20

KST Electric Power Company

     546,242        478,230        120,126        16,154  

KEPCO Energy Service Company

     1,793        451        6,773        976  

KEPCO Netherlands S3 B.V.

     46,642        53        —          2,382  

PT. KOMIPO Pembangkitan Jawa Bali

     11,261        4,769        20,956        4,666  

PT. Cirebon Power Service

     2,808        155        7,439        592  

KOWEPO International Corporation

     —          8        —          (2

KOSPO Jordan LLC

     24,077        13,594        7,331        953  

EWP Philippines Corporation

     1,708        836        —          (17

EWP America Inc. (*1)

     79,854        67,308        23,543        (9,737

KNF Canada Energy Limited

     1,884        31        —          (43

PT KEPCO Resource Indonesia

     491        —          —          (311

EWP Barbados 1 SRL

     235,096        450        —          (2,585

Gyeonggi Green Energy Co., Ltd.

     282,408        199,160        95,192        3,203  

PT. Tanggamus Electric Power

     179,317        160,144        34,281        4,640  

Gyeongju Wind Power Co., Ltd.

     112,279        82,124        7,219        2,400  

KOMIPO America Inc.

     10,505        521        —          2,071  

KOSEP USA, INC.

     184        9,065        —          26,997  

PT. EWP Indonesia

     2,035        23        —          1,916  

KEPCO Netherlands J3 B.V.

     122,612        76        —          12,115  

Korea Offshore Wind Power Co., Ltd.

     190,195        1,985        —          (6,997

Global One Pioneer B.V.

     151        38        —          (80

Global Energy Pioneer B.V.

     309        41        —          (87

Mira Power Limited

     208,150        163,198        —          737  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won                            

2017

 

Subsidiaries

   Total
assets
     Total
liabilities
     Sales      Profit (loss)
for the period
 

KOSEP Material Co., Ltd.

   W 2,751        1,448        3,128        320  

Commerce and Industry Energy Co., Ltd.

     99,129        87,926        30,577        (749

KEPCO Singapore Holdings Pte., Ltd.

     3,265        4        —          (24

KOWEPO India Private Limited

     781        —          —          (46

KEPCO KPS Philippines Corp.

     6,636        235        6,840        555  

KOSPO Chile SpA

     133,570        50,109        —          1,066  

PT. KOWEPO Sumsel Operation And Maintenance Services

     1,350        279        7,651        659  

HeeMang Sunlight Power Co., Ltd.

     6,876        3,395        105        (229

Fujeij Wind Power Company

     165,636        156,099        —          8,836  

KOSPO Youngnam Power Co., Ltd.

     412,785        333,302        68,973        939  

HI Carbon Professional Private Special Asset Investment Trust 1

     3,002        —          —          12  

Chitose Solar Power Plant LLC

     136,098        121,622        7,083        4,100  

KEPCO Energy Solution Co. Ltd.

     313,401        12,376        5,544        1,325  

Solar School Plant Co., Ltd.

     201,482        599        67        874  

KOSPO Power Services Limitada

     3,901        887        11,067        666  

Energy New Industry Specialized Investment Private Investment Trust (*3)

     506,207        2,118        —          52  

KOEN Bylong Pty., Ltd.

     5,875        —          —          —    

KOMIPO Bylong Pty., Ltd.

     5,875        —          —          —    

KOWEPO Bylong Pty., Ltd.

     5,875        —          —          —    

KOSPO Bylong Pty., Ltd.

     5,875        —          —          —    

EWP Bylong Pty., Ltd.

     5,875        —          —          —    

KOWEPO Lao International

     3,259        1,452        3,624        1,881  

KEPCO US Inc.

     16,913        —          —          —    

KEPCO Alamosa LLC

     33,144        492        —          (218

Cogentrix Solar Services, LLC (*2)

     84,458        53,116        8,958        (112

KEPCO-LG CNS Mangilao Holdings LLC

     24,131        24,395        —          (278

Mangilao Investment LLC

     24,131        —          —          —    

KEPCO-LG CNS Mangilao Solar, LLC

     24,002        134        —          (278

Jeju Hanlim Offshore Wind Co., Ltd.

     36        —          —          —    

PT. Siborpa Eco Power

     11,562        214        —          (518

 

(*1)

Financial information of EWP America Inc. includes that of six other subsidiaries, EWP Renewable Corporation, DG Fairhaven Power, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

(*2)

Financial information of Cogentrix Solar Services, LLC includes that of two other subsidiaries, Solar Investments I, LLC and Cogentrix of Alamosa, LLC.

(*3)

Financial information of Energy New Industry Specialized Investment Private Investment Trust includes that of three other subsidiaries, BSK E-New Industry Fund VII, e-New Industry LB Fund 1 and Songhyun e-New Industry Fund.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(4)

Significant restrictions on abilities to subsidiaries are as follows:

 

Company

  

Nature and extent of any significant restrictions

Gyeonggi Green Energy Co., Ltd.    Acquisition or disposal of assets of more than W35 billion, change in the capacity of cogeneration units (except for the change due to performance improvement of equipment, maintenance) will require unanimous consent of all directors.
KOSPO Youngnam Power Co., Ltd.    Dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained. Shares cannot be wholly or partially transferred without prior written consent of financial institutions.
Incheon Fuel Cell Co., Ltd.    Acquisition or disposal of assets of more than W20 billion, change in the capacity of cogeneration units (except for the change due to performance improvement of equipment, maintenance) will require unanimous consent of all directors.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(5)

Details of non-controlling interest prior to intra-group eliminations as of and for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won  

2018

 

Description

   KEPCO Ilijan
Corporation
    KEPCO Plant
Service &
Engineering
Co., Ltd.
    KEPCO
Engineering &
Construction
Company, Inc.
    Others     Total  

Percentage of ownership

     49.00     49.00     33.92    

Current assets

   W 163,622       628,725       281,390       956,928       2,030,665  

Non-current assets

     267,822       646,640       490,090       2,760,500       4,165,052  

Current liabilities

     (16,819     (270,097     (248,402     (559,552     (1,094,870

Non-current liabilities

     (36,594     (26,331     (61,698     (1,933,583     (2,058,206

Net assets

     378,031       978,937       461,380       1,224,293       3,042,641  

Book value of non-controlling interest

     185,235       479,679       156,500       680,963       1,502,377  

Sales

     99,844       1,239,604       433,701       966,037       2,739,186  

Profit for the period

     49,631       160,791       12,937       92,457       315,816  

Profit for the period attributable to non-controlling interest

     24,319       78,788       4,388       28,475       135,970  

Cash flows from operating activities

     92,822       129,700       81,042       110,448       414,012  

Cash flows from investing activities

     (4,452     (123,593     (50,569     35,167       (143,447

Cash flows from financing activities before dividends to non-controlling interest

     (53,733     (33,737     (14,591     (374,669     (476,730

Dividends to non-controlling interest

     (51,626     (32,414     (2,839     (23,452     (110,331

Effect of exchange rate fluctuation

     2,840       (124     31       1,304       4,051  

Net increase (decrease) of cash and cash equivalents

     (14,149     (60,168     13,074       (251,202     (312,445

 

In millions of won  

2017

 

Description

   KEPCO Ilijan
Corporation
    KEPCO Plant
Service &
Engineering
Co., Ltd.
    KEPCO
Engineering &

Construction
Company, Inc.
    Others     Total  

Percentage of ownership

     49.00     49.00     33.92    

Current assets

   W 160,588       623,934       257,529       1,269,175       2,311,226  

Non-current assets

     314,036       571,152       504,637       2,588,833       3,978,658  

Current liabilities

     (21,546     (278,562     (221,860     (394,320     (916,288

Non-current liabilities

     (36,255     (16,127     (83,274     (2,014,925     (2,150,581

Net assets

     416,823       900,397       457,032       1,448,763       3,223,015  

Book value of non-controlling interest

     204,243       441,194       155,025       612,245       1,412,707  

Sales

     109,183       1,232,113       490,193       719,087       2,550,576  

Profit for the period

     66,320       135,482       21,222       66,419       289,443  

Profit for the period attributable to non-controlling interest

     32,497       66,386       7,199       20,447       126,529  

Cash flows from operating activities

     123,534       129,801       62,578       60,021       375,934  

Cash flows from investing activities

     (5,276     (193,408     (8,622     (409,353     (616,659

Cash flows from financing activities before dividends to non-controlling interest

     (44,442     (15,606     (55,504     339,432       223,880  

Dividends to non-controlling interest

     (48,855     (14,994     (1,419     (20,840     (86,108

Effect of exchange rate fluctuation

     (7,432     (1,267     (101     (24,206     (33,006

Net increase (decrease) of cash and cash equivalents

     17,529       (95,474     (3,068     (54,946     (135,959

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

 

(6)

Changes in goodwill

(i) Details of goodwill as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Acquisition cost

   W 2,582        2,582  

Accumulated impairment

     —          —    
  

 

 

    

 

 

 

Carrying book value

   W 2,582        2,582  
  

 

 

    

 

 

 

(ii) There are no changes in goodwill for the years ended December 31, 2018 and 2017.

 

(7)

Disposals of subsidiaries

The Company liquidated KEPCO Canada Energy Ltd , Cogentrix Solar Services, LLC, Solar Investments I, LLC, and PT KEPCO Resource Indonesia during the year ended December 31, 2018.

(i) The fair value of proceeds from disposal as of December 31, 2018 is as follows:

 

In millions of won    2018  

Consideration received in cash

   W 160  

Net assets transferred due to liquidation

     —    
  

 

 

 

Total

   W 160  
  

 

 

 

(ii) The carrying value of assets and liabilities of subsidiaries as at the date the Company lost its control during the year ended December 31, 2018 is as follows:

 

In millions of won    2018  

Current assets

  

Cash and cash equivalents

   W 175  

Trade and other receivables

     11  

Current liabilities

  

Trade and other payables

     (28
  

 

 

 
   W 158  
  

 

 

 

 

78


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

19.

Consolidated Subsidiaries, Continued

 

(7)

Disposals of subsidiaries, continued

 

(iii) Gain from disposals of subsidiaries for the year ended December 31, 2018 is as follows:

 

In millions of won    2018  

Fair value of sale price

   W 160  

Net assets disposed

     (158

Non-controlling interests

     —    

Realization of unrealized gain

     70  

Other comprehensive income

     —    
  

 

 

 

Gain from disposals of subsidiaries (*1)

   W 72  
  

 

 

 

 

(*1)

Gain from disposals of subsidiaries is included in the consolidated statements of comprehensive income (loss).

 

(iv)

Net cashflow from sales of subsidiaries for the year ended December 31, 2018 is as follows:

 

In millions of won    2018  

Consideration received in cash

   W 160  

Less: cash held by disposed subsidiary

     (175
  

 

 

 

Net cash flow

   W (15
  

 

 

 

 

79


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures

 

(1)

Investments in associates and joint ventures as of December 31, 2018 and 2017 are as follows:

 

In millions of won       

2018

 

Investees

  

Key operation activities

   Location      Percentage of
ownership
    Acquisition
cost
     Book
value
 

<Associates>

             

Korea Gas Corporation (*1)

  

Importing and wholesaling LNG

     KOREA        20.47%     W 94,500        1,701,848  

Korea Electric Power Industrial Development

Co., Ltd.

  

Electricity metering and others

     KOREA        29.00%       4,727        21,838  

YTN Co., Ltd.

  

Broadcasting

     KOREA        21.43%       59,000        40,338  

Cheongna Energy Co., Ltd.

  

Generating and distributing vapor and hot/cold water

     KOREA        43.90%       48,353        3,465  

Gangwon Wind Power Co., Ltd. (*2)

  

Power generation

     KOREA        15.00%       5,725        13,220  

Hyundai Green Power Co., Ltd.

  

Power generation

     KOREA        29.00%       88,885        127,160  

Korea Power Exchange (*5)

  

Management of power market and others

     KOREA        100.00%       127,839        251,802  

AMEC Partners Korea Ltd. (*3)

  

Resources development

     KOREA        19.00%       707        209  

Hyundai Energy Co., Ltd. (*8)

  

Power generation

     KOREA        30.66%       71,070        —    

Ecollite Co., Ltd.

  

Artificial light-weight aggregate

     KOREA        36.10%       1,516        —    

Taebaek Wind Power Co., Ltd.

  

Power generation

     KOREA        25.00%       3,810        5,665  

Taeback Guinemi Wind Power Co., Ltd.

  

Power generation

     KOREA        25.00%       3,420        2,569  

Pyeongchang Wind Power Co., Ltd.

  

Power generation

     KOREA        25.00%       3,875        5,419  

Daeryun Power Co., Ltd. (*3)

  

Power generation

     KOREA        9.34%       40,854        26,099  

Changjuk Wind Power Co., Ltd.

  

Power generation

     KOREA        30.00%       3,801        8,086  

KNH Solar Co., Ltd.

  

Power generation

     KOREA        27.00%       1,296        2,337  

SPC Power Corporation

  

Power generation

     PHILIPPINES        38.00%       20,635        57,558  

Gemeng International Energy Co., Ltd.

  

Power generation

     CHINA        34.00%       413,153        647,010  

PT. Cirebon Electric Power

  

Power generation

     INDONESIA        27.50%       40,365        108,628  

KNOC Nigerian East Oil Co., Ltd. (*4)

  

Resources development

     NIGERIA        14.63%       12        —    

KNOC Nigerian West Oil Co., Ltd. (*4)

  

Resources development

     NIGERIA        14.63%       12        —    

PT Wampu Electric Power

  

Power generation

     INDONESIA        46.00%       21,292        31,097  

PT. Bayan Resources TBK

  

Resources development

     INDONESIA        20.00%       615,860        511,646  

S-Power Co., Ltd.

  

Power generation

     KOREA        49.00%       132,300        114,566  

Pioneer Gas Power Limited (*7)

  

Power generation

     INDIA        38.50%       49,831        20,395  

Eurasia Energy Holdings

  

Power generation and resources development

     RUSSIA        40.00%       461        —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

  

Power generation

     LAOS        25.00%       84,374        77,165  

Hadong Mineral Fiber Co., Ltd. (*3)

  

Recycling fly ashes

     KOREA        8.33%       50        —    

Green Biomass Co., Ltd. (*10)

  

Power generation

     KOREA        8.80%       714        115  

PT. Mutiara Jawa

  

Manufacturing and operating

floating coal terminal

     INDONESIA        29.00%       2,978        365  

Samcheok Eco Materials Co., Ltd. (*9)

  

Recycling fly ashes

     KOREA        2.35%       686        —    

Noeul Green Energy Co., Ltd.

  

Power generation

     KOREA        29.00%       1,740        8,015  

Naepo Green Energy Co., Ltd.

  

Power generation

     KOREA        41.67%       29,200        —    

Goseong Green Energy Co., Ltd. (*2)

  

Power generation

     KOREA        1.12%       2,900        2,459  

Gangneung Eco Power Co., Ltd. (*2)

  

Power generation

     KOREA        1.61%       2,900        2,495  

Shin Pyeongtaek Power Co., Ltd.

  

Power generation

     KOREA        40.00%       72,000        67,600  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

  

Power generation

     KOREA        28.00%       194        202  

Dongducheon Dream Power Co., Ltd. (*14)

  

Power generation

     KOREA        33.61%       148,105        76,386  

Jinbhuvish Power Generation Pvt. Ltd. (*2)

  

Power generation

     INDIA        5.16%       9,000        —    

SE Green Energy Co., Ltd.

  

Power generation

     KOREA        47.76%       3,821        3,366  

Daegu Photovoltaic Co., Ltd.

  

Power generation

     KOREA        29.00%       1,230        2,002  

Jeongam Wind Power Co., Ltd.

  

Power generation

     KOREA        40.00%       5,580        4,589  

Korea Power Engineering Service Co., Ltd.

  

Construction and service

     KOREA        29.00%       290        4,333  

Busan Green Energy Co., Ltd.

  

Power generation

     KOREA        29.00%       5,243        12,537  

Gunsan Bio Energy Co., Ltd. (*2)

  

Power generation

     KOREA        18.87%       1,000        —    

Korea Electric Vehicle Charging Service

  

Electric vehicle charge service

     KOREA        28.00%       2,800        1,593  

Ulleungdo Natural Energy Co., Ltd.

  

Renewable power generation

     KOREA        29.85%       8,000        4,628  

Korea Nuclear Partners Co., Ltd.

  

Electric material agency

     KOREA        29.00%       290        175  

Tamra Offshore Wind Power Co., Ltd.

  

Power generation

     KOREA        27.00%       8,910        10,401  

Korea Electric Power Corporation Fund (*11)

  

Developing electric enterprises

     KOREA        98.09%       51,500        47,189  

Energy Infra Asset Management Co., Ltd. (*3)

  

Asset management

     KOREA        9.90%       297        665  

Daegu clean Energy Co., Ltd.

  

Renewable power generation

     KOREA        28.00%       140        17  

YaksuESS Co., Ltd

  

Installing ESS related equipment

     KOREA        29.00%       210        460  

Nepal Water & Energy Development Company Private Limited (*13)

  

Construction and operation of utility plant

     NEPAL        57.67%       33,577        30,961  

Gwangyang Green Energy Co., Ltd.

  

Power generation

     KOREA        20.00%       2,000        1,206  

PND solar., Ltd

  

Power generation

     KOREA        29.00%       1,250        1,020  

Hyundai Eco Energy Co., Ltd. (*2)

  

Power generation

     KOREA        19.00%       3,610        3,388  

YeongGwang Yaksu Wind Electric. Co., Ltd (*2)

  

Power generation

     KOREA        9.63%       533        533  
          

 

 

    

 

 

 
           W 2,338,421        4,064,820  
          

 

 

    

 

 

 

 

80


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(1)

Investments in associates and joint ventures as of December 31, 2018 and 2017 are as follows, continued:

 

In millions of won  

2018

 

Investees

  

Key operation activities

   Location      Percentage of
ownership
    Acquisition
cost
     Book
value
 

<Joint ventures>

             

KEPCO-Uhde Inc. (*6)

  

Power generation

     KOREA        52.80%     W 11,355        188  

Eco Biomass Energy Sdn. Bhd. (*6)

  

Power generation

     MALAYSIA        61.53%       14,439        —    

Shuweihat Asia Power Investment B.V.

  

Holding company

     NETHERLANDS        49.00%       44,405        27,251  

Shuweihat Asia Operation & Maintenance
Company (*6)

  

Maintenance of utility plant

     CAYMAN        55.00%       30        792  

Waterbury Lake Uranium L.P.

  

Resources development

     CANADA        34.07%       26,602        19,032  

ASM-BG Investicii AD

  

Power generation

     BULGARIA        50.00%       16,101        21,379  

RES Technology AD

  

Power generation

     BULGARIA        50.00%       15,595        15,209  

KV Holdings, Inc.

  

Power generation

     PHILIPPINES        40.00%       2,103        1,918  

KEPCO SPC Power Corporation (*6)

  

Construction and operation of utility plant

     PHILIPPINES        75.20%       94,579        208,306  

Gansu Datang Yumen Wind Power Co., Ltd.

  

Power generation

     CHINA        40.00%       16,621        9,981  

Datang Chifeng Renewable Power Co., Ltd.

  

Power generation

     CHINA        40.00%       121,928        166,162  

Datang KEPCO Chaoyang Renewable Power Co., Ltd.

  

Power generation

     CHINA        40.00%       10,858        39,442  

Rabigh Electricity Company

  

Power generation

     SAUDI ARABIA        40.00%       109,743        105,328  

Rabigh Operation & Maintenance Company Limited

  

Maintenance of utility plant

     SAUDI ARABIA        40.00%       70        5,834  

Jamaica Public Service Company Limited

  

Power generation

     JAMAICA        40.00%       301,910        239,632  

KW Nuclear Components Co., Ltd.

  

Manufacturing

     KOREA        45.00%       833        7,708  

Busan Shinho Solar Power Co., Ltd.

  

Power generation

     KOREA        25.00%       2,100        4,761  

GS Donghae Electric Power Co., Ltd.

  

Power generation

     KOREA        34.00%       204,000        240,591  

Global Trade Of Power System Co., Ltd.

  

Exporting products and technology of small or medium business by proxy

     KOREA        29.00%       290        515  

Expressway Solar-light Power Generation Co., Ltd.

  

Power generation

     KOREA        29.00%       1,856        2,676  

Daejung Offshore Wind Power Co., Ltd.

  

Power generation

     KOREA        49.90%       5,190        2,669  

Amman Asia Electric Power Company (*6)

  

Power generation

     JORDAN        60.00%       111,476        177,357  

KAPES, Inc. (*6)

  

R&D

     KOREA        51.00%       5,629        9,079  

Dangjin Eco Power Co., Ltd.

  

Power generation

     KOREA        34.00%       61,540        19,912  

Honam Wind Power Co., Ltd.

  

Power generation

     KOREA        29.00%       3,480        4,860  

Chun-cheon Energy Co., Ltd.

  

Power generation

     KOREA        29.90%       52,700        42,505  

Yeonggwangbaeksu Wind Power Co., Ltd. (*3)

  

Power generation

     KOREA        15.00%       3,000        2,843  

Nghi Son 2 Power LLC

  

Power generation

     VIETNAM        50.00%       2,781        —    

Kelar S.A (*6)

  

Power generation

     CHILE        65.00%       78,060        72,824  

PT. Tanjung Power Indonesia

  

Power generation

     INDONESIA        35.00%       746        7,081  

Incheon New Power Co., Ltd.

  

Power generation

     KOREA        29.00%       461        579  

Seokmun Energy Co., Ltd.

  

Power generation

     KOREA        29.00%       15,370        16,751  

Daehan Wind Power PSC

  

Power generation

     JORDAN        50.00%       3,191        1,632  

Barakah One Company (*12)

  

Power generation

     UAE        18.00%       118        3,807  

Nawah Energy Company (*12)

  

Operation of utility plant

     UAE        18.00%       296        274  

MOMENTUM

  

International thermonuclear experimental reactor construction management

     FRANCE        33.33%       1        582  

Daegu Green Power Co., Ltd.

  

Power generation

     KOREA        29.00%       46,225        41,110  

Yeonggwang Wind Power Co., Ltd.

  

Power generation

     KOREA        41.00%       15,375        15,304  

Chester Solar IV SpA (*6)

  

Power generation

     CHILE        81.82%       1,700        1,851  

Chester Solar V SpA (*6)

  

Power generation

     CHILE        81.82%       525        474  

Diego de Almagro Solar SpA (*6)

  

Power generation

     CHILE        81.82%       2,091        1,663  

South Jamaica Power Company Limited

  

Power generation

     JAMAICA        20.00%       16,231        16,124  

Daesan Green Energy Co., Ltd.

  

Power generation

     KOREA        35.00%       17,850        17,433  

RE Holiday Holdings LLC

  

Power generation

     USA        50.00%       42,948        51,094  

RE Pioneer Holdings LLC

  

Power generation

     USA        50.00%       27,891        38,898  

RE Barren Ridge 1 Holdings LLC

  

Power generation

     USA        50.00%       28,021        41,415  

RE Astoria 2 LandCo LLC

  

Power generation

     USA        50.00%       5,188        5,410  

RE Barren Ridge LandCo LLC

  

Power generation

     USA        50.00%       2,187        1,898  

Laurel SpA (*6)

  

Power generation

     CHILE        81.82%       1,222        921  

KIAMCO KOWEPO Bannerton Hold Co Pty Ltd (*3)

  

Power generation

     AUSTRALIA        12.37%       4,095        3,940  

Chile Solar JV SpA

  

Power generation

     CHILE        50.00%       36,654        36,865  

Taebaek Gadeoksan Wind Power Co., Ltd.

  

Power generation

     KOREA        46.58%       8,500        8,508  

Cheong-Song Noraesan Wind Power Co., Ltd.

  

Power generation

     KOREA        24.76%       2,073        2,073  

Chester Solar I SpA (*6)

  

Power generation

     CHILE        81.82%       1,181        1,181  

Solar Philippines Calatagan Corporation

  

Power generation

     PHILIPPINES        38.00%       47,903        47,903  
          

 

 

    

 

 

 
             1,647,317        1,813,525  
          

 

 

    

 

 

 
           W 3,985,738        5,878,345  
          

 

 

    

 

 

 

 

81


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(1)

Investments in associates and joint ventures as of December 31, 2018 and 2017 are as follows, continued:

 

 

(*1)

The effective percentage of ownership is 21.57% considering treasury stocks.

(*2)

The effective percentage of ownership is less than 20%. However, the Company can exercise significant influence by virtue of its contractual right to appoint directors to the board of directors of the entity, and by strict decision criteria of the Company’s financial and operating policy of the board of directors.

(*3)

The effective percentage of ownership is less than 20%. However, the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity.

(*4)

The effective percentage of ownership is less than 20%. However, the Company can exercise significant influence by virtue of its contractual right to appoint one out of four members of the steering committee of the entity. Moreover, the Company has significant financial transactions, which can affect its influence on the entity.

(*5)

The effective percentage of ownership is 100%. However, the Government regulates the Company’s ability to make operating and financial decisions over the entity, as the Government requires maintaining arms-length transactions between KPX and the Company’s other subsidiaries. The Company can exercise significant influence by its right to nominate directors to the board of directors of the entity.

(*6)

The effective percentage of ownership is more than 50%. However, according to the shareholders’ agreement, all critical financial and operating decisions must be agreed to by all ownership parties. For this reason, the entities are classified as joint ventures.

(*7)

As of reporting date, the annual reporting period of all associates and joint ventures ends on December 31, except for Pioneer Gas Power Limited whose reporting period ends on March 31.

(*8)

As of December 31, 2018, 15.64% of ownership of Hyundai Energy Co., Ltd. is held by NH Power ll Co., Ltd. and NH Bank. According to the shareholders’ agreement reached on March 2011, not only does the Company have a call option to acquire the investment in Hyundai Energy Co., Ltd. from NH Power ll Co., Ltd. and NH Bank with a certain rate of return, NH Power ll Co., Ltd. and NH Bank also have put options to dispose of their investment to the Company. In connection with this agreement, the Company applied the equity method on the investment in Hyundai Energy Co., Ltd. with 46.30% of ownership.

(*9)

The Company’s effective percentage of ownership excluding the redeemable convertible preferred stock is 25.54%.

(*10)

The effective percentage of ownership is less than 20% but the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity and the fact that the dominant portion of the investee’s sales transactions is generated from the Company.

(*11)

The effective percentage of ownership is more than 50% but the Company does not hold control over relevant business while it exercises significant influence by participating in the Investment Decision Committee. For this reason, the entity is classified as an associate.

(*12)

The effective percentage of ownership is less than 20% but the Company has joint control over the entity as decisions on the major activities require the unanimous consent of the parties that collectively control the entity

(*13)

The effective percentage of ownership is more than 50% but the Company does not hold control over the entity according to the shareholders’ agreement. For this reason, the entity is classified as an associate.

(*14)

The effective percentage of ownership is 34.01% considering redeemable convertible preferred stock.

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(1)

Investments in associates and joint ventures as of December 31, 2018 and 2017 are as follows, continued:

 

In millions of won       

2017

 

Investees

  

Key operation activities

  

Location

   Percentage of
ownership
    Acquisition
cost
     Book
value
 

<Associates>

             

Korea Gas Corporation (*1)

  

Importing and wholesaling LNG

   KOREA      20.47   W 94,500        1,618,868  

Korea Electric Power Industrial Development Co., Ltd.

  

Electricity metering and others

   KOREA      29.00     4,727        21,838  

YTN Co., Ltd.

  

Broadcasting

   KOREA      21.43     59,000        40,606  

Cheongna Energy Co., Ltd.

  

Generating and distributing vapor and hot/cold water

   KOREA      43.90     48,353        8,337  

Gangwon Wind Power Co., Ltd. (*2)

  

Power generation

   KOREA      15.00     5,725        13,855  

Hyundai Green Power Co., Ltd.

  

Power generation

   KOREA      29.00     88,885        114,806  

Korea Power Exchange (*5)

  

Management of power market and others

   KOREA      100.00     127,839        237,631  

AMEC Partners Korea Ltd. (*3)

  

Resources development

   KOREA      19.00     707        215  

Hyundai Energy Co., Ltd. (*8)

  

Power generation

   KOREA      30.66     71,070        —    

Ecollite Co., Ltd.

  

Artificial light-weight aggregate

   KOREA      36.10     1,516        —    

Taebaek Wind Power Co., Ltd.

  

Power generation

   KOREA      25.00     3,810        5,319  

Taeback Guinemi Wind Power Co., Ltd.

  

Power generation

   KOREA      25.00     3,420        3,089  

Pyeongchang Wind Power Co., Ltd.

  

Power generation

   KOREA      25.00     3,875        4,136  

Daeryun Power Co., Ltd. (*3, 9)

  

Power generation

   KOREA      13.13     25,477        25,113  

Changjuk Wind Power Co., Ltd.

  

Power generation

   KOREA      30.00     3,801        7,515  

KNH Solar Co., Ltd.

  

Power generation

   KOREA      27.00     1,296        2,218  

SPC Power Corporation

  

Power generation

   PHILIPPINES      38.00     20,635        52,283  

Gemeng International Energy Co., Ltd.

  

Power generation

   CHINA      34.00     413,153        649,973  

PT. Cirebon Electric Power

  

Power generation

   INDONESIA      27.50     40,365        97,410  

KNOC Nigerian East Oil Co., Ltd. (*4)

  

Resources development

   NIGERIA      14.63     12        —    

KNOC Nigerian West Oil Co., Ltd. (*4)

  

Resources development

   NIGERIA      14.63     12        —    

PT Wampu Electric Power

  

Power generation

   INDONESIA      46.00     21,292        29,403  

PT. Bayan Resources TBK

  

Resources development

   INDONESIA      20.00     615,860        451,831  

S-Power Co., Ltd.

  

Power generation

   KOREA      49.00     132,300        116,945  

Pioneer Gas Power Limited (*7)

  

Power generation

   INDIA      38.50     49,831        38,659  

Eurasia Energy Holdings

  

Power generation and resources development

   RUSSIA      40.00     461        —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

  

Power generation

   LAOS      25.00     71,481        61,779  

Hadong Mineral Fiber Co., Ltd. (*3)

  

Recycling fly ashes

   KOREA      8.33     50        —    

Green Biomass Co., Ltd. (*11, 14)

  

Power generation

   KOREA      8.80     714        208  

PT. Mutiara Jawa

  

Manufacturing and operating floating coal terminal

   INDONESIA      29.00     2,978        —    

Samcheok Eco Materials Co., Ltd. (*10)

  

Recycling fly ashes

   KOREA      2.35     686        —    

Noeul Green Energy Co., Ltd.

  

Power generation

   KOREA      29.00     1,740        2,067  

Naepo Green Energy Co., Ltd.

  

Power generation

   KOREA      41.67     29,200        20,598  

Goseong Green Energy Co., Ltd. (*2)

  

Power generation

   KOREA      1.12     2,900        2,597  

Gangneung Eco Power Co., Ltd. (*2)

  

Power generation

   KOREA      1.61     2,900        2,583  

Shin Pyeongtaek Power Co., Ltd.

  

Power generation

   KOREA      40.00     43,920        34,903  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

  

Power generation

   KOREA      28.00     194        187  

Dongducheon Dream Power Co., Ltd.

  

Power generation

   KOREA      33.61     111,134        53,233  

Jinbhuvish Power Generation Pvt.
Ltd. (*2)

  

Power generation

   INDIA      5.16     9,000        —    

SE Green Energy Co., Ltd.

  

Power generation

   KOREA      47.76     3,821        3,476  

Daegu Photovoltaic Co., Ltd.

  

Power generation

   KOREA      29.00     1,230        1,718  

Jeongam Wind Power Co., Ltd.

  

Power generation

   KOREA      40.00     5,580        3,763  

Korea Power Engineering Service Co., Ltd.

  

Construction and service

   KOREA      29.00     290        3,659  

Busan Green Energy Co., Ltd.

  

Power generation

   KOREA      29.00     5,243        7,363  

Gunsan Bio Energy Co., Ltd. (formerly, Jungbu

Bio Energy Co., Ltd.) (*2)

  

Power generation

   KOREA      18.87     1,000        —    

Korea Electric Vehicle Charging Service

  

Electric vehicle charge service

   KOREA      28.00     2,604        1,749  

Ulleungdo Natural Energy Co., Ltd.

  

Renewable power generation

   KOREA      29.85     8,000        6,370  

Korea Nuclear Partners Co., Ltd.

  

Electric material agency

   KOREA      29.00     290        383  

Tamra Offshore Wind Power Co., Ltd.

  

Power generation

   KOREA      27.00     8,910        8,560  

Korea Electric Power Corporation Fund (*12)

  

Developing electric enterprises

   KOREA      98.09     51,500        47,974  

Energy Infra Asset Management Co., Ltd. (*3)

  

Asset management

   KOREA      9.90     297        476  

Daegu clean Energy Co., Ltd.

  

Renewable power generation

   KOREA      28.00     140        11  

YaksuESS Co., Ltd

  

Installing ESS related equipment

   KOREA      29.00     210        194  

Nepal Water & Energy Development Company Private Limited (*15)

  

Construction and operation of utility plant

   NEPAL      62.13     33,577        30,498  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(1)

Investments in associates and joint ventures as of December 31, 2018 and 2017 are as follows, continued:

 

In millions of won       

2017

 

Investees

  

Key operation activities

  

Location

   Percentage of
ownership
    Acquisition
cost
     Book
value
 

Gwangyang Green Energy Co., Ltd.

  

Power generation

   KOREA      20.00   W 2,000        1,772  

PND solar., Ltd

  

Power generation

   KOREA      29.00     1,250        1,250  
          

 

 

    

 

 

 
             2,240,761        3,837,421  
          

 

 

    

 

 

 

<Joint ventures>

             

KEPCO-Uhde Inc. (*6)

  

Power generation

   KOREA      52.80     11,355        258  

Eco Biomass Energy Sdn. Bhd. (*6)

  

Power generation

   MALAYSIA      61.53     14,439        —    

Datang Chaoyang Renewable Power Co., Ltd.

  

Power generation

   CHINA      40.00     27,660        27,262  

Shuweihat Asia Power Investment B.V.

  

Holding company

   NETHERLANDS      49.00     46,037        15,675  

Shuweihat Asia Operation & Maintenance Company (*6)

  

Maintenance of utility plant

   CAYMAN      55.00     30        663  

Waterbury Lake Uranium L.P.

  

Resources development

   CANADA      35.76     26,602        19,781  

ASM-BG Investicii AD

  

Power generation

   BULGARIA      50.00     16,101        21,202  

RES Technology AD

  

Power generation

   BULGARIA      50.00     15,595        14,375  

KV Holdings, Inc.

  

Power generation

   PHILIPPINES      40.00     2,103        1,918  

KEPCO SPC Power Corporation (*6)

  

Construction and operation of utility plant

   PHILIPPINES      75.20     94,579        217,094  

Gansu Datang Yumen Wind Power Co., Ltd.

  

Power generation

   CHINA      40.00     16,621        10,840  

Datang Chifeng Renewable Power Co., Ltd.

  

Power generation

   CHINA      40.00     121,928        171,055  

Datang KEPCO Chaoyang Renewable Power

Co., Ltd.

  

Power generation

   CHINA      40.00     10,858        11,060  

Rabigh Electricity Company

  

Power generation

   SAUDI ARABIA      40.00     109,743        99,356  

Rabigh Operation & Maintenance Company Limited

  

Maintenance of utility plant

   SAUDI ARABIA      40.00     70        3,987  

Jamaica Public Service Company Limited

  

Power generation

   JAMAICA      40.00     301,910        221,153  

KW Nuclear Components Co., Ltd.

  

Manufacturing

   KOREA      45.00     833        6,703  

Busan Shinho Solar Power Co., Ltd.

  

Power generation

   KOREA      25.00     2,100        4,346  

GS Donghae Electric Power Co., Ltd.

  

Power generation

   KOREA      34.00     204,000        220,727  

Global Trade Of Power System Co., Ltd.

  

Exporting products and technology of small or medium business by proxy

   KOREA      29.00     290        577  

Expressway Solar-light Power Generation Co., Ltd.

  

Power generation

   KOREA      29.00     1,856        2,463  

KODE NOVUS I LLC

  

Power generation

   USA      50.00     19,213        —    

KODE NOVUS II LLC

  

Power generation

   USA      50.00     12,756        —    

Daejung Offshore Wind Power Co., Ltd.

  

Power generation

   KOREA      49.90     5,190        2,969  

Amman Asia Electric Power Company (*6)

  

Power generation

   JORDAN      60.00     111,476        145,676  

KAPES, Inc. (*6)

  

R&D

   KOREA      51.00     5,629        7,476  

Dangjin Eco Power Co., Ltd.

  

Power generation

   KOREA      34.00     61,540        57,928  

Honam Wind Power Co., Ltd.

  

Power generation

   KOREA      29.00     3,480        4,302  

Chun-cheon Energy Co., Ltd.

  

Power generation

   KOREA      29.90     52,700        48,118  

Yeonggwangbaeksu Wind Power Co., Ltd. (*3)

  

Power generation

   KOREA      15.00     3,000        2,734  

Nghi Son 2 Power LLC

  

Power generation

   VIETNAM      50.00     2,781        183  

Kelar S.A (*6)

  

Power generation

   CHILE      65.00     77,220        67,233  

PT. Tanjung Power Indonesia

  

Power generation

   INDONESIA      35.00     746        1,776  

Incheon New Power Co., Ltd.

  

Power generation

   KOREA      29.00     461        619  

Seokmun Energy Co., Ltd.

  

Power generation

   KOREA      29.00     15,370        13,786  

Daehan Wind Power PSC

  

Power generation

   JORDAN      50.00     285        —    

Barakah One Company (*13)

  

Power generation

   UAE      18.00     118        626  

Nawah Energy Company (*13)

  

Operation of utility plant

   UAE      18.00     296        258  

MOMENTUM

  

International thermonuclear experimental reactor construction management

   FRANCE      33.33     1        391  

Daegu Green Power Co., Ltd.

  

Power generation

   KOREA      29.00     46,225        42,391  

Yeonggwang Wind Power Co., Ltd.

  

Power generation

   KOREA      41.00     15,375        15,294  

Chester Solar IV SpA (*6)

  

Power generation

   CHILE      81.82     1,700        1,700  

Chester Solar V SpA (*6)

  

Power generation

   CHILE      81.82     525        525  

Diego de Almagro Solar SpA (*6)

  

Power generation

   CHILE      81.82     2,091        2,091  

South Jamaica Power Company Limited

  

Power generation

   JAMAICA      20.00     7,090        6,704  
          

 

 

    

 

 

 
             1,469,978        1,493,275  
          

 

 

    

 

 

 
                     W3,710,739      5,330,696  
          

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(1)

Investments in associates and joint ventures as of December 31, 2018 and 2017 are as follows, continued:

 

(*1)

The effective percentage of ownership is 21.57% considering treasury stocks.

(*2)

The effective percentage of ownership is less than 20%. However, the Company can exercise significant influence by virtue of its contractual right to appoint directors to the board of directors of the entity, and by strict decision criteria of the Company’s financial and operating policy of the board of directors.

(*3)

The effective percentage of ownership is less than 20%. However, the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity.

(*4)

The effective percentage of ownership is less than 20%. However, the Company can exercise significant influence by virtue of its contractual right to appoint one out of four members of the steering committee of the entity. Moreover, the Company has significant financial transactions, which can affect its influence on the entity.

(*5)

The effective percentage of ownership is 100%. However, the Government regulates the Company’s ability to make operating and financial decisions over the entity, as the Government requires maintaining arms-length transactions between KPX and the Company’s other subsidiaries. The Company can exercise significant influence by its right to nominate directors to the board of directors of the entity.

(*6)

The effective percentage of ownership is more than 100%. However, according to the shareholders’ agreement, all critical financial and operating decisions must be agreed to by all ownership parties. For these reasons, the entities are classified as joint ventures.

(*7)

As of reporting date, the annual reporting period of all associates and joint ventures ends on December 31, except for Pioneer Gas Power Limited whose reporting period ends on March 31.

(*8)

As of December 31, 2017, 15.64% of ownership of Hyundai Energy Co., Ltd. is held by NH Power ll Co., Ltd. and NH Bank. According to the shareholders’ agreement reached on March 2011, not only does the Company have a call option to acquire the investment in Hyundai Energy Co., Ltd. from NH Power ll Co., Ltd. and NH Bank with a certain rate of return, NH Power ll Co., Ltd. and NH Bank also have put options to dispose of their investment to the Company. In connection with this agreement, the Company applied the equity method on the investment in Hyundai Energy Co., Ltd. with 46.30% of ownership.

(*9)

The effective percentage of ownership is 19.45% considering stock purchase options.

(*10)

The Company’s effective percentage of ownership excluding the redeemable convertible preferred stock is 25.54%.

(*11)

The effective percentage of ownership is less than 20% but the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity and the fact that the dominant portion of the investee’s sales transactions is generated from the Company.

(*12)

The effective percentage of ownership is more than 50% but the Company does not hold control over relevant business while it exercises significant influence by participating in the Investment Decision Committee. For this reason, the entity is classified as an associate.

(*13)

The effective percentage of ownership is less than 20% but the Company has joint control over the entity as decisions on the major activities require the unanimous consent of the parties that collectively control the entity

(*14)

The percentage of ownership decreased since the Company did not participate in the capital increase of Green Biomass Co., Ltd. during the period.

(*15)

The effective percentage of ownership is more than 50% but the Company does not hold control over the entity according to the shareholders’ agreement. For this reason, the entity is classified as an associate.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

 

(2)

The fair value of associates which are actively traded on an open market and have a readily available market value

as of December 31, 2018 and 2017 are as follows:

 

In millions of won              

Investees

   2018      2017  

<Associates>

     

Korea Electric Power Industrial Development Co., Ltd.

   W 33,609        38,667  

Korea Gas Corporation

     910,980        804,195  

YTN Co., Ltd.

     18,900        18,855  

SPC Power Corporation

     72,710        72,616  

PT. Bayan Resources TBK

     1,017,601        558,267  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows :

 

In millions of won       

2018

 

Investees

   Beginning
balance
     Acquisition      Disposal      Dividends
received
    Share of
income
(loss)
    Other
comprehensive

income
(loss)
    Others     Ending
balance
 

<Associates>

                   

Korea Gas Corporation

   W 1,618,868        —          —          —         107,952       (24,843     (129     1,701,848  

Korea Electric Power Industrial Development Co., Ltd.

     21,838        —          —          (1,872     2,584       (102     (610     21,838  

YTN Co., Ltd.

     40,606        —          —          (180     545       (186     (447     40,338  

Cheongna Energy Co., Ltd.

     8,337        —          —          —         (4,872     —         —         3,465  

Gangwon Wind Power Co., Ltd.

     13,855        —          —          (2,272     1,637       —         —         13,220  

Hyundai Green Power Co., Ltd.

     114,806        —          —          (8,889     21,243       —         —         127,160  

Korea Power Exchange

     237,631        —          —          —         16,031       —         (1,860     251,802  

AMEC Partners Korea Ltd.

     215        —          —          —         (6     —         —         209  

Hyundai Energy Co., Ltd.

     —          —          —          —         —         —         —         —    

Ecollite Co., Ltd.

     —          —          —          —         —         —         —         —    

Taebaek Wind Power Co., Ltd.

     5,319        —          —          (196     542       —         —         5,665  

Taeback Guinemi Wind Power Co., Ltd.

     3,089        —          —          —         (520     —         —         2,569  

Pyeongchang Wind Power Co., Ltd.

     4,136        —          —          —         1,283       —         —         5,419  

Daeryun Power Co., Ltd. (*5)

     25,113        —          —          —         (189     184       991       26,099  

Changjuk Wind Power Co., Ltd.

     7,515        —          —          (416     987       —         —         8,086  

KNH Solar Co., Ltd.

     2,218        —          —          —         119       —         —         2,337  

SPC Power Corporation

     52,283        —          —          (9,549     4,235       10,578       11       57,558  

Gemeng International Energy Co., Ltd.

     649,973        —          —          (11,246     15,156       (6,873     —         647,010  

PT. Cirebon Electric Power

     97,410        —          —          (4,432     9,385       6,265       —         108,628  

KNOC Nigerian East Oil Co., Ltd.

     —          —          —          —         2,615       (471     (2,144     —    

KNOC Nigerian West Oil Co., Ltd.

     —          —          —          —         2,342       (414     (1,928     —    

PT Wampu Electric Power

     29,403        —          —          —         408       1,286       —         31,097  

PT. Bayan Resources TBK

     451,831        —          —          (33,651     74,776       18,690       —         511,646  

S-Power Co., Ltd.

     116,945        —          —          —         (2,326     —         (53     114,566  

Pioneer Gas Power Limited

     38,659        —          —          —         (17,684     (580     —         20,395  

Eurasia Energy Holdings

     —          —          —          —         —         —         —         —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

     61,779        12,893        —          —         (479     2,972       —         77,165  

Hadong Mineral Fiber Co., Ltd.

     —          —          —          —         —         —         —         —    

Green Biomass Co., Ltd.

     208        —          —          —         (93     —         —         115  

PT. Mutiara Jawa

     —          —          —          —         349       16       —         365  

Samcheok Eco Materials Co., Ltd.

     —          —          —          —         —         —         —         —    

Noeul Green Energy Co., Ltd.

     2,067        —          —          —         5,687       —         261       8,015  

Naepo Green Energy Co., Ltd. (*4)

     20,598        —          —          —         (13,511     —         (7,087     —    

Goseong Green Energy Co., Ltd.

     2,597        —          —          —         (138     —         —         2,459  

Gangneung Eco Power Co., Ltd.

     2,583        —          —          —         (88     —         —         2,495  

Shin Pyeongtaek Power Co., Ltd.

     34,903        28,080        —          —         (2,946     6,673       890       67,600  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

     187        —          —          —         15       —         —         202  

Dongducheon Dream Power Co., Ltd.

     53,233        36,971        —          —         (13,824     —         6       76,386  

Jinbhuvish Power Generation Pvt. Ltd.

     —          —          —          —         —         —         —         —    

SE Green Energy Co., Ltd.

     3,476        —          —          —         (110     —         —         3,366  

Daegu Photovoltaic Co., Ltd.

     1,718        —          —          (128     412       —         —         2,002  

Jeongam Wind Power Co., Ltd.

     3,763        —          —          —         826       —         —         4,589  

Korea Power Engineering Service Co., Ltd.

     3,659        —          —          (218     929       —         (37     4,333  

Busan Green Energy Co., Ltd.

     7,363        —          —          —         5,037       —         137       12,537  

Gunsan Bio Energy Co., Ltd.

     —          —          —          —         —         —         —         —    

Korea Electric Vehicle Charging Service

     1,749        196        —          —         (352     —         —         1,593  

Ulleungdo Natural Energy Co., Ltd.

     6,370        —          —          —         (1,749     —         7       4,628  

Korea Nuclear Partners Co., Ltd.

     383        —          —          —         (208     —         —         175  

Tamra Offshore Wind Power Co., Ltd.

     8,560        —          —          —         1,841       —         —         10,401  

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won       

2018

 

Investees

   Beginning
balance
     Acquisition      Disposal     Dividends
received
    Share of
income
(loss)
    Other
comprehensive

income
(loss)
    Others     Ending
balance
 

Korea Electric Power Corporation Fund

   W 47,974        —          —         —         (505     (280     —         47,189  

Energy Infra Asset Management Co., Ltd.

     476        —          —         —         189       —         —         665  

Daegu clean Energy Co., Ltd.

     11        —          —         —         6       —         —         17  

YaksuESS Co., Ltd

     194        —          —         —         266       —         —         460  

Nepal Water & Energy Development Company Private Limited

     30,498        —          —         —         (770     1,233       —         30,961  

Gwangyang Green Energy Co., Ltd.

     1,772        —          —         —         (566           —         1,206  

PND solar., Ltd

     1,250        —          —         —         (230     —               1,020  

Hyundai Eco Energy Co., Ltd.

     —          3,610        —         —         (222     —           3,388  

YeongGwang Yaksu Wind Electric. Co., Ltd

     —          533        —         —         —         —         —         533  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     3,837,421        82,283        —         (73,049     216,009       14,148       (11,992     4,064,820  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

<Joint ventures>

                  

KEPCO-Uhde Inc.

     258        —          —         —         (70     —         —         188  

Eco Biomass Energy Sdn. Bhd.

     —          —          —         —         —         —         —         —    

Datang Chaoyang Renewable Power Co.,
Ltd. (*3)

     27,262        —          —         —         743       1,009       (29,014     —    

Shuweihat Asia Power Investment B.V.

     15,675        —          (1,632     (499     3,075       10,632       —         27,251  

Shuweihat Asia Operation & Maintenance Company

     663        —          —         (859     946       42       —         792  

Waterbury Lake Uranium L.P.

     19,781        —          —         —         (3     (746     —         19,032  

ASM-BG Investicii AD

     21,202        —          —         (1,039     2,236       (1,020     —         21,379  

RES Technology AD

     14,375        —          —         —         812       22       —         15,209  

KV Holdings, Inc.

     1,918        —          —         (735     772       (37     —         1,918  

KEPCO SPC Power Corporation

     217,094        —          —         (41,601     44,909       (12,092     (4     208,306  

Gansu Datang Yumen Wind Power Co., Ltd.

     10,840        —          —         —         (818     (41     —         9,981  

Datang Chifeng Renewable Power Co., Ltd.

     171,055        —          —         (18,859     14,808       (842     —         166,162  

Datang KEPCO Chaoyang Renewable Power Co., Ltd. (*3)

     11,060        —          —         —         582       (1,214     29,014       39,442  

Rabigh Electricity Company

     99,356        —          —         (29,067     13,305       22,371       (637     105,328  

Rabigh Operation & Maintenance Company Limited

     3,987        —          —         (1,147     2,820       174       —         5,834  

Jamaica Public Service Company Limited

     221,153        —          —         (4,472     13,099       9,852       —         239,632  

KW Nuclear Components Co., Ltd.

     6,703        —          —         (208     1,213       —         —         7,708  

Busan Shinho Solar Power Co., Ltd.

     4,346        —          —         (340     755       —         —         4,761  

GS Donghae Electric Power Co., Ltd.

     220,727        —          —         —         20,061       —         (197     240,591  

Global Trade Of Power System Co., Ltd.

     577        —          —         —         (62     —         —         515  

Expressway Solar-light Power Generation Co., Ltd.

     2,463        —          —         —         213       —         —         2,676  

KODE NOVUS I LLC (*1)

     —          —          —         —         —         1,374       (1,374     —    

KODE NOVUS II LLC (*2)

     —          —          —         —         —         810       (810     —    

Daejung Offshore Wind Power Co., Ltd.

     2,969        —          —         —         (300     —         —         2,669  

Amman Asia Electric Power Company

     145,676        —          —         —         19,604       12,077       —         177,357  

KAPES, Inc.

     7,476        —          —         —         1,543       —         60       9,079  

Dangjin Eco Power Co., Ltd.

     57,928        —          —         —         (38,042     (65     91       19,912  

Honam Wind Power Co., Ltd.

     4,302        —          —         (348     906       —         —         4,860  

Chun-cheon Energy Co., Ltd.

     48,118        —          —         —         (5,613     —         —         42,505  

 

88


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won  

2018

 

Investees

   Beginning
balance
     Acquisition      Disposal     Dividends
received
    Share of
income
(loss)
    Other
comprehensive
income (loss)
    Others     Ending
balance
 

Yeonggwangbaeksu Wind Power Co., Ltd.

   W 2,734        —          —         —         109       —         —         2,843  

Nghi Son 2 Power LLC

     183        —          —         —         2,657       (2,840     —         —    

Kelar S.A

     67,233        —          —         —         2,732       2,859       —         72,824  

PT. Tanjung Power Indonesia

     1,776        —          —         —         3,373       1,928       4       7,081  

Incheon New Power Co., Ltd.

     619        —          —         (41     1       —         —         579  

Seokmun Energy Co., Ltd.

     13,786        —          —         —         2,965       —         —         16,751  

Daehan Wind Power PSC

     —          2,288        —         —         (1,311     37       618       1,632  

Barakah One Company

     626        —          —         —         2,162       1,019       —         3,807  

Nawah Energy Company

     258        —          —         —         4       12       —         274  

MOMENTUM

     391        —          —         —         195       (4     —         582  

Daegu Green Power Co., Ltd.

     42,391        —          —         —         (1,283     —         2       41,110  

Yeonggwang Wind Power Co., Ltd.

     15,294        —          —         —         10       —         —         15,304  

Chester Solar IV SpA

     1,700        —          —         —         301       (150     —         1,851  

Chester Solar V SpA

     525        —          —         —         (21     (30     —         474  

Diego de Almagro Solar SpA

     2,091        —          —         —         (299     (129     —         1,663  

South Jamaica Power Company Limited

     6,704        9,141        —         —         (184     463       —         16,124  

Daesan Green Energy Co., Ltd.

     —          17,850        —         —         (417     —         —         17,433  

RE Holiday Holdings LLC

     —          42,948        —         (112     8,055       203       —         51,094  

RE Pioneer Holdings LLC

     —          27,891        —         (979     11,585       401       —         38,898  

RE Barren Ridge 1 Holdings LLC

     —          28,021        —         (1,114     13,994       514       —         41,415  

RE Astoria 2 LandCo LLC

     —          5,188        —         (504     866       (140     —         5,410  

RE Barren Ridge LandCo LLC

     —          2,187        —         (202     (25     (62     —         1,898  

Laurel SpA

     —          1,222        —         —         (309     8       —         921  

KIAMCO KOWEPO Bannerton Hold Co Pty Ltd

     —          4,095        —         —         (23     (132     —         3,940  

Chile Solar JV SpA

     —          36,654        —         —         4,453       (5,278     1,036       36,865  

Taebaek Gadeoksan Wind Power Co., Ltd.

     —          8,500        —         —         8       —         —         8,508  

Cheong-Song Noraesan Wind Power Co., Ltd.

     —          2,073        —         —         —         —         —         2,073  

Chester Solar I SpA (*6)

     —          1,181        —         —         —         —         —         1,181  

Solar Philippines Calatagan Corporation

     —          47,903        —         —         —         —         —         47,903  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     1,493,275        237,142        (1,632     (102,126     147,092       40,985       (1,211     1,813,525  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 5,330,696        319,425        (1,632     (175,175     363,101       55,133       (13,203     5,878,345  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

The Company reclassified its shares of KODE NOVUS I LLC to financial assets at FVOCI during the year ended December 31, 2018 due to non-participation of capital increase that resulted in loss of significant influence.

(*2)

The Company sold all of its shares of KODE NOVUS II LLC during the year ended December 31, 2018.

(*3)

Datang Chaoyang Renewable Power Co., Ltd. was merged with Datang KEPCO Chaoyang Renewable Power Co., Ltd. during the year ended December 31, 2018.

(*4)

It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W7,087 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2018.

(*5)

It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W820 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2018.

 

89


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won       

2017

 

Investees

   Beginning
balance
     Acquisition      Disposal     Dividends
received
    Share of
income
(loss)
    Other
comprehensive
income
(loss)
    Others     Ending
balance
 

<Associates>

                  

Korea Gas Corporation

   W 1,933,877        —          —         —         (242,232     (72,648     (129     1,618,868  

Korea Electric Power Industrial Development

Co., Ltd.

     20,475        —          —         (2,061     3,428       102       (106     21,838  

YTN Co., Ltd.

     38,156        —          —         (135     1,095       929       561       40,606  

Cheongna Energy Co., Ltd.

     12,373        —          —         —         (4,036     —         —         8,337  

Gangwon Wind Power Co., Ltd.

     13,069        —          —         (852     1,638       —         —         13,855  

Hyundai Green Power Co., Ltd.

     115,998        —          —         (8,889     7,697       —         —         114,806  

Korea Power Exchange

     223,238        —          —         —         8,831       —         5,562       237,631  

AMEC Partners Korea Ltd.

     225        —          —         —         (10     —         —         215  

Hyundai Energy Co., Ltd.

     1,031        —          —         —         (3,498     —         2,467       —    

Ecollite Co., Ltd.

     —          —          —         —         —         —         —         —    

Taebaek Wind Power Co., Ltd.

     4,750        —          —         —         569       —         —         5,319  

Taeback Guinemi Wind Power Co., Ltd.

     3,131        —          —         —         (42     —         —         3,089  

Pyeongchang Wind Power Co., Ltd.

     3,383        —          —         —         753       —         —         4,136  

Daeryun Power Co., Ltd.

     29,873        —          —         —         (4,762     —         2       25,113  

Changjuk Wind Power Co., Ltd.

     6,930        —          —         (111     696       —         —         7,515  

KNH Solar Co., Ltd.

     2,073        —          —         —         145       —         —         2,218  

SPC Power Corporation

     56,818        —          —         (5,562     4,310       (3,276     (7     52,283  

Gemeng International Energy Co., Ltd.

     680,065        —          —         (13,365     6,953       (23,680     —         649,973  

PT. Cirebon Electric Power

     96,658        —          —         (550     10,685       2,232       (11,615     97,410  

KNOC Nigerian East Oil Co., Ltd.

     —          —          —         —         (1,914     1,536       378       —    

KNOC Nigerian West Oil Co., Ltd.

     —          —          —         —         (1,712     1,407       305       —    

PT Wampu Electric Power

     23,188        —          —         —         9,336       —         (3,121     29,403  

PT. Bayan Resources TBK

     402,667        —          —         —         34,122       14,982       60       451,831  

S-Power Co., Ltd.

     123,912        —          —         —         (6,982     —         15       116,945  

Pioneer Gas Power Limited

     50,740        —          —         —         (11,119     (1,238     276       38,659  

Eurasia Energy Holdings

     —          —          —         —         —         —         —         —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

     51,544        22,362        —         —         (4,264     (7,863     —         61,779  

Hadong Mineral Fiber Co., Ltd.

     —          —          —         —         (31     —         31       —    

Green Biomass Co., Ltd.

     47        —          —         —         (112     —         273       208  

PT. Mutiara Jawa

     —          —          —         —         —         —         —         —    

Samcheok Eco Materials Co., Ltd.

     —          —          —         —         —         —         —         —    

Noeul Green Energy Co., Ltd.

     1,217        —          —         —         850       —         —         2,067  

Naepo Green Energy Co., Ltd. (*2)

     25,438        —          —         —         (1,400     —         (3,440     20,598  

Goseong Green Energy Co., Ltd.

     2,663        —          —         —         (66     —         —         2,597  

Gangneung Eco Power Co., Ltd.

     2,646        —          —         —         (63     —         —         2,583  

Shin Pyeongtaek Power Co., Ltd.

     —          43,880        —         —         (10,998     (3,617     5,638       34,903  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

     181        —          —         —         6       —         —         187  

DS POWER Co., Ltd. (*4)

     7,190        —          —         —         (1,321     —         (5,869     —    

Dongducheon Dream Power Co., Ltd. (*1,3)

     46,876        —          —         —         (10,980     —         17,337       53,233  

KS Solar Co., Ltd.

     604        —          (613     —         —         9       —         —    

Jinbhuvish Power Generation Pvt. Ltd.

     —          —          —         —         —         —         —         —    

SE Green Energy Co., Ltd.

     3,525        —          —         —         (49     —         —         3,476  

Daegu Photovoltaic Co., Ltd.

     1,700        —          —         (349     367       —         —         1,718  

Jeongam Wind Power Co., Ltd.

     4,000        —          —         —         (237     —         —         3,763  

Korea Power Engineering Service Co., Ltd.

     2,810        —          —         (191     1,030       —         10       3,659  

Busan Green Energy Co., Ltd.

     13,803        —          (9,320     —         2,884       —         (4     7,363  

Gunsan Bio Energy Co., Ltd. (formerly, Jungbu Bio Energy Co., Ltd.)

     —          —          —         —         —         —         —         —    

Korea Electric Vehicle Charging Service

     1,103        1,008        —         —         (362     —         —         1,749  

Ulleungdo Natural Energy Co., Ltd.

     6,894        —          —         —         (524     —         —         6,370  

Korea Nuclear Partners Co., Ltd.

     248        —          —         —         135       —         —         383  

Tamra Offshore Wind Power Co., Ltd.

     7,015        —          —         —         1,545       —         —         8,560  

 

90


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won       

2017

 

Investees

   Beginning
balance
     Acquisition      Disposal     Dividends
received
    Share of
income
(loss)
    Other
comprehensive
income (loss)
    Others     Ending
balance
 

Korea Electric Power Corporation Fund

   W 50,856        —          —         —         (2,171     (711     —         47,974  

Energy Infra Asset Management Co., Ltd.

     259        —          —         —         217       —         —         476  

Daegu clean Energy Co., Ltd.

     140        —          —         —         (129     —         —         11  

YaksuESS Co., Ltd

     196        —          —         —         (2     —         —         194  

Nepal Water & Energy Development Company

Private Limited

     18,667        15,009        —         —         (677     (2,501     —         30,498  

Gwangyang Green Energy Co., Ltd.

     —          2,000        —         —         (228     —         —         1,772  

PND solar., Ltd

     —          1,250        —         —         —         —         —         1,250  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     4,092,252        85,509        (9,933     (32,065     (212,629     (94,337     8,624       3,837,421  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

<Joint ventures>

                  

KEPCO-Uhde Inc.

     301        —          —         —         (43     —         —         258  

Eco Biomass Energy Sdn. Bhd.

     —          —          —         —         —         —         —         —    

Datang Chaoyang Renewable Power Co., Ltd.

     28,239        —          —         (839     840       (978     —         27,262  

Shuweihat Asia Power Investment B.V.

     —          —          —         (1,707     4,275       12,457       650       15,675  

Shuweihat Asia Operation & Maintenance Company

     450        —          —         (770     1,055       (172     100       663  

Waterbury Lake Uranium L.P.

     21,314        —          —         —         (23     (949     (561     19,781  

ASM-BG Investicii AD

     21,488        —          —         (946     (150     810       —         21,202  

RES Technology AD

     13,582        —          —         —         1,053       (260     —         14,375  

KV Holdings, Inc.

     2,098        —          —         —         61       (241     —         1,918  

KEPCO SPC Power Corporation

     245,367        —          —         (37,443     42,359       (33,230     41       217,094  

Canada Korea Uranium Limited partnership

     —          —          —         —         —         —         —         —    

Gansu Datang Yumen Wind Power Co., Ltd.

     12,821        —          —         —         (1,299     (682     —         10,840  

Datang Chifeng Renewable Power Co., Ltd.

     166,535        —          —         —         14,079       (9,559     —         171,055  

Datang KEPCO Chaoyang Renewable Power Co., Ltd.

     10,843        —          —         —         837       (620     —         11,060  

Rabigh Electricity Company

     97,802        —          —         (18,112     35,769       (15,227     (876     99,356  

Rabigh Operation & Maintenance Company Limited

     4,427        —          —         (2,130     2,236       (546     —         3,987  

Jamaica Public Service Company Limited

     249,453        —          —         —         —         (28,300     —         221,153  

KW Nuclear Components Co., Ltd.

     7,133        —          —         (208     (222     —         —         6,703  

Busan Shinho Solar Power Co., Ltd.

     3,814        —          —         (63     595       —         —         4,346  

GS Donghae Electric Power Co., Ltd.

     205,948        —          —         —         14,714       —         65       220,727  

Global Trade Of Power System Co., Ltd.

     477        —          —         —         100       —         —         577  

Expressway Solar-light Power Generation Co., Ltd.

     2,343        —          —         —         120       —         —         2,463  

KODE NOVUS I LLC

     —          —          —         —         —         —         —         —    

KODE NOVUS II LLC

     —          —          —         —         —         —         —         —    

Daejung Offshore Wind Power Co., Ltd.

     3,015        200        —         —         (246     —         —         2,969  

Amman Asia Electric Power Company

     153,857        —          —         (12,213     19,957       (15,925     —         145,676  

KAPES, Inc.

     4,758        —          —         —         2,752       —         (34     7,476  

Dangjin Eco Power Co., Ltd.

     53,253        5,440        —         —         (752     (3     (10     57,928  

Honam Wind Power Co., Ltd.

     4,451        —          —         (487     338       —         —         4,302  

Chun-cheon Energy Co., Ltd.

     50,592        —          —         —         (2,474     —         —         48,118  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won       

2017

 

Investees

   Beginning
balance
     Acquisition      Disposal     Dividends
received
    Share of
income
(loss)
    Other
comprehensive
income (loss)
    Others     Ending
balance
 

Yeonggwangbaeksu Wind Power Co., Ltd.

   W 2,689        —          —         —         45       —         —         2,734  

Nghi Son 2 Power LLC

     229        993        —         —         (1,039     —         —         183  

Kelar S.A

     —          73,040        —         —         (633     (5,175     1       67,233  

PT. Tanjung Power Indonesia

     1,946        —          —         —         2,112       (2,281     (1     1,776  

Incheon New Power Co., Ltd.

     563        —          —         —         56       —         —         619  

Seokmun Energy Co., Ltd.

     391        14,790        —         —         (1,219     (176     —         13,786  

Daehan Wind Power PSC

     16        —          —         —         (40     22       2       —    

Barakah One Company

     116        —          —         —         570       (60     —         626  

Nawah Energy Company

     290        —          —         —         (5     (27     —         258  

MOMENTUM

     67        —          —         —         321       3       —         391  

Daegu Green Power Co., Ltd.

     47,528        —          —         —         (5,133     —         (4     42,391  

Yeonggwang Wind Power Co., Ltd.

     —          15,375        —         —         (25     (56     —         15,294  

Chester Solar IV SpA

     —          1,700        —         —         —         —               1,700  

Chester Solar V SpA

     —          525        —         —         —         —               525  

Diego de Almagro Solar SpA

     —          2,091        —         —         —         —               2,091  

South Jamaica Power Company Limited

     —          7,090        —         —         —         —         (386     6,704  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     1,418,196        121,244        —         (74,918     130,941       (101,175     (1,013     1,493,275  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 5,510,448        206,753        (9,933     (106,983     (81,688     (195,512     7,611       5,330,696  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W23,798 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2017.

(*2)

It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W3,440 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2017.

(*3)

‘Others’ include W41,170 million of assets held-for-sale (note 45).

(*4)

‘Others’ include W4,438 million of assets held-for-sale (note 45), and also include W1,439 million of available-for-sale financial assets which is reclassified due to loss of significant influence.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won       

2018

 

Investees

   Total assets      Total liabilities      Sales      Profit (loss)
for the period
 

<Associates>

           

Korea Gas Corporation (*1)

   W 39,689,692        31,186,488        26,185,038        523,480  

Korea Electric Power Industrial Development Co., Ltd.

     144,425        69,123        325,694        9,987  

YTN Co., Ltd.

     286,964        98,682        132,382        1,587  

Cheongna Energy Co., Ltd.

     431,234        428,921        64,594        (11,110

Gangwon Wind Power Co., Ltd.

     89,614        1,805        25,407        10,926  

Hyundai Green Power Co., Ltd.

     1,127,220        688,738        501,798        66,925  

Korea Power Exchange

     304,318        52,516        108,571        16,031  

AMEC Partners Korea Ltd.

     1,113        14        —          (26

Hyundai Energy Co., Ltd.

     470,818        527,590        101,998        (33,947

Ecollite Co., Ltd.

     1,944        312        —          (68

Taebaek Wind Power Co., Ltd.

     36,986        14,325        8,233        2,170  

Taeback Guinemi Wind Power Co., Ltd.

     10,929        653        —          (2,082

Pyeongchang Wind Power Co., Ltd.

     82,038        60,362        12,615        4,249  

Daeryun Power Co., Ltd.

     798,569        510,358        62,252        (4,958

Changjuk Wind Power Co., Ltd.

     33,148        6,194        7,929        3,291  

KNH Solar Co., Ltd.

     22,598        13,942        3,586        439  

SPC Power Corporation

     225,599        16,819        50,317        37,355  

Gemeng International Energy Co., Ltd.

     7,155,937        4,420,561        1,921,367        120,558  

PT. Cirebon Electric Power

     876,069        481,061        274,962        33,144  

KNOC Nigerian East Oil Co., Ltd.

     78,841        152,017        —          (398

KNOC Nigerian West Oil Co., Ltd.

     70,437        137,663        —          (400

PT Wampu Electric Power

     223,009        155,406        13,463        4,624  

PT. Bayan Resources TBK

     1,388,199        566,890        1,707,387        521,666  

S-Power Co., Ltd.

     825,354        588,022        551,378        (6,185

Pioneer Gas Power Limited

     311,742        316,810        —          (45,934

Eurasia Energy Holdings

     572        1,020        —          —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

     1,015,013        702,187        —          (1,214

Hadong Mineral Fiber Co., Ltd.

     203        231        —          —    

Green Biomass Co., Ltd.

     4,411        3,107        909        (1,057

PT. Mutiara Jawa

     24,022        22,763        14,393        3,917  

Samcheok Eco Materials Co., Ltd.

     24,391        2,921        4,135        (1,836

Noeul Green Energy Co., Ltd.

     147,886        120,249        58,686        19,453  

Naepo Green Energy Co., Ltd.

     93,194        76,190        6,459        (6,623

Goseong Green Energy Co., Ltd.

     1,891,662        1,659,415        —          (7,323

Gangneung Eco Power Co., Ltd.

     813,938        651,621        —          (4,194

Shin Pyeongtaek Power Co., Ltd.

     674,100        511,582        —          682  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

     2,630        1,915        455        52  

Dongducheon Dream Power Co., Ltd.

     1,512,510        1,244,178        828,430        (22,864

Jinbhuvish Power Generation Pvt. Ltd.

     63,163        13,044        —          —    

SE Green Energy Co., Ltd.

     7,048        —          —          (230

Daegu Photovoltaic Co., Ltd.

     16,828        9,923        3,695        1,645  

Jeongam Wind Power Co., Ltd.

     93,444        81,971        1,559        2,154  

Korea Power Engineering Service Co., Ltd.

     18,609        3,666        20,809        3,207  

Busan Green Energy Co., Ltd.

     195,227        151,995        77,011        17,370  

Gunsan Bio Energy Co., Ltd.

     8,990        20,660        —          (4,420

Korea Electric Vehicle Charging Service

     15,019        9,328        8,615        (1,056

Ulleungdo Natural Energy Co., Ltd.

     17,134        1,625        —          (5,855

Korea Nuclear Partners Co., Ltd.

     615        12        80        (707

Tamra Offshore Wind Power Co., Ltd.

     170,238        131,717        21,701        4,077  

Korea Electric Power Corporation Fund

     48,280        176        1,315        (649

Energy Infra Asset Management Co., Ltd.

     7,225        507        5,757        2,193  

Daegu clean Energy Co., Ltd.

     389        328        —          (190

YaksuESS Co., Ltd

     7,525        5,944        2,094        1,259  

Nepal Water & Energy Development Company Private Limited

     55,453        4,249        —          (984

Gwangyang Green Energy Co., Ltd.

     29,234        23,293        —          (2,831

PND solar., Ltd

     42,283        39,297        1,094        (795

Hyundai Eco Energy Co., Ltd.

     165,555        148,852        —          (2,193

YeongGwang Yaksu Wind Electric. Co., Ltd

     46,027        43,606        7,604        (493

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won                            

2018

 

Investees

   Total assets      Total liabilities      Sales      Profit (loss) for
the period
 

<Joint ventures>

           

KEPCO-Uhde Inc.

   W 403        34        18        (139

Eco Biomass Energy Sdn. Bhd.

     —          —          —          —    

Shuweihat Asia Power Investment B.V.

     55,614        —          —          (187

Shuweihat Asia Operation & Maintenance Company

     1,472        31        2,391        1,719  

Waterbury Lake Uranium L.P.

     55,933        64        —          —    

ASM-BG Investicii AD

     84,924        42,166        12,745        4,406  

RES Technology AD

     69,609        39,192        7,879        1,567  

KV Holdings, Inc.

     4,795        —          8        1,257  

KEPCO SPC Power Corporation

     312,093        35,091        184,046        59,543  

Gansu Datang Yumen Wind Power Co., Ltd.

     79,354        54,402        8,323        (2,046

Datang Chifeng Renewable Power Co., Ltd.

     751,551        336,024        117,270        37,159  

Datang KEPCO Chaoyang Renewable Power Co., Ltd.

     190,951        92,347        18,824        2,557  

Rabigh Electricity Company

     2,448,690        2,003,050        274,184        38,789  

Rabigh Operation & Maintenance Company Limited

     26,172        11,587        26,387        7,173  

Jamaica Public Service Company Limited

     1,396,421        827,837        992,677        32,507  

KW Nuclear Components Co., Ltd.

     24,598        7,077        6,031        2,543  

Busan Shinho Solar Power Co., Ltd.

     45,538        26,494        7,901        3,018  

GS Donghae Electric Power Co., Ltd.

     2,259,129        1,551,509        787,425        58,976  

Global Trade Of Power System Co., Ltd.

     2,039        263        1,368        (134

Expressway Solar-light Power Generation Co., Ltd.

     18,443        9,215        2,986        692  

Daejung Offshore Wind Power Co., Ltd.

     6,440        1,091        —          (590

Amman Asia Electric Power Company

     792,532        496,791        23,676        32,674  

KAPES, Inc.

     82,494        64,691        57,047        4,710  

Dangjin Eco Power Co., Ltd.

     51,125        260        —          (111,789

Honam Wind Power Co., Ltd.

     43,713        27,066        7,700        3,122  

Chun-cheon Energy Co., Ltd.

     666,050        523,904        320,950        (19,133

Yeonggwangbaeksu Wind Power Co., Ltd.

     99,368        80,450        11,366        734  

Nghi Son 2 Power LLC

     477,947        561,266        144,381        8,979  

Kelar S.A

     626,206        518,135        87,507        8,587  

PT. Tanjung Power Indonesia

     505,551        485,321        109,029        9,717  

Incheon New Power Co., Ltd.

     6,559        4,563        2,687        3  

Seokmun Energy Co., Ltd.

     253,544        195,782        50,052        10,224  

Daehan Wind Power PSC

     33,081        29,817        —          (1,799

Barakah One Company

     21,480,187        21,459,035        —          (3,062

Nawah Energy Company

     70,386        68,864        —          —    

MOMENTUM

     7,476        5,730        16,933        520  

Daegu Green Power Co., Ltd.

     591,263        523,972        291,734        (4,424

Yeonggwang Wind Power Co., Ltd.

     255,777        219,013        —          (145

Chester Solar IV SpA

     15,307        13,114        1,415        609  

Chester Solar V SpA

     4,759        4,324        298        (19

Diego de Almagro Solar SpA

     21,317        19,399        78        (340

South Jamaica Power Company Limited

     294,341        213,723        —          (932

Daesan Green Energy Co., Ltd.

     52,582        2,774        —          (1,192

RE Holiday Holdings LLC

     334,742        232,553        9,451        1,319  

RE Pioneer Holdings LLC

     252,512        174,717        12,364        6,544  

RE Barren Ridge 1 Holdings LLC

     221,304        138,473        10,567        8,625  

RE Astoria 2 Land Co LLC

     11,030        210        619        583  

RE Barren Ridge Land Co LLC

     3,881        84        248        230  

Laurel SpA

     5,475        4,572        —          (369

KIAMCO KOWEPO Bannerton Hold Co Pty Ltd

     31,958        173        —          (222

Chile Solar JV SpA

     73,740        10        73        8,906  

Taebaek Gadeoksan Wind Power Co., Ltd.

     18,766        499        —          18  

Cheong-Song Noraesan Wind Power Co., Ltd.

     8,221        24        —          —    

Chester Solar I SpA

     1,712        562        —          (81

Solar Philippines Calatagan Corporation

     121,650        51,219        16,689        8,732  

 

(*1)

The profit for the year ended December 31, 2018 is net of net income attributable to non-controlling interests.

 

94


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won       

2017

 

Investees

   Total assets      Total liabilities      Sales      Profit (loss)
for the period
 

<Associates>

           

Korea Gas Corporation

   W 37,139,439        28,999,025        22,172,305        (1,205,110

Korea Electric Power Industrial Development Co., Ltd.

     155,033        79,730        334,547        16,126  

YTN Co., Ltd.

     298,122        108,554        131,080        3,638  

Cheongna Energy Co., Ltd.

     461,958        448,535        56,533        (9,203

Gangwon Wind Power Co., Ltd.

     94,281        2,243        25,963        11,121  

Hyundai Green Power Co., Ltd.

     1,150,729        754,846        477,373        26,543  

Korea Power Exchange

     263,499        25,868        105,107        8,831  

AMEC Partners Korea Ltd.

     1,135        4        1        (53

Hyundai Energy Co., Ltd.

     474,939        511,486        92,992        (43,317

Ecollite Co., Ltd.

     2,052        352        —          (121

Taebaek Wind Power Co., Ltd.

     39,227        17,953        7,056        2,312  

Taeback Guinemi Wind Power Co., Ltd.

     12,369        12        —          (140

Pyeongchang Wind Power Co., Ltd.

     77,152        60,606        11,907        3,038  

Daeryun Power Co., Ltd.

     779,258        655,377        156,508        (23,978

Changjuk Wind Power Co., Ltd.

     35,794        10,745        6,981        2,317  

KNH Solar Co., Ltd.

     24,432        16,215        3,947        628  

SPC Power Corporation

     137,586        —          68,149        37,395  

Gemeng International Energy Co., Ltd.

     6,496,294        4,584,608        1,334,833        21,769  

PT. Cirebon Electric Power

     903,429        549,212        280,452        38,448  

KNOC Nigerian East Oil Co., Ltd.

     241,808        329,639        —          (10,754

KNOC Nigerian West Oil Co., Ltd.

     147,185        227,588        —          (9,768

PT Wampu Electric Power

     212,095        148,177        779        8,114  

PT. Bayan Resources TBK

     908,106        556,881        811,515        243,621  

S-Power Co., Ltd.

     859,633        617,224        489,042        (14,470

Pioneer Gas Power Limited

     339,271        296,898        8,215        (27,796

Eurasia Energy Holdings

     548        978        —          —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

     858,789        607,462        —          (16,677

Hadong Mineral Fiber Co., Ltd.

     203        231        —          (260

Green Biomass Co., Ltd.

     6,379        4,018        2,337        (956

PT. Mutiara Jawa

     27,098        29,670        13,574        3,455  

Samcheok Eco Materials Co., Ltd.

     23,729        270        15        (541

Noeul Green Energy Co., Ltd.

     127,980        120,852        43,099        2,932  

Naepo Green Energy Co., Ltd.

     121,375        71,945        5,696        (5,603

Goseong Green Energy Co., Ltd.

     1,081,238        841,330        —          (5,811

Gangneung Eco Power Co., Ltd.

     186,765        20,344        —          (3,407

Shin Pyeongtaek Power Co., Ltd.

     175,870        90,662        —          (4,585

Heang Bok Do Si Photovoltaic Power Co., Ltd.

     2,782        2,120        451        22  

Dongducheon Dream Power Co., Ltd.

     1,575,175        1,365,845        813,440        (33,740

Jinbhuvish Power Generation Pvt. Ltd.

     66,047        13,640        —          —    

SE Green Energy Co., Ltd.

     7,278        —          —          (103

Daegu Photovoltaic Co., Ltd.

     17,262        11,339        3,714        1,263  

Jeongam Wind Power Co., Ltd.

     67,427        58,019        —          (580

Korea Power Engineering Service Co., Ltd.

     15,738        3,121        22,283        3,783  

Busan Green Energy Co., Ltd.

     193,253        167,864        34,280        9,946  

Gunsan Bio Energy Co., Ltd. (formerly, Jungbu

Bio Energy Co., Ltd.)

     9,648        16,462        —          (6,109

Korea Electric Vehicle Charging Service

     14,650        8,404        8,399        (1,295

Ulleungdo Natural Energy Co., Ltd.

     25,842        4,501        —          (1,758

Korea Nuclear Partners Co., Ltd.

     2,033        711        1,345        465  

Tamra Offshore Wind Power Co., Ltd.

     163,740        132,036        4,392        (191

Korea Electric Power Corporation Fund

     49,170        265        666        (2,213

Energy Infra Asset Management Co., Ltd.

     5,240        431        5,807        2,203  

Daegu clean Energy Co., Ltd.

     252        212        —          (460

YaksuESS Co., Ltd

     7,105        6,437        381        (6

Nepal Water & Energy Development Company Private Limited

     58,121        11,670        —          (968

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won                            

2017

 

Investees

   Total assets      Total liabilities      Sales      Profit (loss) for
the period
 

Gwangyang Green Energy Co., Ltd.

   W 20,165        11,393        —          (1,139

PND solar., Ltd

     10,508        6,729        —          (406

<Joint ventures>

           

KEPCO-Uhde Inc.

     515        7        —          (86

Eco Biomass Energy Sdn. Bhd.

     —          —          —          —    

Datang Chaoyang Renewable Power Co., Ltd.

     138,463        70,309        17,776        2,149  

Shuweihat Asia Power Investment B.V.

     32,001        10        —          (170

Shuweihat Asia Operation & Maintenance Company

     1,220        14        2,580        1,918  

Waterbury Lake Uranium L.P.

     55,563        250        —          —    

ASM-BG Investicii AD

     87,110        44,706        12,611        (262

RES Technology AD

     71,595        42,845        7,793        2,164  

KV Holdings, Inc.

     4,795        —          671        677  

KEPCO SPC Power Corporation

     318,911        30,222        186,725        57,364  

Gansu Datang Yumen Wind Power Co., Ltd.

     81,960        54,859        6,938        (3,253

Datang Chifeng Renewable Power Co., Ltd.

     762,605        334,843        113,329        35,294  

Datang KEPCO Chaoyang Renewable Power Co., Ltd.

     60,913        33,264        8,442        2,094  

Rabigh Electricity Company

     2,364,522        1,936,403        287,105        78,948  

Rabigh Operation & Maintenance Company Limited

     19,992        10,025        22,668        5,668  

Jamaica Public Service Company Limited

     1,276,279        752,617        946,365        24,601  

KW Nuclear Components Co., Ltd.

     25,693        10,221        6,486        1,493  

Busan Shinho Solar Power Co., Ltd.

     47,959        30,573        7,984        2,383  

GS Donghae Electric Power Co., Ltd.

     2,179,465        1,530,266        351,814        43,180  

Global Trade Of Power System Co., Ltd.

     3,576        1,586        4,079        365  

Expressway Solar-light Power Generation Co., Ltd.

     19,143        10,651        3,018        643  

KODE NOVUS I LLC

     755        108,132        14        (8,117

KODE NOVUS II LLC

     292        47,683        —          (6,018

Daejung Offshore Wind Power Co., Ltd.

     6,193        243        —          (493

Amman Asia Electric Power Company

     759,114        516,174        18,034        33,514  

KAPES, Inc.

     70,679        56,021        129,962        5,397  

Dangjin Eco Power Co., Ltd.

     163,197        521        —          (2,182

Honam Wind Power Co., Ltd.

     39,675        24,951        5,961        1,166  

Chun-cheon Energy Co., Ltd.

     699,652        538,733        164,294        (8,145

Yeonggwangbaeksu Wind Power Co., Ltd.

     94,810        76,621        11,124        297  

Nghi Son 2 Power LLC

     741        376        —          (2,068

Kelar S.A

     613,293        513,101        90,435        17,590  

PT. Tanjung Power Indonesia

     374,702        369,627        209,923        6,219  

Incheon New Power Co., Ltd.

     7,194        5,059        2,972        184  

Seokmun Energy Co., Ltd.

     247,735        200,197        35,135        (3,939

Daehan Wind Power PSC

     928        1,752        —          (904

Barakah One Company

     17,574,885        17,571,409        —          (1,358

Nawah Energy Company

     1,459        23        —          (11

MOMENTUM

     5,028        3,854        11,555        939  

Daegu Green Power Co., Ltd.

     602,809        531,103        256,359        (17,700

Yeonggwang Wind Power Co., Ltd.

     212,802        176,062        —          (62

Chester Solar IV SpA

     11,660        9,626        331        151  

Chester Solar V SpA

     2,081        1,569        —          (49

Diego de Almagro Solar SpA

     8,266        5,830        —          (103

South Jamaica Power Company Limited

     153,958        120,436        —          (755

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2018 and 2017 are as follows:

 

In millions of won  

2018

 

Investees

   Net assets     Percentage of
ownership (*)
    Share in
net assets
    Investment
differential
     Intercompany
transaction
    Others     Book
value
 

<Associates>

               

Korea Gas Corporation

   W 8,503,204       21.57     1,834,141       —          —         (132,293     1,701,848  

Korea Electric Power Industrial Development Co., Ltd.

     75,302       29.00     21,838       —          —         —         21,838  

YTN Co., Ltd.

     188,282       21.43     40,346       —          (6     (2     40,338  

Cheongna Energy Co., Ltd.

     2,313       43.90     1,015       2,584        (134     —         3,465  

Gangwon Wind Power Co., Ltd.

     87,809       15.00     13,171       —          —         49       13,220  

Hyundai Green Power Co., Ltd.

     438,482       29.00     127,160       —          —         —         127,160  

Korea Power Exchange

     251,802       100.00     251,802       —          —         —         251,802  

AMEC Partners Korea Ltd.

     1,099       19.00     209       —          —         —         209  

Hyundai Energy Co., Ltd.

     (56,772     46.30     (26,285     —          (996     27,281       —    

Ecollite Co., Ltd.

     1,632       36.10     589       —          —         (589     —    

Taebaek Wind Power Co., Ltd.

     22,661       25.00     5,665       —          —         —         5,665  

Taeback Guinemi Wind Power Co., Ltd.

     10,276       25.00     2,569       —          —         —         2,569  

Pyeongchang Wind Power Co., Ltd.

     21,676       25.00     5,419       —          —         —         5,419  

Daeryun Power Co., Ltd.

     288,211       9.34     26,919       —          —         (820     26,099  

Changjuk Wind Power Co., Ltd.

     26,954       30.00     8,086       —          —         —         8,086  

KNH Solar Co., Ltd.

     8,656       27.00     2,337       —          —         —         2,337  

SPC Power Corporation

     208,780       38.00     79,336       —          —         (21,778     57,558  

Gemeng International Energy Co., Ltd.

     2,735,376       34.00     930,028       —          —         (283,018     647,010  

PT. Cirebon Electric Power

     395,008       27.50     108,628       —          —         —         108,628  

KNOC Nigerian East Oil Co., Ltd.

     (73,176     14.63     (10,706     —          —         10,706       —    

KNOC Nigerian West Oil Co., Ltd.

     (67,226     14.63     (9,835     —          —         9,835       —    

PT Wampu Electric Power

     67,603       46.00     31,097       —          —         —         31,097  

PT. Bayan Resources TBK

     821,309       20.00     164,262       423,763        —         (76,379     511,646  

S-Power Co., Ltd.

     237,332       49.00     116,293       —          (1,727     —         114,566  

Pioneer Gas Power Limited

     (5,068     38.50     (1,951     22,278        —         68       20,395  

Eurasia Energy Holdings

     (448     40.00     (179     —          —         179       —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

     312,826       25.00     78,207       253        (1,006     (289     77,165  

Hadong Mineral Fiber Co., Ltd.

     (28     8.33     (2     —          —         2       —    

Green Biomass Co., Ltd.

     1,304       8.80     115       —          —         —         115  

PT. Mutiara Jawa

     1,259       29.00     365       —          —         —         365  

Samcheok Eco Materials Co., Ltd.

     21,470       2.35     505       —          —         (505     —    

Noeul Green Energy Co., Ltd.

     27,637       29.00     8,015       —          —         —         8,015  

Naepo Green Energy Co., Ltd.

     17,004       41.67     7,085       —          —         (7,085     —    

Goseong Green Energy Co., Ltd.

     232,247       1.12     2,590       —          (131     —         2,459  

Gangneung Eco Power Co., Ltd.

     162,317       1.61     2,615       —          (120     —         2,495  

Shin Pyeongtaek Power Co., Ltd.

     162,518       40.00     65,007       12,800        (10,207     —         67,600  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

     715       28.00     200       —          —         2       202  

Dongducheon Dream Power Co., Ltd.

     268,332       34.01     91,260       1,757        (4,049     (12,582     76,386  

Jinbhuvish Power Generation Pvt. Ltd.

     50,119       5.16     2,586       —          —         (2,586     —    

SE Green Energy Co., Ltd.

     7,048       47.76     3,366       —          —         —         3,366  

Daegu Photovoltaic Co., Ltd.

     6,905       29.00     2,002       —          —         —         2,002  

Jeongam Wind Power Co., Ltd.

     11,473       40.00     4,589       —          —         —         4,589  

Korea Power Engineering Service Co., Ltd.

     14,943       29.00     4,333       —          —         —         4,333  

Busan Green Energy Co., Ltd.

     43,232       29.00     12,537       —          —         —         12,537  

Gunsan Bio Energy Co., Ltd.

     (11,670     18.87     (2,202     —          —         2,202       —    

Korea Electric Vehicle Charging Service

     5,691       28.00     1,593       —          —         —         1,593  

Ulleungdo Natural Energy Co., Ltd.

     15,509       29.85     4,629       —          —         (1     4,628  

Korea Nuclear Partners Co., Ltd.

     603       29.00     175       —          —         —         175  

Tamra Offshore Wind Power Co., Ltd.

     38,521       27.00     10,401       —          —         —         10,401  

Korea Electric Power Corporation Fund

     48,104       98.09     47,185       —          —         4       47,189  

Energy Infra Asset Management Co., Ltd.

     6,718       9.90     665       —          —         —         665  

Daegu clean Energy Co., Ltd.

     61       28.00     17       —          —         —         17  

YaksuESS Co., Ltd

     1,581       29.00     458       —          —         2       460  

Nepal Water & Energy Development

Company Private Limited

     51,204       57.67     29,529       972        —         460       30,961  

Gwangyang Green Energy Co., Ltd.

     5,941       20.00     1,188       18        —         —         1,206  

PND solar., Ltd

     2,986       29.00     866       154        —         —         1,020  

Hyundai Eco Energy Co., Ltd.

     16,703       19.00     3,174       214        —         —         3,388  

YeongGwang Yaksu Wind Electric. Co., Ltd

     2,421       9.63     233       300        —         —         533  

 

97


Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won  

2018

 

Investees

   Net assets     Percentage of
ownership (*)
    Share in
net assets
    Investment
differential
    Intercompany
transaction
    Others     Book value  

<Joint ventures>

              

KEPCO-Uhde Inc.

   W 369       50.85     188       —         —         —         188  

Eco Biomass Energy Sdn. Bhd.

     —         61.53     —         —         —         —         —    

Shuweihat Asia Power Investment B.V.

     55,614       49.00     27,251       —         —         —         27,251  

Shuweihat Asia Operation & Maintenance Company

     1,441       55.00     793       —         —         (1     792  

Waterbury Lake Uranium L.P.

     55,869       34.07     19,032       —         —         —         19,032  

ASM-BG Investicii AD

     42,758       50.00     21,379       —         —         —         21,379  

RES Technology AD

     30,417       50.00     15,209       —         —         —         15,209  

KV Holdings, Inc.

     4,795       40.00     1,918       —         —         —         1,918  

KEPCO SPC Power Corporation

     277,002       75.20     208,306       —         —         —         208,306  

Gansu Datang Yumen Wind Power Co., Ltd.

     24,952       40.00     9,981       —         —         —         9,981  

Datang Chifeng Renewable Power Co., Ltd.

     415,527       40.00     166,211       —         —         (49     166,162  

Datang KEPCO Chaoyang Renewable Power Co., Ltd.

     98,604       40.00     39,442       —         —         —         39,442  

Rabigh Electricity Company

     445,640       40.00     178,256       —         (70,977     (1,951     105,328  

Rabigh Operation & Maintenance Company

Limited

     14,585       40.00     5,834       —         —         —         5,834  

Jamaica Public Service Company Limited

     568,584       40.00     227,434       (80,161     —         92,359       239,632  

KW Nuclear Components Co., Ltd.

     17,521       45.00     7,884       —         —         (176     7,708  

Busan Shinho Solar Power Co., Ltd.

     19,044       25.00     4,761       —         —         —         4,761  

GS Donghae Electric Power Co., Ltd.

     707,620       34.00     240,591       —         —         —         240,591  

Global Trade Of Power System Co., Ltd.

     1,776       29.00     515       —         —         —         515  

Expressway Solar-light Power Generation Co., Ltd.

     9,228       29.00     2,676       —         —         —         2,676  

Daejung Offshore Wind Power Co., Ltd.

     5,349       49.90     2,669       —         —         —         2,669  

Amman Asia Electric Power Company

     295,741       60.00     177,445       —         —         (88     177,357  

KAPES, Inc.

     17,803       51.00     9,079       —         —         —         9,079  

Dangjin Eco Power Co., Ltd.

     50,865       34.00     17,294       2,618       —         —         19,912  

Honam Wind Power Co., Ltd.

     16,647       29.00     4,828       32       —         —         4,860  

Chun-cheon Energy Co., Ltd.

     142,146       29.90     42,502       3       —         —         42,505  

Yeonggwangbaeksu Wind Power Co., Ltd.

     18,918       15.00     2,837       6       —         —         2,843  

Nghi Son 2 Power LLC

     (83,319     50.00     (41,660     —         —         41,660       —    

Kelar S.A

     108,071       65.00     70,246       2,470       —         108       72,824  

PT. Tanjung Power Indonesia

     20,230       35.00     7,081       —         —         —         7,081  

Incheon New Power Co., Ltd.

     1,996       29.00     579       —         —         —         579  

Seokmun Energy Co., Ltd.

     57,762       29.00     16,751       —         —         —         16,751  

Daehan Wind Power PSC

     3,264       50.00     1,632       —         —         —         1,632  

Barakah One Company

     21,152       18.00     3,807       —         —         —         3,807  

Nawah Energy Company

     1,522       18.00     274       —         —         —         274  

MOMENTUM

     1,746       33.33     582       —         —         —         582  

Daegu Green Power Co., Ltd.

     67,291       29.00     19,514       84       —         21,512       41,110  

Yeonggwang Wind Power Co., Ltd.

     36,764       41.00     15,074       230       —         —         15,304  

Chester Solar IV SpA

     2,193       81.82     1,794       57       —         —         1,851  

Chester Solar V SpA

     435       81.82     356       118       —         —         474  

Diego de Almagro Solar SpA

     1,918       81.82     1,569       94       —         —         1,663  

South Jamaica Power Company Limited

     80,618       20.00     16,124       —         —         —         16,124  

Daesan Green Energy Co., Ltd.

     49,808       35.00     17,433       —         —         —         17,433  

RE Holiday Holdings LLC

     102,189       50.00     51,094       —         —         —         51,094  

RE Pioneer Holdings LLC

     77,795       50.00     38,898       —         —         —         38,898  

RE Barren Ridge 1 Holdings LLC

     82,831       50.00     41,415       —         —         —         41,415  

RE Astoria 2 LandCo LLC

     10,820       50.00     5,410       —         —         —         5,410  

RE Barren Ridge LandCo LLC

     3,797       50.00     1,898       —         —         —         1,898  

Laurel SpA

     903       81.82     739       182       —         —         921  

KIAMCO KOWEPO Bannerton Hold Co Pty Ltd

     31,785       12.37     3,931       9       —         —         3,940  

Chile Solar JV SpA

     73,730       50.00     36,865       —         —         —         36,865  

Taebaek Gadeoksan Wind Power Co., Ltd.

     18,267       46.58     8,508       —         —         —         8,508  

Cheong-Song Noraesan Wind Power Co., Ltd.

     8,197       24.76     2,029       44       —         —         2,073  

Chester Solar I SpA

     1,150       81.82     940       241       —         —         1,181  

Solar Philippines Calatagan Corporation

     70,431       38.00     26,764       21,139       —         —         47,903  

 

(*)

The percentage of ownership shown above is after considering the treasury stocks and others.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won  

2017

 

Investees

   Net assets     Percentage of
ownership (*)
    Share in
net assets
    Investment
differential
     Intercompany
transaction
    Others     Book
value
 

<Associates>

               

Korea Gas Corporation

   W 8,140,414       21.57     1,755,887       —          —         (137,019     1,618,868  

Korea Electric Power Industrial Development Co., Ltd.

     75,303       29.00     21,838       —          —         —         21,838  

YTN Co., Ltd.

     189,568       21.43     40,624       —          (18     —         40,606  

Cheongna Energy Co., Ltd.

     13,423       43.90     5,893       2,584        (140     —         8,337  

Gangwon Wind Power Co., Ltd.

     92,038       15.00     13,806       —          —         49       13,855  

Hyundai Green Power Co., Ltd.

     395,883       29.00     114,806       —          —         —         114,806  

Korea Power Exchange

     237,631       100.00     237,631       —          —         —         237,631  

AMEC Partners Korea Ltd.

     1,131       19.00     215       —          —         —         215  

Hyundai Energy Co., Ltd.

     (36,547     46.30     (16,921     —          (1,037     17,958       —    

Ecollite Co., Ltd.

     1,700       36.10     614       —          —         (614     —    

Taebaek Wind Power Co., Ltd.

     21,274       25.00     5,319       —          —         —         5,319  

Taeback Guinemi Wind Power Co., Ltd.

     12,357       25.00     3,089       —          —         —         3,089  

Pyeongchang Wind Power Co., Ltd.

     16,546       25.00     4,136       —          —         —         4,136  

Daeryun Power Co., Ltd.

     123,881       19.45     24,095       1,014        —         4       25,113  

Changjuk Wind Power Co., Ltd.

     25,049       30.00     7,515       —          —         —         7,515  

KNH Solar Co., Ltd.

     8,217       27.00     2,218       —          —         —         2,218  

SPC Power Corporation

     137,586       38.00     52,283       —          —         —         52,283  

Gemeng International Energy Co., Ltd.

     1,911,686       34.00     649,973       —          —         —         649,973  

PT. Cirebon Electric Power

     354,217       27.50     97,410       —          —         —         97,410  

KNOC Nigerian East Oil Co., Ltd.

     (87,831     14.63     (12,850     —          —         12,850       —    

KNOC Nigerian West Oil Co., Ltd.

     (80,403     14.63     (11,763     —          —         11,763       —    

PT Wampu Electric Power

     63,918       46.00     29,403       —          —         —         29,403  

PT. Bayan Resources TBK

     351,225       20.00     70,245       482,109        —         (100,523     451,831  

S-Power Co., Ltd.

     242,409       49.00     118,780       —          (1,835     —         116,945  

Pioneer Gas Power Limited

     42,373       38.50     16,314       22,278        —         67       38,659  

Eurasia Energy Holdings

     (430     40.00     (172     —          —         172       —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

     251,327       25.00     62,832       74        (838     (289     61,779  

Hadong Mineral Fiber Co., Ltd.

     (28     8.33     (2     —          —         2       —    

Green Biomass Co., Ltd.

     2,361       8.80     208       —          —         —         208  

PT. Mutiara Jawa

     (2,572     29.00     (746            —         746       —    

Samcheok Eco Materials Co., Ltd.

     23,459       2.35     551       —          —         (551     —    

Noeul Green Energy Co., Ltd.

     7,128       29.00     2,067       —          —         —         2,067  

Naepo Green Energy Co., Ltd.

     49,430       41.67     20,598       —          —         —         20,598  

Goseong Green Energy Co., Ltd.

     239,908       1.12     2,676       —          (79     —         2,597  

Gangneung Eco Power Co., Ltd.

     166,421       1.61     2,681       —          (98     —         2,583  

Shin Pyeongtaek Power Co., Ltd.

     85,208       40.00     34,083       7,808        (6,988     —         34,903  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

     662       28.00     185       —          —         2       187  

Dongducheon Dream Power Co., Ltd.

     209,330       33.61     70,356       —          (4,409     (12,714     53,233  

Jinbhuvish Power Generation Pvt. Ltd.

     52,407       5.16     2,704              —         (2,704     —    

SE Green Energy Co., Ltd.

     7,278       47.76     3,476       —          —         —         3,476  

Daegu Photovoltaic Co., Ltd.

     5,923       29.00     1,718       —          —         —         1,718  

Jeongam Wind Power Co., Ltd.

     9,408       40.00     3,763       —          —         —         3,763  

Korea Power Engineering Service Co., Ltd.

     12,617       29.00     3,659       —          —         —         3,659  

Busan Green Energy Co., Ltd.

     25,389       29.00     7,363       —          —         —         7,363  

Gunsan Bio Energy Co., Ltd. (formerly,

Jungbu Bio Energy Co., Ltd.)

     (6,814     18.87     (1,286     —          —         1,286       —    

Korea Electric Vehicle Charging Service

     6,246       28.00     1,749       —          —         —         1,749  

Ulleungdo Natural Energy Co., Ltd.

     21,341       29.85     6,370       —          —         —         6,370  

Korea Nuclear Partners Co., Ltd.

     1,322       29.00     383       —          —         —         383  

Tamra Offshore Wind Power Co., Ltd.

     31,704       27.00     8,560       —          —         —         8,560  

Korea Electric Power Corporation Fund

     48,905       98.09     47,971       —          —         3       47,974  

Energy Infra Asset Management Co., Ltd.

     4,809       9.90     476       —          —         —         476  

Daegu clean Energy Co., Ltd.

     40       28.00     11       —          —         —         11  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won  

2017

 

Investees

   Net assets     Percentage of
ownership (*)
    Share in
net assets
    Investment
differential
    Intercompany
transaction
    Others     Book value  

YaksuESS Co., Ltd

   W 668       29.00     193       —         —         1       194  

Nepal Water & Energy Development Company

Private Limited

     46,451       62.13     28,860       972       —         666       30,498  

Gwangyang Green Energy Co., Ltd.

     8,772       20.00     1,754       18       —         —         1,772  

PND solar., Ltd

     3,779       29.00     1,096       154       —         —         1,250  

<Joint ventures>

              

KEPCO-Uhde Inc.

     508       50.85     258       —         —         —         258  

Eco Biomass Energy Sdn. Bhd.

     —         61.53     —         —         —         —         —    

Datang Chaoyang Renewable Power Co., Ltd.

     68,154       40.00     27,262       —         —         —         27,262  

Shuweihat Asia Power Investment B.V.

     31,991       49.00     15,675       —         —         —         15,675  

Shuweihat Asia Operation & Maintenance Company

     1,206       55.00     663       —         —         —         663  

Waterbury Lake Uranium L.P.

     55,313       35.76     19,780       —         —         1       19,781  

ASM-BG Investicii AD

     42,404       50.00     21,202       —         —         —         21,202  

RES Technology AD

     28,750       50.00     14,375       —         —         —         14,375  

KV Holdings, Inc.

     4,795       40.00     1,918       —         —         —         1,918  

KEPCO SPC Power Corporation

     288,689       75.20     217,094       —         —         —         217,094  

Gansu Datang Yumen Wind Power Co., Ltd.

     27,101       40.00     10,840       —         —         —         10,840  

Datang Chifeng Renewable Power Co., Ltd.

     427,762       40.00     171,105       —         —         (50     171,055  

Datang KEPCO Chaoyang Renewable Power Co., Ltd.

     27,649       40.00     11,060       —         —         —         11,060  

Rabigh Electricity Company

     428,119       40.00     171,248       —         (70,978     (914     99,356  

Rabigh Operation & Maintenance Company Limited

     9,967       40.00     3,987       —         —         —         3,987  

Jamaica Public Service Company Limited

     523,662       40.00     209,464       (80,161     —         91,850       221,153  

KW Nuclear Components Co., Ltd.

     15,472       45.00     6,962       —         —         (259     6,703  

Busan Shinho Solar Power Co., Ltd.

     17,386       25.00     4,346       —         —         —         4,346  

GS Donghae Electric Power Co., Ltd.

     649,199       34.00     220,727       —         —         —         220,727  

Global Trade Of Power System Co., Ltd.

     1,990       29.00     577       —         —         —         577  

Expressway Solar-light Power Generation Co., Ltd.

     8,492       29.00     2,463       —         —         —         2,463  

KODE NOVUS I LLC

     (107,377     50.00     (53,689           —         53,689       —    

KODE NOVUS II LLC

     (47,391     50.00     (23,696     —         —         23,696       —    

Daejung Offshore Wind Power Co., Ltd.

     5,950       49.90     2,969       —         —         —         2,969  

Amman Asia Electric Power Company

     242,940       60.00     145,764       —         —         (88     145,676  

KAPES, Inc.

     14,658       51.00     7,476       —         —         —         7,476  

Dangjin Eco Power Co., Ltd.

     162,676       34.00     55,310       2,618       —         —         57,928  

Honam Wind Power Co., Ltd.

     14,724       29.00     4,270       32       —         —         4,302  

Chun-cheon Energy Co., Ltd.

     160,919       29.90     48,115       3       —         —         48,118  

Yeonggwangbaeksu Wind Power Co., Ltd.

     18,189       15.00     2,728       6       —         —         2,734  

Nghi Son 2 Power LLC

     365       50.00     183       —         —         —         183  

Kelar S.A

     100,192       65.00     65,125       2,424       —         (316     67,233  

PT. Tanjung Power Indonesia

     5,075       35.00     1,776       —         —               1,776  

Incheon New Power Co., Ltd.

     2,135       29.00     619       —         —         —         619  

Seokmun Energy Co., Ltd.

     47,538       29.00     13,786       —         —         —         13,786  

Daehan Wind Power PSC

     (824     50.00     (412     —         —         412       —    

Barakah One Company

     3,476       18.00     626       —         —         —         626  

Nawah Energy Company

     1,436       18.00     258       —         —         —         258  

MOMENTUM

     1,174       33.33     391       —         —         —         391  

Daegu Green Power Co., Ltd.

     71,706       29.00     20,795       —         84       21,512       42,391  

Yeonggwang Wind Power Co., Ltd.

     36,740       41.00     15,063       231       —         —         15,294  

Chester Solar IV SpA

     2,034       81.82     1,664       —         —         36       1,700  

Chester Solar V SpA

     512       81.82     419       —         —         106       525  

Diego de Almagro Solar SpA

     2,436       81.82     1,993       —         —         98       2,091  

South Jamaica Power Company Limited

     33,522       20.00     6,704       —         —         —         6,704  

 

(*)

The percentage of ownership shown above is after considering the treasury stocks and others.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(6)

As of December 31, 2018 and 2017, unrecognized equity interest in investments in associates and joint ventures whose book value has been reduced to zero due to accumulated losses are as follows:

 

In millions of won    2018      2017  
     Unrecognized
equity interest
     Accumulated
unrecognized
equity interest
     Unrecognized
equity interest
     Accumulated
unrecognized
equity interest
 

Shin Pyeongtaek Power Co., Ltd.

   W —          —          (2,537      —    

Kelar S.A

     —          —          (61,309      —    

Hadong Mineral Fiber Co., Ltd.

     —          2        (3      2  

PT. Mutiara Jawa

     (746      —          (1,159      746  

Eurasia Energy Holdings

     7        179        (22      172  

KODE NOVUS I LLC

     —          —          8,706        53,689  

KODE NOVUS II LLC

     —          —          181        23,696  

Gunsan Bio Energy Co., Ltd.

     916        2,202        1,154        1,286  

Daehan Wind Power PSC

     (412      —          412        412  

Hyundai Energy Co., Ltd.

     25,841        25,841        —          —    

Nghi Son 2 Power LLC

     41,659        41,659        —          —    

Samcheok Eco Materials Co., Ltd.

     1,285        1,285        —          —    

 

(7)

As of December 31, 2018, shareholders’ agreements on investments in associates and joint ventures that may cause future economic resource or cash outflows are as follows:

 

  (i)

Gemeng International Energy Co., Ltd.

Gemeng International Energy Co., Ltd., issued put options on 8% of its shares to its financial investors, KEPCO Woori Sprott PEF (NPS Co-Pa PEF). If the investment fund is not collected until the maturity date (December 25, 2023, two years extension is possible), PEF can exercise the option at strike price which is the same as a principal investment price (including operating fees ratio of below 1% per annum), and also, the Company provided a performance guarantee on this agreement.

 

  (ii)

Hyundai Energy Co., Ltd.

The Company had placed guarantees for a fixed return on the investment to NH Power II Co., Ltd. and National Agricultural Cooperative Federation (“NACF”) and had obtained the rights to acquire the investment securities in return preferentially. In addition, NH Power II Co., Ltd. and NACF have a right, which can be exercised for 30 days starting from 2 months to 1 month prior to 17 years after the termination date of the contract to sell their shares to the Company.

 

  (iii)

Taebaek Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Taebaek Wind Power Co., Ltd. after the warrant period of defect repair for wind power generator has expired, the Company acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with consideration of various factors such as financial status and business situation.

 

  (iv)

Pyeongchang Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Pyeongchang Wind Power Co., Ltd. after commercial operation of the power plant has started, the Company acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with the careful consideration of various factors such as financial status and business situation.

 

  (v)

Jeongam Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Jeongam Wind Power Co., Ltd. after the construction of the power plant has been completed, the Company is obligated to acquire those shares at fair value.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

20.

Investments in Associates and Joint Ventures, Continued

 

(7)

As of December 31, 2018, shareholders’ agreements on investments in associates and joint ventures that may cause future economic resource or cash outflows are as follows, continued:

 

  (vi)

Daejung Offshore Wind Power Co., Ltd.

In case Samsung Heavy Industries Co., Ltd., a co-participant of the joint venture agreement, decides to dispose of its shares in Daejung Offshore Wind Power Co., Ltd., the Company is obligated to acquire those shares after evaluating the economic feasibility of the facilities installed by Samsung Heavy Industries Co., Ltd.

 

  (vii)

Hyundai Green Power Co., Ltd.

As of December 31, 2018, Hyundai Green Power Co., Ltd., an associate of the Company, which engages in the byproduct gas power generating business, entered into a project financing agreement with a limit of W852.1 billion with Korea Development Bank and others. At a certain period in the future, the Company has call option against the financial investors (Korea Development Bank and others) and also has an obligation to purchase its shares when claimed by the financial investors. At a certain period in the future, the Company has put option against Hyundai Steel Company and a third party designated by Hyundai Steel Company (collectively, “Hyundai Steel Company”), the operating investor of Hyundai Green Power Co., Ltd., according to the conditions of the agreement and also has an obligation to sell its shares upon request from Hyundai Steel Company.

 

  (viii)

YeongGwang Yaksu Wind Electric. Co., Ltd

As of December 31, 2018, YeongGwang Yaksu Wind Electric. Co., Ltd, an associate of the Company, which engages in the wind power generating business, entered into a project financing agreement with a limit of W46.8 billion with Hanwha Life Insurance Co., Ltd. and others.

 

(8)

Significant restrictions on the Company’s abilities on associates or joint ventures are as follows:

 

Company

  

Nature and extent of any significant restrictions

Daeryun Power Co., Ltd.

   Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.

Changjuk Wind Power Co., Ltd.

   Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.

Taebaek Wind Power Co., Ltd.

   Financial institutions can reject or defer an approval with regard to the request for fund executions on subordinated loans of shareholders in order to pay senior loans based on the loan agreement.

Pyeongchang Wind Power Co., Ltd.

   Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.

Daegu Green Power Co., Ltd.

   Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained. Shares cannot be wholly or partially transferred without prior written consent of financial institutions is obtained.

KNH Solar Co., Ltd.

   Principal and interest, dividends to shareholders cannot be paid without written consent of financial institutions.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

21.

Property, Plant and Equipment

 

(1)

Property, plant and equipment as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Acquisition
cost
     Government
grants
    Accumulated
depreciation
    Accumulated
impairment

losses
    Book
value
 

Land

   W 13,554,292        (21,968     —         —         13,532,324  

Buildings

     19,431,536        (63,189     (7,494,176     (3,669     11,870,502  

Structures

     66,335,506        (190,854     (23,615,312     (8,399     42,520,941  

Machinery

     82,047,823        (173,242     (34,151,878     (439,350     47,283,353  

Ships

     3,655        —         (3,353     —         302  

Vehicles

     287,954        (4,220     (215,649     (116     67,969  

Equipment

     1,558,309        (418     (1,175,408     (42     382,441  

Tools

     1,073,145        (675     (880,432     (38     192,000  

Construction-in-progress

     29,026,880        (54,740     —         (205,713     28,766,427  

Finance lease assets

     2,390,701        (26     (2,194,971     —         195,704  

Asset retirement costs

     9,424,181        —         (3,706,004     (146,423     5,571,754  

Others

     11,875,394        —         (9,515,917     —         2,359,477  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 237,009,376        (509,332     (82,953,100     (803,750     152,743,194  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

In millions of won    2017  
     Acquisition
cost
     Government
grants
    Accumulated
depreciation
    Accumulated
impairment

losses
    Book
value
 

Land

   W 13,318,542        (21,968     —         —         13,296,574  

Buildings

     18,777,678        (63,539     (6,722,376     (1,776     11,989,987  

Structures

     66,184,484        (196,414     (22,071,667     (8,039     43,908,364  

Machinery

     75,826,292        (183,188     (28,904,982     (45,512     46,692,610  

Ships

     4,175        —         (3,772     —         403  

Vehicles

     276,425        (6,322     (195,260     (127     74,716  

Equipment

     1,440,870        (761     (1,020,192     (6     419,911  

Tools

     1,010,537        (1,027     (809,842     (32     199,636  

Construction-in-progress

     25,610,649        (49,084     —         (38,108     25,523,457  

Finance lease assets

     2,390,680        (27     (2,093,001     —         297,652  

Asset retirement costs

     9,395,821        —         (3,356,337     —         6,039,484  

Others

     11,247,021        —         (8,807,401     —         2,439,620  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 225,483,174        (522,330     (73,984,830     (93,600     150,882,414  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

21.

Property, Plant and Equipment, Continued

 

(2)

Changes in property, plant and equipment for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
    Acquisition     Disposal     Depreciation     Impairment (*)     Others     Ending
balance
 

Land

   W 13,318,542       2,254       (18,240     —         —         251,736       13,554,292  

(Government grants)

     (21,968     —         —         —         —         —         (21,968

Buildings

     12,053,526       10,156       (8,545     (767,845     (1,896     648,295       11,933,691  

(Government grants)

     (63,539     (4,213     31       6,836       —         (2,304     (63,189

Structures

     44,104,778       11,123       (587,278     (2,476,278     (360     1,659,810       42,711,795  

(Government grants)

     (196,414     —         3,270       10,292       —         (8,002     (190,854

Machinery

     46,875,798       460,676       (250,159     (4,973,252     (393,839     5,737,371       47,456,595  

(Government grants)

     (183,188     (1,185     823       18,099       —         (7,791     (173,242

Ships

     403       —         —         (103     —         2       302  

Vehicles

     81,038       2,774       (402     (32,620     —         21,399       72,189  

(Government grants)

     (6,322     (45     —         2,146       —         1       (4,220

Equipment

     420,672       36,884       (265     (187,821     (36     113,425       382,859  

(Government grants)

     (761     (22     —         365       —         —         (418

Tools

     200,663       12,331       (268     (83,283     (6     63,238       192,675  

(Government grants)

     (1,027     (44     —         432       —         (36     (675

Construction-in-progress

     25,572,541       11,749,397       (47,463     —         (167,603     (8,285,705     28,821,167  

(Government grants)

     (49,084     (23,895     —         —         —         18,239       (54,740

Finance lease assets

     297,679       —         —         (101,888     —         (61     195,730  

(Government grants)

     (27     —         —         1       —         —         (26

Asset retirement costs

     6,039,484       1,988       —         (610,435     (146,424     287,141       5,571,754  

Others

     2,439,620       8,691       (715     (709,579     —         621,460       2,359,477  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 150,882,414       12,266,870       (909,211     (9,904,933     (710,164     1,118,218       152,743,194  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

Korea Hydro & Nuclear Power Co., Ltd. and Korea Western Power Co., Ltd., 100% owned subsidiaries, have determined that there are impairment indicators for the shutdowns of certain power generation units and fire, and performed an impairment test over the individual assets. As a result, the Company recognized the amount of the carrying amount in excess of its recoverable amount as impairment loss in the consolidated statements of comprehensive income. The amount includes impairment loss of W703,133 million in relation to Wolsong unit 1, Shin-Hanwool unit 3 and 4 as described in note 2, and the loss of W7,031 million due to fire at Taean unit 2.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

21.

Property, Plant and Equipment, Continued

 

(2)

Changes in property, plant and equipment for the years ended December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won    2017  
     Beginning
balance
    Acquisition     Disposal     Depreciation     Impairment (*1)     Others     Ending
balance
 

Land

   W 12,969,741       32,773       (8,961     —         —         324,989       13,318,542  

(Government grants)

     (3,204     —         5       —         —         (18,769     (21,968

Buildings

     11,784,624       40,592       (19,715     (794,804     (923     1,043,752       12,053,526  

(Government grants)

     (61,188     (900     28       5,996       —         (7,475     (63,539

Structures

     43,330,415       428       (519,366     (2,421,168     (6,856     3,721,325       44,104,778  

(Government grants)

     (197,641     —         1,905       10,011       —         (10,689     (196,414

Machinery (*2)

     43,421,945       421,892       (242,428     (4,821,595     (43,121     8,139,105       46,875,798  

(Government grants)

     (111,064     (10,834     489       17,390       —         (79,169     (183,188

Ships

     550       —         —         (147     —         —         403  

Vehicles

     70,970       3,447       (174     (34,236     (127     41,158       81,038  

(Government grants)

     (107     (107     14       1,070       —         (7,192     (6,322

Equipment

     376,395       53,529       (413     (158,614     (6     149,781       420,672  

(Government grants)

     (732     (43     —         454       —         (440     (761

Tools

     179,032       30,990       (166     (74,909     (32     65,748       200,663  

(Government grants)

     (430     —         —         354       —         (951     (1,027

Construction-in-progress

     27,296,260       11,996,508       (6,487     —         —         (13,713,740     25,572,541  

(Government grants)

     (135,807     (42,728     —         —         —         129,451       (49,084

Finance lease assets

     406,353       —         (29,696     (107,390     —         28,412       297,679  

(Government grants)

     —         —         —         1       —         (28     (27

Asset retirement costs

     4,065,412       —         —         (518,565     —         2,492,637       6,039,484  

Others

     2,351,532       10,411       (28     (762,711     —         840,416       2,439,620  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 145,743,056       12,535,958       (824,993     (9,658,863     (51,065     3,138,321       150,882,414  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

Korea Midland Power Co., Ltd. and Korea Western Power Co., Ltd., 100% owned subsidiaries, have determined that there are impairment indicators for the shutdowns of certain power generation units and fire, and performed an impairment test over the individual assets. As a result, the Company recognized the amount of the carrying amount in excess of its recoverable amount as impairment loss in the consolidated statements of comprehensive income.

(*2)

As described in note 29, the amount of acquisition of machinery includes W204,787 million of that the Company believes the possibility of economic outflow is probable on the request for additional construction costs of Hyundai E&C, GS Engineering & Construction Corp. and Hansol SeenTec Co., Ltd.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

22.

Investment Properties

 

(1)

Investment properties as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Acquisition
cost
     Government
grants
     Accumulated
depreciation
     Book
value
 

Land

   W 139,940        —          —          139,940  

Buildings

     34,801        (50      (15,132      19,619  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 174,741        (50      (15,132      159,559  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

In millions of won    2017  
     Acquisition
cost
     Government
grants
     Accumulated
depreciation
     Book
value
 

Land

   W 264,205        —          —          264,205  

Buildings

     36,165        (83      (15,573      20,509  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 300,370        (83      (15,573      284,714  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(2)

Changes in investment properties for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
     Depreciation      Others      Ending
balance
 

Land

   W 264,205        —          (124,265      139,940  

Buildings

     20,592        (924      1        19,669  

(Government grants)

     (83      1        32        (50
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 284,714        (923      (124,232      159,559  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

In millions of won    2017  
     Beginning
balance
     Depreciation      Others      Ending
balance
 

Land

   W 336,421        —          (72,216      264,205  

Buildings

     17,323        (1,178      4,447        20,592  

(Government grants)

     (64      2        (21      (83
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 353,680        (1,176      (67,790      284,714  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

22.

Investment Properties, Continued

 

(3)

Income and expenses related to investment properties for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Rental income

   W 9,494        9,581  

Operating and maintenance expenses related to rental income

     (923      (1,172
  

 

 

    

 

 

 
   W 8,571        8,409  
  

 

 

    

 

 

 

 

(4)

Fair value of investment properties as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Book value      Fair value      Book value      Fair value  

Land

   W 139,940        167,178        264,205        309,241  

Buildings

     19,619        23,276        20,509        23,319  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 159,559        190,454        284,714        332,560  
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair values of the investment properties as of the reporting date were determined in consideration of the fluctuation on the publicly announced individual land price after the K-IFRS transition date (January 1, 2010).

 

(5)

All of the Company’s investment property is held under freehold interests.

 

23.

Construction Contracts

 

(1)

Changes in total contract amount in which revenue is not yet recognized for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
     Increase
(decrease) (*)
     Recognized as
revenue
     Ending
balance
 

Nuclear power plant construction in UAE and others

   W 4,176,595        1,186,584        (1,742,391      3,620,788  

 

(*)

For the year ended December 31, 2018, the increased balance of contracts from new orders and other is W1,207,097 million and the decreased balance of contracts due to changes in scope of construction work is W20,513 million.

 

In millions of won    2017  
     Beginning
balance
     Increase
(decrease) (*)
     Recognized as
revenue
     Ending
balance
 

Nuclear power plant construction in UAE and others

   W 7,236,888        151,891        (3,212,184      4,176,595  

 

(*)

For the year ended December 31, 2017, the increased balance of contracts from new orders and other is W438,142 million and the decreased balance of contracts due to changes in scope of construction work is W286,251 million.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

23.

Construction Contracts, Continued

 

(2)

Accumulated earned revenue, expense and others related to the Company’s construction contracts as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Accumulated
earned revenue
     Accumulated
expense
     Accumulated
profit
     Unearned
advance
receipts
 

Nuclear power plant construction in UAE and others

   W 19,801,220        18,651,188        1,150,032        —    
In millions of won    2017  
     Accumulated
earned revenue
     Accumulated
expense
     Accumulated
profit
     Unearned
advance
receipts
 

Nuclear power plant construction in UAE and others

   W 18,236,992        16,937,772        1,299,220        —    

 

(3)

Gross amount due from customers recognized as assets and due to customers recognized as liabilities for contract work as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Assets (*1)      Liabilities (*2)      Assets (*1)      Liabilities (*2)  

Nuclear power plant construction in UAE and others

   W 36,232        350,460        55,755        542,921  

 

(*1)

Included in trade and other receivables, net, in the consolidated statements of financial position.

(*2)

Included in non-financial liabilities in the consolidated statements of financial position.

 

(4)

The contract between the Company and ENEC (purchaser) states that disclosure of information related to UAE nuclear power plant construction projects such as contract date, contractual completion date, completion progress, unbilled construction, impairment losses, etc. is not allowed without consent from the purchaser. ENEC did not agree to disclose such information. Accordingly, the Company did not disclose such information based on K-IFRS 1115 129.2(2) as it is probable that ENEC may file a lawsuit for breach of contract if the Company does so. Also, the Company has not disclosed such information in a registration statement, investment prospectus or annual report and reported to the audit committee that those items will not be disclosed in the notes to the financial statements.

 

(5)

Changes in estimates of contract revenues and costs related to the Company’s construction services for the year ended December 31, 2018 are as follows:

 

In millions of won       
                        Assets     Receivables from
construction
contracts
       
     Expected
loss on
construction
contracts
     Amounts
recognized
in current
profit or
loss
    Amounts
recognized
in future
profit or
loss
    Gross      Allowance
for
doubtful
accounts
    Gross      Allowance
for
doubtful

accounts
    Changes in
estimated
total
contract
costs
 

Transmission and distribution

   W —          (26,264     49,094       21,377        —         —          —         815,581  

Plant maintenance & engineering service

     800        (3,890     (40     14,854        (1     35,218        (7,872     1,812  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   W 800        (30,154     49,054       36,231        (1     35,218        (7,872     817,393  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

24.

Intangible Assets other than Goodwill

 

(1)

Intangible assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Acquisition
cost
     Government
grants
    Accumulated
amortization
    Accumulated
impairment
losses
    Book
value
 

Software

   W 619,662        (420     (461,981     —         157,261  

Licenses and franchises

     3,398        —         (3,398     —         —    

Copyrights, patents rights and other industrial rights

     97,033        —         (29,921     —         67,112  

Mining rights

     561,945        —         (27,421     —         534,524  

Development expenditures

     878,462        (2,110     (785,976     —         90,376  

Intangible assets under development

     83,381        (10,564     —         (12,845     59,972  

Usage rights of donated assets and other

     459,682        —         (372,671     —         87,011  

Leasehold rights

     25,482        —         (19,930     —         5,552  

Greenhouse gas emissions rights

     7,050        —         —         —         7,050  

Others

     333,621        —         (104,486     (12,051     217,084  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 3,069,716        (13,094     (1,805,784     (24,896     1,225,942  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

In millions of won    2017  
     Acquisition
cost
     Government
grants
    Accumulated
amortization
    Accumulated
impairment
losses
    Book
value
 

Software

   W 534,191        (486     (408,300     —         125,405  

Licenses and franchises

     3,398        —         (3,398     —         —    

Copyrights, patents rights and other industrial rights

     43,857        —         (19,876     —         23,981  

Mining rights

     553,876        —         (14,243     —         539,633  

Development expenditures

     836,996        (3,702     (752,478     —         80,816  

Intangible assets under development

     143,851        (10,540     —         (3,941     129,370  

Usage rights of donated assets and other

     459,682        (11     (358,024     —         101,647  

Leasehold rights

     24,306        —         (19,262     —         5,044  

Others

     297,289        —         (103,995     (12,069     181,225  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 2,897,446        (14,739     (1,679,576     (16,010     1,187,121  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

24.

Intangible Assets other than Goodwill, Continued

 

(2)

Changes in intangible assets for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
    Acquisition      Disposal     Amortization     Impairment
(*)
    Others     Ending
balance
 

Software

   W 125,891       10,861        (1     (53,755     —         74,685       157,681  

(Government grants)

     (486     —          —         254       —         (188     (420

Licenses and franchises

     23,981       28        —         (8,665     (13     51,781       67,112  

Copyrights, patents rights and other industrial rights

     539,633       29,687        —         (3,186     —         (31,610     534,524  

Development expenditures

     84,518       823        —         (27,100     —         34,245       92,486  

(Government grants)

     (3,702     —          —         1,591       —         1       (2,110

Intangible assets under

development

     139,910       67,383        —         —         (8,912     (127,845     70,536  

(Government grants)

     (10,540     —          —         —         799       (823     (10,564

Usage rights of donated assets and other

     101,658       —          —         (13,307     —         (1,340     87,011  

(Government grants)

     (11     —          —         11       —         —         —    

Leasehold rights

     5,044       —          —         (667     —         1,175       5,552  

Greenhouse gas emissions rights

     —         —          —         —         —         7,050       7,050  

Others

     181,225       1,805        (8     (14,114     (14     48,190       217,084  

(Government grants)

     —         —          —         —         —         —         —    
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 1,187,121       110,587        (9     (118,938     (8,140     55,321       1,225,942  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

W8,104 million of impairment loss on the intangible assets under development in relation to the technology development of heat transfer tube owned by KEPCO Nuclear Fuel Co., Ltd., 96.36% owned subsidiary, is included.

 

In millions of won    2017  
     Beginning
balance
    Acquisition     Disposal     Amortization     Impairment     Others     Ending
balance
 

Software

   W 93,221       12,700       (5     (44,809     —         64,784       125,891  

(Government grants)

     (595     (17     —         255       —         (129     (486

Licenses and franchises

              

Copyrights, patents rights and other industrial rights

     20,081       30       (7     (3,350     —         7,227       23,981  

Mining rights

     538,860       26,751       (272     (4,640     —         (21,066     539,633  

Development expenditures

     62,405       494       —         (25,924     —         47,543       84,518  

(Government grants)

     (5,152     —         —         2,811       —         (1,361     (3,702

Intangible assets under development

     115,533       56,527       —         —         (20     (32,130     139,910  

(Government grants)

     (11,090     —         —         —         —         550       (10,540

Usage rights of donated assets and other

     84,102       —         —         (14,462     —         32,018       101,658  

(Government grants)

     (21     —         —         10       —         —         (11

Leasehold rights

     4,632       —         —         (545     —         957       5,044  

Greenhouse gas emissions rights

     6,283       —         —         —         —         (6,283     —    

Others

     72,562       47,402       (377     (23,018     54       84,602       181,225  

(Government grants)

     —           —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 980,821       143,887       (661     (113,672     34       176,712       1,187,121  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

24.

Intangible Assets other than Goodwill, Continued

 

(3)

Significant specific intangible assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won and thousands of Australian dollars       

2018

Type

  

Description

   Currency      Amount     

Remaining useful lives

Software

  

ERP system and others

     KRW        783     

2 years and 2 months ~

2 years and 4 months

  

Electricity sales information system

     KRW        6,477      4 years

Copyrights, patents rights and other industrial rights

  

Smart technology verification and standard

design project conducting right

     KRW        9,256      3 years and 9 months
  

Contributions to ARP NRC DC

     KRW        46,594      9 years

Mining rights

  

Mining right of Bylong mine

     AUD        401,225      - (*)

Development expenditures

  

Electricity sales information system

     KRW        22,337      3 years and 3 months

Usage rights of donated assets and others

  

Sejong Haengbogdosi sharing charge

Dangjin power plant load facility usage right

    

KRW

KRW

 

 

    
35,923
14,167
 
 
  

7 years and 11 months

2 years and 3 months

Others

  

Occupancy and use of public waters

     KRW        97,858      17 years and 11 months

 

(*)   Mining rights are amortized using the units-of-production method and the amortization has not commenced yet.

In millions of won and thousands of Australian dollars       

2017

Type

  

Description

   Currency      Amount     

Remaining useful lives

Software

  

ERP system and others

     KRW        1,135     

3 years and 2 months ~

3 years and 4 months

  

AMI GATEWAY S/W

     KRW        3,528      3 years and 2 months

Copyrights, patents rights and other industrial rights

  

Smart technology verification and standard design project conducting right

     KRW        11,724      4 years and 9 months

Mining rights

  

Mining right of Bylong mine

     AUD        401,225      - (*)

Development expenditures

  

Electricity sales information system

     KRW        29,391      4 years and 3 months

Intangible assets under development

  

Contributions to ARP NRC DC

     KRW        46,458      —  

Usage rights of donated assets and others

  

Sejong Haengbogdosi sharing charge

Dangjin power plant load facility usage right

    

KRW

KRW

 

 

    

40,460

20,463

 

 

  

8 years and 11 months

3 years and 3 months

Others

  

Occupancy and use of public waters

     KRW        103,269      18 years and 11 months

(*)   Mining rights are amortized using the units-of-production method and the amortization has not commenced yet.

 

(4)

For the years ended December 31, 2018 and 2017, the Company recognized research and development expenses of W723,888 million and W721,437 million, respectively.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

25. Trade and Other Payables

Trade and other payables as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Current      Non-current      Current      Non-current  

Trade payables

   W 3,411,830        —          2,936,990        —    

Other trade payables

     1,630,860        2,626,876        1,649,933        2,825,039  

Accrued expenses

     1,127,796        1,859        1,087,844        1,951  

Leasehold deposits received

     1,949        1,084        1,562        1,308  

Other deposits received

     169,317        72,453        186,817        102,896  

Finance lease liabilities

     57,200        226,606        131,792        286,468  

Dividends payable

     6,443        —          4,448        —    

Others (*)

     —          12,818        135        5,818  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 6,405,395        2,941,696        5,999,521        3,223,480  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Details of others as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Current      Non-current      Current      Non-current  

Advance received from local governments

   W —          5,818        —          5,818  

Others

     —          7,000        135        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —          12,818        135        5,818  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

26.

Borrowings and Debt Securities

 

(1)

Borrowings and debt securities as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Current liabilities

     

Short-term borrowings

   W 860,602        1,038,328  

Current portion of long-term borrowings

     312,994        128,543  

Current portion of debt securities

     6,790,778        7,961,182  

Less : Current portion of discount on long-term borrowings

     (972      (886

Less : Current portion of discount on debt securities

     (1,974      (3,882

Add : Current portion of premium on debt securities

     20        —    
  

 

 

    

 

 

 
     7,961,448        9,123,285  
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term borrowings

     3,280,015        2,455,737  

Debt securities

     49,905,077        43,270,825  

Less : Discount on long-term borrowings

     (22,000      (21,113

Less : Discount on debt securities

     (89,913      (81,424

Add : Premium on debt securities

     —          82  
  

 

 

    

 

 

 
     53,073,179        45,624,107  
  

 

 

    

 

 

 
   W 61,034,627        54,747,392  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

26.

Borrowings and Debt Securities, Continued

 

(2)

Repayment schedule of borrowings and debt securities as of December 31, 2018 and 2017 are as follows:

 

In millions of won              

2018

 

Type

   Borrowings      Debt securities  

Less than 1 year

   W 1,173,596        6,790,778  

1~ 5 years

     1,911,226        30,175,734  

Over 5 years

     1,368,789        19,729,343  
  

 

 

    

 

 

 
   W 4,453,611        56,695,855  
  

 

 

    

 

 

 

 

In millions of won              

2017

 

Type

   Borrowings      Debt securities  

Less than 1 year

   W 1,166,871        7,961,182  

1~ 5 years

     1,117,222        25,047,075  

Over 5 years

     1,338,515        18,223,750  
  

 

 

    

 

 

 
   W 3,622,608        51,232,007  
  

 

 

    

 

 

 

 

(3)

Short-term borrowings as of December 31, 2018 and 2017 are as follows:

 

In millions of won and thousands of foreign currencies  

2018

 

Type

  

Creditor

   Interest rate (%)      Maturity     Foreign
currency
     Local
currency
 

Local short-term borrowings

  

KTB Investment and securities and others

     2.05~2.51        2019.01.04~2019.02.20       —        W 674,000  

Foreign short-term borrowings

  

SCNT and others

     4.60~6.50        2019.12.03       USD 8,955        10,013  

Foreign short-term borrowings

  

BDO Unibank

     6.59        2020.12.17(*)       PHP 450,000        9,581  

Local bank overdraft

  

Nonghyup Bank

     2.59~3.09        2019.01.10~2019.12.31       —          142,773  

Local bank overdraft

  

Woori Bank

     Standard overdraft rate+1.09        2019.02.26       —          24,235  
             

 

 

 
              W 860,602  
             

 

 

 

 

(*)

The contractual maturity is 2020 but is classified as short-term borrowing due to intention of early payment in 3 months after borrowing.

 

In millions of won and thousands of foreign currencies  

2017

 

Type

  

Creditor

   Interest rate (%)      Maturity      Foreign
currency
     Local
currency
 

Local short-term borrowings

  

KTB Investment and securities and others

     1.57~2.47        2018.01.12~ 2018.09.19        —        W 686,561  

Foreign short-term borrowings

  

SCNT and others

     4.60~6.50        2018.12.03        USD 8,955        9,594  

Foreign short-term borrowings

  

Export-import Bank of

Korea

     3M Libor+0.41~0.63        2018.12.18        AUD 327,259        273,314  

Local bank overdraft

  

Nonghyup Bank

     3.04        2018.01.02        —          51,300  

Local bank overdraft

  

Woori Bank

     Standard overdraft rate+1.12        2018.02.27        —          17,559  
              

 

 

 
               W 1,038,328  
              

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

26.

Borrowings and Debt Securities, Continued

 

(4)

Long-term borrowings as of December 31, 2018 and 2017 are as follows:

 

In millions of won and thousands of foreign currencies  

2018

 

Type

   Interest rate (%)      Maturity      Foreign
currency
     Local
currency
 

Local long-term borrowings

              

Korea Development Bank

   Others      0.50        2019~2044        —        W 4,154  
  

Facility

     2.45~4.60        2023~2028        —          66,793  
  

Operating funds

     2.59~3.56        2020~2021        —          67,000  
  

Operating funds

    

1yr KoFC bond rate

+0.95

 

 

     2020        —          14,000  

KEB Hana Bank

   Commercial Paper      3M CD+0.19~0.32        2021~2023        —          950,000  
  

Facility

     4.60        2028        —          13,781  
  

Facility

     3yr KTB rate-1.25        2019~2028        —          8,072  

IBK

   PF Refinancing      CD+1.25        2030        —          22,500  

Export-Import Bank of Korea

   Project loans      1.50        2026        —          22,096  
  

Operating funds

     2.21        2020        —          35,000  

Korea Energy Agency

   Development of power resources      3yr KTB rate-2.25        2023~2025        —          5,558  
  

Facility

     3yr KTB rate-2.25        2019~2024        —          2,589  
  

Project loans

     —          2023        —          1,197  
  

Others

     KTB rate -2.25        2024~2028        —          17,347  

Shinhan Bank

   Collateral borrowing      2.32        2019        —          30,000  
  

Facility

     CB rate+1.10        2028        —          20,672  
  

Others

     3.95        2035        —          103,851  
  

Others

    
Standard overdraft
rate+1.00
 
 
     2035        —          103,851  

Kookmin Bank

   Facility      3.16        2020        —          10,000  
  

Facility

     MOR+0.79        2023        —          30,333  

Others

   Facility      1.75~4.60        2026~2036        —          168,080  
  

Facility

     CB rate+1.10~1.60        2023~2036        —          52,810  
  

PF Refinancing

     4.10        2030        —          62,500  
  

Others

     4.50~7.90        2022~2039        —          102,347  
              

 

 

 
                 1,914,531  
              

 

 

 

Foreign long-term borrowings

           

Korea Energy Agency

   Project loans      —          2021~2023      USD  8,744        9,776  

Export-Import Bank of Korea and others

   Direct loan and others      1M Libor+1.80~3.20        2036      USD   123,909        138,542  
  

Direct loan and others

     3M Libor+2.75~3.70        2027      JOD  158,524        249,783  
  

Commercial loan and others

     3M Libor+1.50~2.50        2030~2033      USD  277,538        310,315  
  

PF Loan

     6M Libor+1.70~2.50        2032      USD  126,798        141,773  

SCNT and others

   Shareholder’s loan      8.00        2031      JOD  4,853        7,647  
  

Shareholder’s loan

     6.50~8.00        2023      USD  44,680        49,956  
  

Others

     3.88        2021      USD  278,105        310,427  

PT PJB

   Shareholder’s loan      12.75        2019      IDR   5,569,304        428  

Samsung Life Insurance and others

   Syndicated Loan      3.10        2032      JPY  5,286,835        53,565  

Woori Bank and others

   Syndicated Loan      JPY 6M Libor+2.00        2032      JPY   3,410,381        34,553  

SMBC and others

   Equity Bridge Loan      1M Libor+0.90        2019      USD  44,019        49,218  

IFC and others

   Others      6M Libor+5.00        2031      PKR   25,900,420        206,944  

Federal Financing Bank and others

   PF loan      2.39~13.00        2031~2038      USD  102,322        114,406  

Others

   Others      —          2019      USD  1,025        1,145  
              

 

 

 
                 1,678,478  
              

 

 

 
           3,593,009  

Less : Discount of long-term borrowings

 

           (22,972

Less : Current portion of long-term borrowings

 

           (312,994

Add : Current portion of discount on long-term borrowings

 

           972  
        

 

 

 
               W 3,258,015  
        

 

 

 

 

114


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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

26.

Borrowings and Debt Securities, Continued

 

(4)

Long-term borrowings as of December 31, 2018 and 2017 are as follows, continued:

 

In millions of won and thousands of foreign currencies  

2017

 

Type

   Interest rate (%)      Maturity      Foreign
currency
     Local
currency
 

Local long-term borrowings

 

Korea Development Bank

   Others      0.50        2018~2044        —        W 4,909  
   Facility      2.45~4.60        2023~2028        —          68,883  
   Facility     

1yr KoFC bond rate

+0.31

 

 

     2018        —          25,000  
   Operating funds      2.59~3.04        2018~2020        —          47,000  
   Operating funds     

1yr KoFC bond rate

+0.95

 

 

     2020        —          14,000  

KEB Hana Bank

   Commercial Paper      3M CD+0.24~0.32        2021~2022        —          400,000  
   Facility      4.60        2028        —          15,038  
   Facility      3yr KTB rate-1.25        2018~2028        —          8,947  

IBK

   PF Refinancing      CD+1.25        2030        —          22,500  

Export-Import Bank of

   Project loans      1.50        2026        —          25,042  

Korea

   Operating funds      2.21        2020        —          35,000  

Korea Energy Agency

   Development of power resources      3yr KTB rate-2.25        2023~2025        —          6,765  
   Facility      3yr KTB rate-2.25        2018~2024        —          3,121  
   Project loans      —          2022~2025        —          3,733  
   Others      KTB rate -2.25        2024~2028        —          18,455  

Shinhan Bank

   Collateral borrowing      2.32        2019        —          30,000  
   Facility      CB rate +1.10        2028        —          22,557  
   Operating funds      2.70        2018        —          15,000  
   Others      4.10        2035        —          105,000  
   Others     
Standard overdraft
rate +1.10
 
 
     2035        —          105,000  

Kookmin Bank

   Facility      3.16        2020        —          10,000  
   Facility      MOR+0.79        2023        —          35,000  

Others

   Facility      1.75~4.60        2026~2029        —          148,423  
  

Facility

     CB rate +1.10~1.20        2022~2028        —          46,278  
  

PF Refinancing

     4.10        2030        —          62,500  
  

Others

     4.50~8.00        2022~2039        —          102,346  
              

 

 

 
                 1,380,497  
              

 

 

 

Foreign long-term borrowings

           

Korea Energy Agency

   Project loans      —          2021~2023      USD  8,744        9,368  

Export-Import Bank of Korea and others

   Direct loan and others      1M Libor+1.80~3.20        2036      USD   64,913        69,548  
   Direct loan and others      3M Libor+2.75~3.70        2027      JOD  168,663        254,514  
   Commercial loan and others      3M Libor+1.50~2.50        2030~2033      USD  289,026        309,662  
   PF Loan      6M Libor+1.70~2.50        2032      USD  123,253        132,054  

SCNT and others

   Shareholder’s loan      6.50~8.00        2023      USD  41,718        44,697  
   Shareholder’s loan      8.00        2031      JOD  5,136        7,750  

PT PJB

   Shareholder’s loan      12.75        2019      IDR   10,932,568        864  

Samsung Life Insurance and others

   Syndicated Loan      3.10        2032      JPY  5,325,000        50,540  

Woori Bank and others

   Syndicated Loan      JPY 6M Libor +2.00        2032      JPY  3,435,000        32,602  

SMBC and others

   Equity Bridge Loan      1M Libor+0.90        2019      USD  70,986        76,054  

IFC and others

   Others      6M Libor+5.00        2031      PKR   16,652,350        161,195  

Federal Financing Bank

   PF loan      2.39        2031      USD  48,366        51,819  

Others

   Others      —          2019      USD  2,907        3,116  
              

 

 

 
                 1,203,783  
        

 

 

 
                 2,584,280  

Less : Discount of long-term borrowings

 

           (21,999

Less : Current portion of long-term borrowings

 

           (128,543

Add : Current portion of discount on long-term borrowings

 

           886  
        

 

 

 
         W 2,434,624  
        

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

26.

Borrowings and Debt Securities, Continued

 

 

(5)

Local debt securities as of December 31, 2018 and 2017 are as follows:

 

In millions of won  
    

Issue date

   Maturity    Interest rate (%)    2018     2017  

Electricity bonds

  

2009.12.03~2018.12.04

   2019.01.08~2048.10.29    1.62~5.45    W 24,480,000       20,700,000  

Electricity bonds

  

2013.06.25

   2018.06.25    3M CD+0.31            150,000  

Corporate bonds (*1)

  

2009.05.04~2018.11.09`

   2019.01.21~2048.11.09    1.36~6.00      23,223,228       21,122,708  
           

 

 

   

 

 

 
              47,703,228       41,972,708  

Less : Discount on local debt securities

        (41,247     (37,816

Less : Current portion of local debt securities

        (5,330,000     (5,200,000

Add : Current portion of discount on local debt securities

        1,035       923  
  

 

 

   

 

 

 
            W 42,333,016       36,735,815  
  

 

 

   

 

 

 

 

(*1)

Corporate bonds of HeeMang Sunlight Power Co., Ltd. amounting to W2,697 million can be redeemed every March 31 after five years from its issue date, March 31, 2016.

 

(6)

Foreign debt securities as of December 31, 2018 and 2017 are as follows:

 

In millions of won and thousands of foreign currencies  

2018

 

Type

  

Issue date

   Maturity    Interest
rate (%)
   Foreign
currency
     Local
currency
 

FY-96

   1996.04.01~1996.12.06    2026.12.01~2096.04.01    6.00~8.37    USD  249,071      W 278,488  

FY-97

   1997.01.31~1997.08.04    2027.02.01~2027.08.01    6.75~7.00    USD  314,717        351,885  

FY-04

   2004.04.23    2034.04.23    5.13    USD  286,920        320,805  

FY-11

   2011.07.13    2021.07.13    4.75    USD  500,000        559,050  

FY-12

   2012.09.19    2022.09.19    3.00    USD  750,000        838,575  

FY-13

   2013.09.26~2013.10.23    2019.03.26~2019.04.23    1.50~1.63    CHF  400,000        454,488  

FY-13

   2013.09.25    2020.09.25    5.75    AUD  325,000        256,038  

FY-14

   2014.02.11~2014.12.02    2019.02.11~2029.07.30    2.38~3.57    USD  1,500,000        1,677,150  

FY-15

   2015.06.15    2025.06.15    3.25    USD  300,000        335,430  

FY-16

   2016.01.21    2021.07.21    2.50    USD  300,000        335,430  

FY-17

   2017.04.12~2017.07.25    2020.04.12~2027.07.25    2.38~3.13    USD  1,100,000        1,229,910  

FY-17

   2017.10.30    2037.10.30    1.70    EUR  40,000        51,166  

FY-17

   2017.11.16    2037.11.16    2.36    SEK  450,000        56,061  

FY-18

   2018.01.29~2018.07.25    2021.01.29~2023.07.25    3.00~3.88    USD  1,800,000        2,012,580  

FY-18

   2018.03.13    2028.03.13    3.35    HKD    1,650,000        235,571  
              

 

 

 
        8,992,627  

Less : Discount on foreign debt securities

        (50,640

Add : Premium on foreign debt securities

        20  

Less : Current portion of foreign debt securities

        (1,460,778

Add : Current portion of discount on foreign debt securities

        939  

Less: Current portion of premium on foreign debt securities

        (20
     

 

 

 
      W 7,482,148  
     

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

26.

Borrowings and Debt Securities, Continued

 

(6)    Foreign

debt securities as of December 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won and thousands of foreign currencies                
2017  
Type   Issue date   Maturity   Interest rate (%)   Foreign
currency
    Local
currency
 
FY-96   1996.04.01~1996.12.06   2026.12.01~2096.04.01   6.00~8.37     USD 249,070     W 266,854  
FY-97   1997.01.31~1997.08.04   2027.02.01~2027.08.01   6.75~7.00     USD 314,717       337,188  
FY-04   2004.04.23   2034.04.23   5.13     USD 286,920       307,406  
FY-08   2008.11.27   2018.11.27   4.19     JPY 20,000,000       189,822  
FY-11   2011.07.13   2021.07.13   4.75     USD 500,000       535,700  
FY-12   2012.09.19   2022.09.19   3.00     USD 750,000       803,550  
FY-13   2013.02.05~2013.11.27   2018.02.05~2018.11.27   1.88~2.88     USD 1,900,000       2,035,660  
FY-13   2013.09.26~2013.10.23   2019.03.26~2019.04.23   1.50~1.63     CHF 400,000       437,888  
FY-13   2013.09.25   2020.09.25   5.75     AUD 325,000       271,427  
FY-13   2013.02.20~2013.07.25   2018.02.20~2018.07.25   3M
Libor+0.84~1.50
    USD 500,000       535,700  
FY-14   2014.02.11~2014.12.02   2019.02.11~2029.07.30   2.38~3.57     USD 1,500,000       1,607,100  
FY-15   2015.06.15   2025.06.15   3.25     USD 300,000       321,420  
FY-16   2016.01.21   2021.07.21   2.50     USD 300,000       321,420  
FY-17   2017.04.12~2017.07.25   2020.04.12~2027.07.25   2.38~3.13     USD 1,100,000       1,178,540  
FY-17   2017.10.30   2037.10.30   1.70     EUR 40,000       51,170  
FY-17   2017.11.16   2037.11.16   2.36     SEK 450,000       58,454  
         

 

 

 
      9,259,299  

Less : Discount on foreign debt securities

      (47,490

Add : Premium on foreign debt securities

      82  

Less : Current portion of foreign debt securities

      (2,761,182

Add : Current portion of discount on foreign debt securities

      2,959  
   

 

 

 
    W 6,453,668  
   

 

 

 

 

(7)

Changes in borrowings and debt securities for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W 54,747,392        53,639,205  

Cash flow

     5,972,336        2,269,513  

Effect of exchange rate fluctuations

     322,515        (1,169,418

Others

     (7,616      8,092  
  

 

 

    

 

 

 

Ending balance

   W 61,034,627        54,747,392  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

27.

Finance Lease Liabilities

 

(1)

Lease contracts

The Company entered into power purchase agreements (“PPA”) with GS EPS and two other providers. The Company recognizes these PPAs as finance leases; under the PPAs, there is no transfer of ownership or bargain purchase option of the plants at the end of the agreement, however, the present value of the future minimum power purchase payments equals substantially all of the plants’ respective fair values over a twenty-year period which makes up the major part of the respective plant’s economic life.

 

(2)

Finance lease liabilities as of December 31, 2018 and 2017 are as follows and are included in current and non-current trade and other payables, net, in the consolidated statements of financial position:

 

In millions of won    2018      2017  
     Minimum lease
payments
     Present value of
minimum lease
payments
     Minimum
lease
payments
     Present value of
minimum lease
payments
 

Less than 1 year

   W 87,709        57,200        174,534        131,792  

1 ~ 5 years

     228,783        170,676        272,994        204,069  

More than 5 years

     65,250        55,930        108,748        82,399  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 381,742        283,806        556,276        418,260  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(3)

Current and non-current portion of finance lease liabilities as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Current finance lease liabilities

   W 57,200        131,792  

Non-current finance lease liabilities

     226,606        286,468  
  

 

 

    

 

 

 
   W 283,806        418,260  
  

 

 

    

 

 

 

 

(4)

Minimum lease payment and contingent rent payment recognized as an expense as a lessee for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Minimum lease payment

   W 111,530        158,859  
  

 

 

    

 

 

 

Contingent rent payment

     (18,872      (21,024
  

 

 

    

 

 

 

(5)    Changes in finance lease liabilities for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W 418,260        541,179  

Cash flow

     (134,454      (122,919

Acquisition of finance lease assets

     —          —    
  

 

 

    

 

 

 

Ending balance

   W 283,806        418,260  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

28.    Employment Benefits

(1)    Employment benefit obligations as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Net defined benefit obligations

   W 1,638,785        1,476,201  

Other long-term employee benefit obligations

     6,284        6,868  
  

 

 

    

 

 

 
   W 1,645,069        1,483,069  
  

 

 

    

 

 

 

(2)    Principal assumptions on actuarial valuation as of December 31, 2018 and 2017 are as follows:

 

     2018   2017

Discount rate

   2.24% ~ 2.90%   2.75%~2.90%

Future salary and benefit levels

   4.88%   4.88%

Weighted average duration

   13.71 years   13.40 years

 

(3)

Details of expense relating to defined benefit plans for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Current service cost

   W 369,899        392,820  

Interest cost

     87,687        79,524  

Expected return on plan assets

     (42,135      (31,307

Loss from settlement

     (767      (1,055
  

 

 

    

 

 

 
   W 414,684        439,982  
  

 

 

    

 

 

 

Expenses as described above are recognized in those items below in the financial statements.

 

In millions of won    2018      2017  

Cost of sales

   W 308,672        332,249  

Selling and administrative expenses

     51,903        59,111  

Others (Construction-in-progress and others)

     54,109        48,622  
  

 

 

    

 

 

 
   W 414,684        439,982  
  

 

 

    

 

 

 

In addition, for the years ended December 31, 2018 and 2017, employee benefit obligations expenses of W66,833 million and W65,603 million, respectively, is recognized as cost of sales, and W13,204 million and W11,983 million, respectively, is recognized as selling and administrative expenses, and W14,189 million and W13,332 million, respectively, are recognized as construction-in-progress and others, relates to the Company’s defined contribution plans.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

28.

Employment Benefits, Continued

 

(4)

Details of defined benefit obligations as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Present value of defined benefit obligation from

funded plans

   W 3,414,116        2,951,842  

Fair value of plan assets

     (1,775,331      (1,475,641
  

 

 

    

 

 

 

Net liabilities incurred from defined benefit plans

   W 1,638,785        1,476,201  
  

 

 

    

 

 

 

 

(5)

Changes in the present value of defined benefit obligations for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W 2,951,842        2,867,377  

Current service cost

     369,899        392,820  

Interest cost (*)

     87,687        79,524  

Remeasurement component

     154,939        (258,223

Loss from settlement

     (767      (1,055

Actual payments

     (149,454      (128,707

Others

     (30      106  
  

 

 

    

 

 

 

Ending balance

   W 3,414,116        2,951,842  
  

 

 

    

 

 

 

 

(*)

Corporate bond (AAA rated) yield at year-end is applied to measure the interest cost on employee benefit obligations.

 

(6)

Changes in the fair value of plan assets for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W 1,475,641        1,188,907  

Expected return

     42,135        31,307  

Remeasurement component

     (12,308      (10,435

Contributions by the employers

     330,064        325,080  

Actual payments

     (60,201      (59,218
  

 

 

    

 

 

 

Ending balance

   W 1,775,331        1,475,641  
  

 

 

    

 

 

 

In addition, loss on accumulated remeasurement component amounted to W219,381 million and W43,513 million has been recognized as other comprehensive income or loss for the years ended December 31, 2018 and 2017, respectively.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

28.

Employment Benefits, Continued

 

(7)    Details of the fair value of plan assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Equity instruments

   W 96,823        79,204  

Debt instruments

     510,184        517,040  

Bank deposit

     275,518        293,477  

Others

     892,806        585,920  
  

 

 

    

 

 

 
   W 1,775,331        1,475,641  
  

 

 

    

 

 

 

For the years ended December 31, 2018 and 2017, actual returns on plan assets amounted to W29,827 million and W20,872 million, respectively.

 

(8)

Remeasurement component recognized in other comprehensive income (loss) for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Actuarial gain from changes in financial assumptions

   W 186,428        (300,058

Experience adjustments, etc.

     (31,489      41,835  

Expected return

     12,308        10,435  
  

 

 

    

 

 

 
   W 167,247        (247,788
  

 

 

    

 

 

 

Remeasurement component recognized as other comprehensive income or loss is recorded in retained earnings.

 

29.

Provisions

(1)    Provisions as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
  

 

 

    

 

 

 
     Current      Non-current      Current      Non-current  

Employment benefits

           

Provisions for employment benefits

   W 976,347        —          913,787        —    

Litigation

           

Litigation provisions

     40,157        37,636        48,621        24,955  

Decommissioning cost

           

Nuclear plants

     —          13,388,134        —          13,007,228  

Spent fuel

     —          1,291,354        —          1,339,046  

Radioactive waste

     4,310        1,680,698        11,494        1,626,877  

PCBs

     —          147,668        —          180,087  

Other recovery provisions

     —          10,477        —          6,659  

Others

           

Power plant regional support program

     137,668        —          153,756        —    

Transmission regional support program

     151,698        —          243,365        —    

Provisions for tax

     6,845        —          61        —    

Provisions for financial guarantee

     1,320        14,266        —          23,475  

Provisions for RPS

     93,919        —          271,624        —    

Provisions for greenhouse gas emissions obligations

     136,187        —          414,252        —    

Others

     46,347        15,515        80,538        16,387  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,594,798        16,585,748        2,137,498        16,224,714  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

29.

Provisions, Continued

 

(2)

Changes in provisions for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
     Increase in
provision
     Payment     Reversal     Other     Ending
balance
 

Employment benefits

              

Provisions for employment benefits

   W 913,787        912,440        (843,281     (6,599     —         976,347  

Litigation

              

Litigation provisions (*)

     73,576        234,517        (216,187     (13,847     (266     77,793  

Decommissioning cost

              

Nuclear plants

     13,007,228        411,316        (30,410     —         —         13,388,134  

Spent fuel

     1,339,046        435,007        (482,699     —         —         1,291,354  

Radioactive waste

     1,638,371        112,815        (66,178     —         —         1,685,008  

PCBs

     180,087        4,600        (13,758     (23,261     —         147,668  

Other recovery provisions

     6,659        2,125        —         —         1,693       10,477  

Others

              

Power plant regional support program

     153,756        46,366        (71,978     —         9,524       137,668  

Transmission regional support program

     243,365        141,661        (233,328     —         —         151,698  

Provisions for tax

     61        6,821        —         —         (37     6,845  

Provisions for financial guarantee

     23,475        1,179        (67     (8,432     (569     15,586  

Provisions for RPS

     271,624        297,802        (475,507     —           —         93,919  

Provisions for greenhouse gas emissions obligations

     414,252        131,860        (350,356     (59,569     —         136,187  

Others

     96,925        44,732        (82,632     (745     3,582       61,862  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 18,362,212        2,783,241        (2,866,381     (112,453     13,927       18,180,546  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

As described in note 53.(1), the Company believes that the possibility of economic outflow is probable on the request for additional construction costs of Hyundai E&C, GS Engineering & Construction Corp. and Hansol SeenTec Co., Ltd. For this reason, the Company recognized W204,787 million of provision as addition to property, plant and equipment.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

29.

Provisions, Continued

 

(2)

Changes in provisions for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won    2017  
     Beginning
balance
     Increase in
provision
     Payment     Reversal     Other     Ending
balance
 

Employment benefits

              

Provisions for employment benefits

   W 810,607        984,896        (880,255     (1,461     —         913,787  

Litigation

              

Litigation provisions

     198,237        34,629        (152,461     (7,096     267       73,576  

Decommissioning cost

              

Nuclear plants

     10,195,928        2,818,033        (6,733     —         —         13,007,228  

Spent fuel

     1,374,225        307,682        (342,861     —         —         1,339,046  

Radioactive waste

     1,479,502        222,632        (63,763     —         —         1,638,371  

PCBs

     191,744        5,309        (14,266     (2,700     —         180,087  

Other recovery provisions

     507        5,939        —         —         213       6,659  

Others

              

Power plant regional support program

     152,851        94,039        (103,889     —         10,755       153,756  

Transmission regional support program

     282,608        143,178        (182,421     —         —         243,365  

Provisions for tax

     242        —          (25     (136     (20     61  

Provisions for financial guarantee

     29,665        3,760        —         (9,945     (5     23,475  

Provisions for RPS

     417,404        242,946        (388,726     —         —         271,624  

Provisions for greenhouse gas emissions obligations

     249,644        422,666        (256,758     (1,300     —         414,252  

Others (*)

     43,975        6,639        (3,348     (26,477     76,136       96,925  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 15,427,139        5,292,348        (2,395,506     (49,115     87,346       18,362,212  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

The Company believes that the possibility of economic outflow is probable on the cost of construction suspension of Shin-Kori unit 5 and 6 for three months. For this reason, the Company recognized W77,261 million of provision as addition to construction-in-progress.

 

30.

Government Grants

 

(1)

Government grants as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Land

   W (21,968      (21,968

Buildings

     (63,189      (63,539

Structures

     (190,854      (196,414

Machinery

     (173,242      (183,188

Vehicles

     (4,220      (6,322

Equipment

     (418      (761

Tools

     (675      (1,027

Construction-in-progress

     (54,740      (49,084

Finance lease assets

     (26      (27

Investment properties

     (50      (83

Software

     (420      (486

Development expenditures

     (2,110      (3,702

Intangible assets under development

     (10,564      (10,540

Usage rights of donated assets and other

     —          (11

Other intangible assets other than goodwill

     —          —    
  

 

 

    

 

 

 
   W (522,476      (537,152
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

30.

Government Grants, Continued

 

 

(2)

Changes in government grants for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
    Receipt     Acquisition      Offset the
items of
depreciation
expense and
others
     Disposal      Others     Ending
balance
 

Cash

   W —         (30,416     —          —          —          30,416       —    

Land

     (21,968     —         —          —          —          —         (21,968

Buildings

     (63,539     —         —          6,836        31        (6,517     (63,189

Structures

     (196,414     —         —          10,292        3,270        (8,002     (190,854

Machinery

     (183,188     —         —          18,099        823        (8,976     (173,242

Vehicles

     (6,322     —         —          2,146        —          (44     (4,220

Equipment

     (761     —         —          365        —          (22     (418

Tools

     (1,027     —         —          432        —          (80     (675

Construction-in-progress

     (49,084     —         18,239        —          —          (23,895     (54,740

Finance lease assets

     (27     —         —          1        —          —         (26

Investment properties

     (83     —         —          1        —          32       (50

Software

     (486     —         —          254        —          (188     (420

Development expenditures

     (3,702     —         —          1,591        —          1       (2,110

Intangible assets under

development

     (10,540     —         —          —          —          (24     (10,564

Usage rights of donated

assets and other

     (11     —         —          11        —          —         —    

Others

     —         —         —          —          —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   W (537,152     (30,416     18,239        40,028        4,124        (17,299     (522,476
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

In millions of won    2017  
     Beginning
balance
    Receipt     Acquisition      Offset the
items of
depreciation
expense and
others
     Disposal      Others     Ending
balance
 

Cash

   W —           (55,533     —          —          —          55,533       —    

Land

     (3,204     —         —          —          5        (18,769     (21,968

Buildings

     (61,188     —         —          5,996        28        (8,375     (63,539

Structures

     (197,641     —         —          10,011        1,905        (10,689     (196,414

Machinery

     (111,064     —         —          17,390        489        (90,003     (183,188

Vehicles

     (107     —         —          1,070        14        (7,299     (6,322

Equipment

     (732     —         —          454        —          (483     (761

Tools

     (430     —         —          354        —          (951     (1,027

Construction-in-progress

     (135,807     —         129,451        —          —          (42,728     (49,084

Finance lease assets

     —         —         —          1        —          (28     (27

Investment properties

     (64     —         —          2        —          (21     (83

Software

     (595     —         —          255        —          (146     (486

Development expenditures

     (5,152     —         —          2,811        —          (1,361     (3,702

Intangible assets under

development

     (11,090     —         —          —          —          550       (10,540

Usage rights of donated

assets and other

     (21     —         —          10        —          —         (11

Others

     —         —         —          —          —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   W (527,095     (55,533     129,451        38,354        2,441        (124,770     (537,152
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

31.

Deferred Revenues

Deferred revenue related to the Company’s construction contracts for the years ended December 31, 2018 and 2017 are as follows which included in current and non-current non-financial liabilities in the consolidated statements of financial position:

 

In millions of won    2018      2017  

Beginning balance

   W 8,325,181        7,825,765  

Increase during the current year

     875,930        978,389  

Recognized as revenue during the current year

     (594,548      (478,973
  

 

 

    

 

 

 

Ending balance

   W 8,606,563        8,325,181  
  

 

 

    

 

 

 

 

32.

Non-financial Liabilities

Non-financial liabilities as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Current      Non-current      Current      Non-current  

Advance received

   W 3,724,238        80,937        3,772,713        181,612  

Unearned revenue

     63,038        4,690        41,593        19,718  

Deferred revenue

     556,072        8,050,491        476,631        7,848,550  

Withholdings

     172,454        10,856        164,370        10,529  

Others

     1,058,239        13,059        1,129,001        12,025  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,574,041        8,160,033        5,584,308        8,072,434  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

33.

Contributed Capital

 

(1)

Details of shares issued as of December 31, 2018 and 2017 are as follows:

 

In millions of won except share information  
     2018  
     Shares
authorized
     Shares issued      Par value
per share
(in won)
     Owned by
government (*)
     Owned by
others
     Total  

Common shares

     1,200,000,000        641,964,077      W 5,000        1,640,385        1,569,435        3,209,820  

 

(*)

Korea Development Bank’s interest of W1,056,176 million is included.

 

In millions of won except share information

 

     2017  
     Shares
authorized
     Shares issued      Par value
per share
(in won)
     Owned by
government (*)
     Owned by
others
     Total  

Common shares

     1,200,000,000        641,964,077      W 5,000        1,640,385        1,569,435        3,209,820  

 

(*)

Korea Development Bank’s interest of W1,056,176 million is included.

 

(2)

Details in number of outstanding capital stock for the years ended December 31, 2018 and 2017 are as follows:

 

Number of shares    2018      2017  

Beginning balance

     641,964,077        641,964,077  
  

 

 

    

 

 

 

Ending balance

     641,964,077        641,964,077  
  

 

 

    

 

 

 

 

(3)

Details of share premium as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Share premium

   W 843,758        843,758  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

34.

Retained Earnings and Dividends Paid

 

(1)

Details of retained earnings as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Legal reserve (*)

   W 1,604,910        1,604,910  

Voluntary reserves

     35,906,267        34,833,844  

Retained earnings before appropriations

     14,007,942        16,931,804  
  

 

 

    

 

 

 

Retained earnings

   W 51,519,119        53,370,558  
  

 

 

    

 

 

 

 

(*)

The KEPCO Act requires KEPCO to appropriate a legal reserve equal to at least 20 percent of net income for each accounting period until the reserve equals 50 percent of KEPCO’s common stock. The legal reserve is not available for cash dividends; however, this reserve may be credited to paid-in capital or offset against accumulated deficit by the resolution of the shareholders.

 

(2)

Details of voluntary reserves as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Reserve for investment on social overhead capital

   W 5,277,449        5,277,449  

Reserve for research and human development (*)

     330,000        330,000  

Reserve for business expansion

     30,088,818        29,016,395  

Reserve for equalizing dividends

     210,000        210,000  
  

 

 

    

 

 

 
   W 35,906,267        34,833,844  
  

 

 

    

 

 

 

 

(*)

The reserve for research and human development is appropriated by KEPCO to use as qualified tax credits to reduce corporate tax liabilities. The reserve is available for cash dividends for a certain period as defined by the Restriction of Special Taxation Act of Korea.

 

(3)

Changes in retained earnings for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Beginning balance

   W 53,370,558        53,173,871  

Effect of change in accounting policy

     71,928        —    

Net profit (loss) for the period attributed to owner of the Company

     (1,314,567      1,298,720  

Changes in equity method retained earnings

     (1,153      10,065  

Remeasurement of defined benefit liability, net of tax

     (100,495      158,991  

Dividends paid

     (507,152      (1,271,089
  

 

 

    

 

 

 

Ending balance

   W 51,519,119        53,370,558  
  

 

 

    

 

 

 

 

(4)

Dividends paid for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Number of
shares issued
     Number of
treasury stocks
     Number of
shares eligible for
dividends
     Dividends paid
per share
(in won)
     Dividends
paid
 

Common shares

     641,964,077        —          641,964,077      W 790        507,152  
              
In millions of won    2017  
     Number of
shares issued
     Number of
treasury stocks
     Number of
shares eligible for
dividends
     Dividends paid
per share
(in won)
     Dividends
paid
 

Common shares

     641,964,077        —          641,964,077      W 1,980        1,271,089  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

34.

Retained Earnings and Dividends Paid, Continued

 

(5)

Changes in retained earnings of investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as follows :

 

In millions of won    2018      2017  

Beginning balance

   W 5,122        (4,943

Changes

     (1,153      10,065  
  

 

 

    

 

 

 

Ending balance

   W 3,969        5,122  
  

 

 

    

 

 

 

 

(6)

Changes in remeasurement components related to defined benefit liability for the years ended December 31, 2018 and 2017 are as follows :

 

In millions of won    2018      2017  

Beginning balance

   W (43,513      (222,997

Changes

     (154,198      239,636  

Income tax effect

     53,703        (80,645

Transfer to reserve for business expansion

     (75,373      20,493  
  

 

 

    

 

 

 

Ending balance

   W (219,381      (43,513
  

 

 

    

 

 

 

 

35.

Statement of Disposition of Deficit

For the year ended December 31, 2017, KEPCO’s retained earnings were appropriated on March 30, 2018. For the year ended December 31, 2018, KEPCO’s deficits are expected to be disposed on March 22, 2019. Statements of disposition of deficit and appropriation of retained earnings of KEPCO, the controlling company, for the years ended December 31, 2018 and 2017, respectively, are as follows:

 

In millions of won except for dividends per share    2018      2017  

I. Retained earnings before appropriations (undisposed deficit)

     

Unappropriated retained earnings carried over from prior years

   W —          —    

Effect of change in accounting policy

     39,813        —    

Net income (loss)

     (1,095,213      1,506,852  

Remeasurement of the defined benefit plan

     (65,442      72,723  
  

 

 

    

 

 

 
     (1,120,842      1,579,575  
  

 

 

    

 

 

 

II. Transfer from voluntary reserves

     1,120,842        —    
  

 

 

    

 

 

 

III. Subtotal ( I+II )

     —          1,579,575  
  

 

 

    

 

 

 

IV. Appropriations of retained earnings

     —          (1,579,575

Legal reserve

     —          —    

Dividends (government, individual)

(Amount of dividends per share (%) : Current year – W0

                                                              Prior year – W790 (16%))

     —          (507,152

Reserve for business expansion

     —          (1,072,423

V. Unappropriated retained earnings to be carried over forward to subsequent year

     —          —    

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

36.

Hybrid Bonds

Hybrid bonds classified as equity (non-controlling interest) as of December 31, 2018 and 2017 are as follows:

 

In millions of won                                         

Issuer

   Hybrid bond      Issued date      Maturity      Yield (%)      2018     2017  

Korea South-East Power Co., Ltd.

     1st hybrid bond        2012.12.07        2042.12.06        4.38      W 170,000       170,000  

Korea South-East Power Co., Ltd.

     2nd hybrid bond        2012.12.07        2042.12.06        4.44        230,000       230,000  

Expense of issuance

                 (1,090     (1,090
              

 

 

   

 

 

 
               W  398,910       398,910  
              

 

 

   

 

 

 

Although these instruments have contractual maturity dates, the contractual agreements allow these subsidiaries to indefinitely extend the maturity dates and defer the payment of interest without modification to the other terms of the instruments. When the Company decides not to pay dividends on ordinary shares, they are not required to pay interest on the hybrid bonds.

Substantially, as these instruments have no contractual obligation to pay principal and interest, these instruments have been classified as equity (non-controlling interest) in the Company’s consolidated financial statements.

 

37.

Other Components of Equity

 

(1)

Other components of equity as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Other capital surplus

   W 1,234,825        1,233,793  

Accumulated other comprehensive loss

     (358,570      (271,457

Other equity

     13,294,973        13,294,973  
  

 

 

    

 

 

 
   W 14,171,228        14,257,309  
  

 

 

    

 

 

 

 

(2)

Changes in other capital surplus for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Gain on disposal
of

treasury
stocks
     Others      Subtotal      Gain on disposal
of

treasury
stocks
     Others     Subtotal  

Beginning balance

   W 387,524        846,269        1,233,793        387,524        847,622       1,235,146  

Issuance of share capital of subsidiary

     —          1,032        1,032        —          (1,378     (1,378

Others

     —          —          —          —          25       25  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ending balance

   W 387,524        847,301        1,234,825        387,524        846,269       1,233,793  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

37.

Other Components of Equity, Continued

 

(3)

Changes in accumulated other comprehensive income (loss) for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Available-for-sale
financial asset
valuation reserve
    Shares in other
comprehensive

income of
investments in
associates and joint
ventures
    Reserve
for

overseas
operations

translation
    Reserve for
loss on
valuation of
derivatives
    Total  

Beginning balance

   W 29,268       66,464       (318,159     (49,030     (271,457

Effect of change in accounting Policy

     (76,851     —         —         —         (76,851

Changes in the unrealized fair value of available-for-sale financial assets, net of tax

     (34,125     —         —         —         (34,125

Shares in other comprehensive income of associates and joint ventures, net of tax

     —         57,089       —         —         57,089  

Foreign currency translation of foreign operations, net of tax

     —         —         (32,086     —         (32,086

Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax

     —         —         —         (1,140     (1,140
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   W (81,708     123,553       (350,245     (50,170     (358,570
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
In millions of won    2017  
     Available-for-sale
financial asset
valuation reserve
    Shares in other
comprehensive

income of
investments in
associates and joint
ventures
    Reserve
for

overseas
operations

translation
    Reserve for
loss on
valuation of
derivatives
    Total  

Beginning balance

   W 36,370       221,455       (223,056     (68,644     (33,875

Changes in the unrealized fair value of available-for-sale financial assets, net of tax

     (7,102     —         —         —         (7,102

Shares in other comprehensive income of associates and joint ventures, net of tax

     —         (154,991     —         —         (154,991

Foreign currency translation of foreign operations, net of tax

     —         —         (95,103     —         (95,103

Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax

     —         —         —         19,614       19,614  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   W 29,268       66,464       (318,159     (49,030     (271,457
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(4)

Details of changes in other equity for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Statutory revaluation reserve

   W 13,295,098        13,295,098  

Changes in other equity

     (125      (125
  

 

 

    

 

 

 
   W 13,294,973        13,294,973  
  

 

 

    

 

 

 

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

38.

Sales

Details of sales for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Domestic      Overseas      Total      Domestic      Overseas      Total  

[Type of goods and services]

 

              

Sales of goods

   W 57,514,866        382,938        57,897,804        55,373,316        399,232        55,772,548  

Electricity

     56,842,011        —          56,842,011        54,649,882        —          54,649,882  

Heat supply

     216,117        —          216,117        205,838        —          205,838  

Others

     456,738        382,938        839,676        517,596        399,232        916,828  

Sales of service

     176,539        216,328        392,867        186,990        164,167        351,157  

Sales of construction services

     108,586        1,633,805        1,742,391        92,501        3,119,683        3,212,184  

Revenue related to transfer of assets from customers

     594,548        —          594,548        478,973        —          478,973  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 58,394,539        2,233,071        60,627,610        56,131,780        3,683,082        59,814,862  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

[Timing of revenue recognition]

 

              

Performance obligations satisfied at a point in time

   W 57,514,866        382,938        57,897,804        55,373,316        399,232        55,772,548  

Performance obligations satisfied over time

     879,673        1,850,133        2,729,806        758,464        3,283,850        4,042,314  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 58,394,539        2,233,071        60,627,610        56,131,780        3,683,082        59,814,862  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

39.

Selling and Administrative Expenses

 

(1)

Selling and administrative expenses for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Salaries

   W 757,819        735,383  

Retirement benefit expense

     65,107        71,094  

Welfare and benefit expense

     132,089        179,406  

Insurance expense

     12,181        15,414  

Depreciation

     214,499        190,245  

Amortization of intangible assets

     54,153        44,990  

Bad debt expense

     39,784        126,714  

Commission

     714,096        673,740  

Advertising expense

     30,894        114,519  

Training expense

     6,277        7,027  

Vehicle maintenance expense

     10,148        9,998  

Publishing expense

     3,307        3,672  

Business development expense

     2,785        3,700  

Rent expense

     42,851        38,380  

Telecommunication expense

     23,505        24,916  

Transportation expense

     686        495  

Taxes and dues

     46,424        48,395  

Expendable supplies expense

     6,166        7,731  

Water, light and heating expense

     12,629        10,545  

Repairs and maintenance expense

     62,580        63,477  

Ordinary development expense

     215,494        211,417  

Travel expense

     14,363        16,658  

Clothing expense

     10,108        8,410  

Survey and analysis expense

     705        698  

Membership fee

     1,043        1,122  

Others

     148,197        154,709  
  

 

 

    

 

 

 
   W 2,627,890        2,762,855  
  

 

 

    

 

 

 

 

(2)

Other selling and administrative expenses for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Accommodation development expenses

   W 52,822        55,799  

Miscellaneous wages

     32,447        32,300  

Litigation and filing expenses

     12,853        11,881  

Compensation for damages

     19,193        12,297  

Outsourcing expenses

     3,036        2,647  

Reward expenses

     2,713        2,786  

Overseas market development expenses

     1,361        1,876  

Others

     23,772        35,123  
  

 

 

    

 

 

 
   W 148,197        154,709  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

40.

Other Non-operating Income and Expense

 

(1)

Other non-operating income for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Reversal of other provisions

   W 12,700        35,265  

Reversal of other allowance for bad debt

     143        2,166  

Gains on government grants

     482        430  

Gains on assets contributed

     17,336        4,218  

Gains on liabilities exempted

     10,303        3,166  

Compensation and reparations revenue

     89,901        89,196  

Revenue from research contracts

     6,818        12,580  

Rental income

     186,631        192,136  

Others

     51,032        50,988  
  

 

 

    

 

 

 
   W 375,346        390,145  
  

 

 

    

 

 

 

 

(2)

Details of others of other non-operating income for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Refund of claim for rectification

   W 8,933        9,655  

Adjustment of research project

     2,267        3,884  

Maintenance expenses on lease building

     176        135  

Training expenses

     3,220        3,045  

Deposit redemption

     7        34  

Reversal of expenses on litigation

     753        360  

Revenue on royalty fee

     6,909        2,888  

Reimbursement of insurance fee

     7,145        1,498  

Gains on guarantee contracts

     39        456  

Others

     21,583        29,033  
  

 

 

    

 

 

 
   W 51,032        50,988  
  

 

 

    

 

 

 

 

(3)

Other non-operating expense for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Compensation and indemnification expense

   W 23,437        37  

Accretion expenses of other provisions

     41,924        7,535  

Depreciation expenses on investment properties

     923        1,176  

Depreciation expenses on idle assets

     6,547        6,644  

Other bad debt expense

     17,827        1,778  

Donations

     63,743        119,421  

Others

     76,929        43,464  
  

 

 

    

 

 

 
   W 231,330        180,055  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

40.

Other Non-operating Income and Expense, Continued

 

(4)

Details of others of other non-operating expense for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Operating expenses related to the idle assets

   W 47        136  

Research grants

     461        1,180  

Supporting expenses on farming and fishing village

     13,537        11,956  

Operating expenses on fitness center

     4,788        3,498  

Expenses on adjustment of research and development grants

     404        806  

Taxes and dues

     199        2,270  

Expenses on R&D supporting

     53        5,459  

Others (*)

     57,440        18,159  
  

 

 

    

 

 

 
   W 76,929        43,464  
  

 

 

    

 

 

 

 

(*)

Others include W38,886 million of impairment loss on construction-in-progress of Cheonji unit 1 and 2 and Daejin unit 1 and 2 as described in note 2.

 

41.

Other Gains (Losses)

 

(1)

Composition of other gains (losses) for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Other gains

     

Gains on disposal of property, plant and equipment

   W 98,077        48,316  

Gains on disposal of intangible assets

     12        564  

Reversal of impairment loss on intangible assets

     17        54  

Gains on foreign currency translation

     14,905        20,485  

Gains on foreign currency transaction

     47,297        93,151  

Gains on insurance proceeds

     —          400  

Others

     221,556        269,562  

Other losses

     

Losses on disposal of property, plant and equipment

     (60,704      (70,514

Losses on disposal of intangible assets

     (43      (183

Impairment loss on property, plant and equipment

     (710,162      (51,067

Impairment loss on intangible assets

     (8,112      (20

Impairment loss on other non-current assets

     (87,024      —    

Losses on foreign currency translation

     (7,678      (25,495

Losses on foreign currency transaction

     (65,366      (36,241

Others

     (63,899      (92,385
  

 

 

    

 

 

 
   W (621,124      156,627  
  

 

 

    

 

 

 

 

(2)

Details of others of other gains for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Gains on disposal of inventories

   W 6,350        6,024  

Gains on proxy collection of TV license fee

     40,450        39,711  

Gains on compensation of impaired electric poles

     1,166        1,526  

Gains on compensation for infringement on contract

     3,648        18,990  

Gains on harbor facilities dues

     3,803        3,025  

Gains on technical fees

     2,026        2,105  

Reversal of occupation development training fees

     1,602        1,697  

Gains on disposal of waste

     4,232        4,261  

Gains on insurance

     22,382        10,410  

Gains on tax rebate

     542        2,161  

Gains on other commission

     4,347        4,790  

Others

     131,008        174,862  
  

 

 

    

 

 

 
   W 221,556        269,562  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

41.

Other Gains (Losses), Continued

 

(3)

Details of others of other losses for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Losses on valuation of inventories

   W 1,953        3,875  

Losses on disposal of inventories

     3,555        3,273  

Losses due to disaster

     2,129        5,374  

Losses on rounding adjustment of electric charge surtax

     1,265        1,253  

Losses on adjustments of levies

     —          1  

Forfeit of taxes and dues

     —          656  

Others

     54,997        77,953  
  

 

 

    

 

 

 
   W 63,899        92,385  
  

 

 

    

 

 

 

 

42.

Finance Income

 

(1)

Finance Income for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Interest income

   W 223,767        206,143  

Dividends income

     12,777        11,477  

Gains on disposal of financial assets

     1,838        1,130  

Gains on valuation of financial assets at fair value through profit or loss

     8,495        12  

Gains on valuation of derivatives

     199,943        16,165  

Gains on transaction of derivatives

     179,745        29,257  

Gains on foreign currency translation

     143,254        1,115,832  

Gains on foreign currency transaction

     27,051        150,602  
  

 

 

    

 

 

 
   W 796,870        1,530,618  
  

 

 

    

 

 

 

 

(2)

Interest income included in finance income for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Cash and cash equivalents

   W 40,704        35,474  

Financial assets at fair value through profit or loss

     21,713        —    

Available-for-sale financial assets

     —          290  

Financial assets at amortized cost

     89        —    

Held-to-maturity investments

     —          82  

Loans

     21,925        30,014  

Short-term financial instrument

     41,025        29,412  

Long-term financial instrument

     7,920        8,144  

Other financial assets

     1        —    

Trade and other receivables

     90,390        102,727  
  

 

 

    

 

 

 
   W 223,767        206,143  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

43.

Finance Expenses

 

(1)

Finance expenses for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Interest expense

   W 1,868,458        1,789,552  

Losses on sale of financial assets

     1        2,343  

Losses on valuation of financial assets at fair value through profit or loss

     6,616        —    

Impairment of available-for-sale financial assets

     —          2,713  

Losses on valuation of derivatives

     46,740        890,832  

Losses on transaction of derivatives

     32,448        198,218  

Losses on foreign currency translation

     393,859        207,944  

Losses on foreign currency transaction

     121,763        35,175  

Losses on repayment of financial liabilities

     —          5  

Other

     858        1,170  
  

 

 

    

 

 

 
   W 2,470,743        3,127,952  
  

 

 

    

 

 

 

 

(2)

Interest expense included in finance expenses for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Trade and other payables

   W 42,830        57,160  

Short-term borrowings

     32,545        35,891  

Long-term borrowings

     92,243        87,011  

Debt securities

     1,771,544        1,698,232  

Other financial liabilities

     505,112        491,665  
  

 

 

    

 

 

 
     2,444,274        2,369,959  

Less: Capitalized borrowing costs

     (575,815      (580,407
  

 

 

    

 

 

 
   W 1,868,458        1,789,552  
  

 

 

    

 

 

 

Capitalization rates for the years ended December 31, 2018 and 2017 are 2.17%~3.86% and 2.30%~3.60% respectively.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

44.

Income Taxes

 

(1)

Income tax expense (benefit) for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Current income tax expense

     

Payment of income tax

   W 378,715        881,583  

Adjustment in respect of prior years due to change in estimate

     (195,648      4,484  

Current income tax directly recognized in equity

     101,528        (56,098

Effect of change in accounting policy

     1,780        —    
  

 

 

    

 

 

 
     286,375        829,969  
  

 

 

    

 

 

 

Deferred income tax expense

     

Generation and realization of temporary differences

     (495,658      1,283,012  

Changes of unrecognized tax losses, tax credit and temporary differences for prior periods

     (28,509      44,573  

Changes in deferred tax on tax losses carryforwards

     (572,305      —    

Tax credit carryforwards

     (16,224      15,270  
  

 

 

    

 

 

 
     (1,112,696      1,342,855  
  

 

 

    

 

 

 

Income tax expense (benefit)

   W (826,321      2,172,824  
  

 

 

    

 

 

 

 

(2)

Reconciliation between actual income tax expense and amount computed by applying the statutory tax rate to income before income taxes for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Income (loss) before income tax

   W (2,000,819      3,614,218  
  

 

 

    

 

 

 

Income tax expense (benefit) computed at applicable tax rate (*1)

     (550,225      874,641  
  

 

 

    

 

 

 

Adjustments

     

Effect of applying gradual tax rate

     (1,408      (5,082

Effect of non-taxable income

     (1,705      (32,032

Effect of non-deductible expenses

     40,151        15,032  

Effect of tax losses that are not recognized as deferred tax asset

     2,086        —    

Effects of tax credits and deduction

     (39,471      (161,069

Reversal of unrecognized deferred tax asset, net

     (28,509      44,573  

Effect of change in deferred tax due to change in tax rate

     261        1,055,154  

Deferred income tax related to investments in subsidiaries and associates

     (52,618      394,145  

Others, net

     765        (17,022
  

 

 

    

 

 

 
     (80,448      1,293,699  

Adjustment in respect of prior years due to change in estimate

     (195,648      4,484  
  

 

 

    

 

 

 

Income tax expense (benefit)

   W (826,321      2,172,824  
  

 

 

    

 

 

 

Effective tax rate

     (*2      60.10

 

(*1)

Applicable tax rate is 27.5% and 24.2% as of December 31, 2018 and 2017, respectively.

(*2)

The effective tax rate for the year ended December 31, 2018 is not calculated for income tax benefit.

 

(3)

Income tax directly adjusted to shareholders’ equity (except for accumulated other comprehensive income (loss)) for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Dividends of hybrid bond

   W 4,273        5,248  

Effect of change in effective tax rate

     —          (25
  

 

 

    

 

 

 
   W 4,273        5,223  
  

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

44.

Income Taxes, Continued

 

(4)

Income tax recognized as other comprehensive income (loss) for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Income tax recognized as other comprehensive income (loss)

     

Gain (loss) on valuation of financial assets at fair value through other comprehensive income

   W 35,798        —      

Gain (loss) on valuation of available-for-sale financial assets

     —          (2,551

Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax

     6,639        (11,016

Remeasurement of defined benefit obligations

     53,703        (80,645

Investments in associates

     6,592        8,649  

Others

     (5,477      24,242  
  

 

 

    

 

 

 
   W 97,255        (61,321
  

 

 

    

 

 

 

 

(5)

Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
    Amounts
recognized
in profit or
loss
    Amount
recognized in
other
comprehensive
income (loss)
    Amounts
recognized
directly
in equity
     Ending
balance
 

Deferred income tax on temporary differences

           

Employee benefits

   W 498,694       42,144       53,703       —          594,541  

Cash flow hedge

     65,445       (32,623     6,639       —          39,461  

Investments in associates or subsidiaries

     (8,668,016     (5,447     6,592       —          (8,666,871

Property, plant and equipment

     (6,860,440     337,662       —         —          (6,522,778

Finance lease

     (426,949     (26,125     —         —          (453,074

Intangible assets

     7,648       (1,593     —         —          6,055  

Financial assets at fair value through profit or loss

     890       (871     —         —          19  

Financial assets at fair value through other comprehensive income

     (8,843     (1,379     35,798       —          25,576  

Deferred revenue

     230,711       (10,969     —         —          219,742  

Provisions

     4,822,833       (21,887     —         —          4,800,946  

Doubtful receivables

     59       —         —         —          59  

Other finance liabilities

     32,755       2,465       —         4,273        39,493  

Gains or losses on foreign exchange translation

     (1,354     28,434       —         —          27,080  

Allowance for doubtful accounts

     42,931       15,825       —         —          58,756  

Accrued income

     (1,825     (1,089     —         —          (2,914

Special deduction for property, plant and equipment

     (200,927     (10,819     —         —          (211,746

Reserve for research and human development

     (3,041     3,041       —         —          —    

Others

     952,754       105,869       (5,477     —          1,053,146  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     (9,516,675     422,638       97,255       4,273        (8,992,509
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Deferred income tax on unused tax losses and tax credit

           

Unused tax losses

     —         554,457       —         —          554,457  

Excess of donation limit

     —           17,848       —           —            17,848  

Tax credit

     20,431       16,225       —         —          36,656  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     20,431       588,530       —         —          608,961  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
   W (9,496,244     1,011,168       97,255       4,273        (8,383,548
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

44.

Income Taxes, Continued

 

(5)

Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won    2017  
     Beginning
balance
    Amounts
recognized
in profit or
loss
    Amount
recognized in
other
comprehensive
income (loss)
    Amounts
recognized
directly
in equity
    Ending
balance
 

Deferred income tax on temporary differences

          

Employee benefits

   W 493,331       86,008       (80,645     —         498,694  

Cash flow hedge

     (53,583     130,044       (11,016     —         65,445  

Investments in associates or subsidiaries

     (7,166,345     (1,510,295     8,649       (25     (8,668,016

Property, plant and equipment

     (5,527,318     (1,333,122     —         —         (6,860,440

Finance lease

     (345,431     (81,518     —         —         (426,949

Intangible assets

     8,987       (1,339     —         —         7,648  

Financial assets at fair value through profit or loss

     (62     952       —         —         890  

Available-for-sale financial assets

     (68,347     62,055       (2,551     —         (8,843

Deferred revenue

     213,859       16,852       —         —         230,711  

Provisions

     3,583,371       1,239,462       —         —         4,822,833  

Doubtful receivables

     2,696       (2,637     —         —         59  

Other finance liabilities

     30,249       (2,742     —         5,248       32,755  

Gains or losses on foreign exchange translation

     138,938       (140,292     —         —         (1,354

Allowance for doubtful accounts

     17,252       25,679       —         —         42,931  

Accrued income

     (5,367     3,542       —         —         (1,825

Special deduction for property, plant and equipment

     (194,309     (6,618     —         —         (200,927

Reserve for research and human development

     (12,883     9,842       —         —         (3,041

Others

     695,870       232,642       24,242       —         952,754  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (8,189,092     (1,271,485     (61,321     5,223       (9,516,675
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deferred income tax on unused tax losses and tax credit

          

Tax credit

     35,703       (15,272     —         —         20,431  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     35,703       (15,272     —         —         20,431  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W (8,153,389     (1,286,757     (61,321     5,223       (9,496,244
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(6)

Deferred income tax assets (liabilities) recognized in the statements of financial position as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Deferred income tax assets

   W 1,233,761        919,153  

Deferred income tax liabilities

     (9,617,309      (10,415,397
  

 

 

    

 

 

 
   W (8,383,548      (9,496,244
  

 

 

    

 

 

 

 

(7)

Details of deductible temporary differences, tax losses and unused tax credits for which no deferred income tax assets were recognized as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Deductible temporary differences

   W 442,391        444,426  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

45.

Assets Held-for-Sale

Assets held-for-sale as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Land (*1)

   W 2,765        2,765  

Building (*1)

     19,369        19,369  

Investments in associates (*2, 3, 4)

     —          5,837  

Investments in subsidiaries (*5)

     747        —    
  

 

 

    

 

 

 
   W 22,881        27,971  
  

 

 

    

 

 

 

 

(*1)

The board of directors of KEPCO Engineering & Construction Company, Inc., a subsidiary of the Company, determined to dispose the office building in Yongin as part of the government’s plan to relocate state-run companies for balanced national development and moved the head office to Kimchun, Kyungsangbukdo, in 2015. As the Company believes the book value of Yongin office will be recovered by a disposal transaction rather than continuous operation, it reclassified buildings, land and structures as assets held-for-sale.

(*2)

Korea Western Power Co., Ltd., a subsidiary of the Company, planned to dispose certain portion of its investment in Dongducheon Dream Power Co., Ltd. and had classified the relevant book value as non-current assets held-for-sale. However, due to uncertainty of sale, it reclassified the relevant book value to investments in associates during the year ended December 31, 2017.

(*3)

Korea Hydro & Nuclear Power Co., Ltd., a subsidiary of the Company, initiated efforts to sell its shares in Yeongwol Energy Station Co., Ltd. during the year ended December 31, 2016. KHNP sold its shares in Yeongwol Energy Station Co. during the year ended December 31, 2018 accordingly.

(*4)

KEPCO Engineering & Construction Company, Inc., a subsidiary of the Company, exercised a put option to sell the shares of DS POWER Co., Ltd. on December 11, 2017 and the shares were sold on February 28, 2018.

(*5)

KOWEPO India Private Limited was in the process of liquidating its business as of December 31, 2018 and has been reclassified to assets held-for-sale, accordingly.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

46.

Expenses Classified by Nature

Expenses classified by nature for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Selling and
administrative expenses
     Cost of sales      Total  

Raw materials used

   W —          19,537,928        19,537,928  

Salaries

     757,819        3,478,804        4,236,623  

Retirement benefit expense

     65,107        375,505        440,612  

Welfare and benefit expense

     132,089        464,483        596,572  

Insurance expense

     12,181        93,876        106,057  

Depreciation

     214,499        9,683,887        9,898,386  

Amortization of intangible assets

     54,153        64,785        118,938  

Bad debt expense

     39,784        —          39,784  

Commission

     714,096        475,188        1,189,284  

Advertising expense

     30,894        9,419        40,313  

Training expense

     6,277        14,096        20,373  

Vehicle maintenance expense

     10,148        7,809        17,957  

Publishing expense

     3,307        3,530        6,837  

Business promotion expense

     2,785        3,860        6,645  

Rent expense

     42,851        171,132        213,983  

Telecommunication expense

     23,505        82,568        106,073  

Transportation expense

     686        4,537        5,223  

Taxes and dues

     46,424        440,317        486,741  

Expendable supplies expense

     6,166        31,844        38,010  

Water, light and heating expense

     12,629        34,640        47,269  

Repairs and maintenance expense

     62,580        2,156,668        2,219,248  

Ordinary development expense

     215,494        508,394        723,888  

Travel expense

     14,363        67,064        81,427  

Clothing expense

     10,108        4,368        14,476  

Survey and analysis expense

     705        3,929        4,634  

Membership fee

     1,043        11,563        12,606  

Power purchase

     —          18,307,289        18,307,289  

Others

     148,197        2,170,238        2,318,435  
  

 

 

    

 

 

    

 

 

 
   W 2,627,890        58,207,721        60,835,611  
  

 

 

    

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

46.

Expenses Classified by Nature, Continued

 

    

Expenses classified by nature for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won    2017  
     Selling and
administrative expenses
     Cost of sales      Total  

Raw materials used

   W —          15,924,707        15,924,707  

Salaries

     735,383        3,479,591        4,214,974  

Retirement benefit expense

     71,094        397,852        468,946  

Welfare and benefit expense

     179,406        543,738        723,144  

Insurance expense

     15,414        90,677        106,091  

Depreciation

     190,245        9,461,974        9,652,219  

Amortization of intangible assets

     44,990        68,682        113,672  

Bad debt expense

     126,714        —          126,714  

Commission

     673,740        469,695        1,143,435  

Advertising expense

     114,519        10,917        125,436  

Training expense

     7,027        14,362        21,389  

Vehicle maintenance expense

     9,998        7,468        17,466  

Publishing expense

     3,672        4,248        7,920  

Business promotion expense

     3,700        4,973        8,673  

Rent expense

     38,380        148,509        186,889  

Telecommunication expense

     24,916        73,956        98,872  

Transportation expense

     495        9,145        9,640  

Taxes and dues

     48,395        437,643        486,038  

Expendable supplies expense

     7,731        31,994        39,725  

Water, light and heating expense

     10,545        30,150        40,695  

Repairs and maintenance expense

     63,477        2,047,943        2,111,420  

Ordinary development expense

     211,417        510,020        721,437  

Travel expense

     16,658        69,015        85,673  

Clothing expense

     8,410        4,985        13,395  

Survey and analysis expense

     698        3,661        4,359  

Membership fee

     1,122        8,482        9,604  

Power purchase

     —          14,264,331        14,264,331  

Others

     154,709        3,980,137        4,134,846  
  

 

 

    

 

 

    

 

 

 
   W 2,762,855        52,098,855        54,861,710  
  

 

 

    

 

 

    

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

47.

Earnings (Loss) Per Share

 

(1)

Basic earnings (loss) per share for the years ended December 31, 2018 and 2017 are as follows:

 

In won              

Type

   2018      2017  

Basic earnings per share

   W (2,048      2,023  

 

(2)

Net profit (loss) for the period and weighted average number of common shares used in the calculation of basic earnings per share for the years ended December 31, 2018 and 2017 are as follows

 

In millions of won except number of shares              

Type

   2018      2017  

Net income attributable to controlling interest

   W (1,314,567      1,298,720  

Profit used in the calculation of total basic earnings per share

     (1,314,567      1,298,720  

Weighted average number of common shares

     641,964,077        641,964,077  

 

(3)

Weighted average number of common shares used in the calculation of basic earnings (loss) per share for the years ended December 31, 2018 and 2017 are as follows:

 

In number of shares              

Type

   2018      2017  

The number of common shares issued at beginning of the year

     641,964,077        641,964,077  

Weighted average number of common shares

     641,964,077        641,964,077  

 

(4)

There are no potential dilutive instruments and diluted earnings (loss) per share are same as basic earnings (loss) per share for the years ended December 31, 2018 and 2017.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management

 

(1)

Capital risk management

The Company manages its capital to ensure that entities in the Company will be able to continue while maximizing the return to shareholder through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (offset by cash and cash equivalents) and equity. The Company’s overall capital risk management strategy remains consistent with the prior year.

Details of the Company’s capital management accounts as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018     2017  

Total borrowings and debt securities

   W 61,034,627       54,747,392  

Cash and cash equivalents

     1,358,345       2,369,739  
  

 

 

   

 

 

 

Net borrowings and debt securities

     59,676,282       52,377,653  
  

 

 

   

 

 

 

Total shareholder’s equity

   W 71,092,762       72,964,641  
  

 

 

   

 

 

 

Debt to equity ratio

     83.94     71.78

 

(2)

Financial risk management

The Company is exposed to various risks related to its financial instruments, such as, market risk (currency risk, interest rate risk, price risk), credit risk. The Company monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. The Company uses derivative financial instruments to hedge certain risk exposures. The Company’s overall financial risk management strategy remains consistent with the prior year.

 

  (i)

Credit risk

Credit risk is the risk of finance loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the sales activities, securities and derivatives. In addition, credit risk exposure may exist within financial guarantees and unused line of credits. As these financial institutions the Company makes transactions with are reputable financial institutions, the credit risk from them are considered limited. The Company decides credit transaction limits based on evaluation of client’s credit, through information obtained from the credit bureau and disclosed financial position at committing contracts.

 

 

Credit risk management

Electricity sales, the main operations of the Company are the necessity for daily life and industrial activities of Korean nationals, and have importance as one of the national key industries. The Company dominates the domestic market supplying electricity to customers. The Company is not exposed to significant credit risk as customers of the Company are diverse and are from various industries and areas. The Company uses publicly available information and its own internal data related to trade receivables, to rate its major customers and to measure the credit risk that a counter party will default on a contractual obligation. For the incurred but not recognized loss, it is measured considering overdue period.

 

 

Impairment and allowance account

In accordance with the Company policies, individual material financial assets are assessed on a regular basis, trade receivables that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Value of the acquired collateral (including the confirmation of feasibility) and estimated collectable amounts are included in this assessment.

Allowance for bad debts assessed on a collective basis are recognized for (i) the group of assets which individually are not material and (ii) incurred but not recognized losses that are assessed using statistical methods, judgment and past experience.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(2)

Financial risk management, continued

 

Book values of the financial assets represent the maximum exposed amounts of the credit risk. Details of the Company’s level of maximum exposure to credit risk as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Cash and cash equivalents

   W 1,358,345        2,369,739  

Financial assets at fair value through profit or loss

     920,935        —    

Financial assets at fair value through profit or loss

     —          111,512  

Derivative assets (trading)

     37,631        22,020  

Equity investment at fair value through other comprehensive income

     399,495        —    

Available-for-sale financial assets

     —          699,833  

Financial assets at amortized cost

     14,042        —    

Held-to-maturity investments

     —          3,144  

Loans

     718,674        905,641  

Long-term/short-term financial instruments

     2,318,027        2,244,514  

Derivative assets (applying hedge accounting)

     64,704        10,606  

Trade and other receivables

     9,613,437        9,683,769  

Financial guarantee contracts (*)

     1,310,817        1,154,862  

 

(*)

Maximum exposure associated with the financial guarantee contracts is the maximum amounts of the obligation.

As of the reporting date, there are no financial assets and non-financial assets that were acquired through the exercise of the right of collateralized assets and reinforcement of credit arrangement.

 

  (ii)

Market risk

Market risk is the risk that the Company’s fair values of the financial instruments or future cash flows are affected by the changes in the market. Market risk consists of interest rate risk, currency risk and other price risk.

 

  (iii)

Sensitivity analysis

Significant assets and liabilities with uncertainties in underlying assumptions

 

 

Defined benefit obligation

A sensitivity analysis of defined benefit obligation assuming a 1% increase and decrease movements in the actuarial valuation assumptions as of December 31, 2018 and 2017 are as follows:

 

In millions of won   

2018

     2017  

Type

  

Accounts

  

1% Increase

   1% Decrease      1% Increase      1% Decrease  

Future salary increases

  

Increase (decrease) in defined benefit obligation

   W416,956      (363,820      354,852        (305,494

Discount rate

  

Increase (decrease) in defined benefit obligation

   (377,221)      445,833        (313,597      377,148  

Changes of employee benefits assuming a 1% increase and decrease movements in discount rate on plan asset for the years ended December 31, 2018 and 2017 are W14,646 million and W8,926 million, respectively.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(2)

Financial risk management, continued

 

 

Provisions

Changes in provisions due to movements in underlying assumptions as of December 31, 2018 and 2017 are as follows:

 

Type

  

Accounts

   2018     2017  

PCBs

  

Inflation rate

     1.27     1.23
  

Discount rate

     2.18     2.55

Nuclear plants

  

Inflation rate

     1.21     1.21
  

Discount rate

     2.94     2.94

Spent fuel

  

Inflation rate

     2.93     2.93
  

Discount rate

     4.49     4.49

A sensitivity analysis of provisions assuming a 0.1% increase and decrease movements in the underlying assumptions as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018     2017  

Type

  

Accounts

   0.1%
Increase
    0.1%
Decrease
    0.1%
Increase
    0.1%
Decrease
 

Discount rate

  

PCBs

   W (623     627       (811     816  
  

Nuclear plants

     (256,513     263,595       (262,949     270,370  
  

Spent fuel

     (49,182     51,098       (51,015     52,997  

Inflation rate

  

PCBs

     632       (629     826       (822
  

Nuclear plants

     294,984       (287,110     287,926       (280,249
  

Spent fuel

     51,837       (49,961     53,763       (51,823

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(2)

Financial risk management, continued

 

Management judgment effected by uncertainties in underlying assumptions

 

 

Foreign currency risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities as of December 31, 2018 and 2017 are as follows:

 

In thousands of foreign currencies    Assets      Liabilities  

Type

   2018      2017      2018      2017  

AED

     10,513        5,693        5,890        2,049  

AUD

     143        145        717,712        652,259  

BDT

     71,575        60,208        1,175        1,001  

BWP

     1,214        797        —          —    

CAD

     96        82        4        171  

CHF

     —          —          400,000        400,004  

CNY

     —          13,007        26,140        26,140  

EUR

     337        5,708        105,673        68,003  

GBP

     —          3        1        2,327  

HKD

     —          —          1,650,000        —    

IDR

     60,568        167,775        206,935        —    

INR

     1,228,795        1,228,259        183,963        227,078  

JOD

     2,764        1,624        5        5  

JPY

     35,935        799,501        390,921        21,624,128  

KZT

     319        359                

MGA

     3,318,447        2,762,572        170,641        319,581  

NOK

     —          —          —          482  

PHP

     709,285        189,261        66,985        125,431  

PKR

     305,542        251,190        3,588        4,676  

SAR

     2,024        1,191        —          44  

SEK

     —          —          450,000        449,002  

USD

     1,422,510        1,653,858        8,103,602        8,321,335  

UYU

     39,898        12,955        4,253        10,586  

ZAR

     170        361        4        4  

MMK

     25,208        —          —          —    

GHS

     25,794        —          —          —    

A sensitivity analysis on the Company’s income for the period assuming a 10% increase and decrease in currency exchange rates as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Type

   10% Increase      10% Decrease      10% Increase      10% Decrease  

Increase (decrease) of profit before income tax

   W (887,561      887,561        (844,122      844,122  

Increase (decrease) of shareholder’s equity (*)

     (887,561      887,561        (844,122      844,122  

 

(*)

The effect on the shareholders’ equity excluding the impact of income taxes.

The sensitivity analysis above is conducted for monetary assets and liabilities denominated in foreign currencies other than functional currency, without consideration of hedge effect of related derivatives, as of December 31, 2018 and 2017.

To manage its foreign currency risk related to foreign currency denominated receivables and payables, the Company has a policy to enter into currency forward agreements. In addition, to manage its foreign currency risk related to foreign currency denominated expected sales transactions and purchase transactions, the Company enters into cross-currency swap agreements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(2)

Financial risk management, continued

 

 

Interest rate risk

The Company is exposed to interest rate risk due to its borrowing with floating interest rates. A 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

The Company’s borrowings and debt securities with floating interest rates as of December 31, 2018 and 2017 are as follows:

 

In millions of won       

Type

   2018      2017  

Short-term borrowings

   W 24,235        290,873  

Long-term borrowings

     2,358,860        1,743,252  

Debt securities

     —          685,700  
  

 

 

    

 

 

 
   W 2,383,095        2,719,825  
  

 

 

    

 

 

 

A sensitivity analysis on the Company’s long-term borrowings and debt securities assuming a 1% increase and decrease in interest rates, without consideration of hedge effect of related derivatives for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Type

   1% Increase      1% Decrease      1% Increase      1% Decrease  

Increase (decrease) of profit before income tax

   W (23,831      23,831        (27,198      27,198  

Increase (decrease) of shareholder’s equity (*)

     (23,831      23,831        (27,198      27,198  

 

(*)

The effect on the shareholders’ equity excluding the impact of income taxes.

To manage its interest rate risks, the Company enters into certain interest swap agreements or maintains an appropriate mix of fixed and floating rate borrowings.

 

 

Electricity rates risk

The Company is exposed to electricity rates risk due to the rate regulation of the government which considers the effect of electricity rate on the national economy.

A sensitivity analysis on the Company’s income for the period assuming a 1% increase and decrease in price of electricity for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Type

   1% Increase      1% Decrease      1% Increase      1% Decrease  

Increase (decrease) of profit before income tax

   W 568,420        (568,420      546,499        (546,499

Increase (decrease) of shareholder’s equity (*)

     568,420        (568,420      546,499        (546,499

 

(*)

The effect on the shareholders’ equity excluding the impact of income taxes.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(2)

Financial risk management, continued

 

  (iv)

Liquidity risk

The Company has established an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by continuously monitoring forecasted and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

In addition, the Company has established credit lines on its trade financing and bank overdrafts, and through payment guarantees it has received, it maintains an adequate credit (borrowing) line. In addition, the Company has the ability to utilize excess cash or long-term borrowings for major construction investments.

The following table shows the details of maturities of non-derivative financial liabilities as of December 31, 2018 and 2017. This table, based on the undiscounted cash flows of the non-derivative financial liabilities including estimated interests, has been prepared based on the respective liabilities’ earliest maturity date.

 

In millions of won    2018  

Type

   Less than
1 year
     1~2 Years      2~5 Years      More than
5 years
     Total  

Borrowings and debt securities

   W 10,204,471        9,274,378        28,143,311        25,312,534        72,934,694  

Finance lease liabilities

     87,709        87,709        141,074        65,250        381,742  

Trade and other payables

     6,348,195        150,479        375,661        2,188,950        9,063,285  

Financial guarantee contracts (*)

     91,722        855,488        363,607               1,310,817  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 16,732,097        10,368,054        29,023,653        27,566,734        83,690,538  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
In millions of won    2017  

Type

   Less than 1
year
     1~2 Years      2~5 Years      More than 5
years
     Total  

Borrowings and debt securities

   W 10,748,437        7,948,320        21,331,394        22,694,867        62,723,018  

Finance lease liabilities

     174,534        87,709        185,284        108,749        556,276  

Trade and other payables

     5,867,729        301,165        698,289        1,937,558        8,804,741  

Financial guarantee contracts (*)

     7,081        18,054        1,049,667        80,060        1,154,862  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 16,797,781        8,355,248        23,264,634        24,821,234        73,238,897  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

This represents the total guarantee amounts associated with the financial guarantee contracts. Financial guarantee liabilities which are recognized as of December 31, 2018 and 2017 are W15,586 million W23,475 million, respectively.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(2)

Financial risk management, continued

 

The expected maturities for non-derivative financial assets as of December 31, 2018 and 2017 in detail are as follows:

 

In millions of won    2018  

Type

   Less than 1 year      1~5 Years      More than
5 years
     Other (*)      Total  

Cash and cash equivalents

   W 1,358,345        —          —          —          1,358,345  

Equity investment at fair value through other comprehensive income

     —          —          —          399,495        399,495  

Financial assets at amortized cost

     11,956        2,086        —          —          14,042  

Loans

     123,646        314,744        319,988        —          758,378  

Long-term/short-term financial Instruments

     1,869,286        278,899        164,057        5,785        2,318,027  

Financial assets at fair value through profit or loss

     313,893        81,828        483,398        41,816        920,935  

Trade and other receivables

     7,795,619        1,067,800        701,743        57,651        9,622,813  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 11,472,745        1,745,357        1,669,186        504,747        15,392,035  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
In millions of won    2017  

Type

   Less than 1 year      1~5 Years      More than
5 years
     Other (*)      Total  

Cash and cash equivalents

   W 2,369,739        —          —          —          2,369,739  

Available-for-sale financial assets

     —          —          214,156        485,677        699,833  

Held-to-maturity investments

     5        3,139        —          —          3,144  

Loans

     244,309        261,672        429,628        10,821        946,430  

Long-term/short-term financial Instruments

     1,702,084        201,821        340,304        305        2,244,514  

Financial assets at fair value through profit or loss

     —          —          111,512        —          111,512  

Trade and other receivables

     7,930,715        920,539        788,795        52,031        9,692,080  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 12,246,852        1,387,171        1,884,395        548,834        16,067,252  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

The maturities cannot be presently determined.

Derivative liabilities classified by maturity periods which from reporting date to maturity date of contract as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  

Type

   Less than
1 year
    1~2 Years     2~5 Years     More than
5 years
    Total  

Net settlement

          

- Trading

   W —         —         —         —         —    

Gross settlement

          

- Trading

     5,734       16,565       28,283       40,124       90,706  

- Hedging

     5,154       (43,447     71,840       (40,917     (7,370
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 10,888       (26,882     100,123       (793     83,336  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
In millions of won    2017  

Type

   Less than
1 year
    1~2 Years     2~5 Years     More than
5 years
    Total  

Net settlement

          

- Trading

   W (774     —         —         —         (774

Gross settlement

          

- Trading

     (51,496     (19,887     (16,597     (4,967     (92,947

- Hedging

     (17,547     (28,977     (192,205     (44,137     (282,866
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W (69,817     (48,864     (208,802     (49,104     (376,587
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(3)

Fair value risk

The fair value of the Company’s actively-traded financial instruments (i.e. FVTPL, FVOCI, etc.) is based on the traded market-price as of the reporting period end. The fair value of the Company’s financial assets is the amount which the asset could be exchanged for or the amount a liability could be settled for.

The fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the Company uses that technique.

For trade receivables and payables, the Company considers the carrying value net of impairment as fair value. While for disclosure purposes, the fair value of financial liabilities is estimated by discounting a financial instruments with similar contractual cash flows based on the effective interest method.

 

  (i)

Fair value and book value of financial assets and liabilities as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Type

   Book value      Fair value      Book value      Fair value  

Assets recognized at fair value

           

Financial assets at fair value through other comprehensive income

   W 399,495        399,495        —          —    

Available-for-sale financial assets (*1)

     —          —          699,833        699,833  

Derivative assets (trading)

     37,631        37,631        22,020        22,020  

Derivative assets (applying hedge accounting)

     64,704        64,704        10,606        10,606  

Long-term financial instruments

     —          —          542,430        542,430  

Short-term financial instruments

     —          —          1,702,084        1,702,084  

Financial assets at fair value through profit or loss

     920,935        920,935        —          —    

Financial assets at fair value through profit or loss

     —          —          111,512        111,512  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,422,765        1,422,765        3,088,485        3,088,485  
  

 

 

    

 

 

    

 

 

    

 

 

 

Assets carried at amortized cost

           

Financial assets at amortized cost

   W 14,042        14,042        —          —    

Held-to-maturity investments

     —          —          3,144        3,144  

Loans and receivables

     718,674        718,674        905,641        905,641  

Long-term financial instruments

     448,741        448,741        —          —    

Short-term financial instruments

     1,869,286        1,869,286        —          —    

Trade and other receivables

     9,613,437        9,613,437        9,683,769        9,683,769  

Cash and cash equivalents

     1,358,345        1,358,345        2,369,739        2,369,739  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 14,022,525        14,022,525        12,962,293        12,962,293  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities recognized at fair value

           

Derivative liabilities (trading)

   W 99,010        99,010        150,929        150,929  

Derivative liabilities (applying hedge accounting)

     213,153        213,153        277,130        277,130  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 312,163        312,163        428,059        428,059  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities carried at amortized cost

           

Secured borrowings

   W 741,029        741,029        1,055,554        1,055,554  

Unsecured bond

     56,603,988        58,804,070        51,146,783        53,436,659  

Finance lease liabilities

     283,806        283,806        418,260        418,260  

Unsecured borrowings

     3,522,602        3,950,517        2,476,196        2,477,055  

Trade and other payables (*2)

     9,063,285        9,063,285        8,804,741        8,804,741  

Bank overdraft

     167,008        167,008        68,859        68,859  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 70,381,718        73,009,715        63,970,393        66,261,128  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Book values of equity securities held by the Company that were measured at cost as of December 31, 2017 are W37,926 million, as a quoted market price does not exist in an active market and its fair value cannot be measured reliably.

(*2)

Excludes finance lease liabilities.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(3)

Fair value risk, continued

 

  (ii)

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows, when applicable, are based on the government yield curve at the reporting date plus an adequate credit spread.

The discount rate used for calculating fair value as of December 31, 2018 and 2017 are as follows:

 

Type

  

2018

  

2017

Derivatives

   0.02% ~ 4.16%    0.03% ~ 4.16%

Borrowings and debt securities

   0.51% ~ 5.14%    0.08% ~ 4.38%

Finance lease

   3.50% ~ 10.83%    9.00% ~ 10.83%

 

  (iii)

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, classified as Level 1, 2 or 3, based on the degree to which the fair value is observable.

 

Level 1:    Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2:    Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3:    Inputs that are not based on observable market data.

Fair values of financial instruments by hierarchy level as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  

Type

   Level 1      Level 2      Level 3      Total  

Financial assets at fair value

           

Financial assets at fair value through other comprehensive income

   W 210,056        —          189,439        399,495  

Derivative assets

     —          100,490        1,845        102,335  

Financial assets at fair value through profit or loss

     106,600        809,283        5,052        920,935  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 316,656        909,773        196,336        1,422,765,  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities at fair value

           

Derivative liabilities

   W —          310,008        2,155        312,163  

In millions of won

   2017  

Type

   Level 1      Level 2      Level 3      Total  

Financial assets at fair value

           

Available-for-sale financial assets

   W 274,453        214,156        173,298        661,907  

Derivative assets

     —          18,466        14,160        32,626  

Financial assets at fair value through profit or loss

     —          111,512        —          111,512  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 274,453        344,134        187,458        806,045  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities at fair value

           

Derivative liabilities

   W —          428,059        —          428,059  

The fair value of financial assets (FVTPL and FVOCI) publicly traded is measured at the closing bid price quoted at the end of the reporting period. Meanwhile, the fair value of unquoted financial assets (FVTPL and FVOCI) is calculated using the valuation results from an external pricing service in which weighted average borrowing rates of interest of evaluated companies are used as a discount rate. The fair value of derivatives is measured using valuation model which is determined at the present value of estimated future cash flows discounted at current market interest rate.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

48.

Risk Management, Continued

 

(3)

Fair value risk, continued

 

 

Changes of financial assets and liabilities which are classified as level 3 for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won    2018  
     Beginning
balance
     Effect of
change in
accounting
policy
     Acquisition      Reclassified
category
     Valuation     Disposal     Foreign
currency
translation
     Ending
balance
 

Financial assets at fair value

                     

Financial assets at fair value through profit or loss Cooperative

   W —          5,038        —          —          14       —         —          5,052  

Financial assets at fair value through other comprehensive income Unlisted securities

     —          197,450        —          —          (11,744     (326     4,059        189,439  

 

In millions of won    2017  
     Beginning
balance
     Acquisition      Reclassified
category
    Valuation     Disposal      Foreign
currency
translation
     Ending
balance
 

Financial assets at fair value

                  

Available-for-sale financial assets Unlisted securities

   W 269,461        —          (92,128     (6,201     —          2,166        173,298  

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

49.

Service Concession Arrangements

 

(1)

Gas Complex Thermal Power Plant at Ilijan, Philippines (BOT)

 

  (i)

Significant terms and concession period of the arrangement

The Company has entered into a contract with National Power Corporation (the “NPC”), based in the Republic of the Philippines whereby the Company can collect the electricity rates which are composed of fixed costs and variable costs during the concession period from 2002 to 2022 after building, rehabilitating, and operating the power plant.

 

  (ii)

Rights and classification of the arrangement

The Company has the rights to use and own the power plant during the concession period from 2002 to 2022. At the end of the concession period, the Company has an obligation to transfer its ownership of the power plant to NPC.

 

  (iii)

The Company’s expected future collections of service concession arrangements as of December 31, 2018 are as follows:

 

In millions of won       

Type

   Amounts  

Less than 1 year

   W 116,790  

1~ 2 years

     116,790  

2~ 3 years

     116,790  

Over 3 years

     48,663  
  

 

 

 
   W 399,033  
  

 

 

 

 

(2)    Hydroelectric

Power Generation at Semangka, Indonesia (BOT)

 

  (i)

Significant terms and concession period of the arrangement

The Company has entered into a contract with PT. Perusahaan Listrik Negara (the “PLN”) whereby the Company provides electricity generated and charge tariff rates designed to recover capital cost, fixed O&M cost, water usage cost, variable O&M cost and special facilities cost during the concession period after building, rehabilitating, and operating the power plant for approximately 30 years (2018~2048) subsequent to the completion of plant construction.

 

  (ii)

Rights and classification of the arrangement

The Company has the rights to use and own the power plant during the concession period from 2018 to 2048. At the end of the concession period, PNL has an option to take over the ownership of the power plant from the Company.

 

  (iii)

The Company’s expected future collections of service concession arrangements as of December 31, 2018 are as follows:

 

In millions of won       

Type

   Amounts  

Less than 1 year

   W 27,803  

1~ 2 years

     27,929  

2~ 3 years

     27,863  

Over 3 years

     595,706  
  

 

 

 
   W 679,301  
  

 

 

 

 

  (iv)

Accumulated contract costs and profits related to the Company’s contract in process for the year ended December 31, 2018 are W163,309 million and W9,673 million, respectively. There are no amount due from customers and advance receipts in progress.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties

 

(1)

Related parties of the Company as of December 31, 2018 are as follows:

 

Type

  

Related party

Parent    Republic of Korea government

Subsidiaries

(106 subsidiaries)

   Korea Hydro & Nuclear Power Co., Ltd., Korea South-East Power Co., Ltd., Korea Midland Power Co., Ltd., Korea Western Power Co., Ltd., Korea Southern Power Co., Ltd., Korea East-West Power Co., Ltd., KEPCO Engineering & Construction Company, Inc., KEPCO Plant Service & Engineering Co., Ltd., KEPCO Nuclear Fuel Co., Ltd., KEPCO KDN Co., Ltd., Garolim Tidal Power Plant Co., Ltd., Gyeonggi Green Energy Co., Ltd., Korea Offshore Wind Power Co., Ltd., KOSEP Material Co., Ltd., KEPCO International HongKong Ltd., KEPCO International Philippines Inc., KEPCO Philippines Corporation, KEPCO Ilijan Corporation, KEPCO Gansu International Ltd., KEPCO Philippines Holdings Inc., KEPCO Lebanon SARL, KEPCO Neimenggu International Ltd., KEPCO Australia Pty., Ltd., KEPCO Shanxi International Ltd., KOMIPO Global Pte Ltd., KOSEP Australia Pty., Ltd., KOMIPO Australia Pty., Ltd., KOWEPO Australia Pty., Ltd.,KOSPO Australia Pty., Ltd., KEPCO Netherlands B.V., KOREA Imouraren Uranium Investment Corp., KEPCO Middle East Holding Company, Qatrana Electric Power Company, Korea Electric Power Nigeria Ltd., KOWEPO International Corporation, KOSPO Jordan LLC, Korea Waterbury Uranium Limited Partnership, PT. Cirebon Power Service, EWP America Inc., KHNP Canada Energy, Ltd., KEPCO Bylong Australia Pty., Ltd., KNF Canada Energy Limited, KEPCO Holdings de Mexico, KST Electric Power Company, KEPCO Energy Service Company, KEPCO Netherlands S3 B.V., PT. KOMIPO Pembangkitan Jawa Bali, EWP (Barbados) 1 SRL, PT. Tanggamus Electric Power, KOMIPO America Inc, KOSEP USA, INC., PT. EWP Indonesia, KEPCO Netherlands J3 B.V., Global One Pioneer B.V., Global Energy Pioneer B.V., Mira Power Limited, EWP Philippines Corporation, KEPCO Singapore Holdings Pte., Ltd., KEPCO KPS Philippines Corp., KOSPO Chile SpA, PT. KOWEPO Sumsel Operation And Maintenance Services, Commerce and Industry Energy Co., Ltd., Gyeongju Wind Power Co., Ltd., California Power Holdings, LLC, DG Fairhaven Power, LLC, DG Whitefield, LLC, EWP Renewable Corporation, EWPRC Biomass Holdings, LLC, Springfield Power, LLC, HeeMang Sunlight Power Co., Ltd., Fujeij Wind Power Company, KOSPO Youngnam Power Co., Ltd., HI Carbon Professional Private Special Asset Investment Trust 1, Chitose Solar Power Plant LLC., Solar School Plant Co., Ltd., KEPCO Energy Solution Co. Ltd., KOSPO Power Services Limitada, KOEN Bylong Pty., Ltd., KOWEPO Bylong Pty., Ltd., KOSPO Bylong Pty., Ltd., EWP Bylong Pty., Ltd., KOWEPO Lao International, KOMIPO Bylong Pty Ltd., Energy New Industry Specialized Investment Private Investment Trust., KEPCO US Inc., KEPCO Alamosa LLC, KEPCO Solar of Alamosa, LLC (formerly, Cogentrix of Alamosa, LLC), KEPCO-LG CNS Mangilao Holdings LLC, Mangilao Investment LLC, KEPCO-LG CNS Mangilao Solar, LLC Jeju Hanlim Offshore Wind Co., Ltd., PT, Siborpa Eco Power, e-New Industry LB Fund 1, Songhyun e-New Industry Fund, BSK E-New Industry Fund VII, PT. Korea Energy Indonesia, KOLAT SpA, KEPCO California, LLC, KEPCO Mojave Holdings, LLC, Incheon Fuel Cell Co., Ltd., KOEN Service Co., Ltd., KOMIPO Service Co., Ltd., KOWEPO Service Co., Ltd., KOSPO Service Co., Ltd., EWP Service Co., Ltd., PT. KOMIPO Energy Indonesia

Associates

(58 associates)

   Dongducheon Dream Power Co., Ltd., Korea Gas Corporation, SE Green Energy Co., Ltd., Daegu Photovoltaic Co., Ltd., Jeongam Wind Power Co., Ltd., Korea Power Engineering Service Co., Ltd., Heang Bok Do Si Photovoltaic Power Co., Ltd., Korea Electric Power Industrial Development Co., Ltd., Goseong Green Energy Co., Ltd., Gangneung Eco Power Co., Ltd., Shin Pyeongtaek Power Co., Ltd., Naepo Green Energy Co., Ltd., Noeul Green Energy Co., Ltd., YTN Co., Ltd., Cheongna Energy Co., Ltd., Samcheok Eco Materials Co., Ltd., Gangwon Wind Power Co., Ltd., Gwangyang Green Energy Co., Ltd., Hyundai Green Power Co., Ltd., Korea Power Exchange, AMEC Partners Korea Ltd., Hyundai Energy Co., Ltd., Ecollite Co., Ltd., Taebaek Wind Power Co., Ltd., Taeback Guinemi Wind Power Co., Ltd., Pyeongchang Wind Power Co., Ltd., Daeryun Power Co., Ltd., Changjuk Wind Power Co., Ltd., KNH Solar Co., Ltd., S-Power Co., Ltd., Hadong Mineral Fiber Co., Ltd., Green Biomass Co., Ltd., SPC Power Corporation, Gemeng International Energy Co., Ltd., PT. Cirebon Electric Power, KNOC Nigerian East Oil Co., Ltd., KNOC Nigerian West Oil Co., Ltd., PT Wampu Electric Power, PT. Bayan Resources TBK, Nepal Water & Energy Development Company Private Limited, Pioneer Gas Power Limited, Eurasia Energy Holdings, Xe-Pian Xe-Namnoy Power Co., Ltd., PT. Mutiara Jawa, Jinbhuvish Power Generation Pvt. Ltd., Busan Green Energy Co., Ltd., Gunsan Bio Energy Co., Ltd., Korea Electric Vehicle Charging Service, Ulleungdo Natural Energy Co., Ltd., Korea Nuclear Partners Co., Ltd., Tamra Offshore Wind Power Co., Ltd., Korea Electric Power Corporation Fund, Energy Infra Asset Management Co., Ltd., Daegu clean Energy Co., Ltd., YaksuESS Co., Ltd, PND solar., Ltd, Hyundai Eco Energy Co., Ltd., YeongGwang Yaksu Wind Electric. Co., Ltd

Joint ventures

(55 joint ventures)

   Daegu Green Power Co., Ltd., KEPCO SPC Power Corporation, Daejung Offshore Wind Power Co., Ltd., KAPES, Inc., Dangjin Eco Power Co., Ltd., Honam Wind Power Co., Ltd., Seokmun Energy Co., Ltd., Incheon New Power Co., Ltd., Chun-cheon Energy Co., Ltd., Yeonggwangbaeksu Wind Power Co., Ltd., KW Nuclear Components Co., Ltd., KEPCO-Uhde Inc., GS Donghae Electric Power Co., Ltd., Busan Shinho Solar Power Co., Ltd., Global Trade Of Power System Co., Ltd., Expressway Solar-light Power Generation Co., Ltd., Gansu Datang Yumen Wind Power Co., Ltd., Datang Chifeng Renewable Power Co., Ltd., Rabigh Electricity Company, Eco Biomass Energy Sdn. Bhd., Rabigh Operation & Maintenance Company Limited, Datang KEPCO Chaoyang Renewable Power Co., Ltd., Shuweihat Asia Power Investment B.V., Shuweihat Asia Operation & Maintenance Company, Waterbury Lake Uranium L.P., ASM-BG Investicii AD, RES Technology AD, Jamaica Public Service Company Limited, KV Holdings, Inc., Amman Asia Electric Power Company, Kelar S.A, PT. Tanjung Power Indonesia, Nghi Son 2 Power LLC, Daehan Wind Power PSC, MOMENTUM, Barakah One Company, Nawah Energy Company, Yeonggwang Wind Power Co., Ltd., Chester Solar IV SpA, Chester Solar V SpA, Diego de Almagro Solar SpA, South Jamaica Power Company Limited, Daesan Green Energy Co.,Ltd., RE Holiday Holdings LLC, RE Pioneer Holdings LLC, RE Barren Ridge 1 Holdings LLC, RE Astoria 2 LandCo LLC, RE Barren Ridge LandCo LLC, Laurel SpA, KIAMCO KOWEPO Bannerton Hold Co Pty Ltd, Chile Solar JV SpA, Taebaek Gadeoksan Wind Power Co., Ltd., Cheong-Song Noraesan Wind Power Co., Ltd., Chester Solar I SpA, Solar Philippines Calatagan Corporation
Others (2 others)    Korea Development Bank, KOWEPO India Private Limited

 

(2)

Transactions between the Company and its subsidiaries are eliminated during the consolidation and are not disclosed in notes.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(3)

Related party transactions for the years ended December 31, 2018 and 2017 are as follows:

<Sales and Others>

 

In millions of won         Sales and others  

Company name

  

Transaction type

   2018      2017  

<Associates>

        

Dongducheon Dream Power Co., Ltd.

   Electricity sales    W 6,093        17,041  

Korea Gas Corporation

   Electricity sales      99,933        88,011  

Daegu Photovoltaic Co., Ltd.

   Electricity sales      128        349  

Jeongam Wind Power Co., Ltd.

   Electricity sales      724        30  

Korea Power Engineering Service Co., Ltd.

   Service      840        1,317  

KS Solar Co., Ltd.

   Electricity sales      —          5  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

   Electricity sales      2        2  

Korea Electric Power Industrial Development Co., Ltd.

   Service      10,422        14,044  

Goseong Green Energy Co., Ltd.

   Electricity sales      10,024        24,069  

Gangneung Eco Power Co., Ltd.

   Service      4,928        2,391  

Shin Pyeongtaek Power Co., Ltd.

   Electricity sales      8,468        9,025  

Naepo Green Energy Co., Ltd.

   Electricity sales      160        185  

Noeul Green Energy Co., Ltd.

   Electricity sales      30        32  

Samcheok Eco Materials Co., Ltd.

   Electricity sales      605        237  

YTN Co., Ltd.

   Electricity sales      2,043        1,987  

Busan Green Energy Co., Ltd.

   Electricity sales      19        120  

Gunsan Bio Energy Co., Ltd.

   Electricity sales      3,611        —    

Korea Electric Vehicle Charging Service

   Electricity sales      578        700  

Ulleungdo Natural Energy Co., Ltd.

   Service      292        1,013  

Tamra Offshore Wind Power Co., Ltd.

   Electricity sales      58        55  

Daegu clean Energy Co., Ltd.

   Electricity sales      126        421  

Cheongna Energy Co., Ltd.

   Service      11,688        7,980  

Gangwon Wind Power Co., Ltd.

   Electricity sales      2,402        994  

Gwangyang Green Energy Co., Ltd.

   Electricity sales      874        —    

Hyundai Green Power Co., Ltd.

   Design service      14,031        14,280  

Korea Power Exchange

   Service      6,854        8,446  

Hyundai Energy Co., Ltd.

   Service      1,718        15,627  

Taebaek Wind Power Co., Ltd.

   Service      614        813  

Pyeongchang Wind Power Co., Ltd.

   Design service      1,166        1,176  

Daeryun Power Co., Ltd.

   Electricity sales      1,731        1,796  

Changjuk Wind Power Co., Ltd.

   Electricity sales      758        788  

KNH Solar Co., Ltd.

   Electricity sales      17        17  

S-Power Co., Ltd.

   Service      9,118        12,852  

PND solar., Ltd

   Service      12        —    

SPC Power Corporation

   Dividend income      9,549        5,562  

Gemeng International Energy Co., Ltd.

   Dividend income      11,246        13,365  

PT. Cirebon Electric Power

   Dividend income      4,432        550  

PT. Bayan Resources TBK

   Service      33,817        717  

Nepal Water & Energy Development Company Private Limited

   Service      536        900  

Pioneer Gas Power Limited

   Rental income and others      26        62  

Xe-Pian Xe-Namnoy Power Co., Ltd.

   Service      672        661  

PT. Mutiara Jawa

   Rental income and others      40        47  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(3)

Related party transactions for the years ended December 31, 2018 and 2017 are as follows, continued:

 

In millions of won         Sales and others  

Company name

  

Transaction type

   2018      2017  

<Joint ventures>

        

Daegu Green Power Co., Ltd.

   Electricity sales    W 1,022        1,131  

KEPCO SPC Power Corporation

   Service      43,141        45,005  

Daejung Offshore Wind Power Co., Ltd.

   Electricity sales      1        1  

KAPES, Inc.

   Commission      648        1,420  

Dangjin Eco Power Co., Ltd.

   Technical fee      3,424        670  

Honam Wind Power Co., Ltd.

   Electricity sales      415        552  

Seokmun Energy Co., Ltd.

   Service      1,897        1,765  

Incheon New Power Co., Ltd.

   Construction revenue      568        539  

Chun-cheon Energy Co., Ltd.

   Electricity sales      2,471        4,855  

Yeonggwangbaeksu Wind Power Co., Ltd.

   Electricity sales      1,540        1,654  

Yeonggwang Wind Power Co., Ltd.

   Electricity sales      46        —    

KW Nuclear Components Co., Ltd.

   Service      839        644  

KEPCO-Uhde Inc.

   Service      17        34  

GS Donghae Electric Power Co., Ltd.

   Electricity sales      7,238        11,204  

Busan Shinho Solar Power Co., Ltd.

   Electricity sales      362        87  

Datang Chifeng Renewable Power Co., Ltd.

   Interest income      19,013        500  

Rabigh Electricity Company

   Service      29,167        19,179  

Rabigh Operation & Maintenance Company Limited

   Service      1,707        2,784  

Datang Chaoyang Renewable Power Co., Ltd.

   Dividend income      —          839  

Shuweihat Asia Power Investment B.V.

   Dividend income      499        1,707  

Shuweihat Asia Operation & Maintenance Company

   Service      1,046        1,319  

ASM-BG Investicii AD

   Service      1,153        1,062  

Jamaica Public Service Company Limited

   Service      5,160        —    

KV Holdings, Inc.

   Dividend income      735        —    

Amman Asia Electric Power Company

   Service      16,569        14,205  

Kelar S.A

   Service      —          570  

Nghi Son 2 Power LLC

   Service      25,880        2,693  

Barakah One Company

   Service      7,777        7,059  

Nawah Energy Company

   Service      51,144        34,421  

South Jamaica Power Company Limited

   Service      152        —    

RE Holiday Holdings LLC

   Dividend income      112        —    

RE Pioneer Holdings LLC

   Dividend income      979        —    

RE Barren Ridge 1 Holdings LLC

   Dividend income      1,114        —    

RE Astoria 2 LandCo LLC

   Dividend income      504        —    

RE Barren Ridge LandCo LLC

   Dividend income      202        —    

<Others>

        

Yeongwol Energy Station Co., Ltd.

   Service      373        830  

DS POWER Co., Ltd.

   Service      565        5,819  

Korea Development Bank

   Electricity sales      3,524        3,239  
   Interest income      4,438        1,685  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(3)

Related party transactions for the years ended December 31, 2018 and 2017 are as follows, continued:

 

<Purchase and Others>

 

In millions of won         Purchase and others  

Company name

  

Transaction type

   2018      2017  

<Associates>

        

Dongducheon Dream Power Co., Ltd.

   Electricity purchase    W 828,547        813,440  

Korea Gas Corporation

   Electricity purchase      5,191,243        3,245,519  

Daegu Photovoltaic Co., Ltd.

   REC purchase      3,745        3,646  

Korea Power Engineering Service Co., Ltd.

   Service      1,765        1,292  

KS Solar Co., Ltd.

   REC purchase      —          900  

Heang Bok Do Si Photovoltaic Power Co., Ltd.

   Rental fee and others      455        570  

Korea Electric Power Industrial Development Co., Ltd.

   Service      261,668        289,293  

Gangneung Eco Power Co., Ltd.

   Service      19        —    

Noeul Green Energy Co., Ltd.

   REC purchase      18,282        15,862  

Samcheok Eco Materials Co., Ltd.

   Electricity purchase      3,819        14  

YTN Co., Ltd.

   Electricity purchase      322        731  

Busan Green Energy Co., Ltd.

   REC purchase      25,123        12,189  

Korea Electric Vehicle Charging Service

   Electricity purchase      605        1,093  

Ulleungdo Natural Energy Co., Ltd.

   Service      63        119  

Tamra Offshore Wind Power Co., Ltd.

   Electricity purchase      8,371        2,105  

Cheongna Energy Co., Ltd.

   Service      58        59  

Gangwon Wind Power Co., Ltd.

   Electricity purchase      25,407        25,968  

Hyundai Green Power Co., Ltd.

   Design service      480,815        458,378  

Korea Power Exchange

   Service      137,489        207,855  

Hyundai Energy Co., Ltd.

   Service      3,445        87,607  

Taebaek Wind Power Co., Ltd.

   Service/ REC purchase      8,582        6,534  

Pyeongchang Wind Power Co., Ltd.

   Design service      6,994        4,033  

Daeryun Power Co., Ltd.

   Electricity purchase      184,063        146,189  

Changjuk Wind Power Co., Ltd.

   Electricity purchase      7,929        6,981  

KNH Solar Co., Ltd.

   Electricity purchase      3,586        3,947  

S-Power Co., Ltd.

   Service      507,875        457,329  

Hadong Mineral Fiber Co., Ltd.

   Service      60        —    

Green Biomass Co., Ltd.

   Service      440        1,345  

YeongGwang Yaksu Wind Electric. Co., Ltd

   Electricity purchase      2,437        —    

Nepal Water & Energy Development Company Private Limited

   Service      31        72  

<Joint ventures>

        

Daegu Green Power Co., Ltd.

   Electricity purchase      287,008        252,024  

KAPES, Inc.

   Commission      77,758        164,165  

Honam Wind Power Co., Ltd.

   Electricity purchase      7,700        5,962  

Seokmun Energy Co., Ltd.

   Technical fee      31,759        21,674  

Chun-cheon Energy Co., Ltd.

   Electricity purchase      320,954        194,136  

Yeonggwangbaeksu Wind Power Co., Ltd.

   Electricity purchase      11,366        11,124  

GS Donghae Electric Power Co., Ltd.

   Electricity purchase      780,233        351,367  

Busan Shinho Solar Power Co., Ltd.

   REC purchase      7,901        7,984  

Global Trade Of Power System Co., Ltd.

   Service      565        414  

Expressway Solar-light Power Generation Co., Ltd.

   Electricity purchase      3,513        2,941  

ASM-BG Investicii AD

   Service      1        —    

Jamaica Public Service Company Limited

   Service      83        154  

Barakah One Company

   Service      1,145        2,631  

South Jamaica Power Company Limited

   Service      67        —    

<Others>

        

Yeongwol Energy Station Co., Ltd.

   REC purchase      4,019        14,256  

Korea Development Bank

   Interest expense      5,043        4,573  
   Dividends paid      166,876        418,407  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(4)

Receivables and payables arising from related party transactions as of December 31, 2018 and 2017 are as follows:

 

In millions of won         Receivables      Payables  

Company name

  

Type

   2018      2017      2018      2017  

<Associates>

              

Dongducheon Dream Power Co., Ltd.

   Trade receivables    W 332        2,230        —          —    
   Non-trade receivables and others      298        655        —          —    
   Trade payables      —          —          74,651        77,817  
   Non-trade payables and others      —          —          10        —    

Korea Gas Corporation

   Trade receivables      9,439        9,833        —          —    
   Non-trade receivables and others      498        339        —          —    
   Trade payables      —          —          601,092        524,881  
   Non-trade payables and others      —          —          314        569  

Daegu Photovoltaic Co., Ltd.

   Trade payables      —          —          83        71  

Jeongam Wind Power Co., Ltd.

   Trade receivables      151        —          —          —    
   Non-trade payables and others      —          —          2        4  

Korea Electric Power Industrial Development Co., Ltd.

   Trade receivables      278        333        —          —    
   Non-trade receivables and others      51        42        —          —    
   Non-trade payables and others      —          —          13,102        18,006  

Goseong Green Energy Co., Ltd.

   Non-trade receivables and others      —          19        —          —    
   Non-trade payables and others      —          —          43,020        7,140  

Gangneung Eco Power Co., Ltd.

   Trade receivables      1        1        —          —    
   Non-trade receivables and others      99        4,747        —          —    

Shin Pyeongtaek Power Co., Ltd.

   Trade receivables      123        —          —          —    
   Non-trade receivables and others      242        210        —          —    
   Non-trade payables and others      —          —          82        52  

Naepo Green Energy Co., Ltd.

   Trade receivables      17        17        —          —    

Noeul Green Energy Co., Ltd.

   Trade receivables      3        3        —          —    
   Non-trade payables and others      —          —          8,774        2,041  

Samcheok Eco Materials Co., Ltd.

   Trade receivables      61        20        —          —    

YTN Co., Ltd.

   Trade receivables      98        98        —          —    
   Non-trade payables and others      —          —          11        209  

Busan Green Energy Co., Ltd.

   Trade receivables      1        7        —          —    
   Non-trade receivables and others      —          1,691        —          —    
   Non-trade payables and others      —          —          10,882        —    

Gunsan Bio Energy Co., Ltd.

   Non-trade receivables and other      3,458        —          —          —    

Korea Electric Vehicle Charging Service

   Trade receivables      69        23        —          —    
   Non-trade receivables and others      354        —          —          —    
   Trade payables      —          —          —          45  
   Non-trade payables and others      —          —          56        —    

Daegu Clean Energy Co., Ltd.

   Non-trade receivables and others      17        —          —          —    

Cheongna Energy Co., Ltd.

   Trade receivables      183        182        —          —    
   Non-trade payables and others      —          —          —          1  

Gangwon Wind Power Co., Ltd.

   Trade receivables      10        6        —          —    
   Trade payables      —          —          2,547        3,033  

Hyundai Green Power Co., Ltd.

   Trade receivables      390        946        —          —    
   Trade payables      —          —          38,072        32,589  

Korea Power Exchange

   Trade receivables      847        463        —          —    
   Non-trade receivables and others      229        128        —          —    
   Non-trade payables and others      —          —          1,214        1,142  

Hyundai Energy Co., Ltd.

   Trade receivables      57        49        —          —    
   Non-trade receivables and others      9,664        6,598        —          —    
   Trade payables      —          —          259        223  
   Non-trade payables and others      —          —          8,021        13,796  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(4)

Receivables and payables arising from related party transactions as of December 31, 2018 and 2017 are as follows, continued:

 

In millions of won         Receivables      Payables  

Company name

  

Type

   2018      2017      2018      2017  

<Associates>

              

Ecollite Co., Ltd.

   Non-trade receivables and others    W 210        210        —          —    

Taebaek Wind Power Co., Ltd.

   Trade receivables      —          116        —          —    
   Trade payables      —          —          453        533  
   Non-trade payables and others      —          —          291        121  

Pyeongchang Wind Power Co., Ltd.

   Trade receivables      4        3        —          —    
   Non-trade payables and others      —          —          25        163  

Daeryun Power Co., Ltd.

   Trade receivables      178        162        —          —    
   Trade payables      —          —          15,845        15,706  

Changjuk Wind Power Co., Ltd.

   Trade receivables      —          101        —          —    
   Trade payables      —          —          455        515  
   Non-trade payables and others      —          —          273        546  

KNH Solar Co., Ltd.

   Trade receivables      1        1        —          —    
   Non-trade payables and others      —          —          —          193  

S-Power Co., Ltd.

   Trade receivables      922        117        —          —    
   Non-trade receivables and others      34        5,183        —          —    
   Trade payables      —          —          56,897        25,061  
   Non-trade payables and others      —          —          16        —    

Green Biomass Co., Ltd.

   Non-trade payables and others      —          —          —          85  

PND solar., Ltd

   Trade receivables      3        —          —          —    

YeongGwang Yaksu Wind Electric. Co., Ltd

   Trade payables      —          —          2,679        —    

SPC Power Corporation

   Non-trade receivables and others      73        76        —          —    

Nepal Water & Energy Development Company Private Limited

   Non-trade receivables and others      311        227        —          —    

Xe-Pian Xe-Namnoy Power Co., Ltd.

   Non-trade receivables and others      61        53        —          —    

PT. Mutiara Jawa

   Non-trade receivables and others      10        —          —          —    

<Joint ventures>

              

Daegu Green Power Co., Ltd.

   Trade receivables      110        98        —          —    
   Non-trade receivables and others      12        10        —          —    
   Trade payables      —          —          32,609        25,257  

KAPES, Inc.

   Non-trade receivables and others      253        —          —          —    
   Trade payables      —          —          —          55  
   Non-trade payables and others      —          —          338        —    

Dangjin Eco Power Co., Ltd.

   Non-trade receivables and others      18        1,211        —          —    
   Non-trade payables and others      —          —          —          41  

Honam Wind Power Co., Ltd.

   Trade payables      —          —          432        381  
   Non-trade payables and others      —          —          3,573        3,013  

Seokmun Energy Co., Ltd.

   Trade receivables      39        93        —          —    
   Non-trade receivables and others      303        276        —          —    
   Non-trade payables and others      —          —          5,043        3,052  

Incheon New Power Co., Ltd.

   Trade receivables      128        128        —          —    

Chun-cheon Energy Co., Ltd.

   Trade receivables      20        129        —          —    
   Non-trade receivables and others      308        252        —          —    
   Trade payables      —          —          33,796        29,676  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(4)

Receivables and payables arising from related party transactions as of December 31, 2018 and 2017 are as follows, continued:

 

In millions of won         Receivables      Payables  

Company name

  

Type

   2018      2017      2018      2017  

<Joint ventures>

              

Yeonggwangbaeksu Wind Power Co., Ltd.

   Trade receivables    W 7        7        —          —    
   Non-trade receivables and others      —          144        —          —    
   Trade payables      —          —          736        619  
   Non-trade payables and others      —          —          789        1,300  

Yeonggwang Wind Power Co., Ltd.

   Trade receivables      10        —          —          —    

KW Nuclear Components Co., Ltd.

   Trade receivables      4        4        —          —    
   Non-trade receivables and others      31        —          —          —    

KEPCO-Uhde Inc.

   Non-trade payables and others      —          —          4        4  

GS Donghae Electric Power Co., Ltd.

   Trade receivables      245        450        —          —    
   Non-trade receivables and others      2,537        1,892        —          —    
   Trade payables      —          —          69,820        73,570  
   Non-trade payables and others      —          —          59        —    

Busan Shinho Solar Power Co., Ltd.

   Trade receivables      2        2        —          —    
   Trade payables      —          —          175        159  
   Non-trade payables and others      —          —          717        811  

Datang Chifeng Renewable Power Co., Ltd.

   Non-trade receivables and others      —          82        —          —    

Rabigh Operation & Maintenance Company Limited

   Non-trade receivables and others      449        869        —          —    

ASM-BG Investicii AD

   Non-trade receivables and others      38        37        —          —    

Jamaica Public Service Company Limited

   Trade receivables      594        —          —          —    
   Non-trade payables and others      —          —          24        —    

Amman Asia Electric Power Company

   Trade receivables      —          2,675        —          —    
   Non-trade payables and others      —          —          18,351        —    

Nawah Energy Company

   Trade receivables      29,614        10,419        —          —    
   Non-trade receivables and others      253        —          —          —    

<Others>

              

Yeongwol Energy Station Co., Ltd.

   Trade receivables      —          7,068        —          —    

DS POWER Co., Ltd.

   Trade receivables      —          340        —          —    

Korea Development Bank

   Accrued interest income      1,147        204        —          —    
   Non-trade receivables and others      12,125        501,029        —          —    
   Non-trade payables and others      —          —          218        200  
   Derivatives      27,306        569        18,095        22,398  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(5)

Loans and others arising from related party transactions as of December 31, 2018 and 2017 are as follows:

 

In millions of won                                

Type

  

Company name

   Beginning
balance
    Loans      Collection     Others     Ending
balance
 

Associates            

   KNOC Nigerian East Oil Co., Ltd.,            
   KNOC Nigerian West Oil Co., Ltd.    W 26,341       229        —         1,064       27,634  
   (Allowance for doubtful accounts)      (16,551     —          4,072       6,414       (6,065

Associates

   PT. Cirebon Electric Power      15,436       1,283        (8,522     499       8,696  

Associates

   Xe-Pian Xe-Namnoy Power Co., Ltd.      1,413       —          —         —         1,413  

Associates

   PT Wampu Electric Power      13,288       970        —         622       14,880  

Associates

   Gunsan Bio Energy Co., Ltd.      9,396       —          —         —         9,396  

Associates

   Hyundai Energy Co., Ltd.      2,465       —          —         —         2,465  
   (Allowance for doubtful accounts)      (2,465     —          —         —         (2,465

Joint ventures

   KEPCO SPC Power Corporation      17,249       —          (17,715     466       —    

Joint ventures

   Datang Chifeng Renewable Power Co., Ltd.      7,245       —          (7,440     195       —    

Joint ventures

   Nghi Son 2 Power LLC      —         4,566        (4,566     —         —    

Joint ventures

   KODE NOVUS II LLC (*)      4,018       —          —         (4,018     —    
   (Allowance for doubtful accounts) (*)      (4,018     —          —         4,018       —    

Joint ventures

   Kelar S.A      46,620       —          —         2,074       48,694  

Joint ventures

   Daehan Wind Power PSC      1,211       —          (606     (605     —    

Joint ventures

   Chester Solar IV SpA      4,607       —          (4,607     —         —    

Joint ventures

   Chun-cheon Energy Co., Ltd.      —         616        —         —         616  
     

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
      W 126,255       7,664        (39,384     10,729       105,264  
     

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(*)

The loans of KODE NOVUS II LLC is eliminated because the Company sold all of its shares of KODE NOVUS II LLC during the year ended December 31, 2018 as described in note 20.

 

(6)

Borrowings arising from related party transactions as of December 31, 2018 and 2017 are as follows:

 

In millions of won  

Related parties

  

Type

   Beginning
balance
     Borrowings      Repayment     Others      Ending
balance
 

Korea Development Bank

   Facility    W 93,883        1,200        (28,290     —          66,793  
   Others      4,909        —          (755     —          4,154  
   Operating funds      61,000        32,000        (12,000     —          81,000  
   Syndicated Loan      16,301        —          (125     1,100        17,276  

 

(7)

Guarantees provided to associates or joint ventures as of December 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies

Primary guarantor

  

Principal obligor

  

Type of guarantees

  

Credit limit

  

Guarantee

Korea Electric Power Corporation

  

Shuweihat Asia Operation & Maintenance Company

  

Performance guarantees

   USD 11,000   

SAPCO

Korea Electric Power Corporation

  

Rabigh Operation & Maintenance Company Limited

  

Performance guarantees and others

   USD 1,387   

RABEC

Korea Electric Power Corporation

  

Barakah One Company

  

Debt guarantees

   USD 900,000   

Export-Import Bank of Korea and others

     

Performance guarantees and others

   USD 3,404,275   

Export-Import Bank of Korea and others

Korea Electric Power Corporation

  

RE Holiday Holdings LLC

  

Performance guarantees

   USD 223,000   

EPS Renewables Holdings, LLC, Santander Bank and others

Korea Electric Power Corporation

  

RE Pioneer Holdings LLC

  

Performance guarantees

   USD 170,000   

EPS Renewables Holdings, LLC, Santander Bank and others

Korea Electric Power Corporation

  

RE Barren Ridge 1 Holdings LLC

  

Performance guarantees

   USD 149,000   

Firstar Development, LLC,
Santander Bank and others

Korea Electric Power Corporation

  

Nghi Son 2 Power LLC

  

Performance guarantees

   USD 28,000   

SMBC Ho Chi Minh

Korea Western Power Co., Ltd.

  

Cheongna Energy Co., Ltd.

  

Collateralized money invested

   KRW 3,465   

KEB Hana Bank and others

     

Guarantees for supplemental funding and others (*1)

   —     

KEB Hana Bank and others

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(7)

Guarantees provided to associates or joint ventures as of December 31, 2018 are as follows, continued:

 

In millions of won and thousands of foreign currencies

Primary guarantor

 

Principal obligor

 

Type of guarantees

  Credit limit    

Guarantee

Korea Western Power Co., Ltd.

 

Xe-Pian Xe-Namnoy Power Co., Ltd.

 

Payment guarantees for business reserve

    USD 2,500    

Krung Thai Bank

   

Collateralized money invested

    KRW 77,165    

Krung Thai Bank

   

Impounding bonus guarantees

    USD 5,000    

SK E&C

Korea Western Power Co., Ltd.

 

Rabigh Operation & Maintenance Company Limited

 

Performance guarantees and others

    SAR 5,600    

Saudi Arabia British Bank

Korea Western Power Co., Ltd.

 

Daegu Photovoltaic Co., Ltd.

 

Collateralized money invested

    KRW 2,002    

Korea Development Bank

Korea Western Power Co., Ltd.

 

Dongducheon Dream Power Co., Ltd.

 

Collateralized money invested(*7)

Debt guarantees

   

KRW 41,389

KRW 20,300

 

 

 

Kookmin Bank and others

BNK Securities and others

Korea Western Power Co., Ltd.

 

PT. Mutiara Jawa

 

Collateralized money invested

    KRW 365    

Woori Bank

Korea Western Power Co., Ltd.

 

Heang Bok Do Si Photovoltaic Power Co., Ltd.

 

Collateralized money invested

    KRW 202    

Nonghyup Bank

Korea Western Power Co., Ltd.

 

Shin Pyeongtaek Power Co., Ltd.

 

Collateralized money invested

Guarantees for supplemental funding (*1)

   

 

KRW 67,600

 

—  

 

 

 

 

Kookmin Bank

 

Kookmin Bank

Korea East-West Power Co., Ltd.

 

Busan Shinho Solar Power Co., Ltd.

 

Collateralized money invested

    KRW 4,761    

Korea Development Bank and others

Korea East-West Power Co., Ltd.

 

Seokmun Energy Co., Ltd.

 

Collateralized money invested

    KRW 16,751    

Kookmin Bank and others

Korea East-West Power Co., Ltd.

 

Chun-cheon Energy Co., Ltd.

 

Collateralized money invested

Guarantees for supplemental funding (*1)

   

 

KRW 42,505

 

KRW 20,000

 

 

 

 

Kookmin Bank and others

 

Kookmin Bank and others

Korea East-West Power Co., Ltd.

 

Honam Wind Power Co., Ltd.

 

Collateralized money invested

    KRW 4,860    

Shinhan Bank and others

Korea East-West Power Co., Ltd.

 

GS Donghae Electric Power Co., Ltd.

 

Collateralized money invested

    KRW 240,591    

Korea Development Bank and others

Korea East-West Power Co., Ltd.

 

Yeonggwangbaeksu Wind Power Co., Ltd.

 

Collateralized money invested

    KRW 2,843    

Kookmin Bank and others

Korea East-West Power Co., Ltd.

 

Yeonggwang Wind Power Co., Ltd.

 

Collateralized money invested

    KRW 15,304    

KDB Capital Corporation and others

Korea East-West Power Co., Ltd.

 

Daesan Green Energy Co., Ltd.

 

Collateralized money invested

    KRW 17,433    

IBK

Korea East-West Power Co., Ltd.

 

Taebaek Gadeoksan Wind Power Co., Ltd.

 

Collateralized money invested

    KRW 8,508    

Samsung Fire & Marine Insurance Co., Ltd. and others

Korea East-West Power Co., Ltd.

 

PT. Tanjung Power Indonesia

 

Debt guarantees

 

 

Other guarantees

   

 

 

USD 46,983

 

 

USD 3,150

 

 

 

 

 

MUFG Bank, Ltd.(MUFG) (formerly, the Bank of Tokyo Mitsubishi UFJ, Ltd.(BTMU)) and others

 

PT Adaro Indonesia

Korea East-West Power Co., Ltd.

 

South Jamaica Power Company Limited

 

Performance guarantees

    USD 14,400    

Societe Generale

EWP Barbados 1 SRL

 

South Jamaica Power Company Limited

 

Guarantees for supplemental funding (*1, 3)

    USD 18,350    

JCSD Trustee Services Limited and others

Korea Southern Power Co., Ltd.

 

KNH Solar Co., Ltd.

 

Collateralized money invested

    KRW 2,337    

Shinhan Bank and Kyobo Life Insurance Co., Ltd.

 

Performance guarantees and guarantees for supplemental funding (*1)

    —    

Korea Southern Power Co., Ltd.

 

Daeryun Power Co., Ltd.

 

Collateralized money invested

    KRW 26,099    

Korea Development Bank and others

 

Guarantees for supplemental funding and others (*1)

    —      

Korea Development Bank and others

Korea Southern Power Co., Ltd.

 

Changjuk Wind Power Co., Ltd.

 

Collateralized money invested

    KRW 8,086    

Shinhan Bank

   

Guarantees for supplemental funding (*1)

    —      

Shinhan Bank

Korea Southern Power Co., Ltd.

 

Daegu Green Power Co., Ltd.

 

Collateralized money invested

    KRW 41,110    

Shinhan Bank and others

Korea Southern Power Co., Ltd.

 

Kelar S.A

 

Performance guarantees

    USD 63,707    

KEB Hana Bank, SMBC, Mizuho Bank, MUFG, Natixis

Korea Southern Power Co., Ltd.

 

Daehan Wind Power PSC

 

Debt guarantees

Performance guarantees

Guarantees for supplemental funding (*1)

   

 

USD 18,200

USD 3,000

 

—  

 

 

 

 

 

Shinhan Bank

Shinhan Bank

 

Shinhan Bank

Korea Southern Power Co., Ltd.

 

Pyeongchang Wind Power Co., Ltd.

 

Collateralized money invested

 

Performance guarantees

   

 

KRW 5,419

 

—  

 

 

 

 

Woori Bank and Shinhan Bank and others

Woori Bank and Shinhan Bank and others

Korea Southern Power Co., Ltd.

 

Taebaek Wind Power Co., Ltd.

 

Guarantees for supplemental funding (*1)

    —      

Shinhan Bank and others

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(7)

Guarantees provided to associates or joint ventures as of December 31, 2018 are as follows, continued:

 

In millions of won and thousands of foreign currencies

Primary guarantor

  

Principal obligor

  

Type of guarantees

   Credit limit     

Guarantee

Korea Southern Power Co., Ltd.

  

Jeongam Wind Power Co., Ltd.

  

Collateralized money invested

     KRW 4,589     

IBK, SK Securities Co., Ltd. and others

IBK, SK Securities Co., Ltd. and others

  

Performance guarantees

     —    

Korea Southern Power Co., Ltd.

  

Samcheok Eco Materials Co., Ltd.

  

Payment guarantees (*4)

     —       

SEM Investment Co., Ltd.

Korea Midland Power Co., Ltd.

  

Hyundai Green Power Co., Ltd.

  

Collateralized money invested

     KRW 127,160     

Korea Development Bank and others

Korea Midland Power Co., Ltd.

  

PT. Cirebon Electric Power

  

Debt guarantees

     USD 11,825     

Mizuho Bank

Korea Midland Power Co., Ltd.

  

PT Wampu Electric Power

  

Debt guarantees

     USD 4,854     

SMBC

Korea Midland Power Co., Ltd.

  

YaksuESS Co., Ltd

  

Collateralized money invested

     KRW 460     

Hanwha Life Insurance Co., Ltd.

Hanwha Life Insurance Co., Ltd.

  

Guarantees for supplemental funding (*1)

     —    

Korea Midland Power Co., Ltd.

  

YeongGwang Yaksu Wind

Electric. Co., Ltd

  

Collateralized money invested

     KRW 533     

Hanwha Life Insurance Co., Ltd. and others

Korea South-East Power Co., Ltd.

  

Hyundai Energy Co., Ltd.

  

Collateralized money invested (*5)

     —       

Korea Development Bank and others

  

Guarantees for supplemental funding and others (*1,6)

     KRW 78,600     

Korea Development Bank and others

Korea South-East Power Co., Ltd.

  

RES Technology AD

  

Collateralized money invested

     KRW 15,209     

UniCredit Bulbank and others

Korea South-East Power Co., Ltd.

  

ASM-BG Investicii AD

  

Collateralized money invested

     KRW 21,379     

UniCredit Bulbank and others

Korea South-East Power Co., Ltd.

  

Expressway Solar-light Power Generation Co., Ltd.

  

Guarantees for supplemental funding (*1, 2)

     KRW 2,500     

Woori Bank

Korea South-East Power Co., Ltd.

  

S-Power Co., Ltd.

  

Collateralized money invested

     KRW 114,566     

Korea Development Bank and others

Korea South-East Power Co., Ltd.

  

Goseong Green Energy Co., Ltd.

  

Collateralized money invested

     KRW 2,459     

Kyobo Life Insurance Co., Ltd. and others

Korea South-East Power Co., Ltd.

  

Gangneung Eco Power Co., Ltd.

  

Collateralized money invested

     KRW 2,495     

Kyobo Life Insurance Co., Ltd. and others

Korea South-East Power Co., Ltd.

  

PND solar., Ltd.

  

Collateralized money invested

     KRW 1,020     

IBK and others

Korea South-East Power Co., Ltd.

  

Tamra Offshore Wind Power Co., Ltd.

  

Collateralized money invested

     KRW 10,401     

Nonghyup Life Insurance Co., Ltd. and others

Korea South-East Power Co., Ltd.

  

Hyundai Eco Energy Co., Ltd.

  

Collateralized money invested

     KRW 3,388     

Samsung Life Insurance and others

Korea Hydro & Nuclear Power Co., Ltd.

  

Noeul Green Energy Co., Ltd.

  

Collateralized money invested

     KRW 8,016     

KEB Hana Bank and others

Korea Hydro & Nuclear Power Co., Ltd.

  

Busan Green Energy Co., Ltd.

  

Collateralized money invested

     KRW 12,537     

Shinhan Bank and others

KEPCO Plant Service & Engineering Co., Ltd.

  

Incheon New Power Co., Ltd.

  

Collateralized money invested

     KRW 579     

Shinhan Bank

  

Guarantees for supplemental funding and others (*1)

     —       

Shinhan Bank

 

(*1)

The Company guarantees to provide supplemental funding for business with respect to excessive business expenses or insufficient repayment of borrowings.

(*2)

The Company has granted the right to Hana Financial Investment Co., Ltd., as an agent for the creditors to Expressway Solar-light Power Generation Co., Ltd. (“ESPG”), to the effect that in the event of acceleration of ESPG’s payment obligations under certain borrowings to such creditors, Hana Financial may demand the Company to dispose of shares in ESPG held by the Company and apply the resulting proceeds to repayment of ESPG’s obligations.

(*3)

This includes a guarantee for the shareholder’s capital payment in connection with the business of 190MW gas complex thermal power plant in Jamaica. EWP Barbados 1 SRL’s capital contribution amount is USD 14,730 thousand and the total amount of guarantees is USD 8,257.5 thousand which consists of USD 3,670 thousand of EWP (Barbados) 1 SRL’s contribution obligation and USD 4,587.5 thousand of South Jamaica Energy Holding Limited’s portion (50%) of contribution obligation.

(*4)

The Company has the obligation to purchase the stocks should preferred stockholders elect to sell their stocks on the expected sell date (3 years from preferred stock payment date) and is required to guarantee the promised yield when preferred stockholders sell their stocks. In relation to this guarantee, the Company has recognized W2,155 million of derivative liabilities as of December 31, 2018.

(*5)

The Company recognized impairment loss on all of the equity securities of Hyundai Energy Co., Ltd. in prior years, and the acquisition cost of the securities provided as collateral is W47,067 million.

(*6)

Pursuant to the guarantee agreement, the Company recognized other provisions of W40,898 million as the possibility of economic outflow to fulfill the obligation was probable and the amount could be reasonably estimated.

(*7)

The common stocks of Dongducheon Dream Power Co., Ltd. held by the Company were pledged as collateral.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

50.

Related Parties, Continued

 

(8)

As of December 31, 2018, there is no financial guarantee contract provided by related parties.

 

(9)

Derivatives transactions with related parties as of December 31, 2018 are as follows:

(i) Currency Swap

 

In millions of won and thousands of foreign currencies  

Counterparty

   Contract year             Contract
Amount
     Contract interest rate
per annum
           Contract
exchange
rate
 
          Pay      Receive      Pay (%)     Receive (%)        

Korea Development Bank

     2016~2019      W        105,260        USD 100,000        2.48     2.38   W        1,052.60  
     2015~2025           111,190        USD 100,000        2.62     3.25        1,111.90  
     2017~2027           111,610        USD 100,000        2.31     3.13        1,116.10  
     2018~2028           108,600        HKD 800,000        2.69     3.35        135.75  
     2018~2023           170,280        USD 150,000        2.15     3.75        1,135.20  
     2017~2020           114,580        USD 100,000        1.75     2.38        1,145.80  
     2016~2021           121,000        USD 100,000        2.15     2.50        1,210.00  
     2018~2023           320,880        USD 300,000        2.03     3.75        1,069.60  
     2018~2021           212,960        USD 200,000        2.10     3.00        1,064.80  
     2017~2022           113,300        USD 100,000        1.94     2.63        1,133.00  
     2018~2023           169,335        USD 150,000        2.26     3.88        1,128.90  

(ii) Currency forward

 

In millions of won and thousands of foreign currencies                

Counterparty

   Contract
date
     Maturity
date
            Contract amounts             Contract
exchange
rate
 
          Pay      Receive         

Korea Development Bank

     2017.12.27        2021.07.12      W        104,849        USD 100,000      W        1,048.49  
     2018.12.18        2019.01.22           11,279        USD 10,000           1,127.85  
     2018.12.13        2019.01.10           4,490        USD 4,000           1,122.60  
     2018.12.24        2019.01.10           13,497        USD 12,000           1,124.74  
     2018.12.21        2019.01.15           10,103        USD 9,000           1,122.50  
     2018.12.27        2019.01.23           11,207        USD 10,000           1,120.68  
     2018.12.28        2019.01.23           13,412        USD 12,000           1,117.64  

 

(10)

Salaries and other compensations to the key members of management of the Company for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won                     

Type

          2018      2017  

Salaries

   W        1,106        1,271  

Employee benefits

        24        54  
     

 

 

    

 

 

 
   W        1,130        1,325  
     

 

 

    

 

 

 

 

51.

Non-Cash Transactions

Significant non-cash investing and financing transactions for the years ended December 31, 2018 and 2017 are as follows:

 

In millions of won                     

Transactions

          2018      2017  

Transfer from construction-in-progress to other assets

   W        8,656,252        13,676,233  

Recognition of asset retirement cost and related provision for decommissioning costs

        310,272        2,494,802  

Transfer from provision for disposal of spent nuclear fuel to accrued expenses

        482,699        342,861  

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

52.

Commitments for Expenditure

 

(1)

The commitments for acquisition of property, plant and equipment as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  

Contracts

   Amounts      Balance      Amounts      Balance  

Purchase of switch (25.8kV Eco) 12,450

   W 50,526        —          50,526        35,494  

Purchase of cable (PVC,1C,2000SQ) 153,000M and others (Shin-Bupyung-Youngseo)

     56,183        37,309        50,256        42,857  

Purchase of cable (PVC, 1C, 2500SQ) 103,374M and others (Bukdangjin-Shintangjung)

     44,315        31,801        42,500        29,987  

Purchase of GIS (362KV 6300A 63KA) 23CB – YoungseoS/S

     34,500        34,500        34,500        34,500  

Purchase of GIS (362KV 6300A 63KA) 27CB – KwangyangS/S

     37,694        10,491        37,476        18,044  

Purchase of GIS (800KV 8000A 50KA) 10CB – Shin-JungbuS/S

     63,730        —          63,730        44,955  

Purchase of transformer (765/345/23kV 666.7MVA, 2TANK) 6 units – Shin-JungbuS/S

     37,500        —          37,500        37,500  

Purchase of cable (TR CNCE-W/AL,1C,400SQ) 4,645,000M

     78,076        —          78,076        76,762  

Purchase of Concrete Poles (10M, 350KGF) 121,900 and 6 others

     133,387        13,343        133,387        112,981  

Advanced E-Type low voltage electricity meter 1,600,000 units

     65,408        —          65,408        64,592  

Purchase of Ground Switch (44-D-A125, 600AX4) and 1 other 4,016 units

     56,482        —          56,482        55,990  

Purchase of cable (TR CNCE-W/AL,1C,400SQ) 3,504,000M

     66,240        38,998        —          —    

Purchase of cable (FR CNCO-W,1C,325SQ) 1,400,000

     57,475        48,598        —          —    

Purchase of switch (Eco) 9,360 units

     40,631        34,797        —          —    

Construction of Shin-Kori units (#3,4)

     7,363,514        3,211        7,363,514        93,637  

Construction of Shin-Kori units (#5,6)

     8,625,387        5,930,099        8,625,387        6,757,146  

Construction of Shin-Hanwool units (#1,2)

     7,982,342        355,704        7,982,342        1,015,813  

Construction of Shin-Hanwool units (#3,4) (*)

     —          —          8,261,818        8,097,056  

Other 26 contracts

     269,681        161,243        262,400        114,041  

Purchase of main machine for construction of Seoul Combined units (#1,2)

     365,164        51,165        361,203        99,031  

Construction of Seoul Combined units (#1,2)

     285,890        27,125        227,685        60,568  

Purchase of smoke eliminating machine for construction of Shin-Boryeong units (#1,2)

     172,609        13,986        169,544        36,417  

Service of designing Shin-Boryeong units (#1,2)

     120,199        1,076        127,810        16,371  

Purchase of main machine for construction of Shin-Boryeong units (#1,2)

     866,065        4,981        866,065        4,981  

Construction of Shin-Boryeong units (#1,2)

     309,466        —          316,190        23,100  

Purchase of furnace for construction of Shin-Seocheon thermal power plant

     305,209        74,631        302,030        222,555  

Purchase of turbine generator for construction of Shin-Seocheon thermal power plant

     104,402        57,968        104,402        83,522  

Electricity construction of Shin-Seocheon thermal power plant

     217,848        174,122        200,453        196,993  

Purchase of main machine for Jeju LNG combined

     166,287        11,272        166,287        15,409  

Purchase of coal handling machine for construction of Taean (#9,10) and IGCC units (conditional contract for installation)

     205,764        282        193,375        5,129  

Purchase of furnace for construction of Taean units (#9,10)

     556,504        18,502        566,945        33,817  

Service of designing Taean units (#9,10)

     112,344        13,338        111,322        13,671  

Purchase of turbine generator for construction of Taean units (#9,10)

     214,462        10,422        205,267        550  

Purchase of oxygen plant for construction of Taean IGCC units

     96,068        1,552        94,564        199  

Service of designing Taean IGCC plant units

     46,001        3,161        44,802        2,669  

Purchase of furnace for construction of Samcheok units (#1,2)

     1,092,287        12,215        1,082,641        5,963  

Purchase of coal handling machine for construction of Samcheok units (#1,2)

     307,925        48,736        304,924        52,362  

Service of designing Samcheok units (#1,2)

     103,679        —          114,047        4,745  

Purchase of turbine main equipment for Samcheok units (#1,2)

     212,188        348        215,333        874  

Purchase of main equipment for Namjeju

     146,594        134,949        —          —    

 

  (*)

The Company recognized impairment loss in relation to Shin-Hanwool unit 3 and 4, and there are no legally binding commitments for expenditure as of December 31, 2018.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

52.

Commitments for Expenditure, Continued

 

 

(2)

As of December 31, 2018, details of contracts for inventory purchase commitment are as follows:

The Company imports all of its uranium ore concentrates from sources outside Korea (including the United States, United Kingdom, Kazakhstan, France, Russia, South Africa, Canada and Australia) which are paid for with currencies other than Won, primarily in U.S. dollars. In order to ensure stable supply, the Company entered into long-term and medium-term contracts with various suppliers, and supplements such supplies with purchases of fuels on spot markets. The long-term and medium-term contract periods vary among contractors and the stages of fuel manufacturing process. Contract prices for processing of uranium are generally based on market prices. Contract periods for ore concentrates, conversion, enrichment and design and fabrication are as follows:

 

Type

   Periods    Contracted quantity

Concentrate

   2018 ~ 2030    48,162 Ton U3O8

Transformed

   2018 ~ 2030    23,484 Ton U

Enrichment

   2018 ~ 2030    25,530 Ton SWU

Molded

   2018 ~ 2022    520 Ton U

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

53.

Contingencies and Commitments

 

(1)

Ongoing litigations and claims related with contingent liabilities and contingent assets as of December 31, 2018 and 2017 are as follows:

 

In millions of won    2018      2017  
     Number of cases      Claim amount      Number of cases      Claim amount  

As the defendant

     570      W 673,882        565      W 477,719  

As the plaintiff

     174        793,491        185        690,934  

As of December 31, 2018, among the litigations mentioned above, there are ongoing litigations of KHNP, a subsidiary of KEPCO, against KEPCO Engineering & Construction Company, Inc., a subsidiary of KEPCO, as a co-defendant (one case amounting to W65,927 million).

A group of plaintiffs (consisting 2,167 individuals) filed a lawsuit against NSSC regarding NSSC’s approval on May 18, 2015 of extending the operation of Wolsong unit 1 nuclear power plant. The appeal was ongoing as of December 31, 2018. Also, Greenpeace and others filed an administrative litigation against NSSC requesting cancelation of the construction permit of Shin-Kori unit 5 and 6, which was ongoing as of December 31, 2018. The Company joined these litigations as a stakeholder with the permission of the Court.

As described in note 2.(4), on June 15, 2018, the board of directors of KHNP, a subsidiary of KEPCO, has decided to shut down the Wolsong unit 1. Accordingly, the Company recognized a full impairment loss of W570,408 million. Also, the provision for decommissioning costs of the Wolsong unit 1 has increased by W28,196 million as the timing of actual cash outflows was accelerated due to the shortened operating period.

As of December 31, 2018, in connection with Shin-Hanul unit 3 & 4, the Company has received communications from a vendor for costs incurred for the preliminary work of the main equipment and associated compensation due to the discontinuation of the construction. The Company does not believe that it has a present obligation for this vendor, and that it is probable that the Company will prevail if a lawsuit is filed against the Company. In addition, the Company cannot reliably estimate the potential outflow related to the obligation, if any.

The long-term service contract between Gyeonggi Green Energy Co., Ltd. (Gyeonggi Green Energy) and its fuel cell supplier expired during the year ended December 31, 2018. Based on the agreement with the creditors of Gyeonggi Green Energy, as Gyeonggi Green Energy was unable to renew the fuel cell supply contract by December 31, 2018, the creditors have the right to request immediate repayment of the related borrowings from Gyeonggi Green Energy or to take over the all shares held by KHNP. Depending on the result of this negotiation, the schedule of repayment of borrowings of Gyeonggi Green Energy Co., Ltd. may be adjusted accordingly. As of December 31, 2018, Gyeonggi Green Energy Co., Ltd. is in negotiations to renew the contract.

The Company is the defendant against a number of claims. The followings are potentially significant ongoing claims pertaining to the Company.

 

   

Hyundai Engineering & Construction Co., Ltd.(“Hyundai E&C”), SK Engineering & Construction Co., Ltd. and GS Engineering & Construction Co., Ltd. filed a lawsuit for increase in contract bill against KHNP in September 2013, in relation to the design changes on the plant construction of Shin-Hanwool 1 & 2. KHNP has paid the claim amounts in full upon the first ruling and believes that the contingent liabilities related to the other pending lawsuits are not significant.

 

   

In December 2013, the Supreme Court of Korea ruled that regular bonuses also fall under the category of ordinary wages on the condition that those bonuses are paid regularly and uniformly. Also, the Supreme Court ruled that employees are entitled to retroactively demand certain wages based on the new ordinary wages that include regular bonuses as additional wages. However, the request may be limited to the extent of the principle of good faith.

The Company believes that the possibility of economic outflow is probable on the ongoing and the expected lawsuit. For this reason, the Company recognized W39,139 million of other provision in relation to the lawsuit as of December 31, 2018.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

53.

Contingencies and Commitments, Continued

 

(1)

Ongoing litigations and claims related with contingent liabilities and contingent assets as of December 31, 2018 and 2017 are as follows, continued:

 

Except these significant ongoing claims, there are 12 arbitration cases pertaining to the Company as of December 31, 2018 and the significant arbitration cases for the year ended December 31, 2018 are as follows:

 

   

KEPCO and KEPCO KDN Co., Ltd., a subsidiary of KEPCO, have been accused of breach of contract in relation to ERP software, which is provided by SAP Korea Ltd. The litigation was filed in the International Chamber of Commerce International Court of Arbitration but the Company has not recognized any provision because the probability of economic benefit outflow is remote and the related amount cannot be reliably estimated.

 

   

Hyundai Samsung Joint Venture (HSJV), one of the subcontractors of the Company, filed an arbitration against the Company at the London Court of International Arbitration (LCIA) in 2016 due to disagreements in UAE nuclear power plant construction project, but the Company has not recognized any losses because the probability of economic benefit outflow is remote and the related amount cannot be reasonably estimated.

 

   

In 2016, Hyundai E&C, GS Engineering & Construction Corp. and Hansol SeenTec Co., Ltd. filed an arbitration against the Company to the Korea Commercial Arbitration Board in relation to the request for additional construction costs. As described in note 29.(2), the Company recognized the litigation provisions of W204,787 million in relation to this arbitration case and made the payment according to the results of this arbitration during the year ended December 31, 2018.

 

   

In 2016, Halla Corporation filed on arbitration against the Company to the Korea Commercial Arbitration Board in relation to the request for additional construction costs and the Company filed on arbitration against Halla Corporation to the Korea Commercial Arbitration Board in relation to the request for a penalty payment for the delayed construction work. The Company has recognized W19,754 million of provision for the best estimate of the expenditure required to fulfill its obligations in relation to this arbitration as of December 31, 2018.

 

   

In connection with the electric power IT modernization project in Kerala, India, Enzen, a subcontractor, filed an arbitration against the Company to the Indian Council of Arbitration due to disagreements in the contract, but the Company has not recognized any losses because the probability of economic benefit outflow is remote and the related amount cannot be reasonably estimated.

 

(2)

Guarantees of payments and commitments provided to other companies as of December 31, 2018 and 2017 are as follows:

 

   

In order to secure its status as a shareholder of Navanakorn Electric Co., Ltd., the Company has signed a fund supplement contract. According to the contract, in case Navanakorn Electric Co., Ltd. does not have sufficient funds for its operation or repayment of borrowings, the Company bears a payment obligation in proportion to its ownership.

 

   

The Company has outstanding borrowings with a limit of USD 275,600 thousand from its creditors such as International Finance Corporation. Regarding the borrowing contract, the Company has guaranteed capital contribution of USD 69,808 thousand and additional contribution up to USD 19,000 thousand for contingencies, if any. Moreover, for one of the electricity purchasers, Central Power Purchasing Agency Guarantee Ltd., the Company has provided payment guarantee up to USD 2,777 thousand, in case of construction delay or insufficient contract volume after commencement of the construction.

 

   

The Company has provided PT. Perusahaan Listrik Negara performance guarantee up to USD 2,293 thousand and Mizuho bank and others investment guarantee up to USD 43,500 thousand in proportion to its ownership in the electricity purchase contract with PT. Cirebon Energi Prasarana in relation to the second electric power generation business in Cirebon, Indonesia.

 

  LOGO

The Company has provided MUFG Bank, Ltd. (MUFG) (formerly, the Bank of Tokyo Mitsubishi UFJ. Ltd. (BTMU)) borrowing guarantee up to USD 41,258 thousand proportion to its ownership in the equity bridge loan guarantee with PT. Cirebon Energi Prasarana in relation to the second electric power generation business in Cirebon, Indonesia.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

53.

Contingencies and Commitments, Continued

 

(2)

Guarantees of payments and commitments provided to other companies as of December 31, 2018 and 2017 are as follows, continued:

 

  LOGO

The Company has provided the Export-Import Bank of Korea, BNP Paribas and ING Bank guarantee of mutual investment of USD 2,192 thousand, which is equivalent to the ownership interest of PT BS Energy and PT Nusantara Hydro Alam, in order to guarantee the expenses related to hydroelectric power business of Tanggamus, Indonesia.

 

  LOGO

The Company has provided the Export-Import Bank of Korea and SMBC guarantee of mutual investment of USD 401 thousand, which is equivalent to the ownership interest of PT Mega Power Mandiri, in order to guarantee the expenses related to hydroelectric power business of PT Wampu Electric Power, an associate of the Company.

 

(3)

Credit lines provided by financial institutions as of December 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies                        

Commitments

  

Financial institutions

   Currency    Limited amount      Exercised amount  

Commitments on bank-overdraft

   Nonghyup Bank and others    KRW      1,855,000        167,010  

Commitments on bank-daylight overdraft

   Nonghyup Bank    KRW      280,000        —    

Limit amount available for CP

   KEB Hana Bank and others    KRW      1,050,000        —    

Limit amount available for card

   KEB Hana Bank and others    KRW      55,904        2,740  
   Banco de Oro    PHP      5,000        5,000  

Loan limit

   Kookmin Bank and others    KRW      1,238,500        612,197  
   DBS Bank and others    USD      1,840,700        20,000  

Certification of payment on payables from foreign country

   Kookmin Bank and others    USD      44,680        4,754  

Certification of payment on L/C

   Shinhan Bank and others    USD      992,434        252,392  

Certification of performance guarantee on contract

   KEB Hana Bank and others    EUR      4,158        4,158  
   KEB Hana Bank and others    INR      237,321        237,321  
   Korea Development Bank and others    JPY      637,322        637,322  
   Seoul Guarantee Insurance and others    KRW      89,335        72,802  
   First Abu Dhabi Bank and others    USD      923,915        830,314  
   KEB Hana Bank    SAR      6,508        6,508  
   Bank of Kathmandu    NPR      36,304        36,304  
   KEB Hana Bank    CAD      617        617  

Certification of bidding

   KEB Hana Bank and others    USD      110,000        3,199  
   Shinhan Bank    ZAR      55,730        55,730  

Advance payment bond, Warranty bond, Retention bond and others

   Export-Import Bank of Korea and others    USD      3,934,928        3,220,418  

Others

   Shinhan Bank    JPY      381,210        381,210  
   Nonghyup Bank and others    KRW      307,436        7,088  
   Export-Import Bank of Korea and others    USD      1,171,470        842,897  

Inclusive credit

   Shinhan Bank    INR      70,028        70,028  
   KEB Hana Bank    KRW      258,000        12,278  
   KEB Hana Bank and others    USD      30,930        18,245  

Trade finance

   BNP Paribas and others    USD      800,000        —    

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

53.

Contingencies and Commitments, Continued

 

(4)

As of December 31, 2018, blank check and assets provided as collaterals or pledges to financial institutions by the Company are follows:

 

In millions of won and thousands of foreign currencies                 

Guarantor

  

Guarantee

  

Type of guarantee

   Currency    Amount      Description
Korea Southern Power Co., Ltd.   

Korea Development Bank and others

  

Shareholdings of DS Power Co., Ltd.

   KRW      916      Collateral for borrowings
Mira Power Limited   

International Finance Corporation and others

  

Property, plant and equipment and others

   USD      275,600      Collateral for borrowings

(*2)

Gyeonggi Green Energy Co., Ltd.    Korea Development Bank and others   

Cash and cash equivalents

   KRW      327,080      Collateral for borrowings

(*1)

Commerce and Industry Energy Co., Ltd.    IBK and others   

Land, buildings, structures and machinery and others

   KRW      110,500      Collateral for borrowings

(*1)

KOSPO Youngnam Power Co., Ltd.    Shinhan Bank and others   

Cash and cash equivalents

   KRW      396,120      Collateral for borrowings

(*1)

Gyeongju Wind Power Co., Ltd.   

Samsung Fire & Marine Insurance Co., Ltd. and others

  

Property, plant and equipment and others

   KRW      110,240      Collateral for borrowings

(*1)

Korea Offshore Wind Power Co., Ltd    Woori Bank and others   

Utility plant and others

   KRW      293,400      Collateral for borrowings
Qatrana Electric Power Company   

The Islamic Development Bank and others

  

Finance lease receivable and property, plant and equipment and others

   JOD      236,570      Collateral for borrowings

(*2)

KST Electric Power Company   

The Export—Import Bank of Korea and others

  

Finance lease receivable and property, plant and equipment and others

   USD      337,000      Collateral for borrowings

(*2)

 

  (*1)

As of December 31, 2018, the Company has established guarantees for pledge for transfer of rights of long-term borrowings, pledge for insurance claims, pledge for shares, etc.

  (*2)

This is based on the amount of loan commitment limit.

The Company has W1,197 million of project loans from Korea Energy Agency as of December 31, 2018. The Company has provided a blank check as repayment guarantee.

 

(5)

The Company temporarily suspended operations of the Gangneung hydroelectric generating plant, with a carrying amount of W81,900 million as of December 31, 2018, to improve the quality of water used in generating electricity. The expenses related to the suspension of operations of W47 million and depreciation on the utility plant of W6,547 million are recorded in other expenses for the year ended December 31, 2018. Regarding the improvement of water quality, the results of damages compensation for the local residents cannot be reasonably estimated, and the Company is in negotiations with Gangneung City and related stakeholders to restart the Gangneung hydroelectric generating plant as of December 31, 2018.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

53. Contingencies and Commitments, Continued

 

(6)

Due to the Korean government’s announcement of suspension of operation in the Gaeseong Industrial District, it is uncertain if the Company can exercise the property rights for the Company’s facility in the Gaeseong Industrial District as of December 31, 2018. The book value of facility is W17,522 million and the amount of trade receivables related to the companies residing in Gaeseong industrial complex is W2,911 million. The ultimate outcome of this event cannot be reasonably estimated.

 

(7)

As of December 31, 2018, five subsidiaries of KEPCO, including Korea South-East Power Co., Ltd., have entered into consecutive voyage charter contracts with shipping companies, including Korea Line Corporation, for the stable transportation of overseas bituminous coal used for power generation. As of December 31, 2018, there are 73 vessels under contract and the average remaining contract period is about 9 years.

 

54.

Subsequent Events

Subsequent to December 31, 2018, Korea Midland Power Co., Ltd., Korea Western Power Co., Ltd. and Korea East-West Power Co., Ltd. issued foreign bond, corporate bonds and non-guaranteed corporate bonds for funding facilities and operations as follows:

 

In millions of won and thousands of USD  

Company Name

  

Type

   Issue date    Maturity    Interest rate (%)          Amount  

Korea Midland Power Co., Ltd.

   #7 foreign bond    2019.01.22    2022.01.22      3.38   USD      300,000  
   #47-1 corporate bond    2019.02.08    2039.02.08      2.19   KRW      160,000  
   #47-2 corporate bond    2019.02.08    2049.02.08      2.17   KRW      120,000  

Korea Western Power Co., Ltd.

   #2 Swiss Franc bond    2019.02.27    2024.02.27      0.13   CHF      200,000  

Korea East-West Power Co., Ltd.

   #32-1 non-guaranteed corporate bond    2019.03.07    2039.03.07      2.18   KRW      40,000  
   #32-2 non-guaranteed corporate bond    2019.03.07    2049.03.07      2.16   KRW      40,000  

On January 9, 2019, Korea Western Power Co., Ltd., a subsidiary of KEPCO, has completed the liquidation of KOWEPO India Private Limited, which was classified as assets held-for-sale.

 

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Notes to the Consolidated Financial Statements, Continued

December 31, 2018

 

55.

Adjusted Operating Profit (loss)

The operating profit (loss) in the Company’s consolidated statements of comprehensive income (loss) prepared in accordance with K-IFRS included in this report differs from that in its consolidated statements of comprehensive income (loss) prepared in accordance with IFRS as issued by IASB. The table below sets forth a reconciliation of the Company’s results from operating activities as presented in the Company’s consolidated statements of comprehensive income (loss) prepared in accordance with K-IFRS for each of the years ended December 31, 2018 and 2017 to the operating profit or loss as presented in the Company’s consolidated statements of comprehensive income (loss) prepared in accordance with IFRS as issued by IASB for each of the corresponding years.

 

In millions of won    2018      2017  

Operating profit (loss) on the consolidated statements of comprehensive income (loss)

   W (208,001      4,953,152  

Add

     

Other income

     

Reversal of other provisions

     12,700        35,265  

Reversal of other allowance for bad debt

     143        2,166  

Gains on government grants

     482        430  

Gains on assets contributed

     17,336        4,218  

Gains on liabilities exempted

     10,303        3,166  

Compensation and reparations revenue

     89,901        89,196  

Revenue from research contracts

     6,818        12,580  

Rental income

     186,631        192,136  

Others

     51,032        50,988  

Other gains

     

Gains on disposal of property, plant and equipment

     98,077        48,316  

Gains on disposal of intangible assets

     12        564  

Reversal of impairment loss on intangible assets

     17        54  

Gains on foreign currency translation

     14,905        20,485  

Gains on foreign currency transaction

     47,297        93,151  

Gains on insurance proceeds

     —          400  

Others

     221,556        269,562  

Deduct

     

Other expense

     

Compensation and indemnification expense

     (23,437      (37

Accretion expenses of other provisions

     (41,924      (7,535

Depreciation expenses on investment properties

     (923      (1,176

Depreciation expenses on idle assets

     (6,547      (6,644

Other bad debt expense

     (17,827      (1,778

Donations

     (63,743      (119,421

Others

     (76,929      (43,464

Other loss

     

Losses on disposal of property, plant and equipment

     (60,704      (70,514

Losses on disposal of intangible assets

     (43      (183

Impairment loss on property, plant and equipment

     (710,162      (51,067

Impairment loss on intangible assets

     (8,112      (20

Impairment loss on other non-current assets

     (87,024      —    

Losses on foreign currency translation

     (7,678      (25,495

Losses on foreign currency transaction

     (65,366      (36,241

Others

     (63,899      (92,385
  

 

 

    

 

 

 

Adjusted operating profit (loss)

   W (685,109      5,319,869  
  

 

 

    

 

 

 

 

173