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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 September 2016

Commission File Number: 001-13372

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  x                    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  x

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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This Report of Foreign Private Issuer on Form 6-K is deemed filed for all purposes under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.

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QUARTERLY BUSINESS REPORT

(For the period from January 1, 2016 to June 30, 2016)

THIS IS A SUMMARY IN ENGLISH OF THE QUARTERLY BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE FINANCIAL SERVICES COMMISSION OF KOREA.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS. NON-MATERIAL OR PREVIOUSLY DISCLOSED INFORMATION IS OMITTED OR ABRIDGED.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ADOPTED FOR USE IN KOREA, OR K-IFRS, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

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I. Company Overview

1. Name of the company: Korea Electric Power Corporation (KEPCO)

2. Information of the company

(Address) 55 Jeollyeok-ro, Naju-si, Jeollanam-do, 58217, Korea

(Phone number) 82-61-345-4261

(Website) http://www.kepco.co.kr

3. Major businesses

KEPCO, as the parent company, is engaged in the following activities:

 

l

development of electric power resources;

 

l

generation, transmission, transformation and distribution of electricity and other related activities;

 

l

research and development of technology related to the businesses mentioned above;

 

l

overseas business related to the businesses mentioned above;

 

l

investment or contributions related to the businesses mentioned above;

 

l

development and operation of certain real estate holdings; and

 

l

other businesses entrusted by the government.

Businesses operated by KEPCO’s major subsidiaries are as follows: nuclear power generation by Korea Hydro & Nuclear Power (KHNP), thermal power generation by Korea South-East Power (KOSEP), Korea Midland Power (KOMIPO), Korea Western Power (KOWEPO), Korea Southern Power (KOSPO) and Korea East-West Power (EWP), other businesses including engineering service by KEPCO Engineering & Construction (KEPCO E&C), maintenance and repair of power plants by KEPCO Plant Service & Engineering (KEPCO KPS), nuclear fuel processing by KEPCO Nuclear Fuel (KEPCO NF), IT service by KEPCO KDN, and other overseas businesses and related investments.

4. Subsidiaries and affiliates of KEPCO

(As of June 30, 2016)

 

Classification		Consolidated subsidiaries				Associates and joint ventures				Total
Domestic			21				57				78
Overseas			60				37				97
Total			81				94				175

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5. Major changes in management for the second three-month period ended June 30, 2016

A. At the extraordinary meeting of shareholders of KEPCO held on April 25, 2016, Mr. Lee, Sung-Han was appointed as a standing director and a member of the audit committee in replacement of Mr. Ahn, Hong-Ryoul, whose term of office expired. On the same date, Mr. Cho, Jeon-Hyeok was reappointed as a non-standing director and a member of the audit committee.

B. On May 16, 2016, Mr. Kim, Ji-Hong was appointed as a non-standing director in the replacement of Mr. Ahn, Hyun-Ho, who voluntarily resigned on March 17, 2016.

6. Changes in major shareholders

On December 31, 2014, Korea Development Bank merged with Korea Finance Corporation, and became the largest shareholder of KEPCO.

7. Information regarding KEPCO shares

A. Issued share capital: Won 3,210 billion (Authorized capital: Won 6 trillion)

B. Total number of issued shares: 641,964,077 (Total number of shares authorized to for issuance: 1,200,000,000)

C. Dividends: Dividend payment of Won 3,100 per share for fiscal year 2015 (Won 1.99 trillion in aggregate). Dividend payments for fiscal year 2014 and 2013 were Won 500 and Won 90 per share respectively and no dividend was paid for fiscal year 2012.

II. Business Overview

1. Consolidated financial results by segment for a six-month period ended June 30, 2015 and 2016

(In billions of Won)

 

		January to June 2015								January to June 2016
		Sales				Operating profit				Sales				Operating profit
Electricity sales			28,498				1,930				28,819				2,175
Nuclear generation			4,638				1,192				5,671				2,165
Thermal generation			10,710				1,034				10,270				1,982
Others(*)			1,485				164				1,474				195
Subtotal			45,331				4,320				46,234				6,517
Adjustment for related-party transactions			-16,535				8				-17,273				- 207
Total			28,796				4,328				28,961				6,310

 

•	The figures may not add up to the relevant total numbers due to rounding.

 

(*)	Others relate to 75 subsidiaries including KEPCO E&C, KEPCO KPS, KEPCO NF and KEPCO KDN, among others.

 

•	Sales and operating profit reflects amendments to Korean IFRS 1001 “Presentation of Financial Statements.”

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2. Changes in unit prices of major products

(In Won per kWh)

 

Business sector				Company		January to March 2016		January to June 2016
Electricity sold		Residential		KEPCO		129.91		124.02
		Commercial				129.40		126.48
		Educational				104.21		106.94
		Industrial				107.91		103.64
		Agricultural				47.56		47.86
		Street lighting				108.89		114.05
		Overnight usage				72.86		67.77
Electricity from nuclear generation		Nuclear Generation		KHNP		75.93		65.08
Electricity from thermal generation		Thermal generation		KOSEP		81.66		71.39
				KOMIPO		92.88		81.70
				KOWEPO		98.86		86.68
				KOSPO		100.14		86.14
				EWP		98.06		87.00

3. Power purchase from generation companies for the six-month period ended June 30, 2016

 

Company		Volume (MWh)				Expense (In billions of Won)
KHNP			84,441,535				5,584
KOSEP			32,960,248				2,354
KOMIPO			21,022,889				1,719
KOWEPO			22,925,975				1,988
KOSPO			21,279,364				1,833
EWP			23,111,784				2,009
Others			49,724,715				4,782
Total			255,466,510				20,269

 

•	Excludes expense related to the renewable portfolio standard provisions and emission trading system.

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4. Intellectual property as of June 30, 2016

 

		Patents				Utility models		Designs		Trademarks				Total
		Domestic		Overseas						Domestic		Overseas
KEPCO		1,804		175		96		73		125		44		2,317
Consolidated subsidiaries		3,635		567		747		98		258		16		5,321
Total		5,439		742		843		171		383		60		7,638

III. Financial Information

1. Condensed consolidated financial results as of and for a six-month period ended June 30, 2015 and 2016

(In billions of Won)

 

Consolidated statements of comprehensive income														Consolidated statements of financial position
		January to June 2015				January to June 2016				Change (%)						December 31, 2015				June 30, 2016				Change (%)
Sales			28,796				28,961				0.6			Total assets			175,257				175,191				0.0
Operating profit			4,328				6,310				45.8			Total liabilities			107,315				105,551				-1.6
Net income			2,565				3,931				53.2			Total equity			67,942				69,640				2.5

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2. Condensed separate financial results as of and for the six-month period ended June 30, 2015 and 2016

(In billions of Won)

 

Separate statements of comprehensive income														Separate statements of financial position
		January to June 2015				January to June 2016				Change (%)						December 31, 2015				June 30, 2016				Change (%)
Sales			28,498				28,819				1.1			Total assets			106,306				103,638				-2.5
Operating profit			1,931				2,175				12.7			Total liabilities			53,125				50,062				-5.8
Net income			1,929				2,448				26.9			Total equity			53,181				53,576				0.7

IV. Board of Directors (KEPCO Only)

1. The board of directors is required to consist of not more than 15 directors including the president. Under our Article of Incorporation, there may not be more than 7 standing directors including president, and more than 8 non-standing directors. The number of non-standing directors must exceed the number of standing directors, including our president.

 

*	The Audit Committee consists of one standing director and two non-standing directors.

2. Board meetings and agendas for a six-month period ended June 30, 2016

 

Number of meetings		Number of agendas		Classification
				Resolutions		Results		Reports		Results
10		37		31		Approved as proposed		6		Accepted as reported

 

*	The audit committee held 6 meetings with 24 agendas (of which, 14 were resolved as proposed and 10 were approved as reported).

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3. Major activities of the Board of Directors

 

Date		Agenda		Results				Type
January 5, 2016		Approval to close the shareholders’ registry for extraordinary general meeting of shareholders			Approved as proposed				Resolution
		Approval to call for the extraordinary general meeting of shareholders for the fiscal year 2016			Approved as proposed				Resolution
February 19, 2016		Approval of the maximum aggregate amount of remuneration for directors in 2016			Approved as proposed				Resolution
		Approval of consolidated and separate financial statements for the fiscal year 2015			Approved as proposed				Resolution
		Approval to call for the annual general meeting of shareholders for the fiscal year 2015			Approved as proposed				Resolution
		Approval of contribution to a special purpose company for solar power project in Hokkaido, Japan			Approved as proposed				Resolution
		Composition of and approval of standards for examining candidates for the Director Nomination Committee to recommend candidates for a standing director and member of the Audit Committee			Approved as proposed				Resolution
		Approval to close the shareholders’ registry for extraordinary general meeting of shareholders			Approved as proposed				Resolution
		Report on the annual management of commercial papers in 2015			Accepted as reported				Report
		Report on internal control over financial reporting for the fiscal year 2015			Accepted as reported				Report
		Evaluation report on internal control over financial reporting for the fiscal year 2015			Accepted as reported				Report
		Report on operating plan of the Act on the Control and Supervision on Nuclear Power Suppliers, etc. for the Prevention of Corruption in the Nuclear Power Industry			Accepted as reported				Report

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Date		Agenda		Results		Type
February 29, 2016		Approval of amendments to the Electricity Usage Agreement and Rules for Operation		Approved as proposed		Resolution
		Approval of the Statement of Appropriation of fiscal year 2015 retained earnings		Approved as proposed		Resolution
March 18, 2016		Approval of Agreement on Management Performance Assessment for the President		Approved as proposed		Resolution
		Approval of the establishment of a new organization		Approved as proposed		Resolution
		Approval of amendments to the Electricity Usage Agreement and Rules for Operation		Approved as proposed		Resolution
		Approval of liquidation of Dolphin, an associate located in Nigeria		Approved as proposed		Resolution
		Composition of and approval of standards for examining candidates for the Director Nomination Committee to recommend candidates for non-standing directors		Approved as proposed		Resolution
		Auditor’s report to the board of directors for 2015		Accepted as reported		Report
April 8, 2016		Recommendation of candidates for the Audit Committee		Approved as proposed		Resolution
		Approval to call for the extraordinary meeting of shareholders for the fiscal year 2016		Approved as proposed		Resolution
April 15, 2016		Approval of amendments to the Articles of Incorporation		Approved as proposed		Resolution
		Approval of the establishment of a new organization		Approved as proposed		Resolution
		Approval of amendments to the regulation for employee remuneration and welfare		Approved as proposed		Resolution

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Date		Agenda		Results		Type
April 29, 2016		Approval of adoption of proposal of merit-based annual salary for state-owned corporations and amendments to the regulation for remuneration and welfare		Approved as proposed		Resolution
May 20, 2016		Approval to establish and contribute to a Special Purpose Company for solar energy business in schools, one of the Government’s top ten energy industry initiatives		Approved as proposed		Resolution
		Approval to establish electricity vehicle charging infrastructure		Approved as proposed		Resolution
		Approval of long-term plan for power transmission and distribution network		Approved as proposed		Resolution
		Approval to transfer KEPCO’s shares in KEPCO Energy Resource Nigeria, Ltd (KERNL) to ERL		Approved as proposed		Resolution
		Report on results of external and internal audits for the first quarter of 2016		Accepted as reported		Report
June 17, 2016		Approval to establish and contribute to a Special Purpose Company for energy efficiency business, Government’s top ten energy industry initiatives		Conditional approved as proposed		Resolution
		Approval to finance the new energy industry fund and operating company		Deferred		-
		Approval to modify capital budget for fiscal year 2016 to finance a Special Purpose Company for the new energy industry fund and energy efficiency business		Deferred		-
		Approval of mid-to-long term financial management plan (2016-2020)		Approved as proposed		Resolution
June 24, 2016		Approval to contribute to the new energy industry fund and operating company		Accepted as revised		Resolution
		Approval to modify capital budget for fiscal year 2016		Accepted as revised		Resolution

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4. Major Activities and Attendance Status of Non-standing Directors

 

Date

Agenda

Ahn, Choong- Yong

Lee, Kang- Hee

Cho, Jeon- Hyeok

Choi, Ki- Ryun

Sung, Tae- Hyun

Koo, Ja- Yoon

Ahn, Hyun- Ho(*)

Kim, Joo- Suen

Kim, Ji- Hong(*)

January 5, 2016

Approval to close the shareholders’ registry for extraordinary general meeting of shareholders

For

For

For

For

For

For

Absence

For

-

Approval to call for the extraordinary general meeting of shareholders for the fiscal year 2016

For

For

For

For

For

For

Absence

For

-

February 19, 2016

Approval of the maximum aggregate amount of remuneration for directors in 2016

For

For

For

For

For

For

For

For

-

Approval of consolidated and separate financial statements for the fiscal year 2015

For

For

For

For

For

For

For

For

-

Approval to call for the annual general meeting of shareholders for the fiscal year 2015

For

For

For

For

For

For

For

For

-

Approval of contribution to a special purpose company for solar power project in Hokkaido, Japan

For

For

For

For

For

For

For

For

-

Composition of and approval of standards for examining candidates for the Director Nomination Committee to recommend candidates for a standing director and member of the Audit Committee

For

For

For

For

For

For

For

For

-

Approval to close the shareholders’ registry for extraordinary general meeting of shareholders

For

For

For

For

For

For

For

For

-

Report on the annual management of commercial papers in 2015

Agenda for Report

Report on internal control over financial reporting for the fiscal year 2015

Agenda for Report

Evaluation report on internal control over financial reporting for the fiscal year 2015

Agenda for Report

Report on operating plan of the Act on the Control and Supervision on Nuclear Power Suppliers, etc. for the Prevention of Corruption in the Nuclear Power Industry

Agenda for Report

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Date

Agenda

Ahn, Choong- Yong

Lee, Kang- Hee

Cho, Jeon- Hyeok

Choi, Ki- Ryun

Sung, Tae- Hyun

Koo, Ja- Yoon

Ahn, Hyun- Ho(*)

Kim, Joo- Suen

Kim, Ji- Hong(*)

February 29, 2016

Approval of amendments to the Electricity Usage Agreement and Rules for Operation

For

For

Absence

For

Absence

For

For

For

-

Approval of the Statement of Appropriation of fiscal year 2015 retained earnings

For

For

Absence

For

Absence

For

For

For

-

March 18, 2016

Approval of Agreement on Management Performance Assessment for the President

For

For

Absence

For

For

Absence

Resigned

For

-

Approval of the establishment of a new organization

For

For

Absence

For

For

Absence

-

For

-

Approval of amendments to the Electricity Usage Agreement and Rules for Operation

For

For

Absence

For

For

Absence

-

For

-

Approval of liquidation of Dolphin, an associate located in Nigeria

For

For

Absence

For

For

Absence

-

For

-

Composition of and approval of standards for examining candidates for the Director Nomination Committee to recommend candidates for non-standing directors

For

For

Absence

For

For

Absence

-

For

-

Auditor’s report to the board of directors for 2015

Agenda for Report

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Date

Agenda

Ahn, Choong- Yong

Lee, Kang- Hee

Cho, Jeon- Hyeok

Choi, Ki- Ryun

Sung, Tae- Hyun

Koo, Ja- Yoon

Ahn, Hyun- Ho(*)

Kim, Joo- Suen

Kim, Ji- Hong(*)

April 8, 2016

Recommendation of candidates for the Audit Committee

For

For

Absence

For

Absence

For

-

For

-

Approval to call for the extraordinary meeting of shareholders for the fiscal year 2016

For

For

Absence

For

Absence

For

-

For

-

April 15, 2016

Approval of amendments to the Articles of Incorporation

For

For

For

For

Absence

For

-

For

-

Approval of the establishment of a new organization

For

For

For

For

Absence

For

-

For

-

Approval of amendments to the regulation for employee remuneration and welfare

For

For

For

For

Absence

For

-

For

-

April 29, 2016

Approval of adoption of proposal of merit-based annual salary for state-owned corporations and amendments to the regulation for remuneration and welfare

For

For

For

For

Absence

For

-

For

-

May 20, 2016

Approval to establish and contribute to a Special Purpose Company for solar energy business in schools, one of the Government’s top ten energy industry initiatives

For

For

Absence

For

For

Absence

-

For

For

Approval to establish electricity vehicle charging infrastructure

For

For

Absence

For

For

Absence

-

For

For

Approval of long-term plan for power transmission and distribution network

For

For

Absence

For

For

Absence

-

For

For

Approval to transfer KEPCO’s shares in KEPCO Energy Resource Nigeria, Ltd (KERNL) to ERL

For

For

Absence

For

For

Absence

-

For

For

Report on results of external and internal audits for the first quarter of 2016

Agenda for Report

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Date

Agenda

Ahn, Choong- Yong

Lee, Kang- Hee

Cho, Jeon- Hyeok

Choi, Ki- Ryun

Sung, Tae- Hyun

Koo, Ja- Yoon

Ahn, Hyun- Ho(*)

Kim, Joo- Suen

Kim, Ji- Hong(*)

June 17, 2016

Approval to establish and contribute to a Special Purpose Company for energy efficiency business, Government’s top ten energy industry initiatives

For

For

For

For

For

For

-

For

For

Approval to finance the new energy industry fund and operating company

Deferred

Approval to modify capital budget for fiscal year 2016 to finance a Special Purpose Company for the new energy industry fund and energy efficiency business

Deferred

Approval of mid-to-long term financial management plan (2016-2020)

For

For

For

For

For

For

-

For

For

June 24, 2016

Approval to contribute to the new energy industry fund and operating company

For

Absence

Absence

For

Absence

For

-

For

For

Approval to modify capital budget for fiscal year 2016

For

Absence

Absence

For

Absence

For

-

For

For

Attendance Rate

100%

90%

50%

100%

60%

70%

66.7%

100%

100%

(*) Ahn, Hyun-Ho voluntarily resigned on March 17, 2016. Under Korean Law, Mr. Ahn had retained the rights and had been subject to obligations as a non-standing director until his successor, Kim, Ji-Hong was appointed on May 16, 2016.

4. Major activities of the Audit Committee

 

Date		Agenda		Results		Type
January 8, 2016		Approval of selection of independent auditors of subsidiaries		Approved as proposed		Resolution
		Prior approval for non-audit service for subsidiaries by the independent auditor		Approved as proposed		Resolution
		Auditor’s report on the agendas for the extraordinary general meeting of shareholders		Approved as proposed		Resolution
		Evaluation report on joint selection of independent auditors for the period from fiscal year 2016 to 2018		Accepted as reported		Report
January 12, 2016		Approval of selection and remuneration for independent auditors for the period from fiscal year 2016 to 2018		Approved as proposed		Resolution

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Date		Agenda		Results		Type
February 19, 2016		Auditor’s report on the agendas for the annual general meeting of shareholders		Approved as proposed		Resolution
		Audit plans for 2016		Approved as proposed		Resolution
		Report on internal controls over financial reporting for the fiscal year 2015		Accepted as reported		Report
		Evaluation report on internal controls over financial reporting for the fiscal year 2015		Accepted as reported		Report
		Education plans for auditors for 2016		Accepted as reported		Report
March 16, 2016		Approval of selection of independent auditors of subsidiaries		Approved as proposed		Resolution
		Prior approval for non-audit service for subsidiaries by the independent auditor		Approved as proposed		Resolution
		Amendments to the Charter of Ethics for KEPCO Employees and the Code of Conduct for KEPCO Executives and Staff members		Approved as proposed		Resolution
		Auditor’s report to the board of directors for 2015		Accepted as reported		Report
		Independent auditor’s report on the audit results for the consolidated and separate financial statements for the fiscal year 2015		Accepted as reported		Report

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Date		Agenda		Results		Type
April 15, 2016		Auditor’s report on the agendas for the extraordinary general meeting of shareholders		Approved as proposed		Resolution
		Approval of selection of independent auditors of subsidiaries		Approved as proposed		Resolution
		Prior approval for non-audit services for consolidated subsidiaries by independent auditors		Approved as proposed		Resolution
		Report on the Form 20-F for the fiscal year 2015 to be filed with the U.S. Securities and Exchange Commission		Accepted as reported		Report
		Auditor’s report for fiscal year 2015 in accordance with U.S. accounting principles		Accepted as reported		Report
May 20, 2016		Approval to appoint the chairman of the Audit Committee		Approved as proposed		Resolution
		Prior approval for non-audit services for consolidated subsidiaries by independent auditors		Approved as proposed		Resolution
		Report on results of external and internal audits during the first quarter of 2016		Accepted as reported		Report
		Independent auditor’s report on the audit plans for the fiscal year 2016		Accepted as reported		Report

The audit department, organized under the supervision of the Audit Committee, conducts internal audit over the entire company and takes administrative measures as appropriate in accordance with relevant internal regulations. KEPCO’s District Divisions and Branch Offices also have separate audit teams which conduct internal inspections with respect to the relevant divisions or offices.

V. Shareholders

1. List of shareholders as of March 8, 2016

 

				Number of shareholders				Shares owned				Percentage of total (%)
Government of the Republic of Korea					1				116,841,794				18.20
Korea Development Bank					1				211,235,264				32.90
Subtotal					2				328,077,058				51.10
National Pension Service					1				44,276,581				6.90
Public (non-Koreans)		Common shares			1,687				168,832,936				26.30
		American depositary shares (ADS)			1				36,199,847				5.64
Public		Corporate			1,448				47,461,707				7.39
(Koreans)		Individual			340,532				17,115,948				2.67
Total					343,671				641,964,077				100.00

 

•	Percentages are based on issued shares of common stock.

 

•	All of our shareholder have equal voting rights.

 

•	Citibank, N.A. is our depositary bank and each ADS represents one-half of one share of our common stock.

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VI. Directors and employees as of and for a six-month period ended June 30, 2016 (KEPCO Only)

1. Directors

(In thousands of Won)

 

Type		Number of directors				Total remuneration				Average remuneration per person
Standing director			7				1,061,400				151,629
Non-standing director			8				107,704				13,463
Total			15				1,169,104				77,940

2. Employees

(In thousands of Won)

 

Type		Number of employees												Average								Average
		Regular				Non-regular				Total				continuous service year				Total salaries				salaries per person
Male			16,727				284				17,011				19.2				694,470,640				40,825
Female			3,646				160				3,806				14.1				114,963,498				30,206
Total			20,373				444				20,817				18.3				809,434,138				38,883

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VII. Other Information Necessary for the Protection of Investors

1. Summary of shareholder’s meetings for the first three-month period ended March 31

 

Type		Agenda		Results
Extraordinary General Meeting held on February 22, 2016		Election of the President and Chief Executive Officer : Cho, Hwan-Eik		Approved as proposed
Annual General Meeting held on March 22, 2016		Approval of financial statements for the fiscal year 2015		Approved as proposed
		Approval of the maximum aggregate amount of remuneration for directors in 2016		Approved as proposed
Extraordinary General Meeting held on April 25, 2016		Election of a standing director : Lee, Sung-Han		Approved as proposed
		Election of a standing director and member of the Audit Committee : Lee, Sung-Han		Approved as proposed
		Election of a non-standing director and member of the Audit Committee : Cho, Jeon-Hyeok		Approved as proposed

2. Pending legal proceedings as of June 30, 2016

(In billions of Won)

 

Type		Number of lawsuits		Claim amount
Lawsuits where KEPCO and its subsidiaries are engaged as the defendants		730		776
Lawsuits where KEPCO and its subsidiaries are engaged as the plaintiffs		189		614

Some ongoing litigations were not included in the table above. Please refer to the contingencies and commitments part of notes to the following consolidated interim financial statements for details.

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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.

 

Date: September 9, 2016

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Financial Statements

June 30, 2016

(Unaudited)

(With Independent Auditors’ Review Report Thereon)

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INDEX TO FINANCIAL STATEMENTS

 

		Page
Independent Auditors’ Review Report			1
Consolidated Interim Statements of Financial Position			3
Consolidated Interim Statements of Comprehensive Income			5
Consolidated Interim Statements of Changes in Equity			7
Consolidated Interim Statements of Cash Flows			9
Notes to the Consolidated Interim Financial Statements			11

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Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

Korea Electric Power Corporation:

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of Korea Electric Power Corporation and its subsidiaries (the “Company”), which comprise the consolidated interim statement of financial position as of June 30, 2016, the consolidated interim statements of comprehensive income for the three and six-month periods ended June 30, 2016 and 2015, changes in equity and cash flows for the six-month periods ended June 30, 2016 and 2015 and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Interim Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, ‘Interim Financial Reporting’ and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Review Responsibility

Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Review Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS 1034, ‘Interim Financial Reporting’.

Emphasis of Matters

Without qualifying our review report, we draw attention to the key audit matter of a build-to-order industry that was of significance in our review of the consolidated interim financial statements as of and for the six-month period ended June 30, 2016 in accordance with Practical Guide of Korean Standards on Auditing 2016-1. This matter was addressed in the context of our review of the consolidated interim financial statements as a whole, and in forming our review conclusion thereon, and we do not provide a separate conclusion on this matter.

Also, as stated above under “Auditors’ Review Responsibility”, our responsibility is to issue a report on these consolidated interim financial statements based on our reviews in accordance with the Review Standards for Quarterly and Semi-annual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. Accordingly, we have inquired primarily of persons responsible for financial and accounting matters, and applied analytical and other review procedures on the key audit matter of a build-to-order industry.

When the outcome of a construction contract can be estimated reliably, the Company recognizes contract revenue and costs based on the percentage-of-completion method at the end of the reporting period. Also, the gross amount due from customers for contract work is presented for all contracts in which costs incurred plus recognized profits exceed progress billings. The gross amount due to customers for contract work is presented for all contracts in which progress billings exceed costs incurred plus recognized profits.

Total contract revenue is measured based on an agreed contract price; however, it may fluctuate due to changes in construction during contract work. The measurement of contract revenue is affected by various uncertainties resulting unexpected future events. Total contract cost is estimated based on the future estimates such as material costs, labor costs and construction period. The uncertainty of estimated total contract costs and changes in such estimates have an impact on the completion progress and contract revenue.

 

1

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Considering the impacts from these uncertainty and changes in estimates on profit or loss for the current or future period, we identified the Company’s revenue recognition accounting policy utilizing the input method with uncertainty of estimated total contract costs, assessment of the percentage-of-completion and accounting for the variation of construction works as a significant risk.

We conducted the following review procedures regarding the Company’s accounting policy of revenue recognition utilizing the input method for the six-month period ended June 30, 2016:

 

•

Inquiry of the accounting policy of revenue recognition and any changes, and significant changes to the contracts

 

•

Analytical review of financial indicators such as contract price, estimated contract costs, cost ratio, ratio of amounts due from/to customers for contract work and others.

 

•

Inquiry and analytical review of changes in major components of estimated contract costs

 

•

Inquiry and analytical review of fluctuations in completion progress of contracts including contract price, accumulated contract cost and total contract cost

Other Matters

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

We have previously audited, in accordance with Korean Standards on Auditing, the consolidated statement of financial position of the Company as of December 31, 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, and we expressed an unqualified opinion on those consolidated financial statements in our report dated March 11, 2016. The accompanying consolidated financial position of the Company as of December 31, 2015, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

 

KPMG Samjong Accounting Corp.

Seoul, Korea

August 12, 2016

 

 

2

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position

As of June 30, 2016 and December 31, 2015

(Unaudited)

 

In millions of won		Note				June 30, 2016				December 31, 2015
Assets
Current assets
Cash and cash equivalents			5,6,7,44			￦	3,360,776				3,783,065
Current financial assets, net			5,10,11,12,44				2,078,484				5,335,621
Trade and other receivables, net			5,8,14,20,44,45,46				6,733,310				7,473,548
Inventories, net			13				5,029,808				4,946,413
Income tax refund receivables			40				10,025				9,081
Current non-financial assets			15				478,709				397,950
Assets held-for-sale			41				79,647				79,647
Total current assets							17,770,759				22,025,325
Non-current assets
Non-current financial assets, net			5,6,9,10,11,12,44				2,477,073				2,495,554
Non-current trade and other receivables, net			5,8,14,44,45,46				1,804,141				1,798,419
Property, plant and equipment, net			18,27,48				145,260,670				141,361,351
Investment properties, net			19,27				244,875				269,910
Goodwill			16				2,582				2,582
Intangible assets other than goodwill, net			21,27,45				906,084				855,832
Investments in associates			4,17				4,522,898				4,405,668
Investments in joint ventures			4,17				1,323,299				1,287,862
Deferred tax assets			40				752,896				623,623
Non-current non-financial assets			15				125,512				131,233
Total non-current assets							157,420,030				153,232,034
Total Assets			4			￦	175,190,789				175,257,359

 

(Continued)

 

3

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position, Continued

As of June 30, 2016 and December 31, 2015

(Unaudited)

 

In millions of won		Note				June 30, 2016				December 31, 2015
Liabilities
Current liabilities
Trade and other payables, net			5,22,24,44,46			￦	4,617,300				4,735,697
Current financial liabilities, net			5,11,23,44,46				9,714,281				7,857,198
Income tax payables			40				1,779,908				2,218,060
Current non-financial liabilities			20,28,29				6,638,952				6,320,711
Current provisions			26,44				1,820,171				1,579,176
Total current liabilities							24,570,612				22,710,842
Non-current liabilities
Non-current trade and other payables, net			5,22,24,44,46				3,818,495				3,718,435
Non-current financial liabilities, net			5,11,23,44,46				46,227,263				51,062,811
Non-current non-financial liabilities			28,29				7,353,129				7,092,252
Employee benefits liabilities, net			25,44				1,982,272				1,503,107
Deferred tax liabilities			40				8,537,370				8,362,683
Non-current provisions			26,44				13,062,010				12,864,754
Total non-current liabilities							80,980,539				84,604,042
Total Liabilities			4			￦	105,551,151				107,314,884
Equity
Contributed capital			1,30,44
Share capital						￦	3,209,820				3,209,820
Share premium							843,758				843,758
							4,053,578				4,053,578
Retained earnings			31
Legal reserves							1,604,910				1,604,910
Voluntary reserves							31,847,274				23,720,167
Unappropriated retained earnings							16,418,167				22,862,164
							49,870,351				48,187,241
Other components of equity			33
Other capital surpluses							1,197,128				1,197,388
Accumulated other comprehensive loss							(78,483	)			(98,713	)
Other equity							13,294,973				13,294,973
							14,413,618				14,393,648
Equity attributable to owners of the Company							68,337,547				66,634,467
Non-controlling interests			16, 32				1,302,091				1,308,008
Total Equity						￦	69,639,638				67,942,475
Total Liabilities and Equity						￦	175,190,789				175,257,359

See accompanying notes to the consolidated interim financial statements.

 

4

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2016 and 2015

(Unaudited)

 

In millions of won, except per share information						June 30, 2016								June 30, 2015
		Note				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Sales			4,34,44,46
Sales of goods						￦	12,155,550				26,657,484				12,264,491				26,497,475
Sales of services							74,098				177,728				121,583				216,371
Sales of construction services			20				945,481				1,927,326				1,192,576				1,897,085
Revenue related to transfer of assets from customers							100,295				198,213				93,176				184,754
							13,275,424				28,960,751				13,671,826				28,795,685
Cost of sales			13,25,42,46
Cost of sales of goods							(9,005,798	)			(19,522,816	)			(9,783,228	)			(21,449,147	)
Cost of sales of services							(111,863	)			(205,097	)			(115,545	)			(204,704	)
Cost of sales of construction services							(861,011	)			(1,821,882	)			(1,132,526	)			(1,799,617	)
							(9,978,672	)			(21,549,795	)			(11,031,299	)			(23,453,468	)
Gross profit							3,296,752				7,410,956				2,640,527				5,342,217
Selling and administrative expenses			25,35,42,46				(592,258	)			(1,101,115	)			(552,543	)			(1,014,367	)
Operating profit			4				2,704,494				6,309,841				2,087,984				4,327,850
Other non-operating income			36				103,010				195,312				96,330				213,695
Other non-operating expense			36				(31,888	)			(52,590	)			(16,980	)			(40,117	)
Other gains, net			37				30,883				70,786				47,241				73,135
Finance income			5,11,38				207,714				379,446				275,466				448,373
Finance expenses			5,11,39				(610,604	)			(1,149,549	)			(783,041	)			(1,450,165	)
Profit related to associates, joint ventures and subsidiaries			4,17
Share in profit of associates and joint ventures							28,274				214,055				38,653				246,207
Gain on disposal of investments in associates and joint ventures							52				52				—				—
Gain on disposal of investments in subsidiaries			16				—				—				—				5,866
Share in loss of associates and joint ventures							(27,352	)			(54,212	)			(12,170	)			(33,041	)
Loss on disposal of investments in associates and joint ventures							(171	)			(171	)			—				—
							803				159,724				26,483				219,032
Profit before income tax							2,404,412				5,912,970				1,733,483				3,791,803
Income tax expense			40				(636,624	)			(1,982,349	)			(391,589	)			(1,226,802	)
Profit for the period						￦	1,767,788				3,930,621				1,341,894				2,565,001

 

(Continued)

 

5

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income, Continued

For the three and six-month periods ended June 30, 2016 and 2015

(Unaudited)

 

In millions of won, except per share information						June 30, 2016								June 30, 2015
		Note				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Other comprehensive income (loss)			5,11,25,31,33
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax			25,31			￦	(101,290	)			(201,861	)			45,646				(33,185	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			31				(459	)			(643	)			1,472				1,230
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			33				(4,694	)			22,476				32,552				22,905
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			5,11,33				43,282				30,478				(33,358	)			(21,360	)
Foreign currency translation of foreign operations, net of tax			33				1,378				4,721				36,051				(15,962	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			33				(43,811	)			(39,222	)			45,713				34,922
Other comprehensive income (loss), net of tax							(105,594	)			(184,051	)			128,076				(11,450	)
Total comprehensive income for the period						￦	1,662,194				3,746,570				1,469,970				2,553,551
Profit or loss attributable to:
Owners of the Company			43			￦	1,726,467				3,861,917				1,305,183				2,505,266
Non-controlling interests							41,321				68,704				36,711				59,735
						￦	1,767,788				3,930,621				1,341,894				2,565,001
Total comprehensive income attributable to:
Owners of the Company						￦	1,625,395				3,693,429				1,423,010				2,491,790
Non-controlling interests							36,799				53,141				46,960				61,761
						￦	1,662,194				3,746,570				1,469,970				2,553,551
Earnings per share			43
Basic and diluted earnings per share						￦	2,689				6,016				2,034				3,903

See accompanying notes to the consolidated interim financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2016 and 2015

(Unaudited)

 

In millions of won		Equity attributable to owners of the Company																Non-
		Contributed capital				Retained earnings				Other components of equity				Subtotal				controlling interests				Total equity
Balance at January 1, 2015		￦	4,053,578				35,303,647				14,244,106				53,601,331				1,223,679				54,825,010
Total comprehensive income (loss) for the period
Profit for the period			—				2,505,266				—				2,505,266				59,735				2,565,001
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax			—				(33,575	)			—				(33,575	)			390				(33,185	)
Share in other comprehensive income of associates and joint ventures, net of tax			—				1,230				—				1,230				—				1,230
Items that may be reclassified subsequently to profit or loss:
Net changes in the unrealized fair value of available-for-sale financial assets, net of tax			—				—				22,905				22,905				—				22,905
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				(17,875	)			(17,875	)			(3,485	)			(21,360	)
Foreign currency translation of foreign operations, net of tax			—				—				(21,083	)			(21,083	)			5,121				(15,962	)
Share in other comprehensive income of associates and joint ventures, net of tax			—				—				34,922				34,922				—				34,922
Transactions with owners of the Company, recognized directly in equity
Dividends paid			—				(320,982	)			—				(320,982	)			(56,352	)			(377,334	)
Issuance of share capital by subsidiaries and others			—				—				2,865				2,865				6,382				9,247
Equity transaction within consolidated scope			—				—				44,107				44,107				9,591				53,698
Changes in consolidated scope			—				—				—				—				(1,547	)			(1,547	)
Dividends paid (hybrid securities)			—				—				—				—				(8,182	)			(8,182	)
Others			—				—				—				—				(1,157	)			(1,157	)
Balance at June 30, 2015		￦	4,053,578				37,455,586				14,309,947				55,819,111				1,234,175				57,053,286

 

(Continued)

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity, Continued

For the six-month periods ended June 30, 2016 and 2015

(Unaudited)

 

In millions of won		Equity attributable to owners of the Company																Non-
		Contributed capital				Retained earnings				Other components of equity				Subtotal				controlling interests				Total equity
Balance at January 1, 2016		￦	4,053,578				48,187,241				14,393,648				66,634,467				1,308,008				67,942,475
Total comprehensive income (loss) for the period
Profit for the period			—				3,861,917				—				3,861,917				68,704				3,930,621
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax			—				(188,083	)			—				(188,083	)			(13,778	)			(201,861	)
Share in other comprehensive loss of associates and joint ventures, net of tax			—				(635	)			—				(635	)			(8	)			(643	)
Items that may be reclassified subsequently to profit or loss:
Net changes in the unrealized fair value of available-for-sale financial assets, net of tax			—				—				22,477				22,477				(1	)			22,476
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				30,486				30,486				(8	)			30,478
Foreign currency translation of foreign operations, net of tax			—				—				6,493				6,493				(1,772	)			4,721
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			—				—				(39,226	)			(39,226	)			4				(39,222	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid			—				(1,990,089	)			—				(1,990,089	)			(68,099	)			(2,058,188	)
Issuance of shares of capital by subsidiaries and others			—				—				(260	)			(260	)			14,815				14,555
Changes in consolidation scope			—				—				—				—				2,453				2,453
Dividends paid (hybrid securities)			—				—				—				—				(8,227	)			(8,227	)
Balance at June 30, 2016		￦	4,053,578				49,870,351				14,413,618				68,337,547				1,302,091				69,639,638

See accompanying notes to the consolidated interim financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2016 and 2015

(Unaudited)

 

In millions of won		June 30, 2016				June 30, 2015
Cash flows from operating activities
Profit for the period		￦	3,930,621				2,565,001
Adjustments for:
Income tax expense			1,982,349				1,226,802
Depreciation			4,247,987				4,003,612
Amortization			37,421				37,647
Employee benefit expense			172,046				153,924
Bad debt expense			14,550				—
Reversal of allowance for bad debt			—				(4,488	)
Interest expense			881,259				1,078,463
Loss on sale of financial assets			—				2,983
Loss on disposal of property, plant and equipment			3,232				1,720
Loss on abandonment of property, plant, and equipment			185,261				123,390
Impairment loss on property, plant and equipment			—				4,757
Loss on disposal of intangible assets			138				5
Accretion expense to provisions, net			701,038				796,511
Loss (gain) on foreign currency translation, net			(45,699	)			246,856
Valuation and transaction loss (gain) on derivative instruments, net			47,307				(211,224	)
Share in income of associates and joint ventures, net			(159,843	)			(213,166	)
Gain on sale of financial assets			(1,480	)			—
Gain on disposal of property, plant and equipment			(29,958	)			(96,769	)
Gain on disposal of intangible assets			—				(32	)
Gain on disposal of associates and joint ventures			(52	)			—
Loss on disposal of associates and joint ventures			171				—
Gain on disposal of investments in subsidiaries			—				(5,866	)
Interest income			(132,521	)			(105,008	)
Dividend income			(9,995	)			(13,564	)
Impairment loss on available-for-sale securities			93				13,993
Others, net			23,973				(945	)
			7,917,277				7,039,601
Changes in:
Trade receivables			944,568				1,088,488
Non-trade receivables			(210,067	)			(8,699	)
Accrued income			(148,170	)			(45,056	)
Other receivables			4,631				(279	)
Other current assets			(228,884	)			22,890
Inventories			(415,405	)			(599,374	)
Other non-current assets			(25,486	)			(42,396	)
Trade payables			(772,771	)			(1,700,352	)
Non-trade payables			142,366				100,075
Accrued expenses			588,683				45,201
Other payables			—				22
Other current liabilities			577,089				963,614
Other non-current liabilities			399,562				127,768
Investments in associates and joint ventures			46,851				37,903
Provisions			(523,884	)			(414,474	)
Payments of employee benefit obligations			(23,704	)			(14,844	)
Plan assets			(2,176	)			305
			353,203				(439,208	)

 

(Continued)

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2016 and 2015

(Unaudited)

 

In millions of won		June 30, 2016				June 30, 2015
Cash generated from operating activities
Dividends received		￦	10,681				13,564
Interest paid			(1,016,999	)			(1,120,011	)
Interest received			107,571				80,705
Income taxes paid			(2,293,616	)			(514,632	)
Net cash from operating activities			9,008,738				7,625,020
Cash flows from investing activities
Proceeds from disposals of associates and joint ventures			10,942				—
Acquisition of associates and joint ventures			(93,700	)			(67,886	)
Proceeds from disposals of property, plant and equipment			30,490				6,589,066
Acquisition of property, plant and equipment			(7,458,658	)			(7,799,359	)
Proceeds from disposals of intangible assets			134				163
Acquisition of intangible assets			(48,213	)			(33,945	)
Proceeds from disposals of financial assets			4,842,813				142,562
Acquisition of financial assets			(1,499,610	)			(1,629,993	)
Increase in loans			(165,654	)			(109,534	)
Collection of loans			67,324				47,743
Increase in deposits			(238,624	)			(156,985	)
Decrease in deposits			96,147				119,476
Receipt of government grants			17,065				10,153
Usage of government grants			(19,470	)			(18,943	)
Net cash inflow from business acquisitions			2,480				553
Other cash inflow from investing activities, net			19,175				15,016
Net cash used in investing activities			(4,437,359	)			(2,891,913	)
Cash flows from financing activities
Proceeds from short-term borrowings, net			29,775				323,645
Proceeds from long-term borrowings and debt securities			883,008				2,124,045
Repayment of long-term borrowings and debt securities			(3,872,266	)			(4,783,278	)
Payment of finance lease liabilities			(59,439	)			(55,242	)
Settlement of derivative instruments, net			56,358				3,713
Change in non-controlling interest			14,264				72,316
Dividends paid (hybrid bond)			(8,227	)			(8,182	)
Dividends paid			(2,058,188	)			(377,334	)
Other cash outflow from financing activities, net			(523	)			(2,437	)
Net cash used in financing activities			(5,015,238	)			(2,702,754	)
Net increase (decrease) in cash and cash equivalents before effect of exchange rate fluctuations			(443,859	)			2,030,353
Effect of exchange rate fluctuations on cash held			21,570				23,785
Net increase (decrease) in cash and cash equivalents			(422,289	)			2,054,138
Cash and cash equivalents at January 1			3,783,065				1,796,300
Cash and cash equivalents at June 30		￦	3,360,776				3,850,438

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2016

(Unaudited)

 

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 June 30, 2016, KEPCO’s share capital amounts to ￦3,209,820 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 205,032,783 shares (31.94%) as of the most recent closing date of Register of Shareholders (March 8, 2016).

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

 

(1)	Statement of compliance

These consolidated interim financial statements were prepared in accordance with K-IFRS 1034, ‘Interim Financial Reporting’ as part of the period covered by KEPCO and subsidiaries’ (the “Company”) K-IFRS annual financial statements. The notes are included to explain events and transactions to give the changes in financial position and performance of the Company since the last annual consolidated financial statements as at and for the year ended December 31, 2015.

 

(2)	Basis of measurement

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

 

•

derivative financial instruments are measured at fair value

 

•

available-for-sale financial assets 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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

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, 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.

 

(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. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the financial officer.

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 25).

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

2.	Basis of Preparation, Continued

 

(4)	Use of estimates and judgments, continued

 

(v)

Unbilled revenue

Energy delivered but not yet metered nor billed are estimated at the reporting date 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 assumptions and prices based on statistics. Unbilled revenue recognized as of June 30, 2016 and 2015 are ￦1,121,003 million and ￦1,302,371 million, respectively.

 

(5)	Changes in accounting policies

 

(i)

Amendments to K-IFRS 1016, ‘Property, Plant and Equipment’

The Company has adopted amendments to K-IFRS 1016, ‘Property, Plant and Equipment’, since January 1, 2016. Amendments to K-IFRS 1016, ‘Property, Plant and Equipment’, specify that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate.

Upon adoption of the amendments, there is no significant impact on the Company’s consolidated financial statements.

 

(ii)

Amendments to K- IFRS 1038, ‘Intangible Assets’

The Company has adopted amendments to K- IFRS 1038, ‘Intangible Assets’, since January 1, 2016. Amendments to K-IFRS 1038, ‘Intangible Assets’, introduce a rebuttable presumption that the use of revenue-based amortization methods for intangible assets is inappropriate. This presumption can be rebutted only when revenue and the consumption of the economic benefits of the intangible asset are highly correlated, or when the intangible asset is expressed as a measure of revenue.

Upon adoption of the amendments, there is no significant impact on the Company’s consolidated financial statements.

 

(iii)

Amendments to K-IFRS 1111, ‘Joint Arrangement’

The Company has adopted amendments to K-IFRS 1111, ‘Joint Arrangement’, since January 1, 2016. Amendments to K-IFRS 1111, ‘Joint Arrangement’, require an investor to apply the principles of business combination accounting when it acquires an interest in a joint operation that constitutes a business as defined in K-IFRS 1103, ‘Business Combinations’.

Upon adoption of the amendments, there is no significant impact on the Company’s consolidated financial statements.

 

(iv)

Amendments to K-IFRS 1011, ‘Construction Contracts’

The Company has adopted amendments to K-IFRS 1011, ‘Construction Contracts’, since January 1, 2016. Amendments to K-IFRS 1011, ‘Construction Contracts’, require the Company to disclose the construction contracts by each project or operating segment (refer to note 20).

 

(6)	New standards and amendments not yet adopted

The following new standards, interpretations and amendments to existing standards have been published for mandatory application for annual periods beginning after January 1, 2016, and the Company has not early adopted them. The management believes the impact on the consolidated financial statements upon the adoption of the amendments is immaterial.

 

(i)

K-IFRS 1109, ‘Financial Instruments’

 

K-IFRS 1109, ‘Financial Instruments’ specifies classification and measurement of financial instruments and changes the credit loss mode into an expected credit loss model from an incurred credit loss model. Additionally, this standard was aimed to align accounting more closely with risk management and expanded the types of eligible hedged item, hedging instrument, and hedged risk under new hedge accounting model. This standard is effective for annual periods beginning on or after January 1, 2018.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

2.	Basis of Preparation, Continued

 

(6)	New standards and interpretations not yet adopted, continued

 

(ii)

K-IFRS 1115, ‘Revenue from Contracts with Customers’

K-IFRS 1115, ‘Revenue from Contracts with Customers’ as a single standard applying to all contracts with customers, provides the five-step process for revenue recognition and replaces the risk-and-reward model, which is based on the control, under the current standards. The risk-and-reward model is changed to a single indicator implicating the satisfaction of a performance obligation. This standard is effective for annual periods beginning on or after January 1, 2018.

 

3.	Significant Accounting Policies

The significant accounting policies applied by the Company in preparation of its 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, 2015.

 

(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 (loss) 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 1039, ‘Financial Instruments: Recognition and Measurement’ or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(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.

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 1039, ‘Financial Instruments: Recognition and Measurement’, 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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(2)	Business combinations, continued

 

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.

 

(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.

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. If the Company holds 20% ~ 50% of the voting power of the investee, it is presumed that the Company has significant influence.

After the disposal takes place, the Company shall account for any retained interest in associates in accordance with K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’ 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. The requirements of K-IFRS 1039, ’Financial Instruments: Recognition and Measurement’, 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.

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 1036. 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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(3)	Investments in associates, continued

 

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.

 

(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-IFRS’ 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 applying 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 is 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 whether there is any indication that an 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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(6)	Goodwill, continued

 

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.

 

(7)	Revenue recognition

Revenue from the sale of goods, rendering of services or use of the Company assets is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates, which are recognized as a reduction of revenue. Revenue is recognized when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Company.

 

(i)

Sales of goods

The Korean government approves the rates charged to customers by the Company’s power transmission and distribution division. The Company’s utility rates are designed to recover the Company’s reasonable costs plus a fair investment return. The Company’s power generation rates are determined in the market.

The Company recognizes electricity sales revenue based on power sold (transferred to the customer) up to the reporting date. To determine the amount of power sold, the Company estimates daily power volumes of electricity for residential, commercial, general, etc. The differences between the current month’s estimated amount and actual (meter-read) amount, is adjusted for (trued-up) during the subsequent month.

 

(ii)

Sales of other services

Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed or services performed to date as a percentage of total services to be performed or the proportion that costs incurred to date bear to the estimated total costs of the transaction or other methods that reliably measures the services performed.

 

(iii)

Dividend income and interest income

Dividend income is recognized in profit or loss on the date that the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Interest income is recognized as it accrues in profit or loss, using the effective interest method. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

 

(iv)

Rental income

The Company’s policy for recognition of revenue from operating leases is described in note 3. (9) below.

 

(v)

Deferral of revenue – Transfer of Assets from Customers

The Company recovers a substantial amount of the cost related to its electric power distribution facilities from customers through the transfer of assets, while the remaining portion is recovered through electricity sales from such customers in the future. As such, the Company believes there exists a continued service obligation to the customers in accordance with K-IFRS 2118, ‘Transfer of Assets from Customers’, when the Company receives an item of property, equipment, or cash for constructing or acquiring an item of property or equipment, in exchange for supplying electricity to customers. The Company defers the amounts received, which are subsequently recognized as revenue over the estimated service period which does not exceed the transferred asset’s useful life.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(8)	Construction services revenue

The Company provides services related to the construction of power plants related to facilities of its customers, mostly in foreign countries.

When the outcome of a construction contract can be estimated reliably, revenue and costs are recognized based on the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred when it is probable the revenue will be realized. Contract costs are recognized as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.

When contract costs incurred to date plus recognized income less recognized losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognized income less recognized losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the consolidated statements of financial position, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated statements of financial position as accounts and other receivables.

 

(9)

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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(9)	Leases, continued

 

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.

 

(10)	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.(24) 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 profit or loss on disposal.

 

(11)	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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(12)	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.

 

(13)	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 will 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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(14)	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.

 

(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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(15)	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		6 ~ 32
Vehicles		4
Loaded heavy water		30
Asset retirement costs		18, 30, 40
Finance lease assets		20
Ships		9
Others		4 ~ 9

A component that is significant compared to the total cost of property, plant and equipment is depreciated over its separate useful life. Depreciation methods, useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate.

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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(16)	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.

 

(17)	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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(17)	Intangible assets, continued

 

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

 

		Useful lives (years)		Amortization methods
Usage rights for donated assets		4 ~ 30		Straight
Software		4, 5		Straight
Industrial rights		5, 10		Straight
Development expenses		5		Straight
Others		10 ~ 50		Straight
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 (which is regarded as their cost).

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.

 

(18)	Greenhouse gas emissions rights (allowances) and obligations

With Enforcement of Allocation and Trading of Greenhouse Gas Emissions Allowances, the Company applies the following accounting policies for emissions rights and obligations.

 

(i)

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 emissions rights includes expenditures arising directly from the acquisition and any other costs incurred during normal course of the acquisition.

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 emissions rights are classified as current assets Emissions rights recorded as intangible assets are initially measured at cost and substantially remeasured at cost less accumulated impairment losses.

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

 

(ii)

Emissions obligations

Emissions obligations are the Company’s present legal obligation to submit the 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. 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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(19)	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.

 

(20)	Inventories

Inventories are measured at the lower of cost and net realizable value. 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.

 

(21)	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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(21)	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 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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(22)	Non-derivative financial assets

The Company recognizes and measures non-derivative financial assets by the following four categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. The Company recognizes financial assets in the statement of financial position when the Company becomes a party to the contractual provisions of the instrument. Upon initial recognition, non-derivative financial assets are measured at their fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the asset’s acquisition or issuance.

A regular way purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade date accounting or settlement date accounting. A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

 

(i)

Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as financial assets at fair value through profit or loss.

 

(ii)

Financial assets at fair value through profit or loss (FVTPL)

A financial asset is classified as financial assets are classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Upon initial recognition, transaction costs are recognized in profit or loss when incurred. A financial assets its acquired principally for the purpose of selling it in the near term are classified as a short-term financial assets held for trading and also all the derivatives including an embedded derivate that is not designated and effective as a hedging instrument are classified at the short-term trading financial asset as well. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.

A financial asset is classified as held for trading if:

 

•

It has been acquired principally for the purpose of selling it in the near term; or

 

•

On initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short term profit taking; or

 

•

It is derivative, including an embedded derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at financial assets at fair value through profit or loss upon initial recognition if:

 

•

Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

 

•

The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its’ performance is evaluated on a fair value basis in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

 

•

It forms a part of a contract containing one or more embedded derivatives, and with K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’, permits the entire combined contract (asset or liability) to be designated as at financial assets at fair value through profit or loss.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(22)	Non-derivative financial assets, continued

 

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on re-measurement recognized in income or loss. The net gain or loss recognized in income or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘finance income and finance expenses’ line item in the consolidated statement of comprehensive income.

 

(iii)

Held-to-maturity investments

A non-derivative financial asset with a fixed or determinable payment and fixed maturity, for which the Company has the positive intention and ability to hold to maturity, are classified as held-to-maturity investments. Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method.

 

(iv)

Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified as financial assets at fair value through profit or loss, held-to-maturity investments or loans and receivables.

Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in the valuation reserve. However, impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets are recognized in income or loss. Unquoted equity investments which are not traded in an active market, whose fair value cannot be measured reliably are carried at cost.

When a financial asset is derecognized or impairment losses are recognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Dividends on an available-for-sale equity instrument are recognized in profit or loss when the Company’s right to receive payment is established.

The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognized in income or loss are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other comprehensive income.

 

(v)

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method except for loans and receivables of which the effect of discounting is immaterial.

 

(vi)

Impairment of financial assets

Financial assets, other than those at financial assets at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For listed and unlisted equity investments classified as available-for-sale financial asset, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment in addition to the criteria mentioned below.

For all other financial assets, objective evidence of impairment could include:

 

•

Significant financial difficulty of the issuer or counterparty; or

 

•

Breach of contract, such as a default or delinquency in interest or principal payments, or

 

•

It becoming probable that the borrower will enter bankruptcy or financial re-organization; or

 

•

The disappearance of an active market for that financial asset because of financial difficulties.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(22)	Non-derivative financial assets, continued

 

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets recorded at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in income or loss.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to income or loss in the period.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

In respect of available-for-sale equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

 

(vii)

De-recognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. If the Company retains substantially all the risks and rewards of ownership of the transferred financial assets, the Company continues to recognize the transferred financial assets and recognizes financial liabilities for the consideration received.

On de-recognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in income or loss.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(22)	Non-derivative financial assets, continued

 

On de-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in income or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

 

(23)	Non-derivative financial liabilities and equity instruments issued by the Company

 

(i)

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

 

(ii)

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in income or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

 

(iii)

Financial liabilities

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially measured at fair value. Transaction cost that are directly attributable to the issue of financial liabilities are added to or deducted from the fair value of the financial liabilities, as appropriate, on initial recognition. Transaction cost directly attributable to acquisition of financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

 

(iv)

Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities are classified as at financial liabilities at fair value through profit or loss when the financial liability is either held for trading or it is designated as financial liabilities at fair value through profit or loss.

A financial liability is classified as held for trading if:

 

•

It has been acquired principally for the purpose of repurchasing it in the near term; or

 

•

On initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

 

•

It is a derivative that is not designated and effective as a hedging instrument.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(23)	Non-derivative financial liabilities and equity instruments issued by the Company, continued

 

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

 

•

Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

 

•

The financial liability forms part of a Company of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

 

•

It forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’, permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on re-measurement recognized in income or loss. The net gain or loss recognized in income or loss incorporates any interest paid on the financial liability and is included in ‘finance income and finance expenses’.

 

(v)

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

 

(vi)

Financial guarantee contract liabilities

Financial guarantee contract liabilities are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of: (a) the amount of the obligation under the contract, as determined in accordance with K-IFRS 1037, ‘Provisions’, Contingent Liabilities and Contingent Assets; or (b) the amount initially recognized less, cumulative amortization recognized in accordance with K-IFRS 1018, ‘Revenue’.

 

(vii)

De-recognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in income or loss.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

 

(24)	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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(24)	Derivative financial instruments, including hedge accounting, continued

 

(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’.

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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

(2)	Financial information of the segments for the three and six-month periods ended June 30, 2016 and 2015, respectively, are as follows:

 

In millions of won
June 30, 2016
Segment		Total segment revenue								Intersegment revenue								Revenue from external customers								Operating profit (loss)								Depreciation and Amortization								Interest Income								Interest expense								Profit related to associates, joint ventures, and subsidiaries
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Transmission and distribution		￦	13,252,820				28,818,959				503,673				783,099				12,749,147				28,035,860				1,886,287				2,175,110				754,787				1,504,430				15,341				48,035				210,533				448,060				15,518				161,629
Electric power generation (Nuclear)			2,361,674				5,671,350				2,330,565				5,635,465				31,109				35,885				481,597				2,164,923				768,880				1,556,168				9,546				17,744				118,522				237,043				(641	)			(821	)
Electric power generation (Non-Nuclear)			4,034,310				10,269,793				3,776,853				9,810,464				257,457				459,329				291,196				1,982,176				579,222				1,182,031				7,051				15,519				76,269				160,185				(15,842	)			(2,107	)
Plant Maintenance & engineering service			628,315				1,189,569				518,465				1,000,500				109,850				189,069				78,355				136,257				24,766				49,448				2,363				5,736				922				1,412				1,768				1,023
Others			146,323				284,525				18,462				43,917				127,861				240,608				35,196				58,697				6,882				15,030				21,768				55,283				23,058				46,821				—				—
Consolidation adjustments			(7,148,018	)			(17,273,445	)			(7,148,018	)			(17,273,445	)			—				—				(68,137	)			(207,322	)			(11,467	)			(21,699	)			(3,867	)			(9,796	)			(6,280	)			(12,262	)			—				—
		￦	13,275,424				28,960,751				—				—				13,275,424				28,960,751				2,704,494				6,309,841				2,123,070				4,285,408				52,202				132,521				423,024				881,259				803				159,724
In millions of won
June 30, 2015
Segment		Total segment revenue								Intersegment revenue								Revenue from external customers								Operating profit (loss)								Depreciation and Amortization								Interest Income								Interest expense								Profit related to associates, joint ventures, and subsidiaries
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Transmission and distribution		￦	13,561,560				28,498,239				313,577				610,732				13,247,983				27,887,507				2,124,786				1,930,620				706,033				1,410,193				21,292				31,862				281,603				583,719				44,215				214,247
Electric power generation (Nuclear)			1,902,260				4,638,420				1,896,788				4,630,737				5,472				7,683				(3,327	)			1,192,216				725,525				1,462,841				6,086				13,094				149,585				299,171				(55	)			(713	)
Electric power generation (Non-Nuclear)			4,085,679				10,709,496				3,928,265				10,341,346				157,414				368,150				(183,626	)			1,033,762				572,605				1,134,531				5,397				11,066				78,141				160,470				(16,831	)			5,544
Plant Maintenance & engineering service			616,499				1,170,215				479,572				893,785				136,927				276,430				74,239				130,854				20,133				40,031				2,398				5,422				32				71				(846	)			(46	)
Others			162,603				314,232				38,573				58,317				124,030				255,915				18,398				32,899				6,493				13,536				27,616				53,138				24,557				45,066				—				—
Consolidation adjustments			(6,656,775	)			(16,534,917	)			(6,656,775	)			(16,534,917	)			—				—				57,514				7,499				(10,469	)			(19,873	)			(7,274	)			(9,574	)			(8,111	)			(10,034	)			—				—
		￦	13,671,826				28,795,685				—				—				13,671,826				28,795,685				2,087,984				4,327,850				2,020,320				4,041,259				55,515				105,008				525,807				1,078,463				26,483				219,032

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

(3)	Information related to segment assets and segment liabilities as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Segment		Segment assets				Investments in associates and joint ventures				Acquisition of non-current assets				Segment liabilities
Transmission and distribution		￦	103,637,617				4,465,501				4,212,995				50,061,642
Electric power generation (Nuclear)			52,138,260				16,904				1,236,340				27,685,996
Electric power generation (Non-nuclear)			45,466,902				1,309,114				1,997,382				25,482,154
Plant maintenance & engineering service			3,043,560				54,678				84,431				1,241,987
Others			6,584,546				—				70,832				2,407,724
Consolidation adjustments			(35,680,096	)			—				(95,109	)			(1,328,352	)
Consolidated totals		￦	175,190,789				5,846,197				7,506,871				105,551,151
In millions of won
December 31, 2015
Segment		Segment assets				Investments in associates and joint ventures				Acquisition of non-current assets				Segment liabilities
Transmission and distribution		￦	106,306,250				4,338,888				5,885,919				53,125,589
Electric power generation (Nuclear)			51,043,890				16,385				2,647,304				27,386,113
Electric power generation (Non-nuclear)			44,453,545				1,283,432				5,063,195				25,587,071
Plant maintenance & engineering service			2,990,862				54,825				249,627				1,172,351
Others			5,962,546				—				144,846				2,312,658
Consolidation adjustments			(35,499,734	)			—				146,942				(2,268,898	)
Consolidated totals		￦	175,257,359				5,693,530				14,137,833				107,314,884

 

(4)	Geographic information

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)
		June 30, 2016								June 30, 2015								June 30, 2016				December 31, 2015
Geographical unit		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Domestic		￦	12,254,627				26,835,890				12,378,120				26,685,740				148,030,969				143,788,043
Overseas (*1)			1,020,797				2,124,861				1,293,706				2,109,945				4,354,951				4,526,395
		￦	13,275,424				28,960,751				13,671,826				28,795,685				152,385,920				148,314,438

 

(*1)	Middle East and other Asian countries make up the majority of overseas revenue and non-current assets.

(*2)	Amount excludes financial assets and deferred tax assets.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

(5)	Information on significant customers

There is no individual customer comprising more than 10% of the Company’s revenue for the six-month periods ended June 30, 2016 and 2015.

 

5.	Classification of Financial Instruments

 

(1)	Classification of financial assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Financial assets at fair value through profit or loss				Loans and receivables				Available- for-sale financial assets				Held-to- maturity investments				Derivative assets (using hedge accounting)				Total
Current assets
Cash and cash equivalents		￦	—				3,360,776				—				—				—				3,360,776
Current financial assets
Held-to-maturity investments			—				—				—				351				—				351
Derivative assets			26,295				—				—				—				80,645				106,940
Other financial assets			—				1,971,193				—				—				—				1,971,193
Trade and other receivables			—				6,733,310				—				—				—				6,733,310
			26,295				12,065,279				—				351				80,645				12,172,570
Non-current assets
Non-current financial assets
Available-for-sale financial assets			—				—				1,033,110				—				—				1,033,110
Held-to-maturity investments			—				—				—				3,194				—				3,194
Derivative assets			241,050				—				—				—				216,192				457,242
Other financial assets			—				983,527				—				—				—				983,527
Trade and other receivables			—				1,804,141				—				—				—				1,804,141
			241,050				2,787,668				1,033,110				3,194				216,192				4,281,214
		￦	267,345				14,852,947				1,033,110				3,545				296,837				16,453,784

 

In millions of won		December 31, 2015
		Financial assets at fair value through profit or loss				Loans and receivables				Available- for-sale financial assets				Held-to- maturity investments				Derivative assets (using hedge accounting)				Total
Current assets
Cash and cash equivalents		￦	—				3,783,065				—				—				—				3,783,065
Current financial assets
Held-to-maturity investments			—				—				—				381				—				381
Derivative assets			1,498				—				—				—				95,759				97,257
Other financial assets			—				5,237,983				—				—				—				5,237,983
Trade and other receivables			—				7,473,548				—				—				—				7,473,548
			1,498				16,494,596				—				381				95,759				16,592,234
Non-current assets
Non-current financial assets
Available-for-sale financial assets			—				—				584,479				—				—				584,479
Held-to-maturity investments			—				—				—				3,242				—				3,242
Derivative assets			253,510				—				—				—				266,383				519,893
Other financial assets			—				1,387,940				—				—				—				1,387,940
Trade and other receivables			—				1,798,419				—				—				—				1,798,419
			253,510				3,186,359				584,479				3,242				266,383				4,293,973
		￦	255,008				19,680,955				584,479				3,623				362,142				20,886,207

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

5.	Classification of Financial Instruments, Continued

 

(2)	Classification of financial liabilities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Financial liabilities at fair value through profit or loss				Financial liabilities recognized at amortized cost				Derivative liabilities (using hedge accounting)				Total
Current liabilities
Borrowings		￦	—				1,144,234				—				1,144,234
Debt securities			—				8,563,072				—				8,563,072
Derivative liabilities			6,062				—				913				6,975
Trade and other payables			—				4,617,300				—				4,617,300
			6,062				14,324,606				913				14,331,581
Non-current liabilities
Borrowings			—				1,615,496				—				1,615,496
Debt securities			—				44,446,151				—				44,446,151
Derivative liabilities			16,574				—				149,042				165,616
Trade and other payables			—				3,818,495				—				3,818,495
			16,574				49,880,142				149,042				50,045,758
		￦	22,636				64,204,748				149,955				64,377,339

 

In millions of won		December 31, 2015
		Financial liabilities at fair value through profit or loss				Financial liabilities recognized at amortized cost				Derivative liabilities (using hedge accounting)				Total
Current liabilities
Borrowings		￦	—				1,144,027				—				1,144,027
Debt securities			—				6,702,926				—				6,702,926
Derivative liabilities			9,487				—				758				10,245
Trade and other payables			—				4,735,697				—				4,735,697
			9,487				12,582,650				758				12,592,895
Non-current liabilities
Borrowings			—				1,932,259				—				1,932,259
Debt securities			—				48,974,287				—				48,974,287
Derivative liabilities			39,524				—				116,741				156,265
Trade and other payables			—				3,718,435				—				3,718,435
			39,524				54,624,981				116,741				54,781,246
		￦	49,011				67,207,631				117,499				67,374,141

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

5.	Classification of Financial Instruments, Continued

 

(3)	Classification of comprehensive income from financial instruments for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won				June 30, 2016								June 30, 2015
				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Cash and cash equivalents		Interest income		￦	17,856				38,539				13,297				25,188
Available-for-sale financial assets		Dividends income			628				9,995				8,107				13,564
		Impairment loss on available-for-sale financial assets			(93	)			(93	)			(8,172	)			(13,993	)
		Gain (loss) on disposal of available-for-sale financial assets			—				1,480				(2,008	)			(2,983	)
		Interest income			—				—				—				29
Held-to-maturity investments		Interest income			29				54				24				48
Loans and receivables		Interest income			7,163				14,101				4,400				11,174
Trade and other receivables		Interest income			18,414				49,475				29,484				54,465
Short-term financial instruments		Interest income			6,406				25,457				5,668				8,532
Long-term financial instruments		Interest income			2,334				4,895				2,643				5,572
Financial assets at fair value through profit or loss		Gain on valuation of derivatives			86,384				38,717				30,540				60,905
		Gain (loss) on transaction of derivatives			(4,338	)			(6,170	)			472				2,138
Derivative assets (using hedge accounting)		Gain (loss) on valuation of derivatives (profit or loss)			27,884				(18,170	)			69,806				84,005
		Gain (loss) on valuation of derivatives (equity, before tax) (*)			32,543				20,507				(32,598	)			(19,588	)
		Gain (loss) on transaction of derivatives			(146	)			2,656				354				1,419
Financial liabilities carried at amortized cost		Interest expense of borrowings and debt securities			(286,005	)			(607,014	)			(350,453	)			(729,657	)
		Interest expense of trade and other payables			(17,103	)			(33,506	)			(24,211	)			(45,120	)
		Interest expense of others			(119,916	)			(240,739	)			(151,143	)			(303,686	)
		Gain (loss) on foreign currency transactions and translations			(106,918	)			9,319				(198,642	)			(258,978	)
Financial liabilities at fair value through profit or loss		Gain (loss) on valuation of derivatives			(7,233	)			(151	)			12,199				30,541
		Gain (loss) on transaction of derivatives			5,146				7,277				(2,424	)			(4,209	)
Derivative liabilities (using hedge accounting)		Gain (loss) on valuation of derivatives (profit or loss)			20,822				(19,956	)			39,586				41,443
		Gain (loss) on valuation of derivatives (equity, before tax) (*)			42,788				32,553				(25,460	)			(11,723	)
		Loss on transaction of derivatives			(51,510	)			(51,510	)			(1,618	)			(5,018	)

 

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

6.	Restricted Deposits

Restricted deposits as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won				June 30, 2016				December 31, 2015
Cash and cash equivalents		Escrow accounts		￦	111				4,828
		Deposits for government project			6,258				5,839
		Collateral provided for borrowings			32,005				6,839
		Collateral provided for lawsuit			293				641
		Deposits for transmission regional support program			5,682				204
		Pledge			—				740
Non-current available-for-sale financial asset		Decommissioning costs of nuclear power plants			409,581				—
Short-term financial instruments		Bidding guarantees			118				—
		Restriction on withdrawal related to ‘win-win growth program’ for small and medium enterprises			33,000				18,000
Long-term financial instruments		Guarantee deposits for checking account			2				2
		Guarantee deposits for banking accounts at oversea branches			330				333
		Decommissioning costs of nuclear power plants			243,300				652,700
		Collateral provided for borrowings			—				20
		Funds for developing small and medium enterprises (*1)			100,000				100,000
				￦	830,680				790,146

 

(*1)	Deposits for small and medium enterprise at IBK for construction of Bitgaram Energy Valley and support for the businesses as of June 30, 2016.

 

7.	Cash and Cash Equivalents

Cash and cash equivalents as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Cash		￦	114				109
Other demand deposit			1,510,021				1,309,396
Short-term deposits classified as cash equivalents			437,276				374,575
Short-term investments classified as cash equivalents			1,413,365				2,098,985
		￦	3,360,776				3,783,065

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables

 

(1)	Trade and other receivables as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Trade receivables		￦	6,070,576				(59,016	)			(24	)			6,011,536
Other receivables			775,403				(51,734	)			(1,895	)			721,774
			6,845,979				(110,750	)			(1,919	)			6,733,310
Non-current assets
Trade receivables			440,928				—				—				440,928
Other receivables			1,404,460				(34,911	)			(6,336	)			1,363,213
			1,845,388				(34,911	)			(6,336	)			1,804,141
		￦	8,691,367				(145,661	)			(8,255	)			8,537,451

 

In millions of won		December 31, 2015
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Trade receivables		￦	6,862,762				(51,956	)			(14	)			6,810,792
Other receivables			718,717				(52,778	)			(3,183	)			662,756
			7,581,479				(104,734	)			(3,197	)			7,473,548
Non-current assets
Trade receivables			447,010				—				—				447,010
Other receivables			1,396,107				(38,968	)			(5,730	)			1,351,409
			1,843,117				(38,968	)			(5,730	)			1,798,419
		￦	9,424,596				(143,702	)			(8,927	)			9,271,967

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

(2)	Other receivables as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Non-trade receivables		￦	400,192				(51,734	)			—				348,458
Accrued income			122,347				—				—				122,347
Deposits			188,823				—				(1,895	)			186,928
Finance lease receivables			12,486				—				—				12,486
Others			51,555				—				—				51,555
			775,403				(51,734	)			(1,895	)			721,774
Non-current assets
Non-trade receivables			84,625				(26,398	)			—				58,227
Accrued income			2,013				—				—				2,013
Deposits			309,694				—				(6,336	)			303,358
Finance lease receivables			930,548				—				—				930,548
Others			77,580				(8,513	)			—				69,067
			1,404,460				(34,911	)			(6,336	)			1,363,213
		￦	2,179,863				(86,645	)			(8,231	)			2,084,987

 

In millions of won		December 31, 2015
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Non-trade receivables		￦	330,669				(52,778	)			—				277,891
Accrued income			88,256				—				—				88,256
Deposits			235,745				—				(3,183	)			232,562
Finance lease receivables			12,098				—				—				12,098
Others			51,949				—				—				51,949
			718,717				(52,778	)			(3,183	)			662,756
Non-current assets
Non-trade receivables			93,782				(31,829	)			—				61,953
Accrued income			582				—				—				582
Deposits			256,745				—				(5,730	)			251,015
Finance lease receivables			941,710				—				—				941,710
Others			103,288				(7,139	)			—				96,149
			1,396,107				(38,968	)			(5,730	)			1,351,409
		￦	2,114,824				(91,746	)			(8,913	)			2,014,165

Trade and other receivables are classified as loans and receivables, 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 2.0% 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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

(3)	Aging analysis of trade receivables as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Trade receivables: (not overdue, not impaired)		￦	6,375,157				7,198,403
Trade receivables: (overdue, not impaired)			1,465				891
Less than 60 days			1,465				891
Trade receivables: (impairment reviewed)			134,882				110,478
60 ~ 90 days			32,995				31,973
90 ~ 120 days			15,758				11,010
120 days ~ 1 year			45,448				35,097
Over 1 year			40,681				32,398
			6,511,504				7,309,772
Less: allowance for doubtful accounts			(59,016	)			(51,956	)
Less: present value discount			(24	)			(14	)
		￦	6,452,464				7,257,802

The Company assesses at the end of each reporting period whether there is any objective evidence that trade receivables are impaired, and provides allowances for doubtful accounts which includes impairment for trade receivables that are individually significant. The Company considers receivables as overdue if the receivables are outstanding 60 days after the maturity and sets an allowance based on past experience of collection.

 

(4)	Aging analysis of other receivables as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Other receivables: (not overdue, not impaired)		￦	1,938,787				1,918,132
Other receivables: (overdue, not impaired)			32,547				20,249
Less than 60 days			32,547				20,249
Other receivables: (impairment reviewed)			208,529				176,443
60 ~ 90 days			17,139				2,409
90 ~ 120 days			5,720				10,097
120 days ~ 1 year			33,713				21,433
Over 1 year			151,957				142,504
			2,179,863				2,114,824
Less: allowance for doubtful accounts			(86,645	)			(91,746	)
Less: present value discount			(8,231	)			(8,913	)
		￦	2,084,987				2,014,165

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

(5)	Changes in the allowance for doubtful accounts for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Trade receivables				Other receivables				Trade receivables				Other receivables
Beginning balance		￦	51,956				91,746				80,644				67,932
Bad debt expense			15,728				850				1,308				18,473
Write-off			(8,090	)			(760	)			(28,978	)			(888	)
Reversal			(500)				(5,786	)			(1,018	)			(413	)
Others			(78	)			595				—				6,642
Ending balance		￦	59,016				86,645				51,956				91,746

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Listed:
Korea District Heating Corp.		￦	130,410				—				—				16,981				—				—				147,391
Kwanglim Co., Ltd. (*1)			262				—				(214	)			598				—				(646	)			—
Ssangyong Motor Co., Ltd.			299				—				—				(29	)			—				—				270
Sungjee Construction. Co., Ltd.			5				—				—				25				—				—				30
Korea Line Corp.			—				—				—				—				—				—				—
Namkwang Engineering & Construction Co., Ltd.			1				—				—				—				—				—				1
Pumyang Construction Co., Ltd.			—				—				—				—				—				—				—
ELCOMTEC Co., Ltd.			53				—				—				59				—				—				112
PAN ocean Co., Ltd.			6				—				—				—				—				—				6
Borneo International Furniture Co., Ltd.			103				—				—				—				—				—				103
TONGYANG Inc. (*1)			217				—				(44	)			25				—				(198	)			—
TONGYANG networks Inc. (*1)			6				—				(3	)			—				—				(3	)			—
Nexolon Co., Ltd. (*1)			3,196				—				(3,137	)			569				—				(628	)			—
PT Adaro Energy Tbk			21,012				—				—				15,096				—				—				36,108
Energy Fuels Inc.			5,926				—				—				(1,720	)			—				275				4,481
Cockatoo Coal Limited			42				—				—				—				—				—				42
Denison Mines Corp.			34,457				—				—				518				—				2,261				37,236
Fission 3.0			30				—				—				(10	)			—				3				23
Fission Uranium Corp.			554				—				—				(93	)			—				36				497
			196,579				—				(3,398	)			32,019				—				1,100				226,300
Unlisted:
K&C - Gyeongnam youth job creation Investment Fund			1,207				—				—				—				—				—				1,207
Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I			571				—				—				—				—				—				571
Troika Overseas Resource Development Private Equity Firm			1,553				—				—				—				—				—				1,553
IBK-AUCTUS Green Growth Private Equity firm (*1)			855				—				(814	)			—				—				—				41
Global Dynasty Overseas Resource Development Private Equity Firm			2,233				—				—				—				—				—				2,233
Intellectual Discovery, Ltd.			1,375				—				—				—				—				—				1,375
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 (*1)			1,069				3,685				(331	)			—				—				—				4,423
Construction Guarantee			805				—				—				(1	)			—				—				804
Plant & Mechanical Contractors Financial Cooperative of Korea			36				—				—				—				—				—				36
Fire Guarantee			20				—				—				—				—				—				20
Korea Software Financial Cooperative			301				3,000				—				—				—				—				3,301
Engineering Financial Cooperative			60				—				—				—				—				—				60
Electric Contractors Financial Cooperative			152				—				—				—				—				—				152
Korea Specialty Contractor Financial Cooperative			417				—				—				—				—				—				417
Information & Communication Financial Cooperative			10				—				—				—				—				—				10
Korea Electric Engineers Association			40				—				—				—				—				—				40
Korea investment – Investment Pool for Public funds 10			—				142,470				—				67				—				—				142,537
Samsung investment – Investment Pool for Public funds 2			—				213,710				—				101				—				—				213,811
Samsung investment – Investment Pool for Public funds 1			—				53,220				—				13				—				—				53,233

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Hwan Young Steel Co., Ltd.		￦	97				—				—				—				—				—				97
Woobang ENC Co., Ltd			22				—				—				—				(22	)			—				—
Dongnam Co., Ltd.			72				—				—				—				—				—				72
SAMBO AUTO. Co., Ltd.			38				—				—				—				—				—				38
Mobo Co., Ltd.			14				—				—				—				—				—				14
Poonglim Industrial Co., Ltd.			93				—				—				—				—				—				93
HANKOOK Silicon Co., Ltd.			7,513				—				—				—				—				—				7,513
Kun Young Engineering & Construction Co., Ltd.			5				—				—				—				—				—				5
Pumyang Asset Management Co., Ltd.			3				—				—				—				—				—				3
Dae Kwang Semiconductor Co., Ltd.			6				—				—				—				—				—				6
Sanbon Department Store			3				—				—				—				—				—				3
Woori Ascon Co., Ltd.			10				—				—				—				—				(10	)			—
Miju Steel Mfg. Co., Ltd.			51				—				—				—				—				—				51
BnB Sungwon Co., Ltd.			15				—				—				—				—				—				15
Hana Civil Engineering Co., Ltd.			1				—				—				—				—				—				1
KC Development Co., Ltd.			6				—				—				—				—				—				6
IMHWA Corp.			5				—				—				—				—				—				5
DALIM Special Vehicle Co., Ltd.			10				—				—				—				—				—				10
ASA JEONJU Co., Ltd.			69				—				—				—				—				—				69
KYUNGWON Co., Ltd.			14				—				—				—				(14	)			—				—
Moonkyung Silica Co., Ltd.			—				—				—				—				—				—				—
Yousung Remicon Co., Ltd.			4				—				—				—				—				—				4
Sungkwang Timber Co., Ltd.			4				—				—				—				—				—				4
Yongbo Co., Ltd.			3				—				—				—				—				—				3
HJ Steel Co., Ltd.			2				—				—				—				—				—				2
KS Remicon Co., Ltd.			3				—				—				—				—				—				3
Sewoong Heavy Industries Co., Ltd.			40				—				—				—				(40	)			—				—
SIN-E Steel Co., Ltd.			33				—				—				—				—				—				33
Joongang Platec Co., Ltd.			72				—				—				—				—				—				72
Pyungsan SI Ltd.			9				—				—				—				—				—				9
Samgong Development Co., Ltd.			7				—				—				—				—				—				7
Joongang Development Co., Ltd.			8				—				—				—				—				—				8
AJS Co., Ltd.			32				—				—				—				—				—				32
SHIN-E B&P Co., Ltd.			10				—				—				—				—				—				10
MSE Co., Ltd.			9				—				—				—				—				—				9
Ilrim Nano Tec Co., Ltd.			15				—				—				—				—				—				15
Kwang Myeong Electronics Technology Co., Ltd.			11				—				—				—				—				—				11
Youngjin Hi-Tech Co., Ltd.			21				—				—				—				—				—				21
Dong Woo International Co., Ltd.			18				—				—				—				—				—				18
Bench Mark Construction Co., Ltd.			—				—				—				—				—				—				—
Buyoung Co., Ltd.			3				—				—				—				—				—				3
Ilsuk Co., Ltd.			10				—				—				—				—				—				10
Dongyang Telecom Co., Ltd.			11				—				—				—				—				—				11
Han Young Construction Co., Ltd.			3				—				—				—				—				—				3
Jongwon Remicon Co., Ltd.			13				—				—				—				—				—				13
Ace Heat Treating Co., Ltd.			72				—				—				—				—				—				72
Zyle Daewoo Motor Sales Co., Ltd.			—				—				—				—				—				—				—
Daewoo Development Co., Ltd.			—				—				—				—				—				—				—
Seyang Inc.			27				—				—				—				—				—				27
Seungri Enterprise Co., Ltd.			3				—				—				—				—				—				3
Onggane Food Co., Ltd.			1				—				—				—				—				—				1

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Shin-E P&C Co., Ltd.		￦	1				—				—				—				—				—				1
Ejung Ad Co., Ltd.			3				—				—				—				—				—				3
Solvus Co., Ltd.			3				—				—				—				—				—				3
Myung Co., Ltd.			2				—				—				—				—				—				2
Emotion Co., Ltd.			8				—				—				—				—				—				8
Youngdong Concrete Co., Ltd.			7				—				—				—				—				—				7
Shinil Engineering Co., Ltd.			3				—				—				—				—				—				3
Korea Castiron Industrial Co., Ltd.			22				—				—				—				—				—				22
FFG DMC Co., Ltd.			17				—				—				—				(17	)			—				—
Daeseong Metal Co., Ltd.			47				—				—				—				—				—				47
Biwang Industry Co., Ltd			2				—				—				—				—				—				2
Huimun Co., Ltd.			4				—				—				—				—				—				4
Sunun IT F Co., Ltd.			8				—				—				—				—				—				8
Young Sung Co., Ltd.			27				—				—				—				—				—				27
Yuil Industrial Electronics Co., Ltd.			16				—				—				—				—				—				16
DN TEK Inc.			62				—				—				—				—				—				62
Daeyang FMS Corporation			3				—				—				—				—				—				3
Kwang Jin Structure Co., Ltd.			31				—				—				—				—				—				31
Woojin Industry Corporation			16				—				—				—				—				—				16
Kwang Sung Industry Co., Ltd.			7				—				—				—				—				—				7
Matsaeng Food Co., Ltd.			6				—				—				—				—				—				6
Futech Mold Co., Ltd.			14				—				—				—				—				—				14
Samcheonri Industrial Co., Ltd.			13				—				—				—				—				—				13
Woojoo Environment Ind. Co., Ltd.			13				—				—				—				—				—				13
Cheongatti Co., Ltd.			4				—				—				—				—				—				4
Hyungji Esquire Co., Ltd.			21				—				—				—				—				1				22
Kolmar Pharma Co., Ltd.			52				—				—				—				—				—				52
Morado Co., Ltd.			2				—				—				—				—				—				2
Myung Sung Tex Co., Ltd.			2				—				—				—				—				—				2
Kwang Sung Co., Ltd.			—				—				—				—				—				31				31
EverTechno. Co.,Ltd.			—				—				—				—				—				147				147
Autowel Co.,Ltd.			—				—				—				—				—				13				13
Baekseok Construction Co., Ltd.			—				—				—				—				—				4				4
Shin Pyung Co., Ltd.			—				—				—				—				—				3				3
JMC Heavy Industries Co., Ltd.			—				—				—				—				—				25				25
Najin Steel Co., Ltd.			—				—				—				—				—				5				5
Kunyang Food Co., Ltd.			—				—				—				—				—				1				1
Sinkwang Industry Co., Ltd.			—				—				—				—				—				5				5
Join Land Co., Ltd.			—				—				—				—				—				1				1
Crystal Co., Ltd.			—				—				—				—				—				2				2
Elephant & Friends Co., Ltd.			—				—				—				—				—				3				3
Mireco Co., Ltd.			—				—				—				—				—				11				11
L&K Industry Co., Ltd.			—				—				—				—				—				24				24
JO Tech Co., Ltd.			—				—				—				—				—				25				25
Samwoo EMC Co., Ltd.			—				—				—				—				—				117				117
Kendae Printing Co., Ltd.			—				—				—				—				—				21				21
Golden Tech Co., Ltd.			—				—				—				—				—				114				114
Dauning Co., Ltd.			—				—				—				—				—				6				6
Korea Trecision Co., Ltd.			—				—				—				—				—				5				5
Buhmwoo Chemical Corp.			—				—				—				—				—				20				20
Ace Track Co., Ltd.			—				—				—				—				—				219				219

 

48

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Daebok Machinery Co., Ltd.		￦	—				—				—				—				—				11				11
Yooah Industry Co., Ltd.			—				—				—				—				—				13				13
Yoo-A Construction Co., Ltd.			—				—				—				—				—				11				11
Dung Hwan Co., Ltd.			—				—				—				—				—				5				5
Dongjin Metal Co., Ltd.			—				—				—				—				—				27				27
Ultra Construction and Engineering Co., Ltd.			—				—				—				—				—				—				—
Hurim Biocell Co., Ltd.			—				—				—				—				—				5				5
P. J, Trading Co., LTd.			—				—				—				—				—				—				—
Sunjin Power Tech Co., Ltd.			—				—				—				—				—				247				247
Smart Power Co.,Ltd.			—				200				—				—				—				—				200
Areva nc Expansion			170,118				—				—				—				—				1,989				172,107
Navanakorn Electric Co., Ltd.			17,951				—				—				—				—				(112	)			17,839
PT. Kedap Saayq			—				—				—				—				—				—				—
Set Holding			179,585				—				—				—				—				—				179,585
PT. Cirebon Energi Prasarana			635				721				—				—				—				(27	)			1,329
			387,900				417,006				(1,145	)			180				(93	)			2,962				806,810
		￦	584,479				417,006				(4,543	)			32,199				(93	)			4,062				1,033,110

 

(*1)

The Company recognized gain on disposal of available-for-sale financial assets amounted to ￦1,480 million, from the sales of shares of Kwanglim Co., Ltd., TONGYANG Inc., TONGYANG networks Inc. and Nexolon Co., Ltd. and from the certain portion sales of IBK-AUCTUS Green Growth Private Equity Firm and Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 during the six-month period ended June 30, 2016.

 

49

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Listed:
Korea District Heating Corp.		￦	127,241				—				—				3,169				—				—				130,410
Kwanglim Co., Ltd.			128				—				—				134				—				—				262
Ssangyong Motor Co., Ltd.			357				—				—				(58	)			—				—				299
Sungjee Construction. Co., Ltd.			5				—				—				—				—				—				5
Korea Line Corp.			—				—				—				—				—				—				—
Namkwang Engineering & Construction Co., Ltd.			2				—				—				(3	)			—				2				1
Pumyang Construction Co., Ltd.			—				—				—				—				—				—				—
ELCOMTEC Co., Ltd.			48				—				—				5				—				—				53
PAN ocean Co., Ltd.			5				—				—				1				—				—				6
Borneo International Furniture Co., Ltd.			4				—				—				7				—				92				103
TONGYANG Inc.			66				—				—				140				—				11				217
TONGYANG networks Inc.			3				—				—				3				—				—				6
Nexolon Co., Ltd.			—				—				—				59				—				3,137				3,196
PT Adaro Energy Tbk			44,109				—				—				(23,097	)			(23,206	)			23,206				21,012
Energy Fuels Inc.			11,568				—				—				(4,866	)			(9,391	)			8,615				5,926
Cockatoo Coal Limited			628				—				—				(572	)			(572	)			558				42
Denison Mines Corp.			62,339				—				—				(22,187	)			(20,154	)			14,459				34,457
Fission 3.0 (*1)			61				—				(57	)			11				—				15				30
Fission Uranium Corp.			651				—				—				(28	)			—				(69	)			554
			247,215				—				(57	)			(47,282	)			(53,323	)			50,026				196,579
Unlisted:
K&C - Gyeongnam youth job creation Investment Fund (*1)			1,340				—				(133	)			—				—				—				1,207
Hanwha Electric Power Venture Fund (*1)			1,804				—				(1,804	)			—				—				—				—
Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I (*1)			4,752				—				(3,000	)			—				(1,181	)			—				571
Troika Overseas Resource Development Private Equity Firm			13,340				—				—				—				(11,787	)			—				1,553
IBK-AUCTUS Green Growth Private Equity firm (*1)			2,325				—				(1,470	)			—				—				—				855
Global Dynasty Overseas Resource Development Private Equity Firm			2,233				—				—				—				—				—				2,233
Intellectual Discovery, Ltd.			5,000				—				—				—				(3,625	)			—				1,375
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 (*1)			498				802				(231	)			—				—				—				1,069
Construction Guarantee			795				—				—				10				—				—				805
Plant & Mechanical Contractors Financial Cooperative of Korea			36				—				—				—				—				—				36
Fire Guarantee			20				—				—				—				—				—				20
Korea Software Financial Cooperative			301				—				—				—				—				—				301
Engineering Financial Cooperative			60				—				—				—				—				—				60
Electric Contractors Financial Cooperative			152				—				—				—				—				—				152
Korea Specialty Contractor Financial Cooperative			417				—				—				—				—				—				417
Information & Communication Financial Cooperative			10				—				—				—				—				—				10
Korea Electric Engineers Association			40				—				—				—				—				—				40
Hwan Young Steel Co., Ltd.			97				—				—				—				—				—				97
Woobang ENC Co., Ltd			22				—				—				—				—				—				22
Dongnam Co., Ltd.			72				—				—				—				—				—				72
SAMBO AUTO. Co., Ltd.			38				—				—				—				—				—				38
Mobo Co., Ltd.			14				—				—				—				—				—				14

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Poonglim Industrial Co., Ltd.		￦	78				—				—				—				—				15				93
HANKOOK Silicon Co., Ltd.			7,513				—				—				—				—				—				7,513
Kun Young Engineering & Construction Co., Ltd.			5				—				—				—				—				—				5
Pumyang Asset Management Co., Ltd.			3				—				—				—				—				—				3
Dae Kwang Semiconductor Co., Ltd.			6				—				—				—				—				—				6
Sanbon Department Store			124				—				—				—				(121	)			—				3
Woori Ascon Co., Ltd.			10				—				—				—				—				—				10
Miju Steel Mfg. Co., Ltd.			51				—				—				—				—				—				51
BnB Sungwon Co., Ltd.			15				—				—				—				—				—				15
Hana Civil Engineering Co., Ltd.			1				—				—				—				—				—				1
KC Development Co., Ltd.			6				—				—				—				—				—				6
IMHWA Corp.			5				—				—				—				—				—				5
IXELON Co., Ltd.			23				—				—				—				(23	)			—				—
DALIM Special Vehicle Co., Ltd.			10				—				—				—				—				—				10
ASA KIMJE Co., Ltd.			465				—				—				—				(465	)			—				—
ASA JEONJU Co., Ltd.			697				—				—				—				(628	)			—				69
KYUNGWON Co., Ltd.			14				—				—				—				—				—				14
Moonkyung Silica Co., Ltd.			—				—				—				—				—				—				—
Yousung Remicon Co., Ltd.			4				—				—				—				—				—				4
Sungkwang Timber Co., Ltd.			4				—				—				—				—				—				4
Yongbo Co., Ltd.			3				—				—				—				—				—				3
HJ Steel Co., Ltd.			—				—				—				—				—				2				2
Ildong Air Conditioning Co., Ltd.			—				—				—				—				(2	)			2				—
KS Remicon Co., Ltd.			—				—				—				—				—				3				3
Sewoong Heavy Industries Co., Ltd.			—				—				—				—				—				40				40
SIN-E Steel Co., Ltd.			—				—				—				—				—				33				33
Joongang Platec Co., Ltd.			—				—				—				—				—				72				72
Hangjin Steel Co., Ltd.			—				—				—				—				(116	)			116				—
Pyungsan SI Ltd.			—				—				—				—				—				9				9
Samgong Development Co., Ltd.			—				—				—				—				—				7				7
Joongang Development Co., Ltd.			—				—				—				—				—				8				8
AJS Co., Ltd.			—				—				—				—				—				32				32
SHIN-E B&P Co., Ltd.			—				—				—				—				—				10				10
MSE Co., Ltd.			—				—				—				—				—				9				9
Ilrim Nano Tec Co., Ltd.			—				—				—				—				—				15				15
Kwang Myeong Electronics Technology Co., Ltd.			—				—				—				—				—				11				11
Youngjin Hi-Tech Co., Ltd.			—				—				—				—				(105	)			126				21
Dong Woo International Co., Ltd.			—				—				—				—				—				18				18
Bench Mark Construction Co., Ltd.			—				—				—				—				—				—				—
Buyoung Co., Ltd.			—				—				—				—				—				3				3
Ilsuk Co., Ltd.			—				—				—				—				—				10				10
Dongyang Telecom Co., Ltd.			—				—				—				—				—				11				11
Han Young Construction Co., Ltd.			—				—				—				—				—				3				3
Jongwon Remicon Co., Ltd.			—				—				—				—				—				13				13
Ace Heat Treating Co., Ltd.			—				—				—				—				—				72				72
Zyle Daewoo Motor Sales Co., Ltd.			—				—				—				—				—				—				—
Daewoo Development Co., Ltd.			—				—				—				—				—				—				—
Daewoo Songdo Development Co., Ltd.			—				—				—				—				(2	)			2				—
Seyang Inc.			—				—				—				—				—				27				27
Seungri Enterprise Co., Ltd.			—				—				—				—				—				3				3

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Onggane Food Co., Ltd.		￦	—				—				—				—				—				1				1
Shin-E P&C Co., Ltd.			—				—				—				—				—				1				1
Montista Telecom Co., Ltd.			—				—				—				—				(3	)			3				—
Ejung Ad Co., Ltd.			—				—				—				—				—				3				3
Solvus Co., Ltd.			—				—				—				—				—				3				3
Myung Co., Ltd.			—				—				—				—				—				2				2
Emotion Co., Ltd.			—				—				—				—				—				8				8
Youngdong Concrete Co., Ltd.			—				—				—				—				—				7				7
Shinil Engineering Co., Ltd.			—				—				—				—				—				3				3
Korea Castiron Industrial Co., Ltd.			—				—				—				—				—				22				22
FFG DMC Co., Ltd.			—				—				—				—				—				17				17
Daeseong Metal Co., Ltd.			—				—				—				—				—				47				47
Biwang Industry Co., Ltd			—				—				—				—				—				2				2
Huimun Co., Ltd.			—				—				—				—				—				4				4
Sunun IT F Co., Ltd.			—				—				—				—				—				8				8
Young Sung Co., Ltd.			—				—				—				—				—				27				27
Yuil Industrial Electronics Co., Ltd.			—				—				—				—				—				16				16
DN TEK Inc.			—				—				—				—				—				62				62
Daeyang FMS Corporation			—				—				—				—				—				3				3
Kwang Jin Structure Co., Ltd.			—				—				—				—				—				31				31
Woojin Industry Corporation			—				—				—				—				—				16				16
Kwang Sung Industry Co., Ltd.			—				—				—				—				—				7				7
Matsaeng Food Co., Ltd.			—				—				—				—				—				6				6
Futech Mold Co., Ltd.			—				—				—				—				—				14				14
Samcheonri Industrial Co., Ltd.			—				—				—				—				—				13				13
Woojoo Environment Ind. Co., Ltd.			—				—				—				—				—				13				13
Cheongatti Co., Ltd.			—				—				—				—				—				4				4
Hyungji Esquire Co., Ltd.			—				—				—				—				—				21				21
Kolmar Pharma Co., Ltd.			—				—				—				—				—				52				52
Morado Co., Ltd.			—				—				—				—				—				2				2
Myung Sung Tex Co., Ltd.			—				—				—				—				—				2				2
Areva nc Expansion			227,876				—				—				—				—				(57,758	)			170,118
Navanakorn Electric Co., Ltd.			16,836				—				—				—				—				1,115				17,951
PT. Kedap Saayq			12,989				—				—				—				(12,989	)			—				—
Set Holding			167,832				—				—				11,753				—				—				179,585
PT. Cirebon Energi Prasarana			—				635				—				—				—				—				635
			467,936				1,437				(6,638	)			11,763				(31,047	)			(55,551	)			387,900
		￦	715,151				1,437				(6,695	)			(35,519	)			(84,370	)			(5,525	)			584,479

 

(*1)

The Company recognized gain and loss on disposal of available-for-sale financial assets amounted to ￦4 million and ￦3,008 million, respectively, from the sales of shares of Fission 3.0, K&C- Gyeongnam Youth Job Creation Investment Fund, Korea Investment - Korea EXIM Bank CERs Private Special Asset Investment Trust 1, IBK-AUCTUS Green Growth Private Equity Firm and others and from the liquidation of Hanwha Electric Power Venture fund for the year ended December 31, 2015.

 

52

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
Listed
Korea District Heating Corp.			2,264,068				19.55	%		￦	173,201				147,391				147,391
Ssangyong Motor Co., Ltd.			38,568				0.03	%			428				270				270
Sungjee Construction. Co., Ltd.			1,053				0.01	%			49				30				30
Korea Line Corp.			18				0.00	%			1				—				—
Namkwang Engineering & Construction Co., Ltd.			46				0.00	%			15				1				1
Pumyang Construction Co., Ltd.			7				0.00	%			2				—				—
ELCOMTEC Co., Ltd.			32,875				0.04	%			217				112				112
PAN ocean Co., Ltd.			1,492				0.00	%			14				6				6
Borneo International Furniture Co., Ltd.			64,037				0.28	%			97				103				103
PT Adaro Energy Tbk			480,000,000				1.50	%			71,554				36,108				36,108
Energy Fuels Inc.			1,711,814				3.79	%			16,819				4,481				4,481
Cockatoo Coal Limited			49,881,423				0.07	%			18,445				42				42
Denison Mines Corp.			58,284,000				11.24	%			84,134				37,236				37,236
Fission 3.0			300,000				0.17	%			—				23				23
Fission Uranium Corp.			800,000				0.21	%			785				497				497
											365,761				226,300				226,300
Unlisted (*1)
K&C - Gyeongnam youth job creation Investment Fund			24				10.00	%			1,207				1,207				—
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			171				6.30	%			41				41				—
Global Dynasty Overseas Resource Development Private Equity Firm			2,233,407,439				7.46	%			2,233				2,233				—
Intellectual Discovery, Ltd.			1,000,000				8.81	%			5,000				1,375				—
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1			4,279,159,433				5.00	%			4,423				4,423				—
Construction Guarantee (*2)			571				0.02	%			601				804				804
Plant & Mechanical Contractors Financial Cooperative of Korea			50				0.01	%			36				36				—
Fire Guarantee			40				0.02	%			20				20				—
Korea Software Financial Cooperative			5,186				1.54	%			3,301				3,301				—
Engineering Financial Cooperative			528				0.10	%			60				60				—
Electric Contractors Financial Cooperative			800				0.03	%			152				152				—
Korea Specialty Contractor Financial Cooperative			476				0.01	%			417				417				—
Information & Communication Financial Cooperative			70				0.01	%			10				10				—
Korea Electric Engineers Association			400				0.26	%			40				40				—
Korea investment – Investment Pool for Public funds 10			138,458,847,197				13.12	%			142,470				142,537				142,537
Samsung investment – Investment Pool for Public funds 2			211,418,226,426				8.26	%			213,710				213,811				213,811
Samsung investment – Investment Pool for Public funds 1			53,220,000,000				8.87	%			53,220				53,233				53,233
Hwan Young Steel Co., Ltd.			10,916				0.14	%			1,092				97				—
Dongnam Co., Ltd.			2,070				0.46	%			72				72				—
SAMBO AUTO. Co., Ltd.			15,066				0.02	%			38				38				—
Mobo Co., Ltd.			504				0.00	%			14				14				—
Poonglim Industrial Co., Ltd.			1,915				0.01	%			93				93				—

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won		June 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
HANKOOK Silicon Co., Ltd.			3,005,208				10.44	%		￦	7,513				7,513				—
Kun Young Engineering & Construction Co., Ltd.			100				0.00	%			5				5				—
Pumyang Asset Management Co., Ltd.			13				0.00	%			3				3				—
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	%			51				51				—
BnB 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	%			—				—				—
Yousung Remicon Co., Ltd.			8				0.26	%			4				4				—
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				—
SIN-E Steel Co., Ltd.			109				0.08	%			33				33				—
Joongang Platec Co., Ltd.			3,591				0.75	%			72				72				—
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				—
Kwang Myeong Electronics Technology Co., Ltd.			113				0.37	%			11				11				—
Youngjin Hi-Tech Co., Ltd.			2,512				0.25	%			126				21				—
Dong Woo International Co., Ltd.			90				0.37	%			18				18				—
Bench Mark Construction Co., Ltd.			2				0.00	%			—				—				—
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				—
Han Young Construction Co., Ltd.			35				0.03	%			3				3				—
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				—
Emotion Co., Ltd.			167				0.61	%			8				8				—
Youngdong Concrete Co., Ltd.			32				0.32	%			7				7				—
Shinil Engineering Co., Ltd.			887				0.06	%			3				3				—
Korea Castiron Industrial Co., Ltd.			617				1.86	%			22				22				—

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won		June 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
Daeseong Metal Co., Ltd.			518				2.37	%		￦	47				47				—
Biwang Industry Co., Ltd			406				0.04	%			2				2				—
Huimun Co., Ltd.			263				0.26	%			4				4				—
Sunun IT F Co., Ltd.			133				0.52	%			8				8				—
Young Sung Co., Ltd.			89				0.40	%			27				27				—
Yuil Industrial Electronics Co., Ltd.			804				0.32	%			16				16				—
DN TEK Inc.			12,401				0.29	%			62				62				—
Daeyang FMS Corporation			84				0.05	%			3				3				—
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				—
Matsaeng Food Co., Ltd.			277				0.56	%			6				6				—
Futech Mold Co., Ltd.			274				0.27	%			14				14				—
Samcheonri Industrial Co., Ltd.			533				0.98	%			13				13				—
Woojoo Environment Ind. Co., Ltd.			101				0.11	%			13				13				—
Cheongatti Co., Ltd.			57				0.10	%			4				4				—
Hyungji Esquire Co., Ltd.			54				0.02	%			22				22				—
Kolmar Pharma Co., Ltd.			1,426				0.01	%			52				52				—
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	%			147				147				—
Autowel Co., Ltd.			260				0.38	%			13				13				—
Baekseok Construction Co., Ltd.			30				0.01	%			4				4				—
Shin Pyung Co., Ltd.			6				0.03	%			3				3				—
JMC Heavy Industries Co., Ltd.			2,484				0.09	%			25				25				—
Najin Steel Co., Ltd.			37				0.06	%			5				5				—
Kunyang Food Co., Ltd.			104				0.03	%			1				1				—
Sinkwang Industry Co., Ltd.			1,091				1.68	%			5				5				—
Join Land Co., Ltd.			33				0.00	%			1				1				—
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				—
Samwoo EMC Co., Ltd.			23,465				0.20	%			117				117				—
Kendae Printing Co., Ltd.			422				0.60	%			21				21				—
Golden Tech Co., Ltd.			1,143				3.25	%			114				114				—
Dauning Co., Ltd.			231				0.41	%			6				6				—
Korea Trecision Co., Ltd.			22				0.45	%			5				5				—
Buhmwoo Chemical Corp.			392				1.80	%			20				20				—
Ace Track Co., Ltd.			3,131				1.08	%			219				219				—
Daebok Machinery Co., Ltd.			109				1.08	%			11				11				—
Yooah Industry Co., Ltd.			130				0.02	%			13				13				—
Yoo-A Construction Co., Ltd.			105				0.20	%			11				11				—
Dung Hwan Co., Ltd.			531				0.02	%			5				5				—
Dongjin Metal Co., Ltd.			136				0.33	%			27				27				—
Ultra Construction and Engineering Co., Ltd.			13				0.00	%			—				—				—
Hurim Biocell Co., Ltd.			113				0.00	%			5				5				—
P. J, Trading Co., LTd.			12				0.04	%			—				—				—
Sunjin Power Tech Co., Ltd.			4,941				0.92	%			247				247				—
Smart Power Co.,Ltd.			133,333				5.55	%			200				200				—
Areva nc Expansion			1,077,124				13.49	%			288,443				172,107				—

 

55

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won		June 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
Navanakorn Electric Co., Ltd. (*3)			4,442,800				29.00	%		￦	16,646				17,839				—
PT. Kedap Saayq			671				10.00	%			18,540				—				—
Set Holding (*4)			1,100,220				2.50	%			229,255				179,585				179,585
PT. Cirebon Energi Prasarana			11,420				10.00	%			1,356				1,329				—
											1,008,248				806,810				589,970
										￦	1,374,009				1,033,110				816,270

 

(*1)	Book values of unlisted equity securities held by the Company that a quoted market price does not exist in an active market and fair value cannot be measured reliably were measured at cost.

(*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 six-month period ended June 30, 2016.

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

(*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 six-month period ended June 30, 2016.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Shares				Ownership				Acquisition cost				Book value				Fair value
Listed
Korea District Heating Corp.			2,264,068				19.55	%		￦	173,201				130,410				130,410
Kwanglim Co., Ltd.			84,515				0.44	%			386				262				262
Ssangyong Motor Co., Ltd.			38,568				0.03	%			428				299				299
Sungjee Construction. Co., Ltd.			1,053				0.01	%			49				5				5
Korea Line Corp.			18				0.00	%			1				—				—
Namkwang Engineering & Construction Co., Ltd.			232				0.00	%			15				1				1
Pumyang Construction Co., Ltd.			7				0.00	%			2				—				—
ELCOMTEC Co., Ltd.			32,875				0.04	%			217				53				53
PAN ocean Co., Ltd.			1,492				0.00	%			14				6				6
Borneo International Furniture Co., Ltd.			64,037				0.28	%			97				103				103
TONGYANG Inc.			78,511				0.03	%			45				217				217
TONGYANG networks Inc.			4,422				0.01	%			3				6				6
Nexolon Co., Ltd.			3,665,367				2.59	%			3,138				3,196				3,196
PT Adaro Energy Tbk			480,000,000				1.50	%			71,554				21,012				21,012
Energy Fuels Inc.			1,711,814				3.79	%			16,819				5,926				5,926
Cockatoo Coal Limited			49,881,423				0.07	%			18,445				42				42
Denison Mines Corp.			58,284,000				11.24	%			84,134				34,457				34,457
Fission 3.0			300,000				0.17	%			—				30				30
Fission Uranium Corp.			800,000				0.21	%			785				554				554
											369,333				196,579				196,579
Unlisted (*1)
K&C - Gyeongnam youth job creation Investment Fund			24				10.00	%			1,207				1,207				—
Korea investment – Korea EXIM Bank CERs Private Special Asset InvestmentTrust 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			233				6.30	%			855				855				—
Global Dynasty Overseas Resource Development Private Equity Firm			2,233,407,439				7.46	%			2,233				2,233				—
Intellectual Discovery, Ltd.			1,000,000				8.81	%			5,000				1,375				—
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1			1,069,432,095				5.00	%			1,069				1,069				—
Construction Guarantee (*2)			571				0.02	%			601				805				805
Plant & Mechanical Contractors Financial Cooperative of Korea			50				0.01	%			36				36				—
Fire Guarantee			40				0.02	%			20				20				—
Korea Software Financial Cooperative			301				0.15	%			301				301				—
Engineering Financial Cooperative			528				0.10	%			60				60				—
Electric Contractors Financial Cooperative			800				0.03	%			152				152				—
Korea Specialty Contractor Financial Cooperative			476				0.01	%			417				417				—
Information & Communication Financial Cooperative			70				0.01	%			10				10				—
Korea Electric Engineers Association			400				0.26	%			40				40				—
Hwan Young Steel Co., Ltd.			10,916				0.14	%			1,092				97				—
Woobang ENC Co., Ltd.			14				0.00	%			22				22				—
Dongnam Co., Ltd.			2,070				0.46	%			72				72				—
SAMBO AUTO. Co., Ltd.			15,066				0.02	%			38				38				—
Mobo Co., Ltd.			504				0.00	%			14				14				—
Poonglim Industrial Co., Ltd.			1,915				0.01	%			93				93				—
HANKOOK Silicon Co., Ltd.			7,513,022				10.44	%			7,513				7,513				—
Kun Young Engineering & Construction Co., Ltd.			100				0.00	%			5				5				—

 

57

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Shares				Ownership				Acquisition cost				Book value				Fair value
Pumyang Asset Management Co., Ltd.			13				0.00	%		￦	3				3				—
Dae Kwang Semiconductor Co., Ltd.			589				0.07	%			6				6				—
Sanbon Department Store			828				0.01	%			124				3				—
Woori Ascon Co., Ltd.			25				0.34	%			10				10				—
Miju Steel Mfg. Co., Ltd.			99,804				0.23	%			51				51				—
BnB 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				—
IXELON Co., Ltd.			2,292				0.02	%			23				—				—
DALIM Special Vehicle Co., Ltd.			58				0.08	%			10				10				—
ASA KIMJE Co., Ltd.			23,245				1.11	%			465				—				—
ASA JEONJU Co., Ltd.			34,846				1.34	%			697				69				—
KYUNGWON Co., Ltd.			2,812				0.17	%			14				14				—
Moonkyung Silica Co., Ltd.			42				0.56	%			—				—				—
Yousung Remicon Co., Ltd.			8				0.26	%			4				4				—
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				—
Ildong Air Conditioning Co., Ltd.			218				0.16	%			3				—				—
KS Remicon Co., Ltd.			12				0.04	%			3				3				—
Sewoong Heavy Industries Co., Ltd.			7,931				0.10	%			40				40				—
SIN-E Steel Co., Ltd.			109				0.08	%			33				33				—
Joongang Platec Co., Ltd.			3,591				0.75	%			72				72				—
Hangjin Steel Co., Ltd.			116				1.08	%			116				—				—
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				—
Kwang Myeong Electronics Technology Co., Ltd.			113				0.37	%			11				11				—
Youngjin Hi-Tech Co., Ltd.			2,512				0.25	%			126				21				—
Dong Woo International Co., Ltd.			90				0.37	%			18				18				—
Bench Mark Construction Co., Ltd.			2				0.00	%			—				—				—
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				—
Han Young Construction Co., Ltd.			35				0.03	%			3				3				—
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	%			—				—				—
Daewoo Songdo Development Co., Ltd.			301				0.00	%			2				—				—
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				—
Montista Telecom Co., Ltd.			5,409				0.00	%			3				—				—
Ejung Ad Co., Ltd.			132				0.09	%			3				3				—

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Shares				Ownership				Acquisition cost				Book value				Fair value
Solvus Co., Ltd.			1,056				0.04	%		￦	3				3				—
Myung Co., Ltd.			89				0.05	%			2				2				—
Emotion Co., Ltd.			167				0.61	%			8				8				—
Youngdong Concrete Co., Ltd.			32				0.32	%			7				7				—
Shinil Engineering Co., Ltd.			887				0.06	%			3				3				—
Korea Castiron Industrial Co., Ltd.			617				1.86	%			22				22				—
FFG DMC Co., Ltd.			12				0.00	%			17				17				—
Daeseong Metal Co., Ltd.			518				2.37	%			47				47				—
Biwang Industry Co., Ltd			406				0.04	%			2				2				—
Huimun Co., Ltd.			263				0.26	%			4				4				—
Sunun IT F Co., Ltd.			133				0.52	%			8				8				—
Young Sung Co., Ltd.			89				0.40	%			27				27				—
Yuil Industrial Electronics Co., Ltd.			804				0.32	%			16				16				—
DN TEK Inc.			12,401				0.29	%			62				62				—
Daeyang FMS Corporation			84				0.05	%			3				3				—
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				—
Matsaeng Food Co., Ltd.			277				0.56	%			6				6				—
Futech Mold Co., Ltd.			274				0.27	%			14				14				—
Samcheonri Industrial Co., Ltd.			533				0.98	%			13				13				—
Woojoo Environment Ind. Co., Ltd.			101				0.11	%			13				13				—
Cheongatti Co., Ltd.			57				0.10	%			4				4				—
Hyungji Esquire Co., Ltd.			52				0.02	%			21				21				—
Kolmar Pharma Co., Ltd.			1,426				0.01	%			52				52				—
Morado Co., Ltd.			209				0.04	%			2				2				—
Myung Sung Tex Co., Ltd.			20				0.00	%			2				2				—
Areva nc Expansion			1,077,124				13.49	%			288,443				170,118				—
Navanakorn Electric Co., Ltd. (*3)			4,442,800				29.00	%			16,646				17,951				—
PT. Kedap Saayq			671				10.00	%			18,540				—				—
Set Holding (*4)			1,100,220				2.50	%			229,255				179,585				179,585
PT. Cirebon Energi Prasarana			420				10.00	%			635				635				—
											591,980				387,900				180,390
										￦	961,313				584,479				376,969

 

(*1)	Book values of unlisted equity securities held by the Company that a quoted market price does not exist in an active market and fair value cannot be measured reliably were measured at cost.

(*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, 2015.

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

(*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, 2015.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

10.	Held-to-maturity Investments

Held-to-maturity investments as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Others				Ending balance
Government bonds		￦	3,623				82				(160	)			—				3,545
		￦	3,623				82				(160	)			—				3,545
Current		￦	380				—				(93	)			64				351
Non-current			3,243				82				(67	)			(64	)			3,194
In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Others				Ending balance
Government bonds		￦	3,601				432				(410	)			—				3,623
Corporate bonds			13				—				—				(13	)			—
		￦	3,614				432				(410	)			(13	)			3,623
Current		￦	265				—				(186	)			301				380
Non-current			3,349				432				(224	)			(314	)			3,243

 

11.	Derivatives

 

(1)	Derivatives as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Derivative assets
Currency forward		￦	1,085				25,992				1,498				24,896
Currency swap			105,855				426,922				95,759				491,219
Interest rate swap			—				4,328				—				3,778
		￦	106,940				457,242				97,257				519,893
Derivative liabilities
Currency forward		￦	3,023				2,121				1,142				—
Currency swap			913				71,033				758				66,976
Interest rate swap			3,039				92,462				8,345				89,289
		￦	6,975				165,616				10,245				156,265

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(2)	Currency forward contracts which are not designated as hedge instruments as of June 30, 2016 are as follows:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract Date				Maturity date		Contract amounts								Contract exchange rate
								Pay				Receive
KEB Hana Bank			2014.04.10			2021.07.12			55,120			USD	52,000			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
Standard Chartered			2016.06.07			2016.07.19			4,390			USD	3,772			1,163.78
JP Morgan			2016.06.20			2016.07.15			27,741			USD	23,816			1,164.77
KEB Hana Bank			2016.06.02			2016.07.26			1,224			USD	1,030			1,187.80
Woori Bank			2016.06.07			2016.08.01			27,822			USD	23,886			1,164.77
Credit Suisse			2016.06.02			2016.07.04			3,569			USD	3,000			1,189.60
Credit Suisse			2016.06.24			2016.07.26			5,901			USD	5,000			1,180.20
Mizuho Bank			2016.06.09			2016.07.11			4,637			USD	4,000			1,159.14
Mizuho Bank			2016.06.27			2016.07.27			2,371			USD	2,000			1,185.66
Mizuho Bank			2016.06.30			2016.07.29			11,538			USD	10,000			1,153.84
Morgan Stanley			2016.06.22			2016.07.22			5,784			USD	5,000			1,156.88
Morgan Stanley			2016.06.28			2016.07.28			2,367			USD	2,000			1,183.32
Nova Scotia			2016.06.10			2016.07.11			11,637			USD	10,000			1,163.72
Nova Scotia			2016.06.23			2016.07.25			11,519			USD	10,000			1,151.90
Standard Chartered			2016.06.03			2016.07.05			11,874			USD	10,000			1,187.39
Standard Chartered			2016.06.20			2016.07.19			11,646			USD	10,000			1,164.55
Standard Chartered			2016.06.29			2016.07.29			2,338			USD	2,000			1,169.18
Mizuho Bank			2016.06.07			2016.07.11			3,489			USD	3,000			1,163.03
Mizuho Bank			2016.06.09			2016.07.13			463			USD	400			1,156.73
Mizuho Bank			2016.06.16			2016.07.20			2,340			USD	2,000			1,170.05
Mizuho Bank			2016.06.17			2016.07.11		USD	341				397			1,163.03
Mizuho Bank			2016.06.21			2016.07.11		USD	2,000				2,326			1,163.03
Standard Chartered			2016.06.08			2016.07.11			2,317			USD	2,000			1,158.25
Standard Chartered			2016.06.24			2016.07.27			4,592			USD	4,000			1,148.10
Standard Chartered			2016.06.30			2016.08.05			2,312			USD	2,000			1,156.10
Nova Scotia			2016.06.16			2016.07.20		USD	5,000				5,862			1,172.35
Nova Scotia			2016.06.23			2016.07.27		USD	3,000				3,455			1,151.73
Nova Scotia			2016.06.23			2016.08.29		USD	1,000				1,152			1,152.33
Nova Scotia			2016.06.28			2016.07.29		USD	2,000				2,347			1,173.60
Nova Scotia			2016.06.28			2016.08.31		USD	2,000				2,348			1,174.10
BNP Paribas			2016.06.03			2016.07.07			1,188			USD	1,000			1,187.50
BNP Paribas			2016.06.21			2016.07.25			1,158			USD	1,000			1,158.30
BNP Paribas			2016.06.22			2016.07.07		USD	700				831			1,187.50
BNP Paribas			2016.06.23			2016.07.27			3,452			USD	3,000			1,150.70
BNP Paribas			2016.06.28			2016.07.07		USD	300				356			1,187.50
Nomura			2016.06.29			2016.08.01		USD	3,000				3,494			1,164.50
Societe Generale			2016.06.13			2016.07.15			4,691			USD	4,000			1,172.80
Credit Agricole			2016.06.08			2016.07.11			2,314			USD	2,000			1,156.75
Credit Agricole			2016.06.23			2016.07.11		USD	500				578			1,156.75
Credit Agricole			2016.06.27			2016.07.29			2,360			USD	2,000			1,180.10
Credit Agricole			2016.06.27			2016.07.29			2,357			USD	2,000			1,178.60
Credit Agricole			2016.06.30			2016.07.29		USD	1,334				1,575			1,180.10
Credit Agricole			2016.06.30			2016.07.29		USD	39				46			1,180.10
JP Morgan			2016.06.30			2016.08.05			4,609			USD	4,000			1,152.35
Nova Scotia			2016.06.29			2016.07.04			3,614			USD	3,100			1,165.67
Standard Chartered			2016.06.23			2016.07.06			11,518			USD	10,000			1,151.75

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(2)	Currency forward contracts which are not designated as hedge instruments, as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract Date				Maturity date		Contract amounts								Contract exchange rate
								Pay				Receive
Nonghyup Bank			2016.06.24			2016.07.06			10,844			USD	9,300			1,165.99
Nova Scotia			2016.06.24			2016.12.28			3,432			USD	3,000			1,143.90
Nova Scotia			2016.06.22			2016.12.27			2,300			USD	2,000			1,149.80
Nova Scotia			2016.06.22			2016.12.27			2,302			USD	2,000			1,150.80
Nova Scotia			2016.06.22			2016.12.27			2,304			USD	2,000			1,151.80
Societe Generale			2016.06.30			2017.01.05			5,780			USD	5,000			1,156.05
Societe Generale			2016.06.08			2016.12.12			634			USD	548			1,156.40
Credit Suisse			2016.06.08			2016.12.12			744			USD	643			1,156.60
Standard Chartered			2016.06.08			2016.12.08			5,784			USD	5,000			1,156.70
BNP Paribas			2016.06.30			2017.01.05			5,786			USD	5,000			1,157.10
Woori Bank			2016.06.08			2016.12.12			3,472			USD	3,000			1,157.40
BNP Paribas			2016.06.09			2016.12.13			1,903			USD	1,643			1,158.00
Citibank			2016.06.09			2016.12.13			5,792			USD	5,000			1,158.30
Societe Generale			2016.06.09			2016.12.13			5,770			USD	4,981			1,158.40
Credit Agricole			2016.06.09			2016.12.13			5,793			USD	5,000			1,158.60
Societe Generale			2016.06.20			2016.12.22			5,822			USD	5,000			1,164.40
Nova Scotia			2016.06.20			2016.12.22			11,647			USD	10,000			1,164.74
Nova Scotia			2016.06.20			2016.12.22			11,670			USD	10,000			1,166.95
BNP Paribas			2016.06.20			2016.12.22			5,835			USD	5,000			1,167.00
Nomura			2016.06.20			2016.12.22			5,837			USD	5,000			1,167.30
Societe Generale			2016.06.17			2016.12.21			2,359			USD	2,015			1,170.60
BNP Paribas			2016.06.17			2016.12.19			11,708			USD	10,000			1,170.80
Nova Scotia			2016.06.24			2016.12.29			2,343			USD	2,000			1,171.50
Standard Chartered			2016.06.24			2016.12.29			2,343			USD	2,000			1,171.55
Nova Scotia			2016.06.24			2016.12.29			2,345			USD	2,000			1,172.50
Standard Chartered			2016.06.24			2016.12.29			2,345			USD	2,000			1,172.55
Standard Chartered			2016.06.28			2016.12.29			3,518			USD	3,000			1,172.60
Nova Scotia			2016.06.28			2016.12.29			2,346			USD	2,000			1,173.20
Nova Scotia			2016.06.24			2016.12.29			2,347			USD	2,000			1,173.50
Standard Chartered			2016.06.24			2016.12.29			2,348			USD	2,000			1,173.90
Woori Bank			2016.06.28			2016.12.30			2,348			USD	2,000			1,173.90
Nova Scotia			2016.06.28			2016.12.29			2,348			USD	2,000			1,174.20
Woori Bank			2016.06.28			2016.12.30			2,350			USD	2,000			1,174.90
Nova Scotia			2016.06.28			2016.12.29			2,350			USD	2,000			1,175.20
Standard Chartered			2016.05.25			2016.11.30			6,509			USD	5,500			1,183.50
Citibank			2016.05.25			2016.11.28			2,626			USD	2,218			1,183.65
Credit Agricole			2016.05.26			2016.11.30			2,959			USD	2,500			1,183.70
Nova Scotia			2016.05.25			2016.11.28			2,370			USD	2,000			1,185.10
Nova Scotia			2016.05.23			2016.11.25			2,371			USD	2,000			1,185.40
Nomura			2016.05.25			2016.11.28			2,371			USD	2,000			1,185.50
BNP Paribas			2016.05.25			2016.11.28			4,742			USD	4,000			1,185.60
Nomura			2016.05.25			2016.11.28			2,371			USD	2,000			1,185.70
Nova Scotia			2016.05.25			2016.11.28			2,372			USD	2,000			1,186.10
Credit Agricole			2016.05.23			2016.11.23			3,037			USD	2,561			1,186.20
Nova Scotia			2016.05.23			2016.11.25			2,373			USD	2,000			1,186.40
Citibank			2016.06.03			2016.12.08			5,935			USD	5,000			1,186.90
Standard Chartered			2016.06.03			2016.12.08			5,938			USD	5,000			1,187.60
Nova Scotia			2016.06.02			2016.12.07			3,399			USD	2,860			1,188.50

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(2)	Currency forward contracts which are not designated as hedge instruments, as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract Date				Maturity date		Contract amounts								Contract exchange rate
								Pay				Receive
Standard Chartered			2016.06.30			2017.01.05			5,751			USD	5,000			1,150.10
KEB Hana Bank			2015.08.26			2017.07.31		JPY	630,000				6,377			10.12
BNP Paribas			2015.02.12			2016.07.11		IDR	39,735,684			USD	2,938			13,525.00
BNP Paribas			2015.02.12			2016.08.10		IDR	30,737,686			USD	2,273			13,525.00
BNP Paribas			2015.02.12			2016.09.12		IDR	27,125,351			USD	2,006			13,525.00
BNP Paribas			2015.02.12			2016.10.11		IDR	26,862,636			USD	1,986			13,525.00
BNP Paribas			2015.02.12			2016.11.10		IDR	26,074,490			USD	1,928			13,525.00
BNP Paribas			2015.02.12			2016.12.12		IDR	13,135,763			USD	971			13,525.00
BNP Paribas			2015.02.12			2017.01.10		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.02.10		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.03.10		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.04.10		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.05.10		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.06.12		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.07.10		IDR	6,567,882			USD	486			13,525.00
BNP Paribas			2015.02.12			2017.08.10		IDR	2,889,868			USD	214			13,525.00

 

(3)	Currency swap contracts which are not designated as hedge instruments as of June 30, 2016 are as follows:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract year		Contract amount								Contract interest rate						Contract exchange rate
				Pay				Receive				Pay				Receive
Deutsche Bank		2013~2018			110,412			JPY	10,000,000				6.21	%		4.19%			11.04
IBK		2013~2018			111,800			USD	100,000				3.16	%		2.79%			1,118.00
Bank of America		2013~2018			103,580			JPY	10,000,000				7.05	%		4.19%			10.36
Credit Suisse		2014~2019			118,632			CHF	100,000				2.98	%		1.50%			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
Standard Chartered		2014~2017			51,215			USD	50,000				2.24	%		3M Libor+0.55%			1,024.30
Mizuho Bank		2014~2017			153,645			USD	150,000				2.35	%		3M Libor+0.65%			1,024.30
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
Goldman Sachs		2012~2022			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
DBS		2013~2018			108,140			USD	100,000				2.63	%		3M Libor+0.84%			1,081.40
DBS		2013~2018			108,140			USD	100,000				2.57	%		3M Libor+0.84%			1,081.40
DBS		2013~2018			108,140			USD	100,000				2.57	%		3M Libor+0.84%			1,081.40
HSBC		2013~2018			107,450			USD	100,000				3.41	%		2.88%			1,074.50
Standard Chartered		2013~2018			107,450			USD	100,000				3.44	%		2.88%			1,074.50
JP Morgan		2013~2018			107,450			USD	100,000				3.48	%		2.88%			1,074.50
Bank of America		2014~2018			107,450			USD	100,000				3.09	%		2.88%			1,074.50

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(3)	Currency swap contracts which are not designated as hedge instruments as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract year		Contract amount								Contract interest rate						Contract exchange rate
				Pay				Receive				Pay				Receive
Citibank		2014~2018			107,450			USD	100,000				3.09	%		2.88%			1,074.50
JP Morgan		2014~2017			102,670			USD	100,000				2.89	%		3M Libor+0.78%			1,026.70
Deutsche Bank		2014~2017			102,670			USD	100,000				2.89	%		3M Libor+0.78%			1,026.70
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
RBS		2014~2019			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

 

(4)	Currency swap contracts which are designated as hedge instruments as of June 30, 2016 are as follows:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract year		Contract amount								Contract interest rate				Contract exchange rate
				Pay				Receive				Pay		Receive
Goldman Sachs		2011~2017			105,260			USD	100,000			3.99%		3.63%			1,052.60
Barclays Bank PLC		2011~2017			105,260			USD	100,000			3.99%		3.63%			1,052.60
Citibank		2011~2017			105,260			USD	100,000			3.99%		3.63%			1,052.60
Citibank		2013~2018			54,570			USD	50,000			2.90%		3M Libor+1.01%			1,091.40
Standard Chartered		2013~2018			54,570			USD	50,000			2.90%		3M Libor+1.01%			1,091.40
Credit Suisse		2013~2018			111,410			USD	100,000			3.22%		3M Libor+1.50%			1,114.10
HSBC		2014~2020			99,901			AUD	100,000			3.52%		5.75%			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			126,032			USD	117,250			3.55%		3M Libor+1.25%			1,074.90
JP Morgan		2014~2019			107,190			USD	100,000			3.25%+Floating rate		2.75%			1,071.90
Morgan Stanley		2014~2019			107,190			USD	100,000			3.25%+Floating rate		2.75%			1,071.90
Deutsche Bank		2014~2019			107,190			USD	100,000			3.25%+Floating rate		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			2.10%+Floating rate		2.50%			1,210.00
BNP Paribas		2016~2021			121,000			USD	100,000			2.10%+Floating rate		2.50%			1,210.00
Barclays Bank PLC		2006~2016			71,888			USD	75,000			4.81%		5.50%			958.50
Deutsche Bank		2006~2016			71,888			USD	75,000			4.81%		5.50%			958.50
Barclays Bank PLC		2012~2017			142,500			USD	125,000			3.83%		3.13%			1,140.00
Morgan Stanley		2012~2017			142,500			USD	125,000			3.83%		3.13%			1,140.00
Credit Agricole		2012~2017			142,500			USD	125,000			3.83%		3.13%			1,140.00
JP Morgan		2012~2017			142,500			USD	125,000			3.83%		3.13%			1,140.00
Credit Agricole		2013~2019			118,343			CHF	100,000			3.47%		1.63%			1,183.43
Barclays Bank PLC		2013~2019			59,172			CHF	50,000			3.47%		1.63%			1,183.43
Nomura		2013~2019			59,172			CHF	50,000			3.47%		1.63%			1,183.43
Barclays Bank PLC		2013~2018			107,360			USD	100,000			3.34%		2.88%			1,073.60
Credit Agricole		2013~2018			107,360			USD	100,000			3.34%		2.88%			1,073.60
JP Morgan		2013~2018			161,040			USD	150,000			3.34%		2.88%			1,073.60
Standard Chartered		2013~2018			161,040			USD	150,000			3.34%		2.88%			1,073.60
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

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(4)	Currency swap contracts which are designated as hedge instruments as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Counterparty		Contract year		Contract amount								Contract interest rate				Contract exchange rate
				Pay				Receive				Pay		Receive
Barclays Bank PLC		2014~2019			104,490			USD	100,000			2.77%		2.63%			1,044.90
Barclays Bank PLC		2013~2018			81,188			USD	75,000			2.65%		1.88%			1,082.50
Credit Agricole		2013~2018			81,188			USD	75,000			2.65%		1.88%			1,082.50
Deutsche Bank		2013~2018			81,188			USD	75,000			2.65%		1.88%			1,082.50
Citibank		2013~2018			81,188			USD	75,000			2.65%		1.88%			1,082.50
Standard Chartered		2014~2017			54,205			USD	50,000			2.93%		3M Libor+1.05%			1,084.10
Credit Agricole		2014~2017			54,205			USD	50,000			2.93%		3M Libor+1.05%			1,084.10
HSBC		2012~2017			115,140			USD	100,000			3.38%		2.50%			1,151.40
BNP Paribas		2012~2017			115,140			USD	100,000			3.38%		2.50%			1,151.40
KEB Hana Bank		2012~2017			115,140			USD	100,000			3.38%		2.50%			1,151.40
Barclays Bank PLC		2012~2017			57,570			USD	50,000			3.38%		2.50%			1,151.40
Standard Chartered		2012~2017			57,570			USD	50,000			3.38%		2.50%			1,151.40
Nomura		2012~2017			57,570			USD	50,000			3.38%		2.50%			1,151.40
Credit Agricole		2012~2017			57,570			USD	50,000			3.38%		2.50%			1,151.40
Societe Generale		2013~2018			106,190			USD	100,000			3.48%		2.63%			1,061.90
BNP Paribas		2013~2018			53,095			USD	50,000			3.48%		2.63%			1,061.90
KEB Hana Bank		2013~2018			53,095			USD	50,000			3.48%		2.63%			1,061.90
Standard Chartered		2013~2018			106,030			USD	100,000			3.48%		2.63%			1,060.30
Barclays Bank PLC		2013~2018			53,015			USD	50,000			3.48%		2.63%			1,060.30
KEB Hana Bank		2013~2018			31,809			USD	30,000			3.48%		2.63%			1,060.30
Societe Generale		2013~2018			21,206			USD	20,000			3.48%		2.63%			1,060.30
HSBC		2013~2018			53,015			USD	50,000			3.47%		2.63%			1,060.30
Nomura		2013~2018			53,015			USD	50,000			3.47%		2.63%			1,060.30
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
Barclays Bank PLC		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

 

(5)	Interest rate swap contracts which are not designated as hedge instruments as of June 30, 2016 are as follows:

 

In millions of won
Counterparty		Contract year		Contract amount				Contract interest rate per annum
								Pay		Receive
Nonghyup Bank		2012~2016			100,000			3.49%		3M CD + 0.25%
Korea Development Bank		2012~2016			50,000			3.49%		3M CD + 0.25%
HSBC		2012~2016			50,000			3.49%		3M CD + 0.25%
Standard Chartered		2012~2016			200,000			3.55%		3M CD + 0.26%
Standard Chartered		2012~2017			160,000			3.57%		3M CD + 0.32%
JP Morgan		2013~2018			150,000			3.58%		3M CD + 0.31%
Credit Suisse		2014~2018			200,000			2.98%		1Y CMT + 0.31%
Korea Development Bank (*)		2014~2029			40,000			3M CD - 0.03%		4.65%

 

(*)

The contract is an interest rate swap hedging on Electricity Bonds 885, and the banks would notify the Company of the early termination every year on the early termination notification date (every year on April 28, from 2017 until 2028). The contract will be terminated if the early termination is notified.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(6)	Interest rate swap contracts which are designated as hedge instruments as of June 30, 2016 are as follows:

 

In thousands of U.S. dollars
Counterparty		Contract year		Contract amount				Contract interest rate per annum
								Pay		Receive
BNP Paribas		2009~2027		USD	99,920			4.16%		6M USD Libor
KFW		2009~2027		USD	99,920			4.16%		6M USD Libor
CA-CIB (Credit Agricole)		2015~2033		USD	101,367			3.98%~4.10%		6M USD Libor
SMBC		2015~2033		USD	132,557			4.05%~4.18%		6M USD Libor
Export-Import Bank of Korea		2015~2031		USD	8,826			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

 

(7)	Gains and losses on valuation and transaction of derivatives for the three and six-month periods ended June 30, 2016 and 2015 are as follows and included in finance income and costs in the consolidated statements of comprehensive income:

 

In millions of won		Net income effects of valuation gain (loss)																Net income effects of transaction gain (loss)																Accumulated other comprehensive income (loss) (*)
		June 30, 2016								June 30, 2015								June 30, 2016								June 30, 2015								June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Currency forward		￦	9,650				(925	)			35,910				38,786				(958	)			337				(7,376	)			(3,838	)			—				—				—				—
Currency swap			119,701				(2,138	)			111,290				179,857				(52,319	)			(49,841	)			2,935				(2,414	)			75,331				53,077				(58,058	)			(23,391	)
Interest rate swap			(1,494	)			3,503				4,931				(1,749	)			2,429				1,757				1,225				582				—				(17	)			—				(7,920	)
		￦	127,857				440				152,131				216,894				(50,848	)			(47,747	)			(3,216	)			(5,670	)			75,331				53,060				(58,058	)			(31,311	)

 

(*)	As of June 30, 2016, the net gain on valuation of derivatives using cash flow hedge accounting of ￦30,478 million, net of tax, is included in other comprehensive income or loss.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

12.	Other Financial Assets

 

(1)	Other financial assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Loans and receivables		￦	198,788				684,247				106,013				678,126
Allowance for doubtful accounts			—				(4,195	)			—				—
Present value discount			(1,021	)			(45,158	)			(859	)			(48,223	)
Long-term/short-term financial instruments			1,773,426				348,633				5,132,829				758,037
		￦	1,971,193				983,527				5,237,983				1,387,940

 

(2)	Loans and receivables as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Face value				Allowance for doubtful accounts				Present value discount				Book value
Short-term loans and receivables
Loans for tuition		￦	28,012				—				(1,021	)			26,991
Loans for housing			12,100				—				—				12,100
Fisheries loan			3,376				—				—				3,376
Other loans			155,300				—				—				155,300
			198,788				—				(1,021	)			197,767
Long-term loans and receivables
Loans for tuition			401,035				—				(44,915	)			356,120
Loans for housing			126,387				—				—				126,387
Loans for related parties			96,080				(4,195	)			—				91,885
Fisheries loan			1,344				—				(243	)			1,101
Other loans			59,401				—				—				59,401
			684,247				(4,195	)			(45,158	)			634,894
		￦	883,035				(4,195	)			(46,179	)			832,661

 

In millions of won		December 31, 2015
		Face value				Present value discount				Book value
Short-term loans and receivables
Loans for tuition		￦	29,209				(859	)			28,350
Loans for housing			11,170				—				11,170
Fisheries loan			6,032				—				6,032
Other loans			59,602				—				59,602
			106,013				(859	)			105,154
Long-term loans and receivables
Loans for tuition			390,738				(47,822	)			342,916
Loans for housing			132,239				—				132,239
Loans for related parties			99,768				—				99,768
Fisheries loan			1,664				(401	)			1,263
Other loans			53,717				—				53,717
			678,126				(48,223	)			629,903
		￦	784,139				(49,082	)			735,057

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

12.	Other Financial Assets, Continued

 

(3)	Changes in the allowance for doubtful accounts of Loans and receivables for the six-month period ended June 30, 2016 are as follows:

 

In millions of won		June 30, 2016
Beginning balance		￦	—
Bad debt expense			4,258
Other			(63	)
Ending balance		￦	4,195

 

(4)	Long-term and short-term financial instruments as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Time deposits		￦	1,106,898				30,000				2,131,089				3
ABCP			560,468				187,700				2,598,791				5,000
CP			103,360				—				48,350				—
CD			—				—				163,649				—
RP			—				30,600				—				652,700
Others			2,700				100,333				190,950				100,334
		￦	1,773,426				348,633				5,132,829				758,037

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

13.	Inventories

 

Inventories as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Acquisition cost				Valuation allowance				Book value
Raw materials		￦	3,300,483				(1,238	)			3,299,245
Work-in-progress			109,136				—				109,136
Finished goods			64,684				—				64,684
Supplies			1,118,285				(4,311	)			1,113,974
Inventories in transit			433,424				—				433,424
Other inventories			9,345				—				9,345
		￦	5,035,357				(5,549	)			5,029,808

 

In millions of won		December 31, 2015
		Acquisition cost				Valuation allowance				Book value
Raw materials		￦	3,304,220				(1,238	)			3,302,982
Work-in-progress			133,226				—				133,226
Finished goods			51,073				—				51,073
Supplies			1,062,307				(4,428	)			1,057,879
Inventories in transit			392,340				—				392,340
Other inventories			8,913				—				8,913
		￦	4,952,079				(5,666	)			4,946,413

The reversal of the allowance for loss on inventory valuation due to increases in the net realizable value of inventory deducted from cost of sales was ￦1,584 million for the six-month period ended June 30, 2016. The allowance for loss on inventory valuation due to decreases in the net realizable value of inventory added to cost of sales was ￦533 million for the year ended December 31, 2015. The amounts of loss from inventory valuation included in other gains or losses were ￦1,467 million for the six-month period ended June 30, 2016 and ￦1,318 million for the year ended December 31, 2015, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

14.	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 entered into a PPA with the Comision Federal de Electricidad in Mexico to provide for 25 years 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 June 30, 2016 and December 31, 2015 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		June 30, 2016								December 31, 2015
		Minimum lease payments				Present value of minimum lease payments				Minimum lease payments				Present value of minimum lease payments
Less than 1 year		￦	101,345				12,486				98,488				12,098
1 ~ 5 years			405,055				205,304				407,426				203,699
More than 5 years			1,618,733				725,244				1,689,281				738,011
		￦	2,125,133				943,034				2,195,195				953,808

 

(3)	There are no impaired finance lease receivables as of June 30, 2016 and December 31, 2015.

 

15.	Non-Financial Assets

 

Non-financial assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Advance payment		￦	141,199				21,188				102,842				25,172
Prepaid expenses			217,297				83,464				159,378				85,105
Others (*)			120,213				20,860				135,730				20,956
		￦	478,709				125,512				397,950				131,233

 

(*)	Details of others as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Tax refund receivables		￦	26,691				2,641				39,158				2,658
Others			93,522				18,219				96,572				18,298
		￦	120,213				20,860				135,730				20,956

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries

 

(1)	Consolidated subsidiaries as of June 30, 2016 and December 31, 2015 are as follows:

 

Subsidiaries		Key operation activities		Location		Percentage of ownership (%)
						June 30, 2016				December 31, 2015
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			66.32	%			66.32	%
KEPCO Plant Service & Engineering Co., Ltd.		Utility plant maintenance and others		KOREA			52.48	%			52.48	%
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		Utility plant rehabilitation and operation		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	%			100.00	%
KEPCO Netherlands B.V.		Holding company		NETHERLANDS			100.00	%			100.00	%
KOREA Imouraren Uranium Investment Corp.		Resources development		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.		Resources development		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	%
KEPCO Canada Uranium Investment Limited Partnership		Resources development		CANADA			100.00	%			100.00	%
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		Operation of utility plant		PHILIPPINES			100.00	%			100.00	%
EWP America Inc.		Holding company		USA			100.00	%			100.00	%
EWP Renewable Co.		Holding company		USA			100.00	%			100.00	%
DG Fairhaven Power, LLC		Power generation		USA			100.00	%			100.00	%
DG Kings Plaza, 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		Resources development		CANADA			96.36	%			96.36	%
PT KEPCO Resource Indonesia		Resources development		INDONESIA			100.00	%			100.00	%

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(1)	Consolidated subsidiaries as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

Subsidiaries		Key operation activities		Location		Percentage of ownership (%)
						June 30, 2016				December 31, 2015
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			100.00	%			100.00	%
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)		Power generation		KOREA			46.22	%			46.22	%
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		Holding company		INDIA			100.00	%			100.00	%
KEPCO KPS Philippines Corp.		Utility plant maintenance and others		PHILIPPINES			52.48	%			52.48	%
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.		Power generation		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	%
Global One Carbon Private Equity Investment Trust 2		Holding company		KOREA			96.67	%			—
Chitose Solar Power Plant LLC		Power generation		JAPAN			80.10	%			—
KEPCO Energy Solution Co. Ltd.		Energy service		KOREA			100.00	%			—
Solar School Plant Co., Ltd.		Power generation		KOREA			100.00	%			—

 

(*1)	Considering treasury stocks, the effective percentage of ownership is 66.62%.

(*2)	These subsidiaries are included in the consolidated financial statements as the Company obtained the majority of the voting power through the shareholders’ agreement.

(*3)	As of reporting date, the reporting period of all subsidiaries is December 31, except for Mira Power Limited which is November 30.

(*4)

According to the shareholders’ agreement reached in April 2014, Korea South-East Power Co., Ltd. (“KOSEP”) signed a contract with Long Lasting Value (“LLV”) to guarantee the principal and certain rate of return on LLV’s shares in KOSEP Material Co., Ltd. Moreover, LLV has put options to sell their investment to KOSEP. Therefore, the Company accounted for this agreement as KOSEP acquiring the shares of KOSEP Material from LLV. As such, the effective percentage of ownership is 86.20% as of June 30, 2016.

(*5)

The Company guarantees a certain return on investment related to Commerce & 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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(2)	There is no subsidiary excluded from consolidation for the six-month period ended June 30, 2016 and subsidiaries newly included in consolidation for the six-month period ended June 30, 2016 are as follows:

<Subsidiaries included in consolidation for the six-month periods ended June 30, 2016>

 

Subsidiary		Reason
Global One Carbon Private Equity Investment Trust 2		Newly Established
Chitose Solar Power Plant LLC		Newly Established
KEPCO Energy Solution Co. Ltd.		Newly Established
Solar School Plant Co., Ltd.		Newly Established

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
Korea Hydro & Nuclear Power Co., Ltd.		￦	52,138,260				27,685,996				5,671,351				1,480,259
Korea South-East Power Co., Ltd.			9,116,971				4,439,051				2,453,505				321,901
Korea Midland Power Co., Ltd.			8,542,945				5,170,165				1,811,452				206,073
Korea Western Power Co., Ltd.			9,529,838				5,750,355				2,044,892				305,520
Korea Southern Power Co., Ltd.			9,424,359				5,545,243				1,905,015				219,412
Korea East-West Power Co., Ltd.			8,852,789				4,577,340				2,054,928				354,938
KEPCO Engineering & Construction Company, Inc.			848,215				410,223				246,011				36,154
KEPCO Plant Service & Engineering Co., Ltd.			1,044,364				299,283				571,915				61,485
KEPCO Nuclear Fuel Co., Ltd.			702,054				352,322				157,276				18,735
KEPCO KDN Co., Ltd.			448,927				180,159				214,367				734
Garolim Tidal Power Plant Co., Ltd.			650				348				—				(7	)
KEPCO International HongKong Ltd.			174,000				1				—				2,443
KEPCO International Philippines Inc.			108,884				606				—				29,002
KEPCO Gansu International Ltd.			17,279				536				—				(18	)
KEPCO Philippines Holdings Inc.			124,158				1				—				4,749
KEPCO Philippines Corporation			13,826				127				—				10
KEPCO Ilijan Corporation			567,032				49,480				60,150				33,220
KEPCO Lebanon SARL			713				10,101				—				(41	)
KEPCO Neimenggu International Ltd.			183,291				346				—				7,804
KEPCO Shanxi International Ltd.			555,066				224,686				—				12,041
KOMIPO Global Pte Ltd.			193,997				30				—				8,874
KEPCO Canada Energy Ltd.			59,585				35				—				16
KEPCO Netherlands B.V.			161,284				60				—				460
KOREA Imouraren Uranium Investment Corp.			228,213				241				—				1,123
KEPCO Australia Pty., Ltd.			521,957				2,659				1,989				586
KOSEP Australia Pty., Ltd.			19,176				1,435				2,065				1,007
KOMIPO Australia Pty., Ltd.			19,285				795				2,065				1,005
KOWEPO Australia Pty., Ltd.			19,690				1,066				2,065				992
KOSPO Australia Pty., Ltd.			18,113				816				2,065				715
KEPCO Middle East Holding Company			148,595				153,909				—				(2,186	)
Qatrana Electric Power Company			524,896				405,459				9,801				11,723
KHNP Canada Energy Ltd.			29,151				32				—				(16	)
KEPCO Bylong Australia Pty., Ltd.			203,339				253,154				—				4,172
Korea Waterbury Uranium Limited Partnership			20,994				31				—				(26	)
KEPCO Canada Uranium Investment Limited Partnership			40,500				21				—				(12	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Subsidiaries		Total Assets				Total liabilities				Sales				Profit (loss) for the period
Korea Electric Power Nigeria Ltd.		￦	846				230				11,791				571
KEPCO Holdings de Mexico			267				21				—				247
KST Electric Power Company			575,039				530,042				44,086				7,309
KEPCO Energy Service Company			1,714				405				3,097				853
KEPCO Netherlands S3 B.V.			65,631				42				—				(62	)
PT. KOMIPO Pembangkitan Jawa Bali			19,465				5,543				12,304				6,837
PT. Cirebon Power Service			3,153				1,054				3,561				258
KOWEPO International Corporation			—				—				—				—
KOSPO Jordan LLC			11,368				597				3,669				662
EWP Philippines Corporation			2,014				968				—				(25	)
EWP America Inc. (*)			106,824				77,948				18,853				(3,580	)
KNF Canada Energy Limited			1,983				26				—				(22	)
PT KEPCO Resource Indonesia			1,052				17				—				(173	)
EWP Barbados 1 SRL			259,169				325				1,478				200
Gyeonggi Green Energy Co., Ltd.			303,223				232,575				52,534				9,786
PT. Tanggamus Electric Power			132,988				119,560				22,247				(1,137	)
Gyeongju Wind Power Co., Ltd.			62,308				27,123				4,071				1,375
KOMIPO America Inc.			12,781				2,343				—				(508	)
KOSEP USA, INC.			33,433				7,527				3,140				(9,861	)
PT. EWP Indonesia			1,612				—				—				686
KEPCO Netherlands J3 B.V.			120,672				65				—				(48	)
Korea Offshore Wind Power Co., Ltd.			39,370				71				—				(1,439	)
Global One Pioneer B.V.			10				20				—				(31	)
Global Energy Pioneer B.V.			11				20				—				(31	)
Mira Power Limited			119,943				76,705				—				(558	)
KOSEP Material Co., Ltd.			22,852				23,045				99				(1,947	)
Commerce and Industry Energy Co., Ltd.			99,338				86,792				14,871				(267	)
KEPCO Singapore Holdings Pte., Ltd.			2,324				4				—				—
KOWEPO India Private Limited			893				10				—				—
KEPCO KPS Philippines Corp.			6,501				1,107				5,405				692
KOSPO Chile SpA			44				4,613				—				233
PT. KOWEPO Sumsel Operation and Maintenance Services			1,505				55				3,092				622
HeeMang Sunlight Power Co., Ltd.			7,216				3,389				2				(191	)
Fujeij Wind Power Company			531				65				—				(272	)
KOSPO Youngnam Power Co., Ltd.			170,585				91,308				—				(341	)
Global One Carbon Private Equity Investment Trust 2			2,996				—				—				3
Chitose Solar Power Plant LLC			21,256				8,518				—				(45	)
KEPCO Energy Solution Co. Ltd.			300,000				—				—				—
Solar School Plant Co., Ltd.			200,000				—				—				—

 

(*)	Financial information of EWP America Inc. includes that of seven other subsidiaries, EWP Renewable Co., DG Fairhaven Power, LLC, DG Kings Plaza, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

 

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June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
Korea Hydro & Nuclear Power Co., Ltd.		￦	51,043,890				27,386,113				10,642,352				2,465,244
Korea South-East Power Co., Ltd.			9,326,835				4,859,827				4,961,711				601,204
Korea Midland Power Co., Ltd.			7,857,199				4,648,144				3,927,443				226,244
Korea Western Power Co., Ltd.			9,225,791				5,719,032				4,214,540				294,617
Korea Southern Power Co., Ltd.			9,216,084				5,525,865				4,317,995				224,757
Korea East-West Power Co., Ltd.			8,828,603				4,836,904				4,047,655				454,942
KEPCO Engineering & Construction Company, Inc.			855,156				438,371				657,603				31,047
KEPCO Plant Service & Engineering Co., Ltd.			1,029,304				246,342				1,171,082				168,632
KEPCO Nuclear Fuel Co., Ltd.			666,677				328,364				253,524				35,115
KEPCO KDN Co., Ltd.			439,725				159,275				451,678				33,578
Garolim Tidal Power Plant Co., Ltd.			655				346				—				(76	)
KEPCO International HongKong Ltd.			172,686				18				—				4,993
KEPCO International Philippines Inc.			115,594				1,542				—				38,541
KEPCO Gansu International Ltd.			17,405				540				—				(6	)
KEPCO Philippines Holdings Inc.			132,094				26				—				24,690
KEPCO Philippines Corporation			13,998				218				—				265
KEPCO Ilijan Corporation			603,865				58,572				126,234				54,596
KEPCO Lebanon SARL			741				10,182				—				(1,541	)
KEPCO Neimenggu International Ltd.			184,860				348				—				8,027
KEPCO Shanxi International Ltd.			562,652				242,270				—				22,949
KOMIPO Global Pte Ltd.			187,885				29				—				16,572
KEPCO Canada Energy Ltd.			55,945				23				—				(64	)
KEPCO Netherlands B.V.			169,496				61				—				1,409
KOREA Imouraren Uranium Investment Corp.			224,499				263				—				5,964
KEPCO Australia Pty., Ltd.			510,892				2,541				4,510				168
KOSEP Australia Pty., Ltd.			18,180				1,581				4,729				346
KOMIPO Australia Pty., Ltd.			17,397				559				4,729				349
KOWEPO Australia Pty., Ltd.			18,320				1,578				4,729				353
KOSPO Australia Pty., Ltd.			18,358				1,567				4,729				356
KEPCO Middle East Holding Company			147,618				150,798				—				14,142
Qatrana Electric Power Company			521,206				412,587				17,844				31,767
KHNP Canada Energy Ltd.			42,731				22				—				(123	)
KEPCO Bylong Australia Pty., Ltd.			183,468				236,545				—				(23,352	)
Korea Waterbury Uranium Limited Partnership			20,370				699				—				(48	)
KEPCO Canada Uranium Investment Limited Partnership			38,804				14				—				(26,171	)
Korea Electric Power Nigeria Ltd.			1,721				1,179				55,768				309
KEPCO Holdings de Mexico			39				34				—				(13	)
KST Electric Power Company			564,358				529,439				97,879				14,631
KEPCO Energy Service Company			1,435				604				6,034				875
KEPCO Netherlands S3 B.V.			66,251				189				—				716
PT. KOMIPO Pembangkitan Jawa Bali			16,536				6,170				20,143				8,047
PT. Cirebon Power Service			2,795				1,010				6,663				459
KOWEPO International Corporation			—				—				—				—
KOSPO Jordan LLC			12,998				1,117				9,840				2,693
EWP Philippines Corporation			2,664				1,592				—				258
EWP America Inc. (*)			115,562				82,167				59,124				3,227
KNF Canada Energy Limited			1,874				18				—				(66	)
PT KEPCO Resource Indonesia			1,210				—				—				(217	)
EWP Barbados 1 SRL			260,638				370				2,829				273
Gyeonggi Green Energy Co., Ltd.			315,299				249,608				104,674				(4,111	)
PT. Tanggamus Electric Power			106,892				91,416				60,044				(7,138	)
Gyeongju Wind Power Co., Ltd.			62,600				27,822				5,993				968
KOMIPO America Inc.			13,487				2,480				—				218
KOSEP USA, INC.			40,035				4,178				4,975				153
PT. EWP Indonesia			1,039				15				—				(374	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
KEPCO Netherlands J3 B.V.		￦	121,492				81				—				18,858
Korea Offshore Wind Power Co., Ltd.			7,579				2,317				—				(4,213	)
Global One Pioneer B.V.			40				20				—				(48	)
Global Energy Pioneer B.V.			42				20				—				(48	)
Mira Power Limited			110,918				66,963				—				(1,581	)
KOSEP Material Co., Ltd.			29,768				28,013				26,310				(17,665	)
Commerce and Industry Energy Co., Ltd.			99,638				86,727				24,774				(3,387	)
KEPCO Singapore Holdings Pte., Ltd.			1,817				—				—				(9	)
KOWEPO India Private Limited			911				10				—				(105	)
KEPCO KPS Philippines Corp.			5,688				953				14,278				1,677
KOSPO Chile SpA			133				4,642				—				(942	)
PT. KOWEPO Sumsel Operation and Maintenance Services			2,053				51				5,405				1,762
HeeMang Sunlight Power Co., Ltd.			4,711				—				—				(9	)
Fujeij Wind Power Company			83				—				—				—
KOSPO Youngnam Power Co., Ltd.			82,173				32,166				—				7

 

(*)	Financial information of EWP America Inc. includes that of seven other subsidiaries, EWP Renewable Co., DG Fairhaven Power, LLC, DG Kings Plaza, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

 

(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 ￦35 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.

 

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June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(5)	Details of non-controlling interest prior to intra-group eliminations as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Description		KEPCO Ilijan Corporation				KEPCO Plant Service & Engineering Co., Ltd.				KEPCO Engineering & Construction Company, Inc.				Others				Total
Percentage of ownership			49.00	%			47.52	%			33.37	%
Current assets		￦	153,940				546,452				324,654				678,852				1,703,898
Non-current assets			413,092				497,912				523,561				2,115,697				3,550,262
Current liabilities			(13,390	)			(198,394	)			(290,684	)			(279,322	)			(781,790	)
Non-current liabilities			(36,090	)			(100,889	)			(119,539	)			(1,682,196	)			(1,938,714	)
Net assets			517,552				745,081				437,992				833,031				2,533,656
Book value of non-controlling interest			253,600				354,062				146,158				673,849				1,427,669
Sales			60,150				571,915				246,011				329,349				1,207,425
Profit for the period			33,220				61,485				36,154				52,858				183,717
Profit for the period attributable to non-controlling interest			16,278				29,218				12,065				12,978				70,539
Cash flows from operating activities			47,359				39,172				51,971				7,202				145,704
Cash flows from investing activities			(44	)			86,834				(3,794	)			(95,364	)			(12,368	)
Cash flows from financing activities before dividends to non-controlling interest			(29,789	)			(39,911	)			(29,708	)			132,627				33,219
Dividends to non-controlling interest			(28,140	)			(36,139	)			(2,539	)			(9,508	)			(76,326	)
Effect of exchange rate fluctuation			(234	)			(216	)			(460	)			(803	)			(1,713	)
Net increase (decrease) of cash and cash equivalents			(10,848	)			49,740				15,470				34,154				88,516
In millions of won
December 31, 2015
Description		KEPCO Ilijan Corporation				KEPCO Plant Service & Engineering Co., Ltd.				KEPCO Engineering & Construction Company, Inc.				Others				Total
Percentage of ownership			49.00	%			47.52	%			33.37	%
Current assets		￦	161,855				547,152				341,559				631,442				1,682,008
Non-current assets			442,010				482,152				513,597				1,976,302				3,414,061
Current liabilities			(22,522	)			(195,030	)			(342,315	)			(296,152	)			(856,019	)
Non-current liabilities			(36,050	)			(51,312	)			(96,056	)			(1,566,200	)			(1,749,618	)
Net assets			545,293				782,962				416,785				745,392				2,490,432
Book value of non-controlling interest			267,194				372,064				139,081				644,787				1,423,126
Sales			126,234				1,171,082				657,603				637,544				2,592,463
Profit for the period			54,596				168,632				31,047				61,554				315,829
Profit for the period attributable to non-controlling interest			26,752				78,852				10,360				11,802				127,766
Cash flows from operating activities			83,697				140,625				11,280				(29,888	)			205,714
Cash flows from investing activities			(16,021	)			(104,477	)			(134,874	)			(178,241	)			(433,613	)
Cash flows from financing activities before dividends to non-controlling interest			(39,730	)			(40,581	)			69,955				226,976				216,620
Dividends to non-controlling interest			(36,080	)			(34,569	)			(7,300	)			(24,577	)			(102,526	)
Effect of exchange rate fluctuation			4,123				3				(51	)			6,399				10,474
Net increase (decrease) of cash and cash equivalents			(4,011	)			(38,999	)			(60,990	)			669				(103,331	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(6)	Changes in goodwill

 

(i)

Details of goodwill as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Acquisition cost		￦	2,582				2,582
Accumulated impairment			—				—
Carrying book value		￦	2,582				2,582

 

(ii)

There are no changes in goodwill for the six-month period ended June 30, 2016 and for the year ended December 31, 2015.

 

(7)	Disposals of subsidiaries

The Company disposed the shares of Boulder Solar Power, LLC and liquidated KOWEPO America LLC during the year ended December 31, 2015.

 

(i)

The fair value of sales price as of December 31, 2015 is as follows:

 

In millions of won		December 31, 2015
Consideration received in cash		￦	10,664
Fair value of remaining shares after disposal			13,860
Total		￦	24,524

 

(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, 2015 is as follows:

 

In millions of won		December 31, 2015
Current assets
Cash and cash equivalents		￦	10,071
Current financial assets, net			1,077
Non-current assets
Property, plant and equipment, net			2,460
Other			2,893
Current liabilities
Current non-financial liabilities			(7	)
		￦	16,494

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(7)	Disposals of subsidiaries, continued

 

(iii)

Gain from disposals of subsidiaries for the year ended December 31, 2015 is as follows:

 

In millions of won		December 31, 2015
Fair value of sale price		￦	24,524
Net assets disposed			(16,494	)
Non-controlling interests			—
Realization of unrealized gain			—
Other comprehensive income (*1)			346
Gain from disposals of subsidiaries (*2)		￦	8,376

 

(*1)	This represents the amount subsequently reclassified from other comprehensive income to profit for the period when the Company lost its control of the subsidiaries.

(*2)	Gain from disposals of subsidiaries is included in the consolidated statements of comprehensive income.

 

(iv)

Net cashflow from sales of subsidiaries for the year ended December 31, 2015 is as follows:

 

In millions of won		December 31, 2015
Consideration received in cash		￦	10,664
Less: cash held by disposed subsidiaries			(10,071	)
Net cash flow		￦	593

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures

 

(1)	Investments in associates and joint ventures as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
<Associates>
Daegu Green Power Co., Ltd.		Power generation			KOREA				49.90	%		￦	79,540				90,423
Korea Gas Corporation (*1)		Importing and wholesaling LNG			KOREA				20.47	%			94,500				2,181,562
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering			KOREA				29.00	%			4,727				20,512
YTN Co., Ltd.		Broadcasting			KOREA				21.43	%			59,000				38,298
Cheongna Energy Co., Ltd.		Generating and distributing vapor and hot/cold water			KOREA				43.90	%			49,607				17,223
Gangwon Wind Power Co., Ltd. (*2)		Power generation			KOREA				15.00	%			5,725				12,724
Hyundai Green Power Co., Ltd.		Power generation			KOREA				29.00	%			88,885				111,524
Korea Power Exchange (*6)		Management of power market			KOREA				100.00	%			127,839				216,372
AMEC Partners Korea Ltd. (*3)		Resources development			KOREA				19.00	%			707				223
Hyundai Energy Co., Ltd. (*9)		Power generation			KOREA				29.00	%			30,118				3,700
Ecollite Co., Ltd.		Artificial light-weight aggregate			KOREA				36.10	%			1,516				—
Taebaek Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,810				4,562
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		Power generation			KOREA				25.00	%			3,420				3,099
Pyeongchang Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,875				3,623
Daeryun Power Co., Ltd. (*3, 10)		Power generation			KOREA				13.13	%			25,477				32,844
JinanJangsu Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			100				64
Changjuk Wind Power Co., Ltd.		Power generation			KOREA				30.00	%			3,801				6,605
KNH Solar Co., Ltd.		Power generation			KOREA				27.00	%			1,296				1,853
SPC Power Corporation		Power generation			PHILIPPINES				38.00	%			20,635				57,202
Gemeng International Energy Co., Ltd.		Power generation			CHINA				34.00	%			413,153				729,336
PT. Cirebon Electric Power		Power generation			INDONESIA				27.50	%			40,365				66,146
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				19,734
PT. Bayan Resources TBK		Resources development			INDONESIA				20.00	%			615,860				508,511
S-Power Co., Ltd.		Power generation			KOREA				49.00	%			132,300				127,620
Pioneer Gas Power Limited (*8)		Power generation			INDIA				40.00	%			49,831				50,618
Eurasia Energy Holdings		Power generation and resources development			RUSSIA				40.00	%			461				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Power generation			LAOS				25.00	%			37,740				32,997
Hadong Mineral Fiber Co., Ltd.		Recycling fly ashes			KOREA				25.00	%			50				—
Green Biomass Co., Ltd. (*12)		Power generation			KOREA				14.00	%			714				144
PT. Mutiara Jawa		Manufacturing and operating floating coal terminal			INDONESIA				29.00	%			2,978				—
Samcheok Eco Material Co., Ltd. (*3, 11)		Recycling fly ashes			KOREA				2.67	%			686				—
Noeul Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			1,740				1,268
Naepo Green Energy Co., Ltd.		Power generation			KOREA				25.00	%			29,200				26,079
Goseong Green Energy Co., Ltd. (*2)		Power generation			KOREA				1.45	%			2,900				2,743
Gangneung Eco Power Co., Ltd. (*2)		Power generation			KOREA				3.72	%			2,900				2,623
Shin Pyeongtaek Power Co., Ltd.		Power generation			KOREA				40.00	%			40				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Power generation			KOREA				28.00	%			194				189
DS POWER Co., Ltd. (*2)		Power generation			KOREA				10.91	%			17,900				9,774
Dongducheon Dream Power Co., Ltd.		Power generation			KOREA				33.61	%			107,958				45,194
KS Solar Co., Ltd. (*3)		Power generation			KOREA				19.00	%			637				622

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
Yeongwol Energy Station Co., Ltd. (*2)		Power generation			KOREA				10.00	%		￦	1,400				1,342
Jinbhuvish Power Generation Pvt. Ltd. (*2)		Power generation			INDIA				5.16	%			9,000				8,242
SE Green Energy Co., Ltd.		Power generation			KOREA				47.76	%			3,821				3,552
Daegu Photovoltaic Co., Ltd.		Power generation			KOREA				29.00	%			1,230				1,662
Jeongam Wind Power Co., Ltd.		Power generation			KOREA				40.00	%			1,680				639
Korea Power Engineering Service Co., Ltd.		Construction and service			KOREA				29.00	%			290				1,950
Busan Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			14,564				14,040
Jungbu Bio Energy Co., Ltd. (*2)		Power generation			KOREA				18.87	%			1,000				854
Korea Electric Vehicle Charging Service		Electric vehicle charge service			KOREA				28.00	%			1,596				1,249
Ulleungdo Natural Energy Co., Ltd.		Renewable power generation			KOREA				29.85	%			8,000				7,165
Korea Nuclear Partners Co., Ltd.		Electric material agency			KOREA				29.00	%			290				254
Tamra Offshore Wind Power Co., Ltd		Power generation			KOREA				27.00	%			8,910				7,680
Korea Electric Power Corporation Fund (*13)		Developing electric enterprises			KOREA				97.98	%			48,500				48,258
													2,183,782				4,522,898
<Joint ventures>
KEPCO-Uhde Inc. (*7)		Power generation			KOREA				52.80	%			11,355				8,428
Eco Biomass Energy Sdn. Bhd. (*7)		Power generation			MALAYSIA				61.53	%			9,661				—
Datang Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			27,660				28,102
Shuweihat Asia Power Investment B.V.		Holding company			NETHERLANDS				49.00	%			50,017				7,593
Shuweihat Asia Operation & Maintenance Company (*7)		Maintenance of utility plant			CAYMAN				55.00	%			30				951
Waterbury Lake Uranium L.P.		Resources development			CANADA				38.43	%			26,602				20,889
ASM-BG Investicii AD		Power generation			BULGARIA				50.00	%			16,101				21,259
RES Technology AD		Power generation			BULGARIA				50.00	%			15,595				14,016
KV Holdings, Inc.		Power generation			PHILIPPINES				40.00	%			2,103				1,923
KEPCO SPC Power Corporation (*7)		Construction and operation of utility plant			PHILIPPINES				75.20	%			94,579				236,278
Canada Korea Uranium Limited Partnership (*5)		Resources development			CANADA				12.50	%			5,404				—
KEPCO Energy Resource Nigeria Limited		Holding company			NIGERIA				30.00	%			8,463				—
Gansu Datang Yumen Wind Power Co., Ltd.		Power generation			CHINA				40.00	%			16,621				14,357
Datang Chifeng Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			121,928				165,452
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			10,858				10,565
Rabigh Electricity Company		Power generation			SAUDI ARABIA				40.00	%			109,743				66,956
Rabigh Operation & Maintenance Company		Maintenance of utility plant			SAUDI ARABIA				40.00	%			70				5,012
Jamaica Public Service Company Limited		Power generation			JAMAICA				40.00	%			301,910				240,411
KW Nuclear Components Co., Ltd.		R&D			KOREA				43.36	%			833				6,082
Busan Shinho Solar Power Co., Ltd.		Power generation			KOREA				25.00	%			2,100				3,697
GS Donghae Electric Power Co., Ltd.		Power generation			KOREA				34.00	%			204,000				200,760
Global Trade Of Power System Co., Ltd.		Exporting products and technology of small or medium business by proxy			KOREA				29.00	%			290				478

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Investees		Key operation activities		Location		Percentage of ownership				Acquisition cost				Book value
Expressway Solar-light Power Generation Co., Ltd.		Power generation		KOREA			29.00	%		￦	1,856				1,997
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	%			4,990				3,191
Amman Asia Electric Power Company (*7)		Power generation		JORDAN			60.00	%			111,476				128,890
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.) (*7)		R&D		KOREA			51.00	%			5,629				4,273
Dangjin Eco Power Co., Ltd.		Power generation		KOREA			34.00	%			56,249				53,116
Honam Wind Power Co., Ltd.		Power generation		KOREA			29.00	%			3,600				4,317
Nepal Water & Energy Development Company Pty Ltd. (*7)		Construction and operation of utility plant		NEPAL			52.77	%			18,568				17,441
Chun-cheon Energy Co., Ltd.		Power generation		KOREA			29.90	%			52,700				51,172
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)		Power generation		KOREA			15.00	%			3,000				2,771
Nghi Son 2 Power Ltd.		Power generation		VIETNAM			50.00	%			1,607				453
Kelar S.A (*7)		Power generation		CHILE			65.00	%			4,180				—
PT. Tanjung Power Indonesia		Power generation		INDONESIA			35.00	%			746				1,309
Incheon New Power Co., Ltd.		Power generation		KOREA			29.00	%			461				525
Seokmun Energy Co., Ltd.		Integrated energy business		KOREA			29.00	%			580				481
Daehan Wind Power PSC		Power generation		JORDAN			50.00	%			285				154
											1,333,819				1,323,299
										￦	3,517,601				5,846,197

 

(*1)	The effective percentage of ownership is 21.57% considering treasury stocks.

(*2)	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 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 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 Company has joint control over the entity 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.

(*6)

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.

(*7)	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.

(*8)	As of reporting date, the reporting period of all associates and joint ventures ends in December 31, except for Pioneer Gas Power Limited whose reporting period ends on June 30.

(*9)

As of June 30, 2016, 17.3% 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 46.3% of ownership.

(*10)

The Company’s percentage of ownership has decreased due to the acquisition of Daeryun Power Co., Ltd. and the effective percentage of ownership is 19.45% considering stock purchase options.

(*11)

The Company’s effective percentage of ownership excluding the redeemable convertible preferred stock is 25.54%.

(*12)

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.

(*13)

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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
<Associates>
Daegu Green Power Co., Ltd.		Power generation			KOREA				47.80	%		￦	76,193				80,267
Korea Gas Corporation (*1)		Importing and wholesaling LNG			KOREA				20.47	%			94,500				2,102,813
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering			KOREA				29.00	%			4,727				18,994
YTN Co., Ltd.		Broadcasting			KOREA				21.43	%			59,000				38,365
Cheongna Energy Co., Ltd.		Generating and distributing vapor and hot/cold water			KOREA				43.90	%			49,607				19,490
Gangwon Wind Power Co., Ltd. (*2)		Power generation			KOREA				15.00	%			5,725				12,890
Hyundai Green Power Co., Ltd.		Power generation			KOREA				29.00	%			88,885				113,664
Korea Power Exchange (*6)		Management of power market			KOREA				100.00	%			127,839				208,735
AMEC Partners Korea Ltd. (*3)		Resources development			KOREA				19.00	%			707				230
Hyundai Energy Co., Ltd. (*9)		Power generation			KOREA				29.00	%			30,118				6,990
Ecollite Co., Ltd.		Artificial light-weight aggregate			KOREA				36.10	%			1,516				—
Taebaek Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,810				4,956
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		Power generation			KOREA				25.00	%			2,850				2,587
Pyeongchang Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,875				3,402
Daeryun Power Co., Ltd. (*3, 10)		Power generation			KOREA				13.13	%			25,477				36,156
JinanJangsu Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			100				77
Changjuk Wind Power Co., Ltd.		Power generation			KOREA				30.00	%			3,801				6,143
KNH Solar Co., Ltd.		Power generation			KOREA				27.00	%			1,296				1,924
SPC Power Corporation		Power generation			PHILIPPINES				38.00	%			20,635				58,033
Gemeng International Energy Co., Ltd.		Power generation			CHINA				34.00	%			413,153				728,396
PT. Cirebon Electric Power		Power generation			INDONESIA				27.50	%			40,365				60,574
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				—
Dolphin Property Limited (*4)		Rental company			NIGERIA				15.00	%			12				61
PT Wampu Electric Power		Power generation			INDONESIA				46.00	%			21,292				18,963
PT. Bayan Resources TBK		Resources development			INDONESIA				20.00	%			615,860				525,066
S-Power Co., Ltd.		Power generation			KOREA				49.00	%			132,300				130,908
Pioneer Gas Power Limited (*8)		Power generation			INDIA				40.00	%			49,831				51,187
Eurasia Energy Holdings		Power generation and resources development			RUSSIA				40.00	%			461				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Power generation			LAOS				25.00	%			32,717				31,863
Busan Solar Co., Ltd. (*3)		Power generation			KOREA				19.80	%			793				925
Hadong Mineral Fiber Co., Ltd.		Recycling fly ashes			KOREA				25.00	%			50				—
Green Biomass Co., Ltd. (*12)		Power generation			KOREA				14.00	%			714				—
PT. Mutiara Jawa		Manufacturing and operating floating coal terminal			INDONESIA				29.00	%			2,978				—
Samcheok Eco Material Co., Ltd. (*3, 11)		Recycling fly ashes			KOREA				2.67	%			686				—
Noeul Green Energy Co., Ltd.		Power generation			KOREA				20.00	%			400				295
Naepo Green Energy Co., Ltd.		Power generation			KOREA				25.00	%			29,200				26,746
Goseong Green Energy Co., Ltd. (*2)		Power generation			KOREA				2.90	%			2,900				2,670
Gangneung Eco Power Co., Ltd. (*2)		Power generation			KOREA				3.72	%			2,900				2,688
Shin Pyeongtaek Power Co., Ltd.		Power generation			KOREA				40.00	%			40				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Power generation			KOREA				28.00	%			194				189
DS POWER Co., Ltd. (*2)		Power generation			KOREA				10.91	%			17,900				10,960
Dongducheon Dream Power Co., Ltd.		Power generation			KOREA				33.61	%			107,958				55,667
KS Solar Co., Ltd. (*3)		Power generation			KOREA				19.00	%			637				618
Yeongwol Energy Station Co., Ltd. (*2)		Power generation			KOREA				10.00	%			1,400				1,290
Jinbhuvish Power Generation Pvt. Ltd. (*2)		Power generation			INDIA				5.16	%			9,000				8,350
SE Green Energy Co., Ltd.		Power generation			KOREA				47.76	%			3,821				3,575
Daegu Photovoltaic Co., Ltd.		Power generation			KOREA				29.00	%			1,230				1,886
Jeongam Wind Power Co., Ltd.		Power generation			KOREA				40.00	%			1,680				702
Korea Power Engineering Service Co., Ltd.		Construction and service			KOREA				29.00	%			290				1,805
Busan Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			14,564				14,512
Jungbu Bio Energy Co., Ltd. (*2)		Power generation			KOREA				18.87	%			1,000				904
Korea Electric Vehicle Charging Service		Electric vehicle charge service			KOREA				28.00	%			1,596				1,446
Ulleungdo Natural Energy Co., Ltd.		Renewable power generation			KOREA				29.85	%			8,000				7,417
Korea Nuclear Partners Co., Ltd.		Electric material agency			KOREA				29.00	%			290				289
												￦	2,116,897				4,405,668

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
<Joint ventures>
KEPCO-Uhde Inc. (*7)		Power generation			KOREA				52.80	%		￦	11,355				8,549
Eco Biomass Energy Sdn. Bhd. (*7)		Power generation			MALAYSIA				61.53	%			9,661				—
Datang Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			27,660				27,640
Shuweihat Asia Power Investment B.V.		Holding company			NETHERLANDS				49.00	%			60,191				20,474
Shuweihat Asia Operation & Maintenance Company (*7)		Maintenance of utility plant			CAYMAN				55.00	%			30				486
Waterbury Lake Uranium L.P.		Resources development			CANADA				40.00	%			26,602				20,299
ASM-BG Investicii AD		Power generation			BULGARIA				50.00	%			16,101				20,203
RES Technology AD		Power generation			BULGARIA				50.00	%			15,595				13,789
KV Holdings, Inc.		Power generation			PHILIPPINES				40.00	%			2,103				2,010
KEPCO SPC Power Corporation (*7)		Construction and operation of utility plant			PHILIPPINES				75.20	%			94,579				208,524
Canada Korea Uranium Limited Partnership (*5)		Resources development			CANADA				12.50	%			5,404				—
KEPCO Energy Resource Nigeria Limited		Holding company			NIGERIA				30.00	%			8,463				—
Gansu Datang Yumen Wind Power Co., Ltd.		Power generation			CHINA				40.00	%			16,621				16,107
Datang Chifeng Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			121,928				171,224
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			10,858				10,580
Rabigh Electricity Company		Power generation			SAUDI ARABIA				40.00	%			109,743				59,368
Rabigh Operation & Maintenance Company		Maintenance of utility plant			SAUDI ARABIA				40.00	%			70				3,586
Jamaica Public Service Company Limited		Power generation			JAMAICA				40.00	%			301,910				241,918
KW Nuclear Components Co., Ltd.		R&D			KOREA				43.36	%			833				4,985
Busan Shinho Solar Power Co., Ltd.		Power generation			KOREA				25.00	%			2,100				3,678
GS Donghae Electric Power Co., Ltd.		Power generation			KOREA				34.00	%			204,000				200,379
Global Trade Of Power System Co., Ltd.		Exporting products and technology of small or medium business by proxy			KOREA				29.00	%			290				426
Expressway Solar-light Power Generation Co., Ltd.		Power generation			KOREA				29.00	%			1,856				2,100
KODE NOVUS I LLC		Power generation			USA				50.00	%			19,213				—
KODE NOVUS II LLC		Power generation			USA				49.00	%			12,498				—
Daejung Offshore Wind Power Co., Ltd.		Power generation			KOREA				49.90	%			4,990				3,352
Amman Asia Electric Power Company (*7)		Power generation			JORDAN				60.00	%			111,476				137,668
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.) (*7)		R&D			KOREA				51.00	%			5,629				4,501
Dangjin Eco Power Co., Ltd.		Power generation			KOREA				34.00	%			51,149				48,281
Honam Wind Power Co., Ltd.		Power generation			KOREA				29.00	%			3,600				3,926
Nepal Water & Energy Development Company Pty Ltd. (*7)		Construction and operation of utility plant			NEPAL				52.77	%			18,568				17,765
Chun-cheon Energy Co., Ltd.		Power generation			KOREA				29.90	%			32,868				31,976
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)		Power generation			KOREA				15.00	%			3,000				2,668
Nghi Son 2 Power Ltd.		Power generation			VIETNAM				50.00	%			1,072				269
Kelar S.A (*7)		Power generation			CHILE				65.00	%			4,180				—
PT. Tanjung Power Indonesia		Power generation			INDONESIA				35.00	%			746				617
Incheon New Power Co., Ltd.		Power generation			KOREA				29.00	%			461				514
Seokmun Energy Co., Ltd.		Integrated energy business			KOREA				29.00	%			580				—
													1,317,983				1,287,862
												￦	3,434,880				5,693,530

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

(*1)	The effective percentage of ownership is 21.57% considering treasury stocks.

(*2)	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 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 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 Company has joint control over the entity 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.

(*6)

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.

(*7)	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.

(*8)	As of reporting date, the reporting period of all associates and joint ventures ends in December 31, except for Pioneer Gas Power Limited whose reporting period ends on June 30.

(*9)

As of December 31, 2015, 17.3% 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 46.3% of ownership.

(*10)

The Company’s percentage of ownership has decreased due to the acquisition of Daeryun Power Co., Ltd. and the effective percentage of ownership is 19.45% considering stock purchase options.

(*11)

The Company’s effective percentage of ownership excluding the redeemable convertible preferred stock is 25.54%.

(*12)

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.

 

(2)	The fair value of associates which are actively traded on the open market and have a readily available market value as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
Investees		June 30, 2016				December 31, 2015
<Associates>
Korea Electric Power Industrial Development Co., Ltd.		￦	57,291				46,514
Korea Gas Corporation			751,275				696,465
YTN Co., Ltd.			24,840				26,235
SPC Power Corporation			63,107				65,552
PT. Bayan Resources TBK			489,700				446,250

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
<Associates>
Daegu Green Power Co., Ltd.		￦	80,267				3,347				—				—				6,809				—				—				90,423
Korea Gas Corporation			2,102,813				—				—				(3,213	)			86,924				(4,477	)			(485	)			2,181,562
Korea Electric Power Industrial Development Co., Ltd.			18,994				—				—				(1,598	)			3,540				—				(424	)			20,512
YTN Co., Ltd.			38,365				—				—				—				(1,119	)			955				97				38,298
Cheongna Energy Co., Ltd.			19,490				—				—				—				(2,267	)			—				—				17,223
Gangwon Wind Power Co., Ltd.			12,890				—				—				(1,136	)			970				—				—				12,724
Hyundai Green Power Co., Ltd.			113,664				—				—				(8,888	)			6,748				—				—				111,524
Korea Power Exchange			208,735				—				—				—				7,637				—				—				216,372
AMEC Partners Korea Ltd.			230				—				—				—				(7	)			—				—				223
Hyundai Energy Co., Ltd.			6,990				—				—				—				(3,290	)			—				—				3,700
Ecollite Co., Ltd.			—				—				—				—				—				—				—				—
Taebaek Wind Power Co., Ltd.			4,956				—				—				—				(394	)			—				—				4,562
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			2,587				570				—				—				(58	)			—				—				3,099
Pyeongchang Wind Power Co., Ltd.			3,402				—				—				—				221				—				—				3,623
Daeryun Power Co., Ltd.			36,156				—				—				—				(3,312	)			—				—				32,844
JinanJangsu Wind Power Co., Ltd.			77				—				—				—				(13	)			—				—				64
Changjuk Wind Power Co., Ltd.			6,143				—				—				(190	)			652				—				—				6,605
KNH Solar Co., Ltd.			1,924				—				—				—				(76	)			5				—				1,853
SPC Power Corporation			58,033				—				—				(4,298	)			3,407				52				8				57,202
Gemeng International Energy Co., Ltd.			728,396				—				—				(16,476	)			20,563				(3,147	)			—				729,336
PT. Cirebon Electric Power			60,574				—				—				—				7,471				(1,899	)			—				66,146
KNOC Nigerian East Oil Co., Ltd.			—				—				—				—				(987	)			73				914				—
KNOC Nigerian West Oil Co., Ltd.			—				—				—				—				(624	)			77				547				—
Dolphin Property Limited			61				—				—				(35	)			—				(69	)			43				—
PT Wampu Electric Power			18,963				—				—				—				902				(131	)			—				19,734
PT. Bayan Resources TBK			525,066				—				—				—				(16,045	)			(510	)			—				508,511
S-Power Co., Ltd.			130,908				—				—				—				(3,288	)			—				—				127,620
Pioneer Gas Power Limited			51,187				—				—				—				2				(571	)			—				50,618
Eurasia Energy Holdings			—				—				—				—				—				—				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			31,863				5,023				—				—				(3,536	)			(353	)			—				32,997
Busan Solar Co., Ltd.			925				—				(887	)			—				(29	)			—				(9	)			—
Hadong Mineral Fiber Co., Ltd.			—				—				—				—				—				—				—				—
Green Biomass Co., Ltd.			—				—				—				—				144				—				—				144
PT. Mutiara Jawa			—				—				—				—				—				—				—				—
Samcheok Eco Material Co., Ltd.			—				—				—				—				—				—				—				—
Noeul Green Energy Co., Ltd.			295				1,340				—				—				(209	)			—				(158	)			1,268
Naepo Green Energy Co., Ltd.			26,746				—				—				—				(667	)			—				—				26,079
Goseong Green Energy Co., Ltd.			2,670				—				—				—				73				—				—				2,743
Gangneung Eco Power Co., Ltd.			2,688				—				—				—				(65	)			—				—				2,623
Shin Pyeongtaek Power Co., Ltd.			—				—				—				—				—				—				—				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.			189				—				—				—				—				—				—				189
DS POWER Co., Ltd.			10,960				—				—				—				(1,155	)			—				(31	)			9,774
Dongducheon Dream Power Co., Ltd.			55,667				—				—				—				(10,473	)			—				—				45,194
KS Solar Co., Ltd.			618				—				—				—				4				—				—				622
Yeongwol Energy Station Co., Ltd.			1,290				—				—				—				52				—				—				1,342

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Jinbhuvish Power Generation Pvt. Ltd.		￦	8,350				—				—				—				(50	)			(58	)			—				8,242
SE Green Energy Co., Ltd.			3,575				—				—				—				(23	)			—				—				3,552
Daegu Photovoltaic Co., Ltd.			1,886				—				—				(411	)			187				—				—				1,662
Jeongam Wind Power Co., Ltd.			702				—				—				—				(63	)			—				—				639
Korea Power Engineering Service Co., Ltd.			1,805				—				—				—				145				—				—				1,950
Busan Green Energy Co., Ltd.			14,512				—				—				—				(472	)			—				—				14,040
Jungbu Bio Energy Co., Ltd.			904				—				—				—				(50	)			—				—				854
Korea Electric Vehicle Charging Service			1,446				—				—				—				(197	)			—				—				1,249
Ulleungdo Natural Energy Co., Ltd.			7,417				—				—				—				(252	)			—				—				7,165
Korea Nuclear Partners Co., Ltd.			289				—				—				—				(35	)			—				—				254
Tamra Offshore Wind Power Co., Ltd			—				8,910				—				—				(1,223	)			(7	)			—				7,680
Korea Electric Power Corporation Fund			—				48,500				—				—				(242	)			—				—				48,258
			4,405,668				67,690				(887	)			(36,245	)			96,230				(10,060	)			502				4,522,898
<Joint ventures>
KEPCO-Uhde Inc.			8,549				—				—				—				(121	)			—				—				8,428
Eco Biomass Energy Sdn. Bhd.			—				—				—				—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			27,640				—				—				—				1,087				(625	)			—				28,102
Shuweihat Asia Power Investment B.V.			20,474				—				(10,174	)			—				7,411				(10,118	)			—				7,593
Shuweihat Asia Operation & Maintenance Company			486				—				—				—				465				—				—				951
Waterbury Lake Uranium L.P.			20,299				—				—				—				—				1,290				(700	)			20,889
ASM-BG Investicii AD			20,203				—				—				—				835				221				—				21,259
RES Technology AD			13,789				—				—				—				66				161				—				14,016
KV Holdings, Inc.			2,010				—				—				(302	)			227				(12	)			—				1,923
KEPCO SPC Power Corporation			208,524				—				—				—				29,581				(1,801	)			(26	)			236,278
Canada Korea Uranium Limited Partnership			—				—				—				—				—				—				—				—
KEPCO Energy Resource Nigeria Limited			—				—				—				—				—				—				—				—
Gansu Datang Yumen Wind Power Co., Ltd.			16,107				—				—				—				(1,451	)			(299	)			—				14,357
Datang Chifeng Renewable Power Co., Ltd.			171,224				—				—				(7,384	)			5,198				(3,587	)			1				165,452
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			10,580				—				—				(440	)			658				(233	)			—				10,565
Rabigh Electricity Company			59,368				—				—				—				5,626				1,958				4				66,956
Rabigh Operation & Maintenance Company			3,586				—				—				—				1,453				(27	)			—				5,012
Jamaica Public Service Company Limited			241,918				—				—				—				—				—				(1,507	)			240,411
KW Nuclear Components Co., Ltd.			4,985				—				—				(2,191	)			3,294				—				(6	)			6,082
Busan Shinho Solar Power Co., Ltd.			3,678				—				—				(185	)			204				—				—				3,697
GS Donghae Electric Power Co., Ltd.			200,379				—				—				—				381				—				—				200,760
Global Trade Of Power System Co., Ltd.			426				—				—				—				52				—				—				478
Expressway Solar-light Power Generation Co., Ltd.			2,100				—				—				—				(33	)			—				(70	)			1,997
KODE NOVUS I LLC			—				—				—				—				—				—				—				—
KODE NOVUS II LLC			—				258				—				—				(258	)			—				—				—
Daejung Offshore Wind Power Co., Ltd.			3,352				—				—				—				(161	)			—				—				3,191
Amman Asia Electric Power Company			137,668				—				—				—				9,754				(18,533	)			1				128,890
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			4,501				—				—				—				(232	)			—				4				4,273
Dangjin Eco Power Co., Ltd.			48,281				5,100				—				—				(242	)			(26	)			3				53,116
Honam Wind Power Co., Ltd.			3,926				—				—				(104	)			495				—				—				4,317
Nepal Water & Energy Development Company Pty Ltd.			17,765				—				—				—				(165	)			(159	)			—				17,441
Chun-cheon Energy Co., Ltd.			31,976				19,832				—				—				(541	)			(95	)			—				51,172
Yeonggwangbaeksu Wind Power Co., Ltd.			2,668				—				—				—				103				—				—				2,771
Nghi Son 2 Power Ltd.			269				535				—				—				(346	)			(5	)			—				453

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Kelar S.A		￦	—				—				—				—				—				—				—				—
PT. Tanjung Power Indonesia			617				—				—				—				710				(18	)			—				1,309
Incheon New Power Co., Ltd.			514				—				—				—				3				4				4				525
Seokmun Energy Co., Ltd.			—				—				—				—				(312	)			793				—				481
Daehan Wind Power PSC			—				285				—				—				(128	)			(3	)			—				154
			1,287,862				26,010				(10,174	)			(10,606	)			63,613				(31,114	)			(2,292	)			1,323,299
		￦	5,693,530				93,700				(11,061	)			(46,851	)			159,843				(41,174	)			(1,790	)			5,846,197

 

In millions of won
December 31, 2015
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
<Associates>
Daegu Green Power Co., Ltd.		￦	71,387				—				—				—				8,902				—				(22	)			80,267
Korea Gas Corporation			2,097,539				—				—				(4,725	)			67,949				(55,453	)			(2,497	)			2,102,813
Korea Electric Power Industrial Development Co., Ltd.			21,622				—				—				(1,267	)			(1,792	)			—				431				18,994
YTN Co., Ltd.			39,889				—				—				(90	)			(188	)			(935	)			(311	)			38,365
Cheongna Energy Co., Ltd.			28,771				—				—				—				(9,281	)			—				—				19,490
Gangwon Wind Power Co., Ltd.			12,385				—				—				(852	)			1,279				78				—				12,890
Hyundai Green Power Co., Ltd.			113,033				—				—				(8,889	)			9,520				—				—				113,664
Korea Power Exchange			198,021				—				—				—				9,944				—				770				208,735
AMEC Partners Korea Ltd.			200				—				—				—				30				—				—				230
Hyundai Energy Co., Ltd. (*1)			35,925				—				—				—				(13,731	)			—				(15,204	)			6,990
Ecollite Co., Ltd.			—				—				—				—				—				—				—				—
Taebaek Wind Power Co., Ltd.			5,525				—				—				—				(569	)			—				—				4,956
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			2,706				—				—				—				(119	)			—				—				2,587
Pyeongchang Wind Power Co., Ltd.			3,693				—				—				—				(291	)			—				—				3,402
Daeryun Power Co., Ltd.			41,951				—				—				—				(5,798	)			—				3				36,156
JinanJangsu Wind Power Co., Ltd.			77				—				—				—				—				—				—				77
Changjuk Wind Power Co., Ltd.			6,486				—				—				—				(343	)			—				—				6,143
KNH Solar Co., Ltd.			1,744				—				—				—				178				2				—				1,924
SPC Power Corporation			47,799				—				—				(1,349	)			5,375				381				5,827				58,033
Gemeng International Energy Co., Ltd.			667,578				—				—				(37,163	)			51,766				89,481				(43,266	)			728,396
PT. Cirebon Electric Power			43,335				—				—				—				12,210				5,029				—				60,574
KNOC Nigerian East Oil Co., Ltd.			—				—				—				—				(880	)			(641	)			1,521				—
KNOC Nigerian West Oil Co., Ltd.			—				—				—				—				(1,092	)			(599	)			1,691				—
Dolphin Property Limited			61				—				—				—				—				—				—				61
PT Wampu Electric Power			16,071				2,357				—				—				(600	)			1,135				—				18,963
PT. Bayan Resources TBK			540,011				—				—				—				(11,341	)			(3,604	)			—				525,066
S-Power Co., Ltd.			104,244				24,300				—				—				2,364				—				—				130,908

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Pioneer Gas Power Limited		￦	50,668				—				—				—				59				460				—				51,187
Eurasia Energy Holdings			—				—				—				—				—				—				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			22,152				9,244				—				—				(749	)			1,216				—				31,863
Busan Solar Co., Ltd.			853				—				—				—				72				—				—				925
Hadong Mineral Fiber Co., Ltd.			3				—				—				—				(3	)			—				—				—
Green Biomass Co., Ltd.			—				—				—				—				—				—				—				—
PT. Mutiara Jawa			818				—				—				—				(818	)			—				—				—
Samcheok Eco Material Co., Ltd.			212				—				—				—				(178	)			(34	)			—				—
Noeul Green Energy Co., Ltd.			189				200				—				—				(91	)			(3	)			—				295
Naepo Green Energy Co., Ltd.			28,064				—				—				—				(1,318	)			—				—				26,746
Goseong Green Energy Co., Ltd.			2,586				—				—				—				84				—				—				2,670
Gangneung Eco Power Co., Ltd.			2,783				—				—				—				(95	)			—				—				2,688
Shin Pyeongtaek Power Co., Ltd.			—				—				—				—				—				—				—				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.			221				—				—				—				(32	)			—				—				189
DS POWER Co., Ltd.			15,642				—				—				—				(4,671	)			—				(11	)			10,960
Dongducheon Dream Power Co., Ltd. (*2)			100,545				—				—				—				(3,412	)			—				(41,466	)			55,667
KS Solar Co., Ltd.			325				—				—				—				293				—				—				618
Yeongwol Energy Station Co., Ltd.			1,741				—				—				—				(451	)			—				—				1,290
Jinbhuvish Power Generation Pvt. Ltd.			8,344				—				—				—				(42	)			48				—				8,350
SE Green Energy Co., Ltd.			3,623				—				—				—				(48	)			—				—				3,575
Daegu Photovoltaic Co., Ltd.			1,581				—				—				—				305				—				—				1,886
Jeongam Wind Power Co., Ltd.			93				880				—				—				(271	)			—				—				702
Korea Power Engineering Service Co., Ltd.			1,334				—				—				(44	)			542				—				(27	)			1,805
Busan Green Energy Co., Ltd.			—				14,564				—				—				(52	)			—				—				14,512
Jungbu Bio Energy Co., Ltd.			—				1,000				—				—				(96	)			—				—				904
Korea Electric Vehicle Charging Service			—				1,596				—				—				(135	)			—				(15	)			1,446
Ulleungdo Natural Energy Co., Ltd.			—				8,000				—				—				(583	)			—				—				7,417
Korea Nuclear Partners Co., Ltd.			—				290				—				—				(1	)			—				—				289
			4,341,830				62,431				—				(54,379	)			111,801				36,561				(92,576	)			4,405,668
<Joint ventures>
KEPCO-Uhde Inc.			9,042				—				—				—				(493	)			—				—				8,549
Eco Biomass Energy Sdn. Bhd.			—				—				—				—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			27,514				—				—				—				(135	)			261				—				27,640
Shuweihat Asia Power Investment B.V.			16,241				108				—				—				4,008				117				—				20,474
Shuweihat Asia Operation & Maintenance Company			345				—				—				(798	)			922				24				(7	)			486
Waterbury Lake Uranium L.P.			22,010				—				—				—				—				(2,507	)			796				20,299
ASM-BG Investicii AD			19,608				—				—				—				1,384				(789	)			—				20,203
RES Technology AD			14,725				—				—				—				(318	)			(618	)			—				13,789
KV Holdings, Inc.			1,902				—				—				—				74				34				—				2,010
KEPCO SPC Power Corporation			190,519				—				—				(28,986	)			43,801				3,190				—				208,524
Canada Korea Uranium Limited Partnership			—				—				—				—				—				—				—				—
KEPCO Energy Resource Nigeria Limited			—				—				—				—				—				—				—				—
Gansu Datang Yumen Wind Power Co., Ltd.			17,467				—				—				—				(1,546	)			186				—				16,107
Datang Chifeng Renewable Power Co., Ltd.			169,496				—				—				(8,239	)			8,512				1,464				(9	)			171,224
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			10,539				—				—				—				(33	)			74				—				10,580
Rabigh Electricity Company			8,121				—				—				—				21,582				29,703				(38	)			59,368
Rabigh Operation & Maintenance Company			4,628				—				—				(1,780	)			533				205				—				3,586
Jamaica Public Service Company Limited			226,892				—				—				—				—				15,027				(1	)			241,918
KW Nuclear Components Co., Ltd.			2,899				—				—				(1,016	)			3,065				—				37				4,985
Busan Shinho Solar Power Co., Ltd.			3,284				—				—				—				394				—				—				3,678

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
GS Donghae Electric Power Co., Ltd.		￦	201,409				—				—				—				(1,064	)			—				34				200,379
Global Trade Of Power System Co., Ltd.			343				—				—				—				83				—				—				426
Expressway Solar-light Power Generation Co., Ltd.			2,087				—				—				—				13				—				—				2,100
KODE NOVUS I LLC			12,207				—				—				—				(11,639	)			588				(1,156	)			—
KODE NOVUS II LLC			8,248				—				—				—				(8,104	)			413				(557	)			—
Daejung Offshore Wind Power Co., Ltd.			3,711				—				—				—				(359	)			—				—				3,352
Amman Asia Electric Power Company			122,391				—				—				(19,510	)			25,131				10,244				(588	)			137,668
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			4,617				—				—				—				(98	)			—				(18	)			4,501
Dangjin Eco Power Co., Ltd.			37,837				20,000				(8,851	)			—				(712	)			70				(63	)			48,281
Honam Wind Power Co., Ltd.			3,555				—				—				—				371				—				—				3,926
Nepal Water & Energy Development Company Pty Ltd.			17,872				—				—				—				(1,277	)			1,170				—				17,765
Chun-cheon Energy Co., Ltd.			—				32,853				—				—				(719	)			(158	)			—				31,976
Yeonggwangbaeksu Wind Power Co., Ltd.			2,962				—				—				—				(294	)			—				—				2,668
Nghi Son 2 Power Ltd.			102				722				—				—				(562	)			2				5				269
Kelar S.A			3,156				—				—				—				—				(407	)			(2,749	)			—
PT. Tanjung Power Indonesia			700				—				—				—				(98	)			—				15				617
Incheon New Power Co., Ltd.			465				—				—				—				49				—				—				514
Seokmun Energy Co., Ltd.			—				—				(100	)			—				—				—				100				—
			1,166,894				53,683				(8,951	)			(60,329	)			82,471				58,293				(4,199	)			1,287,862
		￦	5,508,724				116,114				(8,951	)			(114,708	)			194,272				94,854				(96,775	)			5,693,530

 

(*1)	‘Others’ include ￦15,204 million of assets held-for-sale (note 41).

(*2)	‘Others’ include ￦41,170 million of assets held-for-sale (note 41).

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Associates>
Daegu Green Power Co., Ltd.		￦	642,174				461,255				136,263				13,299
Korea Gas Corporation			41,074,518				30,650,242				11,301,341				404,959
Korea Electric Power Industrial Development Co., Ltd.			159,474				88,744				149,161				13,906
YTN Co., Ltd.			300,414				121,512				55,019				(2,084	)
Cheongna Energy Co., Ltd.			450,984				417,303				29,480				(5,072	)
Gangwon Wind Power Co., Ltd.			107,510				23,011				13,972				6,134
Hyundai Green Power Co., Ltd.			1,144,873				760,306				223,996				23,316
Korea Power Exchange			241,619				25,247				42,776				6,876
AMEC Partners Korea Ltd.			1,213				37				53				(34	)
Hyundai Energy Co., Ltd.			519,319				483,623				32,090				(16,874	)
Ecollite Co., Ltd.			2,218				336				—				(44	)
Taebaek Wind Power Co., Ltd.			44,077				25,182				3,257				(2,901	)
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			12,396				—				—				(232	)
Pyeongchang Wind Power Co., Ltd.			76,228				61,736				1,520				915
Daeryun Power Co., Ltd.			793,430				629,808				123,138				(17,026	)
JinanJangsu Wind Power Co., Ltd.			255				—				—				(52	)
Changjuk Wind Power Co., Ltd.			38,157				15,507				3,131				908
KNH Solar Co., Ltd.			26,207				19,172				1,720				(6	)
SPC Power Corporation			190,438				39,905				39,617				25,487
Gemeng International Energy Co., Ltd.			5,959,618				3,919,626				570,190				27,066
PT. Cirebon Electric Power			994,549				754,018				151,753				27,230
KNOC Nigerian East Oil Co., Ltd.			263,062				342,639				—				(4,563	)
KNOC Nigerian West Oil Co., Ltd.			158,296				228,528				—				(2,086	)
PT Wampu Electric Power			205,315				162,415				3,166				1,926
PT. Bayan Resources TBK			943,979				847,690				247,278				504
S-Power Co., Ltd.			886,179				621,653				233,043				(7,188	)
Pioneer Gas Power Limited			318,903				250,396				—				187
Eurasia Energy Holdings			596				1,063				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			624,955				459,139				—				(14,321	)
Hadong Mineral Fiber Co., Ltd.			—				20				—				—
Green Biomass Co., Ltd.			11,059				10,032				1,889				(280	)
PT. Mutiara Jawa			26,702				32,567				1,526				(770	)
Samcheok Eco Material Co., Ltd.			21,863				603				125				(1,147	)
Noeul Green Energy Co., Ltd.			5,318				947				—				(980	)
Naepo Green Energy Co., Ltd.			104,961				646				2,757				(2,668	)
Goseong Green Energy Co., Ltd.			190,906				1,707				—				(2,380	)
Gangneung Eco Power Co., Ltd.			90,166				19,623				—				(1,753	)
Shin Pyeongtaek Power Co., Ltd.			38,280				42,594				—				(1,261	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.			3,047				2,371				230				(12	)
DS POWER Co., Ltd.			706,042				592,752				108,412				(4,654	)
Dongducheon Dream Power Co., Ltd.			1,661,160				1,422,458				450,109				(32,506	)
KS Solar Co., Ltd.			28,915				25,457				2,356				202
Yeongwol Energy Station Co., Ltd.			178,537				165,120				18,280				2,349
Jinbhuvish Power Generation Pvt. Ltd.			68,219				14,088				—				(968	)
SE Green Energy Co., Ltd.			7,437				—				—				(47	)
Daegu Photovoltaic Co., Ltd.			19,391				13,659				1,837				609
Jeongam Wind Power Co., Ltd.			1,898				301				—				(149	)
Korea Power Engineering Service Co., Ltd.			9,038				2,314				12,254				498
Busan Green Energy Co., Ltd.			114,335				65,921				—				(1,626	)
Jungbu Bio Energy Co., Ltd.			4,929				402				—				(265	)
Korea Electric Vehicle Charging Service			9,173				4,711				—				(703	)
Ulleungdo Natural Energy Co., Ltd.			24,105				97				—				(844	)
Korea Nuclear Partners Co., Ltd.			908				32				—				(120	)
Tamra Offshore Wind Power Co., Ltd			113,847				85,402				—				(3,842	)
Korea Electric Power Corporation Fund			49,367				113				100				(236	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Joint ventures>
KEPCO-Uhde Inc.		￦	17,246				61				—				(238	)
Eco Biomass Energy Sdn. Bhd.			—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			149,678				79,420				10,462				2,637
Shuweihat Asia Power Investment B.V.			15,665				2				—				14,990
Shuweihat Asia Operation & Maintenance Company			1,730				—				600				430
Waterbury Lake Uranium L.P.			56,224				1,571				—				—
ASM-BG Investicii AD			83,082				40,565				6,616				1,760
RES Technology AD			72,584				44,552				4,444				131
KV Holdings, Inc.			4,808				1				1				566
KEPCO SPC Power Corporation			452,236				138,036				87,036				39,022
Canada Korea Uranium Limited Partnership			287				85				—				—
KEPCO Energy Resource Nigeria Limited			271,608				317,215				—				(17,999	)
Gansu Datang Yumen Wind Power Co., Ltd.			93,698				57,807				2,218				(3,355	)
Datang Chifeng Renewable Power Co., Ltd.			829,786				416,035				54,444				13,403
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			61,443				35,030				4,761				1,647
Rabigh Electricity Company			2,731,109				2,369,937				133,977				9,067
Rabigh Operation & Maintenance Company			22,657				10,128				12,634				1,252
Jamaica Public Service Company Limited			1,211,303				611,037				375,465				12,103
KW Nuclear Components Co., Ltd.			27,308				13,490				19,994				8,840
Busan Shinho Solar Power Co., Ltd.			49,587				34,800				3,595				779
GS Donghae Electric Power Co., Ltd.			1,916,128				1,325,557				3,671				1,119
Global Trade Of Power System Co., Ltd.			1,943				296				1,905				209
Expressway Solar-light Power Generation Co., Ltd.			20,321				13,433				1,125				(233	)
KODE NOVUS I LLC			61,633				110,699				1,647				(3,829	)
KODE NOVUS II LLC			21,383				46,348				632				(2,336	)
Daejung Offshore Wind Power Co., Ltd.			6,463				67				—				(321	)
Amman Asia Electric Power Company			871,884				656,922				6,012				16,258
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			118,482				110,103				4,179				(608	)
Dangjin Eco Power Co., Ltd.			151,089				830				—				(687	)
Honam Wind Power Co., Ltd.			41,398				26,623				3,957				1,708
Nepal Water & Energy Development Company Pty Ltd.			43,228				12,351				—				(319	)
Chun-cheon Energy Co., Ltd.			366,476				195,345				—				(1,745	)
Yeonggwangbaeksu Wind Power Co., Ltd.			102,741				84,271				6,163				553
Nghi Son 2 Power Ltd.			1,080				176				—				(687	)
Kelar S.A			625,859				682,164				—				(3,918	)
PT. Tanjung Power Indonesia			137,339				133,598				73,160				2,251
Incheon New Power Co., Ltd.			8,973				7,164				1,412				37
Seokmun Energy Co., Ltd.			212,544				210,885				—				(232	)
Daehan Wind Power PSC			314				5				—				(254	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Associates>
Daegu Green Power Co., Ltd.		￦	639,118				471,497				321,273				18,625
Korea Gas Corporation			42,385,340				32,328,396				26,052,724				319,190
Korea Electric Power Industrial Development Co., Ltd.			142,835				77,340				324,162				9,855
YTN Co., Ltd.			305,799				126,561				117,418				(520	)
Cheongna Energy Co., Ltd.			458,205				419,353				48,519				(21,108	)
Gangwon Wind Power Co., Ltd.			114,600				28,994				21,941				8,529
Hyundai Green Power Co., Ltd.			1,182,352				790,407				486,435				31,011
Korea Power Exchange			236,199				27,464				87,400				9,303
AMEC Partners Korea Ltd.			1,332				123				511				155
Hyundai Energy Co., Ltd.			526,305				473,736				80,067				(29,749	)
Ecollite Co., Ltd.			2,271				345				—				(97	)
Taebaek Wind Power Co., Ltd.			48,009				26,212				6,626				(302	)
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			10,349				—				—				(477	)
Pyeongchang Wind Power Co., Ltd.			62,565				48,959				—				(1,164	)
Daeryun Power Co., Ltd.			838,199				657,551				279,787				(29,806	)
JinanJangsu Wind Power Co., Ltd.			306				—				—				(1	)
Changjuk Wind Power Co., Ltd.			41,444				19,053				6,472				772
KNH Solar Co., Ltd.			27,254				20,105				4,399				861
SPC Power Corporation			182,908				30,191				68,149				37,395
Gemeng International Energy Co., Ltd.			5,956,288				3,940,455				902,008				95,064
PT. Cirebon Electric Power			1,026,729				806,458				295,788				43,968
KNOC Nigerian East Oil Co., Ltd.			264,434				337,762				—				(6,069	)
KNOC Nigerian West Oil Co., Ltd.			160,765				230,001				—				(7,386	)
Dolphin Property Limited			300				1				—				8
PT Wampu Electric Power			201,383				160,159				17,476				(2,696	)
PT. Bayan Resources TBK			1,043,143				901,952				461,349				(30,014	)
S-Power Co., Ltd.			935,870				664,523				632,073				5,336
Pioneer Gas Power Limited			310,761				240,833				—				148
Eurasia Energy Holdings			599				1,069				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			506,970				341,261				—				2,760
Busan Solar Co., Ltd.			26,059				21,367				4,267				383
Hadong Mineral Fiber Co., Ltd.			2				21				—				(30	)
Green Biomass Co., Ltd.			10,664				9,343				4,136				(1,323	)
PT. Mutiara Jawa			25,013				29,913				1,943				(7,247	)
Samcheok Eco Material Co., Ltd.			23,119				735				—				(2,171	)
Noeul Green Energy Co., Ltd.			1,517				44				—				(446	)
Naepo Green Energy Co., Ltd.			108,167				1,184				3,126				(5,274	)
Goseong Green Energy Co., Ltd.			95,323				3,248				—				(4,312	)
Gangneung Eco Power Co., Ltd.			81,459				9,163				—				(3,610	)
Shin Pyeongtaek Power Co., Ltd.			25,875				29,190				—				(2,595	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.			3,128				2,452				490				81
DS POWER Co., Ltd.			641,257				525,524				33,542				(5,759	)
Dongducheon Dream Power Co., Ltd.			1,668,235				1,397,026				1,003,346				(10,307	)
KS Solar Co., Ltd.			29,745				26,469				4,667				278
Yeongwol Energy Station Co., Ltd.			179,852				166,953				12,068				1,831
Jinbhuvish Power Generation Pvt. Ltd.			75,429				19,199				—				(805	)
SE Green Energy Co., Ltd.			7,484				—				—				(103	)
Daegu Photovoltaic Co., Ltd.			21,039				14,535				3,977				1,051
Jeongam Wind Power Co., Ltd.			2,053				299				—				(621	)
Korea Power Engineering Service Co., Ltd.			9,194				2,968				25,925				2,296
Busan Green Energy Co., Ltd.			50,093				53				—				(180	)
Jungbu Bio Energy Co., Ltd.			5,192				400				—				(508	)
Korea Electric Vehicle Charging Service			9,577				4,412				—				(482	)
Ulleungdo Natural Energy Co., Ltd.			27,113				2,262				—				(1,948	)
Korea Nuclear Partners Co., Ltd.			1,002				6				—				(4	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the six-month period ended June 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Joint ventures>
KEPCO-Uhde Inc.		￦	17,535				111				—				(765	)
Eco Biomass Energy Sdn. Bhd.			—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			150,157				81,056				16,335				(373	)
Shuweihat Asia Power Investment B.V.			41,969				17				—				8,232
Shuweihat Asia Operation & Maintenance Company			885				—				2,318				1,666
Waterbury Lake Uranium L.P.			51,302				4				—				—
ASM-BG Investicii AD			83,766				43,359				12,328				2,833
RES Technology AD			73,261				45,684				7,539				(566	)
KV Holdings, Inc.			5,025				—				—				186
KEPCO SPC Power Corporation			449,553				172,261				175,008				59,610
Canada Korea Uranium Limited Partnership			305				124				—				(19	)
KEPCO Energy Resource Nigeria Limited			380,282				416,959				—				(16,309	)
Gansu Datang Yumen Wind Power Co., Ltd.			98,298				58,030				7,280				(4,507	)
Datang Chifeng Renewable Power Co., Ltd.			882,914				454,731				103,860				21,900
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			65,110				38,661				7,880				1,216
Rabigh Electricity Company			2,644,825				2,297,194				293,184				53,384
Rabigh Operation & Maintenance Company			18,186				9,222				22,203				2,144
Jamaica Public Service Company Limited			1,086,244				657,962				859,728				3,305
KW Nuclear Components Co., Ltd.			36,065				24,777				16,217				7,687
Busan Shinho Solar Power Co., Ltd.			51,617				36,903				7,565				1,471
GS Donghae Electric Power Co., Ltd.			1,675,986				1,086,534				—				(2,823	)
Global Trade Of Power System Co., Ltd.			1,547				78				4,849				287
Expressway Solar-light Power Generation Co., Ltd.			21,154				13,913				2,981				443
KODE NOVUS I LLC			64,453				110,030				3,421				(59,389	)
KODE NOVUS II LLC			22,500				45,306				1,868				(39,345	)
Daejung Offshore Wind Power Co., Ltd.			6,795				78				—				(606	)
Amman Asia Electric Power Company			875,590				645,998				46,940				41,880
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			50,152				41,326				18,849				(611	)
Dangjin Eco Power Co., Ltd.			136,982				945				—				(1,035	)
Honam Wind Power Co., Ltd.			41,527				28,100				5,944				1,266
Nepal Water & Energy Development Company Pty Ltd.			42,644				11,136				—				(647	)
Chun-cheon Energy Co., Ltd.			149,025				42,094				—				(2,389	)
Yeonggwangbaeksu Wind Power Co., Ltd.			104,045				86,257				4,974				(1,956	)
Nghi Son 2 Power Ltd.			771				234				—				(1,111	)
Kelar S.A			375,136				405,618				—				(3,140	)
PT. Tanjung Power Indonesia			37,948				36,185				16,476				(276	)
Incheon New Power Co., Ltd.			10,078				8,306				3,318				301
Seokmun Energy Co., Ltd.			184,051				184,759				—				(552	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
<Associates>
Daegu Green Power Co., Ltd.		￦	180,919				49.90	%			90,279				144				—				—				90,423
Korea Gas Corporation			10,424,276				21.57	%			2,248,516				—				—				(66,954	)			2,181,562
Korea Electric Power Industrial Development Co., Ltd.			70,730				29.00	%			20,512				—				—				—				20,512
YTN Co., Ltd.			178,902				21.43	%			38,339				—				(37	)			(4	)			38,298
Cheongna Energy Co., Ltd.			33,681				43.90	%			14,786				2,584				(147	)			—				17,223
Gangwon Wind Power Co., Ltd.			84,499				15.00	%			12,675				—				—				49				12,724
Hyundai Green Power Co., Ltd.			384,567				29.00	%			111,524				—				—				—				111,524
Korea Power Exchange			216,372				100.00	%			216,372				—				—				—				216,372
AMEC Partners Korea Ltd.			1,176				19.00	%			223				—				—				—				223
Hyundai Energy Co., Ltd.			35,696				46.30	%			16,527				—				(1,099	)			(11,728	)			3,700
Ecollite Co., Ltd.			1,882				36.10	%			679				—				—				(679	)			—
Taebaek Wind Power Co., Ltd.			18,895				25.00	%			4,724				—				(162	)			—				4,562
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			12,396				25.00	%			3,099				—				—				—				3,099
Pyeongchang Wind Power Co., Ltd.			14,492				25.00	%			3,623				—				—				—				3,623
Daeryun Power Co., Ltd.			163,622				19.45	%			31,824				1,014				—				6				32,844
JinanJangsu Wind Power Co., Ltd.			255				25.00	%			64				—				—				—				64
Changjuk Wind Power Co., Ltd.			22,650				30.00	%			6,795				—				(190	)			—				6,605
KNH Solar Co., Ltd.			7,035				27.00	%			1,899				—				(46	)			—				1,853
SPC Power Corporation			150,533				38.00	%			57,202				—				—				—				57,202
Gemeng International Energy Co., Ltd.			2,039,992				34.00	%			693,597				—				—				35,739				729,336
PT. Cirebon Electric Power			240,531				27.50	%			66,146				—				—				—				66,146
KNOC Nigerian East Oil Co., Ltd.			(79,577	)			14.63	%			(11,642	)			—				—				11,642				—
KNOC Nigerian West Oil Co., Ltd.			(70,232	)			14.63	%			(10,275	)			—				—				10,275				—
PT Wampu Electric Power			42,900				46.00	%			19,734				—				—				—				19,734
PT. Bayan Resources TBK			96,289				20.00	%			19,258				489,253				—				—				508,511
S-Power Co., Ltd.			264,526				49.00	%			129,618				—				(1,998	)			—				127,620
Pioneer Gas Power Limited			68,507				40.00	%			27,403				23,147				—				68				50,618
Eurasia Energy Holdings			(467	)			40.00	%			(187	)			—				—				187				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			165,816				25.00	%			41,454				(7,578	)			(590	)			(289	)			32,997
Hadong Mineral Fiber Co., Ltd.			(20	)			25.00	%			(5	)			—				—				5				—
Green Biomass Co., Ltd.			1,027				14.00	%			144				—				—				—				144
PT. Mutiara Jawa			(5,865	)			29.00	%			(1,701	)			70				—				1,631				—
Samcheok Eco Material Co., Ltd.			21,260				2.67	%			568				—				—				(568	)			—
Noeul Green Energy Co., Ltd.			4,371				29.00	%			1,268				—				—				—				1,268
Naepo Green Energy Co., Ltd.			104,315				25.00	%			26,079				—				—				—				26,079
Goseong Green Energy Co., Ltd.			189,199				1.45	%			2,743				—				—				—				2,743
Gangneung Eco Power Co., Ltd.			70,543				3.72	%			2,624				—				—				(1	)			2,623
Shin Pyeongtaek Power Co., Ltd.			(4,314	)			40.00	%			(1,726	)			—				(1,995	)			3,721				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.			676				28.00	%			189				—				—				—				189
DS POWER Co., Ltd.			113,290				10.91	%			12,360				—				(6,830	)			4,244				9,774
Dongducheon Dream Power Co., Ltd.			238,702				33.61	%			80,228				—				(4,948	)			(30,086	)			45,194
KS Solar Co., Ltd.			3,458				19.00	%			657				—				(35	)			—				622
Yeongwol Energy Station Co., Ltd.			13,417				10.00	%			1,342				—				—				—				1,342
Jinbhuvish Power Generation Pvt. Ltd.			54,131				5.16	%			2,793				5,449				—				—				8,242
SE Green Energy Co., Ltd.			7,437				47.76	%			3,552				—				—				—				3,552
Daegu Photovoltaic Co., Ltd.			5,732				29.00	%			1,662				—				—				—				1,662
Jeongam Wind Power Co., Ltd.			1,597				40.00	%			639				—				—				—				639
Korea Power Engineering Service Co., Ltd.			6,724				29.00	%			1,950				—				—				—				1,950
Busan Green Energy Co., Ltd.			48,414				29.00	%			14,040				—				—				—				14,040
Jungbu Bio Energy Co., Ltd.			4,527				18.87	%			854				—				—				—				854

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	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 June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
June 30, 2016
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
Korea Electric Vehicle Charging Service		￦	4,462				28.00	%			1,249				—				—				—				1,249
Ulleungdo Natural Energy Co., Ltd.			24,008				29.85	%			7,166				—				—				(1	)			7,165
Korea Nuclear Partners Co., Ltd.			876				29.00	%			254				—				—				—				254
Tamra Offshore Wind Power Co., Ltd			28,445				27.00	%			7,680				—				—				—				7,680
Korea Electric Power Corporation Fund			49,254				97.98	%			48,259				—				—				(1	)			48,258
<Joint ventures>
KEPCO-Uhde Inc.			17,185				50.85	%			8,739				—				—				(311	)			8,428
Eco Biomass Energy Sdn. Bhd.			—				61.53	%			—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			70,258				40.00	%			28,103				—				—				(1	)			28,102
Shuweihat Asia Power Investment B.V.			15,663				49.00	%			7,675				—				—				(82	)			7,593
Shuweihat Asia Operation & Maintenance Company			1,730				55.00	%			952				—				—				(1	)			951
Waterbury Lake Uranium L.P.			54,653				38.43	%			21,003				—				—				(114	)			20,889
ASM-BG Investicii AD			42,517				50.00	%			21,259				—				—				—				21,259
RES Technology AD			28,032				50.00	%			14,016				—				—				—				14,016
KV Holdings, Inc.			4,807				40.00	%			1,923				—				—				—				1,923
KEPCO SPC Power Corporation			314,200				75.20	%			236,278				—				—				—				236,278
Canada Korea Uranium Limited Partnership			202				12.50	%			25				—				—				(25	)			—
KEPCO Energy Resource Nigeria Limited			(45,607	)			30.00	%			(13,682	)			—				—				13,682				—
Gansu Datang Yumen Wind Power Co., Ltd.			35,891				40.00	%			14,356				—				—				1				14,357
Datang Chifeng Renewable Power Co., Ltd.			413,751				40.00	%			165,500				—				—				(48	)			165,452
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			26,413				40.00	%			10,565				—				—				—				10,565
Rabigh Electricity Company			361,172				40.00	%			144,469				—				(77,479	)			(34	)			66,956
Rabigh Operation & Maintenance Company			12,529				40.00	%			5,012				—				—				—				5,012
Jamaica Public Service Company Limited			600,266				40.00	%			240,106				—				—				305				240,411
KW Nuclear Components Co., Ltd.			13,818				43.36	%			5,991				90				—				1				6,082
Busan Shinho Solar Power Co., Ltd.			14,787				25.00	%			3,697				—				—				—				3,697
GS Donghae Electric Power Co., Ltd.			590,571				34.00	%			200,794				—				—				(34	)			200,760
Global Trade Of Power System Co., Ltd.			1,647				29.00	%			478				—				—				—				478
Expressway Solar-light Power Generation Co., Ltd.			6,888				29.00	%			1,998				—				—				(1	)			1,997
KODE NOVUS I LLC			(49,066	)			50.00	%			(24,533	)			4,732				—				19,801				—
KODE NOVUS II LLC			(24,965	)			50.00	%			(12,483	)			—				—				12,483				—
Daejung Offshore Wind Power Co., Ltd.			6,396				49.90	%			3,192				—				—				(1	)			3,191
Amman Asia Electric Power Company			214,962				60.00	%			128,977				—				—				(87	)			128,890
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			8,379				51.00	%			4,273				—				—				—				4,273
Dangjin Eco Power Co., Ltd.			150,259				34.00	%			51,088				2,028				—				—				53,116
Honam Wind Power Co., Ltd.			14,775				29.00	%			4,285				32				—				—				4,317
Nepal Water & Energy Development Company Pty Ltd.			30,877				52.77	%			16,294				972				—				175				17,441
Chun-cheon Energy Co., Ltd.			171,131				29.90	%			51,168				3				—				1				51,172
Yeonggwangbaeksu Wind Power Co., Ltd.			18,470				15.00	%			2,771				—				—				—				2,771
Nghi Son 2 Power Ltd.			904				50.00	%			452				—				—				1				453
Kelar S.A			(56,305	)			65.00	%			(36,598	)			2,424				—				34,174				—
PT. Tanjung Power Indonesia			3,741				35.00	%			1,309				—				—				—				1,309
Incheon New Power Co., Ltd.			1,809				29.00	%			525				—				—				—				525
Seokmun Energy Co., Ltd.			1,659				29.00	%			481				—				—				—				481
Daehan Wind Power PSC			309				50.00	%			155				—				—				(1	)			154

 

(*)	The percentage of ownership shown above is after considering the treasury stocks and others.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	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 June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
<Associates>
Daegu Green Power Co., Ltd.		￦	167,621				47.80	%			80,123				144				—				—				80,267
Korea Gas Corporation			10,056,944				21.57	%			2,169,283				—				—				(66,470	)			2,102,813
Korea Electric Power Industrial Development Co., Ltd.			65,495				29.00	%			18,994				—				—				—				18,994
YTN Co., Ltd.			179,238				21.43	%			38,411				—				(43	)			(3	)			38,365
Cheongna Energy Co., Ltd.			38,852				43.90	%			17,056				2,584				(150	)			—				19,490
Gangwon Wind Power Co., Ltd.			85,606				15.00	%			12,841				—				—				49				12,890
Hyundai Green Power Co., Ltd.			391,945				29.00	%			113,664				—				—				—				113,664
Korea Power Exchange			208,735				100.00	%			208,735				—				—				—				208,735
AMEC Partners Korea Ltd.			1,209				19.00	%			230				—				—				—				230
Hyundai Energy Co., Ltd.			52,569				46.30	%			24,340				—				(1,120	)			(16,230	)			6,990
Ecollite Co., Ltd.			1,926				36.10	%			695				—				—				(695	)			—
Taebaek Wind Power Co., Ltd.			21,797				25.00	%			5,449				—				(493	)			—				4,956
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			10,349				25.00	%			2,587				—				—				—				2,587
Pyeongchang Wind Power Co., Ltd.			13,606				25.00	%			3,402				—				—				—				3,402
Daeryun Power Co., Ltd.			180,648				19.45	%			35,136				1,014				—				6				36,156
JinanJangsu Wind Power Co., Ltd.			306				25.00	%			77				—				—				—				77
Changjuk Wind Power Co., Ltd.			22,391				30.00	%			6,717				—				(574	)			—				6,143
KNH Solar Co., Ltd.			7,149				27.00	%			1,930				—				(6	)			—				1,924
SPC Power Corporation			152,717				38.00	%			58,033				—				—				—				58,033
Gemeng International Energy Co., Ltd.			2,015,833				34.00	%			685,383				—				—				43,013				728,396
PT. Cirebon Electric Power			220,271				27.50	%			60,574				—				—				—				60,574
KNOC Nigerian East Oil Co., Ltd.			(73,328	)			14.63	%			(10,728	)			—				—				10,728				—
KNOC Nigerian West Oil Co., Ltd.			(69,236	)			14.63	%			(10,129	)			—				—				10,129				—
Dolphin Property Limited			299				15.00	%			45				—				—				16				61
PT Wampu Electric Power			41,224				46.00	%			18,963				—				—				—				18,963
PT. Bayan Resources TBK			141,191				20.00	%			28,238				498,089				—				(1,261	)			525,066
S-Power Co., Ltd.			271,347				49.00	%			132,960				—				(2,052	)			—				130,908
Pioneer Gas Power Limited			69,928				40.00	%			27,971				23,147				—				69				51,187
Eurasia Energy Holdings			(470	)			40.00	%			(188	)			—				—				188				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			165,709				25.00	%			41,427				(8,796	)			(479	)			(289	)			31,863
Busan Solar Co., Ltd.			4,692				19.80	%			929				—				(4	)			—				925
Hadong Mineral Fiber Co., Ltd.			(19	)			25.00	%			(5	)			—				—				5				—
Green Biomass Co., Ltd.			1,321				14.00	%			185				—				—				(185	)			—
PT. Mutiara Jawa			(4,900	)			29.00	%			(1,421	)			70				—				1,351				—
Samcheok Eco Material Co., Ltd.			22,384				2.67	%			598				—				—				(598	)			—
Noeul Green Energy Co., Ltd.			1,473				20.00	%			295				—				—				—				295
Naepo Green Energy Co., Ltd.			106,983				25.00	%			26,746				—				—				—				26,746
Goseong Green Energy Co., Ltd.			92,075				2.90	%			2,670				—				—				—				2,670
Gangneung Eco Power Co., Ltd.			72,296				3.72	%			2,689				—				—				(1	)			2,688
Shin Pyeongtaek Power Co., Ltd.			(3,315	)			40.00	%			(1,326	)			—				(1,995	)			3,321				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.			676				28.00	%			189				—				—				—				189
DS POWER Co., Ltd.			115,733				10.91	%			12,626				—				(5,940	)			4,274				10,960
Dongducheon Dream Power Co., Ltd.			271,209				33.61	%			91,153				—				5,398				(40,884	)			55,667
KS Solar Co., Ltd.			3,276				19.00	%			622				—				(4	)			—				618
Yeongwol Energy Station Co., Ltd.			12,899				10.00	%			1,290				—				—				—				1,290
Jinbhuvish Power Generation Pvt. Ltd.			56,230				5.16	%			2,901				5,450				—				(1	)			8,350
SE Green Energy Co., Ltd.			7,484				47.76	%			3,575				—				—				—				3,575
Daegu Photovoltaic Co., Ltd.			6,504				29.00	%			1,886				—				—				—				1,886

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	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 June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
December 31, 2015
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
Jeongam Wind Power Co., Ltd.		￦	1,754				40.00	%			702				—				—				—				702
Korea Power Engineering Service Co., Ltd.			6,226				29.00	%			1,805				—				—				—				1,805
Busan Green Energy Co., Ltd.			50,040				29.00	%			14,512				—				—				—				14,512
Jungbu Bio Energy Co., Ltd.			4,792				18.87	%			904				—				—				—				904
Korea Electric Vehicle Charging Service			5,165				28.00	%			1,446				—				—				—				1,446
Ulleungdo Natural Energy Co., Ltd.			24,851				29.85	%			7,418				—				—				(1	)			7,417
Korea Nuclear Partners Co., Ltd.			996				29.00	%			289				—				—				—				289
<Joint ventures>
KEPCO-Uhde Inc.			17,424				50.85	%			8,860				—				—				(311	)			8,549
Eco Biomass Energy Sdn. Bhd.			—				61.53	%			—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			69,101				40.00	%			27,640				—				—				—				27,640
Shuweihat Asia Power Investment B.V.			41,952				49.00	%			20,556				—				—				(82	)			20,474
Shuweihat Asia Operation & Maintenance Company			885				55.00	%			487				—				—				(1	)			486
Waterbury Lake Uranium L.P.			51,298				40.00	%			20,519				—				—				(220	)			20,299
ASM-BG Investicii AD			40,407				50.00	%			20,203				—				—				—				20,203
RES Technology AD			27,577				50.00	%			13,789				—				—				—				13,789
KV Holdings, Inc.			5,025				40.00	%			2,010				—				—				—				2,010
KEPCO SPC Power Corporation			277,292				75.20	%			208,524				—				—				—				208,524
Canada Korea Uranium Limited Partnership			181				12.50	%			23				—				—				(23	)			—
KEPCO Energy Resource Nigeria Limited			(36,677	)			30.00	%			(11,003	)			—				—				11,003				—
Gansu Datang Yumen Wind Power Co., Ltd.			40,268				40.00	%			16,107				—				—				—				16,107
Datang Chifeng Renewable Power Co., Ltd.			428,183				40.00	%			171,273				—				—				(49	)			171,224
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			26,449				40.00	%			10,580				—				—				—				10,580
Rabigh Electricity Company			347,631				40.00	%			139,052				—				(79,646	)			(38	)			59,368
Rabigh Operation & Maintenance Company			8,964				40.00	%			3,586				—				—				—				3,586
Jamaica Public Service Company Limited			428,282				40.00	%			171,313				(72,370	)			—				142,975				241,918
KW Nuclear Components Co., Ltd.			11,288				43.36	%			4,895				90				—				—				4,985
Busan Shinho Solar Power Co., Ltd.			14,714				25.00	%			3,678				—				—				—				3,678
GS Donghae Electric Power Co., Ltd.			589,452				34.00	%			200,414				—				—				(35	)			200,379
Global Trade Of Power System Co., Ltd.			1,469				29.00	%			426				—				—				—				426
Expressway Solar-light Power Generation Co., Ltd.			7,241				29.00	%			2,100				—				—				—				2,100
KODE NOVUS I LLC			(45,577	)			50.00	%			(22,789	)			4,732				—				18,057				—
KODE NOVUS II LLC			(22,806	)			49.00	%			(11,175	)			—				—				11,175				—
Daejung Offshore Wind Power Co., Ltd.			6,717				49.90	%			3,352				—				—				—				3,352
Amman Asia Electric Power Company			229,592				60.00	%			137,755				—				—				(87	)			137,668
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			8,826				51.00	%			4,501				—				—				—				4,501
Dangjin Eco Power Co., Ltd.			136,037				34.00	%			46,253				2,696				—				(668	)			48,281
Honam Wind Power Co., Ltd.			13,427				29.00	%			3,894				32				—				—				3,926
Nepal Water & Energy Development Company Pty Ltd.			31,508				52.77	%			16,627				972				—				166				17,765
Chun-cheon Energy Co., Ltd.			106,931				29.90	%			31,972				3				—				1				31,976
Yeonggwangbaeksu Wind Power Co., Ltd.			17,788				15.00	%			2,668				—				—				—				2,668
Nghi Son 2 Power Ltd.			537				50.00	%			268				—				—				1				269
Kelar S.A			(30,482	)			65.00	%			(19,814	)			2,424				—				17,390				—
PT. Tanjung Power Indonesia			1,763				35.00	%			617				—				—				—				617
Incheon New Power Co., Ltd.			1,772				29.00	%			514				—				—				—				514
Seokmun Energy Co., Ltd.			(708	)			29.00	%			(205	)			—				—				205				—

 

(*)	The percentage of ownership shown above is after considering the treasury stocks and others.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(6)	As of June 30, 2016 and December 31, 2015, 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		June 30, 2016								December 31, 2015
		Unrecognized equity interest				Accumulated unrecognized equity interest				Unrecognized equity interest				Accumulated unrecognized equity interest
Green Biomass Co., Ltd.		￦	—				—				(125	)			—
Shin Pyeongtaek Power Co., Ltd.			400				1,726				1,038				1,326
KEPCO Energy Resource Nigeria Limited			2,679				13,682				4,645				11,003
Chun-cheon Energy Co., Ltd.			—				—				(8	)			—
Seokmun Energy Co., Ltd.			(205	)			—				152				205
Kelar S.A			19,209				36,598				17,389				17,389
Hadong Mineral Fiber Co., Ltd.			—				5				5				5
PT. Mutiara Jawa			350				1,701				1,351				1,351
Eurasia Energy Holdings			(1	)			187				188				188
KODE NOVUS I LLC			1,744				24,533				22,789				22,789
KODE NOVUS II LLC			1,308				12,483				11,175				11,175

 

(7)	As of June 30, 2016, shareholders’ agreements on investments in associates and joint ventures that may cause future economic costs 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 is obligated to acquire 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 is obligated to acquire 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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(7)	As of June 30, 2016, shareholders’ agreements on investments in associates and joint ventures that may cause future economic costs or cash outflows are as follows, continued:

 

(v)

Jeongam Wind Power Co., Ltd.

In case non-controlling shareholders, except for financial investors, 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.

 

(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)

DS Power Co., Ltd.

The Company has a right to sell all shares and bonds of DS POWER Co., Ltd. to Daesung Industrial Co., Ltd. and Daesung Industrial Co., Ltd. or an authoritative person appointed by Daesung Industrial Co., Ltd.

 

(viii)

Samcheok Eco Material Co., Ltd.

The Company has the rights 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.

 

(ix)

Seokmun Energy Co., Ltd.

The Company has an obligation to invest an additional ￦15 billion in Seokmun Energy Co., Ltd. The obligation may be conducted through acquisition of new shares, converted shares or convertible bonds.

 

(x)

Chun-cheon Energy Co., Ltd.

The Company has an obligation to acquire the converted shares up to un-invested balance when Chun-cheon Energy Co., Ltd. fails to repay the convertible bonds on the maturity date.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(8)	Significant restrictions on its abilities to associates or joint ventures are as follows:

 

Company		Nature and extent of any significant restrictions
KNOC Nigerian East Oil Co., Ltd., KNOC Nigerian West Oil Co., Ltd.		The Company has stopped its operation in Nigeria due to an ongoing litigation and payment or retrieval of investments, loans and advances are restricted until the legal dispute is resolved.
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.		Only if the condition satisfies the terms of the loan agreements signed by financial institutions, the investors of subordinated credit facility loans can receive payments of principal and interest and dividend. KEB Hana Bank, the deputy, permits the amount of the payments and dividend.
KS Solar Co., Ltd.		Dividends can only be paid when all conditions of a loan agreement are satisfied.
KNH Solar Co., Ltd.		Principal and interest, dividends to shareholders cannot be paid without written consent of financial institutions.
DS Power Co., Ltd.		Shares cannot be wholly or partially transferred, except as permitted by the agreement.
Hyundai Green Power Co., Ltd.		As of June 30, 2016, 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 ￦919.2 billion with Korea Development Bank and others.   At a certain period in the future, the Company has an appraisal right against the financial investors (Korea Development Bank and others) and also has an obligation to sell its shares when claimed by the financial investors.   At a certain period in the future, the Company has an appraisal right 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 when claimed by Hyundai Steel Company.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

18.	Property, Plant and Equipment

 

(1)	Property, plant and equipment as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Acquisition cost				Government grants				Accumulated depreciation				Accumulated impairment losses (*)				Book value
Land		￦	12,556,031				(3,199	)			—				—				12,552,832
Buildings			15,357,169				(61,886	)			(5,585,268	)			(854	)			9,709,161
Structures			59,474,334				(193,982	)			(18,962,673	)			(1,184	)			40,316,495
Machinery			57,834,515				(114,972	)			(22,150,400	)			(36,230	)			35,532,913
Ships			4,130				—				(3,494	)			—				636
Vehicles			230,129				(24	)			(169,164	)			—				60,941
Equipment			1,170,754				(888	)			(858,484	)			—				311,382
Tools			871,976				(564	)			(709,927	)			—				161,485
Construction-in-progress			40,187,159				(135,502	)			—				(38,107	)			40,013,550
Finance lease assets			2,389,982				—				(1,939,194	)			—				450,788
Asset retirement costs			6,933,949				—				(2,960,230	)			—				3,973,719
Others			9,776,927				—				(7,600,159	)			—				2,176,768
		￦	206,787,055				(511,017	)			(60,938,993	)			(76,375	)			145,260,670

 

(*)	The Company separately recognizes impairment loss on each asset, reflecting various factors such as physical impairment and others during the replacement.

 

In millions of won		December 31, 2015
		Acquisition cost				Government grants				Accumulated depreciation				Accumulated impairment losses (*)				Book value
Land		￦	12,396,460				(3,147	)			—				—				12,393,313
Buildings			14,936,722				(63,932	)			(5,259,436	)			(854	)			9,612,500
Structures			58,251,296				(193,119	)			(17,991,950	)			(1,184	)			40,065,043
Machinery			57,143,211				(108,935	)			(20,242,232	)			(36,230	)			36,755,814
Ships			4,930				—				(4,144	)			—				786
Vehicles			227,733				(29	)			(167,261	)			—				60,443
Equipment			1,134,376				(1,026	)			(823,805	)			—				309,545
Tools			836,131				(691	)			(675,501	)			—				159,939
Construction-in-progress			35,305,133				(139,898	)			—				(38,107	)			35,127,128
Finance lease assets			2,389,985				—				(1,878,476	)			—				511,509
Asset retirement costs			6,888,547				—				(2,782,460	)			—				4,106,087
Others			9,438,381				—				(7,179,137	)			—				2,259,244
		￦	198,952,905				(510,777	)			(57,004,402	)			(76,375	)			141,361,351

 

(*)	The Company separately recognizes impairment loss on each asset, reflecting various factors such as physical impairment and others during the replacement.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

18.	Property, Plant and Equipment, Continued

 

(2)	Changes in property, plant and equipment for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Depreciation				Impairment				Others				Ending balance
Land		￦	12,396,460				5,660				(10,995	)			—				—				164,906				12,556,031
(Government grants)			(3,147	)			—				13				—				—				(65	)			(3,199	)
Buildings			9,676,432				2,709				(3,667	)			(320,336	)			—				415,909				9,771,047
(Government grants)			(63,932	)			—				—				2,589				—				(543	)			(61,886	)
Structures			40,258,162				1,187				(229,789	)			(1,086,483	)			—				1,567,400				40,510,477
(Government grants)			(193,119	)			—				1,211				4,690				—				(6,764	)			(193,982	)
Machinery			36,864,749				116,807				(111,970	)			(2,017,829	)			—				796,128				35,647,885
(Government grants)			(108,935	)			—				827				5,874				—				(12,738	)			(114,972	)
Ships			786				—				—				(150	)			—				—				636
Vehicles			60,472				260				21				(13,554	)			—				13,766				60,965
(Government grants)			(29	)			—				—				5				—				—				(24	)
Equipment			310,571				35,435				(104	)			(59,312	)			—				25,680				312,270
(Government grants)			(1,026	)			—				—				250				—				(112	)			(888	)
Tools			160,630				7,708				(294	)			(34,458	)			—				28,463				162,049
(Government grants)			(691	)			—				—				145				—				(18	)			(564	)
Construction-in-progress			35,267,026				7,299,871				—				—				—				(2,417,845	)			40,149,052
(Government grants)			(139,898	)			(15,074	)			—				—				—				19,470				(135,502	)
Finance lease assets			511,509				—				—				(51,211	)			—				(9,510	)			450,788
Asset retirement cost			4,106,087				—				—				(260,257	)			—				127,889				3,973,719
Others			2,259,244				4,095				130				(417,621	)			—				330,920				2,176,768
		￦	141,361,351				7,458,658				(354,617	)			(4,247,658	)			—				1,042,936				145,260,670

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

18.	Property, Plant and Equipment, Continued

 

(2)	Changes in property, plant and equipment for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Depreciation				Impairment (*1)				Others (*2)				Ending balance
Land		￦	12,238,488				9,370				(192,496	)			—				—				341,098				12,396,460
(Government grants)			(3,103	)			—				—				—				—				(44	)			(3,147	)
Buildings			8,979,023				12,466				(42,889	)			(633,770	)			—				1,361,602				9,676,432
(Government grants)			(67,700	)			—				—				5,064				—				(1,296	)			(63,932	)
Structures			38,654,777				1,787				(181,914	)			(2,120,749	)			—				3,904,261				40,258,162
(Government grants)			(196,871	)			—				1,816				9,178				—				(7,242	)			(193,119	)
Machinery			35,460,708				430,524				(250,915	)			(3,880,076	)			(1,205	)			5,105,713				36,864,749
(Government grants)			(108,750	)			—				1,101				11,133				—				(12,419	)			(108,935	)
Ships			1,085				—				—				(299	)			—				—				786
Vehicles			50,576				5,449				(27	)			(22,175	)			—				26,649				60,472
(Government grants)			(76	)			—				1				47				—				(1	)			(29	)
Equipment			211,647				56,004				(230	)			(103,889	)			—				147,039				310,571
(Government grants)			(1,002	)			—				—				469				—				(493	)			(1,026	)
Tools			152,777				25,940				(90	)			(67,482	)			—				49,485				160,630
(Government grants)			(862	)			—				—				268				—				(97	)			(691	)
Construction-in-progress			32,379,512				13,508,590				(13,658	)			—				(29,139	)			(10,578,279	)			35,267,026
(Government grants)			(123,938	)			(27,239	)			—				—				—				11,279				(139,898	)
Finance lease assets			612,395				1,560				(3,959	)			(110,162	)			—				11,675				511,509
Asset retirement cost			5,354,427				—				—				(551,461	)			—				(696,879	)			4,106,087
Others			2,219,386				25,436				(98	)			(804,545	)			—				819,065				2,259,244
		￦	135,812,499				14,049,887				(683,358	)			(8,268,449	)			(30,344	)			481,116				141,361,351

 

(*1)

Korea South-East Power Co., Ltd. and Korea East-West Power Co., Ltd, 100% owned subsidiaries, have determined that there is an impairment indicator 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)	‘Others’ include ￦23,273 million of assets held for sale (note 41) comprising land and buildings and the amount is ￦2,907 million and ￦20,366 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

19.	Investment Properties

 

(1)	Investment properties as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Acquisition cost				Government grants				Accumulated depreciation				Book value
Land		￦	231,619				—				—				231,619
Buildings			23,541				(65	)			(10,220	)			13,256
		￦	255,160				(65	)			(10,220	)			244,875

 

In millions of won		December 31, 2015
		Acquisition cost				Government grants				Accumulated depreciation				Book value
Land		￦	253,960				—				—				253,960
Buildings			27,655				(13	)			(11,692	)			15,950
		￦	281,615				(13	)			(11,692	)			269,910

 

(2)	Changes in investment properties for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Depreciation				Others				Ending balance
Land		￦	253,960				—				(22,341	)			231,619
Buildings			15,963				(329	)			(2,313	)			13,321
(Government grants)			(13	)			—				(52	)			(65	)
		￦	269,910				(329	)			(24,706	)			244,875

 

In millions of won		December 31, 2015
		Beginning balance				Depreciation				Others				Ending balance
Land		￦	301,483				—				(47,523	)			253,960
Buildings			15,791				(669	)			841				15,963
(Government grants)			(10	)			—				(3	)			(13	)
		￦	317,264				(669	)			(46,685	)			269,910

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

19.	Investment Properties, Continued

 

(3)	Income and expenses related to investment properties for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Rental income		￦	2,949				4,845				2,651				4,843
Operating and maintenance expenses related to rental income			(131	)			(329	)			(185	)			(347	)
		￦	2,818				4,516				2,466				4,496

 

(4)	Fair value of investment properties as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Book value				Fair value				Book value				Fair value
Land		￦	231,619				256,219				253,960				284,423
Buildings			13,256				15,014				15,950				18,263
		￦	244,875				271,233				269,910				302,686

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.

 

(5)	All of the Company’s investment property is held under freehold interests.

 

20.	Construction Contracts

 

(1)	Changes in balance of construction service contracts for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won

June 30, 2016

Beginning balance

Increase and decrease (*)

Recognized revenue

Ending balance

Nuclear power plant construction in UAE and others

￦

12,308,839

73,814

(1,927,326

)

10,455,327

 

(*)	For the six-month period ended June 30, 2016, the increased balance of contracts from new orders and other is ￦164,830 million and the decreased balance of contracts from changes in size of construction is ￦91,016 million.

 

In millions of won		December 31, 2015
		Beginning balance				Increase and decrease (*)				Recognized revenue				Ending balance
Nuclear power plant construction in UAE and others		￦	17,081,074				(1,011,031	)			(3,761,204	)			12,308,839

 

(*)	For the year ended December 31, 2015, the increased balance of contracts from new orders and other is ￦412,617 million and the decreased balance of contracts from changes in size of construction is ￦1,423,648 million.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

20.	Construction Contracts, Continued

 

(2)	Accumulated earned revenue, expense and others related to the Company’s construction as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won

June 30, 2016

Accumulated earned revenue

Accumulated expense

Accumulated profit

Unearned advance receipts

Nuclear power plant construction in UAE and others

￦

13,685,571

12,897,555

788,016

—

 

In millions of won

December 31, 2015

Accumulated earned revenue

Accumulated expense

Accumulated profit

Unearned advance receipts

Nuclear power plant construction in UAE and others

￦

12,224,934

11,573,516

651,418

—

 

(3)	Gross amount due from customers recognized as assets and due to customers recognized as liabilities for contract work as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won

June 30, 2016

December 31, 2015

Assets (*1)

Liabilities (*2)

Assets (*1)

Liabilities (*2)

Nuclear power plant construction in UAE and others

￦

48,205

961,986

55,317

893,992

 

(*1)	Included in trade and other receivables, net, in the consolidated interim statements of financial position.

(*2)	Included in non-financial liabilities in the consolidated interim 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 a contract date, a contractual completion date, completion progress, unbilled construction, impairment losses, etc. is not allowed without agreement of the purchaser. ENEC did not agree to disclose such information. Accordingly, the Company did not disclose such information based on K-IFRS 1011 45.2(2) as it is probable that ENEC may file a lawsuit for breach of contract if the Company discloses. 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 for the six-month period ended June 30, 2016 are as follows:

 

In millions of won		June 30, 2016
																		Assets								Receivables from construction contracts
		Provision for construction losses				Changes in estimates of contract costs				Amounts recognized in current profit or loss				Amounts recognized in future profit or loss				Gross				Allowance for doubtful accounts				Gross				Allowance for doubtful accounts
Transmission and distribution		￦	—				—				—				—				2,207				—				—				—
Electric power generation (nuclear)			—				—				—				—				1,499				—				—				—
Plant maintenance & engineering service			512				3,403				(3,856	)			453				44,499				—				114,485				4,071
		￦	512				3,403				(3,856	)			453				48,205				—				114,485				4,071

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

21.	Intangible Assets other than Goodwill

 

(1)	Intangible assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Acquisition cost				Government grants				Accumulated amortization				Accumulated impairment losses				Book value
Software		￦	418,722				(654	)			(349,874	)			—				68,194
Licenses and franchises			3,398				—				(3,398	)			—				—
Copyrights, patents rights and other industrial rights			34,605				—				(13,990	)			—				20,615
Mining rights			530,155				—				(9,757	)			—				520,398
Development expenditures			772,210				(5,988	)			(712,099	)			—				54,123
Intangible assets under development			97,089				(11,057	)			—				—				86,032
Usage rights of donated assets and other			375,275				(27	)			(331,229	)			—				44,019
Leasehold rights			23,313				—				(18,488	)			—				4,825
Greenhouse gas emissions rights			1,300				—				—				—				1,300
Others			204,206				(1	)			(85,503	)			(12,124	)			106,578
		￦	2,460,273				(17,727	)			(1,524,338	)			(12,124	)			906,084

 

In millions of won		December 31, 2015
		Acquisition cost				Government grants				Accumulated amortization				Accumulated impairment losses				Book value
Software		￦	389,220				(699	)			(331,334	)			—				57,187
Licenses and franchises			3,398				—				(3,398	)			—				—
Copyrights, patents rights and other industrial rights			34,178				—				(12,303	)			—				21,875
Mining rights			508,392				—				(8,855	)			—				499,537
Development expenditures			751,784				(6,835	)			(699,977	)			—				44,972
Intangible assets under development			94,886				(10,483	)			—				—				84,403
Usage rights of donated assets and other			375,275				(32	)			(326,684	)			—				48,559
Leasehold rights			19,112				—				(18,367	)			—				745
Greenhouse gas emissions rights			805				—				—				—				805
Others			189,941				(1	)			(80,067	)			(12,124	)			97,749
		￦	2,366,991				(18,050	)			(1,480,985	)			(12,124	)			855,832

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

21.	Intangible Assets other than Goodwill, Continued

 

(2)	Changes in intangible assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Acquisition				Disposal				Amortization				Impairment				Others				Ending balance
Software		￦	57,886				4,835				—				(17,721	)			—				23,848				68,848
(Government grants)			(699	)			—				—				123				—				(78	)			(654	)
Copyrights, patents rights and other industrial rights			21,875				87				(24	)			(1,316	)			—				(7	)			20,615
Mining rights			499,537				12,191				—				—				—				8,670				520,398
Development expenditures			51,807				577				—				(11,388	)			—				19,115				60,111
(Government grants)			(6,835	)			—				—				1,370				—				(523	)			(5,988	)
Intangible assets under development			94,886				24,633				—				—				—				(22,430	)			97,089
(Government grants)			(10,483	)			(574	)			—				—				—				—				(11,057	)
Usage rights of donated assets and other			48,591				—				—				(4,522	)			—				(23	)			44,046
(Government grants)			(32	)			—				—				5				—				—				(27	)
Leasehold rights			745				—				—				(122	)			—				4,202				4,825
Greenhouse gas emissions rights			805				—				—				—				—				495				1,300
Others			97,750				6,464				(248	)			(3,850	)			—				6,463				106,579
(Government grants)			(1	)			—				—				—				—				—				(1	)
		￦	855,832				48,213				(272	)			(37,421	)			—				39,732				906,084

 

In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Amortization				Impairment				Others				Ending balance
Software		￦	52,556				10,477				(2	)			(29,795	)			187				24,463				57,886
(Government grants)			(488	)			—				—				177				—				(388	)			(699	)
Licenses and franchises			54				—				—				(54	)			—				—				—
Copyrights, patents rights and other industrial rights			22,677				129				(2	)			(2,866	)			—				1,937				21,875
Mining rights			504,214				23,151				—				(228	)			—				(27,600	)			499,537
Development expenditures			55,857				8,096				(5	)			(24,862	)			—				12,721				51,807
(Government grants)			(8,183	)			—				—				2,937				—				(1,589	)			(6,835	)
Intangible assets under development			74,909				40,300				—				—				(22	)			(20,301	)			94,886
(Government grants)			(10,692	)			(1,884	)			—				—				—				2,093				(10,483	)
Usage rights of donated assets and other			57,687				—				—				(9,096	)			—				—				48,591
(Government grants)			(43	)			—				—				11				—				—				(32	)
Leasehold rights			779				—				—				(34	)			—				—				745
Greenhouse gas emissions rights			—				805				—				—				—				—				805
Others			71,734				6,872				(443	)			(8,456	)			88				27,955				97,750
(Government grants)			(1	)			—				—				—				—				—				(1	)
		￦	821,060				87,946				(452	)			(72,266	)			253				19,291				855,832

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

21.	Intangible Assets other than Goodwill, Continued

 

(3)	Significant specific intangible assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won and thousands of Australian dollars
June 30, 2016
Type		Description		Currency		Amount				Remaining useful years
Software		ERP system and others		KRW			642			1 year and 5 months ~ 2 years and 5 months
Copyrights, patents rights and other industrial rights		Smart technology verification and standard design project conducting right		KRW			6,500			6 years and 3 months
Mining rights		Mining right of Bylong mine		AUD			401,225			—  (*)
Development expenditures		Development of maintenance system for utility plant		KRW			801			1 year and 5 months
		CHF testing for best representative of HIPER/X2-Gen Fuel and development of best explanatory CHF correlation		KRW			9,707			4 years and 11 months
Intangible assets under development		Contributions to ARP NRC DC		KRW			37,014			—
Usage rights of donated assets		Songdo international business district (sector 1, 3) sharing charge		KRW			2,031			1 year and 4 months
		Dangjin power plant load facility usage right		KRW			29,907			4 years and 9 months
Others		Sillim electricity supply facility usage right		KRW			2,419			5 years and 5 months
		Next generation SCADA O/S (POWERON RELIANCE)		KRW			3,781			3 years and 7 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
December 31, 2015
Type		Description		Currency		Amount				Remaining useful years
Software		ERP system and others		KRW			1,293			2 months ~ 2 years and 11 months
Copyrights, patents rights and other industrial rights		Smart technology verification and standard design project conducting right		KRW			6,750			6 years and 9 months
Mining rights		Mining right of Bylong mine		AUD			401,225			—  (*)
Development expenditures		KOSPO Evolutionary Efficient & Powerful System (KEEPS)		KRW			2,104			1 year and 6 months
		Development of maintenance system for utility plant		KRW			1,084			1 year and 11 months
Intangible assets under development		Contributions to ARP NRC DC		KRW			29,148			—
		CHF testing for best representative of HIPER/X2-Gen Fuel and development of best explanatory CHF correlation		KRW			9,871			—
Usage rights of donated assets		Songdo international business district (sector 1, 3) sharing charge		KRW			2,793			1 year and 10 months
		Dangjin power plant load facility usage right		KRW			33,055			5 years and 3 months
Others		Shingwangju electricity supply facility usage right		KRW			2,297			3 years and 5 months
		Sillim electricity supply facility usage right		KRW			2,642			5 years and 11 months

 

(*)	Mining rights are amortized using the units-of-production method and the amortization has not commenced yet.

 

(4)	For the six-month periods ended June 30, 2016 and 2015, the Company recognized research and development expenses of ￦286,848 million and ￦262,652 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

22.	Trade and Other Payables

Trade and other payables as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Trade payables		￦	1,439,700				—				1,957,647				—
Other trade payables			1,549,079				3,225,153				1,379,035				3,048,299
Accrued expenses			1,305,978				2,437				1,082,880				2,373
Leasehold deposits received			1,427				1,008				2,451				—
Other deposits received			200,855				96,013				195,237				105,105
Finance lease liabilities			118,699				481,256				116,885				542,509
Dividends payable			1,562				—				1,562				—
Others			—				12,628				—				20,149
		￦	4,617,300				3,818,495				4,735,697				3,718,435

 

23.	Borrowings and Debt Securities

 

(1)	Borrowings and debt securities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Current liabilities
Short-term borrowings		￦	877,025				603,673
Current portion of long-term borrowings			268,164				541,307
Current portion of debt securities			8,565,885				6,704,602
Less : Current portion of discount on long-term borrowings			(955	)			(953	)
Less : Current portion of discount on debt securities			(2,813	)			(1,676	)
			9,707,306				7,846,953
Non-current liabilities
Long-term borrowings			1,633,709				1,951,119
Debt securities			44,539,940				49,077,131
Less : Discount on long-term borrowings			(18,213	)			(18,860	)
Less : Discount on debt securities			(93,980	)			(103,067	)
Add : Premium on debt securities			191				223
			46,061,647				50,906,546
		￦	55,768,953				58,753,499

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(2)	Repayment schedule of borrowings and debt securities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
June 30, 2016
Type		Borrowings				Debt Securities
Less than 1 year		￦	1,145,189				8,565,885
1 ~ 5 years			374,245				23,586,790
Over 5 years			1,259,464				20,953,150
		￦	2,778,898				53,105,825

 

In millions of won
December 31, 2015
Type		Borrowings				Debt Securities
Less than 1 year		￦	1,144,980				6,704,602
1 ~ 5 years			860,351				27,725,651
Over 5 years			1,090,768				21,351,480
		￦	3,096,099				55,781,733

 

(3)	Short-term borrowings as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won and thousands of foreign currencies

June 30, 2016

Type

Creditor

Interest rate (%)

Maturity

Foreign currency

Local currency

Local short-term borrowings

Woori Investment Bank and others

1.51 ~ 2.17

2016.07.05 ~ 2016.08.23

—

￦

570,000

Foreign short-term borrowings

SCNT and others

6.50

2016.12.03

USD

2,163

2,519

Foreign short-term borrowings

Export-Import Bank of Korea

3M Libor + 0.54 ~ 0.65

2016.12.19

AUD

287,646

249,591

Local bank overdraft

Nonghyup Bank

2.71

2016.07.06

—

30,000

Local bank overdraft

Woori Bank

Standard overdraft rate + 1.12

2017.02.25

—

24,915

￦

877,025

 

In millions of won and thousands of U.S. dollars

December 31, 2015

Type

Creditor

Interest rate (%)

Maturity

Foreign currency

Local currency

Local short-term borrowings

Woori Investment Bank and others

1.8 ~ 2.46

2016.01.04 ~ 2016.09.13

—

￦

559,530

Foreign short-term borrowings

ING and others

6.50

2016.12.03

USD

2,163

2,535

Foreign short-term borrowings

Citi Bank and others

3M Libor + 0.35

2016.03.22

USD

12,265

14,375

Local bank overdraft

Woori Bank

Standard overdraft rate + 1.12

2016.02.25

—

27,233

￦

603,673

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(4)	Long-term borrowings as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won and thousands of foreign currencies
June 30, 2016
Type				Interest rate (%)				Maturity				Foreign currency				Local currency
Local long-term borrowings
Korea Development Bank		Others			0.50				2018 ~ 2044				—			￦	6,040
		Facility			2.39 ~ 4.60				2023 ~ 2028				—				60,701
		Facility			3yr KTB rate – 1.25				2027				—				9,000
		Facility			1yr KoFC bond rate + 0.31				2018				—				175,000
		Operating funds			2.75				2018				—				12,000
KEB Hana Bank		Commercial Paper			3M CD + 0.14				2017				—				100,000
		Facility			3yr KTB rate – 1.25				2016 ~ 2028				—				10,009
		Facility			4.60				2028				—				17,844
		Energy rationalization			3yr KTB rate – 1.25				2019				—				550
		Energy rationalization			3.20 ~ 3.70				2021 ~ 2022				—				3,726
Korea Industrial Bank		PF Refinancing			CD + 1.25				2030				—				22,500
Export-Import Bank of Korea		Project loans			2.00				2026				—				30,935
Korea Resources Corporation		Development of power resources			3yr KTB rate – 2.25				2022 ~ 2027				—				42,142
		Facility			3yr KTB rate – 2.25				2016 ~ 2024				—				4,121
		Project loans			—				2022 ~ 2027				—				8,669
		Others			KTB rate – 2.25				2024 ~ 2025				—				12,594
Shinhan Bank and others		Collateral borrowing			2.22				2017				—				30,000
		Facility			3yr AA- CB rate + 1.10				2028				—				26,767
		Operating funds			2.70 ~ 2.86				2017 ~ 2018				—				25,000
Kookmin Bank		Facility			MOR + 0.62 ~ 0.79				2017 ~ 2023				—				36,300
Others		Facility			4.60 ~ 5.80				2025 ~ 2028				—				139,407
		Facility			CB rate + 1.10				2028				—				17,844
		PF Refinancing			4.10				2030				—				62,500
		Others			4.32 ~ 8.00				2020 ~ 2036				—				123,847
		Others			—				2028				—				7,250
																	984,746
Foreign long-term borrowings
Korea National Oil Corporation		Project loans			—				2021 ~ 2023			USD	8,744				10,184
Export-Import Bank of Korea and others		Direct loan and others			3M Libor + 2.75 ~ 3.70				2027			JOD	183,803				302,154
		Commercial loan and others			3M Libor + 1.50 ~ 2.50				2030 ~ 2033			USD	305,196				355,462
		PF Loan			6M Libor + 2.50 ~ 2.70				2032			USD	80,029				93,210
SCNT and others		Shareholder’s loan			6.50 ~ 8.00				2023			USD	38,084				44,356
		Shareholder’s loan			8.00				2031			JOD	7,128				11,717
PT PJB and others		Shareholder’s loan			12.75				2017			IDR	23,947,397				2,119
HSBC and others		Syndicated loan			3M Libor + 0.30 ~ 0.50				2017 ~ 2019			USD	21,186				24,675
IFC and others		Others			6M Libor + 5.00				2031			PKR	5,863,200				65,199
Others		Others			—				2019			USD	6,912				8,051
																	917,127
																	1,901,873
Less : Discount of long-term borrowings																	(19,168	)
Less : Current portion of long-term borrowings																	(268,164	)
Add : Current portion of discount on long-term borrowings																	955
																￦	1,615,496

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(4)	Long-term borrowings as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won and thousands of foreign currencies
December 31, 2015
Type				Interest rate (%)				Maturity				Foreign currency				Local currency
Local long-term borrowings
Korea Development Bank		Others			0.50				2018 ~ 2044				—			￦	6,418
		Facility			2.67 ~ 4.60				2023 ~ 2028				—				52,437
		Facility			3yr KTB rate – 1.25				2027				—				9,000
		Facility			1yr KoFC bond rate + 0.31				2018				—				200,000
		Operating funds			2.75				2018				—				12,000
KEB Hana Bank		Commercial Paper			3M CD + 0.03 ~ 0.54				2016 ~ 2017				—				500,000
		Facility			3yr KTB rate – 1.25				2021 ~ 2028				—				10,363
		Facility			4.60				2028				—				18,411
		Energy rationalization			3yr KTB rate – 1.25				2019				—				650
		Energy rationalization			3.20 ~ 3.70				2021 ~ 2022				—				3,835
Korea Industrial Bank		PF Refinancing			CD + 1.25				2030				—				22,500
		Others			3yr KTB rate – 1.25				2016				—				4,000
Export-Import Bank of Korea		Project loans			2.00				2026				—				30,935
Korea Resources Corporation		Development of power resources			3yr KTB rate – 2.25				2022 ~ 2027				—				44,674
		Facility			3yr KTB rate – 2.25				2023 ~ 2024				—				4,400
		Project loans			—				2022 ~ 2027				—				8,677
		Others			KTB rate – 2.25				2024 ~ 2025				—				13,057
Shinhan Bank and others		Collateral borrowing			2.22				2017				—				30,000
		Facility			3yr AA- CB rate + 1.10				2028				—				27,617
		Operating funds			2.70 ~ 3.35				2017 ~ 2018				—				25,000
Kookmin Bank		Facility			MOR + 0.62 ~ 0.79				2017 ~ 2023				—				25,300
Others		Facility			4.60 ~ 5.80				2025 ~ 2028				—				144,359
		Facility			3yr AA- CB rate + 1.10				2028				—				18,411
		PF Refinancing			4.10				2030				—				62,500
		Others			—				2020 ~ 2036				—				45,847
		Others			—				2028				—				7,250
																	1,327,641
Foreign long-term borrowings
Korea National Oil Corporation		Project loans			—				2021 ~ 2023			USD	8,744				10,248
Export-Import Bank of Korea and others		Direct loan and others			3M Libor + 2.75 ~ 3.70				2027			JOD	188,580				312,104
		Commercial loan and others			3M Libor + 1.50 ~ 2.50				2030 ~ 2033			USD	312,601				366,368
		PF Loan			6M Libor + 2.50 ~ 2.70				2032			USD	64,389				75,464
SCNT and others		Shareholder’s loan			6.50 ~ 8.00				2023			USD	34,924				40,931
		Shareholder’s loan			8.00				2031			JOD	7,128				11,797
PT PJB and others		Shareholder’s loan			12.75				2017			IDR	22,346,550				1,899
HSBC and others		Syndicated loan			3M Libor + 0.30 ~ 0.50				2017 ~ 2019			USD	31,774				37,239
IFC and others		Others			6M Libor + 5.00				2031			PKR	5,891,200				65,805
Others		Others			3M Libor + 0.65				2017			USD	199,269				233,543
		Others			—				2019			USD	8,010				9,387
																	1,164,785
																	2,492,426
Less : Discount of long-term borrowings																	(19,813	)
Less : Current portion of long-term borrowings																	(541,307	)
Add : Current portion of discount on long-term borrowings																	953
																￦	1,932,259

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(5)	Local debt securities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
		Issue date				Maturity				Interest rate (%)				June 30, 2016				December 31, 2015
Electricity Bonds (*1)			2009.11.03 ~ 2014.08.27				2016.07.20 ~ 2033.08.06				2.73 ~ 5.51			￦	20,960,000				22,960,000
Electricity Bonds			2012.06.11 ~ 2013.06.25				2016.09.11 ~ 2018.06.25				3M CD + 0.25 ~ 0.32				710,000				910,000
Corporate Bonds (*2)			2009.05.04 ~ 2016.03.31				2016.07.07 ~ 2040.12.10				1.88 ~ 5.84				20,492,708				20,710,010
															42,162,708				44,580,010
Less : Discount on local debt securities															(36,646	)			(40,228	)
Less : Current portion of local debt securities															(7,110,010	)			(5,730,000	)
Add : Current portion of discount on local debt securities															1,380				1,187
														￦	35,017,432				38,810,969

 

(*1)	Electricity Bonds 885 (￦40,000 million) can be redeemed every April 28 after three years from its issue date, April 28, 2014.

(*2)	Corporate Bonds of HeeMang Sunlight Power Co., Ltd (￦2,697 million) can be redeemed every March 31 after five years from its issue date, March 31, 2016.

 

(6)	Foreign debt securities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won and thousands of foreign currencies
June 30, 2016
Type		Issue date		Maturity		Interest rate (%)		Foreign currency				Local currency
FY-96		1996.04.01 ~ 1996.12.06		2026.12.06 ~ 2096.04.01		6.00 ~ 8.37		USD	249,067			￦	290,088
FY-97		1997.01.31 ~ 1997.08.04		2027.02.01 ~ 2027.08.01		6.75 ~ 7.00		USD	314,717				366,550
FY-04		2004.04.23		2034.04.23		5.13		USD	286,920				334,176
FY-06		2006.09.29		2016.09.29		5.5		USD	150,000				174,705
FY-08		2008.11.27		2018.11.27		4.19		JPY	20,000,000				226,430
FY-11		2011.07.13 ~ 2011.07.29		2017.01.30 ~ 2021.07.13		3.63 ~ 4.75		USD	800,000				931,760
FY-12		2012.05.10 ~ 2012.09.19		2017.05.10 ~ 2022.09.19		2.50 ~ 3.13		USD	1,750,000				2,038,225
FY-13		2013.02.05 ~ 2013.11.27		2018.02.05 ~ 2018.11.27		1.88 ~ 2.88		USD	1,900,000				2,212,930
FY-13		2013.09.26 ~ 2013.10.23		2019.03.26 ~ 2019.04.23		1.50 ~ 1.63		CHF	400,000				475,680
FY-13		2013.09.25		2020.09.25		5.75		AUD	325,000				282,003
FY-13		2013.02.20 ~ 2013.07.25		2018.02.20 ~ 2018.07.25		3M Libor + 0.84 ~ 1.50		USD	500,000				582,350
FY-14		2014.02.11 ~ 2014.12.02		2019.02.11 ~ 2029.07.30		2.38 ~ 3.57		USD	1,500,000				1,747,050
FY-14		2014.01.28 ~ 2014.07.31		2017.01.28 ~ 2017.07.31		3M Libor + 0.55 ~ 1.05		USD	500,000				582,350
FY-15		2015.06.15		2025.06.15		3.25		USD	300,000				349,410
FY-16		2016.01.21		2021.07.21		2.5		USD	300,000				349,410
													10,943,117
Less : Discount on foreign debt securities													(60,147	)
Add : Premium on foreign debt securities													191
Less : Current portion of foreign debt securities													(1,455,875	)
Add : Current portion of discount on foreign debt securities													1,433
												￦	9,428,719

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(6)	Foreign debt securities as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won and thousands of foreign currencies
December 31, 2015
Type		Issue date				Maturity				Interest rate (%)				Foreign currency				Local currency
FY-96			1996.04.01 ~ 1996.12.06				2026.12.06 ~ 2096.04.01				6.00 ~ 8.37			USD	249,136			￦	291,990
FY-97			1997.01.31 ~ 1997.08.04				2027.02.01 ~ 2027.08.01				6.75 ~ 7.00			USD	314,717				368,848
FY-04			2004.04.23				2034.04.23				5.13			USD	286,920				336,270
FY-06			2006.03.14 ~ 2006.09.29				2016.03.14 ~ 2016.09.29				5.50 ~ 6.00			USD	650,000				761,800
FY-08			2008.11.27				2018.11.27				4.19			JPY	20,000,000				194,401
FY-11			2011.07.13 ~ 2011.07.29				2017.01.30 ~ 2021.07.13				3.63 ~ 4.75			USD	800,000				937,600
FY-12			2012.05.10 ~ 2012.09.19				2017.05.10 ~ 2022.09.19				2.50 ~ 3.13			USD	1,750,000				2,051,000
FY-13			2013.02.05 ~ 2013.11.27				2018.02.05 ~ 2018.11.27				1.88 ~ 2.88			USD	1,900,000				2,226,800
FY-13			2013.09.26 ~ 2013.10.23				2019.03.26 ~ 2019.04.23				1.50 ~ 1.63			CHF	400,000				474,156
FY-13			2013.09.25				2020.09.25				5.75			AUD	325,000				277,258
FY-13			2013.02.20 ~ 2013.07.25				2018.02.20 ~ 2018.07.25				3M Libor + 0.84 ~ 1.50			USD	500,000				586,000
FY-14			2014.02.11 ~ 2014.12.02				2019.02.11 ~ 2029.07.30				2.38 ~ 3.57			USD	1,500,000				1,758,000
FY-14			2014.01.28 ~ 2014.07.31				2017.01.28 ~ 2017.07.31				3M Libor + 0.55 ~ 1.05			USD	500,000				586,000
FY-15			2015.06.15				2025.06.15				3.25			USD	300,000				351,600
																			11,201,723
Less : Discount on foreign debt securities																			(64,515	)
Add : Premium on foreign debt securities																			223
Less : Current portion of foreign debt securities																			(974,602	)
Add : Current portion of discount on foreign debt securities																			489
																		￦	10,163,318

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

24.	Finance Lease Liabilities

 

(1)	Lease contracts

The Company enters into a power purchase agreements (“PPA”) with GS EPS and three 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 plants’ economic life.

 

(2)	Finance lease liabilities as of June 30, 2016 and December 31, 2015 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		June 30, 2016								December 31, 2015
		Minimum lease payments				Present value of minimum lease payments				Minimum lease payments				Present value of minimum lease payments
Less than 1 year		￦	178,792				118,699				182,072				116,885
1 ~ 5 years			464,747				350,120				525,465				393,957
More than 5 years			179,285				131,136				206,323				148,552
		￦	822,824				599,955				913,860				659,394

 

(3)	Current and non-current portion of finance lease liabilities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Current finance lease liabilities		￦	118,699				116,885
Non-current finance lease liabilities			481,256				542,509
		￦	599,955				659,394

 

(4)	Lease payments recognized as an expense as a lessee for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Minimum lease payment		￦	42,560				89,251				48,213				98,371
Contingent rent payment			(5,174	)			(10,607	)			(4,398	)			(8,886	)

 

(5)	The Company does not have any irrevocable operating lease contracts as of June 30, 2016 and December 31, 2015.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

25.	Employment Benefits

 

(1)	Employment benefit obligations as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Net defined benefit obligations		￦	1,974,501				1,495,782
Other long-term employee benefit obligations			7,771				7,325
		￦	1,982,272				1,503,107

 

(2)	Principal assumptions on actuarial valuation as of June 30, 2016 and December 31, 2015 are as follows:

 

		June 30, 2016		December 31, 2015
Discount rate		1.74% ~ 1.95%		2.39% ~ 2.58%
Future salary and benefit levels		5.51%		5.43%
Weighted average duration		13.29 years		13.21 years

 

(3)	Details of expense relating to defined benefit plans for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Current service cost		￦	88,609				174,369				77,322				154,171
Interest cost			16,195				32,057				15,767				30,892
Expected return on plan assets			(5,656	)			(11,424	)			(5,412	)			(10,836	)
Loss from settlement			(13	)			(48	)			(239	)			(239	)
		￦	99,135				194,954				87,438				173,988

Expenses as described above are recognized in those items below in the financial statements.

 

In millions of won		June 30, 2016								June 30, 2015
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Cost of sales		￦	73,266				144,478				59,298				123,561
Selling and administrative expenses			14,169				27,568				17,991				30,588
Others (Construction-in-progress and others)			11,700				22,908				10,149				19,839
		￦	99,135				194,954				87,438				173,988

In addition, for the six-month periods ended June 30, 2016 and 2015, employee benefit obligations expenses of ￦29,717 million and ￦27,892 million, respectively, is recognized as cost of sales, and ￦5,495 million and ￦6,421 million, respectively, is recognized as selling and administrative expenses, and ￦6,879 million and ￦6,808 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 Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

25.	Employment Benefits, Continued

 

(4)	Details of defined benefit obligations as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Present value of defined benefit obligation from funded plans		￦	2,868,999				2,426,414
Fair value of plan assets			(894,498	)			(930,632	)
			1,974,501				1,495,782
Present value of defined benefit obligation from unfunded plans			—				—
Net liabilities incurred from defined benefit plans		￦	1,974,501				1,495,782

 

(5)	Changes in the present value of defined benefit obligations for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Beginning balance		￦	2,426,414				1,992,447
Current service cost			174,369				315,811
Interest cost (*)			32,057				63,808
Remeasurement component			307,942				122,825
Loss from settlement			(48	)			(641	)
Actual payments			(72,086	)			(67,291	)
Others			351				(545	)
Ending balance		￦	2,868,999				2,426,414

 

(*)	Corporate bond (AAA rated) yield at year-end is applied to the interest cost on employee benefit obligations.

 

(6)	Changes in the fair value of plan assets for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Beginning balance		￦	930,632				724,250
Expected return			11,424				22,557
Remeasurement component			(1,352	)			(5,924	)
Contributions by the employers			2,176				214,449
Actual payments			(48,382	)			(24,191	)
Others			—				(509	)
Ending balance		￦	894,498				930,632

In addition, loss on accumulated remeasurement component amounted to ￦341,750 million and ￦202,878 million has been recognized as other comprehensive loss for the six-month period ended June 30, 2016 and for the year ended December 31, 2015, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

25.	Employment Benefits, Continued

 

(7)	Details of the fair value of plan assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Equity instruments		￦	21,654				12,791
Debt instruments			304,524				243,372
Bank deposit			265,561				129,350
Others			302,759				545,119
		￦	894,498				930,632

For the six-month period ended June 30, 2016 and for the year ended December 31, 2015, actual returns on plan assets amounted to ￦10,072 million and ￦16,633 million, respectively.

 

(8)	Remeasurement component recognized in other comprehensive income (loss) for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Actuarial gain from changes in financial assumptions		￦	224,885				140,411
Experience adjustments			83,057				(17,586	)
Expected return			1,352				5,924
		￦	309,294				128,749

Remeasurement component recognized as other comprehensive income or loss is recorded in retained earnings.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

26.	Provisions

 

(1)	Provisions as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Employment benefits		￦	727,448				—				718,365				—
Provisions for employment benefits			727,448				—				718,365				—
Litigation			53,972				152,559				57,737				110,228
Litigation provisions			53,972				152,559				57,737				110,228
Decommissioning cost			—				12,896,928				—				12,744,873
Nuclear plants			—				9,856,038				—				9,684,286
Spent fuel			—				1,375,185				—				1,375,185
Waste			—				1,491,897				—				1,502,140
PCBs			—				173,266				—				182,400
Other recovery provisions			—				542				—				862
Others			1,038,751				12,523				803,074				9,653
Power plant regional support program			172,231				—				129,655				—
Transmission regional support program			371,580				—				228,785				—
Provisions for tax			31				136				—				136
Provisions for financial guarantee			1,045				3,957				1,839				2,449
Provisions for RPS			449,633				—				363,178				—
Provisions for greenhouse gas emissions obligations			43,431				—				78,829				—
Others			800				8,430				788				7,068
		￦	1,820,171				13,062,010				1,579,176				12,864,754

 

(2)	Changes in provisions for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Accretion expenses				Payment				Reversal				Other				Ending balance
Employment benefits		￦	718,365				414,309				(405,226	)			—				—				727,448
Provisions for employment benefits			718,365				414,309				(405,226	)			—				—				727,448
Litigation			167,965				52,518				(7,925	)			(6,027	)			—				206,531
Litigation provisions			167,965				52,518				(7,925	)			(6,027	)			—				206,531
Decommissioning cost			12,744,873				434,705				(282,368	)			—				(282	)			12,896,928
Nuclear plants			9,684,286				171,926				(174	)			—				—				9,856,038
Spent fuel			1,375,185				248,451				(248,451	)			—				—				1,375,185
Waste			1,502,140				11,385				(21,681	)			—				53				1,491,897
PCBs			182,400				2,928				(12,062	)			—				—				173,266
Other recovery provisions			862				15				—				—				(335	)			542
Others			812,727				600,770				(351,160	)			(29,084	)			18,021				1,051,274
Power plant regional support program			129,655				44,874				(16,158	)			—				13,860				172,231
Transmission regional support program			228,785				233,165				(90,370	)			—				—				371,580
Provisions for tax			136				44				—				—				(13	)			167
Provisions for financial guarantee			4,288				2,567				—				(1,787	)			(66	)			5,002
Provisions for RPS			363,178				241,661				(143,231	)			(16,249	)			4,274				449,633
Provisions for greenhouse gas emissions obligations			78,829				75,991				(100,355	)			(11,034	)			—				43,431
Others			7,856				2,468				(1,046	)			(14	)			(34	)			9,230
		￦	14,443,930				1,502,302				(1,046,679	)			(35,111	)			17,739				14,882,181

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

26.	Provisions, Continued

 

(2)	Changes in provisions for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		Beginning balance				Accretion expenses				Payment				Reversal				Other				Ending balance
Employment benefits		￦	707,310				727,079				(715,850	)			(174	)			—				718,365
Provisions for employment benefits			707,310				727,079				(715,850	)			(174	)			—				718,365
Litigation			200,289				111,301				(85,819	)			(58,306	)			500				167,965
Litigation provisions			200,289				111,301				(85,819	)			(58,306	)			500				167,965
Decommissioning cost			13,434,606				1,287,095				(680,552	)			(1,296,580	)			304				12,744,873
Nuclear plants			10,331,270				650,218				(622	)			(1,296,580	)			—				9,684,286
Spent fuel			1,298,749				568,190				(491,754	)			—				—				1,375,185
Waste			1,604,241				58,294				(160,699	)			—				304				1,502,140
PCBs			199,518				10,359				(27,477	)			—				—				182,400
Other recovery provisions			828				34				—				—				—				862
Others			460,991				774,760				(368,172	)			(64,494	)			9,642				812,727
Power plant regional support program			120,093				37,569				(37,648	)			—				9,641				129,655
Transmission regional support program			—				393,460				(164,675	)			—				—				228,785
Provisions for tax			649				—				—				(513	)			—				136
Provisions for financial guarantee			3,695				3,528				—				(2,936	)			1				4,288
Provisions for RPS			329,562				259,964				(165,259	)			(61,089	)			—				363,178
Provisions for greenhouse gas emissions obligations			—				78,829				—				—				—				78,829
Others			6,992				1,410				(590	)			44				—				7,856
		￦	14,803,196				2,900,235				(1,850,393	)			(1,419,554	)			10,446				14,443,930

 

27.	Government Grants

 

(1)	Government grants as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Land		￦	(3,199	)			(3,147	)
Buildings			(61,886	)			(63,932	)
Structures			(193,982	)			(193,119	)
Machinery			(114,972	)			(108,935	)
Vehicles			(24	)			(29	)
Equipment			(888	)			(1,026	)
Tools			(564	)			(691	)
Construction-in-progress			(135,502	)			(139,898	)
Investment properties			(65	)			(13	)
Software			(654	)			(699	)
Development expenditures			(5,988	)			(6,835	)
Intangible assets under development			(11,057	)			(10,483	)
Usage rights of donated assets and other			(27	)			(32	)
Others			(1	)			(1	)
		￦	(528,809	)			(528,840	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

27.	Government Grants, Continued

 

(2)	Changes in government grants for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Receipt				Acquisition				Offset the items of depreciation expense and others				Disposal				Others				Ending balance
Cash		￦	—				(17,065	)			—				—				—				17,065				—
Land			(3,147	)			—				—				—				13				(65	)			(3,199	)
Buildings			(63,932	)			—				—				2,589				—				(543	)			(61,886	)
Structures			(193,119	)			—				—				4,690				1,211				(6,764	)			(193,982	)
Machinery			(108,935	)			—				—				5,874				827				(12,738	)			(114,972	)
Vehicles			(29	)			—				—				5				—				—				(24	)
Equipment			(1,026	)			—				—				250				—				(112	)			(888	)
Tools			(691	)			—				—				145				—				(18	)			(564	)
Construction-in-progress			(139,898)				—				19,470				—				—				(15,074	)			(135,502	)
Investment properties			(13	)			—				—				—				—				(52	)			(65	)
Software			(699	)			—				—				123				—				(78	)			(654	)
Development expenditures			(6,835	)			—				—				1,370				—				(523	)			(5,988	)
Intangible assets under development			(10,483	)			—				—				—				—				(574	)			(11,057	)
Usage rights of donated assets and other			(32	)			—				—				5				—				—				(27	)
Others			(1	)			—				—				—				—				—				(1	)
		￦	(528,840	)			(17,065	)			19,470				15,051				2,051				(19,476	)			(528,809	)
In millions of won		December 31, 2015
		Beginning balance				Receipt				Acquisition				Offset the items of depreciation expense and others				Disposal				Others				Ending balance
Cash		￦	—				(52,696	)			—				—				—				52,696				—
Land			(3,103	)			—				—				—				—				(44	)			(3,147	)
Buildings			(67,700	)			—				—				5,064				—				(1,296	)			(63,932	)
Structures			(196,871	)			—				—				9,178				1,816				(7,242	)			(193,119	)
Machinery			(108,750	)			—				—				11,133				1,101				(12,419	)			(108,935	)
Vehicles			(76	)			—				—				47				1				(1	)			(29	)
Equipment			(1,002	)			—				—				469				—				(493	)			(1,026	)
Tools			(862	)			—				—				268				—				(97	)			(691	)
Construction-in-progress			(123,938)				—				11,279				—				—				(27,239	)			(139,898	)
Investment properties			(10	)			—				—				—				—				(3	)			(13	)
Software			(488	)			—				—				177				—				(388	)			(699	)
Development expenditures			(8,183	)			—				—				2,937				—				(1,589	)			(6,835	)
Intangible assets under development			(10,692	)			—				2,093				—				—				(1,884	)			(10,483	)
Usage rights of donated assets and other			(43	)			—				—				11				—				—				(32	)
Others			(1	)			—				—				—				—				—				(1	)
		￦	(521,719	)			(52,696	)			13,372				29,284				2,918				1				(528,840	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

28.	Deferred Revenues

Deferred revenue related to the Company’s construction contracts as of June 30, 2016 and December 31, 2015 are as follows and included in current and non-current non-financial liabilities in the consolidated interim statements of financial position:

 

In millions of won		June 30, 2016				December 31, 2015
Beginning balance		￦	7,165,297				6,850,016
Increase during the current year / period			513,313				691,276
Recognized as revenue during the current year / period			(198,213	)			(375,995	)
Ending balance		￦	7,480,397				7,165,297

 

29.	Non-financial Liabilities

Non-financial liabilities as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Advance received		￦	5,079,412				189,711				5,017,735				215,096
Unearned revenue			24,367				52,430				21,810				63,850
Deferred revenue			393,874				7,086,523				372,157				6,793,140
Withholdings			265,408				6,700				146,258				6,731
Others			875,891				17,765				762,751				13,435
		￦	6,638,952				7,353,129				6,320,711				7,092,252

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

30.	Contributed Capital

 

(1)	Details of shares issued as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won except share information

June 30, 2016

Shares authorized

Shares issued

Par value per share

Owned by government(*)

Owned by others

Total

Common shares

1,200,000,000

641,964,077

￦

5,000

1,640,385

1,569,435

3,209,820

 

(*)	Korea Development Bank’s ownership of ￦1,056,176 million is included.

 

In millions of won except share information

December 31, 2015

Shares authorized

Shares issued

Par value per share

Owned by government(*)

Owned by others

Total

Common shares

1,200,000,000

641,964,077

￦

5,000

1,640,385

1,569,435

3,209,820

 

(*)	Korea Development Bank’s ownership of ￦1,056,176 million is included.

 

(2)	Details in number of outstanding capital stock for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

Number of shares		June 30, 2016				December 31, 2015
Beginning balance			641,964,077				641,964,077
Ending balance			641,964,077				641,964,077

 

(3)	Details of share premium as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Share premium		￦	843,758				843,758

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

31.	Retained Earnings and Dividends Paid

 

(1)	Details of retained earnings as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Legal reserve (*)		￦	1,604,910				1,604,910
Voluntary reserves			31,847,274				23,720,167
Retained earnings before appropriations			16,418,167				22,862,164
Retained earnings		￦	49,870,351				48,187,241

 

(*)

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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Reserve for investment on social overhead capital		￦	5,277,449				5,277,449
Reserve for research and human development (*)			330,000				330,000
Reserve for business expansion			26,029,825				17,902,718
Reserve for equalizing dividends			210,000				210,000
		￦	31,847,274				23,720,167

 

(*)	The reserve for research and human development is appropriated by the Company 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 Tax Incentive Control Law of Korea.

 

(3)	Changes in retained earnings for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Beginning balance		￦	48,187,241				35,303,647
Net profit for the period attributed to owner of the Company			3,861,917				13,289,127
Changes in equity method retained earnings			(635	)			(280	)
Remeasurement of defined benefit liability, net of tax			(188,083	)			(84,271	)
Dividend paid			(1,990,089	)			(320,982	)
Ending balance		￦	49,870,351				48,187,241

 

(4)	Dividends paid for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won except share information

June 30, 2016

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

￦

3,100

1,990,089

In millions of won except share information

December 31, 2015

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

￦

500

320,982

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

31.	Retained Earnings and Dividends Paid, Continued

 

(5)	Changes in retained earnings of investments in associates and joint ventures for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Beginning balance		￦	(2,411	)			(2,131	)
Changes			(635	)			(280	)
Ending balance		￦	(3,046	)			(2,411	)

 

(6)	Changes in remeasurement components related to defined benefit liability for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Beginning balance		￦	(202,878	)			(116,705	)
Changes			(295,895	)			(127,184	)
Income tax effect			107,812				42,913
Transfer to reserve for business expansion			49,211				(1,902	)
Ending balance		￦	(341,750	)			(202,878	)

 

32.	Hybrid Bonds

Bond-type hybrid securities classified as equity (non-controlling interest) as of June 30, 2016 are as follows:

 

In millions of won
Issuer		Hybrid bond				Issued date				Maturity				Yield (%)				Amount
Korea Western Power Co., Ltd.			1st bond-type hybrid bond				2012.10.18				2042.10.18				5yr government bond rate+1.20			￦	100,000
Korea South-East Power Co., Ltd.			1st bond-type hybrid bond				2012.12.07				2042.12.06				4.38				170,000
Korea South-East Power Co., Ltd.			2nd bond-type hybrid bond				2012.12.07				2042.12.06				4.44				230,000
Expense of Issuance																			(1,340	)
																		￦	498,660

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 to not 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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

33.	Other Components of Equity

 

(1)	Other components of equity as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Other capital surpluses		￦	1,197,128				1,197,388
Accumulated other comprehensive loss			(78,483	)			(98,713	)
Other equity			13,294,973				13,294,973
		￦	14,413,618				14,393,648

 

(2)	Changes in other capital surpluses for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016												December 31, 2015
		Gain on disposal of treasury stocks				Others				Subtotal				Gain on disposal of treasury stocks				Others				Subtotal
Beginning balance		￦	387,524				809,864				1,197,388				387,524				763,878				1,151,402
Disposal of subsidiary			—				—				—				—				58,310				58,310
Change in consolidation scope			—				—				—				—				(716	)			(716	)
Issuance of share capital of subsidiary			—				(260	)			(260	)			—				2,536				2,536
Income tax effect			—				—				—				—				(14,144	)			(14,144	)
Ending balance		￦	387,524				809,604				1,197,128				387,524				809,864				1,197,388

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

33.	Other Components of Equity, Continued

 

(3)	Changes in accumulated other comprehensive loss for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Available-for-sale financial asset valuation reserve				Shares in other comprehensive income of investments in associates and joint ventures				Reserve for overseas operations translation credit				Reserve for gain (loss) on valuation of derivatives				Total
Beginning balance		￦	(24,905	)			276,373				(254,462	)			(95,719	)			(98,713	)
Changes in the unrealized fair value of available- for-sale financial assets, net of tax			22,477				—				—				—				22,477
Shares in other comprehensive income of associates and joint ventures, net of tax			—				(39,226	)			—				—				(39,226	)
Foreign currency translation of foreign operations, net of tax			—				—				6,493				—				6,493
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				—				30,486				30,486
Ending balance		￦	(2,428	)			237,147				(247,969	)			(65,233	)			(78,483	)
In millions of won		December 31, 2015
		Available-for-sale financial asset valuation reserve				Shares in other comprehensive income of investments in associates and joint ventures				Reserve for overseas operations translation credit				Reserve for gain (loss) on valuation of derivatives				Total
Beginning balance		￦	(34,649	)			186,897				(255,641	)			(98,876	)			(202,269	)
Changes in the unrealized fair value of available- for-sale financial assets, net of tax			9,744				—				—				—				9,744
Shares in other comprehensive income of associates and joint ventures, net of tax			—				89,476				—				—				89,476
Foreign currency translation of foreign operations, net of tax			—				—				1,179				—				1,179
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				—				3,157				3,157
Ending balance		￦	(24,905	)			276,373				(254,462	)			(95,719	)			(98,713	)

 

(4)	Details of other equity as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Statutory revaluation reserve		￦	13,295,098				13,295,098
Changes in other equity			(125	)			(125	)
		￦	13,294,973				13,294,973

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

34.

Sales

Details of sales for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016
		Domestic								Overseas								Total
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Sales of goods		￦	12,064,001				26,480,221				91,549				177,263				12,155,550				26,657,484
Electricity			11,901,887				26,084,082				—				—				11,901,887				26,084,082
Heat supply			11,119				124,083				—				—				11,119				124,083
Others			150,995				272,056				91,549				177,263				242,544				449,319
Sales of service			52,824				93,612				21,274				84,116				74,098				177,728
Sales of construction services			37,507				63,844				907,974				1,863,482				945,481				1,927,326
Revenue related to transfer of assets from customers			100,295				198,213				—				—				100,295				198,213
		￦	12,254,627				26,835,890				1,020,797				2,124,861				13,275,424				28,960,751
In millions of won		June 30, 2015
		Domestic								Overseas								Total
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Sales of goods		￦	12,182,113				26,312,234				82,378				185,241				12,264,491				26,497,475
Electricity			12,029,496				25,893,559				—				—				12,029,496				25,893,559
Heat supply			15,726				144,286				—				—				15,726				144,286
Others			136,891				274,389				82,378				185,241				219,269				459,630
Sales of service			51,458				96,396				70,125				119,975				121,583				216,371
Sales of construction services			51,373				92,356				1,141,203				1,804,729				1,192,576				1,897,085
Revenue related to transfer of assets from customers			93,176				184,754				—				—				93,176				184,754
		￦	12,378,120				26,685,740				1,293,706				2,109,945				13,671,826				28,795,685

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

35.	Selling and Administrative Expenses

Selling and administrative expenses for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Salaries		￦	168,355				336,662				149,536				310,148
Retirement benefit expense			16,990				33,063				15,170				30,238
Welfare and benefit expense			27,052				50,729				34,390				57,425
Insurance expense			2,662				5,642				2,722				5,385
Depreciation			36,928				73,455				24,075				47,861
Amortization of intangible assets			8,976				17,959				10,218				21,826
Bad debt expense			10,190				15,228				—				—
Reversal of allowance for bad debt			—				—				(5,893	)			(17,471	)
Commission			164,691				300,178				166,025				300,868
Advertising expense			10,287				16,956				8,199				13,779
Training expense			1,249				2,145				1,048				2,158
Vehicle maintenance expense			2,506				4,625				2,760				5,114
Publishing expense			1,134				1,903				686				1,236
Business promotion expense			867				1,756				963				1,719
Rent expense			10,571				19,143				9,224				19,356
Telecommunication expense			6,938				13,537				5,907				11,933
Transportation expense			163				288				159				300
Taxes and dues			28,694				32,550				36,978				39,565
Expendable supplies expense			1,354				2,628				1,250				3,261
Water, light and heating expense			1,990				5,039				2,118				5,567
Repairs and maintenance expense			20,820				28,781				10,476				15,379
Ordinary development expense			35,022				70,192				40,163				73,704
Travel expense			4,661				9,009				3,497				7,503
Clothing expense			776				1,016				1,151				1,208
Survey and analysis expense			155				311				140				283
Membership fee			163				762				247				670
Others			29,064				57,558				31,334				55,352
		￦	592,258				1,101,115				552,543				1,014,367

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

36.	Other Non-operating Income and Expense

 

(1)	Other non-operating income for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Reversal of other provisions		￦	1,075				5,612				5,076				6,734
Reversal of other allowance for bad debt			4,799				5,786				—				—
Gains on government grants			—				36				—				—
Gains on assets contributed			188				1,516				880				3,092
Gains on liabilities exempted			302				305				34				2,371
Compensation and reparations revenue			39,814				63,944				34,319				86,856
Gains on electricity infrastructure development fund			—				—				220				363
Revenue from research contracts			1,593				2,427				1,394				4,531
Rental income			47,757				101,941				47,528				95,786
Others			7,482				13,745				6,879				13,962
		￦	103,010				195,312				96,330				213,695

 

(2)	Other non-operating expense for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Accretion expenses of other provisions		￦	70				119				272				316
Depreciation expenses on investment properties			131				329				185				347
Depreciation expenses on idle assets			1,641				3,311				1,666				3,332
Other bad debt expense			1,163				5,108				5,168				12,983
Donations			23,726				35,387				4,742				17,162
Others			5,157				8,336				4,947				5,977
		￦	31,888				52,590				16,980				40,117

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

37.	Other Gains (Losses)

Composition of other gains (losses) for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Other gains
Gains on disposal of property plant, and equipment		￦	11,360				29,958				78,854				96,769
Gains on disposal of intangible assets			—				—				32				32
Gains on foreign currency translation			4,246				8,653				1,823				2,984
Gains on foreign currency transaction			12,573				23,789				10,999				19,798
Gains on insurance proceeds			—				—				25				25
Others			44,319				93,731				26,786				78,513
Other losses
Losses on disposal of property plant and equipment			(16,871	)			(21,131	)			(28,689	)			(41,044	)
Losses on disposal of intangible assets			(4	)			(138	)			—				(5	)
Impairment loss on property, plant and equipment			—				—				(1,205	)			(1,205	)
Losses on foreign currency translation			(544	)			(4,275	)			(3,472	)			(9,978	)
Losses on foreign currency transaction			(13,731	)			(33,666	)			(23,864	)			(35,632	)
Others			(10,465	)			(26,135	)			(14,048	)			(37,122	)
		￦	30,883				70,786				47,241				73,135

 

38.	Finance Income

 

(1)	Finance income for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Interest income		￦	52,202				132,521				55,515				105,008
Dividends income			628				9,995				8,107				13,564
Gains on disposal of financial assets			—				1,480				—				—
Gains on valuation of derivatives			128,487				53,758				160,714				239,814
Gains on transaction of derivatives			9,085				23,040				6,693				13,653
Gains on foreign currency translation			6,517				142,766				39,297				64,084
Gains on foreign currency transaction			10,795				15,885				5,099				12,186
Others			—				1				41				64
		￦	207,714				379,446				275,466				448,373

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

38.	Finance Income, Continued

 

(2)	Interest income included in finance income for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Cash and cash equivalents		￦	17,856				38,539				13,297				25,188
Available-for-sale financial assets			—				—				—				29
Held-to-maturity investments			29				54				24				48
Loans and receivables			7,163				14,101				4,400				11,174
Short-term financial instrument			6,406				25,457				5,668				8,532
Long-term financial instrument			2,334				4,895				2,643				5,572
Trade and other receivables			18,414				49,475				29,483				54,465
		￦	52,202				132,521				55,515				105,008

 

39.	Finance Expenses

 

(1)	Finance expenses for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Interest expense		￦	423,024				881,259				525,807				1,078,463
Losses on sale of financial assets			—				—				2,008				2,983
Impairment of available-for-sale financial assets			93				93				8,172				13,993
Losses on valuation of derivatives			630				53,318				8,583				22,920
Losses on transaction of derivatives			59,933				70,787				9,909				19,323
Losses on foreign currency translation			111,999				101,445				222,763				303,946
Losses on foreign currency transaction			14,775				42,388				5,760				8,474
Others			150				259				39				63
		￦	610,604				1,149,549				783,041				1,450,165

 

(2)	Interest expense included in finance expenses for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Trade and other payables		￦	17,103				33,506				24,211				45,120
Short-term borrowings			1,339				2,819				4,647				7,937
Long-term borrowings			19,879				42,449				23,463				55,914
Debt securities			488,866				988,164				540,967				1,096,019
Other financial liabilities			119,916				240,739				151,143				303,686
			647,103				1,307,677				744,431				1,508,676
Less: capitalized borrowing costs			(224,079	)			(426,418	)			(218,624	)			(430,213	)
		￦	423,024				881,259				525,807				1,078,463

Capitalization rates for the six-month periods ended June 30, 2016 and 2015 are 2.31% ~ 4.12% and 2.71% ~ 4.22%, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

40.	Income Taxes

 

(1)	Income tax expense for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won
		June 30, 2016				June 30, 2015
Current income tax expense
Payment of income tax		￦	1,815,868				566,854
Adjustment due to changes in estimates related to prior years			40,194				(33,971	)
Current income tax directly recognized in equity			80,873				3,440
			1,936,935				536,323
Deferred income tax expense
Generation and realization of temporary differences			50,687				9,105
Changes of unrecognized tax losses, tax credit and temporary differences for prior periods			(7,533	)			65,138
Changes in deferred tax on tax losses carryforwards			—				612,970
Tax credit carryforwards			2,260				3,266
			45,414				690,479
Income tax expense		￦	1,982,349				1,226,802

 

(2)	Reconciliation between actual income tax expense and amount computed by applying the statutory tax rate of 24.2% to income before income taxes for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won
		June 30, 2016				June 30, 2015
Income before income tax		￦	5,912,970				3,791,803
Income tax expense computed at applicable tax rate of 24.2%			1,430,939				917,616
Adjustments
Additional payment of income taxes or receipt of income tax refunds			(518	)			(6,308	)
Effect of applying gradual tax rate			(2,293	)			(1,397	)
Effect of non-taxable income			(9,476	)			(74,841	)
Effect of non-deductible expenses			5,838				84,491
Effects of tax credits and deduction			(26,052	)			(5,351	)
Recognition (reversal) of unrecognized deferred tax asset, net			(7,533	)			64,448
Deferred income tax related to investments in subsidiaries and associates			542,254				272,782
Others, net			8,478				(24,638	)
			510,698				309,186
Adjustment in respect of prior years			40,712				—
Income tax expense		￦	1,982,349				1,226,802
Effective tax rate			33.50	%			32.40	%

 

(3)	Income tax directly adjusted to shareholders’ equity (except for accumulated other comprehensive loss) for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016				June 30, 2015
Dividends of hybrid securities		￦	2,627				2,612
Gain on disposal of investments in subsidiaries			—				(14,065	)
		￦	2,627				(11,453	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

40.	Income Taxes, Continued

 

(4)	Income tax recognized as other comprehensive income (loss) for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016				June 30, 2015
Income tax recognized as other comprehensive income (loss)
Loss on valuation of available-for-sale financial assets		￦	(8,916	)			(11,763	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			(22,581	)			9,951
Remeasurements of defined benefit obligations			107,812				18,933
Investments in associates			1,526				(559	)
Others			405				(1,669	)
		￦	78,246				14,893

 

(5)	Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
		Beginning balance				Amounts recognized in profit or loss				Amount recognized in other comprehensive income or loss				Amounts recognized directly in equity				Ending balance
Deferred income tax on temporary differences
Employee benefits		￦	407,342				41,123				107,812				—				556,277
Cash flow hedge			(29,013	)			34,503				(22,581	)			—				(17,091	)
Investments in associates or subsidiaries			(6,449,998	)			(491,618	)			1,526				—				(6,940,090	)
Property, plant and equipment			(5,495,786	)			14,245				—				—				(5,481,541	)
Finance lease			(272,430	)			(5,870	)			—				—				(278,300	)
Intangible assets			9,420				(60	)			—				—				9,360
Financial assets at fair value through profit or loss			(4	)			107				—				—				103
Available-for-sale financial assets			(49,199	)			679				(8,916	)			—				(57,436	)
Deferred revenue			215,361				(7,439	)			—				—				207,922
Provisions			3,372,423				118,553				—				—				3,490,976
Doubtful receivables			1,405				1,291				—				—				2,696
Other finance liabilities			26,298				(1,034	)			—				2,627				27,891
Gains or losses on foreign exchange translation			128,714				(4,983	)			—				—				123,731
Allowance for doubtful accounts			18,976				(1,989	)			—				—				16,987
Accrued income			(11,231	)			2,930				—				—				(8,301	)
Special deduction for property, plant and equipment			(194,347	)			(57	)			—				—				(194,404	)
Reserve for research and human development			(20,688	)			3,059				—				—				(17,629	)
Others			576,585				172,530				405				—				749,520
			(7,766,172	)			(124,030	)			78,246				2,627				(7,809,329	)
Deferred income tax on unused tax losses and tax credit
Tax losses			(3	)			3				—				—				—
Tax credit			27,115				(2,260	)			—				—				24,855
			27,112				(2,257	)			—				—				24,855
		￦	(7,739,060	)			(126,287	)			78,246				2,627				(7,784,474	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

40.	Income Taxes, Continued

 

(5)	Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won		December 31, 2015
		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		￦	352,934				11,495				42,913				—				407,342
Cash flow hedge			51,354				(87,620	)			7,253				—				(29,013	)
Investments in associates or subsidiaries			(5,769,627	)			(669,035	)			2,808				(14,144	)			(6,449,998	)
Property, plant and equipment			(5,979,863	)			484,077				—				—				(5,495,786	)
Finance lease			(197,097	)			(75,333	)			—				—				(272,430	)
Intangible assets			12,309				(2,889	)			—				—				9,420
Financial assets at fair value through profit or loss			2,840				(2,844	)			—				—				(4	)
Available-for-sale financial assets			(41,836	)			(1,048	)			(6,315	)			—				(49,199	)
Deferred revenue			230,644				(15,283	)			—				—				215,361
Provisions			3,459,775				(87,352	)			—				—				3,372,423
Doubtful receivables			1,356				49				—				—				1,405
Other finance liabilities			23,237				(2,192	)			—				5,253				26,298
Gains or losses on foreign exchange translation			53,794				74,920				—				—				128,714
Allowance for doubtful accounts			15,452				3,524				—				—				18,976
Accrued income			(3,245	)			(7,986	)			—				—				(11,231	)
Special deduction for property, plant and equipment			(194,674	)			327				—				—				(194,347	)
Impairment of non-current assets			86,720				(86,720	)			—				—				—
Reserve for research and human development			(35,499	)			14,811				—				—				(20,688	)
Others			460,019				116,566				—				—				576,585
			(7,471,407	)			(332,533	)			46,659				(8,891	)			(7,766,172	)
Deferred income tax on unused tax losses and tax credit
Tax losses			2,176,175				(2,176,178	)			—				—				(3	)
Tax credit			98,286				(71,171	)			—				—				27,115
			2,274,461				(2,247,349	)			—				—				27,112
		￦	(5,196,946	)			(2,579,882	)			46,659				(8,891	)			(7,739,060	)

 

(6)	Deferred income tax assets (liabilities) recognized in the statements of financial position as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Deferred income tax assets		￦	752,896				623,623
Deferred income tax liabilities			(8,537,370	)			(8,362,683	)
		￦	(7,784,474	)			(7,739,060	)

 

(7)	Details of deductible temporary differences, tax losses and unused tax credits not recognized in the deferred income tax assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Deductible temporary differences		￦	426,162				441,704

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

41.	Assets Held-for-Sale

Assets held-for-sale as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Land (*1)		￦	2,907				2,907
Building (*1)			20,366				20,366
Investments in associates (*2,3)			56,374				56,374
		￦	79,647				79,647

 

(*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, plans to dispose certain portion of its investment in Dongducheon Dream Power Co., Ltd. and reclassified the relevant book value to non-current assets held-for-sale.

(*3)	Korea South-East Power Co., Ltd., a subsidiary of the Company, plans to dispose certain portion of its investment in Hyundai Energy Co., Ltd. and reclassified the relevant book value to non-current assets held-for-sale.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

42.	Expenses Classified by Nature

Expenses classified by nature for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016
		Selling and administrative expenses				Cost of sales				Total
Raw materials used		￦	—				6,215,759				6,215,759
Salaries			336,662				1,559,841				1,896,503
Retirement benefit expense			33,063				174,195				207,258
Welfare and benefit expense			50,729				180,174				230,903
Insurance expense			5,642				43,159				48,801
Depreciation			73,455				4,170,892				4,244,347
Amortization of intangible assets			17,959				19,462				37,421
Bad debt expense			15,228				—				15,228
Commission			300,178				203,621				503,799
Advertising expense			16,956				3,911				20,867
Training expense			2,145				5,010				7,155
Vehicle maintenance expense			4,625				3,210				7,835
Publishing expense			1,903				1,882				3,785
Business promotion expense			1,756				2,300				4,056
Rent expense			19,143				63,680				82,823
Telecommunication expense			13,537				38,626				52,163
Transportation expense			288				2,433				2,721
Taxes and dues			32,550				241,027				273,577
Expendable supplies expense			2,628				14,319				16,947
Water, light and heating expense			5,039				9,497				14,536
Repairs and maintenance expense			28,781				828,078				856,859
Ordinary development expense			70,192				216,656				286,848
Travel expense			9,009				33,123				42,132
Clothing expense			1,016				1,362				2,378
Survey and analysis expense			311				1,395				1,706
Membership fee			762				7,736				8,498
Power purchase			—				5,240,815				5,240,815
Others			57,558				2,267,632				2,325,190
		￦	1,101,115				21,549,795				22,650,910

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

42.	Expenses Classified by Nature, Continued

 

Expenses classified by nature for the six-month periods ended June 30, 2016 and 2015 are as follows, continued:

 

In millions of won		June 30, 2015
		Selling and administrative expenses				Cost of sales				Total
Raw materials used		￦	—				7,768,317				7,768,317
Salaries			310,148				1,396,119				1,706,267
Retirement benefit expense			30,238				158,224				188,462
Welfare and benefit expense			57,425				231,502				288,927
Insurance expense			5,385				41,454				46,839
Depreciation			47,861				3,952,072				3,999,933
Amortization of intangible assets			21,826				15,821				37,647
Reversal of allowance for bad debt			(17,471	)			—				(17,471	)
Commission			300,868				164,648				465,516
Advertising expense			13,779				3,074				16,853
Training expense			2,158				3,807				5,965
Vehicle maintenance expense			5,114				4,200				9,314
Publishing expense			1,236				1,748				2,984
Business promotion expense			1,719				1,953				3,672
Rent expense			19,356				65,416				84,772
Telecommunication expense			11,933				36,859				48,792
Transportation expense			300				2,704				3,004
Taxes and dues			39,565				214,914				254,479
Expendable supplies expense			3,261				12,903				16,164
Water, light and heating expense			5,567				13,359				18,926
Repairs and maintenance expense			15,379				808,114				823,493
Ordinary development expense			73,704				188,948				262,652
Travel expense			7,503				25,957				33,460
Clothing expense			1,208				1,509				2,717
Survey and analysis expense			283				1,178				1,461
Membership fee			670				5,847				6,517
Power purchase			—				6,186,371				6,186,371
Others			55,352				2,146,450				2,201,802
		￦	1,014,367				23,453,468				24,467,835

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

43.	Earnings Per Share

 

(1)	Basic earnings per share for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In won

Type

June 30, 2016

June 30, 2015

Three- month period ended

Six- month period ended

Three- month period ended

Six- month period ended

Basic earnings per share

￦

2,689

6,016

2,034

3,903

 

(2)	Basic earnings per share

Net profit for the period and weighted average number of common shares used in the calculation of basic earnings per share for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won except number of shares
Type		June 30, 2016								June 30, 2015
		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
Controlling interest in net income		￦	1,726,467				3,861,917				1,305,183				2,505,266
Profit used in the calculation of total basic earnings per share			1,726,467				3,861,917				1,305,183				2,505,266
Weighted average number of common shares			641,964,077				641,964,077				641,964,077				641,964,077

 

(3)	Weighted average number of common shares used in the calculation of basic earnings per share for the three and six-month periods ended June 30, 2016 and 2015 are as follows:

 

In number of shares
		June 30, 2016								June 30, 2015
Type		Three- month period ended				Six- month period ended				Three- month period ended				Six- month period ended
The number of common shares issued at beginning of the year			641,964,077				641,964,077				641,964,077				641,964,077
Weighted average number of common shares			641,964,077				641,964,077				641,964,077				641,964,077

 

(4)	There are no potential dilutive instruments and diluted earnings per shares are same as basic earnings per share for the six-month periods ended June 30, 2016 and 2015.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	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 unchanged from that of the prior year.

Details of the Company’s capital management accounts as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Total borrowings and debt securities		￦	55,768,953				58,753,499
Cash and cash equivalents			3,360,776				3,783,065
Net borrowings and debt securities			52,408,177				54,970,434
Total shareholder’s equity			69,639,638				67,942,475
Debt to equity ratio			75.26	%			80.91	%

 

(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 unchanged from that of 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.

 

①

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 credit risk as customers of the Company 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.

 

②

Impairment and allowance account

In accordance with the Company policies, individually 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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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016				December 31, 2015
Cash and cash equivalents		￦	3,360,776				3,783,065
Derivative assets (trading)			267,345				255,008
Available-for-sale financial assets			1,033,110				584,479
Held-to-maturity investments			3,545				3,623
Loans and receivables			832,661				735,057
Long-term/short-term financial instruments			2,122,059				5,890,866
Derivative assets (using hedge accounting)			296,837				362,142
Trade and other receivables			8,537,451				9,271,967
Financial guarantee contracts (*)			282,134				271,010

 

(*)	Maximum exposure associated with the financial guarantee contracts is the maximum amounts of the obligation.

Financial guarantee contracts as of June 30, 2016 are as follows:

 

In millions of won and thousands of U.S. dollars
Type		Company		Foreign currency				Local currency
Joint ventures		KEPCO SPC Power Corporation		USD	74,638			￦	86,930
Joint ventures		PT. Tanjung Power Indonesia		USD	35,000				40,765
Joint ventures		Kelar S.A		USD	132,600				154,439
				USD	242,238			￦	282,134

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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

(iii)

Sensitivity analysis

Significant assets and liabilities with uncertainties in underlying assumptions

 

①

Defined benefit obligation

A sensitivity analysis of defined benefit obligation assuming a 1% increase and decrease movements in the actuarial valuation assumptions as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won				June 30, 2016								December 31, 2015
Type		Accounts		1% Increase				1% Decrease				1% Increase				1% Decrease
Future salary increases		Increase (decrease) in defined benefit obligation		￦	373,366				(332,146	)			293,205				(271,758	)
Discount rate		Increase (decrease) in defined benefit obligation			(325,956	)			388,073				(267,648	)			315,870

Changes of employee benefits assuming a 1% increase and decrease movements in discount rate on plan asset for the six-month periods ended June 30, 2016 and 2015 are ￦3,026 million and ￦3,620 million, respectively.

 

②

Provisions

Changes in provisions due to movements in underlying assumptions as of June 30, 2016 and December 31, 2015 are as follows:

 

Type		Accounts		June 30, 2016				December 31, 2015
PCBs		Inflation rate			2.65	%			2.65	%
		Discount rate			3.21	%			3.21	%
Nuclear plants		Inflation rate			1.40	%			1.40	%
		Discount rate			3.55	%			3.55	%
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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won				June 30, 2016								December 31, 2015
Type		Accounts		0.1% Increase				0.1% Decrease				0.1% Increase				0.1% Decrease
Discount rate		PCBs		￦	(798	)			804				(875	)			881
		Nuclear plants			(200,202	)			205,497				(201,318	)			206,720
		Spent fuel			(52,390	)			54,425				(52,390	)			54,425
Inflation rate		PCBs			899				(895	)			885				(881	)
		Nuclear plants			224,600				(218,867	)			220,720				(215,086	)
		Spent fuel			55,212				(53,219	)			55,212				(53,219	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

Management judgment effected by uncertainties in underlying assumptions

 

①

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 June 30, 2016 and December 31, 2015 are as follows:

 

In thousands of foreign currencies		Assets								Liabilities
Type		June 30, 2016				December 31, 2015				June 30, 2016				December 31, 2015
AUD			157				158				321,986				595,284
BWP			983				301				314				—
CAD			—				—				—				858
CNY			—				—				26,140				26,140
EUR			11,619				6,141				13,059				33,552
MXN			7,702				7,704				869				—
PHP			678,766				489,309				43,626				77,337
SAR			1,205				1,083				—				—
USD			1,166,391				1,260,094				9,181,721				9,331,854
INR			745,100				972,175				123,114				206,159
PKR			250,038				211,212				2,952				12,928
MGA			3,562,024				2,768,360				86,088				151,729
JPY			731,847				1,425,163				733,989				20,325,211
KZT			48				47,177				—				—
GBP			—				—				11				99
CHF			68				—				200,304				400,029
AED			4,294				1,481				761				1,705
ZAR			438				238				4				—
JOD			2,383				2,972				6				—
BDT			41,385				43,332				539				889
TWD			—				—				—				30
SEK			—				—				1,183				—

A sensitivity analysis on the Company’s income for the period assuming a 10% increase and decrease in currency exchange rates as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
Type		10% Increase				10% Decrease				10% Increase				10% Decrease
Increase (decrease) of income before income tax		￦	(982,478	)			982,478				(1,063,285	)			1,063,285
Increase (decrease) of shareholder’s equity (*)			(982,478	)			982,478				(1,063,285	)			1,063,285

 

(*)	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 June 30, 2016 and December 31, 2015.

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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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

②

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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
Type		June 30, 2016				December 31, 2015
Short-term borrowings		￦	274,506				41,608
Long-term borrowings			1,304,777				1,977,745
Debt securities			1,874,700				2,082,000
		￦	3,453,983				4,101,353

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 six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows

 

In millions of won		June 30, 2016								December 31, 2015
Type		1% Increase				1% Decrease				1% Increase				1% Decrease
Increase (decrease) of profit before income tax		￦	(34,540	)			34,540				(41,014	)			41,014
Increase (decrease) of shareholder’s equity (*)			(34,540	)			34,540				(41,014	)			41,014

 

(*)	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.

 

③

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 six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won		June 30, 2016								June 30, 2015
Type		1% Increase				1% Decrease				1% Increase				1% Decrease
Increase (decrease) of profit before income tax		￦	260,841				(260,841	)			258,936				(258,936	)
Increase (decrease) of shareholder’s equity (*)			260,841				(260,841	)			258,936				(258,936	)

 

(*)	The effect on the shareholders’ equity excluding the impact of income taxes.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	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 June 30, 2016 and December 31, 2015. 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		June 30, 2016
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Borrowings and debt securities		￦	11,561,691				8,495,493				21,162,506				26,861,556				68,081,246
Finance lease liabilities			178,792				175,023				289,724				179,285				822,824
Trade and other payables			4,498,601				301,492				631,447				2,404,300				7,835,840
Financial guarantee contracts (*)			196,368				61,729				24,037				—				282,134
		￦	16,435,452				9,033,737				22,107,714				29,445,141				77,022,044

 

In millions of won		December 31, 2015
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Borrowings and debt securities		￦	9,862,441				11,252,946				23,642,523				28,566,566				73,324,476
Finance lease liabilities			182,072				175,512				349,953				206,323				913,860
Trade and other payables			4,618,812				314,361				617,120				2,244,445				7,794,738
Financial guarantee contracts (*)			168,885				62,116				40,009				—				271,010
		￦	14,832,210				11,804,935				24,649,605				31,017,334				82,304,084

 

(*)	Total guarantee amounts associated with the financial guarantee contracts. Financial guarantee liabilities which are recognized as of June 30, 2016 and December 31, 2015 are ￦5,002 million and ￦4,288 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

The expected maturities for non-derivative financial assets as of June 30, 2016 and December 31, 2015 in detail are as follows:

 

In millions of won		June 30, 2016
Type		Less than 1 year				1~5 Years				More than 5 years				Other (*)				Total
Cash and cash equivalents		￦	3,360,776				—				—				—				3,360,776
Available-for-sale financial assets			—				—				—				1,033,110				1,033,110
Held-to-maturity investments			351				3,194				—				—				3,545
Loans and receivables			198,788				395,309				276,254				8,489				878,840
Long-term/short-term financial instruments			1,773,426				5,000				343,301				332				2,122,059
Trade and other receivables			6,735,229				869,018				866,787				74,672				8,545,706
		￦	12,068,570				1,272,521				1,486,342				1,116,603				15,944,036
In millions of won		December 31, 2015
Type		Less than 1 year				1~5 Years				More than 5 years				Other (*)				Total
Cash and cash equivalents		￦	3,783,065				—				—				—				3,783,065
Available-for-sale financial assets			—				—				—				584,479				584,479
Held-to-maturity investments			381				3,242				—				—				3,623
Loans and receivables			106,013				268,820				397,976				11,330				784,139
Long-term/short-term financial instruments			5,132,829				5,000				752,703				334				5,890,866
Trade and other receivables			7,476,745				765,979				958,968				79,202				9,280,894
		￦	16,499,033				1,043,041				2,109,647				675,345				20,327,066

 

(*)	The maturities cannot be presently determined.

Derivative liabilities classified by maturity periods which from reporting date to maturity date of contract as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Gross settlement
- Trading			￦    (7,230	)			(15,613	)			(39,204	)			(3,842	)			(65,889	)
- Hedging			(3,465	)			(3,686	)			(8,094	)			(93,281	)			(108,526	)
			￦  (10,695	)			(19,299	)			(47,298	)			(97,123	)			(174,415	)

 

In millions of won		December 31, 2015
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Gross settlement
- Trading			￦    (9,552	)			(4,627	)			(47,971	)			—				(62,150	)
- Hedging			1,260				2,032				(44,233	)			(62,534	)			(103,475	)
			￦    (8,292	)			(2,595	)			(92,204	)			(62,534	)			(165,625	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(3)	Fair value risk

The fair value of the Company’s actively-traded financial instruments (i.e. short-term financial assets held for trading, available-for-sale financial assets, 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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
Type		Book value				Fair value				Book value				Fair value
Assets recognized at fair value
Available-for-sale financial assets (*1)		￦	1,033,110				1,033,110				584,479				584,479
Derivative assets (trading)			267,345				267,345				255,008				255,008
Derivative assets (using hedge accounting)			296,837				296,837				362,142				362,142
Long-term financial instruments			348,633				348,633				758,037				758,037
Short-term financial instruments			1,773,426				1,773,426				5,132,829				5,132,829
			3,719,351				3,719,351				7,092,495				7,092,495
Assets carried at amortized cost
Held-to-maturity investments			3,545				3,545				3,623				3,623
Loans and receivables			832,661				832,661				735,057				735,057
Trade and other receivables			8,537,451				8,537,451				9,271,967				9,271,967
Cash and cash equivalents			3,360,776				3,360,776				3,783,065				3,783,065
			12,734,433				12,734,433				13,793,712				13,793,712
Liabilities recognized at fair value
Derivative liabilities (trading)			22,636				22,636				49,011				49,011
Derivative liabilities (using hedge accounting)			149,955				149,955				117,499				117,499
			172,591				172,591				166,510				166,510
Liabilities carried at amortized cost
Secured borrowings			652,027				652,027				641,363				641,363
Unsecured bond			53,009,223				58,278,597				55,677,213				59,619,941
Finance lease liabilities			599,955				599,955				659,394				659,394
Unsecured borrowings			2,052,788				2,070,795				2,407,690				2,427,847
Trade and other payables (*2)			7,835,840				7,835,840				7,794,738				7,794,738
Bank overdraft			54,915				54,915				27,233				27,233
		￦	64,204,748				69,492,129				67,207,631				71,170,516

 

(*1)	Book values of equity securities held by the Company that were measured at cost as of June 30, 2016 and December 31, 2015 are ￦216,840 million and ￦207,508 million, respectively, 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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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	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 June 30, 2016 and December 31, 2015 are as follows:

 

Type		June 30, 2016		December 31, 2015
Derivatives		0.46% ~ 4.16%		0.28% ~ 4.16%
Borrowings and debt securities		0.15% ~ 5.80%		0.15% ~ 5.80%
Finance lease		9.00% ~ 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 June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016
Type		Level 1				Level 2				Level 3				Total
Financial assets at fair value
Available-for-sale financial assets		￦	226,300				409,581				180,389				816,270
Derivative assets			—				564,182				—				564,182
			226,300				973,763				180,389				1,380,452
Financial liabilities at fair value
Derivative liabilities			—				172,591				—				172,591

 

In millions of won		December 31, 2015
Type		Level 1				Level 2				Level 3				Total
Financial assets at fair value
Available-for-sale financial assets		￦	196,579				—				180,390				376,969
Derivative assets			—				617,150				—				617,150
			196,579				617,150				180,390				994,119
Financial liabilities at fair value
Derivative liabilities			—				166,510				—				166,510

The fair value of available-for-sale financial assets publicly traded is measured at the closing bid price quoted at the end of the reporting period. Meanwhile, the fair value of unquoted available-for-sale financial assets 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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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(3)	Fair value risk, continued

 

Changes of financial assets and liabilities which are classified as level 3 for the six-month period ended June 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won

June 30, 2016

Beginning balance

Acquisition

Reclassified category

Valuation

Disposal

Foreign currency translation

Ending balance

Financial assets at fair value

Available-for-sale financial assets

Unlisted securities

￦

180,390

—

—

(1

)

—

—

180,389

 

In millions of won

December 31, 2015

Beginning balance

Acquisition

Reclassified category

Valuation

Disposal

Foreign currency translation

Ending balance

Financial assets at fair value

Available-for-sale financial assets

Unlisted securities

￦

168,627

—

—

11,763

—

—

180,390

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

45.	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 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 June 30, 2016 are as follows:

 

In millions of won
Type		Amounts
Less than 1 year		￦	121,658
1 ~ 2 years			121,658
2 ~ 3 years			121,658
Over 3 years			354,834
		￦	719,808

 

(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 (2017~2047) 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 2017 to 2047. 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 June 30, 2016 are as follows:

 

In millions of won
Type		Amounts
Less than 1 year		￦	—
1 ~ 2 years			26,797
2 ~ 3 years			29,224
Over 3 years			669,912
		￦	725,933

 

(iv)

Accumulated contract costs and profits related to the Company’s contract in process as of June 30, 2016 were ￦96,009 million and ￦6,042 million, respectively. There are no amount due from customers and advance receipts in progress.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties

 

(1)	Related parties of the Company as of June 30, 2016 are as follows:

 

Type		Related party
Parent		Republic of Korea government
Subsidiaries (81 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 Canada Energy Ltd., KEPCO Canada Uranium Investment Limited Partnership, 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, PT KEPCO Resource Indonesia, 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., KOWEPO India Private Limited, 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 Kings Plaza, LLC, DG Whitefield, LLC, EWP Renewable Co., EWPRC Biomass Holdings, LLC, Springfield Power, LLC, HeeMang Sunlight Power Co., Ltd., Fujeij Wind Power Company, KOSPO Youngnam Power Co., Ltd., Global One Carbon Private Equity Investment Trust 2., Chitose Solar Power Plant LLC., Solar School Plant Co., Ltd., KEPCO Energy Solution Co. Ltd.
Associates (55 associates)		Daegu Green Power Co., Ltd., 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., Yeongwol Energy Station Co., Ltd., KS Solar Co., Ltd., Heang Bok Do Si Photovoltaic Power Co., Ltd., Korea Electric Power Industrial Development Co., Ltd., DS POWER 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 Material Co., Ltd., Gangwon Wind Power 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. (formerly, Muju Wind Power Co., Ltd.), Pyeongchang Wind Power Co., Ltd., Daeryun Power Co., Ltd., JinanJangsu Wind 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, 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., Jungbu Bio Energy Co., Ltd., Korea Electric Vehicle Charge Service, Ulleungdo Natural Energy Co., Ltd., Korea Nuclear Partners Co., Ltd., Tamra Offshore Wind Power Co., Ltd., Korea Electric Power Corporation Fund
Joint ventures (39 joint ventures)		KEPCO SPC Power Corporation, Daejung Offshore Wind Power Co., Ltd., KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, 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 Company Ltd., Datang Chifeng Renewable Power Co., Ltd., KEPCO Energy Resource Nigeria Limited, Rabigh Electricity Company, Eco Biomass Energy Sdn. Bhd., Rabigh Operation & Maintenance Company, 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., Datang Chaoyang Renewable Power Co., Ltd., Nepal Water & Energy Development Company Pty Ltd., KODE NOVUS I LLC, KODE NOVUS II LLC, Amman Asia Electric Power Company, Kelar S.A, PT. Tanjung Power Indonesia, Nghi Son 2 Power Ltd., Canada Korea Uranium Limited Partnership, Daehan Wind Power PSC
Others		Korea Development Bank

 

(2)	Transactions between the Company and its subsidiaries are eliminated during the consolidation and will not be shown as notes.

 

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June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(3)	Related party transactions for the six-month periods ended June 30, 2016 and 2015 are as follows:

<Sales and Others>

 

In millions of won				Sales and others
Company name		Transaction type		June 30, 2016				June 30, 2015
<Associates>
Daegu Green Power Co., Ltd.		Electricity sales		￦	369				521
Dongducheon Dream Power Co., Ltd.		Electricity sales			8,330				7,317
Korea Gas Corporation		Electricity sales			45,071				44,730
Jeongam Wind Power Co., Ltd.		Electricity sales			5				5
Korea Power Engineering Service Co., Ltd.		Service			615				1,138
Yeongwol Energy Station Co., Ltd.		Service			448				407
KS Solar Co., Ltd.		Electricity sales			10				10
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Service			1				1
Korea Electric Power Industrial Development Co., Ltd.		Service			6,082				7,421
DS POWER Co., Ltd.		Service			26,629				57,754
Goseong Green Energy Co., Ltd.		Electricity sales			2,550				3,369
Gangneung Eco Power Co., Ltd.		Service			1,196				2,113
Shin Pyeongtaek Power Co., Ltd.		Electricity sales			76				1,048
Naepo Green Energy Co., Ltd.		Electricity sales			49				33
YTN Co., Ltd.		Electricity sales			847				932
Busan Green Energy Co., Ltd.		Service			117				1
Korea Electric Vehicle Charge Service		Service			30				—
Ulleungdo Natural Energy Co., Ltd.		Service			154				—
Cheongna Energy Co., Ltd.		Service			4,209				17,797
Gangwon Wind Power Co., Ltd.		Electricity sales			1,194				929
Hyundai Green Power Co., Ltd.		Design service			12,074				12,068
Korea Power Exchange		Service			2,597				1,773
Hyundai Energy Co., Ltd.		Service			11,718				11,809
Taebaek Wind Power Co., Ltd.		Service			448				455
Pyeongchang Wind Power Co., Ltd.		Design service			20				57
Daeryun Power Co., Ltd.		Electricity sales			793				921
Changjuk Wind Power Co., Ltd.		Electricity sales			760				342
KNH Solar Co., Ltd.		Electricity sales			9				9
S-Power Co., Ltd.		Service			2,796				3,735
Busan Solar Co., Ltd.		Electricity sales			8				8
Green Biomass Co., Ltd.		Electricity sales			2				36
SPC Power Corporation		Dividend income			4,298				1,360
Gemeng International Energy Co., Ltd.		Dividend income			16,476				—
Dolphin Property Limited		Dividend income			35				—
PT. Bayan Resources TBK		Service			120				73
Pioneer Gas Power Limited		Service			26				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Service			443				266
<Joint ventures>
KEPCO SPC Power Corporation		Service			3,817				14,366
Daejung Offshore Wind Power Co., Ltd.		Electricity sales			—				1
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Commission			530				597
Dangjin Eco Power Co., Ltd.		Technical fee			532				10
Honam Wind Power Co., Ltd.		Electricity sales			135				28
Seokmun Energy Co., Ltd.		Technical fee			518				496
Incheon New Power Co., Ltd.		Construction revenue			260				128
Chun-cheon Energy Co., Ltd.		Service			1,820				672
Yeonggwangbaeksu Wind Power Co., Ltd.		Electricity sales			788				143
KW Nuclear Components Co., Ltd.		Service			2,665				1,582
GS Donghae Electric Power Co., Ltd.		Electricity sales			7,178				1,865
Busan Shinho Solar Power Co., Ltd.		Electricity sales			197				12
Datang Chifeng Renewable Power Co., Ltd.		Interest income			7,845				9,056
Rabigh Electricity Company		Interest income			374				259
Shuweihat Asia Operation & Maintenance Company		Service			101				102

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(3)	Related party transactions for the six-month periods ended June 30, 2016 and 2015 are as follows, continued:

 

In millions of won				Sales and others
Company name		Transaction type		June 30, 2016				June 30, 2015
ASM-BG Investicii AD		Service		￦	252				—
Jamaica Public Service Company Limited		Service			1,606				1,494
KV Holdings, Inc.		Dividend income			302				—
Datang KEPCO Chaoyang Renewable Co., Ltd.		Dividend income			440				—
Nepal Water & Energy Development Pty Ltd.		Service			159				—
Amman Asia Electric Power Company		Service			3,559				26,692
Kelar S.A		Service			1,045				5,122
<Others>
Korea Development Bank		Electricity sales			1,399				1,368
		Interest income			235				899

 

<Purchase and Others>

 

In millions of won				Purchase and others
Company name		Transaction type		June 30, 2016				June 30, 2015
<Associates>
Daegu Green Power Co., Ltd.		Electricity purchase		￦	136,515				178,341
Dongducheon Dream Power Co., Ltd.		Electricity purchase			450,109				474,837
Korea Gas Corporation		Purchase of power generation fuel			1,580,827				2,655,013
Daegu Photovoltaic Co., Ltd.		REC purchase			1,628				1,229
Korea Power Engineering Service Co., Ltd.		Services			325				2,221
Yeongwol Energy Station Co., Ltd.		REC purchase			9,236				5,253
KS Solar Co., Ltd.		REC purchase			2,028				3,639
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Rental Fee and others			163				226
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering service fee			120,254				133,411
DS POWER Co., Ltd.		Services			3				—
YTN Co., Ltd.		Advertisement fee			67				162
Ulleungdo Natural Energy Co., Ltd.		Electricity purchase			30				—
Cheongna Energy Co., Ltd.		Services			73				—
Gangwon Wind Power Co., Ltd.		Electricity purchase			13,977				13,451
Hyundai Green Power Co., Ltd.		Electricity purchase			223,996				223,476
Korea Power Exchange		Trading fees			46,310				43,152
Hyundai Energy Co., Ltd.		Electricity purchase			452				1,117
Taebaek Wind Power Co., Ltd.		REC purchase			3,410				4,276
Daeryun Power Co., Ltd.		Electricity purchase			119,644				128,792
Changjuk Wind Power Co., Ltd.		Electricity purchase			3,281				4,230
KNH Solar Co., Ltd.		Electricity purchase			2,655				3,445
S-Power Co., Ltd.		Services			223,016				345,482
Busan Solar Co., Ltd.		Electricity purchase			1,079				2,324
Green Biomass Co., Ltd.		Woodchip purchase			1,586				2,267
<Joint ventures>
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Service			68,611				41,976

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(3)	Related party transactions for the six-month periods ended June 30, 2016 and 2015 are as follows, continued:

 

In millions of won				Purchase and others
Company name		Transaction type		June 30, 2016				June 30, 2015
Honam Wind Power Co., Ltd.		Electricity purchase		￦	3,168				3,618
Yeonggwangbaeksu Wind Power Co., Ltd.		Electricity purchase			5,560				334
Busan Shinho Solar Power Co., Ltd.		REC Purchase			3,595				4,262
Global Trade Of Power System Co., Ltd.		Service			289				1
Expressway Solar-light Power Generation Co., Ltd.		Electricity purchase			1,570				1,880
Jamaica Public Service Company Limited		Service			79				46
<Others>
Korea Development Bank		Interest expense			4,370				13,503
		Provision of dividends			654,829				96,087

 

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June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(4)	Receivables and payables arising from related party transactions as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won				Receivables								Payables
Company name		Type		June 30, 2016				December 31, 2015				June 30, 2016				December 31, 2015
<Associates>
Daegu Green Power Co., Ltd.		Trade receivables		￦	52				95				—				—
		Trade payables			—				—				16,262				22,200
Dongducheon Dream Power Co., Ltd.		Trade receivables			2,702				1,206				—				—
		Trade payables			—				—				53,555				100,396
Korea Gas Corporation		Trade receivables			6,703				7,931				—				—
		Non-trade receivables and others			96				255				—				—
		Trade payables			—				—				250,860				302,752
		Non-trade payables and others			—				—				61				—
Daegu Photovoltaic Co., Ltd.		Trade payables			—				—				50				—
Jeongam Wind Power Co., Ltd.		Non-trade payables and others			—				—				5				1
Korea Power Engineering Service Co., Ltd.		Non-trade receivables and others			614				—				—				—
Yeongwol Energy Station Co., Ltd.		Trade receivables			7,044				7,063				—				—
		Trade payables			—				—				229				229
KS Solar Co., Ltd.		Trade receivables			1				2				—				—
		Trade payables			—				—				86				68
		Non-trade payables and others			—				—				—				281
Korea Electric Power Industrial Development Co., Ltd.		Trade receivables			431				469				—				—
		Non-trade receivables and others			16				27				—				—
		Non-trade payables and others			—				—				15,227				27,569
DS Power Co., Ltd.		Trade receivables			175				260				—				—
		Non-trade payables and others			—				—				180				135
Goseong Green Energy Co., Ltd.		Non-trade payables and others			—				—				3,900				3,900
Gangneung Eco Power Co., Ltd.		Trade receivables			1				1				—				—
		Non-trade receivables and others			3,000				1,701				—				—
Shin Pyeongtaek Power Co., Ltd.		Non-trade receivables and others			8				272				—				—
Naepo Green Energy Co., Ltd.		Trade receivables			6				9				—				—
YTN Co., Ltd.		Trade receivables			98				93				—				—
		Non-trade payables and others			—				—				17				154
Korea Electric Vehicle Charge Service		Trade receivables			5				—				—				—
Cheongna Energy Co., Ltd.		Trade receivables			109				157				—				—
		Non-trade receivables and others			—				375				—				—
		Non-trade payables and others			—				—				388				—
Gangwon Wind Power Co., Ltd.		Trade receivables			17				12				—				—
		Trade payables			—				—				568				1,753
Hyundai Green Power Co., Ltd.		Trade receivables			753				962				—				—
		Trade payables			—				—				31,118				36,079
Korea Power Exchange		Trade receivables			615				1,452				—				—
		Non-trade receivables and others			—				112				—				—
		Trade payables			—				—				—				3,529
		Non-trade payables and others			—				—				1,169				1,529
Hyundai Energy Co., Ltd.		Trade receivables			66				44,510				—				—
		Non-trade receivables and others			55,376				—				—				—
		Trade payables			—				—				47				178
		Non-trade payables and others			—				—				8,217				8,030

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(4)	Receivables and payables arising from related party transactions as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won				Receivables								Payables
Company name		Type		June 30, 2016				December 31, 2015				June 30, 2016				December 31, 2015
Ecollite Co., Ltd.		Non-trade receivables and others		￦	210				210				—				—
Taebaek Wind Power Co., Ltd.		Non-trade receivables and others			100				147				—				—
		Trade payables			—				—				83				349
		Non-trade payables and others			—				—				220				—
Pyeongchang Wind Power Co., Ltd.		Trade receivables			5				—				—				—
		Non-trade receivables and others			—				170				—				—
Daeryun Power Co., Ltd.		Trade receivables			151				117				—				—
		Trade payables			—				—				10,391				27,374
Changjuk Wind Power Co., Ltd.		Non-trade receivables and others			93				153				—				—
		Trade payables			—				—				97				—
		Non-trade payables and others			—				—				201				330
KNH Solar Co., Ltd.		Trade receivables			1				2				—				—
S-Power Co., Ltd.		Trade receivables			186				121				—				—
		Trade payables			—				—				23,931				54,141
		Non-trade payables and others			—				—				3,761				—
Green Biomass Co., Ltd.		Non-trade receivables and others			61				109				—				—
		Non-trade payables and others			—				—				384				152
Pioneer Gas Power Limited		Non-trade receivables and others			—				26				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Non-trade receivables and others			56				—				—				—
<Joint ventures>
KEPCO SPC Power Corporation		Trade receivables			201				—				—				—
		Non-trade receivables and others			—				252				—				—
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Non-trade receivables and others			178				251				—				—
		Non-trade payables and others			—				—				53				61
Dangjin Eco Power Co., Ltd.		Non-trade receivables and others			832				300				—				—
Honam Wind Power Co., Ltd.		Trade payables			—				—				83				342
		Non-trade payables and others			—				—				1,600				2,124
Seokmun Energy Co., Ltd.		Trade receivables			33				—				—				—
		Non-trade receivables and others			1,233				2,086				—				—
Incheon New Power Co., Ltd.		Trade receivables			127				128				—				—
Chun-cheon Energy Co., Ltd.		Non-trade receivables and others			150				112				—				—
Yeonggwangbaeksu Wind Power Co., Ltd.		Trade receivables			7				7				—				—
		Non-trade receivables and others			137				136				—				—
		Trade payables			—				—				143				627
		Non-trade payables and others			—				—				692				2,000
GS Donghae Electric Power Co., Ltd.		Trade receivables			884				970				—				—
		Non-trade receivables and others			1,390				1,216				—				—
Busan Shinho Solar Power Co., Ltd.		Trade receivables			2				2				—				—
		Trade payables			—				—				115				272
		Non-trade payables and others			—				—				956				970
Datang Chifeng Renewable Power Co., Ltd.		Non-trade receivables and others			231				368				—				—
Rabigh Operation & Maintenance Company		Non-trade receivables and others			1,780				1,780				—				—

 

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June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(4)	Receivables and payables arising from related party transactions as of June 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won				Receivables								Payables
Company name		Type		June 30, 2016				December 31, 2015				June 30, 2016				December 31, 2015
ASM-BG Investicii AD		Non-trade receivables and others		￦	116				—				—				—
Nepal Water & Energy Development Company Pty Ltd.		Non-trade receivables and others			692				—				—				—
Jamaica Public Service Company Limited		Trade receivables			1,169				1,193				—				—
		Non-trade receivables and others			703				581				—				—
Amman Asia Electric Power Company		Trade receivables			1,305				739				—				—
<Others>
Korea Development Bank		Accrued interest income			—				212				—				—
		Non-trade receivables and others			125,683				45,623				—				—
		Non-trade payables and others			—				—				408				493
		Derivatives			10,111				3,777				6,253				2,313

 

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June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(5)	Loans and others arising from related party transactions as of June 30, 2016 and December 31, 2015 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.		￦	28,296				—				—				(134	)			28,162
		Allowance for doubtful accounts			(17,755	)			—				—				88				(17,667	)
Associates		PT. Cirebon Electric Power			40,979				1,930				(9,707	)			(250	)			32,952
Associates		PT. Mutiara Jawa			450				—				(450	)			—				—
Associates		Xe-Pian Xe-Namnoy Power Co., Ltd.			1,413				—				—				—				1,413
Associates		PT Wampu Electric Power			—				9,638				—				264				9,902
Associates		Jungbu Bio Energy Co., Ltd.			—				—				—				396				396
Associates		Hyundai Energy Co., Ltd.			—				2,465				—				—				2,465
Joint ventures		KEPCO SPC Power Corporation			29,651				—				(2,719	)			(144	)			26,788
Joint ventures		Datang Chifeng Renewable Power Co., Ltd.			23,775				—				(3,997	)			(89	)			19,689
Joint ventures		Jamaica Public Service Company Limited			2,345				—				—				(15	)			2,330
Joint ventures		Rabigh Electricity Company			45,552				—				—				(262	)			45,290
Joint ventures		KODE NOVUS II LLC			—				1,193				—				3,002				4,195
		Allowance for doubtful accounts			—				(4,258	)			—				63				(4,195	)
				￦	154,706				10,968				(16,873	)			2,919				151,720

 

(6)	Borrowings arising from related party transactions as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
Related parties		Type		Beginning balance				Borrowings				Repayment				Ending balance
Korea Development Bank		Facility		￦	261,437				9,500				(26,236	)			244,701
		Others			6,418				—				(378	)			6,040
		Operating funds			12,000				—				—				12,000

 

(7)	Guarantees provided to associates or joint ventures as of June 30, 2016 are as follows:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Secondary guarantor		Type of guarantees		Credit limit				Guarantee
Korea Electric Power Corporation		KEPCO SPC Power Corporation		Debt guarantees		USD	74,638			SMBC, Export-Import Bank of Korea and ADB
Korea Electric Power Corporation		Shuweihat Asia Operation & Maintenance Company		Performance guarantees		USD	11,000			SAPCO
Korea Electric Power Corporation		KNOC Nigerian East Oil Co., Ltd. and KNOC Nigerian West Oil Co., Ltd.		Performance guarantees		USD	34,650			Korea National Oil Corporation (Nigerian government)
Korea Electric Power Corporation		Rabigh Operation & Maintenance Company		Performance guarantees and others		USD	1,387			Rabigh Electricity Company

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Secondary guarantor		Type of guarantees		Credit limit				Guarantee
Korea Electric Power Corporation		Nghi Son 2 Power Ltd.		Bidding guarantees		USD	10,000			SMBC Ho Chi Minh
Korea Western Power Co., Ltd.		Cheongna Energy Co., Ltd.		Collateralized money invested		KRW	27,211			KEB Hana Bank and others
				Guarantees for supplemental funding (*1)			—
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		USD	33,497
				Impounding bonus guarantees		USD	5,000			SK E&C
Korea Western Power Co., Ltd.		Rabigh Operation & Maintenance Company		Performance guarantees		SAR	5,600			Saudi Arabia British Bank
Korea Western Power Co., Ltd.		Daegu Photovoltaic Co., Ltd.		Collateralized money invested		KRW	1,230			IBK
Korea Western Power Co., Ltd.		Dongducheon Dream Power Co., Ltd. (*2)		Collateralized money invested		KRW	111,134			Kookmin Bank and others
Korea Western Power Co., Ltd.		PT. Mutiara Jawa		Collateralized money invested		USD	2,610			Shinhan Bank Singapore
Korea Western Power Co., Ltd.		Heang Bok Do Si Photovoltaic Power Co., Ltd.		Collateralized money invested		KRW	194			Nonghyup Bank
Korea Western Power Co., Ltd.		Shin Pyeongtaek Power Co., Ltd.		Collateralized money invested		KRW	40			Kookmin Bank
Korea East-West Power Co., Ltd.		Busan Shinho Solar Power Co., Ltd.		Collateralized money invested		KRW	2,100			Heungkuk Life Insurance Co., Ltd. and others
Korea East-West Power Co., Ltd.		Seokmun Energy Co., Ltd.		Collateralized money invested		KRW	580			KEB Hana Bank and others
				Guarantees for supplemental funding (*1)		KRW	15,370
Korea East-West Power Co., Ltd.		Chun-cheon Energy Co., Ltd.		Collateralized money invested		KRW	52,700			Kookmin Bank and others
				Guarantees for supplemental funding (*1)			—
Korea East-West Power Co., Ltd.		Honam Wind Power Co., Ltd.		Collateralized money invested		KRW	3,480			Shinhan Bank
Korea East-West Power Co., Ltd.		GS-Donghae Electric Power Co., Ltd.		Collateralized money invested		KRW	204,000			Korea Development Bank and others
Korea East-West Power Co., Ltd.		Yeonggwangbaeksu Wind Power Co., Ltd.		Collateralized money invested		KRW	3,000			Hyundai Marine & Fire Insurance Co., Ltd. and others

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Secondary guarantor		Type of guarantees		Credit limit				Guarantee
Korea East-West Power Co., Ltd.		PT. Tanjung Power Indonesia		Debt guarantees		USD	35,000			The Bank of Tokyo-Mitsubishi and others
Korea Southern Power Co., Ltd.		KNH Solar Co., Ltd.		Collateralized money invested		KRW	1,296			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	25,477			Korea Development Bank and others
				Guarantees for supplemental funding (*1)			—
Korea Southern Power Co., Ltd.		Changjuk Wind Power Co., Ltd.		Collateralized money invested		KRW	3,801			Shinhan Bank and Woori Bank
				Guarantees for supplemental funding (*1)			—
Korea Southern Power Co., Ltd.		Daegu Green Power Co., Ltd.		Collateralized money invested		KRW	79,540			KEB Hana Bank and Kookmin Bank
				Performance guarantees and guarantees for supplemental funding (*1)			—
Korea Southern Power Co., Ltd.		KS Solar Co., Ltd.		Collateralized money invested		KRW	637			Shinhan Capital Co., Ltd.
Korea Southern Power Co., Ltd.		Kelar S.A		Performance guarantees (*1)		USD	52,000			KEB Hana Bank, SMBC and others
				Debt guarantees		USD	132,600			SMBC, MIZUHO Bank and others
Korea Southern Power Co., Ltd.		DS Power Co., Ltd.		Collateralized money invested		KRW	2,900			Korea Development Bank and Daewoo Securities Co., Ltd.
				Guarantees for supplemental funding (*1)			—
Korea Southern Power Co., Ltd.		Pyeongchang Wind Power Co., Ltd.		Collateralized money invested		KRW	3,875			Woori Bank and Shinhan Bank
				Performance guarantees and guarantees for supplemental funding (*1)			—
Korea Southern Power Co., Ltd.		Taebaek Wind Power Co., Ltd.		Guarantees for supplemental funding (*1)			—			Shinhan Bank and Cheju Bank
KEPCO Engineering & Construction Company, Inc.		DS Power Co., Ltd.		Collateralized money invested		KRW	15,000			Korea Development Bank and Daewoo Securities Co., Ltd.
				Performance guarantees and guarantees for supplemental funding (*1)			—

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of June 30, 2016 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Secondary guarantor		Type of guarantees		Credit limit				Guarantee
Korea Midland Power Co., Ltd.		Hyundai Green Power Co., Ltd.		Collateralized money invested		KRW	87,003			Korea Development Bank and others
				Guarantees for supplemental funding (*1)			—
Korea Midland Power Co., Ltd.		PT. Cirebon Electric Power		Debt guarantees		USD	9,653			Nonghyup Bank
Korea Midland Power Co., Ltd.		PT Wampu Electric Power		Performance guarantees (*1)		USD	8,803			KEB Hana Bank
Korea Midland Power Co., Ltd.		Gangwon Wind Power Co., Ltd.		Collateralized money invested		KRW	7,410			IBK and others
Korea South-East Power Co., Ltd.		Hyundai Energy Co., Ltd.		Collateralized money invested		KRW	35,498			Korea Development Bank and others
				Performance guarantees and guarantees for supplemental funding (*1)			—
Korea South-East Power Co., Ltd.		RES Technology AD		Collateralized money invested		KRW	15,595			Korea Development Bank and others
				Debt guarantees		EUR	4,271
Korea South-East Power Co., Ltd.		ASM-BG Investicii AD		Collateralized money invested		KRW	16,101			Korea Development Bank and others
				Debt guarantees		EUR	4,175
Korea South-East Power Co., Ltd.		Express Solar-light Power Generation Co., Ltd.		Guarantees for supplemental funding (*1, 3)		KRW	2,500			Woori Bank
Korea South-East Power Co., Ltd.		S-Power Co., Ltd.		Collateralized money invested		KRW	132,300			Korea Development Bank and others
KOSEP USA, INC.		KODE NOVUS II LLC		Guarantees for supplemental funding (*1)		USD	3,750			Korea Development Bank and others
KOSEP USA, INC.		KODE NOVUS I LLC		Guarantees for supplemental funding (*1)			—			Export-Import Bank of Korea and others
Korea Hydro & Nuclear Power Co., Ltd.		Yeongwol Energy Station Co., Ltd.		Collateralized money invested		KRW	1,400			Meritz Fire & Marine Insurance Co., Ltd.
Korea Hydro & Nuclear Power Co., Ltd.		Noeul Green Energy Co., Ltd.,		Collateralized money invested		KRW	1,740			KEB Hana Bank and others
Korea Hydro & Nuclear Power Co., Ltd.		Busan Green Energy Co., Ltd.		Collateralized money invested		KRW	14,564			Shinhan Bank and others
KEPCO Plant Service & Engineering Co., Ltd.		Incheon New Power Co., Ltd.		Collateralized money invested		KRW	6,800			Shinhan Bank
				Guarantees for supplemental funding (*1)			—

 

(*1)	The Company guarantees to provide supplemental funding for business with respect to excessive business expenses or insufficient repayment of borrowings.

(*2)	According to the Project Financing Agreement (“Agreement”), if there is any capital increase in Dongducheon Dream Power Co., Ltd. by issuance of new stock after the date of the Agreement, the newly issued shares owned by the Company shall also be provided as a collateral for the Project Financing.

(*3)

The Group has provided rights to Hana Financial Investment Co.,Ltd., an agent financial institution of the majority stockholders, that it can dispose the stocks of Express Solar-light Power Generation Co., Ltd. that the Group owns to repay the borrowings when Express Solar-light Power Generation Co., Ltd.triggers clauses related to its borrowings.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(8)	As of June 30, 2016, there is no financial guarantee contract provided by related parties.

 

(9)	Derivatives transactions with related parties as of June 30, 2016 are as follows:

 

(i)

Currency Swap

 

In millions of won and thousands of U.S. dollars
Counterparty		Contract year				Contract Amount								Contract interest rate per annum								Contract exchange rate
						Pay				Receive				Pay				Receive
Korea Development Bank			2015~2025			￦	111,190				USD 100,000				2.62	%			3.25	%		￦	1,111.90
			2016~2021				121,000				USD 100,000				2.15	%			2.50	%			1,210.00

 

(ii)

Interest Rate Swap

 

In millions of won

Counterparty

Contract year

Contract amount

Contract interest rate per annum

Pay

Receive

Korea Development Bank

2012~2016

50,000

3.49%

3M CD + 0.25%

Korea Development Bank (*)

2014~2029

40,000

3M CD – 0.03%

4.65%

 

(*)

The contract is an interest rate swap hedging on Electricity Bonds 885, and the banks would notify the Company of the early termination every year on the early termination notification date (every year on April 28, from 2017 until 2028). The contract will be terminated if the early termination is notified.

 

(10)	Salaries and other compensations to the key members of management of the Company for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won
Type		June 30, 2016								June 30, 2015
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Salaries		￦	887				1,061				499				694
Employee benefits			5				10				15				31
		￦	892				1,071				514				725

 

47.	Non-Cash Transactions

Significant non-cash investing and financing transactions for the six-month periods ended June 30, 2016 and 2015 are as follows:

 

In millions of won
Transactions		June 30, 2016				June 30, 2015
Transfer from construction-in-progress to other assets		￦	2,943,544				2,668,281
Recognition of asset retirement cost and related provision for decommissioning costs			129,844				1,139,232
Transfer from provision for disposal of spent nuclear fuel to accrued expenses			248,451				262,654

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

48.	Commitments for Expenditure

 

(1)	The agreements for acquisition of property, plant and equipment as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		June 30, 2016								December 31, 2015
Contracts		Amounts				Balance				Amounts				Balance
Purchase of GIS(800KV 8000A 50KA)		￦	63,730				63,730				—				—
Other 41 contracts			140,470				73,747				199,846				140,563
Electricity construction of Dangjin units (#9,10)			331,083				17,311				294,099				16,812
Service of designing Dangjin units (#9,10)			110,188				7,801				109,340				16,261
Construction of Dangjin units (#9,10)			429,098				7,229				388,559				6,054
Construction of Samcheok units (#1,2)			399,114				19,325				384,716				27,018
Construction of breakwater for Samcheok units (#1,2)			85,929				—				84,893				18,096
Purchase of furnace for construction of Samcheok units (#1,2)			1,091,303				62,062				1,091,303				115,896
Purchase of coal handling machine for construction of Samcheok units (#1,2)			300,670				49,106				290,417				23,795
Purchase of turbine generator for construction of Samcheok units (#1,2)			213,761				2,166				213,761				4,040
Purchase of ash disposing facility for construction of Samcheok units (#1,2)			46,952				2,462				46,970				2,857
Service of designing Samcheok units (#1,2)			114,047				38,899				112,949				42,631
Purchase of main machine for construction of Seoul Combined units (#1,2)			360,500				310,037				360,500				328,210
Construction of Seoul Combined units (#1,2)			225,205				138,828				227,000				182,630
Construction of New Kori units (#3,4)			6,856,150				—				6,856,150				214,678
Construction of New Kori units (#5,6)			8,625,387				7,617,746				8,625,387				7,899,368
Electricity construction of New Boryeong units (#1,2)			352,013				56,399				245,357				36,893
Purchase of smoke eliminating machine for construction of New Boryeong units (#1,2)			118,058				2,249				118,058				8,775
Purchase of coal handling machine for construction of New Boryeong units (#1,2)			146,353				3,543				146,353				25,266
Service of designing New Boryeong units (#1,2)			126,038				32,281				126,038				32,910
Purchase of main machine for construction of new Boryeong units (#1,2)			851,132				21,939				851,132				137,744
Construction of New Boryeong units (#1,2)			284,749				26,505				246,964				10,859
Construction of port facilities for New Boryeong units (#1,2)			78,166				—				78,166				—
Construction of New Hanwool units (#1,2)			7,982,342				2,263,982				7,982,343				2,578,707
Construction of New Hanwool units (#3,4)			8,261,818				8,192,783				8,261,817				8,238,651
Construction of yard for Andong natural gas power plant			41,961				2,600				40,960				2,528
Construction of Yeosu Thermal Power units (#1)			477,281				10,719				489,440				30,853
Purchase of generator for Wonju RDF combined&heat power plant			52,877				—				52,877				—
Purchase of cable (TR CNCE-W/AL 1C 400SQ)			40,647				40,647				—				—
Purchase of cable (TR CNCE-W,1C,600MM2,13.2KV)			50,581				—				50,581				50,581
Construction of Chunji units (#1,2)			12,555,724				12,530,360				—				—
Purchase of Concrete Poles (10M, 350KGF)			81,419				5,602				106,037				74,549
Purchase of coal handling machine for construction of Taean (#9,10) and IGCC units(conditional contract for installation)			192,945				45,518				146,634				9,943
Purchase of furnace for construction of Taean units (#9,10)			574,879				54,296				546,637				66,271
Service of designing Taean units (#9,10)			109,700				20,162				107,516				26,437
Purchase of desulfurization machine for construction of Taean units (#9,10)			92,086				3,450				91,592				6,175

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

48.	Commitments for Expenditure, Continued

 

(1)	The agreements for acquisition of property, plant and equipment as of June 30, 2016 and December 31, 2015 are as follows. continued:

 

In millions of won		June 30, 2016								December 31, 2015
Contracts		Amounts				Balance				Amounts				Balance
Purchase of turbine generator for construction of Taean units (#9,10)		￦	220,538				14,594				426,139				103,146
Purchase of gas plant machine for construction of Taean IGCC units			457,903				2,793				457,423				4,541
Purchase of combined generating machine for construction of Taean IGCC units			203,623				7,009				204,514				25,808
Purchase of oxygen plant for construction of Taean IGCC units			97,569				2,159				97,804				4,252
Service of designing Taean IGCC plant units			44,374				4,873				44,374				5,520
Purchase of main machine for Heang Bok do si combined&heat power plant			337,283				—				337,283				—
		￦	53,225,646				31,754,912				40,541,929				20,519,318

 

(2)	As of June 30, 2016, details of contracts for inventory purchase 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 amounts
Concentrate		2016 ~ 2030		34,719 Ton U3O8
Transformed		2016 ~ 2022		18,738 Ton U
Enrichment		2016 ~ 2029		34,879 Ton SWU
Molded		2016 ~ 2022		1,852 Ton U

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

49.	Contingencies and Commitments

 

(1)	Ongoing litigations related with contingent liabilities and assets as of June 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
		June 30, 2016								December 31, 2015
		Number of cases				Claim amount				Number of cases				Claim amount
As the defendant			730			￦	775,845				750			￦	1,052,301
As the plaintiff			189				613,982				202				580,987

As of June 30, 2016, in addition to the litigations mentioned above, there are ongoing litigations of Korea Hydro & Nuclear Power Co., Ltd. (“KHNP”), a subsidiary of KEPCO, against KEPCO Engineering & Construction Company, Inc., a subsidiary of KEPCO, as a co-defendant (one case amounting to ￦496,681 million) and KEPCO Plant Service & Engineering Co., Ltd., a subsidiary of KEPCO, as a co-defendant (three cases amounting to ￦1,593 million).

The Company is the defendant against a number of claims. The followings are potentially significant claims pertaining to the Company:

 

①

Hyundai Engineering & Construction Co., Ltd. (“Hyundai E&C”), SK Engineering & Construction Co., Ltd. and GS Engineering & Construction Co., Ltd. filed a law suit for increase in contract bill (formerly, amounted to ￦1,000 million) against KHNP in September 2013, in relation to the design changes on the plant construction of New Hanwool 1 & 2. Hyundai Engineering & Construction Co., Ltd. and two other companies increased the contract bill to ￦133,426 million in October 2014 and ￦204,040 million in November 2015, respectively, and submitted an application to demand extra contract payments due to the design changes.

Due to the inherent uncertainties, the Company is not able to reliably estimate the amount of compensation and timing if any, that might be awarded to Hyundai E&C and two other companies. Consequently, it is not possible for the Company to make an estimate of the expected financial effect that will result from the ultimate resolution of a lawsuit. Therefore, the Company has not recognized any provision for the lawsuit.

 

②

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 ￦144,152 million of other provision in relation to the lawsuit.

 

③

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.

 

(2)	Guarantees of borrowings provided to other companies as of June 30, 2016 and December 31, 2015 are as follows:

The Company has a borrowing of ￦21,500 million from Long Lasting Value (“LLV”) as of June 30, 2016. LLV obtains loans from major stockholders, such as Samsung Life Insurance, and lends the money to other third parties. The Company guarantees secured payments to the major stockholders of LLV, such as payment of principal, tax, commissions, etc., with a limit of ￦23,900 million.

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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(2)	Guarantees of borrowings provided to other companies as of June 30, 2016 and December 31, 2015 are as follows, continued:

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 performance 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 performance guarantee up to USD 917 thousand in proportion to its ownership in the electricity purchase contract with PT. Cirebon Energi Prasarana in relation to the second electirc power generation business in Cirebon, Indonesia. Also, in relation to the business, the Company has provided LNTP Offshore performance payment guarantee amounting to USD 401 thousand to Toshiba Corporation and MHPS, and LNTP Onshore performance payment guarantee amounting to USD 600 thousand to Hyundai E&C based on the interest owned by the Company to progress the construction.

 

(3)	Credit lines provided by financial institutions as of June 30, 2016 are as follows:

 

In millions of won and thousands of foreign currencies
Commitments		Financial institutions		Currency		Amount
Commitments on bank-overdraft		Nonghyup Bank and others		KRW			1,815,000
Commitments on bank-daylight overdraft		Nonghyup Bank		KRW			280,000
Limit amount available for CP		Shinhan Bank and others		KRW			700,000
Limit amount available for card		KEB Hana Bank and others		KRW			56,333
		Banco de Oro		PHP			5,000
Loan limit		Kookmin Bank and others		KRW			661,887
		BNP Paribas and others		USD			2,460,000
Certification of payment on L/C		KEB Hana Bank		GBP			61,169
		Woori Bank and others		USD			1,086,377
Certification of performance guarantee on contract		Kookmin Bank		EUR			19,333
		KEB Hana Bank and others		INR			236,443
		Seoul Guarantee Insurance and others		KRW			82,589
		Bank of Kathmandu		NPR			32,633
		KEB Hana Bank and others		USD			769,715
Certification of bidding		SMBC and others		USD			10,000
		ABSA Bank		ZAR			45,000
Advance payment bond, Warranty bond, Retention bond and others		HSBC and others		USD			532,250
		Bank of Kathmandu		NPR			36,309
Others		KEB Hana Bank		INR			157,830
		KEB Hana Bank and others		JPY			2,245,843
		KEB Hana Bank and others		KRW			87,250
		KEB Hana Bank		SAR			2,240
		Shinhan Bank and others		USD			812,805
Inclusive credit		Shinhan Bank		INR			47,489
		KEB Hana Bank		KRW			258,000
		HSBC and others		USD			484,510
Trade finance		BNP Paribas and others		USD			800,000

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(4)	As of June 30, 2016, the 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 East-West Power Co., Ltd.

Korea Development Bank and others

All shareholdings of Gyeongju Wind Power Co., Ltd.

KRW

9,240

Collateral for borrowings

Korea Midland Power Co., Ltd

IBK and others

Shareholdings of Commerce and Industry Energy Co., Ltd.

KRW

13,605

Collateral for borrowings

Korea Southern Power Co., Ltd

Shinhan Bank

Shareholdings of KOSPO Youngnam Power Co., Ltd

KRW

40,000

Collateral for borrowings

Korea South-East Power Co., Ltd.

International Finance Corporation and others

Shareholdings of Mira Power Limited

KRW

38,206

Collateral for borrowings

Korea Hydro & Nuclear Power Co., Ltd.

Korea Development Bank and others

All shareholdings of Gyeonggi Green Energy Co., Ltd.

KRW

47,000

Collateral for borrowings

Gyeonggi Green Energy Co., Ltd.

Korea Development Bank and others

Factory estate and others

KRW

327,080

Providing guarantees (*)

Commerce and Industry Energy Co., Ltd.

IBK and others

Land, buildings, structures and machinery

KRW

86,214

Collateral for borrowings

Cash and cash equivalents

KRW

8,868

Gyeongju Wind Power Co., Ltd.

Korea Development Bank and others

Property, plant and equipment and others

KRW

32,931

Collateral for borrowings

Existing or expected trade receivables

KRW

1,731

Cash and cash equivalents

KRW

6,249

Qatrana Electric Power Company

The Islamic Development Bank and others

Finance Lease receivable and property, plant and equipment and others

JOD

53,311

Collateral for borrowings

KST Electric Power Company

Scotiabank Inverlat, S.A

Finance Lease receivable and others

USD

332,850

Collateral for borrowings

 

(*)

The Company provided the financial institutions with shares of Gyeonggi Green Energy Co., Ltd., one of its subsidiaries, as collateral related to long-term borrowings. Additionally, pledge for shares, pledge for transfer of rights of long-term borrowings, pledge for insurance claims and other pledges were established.

The Company has ￦1,200 million of project loans from Korea Resource Corporation as of June 30, 2016. 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 ￦98,068 million, to improve the quality of water used in generating electricity. The expenses related to the suspension of operations of ￦214 million and depreciation on the utility plant of ￦3,311 million are recorded to other expenses for the six-month period ended June 30, 2016.

 

(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 June 30, 2016. The book value of facility is ￦20,082 million and the amount of trade receivables related to the companies residing in Gaeseong industrial complex is ￦4,783 million. The Company has entered into an insurance agreement covering up to ￦7,000 million with the Export-Import Bank of Korea related to Gaeseong industrial complex. The ultimate outcome of this event cannot be reasonably estimated.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

50.	Subsequent Events

Subsequent to June 30, 2016, Korea Western Power Co., Ltd. and Korea Midland Power Co., Ltd., subsidiaries of the Company, issued new debt securities for funding facilities and operations as follows:

 

In millions of won
Company Name		Type		Interest rate				Issued date				Maturity				Amounts
Korea Western Power Co., Ltd.		Short-term borrowings			1.40	%			2016.07.07				2016.09.23			￦	10,000
					1.40	%			2016.07.07				2016.09.23				40,000
					1.34	%			2016.07.21				2016.09.23				20,000
					1.36	%			2016.07.25				2016.10.21				10,000
					1.36	%			2016.07.25				2016.10.21				20,000
					1.35	%			2016.07.29				2016.10.21				60,000
		Corporate bond #31			1.36	%			2016.07.05				2021.07.05				100,000
Korea Midland Power Co., Ltd.		Short-term borrowings			1.31	%			2016.07.01				2016.07.11				50,000
					1.33	%			2016.07.22				2016.08.23				70,000
					1.28	%			2016.07.29				2016.08.23				70,000
					1.36	%			2016.08.11				2016.09.23				80,000
		The 35-1st non-guaranteed bond			1.60	%			2016.07.06				2026.07.06				160,000
		The 35-2nd non-guaranteed bond			1.62	%			2016.07.06				2031.07.06				90,000

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2016

(Unaudited)

 

51.	Adjusted Operating Profit

The operating profit in the Company’s consolidated interim statements of comprehensive income prepared in accordance with K-IFRS included in this report differs from that in its consolidated interim statements of comprehensive income 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 interim statements of comprehensive income prepared in accordance with K-IFRS for each of the three and six-month periods ended June 30, 2016 and 2015 to the operating profit or loss as presented in the Company’s consolidated interim statements of comprehensive income prepared in accordance with IFRS as issued by IASB for each of the corresponding years.

 

In millions of won		June 30, 2016								June 30, 2015
		Three-month period ended				Six-month period ended				Three-month period ended				Six-month period ended
Operating profit on consolidated interim statements of comprehensive income		￦	2,704,494				6,309,841				2,087,984				4,327,850
Add
Other income
Reversal of other provisions			1,075				5,612				5,076				6,734
Reversal of other allowance for bad debt			4,799				5,786				—				—
Gains on government grants			—				36				—				—
Gains on assets contributed			188				1,516				880				3,092
Gains on liabilities exempted			302				305				34				2,371
Compensation and reparations revenue			39,814				63,944				34,319				86,856
Gains on electricity infrastructure development fund			—				—				220				363
Revenue from research contracts			1,593				2,427				1,394				4,531
Rental income			47,757				101,941				47,528				95,786
Others			7,482				13,745				6,879				13,962
Other gains
Gains on disposal of property, plant and equipment			11,360				29,958				78,854				96,769
Gains on disposal of intangible assets			—				—				32				32
Gains on foreign currency translation			4,246				8,653				1,823				2,984
Gains on foreign currency transaction			12,573				23,789				10,999				19,798
Gains on insurance proceeds			—				—				25				25
Others			44,319				93,731				26,786				78,513
Deduct
Other expenses
Accretion expenses of other provisions			(70	)			(119	)			(272	)			(316	)
Depreciation expenses on investment properties			(131	)			(329	)			(185	)			(347	)
Depreciation expense on idle assets			(1,641	)			(3,311	)			(1,666	)			(3,332	)
Other bad debt expense			(1,163	)			(5,108	)			(5,168	)			(12,983	)
Donations			(23,726	)			(35,387	)			(4,742	)			(17,162	)
Others			(5,157	)			(8,336	)			(4,947	)			(5,977	)
Other losses
Losses on disposal of property, plant and equipment			(16,871	)			(21,131	)			(28,689	)			(41,044	)
Losses on disposal of intangible assets			(4	)			(138	)			—				(5	)
Impairment loss on property, plant and equipment			—				—				(1,205	)			(1,205	)
Losses on foreign currency translation			(544	)			(4,275	)			(3,472	)			(9,978	)
Losses on foreign currency transaction			(13,731	)			(33,666	)			(23,864	)			(35,632	)
Others			(10,465	)			(26,135	)			(14,048	)			(37,122	)
Adjusted operating profit		￦	2,806,499				6,523,349				2,214,575				4,574,563

 

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