Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

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

the Securities Exchange Act of 1934

For the Month of December 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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QUARTERLY BUSINESS REPORT

(For the period from January 1, 2016 to September 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:

 

•

development of electric power resources;

 

•

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

 

•

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

 

•

overseas business related to the businesses mentioned above;

 

•

investment or contributions related to the businesses mentioned above;

 

•

development and operation of certain real estate holdings; and

 

•

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 September 30, 2016)
Classification		Consolidated subsidiaries				Associates and joint ventures				Total
Domestic			21				57				78
Overseas			61				37				98
Total			82				94				176

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

(Not applicable)

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 nine-month period ended September 30, 2015 and 2016

 

		(In billions of Won)
		January to September 2015								January to September 2016
		Sales				Operating Profit				Sales				Operating profit
Electricity sales			43,914				4,228				44,955				4,943
Nuclear generation			7,383				2,363				8,248				3,028
Thermal generation			16,099				1,835				15,401				2,672
Others(*)			2,219				262				2,189				281
Subtotal			69,615				8,687				70,793				10,924
Adjustment for related-party transactions			-25,350				-19				-25,889				-190
Total			44,265				8,668				44,904				10,734

 

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

 

(*)	Others relate to 76 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		Jan. to Jun. 2016		Jan. to Sep. 2016
Electricity sold		Residential		KEPCO		124.02		123.82
		Commercial				126.48		130.67
		Educational				106.94		111.99
		Industrial				103.64		106.47
		Agricultural				47.86		47.63
		Street lighting				114.05		115.57
		Overnight usage				67.77		67.08
Electricity from nuclear generation		Nuclear Generation		KHNP		65.08		65.03
Electricity from thermal generation		Thermal generation		KOSEP		71.39		69.36
				KOMIPO		81.70		80.22
				KOWEPO		86.68		84.61
				KOSPO		86.14		83.60
				EWP		87.00		84.65

3. Power purchase from generation companies for a nine-month period ended September 30, 2016

 

Company		Volume (MWh)				Expense (In billions of Won)
KHNP			124,779,144				8,126
KOSEP			50,498,974				3,501
KOMIPO			32,374,531				2,600
KOWEPO			34,973,090				2,947
KOSPO			34,504,827				2,886
EWP			36,320,749				3,078
Others			74,128,135				6,969
Total			387,579,450				30,107

 

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

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4. Intellectual property as of September 30, 2016

 

		Patents								Utility models				Designs				Trademarks								Total
		Domestic				Overseas												Domestic				Overseas
KEPCO			1,822				183				89				70				131				42				2,337
Consolidated subsidiaries			3,693				581				757				97				257				17				5,402
Total			5,515				764				846				167				388				59				7,739

III. Financial Information

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

(In billions of Won)

Consolidated statements of comprehensive income														Consolidated statements of financial position
		Jan. to Sep. 2015				Jan. to Sep. 2016				Change (%)						December 31, 2015				Sep. 30, 2016				Change (%)
Sales			44,266				44,904				1.4			Total assets			175,257				176,239				0.6
Operating profit			8,668				10,734				23.8			Total liabilities			107,315				103,934				-3.2
Net income			11,841				6,869				-42.0			Total equity			67,942				72,305				6.4

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

(In billions of Won)

Separate statements of comprehensive income														Separate statements of financial position
		Jan. to Sep. 2015				Jan. to Sep. 2016				Change (%)						December 31, 2015				Sep. 30, 2016				Change (%)
Sales			43,914				44,955				2.4			Total assets			106,306				104,395				-1.8
Operating profit			4,228				4,943				16.9			Total liabilities			53,125				48,794				-8.2
Net income			9,992				4,480				-55.2			Total equity			53,181				55,601				4.5

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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 September 30, 2016

 

Number of meetings		Number of agendas		Classification
				Resolutions		Results		Reports		Results
15		55		46		Approved as proposed		9		Accepted as reported

 

*	The audit committee held 8 meetings with 30 agendas (of which, 18 were resolved as proposed and 12 were approved as reported).

3. Major activities of the Board of Directors for a nine-month period ended September 30, 2016

 

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

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		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
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

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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
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

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		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
July 15, 2016		Approval to close the shareholders’ registry for extraordinary general meeting of shareholders		Approved as proposed		Resolution
		Approval to invest in Intra-company Employ Welfare Fund in 2016		Approved as proposed		Resolution

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		Approval to support interest payment of cooperative enterprises		Approved as proposed		Resolution
		Approval of contribution to a special purpose company for solar power project in Colorado, the United States		Approved as proposed		Resolution
		Amendment on the Electricity Usage Agreement and Rules for Operation		Approved as proposed		Resolution
		Amendment on the Reorganization Plan		Approved as proposed		Resolution
		Report of management plan on operating company of New Energy Business Fund		Accepted as reported		Report
July 26, 2016		Approval to invest subsidies in high efficiency appliances relating to Economic Policy Direction for the second half of 2016		Approved as proposed		Resolution
August 16, 2016		Amendments on the Electricity Usage Agreement and Rules for Operation		Approved as proposed		Resolution
August 19, 2016		Approval to use reserve fund as a result of ordinary wages lawsuit		Approved as proposed		Resolution
		Mid-to-long term management target (2017-2021)		Approved as proposed		Resolution
		Report on results of external and internal audits for the second quarter of 2016		Accepted as reported		Report
		Report on the earnings results for the first half of fiscal year 2016		Accepted as reported		Report
September 30, 2016		Recommendation of candidates for the Audit Committee		Approved as proposed		Resolution
		Approval to call for the extraordinary general meeting of shareholders for the fiscal year 2016		Approved as proposed		Resolution
		Approval of equity investment in construction and operation businesses of nuclear power plant in UAE		Approved as proposed		Resolution
		Approval to establish electricity vehicle charging infrastructure		Approved as proposed		Resolution
		Approval of Basic Investment Contract of New Energy Business fund		Deferred		-

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4. Major Activities and Attendance Status of Non-standing Directors for a nine-month period ended September 30, 2016

 

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

—

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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

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

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

—

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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

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

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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

July 15, 2016

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

For

Absence

For

For

For

For

—

For

For

Approval to invest in Intra-company Employ Welfare Fund in 2016

For

Absence

For

For

For

For

—

For

For

Approval to support interest payment of cooperative enterprises

For

Absence

For

For

For

For

—

For

For

Approval of contribution to a special purpose company for solar power project in Colorado, the United States

For

Absence

For

For

For

For

—

For

For

Amendment on the Electricity Usage Agreement and Rules for Operation

For

Absence

For

For

For

For

—

For

For

Amendment on the Reorganization Plan

For

Absence

For

For

For

For

—

For

For

Report of management plan on operating company of New Energy Business Fund

For

Absence

For

For

For

For

—

For

For

July 26, 2016

Approval to invest subsidies in high efficiency appliances relating to Economic Policy Direction for the second half of 2016

For

Absence

Against

Absence

For

For

—

Absence

For

August 16, 2016

Amendments on the Electricity Usage Agreement and Rules for Operation

For

Absence

For

For

For

For

—

For

For

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August 19, 2016

Approval to use reserve fund as a result of ordinary wages lawsuit

For

For

For

For

For

Absence

—

For

For

Mid-to-long term management target (2017-2021)

For

For

For

For

For

Absence

—

For

For

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

Report

Report on the earnings results for the first half of fiscal year 2016

Report

September 30, 2016

Recommendation of candidates for the Audit Committee

For

For

For

For

For

For

—

For

For

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

For

For

For

For

For

For

—

For

For

Approval of equity investment in construction and operation businesses of nuclear power plant in UAE

For

For

For

For

For

For

—

For

For

Approval to establish electricity vehicle charging infrastructure

For

For

For

For

For

For

—

For

For

Approval of Basic Investment Contract of New Energy Business fund

Deferred

Deferred

Deferred

Deferred

Deferred

Deferred

—

Deferred

Deferred

Attendance Rate

100

%

73.3

%

66.7

%

93.3

%

73.3

%

73.3

%

66.7

%

93.3

%

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.

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4. Major activities of the Audit Committee for a nine-month period ended September 30, 2016

 

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
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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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
August 19, 2016		Report on results of external and internal audits in the second quarter of 2016		Accepted as reported		Report
		Independent auditor’s report on the auditing results for both non-consolidated and consolidated financial statements for the first half of fiscal year 2016		Accepted as reported		Report
September 23, 2016		Amendments to code of conduct for employees		Approved as proposed		Resolution
		Approval of guidelines for report improper solicitation and graft		Approved as proposed		Resolution
		Amendments to the guidelines for disciplinary actions		Approved as proposed		Resolution
		Approval of selection of independent auditors of consolidated subsidiaries		Approved as proposed		Resolution

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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 August 2, 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			43,917,955				6.84
Public (non-Koreans)		Common shares		1,862			174,126,287				27.13
		American depositary shares (ADS)		1			34,113,003				5.31
Public (Koreans)		Corporate		1,433			44,384,377				6.92
		Individual		339,315			17,345,397				2.70
Total				342,614			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 September 30, 2016

(KEPCO Only)

1. Directors

 

		(In thousands of Won)
Type		Number of directors		Total remuneration				Average remuneration per person
Standing director		7			1,268,847				181,264
Non-standing director		9			154,405				17,156
Total		16			1,423,252				198,420

 

•

Number of Non-standing director includes Mr. Ahn, Hyun Ho, who voluntarily resigned on March 17, 2016.

2. Employees

(In thousands of Won)

Type		Number of employees												Average continuous service year				Total salaries				Average salaries per person
		Regular				Non- regular				Total
Male			16,627				429				17,056				19.2				1,043,032,671				61,153
Female			3,689				188				3,877				14.0				171,332,941				44,192
Total			20,316				617				20,933				18.1				1,214,365,612				58,012

VII. Other Information Necessary for the Protection of Investors

1. Summary of shareholder’s meetings for the third three-month period ended September 30

 

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 September 30, 2016

 

		(In billions of Won)
Type		Number of lawsuits				Claim amount
Lawsuits where KEPCO and its subsidiaries are engaged as the defendants			714				770
Lawsuits where KEPCO and its subsidiaries are engaged as the plaintiffs			184				553

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: December 8, 2016

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Financial Statements

September 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 September 30, 2016, the consolidated interim statements of comprehensive income for the three and nine-month periods ended September 30, 2016 and 2015, changes in equity and cash flows for the nine-month periods ended September 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 nine-month period ended September 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.

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Considering the impacts from these uncertainty and changes in estimates on profit or loss for the current or future periods, 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 nine-month period ended September 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

November 14, 2016

This report is effective as of November 14, 2016, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

2

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position

As of September 30, 2016 and December 31, 2015

(Unaudited)

 

In millions of won		Note				September 30, 2016				December 31, 2015
Assets
Current assets
Cash and cash equivalents			5,6,7,44			W	4,767,502				3,783,065
Current financial assets, net			5,10,11,12,44				3,240,457				5,335,621
Trade and other receivables, net			5,8,14,20,44,45,46				6,228,768				7,473,548
Inventories, net			13				4,786,772				4,946,413
Income tax refund receivables			40				12,679				9,081
Current non-financial assets			15				493,233				397,950
Assets held-for-sale			41				79,647				79,647
Total current assets							19,609,058				22,025,325
Non-current assets
Non-current financial assets, net			5,6,9,10,11,12,44				2,164,880				2,495,554
Non-current trade and other receivables, net			5,8,14,44,45,46				1,751,762				1,798,419
Property, plant and equipment, net			18,27,48				145,011,949				141,361,351
Investment properties, net			19,27				285,131				269,910
Goodwill			16				2,582				2,582
Intangible assets other than goodwill, net			21,27,45				853,730				855,832
Investments in associates			4,17				4,345,281				4,405,668
Investments in joint ventures			4,17				1,281,080				1,287,862
Deferred tax assets			40				762,735				623,623
Non-current non-financial assets			15				170,795				131,233
Total non-current assets							156,629,925				153,232,034
Total Assets			4			W	176,238,983				175,257,359

 

(Continued)

3

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position, Continued

As of September 30, 2016 and December 31, 2015

(Unaudited)

 

In millions of won		Note				September 30, 2016				December 31, 2015
Liabilities
Current liabilities
Trade and other payables, net			5,22,24,44,46			W	3,796,772				4,735,697
Current financial liabilities, net			5,11,23,44,46				9,710,807				7,857,198
Income tax payables			40				1,645,408				2,218,060
Current non-financial liabilities			20,28,29				6,833,754				6,320,711
Current provisions			26,44				1,594,639				1,579,176
Total current liabilities							23,581,380				22,710,842
Non-current liabilities
Non-current trade and other payables, net			5,22,24,44,46				3,782,399				3,718,435
Non-current financial liabilities, net			5,11,23,44,46				45,034,136				51,062,811
Non-current non-financial liabilities			28,29				7,532,688				7,092,252
Employee benefits liabilities, net			25,44				2,074,056				1,503,107
Deferred tax liabilities			40				8,836,196				8,362,683
Non-current provisions			26,44				13,093,584				12,864,754
Total non-current liabilities							80,353,059				84,604,042
Total Liabilities			4			W	103,934,439				107,314,884
Equity
Contributed capital			1,30,44
Share capital						W	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							19,311,391				22,862,164
							52,763,575				48,187,241
Other components of equity			33
Other capital surpluses							1,198,775				1,197,388
Accumulated other comprehensive loss							(305,138	)			(98,713	)
Other equity							13,294,973				13,294,973
							14,188,610				14,393,648
Equity attributable to owners of the controlling company							71,005,763				66,634,467
Non-controlling interests			16, 32				1,298,781				1,308,008
Total Equity						W	72,304,544				67,942,475
Total Liabilities and Equity						W	176,238,983				175,257,359

See accompanying notes to the consolidated interim financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income

For the three and nine-month periods ended September 30, 2016 and 2015

(Unaudited)

 

In millions of won, except per share information						September 30, 2016								September 30, 2015
		Note				Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Sales			4,34,44,46
Sales of goods						W	14,701,479				41,358,964				14,318,121				40,815,596
Sales of services							89,581				267,308				128,205				344,576
Sales of construction services			20				1,037,895				2,965,222				928,789				2,825,874
Revenue related to transfer of assets from customers							114,543				312,756				94,840				279,594
							15,943,498				44,904,250				15,469,955				44,265,640
Cost of sales			13,25,42,46
Cost of sales of goods							(9,709,384	)			(29,232,200	)			(9,594,472	)			(31,043,619	)
Cost of sales of services							(110,518	)			(315,614	)			(119,289	)			(323,993	)
Cost of sales of construction services							(978,132	)			(2,800,015	)			(893,171	)			(2,692,788	)
							(10,798,034	)			(32,347,829	)			(10,606,932	)			(34,060,400	)
Gross profit							5,145,464				12,556,421				4,863,023				10,205,240
Selling and administrative expenses			25,35,42,46				(721,295	)			(1,822,410	)			(522,931	)			(1,537,298	)
Operating profit			4				4,424,169				10,734,011				4,340,092				8,667,942
Other non-operating income			36				109,778				305,090				100,257				313,952
Other non-operating expense			36				(10,683	)			(63,273	)			(18,796	)			(58,913	)
Other gains, net			37				52,393				123,178				8,538,361				8,611,496
Finance income			5,11,38				679,784				1,036,342				814,145				1,262,518
Finance expenses			5,11,39				(1,105,180	)			(2,231,842	)			(1,263,201	)			(2,713,366	)
Profit related to associates, joint ventures and subsidiaries			4,17
Share in profit of associates and joint ventures							(3,200	)			210,855				(6,422	)			239,785
Gain on disposal of investments in associates and joint ventures							—				52				100				100
Gain on disposal of investments in subsidiaries			16				—				—				—				5,866
Share in loss of associates and joint ventures							(26,763	)			(80,975	)			(30,213	)			(63,254	)
Loss on disposal of investments in associates and joint ventures							(114	)			(285	)			—				—
							(30,077	)			129,647				(36,535	)			182,497
Profit before income tax							4,120,184				10,033,153				12,474,323				16,266,126
Income tax expense			40				(1,181,977	)			(3,164,325	)			(3,197,939	)			(4,424,741	)
Profit for the period						W	2,938,207				6,868,828				9,276,384				11,841,385

 

(Continued)

5

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income, Continued

For the three and nine-month periods ended September 30, 2016 and 2015

(Unaudited)

 

In millions of won, except per share information						September 30, 2016								September 30, 2015
		Note				Three-month period ended				Nine-month period ended				Three-month period ended				Nine-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			W	(18,533	)			(220,394	)			(73,697	)			(106,882	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			31				45				(597	)			(225	)			1,005
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				8,967				31,443				(42,592	)			(19,687	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			5,11,33				(3,028	)			27,450				18,069				(3,291	)
Foreign currency translation of foreign operations, net of tax			33				(90,158	)			(85,437	)			61,045				45,083
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			33				(161,548	)			(200,771	)			108,527				143,449
Other comprehensive income (loss), net of tax							(264,255	)			(448,306	)			71,127				59,677
Total comprehensive income for the period						W	2,673,952				6,420,522				9,347,511				11,901,062
Profit or loss attributable to:
Owners of the controlling company			43			W	2,913,361				6,775,278				9,229,740				11,735,006
Non-controlling interests							24,846				93,550				46,644				106,379
						W	2,938,207				6,868,828				9,276,384				11,841,385
Total comprehensive income attributable to:
Owners of the controlling company						W	2,666,570				6,359,998				9,287,904				11,779,694
Non-controlling interests							7,382				60,524				59,607				121,368
						W	2,673,952				6,420,522				9,347,511				11,901,062
Earnings per share			43
Basic and diluted earnings per share						W	4,538				10,554				14,377				18,280

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 nine-month periods ended September 30, 2016 and 2015

(Unaudited)

 

In millions of won		Equity attributable to owners of the controlling company																Non- controlling interests				Total equity
		Contributed capital				Retained earnings				Other components of equity				Subtotal
Balance at January 1, 2015		W	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			—				11,735,006				—				11,735,006				106,379				11,841,385
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax			—				(99,098	)			—				(99,098	)			(7,784	)			(106,882	)
Share in other comprehensive income of associates and joint ventures, net of tax			—				1,005				—				1,005				—				1,005
Items that may be reclassified subsequently to profit or loss:
Net change in the unrealized fair value of available-for-sale financial assets, net of tax			—				—				(19,687	)			(19,687	)			—				(19,687	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				(2,707	)			(2,707	)			(584	)			(3,291	)
Foreign currency translation of foreign operations, net of tax			—				—				21,723				21,723				23,360				45,083
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			—				—				143,452				143,452				(3	)			143,449
Transactions with owners of the Company, recognized directly in equity
Dividends paid			—				(320,982	)			—				(320,982	)			(74,501	)			(395,483	)
Issuance of share capital by subsidiaries and others			—				—				2,858				2,858				11,560				14,418
Equity transaction within consolidated scope			—				—				44,355				44,355				9,811				54,166
Changes in consolidated scope			—				—				—				—				(1,547	)			(1,547	)
Dividends paid (hybrid securities)			—				—				—				—				(12,341	)			(12,341	)
Others			—				—				—				—				(220	)			(220	)
Balance at September 30, 2015		W	4,053,578				46,619,578				14,434,100				65,107,256				1,277,809				66,385,065

 

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity, Continued

For the nine-month periods ended September 30, 2016 and 2015

(Unaudited)

 

In millions of won		Equity attributable to owners of the controlling company																Non- controlling interests				Total equity
		Contributed capital				Retained earnings				Other components of equity				Subtotal
Balance at January 1, 2016		W	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			—				6,775,278				—				6,775,278				93,550				6,868,828
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax			—				(208,266	)			—				(208,266	)			(12,128	)			(220,394	)
Share in other comprehensive loss of associates and joint ventures, net of tax			—				(589	)			—				(589	)			(8	)			(597	)
Items that may be reclassified subsequently to profit or loss:
Net change in the unrealized fair value of available-for-sale financial assets, net of tax			—				—				31,443				31,443				—				31,443
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				27,458				27,458				(8	)			27,450
Foreign currency translation of foreign operations, net of tax			—				—				(64,551	)			(64,551	)			(20,886	)			(85,437	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			—				—				(200,775	)			(200,775	)			4				(200,771	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid			—				(1,990,089	)			—				(1,990,089	)			(74,672	)			(2,064,761	)
Issuance of shares of capital by subsidiaries and others			—				—				1,387				1,387				14,817				16,204
Changes in consolidation scope			—				—				—				—				2,454				2,454
Dividends paid (hybrid securities)			—				—				—				—				(12,350	)			(12,350	)
Balance at September 30, 2016		W	4,053,578				52,763,575				14,188,610				71,005,763				1,298,781				72,304,544

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 nine-month periods ended September 30, 2016 and 2015

(Unaudited)

 

In millions of won		September 30, 2016				September 30, 2015
Cash flows from operating activities
Profit for the period		W	6,868,828				11,841,385
Adjustments for:
Income tax expense			3,164,325				4,424,741
Depreciation			6,506,408				6,075,711
Amortization			52,222				54,729
Employee benefit expense			261,132				231,544
Bad debt expense			26,900				8,595
Interest expense			1,318,959				1,560,825
Loss on sale of financial assets			—				2,983
Loss on disposal of property, plant and equipment			1,741				1,506
Loss on abandonment of property, plant, and equipment			287,457				239,823
Impairment loss on property, plant and equipment			—				6,473
Impairment loss on intangible assets			—				12
Loss on disposal of intangible assets			143				5
Accretion expense to provisions, net			974,715				1,141,296
Loss (gain) on foreign currency translation, net			(596,581	)			888,986
Valuation and transaction loss (gain) on derivative instruments, net			642,344				(881,590	)
Share in income of associates and joint ventures, net			(129,880	)			(176,531	)
Gain on sale of financial assets			(1,481	)			(4	)
Gain on disposal of property, plant and equipment			(48,131	)			(8,618,259	)
Gain on disposal of intangible assets			—				(32	)
Gain on disposal of associates and joint ventures			(52	)			(100	)
Loss on disposal of associates and joint ventures			285				—
Gain on disposal of investments in subsidiaries			—				(5,866	)
Interest income			(188,889	)			(165,361	)
Dividend income			(10,281	)			(7,153	)
Impairment loss on available-for-sale securities			4,706				28,493
Others, net			(5,628	)			2,755
			12,260,414				4,813,581
Changes in:
Trade receivables			1,622,743				1,480,829
Non-trade receivables			57,425				(40,193	)
Accrued income			(8,512	)			63,865
Other receivables			7,750				(9,068	)
Other current assets			(146,262	)			(115,802	)
Inventories			(612,868	)			(762,084	)
Other non-current assets			(43,629	)			(30,057	)
Trade payables			(901,615	)			(1,646,456	)
Non-trade payables			(340,607	)			(153,191	)
Accrued expenses			(230,999	)			(373,400	)
Other current liabilities			740,454				1,139,044
Other non-current liabilities			624,781				254,332
Investments in associates and joint ventures			53,100				73,288
Provisions			(1,002,938	)			(728,141	)
Payments of employee benefit obligations			(43,043	)			(32,712	)
Plan assets			(17,460	)			(13,138	)
			(241,680	)			(892,884	)

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows, Continued

For the nine-month periods ended September 30, 2016 and 2015

(Unaudited)

 

In millions of won		September 30, 2016				September 30, 2015
Cash generated from operating activities
Dividends received		W	10,244				13,600
Interest paid			(1,516,382	)			(1,706,882	)
Interest received			191,512				125,660
Income taxes paid			(3,297,856	)			(931,124	)
Net cash from operating activities			14,275,080				13,263,336
Cash flows from investing activities
Proceeds from disposals of associates and joint ventures			10,828				6,066
Acquisition of associates and joint ventures			(99,077	)			(106,350	)
Proceeds from disposals of property, plant and equipment			50,171				9,821,914
Acquisition of property, plant and equipment			(9,183,090	)			(10,641,512	)
Proceeds from disposals of intangible assets			329				472
Acquisition of intangible assets			(77,525	)			(51,346	)
Proceeds from disposals of financial assets			8,559,539				165,813
Acquisition of financial assets			(6,552,949	)			(5,237,941	)
Increase in loans			(199,000	)			(127,170	)
Collection of loans			91,963				73,742
Increase in deposits			(361,481	)			(219,427	)
Decrease in deposits			137,250				132,016
Receipt of government grants			23,763				17,342
Usage of government grants			(25,558	)			(18,040	)
Net cash inflow from business acquisitions			2,510				553
Other cash inflow (outflow) from investing activities, net			33,519				(112,794	)
Net cash used in investing activities			(7,588,808	)			(6,296,662	)
Cash flows from financing activities
Proceeds from short-term borrowings, net			(311,590	)			(115,615	)
Proceeds from long-term borrowings and debt securities			1,802,368				3,094,612
Repayment of long-term borrowings and debt securities			(5,106,586	)			(6,215,877	)
Payment of finance lease liabilities			(88,827	)			(82,641	)
Settlement of derivative instruments, net			69,577				12,411
Change in non-controlling interest			14,181				78,175
Dividends paid (hybrid bond)			(12,350	)			(12,341	)
Dividends paid			(2,064,770	)			(395,483	)
Other cash outflow from financing activities, net			(523	)			(2,437	)
Net cash used in financing activities			(5,698,520	)			(3,639,196	)
Net increase in cash and cash equivalents before effect of exchange rate fluctuations			987,752				3,327,478
Effect of exchange rate fluctuations on cash held			(3,315	)			50,620
Net increase in cash and cash equivalents			984,437				3,378,098
Cash and cash equivalents at January 1			3,783,065				1,796,300
Cash and cash equivalents at September 30		W	4,767,502				5,174,398

See accompanying notes to the consolidated interim financial statements.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 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 September 30, 2016, KEPCO’s share capital amounts to W3,209,820 million and KEPCO’s shareholders are as follows:

 

		Number of shares				Percentage of ownership
Government of the Republic of Korea			116,841,794				18.20	%
Korea Development Bank			211,235,264				32.90	%
Other (*)			313,887,019				48.90	%
			641,964,077				100.00	%

 

(*)	The number of shares held by foreign shareholders are 208,239,290 shares (32.44%) as of the most recent closing date of Register of Shareholders (Aug 2, 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 that resulted 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

September 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

September 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 September 30, 2016 and 2015 are W1,110,889 million and W1,268,411 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

September 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

September 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

September 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

September 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

September 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

September 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

September 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 gain 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

September 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

September 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

September 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, residual values and useful lives of property, plant and equipment are reviewed at the end of each reporting period and if change is deemed appropriate, it is treated as a change in accounting estimate. Accordingly, useful lives of certain machinery were changed during the current period and as a result, depreciation expenses increased by W122,222 million for the nine-month period ended September 30, 2016. Depreciation expenses are expected to increase by W165,155 for the year ending December 31, 2016 and to decrease by W165,155 million for the years after December 31, 2016.

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

September 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

September 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

September 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

September 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

September 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

September 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

September 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

September 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

September 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

September 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

September 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

September 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

September 30, 2016

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

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

 

In millions of won
September 30, 2016
Segment		Total segment revenue								Intersegment revenue								Revenue from external customers								Operating income(loss)								Depreciation and Amortization								Interest Income								Interest expense								Profit related to associates, joint ventures, and subsidiaries
		Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended
Transmission and distribution		W	16,136,346				44,955,305				573,542				1,356,641				15,562,804				43,598,664				2,767,680				4,942,790				878,020				2,382,450				15,062				63,097				213,674				661,734				(40,219	)			121,410
Electric power generation (Nuclear)			2,577,063				8,248,413				2,576,521				8,211,986				542				36,427				862,808				3,027,731				775,861				2,332,029				7,251				24,995				118,526				355,569				(470	)			(1,291	)
Electric power generation (Non-Nuclear)			5,131,354				15,401,147				4,957,132				14,767,596				174,222				633,551				689,731				2,671,907				599,919				1,781,950				4,948				20,467				87,620				247,805				10,747				8,640
Plant Maintenance & engineering service			579,585				1,769,154				490,412				1,490,912				89,173				278,242				60,952				197,209				25,262				74,710				2,471				8,207				388				1,800				(135	)			888
Others			134,980				419,506				18,223				62,140				116,757				357,366				25,915				84,612				5,380				20,410				32,550				87,833				24,109				70,930				—				—
Consolidation adjustments			(8,615,830	)			(25,889,275	)			(8,615,830	)			(25,889,275	)			—				—				17,083				(190,238	)			(11,220	)			(32,919	)			(5,914	)			(15,710	)			(6,617	)			(18,879	)			—				—
		W	15,943,498				44,904,250				—				—				15,943,498				44,904,250				4,424,169				10,734,011				2,273,222				6,558,630				56,368				188,889				437,700				1,318,959				(30,077	)			129,647

 

In millions of won
September 30, 2015
Segment		Total segment revenue								Intersegment revenue								Revenue from external customers								Operating income(loss)								Depreciation and Amortization								Interest Income								Interest expense								Profit related to associates, joint ventures, and subsidiaries
		Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended
Transmission and distribution		W	15,416,171				43,914,410				292,648				903,380				15,123,523				43,011,030				2,297,246				4,227,866				716,090				2,126,283				24,122				55,984				265,850				849,569				(20,987	)			193,260
Electric power generation (Nuclear)			2,744,830				7,383,250				2,734,133				7,364,870				10,697				18,380				1,170,394				2,362,610				780,650				2,243,491				5,386				18,480				116,659				415,830				(5	)			(718	)
Electric power generation (Non-Nuclear)			5,388,962				16,098,458				5,300,810				15,642,156				88,152				456,302				800,748				1,834,510				573,449				1,707,980				5,509				16,575				81,242				241,712				(14,516	)			(8,972	)
Plant Maintenance & engineering service			570,849				1,741,064				446,361				1,340,146				124,488				400,918				82,039				212,893				22,399				62,430				3,166				8,588				38				109				(1,027	)			(1,073	)
Others			163,746				477,978				40,651				98,968				123,095				379,010				16,438				49,337				6,851				20,387				25,594				78,732				21,842				66,908				—				—
Consolidation adjustments			(8,814,603	)			(25,349,520	)			(8,814,603	)			(25,349,520	)			—				—				(26,773	)			(19,274	)			(10,258	)			(30,131	)			(3,424	)			(12,998	)			(3,269	)			(13,303	)			—				—
		W	15,469,955				44,265,640				—				—				15,469,955				44,265,640				4,340,092				8,667,942				2,089,181				6,130,440				60,353				165,361				482,362				1,560,825				(36,535	)			182,497

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

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

 

In millions of won
September 30, 2016
Segment		Segment assets				Investments in associates and joint ventures				Acquisition of non- current assets				Segment liabilities
Transmission and distribution		W	104,394,803				4,258,450				5,097,863				48,794,027
Electric power generation (Nuclear)			52,516,123				16,434				1,420,611				27,489,481
Electric power generation (Non-nuclear)			45,183,897				1,297,667				2,475,765				24,742,741
Plant maintenance & engineering service			3,067,480				53,810				126,753				1,222,293
Others			6,491,038				—				213,504				2,515,595
Consolidation adjustments			(35,414,358	)			—				(73,881	)			(829,698	)
Consolidated totals		W	176,238,983				5,626,361				9,260,615				103,934,439

 

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		W	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		W	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)
		September 30, 2016								September 30, 2015								September 30, 2016				December 31, 2015
Geographical unit		Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended
Domestic		W	14,797,016				41,632,905				14,423,224				41,108,964				147,737,394				143,788,043
Overseas (*1)			1,146,482				3,271,345				1,046,731				3,156,676				4,213,154				4,526,395
		W	15,943,498				44,904,250				15,469,955				44,265,640				151,950,548				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

September 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 nine-month periods ended September 30, 2016 and 2015.

 

5.	Classification of Financial Instruments

 

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

 

In millions of won		September 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		W	—				4,767,502				—				—				—				4,767,502
Current financial assets
Held-to-maturity investments			—				—				—				355				—				355
Derivative assets			26,277				—				—				—				14,154				40,431
Other financial assets			—				3,199,671				—				—				—				3,199,671
Trade and other receivables			—				6,228,768				—				—				—				6,228,768
			26,277				14,195,941				—				355				14,154				14,236,727
Non-current assets
Non-current financial assets
Available-for-sale financial assets			—				—				1,062,082				—				—				1,062,082
Held-to-maturity investments			—				—				—				3,111				—				3,111
Derivative assets			39,309				—				—				—				23,635				62,944
Other financial assets			—				1,036,743				—				—				—				1,036,743
Trade and other receivables			—				1,751,762				—				—				—				1,751,762
			39,309				2,788,505				1,062,082				3,111				23,635				3,916,642
		W	65,586				16,984,446				1,062,082				3,466				37,789				18,153,369
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		W	—				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
		W	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

September 30, 2016

(Unaudited)

 

5.	Classification of Financial Instruments, Continued

 

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

 

In millions of won		September 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		W	—				840,221				—				840,221
Debt securities			—				8,790,705				—				8,790,705
Derivative liabilities			16,830				—				63,051				79,881
Trade and other payables			—				3,796,772				—				3,796,772
			16,830				13,427,698				63,051				13,507,579
Non-current liabilities
Borrowings			—				1,699,377				—				1,699,377
Debt securities			—				43,095,203				—				43,095,203
Derivative liabilities			64,601				—				174,955				239,556
Trade and other payables			—				3,782,399				—				3,782,399
			64,601				48,576,979				174,955				48,816,535
		W	81,431				62,004,677				238,006				62,324,114
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		W	—				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
		W	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

September 30, 2016

(Unaudited)

 

5.	Classification of Financial Instruments, Continued

 

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

 

In millions of won				September 30, 2016								September 30, 2015
				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended
Cash and cash equivalents		Interest income		W	12,174				50,713				15,519				40,707
Available-for-sale financial assets		Dividends income			286				10,281				646				7,153
		Impairment loss on available-for-sale financial assets			(4,613	)			(4,706	)			(14,500	)			(28,493	)
		Gain (loss) on disposal of available-for-sale financial assets			1				1,481				4				(2,979	)
		Interest income			—				—				—				29
Held-to-maturity investments		Interest income			25				79				30				78
Loans and receivables		Interest income			5,830				19,931				4,734				15,908
Trade and other receivables		Interest income			28,954				78,429				25,278				79,743
Short-term financial instruments		Interest income			8,404				33,861				12,434				20,966
Long-term financial instruments		Interest income			981				5,876				2,358				7,930
Financial assets at fair value through profit or loss		Gain (loss) on valuation of derivatives			(170,547	)			(131,830	)			282,832				343,738
		Gain (loss) on transaction of derivatives			(10,791	)			(16,961	)			4,645				6,783
Derivative assets (using hedge accounting)		Gain (loss) on valuation of derivatives (profit or loss)			(180,303	)			(198,473	)			386,237				470,242
		Gain (loss) on valuation of derivatives (equity, before tax) (*)			(19,030	)			1,477				16,470				(3,118	)
		Loss on transaction of derivatives			(15,357	)			(12,701	)			(6,482	)			(5,063	)
Financial liabilities carried at amortized cost		Interest expense of borrowings and debt securities			(300,090	)			(907,104	)			(346,083	)			(1,075,740	)
		Loss on repayment of financial liabilities			—				—				(33	)			(33	)
		Interest expense of trade and other payables			(16,772	)			(50,278	)			(17,198	)			(62,318	)
		Interest expense of others			(120,838	)			(361,577	)			(119,081	)			(422,767	)
		Gain (loss) on foreign currency transactions and translations			563,203				572,521				(680,562	)			(932,484	)
Financial liabilities at fair value through profit or loss		Gain (loss) on valuation of derivatives			(88,968	)			(89,119	)			3,766				34,307
		Gain on transaction of derivatives			2,978				10,255				56,209				52,000
Derivative liabilities (using hedge accounting)		Loss on valuation of derivatives (profit or loss)			(132,049	)			(152,005	)			(61,860	)			(20,417	)
		Gain (loss) on valuation of derivatives (equity, before tax)(*)			13,759				46,312				10,095				(1,628	)
		Gain (loss) on transaction of derivatives			—				(51,510	)			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

September 30, 2016

(Unaudited)

 

6.	Restricted Deposits

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

 

In millions of won				September 30, 2016				December 31, 2015
Cash and cash equivalents		Escrow accounts		W	85				4,828
		Deposits for government project			10,688				5,839
		Collateral provided for borrowings			15,091				6,839
		Collateral provided for lawsuit			173				641
		Deposits for transmission regional support program			4,927				204
		Pledge			—				740
Non-current available-for-sale financial asset		Decommissioning costs of nuclear power plants			441,557				—
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			310				333
		Decommissioning costs of nuclear power plants			212,640				652,700
		Collateral provided for borrowings			—				20
		Funds for developing small and medium enterprises (*1)			100,000				100,000
Other current receivables		Deposit for lawsuit			16,000				—
				W	834,591				790,146

 

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

 

7.	Cash and Cash Equivalents

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

 

In millions of won		September 30, 2016				December 31, 2015
Cash		W	201				109
Other demand deposits			1,229,875				1,309,396
Short-term deposits classified as cash equivalents			123,133				374,575
Short-term investments classified as cash equivalents			3,414,293				2,098,985
		W	4,767,502				3,783,065

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables

 

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

 

In millions of won		September 30, 2016
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Trade receivables		W	5,668,460				(63,030	)			—				5,605,430
Other receivables			678,710				(53,753	)			(1,619	)			623,338
			6,347,170				(116,783	)			(1,619	)			6,228,768
Non-current assets
Trade receivables			446,832				—				—				446,832
Other receivables			1,344,159				(33,453	)			(5,776	)			1,304,930
			1,790,991				(33,453	)			(5,776	)			1,751,762
		W	8,138,161				(150,236	)			(7,395	)			7,980,530

 

In millions of won		December 31, 2015
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Trade receivables		W	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
		W	9,424,596				(143,702	)			(8,927	)			9,271,967

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

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

 

In millions of won		September 30, 2016
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Non-trade receivables		W	346,405				(53,753	)			—				292,652
Accrued income			101,148				—				—				101,148
Deposits			189,099				—				(1,619	)			187,480
Finance lease receivables			11,927				—				—				11,927
Others			30,131				—				—				30,131
			678,710				(53,753	)			(1,619	)			623,338
Non-current assets
Non-trade receivables			79,265				(26,450	)			—				52,815
Accrued income			2,510				—				—				2,510
Deposits			313,223				—				(5,776	)			307,447
Finance lease receivables			872,983				—				—				872,983
Others			76,178				(7,003	)			—				69,175
			1,344,159				(33,453	)			(5,776	)			1,304,930
		W	2,022,869				(87,206	)			(7,395	)			1,928,268

 

In millions of won		December 31, 2015
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Non-trade receivables		W	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
		W	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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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Trade receivables: (not overdue, not impaired)		W	5,968,170				7,198,403
Trade receivables: (overdue, not impaired)			1,496				891
Less than 60 days			1,496				891
Trade receivables: (impairment reviewed)			145,626				110,478
60 ~ 90 days			38,526				31,973
90 ~ 120 days			13,949				11,010
120 days ~ 1 year			50,799				35,097
Over 1 year			42,352				32,398
			6,115,292				7,309,772
Less: allowance for doubtful accounts			(63,030	)			(51,956	)
Less: present value discount			—				(14	)
		W	6,052,262				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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016				December 31, 2015
Other receivables: (not overdue, not impaired)		W	1,812,304				1,918,132
Other receivables: (overdue, not impaired)			22,961				20,249
Less than 60 days			22,961				20,249
Other receivables: (impairment reviewed)			187,604				176,443
60 ~ 90 days			9,749				2,409
90 ~ 120 days			4,261				10,097
120 days ~ 1 year			31,567				21,433
Over 1 year			142,027				142,504
			2,022,869				2,114,824
Less: allowance for doubtful accounts			(87,206	)			(91,746	)
Less: present value discount			(7,395	)			(8,913	)
		W	1,928,268				2,014,165

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Trade receivables				Other receivables				Trade receivables				Other receivables
Beginning balance		W	51,956				91,746				80,644				67,932
Bad debt expense			24,028				230				1,308				18,473
Write-off			(12,135	)			(1,733	)			(28,978	)			(888	)
Reversal			(500	)			(1,214	)			(1,018	)			(413	)
Others			(319	)			(1,823	)			—				6,642
Ending balance		W	63,030				87,206				51,956				91,746

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Listed:
Korea District Heating Corp.		W	130,410				—				—				18,339				—				—				148,749
Kwanglim Co., Ltd. (*1)			262				—				(214	)			598				—				(646	)			—
Ssangyong Motor Co., Ltd.			299				—				—				5				—				—				304
Sungjee Construction. Co., Ltd.			5				—				—				21				—				—				26
Korea Line Corp.			—				—				—				—				—				—				—
Namkwang Engineering & Construction Co., Ltd.			1				—				—				(1	)			—				—				—
Pumyang Construction Co., Ltd.			—				—				—				—				—				—				—
ELCOMTEC Co., Ltd.			53				—				—				41				—				—				94
PAN ocean Co., Ltd.			6				—				—				1				—				—				7
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	)			—
Dongbu Corporation,			—				—				—				1				—				12				13
PT Adaro Energy Tbk			21,012				—				—				27,863				—				—				48,875
Energy Fuels Inc.			5,926				—				—				(2,961	)			—				60				3,025
Cockatoo Coal Limited			42				—				—				—				—				—				42
Denison Mines Corp.			34,457				—				—				(4,610	)			(4,610	)			4,417				29,654
Fission 3.0			30				—				—				(14	)			—				1				17
Fission Uranium Corp.			554				—				—				(136	)			—				1				419
			196,579				—				(3,398	)			39,741				(4,610	)			3,016				231,328
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				(346	)			—				—				—				4,408
Construction Guarantee			805				—				—				2				—				—				807
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				—				293				—				—				142,763
Samsung investment – Investment Pool for Public funds 2			—				213,710				—				446				—				—				214,156
Samsung investment – Investment Pool for Public funds 1			—				53,220				—				146				—				—				53,366
Korea investment – Hanwha KT Mater Lease Private Special Investment Trust			—				31,200				—				71				—				—				31,271

 

45

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Hwan Young Steel Co., Ltd.		W	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				—				—				—				(3	)			(2	)			—
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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Seungri Enterprise Co., Ltd.		W	3				—				—				—				—				—				3
Onggane Food Co., Ltd.			1				—				—				—				—				—				1
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 F.M.S 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.			—				—				—				—				—				148				148
Autowel Co., Ltd.			—				—				—				—				—				14				14
Baekseok Construction Co., Ltd.			—				—				—				—				—				5				5
Woobang Constructon Co., Ltd.			—				—				—				—				—				8				8
Shin Pyung Co., Ltd.			—				—				—				—				—				3				3
JMC Heavy Industries Co., Ltd.			—				—				—				—				—				27				27
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

 

47

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Buhmwoo Chemical Corp.		W	—				—				—				—				—				20				20
Ace Track Co., Ltd.			—				—				—				—				—				219				219
Taebok 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.			—				—				—				—				—				1				1
Hurim Biocell Co., Ltd.			—				—				—				—				—				5				5
P. J, Trading Co., LTd.			—				—				—				—				—				—				—
Sunjin Power Tech Co., Ltd.			—				—				—				—				—				247				247
Smart Power Co., Ltd.			—				200				—				—				—				—				200
Sunjin Inprecision Co., Ltd.			—				—				—				—				—				169				169
Haseung Industries Co., Ltd.			—				—				—				—				—				28				28
Beer Yeast Korea Inc.			—				—				—				—				—				7				7
Daeryung Corporation			—				—				—				—				—				10				10
Korea Bio Red Ginseng Co., Ltd.			—				—				—				—				—				10				10
ESGI Co., Ltd.			—				—				—				—				—				120				120
Daeyang F.M.S Corporation			—				—				—				—				—				20				20
ENH Co., Ltd.			—				—				—				—				—				55				55
HS Development Co., Ltd.			—				—				—				—				—				54				54
OCO Co., Ltd.			—				—				—				—				—				11				11
B CON Co., Ltd.			—				—				—				—				—				6				6
Doosun Co., Ltd.			—				—				—				—				—				62				62
Areva nc Expansion			170,118				—				—				—				—				(6,671	)			163,447
Navanakorn Electric Co., Ltd.			17,951				—				—				—				—				(1,160	)			16,791
PT. Kedap Saayq			—				—				—				—				—				—				—
Set Holding			179,585				—				—				—				—				—				179,585
PT. Cirebon Energi Prasarana			635				1,999				—				—				—				(177	)			2,457
			387,900				449,484				(1,160	)			958				(96	)			(6,332	)			830,754
		W	584,479				449,484				(4,558	)			40,699				(4,706	)			(3,316	)			1,062,082

 

(*1)

The Company recognized gain on disposal of available-for-sale financial assets amounted to W1,481 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 nine-month period ended September 30, 2016.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the nine-month period ended September 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.		W	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

 

49

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the nine-month period ended September 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.		W	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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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(1)	Changes in available-for-sale financial assets for the nine-month period ended September 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.		W	—				—				—				—				—				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 F.M.S 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
		W	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 W4 million and W3,008 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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
Listed
Korea District Heating Corp.			2,264,068				19.55	%		W	173,201				148,749				148,749
Ssangyong Motor Co., Ltd.			38,568				0.03	%			428				304				304
Sungjee Construction. Co., Ltd.			10,530				0.01	%			49				26				26
Korea Line Corp.			18				0.00	%			1				—				—
Namkwang Engineering & Construction Co., Ltd.			46				0.00	%			15				—				—
Pumyang Construction Co., Ltd.			7				0.00	%			2				—				—
ELCOMTEC Co., Ltd.			32,875				0.04	%			217				94				94
PAN ocean Co., Ltd.			1,492				0.00	%			14				7				7
Borneo International Furniture Co., Ltd.			64,037				0.28	%			97				103				103
Dongbu Corporation,			1,229				0.02	%			12				13				13
PT Adaro Energy Tbk			480,000,000				1.50	%			71,554				48,875				48,875
Energy Fuels Inc.			1,711,814				3.79	%			16,819				3,025				3,025
Cockatoo Coal Limited			49,881,423				0.07	%			18,445				42				42
Denison Mines Corp.			58,284,000				10.93	%			84,134				29,654				29,654
Fission 3.0			300,000				0.17	%			—				17				17
Fission Uranium Corp.			800,000				0.17	%			785				419				419
											365,773				231,328				231,328
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			152				6.29	%			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	%			4,408				4,408				—
Construction Guarantee (*2)			571				0.02	%			601				807				807
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				1.16	%			3,301				3,301				—
Engineering Financial Cooperative			486				0.09	%			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			138,462,756,305				13.12	%			142,470				142,763				142,763
Samsung investment – Investment Pool for Public funds 2			211,422,748,354				8.26	%			213,710				214,156				214,156
Samsung investment – Investment Pool for Public funds 1			53,221,139,215				8.87	%			53,220				53,366				53,366
Korea investment – Hanwha KT Mater Lease Private Special Investment Trust (*3)			31,200,000,000				25.83	%			31,200				31,271				31,271
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

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
HANKOOK Silicon Co., Ltd.			3,005,208				10.44	%		W	7,513				7,513				—
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

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
Daeseong Metal Co., Ltd.			518				2.37	%		W	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 F.M.S 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.			55				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	%			148				148				—
Autowel Co., Ltd.			260				0.38	%			14				14				—
Baekseok Construction Co., Ltd.			30				0.01	%			5				5				—
Woobang Construction Co., Ltd.			8				0.00	%			8				8				—
Shin Pyung Co., Ltd.			6				0.03	%			3				3				—
JMC Heavy Industries Co., Ltd.			2,724				0.10	%			27				27				—
Najin Steel Co., Ltd.			37				0.06	%			5				5				—
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.			3,130				1.08	%			219				219				—
Taebok 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				—

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
		Shares				Ownership				Acquisition cost				Book value				Fair value
Ultra Construction and Engineering Co., Ltd.			13				0.00	%		W	1				1				—
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				—
Sunjin Inprecision Co., Ltd.			3,371				0.20	%			169				169				—
Haseung Industries Co., Ltd.			55				0.62	%			28				28				—
Beer Yeast Korea Inc.			1,388				0.43	%			7				7				—
Daeryung Corporation			207				0.19	%			10				10				—
Korea Bio Red Ginseng Co., Ltd.			194				0.09	%			10				10				—
ESGI Co., Ltd.			40				0.00	%			120				120				—
Daeyang F.M.S Corporation			509				0.33	%			20				20				—
ENH Co.,Ltd.			2,190				0.33	%			55				55				—
HS Development Co., Ltd.			1,086				0.19	%			54				54				—
OCO Co., Ltd.			123				0.37	%			11				11				—
B CON Co., Ltd.			96				1.16	%			6				6				—
Doosun Co., Ltd.			1,247				0.19	%			62				62				—
Areva nc Expansion			1,077,124				13.49	%			288,443				163,447				—
Navanakorn Electric Co., Ltd. (*3)			8,885,600				29.00	%			16,646				16,791				—
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			22,420				10.00	%			2,634				2,457				—
											1,041,272				830,754				621,948
										W	1,407,045				1,062,082				853,276

 

(*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 nine-month period ended September 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 nine-month period ended September 30, 2016.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of September 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	%		W	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 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			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				—
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				—

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of September 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
Hana Civil Engineering Co., Ltd.			23				0.00	%		W	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				—
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				—

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of September 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
Daeseong Metal Co., Ltd.			518				2.37	%		W	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 F.M.S 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
										W	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

September 30, 2016

(Unaudited)

 

10.	Held-to-maturity Investments

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

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Others				Ending balance
Government bonds		W	3,623				85				(242	)			—				3,466
		W	3,623				85				(242	)			—				3,466
Current		W	380				—				(130	)			105				355
Non-current			3,243				85				(112	)			(105	)			3,111
In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Others				Ending balance
Government bonds		W	3,601				432				(410	)			—				3,623
Corporate bonds			13				—				—				(13	)			—
		W	3,614				432				(410	)			(13	)			3,623
Current		W	265				—				(186	)			301				380
Non-current			3,349				432				(224	)			(314	)			3,243

 

11.	Derivatives

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Derivative assets
Currency forward		W	441				8,010				1,498				24,896
Currency swap			39,990				50,382				95,759				491,219
Interest rate swap			—				4,552				—				3,778
		W	40,431				62,944				97,257				519,893
Derivative liabilities
Currency forward		W	12,644				1,997				1,142				—
Currency swap			63,051				155,240				758				66,976
Interest rate swap			4,186				82,319				8,345				89,289
		W	79,881				239,556				10,245				156,265

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

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

 

In millions of won and thousands of foreign currencies
Counterparty		Contract Date		Maturity date		Contract amounts
						Pay				Receive				Contract exchange rate
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
Credit Suisse		2016.09.12		2016.10.11			11,114			USD	10,000				1,111.39
Mizuho Bank		2016.09.28		2016.10.24			5,483			USD	5,000				1,096.69
Mizuho Bank		2016.09.30		2016.10.27			11,033			USD	10,000				1,103.26
Standard Chartered		2016.09.08		2016.10.10			5,468			USD	5,000				1,093.63
Standard Chartered		2016.09.22		2016.10.19			5,515			USD	5,000				1,102.96
Nova Scotia		2016.09.07		2016.10.06			5,467			USD	5,000				1,093.35
Nova Scotia		2016.09.13		2016.10.12			5,558			USD	5,000				1,111.64
Nova Scotia		2016.09.19		2016.10.17			11,219			USD	10,000				1,121.89
Morgan Stanley		2016.09.27		2016.10.21			5,495			USD	5,000				1,098.91
Morgan Stanley		2016.09.29		2016.10.25			10,965			USD	10,000				1,096.47
Mizuho Bank		2016.08.05		2016.11.09			2,223			USD	2,000				1,111.35
Mizuho Bank		2016.08.08		2016.11.09		USD	538				598				1,111.35
Mizuho Bank		2016.08.08		2016.11.09		USD	7				7				1,111.35
Mizuho Bank		2016.08.11		2016.11.09		USD	7				7				1,111.35
Mizuho Bank		2016.08.23		2016.11.09		USD	1,000				1,111				1,111.35
Mizuho Bank		2016.08.26		2016.11.09		USD	116				129				1,111.35
Mizuho Bank		2016.09.01		2016.11.09		USD	339				377				1,111.35
Mizuho Bank		2016.09.12		2016.10.19			1,109			USD	1,000				1,109.20
Mizuho Bank		2016.09.28		2016.10.31			2,191			USD	2,000				1,095.50
Credit Agricole		2016.07.15		2017.01.19			6,797			USD	6,000				1,132.80
Credit Agricole		2016.09.02		2016.10.06			2,236			USD	2,000				1,117.85
Credit Agricole		2016.09.19		2016.10.21			2,237			USD	2,000				1,118.60
Credit Agricole		2016.09.22		2016.10.26			1,103			USD	1,000				1,103.35
Nonghyup Bank		2016.07.15		2017.01.19			1,766			USD	1,559				1,132.45
Nonghyup Bank		2016.09.19		2016.10.21			2,237			USD	2,000				1,118.30
Nonghyup Bank		2016.09.30		2016.11.07			2,201			USD	2,000				1,100.55
BNP Paribas		2016.09.30		2016.10.05			2,199			USD	2,000				1,099.55
Nova Scotia		2016.08.23		2016.10.25			118			USD	105				1,116.70
Nova Scotia		2016.09.01		2016.11.07			1,115			USD	1,000				1,115.25
Nova Scotia		2016.09.20		2016.10.24			1,118			USD	1,000				1,117.60
Nova Scotia		2016.09.23		2016.10.27			1,102			USD	1,000				1,102.15
Nova Scotia		2016.09.28		2016.10.31			2,191			USD	2,000				1,095.60
Standard Chartered		2016.09.21		2016.10.24			4,459			USD	4,000				1,114.70
Standard Chartered		2016.09.27		2016.10.31			2,208			USD	2,000				1,104.10
Societe Generale		2016.09.27		2016.10.31			3,312			USD	3,000				1,104.02
HSBC		2016.08.26		2016.10.31			2,229			USD	2,000				1,114.50
HSBC		2016.08.31		2016.11.02			2,232			USD	2,000				1,115.75
HSBC		2016.09.05		2016.10.07			2,212			USD	2,000				1,106.05
HSBC		2016.09.23		2016.11.02		USD	1,000				1,116				1,115.75
HSBC		2016.09.27		2016.10.31			3,298			USD	3,000				1,099.32
Citibank		2016.09.06		2016.10.11			3,314			USD	3,000				1,104.77
BTMU		2016.09.05		2016.10.05			3,326			USD	3,000				1,108.60
BTMU		2016.09.12		2016.10.19			3,332			USD	3,000				1,110.50
BTMU		2016.09.21		2016.10.24			1,115			USD	1,000				1,115.10
BTMU		2016.09.21		2016.10.24			3,334			USD	3,000				1,111.37
BTMU		2016.09.27		2016.10.31			2,192			USD	2,000				1,095.80
Mizuho Bank		2016.09.27		2016.10.06			5,730			USD	5,200				1,102.00
Standard Chartered		2016.09.27		2016.10.10			8,827			USD	8,000				1,103.35
Standard Chartered		2016.09.30		2016.10.06			8,267			USD	7,500				1,102.33
Standard Chartered		2016.09.30		2016.10.10			5,505			USD	5,000				1,101.00
Standard Chartered		2016.08.26		2017.08.09			4,448			USD	4,000				1,111.90
Standard Chartered		2016.08.26		2017.08.09			4,119			USD	3,700				1,113.30
Standard Chartered		2016.09.07		2017.09.06			5,446			USD	5,000				1,089.25

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

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

 

In millions of won and thousands of foreign currencies
										Contract amounts
Counterparty		Contract Date				Maturity date				Pay				Receive				Contract exchange rate
KEB Hana Bank			2016.08.26				2017.02.16				4,812			EUR	3,800				1,266.30
KEB Hana Bank			2016.08.26				2017.08.09				1,280			CNY	7,800				164.13
KEB Hana Bank			2016.09.07				2017.09.06				3,121			EUR	2,500				1,248.20
KEB Hana Bank			2016.09.07				2017.09.06				834			CNY	5,200				160.48
Nova Scotia			2016.09.07				2017.03.13				1,089			USD	1,000				1,089.25
Woori Bank			2016.09.07				2017.09.11				5,458			USD	5,000				1,091.50
Credit Agricole			2016.09.07				2017.09.11				1,708			USD	1,565				1,091.50
Societe Generale			2016.09.07				2017.09.11				5,460			USD	5,000				1,092.00
Standard Chartered			2016.09.07				2017.09.11				2,705			USD	2,477				1,092.10
Kookmin Bank			2016.09.07				2017.04.07				1,981			USD	1,814				1,092.15
BNP Paribas			2016.08.16				2017.08.16				1,298			USD	1,187				1,093.40
Nova Scotia			2016.09.28				2017.04.04				1,093			USD	1,000				1,093.40
Nova Scotia			2016.09.28				2017.03.31				2,190			USD	2,000				1,095.10
Societe Generale			2016.09.09				2017.09.13				5,485			USD	5,000				1,097.00
BNP Paribas			2016.09.09				2017.09.07				5,489			USD	5,000				1,097.70
Nomura			2016.09.27				2017.09.29				5,490			USD	5,000				1,097.90
Societe Generale			2016.09.27				2017.09.29				5,491			USD	5,000				1,098.10
Standard Chartered			2016.09.27				2017.09.29				5,491			USD	5,000				1,098.10
Citibank			2016.09.27				2017.09.29				5,492			USD	5,000				1,098.30
BNP Paribas			2016.09.27				2017.09.27				5,495			USD	5,000				1,098.90
Nova Scotia			2016.09.27				2017.03.29				2,487			USD	2,263				1,098.96
Societe Generale			2016.09.23				2017.09.27				250			USD	227				1,103.10
Nova Scotia			2016.08.09				2017.02.13				674			USD	611				1,103.20
BNP Paribas			2016.09.23				2017.09.21				4,089			USD	3,705				1,103.70
Nova Scotia			2016.07.29				2017.02.02				1,115			USD	1,000				1,114.60
Societe Generale			2016.09.02				2017.09.06				5,577			USD	5,000				1,115.30
Nova Scotia			2016.07.29				2017.02.02				574			USD	515				1,115.60
Nomura			2016.07.14				2017.01.18				5,714			USD	5,000				1,142.80
JP Morgan			2016.07.14				2017.01.18				5,715			USD	5,000				1,143.00
Nova Scotia			2016.07.14				2017.01.18				3,431			USD	3,000				1,143.60
Nova Scotia			2016.06.24				2016.12.28				3,432			USD	3,000				1,143.90
Woori Bank			2016.07.14				2017.01.17				3,432			USD	3,000				1,143.90
Nova Scotia			2016.07.14				2017.01.18				3,434			USD	3,000				1,144.60
BNP Paribas			2016.07.14				2017.01.18				5,723			USD	5,000				1,144.60
Credit Suisse			2016.07.14				2017.01.18				3,440			USD	3,000				1,146.60
Societe Generale			2016.07.11				2017.01.13				3,874			USD	3,373				1,148.50
Nova Scotia			2016.06.22				2016.12.27				2,291			USD	1,992				1,149.80
Standard Chartered			2016.06.08				2016.12.08				1,559			USD	1,348				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				3,730			USD	3,203				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				9,288			USD	7,959				1,166.95
Societe Generale			2016.06.17				2016.12.21				2,359			USD	2,015				1,170.60
BNP Paribas			2016.06.17				2016.12.19				6,711			USD	5,732				1,170.80
Nova Scotia			2016.06.24				2016.12.29				1,260			USD	1,076				1,171.50
Standard Chartered			2016.06.28				2016.12.29				1,662			USD	1,418				1,172.60
Nova Scotia			2016.06.28				2016.12.29				2,346			USD	2,000				1,173.20
Nova Scotia			2016.06.28				2016.12.29				2,347			USD	2,000				1,173.50
Standard Chartered			2016.06.28				2016.12.29				2,347			USD	2,000				1,173.55
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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(2)	Currency forward contracts which are not designated as hedge instruments, as of September 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
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				886			USD	745				1,188.50
KEB Hana Bank			2015.08.26				2017.07.31			JPY	630,000				6,377				10.12
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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(3)	Currency swap contracts which are not designated as hedge instruments as of September 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
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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(4)	Currency swap contracts which are designated as hedge instruments as of September 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
Standard Chartered		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				3M Libor+3.25	%			2.75	%			1,071.90
Morgan Stanley		2014~2019			107,190			USD	100,000				3M Libor+3.25	%			2.75	%			1,071.90
Deutsche Bank		2014~2019			107,190			USD	100,000				3M Libor+3.25	%			2.75	%			1,071.90
Korea Development Bank		2016~2021			121,000			USD	100,000				2.15	%			2.50	%			1,210.00
Morgan Stanley		2016~2021			121,000			USD	100,000				3M Libor+2.10	%			2.50	%			1,210.00
BNP Paribas		2016~2021			121,000			USD	100,000				3M Libor+2.10	%			2.50	%			1,210.00
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
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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

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

 

In millions of won and thousands of foreign currencies
				Contract amount								Contract interest rate
Counterparty		Contract year		Pay				Receive				Pay				Receive				Contract exchange rate
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 September 30, 2016 are as follows:

 

In millions of won and thousands of foreign currencies										Contract interest rate per annum
Counterparty		Contract year				Contract amount				Pay				Receive
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	%
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

 

(*)

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.

 

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

 

In thousands of U.S. dollars

Contract interest rate per annum

Counterparty

Contract year

Contract amount

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

11.	Derivatives, Continued

 

(7)	Gains and losses on valuation and transaction of derivatives for the three and nine-month periods ended September 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) (*)
		September 30, 2016								September 30, 2015								September 30, 2016								September 30, 2015								September 30, 2016								September 30, 2015
		Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended
Currency forward		W	(28,248	)			(29,173	)			(17,928	)			20,858				(8,167	)			(7,830	)			12,538				8,700				—				—				—				—
Currency swap			(545,822	)			(547,960	)			627,922				807,780				(17,453	)			(67,294	)			47,535				45,121				(5,271	)			47,806				19,972				(3,419	)
Interest rate swap			2,203				5,706				981				(768	)			2,450				4,207				(683	)			(101	)			—				(17	)			6,593				(1,327	)
		W	(571,867	)			(571,427	)			610,975				827,870				(23,170	)			(70,917	)			59,390				53,720				(5,271	)			47,789				26,565				(4,746	)

 

(*)	As of September 30, 2016, the net gain on valuation of derivatives using cash flow hedge accounting of W27,450 million, net of tax, is included in other comprehensive income or loss.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

12.	Other Financial Assets

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Loans and receivables		W	199,993				682,528				106,013				678,126
Allowance for doubtful accounts			—				(4,111	)			—				—
Present value discount			(1,008	)			(44,248	)			(859	)			(48,223	)
Long-term/short-term financial instruments			3,000,686				402,574				5,132,829				758,037
		W	3,199,671				1,036,743				5,237,983				1,387,940

 

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

 

In millions of won		September 30, 2016
		Face value				Allowance for doubtful accounts				Present value discount				Book value
Short-term loans and receivables
Loans for tuition		W	29,317				—				(1,008	)			28,309
Loans for housing			12,022				—				—				12,022
Fisheries loan			3,376				—				—				3,376
Other loans			155,278				—				—				155,278
			199,993				—				(1,008	)			198,985
Long-term loans and receivables
Loans for tuition			414,629				—				(44,050	)			370,579
Loans for housing			127,100				—				—				127,100
Loans for related parties			82,576				(4,111	)			—				78,465
Fisheries loan			1,312				—				(198	)			1,114
Other loans			56,911				—				—				56,911
			682,528				(4,111	)			(44,248	)			634,169
		W	882,521				(4,111	)			(45,256	)			833,154

 

In millions of won		December 31, 2015
		Face value				Present value discount				Book value
Short-term loans and receivables
Loans for tuition		W	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
		W	784,139				(49,082	)			735,057

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

12.	Other Financial Assets, Continued

 

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

 

In millions of won		September 30, 2016
Beginning balance		W	—
Bad debt expense			4,356
Other			(245	)
Ending balance		W	4,111

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Time deposits		W	1,618,174				30,000				2,131,089				3
ABCP			1,139,000				215,277				2,598,791				5,000
CP			241,617				—				48,350				—
CD			197				—				163,649				—
RP			—				6,984				—				652,700
Others			1,698				150,313				190,950				100,334
		W	3,000,686				402,574				5,132,829				758,037

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

13.	Inventories

 

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

 

In millions of won		September 30, 2016
		Acquisition cost				Valuation allowance				Book value
Raw materials		W	2,980,936				(1,238	)			2,979,698
Merchandise			388				—				388
Work-in-progress			120,994				—				120,994
Finished goods			58,197				—				58,197
Supplies			1,193,980				(3,909	)			1,190,071
Inventories in transit			428,141				—				428,141
Other inventories			9,283				—				9,283
		W	4,791,919				(5,147	)			4,786,772

 

In millions of won		December 31, 2015
		Acquisition cost				Valuation allowance				Book value
Raw materials		W	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
		W	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 W2,380 million for the nine-month period ended September 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 W533 million for the year ended December 31, 2015. The amounts of loss from inventory valuation included in other gains or losses were W1,861 million for the nine-month period ended September 30, 2016 and W1,318 million for the year ended December 31, 2015, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 September 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		September 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		W	95,531				11,927				98,488				12,098
1 ~ 5 years			383,020				195,723				407,426				203,699
More than 5 years			1,498,560				677,260				1,689,281				738,011
		W	1,977,111				884,910				2,195,195				953,808

 

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

 

15.	Non-Financial Assets

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Advance payment		W	136,332				67,300				102,842				25,172
Prepaid expenses			211,450				80,359				159,378				85,105
Others (*)			145,451				23,136				135,730				20,956
		W	493,233				170,795				397,950				131,233

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Tax refund receivables		W	17,124				2,486				39,158				2,658
Others			128,327				20,650				96,572				18,298
		W	145,451				23,136				135,730				20,956

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries

 

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

 

Subsidiaries		Key operation activities		Location		Percentage of ownership (%)
						September 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		Holding company		INDONESIA			100.00	%			100.00	%

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

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

 

						Percentage of ownership (%)
Subsidiaries		Key operation activities		Location		September 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.		Operation of utility plant		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.		Operation of utility plant		KOREA			100.00	%			100.00	%
Fujeij Wind Power Company		Operation of utility plant		JORDAN			100.00	%			100.00	%
KOSPO Youngnam Power Co., Ltd.		Operation of utility plant		KOREA			50.00	%			50.00	%
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	%			—
KOSPO Power Services Limitada		Utility plant maintenance and others		CHILE			65.00	%			—

 

(*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 September 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

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

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

<Subsidiaries included in consolidation for the nine-month periods ended September 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
KOSPO Power Services Limitada		Newly Established

 

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

 

In millions of won
September 30, 2016
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
Korea Hydro & Nuclear Power Co., Ltd.		W	52,516,123				27,489,481				8,248,412				2,065,898
Korea South-East Power Co., Ltd.			9,174,651				4,310,486				3,676,684				504,293
Korea Midland Power Co., Ltd.			8,528,597				5,088,285				2,712,725				268,158
Korea Western Power Co., Ltd.			9,364,559				5,551,759				2,973,064				353,799
Korea Southern Power Co., Ltd.			9,331,482				5,383,545				2,967,541				289,467
Korea East-West Power Co., Ltd.			8,784,608				4,408,667				3,071,134				448,540
KEPCO Engineering & Construction Company, Inc.			845,602				412,891				348,167				31,254
KEPCO Plant Service & Engineering Co., Ltd.			1,064,431				291,663				846,448				85,400
KEPCO Nuclear Fuel Co., Ltd.			714,147				355,395				235,558				28,174
KEPCO KDN Co., Ltd.			443,300				162,344				338,981				14,950
Garolim Tidal Power Plant Co., Ltd.			635				348				—				(22	)
KEPCO International HongKong Ltd.			156,055				1				—				3,506
KEPCO International Philippines Inc.			102,466				476				—				34,264
KEPCO Gansu International Ltd.			16,264				505				—				(18	)
KEPCO Philippines Holdings Inc.			112,657				4				—				9,596
KEPCO Philippines Corporation			12,817				69				—				255
KEPCO Ilijan Corporation			538,497				49,541				88,498				46,162
KEPCO Lebanon SARL			657				9,502				—				(52	)
KEPCO Neimenggu International Ltd.			169,953				326				—				7,427
KEPCO Shanxi International Ltd.			521,172				210,829				—				8,238
KOMIPO Global Pte Ltd.			207,447				889				—				34,782
KEPCO Canada Energy Ltd.			49,428				123				—				(6,879	)
KEPCO Netherlands B.V.			116,299				91				—				342
KOREA Imouraren Uranium Investment Corp.			217,228				201				—				1,668
KEPCO Australia Pty., Ltd.			505,617				3,447				3,604				1,815
KOSEP Australia Pty., Ltd.			18,620				500				3,402				2,036
KOMIPO Australia Pty., Ltd.			18,735				10				3,402				1,912
KOWEPO Australia Pty., Ltd.			19,246				10				3,402				2,292
KOSPO Australia Pty., Ltd.			19,317				10				3,402				2,313
KEPCO Middle East Holding Company			140,752				146,879				—				(3,340	)
Qatrana Electric Power Company			506,457				388,077				14,216				17,771
KHNP Canada Energy, Ltd.			29,032				33				—				(30	)
KEPCO Bylong Australia Pty., Ltd.			203,356				244,779				—				10,974
Korea Waterbury Uranium Limited Partnership			17,205				149				—				(44	)
KEPCO Canada Uranium Investment Limited Partnership			31,867				117				—				(6,849	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

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

 

In millions of won
September 30, 2016
Subsidiaries		Total Assets				Total liabilities				Sales				Profit (loss) for the period
Korea Electric Power Nigeria Ltd.		W	851				249				10,536				595
KEPCO Holdings de Mexico			904				23				—				244
KST Electric Power Company			558,421				512,576				73,870				10,777
KEPCO Energy Service Company			1,779				345				4,435				1,129
KEPCO Netherlands S3 B.V.			52,497				20				—				372
PT. KOMIPO Pembangkitan Jawa Bali			19,305				5,769				16,865				8,762
PT. Cirebon Power Service			3,333				1,083				5,435				544
KOWEPO International Corporation			—				—				—				—
KOSPO Jordan LLC			11,222				1,136				5,064				589
EWP Philippines Corporation			1,840				888				—				(29	)
EWP America Inc. (*)			99,598				72,826				27,870				(3,949	)
KNF Canada Energy Limited			1,830				26				—				(34	)
PT KEPCO Resource Indonesia			937				16				—				(226	)
EWP Barbados 1 SRL			243,441				185				1,657				(214	)
Gyeonggi Green Energy Co., Ltd.			295,095				223,364				73,123				10,870
PT. Tanggamus Electric Power			135,216				119,665				29,878				1,968
Gyeongju Wind Power Co., Ltd.			60,261				25,496				4,810				956
KOMIPO America Inc.			11,051				2,206				—				(1,538	)
KOSEP USA, INC.			31,728				8,217				3,809				(10,614	)
PT. EWP Indonesia			2,118				42				—				1,266
KEPCO Netherlands J3 B.V.			113,554				43				—				(61	)
Korea Offshore Wind Power Co., Ltd.			38,198				68				—				(2,609	)
Global One Pioneer B.V.			46				15				—				(38	)
Global Energy Pioneer B.V.			48				15				—				(38	)
Mira Power Limited			159,560				119,065				—				(655	)
KOSEP Material Co., Ltd.			23,520				23,251				1,517				(1,485	)
Commerce and Industry Energy Co., Ltd.			97,728				86,263				20,468				(1,349	)
KEPCO Singapore Holdings Pte., Ltd.			2,168				—				—				(18	)
KOWEPO India Private Limited			848				10				—				—
KEPCO KPS Philippines Corp.			7,939				2,377				9,446				1,368
KOSPO Chile SpA			9				4,342				—				208
PT. KOWEPO Sumsel Operation and Maintenance Services			1,449				179				4,559				497
HeeMang Sunlight Power Co., Ltd.			7,122				3,357				7				(253	)
Fujeij Wind Power Company			787				4				—				(454	)
KOSPO Youngnam Power Co., Ltd.			281,441				202,377				—				(555	)
Global One Carbon Private Equity Investment Trust 2			2,999				—				—				6
Chitose Solar Power Plant LLC			52,056				39,908				—				(90	)
KEPCO Energy Solution Co. Ltd.			300,685				19				—				666
Solar School Plant Co., Ltd.			200,619				55				—				564
KOSPO Power Services Limitada			4,261				570				6,201				3,796

 

(*)	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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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the nine-month period ended September 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.		W	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

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the nine-month period ended September 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.		W	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 W35 billion, change in the capacity of cogeneration units (except for the change due to performance improvement of equipment, maintenance) will require unanimous consent of all directors.
KOSPO Youngnam Power Co., Ltd.		Dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained. Shares cannot be wholly or partially transferred without prior written consent of financial institutions.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

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

 

In millions of won
September 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		W	157,838				557,664				320,809				820,714				1,857,025
Non-current assets			380,659				506,767				524,793				2,127,287				3,539,506
Current liabilities			(14,732	)			(185,630	)			(314,489	)			(292,309	)			(807,160	)
Non-current liabilities			(34,809	)			(106,033	)			(98,402	)			(1,813,412	)			(2,052,656	)
Net assets			488,956				772,768				432,711				842,280				2,536,715
Book value of non-controlling interest			239,588				367,219				144,396				675,308				1,426,511
Sales			88,498				846,448				348,167				495,944				1,779,057
Profit for the period			46,162				85,400				31,254				80,778				243,594
Profit for the period attributable to non-controlling interest			22,620				40,582				10,430				19,958				93,590
Cash flows from operating activities			75,648				100,859				35,006				74,105				285,618
Cash flows from investing activities			(52	)			110,524				(8,766	)			(237,172	)			(135,466	)
Cash flows from financing activities before dividends to non-controlling interest			(34,652	)			(39,911	)			(8,717	)			381,650				298,370
Dividends to non-controlling interest			(33,883	)			(36,139	)			(2,539	)			(14,461	)			(87,022	)
Effect of exchange rate fluctuation			(4,442	)			(671	)			(989	)			(13,004	)			(19,106	)
Net increase of cash and cash equivalents			2,619				134,662				13,995				191,118				342,394
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		W	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

September 30, 2016

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(6)	Changes in goodwill

 

(i)

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

 

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

 

(ii)

There are no changes in goodwill for the nine-month period ended September 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		W	10,664
Fair value of remaining shares after disposal			13,860
Total		W	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		W	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	)
		W	16,494

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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		W	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)		W	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		W	10,664
Less: cash held by disposed subsidiaries			(10,071	)
Net cash flow		W	593

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures

 

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

 

In millions of won
September 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	%		W	79,540				87,562
Korea Gas Corporation (*1)		Importing and wholesaling LNG		KOREA			20.47	%			94,500				2,088,832
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering and others		KOREA			29.00	%			4,727				22,036
YTN Co., Ltd.		Broadcasting		KOREA			21.43	%			59,000				36,943
Cheongna Energy Co., Ltd.		Generating and distributing vapor and hot/cold water		KOREA			43.90	%			49,607				13,784
Gangwon Wind Power Co., Ltd. (*2)		Power generation		KOREA			15.00	%			5,725				12,643
Hyundai Green Power Co., Ltd.		Power generation		KOREA			29.00	%			88,885				114,807
Korea Power Exchange (*6)		Management of power market and others		KOREA			100.00	%			127,839				224,457
AMEC Partners Korea Ltd. (*3)		Resources development		KOREA			19.00	%			707				223
Hyundai Energy Co., Ltd. (*9)		Power generation		KOREA			29.00	%			30,118				—
Ecollite Co., Ltd.		Artificial light-weight aggregate		KOREA			36.10	%			1,516				—
Taebaek Wind Power Co., Ltd.		Power generation		KOREA			25.00	%			3,810				4,553
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		Power generation		KOREA			25.00	%			3,420				3,087
Pyeongchang Wind Power Co., Ltd.		Power generation		KOREA			25.00	%			3,875				3,441
Daeryun Power Co., Ltd. (*3, 10)		Power generation		KOREA			13.13	%			25,477				31,059
JinanJangsu Wind Power Co., Ltd.		Power generation		KOREA			25.00	%			100				64
Changjuk Wind Power Co., Ltd.		Power generation		KOREA			30.00	%			3,801				6,718
KNH Solar Co., Ltd.		Power generation		KOREA			27.00	%			1,296				2,088
SPC Power Corporation		Power generation		PHILIPPINES			38.00	%			20,635				57,720
Gemeng International Energy Co., Ltd.		Power generation		CHINA			34.00	%			413,153				639,871
PT. Cirebon Electric Power		Power generation		INDONESIA			27.50	%			40,365				85,019
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				19,220
PT. Bayan Resources TBK		Resources development		INDONESIA			20.00	%			615,860				502,604
S-Power Co., Ltd.		Power generation		KOREA			49.00	%			132,300				123,888
Pioneer Gas Power Limited (*8)		Power generation		INDIA			40.00	%			49,831				48,455
Eurasia Energy Holdings		Power generation and resources development		RUSSIA			40.00	%			461				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Power generation		LAOS			25.00	%			42,917				35,478
Hadong Mineral Fiber Co., Ltd.		Recycling fly ashes		KOREA			25.00	%			50				—
Green Biomass Co., Ltd. (*12)		Power generation		KOREA			14.00	%			714				100
PT. Mutiara Jawa		Manufacturing and operating floating coal terminal		INDONESIA			29.00	%			2,978				—
Samcheok Eco Materials Co., Ltd. (*3, 11)		Recycling fly ashes		KOREA			2.67	%			686				—
Noeul Green Energy Co., Ltd.		Power generation		KOREA			29.00	%			1,740				1,065
Naepo Green Energy Co., Ltd.		Power generation		KOREA			25.00	%			29,200				25,840
Goseong Green Energy Co., Ltd. (*2)		Power generation		KOREA			1.45	%			2,900				2,644
Gangneung Eco Power Co., Ltd. (*2)		Power generation		KOREA			1.61	%			2,900				2,658
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				184
DS POWER Co., Ltd. (*2)		Power generation		KOREA			10.36	%			17,900				8,745
Dongducheon Dream Power Co., Ltd.		Power generation		KOREA			33.61	%			107,958				42,254
KS Solar Co., Ltd. (*3)		Power generation		KOREA			19.00	%			637				647
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				8,103
SE Green Energy Co., Ltd.		Power generation		KOREA			47.76	%			3,821				3,537
Daegu Photovoltaic Co., Ltd.		Power generation		KOREA			29.00	%			1,230				1,725
Jeongam Wind Power Co., Ltd.		Power generation		KOREA			40.00	%			1,880				736
Korea Power Engineering Service Co., Ltd.		Construction and service		KOREA			29.00	%			290				2,591
Busan Green Energy Co., Ltd.		Power generation		KOREA			29.00	%			14,564				13,826
Jungbu Bio Energy Co., Ltd. (*2)		Power generation		KOREA			18.87	%			1,000				837
Korea Electric Vehicle Charging Service		Electric vehicle charge service		KOREA			28.00	%			1,596				1,147
Ulleungdo Natural Energy Co., Ltd.		Renewable power generation		KOREA			29.85	%			8,000				7,068
Korea Nuclear Partners Co., Ltd.		Electric material agency		KOREA			29.00	%			290				202
Tamra Offshore Wind Power Co., Ltd		Power generation		KOREA			27.00	%			8,910				7,407
Korea Electric Power Corporation Fund (*13)		Developing electric enterprises		KOREA			97.98	%			48,500				48,071
											2,189,159				4,345,281

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

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

 

In millions of won
September 30, 2016
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
<Joint ventures>
KEPCO-Uhde Inc. (*7)		Power generation			KOREA				52.80	%		W	11,355				8,413
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				26,267
Shuweihat Asia Power Investment B.V.		Holding company			NETHERLANDS				49.00	%			50,017				5,966
Shuweihat Asia Operation & Maintenance Company (*7)		Maintenance of utility plant			CAYMAN				55.00	%			30				702
Waterbury Lake Uranium L.P.		Resources development			CANADA				36.97	%			26,602				19,905
ASM-BG Investicii AD		Power generation			BULGARIA				50.00	%			16,101				21,107
RES Technology AD		Power generation			BULGARIA				50.00	%			15,595				13,812
KV Holdings, Inc.		Power generation			PHILIPPINES				40.00	%			2,103				1,758
KEPCO SPC Power Corporation (*7)		Construction and operation of utility plant			PHILIPPINES				75.20	%			94,579				220,674
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				12,771
Datang Chifeng Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			121,928				152,995
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			10,858				9,967
Rabigh Electricity Company		Power generation			SAUDI ARABIA				40.00	%			109,743				73,185
Rabigh Operation & Maintenance Company		Maintenance of utility plant			SAUDI ARABIA				40.00	%			70				3,703
Jamaica Public Service Company Limited		Power generation			JAMAICA				40.00	%			301,910				226,292
KW Nuclear Components Co., Ltd.		R&D			KOREA				43.36	%			833				7,570
Busan Shinho Solar Power Co., Ltd.		Power generation			KOREA				25.00	%			2,100				3,794
GS Donghae Electric Power Co., Ltd.		Power generation			KOREA				34.00	%			204,000				201,150
Global Trade Of Power System Co., Ltd.		Exporting products and technology of small or medium business by proxy			KOREA				29.00	%			290				618
Expressway Solar-light Power Generation Co., Ltd.		Power generation			KOREA				29.00	%			1,856				2,280
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				3,106
Amman Asia Electric Power Company (*7)		Power generation			JORDAN				60.00	%			111,476				129,600
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.) (*7)		R&D			KOREA				51.00	%			5,629				3,993
Dangjin Eco Power Co., Ltd.		Power generation			KOREA				34.00	%			56,249				53,524
Honam Wind Power Co., Ltd.		Power generation			KOREA				29.00	%			3,600				4,198
Nepal Water & Energy Development Company Private Limited (*7)		Construction and operation of utility plant			NEPAL				52.77	%			18,568				17,168
Chun-cheon Energy Co., Ltd.		Power generation			KOREA				29.90	%			52,700				50,861
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)		Power generation			KOREA				15.00	%			3,000				2,563
Nghi Son 2 Power Ltd.		Power generation			VIETNAM				50.00	%			1,607				227
Kelar S.A (*7)		Power generation			CHILE				65.00	%			4,180				—
PT. Tanjung Power Indonesia		Power generation			INDONESIA				35.00	%			746				1,854
Incheon New Power Co., Ltd.		Power generation			KOREA				29.00	%			461				551
Seokmun Energy Co., Ltd.		Integrated energy business			KOREA				29.00	%			580				435
Daehan Wind Power PSC		Power generation			JORDAN				50.00	%			285				71
													1,333,819				1,281,080
												W	3,522,978				5,626,361

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of September 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 March 31.

(*9)

As of September 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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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of September 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	%		W	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 and others			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 and others			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 Materials 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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of September 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
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
<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 Private Limited (*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
										W	3,434,880				5,693,530

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of September 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 March 31.

(*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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won
Investees		September 30, 2016				December 31, 2015
<Associates>
Korea Electric Power Industrial Development Co., Ltd.		W	52,564				46,514
Korea Gas Corporation			835,380				696,465
YTN Co., Ltd.			26,820				26,235
SPC Power Corporation			57,691				65,552
PT. Bayan Resources TBK			383,067				446,250

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

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

 

In millions of won
September 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.		W	80,267				3,347				—				—				3,948				—				—				87,562
Korea Gas Corporation			2,102,813				—				—				(3,213	)			22,524				(24,900	)			(8,392	)			2,088,832
Korea Electric Power Industrial Development Co., Ltd.			18,994				—				—				(1,598	)			5,037				—				(397	)			22,036
YTN Co., Ltd.			38,365				—				—				—				(1,739	)			224				93				36,943
Cheongna Energy Co., Ltd.			19,490				—				—				—				(5,706	)			—				—				13,784
Gangwon Wind Power Co., Ltd.			12,890				—				—				(1,136	)			889				—				—				12,643
Hyundai Green Power Co., Ltd.			113,664				—				—				(8,888	)			10,031				—				—				114,807
Korea Power Exchange			208,735				—				—				—				15,722				—				—				224,457
AMEC Partners Korea Ltd.			230				—				—				—				(7	)			—				—				223
Hyundai Energy Co., Ltd.			6,990				—				—				—				(6,990	)			—				—				—
Ecollite Co., Ltd.			—				—				—				—				—				—				—				—
Taebaek Wind Power Co., Ltd.			4,956				—				—				—				(403	)			—				—				4,553
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			2,587				570				—				—				(70	)			—				—				3,087
Pyeongchang Wind Power Co., Ltd.			3,402				—				—				—				39				—				—				3,441
Daeryun Power Co., Ltd.			36,156				—				—				—				(5,097	)			—				—				31,059
JinanJangsu Wind Power Co., Ltd.			77				—				—				—				(13	)			—				—				64
Changjuk Wind Power Co., Ltd.			6,143				—				—				(190	)			765				—				—				6,718
KNH Solar Co., Ltd.			1,924				—				—				—				159				5				—				2,088
SPC Power Corporation			58,033				—				—				(3,350	)			5,453				(2,784	)			368				57,720
Gemeng International Energy Co., Ltd.			728,396				—				—				(16,476	)			23,012				(95,061	)			—				639,871
PT. Cirebon Electric Power			60,574				—				—				(1,242	)			31,667				(378	)			(5,602	)			85,019
KNOC Nigerian East Oil Co., Ltd.			—				—				—				—				(1,316	)			759				557				—
KNOC Nigerian West Oil Co., Ltd.			—				—				—				—				(918	)			706				212				—
Dolphin Property Limited			61				—				—				(35	)			—				(69	)			43				—
PT Wampu Electric Power			18,963				—				—				—				1,570				—				(1,313	)			19,220
PT. Bayan Resources TBK			525,066				—				—				—				(20,929	)			(1,533	)			—				502,604
S-Power Co., Ltd.			130,908				—				—				—				(7,020	)			—				—				123,888
Pioneer Gas Power Limited			51,187				—				—				—				(841	)			(1,891	)			—				48,455
Eurasia Energy Holdings			—				—				—				—				—				—				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			31,863				10,200				—				—				(3,461	)			(3,124	)			—				35,478
Busan Solar Co., Ltd.			925				—				(887	)			—				(38	)			—				—				—
Hadong Mineral Fiber Co., Ltd.			—				—				—				—				—				—				—				—
Green Biomass Co., Ltd.			—				—				—				—				100				—				—				100
PT. Mutiara Jawa			—				—				—				—				—				—				—				—
Samcheok Eco Materials Co., Ltd.			—				—				—				—				—				—				—				—
Noeul Green Energy Co., Ltd.			295				1,340				—				—				(412	)			—				(158	)			1,065
Naepo Green Energy Co., Ltd.			26,746				—				—				—				(906	)			—				—				25,840
Goseong Green Energy Co., Ltd.			2,670				—				—				—				53				—				(79	)			2,644
Gangneung Eco Power Co., Ltd.			2,688				—				—				—				68				—				(98	)			2,658
Shin Pyeongtaek Power Co., Ltd.			—				—				—				—				—				—				—				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.			189				—				—				—				(8	)			—				3				184
DS POWER Co., Ltd.			10,960				—				—				—				(2,184	)			—				(31	)			8,745
Dongducheon Dream Power Co., Ltd.			55,667				—				—				—				(13,413	)			—				—				42,254
KS Solar Co., Ltd.			618				—				—				—				29				—				—				647
Yeongwol Energy Station Co., Ltd.			1,290				—				—				—				52				—				—				1,342

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

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

 

In millions of won
September 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.		W	8,350				—				—				—				(49	)			(198	)			—				8,103
SE Green Energy Co., Ltd.			3,575				—				—				—				(38	)			—				—				3,537
Daegu Photovoltaic Co., Ltd.			1,886				—				—				(411	)			249				—				1				1,725
Jeongam Wind Power Co., Ltd.			702				200				—				—				(166	)			—				—				736
Korea Power Engineering Service Co., Ltd.			1,805				—				—				—				786				—				—				2,591
Busan Green Energy Co., Ltd.			14,512				—				—				—				(686	)			—				—				13,826
Jungbu Bio Energy Co., Ltd.			904				—				—				—				(67	)			—				—				837
Korea Electric Vehicle Charging Service			1,446				—				—				—				(299	)			—				—				1,147
Ulleungdo Natural Energy Co., Ltd.			7,417				—				—				—				(349	)			—				—				7,068
Korea Nuclear Partners Co., Ltd.			289				—				—				—				(87	)			—				—				202
Tamra Offshore Wind Power Co., Ltd			—				8,910				—				—				(1,503	)			—				—				7,407
Korea Electric Power Corporation Fund			—				48,500				—				—				(429	)			—				—				48,071
			4,405,668				73,067				(887	)			(36,539	)			47,009				(128,244	)			(14,793	)			4,345,281
<Joint ventures>
KEPCO-Uhde Inc.			8,549				—				—				—				(136	)			—				—				8,413
Eco Biomass Energy Sdn. Bhd.			—				—				—				—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			27,640				—				—				—				940				(2,313	)			—				26,267
Shuweihat Asia Power Investment B.V.			20,474				—				(10,174	)			—				6,036				(10,370	)			—				5,966
Shuweihat Asia Operation & Maintenance Company			486				—				—				—				262				(46	)			—				702
Waterbury Lake Uranium L.P.			20,299				—				—				—				—				(271	)			(123	)			19,905
ASM-BG Investicii AD			20,203				—				—				—				1,788				(884	)			—				21,107
RES Technology AD			13,789				—				—				—				594				(571	)			—				13,812
KV Holdings, Inc.			2,010				—				—				(302	)			222				(172	)			—				1,758
KEPCO SPC Power Corporation			208,524				—				—				(5,955	)			40,353				(22,222	)			(26	)			220,674
Canada Korea Uranium Limited Partnership			—				—				—				—				—				—				—				—
KEPCO Energy Resource Nigeria Limited			—				—				—				—				—				—				—				—
Gansu Datang Yumen Wind Power Co., Ltd.			16,107				—				—				—				(2,180	)			(1,156	)			—				12,771
Datang Chifeng Renewable Power Co., Ltd.			171,224				—				—				(7,384	)			2,582				(13,427	)			—				152,995
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			10,580				—				—				(440	)			695				(868	)			—				9,967
Rabigh Electricity Company			59,368				—				—				—				12,914				1,957				(1,054	)			73,185
Rabigh Operation & Maintenance Company			3,586				—				—				—				547				(430	)			—				3,703
Jamaica Public Service Company Limited			241,918				—				—				—				—				(15,626	)			—				226,292
KW Nuclear Components Co., Ltd.			4,985				—				—				(2,191	)			4,782				—				(6	)			7,570
Busan Shinho Solar Power Co., Ltd.			3,678				—				—				(185	)			301				—				—				3,794
GS Donghae Electric Power Co., Ltd.			200,379				—				—				—				737				—				34				201,150
Global Trade Of Power System Co., Ltd.			426				—				—				—				192				—				—				618
Expressway Solar-light Power Generation Co., Ltd.			2,100				—				—				—				180				—				—				2,280
KODE NOVUS I LLC			—				—				—				—				—				—				—				—
KODE NOVUS II LLC			—				258				—				—				(258	)			—				—				—
Daejung Offshore Wind Power Co., Ltd.			3,352				—				—				—				(246	)			—				—				3,106
Amman Asia Electric Power Company			137,668				—				—				—				13,351				(21,425	)			6				129,600
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			4,501				—				—				—				(512	)			—				4				3,993
Dangjin Eco Power Co., Ltd.			48,281				5,100				—				—				(423	)			(26	)			592				53,524
Honam Wind Power Co., Ltd.			3,926				—				—				(104	)			376				—				—				4,198
Nepal Water & Energy Development Company Private Limited			17,765				—				—				—				466				(1,063	)			—				17,168
Chun-cheon Energy Co., Ltd.			31,976				19,832				—				—				(852	)			(95	)			—				50,861
Yeonggwangbaeksu Wind Power Co., Ltd.			2,668				—				—				—				(111	)			—				6				2,563
Nghi Son 2 Power Ltd.			269				535				—				—				(549	)			(28	)			—				227

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

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

 

In millions of won
September 30, 2016
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Kelar S.A		W	—				—				—				—				—				30				(30	)			—
PT. Tanjung Power Indonesia			617				—				—				—				1,353				(116	)			—				1,854
Incheon New Power Co., Ltd.			514				—				—				—				29				4				4				551
Seokmun Energy Co., Ltd.			—				—				—				—				(358	)			793				—				435
Daehan Wind Power PSC			—				285				—				—				(204	)			(10	)			—				71
			1,287,862				26,010				(10,174	)			(16,561	)			82,871				(88,335	)			(593	)			1,281,080
		W	5,693,530				99,077				(11,061	)			(53,100	)			129,880				(216,579	)			(15,386	)			5,626,361
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.		W	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

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the nine-month period ended September 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		W	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 Materials 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

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the nine-month period ended September 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.		W	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 Private Limited			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
		W	5,508,724				116,114				(8,951	)			(114,708	)			194,272				94,854				(96,775	)			5,693,530

 

(*1)	‘Others’ include W15,204 million of assets held-for-sale (note 41).

(*2)	‘Others’ include W41,170 million of assets held-for-sale (note 41).

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 nine-month period ended September 30, 2016 and as of and for the year ended December 31, 2015 are as follows:

 

In millions of won
September 30, 2016
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Associates>
Daegu Green Power Co., Ltd.		W	628,391				453,204				187,241				7,566
Korea Gas Corporation			39,759,011				29,764,983				14,929,566				107,098
Korea Electric Power Industrial Development Co., Ltd.			164,493				88,507				221,092				19,068
YTN Co., Ltd.			295,341				122,776				86,463				(4,991	)
Cheongna Energy Co., Ltd.			416,342				390,498				32,777				(12,909	)
Gangwon Wind Power Co., Ltd.			104,678				20,720				16,706				5,594
Hyundai Green Power Co., Ltd.			1,157,324				761,437				353,455				34,636
Korea Power Exchange			252,768				28,341				75,734				14,961
AMEC Partners Korea Ltd.			1,214				39				78				(33	)
Hyundai Energy Co., Ltd.			498,068				484,747				41,198				(39,249	)
Ecollite Co., Ltd.			2,189				340				—				(76	)
Taebaek Wind Power Co., Ltd.			42,800				24,587				3,858				(3,584	)
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			12,353				3				—				(279	)
Pyeongchang Wind Power Co., Ltd.			75,607				61,844				2,504				186
Daeryun Power Co., Ltd.			792,669				638,224				177,110				(26,203	)
JinanJangsu Wind Power Co., Ltd.			255				—				—				(52	)
Changjuk Wind Power Co., Ltd.			37,182				14,790				3,787				650
KNH Solar Co., Ltd.			26,428				18,693				3,208				693
SPC Power Corporation			200,040				48,144				56,986				35,945
Gemeng International Energy Co., Ltd.			5,459,254				3,567,589				952,274				55,023
PT. Cirebon Electric Power			900,599				591,438				222,415				115,215
KNOC Nigerian East Oil Co., Ltd.			247,523				324,655				—				(6,845	)
KNOC Nigerian West Oil Co., Ltd.			150,671				221,357				—				(6,188	)
PT Wampu Electric Power			191,926				150,143				3,564				3,378
PT. Bayan Resources TBK			865,591				784,256				432,366				(9,336	)
S-Power Co., Ltd.			868,871				612,017				325,229				(14,860	)
Pioneer Gas Power Limited			306,598				243,500				—				(1,923	)
Eurasia Energy Holdings			561				1,000				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			636,697				465,814				—				(13,858	)
Hadong Mineral Fiber Co., Ltd.			—				20				—				—
Green Biomass Co., Ltd.			10,302				9,591				2,402				(596	)
PT. Mutiara Jawa			25,503				30,892				3,945				(544	)
Samcheok Eco Materials Co., Ltd.			20,914				20				—				(1,513	)
Noeul Green Energy Co., Ltd.			107,650				103,978				—				(1,679	)
Naepo Green Energy Co., Ltd.			105,226				1,866				3,385				(3,623	)
Goseong Green Energy Co., Ltd.			191,396				3,599				—				(3,778	)
Gangneung Eco Power Co., Ltd.			172,499				1,412				—				(2,710	)
Shin Pyeongtaek Power Co., Ltd.			43,667				48,529				—				(1,797	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.			2,970				2,321				306				(39	)
DS POWER Co., Ltd.			705,558				599,430				179,095				(11,809	)
Dongducheon Dream Power Co., Ltd.			1,636,534				1,406,845				665,410				(41,520	)
KS Solar Co., Ltd.			28,225				24,817				3,366				151
Yeongwol Energy Station Co., Ltd.			178,537				165,120				18,280				2,349
Jinbhuvish Power Generation Pvt. Ltd.			64,822				13,387				—				(952	)
SE Green Energy Co., Ltd.			7,404				—				—				(80	)
Daegu Photovoltaic Co., Ltd.			19,141				13,194				2,636				824
Jeongam Wind Power Co., Ltd.			2,144				305				—				(406	)
Korea Power Engineering Service Co., Ltd.			11,139				2,203				19,475				2,710
Busan Green Energy Co., Ltd.			95,036				47,359				—				(2,363	)
Jungbu Bio Energy Co., Ltd.			4,845				408				—				(355	)
Korea Electric Vehicle Charging Service			9,286				5,189				—				(1,068	)
Ulleungdo Natural Energy Co., Ltd.			23,778				96				—				(1,170	)
Korea Nuclear Partners Co., Ltd.			730				35				—				(302	)
Tamra Offshore Wind Power Co., Ltd			124,106				96,674				—				(4,855	)
Korea Electric Power Corporation Fund			49,248				186				207				(427	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 nine-month period ended September 30, 2016 and as of and for the year ended December 31, 2015 are as follows, continued:

 

In millions of won
September 30, 2016
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Joint ventures>
KEPCO-Uhde Inc.		W	17,183				28				—				(268	)
Eco Biomass Energy Sdn. Bhd.			—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			140,438				74,770				13,713				2,269
Shuweihat Asia Power Investment B.V.			12,345				2				—				12,185
Shuweihat Asia Operation & Maintenance Company			1,277				—				608				441
Waterbury Lake Uranium L.P.			52,511				188				—				—
ASM-BG Investicii AD			81,806				39,592				10,885				3,664
RES Technology AD			71,034				43,411				7,460				1,185
KV Holdings, Inc.			4,395				—				—				555
KEPCO SPC Power Corporation			421,416				127,966				124,817				53,346
Canada Korea Uranium Limited Partnership			266				79				—				—
KEPCO Energy Resource Nigeria Limited			228,306				266,642				—				(15,047	)
Gansu Datang Yumen Wind Power Co., Ltd.			85,793				53,867				3,039				(5,176	)
Datang Chifeng Renewable Power Co., Ltd.			752,703				370,092				66,990				6,862
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			57,826				32,908				6,347				1,741
Rabigh Electricity Company			2,458,776				2,082,095				205,803				24,533
Rabigh Operation & Maintenance Company			20,539				11,282				15,921				(260	)
Jamaica Public Service Company Limited			1,142,335				577,718				368,944				11,892
KW Nuclear Components Co., Ltd.			27,557				10,305				26,481				12,274
Busan Shinho Solar Power Co., Ltd.			48,781				33,603				5,375				1,169
GS Donghae Electric Power Co., Ltd.			1,935,460				1,343,840				5,870				2,167
Global Trade Of Power System Co., Ltd.			2,239				109				2,635				692
Expressway Solar-light Power Generation Co., Ltd.			20,928				13,067				2,646				741
KODE NOVUS I LLC			14,286				104,252				2,362				(50,151	)
KODE NOVUS II LLC			6,221				44,790				781				(18,263	)
Daejung Offshore Wind Power Co., Ltd.			6,268				43				—				(492	)
Amman Asia Electric Power Company			806,238				590,102				9,040				22,252
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			129,025				121,196				5,690				(1,158	)
Dangjin Eco Power Co., Ltd.			151,217				1,492				—				(1,221	)
Honam Wind Power Co., Ltd.			40,550				26,186				4,769				1,296
Nepal Water & Energy Development Company Private Limited			39,792				9,378				—				(497	)
Chun-cheon Energy Co., Ltd.			474,588				304,496				—				(2,784	)
Yeonggwangbaeksu Wind Power Co., Ltd.			99,932				82,881				7,588				(866	)
Nghi Son 2 Power Ltd.			673				221				—				(1,099	)
Kelar S.A			521,583				615,458				—				(6,453	)
PT. Tanjung Power Indonesia			138,485				133,188				111,888				4,093
Incheon New Power Co., Ltd.			8,858				6,958				2,224				128
Seokmun Energy Co., Ltd.			230,304				228,803				23				(390	)
Daehan Wind Power PSC			151				9				—				(406	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 nine-month period ended September 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.		W	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 Materials 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

September 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 nine-month period ended September 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.		W	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 Private Limited			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

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

 

In millions of won
September 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.		W	175,187				49.90	%			87,418				144				—				—				87,562
Korea Gas Corporation			9,994,028				21.57	%			2,155,712				—				—				(66,880	)			2,088,832
Korea Electric Power Industrial Development Co., Ltd.			75,986				29.00	%			22,036				—				—				—				22,036
YTN Co., Ltd.			172,565				21.43	%			36,981				—				(33	)			(5	)			36,943
Cheongna Energy Co., Ltd.			25,844				43.90	%			11,346				2,584				(146	)			—				13,784
Gangwon Wind Power Co., Ltd.			83,958				15.00	%			12,594				—				—				49				12,643
Hyundai Green Power Co., Ltd.			395,887				29.00	%			114,807				—				—				—				114,807
Korea Power Exchange			224,427				100.00	%			224,427				—				—				30				224,457
AMEC Partners Korea Ltd.			1,175				19.00	%			223				—				—				—				223
Hyundai Energy Co., Ltd.			13,321				46.30	%			6,168				—				(1,089	)			(5,079	)			—
Ecollite Co., Ltd.			1,849				36.10	%			667				—				—				(667	)			—
Taebaek Wind Power Co., Ltd.			18,213				25.00	%			4,553				—				—				—				4,553
TaebackGuinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)			12,350				25.00	%			3,088				—				—				(1	)			3,087
Pyeongchang Wind Power Co., Ltd.			13,763				25.00	%			3,441				—				—				—				3,441
Daeryun Power Co., Ltd.			154,445				19.45	%			30,040				1,014				—				5				31,059
JinanJangsu Wind Power Co., Ltd.			255				25.00	%			64				—				—				—				64
Changjuk Wind Power Co., Ltd.			22,392				30.00	%			6,718				—				—				—				6,718
KNH Solar Co., Ltd.			7,735				27.00	%			2,088				—				—				—				2,088
SPC Power Corporation			151,896				38.00	%			57,720				—				—				—				57,720
Gemeng International Energy Co., Ltd.			1,891,665				34.00	%			643,166				—				—				(3,295	)			639,871
PT. Cirebon Electric Power			309,161				27.50	%			85,019				—				—				—				85,019
KNOC Nigerian East Oil Co., Ltd.			(77,132	)			14.63	%			(11,284	)			—				—				11,284				—
KNOC Nigerian West Oil Co., Ltd.			(70,686	)			14.63	%			(10,341	)			—				—				10,341				—
PT Wampu Electric Power			41,783				46.00	%			19,220				—				—				—				19,220
PT. Bayan Resources TBK			81,335				20.00	%			16,267				486,337				—				—				502,604
S-Power Co., Ltd.			256,854				49.00	%			125,858				—				(1,970	)			—				123,888
Pioneer Gas Power Limited			63,098				40.00	%			25,239				23,147				—				69				48,455
Eurasia Energy Holdings			(439	)			40.00	%			(176	)			—				—				176				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			170,883				25.00	%			42,721				(6,323	)			(630	)			(290	)			35,478
Hadong Mineral Fiber Co., Ltd.			(20	)			25.00	%			(5	)			—				—				5				—
Green Biomass Co., Ltd.			711				14.00	%			100				—				—				—				100
PT. Mutiara Jawa			(5,389	)			29.00	%			(1,563	)			70				—				1,493				—
Samcheok Eco Materials Co., Ltd.			20,894				2.67	%			558				—				—				(558	)			—
Noeul Green Energy Co., Ltd.			3,672				29.00	%			1,065				—				—				—				1,065
Naepo Green Energy Co., Ltd.			103,360				25.00	%			25,840				—				—				—				25,840
Goseong Green Energy Co., Ltd.			187,797				1.45	%			2,723				—				(79	)			—				2,644
Gangneung Eco Power Co., Ltd.			171,087				1.61	%			2,755				—				(98	)			1				2,658
Shin Pyeongtaek Power Co., Ltd.			(4,862	)			40.00	%			(1,945	)			—				(1,995	)			3,940				—
Heang Bok Do Si Photovoltaic Power Co., Ltd.			649				28.00	%			182				—				—				2				184
DS POWER Co., Ltd.			106,128				10.36	%			10,995				—				(6,995	)			4,745				8,745
Dongducheon Dream Power Co., Ltd.			229,689				33.61	%			77,198				—				(4,858	)			(30,086	)			42,254
KS Solar Co., Ltd.			3,408				19.00	%			648				—				—				(1	)			647
Yeongwol Energy Station Co., Ltd.			13,417				10.00	%			1,342				—				—				—				1,342
Jinbhuvish Power Generation Pvt. Ltd.			51,435				5.16	%			2,653				5,450				—				—				8,103
SE Green Energy Co., Ltd.			7,404				47.76	%			3,536				—				—				1				3,537
Daegu Photovoltaic Co., Ltd.			5,947				29.00	%			1,725				—				—				—				1,725
Jeongam Wind Power Co., Ltd.			1,839				40.00	%			736				—				—				—				736
Korea Power Engineering Service Co., Ltd.			8,936				29.00	%			2,591				—				—				—				2,591
Busan Green Energy Co., Ltd.			47,677				29.00	%			13,826				—				—				—				13,826
Jungbu Bio Energy Co., Ltd.			4,437				18.87	%			837				—				—				—				837

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 September 30, 2016 and December 31, 2015 are as follows, continued:

 

In millions of won
September 30, 2016
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
Korea Electric Vehicle Charging Service		W	4,097				28.00	%			1,147				—				—				—				1,147
Ulleungdo Natural Energy Co., Ltd.			23,682				29.85	%			7,069				—				—				(1	)			7,068
Korea Nuclear Partners Co., Ltd.			695				29.00	%			202				—				—				—				202
Tamra Offshore Wind Power Co., Ltd			27,432				27.00	%			7,407				—				—				—				7,407
Korea Electric Power Corporation Fund			49,062				97.98	%			48,071				—				—				—				48,071
<Joint ventures>
KEPCO-Uhde Inc.			17,155				50.85	%			8,723				—				—				(310	)			8,413
Eco Biomass Energy Sdn. Bhd.			—				61.53	%			—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			65,668				40.00	%			26,267				—				—				—				26,267
Shuweihat Asia Power Investment B.V.			12,343				49.00	%			6,048				—				—				(82	)			5,966
Shuweihat Asia Operation & Maintenance Company			1,277				55.00	%			702				—				—				—				702
Waterbury Lake Uranium L.P.			52,323				36.97	%			19,344				—				—				561				19,905
ASM-BG Investicii AD			42,214				50.00	%			21,107				—				—				—				21,107
RES Technology AD			27,623				50.00	%			13,812				—				—				—				13,812
KV Holdings, Inc.			4,395				40.00	%			1,758				—				—				—				1,758
KEPCO SPC Power Corporation			293,450				75.20	%			220,674				—				—				—				220,674
Canada Korea Uranium Limited Partnership			187				12.50	%			23				—				—				(23	)			—
KEPCO Energy Resource Nigeria Limited			(38,336	)			30.00	%			(11,501	)			—				—				11,501				—
Gansu Datang Yumen Wind Power Co., Ltd.			31,926				40.00	%			12,770				—				—				1				12,771
Datang Chifeng Renewable Power Co., Ltd.			382,611				40.00	%			153,044				—				—				(49	)			152,995
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			24,918				40.00	%			9,967				—				—				—				9,967
Rabigh Electricity Company			376,681				40.00	%			150,672				—				(76,395	)			(1,092	)			73,185
Rabigh Operation & Maintenance Company			9,257				40.00	%			3,703				—				—				—				3,703
Jamaica Public Service Company Limited			564,617				40.00	%			225,847				(80,161	)			—				80,606				226,292
KW Nuclear Components Co., Ltd.			17,252				43.36	%			7,480				90				—				—				7,570
Busan Shinho Solar Power Co., Ltd.			15,178				25.00	%			3,795				—				—				(1	)			3,794
GS Donghae Electric Power Co., Ltd.			591,620				34.00	%			201,151				—				—				(1	)			201,150
Global Trade Of Power System Co., Ltd.			2,130				29.00	%			618				—				—				—				618
Expressway Solar-light Power Generation Co., Ltd.			7,861				29.00	%			2,280				—				—				—				2,280
KODE NOVUS I LLC			(89,966	)			50.00	%			(44,983	)			4,732				—				40,251				—
KODE NOVUS II LLC			(38,569	)			50.00	%			(19,285	)			—				—				19,285				—
Daejung Offshore Wind Power Co., Ltd.			6,225				49.90	%			3,106				—				—				—				3,106
Amman Asia Electric Power Company			216,136				60.00	%			129,682				—				—				(82	)			129,600
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			7,829				51.00	%			3,993				—				—				—				3,993
Dangjin Eco Power Co., Ltd.			149,725				34.00	%			50,907				2,617				—				—				53,524
Honam Wind Power Co., Ltd.			14,364				29.00	%			4,166				32				—				—				4,198
Nepal Water & Energy Development Company			30,414				52.77	%			16,049				972				—				147				17,168
Private Limited
Chun-cheon Energy Co., Ltd.			170,092				29.90	%			50,858				3				—				—				50,861
Yeonggwangbaeksu Wind Power Co., Ltd.			17,051				15.00	%			2,558				5				—				—				2,563
Nghi Son 2 Power Ltd.			452				50.00	%			226				—				—				1				227
Kelar S.A			(93,875	)			65.00	%			(61,019	)			2,424				—				58,595				—
PT. Tanjung Power Indonesia			5,297				35.00	%			1,854				—				—				—				1,854
Incheon New Power Co., Ltd.			1,900				29.00	%			551				—				—				—				551
Seokmun Energy Co., Ltd.			1,501				29.00	%			435				—				—				—				435
Daehan Wind Power PSC			142				50.00	%			71				—				—				—				71

 

(*)	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

September 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 September 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.		W	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 Materials 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

September 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 September 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.		W	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 Private Limited			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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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(6)	As of September 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		September 30, 2016								December 31, 2015
		Unrecognized equity interest				Accumulated unrecognized equity interest				Unrecognized equity interest				Accumulated unrecognized equity interest
Green Biomass Co., Ltd.		W	—				—				(125	)			—
Shin Pyeongtaek Power Co., Ltd.			2,614				3,940				1,038				1,326
KEPCO Energy Resource Nigeria Limited			498				11,501				4,645				11,003
Chun-cheon Energy Co., Ltd.			—				—				(8	)			—
Seokmun Energy Co., Ltd.			(205	)			—				152				205
Kelar S.A			43,630				61,019				17,389				17,389
Hadong Mineral Fiber Co., Ltd.			—				5				5				5
PT. Mutiara Jawa			142				1,493				1,351				1,351
Eurasia Energy Holdings			(12	)			176				188				188
KODE NOVUS I LLC			22,194				44,983				22,789				22,789
KODE NOVUS II LLC			8,110				19,285				11,175				11,175

 

(7)	As of September 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 acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with consideration of various factors such as financial status and business situation.

 

(iv)

Pyeongchang Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Pyeongchang Wind Power Co., Ltd. after commercial operation of the power plant has started, the Company acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with the careful consideration of various factors such as financial status and business situation.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(7)	As of September 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 Materials 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 W15 billion in Seokmun Energy Co., Ltd. The obligation may be conducted through acquisition of new shares, converted shares or convertible bonds.

 

(x)

Hyundai Green Power Co., Ltd.

As of September 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 W919.2 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

September 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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

18.	Property, Plant and Equipment

 

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

 

In millions of won		September 30, 2016
		Acquisition cost				Government grants				Accumulated depreciation				Accumulated impairment losses (*)				Book value
Land		W	12,571,046				(3,205	)			—				—				12,567,841
Buildings			15,635,995				(62,038	)			(5,749,282	)			(854	)			9,823,821
Structures			60,983,477				(194,959	)			(19,458,914	)			(1,184	)			41,328,420
Machinery			60,154,028				(112,206	)			(23,242,106	)			(36,230	)			36,763,486
Ships			4,175				—				(3,570	)			—				605
Vehicles			240,136				(22	)			(172,348	)			—				67,766
Equipment			1,179,011				(804	)			(867,373	)			—				310,834
Tools			885,125				(506	)			(726,841	)			—				157,778
Construction-in-progress			37,415,388				(134,613	)			—				(38,107	)			37,242,668
Finance lease assets			2,389,950				—				(1,957,920	)			—				432,030
Asset retirement costs			6,920,813				—				(3,006,296	)			—				3,914,517
Others			10,212,364				—				(7,810,181	)			—				2,402,183
		W	208,591,508				(508,353	)			(62,994,831	)			(76,375	)			145,011,949

 

(*)	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		W	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
		W	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

September 30, 2016

(Unaudited)

 

18.	Property, Plant and Equipment, Continued

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Depreciation				Impairment				Others				Ending balance
Land		W	12,396,460				12,275				(13,980	)			—				—				176,291				12,571,046
(Government grants)			(3,147	)			—				14				—				—				(72	)			(3,205	)
Buildings			9,676,432				—				(6,505	)			(488,239	)			—				704,171				9,885,859
(Government grants)			(63,932	)			—				731				3,908				—				(2,745	)			(62,038	)
Structures			40,258,162				—				(358,667	)			(1,646,634	)			—				3,270,518				41,523,379
(Government grants)			(193,119	)			—				1,909				7,072				—				(10,821	)			(194,959	)
Machinery			36,864,749				142,923				(158,295	)			(3,153,359	)			—				3,179,674				36,875,692
(Government grants)			(108,935	)			—				1,062				8,904				—				(13,237	)			(112,206	)
Ships			786				—				—				(226	)			—				45				605
Vehicles			60,472				1,607				(26	)			(20,012	)			—				25,747				67,788
(Government grants)			(29	)			—				—				7				—				—				(22	)
Equipment			310,571				42,640				(182	)			(90,007	)			—				48,616				311,638
(Government grants)			(1,026	)			—				—				354				—				(132	)			(804	)
Tools			160,630				14,108				(295	)			(51,594	)			—				35,435				158,284
(Government grants)			(691	)			—				—				218				—				(33	)			(506	)
Construction-in-progress			35,267,026				8,989,809				(163	)			—				—				(6,879,391	)			37,377,281
(Government grants)			(139,898	)			(20,273	)			—				—				—				25,558				(134,613	)
Finance lease assets			511,509				—				—				(69,856	)			—				(9,623	)			432,030
Asset retirement cost			4,106,087				—				—				(385,943	)			—				194,373				3,914,517
Others			2,259,244				1				—				(620,493	)			—				763,431				2,402,183
		W	141,361,351				9,183,090				(534,397	)			(6,505,900	)			—				1,507,805				145,011,949

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

18.	Property, Plant and Equipment, Continued

 

(2)	Changes in property, plant and equipment for the nine-month period ended September 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		W	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
		W	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 W23,273 million of land and buildings that were reclassified to assets held for sale (note 41) comprising W2,907 million of land and W20,366 million of buildings.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

19.	Investment Properties

 

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

 

In millions of won		September 30, 2016
		Acquisition cost				Government grants				Accumulated depreciation				Book value
Land		W	268,950				—				—				268,950
Buildings			28,331				(65	)			(12,085	)			16,181
		W	297,281				(65	)			(12,085	)			285,131
In millions of won		December 31, 2015
		Acquisition cost				Government grants				Accumulated depreciation				Book value
Land		W	253,960				—				—				253,960
Buildings			27,655				(13	)			(11,692	)			15,950
		W	281,615				(13	)			(11,692	)			269,910

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Depreciation				Others				Ending balance
Land		W	253,960				—				14,990				268,950
Buildings			15,963				(508	)			791				16,246
(Government grants)			(13	)			—				(52	)			(65	)
		W	269,910				(508	)			15,729				285,131
In millions of won		December 31, 2015
		Beginning balance				Depreciation				Others				Ending balance
Land		W	301,483				—				(47,523	)			253,960
Buildings			15,791				(669	)			841				15,963
(Government grants)			(10	)			—				(3	)			(13	)
		W	317,264				(669	)			(46,685	)			269,910

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

19.	Investment Properties, Continued

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Rental income		W	2,051				6,896				4,580				9,423
Operating and maintenance expenses related to rental income			(179	)			(508	)			(398	)			(745	)
		W	1,872				6,388				4,182				8,678

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Book value				Fair value				Book value				Fair value
Land		W	268,950				298,359				253,960				284,423
Buildings			16,181				19,704				15,950				18,263
		W	285,131				318,063				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 (January 1, 2010).

 

(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 Nine-month period ended September 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		September 30, 2016
		Beginning balance				Increase and decrease (*)				Recognized revenue				Ending balance
Nuclear power plant construction in UAE and others		W	12,308,839				(62,414	)			(2,965,222	)			9,281,203

 

(*)	For the nine-month period ended September 30, 2016, the increased balance of contracts from new orders and other is W472,118 million and the decreased balance of contracts from changes in size of construction is W534,532 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		W	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 W412,617 million and the decreased balance of contracts from changes in size of construction is W1,423,648 million.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

20.	Construction Contracts, Continued

 

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

 

In millions of won

September 30, 2016

Accumulated earned revenue

Accumulated expense

Accumulated profit

Unearned advance receipts

Nuclear power plant construction in UAE and others

W

14,514,669

13,654,121

860,548

—

 

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

W

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

 

In millions of won

September 30, 2016

December 31, 2015

Assets (*1)

Liabilities (*2)

Assets (*1)

Liabilities (*2)

Nuclear power plant construction in UAE and others

W

40,976

799,190

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 nine-month period ended September 30, 2016 are as follows:

 

In millions of won		September 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		W	—				—				—				—				8,746				—				—				—
Electric power generation (nuclear)			—				—				—				—				1,590				—				—				—
Plant maintenance & engineering service			302				3,451				(2,691	)			(760	)			30,640				—				36,999				4,071
		W	302				3,451				(2,691	)			(760	)			40,976				—				36,999				4,071

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

21.	Intangible Assets other than Goodwill

 

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

 

In millions of won		September 30, 2016
		Acquisition cost				Government grants				Accumulated amortization				Accumulated impairment losses				Book value
Software		W	421,861				(595	)			(354,071	)			—				67,195
Licenses and franchises			3,398				—				(3,398	)			—				—
Copyrights, patents rights and other industrial rights			34,759				—				(14,845	)			—				19,914
Mining rights			518,191				—				(10,302	)			—				507,889
Development expenditures			772,554				(5,326	)			(717,860	)			—				49,368
Intangible assets under development			101,482				(11,814	)			—				—				89,668
Usage rights of donated assets and other			375,275				(24	)			(333,499	)			—				41,752
Leasehold rights			23,313				—				(18,602	)			—				4,711
Others			172,737				(1	)			(87,378	)			(12,125	)			73,233
		W	2,423,570				(17,760	)			(1,539,955	)			(12,125	)			853,730

 

In millions of won		December 31, 2015
		Acquisition cost				Government grants				Accumulated amortization				Accumulated impairment losses				Book value
Software		W	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
		W	2,366,991				(18,050	)			(1,480,985	)			(12,124	)			855,832

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

21.	Intangible Assets other than Goodwill, Continued

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Acquisition				Disposal				Amortization				Impairment				Others				Ending balance
Software		W	57,886				9,667				(183	)			(21,430	)			—				21,850				67,790
(Government grants)			(699	)			—				—				186				—				(82	)			(595	)
Copyrights, patents rights and other industrial rights			21,875				53				(24	)			(1,982	)			—				(8	)			19,914
Mining rights			499,537				27,072				—				(473	)			—				(18,247	)			507,889
Development expenditures			51,807				573				—				(16,730	)			—				19,044				54,694
(Government grants)			(6,835	)			—				—				2,065				—				(556	)			(5,326	)
Intangible assets under development			94,886				32,378				—				—				—				(25,782	)			101,482
(Government grants)			(10,483	)			—				—				—				—				(1,331	)			(11,814	)
Usage rights of donated assets and other			48,591				—				—				(6,779	)			—				(36	)			41,776
(Government grants)			(32	)			—				—				8				—				—				(24	)
Leasehold rights			745				—				—				(235	)			—				4,201				4,711
Greenhouse gas emissions rights			805				—				—				—				—				(805	)			—
Others			97,750				7,782				(265	)			(6,852	)			—				(25,181	)			73,234
(Government grants)			(1	)			—				—				—				—				—				(1	)
		W	855,832				77,525				(472	)			(52,222	)			—				(26,933	)			853,730
In millions of won		December 31, 2015
		Beginning balance				Acquisition				Disposal				Amortization				Impairment				Others				Ending balance
Software		W	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	)
		W	821,060				87,946				(452	)			(72,266	)			253				19,291				855,832

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

21.	Intangible Assets other than Goodwill, Continued

 

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

 

In millions of won and thousands of Australian dollars
September 30, 2016
Type		Description		Currency		Amount				Remaining useful years
Software		ERP system and others		KRW			567			1 year and 2 months~ 2 years and 2 months
Copyrights, patents rights and other industrial rights		Smart technology verification and standard design project conducting right		KRW			6,000			6 years
Mining rights		Mining right of Bylong mine		AUD			401,225			—  (*)
Development expenditures		Development of maintenance system for utility plant		KRW			660			1 year and 2 months
Intangible assets under development		Contributions to ARP NRC DC		KRW			40,962			—
Usage rights of donated assets		Songdo international business district (sector 1, 3) sharing charge		KRW			1,650			1 year and 1 months
		Dangjin power plant load facility usage right		KRW			28,333			4 years and 6 months
Others		Shingwangju electricity supply facility usage right		KRW			1,793			2 years and 8 months
		Sillim electricity supply facility usage right		KRW			2,307			5 years and 2 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 nine-month periods ended September 30, 2016 and 2015, the Company recognized research and development expenses of W441,292 million and W408,334 million, respectively.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

22.	Trade and Other Payables

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Trade payables		W	1,468,476				—				1,957,647				—
Other trade payables			950,001				3,229,091				1,379,035				3,048,299
Accrued expenses			1,059,485				2,369				1,082,880				2,373
Leasehold deposits received			1,418				1,008				2,451				—
Other deposits received			195,901				91,829				195,237				105,105
Finance lease liabilities			119,938				450,629				116,885				542,509
Dividends payable			1,553				—				1,562				—
Others			—				7,473				—				20,149
		W	3,796,772				3,782,399				4,735,697				3,718,435

 

23.	Borrowings and Debt Securities

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Current liabilities
Short-term borrowings		W	528,226				603,673
Current portion of long-term borrowings			312,923				541,307
Current portion of debt securities			8,793,350				6,704,602
Less : Current portion of discount on long-term borrowings			(928	)			(953	)
Less : Current portion of discount on debt securities			(2,645	)			(1,676	)
			9,630,926				7,846,953
Non-current liabilities
Long-term borrowings			1,722,179				1,951,119
Debt securities			43,181,861				49,077,131
Less : Discount on long-term borrowings			(22,802	)			(18,860	)
Less : Discount on debt securities			(86,824	)			(103,067	)
Add : Premium on debt securities			166				223
			44,794,580				50,906,546
		W	54,425,506				58,753,499

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

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

 

In millions of won
September 30, 2016
Type		Borrowings				Debt Securities
Less than 1 year		W	841,149				8,793,350
1~ 5 years			357,355				23,557,641
Over 5 years			1,364,824				19,624,220
		W	2,563,328				51,975,211

 

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

 

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

 

In millions of won and thousands of foreign currencies

September 30, 2016

Type

Creditor

Interest rate (%)

Maturity

Foreign currency

Local currency

Local short-term borrowings

Woori Investment Bank and others

1.35~2.51

2016.10.10~ 2017.09.13

—

W

266,100

Foreign short-term borrowings

SCNT and others

6.50

2016.12.03

USD

2,163

2,371

Foreign short-term borrowings

Export-Import Bank of Korea

3M Libor+0.54~0.65

2016.12.19

AUD

288,401

238,373

Local bank overdraft

Woori Bank

Standard overdraft rate+1.12

2017.02.25

—

21,382

W

528,226

 

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

—

W

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

W

603,673

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

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

 

In millions of won and thousands of foreign currencies
September 30, 2016
Type				Interest rate (%)				Maturity				Foreign currency				Local currency
Local long-term borrowings
Korea Development Bank		Others			0.50				2018~2044				—			W	5,852
		Facility			2.39~4.60				2023~2028				—				59,171
		Facility			3yr KTB rate-1.25				2027				—				9,000
		Facility			1yr KoFC bond rate +0.31				2018				—				150,000
		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				—				9,832
		Facility			4.60				2028				—				17,143
		Energy rationalization			3.20~3.70				2016				—				3,617
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				—				40,876
		Facility			3yr KTB rate-2.25				2016~2024				—				3,981
		Project loans			—				2022~2027				—				8,669
		Others			KTB rate-2.25				2024~2025				—				12,363
Shinhan Bank and others		Collateral borrowing			2.22				2017				—				30,000
		Facility			3yr AA- CB rate +1.10				2028				—				25,714
		Operating funds			2.70~2.86				2017~2018				—				25,000
		Others			4.10				2035								55,000
		Others			3yr KTB rate+1.10				2035								55,000
Kookmin Bank		Facility			MOR+0.62~0.79				2017~2023				—				45,000
Others		Facility			4.60~5.80				2025~2028				—				133,525
		Facility			CB rate+1.10				2028				—				17,143
		PF Refinancing			4.10				2030				—				62,500
		Others			4.32~8.00				2020~2036				—				123,847
		Others			—				2028				—				7,250
																	1,065,918
Foreign long-term borrowings
Korea National Oil Corporation		Project loans			—				2021~2023			USD	8,744				9,586
Export-Import Bank of Korea and others		Direct loan and others			3M Libor+2.75~3.70				2027			JOD	183,803				284,550
		Commercial loan and others			3M Libor+1.50~2.50				2030~2033			USD	305,196				334,587
		PF Loan			6M Libor+2.50~2.70				2032			USD	92,909				101,856
SCNT and others		Shareholder’s loan			6.50~8.00				2023			USD	37,973				41,629
Shareholder’s loan					8.00				2031			JOD	7,128				11,034
PT PJB and others		Shareholder’s loan			12.75				2017			IDR	24,422,941				2,064
HSBC and others		Syndicated loan			3M Libor+0.30~0.50				2017~2019			USD	21,186				23,226
IFC and others		Others			6M Libor+5.00				2031			PKR	11,683,820				121,979
Samsumg Life Insurance and others		Syndicated Loan			3.10				2032			JPY	1,758,000				19,051
Woori Nank and others		Syndicated Loan			JPY 6M Libor+2.10				2032			JPY	1,172,000				12,701
Others		Others			—				2019			USD	6,316				6,921
																	969,184
																	2,035,102
Less : Discount of long-term borrowings																	(23,730	)
Less : Current portion of long-term borrowings																	(312,923	)
Add : Current portion of discount on long-term borrowings																	928
																W	1,699,377

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(4)	Long-term borrowings as of September 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				—			W	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
																W	1,932,259

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

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

 

In millions of won
		Issue date				Maturity				Interest rate (%)				September 30, 2016				December 31, 2015
Electricity Bonds (*1)			2009.11.03~ 2014.08.27				2016.10.11~ 2033.08.06				2.73~5.51			W	20,600,000				22,960,000
Electricity Bonds			2012.06.14~ 2013.06.25				2016.12.14~ 2018.06.25				3M CD +0.25~0.32				510,000				910,000
Corporate Bonds(*2)			2009.05.04~ 2016.09.09				2016.10.18~ 2040.12.10				1.41~5.84				20,712,708				20,710,010
															41,822,708				44,580,010
Less : Discount on local debt securities															(36,326	)			(40,228	)
Less : Current portion of local debt securities															(6,820,010	)			(5,730,000	)
Add : Current portion of discount on local debt securities															1,039				1,187
														W	34,967,411				38,810,969

 

(*1)	Electricity Bonds 885 (W40,000 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 (W2,697 million) can be redeemed every March 31 after five years from its issue date, March 31, 2016.

 

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

 

In millions of won and thousands of foreign currencies
September 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			W	273,053
FY-97		1997.01.31~1997.08.04		2027.02.01~2027.08.01		6.75~7.00		USD	314,717				345,024
FY-04		2004.04.23		2034.04.23		5.13		USD	286,920				314,550
FY-08		2008.11.27		2018.11.27		4.19		JPY	20,000,000				216,736
FY-11		2011.07.13~2011.07.29		2017.01.30~2021.07.13		3.63~4.75		USD	800,000				877,040
FY-12		2012.05.10~2012.09.19		2017.05.10~2022.09.19		2.50~3.13		USD	1,750,000				1,918,525
FY-13		2013.02.05~2013.11.27		2018.02.05~2018.11.27		1.88~2.88		USD	1,900,000				2,082,970
FY-13		2013.09.26~2013.10.23		2019.03.26~2019.04.23		1.50~1.63		CHF	400,000				454,024
FY-13		2013.09.25		2020.09.25		5.75		AUD	325,000				272,051
FY-13		2013.02.20~2013.07.25		2018.02.20~2018.07.25		3M Libor+0.84~1.50		USD	500,000				548,150
FY-14		2014.02.11~2014.12.02		2019.02.11~2029.07.30		2.38~3.57		USD	1,500,000				1,644,450
FY-14		2014.01.28~2014.07.31		2017.01.28~2017.07.31		3M Libor+0.55~1.05		USD	500,000				548,150
FY-15		2015.06.15		2025.06.15		3.25		USD	300,000				328,890
FY-16		2016.01.21		2021.07.21		2.5		USD	300,000				328,890
													10,152,503
Less : Discount on foreign debt securities													(53,143	)
Add : Premium on foreign debt securities													166
Less : Current portion of foreign debt securities													(1,973,340	)
Add : Current portion of discount on foreign debt securities													1,606
												W	8,127,792

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(6)	Foreign debt securities as of September 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			W	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
												W	10,163,318

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 September 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		September 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		W	177,152				119,938				182,072				116,885
1 ~ 5 years			434,388				328,201				525,465				393,957
More than 5 years			165,766				122,428				206,323				148,552
		W	777,306				570,567				913,860				659,394

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Current finance lease liabilities		W	119,938				116,885
Non-current finance lease liabilities			450,629				542,509
		W	570,567				659,394

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Minimum lease payment		W	43,161				132,413				47,387				145,758
Contingent rent payment			(5,174	)			(15,782	)			(4,398	)			(13,284	)

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

25.	Employment Benefits

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Net defined benefit obligations		W	2,066,484				1,495,782
Other long-term employee benefit obligations			7,572				7,325
		W	2,074,056				1,503,107

 

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

 

		September 30, 2016		December 31, 2015
Discount rate		1.71% ~ 1.89%		2.39% ~ 2.58%
Future salary and benefit levels		5.39%		5.43%
Weighted average duration		13.29 years		13.21 years

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Current service cost		W	90,248				264,617				77,630				231,801
Interest cost			16,905				48,961				16,741				47,633
Expected return on plan assets			(5,627	)			(17,052	)			(5,474	)			(16,310	)
Loss from settlement			(497	)			(543	)			(420	)			(659	)
		W	101,029				295,983				88,477				262,465

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Cost of sales		W	74,469				218,946				69,844				193,405
Selling and administrative expenses			14,619				42,186				7,551				38,139
Others (Construction-in-progress and others)			11,941				34,851				11,082				30,921
		W	101,029				295,983				88,477				262,465

In addition, for the nine-month periods ended September 30, 2016 and 2015, employee benefit obligations expenses of W44,241 million and W41,727 million, respectively, is recognized as cost of sales, and W8,366 million and W7,489 million, respectively, is recognized as selling and administrative expenses, and W10,277 million and W10,337 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

September 30, 2016

(Unaudited)

 

25.	Employment Benefits, Continued

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Present value of defined benefit obligation from funded plans		W	2,968,804				2,426,414
Fair value of plan assets			(902,320	)			(930,632	)
			2,066,484				1,495,782
Present value of defined benefit obligation from unfunded plans			—				—
Net liabilities incurred from defined benefit plans		W	2,066,484				1,495,782

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Beginning balance		W	2,426,414				1,992,447
Current service cost			264,617				315,811
Interest cost (*)			48,961				63,808
Remeasurement component			333,645				122,825
Loss from settlement			(543	)			(641	)
Actual payments			(103,919	)			(67,291	)
Others			(371	)			(545	)
Ending balance		W	2,968,804				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 nine-month period ended September 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won		September 30, 2016				December 31, 2015
Beginning balance		W	930,632				724,250
Expected return			17,052				22,557
Remeasurement component			(1,948	)			(5,924	)
Contributions by the employers			17,460				214,449
Actual payments			(60,876	)			(24,191	)
Others			—				(509	)
Ending balance		W	902,320				930,632

In addition, loss on accumulated remeasurement component amounted to W361,933 million and W202,878 million has been recognized as other comprehensive loss for the nine-month period ended September 30, 2016 and for the year ended December 31, 2015, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

25.	Employment Benefits, Continued

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Equity instruments		W	39,403				12,791
Debt instruments			254,972				243,372
Bank deposit			145,824				129,350
Others			462,121				545,119
		W	902,320				930,632

For the nine-month period ended September 30, 2016 and for the year ended December 31, 2015, actual returns on plan assets amounted to W15,104 million and W16,633 million, respectively.

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Actuarial gain from changes in financial assumptions		W	245,323				140,411
Experience adjustments			88,322				(17,586	)
Expected return			1,948				5,924
		W	335,593				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

September 30, 2016

(Unaudited)

 

26.	Provisions

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Employment benefits		W	622,313				—				718,365				—
Provisions for employment benefits			622,313				—				718,365				—
Litigation			49,290				118,272				57,737				110,228
Litigation provisions			49,290				118,272				57,737				110,228
Decommissioning cost			—				12,960,604				—				12,744,873
Nuclear plants			—				9,941,856				—				9,684,286
Spent fuel			—				1,375,185				—				1,375,185
Waste			—				1,473,129				—				1,502,140
PCBs			—				169,886				—				182,400
Other recovery provisions			—				548				—				862
Others			923,036				14,708				803,074				9,653
Power plant regional support program			149,266				—				129,655				—
Transmission regional support program			324,328				—				228,785				—
Provisions for tax			67				136				—				136
Provisions for financial guarantee			525				5,046				1,839				2,449
Provisions for RPS			448,037				—				363,178				—
Provisions for greenhouse gas emissions obligations			—				—				78,829				—
Others			813				9,526				788				7,068
		W	1,594,639				13,093,584				1,579,176				12,864,754

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Accretion expenses				Payment				Reversal				Other				Ending balance
Employment benefits		W	718,365				631,665				(724,987	)			(2,720	)			(10	)			622,313
Provisions for employment benefits			718,365				631,665				(724,987	)			(2,720	)			(10	)			622,313
Litigation			167,965				84,819				(67,115	)			(18,117	)			10				167,562
Litigation provisions			167,965				84,819				(67,115	)			(18,117	)			10				167,562
Decommissioning cost			12,744,873				651,887				(435,968	)			—				(188	)			12,960,604
Nuclear plants			9,684,286				257,889				(319	)			—				—				9,941,856
Spent fuel			1,375,185				370,342				(370,342	)			—				—				1,375,185
Waste			1,502,140				19,243				(48,401	)			—				147				1,473,129
PCBs			182,400				4,392				(16,906	)			—				—				169,886
Other recovery provisions			862				21				—				—				(335	)			548
Others			812,727				720,711				(565,085	)			(53,272	)			22,663				937,744
Power plant regional support program			129,655				44,874				(48,336	)			—				23,073				149,266
Transmission regional support program			228,785				233,586				(138,043	)			—				—				324,328
Provisions for tax			136				92				—				—				(25	)			203
Provisions for financial guarantee			4,288				4,145				—				(2,796	)			(66	)			5,571
Provisions for RPS			363,178				357,490				(234,149	)			(38,482	)			—				448,037
Provisions for greenhouse gas emissions obligations			78,829				75,991				(142,840	)			(11,980	)			—				—
Others			7,856				4,533				(1,717	)			(14	)			(319	)			10,339
		W	14,443,930				2,089,082				(1,793,155	)			(74,109	)			22,475				14,688,223

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

26.	Provisions, Continued

 

(2)	Changes in provisions for the nine-month period ended September 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		W	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
		W	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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016				December 31, 2015
Land		W	(3,205	)			(3,147	)
Buildings			(62,038	)			(63,932	)
Structures			(194,959	)			(193,119	)
Machinery			(112,206	)			(108,935	)
Vehicles			(22	)			(29	)
Equipment			(804	)			(1,026	)
Tools			(506	)			(691	)
Construction-in-progress			(134,613	)			(139,898	)
Investment properties			(65	)			(13	)
Software			(595	)			(699	)
Development expenditures			(5,326	)			(6,835	)
Intangible assets under development			(11,814	)			(10,483	)
Usage rights of donated assets and other			(24	)			(32	)
Others			(1	)			(1	)
		W	(526,178	)			(528,840	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

27.	Government Grants, Continued

 

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

 

In millions of won		September 30, 2016
		Beginning balance				Receipt				Acquisition				Offset the items of depreciation expense and others				Disposal				Others				Ending balance
Cash		W	—				(23,763	)			—				—				—				23,763				—
Land			(3,147	)			—				—				—				14				(72	)			(3,205	)
Buildings			(63,932	)			—				—				3,908				731				(2,745	)			(62,038	)
Structures			(193,119	)			—				—				7,072				1,909				(10,821	)			(194,959	)
Machinery			(108,935	)			—				—				8,904				1,062				(13,237	)			(112,206	)
Vehicles			(29	)			—				—				7				—				—				(22	)
Equipment			(1,026	)			—				—				354				—				(132	)			(804	)
Tools			(691	)			—				—				218				—				(33	)			(506	)
Construction-in-progress			(139,898	)			—				25,558				—				—				(20,273	)			(134,613	)
Investment properties			(13	)			—				—				—				—				(52	)			(65	)
Software			(699	)			—				—				186				—				(82	)			(595	)
Development expenditures			(6,835	)			—				—				2,065				—				(556	)			(5,326	)
Intangible assets under development			(10,483	)			—				—				—				—				(1,331	)			(11,814	)
Usage rights of donated assets and other			(32	)			—				—				8				—				—				(24	)
Others			(1	)			—				—				—				—				—				(1	)
		W	(528,840	)			(23,763	)			25,558				22,722				3,716				(25,571	)			(526,178	)
In millions of won		December 31, 2015
		Beginning balance				Receipt				Acquisition				Offset the items of depreciation expense and others				Disposal				Others				Ending balance
Cash		W	—				(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	)
		W	(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

September 30, 2016

(Unaudited)

 

28.	Deferred Revenues

Deferred revenue related to the Company’s construction contracts as of September 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		September 30, 2016				December 31, 2015
Beginning balance		W	7,165,297				6,850,016
Increase during the current year / period			821,828				691,276
Recognized as revenue during the current year / period			(312,756	)			(375,995	)
Ending balance		W	7,674,369				7,165,297

 

29.	Non-financial Liabilities

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

 

In millions of won		September 30, 2016								December 31, 2015
		Current				Non-current				Current				Non-current
Advance received		W	4,661,092				195,356				5,017,735				215,096
Unearned revenue			18,160				46,662				21,810				63,850
Deferred revenue			402,217				7,272,152				372,157				6,793,140
Withholdings			331,986				6,908				146,258				6,731
Others			1,420,299				11,610				762,751				13,435
		W	6,833,754				7,532,688				6,320,711				7,092,252

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

30.	Contributed Capital

 

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

 

In millions of won except share information

September 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

W

5,000

1,640,385

1,569,435

3,209,820

 

(*)	Korea Development Bank’s ownership of W1,056,176 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

W

5,000

1,640,385

1,569,435

3,209,820

 

(*)	Korea Development Bank’s ownership of W1,056,176 million is included.

 

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

 

Number of shares		September 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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016				December 31, 2015
Share premium		W	843,758				843,758

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

31.	Retained Earnings and Dividends Paid

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Legal reserve (*)		W	1,604,910				1,604,910
Voluntary reserves			31,847,274				23,720,167
Retained earnings before appropriations			19,311,391				22,862,164
Retained earnings		W	52,763,575				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 September 30, 2016 and December 31, 2015 are as follows:

 

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

 

(*)	The reserve for research and human development is appropriated by KEPCO to use as qualified tax credits to reduce corporate tax liabilities. The reserve is available for cash dividends for a certain period as defined by the Tax Incentive Control Law of Korea.

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Beginning balance		W	48,187,241				35,303,647
Net profit for the period attributed to owner of the Company			6,775,278				13,289,127
Changes in equity method retained earnings			(589	)			(280	)
Remeasurement of defined benefit liability, net of tax			(208,266	)			(84,271	)
Dividend paid			(1,990,089	)			(320,982	)
Ending balance		W	52,763,575				48,187,241

 

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

 

In millions of won except share information

September 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

W

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

W

500

320,982

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

31.	Retained Earnings and Dividends Paid, Continued

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Beginning balance		W	(2,411	)			(2,131	)
Changes			(589	)			(280	)
Ending balance		W	(3,000	)			(2,411	)

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Beginning balance		W	(202,878	)			(116,705	)
Changes			(322,040	)			(127,184	)
Income tax effect			113,774				42,913
Transfer to reserve for business expansion			49,211				(1,902	)
Ending balance		W	(361,933	)			(202,878	)

 

32.	Hybrid Bonds

Bond-type hybrid securities classified as equity (non-controlling interest) as of September 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			W	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	)
																		W	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

September 30, 2016

(Unaudited)

 

33.	Other Components of Equity

 

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

 

In millions of won		September 30, 2016				December 31, 2015
Other capital surpluses		W	1,198,775				1,197,388
Accumulated other comprehensive loss			(305,138	)			(98,713	)
Other equity			13,294,973				13,294,973
		W	14,188,610				14,393,648

 

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

 

In millions of won		September 30, 2016												December 31, 2015
		Gain on disposal of treasury stocks				Others				Subtotal				Gain on disposal of treasury stocks				Others				Subtotal
Beginning balance		W	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			—				1,387				1,387				—				2,536				2,536
Income tax effect			—				—				—				—				(14,144	)			(14,144	)
Ending balance		W	387,524				811,251				1,198,775				387,524				809,864				1,197,388

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

33.	Other Components of Equity, Continued

 

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

 

In millions of won		September 30, 2016
		Available-for-sale financial asset valuation reserve				Shares in other comprehensive income (loss) of investments in associates and joint ventures				Reserve for overseas operations translation credit				Reserve for gain (loss) on valuation of derivatives				Total
Beginning balance		W	(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			31,443				—				—				—				31,443
Shares in other comprehensive Income (loss) of associates and joint ventures, net of tax			—				(200,775	)			—				—				(200,775	)
Foreign currency translation of foreign operations, net of tax			—				—				(64,551	)			—				(64,551	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				—				27,458				27,458
Ending balance		W	6,538				75,598				(319,013	)			(68,261	)			(305,138	)

 

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		W	(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		W	(24,905	)			276,373				(254,462	)			(95,719	)			(98,713	)

 

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

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

34.

Sales

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

 

In millions of won		September 30, 2016
		Domestic								Overseas								Total
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Sales of goods		W	14,607,157				41,087,378				94,322				271,586				14,701,479				41,358,964
Electricity			14,507,424				40,591,506				—				—				14,507,424				40,591,506
Heat supply			3,144				127,227				—				—				3,144				127,227
Others			96,589				368,645				94,322				271,586				190,911				640,231
Sales of service			47,033				140,645				42,548				126,663				89,581				267,308
Sales of construction services			28,283				92,126				1,009,612				2,873,096				1,037,895				2,965,222
Revenue related to transfer of assets from customers			114,543				312,756				—				—				114,543				312,756
		W	14,797,016				41,632,905				1,146,482				3,271,345				15,943,498				44,904,250

 

In millions of won		September 30, 2015
		Domestic								Overseas								Total
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Sales of goods		W	14,215,542				40,527,776				102,579				287,820				14,318,121				40,815,596
Electricity			14,062,921				39,956,480				—				—				14,062,921				39,956,480
Heat supply			5,746				150,032				—				—				5,746				150,032
Others			146,875				421,264				102,579				287,820				249,454				709,084
Sales of service			60,030				156,426				68,175				188,150				128,205				344,576
Sales of construction services			52,812				145,168				875,977				2,680,706				928,789				2,825,874
Revenue related to transfer of assets from customers			94,840				279,594				—				—				94,840				279,594
		W	14,423,224				41,108,964				1,046,731				3,156,676				15,469,955				44,265,640

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

35.	Selling and Administrative Expenses

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Salaries		W	166,455				503,117				154,502				464,650
Retirement benefit expense			17,489				50,552				15,390				45,628
Welfare and benefit expense			60,073				110,802				26,861				84,286
Insurance expense			2,772				8,414				2,641				8,026
Depreciation			38,405				111,860				23,758				71,619
Amortization of intangible assets			8,487				26,446				9,059				30,885
Bad debt expense			8,300				23,528				7,397				—
Reversal of allowance for bad debt			—				—				—				(10,074	)
Commission			144,603				444,781				142,101				442,969
Advertising expense			5,266				22,222				5,612				19,391
Training expense			2,096				4,241				1,550				3,708
Vehicle maintenance expense			2,696				7,321				2,654				7,768
Publishing expense			550				2,453				580				1,816
Business promotion expense			788				2,544				700				2,419
Rent expense			9,582				28,725				16,165				35,521
Telecommunication expense			6,783				20,320				5,606				17,539
Transportation expense			139				427				329				629
Taxes and dues			4,313				36,863				4,789				44,354
Expendable supplies expense			1,553				4,181				1,788				5,049
Water, light and heating expense			2,390				7,429				2,043				7,610
Repairs and maintenance expense			17,251				46,032				9,445				24,824
Ordinary development expense			41,005				111,197				52,371				126,075
Travel expense			3,428				12,437				3,474				10,977
Clothing expense			1,381				2,397				932				2,140
Survey and analysis expense			157				468				148				431
Membership fee			208				970				198				868
Others			175,125				232,683				32,838				88,190
		W	721,295				1,822,410				522,931				1,537,298

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

36.	Other Non-operating Income and Expense

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Reversal of other provisions		W	12,065				17,677				1,266				4,564
Reversal of other allowance for bad debt			—				1,214				—				—
Gains on government grants			28				64				—				—
Gains on assets contributed			203				1,719				3,182				6,274
Gains on liabilities exempted			682				987				6				2,377
Compensation and reparations revenue			30,786				94,730				37,697				124,553
Revenue from research contracts			2,258				4,685				520				5,051
Rental income			62,879				164,820				49,518				145,304
Others			877				19,194				8,068				25,829
		W	109,778				305,090				100,257				313,952

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Accretion expenses of other provisions		W	154				273				46				362
Depreciation expenses on investment properties			179				508				398				745
Depreciation expenses on idle assets			1,664				4,975				1,668				5,000
Other bad debt expense			—				4,586				5,686				18,669
Donations			6,973				42,360				4,842				22,004
Others			1,713				10,571				6,156				12,133
		W	10,683				63,273				18,796				58,913

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

37.	Other Gains (Losses)

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Other gains
Gains on disposal of property plant, and equipment		W	18,173				48,131				8,521,490				8,618,259
Gains on disposal of intangible assets			—				—				—				32
Reversal of impairment loss on intangible assets			—				—				187				187
Gains on foreign currency translation			5,468				14,121				8,565				11,549
Gains on foreign currency transaction			19,345				43,134				11,997				31,795
Gains on insurance proceeds			—				—				—				25
Others			39,942				133,673				33,605				112,118
Other losses
Losses on disposal of property plant and equipment			(6,623	)			(27,754	)			(11,773	)			(52,817	)
Losses on disposal of intangible assets			(5	)			(143	)			—				(5	)
Impairment loss on property, plant and equipment			—				—				—				(1,205	)
Impairment loss on intangible assets			—				—				(12	)			(12	)
Losses on foreign currency translation			(9,554	)			(13,829	)			(3,182	)			(13,160	)
Losses on foreign currency transaction			(7,548	)			(41,214	)			(14,415	)			(50,047	)
Others			(6,805	)			(32,941	)			(8,101	)			(45,223	)
		W	52,393				123,178				8,538,361				8,611,496

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

38.	Finance Income

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Interest income		W	56,368				188,889				60,353				165,361
Dividends income			286				10,281				646				7,153
Gains on disposal of financial assets			1				1,481				4				4
Gains on valuation of derivatives			—				30,871				615,130				854,944
Gains on transaction of derivatives			3,874				26,914				67,096				80,749
Gains on foreign currency translation			606,821				749,586				58,474				129,614
Gains on foreign currency transaction			12,434				28,319				12,401				24,588
Others			—				1				41				105
		W	679,784				1,036,342				814,145				1,262,518

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Cash and cash equivalents		W	12,174				50,713				15,519				40,707
Available-for-sale financial assets			—				—				—				29
Held-to-maturity investments			25				79				30				78
Loans and receivables			5,830				19,931				4,734				15,908
Short-term financial instrument			8,404				33,861				12,434				20,966
Long-term financial instrument			981				5,876				2,358				7,930
Trade and other receivables			28,954				78,429				25,278				79,743
		W	56,368				188,889				60,353				165,361

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

39.	Finance Expenses

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Interest expense		W	437,700				1,318,959				482,362				1,560,825
Losses on sale of financial assets			—				—				—				2,983
Impairment of available-for-sale financial assets			4,613				4,706				14,500				28,493
Losses on valuation of derivatives			571,867				602,298				4,155				27,074
Losses on transaction of derivatives			27,044				97,831				7,706				27,029
Losses on foreign currency translation			51,852				153,297				713,043				1,016,989
Losses on foreign currency transaction			11,911				54,299				41,359				49,834
Losses on repayment of financial liabilities			—				—				33				33
Others			193				452				43				106
		W	1,105,180				2,231,842				1,263,201				2,713,366

 

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

 

In millions of won		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Trade and other payables		W	16,772				50,278				17,198				62,318
Short-term borrowings			2,467				5,286				3,732				11,668
Long-term borrowings			21,428				63,877				27,064				82,980
Debt securities			469,524				1,457,688				547,689				1,643,708
Other financial liabilities			120,838				361,577				119,081				422,767
			631,029				1,938,706				714,764				2,223,441
Less: capitalized borrowing costs			(193,329)				(619,747	)			(232,402	)			(662,616	)
		W	437,700				1,318,959				482,362				1,560,825

Capitalization rates for the nine-month periods ended September 30, 2016 and 2015 are 2.29% ~ 3.76% and 2.44% ~ 4.24%, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

40.	Income Taxes

 

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

 

In millions of won		September 30, 2016				September 30, 2015
Current income tax expense
Payment of income tax		W	2,678,549				2,175,431
Adjustment due to changes in estimates related to prior years			45,356				(26,325	)
Current income tax directly recognized in equity			106,019				30,355
			2,829,924				2,179,461
Deferred income tax expense
Generation and realization of temporary differences			334,166				(229,416	)
Changes of unrecognized tax losses, tax credit and temporary differences for prior periods			(2,025	)			79,567
Changes in deferred tax on tax losses carryforwards			—				2,375,307
Tax credit carryforwards			2,260				19,822
			334,401				2,245,280
Income tax expense		W	3,164,325				4,424,741

 

(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 nine-month periods ended September 30, 2016 and 2015 are as follows:

 

In millions of won		September 30, 2016				September 30, 2015
Income before income tax		W	10,033,153				16,266,126
Income tax expense computed at applicable tax rate of 24.2%			2,428,023				3,936,402
Adjustments
Additional payment of income taxes or receipt of income tax refunds			(1,411	)			(1,585	)
Effect of applying gradual tax rate			(3,402	)			(3,500	)
Effect of non-taxable income			(29,911	)			(5,836	)
Effect of non-deductible expenses			19,290				15,157
Effects of tax credits and deduction			(32,588	)			(29,490	)
Recognition (reversal) of unrecognized deferred tax asset, net			(2,025	)			79,526
Deferred income tax related to investments in subsidiaries and associates			731,627				458,812
Others, net			9,366				(24,745	)
			690,946				488,339
Adjustment in respect of prior years			45,356				—
Income tax expense		W	3,164,325				4,424,741
Effective tax rate			31.5	%			27.2	%

 

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

 

In millions of won		September 30, 2016				September 30, 2015
Dividends of hybrid securities		W	3,943				3,940
Gain on disposal of investments in subsidiaries			—				(14,144	)
		W	3,943				(10,204	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

40.	Income Taxes, Continued

 

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

 

In millions of won		September 30, 2016				September 30, 2015
Income tax recognized as other comprehensive income (loss)
Loss on valuation of available-for-sale financial assets		W	(12,383	)			(5,443	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			(20,339	)			1,455
Remeasurements of defined benefit obligations			113,774				60,216
Investments in associates			9,383				(3,220	)
Others			11,641				(12,449	)
		W	102,076				40,559

 

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

 

In millions of won		September 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		W	407,342				68,794				113,774				—				589,910
Cash flow hedge			(29,013	)			118,192				(20,339	)			—				68,840
Investments in associates or subsidiaries			(6,449,998	)			(658,425	)			9,383				—				(7,099,040	)
Property, plant and equipment			(5,495,786	)			(1,324	)			—				—				(5,497,110	)
Finance lease			(272,430	)			(8,722	)			—				—				(281,152	)
Intangible assets			9,420				(124	)			—				—				9,296
Financial assets at fair value through profit or loss			(4	)			2,435				—				—				2,431
Available-for-sale financial assets			(49,199	)			775				(12,383	)			—				(60,807	)
Deferred revenue			215,361				(6,212	)			—				—				209,149
Provisions			3,372,423				81,908				—				—				3,454,331
Doubtful receivables			1,405				1,291				—				—				2,696
Other finance liabilities			26,298				(4,113	)			—				3,943				26,128
Gains or losses on foreign exchange translation			128,714				(87,451	)			—				—				41,263
Allowance for doubtful accounts			18,976				2,175				—				—				21,151
Accrued income			(11,231	)			5,578				—				—				(5,653	)
Special deduction for property, plant and equipment			(194,347	)			(29	)			—				—				(194,376	)
Reserve for research and human development			(20,688	)			5,153				—				—				(15,535	)
Others			576,585				41,936				11,641				—				630,162
			(7,766,172	)			(438,163	)			102,076				3,943				(8,098,316	)
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
		W	(7,739,060)				(440,420	)			102,076				3,943				(8,073,461	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

40.	Income Taxes, Continued

 

(5)	Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the nine-month period ended September 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 or loss				Amounts recognized directly in equity				Ending balance
Deferred income tax on temporary differences
Employee benefits		W	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
		W	(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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016				December 31, 2015
Deferred income tax assets		W	762,735				623,623
Deferred income tax liabilities			(8,836,196	)			(8,362,683	)
		W	(8,073,461)				(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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016				December 31, 2015
Deductible temporary differences		W	425,935				441,704

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

41.	Assets Held-for-Sale

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

 

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

September 30, 2016

(Unaudited)

 

42.	Expenses Classified by Nature

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

 

In millions of won		September 30, 2016
		Selling and administrative expenses				Cost of sales				Total
Raw materials used		W	—				9,546,028				9,546,028
Salaries			503,117				2,337,045				2,840,162
Retirement benefit expense			50,552				263,187				313,739
Welfare and benefit expense			110,802				339,601				450,403
Insurance expense			8,414				62,524				70,938
Depreciation			111,860				6,389,065				6,500,925
Amortization of intangible assets			26,446				25,776				52,222
Bad debt expense			23,528				—				23,528
Commission			444,781				306,060				750,841
Advertising expense			22,222				6,343				28,565
Training expense			4,241				8,426				12,667
Vehicle maintenance expense			7,321				4,913				12,234
Publishing expense			2,453				2,720				5,173
Business promotion expense			2,544				3,342				5,886
Rent expense			28,725				100,693				129,418
Telecommunication expense			20,320				57,148				77,468
Transportation expense			427				3,733				4,160
Taxes and dues			36,863				344,483				381,346
Expendable supplies expense			4,181				22,575				26,756
Water, light and heating expense			7,429				19,866				27,295
Repairs and maintenance expense			46,032				1,247,771				1,293,803
Ordinary development expense			111,197				330,095				441,292
Travel expense			12,437				46,727				59,164
Clothing expense			2,397				2,114				4,511
Survey and analysis expense			468				2,146				2,614
Membership fee			970				8,185				9,155
Power purchase			—				7,656,131				7,656,131
Others			232,683				3,211,132				3,443,815
		W	1,822,410				32,347,829				34,170,239

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

42.	Expenses Classified by Nature, Continued

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

 

In millions of won		September 30, 2015
		Selling and administrative expenses				Cost of sales				Total
Raw materials used		W	—				11,365,128				11,365,128
Salaries			464,650				2,115,183				2,579,833
Retirement benefit expense			45,628				235,132				280,760
Welfare and benefit expense			84,286				314,800				399,086
Insurance expense			8,026				66,873				74,899
Depreciation			71,619				5,998,347				6,069,966
Amortization of intangible assets			30,885				23,844				54,729
Reversal of allowance for bad debt			(10,074	)			—				(10,074	)
Commission			442,969				248,567				691,536
Advertising expense			19,391				5,036				24,427
Training expense			3,708				6,572				10,280
Vehicle maintenance expense			7,768				6,315				14,083
Publishing expense			1,816				2,530				4,346
Business promotion expense			2,419				2,877				5,296
Rent expense			35,521				103,967				139,488
Telecommunication expense			17,539				55,806				73,345
Transportation expense			629				3,962				4,591
Taxes and dues			44,354				308,735				353,089
Expendable supplies expense			5,049				19,842				24,891
Water, light and heating expense			7,610				19,345				26,955
Repairs and maintenance expense			24,824				1,176,321				1,201,145
Ordinary development expense			126,075				282,259				408,334
Travel expense			10,977				38,994				49,971
Clothing expense			2,140				2,291				4,431
Survey and analysis expense			431				1,809				2,240
Membership fee			868				6,170				7,038
Power purchase			—				8,592,026				8,592,026
Others			88,190				3,057,669				3,145,859
		W	1,537,298				34,060,400				35,597,698

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

43.	Earnings Per Share

 

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

 

In won

September 30, 2016

September 30, 2015

Type

Three- month period ended

Nine- month period ended

Three- month period ended

Nine- month period ended

Basic earnings per share

W

4,538

10,554

14,377

18,280

 

(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 nine-month periods ended September 30, 2016 and 2015 are as follows:

 

In millions of won except number of shares		September 30, 2016								September 30, 2015
Type		Three- month period ended				Nine- month period ended				Three- month period ended				Nine- month period ended
Controlling interest in net income		W	2,913,361				6,775,278				9,229,740				11,735,006
Profit used in the calculation of total basic earnings per share			2,913,361				6,775,278				9,229,740				11,735,006
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 nine-month periods ended September 30, 2016 and 2015 are as follows:

 

In number of shares		September 30, 2016								September 30, 2015
Type		Three- month period ended				Nine- month period ended				Three- month period ended				Nine- 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 nine-month periods ended September 30, 2016 and 2015.

 

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Notes to the Consolidated Interim Financial Statements, Continued

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

 

In millions of won		September 30, 2016				December 31, 2015
Total borrowings and debt securities		W	54,425,506				58,753,499
Cash and cash equivalents			4,767,502				3,783,065
Net borrowings and debt securities			49,658,004				54,970,434
Total shareholder’s equity			72,304,544				67,942,475
Debt to equity ratio			68.68	%			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

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

 

In millions of won		September 30, 2016				December 31, 2015
Cash and cash equivalents		W	4,767,502				3,783,065
Derivative assets (trading)			65,586				255,008
Available-for-sale financial assets			1,062,082				584,479
Held-to-maturity investments			3,466				3,623
Loans and receivables			833,154				735,057
Long-term/short-term financial instruments			3,403,260				5,890,866
Derivative assets (using hedge accounting)			37,789				362,142
Trade and other receivables			7,980,530				9,271,967
Financial guarantee contracts (*)			269,594				271,010

 

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

Financial guarantee contracts as of September 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			W	81,826
Joint ventures		PT. Tanjung Power Indonesia		USD	38,675				42,398
Joint ventures		Kelar S.A		USD	132,600				145,370
				USD	245,913			W	269,594

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

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

 

In millions of won				September 30, 2016								December 31, 2015
Type		Accounts		1% Increase				1% Decrease				1% Increase				1% Decrease
Future salary increases		Increase (decrease) in defined benefit obligation		W	392,709				(348,309	)			293,205				(271,758	)
Discount rate		Increase (decrease) in defined benefit obligation			(336,587	)			400,600				(267,648	)			315,870

Changes of employee benefits assuming a 1% increase and decrease movements in discount rate on plan asset for the nine-month periods ended September 30, 2016 and 2015 are W6,841 million and W5,432 million, respectively.

 

②

Provisions

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

 

Type		Accounts		September 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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won				September 30, 2016								December 31, 2015
Type		Accounts		0.1% Increase				0.1% Decrease				0.1% Increase				0.1% Decrease
Discount rate		PCBs		W	(760	)			765				(875	)			881
		Nuclear plants			(199,604	)			204,844				(201,318	)			206,720
		Spent fuel			(52,390	)			54,425				(52,390	)			54,425
Inflation rate		PCBs			907				(902	)			885				(881	)
		Nuclear plants			226,571				(220,787	)			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

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

 

In thousands of foreign currencies		Assets								Liabilities
Type		September 30, 2016				December 31, 2015				September 30, 2016				December 31, 2015
AUD			158				158				606,911				595,284
BWP			358				301				—				—
CAD			—				—				—				858
CNY			—				—				26,140				26,140
EUR			9,903				6,141				18,765				33,552
MXN			—				7,704				—				—
PHP			386,528				489,309				116,921				77,337
SAR			1,205				1,083				43				—
USD			1,265,257				1,260,094				9,039,415				9,331,854
INR			1,007,185				972,175				63,783				206,159
PKR			277,781				211,212				2,846				12,928
MGA			3,420,006				2,768,360				80,759				151,729
JPY			1,510,242				1,425,163				20,357,067				20,325,211
KZT			47,808				47,177				—				—
GBP			6				—				19				99
CHF			68				—				400,058				400,029
AED			8,139				1,481				1,459				1,705
ZAR			344				238				4				—
JOD			667				2,972				6				—
BDT			48,221				43,332				1,661				889
TWD			—				—				—				30

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

 

In millions of won		September 30, 2016								December 31, 2015
Type		10% Increase				10% Decrease				10% Increase				10% Decrease
Increase (decrease) of income before income tax		W	(967,430	)			967,430				(1,063,285	)			1,063,285
Increase (decrease) of shareholder’s equity (*)			(967,430	)			967,430				(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 September 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

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

 

In millions of won
Type		September 30, 2016				December 31, 2015
Short-term borrowings		W	259,755				41,608
Long-term borrowings			1,377,558				1,977,745
Debt securities			1,606,300				2,082,000
		W	3,243,613				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 nine-month period ended September 30, 2016 and for the year ended December 31, 2015 are as follows

 

In millions of won		September 30, 2016								December 31, 2015
Type		1% Increase				1% Decrease				1% Increase				1% Decrease
Increase (decrease) of profit before income tax		W	(32,436	)			32,436				(41,014	)			41,014
Increase (decrease) of shareholder’s equity (*)			(32,436	)			32,436				(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 nine-month periods ended September 30, 2016 and 2015 are as follows:

 

In millions of won		September 30, 2016								September 30, 2015
Type		1% Increase				1% Decrease				1% Increase				1% Decrease
Increase (decrease) of profit before income tax		W	405,915				(405,915	)			399,565				(399,565	)
Increase (decrease) of shareholder’s equity (*)			405,915				(405,915	)			399,565				(399,565	)

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 September 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		September 30, 2016
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Borrowings and debt securities		W	11,381,934				7,934,920				21,177,787				24,651,713				65,146,354
Finance lease liabilities			177,152				174,779				259,609				165,766				777,306
Trade and other payables			3,676,834				301,678				632,478				2,397,614				7,008,604
Financial guarantee contracts (*)			217,369				29,600				22,625				—				269,594
		W	15,453,289				8,440,977				22,092,499				27,215,093				73,201,858
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		W	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
		W	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 September 30, 2016 and December 31, 2015 are W5,571 million and W4,288 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

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

 

In millions of won		September 30, 2016
Type		Less than 1 year				1~5 Years				More than 5 years				Other (*)				Total
Cash and cash equivalents		W	4,767,502				—				—				—				4,767,502
Available-for-sale financial assets			—				—				—				1,062,082				1,062,082
Held-to-maturity investments			355				3,111				—				—				3,466
Loans and receivables			199,993				447,018				218,835				12,564				878,410
Long-term/short-term financial instruments			3,000,686				189,622				212,641				311				3,403,260
Trade and other receivables			6,230,387				878,741				805,278				73,519				7,987,925
		W	14,198,923				1,518,492				1,236,754				1,148,476				18,102,645
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		W	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
		W	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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Gross settlement
- Trading		W	(18,323	)			(12,635	)			(28,511	)			(41,496	)			(100,965	)
- Hedging			(65,460	)			(8,741	)			(110,058	)			(57,828	)			(242,087	)
		W	(83,783	)			(21,376	)			(138,569	)			(99,324	)			(343,052	)
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		W	(9,552	)			(4,627	)			(47,971	)			—				(62,150	)
- Hedging			1,260				2,032				(44,233	)			(62,534	)			(103,475	)
		W	(8,292	)			(2,595	)			(92,204	)			(62,534	)			(165,625	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

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

 

In millions of won		September 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)		W	1,062,082				1,062,082				584,479				584,479
Derivative assets (trading)			65,586				65,586				255,008				255,008
Derivative assets (using hedge accounting)			37,789				37,789				362,142				362,142
Long-term financial instruments			402,574				402,574				758,037				758,037
Short-term financial instruments			3,000,686				3,000,686				5,132,829				5,132,829
			4,568,717				4,568,717				7,092,495				7,092,495
Assets carried at amortized cost
Held-to-maturity investments			3,466				3,466				3,623				3,623
Loans and receivables			833,154				833,154				735,057				735,057
Trade and other receivables			7,980,530				7,980,530				9,271,967				9,271,967
Cash and cash equivalents			4,767,502				4,767,502				3,783,065				3,783,065
			13,584,652				13,584,652				13,793,712				13,793,712
Liabilities recognized at fair value
Derivative liabilities (trading)			81,431				81,431				49,011				49,011
Derivative liabilities (using hedge accounting)			238,006				238,006				117,499				117,499
			319,437				319,437				166,510				166,510
Liabilities carried at amortized cost
Secured borrowings			623,852				623,852				641,363				641,363
Unsecured bond			51,885,908				56,914,539				55,677,213				59,619,941
Finance lease liabilities			570,567				570,567				659,394				659,394
Unsecured borrowings			1,894,364				1,909,605				2,407,690				2,427,847
Trade and other payables (*2)			7,008,604				7,008,604				7,794,738				7,794,738
Bank overdraft			21,382				21,382				27,233				27,233
		W	62,004,677				67,048,549				67,207,631				71,170,516

 

(*1)	Book values of equity securities held by the Company that were measured at cost as of September 30, 2016 and December 31, 2015 are W208,806 million and W207,508 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

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

 

Type		September 30, 2016		December 31, 2015
Derivatives		0.53% ~ 4.16%		0.28% ~ 4.16%
Borrowings and debt securities		0.05% ~ 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 September 30, 2016 and December 31, 2015 are as follows:

 

In millions of won		September 30, 2016
Type		Level 1				Level 2				Level 3				Total
Financial assets at fair value
Available-for-sale financial assets		W	231,328				441,556				180,392				853,276
Derivative assets			—				103,375				—				103,375
			231,328				544,931				180,392				956,651
Financial liabilities at fair value
Derivative liabilities		W	—				319,437				—				319,437
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		W	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		W	—				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

September 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 nine-month period ended September 30, 2016 and for the year ended December 31, 2015 are as follows:

 

In millions of won

September 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

W

180,390

—

—

2

—

—

180,392

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

W

168,627

—

—

11,763

—

—

180,390

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 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 September 30, 2016 are as follows:

 

In millions of won
Type		Amounts
Less than 1 year		W	114,513
1~2 years			114,513
2~3 years			114,513
Over 3 years			305,368
		W	648,907

 

(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 September 30, 2016 are as follows:

 

In millions of won
Type		Amounts
Less than 1 year		W	1,178
1~2 years			26,699
2~3 years			26,412
Over 3 years			629,012
		W	683,301

 

(iv)

Accumulated contract costs and profits related to the Company’s contract in process as of September 30, 2016 were W103,000 million and W6,482 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

September 30, 2016

(Unaudited)

 

46.	Related Parties

 

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

 

 

(2)	Transactions between the Company and its subsidiaries are eliminated during the consolidation and are not disclosed in notes.

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

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

<Sales and Others>

 

In millions of won
Company name		Transaction type		September 30, 2016				September 30, 2015
<Associates>
Daegu Green Power Co., Ltd.		Electricity sales		W	603				805
Dongducheon Dream Power Co., Ltd.		Electricity sales			12,170				11,249
Korea Gas Corporation		Electricity sales			65,420				63,994
Jeongam Wind Power Co., Ltd.		Electricity sales			5				8
Korea Power Engineering Service Co., Ltd.		Service			623				1,138
Yeongwol Energy Station Co., Ltd.		Service			653				610
KS Solar Co., Ltd.		Electricity sales			14				15
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Service			1				—
Korea Electric Power Industrial Development Co., Ltd.		Service			8,518				9,923
DS POWER Co., Ltd.		Service			30,235				88,962
Goseong Green Energy Co., Ltd.		Electricity sales			4,076				7,071
Gangneung Eco Power Co., Ltd.		Service			3,522				7,382
Shin Pyeongtaek Power Co., Ltd.		Electricity sales			97				4,448
Naepo Green Energy Co., Ltd.		Electricity sales			70				48
Noeul Green Energy Co., Ltd.		Electricity sales			153				—
Samcheok Eco Materials Co., Ltd.		Electricity sales			19				—
YTN Co., Ltd.		Electricity sales			1,346				1,358
Busan Green Energy Co., Ltd.		Service			117				1
Jungbu Bio Energy Co., Ltd.		Electricity sales			6				—
Korea Electric Vehicle Charge Service		Service			61				—
Ulleungdo Natural Energy Co., Ltd.		Service			266				—
Cheongna Energy Co., Ltd.		Service			5,037				18,378
Gangwon Wind Power Co., Ltd.		Electricity sales			1,244				1,005
Hyundai Green Power Co., Ltd.		Design service			13,464				13,578
Korea Power Exchange		Service			3,906				2,523
Hyundai Energy Co., Ltd.		Service			18,773				17,631
Taebaek Wind Power Co., Ltd.		Service			585				593
Pyeongchang Wind Power Co., Ltd.		Design service			488				60
Daeryun Power Co., Ltd.		Electricity sales			1,169				1,367
Changjuk Wind Power Co., Ltd.		Electricity sales			703				513
KNH Solar Co., Ltd.		Electricity sales			13				13
S-Power Co., Ltd.		Service			4,439				5,420
Busan Solar Co., Ltd.		Electricity sales			8				12
Green Biomass Co., Ltd.		Electricity sales			2				50
SPC Power Corporation		Dividend income			4,298				1,352
Gemeng International Energy Co., Ltd.		Dividend income			16,476				—
Dolphin Property Limited		Dividend income			35				—
PT. Bayan Resources TBK		Service			160				136
Pioneer Gas Power Limited		Service			81				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Service			603				425

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

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

 

 

In millions of won				Sales and others
Company name		Transaction type		September 30, 2016				September 30, 2015
<Joint ventures>
KEPCO SPC Power Corporation		Service		W	8,541				15,607
Daejung Offshore Wind Power Co., Ltd.		Electricity sales			1				1
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Commission			890				993
Dangjin Eco Power Co., Ltd.		Technical fee			1,325				10
Honam Wind Power Co., Ltd.		Electricity sales			153				48
Seokmun Energy Co., Ltd.		Technical fee			1,088				1,324
Incheon New Power Co., Ltd.		Construction revenue			393				259
Chun-cheon Energy Co., Ltd.		Service			2,438				1,619
Yeonggwangbaeksu Wind Power Co., Ltd.		Electricity sales			1,186				536
KW Nuclear Components Co., Ltd.		Service			3,001				1,615
GS Donghae Electric Power Co., Ltd.		Electricity sales			10,753				2,981
Busan Shinho Solar Power Co., Ltd.		Electricity sales			203				17
Datang Chifeng Renewable Power Co., Ltd.		Interest income			8,039				9,073
Rabigh Electricity Company		Interest income			388				259
Shuweihat Asia Operation & Maintenance Company		Service			159				507
ASM-BG Investicii AD		Service			287				—
Jamaica Public Service Company Limited		Service			1,847				2,289
KV Holdings, Inc.		Dividend income			302				—
Datang KEPCO Chaoyang Renewable Co., Ltd.		Dividend income			440				—
Nepal Water & Energy Development Private Limited		Service			262				—
Amman Asia Electric Power Company		Service			7,675				28,386
Kelar S.A		Service			1,640				5,666
<Others>
Korea Development Bank		Electricity sales			2,365				2,294
		Interest income			2,133				1,993

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

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

 

<Purchase and Others>

 

In millions of won						Purchase and others
Company name		Transaction type				September 30, 2016				September 30, 2015
<Associates>
Daegu Green Power Co., Ltd.			Electricity purchase			W	186,474				240,016
Dongducheon Dream Power Co., Ltd.			Electricity purchase				665,473				711,874
Korea Gas Corporation			Purchase of power generation fuel				2,557,299				3,796,417
Daegu Photovoltaic Co., Ltd.			REC purchase				2,513				3,071
Korea Power Engineering Service Co., Ltd.			Services				490				2,791
Yeongwol Energy Station Co., Ltd.			REC purchase				13,754				8,974
KS Solar Co., Ltd.			REC purchase				3,188				5,010
Heang Bok Do Si Photovoltaic Power Co., Ltd.			Rental fee and others				288				362
Korea Electric Power Industrial Development Co., Ltd.			Electricity metering service fee				180,631				199,442
YTN Co., Ltd.			Advertisement fee				146				202
Ulleungdo Natural Energy Co., Ltd.			Electricity purchase				45				—
Cheongna Energy Co., Ltd.			Services				73				—
Gangwon Wind Power Co., Ltd.			Electricity purchase				16,712				16,311
Hyundai Green Power Co., Ltd.			Electricity purchase				334,953				345,300
Korea Power Exchange			Trading fees				69,279				60,771
Hyundai Energy Co., Ltd.			Electricity purchase				889				1,441
Taebaek Wind Power Co., Ltd.			REC purchase				3,858				5,065
Pyeongchang Wind Power Co., Ltd.			Services				1,007				—
Daeryun Power Co., Ltd.			Electricity purchase				171,938				183,059
Changjuk Wind Power Co., Ltd.			Electricity purchase				3,787				5,065
KNH Solar Co., Ltd.			Electricity purchase				4,443				3,509
S-Power Co., Ltd.			Services				313,909				454,921
Busan Solar Co., Ltd.			Electricity purchase				1,079				3,549
Green Biomass Co., Ltd.			Woodchip purchase				1,951				3,243
<Joint ventures>
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)			Service				95,311				44,369
Honam Wind Power Co., Ltd.			Electricity purchase				3,980				4,306
Yeonggwangbaeksu Wind Power Co., Ltd.			Electricity purchase				6,984				846
Busan Shinho Solar Power Co., Ltd.			REC purchase				5,375				6,106
Global Trade Of Power System Co., Ltd.			Service				792				192
Expressway Solar-light Power Generation Co., Ltd.			Electricity purchase				2,334				2,689
Jamaica Public Service Company Limited			Service				84				78
Amman Asia Electric Power Company			Service				—				125
<Others>
Korea Development Bank			Interest expense				6,703				19,187
			Provision of dividends				654,829				96,087

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

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

 

In millions of won				Receivables								Payables
Company name		Type		September 30, 2016				December 31, 2015				September 30, 2016				December 31, 2015
<Associates>
Daegu Green Power Co., Ltd.		Trade receivables		W	70				95				—				—
		Trade payables			—				—				15,790				22,200
Dongducheon Dream Power Co., Ltd.		Trade receivables			2,703				1,206				—				—
		Non-trade receivables and others			21				—				—				—
		Trade payables			—				—				57,188				100,396
Korea Gas Corporation		Trade receivables			5,360				7,931				—				—
		Non-trade receivables and others			189				255				—				—
		Trade payables			—				—				314,537				302,752
		Non-trade payables and others			—				—				34				—
Daegu Photovoltaic Co., Ltd.		Trade payables			—				—				41				—
Jeongam Wind Power Co., Ltd.		Non-trade payables and others			—				—				5				1
Yeongwol Energy Station Co., Ltd.		Trade receivables			7,044				7,063				—				—
		Trade payables			—				—				229				229
		Non-trade payables and others			—				—				967				—
KS Solar Co., Ltd.		Trade receivables			1				2				—				—
		Trade payables			—				—				62				68
		Non-trade payables and others			—				—				308				281
Korea Electric Power Industrial Development Co., Ltd.		Trade receivables			437				469				—				—
		Non-trade receivables and others			47				27				—				—
		Non-trade payables and others			—				—				11,642				27,569
DS Power Co., Ltd.		Trade receivables			1,948				260				—				—
		Non-trade payables and others			—				—				4,441				135
Goseong Green Energy Co., Ltd.		Non-trade payables and others			—				—				3,900				3,900
Gangneung Eco Power Co., Ltd.		Trade receivables			17				1				—				—
		Non-trade receivables and others			259				1,701				—				—
Shin Pyeongtaek Power Co., Ltd.		Non-trade receivables and others			22				272				—				—
Naepo Green Energy Co., Ltd.		Trade receivables			5				9				—				—
Samcheok Eco Materials Co., Ltd.		Trade receivables			12				—				—				—
YTN Co., Ltd.		Trade receivables			74				93				—				—
		Non-trade payables and others			—				—				44				154
Korea Electric Vehicle Charge Service		Trade receivables			5				—				—				—
Cheongna Energy Co., Ltd.		Trade receivables			89				157				—				—
		Non-trade receivables and others			—				375				—				—
		Non-trade payables and others			—				—				194				—
Gangwon Wind Power Co., Ltd.		Trade receivables			15				12				—				—
		Trade payables			—				—				341				1,753
Hyundai Green Power Co., Ltd.		Trade receivables			464				962				—				—
		Trade payables			—				—				37,513				36,079
Korea Power Exchange		Trade receivables			702				1,452				—				—
		Non-trade receivables and others			52				112				—				—
		Trade payables			—				—				—				3,529
		Non-trade payables and others			—				—				1,169				1,529
Hyundai Energy Co., Ltd.		Trade receivables			74				44,510				—				—
		Non-trade receivables and others			62,683				—				—				—
		Trade payables			—				—				162				178
		Non-trade payables and others			—				—				—				8,030
Ecollite Co., Ltd.		Non-trade receivables and others			210				210				—				—
Taebaek Wind Power Co., Ltd.		Non-trade receivables and others			101				147				—				—
		Trade payables			—				—				65				349
		Non-trade payables and others			—				—				14				—
Pyeongchang Wind Power Co., Ltd.		Trade receivables			5				—				—				—
		Non-trade receivables and others			—				170				—				—
Daeryun Power Co., Ltd.		Trade receivables			112				117				—				—
		Trade payables			—				—				16,004				27,374

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

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

 

In millions of won				Receivables								Payables
Company name		Type		September 30, 2016				December 31, 2015				September 30, 2016				December 31, 2015
Changjuk Wind Power Co., Ltd.		Non-trade receivables and others		W	88				153				—				—
		Trade payables			—				—				72				—
		Non-trade payables and others			—				—				—				330
KNH Solar Co., Ltd.		Trade receivables			1				2				—				—
S-Power Co., Ltd.		Trade receivables			196				121				—				—
		Trade payables			—				—				24,127				54,141
		Non-trade payables and others			—				—				14				—
Green Biomass Co., Ltd.		Non-trade receivables and others			—				109				—				—
		Non-trade payables and others			—				—				121				152
Pioneer Gas Power Limited		Non-trade receivables and others			—				26				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Non-trade receivables and others			53				—				—				—
<Joint ventures>
KEPCO SPC Power Corporation		Non-trade receivables and others			1,959				252				—				—
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Non-trade receivables and others			195				251				—				—
		Non-trade payables and others			—				—				5,511				61
Dangjin Eco Power Co., Ltd.		Trade receivables			708				—				—				—
		Non-trade receivables and others			980				300				—				—
Honam Wind Power Co., Ltd.		Trade payables			—				—				56				342
		Non-trade payables and others			—				—				2,048				2,124
Seokmun Energy Co., Ltd.		Trade receivables			76				—				—				—
		Non-trade receivables and others			1,015				2,086				—				—
Incheon New Power Co., Ltd.		Trade receivables			128				128				—				—
Chun-cheon Energy Co., Ltd.		Non-trade receivables and others			198				112				—				—
Yeonggwangbaeksu Wind Power Co., Ltd.		Trade receivables			8				7				—				—
		Non-trade receivables and others			137				136				—				—
		Trade payables			—				—				100				627
		Non-trade payables and others			—				—				468				2,000
GS Donghae Electric Power Co., Ltd.		Trade receivables			747				970				—				—
		Non-trade receivables and others			1,641				1,216				—				—
Busan Shinho Solar Power Co., Ltd.		Trade receivables			2				2				—				—
		Trade payables			—				—				97				272
		Non-trade payables and others			—				—				845				970
Datang Chifeng Renewable Power Co., Ltd.		Non-trade receivables and others			24				368				—				—
Rabigh Operation & Maintenance Company		Non-trade receivables and others			—				1,780				—				—
ASM-BG Investicii AD		Non-trade receivables and others			64				—				—				—
Jamaica Public Service Company Limited		Trade receivables			1,259				1,193				—				—
		Non-trade receivables and others			722				581				—				—
Nepal Water & Energy Development Company Private Limited		Non-trade receivables and others			778				—				—				—
Amman Asia Electric Power Company		Trade receivables			3,516				739				—				—
<Others>
Korea Development Bank		Accrued interest income			204				212				—				—
		Non-trade receivables and others			219,177				45,623				—				—
		Non-trade payables and others			—				—				374				493
		Derivatives			4,687				3,777				13,326				2,313

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(5)	Loans and others arising from related party transactions as of September 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.		W	28,296				129				—				(1,680	)			26,745
		Allowance for doubtful accounts			(17,755	)			—				—				906				(16,849	)
Associates		PT. Cirebon Electric Power			40,979				2,427				(17,855	)			(1,821	)			23,730
Associates		PT. Mutiara Jawa			450				—				(450	)			—				—
Associates		Xe-Pian Xe-Namnoy Power Co., Ltd.			1,413				—				—				—				1,413
Associates		PT Wampu Electric Power			—				13,250				—				(745	)			12,505
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				—				(2,672	)			(1,765	)			25,214
Joint ventures		Datang Chifeng Renewable Power Co., Ltd.			23,775				—				(7,855	)			(1,094	)			14,826
Joint ventures		Jamaica Public Service Company Limited			2,345				—				—				(151	)			2,194
Joint ventures		Rabigh Electricity Company			45,552				—				(37,681	)			(809	)			7,062
Joint ventures		KODE NOVUS II LLC			—				1,361				—				2,750				4,111
		Allowance for doubtful accounts			—				(4,356	)			—				245				(4,111	)
				W	154,706				15,276				(66,513	)			(3,768	)			99,701

 

(6)	Borrowings arising from related party transactions as of September 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		W	261,437				9,500				(52,766	)			218,171
		Others			6,418				—				(566	)			5,852
		Operating funds			12,000				25,000				—				37,000
		Syndicated Loan			—				6,350				—				6,350

 

(7)	Guarantees provided to associates or joint ventures as of September 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
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	37,893
				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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of September 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 Western Power Co., Ltd.		PT. Mutiara Jawa		Collateralized money invested		USD	2,610			Woori Bank
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)		KRW	60,270
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
Korea East-West Power Co., Ltd.		PT. Tanjung Power Indonesia		Debt guarantees		USD	48,000			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)			—
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		USD	1,176			Export-Import Bank of Korea and others
				Debt guarantees		USD	5,367			Nonghyup Bank
Korea Midland Power Co., Ltd.		Gangwon Wind Power Co., Ltd.		Collateralized money invested		KRW	7,410			IBK and others

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of September 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 South-East Power Co., Ltd.		Hyundai Energy Co., Ltd.		Collateralized money invested		KRW	47,067			Korea Development Bank and others
				Performance guarantees and guarantees for supplemental funding (*1)		KRW	78,600
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.

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

46.	Related Parties, Continued

 

(9)	Derivatives transactions with related parties as of September 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			W	111,190			USD	100,000				2.62	%			3.25	%		W	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

Contract year

Contract amount

Contract interest rate per annum

Counterparty

Pay

Receive

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 nine-month periods ended September 30, 2016 and 2015 are as follows:

 

In millions of won		September 30, 2016								September 30, 2015
Type		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Salaries		W	208				1,269				376				1,070
Employee benefits			10				20				113				144
		W	218				1,289				489				1,214

 

47.	Non-Cash Transactions

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

 

In millions of won
Transactions		September 30, 2016				September 30, 2015
Transfer from construction-in-progress to other assets		W	7,369,186				6,527,914
Recognition of asset retirement cost and related provision for decommissioning costs			199,244				822,161
Transfer from provision for disposal of spent nuclear fuel to accrued expenses			370,342				388,463

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

48.	Commitments for Expenditure

 

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

 

In millions of won		September 30, 2016								December 31, 2015
Contracts		Amounts				Balance				Amounts				Balance
Purchase of switch (25.8kV Eco)		W	40,227				33,834				—				—
Purchase of cable (PVC, 1C, 2500SQ)			42,500				42,500				—				—
Purchase of GIS (800KV 8000A 50KA)			63,730				63,730				—				—
Other 44 contracts			376,618				210,385				199,846				140,563
Electricity construction of Dangjin units (#9,10)			353,889				—				294,099				16,812
Service of designing Dangjin units (#9,10)			122,489				14,417				109,340				16,261
Construction of Dangjin units (#9,10)			437,328				—				388,559				6,054
Construction of Samcheok units (#1,2)			399,114				19,325				384,716				27,018
Purchase of furnace for construction of Samcheok units (#1,2)			1,091,303				54,486				1,091,303				115,896
Purchase of coal handling machine for construction of Samcheok units (#1,2)			303,897				49,305				290,417				23,795
Purchase of turbine generator for construction of Samcheok units (#1,2)			213,761				1,798				213,761				4,040
Purchase of ash disposing facility for construction of			47,560				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				308,981				360,500				328,210
Construction of Seoul Combined units (#1,2)			225,205				136,389				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				7,418,829				8,625,387				7,899,368
Electricity construction of New Boryeong units (#1,2)			354,114				45,688				245,357				36,893
Purchase of smoke eliminating machine for construction of New Boryeong units (#1,2)			118,058				1,803				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				26,205				126,038				32,910
Purchase of main machine for construction of New Boryeong units (#1,2)			851,132				10,746				851,132				137,744
Construction of New Boryeong units (#1,2)			287,109				24,621				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				2,031,051				7,982,343				2,578,707
Construction of New Hanwool units (#3,4)			8,261,818				8,183,033				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)			519,415				8,599				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)			71,986				61,728				—				—
Purchase of cable (TR CNCE-W,1C,600MM2,13.2KV)			50,581				—				50,581				50,581
Purchase of 44-D-AX4 switch			43,624				—				43,624				42,912
Purchase of Concrete Poles (10M, 350KGF)			129,175				129,175				—				—
Purchase of Concrete Poles (10M, 350KGF)			106,037				—				106,037				74,549
Purchase of coal handling machine for construction of Taean (#9,10) and IGCC units (conditional contract for installation)			192,945				42,723				146,634				9,943
Purchase of furnace for construction of Taean units (#9,10)			560,403				49,035				546,637				66,271

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

48.	Commitments for Expenditure, Continued

 

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

 

 

In millions of won		September 30, 2016								December 31, 2015
Contracts		Amounts				Balance				Amounts				Balance
Service of designing Taean units (#9,10)			109,700				21,370				107,516				26,437
Purchase of desulfurization machine for construction of Taean units (#9,10)			92,086				2,453				91,592				6,175
Purchase of turbine generator for construction of Taean units (#9,10)			207,645				8,334				426,139				103,146
Purchase of gas plant machine for construction of Taean IGCC units			453,985				2,663				457,423				4,541
Purchase of combined generating machine for construction of Taean IGCC units			195,269				6,286				204,514				25,808
Purchase of oxygen plant for construction of Taean IGCC units			95,366				1,890				97,804				4,252
Service of designing Taean IGCC plant units			44,802				5,301				44,374				5,520
Purchase of main machine for Heang Bok Do Si combined & heat power plant			337,283				—				337,283				—
		W	41,183,975				19,064,187				40,500,660				20,544,134

 

(2)	As of September 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

September 30, 2016

(Unaudited)

 

49.	Contingencies and Commitments

 

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

 

In millions of won		September 30, 2016								December 31, 2015
		Number of cases				Claim amount				Number of cases				Claim amount
As the defendant			714			W	770,339				750			W	1,052,301
As the plaintiff			184				552,686				202				580,987

As of September 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 W496,681 million) and KEPCO Plant Service & Engineering Co., Ltd., a subsidiary of KEPCO, as a co-defendant (three cases amounting to W1,560 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 W1,000 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 W133,426 million in October 2014 and W204,040 million in November 2015, respectively, and submitted an application to demand extra contract payments due to the design changes.

The Company believes that the possibility of economic outflow is probable on the ongoing and the expected lawsuit. Based on the best estimate of a provision, the Company recognized W28,980 million of other provision in relation to 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 W119,980 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 September 30, 2016 and December 31, 2015 are as follows:

 

•

The Company has a borrowing of W21,500 million from Long Lasting Value (“LLV”) as of September 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 W23,900 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

September 30, 2016

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(2)	Guarantees of borrowings provided to other companies as of September 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 the PLN 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 Limited Notice To Proceed (“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 September 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			1,775,000
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			56,323
		Banco de Oro		PHP			5,000
Loan limit		Kookmin Bank and others		KRW			726,887
		BNP Paribas and others		USD			2,522,000
Certification of payment on L/C		KEB Hana Bank		GBP			61,169
		Woori Bank and others		USD			1,044,001
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			97,244
		Bank of Kathmandu		NPR			32,633
		KEB Hana Bank and others		USD			701,109
Certification of bidding		SMBC and others		USD			18,450
		ABSA Bank		ZAR			45,000
Advance payment bond, Warranty bond, Retention bond and others		HSBC and others		USD			540,992
		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			825,805
Inclusive credit		Shinhan Bank		INR			47,489
		KEB Hana Bank		KRW			258,000
		HSBC and others		USD			384,510
Trade finance		BNP Paribas and others		USD			800,000

 

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Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2016

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(4)	As of September 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

87,045

Collateral for borrowings

Cash and cash equivalents

KRW

6,675

Gyeongju Wind Power Co., Ltd.

Korea Development Bank and others

Property, plant and equipment and others

KRW

32,381

Collateral for borrowings

Existing or expected trade receivables

KRW

2,185

Cash and cash equivalents

KRW

4,324

Qatrana Electric Power Company

The Islamic Development Bank and others

Finance Lease receivable and property, plant and equipment and others

JOD

188,580

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 W1,200 million of project loans from Korea Resource Corporation as of September 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 W96,549 million, to improve the quality of water used in generating electricity. The expenses related to the suspension of operations of W317 million and depreciation on the utility plant of W4,975 million are recorded to other expenses for the nine-month period ended September 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 September 30, 2016. The book value of facility is W20,498 million and the amount of trade receivables related to the companies residing in Gaeseong industrial complex is W4,782 million. The Company has entered into an insurance agreement covering up to W7,000 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

September 30, 2016

(Unaudited)

 

50.	Subsequent Events

Subsequent to September 30, 2016, Korea Western Power Co., Ltd., Korea Southern Power Co., Ltd. and Korea Midland Power Co., Ltd., subsidiaries of the Company, issued new asset backed short-term bonds and debt securities for funding facilities, operations and refunds as follows:

 

In millions of won
Company Name		Type		Interest rate				Issued date				Maturity				Amounts
Korea Western Power Co., Ltd.		Short-term borrowings			1.42	%			2016.10.19				2016.12.23			W	20,000
					1.42	%			2016.10.19				2016.12.23				20,000
					1.65	%			2016.10.28				2017.01.25				30,000
					1.42	%			2016.10.31				2016.12.15				20,000
					1.42	%			2016.10.31				2016.12.15				10,000
Korea Southern Power Co., Ltd.		The 37-1st non-guaranteed bond			1.57	%			2016.10.12				2021.10.12				40,000
		The 37-2nd non-guaranteed bond			1.74	%			2016.10.12				2026.10.12				30,000
		The 38-1st non-guaranteed bond			1.62	%			2016.11.04				2019.11.04				70,000
		The 38-2nd non-guaranteed bond			1.83	%			2016.11.04				2026.11.04				20,000
Korea Midland Power Co., Ltd.		The 36-1st non-guaranteed bond			1.63	%			2016.11.09				2019.11.09				100,000
		The 36-2nd non-guaranteed bond			1.99	%			2016.11.09				2031.11.09				100,000
		Asset backed short-term bond			1.43	%			2016.10.04				2016.10.21				60,000
					1.46	%			2016.10.11				2016.11.10				80,000
					1.39	%			2016.10.28				2016.11.09				60,000

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 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 nine-month periods ended September 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		September 30, 2016								September 30, 2015
		Three-month period ended				Nine-month period ended				Three-month period ended				Nine-month period ended
Operating profit on consolidated interim statements of comprehensive income		W	4,424,170				10,734,011				4,340,092				8,667,942
Add
Other income
Reversal of other provisions			12,065				17,677				1,266				4,564
Reversal of other allowance for bad debt			—				1,214				—				—
Gains on government grants			28				64				—				—
Gains on assets contributed			203				1,719				3,182				6,274
Gains on liabilities exempted			682				987				6				2,377
Compensation and reparations revenue			30,786				94,730				37,697				124,553
Revenue from research contracts			2,258				4,685				520				5,051
Rental income			62,879				164,820				49,518				145,304
Others			877				19,194				8,068				25,829
Other gains
Gains on disposal of property, plant and equipment			18,173				48,131				8,521,490				8,618,259
Gains on disposal of intangible assets			—				—				—				32
Reversal of impairment loss on intangible assets			—				—				187				187
Gains on foreign currency translation			5,468				14,121				8,565				11,549
Gains on foreign currency transaction			19,345				43,134				11,997				31,795
Gains on insurance proceeds			—				—				—				25
Others			39,942				133,673				33,605				112,118
Deduct
Other expenses
Accretion expenses of other provisions			(154	)			(273	)			(46	)			(362	)
Depreciation expenses on investment properties			(179	)			(508	)			(398	)			(745	)
Depreciation expense on idle assets			(1,664	)			(4,975	)			(1,668	)			(5,000	)
Other bad debt expense			—				(4,586	)			(5,686	)			(18,669	)
Donations			(6,973	)			(42,360	)			(4,842	)			(22,004	)
Others			(1,713	)			(10,571	)			(6,156	)			(12,133	)
Other losses
Losses on disposal of property, plant and equipment			(6,623	)			(27,754	)			(11,773	)			(52,817	)
Losses on disposal of intangible assets			(5	)			(143	)			—				(5	)
Impairment loss on property, plant and equipment			—				—				—				(1,205	)
Impairment loss on intangible assets			—				—				(12	)			(12	)
Losses on foreign currency translation			(9,554	)			(13,829	)			(3,182	)			(13,160	)
Losses on foreign currency transaction			(7,548	)			(41,214	)			(14,415	)			(50,047	)
Others			(6,805	)			(32,941	)			(8,101	)			(45,223	)
Adjusted operating profit		W	4,575,658				11,099,006				12,959,914				17,534,477

 

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