Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 2018

 

 

KOREA ELECTRIC POWER CORPORATION

(Translation of registrant’s name into English)

 

 

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

(Address of principal executive offices)

 

 

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

Form 20-F  ☒            Form 40-F  ☐

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

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

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

Yes  ☐            No  ☒

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

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

 

 

 

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QUARTERLY BUSINESS REPORT

(For the period from January 1, 2018 to March 31, 2018)

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) 82-61-345-4213

(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 March 31, 2018)
Classification		Consolidated subsidiaries				Associates and joint ventures				Total
Domestic			26				60				86
Overseas			78				46				124
Total			104				106				210

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5. Major changes in management

 

A.

On March 19, 2018, Mr. Kim, Chang-Joon was appointed as a non-standing director in the replacement of Mr. Koo, Ja-Yoon, whose term of office expired.

 

B.

On April 4, 2018, Mr. Yang, Bong-Ryull, Mr. Kim, Jwa-Kwan and Mr. Jung, Yeon-Gil were appointed as non-standing directors in the replacement of Mr. Ahn, Choong-Yong, Mr. Lee, Gang-Hee and Mr. Cho, Jeon-Hyeok whose term of office expired.

 

C.

At the extraordinary general meeting of shareholders of KEPCO held on April 10, 2018, Mr. JongKap KIM was appointed as the President and Chief Executive Officer, in replacement of Mr. Cho, Hwan-Eik who voluntarily resigned on December 8, 2017.

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 790 per share for fiscal year 2017 (Won 0.51 trillion in aggregate). Dividend payments for fiscal year 2016, 2015 and 2014 were Won 1,980, Won 3,100 and Won 500 per share respectively.

II. Business Overview

1. Consolidated financial results by segment for the first three-month period ended March 31, 2018 and 2017

 

		(In billions of Won)
		January to March 2017								January to March 2018
		Sales				Operating profit				Sales				Operating profit
Electricity sales			15,193				-784				15,564				-1,442
Nuclear generation			2,669				738				1,962				182
Thermal generation			6,789				1,522				7,726				1,230
Others(*)			669				65				784				69
Subtotal			25,320				1,541				26,036				39
Adjustment for related-party transactions			-10,173				-78				-10,330				-167
Total			15,147				1,463				15,706				-128

 

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

 

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

 

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

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2. Changes in unit prices of major products

 

		(In Won per kWh)
Business sector				Company		January to March 2017		January to March 2018
Electricity sold		Residential		KEPCO		109.40		111.06
		Commercial				130.09		128.54
		Educational				98.68		99.62
		Industrial				109.15		109.19
		Agricultural				47.82		47.67
		Street lighting				109.48		110.02
		Overnight usage				72.69		72.84
Electricity from nuclear generation		Nuclear Generation		KHNP		69.23		69.16
Electricity from thermal generation		Thermal generation		KOSEP		89.30		88.31
				KOMIPO		104.70		101.86
				KOWEPO		107.18		105.07
				KOSPO		106.21		104.21
				EWP		105.99		103.94

3. Power purchase from generation companies for the first three-month period ended March 31, 2018

 

Company		Volume (MWh)				Expense (In billions of Won)
KHNP			27,542,332				1,907
KOSEP			17,589,035				1,562
KOMIPO			13,471,173				1,373
KOWEPO			13,018,327				1,369
KOSPO			15,355,844				1,606
EWP			14,602,564				1,524
Others			40,130,728				4,690
Total			141,710,003				14,031

 

•	Excludes expense related to the renewable portfolio standard provisions and carbon emissions.

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4. Intellectual property as of March 31, 2018

 

		Patents								Utility models				Designs				Trademarks								Total
		Domestic				Overseas												Domestic				Overseas
KEPCO			1,943				220				73				66				154				45				2,501
Consolidated subsidiaries			3,808				583				803				117				245				23				5,579
Total			5,751				803				876				183				399				68				8,080

III. Financial Information

1. Condensed consolidated financial results as of and for the first three-month period ended March 31, 2018

(In billions of Won)

Consolidated statements of comprehensive income														Consolidated statements of financial position
		January to March 2017				January to March 2018				Change (%)						December 31, 2017				March 31, 2018				Change (%)
Sales			15,147				15,706				3.7			Total assets			181,789				184,025				1.2
Operating profit			1,463				-128				-108.7			Total liabilities			108,824				111,827				2.8
Net income			900				-250				-127.8			Total equity			72,965				72,198				-1.1

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2. Condensed separate financial results as of and for the first three-month period ended March 31, 2018

(In billions of Won)

Separate statements of comprehensive income														Separate statements of financial position
		January to March 2017				January to March 2018				Change (%)						December 31, 2017				March 31, 2018				Change (%)
Sales			15,193				15,564				2.4			Total assets			106,540				107,194				0.6
Operating profit			-784				-1,442				-83.9			Total liabilities			50,758				52,538				3.5
Net income			318				-622				-295.8			Total equity			55,782				54,656				-2.0

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 Articles of Incorporation, there may not be more than seven standing directors including the president, and more than eight 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 the first three-month period ended March 31, 2018

 

Number of meetings		Number of agendas		Classification
				Resolutions		Reports
5		16		11		5

 

*	The audit committee held 3 meetings with 9 agendas (of which, 4 were approved as proposed and 5 were accepted as reported).

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3. Major activities of the Board of Directors

 

Date		Agenda		Results		Type
February 8, 2018		Approval of amendments to the Electricity Usage Agreement and Rules for Operation		Approved as proposed		Resolution
February 23, 2018		Approval of the maximum aggregate amount of remuneration for directors in 2018		Approved as proposed		Resolution
		Approval of the relocation plan of materials center in Gyeonggi District Division		Approved as proposed		Resolution
		Approval of consolidated and separate financial statements for the fiscal year 2017		Approved as proposed		Resolution
		Approval to call for the annual general meeting of shareholders for the fiscal year 2017		Approved as proposed		Resolution
		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 (2018-2019)		Accepted as reported		Report
		Report on the annual management of commercial papers in 2017		Accepted as reported		Report
		Report on internal control over financial reporting for the fiscal year 2017		Accepted as reported		Report
		Evaluation report on internal control over financial reporting for the fiscal year 2017		Accepted as reported		Report
		Report on the audit result for 2017		Accepted as reported		Report
February 27, 2018		Approval to close the shareholders’ registry for extraordinary general meeting of shareholders		Approved as proposed		Resolution
March 15, 2018		Approval of amendments to investment structure and guarantee for Nghi Son II coal-fired power plant in Vietnam		Conditionally Approved		Resolution
		Approval of liquidation of KEPCO Canada Energy(KCE), a subsidiary located in Canada		Approved as proposed		Resolution
		Approval of the construction of a new Integrated Gangwon District Division Office Building		Approved as proposed		Resolution
		Approval of the Statement of Appropriation of Retained Earnings for the fiscal year 2017		Approved as proposed		Resolution
March 26, 2018		Approval to call for the extraordinary general meeting of shareholders for the fiscal year 2018		Approved as proposed		Resolution

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

 

Date

Agenda

Ahn, Choong- Yong

Lee, Gang- Hee

Cho, Jeon- Hyeok

Choi, Ki- Ryun

Sung, Tae- Hyun

Koo, Ja- Yoon

Kim, Joo- Suen

Kim, Ji- Hong

Kim, Chang- Joon

February 8, 2018

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

For

For

For

For

Absent

For

For

For

Before Appoint -ment

February 23, 2018

Approval of the maximum aggregate amount of remuneration for directors in 2018

For

For

For

For

For

For

For

For

—

Approval of the relocation plan of materials center in Gyeonggi District Division

For

For

For

For

For

For

For

For

—

Approval of consolidated and separate financial statements for the fiscal year 2017

For

For

For

For

For

For

For

For

—

Approval to call for the annual general meeting of shareholders for the fiscal year 2017

For

For

For

For

For

For

For

For

—

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 (2018-2019)

Agenda for Report

Report on the annual management of commercial papers in 2017

Agenda for Report

Report on internal control over financial reporting for the fiscal year 2017

Agenda for Report

Evaluation report on internal control over financial reporting for the fiscal year 2017

Agenda for Report

Report on the audit result for 2017

Agenda for Report

February 27, 2018

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

Absent

For

Absent

Absent

Absent

For

For

For

—

March 15, 2018

Approval of amendments to investment structure and guarantee for Nghi Son II coal-fired power plant in Vietnam

For

For

For

For

Absent

Absent

For

For

—

Approval of liquidation of KEPCO Canada Energy (KCE), subsidiary located in Canada

For

For

For

For

Absent

Absent

For

For

—

Approval of the construction of a new Integrated Gangwon District Division Office Building

For

For

For

For

Absent

Absent

For

For

—

Approval of the Statement of Appropriation of Retained Earnings for fiscal year 2017

For

For

For

For

Absent

Absent

For

For

—

March 26, 2018

Approval to call for the extraordinary general meeting of shareholders for the fiscal year 2018

For

For

For

For

Absent

Retired

For

Absent

For

Attendance Rate

80%

100%

80%

80%

20%

75%

100%

80%

100%

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4. Major activities of the Audit Committee

 

Date		Agenda		Results		Type
January 19, 2018		Audit plans for 2018		Approved as proposed		Resolution
		Education plans for auditors for 2018		Approved as reported		Report
February 23, 2018		Amendments to Code of Conduct and Guideline for Practice for KEPCO executives and staff members		Approved as proposed		Resolution
		Report on the audit result for 2017		Approved as reported		Report
		Report on internal control over financial reporting for the fiscal year 2017		Approved as reported		Report
		Evaluation report on internal control over financial reporting for the fiscal year 2017		Approved as reported		Report
March 15, 2018		Auditor’s report on the agendas for the annual general meeting of shareholders		Approved as proposed		Resolution
		Approval of selection of independent auditors of subsidiaries		Approved as proposed		Resolution
		Independent auditor’s report on the auditing results for the consolidated and separate financial statements for the fiscal year 2017		Approved as reported		Report

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

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V. Shareholders

1. List of shareholders as of March 15, 2018

 

				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			36,460,422				5.68
Public (non-Koreans)		Common shares		1,297			156,960,303				24.45
		American depositary shares (ADS)		1			35,678,712				5.56
Public (Koreans)		Corporate		1,092			31,469,657				4.90
		Individual		429,751			53,317,925				8.31
Total				432,144			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 the first three-month period ended March 31, 2018

(KEPCO Only)

1. Directors

 

																	(In thousands of Won)
Type		Number of directors					Total remuneration					Average remuneration per person					Remarks
Standing director		3							89,049					29,683			Excluding the members of Audit Committee
Non-standing director		6							45,000					7,500
Member of Audit Committee		3							44,729					14,910			—
Total		12							178,778					14,898			—

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			17,047				419				17,466				17.7				397,730,608				22,772
Female			4,106				91				4,197				13.6				74,138,923				17,665
Total			21,153				510				21,663				16.9				471,869,531				21,782

VII. Other Information Necessary for the Protection of Investors

1. Summary of shareholder’s meetings for the first three-month period ended March 31, 2018

 

Type		Agenda		Results
Annual General Meeting held on March 30, 2018		Approval of financial statements for the fiscal year 2017		Approved as proposed
		Approval of the maximum aggregate amount of remuneration for directors in 2018		Approved as proposed

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2. Pending legal proceedings as of March 31, 2018

 

		(In billions of Won)
Type		Number of lawsuits				Amount claimed
Lawsuits where KEPCO and its subsidiaries are engaged as the defendants			579				478
Lawsuits where KEPCO and its subsidiaries are engaged as the plaintiffs			188				751

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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: June 12, 2018

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Financial Statements

March 31, 2018

(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			2
Consolidated Interim Statements of Comprehensive Income (Loss)			4
Consolidated Interim Statements of Changes in Equity			6
Consolidated Interim Statements of Cash Flows			8
Notes to the Consolidated Interim Financial Statements			10

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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 March 31, 2018, the consolidated interim statements of comprehensive income (loss), changes in equity and cash flows for the three-month periods ended March 31, 2018 and 2017 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 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’.

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, 2017, 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 15, 2018. The accompanying consolidated financial position of the Company as of December 31, 2017, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

 

KPMG Samjong Accounting Corp.

Seoul, Korea

May 15, 2018

This report is effective as of May 15, 2018, 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 financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position

As of March 31, 2018 and December 31, 2017

(Unaudited)

 

In millions of won		Note				March 31, 2018				December 31, 2017
Assets
Current assets
Cash and cash equivalents			5,6,7,44			W	2,580,522				2,369,739
Current financial assets, net			5,10,11,12,44				3,315,560				1,958,357
Trade and other receivables, net			5,8,14,20,44,45,46				6,937,378				7,928,972
Inventories, net			13				5,966,492				6,002,086
Income tax refund receivables			40				19,811				100,590
Current non-financial assets			15				987,215				753,992
Assets held-for-sale			41				23,533				27,971
Total current assets							19,830,511				19,141,707
Non-current assets
Non-current financial assets, net			5,6,9,10,11,12,44				2,157,284				2,038,913
Non-current trade and other receivables, net			5,8,14,44,45,46				1,716,441				1,754,797
Property, plant and equipment, net			18,27,48				151,687,109				150,882,414
Investment properties, net			19,27				287,642				284,714
Goodwill			16				2,582				2,582
Intangible assets other than goodwill, net			21,27,45				1,183,519				1,187,121
Investments in associates			4,17				4,092,261				3,837,421
Investments in joint ventures			4,17				1,612,518				1,493,275
Deferred tax assets			40				1,015,343				919,153
Non-current non-financial assets			15				439,348				246,818
Total non-current assets							164,194,047				162,647,208
Total Assets			4			W	184,024,558				181,788,915

 

(Continued)

2

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position, Continued

As of March 31, 2018 and December 31, 2017

(Unaudited)

 

In millions of won		Note				March 31, 2018				December 31, 2017
Liabilities
Current liabilities
Trade and other payables, net			5,22,24,44,46			W	6,836,478				5,999,521
Current financial liabilities, net			5,11,23,44,46				9,090,721				9,194,552
Income tax payables			40				609,309				508,402
Current non-financial liabilities			20,28,29				5,984,682				5,584,308
Current provisions			26,44				2,279,563				2,137,498
Total current liabilities							24,800,753				23,424,281
Non-current liabilities
Non-current trade and other payables, net			5,22,24,44,46				3,217,146				3,223,480
Non-current financial liabilities, net			5,11,23,44,46				47,640,648				45,980,899
Non-current non-financial liabilities			28,29				8,136,414				8,072,434
Employee benefits liabilities, net			25,44				1,565,834				1,483,069
Deferred tax liabilities			40				10,148,615				10,415,397
Non-current provisions			26,44				16,317,102				16,224,714
Total non-current liabilities							87,025,759				85,399,993
Total Liabilities			4			W	111,826,512				108,824,274
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							35,906,267				34,833,844
Unappropriated retained earnings							15,144,636				16,931,804
							52,655,813				53,370,558
Other components of equity			33
Other capital surplus							1,233,660				1,233,793
Accumulated other comprehensive loss							(314,942	)			(271,457	)
Other equity							13,294,973				13,294,973
							14,213,691				14,257,309
Equity attributable to owners of the controlling company							70,923,082				71,681,445
Non-controlling interests			16,32				1,274,964				1,283,196
Total Equity						W	72,198,046				72,964,641
Total Liabilities and Equity						W	184,024,558				181,788,915

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 (Loss)

For the three-month periods ended March 31, 2018 and 2017

(Unaudited)

 

In millions of won, except per share information		Note				March 31, 2018				March 31, 2017
Sales			4,34,44,46
Sales of goods						W	15,057,977				14,299,466
Sales of services							74,165				71,905
Sales of construction services			20				450,161				659,092
Revenue related to transfer of assets from customers							123,741				116,146
							15,706,044				15,146,609
Cost of sales			13,25,42,46
Cost of sales of goods							(14,687,736	)			(12,371,525	)
Cost of sales of services							(112,391	)			(96,278	)
Cost of sales of construction services							(423,838	)			(662,638	)
							(15,223,965	)			(13,130,441	)
Gross profit							482,079				2,016,168
Selling and administrative expenses			25,35,42,46				(609,692	)			(552,982	)
Operating profit (loss)			4				(127,613	)			1,463,186
Other non-operating income			36				84,827				85,416
Other non-operating expense			36				(16,901	)			(36,434	)
Other gains, net			37				54,056				129,012
Finance income			5,11,38				156,787				897,286
Finance expenses			5,11,39				(614,430	)			(1,309,456	)
Profit related to associates, joint ventures and subsidiaries			4,17
Share in profit of associates and joint ventures							261,581				176,995
Gain on disposal of investments in associates and joint ventures							—				68
Share in loss of associates and joint ventures							(58,552	)			(16,513	)
Loss on disposal of investments in associates and joint ventures							(2,184	)			—
							200,845				160,550
Profit (loss) before income tax							(262,429	)			1,389,560
Income tax benefit (expense)			40				11,962				(489,529	)
Profit (loss) for the period						W	(250,467	)			900,031

 

(Continued)

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Loss), Continued

For the three-month periods ended March 31, 2018 and 2017

(Unaudited)

 

In millions of won, except per share information		Note				March 31, 2018				March 31, 2017
Other comprehensive income (loss)			5,11,25,31,33
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit liability, net of tax			25,31			W	(8,084	)			3,917
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			31				5,410				(1,891	)
Net change in fair value of equity investments at fair value through other comprehensive income			33				19,084				—
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				—				(1,174	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			5,11,33				(20,748	)			(5,937	)
Foreign currency translation of foreign operations, net of tax			33				(17,438	)			(115,141	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			33				50,279				(103,283	)
Other comprehensive income (loss), net of tax							28,503				(223,509	)
Total comprehensive income (loss) for the period						W	(221,964	)			676,522
Profit (loss) attributable to:
Owners of the controlling company			43			W	(277,270	)			866,913
Non-controlling interests							26,803				33,118
						W	(250,467	)			900,031
Total comprehensive income attributable to:
Owners of the controlling company						W	(246,155	)			665,753
Non-controlling interests							24,191				10,769
						W	(221,964	)			676,522
Earnings (loss) per share (in won)			43
Basic and diluted earnings (loss) per share						W	(432	)			1,350

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 three-month periods ended March 31, 2018 and 2017

(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, 2017		W	4,053,578				53,173,871				14,496,244				71,723,693				1,326,852				73,050,545
Total comprehensive income (loss) for the period
Profit for the period			—				866,913				—				866,913				33,118				900,031
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit liability, net of tax			—				1,812				—				1,812				2,105				3,917
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			—				(1,895	)			—				(1,895	)			4				(1,891	)
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			—				—				(1,172	)			(1,172	)			(2	)			(1,174	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				(5,937	)			(5,937	)			—				(5,937	)
Foreign currency translation of foreign operations, net of tax			—				—				(90,391	)			(90,391	)			(24,750	)			(115,141	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax			—				—				(103,577	)			(103,577	)			294				(103,283	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid			—				(1,271,089	)			—				(1,271,089	)			(21,864	)			(1,292,953	)
Issuance of shares of capital by subsidiaries and others			—				—				—				—				(1	)			(1	)
Dividends paid (hybrid bond)			—				—				—				—				(4,059	)			(4,059	)
Balance at March 31, 2017		W	4,053,578				52,769,612				14,295,167				71,118,357				1,311,697				72,430,054

(Continued)

 

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Consolidated Interim Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2018 and 2017

(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, 2018		W	4,053,578				53,370,558				14,257,309				71,681,445				1,283,196				72,964,641
Effect of change in accounting policy			—				71,928				(76,851	)			(4,923	)			—				(4,923	)
Adjusted balance at January 1, 2018			4,053,578				53,442,486				14,180,458				71,676,522				1,283,196				72,964,641
Total comprehensive income (loss) for the period
Profit (loss) for the period			—				(277,270	)			—				(277,270	)			26,803				(250,467	)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit liability, net of tax			—				(7,652	)			—				(7,652	)			(432	)			(8,084	)
Share in other comprehensive income of associates and joint ventures, net of tax			—				5,401				—				5,401				9				5,410
Net change in fair value of equity investments at fair value through other comprehensive income			—				—				19,085				19,085				(1	)			19,084
Items that are or may be reclassified subsequently to profit or loss:
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				(20,748	)			(20,748	)			—				(20,748	)
Foreign currency translation of foreign operations, net of tax			—				—				(15,248	)			(15,248	)			(2,190	)			(17,438	)
Share in other comprehensive income of associates and joint ventures, net of tax			—				—				50,277				50,277				2				50,279
Transactions with owners of the Company, recognized directly in equity
Dividends paid			—				(507,152	)			—				(507,152	)			(35,291	)			(542,443	)
Issuance of shares of capital by subsidiaries and others			—				—				(133	)			(133	)			6,168				6,035
Changes in consolidation scope			—				—				—				—				46				46
Dividends paid (hybrid bond)			—				—				—				—				(3,346	)			(3,346	)
Balance at March 31, 2018		W	4,053,578				52,655,813				14,213,691				70,923,082				1,274,964				72,198,046

See accompanying notes to the consolidated interim financial statements.

 

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Consolidated Interim Statements of Cash Flows

For the three-month periods ended March 31, 2018 and 2017

(Unaudited)

 

In millions of won		March 31, 2018				March 31, 2017
Cash flows from operating activities
Profit (loss) for the period		W	(250,467	)			900,031
Adjustments for:
Income tax expense (benefit)			(11,962	)			489,529
Depreciation			2,456,076				2,369,838
Amortization			30,069				34,023
Employee benefit expense			88,575				90,580
Bad debt expense			20,862				7,955
Interest expense			462,385				440,954
Loss on sale of financial assets			—				1,038
Loss on disposal of property, plant and equipment			3,429				3,675
Loss on abandonment of property, plant, and equipment			128,779				94,305
Loss on disposal of intangible assets			2				—
Increase to provisions			375,716				510,013
Gain on foreign currency translation, net			(9,846	)			(700,819	)
Loss on valuation of financial assets at FVTPL			468				—
Valuation and transaction loss on derivative instruments, net			62,056				743,089
Share in income of associates and joint ventures, net			(203,029	)			(160,482	)
Gain on sale of financial assets			—				(494	)
Gain on disposal of property, plant and equipment			(14,366	)			(11,029	)
Gain on disposal of intangible assets			—				(463	)
Gain on disposal of investments in associates and joint ventures			—				(68	)
Loss on disposal of investments in associates and joint ventures			2,184				—
Interest income			(50,678	)			(54,457	)
Dividend income			(8,107	)			(9,677	)
Others, net			2,468				6,610
			3,335,081				3,854,120
Changes in:
Trade receivables			1,050,573				1,112,414
Non-trade receivables			39,971				41,927
Accrued income			156,933				(50,930	)
Other receivables			3,752				3,729
Other current assets			(369,537	)			(120,754	)
Inventories			(164,688	)			(302,233	)
Other non-current assets			(133,258	)			(13,048	)
Trade payables			71,386				(516,617	)
Non-trade payables			144,499				(164,995	)
Accrued expenses			(215,813	)			(61,172	)
Other payables			(291	)			—
Other current liabilities			606,374				148,256
Other non-current liabilities			154,769				227,729
Investments in associates and joint ventures (dividends received)			19,822				13,260
Provisions			(236,306	)			(248,582	)
Payments of employee benefit obligations			(26,059	)			(23,265	)
Plan assets			(234	)			—
			1,101,893				45,719

 

(Continued)

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Consolidated Interim Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2018 and 2017

(Unaudited)

 

In millions of won		March 31, 2018				March 31, 2017
Cash generated from operating activities		W	4,186,507				4,799,870
Dividends received (available-for-sale financial assets)			1,583				1,323
Interest paid			(433,588	)			(470,114	)
Interest received			41,002				44,329
Income taxes paid			(160,371	)			(989,289	)
Net cash from operating activities			3,635,133				3,386,119
Cash flows from investing activities
Proceeds from disposals of associates and joint ventures			—				681
Acquisition of associates and joint ventures			(137,552	)			(116,618	)
Proceeds from disposals of property, plant and equipment			24,767				37,155
Acquisition of property, plant and equipment			(3,212,009	)			(3,569,106	)
Proceeds from disposals of intangible assets			—				2,689
Acquisition of intangible assets			(24,251	)			(16,375	)
Proceeds from disposals of financial assets			933,393				1,713,211
Acquisition of financial assets			(1,826,249	)			(1,384,357	)
Increase in loans			(86,796	)			(190,519	)
Collection of loans			38,681				25,931
Increase in deposits			(85,112	)			(80,028	)
Decrease in deposits			49,304				28,107
Receipt of government grants			5,689				24,640
Other cash inflow (outflow) from investing activities, net			20,209				(578	)
Net cash used in investing activities			(4,299,926	)			(3,525,167	)
Cash flows from financing activities
Proceeds from short-term borrowings, net			571,300				1,642,339
Proceeds from long-term borrowings and debt securities			3,160,771				1,860,683
Repayment of long-term borrowings and debt securities			(2,199,149	)			(3,166,110	)
Payment of finance lease liabilities			(34,303	)			(31,039	)
Settlement of derivative instruments, net			(6,011	)			18,898
Change in non-controlling interest			6,271				6
Dividends paid (hybrid bond)			(4,415	)			(4,059	)
Dividends paid			(14	)			(5,116	)
Other cash outflow from financing activities, net			(242	)			—
Net cash from financing activities			1,494,208				315,602
Net increase in cash and cash equivalents before effect of exchange rate fluctuations			829,415				176,554
Effect of exchange rate fluctuations on cash held			172,692				(40,267	)
Net increase in cash and cash equivalents			1,002,107				136,287
Cash and cash equivalents at January 1			2,369,739				3,051,353
Effect of change in accounting policy			(791,324	)			—
Cash and cash equivalents at March 31		W	2,580,522				3,187,640

See accompanying notes to the consolidated interim financial statements.

 

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Notes to the Consolidated Interim Financial Statements

March 31, 2018

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

 

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

 

(*)	The number of shares held by foreign shareholders are 192,639,015 shares (30.01%) as of the most recent closing date of Register of Shareholders (March 15, 2018).

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

 

2.	Basis of Preparation

 

(1)	Statement of compliance

These consolidated interim financial statements have been 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.

 

(2)	Basis of measurement

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

 

•

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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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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, and estimations on provision for decommissioning costs

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

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

 

(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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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

2.	Basis of Preparation, Continued

 

(4)	Use of estimates and judgments, continued

 

(v)

Unbilled revenue

Energy delivered but not metered nor billed is calculated at the reporting date and is estimated based on consumption statistics and selling price estimates. Determination of the unbilled revenues at the end of the reporting period is sensitive to the estimated consumptions and prices based on statistics. Unbilled revenue recognized as of March 31, 2018 and 2017 are W1,344,125 million and W1,347,431 million, respectively.

 

(vi)

Construction contracts

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 utilizing the cost-based input method at the end of the reporting period. In applying the cost-based input method, it is necessary to use estimates and assumptions related to the total estimated costs expected to be incurred in the future, costs incurred which are not related to construction progress, changes in costs due to change of contract or design, etc. Total contract revenue is measured based on an agreed contract price; however, it may fluctuate due to the variation of construction work. The measurement of contract revenue is affected by various uncertainties resulting from unexpected future events.

 

(vii)

Continuing operation of Wolsong Unit 1 nuclear power plant

Wolsong unit 1 nuclear power plant of the Company commenced operations on November 21, 1982 and its 30-year of designed life expired on November 20, 2012. On February 27, 2015, the Nuclear Safety and Security Commission (NSSC) evaluated the safety of operation on the Wolsong Unit 1 nuclear power plant and approved to continue its operation until November 20, 2022. As described in note 49, the lawsuit related to the validity of the approval of NSSC is currently ongoing.

According to the Eighth Basic Plan for Electricity Supply and Demand by the Ministry of Trade, Industry and Energy, Wolsong Unit 1 nuclear power plant is expected to go through a comprehensive evaluation for the feasibility of continuous operation including economic efficiency and acceptability of household and community in 2018.

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

 

(5)	Changes in accounting policies

The Company has newly applied the following new standards for annual periods beginning on January 1, 2018.

 

(i)

K-IFRS 1109 ‘Financial Instruments’

The Company has adopted K-IFRS 1109 ‘Financial Instruments’, since January 1, 2018. K-IFRS 1109 sets out the requirements for recognizing and measuring financial assets, financial liabilities and certain contracts to buy or sell non-financial items. It replaces existing guidance in K-IFRS 1039 ‘Financial Instruments: Recognition and Measurement’.

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

2.	Basis of Preparation, Continued

 

(5)	Changes in accounting policies, continued

 

Based on the result of the detailed assessment, the impacts on the Company’s financial assets (excluding derivative instruments) on the date of initial application (January 1, 2018) are as follows:

 

In millions of won
Original classification under K-IFRS 1039		New classification under K-IFRS 1109		Original carrying amount under K-IFRS 1039				New carrying amount under K-IFRS 1109
Financial assets at FVTPL		FVTPL		W	111,512				111,512
Loans and receivables		Amortized cost			15,203,663				14,405,570
Loans and receivables		FVTPL			—				791,324
Available-for-sale financial assets		FVOCI			699,833				476,941
Available-for-sale financial assets		FVTPL			—				222,892
Held-to-maturity investments		Amortized cost			3,144				3,144
Total financial assets (excluding derivative instruments)				W	16,018,152				16,011,383

The impacts on the Company’s equity including retained earnings on the date of initial application (January 1, 2018) are as follows:

 

In millions of won
Type		Equity attributable to owners of the controlling company								Non- controlling interests				Total equity
		Retained earnings				Other components of equity
Reclassification of cumulative gain or loss of available-for-sale financial assets		W	76,851				(76,851	)			—				—
Remeasurement of expected credit loss
- Trade and other receivables			(6,769	)			—				—				(6,769	)
- Income tax effect			1,846				—				—				1,846
Total		W	71,928				(76,851	)			—				(4,923	)

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

 

(ii)

K-IFRS 1115 ‘Revenue from Contracts with Customers’

K-IFRS 1115 sets out a comprehensive framework for determining whether revenue is recognized, the extent of revenue recognized, and when revenue is recognized. It replaces existing revenue recognition guidance, including K-IFRS 1018 ‘Revenue’, K-IFRS 1011 ‘Construction Contracts’, K-IFRS 2031 ‘Revenue-Barter Transactions Involving Advertising Services’, K-IFRS 2113 ‘Customer Loyalty Programs’, K-IFRS 2115 ‘Agreements for the Construction of Real Estate’, K-IFRS 2118 ‘Transfers of Assets from Customers’.

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

The Company believes that there is no significant impact on the Company’s consolidated interim financial statements. The detailed accounting policies under K-IFRS 1115 are described in note 3.(7).

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

2.	Basis of Preparation, Continued

 

 

(6)	New standards and amendments not yet adopted

 

(i)

K-IFRS 1116 ‘Lease’

K-IFRS 1116 replaces K-IFRS 1017 ‘Lease’ and K-IFRS 2104 ‘Determining whether an Arrangement contains a Lease’. This standard is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted if K-IFRS 1115 ‘Revenue from Contracts with Customers’ has also been applied.

Under K-IFRS 1116, a lessee shall apply this standard to its leases either:

(a) retrospectively to each prior reporting period presented applying K-IFRS 1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’; or

(b) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application.

The Company has not yet determined the transition approach for K-IFRS 1116.

K-IFRS 1116 provides a single lessee accounting model in which the lessee recognizes lease related assets and liabilities in the statement of financial position. A lessee is required to recognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Lease recognition may be exempted for short-term leases and leases for which the underlying asset is of low value. Accounting for a lessor is similar to the existing standard that classifies each of its leases as either an operating lease or a finance lease.

Upon adoption of K-IFRS 1116, the nature of the costs associated with the lease will change as the operating lease payments recognized based on a straight-line basis will change to depreciation expense of a right-of-use asset and interest expense of the lease liability and no significant impact is expected on the Company’s finance lease.

The Company plans to conduct a detailed assessment of the potential impact from the application of K-IFRS 1116 during the year ending December 31, 2018.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies

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

 

(1)	Basis of consolidation

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

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

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

Transactions within the Company are eliminated during the consolidation.

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

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

 

(2)	Business combinations

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(2)	Business combinations, continued

 

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

 

•

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

 

•

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

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

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

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

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

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

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

 

(3)	Investments in associates

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

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

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

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

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

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

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

 

(4)	Joint arrangements

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

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

 

(5)	Non-current assets held for sale

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

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

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

 

(6)

Goodwill

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

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(7)	Revenue from Contracts with Customers

The Company recognizes revenue by applying the five-step approach (Step 1: Identify the contract(s) with a customer, Step 2: Identify the performance obligations in the contract, Step 3: Determine the transaction price, Step 4: Allocate the transaction price to the performance obligations in the contract, Step 5: Recognize revenue when the entity satisfied a performance obligation).

 

(i)

Identify the performance obligations in the contract

The Company is engaged in the generation, transmission and distribution of electricity and development of electric power resources, and electricity sales revenue accounts for 95.8% of consolidated revenue for the three-month period ended March 31, 2018.

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

 

(ii)

Variable consideration

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

 

(iii)

Performance obligations satisfied over time

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

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

 

(a)

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

 

(b)

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

 

(c)

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(8)

Leases

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

 

(i)

The Company as lessor

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

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

 

(ii)

The Company as lessee

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

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

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

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

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

 

(iii)

Determining whether an arrangement contains a lease

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

 

(9)	Foreign currencies

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

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

 

•

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

 

•

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

 

•

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

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

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

 

(10)	Borrowing costs

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

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

 

(11)	Government grants

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

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

 

(i)

If the Company received grants related to assets

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

 

(ii)

If the Company received grants related to income

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

 

(12)	Employee benefits

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

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

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(13)	Income taxes

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

 

(i)

Current tax

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

 

(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

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(14)	Property, plant and equipment

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

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

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

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

 

		Useful lives (years)
Buildings		8 ~ 40
Structures		8 ~ 50
Machinery		2 ~ 32
Vehicles		3 ~ 8
Loaded heavy water		30
Asset retirement costs		18, 30, 40, 60
Finance lease assets		6 ~ 32
Ships		9
Others		4 ~ 15

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

Depreciation methods, residual values and useful lives of property, plant and equipment are reviewed at the end of each reporting period and if change is deemed appropriate, it is treated as a change in accounting estimate.

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

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(15)	Investment property

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

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

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

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

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

 

(16)	Intangible assets

 

(i)

Intangible assets acquired separately

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

 

(ii)

Research and development

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

 

•

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

 

•

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

 

•

The ability to use or sell the intangible asset;

 

•

How the intangible asset will generate probable future economic benefits;

 

•

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

 

•

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

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(16)	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		10 ~ 20		Straight line
Software		4, 5		Straight line
Industrial rights		5 ~ 10		Straight line
Development expenses		5		Straight line
Leasehold rights		10		Straight line
Others		3 ~ 50		Straight line
Mining right		-		Unit of production

 

(iii)

Intangible assets acquired in a business combination

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

 

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

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

 

(i)

Greenhouse gas emissions rights

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

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

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

 

(ii)

Greenhouse gas emissions obligations

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(18)	Impairment of non-financial assets other than goodwill

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

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

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

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

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

 

(19)	Inventories

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

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

 

(20)	Provisions

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(20)	Provisions, continued

 

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

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

 

(i)

Provision for employment benefits

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

 

(ii)

Provision for decommissioning costs of nuclear power plants

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

 

(iii)

Provision for disposal of spent nuclear fuel

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

 

(iv)

Provision for low and intermediate radioactive wastes

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

 

(v)

Provision for Polychlorinated Biphenyls (“PCBs”)

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

 

(vi)

Provisions for power plant regional support program

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

 

(vii)

Provisions for transmission and transformation facilities-neighboring areas support program

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

 

(viii)

Renewable Portfolio Standard (“RPS”) provisions

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

 

(21)	Financial instruments

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

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. The Company derecognizes financial liabilities (or part of financial liabilities) when, and only when, the Company’s obligations are discharged, cancelled or they expire.

 

(i)

Classification and measurement of financial assets

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

 

Cash flow characteristics

Solely payments of

principal and

Business model

interest (SPPI)

Other than SPPI

To collect contractual cash flows

Amortized cost

Both collecting contractual cash flows and selling financial assets

FVOCI (*1)

FVTPL (*2)

To sell financial assets

FVTPL

 

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

(*2)	For equity investment that is not held for trading, the Company may elect to present subsequent changes in fair value in OCI.

 

•

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

 

•

A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: 1) the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and 2) the contractual terms of the financial asset give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding. On initial recognition of equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in OCI, and will not reclassify(recycle) the those items in OCI to profit or loss subsequently.

 

•

A financial asset is measured at FVTPL if the contractual terms of the financial asset give rise to specified dates to cash flows that are not solely payments of principal and interest on the principal amount outstanding, the debt instrument is held within a business model whose objective is to sell the asset, or the equity instruments that are not elected to be designated as measured at FVOCI.

 

•

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial 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.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

(21)	Financial instruments, continued

 

(ii)

Classification and measurement of financial liabilities

The amount of change in the fair value attributable to the changes in the credit risk of the financial liabilities is presented in OCI, not recognized in profit or loss, and the OCI amount will not be reclassified (recycled) to profit or loss. However, if doing so creates or increase an accounting mismatch, the amount of change in the fair value is recognized in profit or loss.

 

(iii)

Impairment: Financial assets and contract assets

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

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

 

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

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

 

(22)	Service Concession Arrangements

The Company recognizes revenues from construction services and operating services related to service concession arrangements in accordance with K-IFRS 1115 ’ Revenue from Contracts with Customers’. If the Company performs more than one service under a single contract or arrangement, consideration received or receivable is allocated by reference to the relative stand-alone selling price basis of the services delivered, when such performance obligations are separately identifiable.

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

 

(23)	Derivative financial instruments, including hedge accounting

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

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

3.	Significant Accounting Policies, Continued

 

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

 

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

 

(i)

Separable embedded derivatives

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

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

 

(ii)

Hedge accounting

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

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

 

(iii)

Fair value hedges

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

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

 

(iv)

Cash flow hedges

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

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

March 31, 2018

(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

March 31, 2018

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

 

(2)	Financial information of the segments for the three-month periods ended March 31, 2018 and 2017, respectively, are as follows:

 

In millions of won
March 31, 2018
Segment		Total segment revenue				Intersegment revenue				Revenue from external customers				Operating Profit (loss)				Depreciation and amortization				Interest income				Interest expense				Profit (loss) related associates, joint ventures and subsidiaries
Transmission and distribution		W	15,563,743				371,043				15,192,700				(1,442,122	)			880,413				15,213				174,801				200,023
Electric power generation (Nuclear)			1,962,306				1,952,888				9,418				181,878				763,621				2,495				125,688				1,077
Electric power generation (Non-nuclear)			7,725,692				7,431,070				294,622				1,229,630				814,588				5,810				140,609				(70	)
Plant maintenance & engineering service			524,530				453,640				70,890				32,779				28,433				2,851				1,262				(185	)
Others			260,082				121,668				138,414				36,726				13,202				39,059				26,012				—
Consolidation adjustments			(10,330,309	)			(10,330,309	)			—				(166,504	)			(14,112	)			(14,750	)			(5,987	)			—
		W	15,706,044				—				15,706,044				(127,613	)			2,486,145				50,678				462,385				200,845

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

(2)	Financial information of the segments for the three-month periods ended March 31, 2018 and 2017, respectively, are as follows, continued:

 

In millions of won
March 31, 2017
Segment		Total segment revenue				Intersegment revenue				Revenue from external customers				Operating profit (loss)				Depreciation and amortization				Interest income				Interest expense				Profit (loss) related associates and joint ventures
Transmission and distribution		W	15,193,328				497,725				14,695,603				(783,980	)			842,622				11,561				188,846				152,071
Electric power generation (Nuclear)			2,668,468				2,658,386				10,082				738,402				852,147				3,908				121,876				(246	)
Electric power generation (Non-nuclear)			6,789,103				6,559,467				229,636				1,521,498				688,657				3,581				110,766				9,292
Plant maintenance & engineering service			533,405				437,985				95,420				45,326				27,181				2,761				781				(567	)
Others			135,240				19,372				115,868				19,919				6,519				38,707				22,606				—
Consolidation adjustments			(10,172,935	)			(10,172,935	)			—				(77,979	)			(13,265	)			(6,061	)			(3,921	)			—
		W	15,146,609				—				15,146,609				1,463,186				2,403,861				54,457				440,954				160,550

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

4.	Segment, Geographic and Other Information, Continued

 

(3)	Information related to segment assets and segment liabilities as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Segment		Segment assets				Investments in associates and joint ventures				Acquisition of non- current assets				Segment liabilities
Transmission and distribution		W	107,193,746				3,684,581				2,151,261				52,537,753
Electric power generation (Nuclear)			55,359,977				32,124				349,112				29,815,280
Electric power generation (Non-nuclear)			48,919,002				1,940,322				569,168				26,716,624
Plant maintenance & engineering service			3,342,681				47,752				15,888				1,307,652
Others			7,997,336				—				127,250				3,062,823
Consolidation adjustments			(38,788,184	)			—				23,581				(1,613,620	)
Consolidated totals		W	184,024,558				5,704,779				3,236,260				111,826,512

 

In millions of won
December 31, 2017
Segment		Segment assets				Investments in associates and joint ventures				Acquisition of non- current assets				Segment liabilities
Transmission and distribution		W	106,540,154				3,366,309				6,606,512				50,757,798
Electric power generation (Nuclear)			55,011,096				11,843				2,083,967				29,252,816
Electric power generation (Non-nuclear)			47,938,084				1,904,224				3,250,524				26,337,295
Plant maintenance & engineering service			3,273,959				48,320				145,779				1,176,627
Others			7,798,400				—				569,447				3,013,743
Consolidation adjustments			(38,772,778	)			—				23,616				(1,714,005	)
Consolidated totals		W	181,788,915				5,330,696				12,679,845				108,824,274

 

(4)	Geographic information

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

 

In millions of won		Revenue from external customers								Non-current assets (*2)
Geographical unit		March 31, 2018				March 31, 2017				March 31, 2018				March 31, 2017
Domestic		W	15,131,391				14,375,352				154,709,077				153,436,810
Overseas (*1)			574,653				771,257				4,595,902				4,497,535
		W	15,706,044				15,146,609				159,304,979				157,934,345

 

(*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.

 

(5)	Information on significant customers

There is no individual customer comprising more than 10% of the Company’s revenue for the three-month periods ended March 31, 2018 and 2017.

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

5.	Classification of Financial Instruments

 

(1)	Classification of financial assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Financial assets measured at FVTPL				Financial assets measured at amortized cost				Financial assets measured at FVOCI				Derivative assets (applying hedge accounting)				Total
Current assets
Cash and cash equivalents		W	—				2,580,522				—				—				2,580,522
Current financial assets
Held-to-maturity investments			—				70				—				—				70
Financial assets at fair value through profit or loss			1,794,615				—				—				—				1,794,615
Derivative assets			407				—				—				3,376				3,783
Other financial assets			—				1,517,092				—				—				1,517,092
Trade and other receivables			—				6,937,378				—				—				6,937,378
			1,795,022				11,035,062				—				3,376				12,833,460
Non-current assets
Non-current financial assets
Financial assets at fair value through profit or loss			336,654				—				—				—				336,654
Available-for-sale financial assets			254,267				—				505,206				—				759,473
Held-to-maturity investments			—				3,148				—				—				3,148
Derivative assets			4,380				—				—				9,146				13,526
Other financial assets			—				1,044,483				—				—				1,044,483
Trade and other receivables			—				1,716,441				—				—				1,716,441
			595,301				2,764,072				505,206				9,146				3,873,725
		W	2,390,323				13,799,134				505,206				12,522				16,707,185

 

In millions of won		December 31, 2017
		Financial assets at fair value through profit or loss				Loans and receivables				Available- for-sale financial assets				Held-to- maturity investments				Derivative assets (applying hedge accounting)				Total
Current assets
Cash and cash equivalents		W	—				2,369,739				—				—				—				2,369,739
Current financial assets
Held-to-maturity investments			—				—				—				5				—				5
Derivative assets			12,923				—				—				—				12				12,935
Other financial assets			—				1,945,417				—				—				—				1,945,417
Trade and other receivables			—				7,928,972				—				—				—				7,928,972
			12,923				12,244,128				—				5				12				12,257,068
Non-current assets
Non-current financial assets
Available-for-sale financial assets			—				—				699,833				—				—				699,833
Held-to-maturity investments			—				—				—				3,139				—				3,139
Derivative assets			9,097				—				—				—				10,594				19,691
Other financial assets			111,512				1,204,738				—				—				—				1,316,250
Trade and other receivables			—				1,754,797				—				—				—				1,754,797
			120,609				2,959,535				699,833				3,139				10,594				3,793,710
		W	133,532				15,203,663				699,833				3,144				10,606				16,050,778

 

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

5.	Classification of Financial Instruments, Continued

 

(2)	Classification of financial liabilities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		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	—				1,735,932				—				1,735,932
Debt securities			—				7,272,946				—				7,272,946
Derivative liabilities			32,989				—				48,854				81,843
Trade and other payables			—				6,836,478				—				6,836,478
			32,989				15,845,356				48,854				15,927,199
Non-current liabilities
Borrowings			—				2,459,558				—				2,459,558
Debt securities			—				44,744,448				—				44,744,448
Derivative liabilities			160,554				—				276,088				436,642
Trade and other payables			—				3,217,146				—				3,217,146
			160,554				50,421,152				276,088				50,857,794
		W	193,543				66,266,508				324,942				66,784,993
In millions of won		December 31, 2017
		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	—				1,165,985				—				1,165,985
Debt securities			—				7,957,300				—				7,957,300
Derivative liabilities			51,090				—				20,177				71,267
Trade and other payables			—				5,999,521				—				5,999,521
			51,090				15,122,806				20,177				15,194,073
Non-current liabilities
Borrowings			—				2,434,624				—				2,434,624
Debt securities			—				43,189,483				—				43,189,483
Derivative liabilities			99,839				—				256,953				356,792
Trade and other payables			—				3,223,480				—				3,223,480
			99,839				48,847,587				256,953				49,204,379
		W	150,929				63,970,393				277,130				64,398,452

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

5.	Classification of Financial Instruments, Continued

 

(3)	Classification of comprehensive income from financial instruments for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won				March 31, 2018				March 31, 2017
Cash and cash equivalents		Interest income		W	8,461				8,372
Available-for-sale financial assets		Dividends income			8,107				9,677
		Impairment loss on available-for-sale financial assets			1,391				—
		Loss on disposal of available-for-sale financial assets			—				(544	)
Held-to-maturity investments		Interest income			20				29
Loans and receivables		Interest income			5,684				5,545
Trade and other receivables		Interest income			24,271				33,489
Short-term financial instruments		Interest income			9,586				6,234
Long-term financial instruments		Interest income			112				788
Financial assets at fair value through profit or loss		Interest income			2,544				—
		Gain (loss) on valuation of derivatives			903				(186,839	)
		Gain (loss) on transaction of derivatives			1,823				(9,732	)
		Gain on valuation of financial assets			3,348				—
Derivative assets (applying hedge accounting)		Loss on valuation of derivatives (profit or loss)			(282	)			(234,674	)
		Loss on valuation of derivatives (equity, before tax) (*)			(1,681	)			(11,139	)
		Loss on transaction of derivatives			—				(19,230	)
Financial liabilities carried at amortized cost		Interest expense of borrowings and debt securities			322,376				303,889
		Interest expense of trade and other payables			12,092				13,449
		Interest expense of others			127,917				123,616
		Gain on foreign currency transactions and translations			3,596				744,334
Financial liabilities at fair value through profit or loss		Loss on valuation of derivatives			(57,628	)			(138,031	)
		Gain (loss) on transaction of derivatives			7,256				(10,633	)
Derivative liabilities (applying hedge accounting)		Loss on valuation of derivatives (profit or loss)			(15,983	)			(143,931	)
		Gain (loss) on valuation of derivatives (equity, before tax) (*)			(36,864	)			806
		Gain (loss) on transaction of derivatives			1,855				(19	)

 

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

6.	Restricted Deposits

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

 

In millions of won				March 31, 2018				December 31, 2017
Cash and cash equivalents		Escrow accounts		W	84				53
		Deposits for government project			5,435				15,365
		Collateral provided for borrowings			83,855				79,569
		Collateral provided for lawsuit			2				2
		Deposits for transmission regional support program			7,292				2,320
Short-term financial instruments		Bidding guarantees			119				119
		Restriction on withdrawal related to ‘win-win growth program’ for small and medium enterprises			34,000				34,000
Financial assets at fair value through profit or loss		Decommissioning costs of nuclear power plants			332,610				108,512
Non-current available-for-sale financial asset		Decommissioning costs of nuclear power plants			245,547				214,156
Long-term financial instruments		Guarantee deposits for checking account			2				2
		Guarantee deposits for banking accounts at oversea branches			301				302
		Decommissioning costs of nuclear power plants			185,000				337,234
		Funds for developing small and medium enterprises (*)			200,000				200,000
				W	1,094,247				991,634

 

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

 

7.	Cash and Cash Equivalents

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

 

In millions of won		March 31, 2018				December 31, 2017
Cash		W	123				132
Other demand deposits			1,026,095				968,966
Short-term deposits classified as cash equivalents			1,270,735				559,239
Short-term investments classified as cash equivalents			283,569				841,402
		W	2,580,522				2,369,739

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

8.	Trade and Other Receivables

 

(1)	Trade and other receivables as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Trade receivables		W	6,461,032				(191,324	)			—				6,269,708
Other receivables			685,764				(16,335	)			(1,759	)			667,670
			7,146,796				(207,659	)			(1,759	)			6,937,378
Non-current assets
Trade receivables			426,440				(105	)			(640	)			425,695
Other receivables			1,365,399				(67,885	)			(6,768	)			1,290,746
			1,791,839				(67,990	)			(7,408	)			1,716,441
		W	8,938,635				(275,649	)			(9,167	)			8,653,819

 

In millions of won		December 31, 2017
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Trade receivables		W	7,499,285				(173,583	)			—				7,325,702
Other receivables			614,212				(9,199	)			(1,743	)			603,270
			8,113,497				(182,782	)			(1,743	)			7,928,972
Non-current assets
Trade receivables			449,191				—				(414	)			448,777
Other receivables			1,380,983				(68,809	)			(6,154	)			1,306,020
			1,830,174				(68,809	)			(6,568	)			1,754,797
		W	9,943,671				(251,591	)			(8,311	)			9,683,769

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

(2)	Other receivables as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Non-trade receivables		W	324,483				(16,291	)			—				308,192
Accrued income			60,503				—				—				60,503
Deposits			226,968				—				(1,759	)			225,209
Finance lease receivables			68,439				(44	)			—				68,395
Others			5,371				—				—				5,371
			685,764				(16,335	)			(1,759	)			667,670
Non-current assets
Non-trade receivables			112,030				(58,794	)			—				53,236
Deposits			338,297				—				(6,768	)			331,529
Finance lease receivables			828,640				(99	)			—				828,541
Others			86,432				(8,992	)			—				77,440
			1,365,399				(67,885	)			(6,768	)			1,290,746
		W	2,051,163				(84,220	)			(8,527	)			1,958,416

 

In millions of won		December 31, 2017
		Gross amount				Allowance for doubtful accounts				Present value discount				Book value
Current assets
Non-trade receivables		W	314,256				(9,199	)			—				305,057
Accrued income			54,002				—				—				54,002
Deposits			228,317				—				(1,743	)			226,574
Finance lease receivables			13,067				—				—				13,067
Others			4,570				—				—				4,570
			614,212				(9,199	)			(1,743	)			603,270
Non-current assets
Non-trade receivables			112,983				(59,117	)			—				53,866
Accrued income			182				—				—				182
Deposits			331,071				—				(6,154	)			324,917
Finance lease receivables			849,554				—				—				849,554
Others			87,193				(9,692	)			—				77,501
			1,380,983				(68,809	)			(6,154	)			1,306,020
		W	1,995,195				(78,008	)			(7,897	)			1,909,290

 

(3)

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

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

(4)	Aging analysis of trade receivables as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Trade receivables: (not overdue)		W	6,599,167				7,698,604
Trade receivables: (overdue, not impaired)			—				7,117
Less than 60 days			—				7,117
Trade receivables: (impairment reviewed)			288,305				242,755
Less than 60 days			5,958				—
60 ~ 90 days			63,663				39,070
90 ~ 120 days			24,445				17,502
120 days ~ 1 year			53,709				55,242
Over 1 year			140,530				130,941
			6,887,472				7,948,476
Less: allowance for doubtful accounts			(191,429	)			(173,583	)
Less: present value discount			(640	)			(414	)
		W	6,695,403				7,774,479

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

 

(5)	Aging analysis of other receivables as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Other receivables: (not overdue)		W	1,843,578				1,810,075
Other receivables: (overdue, not impaired)			—				47,532
Less than 60 days			—				47,532
Other receivables: (impairment reviewed)			207,585				137,588
Less than 60 days			52,603				—
60 ~ 90 days			29,297				44
90 ~ 120 days			290				1,017
120 days ~ 1year			1,916				11,042
Over 1 year			123,479				125,485
			2,051,163				1,995,195
Less: allowance for doubtful accounts			(84,220	)			(78,008	)
Less: present value discount			(8,527	)			(7,897	)
		W	1,958,416				1,909,290

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

8.	Trade and Other Receivables, Continued

 

(6)	Changes in the allowance for doubtful accounts for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Trade receivables				Other receivables				Trade receivables				Other receivables
Beginning balance		W	173,583				78,008				71,985				87,661
Effect of change in accounting policy			6,641				128				—				—
Bad debt expense			18,381				1,174				126,714				1,778
Write-off			(6,991	)			(138	)			(32,995	)			(3,129	)
Reversal			—				(15	)			—				(2,166	)
Others			(185	)			5,063				7,879				(6,136	)
Ending balance		W	191,429				84,220				173,583				78,008

 

9.	Available-for-sale Financial Assets

 

(1)	Changes in available-for-sale financial assets for the three-month period ended March 31, 2018 and the years ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Effect of change in accounting policy				Acquisition				Disposal				Valuation				Impairment				Others				Ending balance
Listed		W	274,453				—				—				—				28,387				—				(982	)			301,858
Unlisted			425,380				(222,892	)			—				—				(7	)			—				868				203,349
Beneficiary securities			—				222,892				30,000				(17	)			1,391				—				—				254,266
			699,833				—				30,000				(17	)			29,771				—				(114	)			759,473
Short-term available-for-sale financial assets		W	—				—				—				—				—				—				—				—
Long-term available-for-sale financial assets			699,833				—				30,000				(17	)			29,771				—				(114	)			759,473

 

In millions of won		December 31, 2017
		Beginning balance				Acquisition				Disposal (*1)				Valuation				Impairment				Others				Ending balance
Listed		W	268,171				106				—				8,156				(97	)			(1,883	)			274,453
Unlisted			746,561				233,179				(461,423	)			(2,908	)			(2,616	)			(87,413	)			425,380
			1,014,732				233,285				(461,423	)			5,248				(2,713	)			(89,296	)			699,833
Short-term available-for-sale financial assets		W	—				—				—				—				—				—				—
Long-term available-for-sale financial assets			1,014,732				233,285				(461,423	)			5,248				(2,713	)			(89,296	)			699,833

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Shares				Ownership				Acquisition cost				Book value				Fair value
Listed
Korea District Heating Corp.			2,264,068				19.55	%		W	173,201				190,635				190,635
Ssangyong Motor Co., Ltd.			38,568				0.03	%			428				191				191
Sungjee Construction. Co., Ltd.(*6)			1,053				0.01	%			49				9				9
Korea Line Corp.			18				0.00	%			1				—				—
Namkwang Engineering & Construction Co., Ltd.			46				0.00	%			15				1				1
Bumyang Construction Co., Ltd.			35				0.00	%			2				—				—
ELCOMTEC Co., Ltd.			32,875				0.04	%			217				81				81
PAN ocean Co., Ltd.			1,492				0.00	%			14				8				8
Dongbu Corporation			955				0.02	%			12				9				9
KSP Co., Ltd.			6,324				0.08	%			24				24				24
STX Heavy Industries Co., Ltd.			35,755				0.14	%			191				183				183
Codes Combine Co., Ltd.			291				0.00	%			1				1				1
PT Adaro Energy Tbk			480,000,000				1.50	%			71,554				79,236				79,236
Energy Fuels Inc.			1,711,814				2.38	%			16,819				3,076				3,076
Baralaba Coal Company Limited			99,763				0.07	%			18,445				—				—
Denison Mines Corp.			58,284,000				10.42	%			84,134				27,978				27,978
Fission 3.0			300,000				0.14	%			—				9				9
Fission Uranium Corp.			800,000				0.16	%			785				417				417
											365,892				301,858				301,858
Unlisted (*1)
Intellectual Discovery Co., Ltd.			1,000,000				8.81	%			5,000				954				954
Construction Guarantee (*2)			571				0.02	%			601				826				826
Plant & Mechanical Contractors Financial Cooperative of Korea			97				0.02	%			81				81				81
Fire Guarantee			40				0.01	%			20				20				20
Korea Software Financial Cooperative			5,186				1.08	%			3,301				3,301				3,301
Engineering Financial Cooperative			486				0.05	%			60				60				60
Electric Contractors Financial Cooperative			1,000				0.04	%			215				215				215
Korea Specialty Contractor Financial Cooperative			476				0.01	%			417				417				417
Information & Communication Financial Cooperative			121				0.02	%			26				26				26
Korea Electric Engineers Association			400				0.24	%			40				40				40
Hwan Young Steel Co., Ltd.			10,916				0.14	%			1,092				97				97
SAMBO AUTO. Co., Ltd.			15,066				0.02	%			38				38				38
Mobo Co., Ltd.			504				0.00	%			14				14				14
Dae Kwang Semiconductor Co., Ltd.			589				0.07	%			6				6				6
Sanbon Department Store			828				0.01	%			124				3				3
Miju Steel Mfg. Co., Ltd.			99,804				0.23	%			50				50				50
Sungwon Co., Ltd.			589				0.07	%			15				15				15
Hana Civil Engineering Co., Ltd.			23				0.00	%			1				1				1
KC Development Co., Ltd.			839				0.02	%			6				6				6
IMHWA Corp.			329				0.11	%			5				5				5
DALIM Special Vehicle Co., Ltd.			58				0.08	%			10				10				10
ASA JEONJU Co., Ltd.			34,846				1.34	%			697				69				69
Moonkyung Silica Co., Ltd.			42				0.56	%			—				—				—
Sungkwang Timber Co., Ltd.			9				0.34	%			4				4				4
Yongbo Co., Ltd.			61				0.20	%			3				3				3
HJ Steel Co., Ltd.			218				0.07	%			2				2				2
KS Remicon Co., Ltd.			12				0.04	%			3				3				3
Joongang Platec Co., Ltd.			3,591				0.75	%			72				35				35
Pyungsan SI Ltd.			434				0.01	%			9				9				9
Samgong Development Co., Ltd.			12				0.01	%			7				7				7
Joongang Development Co., Ltd.			540				0.12	%			8				8				8

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		March 31, 2018
		Shares				Ownership				Acquisition cost				Book value				Fair value
AJS Co., Ltd.			12,906				0.23	%		W	32				32				32
SHIN-E B&P Co., Ltd.			119				0.13	%			10				10				10
MSE Co., Ltd.			429				0.13	%			9				9				9
Ilrim Nano Tec Co., Ltd.			1,520				0.07	%			15				15				15
Youngjin Hi-Tech Co., Ltd.			2,512				0.25	%			126				21				21
Buyoung Co., Ltd.			270				0.00	%			3				3				3
Ilsuk Co., Ltd.			152				0.17	%			10				10				10
Dongyang Telecom Co., Ltd.			1,760				0.01	%			11				11				11
Jongwon Remicon Co., Ltd.			31				0.18	%			13				13				13
Ace Heat Treating Co., Ltd.			477				1.43	%			72				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				27
Seungri Enterprise Co., Ltd.			93				0.05	%			3				3				3
Onggane Food Co., Ltd			5				0.07	%			1				1				1
Shin-E P&C Co., Ltd.			12				0.00	%			1				1				1
Ejung Ad Co., Ltd.			132				0.09	%			3				3				3
Solvus Co., Ltd.			1,056				0.04	%			3				3				3
Myung Co., Ltd.			89				0.05	%			2				2				2
Shinil Engineering Co., Ltd.			887				0.06	%			3				3				3
Biwang Industry Co., Ltd			406				0.04	%			2				2				2
Huimun Co., Ltd.			263				0.26	%			4				4				4
Young Sung Co., Ltd.			89				0.40	%			26				26				26
Yuil Industrial Electronics Co., Ltd.			804				0.32	%			15				15				15
DN TEK Inc.			12,401				0.29	%			61				5				5
Kwang Jin Structure Co., Ltd.			3,072				0.60	%			31				31				31
Woojin Industry Corporation			3				0.00	%			16				16				16
Kwang Sung Industry Co., Ltd.			325				0.35	%			7				7				7
Futech Mold Co., Ltd.			274				0.27	%			14				14				14
Woojoo Environment Ind. Co., Ltd.			101				0.11	%			13				13				13
CHONGATTI Agricultural Co., Inc.			57				0.10	%			4				4				4
Hyungji Esquire Co., Ltd.			55				0.02	%			22				22				22
Kolmar Pharma Co., Ltd.			1,426				0.01	%			52				3				3
Morado Co., Ltd.			209				0.04	%			2				2				2
Myung Sung Tex Co., Ltd.			20				0.00	%			2				2				2
Kwang Sung Co., Ltd.			610				0.53	%			31				31				31
EverTechno. Co.,Ltd.			29,424				0.73	%			148				7				7
Autowel Co.,Ltd.			260				0.38	%			14				14				14
Woobang Construction Co., Ltd.			8				0.00	%			8				8				8
Shin Pyung Co., Ltd.			6				0.03	%			3				3				3
JMC Heavy Industries Co., Ltd.			2,724				0.10	%			27				27				27
Najin Steel Co., Ltd.			37				0.06	%			5				5				5
Sinkwang Industry Co., Ltd.			1,091				1.68	%			5				5				5
Crystal Co., Ltd.			22				0.07	%			2				2				2
Elephant & Friends Co., Ltd.			563				0.61	%			3				3				3
Mireco Co., Ltd.			109				0.25	%			11				11				11
L&K Industry Co., Ltd.			1,615				0.60	%			24				24				24
JO Tech Co., Ltd.			1,263				0.62	%			25				25				25
Kendae Printing Co., Ltd.			422				0.60	%			21				21				21
Dauning Co., Ltd.			231				0.41	%			6				6				6
Korea Trecision Co., Ltd.			22				0.45	%			5				5				5
Ace Track Co., Ltd.			3,130				1.08	%			219				59				59
Yoo-A Construction Co., Ltd.			105				0.20	%			11				11				11
Dung Hwan Co., Ltd.			531				0.02	%			5				5				5

 

45

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		March 31, 2018
		Shares				Ownership				Acquisition cost				Book value				Fair value
Hurim Biocell Co., Ltd.			113				0.00	%		W	5				5				5
Smart Power Co.,Ltd.			133,333				4.35	%			200				200				200
Sunjin Power Tech Co., Ltd.			4,941				0.92	%			247				32				32
Haseung Industries Co.,Ltd.			55				0.62	%			28				28				28
Beer Yeast Korea Inc.			1,388				0.43	%			7				7				7
Daeryung Corporation			207				0.19	%			10				10				10
Korea Bio Red Ginseng Co.,Ltd.			194				0.09	%			10				10				10
ENH Co.,Ltd.			1,086				0.19	%			54				54				54
B CON Co.,Ltd.			96				1.16	%			6				6				6
Chunil Metal Co.,Ltd.			11				0.15	%			4				4				4
SsangMa Machine Co., Ltd.			4				0.05	%			1				1				1
SinJin Co., Ltd.			233				0.30	%			9				9				9
Ace Integration Co., Ltd			105				0.09	%			24				24				24
AceInti Agricultural Co., Ltd.			16				0.02	%			5				5				5
KyungDong Co., Ltd.			130				0.01	%			1				1				1
ChunWon Development Co., Ltd.			193				0.19	%			39				39				39
WonIl Co., Ltd.			999				0.15	%			50				50				50
SungLim Industrial Co., Ltd.			29				0.03	%			1				1				1
Korea Minerals Co., Ltd.			191				0.05	%			134				1				1
HyoDong Development Co., Ltd.			119				0.15	%			24				24				24
Haspe Tech Co., Ltd.			652				0.55	%			20				20				20
JoHyun Co., Ltd.			350				1.56	%			18				18				18
KC Co., Ltd.			5,107				0.17	%			26				26				26
SeongJi Industrial Co.,Ltd.			41				0.05	%			1				1				1
DongKwang SD, Inc.			524				0.23	%			13				13				13
Dong Yang Metal Co., Ltd.			2,951				1.97	%			161				147				147
Seyang Precision Ind.Co., Ltd.			829				0.23	%			41				41				41
Dooriwon Food System Co., Ltd.			13				0.27	%			1				1				1
ShinShin Co., Ltd			339				1.12	%			17				17				17
Kitorang Co., Ltd.			165				0.24	%			49				49				49
Sung Kwang Co., Ltd.			23				0.37	%			6				6				6
Hyundai Metal Co., Ltd.			3,757				5.60	%			1,416				1,416				1,416
Shinheung petrol. Co. Ltd.			699				0.14	%			35				35				35
Force TEC Co., Ltd.			3,501				0.02	%			18				18				18
Haisung TPC Co., Ltd.			10,751				0.24	%			71				71				71
Samsung Tech Co., Ltd.			486				1.28	%			97				97				97
Tae Hyung Co., Ltd.			28				0.43	%			20				20				20
Samyangplant Co., Ltd.			323				0.60	%			16				16				16
Younil Metal Co., Ltd.			41				0.21	%			21				21				21
Myungjin Tech Co., Ltd.			20				0.54	%			4				4				4
Hankook Machine Tools Co., Ltd.			719				0.14	%			72				72				72
Hankook Precision Ind Co., Ltd.			110				0.06	%			11				11				11
Borneo International Furniture Co., Ltd.(*7)			2				0.16	%			97				14				14
CJ Paradise Co.,Ltd			24				0.02	%			12				12				12
Han Young Technology Company Co.,Ltd.			35				0.00	%			—				—				—
Jungdo Aluminium Co., Ltd.			8,527				0.35	%			128				128				128
Ilheung Metal Co, Ltd.			280				0.83	%			28				28				28
STX Offshore & Shipbuilding Co., Ltd			8,622				0.25	%			1,078				1,078				1,078
Ptotronics Co., Ltd.			843				0.42	%			84				84				84
NFT Co., Ltd.			136				0.40	%			8				8				8
Echoroba Co.,Ltd.			157				0.02	%			3				3				3
Hyundaitech Co.,Ltd.			1,363				0.87	%			27				27				27
Alord Corporation Co., Ltd.			239				0.22	%			48				48				48
Daekyung Industry Co.,Ltd.			9,112				0.94	%			13				13				13

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		March 31, 2018
		Shares				Ownership				Acquisition cost				Book value				Fair value
Dasan Material Co.Ltd.			29				0.04	%		W	22				22				22
Fish World Co.,Ltd.			47				0.21	%			2				2				2
SG Shinsung Engineering and Construction Co., Ltd.			10				0.00	%			6				6				6
Samdo Industry Electric Co.,Ltd.			48				0.02	%			1				1				1
Taejung Industries Co.,Ltd.			9,268				0.30	%			5				5				5
Shinsei Trading Co., Ltd.			64				0.72	%			1				1				1
Dynamic Co., Ltd.			111				0.19	%			3				3				3
Green Alchemy Co.,Ltd.			38,202				1.48	%			191				191				191
IQ Power Asia Inc.			16,179				0.31	%			81				81				81
Youone TBM Engineering & Construction Co., Ltd.			615				0.27	%			31				31				31
KM Leatech			1,648				0.98	%			8				8				8
Wonil T&I Co., Ltd.			229				0.17	%			23				23				23
Semist Co.,Ltd.			555				0.80	%			3				3				3
DS POWER Co., Ltd.			580,000				2.34	%			2,900				1,223				1,223
Sewon Bus Co.,Ltd.			12				0.00	%			—				—				—
Enertec Co., Ltd.			7,937				0.19	%			44				44				44
Sangji Co., Ltd.			20				0.26	%			4				4				4
Bellie Doughnuts Co., Ltd.			64				0.07	%			4				4				4
Possbell Engineering Co., Ltd.			36				0.64	%			1				1				1
Duke Co., Ltd.			370				0.64	%			6				6				6
AIRTECH Information communication Co., Ltd.			2,379				0.60	%			12				12				12
CST co.,ltd.			4,998				0.28	%			100				100				100
Shin Young Metal Co.,Ltd.			1,043				0.25	%			21				21				21
TN Inc.			1,416				2.00	%			71				71				71
Shin kwang Industrial Co., Ltd.			884				0.35	%			55				55				55
Kiscom Co., Ltd.			1,493				0.04	%			1				1				1
Seil Electronics Co.,Ltd.			2,285				0.41	%			286				286				286
Wonil laser Co., Ltd			157				0.37	%			16				16				16
Pyung Hwa Industrial Co.,Ltd.			3,388				3.00	%			85				85				85
Navanakorn Electric Co., Ltd. (*3)			4,442,800				26.93	%			17,216				16,335				16,335
PT. Kedap Saayq			671				10.00	%			18,540				—				—
Set Holding (*4)			1,100,220				2.50	%			229,255				171,242				171,242
PT. Cirebon Energi Prasarana			22,420				10.00	%			2,612				2,390				2,390
KODE NOVUS 1 LLC (*8)			—				10.00	%			—				—				—
											289,240				203,349				203,349
Beneficiary Securities
Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I (*1)			1,758,731,002				14.18	%			1,752				571				571
Troika Overseas Resource Development Private Equity Firm (*1)			13,340,012,100				3.66	%			13,340				1,553				1,553
IBK-AUCTUS Green Growth Private Equity Firm (*1)			152				6.29	%			41				41				41
Global Dynasty Overseas Resource Development Private Equity Firm (*1)			2,242,437,289				7.46	%			2,242				2,242				2,242
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 (*1)			4,160,431,864				5.00	%			4,311				4,311				4,311
Hanwha KT Master Lease Private Special Investment Trust (*5)			—				0.00	%			26,586				26,796				26,796
Samsung investment – Investment Pool for Public funds 1 (*5)			—				0.00	%			53,220				54,007				54,007
Kyobo Royal-Class Repo Plus A1 ABCP 1Y (*5)			—				0.00	%			50,000				50,625				50,625
Kiwoom Dream Private placement fund 8 [Bond-Derivative] (*5)			—				0.00	%			30,000				30,114				30,114
Kyobo Royal-Class Repo Plus Fixed Income 1Y 2nd (*5)			—				0.00	%			33,000				33,220				33,220
Kyobo Royal-Class Repo Plus Fixed Income 2Y 1st (*5)			—				0.00	%			50,000				50,786				50,786
											264,492				254,266				254,266
										W	919,624				759,473				759,473

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

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

(*2)

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 three-month period ended March 31, 2018.

(*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 three-month period ended March 31, 2018.

(*5)	As of March 31, 2018, the Company invested in W245,548 million as beneficiary securities exclusively for payment of decommissioning cost of nuclear power plants. The Company has measured the fair value of the beneficiary securities based on its net asset value.

(*6)	The number of shares owned has changed due to the stock merge (10:1) during the three-month period ended March 31, 2018.

(*7)	The number of shares owned has changed due to capital reduction without refund (3:1) and consolidation of stocks (10,000:1) during the three-month period ended March 31, 2018

(*8)	As described in note 17, this is reclassified to available-for-sale financial assets due to loss of significant influence of the Company.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Shares				Ownership				Acquisition cost				Book value				Fair value
Listed
Korea District Heating Corp.			2,264,068				19.55	%		W	173,201				165,277				165,277
Ssangyong Motor Co., Ltd.			38,568				0.03	%			428				197				197
Sungjee Construction. Co., Ltd.			10,530				0.01	%			49				8				8
Korea Line Corp.			18				0.00	%			1				—				—
Namkwang Engineering & Construction Co., Ltd.			46				0.00	%			15				—				—
Bumyang Construction Co., Ltd. (*7)			35				0.00	%			2				—				—
ELCOMTEC Co., Ltd.			32,875				0.04	%			217				72				72
PAN ocean Co., Ltd.			1,492				0.00	%			14				8				8
Dongbu Corporation (*6)			955				0.02	%			12				10				10
KSP Co., Ltd.			6,324				0.08	%			24				24				24
STX Heavy Industries Co., Ltd.			35,749				0.14	%			191				165				165
PT Adaro Energy Tbk			480,000,000				1.50	%			71,554				70,531				70,531
Energy Fuels Inc.			1,711,814				2.38	%			16,819				3,300				3,300
Baralaba Coal Company Limited			99,763				0.07	%			18,445				22				22
Denison Mines Corp.			58,284,000				10.42	%			84,134				34,292				34,292
Fission 3.0			300,000				0.14	%			—				15				15
Fission Uranium Corp.			800,000				0.16	%			785				532				532
											365,891				274,453				274,453
Unlisted (*1)
Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I			1,758,731,002				14.18	%			1,752				571				—
Troika Overseas Resource Development Private Equity Firm			13,340,012,100				3.66	%			13,340				1,553				—
IBK-AUCTUS Green Growth Private Equity Firm			152				6.29	%			41				41				—
Global Dynasty Overseas Resource Development Private Equity Firm			2,242,437,289				7.46	%			2,242				2,242				—
Intellectual Discovery, Ltd.			1,000,000				8.81	%			5,000				954				—
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1			4,176,751,013				5.00	%			4,328				4,328				—
Construction Guarantee (*2)			571				0.02	%			601				833				833
Plant & Mechanical Contractors Financial Cooperative of Korea			144				0.03	%			126				126				—
Fire Guarantee			40				0.01	%			20				20				—
Korea Software Financial Cooperative			5,186				1.09	%			3,301				3,301				—
Engineering Financial Cooperative			486				0.05	%			60				60				—
Electric Contractors Financial Cooperative			1,000				0.04	%			216				216				—
Korea Specialty Contractor Financial Cooperative			476				0.01	%			417				417				—
Information & Communication Financial Cooperative			121				0.02	%			26				26				—
Korea Electric Engineers Association			400				0.24	%			40				40				—
Samsung investment – Investment Pool for Public funds 1 (*5)			—				—				53,220				53,739				53,739
Korea investment – Hanwha KT Master Lease Private Special Investment Trust (*5)			—				—				26,586				26,591				26,591
Kyobo Royal-Class Repo Plus Fixed Income 1Y 2nd (*5)			—				—				33,000				33,008				33,008
Kyobo Royal-Class Repo Plus Fixed Income 2Y 1st (*5)			—				—				50,000				50,399				50,399
Kyobo Royal-Class Repo Plus A1 ABCP 1Y (*5)			—				—				50,000				50,419				50,419
Hwan Young Steel Co., Ltd.			10,916				0.14	%			1,092				97				—
SAMBO AUTO. Co., Ltd.			15,066				0.02	%			38				38				—
Mobo Co., Ltd.			504				0.00	%			14				14				—

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Shares				Ownership				Acquisition cost				Book value				Fair value
Dae Kwang Semiconductor Co., Ltd.			589				0.07	%		W	6				6				—
Sanbon Department Store			828				0.01	%			124				3				—
Miju Steel Mfg. Co., Ltd.			99,804				0.23	%			50				50				—
Sungwon Co., Ltd. (formerly, 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	%			—				—				—
Sungkwang Timber Co., Ltd.			9				0.34	%			4				4				—
Yongbo Co., Ltd.			61				0.20	%			3				3				—
HJ Steel Co., Ltd.			218				0.07	%			2				2				—
KS Remicon Co., Ltd.			12				0.04	%			3				3				—
Joongang Platec Co., Ltd.			3,591				0.75	%			72				35				—
Pyungsan SI Ltd.			434				0.01	%			9				9				—
Samgong Development Co., Ltd.			12				0.01	%			7				7				—
Joongang Development Co., Ltd.			540				0.12	%			8				8				—
AJS Co., Ltd.			12,906				0.23	%			32				32				—
SHIN-E B&P Co., Ltd.			119				0.13	%			10				10				—
MSE Co., Ltd.			429				0.13	%			9				9				—
Ilrim Nano Tec Co., Ltd.			1,520				0.07	%			15				15				—
Youngjin Hi-Tech Co., Ltd.			2,512				0.25	%			126				21				—
Buyoung Co., Ltd.			270				0.00	%			3				3				—
Ilsuk Co., Ltd.			152				0.17	%			10				10				—
Dongyang Telecom Co., Ltd.			1,760				0.01	%			11				11				—
Jongwon Remicon Co., Ltd.			31				0.18	%			13				13				—
Ace Heat Treating Co., Ltd.			477				1.43	%			72				72				—
Zyle Daewoo Motor Sales Co., Ltd.			22				0.00	%			—				—				—
Daewoo Development Co., Ltd.			8				0.00	%			—				—				—
Seyang Inc.			537				0.05	%			27				27				—
Seungri Enterprise Co., Ltd.			93				0.05	%			3				3				—
Onggane Food Co., Ltd			5				0.07	%			1				1				—
Shin-E P&C Co., Ltd.			12				0.00	%			1				1				—
Ejung Ad Co., Ltd.			132				0.09	%			3				3				—
Solvus Co., Ltd.			1,056				0.04	%			3				3				—
Myung Co., Ltd.			89				0.05	%			2				2				—
Shinil Engineering Co., Ltd.			887				0.06	%			3				3				—
Biwang Industry Co., Ltd			406				0.04	%			2				2				—
Huimun Co., Ltd.			263				0.26	%			4				4				—
Young Sung Co., Ltd.			89				0.40	%			26				26				—
Yuil Industrial Electronics Co., Ltd.			804				0.32	%			15				15				—
DN TEK Inc.			12,401				0.29	%			61				5				—
Kwang Jin Structure Co., Ltd.			3,072				0.60	%			31				31				—

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Shares				Ownership				Acquisition cost				Book value				Fair value
Woojin Industry Corporation			3				0.00	%		W	16				16				—
Kwang Sung Industry Co., Ltd.			325				0.35	%			7				7				—
Futech Mold Co., Ltd.			274				0.27	%			14				14				—
Woojoo Environment Ind. Co., Ltd.			101				0.11	%			13				13				—
CHONGATTI Agricultural Co., Inc.			57				0.10	%			4				4				—
Hyungji Esquire Co., Ltd.			55				0.02	%			22				22				—
Kolmar Pharma Co., Ltd.			1,426				0.01	%			52				3				—
Morado Co., Ltd.			209				0.04	%			2				2				—
Myung Sung Tex Co., Ltd.			20				0.00	%			2				2				—
Kwang Sung Co., Ltd.			610				0.53	%			31				31				—
EverTechno. Co.,Ltd.			29,424				0.73	%			148				7				—
Autowel Co.,Ltd.			260				0.38	%			14				14				—
Woobang Construction Co., Ltd.			8				0.00	%			8				8				—
Shin Pyung Co., Ltd.			6				0.03	%			3				3				—
JMC Heavy Industries Co., Ltd.			2,724				0.10	%			27				27				—
Najin Steel Co., Ltd.			37				0.06	%			5				5				—
Sinkwang Industry Co., Ltd.			1,091				1.68	%			5				5				—
Crystal Co., Ltd.			22				0.07	%			2				2				—
Elephant & Friends Co., Ltd.			563				0.61	%			3				3				—
Mireco Co., Ltd.			109				0.25	%			11				11				—
L&K Industry Co., Ltd.			1,615				0.60	%			24				24				—
JO Tech Co., Ltd.			1,263				0.62	%			25				25				—
Kendae Printing Co., Ltd.			422				0.60	%			21				21				—
Dauning Co., Ltd.			231				0.41	%			6				6				—
Korea Trecision Co., Ltd.			22				0.45	%			5				5				—
Ace Track Co., Ltd.			3,130				1.08	%			219				59				—
Taebok Machinery Co., Ltd.			109				1.08	%			11				11				—
Yoo-A Construction Co., Ltd.			105				0.20	%			11				11				—
Dung Hwan Co., Ltd.			531				0.02	%			5				5				—
Hurim Biocell Co., Ltd.			113				0.00	%			5				5				—
Sunjin Power Tech Co., Ltd.			4,941				0.92	%			247				32				—
Smart Power Co.,Ltd.			133,333				4.83	%			200				200				—
Haseung Industries Co.,Ltd.			55				0.62	%			28				28				—
Beer Yeast Korea Inc.			1,388				0.43	%			7				7				—
Daeryung Corporation			207				0.19	%			10				10				—
Korea Bio Red Ginseng Co.,Ltd.			194				0.09	%			10				10				—
ENH Co.,Ltd.			1,086				0.19	%			54				54				—
B CON Co.,Ltd.			96				1.16	%			6				6				—
Chunil Metal Co.,Ltd.			11				0.15	%			4				4				—
SsangMa Machine Co., Ltd.			4				0.05	%			1				1				—
SinJin Co., Ltd.			233				0.30	%			9				9				—
Ace Integration Co., Ltd			105				0.09	%			24				24				—
AceInti Agricultural Co., Ltd.			16				0.02	%			5				5				—

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Shares				Ownership				Acquisition cost				Book value				Fair value
KyungDong Co., Ltd.			130				0.01	%		W	1				1				—
ChunWon Development Co., Ltd.			193				0.19	%			39				39				—
WonIl Co., Ltd.			999				0.15	%			50				50				—
SungLim Industrial Co., Ltd.			29				0.03	%			1				1				—
Korea Minerals Co., Ltd.			191				0.05	%			134				1				—
HyoDong Development Co., Ltd.			119				0.15	%			24				24				—
Haspe Tech Co., Ltd.			652				0.55	%			20				20				—
JoHyun Co., Ltd.			350				1.56	%			18				18				—
KC Co., Ltd.			5,107				0.17	%			3				3				—
SeongJi Industrial Co.,Ltd.			41				0.05	%			1				1				—
DongKwang SD, Inc.			524				0.23	%			13				13				—
Dong Yang Metal Co., Ltd.			2,951				1.97	%			15				15				—
Seyang Precision Ind.Co., Ltd.			829				0.23	%			41				41				—
Dooriwon Food System Co., Ltd.			13				0.27	%			1				1				—
ShinShin Co., Ltd			339				1.12	%			17				17				—
Kitorang Co., Ltd.			165				0.24	%			49				49				—
Sung Kwang Co., Ltd.			23				0.37	%			6				6				—
Hyundai Metal Co., Ltd.			3,757				5.60	%			1,416				1,416				—
Shinheung petrol. Co. Ltd.			699				0.14	%			7				7				—
Force TEC Co., Ltd.			3,501				0.02	%			18				18				—
Haisung TPC Co., Ltd.			10,751				0.24	%			54				54				—
Samsung Tech Co., Ltd.			486				1.28	%			97				97				—
Tae Hyung Co., Ltd.			28				0.43	%			20				20				—
Samyangplant Co., Ltd.			323				0.60	%			16				16				—
Younil Metal Co., Ltd.			41				0.21	%			21				21				—
Myungjin Tech Co., Ltd.			20				0.54	%			4				4				—
Hankook Machine Tools Co., Ltd.			719				0.14	%			72				72				—
Hankook Precision Ind Co., Ltd.			110				0.06	%			11				11				—
Borneo International Furniture Co., Ltd.			64,037				0.28	%			97				14				—
CJ Paradise Co.,Ltd			24				0.02	%			12				12				—
Han Young Technology Company Co.,Ltd.			35				0.00	%			—				—				—
Jungdo Aluminium Co., Ltd.			8,527				0.35	%			128				128				—
Ilheung Metal Co, Ltd.			280				0.83	%			28				28				—
STX Offshore & Shipbuilding Co., Ltd			8,622				0.25	%			1,078				1,078				—
Ptotronics Co., Ltd.			151				0.07	%			2				2				—
NFT Co., Ltd.			136				0.40	%			8				8				—
Echoroba Co.,Ltd.			157				0.02	%			3				3				—
Hyundaitech Co.,Ltd.			1,363				0.87	%			27				27				—
Eco Alux Co.,Ltd.			239				0.22	%			48				48				—
Daekyung Industry Co.,Ltd.			9,112				0.94	%			13				13				—
Dasan Material Co.Ltd.			29				0.04	%			—				—				—
Fish World Co.,Ltd.			47				0.21	%			2				2				—
SG Shinsung Engineering and Construction Co., Ltd.			10				0.00	%			6				6				—
Samdo Industry Electric Co.,Ltd.			48				0.02	%			1				1				—
Taejung Industries Co.,Ltd.			9,268				0.30	%			5				5				—
Shinsei Trading Co., Ltd.			64				0.72	%			1				1				—
Dynamic Co., Ltd.			111				0.19	%			3				3				—
Green Alchemy Co.,Ltd.			38,202				1.48	%			191				191				—
IQ Power Asia Inc.			16,179				0.31	%			81				81				—
Youone TBM Engineering & Construction Co., Ltd.			227,854				0.27	%			31				31				—

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

9.	Available-for-sale Financial Assets, Continued

 

(2)	Available-for-sale financial assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Shares				Ownership				Acquisition cost				Book value				Fair value
KM Leatech			1,648				0.98	%		W	8				8				—
Wonil T&I Co., Ltd.			229				0.17	%			23				23				—
Semist Co.,Ltd.			555				0.80	%			3				3				—
DS POWER Co., Ltd. (*8)			580,000				2.34	%			2,900				1,223				1,223
Navanakorn Electric Co., Ltd. (*3)			4,442,800				26.93	%			17,216				16,410				—
PT. Kedap Saayq			671				10.00	%			18,540				—				—
Set Holding (*4)			1,100,220				2.50	%			229,255				171,242				171,242
PT. Cirebon Energi Prasarana			22,420				10.00	%			2,612				2,401				—
											522,782				425,380				387,454
										W	888,673				699,833				661,907

 

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

(*2)

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

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

(*4)

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

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

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

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

(*8)	As described in note 17, this is reclassified to available-for-sale financial assets due to loss of significant influence of the Company.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

10.	Held-to-maturity Investments

Held-to-maturity investments as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Acquisition				Disposal				Others				Ending balance
Government bonds		W	3,144				141				(67	)			—				3,218
		W	3,144				141				(67	)			—				3,218
Current		W	5				—				(4	)			69				70
Non-current			3,139				141				(63	)			(69	)			3,148
In millions of won		December 31, 2017
		Beginning balance				Acquisition				Disposal				Others				Ending balance
Government bonds		W	3,244				250				(350	)			—				3,144
		W	3,244				250				(350	)			—				3,144
Current		W	114				—				(113	)			4				5
Non-current			3,130				250				(237	)			(4	)			3,139

 

11.	Derivatives

 

(1)	Derivatives as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Derivative assets
Currency forward		W	3,734				—				45				—
Currency swap			49				7,541				12				15,711
Interest rate swap			—				4,702				—				2,697
Others (*1)			—				1,283				12,878				1,283
		W	3,783				13,526				12,935				19,691
Derivative liabilities
Currency forward		W	1,119				11,842				7,862				1,278
Currency swap			76,300				367,714				61,997				296,098
Interest rate swap			4,424				57,086				1,408				59,416
		W	81,843				436,642				71,267				356,792

 

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

 

54

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

11.	Derivatives, Continued

 

(2)	Currency forward contracts which are not designated as hedging instruments as of March 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies
Counterparty										Contract amounts								Contract exchange rate
		Contract Date				Maturity date				Pay				Receive
KEB Hana Bank			2014.04.10				2021.07.12				55,120			USD	52,000				1,060.00
KEB Hana Bank			2014.04.28				2021.07.12				50,784			USD	48,000				1,058.00
Bank of America			2014.04.29				2021.07.12				105,400			USD	100,000				1,054.00
KEB Hana Bank			2014.05.09				2021.07.12				104,600			USD	100,000				1,046.00
KEB Hana Bank			2017.12.22				2021.07.12				105,079			USD	100,000				1,050.79
Korea Development Bank			2017.12.27				2021.07.12				104,849			USD	100,000				1,048.49
Kookmin Bank			2018.03.05				2018.04.09				10,818			USD	10,000				1,081.80
Mizuho Bank			2018.03.08				2018.04.09				10,673			USD	10,000				1,067.31
KEB Hana Bank			2018.03.08				2018.04.10				10,678			USD	10,000				1,067.75
KEB Hana Bank			2018.03.13				2018.04.16				10,652			USD	10,000				1,065.20
Morgan Stanley			2018.03.14				2018.04.16				5,312			USD	5,000				1,062.40
Nova Scotia			2018.03.16				2018.04.17				5,339			USD	5,000				1,067.80
CCB			2018.03.22				2018.04.26				10,647			USD	10,000				1,064.65
Morgan Stanley			2018.03.22				2018.04.26				5,328			USD	5,000				1,065.50
Mizuho Bank			2018.03.23				2018.04.27				10,784			USD	10,000				1,078.35
Credit Suisse			2018.03.27				2018.04.30				5,344			USD	5,000				1,068.75
Nova Scotia			2018.03.28				2018.04.30				10,694			USD	10,000				1,069.40
Standard Chartered			2018.03.29				2018.05.02				10,656			USD	10,000				1,065.60
Credit Suisse			2018.03.29				2018.05.02				5,322			USD	5,000				1,064.35
Standard Chartered			2018.03.30				2018.05.03				10,640			USD	10,000				1,063.95
Nova Scotia			2018.03.30				2018.05.03				5,314			USD	5,000				1,062.75
Nova Scotia			2018.03.14				2018.04.10				9,573			USD	9,000				1,063.65
ING Bank			2018.03.15				2018.04.05				5,327			USD	5,000				1,065.44
Credit Agricole			2018.03.15				2018.04.10				10,654			USD	10,000				1,065.35
BTMU			2018.03.19				2018.04.17				5,353			USD	5,000				1,070.50
Korea Development Bank			2018.03.20				2018.04.05				10,706			USD	10,000				1,070.57
Woori bank			2018.03.20				2018.04.17				7,491			USD	7,000				1,070.20
Korea Development Bank			2018.03.23				2018.04.23				7,551			USD	7,000				1,078.75
ING Bank			2018.03.27				2018.04.10				6,420			USD	6,000				1,070.00
Societe Generale			2018.03.29				2018.04.10				8,531			USD	8,000				1,066.36
Woori Bank			2018.03.29				2018.04.10				6,398			USD	6,000				1,066.27
Korea Development Bank			2018.03.29				2018.04.10				7,462			USD	7,000				1,065.98
Mizuho Bank			2018.03.12				2018.04.16				5,315			USD	5,000				1,062.90
Mizuho Bank			2018.03.14				2018.04.16				5,321			USD	5,000				1,064.15
Mizuho Bank			2018.03.29				2018.05.02				10,646			USD	10,000				1,064.60
Mizuho Bank			2018.03.30				2018.05.03				10,628			USD	10,000				1,062.80
Nova Scotia			2018.03.14				2018.04.16				5,316			USD	5,000				1,063.25
Nova Scotia			2018.03.29				2018.05.02				5,306			USD	5,000				1,061.10
Nova Scotia			2018.03.30				2018.04.02				2,042			USD	1,920				1,063.80
Nova Scotia			2018.03.30				2018.06.04				10,613			USD	10,000				1,061.30
BTMU			2018.03.29				2018.05.02				10,646			USD	10,000				1,064.60
BTMU			2018.03.30				2018.05.03				10,632			USD	10,000				1,063.20
BNP Paribas			2018.03.29				2018.05.02				10,653			USD	10,000				1,065.30
BNP Paribas			2018.03.30				2018.05.03				10,639			USD	10,000				1,063.90
CCB			2018.03.29				2018.06.04				10,637			USD	10,000				1,063.70
CCB			2018.03.30				2018.05.03				10,627			USD	10,000				1,062.65
Societe Generale			2018.03.29				2018.06.04				10,639			USD	10,000				1,063.90
Credit Agricole			2018.03.29				2018.06.04				10,639			USD	10,000				1,063.90
Credit Agricole			2018.03.30				2018.06.04				10,617			USD	10,000				1,061.70
Nonghyup Bank			2018.03.29				2018.06.04				10,645			USD	10,000				1,064.45
Nonghyup Bank			2018.03.30				2018.05.03				10,628			USD	10,000				1,062.75
KEB Hana Bank			2018.03.30				2018.06.04				10,612			USD	10,000				1,061.20
Standard Chartered			2018.03.15				2018.04.05				2,127			USD	2,000				1,063.65
Nova Scotia			2018.03.19				2018.04.10				4,282			USD	4,000				1,070.40
Nova Scotia			2018.03.20				2018.04.10				9,629			USD	9,000				1,069.94
BNP Paribas			2018.03.26				2018.04.23				5,393			USD	5,000				1,078.62

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

11.	Derivatives, Continued

 

(2)	Currency forward contracts which are not designated as hedging instruments as of March 31, 2018 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Counterparty										Contract amounts
		Contract Date				Maturity date				Pay				Receive				Contract exchange rate
Standard Chartered			2018.03.29				2018.04.23				19,178			USD	18,000				1,065.47
Busan Bank			2018.03.22				2018.04.26				10,702			USD	10,000				1,070.20
Mizuho Bank			2018.03.23				2018.04.26				4,320			USD	4,000				1,079.95
Nova Scotia			2018.03.23				2018.04.26				3,229			USD	3,000				1,076.30
Nova Scotia			2018.03.27				2018.04.26				4,280			USD	4,000				1,070.05
Standard Chartered			2018.02.14				2018.08.21				86			USD	81				1,061.00
Credit Agricole			2018.03.06				2018.09.10				3,667			USD	3,455				1,061.25
Credit Agricole			2018.03.06				2018.09.10				5,326			USD	5,000				1,065.25
Credit Agricole			2018.03.06				2018.09.10				5,331			USD	5,000				1,066.25
Credit Agricole			2018.03.06				2018.09.10				5,336			USD	5,000				1,067.25
Nova Scotia			2018.03.06				2018.09.10				2,612			USD	2,462				1,061.00
Nova Scotia			2018.03.06				2018.09.10				5,310			USD	5,000				1,062.00
Nova Scotia			2018.03.06				2018.09.10				5,315			USD	5,000				1,063.00
Nova Scotia			2018.03.06				2018.09.10				5,320			USD	5,000				1,064.00
Nova Scotia			2018.03.06				2018.09.10				5,325			USD	5,000				1,065.00
Nova Scotia			2018.03.06				2018.09.10				5,330			USD	5,000				1,066.00
Nova Scotia			2018.03.06				2018.09.10				1,010			USD	946				1,067.00
Societe Generale			2018.03.14				2018.09.19				5,291			USD	5,000				1,058.20
Credit Agricole			2018.03.14				2018.09.19				46			USD	43				1,058.35
Societe Generale			2018.03.21				2018.09.27				5,293			USD	5,000				1,058.50
Societe Generale			2018.03.21				2018.09.27				5,298			USD	5,000				1,059.50
Societe Generale			2018.03.21				2018.09.27				1,024			USD	966				1,060.50
Nova Scotia			2018.03.21				2018.09.27				5,298			USD	5,000				1,059.60
Nova Scotia			2018.03.21				2018.09.27				5,303			USD	5,000				1,060.60
Credit Agricole			2018.03.28				2018.09.28				5,305			USD	5,000				1,060.90
Nova Scotia			2018.03.28				2018.09.28				5,299			USD	5,000				1,059.80
Nova Scotia			2018.03.28				2018.09.28				5,307			USD	5,000				1,061.40
Nova Scotia			2018.03.28				2018.09.28				5,313			USD	5,000				1,062.50
Woori bank			2018.03.28				2018.09.28				5,299			USD	5,000				1,059.70
Woori bank			2018.03.28				2018.09.28				5,302			USD	5,000				1,060.40
Credit Agricole			2018.03.29				2018.10.02				5,293			USD	5,000				1,058.50
Nova Scotia			2018.03.29				2018.10.02				3,176			USD	3,000				1,058.50
Nova Scotia			2018.03.30				2018.10.04				5,279			USD	5,000				1,055.80
KEB Hana Bank			2017.11.27				2018.11.26			JPY	40,000				398				9.94
KEB Hana Bank			2018.03.28				2018.04.30			JPY	156,000			USD	1,577				10.11

 

(3)	Currency forward contracts which are designated as hedging instruments as of March 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies

Counterparty

Contract amounts

Contract exchange rate

Contract date

Maturity date

Pay

Receive

Export-import bank of Korea

2016.12.21

2018.10.31

EUR

112,766

USD

121

1.07

 

56

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

11.	Derivatives, Continued

 

(4)	Currency swap contracts which are not designated as hedging instruments as of March 31, 2018 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
Societe Generale			2014~2024				105,017			USD	100,000				4.92	%			5.13	%			1,050.17
KEB Hana Bank			2015~2024				107,970			USD	100,000				4.75	%			5.13	%			1,079.70
Credit Agricole			2015~2024				94,219			USD	86,920				4.85	%			5.13	%			1,083.97
Citibank			2012~2022				112,930			USD	100,000				2.79	%			3.00	%			1,129.30
JP Morgan			2012~2022				112,930			USD	100,000				2.79	%			3.00	%			1,129.30
Bank of America			2012~2022				112,930			USD	100,000				2.79	%			3.00	%			1,129.30
Shinhan Bank			2016~2022				112,930			USD	100,000				2.79	%			3.00	%			1,129.30
HSBC			2012~2022				111,770			USD	100,000				2.89	%			3.00	%			1,117.70
KEB Hana Bank			2012~2022				111,770			USD	100,000				2.87	%			3.00	%			1,117.70
Standard Chartered			2012~2022				111,770			USD	100,000				2.89	%			3.00	%			1,117.70
Deutsche Bank			2012~2022				55,885			USD	50,000				2.79	%			3.00	%			1,117.70
HSBC			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
HSBC			2014~2019				105,260			USD	100,000				2.48	%			2.38	%			1,052.60
Standard Chartered			2014~2019				105,260			USD	100,000				2.48	%			2.38	%			1,052.60
Korea Development Bank			2016~2019				105,260			USD	100,000				2.48	%			2.38	%			1,052.60
Nomura			2015~2025				111,190			USD	100,000				2.60	%			3.25	%			1,111.90
Korea Development Bank			2015~2025				111,190			USD	100,000				2.62	%			3.25	%			1,111.90
Woori Bank			2015~2025				55,595			USD	50,000				2.62	%			3.25	%			1,111.90
KEB Hana Bank			2015~2025				55,595			USD	50,000				2.62	%			3.25	%			1,111.90
Woori Bank			2017~2027				111,610			USD	100,000				2.25	%			3.13	%			1,116.10
KEB Hana Bank			2017~2027				111,610			USD	100,000				2.31	%			3.13	%			1,116.10
Korea Development Bank			2017~2027				111,610			USD	100,000				2.31	%			3.13	%			1,116.10

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

11.	Derivatives, Continued

 

(5)	Currency swap contracts which are designated as hedging instruments as of March 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies
Counterparty						Contract amount								Contract interest rate								Contract exchange rate
		Contract year				Pay				Receive				Pay				Receive
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
Korea Development Bank			2017~2020				114,580			USD	100,000				1.75	%			2.38	%			1,145.80
KEB Hana Bank			2017~2020				114,580			USD	100,000				1.75	%			2.38	%			1,145.80
Export-import bank of Korea			2017~2020				114,580			USD	100,000				1.75	%			2.38	%			1,145.80
JP Morgan			2014~2019				107,190			USD	100,000				3M Libor+3.25	%			2.75	%			1,071.90
Morgan Stanley			2014~2019				107,190			USD	100,000				3M Libor+3.25	%			2.75	%			1,071.90
Deutsche Bank			2014~2019				107,190			USD	100,000				3M Libor+3.25	%			2.75	%			1,071.90
Korea Development Bank			2016~2021				121,000			USD	100,000				2.15	%			2.50	%			1,210.00
Morgan Stanley			2016~2021				121,000			USD	100,000				3M Libor+2.10	%			2.50	%			1,210.00
BNP Paribas			2016~2021				121,000			USD	100,000				3M Libor+2.10	%			2.50	%			1,210.00
Nomura			2017~2037				52,457			EUR	40,000				2.60	%			1.70	%			1,311.42
Nomura			2017~2037				59,423			SEK	450,000				2.62	%			2.36	%			132.05
Credit Agricole			2013~2019				118,343			CHF	100,000				3.47	%			1.63	%			1,183.43
Morgan Stanley			2013~2019				59,172			CHF	50,000				3.40	%			1.63	%			1,183.43
Nomura			2013~2019				59,172			CHF	50,000				3.47	%			1.63	%			1,183.43
Morgan Stanley			2013~2018				107,360			USD	100,000				3.27	%			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
Morgan Stanley			2014~2019				104,490			USD	100,000				2.70	%			2.63	%			1,044.90
KEB Hana Bank			2018~2021				212,960			USD	200,000				2.10	%			3.00	%			1,064.80
Korea Development Bank			2018~2021				212,960			USD	200,000				2.10	%			3.00	%			1,064.80
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
BNP Paribas			2013~2018				53,015			USD	50,000				3.48	%			2.63	%			1,060.30
KEB Hana Bank			2013~2018				31,809			USD	30,000				3.48	%			2.63	%			1,060.30
Societe Generale			2013~2018				21,206			USD	20,000				3.48	%			2.63	%			1,060.30
HSBC			2013~2018				53,015			USD	50,000				3.47	%			2.63	%			1,060.30
Nomura			2013~2018				53,015			USD	50,000				3.47	%			2.63	%			1,060.30
Credit Agricole			2014~2020				110,680			USD	100,000				2.29	%			2.50	%			1,106.80
Societe Generale			2014~2020				55,340			USD	50,000				2.16	%			2.50	%			1,106.80
KEB Hana Bank			2014~2020				55,340			USD	50,000				2.16	%			2.50	%			1,106.80
KEB Hana Bank			2014~2020				55,340			USD	50,000				2.21	%			2.50	%			1,106.80
Standard Chartered			2014~2020				55,340			USD	50,000				2.21	%			2.50	%			1,106.80
HSBC			2014~2020				55,340			USD	50,000				2.21	%			2.50	%			1,106.80
Nomura			2014~2020				55,340			USD	50,000				2.21	%			2.50	%			1,106.80
BNP Paribas			2014~2020				55,340			USD	50,000				2.21	%			2.50	%			1,106.80
HSBC			2014~2020				55,340			USD	50,000				2.21	%			2.50	%			1,106.80
KEB Hana Bank			2017~2022				226,600			USD	200,000				1.94	%			2.63	%			1,133.00
Korea Development Bank			2017~2022				113,300			USD	100,000				1.94	%			2.63	%			1,133.00
Nomura			2017~2022				113,300			USD	100,000				1.95	%			2.63	%			1,133.00
Woori Bank			2017~2022				56,650			USD	50,000				1.95	%			2.63	%			1,133.00
Kookmin Bank			2017~2022				56,650			USD	50,000				1.95	%			2.63	%			1,133.00

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

11.	Derivatives, Continued

 

(6)	Interest rate swap contracts which are not designated as hedging instruments as of March 31, 2018 are as follows:

 

In millions of won										Contract interest rate per annum
Counterparty		Contract year				Contract amount				Pay				Receive
JP Morgan			2013~2018			W	150,000				3.58	%			3M CD+0.31	%
KEB Hana Bank			2017~2022				100,000				2.01	%			3M CD+0.24	%
KEB Hana Bank			2017~2022				100,000				2.06	%			3M CD+0.27	%
Nomura (*1)			2017~2037				30,000				2.05	%			3.08	%
KEB Hana Bank			2017~2021				200,000				2.45	%			3M CD+0.32	%
Export-import bank of Korea			2015~2031			USD	15,893				2.67	%			6M USD Libor
ING Bank			2015~2031			USD	7,861				2.67	%			6M USD Libor
BNP Paribas			2015~2031			USD	7,861				2.67	%			6M USD Libor

 

(*1)	2.05% of the contract paying interest rate is applied for five years from the date of issuance, and 3M CD+0.10% is applied thereafter.

 

(7)	Interest rate swap contracts which are designated as hedging instruments as of March 31, 2018 are as follows:

 

In millions of won

Contract interest rate per annum

Counterparty

Contract year

Contract amount

Pay

Receive

BNP Paribas

2009~2027

USD

92,120

4.16%

6M USD Libor

KFW

2009~2027

USD

92,120

4.16%

6M USD Libor

Credit Agricole

2016~2033

USD

96,297

3.98%~4.10%

6M USD Libor

SMBC

2016~2033

USD

125,927

4.05%~4.18%

6M USD Libor

Mizuho Bank

2016~2019

USD

36,890

1.56%

1.35

%

SMBC

2016~2019

USD

36,890

1.56%

1.35

%

Export-import bank of Korea

2016~2036

USD

2,564

3.00%

4.99

%

 

59

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

11.	Derivatives, Continued

 

(8)	Gains and losses on valuation and transaction of derivatives for the three-month periods ended March 31, 2018 and 2017 are as follows and included in finance income and costs in the consolidated interim 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) (*)
		March 31, 2018				March 31, 2017				March 31, 2018				March 31, 2017				March 31, 2018				March 31, 2017
Currency forward		W	(11,240	)			(28,635	)			5,530				(19,365	)			3,327				—
Currency swap			(66,380	)			(676,861	)			5,725				(20,249	)			(38,505	)			(10,333	)
Interest rate swap			4,630				2,021				(321	)			—				(3,367	)			—
		W	(72,990	)			(703,475)				10,934				(39,614	)			(38,545	)			(10,333	)

 

(*)	For the three-month period ended March 31, 2018, the net loss on valuation of derivatives applying cash flow hedge accounting of W20,748 million, net of tax, is included in other comprehensive income or loss.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

12.	Other Financial Assets

 

(1)	Other financial assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Loans and receivables		W	63,173				655,798				244,309				711,069
Allowance for doubtful accounts			—				(10,251	)			—				(8,948	)
Present value discount			(1,117	)			(42,406	)			(976	)			(39,813	)
Long-term/short-term financial instruments			1,455,036				441,342				1,702,084				542,430
Financial assets at fair value through profit or loss (*)			—				—				—				111,512
		W	1,517,092				1,044,483				1,945,417				1,316,250

 

(*)	Due to change in accounting policy, financial assets at fair value through profit or loss are presented separately from other financial assets.

 

(2)	Loans and receivables as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Face value				Allowance for doubtful accounts				Present value discount				Book value
Short-term loans and receivables
Loans for tuition		W	36,956				—				(1,117	)			35,839
Loans for housing			14,697				—				—				14,697
Fisheries loan			352				—				—				352
Other loans			11,168				—				—				11,168
			63,173				—				(1,117	)			62,056
Long-term loans and receivables
Loans for tuition			419,832				—				(42,323	)			377,509
Loans for housing			148,513				—				—				148,513
Loans for related parties			75,554				(10,251	)			—				65,303
Fisheries loan			640				—				(83	)			557
Other loans			11,259				—				—				11,259
			655,798				(10,251	)			(42,406	)			603,141
		W	718,971				(10,251	)			(43,523	)			665,197

 

In millions of won		December 31, 2017
		Face value				Allowance for doubtful accounts				Present value discount				Book value
Short-term loans and receivables
Loans for tuition		W	33,763				—				(976	)			32,787
Loans for housing			14,126				—				—				14,126
Fisheries loan			352				—				—				352
Other loans			196,068				—				—				196,068
			244,309				—				(976	)			243,333
Long-term loans and receivables
Loans for tuition			408,803				—				(39,716	)			369,087
Loans for housing			140,452				—				—				140,452
Loans for related parties			94,581				(8,948	)			—				85,633
Fisheries loan			960				—				(97	)			863
Other loans			66,273				—				—				66,273
			711,069				(8,948	)			(39,813	)			662,308
		W	955,378				(8,948	)			(40,789	)			905,641

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

12.	Other Financial Assets, Continued

 

(3)	Changes in the allowance for doubtful accounts of loans and receivables for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	8,948				4,532
Bad debt expense			1,322				2,465
Other			(19	)			1,951
Ending balance		W	10,251				8,948

 

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

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Time deposits		W	1,014,561				2,348				1,479,034				2
ABCP			—				—				145,000				65,600
CP			167,475				53,692				58,050				—
CD			30,000				—				10,000				—
RP			20,000				—				10,000				1,634
Others			223,000				385,302				—				475,194
		W	1,455,036				441,342				1,702,084				542,430

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

13.	Inventories

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

 

In millions of won		March 31, 2018
		Acquisition cost				Valuation allowance				Book value
Raw materials		W	3,324,376				(2,829	)			3,321,547
Merchandise			1,223				—				1,223
Work-in-progress			157,047				(1,028	)			156,019
Finished goods			60,084				(3,181	)			56,903
Supplies			1,662,058				(3,756	)			1,658,302
Inventories in transit			762,596				—				762,596
Other inventories			9,902				—				9,902
		W	5,977,286				(10,794	)			5,966,492

 

In millions of won		December 31, 2017
		Acquisition cost				Valuation allowance				Book value
Raw materials		W	3,528,835				(2,829	)			3,526,006
Merchandise			107				—				107
Work-in-progress			138,709				(1,028	)			137,681
Finished goods			72,923				(1,517	)			71,406
Supplies			1,581,661				(3,940	)			1,577,721
Inventories in transit			679,358				—				679,358
Other inventories			9,807				—				9,807
		W	6,011,400				(9,314	)			6,002,086

The allowance for loss on inventory valuation due to decrease in the net realizable value of inventory recognized in cost of sales was W1,270 million for the three-month period ended March 31, 2018. The reversal of the allowance for loss on inventory valuation due to increase in the net realizable value of inventory deducted from cost of sales was W437 million for the year ended December 31, 2017.

The amounts of loss from inventory valuation included in other gains or losses for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 were W210 million and W3,875 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 provides 12 energy storage system installation projects and 12 energy efficiency contracts as finance leases with a lease term of 2 to 8 years. Also, the Company entered into a PPA with the Comision Federal de Electricidad in Mexico to provide for 25 years (December 2013 to November 2038) of all electricity generated from the power plant after completion of its construction and collect rates consisting of fixed costs (to recover the capital) and variable costs during the contracted period.

 

(2)	Finance lease receivables as of March 31, 2018 and December 31, 2017 are as follows and included in current and non-current trade and other receivables, net, in the consolidated statements of financial position:

 

In millions of won		March 31, 2018								December 31, 2017
		Minimum lease payments				Present value of minimum lease payments				Minimum lease payments				Present value of minimum lease payments
Less than 1 year		W	106,092				68,439				49,542				13,067
1 ~ 5 years			413,667				230,910				381,181				203,990
More than 5 years			1,409,144				597,730				1,398,449				645,564
			1,928,903				897,079				1,829,172				862,621
Allowance for doubtful accounts							(143	)							—
						W	896,936								862,621

 

(3)	Changes in the allowance for doubtful accounts of finance lease receivables for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	—				—
Bad debt expense			143				—
Other			—				—
Ending balance		W	143				—

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

15.	Non-Financial Assets

 

Non-financial assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Advance payment		W	149,799				179,381				109,743				43,872
Prepaid expenses			360,983				95,352				251,715				90,118
Others (*1)			476,433				164,615				392,534				112,828
		W	987,215				439,348				753,992				246,818

 

(*1)	Details of others as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Tax refund receivables		W	87,169				1,223				89,762				1,940
Greenhouse gas emissions rights			207,741				—				135,211				—
Other quick assets (*2)			181,523				163,392				167,561				110,888
		W	476,433				164,615				392,534				112,828

 

(*2)	The Company has recognized W92,128 million of its rights in connection with the securities of Orano Expansion (formerly, AREVA NC Expansion) as non-current non-financial assets.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries

 

(1)	Consolidated subsidiaries as of March 31, 2018 and December 31, 2017 are as follows:

 

Subsidiaries		Key operation activities		Location		Percentage of ownership (%)
						March 31, 2018				December 31, 2017
Korea Hydro & Nuclear Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
Korea South-East Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
Korea Midland Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
Korea Western Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
Korea Southern Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
Korea East-West Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
KEPCO Engineering & Construction Company, Inc. (*1)		Architectural engineering for utility plant and others		KOREA			65.77	%			65.77	%
KEPCO Plant Service & Engineering Co., Ltd.		Utility plant maintenance and others		KOREA			51.00	%			51.00	%
KEPCO Nuclear Fuel Co., Ltd.		Nuclear fuel		KOREA			96.36	%			96.36	%
KEPCO KDN Co., Ltd.		Electric power information technology and others		KOREA			100.00	%			100.00	%
Garolim Tidal Power Plant Co., Ltd. (*2)		Power generation		KOREA			49.00	%			49.00	%
KEPCO International HongKong Ltd.		Holding company		HONG KONG			100.00	%			100.00	%
KEPCO International Philippines Inc.		Holding company		PHILIPPINES			100.00	%			100.00	%
KEPCO Gansu International Ltd.		Holding company		HONG KONG			100.00	%			100.00	%
KEPCO Philippines Holdings Inc.		Holding company		PHILIPPINES			100.00	%			100.00	%
KEPCO Philippines Corporation		Operation of utility plant		PHILIPPINES			100.00	%			100.00	%
KEPCO Ilijan Corporation		Construction and operation of utility plant		PHILIPPINES			51.00	%			51.00	%
KEPCO Lebanon SARL		Operation of utility plant		LEBANON			100.00	%			100.00	%
KEPCO Neimenggu International Ltd.		Holding company		HONG KONG			100.00	%			100.00	%
KEPCO Shanxi International Ltd.		Holding company		HONG KONG			100.00	%			100.00	%
KOMIPO Global Pte Ltd.		Holding company		SINGAPORE			100.00	%			100.00	%
KEPCO Canada Energy Ltd.		Resources development		CANADA			100.00	%			100.00	%
KEPCO Netherlands B.V.		Holding company		NETHERLANDS			100.00	%			100.00	%
KOREA Imouraren Uranium Investment Corp.		Holding company		FRANCE			100.00	%			100.00	%
KEPCO Australia Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOSEP Australia Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOMIPO Australia Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOWEPO Australia Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOSPO Australia Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KEPCO Middle East Holding Company		Holding company		BAHRAIN			100.00	%			100.00	%
Qatrana Electric Power Company		Construction and operation of utility plant		JORDAN			80.00	%			80.00	%
KHNP Canada Energy, Ltd.		Holding company		CANADA			100.00	%			100.00	%
KEPCO Bylong Australia Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
Korea Waterbury Uranium Limited Partnership		Resources development		CANADA			79.64	%			79.64	%
Korea Electric Power Nigeria Ltd.		Operation of utility plant		NIGERIA			100.00	%			100.00	%
KEPCO Holdings de Mexico		Holding company		MEXICO			100.00	%			100.00	%
KST Electric Power Company		Construction and operation of utility plant		MEXICO			56.00	%			56.00	%
KEPCO Energy Service Company		Operation of utility plant		MEXICO			100.00	%			100.00	%
KEPCO Netherlands S3 B.V.		Holding company		NETHERLANDS			100.00	%			100.00	%
PT. KOMIPO Pembangkitan Jawa Bali		Operation of utility plant		INDONESIA			51.00	%			51.00	%
PT. Cirebon Power Service (*2)		Operation of utility plant		INDONESIA			27.50	%			27.50	%
KOWEPO International Corporation		Operation of utility plant		PHILIPPINES			99.99	%			99.99	%
KOSPO Jordan LLC		Operation of utility plant		JORDAN			100.00	%			100.00	%
EWP Philippines Corporation		Holding company		PHILIPPINES			100.00	%			100.00	%
EWP America Inc.		Holding company		USA			100.00	%			100.00	%
EWP Renewable Corporation		Holding company		USA			100.00	%			100.00	%
DG Fairhaven Power, LLC		Power generation		USA			100.00	%			100.00	%
DG Whitefield, LLC		Power generation		USA			100.00	%			100.00	%
Springfield Power, LLC		Power generation		USA			100.00	%			100.00	%
KNF Canada Energy Limited		Holding company		CANADA			96.36	%			96.36	%
PT KEPCO Resource Indonesia		Holding company		INDONESIA			100.00	%			100.00	%
EWP Barbados 1 SRL		Holding company		BARBADOS			100.00	%			100.00	%
California Power Holdings, LLC		Power generation		USA			100.00	%			100.00	%
Gyeonggi Green Energy Co., Ltd.		Power generation		KOREA			62.01	%			62.01	%
PT. Tanggamus Electric Power		Power generation		INDONESIA			52.50	%			52.50	%
Gyeongju Wind Power Co., Ltd.		Power generation		KOREA			70.00	%			70.00	%
KOMIPO America Inc.		Holding company		USA			100.00	%			100.00	%
EWPRC Biomass Holdings, LLC		Holding company		USA			100.00	%			100.00	%
KOSEP USA, INC.		Power generation		USA			100.00	%			100.00	%
PT. EWP Indonesia		Holding company		INDONESIA			99.96	%			99.96	%

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(1)	Consolidated subsidiaries as of March 31, 2018 and December 31, 2017 are as follows, Continued:

 

						Percentage of ownership (%)
Subsidiaries		Key operation activities		Location		March 31, 2018				December 31, 2017
KEPCO Netherlands J3 B.V.		Holding company		NETHERLANDS			100.00	%			100.00	%
Korea Offshore Wind Power Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
Global One Pioneer B.V.		Holding company		NETHERLANDS			100.00	%			100.00	%
Global Energy Pioneer B.V.		Holding company		NETHERLANDS			100.00	%			100.00	%
Mira Power Limited (*3)		Power generation		PAKISTAN			76.00	%			76.00	%
KOSEP Material Co., Ltd. (*4)		Recycling fly ashes		KOREA			86.22	%			86.22	%
Commerce and Industry Energy Co., Ltd. (*5)		Power generation		KOREA			59.03	%			59.03	%
KEPCO Singapore Holdings Pte., Ltd.		Holding company		SINGAPORE			100.00	%			100.00	%
KOWEPO India Private Limited		Holding company		INDIA			100.00	%			100.00	%
KEPCO KPS Philippines Corp.		Utility plant maintenance and others		PHILIPPINES			51.00	%			51.00	%
KOSPO Chile SpA		Holding company		CHILE			100.00	%			100.00	%
PT. KOWEPO Sumsel Operation And Maintenance Services		Utility plant maintenance and others		INDONESIA			95.00	%			95.00	%
HeeMang Sunlight Power Co., Ltd.		Operation of utility plant		KOREA			100.00	%			100.00	%
Fujeij Wind Power Company		Operation of utility plant		JORDAN			100.00	%			100.00	%
KOSPO Youngnam Power Co., Ltd.		Operation of utility plant		KOREA			50.00	%			50.00	%
HI Carbon Professional Private Special Asset Investment Trust 1		Holding company		KOREA			96.67	%			96.67	%
Chitose Solar Power Plant LLC		Power generation		JAPAN			80.10	%			80.10	%
KEPCO Energy Solution Co. Ltd.		Energy service		KOREA			100.00	%			100.00	%
Solar School Plant Co., Ltd.		Power generation		KOREA			100.00	%			100.00	%
KOSPO Power Services Limitada		Utility plant maintenance and others		CHILE			65.00	%			65.00	%
Energy New Industry Specialized Investment Private Investment Trust		Holding company		KOREA			99.75	%			99.75	%
KOEN Bylong Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOMIPO Bylong Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOWEPO Bylong Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOSPO Bylong Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
EWP Bylong Pty., Ltd.		Resources development		AUSTRALIA			100.00	%			100.00	%
KOWEPO Lao International		Utility plant maintenance and others		LAOS			100.00	%			100.00	%
KEPCO US Inc.		Holding company		USA			100.00	%			100.00	%
KEPCO Alamosa LLC		Holding company		USA			50.10	%			50.10	%
Cogentrix Solar Services, LLC		Holding company		USA			50.10	%			50.10	%
Solar Investments I, LLC		Holding company		USA			50.10	%			50.10	%
Cogentrix of Alamosa, LLC		Power generation		USA			50.10	%			50.10	%
KEPCO-LG CNS Mangilao Holdings LLC		Holding company		USA			70.00	%			70.00	%
Mangilao Investment LLC		Holding company		USA			70.00	%			70.00	%
KEPCO-LG CNS Mangilao Solar, LLC		Power generation		USA			70.00	%			70.00	%
Jeju Hanlim Offshore Wind Co., Ltd.		Power generation		KOREA			68.84	%			70.22	%
PT. Siborpa Eco Power		Construction and operation of utility plant		INDONESIA			55.00	%			64.71	%
BSK E-New Industry Fund VII		Holding company		KOREA			81.47	%			81.47	%
e-New Industry LB Fund 1		Holding company		KOREA			75.92	%			75.92	%
Songhyun e-New Industry Fund		Holding company		KOREA			80.45	%			80.45	%
PT. Korea Energy Indonesia		Utility plant maintenance and others		INDONESIA			95.00	%			—
KOLAT SpA		Uility plant maintenance and others		CHILE			100.00	%			—
KEPCO California, LLC		Holding company		USA			100.00	%			—
KEPCO Mojave Holdings, LLC		Holding company		USA			100.00	%			—

 

(*1)	Considering treasury stocks, the effective percentage of ownership is 66.08%.

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

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

(*4)	The effective percentage of ownership has increased to 86.22% since Long Lasting Value exercised the put option to sell its investment to KOSEP during the year ended December 31, 2017.

(*5)

The Company guarantees a certain return on investment related to Commerce and Industry Energy Co., Ltd. for the financial investors. The financial investors have a right to sell their shares to the Company which can be exercised 84 months after the date of investment. Accordingly, the purchase price including the return on investment is classified as a liability.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(2)	Subsidiaries included in and excluded from consolidation for the three-month period ended March 31, 2018 are as follows:

<Subsidiaries included in consolidation during the three-month period ended March 31, 2018>

 

Subsidiary		Reason
PT. Korea Energy Indonesia		Newly established
KOLAT SpA		Newly established
KEPCO California, LLC		Newly established
KEPCO Mojave Holdings, LLC		Newly established

There are no subsidiaries excluded from consolidation during the three-month period ended March 31, 2018.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
Korea Hydro & Nuclear Power Co., Ltd.		W	55,359,977				29,815,280				1,962,306				64,499
Korea South-East Power Co., Ltd.			9,851,333				4,645,116				1,655,574				205,876
Korea Midland Power Co., Ltd.			10,357,108				6,408,339				1,449,382				234,580
Korea Western Power Co., Ltd.			9,976,827				5,987,581				1,387,280				100,400
Korea Southern Power Co., Ltd.			9,876,742				5,515,774				1,626,298				141,159
Korea East-West Power Co., Ltd.			8,856,991				4,159,815				1,607,157				123,035
KEPCO Engineering & Construction Company, Inc.			805,515				357,417				86,250				1,724
KEPCO Plant Service & Engineering Co., Ltd.			1,224,932				368,373				250,177				21,222
KEPCO Nuclear Fuel Co., Ltd.			777,629				408,435				56,971				(1,135	)
KEPCO KDN Co., Ltd.			534,605				173,427				131,132				8,667
Garolim Tidal Power Plant Co., Ltd.			619				351				—				(6	)
KEPCO International HongKong Ltd.			153,535				1				—				712
KEPCO International Philippines Inc.			101,895				1,324				—				(405	)
KEPCO Gansu International Ltd.			11,514				491				—				—
KEPCO Philippines Holdings Inc.			120,045				30				—				577
KEPCO Philippines Corporation			6,056				154				—				27
KEPCO Ilijan Corporation			487,720				63,244				24,790				9,928
KEPCO Lebanon SARL			1,472				9,100				—				555
KEPCO Neimenggu International Ltd.			165,109				—				—				(70	)
KEPCO Shanxi International Ltd.			495,712				194,607				—				(2,193	)
KOMIPO Global Pte Ltd.			228,881				1,496				—				1,917
KEPCO Canada Energy Ltd.			128				28				—				(7	)
KEPCO Netherlands B.V.			114,395				67				—				(8	)
KOREA Imouraren Uranium Investment Corp.			155,145				157				—				(23	)
KEPCO Australia Pty., Ltd.			457,731				529				—				8
KOSEP Australia Pty., Ltd.			31,130				1,827				5,151				1,029
KOMIPO Australia Pty., Ltd.			33,388				3,775				5,151				1,029
KOWEPO Australia Pty., Ltd.			33,519				3,787				5,173				217
KOSPO Australia Pty., Ltd.			31,485				3,027				5,151				3,796
KEPCO Middle East Holding Company			89,024				84,825				—				(753	)
Qatrana Electric Power Company			462,116				324,764				4,669				5,089
KHNP Canada Energy, Ltd.			45,334				33				—				(18	)
KEPCO Bylong Australia Pty., Ltd.			241,561				280,937				—				(5,003	)
Korea Waterbury Uranium Limited Partnership			20,884				133				—				(12	)
Korea Electric Power Nigeria Ltd.			172				51				175				(42	)
KEPCO Holdings de Mexico			238				46				—				(16	)
KST Electric Power Company			547,969				475,472				34,808				4,822
KEPCO Energy Service Company			1,787				1,097				1,318				335
KEPCO Netherlands S3 B.V.			46,472				84				—				12
PT. KOMIPO Pembangkitan Jawa Bali			13,941				4,125				6,543				3,616
PT. Cirebon Power Service			3,012				155				1,665				65
KOWEPO International Corporation			—				7				—				—
KOSPO Jordan LLC			24,741				13,602				2,139				700
EWP Philippines Corporation			1,622				797				—				(5	)
EWP America Inc. (*1)			77,334				68,349				6,997				927
KNF Canada Energy Limited			1,813				20				—				(9	)
PT KEPCO Resource Indonesia			394				—				—				(96	)
EWP Barbados 1 SRL			235,347				602				—				(538	)
Gyeonggi Green Energy Co., Ltd.			277,688				194,428				21,679				(402	)
PT. Tanggamus Electric Power			179,469				156,576				2,191				4,479
Gyeongju Wind Power Co., Ltd.			114,811				82,017				6,163				2,639
KOMIPO America Inc.			10,070				546				—				(417	)
KOSEP USA, INC.			63				4,386				—				4,541
PT. EWP Indonesia			5,223				13				—				813

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
KEPCO Netherlands J3 B.V.		W	122,057				96				—				(14	)
Korea Offshore Wind Power Co., Ltd.			186,968				105				—				(1,346	)
Global One Pioneer B.V.			152				67				—				(27	)
Global Energy Pioneer B.V.			309				72				—				(29	)
Mira Power Limited			202,687				159,419				—				472
KOSEP Material Co., Ltd.			1,828				1,162				271				(637	)
Commerce and Industry Energy Co., Ltd.			98,378				87,680				6,593				(505	)
KEPCO Singapore Holdings Pte., Ltd.			3,244				4				—				(6	)
KOWEPO India Private Limited			765				—				—				—
KEPCO KPS Philippines Corp.			6,905				412				1,517				398
KOSPO Chile SpA			129,126				50,902				—				335
PT. KOWEPO Sumsel Operation And Maintenance Services			2,382				298				1,790				597
HeeMang Sunlight Power Co., Ltd.			6,896				3,429				30				(15	)
Fujeij Wind Power Company			178,499				174,018				—				(1,077	)
KOSPO Youngnam Power Co.,Ltd.			421,340				337,102				103,276				4,755
HI Carbon Professional Private Special Asset Investment Trust 1 (formerly, Global One Carbon Private Equity Investment Trust 2)			2,993				—				—				3
Chitose Solar Power Plant LLC			132,760				117,120				3,403				360
KEPCO Energy Solution Co. Ltd.			304,917				3,591				2,337				301
Solar School Plant Co., Ltd.			202,456				1,233				189				340
KOSPO Power Services Limitada			4,879				1,249				2,812				781
Energy New Industry Specialized Investment Private Investment Trust(*3)			505,865				2,071				—				(295	)
KOEN Bylong Pty., Ltd.			5,763				—				—				—
KOMIPO Bylong Pty., Ltd.			5,763				—				—				—
KOWEPO Bylong Pty., Ltd.			5,765				17				—				—
KOSPO Bylong Pty., Ltd.			5,765				17				—				(16	)
EWP Bylong Pty., Ltd.			5,765				17				—				(16	)
KOWEPO Lao International			3,463				1,344				938				322
KEPCO US Inc.			16,835				—				—				—
KEPCO Alamosa LLC			32,840				475				—				(149	)
Cogentrix Solar Services, LLC (*2)			79,441				53,214				2,086				(43	)
KEPCO-LG CNS Mangilao Holdings LLC			24,021				24,668				—				(274	)
Mangilao Investment LLC			24,021				—				—				—
KEPCO-LG CNS Mangilao Solar, LLC			23,892				135				—				(1	)
Jeju Hanlim Offshore Wind Co., Ltd.			17,241				92				—				(5	)
PT. Siborpa Eco Power			12,826				241				—				(793	)
PT. Korea Energy Indonesia			910				—				—				—
KOLAT SpA			35,834				—				—				—
KEPCO California, LLC			40,484				—				—				(44	)
KEPCO Mojave Holdings, LLC			101,521				63,087				—				(1,783	)

 

(*1)	Financial information of EWP America Inc. includes that of six other subsidiaries, EWP Renewable Corporation, DG Fairhaven Power, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

(*2)	Financial information of Cogentrix Solar Services, LLC includes that of two other subsidiaries, Solar Investments I, LLC and Cogentrix of Alamosa, LLC.

(*3)	Financial information of Energy New Industry Specialized Investment Private Investment Trust includes that of three other subsidiaries, BSK E-New Industry Fund VII, e-New Industry LB Fund 1 and Songhyun e-New Industry Fund.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
Korea Hydro & Nuclear Power Co., Ltd.		W	55,011,096				29,252,816				9,415,751				854,346
Korea South-East Power Co., Ltd.			9,879,577				4,844,184				5,387,846				130,371
Korea Midland Power Co., Ltd.			9,893,822				6,148,173				4,167,009				104,591
Korea Western Power Co., Ltd.			9,660,426				5,739,534				4,199,079				110,939
Korea Southern Power Co., Ltd.			9,648,741				5,401,216				4,397,552				98,817
Korea East-West Power Co., Ltd.			8,855,518				4,204,187				4,644,330				217,599
KEPCO Engineering & Construction Company, Inc.			762,166				305,134				490,193				21,222
KEPCO Plant Service & Engineering Co., Ltd.			1,195,086				294,689				1,232,113				135,482
KEPCO Nuclear Fuel Co., Ltd.			792,187				421,088				279,664				4,557
KEPCO KDN Co., Ltd.			524,520				155,715				619,470				48,968
Garolim Tidal Power Plant Co., Ltd.			619				345				—				(12	)
KEPCO International HongKong Ltd.			153,529				1				—				4,380
KEPCO International Philippines Inc.			102,323				886				—				47,201
KEPCO Gansu International Ltd.			11,567				493				—				(29	)
KEPCO Philippines Holdings Inc.			127,922				2,621				—				43,218
KEPCO Philippines Corporation			6,293				114				—				2,098
KEPCO Ilijan Corporation			474,624				57,801				109,183				66,320
KEPCO Lebanon SARL			1,069				9,281				—				(219	)
KEPCO Neimenggu International Ltd.			165,937				—				—				500
KEPCO Shanxi International Ltd.			497,990				193,309				—				3,796
KOMIPO Global Pte Ltd.			225,411				1,497				—				21,858
KEPCO Canada Energy Ltd.			132				22				—				(32	)
KEPCO Netherlands B.V.			114,911				49				—				17,309
KOREA Imouraren Uranium Investment Corp.			151,278				131				—				1,490
KEPCO Australia Pty., Ltd.			466,654				569				—				(568	)
KOSEP Australia Pty., Ltd.			27,076				333				12,096				1,601
KOMIPO Australia Pty., Ltd.			31,441				4,691				12,096				1,133
KOWEPO Australia Pty., Ltd.			31,586				4,691				12,096				1,232
KOSPO Australia Pty., Ltd.			29,472				4,221				12,096				(2,759	)
KEPCO Middle East Holding Company			95,812				90,842				—				2,913
Qatrana Electric Power Company			460,206				327,401				18,892				23,310
KHNP Canada Energy, Ltd.			51,994				31				—				(92	)
KEPCO Bylong Australia Pty., Ltd.			242,364				277,549				—				20,271
Korea Waterbury Uranium Limited Partnership			20,886				136				—				(59	)
Korea Electric Power Nigeria Ltd.			238				76				2,164				29
KEPCO Holdings de Mexico			235				30				—				(20	)
KST Electric Power Company			546,242				478,230				120,126				16,154
KEPCO Energy Service Company			1,793				451				6,773				976
KEPCO Netherlands S3 B.V.			46,642				53				—				2,382
PT. KOMIPO Pembangkitan Jawa Bali			11,261				4,769				20,956				4,666
PT. Cirebon Power Service			2,808				155				7,439				592
KOWEPO International Corporation			—				8				—				(2	)
KOSPO Jordan LLC			24,077				13,594				7,331				953
EWP Philippines Corporation			1,708				836				—				(17	)
EWP America Inc. (*1)			79,854				67,308				23,543				(9,737	)
KNF Canada Energy Limited			1,884				31				—				(43	)
PT KEPCO Resource Indonesia			491				—				—				(311	)
EWP Barbados 1 SRL			235,096				450				—				(2,585	)
Gyeonggi Green Energy Co., Ltd.			282,408				199,160				95,192				3,203
PT. Tanggamus Electric Power			179,317				160,144				34,281				4,640
Gyeongju Wind Power Co., Ltd.			112,279				82,124				7,219				2,400
KOMIPO America Inc.			10,505				521				—				2,071
KOSEP USA, INC.			184				9,065				—				26,997
PT. EWP Indonesia			2,035				23				—				1,916

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(3)	Summary of financial information of consolidated subsidiaries as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Subsidiaries		Total assets				Total liabilities				Sales				Profit (loss) for the period
KEPCO Netherlands J3 B.V.		W	122,612				76				—				12,115
Korea Offshore Wind Power Co., Ltd.			190,195				1,985				—				(6,997	)
Global One Pioneer B.V.			151				38				—				(80	)
Global Energy Pioneer B.V.			309				41				—				(87	)
Mira Power Limited			208,150				163,198				—				737
KOSEP Material Co., Ltd.			2,751				1,448				3,128				320
Commerce and Industry Energy Co., Ltd.			99,129				87,926				30,577				(749	)
KEPCO Singapore Holdings Pte., Ltd.			3,265				4				—				(24	)
KOWEPO India Private Limited			781				—				—				(46	)
KEPCO KPS Philippines Corp.			6,636				235				6,840				555
KOSPO Chile SpA			133,570				50,109				—				1,066
PT. KOWEPO Sumsel Operation And Maintenance Services			1,350				279				7,651				659
HeeMang Sunlight Power Co., Ltd.			6,876				3,395				105				(229	)
Fujeij Wind Power Company			165,636				156,099				—				8,836
KOSPO Youngnam Power Co.,Ltd.			412,785				333,302				68,973				939
HI Carbon Professional Private Special Asset Investment Trust 1 (formerly, Global One Carbon Private Equity Investment Trust 2)			3,002				—				—				12
Chitose Solar Power Plant LLC			136,098				121,622				7,083				4,100
KEPCO Energy Solution Co. Ltd.			313,401				12,376				5,544				1,325
Solar School Plant Co., Ltd.			201,482				599				67				874
KOSPO Power Services Limitada			3,901				887				11,067				666
Energy New Industry Specialized Investment Private Investment Trust(*3)			506,207				2,118				—				52
KOEN Bylong Pty., Ltd.			5,875				—				—				—
KOMIPO Bylong Pty., Ltd.			5,875				—				—				—
KOWEPO Bylong Pty., Ltd.			5,875				—				—				—
KOSPO Bylong Pty., Ltd.			5,875				—				—				—
EWP Bylong Pty., Ltd.			5,875				—				—				—
KOWEPO Lao International			3,259				1,452				3,624				1,881
KEPCO US Inc.			16,913				—				—				—
KEPCO Alamosa LLC			33,144				492				—				(218	)
Cogentrix Solar Services, LLC (*2)			84,458				53,116				8,958				(112	)
KEPCO-LG CNS Mangilao Holdings LLC			24,131				24,395				—				(278	)
Mangilao Investment LLC			24,131				—				—				—
KEPCO-LG CNS Mangilao Solar, LLC			24,002				134				—				(278	)
Jeju Hanlim Offshore Wind Co., Ltd.			36				—				—				—
PT. Siborpa Eco Power			11,562				214				—				(518	)

 

(*1)	Financial information of EWP America Inc. includes that of six other subsidiaries, EWP Renewable Corporation, DG Fairhaven Power, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

(*2)	Financial information of Cogentrix Solar Services, LLC includes that of two other subsidiaries, Solar Investments I, LLC and Cogentrix of Alamosa, LLC.

(*3)	Financial information of Energy New Industry Specialized Investment Private Investment Trust includes that of three other subsidiaries, BSK E-New Industry Fund VII, e-New Industry LB Fund 1 and Songhyun e-New Industry Fund.

 

(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

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(5)	Details of non-controlling interest prior to intra-group eliminations as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Description		KEPCO Ilijan Corporation				KEPCO Plant Service & Engineering Co., Ltd.				KEPCO Engineering & Construction Company, Inc.				Others				Total
Percentage of ownership			49.00	%			49.00	%			33.92	%
Current assets		W	179,497				651,704				294,799				1,318,622				2,444,622
Non-current assets			308,223				573,228				510,716				2,683,669				4,075,836
Current liabilities			(25,153	)			(345,270	)			(300,386	)			(378,254	)			(1,049,063	)
Non-current liabilities			(38,091	)			(23,103	)			(57,031	)			(2,053,314	)			(2,171,539	)
Net assets			424,476				856,559				448,098				1,570,723				3,299,856
Book value of non-controlling interest			207,993				419,714				151,995				659,704				1,439,406
Sales			24,790				250,177				86,250				255,866				617,083
Profit for the period			9,928				21,222				1,724				32,367				65,241
Profit for the period attributable to non-controlling interest			4,865				10,399				585				13,984				29,833
Cash flows from operating activities			27,558				34,556				25,756				45,481				133,351
Cash flows from investing activities			(12,182	)			(95,946	)			8,623				(235,525	)			(335,030	)
Cash flows from financing activities before dividends to non-controlling interest			—				—				(9,061	)			(2,008	)			(11,069	)
Dividends to non-controlling interest			—				—				—				(4,415	)			(4,415	)
Effect of exchange rate fluctuation			(469	)			(171	)			(70	)			202,576				201,866
Net increase (decrease) of cash and cash equivalents			14,907				(61,561	)			25,248				6,109				(15,297	)

 

In millions of won
December 31, 2017
Description		KEPCO Ilijan Corporation				KEPCO Plant Service & Engineering Co., Ltd.				KEPCO Engineering & Construction Company, Inc.				Others				Total
Percentage of ownership			49.00	%			49.00	%			33.92	%
Current assets		W	160,588				623,934				257,529				1,269,175				2,311,226
Non-current assets			314,036				571,152				504,637				2,588,833				3,978,658
Current liabilities			(21,546	)			(278,562	)			(221,860	)			(394,320	)			(916,288	)
Non-current liabilities			(36,255	)			(16,127	)			(83,274	)			(2,014,925	)			(2,150,581	)
Net assets			416,823				900,397				457,032				1,448,763				3,223,015
Book value of non-controlling interest			204,243				441,194				155,025				612,245				1,412,707
Sales			109,183				1,232,113				490,193				719,087				2,550,576
Profit for the period			66,320				135,482				21,222				66,419				289,443
Profit for the period attributable to non-controlling interest			32,497				66,386				7,199				20,447				126,529
Cash flows from operating activities			123,534				129,801				62,578				60,021				375,934
Cash flows from investing activities			(5,276	)			(193,408	)			(8,622	)			(409,353	)			(616,659	)
Cash flows from financing activities before dividends to non-controlling interest			(44,442	)			(15,606	)			(55,504	)			339,432				223,880
Dividends to non-controlling interest			(48,855	)			(14,994	)			(1,419	)			(20,840	)			(86,108	)
Effect of exchange rate fluctuation			(7,432	)			(1,267	)			(101	)			(24,206	)			(33,006	)
Net increase (decrease) of cash and cash equivalents			17,529				(95,474	)			(3,068	)			(54,946	)			(135,959	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

16.	Consolidated Subsidiaries, Continued

 

(6)	Changes in goodwill

 

(i)

Details of goodwill as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Acquisition cost		W	2,582				2,582
Accumulated impairment			—				—
Carrying book value		W	2,582				2,582

 

(ii)

There are no changes in goodwill for the three-month period ended March 31, 2018 and for the year ended December 31, 2017.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures

 

(1)	Investments in associates and joint ventures as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
<Associates>
Korea Gas Corporation (*1)		Importing and wholesaling LNG			KOREA				20.47	%		W	94,500				1,783,771
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering and others			KOREA				29.00	%			4,727				20,981
YTN Co., Ltd.		Broadcasting			KOREA				21.43	%			59,000				40,178
Cheongna Energy Co., Ltd.		Generating and distributing vapor and hot/cold water			KOREA				43.90	%			48,353				8,348
Gangwon Wind Power Co., Ltd. (*2)		Power generation			KOREA				15.00	%			5,725				12,292
Hyundai Green Power Co., Ltd.		Power generation			KOREA				29.00	%			88,885				114,247
Korea Power Exchange (*5)		Management of power market and others			KOREA				100.00	%			127,839				250,857
AMEC Partners Korea Ltd. (*3)		Resources development			KOREA				19.00	%			707				213
Hyundai Energy Co., Ltd. (*8)		Power generation			KOREA				30.66	%			71,070				—
Ecollite Co., Ltd.		Artificial light-weight aggregate			KOREA				36.10	%			1,516				—
Taebaek Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,810				5,218
Taeback Guinemi Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,420				3,082
Pyeongchang Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,875				4,432
Daeryun Power Co., Ltd. (*3, 9)		Power generation			KOREA				13.13	%			25,477				25,959
Changjuk Wind Power Co., Ltd.		Power generation			KOREA				30.00	%			3,801				7,278
KNH Solar Co., Ltd.		Power generation			KOREA				27.00	%			1,296				2,058
SPC Power Corporation		Power generation			PHILIPPINES				38.00	%			20,635				51,131
Gemeng International Energy Co., Ltd.		Power generation			CHINA				34.00	%			413,153				667,528
PT. Cirebon Electric Power		Power generation			INDONESIA				27.50	%			40,365				97,890
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				28,222
PT. Bayan Resources TBK		Resources development			INDONESIA				20.00	%			615,860				485,720
S-Power Co., Ltd.		Power generation			KOREA				49.00	%			132,300				121,290
Pioneer Gas Power Limited (*7)		Power generation			INDIA				38.50	%			49,831				34,639
Eurasia Energy Holdings		Power generation and resources development			RUSSIA				40.00	%			461				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Power generation			LAOS				25.00	%			74,505				62,359
Hadong Mineral Fiber Co., Ltd. (*3)		Recycling fly ashes			KOREA				8.33	%			50				—
Green Biomass Co., Ltd. (*11)		Power generation			KOREA				8.80	%			714				185
PT. Mutiara Jawa		Manufacturing and operating floating coal terminal			INDONESIA				29.00	%			2,978				—
Samcheok Eco Materials Co., Ltd. (*10)		Recycling fly ashes			KOREA				2.35	%			686				—
Noeul Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			1,740				2,863
Naepo Green Energy Co., Ltd.		Power generation			KOREA				41.67	%			29,200				20,012
Goseong Green Energy Co., Ltd. (*2)		Power generation			KOREA				1.12	%			2,900				2,580
Gangneung Eco Power Co., Ltd. (*2)		Power generation			KOREA				1.61	%			2,900				2,572
Shin Pyeongtaek Power Co., Ltd.		Power generation			KOREA				40.00	%			72,000				61,330
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Power generation			KOREA				28.00	%			194				183
Dongducheon Dream Power Co., Ltd.		Power generation			KOREA				33.61	%			111,134				48,907
Jinbhuvish Power Generation Pvt. Ltd. (*2)		Power generation			INDIA				5.16	%			9,000				—
SE Green Energy Co., Ltd.		Power generation			KOREA				47.76	%			3,821				3,459
Daegu Photovoltaic Co., Ltd.		Power generation			KOREA				29.00	%			1,230				1,661
Jeongam Wind Power Co., Ltd.		Power generation			KOREA				40.00	%			5,580				3,631
Korea Power Engineering Service Co., Ltd.		Construction and service			KOREA				29.00	%			290				3,629
Busan Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			5,243				8,067
Gunsan Bio Energy Co., Ltd. (*2)		Power generation			KOREA				18.87	%			1,000				—
Korea Electric Vehicle Charging Service		Electric vehicle charge service			KOREA				28.00	%			2,604				1,573
Ulleungdo Natural Energy Co., Ltd.		Renewable power generation			KOREA				29.85	%			8,000				6,296
Korea Nuclear Partners Co., Ltd.		Electric material agency			KOREA				29.00	%			290				324
Tamra Offshore Wind Power Co., Ltd.		Power generation			KOREA				27.00	%			8,910				10,291
Korea Electric Power Corporation Fund (*12)		Developing electric enterprises			KOREA				98.09	%			51,500				53,285
Energy Infra Asset Management Co., Ltd. (*3)		Asset management			KOREA				9.90	%			297				513
Daegu clean Energy Co., Ltd.		Renewable power generation			KOREA				28.00	%			140				52
YaksuESS Co., Ltd		Installing ESS related equipment			KOREA				29.00	%			210				69

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
Nepal Water & Energy Development Company Private Limited (*14)		Construction and operation of utility plant			NEPAL				62.13	%		W	33,577				30,261
Gwangyang Green Energy Co., Ltd.		Power generation			KOREA				20.00	%			2,000				1,672
PND solar., Ltd		Power generation			KOREA				29.00	%			1,250				1,153
													2,271,865				4,092,261
<Joint ventures>
KEPCO-Uhde Inc. (*6)		Power generation			KOREA				52.80	%			11,355				256
Eco Biomass Energy Sdn. Bhd. (*6)		Power generation			MALAYSIA				61.53	%			14,439				—
Datang Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			27,660				29,014
Shuweihat Asia Power Investment B.V.		Holding company			NETHERLANDS				49.00	%			46,037				17,961
Shuweihat Asia Operation & Maintenance Company (*6)		Maintenance of utility plant			CAYMAN				55.00	%			30				879
Waterbury Lake Uranium L.P.		Resources development			CANADA				35.76	%			26,602				19,199
ASM-BG Investicii AD		Power generation			BULGARIA				50.00	%			16,101				20,750
RES Technology AD		Power generation			BULGARIA				50.00	%			15,595				14,818
KV Holdings, Inc.		Power generation			PHILIPPINES				40.00	%			2,103				1,596
KEPCO SPC Power Corporation (*6)		Construction and operation of utility plant			PHILIPPINES				75.20	%			94,579				220,219
Gansu Datang Yumen Wind Power Co., Ltd.		Power generation			CHINA				40.00	%			16,621				11,160
Datang Chifeng Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			121,928				182,989
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			10,858				10,891
Rabigh Electricity Company		Power generation			SAUDI ARABIA				40.00	%			109,743				106,542
Rabigh Operation & Maintenance Company Limited		Maintenance of utility plant			SAUDI ARABIA				40.00	%			70				4,048
Jamaica Public Service Company Limited		Power generation			JAMAICA				40.00	%			301,910				220,142
KW Nuclear Components Co., Ltd.		Manufacturing			KOREA				45.00	%			833				6,435
Busan Shinho Solar Power Co., Ltd.		Power generation			KOREA				25.00	%			2,100				4,162
GS Donghae Electric Power Co., Ltd.		Power generation			KOREA				34.00	%			204,000				234,399
Global Trade Of Power System Co., Ltd.		Exporting products and technology of small or medium business by proxy			KOREA				29.00	%			290				510
Expressway Solar-light Power Generation Co., Ltd.		Power generation			KOREA				29.00	%			1,856				2,262
Daejung Offshore Wind Power Co., Ltd.		Power generation			KOREA				49.90	%			5,190				2,901
Amman Asia Electric Power Company (*6)		Power generation			JORDAN				60.00	%			111,476				156,733
KAPES, Inc. (*6)		R&D			KOREA				51.00	%			5,629				6,622
Dangjin Eco Power Co., Ltd.		Power generation			KOREA				34.00	%			61,540				21,806
Honam Wind Power Co., Ltd.		Power generation			KOREA				29.00	%			3,480				4,195
Chun-cheon Energy Co., Ltd.		Power generation			KOREA				29.90	%			52,700				51,081
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)		Power generation			KOREA				15.00	%			3,000				2,843
Nghi Son 2 Power Ltd.		Power generation			VIETNAM				50.00	%			2,781				—
Kelar S.A (*6)		Power generation			CHILE				65.00	%			77,220				61,394
PT. Tanjung Power Indonesia		Power generation			INDONESIA				35.00	%			746				5,021
Incheon New Power Co., Ltd.		Power generation			KOREA				29.00	%			461				656
Seokmun Energy Co., Ltd.		Power generation			KOREA				29.00	%			15,370				14,103
Daehan Wind Power PSC		Power generation			JORDAN				50.00	%			1,354				496
Barakah One Company (*13)		Power generation			UAE				18.00	%			118				4,320
Nawah Energy Company (*13)		Operation of utility plant			UAE				18.00	%			296				261
MOMENTUM		International thermonuclear experimental reactor construction management			FRANCE				33.33	%			1				483
Daegu Green Power Co., Ltd.		Power generation			KOREA				29.00	%			46,225				43,182
Yeonggwang Wind Power Co., Ltd.		Power generation			KOREA				41.00	%			15,375				15,386
Chester Solar IV SpA (*6)		Power generation			CHILE				81.82	%			1,700				738
Chester Solar V SpA (*6)		Power generation			CHILE				81.82	%			525				81
Diego de Almagro Solar SpA (*6)		Power generation			CHILE				81.82	%			2,091				1,521
South Jamaica Power Company Limited		Power generation			JAMAICA				20.00	%			10,823				10,373
Daesan Green Energy Co., Ltd.		Power generation			KOREA				35.00	%			35				34
RE Holiday Holdings LLC		Power generation			USA				50.00	%			40,835				40,728

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
RE Pioneer Holdings LLC		Power generation			USA				50.00	%		W	26,518				26,002
RE Barren Ridge 1 Holdings LLC		Power generation			USA				50.00	%			26,641				25,614
RE Astoria 2 LandCo LLC		Power generation			USA				50.00	%			4,933				4,633
RE Barren Ridge LandCo LLC		Power generation			USA				50.00	%			2,080				1,960
Laurel SpA (*6)		Power generation			CHILE				81.82	%			1,222				1,119
													1,545,075				1,612,518
												W	3,816,940				5,704,779

(*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 Government regulates the Company’s ability to make operating and financial decisions over the entity, as the Government requires maintaining arms-length transactions between KPX and the Company’s other subsidiaries. The Company can exercise significant influence by its right to nominate directors to the board of directors of the entity.

(*6)	According to the shareholders’ agreement, all critical financial and operating decisions must be agreed to by all ownership parties. For this reason, the entities are classified as joint ventures.

(*7)	As of reporting date, the annual reporting period of all associates and joint ventures ends on December 31, except for Pioneer Gas Power Limited whose reporting period ends on March 31.

(*8)

As of March 31, 2018, 15.64% of ownership of Hyundai Energy Co., Ltd. is held by NH Power ll Co., Ltd. and NH Bank. According to the shareholders’ agreement reached on March 2011, not only does the Company have a call option to acquire the investment in Hyundai Energy Co., Ltd. from NH Power ll Co., Ltd. and NH Bank with a certain rate of return, NH Power ll Co., Ltd. and NH Bank also have put options to dispose of their investment to the Company. In connection with this agreement, the Company applied the equity method on the investment in Hyundai Energy Co., Ltd. with 46.30% of ownership.

(*9)	The effective percentage of ownership is 19.45% considering stock purchase options.

(*10)

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

(*11)

The effective percentage of ownership is less than 20% but the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity and the fact that the dominant portion of the investee’s sales transactions is generated from the Company.

(*12)

The effective percentage of ownership is more than 50% but the Company does not hold control over relevant business while it exercises significant influence by participating in the Investment Decision Committee. For this reason, the entity is classified as an associate.

(*13)

The effective percentage of ownership is less than 20% but the Company has joint control over the entity as decisions on the major activities require the unanimous consent of the parties that collectively control the entity

(*14)

The effective percentage of ownership is more than 50% but the Company does not hold control over the entity according to the shareholders’ agreement. For this reason, the entity is classified as an associate.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
<Associates>
Korea Gas Corporation (*1)		Importing and wholesaling LNG			KOREA				20.47	%		W	94,500				1,618,868
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering and others			KOREA				29.00	%			4,727				21,838
YTN Co., Ltd.		Broadcasting			KOREA				21.43	%			59,000				40,606
Cheongna Energy Co., Ltd.		Generating and distributing vapor and hot/cold water			KOREA				43.90	%			48,353				8,337
Gangwon Wind Power Co., Ltd. (*2)		Power generation			KOREA				15.00	%			5,725				13,855
Hyundai Green Power Co., Ltd.		Power generation			KOREA				29.00	%			88,885				114,806
Korea Power Exchange (*5)		Management of power market and others			KOREA				100.00	%			127,839				237,631
AMEC Partners Korea Ltd. (*3)		Resources development			KOREA				19.00	%			707				215
Hyundai Energy Co., Ltd. (*8)		Power generation			KOREA				30.66	%			71,070				—
Ecollite Co., Ltd.		Artificial light-weight aggregate			KOREA				36.10	%			1,516				—
Taebaek Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,810				5,319
Taeback Guinemi Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,420				3,089
Pyeongchang Wind Power Co., Ltd.		Power generation			KOREA				25.00	%			3,875				4,136
Daeryun Power Co., Ltd. (*3, 9)		Power generation			KOREA				13.13	%			25,477				25,113
Changjuk Wind Power Co., Ltd.		Power generation			KOREA				30.00	%			3,801				7,515
KNH Solar Co., Ltd.		Power generation			KOREA				27.00	%			1,296				2,218
SPC Power Corporation		Power generation			PHILIPPINES				38.00	%			20,635				52,283
Gemeng International Energy Co., Ltd.		Power generation			CHINA				34.00	%			413,153				649,973
PT. Cirebon Electric Power		Power generation			INDONESIA				27.50	%			40,365				97,410
KNOC Nigerian East Oil Co., Ltd. (*4)		Resources development			NIGERIA				14.63	%			12				—
KNOC Nigerian West Oil Co., Ltd. (*4)		Resources development			NIGERIA				14.63	%			12				—
PT Wampu Electric Power		Power generation			INDONESIA				46.00	%			21,292				29,403
PT. Bayan Resources TBK		Resources development			INDONESIA				20.00	%			615,860				451,831
S-Power Co., Ltd.		Power generation			KOREA				49.00	%			132,300				116,945
Pioneer Gas Power Limited (*7)		Power generation			INDIA				38.50	%			49,831				38,659
Eurasia Energy Holdings		Power generation and resources development			RUSSIA				40.00	%			461				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Power generation			LAOS				25.00	%			71,481				61,779
Hadong Mineral Fiber Co., Ltd. (*3)		Recycling fly ashes			KOREA				8.33	%			50				—
Green Biomass Co., Ltd. (*11, 14)		Power generation			KOREA				8.80	%			714				208
PT. Mutiara Jawa		Manufacturing and operating floating coal terminal			INDONESIA				29.00	%			2,978				—
Samcheok Eco Materials Co., Ltd. (*10)		Recycling fly ashes			KOREA				2.35	%			686				—
Noeul Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			1,740				2,067
Naepo Green Energy Co., Ltd.		Power generation			KOREA				41.67	%			29,200				20,598
Goseong Green Energy Co., Ltd. (*2)		Power generation			KOREA				1.12	%			2,900				2,597
Gangneung Eco Power Co., Ltd. (*2)		Power generation			KOREA				1.61	%			2,900				2,583
Shin Pyeongtaek Power Co., Ltd.		Power generation			KOREA				40.00	%			43,920				34,903
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Power generation			KOREA				28.00	%			194				187
Dongducheon Dream Power Co., Ltd.		Power generation			KOREA				33.61	%			111,134				53,233
Jinbhuvish Power Generation Pvt. Ltd. (*2)		Power generation			INDIA				5.16	%			9,000				—
SE Green Energy Co., Ltd.		Power generation			KOREA				47.76	%			3,821				3,476
Daegu Photovoltaic Co., Ltd.		Power generation			KOREA				29.00	%			1,230				1,718
Jeongam Wind Power Co., Ltd.		Power generation			KOREA				40.00	%			5,580				3,763
Korea Power Engineering Service Co., Ltd.		Construction and service			KOREA				29.00	%			290				3,659
Busan Green Energy Co., Ltd.		Power generation			KOREA				29.00	%			5,243				7,363
Gunsan Bio Energy Co., Ltd. (formerly, Jungbu Bio Energy Co., Ltd.) (*2)		Power generation			KOREA				18.87	%			1,000				—
Korea Electric Vehicle Charging Service		Electric vehicle charge service			KOREA				28.00	%			2,604				1,749
Ulleungdo Natural Energy Co., Ltd.		Renewable power generation			KOREA				29.85	%			8,000				6,370
Korea Nuclear Partners Co., Ltd.		Electric material agency			KOREA				29.00	%			290				383
Tamra Offshore Wind Power Co., Ltd.		Power generation			KOREA				27.00	%			8,910				8,560
Korea Electric Power Corporation Fund (*12)		Developing electric enterprises			KOREA				98.09	%			51,500				47,974
Energy Infra Asset Management Co., Ltd. (*3)		Asset management			KOREA				9.90	%			297				476
Daegu clean Energy Co., Ltd.		Renewable power generation			KOREA				28.00	%			140				11
YaksuESS Co., Ltd		Installing ESS related equipment			KOREA				29.00	%			210				194
Nepal Water & Energy Development Company Private Limited (*15)		Construction and operation of utility plant			NEPAL				62.13	%			33,577				30,498

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Key operation activities		Location				Percentage of ownership				Acquisition cost				Book value
Gwangyang Green Energy Co., Ltd.		Power generation			KOREA				20.00	%		W	2,000				1,772
PND solar., Ltd		Power generation			KOREA				29.00	%			1,250				1,250
													2,240,761				3,837,421
<Joint ventures>
KEPCO-Uhde Inc. (*6)		Power generation			KOREA				52.80	%			11,355				258
Eco Biomass Energy Sdn. Bhd. (*6)		Power generation			MALAYSIA				61.53	%			14,439				—
Datang Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			27,660				27,262
Shuweihat Asia Power Investment B.V.		Holding company			NETHERLANDS				49.00	%			46,037				15,675
Shuweihat Asia Operation & Maintenance Company (*6)		Maintenance of utility plant			CAYMAN				55.00	%			30				663
Waterbury Lake Uranium L.P.		Resources development			CANADA				35.76	%			26,602				19,781
ASM-BG Investicii AD		Power generation			BULGARIA				50.00	%			16,101				21,202
RES Technology AD		Power generation			BULGARIA				50.00	%			15,595				14,375
KV Holdings, Inc.		Power generation			PHILIPPINES				40.00	%			2,103				1,918
KEPCO SPC Power Corporation (*6)		Construction and operation of utility plant			PHILIPPINES				75.20	%			94,579				217,094
Gansu Datang Yumen Wind Power Co., Ltd.		Power generation			CHINA				40.00	%			16,621				10,840
Datang Chifeng Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			121,928				171,055
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		Power generation			CHINA				40.00	%			10,858				11,060
Rabigh Electricity Company		Power generation			SAUDI ARABIA				40.00	%			109,743				99,356
Rabigh Operation & Maintenance Company Limited		Maintenance of utility plant			SAUDI ARABIA				40.00	%			70				3,987
Jamaica Public Service Company Limited		Power generation			JAMAICA				40.00	%			301,910				221,153
KW Nuclear Components Co., Ltd.		Manufacturing			KOREA				45.00	%			833				6,703
Busan Shinho Solar Power Co., Ltd.		Power generation			KOREA				25.00	%			2,100				4,346
GS Donghae Electric Power Co., Ltd.		Power generation			KOREA				34.00	%			204,000				220,727
Global Trade Of Power System Co., Ltd.		Exporting products and technology of small or medium business by proxy			KOREA				29.00	%			290				577
Expressway Solar-light Power Generation Co., Ltd.		Power generation			KOREA				29.00	%			1,856				2,463
KODE NOVUS I LLC		Power generation			USA				50.00	%			19,213				—
KODE NOVUS II LLC		Power generation			USA				50.00	%			12,756				—
Daejung Offshore Wind Power Co., Ltd.		Power generation			KOREA				49.90	%			5,190				2,969
Amman Asia Electric Power Company (*6)		Power generation			JORDAN				60.00	%			111,476				145,676
KAPES, Inc. (*6)		R&D			KOREA				51.00	%			5,629				7,476
Dangjin Eco Power Co., Ltd.		Power generation			KOREA				34.00	%			61,540				57,928
Honam Wind Power Co., Ltd.		Power generation			KOREA				29.00	%			3,480				4,302
Chun-cheon Energy Co., Ltd.		Power generation			KOREA				29.90	%			52,700				48,118
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)		Power generation			KOREA				15.00	%			3,000				2,734
Nghi Son 2 Power Ltd.		Power generation			VIETNAM				50.00	%			2,781				183
Kelar S.A (*6)		Power generation			CHILE				65.00	%			77,220				67,233
PT. Tanjung Power Indonesia		Power generation			INDONESIA				35.00	%			746				1,776
Incheon New Power Co., Ltd.		Power generation			KOREA				29.00	%			461				619
Seokmun Energy Co., Ltd.		Power generation			KOREA				29.00	%			15,370				13,786
Daehan Wind Power PSC		Power generation			JORDAN				50.00	%			285				—
Barakah One Company (*13)		Power generation			UAE				18.00	%			118				626
Nawah Energy Company (*13)		Operation of utility plant			UAE				18.00	%			296				258
MOMENTUM		International thermonuclear experimental reactor construction management			FRANCE				33.33	%			1				391
Daegu Green Power Co., Ltd.		Power generation			KOREA				29.00	%			46,225				42,391
Yeonggwang Wind Power Co., Ltd.		Power generation			KOREA				41.00	%			15,375				15,294
Chester Solar IV SpA (*6)		Power generation			CHILE				81.82	%			1,700				1,700
Chester Solar V SpA (*6)		Power generation			CHILE				81.82	%			525				525
Diego de Almagro Solar SpA (*6)		Power generation			CHILE				81.82	%			2,091				2,091
South Jamaica Power Company Limited		Power generation			JAMAICA				20.00	%			7,090				6,704
													1,469,978				1,493,275
												W	3,710,739				5,330,696

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(1)	Investments in associates and joint ventures as of March 31, 2018 and December 31, 2017 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 Government regulates the Company’s ability to make operating and financial decisions over the entity, as the Government requires maintaining arms-length transactions between KPX and the Company’s other subsidiaries. The Company can exercise significant influence by its right to nominate directors to the board of directors of the entity.

(*6)	According to the shareholders’ agreement, all critical financial and operating decisions must be agreed to by all ownership parties. For these reasons, the entities are classified as joint ventures.

(*7)	As of reporting date, the annual reporting period of all associates and joint ventures ends on December 31, except for Pioneer Gas Power Limited whose reporting period ends on March 31.

(*8)

As of December 31, 2017, 15.64% of ownership of Hyundai Energy Co., Ltd. is held by NH Power ll Co., Ltd. and NH Bank. According to the shareholders’ agreement reached on March 2011, not only does the Company have a call option to acquire the investment in Hyundai Energy Co., Ltd. from NH Power ll Co., Ltd. and NH Bank with a certain rate of return, NH Power ll Co., Ltd. and NH Bank also have put options to dispose of their investment to the Company. In connection with this agreement, the Company applied the equity method on the investment in Hyundai Energy Co., Ltd. with 46.30% of ownership.

(*9)	The effective percentage of ownership is 19.45% considering stock purchase options.

(*10)

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

(*11)

The effective percentage of ownership is less than 20% but the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity and the fact that the dominant portion of the investee’s sales transactions is generated from the Company.

(*12)

The effective percentage of ownership is more than 50% but the Company does not hold control over relevant business while it exercises significant influence by participating in the Investment Decision Committee. For this reason, the entity is classified as an associate.

(*13)

The effective percentage of ownership is less than 20% but the Company has joint control over the entity as decisions on the major activities require the unanimous consent of the parties that collectively control the entity

(*14)

The percentage of ownership decreased since the Company did not participate in the capital increase of Green Biomass Co., Ltd. during the period.

(*15)

The effective percentage of ownership is more than 50% but the Company does not hold control over the entity according to the shareholders’ agreement. For this reason, the entity is classified as an associate.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

 

(2)	The fair value of associates which are actively traded on an open market and have a readily available market value as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
Investees		March 31, 2018				December 31, 2017
<Associates>
Korea Electric Power Industrial Development Co., Ltd.		W	33,704				38,667
Korea Gas Corporation			915,705				804,195
YTN Co., Ltd.			18,810				18,855
SPC Power Corporation			68,072				72,616
PT. Bayan Resources TBK			556,709				558,267

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
<Associates>
Korea Gas Corporation		W	1,618,868				—				—				—				166,782				(2,058	)			179				1,783,771
Korea Electric Power Industrial Development Co., Ltd.			21,838				—				—				(1,872	)			1,002				44				(31	)			20,981
YTN Co., Ltd.			40,606				—				—				(180	)			(243	)			(4	)			(1	)			40,178
Cheongna Energy Co., Ltd.			8,337				—				—				—				11				—				—				8,348
Gangwon Wind Power Co., Ltd.			13,855				—				—				(2,272	)			709				—				—				12,292
Hyundai Green Power Co., Ltd.			114,806				—				—				(8,888	)			8,329				—				—				114,247
Korea Power Exchange			237,631				—				—				—				8,219				—				5,007				250,857
AMEC Partners Korea Ltd.			215				—				—				—				(2	)			—				—				213
Hyundai Energy Co., Ltd.			—				—				—				—				—				—				—				—
Ecollite Co., Ltd.			—				—				—				—				—				—				—				—
Taebaek Wind Power Co., Ltd.			5,319				—				—				—				(101	)			—				—				5,218
Taeback Guinemi Wind Power Co., Ltd.			3,089				—				—				—				(7	)			—				—				3,082
Pyeongchang Wind Power Co., Ltd.			4,136				—				—				—				296				—				—				4,432
Daeryun Power Co., Ltd.			25,113				—				—				—				846				—				—				25,959
Changjuk Wind Power Co., Ltd.			7,515				—				—				—				(237	)			—				—				7,278
KNH Solar Co., Ltd.			2,218				—				—				—				(160	)			—				—				2,058
SPC Power Corporation			52,283				—				—				—				272				(1,435	)			11				51,131
Gemeng International Energy Co., Ltd.			649,973				—				—				—				(85	)			17,640				—				667,528
PT. Cirebon Electric Power			97,410				—				—				(2,817	)			2,618				1,130				(451	)			97,890
KNOC Nigerian East Oil Co., Ltd.			—				—				—				—				481				31				(512	)			—
KNOC Nigerian West Oil Co., Ltd.			—				—				—				—				79				49				(128	)			—
PT Wampu Electric Power			29,403				—				—				—				(1,051	)			(130	)			—				28,222
PT. Bayan Resources TBK			451,831				—				—				—				14,454				19,435				—				485,720
S-Power Co., Ltd.			116,945				—				—				—				4,345				—				—				121,290
Pioneer Gas Power Limited			38,659				—				—				—				(3,754	)			(266	)			—				34,639
Eurasia Energy Holdings			—				—				—				—				—				—				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			61,779				3,024				—				—				(2,147	)			(297	)			—				62,359
Hadong Mineral Fiber Co., Ltd.			—				—				—				—				—				—				—				—
Green Biomass Co., Ltd.			208				—				—				—				(23	)			—				—				185
PT. Mutiara Jawa			—				—				—				—				—				—				—				—
Samcheok Eco Materials Co., Ltd.			—				—				—				—				—				—				—				—
Noeul Green Energy Co., Ltd.			2,067				—				—				—				533				—				263				2,863
Naepo Green Energy Co., Ltd.			20,598				—				—				—				(586	)			—				—				20,012
Goseong Green Energy Co., Ltd.			2,597				—				—				—				(17	)			—				—				2,580
Gangneung Eco Power Co., Ltd.			2,583				—				—				—				(11	)			—				—				2,572
Shin Pyeongtaek Power Co., Ltd.			34,903				28,080				—				—				(1,517	)			(136	)			—				61,330
Heang Bok Do Si Photovoltaic Power Co., Ltd.			187				—				—				—				(4	)			—				—				183
Dongducheon Dream Power Co., Ltd.			53,233				—				—				—				(4,326	)			—				—				48,907
Jinbhuvish Power Generation Pvt. Ltd.			—				—				—				—				—				—				—				—
SE Green Energy Co., Ltd.			3,476				—				—				—				(17	)			—				—				3,459
Daegu Photovoltaic Co., Ltd.			1,718				—				—				—				(57	)			—				—				1,661
Jeongam Wind Power Co., Ltd.			3,763				—				—				—				(132	)			—				—				3,631
Korea Power Engineering Service Co., Ltd.			3,659				—				—				(219	)			189				—				—				3,629
Busan Green Energy Co., Ltd.			7,363				—				—				—				704				—				—				8,067
Gunsan Bio Energy Co., Ltd.			—				—				—				—				—				—				—				—
Korea Electric Vehicle Charging Service			1,749				—				—				—				(176	)			—				—				1,573
Ulleungdo Natural Energy Co., Ltd.			6,370				—				—				—				(74	)			—				—				6,296
Korea Nuclear Partners Co., Ltd.			383				—				—				—				(59	)			—				—				324
Tamra Offshore Wind Power Co., Ltd.			8,560				—				—				—				1,731				—				—				10,291

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Korea Electric Power Corporation Fund		W	47,974				—				—				—				(840	)			6,151				—				53,285
Energy Infra Asset Management Co., Ltd.			476				—				—				—				37				—				—				513
Daegu clean Energy Co., Ltd.			11				—				—				—				41				—				—				52
YaksuESS Co., Ltd			194				—				—				—				(125	)			—				—				69
Nepal Water & Energy Development Company Private Limited			30,498				—				—				—				(106	)			(131	)			—				30,261
Gwangyang Green Energy Co., Ltd.			1,772				—				—				—				(100	)			—				—				1,672
PND solar., Ltd			1,250				—				—				—				(97	)			—				—				1,153
			3,837,421				31,104				—				(16,248	)			195,624				40,023				4,337				4,092,261
<Joint ventures>
KEPCO-Uhde Inc.			258				—				—				—				(2	)			—				—				256
Eco Biomass Energy Sdn. Bhd.			—				—				—				—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			27,262				—				—				—				742				1,010				—				29,014
Shuweihat Asia Power Investment B.V.			15,675				—				—				(55	)			875				1,466				—				17,961
Shuweihat Asia Operation & Maintenance Company			663				—				—				—				220				(4	)			—				879
Waterbury Lake Uranium L.P.			19,781				—				—				—				—				(582	)			—				19,199
ASM-BG Investicii AD			21,202				—				—				—				97				(549	)			—				20,750
RES Technology AD			14,375				—				—				—				39				404				—				14,818
KV Holdings, Inc.			1,918				—				—				(484	)			272				(110	)			—				1,596
KEPCO SPC Power Corporation			217,094				—				—				—				13,546				(10,417	)			(4	)			220,219
Gansu Datang Yumen Wind Power Co., Ltd.			10,840				—				—				—				(79	)			399				—				11,160
Datang Chifeng Renewable Power Co., Ltd.			171,055				—				—				—				5,592				6,342				—				182,989
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			11,060				—				—				—				(566	)			397				—				10,891
Rabigh Electricity Company			99,356				—				—				—				(2,013	)			9,289				(90	)			106,542
Rabigh Operation & Maintenance Company Limited			3,987				—				—				—				64				(3	)			—				4,048
Jamaica Public Service Company Limited			221,153				—				—				—				—				(1,011	)			—				220,142
KW Nuclear Components Co., Ltd.			6,703				—				—				(208	)			(60	)			—				—				6,435
Busan Shinho Solar Power Co., Ltd.			4,346				—				—				(339	)			155				—				—				4,162
GS Donghae Electric Power Co., Ltd.			220,727				—				—				—				13,672				—				—				234,399
Global Trade Of Power System Co., Ltd.			577				—				—				—				(67	)			—				—				510
Expressway Solar-light Power Generation Co., Ltd.			2,463				—				—				(70	)			(131	)			—				—				2,262
KODE NOVUS I LLC (*1)			—				—				—				—				—				—				—				—
KODE NOVUS II LLC (*2)			—				—				—				—				—				—				—				—
Daejung Offshore Wind Power Co., Ltd.			2,969				—				—				—				(68	)			—				—				2,901
Amman Asia Electric Power Company			145,676				—				—				—				4,771				6,286				—				156,733
KAPES, Inc.			7,476				—				—				—				(854	)			—				—				6,622
Dangjin Eco Power Co., Ltd.			57,928				—				—				—				(36,122	)			—				—				21,806
Honam Wind Power Co., Ltd.			4,302				—				—				(348	)			241				—				—				4,195
Chun-cheon Energy Co., Ltd.			48,118				—				—				—				2,963				—				—				51,081

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Yeonggwangbaeksu Wind Power Co., Ltd.		W	2,734				—				—				—				109				—				—				2,843
Nghi Son 2 Power Ltd.			183				—				—				—				(186	)			3				—				—
Kelar S.A			67,233				—				—				—				2,483				(8,044	)			(278	)			61,394
PT. Tanjung Power Indonesia			1,776				—				—				—				858				2,411				(24	)			5,021
Incheon New Power Co., Ltd.			619				—				—				—				37				—				—				656
Seokmun Energy Co., Ltd.			13,786				—				—				—				317				—				—				14,103
Daehan Wind Power PSC			—				451				—				—				(556	)			(17	)			618				496
Barakah One Company			626				—				—				—				1,963				1,731				—				4,320
Nawah Energy Company			258				—				—				—				4				(1	)			—				261
MOMENTUM			391				—				—				—				83				9				—				483
Daegu Green Power Co., Ltd.			42,391				—				—				—				791				—				—				43,182
Yeonggwang Wind Power Co., Ltd.			15,294				—				—				—				92				—				—				15,386
Chester Solar IV SpA			1,700				—				—				—				(873	)			37				(126	)			738
Chester Solar V SpA			525				—				—				—				(415	)			9				(38	)			81
Diego de Almagro Solar SpA			2,091				—				—				—				(431	)			49				(188	)			1,521
South Jamaica Power Company Limited			6,704				3,733				—				—				(34	)			(30	)			—				10,373
Daesan Green Energy Co., Ltd.			—				35				—				—				(1	)			—				—				34
RE Holiday Holdings LLC			—				40,835				—				(107	)			—				—				—				40,728
RE Pioneer Holdings LLC			—				26,518				—				(516	)			—				—				—				26,002
RE Barren Ridge 1 Holdings LLC			—				26,641				—				(1,027	)			—				—				—				25,614
RE Astoria 2 LandCo LLC			—				4,933				—				(300	)			—				—				—				4,633
RE Barren Ridge LandCo LLC			—				2,080				—				(120	)			—				—				—				1,960
Laurel SpA			—				1,222				—				—				(123	)			24				(4	)			1,119
			1,493,275				106,448				—				(3,574	)			7,405				9,098				(134	)			1,612,518
		W	5,330,696				137,552				—				(19,822	)			203,029				49,121				4,203				5,704,779

 

(*1)	The Company reclassified its shares of KODE NOVUS I LLC to available-for-sale financial assets during the three-month period ended March 31, 2018 due to non-participation of capital increase that resulted in loss of significant influence.

(*2)	The Company sold all of its shares of KODE NOVUS II LLC during the three-month period ended March 31, 2018.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
<Associates>
Korea Gas Corporation		W	1,933,877				—				—				—				(242,232	)			(72,648	)			(129	)			1,618,868
Korea Electric Power Industrial Development Co., Ltd.			20,475				—				—				(2,061	)			3,428				102				(106	)			21,838
YTN Co., Ltd.			38,156				—				—				(135	)			1,095				929				561				40,606
Cheongna Energy Co., Ltd.			12,373				—				—				—				(4,036	)			—				—				8,337
Gangwon Wind Power Co., Ltd.			13,069				—				—				(852	)			1,638				—				—				13,855
Hyundai Green Power Co., Ltd.			115,998				—				—				(8,889	)			7,697				—				—				114,806
Korea Power Exchange			223,238				—				—				—				8,831				—				5,562				237,631
AMEC Partners Korea Ltd.			225				—				—				—				(10	)			—				—				215
Hyundai Energy Co., Ltd.			1,031				—				—				—				(3,498	)			—				2,467				—
Ecollite Co., Ltd.			—				—				—				—				—				—				—				—
Taebaek Wind Power Co., Ltd.			4,750				—				—				—				569				—				—				5,319
Taeback Guinemi Wind Power Co., Ltd.			3,131				—				—				—				(42	)			—				—				3,089
Pyeongchang Wind Power Co., Ltd.			3,383				—				—				—				753				—				—				4,136
Daeryun Power Co., Ltd.			29,873				—				—				—				(4,762	)			—				2				25,113
Changjuk Wind Power Co., Ltd.			6,930				—				—				(111	)			696				—				—				7,515
KNH Solar Co., Ltd.			2,073				—				—				—				145				—				—				2,218
SPC Power Corporation			56,818				—				—				(5,562	)			4,310				(3,276	)			(7	)			52,283
Gemeng International Energy Co., Ltd.			680,065				—				—				(13,365	)			6,953				(23,680	)			—				649,973
PT. Cirebon Electric Power			96,658				—				—				(550	)			10,685				2,232				(11,615	)			97,410
KNOC Nigerian East Oil Co., Ltd.			—				—				—				—				(1,914	)			1,536				378				—
KNOC Nigerian West Oil Co., Ltd.			—				—				—				—				(1,712	)			1,407				305				—
PT Wampu Electric Power			23,188				—				—				—				9,336				—				(3,121	)			29,403
PT. Bayan Resources TBK			402,667				—				—				—				34,122				14,982				60				451,831
S-Power Co., Ltd.			123,912				—				—				—				(6,982	)			—				15				116,945
Pioneer Gas Power Limited			50,740				—				—				—				(11,119	)			(1,238	)			276				38,659
Eurasia Energy Holdings			—				—				—				—				—				—				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			51,544				22,362				—				—				(4,264	)			(7,863	)			—				61,779
Hadong Mineral Fiber Co., Ltd.			—				—				—				—				(31	)			—				31				—
Green Biomass Co., Ltd.			47				—				—				—				(112	)			—				273				208
PT. Mutiara Jawa			—				—				—				—				—				—				—				—
Samcheok Eco Materials Co., Ltd.			—				—				—				—				—				—				—				—
Noeul Green Energy Co., Ltd.			1,217				—				—				—				850				—				—				2,067
Naepo Green Energy Co., Ltd. (*2)			25,438				—				—				—				(1,400	)			—				(3,440	)			20,598
Goseong Green Energy Co., Ltd.			2,663				—				—				—				(66	)			—				—				2,597
Gangneung Eco Power Co., Ltd.			2,646				—				—				—				(63	)			—				—				2,583
Shin Pyeongtaek Power Co., Ltd.			—				43,880				—				—				(10,998	)			(3,617	)			5,638				34,903
Heang Bok Do Si Photovoltaic Power Co., Ltd.			181				—				—				—				6				—				—				187
DS POWER Co., Ltd. (*4)			7,190				—				—				—				(1,321	)			—				(5,869	)			—
Dongducheon Dream Power Co., Ltd. (*1,3)			46,876				—				—				—				(10,980	)			—				17,337				53,233
KS Solar Co., Ltd.			604				—				(613	)			—				—				9				—				—
Jinbhuvish Power Generation Pvt. Ltd.			—				—				—				—				—				—				—				—
SE Green Energy Co., Ltd.			3,525				—				—				—				(49	)			—				—				3,476
Daegu Photovoltaic Co., Ltd.			1,700				—				—				(349	)			367				—				—				1,718
Jeongam Wind Power Co., Ltd.			4,000				—				—				—				(237	)			—				—				3,763
Korea Power Engineering Service Co., Ltd.			2,810				—				—				(191	)			1,030				—				10				3,659
Busan Green Energy Co., Ltd.			13,803				—				(9,320	)			—				2,884				—				(4	)			7,363
Gunsan Bio Energy Co., Ltd. (formerly, Jungbu Bio Energy Co., Ltd.)			—				—				—				—				—				—				—				—
Korea Electric Vehicle Charging Service			1,103				1,008				—				—				(362	)			—				—				1,749
Ulleungdo Natural Energy Co., Ltd.			6,894				—				—				—				(524	)			—				—				6,370
Korea Nuclear Partners Co., Ltd.			248				—				—				—				135				—				—				383
Tamra Offshore Wind Power Co., Ltd.			7,015				—				—				—				1,545				—				—				8,560

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Korea Electric Power Corporation Fund		W	50,856				—				—				—				(2,171	)			(711	)			—				47,974
Energy Infra Asset Management Co., Ltd.			259				—				—				—				217				—				—				476
Daegu clean Energy Co., Ltd.			140				—				—				—				(129	)			—				—				11
YaksuESS Co., Ltd			196				—				—				—				(2	)			—				—				194
Nepal Water & Energy Development Company Private Limited			18,667				15,009				—				—				(677	)			(2,501	)			—				30,498
Gwangyang Green Energy Co., Ltd.			—				2,000				—				—				(228	)			—				—				1,772
PND solar., Ltd			—				1,250				—				—				—				—				—				1,250
			4,092,252				85,509				(9,933	)			(32,065	)			(212,629	)			(94,337	)			8,624				3,837,421
<Joint ventures>
KEPCO-Uhde Inc.			301				—				—				—				(43	)			—				—				258
Eco Biomass Energy Sdn. Bhd.			—				—				—				—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			28,239				—				—				(839	)			840				(978	)			—				27,262
Shuweihat Asia Power Investment B.V.			—				—				—				(1,707	)			4,275				12,457				650				15,675
Shuweihat Asia Operation & Maintenance Company			450				—				—				(770	)			1,055				(172	)			100				663
Waterbury Lake Uranium L.P.			21,314				—				—				—				(23	)			(949	)			(561	)			19,781
ASM-BG Investicii AD			21,488				—				—				(946	)			(150	)			810				—				21,202
RES Technology AD			13,582				—				—				—				1,053				(260	)			—				14,375
KV Holdings, Inc.			2,098				—				—				—				61				(241	)			—				1,918
KEPCO SPC Power Corporation			245,367				—				—				(37,443	)			42,359				(33,230	)			41				217,094
Canada Korea Uranium Limited partnership			—				—				—				—				—				—				—				—
Gansu Datang Yumen Wind Power Co., Ltd.			12,821				—				—				—				(1,299	)			(682	)			—				10,840
Datang Chifeng Renewable Power Co., Ltd.			166,535				—				—				—				14,079				(9,559	)			—				171,055
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			10,843				—				—				—				837				(620	)			—				11,060
Rabigh Electricity Company			97,802				—				—				(18,112	)			35,769				(15,227	)			(876	)			99,356
Rabigh Operation & Maintenance Company Limited			4,427				—				—				(2,130	)			2,236				(546	)			—				3,987
Jamaica Public Service Company Limited			249,453				—				—				—				—				(28,300	)			—				221,153
KW Nuclear Components Co., Ltd.			7,133				—				—				(208	)			(222	)			—				—				6,703
Busan Shinho Solar Power Co., Ltd.			3,814				—				—				(63	)			595				—				—				4,346
GS Donghae Electric Power Co., Ltd.			205,948				—				—				—				14,714				—				65				220,727
Global Trade Of Power System Co., Ltd.			477				—				—				—				100				—				—				577
Expressway Solar-light Power Generation Co., Ltd.			2,343				—				—				—				120				—				—				2,463
KODE NOVUS I LLC			—				—				—				—				—				—				—				—
KODE NOVUS II LLC			—				—				—				—				—				—				—				—
Daejung Offshore Wind Power Co., Ltd.			3,015				200				—				—				(246	)			—				—				2,969
Amman Asia Electric Power Company			153,857				—				—				(12,213	)			19,957				(15,925	)			—				145,676
KAPES, Inc.			4,758				—				—				—				2,752				—				(34	)			7,476
Dangjin Eco Power Co., Ltd.			53,253				5,440				—				—				(752	)			(3	)			(10	)			57,928
Honam Wind Power Co., Ltd.			4,451				—				—				(487	)			338				—				—				4,302
Chun-cheon Energy Co., Ltd.			50,592				—				—				—				(2,474	)			—				—				48,118

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(3)	Changes in investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Beginning balance				Acquisition				Disposal				Dividends received				Share of income (loss)				Other comprehensive income (loss)				Others				Ending balance
Yeonggwangbaeksu Wind Power Co., Ltd.		W	2,689				—				—				—				45				—				—				2,734
Nghi Son 2 Power Ltd.			229				993				—				—				(1,039	)			—				—				183
Kelar S.A			—				73,040				—				—				(633	)			(5,175	)			1				67,233
PT. Tanjung Power Indonesia			1,946				—				—				—				2,112				(2,281	)			(1	)			1,776
Incheon New Power Co., Ltd.			563				—				—				—				56				—				—				619
Seokmun Energy Co., Ltd.			391				14,790				—				—				(1,219	)			(176	)			—				13,786
Daehan Wind Power PSC			16				—				—				—				(40	)			22				2				—
Barakah One Company			116				—				—				—				570				(60	)			—				626
Nawah Energy Company			290				—				—				—				(5	)			(27	)			—				258
MOMENTUM			67				—				—				—				321				3				—				391
Daegu Green Power Co., Ltd.			47,528				—				—				—				(5,133	)			—				(4	)			42,391
Yeonggwang Wind Power Co., Ltd.			—				15,375				—				—				(25	)			(56	)			—				15,294
Chester Solar IV SpA			—				1,700				—				—				—				—				—				1,700
Chester Solar V SpA			—				525				—				—				—				—				—				525
Diego de Almagro Solar SpA			—				2,091				—				—				—				—				—				2,091
South Jamaica Power Company Limited			—				7,090				—				—				—				—				(386	)			6,704
			1,418,196				121,244				—				(74,918	)			130,941				(101,175	)			(1,013	)			1,493,275
		W	5,510,448				206,753				(9,933	)			(106,983	)			(81,688	)			(195,512	)			7,611				5,330,696

 

(*1)	It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W23,798 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2017.

(*2)	It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W3,440 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2017.

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

(*4)	‘Others’ include W4,438 million of assets held-for-sale (note 41), and also include W1,439 million of available-for-sale financial assets which is reclassified due to loss of significant influence.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Associates>
Korea Gas Corporation		W	37,979,191				29,077,955				8,771,509				774,220
Korea Electric Power Industrial Development Co., Ltd.			160,881				88,533				76,115				6,238
YTN Co., Ltd.			288,473				100,918				27,128				(2,052	)
Cheongna Energy Co., Ltd.			444,976				431,531				27,965				21
Gangwon Wind Power Co., Ltd.			84,049				2,430				8,699				4,736
Hyundai Green Power Co., Ltd.			1,207,291				813,337				117,300				22,398
Korea Power Exchange			278,477				27,620				27,789				8,219
AMEC Partners Korea Ltd.			1,122				2				—				(4	)
Hyundai Energy Co., Ltd.			492,011				516,781				28,944				(1,948	)
Ecollite Co., Ltd.			2,027				353				—				(27	)
Taebaek Wind Power Co., Ltd.			40,066				18,299				2,409				1,275
Taeback Guinemi Wind Power Co., Ltd.			12,365				38				—				(30	)
Pyeongchang Wind Power Co., Ltd.			80,729				62,190				2,720				1,112
Daeryun Power Co., Ltd.			779,257				651,024				44,019				4,304
Changjuk Wind Power Co., Ltd.			36,597				11,447				2,434				1,487
KNH Solar Co., Ltd.			23,569				15,625				501				(273	)
SPC Power Corporation			246,963				42,042				18,300				12,456
Gemeng International Energy Co., Ltd.			6,532,376				4,569,059				396,603				5,115
PT. Cirebon Electric Power			848,489				492,527				70,803				8,560
KNOC Nigerian East Oil Co., Ltd.			79,754				164,083				—				(54	)
KNOC Nigerian West Oil Co., Ltd.			71,836				151,362				—				(40	)
PT Wampu Electric Power			205,705				144,351				4,302				1,360
PT. Bayan Resources TBK			931,561				389,803				275,921				85,882
S-Power Co., Ltd.			851,209				599,987				180,856				7,597
Pioneer Gas Power Limited			332,491				300,560				—				(9,750	)
Eurasia Energy Holdings			545				973				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			895,521				642,056				—				(8,395	)
Hadong Mineral Fiber Co., Ltd.			203				231				—				—
Green Biomass Co., Ltd.			5,964				3,864				340				(260	)
PT. Mutiara Jawa			26,085				27,422				4,571				1,339
Samcheok Eco Materials Co., Ltd.			25,768				2,698				—				(259	)
Noeul Green Energy Co., Ltd.			130,420				120,549				11,985				1,681
Naepo Green Energy Co., Ltd.			118,401				70,375				2,783				(1,404	)
Goseong Green Energy Co., Ltd.			1,278,772				1,040,429				—				(1,243	)
Gangneung Eco Power Co., Ltd.			188,245				22,476				—				(741	)
Shin Pyeongtaek Power Co., Ltd.			353,425				212,737				—				(1,901	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.			2,722				2,074				92				(13	)
Dongducheon Dream Power Co., Ltd.			1,525,919				1,329,729				254,301				5,702
Jinbhuvish Power Generation Pvt. Ltd.			64,704				13,362				—				—
SE Green Energy Co., Ltd.			7,243				—				—				(34	)
Daegu Photovoltaic Co., Ltd.			17,166				11,437				955				469
Jeongam Wind Power Co., Ltd.			70,589				61,512				—				(242	)
Korea Power Engineering Service Co., Ltd.			14,417				1,902				3,937				652
Busan Green Energy Co., Ltd.			189,801				161,985				17,076				2,427
Gunsan Bio Energy Co., Ltd.			9,394				16,910				—				(265	)
Korea Electric Vehicle Charging Service			12,009				6,392				780				(629	)
Ulleungdo Natural Energy Co., Ltd.			25,482				4,386				—				(246	)
Korea Nuclear Partners Co., Ltd.			1,203				87				60				(193	)
Tamra Offshore Wind Power Co., Ltd.			171,249				133,133				6,634				3,671
Korea Electric Power Corporation Fund			54,521				202				113				(990	)
Energy Infra Asset Management Co., Ltd.			5,689				506				1,433				658
Daegu clean Energy Co., Ltd.			448				264				—				(67	)
YaksuESS Co., Ltd			6,659				6,427				55				(90	)
Nepal Water & Energy Development Company Private Limited			49,775				3,697				—				(242	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
Gwangyang Green Energy Co., Ltd.		W	28,714				20,444				—				(502	)
PND solar., Ltd			17,739				14,293				—				(335	)
<Joint ventures>
KEPCO-Uhde Inc.			509				7				18				(5	)
Eco Biomass Energy Sdn. Bhd.			—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			144,744				72,210				5,297				1,785
Shuweihat Asia Power Investment B.V.			36,655				—				—				1,785
Shuweihat Asia Operation & Maintenance Company			1,628				27				551				402
Waterbury Lake Uranium L.P.			55,355				1,667				—				—
ASM-BG Investicii AD			88,693				47,194				2,212				128
RES Technology AD			73,618				43,982				1,533				21
KV Holdings, Inc.			3,990				1				—				8
KEPCO SPC Power Corporation			325,572				32,728				45,974				17,837
Gansu Datang Yumen Wind Power Co., Ltd.			84,895				56,994				2,292				(197	)
Datang Chifeng Renewable Power Co., Ltd.			786,510				328,915				32,308				14,121
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			64,134				36,905				2,182				753
Rabigh Electricity Company			2,374,683				1,928,374				55,113				2,910
Rabigh Operation & Maintenance Company Limited			21,640				11,519				7,840				922
Jamaica Public Service Company Limited			1,285,307				755,468				221,922				3,391
KW Nuclear Components Co., Ltd.			24,659				9,966				—				(316	)
Busan Shinho Solar Power Co., Ltd.			46,450				29,804				1,964				619
GS Donghae Electric Power Co., Ltd.			2,238,245				1,548,837				218,111				40,181
Global Trade Of Power System Co., Ltd.			1,865				107				104				(152	)
Expressway Solar-light Power Generation Co., Ltd.			18,407				10,608				317				(737	)
Daejung Offshore Wind Power Co., Ltd.			6,066				252				—				(124	)
Amman Asia Electric Power Company			743,820				482,451				5,491				7,951
KAPES, Inc.			62,212				49,228				19,371				(261	)
Dangjin Eco Power Co., Ltd.			56,933				498				—				(106,142	)
Honam Wind Power Co., Ltd.			40,580				26,225				2,059				831
Chun-cheon Energy Co., Ltd.			701,624				530,797				97,387				9,548
Yeonggwangbaeksu Wind Power Co., Ltd.			95,728				76,815				3,394				729
Nghi Son 2 Power Ltd.			1,744				2,542				—				—
Kelar S.A			614,478				523,808				21,309				4,008
PT. Tanjung Power Indonesia			421,302				406,955				33,236				2,535
Incheon New Power Co., Ltd.			7,348				5,087				849				126
Seokmun Energy Co., Ltd.			249,550				200,917				11,334				1,096
Daehan Wind Power PSC			1,004				11				—				(288	)
Barakah One Company			19,240,620				19,216,618				—				9,548
Nawah Energy Company			1,452				—				—				—
MOMENTUM			5,448				4,000				2,519				248
Daegu Green Power Co., Ltd.			603,754				529,322				84,404				2,726
Yeonggwang Wind Power Co., Ltd.			218,024				181,060				—				55
Chester Solar IV SpA			15,203				14,302				428				(1,174	)
Chester Solar V SpA			4,221				4,204				—				(507	)
Diego de Almagro Solar SpA			16,553				14,694				—				(628	)
South Jamaica Power Company Limited			189,812				137,948				—				(162	)
Daesan Green Energy Co., Ltd.			98				—				—				(2	)
RE Holiday Holdings LLC			330,465				235,433				—				—
RE Pioneer Holdings LLC			245,826				178,511				—				—
RE Barren Ridge 1 Holdings LLC			211,522				141,623				—				—
RE Astoria 2 LandCo LLC			10,921				200				—				—
RE Barren Ridge LandCo LLC			3,822				80				—				—
Laurel SpA			1,433				202				—				(150	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
<Associates>
Korea Gas Corporation		W	37,139,439				28,999,025				22,172,305				(1,205,110	)
Korea Electric Power Industrial Development Co., Ltd.			155,033				79,730				334,547				16,126
YTN Co., Ltd.			298,122				108,554				131,080				3,638
Cheongna Energy Co., Ltd.			461,958				448,535				56,533				(9,203	)
Gangwon Wind Power Co., Ltd.			94,281				2,243				25,963				11,121
Hyundai Green Power Co., Ltd.			1,150,729				754,846				477,373				26,543
Korea Power Exchange			263,499				25,868				105,107				8,831
AMEC Partners Korea Ltd.			1,135				4				1				(53	)
Hyundai Energy Co., Ltd.			474,939				511,486				92,992				(43,317	)
Ecollite Co., Ltd.			2,052				352				—				(121	)
Taebaek Wind Power Co., Ltd.			39,227				17,953				7,056				2,312
Taeback Guinemi Wind Power Co., Ltd.			12,369				12				—				(140	)
Pyeongchang Wind Power Co., Ltd.			77,152				60,606				11,907				3,038
Daeryun Power Co., Ltd.			779,258				655,377				156,508				(23,978	)
Changjuk Wind Power Co., Ltd.			35,794				10,745				6,981				2,317
KNH Solar Co., Ltd.			24,432				16,215				3,947				628
SPC Power Corporation			137,586				—				68,149				37,395
Gemeng International Energy Co., Ltd.			6,496,294				4,584,608				1,334,833				21,769
PT. Cirebon Electric Power			903,429				549,212				280,452				38,448
KNOC Nigerian East Oil Co., Ltd.			241,808				329,639				—				(10,754	)
KNOC Nigerian West Oil Co., Ltd.			147,185				227,588				—				(9,768	)
PT Wampu Electric Power			212,095				148,177				779				8,114
PT. Bayan Resources TBK			908,106				556,881				811,515				243,621
S-Power Co., Ltd.			859,633				617,224				489,042				(14,470	)
Pioneer Gas Power Limited			339,271				296,898				8,215				(27,796	)
Eurasia Energy Holdings			548				978				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			858,789				607,462				—				(16,677	)
Hadong Mineral Fiber Co., Ltd.			203				231				—				(260	)
Green Biomass Co., Ltd.			6,379				4,018				2,337				(956	)
PT. Mutiara Jawa			27,098				29,670				13,574				3,455
Samcheok Eco Materials Co., Ltd.			23,729				270				15				(541	)
Noeul Green Energy Co., Ltd.			127,980				120,852				43,099				2,932
Naepo Green Energy Co., Ltd.			121,375				71,945				5,696				(5,603	)
Goseong Green Energy Co., Ltd.			1,081,238				841,330				—				(5,811	)
Gangneung Eco Power Co., Ltd.			186,765				20,344				—				(3,407	)
Shin Pyeongtaek Power Co., Ltd.			175,870				90,662				—				(4,585	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.			2,782				2,120				451				22
Dongducheon Dream Power Co., Ltd.			1,575,175				1,365,845				813,440				(33,740	)
Jinbhuvish Power Generation Pvt. Ltd.			66,047				13,640				—				—
SE Green Energy Co., Ltd.			7,278				—				—				(103	)
Daegu Photovoltaic Co., Ltd.			17,262				11,339				3,714				1,263
Jeongam Wind Power Co., Ltd.			67,427				58,019				—				(580	)
Korea Power Engineering Service Co., Ltd.			15,738				3,121				22,283				3,783
Busan Green Energy Co., Ltd.			193,253				167,864				34,280				9,946
Gunsan Bio Energy Co., Ltd. (formerly, Jungbu Bio Energy Co., Ltd.)			9,648				16,462				—				(6,109	)
Korea Electric Vehicle Charging Service			14,650				8,404				8,399				(1,295	)
Ulleungdo Natural Energy Co., Ltd.			25,842				4,501				—				(1,758	)
Korea Nuclear Partners Co., Ltd.			2,033				711				1,345				465
Tamra Offshore Wind Power Co., Ltd.			163,740				132,036				4,392				(191	)
Korea Electric Power Corporation Fund			49,170				265				666				(2,213	)
Energy Infra Asset Management Co., Ltd.			5,240				431				5,807				2,203
Daegu clean Energy Co., Ltd.			252				212				—				(460	)
YaksuESS Co., Ltd			7,105				6,437				381				(6	)
Nepal Water & Energy Development Company Private Limited			58,121				11,670				—				(968	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(4)	Summary of financial information of associates and joint ventures as of and for the three-month period ended March 31, 2018 and as of and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Total assets				Total liabilities				Sales				Profit (loss) for the period
Gwangyang Green Energy Co., Ltd.		W	20,165				11,393				—				(1,139	)
PND solar., Ltd			10,508				6,729				—				(406	)
<Joint ventures>
KEPCO-Uhde Inc.			515				7				—				(86	)
Eco Biomass Energy Sdn. Bhd.			—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			138,463				70,309				17,776				2,149
Shuweihat Asia Power Investment B.V.			32,001				10				—				(170	)
Shuweihat Asia Operation & Maintenance Company			1,220				14				2,580				1,918
Waterbury Lake Uranium L.P.			55,563				250				—				—
ASM-BG Investicii AD			87,110				44,706				12,611				(262	)
RES Technology AD			71,595				42,845				7,793				2,164
KV Holdings, Inc.			4,795				—				671				677
KEPCO SPC Power Corporation			318,911				30,222				186,725				57,364
Gansu Datang Yumen Wind Power Co., Ltd.			81,960				54,859				6,938				(3,253	)
Datang Chifeng Renewable Power Co., Ltd.			762,605				334,843				113,329				35,294
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			60,913				33,264				8,442				2,094
Rabigh Electricity Company			2,364,522				1,936,403				287,105				78,948
Rabigh Operation & Maintenance Company Limited			19,992				10,025				22,668				5,668
Jamaica Public Service Company Limited			1,276,279				752,617				946,365				24,601
KW Nuclear Components Co., Ltd.			25,693				10,221				6,486				1,493
Busan Shinho Solar Power Co., Ltd.			47,959				30,573				7,984				2,383
GS Donghae Electric Power Co., Ltd.			2,179,465				1,530,266				351,814				43,180
Global Trade Of Power System Co., Ltd.			3,576				1,586				4,079				365
Expressway Solar-light Power Generation Co., Ltd.			19,143				10,651				3,018				643
KODE NOVUS I LLC			755				108,132				14				(8,117	)
KODE NOVUS II LLC			292				47,683				—				(6,018	)
Daejung Offshore Wind Power Co., Ltd.			6,193				243				—				(493	)
Amman Asia Electric Power Company			759,114				516,174				18,034				33,514
KAPES, Inc.			70,679				56,021				129,962				5,397
Dangjin Eco Power Co., Ltd.			163,197				521				—				(2,182	)
Honam Wind Power Co., Ltd.			39,675				24,951				5,961				1,166
Chun-cheon Energy Co., Ltd.			699,652				538,733				164,294				(8,145	)
Yeonggwangbaeksu Wind Power Co., Ltd.			94,810				76,621				11,124				297
Nghi Son 2 Power Ltd.			741				376				—				(2,068	)
Kelar S.A			613,293				513,101				90,435				17,590
PT. Tanjung Power Indonesia			374,702				369,627				209,923				6,219
Incheon New Power Co., Ltd.			7,194				5,059				2,972				184
Seokmun Energy Co., Ltd.			247,735				200,197				35,135				(3,939	)
Daehan Wind Power PSC			928				1,752				—				(904	)
Barakah One Company			17,574,885				17,571,409				—				(1,358	)
Nawah Energy Company			1,459				23				—				(11	)
MOMENTUM			5,028				3,854				11,555				939
Daegu Green Power Co., Ltd.			602,809				531,103				256,359				(17,700	)
Yeonggwang Wind Power Co., Ltd.			212,802				176,062				—				(62	)
Chester Solar IV SpA			11,660				9,626				331				151
Chester Solar V SpA			2,081				1,569				—				(49	)
Diego de Almagro Solar SpA			8,266				5,830				—				(103	)
South Jamaica Power Company Limited			153,958				120,436				—				(755	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
<Associates>
Korea Gas Corporation		W	8,901,236				21.57	%			1,919,997				—				—				(136,226	)			1,783,771
Korea Electric Power Industrial Development Co., Ltd.			72,348				29.00	%			20,981				—				—				—				20,981
YTN Co., Ltd.			187,555				21.43	%			40,193				—				—				(15	)			40,178
Cheongna Energy Co., Ltd.			13,445				43.90	%			5,902				2,584				(138	)			—				8,348
Gangwon Wind Power Co., Ltd.			81,619				15.00	%			12,243				—				—				49				12,292
Hyundai Green Power Co., Ltd.			393,954				29.00	%			114,247				—				—				—				114,247
Korea Power Exchange			250,857				100.00	%			250,857				—				—				—				250,857
AMEC Partners Korea Ltd.			1,120				19.00	%			213				—				—				—				213
Hyundai Energy Co., Ltd.			(24,770	)			46.30	%			(11,468	)			—				(1,027	)			12,495				—
Ecollite Co., Ltd.			1,674				36.10	%			604				—				—				(604	)			—
Taebaek Wind Power Co., Ltd.			21,767				25.00	%			5,442				—				(224	)			—				5,218
Taeback Guinemi Wind Power Co., Ltd.			12,327				25.00	%			3,082				—				—				—				3,082
Pyeongchang Wind Power Co., Ltd.			18,539				25.00	%			4,635				—				(203	)			—				4,432
Daeryun Power Co., Ltd.			128,233				19.45	%			24,945				1,014				—				—				25,959
Changjuk Wind Power Co., Ltd.			25,150				30.00	%			7,545				—				(267	)			—				7,278
KNH Solar Co., Ltd.			7,944				27.00	%			2,145				—				(87	)			—				2,058
SPC Power Corporation			204,921				38.00	%			77,870				—				—				(26,739	)			51,131
Gemeng International Energy Co., Ltd.			1,963,317				34.00	%			667,528				—				—				—				667,528
PT. Cirebon Electric Power			355,962				27.50	%			97,890				—				—				—				97,890
KNOC Nigerian East Oil Co., Ltd.			(84,329	)			14.63	%			(12,337	)			—				—				12,337				—
KNOC Nigerian West Oil Co., Ltd.			(79,526	)			14.63	%			(11,635	)			—				—				11,635				—
PT Wampu Electric Power			61,354				46.00	%			28,222				—				—				—				28,222
PT. Bayan Resources TBK			541,758				20.00	%			108,352				453,748				—				(76,380	)			485,720
S-Power Co., Ltd.			251,222				49.00	%			123,098				—				(1,808	)			—				121,290
Pioneer Gas Power Limited			31,931				38.50	%			12,294				22,278				—				67				34,639
Eurasia Energy Holdings			(428	)			40.00	%			(171	)			—				—				171				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			253,465				25.00	%			63,366				160				(878	)			(289	)			62,359
Hadong Mineral Fiber Co., Ltd.			(28	)			8.33	%			(2	)			—				—				2				—
Green Biomass Co., Ltd.			2,100				8.80	%			185				—				—				—				185
PT. Mutiara Jawa			(1,337	)			29.00	%			(388	)			—				—				388				—
Samcheok Eco Materials Co., Ltd.			23,070				2.35	%			542				—				—				(542	)			—
Noeul Green Energy Co., Ltd.			9,871				29.00	%			2,863				—				—				—				2,863
Naepo Green Energy Co., Ltd.			48,026				41.67	%			20,012				—				—				—				20,012
Goseong Green Energy Co., Ltd.			238,343				1.12	%			2,659				—				(79	)			—				2,580
Gangneung Eco Power Co., Ltd.			165,769				1.61	%			2,670				—				(98	)			—				2,572
Shin Pyeongtaek Power Co., Ltd.			140,688				40.00	%			56,275				12,800				(7,745	)			—				61,330
Heang Bok Do Si Photovoltaic Power Co., Ltd.			648				28.00	%			181				—				—				2				183
Dongducheon Dream Power Co., Ltd.			196,190				33.61	%			65,940				—				(4,319	)			(12,714	)			48,907
Jinbhuvish Power Generation Pvt. Ltd.			51,342				5.16	%			2,649				—				—				(2,649	)			—
SE Green Energy Co., Ltd.			7,243				47.76	%			3,459				—				—				—				3,459
Daegu Photovoltaic Co., Ltd.			5,729				29.00	%			1,661				—				—				—				1,661
Jeongam Wind Power Co., Ltd.			9,077				40.00	%			3,631				—				—				—				3,631
Korea Power Engineering Service Co., Ltd.			12,515				29.00	%			3,629				—				—				—				3,629
Busan Green Energy Co., Ltd.			27,816				29.00	%			8,067				—				—				—				8,067
Gunsan Bio Energy Co., Ltd.			(7,516	)			18.87	%			(1,418	)			—				—				1,418				—
Korea Electric Vehicle Charging Service			5,617				28.00	%			1,573				—				—				—				1,573
Ulleungdo Natural Energy Co., Ltd.			21,096				29.85	%			6,297				—				—				(1	)			6,296
Korea Nuclear Partners Co., Ltd.			1,116				29.00	%			324				—				—				—				324
Tamra Offshore Wind Power Co., Ltd.			38,116				27.00	%			10,291				—				—				—				10,291
Korea Electric Power Corporation Fund			54,319				98.09	%			53,282				—				—				3				53,285
Energy Infra Asset Management Co., Ltd.			5,183				9.90	%			513				—				—				—				513
Daegu clean Energy Co., Ltd.			184				28.00	%			52				—				—				—				52
YaksuESS Co., Ltd			232				29.00	%			68				—				—				1				69
Nepal Water & Energy Development Company Private Limited			46,078				58.59	%			27,000				972				—				2,289				30,261

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
March 31, 2018
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
Gwangyang Green Energy Co., Ltd.		W	8,270				20.00	%			1,654				18				—				—				1,672
PND solar., Ltd			3,446				29.00	%			999				154				—				—				1,153
<Joint ventures>
KEPCO-Uhde Inc.			502				50.85	%			256				—				—				—				256
Eco Biomass Energy Sdn. Bhd.			—				61.53	%			—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			72,534				40.00	%			29,014				—				—				—				29,014
Shuweihat Asia Power Investment B.V.			36,655				49.00	%			17,961				—				—				—				17,961
Shuweihat Asia Operation & Maintenance Company			1,601				55.00	%			880				—				—				(1	)			879
Waterbury Lake Uranium L.P.			53,688				35.76	%			19,199				—				—				—				19,199
ASM-BG Investicii AD			41,499				50.00	%			20,750				—				—				—				20,750
RES Technology AD			29,636				50.00	%			14,818				—				—				—				14,818
KV Holdings, Inc.			3,989				40.00	%			1,596				—				—				—				1,596
KEPCO SPC Power Corporation			292,844				75.20	%			220,219				—				—				—				220,219
Gansu Datang Yumen Wind Power Co., Ltd.			27,901				40.00	%			11,160				—				—				—				11,160
Datang Chifeng Renewable Power Co., Ltd.			457,595				40.00	%			183,038				—				—				(49	)			182,989
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			27,229				40.00	%			10,891				—				—				—				10,891
Rabigh Electricity Company			446,309				40.00	%			178,524				—				(70,978	)			(1,004	)			106,542
Rabigh Operation & Maintenance Company Limited			10,121				40.00	%			4,048				—				—				—				4,048
Jamaica Public Service Company Limited			529,839				40.00	%			211,935				(80,161	)			—				88,368				220,142
KW Nuclear Components Co., Ltd.			14,693				45.00	%			6,611				—				—				(176	)			6,435
Busan Shinho Solar Power Co., Ltd.			16,646				25.00	%			4,162				—				—				—				4,162
GS Donghae Electric Power Co., Ltd.			689,408				34.00	%			234,399				—				—				—				234,399
Global Trade Of Power System Co., Ltd.			1,758				29.00	%			510				—				—				—				510
Expressway Solar-light Power Generation Co., Ltd.			7,799				29.00	%			2,262				—				—				—				2,262
Daejung Offshore Wind Power Co., Ltd.			5,814				49.90	%			2,901				—				—				—				2,901
Amman Asia Electric Power Company			261,369				60.00	%			156,821				—				—				(88	)			156,733
KAPES, Inc.			12,984				51.00	%			6,622				—				—				—				6,622
Dangjin Eco Power Co., Ltd.			56,435				34.00	%			19,188				2,618				—				—				21,806
Honam Wind Power Co., Ltd.			14,355				29.00	%			4,163				32				—				—				4,195
Chun-cheon Energy Co., Ltd.			170,827				29.90	%			51,078				3				—				—				51,081
Yeonggwangbaeksu Wind Power Co., Ltd.			18,913				15.00	%			2,837				6				—				—				2,843
Nghi Son 2 Power Ltd.			(798	)			50.00	%			(399	)			—				—				399				—
Kelar S.A			90,670				65.00	%			58,936				2,424				—				34				61,394
PT. Tanjung Power Indonesia			14,347				35.00	%			5,021				—				—				—				5,021
Incheon New Power Co., Ltd.			2,261				29.00	%			656				—				—				—				656
Seokmun Energy Co., Ltd.			48,633				29.00	%			14,103				—				—				—				14,103
Daehan Wind Power PSC			993				50.00	%			496				—				—				—				496
Barakah One Company			24,002				18.00	%			4,320				—				—				—				4,320
Nawah Energy Company			1,452				18.00	%			261				—				—				—				261
MOMENTUM			1,448				33.33	%			483				—				—				—				483
Daegu Green Power Co., Ltd.			74,432				29.00	%			21,585				—				84				21,513				43,182
Yeonggwang Wind Power Co., Ltd.			36,964				41.00	%			15,155				231				—				—				15,386
Chester Solar IV SpA			901				81.82	%			738				—				—				—				738
Chester Solar V SpA			17				81.82	%			14				—				—				67				81
Diego de Almagro Solar SpA			1,859				81.82	%			1,521				—				—				—				1,521
South Jamaica Power Company Limited			51,864				20.00	%			10,373				—				—				—				10,373
Daesan Green Energy Co., Ltd.			98				35.00	%			34				—				—				—				34
RE Holiday Holdings LLC			95,032				50.00	%			47,516				(6,788	)			—				—				40,728
RE Pioneer Holdings LLC			67,315				50.00	%			33,658				(7,655	)			—				(1	)			26,002
RE Barren Ridge 1 Holdings LLC			69,899				50.00	%			34,950				(9,335	)			—				(1	)			25,614
RE Astoria 2 LandCo LLC			10,721				50.00	%			5,361				(728	)			—				—				4,633
RE Barren Ridge LandCo LLC			3,742				50.00	%			1,871				89				—				—				1,960
Laurel SpA			1,231				81.82	%			1,007				—				—				112				1,119

 

(*)	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

March 31, 2018

(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 March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
<Associates>
Korea Gas Corporation		W	8,140,414				21.57	%			1,755,887				—				—				(137,019	)			1,618,868
Korea Electric Power Industrial Development Co., Ltd.			75,303				29.00	%			21,838				—				—				—				21,838
YTN Co., Ltd.			189,568				21.43	%			40,624				—				(18	)			—				40,606
Cheongna Energy Co., Ltd.			13,423				43.90	%			5,893				2,584				(140	)			—				8,337
Gangwon Wind Power Co., Ltd.			92,038				15.00	%			13,806				—				—				49				13,855
Hyundai Green Power Co., Ltd.			395,883				29.00	%			114,806				—				—				—				114,806
Korea Power Exchange			237,631				100.00	%			237,631				—				—				—				237,631
AMEC Partners Korea Ltd.			1,131				19.00	%			215				—				—				—				215
Hyundai Energy Co., Ltd.			(36,547	)			46.30	%			(16,921	)			—				(1,037	)			17,958				—
Ecollite Co., Ltd.			1,700				36.10	%			614				—				—				(614	)			—
Taebaek Wind Power Co., Ltd.			21,274				25.00	%			5,319				—				—				—				5,319
Taeback Guinemi Wind Power Co., Ltd.			12,357				25.00	%			3,089				—				—				—				3,089
Pyeongchang Wind Power Co., Ltd.			16,546				25.00	%			4,136				—				—				—				4,136
Daeryun Power Co., Ltd.			123,881				19.45	%			24,095				1,014				—				4				25,113
Changjuk Wind Power Co., Ltd.			25,049				30.00	%			7,515				—				—				—				7,515
KNH Solar Co., Ltd.			8,217				27.00	%			2,218				—				—				—				2,218
SPC Power Corporation			137,586				38.00	%			52,283				—				—				—				52,283
Gemeng International Energy Co., Ltd.			1,911,686				34.00	%			649,973				—				—				—				649,973
PT. Cirebon Electric Power			354,217				27.50	%			97,410				—				—				—				97,410
KNOC Nigerian East Oil Co., Ltd.			(87,831	)			14.63	%			(12,850	)			—				—				12,850				—
KNOC Nigerian West Oil Co., Ltd.			(80,403	)			14.63	%			(11,763	)			—				—				11,763				—
PT Wampu Electric Power			63,918				46.00	%			29,403				—				—				—				29,403
PT. Bayan Resources TBK			351,225				20.00	%			70,245				482,109				—				(100,523	)			451,831
S-Power Co., Ltd.			242,409				49.00	%			118,780				—				(1,835	)			—				116,945
Pioneer Gas Power Limited			42,373				38.50	%			16,314				22,278				—				67				38,659
Eurasia Energy Holdings			(430	)			40.00	%			(172	)			—				—				172				—
Xe-Pian Xe-Namnoy Power Co., Ltd.			251,327				25.00	%			62,832				74				(838	)			(289	)			61,779
Hadong Mineral Fiber Co., Ltd.			(28	)			8.33	%			(2	)			—				—				2				—
Green Biomass Co., Ltd.			2,361				8.80	%			208				—				—				—				208
PT. Mutiara Jawa			(2,572	)			29.00	%			(746	)			—				—				746				—
Samcheok Eco Materials Co., Ltd.			23,459				2.35	%			551				—				—				(551	)			—
Noeul Green Energy Co., Ltd.			7,128				29.00	%			2,067				—				—				—				2,067
Naepo Green Energy Co., Ltd.			49,430				41.67	%			20,598				—				—				—				20,598
Goseong Green Energy Co., Ltd.			239,908				1.12	%			2,676				—				(79	)			—				2,597
Gangneung Eco Power Co., Ltd.			166,421				1.61	%			2,681				—				(98	)			—				2,583
Shin Pyeongtaek Power Co., Ltd.			85,208				40.00	%			34,083				7,808				(6,988	)			—				34,903
Heang Bok Do Si Photovoltaic Power Co., Ltd.			662				28.00	%			185				—				—				2				187
Dongducheon Dream Power Co., Ltd.			209,330				33.61	%			70,356				—				(4,409	)			(12,714	)			53,233
Jinbhuvish Power Generation Pvt. Ltd.			52,407				5.16	%			2,704				—				—				(2,704	)			—
SE Green Energy Co., Ltd.			7,278				47.76	%			3,476				—				—				—				3,476
Daegu Photovoltaic Co., Ltd.			5,923				29.00	%			1,718				—				—				—				1,718
Jeongam Wind Power Co., Ltd.			9,408				40.00	%			3,763				—				—				—				3,763
Korea Power Engineering Service Co., Ltd.			12,617				29.00	%			3,659				—				—				—				3,659
Busan Green Energy Co., Ltd.			25,389				29.00	%			7,363				—				—				—				7,363
Gunsan Bio Energy Co., Ltd. (formerly, Jungbu Bio Energy Co., Ltd.)			(6,814	)			18.87	%			(1,286	)			—				—				1,286				—
Korea Electric Vehicle Charging Service			6,246				28.00	%			1,749				—				—				—				1,749
Ulleungdo Natural Energy Co., Ltd.			21,341				29.85	%			6,370				—				—				—				6,370
Korea Nuclear Partners Co., Ltd.			1,322				29.00	%			383				—				—				—				383
Tamra Offshore Wind Power Co., Ltd.			31,704				27.00	%			8,560				—				—				—				8,560
Korea Electric Power Corporation Fund			48,905				98.09	%			47,971				—				—				3				47,974
Energy Infra Asset Management Co., Ltd.			4,809				9.90	%			476				—				—				—				476
Daegu clean Energy Co., Ltd.			40				28.00	%			11				—				—				—				11

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won
December 31, 2017
Investees		Net assets				Percentage of ownership (*)				Share in net assets				Investment differential				Intercompany transaction				Others				Book value
YaksuESS Co., Ltd		W	668				29.00	%			193				—				—				1				194
Nepal Water & Energy Development Company Private Limited			46,451				62.13	%			28,860				972				—				666				30,498
Gwangyang Green Energy Co., Ltd.			8,772				20.00	%			1,754				18				—				—				1,772
PND solar., Ltd			3,779				29.00	%			1,096				154				—				—				1,250
<Joint ventures>
KEPCO-Uhde Inc.			508				50.85	%			258				—				—				—				258
Eco Biomass Energy Sdn. Bhd.			—				61.53	%			—				—				—				—				—
Datang Chaoyang Renewable Power Co., Ltd.			68,154				40.00	%			27,262				—				—				—				27,262
Shuweihat Asia Power Investment B.V.			31,991				49.00	%			15,675				—				—				—				15,675
Shuweihat Asia Operation & Maintenance Company			1,206				55.00	%			663				—				—				—				663
Waterbury Lake Uranium L.P.			55,313				35.76	%			19,780				—				—				1				19,781
ASM-BG Investicii AD			42,404				50.00	%			21,202				—				—				—				21,202
RES Technology AD			28,750				50.00	%			14,375				—				—				—				14,375
KV Holdings, Inc.			4,795				40.00	%			1,918				—				—				—				1,918
KEPCO SPC Power Corporation			288,689				75.20	%			217,094				—				—				—				217,094
Gansu Datang Yumen Wind Power Co., Ltd.			27,101				40.00	%			10,840				—				—				—				10,840
Datang Chifeng Renewable Power Co., Ltd.			427,762				40.00	%			171,105				—				—				(50	)			171,055
Datang KEPCO Chaoyang Renewable Power Co., Ltd.			27,649				40.00	%			11,060				—				—				—				11,060
Rabigh Electricity Company			428,119				40.00	%			171,248				—				(70,978	)			(914	)			99,356
Rabigh Operation & Maintenance Company Limited			9,967				40.00	%			3,987				—				—				—				3,987
Jamaica Public Service Company Limited			523,662				40.00	%			209,464				(80,161	)			—				91,850				221,153
KW Nuclear Components Co., Ltd.			15,472				45.00	%			6,962				—				—				(259	)			6,703
Busan Shinho Solar Power Co., Ltd.			17,386				25.00	%			4,346				—				—				—				4,346
GS Donghae Electric Power Co., Ltd.			649,199				34.00	%			220,727				—				—				—				220,727
Global Trade Of Power System Co., Ltd.			1,990				29.00	%			577				—				—				—				577
Expressway Solar-light Power Generation Co., Ltd.			8,492				29.00	%			2,463				—				—				—				2,463
KODE NOVUS I LLC			(107,377	)			50.00	%			(53,689	)			—				—				53,689				—
KODE NOVUS II LLC			(47,391	)			50.00	%			(23,696	)			—				—				23,696				—
Daejung Offshore Wind Power Co., Ltd.			5,950				49.90	%			2,969				—				—				—				2,969
Amman Asia Electric Power Company			242,940				60.00	%			145,764				—				—				(88	)			145,676
KAPES, Inc.			14,658				51.00	%			7,476				—				—				—				7,476
Dangjin Eco Power Co., Ltd.			162,676				34.00	%			55,310				2,618				—				—				57,928
Honam Wind Power Co., Ltd.			14,724				29.00	%			4,270				32				—				—				4,302
Chun-cheon Energy Co., Ltd.			160,919				29.90	%			48,115				3				—				—				48,118
Yeonggwangbaeksu Wind Power Co., Ltd.			18,189				15.00	%			2,728				6				—				—				2,734
Nghi Son 2 Power Ltd.			365				50.00	%			183				—				—				—				183
Kelar S.A			100,192				65.00	%			65,125				2,424				—				(316	)			67,233
PT. Tanjung Power Indonesia			5,075				35.00	%			1,776				—				—				—				1,776
Incheon New Power Co., Ltd.			2,135				29.00	%			619				—				—				—				619
Seokmun Energy Co., Ltd.			47,538				29.00	%			13,786				—				—				—				13,786
Daehan Wind Power PSC			(824	)			50.00	%			(412	)			—				—				412				—
Barakah One Company			3,476				18.00	%			626				—				—				—				626
Nawah Energy Company			1,436				18.00	%			258				—				—				—				258
MOMENTUM			1,174				33.33	%			391				—				—				—				391
Daegu Green Power Co., Ltd.			71,706				29.00	%			20,795				—				84				21,512				42,391
Yeonggwang Wind Power Co., Ltd.			36,740				41.00	%			15,063				231				—				—				15,294
Chester Solar IV SpA			2,034				81.82	%			1,664				—				—				36				1,700
Chester Solar V SpA			512				81.82	%			419				—				—				106				525
Diego de Almagro Solar SpA			2,436				81.82	%			1,993				—				—				98				2,091
South Jamaica Power Company Limited			33,522				20.00	%			6,704				—				—				—				6,704

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(6)	As of March 31, 2018 and December 31, 2017, unrecognized equity interest in investments in associates and joint ventures whose book value has been reduced to zero due to accumulated losses are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Unrecognized equity interest				Accumulated unrecognized equity interest				Unrecognized equity interest				Accumulated unrecognized equity interest
Shin Pyeongtaek Power Co., Ltd.		W	—				—				(2,537	)			—
Kelar S.A			—				—				(61,309	)			—
Hadong Mineral Fiber Co., Ltd.			—				2				(3	)			2
PT. Mutiara Jawa			(358	)			388				(1,159	)			746
Eurasia Energy Holdings			(1	)			171				(22	)			172
KODE NOVUS I LLC			—				—				8,706				53,689
KODE NOVUS II LLC			—				—				181				23,696
Gunsan Bio Energy Co., Ltd.			132				1,418				1,154				1,286
Daehan Wind Power PSC			(412	)			—				412				412
Hyundai Energy Co., Ltd.			10,736				10,736				—				—
Nghi Son 2 Power Ltd.			399				399				—				—
Samcheok Eco Materials Co., Ltd.			876				876				—				—

 

(7)	As of March 31, 2018, shareholders’ agreements on investments in associates and joint ventures that may cause future economic resource or cash outflows are as follows:

 

(i)

Gemeng International Energy Co., Ltd.

Gemeng International Energy Co., Ltd., issued put options on 8% of its shares to its financial investors, KEPCO Woori Sprott PEF (NPS Co-Pa PEF). If the investment fund is not collected until the maturity date (December 25, 2023, two years extension is possible), PEF can exercise the option at strike price which is the same as a principal investment price (including operating fees ratio of below 1% per annum), and also, the Company provided a performance guarantee on this agreement.

 

(ii)

Hyundai Energy Co., Ltd.

The Company had placed guarantees for a fixed return on the investment to NH Power II Co., Ltd. and National Agricultural Cooperative Federation (“NACF”) and had obtained the rights to acquire the investment securities in return preferentially. In addition, NH Power II Co., Ltd. and NACF have a right, which can be exercised for 30 days starting from 2 months to 1 month prior to 17 years after the termination date of the contract to sell their shares to the Company.

 

(iii)

Taebaek Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Taebaek Wind Power Co., Ltd. after the warrant period of defect repair for wind power generator has expired, the Company acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with consideration of various factors such as financial status and business situation.

 

(iv)

Pyeongchang Wind Power Co., Ltd.

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

17.	Investments in Associates and Joint Ventures, Continued

 

(7)	As of March 31, 2018, shareholders’ agreements on investments in associates and joint ventures that may cause future economic resource or cash outflows are as follows, continued:

 

(v)

Jeongam Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Jeongam Wind Power Co., Ltd. after the construction of the power plant has been completed, the Company is obligated to acquire those shares at fair value.

 

(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)

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.

 

(viii)

Hyundai Green Power Co., Ltd.

As of March 31, 2018, Hyundai Green Power Co., Ltd., an associate of the Company, which engages in the byproduct gas power generating business, entered into a project financing agreement with a limit of 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 upon request from Hyundai Steel Company.

 

(8)	Significant restrictions on the Company’s abilities on associates or joint ventures are as follows:

 

Company		Nature and extent of any significant restrictions
Daeryun Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.
Changjuk Wind Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.
Taebaek Wind Power Co., Ltd.		Financial institutions can reject or defer an approval with regard to the request for fund executions on subordinated loans of shareholders in order to pay senior loans based on the loan agreement.
Pyeongchang Wind Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.
Daegu Green Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained. Shares cannot be wholly or partially transferred without prior written consent of financial institutions is obtained.
KNH Solar Co., Ltd.		Principal and interest, dividends to shareholders cannot be paid without written consent of financial institutions.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

18.	Property, Plant and Equipment

 

(1)	Property, plant and equipment as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Acquisition cost				Government grants				Accumulated depreciation				Accumulated impairment losses (*)				Book value
Land		W	13,378,753				(21,968	)			—				—				13,356,785
Buildings			18,842,861				(63,523	)			(6,917,451	)			(1,776	)			11,860,111
Structures			66,830,582				(198,056	)			(22,584,774	)			(8,039	)			44,039,713
Machinery			76,287,809				(180,571	)			(30,085,872	)			(45,512	)			45,975,854
Ships			4,175				—				(3,797	)			—				378
Vehicles			274,953				(5,784	)			(199,438	)			(116	)			69,615
Equipment			1,462,559				(662	)			(1,059,762	)			(6	)			402,129
Tools			1,025,317				(974	)			(830,082	)			(32	)			194,229
Construction-in-progress			27,159,493				(46,409	)			—				(38,108	)			27,074,976
Finance lease assets			2,390,678				(27	)			(2,116,905	)			—				273,746
Asset retirement costs			9,425,794				—				(3,485,876	)			—				5,939,918
Others			11,457,226				—				(8,957,571	)			—				2,499,655
		W	228,540,200				(517,974	)			(76,241,528	)			(93,589	)			151,687,109

 

(*)	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, 2017
		Acquisition cost				Government grants				Accumulated depreciation				Accumulated impairment losses (*)				Book value
Land		W	13,318,542				(21,968	)			—				—				13,296,574
Buildings			18,777,678				(63,539	)			(6,722,376	)			(1,776	)			11,989,987
Structures			66,184,484				(196,414	)			(22,071,667	)			(8,039	)			43,908,364
Machinery			75,826,292				(183,188	)			(28,904,982	)			(45,512	)			46,692,610
Ships			4,175				—				(3,772	)			—				403
Vehicles			276,425				(6,322	)			(195,260	)			(127	)			74,716
Equipment			1,440,870				(761	)			(1,020,192	)			(6	)			419,911
Tools			1,010,537				(1,027	)			(809,842	)			(32	)			199,636
Construction-in-progress			25,610,649				(49,084	)			—				(38,108	)			25,523,457
Finance lease assets			2,390,680				(27	)			(2,093,001	)			—				297,652
Asset retirement costs			9,395,821				—				(3,356,337	)			—				6,039,484
Others			11,247,021				—				(8,807,401	)			—				2,439,620
		W	225,483,174				(522,330	)			(73,984,830	)			(93,600	)			150,882,414

 

(*)	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

March 31, 2018

(Unaudited)

 

18.	Property, Plant and Equipment, Continued

 

(2)	Changes in property, plant and equipment for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Acquisition				Disposal				Depreciation				Impairment				Others				Ending balance
Land		W	13,318,542				—				(7,109	)			—				—				67,320				13,378,753
(Government grants)			(21,968	)			—				—				—				—				—				(21,968	)
Buildings			12,053,526				661				(1,922	)			(192,366	)			—				63,735				11,923,634
(Government grants)			(63,539	)			—				—				1,528				—				(1,512	)			(63,523	)
Structures			44,104,778				2,057				(179,406	)			(611,956	)			—				922,296				44,237,769
(Government grants)			(196,414	)			—				522				2,526				—				(4,690	)			(198,056	)
Machinery			46,875,798				62,151				(53,526	)			(1,255,878	)			—				527,880				46,156,425
(Government grants)			(183,188	)			—				88				4,464				—				(1,935	)			(180,571	)
Ships			403				—				—				(25	)			—				—				378
Vehicles			81,038				338				(352	)			(8,571	)			(11	)			2,957				75,399
(Government grants)			(6,322	)			—				—				538				—				—				(5,784	)
Equipment			420,672				5,917				(198	)			(49,631	)			—				26,031				402,791
(Government grants)			(761	)			—				—				99				—				—				(662	)
Tools			200,663				1,983				(489	)			(20,419	)			—				13,465				195,203
(Government grants)			(1,027	)			—				—				115				—				(62	)			(974	)
Construction-in-progress			25,572,541				3,130,807				(3,529	)			—				—				(1,578,434	)			27,121,385
(Government grants)			(49,084	)			(5,196	)			—				—				—				7,871				(46,409	)
Finance lease assets			297,679				—				—				(23,897	)			—				(9	)			273,773
(Government grants)			(27	)			—				—				—				—				—				(27	)
Asset retirement costs			6,039,484				234				—				(150,008	)			—				50,208				5,939,918
Others			2,439,620				13,057				(227	)			(152,305	)			—				199,510				2,499,655
		W	150,882,414				3,212,009				(246,148	)			(2,455,786	)			(11	)			294,631				151,687,109

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

18.	Property, Plant and Equipment, Continued

 

(2)	Changes in property, plant and equipment for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Beginning balance				Acquisition				Disposal				Depreciation				Impairment (*)				Others				Ending balance
Land		W	12,969,741				32,773				(8,961	)			—				—				324,989				13,318,542
(Government grants)			(3,204	)			—				5				—				—				(18,769	)			(21,968	)
Buildings			11,784,624				40,592				(19,715	)			(794,804	)			(923	)			1,043,752				12,053,526
(Government grants)			(61,188	)			(900	)			28				5,996				—				(7,475	)			(63,539	)
Structures			43,330,415				428				(519,366	)			(2,421,168	)			(6,856	)			3,721,325				44,104,778
(Government grants)			(197,641	)			—				1,905				10,011				—				(10,689	)			(196,414	)
Machinery			43,421,945				421,892				(242,428	)			(4,821,595	)			(43,121	)			8,139,105				46,875,798
(Government grants)			(111,064	)			(10,834	)			489				17,390				—				(79,169	)			(183,188	)
Ships			550				—				—				(147	)			—				—				403
Vehicles			70,970				3,447				(174	)			(34,236	)			(127	)			41,158				81,038
(Government grants)			(107	)			(107	)			14				1,070				—				(7,192	)			(6,322	)
Equipment			376,395				53,529				(413	)			(158,614	)			(6	)			149,781				420,672
(Government grants)			(732	)			(43	)			—				454				—				(440	)			(761	)
Tools			179,032				30,990				(166	)			(74,909	)			(32	)			65,748				200,663
(Government grants)			(430	)			—				—				354				—				(951	)			(1,027	)
Construction-in-progress			27,296,260				11,996,508				(6,487	)			—				—				(13,713,740	)			25,572,541
(Government grants)			(135,807	)			(42,728	)			—				—				—				129,451				(49,084	)
Finance lease assets			406,353				—				(29,696	)			(107,390	)			—				28,412				297,679
(Government grants)			—				—				—				1				—				(28	)			(27	)
Asset retirement costs			4,065,412				—				—				(518,565	)			—				2,492,637				6,039,484
Others			2,351,532				10,411				(28	)			(762,711	)			—				840,416				2,439,620
		W	145,743,056				12,535,958				(824,993	)			(9,658,863	)			(51,065	)			3,138,321				150,882,414

 

(*)

Korea Midland Power Co., Ltd. and Korea Western Power Co., Ltd., 100% owned subsidiaries, have determined that there are impairment indicators for the shutdowns of certain power generation units and fire, and performed an impairment test over the individual assets.    As a result, the Company recognized the amount of the carrying amount in excess of its recoverable amount as impairment loss in the consolidated statements of comprehensive income.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

19.	Investment Properties

 

(1)	Investment properties as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Acquisition cost				Government grants				Accumulated depreciation				Book value
Land		W	266,184				—				—				266,184
Buildings			37,127				(82	)			(15,587	)			21,458
		W	303,311				(82	)			(15,587	)			287,642
In millions of won		December 31, 2017
		Acquisition cost				Government grants				Accumulated depreciation				Book value
Land		W	264,205				—				—				264,205
Buildings			36,165				(83	)			(15,573	)			20,509
		W	300,370				(83	)			(15,573	)			284,714

 

(2)	Changes in investment properties for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Depreciation				Others				Ending balance
Land		W	264,205				—				1,979				266,184
Buildings			20,592				(291	)			1,239				21,540
(Government grants)			(83	)			1				—				(82	)
		W	284,714				(290	)			3,218				287,642
In millions of won		December 31, 2017
		Beginning balance				Depreciation				Others				Ending balance
Land		W	336,421				—				(72,216	)			264,205
Buildings			17,323				(1,178	)			4,447				20,592
(Government grants)			(64	)			2				(21	)			(83	)
		W	353,680				(1,176	)			(67,790	)			284,714

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

19.	Investment Properties, Continued

 

(3)	Income and expenses related to investment properties for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Rental income		W	2,861				2,432
Operating and maintenance expenses related to rental income			(290	)			(408	)
		W	2,571				2,024

 

(4)	Fair value of investment properties as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Book value				Fair value				Book value				Fair value
Land		W	266,184				297,007				264,205				309,241
Buildings			21,458				24,045				20,509				23,319
		W	287,642				321,052				284,714				332,560

The fair values of the investment properties as of the reporting date were determined in consideration of the fluctuation on the publicly announced individual land price after the K-IFRS transition date (January 1, 2010).

 

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

 

20.	Construction Contracts

 

(1)	Changes in total contract amount in which revenue is not yet recognized for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won

March 31, 2018

Beginning balance

Increase (decrease) (*)

Recognized as revenue

Ending balance

Nuclear power plant construction in UAE and others

W

4,176,595

168,977

(450,161

)

3,895,411

 

(*)	For the three-month period ended March 31, 2018, the increased balance of contracts from new orders and other is W188,718 million and the decreased balance of contracts due to changes in scope of construction work is W19,741 million.

 

In millions of won

December 31, 2017

Beginning balance

Increase (decrease) (*)

Recognized as revenue

Ending balance

Nuclear power plant construction in UAE and others

W

7,236,888

151,891

(3,212,184

)

4,176,595

 

(*)	For the year ended December 31, 2017, the increased balance of contracts from new orders and other is W438,142 million and the decreased balance of contracts due to changes in scope of construction work is W286,251 million.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

20.	Construction Contracts, Continued

 

(2)	Accumulated earned revenue, expense and others related to the Company’s construction contracts as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won

March 31, 2018

Accumulated earned revenue

Accumulated expense

Accumulated profit

Unearned advance receipts

Nuclear power plant construction in UAE and others

W

18,606,078

17,534,219

1,071,859

—

 

In millions of won

December 31, 2017

Accumulated earned revenue

Accumulated expense

Accumulated profit

Unearned advance receipts

Nuclear power plant construction in UAE and others

W

18,236,992

16,937,772

1,299,220

—

 

(3)	Gross amount due from customers recognized as assets and due to customers recognized as liabilities for contract work as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won

March 31, 2018

December 31, 2017

Assets (*1)

Liabilities (*2)

Assets (*1)

Liabilities (*2)

Nuclear power plant construction in UAE and others

W

51,094

519,524

55,755

542,921

 

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

(*2)	Included in non-financial liabilities in the consolidated statements of financial position.

 

(4)

The contract between the Company and ENEC (purchaser) states that disclosure of information related to UAE nuclear power plant construction projects such as contract date, contractual completion date, completion progress, unbilled construction, impairment losses, etc. is not allowed without consent from the purchaser. ENEC did not agree to disclose such information. Accordingly, the Company did not disclose such information based on K-IFRS 1115 129.2(2) as it is probable that ENEC may file a lawsuit for breach of contract if the Company does so. Also, the Company has not disclosed such information in a registration statement, investment prospectus or annual report and reported to the audit committee that those items will not be disclosed in the notes to the financial statements.

 

(5)	Changes in estimates of contract revenues and costs related to the Company’s construction services for the three-month period ended March 31, 2018 are as follows:

 

In millions of won		March 31, 2018
																		Assets								Receivables from construction contracts
		Expected loss on constructi- on contracts				Changes in estimates of contract revenue and costs				Amounts recognized in current profit or loss				Amounts recogniz- ed in future profit or loss				Gross				Allowance for doubtful accounts				Gross				Allowance for doubtful accounts				Changes in estimated total contract costs
Transmission and distribution		W	—				(449	)			(284	)			(165	)			22,535				—				—				—				—
Electric power generation (nuclear)			—				—				—				—				2,743				—				—				—				—
Plant maintenance & engineering service			539				(1,064	)			(27	)			(1,037	)			25,816				(23	)			26,538				(7,891	)			1,782
		W	539				(1,513	)			(311	)			(1,202	)			51,094				(23	)			26,538				(7,891	)			1,782

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

21.	Intangible Assets other than Goodwill

 

(1)	Intangible assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Acquisition cost				Government grants				Accumulated amortization				Accumulated impairment losses				Book value
Software		W	546,944				(407	)			(422,207	)			—				124,330
Licenses and franchises			3,398				—				(3,398	)			—				—
Copyrights, patents rights and other industrial rights			93,290				—				(22,317	)			—				70,973
Mining rights			563,763				—				(16,417	)			—				547,346
Development expenditures			857,604				(3,219	)			(760,931	)			—				93,454
Intangible assets under development			79,672				(10,707	)			—				(3,941	)			65,024
Usage rights of donated assets and other			459,682				(8	)			(361,686	)			—				97,988
Leasehold rights			25,482				—				(19,431	)			—				6,051
Others			297,815				—				(107,393	)			(12,069	)			178,353
		W	2,927,650				(14,341	)			(1,713,780	)			(16,010	)			1,183,519

 

In millions of won		December 31, 2017
		Acquisition cost				Government grants				Accumulated amortization				Accumulated impairment losses				Book value
Software		W	534,191				(486	)			(408,300	)			—				125,405
Licenses and franchises			3,398				—				(3,398	)			—				—
Copyrights, patents rights and other industrial rights			43,857				—				(19,876	)			—				23,981
Mining rights			553,876				—				(14,243	)			—				539,633
Development expenditures			836,996				(3,702	)			(752,478	)			—				80,816
Intangible assets under development			143,851				(10,540	)			—				(3,941	)			129,370
Usage rights of donated assets and other			459,682				(11	)			(358,024	)			—				101,647
Leasehold rights			24,306				—				(19,262	)			—				5,044
Others			297,289				—				(103,995	)			(12,069	)			181,225
		W	2,897,446				(14,739	)			(1,679,576	)			(16,010	)			1,187,121

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

21.	Intangible Assets other than Goodwill, Continued

 

(2)	Changes in intangible assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Acquisition				Disposal				Amortization				Impairment				Others				Ending balance
Software		W	125,891				784				—				(13,474	)			—				11,536				124,737
(Government grants)			(486	)			—				—				62				—				17				(407	)
Licenses and franchises
Copyrights, patents rights and other industrial rights			23,981				4				—				(2,102	)			—				49,090				70,973
Mining rights			539,633				12,463				—				(371	)			—				(4,379	)			547,346
Development expenditures			84,518				597				—				(6,892	)			—				18,450				96,673
(Government grants)			(3,702	)			—				—				485				—				(2	)			(3,219	)
Intangible assets underdevelopment			139,910				10,202				—				—				—				(74,381	)			75,731
(Government grants)			(10,540	)			—				—				—				—				(167	)			(10,707	)
Usage rights of donatedassets and other			101,658				—				—				(3,332	)			—				(330	)			97,996
(Government grants)			(11	)			—				—				3				—				—				(8	)
Leasehold rights			5,044				—				—				(168	)			—				1,175				6,051
Others			181,225				201				(3	)			(4,280	)			—				1,210				178,353
(Government grants)			—				—				—				—				—				—				—
		W	1,187,121				24,251				(3	)			(30,069	)			—				2,219				1,183,519
In millions of won		December 31, 2017
		Beginning balance				Acquisition				Disposal				Amortization				Impairment				Others				Ending balance
Software		W	93,221				12,700				(5	)			(44,809	)			—				64,784				125,891
(Government grants)			(595	)			(17	)			—				255				—				(129	)			(486	)
Licenses and franchises
Copyrights, patents rights and other industrial rights			20,081				30				(7	)			(3,350	)			—				7,227				23,981
Mining rights			538,860				26,751				(272	)			(4,640	)			—				(21,066	)			539,633
Development expenditures			62,405				494				—				(25,924	)			—				47,543				84,518
(Government grants)			(5,152	)			—				—				2,811				—				(1,361	)			(3,702	)
Intangible assets underdevelopment			115,533				56,527				—				—				(20	)			(32,130	)			139,910
(Government grants)			(11,090	)			—				—				—				—				550				(10,540	)
Usage rights of donatedassets and other			84,102				—				—				(14,462	)			—				32,018				101,658
(Government grants)			(21	)			—				—				10				—				—				(11	)
Leasehold rights			4,632				—				—				(545	)			—				957				5,044
Greenhouse gas emissions rights			6,283				—				—				—				—				(6,283	)			—
Others			72,562				47,402				(377	)			(23,018	)			54				84,602				181,225
(Government grants)			—				—				—				—				—				—				—
		W	980,821				143,887				(661	)			(113,672	)			34				176,712				1,187,121

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

21.	Intangible Assets other than Goodwill, Continued

 

(3)	Significant specific intangible assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won and thousands of Australian dollars
March 31, 2018
Type		Description		Currency		Amount				Remaining useful lives
Software		ERP system and others		KRW			1,047			2 years and 11 months ~ 3 years and 1 month
		AMI GATEWAY S/W		KRW			3,250			2 years and 11 months
Copyrights, patents rights and other industrial rights		Smart technology verification and standard design project conducting right		KRW			11,107			4 years and 6 months
Mining rights		Mining right of Bylong mine		AUD			401,225			—  (*)
Development expenditures		Electricity sales information system		KRW			27,627			4 years
Intangible assets under development		Contributions to ARP NRC DC		KRW			48,167			—
Usage rights of donated assets and others		Sejong Haengbogdosi sharing charge		KRW			39,326			8 years and 8 months
		Dangjin power plant load facility usage right		KRW			18,889			3 years
Others		Occupancy and use of public waters		KRW			101,917			18 years 8 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, 2017
Type		Description		Currency		Amount				Remaining useful lives
Software		ERP system and others		KRW			1,135			3 years and 2 months ~ 3 years and 4 months
		AMI GATEWAY S/W		KRW			3,528			3 years and 2 months
Copyrights, patents rights and other industrial rights		Smart technology verification and standard design project conducting right		KRW			11,724			4 years and 9 months
Mining rights		Mining right of Bylong mine		AUD			401,225			—  (*)
Development expenditures		Electricity sales information system		KRW			29,391			4 years 3 months
Intangible assets under development		Contributions to ARP NRC DC		KRW			46,458			—
Usage rights of donated assets and others		Sejong Haengbogdosi sharing charge		KRW			40,460			8 years and 11 months
		Dangjin power plant load facility usage right		KRW			20,463			3 years 3 months
Others		Occupancy and use of public waters		KRW			103,269			18 years 11 months

 

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

 

(4)	For the three-month periods ended March 31, 2018 and 2017, the Company recognized research and development expenses of W156,387 million and W140,526 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

22.	Trade and Other Payables

 

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

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Trade payables		W	3,006,974				—				2,936,990				—
Other trade payables			1,858,869				2,828,466				1,649,933				2,825,039
Accrued expenses			1,129,545				245				1,087,844				1,951
Leasehold deposits received			1,891				1,008				1,562				1,308
Other deposits received			180,159				103,107				186,817				102,896
Finance lease liabilities			112,455				271,502				131,792				286,468
Dividends payable			546,585				—				4,448				—
Others (*)			—				12,818				135				5,818
		W	6,836,478				3,217,146				5,999,521				3,223,480

 

(*)	Details of others as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Advance received from local governments		W	—				5,818				—				5,818
Others			—				7,000				135				—
		W	—				12,818				135				5,818

 

23.	Borrowings and Debt Securities

 

(1)	Borrowings and debt securities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Current liabilities
Short-term borrowings		W	1,608,085				1,038,328
Current portion of long-term borrowings			128,690				128,543
Current portion of debt securities			7,276,316				7,961,182
Less : Current portion of discount on long-term borrowings			(843	)			(886	)
Less : Current portion of discount on debt securities			(3,370	)			(3,882	)
			9,008,878				9,123,285
Non-current liabilities
Long-term borrowings			2,479,535				2,455,737
Debt securities			44,825,943				43,270,825
Less : Discount on long-term borrowings			(19,977	)			(21,113	)
Less : Discount on debt securities			(81,563	)			(81,424	)
Add : Premium on debt securities			68				82
			47,204,006				45,624,107
		W	56,212,884				54,747,392

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(2)	Repayment schedule of borrowings and debt securities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
March 31, 2018
Type		Borrowings				Debt securities
Less than 1 year		W	1,736,775				7,276,316
1~ 5 years			1,096,974				26,445,309
Over 5 years			1,382,561				18,380,634
		W	4,216,310				52,102,259

 

In millions of won
December 31, 2017
Type		Borrowings				Debt securities
Less than 1 year		W	1,166,871				7,961,182
1~ 5 years			1,117,222				25,047,075
Over 5 years			1,338,515				18,223,750
		W	3,622,608				51,232,007

 

(3)	Short-term borrowings as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won and thousands of foreign currencies

March 31, 2018

Type

Creditor

Interest rate (%)

Maturity

Foreign currency

Local currency

Local short-term borrowings

KTB Investment and securities and others

1.68~1.79

2018.04.04~ 2018.04.19

—

W

1,290,000

Foreign short-term borrowings

SCNT and others

2.01~6.50

2018.04.05~ 2018.12.03

USD

31,905

34,026

Foreign short-term borrowings

Export-import Bank of Korea

3M Libor+0.59

2018.12.18

AUD

340,017

278,552

Local bank overdraft

Woori Bank

Standard overdraft rate+1.09

2019.02.26

—

5,507

W

1,608,085

 

In millions of won and thousands of foreign currencies

December 31, 2017

Type

Creditor

Interest rate (%)

Maturity

Foreign currency

Local currency

Local short-term borrowings

KTB Investment and securities and others

1.57~2.47

2018.01.12~ 2018.09.19

—

W

686,561

Foreign short-term borrowings

SCNT and others

4.60~6.50

2018.12.03

USD

8,955

9,594

Foreign short-term borrowings

Export-import Bank of Korea

3M Libor+0.41~0.63

2018.12.18

AUD

327,259

273,314

Local bank overdraft

Nonghyup Bank

3.04

2018.01.02

—

51,300

Local bank overdraft

Woori Bank

Standard overdraft rate+1.12

2018.02.27

—

17,559

W

1,038,328

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(4)	Long-term borrowings as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won and thousands of foreign currencies
March 31, 2018
Type				Interest rate (%)				Maturity				Foreign currency				Local currency
Local long-term borrowings
Korea Development Bank		Others			0.50				2018~2044				—			W	4,894
		Facility			2.45~4.60				2023~2028				—				68,210
		Operating funds			2.59~3.04				2018~2020				—				47,000
		Operating funds			1yr KoFC bond rate +0.95				2020				—				14,000
KEB Hana Bank		Commercial Paper			3M CD+0.24~0.32				2021~2022				—				400,000
		Facility			4.60				2028				—				14,729
		Facility			3yr KTB rate-1.25				2018~2028				—				8,770
IBK		PF Refinancing			CD+1.25				2030				—				22,500
Export-Import Bank of Korea		Project loans			1.50				2026				—				25,042
		Operating funds			2.21				2020				—				35,000
Korea Energy Agency		Development of power resources			3yr KTB rate-2.25				2023~2025				—				6,463
		Facility			3yr KTB rate-2.25				2018~2024				—				2,988
		Project loans			—				2022~2025				—				3,733
		Others			KTB rate -2.25				2024~2028				—				18,223
Shinhan Bank		Collateral borrowing			2.32				2019				—				30,000
		Facility			CB rate +1.10				2028				—				22,094
		Others			3.95				2035				—				105,000
		Others			Standard overdraft rate +1.00				2035				—				105,000
Kookmin Bank		Facility			3.16				2020				—				10,000
		Facility			MOR+0.79				2023				—				35,000
Others		Facility			1.75~4.60				2026~2029				—				146,292
		Facility			CB rate +1.10~1.20				2022~2028				—				45,969
		PF Refinancing			4.10				2030				—				62,500
		Others			4.50~7.90				2022~2039				—				102,347
																	1,335,754
Foreign long-term borrowings
Korea Energy Agency		Project loans			—				2021~2023			USD	8,744				9,325
Export-Import Bank of Korea and others		Direct loan and others			1M Libor+1.80~3.20				2036			USD	70,418				75,101
		Direct loan and others			3M Libor+2.75~3.70				2027			JOD	168,663				253,529
		Commercial loan and others			3M Libor+1.50~2.50				2030~2033			USD	289,026				308,246
		PF Loan			6M Libor+1.70~2.50				2032			USD	123,013				131,194
SCNT and others		Shareholder’s loan			6.50~8.00				2023			USD	42,690				45,529
		Shareholder’s loan			8.00				2031			JOD	5,136				7,720
PT PJB		Shareholder’s loan			12.75				2019			IDR	10,892,705				844
Samsung Life Insurance and others		Syndicated Loan			3.10				2032			JPY	5,325,000				53,328
Woori Bank and others		Syndicated Loan			JPY 6M Libor+2.00				2032			JPY	3,435,000				34,400
SMBC and others		Equity Bridge Loan			1M Libor+0.90				2019			USD	71,409				76,158
IFC and others		Others			6M Libor+5.00				2031			PKR	17,390,780				160,343
Federal Financing Bank		PF loan			2.39~13.00				2031~2038			USD	107,346				114,484
Others		Others			—				2019			USD	2,127				2,270
																	1,272,471
																	2,608,225
Less : Discount of long-term borrowings																	(20,820	)
Less : Current portion of long-term borrowings																	(128,690	)
Add : Current portion of discount on long-term borrowings																	843
																W	2,459,558

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(4)	Long-term borrowings as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won and thousands of foreign currencies
December 31, 2017
Type				Interest rate (%)				Maturity				Foreign currency				Local currency
Local long-term borrowings
Korea Development Bank		Others			0.50				2018~2044				—			W	4,909
		Facility			2.45~4.60				2023~2028				—				68,883
		Facility			1yr KoFC bond rate +0.31				2018				—				25,000
		Operating funds			2.59~3.04				2018~2020				—				47,000
		Operating funds			1yr KoFC bond rate +0.95				2020				—				14,000
KEB Hana Bank		Commercial Paper			3M CD+0.24~0.32				2021~2022				—				400,000
		Facility			4.60				2028				—				15,038
		Facility			3yr KTB rate-1.25				2018~2028				—				8,947
IBK		PF Refinancing			CD+1.25				2030				—				22,500
Export-Import Bank of Korea		Project loans			1.50				2026				—				25,042
		Operating funds			2.21				2020				—				35,000
Korea Energy Agency(*)		Development of power resources			3yr KTB rate-2.25				2023~2025				—				6,765
		Facility			3yr KTB rate-2.25				2018~2024				—				3,121
		Project loans			—				2022~2025				—				3,733
		Others			KTB rate -2.25				2024~2028				—				18,455
Shinhan Bank		Collateral borrowing			2.32				2019				—				30,000
		Facility			CB rate +1.10				2028				—				22,557
		Operating funds			2.70				2018				—				15,000
		Others			4.10				2035				—				105,000
		Others			Standard overdraft rate +1.10				2035				—				105,000
Kookmin Bank		Facility			3.16				2020				—				10,000
		Facility			MOR+0.79				2023				—				35,000
Others		Facility			1.75~4.60				2026~2029				—				148,423
		Facility			CB rate +1.10~1.20				2022~2028				—				46,278
		PF Refinancing			4.10				2030				—				62,500
		Others			4.50~8.00				2022~2039				—				102,346
																	1,380,497
Foreign long-term borrowings
Korea Energy Agency(*)		Project loans			—				2021~2023			USD	8,744				9,368
Export-Import Bank of Korea and others		Direct loan and others			1M Libor+1.80~3.20				2036			USD	64,913				69,548
		Direct loan and others			3M Libor+2.75~3.70				2027			JOD	168,663				254,514
		Commercial loan and others			3M Libor+1.50~2.50				2030~2033			USD	289,026				309,662
		PF Loan			6M Libor+1.70~2.50				2032			USD	123,253				132,054
SCNT and others		Shareholder’s loan			6.50~8.00				2023			USD	41,718				44,697
		Shareholder’s loan			8.00				2031			JOD	5,136				7,750
PT PJB		Shareholder’s loan			12.75				2019			IDR	10,932,568				864
Samsung Life Insurance and others		Syndicated Loan			3.10				2032			JPY	5,325,000				50,540
Woori Bank and others		Syndicated Loan			JPY 6M Libor +2.00				2032			JPY	3,435,000				32,602
SMBC and others		Equity Bridge Loan			1M Libor+0.90				2019			USD	70,986				76,054
IFC and others		Others			6M Libor+5.00				2031			PKR	16,652,350				161,195
Federal Financing Bank		PF loan			2.39				2031			USD	48,366				51,819
Others		Others			—				2019			USD	2,907				3,116
																	1,203,783
																	2,584,280
Less : Discount of long-term borrowings																	(21,999	)
Less : Current portion of long-term borrowings																	(128,543	)
Add : Current portion of discount on long-term borrowings																	886
																W	2,434,624

 

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KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(5)	Local debt securities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
		Issue date				Maturity				Interest rate (%)				March 31, 2018				December 31, 2017
Electricity bonds			2009.12.03~ 2018.03.29				2018.04.08~ 2037.09.18				1.62~5.45			W	21,350,000				20,700,000
Electricity bonds			2013.06.25				2018.06.25				3M CD+0.31				150,000				150,000
Corporate bonds (*1)			2009.05.04~ 2018.03.27				2018.04.26~ 2048.03.13				1.36~5.84				21,462,708				21,122,708
															42,962,708				41,972,708
Less : Discount on local debt securities															(38,222	)			(37,816	)
Less : Current portion of local debt securities															(4,720,000	)			(5,200,000	)
Add : Current portion of discount on local debt securities															954				923
														W	38,205,440				36,735,815

 

(*1)	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 March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won and thousands of foreign currencies
March 31, 2018
Type		Issue date		Maturity		Interest rate (%)		Foreign currency				Local currency
FY-96		1996.04.01~1996.12.06		2026.12.01~2096.04.01		6.00~8.37		USD	249,070				265,634
FY-97		1997.01.31~1997.08.04		2027.02.01~2027.08.01		6.75~7.00		USD	314,717				335,646
FY-04		2004.04.23		2034.04.23		5.13		USD	286,920				306,000
FY-08		2008.11.27		2018.11.27		4.19		JPY	20,000,000				200,292
FY-11		2011.07.13		2021.07.13		4.75		USD	500,000				533,250
FY-12		2012.09.19		2022.09.19		3.00		USD	750,000				799,875
FY-13		2013.08.14~2013.11.27		2018.08.14~2018.11.27		2.63~2.88		USD	1,600,000				1,706,400
FY-13		2013.09.26~2013.10.23		2019.03.26~2019.04.23		1.50~1.63		CHF	400,000				446,048
FY-13		2013.09.25		2020.09.25		5.75		AUD	325,000				266,250
FY-13		2013.07.25		2018.07.25		3M Libor+1.50		USD	100,000				106,650
FY-14		2014.02.11~2014.12.02		2019.02.11~2029.07.30		2.38~3.57		USD	1,500,000				1,599,750
FY-15		2015.06.15		2025.06.15		3.25		USD	300,000				319,950
FY-16		2016.01.21		2021.07.21		2.5		USD	300,000				319,950
FY-17		2017.04.12~2017.07.25		2020.04.12~2027.07.25		2.38~3.13		USD	1,100,000				1,173,150
FY-17		2017.10.30		2037.10.30		1.7		EUR	40,000				52,478
FY-17		2017.11.16		2037.11.16		2.36		SEK	450,000				57,411
FY-18		2018.01.29		2021.01.29		3.00		USD	400,000				426,600
FY-18		2018.03.13		2028.03.13		3.35		HKD	1,650,000				224,217
													9,139,551
Less : Discount on foreign debt securities													(46,711	)
Add : Premium on foreign debt securities													68
Less : Current portion of foreign debt securities													(2,556,316	)
Add : Current portion of discount on foreign debt securities													2,416
												W	6,539,008

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

23.	Borrowings and Debt Securities, Continued

 

(6)	Foreign debt securities as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won and thousands of foreign currencies
December 31, 2017
Type		Issue date		Maturity		Interest rate (%)		Foreign currency				Local currency
FY-96		1996.04.01~1996.12.06		2026.12.01~2096.04.01		6.00~8.37		USD	249,070				266,854
FY-97		1997.01.31~1997.08.04		2027.02.01~2027.08.01		6.75~7.00		USD	314,717				337,188
FY-04		2004.04.23		2034.04.23		5.13		USD	286,920				307,406
FY-08		2008.11.27		2018.11.27		4.19		JPY	20,000,000				189,822
FY-11		2011.07.13		2021.07.13		4.75		USD	500,000				535,700
FY-12		2012.09.19		2022.09.19		3		USD	750,000				803,550
FY-13		2013.02.05~2013.11.27		2018.02.05~2018.11.27		1.88~2.88		USD	1,900,000				2,035,660
FY-13		2013.09.26~2013.10.23		2019.03.26~2019.04.23		1.50~1.63		CHF	400,000				437,888
FY-13		2013.09.25		2020.09.25		5.75		AUD	325,000				271,427
FY-13		2013.02.20~2013.07.25		2018.02.20~2018.07.25		3M Libor+0.84~1.50		USD	500,000				535,700
FY-14		2014.02.11~2014.12.02		2019.02.11~2029.07.30		2.38~3.57		USD	1,500,000				1,607,100
FY-15		2015.06.15		2025.06.15		3.25		USD	300,000				321,420
FY-16		2016.01.21		2021.07.21		2.5		USD	300,000				321,420
FY-17		2017.04.12~2017.07.25		2020.04.12~2027.07.25		2.38~3.13		USD	1,100,000				1,178,540
FY-17		2017.10.30		2037.10.30		1.7		EUR	40,000				51,170
FY-17		2017.11.16		2037.11.16		2.36		SEK	450,000				58,454
													9,259,299
Less : Discount on foreign debt securities													(47,490	)
Add : Premium on foreign debt securities													82
Less : Current portion of foreign debt securities													(2,761,182	)
Add : Current portion of discount on foreign debt securities													2,959
												W	6,453,668

 

(7)	Changes in borrowings and debt securities for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Beginning balance		W	54,747,392				53,639,205
Cash flow			1,532,922				336,912
Effect of exchange rate fluctuations			(68,968	)			(1,016,229	)
Others			1,538				9,704
Ending balance		W	56,212,884				52,969,592

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

24.	Finance Lease Liabilities

 

(1)	Lease contracts

The Company entered into 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 plant’s economic life.

 

(2)	Finance lease liabilities as of March 31, 2018 and December 31, 2017 are as follows and are included in current and non-current trade and other payables, net, in the consolidated statements of financial position:

 

In millions of won		March 31, 2018								December 31, 2017
		Minimum lease payments				Present value of minimum lease payments				Minimum lease payments				Present value of minimum lease payments
Less than 1 year		W	152,828				112,455				174,534				131,792
1 ~ 5 years			261,941				195,721				272,994				204,069
More than 5 years			97,873				75,781				108,748				82,399
		W	512,642				383,957				556,276				418,260

 

(3)	Current and non-current portion of finance lease liabilities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Current finance lease liabilities		W	112,455				131,792
Non-current finance lease liabilities			271,502				286,468
		W	383,957				418,260

 

(4)	Minimum lease payment and contingent rent payment recognized as an expense as a lessee for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Minimum lease payment		W	39,445				42,153
Contingent rent payment			(4,595	)			(5,275	)

 

(5)	The Company does not have any irrevocable operating lease contracts as of March 31, 2018 and December 31, 2017.

 

(6)	Changes in finance lease liabilities for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Beginning balance		W	418,260				541,179
Cash flow			(34,303	)			(31,039	)
Acquisition of finance lease assets			—				—
Ending balance		W	383,957				510,140

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

25.	Employment Benefits

 

(1)	Employment benefit obligations as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Net defined benefit obligations		W	1,559,042				1,476,201
Other long-term employee benefit obligations			6,792				6,868
		W	1,565,834				1,483,069

 

(2)	Principal assumptions on actuarial valuation as of March 31, 2018 and December 31, 2017 are as follows:

 

		March 31, 2018		December 31, 2017
Discount rate		2.85% ~ 3.02%		2.75% ~ 2.90%
Future salary and benefit levels		4.88%		4.88%
Weighted average duration		13.45 years		13.40 years

 

(3)	Details of expense relating to defined benefit plans for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Current service cost		W	88,549				91,618
Interest cost			20,899				18,113
Expected return on plan assets			(10,425	)			(7,597	)
Loss from settlement			(195	)			(457	)
		W	98,828				101,677

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

 

In millions of won		March 31, 2018				March 31, 2017
Cost of sales		W	72,977				76,866
Selling and administrative expenses			15,598				13,714
Others (Construction-in-progress and others)			10,253				11,097
		W	98,828				101,677

In addition, for the three-month periods ended March 31, 2018 and 2017, employee benefit obligations expenses of W16,042 million and W15,231 million, respectively, is recognized as cost of sales, and W2,973 million and W2,808 million, respectively, is recognized as selling and administrative expenses, and W3,148 million and W3,731 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

March 31, 2018

(Unaudited)

 

25.	Employment Benefits, Continued

 

(4)	Details of defined benefit obligations as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Present value of defined benefit obligation from funded plans		W	3,026,344				2,951,842
Fair value of plan assets			(1,467,302	)			(1,475,641	)
			1,559,042				1,476,201
Present value of defined benefit obligation from unfunded plans			—				—
Net liabilities incurred from defined benefit plans		W	1,559,042				1,476,201

 

(5)	Changes in the present value of defined benefit obligations for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	2,951,842				2,867,377
Current service cost			88,549				392,820
Interest cost (*)			20,899				79,524
Remeasurement component			6,839				(258,223	)
Loss from settlement			(195	)			(1,055	)
Actual payments			(41,592	)			(128,707	)
Others			2				106
Ending balance		W	3,026,344				2,951,842

 

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

 

(6)	Changes in the fair value of plan assets for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	1,475,641				1,188,907
Expected return			10,425				31,307
Remeasurement component			(3,465	)			(10,435	)
Contributions by the employers			234				325,080
Actual payments			(15,533	)			(59,218	)
Ending balance		W	1,467,302				1,475,641

In addition, loss on accumulated remeasurement component amounted to W126,538 million and W43,513 million has been recognized as other comprehensive income or loss for the three-month period ended March 31, 2018 and for the year ended December 31, 2017, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

25.	Employment Benefits, Continued

 

(7)	Details of the fair value of plan assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Equity instruments		W	105,748				79,204
Debt instruments			459,055				517,040
Bank deposit			142,642				293,477
Others			759,857				585,920
		W	1,467,302				1,475,641

For the three-month period ended March 31, 2018 and for the year ended December 31, 2017, actual returns on plan assets amounted to W6,960 million and W20,872 million, respectively.

 

(8)	Remeasurement component recognized in other comprehensive income (loss) for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Actuarial gain from changes in financial assumptions		W	(38,598	)			(300,058	)
Experience adjustments			45,437				41,835
Expected return			3,465				10,435
		W	10,304				(247,788	)

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

 

26.	Provisions

 

(1)	Provisions as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Employment benefits
Provisions for employment benefits		W	1,000,588				—				913,787				—
Litigation
Litigation provisions			47,926				22,463				48,621				24,955
Decommissioning cost
Nuclear plants			—				13,098,969				—				13,007,228
Spent fuel			—				1,338,729				—				1,339,046
Radioactive waste			11,494				1,633,926				11,494				1,626,877
PCBs			—				177,684				—				180,087
Other recovery provisions			—				7,464				—				6,659
Others
Power plant regional support program			199,448				—				153,756				—
Transmission regional support program			239,859				—				243,365				—
Provisions for tax			35				—				61				—
Provisions for financial guarantee			—				20,845				—				23,475
Provisions for RPS			330,722				—				271,624				—
Provisions for greenhouse gas emissions obligations			403,944				—				414,252				—
Others			45,547				17,022				80,538				16,387
		W	2,279,563				16,317,102				2,137,498				16,224,714

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

26.	Provisions, Continued

 

(2)	Changes in provisions for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Increase in provision				Payment				Reversal				Other				Ending balance
Employment benefits
Provisions for employment benefits		W	913,787				231,497				(144,696	)			—				—				1,000,588
Litigation
Litigation provisions			73,576				1,774				(3,900	)			(680	)			(381	)			70,389
Decommissioning cost
Nuclear plants			13,007,228				95,678				(3,937	)			—				—				13,098,969
Spent fuel			1,339,046				83,797				(84,114	)			—				—				1,338,729
Radioactive waste			1,638,371				7,049				—				—				—				1,645,420
PCBs			180,087				1,150				(3,553	)			—				—				177,684
Other recovery provisions			6,659				342				—				—				463				7,464
Others
Power plant regional support program			153,756				46,366				(10,198	)			—				9,524				199,448
Transmission regional support program			243,365				50,009				(53,515	)			—				—				239,859
Provisions for tax			61				—				—				—				(26	)			35
Provisions for financial guarantee			23,475				232				(6	)			(2,066	)			(790	)			20,845
Provisions for RPS			271,624				121,916				(35,009	)			(27,809	)			—				330,722
Provisions for greenhouse gas emissions obligations			414,252				10,956				—				(21,264	)			—				403,944
Others			96,925				1,145				(52,312	)			(1	)			16,812				62,569
		W	18,362,212				651,911				(391,240	)			(51,820	)			25,602				18,596,665
In millions of won		December 31, 2017
		Beginning balance				Increase in provision				Payment				Reversal				Other				Ending balance
Employment benefits
Provisions for employment benefits		W	810,607				984,896				(880,255	)			(1,461	)			—				913,787
Litigation
Litigation provisions			198,237				34,629				(152,461	)			(7,096	)			267				73,576
Decommissioning cost
Nuclear plants			10,195,928				2,818,033				(6,733	)			—				—				13,007,228
Spent fuel			1,374,225				307,682				(342,861	)			—				—				1,339,046
Radioactive waste			1,479,502				222,632				(63,763	)			—				—				1,638,371
PCBs			191,744				5,309				(14,266	)			(2,700	)			—				180,087
Other recovery provisions			507				5,939				—				—				213				6,659
Others
Power plant regional support program			152,851				94,039				(103,889	)			—				10,755				153,756
Transmission regional support program			282,608				143,178				(182,421	)			—				—				243,365
Provisions for tax			242				—				(25	)			(136	)			(20	)			61
Provisions for financial guarantee			29,665				3,760				—				(9,945	)			(5	)			23,475
Provisions for RPS			417,404				242,946				(388,726	)			—				—				271,624
Provisions for greenhouse gas emissions obligations			249,644				422,666				(256,758	)			(1,300	)			—				414,252
Others (*)			43,975				6,639				(3,348	)			(26,477	)			76,136				96,925
		W	15,427,139				5,292,348				(2,395,506	)			(49,115	)			87,346				18,362,212

 

(*)	As described in note 49.(1), the Company believes that the possibility of economic outflow is probable on the cost of construction suspension of Shin-Kori Unit 5 and 6 for three months. For this reason, the Company recognized W77,261 million of provision as addition to construction-in-progress.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

27.	Government Grants

 

(1)	Government grants as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Land		W	(21,968	)			(21,968	)
Buildings			(63,523	)			(63,539	)
Structures			(198,056	)			(196,414	)
Machinery			(180,571	)			(183,188	)
Vehicles			(5,784	)			(6,322	)
Equipment			(662	)			(761	)
Tools			(974	)			(1,027	)
Construction-in-progress			(46,409	)			(49,084	)
Finance lease assets			(27	)			(27	)
Investment properties			(82	)			(83	)
Software			(407	)			(486	)
Development expenditures			(3,219	)			(3,702	)
Intangible assets under development			(10,707	)			(10,540	)
Usage rights of donated assets and other			(8	)			(11	)
Other intangible assets other than goodwill			—				—
		W	(532,397	)			(537,152	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

27.	Government Grants, Continued

 

(2)	Changes in government grants for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Receipt				Acquisition				Offset the items of depreciation expense and others				Disposal				Others				Ending balance
Cash		W	—				(5,689	)			—				—				—				5,689				—
Land			(21,968	)			—				—				—				—				—				(21,968	)
Buildings			(63,539	)			—				—				1,528				—				(1,512	)			(63,523	)
Structures			(196,414	)			—				—				2,526				522				(4,690	)			(198,056	)
Machinery			(183,188	)			—				—				4,464				88				(1,935	)			(180,571	)
Vehicles			(6,322	)			—				—				538				—				—				(5,784	)
Equipment			(761	)			—				—				99				—				—				(662	)
Tools			(1,027	)			—				—				115				—				(62	)			(974	)
Construction-in-progress			(49,084	)			—				7,871				—				—				(5,196	)			(46,409	)
Finance lease assets			(27	)			—				—				—				—				—				(27	)
Investment properties			(83	)			—				—				1				—				—				(82	)
Software			(486	)			—				—				62				—				17				(407	)
Development expenditures			(3,702	)			—				—				485				—				(2	)			(3,219	)
Intangible assets under development			(10,540	)			—				—				—				—				(167	)			(10,707	)
Usage rights of donated assets and other			(11	)			—				—				3				—				—				(8	)
Others			—				—				—				—				—				—				—
		W	(537,152	)			(5,689	)			7,871				9,821				610				(7,858	)			(532,397	)
In millions of won		December 31, 2017
		Beginning balance				Receipt				Acquisition				Offset the items of depreciation expense and others				Disposal				Others				Ending balance
Cash		W	—				(55,533	)			—				—				—				55,533				—
Land			(3,204	)			—				—				—				5				(18,769	)			(21,968	)
Buildings			(61,188	)			—				—				5,996				28				(8,375	)			(63,539	)
Structures			(197,641	)			—				—				10,011				1,905				(10,689	)			(196,414	)
Machinery			(111,064	)			—				—				17,390				489				(90,003	)			(183,188	)
Vehicles			(107	)			—				—				1,070				14				(7,299	)			(6,322	)
Equipment			(732	)			—				—				454				—				(483	)			(761	)
Tools			(430	)			—				—				354				—				(951	)			(1,027	)
Construction-in-progress			(135,807	)			—				129,451				—				—				(42,728	)			(49,084	)
Finance lease assets			—				—				—				1				—				(28	)			(27	)
Investment properties			(64	)			—				—				2				—				(21	)			(83	)
Software			(595	)			—				—				255				—				(146	)			(486	)
Development expenditures			(5,152	)			—				—				2,811				—				(1,361	)			(3,702	)
Intangible assets under development			(11,090	)			—				—				—				—				550				(10,540	)
Usage rights of donated assets and other			(21	)			—				—				10				—				—				(11	)
Others			—				—				—				—				—				—				—
		W	(527,095	)			(55,533	)			129,451				38,354				2,441				(124,770	)			(537,152	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

28.	Deferred Revenues

Deferred revenue related to the Company’s construction contracts for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows which included in current and non-current non-financial liabilities in the consolidated statements of financial position:

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	8,325,181				7,825,765
Increase during the current year / period			196,204				978,389
Recognized as revenue during the current year / period			(123,741	)			(478,973	)
Ending balance		W	8,397,644				8,325,181

 

29.	Non-financial Liabilities

Non-financial liabilities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Current				Non-current				Current				Non-current
Advance received		W	3,986,929				183,890				3,772,713				181,612
Unearned revenue			69,620				14,166				41,593				19,718
Deferred revenue			482,052				7,915,592				476,631				7,848,550
Withholdings			275,947				13,024				164,370				10,529
Others			1,170,134				9,742				1,129,001				12,025
		W	5,984,682				8,136,414				5,584,308				8,072,434

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

30.	Contributed Capital

 

(1)	Details of shares issued as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won except share information

March 31, 2018

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 interest of W1,056,176 million is included.

 

In millions of won except share information

December 31, 2017

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 interest of W1,056,176 million is included.

 

(2)	Details in number of outstanding capital stock for three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

Number of shares		March 31, 2018				December 31, 2017
Beginning balance			641,964,077				641,964,077
Ending balance			641,964,077				641,964,077

 

(3)	Details of share premium as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Share premium		W	843,758				843,758

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

31.	Retained Earnings and Dividends Paid

 

(1)	Details of retained earnings as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Legal reserve (*)		W	1,604,910				1,604,910
Voluntary reserves			35,906,267				34,833,844
Retained earnings before appropriations			15,144,636				16,931,804
Retained earnings		W	52,655,813				53,370,558

 

(*)

The KEPCO Act requires KEPCO to appropriate a legal reserve equal to at least 20 percent of net income for each accounting period until the reserve equals 50 percent of KEPCO’s common stock. The legal reserve is not available for cash dividends; however, this reserve may be credited to paid-in capital or offset against accumulated deficit by the resolution of the shareholders.

 

(2)	Details of voluntary reserves as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Reserve for investment on social overhead capital		W	5,277,449				5,277,449
Reserve for research and human development (*)			330,000				330,000
Reserve for business expansion			30,088,818				29,016,395
Reserve for equalizing dividends			210,000				210,000
		W	35,906,267				34,833,844

 

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

 

(3)	Changes in retained earnings for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	53,370,558				53,173,871
Effect of change in accounting policy			71,928				—
Net profit for the period attributed to owner of the Company			(277,270	)			1,298,720
Changes in equity method retained earnings			5,401				10,065
Remeasurement of defined benefit liability, net of tax			(7,652	)			158,991
Dividends paid			(507,152	)			(1,271,089	)
Ending balance		W	52,655,813				53,370,558

 

(4)	Dividends paid for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won

March 31, 2018

Number of shares issued

Number of treasury stocks

Number of shares eligible for dividends

Dividends paid per share (In won)

Dividends paid

Common shares

641,964,077

—

641,964,077

W

790

507,152

In millions of won

December 31, 2017

Number of shares issued

Number of treasury stocks

Number of shares eligible for dividends

Dividends paid per share (In won)

Dividends paid

Common shares

641,964,077

—

641,964,077

W

1,980

1,271,089

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

31.	Retained Earnings and Dividends Paid, Continued

 

(5)	Changes in retained earnings of investments in associates and joint ventures for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows :

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	5,122				(4,943	)
Changes			5,401				10,065
Ending balance		W	10,523				5,122

 

(6)	Changes in remeasurement components related to defined benefit liability for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows :

 

In millions of won		March 31, 2018				December 31, 2017
Beginning balance		W	(43,513	)			(222,997	)
Changes			(10,266	)			239,636
Income tax effect			2,614				(80,645	)
Transfer to reserve for business expansion			(75,373	)			20,493
Ending balance		W	(126,538	)			(43,513	)

 

32.	Hybrid Bonds

Hybrid bonds classified as equity (non-controlling interest) as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
Issuer		Hybrid bond				Issued date				Maturity				Yield (%)				March 31, 2018				December 31, 2017
Korea South-East Power Co., Ltd.			1st hybrid bond				2012.12.07				2042.12.06				4.38			W	170,000				170,000
Korea South-East Power Co., Ltd.			2nd hybrid bond				2012.12.07				2042.12.06				4.44				230,000				230,000
Expense of issuance																			(1,090	)			(1,090	)
																		W	398,910				398,910

Although these instruments have contractual maturity dates, the contractual agreements allow these subsidiaries to indefinitely extend the maturity dates and defer the payment of interest without modification to the other terms of the instruments. When the Company decides not to pay dividends on ordinary shares, they are not required to pay interest on the hybrid bonds.

Substantially, as these instruments have no contractual obligation to pay principal and interest, these instruments have been classified as equity (non-controlling interest) in the Company’s consolidated financial statements.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

33.	Other Components of Equity

 

(1)	Other components of equity as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Other capital surplus		W	1,233,660				1,233,793
Accumulated other comprehensive loss			(314,942	)			(271,457	)
Other equity			13,294,973				13,294,973
		W	14,213,691				14,257,309

 

(2)	Changes in other capital surplus for the for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018												December 31, 2017
		Gain on disposal of treasury stocks				Others				Subtotal				Gain on disposal of treasury stocks				Others				Subtotal
Beginning balance		W	387,524				846,269				1,233,793				387,524				847,622				1,235,146
Issuance of share capital of subsidiary			—				(133	)			(133	)			—				(1,378	)			(1,378	)
Others			—				—				—				—				25				25
Ending balance		W	387,524				846,136				1,233,660				387,524				846,269				1,233,793

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

33.	Other Components of Equity, Continued

 

(3)	Changes in accumulated other comprehensive income (loss) for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Available-for-sale financial asset valuation reserve				Shares in other comprehensive income of investments in associates and joint ventures				Reserve for overseas operations translation				Reserve for loss on valuation of derivatives				Total
Beginning balance		W	29,268				66,464				(318,159	)			(49,030	)			(271,457	)
Effect of change in accounting policy			(76,851	)			—				—				—				(76,851	)
Changes in the unrealized fair value of available-for-sale financial assets, net of tax			19,085				—				—				—				19,085
Shares in other comprehensive income of associates and joint ventures, net of tax			—				50,277				—				—				50,277
Foreign currency translation of foreign operations, net of tax			—				—				(15,248	)			—				(15,248	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				—				(20,748	)			(20,748	)
Ending balance		W	(28,498	)			116,741				(333,407	)			(69,778	)			(314,942	)
In millions of won		December 31, 2017
		Available-for-sale financial asset valuation reserve				Shares in other comprehensive income of investments in associates and joint ventures				Reserve for overseas operations translation				Reserve for loss on valuation of derivatives				Total
Beginning balance		W	36,370				221,455				(223,056	)			(68,644	)			(33,875	)
Changes in the unrealized fair value of available-for-sale financial assets, net of tax			(7,102	)			—				—				—				(7,102	)
Shares in other comprehensive income of associates and joint ventures, net of tax			—				(154,991	)			—				—				(154,991	)
Foreign currency translation of foreign operations, net of tax			—				—				(95,103	)			—				(95,103	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			—				—				—				19,614				19,614
Ending balance		W	29,268				66,464				(318,159	)			(49,030	)			(271,457	)

 

(4)	Details of changes in other equity for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Statutory revaluation reserve		W	13,295,098				13,295,098
Changes in other equity			(125	)			(125	)
		W	13,294,973				13,294,973

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

34.

Sales

Details of sales for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018												March 31, 2017
		Domestic				Overseas				Total				Domestic				Overseas				Total
Sales of goods		W	14,956,755				101,222				15,057,977				14,202,229				97,237				14,299,466
Electricity			14,717,782				—				14,717,782				13,943,350				—				13,943,350
Heat supply			128,859				—				128,859				120,857				—				120,857
Others			110,114				101,222				211,336				138,022				97,237				235,259
Sales of service			34,026				40,139				74,165				39,999				31,906				71,905
Sales of construction services			16,869				433,292				450,161				16,978				642,114				659,092
Revenue related to transfer of assets from customers			123,741				—				123,741				116,146				—				116,146
		W	15,131,391				574,653				15,706,044				14,375,352				771,257				15,146,609

 

35.	Selling and Administrative Expenses

 

(1)	Selling and administrative expenses for three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Salaries		W	189,121				177,131
Retirement benefit expense			18,571				16,522
Welfare and benefit expense			27,060				26,529
Insurance expense			4,628				3,482
Depreciation			55,880				49,108
Amortization of intangible assets			13,777				10,060
Bad debt expense			18,381				3,967
Commission			156,812				143,499
Advertising expense			6,587				8,914
Training expense			1,533				1,297
Vehicle maintenance expense			2,373				2,298
Publishing expense			802				1,092
Business development expense			801				918
Rent expense			7,945				7,123
Telecommunication expense			5,694				6,322
Transportation expense			127				131
Taxes and dues			4,226				4,129
Expendable supplies expense			1,215				1,808
Water, light and heating expense			3,661				3,425
Repairs and maintenance expense			10,872				7,806
Ordinary development expense			42,090				40,078
Travel expense			3,487				4,380
Clothing expense			593				305
Survey and analysis expense			185				174
Membership fee			299				479
Others			32,972				32,005
		W	609,692				552,982

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

36.	Other Non-operating Income and Expense

 

(1)	Other non-operating income for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Reversal of other provisions		W	582				1,210
Reversal of other allowance for bad debt			15				—
Gains on government grants			78				36
Gains on assets contributed			24				7
Gains on liabilities exempted			6,924				505
Compensation and reparations revenue			19,811				24,180
Revenue from research contracts			1,094				1,976
Rental income			43,663				46,425
Others			12,636				11,077
		W	84,827				85,416

 

(2)	Other non-operating expense for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Compensation and indemnification expense		W	30				—
Accretion expenses of other provisions			129				6,746
Depreciation expenses on investment properties			290				408
Depreciation expenses on idle assets			1,637				1,664
Other bad debt expense			2,496				3,988
Donations			5,288				19,607
Others			7,031				4,021
		W	16,901				36,434

 

37.	Other Gains (Losses)

Composition of other gains (losses) for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Other gains
Gains on disposal of property, plant and equipment		W	14,366				11,029
Gains on disposal of intangible assets			—				463
Gains on foreign currency translation			4,100				18,117
Gains on foreign currency transaction			13,505				44,190
Gains on insurance proceeds			—				383
Others			62,787				107,594
Other losses
Losses on disposal of property, plant and equipment			(3,429	)			(7,867	)
Losses on disposal of intangible assets			(2	)			—
Losses on foreign currency translation			(3,348	)			(15,157	)
Losses on foreign currency transaction			(14,706	)			(11,410	)
Others			(19,217	)			(18,330	)
		W	54,056				129,012

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

38.	Finance Income

 

(1)	Finance Income for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Interest income		W	50,678				54,457
Dividends income			8,107				9,677
Gains on valuation of available-for-sale financial assets			1,392				—
Gains on disposal of available-for-sale financial assets			—				494
Gains on valuation of financial assets at fair value through profit or loss			3,816				—
Gains on valuation of derivatives			23,603				2,749
Gains on transaction of derivatives			19,443				7,864
Gains on foreign currency translation			46,141				799,717
Gains on foreign currency transaction			3,607				22,328
		W	156,787				897,286

 

(2)	Interest income included in finance income for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Cash and cash equivalents		W	8,461				8,372
Available-for-sale financial assets			2,544				—
Held-to-maturity investments			20				29
Loans and receivables			5,684				5,545
Short-term financial instrument			9,586				6,234
Long-term financial instrument			112				788
Trade and other receivables			24,271				33,489
		W	50,678				54,457

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

39.	Finance Expenses

 

(1)	Finance expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Interest expense		W	462,385				440,954
Losses on sale of available-for-sale financial assets			—				1,038
Impairment of available-for-sale financial assets			468				—
Losses on valuation of derivatives			96,593				706,224
Losses on transaction of derivatives			8,509				47,478
Losses on foreign currency translation			37,047				101,858
Losses on foreign currency transaction			8,656				11,593
Other			772				311
		W	614,430				1,309,456

 

(2)	Interest expense included in finance expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Trade and other payables		W	12,092				13,449
Short-term borrowings			5,934				6,037
Long-term borrowings			26,553				23,520
Debt securities			422,537				428,366
Other financial liabilities			127,917				123,616
			595,033				594,988
Less: Capitalized borrowing costs			(132,648	)			(154,034	)
		W	462,385				440,954

Capitalization rates for the three-month periods ended March 31, 2018 and 2017 are 2.56%~3.58% and 2.28%~3.58% respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

40.	Income Taxes

 

(1)	Income tax expense for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Current income tax expense
Payment of income tax		W	368,649				397,435
Adjustment in respect of prior years due to change in estimate			(27,058	)			(78,424	)
Current income tax directly recognized in equity			7,573				31,268
Effect of change in accounting policy			1,846				—
			351,010				350,279
Deferred income tax expense
Generation and realization of temporary differences			(30,739	)			228,080
Changes of unrecognized tax losses, tax credit and temporary differences for prior periods			(18,447	)			31,520
Changes in deferred tax on tax losses carryforwards			(313,815	)			(120,350	)
Tax credit carryforwards			29				—
			(362,972	)			139,250
Income tax expense		W	(11,962	)			489,529

 

(2)	Reconciliation between actual income tax expense and amount computed by applying the statutory tax rate to income before income taxes for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Income (loss) before income tax		W	(262,429	)			1,389,560
Income tax expense (benefit) computed at applicable tax rate (*1)			(72,168	)			336,274
Adjustments
Effect of applying gradual tax rate			(975	)			(1,040	)
Effect of non-taxable income			(47	)			(863	)
Effect of non-deductible expenses			5,108				894
Effect of tax losses that are not recognized as deferred tax asset			10,946				—
Effects of tax credits and deduction			(14,131	)			(103,425	)
Recognition (reversal) of unrecognized deferred tax asset, net			(18,447	)			31,520
Effect of change in deferred tax due to change in tax rate			7,350				—
Deferred income tax related to investments in subsidiaries and associates			130,339				297,808
Others, net			(32,879	)			6,785
			87,264				231,679
Adjustment in respect of prior years due to change in estimate			(27,058	)			(78,424	)
Income tax expense (benefit)		W	(11,962	)			489,529
Effective tax rate			(*2	)			35.20	%

 

(*1)	Applicable tax rate is 27.5% and 24.2% as of March 31, 2018 and March 31, 2017, respectively.

(*2)	The effective tax rate for the three-month period ended March 31, 2018 is not calculated with income tax benefit.

 

(3)	Income tax directly adjusted to shareholders’ equity (except for accumulated other comprehensive income (loss)) for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Dividends of hybrid bond		W	1,068				1,334

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

40.	Income Taxes, Continued

 

(4)	Income tax recognized as other comprehensive income (loss) for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018				March 31, 2017
Income tax recognized as other comprehensive income (loss)
Loss on valuation of available-for-sale financial assets		W	(8,633	)			451
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			17,796				4,396
Remeasurement of defined benefit obligations			2,614				(2,692	)
Investments in associates			192				8,130
Others			(5,464	)			19,649
		W	6,505				29,934

 

(5)	Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Amounts recognized in profit or loss				Amount recognized in other comprehensive income (loss)				Amounts recognized directly in equity				Ending balance
Deferred income tax on temporary differences
Employee benefits		W	498,694				26,421				2,614				—				527,729
Cash flow hedge			65,445				1,589				17,796				—				84,830
Investments in associates or subsidiaries			(8,668,016	)			(178,251	)			192				—				(8,846,075	)
Property, plant and equipment			(6,860,440	)			57,068				—				—				(6,803,372	)
Finance lease			(426,949	)			(7,198	)			—				—				(434,147	)
Intangible assets			7,648				(166	)			—				—				7,482
Financial assets at fair value through profit or loss			890				(866	)			—				—				24
Available-for-sale financial assets			(8,843	)			(46	)			(8,633	)			—				(17,522	)
Deferred revenue			230,711				(4,111	)			—				—				226,600
Provisions			4,822,833				49,619				—				—				4,872,452
Doubtful receivables			59				—				—				—				59
Other finance liabilities			32,755				4,387				—				1,068				38,210
Gains on foreign exchange translation			(1,354	)			(1,482	)			—				—				(2,836	)
Allowance for doubtful accounts			42,931				6,683				—				—				49,614
Accrued income			(1,825	)			182				—				—				(1,643	)
Special deduction for property, plant and equipment			(200,927	)			(908	)			—				—				(201,835	)
Reserve for research and human development			(3,041	)			942				—				—				(2,099	)
Others			952,754				87,750				(5,464	)			—				1,035,040
			(9,516,675	)			41,613				6,505				1,068				(9,467,489	)
Deferred income tax on unused tax losses and tax credit
Unused tax losses			—				313,815				—				—				313,815
Tax credit			20,431				(29	)			—				—				20,402
			20,431				313,786				—				—				334,217
		W	(9,496,244	)			355,399				6,505				1,068				(9,133,272	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

40.	Income Taxes, Continued

 

(5)	Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows, continued:

 

In millions of won		December 31, 2017
		Beginning balance				Amounts recognized in profit or loss				Amount recognized in other comprehensive income (loss)				Amounts recognized directly in equity				Ending balance
Deferred income tax on temporary differences
Employee benefits		W	493,331				86,008				(80,645	)			—				498,694
Cash flow hedge			(53,583	)			130,044				(11,016	)			—				65,445
Investments in associates or subsidiaries			(7,166,345	)			(1,510,295	)			8,649				(25	)			(8,668,016	)
Property, plant and equipment			(5,527,318	)			(1,333,122	)			—				—				(6,860,440	)
Finance lease			(345,431	)			(81,518	)			—				—				(426,949	)
Intangible assets			8,987				(1,339	)			—				—				7,648
Financial assets at fair value through profit or loss			(62	)			952				—				—				890
Available-for-sale financial assets			(68,347	)			62,055				(2,551	)			—				(8,843	)
Deferred revenue			213,859				16,852				—				—				230,711
Provisions			3,583,371				1,239,462				—				—				4,822,833
Doubtful receivables			2,696				(2,637	)			—				—				59
Other finance liabilities			30,249				(2,742	)			—				5,248				32,755
Gains on foreign exchange translation			138,938				(140,292	)			—				—				(1,354	)
Allowance for doubtful accounts			17,252				25,679				—				—				42,931
Accrued income			(5,367	)			3,542				—				—				(1,825	)
Special deduction for property, plant and equipment			(194,309	)			(6,618	)			—				—				(200,927	)
Reserve for research and human development			(12,883	)			9,842				—				—				(3,041	)
Others			695,870				232,642				24,242				—				952,754
			(8,189,092	)			(1,271,485	)			(61,321	)			5,223				(9,516,675	)
Deferred income tax on unused tax losses and tax credit
Tax credit			35,703				(15,272	)			—				—				20,431
			35,703				(15,272	)			—				—				20,431
		W	(8,153,389	)			(1,286,757	)			(61,321	)			5,223				(9,496,244	)

 

(6)	Deferred income tax assets (liabilities) recognized in the statements of financial position as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Deferred income tax assets		W	1,015,343				919,153
Deferred income tax liabilities			(10,148,615	)			(10,415,397	)
		W	(9,133,272	)			(9,496,244	)

 

(7)	Details of deductible temporary differences, tax losses and unused tax credits for which no deferred income tax assets were recognized as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Deductible temporary differences		W	442,123				444,426

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

41.	Assets Held-for-Sale

Assets held-for-sale as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Land (*1)		W	2,765				2,765
Building (*1)			19,369				19,369
Investments in associates (*2, 3, 4)			1,399				5,837
		W	23,533				27,971

 

(*1)

The board of directors of KEPCO Engineering & Construction Company, Inc., a subsidiary of the Company, determined to dispose the office building in Yongin as part of the government’s plan to relocate state-run companies for balanced national development and moved the head office to Kimchun, Kyungsangbukdo, in 2015. As the Company believes the book value of Yongin office will be recovered by a disposal transaction rather than continuous operation, it reclassified buildings, land and structures as assets held-for-sale.

(*2)

Korea Western Power Co., Ltd., a subsidiary of the Company, planned to dispose certain portion of its investment in Dongducheon Dream Power Co., Ltd. and had classified the relevant book value as non-current assets held-for-sale. However, due to uncertainty of sale, it reclassified the relevant book value to investments in associates during the year ended December 31, 2017.

(*3)

Korea Hydro & Nuclear Power Co., Ltd., a subsidiary of the Company, initiated efforts to sell its shares in Yeongwol Energy Station Co., Ltd. during the year ended December 31, 2016. KHNP won the first trial of the lawsuit against the counterparty on November 2, 2017. However, the planned sale period has been extended since the appeal is ongoing as of December 31, 2017. The Company expects the sale to occur in 2018.

(*4)	KEPCO Engineering & Construction Company, Inc., a subsidiary of the Company, exercised a put option to sell the shares of DS POWER Co., Ltd. on December 11, 2017 and the shares were sold on February 28, 2018.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

42.	Expenses Classified by Nature

Expenses classified by nature for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018
		Selling and administrative expenses				Cost of sales				Total
Raw materials used		W	—				5,338,218				5,338,218
Salaries			189,121				852,850				1,041,971
Retirement benefit expense			18,571				89,019				107,590
Welfare and benefit expense			27,060				99,346				126,406
Insurance expense			4,628				20,967				25,595
Depreciation			55,880				2,398,269				2,454,149
Amortization of intangible assets			13,777				16,292				30,069
Bad debt expense			18,381				—				18,381
Commission			156,812				100,888				257,700
Advertising expense			6,587				1,665				8,252
Training expense			1,533				1,956				3,489
Vehicle maintenance expense			2,373				1,811				4,184
Publishing expense			802				743				1,545
Business promotion expense			801				1,096				1,897
Rent expense			7,945				37,551				45,496
Telecommunication expense			5,694				19,180				24,874
Transportation expense			127				724				851
Taxes and dues			4,226				79,898				84,124
Expendable supplies expense			1,215				6,609				7,824
Water, light and heating expense			3,661				9,839				13,500
Repairs and maintenance expense			10,872				422,695				433,567
Ordinary development expense			42,090				114,297				156,387
Travel expense			3,487				16,005				19,492
Clothing expense			593				753				1,346
Survey and analysis expense			185				742				927
Membership fee			299				4,152				4,451
Power purchase			—				4,872,316				4,872,316
Others			32,972				716,084				749,056
		W	609,692				15,223,965				15,833,657

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

42.	Expenses Classified by Nature, Continued

Expenses classified by nature for the three-month periods ended March 31, 2018 and 2017 are as follows, continued:

 

In millions of won		March 31, 2017
		Selling and administrative expenses				Cost of sales				Total
Raw materials used		W	—				4,120,542				4,120,542
Salaries			177,131				792,201				969,332
Retirement benefit expense			16,522				92,097				108,619
Welfare and benefit expense			26,529				93,736				120,265
Insurance expense			3,482				19,590				23,072
Depreciation			49,108				2,318,658				2,367,766
Amortization of intangible assets			10,060				23,963				34,023
Bad debt expense			3,967				—				3,967
Commission			143,499				113,207				256,706
Advertising expense			8,914				1,477				10,391
Training expense			1,297				1,986				3,283
Vehicle maintenance expense			2,298				1,763				4,061
Publishing expense			1,092				709				1,801
Business promotion expense			918				1,324				2,242
Rent expense			7,123				31,079				38,202
Telecommunication expense			6,322				18,156				24,478
Transportation expense			131				3,204				3,335
Taxes and dues			4,129				86,066				90,195
Expendable supplies expense			1,808				7,414				9,222
Water, light and heating expense			3,425				9,557				12,982
Repairs and maintenance expense			7,806				407,791				415,597
Ordinary development expense			40,078				100,448				140,526
Travel expense			4,380				16,990				21,370
Clothing expense			305				196				501
Survey and analysis expense			174				285				459
Membership fee			479				1,920				2,399
Power purchase			—				3,824,272				3,824,272
Others			32,005				1,041,810				1,073,815
		W	552,982				13,130,441				13,683,423

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

43.	Earnings (Loss) Per Share

 

(1)	Basic earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In won
Type		March 31, 2018				March 31, 2017
Basic earnings (loss) per share		W	(432	)			1,350

 

(2)	Net profit (loss) for the period and weighted average number of common shares used in the calculation of basic earnings per share for the three-month periods ended March 31, 2018 and 2017 are as follows

 

In millions of won except number of shares
Type		March 31, 2018				March 31, 2017
Net profit (loss) attributable to controlling interest		W	(277,270	)			866,913
Profit (loss) used in the calculation of total basic earnings per share			(277,270	)			866,913
Weighted average number of common shares			641,964,077				641,964,077

 

(3)	Weighted average number of common shares used in the calculation of basic earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In number of shares
Type		March 31, 2018				March 31, 2017
The number of common shares issued at beginning of the year			641,964,077				641,964,077
Weighted average number of common shares			641,964,077				641,964,077

 

(4)	There are no potential dilutive instruments and diluted earnings (loss) per share are same as basic earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 consistent with the prior year.

Details of the Company’s capital management accounts as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Total borrowings and debt securities			56,212,884				54,747,392
Cash and cash equivalents			2,580,522				2,369,739
Net borrowings and debt securities			53,632,362				52,377,653
Total shareholder’s equity			72,198,046				72,964,641
Debt to equity ratio			74.29	%			71.78	%

 

(2)	Financial risk management

The Company is exposed to various risks related to its financial instruments, such as, market risk (currency risk, interest rate risk, price risk), credit risk. The Company monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. The Company uses derivative financial instruments to hedge certain risk exposures. The Company’s overall financial risk management strategy remains consistent with the prior year.

 

(i)

Credit risk

Credit risk is the risk of finance loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the sales activities, securities and derivatives. In addition, credit risk exposure may exist within financial guarantees and unused line of credits. As these financial institutions the Company makes transactions with are reputable financial institutions, the credit risk from them are considered limited. The Company decides credit transaction limits based on evaluation of client’s credit, through information obtained from the credit bureau and disclosed financial position at committing contracts.

 

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 significant credit risk as customers of the Company are diverse and are from various industries and areas. The Company uses publicly available information and its own internal data related to trade receivables, to rate its major customers and to measure the credit risk that a counter party will default on a contractual obligation. For the incurred but not recognized loss, it is measured considering overdue period.

 

②

Impairment and allowance account

In accordance with the Company policies, individual material financial assets are assessed on a regular basis, trade receivables that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Value of the acquired collateral (including the confirmation of feasibility) and estimated collectable amounts are included in this assessment.

Allowance for bad debts assessed on a collective basis are recognized for (i) the group of assets which individually are not material and (ii) incurred but not recognized losses that are assessed using statistical methods, judgment and past experience.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018				December 31, 2017
Cash and cash equivalents		W	2,580,522				2,369,739
Financial assets at fair value through profit or loss			2,131,269				111,512
Derivative assets (trading)			4,787				22,020
Available-for-sale financial assets			759,473				699,833
Held-to-maturity investments			3,218				3,144
Loans and receivables			665,197				905,641
Long-term/short-term financial instruments			1,896,378				2,244,514
Derivative assets (applying hedge accounting)			12,522				10,606
Trade and other receivables			8,653,819				9,683,769
Financial guarantee contracts (*)			1,164,193				1,154,862

 

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

As of the reporting date, there are no financial assets and non-financial assets that were acquired through the exercise of the right of collateralized assets and reinforcement of credit arrangement.

 

(ii)

Market risk

Market risk is the risk that the Company’s fair values of the financial instruments or future cash flows are affected by the changes in the market. Market risk consists of interest rate risk, currency risk and other price risk.

 

(iii)

Sensitivity analysis

Significant assets and liabilities with uncertainties in underlying assumptions

 

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 March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won				March 31, 2018								December 31, 2017
Type		Accounts		1% Increase				1% Decrease				1% Increase				1% Decrease
Future salary increases		Increase (decrease) in defined benefit obligation		W	360,457				(316,547	)			354,852				(305,494	)
Discount rate		Increase (decrease) in defined benefit obligation			(319,110	)			374,607				(313,597	)			377,148

Changes of employee benefits assuming a 1% increase and decrease movements in discount rate on plan asset for the three-month periods ended March 31, 2018 and 2017 are W3,689 million and W2,972 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

②

Provisions

Changes in provisions due to movements in underlying assumptions as of March 31, 2018 and December 31, 2017 are as follows:

 

Type		Accounts		March 31, 2018				December 31, 2017
PCBs		Inflation rate			1.23	%			1.23	%
		Discount rate			2.55	%			2.55	%
Nuclear plants		Inflation rate			1.21	%			1.21	%
		Discount rate			2.94	%			2.94	%
Spent fuel		Inflation rate			2.93	%			2.93	%
		Discount rate			4.49	%			4.49	%

A sensitivity analysis of provisions assuming a 0.1% increase and decrease movements in the underlying assumptions as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won				March 31, 2018								December 31, 2017
Type		Accounts		0.1% Increase				0.1% Decrease				0.1% Increase				0.1% Decrease
Discount rate		PCBs		W	(771)				776				(811	)			816
		Nuclear plants			(261,743)				269,085				(262,949	)			270,370
		Spent fuel			(51,003)				52,984				(51,015	)			52,997
Inflation rate		PCBs			832				(828	)			826				(822	)
		Nuclear plants			290,019				(282,286	)			287,926				(280,249	)
		Spent fuel			53,750				(51,811	)			53,763				(51,823	)

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 March 31, 2018 and December 31, 2017 are as follows:

 

In thousands of foreign currencies		Assets								Liabilities
Type		March 31, 2018				December 31, 2017				March 31, 2018				December 31, 2017
AED			28,506				5,693				2,129				2,049
AUD			143				145				663,157				652,259
BDT			65,190				60,208				1,804				1,001
BWP			2,215				797				—				—
CAD			257				82				2,023				171
CHF			—				—				400,004				400,004
CNY			13,013				13,007				26,140				26,140
EUR			3,028				5,708				77,456				68,003
GBP			—				3				13				2,327
HKD			—				—				1,650,000				—
IDR			97,406				167,775				—				—
INR			1,091,947				1,228,259				127,014				227,078
JOD			2,005				1,624				5				5
JPY			820,305				799,501				21,569,771				21,624,128
KZT			2,791				359				—				—
MGA			4,395,482				2,762,572				83,273				319,581
NOK			—				—				—				482
PHP			148,569				189,261				143,523				125,431
PKR			257,538				251,190				2,422				4,676
SAR			1,178				1,191				44				44
SEK			—				—				449,011				449,002
SGD			—				—				3				—
USD			1,586,780				1,653,858				8,127,523				8,321,335
UYU			16,985				12,955				4,195				10,586
ZAR			178				361				3				4

A sensitivity analysis on the Company’s income for the period assuming a 10% increase and decrease in currency exchange rates as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
Type		10% Increase				10% Decrease				10% Increase				10% Decrease
Increase (decrease) of profit before income tax		W	(852,332)				852,332				(844,122	)			844,122
Increase (decrease) of shareholder’s equity (*)			(852,332)				852,332				(844,122	)			844,122

 

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

The sensitivity analysis above is conducted for monetary assets and liabilities denominated in foreign currencies other than functional currency, without consideration of hedge effect of related derivatives, as of March 31, 2018 and December 31, 2017.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

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.

 

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 March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
Type		March 31, 2018				December 31, 2017
Short-term borrowings		W	284,059				290,873
Long-term borrowings			1,719,978				1,743,252
Debt securities			256,650				685,700
		W	2,260,687				2,719,825

A sensitivity analysis on the Company’s long-term borrowings and debt securities assuming a 1% increase and decrease in interest rates, without consideration of hedge effect of related derivatives for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
Type		1% Increase				1% Decrease				1% Increase				1% Decrease
Increase (decrease) of profit before income tax		W	(22,607)				22,607				(27,198	)			27,198
Increase (decrease) of shareholder’s equity (*)			(22,607	)			22,607				(27,198	)			27,198

 

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

To manage its interest rate risks, the Company enters into certain interest swap agreements or maintains an appropriate mix of fixed and floating rate borrowings.

 

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 three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won		March 31, 2018								March 31, 2017
Type		1% Increase				1% Decrease				1% Increase				1% Decrease
Increase (decrease) of profit before income tax		W	147,178				(147,178	)			139,433				(139,433	)
Increase (decrease) of shareholder’s equity (*)			147,178				(147,178	)			139,433				(139,433	)

 

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

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(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 March 31, 2018 and December 31, 2017. This table, based on the undiscounted cash flows of the non-derivative financial liabilities including estimated interests, has been prepared based on the respective liabilities’ earliest maturity date.

 

In millions of won		March 31, 2018
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Borrowings and debt securities		W	10,649,199				8,919,614				23,431,029				23,652,528				66,652,370
Finance lease liabilities			152,828				87,709				174,232				97,873				512,642
Trade and other payables			6,724,024				308,809				702,347				1,934,487				9,669,667
Financial guarantee contracts (*)			—				25,020				1,059,478				79,695				1,164,193
		W	17,526,051				9,341,152				25,367,086				25,764,583				77,998,872
In millions of won		December 31, 2017
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Borrowings and debt securities		W	10,748,437				7,948,320				21,331,394				22,694,867				62,723,018
Finance lease liabilities			174,534				87,709				185,284				108,749				556,276
Trade and other payables			5,867,729				301,165				698,289				1,937,558				8,804,741
Financial guarantee contracts (*)			7,081				18,054				1,049,667				80,060				1,154,862
		W	16,797,781				8,355,248				23,264,634				24,821,234				73,238,897

 

(*)	This represents the total guarantee amounts associated with the financial guarantee contracts. Financial guarantee liabilities which are recognized as of March 31, 2018 and December 31, 2017 are W20,845 million W23,475 million, respectively.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

The expected maturities for non-derivative financial assets as of March 31, 2018 and December 31, 2017 in detail are as follows:

 

In millions of won		March 31, 2018
Type		Less than 1 year				1~5 Years				More than 5 years				Other (*)				Total
Cash and cash equivalents		W	2,580,522				—				—				—				2,580,522
Available-for-sale financial assets			—				—				245,547				513,926				759,473
Held-to-maturity investments			70				3,146				2				—				3,218
Loans and receivables			63,173				180,518				259,541				205,488				708,720
Long-term/short-term financial Instruments			1,455,036				229,089				211,907				346				1,896,378
Financial assets at fair value through profit or loss			1,794,615				—				336,654				—				2,131,269
Trade and other receivables			6,939,137				921,438				751,935				50,476				8,662,986
		W	12,832,553				1,334,191				1,805,586				770,236				16,742,566
In millions of won		December 31, 2017
Type		Less than 1 year				1~5 Years				More than 5 years				Other (*)				Total
Cash and cash equivalents		W	2,369,739				—				—				—				2,369,739
Available-for-sale financial assets			—				—				214,156				485,677				699,833
Held-to-maturity investments			5				3,139				—				—				3,144
Loans and receivables			244,309				261,672				429,628				10,821				946,430
Long-term/short-term financial Instruments			1,702,084				201,821				340,304				305				2,244,514
Financial assets at fair value through profit or loss			—				—				111,512				—				111,512
Trade and other receivables			7,930,715				920,539				788,795				52,031				9,692,080
		W	12,246,852				1,387,171				1,884,395				548,834				16,067,252

 

(*)	The maturities cannot be presently determined.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

44.	Risk Management, Continued

 

(2)	Financial risk management, continued

 

Derivative liabilities classified by maturity periods which from reporting date to maturity date of contract as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Gross settlement
- Trading		W	(27,701)				(11,995	)			(23,184	)			2,501				(60,379	)
- Hedging			(43,307)				(24,452	)			(171,536	)			(46,804	)			(286,099	)
		W	(71,008)				(36,447	)			(194,720	)			(44,303	)			(346,478	)
In millions of won		December 31, 2017
Type		Less than 1 year				1~2 Years				2~5 Years				More than 5 years				Total
Net settlement
- Trading		W	(774)				—				—				—				(774	)
Gross settlement
- Trading			(51,496)				(19,887	)			(16,597	)			(4,967	)			(92,947	)
- Hedging			(17,547)				(28,977	)			(192,205	)			(44,137	)			(282,866	)
		W	(69,817)				(48,864	)			(208,802	)			(49,104	)			(376,587	)

(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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

44.	Risk Management, Continued

 

(3)	Fair value risk, continued

 

(i)

Fair value and book value of financial assets and liabilities as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
Type		Book value				Fair value				Book value				Fair value
Assets recognized at fair value
Available-for-sale financial assets (*1)		W	759,473				759,473				699,833				699,833
Derivative assets (trading)			4,787				4,787				22,020				22,020
Derivative assets (applying hedge accounting)			12,522				12,522				10,606				10,606
Long-term financial instruments			441,342				441,342				542,430				542,430
Short-term financial instruments			1,455,036				1,455,036				1,702,084				1,702,084
Financial assets at fair value through profit or loss			2,131,269				2,131,269				111,512				111,512
			4,804,429				4,804,429				3,088,485				3,088,485
Assets carried at amortized cost
Held-to-maturity investments			3,218				3,218				3,144				3,144
Loans and receivables			665,197				665,197				905,641				905,641
Trade and other receivables			8,653,819				8,653,819				9,683,769				9,683,769
Cash and cash equivalents			2,580,522				2,580,522				2,369,739				2,369,739
			11,902,756				11,902,756				12,962,293				12,962,293
Liabilities recognized at fair value
Derivative liabilities (trading)			193,543				193,543				150,929				150,929
Derivative liabilities (applying hedge accounting)			324,942				324,942				277,130				277,130
			518,485				518,485				428,059				428,059
Liabilities carried at amortized cost
Secured borrowings			1,051,783				1,051,783				1,055,554				1,055,554
Unsecured bond			52,017,394				53,436,659				51,146,783				53,436,659
Finance lease liabilities			383,957				383,957				418,260				418,260
Unsecured borrowings			3,138,200				3,137,264				2,476,196				2,477,055
Trade and other payables (*2)			9,669,667				9,669,667				8,804,741				8,804,741
Bank overdraft			5,507				5,507				68,859				68,859
		W	66,266,508				67,684,837				63,970,393				66,261,128

 

(*1)	Book values of equity securities held by the Company that were measured at cost as of December 31, 2017 are W37,926 million, as a quoted market price does not exist in an active market and its fair value cannot be measured reliably.

(*2)	Excludes finance lease liabilities.

 

(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 March 31, 2018 and December 31, 2017 are as follows:

 

Type		March 31, 2018		December 31, 2017
Derivatives		0.03% ~ 4.16%		0.03% ~ 4.16%
Borrowings and debt securities		0.31% ~ 4.59%		0.08% ~ 4.38%
Finance lease		8.85% ~ 10.83%		9.00% ~ 10.83%

 

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March 31, 2018

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44.	Risk Management, Continued

 

(3)	Fair value risk, continued

 

(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 March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
Type		Level 1				Level 2				Level 3				Total
Financial assets at fair value
Available-for-sale financial assets		W	301,858				245,548				212,067				759,473
Derivative assets			—				16,026				1,283				17,309
Financial assets at fair value through profit or loss			—				2,131,269				—				2,131,269
		W	301,858				2,392,843				213,350				2,908,051
Financial liabilities at fair value
Derivative liabilities		W	—				518,485				—				518,485
In millions of won		December 31, 2017
Type		Level 1				Level 2				Level 3				Total
Financial assets at fair value
Available-for-sale financial assets		W	274,453				214,156				173,298				661,907
Derivative assets			—				18,466				14,160				32,626
Financial assets at fair value through profit or loss			—				111,512				—				111,512
		W	274,453				344,134				187,458				806,045
Financial liabilities at fair value
Derivative liabilities		W	—				428,059				—				428,059

The fair value of 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.

Changes of financial assets and liabilities which are classified as level 3 for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 are as follows:

 

In millions of won		March 31, 2018
		Beginning balance				Effect of change in accounting policy				Acquisition				Reclassified category				Valuation				Disposal				Foreign currency translation				Ending balance
Financial assets at fair value
Available-for-sale financial assets
Unlisted securities		W	173,298				29,191				867				—				(7	)			—				—				203,349
Beneficiary securities			—				8,735				—				—				—				(17	)			—				8,718

 

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March 31, 2018

(Unaudited)

 

44.	Risk Management, Continued

 

(3)	Fair value risk, continued

 

In millions of won		December 31, 2017
		Beginning balance				Acquisition				Reclassified category				Valuation				Disposal				Foreign currency translation				Ending balance
Financial assets at fair value
Available-for-sale financial assets
Unlisted securities		W	269,461				—				(92,128	)			(6,201	)			—				2,166				173,298

 

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 from 2002 to 2022 after building, rehabilitating, and operating the power plant.

(ii) Rights and classification of the arrangement

The Company has the rights to use and own the power plant during the concession period from 2002 to 2022. At the end of the concession period, the Company has an obligation to transfer its ownership of the power plant to NPC.

(iii) The Company’s expected future collections of service concession arrangements as of March 31, 2018 are as follows:

 

In millions of won
Type		Amounts
Less than 1 year		W	111,400
1~ 2 years			111,400
2~ 3 years			111,400
Over 3 years			129,968
		W	464,168

 

(2)	Hydroelectric Power Generation at Semangka, Indonesia (BOT)

(i) Significant terms and concession period of the arrangement

The Company has entered into a contract with PT. Perusahaan Listrik Negara (the “PLN”) whereby the Company provides electricity generated and charge tariff rates designed to recover capital cost, fixed O&M cost, water usage cost, variable O&M cost and special facilities cost during the concession period after building, rehabilitating, and operating the power plant for approximately 30 years (2018~2048) subsequent to the completion of plant construction.

(ii) Rights and classification of the arrangement

The Company has the rights to use and own the power plant during the concession period from 2018 to 2048. At the end of the concession period, PNL has an option to take over the ownership of the power plant from the Company.

(iii) The Company’s expected future collections of service concession arrangements as of March 31, 2018 are as follows:

 

In millions of won
Type		Amounts
Less than 1 year		W	20,019
1~ 2 years			26,765
2~ 3 years			26,765
Over 3 years			587,554
		W	661,103

 

(iv)

Accumulated contract costs and profits related to the Company’s contract in process as of March 31, 2018 were W152,889 million and W9,622 million, respectively. There are no amount due from customers and advance receipts in progress.

 

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March 31, 2018

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46.	Related Parties

 

(1)	Related parties of the Company as of March 31, 2018 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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March 31, 2018

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46.	Related Parties, Continued

 

(3)	Related party transactions for the three-month periods ended March 31, 2018 and 2017 are as follows:

<Sales and Others>

 

In millions of won				Sales and others
Company name		Transaction type		March 31, 2018				March 31, 2017
<Associates>
Dongducheon Dream Power Co., Ltd.		Electricity sales		W	1,867				3,633
Korea Gas Corporation		Electricity sales			28,585				24,738
Jeongam Wind Power Co., Ltd.		Electricity sales			14				8
Korea Power Engineering Service Co., Ltd.		Service			218				—
KS Solar Co., Ltd.		Electricity sales			—				5
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Electricity sales			1				1
Korea Electric Power Industrial Development Co., Ltd.		Service			4,678				4,765
Goseong Green Energy Co., Ltd.		Electricity sales			2,405				5
Gangneung Eco Power Co., Ltd.		Service			778				869
Shin Pyeongtaek Power Co., Ltd.		Electricity sales			1,893				73
Naepo Green Energy Co., Ltd.		Electricity sales			63				61
Noeul Green Energy Co., Ltd.		Electricity sales			8				7
Samcheok Eco Materials Co., Ltd.		Electricity sales			88				63
YTN Co., Ltd.		Electricity sales			673				619
Busan Green Energy Co., Ltd.		Service			6				40
Korea Electric Vehicle Charging Service		Electricity sales			58				207
Ulleungdo Natural Energy Co., Ltd.		Service			113				104
Tamra Offshore Wind Power Co., Ltd.		Electricity sales			12				10
Daegu clean Energy Co., Ltd.		Electricity sales			112				—
Cheongna Energy Co., Ltd.		Service			6,134				3,435
Gangwon Wind Power Co., Ltd.		Electricity sales			2,296				875
Hyundai Green Power Co., Ltd.		Design service			10,486				10,170
Korea Power Exchange		Service			1,183				865
Hyundai Energy Co., Ltd.		Service			321				5,670
Taebaek Wind Power Co., Ltd.		Service			189				186
Pyeongchang Wind Power Co., Ltd.		Design service			300				307
Daeryun Power Co., Ltd.		Electricity sales			479				478
Changjuk Wind Power Co., Ltd.		Electricity sales			167				169
KNH Solar Co., Ltd.		Electricity sales			5				5
S-Power Co., Ltd.		Service			2,091				1,494
PT. Cirebon Electric Power		Dividend income			2,817				—
PT. Bayan Resources TBK		Service			—				138
Nepal Water & Energy Development Company Private Limited		Service			128				107
Xe-Pian Xe-Namnoy Power Co., Ltd.		Service			161				167
PT. Mutiara Jawa		Service			10				—

 

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March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(3)	Related party transactions for the three-month periods ended March 31, 2018 and 2017 are as follows, continued:

 

 

In millions of won						Sales and others
Company name		Transaction type				March 31, 2018				March 31, 2017
<Joint ventures>
Daegu Green Power Co., Ltd.			Electricity sales			W	222				170
KEPCO SPC Power Corporation			Service				422				1,365
KAPES, Inc.			Commission				163				203
Dangjin Eco Power Co., Ltd.			Technical fee				—				201
Honam Wind Power Co., Ltd.			Electricity sales				363				501
Seokmun Energy Co., Ltd.			Service				334				306
Incheon New Power Co., Ltd.			Construction revenue				133				144
Chun-cheon Energy Co., Ltd.			Electricity sales				367				1,357
Yeonggwangbaeksu Wind Power Co., Ltd.			Electricity sales				405				408
KW Nuclear Components Co., Ltd.			Service				722				243
KEPCO-Uhde Inc.			Service				7				8
GS Donghae Electric Power Co., Ltd.			Electricity sales				2,394				2,810
Busan Shinho Solar Power Co., Ltd.			Electricity sales				346				70
Expressway Solar-light Power Generation Co., Ltd.			Electricity purchase				70				—
Datang Chifeng Renewable Power Co., Ltd.			Interest income				75				187
Rabigh Electricity Company			Service				99				31
Rabigh Operation & Maintenance Company Limited			Service				90				12
Shuweihat Asia Power Investment B.V.			Dividend income				55				566
Shuweihat Asia Operation & Maintenance Company			Service				17				55
ASM-BG Investicii AD			Service				55				—
KV Holdings, Inc.			Dividend income				484				—
Amman Asia Electric Power Company			Service				4,838				3,501
Kelar S.A			Service				—				138
Nghi Son 2 Power Ltd.			Service				2,698				—
Barakah One Company			Service				1,893				1,680
Nawah Energy Company			Service				6,819				—
<Others>
Yeongwol Energy Station Co., Ltd.			Service				215				208
DS POWER Co., Ltd.			Service				565				848
Korea Development Bank			Electricity sales				775				749
			Interest income				1,896				256

 

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March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(3)	Related party transactions for the three-month periods ended March 31, 2018 and 2017 are as follows, continued:

 

<Purchase and Others>

 

In millions of won						Purchase and others
Company name		Transaction type				March 31, 2018				March 31, 2017
<Associates>
Dongducheon Dream Power Co., Ltd.			Electricity purchase			W	254,329				81,705
Korea Gas Corporation			Purchase of power generation fuel				1,492,602				991,825
Daegu Photovoltaic Co., Ltd.			REC purchase				909				841
Korea Power Engineering Service Co., Ltd.			Services				381				203
KS Solar Co., Ltd.			REC purchase				—				900
Heang Bok Do Si Photovoltaic Power Co., Ltd.			Rental fee and others				92				83
Korea Electric Power Industrial Development Co., Ltd.			Electricity metering service fee				55,786				47,521
Noeul Green Energy Co., Ltd.			Services				6,261				—
Samcheok Eco Materials Co., Ltd.			Electricity purchase				54				—
YTN Co., Ltd.			Advertisement fee				259				79
Busan Green Energy Co., Ltd.			Services				5,936				—
Korea Electric Vehicle Charging Service			Services				101				—
Ulleungdo Natural Energy Co., Ltd.			Electricity purchase				16				20
Tamra Offshore Wind Power Co., Ltd.			Electricity purchase				2,903				—
Cheongna Energy Co., Ltd.			Services				58				58
Gangwon Wind Power Co., Ltd.			Electricity purchase				8,699				6,759
Hyundai Green Power Co., Ltd.			Electricity purchase				108,464				108,479
Korea Power Exchange			Trading fees				25,313				25,152
Hyundai Energy Co., Ltd.			Electricity purchase				944				559
Taebaek Wind Power Co., Ltd.			REC purchase				2,491				1,949
Pyeongchang Wind Power Co., Ltd.			Services				1,145				683
Daeryun Power Co., Ltd.			Electricity purchase				36,934				44,815
Changjuk Wind Power Co., Ltd.			Electricity purchase				2,075				1,883
KNH Solar Co., Ltd.			Electricity purchase				501				542
S-Power Co., Ltd.			Electricity purchase				163,017				161,884
Green Biomass Co., Ltd.			Woodchip purchase				201				337
<Joint ventures>
Daegu Green Power Co., Ltd.			Electricity purchase				82,688				82,835
KAPES, Inc.			Service				16,851				23,050
Honam Wind Power Co., Ltd.			Electricity purchase				2,059				2,113
Seokmun Energy Co., Ltd.			REC purchase				6,458				—
Chun-cheon Energy Co., Ltd.			REC purchase				97,387				—
Yeonggwangbaeksu Wind Power Co., Ltd.			Electricity purchase				3,394				3,835
GS Donghae Electric Power Co., Ltd.			Electricity purchase				217,550				41,970
Busan Shinho Solar Power Co., Ltd.			REC purchase				1,964				2,016
Global Trade Of Power System Co., Ltd.			Service				7				5
Expressway Solar-light Power Generation Co., Ltd.			Electricity purchase				809				614
Jamaica Public Service Company Limited			Service				22				24
Barakah One Company			Service				232				—
<Others>
Yeongwol Energy Station Co., Ltd.			REC purchase				2,221				6,895
Korea Development Bank			Interest expense				1,552				1,713
			Dividends paid				166,880				418,246

 

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March 31, 2018

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46.	Related Parties, Continued

 

(4)	Receivables and payables arising from related party transactions as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won				Receivables								Payables
Company name		Type		March 31, 2018				December 31, 2017				March 31, 2018				December 31, 2017
<Associates>
Dongducheon Dream Power Co., Ltd.		Trade receivables		W	2,309				2,230				—				—
		Non-trade receivables and others			526				655				—				—
		Trade payables			—				—				78,260				77,817
Korea Gas Corporation		Trade receivables			6,956				9,833				—				—
		Non-trade receivables and others			336				339				—				—
		Trade payables			—				—				616,717				524,881
		Non-trade payables and others			—				—				690				569
Daegu Photovoltaic Co., Ltd.		Trade payables			—				—				91				71
Jeongam Wind Power Co., Ltd.		Non-trade payables and others			—				—				2				4
Korea Power Engineering Service Co., Ltd.		Non-trade receivables and others			218				—				—				—
		Non-trade payables and others			—				—				61				—
Korea Electric Power Industrial Development Co., Ltd.		Trade receivables			829				333				—				—
		Non-trade receivables and others			1,924				42				—				—
		Trade payables			—				—				4,429				—
		Non-trade payables and others			—				—				8,415				18,006
Goseong Green Energy Co., Ltd.		Non-trade receivables and others			—				19				—				—
		Non-trade payables and others			—				—				43,020				7,140
Gangneung Eco Power Co., Ltd.		Trade receivables			1				1				—				—
		Non-trade receivables and others			5,595				4,747				—				—
Shin Pyeongtaek Power Co., Ltd.		Non-trade receivables and others			—				210				—				—
		Non-trade payables and others			—				—				183				52
Naepo Green Energy Co., Ltd.		Trade receivables			12				17				—				—
Noeul Green Energy Co., Ltd.		Trade receivables			3				3				—				—
		Non-trade payables and others			—				—				4,972				2,041
Samcheok Eco Materials Co., Ltd.		Trade receivables			38				20				—				—
YTN Co., Ltd.		Trade receivables			138				98				—				—
		Non-trade payables and others			—				—				—				209
Busan Green Energy Co., Ltd.		Trade receivables			1				7				—				—
		Non-trade receivables and others			1,691				1,691				—				—
Korea Electric Vehicle Charging Service		Trade receivables			29				23				—				—
		Non-trade receivables and others			56				—				—				—
		Trade payables			—				—				—				45
Ulleungdo Natural Energy Co., Ltd.		Non-trade receivables and others			124				—				—				—
Daegu Clean Energy Co., Ltd.		Non-trade receivables and others			62				—				—				—
Cheongna Energy Co., Ltd.		Trade receivables			139				182				—				—
		Non-trade payables and others			—				—				673				1
Gangwon Wind Power Co., Ltd.		Trade receivables			9				6				—				—
		Trade payables			—				—				2,586				3,033
Hyundai Green Power Co., Ltd.		Trade receivables			807				946				—				—
		Trade payables			—				—				33,458				32,589
Korea Power Exchange		Trade receivables			128				463				—				—
		Non-trade receivables and others			53				128				—				—
		Non-trade payables and others			—				—				1,063				1,142
Hyundai Energy Co., Ltd.		Trade receivables			54				49				—				—
		Non-trade receivables and others			7,137				6,598				—				—
		Trade payables			—				—				210				223
		Non-trade payables and others			—				—				14,050				13,796

 

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March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(4)	Receivables and payables arising from related party transactions as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won				Receivables								Payables
Company name		Type		March 31, 2018				December 31, 2017				March 31, 2018				December 31, 2017
<Associates>
Ecollite Co., Ltd.		Non-trade receivables and others		W	210				210				—				—
Taebaek Wind Power Co., Ltd.		Trade receivables			100				116				—				—
		Trade payables			—				—				403				533
		Non-trade payables and others			—				—				—				121
Pyeongchang Wind Power Co., Ltd.		Trade receivables			3				3				—				—
		Non-trade payables and others			—				—				—				163
Daeryun Power Co., Ltd.		Trade receivables			155				162				—				—
		Trade payables			—				—				8,700				15,706
Changjuk Wind Power Co., Ltd.		Trade receivables			90				101				—				—
		Trade payables			—				—				405				515
		Non-trade payables and others			—				—				—				546
KNH Solar Co., Ltd.		Trade receivables			1				1				—				—
		Non-trade payables and others			—				—				—				193
S-Power Co., Ltd.		Trade receivables			177				117				—				—
		Non-trade receivables and others			396				5,183				—				—
		Trade payables			—				—				49,885				25,061
Green Biomass Co., Ltd.		Non-trade payables and others			—				—				56				85
SPC Power Corporation		Non-trade receivables and others			10				76				—				—
Nepal Water & Energy Development Company Private Limited		Non-trade receivables and others			355				227				—				—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Non-trade receivables and others			54				53				—				—
PT. Mutiara Jawa		Non-trade receivables and others			10				—				—				—
<Joint ventures>
Daegu Green Power Co., Ltd.		Trade receivables			110				98				—				—
		Non-trade receivables and others			1				10				—				—
		Trade payables			—				—				28,278				25,257
KAPES, Inc.		Non-trade receivables and others			379				—				—				—
		Trade payables			—				—				—				55
		Non-trade payables and others			—				—				5,109				—
Dangjin Eco Power Co., Ltd.		Non-trade receivables and others			206				1,211				—				—
		Non-trade payables and others			—				—				—				41
Honam Wind Power Co., Ltd.		Non-trade receivables and others			348				—				—				—
		Trade payables			—				—				206				381
		Non-trade payables and others			—				—				4,007				3,013
Seokmun Energy Co., Ltd.		Trade receivables			59				93				—				—
		Non-trade receivables and others			437				276				—				—
		Non-trade payables and others			—				—				4,222				3,052
Incheon New Power Co., Ltd.		Trade receivables			128				128				—				—
Chun-cheon Energy Co., Ltd.		Trade receivables			44				129				—				—
		Non-trade receivables and others			183				252				—				—
		Trade payables			—				—				31,234				29,676

 

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March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(4)	Receivables and payables arising from related party transactions as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

In millions of won				Receivables								Payables
Company name		Type		March 31, 2018				December 31, 2017				March 31, 2018				December 31, 2017
<Joint ventures>
Yeonggwangbaeksu Wind Power Co., Ltd.		Trade receivables			7				7				—				—
		Non-trade receivables and others			141				144				—				—
		Trade payables			—				—				357				619
		Non-trade payables and others			—				—				1,029				1,300
KW Nuclear Components Co., Ltd.		Trade receivables			3				4				—				—
		Non-trade receivables and others			3				—				—				—
KEPCO-Uhde Inc.		Non-trade payables and others			—				—				2				4
GS Donghae Electric Power Co., Ltd.		Trade receivables			464				450				—				—
		Non-trade receivables and others			2,097				1,892				—				—
		Trade payables			—				—				63,520				73,570
		Non-trade payables and others			—				—				54				—
Busan Shinho Solar Power Co., Ltd.		Trade receivables			2				2				—				—
		Trade payables			—				—				217				159
		Non-trade payables and others			—				—				932				811
Datang Chifeng Renewable Power Co., Ltd.		Non-trade receivables and others			5				82				—				—
Rabigh Operation & Maintenance Company Limited		Non-trade receivables and others			—				869				—				—
ASM-BG Investicii AD		Non-trade receivables and others			—				37				—				—
Amman Asia Electric Power Company		Trade receivables			2,382				2,675				—				—
Nghi Son 2 Power Ltd.		Non-trade receivables and others			2,698				—
Nawah Energy Company		Trade receivables			14,157				10,419				—				—
<Others>
Yeongwol Energy Station Co., Ltd.		Trade receivables			7,050				7,068				—				—
		Non-trade payables and others			—				—				757				—
DS POWER Co., Ltd.		Trade receivables			—				340				—				—
Korea Development Bank		Accrued interest income			107				204				—				—
		Non-trade receivables and others			109,871				501,029				—				—
		Non-trade payables and others			—				—				167				200
		Derivatives			4				569				34,238				22,398

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(5)	Loans and others arising from related party transactions as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
Type		Company name		Beginning balance				Loans				Collection				Others				Ending balance
Associates		KNOC Nigerian East Oil Co., Ltd., KNOC Nigerian West Oil Co., Ltd.		W	26,341				65				—				(112	)			26,294
		(Allowance for doubtful accounts)			(16,551	)			—				—				59				(16,492	)
Associates		PT. Cirebon Electric Power			15,436				53				(3,438	)			(528	)			11,523
Associates		Xe-Pian Xe-Namnoy Power Co., Ltd.			1,413				—				—				—				1,413
Associates		PT Wampu Electric Power			13,288				233				—				(39	)			13,482
Associates		Gunsan Bio Energy Co., Ltd.			9,396				—				—				—				9,396
Associates		Hyundai Energy Co., Ltd.			2,465				—				—				—				2,465
		(Allowance for doubtful accounts)			(2,465	)			—				—				—				(2,465	)
Joint ventures		KEPCO SPC Power Corporation			17,249				—				(17,264	)			15				—
Joint ventures		Datang Chifeng Renewable Power Co., Ltd.			7,245				—				(3,625	)			(14	)			3,606
Joint ventures		Nghi Son 2 Power Ltd.			—				804				—				(4	)			800
Joint ventures		KODE NOVUS II LLC (*)			4,018				—				—				(4,018	)			—
		(Allowance for doubtful accounts) (*)			(4,018	)			—				—				4,018				—
Joint ventures		Kelar S.A			46,620				—				—				(173	)			46,447
Joint ventures		Daehan Wind Power PSC			1,211				—				(606	)			(605	)			—
Joint ventures		Chester Solar IV SpA			4,607				—				(4,607	)			—				—
				W	126,255				1,155				(29,540	)			(1,401	)			96,469

 

(*)	The loans of KODE NOVUS II LLC is eliminated because the Company sold all of its shares of KODE NOVUS II LLC during the three-month period ended March 31, 2018 as described in Note 17.

 

(6)	Borrowings arising from related party transactions as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won
Related parties		Type		Beginning balance				Borrowings				Repayment				Others				Ending balance
Korea Development Bank		Facility		W	93,883				—				(25,673	)			—				68,210
		Others			4,909				—				(15	)			—				4,894
		Operating funds			61,000				—				—				—				61,000
		Syndicated Loan			16,301				—				—				899				17,200

 

(7)	Guarantees provided to associates or joint ventures as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Principal obligor		Type of guarantees		Credit limit				Guarantee
Korea Electric Power Corporation		Shuweihat Asia Operation & Maintenance Company		Performance guarantees		USD	11,000			SAPCO
Korea Electric Power Corporation		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 Limited		Performance guarantees and others		USD	1,387			RABEC
Korea Electric Power Corporation		Nghi Son 2 Power Ltd.		Bidding guarantees		USD	10,000			SMBC Ho Chi Minh

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of March 31, 2018 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Principal obligor		Type of guarantees		Credit limit				Guarantee
Korea Electric Power Corporation		Barakah One Company		Debt guarantees		USD	900,000			Export-Import Bank of Korea and others
				Performance guarantees and others		USD	3,404,275
Korea Electric Power Corporation		RE Holiday Holdings LLC		Performance guarantees		USD	223,000			EPS Renewables Holdings, LLC, Santander Bank and others
Korea Electric Power Corporation		RE Pioneer Holdings LLC		Performance guarantees		USD	170,000			EPS Renewables Holdings, LLC, Santander Bank and others
Korea Electric Power Corporation		RE Barren Ridge 1 Holdings LLC		Performance guarantees		USD	149,000			Firstar Development, LLC, Santander Bank and others
Korea Western Power Co., Ltd.		Cheongna Energy Co., Ltd.		Collateralized money invested		KRW	27,211			KEB Hana Bank and others
				Guarantees for supplemental funding and others (*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	64,988			Krung Thai Bank
				Impounding bonus guarantees		USD	5,000			SK E&C
Korea Western Power Co., Ltd.		Rabigh Operation & Maintenance Company Limited		Performance guarantees and others		SAR	5,600			Saudi Arabia British Bank
Korea Western Power Co., Ltd.		Daegu Photovoltaic Co., Ltd.		Collateralized money invested		KRW	1,230			Korea Development Bank
Korea Western Power Co., Ltd.		Dongducheon Dream Power Co., Ltd.		Collateralized money invested		KRW	53,233			Kookmin Bank and others
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	72,000			Kookmin Bank
				Guarantees for supplemental funding (*1)			—
Korea East-West Power Co., Ltd.		Busan Shinho Solar Power Co., Ltd.		Collateralized money invested		KRW	2,100			Korea Development Bank and others
Korea East-West Power Co., Ltd.		Seokmun Energy Co., Ltd.		Collateralized money invested		KRW	15,370			Kookmin Bank and others
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			Kookmin Bank and others
Korea East-West Power Co., Ltd.		Honam Wind Power Co., Ltd.		Collateralized money invested		KRW	3,480			Shinhan Bank and others
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			Kookmin Bank and others
Korea East-West Power Co., Ltd.		Yeonggwang Wind Power Co., Ltd.		Collateralized money invested		KRW	15,375			KDB Capital Corporation and others
Korea East-West Power Co., Ltd.		PT. Tanjung Power Indonesia		Debt guarantees		USD	46,983			The Bank of Tokyo-Mitsubishi and others
				Other guarantees		USD	3,150			PT Adaro Indonesia
Korea East-West Power Co., Ltd.		South Jamaica Power Company Limited		Performance guarantees		USD	14,400			Societe Generale
EWP Barbados 1 SRL				Guarantees for supplemental funding and others (*1, 3)		USD	42,500			JCSD Trustee Services Limited 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 and others (*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 and others (*1)			—
Korea Southern Power Co., Ltd.		Changjuk Wind Power Co., Ltd.		Collateralized money invested		KRW	3,801			Shinhan Bank
				Guarantees for supplemental funding (*1)			—
Korea Southern Power Co., Ltd.		Daegu Green Power Co., Ltd.		Collateralized money invested		KRW	46,226			Shinhan Bank
Korea Southern Power Co., Ltd.		Kelar S.A		Performance guarantees		USD	63,707			KEB Hana Bank, SMBC, Mizuho Bank and others

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(7)	Guarantees provided to associates or joint ventures as of March 31, 2018 are as follows, continued:

 

In millions of won and thousands of foreign currencies
Primary guarantor		Principal obligor		Type of guarantees		Credit limit				Guarantee
Korea Southern Power Co., Ltd.		Pyeongchang Wind Power Co., Ltd.		Collateralized money invested		KRW	3,875			Woori Bank and Shinhan Bank
				Performance guarantees and guarantees for supplemental funding and others (*1)			—
Korea Southern Power Co., Ltd.		Taebaek Wind Power Co., Ltd.		Guarantees for supplemental funding and others (*1)			—			Shinhan Bank and others
Korea Southern Power Co., Ltd.		Jeongam Wind Power Co., Ltd.		Collateralized money invested		KRW	5,580			SK Securities Co., Ltd.
				Guarantees for supplemental funding and others (*1)			—
Korea Southern Power Co., Ltd.		Naepo Green Energy Co., Ltd.		Collateralized money invested		KRW	29,200			Hana Financial Investment Co., Ltd. and others
				Guarantees for supplemental funding and others (*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 and others (*1)			—
Korea Midland Power Co., Ltd.		PT. Cirebon Electric Power		Debt guarantees		USD	11,550			Mizuho Bank
Korea Midland Power Co., Ltd.		PT Wampu Electric Power		Debt guarantees		USD	5,068			SMBC
Korea Midland Power Co., Ltd.		YaksuESS Co., Ltd		Collateralized money invested		KRW	210			Hanwha Life Insurance Co., Ltd.
				Guarantees for supplemental funding and others (*1)			—
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 and others (*1)		KRW	78,600
Korea South-East Power Co., Ltd.		RES Technology AD		Collateralized money invested		KRW	15,595			UniCredit Bulbank and others
Korea South-East Power Co., Ltd.		ASM-BG Investicii AD		Collateralized money invested		KRW	16,101			UniCredit Bulbank and others
Korea South-East Power Co., Ltd.		Expressway Solar-light Power Generation Co., Ltd.		Guarantees for supplemental funding (*1, 2)		KRW	2,500			Woori Bank
Korea South-East Power Co., Ltd.		S-Power Co., Ltd.		Collateralized money invested		KRW	132,300			Korea Development Bank 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	5,243			Shinhan Bank and others
KEPCO Plant Service & Engineering Co., Ltd.		Incheon New Power Co., Ltd.		Collateralized money invested		KRW	8,160			Shinhan Bank
				Guarantees for supplemental funding and others (*1)			—

 

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

(*2)

The Company has granted the right to Hana Financial Investment Co., Ltd., as an agent for the creditors to Expressway Solar-light Power Generation Co., Ltd. (“ESPG”), to the effect that in the event of acceleration of ESPG’s payment obligations under certain borrowings to such creditors, Hana Financial may demand the Company to dispose of shares in ESPG held by the Company and apply the resulting proceeds to repayment of ESPG’s obligations.

(*3)

This includes a guarantee for the shareholder’s capital payment in connection with the business of 190MW gas complex thermal power plant in Jamaica. EWP (Barbados) 1 SRL’s capital contribution amount is USD 9,900 thousand and the total amount of guarantees is USD 19,125 thousand which consists of USD 8,500 thousand of EWP (Barbados) 1 SRL’s contribution obligation and USD 10,625 thousand of SJEH’s portion (50%) of contribution obligation.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

46.	Related Parties, Continued

 

(8)	As of March 31, 2018, there is no financial guarantee contract provided by related parties.

 

(9)	Derivatives transactions with related parties as of March 31, 2018 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			2016~2019			W	105,260				USD 100,000				2.48	%			2.38	%		W	1,052.60
			2015~2025				111,190				USD 100,000				2.62	%			3.25	%			1,111.90
			2017~2027				111,610				USD 100,000				2.31	%			3.13	%			1,116.10
			2017~2020				114,580				USD 100,000				1.75	%			2.38	%			1,145.80
			2016~2021				121,000				USD 100,000				2.15	%			2.50	%			1,210.00
			2018~2021				212,960				USD 200,000				2.10	%			3.00	%			1,064.80
			2017~2022				113,300				USD 100,000				1.94	%			2.63	%			1,133.00

(ii) Currency forward

 

In millions of won and thousands of U.S. dollars
Counterparty		Contract Date				Maturity date				Contract amounts								Contract exchange rate
										Pay				Receive
Korea Development Bank			2017.12.27				2021.07.12			W	104,849			USD	100,000			W	1,048.49
			2018.03.20				2018.04.05				10,706			USD	10,000				1,070.57
			2018.03.23				2018.04.23				7,551			USD	7,000				1,078.75
			2018.03.29				2018.04.10				7,462			USD	7,000				1,065.98

 

(10)	Salaries and other compensations to the key members of management of the Company for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won
Type		March 31, 2018				March 31, 2017
Salaries		W	118				205
Employee benefits			9				11
		W	127				216

 

47.	Non-Cash Transactions

Significant non-cash investing and financing transactions for the three-month periods ended March 31, 2018 and 2017 are as follows:

 

In millions of won
Transactions		March 31, 2018				March 31, 2017
Transfer from construction-in-progress to other assets		W	1,630,979				1,759,250
Recognition of asset retirement cost and related provision for decommissioning costs			50,211				46,693
Transfer from provision for disposal of spent nuclear fuel to accrued expenses			84,114				101,701

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

48.	Commitments for Expenditure

 

(1)	The commitments for acquisition of property, plant and equipment as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
Contracts		Amounts				Balance				Amounts				Balance
Purchase of switch (25.8kV Eco) 12,450		W	50,526				14,074				50,526				35,494
Purchase of cable (PVC,1C,2000SQ) 153,000M and others (Shin-Bupyung-Youngseo)			50,256				42,857				50,256				42,857
Purchase of cable (PVC, 1C, 2500SQ) 103,374M and others (Bukdangjin-Shintangjung)			42,500				29,987				42,500				29,987
Purchase of GIS (362KV 6300A 63KA) 23CB – YoungseoS/S			34,500				34,500				34,500				34,500
Purchase of GIS (362KV 6300A 63KA) 26CB – HwasungS/S			40,000				29,231				40,000				29,231
Purchase of GIS (362KV 6300A 63KA) 27CB – KwangyangS/S			37,476				13,172				37,476				18,044
Purchase of GIS (800KV 8000A 50KA) 10CB – Shin-JungbuS/S			63,730				32,439				63,730				44,955
Purchase of transformer (765/345/23kV 666.7MVA, 2TANK) 6 units – Shin-JungbuS/S			37,500				8,825				37,500				37,500
Purchase of cable (TR CNCE-W/AL,1C,400SQ) 4,645,000M			78,076				75,912				78,076				76,762
Purchase of Concrete Poles (10M, 350KGF) 121,900 and 6 others			133,387				78,504				133,387				112,981
Advanced E-Type low voltage electricity meter 1,600,000 units			65,408				45,455				65,408				64,592
Purchase of Ground Switch (44-D-A125, 600AX4) and 1 other 4,016 units			56,482				53,413				56,482				55,990
Construction of Shin-Kori units (#3,4)			7,363,514				76,604				7,363,514				93,637
Construction of Shin-Kori units (#5,6)			8,625,387				6,587,985				8,625,387				6,757,146
Construction of Shin-Hanwool units (#1,2)			7,982,342				870,649				7,982,342				1,015,813
Construction of Shin-Hanwool units (#3,4)			8,261,818				8,090,700				8,261,818				8,097,056
Other 27 contracts			280,807				123,266				262,400				114,041
Purchase of main machine for construction of Seoul Combined units (#1,2)			361,203				91,960				361,203				99,031
Construction of Seoul Combined units (#1,2)			245,536				30,695				227,685				60,568
Purchase of smoke eliminating machine for construction of Shin-Boryeong units (#1,2)			169,544				36,417				169,544				36,417
Service of designing Shin-Boryeong units (#1,2)			127,810				11,996				127,810				16,371
Purchase of main machine for construction of Shin-Boryeong units (#1,2)			866,065				4,981				866,065				4,981
Construction of Shin-Boryeong units (#1,2)			309,466				—				316,190				23,100
Purchase of furnace for construction of Shin-Seocheon thermal power plant			302,030				186,658				302,030				222,555
Purchase of turbine generator for construction of Shin-Seocheon thermal power plant			104,402				83,522				104,402				83,522
Electricity construction of Shin-Seocheon thermal power plant			207,250				198,841				200,453				196,993
Purchase of main machine for Jeju LNG combined			166,287				13,158				166,287				15,409
Purchase of coal handling machine for construction of Taean (#9,10) and IGCC units (conditional contract for installation)			205,764				691				193,375				5,129

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

48.	Commitments for Expenditure, Continued

 

(1)	The commitments for acquisition of property, plant and equipment as of March 31, 2018 and December 31, 2017 are as follows, continued

 

In millions of won		March 31, 2018								December 31, 2017
Contracts		Amounts				Balance				Amounts				Balance
Purchase of furnace for construction of Taean units (#9,10)		W	565,854				30,984				566,945				33,817
Service of designing Taean units (#9,10)			112,344				14,693				111,322				13,671
Purchase of turbine generator for construction of Taean units (#9,10)			204,332				549				205,267				550
Purchase of oxygen plant for construction of Taean IGCC units			94,406				198				94,564				199
Service of designing Taean IGCC plant units			44,802				2,441				44,802				2,669
Purchase of furnace for construction of Samcheok units (#1,2)			1,095,389				5,309				1,082,641				5,963
Purchase of coal handling machine for construction of Samcheok units (#1,2)			304,924				50,388				304,924				52,362
Service of designing Samcheok units (#1,2)			103,679				4,314				114,047				4,745
Purchase of turbine main equipment for Samcheok units (#1,2)			215,333				874				215,333				874
Purchase of main equipment			183,773				10,345				168,076				—
Landscaping construction and other			52,676				6,104				63,110				—

 

(2)	As of March 31, 2018, details of contracts for inventory purchase commitment are as follows:

The Company imports all of its uranium ore concentrates from sources outside Korea (including the United States, United Kingdom, Kazakhstan, France, Russia, South Africa, Canada and Australia) which are paid for with currencies other than Won, primarily in U.S. dollars. In order to ensure stable supply, the Company entered into long-term and medium-term contracts with various suppliers, and supplements such supplies with purchases of fuels on spot markets. The long-term and medium-term contract periods vary among contractors and the stages of fuel manufacturing process. Contract prices for processing of uranium are generally based on market prices. Contract periods for ore concentrates, conversion, enrichment and design and fabrication are as follows:

 

Type		Periods		Contracted quantity
Concentrate		2018 ~ 2030		35,893 Ton U3O8
Transformed		2018 ~ 2030		19,353 Ton U
Enrichment		2018 ~ 2029		24,143 Ton SWU
Molded		2018 ~ 2022		2,004 Ton U

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

49.	Contingencies and Commitments

 

(1)	Ongoing litigations related with contingent liabilities and contingent assets as of March 31, 2018 and December 31, 2017 are as follows:

 

In millions of won		March 31, 2018								December 31, 2017
		Number of cases				Claim amount				Number of cases				Claim amount
As the defendant			579			W	477,872				565			W	477,719
As the plaintiff			188				750,718				185				690,934

As of March 31, 2018, among 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 W62,744 million).

A group of plaintiffs (consisting 2,167 individuals) filed a lawsuit against NSSC regarding NSSC’s approval on May 18, 2015 of extending the operation of Wolsong Unit 1 nuclear power plant. The appeal was ongoing as of March 31, 2018. Also, Greenpeace and others filed an administrative litigation against NSSC requesting cancelation of the construction permit of Shin-Kori Unit 5 and 6 it was ongoing as of March 31, 2018. The Company joined these litigations as a stakeholder with the permission of the Court.

The book value of property, plant and equipment and provision for decommissioning costs of Wolsong Unit 1 nuclear power plant is W579,588 million and W646,734 million, respectively, as of March 31, 2018. If the continuance of operation of Wolsong Unit 1 nuclear power plant is annulled, significant losses may be incurred in connection with the property, plant and equipment of Wolsong Unit 1. In addition, the amount of provision may increase significantly, and the timing of actual cash outflows may be accelerated.

The Company suspended the construction of Shin-Kori Unit 5 and 6 starting from July 24, 2017 to October 24, 2017, which is the public debate period regarding whether to continue the construction for Shin-Kori Unit 5 and 6, and is in the process of reviewing the appropriateness of the additional costs requested by the suppliers that occurred during that period. The Company believes that the possibility of economic outflow is probable and recognized W77,261 million of provision as described in note 26.(2).

As of March 31, 2018, the Company has suspended the construction design of Shin-Hanwool Unit 3 and 4. The construction contract amount and the outstanding balance are described in note 48. (1), and the carrying amount of Shin-Hanwool Unit 3 and 4 is W165,513 million as of March 31, 2018.

The Company is the defendant against a number of claims. The followings are potentially significant ongoing 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 lawsuit 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 Shin-Hanwool 1 & 2. Hyundai Engineering & Construction Co., Ltd. and two other companies increased the contract bill to W133,426 million in October 2014, W204,040 million in November 2015, and W204,564 million in January 2017, respectively, and submitted an application to demand extra contract payments due to the design changes. KHNP has paid W217,724 million of the claim amounts in full upon the first ruling in November 2016 and recognized the amount as addition to construction-in-progress accordingly.

 

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 W52,819 million of other provision in relation to the lawsuit as of March 31, 2018.

Except these significant ongoing claims, there are 12 arbitration cases pertaining to the Company as of March 31, 2018 and the significant arbitration cases are as follows:

 

①

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.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(1)	Ongoing litigations related with contingent liabilities and contingent assets as of March 31, 2018 and December 31, 2017 are as follows, continued:

 

 

②

Hyundai Samsung Joint Venture (HSJV), one of the subcontractors of the Company, filed an arbitration against the Company at the London Court of International Arbitration (LCIA) in 2016 due to disagreements in UAE nuclear power plant construction project, but the Company has not recognized any losses because the probability of economic benefit outflow is remote and the related amount cannot be reasonably estimated.

 

③

In 2016, Hyundai E&C, GS Engineering & Construction Corp., and Hansol SeenTec Co., Ltd. filed on arbitration against the Company to the Korea Commercial Arbitration Board in relation to the request for additional construction costs 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.

 

④

In 2016, Halla Corporation filed on arbitration against the Company to the Korea Commercial Arbitration Board in relation to the request for additional construction costs and the Company filed on arbitration against Halla Corporation to the Korea Commercial Arbitration Board in relation to the request for a penalty payment for the delayed construction work. The Company has recognized W4,916 million of provision for the best estimate of the expenditure required to fulfill its obligations in relation to this arbitration as of March 31, 2018.

 

⑤

Daewon Electric Corporation filed on arbitration against the Company to the Korean Commercial Arbitration Board in relation to the request for payment of royalties during the three-month period ended March 31, 2018 but the Company has not recognized any losses because the probability of economic benefit outflow is remote and the related amount cannot be reasonably estimated.

 

(2)	Guarantees of payments and commitments provided to other companies as of March 31, 2018 and December 31, 2017 are as follows:

 

①

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.

 

②

The Company has outstanding borrowings with a limit of USD 275,600 thousand from its creditors such as International Finance Corporation. Regarding the borrowing contract, the Company has guaranteed capital contribution of USD 69,808 thousand and additional contribution up to USD 19,000 thousand for contingencies, if any. Moreover, for one of the electricity purchasers, Central Power Purchasing Agency Guarantee Ltd., the Company has provided payment guarantee up to USD 2,777 thousand, in case of construction delay or insufficient contract volume after commencement of the construction.

 

③

The Company has provided PT. Perusahaan Listrik Negara performance guarantee up to USD 2,293 thousand and Mizuho bank and others investment guarantee up to USD 43,500 thousand in proportion to its ownership in the electricity purchase contract with PT. Cirebon Energi Prasarana in relation to the second electric power generation business in Cirebon, Indonesia.

 

④

The Company has provided the Bank of Tokyo Mitsubishi UFJ (BTMU) borrowing guarantee up to USD 41,258 thousand proportion to its ownership in the equity bridge loan guarantee with PT. Cirebon Energi Prasarana in relation to the second electric power generation business in Cirebon, Indonesia.

 

⑤

The Company has provided the Export-Import Bank of Korea, BNP Paribas and ING Bank guarantee of mutual investment of USD 2,440 thousand, which is equivalent to the ownership interest of PT BS Energy and PT Nusantara Hydro Alam, in order to guarantee the expenses related to hydroelectric power business of Tanggamus, Indonesia.

 

⑥

The Company has provided the Export-Import Bank of Korea and SMBC guarantee of mutual investment of USD 401 thousand, which is equivalent to the ownership interest of PT Mega Power Mandiri, in order to guarantee the expenses related to hydroelectric power business of PT Wampu Electric Power, an associate of the Company.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(3)	Credit lines provided by financial institutions as of March 31, 2018 are as follows:

 

In millions of won and thousands of foreign currencies
Commitments		Financial institutions		Currency		Limited amount
Commitments on bank-overdraft		Nonghyup Bank and others		KRW			1,855,000
Commitments on bank-daylight overdraft		Nonghyup Bank		KRW			280,000
Limit amount available for CP		Shinhan Bank and others		KRW			900,000
Limit amount available for card		KEB Hana Bank and others		KRW			46,733
		Banco de Oro		PHP			5,000
Loan limit		Kookmin Bank and others		KRW			765,400
		BNP Paribas and others		USD			1,810,700
Certification of payment on L/C		Woori Bank and others		USD			1,081,724
Certification of performance guarantee on contract		KEB Hana Bank		EUR			1,958
		KEB Hana Bank and others		INR			230,515
		Korea Development Bank and others		JPY			637,150
		Seoul Guarantee Insurance and others		KRW			89,812
		Bank of Kathmandu		NPR			32,633
		KEB Hana Bank		SAR			102,186
		Standard Chartered and others		USD			789,252
		Export-Import Bank of Korea and others		ZAR			3,849,521
		KEB Hana Bank		CAD			168
Certification of bidding		SMBC and others		USD			60,000
		ABSA and others		ZAR			55,730
Advance payment bond, Warranty bond, Retention bond and others		Bank of Kathmandu		USD			66
Others		KEB Hana Bank		INR			157,830
		Shinhan Bank		JPY			381,210
		Nonghyup Bank and others		KRW			506,390
		Export-Import Bank of Korea and others		SAR			981,187
		BTMU and others		USD			122,483
Inclusive credit		Kookmin Bank		EUR			26,000
		Shinhan Bank		INR			47,489
		KEB Hana Bank		KRW			258,000
		Shinhan Bank and others		USD			30,607
Trade finance		BNP Paribas and others		USD			800,000

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

49.	Contingencies and Commitments, Continued

 

(4)	As of March 31, 2018, blank check and assets provided as collaterals or pledges to financial institutions by the Company are follows:

 

In millions of won and thousands of foreign currencies

Guarantor

Guarantee

Type of guarantee

Currency

Amount

Description

Korea East-West Power Co., Ltd.

Korea Development Bank and others

Shareholdings of Gyeongju Wind Power Co., Ltd.

KRW

15,958

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 and others

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

44,192

Collateral for borrowings

Korea Hydro & Nuclear Power Co., Ltd.

Korea Development Bank and others

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

Collateral for borrowings (*)

Commerce and Industry Energy Co., Ltd.

IBK and others

Land, buildings, structures and machinery and others

KRW

110,500

Collateral for borrowings

Cash and cash equivalents

KRW

12,498

Gyeongju Wind Power Co., Ltd.

SK Securities Co., Ltd. and others

Property, plant and equipment and others

KRW

96,646

Collateral for borrowings

Existing or expected trade receivables

KRW

7,988

Cash and cash equivalents

KRW

9,849

KOSPO Youngnam Power Co., Ltd.

Shinhan Bank and others

Bank deposit and insurance claim

KRW

396,120

Collateral for borrowings

Qatrana Electric Power Company

The Islamic Development Bank and others

Finance Lease receivable and property, plant and equipment and others

JOD

194,343

Collateral for borrowings

KST Electric Power Company

Scotiabank Inverlat, S.A

Finance Lease receivable and others

USD

289,026

Collateral for borrowings

 

(*)

The Company was provided with shares of Gyeonggi Green Energy Co., Ltd., one of its subsidiaries, from the investors 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 W1,197 million of project loans from Korea Energy Agency as March 31, 2018. The Company has provided a blank check as repayment guarantee.

 

(5)

The Company temporarily suspended operations of the Gangneung hydroelectric generating plant, with a carrying amount of W88,447 million as of March 31, 2018, to improve the quality of water used in generating electricity. The expenses related to the suspension of operations of W11 million and depreciation on the utility plant of W1,637 million are recorded in other expenses for the three-month period ended March 31, 2018.

 

(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 March 31, 2018. The book value of facility is W18,418 million and the amount of trade receivables related to the companies residing in Gaeseong industrial complex is W2,911 million. The ultimate outcome of this event cannot be reasonably estimated.

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

50.    Subsequent

Events

 

Subsequent to March 31, 2018, Korea Hydro & Nuclear Power Co., Ltd., Korea South-East Power Co., Ltd. and Korea Western Power Co., Ltd. issued corporate bonds and non-guaranteed bonds for funding facilities and operations as follows:

 

In millions of won and thousands of foreign currencies
Company Name		Type		Issue date				Maturity				Interest rate (%)				Amount
Korea Hydro & Nuclear Power Co., Ltd.		#49-1 corporate bond #49-2 corporate bond			2018.05.11 2018.05.11				2021.05.11 2038.05.11				2.37 2.90	%  %		W	70,000     170,000
		#49-3 corporate bond			2018.05.11				2048.05.11				2.88	%			60,000
Korea South-East Power Co., Ltd		#43-1 non-guaranteed corporate bond			2018.04.12				2021.04.12				2.46	%			120,000
		#43-2 non-guaranteed corporate bond			2018.04.12				2028.04.12				2.77	%			50,000
		#43-3 non-guaranteed corporate bond			2018.04.12				2038.04.12				2.80	%			100,000
		#43-4 non-guaranteed corporate bond			2018.04.12				2048.04.12				2.77	%			30,000
Korea Western Power Co., Ltd.		#40-1 corporate bond			2018.04.20				2021.04.21				2.34	%			70,000
		#40-2 corporate bond			2018.04.20				2038.04.20				2.81	%			60,000
		#40-3 corporate bond			2018.04.20				2048.04.20				2.81	%			70,000

 

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Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2018

(Unaudited)

 

51.	Adjusted Operating Profit (Loss)

The operating profit in the Company’s consolidated interim statements of comprehensive income (loss) prepared in accordance with K-IFRS included in this report differs from that in its consolidated interim statements of comprehensive income (loss) prepared in accordance with IFRS as issued by IASB. The table below sets forth a reconciliation of the Company’s results from operating activities as presented in the Company’s consolidated interim statements of comprehensive income (loss) prepared in accordance with K-IFRS for each of the three-month periods ended March 31, 2018 and 2017 to the operating profit or loss as presented in the Company’s consolidated interim statements of comprehensive income (loss) prepared in accordance with IFRS as issued by IASB for each of the corresponding periods.

 

In millions of won		March 31, 2018				March 31, 2017
Operating profit (loss) on the consolidated interim statements of comprehensive income		W	(127,613	)			1,463,186
Add
Other income
Reversal of other provisions			582				1,210
Reversal of other allowance for bad debt			15				—
Gains on government grants			78				36
Gains on assets contributed			24				7
Gains on liabilities exempted			6,924				505
Compensation and reparations revenue			19,811				24,180
Revenue from research contracts			1,094				1,976
Rental income			43,663				46,425
Others			12,636				11,077
Other gains
Gains on disposal of property, plant and equipment			14,366				11,029
Gains on disposal of intangible assets			—				463
Gains on foreign currency translation			4,100				18,117
Gains on foreign currency transaction			13,505				44,190
Gains on insurance proceeds			—				383
Others			62,787				107,594
Deduct
Other expenses
Compensation expenses			(30	)			—
Accretion expenses of other provisions			(129	)			(6,746	)
Depreciation expenses on investment properties			(290	)			(408	)
Depreciation expenses on idle assets			(1,637	)			(1,664	)
Other bad debt expense			(2,496	)			(3,988	)
Donations			(5,288	)			(19,607	)
Others			(7,031	)			(4,021	)
Other losses
Losses on disposal of property, plant and equipment			(3,429	)			(7,867	)
Losses on disposal of intangible assets			(2	)			—
Losses on foreign currency translation			(3,348	)			(15,157	)
Losses on foreign currency transaction			(14,706	)			(11,410	)
Others			(19,217	)			(18,330	)
Adjusted operating profit (loss)		W	(5,631	)			1,641,180

 

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