Edgar Filing: KOREA ELECTRIC POWER CORP

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

of the Securities Exchange Act of 1934

For the Month of November 2013

Commission File Number: 001-13372

KOREA ELECTRIC POWER CORPORATION

(Translation of registrant's name into English)

167 Samseong-dong, Gangnam-gu, Seoul 135-791, Korea

(Address of principal executive offices)

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

Form 20-F x Form 40-F ¨

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

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

Indicate by check mark whether the registrant by furnishing the

information contained in this form is also thereby furnishing the

information to the Commission pursuant to Rule 12g3-2(b) under the

Securities Exchange Act of 1934.

Yes ¨ No x

If "Yes" is marked, indicate below the file number assigned to the

registrant in connection with Rule 12g3-2(b): 82- .

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.

QUARTERLY BUSINESS REPORT

(For the period from January 1, 2013 to September 30, 2013)

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.

I. Company Overview

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

2. Information of the company

(Address) 167 Samseong-dong, Gangnam-Gu, Seoul 135-791, Korea

(Phone number) 82-2-3456-4217

(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, distribution of electricity and other related business;

•

research and technology development 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 real estate holdings; and

•

other businesses entrusted by the government.

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

4. Subsidiaries and affiliates of KEPCO

(As of September 30, 2013)



Classification	Subsidiaries		Associates and joint ventures		Total
Domestic		17		53		70
Overseas		64		35		99
Total		81		88		169

5. Major changes in management

On February 6, 2013, Mr. Ryu, Chang-Moo resigned from his position as non-standing director of KEPCO.

On June 18, 2013, Mr. Park, Kyu-Ho, Mr. Rhee, Chong-Chan, Mr. Baek, Seung-Jung and Mr. Kim, Byung-Sook were elected as standing directors of KEPCO at the extraordinary general meeting of shareholders.

On October 29, 2013, Mr. Rhee, Chong-Chan was dismissed from his position as a standing director of KEPCO, and Mr. Park, Jung-Keun was elected as a new standing director of KEPCO at the extraordinary general meeting of shareholders.

6. Changes in major shareholders

No changes in major shareholders for the past three years.

7. Information regarding KEPCO shares

A. Issued share capital: Won 3.2 trillion (Authorized capital: Won 6 trillion)

B. Total number of issued shares: 641,964,077

(Total number of shares authorized for issuance: 1,200,000,000)

C. Dividend: No dividend payments in the past 3 years from 2010 to 2012

II. Business Overview

1. Segment Results

(In billions of Won)


	Jan. - Sep. 2013				Jan. - Sep. 2012
	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Electricity sales		39,578		-1,038		36,443		-3,465
Nuclear generation		5,402		917		5,427		1,257
Thermal generation		21,558		1,123		22,690		1,604
Others*		1,940		235		1,884		312
Sub Total		68,478		1,237		66,444		-292
Adjustment of related party transactions		-28,715		-125		-30,050		-104
Total		39,763		1,112		36,394		-396

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

•

Sales and operating income (loss) reflects amendments to Korean IFRS 1001 “Presentation of Financial Statements” and the reclassification of accounts receivable to non-current non-financial assets related to the fuel cost pass-through adjustment (FCPTA) system.

2. Changes in unit prices of major products

(In Won per kWh)


Business Sector		Company	2013 Jan. - Sep.	2012 Jan. - Dec.
Electricity sold	Residential	KEPCO	129.10	123.69
	Commercial		120.99	112.50
	Educational		115.50	108.84
	Industrial		99.18	92.83
	Agricultural		45.44	42.90
	Street Lighting		109.10	98.89
	Overnight Usage		62.40	58.65
Electricity from nuclear generation	Nuclear Generation	KHNP	51.75	45.29
Electricity from thermal generation	Thermal Generation	KOSEP	70.66	75.43
		KOMIPO	104.26	108.16
		KOWEPO	106.11	109.69
		KOSPO	110.41	113.65
		EWP	99.08	106.38

3. Major contracts in 2013

(In billions of Won)


Party	Date of Contract	Nature of Contract	Contract Amount		Counterparty
KEPCO	2013.03.29	Maintenance of transmission lines		57	KEPCO KPS Co., Ltd
KEPCO	2013.07.18	Procurement of concrete electric poles		85	Korea Centrifugal Reinforced Concrete Industry Cooperative
KHNP	2013.02.25	Procurement of reactor vessel heads for Kori unit 2		54	Doosan Heavy Industries & Construction Co., Ltd
KHNP	2013.08.08	Maintenance and trial operations of BNPP units 1,2,3,4		134	KEPCO KPS Co., Ltd
KOSEP	2013.01.01	Operation of Yong Hung units 5,6 and Samchunpo fuel and refinery facilities		30	Korean Electronics Power Source Co., Ltd
KOSEP	2013.05.01	Operation and maintenance of fuel facilities for 2013		19	Korea Electric Power Industrial Development
KOMIPO	2013.01.30	Procurement of coal handling facilities for Shin-Boryeong units 1,2		183	Hyundai Rotem, Hyundai Emco Co., Ltd
	2013.02.25	Construction of Seoul combined cycle units 1,2		226	POSCO Engineering & Construction Co., Ltd and others
	2013.06.17	Installation of electro-mechanical equipment for Shin-Boryeong units 1,2		245	GS Engineering & Construction Corp.
	2013.07.05	Procurement of main equipments for Seoul combined cycle units 1,2		361	Doosan Heavy Industries & Construction Co., Ltd
KOWEPO	2013.03.04	Procurement of coal handling facilities for IGCC and Taean units 9,10		139	Hyundai Samho Heavy Industries Co., Ltd
EWP	2013.01.01	Maintenance of generation facilities for 2013		55	KEPCO KPS Co., Ltd

4. Intellectual property as of September 30, 2013

Patents

Utility
models

Designs

Trademarks

Domestic

Overseas

Domestic

Overseas

Number of registrations

4,348

452

795

140

356

III. Financial Information

1. Condensed consolidated financial results for the first nine months of 2013


								(In billions of Won)

Consolidated Statements of Comprehensive Income							Consolidated Statements of Financial Position
	Jan.-Sep. 2012		Jan.-Sep. 2013		Change (%)			As of Dec. 31, 2012		As of Sep. 30, 2013		Change (%)
Sales		36,394		39,763		9.3	Total Assets		146,153		152,446		4.3
Operating Income		-396		1,112		380.9	Total Liabilities		95,089		101,890		7.2
Net Income		-1,322		-451		65.9	Total Equity		51,064		50,556		-1.0

2. Condensed separate financial results for the first nine months of 2013


								(In billions of Won)

Separate Statements of Comprehensive Income							Separate Statements of Financial Position
	Jan.-Sep. 2012		Jan.-Sep. 2013		Change (%)			As of Dec. 31, 2012		As of Sep. 30, 2013		Change (%)
Sales		36,443		39,578		8.6	Assets		96,235		96,757		0.5
Operating Income		-3,465		-1,038		70.0	Liabilities		54,964		56,341		2.5
Net Income		-2,264		-927		59.1	Equity		41,271		40,415		-2.1

IV. Auditor's Opinion

1. Auditor’s opinion on consolidated and separate financial statements for the first nine months of 2013: Unqualified

•

KPMG Samjong Accounting Corp. has been engaged as KEPCO’s auditors from 2013 for a term of three years until 2015.


Jan. 1, 2013 – Sep. 30, 2013	Jan. 1, 2012 – Dec. 31, 2012	Jan. 1, 2011 – Dec. 31, 2011
KPMG Samjong Accounting Corp.	Deloitte Anjin LLC	Deloitte Anjin LLC

V. Board of Directors

1. Composition of board of directors: not more than 15 directors (with standing directors comprising less than the majority of the directors)

•

The audit committee consists of one standing director and two non-standing directors

2. Board meetings and agendas


Number of meetings	Number of agendas	Classification
Number of meetings	Number of agendas	Resolutions	Status	Reports	Status
11	31	24	Approved as proposed	7	Accepted as reported

•

Audit Committee: 8 meetings held where 24 agendas were discussed (of which, 11 were resolved as proposed and 13 were approved as reported).

3. Major activities of the Board of Directors


Date	Agenda	Status	Type
2013. 1. 8	Amendments to the Regulation for Electricity Service related to electricity tariff adjustments	Approved as proposed	Resolution
2013. 1. 17	Plans to establish ICT Center in Naju	Approved as proposed	Resolution
2013. 1. 17	Investment plans for the Bylong coal mine in 2013	Approved as proposed	Resolution
2013. 2. 21	Contributions to AESIEAP	Approved as proposed	Resolution
	Approval of aggregate ceiling on remuneration for directors in 2013	Approved as proposed	Resolution
	Auditor’s report to the Board of Directors for fiscal year 2012	Accepted as reported	Report


2013. 3. 14	Approval of consolidated and separate financial statements for fiscal year 2012	Approved as proposed	Resolution
	Approval to call for the 52nd annual general meeting of shareholders	Approved as proposed	Resolution
	Annual report on internal control over financial reporting for fiscal year 2012	Accepted as reported	Report
	Annual evaluation report on internal control over financial reporting for fiscal year 2012	Accepted as reported	Report
2013. 4. 18	Plans to sell real estate holdings within 154kV Deokso substation	Approved as proposed	Resolution
2013. 4. 18	Plans to establish and invest in a holding company to conduct the Nghi Son project II in Vietnam	Approved as proposed	Resolution
2013. 5. 7	Approval to close the shareholders’ registry	Approved as proposed	Resolution
2013. 5. 7	Approval to call for the 53rd extraordinary general meeting of shareholders	Approved as proposed	Resolution
2013. 5. 16	Contributions to KEPCO Foundation for Healthcare	Revised proposal approved	Resolution
	Amendments to the regulation for remuneration and welfare	Approved as proposed	Resolution
	Plans to establish and invest in a holding company to conduct the Fujeij wind farm project in Jordan	Approved as proposed	Resolution
	Auditor’s report to the Board of Directors for the first quarter of 2013	Accepted as reported	Report
2013. 6. 20	Mid-to-long term financial management planning (2013-2017)	Approved as proposed	Resolution
	Sixth long-term plans for transmission and distribution facilities	Revised proposal approved	Resolution
	Settlement of the holding company in charge of the Norte project II in Mexico	Approved as proposed	Resolution
	Report on the signing of the collective bargaining agreement for 2013	Accepted as reported	Report


2013. 7. 18	Amendments to the Articles of Incorporation of KEPCO	Approved as proposed	Resolution
	Amendments to the employment regulation	Approved as proposed	Resolution
	Plans to merge EFI and STM and investment in new shares of EFI	Approved as proposed	Resolution
2013. 8. 22	Contributions to Korea Electrical Engineering & Science Research Institute	Approved as proposed	Resolution
	Approval to close the shareholders’ registry	Approved as proposed	Resolution
	Report on the earnings results for the first half of 2013	Accepted as reported	Report
2013. 9. 26	Mid-to-long term business goals for the years from 2014 to 2018	Approved as proposed	Resolution
	Approval to call for the 53rd extraordinary general meeting of shareholders	Approved as proposed	Resolution
	Results of external and internal audits in the second quarter of 2013	Accepted as reported	Report

4. Major activities of the Audit Committee


Date	Agenda	Status	Type
2013. 1. 8	Selection of independent auditors for fiscal years 2013 to 2015	Approved as proposed	Resolution
	Audit plans for fiscal year 2013	Approved as proposed	Resolution
	Education plans for auditors for 2013	Accepted as reported	Report
	Auditor’s report for fiscal year 2012	Accepted as reported	Report
2013. 2. 4	Joint selection of independent auditors for KEPCO, KHNP, and KOSPO for fiscal years 2013 to 2015	Approved as proposed	Resolution
2013. 2. 4	Power of attorney of the standing director and controller & auditor general	Accepted as reported	Report
2013. 3. 11	Auditor’s report on the agendas for the annual general meeting of shareholders	Approved as proposed	Resolution
	Auditor’s report on the auditing results for the consolidated and separate financial statements for fiscal year 2012	Accepted as reported	Report
	Annual report on internal control over financial reporting for fiscal year 2012	Accepted as reported	Report
	Annual evaluation report on internal control over financial reporting for fiscal year 2012	Accepted as reported	Report
	Results of joint selection of independent auditors for KEPCO, KHNP, and KOSPO for fiscal years 2013 to 2015	Accepted as reported	Report
2013. 3. 27	Approval of selection of independent auditors and auditing fees for fiscal years 2013 to 2015	Approved as proposed	Resolution
	Approval of selection of independent auditors of subsidiaries	Approved as proposed	Resolution
	Auditor’s report on the auditing results of the consolidated and separate financial statements for fiscal year 2012	Accepted as reported	Report
2013. 4. 25	Approval of selection of independent auditors of affiliated companies	Approved as proposed	Resolution
2013. 4. 25	Auditing results by external and internal auditors for the first quarter of 2013	Accepted as reported	Report
2013. 4. 29	Auditor’s report for fiscal year 2012 in accordance with U.S. GAAP	Accepted as reported	Report
2013. 4. 29	Report on the Form 20-F for the fiscal year 2012 to be filed with the U.S. SEC	Accepted as reported	Report
2013. 6. 13	Auditor’s report on the agenda for the extraordinary meeting of shareholders	Approved as proposed	Resolution


2013. 8. 19	Establishment of guidelines for whistleblowing and protection of the whistleblower	Approved as proposed	Resolution
	Amendments to the guidelines for disciplinary actions	Approved as proposed	Resolution
	Approval of selection of independent auditors of affiliated companies	Approved as proposed	Resolution
	Auditor’s report on the auditing results of the consolidated financial statements for the first half of 2013	Accepted as reported	Report
	Auditing results by external and internal auditors for the second quarter of 2013	Accepted as reported	Report

•

An audit team, organized under the supervision of the audit committee, conducts internal audit with respect to 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 inspection with respect to the relevant division or office.

VI. Shareholders

1. List of shareholders as of September 9, 2013


		Number of shareholders		Shares Owned		Percentage
Korean Government			1		135,917,118		21.17	%
Korea Finance Corporation			1		192,159,940		29.94	%
National Pension Service			1		35,390,323		5.51	%
KEPCO (held in the form of treasury stock)*			1		18,929,995		2.95	%
Korea Resolution & Collection Corporation			1		8,710,933		1.36	%
Public (non-Koreans)	Common shares		981		113,135,563		17.62	%
Public (non-Koreans)	American depositary shares		1		30,889,452		4.81	%
Public (Koreans)	Corporate		1,471		63,621,064		9.91	%
Public (Koreans)	Individual		403,806		43,209,689		6.73	%
Total			406,264		641,964,077		100.0	%

*	Treasury stocks do not have voting rights. Number of shares with voting rights: 623,034,082

VII. Directors and Employees

1. Remuneration for directors

A.	Aggregate ceiling on remuneration for directors approved by shareholders:

Won 2.1 billion

B.	Actual amount paid to directors

Type

Number of directors

Total remuneration

(Jan. 1, 2013 – Sep. 30, 2013)

Total

Won 1.2 billion

C.	Stock option: None

2. Employees as of September 30, 2013


Employees			Average years of employment	Total remuneration (Jan. 1, 2013 – Sep. 30, 2013)
Regular	Contract	Total	Average years of employment	Total remuneration (Jan. 1, 2013 – Sep. 30, 2013)
19,250	342	19,592	18.6	Won 1,020 billion

VIII. Other information relating to the protection of investors

1. Number of shareholders’ meetings held in 2013: Twice

(One annual general meeting of shareholders held on March 29, 2013 / one extraordinary general meeting of shareholders held on June 18, 2013)

2. Pending legal proceedings


Type	Number of cases	Litigation value
Cases where KEPCO and its subsidiaries and affiliates are acting as defendants	604	Won 427 billion
Cases where KEPCO and its subsidiaries and affiliates are acting as plaintiffs	140	Won 155 billion

SIGNATURES

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


By:		/s/ Han, Key-Shik
Name:		Han, Key-Shik
Title:		Vice President

Date: November 29, 2013

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Financial Statements

September 30, 2013

(Unaudited)

(With Independent Auditors’ Review Report Thereon)

Contents


	Page

Independent Auditors’ Review Report		1

Consolidated Interim Statements of Financial Position		3

Consolidated Interim Statements of Comprehensive Income (Loss)		5

Consolidated Interim Statements of Changes in Equity		7

Consolidated Interim Statements of Cash Flows		9

Notes to the Consolidated Interim Financial Statements		11

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 “Group”), which comprise the consolidated statement of financial position as of September 30, 2013, the consolidated statements of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2013, the consolidated statements of changes in equity and cash flows for the nine-month period ended September 30, 2013 and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

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”) No.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 review.

We conducted our review 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 information 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 auditing standards generally accepted in the Republic of Korea 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.

Conclusion

Based on our review, 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 No.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. Accordingly, this report and the accompanying consolidated interim financial statements are for use by those knowledgeable about Korean review standards and their application in practice.

The consolidated statement of financial position of the Group as of December 31, 2012, and the related consolidated statements of comprehensive income (loss), changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors whose report thereon, dated March 21, 2013, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2012, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

The consolidated statements of comprehensive income (loss) for the three and nine-month periods ended September 30, 2012, the consolidated statements of changes in equity and cash flows for the nine-month period ended September 30, 2012 were reviewed by other auditors whose report thereon, dated November 29, 2012, expressed that nothing came to their attention that caused them to believe that the consolidated interim financial statements referred to above were not presented fairly, in all material respects, in accordance with K-IFRS No.1034, ‘Interim Financial Reporting’. The Group restated the consolidated statement of comprehensive income (loss) for the three and nine-month periods ended September 30, 2012, in accordance with certain items as described in note 2(6) to the consolidated interim financial statements. As discussed in note 2(6) to the consolidated interim financial statements, the Group applied the amendments to K-IFRS

No.1001, ‘Presentation of Financial Statements’ from the annual period for the year ended December 31, 2012. We were not engaged to audit, review or apply any procedures to the consolidated statement of financial position of the Group as of December 31, 2012 and the consolidated statements of comprehensive income (loss) for the three and nine-month periods ended September 30, 2012, including the changes in accounting policies described in note 2(6).

KPMG Samjong Accounting Corp.

Seoul, Korea

November 14, 2013

This report is effective as of November 14, 2013, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position

As of September 30, 2013 and December 31, 2012

(Unaudited)


In millions of won	*Note*		September 30, 2013		December 31, 2012
Assets

Current assets:
Cash and cash equivalents		5,6,7,41	￦	2,949,827		1,954,949
Current financial assets		5,10,11,12,41		539,532		656,217
Trade and other receivables		5,8,14,20,41,43		6,058,740		7,184,625
Inventories		13		4,108,226		3,440,341
Income tax receivables		38		17,148		30,476
Current non-financial assets		15		655,472		664,047
Non-current assets held for sale				—		2,828

				14,328,945		13,933,483
Non-current assets:
Non-current financial assets		5,6,9,10,11,12,41		1,996,716		1,873,676
Non-current trade and other receivables		5,8,14,41,43		1,274,021		1,254,330
Property, plant and equipment		18,45		127,593,072		122,376,140
Investment properties		19		551,336		590,223
Goodwill		16		2,582		—
Intangible assets other than goodwill		21		828,321		883,814
Investments in joint ventures		4,17		1,122,092		908,593
Investments in associates		4,17		4,143,146		3,982,340
Deferred tax assets		38		450,680		209,783
Non-current non-financial assets		15		155,267		140,438

				138,117,233		132,219,337


Total assets		4	￦	152,446,178		146,152,820


Liabilities

Current liabilities:
Trade and other payables		5,22,24,41,43	￦	5,078,315		6,418,464
Short-term borrowings		5,23,41		2,047,998		689,310
Current financial liabilities		5,11,23,41,43		7,693,487		7,099,509
Income tax payables		38		413,649		334,053
Current non-financial liabilities		20,27,28		4,481,424		4,117,440
Current provisions		26,41		347,966		158,303

				20,062,839		18,817,079

Non-current liabilities:
Non-current trade and other payables		5,22,24,41,43		4,179,887		4,173,691
Non-current financial liabilities		5,11,23,41,43		50,731,985		46,050,766
Non-current non-financial liabilities		27,28		6,784,446		6,298,650
Employee benefits obligations		25,41		2,390,696		2,144,334
Deferred tax liabilities		38		5,215,190		5,433,292
Non-current provisions		26,41		12,525,132		12,170,806

				81,827,336		76,271,539


Total liabilities		4	￦	101,890,175		95,088,618

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position, Continued

As of September 30, 2013 and December 31, 2012

(Unaudited)


In millions of won	*Note*		September 30, 2013			December 31, 2012

Equity

Contributed capital:		1,29,41
Share capital			￦	3,209,820			3,209,820
Share premium				843,758			843,758

				4,053,578			4,053,578
Retained earnings:		30
Legal reserves				1,603,919			1,603,919
Voluntary reserves				22,753,161			25,961,315
Retained earnings before appropriations				7,628,075			4,999,049

				31,985,154			32,564,283

Other components of equity :		31
Other capital surpluses				694,450			705,448
Accumulated other comprehensive income				147,327			11,957
Treasury stocks				(741,489	)		(741,489	)
Other equity				13,294,990			13,294,990

				13,395,278			13,270,906


Equity attributable to owners of the Company				49,434,010			49,888,767


Non-controlling interests		16		1,121,993			1,175,435


Total equity			￦	50,556,003			51,064,202


Total liabilities and equity			￦	152,446,178			146,152,820

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Loss)

For the three and nine-month periods ended September 30, 2013 and 2012

(Unaudited)


In millions of won			September 30, 2013						September 30, 2012
	*Note*		Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended

Sales		2,4,32,41,43
Sales of goods			￦	13,559,051			37,731,917			12,737,036			34,543,938
Sales of services				70,492			221,196			87,061			256,826
Sales of construction services		20		576,214			1,569,472			481,397			1,369,817
Revenue related to transfer of assets from customers				82,233			240,767			75,730			223,361

				14,287,990			39,763,352			13,381,224			36,393,942

Cost of sales		2,13,25,39,43
Cost of sales of goods				(11,572,374	)		(35,546,718	)		(10,451,400	)		(33,968,179	)
Cost of sales of services				(74,139	)		(207,628	)		(97,178	)		(261,652	)
Cost of sales of construction services				(578,796	)		(1,495,114	)		(471,669	)		(1,254,298	)

				(12,225,309	)		(37,249,460	)		(11,020,247	)		(35,484,129	)


Gross profit				2,062,681			2,513,892			2,360,977			909,813


Selling and administrative expenses		2,25,33,39,43		(515,360	)		(1,402,033	)		(454,712	)		(1,305,624	)


Operating profit (loss)		2,4,48		1,547,321			1,111,859			1,906,265			(395,811	)

Other income		2, 34		96,154			271,893			66,582			266,209

Other expenses		34		(14,464	)		(40,610	)		(13,238	)		(47,832	)

Other profit		35		90,130			129,658			17,954			93,326

Finance income		5,11,36		738,348			384,920			395,590			577,989

Finance costs		5,11,37		(1,079,656	)		(2,081,451	)		(941,022	)		(2,043,093	)

Equity method income (loss) of associates and joint ventures
Share in income (loss) of associates and joint ventures		17		(23,033	)		94,193			(32,455	)		154,467
Gains on disposal of investments in associates and joint ventures		16, 17		1,055			1,059			—			—
Share in loss of associates and joint ventures		17		(23,105	)		(65,302	)		(6,396	)		(20,049	)
Gains (losses) on disposal of investments in associates and joint ventures		16, 17		—			(1,134	)		282			—
Impairment losses on investments in associates and joint ventures		17		(1,719	)		(4,211	)		—			—

				(46,802	)		24,605			(38,569	)		134,418


Profit (loss) before income tax				1,331,031			(199,126	)		1,393,562			(1,414,794	)


Income tax benefit (expense)		38		(357,368	)		(251,638	)		(437,330	)		93,034


Profit (loss) for the period			￦	973,663			(450,764	)		956,232			(1,321,760	)

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Loss), Continued

For the three and nine-month periods ended September 30, 2013 and 2012

(Unaudited)


In millions of won, except per share information			September 30, 2013						September 30, 2012
	*Note*		Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended

Other comprehensive income (loss)		5,11,25,31
Items that will not be reclassified subsequently to profit or loss:
Defined benefit plan actuarial losses, net of tax		25,30	￦	(68,228	)		(42,731	)		(148,275	)		(211,953	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		30		(1,723	)		(1,676	)		(221	)		58
Items that may be reclassified subsequently to profit or loss:
Net change in the unrealized fair value of available-for-sale financial assets, net of tax		31		(515	)		92,684			83,606			(18,837	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		5,11,31		28,535			(1,376	)		(48,181	)		(58,092	)
Foreign currency translation of foreign operations, net of tax		31		(145,103	)		(45,097	)		(32,507	)		(32,983	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		31		(18,669	)		91,286			(27,130	)		(70,645	)


Other comprehensive income (loss), net of tax				(205,703	)		93,090			(172,708	)		(392,452	)

Total comprehensive income (loss) for the period			￦	767,960			(357,674	)		783,524			(1,714,212	)


Profit (loss) attributable to:
Owners of the Company		40	￦	945,455			(535,064	)		939,552			(1,382,877	)
Non-controlling interests				28,208			84,300			16,680			61,117

			￦	973,663			(450,764	)		956,232			(1,321,760	)

Total comprehensive income (loss) attributable to:
Owners of the Company			￦	768,696			(443,760	)		784,978			(1,746,412	)
Non-controlling interests				(736	)		86,086			(1,454	)		32,200

			￦	767,960			(357,674	)		783,524			(1,714,212	)


Earnings (loss) per share		40
Basic and diluted earnings (loss) per share			￦	1,518			(859	)		1,508			(2,220	)

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

For the nine-month period ended September 30, 2012

(Unaudited)


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

Balance at January 1, 2012	￦	4,053,578		35,769,094			13,447,624			53,270,296			533,654			53,803,950

Total comprehensive income for the period:
Profit (loss) for the period		—		(1,382,877	)		—			(1,382,877	)		61,117			(1,321,760	)
Items that will not be reclassified subsequently to profit or loss:
Defined benefit plan actuarial losses, net of tax		—		(206,610	)		—			(206,610	)		(5,343	)		(211,953	)
Share in other comprehensive income of associates and joint ventures, net of tax		—		58			—			58			—			58
Items that may be reclassified subsequently to profit or loss:
Net changes in the unrealized fair value of available-for-sale financial assets, net of tax		—		—			(18,802	)		(18,802	)		(35	)		(18,837	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			(38,305	)		(38,305	)		(19,787	)		(58,092	)
Foreign currency translation of foreign operations, net of tax		—		—			(29,188	)		(29,188	)		(3,795	)		(32,983	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		—		—			(70,688	)		(70,688	)		43			(70,645	)
Transactions with owners of the Company, recognized directly in equity:
Dividends paid		—		—			—			—			(53,706	)		(53,706	)
Issuance of share capital		—		—			—			—			77,055			77,055
Changes in consolidation scope		—		—			66,419			66,419			26,641			93,060
Others		—		—			—			—			2,777			2,777


Balance at September 30, 2012	￦	4,053,578		34,179,665			13,357,060			51,590,303			618,621			52,208,924

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity, Continued

For the nine-month period ended September 30, 2013

(Unaudited)


In millions of won	Equity attributable to owners of the Company											Non- controlling Interests			Total equity
	Contributed Capital		Retained earnings			Other components of equity			Subtotal			Non- controlling Interests			Total equity

Balance at January 1, 2013	￦	4,053,578		32,564,283			13,270,906			49,888,767			1,175,435			51,064,202

Total comprehensive income for the period:
Profit (loss) for the period		—		(535,064	)		—			(535,064	)		84,300			(450,764	)
Items that will not be reclassified subsequently to profit or loss:
Defined benefit plan actuarial losses, net of tax		—		(42,389	)		—			(42,389	)		(342	)		(42,731	)
Share in other comprehensive loss of associates and joint ventures, net of tax		—		(1,676	)		—			(1,676	)		—			(1,676	)
Items that may be reclassified subsequently to profit or loss:
Net changes in the unrealized fair value of available-for-sale financial assets, net of tax		—		—			92,758			92,758			(74	)		92,684
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			(5,545	)		(5,545	)		4,169			(1,376	)
Foreign currency translation of foreign operations, net of tax		—		—			(43,236	)		(43,236	)		(1,861	)		(45,097	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		—		—			91,392			91,392			(106	)		91,286
Transactions with owners of the Company, recognized directly in equity:
Dividends paid		—		—			—			—			(41,815	)		(41,815	)
Issuance of share capital		—		—			—			—			31,010			31,010
Changes in consolidation scope		—		—			(10,743	)		(10,743	)		(110,127	)		(120,870	)
Dividends paid (hybrid securities)		—		—			—			—			(12,304	)		(12,304	)
Others		—		—			(254	)		(254	)		(6,292	)		(6,546	)


Balance at September 30, 2013	￦	4,053,578		31,985,154			13,395,278			49,434,010			1,121,993			50,556,003

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

For the nine-month periods ended September 30, 2013 and 2012

(Unaudited)


In millions of won	2013			2012

Cash flows from operating activities
Loss for the period	￦	(450,764	)		(1,321,760	)


Adjustments for:
Income tax expense (benefit)		251,638			(93,034	)
Depreciation		5,429,116			5,179,962
Amortization		66,074			66,715
Employee benefit expense, net		283,693			257,806
Bad debt expense		47,809			28,665
Interest expense		1,767,271			1,752,726
Losses on sale of financial assets		4,202			—
Losses on disposal of property, plant and equipment		32,989			27,497
Losses on abandonment of property, plant, and equipment		201,327			163,647
Impairment losses on property, plant and equipment		1,161			—
Losses on disposal of intangible assets		1			—
Impairment losses on intangible assets		2			18
Accretion expense to provisions, net		375,937			97,857
Gain on foreign currency translation, net		(3,130	)		(314,844	)
Valuation and transaction losses (gains) on derivative instruments, net		(9,931	)		217,479
Share in income of associates and joint ventures, net		(28,891	)		(134,418	)
Gain on sale of financial assets		—			(189	)
Gain on sale of property, plant and equipment		(29,184	)		(25,476	)
Gain on disposal of investments in associates and joint ventures		(76	)		—
Impairment losses on investments in associates and joint ventures		4,211			—
Interest income		(135,228	)		(150,609	)
Dividends income		(9,736	)		(9,043	)
Impairment losses on available-for-sale financial assets		10,673			—
Others, net		(20,041	)		(1,972	)

		8,239,887			7,062,787

Changes in:
Trade receivables		1,104,288			(997,909	)
Other receivables – non trade		75,579			(106,013	)
Accured income		2,273			(20,887	)
Other receivables		3,343			6,272
Other current assets		26,360			(219,332	)
Inventories		(888,242	)		(625,796	)
Other non-current assets		(10,851	)		(24,851	)
Trade payables		(1,098,177	)		(853,630	)
Other payables		(213,835	)		(33,326	)
Accured expenses		(215,369	)		(121,895	)
Other current liabilities		887,043			483,220
Other non-current liabilities		118,617			670,616
Disposal of investments in associates and joint ventures		45,601			48,429
Provisions		(74,249	)		(51,667	)
Payments of employee benefit obligations		(109,711	)		(146,119	)
Plan assets		(16,353	)		(22,838	)

	￦	(363,683	)		(2,015,726	)

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows, Continued

For the nine-month periods ended September 30, 2013 and 2012

(Unaudited)


In millions of won	2013			2012

Cash generated from operating activities
Dividends received	￦	41,683			10,335
Interest paid		(1,879,777	)		(1,781,224	)
Interest received		102,533			110,011
Income taxes paid		(559,492	)		(279,865	)

Net cash from operating activities		5,130,387			1,784,558


Cash flows investing activities
Proceeds from disposals of subsidiaries, associates and joint ventures		2,966			—
Acquisition of subsidiaries, associates and joint ventures		(384,420	)		(309,622	)
Proceeds from disposals of property, plant and equipment		39,214			13,746
Acquisition of property, plant and equipment		(10,230,506	)		(8,439,223	)
Proceeds from disposals of intangible assets		8,318			1,433
Acquisition of intangible assets		(51,318	)		(43,435	)
Acquisition of goodwill		(2,582	)		—
Proceeds from disposals of financial assets		683,502			667,645
Acquisition of financial assets		(671,890	)		(851,315	)
Increase in loans, net		(36,738	)		(11,614	)
Increase (decrease) in deposits, net		10,342			(45,406	)
Increase of government grants		16,358			39,210
Business acquisition, net of cash acquired		(39,227	)		3,193
Others, net		(6,653	)		48,208

Net cash used in investing activities		(10,662,634	)		(8,927,180	)


Cash flows from financing activities
Proceeds from short-term borrowings, net		1,377,838			415,803
Proceeds from long-term borrowings and debt securities		10,644,699			12,820,077
Repayment of long-term borrowings and debt securities		(5,412,323	)		(3,543,766	)
Payment of finance lease liabilities		(91,550	)		(95,632	)
Settlement of derivative instruments, net		50,251			3,567
Contributed capital from non-controlling interests, net		48,325			188,386
Dividends paid (hybrid securities)		(12,304	)		—
Dividends paid		(41,815	)		(54,272	)
Others, net		(2,732	)		(731	)

Net cash from financing activities		6,560,389			9,733,432


Net increase in cash and cash equivalents before effect of exchange rate fluctuations		1,028,142			2,590,810

Effect of exchange rate fluctuations on cash held		(33,264	)		(2,872	)


Net increase in cash and cash equivalents		994,878			2,587,938

Cash and cash equivalents at January 1		1,954,949			1,387,921


Cash and cash equivalents at September 30	￦	2,949,827			3,975,859

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

For the nine-month periods ended September 30, 2013 and 2012

(Unaudited)

1.	Reporting Entity (Description of the controlling company)

Korea Electric Power Corporation (the “Company”), controlling company as defined in Korean International Financial Reporting Standards (“K-IFRS”) No. 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. The Company also provides power plant construction services. The Company’s stock was listed on the Korea Stock Exchange on August 10, 1989 and the Company listed its Depository Receipts (DR) on the New York Stock Exchange on October 27, 1994.

As of September 30, 2013, the Company’s share capital amounts to ￦3,209,820 million and the Company’s shareholders’:


	Number of shares		Percentage of ownership
Government of the Republic of Korea		135,917,118		21.17	%
Korea Finance Corporation		192,159,940		29.93	%
Foreign investors		144,025,015		22.44	%
Other		169,862,004		26.46	%


		641,964,077		100.00	%

In accordance with the Restructuring Plan enacted on January 21, 1999 by the Ministry of Trade, Industry and Energy (the “MTIE”, formerly the Ministry of Knowledge Economy), 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

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

These consolidated interim financial statements were prepared in accordance with K-IFRS No.1034, ‘Interim Financial Reporting’ as part of the period covered by the Group’s K-IFRS annual financial statements. The notes are included to explain events and transactions to give the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended December 31, 2012.

(2)

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the statement 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, which are the Company’s functional currency and the currency of the primary economic environment in which the Company operates.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

2.	Basis of Preparation, Continued

(4)

Use of estimates and judgments

The preparation of the consolidated interim 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 following 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)

Continued operation of Wolseong #1 nuclear power plant

The Group owns Wolseong #1 nuclear power plant, which started its operation on November 21, 1982, and completed its operation on November 20, 2012, maxing out the permitted operation period of 30 years. As of December 31, 2012, the Group is in the process of obtaining safety assessments to obtain an approval from the Nuclear Safety and Security Commission for resuming the plant’s operating for the 2nd operation term. The Group has prepared the accompanying financial statements assuming that the plant will operate for the next 10 years.

(ii)

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

The Group 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 Group records the fair value of estimated decommissioning costs as a liability in the period in which the Group 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. Under the Korean Electricity Business Act (EBA) Article 94, the Group 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.

(iii)

Deferred tax

The Group 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 Group does not realize estimated future taxable income during the carry forward periods.

(iv)

Valuations of financial instruments at fair values

As described in Note 41, the Group uses inputs that are not based on observable market data to estimate the fair value of certain types of financial instruments. Note 41 explain the assumptions used for valuations of financial instruments and sensitivity analysis of these assumptions.

(v)

Defined employee liabilities

The Group 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.

(vi)

Unbilled revenue

Energy delivered but not yet metered, and the quantities of energy delivered but not yet measured and not billed are calculated at the reporting date based on consumption statistics and selling price estimates. Determination of the unbilled revenues at the end of the reporting period is sensitive to the estimated assumptions and prices based on statistics. Unbilled revenue recognized as of September 30, 2013 and 2012 is ￦1,157,804 million and ￦1,205,752 million, respectively.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

2.	Basis of Preparation, Continued

(5)

Changes in accounting policies

(i)

K-IFRS No.1110, ‘Consolidated Financial Statements’

The Group adopted K-IFRS No.1110, ‘Consolidated Financial Statements’ since January 1, 2013. As a result, the Group changed its accounting policy with respect to determining whether it has control over and consequently whether it consolidates its investees. K-IFRS No. 1110 introduces a new control model that is applicable to all investees; among other things, it requires the consolidation of an investee if the Group controls the investee on the basis of de facto circumstances.

The standard includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s return.

Management believes that the impact of adoption of the standard on the Group’s consolidated financial statements is not significant.

(ii)

K-IFRS No.1111, ‘Joint Arrangements’

The Group adopted K-IFRS No.1111, ‘Joint Arrangements’ since January 1, 2013. The standard classifies joint arrangements 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 venturers) have rights to the net assets of the arrangement. The standard requires a joint operator 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. The standard requires a joint venturer to recognize an investment and to account for that investment using the equity method.

The Group classified ownership of joint arrangements into two types – joint operations and joint ventures according to rights to the assets and obligations for the liabilities, relating to the arrangement. Management believes that there are no impacts of the adoption of the standard on the Group’s consolidated financial statements since all arrangements are considered as joint ventures and equity method accounting was applied in prior years.

(iii)

K-IFRS No.1112, ‘Disclosure of Interests in Other Entities’

The Group adopted K-IFRS No.1112, ‘Disclosure of Interests in Other Entities’ since January 1, 2013. The standard brings together into a single standard all the disclosure requirements about an entity’s interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Group is currently assessing the disclosure requirements for interests in subsidiaries, interests in joint arrangements and associates and unconsolidated structured entities in comparison with the existing disclosures. The standard requires the disclosure of information about the nature, risks and financial effects of these interests.

(iv)

Amendments to K-IFRS No. 1019, ‘Employee Benefits’

The Group has applied the amendments to K-IFRS No. 1019, ‘Employee Benefits’ since January 1, 2013. The standard requires recognition of actuarial gains and losses immediately in other comprehensive income and to calculate expected return on plan assets based on the rate used to discount the defined benefit obligation.

(v)

K-IFRS No. 1113,’Fair Value Measurement’

The Group adopted K-IFRS No.1113, ‘Fair Value Measurement’ since January 1, 2013. The standard defines fair value and a single framework for fair value, and requires disclosures about fair value measurements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

2.	Basis of Preparation, Continued

(6)

Impact of change in accounting policy

The accompanying consolidated interim statements of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2012 have been restated for the following changes:

(i)

Presentation of financial statements

The Group has adopted the amendments pursuant to the amended K-IFRS No. 1001, ‘Presentation of Financial Statements’ from the annual period ended December 31, 2012. The Group’s operating income (loss) is calculated as revenue less: (1) cost of goods sold, and (2) selling, general and administrative expenses, and is presented separately in the consolidated statement of comprehensive income (loss).

The Group restated the accompanying consolidated statements of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2012, as follows:


In millions of won	September 30, 2012
	Three-month period ended			Nine-month period ended

Operating income (loss) before adoption of the amendment	￦	1,977,563			(84,108	)
Differences
Other income
Reversal of other provisions		—			(123	)
Reversal of allowance for doubtful accounts		—			(3,535	)
Gains on assets contributed		(50	)		(865	)
Gains on liabilities exempted		(94	)		(697	)
Compensation and reparations revenue		(9,456	)		(74,413	)
Gains on electricity infrastructure development fund		(6,536	)		(23,746	)
Revenue from research contracts		—			(1,656	)
Rental income		(45,159	)		(137,002	)
Others		(5,287	)		(24,172	)
Other expense
Accretion expenses of other provisions		9			80
Depreciation expenses on investment properties		240			710
Depreciation expenses on idle assets		1,657			4,964
Donations		11,332			27,666
Others		—			14,412
Other Loss
Gains on disposal of property, plant and equipment		(6,687	)		(25,476	)
Gains on disposal of other non-current assets		—			(584	)
Reversal of impairment loss on intangible assets		(5	)		(7	)
Gains on foreign currency translation		—			(3,876	)
Gains on foreign currency transaction		(18,394	)		(51,204	)
Gains on insurance		—			(5,375	)
Other profits		(26,446	)		(122,136	)
Losses on disposal of property, plant and equipment		4,901			27,497
Losses on disposal of intangible assets		—			7
Losses on impairment of intangible assets		—			18
Losses on foreign currency translation		521			1,112
Losses on foreign currency transaction		3,936			44,878
Other losses		24,220			41,820


Operating income (loss) after adoption of the amendment	￦	1,906,265			(395,811	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

2.	Basis of Preparation, Continued

(6)

Impact of change in accounting policy, continued

(ii)

Reclassification of other comprehensive income

The Group early adopted K-IFRS No. 1001 ‘Presentation of financial statement’, which requires items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. The Group applied this change in accounting policies retrospectively, and accordingly restated the comparative information of the consolidated statement of comprehensive income for the nine-month period ended September 30, 2012.

(iii)

Fuel cost adjustment

As of July 1, 2011, the Korean government approved a fuel cost pass-through adjustment (“FCPTA”), allowing the Group to ultimately pass-through increases in fuel costs to customers. Currently, the Korean government has issued a temporary hold-order on the Group in collecting on the pass-through of fuel cost from customers, as a means to stabilizing inflation in Korea. The Group recorded unbilled FCPTA amounts as a deduction of the relevant cost and recognized them as a related non-current non-financial asset, and restated the consolidated statements of comprehensive loss for the three-month and nine-month periods ended September 30, 2012 to improve comparability. The impact of the restatement was a decrease in sales and cost of sales by ￦1,468,714 million.

(iv)

Revenue related to transfer of assets from customers

As noted above, the amendments to K-IFRS No. 1001 ‘Presentation of financial statements’ requires operating profit (loss) to be calculated by revenue less: 1) cost of goods sold, and 2) selling, general and administrative expenses. However, according to “accounting guidelines for public enterprises and quasi-government agencies” prepared and distributed by the Ministry of Strategy and Finance in November 2012, the revenue related to the transfer of assets from customers was classified as other income. However, since it is not included in the items to be excluded from operating income per the amendments to K-IFRS No. 1001, it has been reclassified to sales in the accompanying consolidated interim statements of comprehensive income (loss). The financial statements for the three-month and nine-month periods ended September 30, 2012 have been restated to improve comparability. The impact of the restatement was an increase in sales to ￦223,361 million and a decrease in other income by ￦223,361 million, for the nine-month period ended September 30, 2012.

The Group applied these changes in accounting policies retrospectively, and accordingly restated the comparative information of the consolidated interim statement of comprehensive income (loss) for the nine-month periods ended September 30, 2012. The impact of reclassification of FCPTA and customer’s donation is as below:


In millions of won	Before				After				Difference
	Three- month period ended		Nine- month period ended		Three- month period ended		Nine- month period ended		Three- month period ended			Nine- month period ended

Sales	￦	13,724,005		37,639,295		13,381,224		36,393,942		(342,781	)		(1,245,353	)
Cost of sales		11,438,758		36,952,843		11,020,247		35,484,129		418,511			1,468,714
Other income		143,332		490,590		66,582		266,209		(76,750	)		(224,381	)
Selling and Administrative expenses		455,732		1,306,644		454,712		1,305,624		1,020			1,020

(7)

New standards and interpretations not yet adopted

The following new standards, interpretations and amendments to existing standards have been published and are mandatory for the Group for annual period beginning after January 1, 2013, and the Group has not early adopted them.

Amendments to K-IFRS No.1032 – Financial Instruments: Disclosures

The amendments to K-IFRS No.1032 will require changes to the presentation of offsetting financial assets and financial liabilities. The amendments to K-IFRS No.1032 are effective for annual periods beginning on or after January 1, 2014. The Group is in the process of evaluating the impact on the consolidated financial statements upon the adoption of amendments.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies

(1)

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Group and entities (including special purpose entities) controlled by the Group (or its subsidiary). The Group applied control model that is applicable to all investees; among other things, it requires the consolidation of an investee if the Group controls the investee on the basis of de facto circumstances.

Income and expenses 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 Group 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 used the Group.

Transactions between the Company and its subsidiaries are eliminated during the consolidation and will not be shown in notes.

Changes in the Group’s ownership interests in a subsidiary that do not result in the Group losing control over the subsidiary are accounted for as equity transactions. The carrying amounts of the Group’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 Group.

When the Group 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 Group 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 No.1039 ‘Financial Instruments’: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

(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 Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognized in income or loss as incurred.

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

•

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

•

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(2)

Business combinations, continued

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 if it entitles the holder to a proportionate share of the entity’s net assets in an event of a liquidation, the non-controlling interest 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 K-IFRS.

When the consideration transferred by the Group 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 No.1039, ‘Financial Instruments: Recognition and Measurement’, or with K-IFRS No.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 Group’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date (i.e. the date when the Group 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 Group 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.

(3)

Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. If the investment is classified as held for sale, in which case it is accounted for in accordance with K-IFRS No.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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(3)

Investments in associates, continued

After the disposal takes place, the Group shall account for any retained interest in associates in accordance with K-IFRS No.1039 ‘Financial Instruments: Recognition and Measurement’ unless the retained interest continues to be an associates, in which case the entity uses the equity method.

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

Any excess of the cost of acquisition over the Group’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 Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in income or loss. The requirements of K-IFRS No.1039,’Financial Instruments: Recognition and Measurement’, are applied to determine whether it is necessary to recognize any impairment loss with respect to the Group’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 No.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 No.1036 to the extent that the recoverable amount of the investment subsequently increases.

Upon disposal of an associate that results in the Group 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 No.1036. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group 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 Group reclassifies the gain or loss from equity to income or loss (as a reclassification adjustment) when it loses significant influence over that associate.

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

(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 venturers) have rights to the net assets of the arrangement.

If the Group is a joint operator, the Group is to recognizes 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 IFRSs applicable to the particular assets, liabilities, revenues and expenses. If the Group is joint ventures, the Group is to account for that investment using the equity method accounting (see note 3 (3)), except when the Group is applicable to the K-IFRS No.1105 ‘Non-current Assets Held for Sale’.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(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 Group 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 Group 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)

Revenue

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

(i)

Sales of Goods

The Korean government approves the rates the Group charges to the customers, for the Group’s power transmission and distribution division. The Group’s utility rates are designed to recover the Groups reasonable costs plus a fair investment return. The Group’s power generation rates are determined in the market.

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

(ii)

Sales of Service

Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed or services performed to date as a percentage of total services to be performed or the proportion that costs incurred to date bear to the estimated total costs of the transaction or other methods that measures reliably the services performed. Refer to note 2 (4) below for Construction contract related revenue recognition.

(iii)

Dividend income and interest income

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

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

(iv)

Rental income

The Group’s policy for recognition of revenue from operating leases is described in note 3 (8) below.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(6)

Revenue, continued

(v)

Deferral of revenue – Transfer of assets from customers

The Group recovers a substantial amount of the cost related to its electric power distribution facilities from customers through transfer of assets, while the remaining portion is recovered through electricity sales from such customers in the future. As such, the Group believes there exists a continued service obligation to the customers in accordance with K-IFRS 2118, ‘Transfer of assets from customers’ when the Group receives an item of property, equipment, or cash for constructing or acquiring an item of property or equipment, in exchange for supplying electricity to customers. The Group defers the amounts received, which are then recognized as revenue over the transferred asset’s useful life.

(7)

Construction service revenue

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(8)

Leases

The Group classifies and accounts for leases as either a finance or operating lease, depending on the terms. Leases where the Group 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 Group as lessor

Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’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 Group’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 Group 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 Group 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 Group’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.

(9)

Foreign currencies

Transactions in foreign currencies are translated to the respective functional currencies of Group 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; and

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(9)

Foreign currencies, continued

•

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

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

(10)

Borrowing costs

The Group 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.

(11)

Government grants

Government grants are not recognized unless there is reasonable assurance that the Group 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 Group received grants related to assets

Government grants whose primary condition is that the Group 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 Group received grants related to income

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(12)

Employee benefits

(i)

Retirement benefits: defined contribution plans

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

(ii)

Retirement benefits: defined benefit plans

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 asset or liability recognized in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognized past service costs. 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.

All actuarial gains and losses that arise in calculating the present value of the defined benefit obligation and the fair value of plan assets are recognized immediately in retained earnings and included in the statement of comprehensive income.

For the purpose of calculating the expected return on plan assets, the assets are valued at fair value. Actual results will differ from results which are estimated based on assumptions. Past service cost is recognized as an expense at the earlier of the following dates: (a) when the plan amendment or curtailment occurs; (b) when the company recognizes related restructuring costs or termination benefits.

The retirement benefit obligation recognized in the consolidated 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(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 Group 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 Group 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 Group 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 Group 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 Group 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(13)

Income taxes, continued

(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.

(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 Group 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 Group uses the production method to measure and recognizes as expense the economic benefits of the assets.

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


		Useful lives (years)

Buildings		8 ~ 40
Structures		8 ~ 50
Machinery		6 ~ 32
Vehicles		4
Loaded heavy water		30
Asset retirement costs		18, 30, 40
Finance lease assets		20
Ships		9
Others		4 ~ 9

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(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 Group 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(16)

Intangible assets, continued

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


	Useful lives (years)	Amortization methods

Usage rights for donated assets	4 ~ 30	Straight
Software	4, 5	Straight
Industrial rights	5, 10	Straight
Development expenses	5	Straight
Dam usage right	50	Straight
Mining right	—	Unit of production
Others	4 ~ 20, 50	Straight

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes are accounted for as changes in accounting estimates.

(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, 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.

(17)

Impairment of non-financial assets other than goodwill

At the end of each reporting period, the Group 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 Group 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(17)

Impairment of non-financial assets, continued

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 income 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, but so that 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 income 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.

(18)

Inventories

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

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

(19)

Provisions

Provisions are recognized when the Group 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.

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 Polychlorinated Biphenyls (“PCB”)

Under the regulation of Persistent Organic Pollutants Management Act, enacted in 2007, the Group is required to remove polychlorinated biphenyls (PCBs), a toxin, from the insulating oil of its transformers by 2025. As a result of the enactments, the Group is required to inspect the PCBs contents of transformers and dispose of PCBs in excess of safety standards under the legally settled procedures. The Group’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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(19)

Provisions, continued

(ii)

Provision for decommissioning costs of nuclear power plants

The Group records the fair value of estimated decommissioning costs as a liability in the period in which the Group 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 Group is levied to pay the spent nuclear fuel fund for the management of spent nuclear fuel. The Group recognizes the provision of present value of the payments.

(iv)

Provision for low and intermediate radioactive wastes

Under the Radioactive Waste Management Act, the Group 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)

Provisions for power plant regional support program

In accordance with regulations on nuclear and hydro-electric power plants’ social responsibility to support the surrounding communities of the power plants sites; KHNP, the Group’s nuclear generation subsidiary, accrues 0.25won per KWH of KHNP’s generation volume as a provision 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.

(20)

Non-derivative financial assets

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

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

(i)

Effective interest method

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(20)

Non-derivative financial assets, continued

(ii)

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

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

A financial asset is classified as held for trading if:

•

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

•

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

•

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

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

•

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

•

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

•

It forms a part of a contract containing one or more embedded derivatives, and with K-IFRS No. 1039, Financial Instruments; Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at financial assets at fair value through profit or loss.

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

(iii)

Held-to-maturity investments

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(20)

Non-derivative financial assets, continued

(iv)

Available-for-sale financial assets

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

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

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

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

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

(v)

Loans and receivables

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

(vi)

Impairment of financial assets

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

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

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

•

Significant financial difficulty of the issuer or counterparty; or

•

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

•

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

•

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(20)

Non-derivative financial assets, continued

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

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

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

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

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

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

(vii)

De-recognition of financial assets

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial liabilities and equity instruments issued by the Group

(i)

Classification as debt or equity

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

(ii)

Equity instruments

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

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

(iii)

Financial liabilities

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

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

(iv)

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

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

A financial liability is classified as held for trading if:

•

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

•

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

•

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

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

•

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

•

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

•

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial liabilities and equity instruments issued by the Group, continued

(v)

Other financial liabilities

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

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

(vi)

Financial guarantee contract liabilities

Financial guarantee contract liabilities are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of: (a) the amount of the obligation under the contract, as determined in accordance with K-IFRS No. 1037, ‘Provisions’, Contingent Liabilities and Contingent Assets; or (b) the amount initially recognized less, cumulative amortization recognized in accordance with K-IFRS No. 1018, ‘Revenue’.

(vii)

De-recognition of financial liabilities

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

(22)

Derivative financial instruments, including hedge accounting

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

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

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

(i)

Separable embedded derivatives

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

3.	Significant Accounting Policies, Continued

(22)

Derivative financial instruments, including hedge accounting, continued

(ii)

Hedge accounting

The Group 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 Group 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 Group 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 and accumulated under the heading of reverse for gains (loss) on valuation of derivatives. 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 Group 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

4.	Segment Information

(1)

Assets, liabilities, revenue and expenses

The Group’s segments are classified at the business unit level, at which the Group generates separately identifiable revenue and expense, and the related information is reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group’s reporting segments, in accordance with K-IFRS No.1108, are ‘Electric power generation (Nuclear)’, Electric power generation (Non-nuclear)’, Transmission and distribution, and ‘Others’; others mainly represent the business unit that manages the Group’s foreign operations.

Transactions that occur between each segment are based on arms-length transactions priced at market prices that would be applicable to an independent third-party. The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3.

(2)

Sales, income and profit (loss) of the segments for the three and nine-month periods ended September 30, 2013 and 2012 are as follows:


In millions of won
September 30, 2013
	Total segment revenue						Intersegment revenue						Revenue from external customers				Operating income (loss)						Depreciation and amortization
Segment	Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended			Three- month period ended		Nine- month period ended		Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended

Electric power generation (Nuclear)	￦	1,624,124			5,402,178			1,624,124			5,374,065			—		28,113		215,189			916,824			662,158			2,043,314
Electric power generation (Non-nuclear)		6,993,886			21,557,877			6,943,891			21,280,641			49,995		277,236		269,867			1,123,176			487,335			1,433,426

Transmission and distribution		14,244,150			39,577,829			290,574			770,083			13,953,576		38,807,746		1,011,716			(1,038,067	)		665,719			1,978,483

Others		630,268			1,939,686			345,849			1,289,429			284,419		650,257		62,645			234,812			21,189			63,277

Consolidation adjustments		(9,204,438	)		(28,714,218	)		(9,204,438	)		(28,714,218	)		—		—		(12,096	)		(124,886	)		(8,089	)		(23,310	)


	￦	14,287,990			39,763,352			—			—			14,287,990		39,763,352		1,547,321			1,111,859			1,828,312			5,495,190

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

4.	Segment Information, Continued

(2)

Sales, income and profit (loss) of the segments for the three and nine-month periods ended September 30, 2013 and 2012 are as follows, continued:


In millions of won
September 30, 2012
Segment	Total segment revenue						Intersegment revenue						Revenue from external customers				Operating income (loss)						Depreciation and amortization
Segment	Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended			Three- month period ended		Nine- month period ended		Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended

Electric power generation (Nuclear)	￦	1,770,774			5,427,500			1,763,349			5,412,677			7,425		14,823		406,957			1,257,124			617,850			1,828,466
Electric power generation (Non-nuclear)		6,856,103			22,689,771			6,819,054			22,469,864			37,049		219,907		342,551			1,604,263			474,041			1,406,346

Transmission and distribution		13,451,077			36,442,883			330,631			842,768			13,120,446		35,600,115		1,082,664			(3,464,741	)		662,511			1,970,383

Others		628,672			1,884,210			412,368			1,325,113			216,304		559,097		93,695			311,545			19,648			57,773

Consolidation adjustments		(9,325,402	)		(30,050,422	)		(9,325,402	)		(30,050,422	)		—		—		(19,602	)		(104,002	)		(6,152	)		(16,291	)


	￦	13,381,224			36,393,942			—			—			13,381,224		36,393,942		1,906,265			(395,811	)		1,767,898			5,246,677

(*)	Revenue and operating loss has been restated, see note 2(6).

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

4.	Segment Information, Continued

(3)

Total assets and liabilities of the segments as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won
September 30, 2013
Segment	Segment assets			Investments in associates and joint ventures		Acquisition of non-current assets			Segment liabilities

Electric power generation (Nuclear)	￦	46,483,274			1,400		1,831,796			25,753,940
Electric power generation (Non-nuclear)		34,800,213			1,263,872		4,416,755			17,825,189
Transmission and distribution		96,756,544			3,959,439		3,625,499			56,341,240

Others		8,056,487			40,527		459,784			3,038,497

Consolidation adjustments		(33,650,340	)		—		(49,428	)		(1,068,691	)


	￦	152,446,178			5,265,238		10,284,406			101,890,175


In millions of won
December 31, 2012
Segment	Segment assets			Investments in associates and joint ventures		Acquisition of non-current assets			Segment liabilities

Electric power generation (Nuclear)	￦	45,061,851			—		2,928,345			24,638,944
Electric power generation (Non-nuclear)		31,214,058			986,343		3,735,111			14,640,938
Transmission and distribution		96,234,698			3,865,492		4,368,190			54,963,618

Others		7,655,810			39,098		718,966			2,637,369

Consolidation adjustments		(34,013,597	)		—		(236,063	)		(1,792,251	)


	￦	146,152,820			4,890,933		11,514,549			95,088,618

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

4.	Segment Information, Continued

(4)

Geographic information

The Group is engaged in the generation, transmission and distribution of electricity and development of electric power resources in the Republic of Korea. Geographical information on revenue from external customers for the three and nine-month periods ended September 30, 2013 and 2012 and non-current assets as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won
Geographical unit	Revenue from external customers								*Non-current assets (2)**
	September 30, 2013				September 30, 2012				September 30, 2013		December 31, 2012
	Three- month period ended		Nine- month period ended		Three- month period ended		Nine- month period ended		September 30, 2013		December 31, 2012

Domestic	￦	13,682,300		38,076,381		12,835,880		34,822,883		129,773,504		124,433,063

Overseas (*1)		605,690		1,686,971		545,344		1,571,059		4,622,312		4,448,485


	￦	14,287,990		39,763,352		13,381,224		36,393,942		134,395,816		128,881,548

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

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

(5)

Information on key clients

There is no individual client comprising more than 10% of the Group’s revenue for the nine-month periods ended September 30, 2013 and 2012.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

5.	Classification of Financial Instruments

(1)

Classification of financial assets as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013
	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets:

Cash and cash equivalents	￦	—		2,949,827		—		—		—		2,949,827
Current financial assets

Held-to-maturity investments		—		—		—		189		—		189
Derivative assets		32,455		—		—		—		—		32,455
Other financial assets		—		506,888		—		—		—		506,888

Trade and other receivables		—		6,058,740		—		—		—		6,058,740


		32,455		9,515,455		—		189		—		9,548,099

Non-current assets:

Non-current financial assets

Available-for-sale financial assets		—		—		1,251,530		—		—		1,251,530

Held-to-maturity investments		—		—		—		2,015		—		2,015
Derivative assets		6,597		—		—		—		110,866		117,463
Other financial assets		—		625,708		—		—		—		625,708

Trade and other receivables		—		1,274,021		—		—		—		1,274,021


		6,597		1,899,729		1,251,530		2,015		110,866		3,270,737


	￦	39,052		11,415,184		1,251,530		2,204		110,866		12,818,836

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

5.	Classification of Financial Instruments, Continued

(1)

Classification of financial assets as of September 30, 2013 and December 31, 2012 are as follows, continued:


In millions of won	December 31, 2012
	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets:
Cash and cash equivalents	￦	—		1,954,949		—		—		—		1,954,949
Current financial assets

Held-to-maturity investments		—		—		—		196		—		196
Derivative assets		52,061		—		—		—		63,945		116,006
Other financial assets		—		540,015		—		—		—		540,015

Trade and other receivables		—		7,184,625		—		—		—		7,184,625


		52,061		9,679,589		—		196		63,945		9,795,791

Non-current assets:

Non-current financial assets

Available-for-sale financial assets		—		—		1,141,194		—		—		1,141,194

Held-to-maturity investments		—		—		—		2,020		—		2,020
Derivative assets		3,830		—		—		—		123,866		127,696
Other financial assets		—		602,766		—		—		—		602,766

Trade and other receivables		—		1,254,330		—		—		—		1,254,330


		3,830		1,857,096		1,141,194		2,020		123,866		3,128,006


	￦	55,891		11,536,685		1,141,194		2,216		187,811		12,923,797

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

5.	Classification of Financial Instruments, Continued

(2)

Classification of financial liabilities as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013
	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities:

Borrowings	￦	—		2,812,825		—		2,812,825

Debt securities		—		6,680,446		—		6,680,446

Derivative liabilities		239,893		—		8,321		248,214

Trade and other payables		—		5,078,315		—		5,078,315


		239,893		14,571,586		8,321		14,819,800

Non-current liabilities:

Borrowings		—		4,926,628		—		4,926,628

Debt securities		—		45,498,387		—		45,498,387

Derivative liabilities		126,208		—		180,762		306,970

Trade and other payables		—		4,179,887		—		4,179,887


		126,208		54,604,902		180,762		54,911,872


	￦	366,101		69,176,488		189,083		69,731,672


In millions of won	December 31, 2012
	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities:

Borrowings	￦	—		2,215,961		—		2,215,961

Debt securities		—		5,478,720		—		5,478,720

Derivative liabilities		46,939		—		47,199		94,138

Trade and other payables		—		6,418,464		—		6,418,464


		46,939		14,113,145		47,199		14,207,283

Non-current liabilities:

Borrowings		—		4,674,935		—		4,674,935

Debt securities		—		40,849,793		—		40,849,793

Derivative liabilities		322,199		—		203,839		526,038

Trade and other payables		—		4,173,691		—		4,173,691


		322,199		49,698,419		203,839		50,224,457


	￦	369,138		63,811,564		251,038		64,431,740

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

5.	Classification of Financial Instruments, Continued

(3)

Classification of comprehensive income (loss) from financial instruments for the three and nine-month periods ended September 30, 2013 and 2012 are as follows:


In millions of won		September 30, 2013						September 30, 2012
		Three- month period ended			Nine- month period ended			Three- month period ended			Nine- month period ended

Cash and cash equivalents	Interest income	￦	13,830			54,676			28,423			66,442
Available-for-sale financial assets	Dividends income		(48	)		9,736			—			9,043
Available-for-sale financial assets	Interest income		241			1,051			—			—
Held-to-maturity investments	Interest income		14			45			17			51
Loans and receivables (Including Trade and other receivables)	Interest income		23,944			79,456			33,120			84,116
Financial assets at fair value through profit or loss	Losses on valuation of derivatives		(133,646	)		(3,010	)		(85,214	)		(13,562	)
	Gains (losses) on transaction of Derivatives		(101	)		12,555			1,997			9,611
	Gains on disposal of financial assets		—			—			—			189
Derivative assets (using hedge accounting)	Gains (losses) on valuation of derivatives (profit or loss)		(81,812	)		10,964			(73,628	)		(57,619	)
	Gains (losses) on valuation of derivatives (equity, before tax)		7,762			(22,072	)		(5,312	)		12,460
	Gains on transaction of derivatives		24,443			29,663			2,153			2,579
Financial liabilities carried at amortized cost	Interest expense of borrowings and debt securities		(414,896	)		(1,275,767	)		(484,502	)		(1,365,639	)
	Interest expense of trade and other payables		(14,538	)		(66,948	)		(30,213	)		(90,706	)
	Interest expense of others		(142,230	)		(424,555	)		(101,953	)		(296,381	)
Financial liabilities at fair value through profit or loss	Losses on valuation of derivatives		(138,548	)		(37,006	)		(95,401	)		(98,788	)
Financial liabilities at fair value through profit or loss	Losses on transaction of derivatives		(24,075	)		(9,477	)		(7,578	)		(7,076	)
Derivative liabilities (using hedge accounting)	Losses on valuation of derivatives (profit or loss)		(127,897	)		(10,279	)		(38,811	)		(42,576	)
	Gains (losses) on valuation of derivatives (equity, before tax)		49,512			12,448			(38,838	)		(64,838	)
	Gains (losses) on transaction of derivatives		(12,121	)		16,521			(7,002	)		(10,048	)

6.	Restricted Deposits

Restricted deposits as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won		September 30, 2013		December 31, 2012

Cash and cash equivalents	Escrow accounts	￦	79,000		72,979
Cash and cash equivalents	Collateral provided for lawsuit		330		329
Long-term financial instruments	Guarantee deposits for checking account		5		5
Long-term financial instruments	Guarantee deposits for banking accounts at oversea branches		306		303


		￦	79,641		73,616

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

7.	Cash and Cash Equivalents

Cash and cash equivalents as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013		December 31, 2012

Cash	￦	843,273		734,986
Cash equivalents		2,106,554		1,249,704
Government grants		—		(29,741	)


	￦	2,949,827		1,954,949

8.	Trade and Other receivables

(1)

Trade and other receivables as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	￦	5,719,192		(67,917	)		(188	)		5,651,087
Other receivables		454,601		(44,562	)		(2,386	)		407,653

		6,173,793		(112,479	)		(2,574	)		6,058,740

Non-current assets
Trade receivables		436,253		—			(23	)		436,230
Other receivables		884,667		(41,350	)		(5,526	)		837,791

		1,320,920		(41,350	)		(5,549	)		1,274,021


	￦	7,494,713		(153,829	)		(8,123	)		7,332,761


In millions of won	December 31, 2012
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	￦	6,776,526		(47,312	)		(416	)		6,728,798
Other receivables		504,067		(45,791	)		(2,449	)		455,827

		7,280,593		(93,103	)		(2,865	)		7,184,625

Non-current assets
Trade receivables		451,179		—			(144	)		451,035
Other receivables		989,445		(179,287	)		(6,863	)		803,295

		1,440,624		(179,287	)		(7,007	)		1,254,330


	￦	8,721,217		(272,390	)		(9,872	)		8,438,955

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

8.	Trade and Other receivables, Continued

(2)

Other receivables as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets

Other receivables	￦	214,088		(44,562	)		—			169,526

Accrued income		65,815		—			—			65,815

Deposits		166,798		—			(2,386	)		164,412
Finance lease receivables		4,252		—			—			4,252

Others		3,648		—			—			3,648

		454,601		(44,562	)		(2,386	)		407,653

Non-current assets

Other receivables		101,372		(7,727	)		—			93,645

Deposits		212,849		—			(5,526	)		207,323
Finance lease receivables		391,374		—			—			391,374

Others		179,072		(33,623	)		—			145,449

		884,667		(41,350	)		(5,526	)		837,791


	￦	1,339,268		(85,912	)		(7,912	)		1,245,444


In millions of won	December 31, 2012
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets

Other receivables	￦	294,989		(45,791	)		—			249,198

Accrued income		42,067		—			—			42,067

Deposits		160,801		—			(2,449	)		158,352
Finance lease receivables		4,134		—			—			4,134

Others		2,076		—			—			2,076

		504,067		(45,791	)		(2,449	)		455,827

Non-current assets

Other receivables		57,386		(1,684	)		—			55,702

Deposits		224,112		—			(6,863	)		217,249
Finance lease receivables		389,326		—			—			389,326

Others		318,621		(177,603	)		—			141,018

		989,445		(179,287	)		(6,863	)		803,295


	￦	1,493,512		(225,078	)		(9,312	)		1,259,122

Trade and other receivables are classified as loans and receivables, and are measured using the effective interest method. No interest is accrued for trade receivables for the duration between the billing date and the payment due dates. But once trade receivables are overdue, the Group imposes a 2.0% interest rate on the overdue trade receivables. The Group holds deposits of three-months’ expected electricity rate for customers requesting temporary usage and customers with past defaulted payment.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

8.	Trade and Other receivables, Continued

(3)

Aging analysis of trade receivables as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013			December 31, 2012

Trade receivables: (not overdue, not impaired)	￦	5,991,551			7,125,836

Less than 60 days		7			4
60 ~ 90 days		32,111			33,124
90 ~ 120 days		10,349			9,853
120 days ~ 1year		68,778			25,621
Over 1 year		52,649			33,267

Trade receivables: (impairment reviewed)		163,894			101,869

		6,155,445			7,227,705


Less allowance for doubtful accounts		(67,917	)		(47,312	)
Less present value discount		(211	)		(560	)


	￦	6,087,317			7,179,833

The Group assesses at the end of each reporting period whether there is any objective evidence that trade receivables are impaired, and provides allowances for doubtful accounts; which includes impairment for trade receivables that are individually significant and incurred but not identified as impairment for the Group of trade receivables with similar credit risk characteristics.

The Group considers receivables as overdue if the receivables are outstanding 60 days after the maturity and sets allowance based on past experience of collection.

(4)

Aging analysis of other receivables as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won	September 30, 2013			December 31, 2012

Other receivables: (not overdue, not impaired)	￦	1,222,426			1,252,525

Less than 60 days		22,417			—
60 ~ 90 days		3,241			7,430
90 ~ 120 days		2,435			1,870
120 days ~ 1year		21,991			5,520
Over 1 year		66,758			226,167

Other receivables: (impairment reviewed)		116,842			240,987

		1,339,268			1,493,512


Less allowance for doubtful accounts		(85,912	)		(225,078	)
Less present value discount		(7,912	)		(9,312	)


	￦	1,245,444			1,259,122

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

8.	Trade and Other receivables, Continued

(5)

Changes in allowance for doubtful accounts for the nine-month period ended September 30, 2013 and for the year ended December 31, 2012 are as follows:


In millions of won	September 30, 2013						December 31, 2012
	Trade receivables			Other receivables			Trade receivables			Other receivables

Beginning balance	￦	47,312			225,078			24,586			203,198
Bad debt expense		42,233			5,576			37,447			3,994
Write-off		(21,628	)		(641	)		(14,721	)		(3,331	)
Reversal		—			(226	)		—			(152	)
Others (*)		—			(143,875	)		—			21,369


Ending balance	￦	67,917			85,912			47,312			225,078

(*)	The allowance on the loan was converted to cumulative equity method loss when loan was converted to investment in associates.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

9.	Available-for-sale Financial Assets

Available-for-sale financial assets as of September 30, 2013 and December 31, 2012 are as follows:


In millions of won				September 30, 2013				December 31, 2012
	Ownership			Current		Non-current		Current		Non-current
Equity securities

Listed:

Kwanglim Co., Ltd.		0.44	%	￦	—		144		—		168

Sungjee Construction Co., Ltd.		0.01	%		—		8		—		5

Korea District Heating Corp. (*1)		19.55	%		—		223,916		—		167,541

Ssangyong Motor Co., Ltd.		0.03	%		—		329		—		205

LG Uplus Corporation (*1)		8.80	%		—		443,628		—		299,593

Fission Uranium Corp.		0.52	%		—		1,051		—		533

Denison Mines Corp.		12.63	%		—		69,288		—		76,765

Energy Fuel INC		9.06	%		—		14,276		—		12,425

PT Adaro Energy Tbk		1.50	%		—		39,957		—		84,288

Cockatoo Coal Limited (*3)		4.91	%		—		3,055		—		6,487

Korea Line Corporation		0.00	%		—		2		—		—

Strathmore Minerals Corp.		0.00	%		—		—		—		4,132

					—		795,654		—		652,142

Unlisted:

Construction Guarantee		0.02	%		—		782		—		784
Global Dynasty overseas resource development private equity firm		7.46	%		—		1,275		—		881
Plant & Mechanical Contractors Financial Cooperative of Korea		0.01	%		—		36		—		36

Dongnam Co., Ltd.		0.46	%		—		72		—		72

Mobo Co., Ltd.		0.00	%		—		14		—		14

Fire Guarantee		0.02	%		—		20		—		20

Korea Software Financial Cooperative		0.23	%		—		301		—		301

Woobang ENC Co., Ltd.		0.00	%		—		22		—		22

Women’s venture fund		10.00	%		—		780		—		780

Engineering Financial Cooperative		0.10	%		—		60		—		60

Intellectual Discovery, Ltd.		9.13	%		—		5,000		—		5,000
Electric Contractors Financial Cooperative		0.03	%		—		151		—		152
Korea Specialty Contractor Financial Cooperative		0.01	%		—		417		—		417
Information & Communication Financial Cooperative		0.01	%		—		10		—		10
Troika overseas resource development private equity firm		3.66	%		—		8,573		—		8,573

POSTECH Venture Capital Corporation		0.00	%		—		—		—		240

POSTECH electric power fund		13.33	%		—		3,040		—		2,800

Poonglim Industrial Co., Ltd.		0.01	%		—		78		—		—
Namkwang Engineering & Construction Co., Ltd.		0.01	%		—		5		—		—

HANKOOK Silicon Co., Ltd.		11.05	%		—		7,023		—		—

LIG E&C Co., Ltd.		0.00	%		—		5		—		—

Pumyang Construction Co., Ltd.		0.00	%		—		3		—		—

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

September 30, 2013

(Unaudited)

9.	Available-for-sale Financial Assets, Continued

Available-for-sale financial assets as of September 30, 2013 and December 31, 2012 are as follows, continued:


In millions of won				September 30, 2013				December 31, 2012
	Ownership			Current		Non-current		Current		Non-current

Dae Kwang Semiconductor Co., Ltd.		0.07	%	￦	—		6		—		—

Sanbon Department Store		0.01	%		—		124		—		—

Korea Bio Fuel Co., Ltd.		15.00	%		—		1,500		—		1,500

SAMBOAUTO. Co., Ltd.		0.02	%		—		38		—		38

Korea Electric Engineers Association		0.26	%		—		40		—		40
Korea electrical manufacturers Association		1.05	%		—		240		—		240
Korea investment - Korea EXIM Bank CERs private special asset Investment Trust I		14.18	%		—		6,803		—		6,803

Hanwha Venture Capital Corporation		—			—		—		—		180

Hanwha electric power venture fund		16.40	%		—		1,804		—		2,280

Hwan Young Steel Co., Ltd.		0.14	%		—		97		—		97
IBK-AUCTUS green growth Private equity firm (*1)		6.29	%		—		6,054		—