Edgar Filing: KOREA ELECTRIC POWER CORP

(As of March 31, 2015)

Classification

Consolidated
subsidiaries

Associates and joint ventures

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 June 2015

Commission File Number: 001-13372

KOREA ELECTRIC POWER CORPORATION

(Translation of registrant’s name into English)

55 Jeollyeok-ro, Naju-si, Jeollanam-do, 520-350, 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, 2015 to March 31, 2015)

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) 55 Jeollyeok-ro, Naju-si, Jeollanam-do, 520-350, Korea

(Phone number) 82-61-345-4261

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

3. Major businesses

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

•

development of electric power resources;

•

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

•

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

•

overseas business related to the businesses mentioned above;

•

investment or contributions related to the businesses mentioned above;

•

development and operation of certain real estate holdings; and

•

other businesses entrusted by the government.

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

4. Subsidiaries and affiliates of KEPCO

5. Major changes in management

At the annual general meeting of shareholders of KEPCO held on March 31, 2015, Mr. Jang, Jae-Won was appointed as a standing director in lieu of Mr. Goo, Bon-Woo whose the term of office expired, and Mr. Sung, Tae-Hyun, a non-standing director, was appointed as a member of the audit committee.

6. Changes in major shareholders

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

7. Information regarding KEPCO shares

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

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

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

C.	Dividends: Dividend payment of W 500 per share for fiscal year 2014 (W 321 billion in aggregate). Dividend payment for fiscal year 2013 was W 90 per share and no dividend was paid for fiscal year 2012.

II. Business Overview

1. Consolidated financial results by segment for the first three-month period ended March 31, 2015 and 2014


					(In billions of Won)
	January to March 2015				January to March 2014
	Sales		Operating profit		Sales		Operating profit
Electricity sales		14,937		194		14,681		-267
Nuclear generation		2,736		1,196		2,448		949
Thermal generation		6,624		1,217		7,429		514
Others^(*)		705		71		677		89
Sub total		25,002		2,290		25,235		1,285
Adjustment for related- party transactions		-9,878		-50		-10,462		-58
Total		15,124		2,240		14,773		1,227

•

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

^(*) Others relate to 69 subsidiaries including KEPCO E&C, KEPCO KPS, KEPCO NF and KEPCO KDN, among others.

•

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

2. Changes in unit prices of major products


		(In Won per kWh)
Business sector		Company	January to March 2015	January to December 2014
Electricity sold	Residential	KEPCO	129.94	125.14
	Commercial		129.35	129.75
	Educational		107.30	114.15
	Industrial		108.79	106.83
	Agricultural		47.39	47.31
	Street lighting		109.18	113.39
	Overnight usage		72.85	67.33
Electricity from nuclear generation	Nuclear Generation	KHNP	70.19	59.23
Electricity from thermal generation	Thermal generation	KOSEP	75.43	67.96
		KOMIPO	98.51	99.24
		KOWEPO	103.02	99.34
		KOSPO	104.48	108.67
		EWP	92.89	91.18

3. Power purchase from generation companies for the first three-month period ended March 31, 2015


Company	Volume (MWh)	Expense (In billions of Won)
KHNP	38,707,036	2,720
KOSEP	18,695,271	1,410
KOMIPO	11,817,395	1,165
KOWEPO	12,997,428	1,340
KOSPO	12,426,705	1,229
EWP	12,375,890	1,202
Others	24,585,772	3,532
Total	131,605,497	12,598

•

Excludes expense related to the renewable portfolio standard provisions.

4. Intellectual property as of March 31, 2015

Patents

Utility
models

Designs

Trademarks

Total

Domestic

Overseas

Domestic

Overseas

Number of registrations

3,458

501

711

252

5,035

III. Financial Information

1. Condensed consolidated financial results as of and for the first three-month period ended March 31, 2015


					(In billions of Won)
Consolidated statements of comprehensive income				Consolidated statements of financial position
	January to March 2014	January to March 2015	Change (%)		December 31, 2014	March 31, 2015	Change (%)
Sales	14,773	15,124	2.4	Total assets	163,708	166,820	1.9
Operating profit	1,227	2,240	82.5	Total liabilities	108,883	111,295	2.2
Net income	561	1,223	117.9	Total equity	54,825	55,525	1.3

2. Condensed separate financial results as of and for the first three-month period ended March 31, 2015


						(In billions of Won)
Separate statements of comprehensive income				Separate statements of financial position
	January to March 2014	January to March 2015	Change (%)		December 31, 2014	March 31, 2015	Change (%)
Sales	14,681	14,937	1.7	Total assets	99,719	101,354	1.6
Operating profit	-267	-194	27.3	Total liabilities	56,338	58,000	3.0
Net income	-204	335	n/m^(*)	Total equity	43,381	43,354	-0.1

(*)	n/m means not meaningful.

IV. Board of Directors (KEPCO Only)

1. The board of directors is required to consist of not more than 15 directors including the president and there may not be more than seven standing directors including president and more than eight non-standing directors.

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

2. Board meetings and agendas for the first-three month period ended March 31, 2015


Number of	Number of	Classification
meetings	agendas	Resolutions	Results	Reports	Results
2	12	6	Approved as proposed	6	Accepted as reported

*	The audit committee held 2 meetings with 12 agendas (of which, 6 were resolved as proposed and 6 were approved as reported).

3. Major activities of the Board of Directors


Date	Agenda	Results	Type
January 16, 2015	Report on regional cooperation business such as the energy valley composition project in Naju, Korea	Accepted as reported	Report

	Report on plans for the construction expenses for the new transmission lines in Dangjin, Korea	Accepted as reported	Report

February 27, 2015	Recommendation of candidates to become a member of the Audit Committee	Approved as proposed	Resolution

	Approval of the maximum aggregate amount of remuneration for directors in 2015	Approved as proposed	Resolution

	Approval of consolidated and separate financial statements for the fiscal year 2014	Approved as proposed	Resolution

	Approval to call for the annual general meeting of shareholders for the fiscal year 2014	Approved as proposed	Resolution

	Approval of the establishment of the new district offices	Approved as proposed	Resolution

	Approval of establishment of a special purpose company and investment for supporting the communities surrounding transmission lines	Approved as proposed	Resolution

	Report on the annual management of commercial papers in 2014	Accepted as reported	Report

	Report on internal control over financial reporting for the fiscal year 2014	Accepted as reported	Report

	Evaluation report on internal control over financial reporting for the fiscal year 2014	Accepted as reported	Report

	Auditor’s report to the board of directors for 2014	Accepted as reported	Report

4. Major activities of the Audit Committee


Date	Agenda	Results	Type
February 27, 2015	Auditor’s report on the agendas for the annual general meeting of shareholders	Approved as proposed	Resolution
	Audit plans for 2015	Approved as proposed	Resolution
	Report on internal control over financial reporting for the fiscal year 2014	Accepted as reported	Report
	Education plans for auditors for 2015	Accepted as reported	Report
	Auditor’s report for 2014	Accepted as reported	Report

March 20, 2015	Approval of selection of independent auditors of subsidiaries	Approved as proposed	Resolution
March 20, 2015	Independent auditor’s report on the auditing results for the consolidated and separate financial statements for the fiscal year 2014	Accepted as reported	Report

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

V. Shareholders

1. List of shareholders as of December 31, 2014


		Number of shareholders	Shares owned		Percentage of total (%)
Government of the Republic of Korea		1		135,917,118		21.17
Korea Development Bank		1		192,170,340		29.94
Subtotal		2		328,087,458		51.11
National Pension Service		1		44,492,954		6.93
Public (non-Koreans)	Common shares	1,436		152,720,483		23.79
Public (non-Koreans)	American depositary shares (ADS)	1		32,170,678		5.01
Public (Koreans)	Corporate	1,466		56,462,310		8.80
Public (Koreans)	Individual	373,089		28,030,194		4.36
Total		375,995		641,964,077		100.00

•

Percentages are based on issued shares of common stock.

•

All of our shareholder have equal voting rights.

•

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

VI. Directors and employees as of and for the first three-month period ended March 31, 2015 (KEPCO Only)

1. Directors


	(In thousands of Won)
Type	Number of directors	Total remuneration		Average remuneration per person
Standing director	7		194,851		27,836
Non-standing director	8		52,500		6,563
Total	15		247,351		16,490

2. Employees


	(In thousands of Won)
Type	Number of employees						Average continuous service year		Total salaries		Average salaries per person
Type	Regular		Non- regular		Total		Average continuous service year		Total salaries		Average salaries per person
Male		16,427		252		16,679		19.7		340,837,653		20,435
Female		3,380		101		3,481		14.1		51,350,785		14,752
Total		19,807		353		20,160		18.7		392,188,438		19,454

VII. Other Information Necessary for the Protection of Investors

1. Summary of the annual general meeting of shareholders (“AGM”) for the fiscal year 2014


Type	Agenda	Results
Annaul General Meeting held on March 31, 2015	Approval of financial statements for the fiscal year 2014	Approved as proposed
	Approval of the maximum aggregate amount of remuneration for directors in 2015	Approved as proposed
	Election of a standing direcotr: Mr. Chang, Jae-Won	Approved as proposed
	Appointment of a non-standing director as a member of the Audit Committee: Mr. Sung, Tae-Hyun	Approved as proposed

2. Pending legal proceedings as of March 31, 2015

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.

KOREA ELECTRIC POWER CORPORATION

AND SUBSIDIARIES

Consolidated Interim Financial Statements

March 31, 2015

(Unaudited)

(With Independent Auditors’ Review Report Thereon)

INDEX TO FINANCIAL STATEMENTS


	Page
Independent Auditors’ Review Report		1

Consolidated Interim Statements of Financial Position		2

Consolidated Interim Statements of Comprehensive Income		4

Consolidated Interim Statements of Changes in Equity		6

Consolidated Interim Statements of Cash Flows		8

Notes to the Consolidated Interim Financial Statements		10

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

Korea Electric Power Corporation

Reviewed financial statements

We have reviewed the accompanying consolidated interim financial statements of Korea Electric Power Corporation and its subsidiaries (the “Company”), which comprise the consolidated interim statement of financial position as of March 31, 2015, the consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2015 and 2014 and notes to the interim financial statements.

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”) 1034, ‘Interim Financial Reporting’ and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

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

Review conclusion

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

Other matters

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

We have previously audited, in accordance with Korean Standards on Auditing, the consolidated statement of financial position of the Company as of December 31, 2014, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, and we expressed an unqualified opinion on those consolidated financial statements in our report dated March 23, 2015. The accompanying consolidated financial position of the Company as of December 31, 2014, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

LOGO

Seoul, Korea

May 15, 2015

This report is effective as of May 15, 2015, 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 condensed 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 March 31, 2015 and December 31, 2014

(Unaudited)


In millions of won	*Note*		March 31, 2015		December 31, 2014
Assets
Current assets
Cash and cash equivalents		5,6,7,44	W	3,054,376		1,796,300
Current financial assets, net		5,10,11,12,44		1,109,112		176,428
Trade and other receivables, net		5,8,14,20,44,46		6,467,419		7,697,862
Inventories, net		13		4,749,141		4,537,469
Income tax refund receivables		40		21,405		18,475
Current non-financial assets		15		404,819		502,511
Assets held-for-sale		41		2,090,810		2,090,810

Total current assets				17,897,082		16,819,855
Non-current assets
Non-current financial assets, net		5,6,9,10,11,12,44		2,056,717		2,040,921
Non-current trade and other receivables, net		5,8,14,44,46		1,718,492		1,724,357
Property, plant and equipment, net		18,27,48		137,782,101		135,812,499
Investment properties, net		19,27		197,941		317,264
Goodwill		16		2,582		2,582
Intangible assets other than goodwill, net		21,27		781,104		821,060
Investments in associates		4,17		4,518,323		4,341,830
Investments in joint ventures		4,17		1,179,676		1,166,894
Deferred tax assets		40		558,262		526,934
Non-current non-financial assets		15		127,801		134,093

Total non-current assets				148,922,999		146,888,434

Total Assets		4	W	166,820,081		163,708,289

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position, Continued

As of March 31, 2015 and December 31, 2014

(Unaudited)


In millions of won	*Note*		March 31, 2015			December 31, 2014
Liabilities
Current liabilities
Trade and other payables, net		5,22,24,44,46	W	5,371,890			6,128,604
Current financial liabilities, net		5,11,23,44,46		7,008,930			7,162,372
Income tax payables		40		873,674			570,550
Current non-financial liabilities		20,28,29		10,316,351			6,464,356
Current provisions		26,44		1,454,005			1,274,186

Total current liabilities				25,024,850			21,600,068

Non-current liabilities
Non-current trade and other payables, net		5,22,24,44,46		3,806,426			3,806,735
Non-current financial liabilities, net		5,11,23,44,46		54,344,451			55,999,761
Non-current non-financial liabilities		28,29		6,936,522			6,946,410
Employee benefits liabilities, net		25,44		1,481,536			1,277,415
Deferred tax liabilities		40		6,051,408			5,723,880
Non-current provisions		26,44		13,649,645			13,529,010

Total non-current liabilities				86,269,988			87,283,211

Total Liabilities		4	W	111,294,838			108,883,279

Equity
Contributed capital		1,30,44
Share capital			W	3,209,820			3,209,820
Share premium				843,758			843,758

				4,053,578			4,053,578
Retained earnings		31
Legal reserves				1,604,910			1,604,910
Voluntary reserves				23,720,167			22,999,359
Unappropriated retained earnings				10,783,069			10,699,378

				36,108,146			35,303,647

Other components of equity		33
Other capital surpluses				1,150,686			1,151,402
Accumulated other comprehensive loss				(258,970	)		(202,269	)
Other equity				13,294,973			13,294,973

				14,186,689			14,244,106

Equity attributable to owners of the Company				54,348,413			53,601,331

Non-controlling interests		16, 32		1,176,830			1,223,679

Total Equity			W	55,525,243			54,825,010

Total Liabilities and Equity			W	166,820,081			163,708,289

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income

For the three-month periods ended March 31, 2015 and 2014

(Unaudited)


In millions of won, except per share information	*Note*		March 31, 2015			March 31, 2014
Sales		4,35,44,46
Sales of goods			W	14,232,984			14,073,576
Sales of services				94,788			64,578
Sales of construction services		20		704,509			548,748
Revenue related to transfer of assets from customers				91,578			85,745

				15,123,859			14,772,647

Cost of sales		13,25,42,46
Cost of sales of goods				(11,665,919	)		(12,518,259	)
Cost of sales of services				(89,159	)		(88,080	)
Cost of sales of construction services				(667,091	)		(503,382	)

				(12,422,169	)		(13,109,721	)

Gross profit				2,701,690			1,662,926

Selling and administrative expenses		25,35,42,46		(461,824	)		(435,849	)

Operating profit		4		2,239,866			1,227,077
Other non-operating income		36		117,365			70,723
Other non-operating expense		36		(23,137	)		(23,059	)
Other gains, net		37		25,894			41,082
Finance income		5,11,38		187,207			278,058
Finance expenses		5,11,39		(681,424	)		(802,121	)
Profit related associates, joint ventures and subsidiaries		4,17
Share in income of associates and joint ventures				207,554			134,983
Gain on disposal of investments in associates, jonint ventures and subsidiaries				5,866			—
Share in loss of associates and joint ventures				(20,871	)		(23,258	)
Impairment loss on investments in associates and joint ventures				—			(1,558	)

				192,549			110,167

Profit before income tax				2,058,320			901,927

Income tax expense		40		(835,213	)		(340,656	)

Profit for the period			W	1,223,107			561,271

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income, Continued

For the three-month periods ended March 31, 2015 and 2014

(Unaudited)


In millions of won, except per share information	*Note*		March 31, 2015			March 31, 2014
Other comprehensive income (loss)		5,11,25,31,33
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		25,31	W	(78,831	)		(15,345	)
Share in other comprehensive loss of associates and joint ventures, net of tax		31		(242	)		(206	)
Items that are or may be reclassified subsequently to profit or loss:
Net change in the unrealized fair value of available-for-sale financial assets, net of tax		33		(9,647	)		(16,547	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		5,11,33		11,998			3,325
Foreign currency translation of foreign operations, net of tax		33		(52,013	)		58,805
Share in other comprehensive loss of associates and joint ventures, net of tax		33		(10,791	)		(53,794	)

Other comprehensive loss, net of tax				(139,526	)		(23,762	)

Total comprehensive income for the period			W	1,083,581			537,509

Profit or loss attributable to:
Owners of the Company		43	W	1,200,083			532,262
Non-controlling interests				23,024			29,009

			W	1,223,107			561,271

Total comprehensive income attributable to:
Owners of the Company			W	1,068,780			496,003
Non-controlling interests				14,801			41,506

			W	1,083,581			537,509

Earnings per share		43
Basic and diluted earnings per share			W	1,869			854

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

For the three-month periods ended March 31, 2015 and 2014

(Unaudited)


	Equity attributable to owners of the Company
In millions of won	Contributed capital		Retained earnings			Other components of equity			Subtotal			Non- controlling Interests			Total equity
Balance at January 1, 2014	W	4,053,578		32,766,086			13,440,004			50,259,668			1,191,068			51,450,736

Total comprehensive income (loss) for the period
Profit for the period		—		532,262			—			532,262			29,009			561,271
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of Tax		—		(14,700	)		—			(14,700	)		(645	)		(15,345	)
Share in other comprehensive loss of associates and joint ventures, net of tax		—		(206	)		—			(206	)		—			(206	)
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		—		—			(16,545	)		(16,545	)		(2	)		(16,547	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			456			456			2,869			3,325
Foreign currency translation of foreign operations, net of tax		—		—			48,417			48,417			10,388			58,805
Share in other comprehensive loss of associates and joint ventures, net of tax		—		—			(53,681	)		(53,681	)		(113	)		(53,794	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid		—		(56,073	)		—			(56,073	)		(37,753	)		(93,826	)
Issuance of share capital by subsidiaries		—		—			(155	)		(155	)		3,440			3,285
Changes in consolidated scope – other than issuance of share capital		—		—			(2,706	)		(2,706	)		(1,088	)		(3,794	)
Others		—		—			—			—			(10	)		(10	)

Balance at March 31, 2014	W	4,053,578		33,227,369			13,415,790			50,696,737			1,197,163			51,893,900

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2015 and 2014

(Unaudited)


	Equity attributable to owners of the Company
In millions of won	Contributed capital		Retained earnings			Other components of equity			Subtotal			Non- controlling Interests			Total equity
Balance at January 1, 2015	W	4,053,578		35,303,647			14,244,106			53,601,331			1,223,679			54,825,010

Total comprehensive income (loss) for the period
Profit for the period		—		1,200,083			—			1,200,083			23,024			1,223,107
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		—		(74,360	)		—			(74,360	)		(4,471	)		(78,831	)
Share in other comprehensive loss of associates and joint ventures, net of tax		—		(242	)		—			(242	)		—			(242	)
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		—		—			(9,647	)		(9,647	)		—			(9,647	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			15,483			15,483			(3,485	)		11,998
Foreign currency translation of foreign operations, net of tax		—		—			(51,746	)		(51,746	)		(267	)		(52,013	)
Share in other comprehensive loss of associates and joint ventures, net of tax		—		—			(10,791	)		(10,791	)		—			(10,791	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid		—		(320,982	)		—			(320,982	)		(55,044	)		(376,026	)
Equity transaction in consolidated scope – other than issuance of share capital		—		—			(716	)		(716	)		(1,509	)		(2,225	)
Dividends paid (hybrid securities)		—		—			—			—			(4,105	)		(4,105	)
Others		—		—			—			—			(992	)		(992	)

Balance at March 31, 2015	W	4,053,578		36,108,146			14,186,689			54,348,413			1,176,830			55,525,243

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

For the three-month periods ended March 31, 2015 and 2014

(Unaudited)


In millions of won	March 31, 2015			March 31, 2014
Cash flows from operating activities
Profit for the period	W	1,223,107			561,271

Adjustments for:
Income tax expense		835,213			340,656
Depreciation		2,001,075			1,888,262
Amortization		19,864			19,862
Employee benefit expense		76,860			87,045
Bad debt expense (reversal)		(3,745	)		12,371
Interest expense		552,656			597,046
Loss on sale of financial assets		975			2
Loss on disposal of property, plant and equipment		516			2,944
Loss on abandonment of property, plant, and equipment		61,727			74,729
Impairment loss on property, plant and equipment		3,285			—
Loss on disposal of intangible assets		5			—
Accretion expense to provisions, net		323,680			289,543
Loss on foreign currency translation, net		61,740			144,676
Valuation and transaction gain on derivative instruments, net		(62,309	)		(155,782	)
Share in income of associates and joint ventures, net		(186,683	)		(111,724	)
Gain on disposal of property, plant and equipment		(17,915	)		(1,619	)
Gain on disposal of investments in subsidiaries		(5,866	)		—
Impairment loss on investments in associates and joint ventures		—			1,558
Interest income		(49,493	)		(48,195	)
Dividend income		(5,456	)		(12,525	)
Impairment loss on available-for-sale securities		5,821			—
Others, net		148			(665	)

		3,612,098			3,128,184

Changes in:
Trade receivables		1,283,480			839,907
Non-trade receivables		69,047			220,792
Accrued income		(80,701	)		(63,485	)
Other receivables		(1,615	)		1,411
Other current assets		69,597			(103,743	)
Inventories		(297,068	)		(284,922	)
Other non-current assets		(19,309	)		(2,284	)
Trade payables		(863,528	)		(202,389	)
Non-trade payables		(14,846	)		20,006
Accrued expenses		(21,003	)		(97,095	)
Other liabilities		4,046			(171,938	)
Other current liabilities		711,990			327,098
Other non-current liabilities		(28,258	)		241,112
Investments in associates and joint ventures		16,839			14,201
Provisions		(98,760	)		(113,316	)
Payments of employee benefit obligations		(4,016	)		(64,805	)
Plan assets		—			(112	)

		725,895			560,438

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2015 and 2014

(Unaudited)


In millions of won	March 31, 2015			March 31, 2014
Cash generated from operating activities
Dividends received	W	678			644
Interest paid		(593,028	)		(615,071	)
Interest received		44,607			41,016
Income taxes paid		(196,126	)		(19,353	)

Net cash from operating activities		4,817,231			3,657,129

Cash flows from investing activities
Proceeds from disposals of associates and joint ventures		—			491
Acquisition of associates and joint ventures		(31,010	)		(108,576	)
Proceeds from disposals of property, plant and equipment		3,209,129			7,169
Acquisition of property, plant and equipment		(3,894,434	)		(3,580,706	)
Proceeds from disposals of intangible assets		147			—
Acquisition of intangible assets		(5,057	)		(12,028	)
Proceeds from disposals of financial assets		40,263			242,764
Acquisition of financial assets		(946,425	)		(120,351	)
Increase in loans		(39,557	)		(36,622	)
Collection of loans		16,748			23,578
Increase in deposits		(60,846	)		(107,938	)
Decrease in deposits		44,839			97,689
Receipt of government grants		4,739			23,852
Usage of government grants		(4,434	)		(1,597	)
Net cash inflow from changing in consolidation scope		553			—
Other cash inflow (outflow) from investing activities, net		2,588			(4,317	)

Net cash used in investing activities		(1,662,757	)		(3,576,592	)

Cash flows from financing activities
Proceeds (Repayment) from short-term borrowings, net		(290,350	)		346,444
Proceeds from long-term borrowings and debt securities		532,900			1,952,121
Repayment of long-term borrowings and debt securities		(2,105,718	)		(1,804,376	)
Payment of finance lease liabilities		(27,995	)		(30,128	)
Settlement of derivative instruments, net		9,031			(48,360	)
Change in non-controlling interest		(11	)		(367	)
Dividends paid (hybrid bond)		(4,105	)		(5,405	)
Dividends paid		(14,572	)		(1,442	)
Other cash inflow from financing activities, net		—			6,367

Net cash from used in financing activities		(1,900,820	)		414,854

Net increase in cash and cash equivalents before effect of exchange rate fluctuations		1,253,654			495,391
Effect of exchange rate fluctuations on cash held		4,422			1,071

Net increase in cash and cash equivalents		1,258,076			496,462
Cash and cash equivalents at January 1		1,796,300			2,232,313

Cash and cash equivalents at March 31	W	3,054,376			2,728,775

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

March 31, 2015

(Unaudited)

1.	Reporting Entity (Description of the controlling company)

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

As of March 31, 2015, KEPCO’s share capital amounts to W3,209,820 million and KEPCO’s shareholders are as follows:


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

		641,964,077		100.00	%

(*)	The number of shares held by foreign shareholders are 184,891,161 shares (28.80%) as of the most recent closing date of Register of Shareholders (December 31, 2014).

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. KEPCO moved the headquarters to Naju, Jeollanam-do, in November 2014 as part of the government’s plan to relocate state-run companies for balanced national development.

2.	Basis of Preparation

These consolidated interim financial statements were prepared in accordance with K-IFRS 1034, ‘Interim Financial Reporting’ as part of the period covered by KEPCO and subsidiaries (the “Company”)’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 Company since the last annual consolidated financial statements as at and for the year ended December 31, 2014.

(1)

Statement of compliance

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

(2)

Basis of measurement

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

derivative financial instruments are measured at fair value

available-for-sale financial assets are measured at fair value

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

(3)

Functional and presentation currency

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

2.	Basis of Preparation, Continued

(4)

Use of estimates and judgments

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

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

The 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)

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

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

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

(ii)

Deferred tax

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

(iii)

Valuations of financial instruments at fair values

The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the financial officer.

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

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

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

(iv)

Defined employee benefit liabilities

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

2.	Basis of Preparation, Continued

(4)

Use of estimates and judgments, continued

(v)

Unbilled revenue

Energy delivered but not yet metered nor billed are estimated at the reporting date based on consumption statistics and selling price estimates. Determination of the unbilled revenues at the end of the reporting period is sensitive to the estimated assumptions and prices based on statistics. Unbilled revenue recognized as of March 31, 2015 and 2014 is W1,413,414 million and W1,499,049 million, respectively.

(5)

Changes in accounting policies

(i)

Amendments to K-IFRS 1019 ‘Employee Benefits’ – Employee contributions

The Company has adopted amendments to K-IFRS 1019, ‘Employee Benefits – Employee contributions’, since July 1, 2014. Amendments to K-IFRS 1019 introduced a practical expedient to accounting for defined benefit plan, when employees or third parties pay contributions if certain criteria are met. According to the amendments, the entity is permitted to recognize those contributions as a reduction of the service cost in the period in which the related service is rendered, instead of forecast future contributions from employees or third parties and attribute them to periods or service as negative benefits.

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

(6)

New standards and interpretations not yet adopted

The following new standards, interpretations and amendments to existing standards have been published for mandatory application for annual periods beginning after January 1, 2015, and the Company has not early adopted them. The management believes the impact on the consolidated financial statements upon the adoption of the amendments is immaterial.

(i)

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

Amendments to K-IFRS 1016, ‘Property, Plant and Equipment’ specify that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate. This amendments are effective for annual periods beginning on or after January 1, 2016.

(ii)

Amendments to K-IFRS 1038, ‘Intangible Assets’

Amendments to K-IFRS 1038, ‘Intangible Assets’ introduce a rebuttable presumption that the use of revenue-based amortization methods for intangible assets is inappropriate. This presumption can be overcome only when revenue and the consumption of the economic benefits of the intangible asset are highly correlated, or when the intangible asset is expressed as a measure of revenue. This amendments are effective for annual periods beginning on or after January 1, 2016.

(iii)

Amendments to K-IFRS 1111, ‘Joint Arrangement’

Amendments to K-IFRS 1111, ‘Joint Arrangement’ require an investor to apply the principles of business combination accounting when it acquires an interest in a joint operation that constitutes a business as defined in K-IFRS 1103, ‘Business Combinations’. This amendments are effective for annual periods beginning on or after January 1, 2016.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies

Except as described in note 2.(5), the Company applied the following significant accounting policies consistently for all periods presented.

(1)

Basis of consolidation

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

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

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

Transactions between the Company and its subsidiaries are eliminated during the consolidation.

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

When the Company loses control of a subsidiary, the income or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of the relevant assets (i.e. reclassified to income or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’ or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

(2)

Business combinations

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

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

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

•

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

•

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

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

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

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is re-measured at subsequent reporting dates in accordance with K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’, or with K-IFRS 1037, ‘Provisions’, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in income or loss.

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(3)

Investments in associates

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

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. If the investment is classified as held for sale, in which case it is accounted for in accordance with K-IFRS 1105 ‘Non-current Assets Held for Sale’, any retained portion of an investment in associates that has not been classified as held for sale shall be accounted for using the equity method until disposal of the portion that is classified as held for sale takes place. If the Company holds 20% ~ 50% of the voting power of the investee, it is presumed that the Company has significant influence.

After the disposal takes place, the Company shall account for any retained interest in associates in accordance with K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’ unless the retained interest continues to be an associates, in which case the entity uses the equity method.

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

Any excess of the cost of acquisition over the Company's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in income or loss. The requirements of K-IFRS 1039,’Financial Instruments: Recognition and Measurement’, are applied to determine whether it is necessary to recognize any impairment loss with respect to the Company’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with K-IFRS 1036 ‘Impairment of Assets’ as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with K-IFRS 1036 to the extent that the recoverable amount of the investment subsequently increases.

Upon disposal of an associate that results in the Company losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with K-IFRS 1036. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate would be reclassified to income or loss on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to income or loss (as a reclassification adjustment) when it loses significant influence over that associate.

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(4)

Joint arrangements

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

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

(5)

Non-current assets held for sale

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

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

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

(6)

Goodwill

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(7)

Revenue recognition

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

(i)

Sales of goods

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

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

(ii)

Sales of other services

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

(iii)

Dividend income and interest income

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

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

(iv)

Rental income

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

(v)

Deferral of revenue – Transfer of Assets from Customers

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(8)

Construction services revenue

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

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

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

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

(9)

Leases

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

(i)

The Company as lessor

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

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

(ii)

The Company as lessee

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(9)

Leases, continued

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

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

(10)

Foreign currencies

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

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

•

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

•

Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

•

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

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

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

(11)

Borrowing costs

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(12)

Government grants

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

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

(i)

If the Company received grants related to assets

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

(ii)

If the Company received grants related to income

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

(13)

Employee benefits

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(14)

Income taxes

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

(i)

Current tax

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

(ii)

Deferred tax

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

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

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

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

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

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

(iii)

Current and deferred tax for the year

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(15)

Property, plant and equipment

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

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

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

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


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

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

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

(16)

Investment property

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

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

Investment property except for land, are depreciated on a straight-line basis over 8 ~ 40 years as estimated useful lives. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(16)

Investment property, continued

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

(17)

Intangible assets

(i)

Intangible assets acquired separately

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

(ii)

Research and development

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

•

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

•

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

•

The ability to use or sell the intangible asset;

•

How the intangible asset will generate probable future economic benefits;

•

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

•

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

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

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

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


	Useful lives (years)	Amortization methods
Usage rights for donated assets	4 ~ 30	Straight
Software	4, 5	Straight
Industrial rights	5, 10	Straight
Development expenses	5	Straight
Dam usage right	50	Straight
Mining right	-	Unit of production
Others	4~20, 50	Straight

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(17)

Intangible assets, continued

(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, and are recognized in income or loss when the asset is derecognized.

(18)

Impairment of non-financial assets other than goodwill

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

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(19)

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.

(20)

Provisions

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

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

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

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

(i)

Provision for employment benefits

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

(ii)

Provision for decommissioning costs of nuclear power plants

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

(iii)

Provision for disposal of spent nuclear fuel

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

(iv)

Provision for low and intermediate radioactive wastes

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(20)

Provisions, Continued

(v)

Provision for Polychlorinated Biphenyls (“PCBs”)

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

(vi)

Provisions for power plant regional support program

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

(vii)

Provisions for transmission and transformation facilities-neighboring areas support program

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

(viii)

Renewable portfolio standard (“RPS”) provisions

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

(21)

Non-derivative financial assets

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

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

(i)

Effective interest method

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

(ii)

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial assets, continued

A financial asset is classified as held for trading if:

•

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

•

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

•

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

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

•

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

•

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

•

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

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

(iii)

Held-to-maturity investments

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

(iv)

Available-for-sale financial assets

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

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

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

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

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

(v)

Loans and receivables

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial assets, continued

(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 Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and, as well as observable changes in national or local economic conditions that correlate with default on receivables.

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

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

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial assets, continued

(vii)

De-recognition of financial assets

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

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

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

(22)

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

(i)

Classification as debt or equity

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

(ii)

Equity instruments

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

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

(iii)

Financial liabilities

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(22)

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

(iv)

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

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

A financial liability is classified as held for trading if:

•

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

•

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

•

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

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

•

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

•

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

•

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

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

(v)

Other financial liabilities

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

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

(vi)

Financial guarantee contract liabilities

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

(vii)

De-recognition of financial liabilities

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(23)

Derivative financial instruments, including hedge accounting

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

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value.

The resulting gain or loss is recognized in income or loss immediately unless the derivative is designated and effective as a hedging instrument, in such case the timing of the recognition in income or loss depends on the nature of the hedge relationship.

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

(i)

Separable embedded derivatives

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

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

(ii)

Hedge accounting

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

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

(iii)

Fair value hedges

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(23)

Derivative financial instruments, including hedge accounting, continued

(iv)

Cash flow hedges

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

4.	Segment, Geographic and Other Information

(1)

Segment determination and explanation of the measurements

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(2)

Financial information of the segments for the three-month periods ended March 31, 2015 and 2014, respectively, are as follows:


In millions of won
March 31, 2015
Segment	Total segment revenue			Intersegment revenue			Revenue from external customers		Depreciation and amortization			Interest income			Interest expense			Profit related associates, joint ventures and subsidiaries			Operating profit(loss)
Transmission and distribution	W	14,936,679			297,155			14,639,524		704,160			10,570			302,116			170,032			(194,166	)
Electric power generation (Nuclear)		2,736,160			2,733,949			2,211		737,316			7,008			149,586			(658	)		1,195,543
Electric power generation (Non-nuclear)		6,623,817			6,413,081			210,736		561,926			5,669			82,329			22,375			1,217,388
Plant maintenance & engineering service		553,716			414,213			139,503		19,898			3,024			39			800			56,615
Others		151,629			19,744			131,885		7,043			25,522			20,509			—			14,501
Consolidation adjustments		(9,878,142	)		(9,878,142	)		—		(9,404	)		(2,300	)		(1,923	)		—			(50,015	)

	W	15,123,859			—			15,123,859		2,020,939			49,493			552,656			192,549			2,239,866

Other income																						117,365
Other expenses																						(23,137	)
Other gains, net																						25,894
Financial income																						187,207
Financial costs																						(681,424	)

Profit related associates, joint ventures and subsidiaries																						192,549

Profit before income tax																						2,058,320

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(2)

Financial information of the segments the three-month periods ended March 31, 2015 and 2014, respectively, are as follows, continued:


In millions of won
March 31, 2014
Segment	Total segment revenue			Intersegment revenue			Revenue from external customers		Depreciation and amortization			Interest income			Interest expense			Profit related associates, joint ventures and subsidiaries			Operating profit(loss)
Transmission and distribution	W	14,681,061			285,952			14,395,109		671,919			6,965			359,889			107,056			(266,967	)
Electric power generation (Nuclear)		2,448,121			2,445,463			2,658		703,211			3,952			145,797			740			948,969
Electric power generation (Non-nuclear)		7,428,668			7,301,758			126,910		517,069			8,150			74,913			3,572			514,372
Plant maintenance & engineering service		554,479			403,044			151,435		17,766			5,002			143			(1,201	)		57,658
Others		122,200			25,665			96,535		6,657			26,896			18,568			—			31,107
Consolidation adjustments		(10,461,882	)		(10,461,882	)		—		(8,498	)		(2,770	)		(2,264	)		—			(58,062	)

	W	14,772,647			—			14,772,647		1,908,124			48,195			597,046			110,167			1,227,077

Other income																						70,723
Other expenses																						(23,059	)
Other gains, net																						41,082
Financial income																						278,058
Financial costs																						(802,121	)

Profit related associates, joint ventures and subsidiaries																						110,167

Profit before income tax																						901,927

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(3)

Information related to segment assets and segment liabilities as of and for the three-month period ended March 31, 2015 and as of and for the year ended December 31, 2014 are as follows:


In millions of won
March 31, 2015
Segment	Segment assets			Investments in associates and joint ventures		Acquisition of non- current assets		Segment liabilities
Transmission and distribution	W	101,353,820			4,330,535		1,801,303		57,999,737
Electric power generation (Nuclear)		50,194,502			15,835		521,821		28,191,129
Electric power generation (Non-nuclear)		42,356,919			1,292,775		1,355,742		24,383,339
Plant maintenance & engineering service		2,668,406			58,854		49,608		1,076,970
Others		5,570,163			—		28,377		2,200,272
Consolidation adjustments		(35,323,729	)		—		142,640		(2,556,609	)

Consolidated totals	W	166,820,081			5,697,999		3,899,491		111,294,838


In millions of won
December 31, 2014
Segment	Segment assets			Investments in associates and joint ventures		Acquisition of non- current assets			Segment liabilities
Transmission and distribution	W	99,719,106			4,173,139		4,979,968			56,338,038
Electric power generation (Nuclear)		49,237,136			1,929		2,211,783			27,588,281
Electric power generation (Non-nuclear)		41,413,556			1,274,761		7,071,376			24,185,126
Plant maintenance & engineering service		2,659,506			58,895		377,055			990,496
Others		5,681,070			—		120,667			2,098,115
Consolidation adjustments		(35,002,085	)		—		(144,726	)		(2,316,777	)

Consolidated totals	W	163,708,289			5,508,724		14,616,123			108,883,279

(4)

Geographic information

The following information on revenue from external customers and non-current assets is determined by the location of the customers and the assets:


In millions of won
Geographical unit	Revenue from external customers				*Non-current assets (2)**
Geographical unit	March 31, 2015		March 31, 2014		March 31, 2015		December 31, 2014
Domestic	W	14,307,620		14,164,630		140,320,130		136,053,940
Overseas (*1)		816,239		608,017		4,269,398		6,542,282

	W	15,123,859		14,772,647		144,589,528		142,596,222

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

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

(5)

Information on significant customers

There is no individual customer comprising more than 10% of the Company’s revenue for the three-month periods ended March 31, 2015 and 2014.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

5.	Classification of Financial Instruments

(1)

Classification of financial assets as of March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015
In millions of won	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets
Cash and cash equivalents	W	—		3,054,376		—		—		—		3,054,376
Current financial assets
Held-to-maturity investments		—		—		—		181		—		181
Derivative assets		7,163		—		—		—		27,649		34,812
Other financial assets		—		1,074,119		—		—		—		1,074,119
Trade and other receivables		—		6,467,419		—		—		—		6,467,419

		7,163		10,595,914		—		181		27,649		10,630,907

Non-current assets
Non-current financial assets
Available-for-sale financial assets		—		—		668,543		—		—		668,543
Held-to-maturity investments		—		—		—		3,367		—		3,367
Derivative assets		89,239		—		—		—		113,169		202,408
Other financial assets		—		1,182,399		—		—		—		1,182,399
Trade and other receivables		—		1,718,492		—		—		—		1,718,492

		89,239		2,900,891		668,543		3,367		113,169		3,775,209

	W	96,402		13,496,805		668,543		3,548		140,818		14,406,116


	December 31, 2014
In millions of won	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets
Cash and cash equivalents	W	—		1,796,300		—		—		—		1,796,300
Current financial assets
Held-to-maturity investments		—		—		—		265		—		265
Derivative assets		6,812		—		—		—		1,409		8,221
Other financial assets		—		167,942		—		—		—		167,942
Trade and other receivables		—		7,697,862		—		—		—		7,697,862

		6,812		9,662,104		—		265		1,409		9,670,590

Non-current assets
Non-current financial assets
Available-for-sale financial assets		—		—		715,151		—		—		715,151
Held-to-maturity investments		—		—		—		3,349		—		3,349
Derivative assets		59,037		—		—		—		102,867		161,904
Other financial assets		—		1,160,517		—		—		—		1,160,517
Trade and other receivables		—		1,724,357		—		—		—		1,724,357

		59,037		2,884,874		715,151		3,349		102,867		3,765,278

	W	65,849		12,546,978		715,151		3,614		104,276		13,435,868

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

5.	Classification of Financial Instruments, continued

(2)

Classification of financial liabilities as of March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015
In millions of won	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities
Borrowings	W	—		824,448		—		824,448
Debt securities		—		6,130,910		—		6,130,910
Derivative liabilities		50,830		—		2,742		53,572
Trade and other payables		—		5,371,890		—		5,371,890

		50,830		12,327,248		2,742		12,380,820

Non-current liabilities
Borrowings		—		3,108,705		—		3,108,705
Debt securities		—		50,962,768		—		50,962,768
Derivative liabilities		94,995		—		177,983		272,978
Trade and other payables		—		3,806,426		—		3,806,426

		94,995		57,877,899		177,983		58,150,877

	W	145,825		70,205,147		180,725		70,531,697


	December 31, 2014
In millions of won	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities
Borrowings	W	—		1,113,354		—		1,113,354
Debt securities		—		5,991,398		—		5,991,398
Derivative liabilities		56,296		—		1,324		57,620
Trade and other payables		—		6,128,604		—		6,128,604

		56,296		13,233,356		1,324		13,290,976

Non-current liabilities
Borrowings		—		3,475,206		—		3,475,206
Debt securities		—		52,244,369		—		52,244,369
Derivative liabilities		108,635		—		171,551		280,186
Trade and other payables		—		3,806,735		—		3,806,735

		108,635		59,526,310		171,551		59,806,496

	W	164,931		72,759,666		172,875		73,097,472

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

5.	Classification of Financial Instruments, Continued

(3)

Classification of comprehensive income (loss) from financial instruments for the three-month periods ended March 31, 2015 and 2014 are as follows:


In millions of won		March 31, 2015			March 31, 2014
Cash and cash equivalents	Interest income	W	11,890			12,242
Available-for-sale financial assets	Dividends income		5,456			12,525
	Impairment loss on available-for- sale financial assets		(5,821	)		—
	Loss on disposal of financial assets		(975	)		(2	)
	Interest income		29			108
Held-to-maturity investments	Interest income		25			17
Loans and receivables	Interest income		6,775			6,020
Trade and other receivables	Interest income		24,981			25,771
Short-term financial instruments	Interest income		2,864			3,927
Long-term financial instruments	Interest income		2,929			110
Financial assets at fair value through profit or loss	Gain on valuation of derivatives		30,365			9,379
Derivative assets	Gain (loss) on transaction of derivatives		1,666			(9,563	)
(using hedge accounting)	Gain (loss) on valuation of derivatives		14,199			35,908
	Gain (loss) on valuation of derivatives (equity, before tax) (*)		13,010			(5,732	)
	Gain (loss) on transaction of derivatives		1,065			(1,585	)
Financial liabilities carried at amortized cost	Interest expense of borrowings and debt securities		(379,204	)		(427,547	)
	Interest expense of trade and other payables		(20,909	)		(22,376	)
	Interest expense of others		(152,543	)		(147,123	)
	Loss on foreign currency transactions and translations		(60,337	)		(145,391	)
Financial liabilities at fair value through profit or loss	Gain on valuation of derivatives		18,342			68,839
	Gain (loss) on transaction of derivatives		(1,785	)		28,595
Derivative liabilities	Gain on valuation of derivatives		1,857			29,520
(using hedge accounting)	Gain on valuation of derivatives (equity, before tax) (*)		13,737			6,690
	Loss on transaction of derivatives		(3,400	)		(5,311	)

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

6.	Restricted Deposits

Restricted deposits as of March 31, 2015 and December 31, 2014 are as follows:


In millions of won		March 31, 2015		December 31, 2014
Cash and cash equivalents	Escrow accounts	W	457		100
	Deposits for government project		7,001		10,156
	Collateral provided for borrowings		13,968		12,926
	Collateral provided for lawsuit		367		367
Short-term financial instruments	Restriction on withdrawal related to ‘win-win growth program’ for small and medium enterprises		5,000		5,000
Long-term financial instruments	Guarantee deposits for checking account		3		3
	Guarantee deposits for banking accounts at oversea branches		314		312
	Pledge		740		740
	Decommissioning costs of nuclear power plants		—		603,306
	Collateral provided for lawsuit		20		—

		W	27,870		632,910

7.	Cash and Cash Equivalents

Cash and cash equivalents as of March 31, 2015 and December 31, 2014 are as follows:


In millions of won	March 31, 2015		December 31, 2014
Cash	W	160		77
Other demand deposit		1,245,074		1,154,250
Short-term deposits classified as cash equivalents		1,151,422		340,119
Short-term investments classified as cash equivalents		657,720		301,854

	W	3,054,376		1,796,300

8.	Trade and Other Receivables

(1)

Trade and other receivables as of March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015
In millions of won	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	W	6,008,073		(65,450	)		(66	)		5,942,557
Other receivables		577,683		(50,355	)		(2,466	)		524,862

		6,585,756		(115,805	)		(2,532	)		6,467,419

Non-current assets
Trade receivables		405,626		—			(5)			405,621
Other receivables		1,345,984		(26,964	)		(6,149	)		1,312,871

		1,751,610		(26,964	)		(6,154	)		1,718,492

	W	8,337,366		(142,769	)		(8,686	)		8,185,911

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

8.	Trade and Other Receivables, Continued

(1)

Trade and other receivables as of March 31, 2015 and December 31, 2014 are as follows, continued:


	December 31, 2014
In millions of won	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	W	7,243,064		(80,644	)		(94	)		7,162,326
Other receivables		583,991		(46,245	)		(2,210	)		535,536

		7,827,055		(126,889	)		(2,304	)		7,697,862

Non-current assets
Trade receivables		412,222		—			(14	)		412,208
Other receivables		1,341,398		(21,687	)		(7,562	)		1,312,149

		1,753,620		(21,687	)		(7,576	)		1,724,357

	W	9,580,675		(148,576	)		(9,880	)		9,422,219

(2)

Other receivables as of March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015
In millions of won	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Non-trade receivables	W	249,026		(50,355	)		—			198,671
Accrued income		50,782		—			—			50,782
Deposits		201,935		—			(2,466	)		199,469
Finance lease receivables		8,958		—			—			8,958
Others		66,982		—			—			66,982

		577,683		(50,355	)		(2,466	)		524,862

Non-current assets
Non-trade receivables		133,399		(23,209	)		—			110,190
Accrued income		364		—			—			364
Deposits		247,266		—			(6,149	)		241,117
Finance lease receivables		882,805		—			—			882,805
Others		82,150		(3,755	)		—			78,395

		1,345,984		(26,964	)		(6,149	)		1,312,871

	W	1,923,667		(77,319	)		(8,615	)		1,837,733


	December 31, 2014
In millions of won	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Non-trade receivables	W	257,260		(46,245	)		—			211,015
Accrued income		54,242		—			—			54,242
Deposits		196,537		—			(2,210	)		194,327
Finance lease receivables		8,275		—			—			8,275
Others		67,677		—			—			67,677

		583,991		(46,245	)		(2,210	)		535,536

Non-current assets
Non-trade receivables		117,604		(18,630	)		—			98,974
Accrued income		303		—			—			303
Deposits		267,397		—			(7,562	)		259,835
Finance lease receivables		877,479		—			—			877,479
Others		78,615		(3,057	)		—			75,558

		1,341,398		(21,687	)		(7,562	)		1,312,149

	W	1,925,389		(67,932	)		(9,772	)		1,847,685

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

8.	Trade and Other receivables, Continued

(2)

Other receivables as of March 31, 2015 and December 31, 2014 are as follows, continued:

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

(3)

Aging analysis of trade receivables as of March 31, 2015 and December 31, 2014 are as follows:


In millions of won	March 31, 2015			December 31, 2014
Trade receivables: (not overdue, not impaired)	W	6,268,444			7,516,233

Trade receivables: (overdue, not impaired)		908			1,061

Less than 60 days		908			1,061

Trade receivables: (impairment reviewed)		144,347			137,992

60 ~ 90 days		56,518			31,438
90 ~ 120 days		7,571			12,045
120 days ~ 1 year		39,995			42,736
Over 1 year		40,263			51,773

		6,413,699			7,655,286

Less allowance for doubtful accounts		(65,450	)		(80,644	)
Less present value discount		(71	)		(108	)

	W	6,348,178			7,574,534

The Company assesses at the end of each reporting period whether there is any objective evidence that trade receivables are impaired, and provides allowances for doubtful accounts which includes impairment for trade receivables that are individually significant.

The Company considers receivables as impaired 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 March 31, 2015 and December 31, 2014 are as follows:


In millions of won	March 31, 2015			December 31, 2014
Other receivables: (not overdue, not impaired)	W	1,743,195			1,729,807

Other receivables: (overdue, not impaired)		54,614			58,778

Less than 60 days		54,614			58,778

Other receivables: (impairment reviewed)		125,858			136,803

60 ~ 90 days		2,996			1,132
90 ~ 120 days		10,240			2,242
120 days ~ 1 year		15,693			18,857
Over 1 year		96,929			114,572

		1,923,667			1,925,388

Less allowance for doubtful accounts		(77,319	)		(67,932	)
Less present value discount		(8,615	)		(9,772	)

	W	1,837,733			1,847,684

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

8.	Trade and Other Receivables, Continued

(5)

Changes in the allowance for doubtful accounts for the three-month period ended March 31, 2015 and for the year ended December 31, 2014 are as follows:


	March 31, 2015						December 31, 2014
In millions of won	Trade receivables			Other receivables			Trade receivables			Other receivables
Beginning balance	W	80,644			67,932			65,024			69,887
Bad debt expense		1,159			7,833			39,018			15,981
Write-off		(3,616	)		(266	)		(23,398	)		(7,534	)
Reversal		(12,737	)		—			—			(241	)
Others		—			1,820			—			(10,161	)

Ending balance	W	65,450			77,319			80,644			67,932

9.	Available-for-sale Financial Assets

Available-for-sale financial assets as of March 31, 2015 and December 31, 2014 are as follows:


In millions of won	Ownership			March 31, 2015		December 31, 2014
Equity securities
Listed
Kwanglim Co., Ltd. (*3)		0.44	%	W	162		128
Cockatoo Coal Limited (*1)		1.10	%		110		628
Denison Mines Corp.		11.51	%		51,310		62,339
Energy Fuels Inc.		8.70	%		8,475		11,569
Fission 3.0		0.45	%		63		61
Fission Uranium Corp.		0.22	%		920		651
PT Adaro Energy Tbk (*1,3)		1.50	%		38,797		44,109
Sungjee Construction Co., Ltd.		0.01	%		7		5
Ssangyong Motor Co., Ltd.		0.03	%		350		357
Korea District Heating Corp. (*3)		19.55	%		124,977		127,240
Korea Line Corp.		0.00	%		—		—
Namkwang Engineering & Construction Co., Ltd.		0.01	%		1		2
Pumyang Construction Co., Ltd.		0.00	%		—		—
ELCOMTEC Co., Ltd.		0.04	%		69		48
PAN Ocean Co., Ltd.		0.00	%		6		5
Borneo International Furniture Co., Ltd.		0.01	%		4		4
TONGYANG Inc.		0.03	%		98		66
TONGYANG Networks Inc.		0.01	%		4		3

					225,353		247,215

Unlisted
LIG E&C Co., Ltd.		0.00	%		5		5
Dae Kwang Semiconductor Co., Ltd.		0.07	%		6		6
Dongnam Co., Ltd.		0.46	%		72		72
Mobo Co., Ltd.		0.00	%		14		14
SAMBO AUTO. Co., Ltd. (Formerly, Hydrogen Power Co., Ltd.)		0.02	%		38		38
Woobang ENC Co., Ltd.		0.00	%		22		22
Ginseng K Co., Ltd.		0.00	%		—		—
Areva Nc Expansion		13.49	%		204,048		227,876
IBK-AUCTUS Green Growth Private Equity Firm (*3)		6.30	%		2,325		2,325
K&C- Gyeongnam Youth Job Creation Investment Fund		10.00	%		1,340		1,340
Navanakorn Electric Co., Ltd. (*5)		29.00	%		16,925		16,836
PT. Kedap Saayq		10.00	%		12,989		12,989
Set Holding (*6)		2.50	%		167,832		167,832
Construction Guarantee (*7)		0.02	%		791		795
Global Dynasty Overseas Resource Development Private Equity Firm		7.46	%		2,233		2,233

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

9.	Available-for-sale Financial Assets, Continued

Available-for-sale financial assets as of March 31, 2015 and December 31, 2014 are as follows, continued:


In millions of won	Ownership			March 31, 2015		December 31, 2014
Plant & Mechanical Contractors Financial Cooperative of Korea		0.01	%	W	36		36
Fire Guarantee		0.02	%		20		20
Korea Software Financial Cooperative		0.15	%		301		301
Engineering Financial Cooperative		0.10	%		60		60
Electric Contractors Financial Cooperative		0.03	%		152		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	%		13,340		13,340
Korea Electric Engineers Association		0.26	%		40		40
Korea Investment—Korea EXIM Bank CERs Private Special Asset Investment Trust 1		14.18	%		4,752		4,752
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1		5.00	%		1,167		498
Hanwha Electric Power Venture fund (*2)		—			—		1,804
Hwan Young Steel Co., Ltd.		0.14	%		97		97
Intellectual Discovery, Ltd.		8.81	%		5,000		5,000
Poonglim Industrial Co., Ltd.		0.01	%		78		78
HANKOOK Silicon Co., Ltd.		10.44	%		7,513		7,513
Pumyang Asset Management Co., Ltd.		0.00	%		3		3
Sanbon Department Store		0.01	%		124		124
Woori Ascon Co., Ltd.		0.34	%		10		10
Miju Steel Mfg Co., Ltd.		0.23	%		51		51
BnB Sungwon Co., Ltd.		0.01	%		15		15
Hana Civil Engineering Co., Ltd.		0.00	%		1		1
KC Development Co., Ltd.		0.02	%		6		6
IMHWA Corp.		0.11	%		5		5
IXELON Co., Ltd.		0.02	%		23		23
DAIM Special Vehicle Co., Ltd.		0.08	%		10		10
ASA KIMJE Co., Ltd.		1.11	%		465		465
ASA JEONJU Co., Ltd.		1.34	%		697		697
KYUNGWON Co., Ltd.		0.17	%		14		14
Moonkyung Silica Co., Ltd.		0.56	%		—		—
Yousung Remicon Co., Ltd.		0.26	%		4		4
Sungkwang Timber Co., Ltd.		0.34	%		4		4
Yongbo Co., Ltd.		0.20	%		3		3
HJ Steel Co., Ltd.		0.07	%		2		—
Iidong Air Conditioning Co., Ltd.		0.16	%		2		—
KS Remicon Co., Ltd.		0.04	%		3		—
Sewoong Heavy Industries Co., Ltd.		0.10	%		40		—
SIN-E Steel Co., Ltd.		0.03	%		13		—
Joongang Platec Co., Ltd.		0.75	%		72		—
Green & Sustainable Energy Investment Corp. (*4)		0.00	%		—		—
Kanan Hydroelectric Power Corp. (*4)		19.58	%		—		—
3i Powergen Inc. (*4)		15.00	%		—		—

					443,190		467,936

				W	668,543		715,151

(*1)

It has been determined that available-for-sale financial assets were impaired because the fair values of the securities of PT Adaro Energy Tbk, Cockatoo Coal Limited declined significantly below their respective acquisition costs during the three-month period ended March 31, 2015. As such, the Company recognized W5,821 million of impairment loss on available-for-sale financial assets.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

9.	Available-for-sale Financial Assets, Continued

Available-for-sale financial assets as of March 31, 2015 and December 31, 2014 are as follows, continued:

(*2)	Hanwha Electric Power Venture fund liquidated and the Company recognized loss on disposal of available-for-sale financial assets of W975 million for the three-month period ended March 31, 2015.

(*3)

The fair values of the securities of PT. Adaro Energy Tbk, Korea District Heating Corp., IBK-AUCTUS green growth private equity firm, and others declined significantly below their respective acquisition costs during 2014. As such, the Company recognized W10,602 million of impairment loss on available-for-sale financial assets and cumulative losses of W67,503 million previously recognized in other comprehensive loss were reclassified to impairment loss on available-for-sale financial assets for the year ended December 31, 2014.

(*4)	Green & Sustainable Energy Investment Corp., Kanan Hydroelectric Power Corp., 3i Power Inc. ceased its operations and the Company recognized impairment loss of available-for-sale financial assets of W1,513 million for the year ended December 31, 2014.

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

(*6)

The Company has estimated the fair value of SET Holding by using the discounted cash flow method and, has recognized the difference between its fair value and book value as gain or loss on valuation of available-for-sale financial assets in other comprehensive loss during the three-month period ended March 31, 2015.

(*7)

The Company has estimated the fair value of the investment in Construction Guarantee based upon the price which would be applied when the investment is returned. The Company has recognized the difference between its fair value and book value as a loss on valuation of available-for-sale financial assets in other comprehensive income or loss during the three-month period ended March 31, 2015.

Book values of unlisted equity securities held by the Company that were measured at cost as of March 31, 2015 and December 31, 2014 are W274,567 million and W299,308 million, respectively, as a quoted market price does not exist in an active market and its fair value cannot be measured reliably.

10.

Held-to-maturity Investments

Held-to-maturity investments as of March 31, 2015 and December 31, 2014 are as follows:

March 31, 2015

December 31, 2014

In millions of won

Current

Non-current

Current

Non-current

Government and municipal bonds and others

181

3,367

265

3,349

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

11.

Derivatives

(1)

Derivatives as of March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015				December 31, 2014
In millions of won	Current		Non-current		Current		Non-current
Derivative assets
Currency forward	W	152		11,412		182		7,233
Currency swap		34,660		187,862		8,039		151,934
Interest rate swap		—		3,134		—		2,737

	W	34,812		202,408		8,221		161,904

Derivative liabilities
Currency forward	W	1,528		—		466		—
Currency swap		49,462		159,824		53,697		196,273
Interest rate swap		2,582		113,154		3,457		83,913

	W	53,572		272,978		57,620		280,186

(2)

Currency forward contracts which are not designated as hedge instruments as of March 31, 2015 are as follows:


In millions of won and thousands of foreign currencies
Counterparty	Contract Date		Maturity date		Contract amounts				Contract exchange rate
Counterparty	Contract Date		Maturity date		Pay		Receive		Contract exchange rate
Korea Exchange Bank		2014.04.10		2021.07.12	W	55,120		USD 52,000		1,060.00
Korea Exchange Bank		2014.04.28		2021.07.12		50,784		USD 48,000		1,058.00
Bank of America		2014.04.29		2021.07.12		105,400		USD 100,000		1,054.00
Korea Exchange Bank		2014.05.09		2021.07.12		104,600		USD 100,000		1,046.00
Citibank		2015.03.05		2015.04.06		5,508		USD 5,000		1,101.50
Citibank		2015.03.11		2015.04.13		5,649		USD 5,000		1,129.77
Credit Suisse		2015.03.09		2015.04.09		5,563		USD 5,000		1,112.65
Credit Suisse		2015.03.12		2015.04.14		5,658		USD 5,000		1,131.62
Credit Suisse		2015.03.30		2015.04.29		5,535		USD 5,000		1,106.99
HSBC		2015.03.24		2015.04.23		5,544		USD 5,000		1,108.80
Nova Scotia		2015.03.09		2015.04.08		5,562		USD 5,000		1,112.35
Nova Scotia		2015.03.19		2015.04.17		5,580		USD 5,000		1,116.06
Nova Scotia		2015.03.25		2015.04.27		5,525		USD 5,000		1,105.00
Standard Chartered		2015.03.03		2015.04.01		5,515		USD 5,000		1,102.94
Standard Chartered		2015.03.10		2015.04.10		5,611		USD 5,000		1,122.15
Standard Chartered		2015.03.26		2015.04.28		5,531		USD 5,000		1,106.14
Deutsche Bank		2015.03.04		2015.04.02		5,484		USD 5,000		1,096.80
Deutsche Bank		2015.03.23		2015.04.21		5,588		USD 5,000		1,117.60
ING Bank		2015.03.24		2015.04.01		5,538		USD 5,000		1,107.55
Nova Scotia		2015.03.12		2015.04.16		11,313		USD 10,000		1,131.30
Nova Scotia		2015.03.23		2015.04.27		11,163		CHF 10,000		1,116.25
Nova Scotia		2015.03.24		2015.04.01		5,445		CHF 4,920		1,106.64
Barclays Bank PLC		2015.03.23		2015.04.27		7,967		CHF 7,127		1,117.85
HSBC		2015.03.24		2015.04.27		11,087		USD 10,000		1,108.70
Mizuho Bank		2015.03.24		2015.04.27		9,255		USD 8,349		1,108.40
Credit Agricole		2015.03.24		2015.05.26		5,550		USD 5,000		1,110.00
BNP Paribas		2015.03.24		2015.05.26		5,549		USD 5,000		1,109.85
Standard Chartered		2015.03.24		2015.05.26		11,097		USD 10,000		1,109.70
Mizuho Bank		2015.03.19		2015.04.06		4,471		USD 4,000		1,117.75
Mizuho Bank		2015.03.24		2015.04.06		2,212		USD 2,000		1,106.04
HSBC		2015.03.23		2015.04.06		2,232		USD 2,000		1,115.88
Citibank		2015.03.24		2015.04.06		2,211		USD 2,000		1,105.54
Standard Chartered		2015.03.25		2015.04.09		4,416		USD 4,000		1,104.00
Standard Chartered		2015.03.27		2015.04.23		3,311		USD 3,000		1,103.50
Credit Agricole		2015.03.27		2015.04.15		5,519		USD 5,000		1,103.80
Deutsche Bank		2015.03.25		2015.04.09		4,408		USD 4,000		1,101.90
Deutsche Bank		2015.03.27		2015.04.23		5,519		USD 5,000		1,103.80
Nova Scotia		2015.03.26		2015.04.15		4,435		USD 4,000		1,108.70
Societe Generale		2015.03.19		2015.04.23		5,565		USD 5,000		1,112.90
Citibank		2015.03.19		2015.04.23		5,565		USD 5,000		1,112.90
Standard Chartered		2015.03.19		2015.04.23		5,553		USD 4,987		1,113.45

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

11.

Derivatives, Continued

(2)

Currency forward contracts which are not designated as hedge instruments, as of March 31, 2015 are as follows, continued:


In millions of won and thousands of foreign currencies
Counterparty	Contract Date		Maturity date		Contract amounts				Contract exchange rate
Counterparty	Contract Date		Maturity date		Pay		Receive		Contract exchange rate
Credit Suisse		2015.03.19		2015.04.23	W	5,567		USD 5,000		1,113.40
Nova Scotia		2015.03.24		2015.04.27		5,536		USD 5,000		1,107.10
Nova Scotia		2015.03.24		2015.04.27		5,530		USD 5,000		1,106.00
Standard Chartered		2015.03.24		2015.04.27		5,536		USD 5,000		1,107.10
Standard Chartered		2015.03.24		2015.04.27		5,541		USD 5,000		1,108.10
Standard Chartered		2015.03.24		2015.04.27		5,546		USD 5,000		1,109.10
Standard Chartered		2015.03.24		2015.04.27		5,551		USD 5,000		1,110.10
Credit Suisse		2015.03.24		2015.04.27		5,536		USD 5,000		1,107.10
Credit Suisse		2015.03.24		2015.04.27		5,541		USD 5,000		1,108.10
Credit Suisse		2015.03.24		2015.04.27		5,546		USD 5,000		1,109.10
Credit Suisse		2015.03.24		2015.04.27		5,551		USD 5,000		1,110.10
Credit Agricole		2015.03.24		2015.04.27		5,536		USD 5,000		1,107.10
Credit Agricole		2015.03.24		2015.04.27		5,541		USD 5,000		1,108.10
Credit Agricole		2015.03.24		2015.04.27		5,546		USD 5,000		1,109.10
Credit Agricole		2015.03.24		2015.04.27		5,551		USD 5,000		1,110.10
Credit Agricole		2015.03.24		2015.04.27		5,556		USD 5,000		1,111.10
HSBC		2015.03.24		2015.04.27		4,973		USD 4,497		1,105.80
Standard Chartered		2011.08.08		2015.04.27 ~2015.12.28		USD 6,037		6,616		1,093.10~1,098.70

(3)

Currency swap contracts which are not designated as hedge instruments as of March 31, 2015 are as follows:


In millions of won and thousands of foreign currencies
Counterparty	Contract year	Contract amount				Contract interest rate				Contract exchange rate
Counterparty	Contract year	Pay		Receive		Pay (%)			Receive (%)	Contract exchange rate
UBS	2011~2015	W	220,356		USD 200,000		3.90	%	3.00%		1,101.78
RBS	2011~2015		110,110		USD 100,000		3.90	%	3.00%		1,101.10
Barclays Bank PLC	2011~2015		108,390		USD 100,000		3.78	%	3.00%		1,083.90
Credit Suisse	2011~2015		108,390		USD 100,000		3.22	%	3.00%		1,083.90
Morgan Stanley	2011~2015		63,006		USD 60,000		4.06	%	3.00%		1,050.10
Goldman Sachs	2012~2015		156,643		USD 140,000		3.92	%	3.00%		1,118.88
Deutsche Bank	2013~2018		110,412		JPY 10,000,000		6.21	%	4.19%		11.04
IBK	2013~2018		111,800		USD 100,000		3.16	%	2.79%		1,118.00
Bank of America	2013~2018		103,580		JPY 10,000,000		7.05	%	4.19%		10.36
Credit Suisse	2014~2019		118,632		CHF 100,000		2.98	%	1.50%		1,186.32
Standard Chartered	2014~2019		114,903		CHF 100,000		4.00	%	1.50%		1,149.03
Standard Chartered	2014~2017		51,215		USD 50,000		2.24	%	3M USD Libor + 0.55%		1,024.30
Mizuho Bank	2014~2017		153,645		USD 150,000		2.35	%	3M USD Libor + 0.65%		1,024.30
Societe Generale	2014~2024		105,017		USD 100,000		4.92	%	5.13%		1,050.17
Korea Exchange Bank	2015~2024		107,970		USD 100,000		4.75	%	5.13%		1,079.70
Morgan Stanley	2010~2015		118,800		USD 100,000		4.61	%	3M Libor + 1.64%		1,188.00
M-UFJ	2010~2015		116,100		USD 100,000		4.00	%	3M Libor + 1.00%		1,161.00
Standard Chartered	2014~2029		102,470		USD 100,000		3.14	%	3.57%		1,024.70
Citibank	2010~2015		116,080		USD 100,000		3.97	%	3.13%		1,160.80
Deutsche Bank	2010~2015		116,080		USD 100,000		3.98	%	3.13%		1,160.80
RBS	2010~2015		116,080		USD 100,000		3.97	%	3.13%		1,160.80
HSBC	2010~2015		116,080		USD 100,000		3.23	%	3.13%		1,160.80
UBS	2010~2015		116,080		USD 100,000		3.23	%	3.13%		1,160.80
Citibank	2012~2022		112,930		USD 100,000		2.79	%	3.00%		1,129.30
JP Morgan	2012~2022		112,930		USD 100,000		2.79	%	3.00%		1,129.30
Bank of America	2012~2022		112,930		USD 100,000		2.79	%	3.00%		1,129.30
Goldman Sachs	2012~2022		112,930		USD 100,000		2.79	%	3.00%		1,129.30
HSBC	2012~2022		111,770		USD 100,000		2.89	%	3.00%		1,117.70
Hana Bank	2012~2022		111,770		USD 100,000		2.87	%	3.00%		1,117.70
Standard Chartered	2012~2022		111,770		USD 100,000		2.89	%	3.00%		1,117.70

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

March 31, 2015

(Unaudited)

11.

Derivatives, Continued

(3)

Currency swap contracts which are not designated as hedge instruments as of March 31, 2015 are as follows, continued:


In millions of won and thousands of foreign currencies
Counterparty	Contract year		Contract amount			Contract interest rate		Contract exchange rate
Counterparty	Contract year		Pay		Receive	Pay (%)	Receive (%)	Contract exchange rate
Deutsche Bank		2012~2022	W	55,885	USD 50,000	2.79%	3.00%		1,117.70
DBS		2013~2018		108,140	USD 100,000	2.63%	3M Libor+0.84%		1,081.40
DBS		2013~2018		108,140	USD 100,000	2.57%	3M Libor+0.84%		1,081.40
DBS		2013~2018		108,140	USD 100,000	2.57%	3M Libor+0.84%		1,081.40
HSBC		2013~2018		107,450	USD 100,000	3.41%	2.88%		1,074.50
Standard Chartered		2013~2018		107,450	USD 100,000	3.44%	2.88%		1,074.50
JP Morgan		2013~2018		107,450	USD 100,000	3.48%	2.88%		1,074.50
Bank of America		2014~2018		107,450	USD 100,000	3.09%	2.88%		1,074.50
Citibank		2014~2018		107,450	USD 100,000	3.09%	2.88%		1,074.50
JP Morgan		2014~2017		102,670	USD 100,000	2.89%	3M Libor+0.78%		1,026.70
Deutsche Bank		2014~2017		102,670	USD 100,000	2.89%	3M Libor+0.78%		1,026.70
HSBC		2014~2019		105,260	USD 100,000	2.48%	2.38%		1,052.60
Standard Chartered		2014~2019		105,260	USD 100,000	2.48%	2.38%		1,052.60
RBS		2014~2019		105,260	USD 100,000	2.48%	2.38%		1,052.60

(4)

Currency swap contracts which are designated as hedge instruments as of March 31, 2015 are as follows:

In millions of won and thousands of foreign currencies

Counterparty

Contract year

Contract amount

Contract interest rate

Contract
exchange rate

Pay

Receive

Pay (%)

Receive (%)

Citibank

2006~2016

113,200

USD 100,000

1.05%

6.00%

1,132.00

Barclays Bank PLC

2006~2016

113,200