Edgar Filing: KOREA ELECTRIC POWER CORP

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

of the Securities Exchange Act of 1934

For the Month of September 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 June 30, 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

(As of June 30, 2015)


Classification	Consolidated subsidiaries		Associates and joint ventures		Total
Domestic		17		53		70
Overseas		59		37		96
Total		76		90		166

5. Major changes in management for six-month period ended June 30, 2015

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. Information regarding KEPCO shares

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

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

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

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

II. Business Overview

1. Summary of consolidated financial results by segment for six-month periods ended June 30, 2014 and 2015

(In billions of Won)


	January to June 2014				January to June 2015
	Sales		Operating profit		Sales		Operating profit
Electricity sales		27,592		-454		28,498		1,931
Nuclear generation		4,796		1,593		4,638		1,192
Thermal generation		13,054		822		10,710		1,034
Others(*)		1,452		211		1,485		164
Subtotal		46,894		2,172		45,331		4,321
Adjustment for related- party transactions		-19,232		-116		-16,535		7
Total		27,662		2,056		28,796		4,328

•	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 electricity

(In Won per kWh)


Business sector		Company	April to June 2015	January to December 2014
Electricity sold to end users	Residential	KEPCO	124.49	125.14
	Commercial		126.11	129.75
	Educational		107.90	114.15
	Industrial		105.05	106.83
	Agricultural		47.58	47.31
	Street lighting		114.38	113.39
	Overnight usage		67.54	67.33
Electricity sold to KEPCO	Nuclear Generation	KHNP	59.67	59.23
	Thermal generation	KOSEP	70.14	67.96
		KOMIPO	89.21	99.24
		KOWEPO	89.06	99.34
		KOSPO	89.67	108.67
		EWP	82.30	91.18

3. Electricity purchased from generation companies for six-month period ended June 30, 2015


Company	Volume (MWh)		Expense (In billions of Won)
KHNP		76,743,520		4,585
KOSEP		34,497,312		2,283
KOMIPO		21,298,953		1,847
KOWEPO		24,084,657		2,146
KOSPO		23,522,627		2,111
EWP		23,799,929		1,959
Others		46,591,376		5,930
Total		250,538,374		20,861

•	Excludes expense related to the Renewable Portfolio Standard provisions.

4. Intellectual property as of June 30, 2015

Patents

Utility

models

Designs

Trademarks

Total

Domestic

Overseas

Domestic

Overseas

Number of

registrations

5,236

669

843

176

399

7,414

III. Financial Information

1. Condensed consolidated financial results as of and for six-month periods ended June 30, 2014 and 2015

(In billions of Won)


Consolidated statements of financial position							Consolidated statements of comprehensive income
	Dec. 31, 2014		June 30, 2015		Change (%)			January to June 2014		January to June 2015		Change (%)
Total assets		163,708		170,083		3.9	Sales		27,662		28,796		4.1
Total liabilities		108,883		113,030		3.8	Operating profit		2,056		4,328		110.5
Total equity		54,825		57,053		4.1	Net income		753		2,565		240.6

2. Condensed separate financial results as of and for six-month periods ended June 30, 2014 and 2015

(In billions of Won)


Separate statements of financial position							Separate statements of comprehensive income
	Dec. 31, 2014		June 30, 2015		Change (%)			January to June 2014		January to June 2015		Change (%)
Total assets		99,719		104,027		4.3	Sales		27,592		28,498		3.3
Total liabilities		56,338		59,016		4.8	Operating profit		-454		1,931		n/m
Total equity		43,381		45,011		3.8	Net income		-543		1,929		n/m

(. )	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-six month period ended June 30, 2015


Number of meetings	Number of agendas	Classification
Number of meetings	Number of agendas	Resolutions	Results	Reports	Results
6	24	17	Approved as proposed	7	Accepted as reported

*	The audit committee held 4 meetings with 14 agendas (of which, 7 were resolved as proposed and 7 were approved as reported).

3. Major activities of the Board of Directors for six-month period ended June 30, 2015


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
January 16, 2015	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


Date	Agenda	Results	Type
April 17, 2015	Approval to close the shareholders’ registry for extraordinary general meeting of shareholders	Approved as proposed	Resolution
	Amendments on the regulation for remuneration and welfare	Approved as proposed	Resolution
	Approval to invest in Intra-company Employee Welfare Fund in 2015	Approved as proposed	Resolution
	Approval to invest in nurturing fund for small- and medium-sized enterprises	Approved as proposed	Resolution
	Approval to change management planning for technical development	Approved as proposed	Resolution
May 15, 2015	Approval to establish and finance a Special Purpose Company to make Ulleungdo eco-friendly energy self-sufficient	Approved as proposed	Resolution
	Approval of establishment and investment for a local subsidiary to conduct the Fujeij wind farm project in Jordan	Approved as proposed	Resolution
	Report on results of external and internal audits for the first quarter of 2015	Accepted as reported	Report
June 5, 2015	Amendments on the Electricity Usage Agreement and Rules for Operation	Approved as proposed	Resolution
June 19, 2015	Composition of the Director Nomination Committee to recommend candidates for non-standing directors	Approved as proposed	Resolution
	Approval of mid-to-long term financial management plan for the fiscal years from 2015 to 2019	Approved as proposed	Resolution
	Approval to establish a Special Purpose Company to begin charging fees for recharging electric vehicles	Approved as proposed	Resolution

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 on the audit results 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 audit results for the consolidated and separate financial statements for the fiscal year 2014	Accepted as reported	Report
April 16, 2015	Approval of selection of independent auditors of subsidiaries	Approved as proposed	Resolution
	Auditor’s report for fiscal year 2014 in accordance with U.S. accounting principles	Accepted as reported	Report
	Report on the Form 20-F for the fiscal year 2014 to be filed with the U.S. SEC	Accepted as reported	Report
May 15, 2015	Amendments on the Charter of Ethics for KEPCO Employees and the Code of Conductor for KEPCO Executives and Staff members	Approved as proposed	Resolution
	Amendments on guidelines for disciplinary actions	Approved as proposed	Resolution
	Prior approval for non-audit service for subsidiaries by the independent auditor	Approved as proposed	Resolution
	Independent auditor’s report on the audit plans for fiscal year 2015	Accepted as reported	Report
	Report on results of external and internal audits in the first quarter of 2015	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 May 6, 2015


		Number of shareholders		Shares owned		Percentage of total (%)
Government of the Republic of Korea			1		116,841,794		18.20
Korea Development Bank			1		211,235,264		32.90
Subtotal			2		328,077,058		51.10
National Pension Service			1		45,608,271		6.64
Public (non-Koreans)	Common shares		1,430		160,998,099		25.08
Public (non-Koreans)	American depositary shares (ADS)		1		35,516,861		5.53
Public	Corporate		1,359		51,433,844		8.01
(Koreans)	Individual		356,092		23,329,944		3.64
Total			358,885		641,964,077		100.00

•	Percentages are based on issued shares of common stock.

•	All of our shareholders have equal voting rights.

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

VI. Directors and employees as of and for the six-month period ended June 30, 2015 (KEPCO Only)

1. Directors

(In thousands of Won)


Type	Number of directors		Total remuneration		Average remuneration per person
Standing director		7		693,847		99,121
Non-standing director		8		105,000		13,125
Total		15		798,847		53,256

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		16,539		258		16,797		19.7		661,597,163		39,388
Female		3,453		115		3,568		14.0		101,663,047		28,493
Total		19,992		373		20,365		18.7		763,260,210		37,479

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
Annual 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 director: 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 June 30, 2015

(In billions of Won)


Type	Number of lawsuits	Amount claimed
Lawsuits where KEPCO and its subsidiaries are engaged as the defendants	747	477
Lawsuits where KEPCO and its subsidiaries are engaged as the plaintiffs	176	433

SIGNATURES

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


By:		/s/ Lee, Sang-Lyong
Name:		Lee, Sang-Lyong
Title:		Head of Finance & IR team

Date: September 9, 2015

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Financial Statements

June 30, 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 (Loss)		4

Consolidated Interim Statements of Changes in Equity		6

Consolidated Interim Statements of Cash Flows		8

Notes to the Consolidated Interim Financial Statements		10

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 statement of financial position as of June 30, 2015, the consolidated statements of comprehensive income (loss) for the three and six-month periods ended June 30, 2015 and 2014, changes in equity and cash flows for the six-month periods ended June 30, 2015 and 2014 and notes, comprising a summary of a significant accounting policies and other explanatory information.

Management’s responsibility

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

Auditors’ review responsibility

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

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

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

KPMG Samjong Accounting Corp.

Seoul, Korea

August 13, 2015

This report is effective as of August 13, 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 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 June 30, 2015 and December 31, 2014

(Unaudited)


In millions of won	*Note*		June 30, 2015		December 31, 2014
Assets

Current assets
Cash and cash equivalents		5,6,7,44	￦	3,850,438		1,796,300
Current financial assets, net		5,10,11,12,44		1,754,114		176,428
Trade and other receivables, net		5,8,14,20,44,46		6,691,138		7,697,862
Inventories, net		13		4,827,817		4,537,469
Income tax refund receivables		40		23,409		18,475
Current non-financial assets		15		434,090		502,511
Assets held-for-sale		41		2,090,810		2,090,810

Total current assets				19,671,816		16,819,855

Non-current assets
Non-current financial assets, net		5,6,9,10,11,12,44		2,151,485		2,040,921
Non-current trade and other receivables, net		5,8,14,44,46		1,754,614		1,724,357
Property, plant and equipment, net		18,27,48		138,903,739		135,812,499
Investment properties, net		19,27		237,581		317,264
Goodwill		16		2,582		2,582
Intangible assets other than goodwill, net		21,27		807,112		821,060
Investments in associates		4,17		4,532,250		4,341,830
Investments in joint ventures		4,17		1,263,002		1,166,894
Deferred tax assets		40		628,931		526,934
Non-current non-financial assets		15		129,787		134,093

Total non-current assets				150,411,083		146,888,434


Total assets		4	￦	170,082,899		163,708,289

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position, Continued

As of June 30, 2015 and December 31, 2014

(Unaudited)


In millions of won	*Note*		June 30, 2015			December 31, 2014

Liabilities

Current liabilities
Trade and other payables, net		5,22,24,44,46	￦	4,794,212			6,128,604
Current financial liabilities, net		5,11,23,44,46		7,860,325			7,162,372
Income tax payables		40		589,516			570,550
Current non-financial liabilities		20,28,29		13,720,341			6,464,356
Current provisions		26,44		1,541,659			1,274,186

Total current liabilities				28,506,053			21,600,068

Non-current liabilities
Non-current trade and other payables, net		5,22,24,44,46		3,809,699			3,806,735
Non-current financial liabilities, net		5,11,23,44,46		53,228,171			55,999,761
Non-current non-financial liabilities		28,29		6,991,431			6,946,410
Employee benefits liabilities, net		25,44		1,487,885			1,277,415
Deferred tax liabilities		40		6,516,356			5,723,880
Non-current provisions		26,44		12,490,018			13,529,010

Total non-current liabilities				84,523,560			87,283,211


Total liabilities		4	￦	113,029,613			108,883,279


Equity

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

				4,053,578			4,053,578
Retained earnings		31
Legal reserves				1,604,910			1,604,910
Voluntary reserves				23,720,167			22,999,359
Unappropriated retained earnings				12,130,509			10,699,378

				37,455,586			35,303,647


Other components of equity		33
Other capital surpluses				1,198,374			1,151,402
Accumulated other comprehensive loss				(183,400	)		(202,269	)
Other equity				13,294,973			13,294,973

				14,309,947			14,244,106


Equity attributable to owners of the Company				55,819,111			53,601,331


Non-controlling interests		16, 32		1,234,175			1,223,679


Total equity			￦	57,053,286			54,825,010


Total liabilities and equity			￦	170,082,899			163,708,289

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Loss)

For the three and six-month periods ended June 30, 2015 and 2014

(Unaudited)


In millions of won, except per share information			June 30, 2015						June 30, 2014
	*Note*		Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended

Sales		4,34,44,46
Sales of goods			￦	12,264,491			26,497,475			11,830,026			25,903,602
Sales of services				121,583			216,371			142,886			207,464
Sales of construction services		20		1,192,576			1,897,085			829,221			1,377,969
Revenue related to transfer of assets from customers				93,176			184,754			87,166			172,911

				13,671,826			28,795,685			12,889,299			27,661,946

Cost of sales		13,25,42,46
Cost of sales of goods				(9,783,228	)		(21,449,147	)		(10,682,236	)		(23,200,495	)
Cost of sales of services				(115,545	)		(204,704	)		(55,591	)		(143,671	)
Cost of sales of construction services				(1,132,526	)		(1,799,617	)		(798,761	)		(1,302,143	)

				(11,031,299	)		(23,453,468	)		(11,536,588	)		(24,646,309	)


Gross profit				2,640,527			5,342,217			1,352,711			3,015,637


Selling and administrative expenses		25,35,42,46		(552,543	)		(1,014,367	)		(523,471	)		(959,320	)


Operating profit		4,51		2,087,984			4,327,850			829,240			2,056,317

Other non-operating income		36		96,330			213,695			74,958			145,681

Other non-operating expense		36		(16,980	)		(40,117	)		(14,298	)		(37,357	)

Other gains, net		13, 37		47,241			73,135			49,395			90,477

Finance income		5,11,38		275,466			448,373			681,344			655,948

Finance expenses		5,11,39		(783,041	)		(1,450,165	)		(1,284,271	)		(1,782,938	)

Profit related to associates, joint ventures and subsidiaries		4,17
Share in profit of associates and joint ventures				38,653			246,207			50,095			185,078
Gain on disposal of investments in subsidiaries		16		—			5,866			45,981			45,981
Share in loss of associates and joint ventures				(12,170	)		(33,041	)		(3,790	)		(27,048	)
Loss on disposal of investments in associates and joint ventures				—			—			(106	)		(106	)
Impairment loss on investments in associates and joint ventures				—			—			—			(1,558	)

				26,483			219,032			92,180			202,347


Profit before income tax				1,733,483			3,791,803			428,548			1,330,475


Income tax expense		40		(391,589	)		(1,226,802	)		(237,036	)		(577,692	)


Profit for the period			￦	1,341,894			2,565,001			191,512			752,783

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Loss), Continued

For the three and six-month periods ended June 30, 2015 and 2014

(Unaudited)


In millions of won, except per share information			June 30, 2015						June 30, 2014
	*Note*		Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended

Other comprehensive income (loss)		5,11,25,31,33
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		25,31	￦	45,646			(33,185	)		(45,363	)		(60,708	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		31		1,472			1,230			(1,811	)		(2,017	)
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		32,552			22,905			(23,948	)		(40,495	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		5,11,33		(33,358	)		(21,360	)		(37,238	)		(33,913	)
Foreign currency translation of foreign operations, net of tax		33		36,051			(15,962	)		(157,270	)		(98,465	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		33		45,713			34,922			(27,895	)		(81,689	)


Other comprehensive income (loss), net of tax				128,076			(11,450	)		(293,525	)		(317,287	)

Total comprehensive income (loss) for the period			￦	1,469,970			2,553,551			(102,013	)		435,496


Profit or loss attributable to:
Owners of the Company		43	￦	1,305,183			2,505,266			154,752			687,014
Non-controlling interests				36,711			59,735			36,760			65,769

			￦	1,341,894			2,565,001			191,512			752,783

Total comprehensive income (loss) attributable to:
Owners of the Company			￦	1,423,010			2,491,790			(117,946	)		378,057
Non-controlling interests				46,960			61,761			15,933			57,439

			￦	1,469,970			2,553,551			(102,013	)		435,496


Earnings per share		43
Basic and diluted earnings per share			￦	2,034			3,903			248			1,103

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2015 and 2014

(Unaudited)


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

Balance at January 1, 2014	￦	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		—		687,014			—			687,014			65,769			752,783
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		—		(53,574	)		—			(53,574	)		(7,134	)		(60,708	)
Share in other comprehensive loss of associates and joint ventures, net of tax		—		(2,017	)		—			(2,017	)		—			(2,017	)
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		—		—			(40,494	)		(40,494	)		(1	)		(40,495	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			(30,673	)		(30,673	)		(3,240	)		(33,913	)
Foreign currency translation of foreign operations, net of tax		—		—			(99,918	)		(99,918	)		1,453			(98,465	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		—		—			(82,281	)		(82,281	)		592			(81,689	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid		—		(56,074	)		—			(56,074	)		(86,805	)		(142,879	)
Issuance of share capital by subsidiaries		—		—			—			—			4,379			4,379
Equity transaction within consolidated scope		—		—			(3,917	)		(3,917	)		(1,939	)		(5,856	)
Changes in consolidated scope – other than issuance of share capital		—		—			—			—			(5,648	)		(5,648	)
Dividends paid (hybrid securities)		—		—			—			—			(8,182	)		(8,182	)
Others		—		—			—			—			(5	)		(5	)


Balance at June 30, 2014	￦	4,053,578		33,341,435			13,182,721			50,577,734			1,150,307			51,728,041

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity, Continued

For the six-month periods ended June 30, 2015 and 2014

(Unaudited)


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

Balance at January 1, 2015	￦	4,053,578		35,303,647			14,244,106			53,601,331			1,223,679			54,825,010

Total comprehensive income (loss) for the period
Profit for the period		—		2,505,266			—			2,505,266			59,735			2,565,001
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		—		(33,575	)		—			(33,575	)		390			(33,185	)
Share in other comprehensive income of associates and joint ventures, net of tax		—		1,230			—			1,230			—			1,230
Items that may be reclassified subsequently to profit or loss:
Net changes in the unrealized fair value of available-for-sale financial assets, net of tax		—		—			22,905			22,905			—			22,905
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			(17,875	)		(17,875	)		(3,485	)		(21,360	)
Foreign currency translation of foreign operations, net of tax		—		—			(21,083	)		(21,083	)		5,121			(15,962	)
Share in other comprehensive income of associates and joint ventures, net of tax		—		—			34,922			34,922			—			34,922
Transactions with owners of the Company, recognized directly in equity
Dividends paid		—		(320,982	)		—			(320,982	)		(56,352	)		(377,334	)
Issuance of share capital by subsidiaries		—		—			2,865			2,865			6,382			9,247
Equity transaction within consolidated scope		—		—			44,107			44,107			9,591			53,698
Changes in consolidated scope – other than issuance of share capital		—		—			—			—			(1,547	)		(1,547	)
Dividends paid (hybrid securities)		—		—			—			—			(8,182	)		(8,182	)
Others		—		—			—			—			(1,157	)		(1,157	)


Balance at June 30, 2015	￦	4,053,578		37,455,586			14,309,947			55,819,111			1,234,175			57,053,286

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2015 and 2014

(Unaudited)


In millions of won	June 30, 2015			June 30, 2014

Cash flows from operating activities
Profit for the period	￦	2,565,001			752,783


Adjustments for:
Income tax expense		1,226,802			577,692
Depreciation		4,003,612			3,797,274
Amortization		37,647			39,229
Employee benefit expense		153,924			173,881
Bad debt expense (reversal)		(4,488	)		30,299
Interest expense		1,078,463			1,193,767
Loss on sale of financial assets		2,983			2
Loss on disposal of property, plant and equipment		1,720			10,141
Loss on abandonment of property, plant, and equipment		123,390			127,051
Impairment loss on property, plant and equipment		4,757			8,900
Loss on disposal of intangible assets		5			17
Accretion expense to provisions, net		796,511			568,534
Loss (gain) on foreign currency translation, net		246,856			(401,492	)
Valuation and transaction loss (gain) on derivative instruments, net		(211,224	)		446,877
Share in profit of associates and joint ventures, net		(213,166	)		(158,030	)
Gain on disposal of property, plant and equipment		(96,769	)		(32,508	)
Gain on disposal of intangible assets		(32	)		—
Gain on disposal of investments in associates, joint ventures and subsidiaries		(5,866	)		(45,875	)
Impairment loss on investments in associates and joint ventures		—			1,558
Interest income		(105,008	)		(98,005	)
Dividend income		(13,564	)		(13,547	)
Impairment loss on available-for-sale securities		13,993			41,792
Others, net		(945	)		(25,522	)

		7,039,601			6,242,035

Changes in:
Trade receivables		1,088,488			710,016
Non-trade receivables		(8,699	)		3,584
Accrued income		(45,056	)		(87,989	)
Other receivables		(279	)		2,907
Other current assets		22,890			20,963
Inventories		(599,374	)		(502,572	)
Other non-current assets		(42,396	)		(34,391	)
Trade payables		(1,700,352	)		(1,118,435	)
Non-trade payables		100,075			281,887
Accrued expenses		45,201			84,938
Other liabilities		22			—
Other current liabilities		963,614			849,354
Other non-current liabilities		127,768			(142,255	)
Investments in associates and joint ventures		37,903			22,378
Provisions		(414,474	)		(327,564	)
Payments of employee benefit obligations		(14,844	)		(88,605	)
Plan assets		305			(2,311	)

		(439,208	)		(328,095	)

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2015 and 2014

(Unaudited)


In millions of won	June 30, 2015			June 30, 2014

Cash generated from operating activities
Dividends received	￦	13,564			11,051
Interest paid		(1,120,011	)		(1,227,539	)
Interest received		80,705			84,933
Income taxes refund (paid)		(514,632	)		111,027

Net cash provided by operating activities		7,625,020			5,646,195


Cash flows from investing activities
Proceeds from disposals of associates and joint ventures		—			1,915
Acquisition of associates and joint ventures		(67,886	)		(210,911	)
Proceeds from disposals of property, plant and equipment		6,589,066			35,453
Acquisition of property, plant and equipment		(7,799,359	)		(7,642,027	)
Proceeds from disposals of intangible assets		163			2
Acquisition of intangible assets		(33,945	)		(30,017	)
Proceeds from disposals of financial assets		142,562			433,673
Acquisition of financial assets		(1,629,993	)		(192,456	)
Increase in loans		(109,534	)		(91,151	)
Collection of loans		47,743			56,190
Increase in deposits		(156,985	)		(120,450	)
Decrease in deposits		119,476			115,284
Receipt of government grants		10,153			31,021
Usage of government grants		(18,943	)		(1,805	)
Net cash inflow from changes in consolidation scope		553			44,523
Other cash inflow (outflow) from investing activities, net		15,016			(16,958	)

Net cash used in investing activities		(2,891,913	)		(7,587,714	)


Cash flows from financing activities
Proceeds from short-term borrowings, net		323,645			1,218,390
Proceeds from long-term borrowings and debt securities		2,124,045			5,176,073
Repayment of long-term borrowings and debt securities		(4,783,278	)		(3,876,757	)
Payment of finance lease liabilities		(55,242	)		(60,078	)
Settlement of derivative instruments, net		3,713			(316,069	)
Proceeds (payment) for changes in interests in subsidiaries		72,316			(378	)
Dividends paid (hybrid bond)		(8,182	)		(8,182	)
Dividends paid		(377,334	)		(142,879	)
Other cash inflow (outflow) from financing activities, net		(2,437	)		4,886

Net cash provided by (used in) financing activities		(2,702,754	)		1,995,006


Net increase in cash and cash equivalents before effect of exchange rate fluctuations		2,030,353			53,487

Effect of exchange rate fluctuations on cash held		23,785			4,506


Net increase in cash and cash equivalents		2,054,138			57,993

Cash and cash equivalents at January 1		1,796,300			2,232,313


Cash and cash equivalents at June 30	￦	3,850,438			2,290,306

See accompanying notes to the consolidated interim financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 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 June 30, 2015, KEPCO’s share capital amounts to ￦3,209,820 million and KEPCO’s shareholders are as follows:


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


		641,964,077		100.00	%

(*)	The number of shares held by foreign shareholders are 196,514,960 shares (30.61%) as of the most recent closing date of Register of Shareholders (May 6, 2015).

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 of 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

June 30, 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

2.	Basis of Preparation, Continued

(4)

Use of estimates and judgments, continued

(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 (Note 25).

(v)

Unbilled revenue

Energy delivered but not yet metered nor billed are estimated at the reporting date based on consumption statistics and selling price estimates. Determination of the unbilled revenues at the end of the reporting period is sensitive to the estimated assumptions and prices based on statistics. Unbilled revenue recognized as of June 30, 2015 and 2014 is ￦1,302,371 million and ￦1,303,863 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 significant 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, and effective for annual periods beginning on or after January 1, 2016, and the Company has not early adopted them. The management believes the impact on the consolidated financial statements upon the adoption of the amendments is immaterial.

(i)

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. These 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 rebutted only when revenue and the consumption of the economic benefits of the intangible asset are highly correlated, or when the intangible asset is expressed as a measure of revenue. These 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’. These 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

June 30, 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 (loss) 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 (loss) and accumulated in equity, the amounts previously recognized in other comprehensive income (loss) 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 joint venture.

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(2)

Business combinations, continued

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

•

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

•

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

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

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

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

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is re-measured at subsequent reporting dates in accordance with K-IFRS 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 (loss) 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(2)

Business combinations, continued

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

(3)

Investments in associates

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

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

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

Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Company’s share of the income or loss and other comprehensive income (loss) 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 (loss) 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 (loss) 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(3)

Investments in associates, continued

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

(4)

Joint arrangements

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

If the Company is a joint operator, the Company is to recognize and measure the assets and liabilities (and recognize the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant K-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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(6)

Goodwill, continued

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

(7)

Revenue recognition

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

(i)

Sales of goods

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

The Company recognizes electricity sales revenue based on power sold (transferred to the customer) up to the reporting date. To determine the amount of power sold, the Company estimates daily power volumes of electricity for residential, commercial, general 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

June 30, 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

June 30, 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 (loss) 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 (loss) 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

June 30, 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 (loss). The actuarial gains or losses recognized in other comprehensive income (loss) 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

June 30, 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 (loss).

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(14)

Income taxes, continued

(iii)

Current and deferred tax for the year

Current and deferred tax are recognized in income or loss, except when they relate to items that are recognized in other comprehensive income (loss) or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income (loss) 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.

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(16)

Investment property

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

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

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

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

(17)

Intangible assets

(i)

Intangible assets acquired separately

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

(ii)

Research and development

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

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

•

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

•

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

•

The ability to use or sell the intangible asset;

•

How the intangible asset will generate probable future economic benefits;

•

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

•

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(17)

Intangible assets, continued

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


	Useful lives (years)	Amortization methods

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

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(18)

Impairment of non-financial assets other than goodwill, continued

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

(19)

Inventories

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(20)

Provisions, continued

(iv)

Provision for low and intermediate radioactive wastes

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

(v)

Provision for Polychlorinated Biphenyls (“PCBs”)

Under the regulation of Persistent Organic Pollutants Management Act, enacted in 2007, the Company is required to remove 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial assets, continued

(ii)

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

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

A financial asset is classified as held for trading if:

•

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

•

On initial recognition it is part of a portfolio of identified financial instruments that the 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial assets, continued

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

(v)

Loans and receivables

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

(vi)

Impairment of financial assets

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

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

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

•

Significant financial difficulty of the issuer or counterparty; or

•

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

•

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

•

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

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the 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 income or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

3.	Significant Accounting Policies, Continued

(21)

Non-derivative financial assets, continued

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 income or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

(vii)

De-recognition of financial assets

The 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

June 30, 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

June 30, 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

June 30, 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

June 30, 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

June 30, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(2)

Financial information of the segments for the three and six-month periods ended June 30, 2015 and 2014, respectively, are as follows:


In millions of won
June 30, 2015
Segment	Total segment revenue						Intersegment revenue						Revenue from external customers				Income (loss) of associates and joint ventures						Depreciation and Amortization						Interest Income						Interest expense						Operating income (loss)
	Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended		Six- month period ended		Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended

Transmission and distribution	￦	13,561,560			28,498,239			313,577			610,732			13,247,983		27,887,507		44,215			214,247			706,033			1,410,193			21,292			31,862			281,603			583,719			2,124,786			1,930,620
Electric power generation (Nuclear)		1,902,260			4,638,420			1,896,788			4,630,737			5,472		7,683		(55	)		(713	)		725,525			1,462,841			6,086			13,094			149,585			299,171			(3,327	)		1,192,216
Electric power generation (Non-nuclear)		4,085,679			10,709,496			3,928,265			10,341,346			157,414		368,150		(16,831	)		5,544			572,605			1,134,531			5,397			11,066			78,141			160,470			(183,626	)		1,033,762
Plant maintenance & engineering service		616,499			1,170,215			479,572			893,785			136,927		276,430		(846	)		(46	)		20,133			40,031			2,398			5,422			32			71			74,239			130,854
Others		162,603			314,232			38,573			58,317			124,030		255,915		—			—			6,493			13,536			27,616			53,138			24,557			45,066			18,398			32,899
Consolidation adjustments		(6,656,775	)		(16,534,917	)		(6,656,775	)		(16,534,917	)		—		—		—			—			(10,469	)		(19,873	)		(7,274	)		(9,574	)		(8,111	)		(10,034	)		57,514			7,499


	￦	13,671,826			28,795,685			—			—			13,671,826		28,795,685		26,483			219,032			2,020,320			4,041,259			55,515			105,008			525,807			1,078,463			2,087,984			4,327,850

Other non-operating income																																										96,330			213,695
Other non-operating expense																																										(16,980	)		(40,117	)
Other gains, net																																										47,241			73,135
Finance income																																										275,466			448,373
Finance expenses																																										(783,041	)		(1,450,165	)

Profit related associates, joint ventures and subsidiaries																																										26,483			219,032

Profit before income tax																																										1,733,483			3,791,803

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(2)

Financial information of the segments for the three and six-month periods ended June 30, 2015 and 2014, respectively, are as follows, continued:


In millions of won
June 30, 2014
Segment	Total segment revenue						Intersegment revenue						Revenue from external customers				Income (loss) of associates and joint ventures						Depreciation and amortization						Interest Income						Interest expense						Operating profit (loss)
	Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended		Six- month period ended		Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended

Transmission and distribution	￦	12,910,804			27,591,865			367,866			653,818			12,542,938		26,938,047		47,295			154,351			672,748			1,344,667			6,128			13,093			367,594			727,483			(186,677	)		(453,644	)
Electric power generation (Nuclear)		2,348,101			4,796,222			2,346,772			4,792,235			1,329		3,987		—			740			726,898			1,430,109			8,005			11,957			145,511			291,308			644,341			1,593,310
Electric power generation (Non-nuclear)		5,625,770			13,054,438			5,559,204			12,860,962			66,566		193,476		46,107			49,679			513,202			1,030,271			8,395			16,545			65,968			140,881			307,609			821,981
Plant maintenance & engineering service		647,547			1,202,026			467,514			870,558			180,033		331,468		(1,222	)		(2,423	)		17,141			34,907			3,697			8,699			(35	)		108			90,757			148,415
Others		127,435			249,635			29,002			54,667			98,433		194,968		—			—			6,856			13,513			28,258			55,154			21,852			40,420			31,116			62,223
Consolidation adjustments		(8,770,358	)		(19,232,240	)		(8,770,358	)		(19,232,240	)		—		—		—			—			(8,466	)		(16,964	)		(4,673	)		(7,443	)		(4,169	)		(6,433	)		(57,906	)		(115,968	)


	￦	12,889,299			27,661,946			—			—			12,889,299		27,661,946		92,180			202,347			1,928,379			3,836,503			49,810			98,005			596,721			1,193,767			829,240			2,056,317

Other non-operating income																																										74,958			145,681
Other non-operating expense																																										(14,298	)		(37,357	)
Other gains, net																																										49,395			90,477
Finance income																																										681,344			655,948
Finance expenses																																										(1,284,271	)		(1,782,938	)

Profit related associates, joint ventures and subsidiaries																																										92,180			202,347

Profit before income tax																																										428,548			1,330,475

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(3)

Information related to segment assets and segment liabilities as of and for the six-month period ended June 30, 2015 and as of and for the year ended December 31, 2014 are as follows:


In millions of won
June 30, 2015
Segment	Segment assets			Investments in associates and joint ventures		Acquisition of non-current assets			Segment liabilities

Transmission and distribution	￦	104,026,965			4,400,585		3,718,556			59,015,749
Electric power generation (Nuclear)		49,128,233			15,780		1,359,329			27,289,507
Electric power generation (Non-nuclear)		42,485,625			1,321,098		2,811,554			24,760,768
Plant maintenance & engineering service		2,794,058			57,789		117,004			1,122,188
Others		5,647,717			—		53,909			2,171,544
Consolidation adjustments		(33,999,699	)		—		(227,048	)		(1,330,143	)


Consolidated totals	￦	170,082,899			5,795,252		7,833,304			113,029,613


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	￦	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	￦	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)**
	June 30, 2015				June 30, 2014				June 30, 2015		December 31, 2014
	Three- month period ended		Six- month period ended		Three- month period ended		Six- month period ended		June 30, 2015		December 31, 2014

Domestic	￦	12,378,120		26,685,740		11,970,221		26,134,851		141,544,538		136,053,940
Overseas (*1)		1,293,706		2,109,945		919,078		1,527,095		4,331,515		6,542,282


	￦	13,671,826		28,795,685		12,889,299		27,661,946		145,876,053		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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

4.	Segment, Geographic and Other Information, Continued

(5)

Information on significant customers

There is no individual customer comprising more than 10% of the Company’s revenue for the six-month periods ended June 30, 2015 and 2014.

5.	Classification of Financial Instruments

(1)

Classification of financial assets as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015
	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets
Cash and cash equivalents	￦	—		3,850,438		—		—		—		3,850,438
Current financial assets

Held-to-maturity investments		—		—		—		151		—		151
Derivative assets		21,305		—		—		—		45,655		66,960
Other financial assets		—		1,687,003		—		—		—		1,687,003

Trade and other receivables		—		6,691,138		—		—		—		6,691,138

		21,305		12,228,579		—		151		45,655		12,295,690

Non-current assets

Non-current financial assets

Available-for-sale financial assets		—		—		720,196		—		—		720,196

Held-to-maturity investments		—		—		—		3,236		—		3,236
Derivative assets		62,536		—		—		—		172,827		235,363
Other financial assets		—		1,192,690		—		—		—		1,192,690

Trade and other receivables		—		1,754,614		—		—		—		1,754,614

		62,536		2,947,304		720,196		3,236		172,827		3,906,099


	￦	83,841		15,175,883		720,196		3,387		218,482		16,201,789


In millions of won	December 31, 2014
	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets
Cash and cash equivalents	￦	—		1,796,300		—		—		—		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


	￦	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

June 30, 2015

(Unaudited)

5.	Classification of Financial Instruments, continued

(2)

Classification of financial liabilities as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015
	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities
Borrowings	￦	—		1,441,276		—		1,441,276
Debt securities		—		6,379,875		—		6,379,875
Derivative liabilities		37,661		—		1,513		39,174
Trade and other payables		—		4,794,212		—		4,794,212

		37,661		12,615,363		1,513		12,654,537

Non-current liabilities
Borrowings		—		1,819,091		—		1,819,091
Debt securities		—		51,151,651		—		51,151,651
Derivative liabilities		93,341		—		164,088		257,429
Trade and other payables		—		3,809,699		—		3,809,699

		93,341		56,780,441		164,088		57,037,870


	￦	131,002		69,395,804		165,601		69,692,407


In millions of won	December 31, 2014
	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities
Borrowings	￦	—		1,113,354		—		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


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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

5.	Classification of Financial Instruments, Continued

(2)

Classification of comprehensive income (loss) from financial instruments for the three and six-month periods ended June 30, 2015 and 2014 are as follows:


In millions of won		June 30, 2015						June 30, 2014
		Three- month period ended			Six- month period ended			Three- month period ended			Six- month period ended

Cash and cash equivalents	Interest income	￦	13,297			25,188			14,600			26,835
Available-for-sale financial assets	Dividends income		8,107			13,564			1,022			13,547
	Impairment loss on available-for-sale financial assets		(8,172	)		(13,993	)		(41,792	)		(41,792	)
	Loss on disposal of available-for-sale financial assets		(2,008	)		(2,983	)		—			(2	)
	Interest income		—			29			110			218
Held-to-maturity investments	Interest income		24			48			21			38
Loans and receivables	Interest income		4,400			11,174			8,981			16,929
Trade and other receivables	Interest income		29,484			54,465			24,875			50,646
Short-term financial instruments	Interest income		5,668			8,532			1,142			3,148
Long-term financial instruments	Interest income		2,643			5,572			81			191
Financial assets at fair value through profit or loss	Gain (loss) on valuation of derivatives		30,540			60,905			(14,141	)		(4,762	)
Financial assets at fair value through profit or loss	Gain on transaction of derivatives		472			2,138			42,762			33,199
Derivative assets (using hedge accounting)	Gain (loss) on valuation of derivatives (profit or loss)		69,806			84,005			(107,359	)		(71,451	)
	Loss on valuation of derivatives (equity, before tax) (*)		(32,598	)		(19,588	)		(16,813	)		(22,545	)
	Gain (loss) on transaction of derivatives		354			1,419			—			(1,584	)
Financial liabilities carried at amortized cost	Interest expense of borrowings and debt securities		(350,453	)		(729,657	)		(426,175	)		(853,722	)
	Interest expense of trade and other payables		(24,211	)		(45,120	)		(24,764	)		(47,140	)
	Interest expense of others		(151,143	)		(303,686	)		(145,782	)		(292,905	)
	Gain (loss) on foreign currency transactions and translations		(198,642	)		(258,978	)		590,587			445,196
Financial liabilities at fair value through profit or loss	Gain (loss) on valuation of derivatives		12,199			30,541			(267,921	)		(199,082	)
Financial liabilities at fair value through profit or loss	Loss on transaction of derivatives		(2,424	)		(4,209	)		(103,335	)		(74,740	)
Derivative liabilities (using hedge accounting)	Gain (loss) on valuation of derivatives (profit or loss)		39,586			41,443			(151,029	)		(121,509	)
	Loss on valuation of derivatives (equity, before tax) (*)		(25,460	)		(11,723	)		(37,717	)		(31,027	)
	Loss on transaction of derivatives		(1,618	)		(5,018	)		(1,636	)		(6,948	)

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

6.	Restricted Deposits

Restricted deposits as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won		June 30, 2015		December 31, 2014

Cash and cash equivalents	Escrow accounts	￦	6,336		100
	Deposits for government project		7,519		10,156
	Collateral provided for borrowings		9,181		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		2		3
	Guarantee deposits for banking accounts at oversea branches		319		312
	Pledge		740		740
	Decommissioning costs of nuclear power plants		603,306		603,306
	Collateral provided for borrowings		6		—


		￦	632,776		632,910

7.	Cash and Cash Equivalents

Cash and cash equivalents as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015		December 31, 2014

Cash	￦	132		77
Other demand deposit		1,635,814		1,154,250
Short-term deposits classified as cash equivalents		2,003,061		340,119
Short-term investments classified as cash equivalents		211,431		301,854


	￦	3,850,438		1,796,300

8.	Trade and Other Receivables

(1)

Trade and other receivables as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	￦	6,331,935		(54,205	)		(46	)		6,277,684
Other receivables		467,779		(51,660	)		(2,665	)		413,454

		6,799,714		(105,865	)		(2,711	)		6,691,138

Non-current assets
Trade receivables		403,297		—			(1	)		403,296
Other receivables		1,389,394		(31,979	)		(6,097	)		1,351,318

		1,792,691		(31,979	)		(6,098	)		1,754,614


	￦	8,592,405		(137,844	)		(8,809	)		8,445,752

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

8.	Trade and Other Receivables, Continued

(1)

Trade and other receivables as of June 30, 2015 and December 31, 2014 are as follows, continued:


In millions of won	December 31, 2014
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	￦	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


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

(2)

Other receivables as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Non-trade receivables	￦	156,094		(51,660	)		—			104,434
Accrued income		57,149		—			—			57,149
Deposits		190,334		—			(2,665	)		187,669
Finance lease receivables		9,712		—			—			9,712
Others		54,490		—			—			54,490

		467,779		(51,660	)		(2,665	)		413,454

Non-current assets
Non-trade receivables		140,491		(27,141	)		—			113,350
Accrued income		432		—			—			432
Deposits		267,986		—			(6,097	)		261,889
Finance lease receivables		895,708		—			—			895,708
Others		84,777		(4,838	)		—			79,939

		1,389,394		(31,979	)		(6,097	)		1,351,318


	￦	1,857,173		(83,639	)		(8,762	)		1,764,772

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

8.	Trade and Other receivables, Continued

(2)

Other receivables as of June 30, 2015 and December 31, 2014 are as follows, continued:


In millions of won	December 31, 2014
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Non-trade receivables	￦	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


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

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 June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015			December 31, 2014
Trade receivables: (not overdue, not impaired)	￦	6,615,744			7,516,233

Trade receivables: (overdue, not impaired)		4,981			1,061

Less than 60 days		4,981			1,061

Trade receivables: (other)		114,507			137,992

60 ~ 90 days		31,706			31,438
90 ~ 120 days		16,735			12,045
120 days ~ 1 year		37,295			42,736
Over 1 year		28,771			51,773

		6,735,232			7,655,286


Less allowance for doubtful accounts		(54,205	)		(80,644	)
Less present value discount		(47	)		(108	)


	￦	6,680,980			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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

8.	Trade and Other receivables, Continued

(4)

Aging analysis of other receivables as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	June 30, 2015			December 31, 2014
Other receivables: (not overdue, not impaired)	￦	1,643,443			1,729,807

Other receivables: (overdue, not impaired)		47,192			58,778

Less than 60 days		47,192			58,778

Other receivables: (other)		166,538			136,804

60 ~ 90 days		5,491			1,132
90 ~ 120 days		6,633			2,242
120 days ~ 1 year		57,127			18,857
Over 1 year		97,287			114,573

		1,857,173			1,925,389


Less allowance for doubtful accounts		(83,639	)		(67,932	)
Less present value discount		(8,762	)		(9,772	)


	￦	1,764,772			1,847,685

(5)

Changes in the allowance for doubtful accounts for the six-month period ended June 30, 2015 and for the year ended December 31, 2014 are as follows:


In millions of won	June 30, 2015						December 31, 2014
	Trade receivables			Other receivables			Trade receivables			Other receivables

Beginning balance	￦	80,644			67,932			65,024			69,887
Bad debt expense		—			12,983			39,018			15,981
Write-off		(8,968	)		(591	)		(23,398	)		(7,534	)
Reversal		(17,471	)		—			—			(241	)
Others		—			3,315			—			(10,161	)


Ending balance	￦	54,205			83,639			80,644			67,932

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

9.	Available-for-sale Financial Assets

Available-for-sale financial assets as of June 30, 2015 and December 31, 2014 are as follows:


In millions of won	Ownership			June 30, 2015		December 31, 2014
Equity securities
Listed
Kwanglim Co., Ltd. (*3)		0.44	%	￦	172		128
Cockatoo Coal Limited (*1)		0.07	%		43		628
Denison Mines Corp.		11.24	%		47,534		62,339
Energy Fuels Inc.		5.09	%		8,671		11,569
Fission 3.0		0.45	%		76		61
Fission Uranium Corp.		0.21	%		718		651
PT Adaro Energy Tbk (*1,3)		1.50	%		30,716		44,109
Sungjee Construction Co., Ltd.		0.01	%		6		5
Ssangyong Motor Co., Ltd.		0.03	%		336		357
Korea District Heating Corp. (*3)		19.55	%		176,144		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	%		55		48
PAN Ocean Co., Ltd.		0.00	%		6		5
Borneo International Furniture Co., Ltd.		0.28	%		77		4
TONGYANG Inc.		0.03	%		125		66
Nexolon Co., Ltd.		2.59	%		3,504
TONGYANG Networks Inc.		0.01	%		8		3

					268,192		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	%		214,916		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	%		17,217		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	%		800		795
Global Dynasty Overseas Resource Development Private Equity Firm		7.46	%		2,233		2,233
Plant & Mechanical Contractors Financial Cooperative of Korea		0.01	%		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 (*2)		14.18	%		1,752		4,752
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1		5.00	%		1,299		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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements, Continued

June 30, 2015

(Unaudited)

9.	Available-for-sale Financial Assets, Continued

Available-for-sale financial assets as of June 30, 2015 and December 31, 2014 are as follows, continued:


In millions of won	Ownership			June 30, 2015		December 31, 2014

Poonglim Industrial Co., Ltd.		0.01	%	￦	93		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. (*1)		0.02	%		—		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		—
Ildong 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.		0.04	%		16		—
Joongang Platec Co., Ltd.		0.75	%		72		—
Hangjin Steel Co., Ltd.		0.01	%		116		—
Pyungsan SI Ltd.		0.01	%		4		—
Samgong Development Co., Ltd.		0.01	%		7		—
Joongang Development Co., Ltd.		0.12	%		8		—
AJS Co., Ltd.		0.23	%		32		—
SET&C Co., Ltd.		0.13	%