strictly private and confidential annual ratings review presentation korea western power october...

Strictly Private and Confidential

Annual Ratings Review PresentationAnnual Ratings Review PresentationKorea Western PowerKorea Western Power

October 2010October 2010

Table of Contents

Regulatory Environment Regulatory Environment

Operation Overview Operation Overview

Financial Management Financial Management

Financial Forecast Financial Forecast

22

33

44

55

11 Company Overview Company Overview

3

Note : Applied FX rate : KRW 1221.80/USD (Bloomberg as of June 30, 2010)

Inception Inception Spun off from KEPCO in April 2, 2001 Spun off from KEPCO in April 2, 2001

OwnershipOwnership 100% owned by KEPCO (51% owned by Korean Government) 100% owned by KEPCO (51% owned by Korean Government)

Generation Capacity

Generation Capacity 9,604 MW 9,604 MW

Total AssetsTotal Assets 1H 2010 : KRW 4,725 bn (USD 3,868mn) FY2009 : KRW 4,482 bn (USD 3,668mn)

1H 2010 : KRW 4,725 bn (USD 3,868mn) FY2009 : KRW 4,482 bn (USD 3,668mn)

Total Revenue

Total Revenue



Net IncomeNet Income 1H 2010 : KRW 173 bn (USD 142 mn) FY2009 : KRW 88bn (USD 72 mn)

1H 2010 : KRW 173 bn (USD 142 mn) FY2009 : KRW 88bn (USD 72 mn)

Introduction to KOWEPO

4

Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”, P/S denotes “Pumped Storage”

Base load, intermediate load, and peak load account for 42%, 15% and 43% respectively in terms of generation capacity in operation

Over 85% of capacity is located in or near the Seoul and Gyeonggi metropolitan areas– Seoul and Gyeonggi metropolitan areas comprise approximately 40% of total national

demand

Base Load Intermediate Load Peak Load

In Operation

Taean T/P(4,000 MW)

Pyeongtaek T/P(1,400 MW)

4,000MW

Seoincheon C/C

(1,800 MW)

Samrangjin P/S (600 MW)

CheongsongP/S (600 MW)

PyeongtaekC/C (480 MW)

Location of Plant Complex

GunsanC/C (718 MW)

Generation Capacity by Type of Plant

4,198MW CoalLNGBC Oil

Pumped StorageHydro Solar

TaeanPyeongtaek

Gunsan

Cheongsong

Seoincheon

Samrangjin

Seoul and Gyeonggi Metropolitan Area

Power Plants Portfolio

1,400MW

5

KOWEPO

9,604

12.9%

KOSEP

8,966

12.0%

KOMIPO

9,399

12.6%KOSPO

8,779

11.8%

EWP

9,509

12.8%

KHNP

18,256

24.5%

Others

9,894

13.3%

Sales Volume Market ShareGeneration Capacity Market

Share

Total Generation Capacity74,407 MW

Total Electricity Sales215,316 GWh

(MW) (GWh)

KOWEPO’s Market Position -1H 2010

KOWEPO

24,764

11.5%

KOSEP

28,775

13.4%

KOMIPO

25,860

12.0%KOSPO

29,052

13.5%

EWP

25,089

11.7%

KHNP

69,919

32.5%

Others

11,857

5.5%

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Introduction of vesting contracts for Gencos deferred

Wholesale competition was put on a hold

1999 2000 20022001 2003 2004 2005 2007 20082006 2009

MOCIE announced restructuring plan for power industry

Incorporation of generation companies

Cost-based pool bidding (“CBP”) mechanism

Initiation of KOSEP privatization

Plan to separate KEPCO’s distribution sector was halted due to substantial risk and uncertain benefits from the separation plan

Latest Power Industry Operating Environment

Update on Gencos Privatization and Consolidation Plan Privatization plan for KEPCO and its Gencos was cancelled in July 2008 Gencos will be designated as market oriented public firms by government to create

a more efficient management structure and enhance their competitiveness in 2011

The power industry restructuring plan delayed and the former privatization plan for Gencos cancelled

2010

Gencos will be designated as market oriented public firms

IPO of KOSEP was delayed

Implementation of TWBP was suspended

Privatization plan for Gencos cancelled

Latest Power Industry Operating Environment (Cont’d)

Electric Power Industry Reorganization - Transfer of Water Pump Generators to KHNP Purpose: Exclude water pump generator from competition and seek stability in electricity system network at the

same time achieving synergy from integration of the water pump generation and water generation Timeline: Before 2010; all assets must have been transferred before 2011 Effect on governance: No change in corporate governance – KEPCO will continue to hold 100% of respective

GENCOs

Transfer of water pump generators to Korea Hydro Nuclear Power

Genco Generator Power Capacity (kW)

South East Mooju 600,000

Mid Yangyang 1,000,000

West Samrangjin

Chungsong

600,000

600,000

South Chungpyung 400,000

East West Sanchung 700,000

Total 6 Generators 3,900,000

Implication for Korea Western Power

Site Asset Rev (% M/S)

Net Inc.

Gener-ation (% M/S)

Samrangjin 1,244 645 (1.63%)

99 385GWh (0.84%)

Chungsong 3,651 817 (2.06%)

-17 533GWh (1.17%)

Based on 2009YE total asset of W4,481.6bn, water pump generator is 10.9% of total asset

As a result of the transfer of water pump generator, we expect approximately 11% decrease in asset size, but given profit and generation consists of only 2-4%, the decrease relative to asset size is small

Note: Unit in KRW100mm

Nationwide Power Consumption

* 2010 GDP growth rate : 5.8%(Forecast), 1H 2010 : 7.6%* Source: “Statistics of Electric Power in Korea”, KEPCO / The Bank of Korea (July 2010) “Electricity Supply and Demand Basic Plan #4, MKE (Dec 2009)

147163

182201 193

214

258278

294312

332349

361

385 390408

240

8.50%9.20%

7.00%

4.70%

9.50%

7.20%8.50%

-6.90%

3.80%2.80%

4.60%4.00%

5.20% 5.10%

2.30%

0.20%

5.80%

0

50

100

150

200

250

300

350

400

450

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Pow

er c

onsu

mpt

ion

(TW

h)

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Gro

wth

rat

e

Power consumption GDP growth rate

Power consumption has continued to rise on the back of strong economic growth Continuous increase in power consumption expected

Electricity Demand Forecast

Korea’s electricity sector is expected to enjoy robust demand growth – Continuous economic growth will be the primary driver of power demand growth

Power demand is expected to grow at a rate of 2.2% per annum from 2008 to 2018

Source: MKE (Electricity Supply and Demand Basic Plan #4 – Published in Dec 2009)

(Unit: TWh)

390

409425

439450 459

467 473 478 483 487

200

300

400

500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Government’s Mid-to-Long Term Energy Strategy

Govt’s Mid-to-Long Term Energy Supply Scheme

Expansion on cost effective base load infrastructure in addition to promotion of environmental friendly energy sources such as renewable energies, following the Government’s Green Growth Plan

By year 2022, the installed capacity for Nuclear Power : 24.8% (’08) 33.0% (’22) Coal : 33.2% (’08) 29.2% (’22) LNG : 25.2% (’08) 22.9% (’22)

Installed Capacity Forecast by different energy sources

Source: MKE (Electricity Supply and Demand Basic Plan #4 – Published in Dec 2009)

24.8% 24.6% 27.7% 31.5% 32.6%

33.2% 31.8% 31.4% 29.4% 29.2%

25.2% 26.1% 24.6% 23.0% 22.9%

7.5% 7.1% 4.6% 4.3% 3.6%5.5% 5.1% 5.0% 4.7% 4.7%3.8% 5.3% 6.6% 7.2% 7.1%

2008 2010 2015 2020 2022

Nuclear Coal LNG Oil Hydraulic Others

Update on Electricity Pricing Mechanism

Power Price Comparison

Price type Price Remarks

Capacity Payment

(CP)

Base Load

KRW 7.46/kWh KRW 7.46/kWh as a base price, CP is dif-

ferentiated by regions, by seasons and by hours

Non Base Load

Energy Price

Base Load

[Max {(SMP-Fuel Cost), 0} x

The Adjusted Coefficient + Fuel Cost]

The Adjusted Coefficient (Aug. 2010 ~ )

Nuclear : 0.1913 (←0.3052)

Coal : 0.1315 (←0.1865)

Anthracite : 0.5000 (←0.7500)

Others/General : 0.3200 (←0. 3270)

Non Base Load

Application of The Adjusted Coefficient of SMP Abolition of Regulated Market Price (RMP) system KOWEPO can pass through 100% of its fuel cost through the energy price Electricity Generation Cost Evaluation Committee annually determines The Adjusted

Coefficient

※ RMP : Regulated Market Price, SMP : System Marginal Price

Introduction of “The Adjusted Coefficient of SMP” will motivate Gencos to construct base load power plants and lead to fair competition among Gencos. It will increase the efficiency of the power

market by stimulating cost reduction

Newly lowered Adjusted Coefficient will decrease KOWEPO’s operating income by KRW 57 billion for 5 months. (Aug.’10 ~ Dec.’10)

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Power Plant Facilities in Operation

KOWEPO operates 47 generation units with total generation capacity of 9,604MW.

Type Fuel TypeNumber of Units

Total Ca-pacity

Sales(GWh)

Utilization Rate (%)

Load Fac-tor (%)

Taean Thermal Bituminous 8 4,000 15,615 94.06 90.19

Pyeongtaek Thermal BC Oil 4 1,400 1,761 29.95 29.93

PyeongtaekCombined

CycleLNG

GT : 4ST : 1

320160

631 30.62 27.42

SeoincheonCombined

CycleLNG

GT : 8ST : 8

1,200600

5,913 76.38 64.85

SamrangjinPumped Storage

- 2 600 121 4.65 5.3

CheongsongPumped Storage

- 2 600 266 10.22 11.31

Taean Solar - 1 0.1 0 12.28 14.86

Samrangjin Solar - 2 3 2 12.41 15.43

Taean Hydraulic - 4 2.2 2 21.03 36.99

GusanCombined

CycleLNG

GT : 2ST : 1

718 453 29.35 28.07

TOTAL 47 9,604 24,764 64.62 68.34

Source: Company. As of June 30, 2010

Taean IGCC (300MW) will be added in Dec 2015.

New Business(1)

Domestic

KOWEPO plans to maintain its leading market position and superior operating performance promoting growth with new plant constructions and new business

Power Plant Type Generation Capacity Completion Remarks

New Plant

Taean IGCC 300MW Dec. 2015 Integrated Gasification Combined Cycle R&D project supported by Government

Equity Investment

Garorim Tidal 520MW Dec. 2014 Consortium With Posco E&C, Daewoo E&C, Lotte E&C Project Financing KOWEPO to be in charge of operation and maintenance

Dongducheon Combined Cycle 1500MW Dec. 2014 Consortium with Samsung E&C Project Financing KOWEPO to be in charge of operation and maintenance

Ansan Combined Cycle 750MW Mar. 2014 Consortium with Posco E&C Project Financing KOWEPO to be in charge of operation and maintenance

New Business(2)

Overseas

Power Plant Type Generation Capac-ity Remarks

Equity Investment

Philippines Kanan Hydro 150MW

Consortium with SK E&C (Korea) Build, Own, Operate Project Financing KOWEPO to be in charge of operation and maintenance

Indonesia Takalar Thermal (Coal) 200MW

Consortium with SAMBU, Yooho and MSC (Indonesia) Build, Own, Operate Project Financing KOWEPO to be in charge of operation and maintenance

Laos Xe-Namnoi Hydro 390MW

Consortium with SK E&C (Korea), Ratchaburi (Thai) and LHSE (Laos) Build, Own, Operate, Transfer Project Financing KOWEPO to be in charge of operation and maintenance

Saudi Arabia Ra-bigh

Thermal (Heavy Oil) 1,204MW

Consortium between KEPCO and ACWA received order for Build, Own, Operate Consortium between KOWEPO and NOMAC (Saudi) received mandate for O&M from KEPCO–ACWA consortium

KOWEPO plans to diversify its revenue sources through overseas expansion by leveraging its proven experiences and track records in operating and maintaining power plants

Project financing as a key funding source to minimize the financial risks

Global Fuel Market Trend

COAL Likely to maintain upward

trend due to the increasing demand from China and India

Widely known global view that the coal price will remain competitive compared with oil or gas

Forecast of Newcastle coal price: around US$ 90-100 in 2H 2010 and nearing around US$100’s/ton in 2011

OIL Reasons for price hike:

Favorable global economic condition, weakness in dollar, concern on inflation, strong demand from emerging markets Reasons for fall in price: Infeasibility of

OPEC’s production cuts, Completion of security of Strategy Petroleum Reserve of U.S. and China,

Forecast of oil prices: around US$90’s/bbl in 2011

NATURAL GAS The trend in natural gas will

be in line with oil

Competitive market environment will continue on the back of large-scale capital expenditure and development time which are required for new gas field exploitation

Fuel Market Forecast

COAL Coal prices picked up in the initial months of the year and

have stabilized thereafter Pacific: Newcastle Index (Australia) Atlantic: Richards Bay Index (South Africa)

OIL Fluctuated between US$70/bbl and US$85/bbl ranges Experienced a range bound movement throughout the year

and currently testing US$80-85/bbl ranges

Recent Fuel Market Trends

60

70

80

90

1.1. 1.29. 2.26. 3.26. 4.23. 5.21. 6.18. 7.16. 8.13. 9.10.

Brent WTI Dubai

70

80

90

100

110

1.1. 1.29. 2.26 3.26. 4.23. 5.21. 6.18. 7.16. 8.13. 9.10.

NEWC RB

US$ US$

Source: Bloomberg; Factset

Long –Term Supply Contracts

KOWEPO enters into long-term supply contracts

– To assure an adequate supply of the raw materials for a streamlined operation

– KOWEPO will adjust the portion of long-term supply contracts according to the market price volatility

Short-

term

30%

Long-

term

70%

Bituminous Coal LNG

Long-term100%

Bituminous

Supplier Country Contract Amount (1,000 ton/year)

Terms

Xstrata Australia 505 Apr 01 ~ Dec 10

Peabody Australia 500 Jan 05 ~ Dec 10

Flame Australia 500 Jan 07 ~ Dec 10

Rio Tinto Australia 1,000 Oct 08 ~ Sep 11

ECM Australia 1,000 Jan 10 ~ Dec 12

Bengalla Australia 250 Jun 10 ~ Dec 12

SONOMA Australia 750 Feb 08 ~ Apr 14

Felix Australia 625 Sep 09 ~ Life of mine

Australia: Sub-total 5,130 (38.0%)

Shanxi Coal China 1,000 Apr 99 ~ Mar 11

China Coal China 500 Jan 96 ~ Mar 11

Xinhua China 960 Jul 01 ~ Mar 11

China: Sub-total 2,460 (18.2%)

Indominco Indonesia 750 Sep 03 ~Dec 12

ABK Indonesia 720 Apr 10 ~ Dec 10

MSJ Indonesia 800 Jan 08 ~ Dec 15

Glencore (MHU) Indonesia 300 Apr 09 ~ Dec 10

ECM Indonesia 625 May 07 ~ Apr 11

VITOL Indonesia 325 Oct 10 ~ Sep 13

EMH Indonesia 420 Oct 10 ~ Sep 13

Morgan Stanley Indonesia 260 Oct 10 ~ Sep 13

Tiger Indonesia 750 Jan 09 ~ Dec 13

Indonesia: Sub-total 4,950 (36.6%)

SUEK Russia 455 Apr 10 ~ Dec 10

Russia: Sub-total 455 (3.4%)

VITOL US 520 Jan 10 ~ Dec 12

US: Sub-total 520 (3.8%)

TOTAL 13,515 (100%)

LNG SupplierContract amount

(1,000 ton/year)Terms

LNG KOGAS 1,340 07 ~ 26 (20 years)

Fuel Procurement Strategy

Hedging Strategy Established an internal infrastructure that analyzes the real time fuel market condition For bituminous coal, the portion of long term contracts is as high as 70% whereas the remaining

30% from the spot market which will be changed according to market situation 99% of required volume for 2010 and 30% of the required volume for 2011 already secured as of

Oct 2010 Entered into agreements with KEPCO and other Gencos for development of overseas resources

and also for stable and economical supply of bituminous coal Stability in supply and demand secured by using both domestic and offshore bidding strategies More than 90% of transportation is already secured through long-term (dedicated carrier +long-

term charter) transportation plan, providing a stable and economical means of transportation Collective negotiation and information sharing by 5 Gencos reinforces purchasing

competitiveness

`

Collaboration with other GENCOs Recently co-purchased Australian Moolarben coal with other Gencos through close co-operation Have jointly bid for Australia, Canada, Russia and South Africa coal along with other Gencos

Update on LNG procurement 100% of LNG will be supplied from KOGAS as the long-term supply/purchase contract has been

renewed Plans to purchase LNG directly with other Gencos from overseas suppliers when the Government

eases the regulation in the future

Insurance Coverage -1H 2010

Asset Comprehensive Insurance

Assembly Insurance Insurance on Cargo

Details

Insurance Type

2010 Asset Com-prehensive Insur-ance

InsurerMeritz fire & Marine and five others

Insured Amount

KRW 6,031,436mn

Insured Target

Generation Facili-ties

Details

Insurance Type

Construction works for Taean Site

InsurerSamsung fire & Ma-rine

Insured Amount

KRW 162,721mn

Insured Target

Fuel Unloading dock and Equip-ments

Details

Insurance Type

Fuel and Equipment Facilities Compre-hensive Insurance on Cargo

Insurer LIG Insurance

Insured Amount

KRW 1,591,714mn

Insured Target

Fuel and Equip-ments

KOWEPO is fully insured on its facilities under operation or construction and shipment/transportation of fuels and raw materials to refrain from any unexpected accident and subsequent losses.

Management’s View on KRW/USD

USD/KRW rate is expected to be gradually stabilized with downward tendency The precise estimation of USD/KRW rate is difficult given the volatile nature of

world’s macro economies

View on KRW/USD and its Impact

Current 2011 2012 2013 2014

USD/KRW 1,140 1,060 1,048 1,048 1,048

Impact of change in FX rate on KOWEPO

Under the CBP (Cost-Based Pool) system, the fuel price hikes as a result of depreciation of KRW (or appreciation of USD) shall be 100% compensated.

In that reason, KEPCO’s financial condition could be impacted by the FX fluctuation.

The company enters into the cross-currency swaps for all its long-term foreign currency denominated debt, thus neutrally positioned against FX fluctuation.

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Capital Structure -1H 2010

Capital Structure

3,8854,199

4,4824,725

3,708

2,302 2,4262,273

2,3542,501

2,224

1,4061,459

1,926

2,127

0

1,000

2,000

3,000

4,000

5,000

2006 2007 2008 2009 1H2010(K

RW b

illio

n)

Total Assets Total Shareholders' Equity Total Liability

Assets

Liability

Share-holders Equity

Revenue

EBITDA

KRW 4,725 bn - Non-Current Assets/To-

tal Assets Ratio : 79.9% KRW 2,224 bn - Debt/Capital Ratio :

40.2%

KRW 2,501 bn - Stake is wholly owned

by KEPCO

KRW 2,334 bn

KRW 394bn - Net Income : 173 bn

EBITDARevenue

2,424

3,069

3,700 3,817

1,2351,535

1,702 1,857

2,334

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2006 2007 2008 2009 1H 2010

(KRW

bi

llion

)

Full Year 1H

Financial Performance(1)

Sales revenue has shown a continuous growth rate EBITDA has been stable but we have seen a decline in 2008 resulting from

the surge in raw material costs

465

616

273

423

293 312

214246

394

0

100

200

300

400

500

600

700

2006 2007 2008 2009 1H 2010

(KRW

bi

llion

)

Full Year 1H

LeverageCoverage

Coverage ratio was deteriorated in 2008 and 1H 2009 due to the sharp increase in raw material costs, but has recovered in 1H 2010

Leverage ratio has been deteriorated due to increased debt, but still maintains a stable level

5.7 5.5

-1.6

2.0

8.4

2.21.5

4.7

3.54.3

-3

0

3

6

9

2006 2007 2008 2009 1H 2010

(Tim

es)

EBIT / Gross Interest Expense Debt/EBITDA

43.637.6

56.762.5

67.1

30.4 27.3

36.2 38.5 40.2

0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 1H 2010(%

)

Debt/Equity Debt/Capital

Financial Performance(2)

2007 2008 2009 1H 2009 1H 2010

Sales 3,069 3,700 3,817 1,857 2,334

Cost of Sales 2,769 3,736 3,681 1,753 2,074

Gross Profit 300 (35) 136 104 260

SG&A 36 38 32 15 18

Operating Income 264 (73) 104 89 242

Non-Operating Income 26 197 141 84 56

Non-Operating Expense 54 248 132 82 68

Income before Tax 236 (125) 113 92 230

Tax Expense 61 (22) 25 21 57

Net Income 175 (104) 88 71 173

Cash & Equivalents 173 43 126 121 308

Other Current Asset 434 696 717 574 640

Investment Assets 13 46 74 65 79

Tangible Assets 3,051 2,999 3,275 3,239 3,441

Intangible Asset 167 167 161 159 154

Other Asset 48 249 128 223 104

Total Asset 3,885 4,199 4,482 4,381 4,725

Current Liabilities 543 740 956 785 944

Debenture, net of discount 655 907 809 1,005 819

Long-term Debt 86 93 178 80 266

Other L/T Liabilities 175 187 184 185 196

Total Liabilities 1,459 1,926 2,127 2,055 2,224

Total Stockholder's Equities 2,426 2,272 2,354 2,326 2,501

Income Statement

Balance Sheet

(Unit : KRW bn)

Financial Highlights(1)

2007 2008 2009 1H 2009 1H 2010

Cash Flows from Operating Activities

Net Income 174.8 (103.5) 87.9 70.9 173.2

Non-cash Expense and Income 373.5 371.2 305.9 134.3 171.3

Depreciation 351.3 345.9 319.4 156.9 152.0

Changes in Assets and Liabilities (66.8) (190.3) 97.8 125.6 (5.4)

Net cash flows provided by operating activities 481.4 77.4 491.6 330.7 339.1

Cash Flows from Investing Activities

Cape / Purchase of Fixed Assets (282.5) (294.1) (593.1) (390.8) (245.9)

Other (1.7) (17.1) (34.3) (24.6) (65.0)

Net cash flows used in investing activities (284.2) (311.3) (627.4) (415.4) (310.9)

Cash flows from Financing Activities

Cash inflows 880.9 1,028.9 1,233.9 686.8 438.2

Cash outflows (1,069.5) (923.7) (1,013.5) (521.9) (284.4)

Dividends (51.3) (69.9) (26.4) - -

Net cash flows used in financing activities (188.7) 105.2 220.4 164.9 153.8

NET INCREASE(DECREASE) IN CASH 8.6 (128.7) 84.5 80.2 182.0

CASH, BEGINNING OF THE YEAR 166.9 175.5 46.8 46.8 131.3

CASH, END OF THE YEAR 175.5 46.8 131.3 127.0 313.3

Cash flowStatement

(Unit : KRW bn)

Financial Highlights(2)

Sales Breakdown

Revenue sourceKRW billion 2006 2007 2008 2009 1H 2010

LNG 963.2 1,223.2 1,596.2 1,056.0 830.3

Coal 864.7 1,133.3 1,542.5 2,149.6 1,103.8

Oil 504.0 569.6 350.5 443.7 286.1

Pumped Storage 41.6 65.3 139.3 113.9 77.4

Others - 0.2 0.9 1.2 0.5

TOTAL 2,373.5 2,991.6 3,629.4 3,764.4 2,298.1

Sales (GWh) 37,046 46,987 45,266 43,539 24,764

Unit Price (KRW/kWh) 65.45 66.80 81.39 86.5 95.0

In 2007, sales increased due to the completion of Taean Coal plant #7-8 In 2008, sales increased due to the fuel price and FX rates hikes

Note : Sales unit price includes other revenues associated with power gen-eration

Details on Credit Line Facilities -1H 2010

Bank overdraft Facilities

Bank Amount Used

NACF KRW 50 billion -

Short-term FCY Credit Facilities

Bank Amount Used Amount

KEB USD 18 million -

RBS USD 50 million USD 46.9 million

BNP Paribas USD 60 million -

SC First Bank USD 50 million USD 9.5 million

Shinhan USD 30 million -

Bill Acceptance Facilities

Bank Amount Used Amount

KEB KRW 34 billion -

Woori KRW 30 billion -

Shinhan KRW 100 Billion -

Debt Profile(1) –1H 2010

Debt Repayment Schedule

Note: 1. Total debt in 2010 represents the remaining outstanding debt as of June 30, 2010. 2. Total amount of debt is reflected currency swap in case of foreign currency bond.

(KRW in billions)

212

312

239 237

97

224

150

0

50

100

150

200

250

300

350

'10 '11 '12 '13 '14 '15 '16~

KOWEPO prefers long-term funding of at least 5 year as the plant construction usually takes mid to long term period to complete

The company prefers to borrow 70% to 80% of it total debt in KRW and the remaining in foreign currencies

88% of KOWEPO’s debt carries fixed interest rate, while 12% is in floating rate

All of total debt is unsecured.Total Debt Profile : 1,471 billion

Type of InstrumentCurrency Distribution

KRW76.2%

(KRW 1,121bn)

JPY 7.4%

(KRW 109bn)

USD16.4%

(KRW 241bn)

Local Bond71.1%

(KRW 1,046bn)

Eurobond 9.8%

(KRW 144bn)

Long TermBorrowing

19.1%(KRW 281bn)

Debt Profile(2) -1H 2010

Rating Triggers/Financial CovenantsBond # 5~ 6(KRW)Bond # 9~14 (KRW)

Bond #7(JPY) Bond #8(USD)

Rating Trigger

- - No lower than BBB-

Financial Covenants

Liability/Equity ratio 500% or less 200% or less 200% or less

Collateral Not permitted

Sales of assetsSales more than 5 trillion KRW are not permitted in the same

fiscal year

Sales more than 0.5 trillion KRW are not permitted in the same fiscal year

Maturity

2010.3~2014.5 2010.10 2011.3

Currency SwapEurobond Bond #7 Bond #8

Issue USD 150mn / 5.95% JPY14bn / Tibor + 0.5% USD 100mn / Libor + 1.3%

Currency Swap KRW 143.8bn / 4.95% KRW 109.1bn / 5.25% KRW 97.3bn / 4.15%

Counter Party Barclays / Deutsche Bank BTMU BNP / RBS / Woori

Capital Expenditure Plan

Capital Expenditure Schedule(Unit : KRW bn)

740 0 0

690

193

426341

116

96

5976

153

124

9071

24

55

32

0

100

200

300

400

500

600

700

2010 2011 2012 2013

Gunsan C/C Taean IGCC Facility Improvement Equity Investment Others(Wind, Solar etc.)

568

383468

607

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Key Assumption

2010 2011 2012

Inflation

- Domestic 3.00% 3.00% 3.00%

- International 2.50% 2.50% 2.50%

FX rate (KRW/USD) 1,150 1,100 1,100

Oil Price (US$/barrel) 85.00 90.00 90.00

Coal (US$/ton) 95.00 90.00 90.00

Gross Generation(GWh) 45,865 46,150 46,201

Note: Forecast subject to change by year-end

Financial Statements(1)

Balance Sheet

2010 2011 2012

Assets

Current Assets 725.5 717.2 736.0

Non-Current Assets 3,970.5 4,128.1 4,115.5

Total Assets 4,696.0 4,845.3 4,851.5

Liabilities

Current Liabilities 798.9 682.4 444.6

Non-Current Liabilities 1,498.1 1,724.3 1,927.3

Total Liabilities 2,297.0 2,406.7 2,371.9

Stockholder’s Equity

Capital Stock 176.0 176.0 176.0

Capital Surplus 1,266.6 1,266.6 1,266.6

Retained Earnings 956.4 996.0 1,037.0

Total Stockholders’ Equity 2,399.0 2,438.6 2,479.6

Total Liabilities and Stockholders’ Equity 4,696.0 4,845.3 4,851.5

(Unit : KRW bn)



Income Statement

2010 2011 2012

Sales 3,915.6 3,886.6 3,905.4

Sales of Electric Power 3,896.7 3,867.9 3,886.5

Others 18.9 18.7 18.9

Cost of Sales & SGA 3,704.5 3,759.2 3,780.3

Operating Income 211.1 127.4 125.1

Non-Operating Income 9.1 9.2 12.8

Non-Operating Expense 45.7 63.0 62.6

Income before Tax 174.5 73.6 75.3

Income Tax 41.5 17.1 16.7

Net Income 133.0 56.5 58.6

Dividend 39.9 17.0 17.6

Plans to declare annual dividend at the level of 30% of net income

(Unit : KRW bn)



Cash Flow Forecasts

2010 2011 2012

Operating Activities 516.6 429.3 400.0

Net Income 133.0 56.5 58.6

Non-cash Expenses &Incomes 372.6 381.6 373.1

Depreciation 357.3 365.7 360.2

Changes in Assets and Liabilities 11.0 (8.8) (31.7)

Investing Activities (551.3) (519.6) (340.2)

Plant Construction &Facility Improvement (455.4) (386.3) (244.1)

Others (95.9) (133.3) (96.1)

Financing Activities 31.5 90.0 (59.7)

Cash Balance, Beginning of Year 42.4 39.2 38.9

Net Cash (3.2) (0.3) 0.1

Cash Balance, End of Year 39.2 38.9 39.0

Plans to maintain year-end cash balance at approx. KRW40 billion

(Unit : KRW bn)


Thank you

strictly private and confidential annual ratings review presentation korea western power october...

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