Korea Western Power · Gunsan C/C (718MW) 2,998MW Coal LNG 1,400MW Taean Pyeongtaek Gunsan...

Korea Western Power Ratings Presentation November 2012

Confidential Presentation

Table of Contents Agenda

1. Company Overview

2. Industry Overview

3. Operation Overview

4. Financial Management

5. Financial Forecast

I. Company Overview

Strong Credit Profile

Korea Western Power (KOWEPO) has maintained its strong credit profile

KOWEPO is closely linked with KEPCO,

given 100% share ownership and role as

the sole off-taker

There will be no change in the

shareholding structure for KEPCO and

Gencos for the foreseeable future

KEWEPO’s cost system ensures that it

can pass increases in fuel costs to

KEPCO

Wholesale electricity tariff system helps

maintain KOWEPO’s earnings and

financial stability

KOWEPO has maintained strong financial

stability with Debt/EBITDA of 2.5x and

EBIT/Interest Expense of 6.5x as of 1H

2012

The commercial operations of the new

plants will enhance operating cash flows

for debt reduction over the medium-to-

long term

KOWEPO plays a key role in the supply of

electricity in Korea, having provided

11.6% of all sales volume in 1H 2012

KOWEPO has a combined capacity of

8,409MW as of June 2012

Strong financial stability

Strategically important role of

KOWEPO Close link with Korea Electric

Power Corp (“KEPCO”)

Cost pass-through pricing

mechanism

Overview of Credit Profile

1

KOWEPO has established strong power generating facilities in Korea

Company Overview

One of the Most Important Gencos in Korea

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Base Load Intermediate Load Peak Load

In Operation

Taean T/P

(4,000MW)

Pyeongtaek

T/P

(1,400MW)

4,000MW

Seoincheon

C/C

(1,800MW)

Pyeongtaek

C/C (480MW)

Gunsan

C/C (718MW)

2,998MW

Coal

LNG BC Oil

1,400MW Taean

Pyeongtaek

Gunsan

Seoincheon

Seoul and Gyeonggi Metropolitan Area

Samrangjin

Taean, Gunsan,

Samrangjin, Sejong

City, Taean S/H

(11MW)

Metropolitan Area

Power Plant Region

Sejong City

Hydro

Solar

Generation Capacity by Type of Plant Location of Plan Complex

Base load, intermediate load, and peak load account for 48%, 17% and 35% respectively in terms of generation capacity in

operation

Over 91% of capacity is located in or near the Seoul and Gyeonggi metropolitan areas

Seoul and Gyeonggi metropolitan areas comprise approximately 44% of total national demand

___________________________ Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”, S “Solar”, S/H “Small Hydro.” Source: “Statistics of Electric Power in Korea”, KEPCO as of August 2012.

2

Company Overview

KOWEPO

8,408

10.3%

KOSEP

8,199

10.1%

KOMIPO

7,952

9.8%

KOSPO

9,240

11.3%

EWP

8,816

10.8%

KHNP

26,022

31.9%

Others

12,889

15.8%

Market Share by Generation Capacity

Others

38,410

9.2%

KHNP

152,443

31.6%

EWP

51,121

11.7%

KOSPO

58,085

13.1%

KOMIPO

51,355

10.4%

KOSEP

58,039

12.5%

KOWEPO

52,903

11.6%

Market Share by Sales Volume

(MW)

Total Generation Capacity

81,552MW

(GWh)

Total Electricity Sales

315,192GWh

Strong Market Position

KOWEPO maintained strong market share in terms of capacity and sales volume

___________________________ Source: “Statistics of Electric Power in Korea” , KEPCO as of Aug 2012.

3

Industry Overview

Industry Overview

Latest Power Industry Operating Environment

The Power Industry Restructuring Plan Delayed and the Former Privatization Plan for Gencos Cancelled

Privatization plan for

Gencos indefinitely

suspended

MOCIE(1) announced

restructuring plan for

power industry

Incorporation of

generation companies

Cost-based pool

bidding (“CBP”)

mechanism

IPO of KOSEP was

delayed

Implementation of

TWBP(2) was

suspended

Gencos were

designated as

market-oriented

public firms

Initiation of KOSEP

privatization

Plan to separate

KEPCO’s distribution

sector was halted due

to substantial risk and

uncertain benefits

from the separation

plan

Introduction of vesting

contracts for Gencos

deferred

Wholesale competition

was put on hold

Update on Gencos Privatization and Consolidation Plan

Privatization plan for KEPCO and its Gencos was cancelled in July 2008

Gencos have been designated as market oriented public firms by government to create a more efficient management structure and enhance their

competitiveness in 2011

1999 2000 2002 2001 2003 2004 2005 2007 2008 2006 2009 2010 2011

___________________________ 1. MOCIE : Ministry of Commerce, Industry and Energy (currently renamed as Ministry of Knowledge Economy). 2. TWBP : Two Way Bidding Pool.

4

Korean power generating sector is expected to enjoy constant demand growth and

government support

Industry Overview

High Electricity Demand and Strong Gov’t Support

240258

278294

312332 349

369385 394

434455

314

100

200

300

400

500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

1H

2012

TWh

History of Power Consumption

Power consumption has continued to rise on the back of strong economic growth at an average rate of 6.0% per annum from 2000 tp

2011

Power demand is expected to grow at an average rate of 2.9% per annum from 2012 to 2024

The country imposed rolling blackouts as recently as September 2011, due to numerous maintenance issues which led to insufficient

peak load; this highlights the slim margin between electricity demand and supply

South Korea will have to develop more coal- and gas-fired generating capacity despite the strong expected growth in clean energy;

planned clean energy projects are insufficient to alleviate this shortage problem, and the government will have to increase capacity to

avoid an electricity shortfall

The South Korean government has plans to invest KRW49 tn (USD43 bn) in the country’s power generation capacity by 2024

Commentary

CAGR 6.0%

___________________________ Source: “Statistics of Electric Power in Korea”, KEPCO as of August 2012 / The Bank of Korea as of June 2012 / “Electricity Supply and Demand Basic Plan #5”, MKE as of 2010.

462482

503521

536 551567

582598 612 626 640 654

300

400

500

600

700

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

TWh

Electricity Demand Forecast

CAGR 2.9%

5

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

Industry Overview

Government’s Mid-to-Long Term Energy Strategy

24.8% 25.5% 29.4% 31.9%

32.1% 32.2% 29.7%27.9%

25.8% 21.9%

4.9% 4.4% 4.2%

4.3% 6.2% 7.2%

4.4% 4.6% 4.3%

24.6%24.4%

4.3% 3.8% 3.6%7.1%

5.2%2.8%2.2%

0%

20%

40%

60%

80%

100%

2010 2015 2020 2024

Nuclear Coal LNG Oil Hydraulic Renew able Others

___________________________ Source: “Electricity Supply and Demand Basic Plan #5”, MKE as of 2010.

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 2024, the installed capacity for

Nuclear Power : 24.8% (’10) 31.9% (’24)

Coal : 32.1% (’10) 27.9% (’24)

LNG : 25.8% (’10) 20.9% (’24)

Renewable : 2.2% (’10) 4.3% (’24)

Installed Capacity Forecast by different energy sources

6

Industry Overview

Electricity Pricing Mechanism

Application of The Adjusted Coefficient of SMP

KOWEPO can pass through 100% of its fuel cost through the energy price

Electricity Generation Cost Evaluation Committee annually determines The Adjusted Coefficient

Power Price Comparison

Price type Price Remarks

Capacity

Payment

(CP)

Base Load

KRW 7.73/kWh

KRW 7.73/kWh as a base price, CP is

differentiated 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 (Sept. 2012~)

Nuclear : 0.1194 (←0.1718)

Coal : 0.0001 (←0.0500)

Anthracite : 0.0001 (←0.2000)

Others/General : 0.0001 (←0.0936) Non Base Load

Newly raised Adjusted Coefficient will decrease KOWEPO’s operating income by KRW63.5 bn

※ 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

Source: Company data as of September 2012.

KOWEPO continues to enjoy 100% fuel cost pass through pricing mechanism

7

Operation Overview

Sub-Header: Enter your optional sub-heading here

Operation Overview

Power Plant Facilities in Operation

___________________________ Source: “Statistics of Electric Power in Korea”, KEPCO as of June 2012. 1. GT: Gas Turbine 2. ST: Steam Turbine

KOWEPO Operates 48 Generation Units with Total Generation Capacity of 8,409MW

Type Fuel Type Number of Units Capacity (MW) Capacity Factor(%)

Taean

Thermal Bituminous 8 4,000 93.7

Small Hydro - 4 2.2 22.0

Solar - 2 0.7 -

Pyeongtaek

Thermal BC Oil 4 1,400 29.1

Combined Cycle LNG GT(1) : 4

ST(2) : 1

320

160 33.4

Seoincheon Combined Cycle LNG GT(1) : 8

ST(2) : 8

1,200

600 76.5

Gunsan

Combined Cycle LNG GT(1) : 2

ST(2) : 1 718 90.1

Solar - 1 0.3 14.7

Samrangjin Solar - 2 3 14.7

Sejong City Solar - 3 5 -

TOTAL 48 8,409 75.4

8

Operation Overview

New Business - Domestic

Power

Plant Type

Generation

Capacity

Construction

Period Remarks

New Plant

Taean

IGCC

Integrated

Gasification

Combined

Cycle

(IGCC)

380MW

Nov. 2011

~Nov. 2015

(49M)

Consortium with KEPCO E&C, Doosan Heavy(IG) / GE (CC) / Kumho E&C

R&D project supported by the government

Reduced emission of CO2 and waste by-products due to higher efficiency

compared to coal-fired electrical power plants

Taean

#9, #10 Thermal

2,100MW

(1,050x2)

Sep. 2012

~Dec. 2016

(52M)

Consortium with KEPCO E&C, Hitachi & Daelim, Hitachi

Largest unit capacity in Korea

Generation cost to be lowered through facility optimization such as expanding

combustion range of low rank coal

Pyungt

-aek 2nd

Combined

Cycle 946.5MW

Jul. 2012

~Oct. 2014

(28M)

Consortium with KEPCO E&C, MHI & Marunbeni, Daewoo / Lotte / Daejoe

Emergency power plant to prepare exponential increase in demand in summer of

2013

Initiation of Gas Turbine in July 2013

GT 317.5 MW x 2; ST 311.5 MW x 1

Equity Investment

Garolim Tidal 520MW

Oct. 2013

~Aug. 2020

(83M)

Consortium with POSCO E&C, Daewoo E&C, Lotte E&C

Project Financing

KOWEPO to be in charge of operation and maintenance

Dongdu

-cheon

Combined

Cycle 1,880MW

Jun. 2012

~Dec. 2014

(31M)

Consortium with Samsung E&C

Project Financing

KOWEPO to be in charge of operation and maintenance

KOWEPO plans to maintain its strong market position and superb operating performance

promoting growth with new plant constructions and new business

___________________________ Source: Company data as of September 2012.

9

KOWEPO plans to diversify its revenue through overseas expansion by leveraging its

proven experience in operating and maintaining power plants

Operation Overview

New Business - Overseas

Project Type

Gen Capacity /

Construction

Period

Ownership

Structure

Total Project

Expense Funding Method Remarks

Equity Investment

Rabigh,

Saudi Arabia Heavy Oil 1,204MW

KOWEPO 40%

NOMAC 60% n/a n/a

Consortium with KEPCO-ACWA

Construction started in Jun. 2009

KOWEPO to be in charge of O&M

Maharashtra,

India C/C

388MW /

2 yrs

KOWEPO 40%

PPIL 51%

Individual 9%

USD274 mn

Debt 75%

Equity 25%

(Local Financing)

Consortium with PPIL

Construction started in Feb. 2012

Build, Own, Operate & O&M

Xe-Namnoi,

Laos Hydro

410MW /

5 yrs

KOWEPO 25%

SK E&C 26%

Ratchaburi 25%

LHSE 24%

USD1,020 mn

Debt 70%

Equity 30%

(ADB, KEXIM,

Commercial

Banks)

Consortium with SK E&C, Ratchaburi,

LHSE

Construction expected to start in Jun.

2013

Build, Own, Operate, Transfer & O&M

Takalar,

Indonesia Thermal

250MW /

3 yrs

KOWEPO 48%

Indika 47%

MSC 5%

USD436 mn

Debt 70%

Equity 30%

(ECA, Commercial

Banks)

Consortium with Sambu, Yooho, MSC

Construction expected to start in Jul.

2013

Build, Own, Operate & O&M

Under PPA Negotiation

___________________________ Source: Company data as of June 2012.

10

Short

Term

18%

Long

Term

82%

Long

Term

100%

Fuel costs account for 88.2% of production costs

Long-term supply contracts assure adequate supply of the raw

materials

Hedging risks by adjusting portion of long-term contracts with market

volatility

Saved KRW5.9 bn of coal via group purchase with other Gencos

Operation Overview

Cost Efficiency

___________________________ Source: Company data as of June 2011. 1. Others: Fuel costs other than that required to generate electricity, such as fuel required to start up the generating units.

Coal

28.9%

LNG

57.9%

Oil&Others

13.2%

Fuel Cost Composition

44 50 52

110

148

208

108129

147

0

50

100

150

200

250

2010 2011 1H2012

KRW / kWh

Coal Heavy Oil Combined(LNG)

Fuel Cost

3,264

1,818

471 336 310 143

0

1,500

3,000

4,500

Indonesia Australia South

Africa

Colombia Canada US

Kiloton

Major Suppliers of Coal

Total 6,343 kilotons

Coal LNG

KOWEPO has implemented a cost competitive strategy

(1)

11

Operation Overview

Insurance Coverage -1H 2012

Asset Comprehensive Insurance

Details

Insurance Type Asset Comprehensive

Insurance

Insurer Dong-bu Fire & Marine

Insured Period 2012.01.01 ~ 2013.01.01

Insured Amount KRW6,402 bn

Insured Target Generation Facilities

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

Assembly Insurance

Details

Insurance Type Construction works for

Taean Pier 3 Site

Insurer Samsung Fire & Marine

Insured Period 2009.10.28 ~ 2013.09.30

Insured Amount KRW163 bn

Insured Target Fuel Unloading dock and

Equipments

Insurance on Cargo

Details

Insurance Type

Fuel and Equipment

Facilities Comprehensive

Insurance on Cargo

Insurer Lotte Fire & Marine

Insured Period 2012.02.01 ~ 2013.02.01

Insured Amount KRW1,655 bn

Insured Target Fuel and Equipments


12

Operation Overview

View on USD/KRW and its Impact

Management’s View on USD/KRW

Impact of change in FX rate on KOWEPO

Current(1) 2012 2013 2014

USD/KRW 1,091 1,080 1,060 1,040

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

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

KOWEPO is putting enormous effort on currency rate risk management through increasing credit line of the company and

reviewing to set dollar reserves

___________________________ 1. USD/KRW FX rate as of 1 November 2012.

KOWEPO has implemented strategies to minimize risks related to FX fluctuation

13

Financial Management


Capital Structure

___________________________ Source: Company filing as of 30 June 2012. 1. Financial data based on non-consolidated K-GAAP accounting standard. 2. Financial data based on consolidated K-IFRS accounting standard.

4,499

5,287

5,982

2,567

2,9523,134

1,932

2,847

2,335

0

1,000

2,000

3,000

4,000

5,000

6,000

2010 2011 1H 2012

(KRW bn)

Total Assets Total Shareholders' Equity Total Liability

Capital Structure

Assets

KRW5,982 bn

Non-Current Assets / Total

Assets Ratio : 74.5%

Liability

KRW2,847 bn

Shareholders

Equity

KRW3,134 bn

wholly owned by KEPCO

Revenue

KRW3,293 bn

EBITDA

KRW397 bn

Net Income: KRW135 bn

(1) (2) (2)

14


Financial Performance (1)

4,572

5,208

2,622

3,294

0

2,000

4,000

6,000

2010 2011 1H 2011 1H 2012

(KRW billion)

Revenue

6.1x

2.5x3.0x

6.5x

0.7x

1.5x

2.2x2.5x

0.0x

2.0x

4.0x

6.0x

8.0x

2010 2011 1H 2011 1H 2012

EBIT / Gross Interest Expense Debt / EBITDA

Interest Coverage

692

497

251

397

0

200

400

600

800

2010 2011 1H 2011 1H 2012

(KRW billion)

EBITDA

39%

50%

62%

28%33%

38%

0%

20%

40%

60%

80%

2010 2011 1H 2012

Debt / Equity Debt / Capital

Leverage

___________________________ Source: Company filing as of 30 June 2012.

15


Financial Performance (2)

___________________________ Source: Company filing as of 30 June 2012.

EBITDA / Revenue EBITDA / Net Interest Expense Debt / Equity

12.0%

18.5%

12.4%

13.9%13.6%

0%

5%

10%

15%

20%

KOWEPO KOSEP KOMIPO KOSPO EWP

17.0x

10.8x

14.2x

18.2x17.9x

0x

5x

10x

15x

20x


62.0%

77.8%

67.7%

47.3%

39.6%

0%

15%

30%

45%

60%

75%

90%


16


Financial Statements

Income Statement

___________________________ Source: Company filing as of 30 June 2012. 1. Financial data based on non-consolidated K-GAAP accounting standard. 2. Financial data based on consolidated K-IFRS accounting standard. 3. Decimal difference.

(Unit : KRW bn)

2009(1) 2010(1) 2010(2) 2011(2) 1H2011(2) 1H2012(2)

Sales 3,817 4,767 4,572 5,208 2,622 3,294

Cost of Sales 3,681 4,393 4,277 5,030 2,526 3,069

Gross Profit 136 374 295 178 96 225

SG&A 32 38 39 55 23 28

Net Other Operating Income (IFRS adj.) - - 20 (4) 6 (2)

Operating Profit (Loss) 104 335(3) 276 119 79 196

Non-Operating Income 141 87 47 13 17 23

Non-Operating Expense 132 104 81 64 34 40

Net Profit from Subs / Affiliates (IFRS adj.) - - (3) (1) (1) 1

Income Tax Expense (Benefits) 25 72 55 25 10 44

Income from Discontinued Operations (Loss) - - 34 - - -

Net Income (Loss) 88 246 218 42 51 135

17



Balance Sheet

(Unit : KRW bn)

2009(1) 2010(1) 2010(2) 2011(2) 1H2012(2)

Assets

Current Assets 843 815 1,348 1,182 1,528

Non-Current Assets 3,639 3,683 4,040 4,105 4,454

Total Assets 4,482 4,499* 5,388 5,287 5,982

Liabilities

Current Liabilities 956 765 994 938 985

Non-Current Liabilities 1,171 1,167 1,138 1,397 1,862

Total Liabilities 2,127 1,932 2,132 2,335 2,847

Stockholders’ Equity

Capital Stock 176 176 1,443 1,192 1,192

Capital Surplus 1,267 1,267 22 2 -

Retained Earnings 896 1,116 1,791 1,757 1,859

Total Stockholders’ Equity 2,354 2,567 3,256 2,952(3)

3,135

Total Liabilities and Stockholders’ Equity 4,482 4,499 5,388 5,287 5,982 ___________________________ Source: Company filing as of 30 June 2012. 1. Financial data based on non-consolidated K-GAAP accounting standard. 2. Financial data based on consolidated K-IFRS accounting standard. 3. Decimal difference.

18



Cash Flow Statement

___________________________ Source: Company filing as of 30 June 2012. 1. Financial data based on non-consolidated K-GAAP accounting standard. 2. Financial data based on consolidated K-IFRS accounting standard .

2009(1) 2010(1) 2010(2) 2011(2) 1H2011(2) 1H2012(2)

Cash Flows from Operating Activities

Net Income 88 246 218 42 51 135

Non-cash Income & Expenses 306 410 546 478 220 273

Changes in Assets and Liabilities 98 (38) (52) (167) (73) 4

Other - - (88) (76) (38) (9)

Net Cash Provided by Operating Activities 492 619 624 277 160 403

Cash Flows from Investing Activities

Purchase of Fixed Asset (593) (487) (506) (452) (197) (555)

Other, Net (34) (19) (12) 11 14 5

Net Cash Used in Investing Activities (627) (506) (518) (441) (183) (550)

Cash Flows from Financing Activities

Cash Inflows 1,234 968 968 721 250 945

Cash Outflows (1,014) (1,062) (1,061) (422) (325) (422)

Net Cash Used in Financing Activities 220 (94) (93) 299 (44) 503

Cash and Cash Equiv. at End of Period 131 150 153 285 87 641

(Unit : KRW Bn)

19


Details on Credit Line Facilities -1H 2012

Bank Amount

NACF KRW100 bn

Bank Overdraft Facilities

Bank Amount

KEB KRW284 bn

Shinhan KRW100 bn

Bill Acceptance Facilities

Bank Amount

KEB USD18 mn

RBS USD80 mn

BNP Paribas USD60 mn

SC First Bank USD50 mn

Shinhan USD30 mn

HSBC USD100 mn

Mizuho Corporate Bank USD100 mn

Deutsche Bank USD100 mn

Short-term FCY Credit Facilities


20


Debt Profile (1)

Debt Maturity Profile (1) Local vs. Foreign Currency

100.0

220.0

80.0100.0

404.0

570.0

160.0

0

200

400

600

2012 2013 2014 2015 2016 2017 2018

Foreign

(KRW 714bn)

42%

Local

(KRW 1,004bn)

58%

Floating

(KRW 104bn)

6%

Fixed

(KRW 1,617bn)

94%

Fixed vs. Floating Rate Debt

___________________________ Source: Company filing as of 30 June 2012. 1. Excludes swap effect of KRW29 bn and short-term borrowings of KRW182 bn.

(KRW bn)

21


Debt Profile (2)

Rating Triggers / Financial Covenants

Bond # 11~ 16 (KRW)

Rating Trigger

-

Financial Covenants

Liability/Equity ratio 500% or less

Collateral Not permitted

Sales of assets Sales more than 5 trillion KRW are not permitted in the same fiscal year

Maturity

2013.11- 2021.11

Currency Swap

Eurobond

Issue USD150 mn / 5.5%

Currency Swap KRW143.8 bn / 4.81%

Global bond

Issue USD500 mn / 3.125%

Currency Swap KRW570 bn / 3.83%

22

KOWEPO expects to increase its CAPEX for next 3 years


Capital Expenditure Plan

969

1,548

2,138

1,701

244

333

1,213

1,890

2,471

2,034

342

333

0

1,000

2,000

3,000

2012 2013 2014 2015

Unit : KRW billions

Expansion Maintenance&Others

Capital Expenditure Schedule


23


Diversified Funding Sources (1)

KOWEPO successfully diversified its funding sources by establishing global MTN program

___________________________ Source: Issue Orderbook.

Benefits from the GMTN Programme

On 3 May 2012, KOWEPO priced a

US$500 million 5-year Reg S/144A

senior unsecured bond under its

Programme

With an issue spread of T5+235bps to

yield 3.169%, KOWEPO achieved

aribitrage funding on an after swap

basis, compared with the domestic

KRW market

USD500 mn Public Bond Offering (May 2012)

KOWEPO’s USD2 bn GMTN Programme

The Programme allows KOWEPO to access broader funding

markets and investor base, while issuing in various forms –

Currency: In any currency agreed between the issuer and the

relevant dealers

Type of Notes: Includes Fixed Rate, Floating Rate, Index Linked,

Dual Currency and Zero Coupon Notes

The cost of funding can be materially reduced on back of reduced

documentation process and timely access to relevant capital markets

Korea Western

Power Co., Ltd.

US$500 billion

3.125% due 2017

May 2012

24


KOWEPO secured funding sources by successfully issuing KRW100 bn Hybrid Bond

Diversified Funding Sources (2)

Hybrid Bond Issuance Terms

Spread:

5-yr T-bond +120bp

Method:

Private

Placement

Ratings:

AA+

Tenor:

30-Year

Revolving

Size:

KRW100 bn

Coupon

Rate:

4.05%

Benefits from Hybrid Bond

Increase in funding without diluting share value

Categorized as equity under IFRS

Does not deteriorate liability-to-equity ratio

Stock market multiples (ROD and P/E) do not

deteriorate

Option to extend tenor

Essentially equivalent to perpetuity bond

Call option (after 5 years)

Allows refinancing at a lower interest rate in the future

Step-up feature: +100bps after 10 yrs

Leads to higher investor demand

___________________________ Source: Company data as of October 2012.

25

Financial Forecast

Key Assumption

Assumptions Used for Financial Projection

(Unit : KRW bn) 2012 2013 2014 2015

GDP Growth (%) 3.3% 4.0% 4.3% 4.5%

Inflation (%) 2.8% 3.0% 3.0% 3.0%

FX rate (KRW/USD) 1,130 1,130 1,130 1,130

Oil Price (USD/barrel) 105 110 110 110

Interest Rate (%) 4.0 4.0 4.0 4.0

26

Financial Statements (1)

Balance Sheet

(Unit : KRW bn) 2012 2013 2014 2015

Assets

Current Assets 995.3 1,258.8 1,347.0 1,448.5

Non-Current Assets 5,253.7 6,671.3 8,672.4 11,051.5

Total Assets 6,249.0 7,930.1 10,019.4 12,500.0

Liabilities

Current Liabilities 900.6 1,018.5 1,011.8 1,045.8

Non-Current Liabilities 2,132.2 3,580.1 5,049.6 6,971.3

Total Liabilities 3,032.8 4,598.6 6,061.4 8,017.1

Stockholder’s Equity

Capital Stock 351.1 210.1 438.7 527.8

Capital Surplus 1,031.4 1,031.4 1,031.4 1,031.4

Retained Earnings 1,829.4 2,085.8 2,483.6 2,919.5

Accumulated Other Comprehensive

Income 4.2 4.2 4.2 4.2

Total Stockholders’ Equity 3,216.2 3,331.6 3,958.0 4,482.9

Total Liabilities and Stockholders’ Equity 6,249.0 7,930.1 10,019.4 12,500.0

___________________________ Note: Forecast subject to change by year end.

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Income Statement

(Unit : KRW bn) 2012 2013 2014 2015

Sales 5,713.1 6.140.2 6,396.8 6,706.3

Sales of Electric Power 5,689.6 6,084.4 6,340.2 6,651.3

Others 23.5 55.8 56.5 55.0

Cost of Sales & SGA 5,538.1 5,683.7 5,785.8 6,038.0

Operating Income 174.9 456.4 611.0 668.3

Non-Operating Income 23.5 14.1 15.1 17.0

Non-Operating Expense 100.5 101.4 88.0 98.0

Income before Tax 98.0 369.2 538.1 587.3

Income Tax 23.2 88.9 129.8 141.7

Income(Loss) from Equity Method Invest. (5.3) (3.7) 71.9 133.7

Net Income 69.4 276.6 480.2 579.3


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Cash Flow Forecasts

(Unit : KRW bn) 2012 2013 2014 2015

Operating Activities 331.9 846.4 947.0 1,000.8

Net Income 69.4 276.6 480.2 579.3

Non-cash Expenses &Incomes 455.7 344.1 383.6 455.3

Depreciation 409.4 283.2 313.3 397.8

Changes in Assets and Liabilities (193.3) 225.7 83.2 (33.8)

Investing Activities (1,473.4) (1,948.0) (2,324.8) (2,780.6)

Plant Construction &Facility Improvement (1,318.3) (1,684.2) (2,144.8) (2,599.1)

Others (155.1) (263.8) (180.0) (181.5)

Financing Activities 864.2 1,104.2 1,380.4 1,782.4

Cash Balance, Beginning of Year 294.0 16.6 19.2 21.8

Net Cash (277.4) 2.6 2.6 2.6

Cash Balance, End of Year 16.6 19.2 21.8 24.3


29

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above condition by participating into this presentation. Any non-compliance may be against the related laws and requirements.

This presentation material does not constitute an offer to purchase or sell the related securities or forms the basis of, or be relied upon in

connection with any contract, commitment or investment decision whatsoever.

This presentation material may contain forward-looking statements. These forward-looking statements are based on a number of

assumptions about the future, some of which are beyond the Company’s control. The Company does not undertake any obligation to update

any forward-looking statements to reflect events that occur or circumstances that arises after the date of this presentation. Potential

investors should bear in mind that actual financial results may differ materially from the following forward-looking statements.

The information contained in this presentation material is not verified by any independent third party. No warranty is made as to, and no

reliance should be placed on, the fairness, accuracy, completeness or correctness of the information contained herein. The information

contained in this presentation material should be interpreted under the prevailing circumstances. There is no update and nothing to be

updated upon the presentation to reflect any significant change in the development. At no time does the Company or the related directors,

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Korea Western Power · Gunsan C/C (718MW) 2,998MW Coal LNG 1,400MW Taean Pyeongtaek Gunsan...

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