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, 2006
KOREA ELECTRIC POWER CORPORATION
(Translation of registrant’s name into English)
167, Samseong-dong, Gangnam-gu, Seoul 135-791, Korea
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes No X
If “Yes” is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- .
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/ Kim, Myung-Whan | |
| Name : | Kim, Myung-Whan | |
| Title : | General Manager | |
| International Finance Department |
Date: September 21, 2006
Investor Presentation
September 2006
This material has been prepared by Korea Electric Power Corporation for the information of investors of the company. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument or securities. While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of preparation, the company makes no representation as to its accuracy or completeness.
Certain statements in this presentation, including estimates and forecasts, include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward- looking terminology, such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project” or “continue” or the negative thereof or other similar words. All forward-looking statements involve risks and uncertainties. Actual results may differ materially from those discussed in, or implied by, forward-looking statements. The forward-looking statements speak only as of the date of this release and KEPCO assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.
KEPCO
KOREA ELECTRIC POWER CORPORATION
Table of Contents
I. Overview
II. Business & Operations
III. Financial Profile
IV. Industry Restructuring
KEPCO
KOREA ELECTRIC POWER CORPORATION 2
I. Overview
KEPCO
KOREA ELECTRIC POWER CORPORATION
Power Monopoly in Korea
95% 100% 100%
Transmission Generation Distribution
* Based on gross generation (1H 2006)
Assets KRW 74.7 trillion (USD 74.0 billion)
Revenues KRW 25.4 trillion (USD 25.2 billion)
Generating Capacity 57,204 MW
Market Capitalization KRW 22.6 trillion (USD 23.8 billion)
Credit Rating A1(Moody’s), A(S&P)
Assets & Revenues : as of December 31, 2005 (Consolidated, audited)
Generating Capacity : as of Jun. 30, 2006
Market Cap.: as of Jun. 30, 2006, USD/KRW=948.9
KEPCO
KOREA ELECTRIC POWER CORPORATION 4
II. Business & Operations
KEPCO
KOREA ELECTRIC POWER CORPORATION
Demand Growth
Historical Demand Growth & GDP (%)
Demand Growth
GDP Growth 11.8
Sales Volume
8.5 7.6 8.0
Demand Growth Forecast
2007 : 4.3% 2008 ~ 2011 : 3 – 4%
6.5 5.4 5.9 6.3 3.8 7.0 4.0 3.1 4.6 5.0
Forecast value for 2007 onward by MOCIE & KPX
Actual results may differ from the forecast
2006 2005 2004 2003 2002 2001 2000 (Unit : 1,000 GWh)
Sales Volume
332 312 294 278 258 240 352
Demand Growth for 1H 2006 (yoy)
Unit Sales Price
Volume Revenue
1H 2006 1H 2005 (Won/kWh)
85.1 87.5 Residential 9.5% 9.1% 9.9% 7.4% 8.2% 93.2 91.0 6.1% Average
Commercial 5.2% 5.8% 59.7 57.7
Industrial 71.0 73.0
Overall Commercial Industrial Residential
KEPCO
KOREA ELECTRIC POWER CORPORATION 6
Tariff (1)
Formula
Cost of Debt × Debt Weighting
Fair Rate of Return + = Cost of Equity * × Equity Weighting
Net Plant in Service + Working Capital (2 Months)
Operating Income (1 - tax rate)
Actual Rate of Return ÷ =
* Cost of Equity is determined by CAPM : Risk Free Rate + Beta x Market Premium
* This formula forms a base on which KEPCO and MOCIE negotiate.
Tariff Adjustment Flow MOCIE
(Korean Electricity Commission) MOFE
Discussion Authorization
Application KEPCO
Notice & Operation
Put into Effect
1 2 3 4
KEPCO
KOREA ELECTRIC POWER CORPORATION 7
Tariff (2)
History of Tariff Adjustment
Tariff Rebalancing
6.0% 6.1% 5.9% 4.9% 5.3% 1.5% -2.8% -2.0%
Residential
4.2% 4.0% -3.5% -2.2%
Commercial
2.8%* 1.9% 0.0% 2.5%
Industrial
2.4% 1.9% -1.5% 0.0%
Average
1.9%
Mar04 Nov99 Jan03 Jun91 Feb92 May95 Nov00 Jan98 Jul97 Dec05 Dec05
* Tariffs were increased by 1.9%, while the rate of The Electric Power Industry Basis Fund was decreased by 0.9% p from 4.6% to 3.7% This resulted in 2.8% effective tariff increase
Management Strategies on Tariff Adjustments
Rebalancing tariffs among different customers to recover the different cost of supply
in a timely manner
Reclassifying commercial, industrial, and educational customers by voltage supplied
Narrowing the gap between the highest and lowest tariffs within residential customer base
KEPCO
KOREA ELECTRIC POWER CORPORATION 8
Fuel Price & Expense (1)
Fuel Price & FX trends 2004 Average
1/4 2006 4/4 2005 3/4 2005 2/4 2005 1/4 2005 2005
Average 2/4 2006 2003
Average 51.7 25.3 47.6 50.7 53.3
NEWC* Coal Price Index
47.3 39.1 47.6 52.8
USD/ton 47.9 26.8 58.6
USD/barrel 41.2 33.6
Dubai Oil Price
52.7 55.5 64.9 49.4
FX Rate*
1,191.8 1,036.6 1,029.4 1,143.7 1,024.1 976.1 1,008.1 1,022.1 949.6
KRW/USD
* NEWC : Newcastle
* FX Rate Source : Bloomberg
1H 2006 Fuel Expense
Unit Price & FX Rate Change
(1,000Won/ton,Won/liter, KRW/USD)
Fuel Expense (in billion Won)
yoy yoy 1H 2006 1H 2005 1H 2006 1H 2005
B. Coal -8.1% 57.1 62.2 -3.5% 1,208 1,252 B. Coal 4.3% 593 569
B.C. Oil B.C. Oil 369.5 262.3 40.9% 70.7% 1,428 2,437 LNG 28.7% 566.8 440.3 Nuclear
LNG -3.4% 413 399 -5.2% 962.8 1,015.3
FX Rate 26.6% 3,662 4,637 Total
KEPCO
KOREA ELECTRIC POWER CORPORATION 9
Fuel Price & Expense (2)
Strategy on Fuel Cost Saving
Maintaining optimal proportion of generation based on fuel type
Sustaining over 80% of nuclear & coal generation, above 90% utilization rate of nuclear
Securing shares of foreign mines & fuel suppliers
Re-trying direct import of LNG
Fuel Cost Mix
Generation Mix
1H 2006 1H 2006 1H 2005 1H 2005 13% 17% LNG
LNG Oil 6% 37% 4% 51%
Coal 38% 17%
Oil 38% 14% 35% 27%
Nuclear & Hydro
Coal 41% 43% 11%
Nuclear & Hydro 8%
KEPCO
KOREA ELECTRIC POWER CORPORATION 10
III. Financial Profile
KEPCO
KOREA ELECTRIC POWER CORPORATION
Capital Structure
Capital Structure
Total SH’s Equity : KRW 42.3 trillion (USD 41.9 billion)
Total Liabilities : KRW 32.4 trillion (USD 32.1 billion)
Shareholder Mix as of June 30, 2006
29.95% 24.07% 0.73% 30.26% 14.99%
KDB Government Treasury Stock Foreigners
Others 54.02% SH’s Equity 57% Liab. 43% as of Dec.31, 2005
Consolidated Interest Bearing Debt* Local Currency Debt 84%
FX Debt 16%
Total Debt : KRW 19.4 trillion equivalent JPY 34%
US Dollar 50%
Total Foreign Currency Debt
: KRW 3.2 trillion equivalent
Others 16%
* Debt : KEPCO + GENCOs, as of Jun. 30, 2006
KEPCO
KOREA ELECTRIC POWER CORPORATION 12
Debt Profile & Strategy
Debt Repayment Schedule 4.9
Total Maturing Debt FX Debt 3.7
Target Schedule 3.2 2.0 2.2 1.7
Trillion Won 0.9 0.4 0.5 0.6 0.8 0.4 0.3 0.3 0.7
2014 & after 2013 2012 2011 2010 2009 2008 2007 2006
Debt Currency Mix
Fixed vs. Floating Mix
1H 2006 Target Fixed 62% Floating 38% Total
Fixed 57% Floating 43% 84%
KRW KRW 70% 15% 8% USD Fixed 91% Floating 9%
FX 8%
JPY & Others
15%
* Debt : KEPCO + GENCOs, as of Jun. 30, 2006
KEPCO
KOREA ELECTRIC POWER CORPORATION 13
Improved Financial Status* 2003 yoy
2005 2004 2002 yoy yoy yoy
(Unit: KRW bn) 6.3%
278,451 8.0% 332,413 6.6% 293,599 5.4%
KWh sold(GWh)
312,096 23,956 5.2% 21,366 5.6% 25,445 6.2%
22,775 6.6% Revenues (3.8%) 9,953 11.3% (1.5%) 10,313 3.6%
EBITDA ** 9,916 9,769 4,467 (14.5%) 5,047 26.5% 3,922 (12.2%) 5,224 3.5%
Operating Income 1,292 (3.1%) 1,608 (20.3%) 1,014 (21.5%) 1,333 (17.1%)
Total Interest Cost *** 19,714 (12.9%) 23,477 (15.9%) 19,112 (3.1%) 22,645 (3.5%)
Interest Bearing Debt 2,883 24.1% 3,048 86.4% (16.5%) 2,323 (23.8%)
Net Income 2,408
* Based on consolidated financial statements
** Operating Income + Depreciation & Amortization
*** Interest cost is inclusive of the capitalized interest
KEPCO
KOREA ELECTRIC POWER CORPORATION 14
1H 2006 Results*
Primarily due to 6.1% demand growth, operating revenues increased by 8.5%
Fuel cost was up by 25.3% mainly due to oil & LNG price hike
Power purchased for resale was up by 59.6% due to LNG price hike & new facility added to current PPA
Maintenance cost was up by 33.9% due to an increase in scheduled maintenance for nuclear plants
Operating income decreased by 33.2% mainly due to increases in fuel cost, power purchased for resale & maintenance cost
1H 2006 1H 2005 %change (Unit : in billions of Korean Won)
Operating revenues: 8.5% 11,919 12,930 Sale of electric power 9.1% 11,670 12,728
Other operating revenues -55.2% 192 86 Revenues for other businesses 103.5% 57 116
Operating expenses: 17.9% 9,711 11,455 3,833 4,803 Fuel 25.3% 629 1,004
Power purchased for resale 59.6% 33.9% 705 944 Maintenance Depreciation 0.2% 2,456 2,461
Commission 3.8% 287 298 1,742 1,929 Other 10.7% -72.9% 59 16
Expenses for other businesses -33.2% 2,208 1,475 Operating income 789 619
Other income: -21.5% 12.9% 232 262 FX gain -49.7% 175 88
Investment income from affiliates -29.6% 382 269 Other 12.2% 607 681
Other expenses: 310 348 Interest expenses 12.3% FX loss -11.1% 18 16 1 56
Investment loss from affiliates 55.0% -6.1% 278 261 Other -40.9% 2,390 1,413
Ordinary income 820 521
Provision for income taxes -36.5% -43.2% 1,570 892
Net income
* KEPCO+GENCOs
* This financial information is preliminary, un-audited and made by adjusting for major inter-company transactions among KEPCO and its six generating subsidiaries only. As such, these financial information may not have been prepared in accordance with Korean generally accepted accounting principles, and may not necessarily be indicative of the results of operations of KEPCO and its six generating subsidiaries as a group
KEPCO
KOREA ELECTRIC POWER CORPORATION 15
Capital Expenditure
Conservative Official Forecast (in billion Won) 9,912 10,168 9,803 8,642 3,441 3,607 3,035 2,009
Nuclear Plant
Thermal Plant 1,540
Transmission & Distribution Facility
2,032 2,911 2,218 4,695 4,765 3,722 4,550 2007F 2006F 2009F 2008F
Nuclear New Capacity to be added 2,801 1,622 2,240
Thermal 1,500
KEPCO
KOREA ELECTRIC POWER CORPORATION 16
Major Financial Statistics *
Operating & Net Profit Margin
Total Borrowing to Equity Ratio
23.6% 84.1% 22.9% 18.7% 19.7% 14.3% 15.4% 59.9%
12.0% 65.1% 10.2% 9.5% 45.1% 48.6% 8.1%
2004 2003 2002 2001 2005 2004 2003 2002 2001 2005
Average Debt Cost EBITDA Interest Coverage KEPCO+GENCOs
6.3% 6.1% 9.6X 7.7X 7.7X 5.2% 6.2X 4.4% 4.7% 4.4X
2004 2003 2002 2001 2005 2004 2003 2002 2001 2005
* Based on consolidated financial statements
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KOREA ELECTRIC POWER CORPORATION 17
IV. Industry Restructuring
KEPCO
KOREA ELECTRIC POWER CORPORATION
Industry Restructuring
Initial Plan, Current Status & Future
Current Status Plan Future Strategy GENCO setup + Sale Generation
6 GENCOs in operation, 100% owned by KEPCO
Be prepared to sell GENCOs when price is right
Management control is on for sale
Improving the asset value to get right price
All GENCOs except for Nuke & Hydro to be sold
DISCO setup was scrapped by MOCIE in June 2004 DISCO setup + Sale Distribution
Divisional System within KEPCO will be introduced
Each division will be autonomous and competitive
IPO has been delayed as the price quote was below book value
KEPCO will push forward with selling management control at the right price (at least book value)
This policy secures KEPCO’s value, and credit won’t be affected during the sale process
Sale of KOSEP Scrapping DISCO setup
Scrapped because benefits were not certain given substantial risks
This cleared the uncertainty considerably and saved the cost of DISCO setup
KEPCO
KOREA ELECTRIC POWER CORPORATION 19
Asset Sale Assets on Sale
Book Value* Ownership Plan to Sell (in billion Korean Won)
Selling management control as originally planned
KOSEP 1,986 100.0% KPS 286 100.0%
KEPID 25 49.0% KDHC 176 26.1% KOGAS 819 24.5% KOPEC 56 97.9%
Powercomm 408 43.1% Listing on domestic exchange or selling to strategic investors
Timing & method of selling is to be set in consultation with Government
Timing & method of selling is to be set in consultation with Government
Subject to Government’s plan of deregulating the gas industry
After Government’s finalization of the plan to introduce competition
into the market for designing nuclear reactors
Listing on either domestic or foreign exchange, in relation to
the bonds convertible into Powercomm shares issued in Euro market
* Book value: as of Dec. 31, 2005
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KOREA ELECTRIC POWER CORPORATION 20