Edgar Filing: KOREA ELECTRIC POWER CORP

Classification

Loss allowances

Credit risk has not increased significantly since the initial recognition

12-month ECL:

ECLs that resulted from possible default events within the 12 months after the reporting date

Credit risk has increase significantly since the initial recognition

Lifetime ECL:

ECL that resulted from all possible default events over the expected life of a financial instrument

Credit-impaired

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 March 2017

KOREA ELECTRIC POWER CORPORATION

(Translation of registrant’s name into English)

55 Jeollyeok-ro, Naju-si, Jeollanam-do, 58217, 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 ☒ 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 ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .

On March 6, 2017, Korea Electric Power Corporation filed its audit report for the fiscal year 2016 prepared in accordance with Korean International Financial Reporting Standards (K-IFRS) as shown below. The financial statements in such reports have been approved by the shareholders of Korean Electric Power Corporation and remain subject to change.

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, Jeong-soo

Name:		Kim, Jeong-soo

Title:		Head of Finance & IR team

Date: March 6, 2017

KOREA ELECTRIC POWER CORPORATION

AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2016

(With Independent Auditors’ Report Thereon)

INDEX TO FINANCIAL STATEMENTS


	Page

Independent Auditors’ Report		1

Consolidated Statements of Financial Position		3

Consolidated Statements of Comprehensive Income		5

Consolidated Statements of Changes in Equity		7

Consolidated Statements of Cash Flows		9

Notes to the Consolidated Financial Statements		11

Independent Auditors’ Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

Korea Electric Power Corporation:

We have audited the accompanying consolidated statement of financial statements of Korea Electric Power Corporation and subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2016 and 2015, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Korean International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2016 and 2015 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial Reporting Standards.

Emphasis of Matters

Without qualifying our audit report, we draw attention to the following key audit matters of the build-to-order industry that were of significance in our audit of the consolidated financial statements as of and for the year ended December 31, 2016, which determination is based on auditor’s professional judgment and communications with those who charged with governance, in accordance with Practical Guide of Korean Standards on Auditing 2016-1. This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and we do not provide a separate opinion on this matter. We have considered the results from audit procedures for these key audit matters in forming our audit opinion on the 2016 consolidated financial statements.

When the outcome of a construction contract can be estimated reliably, the Company recognizes contract revenue and costs based on the percentage-of-completion method at the end of the reporting period. Also, the gross amount due from customers for contract work is presented for all contracts in which costs incurred plus recognized profits exceed progress billings. The gross amount due to customers for contract work is presented for all contracts in which progress billings exceed costs incurred plus recognized profits.

Total contract revenue is measured based on an agreed contract price; however, it may fluctuate due to the variation of construction work. The measurement of contract revenue is affected by various uncertainties resulting from unexpected future events. Total contract costs are estimated based on the estimates of future costs such as material costs, labor costs and construction period. The uncertainty of estimated total contract costs and changes in such estimates have an impact on the completion progress and contract revenue.

Considering the impacts from these uncertainty and changes in estimates on profit or loss for the current or future periods, we identified the Company’s revenue recognition accounting policy utilizing the input method, uncertainty of estimated total contract costs, assessment of the percentage-of-completion and accounting for the variation of construction works as significant risks.

We conducted the following audit procedures regarding the Company’s accounting policy of revenue recognition utilizing the input method as of and for the year ended December 31, 2016:

•

Review of the appropriateness of accounting policy of revenues recognition by the input method

•

Inquiry and analytical review of current progress and significant changes in major projects as of period end

•

Inquiry and analytical review of financial indicators such as contract price, estimated contract costs, cost ratio, ratio of amounts due from customers for contract work, major components of total contract costs by the reporting period, accumulated contract costs, fluctuations in total contract costs and others

•

Testing of design and operating effectiveness of internal controls over construction contracts with changed terms and conditions

•

Testing of design and operating effectiveness of internal controls over new construction contracts

•

Recalculation of the percentage of completion independently for the contracts in which the percentage of completion was significantly changed

•

Independent testing of appropriateness of input costs, cut-off, and attribution of costs to each construction contract

•

Review of whether financial statement disclosures on changes in constructions are disclosed appropriately

LOGO

KPMG Samjong Accounting Corp.

Seoul, Korea

March 6, 2017

This report is effective as of March 6, 2017, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Position

As of December 31, 2016 and 2015


In millions of won	*Note*		2016		2015

Assets

Current assets
Cash and cash equivalents		5,6,7,45	W	3,051,353		3,783,065
Current financial assets, net		5,10,11,12,45		2,671,989		5,335,621
Trade and other receivables, net		5,8,14,20,45,46,47		7,788,876		7,473,548
Inventories, net		13		5,479,443		4,946,413
Income tax refund receivables		41		19,163		9,081
Current non-financial assets		15		631,860		397,950
Assets held-for-sale		42		65,842		79,647

Total current assets				19,708,526		22,025,325

Non-current assets
Non-current financial assets, net		5,6,9,10,11,12,45		2,657,494		2,495,554
Non-current trade and other receivables, net		5,8,14,45,46,47		1,903,515		1,798,419
Property, plant and equipment, net		18,27,49		145,743,056		141,361,351
Investment properties, net		19,27		353,680		269,910
Goodwill		16		2,582		2,582
Intangible assets other than goodwill, net		21,27,46		980,821		855,832
Investments in associates		4,17		4,092,252		4,405,668
Investments in joint ventures		4,17		1,418,196		1,287,862
Deferred tax assets		41		795,131		623,623
Non-current non-financial assets		15		181,789		131,233

Total non-current assets				158,128,516		153,232,034


Total Assets		4	W	177,837,042		175,257,359

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Position, Continued

As of December 31, 2016 and 2015


In millions of won	*Note*		2016			2015

Liabilities

Current liabilities
Trade and other payables, net		5,22,24,45,47	W	5,585,411			4,735,697
Current financial liabilities, net		5,11,23,45,47		8,942,329			7,857,198
Income tax payables		41		1,843,288			2,218,060
Current non-financial liabilities		20,28,29		6,368,210			6,320,711
Current provisions		26,45		1,999,988			1,579,176

Total current liabilities				24,739,226			22,710,842

Non-current liabilities
Non-current trade and other payables, net		5,22,24,45,47		3,558,175			3,718,435
Non-current financial liabilities, net		5,11,23,45,47		44,835,562			51,062,811
Non-current non-financial liabilities		28,29		7,591,605			7,092,252
Employee benefits liabilities, net		25,45		1,686,258			1,503,107
Deferred tax liabilities		41		8,948,520			8,362,683
Non-current provisions		26,45		13,427,151			12,864,754

Total non-current liabilities				80,047,271			84,604,042


Total Liabilities		4	W	104,786,497			107,314,884


Equity

Contributed capital		1,30,45
Share capital			W	3,209,820			3,209,820
Share premium				843,758			843,758

				4,053,578			4,053,578
Retained earnings		31
Legal reserves				1,604,910			1,604,910
Voluntary reserves				31,847,275			23,720,167
Unappropriated retained earnings				19,721,686			22,862,164

				53,173,871			48,187,241


Other components of equity		34
Other capital surplus				1,235,146			1,197,388
Accumulated other comprehensive loss				(33,875	)		(98,713	)
Other equity				13,294,973			13,294,973

				14,496,244			14,393,648


Equity attributable to owners of the controlling company				71,723,693			66,634,467


Non-controlling interests		16, 33		1,326,852			1,308,008


Total Equity			W	73,050,545			67,942,475


Total Liabilities and Equity			W	177,837,042			175,257,359

See accompanying notes to the consolidated financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2016 and 2015


In millions of won, except per share information	*Note*		2016			2015

Sales		4,35,45,47
Sales of goods			W	55,379,487			54,367,036
Sales of services				356,743			453,487
Sales of construction services		20		4,026,857			3,761,204
Revenue related to transfer of assets from customers				427,297			375,995

				60,190,384			58,957,722

Cost of sales		13,25,43,47
Cost of sales of goods				(41,237,372	)		(41,348,917	)
Cost of sales of services				(557,037	)		(545,692	)
Cost of sales of construction services				(3,755,144	)		(3,563,120	)

				(45,549,553	)		(45,457,729	)


Gross profit				14,640,831			13,499,993

Selling and administrative expenses		25,36,43,47		(2,639,232	)		(2,153,261	)


Operating profit		4		12,001,599			11,346,732

Other non-operating income		37		412,887			432,219

Other non-operating expense		37		(188,624	)		(108,848	)

Other gains, net		38		70,498			8,610,773

Finance income		5,11,39		791,543			1,182,988

Finance expenses		5,11,40		(2,437,087	)		(3,015,457	)

Profit related to associates, joint ventures and subsidiaries		4,17
Share in profit of associates and joint ventures				224,435			280,794
Gain on disposal of investments in associates and joint ventures				52			4,731
Gain on disposal of investments in subsidiaries		16		—			8,376
Share in loss of associates and joint ventures				(243,361	)		(86,522	)
Loss on disposal of investments in associates and joint ventures				(2,935	)		—
Impairment loss on investments in associates and joint ventures		17		(115,539	)		—

				(137,348	)		207,379


Profit before income tax				10,513,468			18,655,786

Income tax expense		41		(3,365,141	)		(5,239,413	)


Profit for the period			W	7,148,327			13,416,373

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income, Continued

For the years ended December 31, 2016 and 2015


In millions of won, except per share information	*Note*		2016			2015

Other comprehensive income (loss)		5,11,25,31,34
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		25,31	W	(75,926	)		(87,861	)
Share in other comprehensive loss of associates and joint ventures, net of tax		31		(2,515	)		(283	)
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		34		61,279			9,648
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		5,11,34		28,414			4,409
Foreign currency translation of foreign operations, net of tax		34		41,360			18,535
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		34		(54,914	)		89,558


Other comprehensive income (loss), net of tax				(2,302	)		34,006

Total comprehensive income for the period			W	7,146,025			13,450,379


Profit or loss attributable to:
Owners of the controlling company		44	W	7,048,581			13,289,127
Non-controlling interests				99,746			127,246

			W	7,148,327			13,416,373

Total comprehensive income attributable to:
Owners of the controlling company			W	7,041,557			13,308,132
Non-controlling interests				104,468			142,247

			W	7,146,025			13,450,379


Earnings per share		44
Basic and diluted earnings per share			W	10,980			20,701

See accompanying notes to the consolidated financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2016 and 2015


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

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

Total comprehensive income (loss) for the period
Profit for the period		—		13,289,127			—			13,289,127			127,246			13,416,373
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		—		(84,271	)		—			(84,271	)		(3,590	)		(87,861	)
Share in other comprehensive loss of associates and joint ventures, net of tax		—		(280	)		—			(280	)		(3	)		(283	)
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		—		—			9,744			9,744			(96	)		9,648
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			3,157			3,157			1,252			4,409
Foreign currency translation of foreign operations, net of tax		—		—			1,179			1,179			17,356			18,535
Share in other comprehensive income of associates and joint ventures, net of tax		—		—			89,476			89,476			82			89,558
Transactions with owners of the Company, recognized directly in equity
Dividends paid		—		(320,982	)		—			(320,982	)		(86,071	)		(407,053	)
Issuance of shares of capital by subsidiaries and others		—		—			2,536			2,536			12,329			14,865
Equity transaction within consolidation scope – other than issuance of share capital		—		—			44,166			44,166			9,046			53,212
Changes in consolidation scope		—		—			(716	)		(716	)		23,229			22,513
Dividends paid (hybrid securities)		—		—			—			—			(16,455	)		(16,455	)
Others		—		—			—			—			4			4


Balance at December 31, 2015	W	4,053,578		48,187,241			14,393,648			66,634,467			1,308,008			67,942,475

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity, Continued

For the years ended December 31, 2016 and 2015


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

Balance at January 1, 2016	W	4,053,578		48,187,241			14,393,648			66,634,467			1,308,008			67,942,475

Total comprehensive income (loss) for the period
Profit for the period		—		7,048,581			—			7,048,581			99,746			7,148,327
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit liability, net of tax		—		(69,330	)		—			(69,330	)		(6,596	)		(75,926	)
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		—		(2,532	)		—			(2,532	)		17			(2,515	)
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		—		—			61,275			61,275			4			61,279
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—		—			27,075			27,075			1,339			28,414
Foreign currency translation of foreign operations, net of tax		—		—			31,406			31,406			9,954			41,360
Share in other comprehensive income (loss) of associates and joint ventures, net of tax		—		—			(54,918	)		(54,918	)		4			(54,914	)
Transactions with owners of the Company, recognized directly in equity
Dividends paid		—		(1,990,089	)		—			(1,990,089	)		(99,982	)		(2,090,071	)
Issuance of shares of capital by subsidiaries and others		—		—			1,750			1,750			14,809			16,559
Equity transaction within consolidation scope – other than issuance of share capital		—		—			36,008			36,008			12,299			48,307
Changes in consolidation scope		—		—			—			—			3,705			3,705
Dividends paid (hybrid securities)		—		—			—			—			(16,455	)		(16,455	)


Balance at December 31, 2016	W	4,053,578		53,173,871			14,496,244			71,723,693			1,326,852			73,050,545

See accompanying notes to the consolidated financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2016 and 2015


In millions of won	2016			2015

Cash flows from operating activities
Profit for the period	W	7,148,327			13,416,373
Adjustments for:
Income tax expense		3,365,141			5,239,413
Depreciation		8,881,273			8,269,118
Amortization		79,715			72,266
Employee benefit expense		373,753			314,692
Bad debt expense		37,815			18,350
Interest expense		1,752,868			2,015,684
Loss on sale of financial assets		9			3,008
Loss on disposal of property, plant and equipment		4,996			1,933
Loss on abandonment of property, plant, and equipment		426,519			365,056
Impairment loss on property, plant and equipment		—			30,344
Impairment loss on intangible assets		3,945			22
Loss on disposal of intangible assets		158			16
Accretion expense to provisions, net		1,782,732			1,602,724
Loss on foreign currency translation, net		253,468			617,224
Valuation and transaction gain on derivative instruments, net		(231,630	)		(708,120	)
Share in loss (income) of associates and joint ventures, net		18,926			(194,272	)
Gain on disposal of financial assets		(1,482	)		(4	)
Gain on disposal of property, plant and equipment		(74,035	)		(8,637,508	)
Gain on disposal of intangible assets		—			(32	)
Gain on disposal of investments in associates and joint ventures		(52	)		(4,731	)
Loss on disposal of investments in associates and joint ventures		2,935			—
Gain on disposal of investments in subsidiaries		—			(8,376	)
Impairment loss on investments in associates and joint ventures		115,539			—
Interest income		(241,778	)		(241,585	)
Dividend income		(9,446	)		(14,069	)
Impairment loss on available-for-sale securities		86,703			84,370
Others, net		66,260			(35,107	)

		16,694,332			8,790,416

Changes in:
Trade receivables		200,529			715,498
Non-trade receivables		(68,322	)		(17,102	)
Accrued income		69,151			17,051
Other receivables		10,093			(9,441	)
Other current assets		(259,492	)		67,520
Inventories		(1,439,545	)		(1,190,188	)
Other non-current assets		(2,792	)		(31,465	)
Trade payables		141,994			(1,577,551	)
Non-trade payables		(8,379	)		38,223
Accrued expenses		(153,172	)		(410,744	)
Other payables		—			964
Other current liabilities		284,417			870,945
Other non-current liabilities		809,699			377,617
Investments in associates and joint ventures		75,407			114,708
Provisions		(1,527,129	)		(1,033,502	)
Payments of employee benefit obligations		(53,477	)		(43,100	)
Plan assets		(312,125	)		(214,449	)

		(2,233,143	)		(2,325,016	)

(Continued)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2016 and 2015


In millions of won	2016			2015

Cash generated from operating activities	W	21,609,516			19,881,773
Dividends received		10,294			38,565
Interest paid		(2,041,379	)		(2,176,040	)
Interest received		240,878			133,875
Income taxes paid		(3,298,757	)		(935,068	)

Net cash from operating activities		16,520,552			16,943,105


Cash flows from investing activities
Proceeds from disposals of associates and joint ventures		46,644			22,058
Acquisition of associates and joint ventures		(113,222	)		(116,114	)
Proceeds from disposals of property, plant and equipment		207,960			9,843,796
Acquisition of property, plant and equipment		(12,028,789	)		(14,049,887	)
Proceeds from disposals of intangible assets		430			467
Acquisition of intangible assets		(124,422	)		(87,946	)
Proceeds from disposals of financial assets		10,876,017			242,856
Acquisition of financial assets		(8,130,621	)		(5,326,151	)
Increase in loans		(206,092	)		(153,570	)
Collection of loans		117,561			111,714
Increase in deposits		(468,734	)		(352,669	)
Decrease in deposits		161,166			185,154
Receipt of government grants		32,878			52,696
Usage of government grants		(33,516	)		(13,372	)
Net cash inflow (outflow) from changes in consolidation scope		3,754			(968	)
Other cash inflow (outflow) from investing activities, net		13,116			(132,034	)

Net cash used in investing activities		(9,645,870	)		(9,773,970	)


Cash flows from financing activities
Repayment of short-term borrowings, net		(49,604	)		(65,355	)
Proceeds from long-term borrowings and debt securities		2,302,060			4,178,454
Repayment of long-term borrowings and debt securities		(7,750,047	)		(8,960,706	)
Payment of finance lease liabilities		(118,215	)		(110,040	)
Settlement of derivative instruments, net		73,246			73,348
Change in non-controlling interest		10,538			104,019
Dividends paid (hybrid bond)		(16,455	)		(16,455	)
Dividends paid		(2,088,429	)		(409,884	)
Other cash outflow from financing activities, net		(570	)		—

Net cash used in financing activities		(7,637,476	)		(5,206,619	)


Net increase (decrease) in cash and cash equivalents before effect of exchange rate fluctuations		(762,794	)		1,962,516

Effect of exchange rate fluctuations on cash held		31,082			24,249


Net increase (decrease) in cash and cash equivalents		(731,712	)		1,986,765

Cash and cash equivalents at January 1		3,783,065			1,796,300


Cash and cash equivalents at December 31	W	3,051,353			3,783,065

See accompanying notes to the consolidated financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

December 31, 2016

1.	Reporting Entity (Description of the controlling company)

Korea Electric Power Corporation (“KEPCO”), the 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 KEPCO listed its Depository Receipts (DR) on the New York Stock Exchange on October 27, 1994. KEPCO’s head office is located in Naju, Jeollanam-do.

As of December 31, 2016, KEPCO’s share capital amounts to W3,209,820 million and KEPCO’s shareholders are as follows:


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


		641,964,077		100.00	%

(*)	The number of shares held by foreign shareholders are 197,308,414 shares (30.74%) as of December 31, 2016.

In accordance with the Restructuring Plan enacted on January 21, 1999 by the Ministry of Trade, Industry and Energy, KEPCO spun off its power generation divisions on April 2, 2001, resulting in the establishment of six power generation subsidiaries.

2.	Basis of Preparation

The consolidated financial statements of Korea Electric Power Corporation and subsidiaries (the “Company”) were authorized for issuance by the Board of Directors on February 17, 2017, which will be submitted for approval at the shareholders’ meeting held on March 21, 2017.

(1)

Statement of compliance

These 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

These 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 Financial Statements, Continued

December 31, 2016

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 followings 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 carryforward periods.

(iii)

Valuations of financial instruments at fair values

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

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

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

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

(iv)

Defined employee benefit liabilities

The Company offers its employees defined benefit plans. The cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. For actuarial valuations, certain inputs such as discount rates and future salary increases are estimated. Defined benefit plans contain significant uncertainties in estimations due to its long-term nature (refer to note 25).

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

2.	Basis of Preparation, Continued

(4)

Use of estimates and judgments, continued

(v)

Unbilled revenue

Energy delivered but not yet metered nor billed are estimated at the reporting date are estimated 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 consumptions and prices based on statistics. Unbilled revenue recognized as of December 31, 2016 and 2015 are W1,615,322 million and W1,599,592 million, respectively.

(vi)

Construction contracts

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 utilizing the cost-based input method at the end of the reporting period. In applying the cost-based input method, it is necessary to use estimates and assumptions related to the total estimated costs expected to be incurred in the future, costs incurred which are not related to construction progress, changes in costs due to change of contract or design, etc. Total contract revenue is measured based on an agreed contract price; however, it may fluctuate due to the variation of construction work. The measurement of contract revenue is affected by various uncertainties resulting from unexpected future events.

(vii)

Wolsung unit 1 nuclear power plant of the Company commenced operations on November 21, 1982 and ended its operations on November 20, 2012 pursuant to its 30-year operating license. On February 27, 2015, the Nuclear Safety and Security Commission (NSSC) evaluated the safety of operation on the Wolsung Unit 1 nuclear power plant and approved to continue its operation until November 20, 2022. As described in note 50, the lawsuit related to the validity of the approval of NSSC is currently ongoing. The consolidated financial statements were prepared based on the judgment of the Company that the approval of NSSC is valid and Wolsung Unit 1 nuclear power plant will be operating until 2022.

(5)

Changes in accounting policies

(i)

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

The Company has adopted amendments to K-IFRS 1016, ‘Property, Plant and Equipment’, since January 1, 2016. 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.

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

(ii)

Amendments to K- IFRS 1038, ‘Intangible Assets’

The Company has adopted amendments to K- IFRS 1038, ‘Intangible Assets’, since January 1, 2016. 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.

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

(iii)

Amendments to K-IFRS 1111, ‘Joint Arrangement’

The Company has adopted amendments to K-IFRS 1111, ‘Joint Arrangement’, since January 1, 2016. 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’.

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

(iv)

Amendments to K-IFRS 1011, ‘Construction Contracts’

The Company has adopted amendments to K-IFRS 1011, ‘Construction Contracts’, since January 1, 2016. Amendments to K-IFRS 1011, ‘Construction Contracts’, require the Company to disclose the construction contracts by each project or operating segment (refer to note 20).

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

2.	Basis of Preparation, Continued

(5)

Changes in accounting policies, continued

There are certain amendments to K-IFRS 1105, ‘Non-current Assets Held for Sale and Discontinued Operation’, that provides guidance when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), K-IFRS 1107, ‘Financial Instruments: Disclosures’, K-IFRS 1019, ‘Employee Benefits’, and K-IFRS 1034, ‘Interim Financial Reporting’.

Upon adoption of the amendments, 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 for mandatory application for annual periods beginning after January 1, 2016.

(i)

K-IFRS 1109, ‘Financial Instruments’

K-IFRS 1109, published on September 25, 2015, is effective for annual periods beginning on or after January 1, 2018, with earlier adoption permitted. It replaces existing guidance in K-IFRS 1039, ‘Financial Instruments: Recognition and Measurement’. The Company plans to adopt K-IFRS 1109 for the year beginning on January 1, 2018. K-IFRS 1109 will generally be applied retrospectively; however the Company plans to take advantage of the exemption allowing it not to restate the comparative information for prior periods with respect to classification and measurement including impairment changes. New hedge accounting requirements will generally be applied prospectively except for certain exemptions including the accounting for the time value of options.

Key features of the new standard, K-IFRS 1109, are 1) classification and measurement of financial assets that reflects the business model in which the assets are managed and their cash flow characteristics, 2) impairment methodology that reflects ‘expected credit loss’ (ECL) model for financial assets, and 3) expanded scope of hedged items and hedging instruments which qualify for hedge accounting and changes in assessment method for effect of hedging relationships.

K-IFRS 1109 will require the Company to assess the financial impact from application of K-IFRS 1109 and revise its accounting processes and internal controls related to financial instruments. Actual impact of adopting K-IFRS 1109 will be dependent on the financial instruments the Company holds and economic conditions at that time as well as accounting policy elections and judgment that it will make in the future.

The Company has not initiated any changes in internal controls processes or accounting processing systems, and has not performed an assessment of the impact resulting from the application of K-IFRS 1109. The Company is currently performing a detailed assessment of the potential impact from the application of K-IFRS 1109 and plans to complete the assessment in advance of its effective date. Expected impacts on the consolidated financial statements are generally categorized as follows:

①

Classification and measurement of financial assets

Under K-IFRS 1109, financial assets are classified into three principal categories; measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) based on the business model in which assets are managed and their cash flow characteristics. Under K-IFRS 1109, derivatives embedded in hybrid contracts where the host is a financial asset are not bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification.

As there are additional requirements for a financial asset to be classified as measured at amortized costs or FVOCI under K-IFRS 1109 compared to the existing guidance in K-IFRS 1039, the adoption of K-IFRS 1109 would potentially increase the proportion of financial assets that are measured at FVTPL, increasing volatility in the Company’s profit or loss.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

2.	Basis of Preparation, Continued

(6)

New standards and interpretations not yet adopted, continued

The criteria for classification and measurement of financial assets under K-IFRS 1109 are as follows:

•

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: 1) the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and 2) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

•

A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: 1) the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and 2) the contractual terms of the financial asset give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding.

•

On initial recognition of equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in OCI, and will not reclassify(recycle) the those items in OCI to profit or loss subsequently.

•

A financial asset is measured at FVTPL if the contractual terms of the financial asset give rise to specified dates to cash flows that are not solely payments of principal and interest on the principal amount outstanding, the debt instrument is held within a business model whose objective is to sell the asset, or the equity instruments that are not elected to be designated as measured at FVOCI.

As of December 31, 2016, the Company has loans and receivables amounting to W16,273,877 million, available-for-sale financial assets amounting to W1,014,732 million, and financial assets at fair value through profit or loss amounting to W367,477 million.

②

Classification and measurement of financial liabilities

Under K-IFRS 1109, the amount of change in the fair value attributable to the changes in the credit risk of the financial liabilities is presented in OCI, not recognized in profit or loss, and the OCI amount will not be reclassified (recycled) to profit or loss. However, if doing so creates or increase an accounting mismatch, the amount of change in the fair value is recognized in profit or loss.

As a portion of fair value change which was recognized in profit or loss under the existing standard, K-IFRS 1039, will be presented in OCI under K-IFRS 1109, profit or loss related to valuation of the same financial liabilities is likely to decrease.

The Company does not have any financial liability designated as at FVTPL as of December 31, 2016.

③

Impairment: Financial assets and contract assets

K-IFRS 1109 replaces the ‘incurred loss’ model in the existing standard with a forward-looking ‘expected credit loss’ (ECL) model for debt instruments, lease receivables, contractual assets, loan commitments, financial guarantee contracts.

Under K-IFRS 1109, impairment losses are likely to be recognized earlier than using the incurred loss model under the existing guidance in K-IFRS 1039 as loss allowances will be measured on either of the 12-month or lifetime ECL based on the extent of increase in credit risk since inception as shown in the below table.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

2.	Basis of Preparation, Continued

(6)

New standards and interpretations not yet adopted, continued

Under K-IFRS 1109, financial assets of which the credit was impaired at the initial recognition, cumulative changes in lifetime ECL since the initial recognition are recognized as loss allowances.

As of December 31, 2016, the Company has debt instruments in financial assets measured at amortized cost amounting to W16,438,054 million (loans and receivables) and has recognized loss allowances for W164,177 million.

④

Hedge accounting

K-IFRS 1109 retains the mechanics of hedge accounting (fair value hedge, cash flow hedge, hedging on net investment in a foreign operation) which was defined in the existing guidance in K-IFRS 1109, but provides principle-based and less complex guidance in hedging which focuses on the risk management activities. More hedged items and hedging instruments would qualify for hedge accounting, more qualitative and forward-looking approach will be taken to assessing hedge effectiveness, and qualitative threshold (80~125%) is removed under K-IFRS 1109.

Certain transactions which were not qualified for hedge accounting under the existing standard will likely quality for hedge accounting under K-IFRS 1109, decreasing volatility in the Company’s profits or loss.

As of December 31, 2016, the Company has asset and liabilities designated as hedged items amounting to W413,897 million and W117,157 million, respectively.

When initially applying K-IFRS 1109, the Company may choose as its accounting policy to continue to apply the hedge accounting requirements of K-IFRS 1039.

(ii)

K-IFRS 1115, ‘Revenue from Contracts with Customers’

K-IFRS 1115, ‘Revenue from Contracts from Customers’, published on November 6, 2015, is effective for annual periods beginning on or after January 1, 2018, with earlier adoption permitted.

It replaces existing revenue recognition guidance, including K-IFRS 1018, ‘Revenue’, K-IFRS 1011, ‘Construction Contracts’, K-IFRS 2031, ‘Revenue-Barter transactions involving advertising services’, K-IFRS, ‘2113 Customer Loyalty Programs’, K-IFRS 2115, ‘Agreements for the construction of real estate’, K-IFRS 2118, ‘Transfers of assets from customers’.

Existing K-IFRS standards and interpretations including K-IFRS 1018 provide revenue recognition guidance by transaction types such as sales of goods, rendering of services, interest income, royalty income, dividend income and construction revenue; however, under the new standard, K-IFRS 1115, the five-step approach (Step 1: Identify the contract(s) with a customer, Step 2: Identify the performance obligations in the contract, Step 3: Determine the transaction price, Step 4: Allocate the transaction price to the performance obligations in the contract, Step 5: Recognize revenue when the entity satisfied a performance obligation) is applied for all types of contracts or agreements.

The Company is currently performing a detailed assessment of the impact resulting from the application of K-IFRS 1115 and plans to complete the assessment in advance of its effective date.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

2.	Basis of Preparation, Continued

(6)

New standards and interpretations not yet adopted, continued

(iii)

Amendments to K-IFRS 1102, ‘Share-based Payment’

The amendments include: 1) when measuring the fair value of share-based payment, the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payment should be consistent with the measurement of equity-settled share-based payment, 2) Share-based payment transaction in which the company settles the share-based payment arrangement net by withholding a specified portion of the equity instruments per statutory tax withholding requirements would be classified as equity-settled in its entirety, if otherwise would be classified as equity-settled without the net settlement feature, and 3) when a cash-settled share-based payment changes to an equity-settled share-based payment because of modifications of the terms and conditions, the original liability recognized is derecognized and the equity-settled share-based payment is recognized at the modification date fair value. Any difference between the carrying amount of the liability at the modification date and the amount recognized in equity at the same date would be recognized in profit and loss immediately. The amendments are effective for annual periods beginning on or after January 1, 2018.

The adoption of the amendments is not expected to have a significant impact on the Company’s consolidated financial statements.

(iv)

Amendments to K-IFRS 1007, ‘Statement of Cash Flows’

The amendments require changes in liabilities arising from financing activities to be disclosed. The amendments are effective for annual periods beginning on or after January 1, 2017.

The adoption of the amendments is not expected to have a significant impact on the Company’s consolidated financial statements.

(v)

Amendments to K-IFRS 1012, ‘Income Taxes’

The amendments clarify that unrealized losses on fixed-rate debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the holder expects to recover the carrying amount of the debt instrument by sale or by use and that the estimate of probable future taxable profit may include the recovery of some of assets for more than their carrying amount. When the Company assesses whether there will be sufficient taxable profit, the Company should compare the deductible temporary differences with future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary differences. The amendments are effective for annual periods beginning on or after January 1, 2017.

The adoption of the amendments is not expected to have a significant impact on the Company’s consolidated financial statements.

3.	Significant Accounting Policies

The significant accounting policies applied by the Company in preparation of its consolidated financial statements are included below. Except as described in note 2.(5), the accounting policies applied by the Company in these consolidated financial statements are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2015.

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(1)

Basis of consolidation, continued

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

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

Transactions within the Company are eliminated during the consolidation.

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

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

(2)

Business combinations

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

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

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

•

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

•

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

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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(2)

Business combinations, continued

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

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

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(3)

Investments in associates

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

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(3)

Investments in associates, continued

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

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

(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-IFRS’ 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’ (refer to 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(6)

Goodwill, continued

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

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

(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 utility 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 recognize revenue from 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, 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 on a straight-line basis 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 Financial Statements, Continued

December 31, 2016

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 presented 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 presented 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 advance 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.

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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(9)

Leases, continued

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.

(iii)

Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset.

(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 (refer to note 3.(25) Derivative financial instruments, including hedge accounting); and

•

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

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

When a foreign operation is disposed of, the relevant amount in the translation is transferred to profit or loss as part of the gain 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 Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(12)

Government grants

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

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

(i)

If the Company received grants related to assets

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

(ii)

If the Company received grants related to income

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

(13)

Employee benefits

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

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

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

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(14)

Income taxes

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

(i)

Current tax

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

(ii)

Deferred tax

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

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

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

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

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

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

(iii)

Current and deferred tax for the year

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(15)

Property, plant and equipment

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

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

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

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


		Useful lives (years)

Buildings		8 ~ 40
Structures		8 ~ 50
Machinery		2 ~ 32
Vehicles		3 ~ 8
Loaded heavy water		30
Asset retirement costs		18, 30, 40, 60
Finance lease assets		6 ~ 32
Ships		9
Others		4 ~ 15

A component that is significant compared to the total cost of property, plant and equipment is depreciated over its separate useful life.

Depreciation methods, residual values and useful lives of property, plant and equipment are reviewed at the end of each reporting period and if change is deemed appropriate, it is treated as a change in accounting estimate. Accordingly, useful lives of certain machinery were changed during 2016 and as a result, depreciation expenses increased by W160,985 million for the year ended December 31, 2016. Depreciation expenses are expected to increase by W130,514 million and W91,197 million for the years ending December 31, 2017 and 2018, respectively, and to decrease by W382,696 million for the years after December 31, 2018.

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 Financial Statements, Continued

December 31, 2016

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 Financial Statements, Continued

December 31, 2016

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	10 ~ 20	Straight
Software	4, 5	Straight
Industrial rights	5, 10	Straight
Development expenses	5	Straight
Leasehold rights	10	Straight
Others	3 ~ 50 or Indefinite	Straight
Mining right	—	Unit of production

(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 are 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)

Greenhouse gas emissions rights (allowances) and obligations

In connection with Enforcement of Allocation and Trading of Greenhouse Gas Emissions Allowances, the Company applies the following accounting policies for greenhouse gas emissions rights and obligations.

(i)

Greenhouse gas emissions rights

Greenhouse gas emissions rights consist of the allowances received free of charge from the government and the ones purchased. The cost of the greenhouse gas emissions rights includes expenditures arising directly from the acquisition and any other costs incurred during normal course of the acquisition.

Greenhouse gas emissions rights are held by the Company to fulfill the legal obligation and recorded as intangible assets. To the extent that the portion to be submitted to the government within one year from the end of reporting period, the greenhouse gas emissions rights are classified as current assets. Greenhouse gas emissions rights recorded as intangible assets are initially measured at cost and substantially remeasured at cost less accumulated impairment losses.

Greenhouse gas emissions rights are derecognized on submission to the government or when no future economic benefits are expected from its use or disposal.

(ii)

Greenhouse gas emissions obligations

Greenhouse gas emissions obligations are the Company’s present legal obligation to submit the greenhouse gas emissions allowances to the government and recognized when an outflow of resources is probable and a reliable estimate can be made of the amount of the obligation. Greenhouse gas emissions obligations are measured as the sum of the carrying amount of the allocated rights that will be submitted to the government and the best estimate of expenditure required to settle the obligation at the end of the reporting period for any excess emission.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(19)

Impairment of non-financial assets other than goodwill

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

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

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

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

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

(20)

Inventories

Inventories are measured at the lower of cost and net realizable value. Cost of inventories for inventories in transit are measured by using specific identification method. 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.

(21)

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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(21)

Provisions, continued

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

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

(i)

Provision for employment benefits

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

(ii)

Provision for decommissioning costs of nuclear power plants

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

(iii)

Provision for disposal of spent nuclear fuel

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

(iv)

Provision for low and intermediate radioactive wastes

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

(v)

Provision for Polychlorinated Biphenyls (“PCBs”)

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

RPS program is recognized for the governmental regulations to require the production of energies from renewable energy sources such as solar, wind and biomass.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(22)

Non-derivative financial assets

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

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

(i)

Effective interest method

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

(ii)

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

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

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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(22)

Non-derivative financial assets, continued

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

(iii)

Held-to-maturity investments

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

(iv)

Available-for-sale financial assets

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

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

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

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

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

(v)

Loans and receivables

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

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(22)

Non-derivative financial assets, continued

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and, as well as observable changes in national or local economic conditions that correlate with default on receivables.

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

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

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

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

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

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

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(22)

Non-derivative financial assets, continued

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.

(23)

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.

(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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(23)

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

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.

(24)

Service Concession Arrangements

The Company recognizes revenues from construction services and operating services related to service concession arrangements in accordance with K-IFRS 1011, ’Construction Contracts’ and K-IFRS 1018, ‘Revenue’, respectively. If the Company performs more than one service under a single contract or arrangement, consideration received or receivable is allocated by reference to the relative fair values of the services delivered, when the amounts are separately identifiable.

The Company recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset for the construction services and an intangible asset to the extent that it receives a right (license) to charge users of the public service. Borrowing costs attributable to the arrangement are recognized as an expense in the period in which they are incurred unless the Company has a contractual right to receive an intangible asset (a right to charge users of the public service). In this case, borrowing costs attributable to the arrangement are capitalized during the construction phase of the arrangement.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(25)

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 Financial Statements, Continued

December 31, 2016

3.	Significant Accounting Policies, Continued

(24)

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 Financial Statements, Continued

December 31, 2016

4.	Segment, Geographic and Other Information

(1)

Segment determination and explanation of the measurements

The Company’s operating segments are its business components that generate discrete financial information that is reported to and regularly reviewed 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 segments 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 equity method in the consolidated financial statements.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

4.	Segment, Geographic and Other Information, Continued

(2)

Financial information of the segments for the years ended December 31, 2016 and 2015, respectively, are as follows:


In millions of won
2016
Segment	Total segment revenue			Intersegment revenue			Revenue from external customers		Operating profit			Depreciation and amortization			Interest income			Interest expense			Profit related associates, joint ventures and subsidiaries

Transmission and distribution	W	60,289,581			1,890,489			58,399,092		4,881,540			3,226,700			80,882			844,200			(128,402	)
Electric power generation (Nuclear)		11,168,579			11,129,385			39,194		3,819,778			3,130,820			33,111			474,590			(1,082	)
Electric power generation (Non-nuclear)		21,394,223			20,561,044			833,179		3,211,318			2,523,306			24,171			359,607			(8,342	)
Plant maintenance & engineering service		2,618,388			2,190,207			428,181		196,989			98,843			10,672			2,156			478
Others		567,836			77,098			490,738		89,301			26,817			115,928			97,926			—
Consolidation adjustments		(35,848,223	)		(35,848,223	)		—		(197,327	)		(45,498	)		(22,986	)		(25,611	)		—


	W	60,190,384			—			60,190,384		12,001,599			8,960,988			241,778			1,752,868			(137,348	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

4.	Segment, Geographic and Other Information, Continued

(2)

Financial information of the segments for the years ended December 31, 2016 and 2015, respectively, are as follows, continued:


In millions of won
2015
Segment	Total segment revenue			Intersegment revenue			Revenue from external customers		Operating profit (loss)		Depreciation and amortization			Interest income			Interest expense			Profit related associates, joint ventures and subsidiaries

Transmission and distribution	W	58,540,389			1,230,975			57,309,414		4,425,361		2,859,037			132,809			1,092,594			220,406
Electric power generation (Nuclear)		10,642,352			10,596,189			46,163		3,784,990		3,070,828			24,612			532,490			(595	)
Electric power generation (Non-nuclear)		21,469,345			20,906,081			563,264		2,732,497		2,337,353			22,171			319,647			(10,686	)
Plant maintenance & engineering service		2,533,887			2,016,699			517,188		285,786		85,662			12,293			542			(1,746	)
Others		672,250			150,557			521,693		42,629		27,491			108,104			127,684			—
Consolidation adjustments		(34,900,501	)		(34,900,501	)		—		75,469		(38,987	)		(58,404	)		(57,273	)		—


	W	58,957,722			—			58,957,722		11,346,732		8,341,384			241,585			2,015,684			207,379

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

4.	Segment, Geographic and Other Information, Continued

(3)

Information related to segment assets and segment liabilities as of and for the years ended December 31, 2016 and 2015 are as follows:


In millions of won
2016
Segment	Segment assets			Investments in associates and joint ventures		Acquisition of non- current assets			Segment liabilities

Transmission and distribution	W	105,321,129			4,121,462		6,345,004			49,854,420
Electric power generation (Nuclear)		52,782,915			15,384		1,945,610			27,366,938
Electric power generation (Non-nuclear)		47,427,642			1,320,203		3,508,313			26,205,049
Plant maintenance & engineering service		3,106,909			53,399		180,715			1,218,047
Others		7,423,132			—		365,470			2,761,262
Consolidation adjustments		(38,224,685	)		—		(191,901	)		(2,619,219	)


Consolidated totals	W	177,837,042			5,510,448		12,153,211			104,786,497


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

Transmission and distribution	W	106,306,250			4,338,888		5,885,919		53,125,589
Electric power generation (Nuclear)		51,043,890			16,385		2,647,304		27,386,113
Electric power generation (Non-nuclear)		44,453,545			1,283,432		5,063,195		25,587,071
Plant maintenance & engineering service		2,990,862			54,825		249,627		1,172,351
Others		5,962,546			—		144,846		2,312,658
Consolidation adjustments		(35,499,734	)		—		146,942		(2,268,898	)


Consolidated totals	W	175,257,359			5,693,530		14,137,833		107,314,884

(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	Revenue from external customers				*Non-current assets (2)**
Geographical unit	2016		2015		2016		2015

Domestic	W	55,737,308		54,727,071		148,297,677		143,788,043
Overseas (*1)		4,453,076		4,230,651		4,474,699		4,526,395


	W	60,190,384		58,957,722		152,772,376		148,314,438

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

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

(5)

Information on significant customers

There is no individual customer comprising more than 10% of the Company’s revenue for the years ended December 31, 2016 and 2015.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

5.	Classification of Financial Instruments

(1)

Classification of financial assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Financial assets at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- maturity investments		Derivative assets (using hedge accounting)		Total
Current assets
Cash and cash equivalents	W	—		3,051,353		—		—		—		3,051,353
Current financial assets
Held-to-maturity investments		—		—		—		114		—		114
Derivative assets		79,709		—		—		—		113,574		193,283
Other financial assets		—		2,478,592		—		—		—		2,478,592
Trade and other receivables		—		7,788,876		—		—		—		7,788,876

		79,709		13,318,821		—		114		113,574		13,512,218

Non-current assets
Non-current financial assets
Available-for-sale financial assets		—		—		1,014,732		—		—		1,014,732
Held-to-maturity investments		—		—		—		3,130		—		3,130
Derivative assets		287,768		—		—		—		300,323		588,091
Other financial assets		—		1,051,541		—		—		—		1,051,541
Trade and other receivables		—		1,903,515		—		—		—		1,903,515

		287,768		2,955,056		1,014,732		3,130		300,323		4,561,009


	W	367,477		16,273,877		1,014,732		3,244		413,897		18,073,227


In millions of won	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	W	—		3,783,065		—		—		—		3,783,065
Current financial assets
Held-to-maturity investments		—		—		—		381		—		381
Derivative assets		1,498		—		—		—		95,759		97,257
Other financial assets		—		5,237,983		—		—		—		5,237,983
Trade and other receivables		—		7,473,548		—		—		—		7,473,548

		1,498		16,494,596		—		381		95,759		16,592,234

Non-current assets
Non-current financial assets
Available-for-sale financial assets		—		—		584,479		—		—		584,479
Held-to-maturity investments		—		—		—		3,242		—		3,242
Derivative assets		253,510		—		—		—		266,383		519,893
Other financial assets		—		1,387,940		—		—		—		1,387,940
Trade and other receivables		—		1,798,419		—		—		—		1,798,419

		253,510		3,186,359		584,479		3,242		266,383		4,293,973


	W	255,008		19,680,955		584,479		3,623		362,142		20,886,207

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

5.	Classification of Financial Instruments, Continued

(2)

Classification of financial liabilities as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Financial liabilities at fair value through profit or loss		Financial liabilities recognized at amortized cost		Derivative liabilities (using hedge accounting)		Total
Current liabilities
Borrowings	W	—		1,115,521		—		1,115,521
Debt securities		—		7,823,557		—		7,823,557
Derivative liabilities		3,251		—		—		3,251
Trade and other payables		—		5,585,411		—		5,585,411

		3,251		14,524,489		—		14,527,740

Non-current liabilities
Borrowings		—		1,773,891		—		1,773,891
Debt securities		—		42,926,236		—		42,926,236
Derivative liabilities		18,278		—		117,157		135,435
Trade and other payables		—		3,558,175		—		3,558,175

		18,278		48,258,302		117,157		48,393,737


	W	21,529		62,782,791		117,157		62,921,477


In millions of won	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	W	—		1,144,027		—		1,144,027
Debt securities		—		6,702,926		—		6,702,926
Derivative liabilities		9,487		—		758		10,245
Trade and other payables		—		4,735,697		—		4,735,697

		9,487		12,582,650		758		12,592,895

Non-current liabilities
Borrowings		—		1,932,259		—		1,932,259
Debt securities		—		48,974,287		—		48,974,287
Derivative liabilities		39,524		—		116,741		156,265
Trade and other payables		—		3,718,435		—		3,718,435

		39,524		54,624,981		116,741		54,781,246


	W	49,011		67,207,631		117,499		67,374,141

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

5.	Classification of Financial Instruments, Continued

(3)

Classification of comprehensive income from financial instruments for the years ended December 31, 2016 and

2015 are as follows:


In millions of won		2016			2015

Cash and cash equivalents	Interest income	W	61,380			54,687
Available-for-sale financial assets	Dividends income		9,446			14,069
	Impairment loss on available-for-sale financial assets		(86,703	)		(84,370	)
	Gain (loss) on disposal of available-for-sale financial assets		1,473			(3,004	)
	Interest income		—			29
Held-to-maturity investments	Interest income		97			99
Loans and receivables	Interest income		25,106			28,586
Trade and other receivables	Interest income		102,237			100,771
Short-term financial instruments	Interest income		45,763			46,921
Long-term financial instruments	Interest income		7,195			10,492
Financial assets at fair value through profit or loss	Gain on valuation of derivatives		113,671			220,285
	Gain (loss) on transaction of derivatives		(8,039	)		8,605
Derivative assets (using hedge accounting)	Gain on valuation of derivatives (profit or loss)		145,458			244,020
	Gain (loss) on valuation of derivatives (equity, before tax) (*)		50,047			(12,572	)
	Gain (loss) on transaction of derivatives		(13,994	)		2,818
Financial liabilities carried at amortized cost	Interest expense of borrowings and debt securities		(1,202,065	)		(1,392,477	)
	Loss on retirement of financial liabilities		(23,000	)		(33	)
	Interest expense of trade and other payables		(68,375	)		(84,527	)
	Interest expense of others		(482,428	)		(538,680	)
	Loss on foreign currency transactions and translations		(290,485	)		(708,178	)
Financial liabilities at fair value through profit or loss	Gain on valuation of derivatives		23,225			35,312
	Gain on transaction of derivatives		17,045			107,454
Derivative liabilities (using hedge accounting)	Gain on valuation of derivatives (profit or loss)		5,714			93,914
	Gain (loss) on valuation of derivatives (equity, before tax) (*)		(3,297	)		9,728
	Loss on transaction of derivatives		(51,450	)		(4,288	)

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

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

6.	Restricted Deposits

Restricted deposits as of December 31, 2016 and 2015 are as follows:


In millions of won		2016		2015

Cash and cash equivalents	Escrow accounts	W	91		4,828
	Deposits for government project		16,457		5,839
	Collateral provided for borrowings		80,327		6,839
	Collateral provided for lawsuit		241		641
	Deposits for transmission regional support program		2,137		204
	Pledge		—		740
Non-current available-for-sale financial asset	Decommissioning costs of nuclear power plants		437,015		—
Short-term financial instruments	Bidding guarantees		118		—
	Restriction on withdrawal related to ‘win-win growth program’ for small and medium enterprises		33,000		18,000
Other current receivables	Deposit for lawsuit		16,000		—
Long-term financial instruments	Guarantee deposits for checking account		2		2
	Guarantee deposits for banking accounts at oversea branches		342		333
	Decommissioning costs of nuclear power plants		214,121		652,700
	Collateral provided for borrowings		—		20
	Funds for developing small and medium enterprises (*1)		200,000		100,000


		W	999,851		790,146

(*1)	Deposits for small and medium enterprise at IBK for construction of Bitgaram Energy Valley and support for the high potential businesses as of December 31, 2016.

7.	Cash and Cash Equivalents

Cash and cash equivalents as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Cash	W	119		109
Other demand deposits		1,725,785		1,309,396
Short-term deposits classified as cash equivalents		120,594		374,575
Short-term investments classified as cash equivalents		1,204,855		2,098,985


	W	3,051,353		3,783,065

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

8.	Trade and Other Receivables

(1)

Trade and other receivables as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	W	7,260,227		(71,985	)		—			7,188,242
Other receivables		652,782		(50,071	)		(2,077	)		600,634

		7,913,009		(122,056	)		(2,077	)		7,788,876

Non-current assets
Trade receivables		491,509		—			—			491,509
Other receivables		1,455,860		(37,590	)		(6,264	)		1,412,006

		1,947,369		(37,590	)		(6,264	)		1,903,515


	W	9,860,378		(159,646	)		(8,341	)		9,692,391


In millions of won	2015
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Trade receivables	W	6,862,762		(51,956	)		(14	)		6,810,792
Other receivables		718,717		(52,778	)		(3,183	)		662,756

		7,581,479		(104,734	)		(3,197	)		7,473,548

Non-current assets
Trade receivables		447,010		—			—			447,010
Other receivables		1,396,107		(38,968	)		(5,730	)		1,351,409

		1,843,117		(38,968	)		(5,730	)		1,798,419


	W	9,424,596		(143,702	)		(8,927	)		9,271,967

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

8.	Trade and Other Receivables, Continued

(2)

Other receivables as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Non-trade receivables	W	360,021		(50,071	)		—			309,950
Accrued income		62,063		—			—			62,063
Deposits		193,720		—			(2,077	)		191,643
Finance lease receivables		12,225		—			—			12,225
Others		24,753		—			—			24,753

		652,782		(50,071	)		(2,077	)		600,634

Non-current assets
Non-trade receivables		80,393		(26,942	)		—			53,451
Accrued income		174		—			—			174
Deposits		320,935		—			(6,264	)		314,671
Finance lease receivables		960,649		—			—			960,649
Others		93,709		(10,648	)		—			83,061

		1,455,860		(37,590	)		(6,264	)		1,412,006


	W	2,108,642		(87,661	)		(8,341	)		2,012,640


In millions of won	2015
	Gross amount		Allowance for doubtful accounts			Present value discount			Book value
Current assets
Non-trade receivables	W	330,669		(52,778	)		—			277,891
Accrued income		88,256		—			—			88,256
Deposits		235,745		—			(3,183	)		232,562
Finance lease receivables		12,098		—			—			12,098
Others		51,949		—			—			51,949

		718,717		(52,778	)		(3,183	)		662,756

Non-current assets
Non-trade receivables		93,782		(31,829	)		—			61,953
Accrued income		582		—			—			582
Deposits		256,745		—			(5,730	)		251,015
Finance lease receivables		941,710		—			—			941,710
Others		103,288		(7,139	)		—			96,149

		1,396,107		(38,968	)		(5,730	)		1,351,409


	W	2,114,824		(91,746	)		(8,913	)		2,014,165

(3)

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 1.5% 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.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

8.	Trade and Other Receivables, Continued

(4)

Aging analysis of trade receivables as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Trade receivables: (not overdue, not impaired)	W	7,592,363			7,198,403

Trade receivables: (overdue, not impaired)		820			891

Less than 60 days		820			891

Trade receivables: (impairment reviewed)		158,553			110,478

60 ~ 90 days		44,277			31,973
90 ~ 120 days		18,917			11,010
120 days ~ 1 year		42,534			35,097
Over 1 year		52,825			32,398

		7,751,736			7,309,772
Less: allowance for doubtful accounts		(71,985	)		(51,956	)
Less: present value discount		—			(14	)


	W	7,679,751			7,257,802

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 overdue if the receivables are outstanding 60 days after the maturity and sets an allowance based on past experience of collection.

(5)

Aging analysis of other receivables as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Other receivables: (not overdue, not impaired)	W	1,887,620			1,918,132

Other receivables: (overdue, not impaired)		46,887			20,249

Less than 60 days		46,887			20,249

Other receivables: (impairment reviewed)		174,135			176,443

60 ~ 90 days		7,352			2,409
90 ~ 120 days		2,160			10,097
120 days ~ 1 year		17,613			21,433
Over 1 year		147,010			142,504

		2,108,642			2,114,824
Less: allowance for doubtful accounts		(87,661	)		(91,746	)
Less: present value discount		(8,341	)		(8,913	)


	W	2,012,640			2,014,165

(6)

Changes in the allowance for doubtful accounts for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016						2015
	Trade receivables			Other receivables			Trade receivables			Other receivables

Beginning balance	W	51,956			91,746			80,644			67,932
Bad debt expense		38,719			233			1,308			18,473
Write-off		(18,939	)		(928	)		(28,978	)		(888	)
Reversal		—			(5,489	)		(1,018	)		(413	)
Others		249			2,099			—			6,642


Ending balance	W	71,985			87,661			51,956			91,746

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance		Acquisition		Disposal			Valuation			Impairment			Others			Ending balance
Listed:
Korea District Heating Corp.	W	130,410		—		—			23,773			—			—			154,183
Kwanglim Co., Ltd. (*1)		262		—		(214	)		598			—			(646	)		—
Ssangyong Motor Co., Ltd.		299		—		—			5			—			—			304
Sungjee Construction. Co., Ltd.		5		—		—			16			—			—			21
Korea Line Corp.		—		—		—			—			—			—			—
Namkwang Engineering & Construction Co., Ltd.		1		—		—			(1	)		—			—			—
Pumyang Construction Co., Ltd.		—		—		—			—			—			—			—
ELCOMTEC Co., Ltd.		53		—		—			21			—			—			74
PAN ocean Co., Ltd.		6		—		—			1			—			—			7
Borneo International Furniture Co., Ltd.		103		—		—			—			—			—			103
TONGYANG Inc. (*1)		217		—		(44	)		25			—			(198	)		—
TONGYANG networks Inc. (*1)		6		—		(3	)		—			—			(3	)		—
Nexolon Co., Ltd. (*1)		3,196		—		(3,137	)		569			—			(628	)		—
Dongbu Corporation,		—		—		—			—			—			12			12
PT Adaro Energy Tbk		21,012		—		—			52,049			—			—			73,061
Energy Fuels Inc.		5,926		—		—			(2,775	)		(3,273	)		3,507			3,385
Baralaba Coal Company Limited (formerly, Cockatoo Coal Limited)		42		—		—			—			—			—			42
Denison Mines Corp.		34,457		—		—			—			(5,849	)		7,896			36,504
Fission 3.0		30		—		—			(16	)		—			2			16
Fission Uranium Corp.		554		—		—			(126	)		—			31			459

		196,579		—		(3,398	)		74,139			(9,122	)		9,973			268,171

Unlisted:
K&C - Gyeongnam youth job creation Investment Fund		1,207		—		—			—			—			—			1,207
Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I		571		—		—			—			—			—			571
Troika Overseas Resource Development Private Equity Firm		1,553		—		—			—			—			—			1,553
IBK-AUCTUS Green Growth Private Equity firm (*1)		855		—		(814	)		—			—			—			41
Global Dynasty Overseas Resource Development Private Equity Firm		2,233		—		—			—			—			—			2,233
Intellectual Discovery, Ltd.		1,375		—		—			—			—			—			1,375
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 (*1)		1,069		3,685		(365	)		—			—			—			4,389
Construction Guarantee		805		—		—			14			—			—			819
Plant & Mechanical Contractors Financial Cooperative of Korea		36		—		—			—			—			—			36
Fire Guarantee		20		—		—			—			—			—			20
Korea Software Financial Cooperative		301		3,000		—			—			—			—			3,301
Engineering Financial Cooperative		60		—		—			—			—			—			60
Electric Contractors Financial Cooperative		152		—		—			—			—			—			152
Korea Specialty Contractor Financial Cooperative		417		—		—			—			—			—			417
Information & Communication Financial Cooperative		10		—		—			—			—			—			10
Korea Electric Engineers Association		40		—		—			—			—			—			40
Korea investment – Investment Pool for Public funds 10		—		142,470		—			(1,155	)		—			—			141,315
Samsung investment – Investment Pool for Public funds 2		—		213,710		—			(1,790	)		—			—			211,920
Samsung investment – Investment Pool for Public funds 1		—		53,220		—			(8	)		—			—			53,212
Korea investment – Hanwha KT Mater Lease Private Special Investment Trust (*1)		—		31,200		(640	)		8			—			—			30,568

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016
	Beginning balance		Acquisition		Disposal		Valuation		Impairment			Others			Ending balance
Hwan Young Steel Co., Ltd.	W	97		—		—		—		—			—			97
Woobang ENC Co., Ltd		22		—		—		—		(22	)		—			—
Dongnam Co., Ltd.		72		—		—		—		(72	)		—			—
SAMBO AUTO. Co., Ltd.		38		—		—		—		—			—			38
Mobo Co., Ltd.		14		—		—		—		—			—			14
Poonglim Industrial Co., Ltd.		93		—		—		—		(93	)		—			—
HANKOOK Silicon Co., Ltd.		7,513		—		—		—		(6,018	)		—			1,495
Kun Young Engineering & Construction Co., Ltd.		5		—		—		—		(3	)		(2	)		—
Pumyang Asset Management Co., Ltd.		3		—		—		—		(3	)		—			—
Dae Kwang Semiconductor Co., Ltd.		6		—		—		—		—			—			6
Sanbon Department Store		3		—		—		—		—			—			3
Woori Ascon Co., Ltd.		10		—		—		—		—			(10	)		—
Miju Steel Mfg. Co., Ltd.		51		—		—		—		—			—			51
BnB Sungwon Co., Ltd.		15		—		—		—		—			—			15
Hana Civil Engineering Co., Ltd.		1		—		—		—		—			—			1
KC Development Co., Ltd.		6		—		—		—		—			—			6
IMHWA Corp.		5		—		—		—		—			—			5
DALIM Special Vehicle Co., Ltd.		10		—		—		—		—			—			10
ASA JEONJU Co., Ltd.		69		—		—		—		—			—			69
KYUNGWON Co., Ltd.		14		—		—		—		(14	)		—			—
Moonkyung Silica Co., Ltd.		—		—		—		—		—			—			—
Yousung Remicon Co., Ltd.		4		—		—		—		(4	)		—			—
Sungkwang Timber Co., Ltd.		4		—		—		—		—			—			4
Yongbo Co., Ltd.		3		—		—		—		—			—			3
HJ Steel Co., Ltd.		2		—		—		—		—			—			2
KS Remicon Co., Ltd.		3		—		—		—		—			—			3
Sewoong Heavy Industries Co., Ltd.		40		—		—		—		(40	)		—			—
SIN-E Steel Co., Ltd.		33		—		—		—		—			—			33
Joongang Platec Co., Ltd.		72		—		—		—		(37	)		—			35
Pyungsan SI Ltd.		9		—		—		—		—			—			9
Samgong Development Co., Ltd.		7		—		—		—		—			—			7
Joongang Development Co., Ltd.		8		—		—		—		—			—			8
AJS Co., Ltd.		32		—		—		—		—			—			32
SHIN-E B&P Co., Ltd.		10		—		—		—		—			—			10
MSE Co., Ltd.		9		—		—		—		—			—			9
Ilrim Nano Tec Co., Ltd.		15		—		—		—		—			—			15
Kwang Myeong Electronics Technology Co., Ltd.		11		—		—		—		(11	)		—			—
Youngjin Hi-Tech Co., Ltd.		21		—		—		—		—			—			21
Dong Woo International Co., Ltd.		18		—		—		—		—			—			18
Bench Mark Construction Co., Ltd.		—		—		—		—		—			—			—
Buyoung Co., Ltd.		3		—		—		—		—			—			3
Ilsuk Co., Ltd.		10		—		—		—		—			—			10
Dongyang Telecom Co., Ltd.		11		—		—		—		—			—			11
Han Young Construction Co., Ltd.		3		—		—		—		—			—			3
Jongwon Remicon Co., Ltd.		13		—		—		—		—			—			13
Ace Heat Treating Co., Ltd.		72		—		—		—		—			—			72
Zyle Daewoo Motor Sales Co., Ltd.		—		—		—		—		—			—			—
Daewoo Development Co., Ltd.		—		—		—		—		—			—			—
Seyang Inc.		27		—		—		—		—			—			27
Seungri Enterprise Co., Ltd.		3		—		—		—		—			—			3

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016
	Beginning balance		Acquisition		Disposal		Valuation		Impairment			Others			Ending balance
Onggane Food Co., Ltd.	W	1		—		—		—		—			—			1
Shin-E P&C Co., Ltd.		1		—		—		—		—			—			1
Ejung Ad Co., Ltd.		3		—		—		—		—			—			3
Solvus Co., Ltd.		3		—		—		—		—			—			3
Myung Co., Ltd.		2		—		—		—		—			—			2
Emotion Co., Ltd.		8		—		—		—		—			—			8
Youngdong Concrete Co., Ltd.		7		—		—		—		—			—			7
Shinil Engineering Co., Ltd.		3		—		—		—		—			—			3
Korea Castiron Industrial Co., Ltd.		22		—		—		—		(22	)		—			—
FFG DMC Co., Ltd.		17		—		—		—		(68	)		51			—
Daeseong Metal Co., Ltd.		47		—		—		—		—			(47	)		—
Biwang Industry Co., Ltd		2		—		—		—		—			—			2
Huimun Co., Ltd.		4		—		—		—		—			—			4
Sunun IT F Co., Ltd.		8		—		—		—		—			(8	)		—
Young Sung Co., Ltd.		27		—		—		—		—			—			27
Yuil Industrial Electronics Co., Ltd.		16		—		—		—		—			—			16
DN TEK Inc.		62		—		—		—		(56	)		—			6
Daeyang F.M.S Corporation		3		—		—		—		—			20			23
Kwang Jin Structure Co., Ltd.		31		—		—		—		—			—			31
Woojin Industry Corporation		16		—		—		—		—			—			16
Kwang Sung Industry Co., Ltd.		7		—		—		—		—			—			7
Matsaeng Food Co., Ltd.		6		—		—		—		—			(6	)		—
Futech Mold Co., Ltd.		14		—		—		—		—			—			14
Samcheonri Industrial Co., Ltd.		13		—		—		—		—			—			13
Woojoo Environment Ind. Co., Ltd.		13		—		—		—		—			—			13
Cheongatti Co., Ltd.		4		—		—		—		—			—			4
Hyungji Esquire Co., Ltd.		21		—		—		—		—			1			22
Kolmar Pharma Co., Ltd.		52		—		—		—		(49	)		—			3
Morado Co., Ltd.		2		—		—		—		—			—			2
Myung Sung Tex Co., Ltd.		2		—		—		—		—			—			2
Kwang Sung Co., Ltd.		—		—		—		—		—			31			31
EverTechno. Co., Ltd.		—		—		—		—		(140	)		147			7
Autowel Co., Ltd.		—		—		—		—		—			13			13
Woobang Constructon Co., Ltd.		—		—		—		—		—			8			8
Shin Pyung Co., Ltd.		—		—		—		—		—			3			3
JMC Heavy Industries Co., Ltd.		—		—		—		—		—			27			27
Najin Steel Co., Ltd.		—		—		—		—		—			5			5
Kunyang Food Co., Ltd.		—		—		—		—		(1	)		1			—
Sinkwang Industry Co., Ltd.		—		—		—		—		—			5			5
Join Land Co., Ltd.		—		—		—		—		—			1			1
Crystal Co., Ltd.		—		—		—		—		—			2			2
Elephant & Friends Co., Ltd.		—		—		—		—		—			3			3
Mireco Co., Ltd.		—		—		—		—		—			11			11
L&K Industry Co., Ltd.		—		—		—		—		—			24			24
JO Tech Co., Ltd.		—		—		—		—		—			25			25
Samwoo EMC Co., Ltd.		—		—		—		—		(117	)		117			—
Kendae Printing Co., Ltd.		—		—		—		—		—			21			21
Golden Tech Co., Ltd.		—		—		—		—		(114	)		114			—
Dauning Co., Ltd.		—		—		—		—		—			6			6
Korea Trecision Co., Ltd.		—		—		—		—		—			5			5
Buhmwoo Chemical Corp.		—		—		—		—		(20	)		20			—
Ace Track Co., Ltd.		—		—		—		—		(160	)		219			59

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016
	Beginning balance		Acquisition		Disposal			Valuation			Impairment			Others			Ending balance
Taebok Machinery Co., Ltd.	W	—		—		—			—			—			11			11
Yooah Industry Co., Ltd.		—		—		—			—			—			13			13
Yoo-A Construction Co., Ltd.		—		—		—			—			—			11			11
Dung Hwan Co., Ltd.		—		—		—			—			—			5			5
Dongjin Metal Co., Ltd.		—		—		—			—			(27	)		27			—
Hurim Biocell Co., Ltd.		—		—		—			—			—			5			5
P. J, Trading Co., LTd.		—		—		—			—			—			—			—
Sunjin Power Tech Co., Ltd.		—		—		—			—			(157	)		247			90
Smart Power Co., Ltd.		—		200		—			—			—			—			200
Sunjin Inprecision Co., Ltd.		—		—		—			—			(169	)		169			—
Haseung Industries Co., Ltd.		—		—		—			—			—			28			28
Beer Yeast Korea Inc.		—		—		—			—			—			7			7
Daeryung Corporation		—		—		—			—			—			10			10
Korea Bio Red Ginseng Co., Ltd.		—		—		—			—			—			10			10
ESGI Co., Ltd.		—		—		—			—			(120	)		120			—
ENH Co., Ltd.		—		—		—			—			(55	)		55			—
HS Development Co., Ltd.		—		—		—			—			—			54			54
OCO Co., Ltd.		—		—		—			—			—			11			11
B CON Co., Ltd.		—		—		—			—			—			6			6
Doosun Co., Ltd.		—		—		—			—			(62	)		62			—
CheonIl Metal Co., Ltd.		—		—		—			—			—			4			4
Teakwang Tech Co., Ltd.		—		—		—			—			—			12			12
SsangMa Machine Co., Ltd.		—		—		—			—			—			1			1
SinJin Co., Ltd.		—		—		—			—			—			9			9
Ace Integration Co., Ltd		—		—		—			—			—			21			21
AceInti Agricultiral Co., Ltd.		—		—		—			—			—			1			1
KyungDong Co., Ltd.		—		—		—			—			—			1			1
ChunWon Development Co., Ltd.		—		—		—			—			—			39			39
WonIl Co., Ltd.		—		—		—			—			—			50			50
SungLim Industrial Co., Ltd.		—		—		—			—			—			1			1
DaeHa Co., Ltd.		—		—		—			—			—			11			11
Korea Minerals Co., Ltd.		—		—		—			—			—			135			135
HyoDong Development Co., Ltd.		—		—		—			—			—			24			24
Haspe Tech Co., Ltd.		—		—		—			—			—			20			20
JoHyun Co., Ltd.		—		—		—			—			—			18			18
KC Co., Ltd.		—		—		—			—			—			3			3
SeongJi Industrial Co., Ltd.		—		—		—			—			—			1			1
SsangYong E&C Co., Ltd. (*1)		—		—		(9	)		—			—			9			—
Areva nc Expansion		170,118		—		—			—			(69,927	)		(1,719	)		98,472
Navanakorn Electric Co., Ltd.		17,951		—		—			—			—			558			18,509
PT. Kedap Saayq		—		—		—			—			—			—			—
Set Holding		179,585		—		—			(9,415	)		—			—			170,170
PT. Cirebon Energi Prasarana		635		1,999		—			—			—			75			2,709

		387,900		449,484		(1,828	)		(12,346	)		(77,581	)		932			746,561

	W	584,479		449,484		(5,226	)		61,793			(86,703	)		10,905			1,014,732

(*1)

The Company recognized gain and loss on disposal of available-for-sale financial assets amounted to W1,482 million and W9 million, respectively, from the sales of shares of Kwanglim Co., Ltd., TONGYANG Inc., TONGYANG networks Inc., Nexolon Co., Ltd. and SsangYong E&C Co., Ltd. and from the partial sales of IBK-AUCTUS Green Growth Private Equity Firm, Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 and Korea investment – Hanwha KT Mater Lease Private Special Investment Trust for the year ended December 31, 2016.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Beginning balance		Acquisition		Disposal			Valuation			Impairment			Others			Ending Balance
Listed:
Korea District Heating Corp.	W	127,241		—		—			3,169			—			—			130,410
Kwanglim Co., Ltd.		128		—		—			134			—			—			262
Ssangyong Motor Co., Ltd.		357		—		—			(58	)		—			—			299
Sungjee Construction. Co., Ltd.		5		—		—			—			—			—			5
Korea Line Corp.		—		—		—			—			—			—			—
Namkwang Engineering & Construction Co., Ltd.		2		—		—			(3	)		—			2			1
Pumyang Construction Co., Ltd.		—		—		—			—			—			—			—
ELCOMTEC Co., Ltd.		48		—		—			5			—			—			53
PAN ocean Co., Ltd.		5		—		—			1			—			—			6
Borneo International Furniture Co., Ltd.		4		—		—			7			—			92			103
TONGYANG Inc.		66		—		—			140			—			11			217
TONGYANG networks Inc.		3		—		—			3			—			—			6
Nexolon Co., Ltd		—		—		—			59			—			3,137			3,196
PT Adaro Energy Tbk		44,109		—		—			(23,097	)		(23,206	)		23,206			21,012
Energy Fuels Inc.		11,568		—		—			(4,866	)		(9,391	)		8,615			5,926
Baralaba Coal Company Limited (formerly, Cockatoo Coal Limited)		628		—		—			(572	)		(572	)		558			42
Denison Mines Corp.		62,339		—		—			(22,187	)		(20,154	)		14,459			34,457
Fission 3.0 (*1)		61		—		(57	)		11			—			15			30
Fission Uranium Corp.		651		—		—			(28	)		—			(69	)		554

		247,215		—		(57	)		(47,282	)		(53,323	)		50,026			196,579

Unlisted:
K&C - Gyeongnam youth job creation Investment Fund (*1)		1,340		—		(133	)		—			—			—			1,207
Hanwha Electric Power Venture Fund(*1)		1,804		—		(1,804	)		—			—			—			—
Korea Investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I (*1)		4,752		—		(3,000	)		—			(1,181	)		—			571
Troika Overseas Resource Development Private Equity Firm		13,340		—		—			—			(11,787	)		—			1,553
IBK-AUCTUS Green Growth Private Equity firm (*1)		2,325		—		(1,470	)		—			—			—			855
Global Dynasty Overseas Resource Development Private Equity Firm		2,233		—		—			—			—			—			2,233
Intellectual Discovery, Ltd.		5,000		—		—			—			(3,625	)		—			1,375
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1 (*1)		498		802		(231	)		—			—			—			1,069
Construction Guarantee		795		—		—			10			—			—			805
Plant & Mechanical Contractors Financial Cooperative of Korea		36		—		—			—			—			—			36
Fire Guarantee		20		—		—			—			—			—			20
Korea Software Financial Cooperative		301		—		—			—			—			—			301
Engineering Financial Cooperative		60		—		—			—			—			—			60
Electric Contractors Financial Cooperative		152		—		—			—			—			—			152
Korea Specialty Contractor Financial Cooperative		417		—		—			—			—			—			417
Information & Communication Financial Cooperative		10		—		—			—			—			—			10
Korea Electric Engineers Association		40		—		—			—			—			—			40
Hwan Young Steel Co., Ltd.		97		—		—			—			—			—			97
Woobang ENC Co., Ltd		22		—		—			—			—			—			22
Dongnam Co., Ltd.		72		—		—			—			—			—			72
SAMBO AUTO. Co., Ltd.		38		—		—			—			—			—			38
Mobo Co., Ltd.		14		—		—			—			—			—			14
Poonglim Industrial Co., Ltd.		78		—		—			—			—			15			93

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Beginning balance		Acquisition		Disposal		Valuation		Impairment			Others		Ending Balance
HANKOOK Silicon Co., Ltd.	W	7,513		—		—		—		—			—		7,513
Kun Young Engineering & Construction Co., Ltd.		5		—		—		—		—			—		5
Pumyang Asset Management Co., Ltd.		3		—		—		—		—			—		3
Dae Kwang Semiconductor Co., Ltd.		6		—		—		—		—			—		6
Sanbon Department Store		124		—		—		—		(121	)		—		3
Woori Ascon Co., Ltd.		10		—		—		—		—			—		10
Miju Steel Mfg. Co., Ltd.		51		—		—		—		—			—		51
BnB Sungwon Co., Ltd.		15		—		—		—		—			—		15
Hana Civil Engineering Co., Ltd.		1		—		—		—		—			—		1
KC Development Co., Ltd.		6		—		—		—		—			—		6
IMHWA Corp.		5		—		—		—		—			—		5
IXELON Co., Ltd.		23		—		—		—		(23	)		—		—
DALIM Special Vehicle Co., Ltd.		10		—		—		—		—			—		10
ASA KIMJE Co., Ltd.		465		—		—		—		(465	)		—		—
ASA JEONJU Co., Ltd.		697		—		—		—		(628	)		—		69
KYUNGWON Co., Ltd.		14		—		—		—		—			—		14
Moonkyung Silica Co., Ltd.		—		—		—		—		—			—		—
Yousung Remicon Co., Ltd.		4		—		—		—		—			—		4
Sungkwang Timber Co., Ltd.		4		—		—		—		—			—		4
Yongbo Co., Ltd.		3		—		—		—		—			—		3
HJ Steel Co., Ltd.		—		—		—		—		—			2		2
Ildong Air Conditioning Co., Ltd.		—		—		—		—		(2	)		2		—
KS Remicon Co., Ltd.		—		—		—		—		—			3		3
Sewoong Heavy Industries Co., Ltd.		—		—		—		—		—			40		40
SIN-E Steel Co., Ltd.		—		—		—		—		—			33		33
Joongang Platec Co., Ltd.		—		—		—		—		—			72		72
Hangjin Steel Co., Ltd.		—		—		—		—		(116	)		116		—
Pyungsan SI Ltd.		—		—		—		—		—			9		9
Samgong Development Co., Ltd.		—		—		—		—		—			7		7
Joongang Development Co., Ltd.		—		—		—		—		—			8		8
AJS Co., Ltd.		—		—		—		—		—			32		32
SHIN-E B&P Co., Ltd.		—		—		—		—		—			10		10
MSE Co., Ltd.		—		—		—		—		—			9		9
Ilrim Nano Tec Co., Ltd.		—		—		—		—		—			15		15
Kwang Myeong Electronics Technology Co., Ltd.		—		—		—		—		—			11		11
Youngjin Hi-Tech Co., Ltd.		—		—		—		—		(105	)		126		21
Dong Woo International Co., Ltd.		—		—		—		—		—			18		18
Bench Mark Construction Co., Ltd.		—		—		—		—		—			—		—
Buyoung Co., Ltd.		—		—		—		—		—			3		3
Ilsuk Co., Ltd.		—		—		—		—		—			10		10
Dongyang Telecom Co., Ltd.		—		—		—		—		—			11		11
Han Young Construction Co., Ltd.		—		—		—		—		—			3		3
Jongwon Remicon Co., Ltd.		—		—		—		—		—			13		13
Ace Heat Treating Co., Ltd.		—		—		—		—		—			72		72
Zyle Daewoo Motor Sales Co., Ltd.		—		—		—		—		—			—		—
Daewoo Development Co., Ltd.		—		—		—		—		—			—		—
Daewoo Songdo Development Co., Ltd.		—		—		—		—		(2	)		2		—
Seyang Inc.		—		—		—		—		—			27		27
Seungri Enterprise Co., Ltd.		—		—		—		—		—			3		3
Onggane Food Co., Ltd		—		—		—		—		—			1		1

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(1)

Changes in available-for-sale financial assets for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Beginning balance		Acquisition		Disposal			Valuation			Impairment			Others			Ending Balance
Shin-E P&C Co., Ltd.	W	—		—		—			—			—			1			1
Montista Telecom Co., Ltd.		—		—		—			—			(3	)		3			—
Ejung Ad Co., Ltd.		—		—		—			—						3			3
Solvus Co., Ltd.		—		—		—			—			—			3			3
Myung Co., Ltd.		—		—		—			—			—			2			2
Emotion Co., Ltd.		—		—		—			—			—			8			8
Youngdong Concrete Co., Ltd.		—		—		—			—			—			7			7
Shinil Engineering Co., Ltd.		—		—		—			—			—			3			3
Korea Castiron Industrial Co., Ltd.		—		—		—			—			—			22			22
FFG DMC Co., Ltd.		—		—		—			—			—			17			17
Daeseong Metal Co., Ltd.		—		—		—			—			—			47			47
Biwang Industry Co., Ltd		—		—		—			—			—			2			2
Huimun Co., Ltd.		—		—		—			—			—			4			4
Sunun IT F Co., Ltd.		—		—		—			—			—			8			8
Young Sung Co., Ltd.		—		—		—			—			—			27			27
Yuil Industrial Electronics Co., Ltd.		—		—		—			—			—			16			16
DN TEK Inc.		—		—		—			—			—			62			62
Daeyang F.M.S Corporation		—		—		—			—			—			3			3
Kwang Jin Structure Co., Ltd.		—		—		—			—			—			31			31
Woojin Industry Corporation		—		—		—			—			—			16			16
Kwang Sung Industry Co., Ltd.		—		—		—			—			—			7			7
Matsaeng Food Co., Ltd.		—		—		—			—			—			6			6
Futech Mold Co., Ltd.		—		—		—			—			—			14			14
Samcheonri Industrial Co., Ltd.		—		—		—			—			—			13			13
Woojoo Environment Ind. Co., Ltd.		—		—		—			—			—			13			13
Cheongatti Co., Ltd.		—		—		—			—			—			4			4
Hyungji Esquire Co., Ltd.		—		—		—			—			—			21			21
Kolmar Pharma Co., Ltd.		—		—		—			—			—			52			52
Morado Co., Ltd.		—		—		—			—			—			2			2
Myung Sung Tex Co., Ltd.		—		—		—			—			—			2			2
Areva nc Expansion		227,876		—		—			—			—			(57,758	)		170,118
Navanakorn Electric Co., Ltd.		16,836		—		—			—			—			1,115			17,951
PT. Kedap Saayq		12,989		—		—			—			(12,989	)		—			—
Set Holding		167,832		—		—			11,753			—			—			179,585
PT. Cirebon Energi Prasarana		—		635		—			—			—			—			635

		467,936		1,437		(6,638	)		11,763			(31,047	)		(55,551	)		387,900


	W	715,151		1,437		(6,695	)		(35,519	)		(84,370	)		(5,525	)		584,479

(*1)

The Company recognized gain and loss on disposal of available-for-sale financial assets amounted to W4 million and W3,008 million, respectively, from the sales of shares of Fission 3.0, K&C- Gyeongnam Youth Job Creation Investment Fund, Korea Investment - Korea EXIM Bank CERs Private Special Asset Investment Trust 1, IBK-AUCTUS Green Growth Private Equity Firm and others and from the liquidation of Hanwha Electric Power Venture fund for the year ended December 31, 2015.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for-sale financial assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Shares		Ownership			Acquisition cost		Book value		Fair value
Listed
Korea District Heating Corp.		2,264,068		19.55	%	W	173,201		154,183		154,183
Ssangyong Motor Co., Ltd.		38,568		0.03	%		428		304		304
Sungjee Construction. Co., Ltd.		10,530		0.01	%		49		21		21
Korea Line Corp.		18		0.00	%		1		—		—
Namkwang Engineering & Construction Co., Ltd.		46		0.00	%		15		—		—
Pumyang Construction Co., Ltd.		7		0.00	%		2		—		—
ELCOMTEC Co., Ltd.		32,875		0.04	%		217		74		74
PAN ocean Co., Ltd.		1,492		0.00	%		14		7		7
Borneo International Furniture Co., Ltd.		64,037		0.28	%		97		103		103
Dongbu Corporation,		1,229		0.02	%		12		12		12
PT Adaro Energy Tbk		480,000,000		1.50	%		71,554		73,061		73,061
Energy Fuels Inc.		1,711,814		2.59	%		16,819		3,385		3,385
Baralaba Coal Company Limited (formerly, Cockatoo Coal Limited) (*6)		99,763		0.07	%		18,445		42		42
Denison Mines Corp.		58,284,000		10.93	%		84,134		36,504		36,504
Fission 3.0		300,000		0.17	%		—		16		16
Fission Uranium Corp.		800,000		0.17	%		785		459		459

							365,773		268,171		268,171

Unlisted (*1)
K&C - Gyeongnam youth job creation Investment Fund		24		10.00	%		1,207		1,207		—
Korea investment – Korea EXIM Bank CERs Private Special Asset Investment Trust I		1,758,731,002		14.18	%		1,752		571		—
Troika Overseas Resource Development Private Equity Firm		13,340,012,100		3.66	%		13,340		1,553		—
IBK-AUCTUS Green Growth Private Equity firm		152		6.29	%		41		41		—
Global Dynasty Overseas Resource Development Private Equity Firm		2,233,407,439		7.46	%		2,233		2,233		—
Intellectual Discovery, Ltd.		1,000,000		8.81	%		5,000		1,375		—
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1		4,256,096,329		5.00	%		4,389		4,389		—
Construction Guarantee (*2)		571		0.02	%		601		819		819
Plant & Mechanical Contractors Financial Cooperative of Korea		50		0.01	%		36		36		—
Fire Guarantee		40		0.02	%		20		20		—
Korea Software Financial Cooperative		5,186		1.39	%		3,301		3,301		—
Engineering Financial Cooperative		486		0.05	%		60		60		—
Electric Contractors Financial Cooperative		800		0.03	%		152		152		—
Korea Specialty Contractor Financial Cooperative		476		0.01	%		417		417		—
Information & Communication Financial Cooperative		70		0.01	%		10		10		—
Korea Electric Engineers Association		400		0.24	%		40		40		—
Korea investment – Investment Pool for Public funds 10 (*5)		—		—			142,470		141,315		141,315
Samsung investment – Investment Pool for Public funds 2 (*5)		—		—			213,710		211,920		211,920
Samsung investment – Investment Pool for Public funds 1 (*5)		—		—			53,220		53,212		53,212
Korea investment – Hanwha KT Mater Lease Private Special Investment Trust (*5)		—		—			30,560		30,568		30,568
Hwan Young Steel Co., Ltd.		10,916		0.14	%		1,092		97		—
SAMBO AUTO. Co., Ltd.		15,066		0.02	%		38		38		—
Mobo Co., Ltd.		504		0.00	%		14		14		—
HANKOOK Silicon Co., Ltd.		3,005,208		10.44	%		7,513		1,495		—
Dae Kwang Semiconductor Co., Ltd.		589		0.07	%		6		6		—

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for-sale financial assets as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016
	Shares		Ownership			Acquisition cost		Book value		Fair value
Sanbon Department Store		828		0.01	%	W	124		3		—
Miju Steel Mfg. Co., Ltd.		99,804		0.23	%		51		51		—
BnB Sungwon Co., Ltd.		589		0.07	%		15		15		—
Hana Civil Engineering Co., Ltd.		23		0.00	%		1		1		—
KC Development Co., Ltd.		839		0.02	%		6		6		—
IMHWA Corp.		329		0.11	%		5		5		—
DALIM Special Vehicle Co., Ltd.		58		0.08	%		10		10		—
ASA JEONJU Co., Ltd.		34,846		1.34	%		697		69		—
Moonkyung Silica Co., Ltd.		42		0.56	%		—		—		—
Sungkwang Timber Co., Ltd.		9		0.34	%		4		4		—
Yongbo Co., Ltd.		61		0.20	%		3		3		—
HJ Steel Co., Ltd.		218		0.07	%		2		2		—
KS Remicon Co., Ltd.		12		0.04	%		3		3		—
SIN-E Steel Co., Ltd.		109		0.08	%		33		33		—
Joongang Platec Co., Ltd.		3,591		0.75	%		72		35		—
Pyungsan SI Ltd.		434		0.01	%		9		9		—
Samgong Development Co., Ltd.		12		0.01	%		7		7		—
Joongang Development Co., Ltd.		540		0.12	%		8		8		—
AJS Co., Ltd.		12,906		0.23	%		32		32		—
SHIN-E B&P Co., Ltd.		119		0.13	%		10		10		—
MSE Co., Ltd.		429		0.13	%		9		9		—
Ilrim Nano Tec Co., Ltd.		1,520		0.07	%		15		15		—
Youngjin Hi-Tech Co., Ltd.		2,512		0.25	%		126		21		—
Dong Woo International Co., Ltd.		90		0.37	%		18		18		—
Buyoung Co., Ltd.		270		0.00	%		3		3		—
Ilsuk Co., Ltd.		152		0.17	%		10		10		—
Dongyang Telecom Co., Ltd.		1,760		0.01	%		11		11		—
Han Young Construction Co., Ltd.		35		0.03	%		3		3		—
Jongwon Remicon Co., Ltd.		31		0.18	%		13		13		—
Ace Heat Treating Co., Ltd.		477		1.43	%		72		72		—
Zyle Daewoo Motor Sales Co., Ltd.		22		0.00	%		—		—		—
Daewoo Development Co., Ltd.		8		0.00	%		—		—		—
Seyang Inc.		537		0.05	%		27		27		—
Seungri Enterprise Co., Ltd.		93		0.05	%		3		3		—
Onggane Food Co., Ltd		5		0.07	%		1		1		—
Shin-E P&C Co., Ltd.		12		0.00	%		1		1		—
Ejung Ad Co., Ltd.		132		0.09	%		3		3		—
Solvus Co., Ltd.		1,056		0.04	%		3		3		—
Myung Co., Ltd.		89		0.05	%		2		2		—
Emotion Co., Ltd.		167		0.61	%		8		8		—
Youngdong Concrete Co., Ltd.		32		0.32	%		7		7		—
Shinil Engineering Co., Ltd.		887		0.06	%		3		3		—
Biwang Industry Co., Ltd		406		0.04	%		2		2		—
Huimun Co., Ltd.		263		0.26	%		4		4		—
Young Sung Co., Ltd.		89		0.40	%		27		27		—
Yuil Industrial Electronics Co., Ltd.		804		0.32	%		16		16		—
DN TEK Inc.		12,401		0.29	%		62		6		—
Daeyang F.M.S Corporation		593		0.40	%		23		23		—
Kwang Jin Structure Co., Ltd.		3,072		0.60	%		31		31		—

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for-sale financial assets as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016
	Shares		Ownership			Acquisition cost		Book value		Fair value
Woojin Industry Corporation		3		0.00	%	W	16		16		—
Kwang Sung Industry Co., Ltd.		325		0.35	%		7		7		—
Futech Mold Co., Ltd.		274		0.27	%		14		14		—
Samcheonri Industrial Co., Ltd.		533		0.98	%		13		13		—
Woojoo Environment Ind. Co., Ltd.		101		0.11	%		13		13		—
Cheongatti Co., Ltd.		57		0.10	%		4		4		—
Hyungji Esquire Co., Ltd.		55		0.02	%		22		22		—
Kolmar Pharma Co., Ltd.		1,426		0.01	%		52		3		—
Morado Co., Ltd.		209		0.04	%		2		2		—
Myung Sung Tex Co., Ltd.		20		0.00	%		2		2		—
Kwang Sung Co., Ltd.		610		0.53	%		31		31		—
EverTechno. Co.,Ltd.		29,424		0.73	%		147		7		—
Autowel Co., Ltd.		260		0.38	%		13		13		—
Woobang Construction Co., Ltd.		8		0.00	%		8		8		—
Shin Pyung Co., Ltd.		6		0.03	%		3		3		—
JMC Heavy Industries Co., Ltd.		2,724		0.10	%		27		27		—
Najin Steel Co., Ltd.		37		0.06	%		5		5		—
Sinkwang Industry Co., Ltd.		1,091		1.68	%		5		5		—
Join Land Co., Ltd.		33		0.00	%		1		1		—
Crystal Co., Ltd.		22		0.07	%		2		2		—
Elephant & Friends Co., Ltd.		563		0.61	%		3		3		—
Mireco Co., Ltd.		109		0.25	%		11		11		—
L&K Industry Co., Ltd.		1,615		0.60	%		24		24		—
JO Tech Co., Ltd.		1,263		0.62	%		25		25		—
Kendae Printing Co., Ltd.		422		0.60	%		21		21		—
Dauning Co., Ltd.		231		0.41	%		6		6		—
Korea Trecision Co., Ltd.		22		0.45	%		5		5		—
Ace Track Co., Ltd.		3,130		1.08	%		219		59		—
Taebok Machinery Co., Ltd.		109		1.08	%		11		11		—
Yooah Industry Co., Ltd.		130		0.02	%		13		13		—
Yoo-A Construction Co., Ltd.		105		0.20	%		11		11		—
Dung Hwan Co., Ltd.		531		0.02	%		5		5		—
Hurim Biocell Co., Ltd.		113		0.00	%		5		5		—
P. J, Trading Co., LTd.		12		0.04	%		—		—		—
Sunjin Power Tech Co., Ltd.		4,941		0.92	%		247		90		—
Smart Power Co., Ltd.		133,333		5.55	%		200		200		—
Haseung Industries Co., Ltd.		55		0.62	%		28		28		—
Beer Yeast Korea Inc.		1,388		0.43	%		7		7		—
Daeryung Corporation		207		0.19	%		10		10		—
Korea Bio Red Ginseng Co., Ltd.		194		0.09	%		10		10		—
ENH Co., Ltd.		1,086		0.19	%		54		54		—
OCO Co., Ltd.		123		0.37	%		11		11		—
B CON Co., Ltd.		96		1.16	%		6		6		—
Teakwang Tech Co., Ltd.		11		0.15	%		4		4		—
SsangMa Machine Co., Ltd.		2,460		0.11	%		12		12		—
SinJin Co., Ltd.		4		0.05	%		1		1		—
Ace Integration Co., Ltd		233		0.30	%		9		9		—
AceInti Agricultiral Co., Ltd.		93		0.09	%		21		21		—
Teakwang Tech Co., Ltd.		3		0.00	%		1		1		—

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for-sale financial assets as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016
	Shares		Ownership			Acquisition cost		Book value		Fair value
KyungDong Co., Ltd.		130		0.01	%	W	1		1		—
ChunWon Development Co., Ltd.		193		0.19	%		39		39		—
WonIl Co., Ltd.		999		0.15	%		50		50		—
SungLim Industrial Co., Ltd.		29		0.03	%		1		1		—
DaeHa Co., Ltd.		141		0.54	%		11		11		—
Korea Minerals Co., Ltd.		191		0.05	%		135		135		—
HyoDong Development Co., Ltd.		119		0.15	%		24		24		—
Haspe Tech Co., Ltd.		652		0.55	%		20		20		—
JoHyun Co., Ltd.		350		1.56	%		18		18		—
KC Co., Ltd.		5,107		0.17	%		3		3		—
SeongJi Industrial Co., Ltd.		41		0.05	%		1		1		—
Areva nc Expansion		1,077,124		13.49	%		288,443		98,472		98,472
Navanakorn Electric Co., Ltd. (*3)		8,885,600		26.93	%		17,216		18,509		—
PT. Kedap Saayq		671		10.00	%		18,540		—		—
Set Holding (*4)		1,100,220		2.50	%		229,255		170,170		170,170
PT. Cirebon Energi Prasarana		22,420		10.00	%		2,612		2,709		—

							1,040,553		746,561		706,476


						W	1,406,326		1,014,732		974,647

(*1)	Book values of unlisted equity securities held by the Company for which a quoted market price does not exist in an active market and fair value cannot be measured reliably were measured at cost.

(*2)

The Company has estimated the fair value of the investment in Construction Guarantee based upon the price which would be applied when the investment is returned. The Company has recognized the difference between its fair value and book value as a gain or loss on valuation of available-for-sale financial assets in other comprehensive income or loss during the year ended December 31, 2016.

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

(*4)

The Company has estimated the fair value of Set Holding by using the discounted cash flow method and has recognized the difference between its fair value and book value as gain or loss on valuation of available-for-sale financial assets in other comprehensive income or loss during the year ended December 31, 2016.

(*5)	As of December 31, 2016, the Company invested in W437,015 million as beneficiary securities exclusively for payment of decommissioning cost of nuclear power plants. The Company has measured the fair value of the beneficiary securities based on its net asset value.

(*6)	The number of shares has changed due to the merger of shares (500:1) during the year ended December 31, 2016.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for-sale financial assets as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Shares		Ownership			Acquisition cost		Book value		Fair value
Listed
Korea District Heating Corp.		2,264,068		19.55	%	W	173,201		130,410		130,410
Kwanglim Co., Ltd.		84,515		0.44	%		386		262		262
Ssangyong Motor Co., Ltd.		38,568		0.03	%		428		299		299
Sungjee Construction. Co., Ltd.		1,053		0.01	%		49		5		5
Korea Line Corp.		18		0.00	%		1		—		—
Namkwang Engineering & Construction Co., Ltd.		232		0.00	%		15		1		1
Pumyang Construction Co., Ltd.		7		0.00	%		2		—		—
ELCOMTEC Co., Ltd.		32,875		0.04	%		217		53		53
PAN ocean Co., Ltd.		1,492		0.00	%		14		6		6
Borneo International Furniture Co., Ltd.		64,037		0.28	%		97		103		103
TONGYANG Inc.		78,511		0.03	%		45		217		217
TONGYANG networks Inc.		4,422		0.01	%		3		6		6
Nexolon Co., Ltd		3,665,367		2.59	%		3,138		3,196		3,196
PT Adaro Energy Tbk		480,000,000		1.50	%		71,554		21,012		21,012
Energy Fuels Inc.		1,711,814		3.79	%		16,819		5,926		5,926
Baralaba Coal Company Limited (formerly, Cockatoo Coal Limited)		49,881,423		0.07	%		18,445		42		42
Denison Mines Corp.		58,284,000		11.24	%		84,134		34,457		34,457
Fission 3.0		300,000		0.17	%		—		30		30
Fission Uranium Corp.		800,000		0.21	%		785		554		554


							369,333		196,579		196,579

Unlisted (*1)
K&C - Gyeongnam youth job creation Investment Fund		24		10.00	%		1,207		1,207		—
Korea Investment - Korea EXIM Bank CERs Private Special Asset Investment Trust I		1,758,731,002		14.18	%		1,752		571		—
Troika Overseas Resource Development Private Equity Firm		13,340,012,100		3.66	%		13,340		1,553		—
IBK-AUCTUS Green Growth Private Equity firm		233		6.30	%		855		855		—
Global Dynasty Overseas Resource Development Private Equity Firm		2,233,407,439		7.46	%		2,233		2,233		—
Intellectual Discovery, Ltd.		1,000,000		8.81	%		5,000		1,375		—
Hanwha-KOSEP New Renewable Energy Private Special Assets Investment Trust 1		1,069,432,095		5.00	%		1,069		1,069		—
Construction Guarantee (*2)		571		0.02	%		601		805		805
Plant & Mechanical Contractors Financial Cooperative of Korea		50		0.01	%		36		36		—
Fire Guarantee		40		0.02	%		20		20		—
Korea Software Financial Cooperative		301		0.15	%		301		301		—
Engineering Financial Cooperative		528		0.10	%		60		60		—
Electric Contractors Financial Cooperative		800		0.03	%		152		152		—
Korea Specialty Contractor Financial Cooperative		476		0.01	%		417		417		—
Information & Communication Financial Cooperative		70		0.01	%		10		10		—
Korea Electric Engineers Association		400		0.26	%		40		40		—
Hwan Young Steel Co., Ltd.		10,916		0.14	%		1,092		97		—
Woobang ENC Co., Ltd		14		0.00	%		22		22		—
Dongnam Co., Ltd.		2,070		0.46	%		72		72		—
SAMBO AUTO. Co., Ltd.		15,066		0.02	%		38		38		—
Mobo Co., Ltd.		504		0.00	%		14		14		—
Poonglim Industrial Co., Ltd.		1,915		0.01	%		93		93		—
HANKOOK Silicon Co., Ltd.		7,513,022		10.44	%		7,513		7,513		—
Kun Young Engineering & Construction Co., Ltd.		100		0.00	%		5		5		—
Pumyang Asset Management Co., Ltd.		13		0.00	%		3		3		—
Dae Kwang Semiconductor Co., Ltd.		589		0.07	%		6		6		—
Sanbon Department Store		828		0.01	%		124		3		—
Woori Ascon Co., Ltd.		25		0.34	%		10		10		—
Miju Steel Mfg. Co., Ltd.		99,804		0.23	%		51		51		—
BnB Sungwon Co., Ltd.		589		0.07	%		15		15		—

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for-sale financial assets as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Shares		Ownership			Acquisition cost		Book value		Fair value
Hana Civil Engineering Co., Ltd.		23		0.00	%	W	1		1		—
KC Development Co., Ltd.		839		0.02	%		6		6		—
IMHWA Corp.		329		0.11	%		5		5		—
IXELON Co., Ltd.		2,292		0.02	%		23		—		—
DALIM Special Vehicle Co., Ltd.		58		0.08	%		10		10		—
ASA KIMJE Co., Ltd.		23,245		1.11	%		465		—		—
ASA JEONJU Co., Ltd.		34,846		1.34	%		697		69		—
KYUNGWON Co., Ltd.		2,812		0.17	%		14		14		—
Moonkyung Silica Co., Ltd.		42		0.56	%		—		—		—
Yousung Remicon Co., Ltd.		8		0.26	%		4		4		—
Sungkwang Timber Co., Ltd.		9		0.34	%		4		4		—
Yongbo Co., Ltd.		61		0.20	%		3		3		—
HJ Steel Co., Ltd.		218		0.07	%		2		2		—
Ildong Air Conditioning Co., Ltd.		218		0.16	%		3		—		—
KS Remicon Co., Ltd.		12		0.04	%		3		3		—
Sewoong Heavy Industries Co., Ltd.		7,931		0.10	%		40		40		—
SIN-E Steel Co., Ltd.		109		0.08	%		33		33		—
Joongang Platec Co., Ltd.		3,591		0.75	%		72		72		—
Hangjin Steel Co., Ltd.		116		1.08	%		116		—		—
Pyungsan SI Ltd.		434		0.01	%		9		9		—
Samgong Development Co., Ltd.		12		0.01	%		7		7		—
Joongang Development Co., Ltd.		540		0.12	%		8		8		—
AJS Co., Ltd.		12,906		0.23	%		32		32		—
SHIN-E B&P Co., Ltd.		119		0.13	%		10		10		—
MSE Co., Ltd.		429		0.13	%		9		9		—
Ilrim Nano Tec Co., Ltd.		1,520		0.07	%		15		15		—
Kwang Myeong Electronics Technology Co., Ltd.		113		0.37	%		11		11		—
Youngjin Hi-Tech Co., Ltd.		2,512		0.25	%		126		21		—
Dong Woo International Co., Ltd.		90		0.37	%		18		18		—
Bench Mark Construction Co., Ltd.		2		0.00	%		—		—		—
Buyoung Co., Ltd.		270		0.00	%		3		3		—
Ilsuk Co., Ltd.		152		0.17	%		10		10		—
Dongyang Telecom Co., Ltd.		1,760		0.01	%		11		11		—
Han Young Construction Co., Ltd.		35		0.03	%		3		3		—
Jongwon Remicon Co., Ltd.		31		0.18	%		13		13		—
Ace Heat Treating Co., Ltd.		477		1.43	%		72		72		—
Zyle Daewoo Motor Sales Co., Ltd.		22		0.00	%		—		—		—
Daewoo Development Co., Ltd.		8		0.00	%		—		—		—
Daewoo Songdo Development Co., Ltd.		301		0.00	%		2		—		—
Seyang Inc.		537		0.05	%		27		27		—
Seungri Enterprise Co., Ltd.		93		0.05	%		3		3		—
Onggane Food Co., Ltd		5		0.07	%		1		1		—
Shin-E P&C Co., Ltd.		12		0.00	%		1		1		—
Montista Telecom Co., Ltd.		5,409		0.00	%		3		—		—
Ejung Ad Co., Ltd.		132		0.09	%		3		3		—
Solvus Co., Ltd.		1,056		0.04	%		3		3		—
Myung Co., Ltd.		89		0.05	%		2		2		—
Emotion Co., Ltd.		167		0.61	%		8		8		—
Youngdong Concrete Co., Ltd.		32		0.32	%		7		7		—
Shinil Engineering Co., Ltd.		887		0.06	%		3		3		—
Korea Castiron Industrial Co., Ltd.		617		1.86	%		22		22		—
FFG DMC Co., Ltd.		12		0.00	%		17		17		—
Daeseong Metal Co., Ltd.		518		2.37	%		47		47		—
Biwang Industry Co., Ltd		406		0.04	%		2		2		—
Huimun Co., Ltd.		263		0.26	%		4		4		—

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

9.	Available-for-sale Financial Assets, Continued

(2)

Available-for sale financial assets as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Shares		Ownership			Acquisition cost		Book value		Fair value
Sunun IT F Co., Ltd.		133		0.52	%	W	8		8		—
Young Sung Co., Ltd.		89		0.40	%		27		27		—
Yuil Industrial Electronics Co., Ltd.		804		0.32	%		16		16		—
DN TEK Inc.		12,401		0.29	%		62		62		—
Daeyang F.M.S Corporation		84		0.05	%		3		3		—
Kwang Jin Structure Co., Ltd.		3,072		0.60	%		31		31		—
Woojin Industry Corporation		3		0.00	%		16		16		—
Kwang Sung Industry Co., Ltd.		325		0.35	%		7		7		—
Matsaeng Food Co., Ltd.		277		0.56	%		6		6		—
Futech Mold Co., Ltd.		274		0.27	%		14		14		—
Samcheonri Industrial Co., Ltd.		533		0.98	%		13		13		—
Woojoo Environment Ind. Co., Ltd.		101		0.11	%		13		13		—
Cheongatti Co., Ltd.		57		0.10	%		4		4		—
Hyungji Esquire Co., Ltd.		52		0.02	%		21		21		—
Kolmar Pharma Co., Ltd.		1,426		0.01	%		52		52		—
Morado Co., Ltd.		209		0.04	%		2		2		—
Myung Sung Tex Co., Ltd.		20		0.00	%		2		2		—
Areva nc Expansion		1,077,124		13.49	%		288,443		170,118		—
Navanakorn Electric Co., Ltd. (*3)		4,442,800		29.00	%		17,216		17,951		—
PT. Kedap Saayq		671		10.00	%		18,540		—		—
Set Holding (*4)		1,100,220		2.50	%		229,255		179,585		179,585
PT. Cirebon Energi Prasarana		420		10.00	%		635		635		—

							592,550		387,900		180,390


						W	961,883		584,479		376,969

(*1)	Book values of unlisted equity securities held by the Company for which a quoted market price does not exist in an active market and fair value cannot be measured reliably were measured at cost.

(*2)

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

(*4)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

10.

Held-to-maturity Investments

Held-to-maturity investments as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance		Acquisition		Disposal			Others			Ending balance

Government bonds	W	3,623		149		(528	)		—			3,244


	W	3,623		149		(528	)		—			3,244


Current	W	380		—		(380	)		114			114
Non-current		3,243		149		(148	)		(114	)		3,130


In millions of won	2015
	Beginning balance		Acquisition		Disposal			Others			Ending balance

Government bonds	W	3,601		432		(410	)		—			3,623
Corporate bonds		13		—		—			(13	)		—


	W	3,614		432		(410	)		(13	)		3,623


Current	W	265		—		(186	)		301			380
Non-current		3,349		432		(224	)		(314	)		3,243

11.

Derivatives

(1)

Derivatives as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Derivative assets

Currency forward	W	8,370		32,806		1,498		24,896

Currency swap		184,913		540,057		95,759		491,219

Interest rate swap		—		4,705		—		3,778

Others (*1)		—		10,523		—		—


	W	193,283		588,091		97,257		519,893


Derivative liabilities

Currency forward	W	1,153		34		1,142		—

Currency swap		—		56,612		758		66,976

Interest rate swap		2,098		78,789		8,345		89,289


	W	3,251		135,435		10,245		156,265

(*1)	The Company has a put option to sell shares of DS POWER Co., Ltd, a related party of the Company, and the fair value of the option is recorded in ‘Others’. (Note 17)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

11.

Derivatives, Continued

(2)

Currency forward contracts which are not designated as hedge instruments as of December 31, 2016 are as follows:


In millions of won and thousands of foreign currencies
	Contract		Maturity		Contract amounts				Contract
Counterparty	Date		date		Pay		Receive		exchange rate

KEB Hana Bank		2014.04.10		2021.07.12	W	55,120	USD	52,000		1,060.00
KEB Hana Bank		2014.04.28		2021.07.12		50,784	USD	48,000		1,058.00
Bank of America		2014.04.29		2021.07.12		105,400	USD	100,000		1,054.00
KEB Hana Bank		2014.05.09		2021.07.12		104,600	USD	100,000		1,046.00
JP Morgan		2016.12.09		2017.01.09		35,215	USD	30,219		1,165.31
Woori Bank		2016.12.08		2017.01.09		59,657	USD	51,411		1,160.40
Standard Chartered		2016.12.06		2017.01.03		11,712	USD	10,000		1,171.20
Nova Scotia		2016.12.08		2017.01.09		11,590	USD	10,000		1,159.00
BNP Paribas		2016.12.13		2017.01.17		2,681	USD	2,300		1,165.65
BNP Paribas		2016.12.14		2017.01.17		4,673	USD	4,000		1,168.20
BTMU		2016.12.08		2017.01.12		11,594	USD	10,000		1,159.40
BTMU		2016.12.12		2017.01.17		11,704	USD	10,000		1,170.40
BTMU		2016.12.14		2017.01.17		2,330	USD	2,000		1,165.10
Mizuho Bank		2016.12.08		2017.01.12		11,594	USD	10,000		1,159.35
Nonghyup Bank		2016.12.12		2017.01.17		5,852	USD	5,000		1,170.40
Societe Generale		2016.12.12		2017.01.17		3,979	USD	3,400		1,170.40
Societe Generale		2016.12.15		2017.01.19		14,160	USD	12,000		1,180.00
Societe Generale		2016.12.28		2017.01.31		8,212	USD	6,800		1,207.60
BNP Paribas		2016.11.22		2017.01.25		2,351	USD	2,000		1,175.40
BNP Paribas		2016.11.25		2017.01.31		2,353	USD	2,000		1,176.40
Citibank		2016.11.25		2017.01.31		1,029	USD	874		1,177.85
Mizuho Bank		2016.12.30		2017.03.03		9,596	USD	8,000		1,199.45
HSBC		2016.11.18		2017.05.22		4,717	USD	4,000		1,179.35
HSBC		2016.11.22		2017.01.25		7,046	USD	6,000		1,174.32
HSBC		2016.12.07		2017.02.09		4,669	USD	4,000		1,167.15
HSBC		2016.12.15		2017.01.25	USD	2,489		2,923		1,174.32
HSBC		2016.12.28		2017.02.09	USD	3,424		3,997		1,167.15
HSBC		2016.12.29		2017.01.25	USD	2,693		3,162		1,174.32
HSBC		2016.12.30		2017.03.03		3,605	USD	3,000		1,201.55
HSBC		2016.12.30		2017.03.03		8,396	USD	7,000		1,199.45
Standard Chartered		2016.12.13		2017.02.15		871	USD	748		1,163.60
Nova Scotia		2016.11.22		2017.01.23		7,080	USD	6,000		1,180.03
Nova Scotia		2016.11.24		2017.01.31		3,004	USD	2,540		1,182.55
Nova Scotia		2016.12.26		2017.02.28		2,397	USD	2,000		1,198.70
Nova Scotia		2016.12.30		2017.03.03		6,017	USD	5,000		1,203.30
Nova Scotia		2016.12.30		2017.03.03		9,597	USD	8,000		1,199.60
Nonghyup Bank		2016.11.22		2017.01.25		2,446	USD	2,083		1,174.73
Nonghyup Bank		2016.12.27		2017.02.28		2,410	USD	2,000		1,205.20
Credit Agricole		2016.11.21		2017.01.23		1,182	USD	1,000		1,181.55
Credit Agricole		2016.12.26		2017.02.28		2,397	USD	2,000		1,198.25
Societe Generale		2016.11.22		2017.01.25		2,352	USD	2,000		1,175.90
Societe Generale		2016.11.30		2017.02.02		1,167	USD	1,000		1,166.70
Societe Generale		2016.12.29		2017.02.02	USD	913		1,065		1,166.70
Societe Generale		2016.12.06		2017.02.08		1,168	USD	1,000		1,167.65
Societe Generale		2016.12.23		2017.02.27		4,807	USD	4,000		1,201.78
Mizuho Bank		2016.12.12		2017.01.10		19,887	USD	17,000		1,169.83
Credit Agricole		2016.12.19		2017.01.13		8,302	USD	7,000		1,186.05
Standard Chartered		2016.12.15		2017.01.13		16,503	USD	14,000		1,178.76
KEB Hana Bank		2016.12.29		2017.01.05		341	EUR	270		1,262.26
KEB Hana Bank		2016.08.26		2017.02.16		4,812	EUR	3,800		1,266.30
KEB Hana Bank		2016.09.07		2017.09.06		3,121	EUR	2,500		1,248.20
KEB Hana Bank		2016.08.26		2017.08.09		1,280	CNY	7,800		164.13
KEB Hana Bank		2016.09.07		2017.09.06		834	CNY	5,200		160.48
Societe Generale		2016.12.14		2017.06.16		2,245	USD	1,929		1,163.90
Nova Scotia		2016.12.13		2017.06.15		2,328	USD	2,000		1,164.20
Nomura		2016.12.07		2017.06.12		1,000	USD	858		1,165.10
Nova Scotia		2016.11.16		2017.05.18		23	USD	20		1,166.50
Societe Generale		2016.11.30		2017.06.02		771	USD	661		1,166.70
Nova Scotia		2016.12.07		2017.06.09		737	USD	631		1,167.70
Nomura		2016.12.01		2017.06.05		5,839	USD	5,000		1,167.80
Credit Suisse		2016.11.29		2017.06.01		5,840	USD	5,000		1,167.90

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

11.

Derivatives, Continued

(2)

Currency forward contracts which are not designated as hedge instruments, as of December 31, 2016 are as follows, continued:


In millions of won and thousands of foreign currencies
	Contract		Maturity		Contract amounts				Contract
Counterparty	Date		date		Pay		Receive		exchange rate

Nova Scotia		2016.12.07		2017.06.09		3,505	USD	3,000		1,168.20
Societe Generale		2016.11.28		2017.05.31		2,047	USD	1,751		1,168.50
BNP Paribas		2016.12.29		2017.07.03		4,241	USD	3,513		1,207.40
Nova Scotia		2016.12.15		2017.03.20	USD	15,000		17,678		1,178.50
Nova Scotia		2016.12.16		2017.03.20	USD	3,000		3,552		1,184.00
Nova Scotia		2016.12.20		2017.03.22	USD	3,000		3,571		1,190.40
Nova Scotia		2016.12.23		2017.03.27	USD	3,000		3,606		1,202.00
KEB Hana Bank		2015.08.26		2017.07.31	JPY	630,000		6,377		10.12
BNP Paribas		2015.02.12		2017.01.10	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.02.10	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.03.10	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.04.10	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.05.10	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.06.12	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.07.10	IDR	6,567,882	USD	486		13,525.00
BNP Paribas		2015.02.12		2017.08.10	IDR	2,889,868	USD	214		13,525.00

(3)

Currency swap contracts which are not designated as hedge instruments as of December 31, 2016 are as follows:


In millions of won and thousands of foreign currencies
			Contract amount				Contract interest rate		Contract
Counterparty	Contract year		Pay		Receive		Pay	Receive	exchange rate

Deutsche Bank		2013~2018	W	110,412	JPY	10,000,000	6.21%	4.19%		11.04
IBK		2013~2018		111,800	USD	100,000	3.16%	2.79%		1,118.00
Bank of America		2013~2018		103,580	JPY	10,000,000	7.05%	4.19%		10.36
Credit Suisse		2014~2019		118,632	CHF	100,000	2.98%	1.50%		1,186.32
Standard Chartered		2014~2019		114,903	CHF	100,000	4.00%	1.50%		1,149.03
Standard Chartered		2014~2029		102,470	USD	100,000	3.14%	3.57%		1,024.70
Standard Chartered		2014~2017		51,215	USD	50,000	2.24%	3M Libor + 0.55%		1,024.30
Mizuho Bank		2014~2017		153,645	USD	150,000	2.35%	3M Libor + 0.65%		1,024.30
Societe Generale		2014~2024		105,017	USD	100,000	4.92%	5.13%		1,050.17
KEB Hana Bank		2015~2024		107,970	USD	100,000	4.75%	5.13%		1,079.70
Credit Agricole		2015~2024		94,219	USD	86,920	4.85%	5.13%		1,083.97
Citibank		2012~2022		112,930	USD	100,000	2.79%	3.00%		1,129.30
JP Morgan		2012~2022		112,930	USD	100,000	2.79%	3.00%		1,129.30
Bank of America		2012~2022		112,930	USD	100,000	2.79%	3.00%		1,129.30
Shinhan Bank		2016~2022		112,930	USD	100,000	2.79%	3.00%		1,129.30
HSBC		2012~2022		111,770	USD	100,000	2.89%	3.00%		1,117.70
KEB Hana Bank		2012~2022		111,770	USD	100,000	2.87%	3.00%		1,117.70
Standard Chartered		2012~2022		111,770	USD	100,000	2.89%	3.00%		1,117.70
Deutsche Bank		2012~2022		55,885	USD	50,000	2.79%	3.00%		1,117.70
DBS		2013~2018		108,140	USD	100,000	2.63%	3M Libor+0.84%		1,081.40
DBS		2013~2018		108,140	USD	100,000	2.57%	3M Libor+0.84%		1,081.40
DBS		2013~2018		108,140	USD	100,000	2.57%	3M Libor+0.84%		1,081.40
HSBC		2013~2018		107,450	USD	100,000	3.41%	2.88%		1,074.50
Standard Chartered		2013~2018		107,450	USD	100,000	3.44%	2.88%		1,074.50
JP Morgan		2013~2018		107,450	USD	100,000	3.48%	2.88%		1,074.50
Bank of America		2014~2018		107,450	USD	100,000	3.09%	2.88%		1,074.50
Citibank		2014~2018		107,450	USD	100,000	3.09%	2.88%		1,074.50
JP Morgan		2014~2017		102,670	USD	100,000	2.89%	3M Libor+0.78%		1,026.70
Deutsche Bank		2014~2017		102,670	USD	100,000	2.89%	3M Libor+0.78%		1,026.70
HSBC		2014~2019		105,260	USD	100,000	2.48%	2.38%		1,052.60
Standard Chartered		2014~2019		105,260	USD	100,000	2.48%	2.38%		1,052.60
Korea Development Bank		2016~2019		105,260	USD	100,000	2.48%	2.38%		1,052.60
Nomura		2015~2025		111,190	USD	100,000	2.60%	3.25%		1,111.90
Korea Development Bank		2015~2025		111,190	USD	100,000	2.62%	3.25%		1,111.90
Woori Bank		2015~2025		55,595	USD	50,000	2.62%	3.25%		1,111.90
KEB Hana Bank		2015~2025		55,595	USD	50,000	2.62%	3.25%		1,111.90

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

11.

Derivatives, Continued

(4)

Currency swap contracts which are designated as hedge instruments as of December 31, 2016 are as follows:


In millions of won and thousands of foreign currencies
			Contract amount				Contract interest rate		Contract
Counterparty	Contract year		Pay		Receive		Pay	Receive	exchange rate

Standard Chartered		2011~2017	W	105,260	USD	100,000	3.99%	3.63%		1,052.60
Barclays Bank PLC		2011~2017		105,260	USD	100,000	3.99%	3.63%		1,052.60
Citibank		2011~2017		105,260	USD	100,000	3.99%	3.63%		1,052.60
Citibank		2013~2018		54,570	USD	50,000	2.90%	3M Libor+1.01%		1,091.40
Standard Chartered		2013~2018		54,570	USD	50,000	2.90%	3M Libor+1.01%		1,091.40
Credit Suisse		2013~2018		111,410	USD	100,000	3.22%	3M Libor+1.50%		1,114.10
HSBC		2014~2020		99,901	AUD	100,000	3.52%	5.75%		999.01
HSBC		2014~2020		100,482	AUD	100,000	3.48%	5.75%		1,004.82
Standard Chartered		2013~2020	USD	117,250	AUD	125,000	3M Libor+1.25%	5.75%		0.94
Standard Chartered		2014~2020		126,032	USD	117,250	3.55%	3M Libor+1.25%		1,074.90
JP Morgan		2014~2019		107,190	USD	100,000	3M Libor+3.25%	2.75%		1,071.90
Morgan Stanley		2014~2019		107,190	USD	100,000	3M Libor+3.25%	2.75%		1,071.90
Deutsche Bank		2014~2019		107,190	USD	100,000	3M Libor+3.25%	2.75%		1,071.90
Korea Development Bank		2016~2021		121,000	USD	100,000	2.15%	2.50%		1,210.00
Morgan Stanley		2016~2021		121,000	USD	100,000	3M Libor+2.10%	2.50%		1,210.00
BNP Paribas		2016~2021		121,000	USD	100,000	3M Libor+2.10%	2.50%		1,210.00
Morgan Stanley		2012~2017		285,000	USD	250,000	3.76%	3.13%		1,140.00
Credit Agricole		2012~2017		142,500	USD	125,000	3.83%	3.13%		1,140.00
JP Morgan		2012~2017		142,500	USD	125,000	3.83%	3.13%		1,140.00
Credit Agricole		2013~2019		118,343	CHF	100,000	3.47%	1.63%		1,183.43
Morgan Stanley		2013~2019		59,172	CHF	50,000	3.40%	1.63%		1,183.43
Nomura		2013~2019		59,172	CHF	50,000	3.47%	1.63%		1,183.43
Morgan Stanley		2013~2018		107,360	USD	100,000	3.27%	2.88%		1,073.60
Credit Agricole		2013~2018		107,360	USD	100,000	3.34%	2.88%		1,073.60
JP Morgan		2013~2018		161,040	USD	150,000	3.34%	2.88%		1,073.60
Standard Chartered		2013~2018		161,040	USD	150,000	3.34%	2.88%		1,073.60
Standard Chartered		2014~2019		104,490	USD	100,000	2.77%	2.63%		1,044.90
Credit Agricole		2014~2019		104,490	USD	100,000	2.77%	2.63%		1,044.90
Morgan Stanley		2014~2019		104,490	USD	100,000	2.70%	2.63%		1,044.90
Barclays Bank PLC		2013~2018		81,188	USD	75,000	2.65%	1.88%		1,082.50
Credit Agricole		2013~2018		81,188	USD	75,000	2.65%	1.88%		1,082.50
Deutsche Bank		2013~2018		81,188	USD	75,000	2.65%	1.88%		1,082.50
Citibank		2013~2018		81,188	USD	75,000	2.65%	1.88%		1,082.50
Standard Chartered		2014~2017		54,205	USD	50,000	2.93%	3M Libor+1.05%		1,084.10
Credit Agricole		2014~2017		54,205	USD	50,000	2.93%	3M Libor+1.05%		1,084.10
HSBC		2012~2017		115,140	USD	100,000	3.38%	2.50%		1,151.40
BNP Paribas		2012~2017		115,140	USD	100,000	3.38%	2.50%		1,151.40
KEB Hana Bank		2012~2017		115,140	USD	100,000	3.38%	2.50%		1,151.40
Barclays Bank PLC		2012~2017		57,570	USD	50,000	3.38%	2.50%		1,151.40
Standard Chartered		2012~2017		57,570	USD	50,000	3.38%	2.50%		1,151.40
Nomura		2012~2017		57,570	USD	50,000	3.38%	2.50%		1,151.40
Credit Agricole		2012~2017		57,570	USD	50,000	3.38%	2.50%		1,151.40
Societe Generale		2013~2018		106,190	USD	100,000	3.48%	2.63%		1,061.90
BNP Paribas		2013~2018		53,095	USD	50,000	3.48%	2.63%		1,061.90
KEB Hana Bank		2013~2018		53,095	USD	50,000	3.48%	2.63%		1,061.90
Standard Chartered		2013~2018		106,030	USD	100,000	3.48%	2.63%		1,060.30
Barclays Bank PLC		2013~2018		53,015	USD	50,000	3.48%	2.63%		1,060.30
KEB Hana Bank		2013~2018		31,809	USD	30,000	3.48%	2.63%		1,060.30
Societe Generale		2013~2018		21,206	USD	20,000	3.48%	2.63%		1,060.30
HSBC		2013~2018		53,015	USD	50,000	3.47%	2.63%		1,060.30
Nomura		2013~2018		53,015	USD	50,000	3.47%	2.63%		1,060.30
Credit Agricole		2014~2020		110,680	USD	100,000	2.29%	2.50%		1,106.80
Societe Generale		2014~2020		55,340	USD	50,000	2.16%	2.50%		1,106.80
KEB Hana Bank		2014~2020		55,340	USD	50,000	2.16%	2.50%		1,106.80
KEB Hana Bank		2014~2020		55,340	USD	50,000	2.21%	2.50%		1,106.80
Standard Chartered		2014~2020		55,340	USD	50,000	2.21%	2.50%		1,106.80
HSBC		2014~2020		55,340	USD	50,000	2.21%	2.50%		1,106.80
Nomura		2014~2020		55,340	USD	50,000	2.21%	2.50%		1,106.80
Barclays Bank PLC		2014~2020		55,340	USD	50,000	2.21%	2.50%		1,106.80
HSBC		2014~2020		55,340	USD	50,000	2.21%	2.50%		1,106.80

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

11.

Derivatives, Continued

(5)

Interest rate swap contracts which are not designated as hedge instruments as of December 31, 2016 are as follows:

In millions of won

Contract interest rate per annum

Counterparty

Contract year

Contract
amount

Pay

Receive

Standard Chartered

2012~2017

160,000

3.57%

3M CD + 0.32%

JP Morgan

2013~2018

150,000

3.58%

3M CD + 0.31%

Credit Suisse

2014~2018

200,000

2.98%

1Y CMT + 0.31%

Korea Development Bank (*)

2014~2029

40,000

3M CD - 0.03%

4.65%

Export-Import Bank of Korea

2015~2031

USD

15,893

2.67%

6M USD Libor

ING Bank

2015~2031

USD

7,861

2.67%

6M USD Libor

BNP Paribas

2015~2031

USD

7,861

2.67%

6M USD Libor

(*)

The contract is an interest rate swap hedging on Electricity Bonds 885, and the banks would notify the Company of the early termination every year on the early termination notification date (every year on April 28, from 2017 until 2028). The contract will be terminated if the early termination is notified.

(6)

Interest rate swap contracts which are designated as hedge instruments as of December 31, 2016 are as follows:

In thousands of U.S. dollars

Contract interest rate per annum

Contract

Counterparty

Contract year

amount

Pay

Receive

BNP Paribas

2009~2027

USD

94,790

4.16%

6M USD Libor

KFW

2009~2027

USD

94,790

4.16%

6M USD Libor

Credit Agricole

2016~2033

USD

99,694

3.98% ~ 4.10%

6M USD Libor

SMBC

2016~2033

USD

130,369

4.05% ~ 4.18%

6M USD Libor

(7)

Gains and losses on valuation and transaction of derivatives for the years ended December 31, 2016 and 2015 are as follows and included in finance income and costs in the consolidated statements of comprehensive income (loss):


In millions of won	Net income effects of valuation gain (loss)				Net income effects of transaction gain (loss)					Accumulated other *comprehensive income (loss) ()**
	2016		2015		2016			2015		2016		2015

Currency forward	W	15,993		357		4,266			8,523		—		—
Currency swap		253,035		431,565		(68,266	)		75,752		40,031		(6,926	)
Interest rate swap		8,517		161,609		7,562			30,314		6,719		4,082
Other derivatives		10,523		—		—			—		—		—


	W	288,068		593,531		(56,438	)		114,589		46,750		(2,844	)

(*)	As of December 31, 2016, the net gain on valuation of derivatives using cash flow hedge accounting of W28,414 million, net of tax, is included in other comprehensive income or loss.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

12.

Other Financial Assets

(1)

Other financial assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016						2015
	Current			Non-current			Current			Non-current

Loans and receivables	W	198,133			683,353			106,013			678,126
Allowance for doubtful accounts		—			(4,532	)		—			—
Present value discount		(1,001	)		(41,746	)		(859	)		(48,223	)
Long-term/short-term financial instruments		2,281,460			414,466			5,132,829			758,037


	W	2,478,592			1,051,541			5,237,983			1,387,940

(2)

Loans and receivables as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Face value		Allowance for doubtful accounts			Present value discount			Book value

Short-term loans and receivables
Loans for tuition	W	29,028		—			(1,001	)		28,027
Loans for housing		12,556		—			—			12,556
Fisheries loan		352		—			—			352
Other loans		156,197		—			—			156,197

		198,133		—			(1,001	)		197,132

Long-term loans and receivables
Loans for tuition		404,200		—			(41,593	)		362,607
Loans for housing		125,850		—			—			125,850
Loans for related parties		91,249		(4,532	)		—			86,717
Fisheries loan		1,312		—			(153	)		1,159
Other loans		60,742		—			—			60,742

		683,353		(4,532	)		(41,746	)		637,075


	W	881,486		(4,532	)		(42,747	)		834,207


In millions of won	2015
	Face value		Present value discount			Book value

Short-term loans and receivables
Loans for tuition	W	29,210		(859	)		28,351
Loans for housing		11,170		—			11,170
Fisheries loan		6,032		—			6,032
Other loans		59,601		—			59,601

		106,013		(859	)		105,154

Long-term loans and receivables
Loans for tuition		390,738		(47,822	)		342,916
Loans for housing		132,239		—			132,239
Loans for related parties		99,768		—			99,768
Fisheries loan		1,664		(401	)		1,263
Other loans		53,717		—			53,717

		678,126		(48,223	)		629,903


	W	784,139		(49,082	)		735,057

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

12.

Other Financial Assets, Continued

(3)

Changes in the allowance for doubtful accounts of Loans and receivables for the the year ended December 31, 2016 is as follows:


In millions of won	2016
Beginning balance	W	—
Bad debt expense		4,352
Other		180

Ending balance	W	4,532

(4)

Long-term and short-term financial instruments as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Time deposits	W	1,820,391		30,000		2,131,089		3
ABCP		351,800		132,600		2,598,791		5,000
CP		16,000		—		48,350		—
CD		60,443		—		163,649		—
RP		—		1,521		—		652,700
Others		32,826		250,345		190,950		100,334


	W	2,281,460		414,466		5,132,829		758,037

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

13.

Inventories

Inventories as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Acquisition cost		Valuation allowance			Book value

Raw materials	W	3,182,711		(1,323	)		3,181,388
Merchandise		20		—			20
Work-in-progress		118,640		—			118,640
Finished goods		57,659		—			57,659
Supplies		1,289,160		(4,553	)		1,284,607
Inventories in transit		827,437		—			827,437
Other inventories		9,692		—			9,692


	W	5,485,319		(5,876	)		5,479,443


In millions of won	2015
	Acquisition cost		Valuation allowance			Book value

Raw materials	W	3,304,220		(1,238	)		3,302,982
Work-in-progress		133,226		—			133,226
Finished goods		51,073		—			51,073
Supplies		1,062,307		(4,428	)		1,057,879
Inventories in transit		392,340		—			392,340
Other inventories		8,913		—			8,913


	W	4,952,079		(5,666	)		4,946,413

The reversal of the allowance for loss on inventory valuation due to increase in the net realizable value of inventory deducted from cost of sales was W2,473 million for the year ended December 31, 2016. The allowance for loss on inventory valuation due to decrease in the net realizable value of inventory added to cost of sales was W533 million for the year ended December 31, 2015. The amounts of loss from inventory valuation included in other gains or losses were W2,683 million and W1,318 million for the years ended December 31, 2016 and 2015, respectively.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

14.

Finance Lease Receivables

(1)

Finance lease contracts

The Company entered into a power purchase agreement (“PPA”) with Jordan Electric Power Company to provide a 373MW level Qatrana gas combined power plant over a 25 year lease term, and accounts for the PPA as a finance lease. Also, the Company has fly-ash pipe conduit finance leases with an average lease term of 7 years. In addition, the Company entered into a PPA with the Comision Federal de Electricidad in Mexico to provide for 25 years of all electricity generated from the power plant after completion of its construction and collect rates consisting of fixed costs (to recover the capital) and variable costs during the contracted period.

(2)

Finance lease receivables as of December 31, 2016 and 2015 are as follows and included in current and non-current trade and other receivables, net, in the consolidated statements of financial position:


In millions of won	2016				2015
	Minimum lease payments		Present value of minimum lease payments		Minimum lease payments		Present value of minimum lease payments

Less than 1 year	W	55,708		12,225		98,488		12,098
1 ~ 5 years		423,152		214,176		407,426		203,699
More than 5 years		1,690,492		746,473		1,689,281		738,011


	W	2,169,352		972,874		2,195,195		953,808

(3)

There are no impaired finance lease receivables as of December 31, 2016 and 2015.

15.

Non-Financial Assets

Non-financial assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Advance payment	W	93,279		71,238		102,842		25,172
Prepaid expenses		228,142		78,066		159,378		85,105
Others (*)		310,439		32,485		135,730		20,956


	W	631,860		181,789		397,950		131,233

(*)	Details of others as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Tax refund receivables	W	30,959		2,188		39,158		2,658
Greenhouse gas emissions rights		145,105		—		51,158		—
Others		134,375		30,297		45,414		18,298


	W	310,439		32,485		135,730		20,956

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries

(1)

Consolidated subsidiaries as of December 31, 2016 and 2015 are as follows:


Subsidiaries	Key operation activities	Location	Percentage of ownership (%)
Subsidiaries	Key operation activities	Location	2016			2015

Korea Hydro & Nuclear Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
Korea South-East Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
Korea Midland Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
Korea Western Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
Korea Southern Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
Korea East-West Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
KEPCO Engineering & Construction Company, Inc. (*1)	Architectural engineering for utility plant and others	KOREA		65.77	%		66.32	%
KEPCO Plant Service & Engineering Co., Ltd.	Utility plant maintenance and others	KOREA		51.00	%		52.48	%
KEPCO Nuclear Fuel Co., Ltd.	Nuclear fuel	KOREA		96.36	%		96.36	%
KEPCO KDN Co., Ltd.	Electric power information technology and others	KOREA		100.00	%		100.00	%
Garolim Tidal Power Plant Co., Ltd. (*2)	Power generation	KOREA		49.00	%		49.00	%
KEPCO International HongKong Ltd.	Holding company	HONG KONG		100.00	%		100.00	%
KEPCO International Philippines Inc.	Holding company	PHILIPPINES		100.00	%		100.00	%
KEPCO Gansu International Ltd.	Holding company	HONG KONG		100.00	%		100.00	%
KEPCO Philippines Holdings Inc.	Holding company	PHILIPPINES		100.00	%		100.00	%
KEPCO Philippines Corporation	Operation of utility plant	PHILIPPINES		100.00	%		100.00	%
KEPCO Ilijan Corporation	Utility plant rehabilitation and operation	PHILIPPINES		51.00	%		51.00	%
KEPCO Lebanon SARL	Operation of utility plant	LEBANON		100.00	%		100.00	%
KEPCO Neimenggu International Ltd.	Holding company	HONG KONG		100.00	%		100.00	%
KEPCO Shanxi International Ltd.	Holding company	HONG KONG		100.00	%		100.00	%
KOMIPO Global Pte Ltd.	Holding company	SINGAPORE		100.00	%		100.00	%
KEPCO Canada Energy Ltd.	Resources development	CANADA		100.00	%		100.00	%
KEPCO Netherlands B.V.	Holding company	NETHERLANDS		100.00	%		100.00	%
KOREA Imouraren Uranium Investment Corp.	Resources development	FRANCE		100.00	%		100.00	%
KEPCO Australia Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		100.00	%
KOSEP Australia Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		100.00	%
KOMIPO Australia Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		100.00	%
KOWEPO Australia Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		100.00	%
KOSPO Australia Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		100.00	%
KEPCO Middle East Holding Company	Holding company	BAHRAIN		100.00	%		100.00	%
Qatrana Electric Power Company	Construction and operation of utility plant	JORDAN		80.00	%		80.00	%
KHNP Canada Energy, Ltd.	Resources development	CANADA		100.00	%		100.00	%
KEPCO Bylong Australia Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		100.00	%
Korea Waterbury Uranium Limited Partnership	Resources development	CANADA		79.64	%		79.64	%
KEPCO Canada Uranium Investment Limited Partnership	Resources development	CANADA		—			100.00	%
Korea Electric Power Nigeria Ltd.	Operation of utility plant	NIGERIA		100.00	%		100.00	%
KEPCO Holdings de Mexico	Holding company	MEXICO		100.00	%		100.00	%
KST Electric Power Company	Construction and operation of utility plant	MEXICO		56.00	%		56.00	%
KEPCO Energy Service Company	Operation of utility plant	MEXICO		100.00	%		100.00	%
KEPCO Netherlands S3 B.V.	Holding company	NETHERLANDS		100.00	%		100.00	%
PT. KOMIPO Pembangkitan Jawa Bali	Operation of utility plant	INDONESIA		51.00	%		51.00	%
PT. Cirebon Power Service (*2)	Operation of utility plant	INDONESIA		27.50	%		27.50	%
KOWEPO International Corporation	Operation of utility plant	PHILIPPINES		99.99	%		99.99	%
KOSPO Jordan LLC	Operation of utility plant	JORDAN		100.00	%		100.00	%
EWP Philippines Corporation	Operation of utility plant	PHILIPPINES		100.00	%		100.00	%
EWP America Inc.	Holding company	USA		100.00	%		100.00	%
EWP Renewable Co.	Holding company	USA		100.00	%		100.00	%
DG Fairhaven Power, LLC	Power generation	USA		100.00	%		100.00	%
DG Kings Plaza, LLC	Power generation	USA		—			100.00	%
DG Whitefield, LLC	Power generation	USA		100.00	%		100.00	%
Springfield Power, LLC	Power generation	USA		100.00	%		100.00	%
KNF Canada Energy Limited	Resources development	CANADA		96.36	%		96.36	%
PT KEPCO Resource Indonesia	Holding company	INDONESIA		100.00	%		100.00	%

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(1)

Consolidated subsidiaries as of December 31, 2016 and 2015 are as follows, continued:


			Percentage of ownership (%)
Subsidiaries	Key operation activities	Location	2016			2015

EWP Barbados 1 SRL	Holding company	BARBADOS		100.00	%		100.00	%
California Power Holdings, LLC	Power generation	USA		100.00	%		100.00	%
Gyeonggi Green Energy Co., Ltd.	Power generation	KOREA		62.01	%		62.01	%
PT. Tanggamus Electric Power	Power generation	INDONESIA		52.50	%		52.50	%
Gyeongju Wind Power Co., Ltd.	Power generation	KOREA		70.00	%		70.00	%
KOMIPO America Inc.	Holding company	USA		100.00	%		100.00	%
EWPRC Biomass Holdings, LLC	Holding company	USA		100.00	%		100.00	%
KOSEP USA, INC.	Power generation	USA		100.00	%		100.00	%
PT. EWP Indonesia	Holding company	INDONESIA		99.95	%		99.95	%
KEPCO Netherlands J3 B.V.	Holding company	NETHERLANDS		100.00	%		100.00	%
Korea Offshore Wind Power Co., Ltd.	Operation of utility plant	KOREA		100.00	%		100.00	%
Global One Pioneer B.V.	Holding company	NETHERLANDS		100.00	%		100.00	%
Global Energy Pioneer B.V.	Holding company	NETHERLANDS		100.00	%		100.00	%
Mira Power Limited (*3)	Power generation	PAKISTAN		76.00	%		76.00	%
KOSEP Material Co., Ltd. (*4)	Power generation	KOREA		46.22	%		46.22	%
Commerce and Industry Energy Co., Ltd. (*5)	Power generation	KOREA		59.03	%		59.03	%
KEPCO Singapore Holdings Pte., Ltd.	Holding company	SINGAPORE		100.00	%		100.00	%
KOWEPO India Private Limited	Holding company	INDIA		100.00	%		100.00	%
KEPCO KPS Philippines Corp.	Utility plant maintenance and others	PHILIPPINES		51.00	%		52.48	%
KOSPO Chile SpA	Holding company	CHILE		100.00	%		100.00	%
PT. KOWEPO Sumsel Operation and Maintenance Services	Utility plant maintenance and others	INDONESIA		95.00	%		95.00	%
HeeMang Sunlight Power Co., Ltd.	Power generation	KOREA		100.00	%		100.00	%
Fujeij Wind Power Company	Operation of utility plant	JORDAN		100.00	%		100.00	%
KOSPO Youngnam Power Co., Ltd.	Operation of utility plant	KOREA		50.00	%		50.00	%
Global One Carbon Private Equity Investment Trust 2	Holding company	KOREA		96.67	%		—
Chitose Solar Power Plant LLC	Power generation	JAPAN		80.10	%		—
KEPCO Energy Solution Co. Ltd.	Energy service	KOREA		100.00	%		—
Solar School Plant Co., Ltd.	Power generation	KOREA		100.00	%		—
KOSPO Power Services Limitada	Utility plant maintenance and others	CHILE		65.00	%		—
Energy New Industry Specialized Investment Private Investment Trust	Holding company	KOREA		99.75	%		—
KOEN Bylong Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		—
KOMIPO Bylong Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		—
KOWEPO Bylong Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		—
KOSPO Bylong Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		—
EWP Bylong Pty., Ltd.	Resources development	AUSTRALIA		100.00	%		—
KOWEPO Lao International	Utility plant maintenance and others	LAOS		100.00	%		—

(*1)	Considering treasury stocks, the effective percentage of ownership is 66.08%.

(*2)	These subsidiaries are included in the consolidated financial statements as the Company obtained the majority of the voting power through the shareholders’ agreement.

(*3)	As of reporting date, the reporting period of all subsidiaries is December 31, except for Mira Power Limited which is November 30.

(*4)

According to the shareholders’ agreement reached in April 2014, Korea South-East Power Co., Ltd. (“KOSEP”) signed a contract with Long Lasting Value(“LLV”) to guarantee the principal and certain rate of return on LLV’s shares in KOSEP Material Co., Ltd. Moreover, LLV has put options to sell their investment to KOSEP. Therefore, the Company accounted for this agreement as KOSEP acquiring the shares of KOSEP Material from LLV. As such, the effective percentage of ownership is 86.20% as of December 31, 2016.

(*5)

The Company guarantees a certain return on investment related to Commerce and Industry Energy Co., Ltd. for the financial investors. The financial investors have a right to sell their shares to the Company which can be exercised 84 months after the date of investment. Accordingly, the purchase price including the return on investment is classified as a liability.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(2)

Subsidiaries included in and excluded from consolidation for the year ended December 31, 2016 are as follows:


Subsidiary		Reason

Global One Carbon Private Equity Investment Trust 2		Newly Established
Chitose Solar Power Plant LLC		Newly Established
KEPCO Energy Solution Co. Ltd.		Newly Established
Solar School Plant Co., Ltd.		Newly Established
KOSPO Power Services Limitada		Newly Established
Energy New Industry Specialized Investment Private Investment Trust		Newly Established
KOEN Bylong Pty., Ltd.		Newly Established
KOMIPO Bylong Pty., Ltd.		Newly Established
KOWEPO Bylong Pty., Ltd.		Newly Established
KOSPO Bylong Pty., Ltd.		Newly Established
EWP Bylong Pty., Ltd.		Newly Established
KOWEPO Lao International		Newly Established

<Subsidiaries excluded from consolidation for the year ended December 31, 2016>

Subsidiary		Reason

KEPCO Canada Uranium Investment Limited Partnership		Dissolved
DG Kings Plaza, LLC		Liquidated

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2016 and 2015 are as follows:


In millions of won
2016
Subsidiaries	Total assets		Total liabilities		Sales		Profit (loss) for the period

Korea Hydro & Nuclear Power Co., Ltd.	W	52,782,915		27,366,938		11,168,579		2,454,810
Korea South-East Power Co., Ltd.		9,773,778		4,794,330		5,093,598		531,061
Korea Midland Power Co., Ltd.		9,066,666		5,416,336		3,719,981		400,696
Korea Western Power Co., Ltd.		9,810,714		5,866,916		4,169,712		401,936
Korea Southern Power Co., Ltd.		9,806,023		5,637,950		4,200,035		426,337
Korea East-West Power Co., Ltd.		8,967,951		4,488,911		4,210,898		467,603
KEPCO Engineering & Construction Company, Inc.		786,596		364,676		506,012		17,796
KEPCO Plant Service & Engineering Co., Ltd.		1,086,421		301,490		1,214,304		86,657
KEPCO Nuclear Fuel Co., Ltd.		713,230		346,012		309,911		33,115
KEPCO KDN Co., Ltd.		519,901		205,869		588,160		43,127
Garolim Tidal Power Plant Co., Ltd.		632		346		—		-24
KEPCO International HongKong Ltd.		173,138		41		—		4,532
KEPCO International Philippines Inc.		114,141		1,468		—		56,783
KEPCO Gansu International Ltd.		17,928		557		—		(18	)
KEPCO Philippines Holdings Inc.		125,100		27		—		13,517
KEPCO Philippines Corporation		13,704		8,949		—		(8,717	)
KEPCO Ilijan Corporation		558,030		58,449		116,667		51,552
KEPCO Lebanon SARL		1,458		10,312		—		810
KEPCO Neimenggu International Ltd.		186,636		—		—		7,082
KEPCO Shanxi International Ltd.		549,189		218,047		—		5,812
KOMIPO Global Pte Ltd.		223,082		1,095		—		36,764
KEPCO Canada Energy Ltd.		202		24		—		(27,216	)
KEPCO Netherlands B.V.		128,014		35		—		224
KOREA Imouraren Uranium Investment Corp.		154,302		764		—		(68,417	)
KEPCO Australia Pty., Ltd.		503,657		1,545		3,670		(19,006	)
KOSEP Australia Pty., Ltd.		25,174		521		5,357		4,028
KOMIPO Australia Pty., Ltd.		25,413		10		5,388		4,023
KOWEPO Australia Pty., Ltd.		25,550		10		5,357		4,012
KOSPO Australia Pty., Ltd.		25,625		10		5,357		4,033
KEPCO Middle East Holding Company		128,846		125,008		—		6,840

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Subsidiaries	Total assets		Total liabilities		Sales		Profit (loss) for the period

Qatrana Electric Power Company	W	546,123		417,800		18,866		19,601
KHNP Canada Energy, Ltd.		54,374		46		—		(6,304	)
KEPCO Bylong Australia Pty., Ltd.		220,721		277,358		—		(2,357	)
Korea Waterbury Uranium Limited Partnership		20,882		149		—		2,348
Korea Electric Power Nigeria Ltd.		696		493		9,794		35
KEPCO Holdings de Mexico		262		19		—		251
KST Electric Power Company		596,823		539,459		146,295		17,322
KEPCO Energy Service Company		1,309		310		5,337		580
KEPCO Netherlands S3 B.V.		55,609		54		—		3,731
PT. KOMIPO Pembangkitan Jawa Bali		16,246		4,549		21,632		8,989
PT. Cirebon Power Service		3,456		1,228		7,463		301
KOWEPO International Corporation		—		—		—		—
KOSPO Jordan LLC		11,524		687		7,321		317
EWP Philippines Corporation		1,966		955		—		(41	)
EWP America Inc. (*)		104,809		80,252		33,616		(8,704	)
KNF Canada Energy Limited		1,967		20		—		(46	)
PT KEPCO Resource Indonesia		913		18		—		(341	)
EWP Barbados 1 SRL		267,859		425		1,656		(902	)
Gyeonggi Green Energy Co., Ltd.		301,126		221,078		108,557		19,211
PT. Tanggamus Electric Power		184,861		167,641		40,903		2,041
Gyeongju Wind Power Co., Ltd.		76,569		49,293		6,413		1,269
KOMIPO America Inc.		11,518		2,432		—		(2,240	)
KOSEP USA, INC.		159		39,028		3,791		(72,817	)
PT. EWP Indonesia		2,154		50		—		1,088
KEPCO Netherlands J3 B.V.		125,337		68		—		12,433
Korea Offshore Wind Power Co., Ltd.		37,826		2,048		—		(4,960	)
Global One Pioneer B.V.		161		22		—		(54	)
Global Energy Pioneer B.V.		338		22		—		(59	)
Mira Power Limited		178,141		133,730		—		(954	)
KOSEP Material Co., Ltd.		2,398		1,497		3,232		(901	)
Commerce and Industry Energy Co., Ltd.		99,432		87,316		28,375		(536	)
KEPCO Singapore Holdings Pte., Ltd.		2,568		13		—		(33	)
KOWEPO India Private Limited		879		—		—		1
KEPCO KPS Philippines Corp.		7,897		1,213		12,843		2,060
KOSPO Chile SpA		6,656		4,787		—		125
PT. KOWEPO Sumsel Operation and Maintenance Services		1,439		700		6,165		(96	)
HeeMang Sunlight Power Co., Ltd.		7,102		3,391		12		(308	)
Fujeij Wind Power Company		47,935		46,636		—		(873	)
KOSPO Youngnam Power Co., Ltd.		284,368		205,680		—		(931	)
Global One Carbon Private Equity Investment Trust 2		3,002		—		—		9
Chitose Solar Power Plant LLC		49,728		38,806		—		(811	)
KEPCO Energy Solution Co. Ltd.		299,933		233		—		(300	)
Solar School Plant Co., Ltd.		200,268		259		1		9
KOSPO Power Services Limitada		4,385		1,262		7,300		2,963
Energy New Industry Specialized Investment Private Investment Trust		501,275		33		—		(7	)
KOEN Bylong Pty., Ltd.		6,135		—		—		—
KOMIPO Bylong Pty., Ltd.		6,135		—		—		—
KOWEPO Bylong Pty., Ltd.		6,135		—		—		—
KOSPO Bylong Pty., Ltd.		6,135		—		—		—
EWP Bylong Pty., Ltd.		6,135		—		—		—
KOWEPO Lao International		218		181		—		(108	)

(*)	Financial information of EWP America Inc. includes that of six other subsidiaries, EWP Renewable Co., DG Fairhaven Power, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Subsidiaries	Total assets		Total liabilities		Sales		Profit (loss) for the period

Korea Hydro & Nuclear Power Co., Ltd.	W	51,043,890		27,386,113		10,642,352		2,465,244
Korea South-East Power Co., Ltd.		9,326,835		4,859,827		4,961,711		601,204
Korea Midland Power Co., Ltd.		7,857,199		4,648,144		3,927,443		226,244
Korea Western Power Co., Ltd.		9,225,791		5,719,032		4,214,540		294,617
Korea Southern Power Co., Ltd.		9,216,084		5,525,865		4,317,995		224,757
Korea East-West Power Co., Ltd.		8,828,603		4,836,904		4,047,655		454,942
KEPCO Engineering & Construction Company, Inc.		855,156		438,371		657,603		31,047
KEPCO Plant Service & Engineering Co., Ltd.		1,029,304		246,342		1,171,082		168,632
KEPCO Nuclear Fuel Co., Ltd.		666,677		328,364		253,524		35,115
KEPCO KDN Co., Ltd.		439,725		159,275		451,678		33,578
Garolim Tidal Power Plant Co., Ltd.		655		346		—		(76	)
KEPCO International HongKong Ltd.		172,686		18		—		4,993
KEPCO International Philippines Inc.		115,594		1,542		—		38,541
KEPCO Gansu International Ltd.		17,405		540		—		(6	)
KEPCO Philippines Holdings Inc.		132,094		26		—		24,690
KEPCO Philippines Corporation		13,998		218		—		265
KEPCO Ilijan Corporation		603,865		58,572		126,234		54,596
KEPCO Lebanon SARL		741		10,182		—		(1,541	)
KEPCO Neimenggu International Ltd.		184,860		348		—		8,027
KEPCO Shanxi International Ltd.		562,652		242,270		—		22,949
KOMIPO Global Pte Ltd.		187,885		29		—		16,572
KEPCO Canada Energy Ltd.		55,945		23		—		(64	)
KEPCO Netherlands B.V.		169,496		61		—		1,409
KOREA Imouraren Uranium Investment Corp.		224,499		263		—		5,964
KEPCO Australia Pty., Ltd.		510,892		2,541		4,510		168
KOSEP Australia Pty., Ltd.		18,180		1,581		4,729		346
KOMIPO Australia Pty., Ltd.		17,397		559		4,729		349
KOWEPO Australia Pty., Ltd.		18,320		1,578		4,729		353
KOSPO Australia Pty., Ltd.		18,358		1,567		4,729		356
KEPCO Middle East Holding Company		147,618		150,798		—		14,142
Qatrana Electric Power Company		521,206		412,587		17,844		31,767
KHNP Canada Energy, Ltd.		42,731		22		—		(123	)
KEPCO Bylong Australia Pty., Ltd.		183,468		236,545		—		(23,352	)
Korea Waterbury Uranium Limited Partnership		20,370		699		—		(48	)
KEPCO Canada Uranium Investment Limited Partnership		38,804		14		—		(26,171	)
Korea Electric Power Nigeria Ltd.		1,721		1,179		55,768		309
KEPCO Holdings de Mexico		39		34		—		(13	)
KST Electric Power Company		564,358		529,439		97,879		14,631
KEPCO Energy Service Company		1,435		604		6,034		875
KEPCO Netherlands S3 B.V.		66,251		189		—		716
PT. KOMIPO Pembangkitan Jawa Bali		16,536		6,170		20,143		8,047
PT. Cirebon Power Service		2,795		1,010		6,663		459
KOWEPO International Corporation		—		—		—		—
KOSPO Jordan LLC		12,998		1,117		9,840		2,693
EWP Philippines Corporation		2,664		1,592		—		258
EWP America Inc. (*)		115,562		82,167		59,124		3,227
KNF Canada Energy Limited		1,874		18		—		(66	)
PT KEPCO Resource Indonesia		1,210		—		—		(217	)
EWP Barbados 1 SRL		260,638		370		2,829		273
Gyeonggi Green Energy Co., Ltd.		315,299		249,608		104,674		(4,111	)
PT. Tanggamus Electric Power		106,892		91,416		60,044		(7,138	)
Gyeongju Wind Power Co., Ltd.		62,600		27,822		5,993		968
KOMIPO America Inc.		13,487		2,480		—		218
KOSEP USA, INC.		40,035		4,178		4,975		153
PT. EWP Indonesia		1,039		15		—		(374	)
KEPCO Netherlands J3 B.V.		121,492		81		—		18,858
Korea Offshore Wind Power Co., Ltd.		7,579		2,317		—		(4,213	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(3)

Summary of financial information of consolidated subsidiaries as of and for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Subsidiaries	Total assets		Total liabilities		Sales		Profit (loss) for the period

Global One Pioneer B.V.		40		20		—		(48	)
Global Energy Pioneer B.V.		42		20		—		(48	)
Mira Power Limited		110,918		66,963		—		(1,581	)
KOSEP Material Co., Ltd.		29,768		28,013		26,310		(17,665	)
Commerce and Industry Energy Co., Ltd.		99,638		86,727		24,774		(3,387	)
KEPCO Singapore Holdings Pte., Ltd.		1,817		—		—		(9	)
KOWEPO India Private Limited		911		10		—		(105	)
KEPCO KPS Philippines Corp.		5,688		953		14,278		1,677
KOSPO Chile SpA		133		4,642		—		(942	)
PT. KOWEPO Sumsel Operation and Maintenance Services		2,053		51		5,405		1,762
HeeMang Sunlight Power Co., Ltd.		4,711		—		—		(9	)
Fujeij Wind Power Company		83		—		—		—
KOSPO Youngnam Power Co.,Ltd.		82,173		32,166		—		7

(*)	Financial information of EWP America Inc. includes that of seven other subsidiaries, EWP Renewable Co., DG Fairhaven Power, LLC, DG Kings Plaza, LLC, DG Whitefield, LLC, Springfield Power, LLC, California Power Holdings, LLC, and EWPRC Biomass Holdings, LLC.

(4)

Significant restrictions on abilities to subsidiaries are as follows:


Company		Nature and extent of any significant restrictions

Gyeonggi Green Energy Co., Ltd.		Acquisition or disposal of assets of more than W35 billion, change in the capacity of cogeneration units (except for the change due to performance improvement of equipment, maintenance) will require unanimous consent of all directors.

KOSPO Youngnam Power Co., Ltd.		Dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained. Shares cannot be wholly or partially transferred without prior written consent of financial institutions.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(5)

Details of non-controlling interest prior to intra-group eliminations as of and for the years ended December 31, 2016 and 2015 are as follows:


In millions of won
2016
Description	KEPCO Ilijan Corporation			KEPCO Plant Service & Engineering Co., Ltd.			KEPCO Engineering & Construction Company, Inc.			Others			Total

Percentage of ownership		49.00	%		49.00	%		33.92	%
Current assets	W	154,758			553,924			270,553			1,211,510			2,190,745
Non-current assets		403,272			532,497			516,043			2,379,882			3,831,694
Current liabilities		(19,256	)		(264,506	)		(286,444	)		(297,510	)		(867,716	)
Non-current liabilities		(39,193	)		(36,984	)		(78,232	)		(1,919,924	)		(2,074,333	)
Net assets		499,581			784,931			421,920			1,373,958			3,080,390
Book value of non-controlling interest		244,794			384,616			143,115			684,093			1,456,618
Sales		116,667			1,214,304			506,012			674,461			2,511,444
Profit for the period		51,552			86,657			17,796			102,170			258,175
Profit for the period attributable to non-controlling interest		25,260			42,462			6,036			26,709			100,467
Cash flows from operating activities		102,546			121,240			18,748			84,086			326,620
Cash flows from investing activities		(117	)		79,807			(7,556	)		(367,674	)		(295,540	)
Cash flows from financing activities before dividends to non-controlling interest		(56,863	)		(39,911	)		(1,634	)		877,863			779,455
Dividends to non-controlling interest		(55,705	)		(36,139	)		(2,539	)		(22,054	)		(116,437	)
Effect of exchange rate fluctuation		1,529			127			(854	)		7,216			8,018
Net increase (decrease) of cash and cash equivalents		(8,610	)		125,124			6,165			579,437			702,116

In millions of won
2015
Description	KEPCO Ilijan Corporation			KEPCO Plant Service & Engineering Co., Ltd.			KEPCO Engineering & Construction Company, Inc.			Others			Total

Percentage of ownership		49.00	%		47.52	%		33.37	%
Current assets	W	161,855			547,152			341,559			631,442			1,682,008
Non-current assets		442,010			482,152			513,597			1,976,302			3,414,061
Current liabilities		(22,522	)		(195,030	)		(342,315	)		(296,152	)		(856,019	)
Non-current liabilities		(36,050	)		(51,312	)		(96,056	)		(1,566,200	)		(1,749,618	)
Net assets		545,293			782,962			416,785			745,392			2,490,432
Book value of non-controlling interest		267,194			372,064			139,081			644,787			1,423,126
Sales		126,234			1,171,082			657,603			637,544			2,592,463
Profit for the period		54,596			168,632			31,047			61,554			315,829
Profit for the period attributable to non-controlling interest		26,752			78,852			10,360			11,802			127,766
Cash flows from operating activities		83,697			140,625			11,280			(29,888	)		205,714
Cash flows from investing activities		(16,021	)		(104,477	)		(134,874	)		(178,241	)		(433,613	)
Cash flows from financing activities before dividends to non-controlling interest		(39,730	)		(40,581	)		69,955			226,976			216,620
Dividends to non-controlling interest		(36,080	)		(34,569	)		(7,300	)		(24,577	)		(102,526	)
Effect of exchange rate fluctuation		4,123			3			(51	)		6,399			10,474
Net increase (decrease) of cash and cash equivalents		(4,011	)		(38,999	)		(60,990	)		669			(103,331	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(6)

Changes in goodwill

(i)

Details of goodwill as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Acquisition cost	W	2,582		2,582
Accumulated impairment		—		—


Carrying book value	W	2,582		2,582

(ii)

There are no changes in goodwill for the years ended December 31, 2016 and 2015.

(7)

Disposals of subsidiaries

KEPCO Canada Uranium Investment Limited Partnership was dissolved and the Company liquidated DG Kings Plaza, LLC during the year ended December 31, 2016. The Company disposed of the shares of Boulder Solar Power, LLC and liquidated KOWEPO America LLC during the year ended December 31, 2015.

(i)

The fair value of consideration as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Consideration received in cash	W	898		10,664
Fair value of remaining shares after disposal		—		13,860
Net assets transferred due to dissolution		34,148		—


	W	35,046		24,524

(ii)

The carrying value of assets and liabilities of subsidiaries as at the date the Company lost its control during the year ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Current assets	W
Cash and cash equivalents		898			10,071
Current financial assets, net		81			1,077
Non-current assets
Available-for-sale financial assets		34,089			—
Property, plant and equipment, net		—			2,460
Other		—			2,893
Current liabilities
Current financial liabilities		(22	)		—
Current non-financial liabilities		—			(7	)


	W	35,046			16,494

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

16.

Consolidated Subsidiaries, Continued

(7)

Disposals of subsidiaries, continued

(iii)

Gain from disposals of subsidiaries for the year ended December 2016 and 2015 are as follows:


In millions of won	2016			2015

Fair value of sale price	W	35,046			24,524
Net assets disposed		(35,046	)		(16,494	)
Non-controlling interests		—			—
Realization of unrealized gain		—			—
Other comprehensive income (*1)		—			346


Gain from disposals of subsidiaries (*2)	W	—			8,376

(*1)	This represents the amount subsequently reclassified from other comprehensive income to profit for the period when the Company lost its control of the subsidiaries.

(*2)	Gain from disposals of subsidiaries is included in the consolidated financial statements of comprehensive income.

(iv)

Net cashflow from sales of subsidiaries for the year ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Consideration received in cash	W	898			10,664
Less: cash held by disposed subsidiaries		(898	)		(10,071	)


Net cash flow	W	—			593

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures

(1)

Investments in associates and joint ventures as of December 31, 2016 and 2015 are as follows:


In millions of won
2016
Investees	Key operation activities	Location		Percentage of ownership			Acquisition cost		Book value
<Associates>
Korea Gas Corporation (*1)	Importing and wholesaling LNG		KOREA		20.47	%	W	94,500		1,933,877
Korea Electric Power Industrial Development Co., Ltd.	Electricity metering and others		KOREA		29.00	%		4,727		20,475
YTN Co., Ltd.	Broadcasting		KOREA		21.43	%		59,000		38,156
Cheongna Energy Co., Ltd.	Generating and distributing vapor and hot/cold water		KOREA		43.90	%		48,353		12,373
Gangwon Wind Power Co., Ltd. (*2)	Power generation		KOREA		15.00	%		5,725		13,069
Hyundai Green Power Co., Ltd.	Power generation		KOREA		29.00	%		88,885		115,998
Korea Power Exchange (*6)	Management of power market and others		KOREA		100.00	%		127,839		223,238
AMEC Partners Korea Ltd. (*3)	Resources development		KOREA		19.00	%		707		225
Hyundai Energy Co., Ltd. (*9)	Power generation		KOREA		30.66	%		71,070		1,031
Ecollite Co., Ltd.	Artificial light-weight aggregate		KOREA		36.10	%		1,516		—
Taebaek Wind Power Co., Ltd.	Power generation		KOREA		25.00	%		3,810		4,750
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)	Power generation		KOREA		25.00	%		3,420		3,131
Pyeongchang Wind Power Co., Ltd.	Power generation		KOREA		25.00	%		3,875		3,383
Daeryun Power Co., Ltd. (*3, 10)	Power generation		KOREA		13.13	%		25,477		29,873
Changjuk Wind Power Co., Ltd.	Power generation		KOREA		30.00	%		3,801		6,930
KNH Solar Co., Ltd.	Power generation		KOREA		27.00	%		1,296		2,073
SPC Power Corporation	Power generation		PHILIPPINES		38.00	%		20,635		56,818
Gemeng International Energy Co., Ltd.	Power generation		CHINA		34.00	%		413,153		680,065
PT. Cirebon Electric Power	Power generation		INDONESIA		27.50	%		40,365		96,658
KNOC Nigerian East Oil Co., Ltd. (*4)	Resources development		NIGERIA		14.63	%		12		—
KNOC Nigerian West Oil Co., Ltd. (*4)	Resources development		NIGERIA		14.63	%		12		—
PT Wampu Electric Power	Power generation		INDONESIA		46.00	%		21,292		23,188
PT. Bayan Resources TBK	Resources development		INDONESIA		20.00	%		615,860		402,667
S-Power Co., Ltd.	Power generation		KOREA		49.00	%		132,300		123,912
Pioneer Gas Power Limited (*8)	Power generation		INDIA		40.00	%		49,831		50,740
Eurasia Energy Holdings	Power generation and resources development		RUSSIA		40.00	%		461		—
Xe-Pian Xe-Namnoy Power Co., Ltd.	Power generation		LAOS		25.00	%		49,119		51,544
Hadong Mineral Fiber Co., Ltd. (*17)	Recycling fly ashes		KOREA		8.33	%		50		—
Green Biomass Co., Ltd. (*12)	Power generation		KOREA		14.00	%		714		47
PT. Mutiara Jawa	Manufacturing and operating floating coal terminal		INDONESIA		29.00	%		2,978		—
Samcheok Eco Materials Co., Ltd. (*3, 11)	Recycling fly ashes		KOREA		2.35	%		686		—
Noeul Green Energy Co., Ltd.	Power generation		KOREA		29.00	%		1,740		1,217
Naepo Green Energy Co., Ltd.	Power generation		KOREA		25.00	%		29,200		25,438
Goseong Green Energy Co., Ltd. (*2)	Power generation		KOREA		1.12	%		2,900		2,663
Gangneung Eco Power Co., Ltd. (*2)	Power generation		KOREA		1.61	%		2,900		2,646
Shin Pyeongtaek Power Co., Ltd.	Power generation		KOREA		40.00	%		40		—
Heang Bok Do Si Photovoltaic Power Co., Ltd.	Power generation		KOREA		28.00	%		194		181
DS POWER Co., Ltd. (*2)	Power generation		KOREA		14.44	%		17,900		7,190
Dongducheon Dream Power Co., Ltd.	Power generation		KOREA		33.61	%		61,535		46,876
KS Solar Co., Ltd. (*3)	Power generation		KOREA		19.00	%		637		604
Yeongwol Energy Station Co., Ltd. (*2)	Power generation		KOREA		10.00	%		1,400		—
Jinbhuvish Power Generation Pvt. Ltd. (*2)	Power generation		INDIA		5.16	%		9,000		—
SE Green Energy Co., Ltd.	Power generation support		KOREA		47.76	%		3,821		3,525
Daegu Photovoltaic Co., Ltd.	Power generation		KOREA		29.00	%		1,230		1,700
Jeongam Wind Power Co., Ltd.	Power generation		KOREA		40.00	%		5,580		4,000
Korea Power Engineering Service Co., Ltd.	Construction and service		KOREA		29.00	%		290		2,810
Busan Green Energy Co., Ltd.	Power generation		KOREA		29.00	%		14,564		13,803
Jungbu Bio Energy Co., Ltd.(*2)	Power generation		KOREA		18.87	%		1,000		—
Korea Electric Vehicle Charging Service	Electric vehicle charge service		KOREA		28.00	%		1,596		1,103
Ulleungdo Natural Energy Co., Ltd.	Renewable power generation		KOREA		29.85	%		8,000		6,894
Korea Nuclear Partners Co., Ltd.	Electric material agency		KOREA		29.00	%		290		248
Tamra Offshore Wind Power Co., Ltd.	Power generation		KOREA		27.00	%		8,910		7,015
Korea Electric Power Corporation Fund (*13)	Developing electric enterprises		KOREA		98.09	%		51,500		50,856
Energy Infra Asset Management Co., Ltd. (*3)	Asset management		KOREA		9.90	%		297		259
Daegu clean Energy Co., Ltd.	Renewable power generation		KOREA		28.00	%		140		140
YaksuESS Co.,Ltd	Installing ESS related equipment		KOREA		29.00	%		210		196

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Investees	Key operation activities	Location		Percentage of ownership			Acquisition cost		Book value

Nepal Water & Energy Development Company Private Limited (*14)	Construction and operation of utility plant		NEPAL		52.77	%	W	18,568		18,667

								2,134,911		4,092,252


<Joint ventures>
KEPCO-Uhde Inc. (*7)	Power generation		KOREA		52.8	%		11,355		301
Eco Biomass Energy Sdn. Bhd. (*7)	Power generation		MALAYSIA		61.53	%		9,661		—
Datang Chaoyang Renewable Power Co., Ltd.	Power generation		CHINA		40.00	%		27,660		28,239
Shuweihat Asia Power Investment B.V.	Holding company		NETHERLANDS		49.00	%		46,037		—
Shuweihat Asia Operation & Maintenance Company (*7)	Maintenance of utility plant		CAYMAN		55.00	%		30		450
Waterbury Lake Uranium L.P.	Resources development		CANADA		36.97	%		26,602		21,314
ASM-BG Investicii AD	Power generation		BULGARIA		50.00	%		16,101		21,488
RES Technology AD	Power generation		BULGARIA		50.00	%		15,595		13,582
KV Holdings, Inc.	Power generation		PHILIPPINES		40.00	%		2,103		2,098
KEPCO SPC Power Corporation (*7)	Construction and operation of utility plant		PHILIPPINES		75.20	%		94,579		245,367
Canada Korea Uranium Limited Partnership (*5)	Resources development		CANADA		12.50	%		5,404		—
Gansu Datang Yumen Wind Power Co., Ltd.	Power generation		CHINA		40.00	%		16,621		12,821
Datang Chifeng Renewable Power Co., Ltd.	Power generation		CHINA		40.00	%		121,928		166,535
Datang KEPCO Chaoyang Renewable Power Co., Ltd.	Power generation		CHINA		40.00	%		10,858		10,843
Rabigh Electricity Company	Power generation		SAUDI ARABIA		40.00	%		109,743		97,802
Rabigh Operation & Maintenance Company	Maintenance of utility plant		SAUDI ARABIA		40.00	%		70		4,427
Jamaica Public Service Company Limited	Power generation		JAMAICA		40.00	%		301,910		249,453
KW Nuclear Components Co., Ltd.	Manufacturing		KOREA		45.00	%		833		7,133
Busan Shinho Solar Power Co., Ltd.	Power generation		KOREA		25.00	%		2,100		3,814
GS Donghae Electric Power Co., Ltd.	Power generation		KOREA		34.00	%		204,000		205,948
Global Trade Of Power System Co., Ltd.	Exporting products and technology of small or medium business by proxy		KOREA		29.00	%		290		477
Expressway Solar-light Power Generation Co., Ltd.	Power generation		KOREA		29.00	%		1,856		2,343
KODE NOVUS I LLC	Power generation		USA		50.00	%		19,213		—
KODE NOVUS II LLC	Power generation		USA		50.00	%		12,756		—
Daejung Offshore Wind Power Co., Ltd.	Power generation		KOREA		49.90	%		4,990		3,015
Amman Asia Electric Power Company (*7)	Power generation		JORDAN		60.00	%		111,476		153,857
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.) (*7)	R&D		KOREA		51.00	%		5,629		4,758
Dangjin Eco Power Co., Ltd.	Power generation		KOREA		34.00	%		56,100		53,253
Honam Wind Power Co., Ltd.	Power generation		KOREA		29.00	%		3,480		4,451
Chun-cheon Energy Co., Ltd.	Power generation		KOREA		29.90	%		52,700		50,592
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)	Power generation		KOREA		15.00	%		3,000		2,689
Nghi Son 2 Power Ltd.	Power generation		VIETNAM		50.00	%		1,788		229
Kelar S.A (*7)	Power generation		CHILE		65.00	%		4,180		—
PT. Tanjung Power Indonesia	Power generation		INDONESIA		35.00	%		746		1,946
Incheon New Power Co., Ltd.	Power generation		KOREA		29.00	%		461		563
Seokmun Energy Co., Ltd.	Power generation		KOREA		29.00	%		580		391
Daehan Wind Power PSC	Power generation		JORDAN		50.00	%		285		16
Barakah One Company (*16)	Power generation		UAE		18.00	%		118		116
Nawah Energy Company (*16)	Operation of utility plant		UAE		18.00	%		296		290
MOMENTUM	International thermonuclear experimental reactor construction management		FRANCE		33.33	%		1		67
Daegu Green Power Co., Ltd. (*15)	Power generation		KOREA		29.00	%		46,225		47,528

								1,349,360		1,418,196


							W	3,484,271		5,510,448

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures as of December 31, 2016 and 2015 are as follows, continued:

(*1)	The effective percentage of ownership is 21.57% considering treasury stocks.

(*2)	The Company can exercise significant influence by virtue of its contractual right to appoint directors to the board of directors of the entity, and by strict decision criteria of the Company’s financial and operating policy of the board of directors.

(*3)	The Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity.

(*4)	The Company can exercise significant influence by virtue of its contractual right to appoint one out of four members of the steering committee of the entity. Moreover, the Company has significant financial transactions, which can affect its influence on the entity.

(*5)	The Company has joint control over the entity by virtue of its contractual right to appoint directors to the board of directors of the entity, and by strict decision criteria of the Company’s financial and operating policy of the board of directors.

(*6)

The Government regulates the Company’s ability to make operating and financial decisions over the entity, as the Government requires maintaining arms-length transactions between KPX and the Company’s other subsidiaries. The Company can exercise significant influence by its right to nominate directors to the board of directors of the entity.

(*7)	According to the shareholders’ agreement, all critical financial and operating decisions must be agreed to by all ownership parties. For these reasons, the entities are classified as joint ventures.

(*8)	As of reporting date, the reporting period of all associates and joint ventures ends in December 31, except for Pioneer Gas Power Limited whose reporting period ends on March 31.

(*9)

As of December 31, 2016, 15.64% of ownership of Hyundai Energy Co., Ltd. is held by NH Power ll Co., Ltd. and NH Bank. According to the shareholders’ agreement reached on March 2011, not only does the Company have a call option to acquire the investment in Hyundai Energy Co., Ltd. from NH Power ll Co., Ltd. and NH Bank with a certain rate of return, NH Power ll Co., Ltd. and NH Bank also have put options to dispose of their investment to the Company. In connection with this agreement, the Company applied the equity method on the investment in Hyundai Energy Co., Ltd. with 46.30% of ownership.

(*10)

The Company’s percentage of ownership has decreased due to the acquisition of Daeryun Power Co., Ltd. and the effective percentage of ownership is 19.45% considering stock purchase options.

(*11)

The Company’s effective percentage of ownership excluding the redeemable convertible preferred stock is 25.54%.

(*12)

The effective percentage of ownership is less than 20% but the Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity and the fact that the dominant portion of the investee’s sales transactions is generated from the Company.

(*13)

The effective percentage of ownership is more than 50% but the Company does not hold control over relevant business while it exercises significant influence by participating in the Investment Decision Committee. For this reason, the entity is classified as an associate.

(*14)

The effective percentage of ownership is more than 50%, but the Company does not control the entity according to the shareholders’ agreement. For this reason, the entity is classified as an associate.

(*15)

The entity is reclassified from associates to joint ventures since the terms of the shareholders’ agreement had been amended.

(*16)

The effective percentage of ownership is less than 20%, but the Company has joint control over the entity as decisions on the major activities require the unanimous consent of the parties that collectively control the entity.

(*17)

Although the percentage of ownership temporarily decreased to 8.33% from the difference in timing of capital payment by shareholders, the Company can excercise significant influence by virtue of its right to appoint a director to the board of directors of the entity based on the shareholders’ agreement. The percentage of ownership is 25.00% at the time of completion of capital payment.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Key operation activities	Location		Percentage of ownership			Acquisition cost		Book value
<Associates>
Daegu Green Power Co., Ltd.	Power generation		KOREA		47.80	%	W	76,193		80,267
Korea Gas Corporation (*1)	Importing and wholesaling LNG		KOREA		20.47	%		94,500		2,102,813
Korea Electric Power Industrial Development Co., Ltd.	Electricity metering and others		KOREA		29.00	%		4,727		18,994
YTN Co., Ltd.	Broadcasting		KOREA		21.43	%		59,000		38,365
Cheongna Energy Co., Ltd.	Generating and distributing vapor and hot/cold water		KOREA		43.90	%		48,353		19,490
Gangwon Wind Power Co., Ltd. (*2)	Power generation		KOREA		15.00	%		5,725		12,890
Hyundai Green Power Co., Ltd.	Power generation		KOREA		29.00	%		88,885		113,664
Korea Power Exchange (*6)	Management of power market and others		KOREA		100.00	%		127,839		208,735
AMEC Partners Korea Ltd. (*3)	Resources development		KOREA		19.00	%		707		230
Hyundai Energy Co., Ltd. (*9)	Power generation		KOREA		30.66	%		30,118		6,990
Ecollite Co., Ltd.	Artificial light-weight aggregate		KOREA		36.10	%		1,516		—
Taebaek Wind Power Co., Ltd.	Power generation		KOREA		25.00	%		3,810		4,956
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)	Power generation		KOREA		25.00	%		2,850		2,587
Pyeongchang Wind Power Co., Ltd.	Power generation		KOREA		25.00	%		3,875		3,402
Daeryun Power Co., Ltd. (*3, 10)	Power generation		KOREA		13.13	%		25,477		36,156
JinanJangsu Wind Power Co., Ltd.	Power generation		KOREA		25.00	%		100		77
Changjuk Wind Power Co., Ltd.	Power generation		KOREA		30.00	%		3,801		6,143
KNH Solar Co., Ltd.	Power generation		KOREA		27.00	%		1,296		1,924
SPC Power Corporation	Power generation		PHILIPPINES		38.00	%		20,635		58,033
Gemeng International Energy Co., Ltd.	Power generation		CHINA		34.00	%		413,153		728,396
PT. Cirebon Electric Power	Power generation		INDONESIA		27.50	%		40,365		60,574
KNOC Nigerian East Oil Co., Ltd. (*4)	Resources development		NIGERIA		14.63	%		12		—
KNOC Nigerian West Oil Co., Ltd. (*4)	Resources development		NIGERIA		14.63	%		12		—
Dolphin Property Limited (*4)	Rental company		NIGERIA		15.00	%		12		61
PT Wampu Electric Power	Power generation		INDONESIA		46.00	%		21,292		18,963
PT. Bayan Resources TBK	Resources development		INDONESIA		20.00	%		615,860		525,066
S-Power Co., Ltd.	Power generation		KOREA		49.00	%		132,300		130,908
Pioneer Gas Power Limited (*8)	Power generation		INDIA		40.00	%		49,831		51,187
Eurasia Energy Holdings	Power generation and resources development		RUSSIA		40.00	%		461		—
Xe-Pian Xe-Namnoy Power Co., Ltd.	Power generation		LAOS		25.00	%		32,717		31,863
Busan Solar Co., Ltd. (*3)	Power generation		KOREA		19.80	%		793		925
Hadong Mineral Fiber Co., Ltd.	Recycling fly ashes		KOREA		25.00	%		50		—
Green Biomass Co., Ltd. (*12)	Power generation		KOREA		14.00	%		714		—
PT. Mutiara Jawa	Manufacturing and operating floating coal terminal		INDONESIA		29.00	%		2,978		—
Samcheok Eco Materials Co., Ltd. (*3, 11)	Recycling fly ashes		KOREA		2.67	%		686		—
Noeul Green Energy Co., Ltd.	Power generation		KOREA		20.00	%		400		295
Naepo Green Energy Co., Ltd.	Power generation		KOREA		25.00	%		29,200		26,746
Goseong Green Energy Co., Ltd. (*2)	Power generation		KOREA		2.90	%		2,900		2,670
Gangneung Eco Power Co., Ltd. (*2)	Power generation		KOREA		3.72	%		2,900		2,688
Shin Pyeongtaek Power Co., Ltd.	Power generation		KOREA		40.00	%		40		—
Heang Bok Do Si Photovoltaic Power Co., Ltd.	Power generation		KOREA		28.00	%		194		189
DS POWER Co., Ltd. (*2)	Power generation		KOREA		14.44	%		17,900		10,960
Dongducheon Dream Power Co., Ltd.	Power generation		KOREA		33.61	%		61,535		55,667
KS Solar Co., Ltd. (*3)	Power generation		KOREA		19.00	%		637		618
Yeongwol Energy Station Co., Ltd. (*2)	Power generation		KOREA		10.00	%		1,400		1,290
Jinbhuvish Power Generation Pvt. Ltd. (*2)	Power generation		INDIA		5.16	%		9,000		8,350
SE Green Energy Co., Ltd.	Power generation		KOREA		47.76	%		3,821		3,575
Daegu Photovoltaic Co., Ltd.	Power generation		KOREA		29.00	%		1,230		1,886
Jeongam Wind Power Co., Ltd.	Power generation		KOREA		40.00	%		1,680		702
Korea Power Engineering Service Co., Ltd.	Construction and service		KOREA		29.00	%		290		1,805
Busan Green Energy Co., Ltd.	Power generation		KOREA		29.00	%		14,564		14,512
Jungbu Bio Energy Co., Ltd. (*2)	Power generation		KOREA		18.87	%		1,000		904
Korea Electric Vehicle Charging Service	Electric vehicle charge service		KOREA		28.00	%		1,596		1,446
Ulleungdo Natural Energy Co., Ltd.	Renewable power generation		KOREA		29.85	%		8,000		7,417
Korea Nuclear Partners Co., Ltd.	Electric material agency		KOREA		29.00	%		290		289

								2,069,220		4,405,668

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Key operation activities	Location		Percentage of ownership			Acquisition cost		Book value

<Joint ventures>
KEPCO-Uhde Inc. (*7)	Power generation		KOREA		52.80	%	W	11,355		8,549
Eco Biomass Energy Sdn. Bhd. (*7)	Power generation		MALAYSIA		61.53	%		9,661		—
Datang Chaoyang Renewable Power Co., Ltd.	Power generation		CHINA		40.00	%		27,660		27,640
Shuweihat Asia Power Investment B.V.	Holding company		NETHERLANDS		49.00	%		60,191		20,474
Shuweihat Asia Operation & Maintenance Company (*7)	Maintenance of utility plant		CAYMAN		55.00	%		30		486
Waterbury Lake Uranium L.P.	Resources development		CANADA		40.00	%		26,602		20,299
ASM-BG Investicii AD	Power generation		BULGARIA		50.00	%		16,101		20,203
RES Technology AD	Power generation		BULGARIA		50.00	%		15,595		13,789
KV Holdings, Inc.	Power generation		PHILIPPINES		40.00	%		2,103		2,010
KEPCO SPC Power Corporation (*7)	Construction and operation of utility plant		PHILIPPINES		75.20	%		94,579		208,524
Canada Korea Uranium Limited Partnership (*5)	Resources development		CANADA		12.50	%		5,404		—
KEPCO Energy Resource Nigeria Limited	Holding company		NIGERIA		30.00	%		8,463		—
Gansu Datang Yumen Wind Power Co., Ltd.	Power generation		CHINA		40.00	%		16,621		16,107
Datang Chifeng Renewable Power Co., Ltd.	Power generation		CHINA		40.00	%		121,928		171,224
Datang KEPCO Chaoyang Renewable Power Co., Ltd.	Power generation		CHINA		40.00	%		10,858		10,580
Rabigh Electricity Company	Power generation		SAUDI ARABIA		40.00	%		109,743		59,368
Rabigh Operation & Maintenance Company	Maintenance of utility plant		SAUDI ARABIA		40.00	%		70		3,586
Jamaica Public Service Company Limited	Power generation		JAMAICA		40.00	%		301,910		241,918
KW Nuclear Components Co., Ltd.	Manufacturing		KOREA		45.00	%		833		4,985
Busan Shinho Solar Power Co., Ltd.	Power generation		KOREA		25.00	%		2,100		3,678
GS Donghae Electric Power Co., Ltd.	Power generation		KOREA		34.00	%		204,000		200,379
Global Trade Of Power System Co., Ltd.	Exporting products and technology of small or medium business by proxy		KOREA		29.00	%		290		426
Expressway Solar-light Power Generation Co., Ltd.	Power generation		KOREA		29.00	%		1,856		2,100
KODE NOVUS I LLC	Power generation		USA		50.00	%		19,213		—
KODE NOVUS II LLC	Power generation		USA		49.00	%		12,498		—
Daejung Offshore Wind Power Co., Ltd.	Power generation		KOREA		49.90	%		4,990		3,352
Amman Asia Electric Power Company (*7)	Power generation		JORDAN		60.00	%		111,476		137,668
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.) (*7)	R&D		KOREA		51.00	%		5,629		4,501
Dangjin Eco Power Co., Ltd.	Power generation		KOREA		34.00	%		51,000		48,281
Honam Wind Power Co., Ltd.	Power generation		KOREA		29.00	%		3,480		3,926
Nepal Water & Energy Development Company Private Limited (*7)	Construction and operation of utility plant		NEPAL		52.77	%		18,568		17,765
Chun-cheon Energy Co., Ltd.	Power generation		KOREA		29.90	%		32,868		31,976
Yeonggwangbaeksu Wind Power Co., Ltd. (*3)	Power generation		KOREA		15.00	%		3,000		2,668
Nghi Son 2 Power Ltd.	Power generation		VIETNAM		50.00	%		1,072		269
Kelar S.A (*7)	Power generation		CHILE		65.00	%		4,180		—
PT. Tanjung Power Indonesia	Power generation		INDONESIA		35.00	%		746		617
Incheon New Power Co., Ltd.	Power generation		KOREA		29.00	%		461		514
Seokmun Energy Co., Ltd.	Power generation		KOREA		29.00	%		580		—

								1,317,714		1,287,862


							W	3,386,934		5,693,530

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures as of December 31, 2016 and 2015 are as follows, continued:

(*1)	The effective percentage of ownership is 21.57% considering treasury stocks.

(*2)	The Company can exercise significant influence by virtue of its contractual right to appoint directors to the board of directors of the entity, and by strict decision criteria of the Company’s financial and operating policy of the board of directors.

(*3)	The Company can exercise significant influence by virtue of its contractual right to appoint a director to the board of directors of the entity.

(*4)	The Company can exercise significant influence by virtue of its contractual right to appoint one out of four members of the steering committee of the entity. Moreover, the Company has significant financial transactions, which can affect its influence on the entity.

(*5)	The Company has joint control over the entity by virtue of its contractual right to appoint directors to the board of directors of the entity, and by strict decision criteria of the Company’s financial and operating policy of the board of directors.

(*6)

(*7)	According to the shareholders’ agreement, all critical financial and operating decisions must be agreed to by all ownership parties. For these reasons, the entities are classified as joint ventures.

(*8)	As of reporting date, the reporting period of all associates and joint ventures ends in December 31, except for Pioneer Gas Power Limited whose reporting period ends on March 31.

(*9)

As of December 31, 2015, 15.64% of ownership of Hyundai Energy Co., Ltd. is held by NH Power ll Co., Ltd. and NH Bank. According to the shareholders’ agreement reached on March 2011, not only does the Company have a call option to acquire the investment in Hyundai Energy Co., Ltd. from NH Power ll Co., Ltd. and NH Bank with a certain rate of return, NH Power ll Co., Ltd. and NH Bank also have put options to dispose of their investment to the Company. In connection with this agreement, the Company applied the equity method on the investment in Hyundai Energy Co., Ltd. with 46.30% of ownership.

(*10)

The Company’s percentage of ownership has decreased due to the acquisition of Daeryun Power Co., Ltd. and the effective percentage of ownership is 19.45% considering stock purchase options.

(*11)

The Company’s effective percentage of ownership excluding the redeemable convertible preferred stock is 25.54%.

(*12)

(2)

The fair value of associates which are actively traded on the open market and have a readily available market value as of December 31, 2016 and 2015 are as follows:


In millions of won
Investees	2016		2015
<Associates>
Korea Electric Power Industrial Development Co., Ltd.	W	45,474		46,514
Korea Gas Corporation		915,705		696,465
YTN Co., Ltd.		22,320		26,235
SPC Power Corporation		70,253		65,552
PT. Bayan Resources TBK		359,200		446,250

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2016 and 2015 are as follows:


In millions of won
2016
Investees	Beginning balance		Acquisition		Disposal			Dividends received			Share of income (loss)			Other comprehensive income (loss)			Others			Ending balance
<Associates>
Daegu Green Power Co., Ltd.	W	80,267		3,347		(34,422	)		—			(1,814	)		148			(47,526	)		—
Korea Gas Corporation		2,102,813		—		—			(3,213	)		(146,308	)		(14,551	)		(4,864	)		1,933,877
Korea Electric Power Industrial Development Co., Ltd.		18,994		—		—			(1,598	)		4,491			—			(1,412	)		20,475
YTN Co., Ltd.		38,365		—		—			—			(227	)		32			(14	)		38,156
Cheongna Energy Co., Ltd.		19,490		—		—			—			(7,117	)		—			—			12,373
Gangwon Wind Power Co., Ltd.		12,890		—		—			(1,136	)		1,270			45			—			13,069
Hyundai Green Power Co., Ltd.		113,664		—		—			(8,888	)		11,222			—			—			115,998
Korea Power Exchange		208,735		—		—			—			15,847			—			(1,344	)		223,238
AMEC Partners Korea Ltd.		230		—		—			—			(5	)		—			—			225
Hyundai Energy Co., Ltd.		6,990		—		—			—			(21,163	)		—			15,204			1,031
Ecollite Co., Ltd.		—		—		—			—			—			—			—			—
Taebaek Wind Power Co., Ltd.		4,956		—		—			—			(206	)		—			—			4,750
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		2,587		570		—			—			(26	)		—			—			3,131
Pyeongchang Wind Power Co., Ltd.		3,402		—		—			—			(19	)		—			—			3,383
Daeryun Power Co., Ltd.		36,156		—		—			—			(6,282	)		(1	)		—			29,873
JinanJangsu Wind Power Co., Ltd.		77		—		(64	)		—			(13	)		—			—			—
Changjuk Wind Power Co., Ltd.		6,143		—		—			(190	)		977			—			—			6,930
KNH Solar Co., Ltd.		1,924		—		—			—			144			5			—			2,073
SPC Power Corporation		58,033		—		—			(7,151	)		6,416			(477	)		(3	)		56,818
Gemeng International Energy Co., Ltd.		728,396		—		—			(16,476	)		26,714			(58,493	)		(76	)		680,065
PT. Cirebon Electric Power		60,574		—		—			(1,242	)		31,511			2,568			3,247			96,658
KNOC Nigerian East Oil Co., Ltd.		—		—		—			—			(1,346	)		(398	)		1,744			—
KNOC Nigerian West Oil Co., Ltd.		—		—		—			—			(973	)		(356	)		1,329			—
Dolphin Property Limited		61		—		—			(35	)		—			(69	)		43			—
PT Wampu Electric Power		18,963		—		—			—			3,493			(3	)		735			23,188
PT. Bayan Resources TBK (*2)		525,066		—		—			—			(23,257	)		208			(99,350	)		402,667
S-Power Co., Ltd.		130,908		—		—			—			(7,006	)		—			10			123,912
Pioneer Gas Power Limited		51,187		—		—			—			(698	)		251			—			50,740
Eurasia Energy Holdings		—		—		—			—			—			—			—			—
Xe-Pian Xe-Namnoy Power Co., Ltd.		31,863		16,402		—			—			1,576			1,703			—			51,544
Busan Solar Co., Ltd.		925		—		(887	)		—			(38	)		—			—			—
Hadong Mineral Fiber Co., Ltd.		—		—		—			—			—			—			—			—
Green Biomass Co., Ltd.		—		—		—			—			(138	)		—			185			47
PT. Mutiara Jawa		—		—		—			—			—			—			—			—
Samcheok Eco Materials Co., Ltd.		—		—		—			—			—			—			—			—
Noeul Green Energy Co., Ltd.		295		1,340		—			—			(418	)		—			—			1,217
Naepo Green Energy Co., Ltd.		26,746		—		—			—			(1,308	)		—			—			25,438
Goseong Green Energy Co., Ltd.		2,670		—		—			—			71			—			(78	)		2,663
Gangneung Eco Power Co., Ltd.		2,688		—		—			—			56			—			(98	)		2,646
Shin Pyeongtaek Power Co., Ltd.		—		—		—			—			—			—			—			—
Heang Bok Do Si Photovoltaic Power Co., Ltd.		189		—		—			—			(10	)		—			2			181
DS POWER Co., Ltd.		10,960		—		—			—			(3,738	)		—			(32	)		7,190
Dongducheon Dream Power Co., Ltd.		55,667		—		—			—			(8,757	)		—			(34	)		46,876
KS Solar Co., Ltd.		618		—		—			—			(14	)		—			—			604
Yeongwol Energy Station Co., Ltd. (*1)		1,290		—		—			—			85			25			(1,400	)		—
Jinbhuvish Power Generation Pvt. Ltd. (*3)		8,350		—		—			—			(49	)		(198	)		(8,103	)		—
SE Green Energy Co., Ltd.		3,575		—		—			—			(50	)		—			—			3,525
Daegu Photovoltaic Co., Ltd.		1,886		—		—			(411	)		225			—			—			1,700
Jeongam Wind Power Co., Ltd.		702		3,900		—			—			(602	)		—			—			4,000
Korea Power Engineering Service Co., Ltd.		1,805		—		—			—			1,005			—			—			2,810
Busan Green Energy Co., Ltd.		14,512		—		—			—			(709	)		—			—			13,803
Jungbu Bio Energy Co., Ltd.		904		—		—			—			(904	)		—			—			—
Korea Electric Vehicle Charging Service		1,446		—		—			—			(343	)		—			—			1,103

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Investees	Beginning balance		Acquisition		Disposal			Dividends received			Share of income (loss)			Other comprehensive income (loss)			Others			Ending balance

Ulleungdo Natural Energy Co., Ltd.		7,417		—		—			—			(516	)		—			(7	)		6,894
Korea Nuclear Partners Co., Ltd.		289		—		—			—			(41	)		—			—			248
Tamra Offshore Wind Power Co., Ltd.		—		8,910		—			—			(1,895	)		—			—			7,015
Korea Electric Power Corporation Fund		—		51,500		—			—			(644	)		—			—			50,856
Energy Infra Asset Management Co., Ltd.		—		297		—			—			(38	)		—			—			259
Daegu clean Energy Co., Ltd.		—		140		—			—			—			—			—			140
YaksuESS Co., Ltd		—		210		—			—			(14	)		—			—			196
Nepal Water & Energy Development Company Private Limited		—		—		—			—			—			—			18,667			18,667

		4,405,668		86,616		(35,373	)		(40,340	)		(131,583	)		(69,561	)		(123,175	)		4,092,252

<Joint ventures>
KEPCO-Uhde Inc. (*4)		8,549		—		—			—			(159	)		—			(8,089	)		301
Eco Biomass Energy Sdn. Bhd.		—		—		—			—			—			—			—			—
Datang Chaoyang Renewable Power Co., Ltd.		27,640		—		—			—			1,417			(818	)		—			28,239
Shuweihat Asia Power Investment B.V.		20,474		—		(14,154	)		(2,957	)		6,131			(9,494	)		—			—
Shuweihat Asia Operation & Maintenance Company		486		—		—			(931	)		941			(46	)		—			450
Waterbury Lake Uranium L.P.		20,299		—		—			—			—			1,138			(123	)		21,314
ASM-BG Investicii AD		20,203		—		—			—			1,508			(223	)		—			21,488
RES Technology AD		13,789		—		—			—			(68	)		(139	)		—			13,582
KV Holdings, Inc.		2,010		—		—			(302	)		429			(39	)		—			2,098
KEPCO SPC Power Corporation		208,524		—		—			(5,955	)		48,132			(5,308	)		(26	)		245,367
Canada Korea Uranium Limited Partnership		—		—		—			—			—			—			—			—
Gansu Datang Yumen Wind Power Co., Ltd.		16,107		—		—			—			(2,836	)		(450	)		—			12,821
Datang Chifeng Renewable Power Co., Ltd.		171,224		—		—			(7,384	)		7,455			(4,760	)		—			166,535
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		10,580		—		—			(440	)		1,002			(299	)		—			10,843
Rabigh Electricity Company		59,368		—		—			—			18,961			19,473			—			97,802
Rabigh Operation & Maintenance Company		3,586		—		—			(1,934	)		2,253			229			293			4,427
Jamaica Public Service Company Limited		241,918		—		—			—			—			7,535			—			249,453
KW Nuclear Components Co., Ltd.		4,985		—		—			(2,191	)		4,344			—			(5	)		7,133
Busan Shinho Solar Power Co., Ltd.		3,678		—		—			(185	)		321			—			—			3,814
GS Donghae Electric Power Co., Ltd.		200,379		—		—			—			5,575			—			(6	)		205,948
Global Trade Of Power System Co., Ltd.		426		—		—			—			51			—			—			477
Expressway Solar-light Power Generation Co., Ltd.		2,100		—		—			—			243			—			—			2,343
KODE NOVUS I LLC		—		—		—			—			—			—			—			—
KODE NOVUS II LLC		—		258		—			—			(260	)		—			2			—
Daejung Offshore Wind Power Co., Ltd.		3,352		—		—			—			(337	)		—			—			3,015
Amman Asia Electric Power Company		137,668		—		—			(12,684	)		17,811			11,062			—			153,857
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		4,501		—		—			—			311			—			(54	)		4,758
Dangjin Eco Power Co., Ltd.		48,281		5,100		—			—			(696	)		(26	)		594			53,253
Honam Wind Power Co., Ltd.		3,926		—		—			(104	)		629			—			—			4,451
Nepal Water & Energy Development Company Private Limited		17,765		—		—			—			359			543			(18,667	)		—
Chun-cheon Energy Co., Ltd.		31,976		19,832		—			—			(1,121	)		(95	)		—			50,592
Yeonggwangbaeksu Wind Power Co., Ltd.		2,668		—		—			—			16			—			5			2,689
Nghi Son 2 Power Ltd.		269		716		—			—			(740	)		(16	)		—			229

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Investees	Beginning balance		Acquisition		Disposal			Dividends received			Share of income (loss)			Other comprehensive income (loss)			Others			Ending balance

Kelar S.A	W	—		—		—			—			—			—			—			—
PT. Tanjung Power Indonesia		617		—		—			—			1,337			—			(8	)		1,946
Incheon New Power Co., Ltd.		514		—		—			—			41			8			—			563
Seokmun Energy Co., Ltd.		—		—		—			—			(197	)		793			(205	)		391
Daehan Wind Power PSC		—		285		—			—			(261	)		(8	)		—			16
Barakah One Company		—		118		—			—			—			—			(2	)		116
Nawah Energy Company		—		296		—			—			—			—			(6	)		290
MOMENTUM		—		1		—			—			65			—			1			67
Daegu Green Power Co., Ltd.		—		—		—			—			—			—			47,528			47,528

		1,287,862		26,606		(14,154	)		(35,067	)		112,657			19,060			21,232			1,418,196


	W	5,693,530		113,222		(49,527	)		(75,407	)		(18,926	)		(50,501	)		(101,943	)		5,510,448

(*1)	‘Others’ include W1,400 million of assets held-for-sale (note 42).

(*2)	It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W99,338 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2016.

(*3)	Due to discontinue of operations during the current year, the Company recognized an impairment loss of W8,103 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2016.

(*4)	It was determined that there is objective evidence of impairment due to prolonged operating losses. As a result, the Company recognized an impairment loss of W8,099 million in impairment loss on investments in associates and joint ventures for the year ended December 31, 2016.

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(3)

Changes in investments in associates and joint for the years ended December 31, 2016 and 2015 are as follows, continued;


In millions of won
2015
Investees	Beginning balance		Acquisition		Disposal		Dividends received			Share of income (loss)			Other comprehensive income (loss)			Others			Ending balance
<Associates>
Daegu Green Power Co., Ltd.	W	71,387		—		—		—			8,902			—			(22	)		80,267
Korea Gas Corporation		2,097,539		—		—		(4,725	)		67,949			(55,453	)		(2,497	)		2,102,813
Korea Electric Power Industrial Development Co., Ltd.		21,622		—		—		(1,267	)		(1,792	)		—			431			18,994
YTN Co., Ltd.		39,889		—		—		(90	)		(188	)		(935	)		(311	)		38,365
Cheongna Energy Co., Ltd.		28,771		—		—		—			(9,281	)		—			—			19,490
Gangwon Wind Power Co., Ltd.		12,385		—		—		(852	)		1,279			78			—			12,890
Hyundai Green Power Co., Ltd.		113,033		—		—		(8,889	)		9,520			—			—			113,664
Korea Power Exchange		198,021		—		—		—			9,944			—			770			208,735
AMEC Partners Korea Ltd.		200		—		—		—			30			—			—			230
Hyundai Energy Co., Ltd. (*1)		35,925		—		—		—			(13,731	)		—			(15,204	)		6,990
Ecollite Co., Ltd.		—		—		—		—			—			—			—			—
Taebaek Wind Power Co., Ltd.		5,525		—		—		—			(569	)		—			—			4,956
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		2,706		—		—		—			(119	)		—			—			2,587
Pyeongchang Wind Power Co., Ltd.		3,693		—		—		—			(291	)		—			—			3,402
Daeryun Power Co., Ltd.		41,951		—		—		—			(5,798	)		—			3			36,156
JinanJangsu Wind Power Co., Ltd.		77		—		—		—			—			—			—			77
Changjuk Wind Power Co., Ltd.		6,486		—		—		—			(343	)		—			—			6,143
KNH Solar Co., Ltd.		1,744		—		—		—			178			2			—			1,924
SPC Power Corporation		47,799		—		—		(1,349	)		5,375			381			5,827			58,033
Gemeng International Energy Co., Ltd.		667,578		—		—		(37,163	)		51,766			89,481			(43,266	)		728,396
PT. Cirebon Electric Power		43,335		—		—		—			12,210			5,029			—			60,574
KNOC Nigerian East Oil Co., Ltd.		—		—		—		—			(880	)		(641	)		1,521			—
KNOC Nigerian West Oil Co., Ltd.		—		—		—		—			(1,092	)		(599	)		1,691			—
Dolphin Property Limited		61		—		—		—			—			—			—			61
PT Wampu Electric Power		16,071		2,357		—		—			(600	)		1,135			—			18,963
PT. Bayan Resources TBK		540,011		—		—		—			(11,341	)		(3,604	)		—			525,066
S-Power Co., Ltd.		104,244		24,300		—		—			2,364			—			—			130,908
Pioneer Gas Power Limited		50,668		—		—		—			59			460			—			51,187
Eurasia Energy Holdings		—		—		—		—			—			—			—			—
Xe-Pian Xe-Namnoy Power Co., Ltd.		22,152		9,244		—		—			(749	)		1,216			—			31,863
Busan Solar Co., Ltd.		853		—		—		—			72			—			—			925
Hadong Mineral Fiber Co., Ltd.		3		—		—		—			(3	)		—			—			—
Green Biomass Co., Ltd.		—		—		—		—			—			—			—			—
PT. Mutiara Jawa		818		—		—		—			(818	)		—			—			—
Samcheok Eco Materials Co., Ltd.		212		—		—		—			(178	)		(34	)		—			—
Noeul Green Energy Co., Ltd.		189		200		—		—			(91	)		(3	)		—			295
Naepo Green Energy Co., Ltd.		28,064		—		—		—			(1,318	)		—			—			26,746
Goseong Green Energy Co., Ltd.		2,586		—		—		—			84			—			—			2,670
Gangneung Eco Power Co., Ltd.		2,783		—		—		—			(95	)		—			—			2,688
Shin Pyeongtaek Power Co., Ltd.		—		—		—		—			—			—			—			—
Heang Bok Do Si Photovoltaic Power Co., Ltd.		221		—		—		—			(32	)		—			—			189
DS POWER Co., Ltd.		15,642		—		—		—			(4,671	)		—			(11	)		10,960
Dongducheon Dream Power Co., Ltd. (*2)		100,545		—		—		—			(3,412	)		—			(41,466	)		55,667
KS Solar Co., Ltd.		325		—		—		—			293			—			—			618
Yeongwol Energy Station Co., Ltd.		1,741		—		—		—			(451	)		—			—			1,290

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(3)

Changes in investments in associates and joint for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Beginning balance		Acquisition		Disposal			Dividends received			Share of income (loss)			Other comprehensive income (loss)			Others			Ending balance

Jinbhuvish Power Generation Pvt. Ltd.	W	8,344		—		—			—			(42	)		48			—			8,350
SE Green Energy Co., Ltd.		3,623		—		—			—			(48	)		—			—			3,575
Daegu Photovoltaic Co., Ltd.		1,581		—		—			—			305			—			—			1,886
Jeongam Wind Power Co., Ltd.		93		880		—			—			(271	)		—			—			702
Korea Power Engineering Service Co., Ltd.		1,334		—		—			(44	)		542			—			(27	)		1,805
Busan Green Energy Co., Ltd.		—		14,564		—			—			(52	)		—			—			14,512
Jungbu Bio Energy Co., Ltd.		—		1,000		—			—			(96	)		—			—			904
Korea Electric Vehicle Charging Service		—		1,596		—			—			(135	)		—			(15	)		1,446
Ulleungdo Natural Energy Co., Ltd.		—		8,000		—			—			(583	)		—			—			7,417
Korea Nuclear Partners Co., Ltd.		—		290		—			—			(1	)		—			—			289

		4,341,830		62,431		—			(54,379	)		111,801			36,561			(92,576	)		4,405,668

<Joint ventures>
KEPCO-Uhde Inc.		9,042		—		—			—			(493	)		—			—			8,549
Eco Biomass Energy Sdn. Bhd.		—		—		—			—			—			—			—			—
Datang Chaoyang Renewable Power Co., Ltd.		27,514		—		—			—			(135	)		261			—			27,640
Shuweihat Asia Power Investment B.V.		16,241		108		—			—			4,008			117			—			20,474
Shuweihat Asia Operation & Maintenance Company		345		—		—			(798	)		922			24			(7	)		486
Waterbury Lake Uranium L.P.		22,010		—		—			—			—			(2,507	)		796			20,299
ASM-BG Investicii AD		19,608		—		—			—			1,384			(789	)		—			20,203
RES Technology AD		14,725		—		—			—			(318	)		(618	)		—			13,789
KV Holdings, Inc.		1,902		—		—			—			74			34			—			2,010
KEPCO SPC Power Corporation		190,519		—		—			(28,986	)		43,801			3,190			—			208,524
Canada Korea Uranium Limited Partnership		—		—		—			—			—			—			—			—
KEPCO Energy Resource Nigeria Limited		—		—		—			—			—			—			—			—
Gansu Datang Yumen Wind Power Co., Ltd.		17,467		—		—			—			(1,546	)		186			—			16,107
Datang Chifeng Renewable Power Co., Ltd.		169,496		—		—			(8,239	)		8,512			1,464			(9	)		171,224
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		10,539		—		—			—			(33	)		74			—			10,580
Rabigh Electricity Company		8,121		—		—			—			21,582			29,703			(38	)		59,368
Rabigh Operation & Maintenance Company		4,628		—		—			(1,780	)		533			205			—			3,586
Jamaica Public Service Company Limited		226,892		—		—			—			—			15,027			(1	)		241,918
KW Nuclear Components Co., Ltd.		2,899		—		—			(1,016	)		3,065			—			37			4,985
Busan Shinho Solar Power Co., Ltd.		3,284		—		—			—			394			—			—			3,678
GS Donghae Electric Power Co., Ltd.		201,409		—		—			—			(1,064	)		—			34			200,379
Global Trade Of Power System Co., Ltd.		343		—		—			—			83			—			—			426
Expressway Solar-light Power Generation Co., Ltd.		2,087		—		—			—			13			—			—			2,100
KODE NOVUS I LLC		12,207		—		—			—			(11,639	)		588			(1,156	)		—
KODE NOVUS II LLC		8,248		—		—			—			(8,104	)		413			(557	)		—
Daejung Offshore Wind Power Co., Ltd.		3,711		—		—			—			(359	)		—			—			3,352
Amman Asia Electric Power Company		122,391		—		—			(19,510	)		25,131			10,244			(588	)		137,668
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		4,617		—		—			—			(98	)		—			(18	)		4,501
Dangjin Eco Power Co., Ltd.		37,837		20,000		(8,851	)		—			(712	)		70			(63	)		48,281
Honam Wind Power Co., Ltd.		3,555		—		—			—			371			—			—			3,926
Nepal Water & Energy Development Company Private Limited		17,872		—		—			—			(1,277	)		1,170			—			17,765
Chun-cheon Energy Co., Ltd.		—		32,853		—			—			(719	)		(158	)		—			31,976
Yeonggwangbaeksu Wind Power Co., Ltd.		2,962		—		—			—			(294	)		—			—			2,668
Nghi Son 2 Power Ltd.		102		722		—			—			(562	)		2			5			269

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(3)

Changes in investments in associates and joint ventures for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Beginning balance		Acquisition		Disposal			Dividends received			Share of income (loss)			Other comprehensive income (loss)			Others			Ending balance

Kelar S.A	W	3,156		—		—			—			—			(407	)		(2,749	)		—
PT. Tanjung Power Indonesia		700		—		—			—			(98	)		—			15			617
Incheon New Power Co., Ltd.		465		—		—			—			49			—			—			514
Seokmun Energy Co., Ltd.		—		—		(100	)		—			—			—			100			—

		1,166,894		53,683		(8,951	)		(60,329	)		82,471			58,293			(4,199	)		1,287,862


	W	5,508,724		116,114		(8,951	)		(114,708	)		194,272			94,854			(96,775	)		5,693,530

(*1)	‘Others’ include W15,204 million of assets held-for-sale (note 42).

(*2)	‘Others’ include W41,170 million of assets held-for-sale (note 42).

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(4)

Summary of financial information of associates and joint ventures as of and for the year ended December 31, 2016 and 2015 are as follows:


In millions of won
2016
Investees	Total assets		Total liabilities		Sales		Profit (loss) for the period
<Associates>
Korea Gas Corporation	W	39,927,836		30,541,350		21,108,116		(673,558	)
Korea Electric Power Industrial Development Co., Ltd.		144,346		73,742		304,067		17,187
YTN Co., Ltd.		304,536		126,324		130,690		2,051
Cheongna Energy Co., Ltd.		469,843		447,216		46,484		(16,127	)
Gangwon Wind Power Co., Ltd.		102,550		15,753		22,774		8,133
Hyundai Green Power Co., Ltd.		1,151,975		751,981		469,547		38,743
Korea Power Exchange		255,533		32,295		101,222		15,087
AMEC Partners Korea Ltd.		1,216		32		103		(25	)
Hyundai Energy Co., Ltd.		505,979		499,205		61,813		(45,800	)
Ecollite Co., Ltd.		2,157		336		—		(105	)
Taebaek Wind Power Co., Ltd.		43,162		24,162		5,741		(2,796	)
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		12,523		1		—		(106	)
Pyeongchang Wind Power Co., Ltd.		75,440		61,909		3,997		(45	)
Daeryun Power Co., Ltd.		793,283		644,930		249,558		(32,291	)
Changjuk Wind Power Co., Ltd.		37,878		15,162		5,782		1,739
KNH Solar Co., Ltd.		25,878		18,199		4,006		638
SPC Power Corporation		191,562		42,042		73,674		42,617
Gemeng International Energy Co., Ltd.		5,822,879		3,821,905		1,233,972		66,370
PT. Cirebon Electric Power		988,975		637,491		265,813		114,653
KNOC Nigerian East Oil Co., Ltd.		272,964		358,211		—		(7,051	)
KNOC Nigerian West Oil Co., Ltd.		165,396		243,713		—		(6,562	)
PT Wampu Electric Power		222,004		171,595		19,260		7,550
PT. Bayan Resources TBK		945,436		845,963		593,441		402
S-Power Co., Ltd.		886,841		629,992		453,606		(14,885	)
Pioneer Gas Power Limited		345,791		276,978		14,353		396
Eurasia Energy Holdings		618		1,103		—		—
Xe-Pian Xe-Namnoy Power Co., Ltd.		772,699		543,472		—		6,458
Hadong Mineral Fiber Co., Ltd.		—		20		—		—
Green Biomass Co., Ltd.		9,336		9,001		2,892		(972	)
PT. Mutiara Jawa		28,104		34,671		7,175		(1,361	)
Samcheok Eco Materials Co., Ltd.		24,143		254		—		(1,945	)
Noeul Green Energy Co., Ltd.		115,062		110,866		203		(1,155	)
Naepo Green Energy Co., Ltd.		104,029		2,276		4,912		(5,230	)
Goseong Green Energy Co., Ltd.		356,546		110,753		—		(5,489	)
Gangneung Eco Power Co., Ltd.		176,805		6,503		—		(3,494	)
Shin Pyeongtaek Power Co., Ltd.		54,174		60,518		—		(3,291	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.		2,937		2,297		427		(47	)
DS POWER Co., Ltd.		726,699		618,793		276,324		(10,031	)
Dongducheon Dream Power Co., Ltd.		1,670,945		1,427,773		946,379		(27,936	)
KS Solar Co., Ltd.		27,213		24,035		4,152		(79	)
Jinbhuvish Power Generation Pvt. Ltd.		70,273		14,513		—		(950	)
SE Green Energy Co., Ltd.		7,381		—		—		(103	)
Daegu Photovoltaic Co., Ltd.		18,909		13,047		3,317		739
Jeongam Wind Power Co., Ltd.		13,199		3,199		—		(1,496	)
Korea Power Engineering Service Co., Ltd.		13,401		3,713		27,394		3,463
Busan Green Energy Co., Ltd.		147,843		100,247		—		(2,444	)
Jungbu Bio Energy Co., Ltd.		11,340		12,037		—		(5,489	)
Korea Electric Vehicle Charging Service		10,545		6,604		5,177		(1,225	)
Ulleungdo Natural Energy Co., Ltd.		24,836		1,738		—		(1,730	)
Korea Nuclear Partners Co., Ltd.		1,363		507		372		(140	)
Tamra Offshore Wind Power Co., Ltd.		127,880		101,900		983		(6,307	)
Korea Electric Power Corporation Fund		51,970		128		3		(647	)
Energy Infra Asset Management Co., Ltd.		2,779		160		32		(381	)
Daegu clean Energy Co., Ltd.		500		—		—		—
YaksuESS Co., Ltd		6,474		5,801		—		(48	)
Nepal Water & Energy Development Company Private Limited		43,788		10,477		—		(703	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Investees	Total assets		Total liabilities		Sales		Profit (loss) for the period

<Joint ventures>
KEPCO-Uhde Inc.	W	624		33		—		(16,855	)
Eco Biomass Energy Sdn. Bhd.		—		—		—		—
Datang Chaoyang Renewable Power Co., Ltd.		142,684		72,086		18,628		3,462
Shuweihat Asia Power Investment B.V.		282		4		—		12,380
Shuweihat Asia Operation & Maintenance Company		1,016		13		2,388		1,723
Waterbury Lake Uranium L.P.		56,181		47		—		—
ASM-BG Investicii AD		79,898		36,921		12,604		3,105
RES Technology AD		68,553		41,389		7,798		(139	)
KV Holdings, Inc.		5,245		1		—		1,072
KEPCO SPC Power Corporation		448,069		121,783		165,046		63,689
Canada Korea Uranium Limited Partnership		285		144		—		(59	)
Gansu Datang Yumen Wind Power Co., Ltd.		89,517		57,464		4,263		(6,815	)
Datang Chifeng Renewable Power Co., Ltd.		813,804		397,344		99,795		19,042
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		62,600		35,493		8,742		2,505
Rabigh Electricity Company		2,691,654		2,258,772		278,431		37,791
Rabigh Operation & Maintenance Company		25,032		13,965		25,607		4,870
Jamaica Public Service Company Limited		1,291,008		659,296		827,298		25,324
KW Nuclear Components Co., Ltd.		26,417		11,990		26,481		9,452
Busan Shinho Solar Power Co., Ltd.		47,789		32,533		6,770		1,247
GS Donghae Electric Power Co., Ltd.		1,952,297		1,346,568		19,851		16,396
Global Trade Of Power System Co., Ltd.		1,661		18		2,667		205
Expressway Solar-light Power Generation Co., Ltd.		20,790		12,710		3,395		960
KODE NOVUS I LLC		14,286		104,252		2,362		(50,151	)
KODE NOVUS II LLC		3,236		50,267		810		(22,582	)
Daejung Offshore Wind Power Co., Ltd.		6,076		34		—		(675	)
Amman Asia Electric Power Company		881,164		624,590		13,631		29,684
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		145,576		136,247		31,852		456
Dangjin Eco Power Co., Ltd.		149,926		1,001		—		(2,023	)
Honam Wind Power Co., Ltd.		41,614		26,375		6,776		2,171
Chun-cheon Energy Co., Ltd.		548,306		379,113		—		(3,684	)
Yeonggwangbaeksu Wind Power Co., Ltd.		99,773		81,881		11,208		(26	)
Nghi Son 2 Power Ltd.		757		302		—		(1,481	)
Kelar S.A		617,803		712,124		—		(4,109	)
PT. Tanjung Power Indonesia		203,051		197,491		122,583		3,821
Incheon New Power Co., Ltd.		7,902		5,961		2,985		168
Seokmun Energy Co., Ltd.		235,905		234,556		—		(543	)
Daehan Wind Power PSC		750		714		—		(523	)
Barakah One Company		17,117,338		17,116,680		—		—
Nawah Energy Company		1,645		—		—		—
MOMENTUM		2,749		2,547		2,886		194
Daegu Green Power Co., Ltd.		636,438		547,017		265,621		(3,981	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Total assets		Total liabilities		Sales		Profit (loss) for the period

<Associates>
Daegu Green Power Co., Ltd.	W	639,118		471,497		321,273		18,625
Korea Gas Corporation		42,385,340		32,328,396		26,052,724		319,190
Korea Electric Power Industrial Development Co., Ltd.		142,835		77,340		324,162		9,855
YTN Co., Ltd.		305,799		126,561		117,418		(520	)
Cheongna Energy Co., Ltd.		458,205		419,353		48,519		(21,108	)
Gangwon Wind Power Co., Ltd.		114,600		28,994		21,941		8,529
Hyundai Green Power Co., Ltd.		1,182,352		790,407		486,435		31,011
Korea Power Exchange		236,199		27,464		87,400		9,303
AMEC Partners Korea Ltd.		1,332		123		511		155
Hyundai Energy Co., Ltd.		526,305		473,736		80,067		(29,749	)
Ecollite Co., Ltd.		2,271		345		—		(97	)
Taebaek Wind Power Co., Ltd.		48,009		26,212		6,626		(302	)
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		10,349		—		—		(477	)
Pyeongchang Wind Power Co., Ltd.		62,565		48,959		—		(1,164	)
Daeryun Power Co., Ltd.		838,199		657,551		279,787		(29,806	)
JinanJangsu Wind Power Co., Ltd.		306		—		—		(1	)
Changjuk Wind Power Co., Ltd.		41,444		19,053		6,472		772
KNH Solar Co., Ltd.		27,254		20,105		4,399		861
SPC Power Corporation		182,908		30,191		68,149		37,395
Gemeng International Energy Co., Ltd.		5,956,288		3,940,455		902,008		95,064
PT. Cirebon Electric Power		1,026,729		806,458		295,788		43,968
KNOC Nigerian East Oil Co., Ltd.		264,434		337,762		—		(6,069	)
KNOC Nigerian West Oil Co., Ltd.		160,765		230,001		—		(7,386	)
Dolphin Property Limited		300		1		—		8
PT Wampu Electric Power		201,383		160,159		17,476		(2,696	)
PT. Bayan Resources TBK		1,043,143		901,952		461,349		(30,014	)
S-Power Co., Ltd.		935,870		664,523		632,073		5,336
Pioneer Gas Power Limited		310,761		240,833		—		148
Eurasia Energy Holdings		599		1,069		—		—
Xe-Pian Xe-Namnoy Power Co., Ltd.		506,970		341,261		—		2,760
Busan Solar Co., Ltd.		26,059		21,367		4,267		383
Hadong Mineral Fiber Co., Ltd.		2		21		—		(30	)
Green Biomass Co., Ltd.		10,664		9,343		4,136		(1,323	)
PT. Mutiara Jawa		25,013		29,913		1,943		(7,247	)
Samcheok Eco Materials Co., Ltd.		23,119		735		—		(2,171	)
Noeul Green Energy Co., Ltd.		1,517		44		—		(446	)
Naepo Green Energy Co., Ltd.		108,167		1,184		3,126		(5,274	)
Goseong Green Energy Co., Ltd.		95,323		3,248		—		(4,312	)
Gangneung Eco Power Co., Ltd.		81,459		9,163		—		(3,610	)
Shin Pyeongtaek Power Co., Ltd.		25,875		29,190		—		(2,595	)
Heang Bok Do Si Photovoltaic Power Co., Ltd.		3,128		2,452		490		81
DS POWER Co., Ltd.		641,257		525,524		33,542		(5,759	)
Dongducheon Dream Power Co., Ltd.		1,668,235		1,397,026		1,003,346		(10,307	)
KS Solar Co., Ltd.		29,745		26,469		4,667		278
Yeongwol Energy Station Co., Ltd.		179,852		166,953		12,068		1,831
Jinbhuvish Power Generation Pvt. Ltd.		75,429		19,199		—		(805	)
SE Green Energy Co., Ltd.		7,484		—		—		(103	)
Daegu Photovoltaic Co., Ltd.		21,039		14,535		3,977		1,051
Jeongam Wind Power Co., Ltd.		2,053		299		—		(621	)
Korea Power Engineering Service Co., Ltd.		9,194		2,968		25,925		2,296
Busan Green Energy Co., Ltd.		50,093		53		—		(180	)
Jungbu Bio Energy Co., Ltd.		5,192		400		—		(508	)
Korea Electric Vehicle Charging Service		9,577		4,412		—		(482	)
Ulleungdo Natural Energy Co., Ltd.		27,113		2,262		—		(1,948	)
Korea Nuclear Partners Co., Ltd.		1,002		6		—		(4	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(4)

Summary of financial information of associates and joint ventures as of and for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Total assets		Total liabilities		Sales		Profit (loss) for the period

<Joint ventures>
KEPCO-Uhde Inc.	W	17,535		111		—		(765	)
Eco Biomass Energy Sdn. Bhd.		—		—		—		—
Datang Chaoyang Renewable Power Co., Ltd.		150,157		81,056		16,335		(373	)
Shuweihat Asia Power Investment B.V.		41,969		17		—		8,232
Shuweihat Asia Operation & Maintenance Company		885		—		2,318		1,666
Waterbury Lake Uranium L.P.		51,302		4		—		—
ASM-BG Investicii AD		83,766		43,359		12,328		2,833
RES Technology AD		73,261		45,684		7,539		(566	)
KV Holdings, Inc.		5,025		—		—		186
KEPCO SPC Power Corporation		449,553		172,261		175,008		59,610
Canada Korea Uranium Limited Partnership		305		124		—		(19	)
KEPCO Energy Resource Nigeria Limited		380,282		416,959		—		(16,309	)
Gansu Datang Yumen Wind Power Co., Ltd.		98,298		58,030		7,280		(4,507	)
Datang Chifeng Renewable Power Co., Ltd.		882,914		454,731		103,860		21,900
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		65,110		38,661		7,880		1,216
Rabigh Electricity Company		2,644,825		2,297,194		293,184		53,384
Rabigh Operation & Maintenance Company		18,186		9,222		22,203		2,144
Jamaica Public Service Company Limited		1,086,244		657,962		859,728		3,305
KW Nuclear Components Co., Ltd.		36,065		24,777		16,217		7,687
Busan Shinho Solar Power Co., Ltd.		51,617		36,903		7,565		1,471
GS Donghae Electric Power Co., Ltd.		1,675,986		1,086,534		—		(2,823	)
Global Trade Of Power System Co., Ltd.		1,547		78		4,849		287
Expressway Solar-light Power Generation Co., Ltd.		21,154		13,913		2,981		443
KODE NOVUS I LLC		64,453		110,030		3,421		(59,389	)
KODE NOVUS II LLC		22,500		45,306		1,868		(39,345	)
Daejung Offshore Wind Power Co., Ltd.		6,795		78		—		(606	)
Amman Asia Electric Power Company		875,590		645,998		46,940		41,880
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		50,152		41,326		18,849		(611	)
Dangjin Eco Power Co., Ltd.		136,982		945		—		(1,035	)
Honam Wind Power Co., Ltd.		41,527		28,100		5,944		1,266
Nepal Water & Energy Development Company Private Limited		42,644		11,136		—		(647	)
Chun-cheon Energy Co., Ltd.		149,025		42,094		—		(2,389	)
Yeonggwangbaeksu Wind Power Co., Ltd.		104,045		86,257		4,974		(1,956	)
Nghi Son 2 Power Ltd.		771		234		—		(1,111	)
Kelar S.A		375,136		405,618		—		(3,140	)
PT. Tanjung Power Indonesia		37,948		36,185		16,476		(276	)
Incheon New Power Co., Ltd.		10,078		8,306		3,318		301
Seokmun Energy Co., Ltd.		184,051		184,759		—		(552	)

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2016 and 2015 are as follows:


In millions of won
2016
Investees	Net assets			Percentage of ownership (*)			Share in net assets			Investment differential			Intercompany transaction			Others			Book value

<Associates>
Korea Gas Corporation	W	9,386,486			21.57	%		2,024,665			—			—			(90,788	)		1,933,877
Korea Electric Power Industrial Development Co., Ltd.		70,604			29.00	%		20,475			—			—			—			20,475
YTN Co., Ltd.		178,212			21.43	%		38,191			—			(30	)		(5	)		38,156
Cheongna Energy Co., Ltd.		22,627			43.90	%		9,933			2,584			(144	)		—			12,373
Gangwon Wind Power Co., Ltd.		86,797			15.00	%		13,020			—			—			49			13,069
Hyundai Green Power Co., Ltd.		399,994			29.00	%		115,998			—			—			—			115,998
Korea Power Exchange		223,238			100.00	%		223,238			—			—			—			223,238
AMEC Partners Korea Ltd.		1,184			19.00	%		225			—			—			—			225
Hyundai Energy Co., Ltd.		6,774			46.30	%		3,136			—			(1,079	)		(1,026	)		1,031
Ecollite Co., Ltd.		1,821			36.10	%		657			—			—			(657	)		—
Taebaek Wind Power Co., Ltd.		19,000			25.00	%		4,750			—			—			—			4,750
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		12,522			25.00	%		3,131			—			—			—			3,131
Pyeongchang Wind Power Co., Ltd.		13,531			25.00	%		3,383			—			—			—			3,383
Daeryun Power Co., Ltd.		148,353			19.45	%		28,855			1,014			—			4			29,873
Changjuk Wind Power Co., Ltd.		22,716			30.00	%		6,815			—			—			115			6,930
KNH Solar Co., Ltd.		7,679			27.00	%		2,073			—			—			—			2,073
SPC Power Corporation		149,520			38.00	%		56,818			—			—			—			56,818
Gemeng International Energy Co., Ltd.		2,000,974			34.00	%		680,331			—			—			(266	)		680,065
PT. Cirebon Electric Power		351,484			27.50	%		96,658			—			—			—			96,658
KNOC Nigerian East Oil Co., Ltd.		(85,247	)		14.63	%		(12,472	)		—			—			12,472			—
KNOC Nigerian West Oil Co., Ltd.		(78,317	)		14.63	%		(11,458	)		—			—			11,458			—
PT Wampu Electric Power		50,409			46.00	%		23,188			—			—			—			23,188
PT. Bayan Resources TBK		99,473			20.00	%		19,895			482,109			—			(99,337	)		402,667
S-Power Co., Ltd.		256,849			49.00	%		125,856			—			(1,944	)		—			123,912
Pioneer Gas Power Limited		68,813			40.00	%		27,525			23,147			—			68			50,740
Eurasia Energy Holdings		(485	)		40.00	%		(194	)		—			—			194			—
Xe-Pian Xe-Namnoy Power Co., Ltd.		229,227			25.00	%		57,307			(4,802	)		(672	)		(289	)		51,544
Hadong Mineral Fiber Co., Ltd.		(20	)		25.00	%		(5	)		—			—			5			—
Green Biomass Co., Ltd.		335			14.00	%		47			—			—			—			47
PT. Mutiara Jawa		(6,567	)		29.00	%		(1,904	)		70			—			1,834			—
Samcheok Eco Materials Co., Ltd.		23,889			2.35	%		561			—			—			(561	)		—
Noeul Green Energy Co., Ltd.		4,196			29.00	%		1,217			—			—			—			1,217
Naepo Green Energy Co., Ltd.		101,753			25.00	%		25,438			—			—			—			25,438
Goseong Green Energy Co., Ltd.		245,793			1.12	%		2,742			—			(79	)		—			2,663
Gangneung Eco Power Co., Ltd.		170,302			1.61	%		2,744			—			(98	)		—			2,646
Shin Pyeongtaek Power Co., Ltd.		(6,344	)		40.00	%		(2,538	)		—			(3,380	)		5,918			—
Heang Bok Do Si Photovoltaic Power Co., Ltd.		640			28.00	%		179			—			—			2			181
DS POWER Co., Ltd.		107,906			14.44	%		15,582			—			(7,302	)		(1,090	)		7,190
Dongducheon Dream Power Co., Ltd.		243,172			33.61	%		81,730			—			(4,768	)		(30,086	)		46,876
KS Solar Co., Ltd.		3,178			19.00	%		604			—			—			—			604
Jinbhuvish Power Generation Pvt. Ltd.		55,760			5.16	%		2,877			—			—			(2,877	)		—
SE Green Energy Co., Ltd.		7,381			47.76	%		3,525			—			—			—			3,525

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Investees	Net assets			Percentage of ownership (*)			Share in net assets			Investment differential			Intercompany transaction			Others			Book value
Daegu Photovoltaic Co., Ltd.		5,862			29.00	%		1,700			—			—			—			1,700
Jeongam Wind Power Co., Ltd.		10,000			40.00	%		4,000			—			—			—			4,000
Korea Power Engineering Service Co., Ltd.		9,688			29.00	%		2,810			—			—			—			2,810
Busan Green Energy Co., Ltd.		47,596			29.00	%		13,803			—			—			—			13,803
Jungbu Bio Energy Co., Ltd.		(697	)		18.87	%		(132	)		—			—			132			—
Korea Electric Vehicle Charging Service		3,941			28.00	%		1,103			—			—			—			1,103
Ulleungdo Natural Energy Co., Ltd.		23,098			29.85	%		6,895			—			—			(1	)		6,894
Korea Nuclear Partners Co., Ltd.		856			29.00	%		248			—			—			—			248
Tamra Offshore Wind Power Co., Ltd.		25,980			27.00	%		7,015			—			—			—			7,015
Korea Electric Power Corporation Fund		51,842			98.09	%		50,852			—			—			4			50,856
Energy Infra Asset Management Co., Ltd.		2,619			9.90	%		259			—			—			—			259
Daegu clean Energy Co., Ltd.		500			28.00	%		140			—			—			—			140
YaksuESS Co., Ltd		673			29.00	%		195			—			—			1			196
Nepal Water & Energy Development Company Private Limited		33,311			52.77	%		17,578			972			—			117			18,667

<Joint ventures>
KEPCO-Uhde Inc.		591			50.85	%		301			—			—			—			301
Eco Biomass Energy Sdn. Bhd.		—			61.53	%		—			—			—			—			—
Datang Chaoyang Renewable Power Co., Ltd.		70,598			40.00	%		28,239			—			—			—			28,239
Shuweihat Asia Power Investment B.V.		278			49.00	%		136			—			—			(136	)		—
Shuweihat Asia Operation & Maintenance Company		1,003			55.00	%		552			—			—			(102	)		450
Waterbury Lake Uranium L.P.		56,134			36.97	%		20,753			—			—			561			21,314
ASM-BG Investicii AD		42,977			50.00	%		21,489			—			—			(1	)		21,488
RES Technology AD		27,164			50.00	%		13,582			—			—			—			13,582
KV Holdings, Inc.		5,244			40.00	%		2,098			—			—			—			2,098
KEPCO SPC Power Corporation		326,286			75.20	%		245,367			—			—			—			245,367
Canada Korea Uranium Limited Partnership		141			12.50	%		18			—			—			(18	)		—
Gansu Datang Yumen Wind Power Co., Ltd.		32,053			40.00	%		12,821			—			—			—			12,821
Datang Chifeng Renewable Power Co., Ltd.		416,460			40.00	%		166,584			—			—			(49	)		166,535
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		27,107			40.00	%		10,843			—			—			—			10,843
Rabigh Electricity Company		432,882			40.00	%		173,153			—			(75,311	)		(40	)		97,802
Rabigh Operation & Maintenance Company		11,067			40.00	%		4,427			—			—			—			4,427
Jamaica Public Service Company Limited		631,712			40.00	%		252,685			(80,161	)		—			76,929			249,453
KW Nuclear Components Co., Ltd.		14,427			45.00	%		6,492			90			—			551			7,133
Busan Shinho Solar Power Co., Ltd.		15,256			25.00	%		3,814			—			—			—			3,814
GS Donghae Electric Power Co., Ltd.		605,729			34.00	%		205,948			—			—			—			205,948
Global Trade Of Power System Co., Ltd.		1,643			29.00	%		476			—			—			1			477
Expressway Solar-light Power Generation Co., Ltd.		8,080			29.00	%		2,343			—			—			—			2,343
KODE NOVUS I LLC		(89,966	)		50.00	%		(44,983	)		4,732			—			40,251			—
KODE NOVUS II LLC		(47,031	)		50.00	%		(23,516	)		—			—			23,516			—
Daejung Offshore Wind Power Co., Ltd.		6,042			49.90	%		3,015			—			—			—			3,015
Amman Asia Electric Power Company		256,574			60.00	%		153,944			—			—			(87	)		153,857
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		9,329			51.00	%		4,758			—			—			—			4,758

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2016
Investees	Net assets			Percentage of ownership (*)			Share in net assets			Investment differential		Intercompany transaction		Others			Book value
Dangjin Eco Power Co., Ltd.		148,925			34.00	%		50,635			2,618		—		—			53,253
Honam Wind Power Co., Ltd.		15,239			29.00	%		4,419			32		—		—			4,451
Chun-cheon Energy Co., Ltd.		169,193			29.90	%		50,589			3		—		—			50,592
Yeonggwangbaeksu Wind Power Co., Ltd.		17,892			15.00	%		2,684			5		—		—			2,689
Nghi Son 2 Power Ltd.		455			50.00	%		228			—		—		1			229
Kelar S.A		(94,321	)		65.00	%		(61,309	)		2,424		—		58,885			—
PT. Tanjung Power Indonesia		5,560			35.00	%		1,946			—		—		—			1,946
Incheon New Power Co., Ltd.		1,941			29.00	%		563			—		—		—			563
Seokmun Energy Co., Ltd.		1,349			29.00	%		391			—		—		—			391
Daehan Wind Power PSC		36			50.00	%		18			—		—		(2	)		16
Barakah One Company		658			18.00	%		118			—		—		(2	)		116
Nawah Energy Company		1,645			18.00	%		296			—		—		(6	)		290
MOMENTUM		202			33.33	%		67			—		—		—			67
Daegu Green Power Co., Ltd.		89,421			29.00	%		25,932			84		—		21,512			47,528

(*)	The percentage of ownership shown above is after considering the treasury stocks and others.

100

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Net assets			Percentage of ownership (*)			Share in net assets			Investment differential			Intercompany transaction			Others			Book value

<Associates>
Daegu Green Power Co., Ltd.	W	167,621			47.80	%		80,123			144			—			—			80,267
Korea Gas Corporation		10,056,944			21.57	%		2,169,283			—			—			(66,470	)		2,102,813
Korea Electric Power Industrial Development Co., Ltd.		65,495			29.00	%		18,994			—			—			—			18,994
YTN Co., Ltd.		179,238			21.43	%		38,411			—			(43	)		(3	)		38,365
Cheongna Energy Co., Ltd.		38,852			43.90	%		17,056			2,584			(150	)		—			19,490
Gangwon Wind Power Co., Ltd.		85,606			15.00	%		12,841			—			—			49			12,890
Hyundai Green Power Co., Ltd.		391,945			29.00	%		113,664			—			—			—			113,664
Korea Power Exchange		208,735			100.00	%		208,735			—			—			—			208,735
AMEC Partners Korea Ltd.		1,209			19.00	%		230			—			—			—			230
Hyundai Energy Co., Ltd.		52,569			46.30	%		24,340			—			(1,120	)		(16,230	)		6,990
Ecollite Co., Ltd.		1,926			36.10	%		695			—			—			(695	)		—
Taebaek Wind Power Co., Ltd.		21,797			25.00	%		5,449			—			(493	)		—			4,956
Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.)		10,349			25.00	%		2,587			—			—			—			2,587
Pyeongchang Wind Power Co., Ltd.		13,606			25.00	%		3,402			—			—			—			3,402
Daeryun Power Co., Ltd.		180,648			19.45	%		35,136			1,014			—			6			36,156
JinanJangsu Wind Power Co., Ltd.		306			25.00	%		77			—			—			—			77
Changjuk Wind Power Co., Ltd.		22,391			30.00	%		6,717			—			(574	)		—			6,143
KNH Solar Co., Ltd.		7,149			27.00	%		1,930			—			(6	)		—			1,924
SPC Power Corporation		152,717			38.00	%		58,033			—			—			—			58,033
Gemeng International Energy Co., Ltd.		2,015,833			34.00	%		685,383			—			—			43,013			728,396
PT. Cirebon Electric Power		220,271			27.50	%		60,574			—			—			—			60,574
KNOC Nigerian East Oil Co., Ltd.		(73,328	)		14.63	%		(10,728	)		—			—			10,728			—
KNOC Nigerian West Oil Co., Ltd.		(69,236	)		14.63	%		(10,129	)		—			—			10,129			—
Dolphin Property Limited		299			15.00	%		45			—			—			16			61
PT Wampu Electric Power		41,224			46.00	%		18,963			—			—			—			18,963
PT. Bayan Resources TBK		141,191			20.00	%		28,238			498,089			—			(1,261	)		525,066
S-Power Co., Ltd.		271,347			49.00	%		132,960			—			(2,052	)		—			130,908
Pioneer Gas Power Limited		69,928			40.00	%		27,971			23,147			—			69			51,187
Eurasia Energy Holdings		(470	)		40.00	%		(188	)		—			—			188			—
Xe-Pian Xe-Namnoy Power Co., Ltd.		165,709			25.00	%		41,427			(8,796	)		(479	)		(289	)		31,863
Busan Solar Co., Ltd.		4,692			19.80	%		929			—			(4	)		—			925
Hadong Mineral Fiber Co., Ltd.		(19	)		25.00	%		(5	)		—			—			5			—
Green Biomass Co., Ltd.		1,321			14.00	%		185			—			—			(185	)		—
PT. Mutiara Jawa		(4,900	)		29.00	%		(1,421	)		70			—			1,351			—
Samcheok Eco Materials Co., Ltd.		22,384			2.67	%		598			—			—			(598	)		—
Noeul Green Energy Co., Ltd.		1,473			20.00	%		295			—			—			—			295
Naepo Green Energy Co., Ltd.		106,983			25.00	%		26,746			—			—			—			26,746
Goseong Green Energy Co., Ltd.		92,075			2.90	%		2,670			—			—			—			2,670
Gangneung Eco Power Co., Ltd.		72,296			3.72	%		2,689			—			—			(1	)		2,688
Shin Pyeongtaek Power Co., Ltd.		(3,315	)		40.00	%		(1,326	)		—			(1,995	)		3,321			—
Heang Bok Do Si Photovoltaic Power Co., Ltd.		676			28.00	%		189			—			—			—			189
DS POWER Co., Ltd.		115,733			14.44	%		16,712			—			(5,940	)		188			10,960
Dongducheon Dream Power Co., Ltd.		271,209			33.61	%		91,153			—			5,398			(40,884	)		55,667
KS Solar Co., Ltd.		3,276			19.00	%		622			—			(4	)		—			618
Yeongwol Energy Station Co., Ltd.		12,899			10.00	%		1,290			—			—			—			1,290
Jinbhuvish Power Generation Pvt. Ltd.		56,230			5.16	%		2,901			5,450			—			(1	)		8,350
SE Green Energy Co., Ltd.		7,484			47.76	%		3,575			—			—			—			3,575
Daegu Photovoltaic Co., Ltd.		6,504			29.00	%		1,886			—			—			—			1,886

101

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(5)

Financial information of associates and joint ventures reconciled to the Company’s investments in consolidated financial statements as of December 31, 2016 and 2015 are as follows, continued:


In millions of won
2015
Investees	Net assets			Percentage of ownership (*)			Share in net assets			Investment differential			Intercompany transaction			Others			Book value

Jeongam Wind Power Co., Ltd.	W	1,754			40.00	%		702			—			—			—			702
Korea Power Engineering Service Co., Ltd.		6,226			29.00	%		1,805			—			—			—			1,805
Busan Green Energy Co., Ltd.		50,040			29.00	%		14,512			—			—			—			14,512
Jungbu Bio Energy Co., Ltd.		4,792			18.87	%		904			—			—			—			904
Korea Electric Vehicle Charging Service		5,165			28.00	%		1,446			—			—			—			1,446
Ulleungdo Natural Energy Co., Ltd.		24,851			29.85	%		7,418			—			—			(1	)		7,417
Korea Nuclear Partners Co., Ltd.		996			29.00	%		289			—			—			—			289

<Joint ventures>
KEPCO-Uhde Inc.		17,424			50.85	%		8,860			—			—			(311	)		8,549
Eco Biomass Energy Sdn. Bhd.		—			61.53	%		—			—			—			—			—
Datang Chaoyang Renewable Power Co., Ltd.		69,101			40.00	%		27,640			—			—			—			27,640
Shuweihat Asia Power Investment B.V.		41,952			49.00	%		20,556			—			—			(82	)		20,474
Shuweihat Asia Operation & Maintenance Company		885			55.00	%		487			—			—			(1	)		486
Waterbury Lake Uranium L.P.		51,298			40.00	%		20,519			—			—			(220	)		20,299
ASM-BG Investicii AD		40,407			50.00	%		20,203			—			—			—			20,203
RES Technology AD		27,577			50.00	%		13,789			—			—			—			13,789
KV Holdings, Inc.		5,025			40.00	%		2,010			—			—			—			2,010
KEPCO SPC Power Corporation		277,292			75.20	%		208,524			—			—			—			208,524
Canada Korea Uranium Limited Partnership		181			12.50	%		23			—			—			(23	)		—
KEPCO Energy Resource Nigeria Limited		(36,677	)		30.00	%		(11,003	)		—			—			11,003			—
Gansu Datang Yumen Wind Power Co., Ltd.		40,268			40.00	%		16,107			—			—			—			16,107
Datang Chifeng Renewable Power Co., Ltd.		428,183			40.00	%		171,273			—			—			(49	)		171,224
Datang KEPCO Chaoyang Renewable Power Co., Ltd.		26,449			40.00	%		10,580			—			—			—			10,580
Rabigh Electricity Company		347,631			40.00	%		139,052			—			(79,646	)		(38	)		59,368
Rabigh Operation & Maintenance Company		8,964			40.00	%		3,586			—			—			—			3,586
Jamaica Public Service Company Limited		428,282			40.00	%		171,313			(72,370	)		—			142,975			241,918
KW Nuclear Components Co., Ltd.		11,288			45.00	%		5,080			90			—			(185	)		4,985
Busan Shinho Solar Power Co., Ltd.		14,714			25.00	%		3,678			—			—			—			3,678
GS Donghae Electric Power Co., Ltd.		589,452			34.00	%		200,414			—			—			(35	)		200,379
Global Trade Of Power System Co., Ltd.		1,469			29.00	%		426			—			—			—			426
Expressway Solar-light Power Generation Co., Ltd.		7,241			29.00	%		2,100			—			—			—			2,100
KODE NOVUS I LLC		(45,577	)		50.00	%		(22,789	)		4,732			—			18,057			—
KODE NOVUS II LLC		(22,806	)		49.00	%		(11,175	)		—			—			11,175			—
Daejung Offshore Wind Power Co., Ltd.		6,717			49.90	%		3,352			—			—			—			3,352
Amman Asia Electric Power Company		229,592			60.00	%		137,755			—			—			(87	)		137,668
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		8,826			51.00	%		4,501			—			—			—			4,501
Dangjin Eco Power Co., Ltd.		136,037			34.00	%		46,253			2,696			—			(668	)		48,281
Honam Wind Power Co., Ltd.		13,427			29.00	%		3,894			32			—			—			3,926
Nepal Water & Energy Development Company Private Limited		31,508			52.77	%		16,627			972			—			166			17,765
Chun-cheon Energy Co., Ltd.		106,931			29.90	%		31,972			3			—			1			31,976
Yeonggwangbaeksu Wind Power Co., Ltd.		17,788			15.00	%		2,668			—			—			—			2,668
Nghi Son 2 Power Ltd.		537			50.00	%		268			—			—			1			269
Kelar S.A		(30,482	)		65.00	%		(19,814	)		2,424			—			17,390			—
PT. Tanjung Power Indonesia		1,763			35.00	%		617			—			—			—			617
Incheon New Power Co., Ltd.		1,772			29.00	%		514			—			—			—			514
Seokmun Energy Co., Ltd.		(708	)		29.00	%		(205	)		—			—			205			—

(*)	The percentage of ownership shown above is after considering the treasury stocks and others.

102

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(6)

As of December 31, 2016 and 2015, unrecognized equity interest in investments in associates and joint ventures whose book value has been reduced to zero due to accumulated losses are as follows:


In millions of won	2016					2015
	Unrecognized equity interest			Accumulated unrecognized equity interest		Unrecognized equity interest			Accumulated unrecognized equity interest

Green Biomass Co., Ltd.	W	—			—		(125	)		—
Shin Pyeongtaek Power Co., Ltd.		1,211			2,537		1,038			1,326
Chun-cheon Energy Co., Ltd.		—			—		(8	)		—
Seokmun Energy Co., Ltd.		(205	)		—		152			205
Kelar S.A		43,920			61,309		17,389			17,389
Hadong Mineral Fiber Co., Ltd.		—			5		5			5
PT. Mutiara Jawa		554			1,905		1,351			1,351
Eurasia Energy Holdings		6			194		188			188
KODE NOVUS I LLC		22,194			44,983		22,789			22,789
KODE NOVUS II LLC		12,340			23,515		11,175			11,175
Jungbu Bio Energy Co., Ltd.		132			132		—			—

(7)

As of December 31, 2016, shareholders’ agreements on investments in associates and joint ventures that may cause future economic resource or cash outflows are as follows:

(i)

Gemeng International Energy Co., Ltd.

Gemeng International Energy Co., Ltd., issued put options on 8% of its shares to its financial investors, KEPCO Woori Sprott PEF (NPS Co-Pa PEF). If the investment fund is not collected until the maturity date (December 25, 2023, two years extension is possible), PEF can exercise the option at strike price which is the same as a principal investment price (including operating fees ratio of below 1% per annum), and also, the Company provided a performance guarantee on this agreement.

(ii)

Hyundai Energy Co., Ltd.

The Company had placed guarantees for a fixed return on the investment to NH Power II Co., Ltd. and National Agricultural Cooperative Federation (“NACF”) and had obtained the rights to acquire the investment securities in return preferentially. In addition, NH Power II Co., Ltd. and NACF have a right, which can be exercised for 30 days starting from 2 months to 1 month prior to 17 years after the termination date of the contract to sell their shares to the Company.

(iii)

Taebaek Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Taebaek Wind Power Co., Ltd. after the warrant period of defect repair for wind power generator has expired, the Company acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with consideration of various factors such as financial status and business situation.

(iv)

Pyeongchang Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Pyeongchang Wind Power Co., Ltd. after commercial operation of the power plant has started, the Company acquires those shares at fair value. The acquisition is to be made after the conditions of the acquisition are discussed among the parties involved, with the careful consideration of various factors such as financial status and business situation.

103

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(7)

As of December 31, 2016, shareholders’ agreements on investments in associates and joint ventures that may cause future economic costs or cash outflows are as follows, continued:

(v)

Jeongam Wind Power Co., Ltd.

In case non-controlling shareholders decide to dispose of their shares in Jeongam Wind Power Co., Ltd. after the construction of the power plant has been completed, the Company is obligated to acquire those shares at fair value.

(vi)

Daejung Offshore Wind Power Co., Ltd.

In case Samsung Heavy Industries Co., Ltd., a co-participant of the joint venture agreement, decides to dispose of its shares in Daejung Offshore Wind Power Co., Ltd., the Company is obligated to acquire those shares after evaluating the economic feasibility of the facilities installed by Samsung Heavy Industries Co., Ltd.

(vii)

DS Power Co., Ltd.

The Company has a right to sell all shares and bonds of DS POWER Co., Ltd. to Daesung Industrial Co., Ltd. and Daesung Industrial Co., Ltd. or an authoritative person appointed by Daesung Industrial Co., Ltd.

(viii)

Samcheok Eco Materials Co., Ltd.

The Company has the rights to purchase the stocks should preferred stockholders elect to sell their stocks on the expected sell date (3 years from preferred stock payment date) and is required to guarantee the promised yield when preferred stockholders sell their stocks.

(ix)

Hyundai Green Power Co., Ltd.

As of December 31, 2016, Hyundai Green Power Co., Ltd., an associate of the Company, which engages in the byproduct gas power generating business, entered into a project financing agreement with a limit of W919.2 billion with Korea Development Bank and others. At a certain period in the future, the Company has an appraisal right against the financial investors (Korea Development Bank and others) and also has an obligation to sell its shares when claimed by the financial investors. At a certain period in the future, the Company has an appraisal right against Hyundai Steel Company and a third party designated by Hyundai Steel Company (collectively, “Hyundai Steel Company”), the operating investor of Hyundai Green Power Co., Ltd., according to the conditions of the agreement and also has an obligation to sell its shares when claimed by Hyundai Steel Company.

104

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

17.

Investments in Associates and Joint Ventures, Continued

(8)

Significant restrictions on its abilities to associates or joint ventures are as follows:


Company		Nature and extent of any significant restrictions

KNOC Nigerian East Oil Co., Ltd., KNOC Nigerian West Oil Co., Ltd.		The Company has stopped its operation in Nigeria due to an ongoing litigation and payment or retrieval of investments, loans and advances are restricted until the legal dispute is resolved.

Daeryun Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.

Changjuk Wind Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.

Taebaek Wind Power Co., Ltd.		Financial institutions can reject or defer an approval with regard to the request for fund executions on subordinated loans of shareholders in order to pay senior loans based on the loan agreement.

Pyeongchang Wind Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained.

Daegu Green Power Co., Ltd.		Principals on subordinated loans or dividends can only be paid when all conditions of the loan agreement are satisfied or prior written consent of financial institutions is obtained. Shares cannot be wholly or partially transferred without prior written consent of financial institutions is obtained.

KS Solar Co., Ltd.		Dividends can only be paid when all conditions of a loan agreement are satisfied.

KNH Solar Co., Ltd.		Principal and interest, dividends to shareholders cannot be paid without written consent of financial institutions.

DS Power Co., Ltd.		Shares cannot be wholly or partially transferred, except as permitted by the agreement.

105

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

18.

Property, Plant and Equipment

(1)

Property, plant and equipment as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Acquisition cost		Government grants			Accumulated depreciation			Accumulated impairment *losses ()**			Book value

Land	W	12,969,741		(3,204	)		—			—			12,966,537
Buildings		17,722,326		(61,188	)		(5,936,849	)		(853	)		11,723,436
Structures		63,291,437		(197,641	)		(19,959,839	)		(1,183	)		43,132,774
Machinery		67,769,168		(111,064	)		(24,344,832	)		(2,391	)		43,310,881
Ships		4,175		—			(3,625	)		—			550
Vehicles		247,751		(107	)		(176,781	)		—			70,863
Equipment		1,270,660		(732	)		(894,265	)		—			375,663
Tools		921,115		(430	)		(742,083	)		—			178,602
Construction-in-progress		27,334,368		(135,807	)		—			(38,108	)		27,160,453
Finance lease assets		2,390,779		—			(1,984,426	)		—			406,353
Asset retirement costs		7,129,771		—			(3,064,359	)		—			4,065,412
Others		10,361,294		—			(8,009,762	)		—			2,351,532


	W	211,412,585		(510,173	)		(65,116,821	)		(42,535	)		145,743,056

(*)	The Company separately recognizes impairment loss on each asset, reflecting various factors such as physical impairment and others during the replacement.


In millions of won	2015
	Acquisition cost		Government grants			Accumulated depreciation			Accumulated impairment *losses ()**			Book value

Land	W	12,396,460		(3,147	)		—			—			12,393,313
Buildings		14,936,722		(63,932	)		(5,259,436	)		(854	)		9,612,500
Structures		58,251,296		(193,119	)		(17,991,950	)		(1,184	)		40,065,043
Machinery		57,143,211		(108,935	)		(20,242,232	)		(36,230	)		36,755,814
Ships		4,930		—			(4,144	)		—			786
Vehicles		227,733		(29	)		(167,261	)		—			60,443
Equipment		1,134,376		(1,026	)		(823,805	)		—			309,545
Tools		836,131		(691	)		(675,501	)		—			159,939
Construction-in-progress		35,305,133		(139,898	)		—			(38,107	)		35,127,128
Finance lease assets		2,389,985		—			(1,878,476	)		—			511,509
Asset retirement costs		6,888,547		—			(2,782,460	)		—			4,106,087
Others		9,438,381		—			(7,179,137	)		—			2,259,244


	W	198,952,905		(510,777	)		(57,004,402	)		(76,375	)		141,361,351

(*)	The Company separately recognizes impairment loss on each asset, reflecting various factors such as physical impairment and others during the replacement.

106

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

18.

Property, Plant and Equipment, Continued

(2)

Changes in property, plant and equipment for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance			Acquisition			Disposal			Depreciation			Impairment		Others			Ending balance

Land	W	12,396,460			13,973			(52,569	)		—			—		611,877			12,969,741
(Government grants)		(3,147	)		—			14			—			—		(71	)		(3,204	)
Buildings		9,676,432			—			(9,020	)		(676,866	)		—		2,794,078			11,784,624
(Government grants)		(63,932	)		—			731			5,299			—		(3,286	)		(61,188	)
Structures		40,258,162			455			(524,310	)		(2,233,333	)		—		5,829,441			43,330,415
(Government grants)		(193,119	)		—			2,597			9,491			—		(16,610	)		(197,641	)
Machinery		36,864,749			193,017			(243,757	)		(4,353,596	)		—		10,961,532			43,421,945
(Government grants)		(108,935	)		(33	)		1,210			12,272			—		(15,578	)		(111,064	)
Ships		786			—			—			(281	)		—		45			550
Vehicles		60,472			2,493			(34	)		(27,615	)		—		35,654			70,970
(Government grants)		(29	)		(58	)		—			25			—		(45	)		(107	)
Equipment		310,571			67,134			(323	)		(128,084	)		—		127,097			376,395
(Government grants)		(1,026	)		—			—			452			—		(158	)		(732	)
Tools		160,630			27,856			(327	)		(69,842	)		—		60,715			179,032
(Government grants)		(691	)		—			—			295			—		(34	)		(430	)
Construction-in-progress		35,267,026			11,752,352			(94,443	)		—			—		(19,628,675	)		27,296,260
(Government grants)		(139,898	)		(28,434	)		—			—			—		32,525			(135,807	)
Finance lease assets		511,509			34			(31	)		(96,254	)		—		(8,905	)		406,353
Asset retirement costs		4,106,087			—			—			(509,310	)		—		468,635			4,065,412
Others		2,259,244			—			(9	)		(813,248	)		—		905,545			2,351,532


	W	141,361,351			12,028,789			(920,271	)		(8,880,595	)		—		2,153,782			145,743,056

107

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

18.

Property, Plant and Equipment, Continued

(2)

Changes in property, plant and equipment for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Beginning balance			Acquisition			Disposal			Depreciation			Impairment *(1)**			*Others (2)**			Ending balance

Land	W	12,238,488			9,370			(192,496	)		—			—			341,098			12,396,460
(Government grants)		(3,103	)		—			—			—			—			(44	)		(3,147	)
Buildings		8,979,023			12,466			(42,889	)		(633,770	)		—			1,361,602			9,676,432
(Government grants)		(67,700	)		—			—			5,064			—			(1,296	)		(63,932	)
Structures		38,654,777			1,787			(181,914	)		(2,120,749	)		—			3,904,261			40,258,162
(Government grants)		(196,871	)		—			1,816			9,178			—			(7,242	)		(193,119	)
Machinery		35,460,708			430,524			(250,915	)		(3,880,076	)		(1,205	)		5,105,713			36,864,749
(Government grants)		(108,750	)		—			1,101			11,133			—			(12,419	)		(108,935	)
Ships		1,085			—			—			(299	)		—			—			786
Vehicles		50,576			5,449			(27	)		(22,175	)		—			26,649			60,472
(Government grants)		(76	)		—			1			47			—			(1	)		(29	)
Equipment		211,647			56,004			(230	)		(103,889	)		—			147,039			310,571
(Government grants)		(1,002	)		—			—			469			—			(493	)		(1,026	)
Tools		152,777			25,940			(90	)		(67,482	)		—			49,485			160,630
(Government grants)		(862	)		—			—			268			—			(97	)		(691	)
Construction-in-progress		32,379,512			13,508,590			(13,658	)		—			(29,139	)		(10,578,279	)		35,267,026
(Government grants)		(123,938	)		(27,239	)		—			—			—			11,279			(139,898	)
Finance lease assets		612,395			1,560			(3,959	)		(110,162	)		—			11,675			511,509
Asset retirement costs		5,354,427			—			—			(551,461	)		—			(696,879	)		4,106,087
Others		2,219,386			25,436			(98	)		(804,545	)		—			819,065			2,259,244


	W	135,812,499			14,049,887			(683,358	)		(8,268,449	)		(30,344	)		481,116			141,361,351

(*1)

Korea South-East Power Co., Ltd. and Korea East-West Power Co., Ltd, 100% owned subsidiaries, have determined that there is an impairment indicator and performed an impairment test over the individual assets. As a result, the Company recognized the amount of the carrying amount in excess of its recoverable amount as impairment loss in the consolidated statements of comprehensive income.

(*2)	‘Others’ include W23,273 million of land and buildings that were reclassified to assets held for sale (note 42) comprising W2,907 million of land and W20,366 million of buildings.

108

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

19.

Investment Properties

(1)

Investment properties as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Acquisition cost		Government grants			Accumulated depreciation			Book value

Land	W	336,421		—			—			336,421
Buildings		29,168		(64	)		(11,845	)		17,259


	W	365,589		(64	)		(11,845	)		353,680


In millions of won	2015
	Acquisition cost		Government grants			Accumulated depreciation			Book value

Land	W	253,960		—			—			253,960
Buildings		27,655		(13	)		(11,692	)		15,950


	W	281,615		(13	)		(11,692	)		269,910

(2)

Changes in investment properties for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance			Depreciation			Others			Ending balance

Land	W	253,960			—			82,461			336,421
Buildings		15,963			(679	)		2,039			17,323
(Government grants)		(13	)		1			(52	)		(64	)


	W	269,910			(678	)		84,448			353,680


In millions of won	2015
	Beginning balance			Depreciation			Others			Ending balance

Land	W	301,483			—			(47,523	)		253,960
Buildings		15,791			(669	)		841			15,963
(Government grants)		(10	)		—			(3	)		(13	)


	W	317,264			(669	)		(46,685	)		269,910

109

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

19.

Investment Properties, Continued

(3)

Income and expenses related to investment properties for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Rental income	W	9,460			10,931
Operating and maintenance expenses related to rental income		(678	)		(669	)


	W	8,782			10,262

(4)

Fair value of investment properties as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Book value		Fair value		Book value		Fair value

Land	W	336,421		374,042		253,960		284,423
Buildings		17,259		20,708		15,950		18,263


	W	353,680		394,750		269,910		302,686

The fair values of the investment properties as of the reporting date were determined in consideration of the fluctuation on the publicly announced individual land price after the K-IFRS transition date (January 1, 2010).

(5)

All of the Company’s investment property is held under freehold interests.

20.

Construction Contracts

(1)

Changes in total contract amount in which revenue is not yet recognized for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance		Increase and *decrease ()**			Recognized as revenue			Ending balance

Nuclear power plant construction in UAE and others	W	12,308,839		(1,045,094	)		(4,026,857	)		7,236,888

(*)	For the year ended December 31, 2016, the increased balance of contracts from new orders and other is W718,118 million and the decreased balance of contracts due to changes in scope of construction work is W1,763,212 million.


In millions of won	2015
	Beginning balance		Increase and *decrease ()**			Recognized as revenue			Ending balance

Nuclear power plant construction in UAE and others	W	17,081,074		(1,011,031	)		(3,761,204	)		12,308,839

(*)	For the year ended December 31, 2015, the increased balance of contracts from new orders and other is W412,617 million and the decreased balance of contracts due to changes in scope of construction work is W1,423,648 million.

110

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

20.

Construction Contracts, Continued

(2)

Accumulated earned revenue, expense and others related to the Company’s construction contracts as of December 31, 2016 and 2015 are as follows:

In millions of won

2016

Accumulated
earned revenue

Accumulated
expense

Accumulated
profit

Unearned
advance receipts

Nuclear power plant construction in UAE and others

15,314,737

14,396,890

917,847

—

In millions of won

2015

Accumulated
earned revenue

Accumulated
expense

Accumulated
profit

Unearned
advance receipts

Nuclear power plant construction in UAE and others

12,224,934

11,573,516

651,418

—

(3)

Gross amount due from customers recognized as assets and due to customers recognized as liabilities for contract work as of December 31, 2016 and 2015 are as follows:

In millions of won

2016

2015

Assets (*1)

Liabilities (*2)

Assets (*1)

Liabilities (*2)

Nuclear power plant construction in UAE and others

44,930

651,985

55,317

893,992

(*1)	Included in trade and other receivables, net, in the consolidated statements of financial position.

(*2)	Included in non-financial liabilities in the consolidated statements of financial position.

(4)

The contract between the Company and ENEC (purchaser) states that disclosure of information related to UAE nuclear power plant construction projects such as contract date, contractual completion date, completion progress, unbilled construction, impairment losses, etc. is not allowed without agreement of the purchaser. ENEC did not agree to disclose such information. Accordingly, the Company did not disclose such information based on K-IFRS 1011 45.2(2) as it is probable that ENEC may file a lawsuit for breach of contract if the Company does so. Also, the Company has not disclosed such information in a registration statement, investment prospectus or annual report and reported to the audit committee that those items will not be disclosed in the notes to the financial statements.

(5)

Changes in estimates of contract revenues and costs related to the Company’s construction for the year ended December 31, 2016 are as follows:


In millions of won	2016
											Assets				Receivables from construction contracts
	Expected loss on construction contracts		Changes in estimates of contract revenue and costs			Amounts recognized in current profit or loss		Amounts recognized in future profit or loss			Gross		Allowance for doubtful accounts		Gross		Allowance for doubtful accounts			Changes in estimated total contract costs

Transmission and distribution	W	—		(24,494	)		46,935		(71,429	)		16,331		—		—		—			(1,889,473	)
Electric power generation (nuclear)		—		—			—		—			1,902		—		—		—			—
Plant maintenance & engineering service		233		973			1,061		(88	)		25,925		—		40,980		(8,456	)		1,889
Others		—		—			—		—			772		—		—		—			—


	W	233		(23,521	)		47,996		(71,517	)		44,930		—		40,980		(8,456	)		(1,887,584	)

111

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

21.

Intangible Assets other than Goodwill

(1)

Intangible assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Acquisition cost		Government grants			Accumulated amortization			Accumulated impairment losses			Book value

Software	W	458,382		(595	)		(365,161	)		—			92,626
Licenses and franchises		3,398		—			(3,398	)		—			—
Copyrights, patents rights and other industrial rights		35,756		—			(15,675	)		—			20,081
Mining rights		549,371		—			(10,511	)		—			538,860
Development expenditures		785,966		(5,152	)		(723,561	)		—			57,253
Intangible assets under development		119,474		(11,090	)		—			(3,941	)		104,443
Usage rights of donated assets and other		426,346		(21	)		(342,244	)		—			84,081
Leasehold rights		23,350		—			(18,718	)		—			4,632
Greenhouse gas emissions rights		6,283		—			—			—			6,283
Others		173,213		—			(88,527	)		(12,124	)		72,562


	W	2,581,539		(16,858	)		(1,567,795	)		(16,065	)		980,821


In millions of won	2015
	Acquisition cost		Government grants			Accumulated amortization			Accumulated impairment losses			Book value

Software	W	389,220		(699	)		(331,334	)		—			57,187
Licenses and franchises		3,398		—			(3,398	)		—			—
Copyrights, patents rights and other industrial rights		34,178		—			(12,303	)		—			21,875
Mining rights		508,392		—			(8,855	)		—			499,537
Development expenditures		751,784		(6,835	)		(699,977	)		—			44,972
Intangible assets under development		94,886		(10,483	)		—			—			84,403
Usage rights of donated assets and other		375,275		(32	)		(326,684	)		—			48,559
Leasehold rights		19,112		—			(18,367	)		—			745
Greenhouse gas emissions rights		805		—			—			—			805
Others		189,941		(1	)		(80,067	)		(12,124	)		97,749


	W	2,366,991		(18,050	)		(1,480,985	)		(12,124	)		855,832

112

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

21.

Intangible Assets other than Goodwill, Continued

(2)

Changes in intangible assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance			Acquisition			Disposal			Amortization			Impairment			Others			Ending balance

Software	W	57,886			18,267			—			(32,378	)		—			49,446			93,221
(Government grants)		(699	)		—			—			249			—			(145	)		(595	)
Licenses and franchises
Copyrights, patents rights and other industrial rights		21,875			85			(39	)		(2,697	)		—			857			20,081
Mining rights		499,537			26,311			—			(899	)		—			13,911			538,860
Development expenditures		51,807			212			—			(21,993	)		—			32,379			62,405
(Government grants)		(6,835	)		—			—			2,771			—			(1,088	)		(5,152	)
Intangible assets under development		94,886			66,588			—			—			(3,945	)		(41,996	)		115,533
(Government grants)		(10,483	)		(1,597	)		—			—			—			990			(11,090	)
Usage rights of donated assets and other		48,591			—			—			(15,513	)		—			51,024			84,102
(Government grants)		(32	)		—			—			11			—			—			(21	)
Leasehold rights		745			—			—			(351	)		—			4,238			4,632
Greenhouse gas emissions rights		805			6,283			—			—			—			(805	)		6,283
Others		97,750			8,273			(550	)		(8,916	)		3			(23,998	)		72,562
(Government grants)		(1	)		—			—			1			—			—			—


	W	855,832			124,422			(589	)		(79,715	)		(3,942	)		84,813			980,821


In millions of won	2015
	Beginning balance			Acquisition			Disposal			Amortization			Impairment			Others			Ending balance

Software	W	52,556			10,477			(2	)		(29,795	)		187			24,463			57,886
(Government grants)		(488	)		—			—			177			—			(388	)		(699	)
Licenses and franchises		54			—			—			(54	)		—			—			—
Copyrights, patents rights and other industrial rights		22,677			129			(2	)		(2,866	)		—			1,937			21,875
Mining rights		504,214			23,151			—			(228	)		—			(27,600	)		499,537
Development expenditures		55,857			8,096			(5	)		(24,862	)		—			12,721			51,807
(Government grants)		(8,183	)		—			—			2,937			—			(1,589	)		(6,835	)
Intangible assets under development		74,909			40,300			—			—			(22	)		(20,301	)		94,886
(Government grants)		(10,692	)		(1,884	)		—			—			—			2,093			(10,483	)
Usage rights of donated assets and other		57,687			—			—			(9,096	)		—			—			48,591
(Government grants)		(43	)		—			—			11			—			—			(32	)
Leasehold rights		779			—			—			(34	)		—			—			745
Greenhouse gas emissions rights		—			805			—			—			—			—			805
Others		71,734			6,872			(443	)		(8,456	)		88			27,955			97,750
(Government grants)		(1	)		—			—			—			—			—			(1	)


	W	821,060			87,946			(452	)		(72,266	)		253			19,291			855,832

113

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

21.

Intangible Assets other than Goodwill, Continued

(3)

Significant specific intangible assets as of December 31, 2016 and 2015 are as follows:


In millions of won and thousands of Australian dollars
2016
Type	Description	Currency	Amount		Remaining useful years
Software	ERP system and others	KRW		506	11 months ~ 1 year and 11 months
	SCADA O/S (POWERON RELIANCE)	KRW		4,206	3 years and 1 month
Copyrights, patents rights and other industrial rights	Smart technology verification and standard design project conducting right	KRW		5,750	5 years and 9 months
Mining rights	Mining right of Bylong mine	AUD		401,225	— (*)
Development expenditures	Development of maintenance system for utility plant	KRW		518	11 months
Intangible assets under development	Contributions to ARP NRC DC	KRW		41,190	—
Usage rights of donated assets	Sejong Haengbogdosi sharing charge	KRW		44,502	9 years and 11 months
Usage rights of donated assets	Dangjin power plant load facility usage right	KRW		26,759	4 years and 3 months
Others	Sillim electricity supply facility usage right	KRW		2,196	4 years and 11 months

(*)	Mining rights are amortized using the units-of-production method and the amortization has not commenced yet.


In millions of won and thousands of Australian dollars
2015
Type	Description	Currency	Amount		Remaining useful years
Software	ERP system and others	KRW		1,293	2 months ~ 2 years and 11 months
Copyrights, patents rights and other industrial rights	Smart technology verification and standard design project conducting right	KRW		6,750	6 years and 9 months
Mining rights	Mining right of Bylong mine	AUD		401,225	— (*)
Development expenditures	KOSPO Evolutionary Efficient & Powerful System(KEEPS)	KRW		2,104	1 year and 6 months
	Development of maintenance system for utility plant	KRW		1,084	1 year and 11 months
Intangible assets under development	Contributions to ARP NRC DC	KRW		29,148	—
	CHF testing for best representative of HIPER/X2-Gen Fuel and development of best explanatory CHF correlation	KRW		9,871	—
Usage rights of donated assets	Songdo international business district(sector 1, 3) sharing charge	KRW		2,793	1 year and 10 months
	Dangjin power plant load facility usage right	KRW		33,055	5 years and 3 months
Others	Shingwangju electricity supply facility usage right	KRW		2,297	3 years and 5 months
	Sillim electricity supply facility usage right	KRW		2,642	5 years and 11 months

(*)	Mining rights are amortized using the units-of-production method and the amortization has not commenced yet.

(4)

For the years ended December 31, 2016 and 2015, the Company recognized research and development expenses of W705,504 million and W611,220 million, respectively.

114

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

22.

Trade and Other Payables

Trade and other payables as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Trade payables	W	2,610,373		—		1,957,647		—
Other trade payables		1,498,582		3,033,780		1,379,035		3,048,299
Accrued expenses		1,152,933		2,161		1,082,880		2,373
Leasehold deposits received		1,426		1,008		2,451		—
Other deposits received		197,711		93,751		195,237		105,105
Finance lease liabilities		121,176		420,003		116,885		542,509
Dividends payable		3,204		—		1,562		—
Others (*)		6		7,472		—		20,149


	W	5,585,411		3,558,175		4,735,697		3,718,435

(*)

Details of others as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Advance received from local governments	W	—		7,472		—		20,149
Others		6		—		—		—


	W	6		7,472		—		20,149

23.

Borrowings and Debt Securities

(1)

Borrowings and debt securities as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015
Current liabilities
Short-term borrowings	W	805,523			603,673
Current portion of long-term borrowings		310,977			541,307
Current portion of debt securities		7,825,310			6,704,602
Less : Current portion of discount on long-term borrowings		(979	)		(953	)
Less : Current portion of discount on debt securities		(1,753	)		(1,676	)

		8,939,078			7,846,953

Non-current liabilities
Long-term borrowings		1,799,750			1,951,119
Debt securities		43,012,960			49,077,131
Less : Discount on long-term borrowings		(25,859	)		(18,860	)
Less : Discount on debt securities		(86,880	)		(103,067	)
Add : Premium on debt securities		156			223

		44,700,127			50,906,546


	W	53,639,205			58,753,499

115

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

23.

Borrowings and Debt Securities, Continued

(2)

Repayment schedule of borrowings and debt securities as of December 31, 2016 and 2015 are as follows:


In millions of won
2016
Type	Borrowings		Debt Securities

Less than 1 year	W	1,116,500		7,825,310
1~ 5 years		295,162		24,462,410
Over 5 years		1,504,588		18,550,550


	W	2,916,250		50,838,270


In millions of won
2015
Type	Borrowings		Debt Securities

Less than 1 year	W	1,144,980		6,704,602
1~ 5 years		860,351		27,725,651
Over 5 years		1,090,768		21,351,480


	W	3,096,099		55,781,733

(3)

Short-term borrowings as of December 31, 2016 and 2015 are as follows:

In millions of won and thousands of foreign currencies

2016

Type

Creditor

Interest rate (%)

Maturity

Foreign
currency

Local
currency

Local short-term borrowings

Woori Investment Bank and others

1.54~2.51

2017.01.25~

2017.09.13

—

436,800

Foreign short-term borrowings

SCNT and others

1.58~6.50

2017.03.30~

2017.12.03

USD

35,086

42,401

Foreign short-term borrowings

Export-import Bank of Korea

3M Libor+0.54~0.63

2017.05.17~

2017.12.18

AUD

311,174

271,360

Local bank overdraft

Nonghyup Bank

2.45

2017.01.05

—

37,000

Local bank overdraft

Woori Bank

Standard overdraft rate+1.12

2017.02.25

—

17,962

805,523

In millions of won and thousands of U.S. dollars

2015

Type

Creditor

Interest rate (%)

Maturity

Foreign
currency

Local
currency

Local short-term borrowings

Woori Investment Bank and others

1.80~2.46

2016.01.04~

2016.09.13

—

559,530

Foreign short-term borrowings

ING and others

6.50

2016.12.03

USD

2,163

2,535

Foreign short-term borrowings

Citi Bank and others

3M Libor+0.35

2016.03.22

USD

12,265

14,375

Local bank overdraft

Woori Bank

Standard overdraft rate+1.12

2016.02.25

—

27,233

603,673

116

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

23.

Borrowings and Debt Securities, Continued

(4)

Long-term borrowings as of December 31, 2016 and 2015 are as follows:


In millions of won and thousands of foreign currencies
2016
Type		Interest rate (%)		Maturity		Foreign currency		Local currency

Local long-term borrowings
Korea Development Bank	Others		0.50		2018~2044		—	W	5,663
	Facility		2.45~4.60		2023~2028		—		61,835
	Facility		1yr KoFC bond rate +0.31		2018		—		125,000
	Operating funds		2.75		2018		—		12,000
KEB Hana Bank	Commercial Paper		3M CD+0.14		2017		—		100,000
	Facility		4.60		2028		—		16,851
	Facility		3yr KTB rate -1.25		2017~2028		—		9,655
Korea Industrial Bank	PF Refinancing		CD+1.25		2030		—		22,500
Export-Import Bank of Korea	Project loans		1.50		2026		—		30,935
Korea Resources Corporation	Development of power resources		3yr KTB rate -2.25		2022~2025		—		14,039
	Facility		3yr KTB rate -2.25		2017~2024		—		3,842
	Project loans		—		2022~2025		—		3,733
	Others		KTB rate -2.25		2024~2025		—		12,131
Shinhan Bank and others	Collateral borrowing		2.22		2017		—		30,000
	Facility		CB rate+1.10		2028		—		25,276
	Operating funds		2.70~2.86		2017~2018		—		25,000
	Others		4.10		2035		—		55,000
	Others		3yr KTB rate+1.10		2035		—		55,000
Kookmin Bank	Facility		MOR+0.62~0.79		2017~2023		—		45,000
Others	Facility		1.75~4.60		2026~2029		—		146,472
	Facility		CB rate+1.10~1.20		2022~2028		—		34,951
	PF Refinancing		4.10		2030		—		62,500
	Others		8.00		2036		—		102,347
	Others		—		2028		—		7,250

									1,006,980


Foreign long-term borrowings
Korea National Oil Corporation	Project loans		—		2021~2023	USD	8,744		10,567
Export-Import Bank of Korea and others	Direct loan and others		3M Libor+2.75~3.70		2027	JOD	178,892		305,332
	Commercial loan and others		3M Libor+1.50~2.50		2030~2033	USD	299,859		362,379
	PF Loan		6M Libor+2.50~2.70		2032	USD	119,647		144,594
SCNT and others	Shareholder’s loan		6.50~8.00		2023	USD	40,618		49,086
SCNT and others	Shareholder’s loan		8.00		2031	JOD	7,128		12,166
PT PJB	Shareholder’s loan		12.75		2019	IDR	16,705,505		1,500
Samsung Life Insurance and others	Syndicated Loan		3.10		2032	JPY	1,758,000		18,227
Woori Bank and others	Syndicated Loan		JPY 6M Libor+2.10		2032	JPY	1,172,000		12,151
SMBC and others	Equity Bridge Loan		1M Libor+0.90		2019	USD	37,978		45,897
IFC and others	Others		6M Libor+5.00		2031	PKR	11,706,160		134,972
Others	Others		—		2019	USD	5,691		6,876

									1,103,747

									2,110,727
Less : Discount of long-term borrowings									(26,838	)
Less : Current portion of long-term borrowings									(310,977	)
Add : Current portion of discount on long-term borrowings									979


								W	1,773,891

117

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

23.

Borrowings and Debt Securities, Continued

(4)

Long-term borrowings as of December 31, 2016 and 2015 are as follows, continued:


In millions of won and thousands of foreign currencies
2015
Type		Interest rate (%)		Maturity		Foreign currency		Local currency

Local long-term borrowings
Korea Development Bank	Others		0.50		2018~2044		—	W	6,418
	Facility		2.67~4.60		2023~2028		—		52,437
	Facility		3yr KTB rate-1.25		2027		—		9,000
	Facility		1yr KoFC bond rate +0.31		2018		—		200,000
	Operating funds		2.75		2018		—		12,000
KEB Hana Bank	Commercial Paper		3M CD+0.03~0.54		2016~2017		—		500,000
	Facility		3yr KTB rate-1.25		2021~2028		—		10,363
	Facility		4.60		2028		—		18,411
	Energy rationalization		3yr KTB rate-1.25		2019		—		650
	Energy rationalization		3.20~3.70		2021~2022		—		3,835
Korea Industrial Bank	PF Refinancing		CD+1.25		2030		—		22,500
Korea Industrial Bank	Others		3yr KTB rate-1.25		2016		—		4,000
Export-Import Bank of Korea	Project loans		2.00		2026		—		30,935
Korea Resources Corporation	Development of power resources		3yr KTB rate-2.25		2022~2027		—		44,674
	Facility		3yr KTB rate-2.25		2023~2024		—		4,400
	Project loans		—		2022~2027		—		8,677
	Others		3yr KTB rate-2.25		2024~2025		—		13,057
Shinhan Bank and others	Collateral borrowing		2.22		2017		—		30,000
	Facility		3yr AA- CB rate +1.10		2028		—		27,617
	Operating funds		2.70~3.35		2017~2018		—		25,000
Kookmin Bank	Facility		MOR+0.62~0.79		2017~2023		—		25,300
Others	Facility		4.60~5.80		2025~2028		—		144,359
	Facility		3yr AA- CB rate +1.10		2028		—		18,411
	PF Refinancing		4.10		2030		—		62,500
	Others		—		2020~2036		—		45,847
	Others		—		2028		—		7,250

									1,327,641


Foreign long-term borrowings
Korea National Oil Corporation	Project loans		—		2021~2023	USD	8,744		10,248
Export-Import Bank of Korea and others	Direct loan and others		3M Libor+2.75~3.70		2027	JOD	188,580		312,104
	Commercial loan and others		3M Libor+1.50~2.50		2030~2033	USD	312,601		366,368
	PF Loan		6M Libor+2.50~2.70		2032	USD	64,389		75,464
SCNT and others	Shareholder’s loan		6.50~8.00		2023	USD	34,924		40,931
SCNT and others	Shareholder’s loan		8.00		2031	JOD	7,128		11,797
PT PJB and others	Shareholder’s loan		12.75		2017	IDR	22,346,550		1,899
HSBC and others	Syndicated loan		3M Libor+0.30~0.50		2017~2019	USD	31,774		37,239
IFC and others	Others		6M Libor+5.00		2031	PKR	5,891,200		65,805
Others	Others		3M Libor+0.65		2017	USD	199,269		233,543
Others	Others		—		2019	USD	8,010		9,387

									1,164,785

									2,492,426
Less : Discount of long-term borrowings									(19,813	)
Less : Current portion of long-term borrowings									(541,307	)
Add : Current portion of discount on long-term borrowings									953


								W	1,932,259

118

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

23.

Borrowings and Debt Securities, Continued

(5)

Local debt securities as of December 31, 2016 and 2015 are as follows:


In millions of won
	Issue date	Maturity	Interest rate (%)	2016			2015

Electricity Bonds (*1)	2009.12.03~ 2014.08.27	2017.01.05~ 2033.08.06	2.73~5.51	W	19,860,000			22,960,000
Electricity Bonds	2012.07.10~ 2013.06.25	2017.07.10~ 2018.06.25	3M CD +0.31~0.32		310,000			910,000
Corporate Bonds (*2)	2009.05.04~ 2016.12.02	2017.01.17~ 2040.12.10	1.36~5.84		19,552,708			20,710,010

					39,722,708			44,580,010
Less : Discount on local debt securities					(34,667	)		(40,228	)
Less : Current portion of local debt securities					(5,650,010	)		(5,730,000	)
Add : Current portion of discount on local debt securities					728			1,187


				W	34,038,759			38,810,969

(*1)	Electricity Bonds 885 (W40,000 million) can be redeemed every April 28 after three years from its issue date, April 28, 2014.

(*2)	Corporate Bonds of HeeMang Sunlight Power Co., Ltd (W2,697 million) can be redeemed every March 31 after five years from its issue date, March 31, 2016.

(6)

Foreign debt securities as of December 31, 2016 and 2015 are as follows:


In millions of won and thousands of foreign currencies
2016
Type	Issue date	Maturity	Interest rate (%)	Foreign currency		Local currency

FY-96	1996.04.01~1996.12.06	2026.12.06~2096.04.01	6.00~8.37	USD	249,068	W	300,999
FY-97	1997.01.31~1997.08.04	2027.02.01~2027.08.01	6.75~7.00	USD	314,717		380,335
FY-04	2004.04.23	2034.04.23	5.13	USD	286,920		346,743
FY-08	2008.11.27	2018.11.27	4.19	JPY	20,000,000		207,362
FY-11	2011.07.13~2011.07.29	2017.01.30~2021.07.13	3.63~4.75	USD	800,000		966,800
FY-12	2012.05.10~2012.09.19	2017.05.10~2022.09.19	2.50~3.13	USD	1,750,000		2,114,875
FY-13	2013.02.05~2013.11.27	2018.02.05~2018.11.27	1.88~2.88	USD	1,900,000		2,296,150
FY-13	2013.09.26~2013.10.23	2019.03.26~2019.04.23	1.50~1.63	CHF	400,000		472,532
FY-13	2013.09.25	2020.09.25	5.75	AUD	325,000		283,416
FY-13	2013.02.20~2013.07.25	2018.02.20~2018.07.25	3M Libor+0.84~1.50	USD	500,000		604,250
FY-14	2014.02.11~2014.12.02	2019.02.11~2029.07.30	2.38~3.57	USD	1,500,000		1,812,750
FY-14	2014.01.28~2014.07.31	2017.01.28~2017.07.31	3M Libor+0.55~1.05	USD	500,000		604,250
FY-15	2015.06.15	2025.06.15	3.25	USD	300,000		362,550
FY-16	2016.01.21	2021.07.21	2.50	USD	300,000		362,550

							11,115,562
Less : Discount on foreign debt securities							(53,966	)
Add : Premium on foreign debt securities							156
Less : Current portion of foreign debt securities							(2,175,300	)
Add : Current portion of discount on foreign debt securities							1,025


						W	8,887,477

119

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

23.

Borrowings and Debt Securities, Continued

(6)

Foreign debt securities as of December 31, 2016 and 2015 are as follows, continued:


In millions of won and thousands of foreign currencies
2015
Type	Issue date	Maturity	Interest rate (%)	Foreign currency		Local currency

FY-96	1996.04.01~1996.12.06	2026.12.06~2096.04.01	6.00~8.37	USD	249,136	W	291,990
FY-97	1997.01.31~1997.08.04	2027.02.01~2027.08.01	6.75~7.00	USD	314,717		368,848
FY-04	2004.04.23	2034.04.23	5.13	USD	286,920		336,270
FY-06	2006.03.14~2006.09.29	2016.03.14~2016.09.29	5.50~6.00	USD	650,000		761,800
FY-08	2008.11.27	2018.11.27	4.19	JPY	20,000,000		194,401
FY-11	2011.07.13~2011.07.29	2017.01.30~2021.07.13	3.63~4.75	USD	800,000		937,600
FY-12	2012.05.10~2012.09.19	2017.05.10~2022.09.19	2.50~3.13	USD	1,750,000		2,051,000
FY-13	2013.02.05~2013.11.27	2018.02.05~2018.11.27	1.88~2.88	USD	1,900,000		2,226,800
FY-13	2013.09.26~2013.10.23	2019.03.26~2019.04.23	1.50~1.63	CHF	400,000		474,156
FY-13	2013.09.25	2020.09.25	5.75	AUD	325,000		277,258
FY-13	2013.02.20~2013.07.25	2018.02.20~2018.07.25	3M Libor+0.84~1.50	USD	500,000		586,000
FY-14	2014.02.11~2014.12.02	2019.02.11~2029.07.30	2.38~3.57	USD	1,500,000		1,758,000
FY-14	2014.01.28~2014.07.31	2017.01.28~2017.07.31	3M Libor+0.55~1.05	USD	500,000		586,000
FY-15	2015.06.15	2025.06.15	3.25	USD	300,000		351,600

							11,201,723
Less : Discount on foreign debt securities							(64,515	)
Add : Premium on foreign debt securities							223
Less : Current portion of foreign debt securities							(974,602	)
Add : Current portion of discount on foreign debt securities							489


						W	10,163,318

120

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

24.

Finance Lease Liabilities

(1)

Lease contracts

The Company enters into power purchase agreements (“PPA”) with GS EPS and three other providers. The Company recognizes these PPAs as finance leases; under the PPAs, there is no transfer of ownership or bargain purchase option of the plants at the end of the agreement, however, the present value of the future minimum power purchase payments equals substantially all of the plants’ respective fair values over a twenty-year period which makes up the major part of the respective plants’ economic life.

(2)

Finance lease liabilities as of December 31, 2016 and 2015 are as follows and are included in current and non-current trade and other payables, net, in the consolidated statements of financial position:


In millions of won	2016				2015
	Minimum lease payments		Present value of minimum lease payments		Minimum lease payments		Present value of minimum lease payments

Less than 1 year	W	175,512		121,176		182,072		116,885
1 ~ 5 years		404,029		306,282		525,465		393,957
More than 5 years		152,247		113,721		206,323		148,552


	W	731,788		541,179		913,860		659,394

(3)

Current and non-current portion of finance lease liabilities as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Current finance lease liabilities	W	121,176		116,885
Non-current finance lease liabilities		420,003		542,509


	W	541,179		659,394

(4)

Lease payments recognized as an expense as a lessee for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Minimum lease payment	W	177,585			194,960
Contingent rent payment		(20,956	)		(17,682	)

(5)

The Company does not have any irrevocable operating lease contracts as of December 31, 2016 and 2015.

121

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

25.

Employment Benefits

(1)

Employment benefit obligations as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Net defined benefit obligations	W	1,678,470		1,495,782
Other long-term employee benefit obligations		7,788		7,325


	W	1,686,258		1,503,107

(2)

Principal assumptions on actuarial valuation as of December 31, 2016 and 2015 are as follows:


	2016	2015

Discount rate	2.45% ~ 2.64%	2.39% ~ 2.58%
Future salary and benefit levels	5.23%	5.43%
Weighted average duration	13.34 years	13.21 years

(3)

Details of expense relating to defined benefit plans for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Current service cost	W	378,930			315,811
Interest cost		67,104			63,808
Expected return on plan assets		(23,612	)		(22,557	)
Loss from settlement		(706	)		(641	)


	W	421,716			356,421

Expenses as described above are recognized in those items below in the financial statements.


In millions of won	2016		2015

Cost of sales	W	312,391		262,760
Selling and administrative expenses		61,362		51,932
Others (Construction-in-progress and others)		47,963		41,729


	W	421,716		356,421

In addition, for the years ended December 31, 2016 and 2015, employee benefit obligations expenses of W62,435 million and W57,940 million, respectively, is recognized as cost of sales, and W11,450 million and W9,971 million, respectively, is recognized as selling and administrative expenses, and W14,024 million and W14,195 million, respectively, are recognized as construction-in-progress and others, relates to the Company’s defined contribution plans.

122

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

25.

Employment Benefits, Continued

(4)

Details of defined benefit obligations as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Present value of defined benefit obligation from funded plans	W	2,867,377			2,426,414
Fair value of plan assets		(1,188,907	)		(930,632	)

		1,678,470			1,495,782
Present value of defined benefit obligation from unfunded plans		—			—


Net liabilities incurred from defined benefit plans	W	1,678,470			1,495,782

(5)

Changes in the present value of defined benefit obligations for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Beginning balance	W	2,426,414			1,992,447
Current service cost		378,930			315,811
Interest cost (*)		67,104			63,808
Remeasurement component		120,993			122,825
Loss from settlement		(707	)		(641	)
Actual payments		(125,233	)		(67,291	)
Others		(124	)		(545	)


Ending balance	W	2,867,377			2,426,414

(*)	Corporate bond (AAA rated) yield at year-end is applied to the interest cost on employee benefit obligations.

(6)

Changes in the fair value of plan assets for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Beginning balance	W	930,632			724,250
Expected return		23,612			22,557
Remeasurement component		(5,706	)		(5,924	)
Contributions by the employers		312,125			214,449
Actual payments		(71,756	)		(24,191	)
Others		—			(509	)


Ending balance	W	1,188,907			930,632

In addition, loss on accumulated remeasurement component amounted to W222,997 million and W202,878 million has been recognized as other comprehensive income or loss for the years ended December 31, 2016 and 2015, respectively.

123

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

25.

Employment Benefits, Continued

(7)

Details of the fair value of plan assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Equity instruments	W	86,054		12,791
Debt instruments		383,654		243,372
Bank deposit		305,670		129,350
Others		413,529		545,119


	W	1,188,907		930,632

For the years ended December 31, 2016 and 2015, actual returns on plan assets amounted to W17,906 million and W16,633 million, respectively.

(8)

Remeasurement component recognized in other comprehensive income (loss) for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Actuarial gain from changes in financial assumptions	W	(27,792	)		140,411
Experience adjustments		148,785			(17,586	)
Expected return		5,706			5,924


	W	126,699			128,749

Remeasurement component recognized as other comprehensive income or loss is recorded in retained earnings.

124

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

26.

Provisions

(1)

Provisions as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
In millions of won	Current		Non-current		Current		Non-current

Employment benefits
Provisions for employment benefits	W	810,607		—		718,365		—

Litigation
Litigation provisions		79,359		118,878		57,737		110,228

Decommissioning cost
Nuclear plants		—		10,195,928		—		9,684,286
Spent fuel		—		1,374,225		—		1,375,185
Waste		2,566		1,476,936		—		1,502,140
PCBs		—		191,744		—		182,400
Other recovery provisions		—		507		—		862

Others
Power plant regional support program		152,851		—		129,655		—
Transmission regional support program		282,608		—		228,785		—
Provisions for tax		106		136		—		136
Provisions for financial guarantee		458		29,207		1,839		2,449
Provisions for RPS		417,404		—		363,178		—
Provisions for greenhouse gas emissions obligations		249,644		—		78,829		—
Others		4,385		39,590		788		7,068


	W	1,999,988		13,427,151		1,579,176		12,864,754

(2)

Changes in provisions for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance		Accretion expenses		Payment			Reversal			Other			Ending balance

Employment benefits
Provisions for employment benefits	W	718,365		1,047,342		(947,982	)		(7,108	)		(10	)		810,607

Litigation
Litigation provisions		167,965		124,931		(294,403	)		(20,736	)		220,480			198,237

Decommissioning cost
Nuclear plants		9,684,286		513,383		(1,741	)		—			—			10,195,928
Spent fuel		1,375,185		469,982		(470,942	)		—			—			1,374,225
Waste		1,502,140		49,092		(71,998	)		—			268			1,479,502
PCBs		182,400		30,675		(21,331	)		—			—			191,744
Other recovery provisions		862		—		—			(20	)		(335	)		507

Others
Power plant regional support program		129,655		50,252		(41,540	)		—			14,484			152,851
Transmission regional support program		228,785		253,664		(199,841	)		—			—			282,608
Provisions for tax		136		125		—			—			(19	)		242
Provisions for financial guarantee		4,288		29,741		—			(4,298	)		(66	)		29,665
Provisions for RPS		363,178		420,154		(309,975	)		(55,953	)		—			417,404
Provisions for greenhouse gas emissions obligations		78,829		298,618		(116,336	)		(11,467	)		—			249,644
Others		7,856		37,491		(2,699	)		(9	)		1,336			43,975


	W	14,443,930		3,325,450		(2,478,788	)		(99,591	)		236,138			15,427,139

125

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

26.

Provisions, Continued

(2)

Changes in provisions for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Beginning balance		Accretion expenses		Payment			Reversal			Other		Ending balance

Employment benefits
Provisions for employment benefits	W	707,310		727,079		(715,850	)		(174	)		—		718,365

Litigation
Litigation provisions		200,289		111,301		(85,819	)		(58,306	)		500		167,965

Decommissioning cost
Nuclear plants		10,331,270		650,218		(622	)		(1,296,580	)		—		9,684,286
Spent fuel		1,298,749		568,190		(491,754	)		—			—		1,375,185
Waste		1,604,241		58,294		(160,699	)		—			304		1,502,140
PCBs		199,518		10,359		(27,477	)		—			—		182,400
Other recovery provisions		828		34		—			—			—		862

Others
Power plant regional support program		120,093		37,569		(37,648	)		—			9,641		129,655
Transmission regional support program		—		393,460		(164,675	)		—			—		228,785
Provisions for tax		649		—		—			(513	)		—		136
Provisions for financial guarantee		3,695		3,528		—			(2,936	)		1		4,288
Provisions for RPS		329,562		259,964		(165,259	)		(61,089	)		—		363,178
Provisions for greenhouse gas emissions obligations		—		78,829		—			—			—		78,829
Others		6,992		1,410		(590	)		44			—		7,856


	W	14,803,196		2,900,235		(1,850,393	)		(1,419,554	)		10,446		14,443,930

27.

Government Grants

(1)

Government grants as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Land	W	(3,204	)		(3,147	)
Buildings		(61,188	)		(63,932	)
Structures		(197,641	)		(193,119	)
Machinery		(111,064	)		(108,935	)
Vehicles		(107	)		(29	)
Equipment		(732	)		(1,026	)
Tools		(430	)		(691	)
Construction-in-progress		(135,807	)		(139,898	)
Investment properties		(64	)		(13	)
Software		(595	)		(699	)
Development expenditures		(5,152	)		(6,835	)
Intangible assets under development		(11,090	)		(10,483	)
Usage rights of donated assets and other		(21	)		(32	)
Others		—			(1	)


	W	(527,095	)		(528,840	)

126

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

27.

Government Grants, Continued

(2)

Changes in government grants for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance			Receipt			Acquisition		Offset the items of depreciation expense and others		Disposal		Others			Ending balance

Cash	W	—			(32,878	)		—		—		—		32,878			—
Land		(3,147	)		—			—		—		14		(71	)		(3,204	)
Buildings		(63,932	)		—			—		5,299		731		(3,286	)		(61,188	)
Structures		(193,119	)		—			—		9,491		2,597		(16,610	)		(197,641	)
Machinery		(108,935	)		—			—		12,272		1,210		(15,611	)		(111,064	)
Vehicles		(29	)		—			—		25		—		(103	)		(107	)
Equipment		(1,026	)		—			—		452		—		(158	)		(732	)
Tools		(691	)		—			—		295		—		(34	)		(430	)
Construction-in-progress		(139,898	)		—			32,525		—		—		(28,434	)		(135,807	)
Investment properties		(13	)		—			—		1		—		(52	)		(64	)
Software		(699	)		—			—		249		—		(145	)		(595	)
Development expenditures		(6,835	)		—			—		2,771		—		(1,088	)		(5,152	)
Intangible assets under development		(10,483	)		—			991		—		—		(1,598	)		(11,090	)
Usage rights of donated assets and other		(32	)		—			—		11		—		—			(21	)
Others		(1	)		—			—		1		—		—			—


	W	(528,840	)		(32,878	)		33,516		30,867		4,552		(34,312	)		(527,095	)


In millions of won	2015
	Beginning balance			Receipt			Acquisition		Offset the items of depreciation expense and others		Disposal		Others			Ending balance

Cash	W	—			(52,696	)		—		—		—		52,696			—
Land		(3,103	)		—			—		—		—		(44	)		(3,147	)
Buildings		(67,700	)		—			—		5,064		—		(1,296	)		(63,932	)
Structures		(196,871	)		—			—		9,178		1,816		(7,242	)		(193,119	)
Machinery		(108,750	)		—			—		11,133		1,101		(12,419	)		(108,935	)
Vehicles		(76	)		—			—		47		1		(1	)		(29	)
Equipment		(1,002	)		—			—		469		—		(493	)		(1,026	)
Tools		(862	)		—			—		268		—		(97	)		(691	)
Construction-in-progress		(123,938	)		—			11,279		—		—		(27,239	)		(139,898	)
Investment properties		(10	)		—			—		—		—		(3	)		(13	)
Software		(488	)		—			—		177		—		(388	)		(699	)
Development expenditures		(8,183	)		—			—		2,937		—		(1,589	)		(6,835	)
Intangible assets under development		(10,692	)		—			2,093		—		—		(1,884	)		(10,483	)
Usage rights of donated assets and other		(43	)		—			—		11		—		—			(32	)
Others		(1	)		—			—		—		—		—			(1	)


	W	(521,719)			(52,696	)		13,372		29,284		2,918		1			(528,840	)

127

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

28.

Deferred Revenues

Deferred revenue related to the Company’s construction contracts as of December 31, 2016 and 2015 are as follows which included in current and non-current non-financial liabilities in the consolidated statements of financial position:


In millions of won	2016			2015

Beginning balance	W	7,165,297			6,850,016
Increase during the current year / period		1,087,765			691,276
Recognized as revenue during the current year / period		(427,297	)		(375,995	)


Ending balance	W	7,825,765			7,165,297

29.

Non-financial Liabilities

Non-financial liabilities as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Current		Non-current		Current		Non-current

Advance received	W	4,498,739		148,404		5,017,735		215,096
Unearned revenue		26,084		41,936		21,810		63,850
Deferred revenue		445,018		7,380,747		372,157		6,793,140
Withholdings		263,263		10,781		146,258		6,731
Others		1,135,106		9,737		762,751		13,435


	W	6,368,210		7,591,605		6,320,711		7,092,252

128

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

30.

Contributed Capital

(1)

Details of shares issued as of December 31, 2016 and 2015 are as follows:

In millions of won except share information

2016

Shares
authorized

Shares issued

Par value
per share

Owned by
government (*)

Owned by
others

Total

Common shares

1,200,000,000

641,964,077

5,000

1,640,385

1,569,435

3,209,820

(*)	Korea Development Bank’s ownership of W1,056,176 million is included.

In millions of won except share information

2015

Shares
authorized

Shares issued

Par value
per share

Owned by
government (*)

Owned by
others

Total

Common shares

1,200,000,000

641,964,077

5,000

1,640,385

1,569,435

3,209,820

(*)	Korea Development Bank’s ownership of W1,056,176 million is included.

(2)

Details in number of outstanding capital stock for the years ended December 31, 2016 and 2015 are as follows:


Number of shares	2016		2015

Beginning balance		641,964,077		641,964,077

Ending balance		641,964,077		641,964,077

(3)

Details of share premium as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Share premium	W	843,758		843,758

129

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

31.

Retained Earnings and Dividends Paid

(1)

Details of retained earnings as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Legal reserve (*)	W	1,604,910		1,604,910
Voluntary reserves		31,847,275		23,720,167
Retained earnings before appropriations		19,721,686		22,862,164


Retained earnings	W	53,173,871		48,187,241

(*)

The KEPCO Act requires KEPCO to appropriate a legal reserve equal to at least 20 percent of net income for each accounting period until the reserve equals 50 percent of KEPCO’s common stock. The legal reserve is not available for cash dividends; however, this reserve may be credited to paid-in capital or offset against accumulated deficit by the resolution of the shareholders.

(2)

Details of voluntary reserves as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Reserve for investment on social overhead capital	W	5,277,449		5,277,449
Reserve for research and human development (*)		330,000		330,000
Reserve for business expansion		26,029,826		17,902,718
Reserve for equalizing dividends		210,000		210,000


	W	31,847,275		23,720,167

(*)	The reserve for research and human development is appropriated by KEPCO to use as qualified tax credits to reduce corporate tax liabilities. The reserve is available for cash dividends for a certain period as defined by the Tax Incentive Control Law of Korea.

(3)

Changes in retained earnings for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Beginning balance	W	48,187,241			35,303,647
Net profit for the period attributed to owner of the Company		7,048,581			13,289,127
Changes in equity method retained earnings		(2,532	)		(280	)
Remeasurement of defined benefit liability, net of tax		(69,330	)		(84,271	)
Dividend paid		(1,990,089	)		(320,982	)


Ending balance	W	53,173,871			48,187,241

(4)

Dividends paid for the years ended December 31, 2016 and 2015 are as follows:

In millions of won

2016

Number of
shares issued

Number of
treasury stocks

Number of
shares eligible for
dividends

Dividends paid
per share
(In won)

Dividends
paid

Common shares

641,964,077

—

641,964,077

3,100

1,990,089

In millions of won

2015

Number of
shares issued

Number of
treasury stocks

Number of
shares eligible for
dividends

Dividends paid
per share
(In won)

Dividends
paid

Common shares

641,964,077

—

641,964,077

500

320,982

130

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

31.

Retained Earnings and Dividends Paid, Continued

(5)

Changes in retained earnings of investments in associates and joint ventures for the years ended December 31, 2016 and 2015 are as follows :


In millions of won	2016			2015

Beginning balance	W	(2,411	)		(2,131	)
Changes		(2,532	)		(280	)


Ending balance	W	(4,943	)		(2,411	)

(6)

Changes in remeasurement components related to defined benefit liability for the years ended December 31, 2016 and 2015 are as follows :


In millions of won	2016			2015

Beginning balance	W	(202,878	)		(116,705	)
Changes		(119,316	)		(127,184	)
Income tax effect		49,986			42,913
Transfer to reserve for business expansion		49,211			(1,902	)


Ending balance	W	(222,997	)		(202,878	)

32.

Statement of Appropriation of Retained Earnings

For the year ended December 31, 2015, KEPCO’s retained earnings were appropriated on March 22, 2016.

For the year ended December 31, 2016, KEPCO’s retained earnings are expected to be appropriated on March 21, 2017. Statements of appropriation of retained earnings of KEPCO, the controlling company, for the years ended December 31, 2016 and 2015 are as follows:


In millions of won except for dividends per share	2016			2015

I. Retained earnings before appropriations
Unappropriated retained earnings carried over from prior years	W	—			—
Net income		4,261,986			10,165,653
Remeasurements of the defined benefit plan		(4,328	)		(48,457	)

		4,257,658			10,117,196

II. Transfer from voluntary reserves		—			—

III. Subtotal ( I+II )		4,257,658			10,117,196

IV. Appropriations of retained earnings		(4,257,658	)		(10,117,196	)
Legal reserve		—			—
Dividends (government, individual) (Amount of dividends per share (%): Current year – W1,980 (40%) Prior year – W3,100 (62%)		(1,271,089	)		(1,990,089	)
Reserve for business expansion		(2,986,569	)		(8,127,107	)
V. Unappropriated retained earnings to be carried over forward to subsequent year		—			—

131

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

33.

Hybrid Bonds

Bond-type hybrid securities classified as equity (non-controlling interest) as of December 31, 2016 are as follows:


In millions of won
Issuer	Hybrid bond	Issued date		Maturity		Yield (%)		Amount

Korea Western Power Co., Ltd.	1st bond-type hybrid bond		2012.10.18		2042.10.18		5yr government bond rate+1.20	W	100,000
Korea South-East Power Co., Ltd.	1st bond-type hybrid bond		2012.12.07		2042.12.06		4.38		170,000
Korea South-East Power Co., Ltd.	2nd bond-type hybrid bond		2012.12.07		2042.12.06		4.44		230,000

Expense of issuance									(1,340	)


								W	498,660

Although these instruments have contractual maturity dates, the contractual agreements allow these subsidiaries to indefinitely extend the maturity dates and defer the payment of interest without modification to the other terms of the instruments. When the Company decides to not pay dividends on ordinary shares, they are not required to pay interest on the hybrid bonds.

Substantially, as these instruments have no contractual obligation to pay principal and interest, these instruments have been classified as equity (non-controlling interest) in the Company’s consolidated financial statements.

34.

Other Components of Equity

(1)

Other components of equity as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Other capital surplus	W	1,235,146			1,197,388
Accumulated other comprehensive loss		(33,875	)		(98,713	)
Other equity		13,294,973			13,294,973


	W	14,496,244			14,393,648

(2)

Changes in other capital surplus for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016						2015
	Gain on disposal of treasury stocks		Others		Subtotal		Gain on disposal of treasury stocks		Others			Subtotal

Beginning balance	W	387,524		809,864		1,197,388		387,524		763,878			1,151,402
Disposal of subsidiary		—		36,008		36,008		—		58,310			58,310
Change in consolidation scope		—		—		—		—		(716	)		(716	)
Issuance of share capital of subsidiary		—		1,750		1,750		—		2,536			2,536
Income tax effect		—		—		—		—		(14,144	)		(14,144	)


Ending balance	W	387,524		847,622		1,235,146		387,524		809,864			1,197,388

132

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

34.

Other Components of Equity, Continued

(3)

Changes in accumulated other comprehensive income (loss) for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Available-for-sale financial asset valuation reserve			Shares in other comprehensive Income (loss) of investments in associates and joint ventures			Reserve for overseas operations translation credit			Reserve for gain (loss) on valuation of derivatives			Total

Beginning balance	W	(24,905	)		276,373			(254,462	)		(95,719	)		(98,713	)
Changes in the unrealized fair value of available-for-sale financial assets, net of tax		61,275			—			—			—			61,275
Shares in other comprehensive loss of associates and joint ventures, net of tax		—			(54,918	)		—			—			(54,918	)
Foreign currency translation of foreign operations, net of tax		—			—			31,406			—			31,406
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—			—			—			27,075			27,075


Ending balance	W	36,370			221,455			(223,056	)		(68,644	)		(33,875	)


In millions of won	2015
	Available-for-sale financial asset valuation reserve			Shares in other comprehensive income of investments in associates and joint ventures			Reserve for overseas operations translation credit			Reserve for gain (loss) on valuation of derivatives			Total

Beginning balance	W	(34,649	)		186,897			(255,641	)		(98,876	)		(202,269	)
Changes in the unrealized fair value of available-for-sale financial assets, net of tax		9,744			—			—			—			9,744
Shares in other comprehensive income of associates and joint ventures, net of tax		—			89,476			—			—			89,476
Foreign currency translation of foreign operations, net of tax		—			—			1,179			—			1,179
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		—			—			—			3,157			3,157


Ending balance	W	(24,905	)		276,373			(254,462	)		(95,719	)		(98,713	)

(4)

Details of other equity as of ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Statutory revaluation reserve	W	13,295,098			13,295,098
Changes in other equity		(125	)		(125	)


	W	13,294,973			13,294,973

133

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

35.

Sales

Details of sales for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016						2015
	Domestic		Overseas		Total		Domestic		Overseas		Total

Sales of goods	W	54,982,095		397,392		55,379,487		53,961,463		405,573		54,367,036
Electricity		54,304,529		—		54,304,529		53,229,470		—		53,229,470
Heat supply		181,597		—		181,597		204,987		—		204,987
Others		495,969		397,392		893,361		527,006		405,573		932,579
Sales of service		195,697		161,046		356,743		209,189		244,298		453,487
Sales of construction services		132,219		3,894,638		4,026,857		180,424		3,580,780		3,761,204
Revenue related to transfer of assets from customers		427,297		—		427,297		375,995		—		375,995


	W	55,737,308		4,453,076		60,190,384		54,727,071		4,230,651		58,957,722

36.

Selling and Administrative Expenses

(1)

Selling and administrative expenses for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Salaries	W	734,930		655,432
Retirement benefit expense		72,812		61,903
Welfare and benefit expense		162,243		119,866
Insurance expense		11,513		10,636
Depreciation		169,431		102,867
Amortization of intangible assets		35,171		40,465
Bad debt expense		38,719		290
Commission		605,879		562,171
Advertising expense		34,658		30,085
Training expense		6,314		4,988
Vehicle maintenance expense		10,390		10,529
Publishing expense		3,643		3,124
Business development expense		3,477		3,338
Rent expense		40,020		44,905
Telecommunication expense		25,448		22,678
Transportation expense		596		753
Taxes and dues		46,531		55,970
Expendable supplies expense		6,834		7,272
Water, light and heating expense		9,720		9,558
Repairs and maintenance expense		75,122		74,330
Ordinary development expense		188,063		178,472
Travel expense		16,115		14,388
Clothing expense		8,273		5,751
Survey and analysis expense		666		590
Membership fee		1,132		1,040
Others		331,532		131,860


	W	2,639,232		2,153,261

134

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

36.

Selling and Administrative Expenses, Continued

(2)

Other selling and administrative expenses for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Accommodation development expenses	W	186,896		28,134
Miscellaneous wages		31,907		43,109
Litigation and filing expenses		12,328		10,670
Compensation for damages		60,341		9,032
Outsourcing expenses		3,530		2,865
Reward expenses		3,267		2,472
Overseas market development expenses		2,177		1,541
Others		31,086		34,037


	W	331,532		131,860

37.

Other Non-operating Income and Expense

(1)

Other non-operating income for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Reversal of other provisions	W	22,034		6,355
Reversal of other allowance for bad debt		5,489		413
Gains on government grants		111		204
Gains on assets contributed		12,254		9,004
Gains on liabilities exempted		1,959		2,588
Compensation and reparations revenue		114,530		166,355
Revenue from research contracts		13,143		5,342
Rental income		211,580		196,406
Others		31,787		45,552


	W	412,887		432,219

(2)

Details of others of other non-operating income for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Refund of claim for rectification	W	8,722		7,623
Adjustment of research project		4,148		4,090
Maintenance expenses on lease building		354		324
Training expenses		4,478		4,774
Deposit redemption		991		430
Reversal of expenses on litigation		893		219
Revenue on royalty fee		2,486		2,739
Reimbursement of insurance fee		—		11,797
Gains on guarantee contracts		2,796		4,523
Others		6,919		9,033


	W	31,787		45,552

135

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

37.

Other Non-operating Income and Expense, Continued

(3)

Other non-operating expense for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Compensation and indemnification expense	W	—		16,959
Accretion expenses of other provisions		4,556		4,575
Depreciation expenses on investment properties		678		669
Depreciation expenses on idle assets		6,639		6,698
Other bad debt expense		4,585		18,473
Donations		114,094		34,134
Others		58,072		27,340


	W	188,624		108,848

(4)

Details of others of other non-operating expense for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Operating expenses related to the idle assets	W	459		779
Research grants		1,461		1,392
Supporting expenses on farming and fishing village		15,201		14,626
Operating expenses on fitness center		2,706		2,912
Expenses on adjustment of research and development grants		—		709
Forfeit of taxes and dues		4,582		1,105
Expenses on R&D supporting		690		146
Movement expense		—		3,191
Others		32,973		2,480


	W	58,072		27,340

136

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

38.

Other Gains (Losses)

(1)

Composition of other gains (losses) for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Other gains
Gains on disposal of property, plant and equipment	W	74,035			8,637,508
Gains on disposal of intangible assets		—			32
Reversal of impairment loss on intangible assets		3			275
Gains on foreign currency translation		15,311			13,784
Gains on foreign currency transaction		55,377			61,007
Gains on insurance proceeds		—			30
Others		187,792			162,128

Other losses
Losses on disposal of property, plant and equipment		(42,715	)		(73,073	)
Losses on disposal of intangible assets		(158	)		(16	)
Impairment loss on property, plant and equipment		—			(30,344	)
Impairment loss on intangible assets		(3,945	)		(22	)
Losses on foreign currency translation		(23,835	)		(15,097	)
Losses on foreign currency transaction		(72,058	)		(75,615	)
Others		(119,309	)		(69,824	)


	W	70,498			8,610,773

(2)

Details of others of other gains for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Gains on disposal of inventories	W	9,494		10,758
Gains on valuation of inventories		2		7
Gains on proxy collection of TV license fee		38,991		38,529
Gains on compensation of impaired electric poles		3,650		—
Gains on compensation for infringement on contract		3,040		7,414
Gains on harbor facilities dues		2,957		5,943
Gains on technical fees		1,271		1,258
Reversal of occupation development training fees		1,756		1,878
Gains on disposal of waste		4,222		2,880
Gains on insurance		3,786		11,865
Gains on litigation		—		600
Gains on tax rebate		5,226		1,661
Gains on other commission		4,639		2,177
Gains on research tasks		10		1,446
Gains on settlement and others		2,188		2,803
Gains on sales of greenhouse gas emissions rights		46		52
Others		106,514		72,857


	W	187,792		162,128

137

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

38.

Other Gains (Losses), Continued

(3)

Details of others of other losses for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Losses on valuation of inventories	W	2,683		1,318
Losses on disposal of inventories		3,092		13,469
Losses due to disaster		1,522		263
Losses on rounding adjustment of electric charge surtax		1,260		1,251
Losses on adjustments of levies		1,184		13,928
Forfeit of taxes and dues		4,582		190
Losses on litigation		2,581		488
Others		102,405		38,917

	W	119,309		69,824

39.

Finance Income

(1)

Finance Income for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Interest income	W	241,778		241,585
Dividends income		9,446		14,069
Gains on disposal of financial assets		1,482		4
Gains on valuation of derivatives		293,830		610,582
Gains on transaction of derivatives		45,549		151,851
Gains on foreign currency translation		161,905		127,372
Gains on foreign currency transaction		37,553		37,377
Other finance income		—		148

	W	791,543		1,182,988

(2)

Interest income included in finance income for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Cash and cash equivalents	W	61,380		54,687
Available-for-sale financial assets		—		29
Held-to-maturity investments		97		99
Loans and receivables		25,106		28,586
Short-term financial instrument		45,763		46,921
Long-term financial instrument		7,195		10,492
Trade and other receivables		102,237		100,771

	W	241,778		241,585

138

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

40.

Finance Expenses

(1)

Finance expenses for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Interest expense	W	1,752,868		2,015,684
Losses on sale of financial assets		9		3,008
Impairment of available-for-sale financial assets		86,703		84,370
Losses on valuation of derivatives		5,762		17,051
Losses on transaction of derivatives		101,987		37,262
Losses on foreign currency translation		406,849		743,283
Losses on foreign currency transaction		57,889		113,723
Losses on repayment of financial liabilities		23,000		33
Other		2,020		1,043


	W	2,437,087		3,015,457

(2)

Interest expense included in finance expenses for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Trade and other payables	W	68,375			84,527
Short-term borrowings		6,969			14,627
Long-term borrowings		91,584			103,503
Debt securities		1,922,900			2,177,855
Other financial liabilities		482,428			538,680

		2,572,256			2,919,192

Less: Capitalized borrowing costs		(819,388	)		(903,508	)


	W	1,752,868			2,015,684

Capitalization rates for the years ended December 31, 2016 and 2015 are 2.29%~4.16% and 2.36%~4.25% respectively.

139

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

41.

Income Taxes

(1)

Income tax expense for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Current income tax expense
Payment of income tax	W	2,689,640			2,682,779
Adjustment due to changes in estimates related to prior years		231,113			(23,248	)
Current income tax directly recognized in equity		30,059			37,768

		2,950,812			2,697,299

Deferred income tax expense
Generation and realization of temporary differences		509,762			48,878
Changes of unrecognized tax losses, tax credit and temporary differences for prior periods		(86,845	)		71,999
Changes in deferred tax on tax losses carryforwards		—			2,374,237
Tax credit carryforwards		(8,588	)		47,000

		414,329			2,542,114


Income tax expense	W	3,365,141			5,239,413

(2)

Reconciliation between actual income tax expense and amount computed by applying the statutory tax rate of 24.2% to income before income taxes for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Income before income tax	W	10,513,468			18,655,786

Income tax expense computed at applicable tax rate of 24.2%		2,544,259			4,514,700

Adjustments
Effect of applying gradual tax rate		(5,082	)		(4,147	)
Effect of non-taxable income		(29,554	)		(8,047	)
Effect of non-deductible expenses		22,258			17,734
Effects of tax credits and deduction		(194,731	)		(103,435	)
Recognition (reversal) of unrecognized deferred tax asset, net		(86,845	)		71,999
Deferred income tax related to investments in subsidiaries and associates		862,956			784,793
Others, net		20,767			(10,936	)

		589,769			747,961
Adjustment in respect of prior years due to change in estimate		231,113			(23,248	)


Income tax expense	W	3,365,141			5,239,413


Effective tax rate		32.0	%		28.1	%

(3)

Income tax directly adjusted to shareholders’ equity (except for accumulated other comprehensive income (loss))

for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Dividends of hybrid securities	W	5,253			5,253
Gain on disposal of investments in subsidiaries		(7,006	)		(14,144	)


	W	(1,753	)		(8,891	)

140

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

41.

Income Taxes, Continued

(4)

Income tax recognized as other comprehensive income (loss) for the years ended December 31, 2016 and 2015 are

as follows:


In millions of won	2016			2015

Income tax recognized as other comprehensive income (loss)
Loss on valuation of available-for-sale financial assets	W	(8,143	)		(6,315	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax		(18,335	)		7,253
Remeasurements of defined benefit obligations		49,986			42,913
Investments in associates		7,731			13,648
Others		573			(10,840	)


	W	31,812			46,659

(5)

Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the years

ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Beginning balance			Amounts recognized in profit or loss			Amount recognized in other comprehensive income (loss)			Amounts recognized directly in equity			Ending balance
Deferred income tax on temporary differences
Employee benefits	W	407,342			36,003			49,986			—			493,331
Cash flow hedge		(29,013	)		(6,235	)		(18,335	)		—			(53,583	)
Investments in associates or subsidiaries		(6,449,998	)		(717,072	)		7,731			(7,006	)		(7,166,345	)
Property, plant and equipment		(5,495,786	)		(31,532	)		—			—			(5,527,318	)
Finance lease		(272,430	)		(73,001	)		—			—			(345,431	)
Intangible assets		9,420			(433	)		—			—			8,987
Financial assets at fair value through profit or loss		(4	)		(58	)		—			—			(62	)
Available-for-sale financial assets		(49,199	)		(11,005	)		(8,143	)		—			(68,347	)
Deferred revenue		215,361			(1,502	)		—			—			213,859
Provisions		3,372,423			210,948			—			—			3,583,371
Doubtful receivables		1,405			1,291			—			—			2,696
Other finance liabilities		26,298			(1,302	)		—			5,253			30,249
Gains on foreign exchange translation		128,714			10,224			—			—			138,938
Allowance for doubtful accounts		18,976			(1,724	)		—			—			17,252
Accrued income		(11,231	)		5,864			—			—			(5,367	)
Special deduction for property, plant and equipment		(194,347	)		38			—			—			(194,309	)
Reserve for research and human development		(20,688	)		7,805			—			—			(12,883	)
Others		576,585			118,712			573			—			695,870

		(7,766,172	)		(452,979	)		31,812			(1,753	)		(8,189,092	)

Deferred income tax on unused tax losses and tax credit
Tax losses		(3	)		3			—			—			—
Tax credit		27,115			8,588			—			—			35,703

		27,112			8,591			—			—			35,703


	W	(7,739,060	)		(444,388	)		31,812			(1,753	)		(8,153,389	)

141

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

41.

Income Taxes, Continued

(5)

Changes in deferred income tax assets (liabilities) recognized in the statements of financial position for the years

ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Beginning balance			Amounts recognized in profit or loss			Amount recognized in other comprehensive income or loss			Amounts recognized directly in equity			Ending balance
Deferred income tax on temporary differences
Employee benefits	W	352,934			11,495			42,913			—			407,342
Cash flow hedge		51,354			(87,620	)		7,253			—			(29,013	)
Investments in associates or subsidiaries		(5,769,627	)		(669,035	)		2,808			(14,144	)		(6,449,998	)
Property, plant and equipment		(5,979,863	)		484,077			—			—			(5,495,786	)
Finance lease		(197,097	)		(75,333	)		—			—			(272,430	)
Intangible assets		12,309			(2,889	)		—			—			9,420
Financial assets at fair value through profit or loss		2,840			(2,844	)		—			—			(4	)
Available-for-sale financial assets		(41,836	)		(1,048	)		(6,315	)		—			(49,199	)
Deferred revenue		230,644			(15,283	)		—			—			215,361
Provisions		3,459,775			(87,352	)		—			—			3,372,423
Doubtful receivables		1,356			49			—			—			1,405
Other finance liabilities		23,237			(2,192	)		—			5,253			26,298
Gains on foreign exchange translation		53,794			74,920			—			—			128,714
Allowance for doubtful accounts		15,452			3,524			—			—			18,976
Accrued income		(3,245	)		(7,986	)		—			—			(11,231	)
Special deduction for property, plant and equipment		(194,674	)		327			—			—			(194,347	)
Impairment of non-current assets		86,720			(86,720	)		—			—			—
Reserve for research and human development		(35,499	)		14,811			—			—			(20,688	)
Others		460,019			116,566			—			—			576,585

		(7,471,407	)		(332,533	)		46,659			(8,891	)		(7,766,172	)

Deferred income tax on unused tax losses and tax credit
Tax losses		2,176,175			(2,176,178	)		—			—			(3	)
Tax credit		98,286			(71,171	)		—			—			27,115

		2,274,461			(2,247,349	)		—			—			27,112


	W	(5,196,946	)		(2,579,882	)		46,659			(8,891	)		(7,739,060	)

(6)

Deferred income tax assets (liabilities) recognized in the statements of financial position as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Deferred income tax assets	W	795,131			623,623
Deferred income tax liabilities		(8,948,520	)		(8,362,683	)


	W	(8,153,389	)		(7,739,060	)

(7)

Details of deductible temporary differences, tax losses and unused tax credits not recognized in the deferred income

tax assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Deductible temporary differences	W	426,718		441,704

142

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

42.

Assets Held-for-Sale

Assets held-for-sale as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Land (*1)	W	2,907		2,907
Building (*1)		20,366		20,366
Investments in associates (*2, 3)		42,569		56,374


	W	65,842		79,647

(*1)

The board of directors of KEPCO Engineering & Construction Company, Inc., a subsidiary of the Company, determined to dispose the office building in Yongin as part of the government’s plan to relocate state-run companies for balanced national development and moved the head office to Kimchun, Kyungsangbukdo, in 2015. As the Company believes the book value of Yongin office will be recovered by a disposal transaction rather than continuous operation, it reclassified buildings, land and structures as assets held-for-sale.

(*2)	Korea Western Power Co., Ltd., a subsidiary of the Company, plans to dispose certain portion of its investment in Dongducheon Dream Power Co., Ltd. and reclassified the relevant book value to non-current assets held-for-sale.

(*3)

Korea Hydro & Nuclear Power Co., Ltd., a subsidiary of the Company, reclassified its investments in Yeongwol Energy Station Co., Ltd. to assets held-for-sale according to the shareholders’ agreement. The reclassified amount is determined as using the lower amount of either the book value or net fair value.

143

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

43.

Expenses Classified by Nature

Expenses classified by nature for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016
	Selling and administrative expenses		Cost of sales		Total

Raw materials used	W	—		13,470,586		13,470,586
Salaries		734,930		3,425,712		4,160,642
Retirement benefit expense		72,812		374,826		447,638
Welfare and benefit expense		162,243		507,691		669,934
Insurance expense		11,513		79,987		91,500
Depreciation		169,431		8,704,525		8,873,956
Amortization of intangible assets		35,171		44,544		79,715
Bad debt expense		38,719		—		38,719
Commission		605,879		423,179		1,029,058
Advertising expense		34,658		9,693		44,351
Training expense		6,314		13,347		19,661
Vehicle maintenance expense		10,390		7,016		17,406
Publishing expense		3,643		4,615		8,258
Business promotion expense		3,477		4,836		8,313
Rent expense		40,020		133,670		173,690
Telecommunication expense		25,448		75,925		101,373
Transportation expense		596		5,153		5,749
Taxes and dues		46,531		464,962		511,493
Expendable supplies expense		6,834		34,668		41,502
Water, light and heating expense		9,720		25,820		35,540
Repairs and maintenance expense		75,122		1,896,656		1,971,778
Ordinary development expense		188,063		517,441		705,504
Travel expense		16,115		63,611		79,726
Clothing expense		8,273		5,363		13,636
Survey and analysis expense		666		3,209		3,875
Membership fee		1,132		8,714		9,846
Power purchase		—		10,755,739		10,755,739
Others		331,532		4,488,065		4,819,597


	W	2,639,232		45,549,553		48,188,785

144

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

43.

Expenses Classified by Nature, Continued

Expenses classified by nature for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won	2015
	Selling and administrative expenses		Cost of sales		Total

Raw materials used	W	—		14,626,933		14,626,933
Salaries		655,432		2,962,476		3,617,908
Retirement benefit expense		61,903		320,700		382,603
Welfare and benefit expense		119,866		426,186		546,052
Insurance expense		10,636		83,910		94,546
Depreciation		102,867		8,158,884		8,261,751
Amortization of intangible assets		40,465		31,801		72,266
Bad debt expense		290		—		290
Commission		562,171		353,703		915,874
Advertising expense		30,085		8,498		38,583
Training expense		4,988		11,186		16,174
Vehicle maintenance expense		10,529		8,323		18,852
Publishing expense		3,124		3,981		7,105
Business promotion expense		3,338		4,312		7,650
Rent expense		44,905		142,054		186,959
Telecommunication expense		22,678		73,180		95,858
Transportation expense		753		5,336		6,089
Taxes and dues		55,970		397,161		453,131
Expendable supplies expense		7,272		29,874		37,146
Water, light and heating expense		9,558		26,870		36,428
Repairs and maintenance expense		74,330		1,771,760		1,846,090
Ordinary development expense		178,472		432,748		611,220
Travel expense		14,388		52,910		67,298
Clothing expense		5,751		4,135		9,886
Survey and analysis expense		590		3,071		3,661
Membership fee		1,040		6,401		7,441
Power purchase		—		11,428,027		11,428,027
Others		131,860		4,083,309		4,215,169


	W	2,153,261		45,457,729		47,610,990

145

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

44.

Earnings Per Share

(1)

Basic earnings per share for the years ended December 31, 2016 and 2015 are as follows:


In won
Type	2016		2015

Basic earnings per share	W	10,980		20,701

(2)

Net profit for the period and weighted average number of common shares used in the calculation of basic earnings

per share for the years ended December 31, 2016 and 2015 are as follows


In millions of won except number of shares
Type	2016		2015

Controlling interest in net income	W	7,048,581		13,289,127
Profit used in the calculation of total basic earnings per share		7,048,581		13,289,127
Weighted average number of common shares		641,964,077		641,964,077

(3)

Weighted average number of common shares used in the calculation of basic earnings per share for the years ended December 31, 2016 and 2015 are as follows:


In number of shares
Type	2016		2015

The number of common shares issued at beginning of the year		641,964,077		641,964,077
Weighted average number of common shares		641,964,077		641,964,077

(4)

There are no potential dilutive instruments and diluted earnings per share are same as basic earnings per share for the years ended December 31, 2016 and 2015.

146

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management

(1)

Capital risk management

The Company manages its capital to ensure that entities in the Company will be able to continue while maximizing the return to shareholder through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (offset by cash and cash equivalents) and equity. The Company’s overall capital risk management strategy remains unchanged from that of the prior year.

Details of the Company’s capital management accounts as of December 31, 2016 and 2015 are as follows:


In millions of won	2016			2015

Total borrowings and debt securities	W	53,639,205			58,753,499
Cash and cash equivalents		3,051,353			3,783,065

Net borrowings and debt securities		50,587,852			54,970,434

Total shareholder’s equity		73,050,545			67,942,475

Debt to equity ratio		69.25	%		80.91	%

(2)

Financial risk management

The Company is exposed to various risks related to its financial instruments, such as, market risk (currency risk, interest rate risk, price risk), credit risk. The Company monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. The Company uses derivative financial instruments to hedge certain risk exposures. The Company’s overall financial risk management strategy remains unchanged from that of the prior year.

(i)

Credit risk

Credit risk is the risk of finance loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the sales activities, securities and derivatives. In addition, credit risk exposure may exist within financial guarantees and unused line of credits. As these financial institutions the Company makes transactions with are reputable financial institutions, the credit risk from them are considered limited. The Company decides credit transaction limits based on evaluation of client’s credit, through information obtained from the credit bureau and disclosed financial position at committing contracts.

①

Credit risk management

Electricity sales, the main operations of the Company are the necessity for daily life and industrial activities of Korean nationals, and have importance as one of the national key industries. The Company dominates the domestic market supplying electricity to customers. The Company is not exposed to credit risk as customers of the Company are from various industries and areas. The Company uses publicly available information and its own internal data related to trade receivables, to rate its major customers and to measure the credit risk that a counter party will default on a contractual obligation. For the incurred but not recognized loss, it is measured considering overdue period.

②

Impairment and allowance account

In accordance with the Company policies, individual material financial assets are assessed on a regular basis, trade receivables that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Value of the acquired collateral (including the confirmation of feasibility) and estimated collectable amounts are included in this assessment.

Allowance for bad debts assessed on a collective basis are recognized for (i) the group of assets which individually are not material and (ii) incurred but not recognized losses that are assessed using statistical methods, judgment and past experience.

147

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(2)

Financial risk management, continued

Book values of the financial assets represent the maximum exposed amounts of the credit risk. Details of the Company’s level of maximum exposure to credit risk as of December 31, 2016 and 2015 are as follows:


In millions of won	2016		2015

Cash and cash equivalents	W	3,051,353		3,783,065
Derivative assets (trading)		367,477		255,008
Available-for-sale financial assets		1,014,732		584,479
Held-to-maturity investments		3,244		3,623
Loans and receivables		834,207		735,057
Long-term/short-term financial instruments		2,695,926		5,890,866
Derivative assets (using hedge accounting)		413,897		362,142
Trade and other receivables		9,692,391		9,271,967
Financial guarantee contracts (*)		1,396,152		271,010

(*)	Maximum exposure associated with the financial guarantee contracts is the maximum amounts of the obligation.

As of the reporting date, there are no financial assets and non-financial assets that were acquired through the exercise of the right of collateralized assets and reinforcement of credit arrangement.

(ii)

Market risk

Market risk is the risk that the Company’s fair values of the financial instruments or future cash flows are affected by the changes in the market. Market risk consists of interest rate risk, currency risk and other price risk.

148

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(2)

Financial risk management, continued

(iii)

Sensitivity analysis

Significant assets and liabilities with uncertainties in underlying assumptions

①

Defined benefit obligation

A sensitivity analysis of defined benefit obligation assuming a 1% increase and decrease movements in the actuarial valuation assumptions as of December 31, 2016 and 2015 are as follows:


In millions of won		2016					2015
Type	Accounts	1% Increase		1% Decrease			1% Increase			1% Decrease

Future salary increases	Increase (decrease) in defined benefit obligation	W	344,874		(304,685	)		293,205			(271,758	)
Discount rate	Increase (decrease) in defined benefit obligation		(305,031)		371,689			(267,648	)		315,870

Changes of employee benefits assuming a 1% increase and decrease movements in discount rate on plan asset for the years ended December 31, 2016 and 2015 are W9,096 million and W7,265 million, respectively.

②

Provisions

Changes in provisions due to movements in underlying assumptions as of December 31, 2016 and 2015 are as follows:


Type	Accounts	2016			2015

PCBs	Inflation rate		1.29	%		2.65	%
	Discount rate		2.77	%		3.21	%
Nuclear plants	Inflation rate		1.40	%		1.40	%
	Discount rate		3.55	%		3.55	%
Spent fuel	Inflation rate		2.93	%		2.93	%
	Discount rate		4.49	%		4.49	%

A sensitivity analysis of provisions assuming a 0.1% increase and decrease movements in the underlying assumptions as of December 31, 2016 and 2015 are as follows:


In millions of won		2016						2015
Type	Accounts	0.1% Increase			0.1% Decrease			0.1% Increase			0.1% Decrease

Discount rate	PCBs	W	(817	)		822			(875	)		881
	Nuclear plants		(209,277	)		215,139			(201,318	)		206,720
	Spent fuel		(52,353	)		54,387			(52,390	)		54,425
Inflation rate	PCBs		834			(830	)		885			(881	)
	Nuclear plants		240,115			(233,553	)		220,720			(215,086	)
	Spent fuel		55,173			(53,182	)		55,212			(53,219	)

149

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(2)

Financial risk management, continued

Management judgment effected by uncertainties in underlying assumptions

①

Foreign currency risk

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities as of December 31, 2016 and 2015 are as follows:


In thousands of foreign currencies	Assets				Liabilities
Type	2016		2015		2016		2015

AED		7,479		1,481		1,534		1,705
AUD		187		158		632,613		595,284
BDT		49,110		43,332		833		889
BWP		4,296		301		3,222		—
CAD		—		—		—		858
CHF		—		—		400,308		400,029
CNY		—		—		—		26,140
EUR		17,585		6,141		14,111		33,552
GBP		3		—		110		99
IDR		52,568		—		—		—
INR		1,059,092		972,175		161,631		206,159
JOD		1,746		2,972		5		—
JPY		520,746		1,425,163		20,442,504		20,325,211
KZT		12,157		47,177		—		—
MGA		3,408,579		2,768,360		150,430		151,729
MXN		—		7,704		—		—
PHP		415,818		489,309		136,700		77,337
PKR		274,090		211,212		5,051		12,928
SAR		1,149		1,083		—		—
TWD		—		—		—		30
USD		1,319,524		1,260,094		9,445,567		9,331,854
UYU		1,307		—		586		—
ZAR		386		238		75		—

A sensitivity analysis on the Company’s income for the period assuming a 10% increase and decrease in currency exchange rates as of December 31, 2016 and 2015 are as follows:


In millions of won	2016					2015
Type	10% Increase			10% Decrease		10% Increase			10% Decrease
Increase (decrease) of income before income tax	W	(1,101,372	)		1,101,372		(1,063,285	)		1,063,285
Increase (decrease) of shareholder’s equity (*)		(1,101,372	)		1,101,372		(1,063,285	)		1,063,285

(*)	The effect on the shareholders’ equity excluding the impact of income taxes.

The sensitivity analysis above is conducted for monetary assets and liabilities denominated in foreign currencies other than functional currency, without consideration of hedge effect of related derivatives, as of December 31, 2016 and 2015.

To manage its foreign currency risk related to foreign currency denominated receivables and payables, the Company has a policy to enter into currency forward agreements. In addition, to manage its foreign currency risk related to foreign currency denominated expected sales transactions and purchase transactions, the Company enters into cross-currency swap agreements.

150

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(2)

Financial risk management, continued

②

Interest rate risk

The Company is exposed to interest rate risk due to its borrowing with floating interest rates. A 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

The Company’s borrowings and debt securities with floating interest rates as of December 31, 2016 and 2015 are as follows:


In millions of won
Type	2016		2015

Short-term borrowings	W	289,322		41,608
Long-term borrowings		1,459,969		1,977,745
Debt securities		1,518,500		2,082,000


	W	3,267,791		4,101,353

A sensitivity analysis on the Company’s long-term borrowings and debt securities assuming a 1% increase and decrease in interest rates, without consideration of hedge effect of related derivatives for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016					2015
Type	1% Increase			1% Decrease		1% Increase			1% Decrease

Increase (decrease) of profit before income tax	W	(32,678	)		32,678		(41,014	)		41,014
Increase (decrease) of shareholder’s equity (*)		(32,678	)		32,678		(41,014	)		41,014

(*)	The effect on the shareholders’ equity excluding the impact of income taxes.

To manage its interest rate risks, the Company enters into certain interest swap agreements or maintains an appropriate mix of fixed and floating rate borrowings.

③

Electricity rates risk

The Company is exposed to electricity rates risk due to the rate regulation of the government which considers the effect of electricity rate on the national economy.

A sensitivity analysis on the Company’s income for the period assuming a 1% increase and decrease in price of electricity for the years ended December 31, 2016 and 2015 are as follows:


In millions of won	2016					2015
Type	1% Increase		1% Decrease			1% Increase		1% Decrease

Increase (decrease) of profit before income tax	W	543,045		(543,045	)		532,295		(532,295	)
Increase (decrease) of shareholder’s equity (*)		543,045		(543,045	)		532,295		(532,295	)

(*)	The effect on the shareholders’ equity excluding the impact of income taxes.

151

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(2)

Financial risk management, continued

(iv)

Liquidity risk

The Company has established an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by continuously monitoring forecasted and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

In addition, the Company has established credit lines on its trade financing and bank overdrafts, and through payment guarantees it has received, it maintains an adequate credit (borrowing) line. In addition, the Company has the ability to utilize excess cash or long-term borrowings for major construction investments.

The following table shows the details of maturities of non-derivative financial liabilities as of December 31, 2016 and 2015. This table, based on the undiscounted cash flows of the non-derivative financial liabilities including estimated interests, has been prepared based on the respective liabilities’ earliest maturity date.


In millions of won	2016
Type	Less than 1 year		1~2 Years		2~5 Years		More than 5 years		Total

Borrowings and debt securities	W	10,613,185		9,786,209		19,353,498		24,461,835		64,214,727
Finance lease liabilities		175,512		174,534		229,495		152,247		731,788
Trade and other payables		5,464,234		307,222		660,426		2,170,525		8,602,407
Financial guarantee contracts (*)		249,200		40,617		865,842		240,493		1,396,152


	W	16,502,131		10,308,582		21,109,261		27,025,100		74,945,074


In millions of won	2015
Type	Less than 1 year		1~2 Years		2~5 Years		More than 5 years		Total

Borrowings and debt securities	W	9,862,441		11,252,946		23,642,523		28,566,566		73,324,476
Finance lease liabilities		182,072		175,512		349,953		206,323		913,860
Trade and other payables		4,618,812		314,361		617,120		2,244,445		7,794,738
Financial guarantee contracts (*)		168,885		62,116		40,009		—		271,010


	W	14,832,210		11,804,935		24,649,605		31,017,334		82,304,084

(*)	This represents the total guarantee amounts associated with the financial guarantee contracts. Financial guarantee liabilities which are recognized as of December 31, 2016 and 2015 are W29,665 million and W4,288 million, respectively.

152

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(2)

Financial risk management, continued

The expected maturities for non-derivative financial assets as of December 31, 2016 and 2015 in detail are as follows:


In millions of won	2016
Type	Less than 1 year		1~5 Years		More than 5 years		*Other ()**		Total

Cash and cash equivalents	W	3,051,353		—		—		—		3,051,353
Available-for-sale financial assets		—		—		—		1,014,732		1,014,732
Held-to-maturity investments		114		3,126		4		—		3,244
Loans and receivables		198,133		233,564		439,666		5,591		876,954
Long-term/short-term financial instruments		2,281,460		200,001		214,122		343		2,695,926
Trade and other receivables		7,790,953		915,679		919,901		74,199		9,700,732


	W	13,322,013		1,352,370		1,573,693		1,094,865		17,342,941


In millions of won	2015
Type	Less than 1 year		1~5 Years		More than 5 years		*Other ()**		Total

Cash and cash equivalents	W	3,783,065		—		—		—		3,783,065
Available-for-sale financial assets		—		—		—		584,479		584,479
Held-to-maturity investments		381		3,242		—		—		3,623
Loans and receivables		106,013		268,820		397,976		11,330		784,139
Long-term/short-term financial instruments		5,132,829		5,000		752,703		334		5,890,866
Trade and other receivables		7,476,745		765,979		958,968		79,202		9,280,894


	W	16,499,033		1,043,041		2,109,647		675,345		20,327,066

(*)	The maturities cannot be presently determined.

Derivative liabilities classified by maturity periods which from reporting date to maturity date of contract as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
Type	Less than 1 year			1~2 Years			2~5 Years			More than 5 years			Total

Gross settlement
- Trading	W	(3,081	)		(24,044	)		—			(2,799	)		(29,924	)
- Hedging		(2,645	)		(2,645	)		(56,484	)		(56,575	)		(118,349	)


	W	(5,726	)		(26,689	)		(56,484	)		(59,374	)		(148,273	)


In millions of won	2015
Type	Less than 1 year			1~2 Years			2~5 Years			More than 5 years			Total

Gross settlement
- Trading	W	(9,552	)		(4,627	)		(47,971	)		—			(62,150	)
- Hedging		1,260			2,032			(44,233	)		(62,534	)		(103,475	)


	W	(8,292	)		(2,595	)		(92,204	)		(62,534	)		(165,625	)

153

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(3)

Fair value risk

The fair value of the Company’s actively-traded financial instruments (i.e. short-term financial assets held for trading, available-for-sale financial assets, etc.) is based on the traded market-price as of the reporting period end. The fair value of the Company’s financial assets is the amount which the asset could be exchanged for or the amount a liability could be settled for.

The fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the Company uses that technique.

For trade receivables and payables, the Company considers the carrying value net of impairment as fair value. While for disclosure purposes, the fair value of financial liabilities is estimated by discounting a financial instruments with similar contractual cash flows based on the effective interest method.

(i)

Fair value and book value of financial assets and liabilities as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
Type	Book value		Fair value		Book value		Fair value
Assets recognized at fair value
Available-for-sale financial assets (*1)	W	1,014,732		1,014,732		584,479		584,479
Derivative assets (trading)		367,477		367,477		255,008		255,008
Derivative assets (using hedge accounting)		413,897		413,897		362,142		362,142
Long-term financial instruments		414,466		414,466		758,037		758,037
Short-term financial instruments		2,281,460		2,281,460		5,132,829		5,132,829

		4,492,032		4,492,032		7,092,495		7,092,495


Assets carried at amortized cost
Held-to-maturity investments		3,244		3,244		3,623		3,623
Loans and receivables		834,207		834,207		735,057		735,057
Trade and other receivables		9,692,391		9,692,391		9,271,967		9,271,967
Cash and cash equivalents		3,051,353		3,051,353		3,783,065		3,783,065

		13,581,195		13,581,195		13,793,712		13,793,712


Liabilities recognized at fair value
Derivative liabilities (trading)		21,529		21,529		49,011		49,011
Derivative liabilities (using hedge accounting)		117,157		117,157		117,499		117,499

		138,686		138,686		166,510		166,510


Liabilities carried at amortized cost
Secured borrowings		744,565		744,565		641,363		641,363
Unsecured bond		50,749,793		54,455,659		55,677,213		59,619,941
Finance lease liabilities		541,179		541,179		659,394		659,394
Unsecured borrowings		2,089,885		2,099,574		2,407,690		2,427,847
Trade and other payables (*2)		8,602,407		8,602,407		7,794,738		7,794,738
Bank overdraft		54,962		54,962		27,233		27,233

	W	62,782,791		66,498,346		67,207,631		71,170,516

(*1)	Book values of equity securities held by the Company that were measured at cost as of December 31, 2016 and 2015 are W138,557 million and W207,508 million, respectively, as a quoted market price does not exist in an active market and its fair value cannot be measured reliably.

(*2)	Excludes finance lease liabilities.

154

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(3)

Fair value risk, continued

(ii)

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows, when applicable, are based on the government yield curve at the reporting date plus an adequate credit spread.

The discount rate used for calculating fair value as of December 31, 2016 and 2015 are as follows:


Type	2016	2015

Derivatives	0.02% ~ 4.16%	0.28% ~ 4.16%
Borrowings and debt securities	0.02% ~ 4.38%	0.15% ~ 5.80%
Finance lease	9.00% ~ 10.83%	9.00% ~ 10.83%

(iii)

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, classified as Level 1, 2 or 3, based on the degree to which the fair value is observable.


Level 1:		Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2:		Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3:		Inputs that are not based on observable market data.

Fair values of financial instruments by hierarchy level as of December 31, 2016 and 2015 are as follows:


In millions of won	2016
Type	Level 1		Level 2		Level 3		Total

Financial assets at fair value
Available-for-sale financial assets	W	268,171		437,015		269,461		974,647
Derivative assets		—		770,851		10,523		781,374

		268,171		1,207,866		279,984		1,756,021


Financial liabilities at fair value
Derivative liabilities		—		138,686		—		138,686

In millions of won	2015
Type	Level 1		Level 2		Level 3		Total

Financial assets at fair value
Available-for-sale financial assets	W	196,579		—		180,390		376,969
Derivative assets		—		617,150		—		617,150

		196,579		617,150		180,390		994,119


Financial liabilities at fair value
Derivative liabilities		—		166,510		—		166,510

The fair value of available-for-sale financial assets publicly traded is measured at the closing bid price quoted at the end of the reporting period. Meanwhile, the fair value of unquoted available-for-sale financial assets is calculated using the valuation results from an external pricing service in which weighted average borrowing rates of interest of evaluated companies are used as a discount rate. The fair value of derivatives is measured using valuation model which is determined at the present value of estimated future cash flows discounted at current market interest rate.

155

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

45.

Risk Management, Continued

(3)

Fair value risk, continued

Changes of financial assets and liabilities which are classified as level 3 for the years ended December 31, 2016 and 2015 are as follows:

In millions of won

2016

Beginning
balance

Acquisition

Reclassified
category

Valuation

Disposal

Foreign
currency
translation

Ending
balance

Financial assets at fair value

Available-for-sale financial assets

Unlisted securities

180,390

—

98,472

(9,401

)

—

269,461

In millions of won

2015

Beginning
balance

Acquisition

Reclassified
category

Valuation

Disposal

Foreign
currency
translation

Ending
balance

Financial assets at fair value

Available-for-sale financial assets

Unlisted securities

168,627

—

11,763

—

180,390

156

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

46.

Service Concession Arrangements

(1)

Gas Complex • Thermal Power Plant at Ilijan, Philippines (BOT)

(i)

Significant terms and concession period of the arrangement

The Company has entered into a contract with National Power Corporation (the “NPC”), based in the Republic of the Philippines whereby the Company can collect the electricity rates which are composed of fixed costs and variable costs during the concession period after building, rehabilitating, and operating the power plant.

(ii)

Rights and classification of the arrangement

The Company has the rights to use and own the power plant during the concession period from 2002 to 2022. At the end of the concession period, the Company has an obligation to transfer its ownership of the power plant to NPC.

(iii)

The Company’s expected future collections of service concession arrangements as of December 31, 2016 are as follows:


In millions of won
Type	Amounts

Less than 1 year	W	126,233
1~ 2 years		126,233
2~ 3 years		126,233
Over 3 years		305,062


	W	683,761

(2)

Hydroelectric Power Generation at Semangka, Indonesia (BOT)

(i)

Significant terms and concession period of the arrangement

The Company has entered into a contract with PT. Perusahaan Listrik Negara (the “PLN”) whereby the Company provides electricity generated and charge tariff rates designed to recover capital cost, fixed O&M cost, water usage cost, variable O&M cost and special facilities cost during the concession period after building, rehabilitating, and operating the power plant for approximately 30 years (2017~2047) subsequent to the completion of plant construction.

(ii)

Rights and classification of the arrangement

The Company has the rights to use and own the power plant during the concession period from 2017 to 2047. At the end of the concession period, PNL has an option to take over the ownership of the power plant from the Company.

(iii)

The Company’s expected future collections of service concession arrangements as of December 31, 2016 are as follows:


In millions of won
Type	Amounts

Less than 1 year	W	9,210
1~ 2 years		30,739
2~ 3 years		30,051
Over 3 years		683,233


	W	753,233

(iv)

Accumulated contract costs and profits related to the Company’s contract in process as of December 31, 2016 were W113,362 million and W7,133 million, respectively. There are no amount due from customers and advance receipts in progress.

157

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties

(1)

Related parties of the Company as of December 31, 2016 are as follows:


Type		Related party

Parent		Republic of Korea government

Subsidiaries (87 subsidiaries)		Korea Hydro & Nuclear Power Co., Ltd., Korea South-East Power Co., Ltd., Korea Midland Power Co., Ltd., Korea Western Power Co., Ltd., Korea Southern Power Co., Ltd., Korea East-West Power Co., Ltd., KEPCO Engineering & Construction Company, Inc., KEPCO Plant Service & Engineering Co., Ltd., KEPCO Nuclear Fuel Co., Ltd., KEPCO KDN Co., Ltd., Garolim Tidal Power Plant Co., Ltd., Gyeonggi Green Energy Co., Ltd., Korea Offshore Wind Power Co., Ltd., KOSEP Material Co., Ltd., KEPCO International HongKong Ltd., KEPCO International Philippines Inc., KEPCO Philippines Corporation, KEPCO Ilijan Corporation, KEPCO Gansu International Ltd., KEPCO Philippines Holdings Inc., KEPCO Lebanon SARL, KEPCO Neimenggu International Ltd., KEPCO Australia Pty., Ltd., KEPCO Shanxi International Ltd., KOMIPO Global Pte Ltd., KOSEP Australia Pty., Ltd., KOMIPO Australia Pty., Ltd., KOWEPO Australia Pty., Ltd., KOMIPO Global Pte Ltd., KOSPO Australia Pty., Ltd., KEPCO Canada Energy Ltd., KEPCO Netherlands B.V., KOREA Imouraren Uranium Investment Corp., KEPCO Middle East Holding Company, Qatrana Electric Power Company, Korea Electric Power Nigeria Ltd., KOWEPO International Corporation, KOSPO Jordan LLC, Korea Waterbury Uranium Limited Partnership, PT. Cirebon Power Service, EWP America Inc., KHNP Canada Energy, Ltd., KEPCO Bylong Australia Pty., Ltd., KNF Canada Energy Limited, KEPCO Holdings de Mexico, KST Electric Power Company, KEPCO Energy Service Company, KEPCO Netherlands S3 B.V., PT. KOMIPO Pembangkitan Jawa Bali, PT KEPCO Resource Indonesia, EWP Barbados 1 SRL, PT. Tanggamus Electric Power, KOMIPO America Inc., KOSEP USA, INC., PT. EWP Indonesia, KEPCO Netherlands J3 B.V., Global One Pioneer B.V., Global Energy Pioneer B.V., Mira Power Limited, EWP Philippines Corporation, KEPCO Singapore Holdings Pte., Ltd., KOWEPO India Private Limited, KEPCO KPS Philippines Corp., KOSPO Chile SpA, PT. KOWEPO Sumsel Operation And Maintenance Services, Commerce and Industry Energy Co., Ltd., Gyeongju Wind Power Co., Ltd., California Power Holdings, LLC, DG Fairhaven Power, LLC, DG Whitefield, LLC, EWP Renewable Co., EWPRC Biomass Holdings, LLC, Springfield Power, LLC, HeeMang Sunlight Power Co., Ltd., Fujeij Wind Power Company, KOSPO Youngnam Power Co., Ltd., Global One Carbon Private Equity Investment Trust 2., Chitose Solar Power Plant LLC., Solar School Plant Co., Ltd., KEPCO Energy Solution Co. Ltd., KOSPO Power Services Limitada, KOEN Bylong Pty., Ltd., KOWEPO Bylong Pty., Ltd., KOSPO Bylong Pty., Ltd., EWP Bylong Pty., Ltd., KOWEPO Lao International, KOMIPO Bylong Pty Ltd., Energy New Industry Specialized Investment Private Investment Trust

Associates (57 associates)		Dongducheon Dream Power Co., Ltd., Korea Gas Corporation, SE Green Energy Co., Ltd., Daegu Photovoltaic Co., Ltd., Jeongam Wind Power Co., Ltd., Korea Power Engineering Service Co., Ltd., Yeongwol Energy Station Co., Ltd., KS Solar Co., Ltd., Heang Bok Do Si Photovoltaic Power Co., Ltd., Korea Electric Power Industrial Development Co., Ltd., DS POWER Co., Ltd., Goseong Green Energy Co., Ltd., Gangneung Eco Power Co., Ltd., Shin Pyeongtaek Power Co., Ltd., Naepo Green Energy Co., Ltd., Noeul Green Energy Co., Ltd., YTN Co., Ltd., Cheongna Energy Co., Ltd., Samcheok Eco Materials Co., Ltd., Gangwon Wind Power Co., Ltd., Hyundai Green Power Co., Ltd., Korea Power Exchange, AMEC Partners Korea Ltd., Hyundai Energy Co., Ltd., Ecollite Co., Ltd., Taebaek Wind Power Co., Ltd., Taeback Guinemi Wind Power Co., Ltd. (formerly, Muju Wind Power Co., Ltd.), Pyeongchang Wind Power Co., Ltd., Daeryun Power Co., Ltd., Changjuk Wind Power Co., Ltd., KNH Solar Co., Ltd., S-Power Co., Ltd., Hadong Mineral Fiber Co., Ltd., Green Biomass Co., Ltd., SPC Power Corporation, Gemeng International Energy Co., Ltd., PT. Cirebon Electric Power, KNOC Nigerian East Oil Co., Ltd., KNOC Nigerian West Oil Co., Ltd., PT Wampu Electric Power, PT. Bayan Resources TBK, Nepal Water & Energy Development Company Private Limited, Pioneer Gas Power Limited, Eurasia Energy Holdings, Xe-Pian Xe-Namnoy Power Co., Ltd., PT. Mutiara Jawa, Jinbhuvish Power Generation Pvt. Ltd., Busan Green Energy Co., Ltd., Jungbu Bio Energy Co., Ltd., Korea Electric Vehicle Charge Service, Ulleungdo Natural Energy Co., Ltd., Korea Nuclear Partners Co., Ltd., Tamra Offshore Wind Power Co., Ltd., Korea Electric Power Corporation Fund, Energy Infra Asset Management Co., Ltd., Daegu clean Energy Co., Ltd., YaksuESS Co.,Ltd

158

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(1)

Related parties of the Company as of December 31, 2016 are as follows, continued:


Type		Related party

Joint ventures (41 joint ventures)		Daegu Green Power Co., Ltd., KEPCO SPC Power Corporation, Daejung Offshore Wind Power Co., Ltd., KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.), Dangjin Eco Power Co., Ltd., Honam Wind Power Co., Ltd., Seokmun Energy Co., Ltd., Incheon New Power Co., Ltd., Chun-cheon Energy Co., Ltd., Yeonggwangbaeksu Wind Power Co., Ltd., KW Nuclear Components Co., Ltd., KEPCO-Uhde Inc., GS Donghae Electric Power Co., Ltd., Busan Shinho Solar Power Co., Ltd., Global Trade Of Power System Co., Ltd., Expressway Solar-light Power Generation Co., Ltd., Gansu Datang Yumen Wind Power Company Ltd., Datang Chifeng Renewable Power Co., Ltd., Rabigh Electricity Company, Eco Biomass Energy Sdn. Bhd., Rabigh Operation & Maintenance Company, Datang KEPCO Chaoyang Renewable Power Co., Ltd., Shuweihat Asia Power Investment B.V., Shuweihat Asia Operation & Maintenance Company, Waterbury Lake Uranium L.P., ASM-BG Investicii AD, RES Technology AD, Jamaica Public Service Company Limited, KV Holdings, Inc., Datang Chaoyang Renewable Power Co., Ltd., KODE NOVUS I LLC, KODE NOVUS II LLC, Amman Asia Electric Power Company, Kelar S.A, PT. Tanjung Power Indonesia, Nghi Son 2 Power Ltd., Canada Korea Uranium Limited Partnership, Daehan Wind Power PSC, MOMENTUM, Barakah One Company, Nawah Energy Company

Others		Korea Development Bank

(2)

Transactions between the Company and its subsidiaries are eliminated during the consolidation and are not disclosed in notes.

159

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(3)

Related party transactions for the years ended December 31, 2016 and 2015 are as follows:

<Sales and Others>


In millions of won			Sales and others
Company name	Transaction type		2016		2015

<Associates>
Dongducheon Dream Power Co., Ltd.		Electricity sales	W	15,221		14,811
Korea Gas Corporation		Electricity sales		89,030		90,480
Jeongam Wind Power Co., Ltd.		Electricity sales		6		8
Korea Power Engineering Service Co., Ltd.		Service		1,455		1,743
Yeongwol Energy Station Co., Ltd.		Service		858		814
KS Solar Co., Ltd.		Electricity sales		20		21
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Service		2		1
Korea Electric Power Industrial Development Co., Ltd.		Service		10,723		12,361
DS POWER Co., Ltd.		Service		35,133		106,183
Goseong Green Energy Co., Ltd.		Electricity sales		9,195		9,306
Gangneung Eco Power Co., Ltd.		Service		5,223		9,761
Shin Pyeongtaek Power Co., Ltd.		Electricity sales		3,579		11,344
Naepo Green Energy Co., Ltd.		Electricity sales		104		66
Noeul Green Energy Co., Ltd.		Electricity sales		177		45
Samcheok Eco Materials Co., Ltd.		Electricity sales		64		—
YTN Co., Ltd.		Electricity sales		1,785		1,753
Busan Green Energy Co., Ltd.		Service		133		1
Jungbu Bio Energy Co., Ltd.		Electricity sales		6		—
Korea Electric Vehicle Charge Service		Service		89		2
Ulleungdo Natural Energy Co., Ltd.		Service		691		229
Tamra Offshore Wind Power Co., Ltd.,		Electricity sales		12		—
Cheongna Energy Co., Ltd.		Service		6,831		21,081
Gangwon Wind Power Co., Ltd.		Electricity sales		1,273		1,046
Hyundai Green Power Co., Ltd.		Design service		14,835		15,401
Korea Power Exchange		Service		7,141		4,272
Hyundai Energy Co., Ltd.		Service		24,719		25,402
Taebaek Wind Power Co., Ltd.		Service		796		872
Pyeongchang Wind Power Co., Ltd.		Design service		497		72
Daeryun Power Co., Ltd.		Electricity sales		1,516		1,731
Changjuk Wind Power Co., Ltd.		Electricity sales		863		754
KNH Solar Co., Ltd.		Electricity sales		17		17
S-Power Co., Ltd.		Service		5,994		7,278
Busan Solar Co., Ltd.		Electricity sales		8		16
Green Biomass Co., Ltd.		Electricity sales		2		51
SPC Power Corporation		Dividend income		8,346		1,433
Gemeng International Energy Co., Ltd.		Dividend income		16,476		37,163
Dolphin Property Limited		Dividend income		35		—
PT. Bayan Resources TBK		Service		160		164
Nepal Water & Energy Development Company Private Limited		Service		375		—
Pioneer Gas Power Limited		Service		164		274
Xe-Pian Xe-Namnoy Power Co., Ltd.		Service		773		584

160

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(3)

Related party transactions for the years ended December 31, 2016 and 2015 are as follows, continued:


In millions of won			Sales and others
Company name	Transaction type		2016		2015

<Joint ventures>
Daegu Green Power Co., Ltd.		Electricity sales	W	768		1,055
KEPCO SPC Power Corporation		Service		10,344		29,572
Daejung Offshore Wind Power Co., Ltd.		Electricity sales		1		1
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Commission		1,176		1,315
Dangjin Eco Power Co., Ltd.		Technical fee		1,787		334
Honam Wind Power Co., Ltd.		Electricity sales		169		65
Seokmun Energy Co., Ltd.		Technical fee		1,627		2,395
Incheon New Power Co., Ltd.		Construction revenue		524		388
Chun-cheon Energy Co., Ltd.		Service		3,079		2,201
Yeonggwangbaeksu Wind Power Co., Ltd.		Electricity sales		1,591		927
KW Nuclear Components Co., Ltd.		Service		3,327		1,948
KEPCO-Uhde Inc.		Service		6		—
GS Donghae Electric Power Co., Ltd.		Electricity sales		12,994		5,614
Busan Shinho Solar Power Co., Ltd.		Electricity sales		210		24
Datang Chifeng Renewable Power Co., Ltd.		Interest income		8,216		9,702
Rabigh Electricity Company		Interest income		699		565
Rabigh Operation & Maintenance Company		Service		2,395		1,780
Shuweihat Asia Power Investment B.V.		Dividend income		2,957		—
Shuweihat Asia Operation & Maintenance Company		Service		1,179		1,006
ASM-BG Investicii AD		Service		322		—
Jamaica Public Service Company Limited		Service		1,905		3,077
KV Holdings, Inc.		Dividend income		302		—
Datang KEPCO Chaoyang Renewable Power Co., LTD.		Dividend income		440		—
Amman Asia Electric Power Company		Service		21,915		48,968
Kelar S.A		Service		1,702		6,229
Barakah One Company		Service		25,244		—

<Others>
Korea Development Bank		Electricity sales		3,102		4,039
		Interest income		3,164		2,402

161

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(3)

Related party transactions for the years ended December 31, 2016 and 2015 are as follows, continued:

<Purchase and Others>


In millions of won			Purchase and others
Company name	Transaction type		2016		2015

<Associates>
Dongducheon Dream Power Co., Ltd.		Electricity purchase	W	946,463		1,003,346
Korea Gas Corporation		Purchase of power generation fuel		3,633,198		4,598,763
Daegu Photovoltaic Co., Ltd.		REC purchase		3,243		3,978
Korea Power Engineering Service Co., Ltd.		Service		723		3,241
Yeongwol Energy Station Co., Ltd.		REC purchase		14,875		16,408
KS Solar Co., Ltd.		REC purchase		4,080		6,211
Heang Bok Do Si Photovoltaic Power Co., Ltd.		Rental fee and others		410		479
Korea Electric Power Industrial Development Co., Ltd.		Electricity metering service fee		250,057		273,057
YTN Co., Ltd.		Advertisement fee		554		440
Ulleungdo Natural Energy Co., Ltd.		Electricity purchase		60		—
Cheongna Energy Co., Ltd.		Services		73		—
Gangwon Wind Power Co., Ltd.		Electricity purchase		22,780		21,946
Hyundai Green Power Co., Ltd.		Electricity purchase		469,547		486,443
Korea Power Exchange		Trading fees		91,433		79,283
Hyundai Energy Co., Ltd.		Electricity purchase		1,313		1,684
Taebaek Wind Power Co., Ltd.		REC purchase		5,741		6,626
Pyeongchang Wind Power Co., Ltd.		Services		1,594		—
Daeryun Power Co., Ltd.		Electricity purchase		244,023		274,379
Changjuk Wind Power Co., Ltd.		Electricity purchase		5,786		6,472
KNH Solar Co., Ltd.		Electricity purchase		4,006		4,598
S-Power Co., Ltd.		Services		437,206		614,658
Busan Solar Co., Ltd.		Electricity purchase		1,079		4,055
Green Biomass Co., Ltd.		Woodchip purchase		2,232		3,782

<Joint ventures>
Daegu Green Power Co., Ltd.		Electricity purchase		263,797		318,221
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Service		140,555		47,130
Honam Wind Power Co., Ltd.		Electricity purchase		6,776		5,944
Yeonggwangbaeksu Wind Power Co., Ltd.		Electricity purchase		11,208		4,974
GS Donghae Electric Power Co., Ltd.		Service		903		—
Busan Shinho Solar Power Co., Ltd.		REC purchase		6,770		7,565
Global Trade Of Power System Co., Ltd.		Service		882		192
Expressway Solar-light Power Generation Co., Ltd.		Electricity purchase		2,942		3,451
Jamaica Public Service Company Limited		Service		127		106
Amman Asia Electric Power Company		Service		—		125

<Others>
Korea Development Bank		Interest expense		8,231		21,719
		Provision of dividends		654,829		96,087

162

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(4)

Receivables and payables arising from related party transactions as of December 31, 2016 and 2015 are as follows:


In millions of won			Receivables				Payables
Company name	Type		2016		2015		2016		2015

<Associates>
Dongducheon Dream Power Co., Ltd.		Trade receivables	W	1,073		1,206		—		—
		Trade payables		—		—		93,493		100,396
Korea Gas Corporation		Trade receivables		8,739		7,931		—		—
		Non-trade receivables and others		78		255		—		—
		Trade payables		—		—		399,563		302,752
		Non-trade payables and others		—		—		9,090		—
Daegu Photovoltaic Co., Ltd.		Trade payables		—		—		56		—
Jeongam Wind Power Co., Ltd.		Non-trade payables and others		—		—		4		1
Yeongwol Energy Station Co., Ltd.		Trade receivables		7,064		7,063		—		—
		Trade payables		—		—		229		229
KS Solar Co., Ltd.		Trade receivables		2		2		—		—
		Trade payables		—		—		53		68
		Non-trade payables and others		—		—		—		281
Korea Electric Power Industrial Development Co., Ltd.		Trade receivables		362		469		—		—
		Non-trade receivables and others		47		27		—		—
		Non-trade payables and others		—		—		18,628		27,569
DS Power Co., Ltd.		Trade receivables		1,775		260		—		—
		Non-trade payables and others		—		—		—		135
Goseong Green Energy Co., Ltd.		Non-trade payables and others		—		—		3,900		3,900
Gangneung Eco Power Co., Ltd.		Trade receivables		1		1		—		—
		Non-trade receivables and others		2,137		1,701		—		—
Shin Pyeongtaek Power Co., Ltd.		Non-trade receivables and others		215		272		—		—
Naepo Green Energy Co., Ltd.		Trade receivables		14		9		—		—
Noeul Green Energy Co., Ltd.		Trade receivables		18		—		—		—
Samcheok Eco Materials Co., Ltd.		Trade receivables		21		—		—		—
YTN Co., Ltd.		Trade receivables		165		93		—		—
		Non-trade payables and others		—		—		132		154
Busan Green Energy Co., Ltd.		Trade receivables		9		—		—		—
Korea Electric Vehicle Charge Service		Trade receivables		12		—		—		—
Ulleungdo Natural Energy Co., Ltd.		Non-trade receivables and others		111		—		—		—
Cheongna Energy Co., Ltd.		Trade receivables		165		157		—		—
		Non-trade receivables and others		—		375		—		—
		Non-trade payables and others		—		—		82		—
Gangwon Wind Power Co., Ltd.		Trade receivables		8		12		—		—
		Trade payables		—		—		2,031		1,753
Hyundai Green Power Co., Ltd.		Trade receivables		569		962		—		—
		Trade payables		—		—		31,507		36,079
Korea Power Exchange		Trade receivables		1,066		1,452		—		—
		Non-trade receivables and others		53		112		—		—
		Trade payables		—		—		—		3,529
		Non-trade payables and others		—		—		1,235		1,529
Hyundai Energy Co., Ltd.		Trade receivables		72		44,510		—		—
		Non-trade receivables and others		68,798		—		—		—
		Trade payables		—		—		86		178
		Non-trade payables and others		—		—		—		8,030
Ecollite Co., Ltd.		Non-trade receivables and others		210		210		—		—
Taebaek Wind Power Co., Ltd.		Non-trade receivables and others		112		147		—		—
		Trade payables		—		—		386		349
		Non-trade payables and others		—		—		304		—
Pyeongchang Wind Power Co., Ltd.		Trade receivables		4		—		—		—
		Non-trade receivables and others		—		170		—		—
		Non-trade payables and others		—		—		255		—
Daeryun Power Co., Ltd.		Trade receivables		140		117		—		—
		Trade payables		—		—		21,646		27,374
Changjuk Wind Power Co., Ltd.		Non-trade receivables and others		100		153		—		—
		Trade payables		—		—		358		—
		Non-trade payables and others		—		—		334		330
KNH Solar Co., Ltd.		Trade receivables		1		2		—		—
		Non-trade payables and others		—		—		204		—

163

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(4)

Receivables and payables arising from related party transactions as of December 31, 2016 and 2015 are as follows,

continued:


In millions of won			Receivables				Payables
Company name	Type		2016		2015		2016		2015

S-Power Co., Ltd.		Trade receivables	W	142		121		—		—
		Non-trade receivables and others		393		—		—		—
		Trade payables		—		—		51,844		54,141
Green Biomass Co., Ltd.		Non-trade receivables and others		—		109		—		—
		Non-trade payables and others		—		—		113		152
Nepal Water & Energy Development Company Private Limited		Non-trade receivables and others		889		—		—		—
Pioneer Gas Power Limited		Non-trade receivables and others		82		26		—		—
Xe-Pian Xe-Namnoy Power Co., Ltd.		Non-trade receivables and others		58		—		—		—

<Joint ventures>
Daegu Green Power Co., Ltd.		Trade receivables		52		95		—		—
		Non-trade receivables and others		1		—		—		—
		Trade payables		—		—		27,400		22,200
KEPCO SPC Power Corporation		Non-trade receivables and others		2,349		252		—		—
KAPES, Inc. (formerly, KEPCO-ALSTOM Power Electronics Systems, Inc.)		Non-trade receivables and others		235		251		—		—
		Non-trade payables and others		—		—		11,992		61
Dangjin Eco Power Co., Ltd.		Non-trade receivables and others		833		300		—		—
Honam Wind Power Co., Ltd.		Trade payables		—		—		424		342
		Non-trade payables and others		—		—		3,082		2,124
Seokmun Energy Co., Ltd.		Trade receivables		114		—		—		—
		Non-trade receivables and others		160		2,086		—		—
Incheon New Power Co., Ltd.		Trade receivables		128		128		—		—
Chun-cheon Energy Co., Ltd.		Non-trade receivables and others		255		112		—		—
Yeonggwangbaeksu Wind Power Co., Ltd.		Trade receivables		6		7		—		—
		Non-trade receivables and others		145		136		—		—
		Trade payables		—		—		761		627
		Non-trade payables and others		—		—		1,362		2,000
KEPCO-Uhde Inc.		Non-trade payables and others		—		—		4		—
GS Donghae Electric Power Co., Ltd.		Trade receivables		775		970		—		—
		Non-trade receivables and others		1,497		1,216		—		—
		Non-trade payables and others		—		—		993		—
Busan Shinho Solar Power Co., Ltd.		Trade receivables		3		2		—		—
		Trade payables		—		—		129		272
		Non-trade payables and others		—		—		670		970
Datang Chifeng Renewable Power Co., Ltd.		Non-trade receivables and others		210		368		—		—
Rabigh Operation & Maintenance Company		Trade receivables		2,275		—		—		—
		Non-trade receivables and others		—		1,780		—		—
ASM-BG Investicii AD		Non-trade receivables and others		64		—		—		—
Jamaica Public Service Company Limited		Trade receivables		615		1,193		—		—
		Non-trade receivables and others		—		581		—		—
Amman Asia Electric Power Company		Trade receivables		2,509		739		—		—

<Others>
Korea Development Bank		Accrued interest income		672		212		—		—
		Non-trade receivables and others		217,481		45,623		—		—
		Non-trade payables and others		—		—		408		493
		Derivatives		25,306		3,777		3,278		2,313

164

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(5)

Loans and others arising from related party transactions as of December 31, 2016 and 2015 are as follows:


In millions of won
Type	Company name	Beginning balance			Loans			Collection			Others			Ending balance

Associates	KNOC Nigerian East Oil Co., Ltd., KNOC Nigerian West Oil Co., Ltd.	W	28,296			129			—			857			29,282
	(Allowance for doubtful accounts)		(17,755	)		—			—			(436	)		(18,191	)
Associates	PT. Cirebon Electric Power		40,979			2,976			(17,838	)		616			26,733
Associates	PT. Mutiara Jawa		450			—			(450	)		—			—
Associates	Xe-Pian Xe-Namnoy Power Co., Ltd.		1,413			—			—			—			1,413
Associates	PT Wampu Electric Power		—			13,465			—			557			14,022
Associates	Jungbu Bio Energy Co., Ltd.		—			9,000			—			396			9,396
Associates	Hyundai Energy Co., Ltd.		—			2,465			—			—			2,465
Joint ventures	KEPCO SPC Power Corporation		29,651			—			(2,669	)		813			27,795
Joint ventures	Datang Chifeng Renewable Power Co., Ltd.		23,775			—			(7,847	)		416			16,344
Joint ventures	Jamaica Public Service Company Limited		2,345			—			(2,322	)		(23	)		—
Joint ventures	Rabigh Electricity Company		45,552			—			(42,594	)		(317	)		2,641
Joint ventures	KODE NOVUS II LLC		—			1,360			—			3,172			4,532
	(Allowance for doubtful accounts)		—			(4,352	)		—			(180	)		(4,532	)
	Daehan Wind Power PSC		—			683			—			—			683


		W	154,706			25,726			(73,720	)		5,871			112,583

(6)

Borrowings arising from related party transactions as of December 31, 2016 and 2015 are as follows:


In millions of won
Related parties	Type	Beginning balance		Borrowings		Repayment			Others			Ending balance

Korea Development Bank	Facility	W	261,437		33,958		(87,402	)		—			207,993
	Others		6,418		—		(755	)		—			5,663
	Operating funds		12,000		25,000		—			—			37,000
	Syndicated Loan				6,344		—			(269	)		6,075

(7)

Guarantees provided to associates or joint ventures as of December 31, 2016 are as follows:


In millions of won and thousands of foreign currencies
Primary guarantor	Secondary guarantor	Type of guarantees	Credit limit	Guarantee

Korea Electric Power Corporation	KEPCO SPC Power Corporation	Debt guarantees	USD 71,192	SMBC, Export-Import Bank of Korea and ADB
Korea Electric Power Corporation	Shuweihat Asia Operation & Maintenance Company	Performance guarantees	USD 11,000	SAPCO
Korea Electric Power Corporation	KNOC Nigerian East Oil Co., Ltd. and KNOC Nigerian West Oil Co., Ltd.	Performance guarantees	USD 34,650	Korea National Oil Corporation (Nigerian government)
Korea Electric Power Corporation	Rabigh Operation & Maintenance Company	Performance guarantees and others	USD 1,387	RABEC
Korea Electric Power Corporation	Nghi Son 2 Power Ltd.	Bidding guarantees	USD 10,000	SMBC Ho Chi Minh
Korea Electric Power Corporation	Barakah One Company	Debt guarantees	USD 900,000	Export-Import Bank of Korea and others
Korea Electric Power Corporation	Barakah One Company	Performance guarantees and others	USD 3,404,275
Korea Western Power Co., Ltd.	Cheongna Energy Co., Ltd.	Collateralized money invested	KRW 27,211	KEB Hana Bank and others
Korea Western Power Co., Ltd.	Cheongna Energy Co., Ltd.	Guarantees for supplemental funding and others (*1)	—	KEB Hana Bank and others
Korea Western Power Co., Ltd.	Xe-Pian Xe-Namnoy Power Co., Ltd.	Payment guarantees for business reserve	USD 2,500	Krung Thai Bank
		Collateralized money invested	USD 43,276	Krung Thai Bank
		Impounding bonus guarantees	USD 5,000	SK E&C

165

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(7)

Guarantees provided to associates or joint ventures as of December 31, 2016 are as follows, continued:


In millions of won and thousands of foreign currencies
Primary guarantor	Secondary guarantor	Type of guarantees	Credit limit	Guarantee

Korea Western Power Co., Ltd.	Rabigh Operation & Maintenance Company	Performance guarantees and others	SAR 5,600	Saudi Arabia British Bank
Korea Western Power Co., Ltd.	Daegu Photovoltaic Co., Ltd.	Collateralized money invested	KRW 1,230	IBK
Korea Western Power Co., Ltd.	Dongducheon Dream Power Co., Ltd.	Collateralized money invested	KRW 111,134	Kookmin Bank and others
Korea Western Power Co., Ltd.	PT. Mutiara Jawa	Collateralized money invested	USD 2,610	Woori Bank
Korea Western Power Co., Ltd.	Heang Bok Do Si Photovoltaic Power Co., Ltd.	Collateralized money invested	KRW 194	Nonghyup Bank
Korea Western Power Co., Ltd.	Shin Pyeongtaek Power Co., Ltd.	Collateralized money invested	KRW 40	Kookmin Bank
Korea East-West Power Co., Ltd.	Busan Shinho Solar Power Co., Ltd.	Collateralized money invested	KRW 2,100	Heungkuk Life Insurance Co., Ltd. and others
Korea East-West Power Co., Ltd.	Seokmun Energy Co., Ltd.	Collateralized money invested	KRW 580	KEB Hana Bank and others
Korea East-West Power Co., Ltd.	Seokmun Energy Co., Ltd.	Guarantees for supplemental funding (*1)	KRW 15,370	KEB Hana Bank and others
Korea East-West Power Co., Ltd.	Chun-cheon Energy Co., Ltd.	Collateralized money invested	KRW 52,700	Kookmin Bank and others
Korea East-West Power Co., Ltd.	Chun-cheon Energy Co., Ltd.	Guarantees for supplemental funding (*1)	KRW 60,270	Kookmin Bank and others
Korea East-West Power Co., Ltd.	Honam Wind Power Co., Ltd.	Collateralized money invested	KRW 3,480	Shinhan Bank
Korea East-West Power Co., Ltd.	GS Donghae Electric Power Co., Ltd.	Collateralized money invested	KRW 204,000	Korea Development Bank and others
Korea East-West Power Co., Ltd.	Yeonggwangbaeksu Wind Power Co., Ltd.	Collateralized money invested	KRW 3,000	Hyundai Marine & Fire Insurance Co., Ltd. and others
Korea East-West Power Co., Ltd.	PT. Tanjung Power Indonesia	Debt guarantees	USD 49,221	The Bank of Tokyo-Mitsubishi
Korea Southern Power Co., Ltd.	KNH Solar Co., Ltd.	Collateralized money invested	KRW 1,296	Shinhan Bank and Kyobo Life Insurance Co., Ltd.
Korea Southern Power Co., Ltd.	KNH Solar Co., Ltd.	Performance guarantees and guarantees for supplemental funding and others (*1)	—	Shinhan Bank and Kyobo Life Insurance Co., Ltd.
Korea Southern Power Co., Ltd.	Daeryun Power Co., Ltd.	Collateralized money invested	KRW 25,477	Korea Development Bank and others
Korea Southern Power Co., Ltd.	Daeryun Power Co., Ltd.	Guarantees for supplemental funding and others (*1)	—	Korea Development Bank and others
Korea Southern Power Co., Ltd.	Changjuk Wind Power Co., Ltd.	Collateralized money invested	KRW 3,801	Shinhan Bank and Woori Bank
Korea Southern Power Co., Ltd.	Changjuk Wind Power Co., Ltd.	Guarantees for supplemental funding (*1)	—	Shinhan Bank and Woori Bank
Korea Southern Power Co., Ltd.	Daegu Green Power Co., Ltd.	Collateralized money invested	KRW 46,226	Shinhan Bank
Korea Southern Power Co., Ltd.	KS Solar Co., Ltd.	Collateralized money invested	KRW 637	Shinhan Capital Co., Ltd.
Korea Southern Power Co., Ltd.	Kelar S.A	Performance guarantees	USD 50,700	KEB Hana Bank, SMBC, Mizuho Bank, BTMU, Natixis
Korea Southern Power Co., Ltd.	Kelar S.A	Debt guarantees	USD 132,600	BANCO SANTANDER-CHILE, SMBC, Mizuho Bank
Korea Southern Power Co., Ltd.	DS Power Co., Ltd.	Collateralized money invested	KRW 2,900	Korea Development Bank and others
Korea Southern Power Co., Ltd.	DS Power Co., Ltd.	Guarantees for supplemental funding and others (*1)	—	Korea Development Bank and others

166

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(7)

Guarantees provided to associates or joint ventures as of December 31, 2016 are as follows, continued:


In millions of won and thousands of foreign currencies
Primary guarantor	Secondary guarantor	Type of guarantees	Credit limit	Guarantee

Korea Southern Power Co., Ltd.	Pyeongchang Wind Power Co., Ltd.	Collateralized money invested	KRW 3,875	Woori Bank and Shinhan Bank
Korea Southern Power Co., Ltd.	Pyeongchang Wind Power Co., Ltd.	Performance guarantees and guarantees for supplemental funding and others (*1)	—	Woori Bank and Shinhan Bank
Korea Southern Power Co., Ltd.	Taebaek Wind Power Co., Ltd.	Guarantees for supplemental funding and others (*1)	—	Shinhan Bank
KEPCO Engineering & Construction Company, Inc.	DS Power Co., Ltd.	Collateralized money invested	KRW 15,000	Korea Development Bank and others
Korea Midland Power Co., Ltd.	Hyundai Green Power Co., Ltd.	Collateralized money invested	KRW 87,003	Korea Development Bank and others
Korea Midland Power Co., Ltd.	Hyundai Green Power Co., Ltd.	Guarantees for supplemental funding and others (*1)	—	Korea Development Bank and others
Korea Midland Power Co., Ltd.	PT. Cirebon Electric Power	Debt guarantees	USD 9,653	Mizuho Bank
Korea Midland Power Co., Ltd.	PT Wampu Electric Power	Debt guarantees	USD 5,367	SMBC
Korea Midland Power Co., Ltd.	Gangwon Wind Power Co., Ltd.	Collateralized money invested	KRW 7,409	IBK and others
Korea South-East Power Co., Ltd.	Hyundai Energy Co., Ltd.	Collateralized money invested	KRW 47,067	Korea Development Bank and others
Korea South-East Power Co., Ltd.	Hyundai Energy Co., Ltd.	Performance guarantees and guarantees for supplemental funding and others (*1)	KRW 78,600	Korea Development Bank and others
Korea South-East Power Co., Ltd.	RES Technology AD	Collateralized money invested	KRW 15,595	Korea Development Bank and others
Korea South-East Power Co., Ltd.	RES Technology AD	Debt guarantees	EUR 4,271	Korea Development Bank and others
Korea South-East Power Co., Ltd.	ASM-BG Investicii AD	Collateralized money invested	KRW 16,101	Korea Development Bank and others
Korea South-East Power Co., Ltd.	ASM-BG Investicii AD	Debt guarantees	EUR 4,175	Korea Development Bank and others
Korea South-East Power Co., Ltd.	Express Solar-light Power Generation Co., Ltd.	Guarantees for supplemental funding and others (*1, 2)	KRW 2,500	Woori Bank
Korea South-East Power Co., Ltd.	S-Power Co., Ltd.	Collateralized money invested	KRW 132,300	Korea Development Bank and others
KOSEP USA, INC.	KODE NOVUS II LLC	Guarantees for supplemental funding and others (*1)	USD 3,750	Korea Development Bank
KOSEP USA, INC.	KODE NOVUS I LLC	Guarantees for supplemental funding and others (*1)	—	Export-Import Bank of Korea and others
Korea Hydro & Nuclear Power Co., Ltd.	Yeongwol Energy Station Co., Ltd.	Collateralized money invested	KRW 1,400	Meritz Fire & Marine Insurance Co., Ltd.
Korea Hydro & Nuclear Power Co., Ltd.	Noeul Green Energy Co., Ltd.,	Collateralized money invested	KRW 1,740	KEB Hana Bank and others
Korea Hydro & Nuclear Power Co., Ltd.	Busan Green Energy Co., Ltd.	Collateralized money invested	KRW 14,564	Shinhan Bank and others
KEPCO Plant Service & Engineering Co., Ltd.	Incheon New Power Co., Ltd.	Collateralized money invested	KRW 6,800	Shinhan Bank
KEPCO Plant Service & Engineering Co., Ltd.	Incheon New Power Co., Ltd.	Guarantees for supplemental funding and others (*1)	—	Shinhan Bank

(*1)	The Company guarantees to provide supplemental funding for business with respect to excessive business expenses or insufficient repayment of borrowings.

(*2)

The Company has provided rights to Hana Financial Investment Co.,Ltd., an agent financial institution of the majority stockholders, that it can dispose the stocks of Express Solar-light Power Generation Co., Ltd. that the Company owns to repay the borrowings when Express Solar-light Power Generation Co., Ltd. triggers clauses related to its borrowings.

167

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

47.

Related Parties, Continued

(8)

As of December 31, 2016, there is no financial guarantee contract provided by related parties.

(9)

Derivatives transactions with related parties as of December 31, 2016 are as follows:

(i)

Currency Swap


In millions of won and thousands of U.S. dollars
			Contract Amount				Contract interest rate per annum						Contract exchange
Counterparty	Contract year		Pay		Receive		Pay (%)			Receive (%)			rate

Korea Development Bank		2016~2019	W	105,260	USD	100,000		2.48	%		2.38	%	W	1,052.60
		2015~2025		111,190	USD	100,000		2.62	%		3.25	%		1,111.90
		2016~2021		121,000	USD	100,000		2.15	%		2.50	%		1,210.00

(ii)

Interest Rate Swap


In millions of won
		Contract		Contract interest rate per annum
Counterparty	Contract year	amount		Pay (%)	Receive (%)

Korea Development Bank (*)	2014~2029		40,000	3M CD – 0.03%	4.65%

(*)

(10)

Salaries and other compensations to the key members of management of the Company for the years ended

December 31, 2016 and 2015 are as follows:


In millions of won
Type	2016		2015

Salaries	W	1,463		1,271
Employee benefits		33		59


	W	1,496		1,330

48.

Non-Cash Transactions

Significant non-cash investing and financing transactions for the years ended December 31, 2016 and 2015 are as follows:


In millions of won
Transactions	2016		2015
Transfer from construction-in-progress to other assets	W	19,971,599		10,491,054
Recognition of asset retirement cost and related provision for decommissioning costs		470,941		699,673
Transfer from provision for disposal of spent nuclear fuel to accrued expenses		283,675		491,755

168

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

49.

Commitments for Expenditure

(1)

The agreements for acquisition of property, plant and equipment as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
Contracts	Amounts		Balance		Amounts		Balance

Purchase of cable (PVC, 1C, 2500SQ) 103,374M and others (Bukdangjin-Shintangjung)	W	42,500		42,500		—		—
Purchase of GIS (800KV 8000A 50KA) 10CB – SinjungbuS/S		63,730		63,730		—		—
Purchase of GIS (362KV 6300A 63KA) 26CB – SingosungS/S		36,950		19,897		—		—
Purchase of GIS (362KV 6300A 63KA) 27CB – KwangyangS/S		37,476		27,760		—		—
Purchase of GIS (362KV 6300A 63KA) and 1 other 18CB – BukbusanS/S		34,000		20,766		—		—
Purchase of cable (TR CNCE-W/AL,1C,400SQ)		71,986		50,593		—		—
Purchase of cable (TR CNCE-W,600MM2, 13, 2KV)		50,581		—		50,581		50,581
Purchase of transformer (765/345/23kV 666.7MVA, 2TANK) 6 units – ShinjungbuS/S		37,500		37,500		—		—
Purchase of Ground Switch (44-D-A125, 600AX4)		43,624		—		43,624		42,912
Purchase of Concrete Poles (10M, 350KGF)		129,175		105,905		—		—
Purchase of Concrete Poles (10M, 350KGF)		106,037		—		106,037		74,549
Purchase of switch (25.8kV Eco)		40,226		28,072		—		—
Purchase of cable (PVC,1C,2000SQ)		50,256		50,256		—		—
Construction of New Kori units (#3,4)		6,856,150		—		6,856,150		214,678
Construction of New Kori units (#5,6)		8,625,387		7,286,503		8,625,387		7,899,368
Construction of New Hanwool units (#1,2)		7,982,342		1,157,700		7,982,343		2,578,707
Construction of New Hanwool units (#3,4)		8,261,818		8,170,896		8,261,817		8,238,651
Construction of Yeosu Thermal Power units (#1)		174,291		1,139		489,440		30,853
Other 31 contracts		430,204		222,555		199,846		140,563
Purchase of main machine for construction of Seoul Combined units (#1,2)		360,500		300,663		360,500		328,210
Construction of Seoul Combined units (#1,2)		225,205		129,589		227,000		182,630
Electricity construction of New Boryeong units (#1,2)		354,740		26,878		245,357		36,893
Purchase of smoke eliminating machine for construction of New Boryeong units (#1,2)		121,093		2,023		118,058		8,775
Purchase of coal handling machine for construction of New Boryeong units (#1,2)		146,353		3,543		146,353		25,266
Service of designing New Boryeong units (#1,2)		126,038		24,333		126,038		32,910
Purchase of main machine for construction of New Boryeong units (#1,2)		851,132		10,746		851,132		137,744
Construction of New Boryeong units (#1,2)		288,438		17,828		246,964		10,859
Purchase of factory process piping of New Boryeong units (#1,2)		37,294		—		37,294		11
Purchase of processing plant of New Boryeong units (#1,2)		34,490		—		33,269		9,116
Construction of port facilities for New Boryeong units (#1,2)		78,166		—		78,166		—
Purchase of generator for Wonju RDF combined & heat power plant		52,877		—		52,877		—
Purchase of main machine for Heang Bok Do Si combined & heat power plant		337,283		—		337,283		—
Purchase of coal handling machine for construction of Taean (#9,10) and IGCC units (conditional contract for installation)		192,945		38,218		146,634		9,943
Purchase of furnace for construction of Taean units (#9,10)		584,148		46,059		546,637		66,271
Service of designing Taean units (#9,10)		109,700		18,981		107,516		26,437
Purchase of desulfurization machine for construction of Taean units (#9,10)		92,086		1,017		91,592		6,175
Purchase of turbine generator for construction of Taean units (#9,10)		228,794		6,788		426,139		103,146
Purchase of gas plant machine for construction of Taean IGCC units		457,991		—		457,423		4,541
Purchase of combined generating machine for construction of Taean IGCC units		208,972		2,102		204,514		25,808
Purchase of oxygen plant for construction of Taean IGCC units		98,979		221		97,804		4,252
Service of designing Taean IGCC plant units		44,802		3,342		44,374		5,520
Construction of Samcheok units (#1,2)		457,943		15,851		384,716		27,018

169

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

49.

Commitments for Expenditure, Continued

(1)

The agreements for acquisition of property, plant and equipment as of December 31, 2016 and 2015 are as follows, continued:


In millions of won	2016				2015
Contracts	Amounts		Balance		Amounts		Balance

Purchase of furnace for construction of Samcheok units (#1,2)	W	1,091,303		51,594		1,091,303		115,896
Purchase of coal handling machine for construction of Samcheok units (#1,2)		303,273		155		290,417		23,795
Service of designing Samcheok units (#1,2)		114,047		36,510		112,949		42,631
Service of designing Dangjin units (#9,10)		122,426		6,125		109,340		16,261
Construction of yard for Andong natural gas power plant		41,961		2,600		40,960		2,528
Purchase of main equipments		152,286		39,248		152,286		138,057

(2)

As of December 31, 2016, details of contracts for inventory purchase are as follows:

The Company imports all of its uranium ore concentrates from sources outside Korea (including the United States, United Kingdom, Kazakhstan, France, Russia, South Africa, Canada and Australia) which are paid for with currencies other than Won, primarily in U.S. dollars. In order to ensure stable supply, the Company entered into long-term and medium-term contracts with various suppliers, and supplements such supplies with purchases of fuels on spot markets. The long-term and medium-term contract periods vary among contractors and the stages of fuel manufacturing process. Contract prices for processing of uranium are generally based on market prices. Contract periods for ore concentrates, conversion, enrichment and design and fabrication are as follows:


Type	Periods	Contracted amounts
Concentrate	2016 ~ 2030	34,719 Ton U3O8
Transformed	2016 ~ 2022	18,738 Ton U
Enrichment	2016 ~ 2029	34,879 Ton SWU
Molded	2016 ~ 2022	1,852 Ton U

170

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

50.

Contingencies and Commitments

(1)

Ongoing litigations related with contingent liabilities and assets as of December 31, 2016 and 2015 are as follows:


In millions of won	2016				2015
	Number of cases		Claim amount		Number of cases		Claim amount
As the defendant		675	W	636,433		750	W	1,052,301
As the plaintiff		193		489,605		202		580,987

As of December 31, 2016, in addition to the litigations mentioned above, there are ongoing litigations of Korea Hydro & Nuclear Power Co., Ltd. (“KHNP”), a subsidiary of KEPCO, against KEPCO Engineering & Construction Company, Inc., a subsidiary of KEPCO, as a co-defendant (one case amounting to W62,744million) and KEPCO Plant Service & Engineering Co., Ltd., a subsidiary of KEPCO, as a co-defendant (two cases amounting to W201 million).

A national litigation agency filed a lawsuit against NSSC regarding NSSC’s approval to continue operation of Wolsung Unit 1 nuclear power plant and it is ongoing as of December 31, 2016.

The Company is the defendant against a number of claims. The followings are potentially significant claims pertaining to the Company.

①

Hyundai Engineering & Construction Co., Ltd.(“Hyundai E&C”), SK Engineering & Construction Co., Ltd. and GS Engineering & Construction Co., Ltd. filed a lawsuit for increase in contract bill (formerly, amounted to W1,000 million) against KHNP in September 2013, in relation to the design changes on the plant construction of New Hanwool 1 & 2. Hyundai Engineering & Construction Co., Ltd. and two other companies increased the contract bill to W133,426 million in October 2014 and W204,040 million in November 2015, respectively, and submitted an application to demand extra contract payments due to the design changes. KHNP has paid W217,624 million of the claim amounts in full upon the first ruling in November 2016 and recognized the amount as addition to construction-in-progress accordingly. KHNP has made an appeal against the first ruling and the lawsuit is currently ongoing.

②

In December 2013, the Supreme Court of Korea ruled that regular bonuses also fall under the category of ordinary wages on the condition that those bonuses are paid regularly and uniformly. Also, the Supreme Court ruled that employees are entitled to retroactively demand certain wages based on the new ordinary wages that include regular bonuses as additional wages. However, the request may be limited to the extent of the principle of good faith.

The Company believes that the possibility of economic outflow is probable on the ongoing and the expected lawsuit. For this reason, the Company recognized W178,572 million of other provision in relation to the lawsuit.

Except these significant claims, there are seven arbitration cases pertaining to the Company as of December 31, 2016 and the significant arbitration cases are as follows:

①

KEPCO and KEPCO KDN Co., Ltd., a subsidiary of KEPCO, have been accused of breach of contract in relation to ERP software, which is provided by SAP Korea Ltd. The litigation was filed in the International Chamber of Commerce International Court of Arbitration but the Company has not recognized any provision because the probability of economic benefit outflow is remote and the related amount cannot be reliably estimated.

②

Hyundai Samsung Joint Venture (HSJV), one of the subcontractors of the Company, filed an arbitration against the Company at the London Court of International Arbitration (LCIA) in 2016 due to disagreements in UAE nuclear power plant construction project, but the Company has not recognized any losses because the probability of economic benefit outflow is remote and the related amount cannot be reasonably estimated.

③

Hyundai E&C, GS Engineering & Construction Corp., and Hansol SeenTec Co., Ltd. filed on arbitration against the Company to the Korea Commercial Arbitration Board in relation to the request for additional construction costs but the Company has not recognized any provision because the probability of economic benefit outflow is remote and the related amount cannot be reliably estimated.

④

Halla Corporation filed on arbitration against the Company to the Korea Commercial Arbitration Board in relation to the request for additional construction costs but the Company has not recognized any losses because the probability of economic benefit outflow is remote and the related amount cannot be reasonably estimated.

171

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

50.

Contingencies and Commitments, Continued

(2)

Guarantees of payments and commitments provided to other companies as of December 31, 2016 and 2015 are as follows:

①

In order to secure its status as a shareholder of Navanakorn Electric Co., Ltd., the Company has signed a fund supplement contract. According to the contract, in case Navanakorn Electric Co., Ltd. does not have sufficient funds for its operation or repayment of borrowings, the Company bears a payment obligation in proportion to its ownership.

②

The Company has outstanding borrowings with a limit of USD 275,600 thousand from its creditors such as International Finance Corporation. Regarding the borrowing contract, the Company has guaranteed capital contribution of USD 69,808 thousand and additional contribution up to USD 19,000 thousand for contingencies, if any. Moreover, for one of the electricity purchasers, Central Power Purchasing Agency Guarantee Ltd., the Company has provided performance guarantee up to USD 2,110 thousand, in case of construction delay or insufficient contract volume after commencement of the construction.

③

The Company has provided PT. Perusahaan Listrik Negara performance guarantee up to USD 917 thousand in proportion to its ownership in the electricity purchase contract with PT. Cirebon Energi Prasarana in relation to the second electirc power generation business in Cirebon, Indonesia. Also, in relation to the business, the Company has provided Limited Notice To Proceed 2 (“LNTP 2”) Offshore performance payment guarantee amounting to USD 2,784 thousand to Hyundai Engineering Co. Ltd., Toshiba Corporation and MHPS, and LNTP 2 Onshore performance payment guarantee amounting to USD 380 thousand to Hyundai E&C and Toshiba Asia Pacific Indonesia (TAPI) based on the interest owned by the Company to progress the construction.

④

The Company has provided the Export-Import Bank of Korea and SMBC guarantee of mutual investment of USD 401 thousand, which is equivalent to the ownership interest of PT Mega Power Mandiri, in order to guarantee the expenses related to hydroelectric power business of PT Wampu Electric Power, an associate of the Company.

⑤

The Company has provided the Export-Import Bank of Korea, BNP Paribas and ING Bank guarantee of mutual investment of USD 2,684 thousand, which is equivalent to the ownership interest of PT BS Energy and PT Nusantara Hydro Alam, in order to guarantee the expenses related to hydroelectric power business of Tanggamus, Indonesia.

172

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

50.

Contingencies and Commitments, Continued

(3)

Credit lines provided by financial institutions as of December 31, 2016 are as follows:


In millions of won and thousands of foreign currencies
Commitments	Financial institutions	Currency	Limited amount		Exercised amount

Commitments on bank-overdraft	Nonghyup Bank and others	KRW		1,635,000		54,962
Commitments on bank-daylight overdraft	Nonghyup Bank	KRW		280,000		—
Limit amount available for CP	Shinhan Bank and others	KRW		700,000		—
Limit amount available for card	KEB Hana Bank and others	KRW		46,323		3,102
	Banco de Oro	PHP		5,000		5,000
Loan limit	Kookmin Bank and others	KRW		1,132,282		718,617
Loan limit	BNP Paribas and others	USD		1,954,150		127,395
Certification of payment on L/C	Shinhan Bank (*)	KRW		19,721		19,721
	Woori Bank and others	USD		881,380		227,315
Certification of performance guarantee on contract	Kookmin Bank and others	EUR		21,291		21,291
	KEB Hana Bank	INR		236,443		185,077
	Seoul Guarantee Insurance and others	KRW		93,781		93,781
	Bank of Kathmandu	NPR		32,633		32,633
	KEB Hana Bank and others	USD		634,223		579,844
Certification of bidding	SMBC and others	USD		18,660		18,660
Advance payment bond, Warranty bond, Retention bond and others	Bank of Kathmandu	NPR		7,176		7,176
	KEB Hana Bank	SAR		95,756		91,097
	HSBC and others	USD		3,615,443		523,114
Others	Export-Import Bank of Korea	EUR		1,400		—
	KEB Hana Bank	INR		157,830		157,830
	KEB Hana Bank	JPY		756,669		756,669
	Nonghyup Bank and others	KRW		277,336		7,257
	KEB Hana Bank	SAR		2,240		—
	KEB Hana Bank and others	USD		1,111,636		561,443
Inclusive credit	Shinhan Bank	INR		47,489		47,489
	KEB Hana Bank	KRW		258,000		143,840
	HSBC and others	USD		302,510		2,510
	KEB Hana Bank	USD		30,000		7,730
		INR				256,582
		BRL				426
Trade finance	BNP Paribas and others	USD		750,000		—

(*)	The Company was provided with a guarantee of W198 million from Daewoo Engineering & Construction Co. Ltd. for some of its commitments.

173

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

50.

Contingencies and Commitments, Continued

(4)

As of December 31, 2016, blank check and assets provided as collaterals or pledges to financial institutions by the Company are follows:

In millions of won and thousands of foreign currencies

Guarantor

Guarantee

Type of guarantee

Currency

Amount

Description

Korea East-West Power Co., Ltd.

Korea Development Bank and others

Shareholdings of Gyeongju Wind Power Co., Ltd.

KRW

15,958

Collateral for borrowings

Korea Midland Power Co., Ltd.

IBK and others

Shareholdings of Commerce and Industry Energy Co., Ltd.

KRW

13,605

Collateral for borrowings

Korea Southern Power Co., Ltd.

Shinhan Bank and others

Shareholdings of KOSPO Youngnam Power Co., Ltd.

KRW

40,000

Collateral for borrowings

Korea South-East Power Co., Ltd.

International Finance Corporation and others

Shareholdings of Mira Power Limited

KRW

38,206

Collateral for borrowings

Korea Hydro & Nuclear Power Co., Ltd.

Korea Development Bank and others

Shareholdings of Gyeonggi Green Energy Co., Ltd.

KRW

47,000

Collateral for borrowings

Gyeonggi Green Energy Co., Ltd.

Korea Development Bank and others

Factory estate and others

KRW

327,080

Collateral for borrowings (*)

Commerce and Industry Energy Co., Ltd.

IBK and others

Land, buildings, structures and machinery and others

KRW

110,500

Collateral for borrowings

Cash and cash equivalents

KRW

9,051

Gyeongju Wind Power Co., Ltd.

SK Securities Co., Ltd. and others

Property, plant and equipment and others

KRW

31,962

Collateral for borrowings

Existing or expected trade receivables

KRW

3,431

Cash and cash equivalents

KRW

716

KOSPO Youngnam Power Co., Ltd.

Shinhan Bank and others

Bank deposit and insurance claim

KRW

396,120

Collateral for borrowings

Qatrana Electric Power Company

The Islamic Development Bank and others

Finance Lease receivable and property, plant and equipment and others

JOD

188,580

Collateral for borrowings

KST Electric Power Company

Scotiabank Inverlat, S.A

Finance Lease receivable and others

USD

332,850

Collateral for borrowings

(*)

The Company was provided with shares of Gyeonggi Green Energy Co., Ltd., one of its subsidiaries, from the investors as collateral related to long-term borrowings. Additionally, pledge for shares, pledge for transfer of rights of long-term borrowings, pledge for insurance claims and other pledges were established.

The Company has W1,197 million of project loans from Korea Resource Corporation as of December 31, 2016. The Company has provided a blank check as repayment guarantee.

(5)

The Company temporarily suspended operations of the Gangneung hydroelectric generating plant, with a carrying amount of W94,886 million as of December 31, 2016, to improve the quality of water used in generating electricity. The expenses related to the suspension of operations of W459 million and depreciation on the utility plant of W6,639 million are recorded to other expenses for the year ended December 31, 2016.

174

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

50.

Contingencies and Commitments, Continued

(6)

Due to the Korean government’s announcement of suspension of operation in the Gaeseong Industrial District, it is uncertain if the Company can exercise the property rights for the Company’s facility in the Gaeseong Industrial District as of December 31, 2016. The book value of facility is W19,820 million and the amount of trade receivables related to the companies residing in Gaeseong industrial complex is W3,172 million. The Company has entered into an insurance agreement covering up to W7,000 million with the Export-Import Bank of Korea related to Gaeseong industrial complex. The ultimate outcome of this event cannot be reasonably estimated.

51.

Subsequent Events

(1)

Subsequent to December 31, 2016, Korea Western Power Co., Ltd., a subsidiary of the Company, issued non-guaranteed bonds and additional foreign currency short-term borrowings for funding facilities and operations as follows:


In millions of won and thousands of foreign currencies
Company Name	Type	Issued date		Maturity		Maturity			Amounts

Korea Western Power Co., Ltd.	Short-term borrowings		2017.01.11		2017.07.10		1.62	%	USD	13,618
	Corporate bonds #33-1		2017.02.22		2022.02.22		2.04	%	W	70,000
	Corporate bonds #33-2		2017.02.22		2027.02.22		2.34	%		130,000

(2)

On January 19, 2017, Marubeni Korea Corporation filed on arbitration against the Company to the Korean Commercial Arbitration Board in relation to the refund of W4,050 million paid by Marubeni Korea Corporation to the Company as a penalty payment for the delayed delivery of Pyeongtaek 2 compound main equipment. The Company was notified on February 14, 2017 and is planning to appoint an arbitrator to proceed with arbitration. The management of the Company anticipates that the result of the arbitration will not have a significant impact on the Company’s business or financial position.

(3)

Ordinary wage lawsuit

As of December 31, 2016, a total of eight lawsuits filed at the Busan High Court and others against KHNP in relation to the ordinary wages were ongoing. Two of these lawsuits filed to the Seoul Central District Court were ruled on February 3, 2017 with a partial favor to the plaintiff. The Company believes the ruling did not have any significant impact on the provisions recorded at December 31, 2016.

(4)

Result of Wolsung Unit 1 lawsuit

On February 7, 2017, regarding the lawsuit as disclosed in note 2.(4).(vii), a national litigation agency filed against NSSC, the Seoul Administrative Court ruled to annul the life extension of Wolsung Unit 1 nuclear power plant. On February 14, 2017, NSSC appealed against the first judgment. KHNP, a subsidiary of the Company, is continuing to operate Wolsung Unit 1 nuclear power plant based on the judgment of NSSC that the approval of NSSC is valid, and believes that Wolsung Unit 1 nuclear power plant will be operated until 2022. Meanwhile, the Joint Action for a Nuclear-free Society submitted a suspension of execution of permission to operate Wolsung Unit 1 nuclear power plant to the Seoul Administrative Court. On February 14, 2017, KHNP joined in the lawsuit for a suspension of execution of permission to operate Wolsung Unit 1 nuclear power plant as a third party and a stakeholder.

175

KOREA ELECTRIC POWER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements, Continued

December 31, 2016

52.

Adjusted Operating Income

The operating profit in the Company’s consolidated statements of comprehensive income prepared in accordance with K-IFRS included in this report differs from that in its consolidated statements of comprehensive income prepared in accordance with IFRS as issued by IASB. The table below sets forth a reconciliation of the Company’s results from operating activities as presented in the Company’s consolidated statements of comprehensive income prepared in accordance with K-IFRS for the years ended December 31, 2016 and 2015 to the operating profit or loss as presented in the Company’s consolidated statements of comprehensive income prepared in accordance with IFRS as issued by IASB for each of the corresponding years.


In millions of won	2016			2015

Operating profit on the consolidated statements of comprehensive income	W	12,001,599			11,346,732
Add
Other income
Reversal of other provisions		22,034			6,355
Reversal of other allowance for bad debt		5,489			413
Gains on government grants		111			204
Gains on assets contributed		12,254			9,004
Gains on liabilities exempted		1,959			2,588
Compensation and reparations revenue		114,530			166,355
Revenue from research contracts		13,143			5,342
Rental income		211,580			196,406
Others		31,787			45,552
Other gains
Gains on disposal of property, plant and equipment		74,035			8,637,508
Gains on disposal of intangible assets		—			32
Reversal of impairment loss on intangible assets		3			275
Gains on foreign currency translation		15,311			13,784
Gains on foreign currency transaction		55,377			61,007
Gains on insurance proceeds		—			30
Others		187,792			162,128
Deduct
Other expense
Compensation and indemnification expense		—			(16,959	)
Accretion expenses of other provisions		(4,556	)		(4,575	)
Depreciation expenses on investment properties		(678	)		(669	)
Depreciation expenses on idle assets		(6,639	)		(6,698	)
Other bad debt expense		(4,585	)		(18,473	)
Donations		(114,094	)		(34,134	)
Others		(58,072	)		(27,340	)
Other loss
Losses on disposal of property, plant and equipment		(42,715	)		(73,073	)
Losses on disposal of intangible assets		(158	)		(16	)
Impairment loss on property, plant and equipment		—			(30,344	)
Impairment loss on intangible assets		(3,945	)		(22	)
Losses on foreign currency translation		(23,835	)		(15,097	)
Losses on foreign currency transaction		(72,058	)		(75,615	)
Others		(119,309	)		(69,824	)


Adjusted operating profit	W	12,296,360			20,280,876

176