KEP

Good morning, and good evening. First of all, thank you all for joining this conference. Now we will begin the conferences of the fiscal year 2025 full quarter earnings resulted by KEPCO. This conference will start with a presentation, followed by a divisional Q&A session. If you have a question, please press asterisk one on your phone during the Q&A. Now, we shall commence the presentation on the fiscal year 2025 full quarter earnings resulted by KEPCO.

Good afternoon. This is Si-young Yang, Head of Finance Department of KEPCO. I'd like to thank you all for participating in today's conference call for the business results of the fourth quarter of 2025, despite your busy schedule. Today's call will be conducted in both Korean and English. We will begin with a brief presentation of the earnings results, which will be followed by a Q&A session. Please note that the financial information to be disclosed today is preliminary consolidated IFRS figures, and all comparison is on a year-over-year basis, unless stated otherwise. Business plans, targets, financial estimates, and other forward-looking statements mentioned today are based on our current targets and forecasts. Please be noted that such statements may involve investment risks and uncertainties.

We will begin with an overview of the earnings results for the fourth quarter of 2025 in Korean, which will be then consecutively translated into English.

영업손익부터 살펴보겠습니다. 2025년 연간 연결 영업이익은 KRW 13.5248 trillion을 기록하였습니다. 구체적인 내역을 살펴보면, 매출액은 4.3% 증가한 KRW 97.4345 trillion을 기록하였습니다. 이중 전기 판매 수익은 4.6% 증가한 KRW 93.0046 trillion, 해외 사업 수익 등 기타 수익은 1.8% 감소한 KRW 4.4299 trillion을 기록하였습니다. 매출 원가와 판관비는 1.3% 감소한 KRW 83.9097 trillion입니다. 이 중 연료비는 13.8% 감소한 KRW 19.4364 trillion, 구입 전력비는 1.8% 감소한 KRW 34.0527 trillion을 기록하였습니다. 감가상각비는 2.3% 증가한 KRW 11.6678 trillion을 기록하였습니다. 주요 영업외 손익 중 이자 비용은 전년 동기 대비 KRW 0.3256 trillion 감소한 KRW 4.3399 trillion을 기록하였습니다. 지금까지 언급한 내용을 주요 원인으로, 2025년도 연간 연결 영업이익은 KRW 13.5248 trillion, 당기순이익은 KRW 8.7372 trillion을 기록하였습니다.

I will first go over the operating items. The consolidated operating income in 2025 stood at KRW 13.524.8 trillion. Revenue increased by 4.3% to KRW 97.434.5 trillion. Power sales increased by 4.6% to KRW 93.004.6 trillion. Overseas business and other revenue decreased by 1.8% to KRW 4.429.9 trillion. Cost of goods sold and SG&A decreased by 1.3% to KRW 83.909.7 trillion. Fuel costs decreased by 13.8% to KRW 19.436.4 trillion, and purchase power costs decreased by 1.8% to KRW 34.052.7 trillion. Depreciation expense increased by 2.3% to KRW 11.667.8 trillion.

Next, I will go over the non-operating items. Interest expense decreased by KRW 325.6 billion YOY to KRW 4.339.5 trillion. As a result of the foregoing, the 2025 consolidated annual operating income stood at KRW 13.524.8 trillion, and net income was KRW 8.737.2 trillion.

안녕하세요, IR 담당 Eom Tae-seop입니다. 이어서 주요 관심 사항 말씀드리겠습니다. 먼저 전력 판매 실적 및 전망에 대해 말씀드리겠습니다. 연간 전력 판매량은 경기 둔화 등의 영향으로 산업용 수요가 감소하여 총 판매량 549.4 terawatt-hours를 기록하여 전년 동기 대비 0.1% 감소하였습니다. 2026년에는 경제 성장률 상승과 조업일수 증가 등의 영향으로 판매량이 소폭 증가할 것으로 전망하고 있습니다.

Good afternoon. I am Eom Tae-seop, Head of IR Team. I will go over the matters of interest. I will talk about the performance of power sales and its outlook for the remainder of the year. Annual power sales volume due to economic downturn, and as a result of that, given the industrial demand has decreased, the total sales volume was 549.4 TWh, which is a 0.1% decrease year-over-year. In 2026, the economic growth rate and number of operating days increase should lead to a slight increase in the total sales volume.

다음으로 연료 원별 연료 가격 및 SMP 추이에 대해 말씀드리겠습니다. 이천이십오년 연간 연료 가격은 유연탄은 호주탄 기준 톤당 백오점칠 달러, LNG는 JKM 기준 톤당 약 구십팔만 원을 기록하였습니다. 또한 SMP는 약 백십이점칠 원 per kilowatt hour를 기록하였습니다.

next, I will go over the fuel price by fuel source and SMP trends. In 2025, if you look at the annual trend of the fuel prices for bituminous coal, Australia, the price was around $105.7 per ton. For LNG, JKM was KRW 980,000 per ton, and the SMP was around KRW 112.7 per kWh.

전력 그룹사 발전 믹스를 살펴보면, 2025년 연간 발전 비중의 경우 원전은 이용률 상승으로 발전 비중이 증가하였습니다. 석탄의 경우 이용률 상승으로 발전 비중이 증가하였고, LNG는 설비 용량 감소와 기저 발전량 증가로 발전 비중이 감소하였습니다. 2026년 연간으로는 원전 발전 비중 증가, 석탄 비중은 감소, LNG 비중은 유지할 것으로 예상합니다. 2026년 연간 발전원별 이용률 전망은 원전은 80% 중후반, 석탄은 40% 중반, LNG는 20% 초중반을 전망하고 있습니다.

Next, I will go over the generation company. If you look at the annual 2025 generation mix, the capacity factor of nuclear power increased, thus its contribution to the mix increased as well. For coal, the capacity factor increased, thus the contribution in the generation mix increased. For LNG, the installed capacity decreased, due to the increase of base load power generation, the contribution to the mix decreased. For 2026 on annual basis, we expect the contribution of nuclear power to increase, coal to decrease, LNG should largely remain flat. In 2026, the capacity factor for each fuel source should be as follows: nuclear power around mid to high 80%, coal around mid 40%, LNG should be around early to mid 20%.

RPS 관련 비용에 대해 말씀드리겠습니다. 2025 연간 RPS 비용은 연결기준 KRW 3,989.7 billion, 별도 기준 KRW 4,818.8 billion을 기록하였습니다. 마지막 자금조달 현황입니다. 2025 Q4 연결 기준 차입금은 KRW 129.8 trillion, 별도 기준 차입금은 KRW 84.9 trillion을 기록하고 있습니다.

Next, I will go over the RPS cost. In 2025, annual RPS expense on consolidated basis was KRW 3.989.7 trillion, and on standalone basis it was KRW 4.818.8 trillion. Last, I will go over the funding situation. As of 2025 Q4, consolidated total borrowings was KRW 129.8 trillion, and on standalone basis it was KRW 84.9 billion.

이어서 질의응답 시간을 갖도록 하겠습니다. 국, 영문 순차 통역으로 진행되므로 질문과 답변을 간단하고 명료하게 해주시면 감사하겠습니다. 그럼 이제 질문을 시작해 주시기 바랍니다.

Now we will move on to the Q&A session. Since we will be conducting the Q&A session in both Korean and English, please make your questions and answers clear and brief. Thank you.

지금부터 질의응답을 시작하겠습니다. 질문이 있으신 분들은 전화기 버튼의 별표와 1을 눌러주십시오. 신청하신 질문을 취소하시려면 별표와 2를 눌러주시면 됩니다.

Now, the Q&A session will begin. Please press asterisk one if you have any questions. For cancellation, please press asterisk two on your phone.

처음으로 질문해 주실 분은 LS증권의 성종환님입니다. 질문해 주십시오.

The first question will be given by Sung Jong-hwa from LS Securities. Please go ahead.

네, 감사합니다. LS Securities의 성종화입니다. 감기로 목소리가 좀 안 좋은 거 양해 구하고요. 우선 실적 관련된 질문 2가지 드리겠습니다. 4분기가 그 원전 계획예방정비 집중으로 원전 비중이 YOY로 조금 과도 비중으로 투서되는 것을 감안해서 그 연료비와 전력 구입비를 좀 조정해 놓았기 때문에 예상에 부합했는데, 영업이익이 한 KRW 1 trillion 정도 예상에 미달한 것이 조금 기타 비용 쪽인 것 같아요. 기타 비용이 예상보다 한 KRW 1 trillion, KRW 2.2 trillion 정도 초과를 했거든요. 4분기 혹시 원전 복구 충당금이나 온실가스 배출권 가격이 2025년에는 4분기에 집중되는 걸로 알고 있는데요. 그 금액이 얼마 정도 되는지 말씀해 주시고, 이 매년 특정 분기에 고정적으로 계속 발생 하는 게 아니라, 분기별로 어떤 분기는 뭐 2분기, 어떤 분기는 4분기 자꾸 돌아가면서 발생하고 있는데, 혹시 연간으로는 연도별로는 원전 복구 충당금이나 온실가스 배출권가가 비교적 비슷한 금액이 유지가 되고 있는지 그것도 말씀해 주시고요. 첫 번째 질문이었습니다.

두 번째는, 아까 올해 원전 믹스, 원전 발전 비중은 작년보다는 전체적으로 좀 증가한다고 말씀하셨는데, 작년 Q4가 좀 이례적으로 잘 가다가 원전 발전 비중이 YOY 6 percentage points 이상 이렇게 축소가 됐잖아요? 축소된 그 모수를 기준으로, 예를 들어, 올해 Q4도 그것이 좀 증가한다는 것인지, 아니면 작년 Q4 원전 발전 그 비중이 좀 이례적으로 축소된 것이기 때문에 원래 그 좀 증가했으리라고 가정하는 원래 수준 대비 좀 증가할 것이라는 것인지? 올해 Q4 원전 발전 비중은 작년 Q4 대비로는 상당폭 비중이 확대가 되는 것인지, 아니면 조금 확대가 되는 것인지 답변 부탁드리겠습니다. 두 번째 질문이었습니다.

Good afternoon, thank you for the opportunity. I am from LS Securities, my name is Sung Jong-hwa, please understand my sore throat today. I have two questions. Number one, it's about the contribution of the nuclear power generation in the generation mix. I think largely fuel cost and power purchase cost was in line with expectations. Nevertheless, the operating income was underperforming expectations by around KRW 1 trillion. I think this is largely because of other costs. I think other costs was around KRW 1.2 trillion higher than what we expected. I believe this is mainly coming from the recovery of nuclear power generation sites and costs associated to carbon and greenhouse gases. It seems that these cost items were concentrated in Q4 in 2025.

However, if you look at other years, sometimes it's booked in Q2, sometimes it's booked in Q4, and so, the seasonality is not stable. On an annual basis, on an annual basis, how much do you expect these other cost items to be generated or incurred every year? Second is about the contribution of the nuclear power generation. In Q4 2025, on a YY basis, I think the nuclear power generation contribution went down by around 6%, which is unusual given that for the first three quarters of 2025, our nuclear power generation contribution was higher than that.

When you say, or you said in your keynote that the contribution of nuclear power will probably increase in 2026, is it compared to Q4 2025, or is it compared to the first three quarters of 2025? In other words, in Q4 2026, will nuclear power generation contribution be slightly higher or significantly higher than 2025 Q4? Thank you.

네, 말씀드리겠습니다. 첫 번째 질문 관련해 가지고, 온실가스 충당부채 전입액은 전년 대비 KRW 1,606억 증가한 KRW 3,406억 정도 되고요. 이제 원전 충당부채 증액종목 같은 경우에는 전년 대비 KRW 4,112억 증가한 KRW 46억 환입액, -KRW 46억이라고 보시면 될 것 같습니다. 이게 언제 이게 쌓이냐라고 하는 부분은 저희가 이제 내부적으로 논의하고 답변 드리도록 하겠습니다.

I will first address your first question regarding the other cost. The provisions for related to greenhouse gas emissions went up by around KRW 120.6 billion to KRW 340.6 billion. The provisions regarding the recovery of the nuclear power generation sites, it went up by KRW 411.2 billion, resulting in a -KRW 4.6 billion. There was actually write backs. The exact timing of when we book these type of provisions and costs, I think we will discuss internally and I'll get back to you later on. Regarding your second question, we mentioned that the capacity factor for nuclear power should be around mid-high 80% on an annual basis.

Maybe towards the end or early part of the year, the capacity factor may seem lower than that, but on an annual basis, I believe that it will be higher. Especially given that we have nuclear power plants who are going through and completing its maintenance, preventive maintenance process, which should come back online. The addition of new power plants should add to the higher capacity factor of nuclear power in 2026.

다음 질문 받겠습니다.

다음으로 질문해 주실 분은 Meritz Securities의 Kyeong Won Moon님입니다. 질문해 주십시오.

The following question is by Kyeong Won Moon from Meritz Securities. Please go ahead.

네, 안녕하세요. Meritz Securities Kyeong Won Moon, Analyst. 3가지 질문이 있습니다. 우선 첫 번째로는 3분기 대비해서 4분기 연결 영업이익이 크게 줄었음에도 불구하고, 별도 영업이익은 오히려 늘어났거든요. 이 원인을 설명해 주시면 좋겠습니다. 아무래도 정산조정계수 관련한 것 같은데, 이게 얼마나 변했는지 궁금하고, 1분기에 정산조정계수도 어떤 식으로 변화할지 같이 설명해 주셨으면 좋겠습니다. 두 번째 질문은, 영업이익 대비 세전이익이 좀 잘 나온 것 같습니다. 연결손익, 별도손익 모두, 영업이익 대비 세전손익이 생각보다는, 제 생각보다는 잘 나온 것 같은데, 금융 손익에서 뚜렷한 어떤 일회성 이익이나 이런 것들이 있었는지 궁금합니다. 세 번째로는 방금 배당 공시가 나왔는데요. 제가 계산하기로는 별도 순이익 기준 대비 이 배당성향이 작년보다도 오히려 감소한 이 모습을 보여준 것 같은데, 이 DPS 산출 논리가 어떻게 됐는지, 왜 이런 숫자가 나오게 됐는지 궁금하고요. 2026년에 배당성향은 2024년, 2025년보다 더 늘어날 수 있을지, 그 방향성에 대해서도 같이 공유해 주시면 감사하겠습니다. 이상입니다.

Good afternoon. My name is from Meritz Securities, and I have three questions today. One, if you compare the consolidated operating income of Q3 and Q4, and the standalone operating of the two quarters, I believe that the standalone operating income is relatively higher numbers or relatively better, show better performance. I believe this is largely driven by the adjustment coefficient. Is that the main reason, or what is the main reason behind this? What would be your expected adjustment coefficient for Q1, 2026? My second question is regarding the before tax profit. Compared to the operating income, the before tax profit seemed to have performed quite strongly, both for consolidated and standalone numbers. What would be the reason behind this?

Were there any one-off PNL items in other categories, like the finance, and other businesses? My third question is related to the dividends. I believe that the dividend was just announced, and if you look at the dividend payout on the standalone net income basis, it seems that it actually decreased compared to last year. How did you come to this DPS number? What is the logic behind that? What would be your expectation or outlook for the dividend payout of 2026? Do you think it will be higher than 2024 and 2025?

첫 번째 질문 답변 드리겠습니다. 저희 연결이익 대비 별도이익이 조금 더 나아 보이는 사유는, 연결이익에서는 자회사 관련 비용이 좀 추가된 게 있는데, 별도 이익에서는 그게 없기 때문에 그렇게 나타난 것으로 보이고 있습니다.

Regarding your first question, it may seem that the standalone profits are stronger than the consolidated numbers, because there are some costs associated with our subsidiaries, which is booked under consolidated financial statements, but not on our standalone numbers.

두 번째, 정산조정계수 관련해 조금 부연 설명을 드리면, 정산조정계수는 작년 사분기 중에 조금 높으, 높- 평소보다, 어, 기존보다 조금 높게 설정이 되었습니다.

Regarding the adjustment coefficient, in Q4 last year, the numbers were slightly higher than previous, you know, average quarters.

2026년에 정산조정계수 방향성은 2025년보다는 조금 높은 방향으로 설정이 되어 있는 상태입니다.

The coefficient for 2026, we expect to be slightly higher than 2025.

두 번째 질문에 대한 답변 드리겠습니다. 영업이익에서 이제 세전손익으로 넘어갈 때 이제 금융손익 쪽에서 말씀 주셨는데, 이게 저희 현금 말고 자회사 쪽에서는 이제 환율 하락으로 헷지가 불가능한 리스 부채가 있는데, 이게 외화 환율이 하락을 하면서 이제 외화 평가이익 손익이 발생을 해서 그런 이제 차이, 그, 가 별로 안 나는 그런 차이가 있습니다.

Regarding your question comparing the operating income and the before tax income. For our subsidiaries, there were some lease liabilities that could not be hedged due to the decrease in the FX rates. Because of the FX in the process of the FX conversion, there were some valuation losses and gains that needed to be booked that impacted the numbers.

네, 세 번째 질문에 대한 답변 드리겠습니다. 일단 말씀 주신 대로 전년 배당 성향이 16.5% 대비 올해 배당성향은 13.65%로, 배당성향 자체는 감소하였습니다. 다만, 당기순이익이 크게 증가함에 따라 별도 기준 당기순이익이 크게 증가함에 따라, 총 배당금액을 주당 배당금으로 나누는 DPS 같은 경우에는 증가 1,540 KRW으로 크게 증가하였습니다. 2026년 배당성향 같은 경우에는 저희는 두 규제 상법에 따라 정부 배당 계산 주어서도, 저희가 단독으로 결정하기는 어렵고, 정부와 협의하여 결정되는 사항이기 때문에 현재로서는 배당 증가에 대한 부분은 말씀드리기 어려울 것 같습니다.

Regarding your question on dividends, last year, the payout was 16.5%, and this year it was 13.65%. Like you mentioned, it did decrease. However, I'd like to note that the size of the net income on standalone basis increased significantly, so the absolute amount of dividends that were paid out will increase. DPS also increased to around KRW 1,541 per share. As for 2026, as you know, we are a public corporation, and subject to the relevant legislations. We need to discuss the dividend strategy with government departments. At this point, unfortunately, we are not able to comment on the direction of 2026 dividends.

Foreign language

The following question is by Yoo Jaeseon from Hana Securities. Please go ahead.

Yeah. [Non-English content]

Good afternoon. I am Jaeseon Yoo from Hana Securities. I have four questions. My first question is provisional liabilities related to used fuel, used nuclear fuel. In January, I read news that the unit price has gone up. Maybe can you give us a little bit more color on this topic? My second question is also related to this as well. What was the total amount of the used nuclear fuel related provisional liabilities booked by KHNP in Q4 2025? Third, there was a 15% decrease, price decrease, that was subject to a grace period. That grace period is coming to an end. I believe, therefore, the bituminous coal in price can go up.

What would be the associated cost that you are expecting in regards to the end of the grace period? Fourth is related to the bond issuance limit. What would be the outstanding amount of bonds issued, and how much room do you have in comparison to the cap?

[Foreign language]

Try to address your first two questions at once. The provisional liabilities that were booked for the recovery of nuclear power sites was KRW 904.5 billion, increased by KRW 904.5 billion, to KRW 24.076.9 trillion. As for the used nuclear fuel, it decreased by KRW 178.4 billion to KRW 2.745.3 trillion. As for the mid and low level nuclear waste associated provisions and liabilities, it went up by KRW 10.2 billion to KRW 1.077.2 trillion.

[Foreign language]

As for your third question, regarding the grace period of the individual consumption tax coming to an end, and how that would impact our cost. We do have an internal estimate, but unfortunately, we are not able to disclose those numbers to the public and the market, so we ask for your understanding.

[Foreign language]

Yes, regarding your final question on the bond issuance cap. The final exact number can be calculated after the dividend is finalized at the board and shareholders meeting. We believe that it will be something around just over 3x once all of those dividend-related activities are finalized.

다음 질문 받겠습니다.

현재 질문을 입청하고 계신 분은 없습니다. 질문 있으신 분들은 전화기 버튼의 별표와 일번을 눌러주십시오.

Currently, there are no participants with questions. Please press asterisk one to give you a question.

다시 한번 말씀드리겠습니다. 질문이 있으신 분들은 전화기 버튼의 별표와 일번을 눌러주십시오.

Once again, if you have a question, please press asterisk one.

다음으로 질문해주실 분은 LS증권의 성종화입니다. 질문해 주십시오.

The following question is by 성종화 from LS Securities. Please go ahead.

안녕하세요. 두 가지 더 질문드리겠습니다. 첫 번째는 혹시 이 자리에서 가능한 수준 내에서, 그 원전 수출 일원화 관련 진행 사항이라든지 방향에 대해서 조금 공유해 주실 수 있는지요? 첫 번째 질문이고요. 그 두 번째는 BNPP 추가 공사비 한 KRW 1.4 trillion 정도에 대해서 자회사 한수원이 몇몇 분쟁 중재소에 지금 제출한 상황이잖아요. 그 추가 공사비 KRW 1.4 trillion은 그동안은 저희 연결 실적에 이제 비용으로 쭉 묻어서 이게 감인 요인으로 반영되어 있는 것인지. 만약 그렇다면, 나중에 한전이 UAE 정부로부터 또 이를 받아낼 수 있는지, 받아낸다면 도대체 실제에는 어떠한 식으로 반영이 되는지, 이 부분 말씀 부탁드리겠습니다. 예, 두 가지 질문이 있습니다.

Yes, I have two questions. First is regarding the nuclear power generation export strategy. I believe that there is a process currently ongoing to streamline the Korean nuclear power generation export strategy. Maybe can you elaborate a little bit on how that is moving forward? Second, I believe that there is some court case in the international mediation courts by KHNP regarding the additional KRW 1.4 trillion construction cost that was incurred during the BNPP construction project. Has that been already reflected in the financial statement? If so, if KHNP is able to recover the cost from the UAE government, will that have impact on the financial statements?

네, 첫 번째 질문에 대해 답변드리겠습니다. 원전 수출 체계 일원화 관련으로는 현재 산업부에서 관련 협력을 진행 중인 것으로 알고 있습니다. 한전은 정부 한수원과의 협력을 통해서, 국익극대화 차원에서 가장 좋은 원전 수출 이원화 체계를 나아가는 데 협조하도록 하겠습니다.

Yes. I will address your first question regarding the export of nuclear power plants of Korea. I believe that the research project has been outsourced by the Ministry of Industry, and they are currently waiting for the results. KEPCO, of course, will be closely cooperating with the government to ensure that high quality nuclear power plant export strategy can be developed to maximize and satisfy the global customers.

두 번째 질문 답변드리겠습니다. 현재 KEPCO KHNP 분쟁 관련해서는 분쟁이 진행 중이나 양 사간의 대화와, 대화의 길을 열어놓고 계속 협상하고 있으며, 분쟁 해결 방안을 모색 중에 있습니다. 구체적인 수치 관련해서는 답변드리기 힘든 점 말씀 양해 부탁드립니다.

Yes, your second question regarding the dispute between KEPCO and KHNP. We are currently in conversation and negotiation with them, and I think both parties are making utmost effort to resolve this conflict in a stable manner. However, please understand that we are not able to disclose any specific numbers.

다음 질문 받겠습니다.

다음으로 질문해 주실 분은 UBS의 조윤행님입니다. 질문해 주십시오.

The following question is by 조윤행 from UBS. Please go ahead.

예, 질문 기회 감사합니다. 세 가지 질문 드리겠습니다. 먼저 전기요금 관련해서인데요. 최근에 이제 언론 보도에 따르면 산업용 요금에 대해서 일단 정부하 요금, 이제 시간과 특히 뭐 주말 할인 같은 것들을 고려하고 있다는 보도가 나왔는데요. 추가적으로 또 이제 지역별 요금제도 산업용에 이제 한정해서 적용을 이제 예상을 하고 있다고 기후에너지환경부 장관님이 말씀을 하셨습니다. 그래서 이와 같은 이 두 가지 변화에 대해서 저희가 어떤 방향으로 지금 계획을 짜고 계신지, 그리고 전체적인 전기요금 평균 단가에 어떤 영향을 예상하고 계신지 궁금하고요. 또 이러한 제도들이 어느 시점에 이제 새로 적용이 될 예정인지도 좀 그 타임라인 좀 말씀해 주시면 감사할 것 같습니다. 두 번째 질문과 세 번째 질문은 간단한 숫자 관련인데요.

일단 두 번째 질문은 그 아까 말씀해 주실 때 그 사분기 때 뭐 자회사에서 관련된 비용이 좀 추가된 게 있다고 답변을 말씀해 주셨는데, 혹시 저희가 좀 인지해야 될 만한 좀 특이사항이라든지, 또 일회성 비용이 자회사 쪽에서 있었는지 궁금합니다? 세 번째 질문은 저희가 사분기 때 혹시 연결 기준 판매 관리비 얼마인지 숫자 여쭙겠습니다. 감사합니다.

Good afternoon. Thank you for the opportunity today. I have three questions. One is regarding the tariffs. The press recently has reported that there may be some differentiated price scheme applied to industrial power. Currently you are thinking of, for example, different pricing per time or offering weekend discounts for the industrial use. There are also talks about regional pricing schemes for the industrial power, and these elements have been mentioned by the Minister of Climate, Energy and Environment. Can you elaborate or give us a little bit more color on this scheme? How do you think it will impact the average unit price of power overall? When do you think that these new schemes can be introduced? My second question is regarding to your comments earlier today.

You mentioned that in Q4, there were some costs associated subsidiaries that were booked. Were there any unusual one-offs that should be aware of? My third question is about the SG&A cost. What was the exact amount, consolidated basis for Q4?

First question, inaudible.

Regarding your first question, with the increase of the solar PV power generation, the overall load patterns are changing. To reflect this change, we are currently developing seasonal and seasonal pricing schemes and also different pricing schemes for time period. We are also considering the balanced growth of the overall national economy and regions, and also working to distribute or disperse the power demand nationwide. These are the reasons why we are also developing a new pricing scheme that can better reflect the regional situations and regional demand. We are working closely with the central government to develop a reasonable and reasonable new pricing scheme, reflecting all of these elements. However, as to its impact on unit price and the exact timeline, I believe it's a little bit early.

We are also listening to the opinion of the corporates and overall business and industry community as well. Once we have a better idea on the specifics of this matter, then I think, you know, we can disclose some of the information. Currently we are under a close negotiation and discussion with the government.

Regarding your second question, I think, all we can say at this point about the cost of both by subsidiary is that it is related to overseas businesses.

As for your final question regarding consolidated SG&A cost. Currently we are in the process of closing the books, and so we do not have the final exact numbers right now. Once the audit report is released, the number will be included in the financial statements.

The following question is by from JPMorgan. Please go ahead.

Thank you for the opportunity. I only have one question. I believe that in the past, there were some discussions on reflecting the individual elements in the fuel cost of the SMP. Have you continued those discussions? Do you have any updates that you can share with us? Can you please elaborate on that question, please?

그 한전의 전력 단가를 결정하는 방식에 대해서, 현재까지는 한국전력에서는 좀 제한을 드리고, 그러니까 plus or minus 5 KRW에 대해서 어느 정도, 그, 한국전력에서는 이 정도 가격을 책정을 해주셨으면 한다라고 정부에 건의를 하는 방식이고, 그걸 정부가 결정하는 방식이었는데, 그렇게 하지 않고 이제 또 법률을 통해서, 법률을 통해서 그 가격을 결정하는 방식으로 가게 된다면, 이게 전력, 만약에 현재 이제 fuel cost가 만약에 오르게 된다고 하더라도, 그것을 자연스럽게 전가하는 방식으로, 그러니까 한국 외에 다른 해외 발전 회사처럼 그 cost가 정립되는 방식으로 될 수 있지 않을까라는 생각을 가지고 있는데, 혹시 현재까지 조금 한전 내부 내지는 정부와의 협의가 좀 어떻게 진행되고 있는지 저는 궁금합니다.

Yes, I believe that currently, when the tariffs are determined, KEPCO would make a proposal to the government, maybe around KRW ±5, and ultimately the government would make the decision. However, I believe that there were some discussions on finding the legal mechanism to ensure that the cost pass-through system can work, unlike other utility companies outside of Korea. If the fuel costs would go up, this would naturally be reflected in the tariffs through the cost pass-through mechanism. I was wondering if there were any progress in those discussions with the government?

답변 드리겠습니다. KEPCO에서는 현재 그 말씀하신 KEPCO fuel cost linkage system을 운영을 하고 있고요. 각 분기마다 변동하는 연료비 단가를 반영을 해서 저희 전기요금 단가에 조정을 하고 있는데, 이제 그 전체적으로 합리적인 전기요금 제도가 될 수 있도록, 또 제대로 작동될 수 있도록, 지금 정부랑 또 각계의 의견을 듣고 있습니다. 그 전체적으로 KEPCO fuel cost linkage system도 좀 더 개선되고 합리적으로 운영될 수 있도록, 저희가 정부랑 협의해서 운영을 해보겠습니다.

Currently we have in place the cost pass-through system. On a quarterly basis, the fuel prices are reflected in the tariffs. We are also working to improve how it is being implemented. We are, you know, discussing with the government and listening to the voices of the related parties and industries to find ways to further improve the cost pass-through system going forward.

다음 질문 받겠습니다.

현재 질문을 요청하고 계신 분은 없습니다. 질문이 있으신 분들은 전화기 버튼의 별표와 1번을 눌러주십시오.

Currently, there are no participants with questions. Please press asterisk one to give you a question.

다시 한번 말씀드리겠습니다. 질문이 있으신 분들은 전화기 버튼의 별표와 1번을 눌러주십시오.

Once again, if you have a question, please press asterisk one.

질문이 더 이상 없으신 관계로 이상으로 질의응답을 마치겠습니다. 추가로 궁금하신 점은 IR Team으로 문의 부탁드립니다. 바쁘신 중에도 참석해 주신 분들께 감사드리며, Korea Electric Power Corporation의 2025년 Q4 실적 발표는 이것으로 마치겠습니다. 고맙습니다.

As there are no further questions, we will now end the Q&A sessions. If you have any question inquiries, additional inquiries, please contact our IR department. This concludes the fiscal year 2025 fourth quarter earnings resulted by KEPCO. Thanks for the participation.

Good morning, and good evening. First of all, thank you all for joining this conference. And now we will begin the conference of the fiscal year 2025 fourth quarter earnings resulted by KEPCO. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions] Now we shall commence the presentation on the fiscal year 2025 fourth quarter earnings resulted by KEPCO.

[Interpreted] Good afternoon. This is Siyung Yang, Head of Finance Department of KEPCO. I'd like to thank you all for participating in today's conference call for the business results of the fourth quarter of 2025 despite your busy schedule. Today's call will be conducted in both Korean and English. We will begin with a brief presentation of the earnings results, which will be followed by a Q&A session. Please note that the financial information to be disclosed today is preliminary consolidated IFRS figures and all comparison is on a year-over-year basis unless stated otherwise. Also, business plans, targets, financial estimates and other forward-looking statements mentioned today are based on our current targets and forecasts. Please be noted that such statements may involve investment risks and uncertainties. Now we will begin with an overview of the earnings results for the fourth quarter of 2025 in Korean, which will be then consecutively translated into English. [Interpreted] I will first go over the operating items. The consolidated operating income in 2025 stood at KRW 13,524.8 billion. Revenue increased by 4.3% to KRW 97,434.5 billion. Power sales increased by 4.6% to KRW [indiscernible] billion. Overseas business and other revenue decreased by 1.8% to KRW 4,429.9 billion. Cost of goods sold and SG&A decreased by 1.3% to KRW 83,909.7 billion. Fuel costs decreased by 13.8% to KRW 19,036.4 billion and purchase power costs decreased by 1.8% to KRW 34,052.7 billion. Depreciation expense increased by 2.3% to KRW 11,667.8 billion. Next, I will go over the nonoperating items. Interest expense decreased by KRW 325.6 billion Y-o-Y to KRW 4,339.5 billion. As a result of the foregoing, the 2025 consolidated annual operating income stood at KRW 13,524.8 billion, and net income was KRW 8,007.2 billion.

[Interpreted] Good afternoon. I am Taeseop Eom, Head of IR team. Now I will go over the matters of interest. First, I will talk about the performance of power sales and its outlook for the remainder of the year. Annual power sales volume due to economic downturn and as a result of that, given the industrial demand has decreased. The total sales volume was 549.4 terawatt hour, which is a 0.1% decrease Y-o-Y. In 2026, the economic growth rate and number of operating days increase should lead to a slight increase in the total sales volume. [Interpreted] Next, I will go over the fuel price by fuel source and S&P trends. In 2025, if you look at the annual trend of the fuel prices for bituminous coal Australia, the price was around $105.7 per ton. For LNG, JKM was KRW 980,000 per ton and the S&P was around KRW 112.7 per kilowatt hour. [Interpreted] Next, I will go over the [indiscernible] company. If you look at the annual 2025 generation mix, the capacity factor of nuclear power increased and thus, its contribution to the mix increased as well. For coal, the capacity factor increased and thus, the contribution in the generation mix increased. For LNG, the installed capacity decreased. And due to the increase of baseload power generation, the contribution to the mix decreased. For 2026 on annual basis, we expect the contribution of nuclear power to increase, coal to decrease and LNG should largely remain flat. In 2026, the capacity factor for each fuel source should be as follows: nuclear power around mid- to high 80%, coal around mid-40% and LNG should be around early to mid-20%. [Interpreted] Next, I will go over the RPS cost. In 2025, annual RPS expense on a consolidated basis was KRW 3,989.7 billion. And on a stand-alone basis, it was KRW 4,818.8 billion. Last, I will go over the funding situation. As of 2025 Q4, consolidated total borrowings was KRW 129.8 trillion. And on a stand-alone basis, it was KRW 84.9 billion. [Interpreted] Now we will move on to the Q&A session. Since we will be conducting the Q&A session in both Korean and English, please make your questions and answers clear and brief.

[Interpreted] [Operator Instructions] The first question will be given by Jong Hwa Sung from Securities.

[Interpreted] I am from LS Securities and my name is Jong Hwa Sung. Please understand my sore throat today. I have 2 questions. Number one, it's about the contribution of the nuclear power generation in the generation mix. So I think largely fuel cost and power purchase cost was in line with expectations. But nevertheless, the operating income was underperforming expectations by around KRW 1 trillion. I think this is largely because of other costs. I think other cost was around KRW 1.2 trillion higher than what we expected. I believe this is mainly coming from the recovery of nuclear power generation sites and costs associated to carbon and greenhouse gases. it seems that these cost items were concentrated in Q4 in 2025. However, if you look at other years, sometimes it's booked in Q2, sometimes it's booked in Q4. And so the seasonality is not stable. So on an annual basis, how much do you expect these other cost items to be generated or incurred every year? And then second is about the contribution of the nuclear power generation. So in Q4 2025, on a Y-o-Y basis, I think the nuclear power generation contribution went down by around 6%, which is unusual given that for the first 3 quarters of 2025, nuclear power generation contribution was higher than that. So when you say -- or you said in your keynote that the contribution of nuclear power will probably increase in 2026. Is it compared to Q4 2025? Or is it compared to the first 3 quarters of 2025? In other words, in Q4 2026, will nuclear power generation contribution be slightly higher or significantly higher than 2025 Q4?

[Interpreted] Yes. So I will first address your first question regarding the other cost. So the provisions related to greenhouse gas emissions went up by around KRW 120.6 billion to KRW 340.6 billion. As for the provisions regarding the nuclear -- provisions regarding the recovery of the nuclear power generation sites, it went up by KRW 411.2 billion, resulting in a negative KRW 4.6 billion. So there was actually write-backs. As to the exact timing of when we book these type of provisions and costs, I think we will discuss internally, and I'll get back to you later on.

[Interpreted] Yes. Regarding your second question, we mentioned that the capacity factor for nuclear power should be around mid- high 80% on an annual basis. So maybe towards the end or early part of the year, the capacity factor may seem lower than that. But on an annual basis, I believe that it will be higher, especially given that we have nuclear power plants who are going through and completing its preventive maintenance process, which should come back online. And also the addition of new power plants should add to the higher capacity factor of nuclear power in 2026.

[Interpreted] The following question is by Kyeong Won Moon from Meritz Securities.

[Interpreted] My name is Kyeong Won Moon from Meritz Securities, and I have 3 questions today. One, if you compare the consolidated operating income of Q3 and Q4 and the stand-alone operating of the 2 quarters, I believe that the stand-alone operating income is relatively higher numbers or relatively better -- showed better performance. I believe this is largely driven by the adjustment coefficient. So is that the main reason? What is the main reason behind this? And what would be your expected adjustment coefficient for Q1 2026? My second question is regarding the before tax profit. So compared to the operating income, the before tax profit seemed to have performed quite strongly, both for consolidated and stand-alone numbers. What would be the reason behind this? Were there any one-off P&L items in other categories like the finance and other businesses? My third question is related to the dividends. So I believe that -- so the dividend was just announced. And if you look at the dividend payout on the stand-alone net income basis, it seems that it actually decreased compared to last year. So how did you come to this DPS number? What is the logic behind that? And what would be your expectation or outlook for the dividend payout of 2026? Do you think it will be higher than 2024 and 2025?

[Interpreted] Yes. So regarding your first question, it may seem that the stand-alone profits are stronger than the consolidated numbers because there are some costs associated with our subsidiaries, which is booked under consolidated financial statements, but not on our stand-alone numbers. [Interpreted] Regarding the adjustment coefficient, in Q4 last year, the numbers were slightly higher than previous average quarters. [Interpreted] And the coefficient for 2026, we expect to be slightly higher than 2025.

[Interpreted] And regarding your question comparing the operating income and the before tax income. So for our subsidiaries, there were some lease liabilities that could not be hedged due to the decrease in the FX rates. And so because of the FX -- in the process of the FX conversion, there were some valuation losses and gains that needed to be booked that impacted the numbers.

[Interpreted] And regarding your question on dividends. So last year, the payout was 16.5%. And this year, it was 13.65%. So like you mentioned, it did decrease. However, I'd like to note that the size of the net income on a stand-alone basis increased significantly. So the absolute amount of dividends that were paid out will increase. And DPS also increased to around KRW 1,541 per share. As for 2026, as you know, we are subject -- we are a public corporation and subject to the relevant legislations, we need to discuss the dividend strategy with government departments. So at this point, unfortunately, we are not able to comment on the direction of 2026 dividends.

[Interpreted] The following question is by Jaeseon Yoo from Hana Securities.

[Interpreted] I am Jaeseon Yoo from Hana Securities, and I have 4 questions. My first question is provisional liabilities related to used fuel -- used nuclear fuel. So in January, I read news that the unit price has gone up. And so maybe can you give us a little bit more color on this topic? And my second question is also related to this as well. What was the total amount of the used nuclear fuel-related provisional liabilities booked by KHNP in Q4 2025? And third, there was a 15% decrease -- price decrease that was subject to a grace period, and that grace period is coming to an end. I believe, therefore, the bituminous coal price can go up. So what would be the associated cost that you are expecting in regards to the end of the grace period? And fourth is related to the bond issuance limit. So what would be the outstanding amount of bonds issued? And how much room do you have in comparison to the cap?

[Interpreted] I'll try to address your first 2 questions at once. So the provisional liabilities that were booked for the recovery of nuclear power sites was KRW 904.5 billion -- increased by KRW 904.5 billion to KRW 24,769 billion. As for the used nuclear fuel, it decreased by KRW 178.4 billion to KRW 2,745.3 billion. And as for the mid- and low level nuclear waste associated provisions and liabilities, it went up by KRW 10.2 billion to KRW 1,077.2 billion.

[Interpreted] As for your third question regarding the grace period of the individual consumption tax coming to an end and how that would impact our cost. So we do have an internal estimate, but unfortunately, we are not able to disclose those numbers to the public in the market. So we ask for your understanding.

[Interpreted] Yes. And regarding your final question on the bond issuance cap. So that can -- the final exact number can be calculated after the dividend is finalized at the Board and shareholders' meeting. But we believe that it will be something around just over 3x once all of those dividend-related activities are finalized.

[Interpreted] Currently, there are no participants with questions. [Operator Instructions] The following question is by Jong Hwa Sung from LS Securities.

[Interpreted] I have 2 questions. First is regarding the nuclear power generation export strategy. So I believe that there is a process currently ongoing to streamline the Korean nuclear power generation export strategy. So maybe can you elaborate a little bit on how that is moving forward? And second, I believe that there is some court case in the international mediation courts by KHNP regarding the additional KRW 1.4 trillion construction cost that was incurred during the BNPP construction project. Has that been already reflected in the financial statement? And if so, if KHNP is able to recover the cost from the UAE government, will that have impact on the financial statements?

[Interpreted] Yes. I will address your first question regarding the export of nuclear power plants of Korea. And so we are -- I believe that the research project has been outsourced by the Ministry of Industry, and they are currently waiting for the results. KEPCO, of course, will be closely cooperating with the government to ensure that high-quality nuclear power plant export strategy can be developed to maximize and satisfy the global customers.

[Interpreted] Yes. And your second question regarding the dispute between KEPCO and KHNP. So we are currently in conversation and negotiation with them. And I think both parties are making utmost effort to resolve this conflict in a stable manner. However, please understand that we are not able to disclose any specific numbers.

[Interpreted] The following question is by Yoon Cho from UBS.

[Interpreted] I have 3 questions. One is regarding the tariff. So the press recently has reported that there may be some differentiated price scheme applied to industrial power. And currently, you are thinking of, for example, different pricing per time or offering weekend discounts for the industrial use. There are also talks about regional pricing schemes for the industrial power. And these elements have been mentioned by the Minister of Climate, Energy and Environment. So can you elaborate or give us a little bit more color on these schemes? How do you think it will impact the average unit price of power, overall? And when do you think that these new schemes can be introduced? My second question is regarding to your comments earlier today. You mentioned that in Q4, there were some cost associated subsidiaries that were booked. Were there any unusual one-offs that we should be aware of? And my third question is about the SG&A cost. What was the exact amount consolidated basis for Q4?

[Interpreted] Regarding your first question, with the increase of the solar PV power generation, the overall load patterns are changing. And to reflect this change, we are currently developing seasonal and -- seasonal pricing schemes and also different pricing schemes for time period. We are also considering the balanced growth of the overall national economy and regions and also working to distribute or disperse the power demand nationwide. And these are the reasons why we are also developing a new pricing scheme that can better reflect the regional situations and regional demand. We are working closely with the central government to develop a reasonable and rationable new pricing scheme, reflecting all of these elements. However, as to its impact on unit price and the exact time line, I believe it's a little bit early. We are also listening to the opinion of the corporates and overall business and industry community as well. So once we have a better idea on the specifics of this matter, then I think we can disclose some other information. But currently, we are under close negotiation and discussion with the government. [Interpreted] And regarding your second question, I think all we can say at this point about the cost booked by subsidiary is that it is related to overseas businesses.

And as for your final question regarding consolidated SG&A cost. So currently, we are in the process of closing the books. And so we do not have the final exact numbers right now. But once the audit report is released, the number will be included in the financial statements.

[Interpreted] The following question is by [indiscernible] from JPMorgan.

[Interpreted] I only have one question. I believe that in the past, there were some discussions on reflecting the individual elements in the fuel cost of the ASP. So have you continued those discussions? Do you have any updates that you can share with us?

[Interpreted] Can you please elaborate on that question, please?

[Interpreted] Yes, I believe currently, when the tariffs are determined, KEPCO would make a proposal to the government, maybe around plus/minus 51. And ultimately, the government would make the decision. However, I believe that there were some discussions on finding the legal mechanism to ensure that the cost pass-through system can work like other utility companies outside of Korea. And so if the fuel cost would go up, this would naturally be reflected in the tariffs through the cost pass-through mechanism. So I was wondering if there were any progress in those discussions with the government.

[Interpreted] Yes. So currently, we have implemented -- we have in place the cost pass-through system. So on a quarterly basis, the fuel prices are reflected in the tariffs. But we are also working to improve how it is being implemented. We are discussing with the government and listening to the voices of the related parties and industries to find ways to further improve the cost pass-through system going forward.

[Interpreted] Currently, there are no participants with questions. [Operator Instructions] [Interpreted] As there are no further questions, we will now end the Q&A session. If you have any questions -- additional inquiries, please contact our IR department. This concludes the fiscal year 2025 fourth quarter earnings resulted by KEPCO. Thanks for the participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good morning, and good evening. First of all, thank you all for joining this conference call. And now we'll begin the conference of the fiscal year 2025 second quarter earnings results by KEPCO. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions] Now we shall commence the presentation on the fiscal year 2025 second quarter earning results by KEPCO.

[Interpreted] Good afternoon. I am [indiscernible], Head of Finance and IR team at Korea Electric Power Corporation. We sincerely thank you all for joining us for KEPCO's Q2 2025 earnings conference call despite your busy schedule. Today's conference call will be conducted in both Korean and English, and after a brief earnings presentation, we will proceed to a Q&A session. The figures presented today are based on IFRS consolidated preliminary figures, and all comparisons are made year-over-year, unless otherwise stated. Please also note that any business plans, targets and estimated financial data mentioned during the call reflect on current outlook and are subject to uncertainties investment risk. We will now present the Q2 2025 profit and loss details first in Korean and then provide the same content in English.

[Interpreted] Good afternoon. This is Siyung Yang, General Manager of the IR team. Let us begin by reviewing the operating profit. The consolidated operating profit for the first half of 2025 was KRW 5, 889.5 trillion. If you look into the details, revenue was KRW 46, 174.1 trillion, up by 5.5%. Of this, electricity sales revenue accounted for KRW 4.157 trillion, up by 5.9%, and other revenue, including publicly listed business income posted KRW 2.016 trillion, down by 2.1%. Cost of sales and SG&A expenses totaled KRW 40,284.6 trillion, down by 2.3%. Of this, fuel cost is KRW 9.252 trillion, down by 14.6%, and power purchase cost is KRW 17,357.8 trillion, up by 1.1%, affected by fuel price changes. Depreciation expenses came to KRW 5.878 trillion, increased by 4.4%. Among nonoperating items, interest expense amounted to KRW 2,211.3 trillion, down by KRW 72.8 billion from the same period last year. Based on the factors mentioned, the first half 2025 consolidated operating profit was KRW 889.5 billion and net cost for the period was KRW 3,538.1 trillion.

[Interpreted] Good afternoon. This is Taeseop Eom, Senior IR Manager of the IR team. I will now go over the key points of interest, first on electricity sales performance and outlook. Electricity sales volume in the first half reached 28.4 terawatt hours, down 0.05% Y-o-Y due to reduced industrial sales on the back of sluggish exports. For the full year 2025, we project sales to go down slightly due to the impact of downward adjustment of the economic growth rate and downturn in the manufacturing sector. Next, let me cover the fuel price by type and the SMP trend. In the first half of 2025, the bituminous coal price based on Australian oil was around $103.1 per ton, while LNG based on JKN was approximately KRW 1.05 million per tonne. Additionally, the system marginal price, or SMP, was around KRW 118.9 per kilowatt hour.

[Interpreted] Looking at the generation mix of KEPCO subsidiaries, the generation mix for nuclear went up due to the introduction of a new power plant and the increase of utilization rate. As for coil, generation mix is down from lower utilization, while LNG also is partly down from decreased capacity and increase of base load generation. For the full year of 2025, we expect that the nuclear generation will go down and coal is expected to be maintained, while LNG mix is expected to go down slightly. Expected utilization rate by generation source for 2025 are for nuclear is at the mid-80% range, coil in the upper 40% range and LNG at the mid-20% range. And for -- I will now touch upon the RPS related cost. In the first half of 2025. RPS costs were KRW 1,958.9 trillion on consolidated basis and KRW 2,176 trillion on a separate basis. Finally, to go over the funding status, as for the first half of 2025, borrowings stood at KRW 131.9 trillion on a consolidated basis and KRW 86.5 trillion on a separate basis.

[Interpreted] And now we will proceed to a Q&A session. Since we will conduct the session with consecutive interpretation into English as well as Korean, we would like to ask all the participants to take your questions and answers complete and clearly. We'll now receive questions.

[Interpreted] [Operator Instructions] The first question will be given by Jong Hwa Sung from LS Securities.

[Interpreted] I am Sung, Jong Hwa from LS Securities. I would like to ask just one question. This is true for LG Chemical, starting from this June, they have announced that it will be purchasing directly from KPX and also this is also true for SK as well that they're going to get repurchase power from the power exchange. So there seems to be the trend that the companies are going to directly purchase the power from the power exchange. Recently, the industrial tariff has come up and starting from the fourth quarter of last year, the sales unit price of the industrial power has actually exceeded that of the commercial power. In this situation, what is your view on the future direction? And what kind of impact would this have on your company? And going forward, in order to free or lower the industrial power prices, would -- is it possible for you to actually raise the unit price of the commercial power prices? So what kind of basic directions do you have about the situation and potential solutions for this issue?

[Interpreted] So let me first take the question about the direct power purchase from the power exchange. As you have already mentioned, LG Chemicals Yeosu plant have announced that they will be directly purchasing the power from the power exchange, and this announcement came in June. And therefore, in the case of this customer, they will now be excluded from our sales as well as from a cost of sales as well. And the exchange will be during the settlement. And so this will happen in fact to our sales volume as well as on our cost of sales. And we do understand there is a couple more companies that have applied for this direct purchase from the power exchange, but we're not in a position to disclose who those companies are at this point. And in order to stabilize the corporate power market in order to prevent any abuse of the current system by the direct purchasers, we have actually agreed with the Korea Power Exchange to improve upon the direct power purchasing system. And the key to this agreement is that the mandatory transaction period of the direct purchasers will be extended from 1 year to 3 years. And the sales operator currently bears the burden for the other welfare costs and the DR settlement. And this will be actually imposed in this manner. The system will be improved.

[Interpreted] In order to ease the burden of the accumulated deficit as well as improve the financial soundness of the company, yes, we are in a situation where we do need to raise the tariffs additionally. However, the tariff increases until now has been more concentrated on the industrial tariff. And so at this point, there is limited room to engage in additional tariff adjustment for the industrial power. For the other non-industrial sectors, we are reviewing the potential increase of tariffs. And in order to ease the burden on the industrial sector as well as in consideration of the various external factors, we will be engaging in close consultation with the government on ways in which to undertake these cash adjustment.

[Interpreted] The following question is by Moon, Kyeong Won from Meritz Securities.

[Interpreted] So I have 2 questions. My first question has to do with some of the media reports that came out recently. According to these media reports, it is stated that KEPCO is preparing to enter into the nuclear power market of United States. And if we assume that KEPCO is indeed going to enter into this U.S. market, regardless of whether this is true or not at this point, I would like to ask what kind of preparations have been made by KEPCO in order to do so. So for instance, you need to set up your organization in order to prepare to enter into the overseas nuclear power market or you need to perhaps prepare for the possible licensing related issues. Or is it the case that you don't need to make any further preparation and you can immediately enter into the U.S. market? Which of the two is your situation? That is my first question. And my second question has to do with the SMP. Especially starting from July as well into the month of August, SMP is being maintained at a lower level than have initially been expected, despite the fact that we're now in the high season. Compared to previous quarter, SMP is maintained at a lower level, and what is KEPCO's views of the causes of this more than expected SMP? And what is your SMP-related outlook till the year-end?

[Interpreted] First, let me take your question about our possible entry into the U.S. nuclear power market. Recently, United States has announced that by 2050, they will increase the nuclear power capacity from the current 100 gigawatts to 400 gigawatts, in short a fourfold increase from the current capacity. Now this policy by United States to expand their nuclear power generation from the point of view of global nuclear power expansion is indeed positive news. And as such, KEPCO has taken an interest in the potential entry into the U.S. market. And we are taking a positive view and engaging in a review of the overall circumstances, but we're not in a situation to disclose any specific details, so we'd like to ask for your understanding on this.

[Interpreted] Let me take your second question about why the SMP levels in the month of August was lower than expected. This was because in the month of July due to unexpected cheap rates, there was much higher demand than had been initially expected. SMP is actually conducted by the power exchange. They predict the demand, and they calculate the SMP. And due to the impact of the summer vacations and the weather situation, what the power exchange has initially anticipated about the demand in August was actually different from the actual numbers. In short, there was less demand in the month of August than had been anticipated by the KPX. And also added to that, we do believe that the KPX had changed, to a certain extent, the curtailment method, and this also served as another factor.

[Interpreted] The following question is Ryu, Jae-Hyun from Mirae Securities.

[Interpreted] So I have 4 questions. First, you talked about the generation mix a while ago, but can you also give us your outlook for the utilization rate for the second half of this year? And actually, the next question has to do with the progressive tariff system. Compared to last year, is there any significant difference? If there is, can you elaborate on that? And finally, during one of your comments, you said that there was little room to raise the industrial tariffs. If that is the case, then is there any possibility of raising the tariff for the residential area or other sectors? So -- and also, is there any possibility of introducing a differentiated tariff system as well?

[Interpreted] So let's say, an outlook for the utilization rate, in the case of nuclear, our outlook is mid-80% level and for coal is the upper 40% level. And utilization for LNG is the mid-20% range.

[Interpreted] Yes. So let me take your question about the progressive tariff system. So introducing this current system is something that we have done since 2019. So for the month of July up until the month August, we have actually expanded the progressive tariff intervals in order to ease the public burden on the tariff payment. And this system has been in place since 2019, and we do not believe that the impact has grown any larger since last year.

[Interpreted] And your next question was about the industrial tariffs, the fact that we have mentioned that there was little room to engage in additional hikes of the industrial tariffs and whether we had any plans for raising the tariffs and other sectors. Well, it is true that because the tariff increases up until now has been concentrated largely in the industrial segment that there's little room to engage in additional tariff increases there. But we also recognize the fact that we need to raise the tariffs in other segments. However, in terms of specifically which sector will be targeted for tariff increase, the level of the tariff increases and the timing is something that has not been specifically decided as of yet. We will be continuously persuading the government on the need to do so, and we will closely work with the government in order to make sure that tariff adjustments can come through.

[Interpreted] Next, about the possibility of introducing a regional-based tariff system, currently, in keeping with the government plan to introduce a tariff system that is differentiated by the region, so we are currently engaging in research and study And through further consultations with the government, we are designing the possible introduction of a regionally differentiated tariff system. So our target is to introduce this system by early 2026, and we will be working to come up with a detailed plan for the implementation. And by the first half of next year, while we intend to gather the opinions of relevant stakeholders, and we're targeting introducing the system within the year 2026.

[Interpreted] [Operator Instructions] The following question is by Hur, Minho from Daishin Securities.

[Interpreted] So I have 3 questions. it seems as if in the first quarter, the settlement unit price related to the nuclear is on a rising trend. So I'd like to ask what was the drivers behind this rise in the settlement unit prices of nuclear. And also can you elaborate on what the adjusted coefficient for the coal-fired power plant and other segments in first half of the year? And then moving on to the regional wholesale and retail tariff system that you have mentioned, you said earlier that you plan on introducing the system starting from 2026. Is this going to be a simultaneous introduction of both wholesale and retail tariff system? Or is it going to be only wholesale tariff system that will be introduced first? Because they seem to be different in your report related to this. And my final question has to do with the RPS cost. What was the reference unit price on a consolidated basis as well as on a separate basis? And also can you elaborate what the cost was related to the EPS as well?

[Interpreted] Let me take your question about the rise of the segment -- unit price of the nuclear power segment. So this is something that we will be actually getting back to later on. And moving on to the next question is about the adjusted coefficient. For the nuclear and the coal-fired power plant, the thermal power generation, the adjusted coefficient has not been changed in the first quarter and the second quarter. With regards to the future outlook, we will be reassessing it at a level that allows us to maintain financial health and balance. We will be consulting with the government in order to come up with an appropriate coefficient.

[Interpreted] Yes. Let me take your question about the regionally differentiated tariff system. So this tariff system that we are aiming to introduce by 2026 is actually the retail tariff system. And as for the wholesale system, this is something that is led by KPX, and we understand that they're making preparations to introduce this system within 2025..

[Interpreted] Let me get your question about the RPS. So in the case of the consolidated financial statement, the RPS related costs come to KRW 1, 168.3 trillion and on a separate basis, the number is KRW 1,191.7 trillion. And also regarding the costs related to greenhouse gas emissions, this is already something that is reflected in the power purchase cost and it is already settled. So there is nothing that is reflected in our financial statements related to this item.

[Interpreted] The following question is [indiscernible] from Citi Group.

So I just have one questions about the fuel price outlook for the full year 2025. Can you please give some color about the coal and LNG oil price in the second half of the year?

[Foreign Language]

[Interpreted] [Operator Instructions] The following question is by Hwang, Sung Hyun from Eugene Investment & Securities.

[Interpreted] Yes. I have a question on your dividend policy. Of course, given your current performance, I don't think you're in a very good position to pay out dividends. However, from your positioning, do you sense any change in the government stand about KEPCO possibly paying out dividends going into the future?

[Interpreted] Let me get your question about the dividends. As you are probably well aware, in the mid- to long term, the government's target for the dividend related to KEPCO is a 40% payout -- the dividend payout ratio. When the new administration took office, we have not been separately notified either by the MOE, Ministry of Economy and Finance, or the government's side about any possible changes to the KEPCO's dividend payout ratio. However, going forward, in consideration of our financial situation as well as our need to make investments in order to expand our power grid, we will be considering our dividend payout ratio in the direction that will allow for the enhancement of shareholder value.

[Interpreted] [Operator Instructions] The following question is by Hwang, Sung Hyun from Eugene Investment & Securities.

[Interpreted] I have a question about last year's dividend payout ratio. Last year, the dividend payout ratio was 15%. I'd like to know how that figure has been decided. And my second question has to do with KHNP's role. It seems that, recently, the role of KHNP is expanding, and we want to know what KEPCO's views or position on the potential role of KHNP is.

[Interpreted] Yes. With regards to last year's dividend payout ratio of 15%, actually, it is the Ministry of Economy and Finance, that is the lead ministry in deciding the dividend payout ratio of KEPCO. And so we do not actually have -- we're not in the know of how exactly that figure came about. But during the consultations with that ministry, we did put in a request that our financial situation as well as our future investments needs to be taken into consideration in setting the dividend payout ratio.

[Interpreted] And as relating to your second question about potential IPO of KHNP, we have not officially engaged in any review of this possibility.

[Interpreted] [Operator Instructions] The following question is by Sung, Jong Hwan from LS Securities.

[Interpreted] I have further questions about the dividend. So maybe this is a question that is difficult to answer, but I'll ask this question anyway. In the case of last year, your -- compared to your consolidated net income, your separate base net income share was exceptionally low. Despite that being so, the dividend payout ratio that was determined was only 15%. So although we are seeing in recent days a meaningful profit that is coming out of KEPCO, but on the other hand, if we take into consideration your accumulated losses, it is, I believe, challenging for the company to pay out the dividend that you have paid out in the past. And so if that's the case, is it possible for you to adjust the settlement coefficient, so that the ratio between the consolidated basis, net profit and the separate net profit can be adjusted and dividends possibly be paid out in that manner? What is your view on this?

[Interpreted] Let me answer your question. So in the case of the adjusted coefficient, it is based on cost assessment and also based on our regulations and policy. So is it unrelated to dividend payout ratio.

[Interpreted] So let me add to that. In the Cost Assessment Committee, they take into consideration the fuel costs as well as the fixed cost in coming up with these calculations. So this is something that is determined unrelated to dividend policy.

[Interpreted] [Operator Instructions] As there are no further questions, we'll now end the Q&A session. For any additional inquiries, please contact our IR department. This concludes the fiscal year 2025 second quarter earning results by KEPCO. Thank you for your participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good morning and good evening. First of all, thank you all for joining this conference call and now we will begin the conference of the Fiscal Year 2025 First Quarter Earnings Results by KEPCO. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions] Now we shall commence the presentation on the fiscal year 2025 first quarter earnings results by KEPCO.

[Foreign Language] Good afternoon. This is [Indiscernible], Head of [Technical Difficulty] and IR team at KEPCO. We sincerely thank you all for joining us for our KEPCO's Q1 2025 earnings conference call despite your busy schedule. Today's conference call will be conducted in both Korean and English and after a brief presentation we will proceed with the Q&A session. The figures presented today are preliminary based on IFRS consolidated standard and all comparisons are made year-over-year unless otherwise stated. Please also note that any management plans, targets and estimated financial figures mentioned during the call reflect our current outlook and are subject to uncertainty and investment risk. We will now present the Q1 2025 profit and loss details in Korean and then provide the same content in English.

[Foreign Language] Good afternoon. This is Young Ji Chang, General Manager of our IR team. Let us begin by reviewing the operating profit. The consolidated operating profit for Q1 2025 was KRW3.75 trillion and if you look into the details, revenue was KRW24.2 trillion, up by 4%. Of this, electricity sales revenue accounted for KRW23.2 trillion, up by 4.7% and other revenue including overseas business income recorded KRW1.1 trillion, down by 10.2%. Cost of sales and SG&A expenses totaled KRW20.47 trillion, down by 6.9%. Among these, fuel cost is KRW5 trillion, down by 18.7% and power purchase cost is KRW8.75 trillion, down by 4.8% affected by fuel price changes. Depreciation expenses came to KRW2.95 trillion, increased by 5.1%. Among non-operating items, interest expense amounted to KRW1.1 trillion, down by KRW34.6 billion from the same period last year. Based on the factors mentioned, Q1 2025 consolidated operating profit was KRW3.75 trillion and net profit for the period was KRW2.36 trillion.

[Foreign Language] Good afternoon. This is Yong Thae Seop, Senior IR Manager of the IR team. I will now go over the key points of interest. First on electricity sales, performance and outlook. Electricity sales volume in Q1 reached 141 terawatt hours showing 0.5% decline due to decreased industrial sales from sluggish export. For full year 2025, we project sales to go down slightly due to the impact of lower economic growth and slowdown in manufacturing industry. [Foreign Language] Next I will cover fuel price by type and the S&P trend. In Q1 2025, the determinist coal price based on Australian coal was around $105.3 per ton and while LNG based on JKM was approximately KRW1.06 million per ton. Additionally, the system marginal price was around KRW115.6 per kilowatt hour. [Foreign Language] Looking at the generation mix of KEPCO’s GENCOs, our generation mix for nuclear went up from introduction of new plant and higher utilization. As for coal, generation mix is down from lower utilization while LNG also declined slightly from decreased capacity and higher baseload generation. For full year of 2025, we expect that the nuclear generation will slightly increase and coal also expected to go up slightly while LNG mix is expected to go down slightly. Expected utilization rate by generation source for 2025 are for nuclear it's at the mid-80% range, coal early-50% and LNG at mid-20% range. [Foreign Language] In Q1 2025, RPS costs were KRW782.6 billion on a consolidated basis and KRW978.3 billion on a separate basis. Finally, to go over the funding status, as of Q1 2025 borrowing stood at KRW133.2 trillion on a consolidated basis and KRW87.67 trillion on a separate basis. [Foreign Language] Next we will begin the Q&A session. As this session will be proceeded with consecutive interpretation in both Korean and English, we ask that you kindly keep your question and answers brief and clear. We will now open for Q&A.

[Foreign Language] Now Q&A session will begin. [Operator Instructions] The first question will be given by Moon Kyeongwon from Meritz Securities. Please go ahead.

[Foreign Language] Thank you for the opportunity. I have three questions. First question is on a non-operating profit on a separate basis. It seems that you have had additional or increase in profit before tax and I would like to understand what drove off this non-operating profit on a separate basis. What is the size of this profit? Second question is on your coal efficient -- settlement coefficient. Compared to last year, Q1's coefficient seemed to have changed for coal, how much has changed and what is your expected change within the full year 2025? Third question is on the decline -- decrease in coal generation volume. It seems that coal generation has gone down. Is it because of the increase of utilization of nuclear power plants to balance off the base generation load or is there some other reason for that? If you can share the reasons for outlook for the overall generation mix for coal and nuclear power plants, that would be great.

[Foreign Language] To answer your first question on the non-operating profit increase for on a standalone basis is because we have seen an increase of dividend profit of KRW1.7 trillion leading to the dividend line item for our subsidiary company amounting KRW1.8 trillion. [Foreign Language] To answer your question on a year-on-year basis there has been a slight increase for the settlement coefficient for coal and nuclear power plant -- nuclear energy, so while there has been a slight increase, we have not reassessed the increased amount for the full year yet. Whenever there is a significant change in the fuel price, we will go ahead and carry out this recalculation or reassessment of the coefficient, but we have not been notified from the power exchange on such a plan to do so. [Foreign Language] The decline in the generation mix of coal from increased generation of nuclear power plant is due to the following reason. In Q1 we have had the operation of Q2 and Q3, and except for the CO2 overhaul, all the nuclear power plants were up and running. As of this point, we believe that there will be up to 4 to 6 overhaul in Q4 when you look at the overall full year plan. But at this point, it's difficult to see how much will go up or down within 2025 full year. [Foreign Language] And also if I may cite the additional reason for decreased coal generation mix is because if we were to run all the coal power plant Hanul and Shin Hanul in the east coastline, it will face the limitation of the transmission capacity and we will not be able to transmit all the electricity that is generated.

[Foreign Language] The following question is by [Indiscernible] from Mirae Asset Securities. Please go ahead.

[Foreign Language] Well, we have not been able to receive much materials but my question would be regarding the fuel cost. You shared with us the fuel cost for Q1, but would also like to further understand the outcome this year including S&P price outlook. If you can share your guideline on the overall fuel price including S&P, that would be great. Second question is on your financial status. What is the size of your borrowing at the moment and the associated interest cost?

[Foreign Language] So currently we don't have an official guideline for the fuel cost outlook for this year, but could you please share the overall trend if you can, please. While we do not have official guideline for the fuel cost outlook, we leverage institutional data like data coming from Bloomberg to forecast the overall fuel cost outlook. For 2025, our expectation is that for coal it will be KRW171,000 per ton and for LNG it will be KRW1.06 million per ton and for oil it will be KRW1030 per liter. [Foreign Language] To share the overall outstanding borrowings, if you look at our consolidated basis for borrowing for 2025 Q1, it's at KRW133.2 trillion and it's up by KRW700 billion compared to the end of 2024. As for the interest cost, in 2025, it is KRW1.1 trillion and on a year-on-year basis, it's down by KRW35 billion.

[Foreign Language] Could you also share plans for further borrowing this year? Do you have plans to repay your debt within this year or to source additional debt throughout the year?

[Foreign Language] We will answer the question offline separately. Thank you. We're ready for next question.

[Foreign Language] Currently there are no participants to question. [Operator Instructions] The following question is by Moon Kyeongwon from Meritz Securities. Please go ahead.

[Foreign Language] So it seems that the increase of dividend profit for non-operating profit is somewhat unusual. Looking at the past trend, the average profitability I think is higher than 60%. Do you believe that this number is something that can be sustained going forward? What was the dividend payout ratio for this? And secondly, when do you expect the transmission limitation for east coast area will be resolved? Are you seeing any kind of solution that is being devised?

[Foreign Language] To answer your first question, the current dividend payout ratio was determined based on the increase of -- short increase of the profit on a consolidated basis for our subsidiaries, looking at their current financial status. For the future plans, we will be able to determine the dividend payout ratio looking at their financial status in January next year as well as accommodating the feedback and comments from our GENCOs. [Foreign Language] So the transmission and generation limitation in east coast area, we are connecting Shin Hanul and [Indiscernible] plant with HVDC to increase generation as well as to connect that to the metropolitan area. The plan of completing these connections is scheduled for 2025 and 2026 but the completion date is yet to be seen.

[Foreign Language] The following question is by Cho Yun Haeng [Phonetic] from UBS. Please go ahead.

[Foreign Language] I would like to ask about some numbers regarding the earnings for this quarter. First question is around the unit fuel cost for Q1. Could you please share that once again? Second is on the nuclear power plant fuel cost. What was the fuel cost for nuclear power plant in Q1? The third question is on the utilization of the nuclear power plant and the last question would be the depreciation cost for your generation.

[Foreign Language] Our estimated fuel cost for Q1 for coal is KRW190,000 per ton and for LNG is KRW1.1 billion per ton and for oil it's KRW1,100 per liter. [Foreign Language] To answer your second question for the fuel cost depreciation, Fuel cost depreciation for nuclear power plant for Q1 was KRW490 billion. [Foreign Language] The third question regarding the nuclear power plant utilization that was reflected in the earnings performance will be shared later offline if we are able to have the number. [Foreign Language] To answer your last question on the depreciation cost for our six GENCOs for Q1 is KRW1.8 trillion.

[Foreign Language] The following question is by [Indiscernible] from NH Investment Securities. Please go ahead.

[Foreign Language] I have question regarding the coal utilization rate. I mean the declining coal utilization cannot, I believe, be just explained with the limitation of the transmission lines. When you just look at the utilization by your subsidiaries, it has gone down significantly and the main numbers is somewhere around 30% and one would wonder whether or not you'll be able to achieve the coal utilization rate of 50% within the year. The second question is regarding the IPP unit cost. It seems that the IPP purchase unit cost has gone up looking at the trend from January to March. Is there a reason for that? And the kilowatt unit price I believe is KRW10 higher than S&P cost. It will be great if you can explain the reason behind it. And also if you look at the disclosed fuel cost for May, the fuel cost has gone down for May while S&P is maintained. What is the reason behind that?

[Foreign Language] To answer your first question on the declining nuclear power plant utilization, there has been also limitation on nuclear generation -- on coal generation due to the fine dust particle matters that took place in weekends of March. On the utilization rate for coal going forward, I would share those numbers offline. [Foreign Language] Let me please also follow up on the second and third question later on.

[Foreign Language] We'll move on to the next question.

[Foreign Language] The following question is by [Indiscernible] from Hana Securities. Please go ahead.

[Foreign Language] I have four question. First is on the coal utilization rate not the usage of the coal power plant and second question is on the estimated number for 2025 HMC. And also third question, it seems that the climate environment tariff or fee has been frozen for some time. When do you expect this number to change going forward? And number four on the CHPS for 2025, what is the expected volume for general hydrogen and hydrogen for 1,030 kilowatt plant once it's up and running?

[Foreign Language] Let me please get back to you on utilization rate for the coal power plant later on. [Foreign Language] To answer your question on the overall tariff, the total comprehensive cost is based on the post numbers or settled number for last year and also the budget and estimates for the year going forward and those total comprehensive costs are submitted to the government in June where the government goes through the relevant due diligence and it's disclosed on our website. Once it is disclosed and go through those review process then we will be able to come up with the budget and that will be disclosed as a budget for KEPCO. [Foreign Language] On the climate and environment cost, in principle, the way the cost is reflected is that it's based on the previous year's climate-related cost and it's reflected in the next year's tariff. But since 2024, due to surge in fuel costs, we were not able to reflect all the increase in fuel costs alongside with the cost for climate environment. So this is something that we need to negotiate and discuss with the government and, at this point, we do not have the level or the plan on when this will be adjusted and reflected. [Foreign Language] So for CHPS cost for 2025, while the cost is now being aggregated, as we speak, on the volume and the amount, that's something that I need to get back to you after discussing with the relevant team.

[Foreign Language] We'll move on to the next question.

[Foreign Language] The following question is Moon Kyeongwon from Meritz Securities. Please go ahead.

[Foreign Language] I have a question regarding coal individual consumption tax. It has been reduced to KRW46 to KRW39 per kilowatt and I believe that this was something that is temporary decline until end of June. Will this be maintained going forward for bituminous call? What is the outlook?

[Foreign Language] To answer your question, as you have mentioned, the individual consumption tax for coal has been discounted until end of June. Whether or not that discount will be extended has not been determined by the government yet.

[Foreign Language] Currently there are no participant questions. [Operator Instructions] The following question is by [Indiscernible] from [Indiscernible] Securities. Please go ahead.

[Foreign Language] I have questions regarding different costs. First is on a separate basis, what has been your interest cost? If you can share the average interest cost on a consolidated basis as well as separated basis for this year that would be greatly appreciated. And also, what is the financial profit and cost and dividend profit for Q1 on a separate basis? And could you also share again the RPS cost for consolidated and on a separate basis as well as the external power purchase cost?

[Foreign Language] If I look at the interest cost on a separate basis, it is down by KRW56.2 billion on a year-on-year basis at KRW685.5 billion.

[Foreign Language] Please allow me to follow up on the interest rate for consolidated and separate basis later on.

[Foreign Language] On a separate basis, the financial profit is 1.96 trillion KRW and financial cost is KRW730 billion with dividend profit of KRW1.8 trillion. [Foreign Language] To also share, the RPS cost for Q1, on a consolidated basis it is KRW782.6 billion and on a separate basis it's KRW978.3 billion. [Foreign Language] On power purchase, out of 144.7 terawatt hour, we purchased 6 terawatt from PPA and 84.3 terawatt from IPP.

[Foreign Language] We'll move on to the next question.

[Foreign Language] The following question is by Yi Min Jae [Phonetic] from NH Investment Securities. Please go ahead.

[Foreign Language] If you could share the overall CapEx plan for T&D for this year, next year and the year after that would be great. Is there certain area that you will specifically execute this CapEx on like the undersea cables as well as the electricity towers?

[Foreign Language] Currently we are in the process of developing the 11th basic plan for electricity power supply and demand which will be available within May. Those T&D plan is also being developed alongside with the 11th basic plan and you will be able to access those numbers when this plan becomes available.

[Foreign Language] The following question is by [Indiscernible] Securities. Please go ahead.

[Foreign Language] So I was not able to hear clearly on the financial profit and cost on a consolidated basis, so if you could share that like once again that would be great. And as we have seen the surge in industrial electricity tariff, there has been an issue of industries purchasing power over KPX. So for KEPCO, what's your plan going forward in providing electricity for the private sector and also to pass through the T&D cost, if this becomes an issue going forward?

[Foreign Language] So to mention the cost once again, on a consolidated basis, the financial profit has been KRW413.3 billion and the cost is KRW1.23 trillion. And on the profit, based on the equity method, is KRW125.12 billion. [Foreign Language] On the direct purchase issue that you have mentioned, currently we are discussing this issue with KPX, the Ministry as well as the members of the power industry to resolve this issue and to improve the overall mechanisms and related rules for direct purchase. We have also increase the mandatory purchase period from one year to three years and also the welfare related special costs will be borne to all relevant stakeholders, not just on KEPCO. We're also increasing the market liability as well as responsibility of direct purchase of the market. So this is the overall trend for us to improve the direct purchase arrangement at the moment. And regarding the power grid usage we're currently carrying out a study regarding this and once that study is over we'll be able to share more.

[Foreign Language] Currently there are no participant questions. [Operator Instructions] As there are no further questions, we're now and end the Q&A session. For any additional inquiries, please contact our IR department. This concludes the fiscal year 2025 first quarter earnings result by KEPCO. Thank you for your participation.

Good morning, and good evening. First of all, thank you all for joining this conference call. And now we will begin the conference of the Fiscal Year 2024 Third Quarter Earnings Results by KEPCO. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions] Now we shall commence the presentation on the fiscal year 2024 third quarter earnings results by KEPCO.

[Foreign Language] [interpreted] Good afternoon. My name is [Jang Nam Yong] (ph). I am the Head of Finance and Accounting Department of Korea Power Corporation. I would like to thank you for taking time out of your busy schedules to attend the IR conference call of the third quarter of 2024 of KEPCO. Today's conference call is going to be provided in both Korean and English. I am going to report to you the financial results and then take your questions. The financial results that we will present today are consolidated estimates based on IFRS and all comparisons are based on year-on-year basis unless otherwise mentioned. Also, the business plan and targets and estimates that we may mention during this conference call are the estimates at current point, so please understand there is uncertainty and risk in investment. Now I'm going to present to you the accumulated profit and loss of the third quarter 2024 in Korean and in English afterwards.

[Foreign Language] [interpreted] Good afternoon. I am Yang Si-young. I am the Head of IR. Let us now look at the operating profit. The accumulated consolidated operating profit in the third quarter 2024 recorded KRW5,945.7 billion. Let's look at the details. Our sales recorded KRW69,869.8 billion, up 6.4%. Among this, income from electricity sales, KRW66,727.9 billion, up 8.0%. And other income including income from overseas business, KRW3,141.9 billion, down 19.5%. Cost of sales and selling and administrative expenses recorded KRW63,924.1 billion, down 11.4%. Among this, fuel costs and power purchase costs respectively recorded KRW17,641.1 billion and KRW26,819.3 billion, which are down 18.6% and 11.6% respectively due to fuel cost decrease. Depreciation recorded KRW8,534.8 billion, down 0.2%. Among a major non-operating profit and loss, interest expense recorded KRW3,422.9 billion, which is a Y-o-Y increase of KRW112.5 billion due to an increase in average balance of our borrowings. Due to the reasons that I mentioned so far, the accumulated consolidated operating profit in the 2024 third quarter recorded KRW5,945.7 billion. Net income recorded KRW2,590 billion.

[Foreign Language] [interpreted] Good afternoon. I am, [indiscernible] in charge of IR. Now, I like to report to you the major concerns. Now let me first start by the power sales performance and the outlook. Our power sales accumulated in the third quarter increased Y-o-Y by 1.7% to 421 terawatt hour, thanks to better export of semiconductors and higher demand for summer cooling. And in the annual basis, we believe that the power sales will slightly increase due to an increase in demand for heating and cooling. Now let me report to you the fuel costs fu fuel source. In the third quarter 2024 the quarterly fuel cost was KRW1,990 per ton for coal, KRW1.90 million per ton for LNG, and KRW974 per liter of oil. In the 2024 annual fuel cost other than older unloading cost. The coal cost is about KRW180,000 per ton, LNG KRW1.1 million per ton, and the oil about KRW907 per liter. Please understand that this outlook may differ according to global fuel price trends. Now, we'll look at the power generation mix of our power generation companies. If you look at the power generation mix of accumulated third quarter, the nuclear power plant share increased, thanks to the operation of newly built reactors. Coal share slightly decreased because of a decrease in coal utilization rate. LNG's capacity slightly increased, but their mix was maintained due to an increase in baseload. In 2024 as a whole, we believe that the nuclear power plants share will increase due to the outlook of increase in utilization rate and the operation of newly built reactors, such as Shinhanu Unit 2, which started commercial operation in April. The coal's share will remain similarly and LNG's share will decrease. The utilization rate outlook of 2024 annually by power source is for nuclear power plants early to mid-80%, coal early to mid-50%, and LNG later 20% range. Now let me report to you the cost related to RPS and ETS. The RPS related cost accumulated to the third quarter of 2024 was KRW2,763.8 billion on a consolidated basis and KRW3.269 billion on non-consolidated basis. ETS-related costs, minus KRW30.2 billion consolidated or KRW0 million non-consolidated. And lastly, let me report to you on our capital finance. The consolidated borrowing accumulated to the third quarter 2024 was KRW132 trillion and the borrowing of non-consolidated was KRW88 trillion. Now we are going to have a question-and-answer session. Since the Q&A session will be conducted through consecutive interpretation between Korean and English. So please make your questions concise and clear. We are ready to entertain your questions.

[Foreign Language] [interpreted] Now Q&A session will begin. [Operator Instructions] The first question will be given by Mr. Pierre Lau of Citigroup. Please go ahead.

Hello. Good morning, Capital Management. Thanks for your time. I have three questions. The first one is, what was the key reason for the finance expense drop by 80% year-on-year in the third quarter. The second question is, do you expect more tariff hike in the next six months? And the third question is, what is your guidance for your fuel cost in fourth quarters this year and 2025? Thank you.

Your second question, please.

Second question, what is your expectation regarding more tariff rise in fourth quarter this year or first quarter next year?

[Foreign Language] [interpreted] Let me now try to answer your first question about interest expense. Our borrowings did decrease on a consolidated basis. However, the average balance of borrowing increased year-on-year basis. So on an accumulated basis to third quarter, the interest expense was KRW3.4 trillion, which is up by KRW110 billion from the same quarter last year.

I'm asking about the finance expense in the third quarter. The number was KRW334 and dropped 80% year-on-year. On last year KRW1,674 billion. So I’m asking about your finance expense. Why it is dropped 80% year-on-year in the third quarter. Thank you.

[Foreign Language] [interpreted] The financial expenses is not only influenced by the interest rate, it is also influenced by the loss derived from foreign exchange. Because the range of increase of foreign exchange decreased from the last year, our loss of derived from foreign exchange also decreased. That is why we are down from the last year KRW1.3 trillion. For your question on the guidance of tariffs into the fourth quarter and next year. We increased the tariff of industrial service power by KRW16.1 on October 24th. And the effect of this tariff increase on average is equivalent to an increase of KRW8.5. It has not been a month since the last increase in October, so we do not foresee any more increase in the near future. We are going to closely monitor the financial impact of this increase in energy prices in foreign exchange market. About your questions on the fuel cost outlook, the KEPCO does not present any official outlook on fuel cost. If that answers your question, we would like to take the next question.

[Foreign Language]The following question is by [indiscernible] of LS Securities. Please go ahead.

[Foreign Language] Thank you for the opportunity to ask a question. My question is about dividend. We understand that still you have sizable accumulated operating loss, but this year net income was positive. So we want to know whether KEPCO is planning to resume paying out dividend. If so, the guideline -- will the guideline be same as the past, about 10% dividend of the net income or because still you have accumulated operating loss, are you going to pay out less than previous guidelines and pay out more dividend as time goes by?

[Foreign Language] [interpreted] In answering your question, we will consider the plan to pay our dividends if there is the funds to pay out dividends depending on our annual performance and we do not have any set plan or policy on how much dividends to pay out. So the volume was low from the Korean speaker's side, so we would like to ask the Korean speaker to repeat your answer, please.

[Foreign Language]

Next question, please.

[Foreign Language] The next question is from Mr. [Yoo Jaehyun] (ph) of Media Asset Security. Please go ahead.

[Foreign Language] [interpreted] I'd like to ask a question about your financial income being minus KRW460 billion. Could you tell us why? And my second question is about the completion plan of nuclear power plants. You announced that the Shinhanu Unit 3 is planned to be completed in the fourth quarter, is it still the case, or is there any possibility of postponing this? And when this is completed, when will it start operation?

[Foreign Language] [interpreted] And your questions about the plan for Shinhanu Unit 3, the completion plan for Shinhanu Unit 3. We have not been officially notified by either KHMP or KPX that this plan will be postponed, but we understand they are considering postponing this process because of a delayed construction process. Next question, please.

[Foreign Language] [interpreted] The next questioner is Mr. [indiscernible] Securities. Please go ahead.

[Foreign Language] [interpreted] I have two questions. Although your consolidated operating profit improved a lot, we see an enlarged deficit on a non-consolidated basis. Can you tell us why the gap is getting bigger between consolidated operating profit and non-consolidated operating profit and loss? Is it because you increased the adjusted coefficient? And if you did so, how much did you mark up the adjusted coefficient? My second question. The other operating expenses is down by KRW300 billion. Can you tell us why?

[Foreign Language] [interpreted] Our non-consolidated operating profit is smaller because the S&P relatively increased in the third quarter. It led to a less profit on both consolidated and non-consolidated basis. The consolidated operating profit increased because it includes not only KEPCO’s operating profit but also the operating profit of our GENCOs and other subsidiaries. Other operating expenses is smaller because of the decrease in the fuel supply cost in Southeast power. To give you the number of adjusted coalitions, The first determination of the adjusted coefficient in 2024 was applied to months from January to March. They were determined as 0.4 for nuclear power and 0.5 for coal. And the coefficient got adjusted for April through September 1 for coal and 0.5 for nuclear power. They got readjusted again for the fourth quarter to 0.5 for coal and 0.4 for nuclear power. And to add a little more point on the adjusted coefficient, the current coefficient, which is determined for the fourth quarter, maybe update one more, maybe adjusted one more after updating our performance derived from the last adjusted coefficient. Next question, please.

[Foreign Language] [interpreted] Currently, there is no participant with questions. [Operator Instructions] The next question is from Mr. [Hamino] (ph) of [Daeshin] (ph) Security. Please go ahead.

[Foreign Language] [interpreted] I have three questions. My first question is about the fuel cost for nuclear power plants. In the first quarter, there was a consensus, and you also let us know that there will be an increase of the fuel cost for nuclear power plants for about KRW300 billion, but actually they decreased by KRW220 billion in the second quarter, Y-o-Y, and again by KRW75 billion. Could you tell us why they are going down after you said that they may go up in the first quarter? And again, other operating expenses are going down by KRW500 billion in the second quarter and KRW300 billion in the third quarter. Do you believe that they will continue to go down in the fourth quarter? And the last question, the S&P dropped a lot more than the drop of the fuel cost in October. Can you tell us why?

[Foreign Language] [interpreted] And my answer to your question, the second question is about other operating expenses. As I already answered to other questions, the fuel supply business cost for Southeast Power Generation Company is going down because this is influenced by the decrease of the fuel cost, and that is why the other operating expenses are going down.

[Foreign Language] [interpreted] My question is related to other operating expenses. Does that have much to do with the fuel cost of Southeast Power Generation Company?

[Foreign Language] [interpreted] Yes, try to answer the question. In the conference call, IR conference call, when we refer to fuel costs by KEPCO, this refers to the pure fuel cost that goes into our power generation business, whereas the fuel expenses and other operating expenses refer to the fuel cost of our power generation facilities overseas and GENCO [indiscernible]. To give you the RPS related cost, on a consolidated basis, the RPS cost was KRW2,763.8 billion, and on a non-consolidated basis, KRW3,269 billion. The ETS related expenses, minus KRW30.2 billion consolidated and KRW0 non-consolidated. And your last question is about why the S&P dropped much larger than the fuel cost drop. S&P, of course, is influenced by the trend of fuel cost, but it is also influenced by the demand and supply. The October S&P dropped a lot because the demand for power decreased a lot after the hot season. Any other questions, please?

[Foreign Language] [interpreted] The next questioner is Mr. [indiscernible] of BlackRock. Please go ahead.

Hi, can you hear me?

Yes, we hear you.

Yes, thank you for taking the question. I have two. One is, again, on S&P price down a lot. Does that mean the cost, your procurement cost in fourth quarter would also drop proportionately due to this S&P decline. And the second question is regarding dividend. What's the current dividend payout policy? And given you are profitable this year, can we expect at least some dividend pay to shareholders?

[Foreign Language] [interpreted] In your S&P related question, what do you exactly mean by procurement cost?

The cost when you purchase power from third party power plant.

[Foreign Language] [interpreted] S&P sets the standards of settlement in the power market. So when the S&P goes down, then it is natural that our procurement cost, which is the power purchase cost, also goes down.

[Foreign Language] [interpreted] And once again, about our policy for dividend payout, at the point of announcing the annual closing of our finances we will check whether we have profits that are payable as dividends and to make a decision for dividend payout. At the moment we do not have any official consideration for dividend policy.

Oh, sorry. Do you mind if I follow up on this? How do you define profit payable? Any different [indiscernible] reported in that profit?

[Foreign Language] [interpreted] This payable -- dividend payable profit is calculated as on a non-consolidated net income, we subtract the deferred loss and the reserve.

Okay. Thank you very much.

[Foreign Language] [interpreted] Currently there is no participant with questions. [Operator Instructions] The next question is from Mr. [Hermino] (ph) of [indiscernible] securities. Please go ahead.

[Foreign Language] [interpreted] How much power did you purchase?

[Foreign Language] [interpreted] In the third quarter, we purchased about 156 terawatt hour. Among this, we purchased 104 terawatt hour from our GENCOs. Next question please.

[Foreign Language] [interpreted] Currently there is no participant waiting with questions. [Operator Instructions] The next question is from [Park Yu Shin] (ph) of HSBC. Please go ahead.

[Foreign Language] [interpreted] I have two questions. I understand that KEPCO is making many efforts including tariffs increase to improve the financial structure. Other than tariffs increase, what other measures is the company taking? And secondly, in the market currently the won is depreciating. Can you please tell us the impact of the value of won in the foreign exchange market.

[Foreign Language] [interpreted] KEPCO is implementing a KRW30 trillion of financial stabilization plan for five years from 2022 to 2026. In this plan, we are taking a lot of measures such as filling our assets and reducing our cost of investment and trying to increase the income other than from power sales and we are beating this target by 110%. And to answer your questions about foreign exchange fluctuations impact on us. Foreign exchange fluctuations can impact our business in two ways. The first on the borrowing and the second on the fuel cost. However, our borrowings are hedged so we are hedged from risk somewhat. And secondly, the impact on the fuel cost. We are exposed to some foreign exchange fluctuation risk when we buy LNG or other fuel, but the details of this impact varies from the fluctuation range and the cost of global fuel.

[Foreign Language] [interpreted] Currently, there is no participant waiting with questions. [Operator Instructions] The next question is from [Jo Yoon Heng] (ph) of UBS. Please go ahead.

[Foreign Language] [interpreted] For the information, if you look at our report of national investigation, we understand that KEPCO is planning asset revaluation to improve its financial standing. And if it's planning so, when will this asset revaluation have an impact on your financial position?

[Foreign Language] [interpreted] We have a plan to re-evaluate our land as part of our financial stabilization plan and we are considering by looking at the possible impact of this land re-evaluation. Next question please.

[Foreign Language] [interpreted] Currently there is no participant with questions. [Operator Instructions]

Since there's no further question, we would like to conclude our IR conference call for the third quarter 2024. If you have further questions, please do not hesitate to contact the IR team. Thank you for your attention.

[Foreign Language] [interpreted] This concludes the fiscal year 2024 third quarter earnings result by Capco. Thank you for your participation.