SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUERP
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the Month of September, 2004
KOREA ELECTRIC POWER CORPORATION
(Translation of registrant’s name into English)
167, Samseong-dong, Gangnam-gu, Seoul 135-791, Korea
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______.
This Report of Foreign Private Issuer on Form 6-K is deemed filed for all purposes under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, including by reference in the Registration Statement on Form F-3 (Registration No. 33-99550) and the Registration Statement on Form F-3 (Registration No. 333-9180).
Investor Presentation
Sep 2004
This material has been prepared by Korea Electric Power Corporation for the information of investors of the company. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument or securities. While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of preparation, the company makes no representation as to its accuracy or completeness. Any projections or estimates may be different from actual results.
Table of Contents
I. Overview
II. Business & Operation III. Financial Profile IV. Strategic Initiatives
4
I. Overview
Power Monopoly in Korea
95 % 100% 100%
Generation Transmission Distribution
* Based on gross generation (2003)
Assets
KRW71.7 trillion (US$60.2 billion)
Revenues
KRW22.8 trillion (US$19.1billion)
Generating Capacity
50,432 MW
Market Capitalization
KRW12.6 trillion (US$
10.8 billion)
For the year ended and as of Dec. 31, 2003.(consolidated)
Market Cap.: as of the end of Jul. 2004, USD/KRW=1171
6
II. Business & Operation
Demand Growth
Historical Demand Growth & GDP (%)
Demand Growth GDP Growth
11.8 10.0
10.7 11.8
7.6 8.0
5.4 6.2
6.8 5.0
(3.6)
10.7 8.8
3.0
6.2
2.7
4.7
(6.7)
1996 1997 1998 1999 2000 2001 2002 2003 2004(F)
Demand Growth Forecast
2005: 6.1%
2006 ~ 2010: 4.4% (Annual Average)
GDP: an annual average growth rate of 5.1% from 2004 through 2010
Forecast value for 2004 onward: midpoint of the reference demand and high demand scenario by Korea Power Exchange
Actual results may differ from the forecast
Demand Growth For the 1st 7 Months
Volume Revenue
9.3%
6.9%
5.6%
4.7%
6.1% 5.8% 5.4% 5.1%
Residential Commercial Industrial Total
Unit Sales Price
2003 1st 7 months, 2004
Won/Kwh
Residential 108.0 108.4
Commercial 100.6 94.4
Industrial 60.3 59.3
Average 74.7 72.6
* 2004 data are preliminary
8
Tariff Adjustment
History of Tariff Adjustment
6.5% 6.0% 5.9% 4.9% 5.3%
4.2% 4.0%
Jun91 Feb92 May95 Jul97 Jan98 Nov99 Nov00
Tariff Rebalancing
Residential -2.0% -2.8%
Commercial -2.2% -3.5%
Industrial 2.5% 0.0%
Average 0.0% -1.5%
Jan03 Mar04
Management Objectives on Tariff
Increasing tariff to the level that will generate the profitability recovering the cost of equity, 7.53%
Narrowing tariff difference among sectors
Proposing a tariff-hike later this year after analyzing the impact of cost inflation including fuel
9
Fuel Price & Expense (1)
Surging Fuel Price
with coal price more than doubled and crude oil price over 40% up by Aug
2003 Average 2004 Jan Feb Mar Apr May Jun Jul Aug
NEWC* Coal Price Index 25.3 41.3 42.8 55.3 55.8 58.8 61.4 60.3 55.9 US$/ton
Dubai Oil Price 26.8 28.9 28.6 30.9 31.7 33.6 33.4 34.7 38.2 US$/barrel
* NEWC: Newcastle
proved to be not so serious during 1H 2004
with total fuel expense having been up by only 21%
Unit Price Change Market Price
(1,000Won/ton, Won/liter) Change by Aug. 2004
1H 04 1H 03 yoy yoy
Bituminous 53.6 37.5 42.9% 107.8%
B.C. Oil 244.3 257.8 -5.2% 31.2%*
LNG 405.8 409.2 -0.8% 31.2%*
* Crude oil price
* LNG price lags oil price by 2 months
Fuel Expense
In billion Korean Won
1H 04 1H 03 yoy
Coal 1,222 840 45.4%
Oil 523 801 -34.6%
LNG 1,542 1,025 50.5%
Nuke 210 222 -5.4%
Total 3,497 2,887 21.1%
10
Fuel Price & Expense (2)
Factors that mitigated fuel expense hike in 1H 2004
1-year contracted coal price hike is much lower than market price’s
The volatility of BC oil price is structurally lower than crude’s; BC oil price was up by only 10% Cutting expensive light oil consumption by 80% Korean Won was appreciated by 3%
Generation Mix
2003 1H 2004
11%
LNG
17%
6%
Oil
5%
40%
39%
Coal
42%
Nuclear & Hydro
39%
to be cut
to recover 40%+, respectively
Fuel Cost Mix
2003 1H 2004
39%
LNG
44%
30%
Oil
15%
Coal
35%
25%
6%
Nuclear & Hydro
6%
to be maintained by and large,
but changing with fuel price development
11
Fuel Expense—Strategy
Internal Fuel Price Forecast
We expect overall fuel prices to be largely stable at current level which is relatively high
2005 2006 2007 2008
(annual percentage increase)
Bituminous Coal 3% 2% 2% 2%
Dubai Crude Oil 6% 6% 3% 3%
* Annual increase in 2005 is from the price prevailing in Aug. 2004
Strategy
Maintaining efficient fuel mix: Nuclear at full capacity, and Nuclear/Coal providing over 80% of electricity
Gencos to collectively bargain fuel prices for better terms
Diversifying fuel sources to Russia, Indonesia: Reducing Chinese coal dependency
Securing more coal by long-term contract: minimizing spot market exposure
Gencos to share fuel inventory
Exploring overseas fuel resources to secure long-term supply
Developing alternative non-fossil fuel material
12
III. Financial Profile
Capital Structure
Capital Structure
Total SH’s Equity: KRW 37.8 tril (U$31.7bn) Total Liabilities: KRW 33.9 tril (U$28.5bn) as of 2003, consolidated
Liab.
47%
SH’s Equity
53%
Shareholder Mix as of Aug 2004
Government 27.0%
KDB 26.9%
Resolution & Finance Co. 5.1%
National Pension Fund 2.9%
Treasury Stock 1.7%
Foreigners 30.4%
Others 6.0%
Interest Bearing Debt*
Local Currency Debt 68% FX Debt 32%
US Dollar 62% JPY 34%
Others 4%
Total debt
: KRW 20.5 tril equivalent
Total foreign currency Debt
: KRW 6.5 tril equivalent
* Debt: KEPCO + GENCOs, as of June 30, 2004
14
Debt Profile & Strategy
Current vs. Target Repayment Schedule
Total debt
FX debt
4.4 3.8
3.2 3.1 3.2
1.0
0
0.5
0
1.3
2H 04 2005 2006 2007 2008 2009 2010 2011 2012 2013 & after
(in tril Korean Won)
Debt Currency Mix
June 2004 Target
KRW 68% 70%
USD 20% 15%
JPY 11%
} 15%
Others 1%
Fixed vs. Floating Mix
Fixed 62%
Total
Floating 38%
Fixed 50%
KRW
Floating 50%
Fixed 89%
FX
Floating 11%
Floating portion is to get smaller in general
* Debt: KEPCO + GENCOs, as of June 30, 2004
15
Improved Financial Status
(Unit: KRW bn) yoy 2000 yoy 2001 yoy 2002 yoy 2003
KWh sold(GWh) 11.8% 239,535 7.6% 257,731 8.0% 278,451 5.4% 293,599
Revenues 18.8% 18,708 8.1% 20,225 5.6% 21,366 6.6% 22,775
EBITDA 14.8% 8,800 4.8% 9,226 11.6% 10,299 4.7% 10,783
Operating Income 34.9% 3,470 15.0% 3,989 26.5% 5,047 3.5% 5,224
Total Interest Cost* 4.3% 2,337 (13.7%) 2,017 (20.3%) 1,608 (15.8%) 1,354
Interest Bearing Debt* 3.0% 25,459 4.0% 26,465 (14.1%) 22,738 (3.6%) 21,926
Net Income 0.4% 1,483 10.2% 1,635 86.4% 3,048 (24.0%) 2,323
Based on consolidated financial statements
Interest cost is inclusive of the capitalized
Interest bearing debt: KEPCO+GENCOs
16
First Half Results
(Unit : in billions of Korean Won) 1H 2004 1H 2003 %change
Operating revenues: 11,222 10,780 4.1%
Sale of electric power 11,039 10,493 5.2%
Other operating revenues 58 88 -33.8%
Revenues for other businesses 126 198 -36.7%
Operating expenses: 9,052 8,538 6.0%
Power purchased for resale 681 755 -9.9%
Labor 708 649 9.1%
Retirement benefit 53 56 -4.5%
Maintenance 739 691 7.0%
Depreciation 2,161 2,242 -3.6%
Fuel 3,497 2,887 21.1%
Other 1,149 1,103 4.2%
Expenses for other businesses 64 155 -59.1%
Operating income 2,171 2,242 -3.2%
Other income: 759 560 35.6%
FX gain 309 85 262.9%
Investment income from affiliates 190 164 16.1%
Other 261 312 -16.2%
Other expenses: 636 593 7.2%
Interest expenses 375 416 -9.9%
FX loss 5 24 -80.9%
Other 257 153 67.6%
Ordinary income 2,294 2,209 3.9%
Provision for income taxes 830 925 -10.3%
Net income 1,464 1,283 14.1%
Despite general economic slowdown, demand growth was decent to be 5.8%
Despite tariff cut on March 1, unit sales price was cut by 0.6% to 71.38 Won/kWh
Fuel cost was up by 21.1% due to fuel price-hike
Maintenance cost was cut by 8.4%—cost cutting effort
Korea Won was appreciated by 3.8% to generate FX gain
Operating profit was down by 3.2% mainly due to fuel
Net profit was up mainly due to FX gain
* This financial information is preliminary, un-audited and made by adjusting for inter-company transactions among KEPCO and its six generating subsidiaries only. As such, these financial information may not have been prepared in accordance with Korean generally accepted accounting principles, and may not necessarily be indicative of the results of operations of KEPCO and its six generating subsidiaries as a group
* KEPCO+Gencos
17
Capital Expenditure
Conservative Official Forecast
(in billion Korean Won)
9,971 9,898
9,708
9,432
7,882
2,767 2, 853
3,549 3,869
2,038
1,885 1,476
2,813 2,578
2,297
4,274 4,088
4,391 4,467
3,547
2004F 2005F 2006F 2007F 2008F
Nuclear Plant Thermal Plant T&D
New Capacity to be added
1,002 1,500 1,100 1,000Mw Nuke & Hydro
2,507 700 950 1,650 2,800 Thermal
18
Major Financial Statistics
Operating & Net Profit margin
23.6%
22.9%
19.7% 19.3% 18.5% 14.3%
13.0% 7.9% 8.1% 10.2%
2000 2001 2002 2003 1H
2004
Debt to Equity Ratio total borrowing/ SH’s equity
82.3% 84.1%
65.1%
59.9%
52.3%
2000 2001 2002 2003 1H
2004
Average Debt Cost
Kepco+Gencos
8.2%
6.3% 6.1%
5.2% 5.1%
2000 2001 2002 2003 1H
2004
Return on Asset
4.4%
4.2%
5.8%
5.2%
4.4%
2000 2001 2002 2003 1H
2004
* 2000~2003:based on Consolidated Financial Statements; 1H04: Kepco+Gencos (preliminary)
19
IV. Strategic Initiatives
Industry Restructuring
Initial Plan, Current Status & Future
Plan
Current Status
Future Strategy
Be prepared to sell Gencos when time gets right
Genco Setup + Sale
6 Gencos in operation, 100% owned by KEPCO
Management control is on for sale
GENERATION
Improving the asset value to get right price
All gencos except for Nuc.& Hydro to be sold out
DIVISIONAL SYSTEM within distribution is expected
Disco Setup + Sale
Disco Setup scrapped by MOCIE in June 2004
Each division will be autonomous and competing
DISTRIBUTION
New system shall be implemented gradually
Sale of KOSEP
IPO has been delayed as the price quote was below the book value
KEPCO will push forward with selling management control at a right price
This policy secures KEPCO’s value and credit won’t be hurt along the selling process
Scrapping Disco Setup
Scrapping was because the benefit was not certain given substantial risk
This cleared the uncertainty considerably and saved the cost of Disco setup
21
Asset Sale
Assets on Sale
Book Value Ownership
(in billion Korean Won)
KOSEP 1,991 100.0%
KPS 267 100.0%
KEPID 22 49.0%
KDHC 159 26.1%
KOGAS 740 24.5%
KOPEC 69 97.9%
Powercomm 351 43.1%
Plan to Sell
Selling management control as originally planned
By listing on domestic exchange or selling to strategic investors
Timing & method of selling is to be set by consulting Government
Timing & method of selling is to be set by consulting Government
Subject to Government’s plan of deregulating “gas industry”
After Government’s finalizing the plan to introduce competition into
the industry of designing nuclear reactor
By listing on either domestic or foreign exchange, in relation to the bond convertible into Powercomm shares issued in euro market
Financial projection attached hereto assumes no asset sale.
* Book value: as of December 31, 2003
22
Overseas Business – Background & Strategy
Why do we go abroad?
Supplementing low profitability of core, domestic business, given our status as public entity
Conservative cash flow projection and low gearing seems supportive on overseas investment
Taking advantage of regional power shortage to get high return and secure energy sources
Supported by Government who pursues building “north-Asian energy hub”
Strategy
Bearing in mind that domestic operation is our core business
Establishing fair reputation by running existing project to pave the road for future opportunity
Return must justify the carefully estimated risk
Diversifying business portfolio including nuclear, T&D, communication and fuel development
Project financing with minimal recourse to minimize capex burden and risk, but taking majority of equity stakes
23
Investor Presentation
Sep 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| KOREA ELECTRIC POWER CORPORATION | ||
| By: | /s/ Kim, Myung Whan | |
| Name: |
Kim, Myung-Whan | |
| Title: |
General Manager of International Finance Dept. | |
Date: Sep. 1, 2004