Korea Electric Power Corporation · KRX:015760
Korea Electric Power — Investor Presentation (May 2003)
25 slides from Korea Electric Power's investor presentation, May 5, 2003
Slide 1: Investor Presentation April 29, 2003
Investor Presentation April 29, 2003 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 bas bee
Slide 2: Discussion Topic
Discussion Topic Overview Business & Operation Financial Profile Strategic Initiatives Investment Highlights
Slide 3: Overview
icepeo Overview conn ELECTAIC POWER CORPORATION
Slide 4: Power Monopoly in Korea
Power Monopoly in Korea Assets KRW70.5 trillion (US$58.7 billion) Revenues KRW21.4 trillion (US$17.8 billion) Generating Capacity 49,561 MW Market Capitalization KRW11.5 trillion (US$9.6 billion) 95% Generation 100% Transmission Distribution 100% 1. Financial numbers are consolidated (Korean GAAP) a
Slide 5: World's Leading Utility Player
0 100 200 300 KEPCO Huaneng Power CLP HK Electric Tokyo Electric Tenaga 4 8 12 16 KEPCO Huaneng Power CLP HK Electric Tokyo Electric Tenaga EBITDA U$ billion Source: Deutsche Bank, 2002 World's Leading Utility Player Sales and Capacity Sales (1,000GWh) Capacity (1,000MW) 60 40 20 0 2
Slide 6: Undervalued Compared to Regional Utilities
20 15 10 5 0 5 10 15 20 25 ROE(%) P/E(x) KEPCO Tenaga Tokyo Elecctric HK Electric CLP Huaneng Power 2 4 6 8 10 10 8 6 4 2 0 Interest Cover(x) P/CF(x) KEPCO Tenaga Tokyo Electric HK Electric CLP Huaneng Power Undervalued Compared to Regional Utilities Recent financial improvement not fully appreciate
Slide 7: Business & Operation
KEDCO Business & Operation CPOWEN CORPORATION)
Slide 8: Demand Driven by Residential
Demand Driven by Residential 8.8% 3.0% 6.2% 7.6% 8.0% 11.8% 0 5 10 15(%) 2000 2001 2002 2003(F) (Demand) 7.5% 5.0% (GDP) Annual Demand Growth Volume Revenue Demand Growth 1Q03 Demand Characteristics in 1Q03 KWh sold per residential customer was up by 4.3% - - Tariff rebalancing resulted in higher un
Slide 9: Potential for Tariff Hike
Potential for Tariff Hike History of Tariff Hikes 5.9% 6.5% 5.3% 4.0% 0.0% 0.0% 0% 5% 10% 1997 1998 1999 2000 2001 2002 ?% 2003 Strong Demand Growth Forecast 2003 : 7.5% 2004~2005 : 6.1% (Annual Average) 2006~2010 : 4.4% (Annual Average) The forecast assumes GDP to grow by 5.0% in 2003 and at an ann
Slide 10: Fuel Price Sensitivity Analysis
Fuel Price Sensitivity Analysis Oil Price/ Dubai Coal Price U$1 Change in Oil Price KRW18.2bil. (U$15.0mil.) U$1 Change in Coal Price KRW19.2bil. (U$16.0mil.) Cost Sensitivity to Fuel Price 2003 Budget Price: Dubai Oil Price U$25/BBL Unit Coal Purchase Expense U$32. 76/Ton 20 24 28 25 30 35 40 45/to
Slide 11: Continuous Fuel Cost Control
Continuous Fuel Cost Control Efficient Fuel Mix: Generation by Fuel Type Oil & LNG 32% (1997) 18% (2002) Coal 32% (1997) 41% (2002) Nuclear 36% (1997) 41% (2002) Hedging & Saving Fuel Cost Coal Increasing the portion of long-term contract: 6:4 8:2 Increasing the tenor of long-term contract: 1 year 3
Slide 12: Financial Profile
=<» Financial Protile KORA ELECTRIC POWER CORPORRTION
Slide 13: Capital Structure
Capital Structure Local vs. Foreign Currency Debt* US Dollar 70% Japanese Yen 28% Local Currency Debt 62% FX Debt 38% * Debt currency mix as of Mar.31, 2003 (KRW/US$ = 1,252.90 ). Total Debt: KRW 21.6 tril (U$17.3bil) Total FX-Denominated Debt USD 6.7bil Others 2% Debt 49.6% SH's Equity 50.4% 8 Soun
Slide 14: FX & Interest Rates Sensitivity Analysis
FX & Interest Rates Sensitivity Analysis Sensitivity to FX & Interest Rate 1% Change in Interest Rate KRW85.7bil (71.4U$mil.) Cash (Interest) KRW19.6bil (U$16.4), Cash (Interest, Repayment) KRW66.3bil (U$13.6), Non-Cash (Translation Gain/Loss) KRW43.6bil (U$36.6), Fuel Expense 10 Won Change in FX Ra
Slide 15: Improved Financials
Operating Margin Debt to Equity ratio Average Debt Cost Return on Equity Improved Financials 16.4% 16.3% 18.5% 19.7% 1998 1999 2000 2001 2002 23.6% 175% 106% 113% 1998 1999 2000 2001 2002 114% 98% 10.1% 8.7% 8.2% 6.3% 1998 1999 2000 2001 2002 6.1% 11 6.1% 4.9% 1998 1999 2000 2001 8.6% 2002 4.9% 4.6%
Slide 16: Solid Financial Results 2002
(Unit : KRW bn) % 1999 % D 2000 % D 2001 % D 2002 KWh sold(GWh) Revenue* EBITDA Operating Income Interest Expense Int. Bearing Debt Net income D 12 * The revenue since April 2002 is exclusive of "Electricity Basis Fund" Solid Financial Results 2002 * Int. Bearing Debt: KEPCO + Gencos 10.7 % 214,215
Slide 17: Financial Results 1Q 2003
Financial Results 1Q 2003 1Q 03 1Q 02 Growth Revenue 5,612 5,025 12% Operating Expenses 5,169 4,473 16% Purchased power 4,172 3,599 16% Labor costs 175 158 11% Severance payments 6 18 - -67% Maintenance cost 116 105 11% D&A 365 335 9% Fee expenses 87 77 13% Other expenses 248 181 37% Operating Profi
Slide 18: Strategic Initiatives
KEPCD Sifategic Initiatives CPOWET CORPORATION)
Slide 19: Restructuring Timetable
Generation Transmission Distribution KPX N G G G G G KPX Transmission Distribution N G G G G G Phase I Preparation Phase II Generation Competition Phase III Wholesale Competition Phase IV Retail Competition Transmission GENCOs' Privatization Started GENCOs & KPX, Setup Introducing Cost Based Electri
Slide 20: Restructuring Underway
Restructuring Underway Privatizing KOSEPCO Strategic stake sale was cancelled due to extraneous factors 100% bonus issue followed by 10-15% domestic IPO is currently planned by early 2004 Financial advisors for IPO will be selected in May Alternative measures will also be employed to divest KOSEPCO
Slide 21: Successful Disposition of Non-Core Assets
Successful Disposition of Non-Core Assets 16 *Book value : As of Dec 31, 2002 Assets Sold Book Value* Ownership Proceeds Sales-to-book Multiple Onwards KPS 239 100.0% - - KEPID 20 49.0% - - KDHC 148 26.1% - - KOGAS 691 24.5% - - KOPEC 52 97.9% - - Powercomm 359 43.2% - - (Unit: KRW bn) Completed To
Slide 22: Strategic Initiatives
Overseas Projects Priority: Successful completion of two on-going projects in the Philippines Risk Management: Consortium, balanced geographic mix, project diversification, local government guarantees Focus Area: O&M, test operation, and rehabilitation Value to Shareholders: Minimum capex and hurdle
Slide 23: Investment Highlights
CO Inveatnent Highlights ELECTRIC POWER CORPORATION:
Slide 24: Investment Highlights
Investment Highlights Dominant player in the fast-growing electricity industry Industry restructuring enhances transparency in tariff system Enhancing profitability by Risk Management and Operation Rationalization Improving financial status with the sale of KOSEPCO and non-core assets 18
Slide 25: Signatures
Investor Presentation April 29, 2003 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KOREA ELECTRIC POWER CORPORATION By: /s/ Do-Shik Lee Name: Do-Shik
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