Korea Electric Power Corporation

Good morning and good evening. First of all, thank you all joining this conference, and now we will begin the conferences of the fiscal year 2025 four-quarter earnings resulted by CAPCO. This conference will start with a presentation followed by a divisional Q&A session. If you have a question, please press asterisk 1 on your phone during the Q&A. Now we shall commence the presentation on the fiscal year 2025 four-quarter earnings resulted by CAPCO.

Hello, I'm Yang Si-young, the director of the Financial Services Department of the Korea Power Plant. Thank you for attending the Korea Power Plant's 4th quarter performance announcement IR conference call. Today's conference call will be held in Korean and English. First, I will give a brief performance announcement and then answer the questions. The performance data to be announced today is the IFRS connection standard standard number, All comparisons are in preparation for the previous year, as long as there is no separate mention. In addition, among the contents of the performance announcement meeting, the business plan and goals that can be mentioned, the estimated financial figures, etc. are the goals or prospects at the current point of view, so please note that there are uncertainties and investment risk factors. From now on, I will first explain in Korean about the increase in profit in the fourth quarter of 2025 and then explain the same content in English.

Good afternoon. This is Yang Siyoung, head of finance department of KEDCO. 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.

The annual joint sales profit of 2025 was recorded at 13,524.8 billion won. If we look at the details, the sales revenue increased by 4.3% and was recorded at 97,435 billion won. The regular sales revenue increased by 4.6% and was recorded at 93,460 billion won. The foreign business revenue and other revenues decreased by 1.8% and was recorded at 4,429 billion won. The sales cost and assessment cost decreased by 1.3%, which is 83.997 trillion won. The double fuel cost decreased by 13.8%, which is 19.4364 trillion won. The purchase power cost decreased by 1.8%, which is 34.527 trillion won. The price-to-market cost increased by 2.3%, which is 11.6678 trillion won. Among the major business companies, I will first go over the operating items.

The consolidated operating income in 2025 stood at 13,524.8 billion won. Revenue increased by 4.3% to 97,434.5 billion won. Power sales increased by 4.6% to 93,4.6 billion won. Overseas business and other revenue decreased by 1.8% to 4 trillion or 29.9 billion won. Cost of goods sold on SG&A decreased by 1.3% to $83,909.7 billion. Fuel costs decreased by 13.8% to $19,036.4 billion, and purchase power costs decreased by 1.8% to $34,052.7 billion. Depreciation expense increased by 2.3% to $11,667.8 billion. Next, I will go over the non-operating items. Interest expense decreased by $325.6 billion 1YY to $4,339.5 billion 1. As a result of the foregoing, the 2025 consolidated annual operating income stood at $13,524.8 billion 1, and net income was $8,737.2 billion 1.

Hello, I'm Um Tae-seop in charge of IR. Next, I would like to talk about the main interest. First, I would like to talk about the performance and prospects of power sales. The annual power sales were reduced by industry demand due to the impact of the economic downturn, and the total sales volume was recorded at 549.4 TWh, which decreased by 0.1% compared to the previous year. In 2026, the economic growth rate rose Good afternoon.

I am Montesa, 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 TWh, which is a 0.1% decrease worldwide. In 2026, the economic growth rate and number of operating days increased should lead to a slight increase in the total sales volume.

Next, I would like to talk about the price of fuel and the S&P trend. The annual fuel price for 2025 is 105.7 USD per ton, which is the standard for Australian fuel. LNG는 JKM 기준 톤당 약 98만원을 기록하였습니다. 또한 S&P는 약 112.7원 per kWh를 기록하였습니다.

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 tonne. For LNG, JKM was 980,000 per ton, and the S&P was around 112.71 per kilowatt-hour.

If you look at the power group's power mix, in the case of the annual power balance in 2025, the power balance increased due to an increase in the use rate of the raw materials. In the case of coal, the power balance increased due to an increase in the use rate, and the power balance decreased due to a decrease in the amount of coal used and the increase in the amount of base power. I will go over the generation and 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 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, 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%.

I would like to talk about the RPS-related cost. The RPS cost over the past 25 years is 3,989.7 billion won, and the separate standard is 4,888.8 billion won. Lastly, it is the situation of funding. The RPS cost over the past 25 years is 129.8 trillion won, and the separate standard is 84.9 trillion won.

Next, I will go over the RPS cost. In 2025, annual RPS expense on consolidated basis was $3,989.7 billion. And on standalone basis, it was $4,818.8 billion. Last, I will go over the funding situation. And as of 2025 Q4, consolidated total borrowings was $129.8 trillion. And on a standalone basis, it was 84.9 billion won.

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.

Now the Q&A session will begin. Please press asterisk 1 if you have any question. For cancellation, please press asterisk 2 on your phone. The first question will be given by Sung Jong-hwa from LS Securities. Please go ahead.

Yes, thank you. This is Sung Jong-hwa from LS Securities. I would like to apologize for my poor voice. First of all, I would like to ask two questions related to the current situation. In the fourth quarter, there will be a meeting I think it's the other way around. I think it's the other way around. I think it's the other way around. Thank you. Earlier, you said that the original development ratio is increasing overall compared to last year. Last quarter, the original development ratio was reduced by about 6% YY. Does that mean that the fourth quarter will also increase compared to last year? Or because the original development ratio of the fourth quarter last year was reduced by about 1%, Good afternoon, and thank you for the opportunity.

I am from LS Securities, and my name is Hong Jung-hwa. And 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. 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 1 trillion won. I think this is largely because of other costs. I think other costs was around 1.2 trillion won 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 significant. 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 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, a 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 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. Yes, I will tell you.

Regarding the first question, the first 200 nuclear power plants, compared to last year, is about 3,406 billion won, which has increased by 1,606 billion won. In the case of the original total stock market, it is 4,112 billion won, which has increased by 4,112 billion won last year, which is 4.6 billion won, which is 1.2 billion won, which is minus 4.6 billion won. When will this pile up? We will discuss this internally and answer it.

So I will first address your first question regarding the other costs. So the provisions related to greenhouse gas emissions went up by around 120.6 billion won to 340.6 billion won. As for the provisions regarding the recovery of the nuclear power generation sites, it went up by 411.2 billion won resulting in a negative $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.

Yes, I'll answer the second question. We expect that 80% of users will use the service in the future. Yes, regarding your second question, we mentioned that

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.

The following question is by Moon Kyung-won from Merit Securities. Please go ahead.

Hello, I'm Moon Kyung-won, a researcher at Merit Inc. I have three questions. First of all, even though the net profit of the third quarter decreased significantly compared to the net profit of the fourth quarter, the net profit of the separate quarter has increased. Please explain the cause. I think it's related to the number of capital adjustments. I wonder how much this has changed, and I would like you to explain how the number of capital adjustments in the first quarter will change. The second question seems to have come out a little better than the business interest. Connected interest, separate interest, both business interest and interest-based interest have come out better than I thought, but I wonder if there was any clear one-time profit in the financial interest. And thirdly, the payment notice just came out. According to my calculation, the dividend tendency compared to the separate ranking standard seems to have decreased rather than last year, but I wonder why this number comes out. And I would appreciate it if you could share with us the direction of the dividend tendency in 2026 if it can increase more than in 2024-2025. That's all.

Good afternoon. My name is from Merit 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, 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 standalone 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 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. 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? I'll answer the first question.

In terms of connection profits and separate profits,

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.

Regarding the adjustment coefficient, in Q4 last year,

The numbers were slightly higher than previous average quarters. And the coefficient for 2026 we expect to be slightly higher than 2025.

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.

Yes, I will answer the third question. As you said, the previous year's dividend tendency was 16.5%, and this year's dividend tendency is 13.65%, so the dividend tendency itself has decreased. However, due to a significant increase in the short-term interest rate, the total dividend amount divided by the main dividend amount, in the case of DPS, increased significantly to 1,545 won. And regarding your question on dividends, so last year the PIA 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 standalone basis increased significantly, so the absolute amount of dividends that were paid out will increase. And DPS also increased to around 1,541 per share. As for 2026, as you know, we are a public corporation, and subject to the relevant legislation, 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.

The following question is by Yoo Jae-sun from Hana Securities. Please go ahead.

Hello, I'm Yoo Jae-seon from Hanajung. There are four questions. The first is, in January, we saw the news that the price of the use-after-resolution shock absorber was adjusted for the first time since 2013, which was very impressive. The first question is how much the shock absorber has been recognized this time. The second is, including the first question, the second question is how much Han Soo-won's shock absorber recognition was in the fourth quarter of 2025. Good afternoon. I am from Homeland Securities, and I have four questions.

My first question is for additional 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 KHMP 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?

I will answer the first and second questions at the same time. In the case of the original 4.5 trillion U.S. dollar recovery fund, it increased by 90.45 billion won in the previous year to 24.76 billion won. In the case of the original 4.5 trillion U.S. dollar recovery fund, it decreased by 17.84 billion won in the previous year to 2.745 billion won. In the case of the medium and low-level waste water recovery fund, it increased by 100 billion won

Let's try to address your first two questions at once. So the provisional liabilities that were booked for the recovery of nuclear power sites was 904.5 billion won, increased by 904.5 billion won to 24 trillion 76.9 billion won. As for the used nuclear fault, fuel, it decreased by 178.4 billion won to 2 trillion 745.3 billion won. And as for the mid and low level nuclear waste associated provisions and liabilities, it went up by 10.2 billion won to 1 trillion 77.2 billion won. For your third question, regarding the grace period of the individual consumption tax coming to an end and how that would impact our costs, 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.

Lastly, I would like to answer a question related to the rate of issuance. There is a part of the decision that needs to be made when the dividend is decided and the shareholders' agreement is made. Considering that, I expect it to be in the early three times.

Yes, and regarding your final question on the bond issuance cap, so 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 three times once all of those dividend-related activities are finalized.

Currently, there are no participants with questions. Please press asterisk 1 to give your question. 다시 한번 말씀드리겠습니다. 질문이 있으신 분들은 전화기 버튼의 별표와 1번을 눌러주십시오. Once again, if you have a question, please press asterisk 1. 다음으로 질문해 주실 분은 LS증권의 성종환입니다. 질문해 주십시오. The following question is by 성종화 from LS Securities. Please go ahead.

안녕하세요. I would like to ask two more questions. First, can you share with us the progress and direction of the export of raw materials at this stage? Second, the BNPP additional construction cost of about 1.4 trillion won has been reimbursed to the London State Department for the second half of the year. Thank you for your question.

I have two 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 KHMP regarding the additional $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 KHMP is able to recover the cost from the UAE government, will that have impact on the financial statement?

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 the

to maximize and satisfy the global customers.

Yes, and your second question regarding the dispute between KEPCO and KHMP. 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.

The following question is by Jo Yoon-haeng from UBS. Please go ahead.

Yes, thank you for the question. I will ask three questions. First, it is related to electricity bills. According to recent media reports, First of all, there was a report that the government is considering time and weekend discounts. In addition, the Minister of the Environment said that the regional tax system is expected to be applied only for industrial use. So, regarding these two changes, what direction are we making plans for? I'm curious about what you expect from the overall average cost of electricity. Also, I'd appreciate it if you could tell us the timeline of when these systems will be applied. The second and third questions are simply about numbers. The second question is, as you mentioned earlier, I heard that there is an additional cost related to the self-employment during the quarter. Good afternoon. Thank you for the opportunity today, and I have three questions.

One is regarding the tariffs. 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 this scheme? 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 comment 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 SDNA cost. What was the exact amount consolidated basis for Q4?

I will answer the first question. Due to the expansion of solar power, the power pattern is changing a lot. By reflecting the changing power pattern, we are trying to reform the budget for each season and time. In addition, we are reviewing the introduction of local budget in order to share the balance growth and power. 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 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 rational 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. So once we have a better idea on the specifics of this matter, then I think we can disclose some of the information. But currently, we are under 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 costs, 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, number will be included in the financial statement.

The following question is by Lee Sun Woo from JP Morgan.

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 ASAP. So have you continued those discussions? Do you have any updates that you can share with us?

Can you please elaborate on that question, please?

The way to determine the power price of the Korean power, so far, the Korean power has made some suggestions, and the Korean power has suggested that the price should be measured to this extent, and it was the government's way of deciding, but if we go through the law to determine the price, Yes, I believe currently when the tariffs are determined,

would make a proposal to the government, maybe around plus-minus 5-1, and ultimately the government would make the decision. However, I believe that there were some discussions on finding a legal mechanism to ensure that the cost-pass-through system can work like other utility companies outside of Korea. And so if the fuel costs 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.

Thank you for your question. Hansun is currently operating a fuel-money link. We are adjusting the fuel-money price for each quarter based on the fuel-money price. Currently, we have implemented the cost-pass-through system.

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.

Currently, there are no participants with questions. Please press asterisk 1 to give your question. Once again, if you have a question, please press asterisk 1. As there are no further questions, we will now end the Q&A sessions. If you have any additional inquiries, please contact our IR department. This concludes the fiscal year 2025 four-quarter earnings resulted by CAPCO. Thanks for the participation.