Chang-Keun Shin – VP, Treasury Department Changyoung Ji – Senior Manager, IR

Geoffrey Boyd – CLSA

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 2011 third quarter earnings results by KEPCO. This conference will start with a presentation followed by Q&A session. (Operator Instructions) Now we shall commence the presentation on the fiscal year 2011 third quarter earnings results by KEPCO. Chang-Keun Shin: Good morning and good afternoon everyone. My name is Chang-Keun Shin, Vice President of KEPCO’s Treasury Department. It is a pleasure to have this opportunity to announce KEPCO’s earnings results for the third quarter of 2011. On behalf of KEPCO, I would like to thank you all for participating in this conference call today. Today’s call will begin with a brief presentation on our earnings results after which an opportunity for Q&A will follow. Please note that the financial information that we disclosed today is preliminary and is on consolidated basis. At this time, Mr. Changyoung Ji, Senior Manager of KEPCO’s IR team will provide you with an overview of our earnings results.

Hello everyone, my name is Changyoung Ji and I am going to briefly run through the financial results for the third quarter of 2011, starting with operating income. In the third quarter of 2011, KEPCO recorded a net operating income of KRW177 billion, a year-on-year increase of KRW1.5 trillion compared to the net operating income of KRW1.6 trillion recorded in the same period last year. Despite the increase in power sales revenue, followed by a tariff hike in August 2010 and August 2011 as well as an increase in the volume of power sales, decrease in net operating income was primarily due to increased fuel costs and power purchase costs which went up 14.8% and 44.9% respectively compared to the third quarter of 2010. Taking a closer look, operating revenues rose 9.6% to KRW31.6 trillion. Power sales revenue, the principal component of our operating revenues, went up by 8.2% totaling KRW29.9 trillion. This increase is attributed mainly to the overall average tariff increase of 3.5% in August 2010, and 4.9% in August 2011 as well as 5.6% growth in power sales volume, which was caused by increased demand (inaudible). Operating expenses witnessed a 15.3% rise in the third quarter of 2011 compared to the same period last year, recording KRW21.9 trillion. KEPCO’s total operating expenses, fuels costs increased 14.8% year-on-year to KRW15.8 trillion in the third quarter of 2011. The rise in fuel costs can be attributed to a 1.2% increase in power generation due to rising power demand and a 13.6% jump in unit cost of fuel such as coal and LNG. At this time, I will explain KEPCO’s financial income and expenses. The company’s net financial loss for the third quarter of 2011 was KRW1.7 trillion, an increase of 23.4% compared to the KRW1.4 trillion net loss in the third quarter of 2010. This is attributable to increase in interest payments and increase in FX related loss. [Foreign Language – Korean] Equity net income of KEPCO affiliates totaled KRW118 billion, an increase of KRW52 billion over the KRW66 billion recorded in the third quarter of 2010. This is primarily attributable to a significant rise in net income from our overseas affiliates which recovered from a KRW17 billion net loss in the third quarter of 2010, to a KRW70 billion net income in the third quarter of 2011. As a result of the above factors, we recorded a net loss of KRW1.37 trillion for the third quarter of 2011 as compared to a net loss of KRW185 billion for the third quarter of last year. This concludes my overview of KEPCO’s earnings results for the third quarter of 2011. Today’s Q&A session will be held by Mr. Chang-Keun Shin, Vice President of KEPCO’s Treasury Department. Chang-Keun Shin: This is Chang-Keun Shin again. Today I am joined by KEPCO’s IR members in-charge of finance, tariffs and overseas businesses. At this time we are prepared to take any questions you may have.

Now Q&A session will begin. (Operator Instructions) The first question will be given by Geoff from CLSA. Please go ahead sir. Geoffrey Boyd – CLSA: Yes, thank you for taking the time to do this call. Thank you very much. Just a quick question on the interest expense, I wasn’t clear on the Excel file you sent around, but how much are you capitalizing of the interest, like in the past I think it was around 19% last year, but do you know what percentage is being capitalized this year?

[Foreign Language – Korean]

[Interpreted] Unfortunately we don’t have the exact numbers with us, so please let us go back and check and get back to you at a later time. Geoffrey Boyd – CLSA: Okay, thanks. And are you able to give us the updated view on 2011 in terms of your expectations for the full-year in terms of fuel expense and power purchased expense?

[Foreign Language – Korean]

[Interpreted] Talking about the first fuel cost by the end of this year, the total cost we forecast to be KRW21.780 billion. This is a 14.7% year-over-year increase.

[Foreign Language – Korean]

[Interpreted] And we’re currently checking the numbers for the power purchase, so please hold.

[Foreign Language – Korean]

[Interpreted] And for the total purchased – power purchased amount up to the third quarter is KRW5.342 billion.

[Foreign Language – Korean]

[Interpreted] And so, for the full-year we forecast roughly around KRW7 trillion. Geoffrey Boyd – CLSA: Yes, because on the fuel costs, I mean your total fuel costs for the third quarter was almost KRW5 trillion exactly, but if you actually have KRW21.78 trillion for the year then that would imply almost KRW6 trillion in the last quarter of the year, the fourth year which seems a bit high. Do you think – because normally the third quarter consumption of electricity is higher I think because of summer, is due to air-conditioning or whatever but the fourth quarter, do you think that it will be KRW6 trillion in fuel costs?

[Foreign Language – Korean]

[Interpreted] Now the KRW21.78 trillion forecast that we mentioned includes several assumptions including the exchange rate, the oil price and an increased [ph] coal price and as you have correctly mentioned historically Q4 was actually smaller than – smaller number than Q3.

[Foreign Language – Korean]

[Interpreted] And so, approximately the difference comes from some of the assumptions that we are using to do our forecast. We have given you a full-year forecast, so based on that you should sum our [ph] estimate was for Q4 would be like. Geoffrey Boyd – CLSA: Okay, it’s fair enough. Yes, I guess I know that generally you don’t like to talk about this but what about the tariff hikes, I mean what’s the latest word on that, there has been some talk about the government doing something in the first half of the next year?

[Foreign Language – Korean]

[Interpreted] Regarding the tariff adjustment, there is a consensus that we need to increase the tariff before the onset of the winter season. However, the final decision is left up to the government, and so we are currently unsure about the actual timing of the increase of the tariff, but clearly we’re recognizing that there is a growing demand for a tariff increase. Geoffrey Boyd – CLSA: Okay, that’s it for me. Thank you very much. Chang-Keun Shin: Thank you. Next question please.

(Operator Instructions) The following question is by Geoff from CLSA. Please go ahead sir. Geoffrey Boyd – CLSA: Sorry, just one last question on the sale of electricity power. It was up 6% year-on-year in the third quarter. What are we expecting for the full-year, for the fourth quarter for that line, and then what are you budgeting for in terms of that sale of electricity power?

[Foreign Language – Korean]

[Interpreted] In case of the volume growth for the power sale, assuming that GDP grows at 4.2% in the Q4, we believe that the growth rate would be 5.3%.

[Foreign Language – Korean]

[Interpreted] Correction, for the full-year, the growth is 5.3% and for Q4, 4.8%. Geoffrey Boyd – CLSA: And what would be the growth in the revenue because you also have the tariff hike effect?

[Foreign Language – Korean]

[Interpreted] In terms of the revenue sales amount, we forecast the growth to be 8.7%. Geoffrey Boyd – CLSA: Sorry, 8.7%? Chang-Keun Shin: Yes.

8.7%. Geoffrey Boyd – CLSA: And that’s for the year, right? Chang-Keun Shin: Right. Geoffrey Boyd – CLSA: Okay, thank you very much. Chang-Keun Shin: Okay, next question please.

(Operator Instructions).

[Foreign Language – Korean]

[Interpreted] And while we are waiting for the next question, we can go back to the earlier question raised regarding our capitalization ratio for the interest expense up to Q3, that is 21.71%.

(Operator Instructions).

All right, then. If you have no further questions, we will conclude the conference call. If you have additional questions, or require any assistance please feel free to contact our IR at anytime. Once again, thank you for your interest in KEPCO and for joining in this conference call today. Thanks again. Bye.