Operator:
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.

Unidentified Company Representative:
[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.

Young Ji Chang:
[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.

Yong Thae Seop:
[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.

Operator:
[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.

Moon Kyeongwon:
[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.

Unidentified Company Representative:
[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.

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

Unidentified Analyst:
[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?

Unidentified Company Representative:
[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.

Unidentified Analyst:
[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?

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

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

Moon Kyeongwon:
[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?

Unidentified Company Representative:
[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.

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

Moon Kyeongwon:
[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.

Unidentified Company Representative:
[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.

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

Unidentified Analyst:
[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?

Unidentified Company Representative:
[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.

Unidentified Company Representative:
[Foreign Language] We'll move on to the next question.

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

Unidentified Analyst:
[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?

Unidentified Company Representative:
[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.

Unidentified Company Representative:
[Foreign Language] We'll move on to the next question.

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

Moon Kyeongwon:
[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?

Unidentified Company Representative:
[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.

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

Unidentified Analyst:
[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?

Unidentified Company Representative:
[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.

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

Unidentified Company Representative:
[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.

Unidentified Company Representative:
[Foreign Language] We'll move on to the next question.

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

Unidentified Analyst:
[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?

Unidentified Company Representative:
[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.

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

Unidentified Analyst:
[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?

Unidentified Company Representative:
[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.

Operator:
[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.