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 2026 second 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.

... earnings resulted by Capco.

Hello, I'm Jeong-in Yoon, CEO of Korea Power Corporation. I would like to thank everyone who participated in the high-end performance announcement IR conference call in 2026. Today's conference call is scheduled to be held in Korean and English. First, I will give a brief performance announcement and then answer questions. The performance data to be announced today is the IFRS connection standard, Good afternoon, this is the head of finance at Kipco.

I'd like to thank you all for participating in today's conference call with the business results for the second quarter of 2026 despite your busy schedules. Today's call will be conducted in both . We will end with a brief presentation which will be followed by a Q&A. 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 four of the statements mentioned today are based on our current targets and forecasts. Please be noted that the statements may involve investment risks and uncertainties. Now we will begin with an overview of the earnings results for the first half of 2026 in Korean, which will be then consecutively translated into English.

First, let's take a look at the sales results. In the first half of 2026, we recorded a sales profit of 4.927 trillion won. If we take a closer look at the details, the sales profit increased by 0.3%, which is 46 trillion won. 3,173,000,000,000,000,000,000,000,000,000,000 8.8% 10.429 billion won 0.9% 17.260 billion won 1.3% 5.9515 billion won 1,322,000,000,000,000,000,000,000,000,000,000,000

First, I will go over the operating performance. The consolidated operating income in 2026 first half stood at $4,912.7 billion won. Revenue increased by 0.3% to $46,317.3 billion won. Power tariffs decreased by 0.4% to $43,964.1 billion won. Other revenue, including overseas business revenue, increased by 16.7% to 2 trillion, 353.2 billion won. Cost of goods sold and SG&A rose by 2.8% to 41 trillion, 404.6 billion won. Fuel costs increased by 8.8% to 10 trillion, 142.9 billion won. Increased by 0.9% to 17 trillion, 206.9 billion won Depreciation expense increased by 1.3% to 5 trillion, 951.5 billion won Of the non-operating items, interest expense decreased by 132.2 billion won while line to 2 trillion, 79.1 billion won As a result of the foregoing, the 2026 First Step Consolidated Operating Income stood at $4,912.7 billion won and its income at $2,796.5 billion won.

Hello, I'm Taeseop Eom, in charge of IR. Next, I would like to explain the main concerns. First, I would like to talk about power sales and performance prospects. In the first half of the year, sales decreased by 266.7 terawatt-hours due to a decline in economic demand due to a decline in sales in the first half of the year. In the year of 2026, sales are expected to increase rapidly due to an increase in economic growth rate and increase in the number of companies. I am Chul-Seop Eom, Senior IR Manager.

I will now go over the main areas of interest starting with power sales performance and outlook. 2026 first half power sales volume decreased by 0.6% YY to 266.7 TWh due to a decrease in industrial demand caused by economic slowdown. For the full year, a higher economic growth rate and number of operating days are expected to slightly increase sales volume.

Next, I would like to talk about fuel price and S&P price. In the first half of the year of 2026, fuel price was 128.2 USD per ton according to U.S. and Australia. LNG was 93.9 USD per ton according to JKM. Also, S&P recorded about 112.3 won per kWh.

Next, I will go over the fuel price by fuel source and S&P trends. In 2026 first half, for bituminous coal, Australian coal was around $128.2 per ton. JKM LNG was about $939,000 per ton. S&P was approximately $112.31 per kilowatt-hour.

If we look at the Power Corporation development mix, In the first half of the year of 2026, the amount of power generation decreased due to a decline in the usage rate. In the case of coal, the amount of power generation increased due to a decline in the usage rate due to a decline in the usage rate. The amount of power generation increased rapidly due to a decrease in the overall base power generation of LNG. In the year of 2026, the amount of power generation will increase rapidly, the amount of coal will decrease, and the amount of LNG will remain.

Looking at the subsidiary generation mix in the first half, the capacity factor of nuclear power decreased and contribution to the generation mix declined, while for coal utilization and contribution to the generation mix both increased due to the decrease of the capacity factor of nuclear power. In case of LNG, contribution to the generation mix increased as the overall volume of phase load generation decreased. In 2026, the contribution of nuclear power should slightly increase, coal should slightly decrease, and LNG should largely be maintained. Also in 2026, the capacity factor of each power source is projected to be low to mid 80% for nuclear power, low to mid 50% for coal, and low to mid 20% for LNG. RPS cost as of 2026 first half was 2 trillion 533 billion won on consolidated basis and 2 trillion 938.9 billion won on standalone basis. Lastly, on funding, as of 2026 first half, total borrowing on consolidated basis was 133.3 trillion won and 84.8 trillion won on standalone basis.

Now we will move on to the Q&A session. Since we will be conducting the Q&A session in Korean and English with consecutive interpretation, please make your questions and answers clear and brief. Thank you.

Now, Q&A session will begin. Please press asterisk 1 if you have any questions. 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, hello. I'm Sung Jong-hwa from LS Securities. Thank you for the question. First of all, I would like to ask one question. Since YYBS has been significantly reduced since the third quarter of last year, In the second quarter, four quarters in a row, YY has been decreasing rapidly. As you can see in the video, it is expected to increase rapidly compared to last year, but it has already decreased a lot in the first half of the year. In the conference call of our company's performance announcement, you talked about the long-term issue of planning and development. This situation has been resolved well, Good afternoon. Thank you for the opportunity today. And I have one question on the contribution of nuclear power to the generation mix.

Since Q3 last year, we have seen the contribution of nuclear power to the generation mix decline quite significantly on a YOY basis. And this Q2, I think we also saw a decline. That means this trend has been continuing for four consecutive quarters. But in your keynote today, you mentioned that for the full year, the contribution of nuclear power should show a slight increase. But as I just mentioned, in the first half of this year, already we have seen significant decline on YOY basis. And when we listened to the earnings call of your subsidiary, they mentioned that the preventive maintenance can be prolonged. So given all of these factors, does this mean in the second half we will see a significant increase I will reply to the situation you mentioned.

Currently, Hanseon is looking forward to 80% of the total use of the power plant, but as you said, due to problems such as long-term maintenance of the prevention and maintenance of the prevention and maintenance, it is true that the use rate of the power plant was somewhat unstable in the first half of the year. However, after the second half of the year, we are warning that the introduction of a new power plant such as a new power plant such as a new power plant such as a new power plant such as

Thank you for the question. As mentioned in the keynote, the capacity factor of nuclear power is being expected to be around early or mid 80% by TECCO. Like you've mentioned, there have been some issues in the prolonged preventive maintenance of some of the nuclear power generation units. And as a result of that, in the first half, the capacity factor numbers were quite weak. However, we are monitoring this situation in the second half very closely. We are adding to unit three to the grid, and we are planning to implement preventive maintenance in existing nuclear power plants in a more timely manner to make sure that we can maintain appropriate level of nuclear power generation contribution for the full year.

The next question is from Jo Yoon-haeng from UBS.

Please go ahead. Hello. Thank you for the question. The first question is about the cost.

If we look at the performance in the first half of the year, especially based on that, if we look at the performance in the second half of the year, I didn't know about the cost of raw materials, but it seems that the other sales costs have increased a little. So, I would like to ask you to explain what factors increased the sales costs in the second half of the year to YY. The second question is related to the budget. Thank you for the opportunity today. First one is regarding cost. So if you look at the numbers of the first half and try to estimate Q2 numbers,

Based on the first half results, there seems to be an increase in fuel costs, but more visibly an increase in other operating costs. So what would be the factors that drove the other operating costs on a YY basis in Q2? My second question is regarding the tariffs. So I understand that the Ministry of Climate, Energy, and Environment is preparing to announce a corporate differentiated tariff system. And so, what would be the financial impact if this new differentiated charging system is introduced? First of all, I'd like to say thank you. The cost of other business is mainly in the mid-term. The source power plant in Hanseong is under prevention and maintenance, and the water and gas cost is about 1.13 billion won. In addition, in Namsung Power Plant,

Yes, I will take your first question regarding the non-operating cost drivers.

So, we already talked about KHMP and that the preventive maintenance period has been prolonged. So this has generated around 101.3 billion won in other operating expense. And another factor is coming from the Korea Southeastern Power. And so they supply fuel or coal to private operators. And there was an increase of 70.3 billion won in terms of the material costs associated with the supply of coal to private operators. And then regarding your second question on the differentiated electricity pricing system. And so I think you are referring to the regional differentiation of electricity pricing. And I believe that unfortunately it is too early to disclose any detailed financial impact.

Just to give you a little bit more color on the timing and progress,

So there should be a public hearing on the regional pricing differentiation during the second half. And towards latter half of the year, I believe this system will be finalized. And this will be introduced by the end of this year. And it will also be in junction with the reform of the regional wholesale power pricing mechanism.

The following question is by Pierre Lau from Citibank.

Please go ahead. Hello, good afternoon. I have three questions on CatCo. The first one is, given that we have lower

Global oil prices as Middle East contract seems to be have more stability now. Do Capco expect its fuel cost in third quarter to be lower than that in second quarter or should it be similar? And second question is what is Capco expectation regarding tail rise? Could we expect any tail rise For the rest of this year, or we have to wait until 2027. The first question is, is Capco is able to lower the ratio of corporate bond issuance to the sum of capital and reserve to below 2 times by end of 2027? Thank you.

Yes, hello. I have three questions. The first question is, recently, as the situation of the Middle East war has stabilized, the International Ministry of Foreign Affairs has been approved. If this happens, do you think the energy cost of the Korean War will be lower than that of the Second World War in the third quarter, or will it be maintained at a similar level as the Second World War? The second question is... Do you think it will be possible to increase the budget? Do you think it will be possible to increase the budget by 2027? The third question is related to the limit of the release of the body. Do you think it will be possible to reduce the amount of the release of the body by two times by the end of 2027?

I will answer the first question. If we look at the S&P in the second quarter of 2026, the S&P in the second quarter recorded a low level compared to the second quarter last year. However, if we compare the S&P in July and August of 2025, the S&P in July last year was 120 won, but this year the S&P recorded 133 won. I'll take your first question on the fuel cuts. So if we just look at the S&P,

In Q2 of 2026, and compare that on a YOY basis, it's lower than last year Q2. But if we look at the July and August numbers, so S&P in 2025 July was 121, and this year it has been around 133. But S&P in August in 2025 was around 117 for the full month. This year, to date, It's around 151. There can be many different factors that cause the S&P to increase on a YY basis. But I think one of the main drivers will be the increase of international fuel costs. And there is a time lag between the actual increase in the market and when it is actually reflected in the S&P. So I think this time lag has started to kick in in July and August. Yes, in terms of the tariff hikes, in order to address the accumulated operating loss and to also meet the bond issuance requirements, the increase in tariffs will be very helpful. At the same time, there are various factors that need to be considered when raising the tariffs, such as inflation and overall macroeconomic situation. We will be monitoring the domestic and international markets and economies very closely and will be discussing with the government to try to achieve the tariff hike in the future.

I will answer the third question. Rather than answering the expectation that it will be two times by the end of 2027, we need to make an effort to match the two times. Rather than addressing the issue of reducing the issuance of bonds or approaching it in this way, we need to ensure the net profit through continuous business activities, and like the answer to the second question just now, we need to make an effort to meet the required level of demand

And then, regarding your last question on bond insurance caps. So, I don't believe it's an issue of whether we can meet these two times requirements by end of 2027. We will be making utmost effort to ensure that we can meet those requirements by 2027 year-end. We are not really focusing on reducing the overall bond issuance amount, however. I think we are working more on increasing profit generation from operating activities. And like Josh mentioned when answering the second question, working closely with the government to achieve an appropriate level of tariffs to make sure that we can meet these requirements by the end of 2027.

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

Please go ahead.

Thank you for the opportunity today. The first half last year, KHMP's other provisional liabilities was $471.3 billion won. What would be this number for the first half of this year?

Yes, the number for this top, so from January to June, was 307.8 billion won. But there has been some write-backs. So, it's actually a minus cost, 164.2 million won.

Currently, there are no participants with questions.

Please press asterisk 1 to give your question. The following question is by Sung Dong-hwa from LS Securities. Please go ahead. Yes, I have one more question. Recently, you have announced three AI megaprojects.

In the future, you need to increase the amount of power generation in the future, and you also need to build power lines. We need a lot of money to build the central power plant. We said that we need a lot of money to build the central power plant. We said that we need a lot of money to build the central power plant.

I have one question on the three megaprojects announced by government. I believe there is a critical role to play by Capco as the central power provider. But in order to do so, you will have to significantly increase the capacity and also expand the power grid, which should require considerable amounts of capacity. We just discussed the bond insurance cap, reducing it from five times to two times, and you said in order to meet these requirements, you will be working to boost the profit generation of KEPCO. However, even considering all of these factors, I believe that given the sheer amount of capital required for such a large national project, KEPCO will be eating Additional amounts of capital and funding. What is your solution in terms of funding such large national projects?

I will answer. First of all, projects such as mega-projects or large-scale grid construction are done in the medium to long term, so they are not projects that require large-scale funds in the short term. At the same time, we also have a task that we have to do less than 2 times the amount of waste. Therefore, various medium-term investment plans, investment funds, and various angles of financial management and operation need to be utilized. These areas need to be taken into account by the government, relevant stakeholders, and various related departments of Hanjeon, Thank you for the question. The meta-project and the grid expansion that you just mentioned are mid- to long-term projects.

It does not necessarily mean we need the full amount upfront at once. At the same time, we do face the challenge of reducing the bond issuance amount to two times of capital. So I think we need to take a balanced approach. We need to develop a mid-long-term CapEx plan and calculate the total CapEx amount that may be necessary for these projects. and try to distribute that across multiple quarters and years and also have strict management approach towards the management of funds that we already have. We will be working closely with government departments, the multiple stakeholders, and all of the relevant departments and subsidiaries of PEPCO to try to come up with the most optimal way to approach these funding needs. And at the same time, of course, we will be also working to ensure that such cap-picks does not undermine the business management of overall capital.

I'll take the next question.

No one is asking for a question right now. If you have a question, please press the star and number on the call button. Currently, there are no participants with questions.

Please press asterisk 1 to give your question.

다시 한번 말씀드리겠습니다. 질문 있으신 분들은 전화기 버튼의 별표와 1번을 눌러주십시오.

Once again, if you have a question, please press asterisk 1.

In the beginning of the presentation, there was a slight error in the explanation of the value of the upper half of the power generation. The reason for the increase in coal power generation is due to the increase in the price of liquid-fueled natural gas caused by the Middle East War and the increase in the price of fuel-fueled gas caused by the increase in the price of fuel-fueled gas caused by the increase in the price of fuel-fueled gas caused by the increase in the price of fuel-fueled gas caused by the increase in the price of fuel-fueled gas caused by the increase in the price of fuel-fueled gas caused by the increase in

Yes, and I would like to take this opportunity to make a correction in the keynote presentation today regarding the contribution of the different fuel sources to the generation mix. We mentioned earlier that the coal contribution increased. The main factors were the increase in LNG prices triggered by the Middle Eastern conflict and also higher bituminous coal prices as well. So I don't think that was really clearly stated in the presentation earlier, so I would like to make this correction. Thank you.

Once again, if you have a question, please press asterisk 1.

Thank you for watching.

As there are no further questions, we will now end the Q&A session. For any additional inquiries, please contact our IR department. This concludes the fiscal year 2026 second quarter earnings resulted by CATCO. Thank you for the participation.