Taking a closer look, operating revenues rose 12% to KRW19.9 trillion. Power sales revenue, the principal component of our operating revenues went up by 10.1% totaling KRW18.8 trillion. This increase is attributed mainly to the over average tariff increase of 3.5% in August 2010, as well as 6.7% growth in power sales volume, which was closed by a substantial growth in demand for electric heating and increased demand flow on the industrial sector. Operating expenses witnessed a 17.9% rise in the first half of 2011 compared to the same period last year, recording KRW21.6 trillion.Our total operating expenses, fuels costs increased 18.5% year-on-year to KRW10.8 trillion in the first half of 2011. The rise in fuel costs can be attributed to a 3.3% increase in power generation due to rising power demand and a 14.8% jump in unit cost of fuel such as coal and LNG. At this time, I will explain KEPCO’s financial income and expenses. The compared net financial loss for the first half of 2011 was KRW757 billion, a decrease of 25.4% compared to the KRW1.1 trillion net loss in the first half of 2010. The major reason for this improvement is the stronger Won. Net equity income of KEPCO affiliates totaled KRW166 billion on increase of a KRW78 billion over the KRW88 billion recorded in the first half of 2010. This is primarily attributable to a significant rise in net income from our overseas affiliates which recovered from a KRW15 billion net loss in the first half of 2010, to record KRW39 billion in net income in the first half of 2011. To illustrate [ph] that one I have just explained are on overall debt loss of KRW1.2 trillion for the first half of 2011 which compared to a net loss of KRW1.1 trillion for the first half of last year. This concludes my overview of KEPCO’s earnings results for the first half of 2011.
The question and answer part of today’s call will be handled by Jung-in Kim, General Manger of KEPCO’s IR Team.Jung-in Kim This is Jung-in Kim again. Today I am joined by KEPCO’s IR committee members in-charge of finance, tariffs and overseas businesses. At this time we are looking forward to any questions that you may have. Please go ahead. Question-and-Answer Session Operator Now Q&A session will begin. (Operator Instructions) The first question will be given by Cathy Chan from Citigroup. Please go ahead madam. Cathy Chan – Citigroup Good afternoon management. This is Cathy from Citigroup, Hong Kong. I will have a few questions want to know more from you. The first question is about the overseas business. What was the revenue for KEPCO since first half 2011 from which is generated from the overseas business, and as the overseas business revenue, what is the amount generated from the UAE project? Unidentified Company Representative [Foreign Language – Korean] The revenue coming from the overseas business for the first half of 2011 is KRW602.7 billion. [Foreign Language – Korean] And among that, the UAE project took up KRW413.3 billion. Cathy Chan – Citigroup Okay, thanks a lot. And my second question is could you explain more about the fuel cost pass-through mechanism which has been implemented from the 1st of July 2011, for example what is the expected impact on the mechanism for this year or the coming years and also if you can explain more about for example the when the fuel price be high in this mechanism or the frequency to be reviewed by government for this mechanism? Read the rest of this transcript for free on seekingalpha.com