POSCO (PKX) 6-K Current report (foreign)

Exhibit 99.1

QUARTERLY REPORT

(From January 1, 2019 to March 31, 2019)

THIS IS AN ENGLISH TRANSLATION OF THE QUARTERLY REPORT ORIGINALLY PREPARED IN THE KOREAN LANGUAGE (IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION). THIS ENGLISH TRANSLATION IS NOT OFFICIAL AND IS PROVIDED FOR INFORMATION PURPOSES ONLY.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON BOTH CONSOLIDATED AND NONCONSOLIDATED BASIS IN ACCORDANCE WITH THE KOREAN-INTERNATIONAL FINANCIAL REPORTING STANDARDS(K-IFRS) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

QUARTERLY REPORT

(From January 1, 2019 to March 31, 2019)

To:     Korean Financial Services Commission and Korea Exchange

/s/In-Hwa, Chang

In-Hwa, Chang

President and Representative Director

POSCO

6261Donghaean-ro (Goedong-dong),Pohang-si,Nam-gu,Gyungsangbuk-do, Korea

Telephone:+82-54-220-0114

/s/Seung-Kyu, Lim

Seung Kyu, Lim

Executive Vice President

POSCO

6261Donghaean-ro (Goedong-dong),Pohang-si,Nam-gu,Gyungsangbuk-do, Korea

Telephone:+82-2-3457-0114

2

TABLE OF CONTENTS

I.	Overview	4
II.	Business	10
III.	Financial Statements	32
IV.	Corporate Governance and Company Affiliates	36

Attachment: Independent Auditors’ Review Report
(Consolidated and Separate)

3

I. OVERVIEW

1. Scope of Business

A. POSCO(the “Company”, as of March, 2019)

Business

(1)   To manufacture, market, promote, sell and distribute iron, steel and rolled products;

(2)   To engage in harbor loading and unloading, transportation and warehousing businesses;

(3)   To engage in the management of professional athletic organizations;

(4)   To engage in the supply of gas and power generation as well as in the distribution business thereof and in the resources development business;

(5)   To engage in leasing of real estate and distribution businesses;

(6)   To engage in the supply of district heating business;

(7)   To engage in marine transportation, processing and sales of minerals within or outside of Korea;

(8)   To engage in educational service and other services related to business;

(9)   To engage in manufacture, process and sale ofnon-ferrous metal;

(10)  To engage in technology license sales and engineering business; and

(11)  To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes

B. POSCO Business Group

(1) Name of the Business Group: POSCO

(2) Companies Belonging to the Business Group

POSCO, POSCO COATED & COLOR STEEL Co., Ltd., POSCO International Corporation, POSCO ICT, POSCO Chemical Co., Ltd., POSCOM-TECH, Busan E&E Co., Ltd., Suncheon Eco Trans Co., Ltd., SNNC, eNtoB Corporation, UITrans LRT Co. Ltd., POSCO O&M, POSCO Humans,POSCO ENGINEERING & CONSTRUCTION., LTD., POSCO Research Institute, POSCO A&C, Tancheon E&E, Pohang Scrap Recycling Distribution Center Co., Ltd., POSCO NIPPON STEEL RHF JOINT VENTURE CO., Ltd., POSCO-Terminal Co., Ltd., POSCO ENERGY CO., LTD., PSC Energy Global Co., Ltd., Gale International Korea, LLC, POSCO Venture Capital Co., Ltd., POSCO ES MATERIALS, Pohang Special Welding Co., Ltd., POSCO MITSUBISHI CARBON TECHNOLOGY, POSPower CO., LTD., Songdo Posco family Housing, HOTEL LAONZENA, POSCO Group University, POSCO PLANTEC Co., Ltd., POSCO E&C Songdo International Building, POSCO Research & Technology,RISTec-Biz CO.,LTD., Pohang Techno Valley PFV Corporation, NB POSTECH, Inc.

4

(a) Changes in Companies Belonging to the Business Group

• Exclusion of the Business Group:

POSCO Processing&Service (February 25, 2019)

BLUE O&M Co., Ltd. (February 25, 2019)

MegaAsset Co., Ltd. (February 25, 2019)

• Name of the Business Group:

From POSMATE to POSCO O&M (February 1, 2019)

From POSCO Daewoo Corporation to POSCO International Corporation (March 18, 2019)

From POSCO Chemtech to POSCO Chemical Co., LTD. (March 18, 2019)

From POSCO E&E to Tancheon E&E (March 29, 2019)

(3) Related Laws and Regulations

The Korea Fair Trade Commission has designated POSCO as a company subject to the limitations on Cross Shareholding and Debt Guarantee for Affiliates under the Monopoly Regulation and Fair Trade Act (the “MRFTA”).

Details

(a) Prohibition on Cross Shareholdings (Article 9 (1) of the MRFTA)

(b) Prohibition on Debt Guarantees for Affiliated Corporations (Article10-2 of the MRFTA)

(c) Prohibition on Shareholding of Venture Capitals for Subsidiaries (Article 9 (3) of the MRFTA)

(d) Limitation of Voting Rights of Financial or Insurance Companies (Article 11 of the MRFTA)

(e) Resolution of the Board of Directors and Publication on Large-Scale Intra-Group Transaction(Article11-2 of the MRFTA)

(f) Disclosure of Important Facts such as Unlisted Shares (Article11-3 of the MRFTA)

(g) Disclosure of a corporate group (Article11-4 of the MRFTA)

(h) Report on Status of Shareholding (Article 13 of the MRFTA)

2. Business Organization

A. Highlights of the Company’s Business Organization

(1) Location of the Headquarters: 6261Donghaean-ro (Goedong-dong),Nam-gu,Pohang-si, Gyeongsangbuk -do, Korea

(2) Steel Works and Offices

5

(a) Pohang Steel Works: 6262Donghaean-ro (Dongchon-dong),Nam-gu,Pohang-si, Gyeongsangbuk-do, Korea

(b) Gwangyang Steel Works:20-26Pokposarang-gil (Kumho-dong),Gwangyang-si, Jeollanam-do, Korea

(c) Seoul Office: POSCO Center, 440Teheran-ro (Daechi-dong),Gangnam-gu, Seoul, Korea

(d) Overseas Offices: For the purpose of supporting international business transactions, the Company operates six overseas offices as follows:

United Arab Emirates (Dubai), Iran(Teheran), European Union (Dusseldorf, Germany), Brazil (Rio de Janeiro), Argentina (Jujuy), and Australia (Perth).

(3) Major Changes in the Board of Directors (as of March 15, 2019)

(a) Inside Directors

• New member : Tak, Jeong andHag-Dong, Kim

(b) Outside Directors

• New member :Heui-Jae Pahk

(c) Representative Directors

• Jeong-Woo, Choi andIn-Hwa, Chang

(4) Changes of the Major Shareholders of POSCO

(a) National Pension Service holds the largest number of shares of POSCO.

(b) Date of Disclosure: January 30, 2007

(For further reference, please refer to the public disclosures regarding the change of the major shareholders on January 30, 2007, July 27, 2007, January 29, 2008, July 25, 2008, January 21, 2009, March 2, 2009, July 22, 2009, October 9, 2009, January 26, 2010, July 20, 2010, January 28, 2011, July 22, 2011, January 31, 2012, August 1, 2012, February 1, 2013, August 1, 2013, January 14, 2014, January 23, 2014, July 29, 2014,January 23, 2015, August 5, 2015, January 6, 2016, January 26, 2016, March 15, 2016, April 12, 2016, July 4, 2016, July 5, 2016, July 21, 2016, October 7, 2016, October 11, 2016, January 10, 2017, April 10, 2017, July 12, 2017, October 13, 2017, January 10, 2018, April 11, 2018, July 9, 2018, October 10, 2018, January 8, 2019, April 8, 2019)

B. Merger, Acquisition and Handover of Businesses

(1) Small scale merger of POSHIMETAL Co., Ltd into POSCO was completed on March 15, 2016

• Date of merger : March 1, 2016

(2) Small scale merger of POSCO Green Gas Technology into POSCO was completed on May 16, 2016

• Date of merger : May 1, 2016

(3) Small scale merger of POSCO Processing&Service into POSCO was completed on Februrary 1, 2019

• Date of merger : January 1, 2019

The purpose of mergers above is to enhance the shareholders’ value by increasing operational efficiency and creating synergies between businesses.

6

POSCO holds a 100% stake in POSHIMETAL Co., Ltd. and a 100% stake in POSCO Green Gas Technology. For the first two small scale mergers, the merger ratio is 1:0 and POSCO did not issue new shares. On the completion of mergers, POSCO remains as a surviving company.

For the POSCO P&S merger, the merger ratio is 1:0.1456475 and POSCO did not issue new shares. On the completion of mergers, POSCO remains as a surviving company.

C. Major Changes in Production Facilities

Refer to the ‘II. Business (5. Production and Facilities)’

3. Equity Capital

A. New Issuance of Registered Common Stock

There was no new issuance of registered common stock in the last five years.

B. Convertible Bonds

[None]

C. Bonds with Warrant

[None]

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4. Other Information Regarding Shares

A. Total Number of Shares

	(As of March 31, 2019)
Authorized Shares	Outstanding Shares
200,000,000		87,186,835

Currency of the Republic of Korea is Korean Won (“KRW”).

Par Value: KRW 5,000 per share

B. Treasury Stock Holding and Cancellation

									(As of March 31, 2019)
Method of Purchase	Type		Beginning*		Increased		Decreased		Cancelled		Balance
Direct		Registered		7,185,703		—		114,509		—		7,071,194
Special Money Trust		Common		—		—		—		—		—
Total				7,185,703		—		114,509		—		7,071,194

* Beginning Balance: as of December 31, 2018

• On January 19, 2018, the Executive Management Committee resolved its plan to dispose the treasury stocks and the actual disposal of 70 treasury stocks was completed on January 22, 2018.

• On April 17, 2018, the Executive Management Committee resolved its plan to dispose the treasury stocks and the actual disposal of 1,198 treasury stocks was completed on April 20, 2018.

• On August 20, 2018, the Executive Management Committee resolved its plan to dispose the treasury stocks and the actual disposal of 260 treasury stocks was completed on August 23, 2018.

• On November 11, 2018, the Executive Management Committee resolved its plan to distribute the treasury stocks and the actual disposal of 114,509 treasury stocks was completed on January 7, 2019.

5. Voting Rights

			(As of March 31, 2019)
Classification of Shares	Number of Shares		Remarks
(1) Number of Outstanding Shares		87,186,835	—
(2) Shares without Voting Rights *		7,071,194	*Treasury Stock 7,071,194 shares
(3) Shares with Voting Rights		80,115,641	—

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6. Earnings and Dividend

					(In millions of KRW)
	2019.1Q		2018		2017
(Consolidated) Net Profit		778,445		1,690,612		2,790,106
(Separate) Net Profit		671,173		1,072,592		2,545,685
Earnings per Share (Consolidated, KRW)		9,233		20,911		34,464
Cash Dividend Paid		160,231		800,009		639,991
Pay-out Ratio (Consolidated, %)		21.6		47.3		22.9
Dividend per Share (KRW)		2,000		10,000		8,000
Dividend Yield (%)		0.8		4.1		2.4

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II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into four segments;

Steel, Trading, Engineering & Construction, and Others.

B. Segment Results

									(In millions of KRW)
Category	2019.1Q				2018				2017
	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Steel		8,071,816		942,531		32,358,009		4,536,318		30,230,368		3,628,314
Trading		5,537,881		133,153		22,407,717		383,934		20,802,207		315,201
Engineering & Construction		1,518,642		42,109		6,769,410		411,489		6,886,606		414,988
Others		885,899		85,103		3,442,641		210,859		2,735,919		263,331
Total		16,014,238		1,202,896		64,977,777		5,542,600		60,655,100		4,621,834

2. Current Situation

1) Steel

A. Domestic Market Share

									(Millions of Tons, %)
Category	2019. 1Q				2018				2017
	Production		Market share		Production		Market share		Production		Market share
Crude Steel Production		18.1		100		72.5		100		71.1		100
POSCO		9.4		51.9		37.7		52.0		37.2		52.3
Others		8.7		48.1		34.8		48.0		33.9		47.7

Source: world steel association (www.worldsteel.org)

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B. Characteristics of the Steel Market

The steel industry supplies materials to major industries such as the automobile, shipbuilding and electronic appliance industries.

C. Summary and Prospect of New Businesses

(1) Establishment of the Steelworks in Brazil

(a) Board of Directors resolved to invest a 20% interest in CSP Joint Venture established by POSCO, VALE S.A. and DONGKUK STEEL MILL CO., LTD. (May, 2011)

(b) CSP Joint Venture entered into an Engineering Procurement Construction contract with POSCO E&C. (December, 2011)

(c) Construction of a steelwork with an annual capacity of 3 million tons initiated. (September, 2012)

(d) Build 4 pillars sustaining the furnace (March, 2014)

(e) Receiving electrical power (July, 2015)

(f) Production of slabs commenced (June, 2016)

(g) Construction completed (August, 2016)

(2) Establishment of a Continuous Galvanizing Line in Thailand

(a) Approval of the Board of Directors (November, 2013)

(b) Contract of the Site Sales (March, 2014)

(c) Construction of a steelwork with an annual capacity of 0.45 million tons commenced (September, 2014)

(d) Construction of Continuous Galvanizing Line completed (June, 2016)

(3) Establishment of No.7 Continuous Galvanizing Line at Gwangyang Works

(a) Board of Directors resolved to construct a Continuous Galvanizing Line at Gwangyang Works (December, 2014)

(b) Construction of a steelwork with an annual capacity of 0.5 million tons commenced (September, 2015)

(c) Construction of No.7 Continuous Galvanizing Line completed (April, 2017)

(4) Increase capability ofnon-oriented electrical steel at Pohang Works

(a) Board of Directors resolved to increase capability ofnon-oriented electrical steel at Pohang Works (May, 2015)

(b) Construction of a steelwork with an annual capacity of 0.1 million tons commenced (March, 2016)

(c) Construction completed (February, 2017)

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(5) Joint venture with Chongqing Iron and Steel (Group) Company Limited in China

(a) Board of Directors resolved to invest in JV with Chongqing Iron and Steel (January, 2016)

(b) Execution of JV Agreements (April, 2016) – Construction of Steel mills for 1) cold rolled steel products and 2) plated steel products (June, 2016)

(c) Termination of JV Agreements (September, 2017)

(d) Liquidation of Steel mills set off (November, 2017)

(e) Completion of liquidation (June, 2018)

2) Trading

A. Market Share

					(Millions of Dollars)
Category	2019.1Q		2018.1Q		Growth rate
All Trading Companies in Korea		132,729		145,055		-8.5	%
POSCO International Corp		1,540		1,910		-19.4	%

Source: Korea International Trade Association

B. Summary and Prospect of New Businesses

POSCO International and its subsidiaries engage in three major business segments; trading, overseas infra-project implementation and resource development. First, it engages in the trading of a wide range of products from steel, automotive and components, machinery and industrial electronics tonon-ferrous metal, food resources, chemicals, commodities and textiles, with both local and international customers. Second, it also actively leads the implementation of overseas projects such as the EPC project and the independent power project (IPP) as a project organizer. Third, it has engaged in overseas resource development projects in oil, gas, mineral and food resources, Furthermore, POSCO International is actively expanding its business spectrum into manufacturing, logistics and real estates development for further growth.

3) Engineering & Construction

A. Summary and Prospect of New Businesses

POSCO E&C is one of the leading engineering and construction companies in Korea, primarily engaged in the planning, design and construction of industrial plants and architectural works and civil engineering projects. In particular, POSCO E&C has established itself as one of the premier engineering and construction companies in Korea through its strong and stable customer base and its cutting-edge technological expertise obtained from construction of advanced integrated steel plants, as well as participation in numerous modernization and rationalization projects at our Pohang Works and Gwangyang Works.

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4) Others

A. POSCO ENERGY CO., LTD

POSCO ENERGY CO., LTD. (“POSCO ENERGY”) started its commercial operation in February, 1972 as the only privately-owned power plant in Korea. Since the early 90’s, POSCO ENERGY continuously remodeled and built additional power plants meeting the increased demand of electricity in Korea. POSCO ENERGY started its fuel cell business in 2007 and continuously develops, manufactures and provides the operation and management services for fuel cell plants.

B. POSCO ICT

POSCO ICT is established for the purpose of providing services in software development, data processing, and info-communications business. It has an expertise in IT and engineering, which was made in an effort to lead the trend of green growth and convergence. POSCO ICT has provided total solution to overseas existing steel mills and other solution systems through application of optimal information technology. Currently, POSCO ICT applies its developed ICT technology at Smart Factory by applying the industrial IoT and big data at industrial sites. Based on its key technologies, POSCO ICT has been putting efforts to enhance competitiveness of the industries, in areas such as smart factory, smart IT, energy, SOC (railroad/transportation), and environment. POSCO ICT will continue to support to strengthen the core business of POSCO Group and enhance its business competency globally.

C. POSCO Chemical

POSCO CHEMICAL, specializes in manufacturing of refractories, lime used in steel manufacturing processes as well as a wide range of chemical and environmentally friendly products. POSCO CHEMICAL provides refractories to a wide range of industries including steel, cement, and glass companies. POSCO CHEMICAL is currently expanding its comprehensive chemical and carbon material business in the secondary cell, anode materials and needle coke graphites.

D. POSCOM-TECH

POSCOM-TECH is a specialized supplier of steel supplementary materials, including aluminum deoxidizers and steel products packaging. POSCOM-TECH makes its utmost efforts to stronghold its ground as a steel packaging andup-stream material-specialized company.

13

3. Key Products

A. Sales of Key Products

			(In hundred millions of KRW, %)
Business Area	Item	Specific Use	Total Sales			Ratio
Steel	Hot-rolled Product (HR)	Steel pipe, Shipbuilding, etc.		21,805			17.37
	Cold-rolled Product (CR)	Automobile , Home appliances, etc.		41,773			33.27
	Stainless Steel Products	Western tableware, etc.		24,200			19.27
	Others	Plates, Wire rods, etc.		37,786			30.09
	Gross Sum			125,564			100.00
	Deduction of Internal Trade			(44,846	)
	Sub Total			80,718
Trading	Steel, Metal			73,585			78.52
	Chemical, Strategic Item, Energy			1,743			1.86
	Others			18,386			19.62
	Gross Sum			93,714			100.00
	Deduction of Internal Trade			(38,335	)
	Sub Total			55,379
Engineering & Construction	Domestic Construction	Architecture		9,927			60.62
		Plant		1,684			10.28
		Civil Engineering		1,219			7.44
		Others		281			1.71
	Overseas Construction			1,307			7.98
	Owned Construction			1,471			8.98
	Others			486			2.97
	Gross Sum			16,375			100.00
	Deduction of Internal Trade			(1,189	)
	Sub Total			15,186
Others	Electricity Sales, etc.			15,294
	Deduction of Internal Trade			(6,435	)
	Sub Total			8,859
	Total Sum			160,142

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B. Price Fluctuation Trend of Key Products

				(In thousands of KRW/Tons, KRW/kWh)
Business Area	Products	2019.1Q		2018		2017
Steel	Hot-rolled Product (HR)		703		707		641
	Cold-rolled Product (CR)		790		807		791
Others	Electric Power		116		100		93
	Lime		112		108		106

Figures for the Trade and Engineering & Construction businesses are not reflected on the table due to difficulties in measuring the price fluctuation trend.

[Steel]

(1) Criteria for Calculation

(a) Subjects for Calculation: unit prices of the standardhot-rolled product and cold-rolled product

(b) Calculation Method and Unit: The average price of each product based on its total sales including the freight during the given period.

(2) Factors of Price Fluctuations

From 2016 to 2018, the price of steel has continuously increased due to the change in supply and demand of steel market and the reflection of increased raw material price into the cost. The price for steel products has slightly decreased during the 2019.1Q primarily due to a decrease in demand of steels and a decrease of Chinese steel price in the last quarter of 2018.

[Others]

(1) Criteria for Calculation

(a) Electric Power = price of electric power/total amount of generated power

(b) Lime: average sales price including shipping cost

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4. Major Raw Materials

A. Current Status of Major Raw Materials

				(In hundred millions of KRW)
Business Area	Type of Purchase	Item	Specific Use	Purchase Amount (Portion)	Remarks
Steel	Raw Materials	Materials for Iron-making,	Iron Ore for Blast Furnaces	30,112 (44.2%)	Iron Ore, Coal
		Sub-materials	Sub-materials for Iron-making, Steelmaking	17,791 (26.1%)	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
		Stainless Steel Materials	Key Materials for STS Production	13,026 (19.1%)	Nickel, Ferrochrome, STS Scrap Iron, etc.
		Others	OtherSub-materials	7,211 (10.6%)	—
Engineering         & Construction	Raw Materials	Ready-mixed Concrete	Construction of Structure	571 (21.5%)
		Steel Reinforcement	Strengthening Concrete	470 (17.7%)
		Cable	Electricity Transfer	16 (0.6%)
		Steel Pile	Foundation of Structure	54 (2.0%)
		Others	Construction of Pipe and Structure etc.	1,547 (58.2%)
Others	Raw Materials	LNG	Material for Power Generation	3,088 (48.0%)
		Limestone	Production of Lime	255 (4.0%)
		Others	Engineering business etc.	3,085 (48.0%)

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B. Price Fluctuation Trend of Major Raw Materials

				(In thousands of KRW)
Business Area	Category	2019.1Q		2018		2017
Steel	Iron Ore(per ton)		87		76		81
	Coal(per ton)		232		228		246
	Scrap Iron(per ton)		366		395		344
	Nickel(per ton)		13,916		15,074		11,763
Engineering & Construction	Ready-mixed Concrete (per m3)		63		63		61
	Steel Pile (per m)		146		146		50
	Steel Reinforcement (per kg)		1.0		1.0		1.0
	Cable (per m)		1.0		1.0		1.0
Others	LNG (per ton)		817		768		661
	Lime (per ton)		20		19		19

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[Steel]

Key Factors in Price Fluctuations

(1) Iron Ore

																			(In US Dollars/Tons)
	’19.1Q		’18.4Q		’18.3Q		’18.2Q		’18.1Q		’17.4Q		’17.3Q		’17.2Q		’17.1Q		’16.4Q		’16.3Q		’16.2Q
Trend of International Benchmark Price (Free On Board, “FOB”)		77		64		57		58		68		57		64		57		79		65		53		51

(2) Coal

																			(In US Dollars/Tons)
	’19.1Q		’18.4Q		’18.3Q		’18.2Q		’18.1Q		’17.4Q		’17.3Q		’17.2Q		’17.1Q		‘16 4Q		’16.3Q		’16.2Q
Trend of International Benchmark Price (FOB)		206		221		188		190		229		204		189		191		285		200		92.5		84

(3) Scrap Iron

																			(In US Dollars/Tons)
	’19.1Q		’18.4Q		’18.3Q		’18.2Q		’18.1Q		’17.4Q		’17.3Q		’17.2Q		’17.1Q		‘16 4Q		’16.3Q		’16.2Q
Trend of Purchase Price (Cost and Freight, “CFR”)		325		343		350		364		379		344		322		268		284		253		227		235

(4) Nickel

’19.1Q

’18.4Q

’18.3Q

’18.2Q

’18.1Q

’17.4Q

’17.3Q

’17.2Q

’17.1Q

‘16 4Q

’16.3Q

’16.2Q

Trend of London Metal Exchange (“LME”) Cash Price

USD 5.61 /lb USD 12,369/ton

USD 5.22 /lb USD 11,516/ton

USD 6.02 /lb USD 13,266/ton

USD 6.56 /lb USD 14,467/ton

USD 6.02 /lb USD 13,276/ton

USD 5.25/lb USD 11,584/ton

USD 4.78/lb USD 10,528/ton

USD 4.18/lb USD 9,225/ton

USD 4.66/lb USD 10,271/ton

USD 4.90/lb USD 10,810/ton

USD 4.66/lb USD 10,265/ton

USD 4.00/lb USD 8,823/ton

LME : London Metal Exchange

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[Engineering and Construction]

(1) Criteria for Calculation

Products	Criteria for Calculation
Ready-mixed Concrete	Standard25-210-15
Steel Pile	SPIRAL, 609.6, 12T, STP275, KS F 4602
Steel Reinforcement	High Tensile Deformed Bar SD400 D10
Cable	TFR-CV, 0.6/1KV, 2.5SQ, 2core

[Others]

(1) Criteria for Calculation

(a) Electric Power: purchase price of electricity from Korea Gas Corporation

(b) Lime: purchase price of lime and transportation fees

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5. Production and Facilities

A. Production Capacity

[Steel]

					(Thousands of Tons)
Business Area	Products		2019.1Q		2018		2017
Steel		Crude Steel		11,715		47,590		47,590

[Others]

	(Electric Power-MW per year, Lime-Thousands of Tons  per year)
Business Area	Products		2019.1Q		2018		2017
		Incheon		3,412		3,412		3,412
Power Generation	Electric Power	Gwangyang		284		284		284
		Pohang		290		290		290
Lime	Lime			540		2,190		2,190

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production

				(Thousands of Tons)
Products		2019.1Q		2018		2017
Crude Steel			10,634		42,867		42,193
Products	Hot-Rolled Steel		2,325		8,716		8,372
	Plate		1,798		7,432		6,512
	Wire Rod		701		2,867		2,830
	Pickled-Oiled Steel		760		2,946		3,005
	Cold-Rolled Products		2,123		8,551		7,563
	Coated Steel		1,623		7,163		6,249
	Electrical Steel		243		1,078		1,028
	Stainless Steel		654		3,978		3,863
	Others		1,465		5,903		6,359
	Total		11,693		48,634		45,781

The amount of products is the aggregate of the amount of products of POSCO and subsidiaries of POSCO, which may include interested party transactions.

20

(2) Capacity Utilization Rate

						(Thousands of Tons, %)
	Company	Capacity		Production		Utilization Rate
Crude Steel Production	POSCO		10,452		9,406		90.0	%
	Zhangjiagang Pohang Stainless Steel Co., Ltd		275		284		103.4	%
	PT.KRAKATAU POSCO		712		732		102.8	%
	POSCOSS-VINA Co., Ltd.		275		211		76.9	%
	Total		11,715		10,634		90.8	%

Trade and Engineering & Construction businesses are not reflected on the table due to difficulties in measuring capacity, production and utilization rate of such businesses.

[Others]

(1) Production Result

				(Gwh, Thousands of Tons)
Business Area	Products	2019. 1Q		2018		2017
Power Generation	Electric Power		3,987		15,297		13,774
Lime	Lime		634		2,511		2,406

(2) Capacity Utilization Rate

			(Electric Power-hr, Lime-Thousands of Tons)
Business Area	Products		2019. 1Q Capacity		2019. 1Q Production		Utilization Rate
Power Generation	Electric Power	Incheon		2,160		1,097		51	%
		Gwangyang		2,160		1,939		90	%
		Pohang		2,160		2,079		96	%
Lime	Lime			540		634		117	%

21

C. Production Facilities

[Land]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation		Ending Book Balance
Steel		1,936,973		15,408		(7,284	)		—		1,945,097
Trade		170,115		143		—			—		170,258
Engineering & Construction		25,463		3,340		(3,302	)		—		25,501
Others		415,451		38		—			—		415,489

[Building]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		3,474,584		105,876		(71,262	)		(51,049	)		3,458,149
Trade		430,863		6,050		(324	)		(3,031	)		433,558
Engineering & Construction		79,363		21,830		1			(20,654	)		80,540
Others		417,642		7,916		(4,370	)		(2,080	)		419,108

[Structures]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		2,637,523		38,311		(10,611	)		(56,328	)		2,608,895
Trade		22,036		998		(19	)		(379	)		22,636
Engineering & Construction		14,708		144		(4	)		(432	)		14,416
Others		243,657		1,361		(1	)		(4,179	)		240,838

[Machinery and Equipments]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		15,916,598		470,201		(184,894	)		(568,489	)		15,633,416
Trade		386,081		29,261		(28,257	)		(9,339	)		377,746
Engineering & Construction		7,139		1,437		(1,169	)		(380	)		7,027
Others		2,208,311		23,165		(104	)		(47,156	)		2,184,216

[Vehicles]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		19,958		6,119		(3,517	)		(2,649	)		19,911
Trade		5,677		1,786		(1,104	)		(460	)		5,899
Engineering & Construction		1,158		566		(589	)		(222	)		913
Others		4,548		2,103		(1,390	)		(423	)		4,838

22

[Tools and Fixtures]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		47,852		8,183		(4,559	)		(4,925	)		46,551
Trade		10,677		3,733		(829	)		(1,257	)		12,324
Engineering & Construction		617		313		(373	)		(66	)		491
Others		7,018		28,075		(26,718	)		(717	)		7,658

[Equipment]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		66,924		9,964		(5,694	)		(5,677	)		65,517
Trade		30,238		4,715		(1,484	)		(2,401	)		31,068
Engineering & Construction		3,304		2,039		(1,168	)		(345	)		3,830
Others		35,821		129,734		(127,987	)		(1,024	)		36,544

[Financial Lease Assets]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		91,928		426,662		(8,594	)		(41,403	)		468,593
Trade		548		59,529		(156	)		(5	)		59,916
Engineering & Construction		2,957		231,235		—			(376	)		233,816
Others		42,131		6,937		(1	)		(1,385	)		47,682

[Biological Assets]							(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased		Depreciation			Ending Book Balance
Steel		—		—		—		—			—
Trade		80,771		12,890		—		(1,244	)		92,417
Engineering & Construction		—		—		—		—			—
Others		—		—		—		—			—

23

[Assets under Construction]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation		Ending Book Balance
Steel		943,260		329,563		(250,666	)		—		1,022,157
Trade		118,315		21,311		(15,674	)		—		123,952
Engineering & Construction		25,943		2,687		—			—		28,630
Others		92,121		61,416		(17,074	)		—		136,463

24

(2) Major Capital Expenditures

(a) Investments under Construction

[Steel]				(In hundred millions of KRW)
Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO	Expansion/ Establishment	June, 2011 ~ December, 2021	G) Expansion of land for facilities, P) Establishment of by-product gas Power Plant		4,551		1,146		3,405
		September, 2011 ~ November, 2021	G) The renovation of #3 furnace P) Establishment of NOx removal equipment for sintering factories		21,982		5,111		16,871
POSCO-CSPC	Establishment	August, 2018 ~ October, 2019	Establishment of a 2,500 tonnage press machine		108		29		79
PT. KRAKATAU POSCO	Establishment	April, 2017 ~ June, 2019	Establishment of facilities		238		132		106

P stands for Pohang Steel Works.

G stands for Gwangyang Steel Works.

[Trade]					(In hundred millions of KRW)
Company		Date		Project	Total Investment		Invested Amount		Amount to Be Invested
PT. BIO INTI AGRINDO	Establishment		December, 2014 ~ September, 2019	CPO MILL		558		275		283

The investments over KRW 10 billion are listed on the table while equity investment is not reflected thereon.

[Others]				(In hundred millions of KRW)
Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO ICT	Expansion	January, 2019 ~ December, 2019	Expansion of smart management server for smart management operation efficiency, etc		479		61		418
POSCO CHEMICAL	Establishment	November, 2018 ~ November, 2019	The expansion of product lines #1~#8 for the second factory of anode materials		1,598		408		1,190

The investments over KRW 10 billion are listed on the table while equity investment is not reflected thereon.

25

(b) Future Investment Plans

			(In hundred millions of KRW)
Business	Company	Project	Investment effects	Planned Investments
				2019		2020		2021
Steel	POSCO	Expansion, Renovation and Replacement of Existing Facilities, etc.	Maintenance of existing facilities, etc.		1,356		7,788		8,576
			Advancement of products		584		1,018		5,124
	POSCO SS VINA CO., LTD.	Expansion, Renovation and Replacement of Existing Facilities, etc.	Enhancing production efficiency, cost reduction, etc.		13		38		54
Trading	PT. BIO INTI AGRINDO	Expansion, Renovation and Replacement of Existing Facilities, etc.	Realization of profits by selling CPO		113		54		116
	DAEWOO TEXTILE LLC	Expansion, Renovation and Replacement of Existing Facilities, etc.	Enhancing production efficiency and quality		35		57		57
	POSCO ICT	Expansion, Renovation and Replacement of Existing Facilities, etc.	Investment in POSCO IT Infra, etc.		267		284		—
			AI, RPA, etc.		276		402		—
			Improving of workplaces, etc.		64		78		—
	POSCO O&M	Expansion, Renovation and Replacement of Existing Facilities, etc.	Renovation of Existing Facilities		65		99		110
	POSCO CHEMICAL	Expansion, Renovation and Replacement of Existing Facilities, etc.	Expansion of Anode materials product line		1,190		—		—

The investments over KRW 10 billion are listed on the table

26

6. Product Sales

[Steel]								(In hundred millions of KRW)
Items		2019.1Q			2018			2017
Domestic	Hot-Rolled Products		11,610			48,879			42,950
	Cold-Rolled Products		9,909			39,901			38,298
	Stainless Steel		5,111			21,281			24,798
	Others		20,317			77,230			66,555
Export	Hot-Rolled Products		10,195			35,231			34,277
	Cold-Rolled Products		31,864			124,449			125,622
	Stainless Steel		19,089			79,931			74,880
	Others		17,469			77,311			68,734
Total	Gross Sum		125,564			504,212			476,114
	Internal Transaction		(44,846	)		(180,632	)		(173,810	)
	Total		80,718			323.580			302,304
[Trading]								(In hundred millions of KRW)
Items		2019.1Q			2018			2017
Domestic	Merchandise		8,451			33,706			24,210
	Product		1,185			4,702			4,079
	Others		361			1,483			1,421
Export	Merchandise		20,633			87,124			87,116
	Product		203			768			938
	Others		204			736			1,107
Trades among the 3rd countries			62,677			254,670			229,911
Gross Sum			93,714			383,189			348,782
Internal Transaction			(38,335	)		(159,112	)		(140,760	)
Total			55,379			224,077			208,022

27

[Engineering & Construction]					(In hundred millions of KRW)
Items		2019.1Q			2018			2017
Domestic	Architecture		9,927			37,363			32,375
	Plant		1,684			10,238			6,874
	Civil Engineering		1,219			5,129			6,418
	Others		281			337			—
Overseas			1,307			9,471			15,056
Own Construction			1,471			7,568			7,654
Other Subsidiary company sales			487			3,101			4,478
Gross Sum			16,375			73,207			72,855
Internal Transaction			(1,189	)		(5,513	)		(3,989	)
Total			15,186			67,694			68,866

[Others]			(In hundred millions of KRW)
Items	2019.1Q		2018		2017
Electric Power		8,859		34,426		27,359

7. Derivatives

We purchased forward exchange contracts to hedge the exchange rate risk for foreign currency loans. As of March 31, 2019, we assessed the fair value of our forward exchange contracts to be USD 0.7 Billion (expiring October, 2020), USD 0.55 billion (expiring April, 2021), and a currency swap contract to be USD 0.5 billion (expiring July, 2023). We recognized KRW 35,628 million of gain on valuations of forward exchange contracts. Also, we recognized KRW 18,844 million of gain on valuation, and KRW 19 million of gain on transaction of a currency swap contract.

8. Significant Contracts

Company	Contract	Date	Remarks
POSCO	Small scale merger with POSHIMETAL Co.,Ltd.	December, 2015	1) Purpose: Enhancing the shareholders’ value by increasing operational efficiency and creating synergies between businesses 2) Information: POSCO holds a 100% stake in POSHIMETAL Co.,Ltd. The merger ratio is 1:0, and POSCO will not be issuing new shares 3) Conclusion of a contract: December 23, 2015 4) Date of merger: March 1, 2016 5) Registration of merger: March 15, 2016

28

	Small scale merger with POSCO GREEN GAS TECHNOLOGY	February, 2016	1) Purpose: Enhancing the shareholders’ value by increasing operational efficiency and creating synergies between businesses 2) Information: POSCO holds a 100% stake in POSCO GREEN GAS TECHNOLOGY. The merger ratio is 1:0, and POSCO will not be issuing new shares 3) Conclusion of a contract: February 26, 2016 4) Date of merger: May 1, 2016 5) Registration of merger: May 16, 2016
	JV Agreement for Construction of Steel mills for cold rolled steel products and plated steel products	April, 2016	Purpose: Expansion of sales of automotive steel in Southwest province of China POSCO signed JV contracts with Chongqing Iron and Steel by holding 10% stake in Chongqing CISL High Strength Cold Rolling Steel Co.Ltd, and 51% stake in Chongqing POSCO CISL Automotive Steel Co., Ltd •  Execution of JV Agreements: April 6, 2016 •  Termination JV Agreements: September, 2017 •  Liquidation of Steel mills set off: November 13, 2017 •  Completion of liquidation: June 28, 2018
	Small scale merger of POSCO P&S	August, 2018	1) Purpose: To increase operational efficiency 2) Information: POSCO P&S is merged into POSCO •  The merger ratio is 1 : 0.1456475 (POSCO : POSCO P&S) •  POSCO will distribute its treasury shares to the shareholders of POSCO P&S, and new shares will not be issued. 3) Conclusion of a contract: August 23, 2018 4) Date of merger: January 1, 2019 5) Registration of merger: February 2, 2019
POSCO International Corporation	Investment on the 2nd stage development of A-1 /A-3 block in Myanmar gas field	June, 2018	1) Investment amount: KRW 511,709,005,500 (USD 473,235,000) 2) Development period: August 1, 2017 ~ December 31, 2022 3) Gas production schedule: By additionally developing Shwe gasfield and newly developing Shwe Phyu gasfield, production will start in 2021 from Shwe and 2022 from Shwe Phyu 4) Other Information •  Location: North-west offshore, Myanmar •  This investment is the 2nd stage of development, which consists of 3 stages in Myanmar gas field development. The purpose of investment is to maintain current gas production level by completing more drilling and adding more production wells to current Shwe platform. •  In July 2018, facility design and construction began, and production is scheduled to start in 2021 in Shwe and in 2022 in She Phyu. But the development period includes the duration of feasibility test and basic design from August 2017 to May 2018. •  POSCO International Corporation : 51.0% •  ONGC VIDESH(Oil and Natural Gas Corporation Videsh Limited) : 17.0% •  MOGE(Myanmar Oil and Gas Enterprise): 15.0% •  GAIL (India) Limited : 8.5% •  KGAS(Korea Gas Corporation): 8.5% •  Investment size of USD 473,235 thousand, applying the exchange rate of 1USD=1,081.30 KRW, was disclosed on the date of the BOD resolution (May 31, 2018). •  Detailed information and future timeline on this resource development investment is subject to change. Disclosure date : May 31, 2018 (Decision on natural resources investment)
	Small scale merger with Steel segment after spinoff from POSCO Processing &Service	November, 2016	1) Purpose: Expanding the company’s capabilities in steel trading business and enhancing global competitiveness of the company’s steel business 2) Information: POSCO International merges with the steel segment and others of POSCO P&S at the merger ratio of 1: 0.4387662, after the spin off from POSCO P&S 3) Conclusion of a contract: November 4, 2016 4) Date of merger: March 1, 2017 5) Registration of merger: March 2, 2017

29

POSCO ENGINEERING & CONSTRUCTION	Small scale merger with POSCO ENGINEERING CO., LTD.	November, 2016	1) Purpose: Achieving sustainable profit and growth by enhancing competitiveness 2) Information: POSCO E&C merges with POSCO Engineering at the merger ratio of 1:0, and POSCO E&C will not be issuing new shares 3) Conclusion of a contract: November 23, 2016 4) Date of merger: February 1, 2017 5) Registration of merger: February 14, 2017
POSCO O&M	Small scale merger with Blue O&M and MegaAsset	February, 2019	1) Purpose: Enhancing foundation of growth by improving management efficiency and creating synergies among businesses 2) Information: POSCO O&M merges with Blue O&M and MegaAsset 3) Date of merger: February 1, 2019 4) Registration of merger: February 11, 2019
POSCO ENERGY	Contract of Shares Transfer	July, 2018	1) Contract Parties: Nonghyup Bank(The third agent of KIAMCO PowerEnergy Private Special Assets Investment Trust), Doosan Heavy Industries & Construction, POSCO E&C, Industrial Bank of Korea(The first agent of Multi Asset POSPower Samcheok coal-fired private investment trust) 2) Signed Date: July, August, 2018 3) Contract Amount : KRW 343,706 million Information: Contract of shares transfer for disposal of 68.5%(July) and 2.5%(August) POSPower shares

Changes after March 31, 2019

Company	Contract	Date	Remarks
POSCO	Split merger of POSCO Energy’s division ofby-product	April, 2019	1) Purpose: Enhancing the company’ value by increasing operational efficiency 2) Information: POSCO Energy’s division ofby-product gas power plant will be split off from POSCO Energy and merged into POSCO 3) Conclusion of a contract: April 16, 2019 4) Date of merger: September 1, 2019

9. Research and Development

A. Research and Development (“R&D”) Organization

Business Area	Company	Organization
Steel	POSCO	Technology Strategy Office
		Technical Research Laboratories
		Steel Product Research Lab
		Process and Engineering Research Lab
		Automotive Steel Research Lab
		Steel Solution Research Lab
	POSCO COATED & COLOR STEEL Co,. Ltd.	R&D Center
	Zhangjiagang Pohang Stainless Steel Co., Ltd.	R&D Center
	POSCO Thainox Public Company Ltd.	Product Testing Laboratory(LAB) Team
Trading	POSCO International Corporation	Electric Power Train Development Group
		Molding R&D Center
		Stainless Quality Technology Group

30

Engineering & Construction	POSCO Engineering & Construction,. LTD.	R&D Center
	POSCO A&C	Smart Construction R&D Center
Others	POSCO ENERGY Co,. LTD	Gas & Renewable Energy Business Development Office
	POSCO ICT	R&D Center
	POSCO CHEMICAL	R&D Center
	POSCOM-TECH	R&D Center
	POSCO PNR	Quality Innovation Department

B. R&D Expenses in 2019.1Q (In millions of KRW)

Category	Business Area
	Steel			Trade			Engineering & Construction			Others			Total
Selling and Administrative Cost		23,192			1,060			836			5,446			30,534
Manufacturing Cost		95,518			56			55			740			96,369
R&D Cost (Intangible Assets)		3,868			—			1			3,577			7,446
Total*		122,578			1,116			892			9,763			134,349
Government Subsidy		—			—			151			—			151
R&D/Sales Ratio		1.52	%		0.02	%		0.06	%		1.10	%		0.84	%

* This total expenses include government subsidy amount

31

III. Financial Statements

1. Consolidated Financial Statements

A. Summary of Fiscal Years of 2017, 2018 and 2019.1Q

					(In millions of KRW)
Account	2019.1Q (2019.1.1~2019.3.31)		2018		2017
[Total current assets]		34,677,787		33,651,002		31,127,418
Cash and cash equivalents		2,637,550		2,643,865		2,612,530
Other receivables, net		1,416,916		1,385,629		1,636,006
Other short-term financial assets		8,284,797		8,081,096		7,045,880
Trade accounts and notes receivable, net		10,109,781		9,282,609		8,950,548
Inventories		11,259,369		11,499,928		9,950,955
Other current assets		969,374		931,499		931,499
[Totalnon-current assets]		45,062,064		44,597,263		47,897,541
Other receivables, net		874,296		863,240		879,176
Otherlong-term financial assets		1,666,475		1,647,898		1,911,684
Investments in associates and joint ventures		3,781,037		3,650,003		3,557,932
Property, plant and equipment, net		30,486,060		30,018,273		31,883,535
Intangible assets, net		5,171,973		5,170,825		5,952,269
Othernon-current assets		3,082,223		3,247,024		3,712,945
Total assets		79,739,850		78,248,265		79,024,959
[Total current liabilities]		18,945,396		18,937,985		18,946,016
[Totalnon-current liabilities]		13,550,052		12,550,729		12,614,935
Total liabilities		32,495,448		31,488,714		31,560,951
[Equity attributable to owners of the controlling company]		43,944,850		43,371,260		43,732,877
Share capital		482,403		482,403		482,403
Capital surplus		1,445,064		1,410,551		1,412,565

32

Hybrid bonds	199,384		199,384		996,919
Retained earnings	44,566,856		44,216,018		43,056,600
Other equity attributable to owners of the controlling company	(2,748,857	)	(2,937,096	)	(2,215,610	)
[Non-controlling Interests]	3,299,553		3,388,291		3,731,131
Total equity	47,244,402		46,759,551		47,464,008
Revenue	16,014,238		64,977,777		60,655,100
Operating profit	1,202,896		5,542,600		4,621,834
Profit	778,445		1,892,064		2,973,469
[Profit attributable to owners of the controlling company]	741,253		1,690,612		2,790,106
[Profit attributable tonon-controlling interests]	37,192		201,452		183,363
Total comprehensive Income	933,231		1,463,535		2,412,311
[Total comprehensive income attributable to owners of the controlling company]	912,402		1,271,495		2,218,278
[Total comprehensive income attributable tonon-controlling interests]	20,829		192,040		194,033
Earnings per share(KRW)	9,233		20,911		34,464
Number of Consolidated Companies	168		172		180

B. The Standards Used for Reporting the Financial Statements

The Company prepared its financial statements in accordance with the Korean-International Financial Reporting Standards (the“K-IFRS”) and applied it to each Company’s final financial statements.

C. Consolidated Financial Statements

Refer to the attached Condensed Consolidated Financial Statements for the Condensed Consolidated Statements of Financial Position as of March 31, 2019, Condensed Consolidated Statements of Comprehensive Income (loss), Condensed Consolidated Statements of Changes in Equity, Condensed Consolidated Statements of Cash Flows for the three-month period ended March 31, 2019, and Notes

33

2. Separate Financial Statements

A. Summary of Fiscal Years of 2017, 2018 and 2019.1Q

	(In millions of KRW)
Account	2019.1Q (2019.1.1~2019.3.31)		2018		2017
[Total current assets]		17,603,455		16,796,400		14,840,421
Cash and Cash equivalents		419,648		259,219		332,405
Trade accounts and notes receivable, net		4,449,073		3,968,372		3,867,714
Other receivables, net		319,343		206,432		210,230
Other short-term financial assets		7,314,439		7,025,143		5,824,087
Inventories		4,997,913		5,288,009		4,543,533
Other current assets		103,039		49,225		62,452
[Totalnon-current assets]		37,608,361		37,329,580		38,851,837
Other receivables, net		58,393		57,767		62,421
Otherlong-term financial assets		1,200,335		1,176,757		1,393,316
Investments in Subsidiaries, associates, and joint ventures		15,507,841		15,121,339		15,098,856
Property, plant and equipment, net		19,952,653		20,154,334		21,561,270
Intangible assets, net		660,560		645,222		528,074
Othernon-current assets		228,579		174,161		207,900
Total assets		55,211,816		54,125,980		53,692,258
[Total current liabilities]		4,164,307		3,895,973		3,570,148
[Totalnon-current Liabilities]		5,047,008		4,957,905		4,180,655
Total liabilities		9,211,315		8,853,878		7,750,803
[Share capital]		482,403		482,403		482,403
[Capital surplus]		1,602,845		1,154,775		1,156,429
[Hybrid bonds]		199,384		199,384		996,919
[Retained earnings]		45,430,513		45,175,459		44,605,368

34

Account	2019.1Q (2019.1.1~2019.3.31)			2018			2017
[Other equity]		(1,714,644	)		(1,739,919	)		(1,299,664	)
Total equity		46,000,501			45,272,102			45,941,455
Revenue		7,816,471			30,659,425			28,553,815
Operating profit		832,467			3,809,376			2,902,453
Profit		671,173			1,072,592			2,545,685
Earnings per share(KRW)		8,358			13,186			31,409

B. The Standards Used for Reporting the Financial Statements

The company prepared its financial statements and its Certified Public Accountant’s audit opinions on financial statements in accordance with the Korean - International Financial Reporting Standards (the“K-IFRS”).

C. Separate Financial Statements

Refer to the attached Condensed Separate Financial Statements for the Condensed Separate Statements of Financial Position as of March 31, 2019, Condensed Separate Statements of Comprehensive Income (loss), Condensed Separate Statements of Changes in Equity, Condensed Separate Statements of Cash Flows for the three-month period ended March 31, 2019, and Notes.

35

IV. CORPORATE GOVERNANCE AND COMPANY AFFILIATES

1. Overview of Corporate Governance

A. Board of Directors

(1) Board of Directors (as of May 15, 2019)

Our Board of Directors consists of five inside directors (i.e.Jeong-Woo, Choi; In-Hwa, Chang;Jung-Son, Chon;Hag-Dong, Kim; Tak, Jeong ) and seven outside directors (i.e.Shin-Bae, Kim;Byong-Won, Bahk;Moon-Ki, Chung;Joo-Hyun, Kim;Seung-Wha, Chang;Sung-Jin, Kim;Heui-Jae Pahk).

Our Board of Directors manages the following fivesub-committees:

(a) Director Candidate Recommendation and Management Committee;

(b) Evaluation and Compensation Committee;

(c) Finance and Related Party Transactions Committee;

(d) Executive Management Committee; and

(e) Audit Committee.

Composition of the Special Committees under the Board of Directors and their Functions(as of May 15, 2019)

Category	Composition	Directors	Major Functions
Director Candidate Recommendation and Management Committee	3 Outside Directors; 1 Inside Director	Byong-Won, Bahk (Chairman) Joo-Hyun, Kim Heui-Jae, Pahk, Jung-Son, Chon	•  Reviews the qualifications of potential candidates for Directors •  Proposes nominees for the Outside Directors •  Advances the nomination process for the CEO among the Inside Directors and the members of the special committees •  Reviews operational matters of our board of directors
Evaluation and Compensation Committee	4 Outside Directors	Seung-Wha, Jang (Chairman) Shin-Bae, Kim Moon-Ki, Chung Sung-Jin, Kim	•  Executes management succession and development plans •  Establishes evaluation procedures of directors •  Reviews the retirement procedures and distribution of the allowance for directors
Finance and Related Party Transactions Committee	3 Outside Directors; 1 Inside Director	Joo-Hyun, Kim (Chairman) Sung-Jin, Kim Heui-Jae, Pahk In-Hwa, Chang	•  Advances deliberation of new investments in other companies •  Deliberates financial matters and donations from the range of KRW 100 million and KRW 1 billion •  Reviews related party and other internal transactions and ensures compliance with the Monopoly Regulation and Fair Trade Act
Audit Committee	3 Outside Directors	Moon-Ki, Chung (Chairman) Byong-Won, Bahk Seung-Wha, Chang	•  Audits the accounting system and business operations •  Examines the agenda for financial statements and other reports to be submitted by the Board of Directors at each general meeting of shareholders
Executive Management Committee	5 Inside Directors	Jeong-Woo, Choi (Chairman) In-Hwa, Chang Chon,Jung-Son Hag-Dong, Kim Tak, Jeong	•  Oversees decisions with respect to our operational and management matters •  Reviews management’s proposal for new strategic initiatives •  Reviews deliberation over critical internal matters related to the organization structure and development of personnel •  Reviews and revises work and welfare policies

36

(2) List of Outside Directors (As of March 31, 2019)

Name	Experience	Relation with Majority Shareholder	Remarks
Joo-Hyun, Kim	•  President & CEO, The financial news (‘17.4~Present) •  President, Future Korea Institute, Kookmin University (‘16.5~‘17.3) •  President & CEO, Hyundai Research Institute (‘04.1~‘14.4) •  Ph.D. in Department of Finance, College of Business Arizona State University (‘89)	None	Chairman of Board of Directors
Heui-Jae, Pahk	•  Professor in Mechanical&Aerospace Engineering, Seoul National University (‘93.3~Present) •  Chairman of the Board, Korea Youth Foundation (’16.5~Present) •  Head of R&D Strategic Planning, Ministry of Trade, Industry and Energy (‘13.4~‘16.4) •  SNUPrecision CEO (‘98.2~‘16.12) •  Ph D in Mechanical Engineering, Seoul National University (‘90)	None
Byong-Won, Bahk	•  Honarary Chairman of Korea Employers Federation (’18.3~Present) •  Chairman of Korea Employers Federation (‘15.2~‘18.2) •  Chairman of The Korea Federation of Banks (‘11.11~‘14.11) •  Chairman & CEO Woori Financial Group (‘07.3~‘08.6) •  MA in Economics, University of Washington (‘85)	None
Shin-Bae, Kim	•  Vice Chairman, SK Group (‘10.1~‘13.2) •  President, Korea IoT (Internet of Things) Association (‘05.3~‘12.3) •  President and CEO, SK Telecom (‘04.3~‘08.12) •  M.B.A., Wharton School, University of Pennsylvania (‘85)	None
Moon-Ki, Chung	•  Professor in Accounting, Sungkyunkwan University (‘16~Present) •  Partner and Chief Quality Officer, Samil PwC (‘81~‘12) •  Committee Member, Accounting Review Committee of Financial Supervisory Service •  Ph.D. in Accounting, Sungkyunkwan University	None
Seung-Wha, Chang,	•  Dean of Seoul National University School of Law (’18.6~Present) •  Professor of Law, Seoul National University (‘95~Present) •  World Trade Organization(WTO) as the Appellate Body Member (‘12.5~‘16.9) •  Member, International Chamber of Commerce(ICC) Court of Arbitration (‘00~‘13) •  LL.M and Doctorate in International Trade Law from Harvard Law School (‘94)	None
Sung-Jin, Kim	•  Adjunct Professor at Department of Economics, Seoul National University (‘11~Present) •  The Minister of Maritime Affairs and Fisheries (‘06~‘07) •  Administrator of the Small and Medium Business Administration (‘04~‘06) •  Ph.D. in Economics Kansas State University (‘91)	None

37

(3) List of Key Activities of the Board of Directors (January 1, 2019 ~ May 15, 2019)

Session	Date	Agenda	Approval
2019-1	January 30	•  Deliberation Agenda 1. Approval of the financial statements for the 51th fiscal year and the convocation schedule for the 51th General Meeting of Shareholders 2. Announcement of closing POSCO P&S merge 3. Appointment of Legal Affairs Office head 4. Contribution of donation to Indonesia for the recovery of damage caused by Tsunami •  Report Agenda 1. The management result for the fiscal year of 2018 2. Report on the operation of the internal accounting control system for the fiscal year of 2018	All 4 Cases Approved
2019-2	February 20	•  Deliberation Agenda 1. Agenda for the 51th General Meeting of Shareholders 2. Recommendation of candidates for the Inside Director position (Excluding the candidate for the Chief Executive Officer)	All 2 Cases Approved
2019-3	March 15	•  Deliberation Agenda 1. Appointment of the Chairman of the Board of Directors 2. Appointment of the Special Committee Members 3. Designation of Representative Directors and presenting positions to Inside Directors	All 3 Cases Approved
2019-4	April 12	•  Deliberation Agenda 1. Business restructuring plan for LNG terminal andby-product power plant 2. Contribution of donation for the recovery of damage caused by forest fire in Gangwon Province.	All 2 Cases Approved
2019-5	May 10	•  Deliberation Agenda 1. Declaration of the first quarter dividend for the fiscal year of 2019 2. Plan for financing for the fiscal year of 2019 3. Increase of capital and extension of the payment guarantee period for Brazil CSP 4. FY2019 Transaction Plans with affiliates •  Report Agenda 1. The management result of the first quarter of 2019 2. The performance and assessment of Board of Directors for 2018 3. Standard for selecting domain and the possible list of domains for new business 4. Establishment of venture platform for exploring new business 5. The result of publicizing commemorative project and its future plan	All 4 Cases Approved

Major Activities of the Outside Directors on the Board of Directors (January 1, 2019 ~ November 15, 2019)

Session	Date	Participation of the Outside Directors (the Number of total members)	Remarks
2019-1	January 30	7 (7)	—
2019-2	February 20	7 (7)	—
2019-3	March 15	7 (7)	—
2019-4	April 12	7 (7)	—
2019-5	May 10	7 (7)	—

38

(4) Composition of the Special Committees and their Activities

• Major Activities of Director Candidate Recommendation Committee (January 1, 2019~March 15, 2019)

Date	Agenda	Approval
February 13, February 20, 2019	•  Deliberation Agenda	Approved
	1. Qualification Assessment and Recommendation of Outside Director Candidates
	•  Preliminary Review Agenda
	1. Qualification Assessment of Inside Director Candidates(Excluding the candidate for the CEO)	—
March 15, 2019	•  Preliminary Review Agenda
	1. Appointment of the Special Committee Members	—
	2. Appointment of CEO

• Major Activities of Evaluation and Compensation Committee (January 1, 2019~March 14, 2019)

Date	Agenda	Approval
January 28, 2019	1. Evaluation of the management result for the fiscal year of 2018	Approved

• Major Activities of Finance and Related Party Transaction Committee (January 1, 2018~March 14, 2019)

Date	Agenda	Approval
January 30, 2019	•  Deliberation Agenda	Approved
	1. Contribution to Labor Welfare Fund
	2. Appointment of Director for voluntary compliance of Fair Trade
	•  Report Agenda
	1. Review of and plan for the operation of the Fair Trading Program

• Major Activities of Finance and Related Party Transaction Committee (March 15, 2019~May 15, 2019)

Date	Agenda	Approval
April 12, 2019	•  Preliminary Review Agenda	—
	1. Restructuring ofby-product gas power plant and LNG terminal business
May 8, 2019	•  Preliminary Review Agenda
	1. Plan for financing in FY2019	—
	2. Myanmar POSCO sales of stake	Approved
	3. Plan for Payment Guarantee to POSCO-Mexico	Approved

• Major Activities of Executive Management Committee (January 1, 2019 ~ March 14, 2019)

Session	Date	Agenda	Approval
2019-1	January 30	•  Deliberation Agenda 1. Sales of stake for Guangdong Shunde Pohang Steel Co., Ltd.	Approved
2019-2	February 19	•  Deliberation Agenda 1, Rationalization of Gwangyang #1 power plant 2. Improvement on Gwangyang Works’s working environment 3. Disposal of 1 Finex’s melting furnace and induction furnace assets	Approved Approved Hold

* Decided to hold the agenda about 1 finex to amend partially and submit to the committee again

• Major Activities of Executive Management Committee (March 15, 2019 ~ May 15, 2019)

Session	Date	Agenda	Approval
2019-3	March 19	•  Deliberation Agenda 1. Replacement of Gwangyang #1,2 blast furnace’s old wind passing equipment	Approved

39

2019-4 February 19 •  Preliminary Review Agenda 1.Increase of capital and extension of the period for payment guarantee •  Deliberation Agenda 1. R&D investment on STS 3HAPL alternating electrolytic aid pickling machine 2. Plan for remodeling of Pohang Dongchon Plaza 3. Plan for construction and operation of workplace nursery 4. Disposal of 1 Finex tangible assets —  
Approved Approved Approved Approved

B. Audit Committee

(1) Composition of the Audit Committee (Auditors, as of May 15, 2019)

Name	Qualifications	Remarks
Chung,Moon-Ki Bahk, Byong-Won Chang, Seung-Wha	Satisfies the requirements stipulated in the Korean Commercial Act and the Articles of Incorporation	Chairman — —

(2) Major Activities of the Audit Committee (January 1, 2019 ~ May 15, 2019)

Session	Date	Agenda	Approval
2019-1	January 29	•  Deliberation Agenda •  Assessment of the Audit Committee for the fiscal year of 2018 •  Approval on the appointment of the internal audit department head •  Approval of audit andnon-audit services for POSCO and its subsidiaries •  Report Agenda •  Report on the operation of the internal accounting control system for the fiscal year of 2018 •  The result of internal audit for the fiscal year of 2018 and audit plans for the fiscal year of 2019 •  The assessment on the employees’ conformity to the code of ethics	All 3 Cases Approved
2019-2	February 19	•  Deliberation Agenda •  Internal audit result for the fiscal year of 2018 •  Assessment of the operation of the internal accounting control system for the fiscal year of 2018 •  Approval of audit andnon-audit services for POSCO’s Subsidiaries abroad •  Report Agenda •  External audit result for the fiscal year of 2018	All 3 Cases Approved
2019-3	February 20	•  Deliberation Agenda •  Review of agenda for general meeting of shareholders	Approved
2019-4	April 26	•  Deliberation Agenda •  Appointment of the Chairman of the Audit Committee •  Report Agenda •  Consolidated internal audit operation report for the fiscal year of 2018 •  The appraisal on the consolidated internal audit operation report for the fiscal year of 2018 •  External audit result on20-F for the fiscal year of 2018	Approved

40

Session	Date	Agenda	Approval
2019-5	May 9	•  Deliberation Agenda •  Approval on thenon-audit service for POSCO •  Report Agenda •  Internal audit result on the Consolidated Financial Statements for the first quarter of 2019 •  External auditors’ review result on the Consolidated Financial Statements for the first quarter of 2019	Approved Approved

C. Voting Rights of Shareholders

(1) The Cumulative Voting System: The cumulative voting system was introduced at the thirty sixth general meeting of shareholders on March 12, 2004.

(2) Voting by Mail: Thevoting-by-mail system was introduced at the thirty sixth general meeting ofshareholders on March 12, 2004.

(3) The Electronic Voting System: The electronic voting system was introduced at the fifty first general meeting of shareholders on February 20, 2019.

D. Compensation of Directors and Officers

(1) Directors’ (including Outside Directors) and the Audit Committee members’ (Auditors’) Salaries March (served between January 1, 2019 ~ March 31, 2019)

			(In millions of KRW)
Number	Total amount of Salaries		Average salary for person
12		2,596		128

(2) Individual remuneration amount

• N/A

(3) List of Stock Options Presented to the Executives

• Exercise of the stock option ended on the final day of the stock options exercise period (April 28, 2012).

41

POSCO

and Subsidiaries

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2019

(With Independent Auditors’ Review Report Thereon)

Table of Contents

	Page
Independent Auditors’ Review Report		1
Condensed Consolidated Interim Financial Statements
Condensed Consolidated Interim Statements of Financial Position		3
Condensed Consolidated Interim Statements of Comprehensive Income		5
Condensed Consolidated Interim Statements of Changes in Equity		6
Condensed Consolidated Interim Statements of Cash Flows		8
Notes to the Condensed Consolidated Interim Financial Statements		10

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of POSCO and its subsidiaries (the “Company”), which comprise the condensed consolidated interim statement of financial position as of March 31, 2019, the condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2019 and 2018, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standard(“K-IFRS”) No. 1034 “Interim Financial Reporting”. The Company’s management is also responsible for the internal controls determined necessary to prepare condensed consolidated interim financial statements free of material misstatements due to error or fraud.

Auditor’s review responsibility

Our responsibility is to issue a report on the condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial statements consists of making inquiries primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance withK-IFRS No. 1034 “Interim Financial Reporting”.

Other matters

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

The consolidated statement of financial position of the Company as of December 31, 2018, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 7, 2019, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Company as of December 31, 2018, presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

Seoul, Korea

May 15, 2019

This report is effective as of May 15, 2019, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

2

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of March 31, 2019 and December 31, 2018

(Unaudited)

(in millions of Won)	Notes		March 31, 2019		December 31, 2018
Assets
Cash and cash equivalents		21	W	2,637,550		2,643,865
Trade accounts and notes receivable, net		4,21,26,27,34		10,109,781		9,282,609
Other receivables, net		5,21,34		1,416,916		1,385,629
Other short-term financial assets		6,21		8,284,797		8,081,096
Inventories		7		11,259,369		11,499,928
Current income tax assets				37,827		51,557
Assets held for sale		8		62,158		21,854
Other current assets		14		869,389		684,464
Total current assets				34,677,787		33,651,002
Long-term trade accounts and notes receivable, net		4,21		577,641		427,125
Other receivables, net		5,21		874,296		863,240
Other long-term financial assets		6,21		1,666,475		1,647,898
Investments in associates and joint ventures		9		3,781,037		3,650,003
Investment property, net		11		928,145		928,615
Property, plant and equipment, net		12		30,486,060		30,018,273
Intangible assets, net		13		5,171,973		5,170,825
Defined benefit assets, net		19		223		1,489
Deferred tax assets				1,335,162		1,381,031
Othernon-current assets		14		241,051		508,764
Totalnon-current assets				45,062,063		44,597,263
Total assets			W	79,739,849		78,248,265

See accompanying notes to the condensed consolidated interim financial statements.

3

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued

As of March 31, 2019 and December 31, 2018

(Unaudited)

(in millions of Won)	Notes		March 31, 2019			December 31, 2018
Liabilities
Trade accounts and notes payable		21,34	W	3,760,796			4,006,135
Short-term borrowings and current installments of long-term borrowings		4,15,21		9,493,467			10,289,619
Other payables		16,21,34		2,290,216			1,720,097
Other short-term financial liabilities		17,21		96,605			77,800
Current income tax liabilities				1,169,620			948,166
Liabilities directly related to assets held for sale		8		12,131			—
Provisions		18,35		310,824			301,280
Other current liabilities		20,26,27		1,811,737			1,594,888
Total current liabilities				18,945,396			18,937,985
Long-term trade accounts and notes payable		21		3,290			29,825
Long-term borrowings, excluding current installments		15,21		10,438,232			9,919,651
Other payables		16,21		647,143			148,868
Other long-term financial liabilities		17,21		34,043			64,162
Defined benefit liabilities, net		19		194,187			140,933
Deferred tax liabilities				1,665,371			1,688,893
Long-term provisions		18,35		461,658			431,036
Othernon-current liabilities		20,26		106,127			127,361
Totalnon-current liabilities				13,550,051			12,550,729
Total liabilities				32,495,447			31,488,714
Equity
Share capital		22		482,403			482,403
Capital surplus		22		1,445,064			1,410,551
Hybrid bonds		23		199,384			199,384
Reserves		24		(1,240,554	)		(1,404,368	)
Treasury shares		25		(1,508,303	)		(1,532,728	)
Retained earnings				44,566,855			44,216,018
Equity attributable to owners of the controlling company				43,944,849			43,371,260
Non-controlling interests		23		3,299,553			3,388,291
Total equity				47,244,402			46,759,551
Total liabilities and equity			W	79,739,849			78,248,265

See accompanying notes to the condensed consolidated interim financial statements.

4

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income

For the three-month periods ended March 31, 2019 and 2018

(Unaudited)

(in millions of Won, except per share information)	Notes		March 31, 2019			March 31, 2018
Revenue		26,27,34,37	W	16,014,238			15,862,284
Cost of sales		7,27,31,34		(14,200,867	)		(13,476,127	)
Gross profit				1,813,371			2,386,157
Selling and administrative expenses		31,34
Impairment loss on trade accounts and notes receivable				(13,132	)		(13,554	)
Other administrative expenses		28		(506,083	)		(518,091	)
Selling expenses		28		(91,260	)		(366,808	)
Operating profit				1,202,896			1,487,704
Share of profit of equity-accounted investees, net		9		66,859			87,387
Finance income and costs		21,29
Finance income				494,014			456,488
Finance costs				(550,593	)		(519,290	)
Othernon-operating income and expenses		34
Reversal of (impairment loss) on other receivables				(3,390	)		4,655
Othernon-operating income		30		74,344			60,956
Othernon-operating expenses		30,31		(137,189	)		(94,887	)
Profit before income tax		37		1,146,941			1,483,013
Income tax expense		32,37		(368,496	)		(399,471	)
Profit				778,445			1,083,542
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		19		(9,706	)		(26,556	)
Net changes in fair value of equity investments at fair value through other comprehensive income		21		(5,540	)		(44,756	)
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees				48,839			(11,126	)
Foreign currency translation differences				121,161			21,819
Gains or losses on valuation of derivatives		21		32			(159	)
Other comprehensive income (loss), net of tax				154,786			(60,778	)
Total comprehensive income			W	933,231			1,022,764
Profit attributable to:
Owners of the controlling company			W	741,253			993,516
Non-controlling interests				37,192			90,026
Profit			W	778,445			1,083,542
Total comprehensive income attributable to :
Owners of the controlling company			W	912,402			932,193
Non-controlling interests				20,829			90,571
Total comprehensive income			W	933,231			1,022,764
Basic and diluted earnings per share (in Won)		33		9,233			12,323

See accompanying notes to the condensed consolidated interim financial statements.

5

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the three-month periods ended March 31, 2019 and 2018

(Unaudited)

(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share		Capital			Hybrid					Treasury			Retained						controlling
	capital		surplus			bonds		Reserves			shares			earnings			Subtotal			interests			Total
Balance as of January 1, 2018	W	482,403		1,412,565			996,919		(682,556	)		(1,533,054	)		43,056,600			43,732,877			3,731,131			47,464,008
Adjustment on initial application ofK-IFRS No. 1115, net of tax		—		—			—		—			—			(76,359	)		(76,359	)		(63,792	)		(140,151	)
Adjustment on initial application ofK-IFRS No. 1109, net of tax		—		—			—		(412,102	)		—			379,370			(32,732	)		(19,544	)		(52,276	)
Adjusted balance as of January 1, 2018		482,403		1,412,565			996,919		(1,094,658	)		(1,533,054	)		43,359,611			43,623,786			3,647,795			47,271,581
Comprehensive income:
Profit		—		—			—		—			—			993,516			993,516			90,026			1,083,542
Other comprehensive income (loss)
Remeasurements of defined benefit pension plans, net of tax		—		—			—		—			—			(14,599	)		(14,599	)		(11,957	)		(26,556	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		(15,555	)		—			—			(15,555	)		4,429			(11,126	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		(50,621	)		—			1,628			(48,993	)		4,237			(44,756	)
Foreign currency translation differences, net of tax		—		—			—		17,990			—			—			17,990			3,829			21,819
Gains or losses on valuation of derivatives, net of tax		—		—			—		(166	)		—			—			(166	)		7			(159	)
Total comprehensive income		—		—			—		(48,352	)		—			980,545			932,193			90,571			1,022,764
Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(279,999	)		(279,999	)		(42,655	)		(322,654	)
Changes in subsidiaries		—		—			—		—			—			—			—			(31	)		(31	)
Changes in ownership interest in subsidiaries		—		(814	)		—		—			—			—			(814	)		200			(614	)
Interest of hybrid bonds		—		—			—		—			—			(10,631	)		(10,631	)		(5,964	)		(16,595	)
Disposal of treasury shares		—		9			—		—			15			—			24			—			24
Others		—		(423	)		—		473			—			(4,579	)		(4,529	)		1,316			(3,213	)
Total transactions with owners of the controlling company		—		(1,228	)		—		473			15			(295,209	)		(295,949	)		(47,134	)		(343,083	)
Balance as of March 31, 2018	W	482,403		1,411,337			996,919		(1,142,537	)		(1,533,039	)		44,044,947			44,260,030			3,691,232			47,951,262

See accompanying notes to the condensed consolidated interim financial statements.

6

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2019 and 2018

(Unaudited)

(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share		Capital			Hybrid					Treasury			Retained						controlling
	capital		surplus			bonds		Reserves			shares			earnings			Subtotal			interests			Total
Balance as of January 1, 2019	W	482,403		1,410,551			199,384		(1,404,368	)		(1,532,728	)		44,216,018			43,371,260			3,388,291			46,759,551
Comprehensive income:
Profit		—		—			—		—			—			741,253			741,253			37,192			778,445
Other comprehensive income (loss)
Remeasurements of defined benefit pension plans, net of tax		—		—			—		—			—			(3,164	)		(3,164	)		(6,542	)		(9,706	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		45,224			—			—			45,224			3,615			48,839
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		23,183			—			(26,417	)		(3,234	)		(2,306	)		(5,540	)
Foreign currency translation differences, net of tax		—		—			—		132,293			—			—			132,293			(11,132	)		121,161
Gains or losses on valuation of derivatives, net of tax		—		—			—		30			—			—			30			2			32
Total comprehensive income		—		—			—		200,730			—			711,672			912,402			20,829			933,231
Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(400,006	)		(400,006	)		(56,485	)		(456,491	)
Changes in subsidiaries		—		—			—		—			—			—			—			(59	)		(59	)
Changes in ownership interest in subsidiaries		—		22,212			—		—			—			—			22,212			(49,856	)		(27,644	)
Interest of hybrid bonds		—		—			—		—			—			(2,268	)		(2,268	)		(1,799	)		(4,067	)
Disposal of treasury shares		—		12,576			—		—			24,425			—			37,001			—			37,001
Others		—		(275	)		—		(36,916	)		—			41,439			4,248			(1,368	)		2,880
Total transactions with owners of the controlling company		—		34,513			—		(36,916	)		24,425			(360,835	)		(338,813	)		(109,567	)		(448,380	)
Balance as of March 31, 2019	W	482,403		1,445,064			199,384		(1,240,554	)		(1,508,303	)		44,566,855			43,944,849			3,299,553			47,244,402

See accompanying notes to the condensed consolidated interim financial statements.

7

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the three-month periods ended March 31, 2019 and 2018

(Unaudited)

(in millions of Won)	Notes		March 31, 2019			March 31, 2018
Cash flows from operating activities
Profit			W	778,445			1,083,542
Adjustments for:
Depreciation				764,760			713,382
Amortization				99,262			108,855
Finance income				(341,882	)		(252,310	)
Finance costs				386,371			331,842
Income tax expense				368,496			399,471
Impairment loss on property, plant and equipment				68,345			18,222
Gain on disposal of property, plant and equipment				(12,282	)		(3,805	)
Loss on disposal of property, plant and equipment				12,297			12,210
Impairment loss on other intangible assets				1,004			1,726
Gain on disposal of investments in subsidiaries, associates and joint ventures				(14,436	)		—
Loss on disposal of investments in subsidiaries, associates and joint ventures				1,871			435
Share of loss of equity-accounted investees				(66,859	)		(87,387	)
Gain on disposals of assets held for sale				4,195			—
Expenses related to post-employment benefit				60,027			54,834
Impairment loss on trade and other receivables				16,522			8,899
Loss on valuation of inventories				68,743			60,848
Increase to provisions				57,307			41,605
Others, net				6,908			(21,788	)
				1,480,649			1,387,039
Changes in operating assets and liabilities		36		(714,618	)		(880,133	)
Interest received				59,458			50,660
Interest paid				(161,145	)		(115,532	)
Dividends received				29,566			56,828
Income taxes paid				(81,863	)		(81,795	)
Net cash provided by operating activities			W	1,390,492			1,500,609

See accompanying notes to the condensed consolidated interim financial statements.

8

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2019 and 2018

(Unaudited)

(in millions of Won)	Notes		March 31, 2019			March 31, 2018
Cash flows from investing activities
Acquisitions of short-term financial instruments			W	(7,142,031	)		(7,268,757	)
Proceeds from disposal of short-term financial instruments				7,126,453			6,455,032
Increase in loans				(145,366	)		(155,944	)
Collection of loans				174,199			169,818
Acquisitions of securities				(204,535	)		(86,250	)
Proceeds from disposal of securities				18,737			24,885
Acquisitions of investment in associates and joint ventures				(32,844	)		(7,830	)
Proceeds from disposal of investment in associates and joint ventures				2,998			3,670
Acquisitions of investment property				(4,395	)		(2,278	)
Proceeds from disposal of investment property				376			428
Acquisitions of property, plant and equipment				(458,378	)		(404,066	)
Proceeds from disposal of property, plant and equipment				15,856			12,750
Acquisitions of intangible assets				(113,388	)		(31,043	)
Proceeds from disposal of intangible assets				2,018			66,630
Proceeds from disposal of assets held for sale				311			9,036
Cash received from disposal of business, net of cash transferred				—			(13	)
Others, net				15,903			(978	)
Net cash used in investing activities				(744,086	)		(1,214,910	)
Cash flows from financing activities
Proceeds from borrowings				437,174			444,665
Repayment of borrowings				(690,360	)		(440,269	)
Proceeds from short-term borrowings, net				(389,652	)		(25,282	)
Capital contribution fromnon-controlling interests				23,579			808
Payment of cash dividends				(8,904	)		(5,499	)
Payment of interest of hybrid bonds				(4,087	)		(16,781	)
Others, net				(46,389	)		(33,224	)
Net cash used in financing activities				(678,639	)		(75,582	)
Effect of exchange rate fluctuation on cash held				33,448			15,742
Net increase in cash and cash equivalents				1,215			225,859
Cash and cash equivalents at beginning of the period				2,643,865			2,612,530
Cash and cash equivalents at end of the period		8	W	2,645,080			2,838,389

See accompanying notes to the condensed consolidated interim financial statements.

9

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

As of March 31, 2019

(Unaudited)

1. General Information

General information about POSCO, its 33 domestic subsidiaries including POSCO ENGINEERING & CONSTRUCTION CO., LTD., 135 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 128 associates and joint ventures are as follows:

(a) The controlling company

POSCO, the controlling company, was incorporated on April 1, 1968, under the Commercial Code of the Republic of Korea to manufacture and sell steel rolled products and plates in the domestic and foreign markets.

The shares of POSCO have been listed on the Korea Exchange since June 10, 1988. POSCO owns and operates two steel plants (Pohang and Gwangyang) and one office in Korea and it also operates internationally through six of its overseas liaison offices.

As of March 31, 2019, the shares of the POSCO are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchange.

(b) There are no consolidated subsidiaries newly included during the three-month period ended March 31, 2019.

(c) Subsidiaries excluded from consolidation during the three-month period ended March 31, 2019 were as follows:

Company	Date of exclusion	Reason
POSCO Processing&Service	January 2019	Merged into POSCO
Daewoo Precious Resources CO., Ltd.	January 2019	Liquidation
BLUE O&M Co.,Ltd.	February 2019	Merged into POSCO O&M Co.,Ltd.
		(formerly, POSMATE)
MegaAsset Co.,Ltd.	February 2019	Merged into POSCO O&M Co.,Ltd.
		(formerly, POSMATE)

10

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2. Statement of Compliance

Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards(“K-IFRS”), as prescribed in theAct on External Audit of Corporations.

These condensed consolidated interim financial statements have been prepared in accordance withK-IFRS No. 1034 “Interim Financial Reporting” as part of the period covered by the Company’sK-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the last annual consolidated financial statements as of and for the year ended December 31, 2018. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

The Company adoptedK-IFRS No. 1116 “Leases” for the first time. Changes to significant accounting policies are described in Note 3.

Use of estimates and judgments

(a) Judgments, assumptions and estimation uncertainties

The preparation of the condensed consolidated interim financial statements in conformity withK-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.

The significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements, except for new significant judgments and key sources of estimation uncertainty related to the application ofK-IFRS No. 1116 “Leases” which are described in Note 3.

(b) Measurement of fair value

The Company’s accounting policies and disclosures require the measurement of fair values, for both financial andnon-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the financial officer.

11

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements ofK-IFRS including the level in the fair value hierarchy in which such valuation techniques should be classified.

Significant valuation issues are reported to the Company’s Audit Committee.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

• Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 - inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly.

• Level 3 - inputs for the assets or liabilities that are not based on observable market data.

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Information about the assumptions made in measuring fair value is included in Note 21.

3. Summary of Significant Accounting Policies

Except as described inK-IFRS No. 1034 “Interim Financial Reporting” and below, the accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2018.

K-IFRS No. 1116 “Leases”

The Company has initially adoptedK-IFRS No. 1116 “Leases” from January 1, 2019. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2019.

K-IFRS No. 1116 “Leases” introduced a single accounting model for lessees. As a result, the Company, as a lessee, recognizedright-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessor accounting remains similar to previous accounting policies.

12

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

The Company appliedK-IFRS No. 1116 “Leases” using the modified retrospective approach by recognizing the cumulative effect of initial application as of January 1, 2019, the date of initial application. Accordingly, the comparative information presented for 2018 has not been restated.

(a) Definition of a lease

Previously, the Company determined at contract inception whether an arrangement was or contained a lease underK-IFRS No. 2014 “Determining Whether an Arrangement contains a Lease”. The Company now assesses whether a contract is or contains a lease based on the new definition of a lease. UnderK-IFRS No. 1116 “Leases”, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

On transition toK-IFRS No. 1116 “Leases”, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Company appliedK-IFRS No. 1116 only to contract that were previously identified as leases. Contracts that were not identified as leases underK-IFRS No. 1017 “Leases” andK-IFRS No. 2104 “Determining Whether an Arrangement contains a Lease” were not reassessed. Therefore, the definition of a lease underK-IFRS No. 1116 has been applied only to contracts entered into or changed on or after January 1, 2019.

At inception or reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease anon-lease component on the basis of their relative stand-alone prices.

(b) As a lessee

The Company leases many assets, including land, warehouses, handling equipment and IT equipment. As a lessee, the Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. UnderK-IFRS No. 1116 “Leases”, the Company recognizesright-of-use assets and lease liabilities for most leases. That is, most leases are presented in the statement of financial position.

However, the Company has elected not to recognizeright-of-use assets and lease liabilities for some leases oflow-value assets (e.g. desktops, IT supplies, etc.). The Company recognizes lease payments associated with these leases as an expense on a straight-line basis over the lease term.

13

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

The Company presentsright-of-use assets in the same line item as it presents underlying assets of the same nature that it owns, and lease liabilities are included in other payables on the consolidated statements of financial position. The carrying amounts ofright-of-use assets as of January 1, 2019, the date of initial application, and March 31, 2019 are as follows:

	Property, Plant and Equipment (*1)
(in millions of Won)	Land		Buildings and structures		Machinery and equipment		Vehicles		Furniture, fixtures and others		Total
The date of initial application (January 1, 2019)	W	323,533		187,921		223,985		19,238		38,794	793,471
March 31, 2019		354,070		184,870		218,446		24,035		28,586	810,007

(*1) Leases classified as a finance lease under withK-IFRS No. 1017 “Leases” at the end of 2018 are included, the carrying amounts ofright-of-use assets and lease liabilities to the leases are equal to the carrying amounts of the finance lease assets and financial lease liabilities measured in accordance withK-IFRS 1017 “Leases” as of January 1, 2019, the date of initial application.

1) Significant accounting policies

The Company recognizes aright-of-use assets and a lease liability at the lease commencement date. Theright-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Company applies judgment to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Company is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities andright-of-use assets recognized.

14

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) Transition

At transition, for leases classified as operating leases underK-IFRS No. 1017 “Leases”, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate as of January 1, 2019, the date of initial application.Right-of-use assets are measured at amounts equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments.

In addition, the Company used the following practical expedients when applyingK-IFRS No. 1116 “Leases” to leases previously classified as operating leases underK-IFRS No. 1017 “Leases”.

- Applied the exemption not to recognizeright-of-use assets and lease liabilities for leases with less than 12 months of lease term.

- Excluded initial direct costs from measuring theright-of-use asset at the date of initial application.

- Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

(c) As a lessor

The Company leases out its investment property. The Company classified these leases as operating leases, and the accounting policies applicable to the Company as a lessor are not different from those underK-IFRS No. 1017 “Leases”. However, when the Company is an intermediate lessor thesub-leases are classified with reference to theright-of-use asset arising from the head lease, not with reference to the underlying asset.

The Company providessub-leases for leases of vessels classified as operating leases underK-IFRS No. 1017 “Leases” as an intermediate lessor, and classified thesub-leases as finance leases as of January 1, 2019, the date of initial application ofK-IFRS No. 1116 “Leases”. Accordingly, the Company recognized finance lease receivables amounting toW225,198 million. In addition, the Company did not make any adjustments to leases for which the Company is a lessor, except forsub-leases described above as of January 1, 2019, the date of initial application.

15

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(d) Impact on financial statements

The Company recognized additionalright-of-use assets, lease receivables and lease liabilities as of January 1, 2019, the date of initial application. The effect on the financial statements as of January 1, 2019, the date of initial application is as follows:

(in millions of Won)	The date of initial application (January 1, 2019)
Consolidated statements of financial position
Right-of-use assets presented as property, plant and equipment(*1)	W	655,907
Lease receivables		225,198
Lease liabilities		609,094

(*1) Prepaid lease payments amounting toW272,011 million, classified as operating leases as of December 31, 2018, was reclassified from other assets to property, plant and equipment.

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rates as of January 1, 2019, the date of initial application, and the weighted-average rates applied are 1.8 ~ 12.6%. The carrying amount of lease liabilities as of January 1, 2019, the date of initial application, is as follow:

(in millions of Won)	The date of initial application (January 1, 2019)
Operating lease commitments as of December 31, 2018	W	886,021
Operating lease commitments not recognized as lease liabilities		(60,843	)
- Leases of low-value assets		(46,551	)
- Leases with less than 12 months of lease term at transition		(14,292	)
Operating lease commitments recognized as lease liabilities		825,178
Amount discounted using the incremental borrowing rate as of January 1, 2019, the date of initial application		609,094
Finance lease liabilities recognized as of December 31, 2018		94,754
Lease liabilities as of January 1, 2019, the date of initial application		703,848

As of March 31, 2019, the Company recognizedW676,035 million ofright-of-use assets andW607,719 million of lease liabilities for leases that were previously classified as operating leases.

In addition, the Company recognized depreciation and interest expenses instead of operating lease expenses, instead of operating lease expenses. The Company recognized depreciation expenses amounted toW32,804 million and interest expenses amounted toW8,236 million during the three-month period ended March 31, 2019.

16

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019			December 31, 2018
Current
Trade accounts and notes receivable	W	9,420,946			8,648,250
Finance lease receivables		43,717			57,487
Due from customers for contract work		1,046,671			963,060
Less: Allowance for doubtful accounts		(401,553	)		(386,188	)
	W	10,109,781			9,282,609
Non-current
Trade accounts and notes receivable	W	563,969			583,797
Finance lease receivables		214,676			45,873
Less: Allowance for doubtful accounts		(201,004	)		(202,545	)
	W	577,641			427,125

Trade accounts and notes receivable sold to financial institutions, for which the derecognition conditions were not met, amounted toW356,312 million andW468,706 million as of March 31, 2019 and December 31, 2018, respectively. The fair value of trade accounts and notes receivable approximates the carrying amounts and recognized as short-term borrowings from financial institutions.

5. Other Receivables

Other receivables as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019			December 31, 2018
Current
Loans	W	284,910			236,782
Other accounts receivable		936,548			954,030
Accrued income		206,686			220,066
Deposits		111,634			108,640
Others		28,768			16,201
Less: Allowance for doubtful accounts		(151,630	)		(150,090	)
	W	1,416,916			1,385,629
Non-current
Loans	W	686,540			731,344
Other accounts receivable		152,315			155,936
Accrued income		56,636			1,855
Deposits		161,107			152,072
Less: Allowance for doubtful accounts		(182,302	)		(177,967	)
	W	874,296			863,240

17

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

6. Other Financial Assets

Other financial assets as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Current
Derivatives assets	W	35,708		47,288
Debt securities		193,144		2,987
Deposit instruments(*1,2)		2,134,507		1,931,518
Short-term financial instruments(*2)		5,921,438		6,099,303
	W	8,284,797		8,081,096
Non-current
Derivatives assets	W	25,262		1,795
Equity securities(*3)		1,232,572		1,238,630
Debt securities		33,722		34,327
Other securities(*3)		340,417		338,106
Deposit instruments(*2)		34,502		35,040
	W	1,666,475		1,647,898

(*1) As of March 31, 2019 and December 31, 2018,W4,398 million andW5,715 million, respectively, are restricted for the use in a government project.

(*2) As of March 31, 2019 and December 31, 2018, financial instruments amounting toW79,897 million andW73,935 million, respectively, are restricted for use in financial arrangements, pledge and others.

(*3) As of March 31, 2019 and December 31, 2018,W115,586 million andW115,431 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.

7. Inventories

Inventories as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019			December 31, 2018
Finished goods	W	1,669,364			1,886,040
Merchandise		1,065,799			1,131,416
Semi-finished goods		1,952,082			1,945,567
Raw materials		2,985,382			2,821,972
Fuel and materials		948,784			888,941
Construction inventories		700,391			718,884
Materials-in-transit		2,069,856			2,245,740
Others		64,607			68,150
		11,456,265			11,706,710
Less: Allowance for inventories valuation		(196,896	)		(206,782	)
	W	11,259,369			11,499,928

The amounts of loss on valuation of inventories recognized within cost of sales during the three-month period ended March 31, 2019 and the year ended December 31, 2018 wereW68,743 million andW141,799 million, respectively.

18

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

8. Assets Held for Sale

Details of assets held for sale and related liabilities as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
	Subsidiaries(*1,2)		Subsidiaries(*2)
Assets
Cash and cash equivalents(*3)	W	7,530		—
Inventories		12,766		—
Property, plant and equipment		36,681		21,076
Others		5,181		778
	W	62,158		21,854
Liabilities
Borrowings	W	10,064		—
Others		2,067		—
	W	12,131		—

(*1) During the three-month period ended March 31, 2019, the Company and POSCO-China Holdings Corp. determined to dispose the interest in POSCO (Guangdong) Coated Steel Co., Ltd., a subsidiary of the Company, and entered into a sale agreement. Accordingly, assets and liabilities of POSCO (Guangdong) Coated Steel Co., Ltd. are classified as held for sale assets and liabilities. The Company recognizedW4,195 million of impairment loss from the difference between book value and net fair value of the assets and liabilities held for sale during the three-month period ended March 31, 2019.

(*2) During the year ended December 31, 2018, DAESAN (CAMBODIA) Co., Ltd., a subsidiary of the Company, determined to dispose of the land and classified the related property, plant and equipment amounting toW21,076 million as assets held for sale.

(*3) Cash and cash equivalents of the statements of cash flows include cash and cash equivalents that are classified as assets held for sale.

19

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

9. Investments in Associates and Joint Ventures

(a) Details of investments in associates as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019								December 31, 2018
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natual Resources Private Equity Fund		178,713,975,892		31.27	W	178,787	W	174,625		174,123
POSPower Co., Ltd(*1)		4,507,138		34.00		179,410		173,165		161,477
SNNC		18,130,000		49.00		90,650		115,516		116,922
QSONE Co., Ltd.		200,000		50.00		84,395		84,891		85,550
Chun-cheon Energy Co., Ltd(*1)		17,308,143		49.10		86,541		68,735		62,478
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		2,008,000		29.53		10,040		17,566		17,382
Daesung Steel(*3)		108,038		17.54		14,000		15,644		15,644
Incheon-Gimpo Expressway Co., Ltd.(*1,3)		9,032,539		18.26		45,163		11,902		13,329
Keystone NO. 1. Private Equity Fund		13,800,000		40.45		13,800		11,961		11,183
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund(*3)		6,485		12.50		6,485		5,756		5,739
KONES, Corp.		3,250,000		41.67		6,893		2,649		2,849
Others (47 companies)(*1)								119,918		123,734
								802,328		790,410
[Foreign]
AES-VCM Mong Duong Power Company Limited(*2)		—		30.00		164,303		222,916		209,936
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		135,899		194,609		179,459
7623704 Canada Inc.(*3)		114,452,000		10.40		124,341		130,133		126,885
Eureka Moly LLC		—		20.00		240,123		83,899		82,447
AMCI (WA) PTY LTD		49		49.00		209,664		71,981		71,086
Nickel Mining Company SAS		3,234,698		49.00		157,585		41,034		41,712
KOREA LNG LTD.		2,400		20.00		135,205		45,731		43,554
NCR LLC		—		29.41		40,868		38,758		37,602
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		134,400,000		40.00		22,423		22,654		—
PT. Batutua Tembaga Raya		128,285		22.00		21,824		11,130		20,479
PT. Wampu Electric Power(*1)		8,708,400		20.00		10,054		14,093		14,120
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,200,000		34.00		9,517		15,519		14,796
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		6,801		6,478
Others (29 companies)(*1)								109,547		99,728
								1,008,805		948,282
							W	1,811,133		1,738,692

(*1) As of March 31, 2019 and December 31, 2018, investments in associates amounting toW304,777 million andW285,066 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2) As of March 31, 2019 and December 31, 2018, shares of PSC Energy Global Co., Ltd., a subsidiary of the Company, are provided as collateral in relation to the associates’ borrowings.

(*3) As of March 31, 2019, it was classified as an associate even though the Company’s ownership percentage is less than 20% of ownership percentage since the Company has significant influence over the investee when considering its structure of the Board of Directors and others.

20

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(b) Details of investments in joint ventures as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019								December 31, 2018
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
POSCO MITSUBISHI CARBON TECHNOLOGY		11,568,000		60.00	W	115,680	W	173,837		180,192	��
Others (8 companies)								10,072		9,124
								183,909		189,316
[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672		1,084,148		1,041,600
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		370,504		363,506
KOBRASCO		2,010,719,185		50.00		32,950		155,946		133,449
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961		91,531		88,391
DMSA/AMSA(*1)		—		4.00		332,952		30,280		26,709
CSP - Compania Siderurgica do Pecem		1,108,696,532		20.00		558,821		8,349		24,832
Others (13 companies)								45,237		43,508
								1,785,995		1,721,995
							W	1,969,904		1,911,311

(*1) As of March 31, 2019 and December 31, 2018, the investments in joint ventures were provided as collateral in relation to the joint ventures’ borrowings.

21

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(c) The movements of investments in associates and joint ventures for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

1) For the three-month period ended March 31, 2019

(in millions of Won)
Company	December 31, 2018 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			March 31, 2019 Book value
[Domestic]
EQP POSCO Global NO1 Natual Resources Private Equity Fund	W	174,123		—		—			502			—			174,625
POSPower Co., Ltd		161,477		—		—			(1,092	)		12,780			173,165
SNNC		116,922		—		(1,450	)		44			—			115,516
QSONE Co., Ltd.		85,550		—		(950	)		291			—			84,891
Chun-cheon Energy Co., Ltd		62,478		6,050		—			207			—			68,735
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		17,382		—		—			184			—			17,566
Daesung Steel		15,644		—		—			—			—			15,644
Incheon-Gimpo Expressway Co., Ltd.		13,329		—		—			(1,427	)		—			11,902
Keystone NO. 1. Private Equity Fund		11,183		—		—			778			—			11,961
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		5,739		—		—			17			—			5,756
KONES, Corp.		2,849		—		—			(200	)		—			2,649
POSCO MITSUBISHI CARBON TECHNOLOGY		180,192		—		(16,369	)		10,014			—			173,837
Others (55 companies)		132,858		3,275		(530	)		1,120			(6,733	)		129,990
		979,726		9,325		(19,299	)		10,438			6,047			986,237
[Foreign]
AES-VCM Mong Duong Power Company Limited		209,936		—		—			10,573			2,407			222,916
South-East Asia Gas Pipeline Company Ltd.		179,459		—		—			11,847			3,303			194,609
7623704 Canada Inc.		126,885		—		(3,530	)		4,486			2,292			130,133
Eureka Moly LLC		82,447		—		—			(40	)		1,492			83,899
AMCI (WA) PTY LTD		71,086		—		—			(667	)		1,562			71,981
Nickel Mining Company SAS		41,712		—		—			(507	)		(171	)		41,034
KOREA LNG LTD.		43,554		—		(4,088	)		4,098			2,167			45,731
NCR LLC		37,602		729		—			(95	)		522			38,758
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		—		22,423		—			(44	)		275			22,654
PT. Batutua Tembaga Raya		20,479		—		—			(9,460	)		111			11,130
PT. Wampu Electric Power		14,120		—		—			(262	)		235			14,093
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		14,796		—		—			75			648			15,519
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,478		—		—			(74	)		397			6,801
Roy Hill Holdings Pty Ltd		1,041,600		—		—			15,274			27,274			1,084,148
POSCO-NPS Niobium LLC		363,506		—		(6,712	)		7,292			6,418			370,504
KOBRASCO		133,449		—		—			21,342			1,155			155,946
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		88,391		—		—			100			3,040			91,531
DMSA/AMSA		26,709		10,356		—			(7,753	)		968			30,280
CSP—Compania Siderurgica do Pecem		24,832		—		—			(15,630	)		(853	)		8,349
Others (42 companies)		143,236		366		(9,796	)		15,866			5,112			154,784
		2,670,277		33,874		(24,126	)		56,421			58,354			2,794,800
	W	3,650,003		43,199		(43,425	)		66,859			64,401			3,781,037

(*1) Other increase or decrease represents the changes in investments in associates and joint ventures due to disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others.

22

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) For the year ended December 31, 2018

(in millions of Won)
Company	December 31, 2017 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			December 31, 2018 Book value
[Domestic]
EQP POSCO Global NO1 Natual Resources Private Equity Fund	W	175,553		—		—			(1,430	)		—			174,123
POSPower Co., Ltd		—		176,731		—			(3,198	)		(12,056	)		161,477
SNNC		110,424		—		—			6,624			(126	)		116,922
QSONE Co.,Ltd.		85,049		—		(550	)		1,051			—			85,550
Chun-cheon Energy Co., Ltd		74,378		—		—			(11,900	)		—			62,478
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		17,252		—		—			130			—			17,382
BLUE OCEAN Private Equity Fund		19,620		—		—			(17,930	)		(1,690	)		—
Daesung Steel		15,500		—		—			144			—			15,644
Incheon-Gimpo Expressway Co., Ltd.		31,660		—		—			(18,331	)		—			13,329
Keystone NO. 1. Private Equity Fund		12,379		—		—			(1,295	)		99			11,183
UITrans LRT Co., Ltd.		15,841		—		—			(15,841	)		—			—
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		6,828		—		—			(1,089	)		—			5,739
KONES, Corp.		2,827		—		—			29			(7	)		2,849
POSCO MITSUBISHI CARBON TECHNOLOGY		110,760		—		—			69,594			(162	)		180,192
Others (52 companies)		73,419		44,629		(784	)		18,942			(3,348	)		132,858
		751,490		221,360		(1,334	)		25,500			(17,290	)		979,726
[Foreign]
AES-VCM Mong Duong Power Company Limited		142,348		—		(26,108	)		30,096			63,600			209,936
South-East Asia Gas Pipeline Company Ltd.		197,069		—		(29,301	)		17,709			(6,018	)		179,459
7623704 Canada Inc.		121,702		—		(4,509	)		4,373			5,319			126,885
Eureka Moly LLC		79,398		—		—			(406	)		3,455			82,447
AMCI (WA) PTY LTD		63,378		—		—			(3,412	)		11,120			71,086
Nickel Mining Company SAS		45,905		—		—			(4,268	)		75			41,712
KOREA LNG LTD.		33,422		—		(10,544	)		10,542			10,134			43,554
NCR LLC		33,738		2,505		—			(5,909	)		7,268			37,602
PT. Batutua Tembaga Raya		21,823		—		—			(1,817	)		473			20,479
PT. Wampu Electric Power		13,391		—		—			177			552			14,120
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		15,617		—		—			(735	)		(86	)		14,796
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,517		—		—			23			(62	)		6,478
Roy Hill Holdings Pty Ltd		1,125,133		—		—			59,095			(142,628	)		1,041,600
POSCO-NPS Niobium LLC		348,836		—		(22,254	)		21,536			15,388			363,506
KOBRASCO		108,485		—		(37,710	)		75,170			(12,496	)		133,449
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		88,305		—		—			540			(454	)		88,391
DMSA/AMSA		56,735		17,973		—			(48,802	)		803			26,709
CSP - Compania Siderurgica do Pecem		146,427		—		—			(109,714	)		(11,881	)		24,832
Others (42 companies)		158,213		2,771		(22,588	)		42,937			(38,097	)		143,236
		2,806,442		23,249		(153,014	)		87,135			(93,535	)		2,670,277
	W	3,557,932		244,609		(154,348	)		112,635			(110,825	)		3,650,003

(*1) Other increase or decrease represents the changes in investments in associates and joint ventures due to disposals, change in capital adjustments effect from translations of financial statements of foreign investees and others.

23

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(d) Summarized financial information of associates and joint ventures as of and for the three-month period March 31, 2019 and the year ended December 31, 2018 are as follows:

1) March 31, 2019

(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natual Resources Private Equity Fund	W	554,332		749		553,583			—		1,606
POSPower Co., Ltd		542,455		14,598		527,857			—		(1,504	)
SNNC		689,677		436,396		253,281			149,874		(4,187	)
QSONE Co.,Ltd.		250,043		80,261		169,782			4,153		583
Chun-cheon Energy Co., Ltd		658,529		516,037		142,492			103,175		346
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		61,139		31,964		29,175			3,900		624
Daesung Steel		172,259		114,863		57,803			25,061		(407	)
Incheon-Gimpo Expressway Co., Ltd.		1,041,689		951,339		90,350			11,824		(9,338	)
Keystone NO. 1. Private Equity Fund		176,844		142,143		34,701			7,638		1,923
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		46,971		923		46,048			267		134
KONES, Corp.		2,043		1,320		723			835		(480	)
POSCO MITSUBISHI CARBON TECHNOLOGY		536,090		247,153		288,937			64,237		16,644
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,783,366		1,006,184		777,182			128,619		47,312
7623704 Canada Inc.		1,265,498		2,064		1,263,434			—		43,136
Nickel Mining Company SAS		467,341		335,899		131,442			37,407		(4,678	)
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		57,130		545		56,585			24		(111	)
KOREA LNG LTD.		228,772		116		228,656			21,074		20,489
PT. Batutua Tembaga Raya		387,750		372,805		14,945			22,568		(43,281	)
PT. Wampu Electric Power		220,118		152,652		67,466			5,088		(1,312	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		74,061		22,776		51,285			26,582		221
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		62,830		35,079		27,751			14,846		(280	)
Roy Hill Holdings Pty Ltd		9,870,206		5,926,031		3,944,175			703,301		197,781
POSCO-NPS Niobium LLC		740,805		—		740,805			—		14,118
KOBRASCO		335,434		23,541		311,893			59,645		42,683
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		637,372		298,864		338,508			320,736		401
DMSA/AMSA		5,566,007		4,119,906		1,446,101			146,995		(194,431	)
CSP - Compania Siderurgica do Pecem		4,044,914		4,120,904		(75,990	)		408,398		(79,229	)

24

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) December 31, 2018

(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natual Resources Private Equity Fund	W	552,760		783		551,977			—		10,249
POSPower Co., Ltd		425,632		35,761		389,871			—		(4,536	)
SNNC		645,013		384,586		260,427			656,320		14,229
QSONE Co.,Ltd.		249,384		78,285		171,099			16,597		2,101
Chun-cheon Energy Co., Ltd		667,454		525,308		142,146			320,950		(18,796	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		63,554		35,003		28,551			16,237		439
BLUE OCEAN Private Equity Fund		305,876		174,640		131,236			459,491		(5,294	)
Daesung Steel		169,305		111,502		57,803			75,474		824
Incheon-Gimpo Expressway Co., Ltd.		1,049,629		931,937		117,692			45,566		(92,202	)
Keystone NO. 1. Private Equity Fund		177,024		144,186		32,838			15,507		(3,962	)
UITrans LRT Co., Ltd.		430,227		435,699		(5,472	)		12,929		(85,344	)
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		59,464		1,061		58,403			2,401		(12,313	)
KONES, Corp.		2,618		1,414		1,204			5,167		70
POSCO MITSUBISHI CARBON TECHNOLOGY		537,138		237,563		299,575			300,986		116,049
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,726,410		1,009,731		716,679			343,471		70,717
7623704 Canada Inc.		1,232,208		1		1,232,207			—		44,320
Nickel Mining Company SAS		465,463		329,084		136,379			207,956		(4,569	)
KOREA LNG LTD.		217,883		110		217,773			54,357		52,720
PT. Batutua Tembaga Raya		332,305		274,580		57,725			128,609		(8,451	)
PT. Wampu Electric Power		223,009		155,407		67,602			13,461		887
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		73,515		24,264		49,251			121,104		(2,231	)
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		61,782		34,740		27,042			85,619		78
Roy Hill Holdings Pty Ltd		9,666,619		6,043,492		3,623,127			3,259,256		497,469
POSCO-NPS Niobium LLC		726,810		—		726,810			—		41,812
KOBRASCO		317,842		50,945		266,897			229,340		150,550
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		710,518		384,572		325,946			1,341,849		2,159
DMSA/AMSA		5,562,877		4,171,896		1,390,981			731,127		(529,844	)
CSP - Compania Siderurgica do Pecem		4,194,242		4,192,867		1,375			1,860,198		(542,865	)

25

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

10. Joint Operations

Details of significant joint operations that the Company is participating in as a party to a joint arrangement as of March 31, 2019 are as follows:

Joint operations	Operation	Ownership (%)		Location
MyanmarA-1/A-3 mine	Mine development and gas production		51.00	Myanmar
Offshore midstream	Gas transportation facility		51.00	Myanmar
Greenhills mine	Mine development		20.00	Canada
Arctos Anthracite coal project	Mine development		50.00	Canada
Mt. Thorley J/V	Mine development		20.00	Australia
POSMAC J/V	Mine development		20.00	Australia
RUM J/V	Mine development		10.00	Australia
Hanam-Gamil package public housing project	Construction		7.70	Korea
Hanam-Gamil district B6, C2, C3 Block public housing lot development project	Construction		27.00	Korea
Sejong2-1 P3 Block public housing project	Construction		37.00	Korea
Yongin-Giheung Station area city development project	Construction		61.00	Korea
Korean wave world complex land multi-purpose building development project	Construction		33.30	Korea
Sejong4-1 P3 Block public housing project	Construction		60.00	Korea

11. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

(a) For the three-month period ended March 31, 2019

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Others(*1)			Ending
Land	W	278,585		—		(84	)		—			735			279,236
Buildings		571,335		—		(217	)		(4,871	)		(592	)		565,655
Structures		1,408		—		—			(159	)		(240	)		1,009
Construction-in-progress		77,287		3,852		—			—			1,106			82,245
	W	928,615		3,852		(301	)		(5,030	)		1,009			928,145

(*1) Includes reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences, and others.

(b) For the year ended December 31, 2018

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation(*1)			Others(*2)			Ending
Land	W	360,402		1,327		(26,826	)		(16,743	)		(39,575	)		278,585
Buildings		634,040		727		(32,807	)		(28,358	)		(2,267	)		571,335
Structures		6,281		—		—			(603	)		(4,270	)		1,408
Construction-in-progress		64,191		42,052		—			(24,948	)		(4,008	)		77,287
	W	1,064,914		44,106		(59,633	)		(70,652	)		(50,120	)		928,615

(*1) Includes impairment loss on investment property recognized by each of the consolidated subsidiaries, including the office for rent of POSCO(Dalian) IT Center Development Co., Ltd. amounting toW51,461 million.

(*2) Includes reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences, and others.

26

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

12. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

(a) For the three-month period ended March 31, 2019

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1)			Others(*2)			Ending
Land	W	2,548,002		366		(4,334	)		—			—			12,311			2,556,345
Buildings		4,402,452		3,257		(3,631	)		(79,071	)		2,257			66,091			4,391,355
Structures		2,917,924		3,536		(898	)		(56,553	)		(4,765	)		27,541			2,886,785
Machinery and equipment		18,518,129		27,113		(5,760	)		(559,312	)		(66,052	)		288,287			18,202,405
Vehicles		31,341		1,804		(123	)		(3,788	)		34			2,293			31,561
Tools		66,164		3,629		(206	)		(7,145	)		180			4,402			67,024
Furniture and fixtures		136,287		6,896		(54	)		(9,448	)		1			3,277			136,959
Lease assets(*3)		137,564		10,693		(117	)		(43,169	)		—			705,036			810,007
Bearer plants		80,771		—		—			(1,244	)		—			12,890			92,417
Construction-in-progress		1,179,639		405,484		(748	)		—			—			(273,173	)		1,311,202
	W	30,018,273		462,778		(15,871	)		(759,730	)		(68,345	)		848,955			30,486,060

(*1) The recoverable amount of the CEM plant and others was less than important in the carrying amount, so the consolidation entity recognized the impairment loss during the current quarter.

(*2) Represents assets transferred fromconstruction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others.

(*3) On the date of initial application ofK-IFRS No.1116 (January 1, 2019), recognition ofW655,907 million ofright-of-use assets is represented in others.

(b) For the year ended December 31, 2018

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1,2)			Others(*3)			Ending
Land	W	2,527,650		28,998		(26,157	)		—			6,399			11,112			2,548,002
Buildings		4,877,018		46,129		(21,501	)		(331,688	)		(73,523	)		(93,983	)		4,402,452
Structures		2,765,852		18,749		(2,834	)		(220,218	)		(6,652	)		363,027			2,917,924
Machinery and equipment		19,367,957		145,220		(62,135	)		(2,224,000	)		(143,293	)		1,434,380			18,518,129
Vehicles		32,861		8,538		(1,149	)		(14,835	)		(56	)		5,982			31,341
Tools		63,640		21,337		(1,867	)		(26,421	)		(206	)		9,681			66,164
Furniture and fixtures		145,439		32,258		(577	)		(51,835	)		(1,494	)		12,496			136,287
Lease assets		145,257		28,466		(420	)		(19,224	)		—			(16,515	)		137,564
Bearer plants		65,515		—		—			(3,636	)		—			18,892			80,771
Construction-in-progress		1,892,346		1,884,125		(23,814	)		—			(778,373	)		(1,794,645	)		1,179,639
	W	31,883,535		2,213,820		(140,454	)		(2,891,857	)		(997,198	)		(49,573	)		30,018,273

(*1) During 2018, the Controlling Company evaluated future economic performance of its Synthetic Natural Gas (SNG) facility that was still in trial run stage. Considering the continuous decline in LNG price, increase in coal prices and the need for additional capital investment in the SNG facility, the Controlling Company concluded that the profitability for the SNG facility is unlikely to be sustainable and decided to terminate the operation of SNG facility as of December 31, 2018. The property, plant and equipment in the SNG facility are primarily comprised of machinery and equipment, among which assets with a carrying value ofW167,054 million are expected to be reused in other facilities of the Controlling Company therefore no impairment test was conducted. For the remaining assets impairment test was performed by estimating the recoverable amount of each individual assets. For the assets which are determined to be technically obsolete and therefore sale is unlikely, recoverable amount represents expected scrap value less cost of disposal.

27

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

For the assets for which sale is probable, the recoverable amount is determined based on fair value less cost of disposal. Fair value was measured using cost approach, which is based on estimated the current cost to purchase or replace the asset less applicable depreciation and obsolescence.

Specifically, the Controlling Company used indirect cost approach to estimate the replacement cost for a new asset by applying asset specific inflation factors to the asset’s historical cost. Then the Controlling Company estimates and deducts depreciation for physical deterioration. Depreciation factors are applied primarily based on estimated useful life of the asset and declining balance depreciation method. The fair value measurement of assets in SNG facility is considered to be level 3 because significant inputs used in the estimate, such as asset specific inflation factors and estimated useful lives, are unobservable.

As a result of the impairment test, the Company recognized an impairment loss ofW809,737 million in connection with the property, plant and equipment in the SNG facility.

The Controlling Company has recognized an impairment loss amounting toW61,787 million since recoverable amount on Strip Casting facilities and others is less than its carrying amount for the period ended December 31, 2018.

(*2) As of December 31, 2018, POSCO ENERGY CO., LTD., as a subsidiary, performed the impairment test due to the consecutive operating loss of the fuel cell business, a recognized impairment losses amounting toW54,250 million.

(*3) Represents assets transferred fromconstruction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others.

28

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

13. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill and other intangible assets for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

(a) For the three-month period ended March 31, 2019

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss			Others(*2)			Ending
Goodwill	W	1,125,149		—		—			—			—			1,580			1,126,729
Intellectual property rights		2,399,525		44,212		(54	)		(58,012	)		—			12,072			2,397,743
Premium in rental(*1)		134,793		10,455		(1,996	)		(40	)		275			1,860			145,347
Development expense		99,163		574		—			(11,032	)		—			6,430			95,135
Port facilities usage rights		305,081		—		—			(5,774	)		—			1			299,308
Exploratation and evaluation assets		192,130		843		—			—			(3	)		4,844			197,814
Customer relationships		421,773		—		—			(13,432	)		—			792			409,133
Other intangible assets		493,211		26,970		(54	)		(10,972	)		(510	)		(7,881	)		500,764
	W	5,170,825		83,054		(2,104	)		(99,262	)		(238	)		19,698			5,171,973

(*1) Premium in rental includes memberships with indefinite useful lives.

(*2) Represents assets transferred fromconstruction-in-progress to intangible assets and assets transferred from property, plant and equipment, adjustments of foreign currency translation difference and others.

(b) For the year ended December 31, 2018

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss			Others(*3)			Ending
Goodwill	W	1,349,838		—		—			—			(223,709	)		(980	)		1,125,149
Intellectual property rights		2,449,193		334,667		(18,619	)		(198,282	)		(96,475	)		(70,959	)		2,399,525
Premium in rental(*1)		118,310		36,196		(15,675	)		(330	)		(4,218	)		510			134,793
Development expense		80,218		4,248		(32	)		(37,305	)		(411	)		52,445			99,163
Port facilities usage rights		309,373		—		—			(22,975	)		—			18,683			305,081
Exploratation and evaluation assets		205,944		2,654		—			—			(3,339	)		(13,129	)		192,130
Customer relationships		466,945		—		—			(48,499	)		—			3,327			421,773
Power generation permit(*2)		539,405		—		—			—			—			(539,405	)		—
Other intangible assets		433,043		164,594		(1,644	)		(49,190	)		(8,844	)		(44,748	)		493,211
	W	5,952,269		542,359		(35,970	)		(356,581	)		(336,996	)		(594,256	)		5,170,825

(*1) Premium in rental includes memberships with indefinite useful lives.

(*2) During the year ended December 31, 2018, the Company disposed of a portion of shares of its subsidiary, POSPower Co., Ltd, which resulted in the Company’s loss of control, and derecognition of corresponding intangible assets.

(*3) Represents assets transferred fromconstruction-in-progress to intangible assets and assets transferred from property, plant and equipment, adjustments of foreign currency translation difference and others.

29

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

14. Other Assets

Other assets as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Current
Advance payments	W	607,780		539,894
Prepaid expenses		237,440		123,770
Firm commitment asset		18,368		11,246
Others		5,801		9,554
	W	869,389		684,464
Non-current
Long-term advance payments	W	22,145		24,280
Long-term prepaid expenses		48,753		334,918
Others(*1)		170,153		149,566
	W	241,051		508,764

(*1) As of March 31, 2019 and December 31, 2018, the Company recognized tax assets amounting toW116,693 million based on the Company’s best estimate of the tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits that were finalized and claim for rectification are finalized.

30

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

15. Borrowings

(a) Short-term borrowings and current portion of long-term borrowings as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	Lenders	Interest rate (%)		March 31, 2019			December 31, 2018
Short-term borrowings
Bank overdrafts	JP Morgan and others		0.9~9.1	W	293,195			294,364
Short-term borrowings	HSBC and others		0.3~10.4		6,743,194			7,193,416
					7,036,389			7,487,780
Current portion of long-term liabilities
Current portion of long-term borrowings	Export-Import Bank of Korea and others		0.5~8.5		1,046,175			1,234,915
Current portion of debentures	Korea Development Bank and others		1.8~6.3		1,411,593			1,568,108
Less: Current portion of discount on debentures issued					(690	)		(1,184	)
					2,457,078			2,801,839
				W	9,493,467			10,289,619

(b) Long-term borrowings, excluding current portion as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	Lenders	Interest rate (%)		March 31, 2019			December 31, 2018
Long-term borrowings	Export-Import Bank of Korea and others		0.2~8.8	W	4,621,827			4,499,199
Less: Present value discount					(28,980	)		(30,526	)
Debentures	KB Securities and others		1.9~5.3		5,863,800			5,469,580
Less: Discount on debentures issued					(18,415	)		(18,602	)
				W	10,438,232			9,919,651

(c) Assets pledged as collateral in regards to the borrowings as of March 31, 2019 are as follows:

(in millions of Won)	Lenders	Book value		Pledged amount
Cash and cash equivalents	Sinhan Bank and others	W	8,379		8,379
Property, plant and equipment and Investment property	Korea Development Bank and others		5,562,957		5,383,896
Trade accounts and notes receivable	Korea Development Bank		146,524		146,524
Inventories	Export-Import Bank of Korea and others		235,249		165,301
Financial instruments	Kookmin Bank and others		51,032		51,032
		W	6,004,141		5,755,132

31

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

16. Other Payables

Other payables as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Current
Accounts payable	W	812,364		783,562
Accrued expenses		715,209		720,773
Dividend payable		456,240		8,673
Lease liabilities(*1)		114,276		10,152
Withholdings		192,127		196,937
	W	2,290,216		1,720,097
Non-current
Accounts payable	W	1,543		1,624
Accrued expenses		3,547		19,021
Lease liabilities(*1)		592,562		84,602
Long-term withholdings		49,491		43,621
	W	647,143		148,868

(*1) As of the end of the March 31, 2019, the company recognized lease liabilities ofW607,719 million on initial application ofK-IFRS No. 1116 “Leases”.

17. Other Financial Liabilities

Other financial liabilities as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Current
Derivative liabilities	W	47,399		27,328
Financial guarantee liabilities		49,206		50,472
	W	96,605		77,800
Non-current
Derivative liabilities	W	18,214		46,429
Financial guarantee liabilities		15,829		17,733
	W	34,043		64,162

32

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

18. Provisions

(a) Provisions as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019				December 31, 2018
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	35,525		43,095		46,514		26,964
Provision for construction warranties		11,423		135,420		11,842		130,391
Provision for legal contingencies and claims(*1)		14,232		95,643		16,981		94,169
Provision for the restoration(*2)		8,930		86,480		9,379		79,789
Others(*3,4)		240,714		101,020		216,564		99,723
	W	310,824		461,658		301,280		431,036

(*1) The Company recognized probable outflow of resources amounting toW48,724 million andW50,888 million as provisions in relation to lawsuits against the Company as of March 31, 2019 and December 31, 2018, respectively.

(*2) Due to contamination of lands near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery,W27,901 million as provisions for restoration as of March 31, 2019. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available for now to recover the land. In addition, the Company has applied a discount rate of 1.99~2.11% to measure present value of these costs.

(*3) As of March 31, 2019 and December 31, 2018, POSCO ENERGY CO., LTD., a subsidiary of the Company, recognizedW206,891 million andW200,407 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow of resources.

(*4) As of March 31, 2019 and December 31, 2018, the amount includes a provision ofW17,595 million, for expected outflow of resources in connection with the performance guarantee for the Hwaseong-Dongtan complexes development project of POSCO ENGINEERING & CONSTRUCTION CO., LTD.

(b) Changes in provisions for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

1) For the three-month period ended March 31, 2019

(in millions of Won)	Beginning		Increase		Utilization			Reversal			Others(*1)			Ending
Provision for bonus payments	W	73,478		13,790		(23,907	)		(1,466	)		16,725			78,620
Provision for construction warranties		142,233		12,243		(6,946	)		(729	)		42			146,843
Provision for legal contingencies and claims		111,150		3,491		(5,340	)		(442	)		1,016			109,875
Provision for the restoration		89,168		11,823		(6,185	)		(292	)		896			95,410
Others		316,287		44,185		(5,401	)		(12,972	)		(365	)		341,734
	W	732,316		85,532		(47,779	)		(15,901	)		18,314			772,482

(*1) Includes adjustments of foreign currency translation differences and others.

33

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) For the year ended December 31, 2018

(in millions of Won)	Beginning		Increase		Utilization			Reversal			Others(*1)			Ending
Provision for bonus payments	W	49,171		88,879		(60,723	)		(3,856	)		7			73,478
Provision for construction warranties		118,036		56,560		(24,608	)		(7,660	)		(95	)		142,233
Provision for legal contingencies and claims		36,764		84,242		(6,066	)		(3,399	)		(391	)		111,150
Provision for the restoration		134,190		14,912		(9,212	)		(47,682	)		(3,040	)		89,168
Others		249,957		328,879		(118,388	)		(216,668	)		72,507			316,287
	W	588,118		573,472		(218,997	)		(279,265	)		68,988			732,316

(*1) Includes adjustments of foreign currency translation differences and others.

19. Employee Benefits

(a) Defined contribution plans

The expenses related to post-employment benefit plans under defined contribution plans for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Expense related to post-employment benefit plans under defined contribution plans	W	12,528		10,509

(b) Defined benefit plan

1) The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Present value of funded obligations	W	2,140,054		2,117,829
Fair value of plan assets(*1)		(1,961,792)		(1,997,717	)
Present value ofnon-funded obligations		15,702		19,332
Net defined benefit liabilities	W	193,964		139,444

(*1) As of March 31, 2019 and December 31, 2018, the Company recognized net defined benefit assets amounting toW223 million andW1,489 million, respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations.

34

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) Changes in present value of defined benefit obligations for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

(in millions of Won)	March 31, 2019			December 31, 2018
Defined benefit obligation at the beginning of period	W	2,137,161			1,843,135
Current service costs		58,930			212,323
Interest costs		13,047			54,950
Remeasurements		12,965			212,678
Benefits paid		(68,754	)		(189,165	)
Others		2,407			3,240
Defined benefit obligation at the end of period	W	2,155,756			2,137,161

3) Changes in fair value of plan assets for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

(in millions of Won)	March 31, 2019			December 31, 2018
Fair value of plan assets at the beginning of period	W	1,997,717			1,714,166
Interest on plan assets		11,950			50,784
Remeasurement of plan assets		(2,094	)		(19,761	)
Contributions to plan assets		—			408,326
Benefits paid		(45,631	)		(163,112	)
Others		(150	)		7,314
Fair value of plan assets at the end of period	W	1,961,792			1,997,717

4) The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Current service costs	W	58,930		54,417
Net interest costs		1,097		417
	W	60,027		54,834

35

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

20. Other Liabilities

Other liabilities as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Current
Due to customers for contract work	W	733,787		709,180
Advances received		744,608		567,375
Unearned revenue		90,180		49,805
Withholdings		219,428		233,981
Firm commitment liability		13,151		24,373
Others		10,583		10,174
	W	1,811,737		1,594,888
Non-current
Unearned revenue	W	46,658		42,992
Others		59,469		84,369
	W	106,127		127,361

21. Financial Instruments

(a) Classification and fair value of financial instruments

1) The carrying amount and the fair values of financial assets and financial liabilities by fair value hierarchy as of March 31, 2019 and December 31, 2018 are as follows

① March 31, 2019

(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	51,179		—		51,179		—		51,179
Short-term financial instruments		5,921,438		—		5,921,438		—		5,921,438
Debt securities		26,747		—		—		26,747		26,747
Other securities		340,417		1,224		4,526		334,667		340,417
Other receivables		2,000		—		—		2,000		2,000
Derivatives hedging instrument(*2)		9,791		—		9,791		—		9,791
Fair value through other comprehensive income
Equity securities		1,232,572		854,886		—		377,686		1,232,572
Debt securities		1,638		—		—		1,638		1,638
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		2,637,550		—		—		—		—
Trade accounts and notes receivable		9,716,547		—		—		—		—
Other receivables		1,948,451		—		—		—		—
Debt securities		198,481		—		—		—		—
Deposit instruments		2,169,009		—		—		—		—
	W	24,255,820		856,110		5,986,934		742,738		7,585,782
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	45,623		—		45,623		—		45,623
Derivatives hedging instrument(*2)		19,990		—		19,990		—		19,990
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		3,764,086		—		—		—		—
Borrowings		19,931,699		—		20,162,906		—		20,162,906
Financial guarantee liabilities		65,035		—		—		—		—
Others		2,409,126		—		—		—		—
	W	26,235,559		—		20,228,519		—		20,228,519

(*1) Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates carrying amounts.

36

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(*2) The Company applies hedge accounting which uses forward contracts as hedging instrument in order to hedge the risk of changes in fair value of product prices regarding firm commitments or purchase commitments. Also, the Company applies cash flow accounting which uses currency swap as hedging instrument in order to hedge the risk of changes in foreign currency which influences cash flow from borrowings.

② December 31, 2018

(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	16,662		—		16,662		—		16,662
Short-term financial instruments		6,099,303		—		6,099,303		—		6,099,303
Debt securities		27,229		—		—		27,229		27,229
Other securities		338,106		1,224		5,205		331,677		338,106
Other receivables		2,000		—		—		2,000		2,000
Derivatives hedging instrument		32,421		—		32,421		—		32,421
Fair value through other comprehensive income
Equity securities		1,238,630		891,514		—		347,116		1,238,630
Debt securities		1,638		—		—		1,638		1,638
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		2,643,865		—		—		—		—
Trade accounts and notes receivable		8,819,617		—		—		—		—
Other receivables		1,843,381		—		—		—		—
Debt securities		8,447		—		—		—		—
Deposit instruments		1,966,558		—		—		—		—
	W	23,037,857		892,738		6,153,591		709,660		7,755,989
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	60,047		—		60,047		—		60,047
Derivatives hedging instrument		13,710		—		13,710		—		13,710
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		4,035,960		—		—		—		—
Borrowings		20,209,270		—		20,377,105		—		20,377,105
Financial guarantee liabilities		68,205		—		—		—		—
Others		1,803,353		—		—		—		—
	W	26,190,545		—		20,450,862		—		20,450,862

(*1) Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates carrying amounts.

37

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) Finance income and costs by category of financial instrument for the three-month periods ended March 31, 2019 and 2018 were as follows:

① For the three-month period ended March 31, 2019

(in millions of Won)	Finance income and costs
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Others			Total			Other comprehensive income(loss)
Financial assets at fair value through profit or loss	W	35,073			784			—			720			598			37,175			—
Derivatives assets		—			48,024			—			32,590			—			80,614			—
Financial assets at fair value through other comprehensive income		—			—			—			—			30,910			30,910			(5,540	)
Financial assets measured at amortized cost		40,454			—			151,402			(9,408	)		(108	)		182,340			—
Derivatives liabilities		—			(4,241	)		—			(40,340	)		—			(44,581	)		32
Financial liabilities measured at amortized cost		(200,478	)		—			(133,050	)		(2,237	)		(7,271	)		(343,036	)		—
	W	(124,951)			44,567			18,352			(18,675	)		24,129			(56,578	)		(5,508	)

② For the three-month period ended March 31, 2018

(in millions of Won)	Finance income and costs
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Impairment loss			Others			Total			Other comprehensive loss
Financial assets at fair value through profit or loss	W	34,181			522			—			5,399			(2,705	)		1,804			39,201			—
Derivatives assets		—			59,425			—			28,450			—			—			87,875			—
Financial assets at fair value through other comprehensive income		—			—			—			—			—			30,694			30,694			(44,756	)
Financial assets measured at amortized cost		37,668			—			28,895			(10,855	)		—			(92	)		55,616			—
Derivatives liabilities		—			(48,960	)		—			(47,726	)		—			—			(96,686	)		(159	)
Financial liabilities measured at amortized cost		(161,860	)		—			(17,532	)		—			—			(110	)		(179,502	)		—
	W	(90,011)			10,987			11,363			(24,732	)		(2,705	)		32,296			(62,802	)		(44,915	)

(b) Financial risk management

The Company is exposed to credit risk, liquidity risk and market risk arising from financial assets and liabilities. The Company’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as of and for the year ended December 31, 2018.

38

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

22. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2019 and December 31, 2018 are as follows:

(Share, in Won)	March 31, 2019		December 31, 2018
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1) As of March 31, 2019, total shares of ADRs of 35,315,420 outstanding in overseas stock market are equivalent to 8,828,855 shares of common stock.

(*2) As of March 31, 2019, the difference between the ending balance of common stock and the par value of issued common stock isW46,469 million due to retirement of 9,293,790 treasury stocks.

(b) Capital surplus as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		796,623		784,047
Other capital surplus		184,616		162,679
	W	1,445,064		1,410,551

(c) POSCO Energy Co., Ltd., a subsidiary of the Company, issued redeemable convertible preferred shares which are classified asnon-controlling interests in the consolidated financial statements. The details of redeemable convertible preferred shares as of March 31, 2019 are as follows:

(Share, in Won)	Redeemable Convertible Preferred Shares
Issue date	February 25, 2017
Number of shares issued	8,643,193 shares
Price per share	28,346
Voting rights	No voting rights for 3 years from issue date
Dividend rights	Comparative,Non-participanting •  Minimum dividend rate for 1~3 years : 3.98% •  Minimum dividend rate after 4 years : Comparative rate + Issuance spread + 2%
Details about Redemption	Issuer can demand redemption of all or part of redeemable convertible preferred shares every year after the issue date, for a period of 10 years from the issue date.
Details about Conversion	Stockholders of redeemable convertible preferred shares can convert them from 3 years after the issue date to the end of the redemption period (10 years).

Redeemable convertible preferred stocks are classified as equity because the issuer has a redemption right and can control the circumstances in which the entity can settle a variable quantity of equity instruments.

39

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

23. Hybrid Bonds

(a) Hybrid bonds classified as equity as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	Date of issue		Date of maturity		(%)		March 31, 2019			December 31, 2018
Hybrid bond1-2(*1)		2013-06-13		2043-06-13		4.60	W	200,000			200,000
Issuance cost								(616	)		(616	)
							W	199,384			199,384

(*1) Details of issuance of hybrid bonds as of March 31, 2019 are as follows:

	Hybrid bond1-2
Maturity date	30 years (The Company has a right to extend the maturity date)
Interest rate	Issue date ~2023-06-12 : 4.60% Reset every 10 years as follows;
	•    After 10 years: return on government bond (10 years) + 1.40% •    After 10 years: additionally +0.25% according toStep-up clauses •    After 30 years: additionally +0.75%
Interest payments condition	Quarterly (Optional deferral of interest payment is available to POSCO)
Others	Posco can call the hybrid bond at year 10 and interest payment date afterwards

The hybrid bond holder’s preference in the event of liquidation is higher than the common stock holders, but lower than other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2019 amounts toW479 million.

(b) POSCO ENERGY Co., Ltd., a subsidiary of the Company, issued hybrid bonds which are classified asnon-controlling interests in the consolidated financial statements. Hybrid bonds as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Interest rate		March 31, 2019			December 31, 2018
Hybrid bond1-4(*1)		2013-08-29		2043-08-29		5.21	W	140,000			140,000
Issuance cost								(429	)		(429	)
							W	139,571			139,571

40

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(*1) Details of hybrid bonds of POSCO ENERGY Co., Ltd. as of March 31, 2019 are as follows:

	Hybrid bond1-4
Maturity date	30 years (The Company has a right to extend the maturity date)
Interest rate	Issue date ~2023-08-29 : 5.21% Reset every 10 years as follows; •    After 10 years: return on government bond (10 years) + 1.55% •    After 10 years: additionally + 0.25% according toStep-up clauses •    After 30 years: additionally +0.75%
Interest payments condition	Quarterly (Optional deferral of interest payment is available to the Company)
Others	The Company can call the hybrid bond at year 10 and interest payment date afterwards

The interest accumulated but not paid on the hybrid bonds as of March 31, 2019 amounts toW619 million.

24. Reserves

Reserves as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019			December 31, 2018
Accumulated comprehensive loss of investments in associates and joint ventures	W	(664,646	)		(670,435	)
Changes in fair value of equity investments at fair value through other comprehensive income		(272,117	)		(295,300	)
Foreign currency translation differences		(285,524	)		(417,817	)
Gains or losses on valuation of derivatives		(322	)		(352	)
Others		(17,945	)		(20,464	)
	W	(1,240,554	)		(1,404,368	)

41

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

25. Treasury Shares

As of March 31, 2019, the Company holds 7,071,194 shares of treasury stock for price stabilization and others in accordance with the Board of Director’s resolution.

26. Revenue

(a) Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended March 31, 2019 and 2018 were as follows:

1) March 31, 2019

(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	7,900,484		5,407,002		—		160,218		13,467,704
Revenue from services		161,730		98,064		12,068		645,701		917,563
Revenue from construction contract		—		—		1,505,201		6,460		1,511,661
Others		9,602		32,815		1,373		73,520		117,310
	W	8,071,816		5,537,881		1,518,642		885,899		16,014,238
Timing of revenue recognition
Revenue recognized at a point in time	W	7,910,086		5,439,817		3,220		236,144		13,589,267
Revenue recognized over time		161,730		98,064		1,515,422		649,755		2,424,971
	W	8,071,816		5,537,881		1,518,642		885,899		16,014,238

2) March 31, 2018

(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	7,881,987		5,433,110		—		140,517		13,455,614
Revenue from services		144,955		87,748		25,819		568,360		826,882
Revenue from construction contract		—		—		1,451,148		15,927		1,467,075
Others		3,581		39,260		5,763		64,109		112,713
	W	8,030,523		5,560,118		1,482,730		788,913		15,862,284
Timing of revenue recognition
Revenue recognized at a point in time	W	7,885,568		5,472,370		8,288		207,004		13,573,230
Revenue recognized over time		144,955		87,748		1,474,442		581,909		2,289,054
	W	8,030,523		5,560,118		1,482,730		788,913		15,862,284

(c) Details of contract assets and liabilities from contracts with customers as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Receivables
Account receivables	W	9,716,547		8,819,617
Contract assets
Due from customers for contact work		970,875		890,117
Contract liabilities
Advance received		743,793		592,125
Due to customers for contact work		733,787		709,180
Unearned revenue		136,613		91,872

42

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

27. Revenue – Contract Balances

(a) Details ofin-progress construction contracts as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019						December 31, 2018
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	26,359,551			299,125			27,860,778			234,092
Accumulated contract profit		2,517,937			46,980			2,266,897			34,815
Accumulated contract loss		(930,187	)		(17,757	)		(792,496	)		(12,042	)
Accumulated contract revenue		27,947,301			328,348			29,335,179			256,865

(b) Details of due from customers for contract work and due to customers for contract work as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019						December 31, 2018
	Construction segment			Others			Construction segment			Others
Due from customers for contract work	W	992,623			54,048			914,489			48,571
Due to customers for contract work		(713,748	)		(20,039	)		(676,990	)		(32,190	)
	W	278,875			34,009			237,499			16,381

(c) Details of the provisions of construction loss as of March 31, 2019 and December 31, 2018 are as follows:

(in millions of Won)	March 31, 2019		December 31, 2018
Construction segment	W	29,291		31,067
Others		797		1,203
	W	30,088		32,270

43

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(d) Due to the factors causing the variation of costs for the three-month period ended March 31, 2019, the estimated total contract costs have changed. Details of changes in estimated total contract costs and the impact on profits or loss for the three-month period ended March 31, 2019 and future periods are as follows:

(in millions of Won)	Changes in estimated			Changes in profit (loss) of construction contract
	total contract costs			Net income (loss)			Future income (loss)			Total
Construction segment	W	172,516			(30,349	)		(12,784	)		(43,133	)
Others		(3,164	)		(10,446	)		12,535			2,089
	W	169,352			(40,795	)		(249	)		(41,044	)

The effect on the current and future profit is estimated based on the circumstances that have occurred from the commencement date of the contracts as of March 31, 2019. The estimation is evaluated for the total contract cost and expected total contract revenue as of the end of the period. Also, it may change during future periods.

(e) Uncertainty of estimates

1) Total contract revenues

Total contract revenues are measured based on contractual amount initially agreed. However, the contract revenues can increase due to additional contract work, claims and incentive payments, or decrease due to penalty when the completion of contract is delayed due to the Company’s fault. Therefore, this measurement of contract revenues is affected by the uncertainty of the occurrence of future events.

2) Total contract costs

Contract revenues are recognized based on the percentage of completion, which is measured on the basis of the gross cost amount incurred to date. Total contract costs are estimated based on estimates of future material costs, labor costs, outsourcing cost and others. There is uncertainty in estimates on future contract costs due to various internal and external factors such as fluctuation of market, the risk of business partner and the experience of project performance and others. The significant assumptions including uncertainty of the estimate of total contract costs are as follows:

	Method of significant assumption
Material cost	Assumption based on recent purchasing price and quoted market price
Labor cost	Assumption based on standard monthly and daily labor cost
Outsourcing cost	Assumption based on the past experience rate of similar project and market price

Management reviews the assumptions used in estimated contract costs at each reporting period end and adjusts them, if necessary.

44

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

28. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Wages and salaries	W	208,622		216,938
Expenses related to post-employment benefits		21,868		20,802
Other employee benefits		45,777		47,811
Travel		9,667		9,267
Depreciation		34,326		24,180
Amortization		28,360		27,650
Communication		2,473		2,625
Electricity expenses		2,030		2,241
Taxes and public dues		12,885		15,064
Rental		11,458		18,445
Repairs		2,517		4,123
Entertainment		3,032		2,948
Advertising		17,906		30,361
Research & development		30,383		24,477
Service fees		51,522		39,212
Vehicles maintenance		2,328		1,943
Industry association fee		3,437		3,404
Conference		3,853		3,548
Increase in provisions		1,398		12,663
Others		12,241		10,389
	W	506,083		518,091

45

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Freight and custody expenses(*1)	W	47,361		333,254
Operating expenses for distribution center		2,594		2,544
Sales commissions		16,036		12,873
Sale advertising		234		561
Sales promotion		2,537		3,137
Samples		511		630
Sales insurance premium		8,009		10,002
Contract cost		8,640		76
Others		5,338		3,731
	W	91,260		366,808

(*1) The Company identified the transportation services included in the contract with customers as a separate performance obligations, and as of December 31, 2018, expenses incurred for the delivery of transportation services had been reclassified from selling and administrative expenses to cost of sales. In addition, during the three-month period ended March 31, 2018, the selling and administrative expenses includedW291,410 million of expenses incurred for the delivery of transportation services.

46

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

29. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Finance income
Interest income(*1)	W	75,527		71,849
Dividend income		31,508		32,498
Gain on foreign currency transactions		117,933		170,326
Gain on foreign currency translations		145,167		84,896
Gain on derivatives transactions		33,400		28,450
Gain on valuations of derivatives		87,074		59,425
Others		3,405		9,044
	W	494,014		456,488
Finance costs
Interest expenses	W	200,478		161,860
Loss on foreign currency transactions		105,289		126,020
Loss on foreign currency translations		139,459		117,839
Loss on derivatives transactions		41,150		47,726
Loss on valuation of derivatives		43,291		48,960
Loss on disposal of trade accounts and notes receivables		9,408		10,855
Others		11,518		6,030
	W	550,593		519,290

(*1) Interest income calculated using the effective interest method for the three-month periods ended March 31, 2019 and 2018 wereW40,454 million andW37,744 million, respectively.

47

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

30. OtherNon-Operating Income and Expenses

Details of othernon-operating income and expenses for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Othernon-operating income
Gain on disposals of investment in subsidiaries, associates and joint ventures	W	14,436		—
Gain on disposals of property, plant and equipment		12,282		3,805
Gain on disposals of intangible assets		—		30,572
Gain on valuation of firm commitment		19,709		4,194
Gain on insurance proceeds		420		185
Others		27,497		22,200
	W	74,344		60,956
Othernon-operating expenses
Impairment loss on assets held for sale	W	4,195		—
Loss on disposals of investment in subsidiaries, associates and joint ventures		1,871		435
Loss on disposals of property, plant and equipment		12,297		12,210
Impairment loss on property, plant and equipment		68,345		18,222
Impairment loss on intangible assets		1,004		1,726
Loss on valuation of firm commitment		3,809		15,425
Idle tangible asset expenses		7,619		2,212
Increase to provisions		5,273		283
Donations		9,405		16,834
Others		23,371		27,540
	W	137,189		94,887

48

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

31. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses, impairment loss on other receivables and othernon-operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2019 and 2018 were as follows (excluding finance costs and income tax expense):

(in millions of Won)	March 31, 2019		March 31, 2018
Raw material used, changes in inventories and others	W	9,679,323		9,260,784
Employee benefits expenses		875,668		934,964
Outsourced processing cost		1,770,630		1,627,629
Electricity expenses		219,802		231,129
Depreciation(*1)		764,760		713,382
Amortization		99,262		108,855
Freight and custody expenses		369,234		333,254
Sales commissions		16,036		12,873
Loss on disposal of property, plant and equipment		12,297		12,210
Impairment loss on property, plant and equipment		68,345		18,222
Impairment loss on other intangible assets		1,004		1,726
Donations		9,405		16,834
Others		1,067,713		1,200,261
	W	14,953,479		14,472,123

(*1) Includes depreciation expense of investment property.

32. Income Taxes

The effective tax rates of the Company for the three-month periods ended March 31, 2019 and 2018 were 32.1% and 26.9%, respectively.

49

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

33. Earnings per Share

Basic and diluted earnings per share for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in Won, except per share information)	March 31, 2019			March 31, 2018
Profit attribute to controlling interest	W	741,253,192,407			993,516,014,970
Interests of hybrid bonds		(1,644,657,534	)		(7,707,643,835	)
Weighted-average number of common shares outstanding(*1)		80,108,007			79,999,659
Basic and diluted earnings per share	W	9,233			12,323

(*1) The weighted-average number of common shares used to calculate basic and diluted earnings per share are as follows:

(Shares)	March 31, 2019			March 31, 2018
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(7,078,828	)		(7,187,176	)
Weighted-average number of common shares outstanding		80,108,007			79,999,659

Since there were no potential shares of common stock which had dilutive effects as of March 31, 2019 and 2018, diluted earnings per share is equal to basic earnings per share.

50

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

34. Related Party Transactions

(a) Significant transactions between the controlling company and related companies for the three-month periods ended March 31, 2019 and 2018 were as follows:

1) For the three-month period ended March 31, 2019

(in millions of Won)	Sales and others(*1)				Purchase and others(*2)
	Sales		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries(*3)
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1,410		11,073		—		66,497		21		2,714
POSCO COATED & COLOR STEEL Co., Ltd.		117,197		1,706		—		—		2,369		372
POSCO ICT(*4)		780		4,989		—		60,828		8,557		46,161
eNtoB Corporation		4		60		78,496		5,984		26		5,524
POSCO CHEMICAL CO., LTD (Formerly, POSCO CHEMTECH)		103,924		19,330		130,996		2,065		78,130		129
POSCO ENERGY CO., LTD.		56,888		314		—		—		—		20
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)		1,417,608		46,571		175,163		—		12,656		940
POSCO Thainox Public Company Limited		65,104		59		1,670		—		—		3
POSCO America Corporation		95,001		—		—		—		—		18
POSCO Canada Ltd.		—		75		76,613		—		—		—
POSCO Asia Co., Ltd.		416,638		87		148,034		—		558		561
Qingdao Pohang Stainless Steel Co., Ltd.		54,047		—		—		—		—		—
POSCO JAPAN Co., Ltd.		405,675		—		9,520		2,314		—		634
POSCO-VIETNAM Co., Ltd.		74,540		85		—		—		—		37
POSCO MEXICO S.A. DE C.V.		78,213		14		—		—		—		5
POSCO Maharashtra Steel Private Limited		190,663		95		—		—		—		—
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		18,004		—		524		—		—		—
Others		299,408		11,260		179,780		5,782		67,158		26,480
		3,395,104		95,718		800,796		143,470		169,475		83,598
Associates and joint ventures(*3)
POSCO PLANTEC Co., Ltd.		116		60		751		50,746		4,915		2,711
SNNC		1,348		2,280		115,648		—		—		10
POSCO-SAMSUNG-Slovakia Processing Center		23,863		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		202,028		—		—		—
Others		3,992		11,253		13,165		—		—		—
		29,319		13,593		331,592		50,746		4,915		2,721
	W	3,424,423		109,311		1,132,388		194,216		174,390		86,319

(*1) Sales and others mainly consist of sales of steel products to subsidiaries, associates and joint ventures.

(*2) Purchases and others mainly consist of subsidiaries’ purchases of construction services and purchases of raw materials to manufacture steel products.

(*3) As of March 31, 2019, the Company provided guarantees to related parties (Note 35).

(*4) Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System.

51

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) For the three-month period ended March 31, 2018

(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	762		53		—		58,706		9		9,288
POSCO COATED & COLOR STEEL Co., Ltd.		110,752		2,560		—		—		1,592		189
POSCO ICT		648		7,474		—		70,821		8,087		48,847
eNtoB Corporation		1		60		85,857		3,346		45		5,813
POSCO CHEMICAL CO., LTD (Formerly, POSCO CHEMTECH)		98,233		17,675		132,591		5,687		77,282		148
POSCO ENERGY CO., LTD.		52,095		369		—		—		—		—
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)		1,462,604		38,852		188,278		—		13,895		322
POSCO Thainox Public Company Limited		65,975		—		3,197		—		—		—
POSCO America Corporation		63,366		—		—		—		—		886
POSCO Canada Ltd.		—		318		70,006		—		—		—
POSCO Asia Co., Ltd.		495,863		141		88,001		303		902		872
Qingdao Pohang Stainless Steel Co., Ltd.		44,031		7		—		—		—		5
POSCO JAPAN Co., Ltd.		349,756		—		5,974		725		—		994
POSCO-VIETNAM Co., Ltd.		88,286		13		—		—		—		8
POSCO MEXICO S.A. DE C.V.		65,090		17		—		—		—		—
POSCO Maharashtra Steel Private Limited		134,773		209		—		—		—		30
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		67,154		—		—		—		—		5
Others		299,845		7,928		59,368		5,171		65,268		27,671
		3,399,234		75,676		633,272		144,759		167,080		95,078
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		336		80		914		28,043		5,758		2,148
SNNC		1,208		422		133,613		—		—		5
POSCO-SAMSUNG-Slovakia Processing Center		18,238		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		191,457		—		—		—
Others		2,719		9,731		16,978		—		—		5
		22,501		10,233		342,962		28,043		5,758		2,158
	W	3,421,735		85,909		976,234		172,802		172,838		97,236

(b) The related account balances of significant transactions between the controlling company and related companies as of March 31, 2019 and December 31, 2018 are as follows:

1) March 31, 2019

(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1		17,508		17,509		—		20,318		447		20,765
POSCO COATED & COLOR STEEL Co., Ltd.		64,700		398		65,098		—		94		1,352		1,446
POSCO ICT		—		10,216		10,216		1,227		50,294		44,606		96,127
eNtoB Corporation		—		120		120		6,109		36,875		—		42,984
POSCO CHEMICAL CO., LTD (Formerly, POSCO CHEMTECH)		65,624		17,982		83,606		20,503		54,460		18,202		93,165
POSCO ENERGY CO., LTD.		41,831		2,046		43,877		—		—		1,425		1,425
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)		525,186		47,889		573,075		1,395		1,875		5,263		8,533
POSCO Thainox Public Company Limited		66,849		—		66,849		—		—		—		—
POSCO America Corporation		16,896		—		16,896		—		—		—		—
POSCO Asia Co., Ltd.		454,413		1,068		455,481		6,553		—		—		6,553
Qingdao Pohang Stainless Steel Co., Ltd.		52,346		—		52,346		—		—		—		—
POSCO MEXICO S.A. DE C.V.		95,731		223		95,954		—		—		—		—
POSCO Maharashtra Steel Private Limited		402,611		1,458		404,069		—		—		—		—
Others(*1)		433,529		58,806		492,335		58,712		24,677		90,454		173,843
		2,219,717		157,714		2,377,431		94,499		188,593		161,749		444,841
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		—		4		4		1,608		16,390		—		17,998
SNNC		295		1,834		2,129		19,856		—		—		19,856
Roy Hill Holdings Pty Ltd		—		—		—		—		9,370		—		9,370
Others		896		912		1,808		333		76		—		409
		1,191		2,750		3,941		21,797		25,836		—		47,633
	W	2,220,908		160,464		2,381,372		116,296		214,429		161,749		492,474

(*1) During the year ended December 31, 2018, the Company made loans ofW2,950 million to Suncheon Eco Trans Co., Ltd., a subsidiary of the Company. As of March 31, 2019, corresponding amounts of those loans were recorded as allowance for doubtful accounts.

52

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) December 31, 2018

(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	57		5,181		5,238		—		52,775		438		53,213
POSCO COATED & COLOR STEEL Co., Ltd.		55,598		317		55,915		—		25		1,194		1,219
POSCO ICT		—		229		229		1,572		112,960		8,717		123,249
eNtoB Corporation		—		—		—		10,860		22,072		11		32,943
POSCO CHEMICAL CO., LTD (Formerly, POSCO CHEMTECH)		40,258		3,883		44,141		19,911		58,725		19,012		97,648
POSCO ENERGY CO., LTD.		22,163		1,700		23,863		—		—		1,425		1,425
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)		437,554		1,056		438,610		161		1,881		5,304		7,346
POSCO Thainox Public Company Limited		71,189		—		71,189		467		71		—		538
POSCO America Corporation		14,338		—		14,338		—		221		—		221
POSCO Asia Co., Ltd.		480,205		1,047		481,252		7,839		—		—		7,839
Qingdao Pohang Stainless Steel Co., Ltd.		52,037		—		52,037		—		—		—		—
POSCO MEXICO S.A. DE C.V.		101,179		218		101,397		—		—		—		—
POSCO Maharashtra Steel Private Limited		390,413		1,428		391,841		—		—		—		—
Others		379,950		54,407		434,357		33,183		36,591		85,745		155,519
		2,044,941		69,466		2,114,407		73,993		285,321		121,846		481,160
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		249		10		259		3,275		34,803		—		38,078
SNNC		541		61		602		22,188		—		—		22,188
Roy Hill Holdings Pty Ltd		—		—		—		22,997		—		—		22,997
Others		918		910		1,828		217		76		—		293
		1,708		981		2,689		48,677		34,879		—		83,556
	W	2,046,649		70,447		2,117,096		122,670		320,200		121,846		564,716

(c) Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended March 31, 2019 and 2018 were as follows:

1) For the three-month period ended March 31, 2019

(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Others
Associates and joint ventures
POSCO PLANTEC Co., Ltd.	W	3,396		—		7		3,371
New Songdo International City Development, LLC		361		4,471		—		3
SNNC		18,012		—		5,043		20,624
Chun-cheon Energy Co., Ltd		1,010		—		—		—
Noeul Green Energy		1,662		—		—		587
USS-POSCO Industries		—		—		604		—
CSP—Compania Siderurgica do Pecem		22,270		2,067		120,388		385
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		8,745		—		10,794		—
LLP POSUK Titanium		—		—		272		—
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		852		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		3,877		—		—		—
PT. Batutua Tembaga Raya		—		365		10,597		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		8,093		—		80		—
Sebang Steel		—		—		703		—
DMSA/AMSA		—		—		16,755		—
South-East Asia Gas Pipeline Company Ltd.		5		4,805		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		24,615		16,369		1,340		713
POSPOWER Co.,Ltd		37,409		—		—		—
TK CHEMICAL CORPORATION		43,375		—		21,929		—
Others		47,939		14,667		5,563		6,839
	W	220,769		42,744		194,927		32,522

53

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) For the three-month period ended March 31, 2018

(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Others
Associates and joint ventures
POSCO PLANTEC Co., Ltd.	W	4,087		—		32		1,230
New Songdo International City Development, LLC		23,431		9,594		—		5
SNNC		23,090		—		4,502		4,869
Chun-cheon Energy Co., Ltd		20,275		—		—		—
Noeul Green Energy		1,499		���		—		—
VSC POSCO Steel Corporation		6,667		—		1,179		—
USS-POSCO Industries		—		—		516		—
CSP—Compania Siderurgica do Pecem		42,832		—		24,009		15,473
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		12,844		—		14,629		—
LLP POSUK Titanium		—		—		418		—
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		2,690		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		3,174		—		—		—
PT. Batutua Tembaga Raya		—		—		2,191		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		10,333		—		58		—
Sebang Steel		—		—		6,273		—
DMSA/AMSA		—		—		9,422		—
South-East Asia Gas Pipeline Company Ltd.		—		23,108		—		—
Others		61,736		7,652		3,232		1,733
	W	209,968		40,354		69,151		23,310

(d) The related account balances of significant transactions between the Company, excluding the controlling company, and related companies as of March 31, 2019 and December 31, 2018 are as follows:

1) March 31, 2019

(in millions of Won)	Receivables								Payables
	Trade accounts and notes receivable		Loans		Others		Total		Trade accounts and notes payable		Others		Total
Associates and joint ventures
POSCO PLANTEC Co., Ltd.	W	2,839		—		146		2,985		3,851		8		3,859
New Songdo International City Development, LLC		65,235		—		5,725		70,960		—		2		2
Chun-cheon Energy Co., Ltd		55		1,941		—		1,996		803		—		803
POSPOWER Co., Ltd.		33,370		—		—		33,370		—		66,836		66,836
Nickel Mining Company SAS		—		59,585		116		59,701		—		—		—
CSP—Compania Siderurgica do Pecem		349,968		—		15,940		365,908		54,051		—		54,051
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		8,849		—		—		8,849		1,737		—		1,737
PT. Batutua Tembaga Raya		—		35,964		16,327		52,291		584		—		584
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		7,303		3,413		29		10,745		80		—		80
DMSA/AMSA		—		57,973		—		57,973		2,528		—		2,528
South-East Asia Gas Pipeline Company Ltd.		5		182,061		—		182,066		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		9,153		—		—		9,153		1,788		—		1,788
TK CHEMICAL CORPORATION		34,423		—		—		34,423		3,330		—		3,330
Others		78,878		146,150		15,226		240,254		6,385		4,952		11,337
	W	590,078		487,087		53,509		1,130,674		75,137		71,798		146,935

54

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) December 31, 2018

(in millions of Won)	Receivables								Payables
	Trade accounts and notes rceivable		Loans		Others		Total		Trade accounts and notes payable		Others		Total
Associates and joint ventures
POSCO PLANTEC Co., Ltd.	W	3,593		—		6		3,599		6,160		217		6,377
New Songdo International City Development, LLC		233,157		—		—		233,157		—		—		—
Chun-cheon Energy Co., Ltd		—		—		—		—		—		1,758		1,758
POSPOWER Co., Ltd.		13,703		—		—		13,703		—		66,856		66,856
Nickel Mining Company SAS		—		59,664		118		59,782		—		—		—
CSP - Compania Siderurgica do Pecem		364,190		—		9,669		373,859		62,578		—		62,578
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,836		—		—		10,836		2,101		—		2,101
PT. Batutua Tembaga Raya		—		35,100		171		35,271		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,274		3,354		27		9,655		66		—		66
DMSA/AMSA		—		64,297		—		64,297		—		—		—
South-East Asia Gas Pipeline Company Ltd.		—		191,107		—		191,107		—		—		—
Others		75,382		136,117		13,071		224,570		7,768		5,363		13,131
	W	707,135		489,639		23,062		1,219,836		78,673		74,194		152,867

(e) Significant financial transactions between the Company, excluding the controlling company, and related companies for the three-month period ended March 31, 2019 and the year ended December 31, 2018 were as follows:

1) For the three-month period ended March 31, 2019

(in millions of Won)	Beginning		Lend		Collect			Others(*2)			Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	5,695		1,065		—			—			6,760
DMSA/AMSA(*1)		64,297		2,955		—			(9,279	)		57,973
South-East Asia Gas Pipeline Company Ltd.		191,107		—		(11,737	)		2,691			182,061
PT. Batutua Tembaga Raya		35,100		—		—			864			35,964
PT. Tanggamus Electric Power		4,423		—		—			78			4,501
PT. Wampu Electric Power		5,330		—		—			94			5,424
PT. POSMI Steel Indonesia		2,236		—		—			40			2,276
Nickel Mining Company SAS		59,664		—		—			(79	)		59,585
KRAKATAUPOS-CHEMDONG-SUH CHEMICAL		6,709		—		—			118			6,827
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		3,354		—		—			59			3,413
POS-SeaAH Steel Wire (Thailand) Co., Ltd.		6,709		—		—			118			6,827
AMCI (WA) PTY LTD		90,480		581		—			1,994			93,055
POS-AUSTEM YANTAI AUTOMOTIVE CO., LTD		5,590		—		—			99			5,689
POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD		8,945		—		—			157			9,102
Chun-cheon Energy Co., Ltd		—		1,941		—			—			1,941
Pos-Austem Suzhou Automobile Co., Ltd		—		5,622		—			67			5,689
	W	489,639		12,164		(11,737	)		(2,979	)		487,087

(*1) During the three-month period ended March 31, 2019, loans amounting toW10,284 million have been converted to shares of DMSA/AMSA, and its amount is included in others.

(*2) Includes adjustments of foreign currency translation differences and others.

55

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

2) For the year ended December 31, 2018

(in millions of Won)	Beginning		Lend		Collect			Others(*2)			Ending
Associates and jointventures
New Songdo International City Development, LLC	W	282,775		150		(252,759	)		(30,166	)		—
Gail International Korea, LLC		2,000		8,500		(10,500	)		—			—
UITrans LRT Co., Ltd.		—		5,695		—			—			5,695
DMSA/AMSA(*1)		69,713		9,965		(342	)		(15,039	)		64,297
South-East Asia Gas Pipeline Company Ltd.		229,880		—		(47,569	)		8,796			191,107
PT. Batutua Tembaga Raya		29,048		4,678		—			1,374			35,100
PT. Tanggamus Electric Power		3,197		—		—			1,226			4,423
PT. Wampu Electric Power		5,107		—		—			223			5,330
PT. POSMI Steel Indonesia		4,286		—		(2,200	)		150			2,236
Nickel Mining Company SAS		59,668		—		—			(4	)		59,664
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		5,357		—		(5,357	)		—			—
KRAKATAUPOS-CHEMDONG-SUH CHEMICAL		6,428		—		—			281			6,709
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		5,357		4,451		(6,454	)		—			3,354
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,428		—		—			281			6,709
AMCI (WA) PTY LTD		92,061		3,795		—			(5,376	)		90,480
POS-AUSTEM YANTAI AUTOMOTIVE CO., LTD		5,357		5,564		(5,357	)		26			5,590
POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD		8,571		8,902		(8,571	)		43			8,945
SAMHWAN VINA CO., LTD		1,071		—		(1,071	)		—			—
	W	816,304		51,700		(340,180	)		(38,185	)		489,639

(*1) During the year ended December 31, 2018, loans amounting toW17,559 million have been converted to shares of DMSA/AMSA, and its amount is included in others.

(*2) Includes adjustments of foreign currency translation differences and others.

(f) For the three-month periods ended March 31, 2019 and 2018, details of compensation to key management officers were as follows:

(in millions of Won)	March 31, 2019		March 31, 2018
Short-term benefits	W	29,697		31,707
Long-term benefits		4,576		2,586
Retirement benefits		6,518		8,401
	W	40,791		42,694

Key management officers include directors (includingnon-standing directors), executive officials and fellow officials who have significant influences and responsibilities in the Company’s business and operations.

56

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

35. Commitments and Contingencies

(a) Details of guarantees

Contingent liabilities on outstanding guarantees provided by the Company as of March 31, 2019 are as follows:

(in millions of Won)			Guarantee limit					Guarantee amount
Guarantor	Guarantee beneficiary	Financial institution	Foreign currency			Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO	POSCO Asia Co., Ltd.	BOC		USD	100,000,000		113,780		100,000,000		113,780
	POSCO ASSAN TST STEEL INDUSTRY	SMBC and others		USD	146,527,500		166,719		131,874,750		150,045
	POSCO COATED STEEL (THAILAND) CO., LTD.	The Great & CO Co.,Ltd.(SPC)		THB	5,501,000,000		196,551		5,501,000,000		196,551
	POSCO Maharashtra Steel Private Limited	Export-Import Bank of Korea and others		USD	506,853,000		576,697		168,397,800		191,604
	POSCO MEXICO S.A. DE C.V.	BOA and others		USD	160,000,000		182,048		160,000,000		182,048
	POSCO SS VINA CO., LTD.	Export-Import Bank of Korea and others		USD	299,941,250		341,273		299,663,928		340,957
	POSCO-VIETNAM Co., Ltd.	MUFG and others		USD	156,000,000		177,497		156,000,000		177,497
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others		USD	1,350,300,000		1,536,372		1,097,236,405		1,248,437
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)	Daewoo Global Development. Pte., Ltd	Export-Import Bank of Korea		USD	196,017,000		223,028		196,017,000		223,028
	POSCO INTERNATIONAL POWER(PNGLAE)., Ltd	Export-Import Bank of Korea		USD	47,600,000		54,159		47,600,000		54,159
	GOLDEN LACE POSCO INTERNATIONAL CO.,LTD	Shinhan Bank		USD	9,000,000		10,240		9,000,000		10,240
	POSCO ASSAN TST STEEL INDUSTRY	ING and others		USD	14,652,750		16,672		14,652,750		16,672
	PT. Bio Inti Agrindo	KEB Bank		IDR	150,000,000,000		11,985		150,000,000,000		11,985
		Export-Import Bank of Korea		USD	135,000,000		153,603		134,025,281		152,494
	POSCO DAEWOO INDIA PVT., LTD.	Shinhan Bank		USD	149,400,000		169,987		84,053,212		95,635
	Songdo Posco family Housing	SHINYOUNG SECURITIES CO LTD		KRW	10,000		10,000		—		—
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	Export-Import Bank of Korea and others		USD	47,000,000		53,477		47,000,000		53,477
	POSCO Engineering and Construction India Private Limited	KEB Bank		INR	104,000,000		1,710		56,500,000		929
	PT.POSCO E&C INDONESIA	POSCO Asia Co., Ltd.		USD	10,900,000		12,402		10,900,000		12,402
	Daewoo Global Development. Pte., Ltd	Export-Import Bank of Korea and others		USD	163,633,000		186,182		163,633,000		186,182
	HONG KONG POSCO E&C (CHINA) INVESTMENT Co., Ltd.	Woori bank and others		USD	148,000,000		168,394		145,000,000		164,981
	Songdo Posco family Housing	SHINYOUNG SECURITIES CO LTD		KRW	10,000		10,000		—		—
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd.		USD	1,500,000		1,707		1,500,000		1,707
POSCO CHEMICAL CO., LTD (Formerly, POSCO CHEMTECH)	PT.Krakatau Posco Chemtech Calcination	POSCO Asia Co., Ltd.		USD	15,200,000		17,295		15,200,000		17,295
POSCO COATED & COLOR STEEL Co., Ltd.	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.		USD	13,986,947		15,914		13,986,947		15,914
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	Export-Import Bank of Korea and others		USD	193,900,000		220,619		121,231,918		137,938
POSCO Asia Co., Ltd.	POSCO SINGAPORE LNG TRADING PTE.LTD.	SMBC		USD	40,000,000		45,512		40,000,000		45,512

57

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

[Associates and joint ventures]
POSCO	CSP—Compania Siderurgica do Pecem	Export-Import Bank of Korea and others	USD	392,956,955	447,105	392,956,955	447,105
		BNDES	BRL	464,060,000	135,343	462,554,370	134,904
	LLP POSUK Titanium	SMBC	USD	15,000,000	17,067	15,000,000	17,067
	Nickel Mining Company SAS	SMBC	EUR	46,000,000	58,763	46,000,000	58,763
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)	GLOBAL KOMSCO Daewoo LLC	ICBC	USD	8,225,000	9,358	8,225,000	9,358
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	UITrans LRT Co., Ltd.	Kookmin Bank and others	KRW	20,740	20,740	4,830	4,830
	New Songdo International City Development, LLC	Other	KRW	440,000	440,000	434,000	434,000
	Chun-cheon Energy Co., Ltd	Kookmin Bank and others	KRW	12,430	12,430	1,941	1,941
	Pohang E&E Co., Ltd.	Heungkuk Life Insurance	KRW	6,500	6,500	—	—
	Incheon-Gimpo Expressway Co., Ltd.	Kookmin Bank and others	KRW	28,940	28,940	—	—
	JB CLARK HILLS	Korea Investment&Securities	KRW	40,000	40,000	30,000	30,000
POSCO ICT	Incheon-Gimpo Expressway Co, Ltd.	KDB Bank	KRW	100,000	100,000	100,000	100,000
	UITrans LRT Co., Ltd.	Kookmin Bank	KRW	76,000	76,000	76,000	76,000
POSCO CHEMICAL CO., LTD (Formerly, POSCO CHEMTECH)	KRAKATAUPOS-CHEMDONG-SUH CHEMICAL	KEB Bank	USD	1,140,000	1,297	696,667	793
POSCO(Suzhou)	POS-InfraAuto (Suzhou) Co., Ltd	Export-Import Bank of Korea and others	USD	780,000	887	780,000	887
Automotive Processing Center Co.,Ltd.
[Others]
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)	Ambatovy Project Investments Ltd. and others	Export-Import Bank of Korea and others	USD	87,272,727	99,299	11,598,699	13,197
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Ecocity CO.,LTD and others	Kookmin Bank and others	KRW	1,771,134	1,771,134	692,876	692,876
POSCO ICT	BLT Enterprise and others	KEB Bank and others	KRW	1,283,718	1,283,718	1,264,042	1,264,042
POSCO AUSTRALIA PTY LTD	Department of Trade and Investment (NSW Government)	Woori Bank and others	AUD	24,808,159	19,975	24,808,159	19,975
			USD	4,410,786,129	5,018,590	3,586,230,312	4,080,411
			KRW	3,799,462	3,799,462	2,603,689	2,603,689
			IDR	150,000,000,000	11,985	150,000,000,000	11,985
			INR	104,000,000	1,710	56,500,000	929
			THB	5,501,000,000	196,551	5,501,000,000	196,551
			EUR	46,000,000	58,763	46,000,000	58,763
			AUD	24,808,159	19,975	24,808,159	19,975
			BRL	464,060,000	135,343	462,554,370	134,904

58

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(b) POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided the completion guarantees for Samsung C&T Corporation amounting toW215,145 million as of March 31, 2019.

(c) Other commitments

Company	Description
POSCO	POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. The contracts of iron ore and coal generally have terms of more than three years and the contracts of nickel have terms of more than one year. These contracts provide for periodic price adjustments based on the market price. As of March 31, 2019, 86 million tons of iron ore and 14 million tons of coal remained to be purchased under such long-term contracts.
	POSCO entered into an agreement with Tangguh Liquefied Natural Gas (LNG) Consortium in Indonesia to purchase 550 thousand tons of LNG annually for 20 years commencing in August 2005. The purchase price is subject to change, based on changes of the monthly standard oil price (JCC) and with a price ceiling.
	The Company has a long-term service contract for the transportation of raw materials. As of March 31, 2019, there are 38 vessels under contract, and the average remaining contract period is about 10 years.
	As of March 31, 2019, POSCO entered into a commitment with KOREA ENERGY AGENCY for long-term foreign currency borrowings, which are limited up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chenavard. The repayment of the borrowings depends on the success of the projects. POSCO is not liable for the repayment of full or part of the amount borrowed if the respective projects fail. POSCO has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of March 31, 2019, the ending balance of the borrowing amounts to USD 1.02 million.
	POSCO has provided a supplemental funding agreement to POSCO Energy Co., Ltd., as the largest shareholder, at the request of the creditors including Norddeutsche Landesbank, to guarantee successful funding for construction of new power plant.
	POSCO has provided a supplemental funding agreement of up to 9.8 billion to Busan E&E Co., Ltd.,subsidiary of the Company, as requested from the creditors including Korea Development Bank.
	POSCO has provided a supplemental funding agreement, as requested from the creditors, to push forward Suncheon Bay PRT Business of Suncheon Eco Trans Co., Ltd., subsidiary of the Company. On November 2018, creditors sued the company for subrogation based on a supplemental funding agreement. POSCO recognized the provision based on the estimate of the amount and the possibility of any outflows of resources due to the litigation.
POSCO	As of March 31, 2019, POSCO has been provided with external foreign currency guarantee of USD 718
ENGINEERINGS &	million among the total limit of USD 2,507 million via Woori bank and others.
CONSTRUCTION
CO., LTD.	The Company is responsible for 3 projects, including the development of ParkOne in Yeouido-dong. As of March 31, 2019, the outstanding amount of loans related to the responsible payment arrangement isW2,167.6 billion. If the responsibility is not fulfilled, there are duties such as dept acquisition and liability leases.
POSCO ICT	As of March 31, 2019, in relation to contract enforcement, POSCO ICT Co., Ltd. was provided withW139,608 million,W23,580 million andW608 million guaranties from Korea Software Financial Cooperative, Seoul Guarantee Insurance and Engineering Guarantee Insurance, respectively. The Company is responsible for 21 projects, including the construction of Bundang Center. As of March 31, 2019, the outstanding amount of loans related to the responsible payment arrangement isW1,008 billion. If the responsibility is not fulfilled, there are duties such as compensation for principal and interest.

59

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(d) Litigation in progress

In March 2019, regarding the Songdo International City Development Project in Incheon, NSC Investment and TGC (the “applicant”) of POSCO ENGINEERING & CONSTRUCTION CO., LTD. (the “applicant” or “POSCO E&C”) have applied to the International Chamber of Commerce of Singapore, and to the “ICC” for the fact that POSCO E&C’s joint contract violation (approximately USD 2 billion) has applied for mediated. In addition, the applicant filed a confirmation suit with the New York Southern District Court in March 2019 against the fact that all claims listed in the above arbitration application must be settled by ICC arbitration. The claimants are seeking damages allegedly resulting from POSCO E&C’s purported wrongful seizure. As of March 31, 2019, the Company believes that the applicant’s claims are not legally valid and that the present obligation for the above arbitration event does not exist and therefore did not recognize a provision.

The Company is involved in 363 lawsuits and claims for alleged damages aggregating toW883.2 billion as defendant as of March 31, 2019, which arise from ordinary course of business. The Company has recognized provisions amounting toW48.7 billion for 110 lawsuits based on its reliable estimate of outflow of resources. However, the Company has not recognized any provisions for other lawsuits and claims since the Company believes that it does not have a present obligation as of March 31, 2019.

(e) Other contingencies

Company	Description
POSCO	POSCO has provided three blank checks to Korea Energy Agency as collateral for long-term foreign currency borrowings.
POSCO INTERNATIONAL Corporation (Formerly, POSCO DAEWOO Corporation)	As of March 31, 2019, POSCO INTERNATIONAL Corporation(Formerly, POSCO DAEWOO Corporation) has provided thirty-three blank promissory notes and twenty-four blank checks to Korea Energy Agency and others as collateral for the guarantee on performance for contracts and others.
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	As of March 31, 2019, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided twenty-three blank checks and four blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee ofW9,388,847 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.
POSCO ICT	As of March 31, 2019, POSCO ICT has provided two blank promissory notes and four blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

60

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019			March 31, 2018
Trade accounts and notes receivable	W	(593,651	)		(507,799	)
Other receivables		89,387			(121,176	)
Inventories		338,259			(319,516	)
Other current assets		(180,573	)		27,776
Othernon-current assets		(37,240	)		(71,544	)
Trade accounts and notes payable		(437,067	)		52,463
Other payables		(62,899	)		11,397
Other current liabilities		252,888			96,274
Provisions		(41,381	)		(53,768	)
Payments of severance benefits		(68,754	)		(84,076	)
Plan assets		45,631			64,225
Othernon-current liabilities		(19,218	)		25,611
	W	(714,618	)		(880,133	)

37. Operating Segments

The Company’s operating businesses are organized based on the nature of markets and customers. The Company has four reportable operating segments—steel, construction, trading and others. The steel segment includes production of steel products and revenue of such products. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects and commercial and residential buildings, both in Korea and overseas. The trading segment consists of exporting and importing a wide range of steel products and raw materials that are both obtained from and supplied to POSCO, as well as between other suppliers and purchasers in Korea and overseas. Other segments include power generation, network and system integration and logistics. The policies of classification and measurement on operating segments were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2018.

Segment assets, liabilities and profit (loss) are generally measured based on separate financial statements in accordance withK-IFRS of the subsidiaries that constitute reportable operating segments.

61

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2019

(Unaudited)

(a) Information about reportable segments for the three-month periods ended March 31, 2019 and 2018 was as follows:

1) For the three-month period ended March 31, 2019

(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	8,071,816		5,537,881		1,518,642		885,899		16,014,238
Internal revenues		4,484,586		3,833,489		118,868		643,475		9,080,418
Inter segment revenue		3,056,377		2,086,732		105,135		612,863		5,861,107
Total revenues		12,556,402		9,371,370		1,637,510		1,529,374		25,094,656
Segment profits		634,787		73,041		21,152		106,937		835,917

2) For the three-month period ended March 31, 2018

(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	8,030,523		5,560,118		1,482,730		788,913		15,862,284
Internal revenues		4,477,553		3,762,180		109,059		640,289		8,989,081
Inter segment revenue		3,114,893		2,100,395		97,911		614,493		5,927,692
Total revenues		12,508,076		9,322,298		1,591,789		1,429,202		24,851,365
Segment profits		833,348		102,371		63,975		89,686		1,089,380

(b) Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the three-month periods ended March 31, 2019 and 2018 were as follows:

(in millions of Won)	March 31, 2019			March 31, 2018
Total profit for reportable segments	W	835,917			1,089,380
Corporate fair value adjustments		(20,875	)		(21,158	)
Elimination of inter-segment profits		(36,597	)		15,320
Income tax expense		368,496			399,471
Profit before income tax expense	W	1,146,941			1,483,013

38. Events after the reporting period

Pursuant to the resolution of the Board of Directors on May 10, 2019, the Company decided to pay cash dividends ofW2,000 per common share (total dividend:W160.2 billion).

62