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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE13a-16 OR15D-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of June, 2020

Commission File Number:1-13368

POSCO

(Translation of registrant’s name into English)

POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form20-F or Form40-F.

Form20-F  ☒             Form40-F    ☐

Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1):  ☐

Note: RegulationS-T Rule 101(b)(1) only permits the submission in paper of a Form6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(7):  ☐

Note: RegulationS-T Rule 101(b)(7) only permits the submission in paper of a Form6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form6-K submission or other Commission filing on EDGAR.

POSCO is furnishing under cover of Form6-K:

Exhibit 99.1: An English-translated documents of POSCO’s Quarterly Report for the year 2020

.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		POSCO
		(Registrant)
Date: June 8, 2020	By	/s/ Lim, Seung-Kyu
		(Signature)
		Name : Lim, Seung-Kyu
		Title : Executive Vice President

Exhibit 99.1

QUARTERLY REPORT

(From January 1, 2020 to March 31, 2020)

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 ANDNON-CONSOLIDATED 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, 2020 to March 31, 2020)

To: Korean Financial Services Commission and Korea Exchange

/s/ Chang, In-Hwa

Chang, In-Hwa

President and Representative Director

POSCO

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

Telephone:+82-54-220-0114

/s/ Lim ,Seung-Kyu

Lim, Seung Kyu

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
II.	Business
III.	Financial Statements
IV.	Corporate Governance and Company Affiliates

Attachment: Independent Auditors’ Review Report

(Consolidated and Separate)

3

I. OVERVIEW

1. Scope of Business

A. POSCO(the “Company”, as of March, 2020)

As of March 2020, the Company’s business scope is as follows:

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 CHEMICAL CO., LTD, POSCO INTERNATIONAL Corporation, POSCO COATED & COLOR STEEL Co., Ltd., POSCO ICT, POSCOM-TECH, Busan E&E Co., Ltd., Suncheon Eco Trans Co., Ltd., SNNC, eNtoB Corporation, UITrans LRT Co. Ltd., POSCO O&M Co., Ltd., 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., Pohang Special Welding Co., Ltd., POSCO MITSUBISHI CARBON TECHNOLOGY, Samcheok Blue Power Co., Ltd. (By change of name from POSPower Co., Ltd), Songdo Posco family Housing, POSCO Group University, POSCO PLANTEC Co., Ltd., POSCO Research & Technology, Pohang Techno Valley PFV Corporation, Songdo Development PMC (Project Management Company) LLC., Korea Fuel-Cell

4

(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

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

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

(c) Seoul Office: POSCO Center, 440 Teheran-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), Brazil(Rio de Janeiro), Argentina(Jujuy), European Union(Dusseldorf, Germany), and Australia(Perth).

5

(3) Major Changes in the Board of Directors (as of March 27, 2020)

(a) Inside Directors

• Re-appointment : Chang, In-Hwa (Representative Director, President), Chon,Jung-Son (Senior Executive Vice President), Kim,Hag-Dong (Senior Executive Vice President) and Jeong, Tak (Senior Executive Vice President)

(b) Outside Directors

• Re-appointment : Chang,Seung-Wha

(c) Audit Committee Member

• New member : Pahk, Heui-Jae (Outside director)

(4) Changes of the Major Shareholders of POSCO

(a) Since January 30, 2007, National Pension Service holds the largest number of common shares of POSCO.

(b) For further reference, please refer to the public disclosures posted by National Pension Service on Financial Supervisory Service website (http://dart.fss.or.kr) with the filing dates given below: 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, July 8, 2019, October 4, 2019, October 8, 2019, January 7, 2020, February 7, 2020, March 5, 2020, April 7, 2020, May 8, 2020)

B. POSCO’s Merger, Acquisition and Handover of Businesses

(1) March 2016 : Small scale merger of POSHIMETAL Co., Ltd into POSCO

(2) May 2016 : Small scale merger of POSCO Green Gas Technology into POSCO

(3) January 2019 : Small scale merger of POSCO Processing & Service Co., Ltd into POSCO

(4) September 2019 : Small scale merger ofBy-Product Hydrogen Generation Business from POSCO ENERGY into POSCO afterspin-off

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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, 2020)
Authorized Shares	Issued 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, 2020)
Method of Purchase	Type	Beginning*		Increased		Decreased		Cancelled		Balance
Direct	Registered		7,071,194		—		—		—		7,071,194
Trust Contract	Common		—		—		—		—		—
Total	Stock		7,071,194		—		—		—		7,071,194

5. Voting Rights

			(As of March 31, 2020)
Classification of Shares	Number of Shares		Remarks
(1) Number of Issued 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 Dividends

					(In millions of KRW)
	2020.1Q		2019		2018
(Consolidated) Net Profit		395,393		1,835,087		1,690,612
(Separate) Net Profit		453,020		1,175,712		1,072,592
Earnings per Share (Consolidated, KRW)		4,915		22,823		20,911
Cash Dividend Paid		120,173		801,156		800,009
Pay-out Ratio (Consolidated, %)		30.4		43.7		47.3
Dividend per Share (KRW)		1,500		10,000		10,000
Dividend Yield (%)		1.0		4.1		4.1

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II. BUSINESS

1. Overview

1) Classification of Business

We classify our business into four segments:

Steel, Trading, Engineering & Construction, and Others.

2) Segment Results

									(In millions of KRW)
Category	2020.1Q				2019				2018
	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Steel		7,105,453		392,134		32,078,45		2,786,517		32,358,009		4,536,318
Trading		5,055,675		118,282		22,157,131		542,724		22,407,717		383,934
Engineering & Construction		1,618,924		108,708		6,944,629		338,865		6,769,410		411,489
Others		765,761		86,127		3,186,635		200,749		3,442,641		210,859
Total		14,545,813		705,251		64,366,848		3,868,855		64,977,777		5,542,600

2. Current Situation

1) Steel : Domestic Market Share

									(Millions of Tons, %)
Category	2020.1Q				2019				2018
	Production		Market share		Production		Market share		Production		Market share
Crude Steel Production		16.9		100		71.4		100		72.5		100
POSCO		9.1		53.8		38.0		53.2		37.7		52.0
Others		7.8		46.2		33.4		46.7		34.8		48.0

Source: World Steel Association (www.worldsteel.org)

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2) Trading

A. Market Share

			(Millions of US Dollars)
Category	2020.1Q		2019.1Q		Growth rate
All Trading Companies in Korea		130,807		132,654		-1.4	%
POSCO International Corp.		1,403		1,629		-13.9	%

Source: Korea International Trade Association

B. Summary of 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

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.

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.

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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.

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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.		19,237			17.37
	Cold-rolled Product (CR)	Automobile , Home appliances, etc.		37,136			33.53
	Stainless Steel Products	Western tableware, etc.		21,123			19.07
	Others	Plates, Wire rods, etc.		33,255			30.03
	Gross Sum			110,750			100
	Deduction of Internal Trade			(39,695	)
	Sub Total			71,055
Trading	Steel, Metal			62,182			73.82
	Chemical, Strategic Item, Energy			7,792			9.25
	Others			14,264			16.93
	Gross Sum			84,238			100
	Deduction of Internal Trade			(33,681	)
	Sub Total			50,557
Engineering & Construction	Domestic Construction	Architecture		10,998			56.79
		Plant		3,715			19.18
		Civil Engineering		1,350			6.97
		Others		—			—
	Overseas Construction			1,765			9.11
	Owned Construction			914			4.72
	Others			626			3.23
	Gross Sum			19,367			100
	Deduction of Internal Trade			(3,178	)
	Sub Total			16,189
Others	Electricity Sales, etc.			14,623
	Deduction of Internal Trade			(6,965	)
	Sub Total			7,658
	Total Sum			145,458

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B. Price Movement Trends of Key Products

				(In thousands of KRW/ Tons, KRW/kWh)
Business Area	Products	2020.1Q		2019		2018
Steel	Hot-rolled Product (HR)		658		695		707
	Cold-rolled Product (CR)		777		800		807
Others	Electric Power		86		94		100
	Lime		111		111		108

Trade and Engineering & Construction businesses are not reflected on the table above due to difficulties in measuring the price movement 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 Changes

From 2016, the prices of steel products have continuously increased. However, from 2019 due to worsening slowdown in demand for steel products, the steel products prices have decreased.

[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	26,584 (56.4)	Iron Ore, Coal
		Sub-materials	Sub-materials for Iron-making, Steelmaking	9,512 (20.2)	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
		Stainless Steel Materials	Key Materials for STS Production	11,045 (23.4)	Nickel, Ferrochrome, STS Scrap Iron, etc.
Engineering & Construction	Raw Materials	Ready-mixed Concrete	Construction of Structure	592 (20.3)
		Steel Reinforcement	Strengthening Concrete	380 (13.1)
		Cable	Electricity Transfer	12 (0.4)
		Steel Pile	Foundation of Structure	29 (1.0)
		Others	Construction of Pipe and Structure etc.	1,899 (65.2)
Others	Raw Materials	LNG	Material for Power Generation	2,637 (43.1)
		Limestone	Production of Lime	238 (3.9)
		Others	Engineering business etc.	3,242 (53.0)

15

B. Price Movement Trends of Major Raw Materials

				(In thousands of KRW)
Business Area	Category	2020.1Q		2019		2018
Steel	Iron Ore(per ton)		99		102		76
	Coal(per ton)		185		207		228
	Scrap Iron(per ton)		327		347		395
	Nickel(per ton)		15,168		16,148		15,074
Engineering & Construction	Ready-mixed Concrete (per m3)		63		63		63
	Steel Pile (per m)		136		136		146
	Steel Reinforcement (per kg)		1		1		1
	Cable (per m)		1		1		1
Others	LNG (per ton)		588		668		768
	Lime (per ton)		20		20		19

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[Steel]

Price Movement Trend of Major Raw Materials

(1) Iron Ore

																			(In US Dollars/ Tons)
	’20.1Q		’19.4Q		’19.3Q		’19.2Q		’19.1Q		’18.4Q		’18.3Q		’18.2Q		’18.1Q		’17.4Q		’17.3Q		’17.2Q
Trend of International Benchmark Price (Free On Board, “FOB”)		83		80		92		94		77		64		57		58		68		57		64		57

(2) Coal

																			(In US Dollars/ Tons)
	’20.1Q		’19.4Q		’19.3Q		’19.2Q		’19.1Q		’18.4Q		’18.3Q		’18.2Q		’18.1Q		’17.4Q		’17.3Q		’17.2Q
Trend of International Benchmark Price (FOB)		155		140		161		203		206		221		188		190		229		204		189		191

(3) Scrap Iron

																			(In US Dollars/ Tons)
	’20.1Q		’19.4Q		’19.3Q		’19.2Q		’19.1Q		’18.4Q		’18.3Q		’18.2Q		’18.1Q		’17.4Q		’17.3Q		’17.2Q
Trend of Purchase Price (Cost and Freight, “CFR”)		274		270		290		312		325		343		350		364		379		344		322		268

(4) Nickel

’20.1Q

’19.4Q

’19.3Q

’19.2Q

’19.1Q

’18.4Q

’18.3Q

’18.2Q

’18.1Q

’17.4Q

’17.3Q

’17.2Q

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

USD 5.77 /lb USD 12,723/ton

USD 7.01 /lb USD 15,450/ton

USD 7.05 /lb USD 15,540/ton

USD 5.56 /lb USD 12,258/ton

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

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 D10mm
Cable	TFR-3, 0.6/1KV, 2.5SQ, 2core

[Others]

(1) Criteria for Calculation

(a) LNG: The average price between LNG purchased from Korea Gas Corporation and LNG purchased directly from foreign suppliers

(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		2020.1Q		2019		2018
Steel		Crude Steel		11,396		47,534		47,590

[Others]

	(Electric Power-MW per year, Lime-Thousands of Tons  per year)
Business Area	Products		2020.1Q		2019		2018
Power Generation	Electric Power	Incheon		3,412		3,412		3,412
		Gwangyang		—		284		284
		Pohang		—		290		290
Lime	Lime			2,190		2,190		2,190

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production

				(Thousands of Tons)
Products		2020.1Q		2019		2018
Crude Steel			10,174		42,948		42,867
Products	Hot-Rolled Steel		2,090		8,739		8,716
	Plate		1,851		7,191		7,432
	Wire Rod		659		2,756		2,867
	Pickled-Oiled Steel		695		2,967		2,946
	Cold-Rolled Products		1,757		7,416		8,551
	Coated Steel		1,649		6,526		7,163
	Electrical Steel		222		819		1,078
	Stainless Steel		918		3,850		3,978
	Others		853		5,761		5,903
	Total		10,695		46,025		48,634

The amount of products is the aggregate amount of POSCO’s production and production of POSCO subsidiaries, which may include interested parties’ transactions.

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(2) Capacity Utilization Rate

						(Thousands of Tons, %)
	Company	Capacity		Production		Utilization Rate
Crude Steel Production	POSCO		10,114		9,066		89.6
	Zhangjiagang Pohang Stainless Steel Co., Ltd		275		248		90.3
	PT.KRAKATAU POSCO		732		751		102.6
	POSCOSS-VINA Joint Stock Company (Previously, POSCO SS VINA Co., Ltd.)		275		109		39.8
	Total		11,396		10,174		89.3

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	2020.1Q		2019		2018
Power Generation	Electric Power		3,454		15,928		15,297
Lime	Lime		602		2,542		2,511

(2) Capacity Utilization Rate

		(Electric Power-hr, Lime-Thousands of Tons)
Business Area	Products	2020.1Q Capacity		2020.1Q Production		Utilization Rate(%)
Power Generation	Incheon Power Plant		2,184		1,264		57.9
Lime	Lime		546		602		110

20

C. Production Facilities

(1) The current status of production facilities

[Land]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation		Ending Book Balance
Steel		1,900,252		25,798		(232	)		—		1,925,818
Trade		171,177		415		(1	)		—		171,591
Engineering & Construction		25,528		—		(175	)		—		25,353
Others		429,102		4,987		(1,098	)		—		432,991

[Buildings]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		3,312,799		113,828		(13,897	)		(70,380	)		3,342,350
Trade		477,497		13,727		—			(2,454	)		488,770
Engineering & Construction		72,102		1,392		(1	)		(617	)		72,876
Others		353,056		58,189		(13,818	)		(5,495	)		391,932

[Structures]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		2,418,025		145,579		(50,087	)		(48,600	)		2,464,917
Trade		22,484		126		(228	)		(372	)		22,010
Engineering & Construction		13,175		145		—			(426	)		12,894
Others		450,822		67,120		(626	)		(7,913	)		509,403

[Machinery and Equipments]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		15,309,982		695,090		(311,320	)		(521,469	)		15,172,283
Trade		398,184		1,148		(7,782	)		(9,893	)		381,657
Engineering & Construction		5,267		1,817		(1,585	)		(345	)		5,154
Others		1,504,831		115,123		(1,254	)		(32,115	)		1,586,585

21

[Vehicles]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		20,095		3,141		(2,140	)		(2,370	)		18,726
Trade		5,852		726		(440	)		(461	)		5,677
Engineering & Construction		783		744		(733	)		(208	)		586
Others		5,555		1,987		(926	)		(583	)		6,033

[Tools and Fixtures]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		48,984		8,473		(2,420	)		(4,870	)		50,167
Trade		11,647		4,183		(3,520	)		(1,453	)		10,857
Engineering & Construction		599		223		(174	)		(64	)		584
Others		9,521		3,060		(731	)		(998	)		10,852

[Equipment]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		64,739		13,729		(5,948	)		(4,925	)		67,595
Trade		30,675		4,168		(1,744	)		(2,394	)		30,705
Engineering & Construction		4,055		556		(331	)		(410	)		3,870
Others		30,663		3,353		(2,523	)		(1,298	)		30,195

[Financial Lease Assets]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		417,805		124,219		(2,375	)		(18,438	)		521,211
Trade		81,002		23,945		(7,250	)		(5,780	)		91,917
Engineering & Construction		216,170		172,467		(164,932	)		(9,050	)		214,655
Others		59,605		15,697		(994	)		(8,573	)		65,735

22

[Biological Assets]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		—		—		—			—			—
Trade		124,193		6,417		(12,916	)		(1,792	)		115,902
Engineering & Construction		—		—		—			—			—
Others		—		—		—			—			—

[Assets under Construction]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		1,436,769		660,214		(467,286	)		(0	)		1,629,697
Trade		105,280		16,048		(20,393	)		—			100,935
Engineering & Construction		23,060		6,394		(1	)		—			29,453
Others		364,638		95,771		(120,290	)		—			340,119

23

(2) New Facility Establishment, Purchase, Etc.

(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 ~September, 2023	P) Establishment of by-product gas Power Plant P) Establishment of #6 Coke plant		15,080		1,559		13,521
		February, 2017 ~ December, 2021	G) The renovation of #3 furnace P) Establishment of coal storage (Silo)		19,457		10,982		8,476
POSCO-CSPC	Establishment	January, 2015 ~December, 2019	Establishment of a 2,500 tonnage press machine		122		121		1

P stands for Pohang Steel Works.

G stands for Gwangyang Steel Works.

Investments over KRW 10 billion are listed on the table.

[Trade]           (In hundred millions of KRW)      

Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
PT. BIO INTI AGRINDO	Establishment	December, 2014 ~December, 2022	CPO MILL		583		331		252

Investments over KRW 10 billion are listed on the table.

[Others]       (In hundred millions of KRW)    

Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO ICT	Establishment/ Expansion	January, 2020 ~ December, 2020	Expansion of SM server		316		45		271
		January, 2020 ~ December, 2020	System improvement, IT facility purchase, etc.		182		4		178
POSCO CHEMICAL	Establishment/ Expansion	March, 2019 ~March, 2020	Expansion of product lines for cathode materials in Gwangyang		2,396		2,003		393
	Renovation	November, 2019 ~ October, 2021	Renovation of refractory factory for production increase		483		42		441

24

	Establishment/ Expansion	November, 2019 ~ November, 2021	Expansion of product lines in #2 anode materials factory	1,373	130	1,243
	Purchase	February, 2020 ~ May, 2020	Land purchase for the establishment of artificial graphite anode factory	130	13	117
POSCO Energy	Establishment/ Expansion	March, 2020 ~ December, 2021	Expansion of evaporator for Gwangyang LNG Terminal	360	0	360
		April, 2020 ~ April, 2020	Capacity expansion of Gwangyang LNG #5 tank	1,608	0	1,608

Investments over KRW 10 billion are listed on the table

(b) Future Investment Plans (In hundred millions of KRW)

Business	Company	Project	Investment effects	Planned Investments
				2020		2021		2022
Steel	POSCO	Establishment/Expansion	Cost reduction		646		6,451		8,418
		Renovation and Replacement of Existing Facilities, etc.	Maintenance of existing facilities, etc.		—		1,500		2,000
	POSCO SS VINA Joint Stock Company (Previously, POSCO SS VINA Co., Ltd.)	Renovation and Replacement of Existing Facilities, etc.	Enhancing production efficiency, cost reduction, etc.		47		27		12
Trading	PT. BIO INTI AGRINDO	Establishment/Expansion	Realization of profits by selling CPO		47		18		187
Others	POSCO CHEMICAL	Establishment/Expansion	Line up expansion of #2 Anode factory		1,190		—		—
		Renovation and Replacement of Existing Facilities, etc.	Maintenance of refractory factory for facility enhancement		348		—		—
	POSCO ICT	Establishment/Expansion	Improvement of POSCO IT service		271		169		542
			System improvement, etc.		178		380		57
	POSCO O&M	Establishment/Expansion	Renovation of Existing Facilities		91		107		111

Investments over KRW 10 billion are listed on the table

25

6. Product Sales

[Steel]

		(In hundred millions of KRW)
Items		2020.1Q			2019			2018
Domestic	Hot-Rolled Products		9,544			42,605			48,879
	Cold- Rolled Products		9,534			39,716			39,901
	Stainless Steel		5,187			21,167			21,281
	Others		16,264			77,026			77,230
Export	Hot-Rolled Products		9,693			41,064			35,231
	Cold- Rolled Products		27,602			125,658			124,449
	Stainless Steel		15,936			80,181			79,931
	Others		16,991			70,667			77,310
Total	Gross Sum		110,750			498,084			504,212
	Internal Transaction		(39,695	)		(177,299	)		(180,632	)
	Total		71,055			320,785			323,580

[Trading]

		(In hundred millions of KRW)
Items		2020.1Q			2019			2018
Domestic	Merchandise		8,891			29,315			33,706
	Product		1,925			5,120			4,702
	Others		268			1,101			1,483
Export	Merchandise		17,329			69,347			87,124
	Product		161			205			768
	Others		8			638			736
Trades among the 3 countries			55,656			270,522			254,670
Gross Sum			84,238			376,247			383,189
Internal Transaction			(33,681	)		(154,677	)		(159,112	)
Total			50,557			221,571			224,077

26

[Engineering & Construction]

		(In hundred millions of KRW)
Items		2020.1Q			2019			2018
Domestic	Building		10,998			44,681			37,363
	Plant		3,715			10,953			10,238
	Civil Engineering		1,350			6,098			5,129
	Others		—			—			337
Overseas			1,765			7,190			9,471
Own Construction			914			5,712			7,568
Other Subsidiary company sales			626			2,248			3,101
Gross Sum			19,367			76,880			73,207
Internal Transaction			(3,178	)		(7,434	)		(5,513	)
Total			16,189			69,446			67,694

[Others]

	(In hundred millions of KRW)
Items	2020.1Q		2019		2018
Electric Power Sales		7,658		31,866		34,427

7. Derivatives

We use forward exchange contracts to hedge against the exchange rate risk for foreign currency loans. As of March 31, 2020, 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 contracts to be USD 0.5 billion(expiring July, 2023), USD 0.5 billion(expiring July, 2024), USD 0.5 billion(expiring November 2022), USD 0.5 billion(expiring January 2023), and USD 0.44 billion(expiring January 2025), and EUR 0.5 billion(expiring January 2024).

We recognized KRW 77,860 million of gain on valuations of forward exchange contracts. Also, we recognized KRW 186,375 million of valuation gain on currency swap contracts. The transaction gain of currency swap contracts is KRW 221 million.

27

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 100% a 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
	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	1) Purpose: Expansion of sales of automotive steel in Southwest province of China 2) Information: 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 3) Execution of JV Agreements: April 6, 2016 4) Termination JV Agreements: September, 2017 5) Liquidation of Steel mills set off: November 13, 2017 6) Completion of liquidation: June 28, 2018
	Small scale merger of POSCO Processing & Service	August, 2018	1) Purpose: To increase operational efficiency 2) Information: POSCO Processing & Service(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
	Small scale merger with By-product Hydrogen Generation Business afterspin-off from POSCO ENERGY	April, 2019	1) Purpose: To increase operational efficiency 2) Information:By-product Hydrogen Generation Business of POSCO ENERGY will be merged into POSCO -  The merger ratio is 1 : 0.1145836 (POSCO : POSCO ENERGY) 3) Conclusion of a contract: April 16, 2019 4) Date of merger: September 1, 2019 5) Registration of merger: September 9, 2019
	LNG Terminal Business Transfer Agreement	April, 2019	1) Business transferee: POSCO ENERGY 2) Conclusion of a contract: April 16, 2019 3) Date of transfer: September 1, 2019 4) Transfer amount : KRW 608,019 million 5) Information: LNG Terminal Business of POSCO in Gwangyang will be transferred to POSCO ENERGY

28

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% •  KOGAS(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
	Split-off of Domestic steel processing businesses	October, 2019	1) Purpose : To specialize in steel processing business bysplitting-off business division 2) Method :Split-off 3) Resolution date of Board of Directors : October 25, 2019 4) Shareholders’ meeting for approval : March 30, 2020 5) Date ofSplit-off : March 31, 2020 6) Registration date ofSplit-off : April 3, 2020
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

29

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 4) Information: Contract of shares transfer for disposal of 68.5%(July) and 2.5%(August) POSPower shares
	Spin-off By-product Hydrogen Generation Business for merger into POSCO	April, 2019	1) Contract counterpart: POSCO 2) Conclusion of a contract: April 16, 2019 3) Date of merger: September 1, 2019 4) Merger payment : KRW 1,163,692 million (No issuance of new shares from POSCO) 5) Information : POSCO merges with Hydrogen Generation Business of POSCO ENERGY at the merger ratio of 1:0.1145836
	LNG Terminal Business Transfer Agreement	April, 2019	1) Business transferor: POSCO 2) Conclusion of a contract: April 16, 2019 3) Date of transfer: September 1, 2019 4) Transfer amount : KRW 608,019 million 5) Information: LNG Terminal Business of POSCO in Gwangyang will be transferred to POSCO ENERGY
POSCO SS VINA Joint Stock Company (Previously, POSCO SS VINA Co., Ltd.	Joint stock contract with YAMATO KOGYO CO., LTD. And SIAM YAMATO STEEL CO., LTD. to improve business structure	March, 2020	1) Purpose: To improve business structure by collaborating with leading company in section steels 2) Information: POSCO’s 100% share of POSCO SS VINA changes to 51% YAMATO KOGYO CO., LTD. takes 30% of shares and SIAM YAMATO STEEL CO., LTD. takes 19% of shares. 3) Conclusion of a contract: March 18, 2020 4) Registration of joint stock company : April 28, 2020

30

9. Research and Development

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

Business Area	Company	Organization
Steel	POSCO	Steel Production and Technology Strategy Office
		Safety & Environmental Planning 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
Trading	POSCO International Corporation	Molding R&D Center
		Stainless Quality Technology Group
Engineering & Construction	POSCO Engineering & Construction,. LTD.	R&D Center
	POSCO A&C	R&D Center
Others	POSCO ENERGY Co,. LTD	Renewable Energy Business Development Office
	POSCO ICT	R&D Center
	POSCO CHEMICAL	R&D Center
		Energy Material R&D Center
	POSCOM-TECH	R&D Center

B. R&D Expenses in 2020.1Q (In millions of KRW)

Category	Business Area
	Steel		Trade		Engineering & Construction		Others			Total
Selling and Administrative Cost		15,330		49		867		7,676			23,921
Manufacturing Cost		84,168		45		620		86			84,920
R&D Cost (Intangible Assets)		8,195		—		—		(510	)		7,685
Total*		107,693		94		1,487		7,252			116,526
Government Subsidy		—		—		55		—			55
R&D/Sales Ratio (%)		1.52		0.00		0.09		0.95			0.80

* This total expenses include government subsidy amount

31

III. Financial Statements

1. Consolidated Financial Statements

A. Summary of Fiscal Years of 2018, 2019 and 2020.1Q

	(In millions of KRW)
Account	2020.1Q		2019		2018
Condensed Consolidated Statements of Financial Position
[Total current assets]		37,812,465		34,842,374		33,651,002
Cash and cash equivalents		5,081,531		3,514,872		2,643,865
Other receivables, net		1,411,429		1,581,517		1,385,629
Other short-term financial assets		10,406,747		8,996,049		8,081,096
Trade accounts and notes receivable, net		9,343,892		9,078,351		9,282,609
Inventories		10,725,547		10,920,320		11,499,928
Other current assets		843,319		751,265		757,875
[Totalnon-current assets]		44,448,255		44,216,287		44,597,263
Other receivables, net		1,211,202		1,140,878		863,240
Otherlong-term financial assets		1,603,803		1,669,389		1,647,898
Investments in associates and joint ventures		3,833,688		3,927,755		3,650,003
Property, plant and equipment, net		30,352,055		29,925,973		30,018,273
Intangible assets, net		4,852,254		4,908,473		5,170,825
Othernon-current assets		2,595,253		2,643,819		3,247,024
Total assets		82,260,720		79,058,661		78,248,265
[Total current liabilities]		18,284,862		16,323,690		18,937,985
[Totalnon-current liabilities]		16,561,471		14,940,264		12,550,729
Total liabilities		34,846,333		31,263,954		31,488,714
[Equity attributable to owners of the controlling company]		44,234,640		44,471,873		43,371,260
Share capital		482,403		482,403		482,403

32

Capital surplus	1,339,839		1,376,251		1,410,551
Hybrid bonds	199,384		199,384		199,384
Retained earnings	45,139,313		45,080,118		44,216,018
Other equity attributable to owners of the controlling company	(2,926,299	)	(2,666,283	)	(2,937,096	)
[Non-controlling Interests]	3,179,747		3,322,834		3,388,291
Total equity	47,414,387		47,794,707		46,759,551
Condensed Consolidated Statements of Comprehensive Income
Revenue	14,545,813		64,366,848		64,977,777
Operating profit	705,251		3,868,855		5,542,600
Profit	434,658		1,982,637		1,892,064
[Profit attributable to owners of the controlling company]	395,393		1,835,086		1,690,612
[Profit attributable tonon-controlling interests]	39,265		147,551		201,452
Total comprehensive Income	162,275		2,129,105		1,463,535
[Total comprehensive income attributable to owners of the controlling company]	129,987		1,997,731		1,271,495
[Total comprehensive income attributable tonon-controlling interests]	32,288		131,374		192,040
Earnings per share(KRW)	4,915		22,823		20,911
Number of Consolidated Companies	166		164		173

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, 2020, 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, 2020, and Notes

33

2. Separate Financial Statements

A. Summary of Fiscal Years of 2018, 2019 and 2020.1Q

	(In millions of KRW)
Account	2020.1Q			2019			2018
Condensed Separate Statements of Financial Position
[Total current assets]		20,774,352			18,216,066			16,796,400
Cash and Cash equivalents		2,341,514			978,139			259,219
Trade accounts and notes receivable, net		3,679,631			3,987,041			3,968,372
Other receivables, net		310,403			321,352			206,432
Other short-term financial assets		9,441,325			7,858,979			7,025,143
Inventories		4,767,696			4,988,530			5,288,009
Other current assets		233,783			82,025			49,225
[Totalnon-current assets]		37,662,026			37,494,700			37,329,580
Other receivables, net		76,090			56,468			57,767
Otherlong-term financial assets		1,197,424			1,257,896			1,176,757
Investments in Subsidiaries, associates, and joint ventures		15,221,211			15,069,857			15,121,339
Property, plant and equipment, net		20,181,710			20,132,199			20,154,334
Intangible assets, net		717,740			708,915			645,222
Othernon-current assets		267,851			269,365			174,161
Total assets		58,436,378			55,710,766			54,125,980
[Total current liabilities]		4,179,101			3,331,446			3,895,973
[Totalnon-current Liabilities]		8,707,336			6,765,135			4,957,905
Total liabilities		12,886,437			10,096,581			8,853,878
[Share capital]		482,403			482,403			482,403
[Capital surplus]		1,252,220			1,252,220			1,154,775
[Hybrid bonds]		199,384			199,384			199,384
[Retained earnings]		45,498,431			45,372,411			45,175,459
[Other equity]		(1,882,497	)		(1,692,233	)		(1,739,919	)
Total equity		45,549,941			45,614,185			45,272,102

34

	(In millions of KRW)
Account	2020.1Q		2019		2018
Condensed Separate Statements of Comprehensive Income
Revenue		6,969,856		30,373,511		30,659,425
Operating profit		458,111		2,586,359		3,809,376
Profit		453,020		1,175,712		1,072,592
Earnings per share(KRW)		5,634		14,592		13,186

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”).

C. Separate Financial Statements

Refer to the attached Condensed Separate Financial Statements for the Condensed Separate Statements of Financial Position as of March 31, 2020, 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, 2020, 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, 2020)

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

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) Audit Committee

(e) Executive Management Committee

Composition of theSub-Committees under the Board of Directors and their Functions(as of May 15, 2020)
Category	Composition	Directors	Major Functions
Director Candidate Recommendation and Management Committee	3 Outside Directors; 1 Inside Director	Kim, Joo-Hyun (Chairman) Bahk, Byong-Won Pahk, Heui-Jae Chon,Jung-Son	•  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	Kim,Shin-Bae (Chairman) Kim, Joo-Hyun Chang,Seung-Wha Kim, Sung-Jin	•  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	Kim, Sung-Jin (Chairman) Kim,Shin-Bae Chang,Seung-Wha Chang, In-Hwa	•  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	Bahk, Byong-Won (Chairman) Chung,Moon-Ki Chang,Seung-Wha	•  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

36

Category	Composition	Directors	Major Functions
Executive Management Committee	5 Inside Directors	Choi, Jeong-Woo (Chairman) Chang, In- Hwa Chon,Jung-Son Kim,Hag-Dong Jeong, Tak	•  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

(2) List of Outside Directors (As of March 31, 2020)

Name	Experience	Relation with Majority Shareholder	Remarks
Chung,Moon-Ki	•  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	Chairman of the Board of Directors
Bahk, Byong-Won	•  Honorary 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
Kim, Joo-Hyun	•  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
Kim,Shin-Bae	•  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
Chang,Seung-Wha	•  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
Kim, Sung-Jin	•  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
Pahk, Heui-Jae	•  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) •  SNU Precision CEO (‘98.2~‘16.12) •  Ph.D in Mechanical Engineering, Seoul National University (‘90)	None

37

(3) List of Key Activities of the Board of Directors (January 1, 2020 ~ May 15, 2020)

Session	Date	Agenda	Approval
2020-1	January 31	•   Deliberation Agenda 1.  Approval of the 52nd financial statements and schedule for the general meeting of shareholders •   Report Agenda 1.  The progress on implementing resolution made by the Board of Directors for the fiscal year of 2019 2.  Business performance of the fiscal year of 2019 3.  Report on internal control over financial reporting 4.  Assessment on the effectiveness of internal control over financial reporting	All 1 Case Approved
2020-2	February 21	•   Deliberation Agenda 1.  Agendas for the 52nd general meeting of shareholders 2.  Recommendation of inside director candidates (Candidates other than representative director CEO)	All 2 Cases Approved
2020-3	March 27	•   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 4.  Donation to help organizations and institutions againstCOVID-19 virus	All 4 Cases Approved
2020-4	April 10	•   Deliberation Agenda 1.  Decision on contract for share repurchase trust	All 1 Case Approved
2020-5	May 8	•   Deliberation Agenda 1.  Declaration of the first quarter dividend for the fiscal year of 2020 2.  Transaction Plans with affiliates for the fiscal year of 2020 •   Report Agenda 1.  The business performance of the first quarter of 2020 2.  The progress and plan of venture platform 3.  The performance and assessment of Board of Directors for 2019 4.  Plan for POSCO Group logistics integration	All 2 Cases Approved

Major Activities of Outside Directors on the Board of Directors (January 1, 2019 ~ May 15, 2020)

Session	Date	Participation of the Outside Directors (the Number of total members)	Remarks
2020-1	January 31	7(7)	—
2020-2	February 21	7(7)	—
2020-3	March 27	6(7)	Absence : Chung, Moon-Ki
2020-4	April 10	6(7)	Absence : Chung, Moon-Ki
2020-5	May 8	7(7)	—

38

(4) Composition of theSub-committees and their Activities

• Major Activities of Director Candidate Recommendation Committee(January 1, 2020~March 27, 2020 before the Board of Directors meeting)

Date	Agenda	Approval
February 14 & 21, 2020	•   Deliberation Agenda
	1.  Qualification Assessment and Recommendation of Outside Director Candidates	Approved
February 21, 2020	•   Preliminary Review Agenda	—
	1.  Qualification Assessment of Inside Director Candidates
	•   Preliminary Review Agenda
March 27, 2020	1.  Appointment of theSub-committee Members	—
	2.  Appointment of the Representative Directors	—

• Major Activities of Evaluation and Compensation Committee(January 1, 2020~March 27, 2020 before the Board of Directors meeting)

Date	Agenda	Approval
January 22, 2020	•   Deliberation Agenda	Approved
	1.  Evaluation of the business performance for the fiscal year of 2019

• Major Activities of Finance and Related Party Transaction Committee (January 1, 2020~May 15, 2020)

Date	Agenda	Approval
January 31, 2020	•   Deliberation Agenda
	1.  Contribution to the Internal Labor Welfare Fund	Approved
	2.  Contribution to the Mutual Cooperation Fund	Approved
	3.  Donation to help organizations and institutions against COVID 19 virus	Approved
May 6, 2020	•   Deliberation Agenda
	1.  Payment guarantee plan for POSUK	Approved
	2.  Payment guarantee plan forPOSCO-TCS	Approved
May 6 & 8, 2020	•   Deliberation Agenda
	1.  Plan for POSCO Group logistics integration	Approved

• Major Activities of Executive Management Committee (January 1, 2019 ~ May 15, 2020)

Date	Agenda	Approval
January 22, 2020	•   Preliminary Review Agenda
	1.  Establishment of #6 Cokes Oven in Pohang works	—
February 18, 2020	•   Deliberation Agenda	Approved
	1.  Establishment of #6 Cokes Oven in Pohang works
March 17, 2020	•   Deliberation Agenda	Approved
	1.  Capital increase for IJPC 3# factory in Indonesia

39

B. Audit Committee

(1) Composition of the Audit Committee

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

(2) Major Activities of the Audit Committee (January 1, 2020 ~ May 15, 2020)

Session	Date	Agenda	Approval
1	January 30	•   Deliberation Agenda 1.  Assessment of internal control over financial reporting 2.  Approval of audit andnon-audit services for POSCO and subsidiaries 3.  Assessment of the Audit Committee for the fiscal year of 2019 •   Report Agenda 1.  Report of operation of internal control over financial reporting in 2019 2.  The result of internal audit for the fiscal year of 2019 and audit plans for the fiscal year of 2020 3.  The assessment on the executive and employees’ conformity to the code of ethics for the fiscal year of 2019	All 3 Cases Approved
2	February 20	•   Deliberation Agenda 1.  Approval of audit andnon-audit services for POSCO’s subsidiariesabroad 2.  Internal audit result for the 52nd term •   Report Agenda 1.  External audit result for the 52nd term	All 2 Cases Approved
3	February 21	•   Deliberation Agenda 1.  Review of agenda for general meeting of shareholders	Approved

• At the 52^nd General shareholders’ meeting held on March 27, 2020, due to Chang,Seung-Wha’s expiration of term in the audit committee, a new audit committee member, Pahk, Heui-Jae, was elected.

40

     Changes after March 31, 2020

Session	Date	Agenda	Approval
4	April 24	•   Deliberation Agenda 1.  Appointment of the chairman of the audit committee •   Report Agenda 1.  Consolidated internal control over financial reporting for the fiscal year of 2019 2.  Assessment of the consolidated internal control over financial reporting for the fiscal year of 2019 3.  Audit report of20-F for the fiscal year of 2019	Approved
5	May 7	•   Deliberation Agenda 1.  Approval of audit service contract on POSCO SPS •   Report Agenda 1.  Internal audit result on Consolidated financial statements of the 1st quarter of the fiscal year 2020 2.  External review result on Consolidated financial statements of the 1st quarter of the fiscal year 2020	Approved

C. Voting Rights of Shareholders

(1) The Cumulative Voting System: The cumulative voting system was introduced at the 36th general meeting of shareholders on March 12, 2004.

(2) Voting by Mail: Thevoting-by-mail system was introduced at the 36th general meeting ofshareholders on March 12, 2004.

(3) The Electronic Voting System: The electronic voting system was determined at the Board of Directors’ meeting on February 20, 2019.

D. Compensation of Directors and Officers

(1) Directors’ (including Outside Directors) and the Audit Committee members’ Salaries

							(In millions KRW)
Category	Total Numbers	Total Payment		Average Payment (Per Person)		Ceiling Amount Approved at the Shareholders Meeting	Remarks
Inside Director	5		3,244		649	10,000		—
Outside Director	4		71		18			—
Members of the Audit Committee	3		53		18			—	��

     Payment Period: January 1, 2020 ~ March 31, 2020

     Outside Directors also serving as the members of the Audit Committee are excluded in the count for the Outside Directors.

Average payment per person is calculated based on the paid amount to the current directors and audit committee members as of March 31, 2020.

41

POSCO

and Subsidiaries

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2020

(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, 2020, the condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2020 and 2019, 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.

Auditors’ 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, 2019, 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 12, 2020, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Company as of December 31, 2019, 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, 2020

This report is effective as of May 15, 2020, 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, 2020 and December 31, 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020		December 31, 2019
Assets
Cash and cash equivalents	21	W	5,081,531		3,514,872
Trade accounts and notes receivable, net	4,21,26,27,34		9,343,892		9,078,351
Other receivables, net	5,21,34		1,411,429		1,581,517
Other short-term financial assets	6,21		10,406,747		8,996,049
Inventories	7		10,725,547		10,920,320
Current income tax assets			45,541		45,930
Assets held for sale	8		71,808		74,158
Other current assets	14		725,970		631,177
Total current assets			37,812,465		34,842,374
Long-term trade accounts and notes receivable, net	4,21		169,057		198,785
Other receivables, net	5,21		1,211,202		1,140,879
Other long-term financial assets	6,21		1,603,803		1,669,389
Investments in associates and joint ventures	9		3,833,688		3,927,755
Investment property, net	11		887,162		878,227
Property, plant and equipment, net	12		30,352,055		29,925,973
Intangible assets, net	13		4,852,254		4,908,473
Defined benefit assets, net	19		6,943		4,280
Deferred tax assets			1,254,616		1,237,285
Othernon-current assets	14		277,475		325,241
Totalnon-current assets			44,448,255		44,216,287
Total assets		W	82,260,720		79,058,661

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, 2020 and December 31, 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020			December 31, 2019
Liabilities
Trade accounts and notes payable	21,34	W	3,478,052			3,422,922
Short-term borrowings and current installments of long-term borrowings	4,15,21		9,925,975			8,548,212
Other payables	16,21,34		2,084,609			1,879,508
Other short-term financial liabilities	17,21		149,572			77,827
Current income tax liabilities			454,375			396,616
Liabilities directly associated with the assets held for sale	8		4			8
Provisions	18,35		313,552			360,495
Other current liabilities	20,26,27		1,878,724			1,638,102
Total current liabilities			18,284,863			16,323,690
Long-term trade accounts and notes payable	21		9,678			20,067
Long-term borrowings, excluding current installments	15,21		13,576,731			11,893,401
Other payables	16,21		677,528			585,129
Other long-term financial liabilities	17,21		22,289			31,494
Defined benefit liabilities, net	19		226,004			181,011
Deferred tax liabilities			1,572,728			1,691,498
Long-term provisions	18,35		432,887			458,154
Othernon-current liabilities	20,26		43,625			79,510
Totalnon-current liabilities			16,561,470			14,940,264
Total liabilities			34,846,333			31,263,954
Equity
Share capital	22		482,403			482,403
Capital surplus	22		1,339,839			1,376,251
Hybrid bonds	23		199,384			199,384
Reserves	24		(1,417,995	)		(1,157,980	)
Treasury shares	25		(1,508,303	)		(1,508,303	)
Retained earnings			45,139,312			45,080,117
Equity attributable to owners of the controlling company			44,234,640			44,471,872
Non-controlling interests	23		3,179,747			3,322,835
Total equity			47,414,387			47,794,707
Total liabilities and equity		W	82,260,720			79,058,661

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, 2020 and 2019

(Unaudited)

(in millions of Won, except per share information)	Notes	March 31, 2020			March 31, 2019
Revenue	26,27,34,37	W	14,545,813			16,014,238
Cost of sales	7,27,31,34		(13,235,530	)		(14,200,867	)
Gross profit			1,310,283			1,813,371
Selling and administrative expenses	31,34
Impairment loss on trade accounts and notes receivable			(9,987	)		(13,132	)
Other administrative expenses	28		(477,067	)		(506,083	)
Selling expenses	28		(117,978	)		(91,260	)
Operating profit			705,251			1,202,896
Share of profit of equity-accounted investees, net	9		31,664			66,859
Finance income and costs	21,29
Finance income			1,319,425			494,014
Finance costs			(1,345,277	)		(550,593	)
Othernon-operating income and expenses	34
Impairment loss on other receivables			(1,197	)		(3,390	)
Othernon-operating income	30		64,301			74,344
Othernon-operating expenses	30,31		(113,764	)		(137,189	)
Profit before income tax	37		660,403			1,146,941
Income tax expense	32,37		(225,745	)		(368,496	)
Profit			434,658			778,445
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans	19		(3,850	)		(9,706	)
Net changes in fair value of equity investments at fair value through other comprehensive income	21		(202,836	)		(5,540	)
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees			(61,206	)		48,839
Foreign currency translation differences			(4,434	)		121,161
Gains or losses on valuation of derivatives	21		(57	)		32
Other comprehensive income (loss), net of tax			(272,383	)		154,786
Total comprehensive income		W	162,275			933,231
Profit attributable to:
Owners of the controlling company		W	395,393			741,253
Non-controlling interests			39,265			37,192
Profit		W	434,658			778,445
Total comprehensive income attributable to :
Owners of the controlling company		W	129,987			912,402
Non-controlling interests			32,288			20,829
Total comprehensive income		W	162,275			933,231
Basic and diluted earnings per share (in Won)	33		4,915			9,233

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, 2020 and 2019

(Unaudited)

(in millions of Won)	Attributable to owners of the controlling company																			Non- controlling interests			Total
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal
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 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.

6

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2020 and 2019

(Unaudited)

(in millions of Won)	Attributable to owners of the controlling company																			Non- controlling interests			Total
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal
Balance as of January 1, 2020	W	482,403		1,376,251			199,384		(1,157,980	)		(1,508,303	)		45,080,117			44,471,872			3,322,835			47,794,707
Comprehensive income:
Profit		—		—			—		—			—			395,393			395,393			39,265			434,658
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			(4,084	)		(4,084	)		234			(3,850	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		(67,770	)		—			—			(67,770	)		6,564			(61,206	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		(201,529	)		—			(1,307	)		(202,836	)		—			(202,836	)
Foreign currency translation differences, net of tax		—		—			—		9,338			—			—			9,338			(13,772	)		(4,434	)
Gains or losses on valuation of derivatives, net of tax		—		—			—		(54	)		—			—			(54	)		(3	)		(57	)
Total comprehensive income		—		—			—		(260,015	)		—			390,002			129,987			32,288			162,275
Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(320,462	)		(320,462	)		(59,655	)		(380,117	)
Changes in ownership interest in subsidiaries		—		(2,792	)		—		—			—			—			(2,792	)		125,410			122,618
Repayment of redeemable convertible preferred shares		—		(33,581	)		—		—			—			—			(33,581	)		(245,000	)		(278,581	)
Interest of hybrid bonds		—		—			—		—			—			(2,294	)		(2,294	)		(1,838	)		(4,132	)
Others		—		(39	)		—		—			—			(8,051	)		(8,090	)		5,707			(2,383	)
Total transactions with owners of the controlling company		—		(36,412	)		—		—			—			(330,807	)		(367,219	)		(175,376	)		(542,595	)
Balance as of March 31, 2020	W	482,403		1,339,839			199,384		(1,417,995	)		(1,508,303	)		45,139,312			44,234,640			3,179,747			47,414,387

See accompanying notes to the condensed consolidated interim financial statement

7

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the three-month periods ended March 31, 2020 and 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020			March 31, 2019
Cash flows from operating activities
Profit		W	434,658			778,445
Adjustments for:
Depreciation			770,170			764,760
Amortization			114,287			99,262
Finance income			(914,256	)		(341,882	)
Finance costs			993,094			386,371
Income tax expense			225,745			368,496
Impairment loss on property, plant and equipment			78			68,345
Gain on disposal of property, plant and equipment			(4,835	)		(12,282	)
Loss on disposal of property, plant and equipment			40,671			12,297
Impairment loss on other intangible assets			423			1,004
Gain on disposal of investments in subsidiaries, associates and joint ventures			(3,969	)		(14,436	)
Loss on disposal of investments in subsidiaries, associates and joint ventures			4,952			1,871
Share of profit of equity-accounted investees			(31,664	)		(66,859	)
Impairment loss on assets held for sale			—			4,195
Expenses related to post-employment benefit			62,608			60,027
Impairment loss on trade and other receivables			11,184			16,522
Loss on valuation of inventories			97,504			68,743
Increase to provisions			17,009			57,307
Others, net			5,243			6,908
			1,388,244			1,480,649
Changes in operating assets and liabilities	36		123,104			(714,618	)
Interest received			73,960			59,458
Interest paid			(139,460	)		(161,145	)
Dividends received			35,927			29,566
Income taxes paid			(191,110	)		(81,863	)
Net cash provided by operating activities		W	1,725,323			1,390,492

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, 2020 and 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020			March 31, 2019
Cash flows from investing activities
Acquisitions of short-term financial instruments		W	(9,143,509	)		(7,142,031	)
Proceeds from disposal of short-term financial instruments			7,807,693			7,126,453
Increase in loans			(401,063	)		(145,366	)
Collection of loans			479,949			174,199
Acquisitions of securities			(199,977	)		(204,535	)
Proceeds from disposal of securities			211,015			18,737
Acquisitions of investment in associates and joint ventures			(54,564	)		(32,844	)
Proceeds from disposal of investment in associates and joint ventures			3,347			2,998
Acquisitions of investment property			(3,115	)		(4,395	)
Proceeds from disposal of investment property			—			376
Acquisitions of property, plant and equipment			(937,795	)		(458,378	)
Proceeds from disposal of property, plant and equipment			17,837			15,856
Acquisitions of intangible assets			(109,420	)		(113,388	)
Proceeds from disposal of intangible assets			10,463			2,018
Proceeds from disposal of assets held for sale			590			311
Collection of lease receivables			14,990			—
Others, net			(503	)		15,903
Net cash used in investing activities			(2,304,062	)		(744,086	)
Cash flows from financing activities
Proceeds from borrowings			1,822,765			437,174
Repayment of borrowings			(383,099	)		(690,360	)
Proceeds from (payment of) short-term borrowings, net			877,646			(389,652	)
Capital contribution fromnon-controlling interests			125,410			23,579
Payment of cash dividends			(1,363	)		(8,904	)
Payment of interest of hybrid bonds			(4,132	)		(4,087	)
Repayment of lease liabilities			(46,443	)		(47,358	)
Repayment of redeemable convertible preferred shares			(278,581	)		—
Others, net			123			969
Net cash provided by (used in) financing activities			2,112,326			(678,639	)
Effect of exchange rate fluctuation on cash held			32,737			33,448
Net increase in cash and cash equivalents			1,566,324			1,215
Cash and cash equivalents at beginning of the period	8		3,515,246			2,643,865
Cash and cash equivalents at end of the period	8	W	5,081,570			2,645,080

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, 2020

(Unaudited)

1. General Information

General information about POSCO, its 32 domestic subsidiaries including POSCO ENGINEERING & CONSTRUCTION CO., LTD., 133 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 130 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, 2020, the shares of the POSCO are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchange.

(b) Consolidated subsidiaries newly included during the three-month period ended March 31, 2020, were as follows:

Company	Date of inclusion		Ownership (%)		Reason
Posco International (Thailand) Co., Ltd.		January 2020		100.00		New establishment
PT POSCO INTERNATIONAL INDONESIA		January 2020		100.00		New establishment

10

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(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 Companies, Etc. in the Republic of Korea.

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, 2019. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

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.

(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.

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.

11

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

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.

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, 2019. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2020.

(a) K-IFRS No. 1001 “Presentation of Financial Statements” andK-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors”

The definition of materiality has been clarified, andK-IFRS No. 1001 “Presentation of Financial Statements” andK-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors” have been amended according to the clarified definition. In determining the materiality, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

(b) K-IFRS No. 1103 “Business Combinations”

The amendment clarifies the definition of business when it includes input and process together significantly contribute to ability to create output and requires a simplified assessment that result in an asset acquisition if substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or a group of similar identifiable assets. The Company does not expect the effect of the amendment to the consolidated financial statements to be significant.

(c) K-IFRS No. 1109 “Financial Instruments”,K-IFRS No. 1039 “Financial Instruments : Recognition and Measurement” ,K-IFRS No. 1107 “Financial Instruments : Disclosures”

The amendments require the application of exceptions to the analysis of future prospects in relation to the application of hedge accounting while uncertainty exists due to the interest rate benchmark reform. The exception assumes that when assessing whether the expected cash flows based on existing interest rate indicators are highly probable, whether there is an economic relationship between the hedged item and the hedging instrument, or whether the hedge relationship between the hedged item and the hedging instrument is highly probable, the interest rate benchmark that the hedged item and the hedging instrument comply with does not change as a result of the interest rate benchmark reform. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

12

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Current
Trade accounts and notes receivable	W	8,469,148			8,352,968
Finance lease receivables		236			221
Due from customers for contract work		1,292,784			1,136,436
Less: Allowance for doubtful accounts		(418,276	)		(411,274	)
	W	9,343,892			9,078,351
Non-current
Trade accounts and notes receivable	W	179,112			209,310
Finance lease receivables		45,180			43,725
Less: Allowance for doubtful accounts		(55,235	)		(54,250	)
	W	169,057			198,785

Trade accounts and notes receivable sold to financial institutions, for which the derecognition conditions were not met, amounted toW304,972 million andW244,305 million as of March 31, 2020 and December 31, 2019, respectively. The fair value of trade accounts and notes receivable approximates the carrying amounts and is recognized as short-term borrowings from financial institutions.

13

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

5. Other Receivables

Other receivables as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Current
Loans	W	326,817			367,580
Other accounts receivable		801,695			971,845
Accrued income		309,690			272,528
Deposits		70,759			86,519
Others		19,812			14,510
Lease receivables		49,666			48,744
Less: Allowance for doubtful accounts		(167,010	)		(180,209	)
	W	1,411,429			1,581,517
Non-current
Loans	W	756,108			701,529
Other accounts receivable		219,544			209,039
Accrued income		68,184			65,275
Deposits		247,328			238,261
Lease receivables		177,786			179,315
Less: Allowance for doubtful accounts		(257,748	)		(252,540	)
	W	1,211,202			1,140,879

14

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

6. Other Financial Assets

Other financial assets as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Derivatives assets	W	137,050		47,541
Debt securities		339,903		342,371
Deposit instruments(*1,2)		1,945,317		1,744,895
Short-term financial instruments(*2)		7,984,477		6,861,242
	W	10,406,747		8,996,049
Non-current
Derivatives assets	W	275,475		64,737
Equity securities(*3)		936,571		1,204,902
Debt securities		27,589		25,555
Other securities(*3)		334,241		340,008
Deposit instruments(*2)		29,927		34,187
	W	1,603,803		1,669,389

(*1) As of March 31, 2020 and December 31, 2019,W4,928 million andW4,524 million, respectively, are restricted for the use in government projects.

(*2) As of March 31, 2020 and December 31, 2019, financial instruments amounting toW82,223 million andW73,525 million, respectively, are restricted for use in financial arrangements, pledge and others.

(*3) As of March 31, 2020 and December 31, 2019,W110,036 million andW109,395 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, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Finished goods	W	1,672,743			1,655,228
Merchandise		1,071,742			1,058,874
Semi-finished goods		1,969,213			2,097,289
Raw materials		2,632,122			2,656,341
Fuel and materials		973,386			1,026,133
Construction inventories		747,577			734,649
Materials-in-transit		1,780,145			1,824,044
Others		84,171			83,905
		10,931,099			11,136,463
Less: Allowance for inventories valuation		(205,552	)		(216,143	)
	W	10,725,547			10,920,320

The amounts of loss on valuation of inventories recognized in cost of sales during the three-month period ended March 31, 2020 and the year ended December 31, 2019 wereW97,504 million andW96,201 million, respectively.

15

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

8. Assets Held for Sale

Details of assets held for sale as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020						December 31, 2019
	The controlling company(*1)		Subsidiaries		Total		The controlling company(*1)		Subsidiaries		Total
Asset
Cash and cash equivalents(*2)	W	—		39		39		—		374		374
Other financial assets		—		118		118		—		185		185
Property, plant and equipment		36,030		33,888		69,918		36,321		32,972		69,293
Others		—		1,733		1,733		—		4,306		4,306
	W	36,030		35,778		71,808		36,321		37,837		74,158
Liability
Others	W	—		4		4		—		8		8

(*1) During the year ended December 31, 2019, the Company decided to dispose individual assets for which use was discontinued, such as CEM plants, and classified the assets as held for sale.

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

16

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

9. Investments in Associates and Joint ventures

(a) Details of investments in associates as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020								December 31, 2019
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund		178,787,468,209		33.41	W	178,787	W	175,579		175,907
POSPower Co., Ltd(*1)		4,507,138		34.00		179,410		158,004		161,280
SNNC Co., Ltd.		18,130,000		49.00		90,650		140,111		142,602
QSONE Co., Ltd.		200,000		50.00		84,395		85,114		85,887
Chun-cheon Energy Co., Ltd(*1)		17,308,143		49.10		86,541		53,088		56,679
Nextrain Co., Ltd.		8,321,920		32.00		41,610		40,439		41,447
Keystone NO. 1. Private Equity Fund		22,523,123		52.58		22,523		20,258		19,438
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		2,008,000		29.53		10,040		17,525		17,824
Daesung Steel(*3)		108,038		17.54		14,000		15,375		15,375
Incheon-Gimpo Expressway Co., Ltd.(*1,3)		9,032,539		18.26		45,163		6,142		7,904
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund(*3)		5,185		12.50		5,185		4,956		6,177
KONES, Corp.		3,250,000		41.67		6,893		2,088		2,473
Others (54 companies)(*1)								126,120		112,621
								844,799		845,614
[Foreign]
AES-VCM Mong Duong Power Company Limited(*2)		—		30.00		164,303		197,571		178,892
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		135,899		236,476		225,933
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)(*3)		114,452,000		10.40		124,341		140,954		131,529
Eureka Moly LLC		—		20.00		240,123		90,126		85,349
AMCI (WA) PTY LTD		49		49.00		209,664		66,907		72,937
Nickel Mining Company SAS		3,234,698		49.00		157,585		39,973		37,940
KOREA LNG LTD.		2,400		20.00		135,205		47,429		46,557
NCR LLC		—		29.40		49,744		49,177		46,391
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		134,400,000		40.00		22,423		23,205		22,356
PT. Batutua Tembaga Raya		128,285		22.00		21,824		12,002		14,717
PT. Wampu Electric Power(*1)		8,708,400		20.00		10,054		14,360		13,363
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,200,000		34.00		9,517		15,744		15,128
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		7,163		6,755
Others (26 companies)(*1)								101,469		121,048
								1,042,556		1,018,895
							W	1,887,355		1,864,509

(*1) As of March 31, 2020 and December 31, 2019, investments in associates amounting toW252,152 million andW258,754 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2) As of March 31, 2020 and December 31, 2019, 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, 2020, 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. During the three-month period ended March 31, 2020, 7623704 Canada Inc. changed its name to 9404-5515 Quebec Inc.

17

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) Details of investments in joint ventures as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020								December 31, 2019
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	157,646		182,648
Others (8 companies)								10,571		10,305
								168,217		192,953
[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672		1,137,388		1,235,682
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		397,467		376,410
KOBRASCO		2,010,719,185		50.00		32,950		97,684		115,641
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961		92,463		88,935
DMSA/AMSA(*1,2)		—		4.00		349,701		11,908		12,189
CSP - Compania Siderurgica do Pecem		1,367,314,532		20.00		631,796		—		—
Others (10 companies)								41,206		41,436
								1,778,116		1,870,293
							W	1,946,333		2,063,246

(*1) As of March 31, 2020 and December 31, 2019, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings.

(*2) The investors of the joint venture provide financial support agreements to defer the repayment of the loan to the joint venture. However, the Company considers that the resolution for the provision of funding supplementation is invalid and is conducting arbitration, and the obligation to supplement funds of the Company is suspended and may be changed depending on the result of arbitration.

18

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(c) The movements of investments in associates and joint ventures for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)
Company	December 31, 2019 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			March 31, 2020 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	175,907		—		—			(328	)		—			175,579
POSPower Co., Ltd		161,280		—		—			(600	)		(2,676	)		158,004
SNNC Co., Ltd.		142,602		—		(2,901	)		410			—			140,111
QSONE Co., Ltd.		85,887		—		(1,140	)		367			—			85,114
Chun-cheon Energy Co., Ltd		56,679		—		—			(3,591	)		—			53,088
Nextrain Co., Ltd.		41,447		—		—			(1,008	)		—			40,439
Keystone NO. 1. Private Equity Fund		19,438		—		—			820			—			20,258
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		17,824		—		—			(299	)		—			17,525
Daesung Steel		15,375		—		—			—			—			15,375
Incheon-Gimpo Expressway Co., Ltd.		7,904		—		—			(1,762	)		—			6,142
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		6,177		—		—			79			(1,300	)		4,956
KONES, Corp.		2,473		—		—			(385	)		—			2,088
POSCO MITSUBISHI CARBON TECHNOLOGY		182,648		—		(19,401	)		(5,601	)		—			157,646
Others (62 companies)		122,926		16,941		(262	)		1,657			(4,571	)		136,691
		1,038,567		16,941		(23,704	)		(10,241	)		(8,547	)		1,013,016
[Foreign]
AES-VCM Mong Duong Power Company Limited		178,892		—		—			9,699			8,980			197,571
South-East Asia Gas Pipeline Company Ltd.		225,933		—		(16,213	)		13,846			12,910			236,476
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)		131,529		—		(7,380	)		8,949			7,856			140,954
Eureka Moly LLC		85,349		—		—			—			4,777			90,126
AMCI (WA) PTY LTD		72,937		—		—			(865	)		(5,165	)		66,907
Nickel Mining Company SAS		37,940		—		—			481			1,552			39,973
KOREA LNG LTD.		46,557		—		(2,425	)		2,372			925			47,429
NCR LLC		46,391		—		—			(96	)		2,882			49,177
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,356		—		—			(53	)		902			23,205
PT. Batutua Tembaga Raya		14,717		—		—			(3,023	)		308			12,002
PT. Wampu Electric Power		13,363		—		—			260			737			14,360
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		15,128		—		—			(107	)		723			15,744
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,755		—		—			(40	)		448			7,163
Roy Hill Holdings Pty Ltd		1,235,682		—		—			12,803			(111,097	)		1,137,388
POSCO-NPS Niobium LLC		376,410		—		(4,774	)		4,689			21,142			397,467
KOBRASCO		115,641		—		—			3,652			(21,609	)		97,684
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		88,935		—		—			193			3,335			92,463
DMSA/AMSA		12,189		3,423		—			(6,889	)		3,185			11,908
CSP - Compania Siderurgica do Pecem		—		37,623		—			—			(37,623	)		—
Others (36 companies)		162,484		—		(2,586	)		(3,966	)		(13,257	)		142,675
		2,889,188		41,046		(33,378	)		41,905			(118,089	)		2,820,672
	W	3,927,755		57,987		(57,082	)		31,664			(126,636	)		3,833,688

(*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.

19

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) For the year ended December 31, 2019

(in millions of Won)
Company	December 31, 2018 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			December 31, 2019 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	174,123		—		—			(976	)		2,760			175,907
POSPower Co., Ltd		161,477		—		—			(4,744	)		4,547			161,280
SNNC Co., Ltd.		116,922		—		(1,450	)		27,655			(525	)		142,602
QSONE Co., Ltd.		85,550		—		(950	)		1,287			—			85,887
Chun-cheon Energy Co., Ltd		62,478		6,050		—			(11,849	)		—			56,679
Nextrain Co., Ltd.		10		41,600		—			(163	)		—			41,447
Keystone NO. 1. Private Equity Fund		11,183		8,723		—			(342	)		(126	)		19,438
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		17,382		—		—			442			—			17,824
Daesung Steel		15,644		—		—			(269	)		—			15,375
Incheon-Gimpo Expressway Co., Ltd.		13,329		—		—			(5,425	)		—			7,904
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		5,739		—		—			438			—			6,177
KONES, Corp.		2,849		—		—			(403	)		27			2,473
POSCO MITSUBISHI CARBON TECHNOLOGY		180,192		—		(16,369	)		19,377			(552	)		182,648
Others (61 companies)		132,848		30,973		(1,392	)		(18,146	)		(21,357	)		122,926
		979,726		87,346		(20,161	)		6,882			(15,226	)		1,038,567
[Foreign]
AES-VCM Mong Duong Power Company Limited		209,936		—		(18,099	)		24,126			(37,071	)		178,892
South-East Asia Gas Pipeline Company Ltd.		179,459		—		(24,267	)		63,749			6,992			225,933
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)		126,885		—		(9,902	)		9,912			4,634			131,529
Eureka Moly LLC		82,447		—		—			(25	)		2,927			85,349
AMCI (WA) PTY LTD		71,086		—		—			(4,377	)		6,228			72,937
Nickel Mining Company SAS		41,712		—		—			(4,250	)		478			37,940
KOREA LNG LTD.		43,554		—		(13,404	)		13,501			2,906			46,557
NCR LLC		37,602		9,605		—			(822	)		6			46,391
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		—		22,423		—			61			(128	)		22,356
PT. Batutua Tembaga Raya		20,479		—		—			(6,209	)		447			14,717
PT. Wampu Electric Power		14,120		—		—			(1,247	)		490			13,363
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		14,796		—		—			10			322			15,128
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,478		—		—			80			197			6,755
Roy Hill Holdings Pty Ltd		1,041,600		—		—			158,562			35,520			1,235,682
POSCO-NPS Niobium LLC		363,506		—		(24,933	)		24,543			13,294			376,410
KOBRASCO		133,449		—		(74,716	)		56,474			434			115,641
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		88,391		—		(1,574	)		665			1,453			88,935
DMSA/AMSA		26,709		23,682		—			(40,415	)		2,213			12,189
CSP - Compania Siderurgica do Pecem		24,832		35,352		—			(57,647	)		(2,537	)		—
Others (38 companies)		143,236		552		(19,430	)		30,168			7,958			162,484
		2,670,277		91,614		(186,325	)		266,859			46,763			2,889,188
	W	3,650,003		178,960		(206,486	)		273,741			31,537			3,927,755

(*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.

20

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(d) Summarized financial information of associates and joint ventures as of and for the three-month period ended March 31, 2020 and the year ended December 31, 2019 are as follows:

1) March 31, 2020

(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	515,490		599		514,891			—		(983	)
POSPower Co., Ltd		813,129		315,766		497,363			46		(1,971	)
SNNC Co., Ltd.		564,852		260,885		303,967			149,551		(9,778	)
QSONE Co., Ltd.		251,152		80,919		170,233			4,258		739
Chun-cheon Energy Co., Ltd		632,440		522,440		110,000			82,048		(7,469	)
Nextrain Co., Ltd.		138,850		10,445		128,405			—		(476	)
Keystone NO. 1. Private Equity Fund		186,482		135,984		50,498			6,179		1,561
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		50,868		21,833		29,035			2,931		(1,012	)
Daesung Steel		167,788		111,521		56,267			22,893		—
Incheon-Gimpo Expressway Co., Ltd.		1,005,680		952,981		52,699			12,222		(11,176	)
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		42,526		2,879		39,647			139		630
KONES, Corp.		1,127		1,749		(622	)		429		(924	)
POSCO MITSUBISHI CARBON TECHNOLOGY		459,155		196,040		263,115			34,658		(8,259	)
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,854,564		910,187		944,377			115,249		55,292
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)		1,371,660		4,174		1,367,486			—		86,044
Nickel Mining Company SAS		486,098		347,739		138,359			47,065		(7,174	)
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		76,621		18,788		57,833			3		(257	)
KOREA LNG LTD.		237,478		330		237,148			12,398		11,860
PT. Batutua Tembaga Raya		441,258		422,749		18,509			24,473		(14,265	)
PT. Wampu Electric Power		229,764		161,047		68,717			4,252		1,298
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		70,651		18,761		51,890			21,285		(313	)
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		60,690		31,877		28,813			12,519		(168	)
Roy Hill Holdings Pty Ltd		9,580,676		4,403,564		5,177,112			587,785		152,897
POSCO-NPS Niobium LLC		794,731		—		794,731			—		9,377
KOBRASCO		200,334		4,966		195,368			13,082		7,303
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		975,298		632,310		342,988			325,867		1,466
DMSA/AMSA		5,967,036		4,472,487		1,494,549			184,965		(171,349	)
CSP - Compania Siderurgica do Pecem		3,204,245		4,170,508		(966,263	)		396,254		(1,030,706	)

21

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) December 31, 2019

(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	516,659		786		515,873			—		7,479
POSPower Co., Ltd		707,051		199,846		507,205			—		(5,294	)
SNNC Co., Ltd.		677,508		357,843		319,665			738,977		63,269
QSONE Co., Ltd.		250,364		78,589		171,775			17,591		2,576
Chun-cheon Energy Co., Ltd		610,089		492,620		117,469			313,438		(24,677	)
Nextrain Co., Ltd.		136,203		7,322		128,881			—		(509	)
Keystone NO. 1. Private Equity Fund		187,156		138,219		48,937			18,342		(887	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		53,019		22,971		30,048			17,824		1,497
Daesung Steel		164,708		108,441		56,267			85,537		(1,536	)
Incheon-Gimpo Expressway Co., Ltd.		1,014,410		951,321		63,089			50,575		(36,449	)
KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund		50,479		1,062		49,417			2,841		3,502
KONES, Corp.		1,950		1,648		302			4,416		(966	)
POSCO MITSUBISHI CARBON TECHNOLOGY		474,387		170,678		303,709			216,648		32,334
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,808,529		906,254		902,275			555,075		254,582
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)		1,276,857		1		1,276,856			—		95,306
Nickel Mining Company SAS		471,377		331,194		140,183			245,509		2,432
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		73,604		17,765		55,839			641		153
KOREA LNG LTD.		232,935		147		232,788			69,577		67,507
PT. Batutua Tembaga Raya		423,608		392,226		31,382			112,568		(28,360	)
PT. Wampu Electric Power		222,266		158,451		63,815			18,163		(6,233	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		65,413		15,232		50,181			101,101		28
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		61,847		33,989		27,858			77,371		327
Roy Hill Holdings Pty Ltd		11,143,705		5,718,152		5,425,553			5,037,471		1,660,577
POSCO-NPS Niobium LLC		752,617		—		752,617			—		47,521
KOBRASCO		268,139		36,857		231,282			167,022		112,949
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		969,280		637,478		331,802			1,145,794		1,704
DMSA/AMSA		5,703,501		4,202,704		1,500,797			638,797		(504,077	)
CSP - Compania Siderurgica do Pecem		3,959,365		4,249,083		(289,718	)		1,623,843		(465,853	)

22

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(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, 2020 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
Yangsan-Sasong district public housing project(private-participation)	Construction		13.08	Korea
Yangsan-Sasong district public housing project	Construction		49.00	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

23

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

11. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(a) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others(*1)			Ending
Land	W	278,465		2,814		—			(3,613	)		277,666
Buildings		598,159		3,167		(6,346	)		12,897			607,877
Structures		1,178		—		(153	)		155			1,180
Right-of-use assets		425		—		(3	)		17			439
	W	878,227		5,981		(6,502	)		9,456			887,162

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

(b) For the year ended December 31, 2019

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation(*1)			Others(*2)			Ending
Land	W	278,585		—		(5,921	)		—			5,801			278,465
Buildings		571,335		1,548		(5,343	)		(52,416	)		83,035			598,159
Structures		1,408		—		(50	)		(625	)		445			1,178
Right-of-use assets		—		—		—			—			425			425
Construction-in-progress		77,287		18,644		—			—			(95,931	)		—
	W	928,615		20,192		(11,314	)		(53,041	)		(6,225	)		878,227

(*1) Includes impairment loss on investment property recognized in relation to the office for rent of POSCO(Dalian) IT Center Development Co., Ltd. amounting toW32,642 million.

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

24

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

12. Property, Plant and Equipment, Net

(a) Changes in the carrying amount of property, plant and equipment for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss			Others(*1)			Ending
Land	W	2,526,059		4,987		(997	)		—			—			25,704			2,555,753
Buildings		4,215,454		3,587		(2,845	)		(78,946	)		—			158,679			4,295,929
Structures		2,904,506		67,648		(264	)		(57,311	)		—			94,644			3,009,223
Machinery and equipment		17,218,264		61,757		(2,949	)		(563,744	)		(78	)		432,429			17,145,679
Vehicles		32,285		1,413		(241	)		(3,622	)		—			1,187			31,022
Tools		70,751		5,054		(93	)		(7,385	)		—			4,132			72,459
Furniture and fixtures		130,132		4,242		(242	)		(9,027	)		—			7,261			132,366
Lease assets		774,582		25,420		(4,392	)		(41,841	)		—			139,749			893,518
Bearer plants		124,193		—		—			(1,792	)		—			(6,499	)		115,902
Construction-in-progress		1,929,747		722,598		(4,761	)		—			—			(547,380	)		2,100,204
	W	29,925,973		896,706		(16,784	)		(763,668	)		(78	)		309,906			30,352,055

(*1) 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.

2) For the year ended December 31, 2019

(in millions of Won)	Beginning		Acquisitions		Business Combination		Disposals			Depreciation			Impairment loss(*1,2)			Others(*3)			Ending
Land	W	2,548,002		6,550		—		(2,128	)		—			—			(26,365	)		2,526,059
Buildings		4,402,452		39,551		22,836		(10,376	)		(314,107	)		(90,036	)		165,134			4,215,454
Structures		2,917,924		49,931		2		(3,350	)		(228,616	)		(27,217	)		195,832			2,904,506
Machinery and equipment		18,518,129		175,743		1,216		(78,236	)		(2,250,022	)		(309,604	)		1,161,038			17,218,264
Vehicles		31,341		8,027		189		(742	)		(15,057	)		(559	)		9,086			32,285
Tools		66,164		19,178		5,792		(1,340	)		(28,537	)		(2,106	)		11,600			70,751
Furniture and fixtures		136,287		34,618		252		(1,630	)		(36,309	)		(1,808	)		(1,278	)		130,132
Lease assets(*4)		137,564		72,640		490		(8,401	)		(130,905	)		—			703,194			774,582
Bearer plants		80,771		—		—		—			(5,916	)		—			49,338			124,193
Construction-in-progress		1,179,639		2,261,663		17,697		(24,840	)		—			(10,150	)		(1,494,262	)		1,929,747
	W	30,018,273		2,667,901		48,474		(131,043	)		(3,009,469	)		(441,480	)		773,317			29,925,973

(*1) During the year ended December 31, 2019, the Controlling Company estimated recoverable amount for individual assets in CEM andFe-Si factories that ceased operations due to the disposal plan and others. The Company calculated net fair value based on appraisal value or scrap value. The Company recognized impairment losses ofW205,396 million since recoverable amounts are less than their carrying amounts.

(*2) As of December 31, 2019, POSCO SS VINA JOINT STOCK COMPANY, a subsidiary, performed the impairment test due to the consecutive operating losses and recognized impairment losses amounting toW204,546 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.

(*4) On the date of initial application ofK-IFRS No.1116 (January 1, 2019), recognition ofW704,458 million ofright-of-use assets is included in others.

25

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) Changes in the carrying amount of right of use assets presented as Investment property and Property, plant and equipment for the three-month period ended March 31, 2020, and the year ended December 31, 2019, were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	341,767		3,969		(7,345	)		19,625			358,016
Buildings and structures		171,112		17,500		(10,543	)		(6,615	)		171,454
Machinery and equipment		215,828		2,664		(8,814	)		(9,041	)		200,637
Vehicles		14,105		1,261		(2,620	)		1,251			13,997
Ships		24,082		111,537		(6,913	)		—			128,706
Others		8,113		26		(5,609	)		18,617			21,147
	W	775,007		136,957		(41,844	)		23,837			893,957

2) For the year ended December 31, 2019

(in millions of Won)	The date of initial application (January 1, 2019)		Acquisitions		Depreciation			Others			Ending
Land	W	340,107		22,850		(11,461	)		(9,729	)		341,767
Buildings and structures		209,455		23,015		(38,853	)		(22,505	)		171,112
Machinery and equipment		219,877		14,610		(33,751	)		15,092			215,828
Vehicles		20,555		8,735		(10,050	)		(5,135	)		14,105
Ships		26,499		—		(2,417	)		—			24,082
Others		25,529		3,430		(34,373	)		13,527			8,113
	W	842,022		72,640		(130,905	)		(8,750	)		775,007

(c) The amounts recognized in profit or loss related to leases for the three-month periods ended, March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Interest on lease liabilities	W	9,008	��	9,148
Expenses relating to short-term leases		5,004		3,042
Expenses relating to leases oflow-value assets		4,330		6,509
	W	18,342		18,699

26

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(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, 2020 and the year ended December 31, 2019 were as follows:

(a) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss			Others(*2)			Ending
Goodwill	W	1,097,809		—		—			—			—			(1,307	)		1,096,502
Intellectual property rights		2,279,210		50,249		(8,734	)		(71,847	)		—			9,692			2,258,570
Premium in rental(*1)		148,078		171		(1,565	)		(96	)		(178	)		102			146,512
Development expense		94,339		344		—			(12,188	)		—			7,535			90,030
Port facilities usage rights		281,398		—		—			(11,308	)		—			223			270,313
Exploratation and evaluation assets		77,271		4,301		—			—			—			(31,348	)		50,224
Customer relationships		374,875		—		—			(11,120	)		—			(78	)		363,677
Other intangible assets		555,493		47,836		(12,074	)		(7,728	)		—			(7,101	)		576,426
	W	4,908,473		102,901		(22,373	)		(114,287	)		(178	)		(22,282	)		4,852,254

(*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, 2019

(in millions of Won)	Beginning		Acquisitions			Business Combination		Disposals			Amortization			Impairment loss(*2)			Others(*3)			Ending
Goodwill	W	1,125,149		—	��		26,256		—			—			(55,445	)		1,849			1,097,809
Intellectual property rights		2,399,525		127,479			—		(6,566	)		(271,694	)		(2	)		30,468			2,279,210
Premium in rental(*1)		134,793		15,636			—		(3,326	)		(181	)		24			1,132			148,078
Development expense		99,163		4,484			—		(35	)		(44,418	)		(666	)		35,811			94,339
Port facilities usage rights		305,081		—			—		(4,674	)		(22,923	)		—			3,914			281,398
Exploratation and evaluation assets		192,130		9,642			—		—			—			(123,888	)		(613	)		77,271
Customer relationships		421,773		—			—		—			(51,768	)		—			4,870			374,875
Other intangible assets		493,211		141,578			74		(10,718	)		(40,263	)		(10,111	)		(18,278	)		555,493
	W	5,170,825		298,819			26,330		(25,319	)		(431,247	)		(190,088	)		59,153			4,908,473

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

(*2) In connection with exploration and evaluation of theAD-7 block in Myanmar, POSCO International Co., Ltd. failed to find economic gas. The Company recognized impairment loss ofW118,140 million for the excess of the carrying amounts of related assets over the special energy loan which may be forgiven the case of project failure.

(*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.

27

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

14. Other Assets

Other assets as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Advance payments	W	423,127		453,538
Prepaid expenses		261,019		145,834
Firm commitment asset		28,582		17,490
Others		13,242		14,315
	W	725,970		631,177
Non-current
Long-term advance payments	W	21,944		21,950
Long-term prepaid expenses		55,657		41,256
Others(*1)		199,874		262,035
	W	277,475		325,241

(*1) As of March 31, 2020 and December 31, 2019, the Company recognized tax assets amounting toW158,287 million andW213,071 million, respectively, based on the Company’s best estimate of the income 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 and claim for rectification are finalized.

15. Borrowings

(a) Short-term borrowings and current portion of long-term borrowings as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Lenders	Interest rate (%)		March 31, 2020			December 31, 2019
Short-term borrowings
Bank overdrafts	JP Morgan and others		0.2 ~ 8.8	W	266,001			159,075
Short-term borrowings	HSBC and others		0.2 ~10.7		6,340,571			5,327,258
					6,606,572			5,486,333
Current portion of long-term liabilities
Current portion of long-term borrowings	Export-Import Bank of Korea and others		0.4 ~ 6.6		1,492,141			1,491,934
Current portion of debentures	The Goldman Sachs Group, Inc. and others		2.3 ~ 4.2		1,828,498			1,571,194
Less: Current portion of discount on debentures issued					(1,236	)		(1,249	)
					3,319,403			3,061,879
				W	9,925,975			8,548,212

28

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) Long-term borrowings, excluding current portion as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Lenders	Interest rate (%)		March 31, 2020			December 31, 2019
Long-term borrowings	Export-Import Bank of Korea and others		0.2 ~ 8.5	W	3,743,995			3,827,152
Less: Present value discount					(23,721	)		(24,374	)
Bonds	KB SECURITIES CO., LTD. and others		0.5 ~ 5.2		9,903,355			8,124,194
Less: Discount on debentures issued					(46,898	)		(33,571	)
				W	13,576,731			11,893,401

(c) Assets pledged as collateral in regards to the borrowings as of March 31, 2020 are as follows:

(in millions of Won)	Lenders	Book value		Pledged amount
Cash and cash equivalents	Sinhan Bank and others	W	23,985		23,573
Property, plant and equipment and Investment property	Korea Development Bank and others		4,486,269		5,167,987
Trade accounts and notes receivable	Korea Development Bank and others		47,081		45,403
Inventories	Export-Import Bank of Korea and others		118,116		12,650
Financial instruments	KOOKMIN BANK and others		50,766		49,566
		W	4,726,217		5,299,179

16. Other Payables

Other payables as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Accounts payable	W	720,015		832,845
Accrued expenses		675,488		742,370
Dividend payable		381,860		3,106
Lease liabilities		173,632		149,176
Withholdings		133,614		152,011
	W	2,084,609		1,879,508
Non-current
Accounts payable	W	3,548		2,718
Accrued expenses		4,870		4,805
Lease liabilities		614,485		526,294
Long-term withholdings		54,625		51,312
	W	677,528		585,129

29

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

17. Other Financial Liabilities

Other financial liabilities as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Derivative liabilities	W	103,546		28,021
Financial guarantee liabilities		46,026		49,806
	W	149,572		77,827
Non-current
Derivative liabilities	W	11,139		17,033
Financial guarantee liabilities		11,150		14,461
	W	22,289		31,494

18. Provisions

(a) Provisions as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020				December 31, 2019
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	37,930		29,770		76,432		47,237
Provision for construction warranties		7,202		170,943		7,655		162,773
Provision for legal contingencies and claims(*1)		6,974		72,223		6,996		77,488
Provision for the restoration(*2)		5,247		72,287		6,783		80,520
Others(*3,*4)		256,199		87,664		262,629		90,136
	W	313,552		432,887		360,495		458,154

(*1) The Company recognized probable outflow of resources amounting toW48,162 million andW54,228 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of March 31, 2020 and December 31, 2019, 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,W20,855 million as provisions for restoration as of March 31, 2020. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available currently to restore the land to its original condition. In addition, the Company has applied a discount rate of 1.62~1.76% to measure present value of these costs.

(*3) As of March 31, 2020 and December 31, 2019, POSCO ENERGY CO., LTD., and Korea Fuel Cell recognizedW142,884 million andW178,959 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, 2020, the Company has recognized emission liabilities ofW54,372 million for greenhouse gas emissions exceeding the quantity of free quota emission rights expected to be submitted.

30

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) Changes in provisions for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Increase		Utilization			Reversal			Others(*1)			Ending
Provision for bonus payments	W	123,669		18,056		(72,632	)		(1,179	)		(214	)		67,700
Provision for construction warranties		170,428		14,635		(5,241	)		(1,435	)		(242	)		178,145
Provision for legal contingencies and claims		84,484		585		(5,949	)		(278	)		355			79,197
Provision for the restoration		87,303		1,631		(1,665	)		(14,611	)		4,876			77,534
Others		352,765		47,455		(34,649	)		(30,972	)		9,264			343,863
	W	818,649		82,362		(120,136	)		(48,475	)		14,039			746,439

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

2) For the year ended December 31, 2019

(in millions of Won)	Beginning		Increase		Utilization			Reversal			Others(*1)		Ending
Provision for bonus payments	W	73,478		122,714		(86,084	)		(3,077	)		16,638		123,669
Provision for construction warranties		142,233		53,203		(22,858	)		(3,444	)		1,294		170,428
Provision for legal contingencies and claims		111,150		26,407		(37,087	)		(18,098	)		2,112		84,484
Provision for the restoration		89,168		23,559		(13,411	)		(14,379	)		2,366		87,303
Others		316,287		95,747		(38,260	)		(86,458	)		65,449		352,765
	W	732,316		321,630		(197,700	)		(125,456	)		87,859		818,649

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

31

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

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, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Expenses related to post-employment benefit plans under defined contribution plans	W	13,202		12,528

(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, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Present value of funded obligations	W	2,426,478			2,416,203
Fair value of plan assets(*1)		(2,222,421	)		(2,255,149	)
Present value ofnon-funded obligations		15,004			15,677
Net defined benefit liabilities	W	219,061			176,731

(*1) As of March 31, 2020 and December 31, 2019, the Company recognized net defined benefit assets amounting toW6,943 million andW4,280 million respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations.

2) Changes in present value of defined benefit obligations for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Defined benefit obligation at the beginning of period	W	2,431,880			2,137,161
Current service costs		61,309			236,735
Interest costs		12,315			51,900
Remeasurements		1,440			152,713
Benefits paid		(70,418	)		(152,275	)
Others		4,956			5,646
Defined benefit obligation at the end of period	W	2,441,482			2,431,880

32

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

3) Changes in fair value of plan assets for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Fair value of plan assets at the beginning of period	W	2,255,149			1,997,717
Interest on plan assets		11,016			48,210
Remeasurement of plan assets		(4,257	)		(8,692	)
Contributions to plan assets		13,000			342,915
Benefits paid		(57,390	)		(124,962	)
Others		4,903			(39	)
Fair value of plan assets at the end of period	W	2,222,421			2,255,149

4) The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Current service costs	W	61,309		58,930
Net interest costs		1,299		1,097
	W	62,608		60,027

20. Other Liabilities

Other liabilities as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Due to customers for contract work	W	859,656		676,054
Advances received		558,106		487,526
Unearned revenue		69,779		61,795
Withholdings		350,145		388,486
Firm commitment liability		30,485		15,637
Others		10,553		8,604
	W	1,878,724		1,638,102
Non-current
Unearned revenue	W	22,327		27,161
Others		21,298		52,349
	W	43,625		79,510

33

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

21. Financial Instruments

(a) Classification and fair value of financial instruments

1) The carrying amount and fair values of financial assets and financial liabilities by fair value hierarchy as of March 31, 2020 and December 31, 2019 are as follows

① March 31, 2020

			Fair value
(in millions of Won)	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	367,590		—		367,590		—		367,590
Short-term financial instruments		7,984,477		—		7,984,477		—		7,984,477
Debt securities		28,259		—		—		28,259		28,259
Other securities		334,241		1,023		3,330		329,888		334,241
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments(*2)		44,935		—		44,935		—		44,935
Fair value through other comprehensive income
Equity securities		936,571		519,206		73		417,292		936,571
Debt securities		1,747		—		—		1,747		1,747
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		5,081,531		—		—		—		—
Trade accounts and notes receivable		8,294,532		—		—		—		—
Other receivables		2,198,166		—		—		—		—
Debt securities		337,486		—		—		—		—
Deposit instruments		1,975,244		—		—		—		—
	W	27,586,779		520,229		8,400,405		779,186		9,699,820
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	87,101		—		87,101		—		87,101
Derivative hedging instruments(*2)		27,584		—		27,584		—		27,584
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		3,487,730		—		—		—		—
Borrowings		23,502,706		—		23,744,493		—		23,744,493
Financial guarantee liabilities		57,176		—		—		—		—
Others		2,662,359		—		—		—		—
	W	29,824,656		—		23,859,178		—		23,859,178

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

(*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 hedge 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.

34

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

② December 31, 2019

			Fair value
(in millions of Won)	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	106,104		—		106,104		—		106,104
Short-term financial instruments		6,861,242		—		6,861,242		—		6,861,242
Debt securities		28,087		—		—		28,087		28,087
Other securities		340,008		1,222		3,330		335,456		340,008
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments		6,174		—		6,174		—		6,174
Fair value through other comprehensive income
Equity securities		1,204,902		782,108		73		422,721		1,204,902
Debt securities		5,686		—		—		5,686		5,686
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		3,514,872		—		—		—		—
Trade accounts and notes receivable		8,214,459		—		—		—		—
Other receivables		2,193,700		—		—		—		—
Debt securities		334,153		—		—		—		—
Deposit instruments		1,779,082		—		—		—		—
	W	24,590,469		783,330		6,976,923		793,950		8,554,203
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	32,193		—		32,193		—		32,193
Derivative hedging instruments		12,861		—		12,861		—		12,861
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		3,442,989		—		—		—		—
Borrowings		20,441,613		—		20,666,476		—		20,666,476
Financial guarantee liabilities		64,267		—		—		—		—
Others		2,401,382		—		—		—		—
	W	26,395,305		—		20,711,530		—		20,711,530

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

2) Finance income and costs by category of financial instrument for the three-month periods ended March 31, 2020 and 2019 were as follows:

① For the three-month period ended March 31, 2020

(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 loss
Financial assets at fair value through profit or loss	W	41,122			333			—			305			230			41,990			—
Derivatives assets		—			310,227			—			55,791			—			366,018			—
Financial assets at fair value through other comprehensive income		—			—			—			—			25,306			25,306			(202,836	)
Financial assets measured at amortized cost		51,732			—			484,455			(5,986	)		(90	)		530,111			—
Derivatives liabilities		—			(72,290	)		—			(90,302	)		—			(162,592	)		(57	)
Financial liabilities measured at amortized cost		(175,127	)		—			(652,206	)		—			648			(826,685	)		—
	W	(82,273	)		238,270			(167,751	)		(40,192	)		26,094			(25,852	)		(202,893	)

35

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

② 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	)

(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, 2019.

22. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2020 and December 31, 2019 are as follows:

(in Won, except share information)	March 31, 2020		December 31, 2019
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Share capital(*2)	W	482,403,125,000		482,403,125,000

(*1) As of March 31, 2020, the total number of ADRs of 30,591,196 is equivalent to 7,647,779 shares of common stock.

(*2) As of March 31, 2020, the difference between the ending balance of common stock and the aggregate 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, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		796,623		796,623
Other capital surplus		79,391		115,803
	W	1,339,839		1,376,251

(c) On February 25, 2017, POSCO ENERGY CO., LTD., a subsidiary of the Company, issued redeemable convertible preferred shares amounting toW 245,000 million (8,643,193 shares) which are classified asnon-controlling interests in the consolidated financial statements. Repayments of shares were made on February 25, 2020 (4,477,246 shares) and March 30, 2020 (4,165,947 shares).

36

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

23. Hybrid Bonds

(a) Hybrid bonds classified as equity as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		March 31, 2020			December 31, 2019
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, 2020 are as follows:

	Hybrid bond1-2
Maturity date	30 years (POSCO has a right to extend the maturity date)
Interest rate	Issue date ~2023-06-12 : 4.6% Reset every 10 years as follows; •     After 10 years: return on government bond of the Republic of Korea (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 10th anniversary of issuance and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common shareholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2020 amounts toW479 million.

37

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(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, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		March 31, 2020			December 31, 2019
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

(*1) Details of hybrid bonds of POSCO ENERGY CO., LTD. as of March 31, 2020 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 Issuer)
Others	The issuer can call the hybrid bond at year 10 and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common shareholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2020 amounts toW639 million.

24. Reserves

Reserves as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Accumulated comprehensive loss of investments in associates and joint ventures	W	(744,261	)		(676,416	)
Changes in fair value of equity investments at fair value through other comprehensive income		(486,527	)		(285,073	)
Foreign currency translation differences		(193,298	)		(202,636	)
Gains or losses on valuation of derivatives		(492	)		(438	)
Others		6,583			6,583
	W	(1,417,995	)		(1,157,980	)

25. Treasury Shares

As of March 31, 2020, the Company holds 7,071,194 shares of treasury stock for share price stabilization and other purposes in accordance with the Board of Director’s resolution.

38

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

26. Revenue

(a) Disaggregation of revenue

1) Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended March 31, 2020 and 2019 were as follows:

① March 31, 2020

(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	6,971,276		4,914,643		—		191,324		12,077,243
Revenue from services		124,473		83,139		12,060		516,927		736,599
Revenue from construction contract		—		—		1,605,763		6,620		1,612,383
Others		9,704		57,893		1,101		50,890		119,588
	W	7,105,453		5,055,675		1,618,924		765,761		14,545,813
Timing of revenue recognition
Revenue recognized at a point in time	W	6,980,980		4,972,536		10,955		242,213		12,206,684
Revenue recognized over time		124,473		83,139		1,607,969		523,548		2,339,129
	W	7,105,453		5,055,675		1,618,924		765,761		14,545,813

② 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

(b) Details of contract assets and liabilities from contracts with customers as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Receivables
Accounts receivable	W	8,294,532		8,214,459
Contract assets
Due from customers for contract work		1,218,417		1,062,677
Contract liabilities
Advance received		559,769		489,658
Due to customers for contract work		859,656		676,054
Unearned revenue		91,953		88,733

39

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

27. Revenue – Contract Balances

(a) Details of ongoing contracts as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020						December 31, 2019
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	29,972,865			255,592			29,106,218			249,751
Accumulated contract profit		2,990,458			48,797			2,863,207			47,107
Accumulated contract loss		(1,174,529	)		(2,376	)		(1,182,989	)		(2,211	)
Accumulated contract revenue		31,788,794			302,013			30,786,436			294,647

(b) Details of due from customers for contract work and due to customers for contract work as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020						December 31, 2019
	Construction segment			Others			Construction segment			Others
Due from customers for contract work	W	1,239,802			52,982			1,087,119			49,317
Due to customers for contract work		(826,021	)		(33,635	)		(639,130	)		(36,924	)
	W	413,781			19,347			447,989			12,393

(c) Details of the provisions of construction loss as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Construction segment	W	26,855		35,526
Others		389		406
	W	27,244		35,932

40

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(d) Due to the factors causing the variation of costs for the three-month period ended March 31, 2020, the estimated total contract costs have changed. Details of changes in estimated total contract costs and the impact on profit before income taxes for the three-month period ended March 31, 2020 and future periods are as follows:

			Changes in profit (loss) of contract
	Changes in estimated
(in millions of Won)	total contract costs		Net income (loss)		Future income (loss)		Total
Construction segment	W	191,598		24,259		16,620		40,879
Others		4,504		1,231		1,772		3,003
	W	196,102		25,490		18,392		43,882

The effect on the current and future profit is estimated based on the circumstances that have occurred from the commencement date of the contract to March 31, 2020. The estimation is evaluated for the total contract costs 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.

41

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

28. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Wages and salaries	W	213,496		208,622
Expenses related to post-employment benefits		22,379		21,868
Other employee benefits		45,458		45,777
Travel		6,353		9,667
Depreciation		34,952		34,326
Amortization		27,282		28,360
Communication		2,392		2,473
Electricity		2,181		2,030
Taxes and public dues		12,356		12,885
Rental		6,633		11,458
Repairs		1,927		2,517
Entertainment		2,108		3,032
Advertising		17,357		17,906
Research & development		23,866		30,383
Service fees		39,433		51,522
Vehicles maintenance		1,370		2,328
Industry association fee		3,666		3,437
Conference		2,843		3,853
Increase to provisions		1,527		1,398
Others		9,488		12,241
	W	477,067		506,083

42

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Freight and custody	W	45,463		47,361
Operating expenses for distribution center		2,026		2,594
Sales commissions		47,725		16,036
Sales advertising		258		234
Sales promotion		1,843		2,537
Sample		541		511
Sales insurance premium		8,177		8,009
Contract cost		7,632		8,640
Others		4,313		5,338
	W	117,978		91,260

29. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Finance income
Interest income(*1)	W	92,854		75,527
Dividend income		25,536		31,508
Gain on foreign currency transactions		345,432		117,933
Gain on foreign currency translations		447,527		145,167
Gain on derivatives transactions		60,024		33,400
Gain on valuations of derivatives		341,973		87,074
Others		6,079		3,405
	W	1,319,425		494,014
Finance costs
Interest expenses	W	175,127		200,478
Loss on foreign currency transactions		248,523		105,289
Loss on foreign currency translations		712,187		139,459
Loss on derivatives transactions		94,535		41,150
Loss on valuation of derivatives		104,036		43,291
Loss on disposal of trade accounts and notes receivable		5,986		9,408
Others		4,883		11,518
	W	1,345,277		550,593

(*1) Interest income calculated using the effective interest method for the three-month periods ended March 31, 2020 and 2019 wereW51,732 million andW40,454 million, respectively.

43

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

30. OtherNon-Operating Income and Expenses

Details of othernon-operating income and expenses for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Othernon-operating income
Gain on disposals of investment in subsidiaries, associates and joint ventures	W	3,969		14,436
Gain on disposals of property, plant and equipment		4,835		12,282
Gain on valuation of firm commitment		20,118		19,709
Gain on disposals of emission rights		7,743		—
Others		27,636		27,917
	W	64,301		74,344
Othernon-operating expenses
Impairment loss on assets held for sale	W	—		4,195
Loss on disposals of investment in subsidiaries, associates and joint ventures		4,952		1,871
Loss on disposals of property, plant and equipment		40,671		12,297
Impairment loss on property, plant and equipment		78		68,345
Loss on valuation of firm commitment		34,333		3,809
Idle tangible assets expenses		5,355		7,619
Increase to provisions		852		5,273
Donations		12,155		9,405
Others		15,368		24,375
	W	113,764		137,189

44

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(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, 2020 and 2019 were as follows (excluding finance costs and income tax expense):

(in millions of Won)	March 31, 2020		March 31, 2019
Raw material used, changes in inventories and others	W	8,648,277		9,679,323
Employee benefits expenses		920,039		875,668
Outsourced processing cost		2,030,299		1,770,630
Electricity and water expenses		170,696		219,802
Depreciation(*1)		770,170		764,760
Amortization		114,287		99,262
Freight and custody		352,344		369,234
Sales commissions		47,725		16,036
Loss on disposal of property, plant and equipment		40,671		12,297
Impairment loss on property, plant and equipment		78		68,345
Donations		12,155		9,405
Other		858,483		1,068,717
	W	13,965,224		14,953,479

(*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, 2020 and 2019 were 34.18% and 32.13%, respectively.

45

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

33. Earnings per Share

Basic earnings per share for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in Won, except share information)	March 31, 2020			March 31, 2019
Profit attribute to controlling interest	W	395,392,696,009			741,253,192,407
Interests of hybrid bonds		(1,662,931,507	)		(1,644,657,534	)
Weighted-average number of common shares outstanding (*1)		80,115,641			80,108,007
Basic earnings per share	W	4,915			9,233

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

(Shares)	March 31, 2020			March 31, 2019
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(7,071,194	)		(7,078,828	)
Weighted-average number of common shares outstanding		80,115,641			80,108,007

Since there were no potential shares of common stock which had dilutive effects as of March 31, 2020 and 2019, diluted earnings per share is equal to basic earnings per share.

46

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

34. Related Party Transactions

(a) Significant transactions between the controlling company and related companies for the three-month periods ended March 31, 2020 and 2019 were as follows:

1) For the three-month period ended March 31, 2020

(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	1,537		11,079		15		243,473		—		7,712
POSCO COATED & COLOR STEEL Co., Ltd.		116,100		1,694		—		—		8,358		117
POSCO ICT(*4)		711		4,989		—		99,306		10,458		46,455
eNtoB Corporation		4		60		57,592		9,105		19		5,562
POSCO CHEMICAL CO., LTD		83,234		19,942		123,744		4,140		82,815		3,709
POSCO ENERGY CO., LTD.		1,287		679		4,610		3		—		5,512
POSCO INTERNATIONAL Corporation		1,520,559		54,331		79,696		—		11,371		1,142
POSCO Thainox Public Company Limited		51,621		66		2,662		—		—		—
POSCO America Corporation		63,642		—		—		—		—		3
POSCO Canada Ltd.		—		63		39,555		—		—		—
POSCO Asia Co., Ltd.		317,301		219		45,486		1,768		396		509
Qingdao Pohang Stainless Steel Co., Ltd.		35,469		—		—		—		—		57
POSCO JAPAN Co., Ltd.		318,234		—		6,722		620		—		438
POSCO-VIETNAM Co., Ltd.		63,588		115		—		—		—		20
POSCO MEXICO S.A. DE C.V.		51,091		36		—		—		—		55
POSCO Maharashtra Steel Private Limited		117,440		803		—		—		—		185
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		32,551		—		—		—		—		—
POSCO VST CO., LTD.		69,594		—		—		—		—		20
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		342		154,767		—		—		—
Others		268,899		14,540		26,823		12,958		61,073		29,067
		3,112,862		108,958		541,672		371,373		174,490		100,563
Associates and joint ventures(*3)
POSCO PLANTEC Co., Ltd.		65		41		916		84,839		4,086		12,431
SNNC		1,410		3,035		120,426		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		13,925		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		322,187		—		—		—
Others		9,707		15,194		12,365		—		—		7,653
		25,107		18,270		455,894		84,839		4,086		20,084
	W	3,137,969		127,228		997,566		456,212		178,576		120,647

(*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, 2020, 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.

47

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

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

(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	1,410		11,073		—		66,497		21		2,714
POSCO COATED & COLOR STEEL Co., Ltd.		117,197		1,706		—		—		2,369		372
POSCO ICT		780		4,989		—		60,828		8,557		46,161
eNtoB Corporation		4		60		78,496		5,984		26		5,524
POSCO CHEMICAL CO., LTD		103,924		19,330		130,996		2,065		78,130		129
POSCO ENERGY CO., LTD.		56,888		314		—		—		—		20
POSCO INTERNATIONAL 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		—		—		—
POSCO VST CO., LTD.		78,829		—		—		—		—		43
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		139		124,042		—		—		—
Others		220,579		11,121		55,738		5,782		67,158		26,437
		3,395,104		95,718		800,796		143,470		169,475		83,598
Associates and joint ventures
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

48

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) The related account balances from significant transactions between the controlling company and related companies as of March 31, 2020 and December 31, 2019 are as follows:

1) March 31, 2020

(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	7,127		11,101		18,228		—		79,468		395		79,863
POSCO COATED & COLOR STEEL Co., Ltd.		57,427		1,365		58,792		—		5		5,203		5,208
POSCO ICT		281		4,971		5,252		2,269		79,573		11,899		93,741
eNtoB Corporation		—		4		4		2,831		31,872		—		34,703
POSCO CHEMICAL CO., LTD		28,470		18,280		46,750		9,931		53,953		17,706		81,590
POSCO ENERGY CO., LTD.		2,365		247		2,612		—		3,950		14,278		18,228
POSCO INTERNATIONAL Corporation		531,994		54,334		586,328		2,905		2,435		3,953		9,293
POSCO Thainox Public Company Limited		41,832		2		41,834		773		—		—		773
POSCO America Corporation		7,735		—		7,735		—		—		—		—
POSCO Asia Co., Ltd.		411,858		657		412,515		4,790		96		—		4,886
Qingdao Pohang Stainless Steel Co., Ltd.		34,192		—		34,192		—		—		—		—
POSCO MEXICO S.A. DE C.V.		72,159		720		72,879		—		—		—		—
POSCO Maharashtra Steel Private Limited		164,921		471		165,392		—		—		—		—
Others		534,027		38,863		572,890		34,148		27,536		85,466		147,150
		1,894,388		131,015		2,025,403		57,647		278,888		138,900		475,435
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		13		5		18		1,562		29,590		—		31,152
SNNC		305		2,946		3,251		22,212		—		—		22,212
Roy Hill Holdings Pty Ltd		—		—		—		47,910		—		—		47,910
Others		968		18,064		19,032		3,292		141		—		3,433
		1,286		21,015		22,301		74,976		29,731		—		104,707
	W	1,895,674		152,030		2,047,704		132,623		308,619		138,900		580,142

49

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) December 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	5,702		65		5,767		—		78,512		385		78,897
POSCO COATED & COLOR STEEL Co., Ltd.		57,792		—		57,792		—		11		3,828		3,839
POSCO ICT		225		1		226		1,147		129,424		42,844		173,415
eNtoB Corporation		—		—		—		3,459		27,431		—		30,890
POSCO CHEMICAL CO., LTD		35,102		3,578		38,680		17,839		52,710		19,369		89,918
POSCO ENERGY CO., LTD.		1,876		4		1,880		—		3,229		14,912		18,141
POSCO INTERNATIONAL Corporation		633,073		—		633,073		345		2,218		3,839		6,402
POSCO Thainox Public Company Limited		52,826		2		52,828		916		—		—		916
POSCO America Corporation		8,448		—		8,448		—		—		—		—
POSCO Asia Co., Ltd.		508,962		748		509,710		12,784		171		—		12,955
Qingdao Pohang Stainless Steel Co., Ltd.		29,842		—		29,842		—		—		—		—
POSCO MEXICO S.A. DE C.V.		90,351		702		91,053		—		—		—		—
POSCO Maharashtra Steel Private Limited		235,917		444		236,361		—		—		—		—
Others		470,734		33,851		504,585		14,397		40,233		87,652		142,282
		2,130,850		39,395		2,170,245		50,887		333,939		172,829		557,655
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		84		10		94		471		49,511		—		49,982
SNNC		297		65		362		19,769		—		—		19,769
Roy Hill Holdings Pty Ltd		—		—		—		93,383		—		—		93,383
Others		942		706		1,648		3,447		586		—		4,033
		1,323		781		2,104		117,070		50,097		—		167,167
	W	2,132,173		40,176		2,172,349		167,957		384,036		172,829		724,822

(c) Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended March 31, 2020 and 2019 were as follows:

1) For the three-month period ended March 31, 2020

(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	2,558		—		5		—
New Songdo International City Development, LLC		20,200		—		—		3
SNNC		10,355		—		12,103		106,999
Chuncheon Energy Co., Ltd.		287		211		—		—
Noeul Green Energy		1,523		—		—		—
CSP - Compania Siderurgica do Pecem		16,745		4,432		84,190		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,776		—		12,540		—
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		956		—
POS-SEAHSTEELWIRE(TIANJIN)CO., Ltd		2,527		—		—		—
PT. Batutua Tembaga Raya		—		959		11,541		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		4,844		—		64		—
DMSA/AMSA		—		—		26,163		—
South-East Asia Gas Pipeline Company Ltd.		7		20,006		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		8,865		19,401		1,074		267
POSPower Co., Ltd.		41,884		—		—		—
TK CHEMICAL CORPORATION		35,341		—		12,196		—
Others		33,134		5,565		9,072		9,508
	W	189,046		50,574		169,904		116,777

50

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) 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
Chuncheon Energy Co., Ltd.		1,010		—		—		—
Noeul Green Energy		1,662		—		—		587
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		6,167		6,839
	W	220,769		42,744		194,927		32,522

(d) The related account balances from significant transactions between the Company, excluding the controlling company, and related companies as of March 31, 2020 and December 31, 2019 are as follows:

1) March 31, 2020

(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	1,754		—		203		1,957		—		8		8
New Songdo International City Development, LLC		8,757		—		20,592		29,349		—		1		1
Chuncheon Energy Co., Ltd.		—		—		—		—		370		—		370
POSPower Co., Ltd.		55,386		—		—		55,386		—		58,763		58,763
Nickel Mining Company SAS		—		62,905		140		63,045		—		—		—
CSP - Compania Siderurgica do Pecem		194,965		—		11,168		206,133		—		—		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		11,051		—		—		11,051		3,999		—		3,999
PT. Batutua Tembaga Raya		—		39,157		951		40,108		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		8,929		—		—		8,929		73		—		73
DMSA/AMSA		74		57,822		—		57,896		—		—		—
South-East Asia Gas Pipeline Company Ltd.		—		142,276		—		142,276		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		3,792		—		—		3,792		894		—		894
TK CHEMICAL CORPORATION		31,718		—		—		31,718		2,835		—		2,835
Others		78,897		139,702		103,393		321,992		3,222		12,524		15,746
	W	395,323		441,862		136,447		973,632		11,393		71,296		82,689

51

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) December 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	4,121		—		205		4,326		791		8		799
New Songdo International City Development, LLC		23,626		—		20,592		44,218		—		10		10
Chuncheon Energy Co., Ltd.		—		8,234		—		8,234		657		—		657
POSPower Co., Ltd.		34,945		—		—		34,945		—		67,543		67,543
Nickel Mining Company SAS		—		60,516		120		60,636		—		—		—
CSP - Compania Siderurgica do Pecem		244,700		—		14,264		258,964		—		33		33
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,273		—		—		10,273		633		—		633
PT. Batutua Tembaga Raya		—		36,291		19,993		56,284		56		—		56
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		7,035		—		—		7,035		101		—		101
DMSA/AMSA		—		57,999		1,672		59,671		—		—		—
South-East Asia Gas Pipeline Company Ltd.		14		147,367		—		147,381		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		8,078		—		—		8,078		916		—		916
TK CHEMICAL CORPORATION		37,373		—		—		37,373		110		—		110
Others		94,914		138,663		97,804		331,381		7,128		13,379		20,507
	W	465,079		449,070		154,650		1,068,799		10,392		80,973		91,365

52

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(e) Significant financial transactions between the Company, excluding the controlling company, and related companies for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Lend		Collect			Others(*2)			Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	10,579		3,208		—			—			13,787
DMSA/AMSA(*1)		57,999		—		—			(177	)		57,822
South-East Asia Gas Pipeline Company Ltd.		147,367		—		(12,114	)		7,023			142,276
PT. Batutua Tembaga Raya		36,291		—		—			2,866			39,157
PT. Tanggamus Electric Power		4,580		—		—			257			4,837
PT. Wampu Electric Power		5,519		—		—			309			5,828
PT. POSMI Steel Indonesia		2,316		—		—			129			2,445
Nickel Mining Company SAS		60,516		—		—			2,389			62,905
KRAKATAUPOS-CHEMDONG-SUH CHEMICAL		6,947		—		—			389			7,336
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,947		—		—			389			7,336
AMCI (WA) PTY LTD		78,553		825		—			(5,634	)		73,744
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,789		—		—			324			6,113
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		9,262		—		—			519			9,781
Hyochun Co., Ltd.		2,382		—		—			—			2,382
Chuncheon Energy Co., Ltd.		8,234		—		(8,234	)		—			—
POS-AUSTEM Suzhou Automotive Co., Ltd		5,789		—		—			324			6,113
	W	449,070		4,033		(20,348	)		9,107			441,862

(*1) During the three-month period ended March 31, 2020, loans amounting toW3,423 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.

2) For the year ended December 31, 2019

(in millions of Won)	Beginning		Lend		Collect			Others(*2)			Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	5,695		4,884		—			—			10,579
DMSA/AMSA(*1)		64,297		15,451		—			(21,749	)		57,999
South-East Asia Gas Pipeline Company Ltd.		191,107		—		(48,027	)		4,287			147,367
PT. Batutua Tembaga Raya		35,100		—		—			1,191			36,291
PT. Tanggamus Electric Power		4,423		—		—			157			4,580
PT. Wampu Electric Power		5,330		—		—			189			5,519
PT. POSMI Steel Indonesia		2,236		—		—			80			2,316
Nickel Mining Company SAS		59,664		—		—			852			60,516
KRAKATAUPOS-CHEMDONG-SUH CHEMICAL		6,709		—		—			238			6,947
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		3,354		—		(3,354	)		—			—
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,709		—		—			238			6,947
AMCI (WA) PTY LTD		90,480		4,669		—			(16,596	)		78,553
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,590		—		—			199			5,789
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		8,945		—		—			317			9,262
Hyochun Co., Ltd.		—		—		—			2,382			2,382
Chuncheon Energy Co., Ltd.		—		8,234		—			—			8,234
POS-AUSTEM Suzhou Automotive Co., Ltd		—		5,827		—			(38	)		5,789
	W	489,639		39,065		(51,381	)		(28,253	)		449,070

(*1) During the year ended December 31, 2019, loans amounting toW23,682 million have been converted to common shares of DMSA/AMSA, and its amount is included in others.

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

53

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(f) For the three-month periods ended March 31, 2020 and 2019, details of compensation to key management officers were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Short-term benefits	W	26,573		29,697
Long-term benefits		4,260		4,576
Retirement benefits		4,810		6,518
	W	35,643		40,791

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.

54

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

35. Commitments and Contingencies

(a) Details of guarantees

Contingent liabilities on outstanding guarantees provided by the Company as of March 31, 2020 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 and others		USD		100,000,000		122,260		100,000,000		122,260
	POSCO-VIETNAM Co., Ltd.	SMBC and others		USD		156,000,000		190,726		156,000,000		190,726
	POSCO MEXICO S.A. DE C.V.	BOA and others		USD		120,000,000		146,712		120,000,000		146,712
	POSCO COATED STEEL (THAILAND) CO., LTD.	The Great & CO Co.,Ltd.(SPC)		THB		5,501,000,000		205,957		5,501,000,000		205,957
	POSCO Maharashtra Steel Private Limited	ING and others		USD		83,784,000		102,434		83,784,000		102,434
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others		USD		1,350,300,000		1,650,878		940,488,348		1,149,841
	POSCO ASSAN TST STEEL INDUSTRY	SMBC and others		USD		146,527,500		179,144		131,874,750		161,230
POSCO INTERNATIONAL Corporation	Daewoo Global Development. Pte., Ltd	Export-Import Bank of Korea and others		USD		199,917,500		244,419		184,025,000		224,989
	POSCO INTERNATIONAL POWER (PNGLAE) LIMITED	KDB bank		USD		53,517,404		65,430		41,167,234		50,331
	GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Shinhan Bank and others		USD		11,000,000		13,449		11,000,000		13,449
	PT. Bio Inti Agrindo	Export-Import Bank of		USD		145,189,759		177,509		143,354,326		175,265
		Korea and others
	POSCO ASSAN TST STEEL INDUSTRY	ING		USD		14,652,750		17,914		14,652,750		17,914
	POSCO INTERNATIONAL AMERICA Corp.
	POSCO INTERNATIONAL SINGAPORE Pte. Ltd
	POSCO INTERNATIONAL MEXICO S.A. de C.V.
	POSCO INTERNATIONAL Japan Corp.	Bank Mendes Gans		USD		50,000,000		61,130		8,824,800		10,789
	POSCO INTERNATIONAL Malaysia SDN BHD
	POSCO INTERNATIONAL Deutschland GmbH
	POSCO INTERNATIONAL Italia S.R.L.
	Mykolaiv Milling Works PJSC.	Black Sea Trade and Development Bank		USD		25,647,074		31,356		25,647,074		31,356
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	Export-Import Bank of Korea and others		USD		47,000,000		57,462		47,000,000		57,462
	Daewoo Global Development. Pte., Ltd	Export-Import Bank of Korea and others		USD		163,633,000		200,058		163,633,000		200,058
	POSCO Engineering and Construction India Private Limited	Hana bank		INR		221,000,000		3,582		183,875,119		2,981
	SPH Co., Ltd.	Shinyoung securities		KRW		20,000		20,000		20,000		20,000
	PT.POSCO E&C INDONESIA	POSCO Asia Co., Ltd. and others		USD		10,900,000		13,326		10,900,000		13,326
	HONG KONG POSCO E&C (CHINA) INVESTMENT Co.,	POSCO Asia Co., Ltd. and others		USD		160,000,000		195,616		152,190,000		186,067
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd. and others		USD		1,500,000		1,834		1,200,000		1,467
POSCO CHEMICAL CO., LTD	PT.Krakatau Posco Chemtech Calcination	POSCO Asia Co., Ltd. and others		USD		15,200,000		18,584		12,000,000		14,671
POSCO COATED & COLOR STEEL Co., Ltd.	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.		USD		13,986,947		17,100		13,986,947		17,100
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	Export-Import Bank of Korea and others		USD		193,900,000		237,062		105,067,663		128,456
POSCO Asia Co., Ltd.	POSCO America Corporation	SMBC		USD		70,000,000		85,582		70,000,000		85,582
[Associates and joint ventures]
POSCO	CSP - Compania Siderurgica do Pecem	Export-Import Bank of Korea and others		USD		420,000,000		513,493		373,565,631		456,724
		BNDES		BRL		464,060,000		109,226		464,060,000		109,226
	LLP POSUK Titanium	SMBC		USD		15,000,000		18,339		15,000,000		18,339
	Nickel Mining Company SAS	SMBC		EUR		46,000,000		62,038		46,000,000		62,038
POSCO INTERNATIONAL Corporation	GLOBAL KOMSCO Daewoo LLC	Hana Bank		USD		8,225,000		10,056		8,050,000		9,842
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	New Songdo International City Development, LLC	Others		KRW		386,000		386,000		386,000		386,000
	POHANG E&E	Heungkuk Life Insurance Co., Ltd.		KRW		71,930		71,930		63,301		63,301
	UITrans LRT Co., Ltd.	Kookmin Bank and others		KRW		125,845		125,845		110,506		110,506
	JB CLARK HILLS	KOREA INVESTMENT&SECURITIES Co., Ltd.		KRW		60,000		60,000		55,000		55,000
	Incheon-Gimpo Expressway Co, Ltd.	Kookmin Bank and others		KRW		311,468		311,468		289,290		289,290
	RPSD	Plan-up Sinsajeilcha Co., Ltd		KRW		45,000		45,000		36,000		36,000
	Metropolitan Outer Beltway Co,. Ltd	Woori Bank and others		KRW		276,521		276,521		14,486		14,486
	Pureun tongyeong environment	KDB Bank and others		KRW		22,714		22,714		15,781		15,781
	Pure Gimpo.Co.,Ltd	KDB Bank and others		KRW		44,740		44,740		32,398		32,398
	Clean Iksan Co.,Ltd	SAMSUNG FIRE & MARINE INSURANCE		KRW		44,054		44,054		31,136		31,136
	NEXTRAIN Co., Ltd	Kookmin Bank and others		KRW		634,752		634,752		-		-
POSCO ICT	UITrans LRT Co., Ltd.	Kookmin Bank		KRW		76,000		76,000		76,000		76,000
	Hyochun Co., Ltd.	Kyobo Securities		KRW		39,575		39,575		39,575		39,575
	Incheon-Gimpo Expressway Co., Ltd.	KDB Bank		KRW		100,000		100,000		100,000		100,000
	Seobu naeryuk Expressway Co., Ltd.	Kookmin Bank and others		KRW		964,100		964,100		964,100		964,100
	Metropolitan Outer Beltway Co., Ltd	Woori Bank and others		KRW		193,700		193,700		193,700		193,700
POSCO CHEMICAL CO., LTD	KRAKATAU POS-CHEM DONG-SUH CHEMICAL	Hana Bank		USD		1,140,000		1,394		506,667		619
POSCO(Suzhou) Automotive Processing Center Co.,Ltd.	POS-InfraAuto (Suzhou) Co., Ltd	Export-Import Bank of Korea and others		USD		769,500		941		769,500		941
[Others]
POSCO INTERNATIONAL Corporation	Sherritt International Corporation and others	Export-Import Bank of Korea		USD		21,818,182		26,675		3,019,552		3,692
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Ecocity CO.,LTD and others	Kookmin Bank and others		KRW		3,502,259		3,502,259		2,043,673		2,043,673
POSCO ICT	BLT Enterprise and others	Hana Bank and others		KRW		1,180,324		1,180,324		1,180,324		1,180,324
POSCO AUSTRALIA PTY LTD	Department of Trade and Investment (NSW Government) and others	Woori Bank and others		AUD		11,637,124		8,758		11,637,124		8,758
PT. Bio lnti Agrindo	KSU Mandob	Bank Muamalat		IDR		80,000,000,000		5,984		80,000,000,000		5,984
				USD		3,599,608,616		4,400,883		2,937,707,242		3,591,642
				KRW		8,098,982		8,098,982		5,651,270		5,651,270
				IDR		80,000,000,000		5,984		80,000,000,000		5,984
				INR		221,000,000		3,582		183,875,119		2,981
				THB		5,501,000,000		205,957		5,501,000,000		205,957
				EUR		46,000,000		62,038		46,000,000		62,038
				AUD		11,637,124		8,758		11,637,124		8,758
				BRL		464,060,000		109,226		464,060,000		109,226

55

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(b) Other commitments

Details of other commitments of the Company as of March 31, 2020 are as follows:

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, 2020, 92 million tons of iron ore and 13 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.
	POSCO has long-term service contracts for the transportation of raw material. As of March 31, 2020, there are 39 vessels under contracts, and the average remaining contract period is about 10 years.
	As of March 31, 2020, 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-Chinabad. The repayment of the borrowings depends on the success of the project. POSCO is not liable for the repayment in full or in part of the amount borrowed if the project fail. POSCO has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreement. As of March 31, 2020, the ending balance of the borrowing amounts to USD 1.02 million.
	POSCO has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors including Norddeutsche Landesbank, for seamless funding to POSCO ENERGY Co., Ltd., a subsidiary of the Company, under construction of new power plant.
	POSCO provides a supplementary funding of up toW9.8 billion to the Company’s subsidiary, Busan E&E Co., Ltd., a subsidiary of the Company, at the request of creditors such as the Korea Development Bank.
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	As of March 31, 2020, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency guarantees of up to USD 2,716 million provided by financial institutions and used USD 825 million with Woori Bank and others.
	The Company is responsible for completion of 2 projects, including the development of Parc One in Yeouido-dong. As of March 31, 2020, the outstanding amount of loans related to the responsible payment arrangement isW2,034 billion which may be assumed in the case oofnon-performance of developers. If the responsibility is not fulfilled, there are duties such as debt assumption and responsibility for lease.
POSCO ICT	As of March 31, 2020, in relation to contract enforcement, POSCO ICT was provided withW85,600 million,W3,277 million andW305 million guaranties from Korea Software Financial Cooperative, Seoul Guarantee Insurance and Engineering Guarantee Insurance, respectively.
	The Company is responsible for completion of 13 projects, including the construction of Bundang Center. As of March 31, 2020, the outstanding amount of developers’ borrowings amounting toW758.6 billion. If the responsiblility is not fulfilled in which the Company provides payment guarantee.

56

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(c) Litigation in progress

In March 2019, regarding the Songdo International City Development Project in Incheon, NSC Investment and TGC (the “applicant”), former partners of joint venture of POSCO ENGINEERING & CONSTRUCTION CO., LTD. (“POSCO E&C”), have applied to the International Chamber of Commerce of Singapore for arbitration in relation to the POSCO E&C’s alleged contract violation (approximately USD 2 billion). 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, 2020, 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 329 lawsuits, including claim for employee right aggregating toW868.6 billion as defendant as of March 31, 2020, which arise from ordinary course of business. The Company has recognized provisions amounting toW48.2 billion for 95 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, 2020.

(d) Other contingencies

Company	Description
POSCO	POSCO has provided 3 blank checks to Korea Energy Agency as collateral for long-term foreign currency borrowings.
POSCO INTERNATIONAL Corporation	As of March 31, 2020, POSCO INTERNATIONAL Corporation has provided 33 blank promissory notes and 17 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, 2020, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided 29 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee ofW7,945,256 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.
POSCO ICT	As of March 31, 2020, POSCO ICT has provided 2 blank promissory notes and 6 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others. `

57

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020			March 31, 2019
Trade accounts and notes receivable	W	(289,141	)		(593,651	)
Other receivables		355,792			89,387
Inventories		345,162			338,259
Other current assets		(59,248	)		(180,573	)
Othernon-current assets		(96,580	)		(37,240	)
Trade accounts and notes payable		(140,113	)		(437,067	)
Other payables		(180,907	)		(62,899	)
Other current liabilities		321,373			252,888
Provisions		(103,259	)		(41,381	)
Payments of severance benefits		(70,418	)		(68,754	)
Plan assets		44,390			45,631
Othernon-current liabilities		(3,947	)		(19,218	)
	W	123,104			(714,618	)

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, 2019.

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.

58

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(a) Information about reportable segments for the three-month periods ended March 31, 2020 and 2019 were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	7,105,453		5,055,675		1,618,924		765,761		14,545,813
Internal revenues		3,969,596		3,368,091		317,815		696,507		8,352,009
Inter segment revenue		2,745,676		1,638,499		292,565		639,095		5,315,835
Total revenues		11,075,049		8,423,766		1,936,739		1,462,268		22,897,822
Segment profits		285,140		77,915		102,690		113,109		578,854

2) 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

(b) Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020			March 31, 2019
Total profit for reportable segments	W	578,854			835,917
Corporate fair value adjustments		(19,047	)		(20,875	)
Elimination of inter-segment profits		(125,149	)		(36,597	)
Income tax expense		225,745			368,496
Profit before income tax expense	W	660,403			1,146,941

59

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

38. Events after the Reporting Period

(a) Pursuant to the resolution of the Board of Directors on April 10, 2020, the Company decided to enter into a trust contract for acquisition of its treasury shares. The amount of this trust contract isW 1,000 billion, and the contract period is from April 13, 2020 to April 12, 2021.

(b) Pursuant to the resolution of the Board of Directors on May 8, 2020, the Company decided to pay interim cash dividends ofW1,500 per common share (total dividend:W120.2 billion).

(c) With the outbreak of globalCOVID-19, governments around the globe have implemented measures such as mandatory factory shutdown, self-quarantine, closing borders, and travel bans. The ultimate impact ofCOVID-19 pandemic on the Company’s operations is not yet known and will depend on future developments. The duration and significance ofCOVID-19 is highly uncertain and unpredictable, and the protective measures of the governments around the globe or the Company may lead to substantial business interruption and decrease in business scale. The financial impact of this cannot be reasonably estimated, but management expect it to be partially affected to the most areas where the Company operates. The extent and duration ofCOVID-19’s impact on the Company’s business have not yet to be determined.

60

POSCO

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2020

(With Independent Auditors’ Review Report Thereon)

Table of Contents

	Page
Independent Auditors’ Review Report		1
Condensed Separate Interim Financial Statements
Condensed Separate Interim Statements of Financial Position		3
Condensed Separate Interim Statements of Comprehensive Income		5
Condensed Separate Interim Statements of Changes in Equity		6
Condensed Separate Interim Statements of Cash Flows		7
Notes to the Condensed Separate Interim Financial Statements		9

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 separate interim financial statements of POSCO (the “Company”), which comprise the condensed separate interim statement of financial position as of March 31, 2020, the condensed separate interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2020 and 2019, 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 separate 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 separate interim financial statements free of material misstatements due to error or fraud.

Auditors’ review responsibility

Our responsibility is to issue a report on the condensed separate 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 separate 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 separate interim financial statements may differ from those generally accepted and applied in other countries.

The separate statement of financial position of the Company as of December 31, 2019, and the related separate 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 12, 2020, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is consistent, in all material respect, with the audited separate financial statements from which it has been derived.

Seoul, Korea

May 15, 2020

This report is effective as of May 15, 2020, 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 separate 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

Condensed Separate Interim Statements of Financial Position

As of March 31, 2020 and December 31, 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020		December 31, 2019
Assets
Cash and cash equivalents	20	W	2,341,514		978,139
Trade accounts and notes receivable, net	4,14,20,25,32		3,679,631		3,987,041
Other receivables, net	5,20,32		310,403		321,352
Other short-term financial assets	6,20		9,441,325		7,858,979
Inventories	7,29		4,767,696		4,988,530
Assets held for sale	8		181,503		53,924
Other current assets	13		52,280		28,101
Total current assets			20,774,352		18,216,066
Long-term trade accounts and notes receivable, net	4,20		6,009		6,014
Other receivables, net	5,20		76,090		56,468
Other long-term financial assets	6,20		1,197,424		1,257,896
Investments in subsidiaries, associates and joint ventures	9		15,221,211		15,069,857
Investment property, net	10		157,547		158,077
Property, plant and equipment, net	11		20,181,710		20,132,199
Intangible assets, net	12		717,740		708,915
Othernon-current assets	13		104,295		105,274
Totalnon-current assets			37,662,026		37,494,700
Total assets		W	58,436,378		55,710,766

See accompanying notes to the condensed separate interim financial statements.

3

POSCO

Condensed Separate Interim Statements of Financial Position, Continued

As of March 31, 2020 and December 31, 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020			December 31, 2019
Liabilities
Trade accounts and notes payable	20,32	W	876,497			667,551
Short-term borrowings and current installments of long-term borrowings	4,14,20		1,508,552			1,146,476
Other payables	15,20,32		1,281,438			1,113,003
Other short-term financial liabilities	16,20		9,560			10,969
Current income tax liabilities			328,840			237,293
Provisions	17		37,695			21,007
Other current liabilities	19,25		136,519			135,147
Total current liabilities			4,179,101			3,331,446
Long-term borrowings, excluding current installments	14,20		7,153,429			5,191,537
Other payables	15,20		300,159			222,802
Other long-term financial liabilities	16,20		34,526			46,925
Defined benefit liabilities, net	18		80,724			54,146
Deferred tax liabilities			1,088,318			1,190,553
Long-term provisions	17,33		49,632			53,942
Othernon-current liabilities	19,25		548			5,230
Totalnon-current liabilities			8,707,336			6,765,135
Total liabilities			12,886,437			10,096,581
Equity
Share capital	21		482,403			482,403
Capital surplus	21,35		1,252,220			1,252,220
Hybrid bonds	22		199,384			199,384
Reserves	23		(374,194	)		(183,930	)
Treasury shares	24		(1,508,303	)		(1,508,303	)
Retained earnings			45,498,431			45,372,411
Total equity			45,549,941			45,614,185
Total liabilities and equity		W	58,436,378			55,710,766

See accompanying notes to the condensed separate interim financial statements.

4

POSCO

Condensed Separate Interim Statements of Comprehensive Income

For the three-month periods ended March 31, 2020 and 2019

(Unaudited)

(in millions of Won, except per share information)	Notes		March 31, 2020			March 31, 2019
Revenue		25,32	W	6,969,856			7,816,471
Cost of sales		7,29,32		(6,230,404	)		(6,727,507	)
Gross profit				739,452			1,088,964
Selling and administrative expenses		29,32
Reversal of on trade accounts and note receivables				264			4,611
Other administrative expenses		26		(198,769	)		(206,820	)
Selling expenses		26		(82,836	)		(54,288	)
Operating profit				458,111			832,467
Finance income and costs		20,27
Finance income				674,317			293,709
Finance costs				(460,415	)		(112,263	)
Othernon-operating income and expenses		32
Impairment loss on other receivables				(496	)		(132	)
Othernon-operating income		28		24,125			20,925
Othernon-operating expenses		28,29		(78,686	)		(112,647	)
Profit before income tax				616,956			922,059
Income tax expense		30		(163,936	)		(250,886	)
Profit				453,020			671,173
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		18		(3,020	)		(871	)
Net changes in fair value of equity investments at fair value through other comprehensive income		6,20,23		(191,488	)		(12,124	)
Total comprehensive income			W	258,512			658,178
Basic and diluted earnings per share (in Won)		31		5,634			8,358

See accompanying notes to the condensed separate interim financial statements.

5

POSCO

Condensed Separate Interim Statements of Changes in Equity

For the three-month periods ended March 31, 2020 and 2019

(Unaudited)

(in millions of Won)	Share capital		Capital surplus		Hybrid bonds		Reserves			Treasury shares			Retained earnings			Total
Balance as of January 1, 2019	W	482,403		1,154,775		199,384		(207,191	)		(1,532,728	)		45,175,459			45,272,102
Comprehensive income:
Profit		—		—		—		—			—			671,173			671,173
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—		—			—			(871	)		(871	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—		851			—			(12,975	)		(12,124	)
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—		—			—			(400,006	)		(400,006	)
Interest of hybrid bonds		—		—		—		—			—			(2,268	)		(2,268	)
Disposal of treasury shares		—		12,576		—		—			24,425			—			37,001
Business combination		—		435,494		—		—			—			—			435,494
Balance as of March 31, 2019	W	482,403		1,602,845		199,384		(206,340	)		(1,508,303	)		45,430,512			46,000,501
Balance as of January 1, 2020	W	482,403		1,252,220		199,384		(183,930	)		(1,508,303	)		45,372,411			45,614,185
Comprehensive income:
Profit		—		—		—		—			—			453,020			453,020
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—		—			—			(3,020	)		(3,020	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—		(190,264	)		—			(1,224	)		(191,488	)
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—		—			—			(320,462	)		(320,462	)
Interest of hybrid bonds		—		—		—		—			—			(2,294	)		(2,294	)
Balance as of March 31, 2020	W	482,403		1,252,220		199,384		(374,194	)		(1,508,303	)		45,498,431			45,549,941

See accompanying notes to the condensed separate interim financial statements.

6

POSCO

Condensed Separate Interim Statements of Cash Flows

For the three-month periods ended March 31, 2020 and 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020			March 31, 2019
Cash flows from operating activities
Profit		W	453,020			671,173
Adjustments for :
Expenses related to post-employment benefit			32,325			31,169
Depreciation			560,857			538,615
Amortization			25,617			19,090
Bad debt expense			232			(4,479	)
Finance income			(526,932	)		(258,771	)
Finance costs			383,514			81,888
Loss on valuation of inventories			11,181			1,616
Gain on disposal of property, plant and equipment			(3,822	)		(11,489	)
Loss on disposal of property, plant and equipment			51,299			13,115
Impairment losses on property, plant and equipment			—			72,814
Impairment losses on investments in subsidiaries, associates and joint ventures			—			6,435
Impairment loss on assets held for sale			6,330			2,507
Gain on disposal of emissions rights			(7,743	)		—
Increase to provisions			32,471			795
Income tax expense			163,936			250,886
Others			(5,291	)		(2,344	)
Changes in operating assets and liabilities	34		714,874			(527,474	)
Interest received			28,267			33,004
Interest paid			(37,793	)		(26,082	)
Dividends received			12,454			23,907
Income taxes paid			(99,969	)		(19,160	)
Net cash provided by operating activities		W	1,794,827			897,215

See accompanying notes to the condensed separate interim financial statements.

7

POSCO

Condensed Separate Interim Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2020 and 2019

(Unaudited)

(in millions of Won)	Notes	March 31, 2020			March 31, 2019
Cash flows from investing activities
Decrease in deposits		W	513,351			714,200
Proceeds from disposal of short-term financial instruments			6,802,278			6,187,492
Proceeds from disposal of equity securities			1,812			1,285
Proceeds from disposal of current portion of debt security			190,005			—
Collection of short-term loans			104			—
Proceeds from disposal of investments in subsidiaries, associates and joint ventures			1,040			4,055
Proceeds from disposal of property, plant and equipment			—			4,436
Proceeds from disposal of intangible assets			200			—
Proceeds from disposal of assets held for sale			590			—
Proceeds from business combination			—			2,171
Increase in deposits			(543,755	)		(932,882	)
Acquisition of short-term financial investments			(8,309,849	)		(6,046,068	)
Acquisition of debt securities			(190,007	)		(190,000	)
Acquisition of other securities			(2,028	)		(110	)
Payment of long-term loans			(4,622	)		—
Acquisition of investment in subsidiaries, associates and joint ventures			(168,938	)		(40,469	)
Acquisition of property, plant and equipment			(672,114	)		(342,131	)
Proceeds from disposal of property, plant and equipment			(30,392	)		—
Acquisition of intangible assets			(50,011	)		(63,552	)
Net cash used in investing activities		W	(2,462,336	)		(701,573	)
Cash flows from financing activities
Proceeds from borrowings			2,075,317			—
Increase in long-term financial liabilities			179			2,116
Proceeds from disposals of derivatives			—			4,515
Repayment of borrowings			(36,137	)		(29,923	)
Repayment of lease liabilities			(15,819	)		(9,927	)
Decrease in long-term financial liabilities			(38	)		(94	)
Payment of cash dividends			(8	)		(15	)
Payment of interest of hybrid bonds			(2,294	)		(2,268	)
Net cash provided by (used in) financing activities		W	2,021,200			(35,596	)
Effect of exchange rate fluctuation on cash held			9,684			383
Net increase in cash and cash equivalents			1,363,375			160,429
Cash and cash equivalents at beginning of the period			978,139			259,219
Cash and cash equivalents at end of the period		W	2,341,514			419,648

See accompanying notes to the condensed separate interim financial statements.

8

POSCO

Notes to the Condensed Separate Interim Financial Statements

As of March 31, 2020

(Unaudited)

1. Reporting Entity

POSCO (the “Company”) is the largest steel producer in Korea which was incorporated on April 1, 1968, to manufacture and sell steel rolled products and plates in the domestic and overseas markets.

The shares of the Company have been listed on the Korea Exchange since June 10, 1988. The Company 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, 2020, the shares of the Company are listed on the Korea Exchange, while its depository receipts are listed on the New York Stock Exchange.

2. Statement of Compliance

Statement of compliance

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

These condensed separate 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 separate financial statements as of and for the year ended December 31, 2019. These condensed separate interim financial statements do not include all of the disclosures required for full annual financial statements.

These condensed interim financial statements are separate interim financial statements prepared in accordance withK-IFRS No. 1027 “Separate Financial Statements” presented by a parent, an investor with joint control of, or significant influence over, an investee, in which the investments are accounted for at cost.

9

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

Use of estimates and judgments

(a) Judgments, assumptions and estimation uncertainties

The preparation of the condensed 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.

(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.

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.

10

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

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 separate interim financial statements are the same as those applied by the Company in its separate financial statements as of and for the year ended December 31, 2019. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2020.

(a) K-IFRS No. 1001 “Presentation of Financial Statements” andK-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors”

The definition of materiality has been clarified, andK-IFRS No. 1001 “Presentation of Financial Statements” andK-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors” have been amended according to the clarified definition. In determining the materiality, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The Company does not expect the effect of the amendments to the financial statements to be significant.

(b) K-IFRS No. 1103 “Business Combinations”

The amendment clarifies the definition of business when it includes input and process together significantly contribute to ability to create output and requires a simplified assessment that result in an asset acquisition if substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or a group of similar identifiable assets. The Company does not expect the effect of the amendment to the financial statements to be significant.

11

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Current
Trade accounts and notes receivable	W	3,689,468			3,999,991
Less: Allowance for doubtful accounts		(9,837	)		(12,950	)
	W	3,679,631			3,987,041
Non-current
Trade accounts and notes receivable	W	9,524			9,530
Less: Present value discount		(2,501	)		(2,501	)
Less: Allowance for doubtful accounts		(1,014	)		(1,015	)
	W	6,009			6,014

Trade accounts and notes receivable sold to financial institutions, for which the derecognition conditions were not met, amounted toW129,613 million andW167,021 million as of March 31, 2020 and December 31, 2019, respectively. The fair value of trade accounts and notes receivable approximates the carrying amounts and is recognized as short-term borrowings from financial institutions(Note 14).

5. Other Receivables

Other receivables as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Current
Loans	W	2,950			2,950
Other accounts receivable		240,931			279,093
Others		71,772			47,257
Less: Allowance for doubtful accounts		(5,250	)		(7,948	)
	W	310,403			321,352
Non-current
Loans	W	40,501			34,224
Long-term other accounts receivable		40,972			27,570
Others		3,980			3,555
Less: Allowance for doubtful accounts		(9,363	)		(8,881	)
	W	76,090			56,468

12

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

6. Other Financial Assets

(a) Other financial assets as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Short-term derivative assets	W	59,430		15,603
Debt securities		291,104		290,559
Deposit instruments(*1)		1,324,928		1,294,525
Short-term financial instruments		7,765,863		6,258,292
	W	9,441,325		7,858,979
Non-current
Long-term derivative assets	W	268,041		64,072
Equity securities		862,715		1,128,641
Debt securities		8,634		9,177
Other securities		58,000		55,972
Deposit instruments(*2)		34		34
	W	1,197,424		1,257,896

(*1) As of March 31, 2020 and December 31, 2019,W4,928 million andW4,524 million, respectively, are restricted in use in relation to government assigned projects.

(*2) The Company is required to provide deposits to maintain checking accounts and accordingly the withdrawal of these deposits is restricted.

(b) Equity securities as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020													December 31, 2019
	Number of shares		Ownership (%)		Acquisition cost		Fair value		Net changes in fair value of equity securities			Book value		Book value
Listed equity securities
Nippon Steel Corporation		15,698,500		1.65	W	473,962		164,280		(309,682	)		164,280		276,133
KB Financial group Inc.		3,863,520		0.93		178,839		133,485		(45,354	)		133,485		184,097
Woori Financial Group Inc.		20,280,000		2.81		244,447		155,142		(89,305	)		155,142		235,248
DONGKUK STEEL MILL CO., LTD		1,440,459		1.51		8,442		5,287		(3,155	)		5,287		8,571
SAMWONSTEEL Co., Ltd.		5,700,000		14.25		8,930		10,773		1,843			10,773		17,214
DONGKUK INDUSTRIES COMPANY		2,611,989		4.82		11,911		5,328		(6,583	)		5,328		6,778
Others (7 companies)						55,759		25,477		(30,282	)		25,477		34,157
						982,290		499,772		(482,518	)		499,772		762,198
Unlisted equity securities
Congonhas Minerios S.A.		3,658,394		2.02		221,535		292,453		70,918			292,453		292,453
Korea Nickel CO.LTD		75,600		14.00		10,194		10,194		—			10,194		10,194
Poongsan Special Metal Corp.		315,790		5.00		7,657		7,657		—			7,657		7,657
HANKUM.CO.LTD		21,000		4.99		4,599		4,599		—			4,599		4,599
Core-Industry Co., Ltd.		490,000		19.84		4,214		4,214		—			4,214		4,214
AJUSTEEL CO.,LTD		17,000		4.36		4,165		4,165		—			4,165		4,165
Others (27 companies)						144,191		39,661		(104,530	)		39,661		43,161
						396,555		362,943		(33,612	)		362,943		366,443
					W	1,378,845		862,715		(516,130	)		862,715		1,128,641

13

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

7. Inventories

Inventories as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Finished goods	W	876,482			868,012
Semi-finished goods		1,373,218			1,474,153
By-products		8,852			10,763
Raw materials		1,075,917			1,139,517
Fuel and materials		612,751			646,396
Materials-in-transit		831,032			856,706
Others		625			660
		4,778,877			4,996,207
Less: Allowance for inventories valuation		(11,181	)		(7,677	)
	W	4,767,696			4,988,530

The amount of loss on valuation of inventories recognized in cost of sales during the three-month period ended March 31, 2020 and the year ended December 31, 2019 wereW11,181 million andW7,677 million, respectively.

14

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

8. Assets Held for Sale

Assets held for sale as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Assets
Investments in subsidiaries(*1)	W	11,273		17,603
Property, plant and equipment(*2,3)		170,230		36,321
	W	181,503		53,924

(*1) The Company determined to dispose its partial interest in POSCO Thainox Public Company Limited, a subsidiary of the Company, and classified the investment as assets held for sale. During the three-month period ended March 31, 2020, the Company recognizedW6,330 million of impairment loss for the difference between book value and net fair value of the interest, and completed the disposal for part of it.

(*2) During the year ended December 31, 2019, the Company decided to dispose individual assets for which use was discontinued, such as CEM Plants, and classified the assets as held for sale.

(*3) During the year ended December 31, 2019, the Company completed the disposal of all assets, liabilities and rights other than LNG thanks under construction, which were to be disposed of, related to a LNG terminal business of the Company to POSCO ENERGY CO., LTD. LNG tanks, which were completed during the three-month period ended March 31, 2020, are classified as assets held for sale .

15

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

9. Investments in Subsidiaries, Associates and Joint ventures

(a) Details of subsidiaries and their carrying amounts as of March 31, 2020 and December 31, 2019 are as follows:

			March 31, 2020				December 31, 2019
(in millions of Won)	Country	Principal operations	Ownership (%)		Book value		Book value
[Domestic]
POSCO INTERNATIONAL Corporation	Korea	Trading		62.91	W	3,383,745		3,383,745
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	Korea	Engineering and construction		52.80		1,014,314		1,014,314
POSCO ENERGY CO., LTD.	Korea	Power generation		89.02		658,176		658,176
POSCO COATED & COLOR STEEL Co., Ltd.	Korea	Coated steel manufacturing and sales		56.87		108,421		108,421
POSCO Venture Capital Co., Ltd.	Korea	Investment in venture companies		95.00		103,780		103,780
POSCO CHEMICAL CO., LTD	Korea	Refractory manufacturing and sales		61.26		207,631		207,631
POSCO O&M Co., Ltd(*1)	Korea	Business facility maintenance		47.17		73,374		73,374
POSCO ICT	Korea	Computer hardware and software distribution		65.38		70,990		70,990
POSCOM-TECH(*1)	Korea	Packing materials manufacturing and sales		48.85		107,278		107,278
POSCO Family Strategy Fund	Korea	Investment in venture companies		69.91		29,596		29,596
Busan E&E Co,. Ltd.(*2)	Korea	Municipal solid waste fuel and power generation		70.00		30,148		30,148
Others (10 companies)						117,393		117,393
						5,904,846		5,904,846
[Foreign]
PT. KRAKATAU POSCO	Indonesia	Steel manufacturing and sales		70.00		707,509		707,509
POSCO WA PTY LTD	Australia	Iron ore sales and mine development		100.00		641,608		640,720
POSCO Maharashtra Steel Private Limited	India	Steel manufacturing and sales		100.00		722,569		722,569
POSCO Canada Ltd.	Canada	Coal mine development		100.00		560,879		560,879
POSCO AUSTRALIA PTY LTD	Australia	Iron ore sales and mine development		100.00		330,623		330,623
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd.	China	Stainless steel manufacturing and sales		58.60		283,845		283,845
POSCO Thainox Public Company Limited	Thailand	Stainless steel manufacturing and sales		84.39		212,339		212,339
POSCO-China Holding Corp.	China	Investment management		100.00		593,841		593,841
POSCO-India Private Limited	India	Steel manufacturing and sales		99.99		75,567		75,567
POSCO MEXICO S.A. DE C.V.	Mexico	Plate steel manufacturing and sales		83.28		180,072		180,072
POSCO America Corporation	USA	Steel trading		99.45		192,156		192,156
POSCO-VIETNAM Co., Ltd.	Vietnam	Steel manufacturing and sales		100.00		160,572		160,572
POSCO VST CO., LTD.	Vietnam	Stainless steel manufacturing and sales		95.65		144,573		144,573
POSCO(Guangdong) Automotive Steel Co., Ltd.	China	Plate steel manufacturing and sales		83.64		52,936		52,936
POSCO COATED STEEL (THAILAND) CO., LTD.	Thailand	Plate steel manufacturing and sales		100.00		121,592		121,592
POSCO Asia Co., Ltd.	Hong Kong	Steel and raw material trading		100.00		117,710		117,710
POSCO ASSAN TST STEEL INDUSTRY	Turkey	Steel manufacturing and sales		60.00		92,800		92,800
POSCO JAPAN Co., Ltd.	Japan	Steel trading		100.00		68,436		68,436
Qingdao Pohang Stainless Steel Co., Ltd.	China	Stainless steel manufacturing and sales		70.00		65,982		65,982
POSCO(Suzhou) Automotive Processing Center Co., Ltd.	China	Steel manufacturing and sales		90.00		62,494		62,494
POSCO AFRICA (PROPRIETARY) LIMITED	South Africa	Mine development		100.00		50,297		50,297
POSCO-Malaysia SDN. BHD.	Malaysia	Steel manufacturing and sales		81.79		45,479		45,479
POSCO Argentina S.A.U.	Argentina	Mineral exploration, manufacturing and sale		100.00		370,250		370,250
POSCO SS VINA JOINT STOCK COMPANY(*3)	Vietnam	Steel manufacturing and sales		51.00		130,426		—
Others (29 companies)						485,668		485,668
						6,470,223		6,338,909
					W	12,375,069		12,243,755

(*1) The Company classified POSCOM-TECH and POSCO O&M Co., Ltd. as the investments in subsidiaries, considering additional facts and circumstances, such as the relative size of the voting rights held by the Company and the degree of distribution of other shareholders, although the Company holds less than half of the voting rights of POSCOM-TECH and POSCO O&M Co., Ltd.

(*2) As of March 31, 2020 and December 31, 2019, the investments in a subsidiary amounting toW 30,148 million were provided as collateral in relation to the loan agreement of Busan E&E Co., Ltd.

(*3) During the three-month period ended March 31, 2020, the Company sold 49% of POSCO SS VINA JOINT STOCK COMPANY and investedW 130,426 million by participating in the rights issue.

(b) Details of associates and their carrying amounts as of March 31, 2020 and December 31, 2019 are as follows:

16

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

			March 31, 2020				December 31, 2019
(in millions of Won)	Country	Principal operations	Ownership (%)		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	Korea	Investment in mine		31.64	W	169,316		169,316
SNNC	Korea	STS material manufacturing and sales		49.00		100,655		100,655
QSONE Co.,Ltd.	Korea	Real estate rental business		50.00		85,550		85,550
Others (7 companies)						21,428		22,468
						376,949		377,989
[Foreign]
Nickel Mining Company SAS	New Caledonia	Raw material manufacturing and sales		49.00		189,197		189,197
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)(*1)	Canada	Investment in mine		10.40		124,341		124,341
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd	China	Tinplate manufacturing and sales		24.00		11,003		11,003
Others (6 companies)						39,580		39,590
						364,121		364,131
					W	741,070		742,120

(*1) As of March 31, 2020, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering its structure of the Board of Directors and others. During the three-month period ended March 31, 2020, 7623704 Canada Inc. changed its name to 9404-5515 Quebec Inc.

(c) Details of joint ventures and their carrying amounts as of March 31, 2020 and December 31, 2019 are as follows:

				March 31, 2020				December 31, 2019
(in millions of Won)	Country		Principal operations	Ownership (%)		Book value		Book value
Roy Hill Holdings Pty Ltd(*1)		Australia	Mine development		10.00	W	1,225,464		1,225,464
CSP - Compania Siderurgica do Pecem		Brazil	Steel manufacturing and sales		20.00		343,553		322,463
POSCO-NPS Niobium LLC		USA	Mine development		50.00		364,609		364,609
KOBRASCO		Brazil	Steel materials manufacturing and sales		50.00		98,962		98,962
Others (3 companies)							72,484		72,484
						W	2,105,072		2,083,982

(*1) As of March 31, 2020 and December 31, 2019, the investments in joint ventures amounting toW 1,225,464 million were provided as collateral in relation to loans from project financing of Roy Hill Holdings Pty Ltd.

17

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

10. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(a) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Depreciation(*1)			Transfer(*2)		Ending
Land	W	91,738		—			232		91,970
Buildings		57,228		(1,017	)		389		56,600
Structures		9,111		(153	)		19		8,977
	W	158,077		(1,170	)		640		157,547

(*1) The useful life and depreciation method of investment property are identical to those of property, plant and equipment.

(*2) Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio and the purpose of use.

(b) For the year ended December 31, 2019

(in millions of Won)	Beginning		Business Combination(*1)		Depreciation(*2)			Transfer(*3)		Ending
Land	W	44,637		41,195		—			5,906		91,738
Buildings		54,277		25		(4,070	)		6,996		57,228
Structures		9,301		—		(620	)		430		9,111
	W	108,215		41,220		(4,690	)		13,332		158,077

(*1) This increases were due to business combination with POSCO Processing&Service.

(*2) The useful life and depreciation method of investment property are identical to those of property, plant and equipment.

(*3) Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio and the purpose of use.

18

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

11. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(a) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Others(*1)			Ending
Land	W	1,398,081		—		—			—			(231	)		1,397,850
Buildings		2,100,503		869		(1,371	)		(50,854	)		49,840			2,098,987
Structures		2,030,853		426		(181	)		(42,576	)		(27,117	)		1,961,405
Machinery and equipment		12,602,435		7,127		(1,283	)		(443,944	)		220,125			12,384,460
Vehicles		9,951		66		(3	)		(1,702	)		108			8,420
Tools		27,288		569		—			(3,010	)		2,449			27,296
Furniture and fixtures		38,329		872		—			(2,790	)		5,115			41,526
Lease assets		262,368		—		—			(14,811	)		110,761			358,318
Construction-in-progress		1,662,391		647,034		(3,036	)		—			(402,941	)		1,903,448
	W	20,132,199		656,963		(5,874	)		(559,687	)		(41,891	)		20,181,710

(*1) Represents assets transferred fromconstruction-in-progress to intangible assets and other property, plant and equipment, assets transferred from investment properties, assets transferred to assets held for sale, and others.

(b) For the year ended December 31, 2019

(in millions of Won)	Beginning		Acquisitions		business combination(*5)		Disposals			Depreciation			Impairment(*1)			Others(*2,4)			Ending
Land	W	1,458,632		—		—		(1,805	)		—			—			(58,746	)		1,398,081
Buildings		2,199,429		7,157		67,751		(7,706	)		(202,171	)		(25,869	)		61,912			2,100,503
Structures		2,244,099		10,777		39,783		(3,125	)		(173,181	)		(9,585	)		(77,915	)		2,030,853
Machinery and equipment		12,911,467		92,136		696,204		(21,616	)		(1,717,864	)		(176,295	)		818,403			12,602,435
Vehicles		7,340		747		40		—			(6,244	)		—			8,068			9,951
Tools		23,864		5,348		138		(24	)		(11,499	)		—			9,461			27,288
Furniture and fixtures		36,287		4,781		94		(9	)		(9,805	)		(137	)		7,118			38,329
Lease assets(*3)		142,801		27,376		—		—			(34,669	)		—			126,860			262,368
Construction-in-progress		1,130,415		1,838,490		696		—			—			(10,150	)		(1,297,060	)		1,662,391
	W	20,154,334		1,986,812		804,706		(34,285	)		(2,155,433	)		(222,036	)		(401,899	)		20,132,199

(*1) The Company estimated recoverable amount for individual assets such as CEM andFe-Si factories that ceased operations due to the disposal plan and others by calculating net fair value based on the appraisal value or scrap value and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2019

(*2) During the year ended December 31, 2019, the Company decided to sell the rights related to the operation of LNG Terminal to POSCO ENERGY CO., LTD. and reclassified to assets held for sale and liabilities directly associated with the assets held for sale. As of December 31, 2019, the Company recognizedW28,626 million of gain on disposal for the difference between the carrying amount and the sale price.

(*3) Right-of-use assets ofW128,610 million recognized on the date of initial application (January 1, 2019) of theK-IFRS No. 1116 “Leases” are included in other changes.

(*4) Represents assets transferred fromconstruction-in-progress to intangible assets and other property, plant and equipment, assets transferred from investment properties, assets transferred to assets held for sale, and others.

(*5) This has increased due to the business combination between the company and POSCO ENERGY’sby-product power generation business.

19

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(c) Information on lease agreements for which the Company is a lessee is as follows:

1)Right-of-use assets

1 Changes in the carrying amount ofright-of-use assets presented as property, plant and equipment for the three-month period ended March 31, 2020 were as follows.

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Buildings	W	71,921		—		(1,615	)		—			70,306
Structures		64,434		—		(1,304	)		—			63,130
Machinery and equipment		60,198		—		(1,375	)		—			58,823
Vehicles		6,755		—		(125	)		—			6,630
Ships		24,082		111,537		(6,913	)		—			128,706
Furniture and fixtures		34,978		—		(3,479	)		(776	)		30,723
	W	262,368		111,537		(14,811	)		(776	)		358,318

2 Changes in the carrying amount ofright-of-use assets presented as property, plant and equipment for the year ended December 31, 2019 were as follows.

(in millions of Won)	The date of initial application (January 1, 2019)		Acquisitions		Depreciation			Others			Ending
Buildings	W	78,384		—		(6,463	)		—			71,921
Structures		53,761		13,502		(2,829	)		—			64,434
Machinery and equipment		65,698		—		(5,500	)		—			60,198
Vehicles		7,256		—		(501	)		—			6,755
Ships		26,499		—		(2,417	)		—			24,082
Furniture and fixtures		39,813		13,874		(16,959	)		(1,750	)		34,978
	W	271,411		27,376		(34,669	)		(1,750	)		262,368

2) Amount recognized in profit or loss

The amounts recognized in profit or loss related to leases for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Interest on lease liabilities	W	2,658		2,264
Expenses related to short-term leases		1,006		922
Expenses related to leases oflow-value assets		1,816		1,404
	W	5,480		4,590

20

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

12. Intangible Assets, Net

Changes in the carrying amount of intangible assets for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(a) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Transfer(*2)			Ending
Intellectual property rights	W	24,545		—		—			(1,485	)		1,272			24,332
Membership(*1)		82,657		—		(205	)		—			—			82,452
Development expense		86,023		102		—			(11,352	)		7,276			82,049
Port facilities usage rights		278,072		—		—			(11,319	)		—			266,753
Construction-in-progress		137,273		25,686		—			—			(7,729	)		155,230
Other intangible assets		100,345		19,725		(11,982	)		(1,461	)		297			106,924
	W	708,915		45,513		(12,187	)		(25,617	)		1,116			717,740

(*1) Economic useful life of memberships is indefinite.

(*2) Represents assets transferred fromconstruction-in-progress to intangible assets and assets transferred from property, plant and equipment, and others.

(b) For the year ended December 31, 2019

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Transfer(*2)			Ending
Intellectual property rights	W	24,377		—		(1,270	)		(5,678	)		7,116			24,545
Membership(*1)		73,183		9,204		(6	)		—			276			82,657
Development expense		91,758		2,205		—			(41,793	)		33,853			86,023
Port facilities usage rights		305,710		—		(4,674	)		(22,964	)		—			278,072
Construction-in-progress		58,561		114,638		—			—			(35,926	)		137,273
Other intangible assets		91,633		615		(4,568	)		(6,755	)		19,420			100,345
		W645,222		126,662		(10,518)			(77,190)			24,739			708,915

(*1) Economic useful life of membership is indefinite.

(*2) Represents assets transferred fromconstruction-in-progress to intangible assets and assets transferred from property, plant and equipment, and others.

21

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

13. Other Assets

Other assets as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Advance payments	W	9,758		6,252
Prepaid expenses		42,522		21,849
	W	52,280		28,101
Non-current
Long-term prepaid expenses	W	4,962		5,088
Others(*1)		99,333		100,186
	W	104,295		105,274

(*1) As of March 31, 2020 and December 31, 2019, the Company recognized tax assets amounting toW96,312 million andW97,185 million, respectively, based on the Company’s best estimate of the income 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 and claim for rectification are finalized.

22

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

14. Borrowings

(a) Borrowings as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Short-term borrowings
Short-term borrowings	W	483,495			167,021
Current portion of debentures		1,025,820			980,460
Less: Current portion of discount on debentures issued		(763	)		(1,005	)
	W	1,508,552			1,146,476
Long-term borrowings
Long-term borrowings	W	1,248			1,181
Debentures		7,192,914			5,216,681
Less: Discount on debentures issued		(40,733	)		(26,325	)
	W	7,153,429			5,191,537

(b) Short-term borrowings as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Lenders		Issuance date		Maturity date		Annual interest rate (%)		March 31, 2020		December 31, 2019
Transfers of account receivables that do not qualify for derecognition		—		—		—		—	W	129,613		167,021
Short-term Borrowings in Foreign Trade		MUFG and others		2020.03.09~ 2020.03.23		2020.06.05~ 2020.06.22		1.09~1.91		353,882		—
									W	483,495		167,021

(c) Current portion of long-term borrowings as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Lenders	Issuance date		Maturity date	Annual interest rate (%)		March 31, 2020		December 31, 2019
Debentures	Domestic debentures 306-2		2013.10.04	2020.10.04		3.50	W	169,953		169,930
Foreign debentures	Global debentures 2		2010.10.28	2020.10.28		4.25		855,104		809,525
							W	1,025,057		979,455

(d) Long-term borrowings excluding current portion, as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Lenders	Issuance date		Maturity date		Annual Interest rate (%)		March 31, 2020		December 31, 2019
Foreign borrowings	KOREA ENERGY AGENCY		2007.12.27~ 2008.12.29		2022.12.29		3 year Government bond	W	1,248		1,181
Debentures	Domestic debentures304-2 and others		2011.11.28~ 2019.10.16		2021.05.03~ 2029.10.16		1.56~4.12		2,504,616		2,504,194
Foreign debentures	Japan Yen private bond and others		2011.04.14~ 2020.01.17		2021.04.14~ 2025.01.17		0.50~5.25		4,647,565		2,686,162
								W	7,153,429		5,191,537

23

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

15. Other Payables

Other payables as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Accounts payable	W	464,171		630,162
Accrued expenses		422,842		432,835
Dividend payable		322,750		2,296
Lease liabilities		61,894		40,463
Withholdings		9,781		7,247
	W	1,281,438		1,113,003
Non-current
Long-term accrued expenses	W	938		842
Lease liabilities		296,162		216,508
Long-term withholdings		3,059		5,452
	W	300,159		222,802

16. Other Financial Liabilities

Other financial liabilities as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Financial guarantee liabilities	W	9,560		10,969
Non-current
Derivative liabilities	W	—		8,285
Financial guarantee liabilities		34,526		38,640
	W	34,526		46,925

24

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

17. Provisions

(a) Provisions as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020				December 31, 2019
	Current		Non-current		Current		Non-current
Provision for bonus payments(*1,2)	W	9,665		26,825		14,020		35,816
Provision for restoration(*3)		5,247		15,638		6,783		15,942
Provision for legal contingencies and claims(*4,5)		181		2,580		204		2,184
Provision for product warranties(*6)		22,602		4,589		—		—
	W	37,695		49,632		21,007		53,942

(*1) Represents the provision for bonuses limited to 33~67% of annual salaries for executives.

(*2) The Company estimated the present value of estimated future cash payments about the long-term service reward, based on actuarial measurement. The Company recognized a provision ofW 29,299 million, respectively, during the three-month period ended 2020 and the year ended 2019.

(*3) Due to contamination of land near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery as provisions for restoration as of March 31, 2020. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available currently to restore the land to its original condition. In addition, the Company has applied discount rates of 1.62~1.76% to assess present value of these costs.

(*4) The Company has recognized provisions for certain litigations and other contingencies as of March 31, 2020.

(*5) As of March 31, 2020, the Company has recognized a provision for the amount of greenhouse gas emissions expected to exceed its greenhouse gas emission quota.

(*6) As of March 31, 2020, the Company recognized the expected claim cost to be charged as a provision.

(b) Changes in provisions for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

1) For the three-month period ended March 31, 2020

(in millions of Won)	Beginning		Increase		Reversal			Utilization			Ending
Provision for bonus payments	W	49,836		4,397		—			(17,743	)		36,490
Provision for restoration		22,725		42		(340	)		(1,542	)		20,885
Provision for legal contingencies and claims		2,388		424		—			(51	)		2,761
Provision for product warranties		—		32,345		—			(5,154	)		27,191
	W	74,949		37,208		(340	)		(24,490	)		87,327

25

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) For the year ended December 31, 2019

(in millions of Won)	Beginning		Increase		Reversal			Utilization			Transfer		Ending
Provision for bonus payments	W	36,749		23,523		—			(18,038	)		7,602		49,836
Provision for restoration		29,703		549		(277	)		(7,250	)		—		22,725
Provision for legal contingencies and claims		46,432		538		(11,207	)		(33,375	)		—		2,388
	W	112,884		24,610		(11,484	)		(58,663	)		7,602		74,949

18. 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, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Expenses related to post-employment benefit plans under defined contribution plans	W	10,197		9,106

(b) Defined benefit plans

1) The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Present value of funded obligations	W	1,439,574			1,435,942
Fair value of plan assets		(1,358,850	)		(1,381,796	)
Net defined benefit liabilities	W	80,724			54,146

26

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) Changes in present value of defined benefit obligations for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Defined benefit obligation at the beginning of period	W	1,435,942			1,265,675
Current service costs		32,204			119,957
Interest costs		6,928			31,567
Remeasurement(*1)		—			104,442
Business combination		—			317
Reclassification to liabilities directly associated with the assets held for sale		—			(1,448	)
Benefits paid		(35,500	)		(84,568	)
Defined benefit obligation at the end of period	W	1,439,574			1,435,942

(*1) The Company does not remeasure the defined benefit plans for the purpose of interim reporting.

3) Changes in the fair value of plan assets for the three-month period ended March 31, 2020 and the year ended December 31, 2019 were as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Fair value of plan assets at the beginning of period	W	1,381,796			1,264,812
Interest on plan assets		6,807			32,347
Remeasurement of plan assets		(4,165	)		(6,668	)
Contributions to plan assets		—			161,500
Business combination		—			670
Reclassification to liabilities directly associated with the assets held for sale		—			(1,448	)
Benefits paid		(25,588	)		(69,417	)
Fair value of plan assets at the end of period	W	1,358,850			1,381,796

4) The amounts recognized in the statements of comprehensive income for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Current service costs	W	32,204		31,364
Net interest costs		121		(195	)
	W	32,325		31,169

27

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

19. Other Liabilities

Other liabilities as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Current
Advances received	W	4,579		5,112
Withholdings		110,055		106,474
Unearned revenue		21,885		23,562
	W	136,519		135,148
Non-current
Unearned revenue	W	548		5,230

28

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

20. 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, 2020 and December 31, 2019 are as follows:

1 March 31, 2020

			Fair value
(in millions of Won)	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	327,471		—		327,471		—		327,471
Short-term financial instruments		7,765,863		—		7,765,863		—		7,765,863
Debt securities		8,050		—		—		8,050		8,050
Other securities		58,000		—		—		58,000		58,000
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		862,715		499,772		—		362,943		862,715
Debt securities		1,688		—		—		1,688		1,688
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		2,341,514		—		—		—		—
Trade accounts and notes receivable		3,673,786		—		—		—		—
Debt securities		290,000		—		—		—		—
Other receivables		324,898		—		—		—		—
Deposit instruments		1,324,962		—		—		—		—
	W	16,980,947		499,772		8,093,334		432,681		9,025,787
Financial liabilities
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable	W	876,497		—		—		—		—
Borrowings		8,661,980		—		8,865,090		—		8,865,090
Financial guarantee liabilities		44,086		—		—		—		—
Others		1,570,267		—		—		—		—
	W	11,152,830		—		8,865,090		—		8,865,090

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

2 December 31, 2019

			Fair value
(in millions of Won)	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	79,675		—		79,675		—		79,675
Short-term financial instruments		6,258,292		—		6,258,292		—		6,258,292
Debt securities		8,050		—		—		8,050		8,050
Other securities		55,972		—		—		55,972		55,972
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,128,641		762,198		—		366,443		1,128,641
Debt securities		1,686		—		—		1,686		1,686
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		978,139		—		—		—		—
Trade accounts and notes receivable		3,983,573		—		—		—		—
Debt securities		290,000		—		—		—		—
Other receivables		202,819		—		—		—		—
Deposit instruments		1,294,559		—		—		—		—
	W	14,283,406		762,198		6,337,967		434,151		7,534,316
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	8,285		—		8,285		—		8,285
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		667,551		—		—		—		—
Borrowings		6,338,012		—		6,525,464		—		6,525,464
Financial guarantee liabilities		49,609		—		—		—		—
Others		1,325,336		—		—		—		—
	W	8,388,793		—		6,533,749		—		6,533,749

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

29

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) Financial liabilities were recognized in connection with financial guarantee contracts as of March 31, 2020. The details of the amount of guarantees provided are as follows:

(in millions of Won)		Guarantee limit					Guarantee amount
Guarantee beneficiary	Financial institution	Foreign currency			Won equivalent		Foreign currency		Won equivalent
Subsidiaries
POSCO Maharashtra	SCB		USD	33,784,000		41,304		33,784,000		41,304
Steel Private Limited	ING		USD	50,000,000		61,130		50,000,000		61,130
POSCO ASSAN TST	SMBC		USD	62,527,500		76,446		56,274,750		68,802
STEEL INDUSTRY	ING		USD	60,000,000		73,356		54,000,000		66,020
	BNP		USD	24,000,000		29,342		21,600,000		26,408
POSCO Asia Co., Ltd.	BOC		USD	50,000,000		61,130		50,000,000		61,130
	Credit Agricole		USD	50,000,000		61,130		50,000,000		61,130
POSCO MEXICO S.A. DE C.V	CITI BANAMEX		USD	30,000,000		36,678		30,000,000		36,678
	BOA		USD	30,000,000		36,678		30,000,000		36,678
	SMBC		USD	20,000,000		24,452		20,000,000		24,452
	MIZUHO		USD	20,000,000		24,452		20,000,000		24,452
	ANZ		USD	20,000,000		24,452		20,000,000		24,452
POSCO-VIETNAM Co., Ltd.	SMBC		USD	50,000,000		61,130		50,000,000		61,130
	Credit Agricole		USD	40,000,000		48,904		40,000,000		48,904
	BTMU		USD	26,000,000		31,788		26,000,000		31,788
	Citi		USD	20,000,000		24,452		20,000,000		24,452
	MIZUHO		USD	20,000,000		24,452		20,000,000		24,452
PT. KRAKATAU POSCO	Export-Import Bank of Korea		USD	567,000,000		693,214		396,288,870		484,503
	SMBC		USD	140,000,000		171,164		97,998,783		119,813
	BTMU		USD	119,000,000		145,489		81,954,783		100,198
	MIZUHO		USD	105,000,000		128,373		72,313,043		88,410
	SCB		USD	107,800,000		131,796		75,822,783		92,701
	Credit Suisse AG		USD	91,000,000		111,257		62,671,304		76,622
	HSBC		USD	91,000,000		111,257		62,671,304		76,622
	ANZ		USD	73,500,000		89,861		52,200,522		63,820
	BOA		USD	35,000,000		42,791		24,104,348		29,470
	The Tokyo Star Bank, Ltd		USD	21,000,000		25,675		14,462,609		17,682
POSCO COATED STEEL (THAILAND) CO., LTD.	The Great & Co.		THB	5,501,000,000		205,957		5,501,000,000		205,957
Associates
LLP POSUK Titanium	SMBC		USD	15,000,000		18,339		15,000,000		18,339
Nickel Mining Company SAS	SMBC		EUR	46,000,000		62,038		46,000,000		62,038
Joint ventures
CSP - Compania	Export-Import Bank of Korea		USD	182,000,000		222,513		163,396,219		199,768
Siderurgica do Pecem	Santander		USD	47,600,000		58,196		42,033,882		51,391
	BNP		USD	47,600,000		58,196		42,033,882		51,391
	MIZUHO		USD	47,600,000		58,196		42,033,882		51,391
	Credit Agricole		USD	20,000,000		24,452		17,661,302		21,593
	SOCIETE GENERALE		USD	20,000,000		24,452		17,661,302		21,593
	KfW		USD	20,000,000		24,452		17,661,302		21,593
	BBVA Seoul		USD	17,600,000		21,518		15,541,930		19,002
	ING		USD	17,600,000		21,518		15,541,930		19,002
	BNDES		BRL	464,060,000		109,226		464,060,000		109,226
			USD	2,391,611,500		2,923,985		1,920,712,730		2,348,266
			EUR	46,000,000		62,038		46,000,000		62,038
			THB	5,501,000,000		205,957		5,501,000,000		205,957
			BRL	464,060,000		109,226		464,060,000		109,226

30

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

3) Finance income and costs by category of financial instrument for the three-month periods ended March 31, 2020 and 2019 were as follows:

1 For the three-month period ended March 31, 2020

(in millions of Won)	Finance income and costs																	Other comprehensive income (loss)
	Interest income (expense)			Dividend income(*1)		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total
Financial assets at fair value through profit or loss	W	38,715			—		—			196		252,693		—		291,604			—
Financial assets at fair value through other comprehensive income		—			24,246		—			—		—		—		24,246			(191,488	)
Financial assets measured at amortized cost		10,409			—		141,729			—		—		—		152,138			—
Financial liabilities at fair value through profit or loss		—			—		—			25		11,542		—		11,567			—
Financial liabilities measured at amortized cost		(57,096	)		—		(326,152	)		—		—		7,937		(375,311	)		—
	W	(7,972	)		24,246		(184,423	)		221		264,235		7,937		104,243			(191,488	)

(*1) Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures ofW109,658 million for the three-month period ended March 31, 2020.

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

(in millions of Won)	Finance income and costs																	Other comprehensive income (loss)
	Interest income (expense)			Dividend income(*1)		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total
Financial assets at fair value through profit or loss	W	33,453			—		—			—		19,362		—		52,815			—
Financial assets at fair value through other comprehensive income		—			27,787		—			—		—		—		27,787			(12,124	)
Financial assets measured at amortized cost		7,533			—		50,800			—		—		—		58,333			—
Financial liabilities at fair value through profit or loss		—			—		—			19		35,628		—		35,647			—
Financial liabilities measured at amortized cost		(36,912	)		—		(57,968	)		—		—		2,310		(92,570	)		—
	W	4,074			27,787		(7,168	)		19		54,990		2,310		82,012			(12,124	)

(*1) Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures ofW99,435 million for the three-month period ended March 31, 2019.

(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 separate financial statements as of and for the year ended December 31, 2019.

31

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

21. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2020 and December 31, 2019 are as follows:

(in Won, except share information)	March 31, 2020		December 31, 2019
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Share capital(*2)	W	482,403,125,000		482,403,125,000

(*1) As of March 31, 2020, the total number of ADRs of 30,591,196 is equivalent to 7,647,779 shares of common stock.

(*2) As of March 31, 2020, the difference between the ending balance of common stock and the aggregate 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, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Share premium	W	463,825			463,825
Gain on disposal of treasury shares		796,623			796,623
Loss on disposal of hybrid bonds		(1,787	)		(1,787	)
Loss from merger		(6,441	)		(6,441	)
	W	1,252,220			1,252,220

32

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

22. Hybrid Bonds

Hybrid bonds classified as equity as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Rateof Interest (%)		March 31, 2020			December 31, 2019
Hybrid bond1-2(*1)		6/13/2013		6/13/2043		4.60	W	200,000			200,000
Issuance cost								(616	)		(616	)
							W	199,384			199,384

(*1) Details of hybrid bonds as of March 31, 2020 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 of the Republic of Korea (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 the Company)
Others	The Company can call the hybrid bond at 10th anniversary of issuance and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common shareholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2020 amounts toW479 million.

33

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

23. Reserves

Reserves as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020			December 31, 2019
Changes in fair value of equity investments at fair value through other comprehensive income	W	(374,194	)		(183,930	)

24. Treasury Shares

As of March 31, 2020, the Company holds 7,071,194 shares of treasury stock for share price stabilization and other purposes in accordance with the Board of Director’s resolution.

25. Revenue

(a) Details of revenue disaggregated by types of revenue and timing of revenue recognitionfor the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Types of revenue
Sales of steel product	W	6,738,862		7,549,968
Transportation services		186,409		196,671
Others		44,585		69,832
	W	6,969,856		7,816,471
Timing of revenue recognition
Revenue recognized at a point in time	W	6,767,749		7,602,424
Revenue recognized over time		202,107		214,047
	W	6,969,856		7,816,471

(b) Details of contract assets and liabilities from contracts with customers as of March 31, 2020 and December 31, 2019 are as follows:

(in millions of Won)	March 31, 2020		December 31, 2019
Receivables
Accounts receivable	W	3,673,786		3,983,573
Contract assets
Accounts receivable		11,854		9,482
Contract liabilities
Advance received		4,579		5,112
Unearned income		22,275		28,484

34

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

26. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Wages and salaries	W	61,255		57,234
Expenses related to post-employment benefits		7,643		9,287
Other employee benefits		12,235		13,326
Travel		2,786		3,035
Depreciation		6,853		6,476
Amortization		9,416		9,143
Rental		13,258		8,943
Repairs		2,250		2,472
Advertising		14,894		13,639
Research & development		15,806		23,009
Service fees		37,373		41,580
Supplies		235		2,506
Vehicles maintenance		1,281		1,302
Industry association fee		1,977		1,723
Training		4,319		5,535
Conference		1,081		1,495
Others		6,107		6,115
	W	198,769		206,820

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Freight and custody	W	33,701		33,708
Operating expenses for distribution center		1,719		2,356
Sales commissions		45,253		15,566
Sales advertising		86		133
Sales promotion		394		1,003
Sample		176		214
Sales insurance premium		1,507		1,308
	W	82,836		54,288

35

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

27. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Finance income
Interest income(*1)	W	49,124		40,986
Dividend income		133,904		127,222
Gain on foreign currency transactions		147,164		34,939
Gain on foreign currency translations		71,298		32,663
Gain on valuation of derivatives		264,235		54,472
Others		8,591		3,427
	W	674,316		293,709
Finance costs
Interest expenses	W	57,096		36,912
Loss on foreign currency transactions		76,467		29,794
Loss on foreign currency translations		326,418		44,976
Others		434		581
	W	460,415		112,263

(*1) Interest income calculated using the effective interest method for the three-month periods ended March 31, 2020 and 2019 wereW10,409 million andW7,533 million, respectively.

36

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

28. OtherNon-Operating Income and Expenses

Details of othernon-operating income and expenses for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Othernon-operating income
Gain on disposals of property, plant and equipment	W	3,822		11,489
Gain on disposals of investment in subsidiaries, associates and joint ventures		—		1,194
Gain on disposals of emission rights		7,743		—
Others		12,560		8,242
	W	24,125		20,925
Othernon-operating expenses
Loss on disposals of property, plant and equipment	W	51,299		13,115
Impairment loss on property, plant and equipment		—		72,814
Impairment loss on investment in subsidiaries, associates and joint ventures		—		6,435
Impairment loss on assets held for sale		6,330		2,507
Donations		8,709		7,400
Others		12,348		10,376
	W	78,686		112,647

37

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

29. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses and othernon-operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2020 and 2019 were as follows (excluding finance costs and income tax expenses):

(in millions of Won)	March 31, 2020		March 31, 2019
Changes in inventories(*1)	W	97,880		218,708
Raw materials and consumables used		4,145,641		4,411,723
Employee benefits expenses		459,584		431,702
Outsourced processing cost		658,858		598,414
Depreciation(*2)		560,857		538,615
Amortization		25,617		19,090
Electricity and water		66,649		153,020
Service fees		58,346		61,241
Rental		22,746		13,087
Advertising		14,894		13,639
Freight and custody		215,690		227,860
Sales commissions		45,253		15,566
Loss on disposal of property, plant and equipment		51,299		13,115
Impairment loss on property, plant and equipment		—		72,814
Impairment loss on investments in subsidiaries, associates and joint ventures		—		6,435
Other		167,613		301,754
	W	6,590,927		7,096,783

(*1) Changes in inventories include the changes in the balance of product, semi-finished products andby-products.

(*2) Includes depreciation of investment property.

30. Income Taxes

The effective tax rates of the Company for the three-month periods ended March 31, 2020 and 2019 were 26.57% and 27.21%, respectively.

38

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

31. Earnings per Share

Basic earnings per share for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in Won, except share information)	March 31, 2020			March 31, 2019
Profit for the period	W	453,020,315,302			671,172,964,429
Interests of hybrid bonds, net of tax		(1,662,931,507	)		(1,644,657,534	)
Weighted-average number of common shares outstanding(*1)		80,115,641			80,108,007
Basic earnings per share	W	5,634			8,358

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

(shares)	March 31, 2020			March 31, 2019
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(7,071,194	)		(7,078,828	)
Weighted-average number of common shares outstanding		80,115,641			80,108,007

Since there were no potential shares of common stock which had dilutive effects as of March 31, 2020 and 2019, diluted earnings per share is equal to basic earnings per share.

39

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

32. Related Party Transactions

(a) Significant transactions with related companies for the three-month periods ended March 31, 2020 and 2019 were as follows:

1) For the three-month period ended March 31, 2020

(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	1,537		11,079		15		243,473		—		7,712
POSCO COATED & COLOR STEEL Co., Ltd.		116,100		1,694		—		—		8,358		117
POSCO ICT(*4)		711		4,989		—		99,306		10,458		46,455
eNtoB Corporation		4		60		57,592		9,105		19		5,562
POSCO CHEMICAL CO., LTD		83,234		19,942		123,744		4,140		82,815		3,709
POSCO ENERGY CO., LTD.		1,287		679		4,610		3		—		5,512
POSCO INTERNATIONAL Corporation		1,520,559		54,331		79,696		—		11,371		1,142
POSCO Thainox Public Company Limited		51,621		66		2,662		—		—		—
POSCO America Corporation		63,642		—		—		—		—		3
POSCO Canada Ltd.		—		63		39,555		—		—		—
POSCO Asia Co., Ltd.		317,301		219		45,486		1,768		396		509
Qingdao Pohang Stainless Steel Co., Ltd.		35,469		—		—		—		—		57
POSCO JAPAN Co., Ltd.		318,234		—		6,722		620		—		438
POSCO-VIETNAM Co., Ltd.		63,588		115		—		—		—		20
POSCO MEXICO S.A. DE C.V.		51,091		36		—		—		—		55
POSCO Maharashtra Steel Private Limited		117,440		803		—		—		—		185
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		32,551		—		—		—		—		—
POSCO VST CO., LTD.		69,594		—		—		—		—		20
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		342		154,767		—		—		—
Others		268,899		14,540		26,823		12,958		61,073		29,067
		3,112,862		108,958		541,672		371,373		174,490		100,563
Associates and joint ventures(*3)
POSCO PLANTEC Co., Ltd.		65		41		916		84,839		4,086		12,431
SNNC		1,410		3,035		120,426		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		13,925		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		322,187		—		—		—
Others		9,707		15,194		12,365		—		—		7,653
		25,107		18,270		455,894		84,839		4,086		20,084
	W	3,137,969		127,228		997,566		456,212		178,576		120,647

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

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

(*3) As of March 31, 2020, the Company provided guarantees to related companies (Note 20).

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

40

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

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

(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	1,410		11,073		—		66,497		21		2,714
POSCO COATED & COLOR STEEL Co., Ltd.		117,197		1,706		—		—		2,369		372
POSCO ICT		780		4,989		—		60,828		8,557		46,161
eNtoB Corporation		4		60		78,496		5,984		26		5,524
POSCO CHEMICAL CO., LTD		103,924		19,330		130,996		2,065		78,130		129
POSCO ENERGY CO., LTD.		56,888		314		—		—		—		20
POSCO INTERNATIONAL 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		—		—		—
POSCO VST CO., LTD.		78,829		—		—		—		—		43
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		139		124,042		—		—		—
Others		220,579		11,121		55,738		5,782		67,158		26,437
		3,395,104		95,718		800,796		143,470		169,475		83,598
Associates and joint ventures
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

(b) The related account balances from significant transactions with related companies as of March 31, 2020 and December 31, 2019 are as follows:

1) March 31, 2020

(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	7,127		11,101		18,228		—		79,468		395		79,863
POSCO COATED & COLOR STEEL Co., Ltd.		57,427		1,365		58,792		—		5		5,203		5,208
POSCO ICT		281		4,971		5,252		2,269		79,573		11,899		93,741
eNtoB Corporation		—		4		4		2,831		31,872		—		34,703
POSCO CHEMICAL CO., LTD		28,470		18,280		46,750		9,931		53,953		17,706		81,590
POSCO ENERGY CO., LTD.		2,365		247		2,612		—		3,950		14,278		18,228
POSCO INTERNATIONAL Corporation		531,994		54,334		586,328		2,905		2,435		3,953		9,293
POSCO Thainox Public Company Limited		41,832		2		41,834		773		—		—		773
POSCO America Corporation		7,735		—		7,735		—		—		—		—
POSCO Asia Co., Ltd.		411,858		657		412,515		4,790		96		—		4,886
Qingdao Pohang Stainless Steel Co., Ltd.		34,192		—		34,192		—		—		—		—
POSCO MEXICO S.A. DE C.V.		72,159		720		72,879		—		—		—		—
POSCO Maharashtra Steel Private Limited		164,921		471		165,392		—		—		—		—
Others		534,027		38,863		572,890		34,148		27,536		85,466		147,150
		1,894,388		131,015		2,025,403		57,647		278,888		138,900		475,435
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		13		5		18		1,562		29,590		—		31,152
SNNC		305		2,946		3,251		22,212		—		—		22,212
Roy Hill Holdings Pty Ltd		—		—		—		47,910		—		—		47,910
Others		968		18,064		19,032		3,292		141		—		3,433
		1,286		21,015		22,301		74,976		29,731		—		104,707
	W	1,895,674		152,030		2,047,704		132,623		308,619		138,900		580,142

41

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

2) December 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	5,702		65		5,767		—		78,512		385		78,897
POSCO COATED & COLOR STEEL Co., Ltd.		57,792		—		57,792		—		11		3,828		3,839
POSCO ICT		225		1		226		1,147		129,424		42,844		173,415
eNtoB Corporation		—		—		—		3,459		27,431		—		30,890
POSCO CHEMICAL CO., LTD		35,102		3,578		38,680		17,839		52,710		19,369		89,918
POSCO ENERGY CO., LTD.		1,876		4		1,880		—		3,229		14,912		18,141
POSCO INTERNATIONAL Corporation		633,073		—		633,073		345		2,218		3,839		6,402
POSCO Thainox Public Company Limited		52,826		2		52,828		916		—		—		916
POSCO America Corporation		8,448		—		8,448		—		—		—		—
POSCO Asia Co., Ltd.		508,962		748		509,710		12,784		171		—		12,955
Qingdao Pohang Stainless Steel Co., Ltd.		29,842		—		29,842		—		—		—		—
POSCO MEXICO S.A. DE C.V.		90,351		702		91,053		—		—		—		—
POSCO Maharashtra Steel Private Limited		235,917		444		236,361		—		—		—		—
Others		470,734		33,851		504,585		14,397		40,233		87,652		142,282
		2,130,850		39,395		2,170,245		50,887		333,939		172,829		557,655
Associates and joint ventures
POSCO PLANTEC Co., Ltd.		84		10		94		471		49,511		—		49,982
SNNC		297		65		362		19,769		—		—		19,769
Roy Hill Holdings Pty Ltd		—		—		—		93,383		—		—		93,383
Others		942		706		1,648		3,447		586		—		4,033
		1,323		781		2,104		117,070		50,097		—		167,167
		2,132,173		40,176		2,172,349		167,957		384,036		172,829		724,822
	W	2,132,173		40,176		2,172,349		167,957		384,036		172,829		724,822

(c) For the three-month periods ended March 31, 2020 and 2019, details of compensation to key management officers were as follows:

(in millions of Won)	March 31, 2020		March 31, 2019
Short-term benefits	W	10,807		12,114
Long-term benefits		1,152		1,709
Retirement benefits		2,843		4,381
	W	14,802		18,204

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

42

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

33. Commitments and Contingencies

(a) Commitments

1) The Company 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, 2020, 92 million tons of iron ore and 13 million tons of coal remained to be purchased under such long-term contracts.

2) The Company 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.

3) The Company entered into consecutive voyage charter (CVC) contract for transportation of raw materials. As of March 31, 2020, there are 39 vessels under CVC contracts and the average remaining contract period is about 10 years.

4) The Company 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-Chinabad. The repayment of the borrowings depends on the success of the project. The Company is not liable for the repayment in full or in part of the amount borrowed if the project fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreement. As of March 31, 2020, the ending balance of the borrowing amounts to USD 1.02 million.

5) The Company has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors including Norddeutsche Landesbank, for seamless funding to the construction of new power plant by POSCO ENERGY CO., LTD.

6) The Company provides a supplementary fund of up toW9.8 billion to the Company’s subsidiary, Busan E&E Co. Ltd., at the request of creditors such as the Korea Development Bank.

(b) As of March 31, 2020, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral for long-term foreign currency borrowings.

43

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

(c) Litigation in progress

The Company is involved in 23 lawsuits, including claim for confirmation of employee status aggregating toW39.2 billion as defendant as of March 31, 2020, which arise from the ordinary course of business. The Company has recognized provisions amounting toW2.1 billion for a lawsuit based on its reliable estimate of outflow of resources. However, the Company has not recognized any provisions for the other lawsuits and claims since the Company does not believe it has a present obligation as of March 31, 2020.

34. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2020 and 2019 were as follows:

(in millions of Won)	March 31, 2020			March 31, 2019
Trade accounts and notes receivable, net	W	325,991			(447,094	)
Other accounts receivable		159,264			1
Inventories		215,460			289,788
Prepaid expenses		(20,873	)		(30,897	)
Other current assets		(3,509	)		42
Long-term guarantee deposits		(414	)		(342	)
Derivative assets		4,898			—
Othernon-current assets		299			5
Trade accounts and notes payable		211,800			(151,765	)
Other accounts payable		(119,818	)		(152,979	)
Accrued expenses		(32,839	)		(9,722	)
Advances received		(533	)		(434	)
Withholdings		3,582			292
Unearned revenue		(1,685	)		6,762
Other current liabilities		(11,102	)		(6,640	)
Derivative liabliities		3,256			—
Payments of severance benefits		(35,500	)		(37,345	)
Plan assets		25,588			18,780
Othernon-current liabilities		(8,991	)		(5,926	)
	W	714,874			(527,474	)

44

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2020

(Unaudited)

35. Events after the reporting period

(a) Pursuant to the resolution of the Board of Directors on April 10, 2020, the Company decided to enter into a trust contract for acquisition of its treasury shares. The amount of this trust contract isW 1,000 billion, and the contract period is from April 13, 2020 to April 12, 2021.

(b) Pursuant to the resolution of the Board of Directors on May 8, 2020, the Company decided to pay interim cash dividends ofW1,500 per common share (total dividend:W120.2 billion).

(c) With the outbreak of globalCOVID-19, governments around the globe have implemented measures such as mandatory factory shutdown, self-quarantine, closing borders, and travel bans. The ultimate impact ofCOVID-19 pandemic on the Company’s operations is not yet known and will depend on future developments. The duration and significance ofCOVID-19 is highly uncertain and unpredictable, and the protective measures of the governments around the globe or the Company may lead to substantial business interruption and decrease in business scale. The financial impact of this cannot be reasonably estimated, but management expect it to be partially affected to the most areas where the Company operates. The extent and duration ofCOVID-19’s impact on the Company’s business have not yet to be determined.

45