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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15D-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of June, 2021

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 Form 20-F or Form 40-F.

Form 20-F  ☒                Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-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 Form 6-K submission or other Commission filing on EDGAR.

POSCO is furnishing under cover of Form 6-K:

Exhibit 99.1: An English-translated documents of POSCO’s 1^st Quarter Report for the year 2021

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 3, 2021	By	/s/ Chung, Kyung-Jin
		(Signature)
		Name : Chung, Kyung-Jin
		Title : Head of Finance Office

Exhibit 99.1

QUARTERLY REPORT

(From January 1, 2021 to March 31, 2021)

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

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON BOTH CONSOLIDATED AND NON-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, 2021 to March 31, 2021)

To: Korean Financial Services Commission and Korea Exchange

/s/ Kim, Hag-Dong

Kim, Hag-Dong

President and Representative Director

POSCO
6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do, Korea

Telephone: +82-54-220-0114

/s/ Chung, Kyung-Jin

Chung, Kyung-Jin

Head of Finance Office

POSCO
6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do, Korea

Telephone: +82-2-3457-0114

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TABLE OF CONTENTS

I.	Overview
II.	Business
III.	Financial Statements
IV.	Corporate Governance

Attachment: Independent auditors’ review reports on consolidated and separate financial statements

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I. OVERVIEW

1. Scope of Business

A. POSCO (the “Company”)

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 of non-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 Enterprise Group

(1) Name of the Enterprise Group: POSCO

(2) Companies Belonging to the Enterprise Group

POSCO, POSCO CHEMICAL CO., LTD, POSCO INTERNATIONAL Corporation, POSCO COATED & COLOR STEEL Co., Ltd., POSCO ICT, POSCO M-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., Gale International Korea, LLC, POSCO Venture Capital Co., Ltd., Pohang Special Welding Co., Ltd., POSCO MITSUBISHI CARBON TECHNOLOGY, Samcheok Blue Power Co.,Ltd., Songdo Posco-family Housing Co.,Ltd., POSCO Group University, POSCO Research & Technology, Songdo Development PMC (Project Management Company) LLC., Korea Fuel-Cell Co.,Ltd., POSCO SPS, P&O Chemical Co., Ltd.

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(3) Related Laws and Regulations

The Korea Fair Trade Commission has designated POSCO as an Enterprise Group 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 (Article 10-2 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 (Article 11-3 of the MRFTA)

(g) Disclosure of Enterprise Groups (Article 11-4 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: 6261 Donghaean-ro (Goedong-dong), Nam-gu, Pohang-si, Gyeongsangbuk -do, Korea

(2) Steel Works and Offices

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

(b) Gwangyang Steel Works: 20-26 Pokposarang-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: In order to support international businesses, the Company operates five overseas offices as follows:

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

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(3) Major Changes in the Board of Directors (as of March 12, 2021)

(a) Inside Directors

• Re-appointment : Choi, Jeong-Woo(Representative Director & CEO), Kim, Hag-Dong (Representative Director & President), Chon, Jung-Son (Representative Director & Senior Executive Vice President), and Jeong, Tak (Senior Executive Vice President)

• New appointment : Chung, Chang-Hwa (Senior Executive Vice President)

• Expiration of Term : Chang, In-Hwa

(b) Outside Directors

• Re-appointment : Kim, Sung-Jin*

• New appointment : Yoo, Young-Sook and Kwon, Tae-Kyun

• Expiration of Terms : Kim, Joo-Hyun and Bahk, Byong-Won

* Mr. Kim, Sung-Jin was elected as an Outside Director to become an Audit Committee Member.

(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 of changes in common shares of the largest shareholder 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 9, 2019, April 9, 2019, July 9, 2019, October 8, 2019, January 8, 2020, February 10, 2020, March 11, 2020, April 7, 2020, May 8, 2020, June 3, 2020, July 7, 2020, August 6, 2020, September 7, 2020, and October 8, 2020, November 4, 2020, December 4, 2020, January 7, 2021, February 4, 2021, March 5, 2021, April 6, 2021, May 6, 2021)

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

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

(2) September 2019 : Small scale merger of By-Product Hydrogen Generation Business from POSCO ENERGY into POSCO after spin-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

[None]

4. Other Information Regarding Shares

A. Total Number of Shares                

	(As of March 31, 2021)
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, 2021)
Method of Purchase	Type	Beginning Balance		Increased		Decreased		Cancelled		Ending Balance
Direct	Common		7,071,194		—		—		—		7,071,194
Trust Contract	Stock		4,100,169		389,900		—		—		4,490,069
Total			11,171,363		389,900		—		—		11,561,263

* The number of common shares held by the Trust Contract is based on the traded and closed volume as of March 31, 2021.

* POSCO terminated share repurchase trust contract on April 12, 2021 due to repurchase of treasury shares equivalent to the contract amount and expiration of the contract period. The ending balance as of April 12, 2021 is the same as in March 31, 2021.

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5. Voting Rights

			(As of March 31, 2021)
Classification	Number of Common Shares		Remarks
(1) Number of Issued Shares		87,186,835	—
(2) Shares without Voting Rights		11,561,263	Treasury stock and trust holding
(3) Shares with Voting Rights		75,625,572	—

* The above “(3) Shares with Voting Rights” is the number of shares based on holding voting rights as of March 31, 2021.

6. Earnings and Dividends

					(In millions of KRW)
	2021.1Q		2020		2019
(Consolidated) Profit*		1,024,734		1,602,148		1,835,087
(Separate) Profit		952,176		965,863		1,175,712
Earnings per Share (Consolidated, KRW)		13,477		20,165		22,823
Cash Dividend Paid		226,877		620,287		801,156
Pay-out Ratio (Consolidated, %)		22.1		38.7		43.7
Dividend per Share (KRW)		3,000		8,000		10,000
Dividend Yield (%)		1.0		3.0		4.1

(Consolidated) Profit : Profit attributable to owners of the controlling company

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7. Stock Prices and Trading Volumes

The stock prices and trading volumes of POSCO for the last 6 months are as follows.

A. The Korean Stock Market

								(KRW/share, In thousands of shares)
		October 2020		November 2020		December 2020		January 2021		February 2021		March 2021
Common share	Highest Price		220,000		245,000		279,500		294,500		283,000		327,000
	Lowest Price		200,500		216,000		245,500		245,500		253,000		285,000
	Average Price		208,711		234,810		267,738		272,075		268,889		307,045
Trading volume	Daily highest		903		627		663		899		875		2,911
	Daily lowest		191		222		252		340		232		361
	Monthly		7,812		7,542		8,301		10,236		7,347		17,304

B. New York Stock Exchange

								(USD/ADS*, In thousands of ADS*)
		October 2020		November 2020		December 2020		January 2021		February 2021		March 2021
American Depositary Share (ADS)	Highest Price		48.7		56.3		64.3		67.2		62.5		72.2
	Lowest Price		42.2		47.9		56.1		54.8		56.7		63.5
	Average Price		45.1		52.8		61.2		62.1		60.6		67.7
Trading volume	Daily highest		246.1		212.9		246.9		317		319.9		613.8
	Daily lowest		66.4		58.4		23.8		63.8		55.4		118.8
	Monthly		3,519		2,527		2,774		3,094		2,549		6,080

* ADS : One American Depositary Share representing one-fourth of one of Common Share

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II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into four segments:

Steel, Trading, Engineering & Construction, and Others.

B. Summary of Financial Status of Segment

									(In millions of KRW)
Segment	2021.1Q				2020				2019
	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Steel		8,476,513		1,262,373		28,892,877		1,372,852		32,078,453		2,786,517
Trading		5,246,448		95,532		19,345,222		394,954		22,157,131		542,724
Engineering & Construction		1,460,305		145,340		6,576,170		385,048		6,944,629		338,865
Others		885,457		49,196		2,978,527		250,181		3,186,635		200,749
Total		16,068,723		1,552,441		57,792,796		2,403,035		64,366,848		3,868,855

2. Business Status of Segments

A. Steel

(1) Summary of Business

There are 68 consolidated companies in the steel segment, including 4 domestic companies including POSCO and POSCO C&C, and 64 overseas companies including POSCO (Zhangjiagang) Stainless Steel Co., Ltd. in China and overseas processing centers. POSCO produces steel materials such as hot rolled, cold rolled and stainless steel at Pohang Works and Gwangyang Works. POSCO C&C is a company specializing in manufacturing surface-treated steel products, POSCO (Zhangjiagang) Stainless Steel Co., Ltd., is a stainless steel sheet manufacturer and seller, and there are other overseas processing centers that process and sell steel materials.

The steel industry is a fundamental industry that has taken pivotal roles in the national economic development since the 1970s by supplying basic steel materials to steel-consuming industries such as automobiles, shipbuilding, home appliances, construction, etc. The steel industry is a capital and technology-intensive industry that requires enormous initial investments.

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The Korean steel market is tariff-free, and especially within the Northeast Asian region, there is little difference in logistics costs among Korea, China and Japan, so it can be viewed as an almost open market.

All iron ore and coking coal that are the main raw materials for steel manufacturing, are imported. In order to secure stable raw materials sourcing, the company is continuously increasing purchases through raw material development investments by acquiring shares of overseas raw materials companies.

Environmental regulations for the steel industry are being strengthened. To protect the environment, POSCO has continuously invested in environmental facilities and has been actively responding to future environmental changes such as low-carbon and green growth by commercializing the world’s first eco-friendly steel manufacturing process, FINEX.

In the steel industry, automobiles, shipbuilding, and construction are the main demand industries, and steel products are used as raw materials for these demand industries. In terms of sales, the proportion of domestic sale is 57% of total sales and export sales are around 43%, and by export region, the proportion of China, Southeast Asia, and Japan is high. POSCO maintains order based production and sales system, and to secure stable sales, the proportion of direct sales to customers in domestic sales is maintained at about 60%.

The company will focus on the following management activities:

First, in order to maintain the leading position in the steel business, POSCO will secure a new competitive advantage. Second, in the group businesses, we will expand investment to focus on core growth businesses and accelerate the creation of business results. Third, POSCO will focus on fostering new businesses in Green & Mobility as the new growth business in the next-generation. Fourth, POSCO will promote structural and fundamental innovation for the company’s sustainable growth. Fifth, by putting safety as the top priority, POSCO will create the workplace as safe environment without industrial casualties, and actively respond to the low-carbon society as an exemplary company for sustainable growth.

(2) Market Share

									(Millions of Tons, %)
Category	2021.1Q				2020				2019
	Production		Market share		Production		Market share		Production		Market share
Crude Steel Production		17.6		100		67.1		100		71.4		100
POSCO		9.6		54.5		35.9		53.5		38.0		53.2
Others		8.0		45.5		31.2		46.5		33.4		46.7

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

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B. Trading

(1) Market Share

			(Millions of US Dollars)
Category	2021.1Q		2020.1Q		Growth Rate
All Trading Companies in Korea		146,487		130,182		11.13	%
POSCO International Corp.		1,860		1,400		24.73	%

Source: Korea International Trade Association

(2) Summary of Businesses

POSCO International and its consolidated subsidiaries engage in three major businesses: trading, energy and others. In addition, POSCO International maintains a global network of over 80 subsidiaries and branches in major overseas regions. In the case of the trading business, POSCO International has been actively developing and expanding new businesses in fields such as agro-commodities, LNG trading, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. In the energy business, POSCO International conducts businesses such as natural gas and crude oil development, LNG infrastructure, natural resources and power generation infrastructure.

C. Engineering & Construction

POSCO E&C engages in primarily 4 businesses: construction, energy, civil engineering and plant. In the construction business, based on its know-how in the construction of skyscrapers and commercial complexes, POSCO E&C involves in a new city and private complex development projects. In the energy business, it involves in various power generation plant projects including renewable energy projects. The civil engineering business is about constructing expressways, railroads and bridges. Plant business is the construction of integrated steel mills, EPC projects and industrial plants.

D. Others

(1) POSCO ENERGY

POSCO ENERGY started its commercial operation in February, 1972 as the only privately-owned power plant in Korea. Since the early 1990’s, POSCO ENERGY continuously remodeled and built additional power plants meeting the increased demand for electricity in Korea. POSCO ENERGY acquired the LNG terminal business from POSCO in 2019, providing an opportunity to expand the LNG value chain. The LNG terminal business operates stable business structure through businesses such as tank rental, small scale LNG business, and ship trial run. POSCO ENERGY plans to secure stable profit base through the expansion of the LNG terminal in the future and grow into a general energy company focused on gas and power.

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(2) POSCO ICT

Based on the competitiveness in ICT, POSCO ICT has expanded Smart Factory and provided IT solutions to POSCO and POSCO subsidiaries. POSCO ICT has expanded Smart Factory based on the world’s first continuous process platform “PosFrame” and next-generation production optimization system “MES 3.0”. POSCO ICT has been actively applying smart technology for strategic businesses in manufacturing, logistics, trade, and energy sectors, such as building MES at the POSCO CHEMICAL’s anode and cathode material factory, spreading the Smart Management of POSCO International, and spreading the Intelligent Power Plant of POSCO Energy in order to promote the digital transformation of POSCO subsidiaries and other businesses.

(3) POSCO CHEMICAL

POSCO CHEMICAL operates mainly 3 businesses: refractory, quicklime & chemical and energy material. In the refractory business, POSCO CHEMICAL produces and maintains refractories. In the quicklime & chemical business, POSCO CHEMICAL produces quicklime and chemical products such as coal tar and light oil. In the energy material business, POSCO CHEMICAL provides cathode and anode materials which are the main components for secondary cells: cathode, anode, electrolyte and separation membrane. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously.

(4) POSCO M-TECH

POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers. In the case of steel products packaging, POSCO M-TECH continuously develops packaging automated molding machines and applies environment-friendly packaging materials. In addition, aluminum deoxidizers engage in primarily 3 types : Pellet, Mini-Pellet and Ingot. POSCO M-TECH has expanded the sales of aluminum deoxidizers in overseas markets.

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3. Key Products

A. Sales of Key Products (2021.1Q)    

			(In hundred millions of KRW, %)
Business Area	Item	Specific Use	Total Sales			Ratio
Steel	Hot-rolled Product (HR)	Steel pipe, Shipbuilding, etc.		22,500			17.3	%
	Cold-rolled Product (CR)	Automobile , Home appliances, etc.		42,619			32.7	%
	Stainless Steel Products	Tableware, pipes, etc.		26,975			20.7	%
	Others	Plates, Wire rods, etc.		38,157			29.3	%
	Gross Sum			130,252			100.0	%
	Deduction of Internal Trade			(45,487	)
	Sub Total			84,765
Trading	Steel, Metal			70,522			76.5	%
	Chemical, Strategic Item, Energy			10,100			10.9	%
	Others			11,613			12.6	%
	Gross Sum			92,235			100.0	%
	Deduction of Internal Trade			(39,771	)
	Sub Total			52,464
Engineering & Construction	Domestic Construction	Architecture		8,231			49.7	%
		Plant		2,717			16.4	%
		Civil Engineering		1,253			7.6	%
		Others		0			0.0	%
	Overseas Construction			1,628			9.8	%
	Owned Construction			2,250			13.6	%
	Others			496			3.0	%
	Gross Sum			16,575			100.0	%
	Deduction of Internal Trade			(1,972	)
	Sub Total			14,603
Others	Electricity Sales, etc.			15,118
	Deduction of Internal Trade			(6,263	)
	Sub Total			8,855
	Total Sum			160,687

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B. Price Movement Trends of Key Products

				(In thousands of KRW/ Tons, KRW/kWh)
Business Area	Products	2021.1Q		2020		2019
Steel	Hot-rolled Product (HR)		726		622		695
	Cold-rolled Product (CR)		843		759		800
Others	Electric Power		80		72		94
	Refractory		898		965		1,073
	Lime		107		106		111

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 sales prices of the standard hot-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 costs during the given period.

(2) Factors of Price Changes

Key products prices slightly fell in 2019 due to worsened market condition of domestic and overseas steel industry. In 2020, due to COVID-19 the prices fell sharply. The prices increased in the 1^st quarter of 2021 due to recovery of steel market demand.

[Others]

(1) Criteria for Calculation

(a) Electric Power = Price of electric power / Total amount of power generated

(b) Refractory and lime: Average sales price including freight 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	34,146 (61.8)	Iron Ore, Coal
		Sub-materials	Sub-materials for Iron-making, Steelmaking	10,379 (18.8)	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
		Stainless Steel Materials	Key Materials for STS Production	10,705 (19.4)	Nickel, Ferrochrome, STS Scrap Iron, etc.
Engineering & Construction	Raw Materials	Ready-mixed Concrete	Construction of Structure	444 (15.1)
		Steel Reinforcement	Strengthening Concrete	443 (15.1)
		Cable	Electricity Transfer	57 (2.0)
		Steel Pile	Foundation of Structure	21 (0.7)
		Others	Construction of Pipe and Structure etc.	1,977 (67.2)
Others	Raw Materials	LNG	Material for Power Generation	2,349 (52.4)
		Limestone	Production of Lime	232 (5.2)
		Others	Engineering business etc.	1,904 (42.5)

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B. Price Movement Trends of Major Raw Materials

				(In thousands of KRW)
Business Area	Category	2021.1Q		2020		2019
Steel	Iron Ore(per ton)		176		120		102
	Coal(per ton)		141		147		207
	Scrap Iron(per ton)		493		348		347
	Nickel(per ton)		19,559		16,254		16,148
Engineering & Construction	Ready-mixed Concrete (per m3)		65		65		63
	Steel Pile (per m)		144		102		136
	Steel Reinforcement (per kg)		1		1		1
	Cable (per m)		1		1		1
Others	LNG (per ton)		529		484		668
	Lime (per ton)		19		19		20

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[Steel]

Price Movement Trend of Major Raw Materials

(1) Iron Ore

																			(In US Dollars/ Tons)
	’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q		’19.2Q		’19.1Q		’18.4Q		’18.3Q		’18.2Q
Trend of International Benchmark Price (Free On Board, “FOB”)		158		126		110		88		83		80		92		94		77		64		57		58

(2) Coal

																			(In US Dollars/ Tons)
	’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q		’19.2Q		’19.1Q		’18.4Q		’18.3Q		’18.2Q
Trend of International Benchmark Price (FOB)		127		109		115		118		155		140		161		203		206		221		188		190

(3) Scrap Iron

																			(In US Dollars/ Tons)
	’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q		’19.2Q		’19.1Q		’18.4Q		’18.3Q		’18.2Q
Trend of Purchase Price (Cost and Freight, “CFR”)		443		361		289		254		274		270		290		312		325		343		350		364

(4) Nickel

’21.1Q

’20.4Q

’20.3Q

’20.2Q

’20.1Q

’19.4Q

’19.3Q

’19.2Q

’19.1Q

’18.4Q

’18.3Q

’18.2Q

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

USD 7.97 /lb USD 17,570/ton

USD 7.23 /lb USD 15,930/ton

USD 6.45 /lb USD 14,210/ton

USD 5.54 /lb USD 12,215/ton

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

LME : London Metal Exchange

18

[Engineering and Construction]

(1) Criteria for Calculation

Products	Criteria for Calculation
Ready-mixed Concrete	Standard 25-210-15
Steel Pile	SPIRAL, 609.6, 9T, STP275, KS F 4602
Steel Reinforcement	SD400 10mm
Cable	TFR-3, 0.6/1KV, 2.5SQ, 2C

[Others]

(1) Criteria for Calculation

<POSCO ENERGY>

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

<POSCO CHEMICAL>

Refractory and lime: Purchase prices including freight costs

19

5. Production and Facilities

A. Production Capacity

[Steel]

					(Thousands of Tons)
Business Area	Products		2021.1Q		2020		2019
Steel		Crude Steel		11,333		45,330		47,534

[Others]

	(Electric Power: MW/year, Lime: Thousands of Tons/year)
Business Area	Products		2021.1Q			2020		2019
Power Generation	Electric Power	Incheon		3,412			3,412		3,412
		Gwangyang		—			—		284
		Pohang		—			—		290
Lime	Lime			540	*		2,196		2,190

* Production capacity of Lime is based on the 1^st quarter of 2021

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production

				(Thousands of Tons)
Products		2021.1Q		2020		2019
Crude Steel			10,760		40,579		42,948
Products	Hot-Rolled Steel		2,128		9,128		8,739
	Plate		1,715		7,009		7,191
	Wire Rod		664		2,666		2,756
	Pickled-Oiled Steel		726		2,432		2,967
	Cold-Rolled Products		1,996		6,795		7,416
	Coated Steel		1,813		6,316		6,526
	Electrical Steel		221		826		819
	Stainless Steel		1,035		3,900		3,850
	Others		1,264		4,691		5,761
	Total		11,561		43,763		46,025

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

20

(2) Capacity Utilization Rate

						(Thousands of Tons, %)
	Company	Capacity		Production		Utilization Rate
Crude Steel Production	POSCO		10,170		9,559		94.0
	PT.KRAKATAU POSCO		750		810		108.0
	POSCO YAMATO VINA STEEL JOINT STOCK COMPANY		138		138		100.2
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.		275		253		91.9
	Total		11,333		10,760		94.9

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

POSCO YAMATO VINA STEEL JOINT STOCK COMPANY had production capacity of crude steel 1,100 thousand tons/year: section steel 550 thousand tons/year and reinforcing bar 550 thousand tons/year. However, after the exit of the reinforcing bar business in November 2019, the current crude steel production capacity is 550 thousand tons/year.

[Others]

(1) Production Result

				(Gwh, Thousands of Tons)
Business Area	Products	2021.1Q		2020		2019
Power Generation	Electric Power		3,763		13,998		15,928
Lime	Lime		614		2,345		2,542

(2) Capacity Utilization Rate

						(Hour, %)
Business Area	Products	2021.1Q Capacity		2020.1Q Production		Utilization Rate
Power Generation	Incheon Power Plant		2,160		1,420		65.7

				(Thousands of Tons, %)
Business Area	Products	Capacity		Production		Utilization Rate
Lime	Lime		540		614		113.8

21

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		2,013,822		13,398		(17	)		—		2,027,203
Trade		50,688		157		(154	)		—		50,691
Engineering & Construction		25,579		—		(12	)		—		25,567
Others		499,998		13		—			—		500,011

[Buildings]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		3,258,592		62,852		(9,376	)		(70,655	)		3,241,413
Trade		374,644		12,898		—			(2,878	)		384,664
Engineering & Construction		81,702		10,302		(12,635	)		(554	)		78,815
Others		446,462		2,175		—			(6,178	)		442,459

[Structures]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		2,433,141		69,855		(3,303	)		(51,167	)		2,448,526
Trade		2,071		62		—			(77	)		2,056
Engineering & Construction		4,456		427		(0	)		(108	)		4,775
Others		585,558		30		(38,864	)		(6,529	)		540,195

[Machinery and Equipments]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		14,864,929		373,507		(98,484	)		(534,657	)		14,605,295
Trade		266,848		835		—			(5,634	)		262,049
Engineering & Construction		5,071		3,001		(5,550	)		(245	)		2,277
Others		1,720,459		16,624		—			(46,372	)		1,690,711

22

[Vehicles]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		22,881		10,309		(4,490	)		(2,474	)		26,226
Trade		5,469		418		(259	)		(397	)		5,231
Engineering & Construction		1,133		4,596		(5,385	)		(19	)		325
Others		7,673		1,353		(3,662	)		(794	)		4,570

[Tools and Fixtures]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		54,166		8,299		(4,030	)		(6,212	)		52,223
Trade		1,363		47		(15	)		(82	)		1,313
Engineering & Construction		1,027		77		(117	)		(13	)		974
Others		3,745		8,484		(155	)		(1,121	)		10,953

[Equipment]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		66,145		9,662		(5,092	)		(5,274	)		65,441
Trade		25,298		925		(365	)		(2,417	)		23,441
Engineering & Construction		3,532		6,791		(860	)		(5,998	)		3,465
Others		32,484		9,086		—			(1,790	)		39,780

[Financial Lease Assets]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		490,290		141,315		(1,732	)		(12,978	)		616,895
Trade		95,191		26,827		(21,069	)		(11,671	)		89,278
Engineering & Construction		82,876		22,379		(14,994	)		(10,303	)		79,958
Others		105,343		9,885		(2,231	)		(9,825	)		103,172

23

[Biological Assets]

							(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel		—		—		—		—		—
Trade	149,965		10,930		—		(2,250)		158,645
Engineering & Construction	—		—		—		—		—
Others		—		—		—		—		—

[Assets under Construction]

								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation		Ending Book Balance
Steel		1,438,271		330,241		(179,700	)		—		1,588,812
Trade		58,150		2,473		(7,831	)		—		52,792
Engineering & Construction		2,043		17,528		—			—		19,571
Others		119,076		102,743		—			—		221,819

24

(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 ~ November 2023	P) Establishment of #6 Coke plant P) Establishment of by-product gas Power Plant		14,806		5,275		9,532
		September 2015 ~ May 2024	G) The renovation of #4 furnace P) Improvement of #3, #4 power plant, etc.		11,787		5,131		6,656
POSCO SPS	Expansion/ Establishment	October 2020~August 2021	Machinery, etc.		101		48		54
		February 2021 ~August 2021	Cheonan factory		107		—		107
		February 2021 ~October 2021	Pohang factory		109		—		109
POSCO-Indonesia Jakarta Processing Center	Expansion/ Establishment	May 2020 ~May 2021	New establishment of 3rd factory		293		252		41

P stands for Pohang Steel Works.

G stands for Gwangyang Steel Works.

Ongoing investments over KRW 10 billion as of March 31, 2021 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 2021 ~ December 2021	Smart factory expansion and new business growth		194		2		192
	Establishment/ Expansion	January 2021 ~ December 2021	Expansion of SM server, etc.		148		3		145
POSCO O&M	Establishment/ Expansion	January 2021 ~ December 2021	Fixed assets acquisitions and facilities replacement		1,083		93		990

25

POSCO CHEMICAL	Establishment/ Expansion	July 2020 ~ November 2022	The 3rd stage of cathode material factory in Gwangyang	2,895	246	2,649
	Establishment/ Expansion	November 2020 ~ March 2024	The 4th stage of cathode material factory in Gwangyang	2,758	73	2,685
	Establishment/ Expansion	November 2019 ~ December 2022	The 2nd stage of production line up expansion in #2 anode material factory	1,651	775	876
	Establishment/ Expansion	February 2020 ~ August 2020	Establishment of artificial graphite anode factory site	130	125	5
	Establishment/ Expansion	February 2020 ~May 2024	Establishment of artificial graphite anode factory	2,177	212	1,965
	Establishment/ Expansion	November 2019 ~ October 2021	Renovation of refractory factory for production increase	483	135	348
	Establishment/ Expansion	October 2020 ~ November 2022	Facilities rationalization of refractory sintering plant in Pohang	319	—	319
POSCO Energy	Establishment/ Expansion	March 2020 ~ December 2021	Expansion of evaporator in Gwangyang LNG Terminal	360	79	281
	Establishment/ Expansion	January 2021 ~ May 2024	Establishment of #6 Tank in Gwangyang LNG Terminal	1,437	2	1,435

Ongoing investments over KRW 10 billion as of March 31, 2021 are listed on the table.

6. Product Sales

[Steel]

		(In hundred millions of KRW)
Items		2021.1Q			2020			2019
Domestic	Hot-Rolled Products		12,760			39,663			42,605
	Cold- Rolled Products		11,267			37,870			39,716
	Stainless Steel		7,734			23,746			21,167
	Others		18,749			63,111			77,026
Export	Hot-Rolled Products		9,740			37,368			41,064
	Cold- Rolled Products		31,352			101,808			125,658
	Stainless Steel		19,242			72,140			80,181
	Others		19,408			66,877			70,667
Total	Gross Sum		130,252			442,583			498,084
	Internal Transaction		(45,487	)		(153,654	)		(177,299	)
	Total		84,765			288,929			320,785

26

[Trading]

		(In hundred millions of KRW)
Items		2021.1Q			2020			2019
Domestic	Merchandise		10,695			33,565			29,315
	Product		194			2,028			5,120
	Others		20			240			1,101
Export	Merchandise		22,103			75,922			69,347
	Product		80			528			205
	Others		1			1,191			638
Trades among the 3 countries			59,141			209,446			270,522
Gross Sum			92,235			322,920			376,248
Internal Transaction			(39,771	)		(129,468	)		(154,677	)
Total			52,464			193,452			221,571

[Engineering & Construction]

		(In hundred millions of KRW)
Items		2021.1Q			2020			2019
Domestic	Building		8,231			42,761			44,681
	Plant		2,717			12,887			10,953
	Civil Engineering		1,253			6,177			6,098
	Others		—			—			—
Overseas			1,628			7,089			7,190
Own Construction			2,250			4,866			5,712
Other Subsidiary company sales			496			2,320			2,246
Gross Sum			16,575			76,100			76,880
Internal Transaction			(1,972	)		(10,338	)		(7,434	)
Total			14,603			65,762			69,446

[Others]

	(In hundred millions of KRW)
Items	2021.1Q		2020		2019
Electric Power Sales		8,855		29,785		31,866

27

7. Derivatives

We use forward exchange contracts to hedge against the exchange rate risk for foreign currency loans.

As of March 31, 2021, we assessed the fair value of our forward exchange contracts to be USD 0.55 billion (expiring April 2021), and a currency swap contracts to be USD 0.5 billion(expiring August 2023), USD 0.5 billion(expiring July 2024), USD 0.5 billion(expiring November 2022), USD 0.5 billion(expiring January 2023), USD 0.44 billion(expiring January 2025), and EUR 0.5 billion(expiring January 2024).

We recognized KRW 25,143 million of gain on valuations of forward exchange contracts. Also, we recognized KRW 103,145 million of valuation gain on currency swap contracts. The transaction gain of currency swap contracts is KRW 326 million.

8. Significant Contracts

Company	Contract	Date	Remarks
POSCO	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 after spin-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)
	Split-off of Domestic steel processing businesses	October 2019	1) Purpose : To specialize in steel processing business by splitting-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 of Split-off : March 31, 2020 6) Registration date of Split-off : April 3, 2020
	Investment on the 3rd stage development of A-1 / A-3 block in Myanmar gas field	June 2020	1) Investment amount: KRW 365,786,302,000 2) Development period: September 1, 2019 ~ December 31, 2024 3) Schedule : Installation Completion of low-pressure gas compression platform and commenced operation in 2024 4) Other Information -  Location: North-west offshore, Myanmar -  This investment is the 3rd stage of development, which consists of 3 stages in Myanmar gas field development. The purpose of investment is to maintain current gas production level stably by installing low-pressure gas compression platform. -  In the first quarter of 2021, the design and production of the equipment for this work will be started, and it is planned to start operation in 2024. The “(2) Development period” above is the period including the basic design progress period, September 2019 to September 2020. -  Participation rate of each company in gas production and offshore pipeline transportation business •   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 315,170 thousand, applying the exchange rate of 1USD=1,160.60 KRW, which is the date of the BOD resolution. -  Detailed information and future timeline on this resource development investment is subject to change. POSCO International disclosure date : September 22, 2020 (Decision on natural resources investment)
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
	Merger	May 2020	1) Contract counterpart : PSC Energy Global Co., Ltd. 2) Signed date : May 26, 2020 3) Date of merger : August 1, 2020 4) Merger ratio : 1.0000000 : 0.0000000 5) Information : POSCO ENERGY merges PSC Energy Global Co., Ltd., a wholly owned subsidiary of POSCO ENERGY
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY	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
		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
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.	R&D Center
	POSCO SPS	TMC Business Group
		Stainless Quality Technology Group
Engineering & Construction	POSCO Engineering & Construction,. LTD.	R&D Center
	POSCO A&C	R&D Center
Others	POSCO ENERGY CO., LTD.	Power Generation Business Division
	POSCO ICT	R&D Center
	POSCO CHEMICAL	R&D Center
		Energy Material R&D Center
	POSCO M-TECH	R&D Center

B. R&D Expenses in 2021.1Q (In millions of KRW)

Category	Business Area
	Steel			Trade		Engineering & Construction		Others		Total
Selling and Administrative Cost		23,620			—		780		8,135		32,535
Manufacturing Cost		76,386			—		57		10		76,453
R&D Cost (Intangible Assets)		(31,796	)		—		—		241		(31,555	)
Total*		68,210			—		837		8,386		77,433
Government Subsidy		—			—		193		—		193
R&D/Sales Ratio (%)		0.80			—		0.06		0.95		0.48

* Total includes government subsidy.

31

III. Financial Statements

1. Consolidated Financial Statements

A. Summary

	(In millions of KRW)
Account	2021.1Q		2020		2019
	As of March 31, 2021		As of December 31, 2020		As of December 31, 2019
[Total current assets]		39,442,198		35,830,815		34,842,374
Cash and cash equivalents		4,546,138		4,754,644		3,514,872
Other receivables, net		1,736,992		1,494,239		1,581,517
Other short-term financial assets		13,129,801		11,709,209		8,996,049
Trade accounts and notes receivable, net		8,953,757		8,120,619		9,078,351
Inventories		10,253,347		9,051,790		10,920,320
Other current assets		822,163		700,314		751,265
[Total non-current assets]		43,380,416		43,256,158		44,216,287
Other receivables, net		1,186,717		1,195,962		1,140,878
Other long-term financial assets		1,710,782		1,561,807		1,669,389
Investments in associates and joint ventures		3,896,677		3,876,249		3,927,755
Property, plant and equipment, net		29,471,591		29,400,141		29,925,973
Intangible assets, net		4,348,672		4,449,432		4,908,473
Other non-current assets		2,765,977		2,772,567		2,643,819
Total assets		82,822,614		79,086,973		79,058,661
[Total current liabilities]		18,289,089		16,854,968		16,323,690
[Total non-current liabilities]		15,318,054		14,557,413		14,940,264
Total liabilities		33,607,143		31,412,381		31,263,954
[Equity attributable to owners of the controlling company]		45,262,153		44,331,350		44,471,873
Share capital		482,403		482,403		482,403

32

Capital surplus		1,357,038			1,310,547			1,376,251
Hybrid bonds		199,384			199,384			199,384
Retained earnings		46,784,409			46,111,457			45,080,118
Other equity attributable to owners of the controlling company		(3,561,081	)		(3,772,441	)		(2,666,283	)
[Non-controlling Interests]		3,953,318			3,343,242			3,322,834
Total equity		49,215,471			47,674,592			47,794,707
	From January 1, 2021 to March 31, 2021			From January 1, 2020 to December 31, 2020			From January 1, 2019 to December 31, 2019
Revenue		16,068,723			57,792,796			64,366,848
Operating profit		1,552,441			2,403,035			3,868,855
Profit		1,138,779			1,788,152			1,982,637
[Profit attributable to owners of the controlling company]		1,024,736			1,602,147			1,835,086
[Profit attributable to non-controlling interests]		114,043			186,005			147,551
Total comprehensive Income		1,479,851			1,570,204			2,129,105
[Total comprehensive income attributable to owners of the controlling company]		1,350,510			1,415,132			1,997,731
[Total comprehensive income attributable to non-controlling interests]		129,341			155,072			131,374
Earnings per share(KRW)		13,477			20,165			22,823
Number of Consolidated Companies		167			167			164

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.

33

2. Separate Financial Statements

A. Summary

	(In millions of KRW)
Account	2021.1Q			2020			2019
	As of March 31, 2021			As of December 31, 2020			As of December 31, 2019
[Total current assets]		20,397,788			19,579,954			18,216,066
Cash and Cash equivalents		1,828,883			1,822,660			978,139
Trade accounts and notes receivable, net		4,106,907			3,693,535			3,987,041
Other receivables, net		472,246			279,555			321,352
Other short-term financial assets		9,133,419			9,607,632			7,858,979
Inventories		4,758,851			4,093,829			4,988,530
Other current assets		97,482			82,743			82,025
[Total non-current assets]		37,867,526			37,215,015			37,494,700
Other receivables, net		86,491			84,037			56,468
Other long-term financial assets		1,190,314			1,072,817			1,257,896
Investments in Subsidiaries, associates, and joint ventures		15,609,637			14,883,152			15,069,857
Property, plant and equipment, net		20,078,792			20,216,932			20,132,199
Intangible assets, net		590,373			621,926			708,915
Other non-current assets		311,919			336,151			269,365
Total assets		58,265,314			56,794,969			55,710,766
[Total current liabilities]		5,753,568			5,089,111			3,331,446
[Total non-current Liabilities]		6,831,454			6,591,154			6,765,135
Total liabilities		12,585,022			11,680,265			10,096,581
[Share capital]		482,403			482,403			482,403
[Capital surplus]		1,339,289			1,339,289			1,252,220
[Hybrid bonds]		199,384			199,384			199,384
[Retained earnings]		46,386,728			45,781,777			45,372,411
[Other equity]		(2,727,512	)		(2,688,149	)		(1,692,233	)

34

Account	2021.1Q		2020		2019
Total equity		45,680,292		45,114,704		45,614,185
	From January 1, 2021 to March 31, 2021		From January 1, 2020 to December 31, 2020		From January 1, 2019 to December 31, 2019
Revenue		7,800,447		26,509,920		30,373,511
Operating profit		1,072,884		1,135,197		2,586,359
Profit		952,176		965,863		1,175,712
Earnings per share(KRW)		12,522		12,123		14,592

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”).

35

IV. CORPORATE GOVERNANCE

1. Overview of Corporate Governance

A. Board of Directors (“BoD”)

(1) Board of Directors

The Board of Directors consists of five inside directors (Choi, Jeong-Woo, Kim, Hag-Dong, Chon, Jung-Son, Chung, Chang-Hwa and Jeong, Tak) and seven outside directors (Chang, Seung-Wha , Kim, Shin-Bae, Chung, Moon-Ki, Kim, Sung-Jin, Pahk, Heui-Jae Kim, Yoo, Young-Sook, and Kwon, Tae-Kyun).

The Board of Directors manages the following five Special Committees:

(a) ESG Committee

(b) Director Candidate Recommendation Committee

(c) Evaluation and Compensation Committee

(d) Finance Committee

(e) Audit Committee

(f) Executive Management Committee

    Composition of the Special Committees under the BoD and their Functions(as of March 4, 2021)

Category	Composition	Directors	Major Functions
ESG Committee	3 Outside Directors, 1 Inside Director	Kim, Shin-Bae (Chairman) Chang, Seung-Wha Yoo, Young-Sook Kim, Hag-Dong	(1)   Review of low-carbon policies related to environment and climate change (2)   Preliminary review on safety and health plans (3)   Preliminary review of the operation of BoD and Special Committees A. Development of agenda and establishment of operation standards for the BoD and Special Committees B. Preliminary review of amendment or repeal of the Operational Regulations of the BoD C. Preliminary review of establishment and operation of Special Committees within the BoD (4)   Execution monitoring and report publication related to ESG (5)   Deliberation and resolution on donations exceeding KRW 100 million and KRW 1 billion and less, as well as preliminary review on donations exceeding KRW 1 billion (6)   Matters related with internal transactions in accordance with the Monopoly Regulation and Fair Trade Act A. Review of issues and improvement measures in relation to internal transactions B. Preliminary review of internal transactions (KRW 100 billion or more in transaction amount) C. Deliberation and resolution on internal transactions (KRW 5 billion or more and less than KRW 100 billion in transaction amount) (7)   Appointment of fair trade compliance officer

36

Director Candidate Recommendation Committee	3 Outside Directors, 1 Inside Director	Chung, Moon-Ki (Chairman) Kim, Sung-Jin Kwon, Tae-Kyun Jeong, Tak	(1)   Qualification assessment of Outside Director candidates and candidate nomination at the general meeting of shareholders (2)   Pre-screening and qualification assessment of Inside Director candidates (3)   Preliminary review of appointing the Committees members (4)   Preliminary review of appointing the Representative Directors among Inside Directors (excluding the CEO) (5)   Operation of the Outside Director Candidate Recommendation Advisory Group (6)   Other matters necessary to nominate Outside Director candidates
Evaluation and Compensation Committee	4 Outside Directors	Pahk, Heui-Jae (Chairman) Chung, Moon-Ki Kim, Sung-Jin Yoo, Young-Sook	(1)   Development of management succession and executive development plans (2)   Establishment and execution of executive evaluation and compensation plans (3)   Preliminary review on compensation and retirement allowance of Directors
Finance Committee	3 Outside Directors; 1 Inside Director	Kwon, Tae-Kyun (Chairman) Kim, Shin-Bae Chang, Seung-Wha Chon, Jung-Son	(1)   Establishment of policies for company’s internal values and financial soundness (2)   Preliminary review in case of filing in litigation or arbitration, or responding to reconciliation or mediation in the process of trial or taking any equivalent level of legal actions with the amount of KRW 100 billion or more (3)   External Investments A. Preliminary review of new external investments, capital increase and disposal of share in the invested entity executed by a non-steel business division (KRW 100 billion or more. Investment and capital increase include borrowings and liabilities that the company takes) B. Approval of new external investments, capital increase and disposal of share in the invested entity executed by a non-steel business division (From KRW 10 billion to less than KRW 100 billion. Investment and capital increase includes borrowings and liabilities that the company takes) (4)   Deliberation and resolution on bond issuance and important borrowings (including refinancing borrowings exceeding KRW 100 billion) (5)   Preliminary review on bond issuance and important borrowings (new long-term borrowings exceeding KRW 100 billion) (6)   Deliberation and resolution on offering non-current assets as collateral (7)   Deliberation and resolution on takeover of debt such as collateral, guarantee, etc. from invested company (excluding the case involving steel investment)

37

Audit Committee 3 Outside Directors Kim, Sung-Jin (Chairman) Chung, Moon-Ki Pahk, Heui-Jae (1)   Setting the work scope of the committee (2)   Matters that the BoD or Representative Directors delegated (3)   Request for Extraordinary general meeting of shareholders (4)   Consulting of external experts (5)   Audit of the legitimacy of management’s business execution (6)   Review soundness and validity of the company’s financial activities and the appropriateness of financial reporting (7)   Review the validity of important accounting standards or changes in accounting estimates (8)   Evaluation of the operation status of the internal accounting management system (9)   Evaluation of the internal control system (10)  Agreement on appointment or dismissal of internal audit department representative (11)  Contract for appointment, remuneration and non-audit services of independent auditors (12)  Evaluation of independent auditors’ audit activities (13)  Report internal audit department’s annual audit plan and results (14)  Report on the evaluation results of the company’s ethical compliance (15)  An independent auditor reports on important facts of the company’s Directors’ misconduct or violation of laws or Articles of Incorporation (16)  Report that independent auditors violation of the company’s accounting standards (17)  Other matters deemed necessary by each committee member

38

Executive Management Committee 5 Inside Directors Choi, Jeong-Woo (Chairman) Kim, Hag-Dong Chon, Jung-Son Kim, Hag-Dong Jeong, Tak Chung, Chang-Hwa 1. Business (1)   Important matters in the corporate employee hierarchy, development of human resources and adjustment (2)   Important changes in terms of working conditions and welfares (3)   New establishment plan for chair-professor (4)   Housing Policy Establishment (Housing fund support standard and plan for housing construction) (5)   Decision on closure of shareholders’ registry 2. Finance (1)   Preliminary review on in-house investment plan (New establishment or expansion investment of KRW 200 billion or more) (2)   Approval of in-house investment plan -   New establishment or expansion investment from KRW 10 billion to less than KRW 200 billion -   Investment other than new establishment or expansion: KRW 10 billion or more.(In the case of ordinary investment, the investment amount is for KRW 5 billion or more) (3)   Preliminary review on steel business division: New external investments, capital increase and disposal of shares in the invested entity (From KRW 100 billion or more, Investment and capital increase includes borrowings and liabilities that the company takes) (4)   Approval on steel business division: New external investment, capital increase, and disposal of shares in the invested entity (From KRW 10 billion to less than KRW 100 billion, investment and capital increase to includes borrowings and liabilities that the company takes) (5)   Acquisition or disposal of tangible· intangible fixed assets and important investment assets from KRW 10 billion to less than KRW 200 billion (6)   Approval technology application and technology sales contract over USD 1 million (7)   Acquisition of debt such as guarantee for invested company’s collateral involving steel investments 3. Other matters that the Chairman deems necessary or are deemed necessary by each committee member

(2) List of Key Activities of the Board of Directors

(January 1, 2021 ~ March 31, 2021)

No.	Date	Agenda	Approval
2021-1	January 20	1. Approval of participation in POSCO CHEMICAL’s capital increase with consideration	All 1 Case Approved
2021-2	January 28	•   Deliberation Agenda 1. Approval of the 53rd financial statements and schedule for the general meeting of shareholders •   Report Agenda 1.  Business performance of the fiscal year of 2020 2.  Report on internal control over financial reporting 3.  Assessment on the effectiveness of internal control over financial reporting	All 1 Case Approved —   —   —
2021-3	February 18	1. Plans to strengthen roles of the Board of Directors in relation to ESG 2. Recommendation of Inside Directors candidates (other than the candidate for the Representative Director & CEO) 3. Agendas for the 53rd general meeting of shareholders	All 3 Cases Approved

* At the 53^rd General Meeting of Shareholders which was held on March 12, 2021, Outside Director Bahk, Byong-Won and Kim Joo-Hyun, and Inside Director Chang, In-Hwa retired due to expiration of the terms. Outside Directors Yoo, Young-Sook and Kwon, Tae-Kyun, and Inside Director Chung, Chang-Hwa were newly elected.

39

(March 12, 2021 ~ May 14, 2021)

No.	Date	Agenda	Approval
2021-4	March 12	1. Appointment of the Chairman of the BoD 2. Appointment of the Representative Director CEO 3. Appointment of Representative Directors and Inside Directors 4. Appointment of Special Committees members	All 4 Cases Approved
2021-5	April 9	1. Investment on commercial plant for hard rock lithium	All 1 Case Approved
2021-6	May 14	•   Deliberation Agenda 1. Resolution on the dividend for the 1st quarter of 2021 2. POSCO health and safety plan for 2021 3. Joint Venture company establishment with HBIS Group Co., Ltd. 4. Equity investment in an Australian nickel production company 5. Transaction Plans with affiliates for the fiscal year of 2021 •   Report Agenda	All 5 Cases Approved
		1. Business performance of the 1st quarter of 2021	—
		2. Status of global steel growth strategy implementation	—
		3. The performance and assessment of Board of Directors for 2020	—

     Major Activities of Outside Directors on the Board of Directors (January 1, 2021 ~ May 14, 2021)

No.	Date	Participation of the Outside Directors (the Number of total Outside Directors)	Remarks
2021-1	January 20	7 (7)	—
2021-2	January 28	7 (7)	—
2021-3	February 18	7 (7)	—
2021-4	March 12	7 (7)	—
2021-5	April 9	7 (7)	—
2021-6	May 14	7 (7)	—

(4) Special Committees under the BoD and Their Activities (From January 1, 2021 to May 14, 2021)

• Director Candidate Recommendation and Management Committee (January 1, 2021~March 11, 2021)

Date	Agenda	Approval
January 28, 2021	Qualification review and recommendation of the Outside Directors candidates	Approved
February 18, 2021	•   Deliberation Agenda 1. Recommendation of the Outside Directors candidates •   Preliminary Review	Approved
	1. Qualification review of the Inside Directors candidates	—
	2. Plans to strengthen roles of the Board of Directors in relation to ESG	—

• Finance and Related Party Transaction Committee (January 1, 2021~March 11, 2021)

Date	Agenda	Approval
January 28, 2021	Contribution to the Labor Welfare Fund	Approved

o Evaluation and Compensation Committee (January 1, 2021 ~ March 12, 2021)

Date	Agenda	Approval
January 27, 2021	Evaluation of the business performance for the fiscal year of 2020	Approved

• ESG Committee (March 12, 2021 ~ May 14, 2021)

Date	Agenda	Approval
April 22, 2021	•   Deliberation Agenda Plan for publishing Corporate Citizenship Report 2020 •   Report Agenda 2050 Carbon Neutral Declaration and Implementation Status	Approved —

May 13, 2021 •   Preliminary Review POSCO health and safety plan for 2021 —  

40

• Finance Committee (March 12, 2021 ~ May 14, 2021)

Date	Agenda	Approval
April 9, 2021	•   Preliminary Review Investment on commercial plant for hard rock lithium	—
May 14, 2021	•   Preliminary Review Equity investment in an Australian nickel production company	—

• Executive Management Committee (January 1, 2021 ~ May 14, 2021)

Date	Agenda	Approval
March 23, 2021	1. Exhaust gas purification facility replacement at Gwangyang #1 sintering factory 2. EIC facility replacement at Gwangyang #2-4 casting machine 3. Reclamation work for Gwangyang facility expansion site 4. Carbon credit trading plan	All 4 Cases Approved
April 20, 2021	•   Preliminary Review 1. Joint Venture company establishment with HBIS Group Co., Ltd. •   Deliberation Agenda 1. Pohang education center dormitory construction 2. Gwangyang education center construction 3. Contruction of Park1538 Gwangyang PR Hall	—   All 3 Cases Approved

B. Audit Committee

(1) Composition of the Audit Committee

Name	Qualifications	Remarks
Kim, Sung-Jin Chung, Moon-Ki Pahk, Heui-Jae	Satisfies the requirements stipulated in the Korean Commercial Act	Chairman — —

(2) Major Activities of the Audit Committee (January 1, 2021 ~ May 14, 2021)

41

Session	Date	Agenda	Approval
1	January 27	•   Deliberation Agenda 1. Consent to appoint the head of the internal audit department 2. Assessment of internal control over financial reporting in 2020 3. Approval of audit and non-audit services for POSCO and subsidiaries •   Report Agenda	All 3 Cases Approved
		1. Report of operation of internal control over financial reporting in 2020	—
		2. Report on approval of POSCO E&C’s audit service contract	—
		3. The result of internal audit for the fiscal year of 2020 and audit plans for the fiscal year of 2021	—
		4. Audit Committee activities in 2020	—
		5. The assessment on the executives’ and employees’ conformity to the code of ethics for the fiscal year of 2020	—
2	February 17	•   Deliberation Agenda 1. Internal audit result for the year 2020 •   Report Agenda 1. External audit result for the year 2020	Approved
3	February 18	Review of the agendas for the Ordinary General Meeting of Shareholders	Approved

- At the 53^rd general meeting of shareholders held on March 12, 2021, due to Bahk, Byong-Won’s expiration of term in the Audit Committee, a new Audit Committee member, Kim, Sung-Jin was elected.

Session	Date	Agenda	Approval
4	March 12	1. Appointment of the chairman of the audit committee	Approved
5	April 23	•   Report Agenda
		1. POSCO E&C and POSCO ICT deficit projects status and management plans	—
		2. Operation plan for Internal Accounting Management Policy in 2021	—
		3. Results of internal audit on the consolidated financial statements for the 1st quarter of 2021	—
		4. Review of the impact of amendments to the U.S. listed company regulations on independence of external auditors	—
		5. The results of the 20-F audit for 2020 and the results of external reviews on the consolidated financial statements for the 1st quarter of 2021	—

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: The voting-by-mail system was introduced at the 36th general meeting of shareholders on March 12, 2004.

42

(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’ and the Audit Committee members’ Salaries

							(In millions KRW)
Category	No. of people		Total payment		Average payment (Per person)		Ceiling amount approved at the general meeting of shareholders		Remarks
Inside Director		5		2,545		382				—
Outside Director (Excluding Audit Committee Members)		4		82		12		10,000		—
Members of the Audit Committee		3		52		17				—

No. of people : The number of Directors and the Audit Committee members who are in office as of March 31, 2021.

Total payment : The total amount of remuneration paid to all Directors, including the Audit Committee members, who served from January 1 to March 31, 2021.

Average payment per person is calculated based on the paid amount to the current Directors and Audit Committee members as of March 31, 2021.

43

POSCO

and Subsidiaries

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2021

(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, 2021, the condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

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

Auditor’s review responsibility

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

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

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-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, 2020, 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 4, 2021, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Company as of December 31, 2020, 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 14, 2021

This report is effective as of May 14, 2021, 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, 2021 and December 31, 2020

(Unaudited)

(in millions of Won)	Notes		March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents		21	W	4,546,138		4,754,644
Trade accounts and notes receivable, net		4,21,26,27,34		8,953,757		8,120,619
Other receivables, net		5,21,34		1,736,992		1,494,239
Other short-term financial assets		6,21		13,129,801		11,709,209
Inventories		7		10,253,347		9,051,790
Current income tax assets				33,396		49,481
Assets held for sale		8		48,074		34,210
Other current assets		14		740,693		616,623
Total current assets				39,442,198		35,830,815
Long-term trade accounts and notes receivable, net		4,21		76,191		86,423
Other receivables, net		5,21		1,186,717		1,195,962
Other long-term financial assets		6,21		1,710,782		1,561,807
Investments in associates and joint ventures		9		3,896,677		3,876,249
Investment property, net		11		998,405		994,781
Property, plant and equipment, net		12		29,471,591		29,400,141
Intangible assets, net		13		4,348,672		4,449,432
Defined benefit assets, net		19		71,346		86,149
Deferred tax assets				1,356,921		1,335,154
Other non-current assets		14		263,114		270,060
Total non-current assets				43,380,416		43,256,158
Total assets			W	82,822,614		79,086,973

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, 2021 and December 31, 2020

(Unaudited)

(in millions of Won)	Notes		March 31, 2021			December 31, 2020
Liabilities
Trade accounts and notes payable		21,34	W	3,807,052			3,755,513
Short-term borrowings and current installments of long-term borrowings		4,15,21		9,198,919			8,677,529
Other payables		16,21,34		2,332,310			1,845,266
Other short-term financial liabilities		17,21		147,511			141,404
Current income tax liabilities				587,682			366,476
Liabilities directly associated with the assets held for sale		8		7			25
Provisions		18,35		356,656			443,273
Other current liabilities		20,26,27		1,858,952			1,625,482
Total current liabilities				18,289,089			16,854,968
Long-term trade accounts and notes payable		21		14,907			22,323
Long-term borrowings, excluding current installments		15,21		12,425,771			11,820,078
Other payables		16,21		698,123			558,924
Other long-term financial liabilities		17,21		51,773			133,588
Defined benefit liabilities, net		19		171,319			141,785
Deferred tax liabilities				1,361,099			1,320,726
Long-term provisions		18,35		551,287			522,969
Other non-current liabilities		20,26		43,775			37,020
Total non-current liabilities				15,318,054			14,557,413
Total liabilities				33,607,143			31,412,381
Equity
Share capital		22		482,403			482,403
Capital surplus		22		1,357,038			1,310,547
Hybrid bonds		23		199,384			199,384
Reserves		24		(1,052,788	)		(1,380,918	)
Treasury shares		25		(2,508,294	)		(2,391,523	)
Retained earnings				46,784,410			46,111,457
Equity attributable to owners of the controlling company				45,262,153			44,331,350
Non-controlling interests		23		3,953,318			3,343,242
Total equity				49,215,471			47,674,592
Total liabilities and equity			W	82,822,614			79,086,973

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, 2021 and 2020

(Unaudited)

(in millions of Won, except per share information)	Notes		March 31, 2021			March 31, 2020
Revenue		26,27,34,37	W	16,068,723			14,545,813
Cost of sales		7,27,31,34		(13,930,948	)		(13,235,530	)
Gross profit				2,137,775			1,310,283
Selling and administrative expenses		31,34
Reversal of (impairment loss on) trade accounts and notes receivable				6,155			(9,987	)
Other administrative expenses		28		(506,321	)		(477,067	)
Selling expenses		28		(85,168	)		(117,978	)
Operating profit				1,552,441			705,251
Share of profit of equity-accounted investees, net		9		78,000			31,664
Finance income and costs		21,29
Finance income				795,544			1,319,425
Finance costs				(866,299	)		(1,345,277	)
Other non-operating income and expenses		34
Impairment loss on other receivables				(6,606	)		(1,197	)
Other non-operating income		30		129,971			64,301
Other non-operating expenses		30,31		(123,492	)		(113,764	)
Profit before income tax		37		1,559,559			660,403
Income tax expense		32,37		(420,780	)		(225,745	)
Profit				1,138,779			434,658
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		19		(1,725	)		(3,850	)
Net changes in fair value of equity investments at fair value through other comprehensive income		21		92,006			(202,836	)
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees				88,099			(61,206	)
Foreign currency translation differences				162,706			(4,434	)
Gains or losses on valuation of derivatives		21		(14	)		(57	)
Other comprehensive income (loss), net of tax				341,072			(272,383	)
Total comprehensive income			W	1,479,851			162,275
Profit attributable to:
Owners of the controlling company			W	1,024,736			395,393
Non-controlling interests				114,043			39,265
Profit			W	1,138,779			434,658
Total comprehensive income attributable to :
Owners of the controlling company			W	1,350,510			129,987
Non-controlling interests				129,341			32,288
Total comprehensive income			W	1,479,851			162,275
Basic and diluted earnings per share (in Won)		33		13,477			4,915

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, 2021 and 2020

(Unaudited)

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

6

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2021 and 2020

(Unaudited)

(in millions of Won)	Attributable to owners of the controlling company																			Non- controlling interests
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal						Total
Balance as of January 1, 2021	W	482,403		1,310,547			199,384		(1,380,918	)		(2,391,523	)		46,111,457			44,331,350			3,343,242			47,674,592
Comprehensive income:
Profit		—		—			—		—			—			1,024,736			1,024,736			114,043			1,138,779
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			(254	)		(254	)		(1,471	)		(1,725	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		90,686			—			—			90,686			(2,587	)		88,099
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		94,108			—			(2,102	)		92,006			—			92,006
Foreign currency translation differences, net of tax		—		—			—		143,370			—			—			143,370			19,336			162,706
Gains or losses on valuation of derivatives, net of tax		—		—			—		(34	)		—			—			(34	)		20			(14	)
Total comprehensive income		—		—			—		328,130			—			1,022,380			1,350,510			129,341			1,479,851
Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(342,565	)		(342,565	)		(57,375	)		(399,940	)
Changes in ownership interest in subsidiaries		—		52,182			—		—			—			—			52,182			539,053			591,235
Interest of hybrid bonds		—		—			—		—			—			(2,268	)		(2,268	)		(1,799	)		(4,067	)
Acquisition of treasury shares		—		—			—		—			(116,771	)		—			(116,771	)		—			(116,771	)
Others		—		(5,691	)		—		—			—			(4,594	)		(10,285	)		856			(9,429	)
Total transactions with owners of the controlling company		—		46,491			—		—			(116,771	)		(349,427	)		(419,707	)		480,735			61,028
Balance as of March 31, 2021	W	482,403		1,357,038			199,384		(1,052,788	)		(2,508,294	)		46,784,410			45,262,153			3,953,318			49,215,471

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, 2021 and 2020

(Unaudited)

(in millions of Won)	Notes		March 31, 2021			March 31, 2020
Cash flows from operating activities
Profit			W	1,138,779			434,658
Adjustments for:
Depreciation				788,318			770,170
Amortization				110,780			114,287
Finance income				(517,135	)		(914,256	)
Finance costs				601,541			993,094
Income tax expense				420,780			225,745
Impairment loss on property, plant and equipment				16,892			78
Gain on disposal of property, plant and equipment				(3,323	)		(4,835	)
Loss on disposal of property, plant and equipment				18,657			40,671
Impairment loss on other intangible assets				7,183			423
Gain on disposal of investments in subsidiaries, associates and joint ventures				(3,842	)		(3,969	)
Loss on disposal of investments in subsidiaries, associates and joint ventures				1,104			4,952
Share of profit of equity-accounted investees				(78,000	)		(31,664	)
Expenses related to post-employment benefit				62,493			62,608
Impairment loss on trade and other receivables				451			11,184
Loss on valuation of inventories				26,977			97,504
Increase to provisions				(2,502	)		17,009
Others, net				(23,156	)		5,243
				1,427,218			1,388,244
Changes in operating assets and liabilities		36		(1,883,160	)		123,104
Interest received				51,813			73,960
Interest paid				(119,697	)		(139,460	)
Dividends received				90,685			35,927
Income taxes paid				(134,770	)		(191,110	)
Net cash provided by operating activities			W	570,868			1,725,323

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, 2021 and 2020

(Unaudited)

(in millions of Won)	Notes	March 31, 2021			March 31, 2020
Cash flows from investing activities
Acquisitions of short-term financial instruments		W	(10,444,413	)		(9,143,509	)
Proceeds from disposal of short-term financial instruments			8,993,223			7,807,693
Increase in loans			(160,590	)		(401,063	)
Collection of loans			235,136			479,949
Acquisitions of securities			(90,882	)		(199,977	)
Proceeds from disposal of securities			170,646			211,015
Acquisitions of investment in associates and joint ventures			(26,897	)		(54,564	)
Proceeds from disposal of investment in associates and joint ventures			4,421			3,347
Acquisitions of investment property			—			(3,115	)
Acquisitions of property, plant and equipment			(537,878	)		(937,795	)
Proceeds from disposal of property, plant and equipment			(3,940	)		17,837
Acquisitions of intangible assets			(43,161	)		(109,420	)
Proceeds from disposal of intangible assets			3,357			10,463
Proceeds from disposal of assets held for sale			29			590
Collection of lease receivables			16,202			14,990
Others, net			528			(503	)
Net cash used in investing activities			(1,884,219	)		(2,304,062	)
Cash flows from financing activities
Proceeds from borrowings			559,981			1,822,765
Repayment of borrowings			(488,762	)		(383,099	)
Proceeds from short-term borrowings, net			574,287			877,646
Capital contribution from non-controlling interests			597,356			125,410
Payment of cash dividends			(1,567	)		(1,363	)
Acquisition of treasury shares			(116,771	)		—
Payment of interest of hybrid bonds			(4,087	)		(4,132	)
Repayment of lease liabilities			(63,340	)		(46,443	)
Repayment of redeemable convertible preferred shares			—			(278,581	)
Others, net			(5,067	)		123
Net cash provided by financing activities			1,052,030			2,112,326
Effect of exchange rate fluctuation on cash held			52,815			32,737
Net increase(decrease) in cash and cash equivalents			(208,506	)		1,566,324
Cash and cash equivalents at beginning of the period	8		4,755,578			3,515,246
Cash and cash equivalents at end of the period	8	W	4,547,072			5,081,570

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, 2021

(Unaudited)

1. General Information

General information about POSCO, its 34 domestic subsidiaries including POSCO ENGINEERING & CONSTRUCTION CO., LTD., 132 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 131 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 five of its overseas liaison offices.

As of March 31, 2021, 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 acquired or newly established during the three-month period ended March 31, 2021, were as follows:

Company	Date of inclusion	Ownership (%)	Reason
Poland Legnica Sourcing Center Sp. z o.o	February 2021	100.00	New establishment

(c) Subsidiaries for which the Company has lost control during the three-month period ended March 31, 2021, are as follows:

Company	Date of exclusion	Reason
POSCO E&C Mongolia	January 2021	Liquidation

10

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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 the Act on External Audit of Stock Companies, etc. in the Republic of Korea.

These condensed consolidated interim financial statements have been prepared in accordance with K-IFRS No. 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-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, 2020. 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 with K-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 and non-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 of K-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, 2021

(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 in K-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, 2020. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2021.

(a) K-IFRS No. 1116 “Lease”- COVID-19 Related Rent Concessions

The amendment introduces an optional practical expedient that simplifies how a lessee accounts for rent concessions that are a direct consequence of COVID-19. A lessee that applies the practical expedient is not required to assess whether eligible rent concessions are lease modifications. The Company is required to disclose the amount recognized in profit or loss for the reporting period arising from application of the practical expedient. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

(b) K-IFRS No. 1109 “Financial Instruments”, K-IFRS No. 1039 “Financial Instruments : Recognition and Measurement” , K-IFRS No. 1107 “Financial Instruments : Disclosures” , K-IFRS No. 1104 “Insurance Contracts” , K-IFRS No. 1116 “Lease” – Interest Rate Benchmark Reform

Market-wide interest rate benchmark reform requires disclosure of exceptions to practical expedients and discontinuation of hedge accounting in accordance with K-IFRS No. 1109 “Financial Instruments”, K-IFRS No. 1039 “Financial Instruments : Recognition and Measurement” , K-IFRS No. 1107 “Financial Instruments : Disclosures” , K-IFRS No. 1104 “Insurance Contracts” , K-IFRS No. 1116 “Lease”. 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, 2021

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Current
Trade accounts and notes receivable	W	8,334,832			7,471,916
Finance lease receivables		42,180			41,841
Due from customers for contract work		919,346			948,879
Less: Allowance for doubtful accounts		(342,601	)		(342,017	)
	W	8,953,757			8,120,619
Non-current
Trade accounts and notes receivable	W	120,830			131,010
Finance lease receivables		—			46
Less: Allowance for doubtful accounts		(44,639	)		(44,633	)
	W	76,191			86,423

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position, because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. As of March 31, 2021, and December 31, 2020, the carrying amounts of such secured borrowings areW 231,407 million andW 328,807 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

13

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

5. Other Receivables

Other receivables as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Current
Loans	W	256,651			258,735
Other accounts receivable		1,019,123			835,791
Accrued income		374,600			298,157
Deposits		75,539			82,884
Others		14,380			18,015
Lease receivables		65,747			68,198
Less: Allowance for doubtful accounts		(69,048	)		(67,541	)
	W	1,736,992			1,494,239
Non-current
Loans	W	805,557			798,287
Other accounts receivable		192,379			197,304
Accrued income		68,551			86,920
Deposits		307,795			284,588
Lease receivables		123,905			128,366
Less: Allowance for doubtful accounts		(311,470	)		(299,503	)
	W	1,186,717			1,195,962

6. Other Financial Assets

Other financial assets as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Derivatives assets	W	107,849		99,324
Debt securities		84,026		154,154
Deposit instruments(*1,2)		3,945,376		2,322,327
Short-term financial instruments(*2)		8,992,550		9,133,404
	W	13,129,801		11,709,209
Non-current
Derivatives assets	W	42,921		18,551
Equity securities(*3)		1,229,005		1,120,968
Debt securities		18,701		20,260
Other securities(*3)		385,130		364,404
Deposit instruments(*2)		35,025		37,624
	W	1,710,782		1,561,807

(*1) As of March 31, 2021 and December 31, 2020,W5,967 million andW4,881 million, respectively, are restricted in use for government project.

(*2) As of March 31, 2021 and December 31, 2020, financial instruments amounting toW101,122 million andW46,855 million, respectively, are restricted in use for financial arrangements, pledge and others.

(*3) As of March 31, 2021 and December 31, 2020,W138,263 million andW113,674 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.

14

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

7. Inventories

Inventories as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			��	December 31, 2020
Finished goods	W	1,463,696				1,285,552
Merchandise		753,944				751,245
Semi-finished goods		1,833,102				1,626,855
Raw materials		2,459,076				1,980,518
Fuel and materials		847,433				876,593
Construction inventories		859,837				936,813
Materials-in-transit		2,080,200				1,664,770
Others		65,852				61,086
		10,363,140				9,183,432
Less: Allowance for inventories valuation		(109,793	)			(131,642	)
	W	10,253,347				9,051,790

The amounts of loss on valuation of inventories recognized in cost of sales during the three-month period ended March 31, 2021 and the year ended December 31, 2020 wereW26,977 million andW54,014 million, respectively.

8. Assets Held for Sale

Details of assets held for sale as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021						December 31, 2020
	The controlling company(*1)		Subsidiaries		Total		The controlling company(*1)		Subsidiaries		Total
Asset
Cash and cash equivalents(*2)	W	—		934		934		—		934		934
Other financial assets		—		273		273		—		273		273
Property, plant and equipment		36,308		—		36,308		32,244		40		32,284
Intangible Assets		9,841		—		9,841		—		—		—
Others		—		718		718		—		719		719
	W	46,149		1,925		48,074		32,244		1,966		34,210
Liability
Others	W	—		7		7		—		25		25

(*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. During the year ended December 31, 2020 the Company recognizedW5,030 million of impairment loss for the difference between the fair value less cost to sell and the carrying amount of the assets.

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

15

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

9. Investments in Associates and Joint ventures

(a) Details of investments in associates as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021								December 31, 2020
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources
Private Equity Fund		178,691,901,565		36.34	W	178,787	W	175,604		175,939
Samcheok Blue Power Co.,Ltd.(*1)		4,507,138		34.00		179,410		140,934		145,092
SNNC		18,130,000		49.00		90,650		162,325		160,332
QSONE Co.,Ltd.		200,000		50.00		84,395		85,169		86,004
Chun-cheon Energy Co., Ltd(*1)		17,308,143		49.10		86,541		24,519		23,913
Western Inland highway CO.,LTD.		9,533,364		29.40		47,667		44,866		45,070
Nextrain Co., Ltd.(*1)		9,904,000		20.01		49,520		47,442		47,364
Metropolitan Outer Ring Expressway co., ltd.(*1)		3,545,306		21.46		17,727		16,979		13,721
CHUNGJU ENTERPRISE CITY
DEVELOPMENT Co.,Ltd		2,008,000		29.53		10,040		16,353		17,137
Daesung Steel(*2)		108,038		17.54		14,000		17,333		16,990
PCC Amberstone Private Equity Fund 1(*2)		8,570,603,277		8.80		8,453		9,172		9,230
Others (59 companies)(*1)								91,047		103,472
								831,743		844,264
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		132,907		214,778		199,342
AES-VCM Mong Duong Power
Company Limited(*1)		—		30.00		164,303		174,705		158,777
9404-5515 Quebec Inc.(*2)		114,452,000		10.40		124,341		130,784		123,296
Eureka Moly LLC		—		20.00		240,123		45,340		43,520
AMCI (WA) PTY LTD		49		49.00		209,664		72,858		71,732
NCR LLC		—		22.10		62,116		56,396		46,608
KOREA LNG LTD.		2,400		20.00		135,205		25,293		42,229
Nickel Mining Company SAS		3,234,698		49.00		157,585		46,821		40,890
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		134,400,000		40.00		22,423		22,743		22,147
Zhongyue POSCO (Qinhuangdao) Tinplate
Industrial Co., Ltd		10,200,000		34.00		9,517		15,900		15,181
PT. Wampu Electric Power(*1)		8,708,400		20.00		10,054		14,041		12,716
PT. Batutua Tembaga Raya		128,285		22.00		21,824		126		15
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		7,701		7,110
Others (25 companies)(*1)								113,446		105,006
								940,932		888,569
							W	1,772,675		1,732,833

(*1) As of March 31, 2021 and December 31, 2020, investments in associates amounting toW430,113 million andW410,573 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2) As of March 31, 2021, 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.

16

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Details of investments in joint ventures as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021								December 31, 2020
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	157,825		153,457
Others (6 companies)								9,746		14,014
								167,571		167,471
[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672		1,377,846		1,418,056
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		368,512		353,725
KOBRASCO		2,010,719,185		50.00		32,950		56,443		54,400
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961		95,264		91,270
DMSA/AMSA(*1,2)		���		4.27		406,556		29,721		31,104
CSP - Compania Siderurgica do Pecem		1,581,419,343		20.00		676,060		—		—
Others (10 companies)								28,645		27,390
								1,956,431		1,975,945
							W	2,124,002		2,143,416

(*1) As of March 31, 2021 and December 31, 2020, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings.

(*2) All of the shareholders of the joint venture entered into financial support agreement with lenders on behalf of the joint venture to extend the maturity of the loans granted to the joint venture by the lenders. However, the Company believes the shareholders’ financial support agreement is invalid and is currently in arbitration process for annulment. The Company’s obligation to provide financial support is currently on hold and may change depending on the result of the arbitration.

17

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(c) The movements of investments in associates and joint ventures for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)
Company	December 31, 2020 Book value			Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			March 31, 2021 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources
Private Equity Fund	W	175,939			—		—			(335	)		—			175,604
Samcheok Blue Power Co.,Ltd.		145,092			—		—			(1,536	)		(2,622	)		140,934
SNNC		160,332			—		(1,469	)		3,462			—			162,325
QSONE Co.,Ltd.		86,004			—		(1,140	)		305			—			85,169
Chun-cheon Energy Co., Ltd		23,913			—		—			790			(184	)		24,519
Western Inland highway CO.,LTD.		45,070			—		—			(243	)		39			44,866
Nextrain Co., Ltd.		47,364			—		—			(53	)		131			47,442
Metropolitan Outer Ring Expressway co., ltd.		13,721			3,616		—			(358	)		—			16,979
CHUNGJU ENTERPRISE CITY
DEVELOPMENT Co.,Ltd		17,137			—		—			(784	)		—			16,353
Daesung Steel		16,990	��		—		—			343			—			17,333
PCC Amberstone Private Equity Fund 1		9,230			—		(171	)		200			(87	)		9,172
POSCO MITSUBISHI CARBON TECHNOLOGY		153,457			—		—			4,368			—			157,825
Others (65 companies)		117,486			4,105		(327	)		—			(20,471	)		100,793
		1,011,735			7,721		(3,107	)		6,159			(23,194	)		999,314
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		199,342			—		(5,656	)		12,548			8,544			214,778
AES-VCM Mong Duong Power Company Limited		158,777			—		—			9,253			6,675			174,705
9404-5515 Quebec Inc.		123,296			—		(3,798	)		6,001			5,285			130,784
Eureka Moly LLC		43,520			—		—			—			1,820			45,340
AMCI (WA) PTY LTD		71,732			—		—			(998	)		2,124			72,858
NCR LLC		46,608			8,176		—			(303	)		1,915			56,396
KOREA LNG LTD.		42,229			—		(1,713	)		1,719			(16,942	)		25,293
Nickel Mining Company SAS		40,890			—		—			6,300			(369	)		46,821
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,147			—		—			(117	)		713			22,743
Zhongyue POSCO (Qinhuangdao) Tinplate
Industrial Co., Ltd		15,181			—		—			138			581			15,900
PT. Wampu Electric Power		12,716			—		—			400			925			14,041
PT. Batutua Tembaga Raya		15			—		—			(21	)		132			126
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		7,110			—		—			220			371			7,701
Roy Hill Holdings Pty Ltd		1,418,056			—		(145,095	)		51,246			53,639			1,377,846
POSCO-NPS Niobium LLC		353,725			—		(6,640	)		6,539			14,888			368,512
KOBRASCO		54,400			—		—			5,663			(3,620	)		56,443
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		91,270			—		—			1,235			2,759			95,264
DMSA/AMSA		31,104			—		—			(6,180	)		4,797			29,721
CSP—Compania Siderurgica do Pecem		—			19,176		—			(27,815	)		8,639			—
Others (36 companies)		132,396			—		(223	)		6,013			3,905			142,091
		2,864,514			27,352		(163,125	)		71,841			96,781			2,897,363
	W	3,876,249			35,073		(166,232	)		78,000			73,587			3,896,677

(*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.

18

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

2) For the year ended December 31, 2020

(in millions of Won)
Company	December 31, 2019 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			December 31, 2020 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources
Private Equity Fund	W	175,907		—		—			34			(2	)		175,939
Samcheok Blue Power Co.,Ltd.		161,280		—		—			(5,262	)		(10,926	)		145,092
SNNC		142,602		—		(2,901	)		18,701			1,930			160,332
QSONE Co.,Ltd.		85,887		—		(1,140	)		1,257			—			86,004
Chun-cheon Energy Co., Ltd		56,679		—		—			(33,173	)		407			23,913
Western Inland highway CO.,LTD.		5,115		42,246		—			(2,294	)		3			45,070
Nextrain Co., Ltd.		41,447		7,910		—			(2,786	)		793			47,364
Metropolitan Outer Ring Expressway co., ltd.		8,343		5,573		—			(195	)		—			13,721
CHUNGJU ENTERPRISE CITY
DEVELOPMENT Co.,Ltd		17,824		—		—			(687	)		—			17,137
Daesung Steel		15,375		—		—			(514	)		2,129			16,990
PCC Amberstone Private Equity Fund 1		9,570		—		(715	)		589			(214	)		9,230
POSCO MITSUBISHI CARBON TECHNOLOGY		182,648		—		(19,401	)		(9,794	)		4			153,457
Others (65 companies)		135,890		22,145		(1,328	)		(28,128	)		(11,093	)		117,486
		1,038,567		77,874		(25,485	)		(62,252	)		(16,969	)		1,011,735
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		225,933		—		(56,760	)		45,941			(15,772	)		199,342
AES-VCM Mong Duong Power Company Limited		178,892		—		(16,053	)		37,092			(41,154	)		158,777
9404-5515 Quebec Inc.		131,529		—		(11,672	)		10,963			(7,524	)		123,296
Eureka Moly LLC		85,349		—		—			(39,801	)		(2,028	)		43,520
AMCI (WA) PTY LTD		72,937		—		—			(6,561	)		5,356			71,732
NCR LLC		46,391		4,196		—			(1,452	)		(2,527	)		46,608
KOREA LNG LTD.		46,557		—		(7,755	)		7,681			(4,254	)		42,229
Nickel Mining Company SAS		37,940		—		—			1,473			1,477			40,890
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,356		—		—			(384	)		175			22,147
Zhongyue POSCO (Qinhuangdao) Tinplate
Industrial Co., Ltd		15,128		—		—			(80	)		133			15,181
PT. Wampu Electric Power		13,363		—		(559	)		1,411			(1,499	)		12,716
PT. Batutua Tembaga Raya		14,717		—		—			(14,883	)		181			15
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,755		—		—			279			76			7,110
Roy Hill Holdings Pty Ltd		1,235,682		—		(113,985	)		234,693			61,666			1,418,056
POSCO-NPS Niobium LLC		376,410		—		(11,244	)		11,449			(22,890	)		353,725
KOBRASCO		115,641		—		(37,922	)		8,443			(31,762	)		54,400
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		88,935		—		—			1,790			545			91,270
DMSA/AMSA		12,189		60,278		—			(33,305	)		(8,058	)		31,104
CSP—Compania Siderurgica do Pecem		—		62,711		—			(60,708	)		(2,003	)		—
Others (36 companies)		162,484		—		(12,114	)		(8,492	)		(9,482	)		132,396
		2,889,188		127,185		(268,064	)		195,549			(79,344	)		2,864,514
	W	3,927,755		205,059		(293,549	)		133,297			(96,313	)		3,876,249

(*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.

19

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(d) Summarized financial information of associates and joint ventures as of and for the three-month period ended March 31, 2021 and the year ended December 31, 2020 are as follows:

1) March 31, 2021

(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	472,464		548		471,916			—		(924	)
Samcheok Blue Power Co.,Ltd.		1,312,044		851,879		460,165			—		(1,196	)
SNNC		594,468		232,830		361,638			160,075		11,038
QSONE Co.,Ltd.		251,407		81,069		170,338			4,070		611
Chun-cheon Energy Co., Ltd		618,093		524,179		93,914			76,384		1,063
Western Inland highway CO.,LTD.		164,586		6,618		157,968			—		(459	)
Nextrain Co., Ltd.		315,804		73,232		242,572			—		(549	)
Metropolitan Outer Ring Expressway co., ltd.		114,467		34,365		80,102			—		(221	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		54,408		29,340		25,068			—		(2,653	)
Daesung Steel		170,068		102,640		67,428			22,614		1,951
PCC Amberstone Private Equity Fund 1		104,936		670		104,266			3,200		2,269
POSCO MITSUBISHI CARBON TECHNOLOGY		455,880		192,050		263,830			35,151		8,052
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,560,514		702,784		857,730			109,335		50,111
AES-VCM Mong Duong Power Company Limited		1,742,931		1,177,182		565,749			101,645		30,842
9404-5515 Quebec Inc.		1,271,926		2,228		1,269,698			—		57,698
KOREA LNG LTD.		126,773		307		126,466			9,128		8,596
Nickel Mining Company SAS		449,973		312,686		137,287			54,199		2,024
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		95,593		38,915		56,678			2,482		(291	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		77,940		25,589		52,351			29,069		406
PT. Wampu Electric Power		202,071		134,910		67,161			4,715		2,002
PT. Batutua Tembaga Raya		406,282		404,091		2,191			—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		71,159		40,273		30,886			23,397		749
Roy Hill Holdings Pty Ltd		9,555,573		2,856,625		6,698,948			1,219,082		522,547
POSCO-NPS Niobium LLC		736,821		—		736,821			—		10,861
KOBRASCO		120,970		8,084		112,886			19,699		11,326
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		839,252		485,063		354,189			464,171		4,940
DMSA/AMSA		5,151,259		2,582,834		2,568,425			2,457		(168,759	)
CSP-Compania Siderurgica do Pecem		3,168,026		3,687,716		(519,690	)		518,256		191,309

20

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

2) December 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	473,415		575		472,840			—		8,534
Samcheok Blue Power Co.,Ltd.		1,169,343		700,266		469,077			—		(5,994	)
SNNC		592,568		238,971		353,597			698,712		39,826
QSONE Co.,Ltd.		251,190		79,182		172,008			17,075		2,513
Chun-cheon Energy Co., Ltd		609,815		516,963		92,852			222,066		(24,617	)
Western Inland highway CO.,LTD.		158,679		2,534		156,145			—		(1,714	)
Nextrain Co., Ltd.		303,359		74,738		228,621			—		(2,636	)
Metropolitan Outer Ring Expressway co., ltd.		98,510		34,360		64,150			—		(920	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		54,832		27,111		27,721			6,672		(2,326	)
Daesung Steel		172,088		106,611		65,477			85,158		(2,930	)
PCC Amberstone Private Equity Fund 1		104,933		5		104,928			12,280		6,694
POSCO MITSUBISHI CARBON TECHNOLOGY		446,067		190,289		255,778			112,173		(15,603	)
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,515,828		719,745		796,083			458,806		183,465
AES-VCM Mong Duong Power Company Limited		1,599,095		1,086,440		512,655			336,174		121,644
9404-5515 Quebec Inc.		1,197,702		3		1,197,699			—		105,411
KOREA LNG LTD.		211,497		353		211,144			40,086		38,370
Nickel Mining Company SAS		445,140		308,885		136,255			223,427		(8,353	)
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		72,001		16,812		55,189			3,236		(1,086	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		71,805		21,486		50,319			104,537		(237	)
PT. Wampu Electric Power		199,841		139,264		60,577			20,272		7,057
PT. Batutua Tembaga Raya		389,973		387,870		2,103			36,587		(29,714	)
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		68,036		38,843		29,193			78,954		1,156
Roy Hill Holdings Pty Ltd		9,271,788		2,161,353		7,110,435			5,993,950		2,299,529
POSCO-NPS Niobium LLC		707,247		—		707,247			—		25,406
KOBRASCO		118,676		9,875		108,801			32,854		16,887
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		873,174		534,961		338,213			1,252,189		7,856
DMSA/AMSA		4,924,371		2,294,881		2,629,490			204,820		(772,396	)
CSP-Compania Siderurgica do Pecem		3,142,831		3,657,314		(514,483	)		1,402,742		(623,381	)

21

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 are as follows:

Joint operations	Operation	Ownership (%)		Location
Myanmar A-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		19.92	Korea
Yangsan-Sasong district public housing project	Construction		49.00	Korea
Sejong 2-1 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
Sejong 4-1 P3 Block public housing project	Construction		60.00	Korea

22

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

11. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

(a) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Acquisitions			Depreciation			Others(*1)			Ending
Land	W	279,397		(1	)		—			(4,280	)		275,116
Buildings		559,584		—			(5,285	)		10,181			564,480
Structures		1,199		—			(150	)		(72	)		977
Right-of-use assets		154,601		—			(1,103	)		4,334			157,832
	W	994,781		(1	)		(6,538	)		10,163			998,405

(*1) Includes reclassification resulting from changing purpose of use, adjustment of foreign currency translation difference, and others.

(b) For the year ended December 31, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation(*1)			Others(*2)			Ending
Land	W	278,465		2,814		(183	)		—			(1,699	)		279,397
Buildings		598,159		385		—			(9,681	)		(29,279	)		559,584
Structures		1,178		—		—			(610	)		631			1,199
Right-of-use assets		425		—		(56	)		(3,206	)		157,438			154,601
	W	878,227		3,199		(239	)		(13,497	)		127,091			994,781

(*1) Includes reversal of impairment loss on investment property recognized by POSCO(Dalian) IT Center Development Co., Ltd., a subsidiary, in relation to its office lease amounting toW14,953 million.

(*2) Includes reclassification resulting from changing purpose of use, adjustment of foreign currency translation difference and others.

23

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 and the year ended December 31, 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1)			Others(*2)			Ending
Land	W	2,590,087		159		(15	)		—			—			13,241			2,603,472
Buildings		4,161,400		2,015		(1,974	)		(79,670	)		(595	)		66,175			4,147,351
Structures		3,025,226		2,753		(149	)		(57,877	)		(4	)		25,603			2,995,552
Machinery and equipment		16,857,307		20,887		(3,541	)		(570,615	)		(16,293	)		272,587			16,560,332
Vehicles		37,156		2,810		(328	)		(3,684	)		—			398			36,352
Tools		60,301		2,216		(54	)		(7,428	)		—			10,428			65,463
Furniture and fixtures		127,459		4,414		(368	)		(15,479	)		—			16,101			132,127
Lease assets		773,700		154,530		(3,803	)		(44,777	)		—			9,653			889,303
Bearer plants		149,965		—		(17	)		(2,250	)		—			10,947			158,645
Construction-in-progress		1,617,540		476,451		(4,407	)		—			—			(206,590	)		1,882,994
	W	29,400,141		666,235		(14,656	)		(781,780	)		(16,892	)		218,543			29,471,591

(*1) During the three-month period ended March 31, 2021, the Company recognized impairment losses on individual assets that were shut down due to the fire or other loss.

(*2) Represents assets transferred from construction-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, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1)			Others(*2)			Ending
Land	W	2,526,059		29,639		(2,633	)		—			3,490			33,532			2,590,087
Buildings		4,215,454		13,825		(6,296	)		(319,774	)		(3,778	)		261,969			4,161,400
Structures		2,904,506		85,958		(6,661	)		(231,737	)		(883	)		274,043			3,025,226
Machinery and equipment		17,218,264		138,533		(27,966	)		(2,298,951	)		(8,080	)		1,835,507			16,857,307
Vehicles		32,285		6,475		(546	)		(14,599	)		—			13,541			37,156
Tools		70,751		20,230		(211	)		(38,838	)		—			8,369			60,301
Furniture and fixtures		130,132		23,352		(2,908	)		(43,832	)		(519	)		21,234			127,459
Lease assets		774,582		204,699		(9,300	)		(172,029	)		—			(24,252	)		773,700
Bearer plants		124,193		118		(155	)		(7,971	)		—			33,780			149,965
Construction-in-progress		1,929,747		2,835,921		(7,001	)		—			(17,270	)		(3,123,857	)		1,617,540
	W	29,925,973		3,358,750		(63,677	)		(3,127,731	)		(27,040	)		(666,134	)		29,400,141

(*1) The Company estimated the recoverable amount of individual assets that it ceased their use due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2020. During the year ended December 31, 2020, the Company recognized impairment losses on damaged assets caused by the fire.

(*2) Represents assets transferred from construction-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.

24

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 and the year ended December 31, 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	371,719		5,330		(3,479	)		10,408			383,978
Buildings and structures		171,760		15,477		(18,368	)		(1,733	)		167,136
Machinery and equipment		239,181		2,187		(9,953	)		3,451			234,866
Vehicles		11,456		4,340		(2,177	)		(1,347	)		12,272
Ships		106,555		126,361		(4,255	)		—			228,661
Others		27,630		835		(7,648	)		(595	)		20,222
	W	928,301		154,530		(45,880	)		10,184			1,047,135

2) For the year ended December 31, 2020

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	341,767		18,962		(16,397	)		27,387			371,719
Buildings and structures		171,112		47,374		(57,593	)		10,867			171,760
Machinery and equipment		215,828		86,373		(38,909	)		(24,111	)		239,181
Vehicles		14,105		6,186		(9,486	)		651			11,456
Ships		24,082		111,537		(29,064	)		—			106,555
Others		8,113		45,803		(23,786	)		(2,500	)		27,630
	W	775,007		316,235		(175,235	)		12,294			928,301

(c) The amounts recognized in profit or loss related to leases for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Interest on lease liabilities	W	8,954		9,008
Expenses relating to short-term leases		5,294		5,004
Expenses relating to leases of low-value assets		3,827		4,330
	W	18,075		18,342

25

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 and the year ended December 31, 2020 were as follows:

(a) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss			Others(*2)			Ending
Goodwill	W	903,893		—		—			—			—			1,242			905,135
Intellectual property rights		2,170,738		38,260		(279	)		(64,819	)		—			17,065			2,160,965
Membership(*1)		138,703		28		(59	)		(36	)		(3	)		212			138,845
Development expense		227,111		245		—			(20,331	)		—			(31,547	)		175,478
Port facilities usage rights		236,272		—		—			(5,230	)		—			154			231,196
Exploratation and evaluation assets		57,140		1,124		—			(4	)		—			805			59,065
Customer relationships		330,247		—		—			(11,120	)		—			(8	)		319,119
Other intangible assets		385,328		8,273		(5,388	)		(9,240	)		(7,180	)		(12,924	)		358,869
	W	4,449,432		47,930		(5,726	)		(110,780	)		(7,183	)		(25,001	)		4,348,672

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

(*2) Represents assets transferred from construction-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, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss			Others(*2)			Ending
Goodwill	W	1,097,809		—		—			—			(189,379	)		(4,537	)		903,893
Intellectual property rights		2,279,210		136,195		(3,617	)		(282,594	)		(7,727	)		49,271			2,170,738
Membership(*1)		148,078		3,416		(12,340	)		(107	)		244			(588	)		138,703
Development expense		94,339		1,315		(16	)		(56,329	)		(206	)		188,008			227,111
Port facilities usage rights		281,398		—		—			(44,893	)		—			(233	)		236,272
Exploratation and evaluation assets		77,271		14,886		—			—			—			(35,017	)		57,140
Customer relationships		374,875		—		—			(44,478	)		—			(150	)		330,247
Other intangible assets		555,493		159,590		(61,692	)		(37,157	)		—			(230,906	)		385,328
	W	4,908,473		315,402		(77,665	)		(465,558	)		(197,068	)		(34,152	)		4,449,432

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

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

26

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

14. Other Assets

Other assets as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Advance payments	W	385,233		348,753
Prepaid expenses		270,406		181,985
Firm commitment asset		26,745		23,506
Others		58,309		62,379
	W	740,693		616,623
Non-current
Long-term advance payments	W	22,084		21,587
Long-term prepaid expenses		90,535		92,774
Others(*1)		150,495		155,699
	W	263,114		270,060

(*1) As of March 31, 2021 and December 31, 2020, the Company recognized tax assets amounting toW94,086 million andW121,225 million, respectively, based on the Company’s best estimate of the tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification are finalized.

27

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

15. Borrowings

(a) Short-term borrowings and current portion of long-term borrowings and others as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Lenders	Interest rate (% )		March 31, 2021			December 31, 2020
Short-term borrowings
Bank overdrafts	JP Morgan and others		0.52 ~ 4.71	W	161,833			146,762
Short-term borrowings	HSBC and others		0.17 ~ 9.00		5,791,907			5,047,633
					5,953,740			5,194,395
Current portion of long-term liabilities
Current portion of long-term borrowings	Export-Import Bank of Korea and others		0.19 ~ 8.50		861,894			1,067,338
Current portion of debentures	The Goldman Sachs Group, Inc. and others		1.73 ~ 5.25		2,384,250			2,417,339
Less: Current portion of discount on debentures issued					(965	)		(1,543	)
					3,245,179			3,483,134
				W	9,198,919			8,677,529

(b) Long-term borrowings, excluding current portion and others as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Lenders	Interest rate (%)		March 31, 2021			December 31, 2020
Long-term borrowings	Export-Import Bank of Korea and others		0.45 ~ 4.50	W	3,611,478			3,366,400
Less: Present value discount					(15,586	)		(16,058	)
Bonds	KB Securities co., Ltd. and others		0.17 ~ 4.00		8,864,375			8,505,485
Less: Discount on debentures issued					(34,496	)		(35,749	)
				W	12,425,771			11,820,078

(c) Assets pledged as collateral in regards to the borrowings as of March 31, 2021 are as follows:

(in millions of Won)	Lenders	Book value		Pledged amount
Cash and cash equivalents	Shinhan Bank and others	W	23,255		23,501
Property, plant and equipment	Korea Development Bank
and Investment property	and others		4,491,779		4,922,751
Trade accounts and notes receivable	Korea Development Bank and others		277,074		273,545
Inventories	Export-Import Bank of Korea and others		92,527		12,650
Financial instruments	KB Kookmin Bank and others		25,716		25,716
		W	4,910,351		5,258,163

28

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

16. Other Payables

Other payables as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Accounts payable	W	912,748		800,439
Accrued expenses		683,265		697,087
Dividend payable		401,055		2,703
Lease liabilities		228,123		244,548
Withholdings		107,119		100,489
	W	2,332,310		1,845,266
Non-current
Accounts payable	W	13,006		5,572
Accrued expenses		4,874		4,953
Lease liabilities		626,114		495,127
Long-term withholdings		54,129		53,272
	W	698,123		558,924

17. Other Financial Liabilities

Other financial liabilities as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Derivative liabilities	W	87,242		82,859
Financial guarantee liabilities		60,269		58,545
	W	147,511		141,404
Non-current
Derivative liabilities	W	47,051		129,505
Financial guarantee liabilities		4,722		4,083
	W	51,773		133,588

29

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

18. Provisions

(a) Provisions as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021				December 31, 2020
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	42,887		47,335		73,441		48,510
Provision for construction warranties		11,334		216,076		9,662		217,435
Provision for legal contingencies and claims(*1)		19,688		69,677		24,275		63,175
Provision for the restoration(*2)		4,626		129,839		5,307		134,438
Others(*3,*4)		278,121		88,360		330,588		59,411
	W	356,656		551,287		443,273		522,969

(*1) The Company recognized probable outflow of resources amounting toW65,451 million andW59,211 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of March 31, 2021 and December 31, 2020, 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,W16,225 million as provisions for restoration as of March 31, 2021. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials presently available to recover the land. In addition, the Company has applied a discount rate of 1.26~1.59% to measure present value of these costs.

(*3) As of March 31, 2021 and December 31, 2020, POSCO ENERGY CO., LTD., and Korea Fuel Cell recognizedW79,737 million andW80,842 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow of resources.

(*4) The Company has recognized emission liabilities ofW 86,039 million for greenhouse gas emissions exceeding the quantity of free quota emission rights expected to be submitted as of March 31, 2021.

30

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Changes in provisions for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Increase		Utilization			Reversal			Others(*1)			Ending
Provision for bonus payments	W	121,951		22,045		(51,233	)		(1,517	)		(1,024	)		90,222
Provision for construction warranties		227,097		5,288		(4,846	)		(949	)		820			227,410
Provision for legal contingencies and claims		87,450		7,080		(6,086	)		(385	)		1,306			89,365
Provision for the restoration		139,745		1,220		(1,689	)		(10,146	)		5,335			134,465
Others		389,999		70,443		(44,133	)		(50,034	)		206			366,481
	W	966,242		106,076		(107,987	)		(63,031	)		6,643			907,943

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

2) For the year ended December 31, 2020

(in millions of Won)	Beginning		Increase		Utilization			Reversal			Others(*1)			Ending
Provision for bonus payments	W	123,669		106,855		(109,835	)		(6,334	)		7,596			121,951
Provision for construction warranties		170,428		86,691		(23,916	)		(5,311	)		(795	)		227,097
Provision for legal contingencies and claims		84,484		30,894		(16,444	)		(9,087	)		(2,397	)		87,450
Provision for the restoration		87,303		67,501		(6,525	)		(15,811	)		7,277			139,745
Others		352,765		349,639		(142,440	)		(133,294	)		(36,671	)		389,999
	W	818,649		641,580		(299,160	)		(169,837	)		(24,990	)		966,242

(*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, 2021

(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, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Expense related to post-employment benefit plans under defined contribution plans	W	12,181		13,202

(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, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Present value of funded obligations	W	2,421,290			2,439,938
Fair value of plan assets(*1)		(2,336,282	)		(2,397,717	)
Present value of non-funded obligations		14,964			13,415
Net defined benefit liabilities	W	99,972			55,636

(*1) As of March 31, 2021 and December 31, 2020, the Company recognized net defined benefit assets amounting toW71,346 million andW86,149 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, 2021 and the year ended December 31, 2020 were as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Defined benefit obligation at the beginning of period	W	2,453,353			2,431,880
Current service costs		62,339			245,047
Interest costs		12,593			47,485
Remeasurements		1,630			(52,732	)
Benefits paid		(95,599	)		(225,293	)
Others		1,938			6,966
Defined benefit obligation at the end of period	W	2,436,254			2,453,353

32

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

3) Changes in fair value of plan assets for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Fair value of plan assets at the beginning of period	W	2,397,717			2,255,149
Interest on plan assets		12,439			44,208
Remeasurement of plan assets		(1,474	)		(600	)
Contributions to plan assets		151			307,367
Benefits paid		(72,429	)		(213,246	)
Others		(122	)		4,839
Fair value of plan assets at the end of period	W	2,336,282			2,397,717

4) The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Current service costs	W	62,339		61,309
Net interest costs		154		1,299
	W	62,493		62,608

20. Other Liabilities

Other liabilities as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Due to customers for contract work	W	926,056		807,465
Advances received		451,634		416,960
Unearned revenue		41,345		24,433
Withholdings		394,539		332,327
Firm commitment liability		36,927		35,993
Others		8,451		8,304
	W	1,858,952		1,625,482
Non-current
Unearned revenue	W	23,997		17,953
Others		19,778		19,067
	W	43,775		37,020

33

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 and December 31, 2020 are as follows:

① March 31, 2021

			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	114,889		—		114,889		—		114,889
Short-term financial instruments		8,992,550		—		8,992,550		—		8,992,550
Debt securities		20,856		—		—		20,856		20,856
Other securities		385,130		39,052		2,348		343,730		385,130
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments(*2)		35,881		—		35,881		—		35,881
Fair value through other comprehensive income
Equity securities		1,229,005		1,085,371		—		143,634		1,229,005
Debt securities		726		—		—		726		726
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		4,546,138		—		—		—		—
Trade accounts and notes receivable		8,181,380		—		—		—		—
Other receivables		2,489,835		—		—		—		—
Debt securities		81,146		—		—		—		—
Deposit instruments		3,980,401		—		—		—		—
	W	30,059,937		1,124,423		9,145,668		510,946		10,781,037
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	101,114		—		101,114		—		101,114
Derivative hedging instruments(*2)		33,179		—		33,179		—		33,179
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		3,821,959		—		—		—		—
Borrowings		21,624,690		—		22,003,462		—		22,003,462
Financial guarantee liabilities		64,991		—		—		—		—
Others		2,945,773		—		—		—		—
	W	28,591,706		—		22,137,755		—		22,137,755

(*1) Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their 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 interest rate and foreign exchange rate 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, 2021

(Unaudited)

② December 31, 2020

(in millions of Won)	Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	79,995		—		79,995		—		79,995
Short-term financial instruments		9,133,404		—		9,133,404		—		9,133,404
Debt securities		20,797		—		—		20,797		20,797
Other securities		364,404		47,321		2,242		314,841		364,404
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments		37,880		—		37,880		—		37,880
Fair value through other comprehensive income
Equity securities		1,120,968		729,342		—		391,626		1,120,968
Debt securities		2,471		—		—		2,471		2,471
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		4,754,644		—		—		—		—
Trade accounts and notes receivable		7,332,890		—		—		—		—
Other receivables		2,300,515		—		—		—		—
Debt securities		151,146		—		—		—		—
Deposit instruments		2,359,951		—		—		—		—
	W	27,661,065		776,663		9,253,521		731,735		10,761,919
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	180,773		—		180,773		—		180,773
Derivative hedging instruments		31,591		—		31,591		—		31,591
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		3,777,836		—		—		—		—
Borrowings		20,497,607		—		20,821,353		—		20,821,353
Financial guarantee liabilities		62,629		—		—		—		—
Others		2,347,244		—		—		—		—
	W	26,897,680		—		21,033,717		—		21,033,717

(*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, 2021 and 2020 were as follows:

① For the three-month period ended March 31, 2021

(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	35,335			(4,851	)		—			(462	)		70			30,092			—
Derivatives assets		—			101,315			—			65,846			—			167,161			—
Financial assets at fair value through other comprehensive income		—			—			—			—			22,269			22,269			90,892
Financial assets measured at amortized cost		19,287			—			237,962			(3,370	)		(38	)		253,841			—
Derivatives liabilities		—			28,515			—			(72,981	)		—			(44,466	)		(14	)
Financial liabilities measured at amortized cost		(129,317	)		—			(363,852	)		—			(6,483	)		(499,652	)		—
	W	(74,695	)		124,979			(125,890	)		(10,967	)		15,818			(70,755	)		90,878

② For the three-month period ended March 31, 2020

35

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(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	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	)

(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, 2020.

22. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2021 and December 31, 2020 are as follows:

(in Won, except share information)	March 31, 2021		December 31, 2020
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1) As of March 31, 2021, total shares of ADRs of 26,528,728 outstanding in overseas stock market are equivalent to 6,632,182 of common stock.

(*2) As of March 31, 2021, the difference between the ending balance of common stock and the par value of issued common stock isW46,469 million due to retirement of 9,293,790 treasury stocks.

(b) Capital surplus as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		796,623		796,623
Other capital surplus		96,590		50,099
	W	1,357,038		1,310,547

36

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

23. Hybrid Bonds

(a) Hybrid bonds classified as equity as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Interest rate (% )		March 31, 2021			December 31, 2020
Hybrid bond 1-2(*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, 2021 are as follows:

	Hybrid bond 1-2
Maturity date	30 years (POSCO 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 to Step-up clauses •     After 30 years: additionally +0.75%
Interest payments condition	Quarterly (Optional deferral of interest payment is available to POSCO)
Others	POSCO can call the hybrid bond at year 10th anniversary of issuance and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common stockholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2021 amounts toW479 million.

37

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) POSCO ENERGY CO., LTD., a subsidiary of the Company, issued hybrid bonds which are classified as non-controlling interests in the consolidated financial statements. Hybrid bonds as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		March 31, 2021			December 31, 2020
Hybrid bond 1-4(*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, 2021 are as follows:

	Hybrid bond 1-4
Maturity date	30 years (The issuer 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 of the Republic of Korea (10 years) + 1.55% •  After 10 years: additionally + 0.25% according to Step-up clauses •  After 30 years: additionally +0.75%
Interest payments condition	Quarterly (Optional deferral of interest payment is available to the Company)
Others	The issuer can call the hybrid bond at year 10th anniversary of issurance and interest
	payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common stockholders, but subordinated to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2021 amounts toW659 million.

38

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

24. Reserves

Reserves as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Accumulated comprehensive loss of investments in associates and joint ventures	W	(602,489	)		(693,176	)
Changes in fair value of equity investments at fair value through other comprehensive		(265,176	)		(359,283	)
Foreign currency translation differences		(196,336	)		(339,707	)
Gains or losses on valuation of derivatives		(733	)		(699	)
Others		11,946			11,947
	W	(1,052,788	)		(1,380,918	)

25. Treasury Shares

Based on the Board of Directors’ resolution, POSCO holds treasury shares for business purposes including price stabilization. The changes in treasury shares for three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows.

(shares, in millions of Won)	March 31, 2021				December 31, 2020
	Number of shares		Amount		Number of shares		Amount
Beginning		11,171,363	W	2,391,523		7,071,194	W	1,508,303
Acquisition of treasury shares		389,900		116,771		4,100,169		883,220
Ending		11,561,263	W	2,508,294		11,171,363	W	2,391,523

During the year ended December 31, 2020, the Company entered into a trust contract of acquiring treasury shares following approval of the Board of Directors. The amount committed to purchase treasury shares by this trust contract isW1,000 billion, and the contract period is from April 13, 2020 to April 12, 2021

39

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

26. Revenue

(a) Disaggregation of revenue

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended March 31, 2021 and 2020 were as follows:

1) March 31, 2021

(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	8,334,495		5,085,746		—		317,943		13,738,184
Revenue from services		126,860		98,955		12,380		493,142		731,337
Revenue from construction contract		—		—		1,447,417		12,896		1,460,313
Others		15,158		61,747		508		61,476		138,889
	W	8,476,513		5,246,448		1,460,305		885,457		16,068,723
Timing of revenue recognition
Revenue recognized at a point in time	W	8,349,653		5,147,493		18,622		379,419		13,895,187
Revenue recognized over time		126,860		98,955		1,441,683		506,038		2,173,536
	W	8,476,513		5,246,448		1,460,305		885,457		16,068,723

2) 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

(b) Details of contract assets and liabilities from contracts with customers as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Receivables
Account receivables	W	8,181,380		7,332,890
Contract assets
Due from customers for contract work		848,568		874,152
Contract liabilities
Advance received		453,055		418,777
Due to customers for contract work		926,056		807,465
Unearned revenue		65,095		42,040

40

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

27. Revenue – Contract Balances

(a) Details of outstanding contracts as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021						December 31, 2020
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	30,405,094			197,384			30,780,560			247,737
Accumulated contract profit		3,023,458			39,015			3,034,148			49,692
Accumulated contract loss		(1,242,662	)		(1,934	)		(1,260,451	)		(2,482	)
Accumulated contract revenue		32,185,890			234,465			32,554,257			294,947

(b) Details of due from customers for contract work and due to customers for contract work as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021						December 31, 2020
	Construction segment			Others			Construction segment			Others
Due from customers for contract	W	879,471			39,875			915,285			33,594
Due to customers for contract work		(878,784	)		(47,272	)		(765,818	)		(41,647	)
	W	687			(7,397	)		149,467			(8,053	)

(c) Details of the provisions of construction loss as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Construction segment	W	50,671		70,818
Others		431		437
	W	51,102		71,255

41

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(d) Due to the factors causing the variation of costs for the three-month period ended March 31, 2021, 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, 2021 and future periods are as follows:

				Changes in profit (loss) of contract
(in millions of Won)	Changes in estimated total contract costs			Net income (loss)		Future income (loss)		Total
Construction segment	W	104,340			47,464		73,456		120,920
Others		(3,901	)		892		4,304		5,196
	W	100,439			48,356		77,760		126,116

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, 2021. 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.

42

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

28. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Wages and salaries	W	221,427		213,496
Expenses related to post-employment benefits		32,919		22,379
Other employee benefits		46,348		45,458
Travel		4,283		6,353
Depreciation		36,624		34,952
Amortization		27,648		27,282
Communication		2,151		2,392
Electricity		1,887		2,181
Taxes and public dues		21,759		12,356
Rental		4,938		6,633
Repairs		2,348		1,927
Entertainment		2,174		2,108
Advertising		16,074		17,357
Research & development •		32,342		23,866
Service fees		35,006		39,433
Vehicles maintenance		1,263		1,370
Industry association fee		3,368		3,666
Conference		2,887		2,843
Increase to provisions		327		1,527
Others		10,548		9,488
	W	506,321		477,067

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Freight and custody	W	39,596		45,463
Operating expenses for distribution center		1,746		2,026
Sales commissions		18,680		47,725
Sales advertising		136		258
Sales promotion		1,526		1,843
Sample		514		541
Sales insurance premium		9,253		8,177
Contract cost		11,099		7,632
Others		2,618		4,313
	W	85,168		117,978

43

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

29. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Finance income
Interest income(*1)	W	54,622		92,854
Dividend income		22,339		25,536
Gain on foreign currency transactions		211,935		345,432
Gain on foreign currency translations		214,996		447,527
Gain on derivatives transactions		68,470		60,024
Gain on valuations of derivatives		212,849		341,973
Others		10,333		6,079
	W	795,544		1,319,425
Finance costs
Interest expenses	W	129,317		175,127
Loss on foreign currency transactions		180,270		248,523
Loss on foreign currency translations		372,551		712,187
Loss on derivatives transactions		75,605		94,535
Loss on valuation of derivatives		83,019		104,036
Loss on disposal of trade accounts and notes receivable		3,370		5,986
Others		22,167		4,883
	W	866,299		1,345,277

(*1) Interest income calculated using the effective interest method for the three-month periods ended March 31, 2021 and 2020 wereW19,287 million andW51,732 million, respectively.

44

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

30. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Other non-operating income
Gain on disposals of assets held for sale	W	797		299
Gain on disposals of investment
in subsidiaries, associates and joint ventures		3,842		3,969
Gain on disposals of property, plant and equipment		3,323		4,835
Gain on valuation of firm commitment		50,596		20,118
Others(*1)		71,413		35,080
	W	129,971		64,301
Other non-operating expenses
Loss on disposals of investment
in subsidiaries, associates and joint ventures	W	1,104		4,952
Loss on disposals of property, plant and equipment		18,657		40,671
Impairment loss on property, plant and equipment		16,892		78
Impairment loss on intangible assets		7,183		423
Loss on valuation of firm commitment		43,765		34,333
Idle tangible assets expenses		5,192		5,355
Increase to provisions		6,301		852
Donations		5,641		12,155
Others		18,757		14,945
	W	123,492		113,764

(*1) During the three-month period ended March 31, 2021, the Company recognizedW 28,366 million of non-operating income for refund of other than income tax as a result of administrative litigation for tax audits.

45

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(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 other non-operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2021 and 2020 were as follows (excluding finance costs and income tax expense):

(in millions of Won)	March 31, 2021		March 31, 2020
Raw material used, changes in inventories and others	W	9,564,810		8,648,277
Employee benefits expenses		943,053		920,039
Outsourced processing cost		1,714,478		2,030,299
Electricity and water		173,898		170,696
Depreciation(*1)		785,185		770,170
Amortization		110,787		114,287
Freight and custody		339,624		352,344
Sales commissions		18,680		47,725
Loss on disposal of property, plant and equipment		18,657		40,671
Impairment loss on property, plant and equipment		16,892		78
Donations		7,183		12,155
Others		952,967		858,483
	W	14,646,214		13,965,224

(*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, 2021 and 2020 were 26.98% and 34.18%, respectively.

46

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

33. Earnings per Share

Basic earnings per share for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in Won, except share information)	March 31, 2021			March 31, 2020
Profit attribute to controlling interest	W	1,024,735,682,380			395,392,696,009
Interests of hybrid bonds		(1,644,657,534	)		(1,662,931,507	)
Weighted-average number of common shares outstanding (*1)		75,911,805			80,115,641
Basic earnings per share	W	13,477			4,915

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

(shares)	March 31, 2021			March 31, 2020
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(11,275,030	)		(7,071,194	)
Weighted-average number of common shares outstanding		75,911,805			80,115,641

Since there were no potential shares of common stock which had dilutive effects as of March 31, 2021 and 2020, diluted earnings per share is equal to basic earnings per share.

47

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

34. Related Party Transactions

(a) Significant transactions between the controlling company and related companies for the three-month periods ended March 31, 2021 and 2020 were as follows:

1) For the three-month period ended March 31, 2021

(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	1,614		11,069		—		88,862		60		6,463
POSCO COATED & COLOR STEEL Co., Ltd.		123,426		2,034		—		—		7,447		161
POSCO ICT(*4)		447		4,990		—		34,290		10,706		49,422
eNtoB Corporation		4		—		60,190		9,647		14		4,507
POSCO CHEMICAL CO., LTD		57,959		16,280		114,065		1,389		74,295		1,426
POSCO ENERGY CO., LTD.		760		689		2,129		—		—		5,605
POSCO SPS CORPORATION		148,773		—		—		—		10,694		206
POSCO INTERNATIONAL Corporation		1,898,357		54,331		166,152		—		347		536
POSCO Thainox Public Company Limited		60,873		—		—		—		—		20
POSCO Canada Ltd.		—		491		34,796		—		—		—
POSCO Asia Co., Ltd.		18,289		32		417		—		—		272
Qingdao Pohang Stainless Steel Co., Ltd.		40,948		—		—		—		—		—
POSCO JAPAN Co., Ltd.		357,971		1		7,601		4		—		480
POSCO-VIETNAM Co., Ltd.		80,910		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		92,791		34		—		—		—		—
POSCO Maharashtra Steel Private Limited		168,852		84		—		—		—		89
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		28,512		—		—		—		—		—
POSCO VST CO., LTD.		56,408		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		610		350,571		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		65,532		49		8		—		—		10
Others		323,446		21,389		34,299		9,752		60,982		20,702
		3,525,872		112,422		770,228		143,944		164,545		89,907
Associates and joint ventures(*3)
SNNC		7,513		2,043		151,759		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		12,649		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		116,076		486,975		—		—		—
Others		8,837		12,939		21,723		—		—		9,173
		28,999		131,058		660,457		—		—		9,173
	W	3,554,871		243,480		1,430,685		143,944		164,545		99,080

(*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, 2021, 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.

48

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

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

(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	1,537		11,079		15		243,473		—		7,712
POSCO COATED & COLOR STEEL Co., Ltd.		116,100		1,694		—		—		8,358		117
POSCO ICT		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		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		78,164		128		2,314		—		—		—
Others		190,735		14,412		24,509		12,958		61,073		29,067
		3,112,862		108,958		541,672		371,373		174,490		100,563
Associates and joint ventures
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

(b) The related account balances of significant transactions between the controlling company and related companies as of March 31, 2021 and December 31, 2020 are as follows:

1) March 31, 2021

49

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1,502		8		1,510		—		34,299		310		34,609
POSCO COATED & COLOR STEEL Co., Ltd.		64,143		1,715		65,858		—		5		3,803		3,808
POSCO ICT		61		4,971		5,032		2,758		38,614		28,970		70,342
eNtoB Corporation		—		—		—		2,449		17,704		18		20,171
POSCO CHEMICAL CO., LTD		18,982		14,820		33,802		8,481		57,503		18,194		84,178
POSCO ENERGY CO., LTD.		123		277		400		—		2,093		11,894		13,987
POSCO SPS CORPORATION		83,913		—		83,913		—		1,564		4,215		5,779
POSCO INTERNATIONAL Corporation		673,708		54,337		728,045		2,014		199		502		2,715
POSCO Thainox Public Company Limited		47,663		—		47,663		—		—		—		—
POSCO Asia Co., Ltd.		21,304		667		21,971		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		26,401		—		26,401		—		—		—		—
POSCO MEXICO S.A. DE C.V.		106,515		737		107,252		—		—		—		—
POSCO Maharashtra Steel Private Limited		334,220		1,489		335,709		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		240,111		1,370		241,481		—		—		—		—
Others		388,478		28,539		417,017		104,165		29,578		80,594		214,337
		2,007,124		108,930		2,116,054		119,867		181,559		148,500		449,926
Associates and joint ventures
SNNC		271		5,546		5,817		17,399		127		—		17,526
Roy Hill Holdings Pty Ltd		—		116,076		116,076		95,706		34		—		95,740
Others		921		18,517		19,438		2,133		344		—		2,477
		1,192		140,139		141,331		115,238		505		—		115,743
	W	2,008,316		249,069		2,257,385		235,105		182,064		148,500		565,669

2) December 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	6,010		11		6,021		—		81,608		394		82,002
POSCO COATED & COLOR STEEL Co., Ltd.		63,520		—		63,520		—		180		3,709		3,889
POSCO ICT		245		1		246		2,820		118,720		31,411		152,951
eNtoB Corporation		—		—		—		1,361		35,846		18		37,225
POSCO CHEMICAL CO., LTD		19,406		3,434		22,840		13,066		55,515		18,531		87,112
POSCO ENERGY CO., LTD.		261		122		383		—		2,995		12,508		15,503
POSCO SPS CORPORATION		72,009		—		72,009		—		2,352		4,175		6,527
POSCO INTERNATIONAL Corporation		534,531		—		534,531		2,713		—		—		2,713
POSCO Thainox Public Company Limited		39,920		—		39,920		—		—		—		—
POSCO Asia Co., Ltd.		239,847		898		240,745		3,958		258		—		4,216
Qingdao Pohang Stainless Steel Co., Ltd.		25,838		—		25,838		—		—		—		—
POSCO MEXICO S.A. DE C.V.		71,307		397		71,704		—		—		—		—
POSCO Maharashtra Steel Private Limited		173,285		2,006		175,291		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		258,563		1,845		260,408		—		—		—		—
Others		227,288		28,117		255,405		41,564		30,433		82,716		154,713
		1,732,030		36,831		1,768,861		65,482		327,907		153,462		546,851
Associates and jointventures
SNNC		106		228		334		33,380		—		—		33,380
Roy Hill Holdings Pty Ltd		—		52,076		52,076		201,924		—		—		201,924
Others		818		17,882		18,700		6,704		—		—		6,704
		924		70,186		71,110		242,008		—		—		242,008
	W	1,732,954		107,017		1,839,971		307,490		327,907		153,462		788,859

50

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(c) Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended March 31, 2021 and 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City
Development, LLC	W	46,219		—		—		41
SNNC		9,655		53		4,017		5,387
Chuncheon Energy Co., Ltd.		—		—		—		—
Noeul Green Energy		1,512		—		—		522
CSP—Compania Siderurgica do Pecem		1,915		—		—		—
Zhongyue POSCO (Qinhuangdao) Tinplate
Industrial Co., Ltd		6,570		—		8,309		5,683
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		561		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		2,911		—		—		—
PT. Batutua Tembaga Raya		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		9,790		—		39		—
DMSA/AMSA		—		—		2		—
South-East Asia Gas Pipeline Company Ltd.		—		7,984		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		8,716		7		1,012		50
Samcheok BluePower Co.,Ltd		58,064		—		—		—
TK CHEMICAL CORPORATION (*1)		14,906		—		2,292		—
Metropolitan Outer Ring Expressway Co., Ltd		9,553		—		—		—
UITrans LRT Co., Ltd.		8,935		—		—		—
Others		35,814		31,769		6,286		4,063
	W	214,560		39,813		22,518		15,746

(*1) TK CHEMICAL CORPORATION was excluded from the associates due to the sale of its shares during the three-month period ended March 31, 2021.

51

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

2) 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
Samcheok BluePower Co.,Ltd		41,884		—		—		—
TK CHEMICAL CORPORATION		35,341		—		12,196		—
Metropolitan Outer Ring Expressway Co., Ltd		1,816		—		—		—
UITrans LRT Co., Ltd.		169		—		—		9
Others		31,149		5,565		9,072		9,499
	W	189,046		50,574		169,904		116,777

52

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(d) The related account balances of significant transactions between the Company, excluding the controlling company, and related companies as of March 31, 2021 and December 31, 2020 are as follows:

1) March 31, 2021

(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
New Songdo International City Development, LLC	W	15,134		—		20,599		35,733		—		34,753		34,753
Chuncheon Energy Co., Ltd.		—		—		—		—		482		—		482
Samcheok BluePower Co.,Ltd		118,464		—		—		118,464		—		16,962		16,962
Nickel Mining Company SAS		—		61,956		138		62,094		—		—		—
CSP—Compania Siderurgica do Pecem		—		—		—		—		1,337		—		1,337
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		11,276		—		—		11,276		7,452		398		7,850
PT. Batutua Tembaga Raya		—		36,833		—		36,833		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		13,015		—		—		13,015		105		—		105
South-East Asia Gas Pipeline Company Ltd.		—		82,442		—		82,442		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		3,864		—		—		3,864		862		13		875
Metropolitan Outer Ring Expressway Co., Ltd		9,976		—		—		9,976		—		—		—
UITrans LRT Co., Ltd.		7,955		25,578		102		33,635		—		16		16
Others		64,758		148,610		130,682		344,050		3,202		11,938		15,140
	W	244,442		355,419		151,521		751,382		13,440		64,080		77,520

2) December 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
New Songdo International City Development, LLC	W	23,866		—		20,592		44,458		—		3		3
Chuncheon Energy Co., Ltd.		—		—		—		—		444		—		444
Samcheok BluePower Co.,Ltd		92,715		—		—		92,715		—		40,536		40,536
Nickel Mining Company SAS		—		62,420		143		62,563		—		—		—
CSP—Compania Siderurgica do Pecem		19,704		—		—		19,704		—		—		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		6,534		—		—		6,534		1,023		150		1,173
PT. Batutua Tembaga Raya		—		35,355		—		35,355		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		13,889		—		—		13,889		193		—		193
South-East Asia Gas Pipeline Company Ltd.		—		91,003		—		91,003		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		2,799		—		—		2,799		783		—		783
TK CHEMICAL CORPORATION		21,916		—		—		21,916		429		—		429
Metropolitan Outer Ring Expressway Co., Ltd		6,299		—		—		6,299		—		—		—
UITrans LRT Co., Ltd.		6,908		23,452		102		30,462		—		—		—
Others		65,545		143,120		110,981		319,646		7,035		11,446		18,481
	W	260,175		355,350		131,818		747,343		9,907		52,135		62,042

53

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(e) Significant financial transactions between the Company, excluding the controlling company, and related companies for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Lend		Collect			Others(*1)			Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	23,452		2,126		—			—			25,578
South-East Asia Gas Pipeline Company Ltd.		91,003		—		(11,544	)		2,983			82,442
PT. Batutua Tembaga Raya		35,355		—		—			1,478			36,833
PT. Tanggamus Electric Power		4,304		—		—			180			4,484
PT. Wampu Electric Power		5,186		—		—			217			5,403
PT. POSMI Steel Indonesia		2,176		—		—			91			2,267
Nickel Mining Company SAS		62,420		—		—			(464	)		61,956
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		5,440		—		—			228			5,668
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,528		—		—			273			6,801
AMCI (WA) PTY LTD		83,291		547		—			2,468			86,306
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,440		—		—			228			5,668
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		8,704		—		—			364			9,068
Hyochun Co., Ltd.		2,382		—		—			—			2,382
POS-AUSTEM Suzhou Automotive Co., Ltd		16,320		—		—			683			17,003
CAML RESOURCES PTY LTD		3,312		—		—			151			3,463
Shinahn wind power generation		37		60		—			—			97
	W	355,350		2,733		(11,544	)		8,880			355,419

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

2) For the year ended December 31, 2020

(in millions of Won)	Beginning		Lend		Collect			Others(*2)			Ending
Associates and jointventures
UITrans LRT Co., Ltd.	W	10,579		12,873		—			—			23,452
DMSA/AMSA(*1)		57,999		—		—			(57,999	)		—
South-East Asia Gas Pipeline Company Ltd.		147,367		—		(47,539	)		(8,825	)		91,003
PT. Batutua Tembaga Raya		36,291		—		—			(936	)		35,355
PT. Tanggamus Electric Power		4,580		—		—			(276	)		4,304
PT. Wampu Electric Power		5,519		—		—			(333	)		5,186
PT. POSMI Steel Indonesia		2,316		—		—			(140	)		2,176
Nickel Mining Company SAS		60,516		—		—			1,904			62,420
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		6,947		—		(1,239	)		(268	)		5,440
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,947		—		—			(419	)		6,528
AMCI (WA) PTY LTD		78,553		5,550		—			(812	)		83,291
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,789		—		—			(349	)		5,440
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		9,262		—		—			(558	)		8,704
Hyochun Co., Ltd.		2,382		—		—			—			2,382
Chuncheon Energy Co., Ltd.		8,234		—		(8,234	)		—			—
POS-AUSTEM Suzhou Automotive Co., Ltd		5,789		11,805		—			(1,274	)		16,320
CAML RESOURCES PTY LTD		—		3,219		—			93			3,312
Shinahn wind power generation		—		37		—			—			37
	W	449,070		33,484		(57,012	)		(70,192	)		355,350

(*1) During the year ended December 31, 2020, loans amounting toW60,278 million have been converted to common shares of DMSA/AMSA, which is presented in others.

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

54

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(f) For the three-month periods ended March 31, 2021 and 2020, details of compensation to key management officers were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Short-term benefits	W	27,181		26,573
Long-term benefits		4,533		4,260
Retirement benefits		6,515		4,810
	W	38,229		35,643

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

55

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

35. Commitments and Contingencies

(a) Details of guarantees

Contingent liabilities on outstanding guarantees and others provided by the Company as of March 31, 2021 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.	Credit Agricole and others		USD		100,000,000		113,350		100,000,000		113,350
	POSCO-VIETNAM Co., Ltd.	SMBC and others		USD		156,000,000		176,826		156,000,000		176,826
	POSCO MEXICO S.A. DE C.V.	BOA and others		USD		120,000,000		136,020		120,000,000		136,020
	POSCO COATED STEEL (THAILAND) CO., LTD.	SMBC and others		THB		5,501,000,000		199,136		5,501,000,000		199,136
	POSCO Maharashtra Steel Private Limited	SMBC and others		USD		139,784,000		158,446		139,784,000		158,446
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others		USD		1,350,300,000		1,530,568		783,740,291		888,370
	POSCO ASSAN TST STEEL INDUSTRY	SOCIETE GENERALE and others		USD		146,527,500		166,089		131,874,750		149,480
POSCO INTERNATIONAL Corporation	POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD.	Export-Import Bank of Korea and others		USD		186,625,000		211,540		178,750,000		202,613
	POSCO INTERNATIONAL POWER (PNGLAE) LIMITED	KDB bank		USD		53,517,404		60,662		33,167,234		37,595
	GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Shinhan Bank and others		USD		11,000,000		12,469		11,000,000		12,469
	PT. Bio Inti Agrindo	Export-Import Bank of Korea and others		USD		149,704,914		169,692		145,587,428		165,024
	POSCO ASSAN TST STEEL INDUSTRY	ING		USD		14,652,750		16,609		14,652,750		16,609
	POSCO INTERNATIONAL Deutschland GmbH									9,391,215		10,645
	POSCO INTERNATIONAL AMERICA Corp.									5,000,000		5,668
	POSCO INTERNATIONAL JAPAN Corp.									9,084,286		10,297
	POSCO INTERNATIONAL SINGAPORE Pte. Ltd.	Bank Mendes Gans Amsterdam		USD		50,000,000		56,675		—		—
	POSCO INTERNATIONAL Malaysia SDN BHD									—		—
	POSCO INTERNATIONAL Italia S.R.L.									—		—
	POSCO INTERNATIONAL MEXICO S.A. de C.V.									—		—
	GRAIN TERMINAL HOLDING PTE. LTD.	Export-Import Bank of Korea and others		USD		27,000,000		30,605		27,000,000		30,605
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	POSCO Asia Co., Ltd. and others		USD		42,000,000		47,607		42,000,000		47,607
	SPH Co., Ltd.	Shinyoung securities		KRW		20,000		20,000		20,000		20,000
	JB CLARK HILLS	KOREA INVESTMENT & SECURITIES Co., Ltd.		KRW		57,600		57,600		50,600		50,600
		HSBC and others		USD		51,000,000		57,809		44,800,000		50,781
	PT. POSCO E&C INDONESIA	POSCO Asia Co., Ltd. and others		USD		25,900,000		29,358		25,900,000		29,358
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd. and others		USD		1,500,000		1,700		900,000		1,020
POSCO CHEMICAL CO., LTD	PT.Krakatau Posco Chemical Calcination	POSCO Asia Co., Ltd. and others		USD		15,200,000		17,229		9,000,000		10,202
POSCO COATED & COLOR STEEL Co., Ltd.	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.		USD		13,986,947		15,854		13,986,947		15,854
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	POSCO Asia Co., Ltd. and others		USD		88,903,407		100,772		88,903,407		100,772
POSCO Asia Co., Ltd.	POSCO America Corporation	SMBC		USD		70,000,000		79,345		70,000,000		79,345
POSCO America Corporation	POSCO AMERICA COMERCIALIZADORA
	S DE RL DE CV	Bank of America N.A.		USD		27,000,000		30,605		27,000,000		30,605
[Associates and joint ventures]
POSCO	CSP—Compania Siderurgica do Pecem	Export-Import Bank of Korea and others		USD		420,000,000		476,072		370,715,701		420,205
		BNDES		BRL		464,060,000		91,114		464,060,000		91,114
	LLP POSUK Titanium	SMBC		USD		13,500,000		15,302		13,500,000		15,302
	Nickel Mining Company SAS	SMBC		EUR		46,000,000		61,101		46,000,000		61,101
POSCO INTERNATIONAL Corporation	GLOBAL KOMSCO Daewoo LLC	Hana Bank		USD		8,225,000		9,323		7,525,000		8,530
POSCO ENGINEERING	New Songdo International City Development, LLC	Others		KRW		686,000		686,000		624,700		624,700
& CONSTRUCTION CO., LTD.	POHANG E&E Co., LTD	Heungkuk Life Insurance Co., Ltd.		KRW		71,930		71,930		58,294		58,294
	UITrans LRT Co., Ltd.	Kookmin Bank and others		KRW		125,845		125,845		96,894		96,894
	RPSD	Plan-up Sinsajeilcha Co., Ltd		KRW		45,000		45,000		37,000		37,000
	Metropolitan Outer Ring Expressway Co., ltd	Woori Bank and others		KRW		276,033		276,033		14,486		14,486
	Pureun Tongyeong Enviro Co., Ltd.	KDB Bank and others		KRW		22,714		22,714		14,815		14,815
	Pure Gimpo.Co.,Ltd	KDB Bank and others		KRW		44,740		44,740		30,569		30,569
	Clean Iksan Co.,Ltd	SAMSUNG FIRE & MARINE INSURANCE CO.,LTD and others		KRW		44,054		44,054		29,250		29,250
	NEXTRAIN Co., Ltd	Kookmin Bank and others		KRW		634,752		634,752		9,600		9,600
	Chun-cheon Energy Co., Ltd.	Kookmin Bank and others		KRW		149,200		149,200		145,300		145,300
POSCO ICT	UITrans LRT Co., Ltd.	Kookmin Bank		KRW		50,249		50,249		38,646		38,646
	Hyochun Co., Ltd.	Kyobo Securities		KRW		10,325		10,325		10,325		10,325
	Shinahn wind power generation	NH INVESTMENT & SECURITIES CO.,LTD. and others		KRW		17,860		17,860		17,124		17,124
	Metropolitan Outer Ring Expressway Co., Ltd	Woori Bank		KRW		24,920		24,920		1,308		1,308
	Western Inland highway CO.,LTD.	Kookmin Bank		KRW		47,348		47,348		—		—
[Others]
POSCO INTERNATIONAL Corporation	Sherritt International Corporation	Export-Import Bank of Korea		USD		21,818,182		24,731		2,156,083		2,444
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Incheon-Gimpo Expressway Co., Ltd. and others	Kookmin Bank and others		KRW		4,286,813		4,286,813		2,273,058		2,273,058
POSCO ICT	BLT Enterprise and others	Hana Bank and others		KRW		185,847		185,847		112,650		112,650
POSCO AUSTRALIA PTY LTD	Department of Trade and Investment (NSW Government) and others	Woori Bank and others		AUD		11,637,271		10,024		11,637,271		10,024
PT. Bio lnti Agrindo	KSU Mandob	Bank Muamalat		IDR		80,000,000,000		6,264		80,000,000,000		6,264
POSCO Maharashtra Steel Private Limited	MAHARASHTRA STATE ELECTRICITY and others	HSBC and others		INR		188,156,806		2,903		188,156,806		2,903
				USD		3,304,145,104		3,745,258		2,581,419,092		2,926,042
				KRW		6,801,230		6,801,230		3,584,619		3,584,619
				IDR		80,000,000,000		6,264		80,000,000,000		6,264
				INR		188,156,806		2,903		188,156,806		2,903
				THB		5,501,000,000		199,136		5,501,000,000		199,136
				EUR		46,000,000		61,101		46,000,000		61,101
				AUD		11,637,271		10,024		11,637,271		10,024
				BRL		464,060,000		91,114		464,060,000		91,114

56

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Other commitments

Details of other commitments of the Company as of March 31, 2021 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, 2021, 55 million tons of iron ore and 8 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 a long-term service contract for the transportation of raw materiasl. As of March 31, 2021, there are 38 vessels under contract, and the average remaining contract period is about 9 years. As of March 31, 2021, 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 projects. POSCO is not liable for the repayment of full or in part of the amount borrowed if the respective projects fail. POSCO has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of March 31, 2021, 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 W9.8 billion fund supplement agreement for Busan E&E Co., LTD. a subsidiary of our company, at the request of creditors, including the Korea Development Bank.
POSCO INTERNATIONAL Corporation	POSCO INTERNATIONAL Corporation operates a ship-to-ship business in which ships are chartered from ship’s owners and leased out to shippers. The Company has entered into a ship purchase agreement with the ship owners and the shippers, which obliges the shippers to pay the agreed amount either at the end of the contract terms or at the agreed termination and to take over the ownership of the vessel from the ship owners. Only if the shipper fails to fulfill its obligation including payment obligation for the purchase of the vessel, the Company is obliged to take over the ship based on the condition that the shipper’s contractual obligations and rights are transferred to the Company. As of December 30, 2021, the amount which is exposed to the ship purchase agreements entered into is USD 208 million. The Company invested in the Ambatovy Nickel Project (DMSA/AMSA) in Madagascar through the Korea Ambatovy Consortium (KAC) formed with Korea Mineral Resources Corporation (KORES) and STX Corporation. SHERRITT INTERNATIONAL CORP., the operator, transferred a portion of the project’s interests to Sumitomo and AHL (Ambatovy Holdings Limited) in November 2017, and transferred the remaining interests of the project to Sumitomo and AHL2 (Ambatovy Holdins II Limited) in August 2020. KAC has the rights and obligations to the 15.5% stake held by AHL and AHL2.
POSCO ENGINEERING	As of March 31, 2021, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency
& CONSTRUCTION CO., LTD.	guarantees of up to USD 2,483 million and uses USD 889 million with Woori Bank and others. As of March 31, 2021, the out standing balance of loans related to major liability compliance agreements is W165 billion from development of Pangyo the First Park Project. If the responsibility is not fulfilled, the obligation is to compensate for damages of principal and interest. In addition, according to the project agreements related to redevelopment and reconstruction projects, the Company has an agreement to compensate the Korea Housing and Urban Guarantee Corporation for damages of principal and interest amounting to W1,247,888million(limited to W2,466,320 million). Futhermore, the Company provides agreements of construction completion (compensation for non-performance) in connection with a number of implementation and union business projects.
POSCO ICT	As of March 31, 2021, the company is provided with a guarantee of W143,086 million and W14,084 million and W305 million, respectively, from the Software credit union and the Seoul guarantee insurance company and Engineering credit union. In connection with 4 projects, including the construction of the Hanam Smart Building, the company is responsible for fulfilling its obligations. If the responsibility is not fulfilled, the Company is liable for damages of principal and interest of lenders (financial institutions that lend to the developer). Outstanding loans related to the liability compliance agreement are worth W283.8 billion (loan ceiling W320.5 billion) as of March 31, 2021. The company has the right to request the trustee to sell the trust property in the event of a certain reason in the trust contract, such as repaying the liability to the lenders.

57

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(c) Litigation in progress

1) Request for Arbitration of NSC Investment and TGC

In March 2019, NSC Investment and TGC(“Applicant”), a former joint venture partner of POSCO ENGINEERING & CONSTRUCTION CO., LTD., in connection with the Songdo International City Development Project in Incheon, filed an arbitration (mediation price: approximately USD 2 billion) for alleged violations of contract by POSCO ENGINEERING & CONSTRUCTION CO., LTD. As of March 31, 2021, the Company has determined that the applicant’s claim is without merit, and did not recognize a provision.

2) Other litigation

The Company is involved in 297 lawsuits aggregating toW1,566 billion as defendant as of March 31, 2021, which arise from the ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting toW65.5 billion for 80 lawsuits 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 believes that it does not have a present obligation as of March 31, 2021.

(d) Other Contingent circumstances

Other major contingencies for the Company as of March 31, 2021 are as follows:

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, 2021, POSCO INTERNATIONAL Corporation has provided 30 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 &	As of March 31, 2021, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided 32 blank checks and
CONSTRUCTION Co., LTD.	4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee of W7,303,454 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.
POSCO ICT	As of March 31, 2021, POSCO ICT has provided 6 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

58

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021			March 31, 2020
Trade accounts and notes receivable	W	(799,397	)		(289,141	)
Other receivables		17,827			355,792
Inventories		(1,105,301	)		345,162
Other current assets		(117,150	)		(59,248	)
Other non-current assets		(48,845	)		(96,580	)
Trade accounts and notes payable		(67,002	)		(140,113	)
Other payables		39,893			(180,907	)
Other current liabilities		288,235			321,373
Provisions		(87,458	)		(103,259	)
Payments of severance benefits		(95,599	)		(70,418	)
Plan assets •		72,278			44,390
Other non-current liabilities		19,359			(3,947	)
	W	(1,883,160	)		123,104

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, 2020.

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

59

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(a) Information about reportable segments for the three-month periods ended March 31, 2021 and 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	8,476,513		5,246,448		1,460,305		885,457		16,068,723
Internal revenues		4,548,655		3,977,018		197,167		626,334		9,349,174
Inter segment revenue		2,791,487		2,127,683		175,102		589,442		5,683,714
Total revenues		13,025,168		9,223,466		1,657,472		1,511,791		25,417,897
Segment profits		1,164,447		103,344		33,202		80,725		1,381,718

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

(b) Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021			March 31, 2020
Total profit for reportable segments	W	1,381,718			578,854
Corporate fair value adjustments		(11,015	)		(19,047	)
Elimination of inter-segment profits		(231,924	)		(125,149	)
Income tax expense		420,780			225,745
Profit before income tax expense	W	1,559,559			660,403

38. Events after the reporting period

Pursuant to the resolution of the Board of Directors on May 14, 2021, the Company decided to pay interim cash dividends ofW 3,000 per common share (total dividend:W 226.9 billion).

60

POSCO

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2021

(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, 2021, the condensed separate interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020, 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.

Auditor’s 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 with K-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, 2020, 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 4, 2021, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2020, 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 14, 2021

This report is effective as of May 14, 2021, 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, 2021 and December 31, 2020

(Unaudited)

(in millions of Won)	Notes		March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents		20	W	1,828,883		1,822,660
Trade accounts and notes receivable, net		4,14,20,25,32		4,106,907		3,693,535
Other receivables, net		5,20,32		472,246		279,555
Other short-term financial assets		6,20		9,133,419		9,607,632
Inventories		7,29		4,758,851		4,093,829
Assets held for sale		8		46,149		32,244
Other current assets		13		51,333		50,498
Total current assets				20,397,788		19,579,953
Long-term trade accounts and notes receivable, net		4,20		2,408		2,456
Other receivables, net		5,20		86,491		84,037
Other long-term financial assets		6,20		1,190,314		1,072,817
Investments in subsidiaries, associates and joint ventures		9		15,609,637		14,883,152
Investment property, net		10		149,435		149,617
Property, plant and equipment, net		11		20,078,792		20,216,932
Intangible assets, net		12		590,373		621,926
Defined benefit assets, net		18		60,966		76,501
Other non-current assets		13		99,110		107,578
Total non-current assets				37,867,526		37,215,016
Total assets			W	58,265,314		56,794,969

See accompanying notes to the condensed separate interim financial statements.

.

3

POSCO

Condensed Separate Interim Statements of Financial Position, Continued

As of March 31, 2021 and December 31, 2020

(Unaudited)

(in millions of Won)	Notes		March 31, 2021			December 31, 2020
Liabilities
Trade accounts and notes payable		20,32	W	1,010,252			1,258,470
Short-term borrowings and current installments of long-term borrowings		4,14,20		2,997,288			2,408,392
Other payables		15,20,32		1,162,005			1,127,323
Other short-term financial liabilities		16,20		8,181			12,788
Current income tax liabilities				448,703			137,858
Provisions		17		40,579			63,604
Other current liabilities		19,25		86,560			80,676
Total current liabilities				5,753,568			5,089,111
Long-term borrowings, excluding current installments		14,20		5,454,702			5,346,944
Other payables		15,20		390,705			220,612
Other long-term financial liabilities		16,20		38,831			122,154
Deferred tax liabilities				884,406			848,317
Long-term provisions		17,33		62,293			52,602
Other non-current liabilities		19,25		517			525
Total non-current liabilities				6,831,454			6,591,154
Total liabilities				12,585,022			11,680,265
Equity
Share capital		21		482,403			482,403
Capital surplus		21		1,339,289			1,339,289
Hybrid bonds		22		199,384			199,384
Reserves		23		(219,218	)		(296,626	)
Treasury shares		24		(2,508,294	)		(2,391,523	)
Retained earnings				46,386,728			45,781,777
Total equity				45,680,292			45,114,704
Total liabilities and equity			W	58,265,314			56,794,969

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, 2021 and 2020

(Unaudited)

(in millions of Won, except per share information)	Notes		March 31, 2021			March 31, 2020
Revenue		25,32	W	7,800,447			6,969,856
Cost of sales		7,29,32		(6,466,896	)		(6,230,404	)
Gross profit				1,333,551			739,452
Selling and administrative expenses		29,32
Reversal of impairment loss on trade acconts and note receivables				31			264
Other administrative expenses		26		(209,903	)		(198,769	)
Selling expenses		26		(50,795	)		(82,836	)
Operating profit				1,072,884			458,111
Finance income and costs		20,27
Finance income				569,274			674,317
Finance costs				(318,759	)		(460,415	)
Other non-operating income and expenses		32
Impairment loss on other receivables				(348	)		(496	)
Other non-operating income		28		35,248			24,125
Other non-operating expenses		28,29		(52,197	)		(78,686	)
Profit before income tax				1,306,102			616,956
Income tax expense		30		(353,926	)		(163,936	)
Profit				952,176			453,020
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		18		(291	)		(3,020	)
Net changes in fair value of equity investments at fair value through other comprehensive income		6,20,23		75,307			(191,488	)
Total comprehensive income			W	1,027,192			258,512
Basic and diluted earnings per share (in Won)		31		12,522			5,634

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, 2021 and 2020

(Unaudited)

(in millions of Won)	Share capital		Capital surplus		Hybrid bonds		Reserves			Treasury shares			Retained earnings			Total
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
Balance as of January 1, 2021	W	482,403		1,339,289		199,384		(296,626	)		(2,391,523	)		45,781,777			45,114,704
Comprehensive income:
Profit		—		—		—		—			—			952,176			952,176
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—		—			—			(291	)		(291	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—		77,408			—			(2,101	)		75,307
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—		—			—			(342,565	)		(342,565	)
Interest of hybrid bonds		—		—		—		—			—			(2,268	)		(2,268	)
Aquisition of treasury shares		—		—		—		—			(116,771	)		—			(116,771	)
Balance as of March 31, 2021	W	482,403		1,339,289		199,384		(219,218	)		(2,508,294	)		46,386,728			45,680,292

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, 2021 and 2020

(Unaudited)

(in millions of Won)	Notes		March 31, 2021			March 31, 2020
Cash flows from operating activities
Profit			W	952,176			453,020
Adjustments for :
Expenses related to post-employment benefit				31,405			32,325
Depreciation				573,174			560,857
Amortization				27,201			25,617
Bad debt expenses				317			232
Finance income				(471,811	)		(526,932	)
Finance costs				244,304			383,514
Loss on valuation of inventories				1,276			11,181
Gain on disposal of property, plant and equipment				(2,770	)		(3,822	)
Loss on disposal of property, plant and equipment				23,756			51,299
Impairment losses on property, plant and equipment				3,113			—
Impairment losses on intangible assets				7,180			—
Impairment losses on investments in subsidiaries, associates and joint ventures				1,500			—
Gain on disposal of assets held for sale				(790	)		(299	)
Impairment loss on assets held for sale				—			6,330
Gain on disposal of emissions rights				—			(7,743	)
Loss on disposal of emissions rights				2,095			—
Increase to provisions				4,128			32,471
Income tax expense				353,926			163,936
Others				277			(4,992	)
Changes in operating assets and liabilities		34		(1,584,803	)		714,874
Interest received				31,087			28,267
Interest paid				(51,859	)		(37,793	)
Dividends received				88,181			12,454
Income taxes paid				(8,287	)		(99,969	)
Net cash provided by operating activities			W	224,776			1,794,827

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, 2021 and 2020

(Unaudited)

(in millions of Won)	Notes	March 31, 2021			March 31, 2020
Cash flows from investing activities
Decrease in deposits		W	592,164			513,351
Proceeds from disposal of short-term financial instruments			7,935,148			6,802,278
Proceeds from disposal of long-term financial instruments			2			—
Proceeds from disposal of equity securities			12,372			1,812
Proceeds from disposal of debt security			121,813			190,005
Collection of short-term loans			1,774			104
Proceeds from disposal of investments in subsidiaries, associates and joint ventures			720			1,040
Proceeds from disposal of emissions rights			3,094			—
Proceeds from disposal of intangible assets			—			200
Proceeds from disposal of assets held for sale			—			590
Proceeds from disposal of derivatives			851			—
Increase in deposits			(573,250	)		(543,755	)
Acquisition of short-term financial investments			(7,525,719	)		(8,309,849	)
Acquisition of debt securities			(50,033	)		(190,007	)
Acquisition of other securities			(5,430	)		(2,028	)
Payment of long-term loans			(6,446	)		(4,622	)
Acquisition of investment in subsidiaries, associates and joint ventures			(728,714	)		(168,938	)
Acquisition of property, plant and equipment			(370,230	)		(672,114	)
Payment for disposal of property, plant and equipment			(16,804	)		(30,392	)
Acquisition of intangible assets			(18,805	)		(50,011	)
Net cash used in investing activities		W	(627,493	)		(2,462,336	)
Cash flows from financing activities
Proceeds from borrowings			1,139,670			2,075,317
Increase in long-term financial liabilities			755			179
Government grant received			12			—
Repayment of borrowings			(605,118	)		(36,137	)
Decrease in long-term financial liabilities			(792	)		(38	)
Repayment of lease liabilities			(11,549	)		(15,819	)
Payment of cash dividends			(17	)		(8	)
Acquisition of treasury shares			(116,771	)		—
Payment of interest of hybrid bonds			(2,268	)		(2,294	)
Net cash provided by financing activities		W	403,922			2,021,200
Effect of exchange rate fluctuation on cash held			5,018			9,684
Net increase in cash and cash equivalents			6,223			1,363,375
Cash and cash equivalents at beginning of the period			1,822,660			978,139
Cash and cash equivalents at end of the period		W	1,828,883			2,341,514

See accompanying notes to the condensed separate interim financial statements.

8

POSCO

Notes to the Condensed Separate Interim Financial Statements

As of March 31, 2021

(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 five of its overseas liaison offices.

As of March 31, 2021, 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 the Act on External Audit of Companies, Etc in the Republic of Korea.

These condensed separate interim financial statements have been prepared in accordance with K-IFRS No. 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-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, 2020. 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 with K-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.

Use of estimates and judgments

(a) Judgments, assumptions and estimation uncertainties

The preparation of the condensed interim financial statements in conformity with K-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.

9

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

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 and non-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 of K-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, 2021

(Unaudited)

3. Summary of Significant Accounting Policies

Except as described in K-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, 2020. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2021.

(a) K-IFRS No. 1116 “Lease”- COVID-19 Related Rent Concessions

The amendment introduces an optional practical expedient that simplifies how a lessee accounts for rent concessions that are a direct consequence of COVID-19. A lessee that applies the practical expedient is not required to assess whether eligible rent concessions are lease modifications. The Company is required to disclose the amount recognized in profit or loss for the reporting period arising from application of the practical expedient. The Company does not expect the effect of the amendments to the financial statements to be significant.

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Current
Trade accounts and notes receivable	W	4,121,221			3,707,860
Less: Allowance for doubtful accounts		(14,314	)		(14,325	)
	W	4,106,907			3,693,535
Non-current
Trade accounts and notes receivable	W	3,703			3,780
Less: Present value discount		(344	)		(344	)
Less: Allowance for doubtful accounts		(951	)		(980	)
	W	2,408			2,456

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. As of March 31, 2021 and December 31, 2020, the carrying amounts of such secured borrowings areW429,732 million andW520,310 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

11

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

5. Other Receivables

Other receivables as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Current
Loans	W	2,950			2,950
Other accounts receivable		417,078			231,051
Others		57,495			50,822
Less: Allowance for doubtful accounts		(5,277	)		(5,268	)
	W	472,246			279,555
Non-current
Loans	W	58,726			52,760
Long-term other accounts receivable		32,439			35,638
Others		4,027			4,001
Less: Allowance for doubtful accounts		(8,701	)		(8,362	)
	W	86,491			84,037

6. Other Financial Assets

(a) Other financial assets as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Short-term derivative assets	W	24,201		—
Debt securities		83,300		153,370
Deposit instruments(*1)		1,318,966		1,337,881
Short-term financial instruments		7,706,952		8,116,381
	W	9,133,419		9,607,632
Non-current
Long-term derivative assets	W	40,735		18,549
Equity securities		1,072,205		980,706
Debt securities		4,750		6,367
Other securities		72,592		67,161
Deposit instruments(*2)		32		34
	W	1,190,314		1,072,817

(*1) As of March 31, 2021 and December 31, 2020,W5,967 million andW4,881 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.

12

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Equity securities as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021													December 31, 2020
	Number of shares		Ownership (%)		Acquisition cost		Fair value		Net changes in fair value of equity securities			Book value		Book value
Marketable equity securities
Nippon Steel Corporation		15,698,500		1.65	W	473,962		304,246		(169,716	)		304,246		219,788
KB Financial group Inc.		3,863,520		0.93		178,839		217,130		38,291			217,130		167,677
Woori Financial Group Inc.		20,280,000		2.81		244,447		204,828		(39,619	)		204,828		197,324
CSN Mineracao S.A. (*1, 2)		102,186,675		1.83		206,265		184,382		(21,883	)		184,382		246,158
SAMWONSTEEL Co., Ltd.		5,700,000		14.25		8,930		20,520		11,590			20,520		15,020
DONGKUK INDUSTRIES COMPANY		2,611,989		4.82		11,911		9,403		(2,508	)		9,403		8,868
Others (7 companies)						55,759		41,764		(13,995	)		41,764		35,939
						1,180,113		982,273		(197,840	)		982,273		890,774
Non-marketable equity securities
POSCO PLANTEC Co., Ltd.		18,337,912		10.99		19,437		19,437		—			19,437		19,437
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		510,000		2.35		4,165		4,165		—			4,165		4,165
Others (29 companies)						144,196		39,666		(104,530	)		39,666		39,666
						194,462		89,932		(104,530	)		89,932		89,932
					W	1,374,575		1,072,205		(302,370	)		1,072,205		980,706

(*1) During the year ended March 31, 2021, CSN Mineracao S.A. was listed on the Brazilian stock market, and a stock split of 1:30 was carried out at the same time as the listing. On the other hand, the company sold 7,565,145 shares in the current quarter after stock split.

(*2) As of December 31, 2020, fair value is based on an analysis performed by an external professional evaluation agency.

7. Inventories

Inventories as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Finished goods	W	783,858			709,323
Semi-finished goods		1,305,090			1,167,330
By-products		4,282			3,460
Raw materials		1,113,289			885,222
Fuel and materials		493,834			518,151
Materials-in-transit		1,059,082			814,397
Others		692			681
		4,760,127			4,098,564
Less: Allowance for inventories valuation		(1,276	)		(4,735	)
	W	4,758,851			4,093,829

The amount of loss on valuation of inventories recognized in cost of sales during the three-month period ended March 31, 2021 and the year ended December 31, 2020 wereW1,276 million andW4,735 million, respectively.

8. Assets Held for Sale

Assets held for sale as of March 31, 2021 and December 31, 2020 are as follows:

13

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(in millions of Won)	March 31, 2021		December 31, 2020
Assets
Property, plant and equipment(*1,3)	W	36,308		32,244
Intangible Assets(*2)		9,841		—
	W	46,149		32,244

(*1) During the three-month period ended March 31, 2021, the Company classified the land in the Yanghak Neighborhood Park development reserve area as held for sale.

(*2) During the three-month period ended March 31, 2021, the Company decided to trade and exchange paid-in emissions and classified those assets as held for sale.

(*3) 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. During the year ended December 31, 2020, the Company recognizedW5,030 million of impairment loss for the difference between the fair value less costs to sell and the carrying amount of the assets.

14

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

9. Investments in Subsidiaries, Associates and Joint ventures

(a) Details of subsidiaries and carrying amounts as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)			March 31, 2021				December 31, 2020
	Country	Principal operations	Ownership (%)		Book value		Book value
[Domestic]
POSCO INTERNATIONAL Corporation	Korea	Trading		62.91	W	3,223,759		3,223,759
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(*1)	Korea	Refractory manufacturing and sales		59.72		895,707		207,631
POSCO O&M Co., Ltd(*2)	Korea	Business facility maintenance		47.17		73,374		73,374
POSCO ICT	Korea	Computer hardware and software distribution		65.38		70,990		70,990
POSCO M-TECH(*2)	Korea	Packing materials manufacturing and sales		48.85		107,278		107,278
Busan E&E Co,. Ltd.(*3)	Korea	Municipal solid waste fuel and power generation		70.00		30,148		30,148
Others (12 companies)						110,996		110,995
					6,396,943		5,708,866
[Foreign]
PT. KRAKATAU POSCO	Indonesia	Steel manufacturing and sales		70.00		633,421		633,421
POSCO WA PTY LTD	Australia	Iron ore sales and mine development		100.00		646,491		645,830
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		74.56		178,785		178,785
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		71,707		71,707
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		373,366		373,366
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY	Vietnam	Steel manufacturing and sales		51.00		130,526		130,526
Others (29 companies)(*4)						529,079		510,079
						6,392,998		6,373,337
					W	12,789,941		12,082,203

(*1) During the three-month period ended March 31, 2021, the company acquiredW 688,077 million in additional subsidiary investment shares by participating in POSCO CHEMICAL CO., LTD’s paid-in capital increase.

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

(*3) As of March 31, 2021 and December 31, 2020, the investments in a subsidiary amounting toW30,148 million were provided as collateral in relation to the loan agreement of Busan E&E Co., Ltd.

(*4) During the three-month period ended March 31, 2021, the Company established Poland Legnica Sourcing Center Sp. z o.o and acquired a new subsidiary investment ofW 19,000 million.

15

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Details of associates and carrying amounts as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)				March 31,2021				December 31, 2020
	Country		Principal operations	Ownership (%)		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund		Korea	Mine investment		34.43	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 (8 companies)							22,557		22,977
							378,078		378,498
[Foreign]
Nickel Mining Company SAS		New Caledonia	Raw material manufacturing and sales		49.00		189,197		189,197
9404-5515 Quebec Inc. (*1)		Canada	Mine investment		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)							39,662		39,671
							364,203		364,212
						W	742,281		742,710

(*1) As of March 31, 2021, 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.

(c) Details of joint ventures and carrying amounts as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)					March 31,2021				December 31, 2020
	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		315,896		296,720
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	2,077,415		2,058,239

(*1) As of March 31, 2021 and December 31, 2020, 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.

16

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

10. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

(a) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Depreciation(*1)			Transfer(*2)		Ending
Land	W	89,848		—			—		89,848
Buildings		51,417		(994	)		963		51,386
Structures		8,352		(151	)		—		8,201
	W	149,617		(1,145	)		963		149,435

(*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, 2020

(in millions of Won)	Beginning		Depreciation(*1)			Transfer(*2)			Ending
Land	W	91,738		—			(1,890	)		89,848
Buildings		57,228		(4,033	)		(1,778	)		51,417
Structures		9,111		(609	)		(150	)		8,352
	W	158,077		(4,642	)		(3,818	)		149,617

(*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.

17

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 and the year ended December 31, 2020 were as follows:

(a) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment(*1)			Others(*2)			Ending
Land	W	1,401,605		—		(15	)		—			—			(5,487	)		1,396,103
Buildings		2,080,843		210		(273	)		(52,132	)		(595	)		11,031			2,039,084
Structures		2,073,097		76		(91	)		(45,292	)		(4	)		10,178			2,037,964
Machinery and equipment		12,651,431		6,613		(3,123	)		(455,545	)		(2,514	)		135,283			12,332,145
Vehicles		14,486		1,039		—			(1,789	)		—			1			13,737
Tools		24,333		121		—			(2,886	)		—			15			21,583
Furniture and fixtures		44,426		1,350		(140	)		(3,206	)		—			1,778			44,208
Lease assets		331,588		129,832		—			(11,179	)		—			(1,067	)		449,174
Construction-in-progress		1,595,123		313,436		—			—			—			(163,765	)		1,744,794
	W	20,216,932		452,677		(3,642	)		(572,029	)		(3,113	)		(12,033	)		20,078,792

(*1) During the three-month period ended March 31, 2021, the Company recognized impairment losses on individual assets that were shut down due to the fire or other loss.

(*2) Represents assets transferred from construction-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, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment(*1)			Others(*2)			Ending
Land	W	1,398,081		—		(6	)		—			—			3,530			1,401,605
Buildings		2,100,503		3,144		(2,397	)		(207,818	)		(271	)		187,682			2,080,843
Structures		2,030,853		4,037		(6,349	)		(174,343	)		(883	)		219,782			2,073,097
Machinery and equipment		12,602,435		48,747		(22,913	)		(1,796,038	)		(9,422	)		1,828,622			12,651,431
Vehicles		9,951		1,497		(8	)		(6,571	)		—			9,617			14,486
Tools		27,288		4,007		(3	)		(12,052	)		—			5,093			24,333
Furniture and fixtures		38,329		4,399		(179	)		(11,811	)		—			13,688			44,426
Lease assets		262,368		21,920		—			(60,358	)		—			107,658			331,588
Construction-in-progress		1,662,391		2,406,273		(4,872	)		—			(17,270	)		(2,451,399	)		1,595,123
	W	20,132,199		2,494,024		(36,727	)		(2,268,991	)		(27,846	)		(75,727	)		20,216,932

(*1) The Company estimated the recoverable amount of individual assets that it ceased their use due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2020. During the year ended December 31, 2020, the Company recognized impairment losses on damaged assets caused by the fire.

(*2) Represents assets transferred from construction-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.

18

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(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 of right-of-use assets presented as property, plant and equipment for the three-month period ended March 31, 2021 were as follows.

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	8,703		—		(76	)		—			8,627
Buildings		71,431		3,471		(1,810	)		—			73,092
Structures		59,221		—		(1,303	)		—			57,918
Machinery and equipment		54,698		—		(1,375	)		—			53,323
Vehicles		6,255		—		(125	)		—			6,130
Ships		106,555		126,361		(4,255	)		—			228,661
Furniture and fixtures		24,725		—		(2,235	)		(1,067	)		21,423
	W	331,588		129,832		(11,179	)		(1,067	)		449,174

② Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the year ended December 31, 2020 were as follows.

(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	—		8,853		(150	)		—			8,703
Buildings		71,921		6,075		(6,565	)		—			71,431
Structures		64,434		—		(5,213	)		—			59,221
Machinery and equipment		60,198		—		(5,500	)		—			54,698
Vehicles		6,755		—		(500	)		—			6,255
Ships		24,082		111,537		(29,064	)		—			106,555
Furniture and fixtures		34,978		6,992		(13,366	)		(3,879	)		24,725
	W	262,368		133,457		(60,358	)		(3,879	)		331,588

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, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Interest on lease liabilities	W	3,015		2,658
Expenses related to short-term leases		723		1,006
Expenses related to leases of low-value assets		1,523		1,816
	W	5,261		5,480

19

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

12. Intangible Assets, Net

Changes in the carrying amount of intangible assets for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

(a) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment(*2)			Transfer(*3)			Ending
Intellectual property rights	W	22,758		—		(279	)		(1,434	)		—			1,034			22,079
Membership(*1)		81,795		—		—			—			—			—			81,795
Development expense		224,854		—		—			(19,366	)		—			8,508			213,996
Port facilities usage rights		233,447		—		—			(5,245	)		—			—			228,202
Construction-in-progress		34,924		3,406		—			—			—			(8,275	)		30,055
Other intangible assets		24,148		384		(5,189	)		(1,156	)		(7,180	)		3,239			14,246
	W	621,926		3,790		(5,468	)		(27,201	)		(7,180	)		4,506			590,373

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

(*2) During the three-month period ended March 31, 2021, the Company decided to sell a portion of emission rights held and recognized impairment loss for the portion lost due to the replacement of assets held for sale and changes in the selling unit price.

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

(b) For the year ended December 31, 2020

(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Transfer(*2)			Ending
Intellectual property rights	W	24,545		—		(3,609	)		(6,140	)		7,962			22,758
Membership(*1)		82,657		—		(862	)		—			—			81,795
Development expense		86,023		1,579		(16	)		(50,827	)		188,095			224,854
Port facilities usage rights		278,072		—		—			(44,625	)		—			233,447
Construction-in-progress		137,273		88,376		—			—			(190,725	)		34,924
Other intangible assets		100,345		19,785		(61,446	)		(5,334	)		(29,202	)		24,148
	W	708,915		109,740		(65,933	)		(106,926	)		(23,870	)		621,926

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

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

20

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

13. Other Assets

Other assets as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Advance payments	W	4,223		4,263
Prepaid expenses		39,827		26,011
Emission rights purchased from the market		7,283		20,224
	W	51,333		50,498
Non-current
Long-term prepaid expenses	W	4,181		4,312
Others(*1)		94,929		103,266
	W	99,110		107,578

(*1) As of March 31, 2021 and December 31, 2020, the Company recognized tax assets amounting toW73,694 million andW100,852 million, respectively, based on the Company’s best estimate of the tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification are finalized.

14. Borrowings

(a) Borrowings as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Short-term borrowings
Short-term borrowings	W	1,590,058			1,029,363
Current portion of debentures		1,407,550			1,379,739
Less: Current portion of discount on debentures issued		(320	)		(710	)
	W	2,997,288			2,408,392
Long-term borrowings
Long-term borrowings	W	1,157			1,110
Debentures		5,479,885			5,373,840
Less: Discount on debentures issued		(26,340	)		(28,006	)
	W	5,454,702			5,346,944

(b) Short-term borrowings as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Lenders		Issuance date		Maturity date		Annual interest rate (%)		March 31, 2021		December 31, 2020
Transfers of account receivables that do not qualify for derecognition		—		—		—		—	W	429,732		520,310
Borrowings in Foreign Trade		MUFG and others		2021.01.12~ 2021.03.31		2021.04.12~ 2021.06.29		0.40~1.02		1,160,326		509,053
									W	1,590,058		1,029,363

21

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(c) Current portion of long-term borrowings and others as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Lenders	Issuance date		Maturity date		Annual interest rate (%)		March 31, 2021		December 31, 2020
Debentures	Domestic debentures 304-2 and others		2011.11.28~ 2018.07.05		2021.05.03~ 2021.11.28		1.88~4.12	W	459,895		459,811
Foreign debentures	Global debentures 3 and others		2011.04.14~ 2011.12.22		2021.04.14~ 2021.12.22		2.70~5.25		947,335		919,218
								W	1,407,230		1,379,029

(d) Long-term borrowings and others excluding current portion, as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Lenders	Issuance date		Maturity date		Annual interest rate (%)		March 31, 2021		December 31, 2020
Foreign borrowings	KOREA ENERGY AGENCY		2007.12.27~ 2008.12.29		2022.12.29		3 year Government bond	W	1,157		1,110
Debentures	Domestic debentures 306-3 and others		2013.10.04~ 2019.10.16		2022.07.17~ 2029.10.16		1.56~3.64		2,046,456		2,046,166
Foreign debentures	Global debentures 4 and others		2018.08.01~ 2020.01.17		2022.11.12~ 2025.01.17		0.50~4.00		3,407,089		3,299,668
								W	5,454,702		5,346,944

15. Other Payables

Other payables as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Accounts payable	W	367,804		606,902
Accrued expenses		388,270		412,976
Dividend payable		344,401		1,854
Lease liabilities		51,109		94,904
Withholdings		10,421		10,687
	W	1,162,005		1,127,323
Non-current
Long-term accrued expenses	W	57		54
Lease liabilities		387,318		217,458
Long-term withholdings		3,330		3,100
	W	390,705		220,612

22

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

16. Other Financial Liabilities

Other financial liabilities as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Derivative liabilities	W	—		3,087
Financial guarantee liabilities		8,181		9,701
	W	8,181		12,788
Non-current
Derivative liabilities	W	14,262		92,273
Financial guarantee liabilities		24,569		29,881
	W	38,831		122,154

17. Provisions

(a) Provisions as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021				December 31, 2020
	Current		Non-current		Current		Non-current
Provision for bonus payments(*1,2)	W	8,079		34,147		14,518		34,461
Provision for restoration(*3)		4,583		11,642		5,136		12,425
Provision for legal contingencies and claims(*4)		625		2,052		4,937		2,052
Emission liabilities(*5)		7,283		10,601		20,224		—
Provision for product warranties(*6)		20,009		3,851		18,789		3,664
	W	40,579		62,293		63,604		52,602

(*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 award, based on actuarial measurement.

(*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, 2021. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials presently available to recover the land. In addition, the Company has applied discount rates of 1.26%~1.59% to assess present value of these costs.

(*4) The Company has recognized provisions for certain litigations and other contingencies as of March 31, 2021.

(*5) The Company has recognized emission liabilities for greenhouse gas emissions exceeding the quantity of free quota emission rights expected to be submitted as of March 31, 2021.

(*6) As of March 31, 2021, the Company recognized the expected claim cost to be charged as a provision.

23

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Changes in provisions for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

1) For the three-month period ended March 31, 2021

(in millions of Won)	Beginning		Increase		Reversal			Utilization			Ending
Provision for bonus payments	W	48,979		4,573		—			(11,326	)		42,226
Provision for restoration		17,561		95		—			(1,431	)		16,225
Provision for legal contingencies and claims		6,989		625		—			(4,937	)		2,677
Emission liabilities		20,224		10,601		(12,941	)		—			17,884
Provision for product warranties		22,453		5,747		—			(4,340	)		23,860
	W	116,206		21,641		(12,941	)		(22,034	)		102,872

2) For the year ended December 31, 2020

(in millions of Won)	Beginning		Increase		Reversal			Utilization			Ending
Provision for bonus payments	W	49,836		25,853		—			(26,710	)		48,979
Provision for restoration		22,725		363		(340	)		(5,187	)		17,561
Provision for legal contingencies and claims		2,388		4,937		(285	)		(51	)		6,989
Emission liabilities		—		20,648		(424	)		—			20,224
Provision for product warranties		—		48,137		—			(25,684	)		22,453
	W	74,949		99,938		(1,049	)		(57,632	)		116,206

18. Employee Benefits

(a) Defined contribution plans

The expense related to post-employment benefit plans under defined contribution plans for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Expense related to post-employment benefit plans under defined contribution plans	W	8,556		10,197

24

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(b) Defined benefit plans

1) The amounts recognized in relation to net defined benefit assets in the statements of financial position as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Present value of funded obligations	W	1,369,018			1,378,597
Fair value of plan assets		(1,429,984	)		(1,455,098	)
Net defined benefit assets	W	(60,966	)		(76,501	)

2) Changes in present value of defined benefit obligations for the three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Defined benefit obligation at the beginning of period	W	1,378,597			1,435,942
Current service costs		32,051			125,706
Interest costs		7,140			27,712
Remeasurement(*1)		—			(74,678	)
Amount transferred from associate		—			1,104
Benefits paid		(48,770	)		(137,189	)
Defined benefit obligation at the end of period	W	1,369,018			1,378,597

(*1) The Company do 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, 2021 and the year ended December 31, 2020 were as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Fair value of plan assets at the beginning of period	W	1,455,098			1,381,796
Interest on plan assets		7,786			27,227
Remeasurement of plan assets		(401	)		(450	)
Contributions to plan assets		—			178,000
Amount transferred from associate		—			1,104
Benefits paid		(32,499	)		(132,579	)
Fair value of plan assets at the end of period	W	1,429,984			1,455,098

25

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

4) The amounts recognized in the statements of comprehensive income for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021			March 31, 2020
Current service costs	W	32,051			32,204
Net interest costs		(646	)		121
	W	31,405			32,325

19. Other Liabilities

Other liabilities as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Current
Advances received	W	39,277		41,901
Withholdings		27,725		24,253
Unearned revenue		19,558		14,522
	W	86,560		80,676
Non-current
Unearned revenue	W	517		525

26

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021 and December 31, 2020 are as follows:

① March 31, 2021

			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	64,936		—		64,936		—		64,936
Short-term financial instruments		7,706,952		—		7,706,952		—		7,706,952
Debt securities		8,050		—		—		8,050		8,050
Other securities		72,592		—		—		72,592		72,592
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,072,205		982,273		—		89,932		1,072,205
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		1,828,883		—		—		—		—
Trade accounts and notes receivable		4,096,266		—		—		—		—
Debt securities		80,000		—		—		—		—
Other receivables		434,134		—		—		—		—
Deposit instruments		1,318,998		—		—		—		—
	W	16,685,016		982,273		7,771,888		172,574		8,926,735
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	14,262		—		14,262		—		14,262
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		1,010,252		—		—		—		—
Borrowings		8,451,991		—		8,711,704		—		8,711,704
Financial guarantee liabilities		32,750		—		—		—		—
Others		1,541,403		—		—		—		—
	W	11,050,658		—		8,725,966		—		8,725,966

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

② December 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	18,549		—		18,549		—		18,549
Short-term financial instruments		8,116,381		—		8,116,381		—		8,116,381
Debt securities		8,050		—		—		8,050		8,050
Other securities		67,161		—		—		67,161		67,161
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		980,706		644,616		—		336,090		980,706
Debt securities		1,687		—		—		1,687		1,687
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		1,822,660		—		—		—		—
Trade accounts and notes receivable		3,685,573		—		—		—		—
Debt securities		150,000		—		—		—		—
Other receivables		272,846		—		—		—		—
Deposit instruments		1,337,915		—		—		—		—
	W	16,463,528		644,616		8,134,930		414,988		9,194,534
Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	95,360		—		95,360		—		95,360
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		1,258,470		—		—		—		—
Borrowings		7,755,336		—		8,026,373		—		8,026,373
Financial guarantee liabilities		39,582		—		—		—		—
Others		1,335,672		—		—		—		—
	W	10,484,420		—		8,121,733		—		8,121,733

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

27

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

2) Financial liabilities were recognized in connection with financial guarantee contracts as of March 31, 2021. 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	SC		USD	19,784,000		22,425		19,784,000		22,425
Steel Private Limited	SMBC		USD	35,000,000		39,673		35,000,000		39,673
	DBS		USD	35,000,000		39,673		35,000,000		39,673
	BNP		USD	30,000,000		34,005		30,000,000		34,005
	Citi		USD	20,000,000		22,670		20,000,000		22,670
POSCO ASSAN TST	BNP		USD	24,527,500		27,802		22,074,750		25,022
STEEL INDUSTRY	SOCIETE GENERALE		USD	42,000,000		47,607		37,800,000		42,846
	CITI		USD	40,000,000		45,340		36,000,000		40,806
	ING		USD	40,000,000		45,340		36,000,000		40,806
POSCO Asia Co., Ltd.	Credit Agricole		USD	50,000,000		56,675		50,000,000		56,675
	MIZUHO		USD	50,000,000		56,675		50,000,000		56,675
POSCO MEXICO S.A. DE C.V	Citi BANAMEX		USD	30,000,000		34,005		30,000,000		34,005
	BOA		USD	30,000,000		34,005		30,000,000		34,005
	SMBC		USD	20,000,000		22,670		20,000,000		22,670
	MIZUHO		USD	20,000,000		22,670		20,000,000		22,670
	ANZ		USD	20,000,000		22,670		20,000,000		22,670
POSCO-VIETNAM Co., Ltd.	SMBC		USD	50,000,000		56,675		50,000,000		56,675
	Credit Agricole		USD	40,000,000		45,340		40,000,000		45,340
	MUFG		USD	26,000,000		29,471		26,000,000		29,471
	Citi		USD	20,000,000		22,670		20,000,000		22,670
	MIZUHO		USD	20,000,000		22,670		20,000,000		22,670
PT. KRAKATAU POSCO	Export-Import Bank of Korea		USD	567,000,000		642,695		330,240,725		374,328
	SMBC		USD	140,000,000		158,690		81,665,652		92,568
	BTMU		USD	119,000,000		134,887		68,295,652		77,413
	MIZUHO		USD	105,000,000		119,018		60,260,870		68,306
	SCB		USD	107,800,000		122,191		63,185,652		71,621
	Credit Suisse AG		USD	91,000,000		103,149		52,226,087		59,198
	HSBC		USD	91,000,000		103,149		52,226,087		59,198
	ANZ		USD	73,500,000		83,312		43,500,435		49,308
	BOA		USD	35,000,000		39,673		20,086,957		22,769
	The Tokyo Star Bank, Ltd		USD	21,000,000		23,804		12,052,174		13,661
POSCO COATED STEEL	Citi		THB	801,000,000		28,996		801,000,000		28,996
(THAILAND) CO., LTD.	ANZ		THB	1,175,000,000		42,535		1,175,000,000		42,535
	MUFG		THB	1,175,000,000		42,535		1,175,000,000		42,535
	SC		THB	1,175,000,000		42,535		1,175,000,000		42,535
	SMBC		THB	1,175,000,000		42,535		1,175,000,000		42,535
Associates
LLP POSUK Titanium	SMBC		USD	13,500,000		15,302		13,500,000		15,302
Nickel Mining Company SAS	SMBC		EUR	46,000,000		61,101		46,000,000		61,101
Joint ventures
CSP - Compania	Export-Import Bank of Korea		USD	182,000,000		206,297		162,149,671		183,797
Siderurgica do Pecem	Santander		USD	47,600,000		53,955		41,713,206		47,282
	BNP		USD	47,600,000		53,955		41,713,206		47,282
	MIZUHO		USD	47,600,000		53,955		41,713,206		47,282
	Credit Agricole		USD	20,000,000		22,670		17,526,564		19,866
	SOCIETE GENERALE		USD	20,000,000		22,670		17,526,564		19,866
	KfW		USD	20,000,000		22,670		17,526,564		19,866
	BBVA Seoul		USD	17,600,000		19,950		15,423,360		17,482
	ING		USD	17,600,000		19,950		15,423,360		17,482
	BNDES		BRL	464,060,000		91,114		464,060,000		91,114
			USD	2,446,111,500		2,772,673		1,815,614,742		2,057,999
			EUR	46,000,000		61,101		46,000,000		61,101
			THB	5,501,000,000		199,136		5,501,000,000		199,136
			BRL	464,060,000		91,114		464,060,000		91,114

28

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

3) Finance income and costs by category of financial instrument for the three-month periods ended March 31, 2021 and 2020 were as follows:

① For the three-month period ended March 31, 2021

(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	30,166			—		—			166		42,811		—		73,143			—
Financial assets at fair value through other comprehensive income		—			19,940		—			92		—		—		20,032			75,307
Financial assets measured at amortized cost		2,758			—		103,734			—		—		—		106,492			—
Financial liabilities at fair value through profit or loss		—			—		—			1,674		86,957		—		88,631			—
Financial liabilities measured at amortized cost		(47,307	)		—		(224,098	)		—		—		1,291		(270,114	)		—
	W	(14,383	)		19,940		(120,364	)		1,932		129,768		1,291		18,184			75,307

(*1) Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures ofW232,331 million for the three-month period ended March 31, 2021.

② 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		104,244			(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.

(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, 2020.

29

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

21. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2021 and December 31, 2020 are as follows:

(in Won, except share information)	March 31, 2021		December 31, 2020
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1) As of March 31, 2021, total shares of ADRs of 26,528,728 are equivalent to 6,632,182 of common stock.

(*2) As of March 31, 2021, the difference between the ending balance of common stock and the par value of issued common stock isW46,469 million due to retirement of 9,293,790 treasury stocks.

(b) Capital surplus as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Share premium	W	463,825			463,825
Gain on disposal of treasury shares		796,623			796,623
Gain from merger		80,628			80,628
Loss on disposal of hybrid bonds		(1,787	)		(1,787	)
	W	1,339,289			1,339,289

22. Hybrid Bonds

Hybrid bonds classified as equity as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	Date of issue		Date of maturity		Rate of Interest (%)		March 31, 2021			December 31, 2020
Hybrid bond 1-2(*1)		6/13/2013		6/13/2043		4.60	W	200,000			200,000
Issuance cost								(616	)		(616	)
							W	199,384			199,384

30

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(*1) Details of hybrid bonds As of March 31, 2021 are as follows:

	Hybrid bond 1-2
Maturity date	30 years (The Company has a right to extend the maturity date)
Interest rate	Issue date ~ 2023-06-12 : 4.60% Reset every 10 years as follows; •  After 10 years : return on government bond (10 years) + 1.40% •  After 10 years : additionally + 0.25% according to Step-up clauses •  After 30 years : additionally + 0.75%
Interest payments condition	Quarterly (Optional deferral of interest payment is available to the Company)
Others	The Company can call the hybrid bond at year 10 and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common stock holders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds As of March 31, 2021 amounts toW 479 million.

23. Reserves

Reserves as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021			December 31, 2020
Changes in fair value of equity investments at fair value through other comprehensive income	W	(219,218	)		(296,626	)

24. Treasury Shares

Based on the Board of Directors’ resolution, the Company holds treasury shares for business purposes including price stabilization. The changes in treasury shares for three-month period ended March 31, 2021 and the year ended December 31, 2020 were as follows.

(shares, in millions of Won)	March 31, 2021				December 31, 2020
	Number of shares		Amount		Number of shares		Amount
Beginning		11,171,363	W	2,391,523		7,071,194	W	1,508,303
Acquisition of treasury shares		389,900		116,771		4,100,169		883,220
Ending		11,561,263	W	2,508,294		11,171,363	W	2,391,523

During the year ended December 31, 2020, the Company entered into a trust contract of acquiring treasury shares following approval of the Board of Directors. The amount committed to purchase treasury shares by this trust contract isW1,000 billion, and the contract period is from April 13, 2020 to April 12, 2021.

31

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

25. Revenue

(a) Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Types of revenue
Sales of steel product	W	7,512,143		6,738,862
Transportation services		244,129		186,409
Others		44,175		44,585
	W	7,800,447		6,969,856
Timing of revenue recognition
Revenue recognized at a point in time	W	7,540,281		6,767,749
Revenue recognized over time		260,166		202,107
	W	7,800,447		6,969,856

(b) Details of contract assets and liabilities from contracts with customers as of March 31, 2021 and December 31, 2020 are as follows:

(in millions of Won)	March 31, 2021		December 31, 2020
Receivables
Account receivables	W	4,096,266		3,685,573
Contract assets
Account receivables		13,049		10,418
Contract liabilities
Advance received		39,277		41,901
Unearned income		20,075		14,855

32

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

26. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Wages and salaries	W	63,308		61,255
Expenses related to post-employment benefits		10,571		7,643
Other employee benefits		12,958		12,235
Travel		2,243		2,786
Depreciation		6,602		6,853
Amortization		18,852		9,416
Rental		15,421		13,258
Repairs		1,584		2,250
Advertising		12,844		14,894
Research & development		18,623		15,806
Service fees		36,773		37,373
Supplies		514		235
Vehicles maintenance		1,138		1,281
Industry association fee		1,465		1,977
Training		244		4,319
Conference		977		1,081
Others		5,786		6,107
	W	209,903		198,769

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Freight and custody	W	30,580		33,701
Operating expenses for distribution center		1,533		1,719
Sales commissions		16,664		45,253
Sales advertising		49		86
Sales promotion		295		394
Sample		233		176
Sales insurance premium		1,441		1,507
	W	50,795		82,836

33

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

27. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Finance income
Interest income(*1)	W	32,924		49,124
Dividend income		252,271		133,904
Gain on foreign currency transactions		97,128		147,164
Gain on foreign currency translations		48,847		71,298
Gain on valuation of derivatives		134,140		264,235
Others		3,964		8,592
	W	569,274		674,317
Finance costs
Interest expenses	W	47,307		57,096
Loss on foreign currency transactions		73,714		76,467
Loss on foreign currency translations		192,625		326,418
Others		5,112		434
	W	318,758		460,415

(*1) Interest income calculated using the effective interest method for the three-month periods ended March 31, 2021 and 2020 wereW 2,758 million andW10,409 million, respectively.

34

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

28. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Other non-operating income
Gain on disposals of property, plant and equipment	W	2,770		3,822
Gain on insurance settlements		287		859
Gain on disposals of assets held for sale		790		299
Gain on disposals of emission rights		—		7,743
Others(*1)		31,401		11,402
	W	35,248		24,125
Other non-operating expenses
Loss on disposals of property, plant and equipment	W	23,756		51,299
Impairment loss on property, plant and equipment		3,113		—
Impairment loss on intangible assets		7,180		—
Impairment loss on investment in subsidiaries, associates and joint ventures		1,500		—
Impairment loss on assets held for sale		—		6,330
Donations		2,004		8,709
Others		14,644		12,348
	W	52,197		78,686

(*1) During the three-month period ended March 31, 2021, the Company recognizedW28,366 million of non-operating income for refund of other than income tax as a result of administrative litigation for tax audits.

35

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

29. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses and other non-operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2021 and 2020 were as follows (excluding finance costs and income tax expenses):

(in millions of Won)	March 31, 2021			March 31, 2020
Changes in inventories(*1)	W	(216,576	)		97,880
Raw materials and consumables used		4,695,958			4,145,641
Employee benefits expenses		463,321			459,584
Outsourced processing cost		589,023			658,858
Depreciation(*2)		573,174			560,857
Amortization		27,201			25,617
Electricity and water		71,855			66,649
Service fees		52,133			58,346
Rental		24,732			22,746
Advertising		12,844			14,894
Freight and custody		200,802			215,690
Sales commissions		16,664			45,253
Loss on disposal of property, plant and equipment		23,756			51,299
Impairment loss on property, plant and equipment		3,113			—
Impairment loss on investments in subsidiaries, associates and joint ventures		1,500			—
Other		240,608			167,613
	W	6,780,108			6,590,927

(*1) Changes in inventories are the changes in product, semi-finished products and by-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, 2021 and 2020 were 27.10% and 26.57%, respectively.

36

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

31. Earnings per Share

Basic earnings per share for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in Won, except share information)	March 31, 2021			March 31, 2020
Profit for the period	W	952,175,503,207			453,020,315,302
Interests of hybrid bonds, net of tax		(1,644,657,534	)		(1,662,931,507	)
Weighted-average number of common shares outstanding(*1)		75,911,805			80,115,641
Basic earnings per share	W	12,522			5,634

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

(shares)	March 31, 2021			March 31, 2020
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(11,275,030	)		(7,071,194	)
Weighted-average number of common shares outstanding		75,911,805			80,115,641

Since there were no potential shares of common stock which had dilutive effects as of March 31, 2021 and 2020, diluted earnings per share is equal to basic earnings per share.

37

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

32. Related Party Transactions

(a) Significant transactions with related companies for the three-month periods ended March 31, 2021 and 2020 were as follows:

1) For the three-month period ended March 31, 2021

(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	1,614		11,069		—		88,862		60		6,463
POSCO COATED & COLOR STEEL Co., Ltd.		123,426		2,034		—		—		7,447		161
POSCO ICT(*4)		447		4,990		—		34,290		10,706		49,422
eNtoB Corporation		4		—		60,190		9,647		14		4,507
POSCO CHEMICAL CO., LTD		57,959		16,280		114,065		1,389		74,295		1,426
POSCO ENERGY CO., LTD.		760		689		2,129		—		—		5,605
POSCO SPS		148,773		—		—		—		10,694		206
POSCO INTERNATIONAL Corporation		1,898,357		54,331		166,152		—		347		536
POSCO Thainox Public Company Limited		60,873		—		—		—		—		20
POSCO Canada Ltd.		—		491		34,796		—		—		—
POSCO Asia Co., Ltd.		18,289		32		417		—		—		272
Qingdao Pohang Stainless Steel Co., Ltd.		40,948		—		—		—		—		—
POSCO JAPAN Co., Ltd.		357,971		1		7,601		4		—		480
POSCO-VIETNAM Co., Ltd.		80,910		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		92,791		34		—		—		—		—
POSCO Maharashtra Steel Private Limited		168,852		84		—		—		—		89
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		28,512		—		—		—		—		—
POSCO VST CO., LTD.		56,408		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		610		350,571		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		65,532		49		8		—		—		10
Others		323,446		21,389		34,299		9,752		60,982		20,702
		3,525,872		112,422		770,228		143,944		164,545		89,907
Associates and joint ventures(*3)
SNNC		7,513		2,043		151,759		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		12,649		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		116,076		486,975		—		—		—
Others		8,837		12,939		21,723		—		—		9,173
		28,999		131,058		660,457		—		—		9,173
	W	3,554,871		243,480		1,430,685		143,944		164,545		99,080

(*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, 2021, 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.

38

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

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

(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.		W1,537		11,079		15		243,473		—		7,712
POSCO COATED & COLOR STEEL Co., Ltd.		116,100		1,694		—		—		8,358		117
POSCO ICT		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		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		78,164		128		2,314		—		—		—
Others		190,735		14,412		24,509		12,958		61,073		29,067
		3,112,862		108,958		541,672		371,373		174,490		100,563
Associates and joint ventures
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

(b) The related account balances of significant transactions with related companies as of March 31, 2021 and December 31, 2020 are as follows:

1) March 31, 2021

(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1,502		8		1,510		—		34,299		310		34,609
POSCO COATED & COLOR STEEL Co., Ltd.		64,143		1,715		65,858		—		5		3,803		3,808
POSCO ICT		61		4,971		5,032		2,758		38,614		28,970		70,342
eNtoB Corporation		—		—		—		2,449		17,704		18		20,171
POSCO CHEMICAL CO., LTD		18,982		14,820		33,802		8,481		57,503		18,194		84,178
POSCO ENERGY CO., LTD.		123		277		400		—		2,093		11,894		13,987
POSCO SPS		83,913		—		83,913		—		1,564		4,215		5,779
POSCO INTERNATIONAL Corporation		673,708		54,337		728,045		2,014		199		502		2,715
POSCO Thainox Public Company Limited		47,663		—		47,663		—		—		—		—
POSCO Asia Co., Ltd.		21,304		667		21,971		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		26,401		—		26,401		—		—		—		—
POSCO MEXICO S.A. DE C.V.		106,515		737		107,252		—		—		—		—
POSCO Maharashtra Steel Private Limited		334,220		1,489		335,709		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		240,111		1,370		241,481		—		—		—		—
Others		388,478		28,539		417,017		104,165		29,578		80,594		214,337
		2,007,124		108,930		2,116,054		119,867		181,559		148,500		449,926
Associates and joint ventures
SNNC		271		5,546		5,817		17,399		127		—		17,526
Roy Hill Holdings Pty Ltd		—		116,076		116,076		95,706		34		—		95,740
Others		921		18,517		19,438		2,133		344		—		2,477
		1,192		140,139		141,331		115,238		505		—		115,743
	W	2,008,316		249,069		2,257,385		235,105		182,064		148,500		565,669

39

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

2) December 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	6,010		11		6,021		—		81,608		394		82,002
POSCO COATED & COLOR STEEL Co., Ltd.		63,520		—		63,520		—		180		3,709		3,889
POSCO ICT		245		1		246		2,820		118,720		31,411		152,951
eNtoB Corporation		—		—		—		1,361		35,846		18		37,225
POSCO CHEMICAL CO., LTD		19,406		3,434		22,840		13,066		55,515		18,531		87,112
POSCO ENERGY CO., LTD.		261		122		383		—		2,995		12,508		15,503
POSCO SPS		72,009		—		72,009		—		2,352		4,175		6,527
POSCO INTERNATIONAL Corporation		534,531		—		534,531		2,713		—		—		2,713
POSCO Thainox Public Company Limited		39,920		—		39,920		—		—		—		—
POSCO Asia Co., Ltd.		239,847		898		240,745		3,958		258		—		4,216
Qingdao Pohang Stainless Steel Co., Ltd.		25,838		—		25,838		—		—		—		—
POSCO MEXICO S.A. DE C.V.		71,307		397		71,704		—		—		—		—
POSCO Maharashtra Steel Private Limited		173,285		2,006		175,291		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		258,563		1,845		260,408		—		—		—		—
Others		227,288		28,117		255,405		41,564		30,433		82,716		154,713
		1,732,030		36,831		1,768,861		65,482		327,907		153,462		546,851
Associates and joint ventures
SNNC		106		228		334		33,380		—		—		33,380
Roy Hill Holdings Pty Ltd		—		52,076		52,076		201,924		—		—		201,924
Others		818		17,882		18,700		6,704		—		—		6,704
		924		70,186		71,110		242,008		—		—		242,008
		1,732,954		107,017		1,839,971		307,490		327,907		153,462		788,859
	W	1,732,954		107,017		1,839,971		307,490		327,907		153,462		788,859

(c) For the three-month periods ended March 31, 2021 and 2020, details of compensation to key management officers were as follows:

(in millions of Won)	March 31, 2021		March 31, 2020
Short-term benefits	W	11,217		10,807
Long-term benefits		1,383		1,152
Retirement benefits		4,835		2,843
	W	17,435		14,802

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

40

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(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, 2021, 55 million tons of iron ore and 8 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, 2021, there are 38 vessels under contract and the average remaining contract period is about 9 years.

4) As of March 31, 2021, the Company entered into commitments with KOREA ENERGY AGENCY for long-term foreign currency borrowing, which is 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 borrowing depends on the success of the project. The Company is not liable for the repayment of full or part of the money borrowed if the respective project fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of March 31, 2021, 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, 2021, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral for long-term foreign currency borrowings.

41

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2021

(Unaudited)

(c) Litigation in progress

The Company is involved in 31 lawsuits, including claim for employee right aggregating toW50.9 billion as defendant as of March 31, 2021, which arise from the ordinary course of business. The Company has recognized provisions amounting toW2.1 billion for one of 31 lawsuits 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, 2021.

34. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2021 and 2020 were as follows:

(in millions of Won)	March 31, 2021			March 31, 2020
Trade accounts and notes receivable, net	W	(392,886	)		325,991
Other accounts receivable		(22,993	)		159,264
Accrued revenues		(5,140	)		—
Inventories		(663,730	)		215,460
Prepaid expenses		(13,893	)		(20,873	)
Other current assets		40			(3,509	)
Long-term guarantee deposits		(26	)		(414	)
Derivative assets		(3,574	)		4,898
Other non-current assets		(18,614	)		299
Trade accounts and notes payable		(250,809	)		211,800
Other accounts payable		(171,395	)		(119,818	)
Accrued expenses		(22,664	)		(32,839	)
Advances received		(411	)		(533	)
Withholdings		3,472			3,582
Unearned revenue		5,029			(1,685	)
Other current liabilities		(17,147	)		(11,102	)
Derivative liabliities		6,523			3,256
Payments of severance benefits		(48,770	)		(35,500	)
Plan assets		32,499			25,588
Other non-current liabilities		(314	)		(8,991	)
	W	(1,584,803	)		714,874

35. Events after the reporting period

Pursuant to the resolution of the Board of Directors on May 14, 2021, the Company decided to pay interim cash dividends ofW3,000 per common share (total dividend:W226.9 billion).

42