Enhanced Investments - Financial Portal

(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

Executive

Management Committee

5 Inside Directors

Choi, Jeong-Woo

(Chairman)

Kim, Hag-Dong

Chon, Jung-Son

Kim, Hag-Dong

Chung, Chang-Hwa

Jeong, Tak

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

Published: 2021-08-27 06:12:19 ET

<<< go to PKX company page

6-K 1 d204820d6k.htm FORM 6-K FORM 6-K

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 August, 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 Half Interim 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: August 27, 2021	By	/s/ Chung, Kyung-Jin
		(Signature)
		Name:	Chung, Kyung-Jin
		Title:	Head of Finance Office

Exhibit 99.1

LOGO

INTERIM REPORT

(From January 1, 2021 to June 30, 2021)

THIS IS AN ENGLISH TRANSLATION OF THE INTERIM 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.

INTERIM REPORT

(From January 1, 2021 to June 30, 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

TABLE OF CONTENTS


I.	Overview	4

II.	Business	11

III.	Financial Statements	33

IV.	Corporate Governance	36

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

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

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

(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).

(3) Major Changes in the Board of Directors


Date of Change	Type of General Meeting of Shareholders	Appointment		Expiration of Term
Date of Change	Type of General Meeting of Shareholders	New	Re-appointment	Expiration of Term
March 10, 2017	Ordinary	—	Representative Director Kwon, Oh-Joon	—
		—	Representative Director Oh, In-Hwan	—
		—	Representative Director Choi, Jeong-Woo	—
		Inside Director Chang, In-Hwa	—	—
		Inside Director Yu, Seong	—	—
		—	—	Inside Director Kim, Jin-Il
		—	—	Inside Director Lee, Young-Hoon
		Outside Director Kim, Shin-Bae	—	—
		Outside Director Chung, Moon-Ki	—	—
		Outside Director Chang, Seung-Wha	—	—
		—	—	Outside Director Kim, Il-Sup
		—	—	Outside Director Sunwoo, Young
March 9, 2018	Ordinary	—	Representative Director Oh, In-Hwan	—
		—	Representative Director Chang, In-Hwa	—
		—	Inside Director Yu, Seong	—
		Inside Director Chon, Jung-Son	—	—
		—	—	Representative Director Choi, Jeong-Woo
		Outside Director Kim, Sung-Jin	—	—
		—	Outside Director Bahk, Byong-Won	—
		—	Outside Director Kim, Joo-Hyun	—
		—	—	Outside Director Shin, Chae-Chol


Date of Change	Type of General Meeting of Shareholders	Appointment		Expiration of Term
Date of Change	Type of General Meeting of Shareholders	New	Re-appointment	Expiration of Term
July 27, 2018	Extraordinary	Representative Director Choi, Jeong-Woo	—	—
July 27, 2018	Extraordinary	—	—	Representative Director Kwon, Oh-Joon
March 15, 2019	Ordinary	—	Representative Director Chang, In-Hwa	—
		—	Inside Director Chon, Jung-Son	—
		Inside Director Kim, Hag-Dong	—	—
		Inside Director Jeong, Tak	—	—
		—	—	Representative Director Oh, In-Hwan
		—	—	Inside Director Yu, Seong
		Outside Director Pahk, Heui-Jae	—	—
		—	Outside Director Kim, Shin-Bae	—
		—	Outside Director Chung, Moon-Ki	—
		—	—	Outside Director Lee, Myoung-Woo
March 27, 2020	Ordinary	—	Representative Director Chang, In-Hwa	—
		—	Inside Director Chon, Jung-Son	—
		—	Inside Director Kim, Hag-Dong	—
		—	Inside Director Jeong, Tak	—
		—	Outside Director Chang, Seung-Wha	—
		Audit Committee Member Pahk, Heui-Jae *	—	—
March 12, 2021	Ordinary	—	Representative Director Choi, Jeong- Woo	—
		—	Representative Director Kim, Hag-Dong	—
		—	Representative Director Chon, Jung-Son	—
		—	Inside Director Jeong, Tak	—
		Inside Director Chung, Chang-Hwa	—	—


Date of Change	Type of General Meeting of Shareholders	Appointment		Expiration of Term
Date of Change	Type of General Meeting of Shareholders	New	Re-appointment	Expiration of Term
		—	—	Inside Director Chang, In-Hwa
		—	Outside Director Kim, Sung-Jin **	—
		Outside Director Yoo, Young-Sook	—	—
		Outside Director Kwon, Tae-Kyun	—	—
		—	—	Outside Director Kim, Joo-Hyun
		—	—	Outside Director Bahk, Byong-Won

*	The Outside Director Pahk, Heui-Jae was appointed as the Audit Committee Member at the General Meeting of Shareholders held on March 27, 2020.

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

(4) Changes of the Largest Shareholder of POSCO

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

(a) From SK Telecom to National Pension Service

(b) Date of Change: January 30, 2007

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).

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

3. Changes in Share Capital

There has been no changes in share capital in the last 5 years.

(Unit : Share, KRW/Share, In millions of KRW)


Type	Details	As of June 30, 2021
Common Stock	Total number of issued shares	87,186,835
	Par value	5,000
	Share capital	482,403
Preferred Stock	Total number of issued shares	—
	Par value	—
	Share capital	—
Others	Total number of issued shares	—
	Par value	—
	Share capital	—
Sum	Share capital	482,403

4. Other Information Regarding Shares

A. Total Number of Shares

(As of June 30, 2021)


Authorized Shares		Issued Shares
200,000,000		87,186,835

B. Treasury Stock Acquisition and Disposal

(As of June 30, 2021)

(in shares.)


			Type of shares	Beginning balance		Change					Closing balance	Remarks
Methods of acquisition			Type of shares	Beginning balance	Acquisition (+)		Disposal (-)		Share retirement (-)		Closing balance	Remarks
Amount of shares acquired within profits available for dividends	Direct Acquisition	Direct acquisition in the exchange	Common stock	7,071,194		—		—		—	7,071,194	—
	Acquisition by trust contract	No. of shares indirectly held through trust contracts	Common stock	4,100,169		389,900		4,490,069		—	—	Note 1	)
	Acquisition by trust contract	No. of shares directly held	Common stock	—		4,490,069		—		—	4,490,069	Note 2	)
	Total		Common stock	11,171,363		4,879,969		4,490,069		—	11,561,263	—

Note1) The number of treasury stock acquisition by trust contracts is 4,490,069 shares.

Note2) Following the termination (on April 12, 2021) of the contract, 4,490,069 shares have been deposited into the Company’s securities account.

5. Voting Rights

(As of June 30, 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
(3) Shares with Voting Rights	75,625,572	—

*	The share repurchase contract was terminated on April 2021 due to completion of share repurchase equivalent to the contract amount and due to expiration of the contract term.

6. Earnings and Dividends

(In millions of KRW)


	2021.1H	2020	2019
(Consolidated) Profit*	2,689,079	1,602,148	1,835,087
(Separate) Profit	2,270,335	965,863	1,175,712
Earnings per Share (Consolidated, KRW)	35,447	20,165	22,823
Cash Dividend Paid	529,379	620,287	801,156
Pay-out Ratio (Consolidated, %)	19.7	38.7	43.7
Dividend per Share (KRW)	7,000	8,000	10,000
Dividend Yield (%)	2.0	3.0	4.1

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

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)


		January 2021		February 2021		March 2021		April 2021		May 2021		June 2021
Common share	Highest Price		294,500		283,000		327,000		377,500		409,500		354,000
	Lowest Price		245,500		253,000		285,000		318,500		349,000		333,500
	Average Price		272,075		268,889		307,045		344,167		375,667		344,205
Trading volume	Daily highest		899		875		2,911		736		763		707
	Daily lowest		340		232		361		257		362		311
	Monthly		10,236		7,347		17,304		9,552		10,733		10,844

B. New York Stock Exchange

(USD/ADS*, In thousands of ADS*)


		January 2021		February 2021		March 2021		April 2021		May 2021		June 2021
American Depositary Share (ADS)	Highest Price		67.2		62.5		72.2		84.2		91.8		81.5
	Lowest Price		54.8		56.7		63.5		71.6		78.8		73.5
	Average Price		62.1		60.6		67.7		77.3		83.9		76.6
Trading volume	Daily highest		317		319.9		613.8		290.5		444.7		353.9
	Daily lowest		63.8		55.4		118.8		58.3		122.6		110.4
	Monthly		3,094		2,549		6,080		2,950		4,142		4,521

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

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	2021.1H				2020				2019
Segment	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Steel		18,339,930		3,228,143		28,892,877		1,372,852		32,078,453		2,786,517
Trading		11,360,997		226,327		19,345,222		394,954		22,157,131		542,724
Engineering & Construction		2,975,129		253,621		6,576,170		385,048		6,944,629		338,865
Others		1,685,133		44,939		2,978,527		250,181		3,186,635		200,749
Total		34,361,189		3,753,030		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.

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 59% of total sales and export sales are around 41%, 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		2021.1H				2020				2019
Category		Production		Market share		Production		Market share		Production		Market share
Crude Steel Production			35.2		100		67.1		100		71.4		100
	POSCO		19.0		54.0		35.9		53.5		38.0		53.2
	Others		16.2		46.0		31.2		46.5		33.4		46.7

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

B. Trading

(1) Market Share

(Millions of US Dollars)


Category	2021.1H	2020.1H	Growth Rate
All Trading Companies in Korea	303,226	240,521	26.07	%
POSCO International Corp.	4,030	2,563	57.23	%

ø	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.

(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.

3. Key Products

A. Sales of Key Products (2021.1H)

(In hundred millions of KRW, %)


Business Area	Item	Specific Use	Total Sales			Ratio
Steel	Hot-rolled Product (HR)	Steel pipe, Shipbuilding, etc.		50,996			18.00	%
	Cold-rolled Product (CR)	Automobile , Home appliances, etc.		91,742			32.30	%
	Stainless Steel Products	Tableware, pipes, etc.		55,917			19.70	%
	Others	Plates, Wire rods, etc.		85,164			30.00	%
	Gross Sum			283,819			100.00	%
	Deduction of Internal Trade			(100,420	)
	Sub Total			183,399
Trading	Steel, Metal			155,409			76.20	%
	Chemical, Strategic Item, Energy			21,925			10.80	%
	Others			26,572			13.00	%
	Gross Sum			203,906			100.00	%
	Deduction of Internal Trade			(90,296	)
	Sub Total			113,610
Engineering & Construction	Domestic Construction	Architecture		17,460			51.70	%
		Plant		5,262			15.60	%
		Civil Engineering		2,916			8.60	%
		Others		686			2.00	%
	Overseas Construction			3,450			10.20	%
	Owned Construction			3,519			10.40	%
	Others			476			1.40	%
	Gross Sum			33,770			100.00	%
	Deduction of Internal Trade			(4,019	)
	Sub Total			29,751
Others	Electricity Sales, etc.			29,774
	Deduction of Internal Trade			(12,923	)
	Sub Total			16,851
	Total Sum			343,612

B. Price Movement Trends of Key Products

(In thousands of KRW/ Tons, KRW/kWh)


Business Area	Products	2021.1H		2020		2019
Steel	Hot-rolled Product (HR)		808		622		695
Steel	Cold-rolled Product (CR)		903		759		800
Others	Electric Power		82		72		94
	Refractory		900		965		1,073
	Lime		106		106		111

ø	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 continuously. However, from the 4^th quarter of 2020, the steel related industries recovered and resultantly the steel prices have been increased sharply compared to previous year.

[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

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	73,495 (62.5)	Iron Ore, Coal
		Sub-materials	Sub-materials for Iron-making, Steelmaking	22,512 (19.2)	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
		Stainless Steel Materials	Key Materials for STS Production	21,524 (18.3)	Nickel, Ferrochrome, STS Scrap Iron, etc.
Engineering & Construction	Raw Materials	Ready-mixed Concrete	Construction of Structure	910 (16.2)
		Steel Reinforcement	Strengthening Concrete	1,000 (17.8)
		Cable	Electricity Transfer	78 (1.4)
		Steel Pile	Foundation of Structure	96 (1.7)
		Others	Construction of Pipe and Structure etc.	3,542 (62.9)
Others	Raw Materials	LNG	Material for Power Generation	5,205 (39.1)
		Limestone	Production of Lime	466 (3.5)
		Others	Engineering business etc.	7,630 (57.4)

B. Price Movement Trends of Major Raw Materials

(In thousands of KRW)


Business Area	Category	2021.1H	2020	2019
Steel	Iron Ore(per ton)	194	120	102
	Coal(per ton)	148	147	207
	Scrap Iron(per ton)	527	348	347
	Nickel(per ton)	19,588	16,254	16,148
Engineering & Construction	Ready-mixed Concrete (per m’)	65	65	63
	Steel Pile (per m)	184	102	136
	Steel Reinforcement (per kg)	1	1	1
	Cable (per m)	1	1	1
Others	LNG (per ton)	559	484	668
Others	Lime (per ton)	19	19	20

[Steel]

ø	Price Movement Trend of Major Raw Materials

(1) Iron Ore

(In US Dollars/ Tons)


	’21.2Q	’21.1Q	’20.4Q	’20.3Q	’20.2Q	’20.1Q	’19.4Q	’19.3Q	’19.2Q	’19.1Q	’18.4Q	’18.3Q
Trend of International Benchmark Price (Free On Board, “FOB”)	188	158	126	110	88	83	80	92	94	77	64	57

(2) Coal

(In US Dollars/ Tons)


	’21.2Q	’21.1Q	’20.4Q	’20.3Q	’20.2Q	’20.1Q	’19.4Q	’19.3Q	’19.2Q	’19.1Q	’18.4Q	’18.3Q
Trend of International Benchmark Price (FOB)	137	127	109	115	118	155	140	161	203	206	221	188

(3) Scrap Iron

(In US Dollars/ Tons)


	’21.2Q	’21.1Q	’20.4Q	’20.3Q	’20.2Q	’20.1Q	’19.4Q	’19.3Q	’19.2Q	’19.1Q	’18.4Q	’18.3Q
Trend of Purchase Price (Cost and Freight, “CFR”)	497	443	361	289	254	274	270	290	312	325	343	350

(4) Nickel

’21.2Q

’21.1Q

’20.4Q

’20.3Q

’20.2Q

’20.1Q

’19.4Q

’19.3Q

’19.2Q

’19.1Q

’18.4Q

’18.3Q

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

USD

7.87 /lb

USD

17,359/ton

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

ø	LME : London Metal Exchange

[Engineering and Construction]

(1) Criteria for Calculation


Products		Criteria for Calculation
Ready-mixed Concrete		Standard 25-210-15
Steel Pile		SPIRAL, 609.6, 12T, STP275, KS F 4602
Steel Reinforcement		SD400 10mm
Cable		TFR-3, 0.6/1KV, 2.5SQ, 2C

[Others]

(1) Criteria for Calculation

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

Refractory and lime: Purchase prices including freight costs

5. Production and Facilities

A. Production Capacity

[Steel]

(Thousands of Tons)


Business Area	Products	2021.1H	2020	2019
Steel	Crude Steel	22,498	45,330	47,534

[Others]

(Electric Power: MW/year, Lime: Thousands of Tons/year)


Business Area	Products		2021.1H			2020		2019
Power Generation	Electric Power	Incheon		3,412			3,412		3,412
		Gwangyang		—			—		284
		Pohang		—			—		290
Lime	Lime			1,086	*		2,196		2,190

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

B. Production Result and Capacity Utilization Rate

[Steel]


(1) Production		(Thousands of Tons)


Products		2021.1H		2020		2019
Crude Steel			21,450		40,579		42,948
Products	Hot-Rolled Steel		4,508		9,128		8,739
	Plate		3,459		7,009		7,191
	Wire Rod		1,353		2,666		2,756
	Pickled-Oiled Steel		1,440		2,432		2,967
	Cold-Rolled Products		4,320		6,795		7,416
	Coated Steel		3,721		6,316		6,526
	Electrical Steel		516		826		819
	Stainless Steel		2,055		3,900		3,850
	Others		1,894		4,691		5,761
	Total		23,266		43,763		46,025

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

(2) Capacity Utilization Rate

(Thousands of Tons, %)


	Company	Capacity		Production		Utilization Rate
Crude Steel Production	POSCO		20,173		19,007		94.2
	PT.KRAKATAU POSCO		1,500		1,618		107.9
	POSCO YAMATO VINA STEEL JOINT STOCK COMPANY		275		328		119.3
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.		550		497		90.4
	Total		22,498		21,450		95.3

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.

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

[Others]

(1) Production Result

(Gwh, Thousands of Tons)


Business Area	Products	2021.1H		2020		2019
Power Generation	Electric Power		7,103		13,998		15,928
Lime	Lime		1,202		2,345		2,542

(2) Capacity Utilization Rate

(Hour, %)

Business Area

Products

2021.1H

Capacity

2021.1H

Production

Utilization Rate

Power

Generation

Incheon Power Plant

4,344

2,831

65.2

(Thousands of Tons, %)


Business Area	Products	Capacity	Production	Utilization Rate
Lime	Lime	1,086	1,202	110.7

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		14,794		(5,539	)		—			2,023,077
Trade		50,688		158		(220	)		—			50,626
Engineering & Construction		25,579		50		(12	)		—			25,617
Others		499,998		57,547		—			—			557,545

[Buildings]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		3,258,592		173,761		(11,227	)		(139,475	)		3,281,651
Trade		374,644		12,898		(1,355	)		(5,795	)		380,392
Engineering & Construction		81,702		20,140		(12,635	)		(1,110	)		88,097
Others		446,462		3,226		(754	)		(12,352	)		436,582

[Structures]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		2,433,141		73,861		(3,725	)		(99,631	)		2,403,646
Trade		2,071		62		(16	)		(154	)		1,963
Engineering & Construction		4,456		427		(261	)		(214	)		4,408
Others		585,558		1,660		(195	)		(13,082	)		573,941

[Machinery and Equipments]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		14,864,929		656,676		(173,638	)		(1,069,627	)		14,278,340
Trade		266,848		59,448		(59,997	)		(11,353	)		254,946
Engineering & Construction		5,071		5,825		(5,550	)		(491	)		4,855
Others		1,720,459		40,088		(20,249	)		(78,740	)		1,661,558


[Vehicles]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		22,881		11,836		(7,252	)		(4,897	)		22,568
Trade		5,469		1,242		(606	)		(794	)		5,311
Engineering & Construction		1,133		8,982		(8,756	)		(121	)		1,238
Others		7,673		2,400		(841	)		(1,557	)		7,675

[Tools and Fixtures]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		54,166		20,567		(11,371	)		(12,294	)		51,068
Trade		1,363		105		(15	)		(220	)		1,233
Engineering & Construction		1,027		121		(117	)		(100	)		931
Others		3,745		9,850		(1,036	)		(2,220	)		10,339

[Equipment]				(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		66,145		30,026		(6,121	)		(8,731	)		81,319
Trade		25,298		2,670		(1,984	)		(4,743	)		21,241
Engineering & Construction		3,532		8,523		(2,480	)		(6,420	)		3,155
Others		32,484		9,086		(9,024	)		(3,613	)		28,933

[Financial Lease Assets]				(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		490,290		171,289		(12,970	)		(14,599	)		634,010
Trade		95,191		32,355		(24,269	)		(23,235	)		80,042
Engineering & Construction		82,876		48,698		(32,726	)		(20,530	)		78,318
Others		105,343		20,296		(2,859	)		(19,998	)		102,782

[Biological Assets]				(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		—				—
Trade		149,965		20,118		(22	)		(4,597	)		165,464
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		753,286		(611,931	)		—		1,579,626
Trade		58,150		10,419		(22,189	)		—		46,380
Engineering & Construction		2,043		17,528		(16,192	)		—		3,379
Others		119,076		315,989		(53,106	)		—		381,959

(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	February 2020 ~ December 2023	P) Establishment of #6 Coke plant		8,583		678		7,905
	Expansion/ Establishment	June 2011 ~ October 2023	P) Establishment of by-product gas power plant facilities, etc.		5,739		4,646		1,093
	Maintenance/ Improvement	August 2020 ~ August 2022	G) The renovation of #4 furnace		3,368		311		3,056
	Maintenance/ Improvement	September 2015 ~ May 2024	P) Improvement of #3, #4 power plant, etc.		8,777		4,784		3,993
POSCO SPS	Expansion/ Establishment	October 2020 ~ August 2021	Machinery, etc.		101		31		70
		February 2021 ~ October 2021	Pohang factory		152		2		150
		February 2021 ~ August 2021	Cheonan factory		120		47		73
		June 2021 ~ March 2022	Machinery, etc.(Pohang)		152		0.3		151

ø	P stands for Pohang Steel Works.

ø	G stands for Gwangyang Steel Works.

ø	Ongoing investments over KRW 10 billion as of June 30, 2021 are listed on the table.


[Others]		(In hundred millions of KRW)


Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO CHEMICAL	Establishment/ Expansion	July 2020 ~ November 2022	The 3^rd stage of cathode material factory in Gwangyang		2,895		660		2,235
		November 2020 ~ March 2024	The 4^th stage of cathode material factory in Gwangyang		2,758		304		2,454
		November 2019 ~ December 2022	The 2^nd stage of production line up expansion in #2 anode material factory		1,651		1,085		566
		February 2020 ~ August 2020	Establishment of artificial graphite anode factory site		130		125		5
		February 2020 ~ May 2024	Establishment of artificial graphite anode factory		2,177		408		1,769


		November 2019 ~ October 2021	Renovation of refractory factory for production increase	483	193	290
		October 2020 ~ November 2022	Facilities improvement of refractory sintering plant in Pohang	319	—	319
POSCO ICT	Establishment/ Expansion	January 2021 ~ December 2021	Smart factory expansion and new business growth	194	2	192
POSCO ICT	Establishment/ Expansion	January 2021 ~ December 2021	Expansion of SM server, etc.	148	12	136
POSCO Energy	Establishment/ Expansion	March 2020 ~ December 2021	Expansion of evaporator in Gwangyang LNG Terminal	360	142	218
POSCO Energy	Establishment/ Expansion	January 2021 ~ May 2024	Establishment of #6 Tank in Gwangyang LNG Terminal	1,437	188	1,249
POSCO O&M	Establishment/ Expansion	January 2021 ~ December 2021	Fixed assets acquisitions and facilities replacement	1,083	458	624
PT. BIO INTI AGRINDO	Establishment/ Expansion	June 2021 ~ October 2022	CPO Mill	247	—	247

ø	Ongoing investments over KRW 10 billion as of June 30, 2021 are listed on the table.

6. Product Sales


[Steel]		(In hundred millions of KRW)


Items		2021.1H			2020			2019
Domestic	Hot-Rolled Products		29,665			39,663			42,605
	Cold-Rolled Products		24,664			37,870			39,716
	Stainless Steel		16,792			23,746			21,167
	Others		42,220			63,111			77,026
Export	Hot-Rolled Products		21,331			37,368			41,064
	Cold-Rolled Products		67,078			101,808			125,658
	Stainless Steel		39,125			72,140			80,181
	Others		42,944			66,877			70,667
Total	Gross Sum		283,819			442,583			498,084
	Internal Transaction		(100,420	)		(153,654	)		(177,299	)
	Total		183,399			288,929			320,785


[Trading]		(In hundred millions of KRW)


Items		2021.1H			2020			2019
Domestic	Merchandise		24,780			33,565			29,315
	Product		416			2,028			5,120
	Others		58			240			1,101
Export	Merchandise		46,641			75,922			69,347
	Product		183			528			205
	Others		10			1,191			638
Trades among the 3 countries			131,819			209,446			270,522
Gross Sum			203,906			322,920			376,248
Internal Transaction			(90,296	)		(129,468	)		(154,677	)
Total			113,610			193,452			221,571


[Engineering & Construction]		(In hundred millions of KRW)


Items		2021.1H			2020			2019
Domestic	Building		17,460			42,761			44,681
	Plant		5,262			12,887			10,953
	Civil Engineering		2,916			6,177			6,098
	Others		686			—			—
Overseas			3,450			7,089			7,190
Own Construction			3,519			4,866			5,712
Other Subsidiary company sales			476			2,320			2,246
Gross Sum			33,770			76,100			76,880
Internal Transaction			(4,019	)		(10,338	)		(7,434	)
Total			29,751			65,762			69,446


[Others]		(In hundred millions of KRW)

Items

2021.1H

2020

2019

Electric Power Sales

16,851

29,785

31,866

7. Derivatives

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

As of June 30, 2021, we assessed the fair value of our 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 16,300 million of gain on valuations of forward exchange contracts which was expired on April 2021. Also, we recognized KRW 118,510 million of valuation gain on currency swap contracts. The transaction gain of currency swap contracts is KRW 530 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
POSCO International Corporation	Investment on the 2^nd 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 gas field and newly developing Shwe Phyu gas field, production will start in 2021 from Shwe and 2022 from Shwe Phyu


			4) Other Information • Location: North-west offshore, Myanmar • This investment is the 2^nd 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. ø 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 3^rd 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 3^rd 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. ø 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


	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)

POSCO ENERGY			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

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
		LiB Materials Business Office
	POSCO COATED & COLOR STEEL Co,. Ltd.	R&D Center
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.	R&D Center
	POSCO SPS	TMC Business Group
	POSCO SPS	Stainless Quality Technology Group
Engineering & Construction	POSCO Engineering & Construction,. LTD.	R&D Center
Engineering & Construction	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
	POSCO CHEMICAL	Energy Material R&D Center
	POSCO M-TECH	R&D Center

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


Category	Business Area
Category	Steel			Trade		Engineering & Construction		Others		Total
Selling and Administrative Cost		43,432			—		1,249		15,960		60,642
Manufacturing Cost		152,813			—		220		28		153,061
R&D Cost (Intangible Assets)		(27,153	)		—		—		226		(26,927	)
Total*		169,092			—		1,469		16,214		186,776
Government Subsidy		—			—		270		—		270
R&D/Sales Ratio (%)		0.92			—		0.05		0.96		0.54

*	Total includes government subsidy.

III. Financial Statements

1. Consolidated Financial Statements

A. Summary

(In millions of KRW)


Account	2021.1H		2020		2019
		As of June 30, 2021		As of December 31, 2020		As of December 31, 2019
[Total current assets]		40,181,666		35,830,815		34,842,374
Cash and cash equivalents		4,022,137		4,754,644		3,514,872
Other receivables, net		1,769,510		1,494,239		1,581,517
Other short-term financial assets		12,714,409		11,709,209		8,996,049
Trade accounts and notes receivable, net		9,422,049		8,120,619		9,078,351
Inventories		11,426,742		9,051,790		10,920,320
Other current assets		826,819		700,314		751,265
[Total non-current assets]		43,287,935		43,256,158		44,216,287
Other receivables, net		1,163,568		1,195,962		1,140,878
Other long-term financial assets		1,890,471		1,561,807		1,669,389
Investments in associates and joint ventures		3,881,077		3,876,249		3,927,755
Property, plant and equipment, net		29,334,215		29,400,141		29,925,973
Intangible assets, net		4,318,275		4,449,432		4,908,473
Other non-current assets		2,700,329		2,772,567		2,643,819
Total assets		83,469,601		79,086,973		79,058,661
[Total current liabilities]		17,744,270		16,854,968		16,323,690
[Total non-current liabilities]		14,870,050		14,557,413		14,940,264
Total liabilities		32,614,320		31,412,381		31,263,954
[Equity attributable to owners of the controlling company]		46,756,522		44,331,350		44,471,873
Share capital		482,403		482,403		482,403


Capital surplus	1,356,188		1,310,547		1,376,251
Hybrid bonds	199,384		199,384		199,384
Retained earnings	48,220,728		46,111,457		45,080,118
Other equity attributable to owners of the controlling company	(3,502,181	)	(3,772,441	)	(2,666,283	)
[Non-controlling Interests]	4,098,759		3,343,242		3,322,834
Total equity	50,855,281		47,674,592		47,794,707
	From January 1, 2021 to June 30, 2021		From January 1, 2020 to December 31, 2020		From January 1, 2019 to December 31, 2019
Revenue	34,361,189		57,792,796		64,366,848
Operating profit	3,753,030		2,403,035		3,868,855
Profit	2,945,951		1,788,152		1,982,637
[Profit attributable to owners of the controlling company]	2,689,079		1,602,147		1,835,086
[Profit attributable to non-controlling interests]	256,872		186,005		147,551
Total comprehensive Income	3,331,768		1,570,204		2,129,105
[Total comprehensive income attributable to owners of the controlling company]	3,069,036		1,415,132		1,997,731
[Total comprehensive income attributable to non-controlling interests]	262,732		155,072		131,374
Earnings per share(KRW)	35,447		20,165		22,823
Number of Consolidated Companies	168		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.

2. Separate Financial Statements

A. Summary

(In millions of KRW)


Account	2021.1H			2020			2019
		As of June 30, 2021			As of December 31, 2020			As of December 31, 2019
[Total current assets]		21,057,743			19,579,954			18,216,066
Cash and Cash equivalents		1,681,126			1,822,660			978,139
Trade accounts and notes receivable, net		4,920,391			3,693,535			3,987,041
Other receivables, net		370,607			279,555			321,352
Other short-term financial assets		8,690,523			9,607,632			7,858,979
Inventories		5,324,506			4,093,829			4,988,530
Other current assets		70,590			82,743			82,025
[Total non-current assets]		37,942,907			37,215,015			37,494,700
Other receivables, net		90,816			84,037			56,468
Other long-term financial assets		1,282,231			1,072,817			1,257,896
Investments in Subsidiaries, associates, and joint ventures		15,825,085			14,883,152			15,069,857
Property, plant and equipment, net		19,930,520			20,216,932			20,132,199
Intangible assets, net		563,501			621,926			708,915
Other non-current assets		250,754			336,151			269,365
Total assets		59,000,650			56,794,969			55,710,766
[Total current liabilities]		5,347,756			5,089,111			3,331,446
[Total non-current Liabilities]		6,850,032			6,591,154			6,765,135
Total liabilities		12,197,788			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]		47,464,669			45,781,777			45,372,411
[Other equity]		(2,682,883	)		(2,688,149	)		(1,692,233	)
Total equity		46,802,862			45,114,704			45,614,185
		From January 1, 2021 to June 30, 2021			From January 1, 2020 to December 31, 2020			From January 1, 2019 to December 31, 2019
Revenue		17,077,800			26,509,920			30,373,511
Operating profit		2,680,956			1,135,197			2,586,359
Profit		2,270,335			965,863			1,175,712
Earnings per share(KRW)		29,921			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”).

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

(d) Finance Committee

(e) Audit Committee

(f) Executive Management Committee

ø	Composition of the Special Committees under the BoD and their Functions(as of August 13, 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
Director Candidate Recommendation Committee	3 Outside Directors	Chung, Moon-Ki (Chairman) Kim, Sung-Jin Kwon, Tae-Kyun	(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)
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

*	In order to strengthen the roles of the Board of Directors regarding ESG related matters, the Special Committees were reorganized including new establishment of the ESG Committee at the General Meeting of Shareholders held on March 12, 2021.

*	In order to strengthen independence of the Director Candidate Recommendation Committee, on August 13, 2021, the Board of Directors amended the Operational Regulation of Board of Directors so that the Director Candidate Recommendation Committee consists of only Outside Directors.

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

(January 1, 2021 ~ March 11, 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 53^rd 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.

(March 12, 2021 ~ August 13, 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 1^st 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	All 5 Cases Approved — — —

		5. Transaction Plans with affiliates for the fiscal year of 2021 • Report Agenda 1. Business performance of the 1^st quarter of 2021 2. Status of global steel growth strategy implementation 3. The performance and assessment of Board of Directors for 2020
2021-7	August 13	• Deliberation Agenda 1. Resolution on the dividend for the 2^nd quarter of 2021 2. Financing plan of 2021 3. Financial contribution to the joint labor welfare fund with partner companies 4. Amendment of the Operational Regulation of Board of Directors • Report Agenda 1. Implementation status of the BoD resolved agendas 2. Business performance of the 2^nd quarter of 2021 3. Group research center plan	All 4 Cases Approved — — —

ø	Major Activities of Outside Directors on the Board of Directors (January 1, 2021 ~ August 13, 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)	—
2021-7	August 13	7(7)	—

(4) Special Committees under the BoD and Their Activities (From January 1, 2021 to August 13, 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 1. Qualification review of the Inside Directors candidates 2. Plans to strengthen roles of the Board of Directors in relation to ESG	Approved — —

•

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

•

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

•

Director Candidate Recommendation Committee (March 12, 2021 ~ August 13, 2021)


Date	Agenda	Approval
August 13, 2021	Review on Outside Director candidate pool	—

•

ESG Committee (March 12, 2021 ~ August 13, 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	—
August 13, 2021	• Preliminary Review 1. Amendment of the Operational Regulation of Board of Directors 2. Financial contribution to the joint labor welfare fund with partner companies • Deliberation Agenda 1. Venture fund investment for new growth businesses 2. The 2^nd investment in POSCO-HY Clean Metal • Report Agenda Fair Trade Voluntary Compliance Program Operation Status in 201	— — Approved Approved —

•

Finance Committee (March 12, 2021 ~ August 13, 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	—
August 11, 2021	• Deliberation Agenda 1. Venture fund investment for new growth businesses 2. Payment Guarantee Plan for PT. Krakatau POSCO • Preliminary Review Financing plan of 2021	Approved Approved —

•

Executive Management Committee (January 1, 2021 ~ August 13, 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. Construction of Park1538 Gwangyang PR Hall	— All 3 Cases Approved
May 25, 2021	Improvement of facilities in Gwangyang #2 power plant	Approved
June 15, 2021	Establishment of refrigeration facilities in Pohang #2 Chemical conversion factory to increase desulfurization capacity	Approved
July 20, 2021	1. Investment in high-purity nickel refining business for batteries 2. Replacement of air blowing facilities in Gwangyang #3, #4 and #5 blast furnace	All 2 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 ~ August 13, 2021)


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 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	All 3 Cases Approved — — — — —
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 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 1^st quarter of 2021	— — — — —
6	August 12	• Deliberation Agenda Approval on audit contract for POSCO Lithium Soliton and POSCO-HY Clean Metal • Report Agenda 1. Approval report for PT.KP audit service contract change 2. Approval report for POSCO non-audit service contract 3. Results of internal audit on the consolidated financial statements for the 2^nd quarter of 2021 4. Results of external review of the consolidated financial statements for the 2^nd quarter of 2021 5. External Auditor Audit Activity Evaluation Results for the year 2020 6. Internal audit performance in the 1^st half of 2021 and plans for the 2^nd half 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.

(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) The Salary of Directors and Audit Committee Members

(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	3,460	565	10,000	—
Outside Director (Excluding Audit Committee Members)	4	163	32		—
Audit Committee Members	3	111	37		—

ø	No. of people: The number of Directors and the Audit Committee members who are in office as of June 30, 2021.

ø	Total payment: The total amount of remuneration paid to all Directors, including the Audit Committee members, who served from January 1 to June 30, 2021.

ø	Average payment per person is calculated based on the paid amount to the current Directors and Audit Committee members as of June 30, 2021.

POSCO

and Subsidiaries

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 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 (the “Company”), which comprise the condensed consolidated interim statement of financial position as of June 30, 2021, the condensed consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2021 and 2020, the condensed consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 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

August 13, 2021

This report is effective as of August 13, 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.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of June 30, 2021 and December 31, 2020

(Unaudited)


(in millions of Won)	Notes	June 30, 2021		December 31, 2020
Assets

Cash and cash equivalents	21	W	4,022,137		4,754,644
Trade accounts and notes receivable, net	4,21,26,27,34		9,422,049		8,120,619
Other receivables, net	5,21,34		1,769,510		1,494,239
Other short-term financial assets	6,21		12,714,409		11,709,209
Inventories	7		11,426,742		9,051,790
Current income tax assets			29,668		49,481
Assets held for sale	8		22,090		34,210
Other current assets	14		775,061		616,623

Total current assets			40,181,666		35,830,815

Long-term trade accounts and notes receivable, net	4,21		82,100		86,423
Other receivables, net	5,21		1,163,568		1,195,962
Other long-term financial assets	6,21		1,890,471		1,561,807
Investments in associates and joint ventures	9		3,881,077		3,876,249
Investment property, net	11		1,007,446		994,781
Property, plant and equipment, net	12		29,334,215		29,400,141
Goodwill and other intangible assets, net	13		4,318,275		4,449,432
Defined benefit assets, net	19		26,033		86,149
Deferred tax assets			1,353,661		1,335,154
Other non-current assets	14		231,089		270,060

Total non-current assets			43,287,935		43,256,158

Total assets		W	83,469,601		79,086,973

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued

As of June 30, 2021 and December 31, 2020

(Unaudited)


(in millions of Won)	Notes	June 30, 2021			December 31, 2020
Liabilities

Trade accounts and notes payable	21,34	W	4,144,617			3,755,513
Short-term borrowings and current installments of long-term borrowings	4,15,21		8,360,204			8,677,529
Other payables	16,21,34		1,831,865			1,845,266
Other short-term financial liabilities	17,21		78,175			141,404
Current income tax liabilities			1,018,005			366,476
Liabilities directly associated with the assets held for sale	8		7			25
Provisions	18,35		391,717			443,273
Other current liabilities	20,26,27		1,919,680			1,625,482

Total current liabilities			17,744,270			16,854,968

Long-term trade accounts and notes payable	21		34,434			22,323
Long-term borrowings, excluding current installments	15,21		11,942,638			11,820,078
Other payables	16,21		716,899			558,924
Other long-term financial liabilities	17,21		47,042			133,588
Defined benefit liabilities, net	19		168,932			141,785
Deferred tax liabilities			1,376,472			1,320,726
Long-term provisions	18,35		539,716			522,969
Other non-current liabilities	20,26		43,917			37,020

Total non-current liabilities			14,870,050			14,557,413

Total liabilities			32,614,320			31,412,381

Equity

Share capital	22		482,403			482,403
Capital surplus	22		1,356,188			1,310,547
Hybrid bonds	23		199,384			199,384
Reserves	24		(993,888	)		(1,380,918	)
Treasury shares	25		(2,508,294	)		(2,391,523	)
Retained earnings			48,220,729			46,111,457

Equity attributable to owners of the controlling company			46,756,522			44,331,350
Non-controlling interests	23		4,098,759			3,343,242

Total equity			50,855,281			47,674,592

Total liabilities and equity		W	83,469,601			79,086,973

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income

For the three-month and six-month periods ended June 30, 2021 and 2020

(Unaudited)


		For the three-month period ended June 30						For the six-month period ended June 30
(in millions of Won, except per share information)	Notes	2021			2020			2021			2020
Revenue	26,27,34,37	W	18,292,466			13,721,554			34,361,189			28,267,367
Cost of sales	7,27,31,34		(15,469,223	)		(12,987,612	)		(29,400,171	)		(26,223,142	)

Gross profit			2,823,243			733,942			4,961,018			2,044,225

Selling and administrative expenses	31,34
Reversal of (impairment loss) on trade accounts and notes receivable			1,368			(25,337	)		7,523			(35,325	)
Other administrative expenses	28		(516,069	)		(456,541	)		(1,022,390	)		(933,607	)
Selling expenses	28		(107,953	)		(84,348	)		(193,121	)		(202,326	)

Operating profit			2,200,589			167,716			3,753,030			872,967

Share of profit (loss) of equity-accounted investees, net	9		187,869			(11,530	)		265,869			20,134

Finance income and costs	21,29
Finance income			379,944			210,669			1,175,488			1,530,093
Finance costs			(433,678	)		(232,049	)		(1,299,977	)		(1,577,325	)

Other non-operating income and expenses	34
Reversal of (impairment loss) on other receivables			(6,143	)		410			(12,749	)		(787	)
Other non-operating income	30		203,827			102,603			333,798			166,904
Other non-operating expenses	30,31		(134,569	)		(103,673	)		(258,061	)		(217,437	)

Profit before income tax	37		2,397,839			134,146			3,957,398			794,549
Income tax expense	32,37		(590,667	)		(29,278	)		(1,011,447	)		(255,023	)

Profit			1,807,172			104,868			2,945,951			539,526

Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans	19		(1,053	)		1,198			(2,778	)		(2,652	)
Net changes in fair value of equity investments at fair value through other comprehensive income	21		76,883			36,870			168,889			(165,966	)
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees			(15,387	)		142,902			72,712			81,696
Foreign currency translation differences			(15,937	)		70,576			146,769			66,142
Gains or losses on valuation of derivatives	21		239			(784	)		225			(841	)

Other comprehensive income (loss), net of tax			44,745			250,762			385,817			(21,621	)

Total comprehensive income		W	1,851,917			355,630			3,331,768			517,905

Profit attributable to:
Owners of the controlling company		W	1,664,343			40,282			2,689,079			435,675
Non-controlling interests			142,829			64,586			256,872			103,851

Profit		W	1,807,172			104,868			2,945,951			539,526

Total comprehensive income attributable to:
Owners of the controlling company		W	1,718,526			282,755			3,069,036			412,741
Non-controlling interests			133,391			72,875			262,732			105,164

Total comprehensive income		W	1,851,917			355,630			3,331,768			517,905

Basic and diluted earnings per share (in Won)	33		21,986			483			35,447			5,400

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal			controlling interests			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		—		—			—		—			—			435,675			435,675			103,851			539,526
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			(2,768	)		(2,768	)		116			(2,652	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		77,600			—			—			77,600			4,096			81,696
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		(162,981	)		—			(2,985	)		(165,966	)		—			(165,966	)
Foreign currency translation differences, net of tax		—		—			—		69,000			—			—			69,000			(2,858	)		66,142
Gains or losses on valuation of derivatives, net of tax		—		—			—		(799	)		—			—			(799	)		(42	)		(841	)

Total comprehensive income		—		—			—		(17,180	)		—			429,922			412,742			105,163			517,905

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(320,462	)		(320,462	)		(60,517	)		(380,979	)
Interim dividends		—		—			—		—			—			(120,174	)		(120,174	)		—			(120,174	)
Changes in ownership interest in subsidiaries		—		(6,766	)		—		—			—			—			(6,766	)		139,008			132,242
Repayment of redeemable convertible preferred shares		—		(33,581	)		—		—			—			—			(33,581	)		(245,000	)		(278,581	)
Interest of hybrid bonds		—		—			—		—			—			(4,587	)		(4,587	)		(3,637	)		(8,224	)
Acquisition of treasury shares		—		—			—		—			(64,823	)		—			(64,823	)		—			(64,823	)
Others		—		(755	)		—		5,874			—			(8,419	)		(3,300	)		4,373			1,073


Total transactions with owners of the controlling company		—		(41,102	)		—		5,874			(64,823	)		(453,642	)		(553,693	)		(165,773	)		(719,466	)

Balance as of June 30, 2020	W	482,403		1,335,149			199,384		(1,169,286	)		(1,573,126	)		45,056,397			44,330,921			3,262,225			47,593,146

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal			controlling interests			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		—		—			—		—			—			2,689,079			2,689,079			256,872			2,945,951
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			(5,007	)		(5,007	)		2,229			(2,778	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		76,587			—			—			76,587			(3,875	)		72,712
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		170,940			—			(2,066	)		168,874			15			168,889
Foreign currency translation differences, net of tax		—		—			—		139,339			—			—			139,339			7,430			146,769
Gains or losses on valuation of derivatives, net of tax		—		—			—		164			—			—			164			61			225

Total comprehensive income		—		—			—		387,030			—			2,682,006			3,069,036			262,732			3,331,768

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(342,565	)		(342,565	)		(59,835	)		(402,400	)
Interim dividends		—		—			—		—			—			(226,877	)		(226,877	)		—			(226,877	)
Changes in subsidiaries		—		—			—		—			—			—			—			16,800			16,800
Changes in ownership interest in subsidiaries		—		51,243			—		—			—			—			51,243			538,054			589,297
Interest of hybrid bonds		—		—			—		—			—			(4,562	)		(4,562	)		(3,597	)		(8,159	)
Acquisition of treasury shares		—		—			—		—			(116,771	)		—			(116,771	)		—			(116,771	)
Others		—		(5,602	)		—		—			—			1,270			(4,332	)		1,363			(2,969	)

Total transactions with owners of the controlling company		—		45,641			—		—			(116,771	)		(572,734	)		(643,864	)		492,785			(151,079	)

Balance as of June 30, 2021	W	482,403		1,356,188			199,384		(993,888	)		(2,508,294	)		48,220,729			46,756,522			4,098,759			50,855,281

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)	Notes	June 30, 2021			June 30, 2020
Cash flows from operating activities
Profit		W	2,945,951			539,526
Adjustments for:
Depreciation			1,557,056			1,555,037
Amortization			220,474			230,394
Finance income			(577,967	)		(749,166	)
Finance costs			657,286			894,470
Income tax expense			1,011,447			255,023
Impairment loss on property, plant and equipment			16,892			21,400
Gain on disposal of property, plant and equipment			(6,939	)		(7,346	)
Loss on disposal of property, plant and equipment			36,147			78,989
Impairment loss on other intangible assets			7,220			1,184
Gain on disposal of investments in subsidiaries, associates and joint ventures			(26,054	)		(41,339	)
Loss on disposal of investments in subsidiaries, associates and joint ventures			7,569			10,073
Share of profit of equity-accounted investees			(265,869	)		(20,134	)
Impairment loss on assets held for sale			—			5,030
Gain on disposal of assets held for sale			(45,743	)		(300	)
Expenses related to post-employment benefit			120,595			123,989
Impairment loss on trade and other receivables			5,226			36,112
Loss on valuation of inventories			27,835			129,398
Increase to provisions			43,414			19,156
Others, net			(48,199	)		(14,055	)

			2,740,390			2,527,915

Changes in operating assets and liabilities	36		(3,295,393	)		1,205,502

Interest received			112,130			175,455
Interest paid			(243,277	)		(346,723	)
Dividends received			276,792			140,616
Income taxes paid			(321,483	)		(391,928	)

Net cash provided by operating activities		W	2,215,110			3,850,363

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)	Notes	June 30, 2021			June 30, 2020
Cash flows from investing activities
Acquisitions of short-term financial instruments		W	(19,204,164	)		(21,020,169	)
Proceeds from disposal of short-term financial instruments			18,077,010			19,491,360
Increase in loans			(418,390	)		(503,914	)
Collection of loans			547,258			544,806
Acquisitions of securities			(142,498	)		(674,767	)
Proceeds from disposal of securities			216,672			270,642
Acquisitions of investment in associates and joint ventures			(91,734	)		(85,908	)
Proceeds from disposal of investment in associates and joint ventures			37,756			7,591
Acquisitions of investment property			(565	)		(3,907	)
Proceeds from disposal of investment property			2,591			250
Acquisitions of property, plant and equipment			(1,224,620	)		(1,622,465	)
Payment of disposal of property, plant and equipment			(10,164	)		(19,139	)
Acquisitions of intangible assets			(124,012	)		(197,535	)
Proceeds from disposal of intangible assets			12,861			71,304
Proceeds from disposal of assets held for sale			58,750			590
Collection of lease receivables			61,849			27,453
Cash received from disposal of business, net of cash transferred			—			38,360
Others, net			1,064			(3,860	)

Net cash used in investing activities			(2,200,336	)		(3,679,308	)

Cash flows from financing activities
Proceeds from borrowings			631,374			3,218,540
Repayment of borrowings			(1,939,753	)		(1,044,881	)
Proceeds from short-term borrowings, net			734,001			994,266
Capital contribution from non-controlling interests			614,259			139,008
Payment of cash dividends			(629,243	)		(500,915	)
Acquisition of treasury shares			(116,771	)		(64,823	)
Payment of interest of hybrid bonds			(8,204	)		(8,250	)
Repayment of lease liabilities			(113,657	)		(96,092	)
Repayment of redeemable convertible preferred shares			—			(278,581	)
Others, net			13,958			(7,987	)

Net cash provided by (used in) financing activities			(814,036	)		2,350,285

Effect of exchange rate fluctuation on cash held			66,755			4,699

Net increase (decrease) in cash and cash equivalents			(732,507	)		2,526,039

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	4,023,071			6,041,285

See accompanying notes to the condensed consolidated interim financial statements.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

As of June 30, 2021

(Unaudited)

1. General Information

General information about POSCO, its 35 domestic subsidiaries including POSCO ENGINEERING & CONSTRUCTION CO., LTD., 132 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 128 associates and joint ventures are as follows:

(a)	The controlling company

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

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

As of June 30, 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 newly established during the six-month period ended June 30, 2021, are as follows:


Company	Date of inclusion	Ownership (%)		Reason
Poland Legnica Sourcing Center Sp. z o.o	February 2021		100.00	New establishment
POSCO Lithium Solution Co., Ltd.	April 2021		100.00	New establishment
POSCO-HY Clean Metal Co., Ltd.	May 2021		65.00	New establishment

(c)	Subsidiaries for which the Company has lost control during the six-month period ended June 30, 2021, are as follows:


Company	Date of exclusion	Reason
POSCO E&C Mongolia	January 2021	Liquidation
Suncheon Eco Trans Co. LTD	May 2021	Loss of control due to bankruptcy petition

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 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.

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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

•

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.

Changes in Accounting Policies

(a)	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” and 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” and K-IFRS No. 1116 “Lease”. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

New and amended standards not yet adopted

A number of new and amended standards are effective for annual periods beginning after January 1, 2021 and earlier application is permitted but the Company has not early adopted the new or amended standards in preparing these condensed consolidated financial statements.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(a)	K-IFRS No. 1016 “Property, Plant and Equipment”

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the Company is preparing the asset for its intended use. Instead, the Company will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

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

The definition of assets and liabilities to be recognized is amended to refer to the revised Conceptual Framework for Financial Reporting. However, the amendments add an exception which allows K-IFRS No. 1037 “Provisions, Contingent Liabilities and Contingent Assets” and K-IFRS No. 2121 “Levies” to be applied to the liabilities and contingent liabilities included in the scope of these standards. The amendments also clarify that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Current
Trade accounts and notes receivable	W	8,829,346			7,471,916
Finance lease receivables		42,463			41,841
Due from customers for contract work		893,244			948,879
Less: Allowance for doubtful accounts		(343,004	)		(342,017	)

	W	9,422,049			8,120,619

Non-current
Trade accounts and notes receivable	W	127,165			131,010
Finance lease receivables		—			46
Less: Allowance for doubtful accounts		(45,065	)		(44,633	)

	W	82,100			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 June 30, 2021, and December 31, 2020, the carrying amounts of such secured borrowings are W273,906 million and W328,807 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

5. Other Receivables

Other receivables as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Current
Loans	W	245,864			258,735
Other accounts receivable		1,063,630			835,791
Accrued income		403,414			298,157
Deposits		65,900			82,884
Others		19,789			18,015
Lease receivables		52,675			68,198
Less: Allowance for doubtful accounts		(81,762	)		(67,541	)

	W	1,769,510			1,494,239

Non-current
Loans	W	728,596			798,287
Other accounts receivable		171,329			197,304
Accrued income		70,127			86,920
Deposits		358,445			284,588
Lease receivables		97,701			128,366
Less: Allowance for doubtful accounts		(262,630	)		(299,503	)

	W	1,163,568			1,195,962

6. Other Financial Assets

Other

financial assets as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Derivative assets	W	53,875		99,324
Debt securities		53,361		154,154
Deposit instruments(*1,2)		2,656,502		2,322,327
Short-term financial instruments(*2)		9,950,671		9,133,404

	W	12,714,409		11,709,209

Non-current
Derivative assets	W	51,312		18,551
Equity securities(*3)		1,339,116		1,120,968
Debt securities		24,844		20,260
Other securities(*3)		439,914		364,404
Deposit instruments(*2)		35,285		37,624

	W	1,890,471		1,561,807

(*1)	As of June 30, 2021 and December 31, 2020, W3,384 million and W4,881 million, respectively, are restricted in use for government project.

(*2)	As of June 30, 2021 and December 31, 2020, financial instruments amounting to W89,116 million and W46,855 million, respectively, are restricted in use for financial arrangements, pledge and others.

(*3)	As of June 30, 2021 and December 31, 2020, W188,363 million and W113,674 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

7. Inventories

Inventories as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Finished goods	W	1,493,211			1,285,552
M erchandise		877,811			751,245
Semi-finished goods		1,971,770			1,626,855
Raw materials		2,843,819			1,980,518
Fuel and materials		869,194			876,593
Construction inventories		864,955			936,813
M aterials-in-transit		2,546,427			1,664,770
Others		70,286			61,086

		11,537,473			9,183,432

Less: Allowance for inventories valuation		(110,731	)		(131,642	)

	W	11,426,742			9,051,790

The amounts of loss on valuation of inventories recognized in cost of sales during the six-month period ended June 30, 2021 and the year ended December 31, 2020 were W27,835 million and W54,014 million, respectively.

8. Assets Held for Sale

Details of assets held for sale as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021						December 31, 2020
	The controlling company *(1, 2, 3)**		Subsidiaries		Total		The controlling *company(3)**		Subsidiaries		Total
Asset
Cash and cash equivalents(*4)	W	—		934		934		—		934		934
Other financial assets		—		273		273		—		273		273
Property, plant and equipment		20,164		—		20,164		32,244		40		32,284
Others		—		719		719		—		719		719

	W	20,164		1,926		22,090		32,244		1,966		34,210

Liability
Others	W	—		7		7		—		25		25

(*1)	During the six-month period ended June 30, 2021, the Company sold the land in the Yanghak Neighborhood Park development reserve area that was classified as held for sale and recognized W43,760 million of gain on disposal.

(*2)	During the six-month period ended June 30, 2021, the Company decided to sell the emission rights and reclassified the emission rights to assets held for sale. Upon the sale, the Company recognized W1,316 million loss on disposal.

(*3)

During the year ended December 31, 2019, the Company decided to sell 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 recognized W5,030 million of impairment loss for the difference between the fair value less cost to sell and the carrying amount of the assets.

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

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

9. Investments in Associates and Joint ventures

(a)	Details of investments in associates as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 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	175,691		175,939
Samcheok Blue Power Co.,Ltd.(*1)		4,507,138		34.00		199,410		156,674		145,092
SNNC		18,130,000		49.00		90,650		174,006		160,332
QSONE Co.,Ltd.		200,000		50.00		84,395		85,736		86,004
Chun-cheon Energy Co., Ltd(*1)		17,308,143		49.10		86,541		21,390		23,913
Western Inland highway CO.,LTD.		10,062,564		31.40		50,313		47,049		45,070
NEXTRAIN Co., Ltd.(*2)		—		—		—		—		47,364
Metropolitan Outer Ring Expressway co., ltd.(*1)		4,565,162		23.27		22,826		20,678		13,721
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		2,008,000		29.53		10,040		17,897		17,137
Daesung Steel(*3)		108,038		17.54		14,000		17,656		16,990
PCC Amberstone Private Equity Fund 1(*3)		8,508,486,198		8.80		8,390		9,267		9,230
Others (58 companies)(*1)								97,930		103,472

								823,974		844,264

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		132,907		224,879		199,342
AES-VCM Mong Duong Power Company Limited(*1)		—		30.00		164,303		173,592		158,777
9404-5515 Quebec Inc.(*3)		114,452,000		10.40		124,341		129,322		123,296
Eureka Moly LLC		—		20.00		240,123		45,200		43,520
AMCI (WA) PTY LTD		49		49.00		209,664		70,516		71,732
NCR LLC		—		22.10		72,143		73,508		46,608
KOREA LNG LTD.		2,400		20.00		135,205		25,208		42,229
Nickel Mining Company SAS		3,234,698		49.00		157,585		36,455		40,890
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		134,400,000		40.00		22,423		22,689		22,147
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,200,000		34.00		9,517		16,614		15,181
PT. Wampu Electric Power(*1)		8,708,400		20.00		10,054		14,363		12,716
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		8,084		7,110
Others (25 companies)(*1)								116,571		105,021

								957,001		888,569

							W	1,780,975		1,732,833

(*1)	As of June 30, 2021 and December 31, 2020, investments in associates amounting to W397,994 million and W410,573 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2)	During the six-month period ended June 30, 2021, investment in this associate was transferred to equity security at fair value through other comprehensive income due to decline in ownership upon capital increase in the associate in which the Company did not participate.

(*3)	As of June 30, 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 the structure of its Board of Directors and others.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Details of investments in joint ventures as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 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	162,115		153,457
Others (6 companies)								9,060		14,014

								171,175		167,471

[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672		1,340,459		1,418,056
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		367,366		353,725
KOBRASCO		2,010,719,185		50.00		32,950		70,026		54,400
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961		98,022		91,270
DMSA/AMSA(*1,2)		—		3.87		391,816		24,962		31,104
CSP - Compania Siderurgica do Pecem		1,578,377,432		20.00		676,060		—		—
Others (10 companies)								28,092		27,390

								1,928,927		1,975,945

							W	2,100,102		2,143,416

(*1)	As of June 30, 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 supplemental funding agreement to extend the maturity of the loans of the joint venture by the lenders. However, the Company believed the shareholders’ supplemental funding agreement was invalid and was in arbitration process for annulment. As a result of the final judgement in favor, the Company received a refund of the previously paid-up supplement funding amount and deducted the carrying amount due to a change in the ownership.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(c)	The movements of investments in associates and joint ventures for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

For the six-month period ended June 30, 2021


(in millions of Won)
Company	December 31, 2020 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase *(decrease)(1)**			June 30, 2021 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	175,939		—		—			(248	)		—			175,691
Samcheok Blue Power Co.,Ltd.		145,092		20,000		—			(3,067	)		(5,351	)		156,674
SNNC		160,332		—		(1,469	)		15,143			—			174,006
QSONE Co.,Ltd.		86,004		—		(1,140	)		872			—			85,736
Chun-cheon Energy Co., Ltd		23,913		—		—			(3,088	)		565			21,390
Western Inland highway CO.,LTD.		45,070		2,646		—			(710	)		43			47,049
NEXTRAIN Co., Ltd.		47,364		—		—			(127	)		(47,237	)		—
Metropolitan Outer Ring Expressway co., ltd.		13,721		8,716		—			(1,765	)		6			20,678
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		17,137		—		—			760			—			17,897
Daesung Steel		16,990		—		—			666			—			17,656
PCC Amberstone Private Equity Fund 1		9,230		—		(340	)		526			(149	)		9,267
POSCO MITSUBISHI CARBON TECHNOLOGY		153,457		—		—			8,658			—			162,115
Others (64 companies)		117,486		22,239		(455	)		(9,541	)		(22,739	)		106,990

		1,011,735		53,601		(3,404	)		8,079			(74,862	)		995,149

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		199,342		—		(5,656	)		23,240			7,953			224,879
AES-VCM Mong Duong Power Company Limited		158,777		—		(10,841	)		18,765			6,891			173,592
9404-5515 Quebec Inc.		123,296		—		(3,798	)		4,981			4,843			129,322
Eureka Moly LLC		43,520		—		—			—			1,680			45,200
AMCI (WA) PTY LTD		71,732		—		—			(2,306	)		1,090			70,516
NCR LLC		46,608		18,203		—			(730	)		9,427			73,508
KOREA LNG LTD.		42,229		—		(3,840	)		3,842			(17,023	)		25,208
Nickel Mining Company SAS		40,890		—		—			(4,663	)		228			36,455
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,147		—		—			(494	)		1,036			22,689
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		15,181		—		—			577			856			16,614
PT. Wampu Electric Power		12,716		—		—			923			724			14,363
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		7,110		—		—			429			545			8,084
Roy Hill Holdings Pty Ltd		1,418,056		—		(320,691	)		209,868			33,226			1,340,459
POSCO-NPS Niobium LLC		353,725		—		(6,640	)		6,551			13,730			367,366
KOBRASCO		54,400		—		(7,422	)		17,311			5,737			70,026
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		91,270		—		—			2,668			4,084			98,022
DMSA/AMSA		31,104		—		—			(8,059	)		1,917			24,962
CSP - Compania Siderurgica do Pecem		—		19,176		—			(27,815	)		8,639			—
Others (35 companies)		132,411		754		(3,440	)		12,702			2,236			144,663

		2,864,514		38,133		(362,328	)		257,790			87,819			2,885,928

	W	3,876,249		91,734		(365,732	)		265,869			12,957			3,881,077

(*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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

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
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 (37 companies)		177,201		—		(12,114	)		(23,375	)		(9,301	)		132,411

		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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(d)	Summarized financial information of associates and joint ventures as of and for the six-month period ended June 30, 2021 and the year ended December 31, 2020 are as follows:

June 30, 2021


(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	457,190		458		456,732			—		383
Samcheok Blue Power Co.,Ltd.		1,521,884		1,050,807		471,077			—		(2,262	)
SNNC		584,632		208,332		376,300			363,617		25,700
QSONE Co.,Ltd.		250,571		79,098		171,473			8,748		1,745
Chun-cheon Energy Co., Ltd		600,316		514,065		86,251			140,056		(6,601	)
Western Inland highway CO.,LTD.		175,971		9,517		166,454			—		(932	)
Metropolitan Outer Ring Expressway co., ltd.		142,117		37,640		104,477			—		(433	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		80,945		50,649		30,296			15,500		2,575
Daesung Steel		170,304		101,035		69,269			54,925		3,792
PCC Amberstone Private Equity Fund 1		105,349		—		105,349			6,096		5,979
POSCO MITSUBISHI CARBON TECHNOLOGY		458,794		187,285		271,509			69,594		15,731
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,564,830		666,761		898,069			212,992		92,810
AES-VCM Mong Duong Power Company Limited		1,673,112		1,111,074		562,038			212,056		62,550
9404-5515 Quebec Inc.		1,259,715		4,073		1,255,642			—		47,894
KOREA LNG LTD.		126,370		329		126,041			20,245		19,210
Nickel Mining Company SAS		440,722		312,317		128,405			108,446		(8,592	)
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		109,926		53,406		56,520			13,928		(1,258	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		95,950		41,483		54,467			67,124		1,752
PT. Wampu Electric Power		200,756		131,972		68,784			9,553		4,617
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		72,305		40,128		32,177			48,726		1,586
Roy Hill Holdings Pty Ltd		9,819,731		3,425,896		6,393,835			3,784,148		1,707,488
POSCO-NPS Niobium LLC		734,529		—		734,529			—		10,885
KOBRASCO		174,519		34,467		140,052			56,718		34,892
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		631,527		266,304		365,223			982,946		10,673
DMSA/AMSA		5,240,678		2,698,957		2,541,721			156,734		(187,964	)
CSP - Compania Siderurgica do Pecem		3,635,691		3,709,394		(73,703	)		1,210,650		342,635

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

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
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	)

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 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 June 30, 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
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

11. Investment Property, Net

Changes in the carrying amount of investment property for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

(a)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			*Others(1)**			Ending
Land	W	279,397		1,443		(1,057	)		—			(1,280	)		278,503
Buildings		559,584		2,117		(1,539	)		(10,739	)		19,020			568,443
Structures		1,199		—		—			(305	)		157			1,051
Right-of-use assets		154,601		—		—			(2,211	)		7,059			159,449

	W	994,781		3,560		(2,596	)		(13,255	)		24,956			1,007,446

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

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(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 to W14,953 million.

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

12. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

(a)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1)			*Others(2)**			Ending
Land	W	2,590,087		56,314		(15	)		—			—			10,479			2,656,865
Buildings		4,161,400		5,081		(2,126	)		(158,137	)		(595	)		181,099			4,186,722
Structures		3,025,226		7,583		(311	)		(113,077	)		(4	)		64,541			2,983,958
Machinery and equipment		16,857,307		110,150		(8,983	)		(1,143,918	)		(16,293	)		401,436			16,199,699
Vehicles		37,156		4,948		(312	)		(7,369	)		—			2,369			36,792
Tools		60,301		6,734		(223	)		(14,834	)		—			11,593			63,571
Furniture and fixtures		127,459		9,892		(981	)		(23,507	)		—			21,785			134,648
Lease assets		773,700		159,824		(5,365	)		(78,362	)		—			45,355			895,152
Bearer plants		149,965		—		(17	)		(4,597	)		—			20,113			165,464
Construction-in-progress		1,617,540		1,049,107		(6,074	)		—			—			(649,229	)		2,011,344

	W	29,400,141		1,409,633		(24,407	)		(1,543,801	)		(16,892	)		109,541			29,334,215

(*1)	During the six-month period ended June 30, 2021, the Company recognized impairment losses on individual assets for which operations were discontinued 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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	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 for which operations were discontinued 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.

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

Right-of-use assets

①

Changes in the carrying amount of right-of-use assets presented as investment property and property, plant and equipment for the six-month period ended June 30, 2021 were as follows.


(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	371,719		5,740		(7,141	)		13,034			383,352
Buildings and structures		171,760		16,277		(31,872	)		4,441			160,606
Machinery and equipment		239,181		7,632		(20,871	)		35,941			261,883
Vehicles		11,456		6,516		(3,290	)		(2,948	)		11,734
Ships		106,555		120,217		(8,357	)		—			218,415
Others		27,630		3,442		(9,042	)		(3,419	)		18,611

	W	928,301		159,824		(80,573	)		47,049			1,054,601

②

Changes in the carrying amount of right-of-use assets presented as investment property and 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	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

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

2)	Amount recognized in profit or loss

The amounts recognized in profit or loss related to leases for the three-month and the six-month periods ended June 30, 2021 and 2020 were as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(in millions of Won)	2021		2020		2021		2020
Interest on lease liabilities	W	8,179		8,822		17,133		17,830
Expenses relating to short-term leases		4,636		3,845		9,930		8,850
Expenses relating to leases of low-value assets		3,918		3,595		7,745		7,924

	W	16,733		16,262		34,808		34,604

13. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill and other intangible assets for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

(a)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss(*2)			*Others(3)**			Ending
Goodwill	W	903,893		—		—			—			—			1,148			905,041
Intellectual property rights		2,170,738		101,783		(485	)		(131,902	)		—			33,975			2,174,109
Membership(*1)		138,703		4,010		(3,119	)		(64	)		(4	)		208			139,734
Development expense		227,111		306		—			(37,472	)		—			(29,906	)		160,039
Port facilities usage rights		236,272		—		—			(11,055	)		—			142			225,359
Exploratation and evaluation assets		57,140		1,833		—			(7	)		258			27			59,251
Customer relationships		330,247		—		—			(22,239	)		—			(73	)		307,935
Other intangible assets		385,328		27,886		(14,841	)		(17,735	)		(7,180	)		(26,651	)		346,807

	W	4,449,432		135,818		(18,445	)		(220,474	)		(6,926	)		(21,130	)		4,318,275

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

(*2)	During the six-month period ended June 30, 2021, the Company decided to sell a portion of emission rights and recognized W7,180 million of impairment loss since book value exceeded fair value less costs to sell.

(*3)	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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	For the year ended December 31, 2020


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment *loss(2)**			*Others(3)**			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)

During the year ended December 31, 2020, the Company recognized W188,619 million of impairment loss on goodwill allocated to POSCO INTERNATIONAL Corporation CGU, a subsidiary included in trading segment since the recoverable amount calculated on the basis of value in use is less than the carrying amount of the CGU.

(*3)	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.

14. Other Assets

Other assets as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Advance payments	W	428,225		348,753
Prepaid expenses		282,608		181,985
Firm commitment asset		31,828		23,506
Others		32,400		62,379

	W	775,061		616,623

Non-current
Advance payments	W	22,263		21,587
Prepaid expenses		84,749		92,774
Others(*1)		124,077		155,699

	W	231,089		270,060

(*1)

As of June 30, 2021 and December 31, 2020, the Company recognized tax assets amounting to W67,521 million and W121,225 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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

15. Borrowings

(a)	Short-term borrowings and current portion of long-term borrowings and others as of June 30, 2021 and December 31, 2020 are as follows:

(in millions of Won)


	Lenders	Interest rate (%)		June 30, 2021			December 31, 2020
Short-term borrowings
Bank overdrafts	JP Morgan and others		0.53 ~ 4.83	W	182,437			146,762
Short-term borrowings	HSBC and others		0.17 ~ 8.50		5,907,191			5,047,633

					6,089,628			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		731,366			1,067,338
Current portion of debentures	Merrill Lynch and others		1.14 ~ 4.30		1,539,982			2,417,339
Less: Current portion of discount on debentures issued					(772	)		(1,543	)

					2,270,576			3,483,134

				W	8,360,204			8,677,529

(b)	Long-term borrowings, excluding current portion and others as of June 30, 2021 and December 31, 2020 are as follows:

(in millions of Won)


	Lenders	Interest rate (%)		June 30, 2021			December 31, 2020
Long-term borrowings	Export-Import Bank of Korea and others		0.45 ~ 4.50	W	3,485,128			3,366,400
Less: Present value discount					(13,963	)		(16,058	)
Bonds	KB Securities co., Ltd. and others		0.50 ~ 4.00		8,502,103			8,505,485
Less: Discount on debentures issued					(30,630	)		(35,749	)

				W	11,942,638			11,820,078

(c)	Assets pledged as collateral in regard to the borrowings as of June 30, 2021 are as follows:


(in millions of Won)	Lenders	Book value		Pledged amount
Cash and cash equivalents	Shinhan Bank and others	W	22,894		23,116
Property, plant and equipment and Investment property	Korea Development Bank and others		4,353,854		4,945,331
Trade accounts and notes receivable	Korea Development Bank and others		275,033		274,417
Inventories	Export-Import Bank of Korea and others		106,231		12,650
Financial instruments	KB Kookmin Bank and others		25,529		25,529

		W	4,783,541		5,281,043

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

16. Other Payables

Other payables as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Accounts payable	W	812,905		800,439
Accrued expenses		734,490		697,087
Dividend payable		2,691		2,703
Lease liabilities		170,899		244,548
Withholdings		110,880		100,489

	W	1,831,865		1,845,266

Non-current
Accounts payable	W	12,711		5,572
Accrued expenses		4,942		4,953
Lease liabilities		633,877		495,127
Withholdings		65,369		53,272

	W	716,899		558,924

17. Other Financial Liabilities

Other financial liabilities as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Derivative liabilities	W	54,679		82,859
Financial guarantee liabilities		23,496		58,545

	W	78,175		141,404

Non-current
Derivative liabilities	W	43,240		129,505
Financial guarantee liabilities		3,802		4,083

	W	47,042		133,588

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

18. Provisions

(a)	Provisions as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021				December 31, 2020
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	55,149		49,843		73,441		48,510
Provision for construction warranties		12,926		220,563		9,662		217,435
Provision for legal contingencies and claims(*1)		33,156		66,350		24,275		63,175
Provision for the restoration(*2)		6,376		146,066		5,307		134,438
Others(3,4)		284,110		56,894		330,588		59,411

	W	391,717		539,716		443,273		522,969

(*1)	The Company recognized probable outflow of resources amounting to W76,191 million and W59,211 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of June 30, 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 of W15,166 million as provisions for restoration as of June 30, 2021. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials currently available to recover the land. In addition, the Company has applied a discount rate of 1.57~1.81% to measure present value of these costs.

(*3)

As of June 30, 2021 and December 31, 2020, POSCO ENERGY CO., LTD., and Korea Fuel Cell, subsidiaries of the Company, recognized W72,165 million and W80,842 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 of W42,161 million for greenhouse gas emissions in excess of the quantity of free quota emission rights received, which is expected to be submitted subsequent to June 30, 2021.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Changes in provisions for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Increase		Utilization			Reversal			*Others(1)**			Ending
Provision for bonus payments	W	121,951		41,157		(55,217	)		(1,880	)		(1,019	)		104,992
Provision for construction warranties		227,097		38,170		(30,389	)		(1,502	)		113			233,489
Provision for legal contingencies and claims		87,450		22,120		(9,957	)		(2,607	)		2,500			99,506
Provision for the restoration		139,745		22,113		(3,387	)		(10,460	)		4,431			152,442
Others		389,999		128,732		(99,062	)		(81,398	)		2,733			341,004

	W	966,242		252,292		(198,012	)		(97,847	)		8,758			931,433

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

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.

19. Employee Benefits

(a)	Defined contribution plans

The expenses related to post-employment benefit plans under defined contribution plans for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:

For the three-month periods
ended June 30

For the six-month periods
ended June 30

(in millions of Won)

2021

2020

2021

2020

Expense related to post-employment benefit plans
under defined contribution plans

12,369

11,845

24,550

25,047

(b)	Defined benefit plan

The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Present value of funded obligations	W	2,435,647			2,439,938
Fair value of plan assets(*1)		(2,305,478	)		(2,397,717	)
Present value of non-funded obligations		12,730			13,415

Net defined benefit liabilities	W	142,899			55,636

(*1)	As of June 30, 2021 and December 31, 2020, the Company recognized net defined benefit assets amounting to W26,033 million and W86,149 million respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

Changes in present value of defined benefit obligations for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Defined benefit obligation at the beginning of period	W	2,453,353			2,431,880
Current service costs		120,405			245,047
Interest costs		25,525			47,485
Remeasurements		2,808			(52,732	)
Benefits paid		(153,324	)		(225,293	)
Others		(390	)		6,966

Defined benefit obligation at the end of period	W	2,448,377			2,453,353

Changes in fair value of plan assets for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:


(in millions of Won)	June 30, 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		25,335			44,208
Remeasurement of plan assets		(2,516	)		(600	)
Contributions to plan assets		16,157			307,367
Benefits paid		(130,543	)		(213,246	)
Others		(672	)		4,839

Fair value of plan assets at the end of period	W	2,305,478			2,397,717

The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(in millions of Won)	2021		2020		2021		2020
Current service costs	W	58,066		61,202		120,405		122,511
Net interest costs		36		179		190		1,478

	W	58,102		61,381		120,595		123,989

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

20. Other Liabilities

Other liabilities as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Due to customers for contract work	W	919,991		807,465
Advances received		473,537		416,960
Unearned revenue		45,147		24,433
Withholdings		456,803		332,327
Firm commitment liability		9,078		35,993
Others		15,124		8,304

	W	1,919,680		1,625,482

Non-current
Unearned revenue	W	23,386		17,953
Others		20,531		19,067

	W	43,917		37,020

21. Financial Instruments

(a)	Classification and fair value of financial instruments

The carrying amount and fair values of financial assets and financial liabilities by fair value hierarchy as of June 30, 2021 and December 31, 2020 are as follows:

①

June 30, 2021


(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	82,991		—		82,991		—		82,991
Short-term financial instruments		9,950,671		—		9,950,671		—		9,950,671
Debt securities		13,798		—		—		13,798		13,798
Other securities		439,914		37,676		2,157		400,081		439,914
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments(*2)		22,196		—		22,196		—		22,196
Fair value through other comprehensive income
Equity securities		1,339,116		1,174,853		—		164,263		1,339,116
Debt securities		13,261		—		—		13,261		13,261
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		4,022,137		—		—		—		—
Trade accounts and notes receivable		8,681,429		—		—		—		—
Other receivables		2,476,203		—		—		—		—
Debt securities		51,146		—		—		—		—
Deposit instruments		2,691,787		—		—		—		—

	W	29,786,649		1,212,529		10,058,015		593,403		11,863,947

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	72,067		—		72,067		—		72,067
Derivative hedging instruments(*2)		25,852		—		25,852		—		25,852
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		4,179,051		—		—		—		—
Borrowings		20,302,842		—		20,496,400		—		20,496,400
Financial guarantee liabilities		27,298		—		—		—		—
Others		2,446,321		—		—		—		—

	W	27,053,431		—		20,594,319		—		20,594,319

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

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(*2)

The Company applies hedge accounting which uses forward contracts as hedging instrument in order to hedge the risk of changes in fair value of product prices regarding firm commitments or purchase commitments. Also, the Company applies cash flow 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.

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.

Finance income and costs by category of financial instrument for the six-month periods ended June 30, 2021 and 2020 were as follows:

①

For the six-month period ended June 30, 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 income (loss)
Financial assets at fair value through profit or loss	W	76,894			(10,092	)		—			1,834			7,834			76,470			—
Derivatives assets		—			86,297			—			179,226			—			265,523			—
Financial assets at fair value through other comprehensive income		—			—			—			—			21,691			21,691			168,889
Financial assets measured at amortized cost		39,493			—			227,861			(6,417	)		(89	)		260,848			—
Derivatives liabilities		—			44,500			—			(230,286	)		—			(185,786	)		225
Financial liabilities measured at amortized cost		(235,613	)		—			(341,254	)		—			13,632			(563,235	)		—

	W	(119,226	)		120,705			(113,393	)		(55,643	)		43,068			(124,489	)		169,114

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

②

For the six-month period ended June 30, 2020


(in millions of Won)	Finance income and costs
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Others			Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	82,003			7,804			—			2,854			998			93,659			—
Derivatives assets		—			264,487			—			138,177			—			402,664			—
Financial assets at fair value through other comprehensive income		—			—			—			—			25,568			25,568			(165,966	)
Financial assets measured at amortized cost		121,999			—			296,873			(9,620	)		(160	)		409,092			—
Derivatives liabilities		—			(39,069	)		—			(176,867	)		—			(215,936	)		(841	)
Financial liabilities measured at amortized cost		(346,799	)		—			(415,610	)		—			130			(762,279	)		—

	W	(142,797	)		233,222			(118,737	)		(45,456	)		26,536			(47,232	)		(166,807	)

Finance income and costs by category of financial instrument for the three-month periods ended June 30, 2021 and 2020 were as follows:

①

For the three-month period ended June 30, 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 income (loss)
Financial assets at fair value through profit or loss	W	41,559			(5,241	)		—			2,296			7,764			46,378			—
Derivatives assets		—			(15,018	)		—			113,380			—			98,362			—
Financial assets at fair value through other comprehensive income		—			—			—			—			(578	)		(578	)		77,997
Financial assets measured at amortized cost		20,206			—			(10,101	)		(3,047	)		(51	)		7,007			—
Derivatives liabilities		—			15,985			—			(157,305	)		—			(141,320	)		239
Financial liabilities measured at amortized cost		(106,296	)		—			22,598			—			20,115			(63,583	)		—

	W	(44,531	)		(4,274	)		12,497			(44,676	)		27,250			(53,734	)		78,236

②

For the three-month period ended June 30, 2020


(in millions of Won)	Finance income and costs
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Others			Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	40,881			7,471			—			2,549			768			51,669			—
Derivatives assets		—			(45,740	)		—			82,386			—			36,646			—
Financial assets at fair value through other comprehensive income		—			—			—			—			262			262			36,870
Financial assets measured at amortized cost		70,267			—			(187,582	)		(3,634	)		(70	)		(121,019	)		—
Derivatives liabilities		—			33,221			—			(86,565	)		—			(53,344	)		(784	)
Financial liabilities measured at amortized cost		(171,672	)		—			236,596			—			(518	)		64,406			—

	W	(60,524	)		(5,048	)		49,014			(5,264	)		442			(21,380	)		36,086

(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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

22. Share Capital and Capital Surplus

(a)	Share capital as of June 30, 2021 and December 31, 2020 are as follows:


(in Won, except share information)	June 30, 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 June 30, 2021, total shares of ADRs of 26,910,200 outstanding in overseas stock market are equivalent to 6,727,550 of common stock.

(*2)	As of June 30, 2021, the difference between the ending balance of common stock and the par value of issued common stock is W46,469 million due to retirement of 9,293,790 treasury stocks.

(b)	Capital surplus as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		796,623		796,623
Other capital surplus		95,740		50,099

	W	1,356,188		1,310,547

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

23. Hybrid Bonds

(a)	Hybrid bonds classified as equity as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		June 30, 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 June 30, 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 June 30, 2021 amounts to W454 million.

(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 June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		June 30, 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 June 30, 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 June 30, 2021 amounts to W659 million.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

24. Reserves

Reserves as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Accumulated comprehensive loss of investments in associates and joint ventures	W	(616,589	)		(693,176	)
Changes in fair value of equity investments at fair value through other comprehensive income		(188,343	)		(359,283	)
Foreign currency translation differences		(200,368	)		(339,707	)
Gains or losses on valuation of derivatives		(535	)		(699	)
Others		11,947			11,947

	W	(993,888	)		(1,380,918	)

25. 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 six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows.


(shares, in millions of Won)	June 30, 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

The trust contract of acquiring treasury shares contracted during the year ended December 31, 2020, was ended as of April 12, 2021, due to completion of acquiring treasury share and expiration of contract term.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

26. Revenue

(a)	Disaggregation of revenue

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the six-month periods ended June 30, 2021 and 2020 were as follows:

①

For the six-month period ended June 30, 2021


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	18,049,216		10,987,566		—		667,278		29,704,060
Revenue from services		265,205		236,072		26,988		913,293		1,441,558
Revenue from construction contract		—		—		2,947,135		19,706		2,966,841
Others		25,509		137,359		1,006		84,856		248,730

	W	18,339,930		11,360,997		2,975,129		1,685,133		34,361,189

Timing of revenue recognition
Revenue recognized at a point in time	W	18,074,725		11,124,925		20,756		752,134		29,972,540
Revenue recognized over time		265,205		236,072		2,954,373		932,999		4,388,649

	W	18,339,930		11,360,997		2,975,129		1,685,133		34,361,189

②

For the six-month period ended June 30, 2020


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	13,227,955		9,738,336		—		367,967		23,334,258
Revenue from services		232,864		191,253		22,848		885,331		1,332,296
Revenue from construction contract		—		—		3,368,635		14,207		3,382,842
Others		18,599		87,032		4,019		108,321		217,971

	W	13,479,418		10,016,621		3,395,502		1,375,826		28,267,367

Timing of revenue recognition
Revenue recognized at a point in time	W	13,246,554		9,825,368		104,538		476,289		23,652,749
Revenue recognized over time		232,864		191,253		3,290,964		899,537		4,614,618

	W	13,479,418		10,016,621		3,395,502		1,375,826		28,267,367

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended June 30, 2021 and 2020 were as follows:

①

For the three-month period ended June 30, 2021


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	9,714,721		5,901,820		—		349,335		15,965,876
Revenue from services		138,345		137,117		14,608		420,151		710,221
Revenue from construction contract		—		—		1,499,718		6,810		1,506,528
Others		10,351		75,612		498		23,380		109,841

	W	9,863,417		6,114,549		1,514,824		799,676		18,292,466

Timing of revenue recognition
Revenue recognized at a point in time	W	9,725,072		5,977,432		2,134		372,715		16,077,353
Revenue recognized over time		138,345		137,117		1,512,690		426,961		2,215,113

	W	9,863,417		6,114,549		1,514,824		799,676		18,292,466

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

②

For the three-month period ended June 30, 2020


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	6,256,679		4,823,693		—		176,643		11,257,015
Revenue from services		108,391		108,114		10,788		368,404		595,697
Revenue from construction contract		—		—		1,762,872		7,587		1,770,459
Others		8,895		29,139		2,918		57,431		98,383

	W	6,373,965		4,960,946		1,776,578		610,065		13,721,554

Timing of revenue recognition
Revenue recognized at a point in time	W	6,265,574		4,852,832		93,583		234,076		11,446,065
Revenue recognized over time		108,391		108,114		1,682,995		375,989		2,275,489

	W	6,373,965		4,960,946		1,776,578		610,065		13,721,554

(b)	Details of contract assets and liabilities from contracts with customers as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Receivables
Account receivables	W	8,681,429		7,332,890
Contract assets
Due from customers for contract work		822,720		874,152
Contract liabilities
Advance received		475,103		418,777
Due to customers for contract work		919,991		807,465
Unearned revenue		68,301		42,040

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

27. Revenue – Contract Balances

(a)	Details of outstanding contracts as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021						December 31, 2020
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	31,312,473			168,156			30,780,560			247,737
Accumulated contract profit		3,098,849			32,028			3,034,148			49,692
Accumulated contract loss		(1,276,835	)		(1,856	)		(1,260,451	)		(2,482	)
Accumulated contract revenue		33,134,487			198,328			32,554,257			294,947

(b)	Details of due from customers for contract work and due to customers for contract work as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021						December 31, 2020
	Construction segment			Others			Construction segment			Others
Due from customers for contract work	W	850,277			42,967			915,285			33,594
Due to customers for contract work		(860,913	)		(59,078	)		(765,818	)		(41,647	)

	W	(10,636	)		(16,111	)		149,467			(8,053	)

(c)	Details of the provisions of construction loss as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Construction segment	W	48,703		70,818
Others		326		437

	W	49,029		71,255

(d)

Due to the factors causing the variation of costs for the six-month period ended June 30, 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 six-month period ended June 30, 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	235,344			62,516		10,344		72,860
Others		(554	)		2,674		653		3,327

	W	234,790			65,190		10,997		76,187

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 June 30, 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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(e)	Uncertainty of estimates

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.

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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

28. Selling and Administrative Expenses

(a)	Other administrative expenses

Other administrative expenses for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Wages and salaries	W	209,721		197,024		431,148		410,520
Expenses related to post-employment benefits		38,229		19,502		71,148		41,881
Other employee benefits		46,941		40,293		93,289		85,751
Travel		4,454		3,537		8,737		9,890
Depreciation		33,979		37,905		70,603		72,857
Amortization		22,100		27,351		49,748		54,633
Communication		2,191		2,409		4,342		4,801
Electricity		1,744		1,849		3,631		4,030
Taxes and public dues		25,043		19,719		46,802		32,075
Rental		7,314		9,632		12,252		16,265
Repairs		2,673		1,311		5,021		3,238
Entertainment		2,182		1,437		4,356		3,545
Advertising		20,436		17,296		36,510		34,653
Research & development		28,030		25,405		60,372		49,271
Service fees		50,876		37,342		85,882		76,775
Vehicles maintenance		1,238		1,129		2,501		2,499
Industry association fee		2,416		2,373		5,784		6,039
Conference		3,233		2,482		6,120		5,325
Increase to provisions		2,494		355		2,821		1,882
Others		10,775		8,190		21,323		17,677

	W	516,069		456,541		1,022,390		933,607

(b)	Selling expenses

Selling expenses for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Freight and custody expenses	W	55,226		40,640		94,822		86,103
Operating expenses for distribution center		1,793		1,661		3,539		3,687
Sales commissions		19,082		20,194		37,762		67,919
Sales advertising		253		312		389		570
Sales promotion		1,598		1,393		3,124		3,236
Sample		474		331		988		872
Sales insurance premium		9,965		7,452		19,218		15,629
Contract cost		16,003		8,118		27,102		15,750
Others		3,559		4,247		6,177		8,560

	W	107,953		84,348		193,121		202,326

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

29. Finance Income and Costs

Details of finance income and costs for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30						For the six-month periods ended June 30
	2021			2020			2021		2020
Finance income
Interest income(*1)	W	61,765			111,148			116,387		204,002
Dividend income		7,186			1,030			29,525		26,566
Gain on foreign currency transactions		189,030			290,855			400,965		636,287
Gain on foreign currency translations		(11,130	)		(227,550	)		203,866		219,977
Gain on derivatives transactions		130,573			84,616			199,043		144,640
Gain on valuations of derivatives		(24,615	)		(60,773	)		188,235		281,200
Others		27,135			11,343			37,467		17,421

	W	379,944			210,669			1,175,488		1,530,093

Finance costs
Interest expenses	W	106,296			171,672			235,613		346,799
Loss on foreign currency transactions		200,031			236,231			380,301		484,754
Loss on foreign currency translations		(34,628	)		(221,940	)		337,923		490,247
Loss on derivatives transactions		174,498			88,795			250,103		183,330
Loss on valuation of derivatives		(25,581	)		(48,254	)		57,438		55,782
Loss on disposal of trade accounts and notes receivable		3,047			3,670			6,417		9,656
Others		10,015			1,875			32,182		6,757

	W	433,678			232,049			1,299,977		1,577,325

(*1)	Interest income calculated using the effective interest method for the six-month periods ended June 30, 2021 and 2020 were W39,493 million and W121,999 million, respectively.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

30. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Other non-operating income
Gain on disposals of assets held for sale	W	44,946		—		45,743		299
Gain on disposals of investments in subsidiaries, associates and joint ventures		22,212		37,370		26,054		41,339
Gain on disposals of property, plant and equipment		3,616		2,511		6,939		7,346
Gain on valuation of firm commitment		68,057		17,548		118,653		37,666
Gain on disposals of emission rights		559		16,823		567		24,566
Gain on insurance claim		2,088		6,145		20,549		7,133
Reversal of other provisions		2,223		561		2,399		839
Others(*1)		60,126		21,645		112,894		47,716

	W	203,827		102,603		333,798		166,904

Other non-operating expenses
Impairment loss on assets held for sale	W	—		5,030		—		5,030
Loss on disposals of investments in subsidiaries, associates and joint ventures		6,465		5,121		7,569		10,073
Loss on disposals of property, plant and equipment		17,490		38,318		36,147		78,989
Impairment loss on property, plant and equipment		—		21,322		16,892		21,400
Loss on valuation of firm commitment		33,552		1,742		77,318		36,075
Idle tangible asset expenses		7,476		5,330		12,669		10,685
Increase to other provisions		4,175		372		10,476		1,224
Donations		9,887		4,553		15,528		16,708
Others		55,524		21,885		81,462		37,253

	W	134,569		103,673		258,061		217,437

(*1)	During the six-month period ended June 30, 2021, the Company recognized W48,771 million of non-operating income for refund of other than income tax as a result of administrative litigation for tax audits.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 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 and six-month periods ended June 30, 2021 and 2020 were as follows (excluding finance costs and income tax expense):


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Raw material used, changes in inventories and others	W	10,951,324		8,300,004		20,516,134		16,948,281
Employee benefits expenses		899,138		852,159		1,842,191		1,772,198
Outsourced processing cost		1,807,732		2,056,490		3,522,210		4,086,789
Electricity and water expenses		188,318		142,562		362,216		313,258
Depreciation(*1)		771,871		784,867		1,557,056		1,555,037
Amortization		109,687		116,107		220,474		230,394
Freight and custody expenses		377,597		329,787		717,221		682,131
Sales commissions		19,082		20,194		37,762		67,919
Loss on disposal of property, plant and equipment		17,490		38,318		36,147		78,989
Impairment loss on property, plant and equipment		—		21,322		16,892		21,400
Impairment loss on intangible assets		37		761		7,220		1,184
Donations		9,887		4,553		15,528		16,708
Other expenses		1,081,050		989,396		2,028,376		1,847,456

	W	16,233,213		13,656,520		30,879,427		27,621,744

(*1)	Includes depreciation expense of investment property.

32. Income Taxes

The effective tax rates of the Company for the six-month periods ended June 30, 2021 and 2020 were 25.56% and 32.10%, respectively.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

33. Earnings per Share

Basic earnings per share for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in Won except per share information)	For the three-month periods ended June 30						For the six-month periods ended June 30
	2021			2020			2021			2020
Profit attributable to controlling interest	W	1,664,343,793,496			40,281,852,768			2,689,079,475,876			435,674,548,777
Interests of hybrid bonds		(1,662,931,506	)		(1,662,931,506	)		(3,307,589,040	)		(3,325,863,013	)
Weighted-average number of common shares outstanding (*1)		75,625,572			80,006,436			75,767,898			80,061,039

Basic earnings per share	W	21,986			483			35,447			5,400

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


(Shares)	For the three-month periods ended June 30						For the six-month periods ended June 30
	2021			2020			2021			2020
Total number of common shares issued		87,186,835			87,186,835			87,186,835			87,186,835
Weighted-average number of treasury shares		(11,561,263	)		(7,180,399	)		(11,418,937	)		(7,125,796	)

Weighted-average number of common shares outstanding		75,625,572			80,006,436			75,767,898			80,061,039

Since there were no potential shares of common stock which had dilutive effects as of June 30, 2021 and 2020, diluted earnings per share is equal to basic earnings per share.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

34. Related Party Transactions

(a)	Significant transactions between the controlling company and related companies for the six-month periods ended June 30, 2021 and 2020 were as follows:

For the six-month period ended June 30, 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	2,796		11,082		—		202,735		69		13,481
POSCO COATED & COLOR STEEL Co., Ltd.		291,173		2,085		—		—		17,346		431
POSCO ICT(*4)		837		4,992		—		94,130		20,828		90,417
eNtoB Corporation		7		—		136,794		21,607		21		9,603
POSCO CHEMICAL CO., LTD		128,745		21,446		226,321		5,555		147,420		2,296
POSCO ENERGY CO., LTD.		3,214		966		3,538		—		—		11,199
POSCO SPS		337,690		—		—		—		21,405		439
POSCO INTERNATIONAL Corporation		4,222,135		54,331		424,428		—		541		2,839
POSCO Thainox Public Company Limited		150,184		—		—		—		—		20
POSCO Canada Ltd.		—		681		81,745		—		—		—
POSCO Asia Co., Ltd.		19,137		32		417		—		—		705
Qingdao Pohang Stainless Steel Co., Ltd.		81,402		—		—		—		—		—
POSCO JAPAN Co., Ltd.		722,496		1		14,322		287		—		1,044
POSCO-VIETNAM Co., Ltd.		187,544		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		197,177		71		—		—		—		86
POSCO Maharashtra Steel Private Limited		377,857		180		—		—		—		101
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		66,647		—		—		—		—		—
POSCO VST CO., LTD.		96,247		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		853		746,681		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		120,944		110		8		—		—		10
Others		658,857		52,590		60,126		25,211		122,229		53,622

		7,665,089		149,759		1,694,380		349,525		329,859		186,301

*Associates and joint ventures(3)**
SNNC		20,052		2,342		295,657		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		31,193		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		256,138		1,040,468		—		—		—
Others		22,340		23,575		47,172		—		—		19,833

		73,585		282,055		1,383,297		—		—		19,886

	W	7,738,674		431,814		3,077,677		349,525		329,859		206,187

(*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 June 30, 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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

For the six-month period ended June 30, 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	3,548		11,096		15		442,305		60		12,835
POSCO COATED & COLOR STEEL Co., Ltd.		205,766		1,695		—		—		15,176		208
POSCO ICT		1,429		4,991		—		184,310		20,941		87,668
eNtoB Corporation		7		60		113,378		18,848		28		12,493
POSCO CHEMICAL CO., LTD		144,466		24,770		229,721		12,830		154,424		4,362
POSCO ENERGY CO., LTD.		1,553		1,216		9,995		3		—		11,110
POSCO INTERNATIONAL Corporation		2,795,437		54,331		110,798		—		11,371		2,083
POSCO Thainox Public Company Limited		106,717		137		3,454		—		—		—
POSCO America Corporation		96,266		—		—		—		—		3
POSCO Canada Ltd.		—		816		90,805		—		—		—
POSCO Asia Co., Ltd.		719,978		965		81,671		2,272		1,162		1,419
Qingdao Pohang Stainless Steel Co., Ltd.		70,768		66		—		—		—		176
POSCO JAPAN Co., Ltd.		548,842		—		16,420		2,959		—		1,088
POSCO-VIETNAM CO., Ltd.		101,105		223		—		—		—		20
POSCO MEXICO S.A. DE C.V.		68,574		99		—		—		—		304
POSCO Maharashtra Steel Private Limited		153,754		847		—		—		—		185
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		57,645		—		—		—		—		—
POSCO VST CO., LTD.		132,216		56		—		—		—		20
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		804		291,649		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		120,059		213		2,314		—		—		18
Others		453,004		17,971		38,792		25,580		128,557		58,047

		5,781,134		120,356		989,012		689,107		331,719		192,039

Associates and joint ventures
SNNC		2,901		3,478		219,060		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		17,154		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		625,545		—		—		—
Others		14,397		54,974		29,870		84,839		4,086		25,779

		34,452		58,452		874,475		84,839		4,086		25,779

	W	5,815,586		178,808		1,863,487		773,946		335,805		217,818

(b)	Significant transactions between the controlling company and related companies for the three-month periods ended June 30, 2021 and 2020 were as follows:

For the three-month period ended June 30, 2021


(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	1,182		13		—		113,873		9		7,018
POSCO COATED & COLOR STEEL Co., Ltd.		167,747		51		—		—		9,899		270
POSCO ICT		390		2		—		59,840		10,122		40,995
eNtoB Corporation		3				76,604		11,960		7		5,096
POSCO CHEMICAL CO., LTD		70,786		5,166		112,256		4,166		73,125		870
POSCO ENERGY CO., LTD.		2,454		277		1,409		—		—		5,594
POSCO SPS		188,917		—		—		—		10,711		233
POSCO INTERNATIONAL Corporation		2,323,778		—		258,276		—		194		2,303
POSCO Thainox Public Company Limited		89,311		—		—		—		—		—
POSCO Canada Ltd.		—		190		46,949		—		—		—
POSCO Asia Co., Ltd.		848		—		—		—		—		433
Qingdao Pohang Stainless Steel Co., Ltd.		40,454		—		—		—		—		—
POSCO JAPAN Co., Ltd.		364,525		—		6,721		283		—		564
POSCO-VIETNAM Co., Ltd.		106,634		—		—		—		—		—
POSCO MEXICO S.A. DE C.V.		104,386		37		—		—		—		86
POSCO Maharashtra Steel Private Limited		209,005		96		—		—		—		12
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		38,135		—		—		—		—		—
POSCO VST CO., LTD.		39,839		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		243		396,110		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		55,412		61		—		—		—		—
Others		335,411		31,201		25,827		15,459		61,247		32,920

		4,139,217		37,337		924,152		205,581		165,314		96,394

Associates and joint ventures
SNNC		12,539		299		143,898		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		18,544		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		140,062		553,493		—		—		—
Others		13,503		10,636		25,449		—		—		10,660

		44,586		150,997		722,840		—		—		10,713

	W	4,183,803		188,334		1,646,992		205,581		165,314		107,107

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

For the three-month period ended June 30, 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	2,011		17		—		198,832		60		5,123
POSCO COATED & COLOR STEEL Co., Ltd.		89,666		1		—		—		6,818		91
POSCO ICT		718		2		—		85,004		10,483		41,213
eNtoB Corporation		3		—		55,786		9,743		9		6,931
POSCO CHEMICAL CO., LTD		61,232		4,828		105,977		8,690		71,609		653
POSCO ENERGY CO., LTD.		266		537		5,385		—		—		5,598
POSCO INTERNATIONAL Corporation		1,274,878		—		31,102		—		—		941
POSCO Thainox Public Company Limited		55,096		71		792		—		—		—
POSCO America Corporation		32,624		—		—		—		—		—
POSCO Canada Ltd.		—		753		51,250		—		—		—
POSCO Asia Co., Ltd.		402,677		746		36,185		504		766		910
Qingdao Pohang Stainless Steel Co., Ltd.		35,299		66		—		—		—		119
POSCO JAPAN Co., Ltd.		230,608		—		9,698		2,339		—		650
POSCO-VIETNAM Co., Ltd.		37,517		108		—		—		—		—
POSCO MEXICO S.A. DE C.V.		17,483		63		—		—		—		249
POSCO Maharashtra Steel Private Limited		36,314		44		—		—		—		—
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		25,094		—		—		—		—		—
POSCO VST CO., LTD.		62,622		56		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		462		136,882		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		41,895		85		—		—		—		18
Others		262,269		3,559		14,283		12,622		67,484		28,980

		2,668,272		11,398		447,340		317,734		157,229		91,476

Associates and joint ventures
SNNC		1,491		443		98,634		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		3,229		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		303,358		—		—		—
Others		4,625		39,739		16,589		—		—		5,695

		9,345		40,182		418,581		—		—		5,695

	W	2,677,617		51,580		865,921		317,734		157,229		97,171

(c)	The related account balances from significant transactions between the controlling company and related companies as of June 30, 2021 and December 31, 2020 are as follows:

June 30, 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	2,909		6		2,915		—		53,489		321		53,810
POSCO COATED & COLOR STEEL Co., Ltd.		96,258		2,295		98,553		—		110		5,540		5,650
POSCO ICT		111		2		113		2,620		52,924		26,115		81,659
eNtoB Corporation		—		—		—		1,613		43,529		18		45,160
POSCO CHEMICAL CO., LTD		23,127		3,471		26,598		14,266		48,255		17,120		79,641
POSCO ENERGY CO., LTD.		734		176		910		—		2,502		11,288		13,790
POSCO SPS		107,435		—		107,435		33		1,534		4,252		5,819
POSCO INTERNATIONAL Corporation		916,818		105		916,923		6,453		697		502		7,652
POSCO Thainox Public Company Limited		54,270		—		54,270		—		—		—		—
POSCO Asia Co., Ltd.		—		676		676		6		—		—		6
Qingdao Pohang Stainless Steel Co., Ltd.		20,816		—		20,816		—		—		—		—
POSCO MEXICO S.A. DE C.V.		126,547		745		127,292		—		—		—		—
POSCO Maharashtra Steel Private Limited		426,597		1,509		428,106		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		259,845		1,388		261,233		—		—		—		—
Others		393,381		20,469		413,850		124,964		31,902		80,913		237,779

		2,428,848		30,842		2,459,690		149,955		234,942		146,069		530,966

Associates and joint ventures
SNNC		364		4,347		4,711		32,030		—		—		32,030
Roy Hill Holdings Pty Ltd		—		140,062		140,062		189,072		—		—		189,072
Others		477		22,888		23,365		2,942		287		—		3,229

		841		167,297		168,138		224,044		287		—		224,331

	W	2,429,689		198,139		2,627,828		373,999		235,229		146,069		755,297

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

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 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

(d)	Significant transactions between the Company, excluding the controlling company, and related companies for the six-month periods ended June 30, 2021 and 2020 were as follows:

For the six-month period ended June 30, 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	128,044		266		—		81
SNNC		33,020		53		15,256		15,166
Noeul Green Energy Co., Ltd.		3,045		—		—		1,041
CSP - Compania Siderurgica do Pecem		4,557		—		30,569		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		24,394		—		16,647		6,736
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		7,125		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		17,982		—		130		—
DMSA/AMSA		—		—		10,084		—
South-East Asia Gas Pipeline Company Ltd.		—		10,016		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		23,067		7		2,050		110
Samcheok Blue Power Co., Ltd.		107,568		—		—		—
TK CHEMICAL CORPORATION(*1)		14,906		—		2,292		—
Metropolitan Outer Ring Expressway Co., ltd		22,480		—		—		—
UITrans LRT Co., Ltd.		10,443		—		—		—
Roy Hill Holdings Pty Ltd		—		64,553		—		—
Others(*2)		82,933		19,577		10,657		9,035

	W	479,564		94,472		87,685		32,169

(*1)	TK CHEMICAL CORPORATION was excluded from the association due to sale of shares during the six-month period ended June 30, 2021.

(*2)	PT. Batutua Tembaga Raya was excluded from the association due to sale of shares during the six-month period ended June 30, 2021.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

For the six-month period ended June 30, 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		51,863		26,450		—		46
SNNC		27,202		—		25,282		107,507
Chuncheon Energy Co., Ltd.		287		211		—		—
Noeul Green Energy Co., Ltd.		3,039		—		—		—
CSP - Compania Siderurgica do Pecem		18,311		4,925		123,368		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		18,928		—		24,782		—
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		2,393		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		3,294		—		—		—
PT. Batutua Tembaga Raya		—		1,111		16,575		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		12,131		—		165		—
DMSA/AMSA		—		—		29,198		—
South-East Asia Gas Pipeline Company Ltd.		7		38,517		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		15,961		19,438		1,888		452
Samcheok Blue Power Co., Ltd.		89,910		—		—		—
TK CHEMICAL CORPORATION		59,752		—		18,743		—
Others		61,699		29,773		17,714		16,853

	W	364,942		120,425		260,113		124,858

(e)	Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended June 30, 2021 and 2020 were as follows:

For the three-month period ended June 30, 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	81,825		266		—		40
SNNC		23,365		—		11,239		9,779
Noeul Green Energy Co., Ltd.		1,533		—		—		519
CSP - Compania Siderurgica do Pecem		2,642		—		30,569		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		17,824		—		8,338		1,053
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		4,214		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		8,192		—		91		—
DMSA/AMSA		—		—		10,082		—
South-East Asia Gas Pipeline Company Ltd.		—		2,032		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		14,351		—		1,038		60
Samcheok Blue Power Co., Ltd.		49,504		—		—		—
TK CHEMICAL CORPORATION		—		—		—		—
Metropolitan Outer Ring Expressway Co., ltd		12,927		—		—		—
UITrans LRT Co., Ltd.		1,508		—		—		—
Roy Hill Holdings Pty Ltd		—		35,534		—		—
Others		47,119		16,827		3,810		4,972

	W	265,004		54,659		65,167		16,423

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

For the three-month period ended June 30, 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	—		—		—		—
New Songdo International City Development, LLC		31,663		26,450		—		43
SNNC		16,847		—		13,179		508
Chuncheon Energy Co., Ltd.		—		—		—		—
Noeul Green Energy Co., Ltd.		1,516		—		—		—
CSP - Compania Siderurgica do Pecem		1,566		493		39,178		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		8,152		—		12,242		—
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		1,437		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		767		—		—		—
PT. Batutua Tembaga Raya		—		152		5,034		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		7,287		—		101		—
DMSA/AMSA		—		—		3,035		—
South-East Asia Gas Pipeline Company Ltd.		—		18,511		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		7,096		37		814		185
Samcheok Blue Power Co., Ltd.		48,026		—		—		—
TK CHEMICAL CORPORATION		24,411		—		6,547		—
Others		28,565		24,208		8,642		7,345

	W	175,896		69,851		90,209		8,081

(f)	The related account balances from significant transactions between the Company, excluding the controlling company, and related companies as of June 30, 2021 and December 31, 2020 are as follows:

June 30, 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	45,279		—		18,264		63,543		—		23,030		23,030
Chuncheon Energy Co., Ltd.		—		—		—		—		367		—		367
Samcheok Blue Power Co., Ltd.		128,817		—		—		128,817		—		6,300		6,300
Nickel Mining Company SAS		—		62,708		144		62,852		—		—		—
CSP - Compania Siderurgica do Pecem		—		—		—		—		3,203		—		3,203
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		18,005		—		—		18,005		1,357		—		1,357
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		11,725		—		—		11,725		168		—		168
South-East Asia Gas Pipeline Company Ltd.		—		69,859		—		69,859		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		5,740		—		—		5,740		895		194		1,089
Metropolitan Outer Ring Expressway Co., ltd		14,717		—		—		14,717		—		—		—
UITrans LRT Co., Ltd.		6,755		26,092		214		33,061		—		—		—
Others		46,541		146,152		146,554		339,247		11,166		8,450		19,616

	W	277,579		304,811		165,176		747,566		17,156		37,974		55,130

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

December 31, 2020


(in millions of Won)	Receivables								Payables
	Trade accounts and notes receivable		Loans		Others		Total		Trade accounts and notes receivable		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 Blue Power 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
Others		78,752		166,572		111,083		356,407		7,035		11,446		18,481

	W	260,175		355,350		131,818		747,343		9,907		52,135		62,042

(g)	Significant financial transactions between the Company, excluding the controlling company, and related companies for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

June 30, 2021


(in millions of Won)	Beginning		Lend		Collect			*Others(1)**			Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	23,452		2,667		—			(27	)		26,092
South-East Asia Gas Pipeline Company Ltd.		91,003		—		(22,925	)		1,781			69,859
PT. Batutua Tembaga Raya(*2)		35,355		—		(9,722	)		(25,633	)		—
PT. Tanggamus Electric Power		4,304		—		—			166			4,470
PT. Wampu Electric Power		5,186		—		—			201			5,387
PT. POSMI Steel Indonesia		2,176		—		—			84			2,260
Nickel Mining Company SAS		62,420		—		—			288			62,708
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		5,440		—		—			(920	)		4,520
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,528		—		—			252			6,780
AMCI (WA) PTY LTD		83,291		741		—			1,213			85,245
POS-AUSTEM YANTAI AUTOMOTIVE CO., LTD		5,440		—		—			210			5,650
POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD		8,704		—		—			336			9,040
Hyo-chun Co., Ltd.		2,382		—		—			—			2,382
POS-AUSTEM Suzhou Automotive Co., Ltd		16,320		—		—			630			16,950
CAML RESOURCES PTY LTD		3,312		—		—			156			3,468
Shinahn Wind Power Generation(*3)		37		60		—			(97	)		—

	W	355,350		3,468		(32,647	)		(21,360	)		304,811

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

(*2)

PT. Batutua Tembaga Raya was excluded from the association due to sale of shares during the six-month period ended June 30, 2021. Meanwhile, the uncollected loan was written off and offset by the allowance for doubtful accounts recognized in the previous period. These effects are included in others.

(*3)	Shinahn Wind Power Generation was excluded from the association due to sale of shares during the six-month period ended June 30, 2021.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

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
Hyo-chun Co., Ltd.		2,382		—		—			—			2,382
Chun-cheon 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 June 30, 2020, loans amounting to W60,278 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.

(h)	For the six-month periods ended June 30, 2021 and 2020, details of compensation to key management officers were as follows:


(in millions of Won)	June 30, 2021		June 30, 2020
Short-term benefits	W	53,218		53,802
Long-term benefits		9,424		8,525
Retirement benefits		10,244		9,322

	W	72,886		71,649

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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

35.

Commitments and Contingencies

(a)	Details of guarantees

Contingent liabilities on outstanding guarantees and others provided by the Company as of June 30, 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		113,000		100,000,000		113,000
	POSCO-VIETNAM Co., Ltd.	SMBC and others		USD	156,000,000		176,280		156,000,000		176,280
	POSCO MEXICO S.A. DE C.V.	BOA and others		USD	120,000,000		135,600		120,000,000		135,600
	POSCO COATED STEEL (THAILAND) CO., LTD.	SMBC and others		THB	5,501,000,000		193,635		5,501,000,000		193,635
	POSCO Maharashtra Steel Private Limited	SMBC and others		USD	139,784,000		157,956		139,784,000		157,956
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others		USD	1,350,300,000		1,525,839		783,740,291		885,625
	POSCO ASSAN TST STEEL INDUSTRY	SOCIETE GENERALE and others		USD	146,527,500		165,576		131,874,750		149,018
POSCO INTERNATIONAL Corporation	POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD.	Export-Import Bank of Korea and others		USD	180,000,000		203,400		180,000,000		203,400
	POSCO INTERNATIONAL POWER (PNGLAE) LIMITED	KDB bank		USD	37,917,404		42,847		29,167,234		32,959
	GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Shinhan Bank and others		USD	11,000,000		12,430		11,000,000		12,430
	PT. Bio Inti Agrindo	Export-Import Bank of Korea and others		USD	149,850,000		169,331		145,708,000		164,650
	POSCO ASSAN TST STEEL INDUSTRY	ING		USD	14,652,750		16,558		14,652,750		16,558
	POSCO INTERNATIONAL Deutschland GmbH	Bank Mendes Gans		USD	50,000,000		56,500		9,518,018		10,755
	POSCO INTERNATIONAL AMERICA Corp.								—		—
	POSCO INTERNATIONAL JAPAN Corp.								9,045,310		10,221
	POSCO INTERNATIONAL SINGAPORE Pte. Ltd.								—		—
	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		30,510		27,000,000		30,510
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	POSCO Asia Co., Ltd. and others		USD	42,000,000		47,460		42,000,000		47,460
	Songdo Posco family Housing	Shinyoung securities		KRW	20,000		20,000		20,000		20,000
	JB CLARK HILLS	HSBC and others		USD	51,000,000		57,630		44,800,000		50,624
	PT.POSCO E&C INDONESIA	POSCO Asia Co., Ltd. and others		USD	25,900,000		29,267		25,900,000		29,267
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd. and others		USD	1,500,000		1,695		900,000		1,017
POSCO CHEMICAL CO., LTD	PT.Krakatau Posco Chemical Calcination	POSCO Asia Co., Ltd. and others		USD	15,200,000		17,176		8,000,000		9,040
POSCO COATED & COLOR STEEL Co., Ltd.	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.		USD	13,986,947		15,805		13,986,947		15,805
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	POSCO Asia Co., Ltd. and others		USD	82,953,123		93,737		82,953,123		93,737
POSCO America Corporation	POSCO AMERICA COMERCIALIZADORA S DE RL DE CV	BANK OF AMERICA N.A.		USD	27,000,000		30,510		27,000,000		30,510
[Associates and joint ventures]
POSCO	CSP - Compania Siderurgica do Pecem	Export-Import Bank of Korea and others		USD	420,000,000		474,600		370,715,701		418,908
		BNDES		BRL	464,060,000		105,792		464,060,000		105,792
	LLP POSUK Titanium	SMBC		USD	13,500,000		15,255		13,500,000		15,255
	Nickel Mining Company SAS	SMBC		EUR	46,000,000		61,843		46,000,000		61,843
POSCO INTERNATIONAL Corporation	GLOBAL KOMSCO Daewoo LLC	Hana Bank		USD	8,225,000		9,294		7,350,000		8,306
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	New Songdo International City Development, LLC	Others		KRW	686,000		686,000		600,200		600,200
	POHANG E&E Co., LTD	Heungkuk Life Insurance Co., Ltd.		KRW	71,930		71,930		57,164		57,164
	UITrans LRT Co., Ltd.	Kookmin Bank and others		KRW	125,845		125,845		95,013		95,013
	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		14,550		14,550
	Pure Gimpo.Co.,Ltd	KDB Bank and others		KRW	44,740		44,740		30,080		30,080
	Clean Iksan Co.,Ltd	SAMSUNG FIRE & MARINE INSURANCE CO.,LTD		KRW	44,054		44,054		29,166		29,166
	Chun-cheon Energy Co., Ltd.	Kookmin Bank and others		KRW	149,200		149,200		145,900		145,900
POSCO ICT	UITrans LRT Co., Ltd.	Kookmin Bank		KRW	50,249		50,249		38,092		38,092
	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 CORP.	Export-Import Bank of Korea		USD	21,818,182		24,655		2,588,000		2,924
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Incheon - Gimpo Expressway Co., Ltd.	Kookmin Bank and others		KRW	4,959,209		4,959,209		2,407,215		2,407,215
POSCO ICT	BTL Enterprise and others	Hana Bank and others		KRW	185,847		185,847		109,129		109,129
POSCO AUSTRALIA PTY LTD	Department of Trade and Investment (NSW Government) and others	Woori Bank and others		AUD	14,665,079		12,449		14,666,079		12,449
PT. Bio lnti Agrindo	KSU Mandob	Bank Muamalat		IDR	80,000,000,000		6,240		80,000,000,000		6,240
POSCO Maharashtra Steel Private Limited	MAHARASHTRA STATE ELECTRICITY and others	HSBC and others		INR	441,618,747		6,717		441,618,747		6,717

				USD	3,206,114,906		3,622,911		2,497,184,124		2,821,815
				KRW	6,753,089		6,753,089		3,599,303		3,599,303
				IDR	80,000,000,000		6,240		80,000,000,000		6,240
				INR	441,618,747		6,717		441,618,747		6,717
				THB	5,501,000,000		193,635		5,501,000,000		193,635
				EUR	46,000,000		61,843		46,000,000		61,843
				AUD	14,665,079		12,449		14,666,079		12,449
				BRL	464,060,000		105,792		464,060,000		105,792

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Other commitments

Details of other commitments of the Company as of June 30, 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 June 30, 2021, 49 million tons of iron ore and 7 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 materials. As of June 30, 2021, there are 38 vessels under contract, and the average remaining contract period is about 9 years.

		As of June 30, 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 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 June 30, 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 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 June 30, 2021, the amount which is exposed to the ship purchase agreements entered into is USD 170 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 & CONSTRUCTION CO., LTD.		As of June 30, 2021, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency guarantees of up to USD 2,387 million provided by financial institutions and uses USD 892 million with Woori Bank and others.

		As of June 30, 2021, the out standing balance of loans related to major liability compliance agreements is W105 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 W1,321,918 million(limited to W2,346,129 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 June 30, 2021, the Company is provided with a guarantee of W135,884 million, W17,672 million and W305 million, respectively, from the Software credit union, the Seoul guarantee insurance company and Engineering credit union.

		In connection with 3 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 W127.4 billion (loan ceiling W156.5 billion) as of June 30, 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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(c)	Litigation in progress

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 June 30, 2021, the Company has determined that the applicant’s claim is without merit, and did not recognize a provision.

Other litigation

The Company is involved in 322 lawsuits aggregating to W1,484.8 billion as defendant as of June 30, 2021, which arise from the ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting to W76.2 billion for 102 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 June 30, 2021.

(d)	Other contingencies


Company		Description
POSCO		POSCO has provided 3 blank checks to Korea Energy Agency as collateral for long-term foreign currency borrowings.

POSCO INTERNATIONAL Corporation		As of June 30, 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 & CONSTRUCTION CO., LTD.		As of June 30, 2021, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided 32 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee of W8,481,017 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.

POSCO ICT		As of June 30, 2021, POSCO ICT has provided 6 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the six-month period ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	June 30, 2021			June 30, 2020
Trade accounts and notes receivable	W	(1,198,404	)		524,843
Other receivables		(26,525	)		22,494
Inventories		(2,320,629	)		1,260,868
Other current assets		(170,744	)		(91,857	)
Other non-current assets		(78,575	)		(71,387	)
Trade accounts and notes payable		449,503			(299,704	)
Other payables		(105,362	)		(75,977	)
Other current liabilities		374,639			168,919
Provisions		(205,979	)		(137,663	)
Payments of severance benefits		(153,324	)		(146,492	)
Plan assets		114,386			48,328
Other non-current liabilities		25,621			3,130

	W	(3,295,393	)		1,205,502

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.

POSCO and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(a)	Information about reportable segments for the six-month period ended June 30, 2021 and 2020 were as follows:

For the six-month period ended June 30, 2021


(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	18,339,930		11,360,997		2,975,129		1,685,133		34,361,189
Internal revenues		10,041,974		9,029,601		401,891		1,292,307		20,765,773
Inter segment revenue		6,258,571		4,665,212		371,847		1,202,965		12,498,595
Total revenues		28,381,904		20,390,598		3,377,020		2,977,440		55,126,962
Segment profits		2,908,707		223,607		72,446		134,497		3,339,257

For the six-month period ended June 30, 2020


(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	13,479,418		10,016,621		3,395,502		1,375,826		28,267,367
Internal revenues		7,383,579		6,437,084		527,600		1,316,242		15,664,505
Inter segment revenue		5,199,890		2,949,668		489,800		1,234,354		9,873,712
Total revenues		20,862,997		16,453,705		3,923,102		2,692,068		43,931,872
Segment profits		137,727		150,120		239,257		184,814		711,918

(b)	Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the six-month period ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	June 30, 2021			June 30, 2020
Total profit for reportable segments	W	3,339,257			711,918
Corporate fair value adjustments		(28,142	)		(38,676	)
Elimination of inter-segment profits		(365,164	)		(133,716	)
Income tax expense		1,011,447			255,023

Profit before income tax expense	W	3,957,398			794,549

38. Events after the Reporting Period

(a)	Pursuant to the resolution of the Board of Directors on August 13, 2021, the Company decided to pay interim cash dividends of W4,000 per common share (total dividend: W302.5 billion).

(b)

POSCO ENGINEERING & CONSTRUCTION CO., LTD. and POSCO ICT decided to make a subrogation commitment for PF loan principle and interest of UITrans LRT Co., Ltd., an associate of the Company, in accordance with the resolution of Board of Directors on July 27, 2021 and July 30, 2021, respectively. The amount of subrogation according to the ownership is W95.5 billion and W38.2 billion, respectively. The expected date of subrogation is January 7, 2022. The Company is evaluating analysis of financial impact resulting from the event.

POSCO

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 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 June 30, 2021, the condensed separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2021 and 2020, the condensed separate interim statements of changes in equity and cash flows for the six-month periods ended June 30, 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.

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

August 13, 2021

This report is effective as of August 13, 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.

POSCO

Condensed Separate Interim Statements of Financial Position

As of June 30, 2021 and December 31, 2020

(Unaudited)


(in millions of Won)			June 30,		December 31,
	Notes		2021		2020
Assets
Cash and cash equivalents		20	W	1,681,126		1,822,660
Trade accounts and notes receivable, net		4,14,20,25,32		4,920,391		3,693,535
Other receivables, net		5,20,32		370,607		279,555
Other short-term financial assets		6,20		8,690,523		9,607,632
Inventories		7,29		5,324,506		4,093,829
Assets held for sale		8		20,164		32,244
Other current assets		13		50,426		50,498

Total current assets				21,057,743		19,579,953

Long-term trade accounts and notes receivable, net		4,20		7,612		2,456
Other receivables, net		5,20		90,816		84,037
Other long-term financial assets		6,20		1,282,231		1,072,817
Investments in subsidiaries, associates and joint ventures		9		15,825,085		14,883,152
Investment property, net		10		148,429		149,617
Property, plant and equipment, net		11		19,930,520		20,216,932
Intangible assets, net		12		563,501		621,926
Defined benefit assets, net		18		15,379		76,501
Other non-current assets		13		79,334		107,578

Total non-current assets				37,942,907		37,215,016

Total assets			W	59,000,650		56,794,969

See accompanying notes to the condensed separate interim financial statements.

POSCO

Condensed Separate Interim Statements of Financial Position, Continued

As of June 30, 2021 and December 31, 2020

(Unaudited)


(in millions of Won)			June 30,			December 31,
	Notes		2021			2020
Liabilities

Trade accounts and notes payable		20,32	W	1,314,010			1,258,470
Short-term borrowings and current installments of long-term borrowings		4,14,20		2,068,156			2,408,392
Other payables		15,20,32		953,582			1,127,323
Other short-term financial liabilities		16,20		7,855			12,788
Current income tax liabilities				862,534			137,858
Provisions		17		53,949			63,604
Other current liabilities		19,25		87,670			80,676

Total current liabilities				5,347,756			5,089,111

Long-term borrowings, excluding current installments		14,20		5,456,804			5,346,944
Other payables		15,20		408,997			220,612
Other long-term financial liabilities		16,20		32,788			122,154
Deferred tax liabilities				902,704			848,317
Long-term provisions		17,33		48,231			52,602
Other non-current liabilities		19,25		508			525

Total non-current liabilities				6,850,032			6,591,154

Total liabilities				12,197,788			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		(174,588	)		(296,626	)
Treasury shares		24		(2,508,294	)		(2,391,523	)
Retained earnings				47,464,668			45,781,777

Total equity				46,802,862			45,114,704

Total liabilities and equity			W	59,000,650			56,794,969

See accompanying notes to the condensed separate interim financial statements.

POSCO

Condensed Separate Interim Statements of Comprehensive Income

For the three-month periods and six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won, except per share informations)		For the three-month periods						For the six-month periods
		ended June 30						ended June 30
	Notes	2021			2020			2021			2020
Revenue	25,32	W	9,277,353			5,884,824			17,077,800			12,854,680
Cost of sales	7,29,32		(7,412,042	)		(5,742,816	)		(13,878,939	)		(11,973,220	)

Gross profit			1,865,311			142,008			3,198,861			881,460
Selling and administrative expenses	29,32
Impairment loss on trade accounts and notes receivable			(37	)		(5,231	)		(6	)		(4,967	)
Other administrative expenses	26		(207,409	)		(192,762	)		(417,312	)		(391,531	)
Selling expenses	26		(49,792	)		(52,490	)		(100,587	)		(135,326	)

Operating profit (loss)			1,608,073			(108,475	)		2,680,956			349,636

Finance income and costs	20,27
Finance income			270,466			110,535			839,740			784,852
Finance costs			(82,518	)		(37,305	)		(401,276	)		(497,720	)

Other non-operating income and expenses	32
Reversal of (impairment loss) on other receivables			27			169			(321	)		(327	)
Other non-operating income	28		76,644			81,598			111,891			105,723
Other non-operating expenses	28,29		(42,238	)		(97,259	)		(94,435	)		(175,945	)

Profit(loss) before income tax			1,830,454			(50,737	)		3,136,555			566,219
Income tax income(expense)	30		(512,294	)		57,383			(866,220	)		(106,553	)

Profit			1,318,160			6,646			2,270,335			459,666

Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans	18		(11,072	)		2,627			(11,362	)		(393	)
Net changes in fair value of equity investments at fair value through other comprehensive income	6,20,23		44,653			30,838			119,960			(160,650	)
Total comprehensive income		W	1,351,741			40,111			2,378,933			298,623

Basic and diluted earnings per share (in Won)	31	W	17,408			62			29,921			5,700

See accompanying notes to the condensed separate interim financial statements.

POSCO

Condensed Separate Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)	Share		Capital		Hybrid					Treasury			Retained
	capital		surplus		bonds		Reserves			shares			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		—		—		—		—			—			459,666			459,666
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—		—			—			(393	)		(393	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—		(157,747	)		—			(2,903	)		(160,650	)
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—		—			—			(320,462	)		(320,462	)
Interim dividends		—		—		—		—			—			(120,174	)		(120,174	)
Interest of hybrid bonds		—		—		—		—			—			(4,587	)		(4,587	)
Acquisition of treasury shares		—		—		—		—			(64,823	)		—			(64,823	)

Balance as of June 30, 2020	W	482,403		1,252,220		199,384		(341,677	)		(1,573,126	)		45,383,558			45,402,762

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		—		—		—		—			—			2,270,335			2,270,335
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—		—			—			(11,362	)		(11,362	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—		122,038			—			(2,078	)		119,960
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—		—			—			(342,565	)		(342,565	)
Interim dividends		—		—		—		—			—			(226,877	)		(226,877	)
Interest of hybrid bonds		—		—		—		—			—			(4,562	)		(4,562	)
Acquisition of treasury shares		—		—		—		—			(116,771	)		—			(116,771	)

Balance as of June 30, 2021	W	482,403		1,339,289		199,384		(174,588	)		(2,508,294	)		47,464,668			46,802,862

See accompanying notes to the condensed separate interim financial statements.

POSCO

Condensed Separate Interim Statements of Cash Flows

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)		June 30,			June 30,
	Notes	2021			2020
Cash flows from operating activities
Profit		W	2,270,335			459,666
Adjustments for:
Expenses related to post-employment benefit			60,154			63,801
Depreciation			1,146,592			1,126,547
Amortization			54,868			50,851
Impairment loss on trade and other receivables			327			5,295
Finance income			(682,277	)		(551,380	)
Finance costs			231,212			360,312
Loss on valuation of inventories			837			40,802
Gain on disposal of property, plant and equipment			(5,687	)		(6,054	)
Loss on disposal of property, plant and equipment			46,270			94,234
Impairment loss on property, plant and equipment			3,113			22,687
Gain on disposal of Intangible assets			—			(131	)
Impairment loss on intangible assets			7,180			—
Gain on disposal of investments in subsidiaries, associates and joint venture			—			(21,907	)
Impairment loss on investments in subsidiaries, associates and joint ventures			1,500			—
Gain on disposal of assets held for sale			(45,736	)		(26,942	)
Impairment loss on assets held for sale			—			8,945
Gain on disposal of emission rights			—			(24,566	)
Loss on disposal of emissions rights			5,843			—
Increase to provisions			5,284			38,674
Income tax expense			866,220			106,553
Others			5,254			(3,631	)

Changes in operating assets and liabilities	34		(2,509,304	)		1,572,924

Interest received			66,343			83,513
Interest paid			(100,350	)		(106,974	)
Dividends received			339,108			152,172
Income taxes paid			(81,599	)		(247,633	)

Net cash provided by operating activities		W	1,685,487			3,197,758

See accompanying notes to the condensed separate interim financial statements.

POSCO

Condensed Separate Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2021 and 2020

(Unaudited)


(in millions of Won)		June 30,			June 30,
	Notes	2021			2020
Cash flows from investing activities
Decrease in deposits		W	1,092,636			2,137,923
Proceeds from disposal of short-term financial instruments			15,642,485			16,810,440
Collection of short-term loans			3,216			807
Proceeds from disposal of long-term financial instruments			2			—
Proceeds from disposal of debt security			150,070			235,068
Proceeds from disposal of equity securities			12,868			7,938
Proceeds from disposal of other securities			2,534			990
Proceeds from disposal of long-term debt security			1,743			—
Proceeds from disposal of investments in subsidiaries, associates and joint ventures			720			1,292
Proceeds from disposal of intangible assets			727			471
Proceeds from disposal of emissions rights			5,503			66,143
Proceeds from disposal of assets held for sale			58,721			161,422
Proceeds from disposal of derivatives			1,482			—
Increase in deposits			(1,066,139	)		(2,676,730	)
Acquisition of short-term financial investments			(14,854,667	)		(17,649,928	)
Increase in long-term loans			(13,207	)		(14,852	)
Acquisition of debt securities			(50,033	)		(627,159	)
Acquisition of other securities			(16,806	)		(9,266	)
Acquisition of equity securities			(8,385	)		—
Acquisition of investment in subsidiaries, associates and joint ventures			(944,171	)		(194,275	)
Acquisition of property, plant and equipment			(753,743	)		(1,322,802	)
Proceeds from disposal of property, plant and equipment			(31,684	)		(49,934	)
Acquisition of intangible assets			(23,448	)		(68,813	)

Net cash used in investing activities		W	(789,576	)		(3,191,265	)

Cash flows from financing activities
Proceeds from borrowings			2,338,590			2,433,096
Increase in long-term financial liabilities			843			209
Proceeds from disposals of derivatives			14,725			—
Receipt of government grants			12			540
Repayment of borrowings			(2,689,014	)		(409,587	)
Repayment of lease liabilities			(23,009	)		(31,654	)
Decrease in long-term financial liabilities			(1,235	)		(284	)
Payment of cash dividends			(569,466	)		(440,648	)
Acquisition of treasury shares			(116,771	)		(64,823	)
Payment of interest of hybrid bonds			(4,587	)		(4,613	)

Net cash provided by (used in) financing activities		W	(1,049,912	)		1,482,236

Effect of exchange rate fluctuation on cash held			12,467			(19,923	)
Net increase(decrease) in cash and cash equivalents			(141,534	)		1,468,806
Cash and cash equivalents at beginning of the period			1,822,660			978,139

Cash and cash equivalents at end of the period		W	1,681,126			2,446,945

See accompanying notes to the condensed separate interim financial statements.

POSCO

Notes to the Condensed Separate Interim Financial Statements

As of June 30, 2021

(Unaudited)

1. Reporting Entity

POSCO (the “Company”) is the largest steel producer in Korea which 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 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 June 30, 2021, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchanges.

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.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Measurement of fair value

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

•

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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 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.

New and amended standards not yet adopted

(a)	K-IFRS No. 1016 “Property, Plant and Equipment”

The amendment prohibits deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the Company is preparing the asset for its intended use. Instead, the Company will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendment should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect the effect of the amendments to the financial statements to be significant.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Current
Trade accounts and notes receivable	W	4,934,735			3,707,860
Less: Allowance for doubtful accounts		(14,344	)		(14,325	)

	W	4,920,391			3,693,535

Non-current
Trade accounts and notes receivable	W	10,202			3,780
Less: Present value discount		(1,878	)		(344	)
Less: Allowance for doubtful accounts		(712	)		(980	)

	W	7,612			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 June 30, 2021, and December 31, 2020, the carrying amounts of such secured borrowings are W395,510 million and W520,310 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

5. Other Receivables

Other receivables as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Current
Loans	W	2,950			2,950
Other accounts receivable		324,294			231,051
Others		48,640			50,822
Less: Allowance for doubtful accounts		(5,277	)		(5,268	)

	W	370,607			279,555

Non-current
Loans	W	64,138			52,760
Long-term other accounts receivable		31,614			35,638
Others		3,738			4,001
Less: Allowance for doubtful accounts		(8,674	)		(8,362	)

	W	90,816			84,037

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

6. Other Financial Assets

(a)	Other financial assets as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Short-term derivative assets	W	576		—
Debt securities		50,000		153,370
Deposit instruments(* 1)		1,311,384		1,337,881
Short-term financial instruments		7,328,563		8,116,381

	W	8,690,523		9,607,632

Non-current
Long-term derivative assets	W	50,029		18,549
Equity securities		1,144,985		980,706
Debt securities		4,750		6,367
Other securities		82,435		67,161
Deposit instruments(* 2)		32		34

	W	1,282,231		1,072,817

(*1)	As of June 30, 2021 and December 31, 2020, W3,384 million and W4,881 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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Equity securities as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)														December 31,
	June 30, 2021													2020
									Net changes in
	Number of		Ownership		Acquisition		Fair		fair value of			Book		Book
	shares		(%)		cost		value		equity securities			value		value
Marketable equity securities
Nippon Steel Corporation		15,698,500		1.65	W	473,962		300,617		(173,345	)		300,617		219,788
KB Financial group Inc.		3,863,520		0.93		178,839		215,584		36,745			215,584		167,677
Woori Financial Group Inc.		20,280,000		2.81		244,447		232,206		(12,241	)		232,206		197,324
CSN Mineracao S.A.(* 1)		102,186,675		1.83		206,265		213,387		7,122			213,387		—
SAMWONSTEEL Co., Ltd.		5,700,000		14.25		8,930		22,230		13,300			22,230		15,020
DONGKUK INDUSTRIES COMPANY		2,611,989		4.82		11,911		10,657		(1,254	)		10,657		8,868
Others (9 companies)						66,980		60,372		(6,608	)		60,372		35,939

						1,191,334		1,055,053		(136,281	)		1,055,053		644,616

Non-marketable equity securities
POSCO PLANTEC CO., LTD		18,337,912		10.99		19,437		19,437		—			19,437		19,437
CSN Mineracao S.A.(* 2)		—		—		—		—		—			—		246,158
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		336,090

					W	1,385,796		1,144,985		(240,811	)		1,144,985		980,706

(*1)	During the six-month period ended June 30, 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 June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Finished goods	W	831,452			709,323
Semi-finished goods		1,425,667			1,167,330
By-products		4,941			3,460
Raw materials		1,299,882			885,222
Fuel and materials		493,668			518,151
Materials-in-transit		1,269,071			814,397
Others		662			681

		5,325,343			4,098,564
Less: Allowance for inventories valuation		(837	)		(4,735	)

	W	5,324,506			4,093,829

The amount of loss on valuation of inventories recognized in cost of sales during the six-month period ended June 30, 2021 and the year ended December 31, 2020 were W837 million and W4,735 million, respectively.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

8. Assets Held for Sale

Assets held for sale as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	*June 30, 2021(1,2)**		December 31, 2020
Assets
Property, plant and equipment(* 3)	W	20,164		32,244

(*1)	During the six-month period ended June 30, 2021, the Company sold the land in the Yanghak Neighborhood Park development reserve area that was classified as held for sale and recognized W43,760 million of gain on disposal.

(*2)	During the six-month period ended June 30, 2021, the Company decided to sell the emission rights and reclassified the emission rights to assets held for sale. Upon the sale, the Company recognized W1,316 million loss on disposal of assets 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 recognized W5,030 million of impairment loss for the difference between the fair value less costs to sell and the carrying amount of the assets.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

9. Investments in Subsidiaries, Associates and Joint ventures

(a)	Details of subsidiaries and their carrying amounts as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)							December 31,
			June 30, 2021				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
POSCO Lithium Solution Co., Ltd.(* 4)	Korea	Lithium manufacturing and sales		100.00		150,000		—
Others (12 companies)						175,770		110,995

						6,611,717		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		646,574		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 POSCO JAPAN Co., Ltd.	Turkey	Steel manufacturing and sales		60.00		71,707		71,707
	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 sales		100.00		373,366		373,366
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY STOCK COMPANY	Vietnam	Steel manufacturing and sales		51.00		130,526		130,526
Others (29 companies)						529,079		510,079

						6,393,081		6,373,337

					W	13,004,798		12,082,203

(*1)	During the six-month period ended June 30, 2021, the company acquired W 688,076 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 December 31, 2020, the investments in a subsidiary amounting to W30,148 million were provided as collateral in relation to the loan agreement of Busan E&E Co., Ltd. On the other hand, during the six-month period ended June 30, 2021, Busan E&E repaid the liability and the collateral is released.

(*4)	During the six-month period ended June 30, 2021, the Company established POSCO Lithium Solution Co., Ltd.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Details of associates and their carrying amounts as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)								December 31,
				June 30, 2021				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)							23,157		22,977

							378,678		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)							39,653		39,671

							364,194		364,212

						W	742,872		742,710

(*1)	As of June 30, 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 the structure of its Board of Directors and others.

(c)	Details of joint ventures and their carrying amounts as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)							December 31,
			June 30, 2021				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 June 30, 2021 and December 31, 2020, the investments in joint ventures amounting to W1,225,464 million were provided as collateral in relation to loans from project financing of Roy Hill Holdings Pty Ltd.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

10. Investment Property, Net

Changes in the carrying amount of investment property for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

(a)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		*Depreciation(1)**			*Transfer(2)**		Ending
Land	W	89,848		—			37		89,885
Buildings		51,417		(2,046	)		1,120		50,491
Structures		8,352		(305	)		6		8,053

	W	149,617		(2,351	)		1,163		148,429

(*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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

11. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

(a)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			*Impairment(1)**			*Others(2)**			Ending
Land	W	1,401,605		—		(15	)		—			—			(5,524	)		1,396,066
Buildings		2,080,843		210		(316	)		(102,968	)		(595	)		138,816			2,115,990
Structures		2,073,097		76		(208	)		(90,814	)		(4	)		54,761			2,036,908
Machinery and equipment		12,651,431		14,837		(7,524	)		(910,327	)		(2,514	)		329,906			12,075,809
Vehicles		14,486		1,039		—			(3,666	)		—			2,027			13,886
Tools		24,333		590		(8	)		(5,620	)		—			643			19,938
Furniture and fixtures		44,426		3,757		(149	)		(7,552	)		—			21,283			61,765
Lease assets		331,588		123,688		—			(23,294	)		—			34,989			466,971
Construction-in-progress		1,595,123		705,659		—			—			—			(557,595	)		1,743,187

	W	20,216,932		849,856		(8,220	)		(1,144,241	)		(3,113	)		19,306			19,930,520

(*1)	During the six-month period ended June 30, 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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

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

Right-of-use assets

①

Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the six-month period ended June 30, 2021 were as follows.


(in millions of Won)	Beginning		Acquisitions		Depreciation			*Others(1)**			Ending
Land	W	8,703		—		(151	)		—			8,552
Buildings		71,431		3,471		(3,622	)		—			71,280
Structures		59,221		—		(2,606	)		—			56,615
Machinery and equipment		54,698		—		(3,760	)		37,124			88,062
Vehicles		6,255		—		(250	)		—			6,005
Ships		106,555		120,217		(8,357	)		—			218,415
Furniture and fixtures		24,725		—		(4,548	)		(2,135	)		18,042

	W	331,588		123,688		(23,294	)		34,989			466,971

(*1)	Increased due to the revised lease term of machinery and equipment.

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

Amount recognized in profit or loss

The amounts recognized in profit or loss related to leases for the three-month and the six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods				For the six-month periods
	ended June 30				ended June 30
	2021		2020		2021		2020
Interest on lease liabilities	W	3,195		2,399		6,210		5,057
Expenses related to short-term leases		909		884		1,632		1,890
Expenses related to leases of low-value assets		1,691		1,574		3,214		3,389

	W	5,795		4,857		11,056		10,336

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

12. Intangible Assets, Net

Changes in the carrying amount of intangible assets for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

(a)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			*Impairment(2)**			*Transfer(3)**			Ending
Intellectual property rights	W	22,758		—		(485	)		(2,929	)		—			2,683			22,027
Membership(*1)		81,795		3,654		(727	)		—			—			—			84,722
Development expense		224,854		103		—			(38,709	)		—			10,923			197,171
Port facilities usage rights		233,447		—		—			(11,084	)		—			—			222,363
Construction-in-progress		34,924		7,802		(4,770	)		—			—			(11,176	)		26,780
Other intangible assets		24,148		878		(10,030	)		(2,146	)		(7,180	)		4,768			10,438

	W	621,926		12,437		(16,012	)		(54,868	)		(7,180	)		7,198			563,501

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

(*2)	During the six-month period ended June 30, 2021, the Company decided to sell a portion of paid-in emission rights and recognized impairment loss which is the difference between carrying amount and net fair value.

(*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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

13. Other Assets

Other assets as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Advance payments	W	4,805		4,263
Prepaid expenses		39,647		26,011
Emission rights purchased from the market		5,974		20,224

	W	50,426		50,498

Non-current
Long-term prepaid expenses	W	3,996		4,312
Others(*1)		75,338		103,266

	W	79,334		107,578

(*1)

As of June 30, 2021 and December 31, 2020, the Company recognized tax assets amounting to W54,102 million and W100,852 million, respectively, based on the Company’s best estimate of the income tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification are finalized.

14. Borrowings

(a)	Borrowings as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Short-term borrowings
Short-term borrowings	W	1,604,963			1,029,363
Current portion of debentures		463,318			1,379,739
Less: Current portion of discount on debentures issued		(125	)		(710	)

	W	2,068,156			2,408,392

Long-term borrowings
Long-term borrowings	W	1,153			1,110
Debentures		5,479,410			5,373,840
Less: Discount on debentures issued		(23,759	)		(28,006	)

	W	5,456,804			5,346,944

(b)	Short-term borrowings as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	Lenders		Issuance date		Maturity date		Annual interest rate (%)		June 30, 2021		December 31, 2020
Transfers of account receivables that do not qualify for derecognition		—		—		—		—	W	395,510		520,310
Borrowings in Foreign Trade		MUFG and others		2021.04.16~ 2021.06.29		2021.07.15~ 2021.09.27		0.47~0.74		1,209,453		509,053

									W	1,604,963		1,029,363

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(c)	Current portion of long-term borrowings and others as of June 30, 2021 and December 31, 2020 are as follows:

(in millions of Won)

Lenders

Issuance
date

Maturity
date

Annual
interest rate (%)

June 30, 2021

December 31, 2020

Debentures

Domestic debentures 304-2 and the other

2011.11.28~

2018.07.05

2021.07.05~

2021.11.28

2.34~4.12

309,966

459,811

Foreign debentures

Japan Yen private bond

2011.12.22

2021.12.22

2.70

153,227

919,218

463,193

1,379,029

(d)	Long-term borrowings and others excluding current portion, as of June 30, 2021 and December 31, 2020 are as follows:

(in millions of Won)

Lenders

Issuance
date

Maturity
date

Annual

interest rate (%)

June 30, 2021

December 31, 2020

Foreign borrowings

KOREA ENERGY AGENCY

2007.12.27~
2008.12.29

2022.12.29

3 year

Government bond

1,153

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

2,046,785

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

3,408,866

3,299,668

5,456,804

5,346,944

15. Other Payables

Other payables as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Accounts payable	W	458,001		606,902
Accrued expenses		433,010		412,976
Dividend payable		1,804		1,854
Lease liabilities		47,997		94,904
Withholdings		12,770		10,687

	W	953,582		1,127,323

Non-current
Long-term accrued expenses	W	62		54
Lease liabilities		408,310		217,458
Long-term withholdings		625		3,100

	W	408,997		220,612

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

16. Other Financial Liabilities

Other financial liabilities as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Derivative liabilities	W	—		3,087
Financial guarantee liabilities		7,855		9,701

	W	7,855		12,788

Non-current
Derivative liabilities	W	10,240		92,273
Financial guarantee liabilities		22,548		29,881

	W	32,788		122,154

17. Provisions

(a)	Provisions as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021				December 31, 2020
	Current		Non-current		Current		Non-current
Provision for bonus payments(*1,2)	W	11,286		35,546		14,518		34,461
Provision for restoration(*3)		6,333		8,833		5,136		12,425
Provision for legal contingencies and claims		1,250		—		4,937		2,052
Emission liabilities(*4)		15,071		—		20,224		—
Provision for product warranties(*5)		20,009		3,852		18,789		3,664

	W	53,949		48,231		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 June 30, 2021. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials currently available to recover the land. In addition, the Company has applied discount rates of 1.57%~1.81% to assess present value of these costs.

(*4)	The Company has recognized emission liabilities for greenhouse gas emissions exceeding the quantity of free quota emission rights expected to be submitted as of June 30, 2021.

(*5)	As of June 30, 2021, the Company recognized the expected claim cost to be charged as a provision.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Changes in provisions for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:

1)	For the six-month period ended June 30, 2021


(in millions of Won)	Beginning		Increase		Reversal			Utilization			Ending
Provision for bonus payments	W	48,979		9,446		—			(11,593	)		46,832
Provision for restoration		17,561		158		(68	)		(2,485	)		15,166
Provision for legal contingencies and claims		6,989		1,250		(2,052	)		(4,937	)		1,250
Emission liabilities		20,224		14,238		(19,391	)		—			15,071
Provision for product warranties		22,453		11,149		—			(9,741	)		23,861

	W	116,206		36,241		(21,511	)		(28,756	)		102,180

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 and the six-month periods ended June 30, 2021 and 2020 were as follows:

(in millions of Won)

For the three-month periods
ended June 30

For the six-month periods
ended June 30

2021

2020

2021

2020

Expense related to post-employment benefit plans under defined contribution plans

9,073

8,710

17,629

18,907

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 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 June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Present value of funded obligations	W	1,381,654			1,378,597
Fair value of plan assets		(1,397,033	)		(1,455,098	)

Net defined benefit assets	W	(15,379	)		(76,501	)

2)	Changes in present value of defined benefit obligations for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Defined benefit obligation at the beginning of period	W	1,378,597			1,435,942
Current service costs		61,281			125,706
Interest costs		14,446			27,712
Remeasurement		14,936			(74,678	)
Amount transferred from associate		—			1,104
Benefits paid		(87,606	)		(137,189	)

Defined benefit obligation at the end of period	W	1,381,654			1,378,597

3)	Changes in the fair value of plan assets for the six-month period ended June 30, 2021 and the year ended December 31, 2020 were as follows:


(in millions of Won)	June 30, 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		15,573			27,227
Remeasurement of plan assets		(737	)		(450	)
Contributions to plan assets		—			178,000
Amount transferred from associate		—			1,104
Benefits paid		(72,901	)		(132,579	)

Fair value of plan assets at the end of period	W	1,397,033			1,455,098

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

4)	The amounts recognized in the statements of comprehensive income for the three-month and the six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30					For the six-month periods ended June 30
	2021			2020		2021			2020
Current service costs	W	29,230			31,355		61,281			63,559
Net interest costs		(481	)		121		(1,127	)		242

	W	28,749			31,476		60,154			63,801

19. Other Liabilities

Other liabilities as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Current
Advances received	W	33,279		41,901
Withholdings		28,467		24,253
Unearned revenue		25,924		14,522

	W	87,670		80,676

Non-current
Unearned revenue	W	508		525

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

20. Financial Instruments

(a)	Classification and fair value of financial instruments

The carrying amount and the fair values of financial assets and financial liabilities by fair value hierarchy as of June 30, 2021 and December 31, 2020 are as follows:

①

June 30, 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	50,605		—		50,605		—		50,605
Short-term financial instruments		7,328,563		—		7,328,563		—		7,328,563
Debt securities		4,750		—		—		4,750		4,750
Other securities		82,435		—		—		82,435		82,435
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,144,985		1,055,053		—		89,932		1,144,985
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		1,681,126		—		—		—		—
Trade accounts and notes receivable		4,922,550		—		—		—		—
Debt securities		50,000		—		—		—		—
Other receivables		364,834		—		—		—		—
Deposit instruments		1,311,416		—		—		—		—

	W	16,943,264		1,055,053		7,379,168		179,117		8,613,338

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	10,240		—		10,240		—		10,240
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		1,314,010		—		—		—		—
Borrowings		7,524,960		—		7,720,953		—		7,720,953
Financial guarantee liabilities		30,403		—		—		—		—
Others		1,310,664		—		—		—		—

	W	10,190,277		—		7,731,193		—		7,731,193

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

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

Financial liabilities were recognized in connection with financial guarantee contracts as of June 30, 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		22,356		19,784,000		22,356
Steel Private Limited	SMBC		USD	35,000,000		39,550		35,000,000		39,550
	DBS		USD	35,000,000		39,550		35,000,000		39,550
	BNP		USD	30,000,000		33,900		30,000,000		33,900
	Citi		USD	20,000,000		22,600		20,000,000		22,600
POSCO ASSAN TST	BNP		USD	24,527,500		27,716		22,074,750		24,944
STEEL INDUSTRY	SOCIETE GENERALE		USD	42,000,000		47,460		37,800,000		42,714
	CITI		USD	40,000,000		45,200		36,000,000		40,680
	ING		USD	40,000,000		45,200		36,000,000		40,680
POSCO Asia Co., Ltd.	Credit Agricole		USD	50,000,000		56,500		50,000,000		56,500
	MIZUHO		USD	50,000,000		56,500		50,000,000		56,500
POSCO MEXICO S.A. DE C.V	Citi BANAMEX		USD	30,000,000		33,900		30,000,000		33,900
	BOA		USD	30,000,000		33,900		30,000,000		33,900
	SMBC		USD	20,000,000		22,600		20,000,000		22,600
	MIZUHO		USD	20,000,000		22,600		20,000,000		22,600
	ANZ		USD	20,000,000		22,600		20,000,000		22,600
POSCO-VIETNAM Co., Ltd.	SMBC		USD	50,000,000		56,500		50,000,000		56,500
	Credit Agricole		USD	40,000,000		45,200		40,000,000		45,200
	MUFG		USD	26,000,000		29,380		26,000,000		29,380
	Citi		USD	20,000,000		22,600		20,000,000		22,600
	MIZUHO		USD	20,000,000		22,600		20,000,000		22,600
PT. KRAKATAU POSCO	Export-Import Bank of Korea		USD	567,000,000		640,710		330,240,725		373,172
	SMBC		USD	140,000,000		158,200		81,665,652		92,282
	BTMU		USD	119,000,000		134,470		68,295,652		77,174
	MIZUHO		USD	105,000,000		118,650		60,260,870		68,095
	SCB		USD	107,800,000		121,814		63,185,652		71,400
	Credit Suisse AG		USD	91,000,000		102,830		52,226,087		59,015
	HSBC		USD	91,000,000		102,830		52,226,087		59,015
	ANZ		USD	73,500,000		83,055		43,500,435		49,155
	BOA		USD	35,000,000		39,550		20,086,957		22,698
	The Tokyo Star Bank, Ltd		USD	21,000,000		23,730		12,052,174		13,619
POSCO COATED STEEL	Citi		THB	801,000,000		28,195		801,000,000		28,195
(THAILAND) CO., LTD.	ANZ		THB	1,175,000,000		41,360		1,175,000,000		41,360
	MUFG		THB	1,175,000,000		41,360		1,175,000,000		41,360
	SC		THB	1,175,000,000		41,360		1,175,000,000		41,360
	SMBC		THB	1,175,000,000		41,360		1,175,000,000		41,360
Associates
LLP POSUK Titanium	SMBC		USD	13,500,000		15,255		13,500,000		15,255
Nickel Mining Company SAS	SMBC		EUR	46,000,000		61,843		46,000,000		61,843
Joint ventures
CSP - Compania	Export-Import Bank of Korea		USD	182,000,000		205,660		162,149,671		183,229
Siderurgica do Pecem	Santander		USD	47,600,000		53,788		41,713,206		47,136
	BNP		USD	47,600,000		53,788		41,713,206		47,136
	MIZUHO		USD	47,600,000		53,788		41,713,206		47,136
	Credit Agricole		USD	20,000,000		22,600		17,526,564		19,805
	SOCIETE GENERALE		USD	20,000,000		22,600		17,526,564		19,805
	KfW		USD	20,000,000		22,600		17,526,564		19,805
	BBVA Seoul		USD	17,600,000		19,888		15,423,360		17,428
	ING		USD	17,600,000		19,888		15,423,360		17,428
	BNDES		BRL	464,060,000		105,792		464,060,000		105,792

			USD	2,446,111,500		2,764,106		1,815,614,742		2,051,642
			EUR	46,000,000		61,843		46,000,000		61,843
			THB	5,501,000,000		193,635		5,501,000,000		193,635
			BRL	464,060,000		105,792		464,060,000		105,792

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

Finance income and costs by category of financial instrument for the six-month periods ended June 30, 2021 and 2020 were as follows:

①

For the six-month period ended June 30, 2021


(in millions of Won)	Finance income and costs
	Interest income (expense)			Dividend *income(1)**		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	58,424			—		—			1,168		28,481		—		88,073			—
Financial assets at fair value through other comprehensive income		—			29,336		—			92		—		—		29,428			119,960
Financial assets measured at amortized cost		7,227			—		83,603			—		—		—		90,830			—
Financial liabilities at fair value through profit or loss		—			—		—			18,177		92,087		—		110,264			—
Financial liabilities measured at amortized cost		(85,908	)		—		(199,560	)		—		—		3,030		(282,438	)		—

	W	(20,257	)		29,336		(115,957	)		19,437		120,568		3,030		36,157			119,960

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of W402,306 million for the six-month period ended June 30, 2021.

②

For the six-month period ended June 30, 2020


(in millions of Won)	Finance income and costs
	Interest income (expense)			Dividend *income(1)**		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	77,159			—		—			485		223,151		—		300,795			—
Financial assets at fair value through other comprehensive income		—			24,483		—			—		—		—		24,483			(160,650	)
Financial assets measured at amortized cost		24,207			—		94,915			—		—		—		119,122			—
Financial liabilities at fair value through profit or loss		—			—		—			447		13,977		—		14,424			—
Financial liabilities measured at amortized cost		(113,808	)				(217,448	)						11,840		(319,416	)

	W	(12,442	)		24,483		(122,533	)		932		237,128		11,840		139,408			(160,650	)

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of W147,724 million for the six-month period ended June 30, 2020.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

Finance income and costs by category of financial instrument for the three-month periods ended June 30, 2021 and 2020 were as follows:

①

For the three-month period ended June 30, 2021


(in millions of Won)	Finance income and costs
	Interest income (expense)			Dividend *income(1)**		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation			Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	28,258			—		—			1,002		(14,330	)		—		14,930			—
Financial assets at fair value through other comprehensive income		—			9,396		—			—		—			—		9,396			44,653
Financial assets measured at amortized cost		4,469			—		(20,131	)		—		—			—		(15,662	)		—
Financial liabilities at fair value through profit or loss		—			—		—			16,503		5,130			—		21,633			—
Financial liabilities measured at amortized cost		(38,601	)		—		24,538			—		—			1,739		(12,324	)		—

	W	(5,874	)		9,396		4,407			17,505		(9,200	)		1,739		17,973			44,653

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of W169,975 million for the three-month period ended June 30, 2021.

②

For the three-month period ended June 30, 2020


(in millions of Won)	Finance income and costs
	Interest income (expense)			Dividend *income(1)**		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation			Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	38,444			—		—			289		(29,542	)		—		9,191			—
Financial assets at fair value through other comprehensive income		—			237		—			—		—			—		237			30,838
Financial assets measured at amortized cost		13,798			—		(46,814	)		—		—			—		(33,016	)		—
Financial liabilities at fair value through profit or loss		—			—		—			422		2,435			—		2,857			—
Financial liabilities measured at amortized cost		(56,712	)				108,704								3,903		55,895

	W	(4,470	)		237		61,890			711		(27,107	)		3,903		35,164			30,838

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of W38,066 million for the three-month period ended June 30, 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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

21. Share Capital and Capital Surplus

(a)	Share capital as of June 30, 2021 and December 31, 2020 are as follows:


(in Won, except share information)	June 30, 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 June 30, 2021, total shares of ADRs of 26,910,200 are equivalent to 6,727,550 of common stock.

(*2)	As of June 30, 2021, the difference between the ending balance of common stock and the par value of issued common stock is W46,469 million due to retirement of 9,293,790 treasury stocks.

(b)	Capital surplus as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 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 June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Rate of Interest (%)		June 30, 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

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(*1)	Details of hybrid bonds as of June 30, 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 of 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 the Company)

Others		The Company 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 shareholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of June 30, 2021 amounts to W454 million.

23. Reserves

Reserves as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021			December 31, 2020
Changes in fair value of equity investments at fair value through other comprehensive income	W	(174,588	)		(296,626	)

24. Treasury Shares


(shares, in millions of Won)	June 30, 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

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

25. Revenue

(a)	Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Types of revenue
Sales of steel product	W	8,932,553		5,683,303		16,444,696		12,422,165
Transportation services		298,446		161,641		542,575		348,051
Others		46,354		39,880		90,529		84,464

	W	9,277,353		5,884,824		17,077,800		12,854,680

Timing of revenue recognition
Revenue recognized at a point in time	W	8,961,641		5,709,534		16,501,922		12,477,283
Revenue recognized over time		315,712		175,290		575,878		377,397

	W	9,277,353		5,884,824		17,077,800		12,854,680

(b)	Details of contract assets and liabilities from contracts with customers as of June 30, 2021 and December 31, 2020 are as follows:


(in millions of Won)	June 30, 2021		December 31, 2020
Receivables
Account receivables	W	4,922,550		3,685,573
Contract assets
Account receivables		5,453		10,418
Contract liabilities
Advance received		33,280		41,901
Unearned income		26,433		14,855

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

26. Selling and Administrative Expenses

(a)	Other administrative expenses

Other administrative expenses for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Wages and salaries	W	58,692		54,435		122,000		115,690
Expenses related to post-employment benefits		7,498		6,539		18,069		14,182
Other employee benefits		13,521		11,052		26,479		23,287
Travel		1,848		1,822		4,091		4,607
Depreciation		7,074		6,809		13,676		13,662
Amortization		6,731		9,039		25,583		18,456
Rental		10,358		10,946		25,779		24,204
Repairs		1,836		1,581		3,420		3,831
Advertising		15,985		14,490		28,829		29,384
Research & development		17,045		15,586		35,668		31,392
Service fees		38,162		40,068		74,935		77,441
Supplies		209		126		723		360
Vehicles maintenance		1,302		1,166		2,440		2,448
Industry association fee		1,661		1,244		3,126		3,220
Training		10,038		3,863		10,282		8,182
Conference		1,158		885		2,135		1,967
Others		14,291		13,111		20,077		19,218

	W	207,409		192,762		417,312		391,531

(b)	Selling expenses

Selling expenses for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Freight and custody	W	28,600		29,401		59,180		63,102
Operating expenses for distribution center		1,553		1,439		3,086		3,158
Sales commissions		17,349		19,535		34,013		64,788
Sales advertising		209		219		258		305
Sales promotion		350		302		645		696
Sample		238		157		471		333
Sales insurance premium		1,493		1,437		2,934		2,944

	W	49,792		52,490		100,587		135,326

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

27. Finance Income and Costs

Details of finance income and costs for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30						For the six-month periods ended June 30
	2021			2020			2021		2020
Finance income
Interest income(*1)	W	32,727			52,242			65,651		101,366
Dividend income		179,372			38,303			431,642		172,207
Gain on foreign currency transactions		59,796			85,665			156,924		232,829
Gain on foreign currency translations		(7,822	)		(43,959	)		41,024		27,339
Gain on valuation of derivatives		(13,572	)		(27,107	)		120,568		237,128
Gain on transcations of derivatives		16,503			422			18,351		643
Others		3,462			4,969			5,580		13,340

	W	270,466			110,535			839,740		784,852

Finance costs
Interest expenses	W	38,601			56,712			85,908		113,808
Loss on foreign currency transactions		94,889			59,730			168,604		136,197
Loss on foreign currency translations		(47,324	)		(79,914	)		145,301		246,504
Others		(3,648	)		777			1,463		1,211

	W	82,518			37,305			401,276		497,720

(*1)	Interest income calculated using the effective interest method for the six-month periods ended June 30, 2021 and 2020 were W7,227 million and W24,207 million, respectively.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

28. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2021		2020		2021		2020
Other non-operating income
Gain on disposals of property, plant and equipment	W	2,917		2,232		5,687		6,054
Gain on disposals of subsidiaries, associates, and joint ventures		—		21,907		—		21,907
Gain on disposals of assets held for sale		44,946		26,644		45,736		26,942
Gain on insurance settlements		2,017		6,027		2,304		6,886
Gain on reversal of other specific reserve debts		2,052		284		2,052		284
Gain on disposals of emission rights		—		16,823		—		24,566
Others(*1)		24,712		7,681		56,112		19,084

	W	76,644		81,598		111,891		105,723

Other non-operating expenses
Loss on disposals of property, plant and equipment	W	22,514		42,935		46,270		94,234
Impairment loss on property, plant and equipment		—		22,687		3,113		22,687
Impairment loss on investment in subsidiaries, associates and joint ventures		—		—		1,500		—
Donations		123		3,000		2,127		11,709
Impairment loss on assets held for sale		—		2,616		—		8,945
Impairment loss on intangible assets		—		—		7,180		—
Others		19,601		26,021		34,245		38,370

	W	42,238		97,259		94,435		175,945

(*1)	During the six-month period ended June 30, 2021, the Company recognized W48,771 million of non-operating income for refund of other than corporate tax as a result of administrative litigation for tax audits.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 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 and six-month periods ended June 30, 2021 and 2020 were as follows (excluding finance costs and income tax expenses):


	For the three-month periods ended June 30					For the six-month periods ended June 30
(in millions of Won)	2021			2020		2021			2020
Changes in inventories(*1)	W	(169,269	)		289,400		(385,845	)		387,281
Raw materials and consumables used		5,419,575			3,578,505		10,115,533			7,724,146
Employee benefits expenses		441,312			437,550		904,633			897,134
Outsourced processing cost		620,482			568,597		1,209,505			1,227,456
Depreciation(*2)		573,418			565,690		1,146,592			1,126,547
Amortization		27,667			25,235		54,868			50,851
Electricity and water		87,612			49,901		159,467			116,551
Service fees		61,386			61,282		113,519			119,628
Rental		19,438			20,162		44,170			42,908
Advertising		15,985			14,490		28,829			29,384
Freight and custody		238,873			164,813		439,675			380,504
Sales commissions		17,349			19,535		34,013			64,788
Loss on disposal of property, plant and equipment		22,514			42,935		46,270			94,234
Impairment loss on property, plant and equipment		—			22,687		3,113			22,687
Other		335,150			229,607		577,258			397,217

	W	7,711,492			6,090,389		14,491,600			12,681,316

(*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 six-month periods ended June 30, 2021 and 2020 were 27.62% and 18.82%, respectively.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

31. Earnings per Share

Basic earnings per share for the three-month and six-month periods ended June 30, 2021 and 2020 were as follows:


(in Won, except share information)	For the three-month periods ended June 30						For the six-month periods ended June 30
	2021			2020			2021			2020
Profit for the period	W	1,318,159,603,103			6,645,986,027			2,270,335,106,310			459,666,301,329
Interests of hybrid bonds, net of tax		(1,662,931,506	)		(1,662,931,506	)		(3,307,589,040	)		(3,325,863,013	)
Weighted-average number of common shares outstanding(*1)		75,625,572			80,006,436			75,767,898			80,061,039
Basic earnings per share	W	17,408			62			29,921			5,700

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


(shares)	For the three-month periods						For the six-month periods
	ended June 30						ended June 30
	2021			2020			2021			2020
Total number of common shares issued		87,186,835			87,186,835			87,186,835			87,186,835
Weighted-average number of treasury shares		(11,561,263	)		(7,180,399	)		(11,418,937	)		(7,125,796	)

Weighted-average number of common shares outstanding		75,625,572			80,006,436			75,767,898			80,061,039

Since there were no potential shares of common stock which had dilutive effects as of June 30, 2021 and 2020, diluted earnings per share is equal to basic earnings per share.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

32. Related Party Transactions

(a)	Significant transactions with related companies for the six-month periods ended June 30, 2021 and 2020 were as follows:

For the six-month period ended June 30, 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	2,796		11,082		—		202,735		69		13,481
POSCO COATED & COLOR STEEL Co., Ltd.		291,173		2,085		—		—		17,346		431
POSCO ICT(*4)		837		4,992		—		94,130		20,828		90,417
eNtoB Corporation		7		—		136,794		21,607		21		9,603
POSCO CHEMICAL CO., LTD		128,745		21,446		226,321		5,555		147,420		2,296
POSCO ENERGY CO., LTD.		3,214		966		3,538		—		—		11,199
POSCO SPS		337,690		—		—		—		21,405		439
POSCO INTERNATIONAL Corporation		4,222,135		54,331		424,428		—		541		2,839
POSCO Thainox Public Company Limited		150,184		—		—		—		—		20
POSCO Canada Ltd.		—		681		81,745		—		—		—
POSCO Asia Co., Ltd.		19,137		32		417		—		—		705
Qingdao Pohang Stainless Steel Co., Ltd.		81,402		—		—		—		—		—
POSCO JAPAN Co., Ltd.		722,496		1		14,322		287		—		1,044
POSCO-VIETNAM Co., Ltd.		187,544		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		197,177		71		—		—		—		86
POSCO Maharashtra Steel Private Limited		377,857		180		—		—		—		101
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		66,647		—		—		—		—		—
POSCO VST CO., LTD.		96,247		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		853		746,681		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		120,944		110		8		—		—		10
Others		658,857		52,590		60,126		25,211		122,229		53,622

		7,665,089		149,759		1,694,380		349,525		329,859		186,301

*Associates and joint ventures(3)**
SNNC		20,052		2,342		295,657		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		31,193		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		256,138		1,040,468		—		—		—
Others		22,340		23,575		47,172		—		—		19,833

		73,585		282,055		1,383,297		—		—		19,886

	W	7,738,674		431,814		3,077,677		349,525		329,859		206,187

(*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 June 30, 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.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

For the six-month period ended June 30, 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	3,548		11,096		15		442,305		60		12,835
POSCO COATED & COLOR STEEL Co., Ltd.		205,766		1,695		—		—		15,176		208
POSCO ICT		1,429		4,991		—		184,310		20,941		87,668
eNtoB Corporation		7		60		113,378		18,848		28		12,493
POSCO CHEMICAL CO., LTD		144,466		24,770		229,721		12,830		154,424		4,362
POSCO ENERGY CO., LTD.		1,553		1,216		9,995		3		—		11,110
POSCO INTERNATIONAL Corporation		2,795,437		54,331		110,798		—		11,371		2,083
POSCO Thainox Public Company Limited		106,717		137		3,454		—		—		—
POSCO America Corporation		96,266		—		—		—		—		3
POSCO Canada Ltd.		—		816		90,805		—		—		—
POSCO Asia Co., Ltd.		719,978		965		81,671		2,272		1,162		1,419
Qingdao Pohang Stainless Steel Co., Ltd.		70,768		66		—		—		—		176
POSCO JAPAN Co., Ltd.		548,842		—		16,420		2,959		—		1,088
POSCO-VIETNAM Co., Ltd.		101,105		223		—		—		—		20
POSCO MEXICO S.A. DE C.V.		68,574		99		—		—		—		304
POSCO Maharashtra Steel Private Limited		153,754		847		—		—		—		185
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		57,645		—		—		—		—		—
POSCO VST CO., LTD.		132,216		56		—		—		—		20
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		804		291,649		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		120,059		213		2,314		—		—		18
Others		453,004		17,971		38,792		25,580		128,557		58,047

		5,781,134		120,356		989,012		689,107		331,719		192,039

Associates and joint ventures
SNNC		2,901		3,478		219,060		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		17,154		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		625,545		—		—		—
Others		14,397		54,974		29,870		84,839		4,086		25,779

		34,452		58,452		874,475		84,839		4,086		25,779

	W	5,815,586		178,808		1,863,487		773,946		335,805		217,818

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(b)	Significant transactions with related companies for the three-month periods ended June 30, 2021 and 2020 were as follows:

For the three-month period ended June 30, 2021


(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	1,182		13		—		113,873		9		7,018
POSCO COATED & COLOR STEEL Co., Ltd.		167,747		51		—		—		9,899		270
POSCO ICT		390		2		—		59,840		10,122		40,995
eNtoB Corporation		3		—		76,604		11,960		7		5,096
POSCO CHEMICAL CO., LTD		70,786		5,166		112,256		4,166		73,125		870
POSCO ENERGY CO., LTD.		2,454		277		1,409		—		—		5,594
POSCO SPS		188,917		—		—		—		10,711		233
POSCO INTERNATIONAL Corporation		2,323,778		—		258,276		—		194		2,303
POSCO Thainox Public Company Limited		89,311		—		—		—		—		—
POSCO Canada Ltd.		—		190		46,949		—		—		—
POSCO Asia Co., Ltd.		848		—		—		—		—		433
Qingdao Pohang Stainless Steel Co., Ltd.		40,454		—		—		—		—		—
POSCO JAPAN Co., Ltd.		364,525		—		6,721		283		—		564
POSCO-VIETNAM Co., Ltd.		106,634		—		—		—		—		—
POSCO MEXICO S.A. DE C.V.		104,386		37		—		—		—		86
POSCO Maharashtra Steel Private Limited		209,005		96		—		—		—		12
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		38,135		—		—		—		—		—
POSCO VST CO., LTD.		39,839		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		243		396,110		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		55,412		61		—		—		—		—
Others		335,411		31,201		25,827		15,459		61,247		32,920

		4,139,217		37,337		924,152		205,581		165,314		96,394

Associates and joint ventures
SNNC		12,539		299		143,898		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		18,544		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		140,062		553,493		—		—		—
Others		13,503		10,636		25,449		—		—		10,660

		44,586		150,997		722,840		—		—		10,713

	W	4,183,803		188,334		1,646,992		205,581		165,314		107,107

For the three-month period ended June 30, 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	2,011		17		—		198,832		60		5,123
POSCO COATED & COLOR STEEL Co., Ltd.		89,666		1		—		—		6,818		91
POSCO ICT		718		2		—		85,004		10,483		41,213
eNtoB Corporation		3		—		55,786		9,743		9		6,931
POSCO CHEMICAL CO., LTD		61,232		4,828		105,977		8,690		71,609		653
POSCO ENERGY CO., LTD.		266		537		5,385		—		—		5,598
POSCO INTERNATIONAL Corporation		1,274,878		—		31,102		—		—		941
POSCO Thainox Public Company Limited		55,096		71		792		—		—		—
POSCO America Corporation		32,624		—		—		—		—		—
POSCO Canada Ltd.		—		753		51,250		—		—		—
POSCO Asia Co., Ltd.		402,677		746		36,185		504		766		910
Qingdao Pohang Stainless Steel Co., Ltd.		35,299		66		—		—		—		119
POSCO JAPAN Co., Ltd.		230,608		—		9,698		2,339		—		650
POSCO-VIETNAM Co., Ltd.		37,517		108		—		—		—		—
POSCO MEXICO S.A. DE C.V.		17,483		63		—		—		—		249
POSCO Maharashtra Steel Private Limited		36,314		44		—		—		—		—
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		25,094		—		—		—		—		—
POSCO VST CO., LTD.		62,622		56		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		462		136,882		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		41,895		85		—		—		—		18
Others		262,269		3,559		14,283		12,622		67,484		28,980

		2,668,272		11,398		447,340		317,734		157,229		91,476

Associates and joint ventures
SNNC		1,491		443		98,634		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		3,229		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		303,358		—		—		—
Others		4,625		39,739		16,589		—		—		5,695

		9,345		40,182		418,581		—		—		5,695

	W	2,677,617		51,580		865,921		317,734		157,229		97,171

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(c)	The related account balances of significant transactions with related companies as of June 30, 2021 and December 31, 2020 are as follows:

June 30, 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	2,909		6		2,915		—		53,489		321		53,810
POSCO COATED & COLOR STEEL Co., Ltd.		96,258		2,295		98,553		—		110		5,540		5,650
POSCO ICT		111		2		113		2,620		52,924		26,115		81,659
eNtoB Corporation		—		—		—		1,613		43,529		18		45,160
POSCO CHEMICAL CO., LTD		23,127		3,471		26,598		14,266		48,255		17,120		79,641
POSCO ENERGY CO., LTD.		734		176		910		—		2,502		11,288		13,790
POSCO SPS		107,435		—		107,435		33		1,534		4,252		5,819
POSCO INTERNATIONAL Corporation		916,818		105		916,923		6,453		697		502		7,652
POSCO Thainox Public Company Limited		54,270		—		54,270		—		—		—		—
POSCO Asia Co., Ltd.		—		676		676		6		—		—		6
Qingdao Pohang Stainless Steel Co., Ltd.		20,816		—		20,816		—		—		—		—
POSCO MEXICO S.A. DE C.V.		126,547		745		127,292		—		—		—		—
POSCO Maharashtra Steel Private Limited		426,597		1,509		428,106		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		259,845		1,388		261,233		—		—		—		—
Others		393,381		20,469		413,850		124,964		31,902		80,913		237,779

		2,428,848		30,842		2,459,690		149,955		234,942		146,069		530,966

Associates and joint ventures
SNNC		364		4,347		4,711		32,030		—		—		32,030
Roy Hill Holdings Pty Ltd		—		140,062		140,062		189,072		—		—		189,072
Others		477		22,888		23,365		2,942		287		—		3,229

		841		167,297		168,138		224,044		287		—		224,331

	W	2,429,689		198,139		2,627,828		373,999		235,229		146,069		755,297

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

	W	1,732,954		107,017		1,839,971		307,490		327,907		153,462		788,859

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(d)	For the six-month periods ended June 30, 2021 and 2020, details of compensation to key management officers were as follows:


(in millions of Won)	June 30, 2021		June 30, 2020
Short-term benefits	W	21,991		21,409
Long-term benefits		2,956		2,172
Retirement benefits		6,938		4,836

	W	31,885		28,417

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.

33. Commitments and Contingencies

(a)	Commitments

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 June 30, 2021, 49 million tons of iron ore and 7 million tons of coal remained to be purchased under such long-term contracts.

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.

The Company entered into consecutive voyage charter (CVC) contract for the transportation of raw materials. As of June 30, 2021, there are 38 vessels under contract and the average remaining contract period is about 9 years.

As of June 30, 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 June 30, 2021, the ending balance of the borrowing amounts to USD 1.02 million.

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.

(b)	As of June 30, 2021, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral for long-term foreign currency borrowings.

POSCO

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2021

(Unaudited)

(c)	Litigation in progress

The Company is involved in 32 lawsuits aggregating to W62.4 billion as defendant as of June 30, 2021, which arise from the ordinary course of business such as claim for confirmation of employee status. 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 June 30, 2021.

34. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the six-month periods ended June 30, 2021 and 2020 were as follows:


(in millions of Won)	June 30, 2021			June 30, 2020
Trade accounts and notes receivable, net	W	(1,225,365	)		830,252
Other accounts receivable		(304	)		(5,207	)
Accrued revenues		948			—
Inventories		(1,225,946	)		740,396
Prepaid expenses		(13,783	)		(1,924	)
Other current assets		(559	)		(3,652	)
Long-term guarantee deposits		265			(448	)
Derivative assets		(3,575	)		4,898
Other non-current assets		(18,359	)		444
Trade accounts and notes payable		53,076			193,651
Other accounts payable		(99,328	)		(89,951	)
Accrued expenses		28,984			(16,670	)
Advances received		4,484			381
Withholdings		4,214			2,303
Unearned revenue		11,387			(5,227	)
Other current liabilities		(20,395	)		(14,429	)
Derivative liabliities		8,572			5,692
Payments of severance benefits		(87,606	)		(89,031	)
Plan assets		72,901			29,417
Other non-current liabilities		1,085			(7,971	)

	W	(2,509,304	)		1,572,924

35. Events after the Reporting Period

Pursuant to the resolution of the Board of Directors on August 13, 2021, the Company decided to pay interim cash dividends of W4,000 per common share (total dividend: W302.5 billion).