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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 December, 2020
Commission File Number: 1-13368
POSCO
(Translation of registrant’s name into English)
POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of 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.
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POSCO is furnishing under cover of Form 6-K:
Exhibit 99.1: An English-translated documents of POSCO’s Quarterly Report for the year 2020
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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: December 15, 2020 | By | /s/ Lim, Seung-Kyu | ||||
(Signature) | ||||||
Name : Lim, Seung-Kyu | ||||||
Title : Executive Vice President |
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Exhibit 99.1
QUARTERLY REPORT
(From January 1, 2020 to September 30, 2020)
THIS IS AN ENGLISH TRANSLATION OF THE QUARTERLY REPORT ORIGINALLY PREPARED IN THE KOREAN LANGUAGE (IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION). THIS ENGLISH TRANSLATION IS NOT OFFICIAL AND IS PROVIDED FOR INFORMATION PURPOSES ONLY.
UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON BOTH CONSOLIDATED 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.
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QUARTERLY REPORT
(From January 1, 2020 to September 30, 2020)
To: Korean Financial Services Commission and Korea Exchange
/s/ Chang, In-Hwa |
Chang, In-Hwa |
President and Representative Director |
POSCO |
6261 Donghaean-ro (Goedong-dong), Pohang-si, Nam-gu, Gyungsangbuk-do, Korea
Telephone: +82-54-220-0114
/s/ Lim, Seung-Kyu |
Lim, Seung Kyu |
Executive Vice President |
POSCO |
6261 Donghaean-ro (Goedong-dong), Pohang-si, Nam-gu, Gyungsangbuk-do, Korea
Telephone: +82-2-3457-0114
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I. | Overview | 4 | ||
II. | Business | 10 | ||
III. | Financial Statements | 32 | ||
IV. | 36 |
Attachment: Independent Auditors’ Review Report (Consolidated and Separate) |
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1. Scope of Business
A. POSCO (the “Company”)
The Company’s business scope is as follows:
Business |
(1) To manufacture, market, promote, sell and distribute iron, steel and rolled products; |
(2) To engage in harbor loading and unloading, transportation and warehousing businesses; |
(3) To engage in the management of professional athletic organizations; |
(4) To engage in the supply of gas and power generation as well as in the distribution business thereof and in the resources development business; |
(5) To engage in leasing of real estate and distribution businesses; |
(6) To engage in the supply of district heating business; |
(7) To engage in marine transportation, processing and sales of minerals within or outside of Korea; |
(8) To engage in educational service and other services related to business; |
(9) To engage in manufacture, process and sale of non-ferrous metal; |
(10) To engage in technology license sales and engineering business; and |
(11) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes |
B. POSCO Enterprise Group
(1) | Name of the Enterprise Group: POSCO |
(2) | Companies Belonging to the Enterprise Group |
POSCO, POSCO CHEMICAL CO., LTD, POSCO INTERNATIONAL Corporation, POSCO COATED & COLOR STEEL Co., Ltd., POSCO ICT, POSCO M-TECH, Busan E&E Co., Ltd., Suncheon Eco Trans Co., Ltd., SNNC, eNtoB Corporation, UITrans LRT Co. Ltd., POSCO O&M Co., Ltd., POSCO Humans, POSCO ENGINEERING & CONSTRUCTION., LTD., POSCO Research Institute, POSCO A&C, TANCHEON E&E, Pohang Scrap Recycling Distribution Center Co., Ltd., POSCO NIPPON STEEL RHF JOINT VENTURE CO., Ltd., POSCO-Terminal Co., Ltd., POSCO ENERGY CO., LTD., Gale International Korea, LLC, POSCO Venture Capital Co., Ltd., Pohang Special Welding Co., Ltd., POSCO MITSUBISHI CARBON TECHNOLOGY, Samcheok Blue Power Co.,Ltd. (By change of name from POSPower Co., Ltd), Songdo Posco family Housing, POSCO Group University, POSCO Research & Technology, Pohang Techno Valley PFV Corporation, Songdo Development PMC (Project Management Company) LLC., Korea Fuel-Cell, POSCO SPS, P&O Chemical Co., Ltd.
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(3) | Related Laws and Regulations |
The Korea Fair Trade Commission has designated POSCO as an Enterprise Group subject to the limitations on Cross Shareholding and Debt Guarantee for Affiliates under the Monopoly Regulation and Fair Trade Act (the “MRFTA”).
Details
(a) | Prohibition on Cross Shareholdings (Article 9 (1) of the MRFTA) |
(b) | Prohibition on Debt Guarantees for Affiliated Corporations (Article 10-2 of the MRFTA) |
(c) | Prohibition on Shareholding of Venture Capitals for Subsidiaries (Article 9 (3) of the MRFTA) |
(d) | Limitation of Voting Rights of Financial or Insurance Companies (Article 11 of the MRFTA) |
(e) | Resolution of the Board of Directors and Publication on Large-Scale Intra-Group Transaction (Article11-2 of the MRFTA) |
(f) | Disclosure of Important Facts such as Unlisted Shares (Article 11-3 of the MRFTA) |
(g) | Disclosure of a corporate group (Article 11-4 of the MRFTA) |
(h) | Report on Status of Shareholding (Article 13 of the MRFTA) |
2. Business Organization
A. Highlights of the Company’s Business Organization
(1) | Location of the Headquarters: 6261 Donghaean-ro (Goedong-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea |
(2) | Steel Works and Offices |
(a) | Pohang Steel Works: 6262 Donghaean-ro (Dongchon-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea |
(b) | Gwangyang Steel Works: 20-26 Pokposarang-gil (Geumho-dong), Gwangyang-si, Jeollanam-do, Korea |
(c) | Seoul Office: POSCO Center, 440 Teheran-ro (Daechi-dong), Gangnam-gu, Seoul, Korea |
(d) | Overseas Offices: In order to support international businesses, the Company operates six overseas offices as follows: |
United Arab Emirates(Dubai), Iran(Teheran), Brazil(Rio de Janeiro), Argentina(Jujuy), European Union(Germany), and Australia(Perth).
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(3) | Major Changes in the Board of Directors (as of March 27, 2020) |
(a) | Inside Directors |
• | Re-appointment : Chang, In-Hwa (Representative Director, President), Chon, Jung-Son (Senior Executive Vice President), Kim, Hag-Dong (Senior Executive Vice President) and Jeong, Tak (Senior Executive Vice President) |
(b) | Outside Directors |
• | Re-appointment : Chang, Seung-Wha |
(c) | Audit Committee Member |
• | New member : Pahk, Heui-Jae (Outside director) |
(4) | Changes of the Major Shareholders of POSCO |
(a) | Since January 30, 2007, National Pension Service holds the largest number of common shares of POSCO. |
(b) | For further reference, please refer to the public disclosures of changes in common shares of the largest shareholder on Financial Supervisory Service website (http://dart.fss.or.kr) with the filing dates given below: |
January 30, 2007, July 27, 2007, January 29, 2008, July 25, 2008, January 21, 2009, March 2, 2009, July 22, 2009, October 9, 2009, January 26, 2010, July 20, 2010, January 28, 2011, July 22, 2011, January 31, 2012, August 1, 2012, February 1, 2013, August 1, 2013, January 14, 2014, January 23, 2014, July 29, 2014,January 23, 2015, August 5, 2015, January 6, 2016, January 26, 2016, March 15, 2016, April 12, 2016, July 4, 2016, July 5, 2016, July 21, 2016, October 7, 2016, October 11, 2016, January 10, 2017, April 10, 2017, July 12, 2017, October 13, 2017, January 10, 2018, April 11, 2018, July 9, 2018, October 10, 2018, January 9, 2019, April 9, 2019, July 9, 2019, October 8, 2019, January 8, 2020, February 10, 2020, March 11, 2020, April 7, 2020, May 8, 2020, June 3, 2020, July 7, 2020, August 6, 2020, September 7, 2020, and October 8, 2020)
B. POSCO’s Merger, Acquisition and Handover of Businesses
(1) | March 2016 : Small scale merger of POSHIMETAL Co., Ltd into POSCO |
(2) | May 2016 : Small scale merger of POSCO Green Gas Technology into POSCO |
(3) | January 2019 : Small scale merger of POSCO Processing & Service Co., Ltd into POSCO |
(4) | September 2019 : Small scale merger of By-Product Hydrogen Generation Business from POSCO ENERGY into POSCO after spin-off |
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C. Major Changes in Production Facilities
Refer to the ‘II. Business (5. Production and Facilities)’
3. Equity Capital
A. New Issuance of Registered Common Stock
[None]
4. Other Information Regarding Shares
A. Total Number of Shares
(As of September 30, 2020) | ||||
Authorized Shares | Issued Shares | |||
200,000,000 | 87,186,835 |
Currency of the Republic of Korea is Korean Won (“KRW”). |
Par Value: KRW 5,000 per share |
B. Treasury Stock Holding and Cancellation
(As of September 30, 2020) | ||||||||||||||||||||||
Method of Purchase | Type | Beginning Balance | Increased | Decreased | Cancelled | Ending Balance | ||||||||||||||||
Direct | Common | 7,071,194 | — | — | — | 7,071,194 | ||||||||||||||||
Trust Contract | Stock | — | 1,675,079 | — | — | 1,675,079 | ||||||||||||||||
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Total | 7,071,194 | 1,675,079 | — | — | 8,746,273 | |||||||||||||||||
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5. Voting Rights
(As of September 30, 2020) | ||||||||
Classification | Number of Common Shares | Remarks | ||||||
(1) Number of Issued Shares | 87,186,835 | — | ||||||
(2) Shares without Voting Rights | 8,746,273 | Treasury stock and trust holding | ||||||
(3) Shares with Voting Rights | 78,440,562 | — |
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6. Earnings and Dividends
(In millions of KRW) | ||||||||||||
2020.3Q | 2019 | 2018 | ||||||||||
(Consolidated) Profit* | 901,132 | 1,835,087 | 1,690,612 | |||||||||
(Separate) Profit | 640,476 | 1,175,712 | 1,072,592 | |||||||||
Earnings per Share (Consolidated, KRW) | 11,232 | 22,823 | 20,911 | |||||||||
Cash Dividend Paid | 277,722 | 801,156 | 800,009 | |||||||||
Pay-out Ratio (Consolidated, %) | 30.8 | 43.7 | 47.3 | |||||||||
Dividend per Share (KRW) | 3,500 | 10,000 | 10,000 | |||||||||
Dividend Yield (%) | 1.8 | 4.1 | 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) | ||||||||||||||||||||||||||
April 2020 | May 2020 | June 2020 | July 2020 | August 2020 | September 2020 | |||||||||||||||||||||
Common share | Highest Price | 201,500 | 184,500 | 203,000 | 202,000 | 210,500 | 196,000 | |||||||||||||||||||
Lowest Price | 155,000 | 168,000 | 174,000 | 178,500 | 184,500 | 185,000 | ||||||||||||||||||||
Average Price | 171,200 | 175,763 | 188,614 | 189,522 | 198,075 | 189,690 | ||||||||||||||||||||
Trading volume | Daily highest | 994 | 899 | 1,149 | 810 | 656 | 953 | |||||||||||||||||||
Daily lowest | 99 | 245 | 205 | 189 | 196 | 200 | ||||||||||||||||||||
Monthly | 10,230 | 9,060 | 9,582 | 8,143 | 7,123 | 7,250 |
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B. New York Stock Exchange
(USD/ADS*, In thousands of ADS*) | ||||||||||||||||||||||||||
April 2020 | May 2020 | June 2020 | July 2020 | August 2020 | September 2020 | |||||||||||||||||||||
American Depositary Share (ADS) | Highest Price | 38.6 | 37.4 | 42.6 | 42.1 | 44.1 | 42.1 | |||||||||||||||||||
Lowest Price | 31.1 | 34.3 | 37.0 | 37.4 | 39.1 | 38.3 | ||||||||||||||||||||
Average Price | 34.8 | 35.9 | 39.1 | 39.5 | 41.8 | 40.0 | ||||||||||||||||||||
Trading volume | Daily highest | 375.3 | 532.9 | 421.0 | 295.9 | 196.2 | 419.4 | |||||||||||||||||||
Daily lowest | 129.0 | 91.9 | 106.6 | 102.6 | 74.3 | 88.2 | ||||||||||||||||||||
Monthly | 5,268 | 4,166 | 4,902 | 4,045 | 2,750 | 4,142 |
* | ADS : American Depositary Share representing one-fourth of one share of Common Stock |
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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 | 2020.3Q | 2019 | 2018 | |||||||||||||||||||||
Sales | Operating Income (Loss) | Sales | Operating Income (Loss) | Sales | Operating Income (Loss) | |||||||||||||||||||
Steel | 20,915,217 | 690,310 | 32,078,453 | 2,786,517 | 32,358,009 | 4,536,318 | ||||||||||||||||||
Trading | 14,520,691 | 325,247 | 22,157,131 | 542,724 | 22,407,717 | 383,934 | ||||||||||||||||||
Engineering & Construction | 4,917,113 | 297,004 | 6,944,629 | 338,865 | 6,769,410 | 411,489 | ||||||||||||||||||
Others | 2,175,564 | 227,114 | 3,186,635 | 200,749 | 3,442,641 | 210,859 | ||||||||||||||||||
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Total | 42,528,585 | 1,539,675 | 64,366,848 | 3,868,855 | 64,977,777 | 5,542,600 | ||||||||||||||||||
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2. Business Status of Segments
A. Steel
(1) Summary of Business
There are 69 consolidated companies in the steel segment, including 4 domestic companies including POSCO and POSCO C&C, and 65 overseas companies including POSCO (Zhangjiagang) Stainless 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 Co., Ltd., is a stainless steel sheet manufacturer and seller, and there are other overseas processing centers that process and sell steel materials.
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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 demanding 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 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 method, FINEX and so on.
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 54% of total sales and export sales are around 46%, and by export region, the proportion of China, Southeast Asia, and Japan is high, in the first half of 2020. 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 the steel business, the company will operate flexible production and sales system that can minimize the impact of production cuts along with extreme cost reduction. Second, the POSCO Group businesses will pursue continuous business evolution and focus on core businesses. Third, the company will endeavor to create symbiotic values, the core of realizing the corporate citizenship management philosophy. Fourth, the company will create safe and pleasant workplaces and maintain sound labor-management culture to realize higher labor productivity compared to competitors.
(2) Market Share
(Millions of Tons, %) | ||||||||||||||||||||||||
Category | 2020.3Q | 2019 | 2018 | |||||||||||||||||||||
Production | Market share | Production | Market share | Production | Market share | |||||||||||||||||||
Crude Steel Production | 49.6 | 100 | 71.4 | 100 | 72.5 | 100 | ||||||||||||||||||
POSCO | 26.4 | 53.1 | 38.0 | 53.2 | 37.7 | 52.0 | ||||||||||||||||||
Others | 23.2 | 46.9 | 33.4 | 46.7 | 34.8 | 48.0 |
Source: World Steel Association (www.worldsteel.org) |
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B. Trading
(1) Market Share
(Millions of US Dollars) | ||||||||||||
Category | 2020.3Q | 2019.3Q | Growth rate | |||||||||
All Trading Companies in Korea | 370,969 | 405,875 | -8.6 | % | ||||||||
POSCO International Corp. | 3,949 | 4,989 | -19.4 | % |
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 100 subsidiaries and branches in major overseas regions. In the case of the trading business, POSCO International has been actively developing and expanding new businesses in fields such as agro-commodities, LNG trading, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. In the energy business, POSCO International conducts businesses such as natural gas and crude oil development, LNG infrastructure, natural resources and power generation infrastructure.
C. Engineering & Construction
POSCO E&C engages in primarily 4 businesses: construction, energy, civil engineering and plant.
In the construction business, based on its know-how in the construction of skyscrapers and commercial complexes, POSCO E&C involves in a new city and private complex development projects. In the energy business, it involves in various power generation plant projects including renewable energy projects. The civil engineering business is about constructing expressways, railroads and bridges. Plant business is the construction of integrated steel mills, EPC projects and industrial plants.
D. Others
(1) POSCO ENERGY
POSCO ENERGY started its commercial operation in February, 1972 as the only privately-owned power plant in Korea. Since the early 1990’s, POSCO ENERGY continuously remodeled and built additional power plants meeting the increased demand for electricity in Korea. POSCO ENERGY acquired the LNG terminal business from POSCO in 2019, providing an opportunity to expand the LNG value chain. The LNG terminal business operates stable business structure through businesses such as tank rental, small scale LNG business, and ship trial run. POSCO ENERGY plans to secure stable profit base through the expansion of the LNG terminal in the future and grow into a general energy company focused on gas and power.
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(2) POSCO ICT
Based on the competitiveness in ICT, POSCO ICT has expanded Smart Factory and provided IT solutions to POSCO and POSCO subsidiaries. POSCO ICT has expanded Smart Factory based on the world’s first continuous process platform “PosFrame” and next-generation production optimization system “MES 3.0”. POSCO ICT has been actively applying smart technology for strategic businesses in manufacturing, logistics, trade, and energy sectors, such as building MES at the POSCO CHEMICAL’s anode and cathode material factory, spreading the Smart Management of POSCO International, and spreading the Intelligent Power Plant of POSCO Energy in order to promote the digital transformation of POSCO subsidiaries and other businesses.
(3) POSCO CHEMICAL
POSCO CHEMICAL operates mainly 3 businesses: refractory, quicklime & chemical and energy material. In the refractory business, POSCO CHEMICAL produces and maintains refractories. In the quicklime & chemical business, POSCO CHEMICAL produces quicklime and chemical products such as coal tar and light oil. In the energy material business, POSCO CHEMICAL provides cathode and anode materials which are the main components for secondary cells: cathode, anode, electrolyte and separation membrane. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously.
(4) POSCO M-TECH
POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers. In the case of steel products packaging, POSCO M-TECH continuously develops packaging automated molding machines and applies environment-friendly packaging materials. In addition, aluminum deoxidizers engage in primarily 3 types : Pellet, Mini-Pellet and Ingot. POSCO M-TECH has expanded the sales of aluminum deoxidizers in overseas markets.
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3. Key Products
A. Sales of Key Products (2020.3Q)
(In hundred millions of KRW, %) | ||||||||||||
Business Area | Item | Specific Use | Total Sales | Ratio | ||||||||
Steel | Hot-rolled Product (HR) | Steel pipe, Shipbuilding, etc. | 55,904 | 17.36 | ||||||||
Cold-rolled Product (CR) | Automobile , Home appliances, etc. | 100,164 | 31.10 | |||||||||
Stainless Steel Products | Tableware, pipes, etc. | 70,299 | 21.82 | |||||||||
Others | Plates, Wire rods, etc. | 95,741 | 29.72 | |||||||||
Gross Sum | 322,108 | 100.00 | ||||||||||
Deduction of Internal Trade | (112,956 | ) | ||||||||||
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Sub Total | 209,152 | |||||||||||
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Trading | Steel, Metal | 175,147 | 73.19 | |||||||||
Chemical, Strategic Item, Energy | 23,561 | 9.85 | ||||||||||
Others | 40,601 | 16.97 | ||||||||||
Gross Sum | 239,309 | 100.00 | ||||||||||
Deduction of Internal Trade | (94,102 | ) | ||||||||||
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Sub Total | 145,207 | |||||||||||
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Engineering & Construction | Domestic Construction | Architecture | 32,427 | 57.61 | ||||||||
Plant | 9,665 | 17.17 | ||||||||||
Civil Engineering | 4,253 | 7.56 | ||||||||||
Others | — | 0.00 | ||||||||||
Overseas Construction | 4,884 | 8.68 | ||||||||||
Owned Construction | 3,311 | 5.88 | ||||||||||
Others | 1,744 | 3.10 | ||||||||||
Gross Sum | 56,283 | 100.00 | ||||||||||
Deduction of Internal Trade | (7,112 | ) | ||||||||||
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Sub Total | 49,171 | |||||||||||
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Others | Electricity Sales, etc. | 41,080 | ||||||||||
Deduction of Internal Trade | (19,324 | ) | ||||||||||
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Sub Total | 21,756 | |||||||||||
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Total Sum | 425,286 | |||||||||||
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B. Price Movement Trends of Key Products
(In thousands of KRW/ Tons, KRW/kWh) | ||||||||||||||
Business Area | Products | 2020.3Q | 2019 | 2018 | ||||||||||
Steel | Hot-rolled Product (HR) | 616 | 695 | 707 | ||||||||||
Cold-rolled Product (CR) | 756 | 800 | 807 | |||||||||||
Others | Electric Power | 78 | 94 | 100 | ||||||||||
Refractory | 978 | 1,073 | 1,073 | |||||||||||
Lime | 106 | 111 | 108 |
Trade and Engineering & Construction businesses are not reflected on the table above due to difficulties in measuring the price movement trend. |
[Steel]
(1) Criteria for Calculation
(a) Subjects for Calculation: Unit 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
Since 2016, prices have continued to rise, but after a slight decline in 2019 as the domestic and overseas demand industry worsened, prices fell sharply due to COVID-19 in 2020.
[Others]
(1) Criteria for Calculation
(a) Electric Power = Price of electric power / Total amount of power generated
(b) Refractory and lime: Average sales price including freight cost
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4. Major Raw Materials
A. Current Status of Major Raw Materials
(In hundred millions of KRW) | ||||||||||
Business Area | Type of Purchase | Item | Specific Use | Purchase Amount (Portion, %) | Remarks | |||||
Steel | Raw Materials | Materials for Iron-making | Iron Ore for Blast Furnaces | 77,206 (60.6) | Iron Ore, Coal | |||||
Sub-materials | Sub-materials for Iron-making, Steelmaking | 22,893 (18.0) | Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc. | |||||||
Stainless Steel Materials | Key Materials for STS Production | 27,325 (21.4) | Nickel, Ferrochrome, STS Scrap Iron, etc. | |||||||
Engineering & Construction | Raw Materials | Ready-mixed Concrete | Construction of Structure | 1,843 (20.5) | ||||||
Steel Reinforcement | Strengthening Concrete | 1,468 (16.3) | ||||||||
Cable | Electricity Transfer | 169 (1.9) | ||||||||
Steel Pile | Foundation of Structure | 190 (2.1) | ||||||||
Others | Construction of Pipe and Structure etc. | 5,322 (59.2) | ||||||||
Others | Raw Materials | LNG | Material for Power Generation | 6,827 (52.0) | ||||||
Limestone | Production of Lime | 648 (4.9) | ||||||||
Others | Engineering business etc. | 5,666 (43.1) |
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B. Price Movement Trends of Major Raw Materials
(In thousands of KRW) | ||||||||||||||
Business Area | Category | 2020.3Q | 2019 | 2018 | ||||||||||
Steel | Iron Ore(per ton) | 112 | 102 | 76 | ||||||||||
Coal(per ton) | 155 | 207 | 228 | |||||||||||
Scrap Iron(per ton) | 327 | 347 | 395 | |||||||||||
Nickel(per ton) | 15,666 | 16,148 | 15,074 | |||||||||||
Engineering & Construction | Ready-mixed Concrete (per m3) | 63 | 63 | 63 | ||||||||||
Steel Pile (per m) | 102 | 136 | 146 | |||||||||||
Steel Reinforcement (per kg) | 1 | 1 | 1 | |||||||||||
Cable (per m) | �� | 1 | 1 | 1 | ||||||||||
Others | LNG (per ton) | 515 | 668 | 768 | ||||||||||
Lime (per ton) | 19 | 20 | 19 |
17
Table of Contents
[Steel]
Price Movement Trend of Major Raw Materials |
(1) Iron Ore
(In US Dollars/ Tons) | ||||||||||||||||||||||||||||||||||||||||||||||||
’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | ’17.4Q | |||||||||||||||||||||||||||||||||||||
Trend of International Benchmark Price (Free On Board, “FOB”) | 110 | 88 | 83 | 80 | 92 | 94 | 77 | 64 | 57 | 58 | 68 | 57 |
(2) Coal
(In US Dollars/ Tons) | ||||||||||||||||||||||||||||||||||||||||||||||||
’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | ’17.4Q | |||||||||||||||||||||||||||||||||||||
Trend of International Benchmark Price (FOB) | 115 | 118 | 155 | 140 | 161 | 203 | 206 | 221 | 188 | 190 | 229 | 204 |
(3) Scrap Iron
(In US Dollars/ Tons) | ||||||||||||||||||||||||||||||||||||||||||||||||
’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | ’17.4Q | |||||||||||||||||||||||||||||||||||||
Trend of Purchase Price (Cost and Freight, “CFR”) | 289 | 254 | 274 | 270 | 290 | 312 | 325 | 343 | 350 | 364 | 379 | 344 |
(4) Nickel
’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | ’17.4Q | |||||||||||||
Trend of London Metal Exchange (“LME”) Cash Price | USD 6.45 /lb USD 14,210/ton | USD 5.54 /lb USD 12,215/ton | USD 5.77 /lb USD 12,723/ton | USD 7.01 /lb USD 15,450/ton | USD 7.05 /lb USD 15,540/ton | USD 5.56 /lb USD 12,258/ton | USD 5.61 /lb USD 12,369/ton | USD 5.22 /lb USD 11,516/ton | USD 6.02 /lb USD 13,266/ton | USD 6.56 /lb USD 14,467/ton | USD 6.02 /lb USD 13,276/ton | USD 5.25/lb USD 11,584/ton |
LME : London Metal Exchange |
18
Table of Contents
[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 | High Tensile Deformed Bar SD400 D10mm | |
Cable | TFR-3, 0.6/1KV, 2.5SQ, 2core |
[Others]
(1) Criteria for Calculation
<POSCO ENERGY>
LNG: The average price between LNG purchased from Korea Gas Corporation and LNG purchased directly from foreign suppliers
<POSCO CHEMICAL>
Refractory and lime: Purchase prices including freight costs
19
Table of Contents
5. Production and Facilities
A. Production Capacity
[Steel]
(Thousands of Tons) | ||||||||||||||||
Business Area | Products | 2020.3Q | 2019 | 2018 | ||||||||||||
Steel | Crude Steel | 33,942 | 47,534 | 47,590 |
[Others]
(Electric Power: MW/year, Lime: Thousands of Tons/year) | ||||||||||||||||
Business Area | Products | 2020.3Q | 2019 | 2018 | ||||||||||||
Power Generation | Electric Power | Incheon | 3,412 | 3,412 | 3,412 | |||||||||||
Gwangyang | — | 284 | 284 | |||||||||||||
Pohang | — | 290 | 290 | |||||||||||||
Lime | Lime | 1,644 | 2,190 | 2,190 |
* | Lime production capacity is based on the 3rd quarter of 2020. |
B. Production Result and Capacity Utilization Rate
[Steel]
(1) Production
(Thousands of Tons) | ||||||||||||||
Products | 2020.3Q | 2019 | 2018 | |||||||||||
Crude Steel | 29,839 | 42,948 | 42,867 | |||||||||||
Products | Hot-Rolled Steel | 6,763 | 8,739 | 8,716 | ||||||||||
Plate | 5,272 | 7,191 | 7,432 | |||||||||||
Wire Rod | 1,953 | 2,756 | 2,867 | |||||||||||
Pickled-Oiled Steel | 1,712 | 2,967 | 2,946 | |||||||||||
Cold-Rolled Products | 5,020 | 7,416 | 8,551 | |||||||||||
Coated Steel | 4,587 | 6,526 | 7,163 | |||||||||||
Electrical Steel | 632 | 819 | 1,078 | |||||||||||
Stainless Steel | 2,942 | 3,850 | 3,978 | |||||||||||
Others | 3,444 | 5,761 | 5,903 | |||||||||||
|
|
|
|
|
| |||||||||
Total | 32,326 | 46,025 | 48,634 | |||||||||||
|
|
|
|
|
|
The amount of products is the aggregate amount of POSCO’s production and production of POSCO subsidiaries, which may include interested parties’ transactions. |
20
Table of Contents
(2) Capacity Utilization Rate
(Thousands of Tons, %) | ||||||||||||||
Company | Capacity | Production | Utilization Rate | |||||||||||
Crude Steel Production | POSCO | 30,454 | 26,356 | 86.5 | ||||||||||
POSCO (Zhangjiagang) Stainless Co., Ltd. | 825 | 749 | 90.8 | |||||||||||
PT.KRAKATAU POSCO | 2,250 | 2,351 | 104.5 | |||||||||||
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (Former, SS VINA JOINT STOCK COMPANY) | 413 | 383 | 92.7 | |||||||||||
|
|
|
|
|
| |||||||||
Total | 33,942 | 29,839 | 87.9 | |||||||||||
|
|
|
|
|
|
Trade and Engineering & Construction businesses are not reflected on the table due to difficulties in measuring capacity, production and utilization rate of such businesses. |
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY, formerly SS VINA JOINT STOCK COMPANY, had a production capacity of crude steel 1,100 thousand tons/year: section steel 550 thousand tons/year and reinforcing bar 550 thousand tons/year. However, after the exit of the reinforcing bar business in November 2019, the current crude steel production capacity is 550 thousand tons/year. |
[Others]
(1) Production Result
(Gwh, Thousands of Tons) | ||||||||||||||
Business Area | Products | 2020.3Q | 2019 | 2018 | ||||||||||
Power Generation | Electric Power | 9,831 | 15,928 | 15,297 | ||||||||||
Lime | Lime | 1,723 | 2,542 | 2,511 |
(2) Capacity Utilization Rate
(Hour, %) | ||||||||||||||
Business Area | Products | 2020.3Q Capacity | 2020.3Q Production | Utilization Rate | ||||||||||
Power Generation | Incheon Power Plant | 6,576 | 3,891 | 59.2 | % |
(Thousands of Tons, %) | ||||||||||||||
Business Area | Products | Capacity | Production | Utilization Rate | ||||||||||
Lime | Lime | 1,644 | 1,723 | 105 |
21
Table of Contents
C. Production Facilities
(1) The current status of production facilities
[Land] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 1,900,252 | 147,249 | (7 | ) | — | 2,047,494 | ||||||||||||||
Trade | 171,177 | 877 | (120,934 | ) | — | 51,120 | ||||||||||||||
Engineering & Construction | 25,528 | 912 | (181 | ) | — | 26,259 | ||||||||||||||
Others | 429,102 | 17,240 | (2,010 | ) | — | 444,332 |
[Buildings] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 3,312,799 | 282,245 | (24,231 | ) | (212,670 | ) | 3,358,143 | |||||||||||||
Trade | 477,497 | 9,125 | (81,122 | ) | (9,537 | ) | 395,963 | |||||||||||||
Engineering & Construction | 72,102 | 2,314 | — | (1,888 | ) | 72,528 | ||||||||||||||
Others | 353,056 | 128,506 | (20,603 | ) | (16,395 | ) | 444,564 | |||||||||||||
[Structures] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 2,418,025 | 126,056 | (11,730 | ) | (146,030 | ) | 2,386,321 | |||||||||||||
Trade | 22,484 | 465 | (20,503 | ) | (241 | ) | 2,205 | |||||||||||||
Engineering & Construction | 13,175 | 386 | (7,531 | ) | (1,176 | ) | 4,854 | |||||||||||||
Others | 450,822 | 163,408 | (2,592 | ) | (22,112 | ) | 589,526 | |||||||||||||
[Machinery and Equipments] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 15,309,982 | 1,858,853 | (298,986 | ) | (1,602,668 | ) | 15,267,181 | |||||||||||||
Trade | 398,184 | 8,990 | (114,165 | ) | (22,623 | ) | 270,386 | |||||||||||||
Engineering & Construction | 5,267 | 3,671 | (3,028 | ) | (872 | ) | 5,038 | |||||||||||||
Others | 1,504,831 | 371,203 | (22,350 | ) | (88,288 | ) | 1,765,396 |
22
Table of Contents
[Vehicles] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 20,095 | 8,698 | (3,330 | ) | (6,239 | ) | 19,224 | |||||||||||||
Trade | 5,852 | 2,858 | (1,526 | ) | (1,263 | ) | 5,921 | |||||||||||||
Engineering & Construction | 783 | 1,772 | (1,016 | ) | (1,315 | ) | 224 | |||||||||||||
Others | 5,555 | 6,178 | (1,955 | ) | (1,877 | ) | 7,901 | |||||||||||||
[Tools and Fixtures] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 48,984 | 32,698 | (9,434 | ) | (17,682 | ) | 54,566 | |||||||||||||
Trade | 11,647 | 1,829 | (10,313 | ) | (1,683 | ) | 1,480 | |||||||||||||
Engineering & Construction | 599 | 983 | (293 | ) | (247 | ) | 1,042 | |||||||||||||
Others | 9,521 | 7,085 | (1,736 | ) | (3,196 | ) | 11,674 | |||||||||||||
[Equipment] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 64,739 | 29,026 | (11,164 | ) | (15,209 | ) | 67,392 | |||||||||||||
Trade | 30,675 | 3,505 | (2,240 | ) | (7,036 | ) | 24,904 | |||||||||||||
Engineering & Construction | 4,055 | 3,421 | (2,753 | ) | (1,634 | ) | 3,089 | |||||||||||||
Others | 30,663 | 12,683 | (8,445 | ) | (4,487 | ) | 30,414 | |||||||||||||
[Financial Lease Assets] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 417,805 | 171,518 | (2,899 | ) | (62,073 | ) | 524,351 | |||||||||||||
Trade | 81,002 | 71,469 | (15,537 | ) | (26,889 | ) | 110,045 | |||||||||||||
Engineering & Construction | 216,170 | 67,670 | (35,327 | ) | (32,189 | ) | 216,324 | |||||||||||||
Others | 59,605 | 20,612 | (3,730 | ) | (25,044 | ) | 51,443 |
23
Table of Contents
[Biological Assets] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | — | — | — | — | — | |||||||||||||||
Trade | 124,193 | 40,405 | (7,898 | ) | (5,812 | ) | 150,888 | |||||||||||||
Engineering & Construction | — | — | — | — | — | |||||||||||||||
Others | — | — | — | — | — | |||||||||||||||
[Assets under Construction] | (In millions of KRW) | |||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 1,436,769 | 1,772,350 | (1,915,425 | ) | (12,811 | ) | 1,280,883 | |||||||||||||
Trade | 105,280 | 23,777 | (68,739 | ) | — | 60,318 | ||||||||||||||
Engineering & Construction | 23,060 | 45 | (1,198 | ) | — | 21,907 | ||||||||||||||
Others | 364,638 | 174,554 | (463,647 | ) | — | 75,545 |
24
Table of Contents
(2) New Facility Establishment, Purchase, Etc.
(a) Investments under Construction
[Steel] | (In hundred millions of KRW) | |||||||||||||||||
Company | Date | Project | Total Investment | Invested Amount | Amount to Be Invested | |||||||||||||
POSCO | Expansion/ Establishment | June 2011 ~ December | P) Establishment of by-product gas Power Plant P) Establishment of #6 Coke plant | 14,989 | 3,001 | 11,988 | ||||||||||||
February 2017 ~ July 2022 | G) The renovation of #3 furnace P) Establishment of coal storage (Silo) | 18,097 | 8,937 | 9,160 |
P stands for Pohang Steel Works. |
G stands for Gwangyang Steel Works. |
Investments over KRW 10 billion are listed on the table. |
[Others] | (In hundred millions of KRW) | |||||||||||||||||
Company | Date | Project | Total Investment | Invested Amount | Amount to Be Invested | |||||||||||||
POSCO ICT | Establishment/Expansion | January 2020 ~ December 2020 | Expansion of SM server | 316 | 70 | 246 | ||||||||||||
January 2020 ~ December 2020 | System improvement, IT facility purchase, etc. | 182 | 49 | 133 | ||||||||||||||
POSCO CHEMICAL | Establishment/Expansion | November 2018 ~ November | Expansion of production lines in #2 anode material factory | 1,605 | 1,594 | 11 | ||||||||||||
Establishment/Expansion | November 2019 ~ November 2021 | The 2nd stage of production line up expansion in #2 anode material factory | 1,657 | 231 | 1,426 | |||||||||||||
Establishment/Expansion | July 2020 ~ November | The 3rd stage of cathode material factory in Gwangyang | 2,895 | 61 | 2,834 | |||||||||||||
Establishment/Expansion | February 2020 ~ May 2024 | Establishment of artificial graphite anode factory | 2,177 | 11 | 2,166 | |||||||||||||
Establishment/Expansion | November 2019 ~ October 2021 | Renovation of refractory factory for production increase | 483 | 87 | 396 | |||||||||||||
POSCO Energy | Establishment/Expansion | March 2020 ~ December 2021 | Expansion of evaporator for Gwangyang LNG Terminal | 360 | 2 | 358 |
Investments over KRW 10 billion are listed on the table as of September 30, 2020. |
25
Table of Contents
6. Product Sales
[Steel] | (In hundred millions of KRW) | |||||||||||||
Items | 2020.3Q | 2019 | 2018 | |||||||||||
Domestic | Hot-Rolled Products | 27,537 | 42,605 | 48,879 | ||||||||||
Cold-Rolled Products | 27,112 | 39,716 | 39,901 | |||||||||||
Stainless Steel | 16,904 | 21,167 | 21,281 | |||||||||||
Others | 46,598 | 77,026 | 77,230 | |||||||||||
Export | Hot-Rolled Products | 28,366 | 41,064 | 35,231 | ||||||||||
Cold-Rolled Products | 73,052 | 125,658 | 124,449 | |||||||||||
Stainless Steel | 53,395 | 80,181 | 79,931 | |||||||||||
Others | 49,144 | 70,667 | 77,310 | |||||||||||
Total | Gross Sum | 322,108 | 498,084 | 504,212 | ||||||||||
Internal Transaction | (112,956 | ) | (177,299 | ) | (180,632 | ) | ||||||||
|
|
|
|
|
| |||||||||
Total | 209,152 | 320,785 | 323,580 | |||||||||||
|
|
|
|
|
| |||||||||
[Trading] | (In hundred millions of KRW) | |||||||||||||
Items | 2020.3Q | 2019 | 2018 | |||||||||||
Domestic | Merchandise | 24,569 | 29,315 | 33,706 | ||||||||||
Product | 1,826 | 5,120 | 4,702 | |||||||||||
Others | 202 | 1,101 | 1,483 | |||||||||||
Export | Merchandise | 48,218 | 69,347 | 87,124 | ||||||||||
Product | 455 | 205 | 768 | |||||||||||
Others | 1 | 638 | 736 | |||||||||||
Trades among the 3 countries | 164,038 | 270,522 | 254,670 | |||||||||||
Gross Sum | 239,309 | 376,247 | 383,189 | |||||||||||
Internal Transaction | (94,102 | ) | (154,677 | ) | (159,112 | ) | ||||||||
|
|
|
|
|
| |||||||||
Total | 145,207 | 221,571 | 224,077 | |||||||||||
|
|
|
|
|
|
26
Table of Contents
[Engineering & Construction] | (In hundred millions of KRW) | |||||||||||||
Items | 2020.3Q | 2019 | 2018 | |||||||||||
Domestic | Building | 32,427 | 44,681 | 37,363 | ||||||||||
Plant | 9,665 | 10,953 | 10,238 | |||||||||||
Civil Engineering | 4,253 | 6,098 | 5,129 | |||||||||||
Others | — | — | 337 | |||||||||||
Overseas | 4,884 | 7,190 | 9,471 | |||||||||||
Own Construction | 3,343 | 5,712 | 7,568 | |||||||||||
Other Subsidiary company sales | 1,713 | 2,248 | 3,101 | |||||||||||
Gross Sum | 56,283 | 76,880 | 73,207 | |||||||||||
Internal Transaction | (7,112 | ) | (7,434 | ) | (5,513 | ) | ||||||||
|
|
|
|
|
| |||||||||
Total | 49,171 | 69,446 | 67,694 | |||||||||||
|
|
|
|
|
| |||||||||
[Others] | (In hundred millions of KRW) | |||||||||||||
Items | 2020.3Q | 2019 | 2018 | |||||||||||
Electric Power Sales | 21,756 | 31,866 | 34,427 |
7. Derivatives
We use forward exchange contracts to hedge against the exchange rate risk for foreign currency loans.
As of September 30, 2020, we assessed the fair value of our forward exchange contracts to be USD 0.7 billion (expiring October 2020), USD 0.55 billion (expiring April 2021), and a currency swap contracts to be USD 0.5 billion(expiring 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 33,955 million of gain on valuations of forward exchange contracts. Also, we recognized KRW 119,749 million of valuation gain on currency swap contracts. The transaction gain of currency swap contracts is KRW 6,564 million.
27
Table of Contents
8. Significant Contracts
Company | Contract | Date | Remarks | |||
POSCO | Small scale merger with POSHIMETAL Co.,Ltd. | December 2015 | 1) Purpose: Enhancing the shareholders’ value by increasing operational efficiency and creating synergies between businesses 2) Information: POSCO holds 100% a stake in POSHIMETAL Co.,Ltd. The merger ratio is 1:0, and POSCO will not be issuing new shares 3) Conclusion of a contract: December 23, 2015 4) Date of merger: March 1, 2016 5) Registration of merger: March 15, 2016
| |||
Small scale merger with POSCO GREEN GAS TECHNOLOGY | February 2016 | 1) Purpose: Enhancing the shareholders’ value by increasing operational efficiency and creating synergies between businesses 2) Information: POSCO holds a 100% stake in POSCO GREEN GAS TECHNOLOGY. The merger ratio is 1:0, and POSCO will not be issuing new shares 3) Conclusion of a contract: February 26, 2016 4) Date of merger: May 1, 2016 5) Registration of merger: May 16, 2016
| ||||
JV Agreement for construction of steel mills for cold rolled steel products and plated steel products | April 2016 | 1) Purpose: Expansion of sales of automotive steel in Southwest province of China 2) Information: POSCO signed JV contracts with Chongqing Iron and Steel by holding 10% stake in Chongqing CISL High Strength Cold Rolling Steel Co.Ltd, and 51% stake in Chongqing POSCO CISL Automotive Steel Co., Ltd 3) Execution of JV Agreements: April 6, 2016 4) Termination JV Agreements: September, 2017 5) Liquidation of Steel mills set off: November 13, 2017 6) Completion of liquidation: June 28, 2018
| ||||
Small scale merger of POSCO Processing & Service | August 2018 | 1) Purpose: To increase operational efficiency 2) Information: POSCO Processing & Service(POSCO P&S) is merged into POSCO • The merger ratio is 1 : 0.1456475 (POSCO : POSCO P&S) • POSCO will distribute its treasury shares to the shareholders of POSCO P&S, and new shares will not be issued. 3) Conclusion of a contract: August 23, 2018 4) Date of merger: January 1, 2019 5) Registration of merger: February 2, 2019
| ||||
Small scale merger with By-product Hydrogen Generation Business after spin-off from POSCO ENERGY
| April 2019 | 1) Purpose: To increase operational efficiency 2) Information: By-product Hydrogen Generation Business of POSCO ENERGY will be merged into POSCO • The merger ratio is 1 : 0.1145836 (POSCO : POSCO ENERGY) 3) Conclusion of a contract: April 16, 2019 4) Date of merger: September 1, 2019 5) Registration of merger: September 9, 2019 | ||||
LNG Terminal Business Transfer Agreement | April 2019 | 1) Business transferee: POSCO ENERGY 2) Conclusion of a contract: April 16, 2019 3) Date of transfer: September 1, 2019 4) Transfer amount : KRW 608,019 million 5) Information: LNG Terminal Business of POSCO in Gwangyang will be transferred to POSCO ENERGY |
28
Table of Contents
POSCO International Corporation | Investment on the 2nd stage development of A-1 / A-3 block in Myanmar gas field | June 2018 |
1) Investment amount: KRW 511,709,005,500 (USD 473,235,000) 2) Development period: August 1, 2017 ~ December 31, 2022 3) Gas production schedule: By additionally developing Shwe gasfield and newly developing Shwe Phyu gasfield, production will start in 2021 from Shwe and 2022 from Shwe Phyu 4) Other Information • Location: North-west offshore, Myanmar • This investment is the 2nd stage of development, which consists of 3 stages in Myanmar gas field development. The purpose of investment is to maintain current gas production level by completing more drilling and adding more production wells to current Shwe platform. • In July 2018, facility design and construction began, and production is scheduled to start in 2021 in Shwe and in 2022 in She Phyu. But the development period includes the duration of feasibility test and basic design from August 2017 to May 2018. • POSCO International Corporation : 51.0% • ONGC VIDESH(Oil and Natural Gas Corporation Videsh Limited) : 17.0% • MOGE(Myanmar Oil and Gas Enterprise): 15.0% • GAIL (India) Limited : 8.5% • KOGAS(Korea Gas Corporation): 8.5% • Investment size of USD 473,235 thousand, applying the exchange rate of 1USD=1,081.30 KRW, was disclosed on the date of the BOD resolution (May 31, 2018). • Detailed information and future timeline on this resource development investment is subject to change. Disclosure date : May 31, 2018 (Decision on natural resources investment)
| |||
Small scale merger with Steel segment after spinoff from POSCO Processing &Service | November 2016 | 1) Purpose: Expanding the company’s capabilities in steel trading business and enhancing global competitiveness of the company’s steel business 2) Information: POSCO International merges with the steel segment and others of POSCO P&S at the merger ratio of 1: 0.4387662, after the spin off from POSCO P&S 3) Conclusion of a contract: November 4, 2016 4) Date of merger: March 1, 2017 5) Registration of merger: March 2, 2017
| ||||
Split-off of Domestic steel processing businesses | October 2019 | 1) Purpose : To specialize in steel processing business 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
| ||||
POSCO ENGINEERING & CONSTRUCTION | Small scale merger with POSCO ENGINEERING CO., LTD. | November 2016 | 1) Purpose: Achieving sustainable profit and growth by enhancing competitiveness 2) Information: POSCO E&C merges with POSCO Engineering at the merger ratio of 1:0, and POSCO E&C will not be issuing new shares 3) Conclusion of a contract: November 23, 2016 4) Date of merger: February 1, 2017 5) Registration of merger: February 14, 2017
| |||
POSCO O&M | Small scale merger with Blue O&M and MegaAsset | February 2019 | 1) Purpose: Enhancing foundation of growth by improving management efficiency and creating synergies among businesses 2) Information: POSCO O&M merges with Blue O&M and MegaAsset 3) Date of merger: February 1, 2019 4) Registration of merger: February 11, 2019 |
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POSCO ENERGY | Contract of Shares Transfer | July 2018 | 1) Contract Parties: Nonghyup Bank(The third agent of KIAMCO PowerEnergy Private Special Assets Investment Trust), Doosan Heavy Industries & Construction, POSCO E&C, Industrial Bank of Korea(The first agent of Multi Asset POSPower Samcheok coal-fired private investment trust) 2) Signed Date: July, August, 2018 3) Contract Amount : KRW 343,706 million 4) Information: Contract of shares transfer for disposal of 68.5%(July) and 2.5%(August) POSPower shares
| |||
Spin-off By-product Hydrogen Generation Business for merger into POSCO
| April 2019 | 1) Contract counterpart: POSCO 2) Conclusion of a contract: April 16, 2019 3) Date of merger: September 1, 2019 4) Merger payment : KRW 1,163,692 million (No issuance of new shares from POSCO) 5) Information : POSCO merges with Hydrogen Generation Business of POSCO ENERGY at the merger ratio of 1:0.1145836
| ||||
LNG Terminal Business Transfer Agreement | April 2019 | 1) Business transferor: POSCO 2) Conclusion of a contract: April 16, 2019 3) Date of transfer: September 1, 2019 4) Transfer amount : KRW 608,019 million 5) Information: LNG Terminal Business of POSCO in Gwangyang will be transferred to POSCO ENERGY
| ||||
Merger | May 2020 | 1) Contract counterpart : PSC Energy Global Co., Ltd. 2) Signed date : May 26, 2020 3) Date of merger : August 1, 2020 4) Merger ratio : 1.0000000 : 0.0000000 5) Information : POSCO ENERGY merges PSC Energy Global Co., Ltd., a wholly owned subsidiary of POSCO ENERGY
| ||||
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (Former, SS VINA 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 |
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9. Research and Development
A. Research and Development (“R&D”) Organization
Business Area | Company | Organization | ||
Steel | POSCO | Steel Production and Technology Strategy Office | ||
Safety & Environmental Planning Office | ||||
Technical Research Laboratories | ||||
Steel Product Research Lab | ||||
Process and Engineering Research Lab | ||||
Automotive Steel Research Lab | ||||
Steel Solution Research Lab | ||||
POSCO COATED & COLOR STEEL Co,. Ltd. | R&D Center | |||
POSCO (Zhangjiagang) Stainless Co., Ltd. | R&D Center | |||
Trading | POSCO SPS | Molding R&D Center | ||
Stainless Quality Technology Group | ||||
Engineering & Construction | POSCO Engineering & Construction,. LTD. | R&D Center | ||
POSCO A&C | R&D Center | |||
Others | POSCO ENERGY Co,. LTD | Renewable Energy Business Development Office | ||
POSCO ICT | R&D Center | |||
POSCO CHEMICAL | R&D Center | |||
Energy Material R&D Center | ||||
POSCO M-TECH | R&D Center |
B. R&D Expenses in 2020.3Q (In millions of KRW)
Category | Business Area | |||||||||||||||||||
Steel | Trade | Engineering & Construction | Others | Total | ||||||||||||||||
Selling and Administrative Cost | 53,454 | 55 | 2,978 | 22,144 | 78,631 | |||||||||||||||
Manufacturing Cost | 253,454 | 45 | 757 | 104 | 254,360 | |||||||||||||||
R&D Cost (Intangible Assets) | 20,720 | — | — | 649 | 21,369 | |||||||||||||||
Total* | 327,628 | 100 | 3,735 | 22,897 | 354,360 | |||||||||||||||
Government Subsidy | — | — | 277 | — | 277 | |||||||||||||||
R&D/Sales Ratio (%) | 1.57 | 0.00 | 0.08 | 1.0 | % | 0.83 |
* | Total includes government subsidy. |
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1. Consolidated Financial Statements
A. Summary
(In millions of KRW) | ||||||||||||
Account | 2020.3Q | 2019 | 2018 | |||||||||
As of September 30, 2020 | As of December 31, 2019 | As of December 31, 2018 | ||||||||||
[Total current assets] | 38,248,904 | 34,842,374 | 33,651,002 | |||||||||
Cash and cash equivalents | 6,769,118 | 3,514,872 | 2,643,865 | |||||||||
Other receivables, net | 1,522,021 | 1,581,517 | 1,385,629 | |||||||||
Other short-term financial assets | 11,239,316 | 8,996,049 | 8,081,096 | |||||||||
Trade accounts and notes receivable, net | 8,893,533 | 9,078,351 | 9,282,609 | |||||||||
Inventories | 9,020,668 | 10,920,320 | 11,499,928 | |||||||||
Other current assets | 804,248 | 751,265 | 757,875 | |||||||||
[Total non-current assets] | 43,842,342 | 44,216,287 | 44,597,263 | |||||||||
Other receivables, net | 1,203,646 | 1,140,878 | 863,240 | |||||||||
Other long-term financial assets | 1,563,582 | 1,669,389 | 1,647,898 | |||||||||
Investments in associates and joint ventures | 4,001,129 | 3,927,755 | 3,650,003 | |||||||||
Property, plant and equipment, net | 29,850,845 | 29,925,973 | 30,018,273 | |||||||||
Intangible assets, net | 4,722,656 | 4,908,473 | 5,170,825 | |||||||||
Other non-current assets | 2,500,484 | 2,643,819 | 3,247,024 | |||||||||
Total assets | 82,091,246 | 79,058,661 | 78,248,265 | |||||||||
[Total current liabilities] | 18,411,626 | 16,323,690 | 18,937,985 | |||||||||
[Total non-current liabilities] | 15,889,220 | 14,940,264 | 12,550,729 | |||||||||
Total liabilities | 34,300,846 | 31,263,954 | 31,488,714 | |||||||||
[Equity attributable to owners of the controlling company] | 44,436,804 | 44,471,873 | 43,371,260 | |||||||||
Share capital | 482,403 | 482,403 | 482,403 | |||||||||
Capital surplus | 1,316,364 | 1,376,251 | 1,410,551 | |||||||||
Hybrid bonds | 199,384 | 199,384 | 199,384 | |||||||||
Retained earnings | 45,476,229 | 45,080,118 | 44,216,018 | |||||||||
Other equity attributable to owners of the controlling company | (3,037,576 | ) | (2,666,283 | ) | (2,937,096 | ) | ||||||
[Non-controlling Interests] | 3,353,596 | 3,322,834 | 3,388,291 | |||||||||
Total equity | 47,790,400 | 47,794,707 | 46,759,551 |
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From January 2020 to September 2020 | From January 2019 to December 2019 | From January 2018 to December 2018 | ||||||||||
Revenue | 42,528,585 | 64,366,848 | 64,977,777 | |||||||||
Operating profit | 1,539,675 | 3,868,855 | 5,542,600 | |||||||||
Profit | 1,053,572 | 1,982,637 | 1,892,064 | |||||||||
[Profit attributable to owners of the controlling company] | 901,132 | 1,835,086 | 1,690,612 | |||||||||
[Profit attributable to non-controlling interests] | 152,440 | 147,551 | 201,452 | |||||||||
Total comprehensive Income | 1,003,856 | 2,129,105 | 1,463,535 | |||||||||
[Total comprehensive income attributable to owners of the controlling company] | 849,730 | 1,997,731 | 1,271,495 | |||||||||
[Total comprehensive income attributable to non-controlling interests] | 154,126 | 131,374 | 192,040 | |||||||||
Earnings per share(KRW) | 11,232 | 22,823 | 20,911 | |||||||||
Number of Consolidated Companies | 167 | 164 | 173 |
B. The Standards Used for Reporting the Financial Statements
The Company prepared its financial statements in accordance with the Korean-International Financial Reporting Standards (the “K-IFRS”) and applied it to each Company’s final financial statements.
C. Consolidated Financial Statements
Refer to the attached Condensed Consolidated Financial Statements for the Condensed Consolidated Statements of Financial Position as of September 30, 2020, Condensed Consolidated Statements of Comprehensive Income (loss), Condensed Consolidated Statements of Changes in Equity, Condensed Consolidated Statements of Cash Flows for the nine-month period ended September 30, 2020, and Notes
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2. Separate Financial Statements
A. Summary
(In millions of KRW) | ||||||||||||
Account | 2020.3Q | 2019 | 2018 | |||||||||
As of September 30, 2020 | As of December 31, 2019 | As of December 31, 2018 | ||||||||||
[Total current assets] | 20,873,341 | 18,216,066 | 16,796,400 | |||||||||
Cash and Cash equivalents | 2,986,906 | 978,139 | 259,219 | |||||||||
Trade accounts and notes receivable, net | 3,686,876 | 3,987,041 | 3,968,372 | |||||||||
Other receivables, net | 275,300 | 321,352 | 206,432 | |||||||||
Other short-term financial assets | 9,995,881 | 7,858,979 | 7,025,143 | |||||||||
Inventories | 3,852,919 | 4,988,530 | 5,288,009 | |||||||||
Other current assets | 75,459 | 82,025 | 49,225 | |||||||||
[Total non-current assets] | 37,452,398 | 37,494,700 | 37,329,580 | |||||||||
Other receivables, net | 92,904 | 56,468 | 57,767 | |||||||||
Other long-term financial assets | 1,124,502 | 1,257,896 | 1,176,757 | |||||||||
Investments in Subsidiaries, associates, and joint ventures | 15,212,632 | 15,069,857 | 15,121,339 | |||||||||
Property, plant and equipment, net | 20,085,560 | 20,132,199 | 20,154,334 | |||||||||
Intangible assets, net | 667,804 | 708,915 | 645,222 | |||||||||
Other non-current assets | 268,996 | 269,365 | 174,161 | |||||||||
Total assets | 58,325,739 | 55,710,766 | 54,125,980 | |||||||||
[Total current liabilities] | 5,646,184 | 3,331,446 | 3,895,973 | |||||||||
[Total non-current Liabilities] | 7,310,016 | 6,765,135 | 4,957,905 | |||||||||
Total liabilities | 12,956,200 | 10,096,581 | 8,853,878 | |||||||||
[Share capital] | 482,403 | 482,403 | 482,403 | |||||||||
[Capital surplus] | 1,339,289 | 1,252,220 | 1,154,775 | |||||||||
[Hybrid bonds] | 199,384 | 199,384 | 199,384 | |||||||||
[Retained earnings] | 45,521,725 | 45,372,411 | 45,175,459 | |||||||||
[Other equity] | (2,173,262 | ) | (1,692,233 | ) | (1,739,919 | ) | ||||||
Total equity | 45,369,539 | 45,614,185 | 45,272,102 |
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Account | 2020.3Q | 2019 | 2018 | |||||||||
From January 2020 to September 2020 | From January 2019 to December 2019 | From January 2018 to December 2018 | ||||||||||
Revenue | 19,432,566 | 30,373,511 | 30,659,425 | |||||||||
Operating profit | 611,499 | 2,586,359 | 3,809,376 | |||||||||
Profit | 640,476 | 1,175,712 | 1,072,592 | |||||||||
Earnings per share(KRW) | 7,965 | 14,592 | 13,186 |
B. The Standards Used for Reporting the Financial Statements
The company prepared its financial statements in accordance with the Korean—International Financial Reporting Standards (the “K-IFRS”).
C. Separate Financial Statements
Refer to the attached Condensed Separate Financial Statements for the Condensed Separate Statements of Financial Position as of September 30, 2020, Condensed Separate Statements of Comprehensive Income (loss), Condensed Separate Statements of Changes in Equity, Condensed Separate Statements of Cash Flows for the nine-month period ended September 30, 2020, and Notes.
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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, Chang, In-Hwa, Chon, Jung-Son, Kim, Hag-Dong and Jeong, Tak) and seven outside directors (Chung, Moon-Ki, Bahk, Byong-Won, Kim, Joo-Hyun, Kim, Shin-Bae, Chang, Seung-Wha, Kim, Sung-Jin and Pahk, Heui-Jae).
The Board of Directors manages the following five Special Committees:
(a) | Director Candidate Recommendation and Management Committee |
(b) | Evaluation and Compensation Committee |
(c) | Finance and Related Party Transactions Committee |
(d) | Audit Committee |
(e) | Executive Management Committee |
Composition of the Special Committees under the BoD and their Functions(as of November 16, 2020) |
Category | Composition | Directors | Major Functions | |||
Director Candidate Recommendation and Management Committee | 3 Outside Directors, 1 Inside Director | Kim, Joo-Hyun (Chairman) Bahk, Byong-Won Pahk, Heui-Jae Chon, Jung-Son | • Qualification review of Outside Director candidates and recommendation to the general meeting of shareholders • Preliminary review and qualification review of Inside Director candidates • Preliminary deliberation on appointment of members of Special Committees • Pre-deliberation of the appointment of Representative Directors other than the CEO and the Representative Director • Operation of Outside Director Candidate Recommendation Advisory Panel • Other matters necessary for recommending candidates for Outside Directors • Agenda development and establishment of operating standards of the BoD and Special Committees • Pre-deliberation on revision or repeal of the Board of Directors Regulations • Pre-deliberation of the composition and operation of the Special Committees under the BoD |
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Evaluation and Compensation Committee | 4 Outside Directors | Kim, Shin-Bae (Chairman) Kim, Joo-Hyun Chang, Seung-Wha Kim, Sung-Jin | • Establishment of management succession and management training plan
• Establishment and execution of management evaluation and compensation plan
• Pre-deliberation on remuneration and retirement allowance of Directors | |||
Finance and Related Party Transactions Committee | 3 Outside Directors; 1 Inside Director | Kim, Sung-Jin (Chairman) Kim, Shin-Bae Chang, Seung-Wha Chang, In-Hwa | • Developing policies for the company’s internal values and financial soundness
• Prior deliberation in case of filing in, KRW 100 billion or more, litigation or arbitration, responding to reconciliation or mediation in the process of trial or taking any equivalent level of legal actions.
• External Investments
• Pre-deliberation on business units other than steel in terms of new external investments, capital increase or investment shares disposal of invested companies (KRW 100 billion or more. Investment and capital increase includes borrowings and liabilities that the company takes)
• Approval of new external investments on business units other than steel in terms of capital increase or investment shares disposal of invested companies (From KRW 10 billion to less than KRW 100 billion. Investment and capital increase includes borrowings and liabilities that the company takes.)
• Deliberation and resolution of donation from over KRW 100 million to KRW 1 billion and pre-deliberation of donation over KRW 1 billion
• Deliberation and resolution of bonds issuance or important borrowings (Including borrowings for refunding over KRW 100 billion)
• Pre-deliberation of bonds issuance or important borrowings (New long-term borrowings over KRW 100 billion)
• Deliberation and resolution on collateral provision of non-current assets
• Deliberation and resolution on debt acquisition of invested company such as security and guarantee (Excludes when the debt is in relation to steel investment)
• Internal transactions under Monopoly Regulation and Fair Trade Act (The act of providing or trading funds, securities, or assets with related party as business counterpart or for related party)
• Review of internal transaction-related problems and improvement measures
• Pre-deliberation of internal transaction (Amount KRW 100 billion or more)
• Deliberation and resolution of internal transaction (Amount from KRW 5 billion to less than KRW 100 billion)
• Appointment of Fair Trade Compliance Manager |
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Audit Committee | 3 Outside Directors | Bahk, Byong-Won (Chairman) Chung, Moon-Ki Pahk, Heui-Jae | • Setting the work scope of the committee
• Matters that the BoD or Representative Directors delegated
• Request for Extraordinary general meeting of shareholders
• Consulting of external experts
• Audit of the legitimacy of management’s business execution
• Review soundness and validity of the company’s financial activities and the appropriateness of financial reporting
• Review the validity of important accounting standards or changes in accounting estimates
• Evaluation of the operation status of the internal accounting management system
• Evaluation of the internal control system
• Agreement on appointment or dismissal of internal audit department representative
• Contract for appointment, remuneration and non-audit services of independent auditors
• Evaluation of independent auditors’ audit activities
• Report internal audit department’s annual audit plan and results
• Report on the evaluation results of the company’s ethical compliance
• An independent auditor reports on important facts of the company’s Directors’ misconduct or violation of laws or Articles of Incorporation
• Report that independent auditors have violated the company’s accounting standards
• Other matters deemed necessary by each committee member | |||
Executive Management Committee | 5 Inside Directors | Choi, Jeong-Woo (Chairman) Chang, In—Hwa Chon, Jung-Son Kim, Hag-Dong Jeong, Tak | • Business
• Position system, important matters related to human resource development and coordination
• Important matters about changing the work system and welfare
• New establishment plan for chair-professor
• Housing Policy Establishment (Housing fund support standard and plan for housing construction)
• Decision on closure of shareholders’ registry
• Finance
• Preliminary review on in-house investment plan (New establishment or expansion investment of KRW 200 billion or more)
• Approval on in-house investment plan New establishment or expansion investment from KRW 10 billion to less than KRW 200 billion. Investment of KRW 10 billion or more other than new establishment or expansion (Amount of KRW 5 billion or more for investment in the ordinary course of business)
• Pre-deliberation on new external investments, capital increase or investment shares disposal of invested companies in Steel Business Unit (KRW 100 billion or more. Investment or capital increase amount includes borrowings and liabilities that the company takes)
• Approval on new external investments, capital increase or investment shares disposal of invested companies in Steel Business Unit (Amount from KRW 10 billion to less than KRW 100 billion. Investment or capital increase amount includes borrowings and liabilities that the company takes)
• Acquisition or disposal of tangible, intangible, fixed or important investment assets from KRW 10 billion to less than KRW 200 billion
• Technology application of over USD 1 million and technology sales contract approval
• Acquisition of debt such as guarantees for invested company’s collateral involving steel investments
• Other matters that the Chairman deems necessary or deemed necessary by each committee member |
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(2) | List of Outside Directors (As of September 30, 2020) |
Name | Experience | Relation with Majority Shareholder | Remarks | |||
Chung, Moon-Ki | • Professor in Accounting, Sungkyunkwan University (2016~Present)
• Partner and Chief Quality Officer, Samil PwC (1981~2012)
• Committee Member, Accounting Review Committee of Financial Supervisory Service
• Ph.D. in Accounting, Sungkyunkwan University | None | Chairman of the Board of Directors | |||
Bahk, Byong-Won | • Honorary Chairman of Korea Employers Federation (March 2018~Present)
• Chairman of Korea Employers Federation (February 2015 ~ February 2018)
• Chairman of The Korea Federation of Banks (November 2011 ~ November 2014)
• Chairman & CEO Woori Financial Group (March 2007 ~ June 2008)
• MA in Economics, University of Washington (1985) | None | ||||
Kim, Joo-Hyun | • President & CEO, The Financial News (April 2017 ~ Present)
• President, Future Korea Institute, Kookmin University (May 2016 ~ March 2017)
• President & CEO, Hyundai Research Institute (January 2004 ~ April 2014)
• Ph.D. in Department of Finance, College of Business, Arizona State University (1989) | None | ||||
Kim, Shin-Bae | • Vice Chairman, SK Group (January 2010 ~ February 2013)
• President, Korea IoT (Internet of Things) Association (March 2005 ~ March 2012)
• President and CEO, SK Telecom (March 2004 ~ December 2008)
• M.B.A., Wharton School, University of Pennsylvania (1985) | None | ||||
Chang, Seung-Wha | • Dean of Seoul National University School of Law (June 2018 ~ Present)
• Professor of Law, Seoul National University (1995 ~ Present)
• World Trade Organization(WTO) as the Appellate Body Member (May 2012 ~ September 2016)
• Member, International Chamber of Commerce(ICC) Court of Arbitration (2000 ~ 2013)
• LL.M and Doctorate in International Trade Law from Harvard Law School (1994) | None | ||||
Kim, Sung-Jin | • Adjunct Professor at Department of Economics, Seoul National University (2011 ~ Present)
• Minister of Maritime Affairs and Fisheries (2006 ~ 2007)
• Administrator of the Small and Medium Business Administration (2004 ~ 2006)
• Ph.D. in Economics Kansas State University (1991) | None | ||||
Pahk, Heui-Jae | • Professor in Mechanical & Aerospace Engineering, Seoul National University (March 1993 ~ Present)
• Chairman of the Board, Korea Youth Foundation (May 2016 ~ Present)
• Head of R&D Strategic Planning, Ministry of Trade, Industry and Energy (April 2013 ~ April 2016)
• SNU Precision CEO (February 1998 ~ December 2016)
• Ph.D in Mechanical Engineering, Seoul National University (1990) | None |
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(3) | List of Key Activities of the Board of Directors (January 1, 2020 ~ November 16, 2020) |
No. | Date | Agenda | Approval | |||
1 | January 31 | • Deliberation Agenda
1. Approval of the 52nd financial statements and schedule for the general meeting of shareholders
• Report Agenda
1. The progress on implementing resolution made by the Board of Directors for the fiscal year of 2019
2. Business performance of the fiscal year of 2019
3. Report on internal control over financial reporting
4. Assessment on the effectiveness of internal control over financial reporting | All 1 Case Approved | |||
2 | February 21 | • Deliberation Agenda
1. Agendas for the 52nd general meeting of shareholders
2. Recommendation of inside director candidates (Candidates other than representative director CEO) | All 2 Cases Approved | |||
3 | March 27 | • Deliberation Agenda
1. Appointment of the Chairman of the Board of Directors
2. Appointment of the Special Committee Members
3. Designation of Representative Directors and presenting positions to Inside Directors
4. Donation to help organizations and institutions against COVID-19 virus | All 4 Cases Approved | |||
4 | April 10 | • Deliberation Agenda
1. Decision on contract for share repurchase trust | All 1 Case Approved | |||
5 | May 8 | • Deliberation Agenda
1. Resolution on the 1st quarter dividend for the fiscal year of 2020
2. Transaction Plans with affiliates for the fiscal year of 2020
• Report Agenda
1. The business performance of the first quarter of 2020
2. The progress and plan of venture platform
3. The performance and assessment of Board of Directors for 2019
4. Plan for POSCO Group logistics integration | All 2 Cases Approved | |||
6 | August 7 | • Deliberation Agenda
1. Resolution on the 2nd quarter dividend for the fiscal year of 2020
• Report Agenda
1. The progress on implementing resolution made by the Board of Directors for the fiscal year of 2020
2. Business performance of the 2nd quarter of the fiscal year of 2020 and yearly outlook
3. Plans on climate change and climate report publication
4. Plan to build sculptures in Pohang Hwanho Park | All 1 Case Approved | |||
7 | November 6 | • Deliberation Agenda
1. Resolution on the 3rd quarter dividend for the fiscal year of 2020
2. Participation in POSCO CHEMICAL’s capital increase with consideration
3. Contribution to support for heavy rain damage recovery
4. Operation of the CEO Candidate Recommendation Committee
• Report Agenda
1. Business performance of the 3rd quarter of 2020 and the yearly outlook | All 4 Cases Approved |
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Major Activities of Outside Directors on the Board of Directors (January 1, 2019 ~ November 16, 2020) |
No. | Date | Participation of the Outside Directors (the Number of total Outside Directors) | Remarks | |||
1 | January 31 | 7 (7) | — | |||
2 | February 21 | 7 (7) | — | |||
3 | March 27 | 6 (7) | Absence : Chung, Moon-Ki | |||
4 | April 10 | 6 (7) | Absence : Chung, Moon-Ki | |||
5 | May 8 | 7 (7) | — | |||
6 | August 7 | 7 (7) | — | |||
7 | November 6 | 7 (7) | — |
(4) Special Committees under the BoD and Their Activities (From January 1, 2020 to November 16, 2020)
• | Major Activities of Director Candidate Recommendation Committee (January 1, 2020~March 27, 2020 before the Board of Directors meeting) |
Date | Agenda | Approval | ||
February 14 & 21, 2020 | [Deliberation] Qualification Assessment and Recommendation of Outside Director Candidates | Approved | ||
February 21, 2020 | [Preliminary Review] Qualification Assessment of Inside Director Candidates | — | ||
March 27, 2020 | [Preliminary Review] 1. Appointment of the Special Committees Members 2. Appointment of the Representative Directors | — — |
• | Major Activities of Evaluation and Compensation Committee (January 1, 2020~March 27, 2020 before the Board of Directors meeting) |
Date | Agenda | Approval | ||
January 22, 2020 | [Deliberation Agenda] Evaluation of the business performance for the fiscal year of 2019 | Approved |
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• | Major Activities of Finance and Related Party Transaction Committee (January 1, 2020~November 16, 2020) |
Date | Agenda | Approval | ||
January 31, 2020 | 1. Contribution to the Internal Labor Welfare Fund
2. Contribution to the Mutual Cooperation Fund
3. Donation to help organizations and institutions against COVID 19 virus | Approved
Approved
Approved | ||
May 6, 2020 | 1. Payment guarantee plan for POSUK
2. Payment guarantee plan for POSCO-TCS | Approved
Approved | ||
May 6 & 8, 2020 | Plan for POSCO Group logistics integration | Approved | ||
August 6, 2020 | [Deliberation] Venture fund investment to discover new growth business
[Report] Fair Trade Compliance Program Performance and Plan | Approved
— | ||
November 5, 2020 | [Preliminary Review]
Participation in POSCO CHEMICAL’s capital increase with consideration [Deliberation]
1. Partial disposal of shares due to listing of CM, a Brazilian invested company
2. Payment guarantee plan of POSCO-Maharashtra
3. Payment guarantee plan of POSCO ASSAN TST
4. Lease contract for the lime facilities | —
Approved
Approved
Approved
Approved
|
• | Major Activities of Executive Management Committee (January 1, 2020 ~ November 16, 2020) |
Date | Agenda | Approval | ||
January 22, 2020 | [Preliminary Review] Establishment of #6 Cokes Oven in Pohang works | — | ||
February 18, 2020 | Establishment of #6 Cokes Oven in Pohang works | Approved | ||
March 17, 2020 | Capital increase for IJPC 3# factory in Indonesia | Approved | ||
May 19, 2020 | 1. Construction of air pollutant measurement system in both steel works
2. Carbon credit trading plan
3. Gwangyang CEM plant suspension facility disposal | Approved
Approved
Approved | ||
August 25, 2020 | Gwangyang #4 blast furnace 2nd stage reparation | Approved | ||
October 27, 2020 | 1. Replacement of the exhaust gas treatment facility on convert furnace in Gwangyang #2 steel-making factory
2. Mass production system establishment in Gwangyang #7CGL Al-HPF | Approved
Approved |
B. Audit Committee
(1) Composition of the Audit Committee
Name | Qualifications | Remarks | ||
Bahk, Byong-Won Chung, Moon-Ki Pahk, Heui-Jae | Satisfies the requirements stipulated in the Korean Commercial Act | Chairman — — |
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(2) Major Activities of the Audit Committee (January 1, 2020 ~ November 16, 2020)
Session | Date | Agenda | Approval | |||
1 | January 30 | • Deliberation Agenda 1. Assessment of internal control over financial reporting
2. Approval of audit and non-audit services for POSCO and subsidiaries
3. Assessment of the Audit Committee for the fiscal year of 2019
• Report Agenda
1. Report of operation of internal control over financial reporting in 2019
2. The result of internal audit for the fiscal year of 2019 and audit plans for the fiscal year of 2020
3. The assessment on the executive and employees’ conformity to the code of ethics for the fiscal year of 2019 | All 3 Cases Approved | |||
2 |
February 20 |
• Deliberation Agenda
1. Approval of audit and non-audit services for POSCO’s subsidiaries abroad
2. Internal audit result for the 52nd term
• Report Agenda
1. External audit result for the 52nd term |
All 2 Cases Approved | |||
3 |
February 21 |
Review of agenda for general meeting of shareholders |
Approved |
• | At the 52nd general meeting of shareholders held on March 27, 2020, due to Chang, Seung-Wha’s expiration of term in the Audit Committee, a new Audit Committee member, Pahk, Heui-Jae, was elected. |
Session | Date | Agenda | Approval | |||
4 | April 24 | • Deliberation Agenda
1. Appointment of the chairman of the audit committee
• Report Agenda
1. Consolidated internal control over financial reporting for the fiscal year of 2019
2. Assessment of the consolidated internal control over financial reporting for the fiscal year of 2019
3. Audit report of 20-F for the fiscal year of 2019 | Approved | |||
5 |
May 7 |
• Deliberation Agenda
1. Approval of audit service contract on POSCO SPS
• Report Agenda
1. Internal audit result on Consolidated financial statements of the 1st quarter of the fiscal year 2020
2. External review result on Consolidated financial statements of the 1st quarter of the fiscal year 2020 |
Approved | |||
6 |
August 6 |
• Deliberation Agenda
1. Approval on changes in the audit service contract for POSCO(Guangdong) Automotive Steel Co., Ltd.
• Report Agenda
1. Plans to strengthen the operation of the internal accounting management system in 2020
2. Results of internal audit on consolidated financial statements for the 2nd quarter of 2020
3. Results of external review on consolidated financial statements for the 2nd quarter of 2020
4. Internal audit performance for the 1st half of 2020 and plans for the 2nd half of 2020
5. Audit activity evaluation results of the independent auditor for the year 2019 |
Approved |
43
Table of Contents
Session | Date | Agenda | Approval | |||
7 | November 5 | • Deliberation Agenda
1. Approval of POSCO audit service contract
• Report Agenda
1. Internal audit result on Consolidated financial statements of the 3rd quarter of the fiscal year 2020
2. External review result on Consolidated financial statements of the 3rd quarter of the fiscal year 2020 | Approved |
C. Voting Rights of Shareholders
(1) | The Cumulative Voting System: The cumulative voting system was introduced at the 36th general meeting of shareholders on March 12, 2004. |
(2) | Voting by Mail: 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) | Directors’ and the Audit Committee members’ Salaries |
(In millions KRW) | ||||||||||||||||||||
Category | Total numbers | Total payment | Average payment (Per person) | Ceiling amount approved at the general meeting of shareholders | Remarks | |||||||||||||||
Inside Director | 5 | 5,547 | 1,109 | — | ||||||||||||||||
Outside Director | 4 | 210 | 53 | 10,000 | — | |||||||||||||||
Members of the Audit Committee | 3 | 157 | 53 | — |
44
Table of Contents
Payment Period: January 1, 2020 ~ September 30, 2020 |
Outside Directors also serving as the members of the Audit Committee are excluded in the count for the Outside Directors. |
Average payment per person is calculated based on the paid amount to the current directors and Audit Committee members as of September 30, 2020. |
45
Table of Contents
POSCO
and Subsidiaries
Condensed Consolidated Interim Financial Statements
(Unaudited)
September 30, 2020
(With Independent Auditors’ Review Report Thereon)
Table of Contents
Table of Contents
Independent Auditors’ Review Report
Based on a report originally issued in Korean
The Board of Directors and Shareholders
POSCO:
Reviewed financial statements
We have reviewed the accompanying condensed consolidated interim financial statements of POSCO and its subsidiaries (the “Company”), which comprise the condensed consolidated interim statement of financial position as of September 30, 2020, the condensed consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020 and 2019, the condensed consolidated interim statements of changes in equity and cash flows for the nine-month periods ended September 30, 2020 and 2019, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s responsibility
Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standard (“K-IFRS”) No. 1034 “Interim Financial Reporting”. The Company’s management is also responsible for the internal controls determined necessary to prepare condensed consolidated interim financial statements free of material misstatements due to error or fraud.
Auditors’ review responsibility
Our responsibility is to issue a report on the condensed consolidated interim financial statements based on our reviews.
We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial statements consists of making inquiries primarily of persons responsible for financial and accounting matters and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No. 1034 “Interim Financial Reporting”.
Table of Contents
Other matters
The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.
The consolidated statement of financial position of the Company as of December 31, 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 12, 2020, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.
Seoul, Korea
November 13, 2020
This report is effective as of November 13, 2020, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
2
Table of Contents
Condensed Consolidated Interim Statements of Financial Position
As of September 30, 2020 and December 31, 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | December 31, 2019 | |||||||||
Assets | ||||||||||||
Cash and cash equivalents | 21 | 3,514,872 | ||||||||||
Trade accounts and notes receivable, net | 4,21,26,27,34 | 8,893,533 | 9,078,351 | |||||||||
Other receivables, net | 5,21,34 | 1,522,021 | 1,581,517 | |||||||||
Other short-term financial assets | 6,21 | 11,239,316 | 8,996,049 | |||||||||
Inventories | 7 | 9,020,668 | 10,920,320 | |||||||||
Current income tax assets | 65,701 | 45,930 | ||||||||||
Assets held for sale | 8 | 33,165 | 74,158 | |||||||||
Other current assets | 14 | 705,382 | 631,177 | |||||||||
|
|
|
| |||||||||
Total current assets | 38,248,904 | 34,842,374 | ||||||||||
|
|
|
| |||||||||
Long-term trade accounts and notes receivable, net | 4,21 | 105,500 | 198,785 | |||||||||
Other receivables, net | 5,21 | 1,203,646 | 1,140,879 | |||||||||
Other long-term financial assets | 6,21 | 1,563,582 | 1,669,389 | |||||||||
Investments in associates and joint ventures | 9 | 4,001,129 | 3,927,755 | |||||||||
Investment property, net | 11 | 872,824 | 878,227 | |||||||||
Property, plant and equipment, net | 12 | 29,850,845 | 29,925,973 | |||||||||
Intangible assets, net | 13 | 4,722,656 | 4,908,473 | |||||||||
Defined benefit assets, net | 19 | 8,252 | 4,280 | |||||||||
Deferred tax assets | 1,246,444 | 1,237,285 | ||||||||||
Other non-current assets | 14 | 267,464 | 325,241 | |||||||||
|
|
|
| |||||||||
Total non-current assets | 43,842,342 | 44,216,287 | ||||||||||
|
|
|
| |||||||||
Total assets | 79,058,661 | |||||||||||
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
3
Table of Contents
POSCO and Subsidiaries
Condensed Consolidated Interim Statements of Financial Position, Continued
As of September 30, 2020 and December 31, 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | December 31, 2019 | |||||||||
Liabilities | ||||||||||||
Trade accounts and notes payable | 21,34 | 3,422,922 | ||||||||||
Short-term borrowings and current installments of long-term borrowings | 4,15,21 | 10,560,958 | 8,548,212 | |||||||||
Other payables | 16,21,34 | 1,780,673 | 1,879,508 | |||||||||
Other short-term financial liabilities | 17,21 | 97,993 | 77,827 | |||||||||
Current income tax liabilities | 386,092 | 396,616 | ||||||||||
Liabilities directly associated with the assets held for sale | 8 | — | 8 | |||||||||
Provisions | 18,35 | 325,886 | 360,495 | |||||||||
Other current liabilities | 20,26,27 | 1,990,519 | 1,638,102 | |||||||||
|
|
|
| |||||||||
Total current liabilities | 18,411,626 | 16,323,690 | ||||||||||
|
|
|
| |||||||||
Long-term trade accounts and notes payable | 21 | 26,561 | 20,067 | |||||||||
Long-term borrowings, excluding current installments | 15,21 | 13,021,040 | 11,893,401 | |||||||||
Other payables | 16,21 | 578,672 | 585,129 | |||||||||
Other long-term financial liabilities | 17,21 | 20,008 | 31,494 | |||||||||
Defined benefit liabilities, net | 19 | 267,577 | 181,011 | |||||||||
Deferred tax liabilities | 1,501,945 | 1,691,498 | ||||||||||
Long-term provisions | 18,35 | 432,226 | 458,154 | |||||||||
Other non-current liabilities | 20,26 | 41,191 | 79,510 | |||||||||
|
|
|
| |||||||||
Total non-current liabilities | 15,889,220 | 14,940,264 | ||||||||||
|
|
|
| |||||||||
Total liabilities | 34,300,846 | 31,263,954 | ||||||||||
|
|
|
| |||||||||
Equity | ||||||||||||
Share capital | 22 | 482,403 | 482,403 | |||||||||
Capital surplus | 22 | 1,316,364 | 1,376,251 | |||||||||
Hybrid bonds | 23 | 199,384 | 199,384 | |||||||||
Reserves | 24 | (1,199,596 | ) | (1,157,980 | ) | |||||||
Treasury shares | 25 | (1,837,980 | ) | (1,508,303 | ) | |||||||
Retained earnings | 45,476,228 | 45,080,117 | ||||||||||
|
|
|
| |||||||||
Equity attributable to owners of the controlling company | 44,436,803 | 44,471,872 | ||||||||||
Non-controlling interests | 23 | 3,353,597 | 3,322,835 | |||||||||
|
|
|
| |||||||||
Total equity | 47,790,400 | 47,794,707 | ||||||||||
|
|
|
| |||||||||
Total liabilities and equity | 79,058,661 | |||||||||||
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
4
Table of Contents
Condensed Consolidated Interim Statements of Comprehensive Income
For the three-month and nine-month periods ended September 30, 2020 and 2019
(Unaudited)
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||||||
(in millions of Won, except per share information) | Notes | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Revenue | 26,27,34,37 | 15,988,227 | 42,528,585 | 48,323,799 | ||||||||||||||||
Cost of sales | 7,27,31,34 | (13,054,079 | ) | (14,375,600 | ) | (39,277,221 | ) | (43,283,629 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Gross profit | 1,207,139 | 1,612,627 | 3,251,364 | 5,040,170 | ||||||||||||||||
Selling and administrative expenses | 31,34 | |||||||||||||||||||
Reversal of (impairment loss) on trade accounts and notes receivable | 15,560 | 5,944 | (19,764 | ) | 13,942 | |||||||||||||||
Other administrative expenses | 28 | (466,257 | ) | (490,770 | ) | (1,399,864 | ) | (1,473,389 | ) | |||||||||||
Selling expenses | 28 | (89,734 | ) | (88,024 | ) | (292,061 | ) | (269,487 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Operating profit | 666,708 | 1,039,777 | 1,539,675 | 3,311,236 | ||||||||||||||||
Share of profit of equity-accounted investees, net | 9 | 88,894 | 88,668 | 109,028 | 230,197 | |||||||||||||||
Finance income and costs | 21,29 | |||||||||||||||||||
Finance income | 341,431 | 602,717 | 1,871,524 | 1,629,594 | ||||||||||||||||
Finance costs | (385,199 | ) | (691,922 | ) | (1,962,525 | ) | (1,852,447 | ) | ||||||||||||
Other non-operating income and expenses | 34 | |||||||||||||||||||
Reversal of (impairment loss) on other receivables | 18,224 | (10,695 | ) | 17,437 | (26,112 | ) | ||||||||||||||
Other non-operating income | 30 | 66,268 | 114,913 | 233,172 | 272,281 | |||||||||||||||
Other non-operating expenses | 30,31 | (84,170 | ) | (290,207 | ) | (301,605 | ) | (594,076 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Profit before income tax | 37 | 712,156 | 853,251 | 1,506,706 | 2,970,673 | |||||||||||||||
Income tax expense | 32,37 | (198,110 | ) | (356,441 | ) | (453,134 | ) | (1,013,999 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Profit | 514,046 | 496,810 | 1,053,572 | 1,956,674 | ||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||
Items that will not be reclassified subsequently to profit or loss: | ||||||||||||||||||||
Remeasurements of defined benefit plans | 19 | 2,225 | (7,269 | ) | (427 | ) | (28,150 | ) | ||||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income | 21 | 11,495 | (81,552 | ) | (154,471 | ) | (63,708 | ) | ||||||||||||
Items that are or may be reclassified subsequently to profit or loss: | ||||||||||||||||||||
Capital adjustment arising from investments in equity-accounted investees | (12,539 | ) | 32,091 | 69,157 | 104,929 | |||||||||||||||
Foreign currency translation differences | (29,387 | ) | 103,200 | 36,755 | 322,863 | |||||||||||||||
Gains or losses on valuation of derivatives | 21 | 111 | 20 | (730 | ) | (81 | ) | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other comprehensive income (loss), net of tax | (28,095 | ) | 46,490 | (49,716 | ) | 335,853 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total comprehensive income | 543,300 | 1,003,856 | 2,292,527 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Profit attributable to: | ||||||||||||||||||||
Owners of the controlling company | 430,875 | 901,132 | 1,784,414 | |||||||||||||||||
Non-controlling interests | 48,589 | 65,935 | 152,440 | 172,260 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Profit | 496,810 | 1,053,572 | 1,956,674 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total comprehensive income attributable to : | ||||||||||||||||||||
Owners of the controlling company | 466,171 | 849,730 | 2,120,940 | |||||||||||||||||
Non-controlling interests | 48,962 | 77,129 | 154,126 | 171,587 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total comprehensive income | 543,300 | 1,003,856 | 2,292,527 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Basic and diluted earnings per share (in Won) | 33 | 5,854 | 5,357 | 11,232 | 22,211 |
See accompanying notes to the condensed consolidated interim financial statements.
5
Table of Contents
Condensed Consolidated Interim Statements of Changes in Equity
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Attributable to owners of the controlling company | Non- controlling interests | Total | |||||||||||||||||||||||||||||||||
Share capital | Capital surplus | Hybrid bonds | Reserves | Treasury shares | Retained earnings | Subtotal | ||||||||||||||||||||||||||||||
Balance as of January 1, 2019 | 1,410,551 | 199,384 | (1,404,368 | ) | (1,532,728 | ) | 44,216,018 | 43,371,260 | 3,388,291 | 46,759,551 | ||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Profit | — | — | — | — | — | 1,784,414 | 1,784,414 | 172,260 | 1,956,674 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||
Remeasurements of defined benefit plans, net of tax | — | — | — | — | — | (15,065 | ) | (15,065 | ) | (13,085 | ) | (28,150 | ) | |||||||||||||||||||||||
Capital adjustment arising from investments in equity-accounted investees, net of tax | — | — | — | 92,533 | — | — | 92,533 | 12,396 | 104,929 | |||||||||||||||||||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax | — | — | — | (42,911 | ) | — | (20,859 | ) | (63,770 | ) | 62 | (63,708 | ) | |||||||||||||||||||||||
Foreign currency translation differences, net of tax | — | — | — | 322,905 | — | — | 322,905 | (42 | ) | 322,863 | ||||||||||||||||||||||||||
Gains or losses on valuation of derivatives, net of tax | — | — | — | (77 | ) | — | — | (77 | ) | (4 | ) | (81 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total comprehensive income | — | — | — | 372,450 | — | 1,748,490 | 2,120,940 | 171,587 | 2,292,527 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Transactions with owners of the controlling company, recognized directly in equity: | ||||||||||||||||||||||||||||||||||||
Year-end dividends | — | — | — | — | — | (400,006 | ) | (400,006 | ) | (60,274 | ) | (460,280 | ) | |||||||||||||||||||||||
Interim dividends | — | �� | — | — | — | — | (320,462 | ) | (320,462 | ) | — | (320,462 | ) | |||||||||||||||||||||||
Changes in subsidiaries | — | — | — | — | — | — | — | (874 | ) | (874 | ) | |||||||||||||||||||||||||
Changes in ownership interest in subsidiaries | — | (53,871 | ) | — | — | — | — | (53,871 | ) | (114,153 | ) | (168,024 | ) | |||||||||||||||||||||||
Interest of hybrid bonds | — | — | — | — | — | (6,881 | ) | (6,881 | ) | (5,456 | ) | (12,337 | ) | |||||||||||||||||||||||
Disposal of treasury shares | — | 12,576 | — | — | 24,425 | — | 37,001 | — | 37,001 | |||||||||||||||||||||||||||
Others | — | 1,974 | — | (37,422 | ) | — | 43,822 | 8,374 | (7,293 | ) | 1,081 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total transactions with owners of the controlling company | — | (39,321 | ) | — | (37,422 | ) | 24,425 | (683,527 | ) | (735,845 | ) | (188,050 | ) | (923,895 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance as of September 30, 2019 | 1,371,230 | 199,384 | (1,069,340 | ) | (1,508,303 | ) | 45,280,981 | 44,756,355 | 3,371,828 | 48,128,183 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
6
Table of Contents
POSCO and Subsidiaries
Condensed Consolidated Interim Statements of Changes in Equity, Continued
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Attributable to owners of the controlling company | Non- controlling interests | Total | |||||||||||||||||||||||||||||||||
Share capital | Capital surplus | Hybrid bonds | Reserves | Treasury shares | Retained earnings | Subtotal | ||||||||||||||||||||||||||||||
Balance as of January 1, 2020 | 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 | — | — | — | — | — | 901,132 | 901,132 | 152,440 | 1,053,572 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||
Remeasurements of defined benefit plans, net of tax | — | — | — | — | — | (1,433 | ) | (1,433 | ) | 1,006 | (427 | ) | ||||||||||||||||||||||||
Capital adjustment arising from investments in equity-accounted investees, net of tax | — | — | — | 69,304 | — | — | 69,304 | (147 | ) | 69,157 | ||||||||||||||||||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax | — | — | — | (151,486 | ) | — | (2,985 | ) | (154,471 | ) | — | (154,471 | ) | |||||||||||||||||||||||
Foreign currency translation differences, net of tax | — | — | — | 35,888 | — | — | 35,888 | 867 | 36,755 | |||||||||||||||||||||||||||
Gains or losses on valuation of derivatives, net of tax | — | — | — | (690 | ) | — | — | (690 | ) | (40 | ) | (730 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total comprehensive income | — | — | — | (46,984 | ) | — | 896,714 | 849,730 | 154,126 | 1,003,856 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Transactions with owners of the controlling company, recognized directly in equity: | ||||||||||||||||||||||||||||||||||||
Year-end dividends | — | — | — | — | — | (320,462 | ) | (320,462 | ) | (60,517 | ) | (380,979 | ) | |||||||||||||||||||||||
Interim dividends | — | — | — | — | — | (160,062 | ) | (160,062 | ) | — | (160,062 | ) | ||||||||||||||||||||||||
Changes in subsidiaries | — | — | — | — | — | — | — | 24,197 | 24,197 | |||||||||||||||||||||||||||
Changes in ownership interest in subsidiaries | — | (27,716 | ) | — | — | — | — | (27,716 | ) | 166,744 | 139,028 | |||||||||||||||||||||||||
Repayment of redeemable convertible preferred shares | — | (33,581 | ) | — | — | — | — | (33,581 | ) | (245,000 | ) | (278,581 | ) | |||||||||||||||||||||||
Interest of hybrid bonds | — | — | — | — | — | (6,906 | ) | (6,906 | ) | (5,496 | ) | (12,402 | ) | |||||||||||||||||||||||
Acquisition of treasury shares | �� | — | — | — | — | (329,677 | ) | — | (329,677 | ) | — | (329,677 | ) | |||||||||||||||||||||||
Others | — | 1,410 | — | 5,368 | — | (13,173 | ) | (6,395 | ) | (3,292 | ) | (9,687 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total transactions with owners of the controlling company | — | (59,887 | ) | — | 5,368 | (329,677 | ) | (500,603 | ) | (884,799 | ) | (123,364 | ) | (1,008,163 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance as of September 30, 2020 | 1,316,364 | 199,384 | (1,199,596 | ) | (1,837,980 | ) | 45,476,228 | 44,436,803 | 3,353,597 | 47,790,400 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
7
Table of Contents
Condensed Consolidated Interim Statements of Cash Flows
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | September 30, 2019 | |||||||||
Cash flows from operating activities | ||||||||||||
Profit | 1,956,674 | |||||||||||
Adjustments for: | ||||||||||||
Depreciation | 2,348,977 | 2,269,280 | ||||||||||
Amortization | 336,624 | 316,947 | ||||||||||
Finance income | (848,936 | ) | (842,951 | ) | ||||||||
Finance costs | 972,462 | 1,082,320 | ||||||||||
Income tax expense | 453,134 | 1,013,999 | ||||||||||
Impairment loss on property, plant and equipment | 21,684 | 194,688 | ||||||||||
Gain on disposal of property, plant and equipment | (9,542 | ) | (21,929 | ) | ||||||||
Loss on disposal of property, plant and equipment | 105,440 | 61,222 | ||||||||||
Impairment loss on other intangible assets | 1,225 | 125,696 | ||||||||||
Gain on disposal of investments in subsidiaries, associates and joint ventures | (43,421 | ) | (20,750 | ) | ||||||||
Loss on disposal of investments in subsidiaries, associates and joint ventures | 13,659 | 5,867 | ||||||||||
Share of profit of equity-accounted investees | (109,028 | ) | (230,197 | ) | ||||||||
Impairment loss on assets held for sale | 5,030 | 40,943 | ||||||||||
Expenses related to post-employment benefit | 183,414 | 176,071 | ||||||||||
Impairment loss on trade and other receivables | 2,327 | 12,170 | ||||||||||
Loss on valuation of inventories | 65,575 | 80,988 | ||||||||||
Increase to provisions | 33,787 | 98,109 | ||||||||||
Others, net | (28,398 | ) | (67,187 | ) | ||||||||
|
|
|
| |||||||||
3,504,013 | 4,295,286 | |||||||||||
|
|
|
| |||||||||
Changes in operating assets and liabilities | 36 | 2,023,340 | (914,733 | ) | ||||||||
Interest received | 286,899 | 228,018 | ||||||||||
Interest paid | (463,028 | ) | (547,833 | ) | ||||||||
Dividends received | 149,159 | 218,155 | ||||||||||
Income taxes paid | (566,782 | ) | (1,295,222 | ) | ||||||||
|
|
|
| |||||||||
Net cash provided by operating activities | 3,940,345 | |||||||||||
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
8
Table of Contents
POSCO and Subsidiaries
Condensed Consolidated Interim Statements of Cash Flows, Continued
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | September 30, 2019 | |||||||||
Cash flows from investing activities | ||||||||||||
Acquisitions of short-term financial instruments | (27,411,573 | ) | ||||||||||
Proceeds from disposal of short-term financial instruments | 30,171,470 | 27,842,901 | ||||||||||
Increase in loans | (589,994 | ) | (173,717 | ) | ||||||||
Collection of loans | 574,267 | 282,778 | ||||||||||
Acquisitions of securities | (436,237 | ) | (377,942 | ) | ||||||||
Proceeds from disposal of securities | 478,633 | 171,793 | ||||||||||
Acquisitions of investment in associates and joint ventures | (103,176 | ) | (101,609 | ) | ||||||||
Proceeds from disposal of investment in associates and joint ventures | 11,841 | 11,293 | ||||||||||
Acquisitions of investment property | (908 | ) | (18,232 | ) | ||||||||
Proceeds from disposal of investment property | 250 | 1,106 | ||||||||||
Acquisitions of property, plant and equipment | (2,175,383 | ) | (1,609,725 | ) | ||||||||
Proceeds from disposal of property, plant and equipment | (28,412 | ) | 27,912 | |||||||||
Acquisitions of intangible assets | (241,819 | ) | (242,000 | ) | ||||||||
Proceeds from disposal of intangible assets | 74,966 | 13,256 | ||||||||||
Proceeds from disposal of assets held for sale | 36,514 | 311 | ||||||||||
Collection of lease receivables | 45,805 | 29,008 | ||||||||||
Payment for acquisition of business, net of cash acquired | — | (33,961 | ) | |||||||||
Cash received from disposal of business, net of cash transferred | 77,488 | 37,776 | ||||||||||
Others, net | (4,001 | ) | 12,969 | |||||||||
|
|
|
| |||||||||
Net cash used in investing activities | (4,514,965 | ) | (1,537,656 | ) | ||||||||
|
|
|
| |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from borrowings | 3,686,119 | 2,622,141 | ||||||||||
Repayment of borrowings | (1,648,402 | ) | (2,458,779 | ) | ||||||||
Proceeds from (repayment of) short-term borrowings, net | 918,477 | (1,466,477 | ) | |||||||||
Capital contribution from non-controlling interests | 165,934 | 23,582 | ||||||||||
Payment of cash dividends | (540,709 | ) | (785,551 | ) | ||||||||
Acquisition of treasury shares | (329,677 | ) | — | |||||||||
Payment of interest of hybrid bonds | (12,407 | ) | (12,362 | ) | ||||||||
Repayment of lease liabilities | (150,822 | ) | (107,703 | ) | ||||||||
Repayment of redeemable convertible preferred shares | (278,581 | ) | — | |||||||||
Others, net | (18,195 | ) | (112,086 | ) | ||||||||
|
|
|
| |||||||||
Net cash provided by (used in) financing activities | 1,791,737 | (2,297,235 | ) | |||||||||
|
|
|
| |||||||||
Effect of exchange rate fluctuation on cash held | (10,073 | ) | 91,767 | |||||||||
|
|
|
| |||||||||
Net increase in cash and cash equivalents | 3,253,872 | 197,221 | ||||||||||
Cash and cash equivalents at beginning of the period | 8 | 3,515,246 | 2,643,865 | |||||||||
|
|
|
| |||||||||
Cash and cash equivalents at end of the period | 2,841,086 | |||||||||||
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
9
Table of Contents
Notes to the Condensed Consolidated Interim Financial Statements
As of September 30, 2020
(Unaudited)
1. General Information
General information about POSCO, its 34 domestic subsidiaries including POSCO ENGINEERING & CONSTRUCTION CO., LTD., 132 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 137 associates and joint ventures are as follows:
(a) | The controlling company |
POSCO, the controlling company, was incorporated on April 1, 1968, under the Commercial Code of the Republic of Korea to manufacture and sell steel rolled products and plates in the domestic and foreign markets.
The shares of POSCO have been listed on the Korea Exchange since June 10, 1988. POSCO owns and operates two steel plants (Pohang and Gwangyang) and one office in Korea and it also operates internationally through six of its overseas liaison offices.
As of September 30, 2020, the shares of the POSCO are listed on the Korea Exchange, while its American Depository Receipts (ADRs) are listed on the New York Stock Exchange.
(b) | Consolidated subsidiaries newly included during the nine-month period ended September 30, 2020, were as follows: |
Company | Date of inclusion | Ownership (%) | Reason | |||
Posco International (Thailand) Co., Ltd. | January 2020 | 100.00 | New establishment | |||
PT POSCO INTERNATIONAL INDONESIA | January 2020 | 100.00 | New establishment | |||
POSCO SPS Corporation | April 2020 | 100.00 | Spun off from POSCO INTERNATIONAL Corporation | |||
P&O Chemical Co., Ltd. | July 2020 | 51.00 | New establishment | |||
POSCO New Growth I Specialized Private Equity Investment Trust | August 2020 | 100.00 | New establishment | |||
IMP Fund I | August 2020 | 98.04 | New establishment | |||
PEC POWERCON SDN. BHD. | August 2020 | 100.00 | New establishment |
(c) | Subsidiaries excluded from consolidation during the nine-month period ended September 30, 2020, were as follows: |
Company | Date of exclusion | Reason | ||
LA-SRDC | April 2020 | Liquidation | ||
POSCO China Dalian Plate Processing Center Co., Ltd. | June 2020 | Disposal | ||
PSC Energy Global Co., Ltd. | August 2020 | Merged into POSCO ENERGY CO., LTD. | ||
POSCO Family Strategy Fund | September 2020 | Liquidation |
10
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2. Statement of Compliance
Statement of compliance
The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audit of 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, 2019. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.
Use of estimates and judgments
(a) | Judgments, assumptions and estimation uncertainties |
The preparation of the condensed consolidated interim financial statements in conformity 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.
With the outbreak of COVID-19 pandemic, governments around the globe have implemented measures such as mandatory factory shutdown, shelter-in-place orders, border closures, and travel restrictions. The ultimate impact of COVID-19 pandemic on the Company’s operations is not yet known and will depend on future developments. The duration and significance of COVID-19 is highly uncertain and unpredictable, and the protective measures by the governments around the globe or the Company may lead to substantial business interruption and decrease in business scale. The financial impact of this cannot be reasonably estimated, but management expects the Company to be partially affected to the most areas where it operates. The extent and duration of COVID-19’s impact on the Company’s business cannot yet be reasonably estimated.
11
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | Measurement of fair value |
The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the financial officer.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of K-IFRS including the level in the fair value hierarchy in which such valuation techniques should be classified.
Significant valuation issues are reported to the Company’s Audit Committee.
When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
• | Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities. |
• | Level 2 - inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly. |
• | Level 3 - inputs for the assets or liabilities that are not based on observable market data. |
If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
12
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(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 consolidated interim financial statements are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2019. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2020.
(a) | K-IFRS No. 1001 “Presentation of Financial Statements” and K-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors” |
The definition of materiality has been clarified, and K-IFRS No. 1001 “Presentation of Financial Statements” and K-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors” have been amended according to the clarified definition. In determining the materiality, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.
(b) | K-IFRS No. 1103 “Business Combinations” |
The amendment clarifies the definition of business when it includes input and process together significantly contribute to ability to create output and requires a simplified assessment that result in an asset acquisition if substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or a group of similar identifiable assets. The Company does not expect the effect of the amendment to the consolidated financial statements to be significant.
(c) | K-IFRS No. 1109 “Financial Instruments”, K-IFRS No. 1039 “Financial Instruments: Recognition and Measurement”, K-IFRS No. 1107 “Financial Instruments: Disclosures” |
The amendments require the application of exceptions to the analysis of future prospects in relation to the application of hedge accounting while uncertainty exists due to the interest rate benchmark reform. The exception assumes that when assessing whether the expected cash flows based on existing interest rate indicators are highly probable, whether there is an economic relationship between the hedged item and the hedging instrument, or whether the hedge relationship between the hedged item and the hedging instrument is highly probable, the interest rate benchmark that the hedged item and the hedging instrument comply with does not change as a result of the interest rate benchmark reform. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.
13
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
4. Trade Accounts and Notes Receivable
Trade accounts and notes receivable as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Trade accounts and notes receivable | 8,352,968 | |||||||
Finance lease receivables | 44,761 | 221 | ||||||
Due from customers for contract work | 1,090,837 | 1,136,436 | ||||||
Less: Allowance for doubtful accounts | (377,365 | ) | (411,274 | ) | ||||
|
|
|
| |||||
9,078,351 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Trade accounts and notes receivable | 209,310 | |||||||
Finance lease receivables | 88 | 43,725 | ||||||
Less: Allowance for doubtful accounts | (46,407 | ) | (54,250 | ) | ||||
|
|
|
| |||||
198,785 | ||||||||
|
|
|
|
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 September 30, 2020 and December 31, 2019, the carrying amounts of such secured borrowings areW177,517 million andW244,305 million, respectively, which are included in the short-term borrowings.
5. Other Receivables
Other receivables as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Loans | 367,580 | |||||||
Other accounts receivable | 815,739 | 971,845 | ||||||
Accrued income | 341,419 | 272,528 | ||||||
Deposits | 100,094 | 86,519 | ||||||
Others | 15,602 | 14,510 | ||||||
Lease receivables | 73,259 | 48,744 | ||||||
Less: Allowance for doubtful accounts | (94,983 | ) | �� | (180,209 | ) | |||
|
|
|
| |||||
1,581,517 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Loans | 701,529 | |||||||
Other accounts receivable | 230,889 | 209,039 | ||||||
Accrued income | 88,520 | 65,275 | ||||||
Deposits | 243,841 | 238,261 | ||||||
Lease receivables | 153,944 | 179,315 | ||||||
Less: Allowance for doubtful accounts | (239,628 | ) | (252,540 | ) | ||||
|
|
|
| |||||
1,140,879 | ||||||||
|
|
|
|
14
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
6. Other Financial Assets
Other financial assets as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Derivatives assets | 47,541 | |||||||
Debt securities | 157,568 | 342,371 | ||||||
Deposit instruments(*1,2) | 2,053,119 | 1,744,895 | ||||||
Short-term financial instruments(*2) | 8,906,797 | 6,861,242 | ||||||
|
|
|
| |||||
8,996,049 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Derivatives assets | 64,737 | |||||||
Equity securities(*3) | 1,030,599 | 1,204,902 | ||||||
Debt securities | 12,106 | 25,555 | ||||||
Other securities(*3) | 360,899 | 340,008 | ||||||
Deposit instruments(*2) | 27,604 | 34,187 | ||||||
|
|
|
| |||||
1,669,389 | ||||||||
|
|
|
|
(*1) | As of September 30, 2020 and December 31, 2019, |
(*2) | As of September 30, 2020 and December 31, 2019, financial instruments amounting to |
(*3) | As of September 30, 2020 and December 31, 2019, |
7. Inventories
Inventories as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Finished goods | 1,655,228 | |||||||
M erchandise | 827,888 | 1,058,874 | ||||||
Semi-finished goods | 1,641,269 | 2,097,289 | ||||||
Raw materials | 2,025,447 | 2,656,341 | ||||||
Fuel and materials | 906,932 | 1,026,133 | ||||||
Construction inventories | 939,470 | 734,649 | ||||||
M aterials-in-transit | 1,400,997 | 1,824,044 | ||||||
Others | 70,794 | 83,905 | ||||||
|
|
|
| |||||
9,174,942 | 11,136,463 | |||||||
|
|
|
| |||||
Less: Allowance for inventories valuation | (154,274 | ) | (216,143 | ) | ||||
|
|
|
| |||||
10,920,320 | ||||||||
|
|
|
|
The amounts of loss on valuation of inventories recognized in cost of sales during the nine-month period ended September 30, 2020 and the year ended December 31, 2019 wereW65,575 million andW96,201 million, respectively.
15
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
8. Assets Held for Sale
Details of assets held for sale as of September 30, 2020 and December 31, 2019 are as follows:
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||
(in millions of Won) | The controlling company(*1) | Subsidiaries | Total | The controlling company(*1) | Subsidiaries | Total | ||||||||||||||||||
Asset | ||||||||||||||||||||||||
Cash and cash equivalents(*2) | — | — | — | 374 | 374 | |||||||||||||||||||
Other financial assets | — | — | — | — | 185 | 185 | ||||||||||||||||||
Property, plant and equipment | 31,634 | 388 | 32,022 | 36,321 | 32,972 | 69,293 | ||||||||||||||||||
Others | 1,143 | — | 1,143 | — | 4,306 | 4,306 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
388 | 33,165 | 36,321 | 37,837 | 74,158 | ||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||
Liability | ||||||||||||||||||||||||
Others | — | — | — | 8 | 8 |
(*1) | During the year ended December 31, 2019, the Company decided to dispose individual assets for which use was discontinued, such as CEM plants, and classified the assets as held for sale. During the nine-month period ended September 30, 2020, the Company recognized |
(*2) | Cash and cash equivalents in the statement of cash flows at beginning of the nine-month period ended September 30, 2020, include cash and cash equivalents that are classified as assets held for sale. |
16
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
9. Investments in Associates and Joint ventures
(a) | Details of investments in associates as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||||||||||||||
Company | Number of shares | Ownership (%) | Acquisition cost | Book value | Book value | |||||||||||||||
[Domestic] | ||||||||||||||||||||
EQP POSCO Global NO1 Natural Resources Private Equity Fund | 178,691,901,565 | 36.34 | 175,907 | |||||||||||||||||
Samcheok Blue Power Co.,Ltd. (Formerly, POSPower Co., Ltd)(*1,2) | 4,507,138 | 34.00 | 179,410 | 149,803 | 161,280 | |||||||||||||||
SNNC | 18,130,000 | 49.00 | 90,650 | 149,875 | 142,602 | |||||||||||||||
QSONE Co.,Ltd. | 200,000 | 50.00 | 84,395 | 86,015 | 85,887 | |||||||||||||||
Chun-cheon Energy Co., Ltd(*1) | 17,308,143 | 49.10 | 86,541 | 48,143 | 56,679 | |||||||||||||||
Western Inland highway CO.,LTD. | 8,818,236 | 29.80 | 44,091 | 43,421 | 5,115 | |||||||||||||||
Nextrain Co., Ltd.(*1) | 9,904,000 | 32.00 | 49,520 | 47,288 | 41,447 | |||||||||||||||
Keystone NO. 1. Private Equity Fund | 22,523,123 | 52.58 | 22,523 | 18,683 | 19,438 | |||||||||||||||
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd | 2,008,000 | 29.53 | 10,040 | 16,737 | 17,824 | |||||||||||||||
Daesung Steel(*3) | 108,038 | 17.54 | 14,000 | 15,298 | 15,375 | |||||||||||||||
PCC Amberstone Private Equity Fund 1(*3) | 8,657,610,240 | 8.80 | 8,540 | 9,151 | 9,570 | |||||||||||||||
Others (62 companies)(*1) | 113,496 | 114,490 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
874,193 | 845,614 | |||||||||||||||||||
|
|
|
| |||||||||||||||||
[Foreign] | ||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 135,219,000 | 25.04 | 135,899 | 224,137 | 225,933 | |||||||||||||||
AES-VCM Mong Duong Power Company Limited(*1) | — | 30.00 | 164,303 | 177,299 | 178,892 | |||||||||||||||
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)(*3,4) | 114,452,000 | 10.40 | 124,341 | 134,040 | 131,529 | |||||||||||||||
Eureka Moly LLC | — | 20.00 | 240,123 | 86,465 | 85,349 | |||||||||||||||
AMCI (WA) PTY LTD | 49 | 49.00 | 209,664 | 73,207 | 72,937 | |||||||||||||||
NCR LLC | — | 29.40 | 49,744 | 46,298 | 46,391 | |||||||||||||||
KOREA LNG LTD. | 2,400 | 20.00 | 135,205 | 45,544 | 46,557 | |||||||||||||||
Nickel Mining Company SAS | 3,234,698 | 49.00 | 157,585 | 39,542 | 37,940 | |||||||||||||||
ZHEJIANG HUAYOU-POSCO ESM CO., LTD | 134,400,000 | 40.00 | 22,423 | 23,076 | 22,356 | |||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 10,200,000 | 34.00 | 9,517 | 15,778 | 15,128 | |||||||||||||||
PT. Wampu Electric Power(*1) | 8,708,400 | 20.00 | 10,054 | 12,900 | 13,363 | |||||||||||||||
PT. Batutua Tembaga Raya | 128,285 | 22.00 | 21,824 | 8,461 | 14,717 | |||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 50 | 25.00 | 4,723 | 7,260 | 6,755 | |||||||||||||||
Others (27 companies)(*1) | 100,698 | 121,048 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
994,705 | 1,018,895 | |||||||||||||||||||
|
|
|
| |||||||||||||||||
1,864,509 | ||||||||||||||||||||
|
|
|
|
(*1) | As of September 30, 2020 and December 31, 2019, investments in associates amounting to |
(*2) | During the nine-month period ended September 30, 2020, POSPower Co., Ltd changed its name to Samcheok Blue Power Co.,Ltd. |
(*3) | As of September 30, 2020, it was classified as an associate even though the Company’s ownership percentage is less than 20% of ownership percentage since the Company has significant influence over the investee when considering its structure of the Board of Directors and others. |
(*4) | During the nine-month period ended September 30, 2020, 7623704 Canada Inc. changed its name to 9404-5515 Quebec Inc. |
17
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | Details of investments in joint ventures as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||||||||||||||
Company | Number of shares | Ownership (%) | Acquisition cost | Book value | Book value | |||||||||||||||
[Domestic] | ||||||||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 11,568,000 | 60.00 | 182,648 | |||||||||||||||||
Others (7 companies) | 12,143 | 10,305 | ||||||||||||||||||
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| |||||||||||||||||
159,334 | 192,953 | |||||||||||||||||||
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| |||||||||||||||||
[Foreign] | ||||||||||||||||||||
Roy Hill Holdings Pty Ltd(*1) | 13,117,972 | 12.50 | 1,528,672 | 1,363,407 | 1,235,682 | |||||||||||||||
POSCO-NPS Niobium LLC | 325,050,000 | 50.00 | 364,609 | 381,515 | 376,410 | |||||||||||||||
KOBRASCO | 2,010,719,185 | 50.00 | 32,950 | 53,407 | 115,641 | |||||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | — | 25.00 | 61,961 | 93,137 | 88,935 | |||||||||||||||
DMSA/AMSA(*1,2) | — | 4.21 | 406,556 | 48,490 | 12,189 | |||||||||||||||
CSP—Compania Siderurgica do Pecem | 1,367,314,532 | 20.00 | 631,796 | — | — | |||||||||||||||
Others (10 companies) | 32,941 | 41,436 | ||||||||||||||||||
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| |||||||||||||||||
1,972,897 | 1,870,293 | |||||||||||||||||||
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| |||||||||||||||||
2,063,246 | ||||||||||||||||||||
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|
(*1) | As of September 30, 2020 and December 31, 2019, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings. |
(*2) | All investors of the joint venture have entered into an agreement to extend the due date for loans made to the joint venture as a means of financial support. However, the Company believes the above agreement for financial support is invalid and is currently in arbitration process for annulment. The Company’s obligation to provide financial support is currently on hold and may change depending on the result of the arbitration. |
18
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(c) | The movements of investments in associates and joint ventures for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
1) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | ||||||||||||||||||||||||
Company | December 31, 2019 Book value | Acquisition | Dividends | Share of profits (losses) | Other increase (decrease)(*1) | September 30, 2020 Book value | ||||||||||||||||||
[Domestic] | ||||||||||||||||||||||||
EQP POSCO Global NO1 Natural Resources Private Equity Fund | — | — | 376 | — | 176,283 | |||||||||||||||||||
Samcheok Blue Power Co.,Ltd. (Formerly, POSPower Co., Ltd) | 161,280 | — | — | (3,331 | ) | (8,146 | ) | 149,803 | ||||||||||||||||
SNNC | 142,602 | — | (2,901 | ) | 8,257 | 1,917 | 149,875 | |||||||||||||||||
QSONE Co.,Ltd. | 85,887 | — | (1,140 | ) | 1,268 | — | 86,015 | |||||||||||||||||
Chun-cheon Energy Co., Ltd | 56,679 | — | — | (9,093 | ) | 557 | 48,143 | |||||||||||||||||
Western Inland highway CO.,LTD. | 5,115 | 38,670 | — | (367 | ) | 3 | 43,421 | |||||||||||||||||
Nextrain Co., Ltd. | 41,447 | 7,910 | — | (2,052 | ) | (17 | ) | 47,288 | ||||||||||||||||
Keystone NO. 1. Private Equity Fund | 19,438 | — | — | (755 | ) | — | 18,683 | |||||||||||||||||
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd | 17,824 | — | — | (1,087 | ) | — | 16,737 | |||||||||||||||||
Daesung Steel | 15,375 | — | — | (77 | ) | — | 15,298 | |||||||||||||||||
PCC Amberstone Private Equity Fund 1 | 9,570 | — | (520 | ) | 316 | (215 | ) | 9,151 | ||||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 182,648 | — | (19,401 | ) | (16,056 | ) | — | 147,191 | ||||||||||||||||
Others (69 companies) | 124,795 | 18,973 | (685 | ) | (13,452 | ) | (3,992 | ) | 125,639 | |||||||||||||||
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1,038,567 | 65,553 | (24,647 | ) | (36,053 | ) | (9,893 | ) | 1,033,527 | ||||||||||||||||
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[Foreign] | ||||||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 225,933 | — | (40,044 | ) | 34,803 | 3,445 | 224,137 | |||||||||||||||||
AES-VCM Mong Duong Power Company Limited | 178,892 | — | (16,053 | ) | 28,629 | (14,169 | ) | 177,299 | ||||||||||||||||
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.) | 131,529 | — | (11,672 | ) | 12,126 | 2,057 | 134,040 | |||||||||||||||||
Eureka Moly LLC | 85,349 | — | — | (42 | ) | 1,158 | 86,465 | |||||||||||||||||
AMCI (WA) PTY LTD | 72,937 | — | — | (3,207 | ) | 3,477 | 73,207 | |||||||||||||||||
NCR LLC | 46,391 | — | — | (904 | ) | 811 | 46,298 | |||||||||||||||||
KOREA LNG LTD. | 46,557 | — | (6,519 | ) | 6,463 | (957 | ) | 45,544 | ||||||||||||||||
Nickel Mining Company SAS | 37,940 | — | — | (803 | ) | 2,405 | 39,542 | |||||||||||||||||
ZHEJIANG HUAYOU-POSCO ESM CO., LTD | 22,356 | — | — | (111 | ) | 831 | 23,076 | |||||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 15,128 | — | — | (16 | ) | 666 | 15,778 | |||||||||||||||||
PT. Wampu Electric Power | 13,363 | — | (559 | ) | 899 | (803 | ) | 12,900 | ||||||||||||||||
PT. Batutua Tembaga Raya | 14,717 | — | — | (6,533 | ) | 277 | 8,461 | |||||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 6,755 | — | — | 92 | 413 | 7,260 | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | 1,235,682 | — | (48,890 | ) | 132,552 | 44,063 | 1,363,407 | |||||||||||||||||
POSCO-NPS Niobium LLC | 376,410 | — | (6,061 | ) | 6,064 | 5,102 | 381,515 | |||||||||||||||||
KOBRASCO | 115,641 | — | (37,922 | ) | 8,246 | (32,558 | ) | 53,407 | ||||||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | 88,935 | — | — | 1,066 | 3,136 | 93,137 | ||||||||||||||||||
DMSA/AMSA | 12,189 | 60,278 | — | (23,595 | ) | (382 | ) | 48,490 | ||||||||||||||||
CSP—Compania Siderurgica do Pecem | — | 37,623 | — | (42,126 | ) | 4,503 | — | |||||||||||||||||
Others (37 companies) | 162,484 | — | (10,472 | ) | (8,522 | ) | (9,851 | ) | 133,639 | |||||||||||||||
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2,889,188 | 97,901 | (178,192 | ) | 145,081 | 13,624 | 2,967,602 | ||||||||||||||||||
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163,454 | (202,839 | ) | 109,028 | 3,731 | 4,001,129 | |||||||||||||||||||
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(*1) | Other increase or decrease represents the changes in investments in associates and joint ventures due to disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others. |
19
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the year ended December 31, 2019 |
(in millions of Won) | ||||||||||||||||||||||||
Company | December 31, 2018 Book value | Acquisition | Dividends | Share of profits (losses) | Other increase (decrease)(*1) | December 31, 2019 Book value | ||||||||||||||||||
[Domestic] | ||||||||||||||||||||||||
EQP POSCO Global NO1 Natural Resources Private Equity Fund | — | — | (976 | ) | 2,760 | 175,907 | ||||||||||||||||||
Samcheok Blue Power Co.,Ltd. (Formerly, POSPower Co., Ltd)(*2) | 161,477 | — | — | (4,744 | ) | 4,547 | 161,280 | |||||||||||||||||
SNNC | 116,922 | — | (1,450 | ) | 27,655 | (525 | ) | 142,602 | ||||||||||||||||
QSONE Co.,Ltd. | 85,550 | — | (950 | ) | 1,287 | — | 85,887 | |||||||||||||||||
Chun-cheon Energy Co., Ltd | 62,478 | 6,050 | — | (11,849 | ) | — | 56,679 | |||||||||||||||||
Western Inland highway CO.,LTD. | 1,494 | 3,752 | — | (167 | ) | 36 | 5,115 | |||||||||||||||||
Nextrain Co., Ltd. | 10 | 41,600 | — | (163 | ) | — | 41,447 | |||||||||||||||||
Keystone NO. 1. Private Equity Fund | 11,183 | 8,723 | — | (342 | ) | (126 | ) | 19,438 | ||||||||||||||||
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd | 17,382 | — | — | 442 | — | 17,824 | ||||||||||||||||||
Daesung Steel | 15,644 | — | — | (269 | ) | — | 15,375 | |||||||||||||||||
PCC Amberstone Private Equity Fund 1 | 9,693 | — | (723 | ) | 1,079 | (479 | ) | 9,570 | ||||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 180,192 | — | (16,369 | ) | 19,377 | (552 | ) | 182,648 | ||||||||||||||||
Others (62 companies) | 143,578 | 27,221 | (669 | ) | (24,448 | ) | (20,887 | ) | 124,795 | |||||||||||||||
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979,726 | 87,346 | (20,161 | ) | 6,882 | (15,226 | ) | 1,038,567 | |||||||||||||||||
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[Foreign] | ||||||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 179,459 | — | (24,267 | ) | 63,749 | 6,992 | 225,933 | |||||||||||||||||
AES-VCM Mong Duong Power Company Limited | 209,936 | — | (18,099 | ) | 24,126 | (37,071 | ) | 178,892 | ||||||||||||||||
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.)(*3) | 126,885 | — | (9,902 | ) | 9,912 | 4,634 | 131,529 | |||||||||||||||||
Eureka Moly LLC | 82,447 | — | — | (25 | ) | 2,927 | 85,349 | |||||||||||||||||
AMCI (WA) PTY LTD | 71,086 | — | — | (4,377 | ) | 6,228 | 72,937 | |||||||||||||||||
NCR LLC | 37,602 | 9,605 | — | (822 | ) | 6 | 46,391 | |||||||||||||||||
KOREA LNG LTD. | 43,554 | — | (13,404 | ) | 13,501 | 2,906 | 46,557 | |||||||||||||||||
Nickel Mining Company SAS | 41,712 | — | — | (4,250 | ) | 478 | 37,940 | |||||||||||||||||
ZHEJIANG HUAYOU-POSCO ESM CO., LTD | — | 22,423 | — | 61 | (128 | ) | 22,356 | |||||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 14,796 | — | — | 10 | 322 | 15,128 | ||||||||||||||||||
PT. Wampu Electric Power | 14,120 | — | — | (1,247 | ) | 490 | 13,363 | |||||||||||||||||
PT. Batutua Tembaga Raya | 20,479 | — | — | (6,209 | ) | 447 | 14,717 | |||||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 6,478 | — | — | 80 | 197 | 6,755 | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | 1,041,600 | — | — | 158,562 | 35,520 | 1,235,682 | ||||||||||||||||||
POSCO-NPS Niobium LLC | 363,506 | — | (24,933 | ) | 24,543 | 13,294 | 376,410 | |||||||||||||||||
KOBRASCO | 133,449 | — | (74,716 | ) | 56,474 | 434 | 115,641 | |||||||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | 88,391 | — | (1,574 | ) | 665 | 1,453 | 88,935 | |||||||||||||||||
DMSA/AMSA | 26,709 | 23,682 | — | (40,415 | ) | 2,213 | 12,189 | |||||||||||||||||
CSP—Compania Siderurgica do Pecem | 24,832 | 35,352 | — | (57,647 | ) | (2,537 | ) | — | ||||||||||||||||
Others (38 companies) | 143,236 | 552 | (19,430 | ) | 30,168 | 7,958 | 162,484 | |||||||||||||||||
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2,670,277 | 91,614 | (186,325 | ) | 266,859 | 46,763 | 2,889,188 | ||||||||||||||||||
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178,960 | (206,486 | ) | 273,741 | 31,537 | 3,927,755 | |||||||||||||||||||
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(*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. |
20
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(d) | Summarized financial information of associates and joint ventures as of and for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 are as follows: |
1) | September 30, 2020 |
(in millions of Won) | ||||||||||||||||||||
Company | Assets | Liabilities | Equity (deficit) | Sales | Net income (loss) | |||||||||||||||
[Domestic] | ||||||||||||||||||||
EQP POSCO Global NO1 Natural Resources Private Equity Fund | 559 | 473,785 | — | 9,475 | ||||||||||||||||
Samcheok Blue Power Co.,Ltd. (Formerly, POSPower Co., Ltd) | 1,062,978 | 583,667 | 479,311 | — | (3,934 | ) | ||||||||||||||
SNNC | 564,403 | 236,474 | 327,929 | 498,495 | 14,184 | |||||||||||||||
QSONE Co.,Ltd. | 251,048 | 79,018 | 172,030 | 12,733 | 2,535 | |||||||||||||||
Chun-cheon Energy Co., Ltd | 609,233 | 510,751 | 98,482 | 176,714 | (18,987 | ) | ||||||||||||||
Western Inland highway CO.,LTD. | 146,037 | 1,196 | 144,841 | — | (1,231 | ) | ||||||||||||||
Nextrain Co., Ltd. | 156,829 | 5,397 | 151,432 | — | (2,044 | ) | ||||||||||||||
Keystone NO. 1. Private Equity Fund | 181,608 | 134,107 | 47,501 | 12,286 | (1,255 | ) | ||||||||||||||
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd | 59,530 | 33,161 | 26,369 | 4,197 | (3,679 | ) | ||||||||||||||
Daesung Steel | 165,476 | 109,647 | 55,829 | 61,032 | (438 | ) | ||||||||||||||
PCC Amberstone Private Equity Fund 1 | 104,037 | — | 104,037 | 9,757 | 3,592 | |||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 436,292 | 190,989 | 245,303 | 82,260 | (26,071 | ) | ||||||||||||||
[Foreign] | ||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 1,703,857 | 808,751 | 895,106 | 338,649 | 138,988 | |||||||||||||||
AES-VCM Mong Duong Power Company Limited | 1,830,346 | 1,255,950 | 574,396 | 293,674 | 93,434 | |||||||||||||||
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.) | 1,301,003 | 2 | 1,301,001 | — | 116,595 | |||||||||||||||
KOREA LNG LTD. | 228,057 | 338 | 227,719 | 33,685 | 32,315 | |||||||||||||||
Nickel Mining Company SAS | 479,473 | 347,461 | 132,012 | 156,042 | (15,666 | ) | ||||||||||||||
ZHEJIANG HUAYOU-POSCO ESM CO., LTD | 75,130 | 17,619 | 57,511 | 355 | (403 | ) | ||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 80,595 | 28,596 | 51,999 | 72,464 | (47 | ) | ||||||||||||||
PT. Wampu Electric Power | 210,213 | 148,733 | 61,480 | 14,403 | 4,496 | |||||||||||||||
PT. Batutua Tembaga Raya | 420,619 | 418,351 | 2,268 | 37,209 | (30,219 | ) | ||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 65,224 | 35,940 | 29,284 | 53,550 | 389 | |||||||||||||||
Roy Hill Holdings Pty Ltd | 8,807,942 | 2,255,669 | 6,552,273 | 3,628,425 | 1,322,590 | |||||||||||||||
POSCO-NPS Niobium LLC | 762,826 | — | 762,826 | — | 16,822 | |||||||||||||||
KOBRASCO | 152,358 | 45,544 | 106,814 | 29,838 | 16,492 | |||||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | 901,463 | 555,779 | 345,684 | 933,497 | 4,957 | |||||||||||||||
DMSA/AMSA | 5,442,457 | 2,862,041 | 2,580,416 | 214,068 | (578,920 | ) | ||||||||||||||
CSP—Compania Siderurgica do Pecem | 2,743,759 | 3,970,986 | (1,227,227 | ) | 997,431 | (1,350,722 | ) |
21
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | December 31, 2019 |
(in millions of Won) | ||||||||||||||||||||
Company | Assets | Liabilities | Equity (deficit) | Sales | Net income (loss) | |||||||||||||||
[Domestic] | ||||||||||||||||||||
EQP POSCO Global NO1 Natural Resources Private Equity Fund | 786 | 515,873 | — | 7,479 | ||||||||||||||||
Samcheok Blue Power Co.,Ltd. (Formerly, POSPower Co., Ltd) | 707,051 | 199,846 | 507,205 | — | (5,294 | ) | ||||||||||||||
SNNC | 677,508 | 357,843 | 319,665 | 738,977 | 63,269 | |||||||||||||||
QSONE Co.,Ltd. | 250,364 | 78,589 | 171,775 | 17,591 | 2,576 | |||||||||||||||
Chun-cheon Energy Co., Ltd | 610,089 | 492,620 | 117,469 | 313,438 | (24,677 | ) | ||||||||||||||
Western Inland highway CO.,LTD. | 21,980 | 5,165 | 16,815 | — | (528 | ) | ||||||||||||||
Nextrain Co., Ltd. | 136,203 | 7,322 | 128,881 | — | (509 | ) | ||||||||||||||
Keystone NO. 1. Private Equity Fund | 187,156 | 138,219 | 48,937 | 18,342 | (887 | ) | ||||||||||||||
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd | 53,019 | 22,971 | 30,048 | 17,824 | 1,497 | |||||||||||||||
Daesung Steel | 164,708 | 108,441 | 56,267 | 85,537 | (1,536 | ) | ||||||||||||||
PCC Amberstone Private Equity Fund 1 | 108,797 | 5 | 108,792 | 14,787 | 12,280 | |||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 474,387 | 170,678 | 303,709 | 216,648 | 32,334 | |||||||||||||||
[Foreign] | ||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 1,808,529 | 906,254 | 902,275 | 555,075 | 254,582 | |||||||||||||||
9404-5515 Quebec Inc. (Formerly, 7623704 Canada Inc.) | 1,276,857 | 1 | 1,276,856 | — | 95,306 | |||||||||||||||
KOREA LNG LTD. | 232,935 | 147 | 232,788 | 69,577 | 67,507 | |||||||||||||||
Nickel Mining Company SAS | 471,377 | 331,194 | 140,183 | 245,509 | 2,432 | |||||||||||||||
ZHEJIANG HUAYOU-POSCO ESM CO., LTD | 73,604 | 17,765 | 55,839 | 641 | 153 | |||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 65,413 | 15,232 | 50,181 | 101,101 | 28 | |||||||||||||||
PT. Wampu Electric Power | 222,266 | 158,451 | 63,815 | 18,163 | (6,233 | ) | ||||||||||||||
PT. Batutua Tembaga Raya | 423,608 | 392,226 | 31,382 | 112,568 | (28,360 | ) | ||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 61,847 | 33,989 | 27,858 | 77,371 | 327 | |||||||||||||||
Roy Hill Holdings Pty Ltd | 11,143,705 | 5,718,152 | 5,425,553 | 5,037,471 | 1,660,577 | |||||||||||||||
POSCO-NPS Niobium LLC | 752,617 | — | 752,617 | — | 47,521 | |||||||||||||||
KOBRASCO | 268,139 | 36,857 | 231,282 | 167,022 | 112,949 | |||||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | 969,280 | 637,478 | 331,802 | 1,145,794 | 1,704 | |||||||||||||||
DMSA/AMSA | 5,703,501 | 4,202,704 | 1,500,797 | 638,797 | (504,077 | ) | ||||||||||||||
CSP—Compania Siderurgica do Pecem | 3,959,365 | 4,249,083 | (289,718 | ) | 1,623,843 | (465,853 | ) |
22
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
10. Joint Operations
Details of significant joint operations that the Company is participating in as a party to a joint arrangement as of September 30, 2020 are as follows:
Joint operations | Operation | Ownership (%) | Location | |||
Myanmar A-1/A-3 mine | Mine development and gas production | 51.00 | Myanmar | |||
Offshore Midstream | Gas transportation facility | 51.00 | Myanmar | |||
Greenhills Mine | Mine development | 20.00 | Canada | |||
Arctos Anthracite Coal Project | Mine development | 50.00 | Canada | |||
Mt. Thorley J/V | Mine development | 20.00 | Australia | |||
POSMAC J/V | Mine development | 20.00 | Australia | |||
RUM J/V | Mine development | 10.00 | Australia | |||
Hanam-Gamil package public housing project | Construction | 7.70 | Korea | |||
Hanam-Gamil district B6, C2, C3 Block public housing lot development project | Construction | 27.00 | Korea | |||
Yangsan-Sasong district public housing project(private-participation) | Construction | 13.08 | 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 nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows:
(a) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Beginning | Acquisitions | Disposals | Depreciation | Others(*1) | Ending | ||||||||||||||||||
Land | 2,814 | (183 | ) | — | (4,890 | ) | 276,206 | |||||||||||||||||
Buildings | 598,159 | 317 | — | (19,002 | ) | 14,869 | 594,343 | |||||||||||||||||
Structures | 1,178 | — | — | (459 | ) | 416 | 1,135 | |||||||||||||||||
Right-of-use assets | 425 | — | (56 | ) | (7 | ) | 778 | 1,140 | ||||||||||||||||
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3,131 | (239 | ) | (19,468 | ) | 11,173 | 872,824 | ||||||||||||||||||
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(*1) | Includes reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences, and others. |
23
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | For the year ended December 31, 2019 |
(in millions of Won) | Beginning | Acquisitions | Disposals | Depreciation(*1) | Others(*2) | Ending | ||||||||||||||||||
Land | — | (5,921 | ) | — | 5,801 | 278,465 | ||||||||||||||||||
Buildings | 571,335 | 1,548 | (5,343 | ) | (52,416 | ) | 83,035 | 598,159 | ||||||||||||||||
Structures | 1,408 | — | (50 | ) | (625 | ) | 445 | 1,178 | ||||||||||||||||
Right-of-use assets | — | — | — | — | 425 | 425 | ||||||||||||||||||
Construction-in-progress | 77,287 | 18,644 | — | — | (95,931 | ) | — | |||||||||||||||||
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20,192 | (11,314 | ) | (53,041 | ) | (6,225 | ) | 878,227 | |||||||||||||||||
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(*1) | Includes impairment loss on investment property recognized in relation to the office for rent of POSCO(Dalian) IT Center Development Co., Ltd. amounting to |
(*2) | Includes reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences, and others. |
12. Property, Plant and Equipment, Net
(a) | Changes in the carrying amount of property, plant and equipment for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
1) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Beginning | Acquisitions | Disposals | Depreciation | Impairment loss(*1) | Others(*2) | Ending | |||||||||||||||||||||
Land | 20,148 | (1,964 | ) | — | — | 24,962 | 2,569,205 | |||||||||||||||||||||
Buildings | 4,215,454 | 12,112 | (4,001 | ) | (240,222 | ) | (268 | ) | 288,123 | 4,271,198 | ||||||||||||||||||
Structures | 2,904,506 | 78,586 | (3,147 | ) | (168,700 | ) | (860 | ) | 172,521 | 2,982,906 | ||||||||||||||||||
Machinery and equipment | 17,218,264 | 98,582 | (16,780 | ) | (1,707,247 | ) | (7,205 | ) | 1,722,387 | 17,308,001 | ||||||||||||||||||
Vehicles | 32,285 | 5,298 | (506 | ) | (10,694 | ) | — | 6,887 | 33,270 | |||||||||||||||||||
Tools | 70,751 | 13,097 | (62 | ) | (22,800 | ) | (9 | ) | 7,785 | 68,762 | ||||||||||||||||||
Furniture and fixtures | 130,132 | 13,025 | (2,908 | ) | (27,839 | ) | (526 | ) | 13,915 | 125,799 | ||||||||||||||||||
Lease assets | 774,582 | 124,593 | (7,671 | ) | (146,195 | ) | — | 156,854 | 902,163 | |||||||||||||||||||
Bearer plants | 124,193 | 118 | — | (5,812 | ) | — | 32,389 | 150,888 | ||||||||||||||||||||
Construction-in-progress | 1,929,747 | 1,896,194 | (8,279 | ) | — | (12,812 | ) | (2,366,197 | ) | 1,438,653 | ||||||||||||||||||
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2,261,753 | (45,318 | ) | (2,329,509 | ) | (21,680 | ) | 59,626 | 29,850,845 | ||||||||||||||||||||
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(*1) | The Company estimated recoverable amount for individual assets that ceased operations due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value and recognized impairment loss since recoverable amounts are less than their carrying amounts for the nine-month period ended September 30, 2020. In addition, during the nine-month period ended September 30, 2020, the Company recognized impairment loss on certain assets due to damage from fire. |
(*2) | Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others. |
24
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the year ended December 31, 2019 |
(in millions of Won) | Beginning | Acquisitions | Business Combination | Disposals | Depreciation | Impairment loss(*1,2) | Others(*3) | Ending | ||||||||||||||||||||||||
Land | 6,550 | — | (2,128 | ) | — | — | (26,365 | ) | 2,526,059 | |||||||||||||||||||||||
Buildings | 4,402,452 | 39,551 | 22,836 | (10,376 | ) | (314,107 | ) | (90,036 | ) | 165,134 | 4,215,454 | |||||||||||||||||||||
Structures | 2,917,924 | 49,931 | 2 | (3,350 | ) | (228,616 | ) | (27,217 | ) | 195,832 | 2,904,506 | |||||||||||||||||||||
Machinery and equipment | 18,518,129 | 175,743 | 1,216 | (78,236 | ) | (2,250,022 | ) | (309,604 | ) | 1,161,038 | 17,218,264 | |||||||||||||||||||||
Vehicles | 31,341 | 8,027 | 189 | (742 | ) | (15,057 | ) | (559 | ) | 9,086 | 32,285 | |||||||||||||||||||||
Tools | 66,164 | 19,178 | 5,792 | (1,340 | ) | (28,537 | ) | (2,106 | ) | 11,600 | 70,751 | |||||||||||||||||||||
Furniture and fixtures | 136,287 | 34,618 | 252 | (1,630 | ) | (36,309 | ) | (1,808 | ) | (1,278 | ) | 130,132 | ||||||||||||||||||||
Lease assets(*4) | 137,564 | 72,640 | 490 | (8,401 | ) | (130,905 | ) | — | 703,194 | 774,582 | ||||||||||||||||||||||
Bearer plants | 80,771 | — | — | — | (5,916 | ) | — | 49,338 | 124,193 | |||||||||||||||||||||||
Construction-in-progress | 1,179,639 | 2,261,663 | 17,697 | (24,840 | ) | — | (10,150 | ) | (1,494,262 | ) | 1,929,747 | |||||||||||||||||||||
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2,667,901 | 48,474 | (131,043 | ) | (3,009,469 | ) | (441,480 | ) | 773,317 | 29,925,973 | |||||||||||||||||||||||
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(*1) | The Company estimated recoverable amount for individual assets related to CEM and Fe-Si factories, etc. that ceased operations due to the disposal plan and others using fair value less costs to sell based on the appraisal value or scrap value. The Company recognized impairment losses of |
(*2) | As of December 31, 2019, POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (formerly, POSCO SS VINA JOINT STOCK COMPANY), a subsidiary, performed the impairment test due to the consecutive operating losses and recognized impairment losses amounting to |
(*3) | 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. |
(*4) | On the date of initial application of K-IFRS No.1116 (January 1, 2019), recognition of |
(b) | Information on lease agreements for which the Company is a lessee is as follows: |
1) | Right-of-use assets |
① | Changes in the carrying amount of right of use assets presented as investment property and property, plant and equipment for the nine-month period ended September 30, 2020 were as follows: |
(in millions of Won) | Beginning | Acquisitions | Depreciation | Others | Ending | |||||||||||||||
Land | 18,388 | (13,891 | ) | 12,542 | 358,806 | |||||||||||||||
Buildings and structures | 171,112 | 41,117 | (31,249 | ) | (19,933 | ) | 161,047 | |||||||||||||
Machinery and equipment | 215,828 | 20,185 | (46,248 | ) | 5,948 | 195,713 | ||||||||||||||
Vehicles | 14,105 | 4,708 | (7,694 | ) | 1,568 | 12,687 | ||||||||||||||
Ships | 24,082 | 111,537 | (20,739 | ) | — | 114,880 | ||||||||||||||
Others | 8,113 | 40,194 | (26,381 | ) | 38,244 | 60,170 | ||||||||||||||
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236,129 | (146,202 | ) | 38,369 | 903,303 | ||||||||||||||||
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25
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
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, 2019 were as follows: |
(in millions of Won) | The date of initial application (January 1, 2019) | Acquisitions | Depreciation | Others | Ending | |||||||||||||||
Land | 22,850 | (11,461 | ) | (9,729 | ) | 341,767 | ||||||||||||||
Buildings and structures | 209,455 | 23,015 | (38,853 | ) | (22,505 | ) | 171,112 | |||||||||||||
Machinery and equipment | 219,877 | 14,610 | (33,751 | ) | 15,092 | 215,828 | ||||||||||||||
Vehicles | 20,555 | 8,735 | (10,050 | ) | (5,135 | ) | 14,105 | |||||||||||||
Ships | 26,499 | — | (2,417 | ) | — | 24,082 | ||||||||||||||
Others | 25,529 | 3,430 | (34,373 | ) | 13,527 | 8,113 | ||||||||||||||
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72,640 | (130,905 | ) | (8,750 | ) | 775,007 | |||||||||||||||
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2) | The amounts recognized in profit or loss related to leases for the three-month and nine-month periods ended, September 30, 2020 and 2019 were as follows: |
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest on lease liabilities | 7,682 | 27,550 | 25,653 | |||||||||||||
Expenses relating to short-term leases | 2,672 | 16,156 | 11,522 | 30,369 | ||||||||||||
Expenses relating to leases of low-value assets | 2,035 | 4,288 | 9,959 | 10,960 | ||||||||||||
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28,126 | 49,031 | 66,982 | ||||||||||||||
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13. Goodwill and Other Intangible Assets, Net
Changes in the carrying amount of goodwill and other intangible assets for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows:
(a) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Beginning | Acquisitions | Disposals | Amortization | Impairment loss | Others(*2) | Ending | |||||||||||||||||||||
Goodwill | — | — | — | (761 | ) | (2,241 | ) | 1,094,807 | ||||||||||||||||||||
Intellectual property rights | 2,279,210 | 109,178 | (1,360 | ) | (208,709 | ) | — | 22,662 | 2,200,981 | |||||||||||||||||||
Membership(*1) | 148,078 | 449 | (8,653 | ) | (136 | ) | 488 | (84 | ) | 140,142 | ||||||||||||||||||
Development expense | 94,339 | 485 | — | (34,076 | ) | — | 12,791 | 73,539 | ||||||||||||||||||||
Port facilities usage rights | 281,398 | — | — | (33,790 | ) | — | 56 | 247,664 | ||||||||||||||||||||
Exploratation and evaluation assets | 77,271 | 9,445 | — | — | — | (31,969 | ) | 54,747 | ||||||||||||||||||||
Customer relationships | 374,875 | — | — | (33,359 | ) | — | (100 | ) | 341,416 | |||||||||||||||||||
Other intangible assets | 555,493 | 137,068 | (61,432 | ) | (26,554 | ) | — | (35,215 | ) | 569,360 | ||||||||||||||||||
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256,625 | (71,445 | ) | (336,624 | ) | (273 | ) | (34,100 | ) | 4,722,656 | |||||||||||||||||||
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(*1) | Economic useful life of membership is indefinite. |
(*2) | Represents assets transferred from construction-in-progress to intangible assets and assets transferred from property, plant and equipment, adjustments of foreign currency translation difference and others. |
26
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | For the year ended December 31, 2019 |
(in millions of Won) | Beginning | Acquisitions | Business Combination | Disposals | Amortization | Impairment loss(*2) | Others(*3) | Ending | ||||||||||||||||||||||||
Goodwill | — | 26,256 | — | — | (55,445 | ) | 1,849 | 1,097,809 | ||||||||||||||||||||||||
Intellectual property rights | 2,399,525 | 127,479 | — | (6,566 | ) | (271,694 | ) | (2 | ) | 30,468 | 2,279,210 | |||||||||||||||||||||
Membership(*1) | 134,793 | 15,636 | — | (3,326 | ) | (181 | ) | 24 | 1,132 | 148,078 | ||||||||||||||||||||||
Development expense | 99,163 | 4,484 | — | (35 | ) | (44,418 | ) | (666 | ) | 35,811 | 94,339 | |||||||||||||||||||||
Port facilities usage rights | 305,081 | — | — | (4,674 | ) | (22,923 | ) | — | 3,914 | 281,398 | ||||||||||||||||||||||
Exploratation and evaluation assets | 192,130 | 9,642 | — | — | — | (123,888 | ) | (613 | ) | 77,271 | ||||||||||||||||||||||
Customer relationships | 421,773 | — | — | — | (51,768 | ) | — | 4,870 | 374,875 | |||||||||||||||||||||||
Other intangible assets | 493,211 | 141,578 | 74 | (10,718 | ) | (40,263 | ) | (10,111 | ) | (18,278 | ) | 555,493 | ||||||||||||||||||||
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298,819 | 26,330 | (25,319 | ) | (431,247 | ) | (190,088 | ) | 59,153 | 4,908,473 | |||||||||||||||||||||||
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(*1) | Economic useful life of membership is indefinite. |
(*2) | In connection with exploration and evaluation of the AD-7 block in Myanmar, POSCO INTERNATIONAL Corporation failed to find economic gas. The Company recognized impairment loss of |
(*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 September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Advance payments | 453,538 | |||||||
Prepaid expenses | 291,910 | 145,834 | ||||||
Firm commitment assets | 8,318 | 17,490 | ||||||
Others | 33,571 | 14,315 | ||||||
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| |||||
631,177 | ||||||||
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| |||||
Non-current | ||||||||
Long-term advance payments | 21,950 | |||||||
Long-term prepaid expenses | 82,173 | 41,256 | ||||||
Others(*1) | 163,733 | 262,035 | ||||||
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| |||||
325,241 | ||||||||
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(*1) | As of September 30, 2020 and December 31, 2019, the Company recognized tax assets amounting to |
27
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
15. Borrowings
(a) | Short-term borrowings and current portion of long-term borrowings as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | Lenders | Interest rate (%) | September 30, 2020 | December 31, 2019 | ||||||||||
Short-term borrowings | ||||||||||||||
Bank overdrafts | JP Morgan and others | 0.20 ~ 8.35 | 159,075 | |||||||||||
Short-term borrowings | HSBC and others | 0.17 ~ 12.50 | 6,219,844 | 5,327,258 | ||||||||||
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| |||||||||||
6,398,986 | 5,486,333 | |||||||||||||
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| |||||||||||
Current portion of long-term liabilities | ||||||||||||||
Current portion of long-term borrowings | Export-Import Bank of Korea and others | 0.40 ~ 6.60 | 1,410,540 | 1,491,934 | ||||||||||
Current portion of debentures | The Goldman Sachs Group, Inc. and others | 0.75 ~ 5.25 | 2,752,900 | 1,571,194 | ||||||||||
Less: Current portion of discount on debentures issued | (1,468 | ) | (1,249 | ) | ||||||||||
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| |||||||||||
4,161,972 | 3,061,879 | |||||||||||||
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| |||||||||||
8,548,212 | ||||||||||||||
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|
(b) | Long-term borrowings, excluding current portion as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | Lenders | Interest rate (%) | September 30, 2020 | December 31, 2019 | ||||||||||
Long-term borrowings | Export-Import Bank of Korea and others | 0.19 ~ 8.50 | 3,827,152 | |||||||||||
Less: Present value discount | (17,541 | ) | (24,374 | ) | ||||||||||
Bonds | KB SECURITIES CO., LTD. and others | 0.50 ~ 4.30 | 9,478,235 | 8,124,194 | ||||||||||
Less: Discount on debentures issued | (42,019 | ) | (33,571 | ) | ||||||||||
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| |||||||||||
11,893,401 | ||||||||||||||
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(c) | Assets pledged as collateral in regards to the borrowings as of September 30, 2020 are as follows: |
(in millions of Won) | Lenders | Book value | Pledged amount | |||||||
Cash and cash equivalents | Shinhan Bank and others | 23,189 | ||||||||
Property, plant and equipment and Investment property | Korea Development Bank and others | 4,709,725 | 5,253,011 | |||||||
Trade accounts and notes receivable | Korea Development Bank and others | 224,229 | 222,918 | |||||||
Inventories | Export-Import Bank of Korea and others | 101,563 | 12,650 | |||||||
Financial instruments | KOOKMIN BANK and others | 48,475 | 47,275 | |||||||
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5,559,043 | ||||||||||
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28
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
16. Other Payables
Other payables as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Accounts payable | 832,845 | |||||||
Accrued expenses | 671,235 | 742,370 | ||||||
Dividend payable | 3,432 | 3,106 | ||||||
Lease liabilities | 265,892 | 149,176 | ||||||
Withholdings | 111,270 | 152,011 | ||||||
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| |||||
1,879,508 | ||||||||
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| |||||
Non-current | ||||||||
Accounts payable | 2,718 | |||||||
Accrued expenses | 3,892 | 4,805 | ||||||
Lease liabilities | 515,750 | 526,294 | ||||||
Long-term withholdings | 53,531 | 51,312 | ||||||
|
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| |||||
585,129 | ||||||||
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|
17. Other Financial Liabilities
Other financial liabilities as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Derivative liabilities | 28,021 | |||||||
Financial guarantee liabilities | 52,476 | 49,806 | ||||||
|
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| |||||
77,827 | ||||||||
|
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| |||||
Non-current | ||||||||
Derivative liabilities | 17,033 | |||||||
Financial guarantee liabilities | 5,027 | 14,461 | ||||||
|
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| |||||
31,494 | ||||||||
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29
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
18. Provisions
(a) | Provisions as of September 30, 2020 and December 31, 2019 are as follows: |
September 30, 2020 | December 31, 2019 | |||||||||||||||
(in millions of Won) | Current | Non-current | Current | Non-current | ||||||||||||
Provision for bonus payments | 41,267 | 76,432 | 47,237 | |||||||||||||
Provision for construction warranties | 6,875 | 185,949 | 7,655 | 162,773 | ||||||||||||
Provision for legal contingencies and claims(*1) | 4,763 | 60,627 | 6,996 | 77,488 | ||||||||||||
Provision for the restoration(*2) | 5,174 | 89,093 | 6,783 | 80,520 | ||||||||||||
Others(*3,*4) | 251,976 | 55,290 | 262,629 | 90,136 | ||||||||||||
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432,226 | 360,495 | 458,154 | ||||||||||||||
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(*1) | The Company recognized probable outflow of resources amounting to |
(*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, |
(*3) | As of September 30, 2020 and December 31, 2019, POSCO ENERGY CO., LTD., and Korea Fuel Cell recognized |
(*4) | As of September 30, 2020, the Company has recognized emission liabilities of |
30
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | Changes in provisions for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
1) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Beginning | Increase | Utilization | Reversal | Others(*1) | Ending | ||||||||||||||||||
Provision for bonus payments | 66,658 | (95,124 | ) | (3,889 | ) | 7,051 | 98,365 | |||||||||||||||||
Provision for construction warranties | 170,428 | 41,286 | (14,232 | ) | (4,066 | ) | (592 | ) | 192,824 | |||||||||||||||
Provision for legal contingencies and claims | 84,484 | 2,405 | (16,116 | ) | (6,229 | ) | 846 | 65,390 | ||||||||||||||||
Provision for the restoration | 87,303 | 15,777 | (4,901 | ) | (15,837 | ) | 11,925 | 94,267 | ||||||||||||||||
Others | 352,765 | 169,572 | (106,497 | ) | (88,888 | ) | (19,686 | ) | 307,266 | |||||||||||||||
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295,698 | (236,870 | ) | (118,909 | ) | (456 | ) | 758,112 | |||||||||||||||||
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(*1) | Includes adjustments of foreign currency translation differences and others. |
2) | For the year ended December 31, 2019 |
(in millions of Won) | Beginning | Increase | Utilization | Reversal | Others(*1) | Ending | ||||||||||||||||||
Provision for bonus payments | 122,714 | (86,084 | ) | (3,077 | ) | 16,638 | 123,669 | |||||||||||||||||
Provision for construction warranties | 142,233 | 53,203 | (22,858 | ) | (3,444 | ) | 1,294 | 170,428 | ||||||||||||||||
Provision for legal contingencies and claims | 111,150 | 26,407 | (37,087 | ) | (18,098 | ) | 2,112 | 84,484 | ||||||||||||||||
Provision for the restoration | 89,168 | 23,559 | (13,411 | ) | (14,379 | ) | 2,366 | 87,303 | ||||||||||||||||
Others | 316,287 | 95,747 | (38,260 | ) | (86,458 | ) | 65,449 | 352,765 | ||||||||||||||||
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| |||||||||||||
321,630 | (197,700 | ) | (125,456 | ) | 87,859 | 818,649 | ||||||||||||||||||
|
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|
|
|
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|
|
(*1) | Includes adjustments of foreign currency translation differences and others. |
31
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
19. | Employee Benefits |
(a) | Defined contribution plans |
The expenses related to post-employment benefit plans under defined contribution plans for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Expense related to post-employment benefit plans under defined contribution plans | 11,469 | 35,729 | 35,527 |
(b) | Defined benefit plan |
1) | The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Present value of funded obligations | 2,416,203 | |||||||
Fair value of plan assets(*1) | (2,215,797 | ) | (2,255,149 | ) | ||||
Present value of non-funded obligations | 17,226 | 15,677 | ||||||
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|
|
| |||||
Net defined benefit liabilities | 176,731 | |||||||
|
|
|
|
(*1) | As of September 30, 2020 and December 31, 2019, the Company recognized net defined benefit assets amounting to |
2) | Changes in present value of defined benefit obligations for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Defined benefit obligation at the beginning of period | 2,137,161 | |||||||
Current service costs | 181,204 | 236,735 | ||||||
Interest costs | 35,397 | 51,900 | ||||||
Remeasurements | 301 | 152,713 | ||||||
Benefits paid | (174,151 | ) | (152,275 | ) | ||||
Others | 490 | 5,646 | ||||||
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|
|
| |||||
Defined benefit obligation at the end of period | 2,431,880 | |||||||
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|
32
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
3) | Changes in fair value of plan assets for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Fair value of plan assets at the beginning of period | 1,997,717 | |||||||
Interest on plan assets | 22,152 | 48,210 | ||||||
Remeasurement of plan assets | 20 | (8,692 | ) | |||||
Contributions to plan assets | 88,297 | 342,915 | ||||||
Benefits paid | (136,625 | ) | (124,962 | ) | ||||
Others | 5,099 | (39 | ) | |||||
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|
|
| |||||
Fair value of plan assets at the end of period | 2,255,149 | |||||||
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|
4) | The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows: |
For the three-month periods | For the nine-month periods | |||||||||||||||
ended September 30 | ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Current service costs | 58,679 | 181,204 | 173,669 | |||||||||||||
Net interest costs | 733 | 168 | 2,211 | 2,403 | ||||||||||||
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| |||||||||
58,847 | 183,415 | 176,072 | ||||||||||||||
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33
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
20. | Other Liabilities |
Other liabilities as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Due to customers for contract work | 676,054 | |||||||
Advances received | 479,943 | 487,526 | ||||||
Unearned revenue | 63,114 | 61,795 | ||||||
Withholdings | 397,753 | 388,486 | ||||||
Firm commitment liabilities | 21,752 | 15,637 | ||||||
Others | 7,584 | 8,604 | ||||||
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| |||||
1,638,102 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Unearned revenue | 27,161 | |||||||
Others | 22,782 | 52,349 | ||||||
|
|
|
| |||||
79,510 | ||||||||
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|
34
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
21. | Financial Instruments |
(a) | Classification and fair value of financial instruments |
1) | The carrying amount and fair values of financial assets and financial liabilities by fair value hierarchy as of September 30, 2020 and December 31, 2019 are as follows: |
● | September 30, 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 | — | 232,877 | — | 232,877 | ||||||||||||||||
Short-term financial instruments | 8,906,797 | — | 8,906,797 | — | 8,906,797 | |||||||||||||||
Debt securities | 13,663 | — | — | 13,663 | 13,663 | |||||||||||||||
Other securities | 360,899 | 4,355 | 680 | 355,864 | 360,899 | |||||||||||||||
Other receivables | 2,000 | — | — | 2,000 | 2,000 | |||||||||||||||
Derivative hedging instruments(*2) | 21,329 | — | 21,329 | — | 21,329 | |||||||||||||||
Fair value through other comprehensive income | ||||||||||||||||||||
Equity securities | 1,030,599 | 548,709 | — | 481,890 | 1,030,599 | |||||||||||||||
Debt securities | 4,864 | — | — | 4,864 | 4,864 | |||||||||||||||
Financial assets measured at amortized cost(*1) | ||||||||||||||||||||
Cash and cash equivalents | 6,769,118 | — | — | — | — | |||||||||||||||
Trade accounts and notes receivable | 7,985,303 | — | — | — | — | |||||||||||||||
Other receivables | 2,340,278 | — | — | — | — | |||||||||||||||
Debt securities | 151,147 | — | — | — | — | |||||||||||||||
Deposit instruments | 2,080,723 | — | — | — | — | |||||||||||||||
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|
|
| |||||||||||
553,064 | 9,161,683 | 858,281 | 10,573,028 | |||||||||||||||||
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|
|
|
|
|
| |||||||||||
Financial liabilities | ||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||
Derivative liabilities | — | 49,382 | — | 49,382 | ||||||||||||||||
Derivative hedging instruments(*2) | 11,116 | — | 11,116 | — | 11,116 | |||||||||||||||
Financial liabilities measured at amortized cost(*1) | ||||||||||||||||||||
Trade accounts and notes payable | 3,296,066 | — | — | — | — | |||||||||||||||
Borrowings | 23,581,998 | — | 23,937,695 | — | 23,937,695 | |||||||||||||||
Financial guarantee liabilities | 57,503 | — | — | — | — | |||||||||||||||
Others | 2,192,610 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
— | 23,998,193 | — | 23,998,193 | |||||||||||||||||
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|
|
|
|
|
|
(*1) | Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their carrying amounts. |
(*2) | The Company applies hedge accounting which uses forward contracts as hedging instruments 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 instruments in order to hedge the risk of changes in foreign currency which influences cash flow from borrowings. |
35
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
● | December 31, 2019 |
Fair value | ||||||||||||||||||||
(in millions of Won) | Book value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial assets | ||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||
Derivative assets | — | 106,104 | — | 106,104 | ||||||||||||||||
Short-term financial instruments | 6,861,242 | — | 6,861,242 | — | 6,861,242 | |||||||||||||||
Debt securities | 28,087 | — | — | 28,087 | 28,087 | |||||||||||||||
Other securities | 340,008 | 1,222 | 3,330 | 335,456 | 340,008 | |||||||||||||||
Other receivables | 2,000 | — | — | 2,000 | 2,000 | |||||||||||||||
Derivative hedging instruments | 6,174 | — | 6,174 | — | 6,174 | |||||||||||||||
Fair value through other comprehensive income | ||||||||||||||||||||
Equity securities | 1,204,902 | 782,108 | 73 | 422,721 | 1,204,902 | |||||||||||||||
Debt securities | 5,686 | — | — | 5,686 | 5,686 | |||||||||||||||
Financial assets measured at amortized cost(*1) | ||||||||||||||||||||
Cash and cash equivalents | 3,514,872 | — | — | — | — | |||||||||||||||
Trade accounts and notes receivable | 8,214,459 | — | — | — | — | |||||||||||||||
Other receivables | 2,193,700 | — | — | — | — | |||||||||||||||
Debt securities | 334,153 | — | — | — | — | |||||||||||||||
Deposit instruments | 1,779,082 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
783,330 | 6,976,923 | 793,950 | 8,554,203 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Financial liabilities | ||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||
Derivative liabilities | — | 32,193 | — | 32,193 | ||||||||||||||||
Derivative hedging instruments | 12,861 | — | 12,861 | — | 12,861 | |||||||||||||||
Financial liabilities measured at amortized cost(*1) | ||||||||||||||||||||
Trade accounts and notes payable | 3,442,989 | — | — | — | — | |||||||||||||||
Borrowings | 20,441,613 | — | 20,666,476 | — | 20,666,476 | |||||||||||||||
Financial guarantee liabilities | 64,267 | — | — | — | — | |||||||||||||||
Others | 2,401,382 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
— | 20,711,530 | — | 20,711,530 | |||||||||||||||||
|
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|
|
|
|
|
|
|
|
(*1) | Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their carrying amounts. |
36
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | Finance income and costs by category of financial instrument for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
● | For the nine-month period ended September 30, 2020 |
Finance income and costs | ||||||||||||||||||||||||||||
(in millions of Won) | Interest income (expense) | Gain and loss on valuation | Gain and loss on foreign currency | Gain and loss on disposal | Others | Total | Other comprehensive loss | |||||||||||||||||||||
Financial assets at fair value through profit or loss | 33,765 | — | 10,591 | 985 | 172,905 | — | ||||||||||||||||||||||
Derivatives assets | — | 185,405 | — | 195,304 | — | 380,709 | — | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | — | — | — | — | 31,075 | 31,075 | (154,471 | ) | ||||||||||||||||||||
Financial assets measured at amortized cost | 168,721 | — | 229,538 | (12,309 | ) | (203 | ) | 385,747 | — | |||||||||||||||||||
Derivatives liabilities | — | (29,170 | ) | — | (255,418 | ) | — | (284,588 | ) | (730 | ) | |||||||||||||||||
Financial liabilities measured at amortized cost | (505,797 | ) | — | (265,300 | ) | — | (5,752 | ) | (776,849 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
190,000 | (35,762 | ) | (61,832 | ) | 26,105 | (91,001 | ) | (155,201 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● | For the nine-month period ended September 30, 2019 |
Finance income and costs | ||||||||||||||||||||||||||||
(in millions of Won) | Interest income (expense) | Gain and loss on valuation | Gain and loss on foreign currency | Gain and loss on disposal | Others | Total | Other comprehensive loss | |||||||||||||||||||||
Financial assets at fair value through profit or loss | (8,395 | ) | — | 9,931 | 630 | 108,059 | — | |||||||||||||||||||||
Derivatives assets | — | 203,729 | — | 143,072 | — | 346,801 | — | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | — | — | — | — | 66,041 | 66,041 | (63,708 | ) | ||||||||||||||||||||
Financial assets measured at amortized cost | 122,398 | — | 528,105 | (29,504 | ) | (309 | ) | 620,690 | — | |||||||||||||||||||
Derivatives liabilities | — | (24,038 | ) | — | (180,061 | ) | — | (204,099 | ) | (81 | ) | |||||||||||||||||
Financial liabilities measured at amortized cost | (571,024 | ) | — | (569,715 | ) | (2,431 | ) | (17,175 | ) | (1,160,345 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
171,296 | (41,610 | ) | (58,993 | ) | 49,187 | (222,853 | ) | (63,789 | ) | |||||||||||||||||||
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37
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
3) | Finance income and costs by category of financial instrument for the three-month periods ended September 30, 2020 and 2019 were as follows: |
● | For the three-month period ended September 30, 2020 |
Finance income and costs | ||||||||||||||||||||||||||||
(in millions of Won) | Interest income (expense) | Gain and loss on valuation | Gain and loss on foreign currency | Gain and loss on disposal | Others | Total | Other comprehensive loss | |||||||||||||||||||||
Financial assets at fair value through profit or loss | 25,961 | — | 7,737 | (13 | ) | 79,246 | — | |||||||||||||||||||||
Derivatives assets | — | (79,082 | ) | — | 57,127 | — | (21,955 | ) | — | |||||||||||||||||||
Financial assets at fair value through other comprehensive income | — | — | — | — | 5,507 | 5,507 | 11,495 | |||||||||||||||||||||
Financial assets measured at amortized cost | 46,722 | — | (67,335 | ) | (2,689 | ) | (43 | ) | (23,345 | ) | — | |||||||||||||||||
Derivatives liabilities | — | 9,899 | — | (78,551 | ) | — | (68,652 | ) | 111 | |||||||||||||||||||
Financial liabilities measured at amortized cost | (158,998 | ) | — | 150,310 | — | (5,882 | ) | (14,570 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(43,222 | ) | 82,975 | (16,376 | ) | (431 | ) | (43,769 | ) | 11,606 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● | For the three-month period ended September 30, 2019 |
Finance income and costs | ||||||||||||||||||||||||||||
(in millions of Won) | 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 | (7,023 | ) | — | 3,507 | — | 34,280 | — | |||||||||||||||||||||
Derivatives assets | — | 95,751 | — | 60,483 | — | 156,234 | — | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | — | — | — | — | 15,293 | 15,293 | (81,552 | ) | ||||||||||||||||||||
Financial assets measured at amortized cost | 36,518 | — | 242,400 | (10,264 | ) | (94 | ) | 268,560 | — | |||||||||||||||||||
Derivatives liabilities | — | (21,193 | ) | — | (69,027 | ) | — | (90,220 | ) | 19 | ||||||||||||||||||
Financial liabilities measured at amortized cost | (179,820 | ) | — | (285,364 | ) | — | (8,167 | ) | (473,351 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
67,535 | (42,964 | ) | (15,301 | ) | 7,032 | (89,204 | ) | (81,533 | ) | |||||||||||||||||||
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|
(b) | Financial risk management |
The Company is exposed to credit risk, liquidity risk and market risk arising from financial assets and liabilities. The Company’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as of and for the year ended December 31, 2019.
38
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
22. | Share Capital and Capital Surplus |
(a) | Share capital as of September 30, 2020 and December 31, 2019 are as follows: |
(Share, in Won) | September 30, 2020 | December 31, 2019 | ||||||
Authorized shares | 200,000,000 | 200,000,000 | ||||||
Par value | 5,000 | |||||||
Issued shares(*1) | 87,186,835 | 87,186,835 | ||||||
Shared capital(*2) | 482,403,125,000 |
(*1) | As of September 30, 2020, total number of ADRs of 26,190,824 outstanding in overseas stock market are equivalent to 6,547,706 of common stock. |
(*2) | As of September 30, 2020, the difference between the ending balance of common stock and the aggregate par value of issued common stock is |
(b) | Capital surplus as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Share premium | 463,825 | |||||||
Gain on disposal of treasury shares | 796,623 | 796,623 | ||||||
Other capital surplus | 55,916 | 115,803 | ||||||
|
|
|
| |||||
1,376,251 | ||||||||
|
|
|
|
(c) | On February 25, 2017, POSCO ENERGY CO., LTD., a subsidiary of the Company, issued redeemable convertible preferred shares amounting to |
39
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
23. | Hybrid Bonds |
(a) | Hybrid bonds classified as equity as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | Date of issue | Date of maturity | Interest rate (%) | September 30, 2020 | December 31, 2019 | |||||||||||||||
Hybrid bond 1-2(*1) | 2013-06-13 | 2043-06-13 | 4.60 | 200,000 | ||||||||||||||||
Issuance cost | (616 | ) | (616 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
199,384 | ||||||||||||||||||||
|
|
|
|
(*1) | Details of hybrid bonds issued by the Company as of September 30, 2020 are as follows: |
Hybrid bond 1-2 | ||
Maturity | 30 years (The Company has a right to extend the maturity) | |
Interest rate | Issue date ~ 2023-06-12 : 4.60% Reset every 10 years as follows; · After 10 years: return on government bond (10 years) + 1.40% · After 10 years: additionally +0.25% according to Step-up clauses · After 30 years: additionally +0.75% | |
Interest payments condition | Quarterly (Optional deferral of interest payment is available to the Company) | |
Others | The Company can call the hybrid bond at 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 September 30, 2020 amounts toW454 million.
40
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | POSCO ENERGY CO., LTD., a subsidiary of the Company, issued hybrid bonds which are classified as non-controlling interests in the consolidated financial statements. Hybrid bonds as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | Date of issue | Date of maturity | Interest rate (%) | September 30, 2020 | December 31, 2019 | |||||||||||||||
Hybrid bond 1-4(*1) | 2013-08-29 | 2043-08-29 | 5.21 | 140,000 | ||||||||||||||||
Issuance cost | (429 | ) | (429 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
139,571 | ||||||||||||||||||||
|
|
|
|
(*1) | Details of hybrid bonds of POSCO ENERGY CO., LTD. as of September 30, 2020 are as follows: |
Hybrid bond 1-4 | ||
Maturity | 30 years (The issuer has a right to extend the maturity) | |
Interest rate | Issue date ~ 2023-08-29 : 5.21% Reset every 10 years as follows; · After 10 years: return on government bond (10 years) + 1.55% · After 10 years: additionally + 0.25% according 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 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 September 30, 2020 amounts toW659 million.
24. | Reserves |
Reserves as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Accumulated comprehensive loss of investments in associates and joint ventures | (676,416 | ) | ||||||
Changes in fair value of equity investments at fair value through other comprehensive income | (436,559 | ) | (285,073 | ) | ||||
Foreign currency translation differences | (166,748 | ) | (202,636 | ) | ||||
Gains or losses on valuation of derivatives | (1,127 | ) | (438 | ) | ||||
Others | 11,950 | 6,583 | ||||||
|
|
|
| |||||
(1,157,980 | ) | |||||||
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|
41
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
25. | Treasury Shares |
During the nine-month period ended September 30, 2020, the Company entered into a trust contract of acquiring treasury shares following approval of the Board of Directors. The amount committed to purchase treasury shares by this trust contract isW1,000 billion, and the contract period is from April 13, 2020 to April 12, 2021. The number of treasury shares acquired according to the contract is 1,739,881 during the nine-month period ended September 30, 2020.
As of September 30, 2020, the Company holds 8,811,075 treasury shares for share price stabilization and other purposes in accordance with the Board of Director’s resolution.
26. | Revenue |
(a) | Disaggregation of revenue |
1) | Details of revenue disaggregated by types of revenue and timing of revenue recognition for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
① | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Steel | Trading | Construction | Others | Total | |||||||||||||||
Types of revenue | ||||||||||||||||||||
Revenue from sales of goods | 14,108,407 | — | 611,217 | 35,264,636 | ||||||||||||||||
Revenue from services | 343,393 | 293,983 | 33,882 | 1,377,614 | 2,048,872 | |||||||||||||||
Revenue from construction contract | — | — | 4,878,088 | 20,467 | 4,898,555 | |||||||||||||||
Others | 26,812 | 118,301 | 5,143 | 166,266 | 316,522 | |||||||||||||||
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| |||||||||||
14,520,691 | 4,917,113 | 2,175,564 | 42,528,585 | |||||||||||||||||
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| |||||||||||
Timing of revenue recognition | ||||||||||||||||||||
Revenue recognized at a point in time | 14,226,708 | 120,754 | 777,483 | 35,696,769 | ||||||||||||||||
Revenue recognized over time | 343,393 | 293,983 | 4,796,359 | 1,398,081 | 6,831,816 | |||||||||||||||
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14,520,691 | 4,917,113 | 2,175,564 | 42,528,585 | |||||||||||||||||
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② | For the nine-month period ended September 30, 2019 |
(in millions of Won) | Steel | Trading | Construction | Others | Total | |||||||||||||||
Types of revenue | ||||||||||||||||||||
Revenue from sales of goods | 16,121,940 | — | 517,833 | 40,628,628 | ||||||||||||||||
Revenue from services | 451,076 | 288,736 | 37,055 | 1,718,722 | 2,495,589 | |||||||||||||||
Revenue from construction contract | — | — | 4,859,983 | 22,602 | 4,882,585 | |||||||||||||||
Others | 37,705 | 105,798 | 4,427 | 169,067 | 316,997 | |||||||||||||||
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16,516,474 | 4,901,465 | 2,428,224 | 48,323,799 | |||||||||||||||||
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| |||||||||||
Timing of revenue recognition | ||||||||||||||||||||
Revenue recognized at a point in time | 16,227,738 | 15,859 | 692,162 | 40,962,319 | ||||||||||||||||
Revenue recognized over time | 451,076 | 288,736 | 4,885,606 | 1,736,062 | 7,361,480 | |||||||||||||||
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16,516,474 | 4,901,465 | 2,428,224 | 48,323,799 | |||||||||||||||||
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POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended September 30, 2020 and 2019 were as follows: |
① | For the three-month period ended September 30, 2020 |
(in millions of Won) | Steel | Trading | Construction | Others | Total | |||||||||||||||
Types of revenue | ||||||||||||||||||||
Revenue from sales of goods | 4,370,071 | — | 243,250 | 11,930,378 | ||||||||||||||||
Revenue from services | 110,529 | 102,730 | 11,034 | 492,283 | 716,576 | |||||||||||||||
Revenue from construction contract | — | — | 1,509,453 | 6,260 | 1,515,713 | |||||||||||||||
Others | 8,213 | 31,269 | 1,124 | 57,945 | 98,551 | |||||||||||||||
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| |||||||||||
4,504,070 | 1,521,611 | 799,738 | 14,261,218 | |||||||||||||||||
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Timing of revenue recognition | ||||||||||||||||||||
Revenue recognized at a point in time | 4,401,340 | 16,216 | 301,194 | 12,044,020 | ||||||||||||||||
Revenue recognized over time | 110,529 | 102,730 | 1,505,395 | 498,544 | 2,217,198 | |||||||||||||||
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4,504,070 | 1,521,611 | 799,738 | 14,261,218 | |||||||||||||||||
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|
② | For the three-month period ended September 30, 2019 |
(in millions of Won) | Steel | Trading | Construction | Others | Total | |||||||||||||||
Types of revenue | ||||||||||||||||||||
Revenue from sales of goods | 5,184,949 | — | 176,097 | 13,429,940 | ||||||||||||||||
Revenue from services | 139,345 | 92,265 | 12,487 | 563,946 | 808,043 | |||||||||||||||
Revenue from construction contract | — | — | 1,637,441 | 5,505 | 1,642,946 | |||||||||||||||
Others | 14,767 | 36,896 | 975 | 54,660 | 107,298 | |||||||||||||||
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| |||||||||||
5,314,110 | 1,650,903 | 800,208 | 15,988,227 | |||||||||||||||||
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| |||||||||||
Timing of revenue recognition | ||||||||||||||||||||
Revenue recognized at a point in time | 5,221,845 | 10,131 | 230,756 | 13,546,393 | ||||||||||||||||
Revenue recognized over time | 139,345 | 92,265 | 1,640,772 | 569,452 | 2,441,834 | |||||||||||||||
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| |||||||||||
5,314,110 | 1,650,903 | 800,208 | 15,988,227 | |||||||||||||||||
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(b) | Details of contract assets and liabilities from contracts with customers as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Receivables | ||||||||
Account receivables | 8,214,459 | |||||||
Contract assets | ||||||||
Due from customers for contract work | 1,013,730 | 1,062,677 | ||||||
Contract liabilities | ||||||||
Advances received | 484,027 | 489,658 | ||||||
Due to customers for contract work | 1,020,373 | 676,054 | ||||||
Unearned revenue | 81,325 | 88,733 |
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POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
27. | Revenue – Contract Balances |
(a) | Details of ongoing contracts as of September 30, 2020 and December 31, 2019 are as follows: |
September 30, 2020 | December 31, 2019 | |||||||||||||||
(in millions of Won) | Construction segment | Others | Construction segment | Others | ||||||||||||
Accumulated cost | 247,797 | 29,106,218 | 249,751 | |||||||||||||
Accumulated contract profit | 2,885,866 | 50,467 | 2,863,207 | 47,107 | ||||||||||||
Accumulated contract loss | (1,209,350 | ) | (1,987 | ) | (1,182,989 | ) | (2,211 | ) | ||||||||
Accumulated contract revenue | 31,403,373 | 296,277 | 30,786,436 | 294,647 |
(b) | Details of due from customers for contract work and due to customers for contract work as of September 30, 2020 and December 31, 2019 are as follows: |
September 30, 2020 | December 31, 2019 | |||||||||||||||
(in millions of Won) | Construction segment | Others | Construction segment | Others | ||||||||||||
Due from customers for contract work | 45,116 | 1,087,119 | 49,317 | |||||||||||||
Due to customers for contract work | (997,738 | ) | (22,635 | ) | (639,130 | ) | (36,924 | ) | ||||||||
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|
|
|
|
|
| |||||||||
22,481 | 447,989 | 12,393 | ||||||||||||||
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|
|
|
|
|
|
(c) | Details of the provisions of construction loss as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Construction segment | 35,526 | |||||||
Others | 388 | 406 | ||||||
|
|
|
| |||||
35,932 | ||||||||
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Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(d) | Due to the factors causing the variation of costs for the nine-month period ended September 30, 2020, the estimated total contract costs have changed. Details of changes in estimated total contract costs and the impact on profit before income taxes for the nine-month period ended September 30, 2020 and future periods are as follows: |
Changes in estimated | Changes in profit (loss) of contract | |||||||||||||||
(in millions of Won) | total contract costs | Net income | Future income | Total | ||||||||||||
Construction segment | 61,433 | 169,756 | 231,189 | |||||||||||||
Others | 13,570 | 4,098 | 583 | 4,681 | ||||||||||||
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| |||||||||
65,531 | 170,339 | 235,870 | ||||||||||||||
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|
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 September 30, 2020. The estimation is evaluated for the total contract costs and expected total contract revenue as of the end of the period, which is subject to change in future periods.
(e) | Uncertainty of estimates |
1) | Total contract revenues |
Total contract revenues are measured based on contractual amount initially agreed. However, the contract revenues can increase due to additional contract work, claims and incentive payments, or decrease due to penalty when the completion of contract is delayed due to the Company’s fault. Therefore, this measurement of contract revenues is affected by the uncertainty of the occurrence of future events.
2) | Total contract costs |
Contract revenues are recognized based on the percentage of completion, which is measured on the basis of the gross cost amount incurred to date. Total contract costs are estimated based on estimates of future material costs, labor costs, outsourcing cost and others. There is uncertainty in estimates on future contract costs due to various internal and external factors such as fluctuation of market, the risk of business partner and the experience of project performance and others. The significant assumptions including uncertainty of the estimate of total contract costs are as follows:
Method of significant assumption | ||
Material cost | Assumption based on recent purchasing price and quoted market price | |
Labor cost | Assumption based on standard monthly and daily labor cost | |
Outsourcing cost | Assumption based on the past experience rate of similar project and market price |
Management reviews the assumptions used in estimated contract costs at each reporting period end and adjusts them, if necessary.
45
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
28. | Selling and Administrative Expenses |
(a) | Other administrative expenses |
Other administrative expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Wages and salaries | 210,590 | 621,394 | 616,453 | |||||||||||||
Expenses related to post-employment benefits | 18,197 | 24,774 | 60,078 | 64,844 | ||||||||||||
Other employee benefits | 43,253 | 42,701 | 129,004 | 131,822 | ||||||||||||
Travel | 3,719 | 10,250 | 13,609 | 31,431 | ||||||||||||
Depreciation | 36,393 | 33,761 | 109,250 | 99,381 | ||||||||||||
Amortization | 26,113 | 28,110 | 80,746 | 84,912 | ||||||||||||
Communication | 2,305 | 2,517 | 7,106 | 7,546 | ||||||||||||
Electricity | 2,055 | 2,480 | 6,085 | 6,511 | ||||||||||||
Taxes and public dues | 11,311 | 15,574 | 43,386 | 47,430 | ||||||||||||
Rental | 6,733 | 9,420 | 22,998 | 30,097 | ||||||||||||
Repairs | 2,463 | 3,107 | 5,701 | 9,731 | ||||||||||||
Entertainment | 1,911 | 2,738 | 5,456 | 8,379 | ||||||||||||
Advertising | 16,842 | 21,276 | 51,495 | 63,241 | ||||||||||||
Research & development | 29,083 | 26,839 | 78,354 | 83,521 | ||||||||||||
Service fees | 36,957 | 37,417 | 113,732 | 125,005 | ||||||||||||
Vehicles maintenance | 1,179 | 1,685 | 3,678 | 5,932 | ||||||||||||
Industry association fee | 1,502 | 1,738 | 7,541 | 7,155 | ||||||||||||
Conference | 2,922 | 3,462 | 8,247 | 11,272 | ||||||||||||
Increase to provisions | 1,728 | 2,126 | 3,610 | 4,608 | ||||||||||||
Others | 10,717 | 10,205 | 28,394 | 34,118 | ||||||||||||
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|
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| |||||||||
490,770 | 1,399,864 | 1,473,389 | ||||||||||||||
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|
|
(b) | Selling expenses |
Selling expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Freight and custody | 42,775 | 135,537 | 130,312 | |||||||||||||
Operating expenses for distribution center | 1,589 | 2,201 | 5,276 | 7,452 | ||||||||||||
Sales commissions | 13,795 | 18,565 | 81,714 | 57,164 | ||||||||||||
Sales advertising | 64 | 341 | 634 | 945 | ||||||||||||
Sales promotion | 1,897 | 2,202 | 5,133 | 7,217 | ||||||||||||
Sample | 318 | 503 | 1,190 | 1,631 | ||||||||||||
Sales insurance premium | 6,735 | 8,208 | 22,364 | 24,133 | ||||||||||||
Contract cost | 11,420 | 8,605 | 27,170 | 24,684 | ||||||||||||
Others | 4,482 | 4,624 | 13,043 | 15,949 | ||||||||||||
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|
|
|
|
|
|
| |||||||||
88,024 | 292,061 | 269,487 | ||||||||||||||
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46
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
29. | Finance Income and Costs |
Details of finance income and costs for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Finance Income | ||||||||||||||||
Interest income(*1) | 74,314 | 296,285 | 228,291 | |||||||||||||
Dividend income | 5,494 | 15,293 | 32,060 | 66,671 | ||||||||||||
Gain on foreign currency transactions | 174,109 | 258,433 | 810,396 | 638,199 | ||||||||||||
Gain on foreign currency translations | 35,923 | 77,820 | 255,900 | 277,437 | ||||||||||||
Gain on derivatives transactions | 67,552 | 63,843 | 212,192 | 148,443 | ||||||||||||
Gain on valuations of derivatives | (72,513 | ) | 97,054 | 208,687 | 243,923 | |||||||||||
Others | 38,583 | 15,960 | 56,004 | 26,630 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
602,717 | 1,871,524 | 1,629,594 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Finance costs | ||||||||||||||||
Interest expenses | 179,820 | 505,797 | 571,024 | |||||||||||||
Loss on foreign currency transactions | 206,255 | 219,368 | 691,009 | 534,666 | ||||||||||||
Loss on foreign currency translations | (79,198 | ) | 159,849 | 411,049 | 422,580 | |||||||||||
Loss on derivatives transactions | 88,976 | 72,387 | 272,306 | 185,432 | ||||||||||||
Loss on valuation of derivatives | (3,330 | ) | 22,496 | 52,452 | 64,232 | |||||||||||
Loss on disposal of trade accounts and notes receivable | 2,689 | 10,264 | 12,345 | 29,504 | ||||||||||||
Others | 10,809 | 27,738 | 17,567 | 45,009 | ||||||||||||
|
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|
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| |||||||||
691,922 | 1,962,525 | 1,852,447 | ||||||||||||||
|
|
|
|
|
|
|
|
(*1) | Interest income calculated using the effective interest method for the nine-month periods ended September 30, 2020 and 2019 were |
47
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
30. | Other Non-Operating Income and Expenses |
Details of other non-operating income and expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Other non-operating income | ||||||||||||||||
Gain on disposals of assets held for sale | — | 299 | 8,536 | |||||||||||||
Gain on disposals of investments in subsidiaries, associates and joint ventures | 2,082 | 4,929 | 43,421 | 20,750 | ||||||||||||
Gain on disposals of property, plant and equipment | 2,196 | 5,567 | 9,542 | 21,929 | ||||||||||||
Gain on valuation of firm commitment | 17,396 | 22,952 | 55,062 | 51,920 | ||||||||||||
Gain on valuation of emission rights | — | — | — | 25,440 | ||||||||||||
Gain on disposals of emission rights | 285 | 11,141 | 24,851 | 11,141 | ||||||||||||
Reversal of other provisions | 2,735 | 29,120 | 3,574 | 35,291 | ||||||||||||
Others | 41,574 | 41,204 | 96,423 | 97,274 | ||||||||||||
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|
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|
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| |||||||||
114,913 | 233,172 | 272,281 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other non-operating expenses | ||||||||||||||||
Impairment loss on assets held for sale | 37,597 | 5,030 | 40,943 | |||||||||||||
Loss on disposals of investments in subsidiaries, associates and joint ventures | 3,586 | 281 | 13,659 | 5,867 | ||||||||||||
Loss on disposals of property, plant and equipment | 26,451 | 23,826 | 105,440 | 61,222 | ||||||||||||
Impairment losses on property, plant and equipment | 284 | 45,029 | 21,684 | 194,688 | ||||||||||||
Impairment losses on intangible assets | 41 | 124,525 | 1,225 | 125,696 | ||||||||||||
Loss on valuation of firm commitment | 21,154 | 11,704 | 57,229 | 30,276 | ||||||||||||
Idle tangible assets expenses | 4,181 | 8,192 | 14,866 | 26,619 | ||||||||||||
Increase to provisions | 6,452 | 5,801 | 7,676 | 13,172 | ||||||||||||
Donations | 8,137 | 12,935 | 24,845 | 24,129 | ||||||||||||
Others | 13,884 | 20,317 | 49,951 | 71,463 | ||||||||||||
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| |||||||||
290,207 | 301,605 | 594,075 | ||||||||||||||
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|
|
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 nine-month periods ended September 30, 2020 and 2019 were as follows (excluding finance costs and income tax expense):
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||
(in millions of Won) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Raw material used, changes in inventories and others | 9,417,705 | 25,757,893 | 28,674,400 | |||||||||||||
Employee benefits expenses | 906,728 | 942,398 | 2,678,926 | 2,688,563 | ||||||||||||
Outsourced processing cost | 1,771,108 | 2,067,057 | 5,857,897 | 5,829,808 | ||||||||||||
Electricity and water | 168,788 | 247,474 | 482,046 | 726,188 | ||||||||||||
Depreciation(*1) | 793,940 | 746,172 | 2,348,977 | 2,269,280 | ||||||||||||
Amortization | 106,230 | 113,214 | 336,624 | 316,947 | ||||||||||||
Freight and custody | 376,397 | 353,335 | 1,058,528 | 1,084,969 | ||||||||||||
Sales commissions | 13,795 | 18,565 | 81,714 | 57,164 | ||||||||||||
Loss on disposal of property, plant and equipment | 26,451 | 23,826 | 105,440 | 61,222 | ||||||||||||
Impairment loss on property, plant and equipment | 284 | 45,029 | 21,684 | 194,688 | ||||||||||||
Donations | 8,137 | 12,935 | 24,845 | 24,129 | ||||||||||||
Other expenses | 696,028 | 1,266,875 | 2,544,668 | 3,712,577 | ||||||||||||
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|
|
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| |||||||||
15,254,585 | 41,299,242 | 45,639,935 | ||||||||||||||
|
|
|
|
|
|
|
|
(*1) | Includes depreciation expense of investment property. |
48
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
32. | Income Taxes |
The effective tax rates of the Company for the nine-month periods ended September 30, 2020 and 2019 were 30.07% and 34.13%, respectively.
33. | Earnings per Share |
Basic earnings per share for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
(in Won except per share information) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Profit attributable to controlling interest | 430,875,315,211 | 901,132,036,554 | 1,784,414,381,573 | |||||||||||||
Interests of hybrid bonds | (1,681,205,479 | ) | (1,681,205,479 | ) | (5,007,068,492 | ) | (4,988,794,519 | ) | ||||||||
Weighted-average number of common shares outstanding (*1) | 79,230,216 | 80,115,641 | 79,784,098 | 80,113,124 | ||||||||||||
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|
|
| |||||||||
Basic earnings per share | 5,357 | 11,232 | 22,211 | |||||||||||||
|
|
|
|
|
|
|
|
(*1) | The weighted-average number of common shares used to calculate basic and diluted earnings per share are as follows: |
(Share) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Total number of common shares issued | 87,186,835 | 87,186,835 | 87,186,835 | 87,186,835 | ||||||||||||
Weighted-average number of treasury shares | (7,956,619 | ) | (7,071,194 | ) | (7,402,737 | ) | (7,073,711 | ) | ||||||||
|
|
|
|
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|
|
| |||||||||
Weighted-average number of common shares outstanding | 79,230,216 | 80,115,641 | 79,784,098 | 80,113,124 | ||||||||||||
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|
|
|
|
|
Since there were no potential shares of common stock which had dilutive effects as of September 30, 2020 and 2019, diluted earnings per share is equal to basic earnings per share.
49
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
34. | Related Party Transactions |
(a) | Significant transactions between the controlling company and related companies for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Sales and others(*1) | Purchase and others(*2) | ||||||||||||||||||||||
Sales | Others | Purchase of material | Purchase of fixed assets | Outsourced processing cost | Others | |||||||||||||||||||
Subsidiaries(*3) | ||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO.,LTD. | 11,107 | 15 | 543,484 | 60 | 17,773 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 309,338 | 1,819 | — | — | 21,466 | 249 | ||||||||||||||||||
POSCO ICT(*4) | 2,088 | 4,992 | — | 248,039 | 30,951 | 131,887 | ||||||||||||||||||
eNtoB Corporation | 11 | 60 | 160,906 | 24,852 | 55 | 17,884 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 200,730 | 29,911 | 342,948 | 16,219 | 226,595 | 4,551 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 2,196 | 2,117 | 12,374 | 3 | — | 16,709 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 4,246,418 | 55,558 | 233,450 | — | 11,371 | 3,293 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 226,231 | 137 | 3,454 | — | — | — | ||||||||||||||||||
POSCO America Corporation | 120,956 | — | — | — | — | 505 | ||||||||||||||||||
POSCO Canada Ltd. | — | 978 | 129,666 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 1,161,489 | 1,002 | 114,796 | 3,229 | 1,174 | 2,765 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 105,037 | 66 | — | — | — | 196 | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 776,819 | — | 29,582 | 4,947 | — | 2,428 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 182,844 | 239 | — | — | — | 59 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 107,763 | 158 | — | — | — | 304 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 210,679 | 1,543 | — | — | — | 282 | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 82,663 | — | — | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 163,085 | 204 | — | — | — | 123 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 1,039 | 395,961 | — | — | — | ||||||||||||||||||
Others | 913,036 | 20,393 | 55,641 | 33,263 | 197,496 | 91,565 | ||||||||||||||||||
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| |||||||||||||
8,816,551 | 131,323 | 1,478,793 | 874,036 | 489,168 | 290,573 | |||||||||||||||||||
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| |||||||||||||
Associates and joint ventures(*3) | ||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd.(*5) | 65 | 41 | 916 | 84,839 | 4,086 | 12,431 | ||||||||||||||||||
SNNC | 4,333 | 4,103 | 372,068 | — | — | — | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 29,429 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | 39,112 | 940,725 | — | — | — | ||||||||||||||||||
Others | 25,649 | 61,949 | 46,788 | — | — | 23,714 | ||||||||||||||||||
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| |||||||||||||
59,476 | 105,205 | 1,360,497 | 84,839 | 4,086 | 36,145 | |||||||||||||||||||
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| |||||||||||||
236,528 | 2,839,290 | 958,875 | 493,254 | 326,718 | ||||||||||||||||||||
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(*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 September 30, 2020, the Company provided guarantees to related parties (Note 35). |
(*4) | Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System. |
(*5) | During the nine-month period ended September 30, 2020, POSCO PLANTEC Co., Ltd. was excluded from associates due to the Company’s loss of significant influence over the investee. |
50
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the nine-month period ended September 30, 2019 |
(in millions of Won) | Sales and others | Purchase and others | ||||||||||||||||||||||
Sales | Others | Purchase of material | Purchase of fixed assets | Outsourced processing cost | Others | |||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO.,LTD. | 11,110 | — | 226,604 | 25 | 12,064 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 354,046 | 1,942 | 95 | — | 13,595 | 586 | ||||||||||||||||||
POSCO ICT | 2,213 | 4,990 | — | 226,456 | 26,235 | 131,522 | ||||||||||||||||||
eNtoB Corporation | 11 | 66 | 231,896 | 28,678 | 72 | 18,443 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 289,090 | 30,298 | 389,598 | 12,396 | 236,114 | 3,084 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 147,124 | 1,252 | 1,090 | — | — | 1,672 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 4,426,067 | 46,572 | 459,705 | — | 38,067 | 4,516 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 188,527 | 13,795 | 6,706 | — | — | 3 | ||||||||||||||||||
POSCO America Corporation | 232,724 | — | — | — | — | 1,682 | ||||||||||||||||||
POSCO Canada Ltd. | 340 | 751 | 245,123 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 1,300,580 | 975 | 323,203 | 72 | 1,484 | 5,093 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 99,757 | — | — | — | — | — | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 1,134,448 | 36 | 29,843 | 3,685 | — | 2,898 | ||||||||||||||||||
POSCO-VIETNAM CO., Ltd. | 222,692 | 263 | — | — | — | 37 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 238,357 | 89 | — | — | — | 246 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 513,467 | 266 | — | — | — | 256 | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 81,829 | 1 | 2,189 | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 217,034 | — | — | — | — | 62 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 285 | 514,751 | — | — | — | ||||||||||||||||||
Others | 685,845 | 17,396 | 106,193 | 19,147 | 182,202 | 119,078 | ||||||||||||||||||
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| |||||||||||||
10,139,302 | 130,087 | 2,310,392 | 517,038 | 497,794 | 301,242 | |||||||||||||||||||
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Associates and joint ventures | ||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | 412 | 70 | 2,009 | 183,351 | 12,994 | 16,430 | ||||||||||||||||||
SNNC | 4,121 | 3,910 | 420,720 | — | — | 10 | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 50,894 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | — | 841,866 | — | — | — | ||||||||||||||||||
Others | 11,830 | 107,865 | 43,088 | — | — | |||||||||||||||||||
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| |||||||||||||
67,257 | 111,845 | 1,307,683 | 183,351 | 12,994 | 16,440 | |||||||||||||||||||
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| |||||||||||||
241,932 | 3,618,075 | 700,389 | 510,788 | 317,682 | ||||||||||||||||||||
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|
|
|
|
(b) | Significant transactions between the controlling company and related companies for the three-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the three-month period ended September 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. | 11 | — | 101,179 | — | 4,938 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 103,572 | 124 | — | — | 6,290 | 41 | ||||||||||||||||||
POSCO ICT | 659 | 1 | — | 63,729 | 10,010 | 44,219 | ||||||||||||||||||
eNtoB Corporation | 4 | — | 47,528 | 6,004 | 27 | 5,391 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 56,264 | 5,141 | 113,227 | 3,389 | 72,171 | 189 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 643 | 901 | 2,379 | — | — | 5,599 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 1,450,981 | 1,227 | 122,652 | — | — | 1,210 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 119,514 | — | — | — | — | — | ||||||||||||||||||
POSCO America Corporation | 24,690 | — | — | — | — | 502 | ||||||||||||||||||
POSCO Canada Ltd. | — | 162 | 38,861 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 441,511 | 37 | 33,125 | 957 | 12 | 1,346 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 34,269 | — | — | — | — | 20 | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 227,977 | — | 13,162 | 1,988 | — | 1,340 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 81,739 | 16 | — | — | — | 39 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 39,189 | 59 | — | — | — | — | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 56,925 | 696 | — | — | — | 97 | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 25,018 | — | — | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 30,869 | 148 | — | — | — | 103 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 235 | 104,312 | — | — | — | ||||||||||||||||||
Others | 339,973 | 2,209 | 14,535 | 7,683 | 68,939 | 33,500 | ||||||||||||||||||
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| |||||||||||||
3,035,417 | 10,967 | 489,781 | 184,929 | 157,449 | 98,534 | |||||||||||||||||||
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| |||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||
SNNC | 1,432 | 625 | 153,008 | — | — | — | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 12,275 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | 39,112 | 315,180 | — | — | — | ||||||||||||||||||
Others | 11,317 | 7,016 | 17,834 | — | — | 10,366 | ||||||||||||||||||
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25,024 | 46,753 | 486,022 | — | — | 10,366 | |||||||||||||||||||
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57,720 | 975,803 | 184,929 | 157,449 | 108,900 | ||||||||||||||||||||
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51
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the three-month period ended September 30, 2019 |
(in millions of Won) | Sales and others | Purchase and others | ||||||||||||||||||||||
Sales | Others | Purchase of material | Purchase of fixed assets | Outsourced processing cost | Others | |||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO.,LTD. | 21 | — | 87,255 | 4 | 6,831 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 120,638 | 235 | 95 | — | 5,911 | 95 | ||||||||||||||||||
POSCO ICT | 704 | 1 | — | 77,639 | 9,180 | 42,684 | ||||||||||||||||||
eNtoB Corporation | 4 | 6 | 72,320 | 11,742 | 13 | 5,012 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 91,297 | 5,169 | 134,299 | 4,818 | 79,731 | 1,074 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 40,522 | 628 | 1,090 | — | — | 1,610 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 1,584,691 | — | 129,661 | — | 12,030 | 1,947 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 68,495 | 120 | 2,973 | — | — | — | ||||||||||||||||||
POSCO America Corporation | 48,207 | — | — | — | — | 1,643 | ||||||||||||||||||
POSCO Canada Ltd. | — | 147 | 93,231 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 438,809 | 390 | 74,772 | 72 | 497 | 2,297 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 40,347 | — | — | — | — | — | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 378,091 | 36 | 8,290 | 664 | — | 1,411 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 81,157 | 82 | — | — | — | — | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 84,591 | 58 | — | — | — | 241 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 179,859 | 79 | — | — | — | — | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 38,516 | 1 | 708 | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 80,009 | — | — | — | — | — | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 105 | 192,541 | — | — | — | ||||||||||||||||||
Others | 260,530 | 2,836 | 25,138 | 8,575 | 48,620 | 58,287 | ||||||||||||||||||
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| |||||||||||||
3,538,010 | 9,914 | 735,118 | 190,765 | 155,986 | 123,132 | |||||||||||||||||||
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| |||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | 229 | 5 | 610 | 72,737 | 3,668 | 7,068 | ||||||||||||||||||
SNNC | 1,374 | 530 | 176,094 | — | — | — | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 19,130 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | — | 359,018 | — | — | — | ||||||||||||||||||
Others | 4,845 | 21,828 | 15,961 | — | — | — | ||||||||||||||||||
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| |||||||||||||
25,578 | 22,363 | 551,683 | 72,737 | 3,668 | 7,068 | |||||||||||||||||||
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| |||||||||||||
32,277 | 1,286,801 | 263,502 | 159,654 | 130,200 | ||||||||||||||||||||
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|
|
(c) | The related account balances from significant transactions between the controlling company and related companies as of September 30, 2020 and December 31, 2019 are as follows: |
1) | September 30, 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. | 5 | 4,512 | — | 37,871 | 261 | 38,132 | ||||||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 60,497 | — | 60,497 | — | 5 | 3,630 | 3,635 | |||||||||||||||||||||
POSCO ICT | 184 | — | 184 | 2,206 | 42,204 | 24,993 | 69,403 | |||||||||||||||||||||
eNtoB Corporation | — | — | — | 2,977 | 28,664 | — | 31,641 | |||||||||||||||||||||
POSCO CHEMICAL CO., LTD | 35,943 | 3,485 | 39,428 | 11,926 | 44,963 | 16,921 | 73,810 | |||||||||||||||||||||
POSCO ENERGY CO., LTD. | 188 | 248 | 436 | — | 3,082 | 12,979 | 16,061 | |||||||||||||||||||||
POSCO INTERNATIONAL Corporation | 569,861 | — | 569,861 | 4,098 | 323 | — | 4,421 | |||||||||||||||||||||
POSCO Thainox Public Company Limited | 83,853 | — | 83,853 | — | — | — | — | |||||||||||||||||||||
POSCO America Corporation | 1,173 | — | 1,173 | — | — | — | — | |||||||||||||||||||||
POSCO Asia Co., Ltd. | 300,471 | 1,433 | 301,904 | 5,275 | — | — | 5,275 | |||||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 16,230 | — | 16,230 | — | — | — | — | |||||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 41,612 | 701 | 42,313 | — | — | — | — | |||||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 183,492 | 471 | 183,963 | — | — | — | — | |||||||||||||||||||||
Others | 608,868 | 34,530 | 643,398 | 31,409 | 37,624 | 84,148 | 153,181 | |||||||||||||||||||||
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| |||||||||||||||
1,906,879 | 40,873 | 1,947,752 | 57,891 | 194,736 | 142,932 | 395,559 | ||||||||||||||||||||||
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| |||||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||||||
SNNC | 294 | 229 | 523 | 36,262 | — | — | 36,262 | |||||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | 39,112 | 39,112 | 194,818 | 32 | — | 194,850 | |||||||||||||||||||||
Others | 755 | 38,003 | 38,758 | 2,660 | — | — | 2,660 | |||||||||||||||||||||
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1,049 | 77,344 | 78,393 | 233,740 | 32 | — | 233,772 | ||||||||||||||||||||||
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118,217 | 2,026,145 | 291,631 | 194,768 | 142,932 | 629,331 | |||||||||||||||||||||||
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52
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | December 31, 2019 |
(in millions of Won) | Receivables | Payables | ||||||||||||||||||||||||||
Trade accounts and notes receivable | Others | Total | Trade accounts and notes payable | Accounts payable | Others | Total | ||||||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | 65 | 5,767 | — | 78,512 | 385 | 78,897 | ||||||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 57,792 | — | 57,792 | — | 11 | 3,828 | 3,839 | |||||||||||||||||||||
POSCO ICT | 225 | 1 | 226 | 1,147 | 129,424 | 42,844 | 173,415 | |||||||||||||||||||||
eNtoB Corporation | — | — | — | 3,459 | 27,431 | — | 30,890 | |||||||||||||||||||||
POSCO CHEMICAL CO., LTD | 35,102 | 3,578 | 38,680 | 17,839 | 52,710 | 19,369 | 89,918 | |||||||||||||||||||||
POSCO ENERGY CO., LTD. | 1,876 | 4 | 1,880 | — | 3,229 | 14,912 | 18,141 | |||||||||||||||||||||
POSCO INTERNATIONAL Corporation | 633,073 | — | 633,073 | 345 | 2,218 | 3,839 | 6,402 | |||||||||||||||||||||
POSCO Thainox Public Company Limited | 52,826 | 2 | 52,828 | 916 | — | — | 916 | |||||||||||||||||||||
POSCO America Corporation | 8,448 | — | 8,448 | — | — | — | — | |||||||||||||||||||||
POSCO Asia Co., Ltd. | 508,962 | 748 | 509,710 | 12,784 | 171 | — | 12,955 | |||||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 29,842 | — | 29,842 | — | — | — | — | |||||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 90,351 | 702 | 91,053 | — | — | — | — | |||||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 235,917 | 444 | 236,361 | — | — | — | — | |||||||||||||||||||||
Others | 470,734 | 33,851 | 504,585 | 14,397 | 40,233 | 87,652 | 142,282 | |||||||||||||||||||||
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2,130,850 | 39,395 | 2,170,245 | 50,887 | 333,939 | 172,829 | 557,655 | ||||||||||||||||||||||
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| |||||||||||||||
Associates and jointventures | ||||||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | 84 | 10 | 94 | 471 | 49,511 | — | 49,982 | |||||||||||||||||||||
SNNC | 297 | 65 | 362 | 19,769 | — | — | 19,769 | |||||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | — | — | 93,383 | — | — | 93,383 | |||||||||||||||||||||
Others | 942 | 706 | 1,648 | 3,447 | 586 | — | 4,033 | |||||||||||||||||||||
1,323 | 781 | 2,104 | 117,070 | 50,097 | — | 167,167 | ||||||||||||||||||||||
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|
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| |||||||||||||||
40,176 | 2,172,349 | 167,957 | 384,036 | 172,829 | 724,822 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) | Significant transactions between the Company, excluding the controlling company, and related companies for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the nine-month period ended September 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. | — | 5 | — | |||||||||||||
New Songdo International City Development, LLC | 81,806 | 26,451 | — | 107 | ||||||||||||
SNNC | 44,485 | — | 35,684 | 118,925 | ||||||||||||
Chuncheon Energy Co., Ltd. | (2,656 | ) | 211 | — | — | |||||||||||
Noeul Green Energy Co., Ltd. | 4,587 | — | — | 582 | ||||||||||||
CSP—Compania Siderurgica do Pecem | 21,943 | 6,883 | 141,883 | — | ||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 35,696 | — | 32,147 | — | ||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | — | — | 4,555 | — | ||||||||||||
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd | 5,909 | — | — | — | ||||||||||||
PT. Batutua Tembaga Raya | — | 1,111 | 23,379 | — | ||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 19,578 | — | 210 | — | ||||||||||||
DMSA/AMSA | — | — | 29,198 | — | ||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 7 | 51,793 | — | — | ||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 24,154 | 19,475 | 2,704 | 602 | ||||||||||||
Samcheok Blue Power Co., Ltd. (Formarly, POSPower Co., Ltd.) | 153,824 | — | — | — | ||||||||||||
TK CHEMICAL CORPORATION | 82,834 | — | 23,339 | — | ||||||||||||
Others | 108,943 | 54,438 | 29,890 | 27,193 | ||||||||||||
|
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| |||||||||
160,362 | 322,994 | 147,409 | ||||||||||||||
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|
53
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the nine-month period ended September 30, 2019 |
(in millions of Won) | Sales and others | Purchase and others | ||||||||||||||
Sales | Others | Purchase of material | Others | |||||||||||||
Associates and joint ventures | ||||||||||||||||
POSCO PLANTEC Co., Ltd. | — | 34 | 12,206 | |||||||||||||
New Songdo International City Development, LLC | 5,276 | 4,471 | — | 18 | ||||||||||||
SNNC | 58,663 | — | 26,910 | 51,967 | ||||||||||||
Chuncheon Energy Co., Ltd. | 1,227 | — | — | — | ||||||||||||
Noeul Green Energy Co., Ltd. | 4,906 | — | — | 1,217 | ||||||||||||
USS-POSCO Industries | 2 | — | 1,710 | — | ||||||||||||
CSP—Compania Siderurgica do Pecem | 90,310 | 7,419 | 324,947 | 26,755 | ||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 25,543 | — | 32,731 | — | ||||||||||||
LLP POSUK Titanium | — | — | 272 | — | ||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | 7 | — | 2,948 | — | ||||||||||||
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd | 8,035 | — | — | — | ||||||||||||
PT. Batutua Tembaga Raya | — | 631 | 31,980 | — | ||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 22,264 | — | 263 | — | ||||||||||||
Sebang Steel | — | — | 4,862 | — | ||||||||||||
DMSA/AMSA | — | — | 50,723 | — | ||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 49 | 37,984 | — | — | ||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 67,073 | 16,369 | 3,714 | 1,629 | ||||||||||||
Samcheok Blue Power Co., Ltd. (Formarly, POSPower Co., Ltd.) | 117,851 | — | — | — | ||||||||||||
TK CHEMICAL CORPORATION | 131,016 | — | 50,766 | — | ||||||||||||
Others | 168,928 | 46,136 | 22,256 | 22,151 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
113,010 | 554,116 | 115,943 | ||||||||||||||
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|
54
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(e) | Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the three-month period ended September 30, 2020 |
(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 | 1 | — | 61 | |||||||||||||
SNNC | 17,283 | — | 10,402 | 11,418 | ||||||||||||
Chuncheon Energy Co., Ltd. | (2,943 | ) | — | — | — | |||||||||||
Noeul Green Energy Co., Ltd. | 1,548 | — | — | 582 | ||||||||||||
CSP - Compania Siderurgica do Pecem | 3,632 | 1,958 | 18,515 | — | ||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 16,768 | — | 7,365 | — | ||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | — | — | 2,162 | — | ||||||||||||
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd | 2,615 | — | — | — | ||||||||||||
PT. Batutua Tembaga Raya | — | — | 6,804 | — | ||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 7,447 | — | 45 | — | ||||||||||||
South-East Asia Gas Pipeline Company Ltd. | — | 13,276 | — | — | ||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 8,193 | 37 | 816 | 150 | ||||||||||||
Samcheok Blue Power Co., Ltd. (Formarly, POSPower Co., Ltd.) | 63,914 | — | — | — | ||||||||||||
TK CHEMICAL CORPORATION | 23,082 | — | 4,596 | — | ||||||||||||
Others | 47,244 | 24,665 | 12,176 | 10,340 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
39,937 | 62,881 | 22,551 | ||||||||||||||
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55
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the three-month period ended September 30, 2019 |
(in millions of Won) | Sales and others | Purchase and others | ||||||||||||||
Sales | Others | Purchase of material | Others | |||||||||||||
Associates and joint ventures | ||||||||||||||||
POSCO PLANTEC Co., Ltd. | — | 13 | 4,449 | |||||||||||||
New Songdo International City Development, LLC | 4,525 | — | — | 5 | ||||||||||||
SNNC | 14,638 | — | 7,949 | 20,811 | ||||||||||||
Chuncheon Energy Co., Ltd. | 82 | — | — | — | ||||||||||||
Noeul Green Energy Co., Ltd. | 1,545 | — | — | — | ||||||||||||
USS-POSCO Industries | — | — | 394 | — | ||||||||||||
CSP—Compania Siderurgica do Pecem | 5,712 | — | 104,405 | 16,169 | ||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 8,998 | — | 10,576 | — | ||||||||||||
LLP POSUK Titanium | — | — | — | — | ||||||||||||
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. | 4 | — | 1,140 | — | ||||||||||||
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd | 2,737 | — | — | — | ||||||||||||
PT. Batutua Tembaga Raya | — | 136 | 10,346 | — | ||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 8,513 | — | 90 | — | ||||||||||||
Sebang Steel | — | — | — | — | ||||||||||||
DMSA/AMSA | — | — | 20,110 | — | ||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 22 | 28,597 | — | — | ||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 22,424 | — | 1,094 | 509 | ||||||||||||
Samcheok Blue Power Co., Ltd. (Formarly, POSPower Co., Ltd.) | 38,579 | — | — | — | ||||||||||||
TK CHEMICAL CORPORATION | 44,029 | — | 11,312 | — | ||||||||||||
Others | 65,503 | 8,112 | 10,606 | 13,105 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
36,845 | 178,035 | 55,048 | ||||||||||||||
|
|
|
|
|
|
|
|
(f) | The related account balances from significant transactions between the Company, excluding the controlling company, and related companies as of September 30, 2020 and December 31, 2019 are as follows: |
1) | September 30, 2020 |
(in millions of Won) | Receivables | Payables | ||||||||||||||||||||||||||
Trade accounts and notes receivable | Loans | Others | Total | Trade accounts and notes payable | Others | Total | ||||||||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||||||
New Songdo International City Development, LLC | — | 20,592 | 30,503 | — | — | — | ||||||||||||||||||||||
Chuncheon Energy Co., Ltd. | — | — | — | — | 3,312 | — | 3,312 | |||||||||||||||||||||
Samcheok Blue Power Co., Ltd. (Formarly, POSPower Co., Ltd.) | 78,150 | — | — | 78,150 | — | 50,059 | 50,059 | |||||||||||||||||||||
Nickel Mining Company SAS | — | 63,874 | 146 | 64,020 | — | — | — | |||||||||||||||||||||
CSP - Compania Siderurgica do Pecem | 149,591 | — | 9,696 | 159,287 | — | — | — | |||||||||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 16,486 | — | — | 16,486 | 2,012 | — | 2,012 | |||||||||||||||||||||
PT. Batutua Tembaga Raya | — | 38,133 | 962 | 39,095 | — | — | — | |||||||||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 9,948 | — | — | 9,948 | 96 | — | 96 | |||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | — | 110,957 | — | 110,957 | — | — | — | |||||||||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 3,515 | — | — | 3,515 | 738 | — | 738 | |||||||||||||||||||||
TK CHEMICAL CORPORATION | 23,081 | — | — | 23,081 | 1,743 | — | 1,743 | |||||||||||||||||||||
Others | 64,559 | 167,814 | 112,490 | 344,863 | 7,563 | 13,309 | 20,872 | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
380,778 | 143,886 | 879,905 | 15,464 | 63,368 | 78,832 | |||||||||||||||||||||||
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56
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | December 31, 2019 |
(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 | ||||||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | — | 205 | 4,326 | 791 | 8 | 799 | ||||||||||||||||||||||
New Songdo International City Development, LLC | 23,626 | — | 20,592 | 44,218 | — | 10 | 10 | |||||||||||||||||||||
Chuncheon Energy Co., Ltd. | — | 8,234 | — | 8,234 | 657 | — | 657 | |||||||||||||||||||||
Samcheok Blue Power Co., Ltd. (Formarly, POSPower Co., Ltd.) | 34,945 | — | — | 34,945 | — | 67,543 | 67,543 | |||||||||||||||||||||
Nickel Mining Company SAS | — | 60,516 | 120 | 60,636 | — | — | — | |||||||||||||||||||||
CSP - Compania Siderurgica do Pecem | 244,700 | — | 14,264 | 258,964 | — | 33 | 33 | |||||||||||||||||||||
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd | 10,273 | — | — | 10,273 | 633 | — | 633 | |||||||||||||||||||||
PT. Batutua Tembaga Raya | — | 36,291 | 19,993 | 56,284 | 56 | — | 56 | |||||||||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 7,035 | — | — | 7,035 | 101 | — | 101 | |||||||||||||||||||||
DMSA/AMSA | — | 57,999 | 1,672 | 59,671 | — | — | — | |||||||||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 14 | 147,367 | — | 147,381 | — | — | — | |||||||||||||||||||||
POSCO MITSUBISHI CARBON TECHNOLOGY | 8,078 | — | — | 8,078 | 916 | — | 916 | |||||||||||||||||||||
TK CHEMICAL CORPORATION | 37,373 | — | — | 37,373 | 110 | — | 110 | |||||||||||||||||||||
Others | 94,914 | 138,663 | 97,804 | 331,381 | 7,128 | 13,379 | 20,507 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
449,070 | 154,650 | 1,068,799 | 10,392 | 80,973 | 91,365 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) | Significant financial transactions between the Company, excluding the controlling company, and related companies for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
1) | September 30, 2020 |
(in millions of Won) | Beginning | Lend | Collect | Others(*2) | Ending | |||||||||||||||
Associates and joint ventures | ||||||||||||||||||||
UITrans LRT Co., Ltd. | 9,471 | — | — | 20,050 | ||||||||||||||||
DMSA/AMSA(*1) | 57,999 | — | — | (57,999 | ) | — | ||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 147,367 | — | (36,026 | ) | (384 | ) | 110,957 | |||||||||||||
PT. Batutua Tembaga Raya | 36,291 | — | — | 1,842 | 38,133 | |||||||||||||||
PT. Tanggamus Electric Power | 4,580 | — | — | 62 | 4,642 | |||||||||||||||
PT. Wampu Electric Power | 5,519 | — | — | 75 | 5,594 | |||||||||||||||
PT. POSMI Steel Indonesia | 2,316 | — | — | 31 | 2,347 | |||||||||||||||
Nickel Mining Company SAS | 60,516 | — | — | 3,358 | 63,874 | |||||||||||||||
KRAKATAU POS-CHEM DONG-SUH CHEMICAL | 6,947 | — | (1,239 | ) | 160 | 5,868 | ||||||||||||||
POS-SeAH Steel Wire (Thailand) Co., Ltd. | 6,947 | — | — | 94 | 7,041 | |||||||||||||||
AMCI (WA) PTY LTD | 78,553 | 3,121 | — | 2,107 | 83,781 | |||||||||||||||
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD | 5,789 | — | — | 79 | 5,868 | |||||||||||||||
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD | 9,262 | — | — | 126 | 9,388 | |||||||||||||||
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 | 12,005 | — | (191 | ) | 17,603 | ||||||||||||||
CAML RESOURCES PTY LTD | — | 3,174 | — | 76 | 3,250 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
27,771 | (45,499 | ) | (50,564 | ) | 380,778 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*1) | During the nine-month period ended September 30, 2020, loans amounting to |
(*2) | Includes adjustments of foreign currency translation differences and others. |
57
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | December 31, 2019 |
(in millions of Won) | Beginning | Lend | Collect | Others(*2) | Ending | |||||||||||||||
Associates and jointventures | ||||||||||||||||||||
UITrans LRT Co., Ltd. | 4,884 | — | — | 10,579 | ||||||||||||||||
DMSA/AMSA(*1) | 64,297 | 15,451 | — | (21,749 | ) | 57,999 | ||||||||||||||
South-East Asia Gas Pipeline Company Ltd. | 191,107 | — | (48,027 | ) | 4,287 | 147,367 | ||||||||||||||
PT. Batutua Tembaga Raya | 35,100 | — | — | 1,191 | 36,291 | |||||||||||||||
PT. Tanggamus Electric Power | 4,423 | — | — | 157 | 4,580 | |||||||||||||||
PT. Wampu Electric Power | 5,330 | — | — | 189 | 5,519 | |||||||||||||||
PT. POSMI Steel Indonesia | 2,236 | — | — | 80 | 2,316 | |||||||||||||||
Nickel Mining Company SAS | 59,664 | — | — | 852 | 60,516 | |||||||||||||||
KRAKATAU POS-CHEM DONG-SUH CHEMICAL | 6,709 | — | — | 238 | 6,947 | |||||||||||||||
POSCO SeAH Steel Wire(Nantong) Co., Ltd. | 3,354 | — | (3,354 | ) | — | — | ||||||||||||||
POS-SeAH Steel Wire (Thailand) Co., Ltd. | 6,709 | — | — | 238 | 6,947 | |||||||||||||||
AMCI (WA) PTY LTD | 90,480 | 4,669 | — | (16,596 | ) | 78,553 | ||||||||||||||
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD | 5,590 | — | — | 199 | 5,789 | |||||||||||||||
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD | 8,945 | — | — | 317 | 9,262 | |||||||||||||||
Hyo-chun Co., Ltd. | — | — | — | 2,382 | 2,382 | |||||||||||||||
Chun-cheon Energy Co., Ltd. | — | 8,234 | — | — | 8,234 | |||||||||||||||
POS-AUSTEM Suzhou Automotive Co., Ltd | — | 5,827 | — | (38 | ) | 5,789 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
39,065 | (51,381 | ) | (28,253 | ) | 449,070 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*1) | During the year ended December 31, 2019, loans amounting to |
(*2) | Includes adjustments of foreign currency translation differences and others. |
(h) | For the nine-month periods ended September 30, 2020 and 2019, details of compensation to key management officers were as follows: |
(in millions of Won) | September 30, 2020 | September 30, 2019 | ||||||
Short-term benefits | 86,850 | |||||||
Long-term benefits | 11,936 | 11,365 | ||||||
Retirement benefits | 11,031 | 14,031 | ||||||
|
|
|
| |||||
112,246 | ||||||||
|
|
|
|
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.
58
Table of Contents
POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
35. | Commitments and Contingencies |
(a) | Details of guarantees |
Contingent liabilities on outstanding guarantees provided by the Company as of September 30, 2020 are as follows:
(in millions of Won) | Guarantee limit | Guarantee amount | ||||||||||||||||||||||
Guarantor | Guarantee | 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 | 117,350 | 100,000,000 | 117,350 | |||||||||||||||||
POSCO-VIETNAM Co., Ltd. | SMBC and others | USD | 156,000,000 | 183,066 | 156,000,000 | 183,066 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | BOA and others | USD | 120,000,000 | 140,820 | 120,000,000 | 140,820 | ||||||||||||||||||
POSCO COATED STEEL (THAILAND) CO., LTD. | SMBC and others | THB | 5,501,000,000 | 204,089 | 5,501,000,000 | 204,089 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | ING and others | USD | 83,784,000 | 98,321 | 83,784,000 | 98,321 | ||||||||||||||||||
PT. KRAKATAU POSCO | Export-Import Bank of Korea and others | USD | 1,350,300,000 | 1,584,580 | 862,114,318 | 1,011,691 | ||||||||||||||||||
POSCO ASSAN TST STEEL INDUSTRY | SMBC and others | USD | 146,527,500 | 171,950 | 131,874,750 | 154,755 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | Daewoo Global Development. Pte., Ltd | Export-Import Bank of Korea and others | USD | 186,625,000 | 219,004 | 178,750,000 | 209,763 | |||||||||||||||||
POSCO INTERNATIONAL POWER (PNGLAE) LIMITED | KDB bank | USD | 48,317,404 | 56,700 | 37,167,234 | 43,616 | ||||||||||||||||||
GOLDEN LACE POSCO INTERNATIONAL CO., LTD. | Shinhan Bank and others | USD | 11,000,000 | 12,909 | 11,000,000 | 12,909 | ||||||||||||||||||
PT. Bio Inti Agrindo | Export-Import Bank of Korea and others | USD | 147,159,352 | 172,691 | 145,144,866 | 170,328 | ||||||||||||||||||
POSCO ASSAN TST STEEL INDUSTRY | ING | USD | 14,652,750 | 17,195 | 14,652,750 | 17,195 | ||||||||||||||||||
POSCO INTERNATIONAL AMERICA Corp. | Bank Mendes Gans | USD | 50,000,000 | 58,675 | 38,812,382 | 45,546 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE Pte. Ltd.. | ||||||||||||||||||||||||
POSCO INTERNATIONAL MEXICO S.A. de C.V. | ||||||||||||||||||||||||
POSCO INTERNATIONAL Japan Corp. | ||||||||||||||||||||||||
POSCO INTERNATIONAL Malaysia SDN BHD | ||||||||||||||||||||||||
POSCO INTERNATIONAL Deutschland GmbH | ||||||||||||||||||||||||
POSCO INTERNATIONAL Italia S.R.L. | ||||||||||||||||||||||||
GRAIN TERMINAL HOLDING PTE. LTD. | Black Sea Trade and Development Bank | USD | 27,000,000 | 31,685 | 27,000,000 | 31,685 | ||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | POSCO E&C Vietnam Co., Ltd. | Export-Import Bank of Korea and others | USD | 42,000,000 | 49,287 | 42,000,000 | 49,287 | |||||||||||||||||
POSCO Engineering and Construction India Private Limited | Hana bank | INR | 221,000,000 | 3,516 | 148,661,567 | 2,365 | ||||||||||||||||||
Songdo Posco family Housing | Shinyoung securities | KRW | 20,000 | 20,000 | 20,000 | 20,000 | ||||||||||||||||||
JB CLARK HILLS | KOREA INVESTMENT&SECURITIES Co., Ltd. | KRW | 60,000 | 60,000 | 60,000 | 60,000 | ||||||||||||||||||
PT.POSCO E&C INDONESIA | POSCO Asia Co., Ltd. and others | USD | 10,900,000 | 12,791 | 10,900,000 | 12,791 | ||||||||||||||||||
HONG KONG POSCO E&C (CHINA) INVESTMENT Co., Ltd. | POSCO Asia Co., Ltd. and others | USD | 160,000,000 | 187,760 | 154,024,000 | 180,747 | ||||||||||||||||||
POSCO ICT | PT.POSCO ICT INDONESIA | POSCO Asia Co., Ltd. and others | USD | 1,200,000 | 1,408 | 1,200,000 | 1,408 | |||||||||||||||||
POSCO CHEMICAL CO., LTD | PT.Krakatau Posco Chemical Calcination (formerly, PT.Krakatau Posco Chemtech Calcination) | POSCO Asia Co., Ltd. and others | USD | 15,200,000 | 17,837 | 12,000,000 | 14,082 | |||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | Myanmar POSCO C&C Company, Limited. | POSCO Asia Co., Ltd. | USD | 13,986,947 | 16,414 | 13,986,947 | 16,414 | |||||||||||||||||
POSCO ENERGY CO., LTD | PT. KRAKATAU POSCO ENERGY | Export-Import Bank of Korea and others | USD | 193,900,000 | 227,542 | 96,985,535 | 113,813 | |||||||||||||||||
POSCO Asia Co., Ltd. | POSCO America Corporation | SMBC | USD | 70,000,000 | 82,145 | 70,000,000 | 82,145 |
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Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(in millions of Won) | Guarantee limit | Guarantee amount | ||||||||||||||||||||||
Guarantor | Guarantee | Financial institution | Foreign currency | Won equivalent | Foreign currency | Won equivalent | ||||||||||||||||||
[Associates and joint ventures] | ||||||||||||||||||||||||
POSCO | CSP—Compania Siderurgica do Pecem | Export-Import Bank of Korea and others | USD | 420,000,000 | 492,872 | 372,140,666 | 436,707 | |||||||||||||||||
BNDES | BRL | 464,060,000 | 96,190 | 464,060,000 | 96,190 | |||||||||||||||||||
LLP POSUK Titanium | SMBC | USD | 13,500,000 | 15,842 | 13,500,000 | 15,842 | ||||||||||||||||||
Nickel Mining Company SAS | SMBC | EUR | 46,000,000 | 62,993 | 46,000,000 | 62,993 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | GLOBAL KOMSCO Daewoo LLC | Hana Bank | USD | 8,225,000 | 9,652 | 7,700,000 | 9,036 | |||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | New Songdo International City Development, LLC | Others | KRW | 386,000 | 386,000 | 386,000 | 386,000 | |||||||||||||||||
POHANG E&E Coi., LTD | Heungkuk Life Insurance Co., Ltd. | KRW | 71,930 | 71,930 | 60,716 | 60,716 | ||||||||||||||||||
UITrans LRT Co., Ltd. | Kookmin Bank and others | KRW | 125,845 | 125,845 | 103,508 | 103,508 | ||||||||||||||||||
Incheon-Gimpo Expressway Co, Ltd. | Kookmin Bank and others | KRW | 311,468 | 311,468 | 288,417 | 288,417 | ||||||||||||||||||
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 | 275,989 | 275,989 | 14,486 | 14,486 | ||||||||||||||||||
Pureun Tongyeong Enviro Co., Ltd. | KDB Bank and others | KRW | 22,714 | 22,714 | 15,312 | 15,312 | ||||||||||||||||||
Pure Gimpo.Co.,Ltd | KDB Bank and others | KRW | 44,740 | 44,740 | 31,508 | 31,508 | ||||||||||||||||||
Clean Iksan Co.,Ltd | SAMSUNG FIRE & MARINE INSURANCE CO.,LTD and others | KRW | 44,054 | 44,054 | 30,200 | 30,200 | ||||||||||||||||||
NEXTRAIN Co., Ltd | Kookmin Bank and others | KRW | 634,752 | 634,752 | — | — | ||||||||||||||||||
Chun-cheon Energy Co., Ltd. | Kookmin Bank and others | KRW | 149,200 | 149,200 | 145,300 | 145,300 | ||||||||||||||||||
POSCO ICT | UITrans LRT Co., Ltd. | Kookmin Bank | KRW | 76,000 | 76,000 | 76,000 | 76,000 | |||||||||||||||||
Hyochun Co., Ltd. | Kyobo Securities | KRW | 39,575 | 39,575 | 39,575 | 39,575 | ||||||||||||||||||
Incheon-Gimpo Expressway Co., Ltd. | Kookmin Bank and others | KRW | 100,000 | 100,000 | 100,000 | 100,000 | ||||||||||||||||||
Shinahn wind power generation | NH INVESTMENT & SECURITIES CO.,LTD. and others | KRW | 17,860 | 17,860 | 17,860 | 17,860 | ||||||||||||||||||
Western Inland highway CO., LTD. | Kookmin Bank | KRW | 964,100 | 964,100 | 964,100 | 964,100 | ||||||||||||||||||
Metropolitan Outer Ring Expressway Co., Ltd | Woori Bank | KRW | 193,700 | 193,700 | 193,700 | 193,700 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | KRAKATAU POS-CHEM DONG-SUH CHEMICAL | Hana Bank | USD | 1,140,000 | 1,338 | 506,667 | 595 | |||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co.,Ltd. | POS-InfraAuto (Suzhou) Co., Ltd | KDB bank | USD | 364,500 | 428 | 81,000 | 95 | |||||||||||||||||
[Others] | ||||||||||||||||||||||||
POSCO INTERNATIONAL Corporation | Sherritt International Corporation | Export-Import Bank of Korea | USD | 21,818,182 | 25,604 | 3,019,552 | 3,543 | |||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | Ecocity CO.,LTD and others | Kookmin Bank and others | KRW | 3,977,656 | 3,977,656 | 2,013,615 | 2,013,615 | |||||||||||||||||
POSCO ICT | BLT Enterprise and others | Hana Bank and others | KRW | 1,179,464 | 1,179,464 | 1,179,464 | 1,179,464 | |||||||||||||||||
POSCO AUSTRALIA PTY LTD | Department of Trade and Investment (NSW Government) and others | Woori Bank and others | AUD | 11,637,263 | 9,674 | 11,637,263 | 9,674 | |||||||||||||||||
PT. Bio lnti Agrindo | KSU Mandob | Bank Muamalat | IDR | 80,000,000,000 | 6,304 | 80,000,000,000 | 6,304 | |||||||||||||||||
POSCO Maharashtra Steel Private Limited | MAHARASHTRA STATE ELECTRICITY and others | HSBC and others | INR | 188,156,806 | 2,994 | 188,156,806 | 2,994 | |||||||||||||||||
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USD | 3,413,600,635 | 4,005,866 | 2,704,344,667 | 3,173,550 | ||||||||||||||||||||
KRW | 8,740,047 | 8,740,047 | 5,776,761 | 5,776,761 | ||||||||||||||||||||
IDR | 80,000,000,000 | 6,304 | 80,000,000,000 | 6,304 | ||||||||||||||||||||
INR | 409,156,806 | 6,510 | 336,818,373 | 5,359 | ||||||||||||||||||||
THB | 5,501,000,000 | 204,089 | 5,501,000,000 | 204,089 | ||||||||||||||||||||
EUR | 46,000,000 | 62,993 | 46,000,000 | 62,993 | ||||||||||||||||||||
AUD | 11,637,263 | 9,674 | 11,637,263 | 9,674 | ||||||||||||||||||||
BRL | 464,060,000 | 96,190 | 464,060,000 | 96,190 | ||||||||||||||||||||
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POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | Other commitments |
Details of other commitments of the Company as of September 30, 2020 are as follows:
Company | Description | |
POSCO | POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. The contracts of iron ore and coal generally have terms of more than three years and the contracts of nickel have terms of more than one year. These contracts provide for periodic price adjustments based on the market price. As of September 30, 2020, 70 million tons of iron ore and 10 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 entered into consecutive voyage charter (CVC) contracts for the transportation of raw materials. As of September 30, 2020, there are 39 vessels under CVC contracts and the average remaining contract period is about 9 years. | ||
As of September 30, 2020, POSCO entered into commitments with KOREA ENERGY AGENCY for long-term foreign currency borrowings up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowings depends on the success of the project. POSCO is not liable for the repayment in full or part of borrowings if the project fail. POSCO has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreement. As of September 30, 2020, the ending balance of the borrowing amounts to USD 1.02 million. | ||
POSCO has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors, including Norddeutsche Landesbank, for seamless funding to the construction of new power plant by POSCO ENERGY CO., LTD. | ||
POSCO provides a supplementary fund of up to | ||
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 September 30, 2020, the amount which is exposed to the ship purchase agreements entered into is USD 208 million. | |
The Company invested in the Ambatovy Nickel Project (DMSA/ASMA) 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 the new corporation AHL2 (Ambatovy Holdins II Limited) in August 2020. KAC has the rights and obligations to the 18.33% stake held by AHL and AHL2. | ||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | As of September 30, 2020, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency guarantees of up to USD 2,464 million provided by financial institutions and uses USD 766 million with Woori Bank and others. | |
The Company is responsible for completion of a project, including The Sharp First Park in Pangyo. As of September 30, 2020, the outstanding amount of loans related to the responsible completion arrangement is |
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Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
Company | Description | |
POSCO ICT | As of September 30, 2020, in relation to fulfillment of project contract, POSCO ICT was provided with | |
The Company is responsible for completion of 8 projects, including the construction of Bundang Center of Doosan Group. As of September 30, 2020, the outstanding amount of loans related to the responsible completion arrangements is |
(c) | Litigation in progress |
In March 2019, regarding the Songdo International City Development Project in Incheon, NSC Investment and TGC (the “applicant”), former partners of joint venture of POSCO ENGINEERING & CONSTRUCTION CO., LTD. (“POSCO E&C”), have applied to the International Chamber of Commerce of Singapore for arbitration in relation to the POSCO E&C’s alleged contract violation (approximately USD 2 billion). In addition, the applicant filed a confirmation suit with the New York Southern District Court in March 2019 against the fact that all claims listed in the above arbitration application must be settled by ICC arbitration. The claimants are seeking damages allegedly resulting from POSCO E&C’s purported wrongful seizure. As of September 30, 2020, the Company believes that the applicant’s claims are not legally valid and that the present obligation for the above arbitration event does not exist and therefore did not recognize a provision.
The Company is involved in 323 lawsuits aggregating toW1,126.7 billion as defendant as of September 30, 2020, which arise from ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting toW39.7 billion for 83 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 September 30, 2020.
(d) | Other contingencies |
Company | Description | |
POSCO | POSCO has provided 3 blank checks to Korea Energy Agency as collateral for long-term foreign currency borrowings. | |
POSCO INTERNATIONAL Corporation | As of September 30, 2020, POSCO INTERNATIONAL Corporation has provided 33 blank promissory notes and 17 blank checks to Korea Energy Agency and others as collateral for the guarantee on performance for contracts and others. | |
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | As of September 30, 2020, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided 29 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee of | |
POSCO ICT | As of September 30, 2020, POSCO ICT has provided 6 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others. |
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POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
36. | Cash Flows from Operating Activities |
Changes in operating assets and liabilities for the nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | September 30, 2020 | September 30, 2019 | ||||||
Trade accounts and notes receivable | (59,239 | ) | ||||||
Other receivables | 203,637 | (313,908 | ) | |||||
Inventories | 2,026,615 | 20,276 | ||||||
Other current assets | (74,404 | ) | (6,444 | ) | ||||
Other non-current assets | (74,021 | ) | 40,745 | |||||
Trade accounts and notes payable | (145,465 | ) | (673,278 | ) | ||||
Other payables | (119,043 | ) | (41,756 | ) | ||||
Other current liabilities | 342,705 | 254,770 | ||||||
Provisions | (174,100 | ) | (61,304 | ) | ||||
Payments of severance benefits | (174,151 | ) | (113,214 | ) | ||||
Plan assets | 76,381 | 71,691 | ||||||
Other non-current liabilities | 15,443 | (33,072 | ) | |||||
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(914,733 | ) | |||||||
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37. | Operating Segments |
The Company’s operating businesses are organized based on the nature of markets and customers. The Company has four reportable operating segments - steel, construction, trading and others. The steel segment includes production of steel products and revenue of such products. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects and commercial and residential buildings, both in Korea and overseas. The trading segment consists of exporting and importing a wide range of steel products and raw materials that are both obtained from and supplied to POSCO, as well as between other suppliers and purchasers in Korea and overseas. Other segments include power generation, network and system integration and logistics. The policies of classification and measurement on operating segments were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2019.
Segment assets, liabilities and profit (loss) are generally measured based on separate financial statements in accordance with K-IFRS of the subsidiaries that constitute reportable operating segments.
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POSCO and Subsidiaries
Notes to the Condensed Consolidated Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(a) | Information about reportable segments for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Steel | Trading | Construction | Others | Total | |||||||||||||||
External revenues | 14,520,691 | 4,917,113 | 2,175,564 | 42,528,585 | ||||||||||||||||
Internal revenues | 11,295,551 | 9,410,203 | 711,221 | 1,932,408 | 23,349,383 | |||||||||||||||
Inter segment revenue | 7,902,278 | 4,575,959 | 658,178 | 1,818,184 | 14,954,599 | |||||||||||||||
Total revenues | 32,210,768 | 23,930,894 | 5,628,334 | 4,107,972 | 65,877,968 | |||||||||||||||
Segment profits | 341,083 | 207,849 | 272,740 | 308,403 | 1,130,075 |
2) | For the nine-month period ended September 30, 2019 |
(in millions of Won) | Steel | Trading | Construction | Others | Total | |||||||||||||||
External revenues | 16,516,474 | 4,901,465 | 2,428,224 | 48,323,799 | ||||||||||||||||
Internal revenues | 13,312,742 | 11,876,420 | 496,770 | 2,004,097 | 27,690,029 | |||||||||||||||
Inter segment revenue | 9,103,854 | 6,397,294 | 452,377 | 1,903,252 | 17,856,777 | |||||||||||||||
Total revenues | 37,790,378 | 28,392,894 | 5,398,235 | 4,432,321 | 76,013,828 | |||||||||||||||
Segment profits | 1,549,538 | 169,160 | 91,376 | 419,889 | 2,229,963 |
(b) | Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
(in millions of Won) | September 30, 2020 | September 30, 2019 | ||||||
Total profit for reportable segments | 2,229,963 | |||||||
Corporate fair value adjustments | (56,976 | ) | (60,575 | ) | ||||
Elimination of inter-segment profits | (19,527 | ) | (212,714 | ) | ||||
Income tax expense | 453,134 | 1,013,999 | ||||||
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Profit before income tax expense | 2,970,673 | |||||||
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38. | Events after the Reporting Period |
Pursuant to the resolution of the Board of Directors on November 6, 2020, the Company decided to pay interim cash dividends ofW1,500 per common share (total dividend:W117.7 billion).
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POSCO
Condensed Separate Interim Financial Statements
(Unaudited)
September 30, 2020
(With Independent Auditors’ Review Report Thereon)
Table of Contents
Table of Contents
Page | ||||
1 | ||||
Condensed Separate Interim Financial Statements | ||||
3 | ||||
Condensed Separate Interim Statements of Comprehensive Income | 5 | |||
6 | ||||
7 | ||||
Notes to the Condensed Separate Interim Financial Statements | 9 |
Table of Contents
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 September 30, 2020, the condensed separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020 and 2019, the condensed separate interim statements of changes in equity and cash flows for the nine-month periods ended September 30, 2020 and 2019, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s responsibility
Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standard (“K-IFRS”) No. 1034 “Interim Financial Reporting”. The Company’s management is also responsible for the internal controls determined necessary to prepare condensed separate interim financial statements free of material misstatements due to error or fraud.
Auditors’ review responsibility
Our responsibility is to issue a report on the condensed separate interim financial statements based on our reviews.
We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial statements consists of making inquiries primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No. 1034 “Interim Financial Reporting”.
Table of Contents
Other matters
The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.
The separate statement of financial position of the Company as of December 31, 2019, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 12, 2020, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is consistent, in all material respect, with the audited separate financial statements from which it has been derived.
Seoul, Korea
November 13, 2020
This report is effective as of November 13, 2020, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
2
Table of Contents
POSCO
Condensed Separate Interim Statements of Financial Position
As of September 30, 2020 and December 31, 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | December 31, 2019 | |||||||||
Assets | ||||||||||||
Cash and cash equivalents | 20 | 978,139 | ||||||||||
Trade accounts and notes receivable, net | 4,14,20,25,32 | 3,686,876 | 3,987,041 | |||||||||
Other receivables, net | 5,20,32 | 275,300 | 321,352 | |||||||||
Other short-term financial assets | 6,20 | 9,995,881 | 7,858,979 | |||||||||
Inventories | 7,29 | 3,852,919 | 4,988,530 | |||||||||
Assets held for sale | 8 | 32,776 | 53,924 | |||||||||
Other current assets | 13 | 42,683 | 28,101 | |||||||||
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Total current assets | 20,873,341 | 18,216,066 | ||||||||||
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Long-term trade accounts and notes receivable, net | 4,20 | 6,000 | 6,014 | |||||||||
Other receivables, net | 5,20 | 92,904 | 56,468 | |||||||||
Other long-term financial assets | 6,20 | 1,124,502 | 1,257,896 | |||||||||
Investments in subsidiaries, associates and joint ventures | 9 | 15,212,632 | 15,069,857 | |||||||||
Investment property, net | 10 | 155,208 | 158,077 | |||||||||
Property, plant and equipment, net | 11 | 20,085,560 | 20,132,199 | |||||||||
Intangible assets, net | 12 | 667,804 | 708,915 | |||||||||
Other non-current assets | 13 | 107,788 | 105,274 | |||||||||
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Total non-current assets | 37,452,398 | 37,494,700 | ||||||||||
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Total assets | 55,710,766 | |||||||||||
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See accompanying notes to the condensed separate interim financial statements.
3
Table of Contents
POSCO
Condensed Separate Interim Statements of Financial Position, Continued
As of September 30, 2020 and December 31, 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | December 31, 2019 | |||||||||
Liabilities | ||||||||||||
Trade accounts and notes payable | 20,32 | 667,551 | ||||||||||
Short-term borrowings and current installments of long-term borrowings | 4,14,20 | 3,178,594 | 1,146,476 | |||||||||
Other payables | 15,20,32 | 948,155 | 1,113,003 | |||||||||
Other short-term financial liabilities | 16,20 | 11,125 | 10,969 | |||||||||
Current income tax liabilities | 152,819 | 237,293 | ||||||||||
Provisions | 17 | 39,898 | 21,007 | |||||||||
Other current liabilities | 19,25 | 168,499 | 135,147 | |||||||||
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Total current liabilities | 5,646,184 | 3,331,446 | ||||||||||
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Long-term borrowings, excluding current installments | 14,20 | 5,893,351 | 5,191,537 | |||||||||
Other payables | 15,20 | 231,617 | 222,802 | |||||||||
Other long-term financial liabilities | 16,20 | 32,564 | 46,925 | |||||||||
Defined benefit liabilities, net | 18 | 80,575 | 54,146 | |||||||||
Deferred tax liabilities | 1,021,937 | 1,190,553 | ||||||||||
Long-term provisions | 17,33 | 49,440 | 53,942 | |||||||||
Other non-current liabilities | 19,25 | 532 | 5,230 | |||||||||
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Total non-current liabilities | 7,310,016 | 6,765,135 | ||||||||||
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Total liabilities | 12,956,200 | 10,096,581 | ||||||||||
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Equity | ||||||||||||
Share capital | 21 | 482,403 | 482,403 | |||||||||
Capital surplus | 21,30 | 1,339,289 | 1,252,220 | |||||||||
Hybrid bonds | 22 | 199,384 | 199,384 | |||||||||
Reserves | 23 | (335,281 | ) | (183,930 | ) | |||||||
Treasury shares | 24 | (1,837,980 | ) | (1,508,303 | ) | |||||||
Retained earnings | 45,521,724 | 45,372,411 | ||||||||||
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Total equity | 45,369,539 | 45,614,185 | ||||||||||
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Total liabilities and equity | 55,710,766 | |||||||||||
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See accompanying notes to the condensed separate interim financial statements.
4
Table of Contents
POSCO
Condensed Separate Interim Statements of Comprehensive Income
For the three-month and nine-month periods ended September 30, 2020 and 2019
(Unaudited)
For the three-month periods ended September 30 | For the nine-month periods ended September 30 | |||||||||||||||||||
(in millions of Won, except per share informations) | Notes | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Revenue | 25,32 | 7,735,895 | 19,432,566 | 23,028,220 | ||||||||||||||||
Cost of sales | 7,29,32 | (6,064,351 | ) | (6,812,557 | ) | (18,037,570 | ) | (20,024,140 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Gross profit | 513,536 | 923,338 | 1,394,996 | 3,004,080 | ||||||||||||||||
Selling and administrative expenses | 29,32 | |||||||||||||||||||
Reversal of (impairment loss) on trade accounts and notes receivable | 31 | 2 | (4,936 | ) | 4,638 | |||||||||||||||
Other administrative expenses | 26 | (196,051 | ) | (203,058 | ) | (587,582 | ) | (619,488 | ) | |||||||||||
Selling expenses | 26 | (55,653 | ) | (57,806 | ) | (190,979 | ) | (169,989 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Operating profit | 261,863 | 662,476 | 611,499 | 2,219,241 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Finance income and costs | 20,27 | |||||||||||||||||||
Finance income | 90,469 | 260,782 | 875,321 | 835,976 | ||||||||||||||||
Finance costs | (28,342 | ) | (197,574 | ) | (526,062 | ) | (465,867 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other non-operating income and expenses | 32 | |||||||||||||||||||
Reversal of (impairment loss) on other receivables |
| 208 | (340 | ) | (119 | ) | (612 | ) | ||||||||||||
Other non-operating income | 28 | 8,840 | 71,158 | 114,563 | 127,998 | |||||||||||||||
Other non-operating expenses | 28,29 | (52,782 | ) | (103,543 | ) | (228,726 | ) | (356,236 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Profit before income tax | 280,256 | 692,959 | 846,476 | 2,360,500 | ||||||||||||||||
Income tax expense | 30 | (99,446 | ) | (193,914 | ) | (206,000 | ) | (644,900 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Profit | 180,810 | 499,045 | 640,476 | 1,715,600 | ||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||
Items that will not be reclassified subsequently to profit or loss: | ||||||||||||||||||||
Remeasurements of defined benefit plans | 18 | (437 | ) | (2,384 | ) | (830 | ) | (4,266 | ) | |||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income | 6,20,23 | 6,396 | (67,564 | ) | (154,254 | ) | (41,974 | ) | ||||||||||||
Total comprehensive income | 429,097 | 485,392 | 1,669,360 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Basic and diluted earnings per share (in Won) | 31 | 6,208 | 7,965 | 21,352 |
See accompanying notes to the condensed separate interim financial statements.
5
Table of Contents
POSCO
Condensed Separate Interim Statements of Changes in Equity
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Share capital | Capital surplus | Hybrid bonds | Reserves | Treasury shares | Retained earnings | Total | |||||||||||||||||||||
Balance as of January 1, 2019 | 1,154,775 | 199,384 | (207,191 | ) | (1,532,728 | ) | 45,175,459 | 45,272,102 | ||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Profit | — | — | — | — | — | 1,715,600 | 1,715,600 | |||||||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||||||
Remeasurements of defined benefit plans, net of tax | — | — | — | — | — | (4,266 | ) | (4,266 | ) | |||||||||||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax | — | — | — | (33,581 | ) | — | (8,393 | ) | (41,974 | ) | ||||||||||||||||||
Transactions with owners of the Company, recognized directly in equity: | ||||||||||||||||||||||||||||
Year-end dividends | — | — | — | — | — | (400,006 | ) | (400,006 | ) | |||||||||||||||||||
Interim dividends | — | — | — | — | — | (320,462 | ) | (320,462 | ) | |||||||||||||||||||
Interest of hybrid bonds | — | — | — | — | — | (6,881 | ) | �� | (6,881 | ) | ||||||||||||||||||
Disposal of treasury shares | — | 12,576 | — | — | 24,425 | — | 37,001 | |||||||||||||||||||||
Business combination | — | 84,869 | — | — | — | — | 84,869 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance as of September 30, 2019 | 1,252,220 | 199,384 | (240,772 | ) | (1,508,303 | ) | 46,151,051 | 46,335,983 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance as of January 1, 2020 | 1,252,220 | 199,384 | (183,930 | ) | (1,508,303 | ) | 45,372,411 | 45,614,185 | ||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Profit | — | — | — | — | — | 640,476 | 640,476 | |||||||||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||||||||
Remeasurements of defined benefit plans, net of tax | — | — | — | — | — | (830 | ) | (830 | ) | |||||||||||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax | — | — | — | (151,351 | ) | — | (2,903 | ) | (154,254 | ) | ||||||||||||||||||
Transactions with owners of the Company, recognized directly in equity: | ||||||||||||||||||||||||||||
Year-end dividends | — | — | — | — | — | (320,462 | ) | (320,462 | ) | |||||||||||||||||||
Interim dividends | — | — | — | — | — | (160,062 | ) | (160,062 | ) | |||||||||||||||||||
Interest of hybrid bonds | — | — | — | — | — | (6,906 | ) | (6,906 | ) | |||||||||||||||||||
Acquisition of treasury shares | — | — | — | — | (329,677 | ) | — | (329,677 | ) | |||||||||||||||||||
Others (Note 30) | — | 87,069 | — | — | — | — | 87,069 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance as of September 30, 2020 | 1,339,289 | 199,384 | (335,281 | ) | (1,837,980 | ) | 45,521,724 | 45,369,539 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed separate interim financial statements.
6
Table of Contents
POSCO
Condensed Separate Interim Statements of Cash Flows
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | September 30, 2019 | |||||||||
Cash flows from operating activities | ||||||||||||
Profit | 1,715,600 | |||||||||||
Adjustments for : | ||||||||||||
Expenses related to post-employment benefit | 93,872 | 88,362 | ||||||||||
Depreciation | 1,698,104 | 1,608,237 | ||||||||||
Amortization | 74,002 | 57,776 | ||||||||||
Impairment loss (reversal of) on trade and other receivables |
| 5,055 | (4,026 | ) | ||||||||
Finance income | (573,676 | ) | (623,502 | ) | ||||||||
Finance costs | 315,516 | 312,416 | ||||||||||
Loss on valuation of inventories | 7,236 | — | ||||||||||
Gain on disposal of property, plant and equipment | (7,211 | ) | (18,748 | ) | ||||||||
Loss on disposal of property, plant and equipment | 125,031 | 63,409 | ||||||||||
Impairment losses on property, plant and equipment | 22,997 | 209,910 | ||||||||||
Gain on disposal of intangible assets | (197 | ) | (1,013 | ) | ||||||||
Gain on disposal of investments in subsidiaries, associates and joint ventures | (24,354 | ) | (4,689 | ) | ||||||||
Impairment losses on investments in subsidiaries, associates and joint ventures | 1,000 | 10,422 | ||||||||||
Gain on disposal of assets held for sale | (22,488 | ) | (29,341 | ) | ||||||||
Loss on disposal of assets held for sale | 5,383 | — | ||||||||||
Impairment loss on assets held for sale | 9,093 | 5,179 | ||||||||||
Gain on disposal of emission rights | (24,566 | ) | (6,122 | ) | ||||||||
Gain on valuation of emission rights | — | (25,440 | ) | |||||||||
Increase to provisions | 45,626 | (10,013 | ) | |||||||||
Income tax expense | 206,000 | 644,900 | ||||||||||
Others | (2,618 | ) | (91 | ) | ||||||||
Changes in operating assets and liabilities | 34 | 1,792,321 | (363,768 | ) | ||||||||
Interest received | 156,619 | 117,263 | ||||||||||
Interest paid | (161,098 | ) | (105,868 | ) | ||||||||
Dividends received | 163,905 | 231,798 | ||||||||||
Income taxes paid | (316,862 | ) | (984,991 | ) | ||||||||
|
|
|
| |||||||||
Net cash provided by operating activities | 2,887,660 | |||||||||||
|
|
|
|
See accompanying notes to the condensed separate interim financial statements.
7
Table of Contents
POSCO
Condensed Separate Interim Statements of Cash Flows, Continued
For the nine-month periods ended September 30, 2020 and 2019
(Unaudited)
(in millions of Won) | Notes | September 30, 2020 | September 30, 2019 | |||||||||
Cash flows from investing activities | ||||||||||||
Decrease in deposits | 2,250,082 | |||||||||||
Proceeds from disposal of short-term financial instruments | 26,654,572 | 25,153,652 | ||||||||||
Collection of short-term loans | 1,798 | — | ||||||||||
Proceeds from disposal of equity securities | 7,938 | 22,752 | ||||||||||
Proceeds from disposal of current portion of debt security | 426,214 | 11 | ||||||||||
Proceeds from disposal of other securities | 8,183 | 3,111 | ||||||||||
Proceeds from disposal of investments in subsidiaries, associates and joint ventures | 21,820 | 13,783 | ||||||||||
Proceeds from disposal of intangible assets | 1,016 | 5,587 | ||||||||||
Proceeds from disposal of emission rights | 66,143 | 12,693 | ||||||||||
Proceeds from disposal of assets held for sale | 224,546 | 463,657 | ||||||||||
Proceeds from business combination | — | 2,171 | ||||||||||
Increase in deposits | (2,939,354 | ) | (2,276,163 | ) | ||||||||
Acquisition of short-term financial instruments | (28,773,711 | ) | (24,591,354 | ) | ||||||||
Increase in long-term loans | (19,127 | ) | (1,773 | ) | ||||||||
Acquisition of debt securities | (361,599 | ) | (290,100 | ) | ||||||||
Acquisition of other securities | (13,107 | ) | (110 | ) | ||||||||
Acquisition of investment in subsidiaries, associates and joint ventures | (204,601 | ) | (81,667 | ) | ||||||||
Acquisition of property, plant and equipment | (1,817,307 | ) | (1,128,329 | ) | ||||||||
Proceeds from disposal of property, plant and equipment | (64,431 | ) | (17,927 | ) | ||||||||
Acquisition of intangible asstes | (119,000 | ) | (120,666 | ) | ||||||||
Payment for acquisition of business, net of cash acquired | — | (1,156,953 | ) | |||||||||
|
|
|
| |||||||||
Net cash used in investing activities | (1,737,543 | ) | ||||||||||
|
|
|
| |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from borrowings | 3,045,576 | 1,379,550 | ||||||||||
Increase in long-term financial liabilities | 251 | 3,237 | ||||||||||
Proceeds from disposals of derivatives | — | 9,683 | ||||||||||
Receipt of government grants | 897 | — | ||||||||||
Repayment of borrowings | (414,574 | ) | (996,544 | ) | ||||||||
Repayment of lease liabilities | (46,913 | ) | (29,247 | ) | ||||||||
Decrease in long-term financial liabilities | (330 | ) | (1,471 | ) | ||||||||
Payment of cash dividends | (480,541 | ) | (720,505 | ) | ||||||||
Acquisition of treasury shares | (329,677 | ) | — | |||||||||
Payment of interest of hybrid bonds | (6,932 | ) | (6,906 | ) | ||||||||
|
|
|
| |||||||||
Net cash provided by (used in) financing activities | (362,203 | ) | ||||||||||
|
|
|
| |||||||||
Effect of exchange rate fluctuation on cash held | (11,368 | ) | 1,744 | |||||||||
Net increase in cash and cash equivalents | 2,008,767 | 789,658 | ||||||||||
Cash and cash equivalents at beginning of the period |
| 978,139 | 259,219 | |||||||||
|
|
|
| |||||||||
Cash and cash equivalents at end of the period | 1,048,877 | |||||||||||
|
|
|
|
See accompanying notes to the condensed separate interim financial statements.
8
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements
As of September 30, 2020
(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 six of its overseas liaison offices.
As of September 30, 2020, the shares of the Company are listed on the Korea Exchange, while its American Depository Receipts (ADRs) are listed on the New York Stock Exchange.
2. Statement of Compliance
Statement of compliance
The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audit of Companies, Etc in the Republic of Korea.
These condensed separate interim financial statements have been prepared in accordance with K-IFRS No. 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the last annual separate financial statements as of and for the year ended December 31, 2019. These condensed separate interim financial statements do not include all of the disclosures required for full annual financial statements.
These condensed interim financial statements are separate interim financial statements prepared in accordance 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.
9
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
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.
With the outbreak of COVID-19 pandemic, governments around the globe have implemented measures such as mandatory factory shutdown, shelter-in-place orders, border closure, and travel restrictions. The ultimate impact of COVID-19 pandemic on the Company’s operations is not yet known and will depend on future developments. The duration and significance of COVID-19 is highly uncertain and unpredictable, and the protective measures by the governments around the globe or the Company may lead to substantial business interruption and decrease in business scale. The financial impact of this cannot be reasonably estimated, but management expects the Company to be partially affected to the most areas where it operates. The extent and duration of COVID-19’s impact on the Company’s business cannot yet be reasonably estimated.
(b) | Measurement of fair value |
The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the financial officer.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of K-IFRS including the level in the fair value hierarchy in which such valuation techniques should be classified.
Significant valuation issues are reported to the Company’s Audit Committee.
When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
• | Level 1 – | unadjusted quoted prices in active markets for identical assets or liabilities. | ||
• | Level 2 – | inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly. | ||
• | Level 3 – | inputs for the assets or liabilities that are not based on observable market data. |
If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
10
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(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, 2019. The Company also expects to apply the accounting policies set out below for their annual reporting period ending December 31, 2020.
(a) | K-IFRS No. 1001 “Presentation of Financial Statements” and K-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors” |
The definition of materiality has been clarified, and K-IFRS No. 1001 “Presentation of Financial Statements” and K-IFRS No. 1008 “Accounting Policies, Changes in Accounting Estimates and Errors” have been amended according to the clarified definition. In determining the materiality, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The Company does not expect the effect of the amendments to the financial statements to be significant.
(b) | K-IFRS No. 1103 “Business Combinations” |
The amendments clarifies the definition of business when it includes input and process together significantly contribute to ability to create output and requires a simplified assessment that result in an asset acquisition if substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or a group of similar identifiable assets. The Company does not expect the effect of the amendments to the financial statements to be significant.
11
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
4. Trade Accounts and Notes Receivable
Trade accounts and notes receivable as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Trade accounts and notes receivable | 3,999,991 | |||||||
Less: Allowance for doubtful accounts | (14,922 | ) | (12,950 | ) | ||||
|
|
|
| |||||
3,987,041 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Trade accounts and notes receivable | 9,530 | |||||||
Less: Present value discount | (2,501 | ) | (2,501 | ) | ||||
Less: Allowance for doubtful accounts | (1,012 | ) | (1,015 | ) | ||||
|
|
|
| |||||
6,014 | ||||||||
|
|
|
|
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 September 30, 2020 and December 31, 2019, the carrying amount of such secured borrowings are497,045 million andW167,021 million, respectively, which are included in the short-term borrowings.W
5. Other Receivables
Other receivables as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Loans | 2,950 | |||||||
Other accounts receivable | 226,814 | 279,093 | ||||||
Others | 50,774 | 47,257 | ||||||
Less: Allowance for doubtful accounts | (5,238 | ) | (7,948 | ) | ||||
|
|
|
| |||||
321,352 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Loans | 34,224 | |||||||
Long-term other accounts receivable | 45,358 | 27,570 | ||||||
Others | 3,891 | 3,555 | ||||||
Less: Allowance for doubtful accounts | (8,998 | ) | (8,881 | ) | ||||
|
|
|
| |||||
56,468 | ||||||||
|
|
|
|
12
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
6. Other Financial Assets
(a) | Other financial assets as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Short-term derivative assets | 15,603 | |||||||
Debt securities | 154,355 | 290,559 | ||||||
Deposit instruments(*1) | 1,310,658 | 1,294,525 | ||||||
Short-term financial instruments | 8,452,851 | 6,258,292 | ||||||
|
|
|
| |||||
7,858,979 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Long-term derivative assets | 64,072 | |||||||
Equity securities | 927,383 | 1,128,641 | ||||||
Debt securities | 5,346 | 9,177 | ||||||
Other securities | 63,286 | 55,972 | ||||||
Deposit instruments(*2) | 34 | 34 | ||||||
|
|
|
| |||||
1,257,896 | ||||||||
|
|
|
|
(*1) | As of September 30, 2020 and December 31, 2019, |
(*2) | The Company is required to provide deposits to maintain checking accounts and accordingly the withdrawal of these deposits is restricted. |
(b) | Equity securities as of September 30, 2020 and December 31, 2019 are as follows: |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||
(in millions of Won) | Number of shares | Ownership (%) | Acquisition cost | Fair value | Net changes in fair value of equity securities | Book value | Book value | |||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||||||
Nippon Steel Corporation | 15,698,500 | 1.65 | 172,744 | (301,218 | ) | 172,744 | 276,133 | |||||||||||||||||||||
KB Financial Group Inc. | 3,863,520 | 0.93 | 178,839 | 145,075 | (33,764 | ) | 145,075 | 184,097 | ||||||||||||||||||||
Woori Financial Group Inc. | 20,280,000 | 2.81 | 244,447 | 174,002 | (70,445 | ) | 174,002 | 235,248 | ||||||||||||||||||||
SAMWONSTEEL Co., Ltd. | 5,700,000 | 14.25 | 8,930 | 13,737 | 4,807 | 13,737 | 17,214 | |||||||||||||||||||||
DONGKUK INDUSTRIES COMPANY | 2,611,989 | 4.82 | 11,911 | 8,698 | (3,213 | ) | 8,698 | 6,778 | ||||||||||||||||||||
DONGKUK STEEL MILL CO., LTD | — | — | — | — | — | — | 8,571 | |||||||||||||||||||||
Others (7 companies) | 55,759 | 30,747 | (25,012 | ) | 30,747 | 34,157 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
973,848 | 545,003 | (428,845 | ) | 545,003 | 762,198 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Non-marketable equity securities |
| |||||||||||||||||||||||||||
CSN Mineracao S.A. | 3,658,394 | 2.02 | 221,535 | 292,453 | 70,918 | 292,453 | 292,453 | |||||||||||||||||||||
POSCO PLANTEC CO., LTD(*1) | 18,337,912 | 10.99 | 19,437 | 19,437 | — | 19,437 | — | |||||||||||||||||||||
Korea Nickel CO.LTD | 75,600 | 14.00 | 10,194 | 10,194 | — | 10,194 | 10,194 | |||||||||||||||||||||
Poongsan Special Metal Corp. | 315,790 | 5.00 | 7,657 | 7,657 | — | 7,657 | 7,657 | |||||||||||||||||||||
HANKUM.CO.LTD | 21,000 | 4.99 | 4,599 | 4,599 | — | 4,599 | 4,599 | |||||||||||||||||||||
Core-Industry Co., Ltd. | 490,000 | 19.84 | 4,214 | 4,214 | — | 4,214 | 4,214 | |||||||||||||||||||||
AJUSTEEL CO.,LTD | 17,000 | 4.36 | 4,165 | 4,165 | — | 4,165 | 4,165 | |||||||||||||||||||||
Others (28 companies) | — | 144,191 | 39,661 | (104,530 | ) | 39,661 | 43,161 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
415,992 | 382,380 | (33,612 | ) | 382,380 | 366,443 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
927,383 | (462,457 | ) | 927,383 | 1,128,641 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*1) | Fair value is based on an analysis performed by an external professional evaluation agency. |
13
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
7. Inventories
Inventories as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Finished goods | 868,012 | |||||||
Semi-finished goods | 1,156,261 | 1,474,153 | ||||||
By-products | 7,831 | 10,763 | ||||||
Raw materials | 765,630 | 1,139,517 | ||||||
Fuel and materials | 548,042 | 646,396 | ||||||
Materials-in-transit | 644,048 | 856,706 | ||||||
Others | 706 | 660 | ||||||
|
|
|
| |||||
3,860,155 | 4,996,207 | |||||||
Less: Allowance for inventories valuation | (7,236 | ) | (7,677 | ) | ||||
|
|
|
| |||||
4,988,530 | ||||||||
|
|
|
|
The amount of loss on valuation of inventories recognized in cost of sales during the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were7,236 million andW7,677 million, respectively.W
14
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
8. Assets Held for Sale
Assets held for sale as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Investments in subsidiaries(*1,2) | 17,603 | |||||||
Property, plant and equipment(*3,4) | 31,634 | 36,321 | ||||||
Intangible assets | 1,142 | — | ||||||
|
|
|
| |||||
53,924 | ||||||||
|
|
|
|
(*1) | The Company determined to dispose a part of its interest in of POSCO Thainox Public Company Limited, a subsidiary of the Company, and classified it as assets held for sale. During the nine-month period ended September 30, 2020, the Company recognized |
(*2) | During the nine-month period ended September 30, 2020, the Company classified its investment in POSCO Family Strategy Fund, a subsidiary of the Company, as assets held for sale and completed liquidation and distribution of residual proceeds during the nine-month period ended September 30, 2020. The Company recognized |
(*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 nine-month period ended September 30, 2020, the Company recognized |
(*4) | During the year ended December 31, 2019, the Company completed the disposal of all assets, liabilities and rights other than LNG tanks under construction, which were to be disposed of, related to a LNG terminal business of the Company to POSCO ENERGY CO., LTD. The construction and disposal were completed during the nine-month period ended September 30, 2020 and the Company recognized |
15
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
9. Investments in Subsidiaries, Associates and Joint ventures
(a) | Details of subsidiaries and their carrying amounts as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||||||||||||
Country | Principal operations | Ownership (%) | Book value | Book value | ||||||||||||||
[Domestic] | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | Korea | Trading | 62.91 | 3,383,745 | ||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO.,LTD. | Korea | Engineering and construction | 52.80 | 1,014,314 | 1,014,314 | |||||||||||||
POSCO ENERGY CO., LTD. | Korea | Power generation | 89.02 | 658,176 | 658,176 | |||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | Korea | Coated steel manufacturing and sales | 56.87 | 108,421 | 108,421 | |||||||||||||
POSCO Venture Capital Co., Ltd. | Korea | Investment in venture companies | 95.00 | 103,780 | 103,780 | |||||||||||||
POSCO CHEMICAL CO., LTD | Korea | Refractory manufacturing and sales | 61.26 | 207,631 | 207,631 | |||||||||||||
POSCO O&M Co., Ltd(*1) | Korea | Business facility maintenance | 47.17 | 73,374 | 73,374 | |||||||||||||
POSCO ICT | Korea | Computer hardware and software distribution | 65.38 | 70,990 | 70,990 | |||||||||||||
POSCO M-TECH(*1) | Korea | Packing materials manufacturing and sales | 48.85 | 107,278 | 107,278 | |||||||||||||
POSCO Family Strategy Fund(*2) | Korea | Investment in venture companies | — | — | 29,596 | |||||||||||||
Busan E&E Co,. Ltd.(*3) | Korea | Municipal solid waste fuel and power generation | 70.00 | 30,148 | 30,148 | |||||||||||||
Others (12 companies) | 110,494 | 117,393 | ||||||||||||||||
|
|
|
| |||||||||||||||
5,868,351 | 5,904,846 | |||||||||||||||||
|
|
|
| |||||||||||||||
[Foreign] | ||||||||||||||||||
PT. KRAKATAU POSCO | Indonesia | Steel manufacturing and sales | 70.00 | 707,509 | 707,509 | |||||||||||||
POSCO WA PTY LTD | Australia | Iron ore sales and mine development | 100.00 | 644,109 | 640,720 | |||||||||||||
POSCO Maharashtra Steel Private Limited | India | Steel manufacturing and sales | 100.00 | 722,569 | 722,569 | |||||||||||||
POSCO Canada Ltd. | Canada | Coal mine development | 100.00 | 560,879 | 560,879 | |||||||||||||
POSCO AUSTRALIA PTY LTD | Australia | Iron ore sales and mine development | 100.00 | 330,623 | 330,623 | |||||||||||||
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd. | China | Stainless steel manufacturing and sales | 58.60 | 283,845 | 283,845 | |||||||||||||
POSCO Thainox Public Company Limited | Thailand | Stainless steel manufacturing and sales | 74.56 | 211,592 | 212,339 | |||||||||||||
POSCO-China Holding Corp. | China | Investment management | 100.00 | 593,841 | 593,841 | |||||||||||||
POSCO-India Private Limited | India | Steel manufacturing and sales | 99.99 | 75,567 | 75,567 | |||||||||||||
POSCO MEXICO S.A. DE C.V. | Mexico | Plate steel manufacturing and sales | 83.28 | 180,072 | 180,072 | |||||||||||||
POSCO America Corporation | USA | Steel trading | 99.45 | 192,156 | 192,156 | |||||||||||||
POSCO-VIETNAM Co., Ltd. | Vietnam | Steel manufacturing and sales | 100.00 | 160,572 | 160,572 | |||||||||||||
POSCO VST CO., LTD. | Vietnam | Stainless steel manufacturing and sales | 95.65 | 144,573 | 144,573 | |||||||||||||
POSCO(Guangdong) Automotive Steel Co., Ltd. | China | Plate steel manufacturing and sales | 83.64 | 52,936 | 52,936 | |||||||||||||
POSCO COATED STEEL (THAILAND) CO., LTD. | Thailand | Plate steel manufacturing and sales | 100.00 | 121,592 | 121,592 | |||||||||||||
POSCO Asia Co., Ltd. | Hong Kong | Steel and raw material trading | 100.00 | 117,710 | 117,710 | |||||||||||||
POSCO ASSAN TST STEEL INDUSTRY | Turkey | Steel manufacturing and sales | 60.00 | 92,800 | 92,800 | |||||||||||||
POSCO JAPAN Co., Ltd. | Japan | Steel trading | 100.00 | 68,436 | 68,436 | |||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | China | Stainless steel manufacturing and sales | 70.00 | 65,982 | 65,982 | |||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | China | Steel manufacturing and sales | 90.00 | 62,494 | 62,494 | |||||||||||||
POSCO AFRICA (PROPRIETARY) LIMITED | South Africa | Mine development | 100.00 | 50,297 | 50,297 | |||||||||||||
POSCO-Malaysia SDN. BHD. | Malaysia | Steel manufacturing and sales | 81.79 | 45,479 | 45,479 | |||||||||||||
POSCO Argentina S.A.U. | Argentina | Mineral exploration, manufacturing and sale | 100.00 | 370,250 | 370,250 | |||||||||||||
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (Formerly, POSCO SS VINA JOINT STOCK COMPANY)(*4) | Vietnam | Steel manufacturing and sales | 51.00 | 130,526 | — | |||||||||||||
Others (28 companies)(*5) | 510,080 | 485,668 | ||||||||||||||||
|
|
|
| |||||||||||||||
6,496,489 | 6,338,909 | |||||||||||||||||
|
|
|
| |||||||||||||||
12,243,755 | ||||||||||||||||||
|
|
|
|
(*1) | The Company classified POSCO M-TECH and POSCO O&M Co., Ltd. as the investments in subsidiaries, considering additional facts and circumstances, such as the relative size of the voting rights held by the Company and the degree of distribution of other shareholders, although the Company holds less than half of the voting rights of POSCO M-TECH and POSCO O&M Co., Ltd. |
(*2) | During the nine-month period ended September 30, 2020, the Company classified its investment in POSCO Family Strategy Fund, a subsidiary of the Company, as assets held for sale and completed liquidation and distribution of residual proceeds during the nine-month period ended September 30, 2020. |
16
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(*3) | As of September 30, 2020 and December 31, 2019, the investments in a subsidiary amounting to |
(*4) | During the nine-month period ended September 30, 2020, POSCO SS VINA JOINT STOCK COMPANY changed its name to POSCO YAMATO VINA STEEL JOINT STOCK COMPANY. The Company sold 49% of POSCO YAMATO VINA STEEL JOINT STOCK COMPANY and invested |
(*5) | During the nine-month period ended September 30, 2020, the Company sold the investment in POSCO China Dalian Plate Processing Center Co., Ltd., a subsidiary. |
(b) | Details of associates and their carrying amounts as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||||||||||||
Country | Principal operations | Ownership (%) | Book value | Book value | ||||||||||||||
[Domestic] | ||||||||||||||||||
EQP POSCO Global NO1 Natural Resources | Korea | Investment in mines | 34.43 | 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 (9 companies)(*1) | 22,976 | 22,468 | ||||||||||||||||
|
|
|
| |||||||||||||||
378,497 | 377,989 | |||||||||||||||||
|
|
|
| |||||||||||||||
[Foreign] | ||||||||||||||||||
Nickel Mining Company SAS | | New Caledonia | | Raw material manufacturing and sales | 49.00 | 189,197 | 189,197 | |||||||||||
9404-5515 Quebec Inc. | Canada | Investment in mines | 10.40 | 124,341 | 124,341 | |||||||||||||
Zhongyue POSCO (Qinhuangdao) | China | Tinplate manufacturing and sales | 24.00 | 11,003 | 11,003 | |||||||||||||
Others (6 companies) | 39,682 | 39,590 | ||||||||||||||||
|
|
|
| |||||||||||||||
364,223 | 364,131 | |||||||||||||||||
|
|
|
| |||||||||||||||
742,120 | ||||||||||||||||||
|
|
|
|
(*1) | During the nine-month period ended September 30, 2020, the investment in POSCO PLANTEC Co., Ltd., an associate, was reclassified from associates to equity securities as the paid-in capital increase of POSCO PLANTEC Co., Ltd. reduced the Company’s ownership percentage to less than 20%, resulting in a loss of significant influence over the investee. |
(*2) | As of September 30, 2020, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering its structure of the Board of Directors and others. During the nine-month period ended September 30, 2020, 7623704 Canada Inc. changed its name to 9404-5515 Quebec Inc. |
17
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(c) | Details of joint ventures and their carrying amounts as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||||||||||||
Country | Principal operations | Ownership (%) | Book value | Book value | ||||||||||||||
Roy Hill Holdings Pty Ltd(*1) | Australia | Mine development | 10.00 | 1,225,464 | ||||||||||||||
CSP—Compania Siderurgica do Pecem | Brazil | Steel manufacturing and sales | 20.00 | 343,553 | 322,463 | |||||||||||||
POSCO-NPS Niobium LLC | USA | Mine development | 50.00 | 364,609 | 364,609 | |||||||||||||
KOBRASCO | Brazil | Steel materials manufacturing and sales | 50.00 | 98,962 | 98,962 | |||||||||||||
Others (3 companies) | 72,484 | 72,484 | ||||||||||||||||
|
|
|
| |||||||||||||||
2,083,982 | ||||||||||||||||||
|
|
|
|
(*1) | As of September 30, 2020 and December 31, 2019, the investments in joint ventures amounting to |
10. Investment Property, Net
Changes in the carrying amount of investment property for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows:
(a) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Beginning | Depreciation(*1) | Transfer(*2) | Ending | ||||||||||||
Land | — | 232 | 91,970 | |||||||||||||
Buildings | 57,228 | (3,050 | ) | 388 | 54,566 | |||||||||||
Structures | 9,111 | (458 | ) | 19 | 8,672 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
(3,508 | ) | 639 | 155,208 | |||||||||||||
|
|
|
|
|
|
|
|
(*1) | The useful life and depreciation method of investment property are identical to those of property, plant and equipment. |
(*2) | Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio and the purpose of use. |
(b) | For the year ended December 31, 2019 |
(in millions of Won) | Beginning | Business Combination(*1) | Depreciation(*2) | Transfer(*3) | Ending | |||||||||||||||
Land | 41,195 | — | 5,906 | 91,738 | ||||||||||||||||
Buildings | 54,277 | 25 | (4,070 | ) | 6,996 | 57,228 | ||||||||||||||
Structures | 9,301 | — | (620 | ) | 430 | 9,111 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
41,220 | (4,690 | ) | 13,332 | 158,077 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*1) | These increases were due to business combination with POSCO Processing&Service. |
(*2) | The useful life and depreciation method of investment property are identical to those of property, plant and equipment. |
(*3) | Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio and the purpose of use. |
18
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
11. Property, Plant and Equipment, Net
Changes in the carrying amount of property, plant and equipment for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows:
(a) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Beginning | Acquisitions | Disposals | Depreciation | Impairment(*1) | Others(*2) | Ending | |||||||||||||||||||||
Land | — | (6 | ) | — | — | 1,409 | 1,399,484 | |||||||||||||||||||||
Buildings | 2,100,503 | 2,659 | (2,128 | ) | (155,198 | ) | (268 | ) | 133,947 | 2,079,515 | ||||||||||||||||||
Structures | 2,030,853 | 1,501 | (2,857 | ) | (129,646 | ) | (860 | ) | 77,333 | 1,976,324 | ||||||||||||||||||
Machinery and equipment | 12,602,435 | 24,915 | (14,105 | ) | (1,343,006 | ) | (9,057 | ) | 1,381,669 | 12,642,851 | ||||||||||||||||||
Vehicles | 9,951 | 974 | (3 | ) | (4,831 | ) | — | 3,682 | 9,773 | |||||||||||||||||||
Tools | 27,288 | 1,191 | (3 | ) | (9,054 | ) | — | 3,363 | 22,785 | |||||||||||||||||||
Furniture and fixtures | 38,329 | 2,114 | (174 | ) | (8,543 | ) | — | 10,066 | 41,792 | |||||||||||||||||||
Lease assets | 262,368 | 14,928 | — | (44,318 | ) | — | 109,211 | 342,189 | ||||||||||||||||||||
Construction-in-progress | 1,662,391 | 1,717,122 | (3,951 | ) | — | (12,812 | ) | (1,791,903 | ) | 1,570,847 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
1,765,404 | (23,227 | ) | (1,694,596 | ) | (22,997 | ) | (71,223 | ) | 20,085,560 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1) | The Company estimated recoverable amount for individual assets that ceased operations due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value and recognized impairment loss since recoverable amounts are less than their carrying amounts as of September 30, 2020. During the nine-month period ended September 30, 2020, the Company recognized impairment loss on certain assets due to damage from 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. |
(b) | For the year ended December 31, 2019 |
(in millions of Won) | Beginning | Acquisitions | business combination(*5) | Disposals | Depreciation | Impairment(*1) | Others(*2,4) | Ending | ||||||||||||||||||||||||
Land | — | — | (1,805 | ) | — | — | (58,746 | ) | 1,398,081 | |||||||||||||||||||||||
Buildings | 2,199,429 | 7,157 | 67,751 | (7,706 | ) | (202,171 | ) | (25,869 | ) | 61,912 | 2,100,503 | |||||||||||||||||||||
Structures | 2,244,099 | 10,777 | 39,783 | (3,125 | ) | (173,181 | ) | (9,585 | ) | (77,915 | ) | 2,030,853 | ||||||||||||||||||||
Machinery and equipment | 12,911,467 | 92,136 | 696,204 | (21,616 | ) | (1,717,864 | ) | (176,295 | ) | 818,403 | 12,602,435 | |||||||||||||||||||||
Vehicles | 7,340 | 747 | 40 | — | (6,244 | ) | — | 8,068 | 9,951 | |||||||||||||||||||||||
Tools | 23,864 | 5,348 | 138 | (24 | ) | (11,499 | ) | — | 9,461 | 27,288 | ||||||||||||||||||||||
Furniture and fixtures | 36,287 | 4,781 | 94 | (9 | ) | (9,805 | ) | (137 | ) | 7,118 | 38,329 | |||||||||||||||||||||
Lease assets(*3) | 142,801 | 27,376 | — | — | (34,669 | ) | — | 126,860 | 262,368 | |||||||||||||||||||||||
Construction-in-progress | 1,130,415 | 1,838,490 | 696 | — | — | (10,150 | ) | (1,297,060 | ) | 1,662,391 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1,986,812 | 804,706 | (34,285 | ) | (2,155,433 | ) | (222,036 | ) | (401,899 | ) | 20,132,199 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1) | The Company estimated recoverable amount for individual assets related to CEM and Fe-Si factories, etc. that ceased operations due to the disposal plan and others using fair value less costs to sell based on the appraisal value or scrap value and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2019. |
(*2) | During the year ended December 31, 2019, the Company decided to sell the rights related to the operation of LNG Terminal to POSCO ENERGY CO., LTD. and reclassified to assets held for sale and liabilities directly associated with the assets held for sale. As of December 31, 2019, the Company recognized |
(*3) | Right-of-use assets of |
19
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(*4) | 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. |
(*5) | This has increased due to the business combination between the company and POSCO ENERGY’s by-product power generation business. |
(c) | Information on lease agreements for which the Company is a lessee is as follows: |
1) Right-of-use assets
1 | Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the nine-month period ended September 30, 2020 were as follows. |
(in millions of Won) | Beginning | Acquisitions | Depreciation | Others | Ending | |||||||||||||||
Land | 8,853 | (75 | ) | — | 8,778 | |||||||||||||||
Buildings | 71,921 | 6,075 | (4,897 | ) | — | 73,099 | ||||||||||||||
Structures | 64,434 | — | (3,910 | ) | — | 60,524 | ||||||||||||||
Machinery and equipment | 60,198 | — | (4,125 | ) | — | 56,073 | ||||||||||||||
Vehicles | 6,755 | — | (375 | ) | — | 6,380 | ||||||||||||||
Ships | 24,082 | 111,537 | (20,739 | ) | — | 114,880 | ||||||||||||||
Furniture and fixtures | 34,978 | — | (10,197 | ) | (2,326 | ) | 22,455 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
126,465 | (44,318 | ) | (2,326 | ) | 342,189 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
2 | Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the year ended December 31, 2019 were as follows. |
(in millions of Won) | The date of initial application (January 1, 2019) | Acquisitions | Depreciation | Others | Ending | |||||||||||||||
Buildings | — | (6,463 | ) | — | 71,921 | |||||||||||||||
Structures | 53,761 | 13,502 | (2,829 | ) | — | 64,434 | ||||||||||||||
Machinery and equipment | 65,698 | — | (5,500 | ) | — | 60,198 | ||||||||||||||
Vehicles | 7,256 | — | (501 | ) | — | 6,755 | ||||||||||||||
Ships | 26,499 | — | (2,417 | ) | — | 24,082 | ||||||||||||||
Furniture and fixtures | 39,813 | 13,874 | (16,959 | ) | (1,750 | ) | 34,978 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
27,376 | (34,669 | ) | (1,750 | ) | 262,368 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
20
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) Amount recognized in profit or loss
The amounts recognized in profit or loss related to leases for the three-month and the nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Interest on lease liabilities | 2,124 | 7,731 | 6,584 | |||||||||||||
Expenses related to short-term leases | 821 | 1,039 | 2,711 | 2,976 | ||||||||||||
Expenses related to leases of low-value assets | 1,459 | 1,304 | 4,848 | 4,031 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
4,467 | 15,290 | 13,591 | ||||||||||||||
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|
|
|
|
|
|
|
12. Intangible Assets, Net
Changes in the carrying amount of intangible assets for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows:
(a) For the nine-month period ended September 30, 2020
(in millions of Won) | Beginning | Acquisitions | Disposals | Amortization | Transfer(*2) | Ending | ||||||||||||||||||
Intellectual property rights | — | (1,360 | ) | (4,563 | ) | 5,726 | 24,348 | |||||||||||||||||
Membership(*1) | 82,657 | — | (862 | ) | — | — | 81,795 | |||||||||||||||||
Development expense | 86,023 | 233 | — | (31,540 | ) | 12,728 | 67,444 | |||||||||||||||||
Port facilities usage rights | 278,072 | — | — | (33,822 | ) | — | 244,250 | |||||||||||||||||
Construction-in-progress | 137,273 | 73,289 | — | — | (16,204 | ) | 194,358 | |||||||||||||||||
Other intangible assets | 100,345 | 19,725 | (61,302 | ) | (4,077 | ) | 918 | 55,609 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
93,247 | (63,524 | ) | (74,002 | ) | 3,168 | 667,804 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(*1) | Economic useful life of membership is indefinite. |
(*2) | Represents assets transferred from construction-in-progress and property, plant and equipment and to intangible assets and to assets held for sale and others. |
(b) For the year ended December 31, 2019
(in millions of Won) | Beginning | Acquisitions | Disposals | Amortization | Transfer(*2) | Ending | ||||||||||||||||||
Intellectual property rights | — | (1,270 | ) | (5,678 | ) | 7,116 | 24,545 | |||||||||||||||||
Membership(*1) | 73,183 | 9,204 | (6 | ) | — | 276 | 82,657 | |||||||||||||||||
Development expense | 91,758 | 2,205 | — | (41,793 | ) | 33,853 | 86,023 | |||||||||||||||||
Port facilities usage rights | 305,710 | — | (4,674 | ) | (22,964 | ) | — | 278,072 | ||||||||||||||||
Construction-in-progress | 58,561 | 114,638 | — | — | (35,926 | ) | 137,273 | |||||||||||||||||
Other intangible assets | 91,633 | 615 | (4,568 | ) | (6,755 | ) | 19,420 | 100,345 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
126,662 | (10,518 | ) | (77,190 | ) | 24,739 | 708,915 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(*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. |
13. Other Assets
21
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
Other assets as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Advance payments | 6,252 | |||||||
Prepaid expenses | 38,612 | 21,849 | ||||||
|
|
|
| |||||
28,101 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Long-term prepaid expenses | 5,088 | |||||||
Others(*1) | 103,266 | 100,186 | ||||||
|
|
|
| |||||
105,274 | ||||||||
|
|
|
|
(*1) | As of September 30, 2020 and December 31, 2019, the Company recognized tax assets amounting to |
14. Borrowings
(a) Borrowings as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Short-term borrowings | ||||||||
Short-term borrowings | 167,021 | |||||||
Current portion of debentures | 2,112,900 | 980,460 | ||||||
Less: Current portion of discount on debentures issued | (982 | ) | (1,005 | ) | ||||
|
|
|
| |||||
1,146,476 | ||||||||
|
|
|
| |||||
Long-term borrowings | ||||||||
Long-term borrowings | 1,181 | |||||||
Debentures | 5,924,859 | 5,216,681 | ||||||
Less: Discount on debentures issued | (32,706 | ) | (26,325 | ) | ||||
|
|
|
| |||||
5,191,537 | ||||||||
|
|
|
|
(b) Short-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | Lenders | Issuance date | Maturity date | Annual interest rate (%) | September 30, 2020 | December 31, 2019 | ||||||||||||||||||
Transfers of account receivables | — | — | — | — | 167,021 | |||||||||||||||||||
Borrowings in foreign trade | MUFG and others | 2020.07.15~2020.09.29 | 2020.10.13~2020.12.28 | 0.62~1.12 | 569,631 | — | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
167,021 | ||||||||||||||||||||||||
|
|
|
|
22
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(c) | Current portion of long-term borrowings as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | Lenders | Issuance | Maturity | Annual | September 30, 2020 | December 31, 2019 | ||||||||||
Debentures | Domestic debentures 306-2 and others | 2013.10.04~ 2018.07.05 | 2020.10.04~ 2021.07.05 | 1.88~3.50 | 169,930 | |||||||||||
Foreign debentures | Global debentures 2 | 2010.10.28~ 2011.04.14 | 2020.10.28~ 2021.04.14 | 4.25~5.25 | 1,642,100 | 809,525 | ||||||||||
|
|
|
| |||||||||||||
979,455 | ||||||||||||||||
|
|
|
|
(d) | Long-term borrowings excluding current portion, as of September 30, 2020 and December 31, 2019 are as follows: |
(in millions of Won) | Lenders | Issuance | Maturity | Annual | September 30, 2020 | December 31, 2019 | ||||||||||
Foreign borrowings | KOREA ENERGY AGENCY | 2007.12.27~ 2008.12.29 | 2022.12.29 | 3 year Government bond | 1,181 | |||||||||||
Debentures | Domestic debentures 304-2 and others | 2011.11.28~ 2019.10.16 | 2021.11.28~ 2029.10.16 | 1.56~4.12 | 2,205,686 | 2,504,194 | ||||||||||
Foreign debentures | Japan Yen private bond and others | 2011.12.22~ 2020.01.17 | 2021.12.22~ 2025.01.17 | 0.50~4.00 | 3,686,467 | 2,686,162 | ||||||||||
|
|
|
| |||||||||||||
5,191,537 | ||||||||||||||||
|
|
|
|
15. Other Payables
Other payables as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Accounts payable | 630,162 | |||||||
Accrued expenses | 409,083 | 432,835 | ||||||
Dividend payable | 2,254 | 2,296 | ||||||
Lease liabilities | 101,946 | 40,463 | ||||||
Withholdings | 11,108 | 7,247 | ||||||
|
|
|
| |||||
1,113,003 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Long-term accrued expenses | 842 | |||||||
Lease liabilities | 228,532 | 216,508 | ||||||
Long-term withholdings | 3,037 | 5,452 | ||||||
|
|
|
| |||||
222,802 | ||||||||
|
|
|
|
23
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
16. Other Financial Liabilities
Other financial liabilities as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Derivative liabilities | — | |||||||
Financial guarantee liabilities | 9,222 | 10,969 | ||||||
|
|
|
| |||||
10,969 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Derivative liabilities | 8,285 | |||||||
Financial guarantee liabilities | 32,564 | 38,640 | ||||||
|
|
|
| |||||
46,925 | ||||||||
|
|
|
|
17. Provisions
(a) Provisions as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||||||||||
Current | Non-current | Current | Non-current | |||||||||||||
Provision for bonus payments(*1,2) | 28,865 | 14,020 | 35,816 | |||||||||||||
Provision for restoration(*3) | 5,004 | 13,934 | 6,783 | 15,942 | ||||||||||||
Provision for legal contingencies | — | 2,052 | 204 | 2,184 | ||||||||||||
Provision for product warranties(*5) | 22,602 | 4,589 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
49,440 | 21,007 | 53,942 | ||||||||||||||
|
|
|
|
|
|
|
|
(*1) | Represents the provision for bonuses limited to 33%~67% of annual salaries for executives. |
(*2) | The Company estimated the present value of estimated future cash payments about the long-term service reward, based on actuarial measurement. |
(*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 September 30, 2020. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available currently to restore the land to its original condition. In addition, the Company has applied discount rates of 1.29%~1.40% to assess present value of these costs. |
(*4) | The Company has recognized provisions for certain litigations and other contingencies as of September 30, 2020. |
(*5) | As of September 30, 2020, the Company recognized the expected claim cost to be charged as a provision. |
24
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
(b) | Changes in provisions for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
1) For the nine-month period ended September 30, 2020
(in millions of Won) | Beginning | Increase | Reversal | Utilization | Ending | |||||||||||||||
Provision for bonus payments | 12,009 | — | (20,688 | ) | 41,157 | |||||||||||||||
Provision for restoration | 22,725 | 322 | (340 | ) | (3,769 | ) | 18,938 | |||||||||||||
Provision for legal contingencies | 2,388 | 424 | (709 | ) | (51 | ) | 2,052 | |||||||||||||
Provision for product warranties | — | 45,928 | — | (18,737 | ) | 27,191 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
58,683 | (1,049 | ) | (43,245 | ) | 89,338 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
2) For the year ended December 31, 2019
(in millions of Won) | Beginning | Increase | Reversal | Utilization | Transfer | Ending | ||||||||||||||||||
Provision for bonus payments | 23,523 | — | (18,038 | ) | 7,602 | 49,836 | ||||||||||||||||||
Provision for restoration | 29,703 | 549 | (277 | ) | (7,250 | ) | — | 22,725 | ||||||||||||||||
Provision for legal contingencies | 46,432 | 538 | (11,207 | ) | (33,375 | ) | — | 2,388 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
24,610 | (11,484 | ) | (58,663 | ) | 7,602 | 74,949 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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 nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Expenses related to post-employment benefit plans | 8,900 | 27,696 | 26,521 |
(b) | Defined benefit plans |
1) The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Present value of funded obligations | 1,435,942 | |||||||
Fair value of plan assets | (1,364,262 | ) | (1,381,796 | ) | ||||
|
|
|
| |||||
Net defined benefit liabilities | 54,146 | |||||||
|
|
|
|
25
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | Changes in present value of defined benefit obligations for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Defined benefit obligation at the beginning of period | 1,265,675 | |||||||
Current service costs | 93,508 | 119,957 | ||||||
Interest costs | 20,784 | 31,567 | ||||||
Remeasurement(*1) | — | 104,442 | ||||||
Business combination | — | 317 | ||||||
Reclassification to liabilities | — | (1,448 | ) | |||||
Benefits paid | (105,397 | ) | (84,568 | ) | ||||
|
|
|
| |||||
Defined benefit obligation at the end of period | 1,435,942 | |||||||
|
|
|
|
(*1) | The Company does not remeasure the defined benefit plans for the purpose of interim reporting. |
3) | Changes in the fair value of plan assets for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were as follows: |
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Fair value of plan assets at the beginning of period | 1,264,812 | |||||||
Interest on plan assets | 20,420 | 32,347 | ||||||
Remeasurement of plan assets | (1,143 | ) | (6,668 | ) | ||||
Contributions to plan assets | 73,730 | 161,500 | ||||||
Business combination | — | 670 | ||||||
Reclassification to liabilities | — | (1,448 | ) | |||||
Benefits paid | (110,541 | ) | (69,417 | ) | ||||
|
|
|
| |||||
Fair value of plan assets at the end of period | 1,381,796 | |||||||
|
|
|
|
4) | The amounts recognized in the statements of comprehensive income for the three-month and the nine-month periods ended September 30, 2020 and 2019 were as follows: |
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Current service costs | 28,808 | 93,508 | 88,947 | |||||||||||||
Net interest costs | 121 | (195 | ) | 364 | (585 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
28,613 | 93,872 | 88,362 | ||||||||||||||
|
|
|
|
|
|
|
|
26
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
19. Other Liabilities
Other liabilities as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Current | ||||||||
Advances received | 5,112 | |||||||
Withholdings | 108,317 | 106,474 | ||||||
Unearned revenue | 18,171 | 23,561 | ||||||
|
|
|
| |||||
135,147 | ||||||||
|
|
|
| |||||
Non-current | ||||||||
Unearned revenue | 5,230 |
20. Financial Instruments
(a) Classification and fair value of financial instruments
1) | The carrying amount and the fair values of financial assets and financial liabilities by fair value hierarchy as of September 30, 2020 and December 31, 2019 are as follows: |
• | September 30, 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 | — | 206,470 | — | 206,470 | ||||||||||||||||
Short-term financial instruments | 8,452,851 | — | 8,452,851 | — | 8,452,851 | |||||||||||||||
Debt securities | 8,050 | — | — | 8,050 | 8,050 | |||||||||||||||
Other securities | 63,286 | — | — | 63,286 | 63,286 | |||||||||||||||
Other receivables | 2,000 | — | — | 2,000 | 2,000 | |||||||||||||||
Fair value through other comprehensive income | ||||||||||||||||||||
Equity securities | 927,383 | 545,003 | — | 382,380 | 927,383 | |||||||||||||||
Debt securities | 1,651 | — | — | 1,651 | 1,651 | |||||||||||||||
Financial assets measured at amortized cost(*1) | ||||||||||||||||||||
Cash and cash equivalents | 2,986,906 | — | — | — | — | |||||||||||||||
Trade accounts and notes receivable | 3,685,351 | — | — | — | — | |||||||||||||||
Debt securities | 150,000 | — | — | — | — | |||||||||||||||
Other receivables | 265,751 | — | — | — | — | |||||||||||||||
Deposit instruments | 1,310,692 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
545,003 | 8,659,321 | 457,367 | 9,661,691 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Financial liabilities | ||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||
Derivatives liabilities | — | 1,903 | — | 1,903 | ||||||||||||||||
Financial liabilities measured at amortized cost(*1) | ||||||||||||||||||||
Trade accounts and notes payable | 1,147,094 | — | — | — | — | |||||||||||||||
Borrowings | 9,071,945 | — | 9,365,488 | — | 9,365,488 | |||||||||||||||
Financial guarantee liabilities | 41,786 | — | — | — | — | |||||||||||||||
Others | 1,074,870 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
— | 9,367,391 | — | 9,367,391 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*1) | Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their carrying amounts. |
27
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
• | December 31, 2019 |
Fair value | ||||||||||||||||||||
(in millions of Won) | Book value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial assets | ||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||
Derivative assets | — | 79,675 | — | 79,675 | ||||||||||||||||
Short-term financial instruments | 6,258,292 | — | 6,258,292 | — | 6,258,292 | |||||||||||||||
Debt securities | 8,050 | — | — | 8,050 | 8,050 | |||||||||||||||
Other securities | 55,972 | — | — | 55,972 | 55,972 | |||||||||||||||
Other receivables | 2,000 | — | — | 2,000 | 2,000 | |||||||||||||||
Fair value through other comprehensive income | ||||||||||||||||||||
Equity securities | 1,128,641 | 762,198 | — | 366,443 | 1,128,641 | |||||||||||||||
Debt securities | 1,686 | — | — | 1,686 | 1,686 | |||||||||||||||
Financial assets measured at amortized cost(*1) | ||||||||||||||||||||
Cash and cash equivalents | 978,139 | — | — | — | — | |||||||||||||||
Trade accounts and notes receivable | 3,983,573 | — | — | — | — | |||||||||||||||
Debt securities | 290,000 | — | — | — | — | |||||||||||||||
Other receivables | 202,819 | — | — | — | — | |||||||||||||||
Deposit instruments | 1,294,559 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
762,198 | 6,337,967 | 434,151 | 7,534,316 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Financial liabilities | ||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||
Derivative liabilities | — | 8,285 | — | 8,285 | ||||||||||||||||
Financial liabilities measured at amortized cost(*1) | ||||||||||||||||||||
Trade accounts and notes payable | 667,551 | — | — | — | — | |||||||||||||||
Borrowings | 6,338,012 | — | 6,525,464 | — | 6,525,464 | |||||||||||||||
Financial guarantee liabilities | 49,609 | — | — | — | — | |||||||||||||||
Others | 1,325,336 | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
— | 6,533,749 | — | 6,533,749 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*1) | Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their carrying amounts. |
28
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | Financial liabilities were recognized in connection with financial guarantee contracts as of September 30, 2020. The details of the amount of guarantees provided are as follows: |
(in millions of Won) | Guarantee limit | Guarantee amount | ||||||||||||||||||||||
Guarantee beneficiary | Financial institution | Foreign currency | Won equivalent | Foreign currency | Won equivalent | |||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
POSCO Maharashtra | SCB | USD | 33,784,000 | 39,646 | 33,784,000 | 39,646 | ||||||||||||||||||
Steel Private Limited | ING | USD | 50,000,000 | 58,675 | 50,000,000 | 58,675 | ||||||||||||||||||
POSCO ASSAN TST | SMBC | USD | 62,527,500 | 73,376 | 56,274,750 | 66,038 | ||||||||||||||||||
STEEL INDUSTRY | ING | USD | 60,000,000 | 70,410 | 54,000,000 | 63,369 | ||||||||||||||||||
BNP | USD | 24,000,000 | 28,164 | 21,600,000 | 25,348 | |||||||||||||||||||
POSCO Asia Co., Ltd. | Credit Agricole | USD | 50,000,000 | 58,675 | 50,000,000 | 58,675 | ||||||||||||||||||
Mizuho | USD | 50,000,000 | 58,675 | 50,000,000 | 58,675 | |||||||||||||||||||
POSCO MEXICO S.A. DE C.V | CITI BANAMEX | USD | 30,000,000 | 35,205 | 30,000,000 | 35,205 | ||||||||||||||||||
BOA | USD | 30,000,000 | 35,205 | 30,000,000 | 35,205 | |||||||||||||||||||
SMBC | USD | 20,000,000 | 23,470 | 20,000,000 | 23,470 | |||||||||||||||||||
MIZUHO | USD | 20,000,000 | 23,470 | 20,000,000 | 23,470 | |||||||||||||||||||
ANZ | USD | 20,000,000 | 23,470 | 20,000,000 | 23,470 | |||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | SMBC | USD | 50,000,000 | 58,675 | 50,000,000 | 58,675 | ||||||||||||||||||
Credit Agricole | USD | 40,000,000 | 46,940 | 40,000,000 | 46,940 | |||||||||||||||||||
BTMU | USD | 26,000,000 | 30,511 | 26,000,000 | 30,511 | |||||||||||||||||||
Citi | USD | 20,000,000 | 23,470 | 20,000,000 | 23,470 | |||||||||||||||||||
MIZUHO | USD | 20,000,000 | 23,470 | 20,000,000 | 23,470 | |||||||||||||||||||
PT. KRAKATAU POSCO | Export-Import Bank of Korea | USD | 567,000,000 | 665,375 | 363,264,797 | 426,291 | ||||||||||||||||||
SMBC | USD | 140,000,000 | 164,290 | 89,832,217 | 105,418 | |||||||||||||||||||
BTMU | USD | 119,000,000 | 139,647 | 75,125,217 | 88,159 | |||||||||||||||||||
MIZUHO | USD | 105,000,000 | 123,218 | 66,286,957 | 77,788 | |||||||||||||||||||
SCB | USD | 107,800,000 | 126,503 | 69,504,217 | 81,563 | |||||||||||||||||||
Credit Suisse AG | USD | 91,000,000 | 106,789 | 57,448,696 | 67,416 | |||||||||||||||||||
HSBC | USD | 91,000,000 | 106,789 | 57,448,696 | 67,416 | |||||||||||||||||||
ANZ | USD | 73,500,000 | 86,252 | 47,850,478 | 56,153 | |||||||||||||||||||
BOA | USD | 35,000,000 | 41,073 | 22,095,652 | 25,929 | |||||||||||||||||||
The Tokyo Star Bank, Ltd | USD | 21,000,000 | 24,644 | 13,257,391 | 15,558 | |||||||||||||||||||
POSCO COATED STEEL | Citi | THB | 801,000,000 | 29,717 | 801,000,000 | 29,717 | ||||||||||||||||||
(THAILAND) CO., LTD. | ANZ | THB | 1,175,000,000 | 43,593 | 1,175,000,000 | 43,593 | ||||||||||||||||||
MUFG | THB | 1,175,000,000 | 43,593 | 1,175,000,000 | 43,593 | |||||||||||||||||||
SC | THB | 1,175,000,000 | 43,593 | 1,175,000,000 | 43,593 | |||||||||||||||||||
SMBC | THB | 1,175,000,000 | 43,593 | 1,175,000,000 | 43,593 | |||||||||||||||||||
Associates | ||||||||||||||||||||||||
LLP POSUK Titanium | SMBC | USD | 13,500,000 | 15,842 | 13,500,000 | 15,842 | ||||||||||||||||||
Nickel Mining Company SAS | SMBC | EUR | 46,000,000 | 62,993 | 46,000,000 | 62,993 | ||||||||||||||||||
Joint ventures | ||||||||||||||||||||||||
CSP - Compania | Export-Import Bank of Korea | USD | 182,000,000 | 213,577 | 162,772,945 | 191,014 | ||||||||||||||||||
Siderurgica do Pecem | Santander | USD | 47,600,000 | 55,859 | 41,873,544 | 49,139 | ||||||||||||||||||
BNP | USD | 47,600,000 | 55,859 | 41,873,544 | 49,139 | |||||||||||||||||||
MIZUHO | USD | 47,600,000 | 55,859 | 41,873,544 | 49,139 | |||||||||||||||||||
Credit Agricole | USD | 20,000,000 | 23,470 | 17,593,933 | 20,646 | |||||||||||||||||||
SOCIETE GENERALE | USD | 20,000,000 | 23,470 | 17,593,933 | 20,646 | |||||||||||||||||||
KfW | USD | 20,000,000 | 23,470 | 17,593,933 | 20,646 | |||||||||||||||||||
BBVA Seoul | USD | 17,600,000 | 20,654 | 15,482,645 | 18,169 | |||||||||||||||||||
ING | USD | 17,600,000 | 20,654 | 15,482,645 | 18,169 | |||||||||||||||||||
BNDES | BRL | 464,060,000 | 96,190 | 464,060,000 | 96,190 | |||||||||||||||||||
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USD | 2,390,111,500 | 2,804,801 | 1,839,413,734 | 2,158,552 | ||||||||||||||||||||
EUR | 46,000,000 | 62,993 | 46,000,000 | 62,993 | ||||||||||||||||||||
THB | 5,501,000,000 | 204,089 | 5,501,000,000 | 204,089 | ||||||||||||||||||||
BRL | 464,060,000 | 96,190 | 464,060,000 | 96,190 | ||||||||||||||||||||
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29
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
3) | Finance income and costs by category of financial instrument for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
1 | For the nine-month period ended September 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 | — | — | 8,148 | 136,514 | — | 266,013 | — | |||||||||||||||||||||||||
Financial assets at fair value | — | 29,363 | — | — | — | — | 29,363 | (154,254 | ) | |||||||||||||||||||||||
Financial assets measured at | 35,972 | — | 47,008 | 1 | — | — | 82,981 | — | ||||||||||||||||||||||||
Financial liabilities at fair value | — | — | — | 722 | 15,287 | — | 16,009 | — | ||||||||||||||||||||||||
Financial liabilities measured at | (171,974 | ) | — | (76,908 | ) | — | — | 11,271 | (237,611 | ) | — | |||||||||||||||||||||
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29,363 | (29,900 | ) | 8,871 | 151,801 | 11,271 | 156,755 | (154,254 | ) | ||||||||||||||||||||||||
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(*1) | Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of |
2 | For the nine-month period ended September 30, 2019 |
(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 | — | — | 525 | 160,715 | — | 259,458 | — | |||||||||||||||||||||||||
Financial assets at fair value | — | 53,690 | — | — | — | — | 53,690 | (41,974 | ) | |||||||||||||||||||||||
Financial assets measured at | 27,060 | — | 153,367 | — | — | — | 180,427 | — | ||||||||||||||||||||||||
Financial liabilities at fair value | — | — | — | 805 | 34,743 | — | 35,548 | — | ||||||||||||||||||||||||
Financial liabilities measured at | (114,716 | ) | — | (260,504 | ) | — | — | 6,415 | (368,805 | ) | — | |||||||||||||||||||||
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53,690 | (107,137 | ) | 1,330 | 195,458 | 6,415 | 160,318 | (41,974 | ) | ||||||||||||||||||||||||
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(*1) | Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of |
30
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
4) | Finance income and costs by category of financial instrument for the three-month periods ended September 30, 2020 and 2019 were as follows: |
1 | For the three-month period ended September 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 | — | — | 7,663 | (86,637 | ) | — | (34,782 | ) | — | |||||||||||||||||||||||
Financial assets at fair value | — | 4,880 | — | — | — | — | 4,880 | 6,396 | ||||||||||||||||||||||||
Financial assets measured at | 11,765 | — | (47,907 | ) | 1 | — | — | (36,141 | ) | — | ||||||||||||||||||||||
Financial liabilities at fair value | — | — | — | 275 | 1,310 | — | 1,585 | — | ||||||||||||||||||||||||
Financial liabilities measured at | (58,166 | ) | — | 140,540 | — | — | (569 | ) | 81,805 | — | ||||||||||||||||||||||
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4,880 | 92,633 | 7,939 | (85,327 | ) | (569 | ) | 17,347 | 6,396 | ||||||||||||||||||||||||
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(*1) | Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of |
2 | For the three-month period ended September 30, 2019 |
(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 | — | — | 64 | 92,169 | — | 125,778 | — | |||||||||||||||||||||||||
Financial assets at fair value | — | 12,602 | — | — | — | — | 12,602 | (67,564 | ) | |||||||||||||||||||||||
Financial assets measured at | 10,112 | — | 69,118 | — | — | — | 79,230 | — | ||||||||||||||||||||||||
Financial liabilities at fair value | — | — | — | 786 | — | — | 786 | — | ||||||||||||||||||||||||
Financial liabilities measured at | (41,127 | ) | — | (137,661 | ) | — | — | 1,749 | (177,039 | ) | — | |||||||||||||||||||||
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12,602 | (68,543 | ) | 850 | 92,169 | 1,749 | 41,357 | (67,564 | ) | ||||||||||||||||||||||||
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(*1) | Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of |
(b) | Financial risk management |
The Company is exposed to credit risk, liquidity risk and market risk arising from financial assets and liabilities. The Company’s financial risk management objectives and policies are consistent with those disclosed in the separate financial statements as of and for the year ended December 31, 2019.
31
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
21. Share Capital and Capital Surplus
(a) Share capital as of September 30, 2020 and December 31, 2019 are as follows:
(in Won, except share information) | September 30, 2020 | December 31, 2019 | ||||||
Authorized shares | 200,000,000 | 200,000,000 | ||||||
Par value | 5,000 | |||||||
Issued shares(*1) | 87,186,835 | 87,186,835 | ||||||
Share capital(*2) | 482,403,125,000 |
(*1) | As of September 30, 2020, total number of ADRs of 26,190,824 outstanding in overseas stock market is equivalent to 6,547,706 shares of common stock. |
(*2) | As of September 30, 2020, the difference between the ending balance of common stock and the aggregate par value of issued common stock is |
(b) Capital surplus as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Share premium | 463,825 | |||||||
Gain on disposal of treasury shares | 796,623 | 796,623 | ||||||
Loss on disposal of hybrid bonds | (1,787 | ) | (1,787 | ) | ||||
Gain (loss) from merger | 80,628 | (6,441 | ) | |||||
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1,252,220 | ||||||||
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32
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
22. Hybrid Bonds
Hybrid bonds classified as equity as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | Date of issue | Date of maturity | Rate of Interest (%) | September 30, 2020 | December 31, 2019 | |||||||||||||||
Hybrid bond 1-2(*1) | 6/13/2013 | 6/13/2043 | 4.60 | 200,000 | ||||||||||||||||
Issuance cost | (616 | ) | (616 | ) | ||||||||||||||||
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199,384 | ||||||||||||||||||||
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(*1) | Details of hybrid bonds issued by the Company as of September 30, 2020 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 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 the Company) | |
Others | The Company can call the hybrid bond at 10th anniversary of issuance and interest payment date afterwards |
The hybrid bond holders’ preference in the event of liquidation is senior to the common stockholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of September 30, 2020 amounts to454 million.W
23. Reserves
Reserves as of September 30, 2020 and December 31, 2019 were as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Changes in fair value of equity investments | (183,930 | ) |
33
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
24. Treasury Shares
During the nine-month period ended September 30, 2020, the Company entered into a trust contract of acquiring treasury shares following approval of the Board of Directors. The amount committed to purchase treasury shares by this trust contract is1,000 billion, and the contract period is from April 13, 2020 to April 12, 2021. The number of treasury shares acquired according to the contract is 1,739,881 during the nine-month periods ended September 30, 2020.W
As of September 30, 2020, the Company holds 8,811,075 treasury shares for share price stabilization and other purposes in accordance with the Board of Director’s resolution.
25. Revenue
(a) | Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows: |
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Types of revenue | ||||||||||||||||
Sales of steel product | 7,479,188 | 18,789,752 | 22,250,287 | |||||||||||||
Transportation services | 168,014 | 196,848 | 516,065 | 586,683 | ||||||||||||
Others | 42,286 | 59,859 | 126,749 | 191,250 | ||||||||||||
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7,735,895 | 19,432,566 | 23,028,220 | ||||||||||||||
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Timing of revenue recognition | ||||||||||||||||
Revenue recognized at a point in time | 7,522,544 | 18,870,603 | 22,389,289 | |||||||||||||
Revenue recognized over time | 184,567 | 213,351 | 561,963 | 638,931 | ||||||||||||
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7,735,895 | 19,432,566 | 23,028,220 | ||||||||||||||
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(b) Details of contract assets and liabilities from contracts with customers as of September 30, 2020 and December 31, 2019 are as follows:
(in millions of Won) | September 30, 2020 | December 31, 2019 | ||||||
Receivables | ||||||||
Accounts receivable | 3,983,573 | |||||||
Contract assets | ||||||||
Accounts receivable | 7,525 | 9,482 | ||||||
Contract liabilities | ||||||||
Advance received | 42,011 | 5,112 | ||||||
Unearned income | 18,471 | 28,484 |
34
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
26. Selling and Administrative Expenses
(a) | Other administrative expenses |
Other administrative expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Wages and salaries | 60,295 | 174,233 | 173,602 | |||||||||||||
Expenses related to post-employment benefits | 4,960 | 6,290 | 19,142 | 21,483 | ||||||||||||
Other employee benefits | 12,780 | 12,691 | 36,067 | 39,184 | ||||||||||||
Travel | 1,806 | 3,397 | 6,413 | 10,211 | ||||||||||||
Depreciation | 6,974 | 5,780 | 20,636 | 18,708 | ||||||||||||
Amortization | 8,382 | 9,163 | 26,838 | 27,451 | ||||||||||||
Rental | 11,809 | 12,155 | 36,013 | 30,607 | ||||||||||||
Repairs | 2,340 | 3,234 | 6,171 | 9,051 | ||||||||||||
Advertising | 13,804 | 17,637 | 43,188 | 50,540 | ||||||||||||
Research & development | 16,304 | 15,037 | 47,696 | 57,313 | ||||||||||||
Service fees | 43,755 | 40,239 | 121,196 | 122,966 | ||||||||||||
Supplies | 162 | 234 | 522 | 3,325 | ||||||||||||
Vehicles maintenance | 1,032 | 1,532 | 3,480 | 4,649 | ||||||||||||
Industry association fee | 997 | 1,202 | 4,217 | 3,833 | ||||||||||||
Training | 5,524 | 6,430 | 13,706 | 18,193 | ||||||||||||
Conference | 908 | 1,202 | 2,875 | 4,193 | ||||||||||||
Others | 5,971 | 6,540 | 25,189 | 24,179 | ||||||||||||
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203,058 | 587,582 | 619,488 | ||||||||||||||
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(b) | Selling expenses |
Selling expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Freight and custody | 33,956 | 97,659 | 97,641 | |||||||||||||
Operating expenses for distribution center | 1,458 | 1,969 | 4,616 | 6,712 | ||||||||||||
Sales commissions | 17,711 | 18,973 | 82,499 | 56,404 | ||||||||||||
Sales advertising | 55 | 230 | 360 | 851 | ||||||||||||
Sales promotion | 286 | 896 | 982 | 3,157 | ||||||||||||
Sample | 94 | 187 | 427 | 732 | ||||||||||||
Sales insurance premium | 1,492 | 1,595 | 4,436 | 4,492 | ||||||||||||
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57,806 | 190,979 | 169,989 | ||||||||||||||
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
27. Finance Income and Costs
Details of finance income and costs for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Finance income | ||||||||||||||||
Interest income(*1) | 43,657 | 157,323 | 125,278 | |||||||||||||
Dividend income | 49,660 | 34,452 | 221,867 | 263,481 | ||||||||||||
Gain on foreign currency transactions | 62,252 | 93,597 | 295,081 | 212,474 | ||||||||||||
Gain on foreign currency translations | (2,711 | ) | (7,322 | ) | 24,628 | 28,617 | ||||||||||
Gain on valuation of derivatives | (83,424 | ) | 90,961 | 153,704 | 193,749 | |||||||||||
Others | 8,735 | 5,437 | 22,718 | 12,377 | ||||||||||||
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260,782 | 875,321 | 835,976 | ||||||||||||||
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Finance costs | ||||||||||||||||
Interest expenses | 41,127 | 171,974 | 114,716 | |||||||||||||
Loss on foreign currency transactions | 71,772 | 61,415 | 207,969 | 151,220 | ||||||||||||
Loss on foreign currency translations | (104,864 | ) | 93,403 | 141,640 | 197,008 | |||||||||||
Loss on valuation of derivatives | 1,903 | — | 1,903 | — | ||||||||||||
Others | 1,365 | 1,629 | 2,576 | 2,923 | ||||||||||||
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197,574 | 526,062 | 465,867 | ||||||||||||||
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(*1) | Interest income calculated using the effective interest method for the nine-month periods ended September 30, 2020 and 2019 were |
36
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
28. Other Non-Operating Income and Expenses
Details of other non-operating income and expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Other non-operating income | ||||||||||||||||
Gain on disposals of property, plant and equipment | 4,063 | 7,211 | 18,748 | |||||||||||||
Gain on disposals of investment in subsidiaries, associates and joint ventures | 2,447 | 3,496 | 24,354 | 4,689 | ||||||||||||
Gain on disposals of assets held for sale | (4,454 | ) | 28,626 | 22,488 | 29,341 | |||||||||||
Reversal of other provisions | — | 11,207 | 284 | 11,484 | ||||||||||||
Gain on insurance proceeds | 2,882 | 4 | 9,768 | 262 | ||||||||||||
Gain on valuation of emission rights | — | — | — | 25,440 | ||||||||||||
Gain on disposals of emission rights | — | 6,122 | 24,566 | 6,122 | ||||||||||||
Others | 6,808 | 17,640 | 25,892 | 31,912 | ||||||||||||
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71,158 | 114,563 | 127,998 | ||||||||||||||
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Other non-operating expenses | ||||||||||||||||
Loss on disposals of property, plant and equipment | 24,872 | 125,031 | 63,409 | |||||||||||||
Impairment loss on property, plant and equipment | 309 | 48,414 | 22,997 | 209,910 | ||||||||||||
Impairment loss on investment in subsidiaries, associates and joint ventures | 1,000 | — | 1,000 | 10,422 | ||||||||||||
Donations | 5,600 | 12,000 | 17,309 | 20,400 | ||||||||||||
Impairment loss on assets held for sale | 148 | 3,385 | 9,093 | 5,179 | ||||||||||||
Loss on disposals of assets held for sale | 5,383 | — | 5,383 | — | ||||||||||||
Others | 9,545 | 14,872 | 47,913 | 46,916 | ||||||||||||
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103,543 | 228,726 | 356,236 | ||||||||||||||
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37
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
29. 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 nine-month periods ended September 30, 2020 and 2019 were as follows (excluding finance costs and income tax expenses):
(in millions of Won) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Changes in inventories(*1) | (14,341 | ) | 450,758 | (12,660 | ) | |||||||||||
Raw materials and consumables used | 4,216,703 | 4,779,807 | 11,940,849 | 13,798,396 | ||||||||||||
Employee benefits expenses | 455,160 | 466,011 | 1,352,294 | 1,334,671 | ||||||||||||
Outsourced processing cost | 560,791 | 602,538 | 1,788,247 | 1,829,634 | ||||||||||||
Depreciation(*2) | 571,557 | 536,323 | 1,698,104 | 1,608,237 | ||||||||||||
Amortization | 23,151 | 19,350 | 74,002 | 57,776 | ||||||||||||
Electricity and water | 59,686 | 118,066 | 176,237 | 406,686 | ||||||||||||
Service fees | 63,710 | 61,267 | 183,338 | 186,129 | ||||||||||||
Rental | 20,986 | 17,858 | 63,894 | 44,427 | ||||||||||||
Advertising | 13,804 | 17,637 | 43,188 | 50,540 | ||||||||||||
Freight and custody expenses | 178,593 | 216,143 | 559,097 | 656,434 | ||||||||||||
Sales commissions | 17,711 | 18,973 | 82,499 | 56,404 | ||||||||||||
Loss on disposals of property, plant and equipment | 30,797 | 24,871 | 125,031 | 63,409 | ||||||||||||
Impairment loss on property, plant and equipment | 310 | 48,414 | 22,997 | 209,910 | ||||||||||||
Impairment loss on investments in subsidiaries, | 1,000 | — | 1,000 | 10,422 | ||||||||||||
Other expenses | 91,161 | 264,384 | 488,377 | 865,435 | ||||||||||||
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7,177,301 | 19,049,912 | 21,165,850 | ||||||||||||||
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(*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 nine-month periods ended September 30, 2020 and 2019 were 24.34% and 27.32%, respectively.
During the year ended December 31, 2019, the Company acquired Off-gas Power Station Business Sector of POSCO ENERGY CO., LTD., which is a subsidiary of the Company. During the nine-month period ended September 30, 2020, the Company changed its estimation about the availability of deductible temporary differences due from the acquisition, and recognized additional87,068 million of deferred tax assets. The tax effect was reflected on gain from merger directly in equity in the statement of financial position.W
38
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
31. Earnings per Share
Basic earnings per share for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:
(in Won, except share information) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Profit for the period | 499,044,928,266 | 640,475,843,825 | 1,715,599,641,115 | |||||||||||||
Interests of hybrid bonds, net of tax | (1,681,205,479 | ) | (1,681,205,479 | ) | (5,007,068,492 | ) | (4,988,794,519 | ) | ||||||||
Weighted-average number of common shares outstanding(*1) | 79,230,216 | 80,115,641 | 79,784,098 | 80,113,124 | ||||||||||||
Basic earnings per share | 6,208 | 7,965 | 21,352 |
(*1) | The weighted-average number of common shares used to calculate basic earnings per share are as follows: |
(in share) | For the three-month periods ended September 30 | For the nine-month periods ended September 30 | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Total number of common shares issued | 87,186,835 | 87,186,835 | 87,186,835 | 87,186,835 | ||||||||||||
Weighted-average number of treasury shares | (7,956,619 | ) | (7,071,194 | ) | (7,402,737 | ) | (7,073,711 | ) | ||||||||
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Weighted-average number of common shares outstanding | 79,230,216 | 80,115,641 | 79,784,098 | 80,113,124 | ||||||||||||
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Since there were no potential shares of common stock which had dilutive effects as of September 30, 2020 and 2019, diluted earnings per share is equal to basic earnings per share.
39
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
32. Related Party Transactions
(a) | Significant transactions with related companies for the nine-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the nine-month period ended September 30, 2020 |
(in millions of Won) | Sales and others(*1) | Purchase and others(*2) | ||||||||||||||||||||||
Sales | Others | Purchase of material | Purchase of fixed assets | Outsourced processing cost | Others | |||||||||||||||||||
Subsidiaries(*3) | ||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO.,LTD. | 11,107 | 15 | 543,484 | 60 | 17,773 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 309,338 | 1,819 | — | — | 21,466 | 249 | ||||||||||||||||||
POSCO ICT(*4) | 2,088 | 4,992 | — | 248,039 | 30,951 | 131,887 | ||||||||||||||||||
eNtoB Corporation | 11 | 60 | 160,906 | 24,852 | 55 | 17,884 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 200,730 | 29,911 | 342,948 | 16,219 | 226,595 | 4,551 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 2,196 | 2,117 | 12,374 | 3 | — | 16,709 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 4,246,418 | 55,558 | 233,450 | — | 11,371 | 3,293 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 226,231 | 137 | 3,454 | — | — | — | ||||||||||||||||||
POSCO America Corporation | 120,956 | — | — | — | — | 505 | ||||||||||||||||||
POSCO Canada Ltd. | — | 978 | 129,666 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 1,161,489 | 1,002 | 114,796 | 3,229 | 1,174 | 2,765 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 105,037 | 66 | — | — | — | 196 | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 776,819 | — | 29,582 | 4,947 | — | 2,428 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 182,844 | 239 | — | — | — | 59 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 107,763 | 158 | — | — | — | 304 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 210,679 | 1,543 | — | — | — | 282 | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 82,663 | — | — | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 163,085 | 204 | — | — | — | 123 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 1,039 | 395,961 | — | — | — | ||||||||||||||||||
Others | 913,036 | 20,393 | 55,641 | 33,263 | 197,496 | 91,565 | ||||||||||||||||||
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8,816,551 | 131,323 | 1,478,793 | 874,036 | 489,168 | 290,573 | |||||||||||||||||||
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Associates and joint ventures(*3) | ||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd.(*5) | 65 | 41 | 916 | 84,839 | 4,086 | 12,431 | ||||||||||||||||||
SNNC | 4,333 | 4,103 | 372,068 | — | — | — | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 29,429 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | 39,112 | 940,725 | — | — | — | ||||||||||||||||||
Others | 25,649 | 61,949 | 46,788 | — | — | 23,714 | ||||||||||||||||||
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59,476 | 105,205 | 1,360,497 | 84,839 | 4,086 | 36,145 | |||||||||||||||||||
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236,528 | 2,839,290 | 958,875 | 493,254 | 326,718 | ||||||||||||||||||||
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(*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 September 30, 2020, the Company provided guarantees to related companies (Note 20). |
(*4) | Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System. |
(*5) | During the nine-month period ended September 30, 2020, POSCO PLANTEC Co., Ltd. was excluded from associates due to the Company’s loss of significant influence over the investee. |
40
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the nine-month period ended September 30, 2019 |
(in millions of Won) | Sales and others | Purchase and others | ||||||||||||||||||||||
Sales | Others | Purchase of material | Purchase of fixed assets | Outsourced processing cost | Others | |||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | 11,110 | — | 226,604 | 25 | 12,064 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 354,046 | 1,942 | 95 | — | 13,595 | 586 | ||||||||||||||||||
POSCO ICT | 2,213 | 4,990 | — | 226,456 | 26,235 | 131,522 | ||||||||||||||||||
eNtoB Corporation | 11 | 66 | 231,896 | 28,678 | 72 | 18,443 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 289,090 | 30,298 | 389,598 | 12,396 | 236,114 | 3,084 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 147,124 | 1,252 | 1,090 | — | — | 1,672 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 4,426,067 | 46,572 | 459,705 | — | 38,067 | 4,516 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 188,527 | 13,795 | 6,706 | — | — | 3 | ||||||||||||||||||
POSCO America Corporation | 232,724 | — | — | — | — | 1,682 | ||||||||||||||||||
POSCO Canada Ltd. | 340 | 751 | 245,123 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 1,300,580 | 975 | 323,203 | 72 | 1,484 | 5,093 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 99,757 | — | — | — | — | — | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 1,134,448 | 36 | 29,843 | 3,685 | — | 2,898 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 222,692 | 263 | — | — | — | 37 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 238,357 | 89 | — | — | — | 246 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 513,467 | 266 | — | — | — | 256 | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 81,829 | 1 | 2,189 | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 217,034 | — | — | — | — | 62 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 285 | 514,751 | — | — | — | ||||||||||||||||||
Others | 685,845 | 17,396 | 106,193 | 19,147 | 182,202 | 119,078 | ||||||||||||||||||
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10,139,302 | 130,087 | 2,310,392 | 517,038 | 497,794 | 301,242 | |||||||||||||||||||
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Associates and joint ventures | ||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | 412 | 70 | 2,009 | 183,351 | 12,994 | 16,430 | ||||||||||||||||||
SNNC | 4,121 | 3,910 | 420,720 | — | — | 10 | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 50,894 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | — | 841,866 | — | — | — | ||||||||||||||||||
Others | 11,830 | 107,865 | 43,088 | — | — | — | ||||||||||||||||||
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67,257 | 111,845 | 1,307,683 | 183,351 | 12,994 | 16,440 | |||||||||||||||||||
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241,932 | 3,618,075 | 700,389 | 510,788 | 317,682 | ||||||||||||||||||||
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(b) | Significant transactions with related companies for the three-month periods ended September 30, 2020 and 2019 were as follows: |
1) | For the three-month period ended September 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. | 11 | — | 101,179 | — | 4,938 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 103,572 | 124 | — | — | 6,290 | 41 | ||||||||||||||||||
POSCO ICT | 659 | 1 | — | 63,729 | 10,010 | 44,219 | ||||||||||||||||||
eNtoB Corporation | 4 | — | 47,528 | 6,004 | 27 | 5,391 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 56,264 | 5,141 | 113,227 | 3,389 | 72,171 | 189 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 643 | 901 | 2,379 | — | — | 5,599 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 1,450,981 | 1,227 | 122,652 | — | — | 1,210 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 119,514 | — | — | — | — | — | ||||||||||||||||||
POSCO America Corporation | 24,690 | — | — | — | — | 502 | ||||||||||||||||||
POSCO Canada Ltd. | — | 162 | 38,861 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 441,511 | 37 | 33,125 | 957 | 12 | 1,346 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 34,269 | — | — | — | — | 20 | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 227,977 | — | 13,162 | 1,988 | — | 1,340 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 81,739 | 16 | — | — | — | 39 | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 39,189 | 59 | — | — | — | — | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 56,925 | 696 | — | — | — | 97 | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 25,018 | — | — | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 30,869 | 148 | — | — | — | 103 | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 235 | 104,312 | — | — | — | ||||||||||||||||||
Others | 339,973 | 2,209 | 14,535 | 7,683 | 68,939 | 33,500 | ||||||||||||||||||
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3,035,417 | 10,967 | 489,781 | 184,929 | 157,449 | 98,534 | |||||||||||||||||||
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Associates and joint ventures | ||||||||||||||||||||||||
SNNC | 1,432 | 625 | 153,008 | — | — | — | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 12,275 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | 39,112 | 315,180 | — | — | — | ||||||||||||||||||
Others | 11,317 | 7,016 | 17,834 | — | — | 10,366 | ||||||||||||||||||
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25,024 | 46,753 | 486,022 | — | — | 10,366 | |||||||||||||||||||
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57,720 | 975,803 | 184,929 | 157,449 | 108,900 | ||||||||||||||||||||
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41
Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | For the three-month period ended September 30, 2019 |
(in millions of Won) | Sales and others | Purchase and others | ||||||||||||||||||||||
Sales | Others | Purchase of material | Purchase of fixed assets | Outsourced processing cost | Others | |||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | 21 | — | 87,255 | 4 | 6,831 | |||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 120,638 | 235 | 95 | — | 5,911 | 95 | ||||||||||||||||||
POSCO ICT | 704 | 1 | — | 77,639 | 9,180 | 42,684 | ||||||||||||||||||
eNtoB Corporation | 4 | 6 | 72,320 | 11,742 | 13 | 5,012 | ||||||||||||||||||
POSCO CHEMICAL CO., LTD | 91,297 | 5,169 | 134,299 | 4,818 | 79,731 | 1,074 | ||||||||||||||||||
POSCO ENERGY CO., LTD. | 40,522 | 628 | 1,090 | — | — | 1,610 | ||||||||||||||||||
POSCO INTERNATIONAL Corporation | 1,584,691 | — | 129,661 | — | 12,030 | 1,947 | ||||||||||||||||||
POSCO Thainox Public Company Limited | 68,495 | 120 | 2,973 | — | — | — | ||||||||||||||||||
POSCO America Corporation | 48,207 | — | — | — | — | 1,643 | ||||||||||||||||||
POSCO Canada Ltd. | — | 147 | 93,231 | — | — | — | ||||||||||||||||||
POSCO Asia Co., Ltd. | 438,809 | 390 | 74,772 | 72 | 497 | 2,297 | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 40,347 | — | — | — | — | — | ||||||||||||||||||
POSCO JAPAN Co., Ltd. | 378,091 | 36 | 8,290 | 664 | — | 1,411 | ||||||||||||||||||
POSCO-VIETNAM Co., Ltd. | 81,157 | 82 | — | — | — | — | ||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 84,591 | 58 | — | — | — | 241 | ||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 179,859 | 79 | — | — | — | — | ||||||||||||||||||
POSCO(Suzhou) Automotive Processing Center Co., Ltd. | 38,516 | 1 | 708 | — | — | — | ||||||||||||||||||
POSCO VST CO., LTD. | 80,009 | — | — | — | — | — | ||||||||||||||||||
POSCO INTERNATIONAL SINGAPORE PTE LTD. | — | 105 | 192,541 | — | — | — | ||||||||||||||||||
Others | 260,530 | 2,836 | 25,138 | 8,575 | 48,620 | 58,287 | ||||||||||||||||||
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3,538,010 | 9,914 | 735,118 | 190,765 | 155,986 | 123,132 | |||||||||||||||||||
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Associates and joint ventures | ||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | 229 | 5 | 610 | 72,737 | 3,668 | 7,068 | ||||||||||||||||||
SNNC | 1,374 | 530 | 176,094 | — | — | — | ||||||||||||||||||
POSCO-SAMSUNG-Slovakia Processing Center | 19,130 | — | — | — | — | — | ||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | — | 359,018 | — | — | — | ||||||||||||||||||
Others | 4,845 | 21,828 | 15,961 | — | — | — | ||||||||||||||||||
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25,578 | 22,363 | 551,683 | 72,737 | 3,668 | 7,068 | |||||||||||||||||||
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32,277 | 1,286,801 | 263,502 | 159,654 | 130,200 | ||||||||||||||||||||
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(c) | The related account balances from significant transactions with related companies as of September 30, 2020 and December 31, 2019 are as follows: |
1) | September 30, 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. | 5 | 4,512 | — | 37,871 | 261 | 38,132 | ||||||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 60,497 | — | 60,497 | — | 5 | 3,630 | 3,635 | |||||||||||||||||||||
POSCO ICT | 184 | — | 184 | 2,206 | 42,204 | 24,993 | 69,403 | |||||||||||||||||||||
eNtoB Corporation | — | — | — | 2,977 | 28,664 | — | 31,641 | |||||||||||||||||||||
POSCO CHEMICAL CO., LTD | 35,943 | 3,485 | 39,428 | 11,926 | 44,963 | 16,921 | 73,810 | |||||||||||||||||||||
POSCO ENERGY CO., LTD. | 188 | 248 | 436 | — | 3,082 | 12,979 | 16,061 | |||||||||||||||||||||
POSCO INTERNATIONAL Corporation | 569,861 | — | 569,861 | 4,098 | 323 | — | 4,421 | |||||||||||||||||||||
POSCO Thainox Public Company Limited | 83,853 | — | 83,853 | — | — | — | — | |||||||||||||||||||||
POSCO America Corporation | 1,173 | — | 1,173 | — | — | — | — | |||||||||||||||||||||
POSCO Asia Co., Ltd. | 300,471 | 1,433 | 301,904 | 5,275 | — | — | 5,275 | |||||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 16,230 | — | 16,230 | — | — | — | — | |||||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 41,612 | 701 | 42,313 | — | — | — | — | |||||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 183,492 | 471 | 183,963 | — | — | — | — | |||||||||||||||||||||
Others | 608,868 | 34,530 | 643,398 | 31,409 | 37,624 | 84,148 | 153,181 | |||||||||||||||||||||
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1,906,879 | 40,873 | 1,947,752 | 57,891 | 194,736 | 142,932 | 395,559 | ||||||||||||||||||||||
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Associates and joint ventures | ||||||||||||||||||||||||||||
SNNC | 294 | 229 | 523 | 36,262 | — | — | 36,262 | |||||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | 39,112 | 39,112 | 194,818 | 32 | — | 194,850 | |||||||||||||||||||||
Others | 755 | 38,003 | 38,758 | 2,660 | — | — | 2,660 | |||||||||||||||||||||
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1,049 | 77,344 | 78,393 | 233,740 | 32 | — | 233,772 | ||||||||||||||||||||||
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118,217 | 2,026,145 | 291,631 | 194,768 | 142,932 | 629,331 | |||||||||||||||||||||||
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Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | December 31, 2019 |
(in millions of Won) | Receivables | Payables | ||||||||||||||||||||||||||
Trade accounts and notes receivable | Others | Total | Trade accounts and notes payable | Accounts payable | Others | Total | ||||||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||||||
POSCO ENGINEERING & CONSTRUCTION CO., LTD. | 65 | 5,767 | — | 78,512 | 385 | 78,897 | ||||||||||||||||||||||
POSCO COATED & COLOR STEEL Co., Ltd. | 57,792 | — | 57,792 | — | 11 | 3,828 | 3,839 | |||||||||||||||||||||
POSCO ICT | 225 | 1 | 226 | 1,147 | 129,424 | 42,844 | 173,415 | |||||||||||||||||||||
eNtoB Corporation | — | — | — | 3,459 | 27,431 | — | 30,890 | |||||||||||||||||||||
POSCO CHEMICAL CO., LTD | 35,102 | 3,578 | 38,680 | 17,839 | 52,710 | 19,369 | 89,918 | |||||||||||||||||||||
POSCO ENERGY CO., LTD. | 1,876 | 4 | 1,880 | — | 3,229 | 14,912 | 18,141 | |||||||||||||||||||||
POSCO INTERNATIONAL Corporation | 633,073 | — | 633,073 | 345 | 2,218 | 3,839 | 6,402 | |||||||||||||||||||||
POSCO Thainox Public Company Limited | 52,826 | 2 | 52,828 | 916 | — | — | 916 | |||||||||||||||||||||
POSCO America Corporation | 8,448 | — | 8,448 | — | — | — | — | |||||||||||||||||||||
POSCO Asia Co., Ltd. | 508,962 | 748 | 509,710 | 12,784 | 171 | — | 12,955 | |||||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 29,842 | — | 29,842 | — | — | — | — | |||||||||||||||||||||
POSCO MEXICO S.A. DE C.V. | 90,351 | 702 | 91,053 | — | — | — | — | |||||||||||||||||||||
POSCO Maharashtra Steel Private Limited | 235,917 | 444 | 236,361 | — | — | — | — | |||||||||||||||||||||
Others | 470,734 | 33,851 | 504,585 | 14,397 | 40,233 | 87,652 | 142,282 | |||||||||||||||||||||
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2,130,850 | 39,395 | 2,170,245 | 50,887 | 333,939 | 172,829 | 557,655 | ||||||||||||||||||||||
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Associates and joint ventures | ||||||||||||||||||||||||||||
POSCO PLANTEC Co., Ltd. | 84 | 10 | 94 | 471 | 49,511 | — | 49,982 | |||||||||||||||||||||
SNNC | 297 | 65 | 362 | 19,769 | — | — | 19,769 | |||||||||||||||||||||
Roy Hill Holdings Pty Ltd | — | — | — | 93,383 | — | — | 93,383 | |||||||||||||||||||||
Others | 942 | 706 | 1,648 | 3,447 | 586 | — | 4,033 | |||||||||||||||||||||
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1,323 | 781 | 2,104 | 117,070 | 50,097 | — | 167,167 | ||||||||||||||||||||||
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40,176 | 2,172,349 | 167,957 | 384,036 | 172,829 | 724,822 | |||||||||||||||||||||||
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(d) | For the nine-month periods ended September 30, 2020 and 2019, details of compensation to key management officers were as follows: |
(in millions of Won) | September 30, 2020 | September 30, 2019 | ||||||
Short-term benefits | 36,012 | |||||||
Long-term benefits | 3,192 | 4,538 | ||||||
Retirement benefits | 5,425 | 7,998 | ||||||
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48,548 | ||||||||
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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 |
1) | The Company entered into long-term contracts to purchase iron ore, coal, nickel and others. The contracts of iron ore and coal generally have terms of more than three years and the contracts of nickel have terms of more than one year. These contracts provide for periodic price adjustments based on the market price. As of September 30, 2020, 70 million tons of iron ore and 10 million tons of coal remained to be purchased under such long-term contracts. |
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POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
2) | The Company entered into an agreement with Tangguh Liquefied Natural Gas (LNG) Consortium in Indonesia to purchase 550 thousand tons of LNG annually for 20 years commencing in August 2005. The purchase price is subject to change, based on changes of the monthly standard oil price (JCC) and with a price ceiling. |
3) | The Company entered into consecutive voyage charter (CVC) contracts for the transportation of raw materials. As of September 30, 2020, there are 39 vessels under CVC contract and the average remaining contract period is about 9 years. |
4) | The Company entered into commitments with KOREA ENERGY AGENCY for long-term foreign currency borrowings up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowings depends on the success of the project. The Company is not liable for the repayment in full or part of borrowings if the project fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreement. As of September 30, 2020, the ending balance of the borrowing amounts to USD 1.02 million. |
5) | The Company has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors, including Norddeutsche Landesbank, for seamless funding to the construction of new power plant by POSCO ENERGY CO., LTD. |
6) | The Company provides a supplementary fund of up to |
(b) | As of September 30, 2020, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral for long-term foreign currency borrowings. |
(c) | Litigation in progress |
The Company is involved in 32 lawsuits aggregating toW45.0 billion as defendant as of September 30, 2020, which arise from the ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting toW2.1 billion for one of 32 lawsuits based on its reliable estimate of outflow of resources. However, the Company has not recognized any provisions for the other lawsuits and claims since the Company does not believe it has a present obligation as of September 30, 2020.
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Table of Contents
POSCO
Notes to the Condensed Separate Interim Financial Statements, Continued
As of September 30, 2020
(Unaudited)
34. Cash Flows from Operating Activities
Changes in operating assets and liabilities for the nine-month periods ended September 30, 2020 and 2019 were as follows:
(in millions of Won) | September 30, 2020 | September 30, 2019 | ||||||
Trade accounts and notes receivable, net | (20,168 | ) | ||||||
Other accounts receivable | 111,238 | (187,091 | ) | |||||
Inventories | 1,138,481 | (21,600 | ) | |||||
Prepaid expenses | (16,945 | ) | (18,765 | ) | ||||
Other current assets | (2,821 | ) | (477 | ) | ||||
Long-term guarantee deposits | (318 | ) | (299 | ) | ||||
Derivative assets | 9,719 | — | ||||||
Other non-current assets | 1,329 | 1,182 | ||||||
Trade accounts and notes payable | 485,595 | (129,738 | ) | |||||
Other accounts payable | (72,903 | ) | 806 | |||||
Accrued expenses | (48,006 | ) | (25,224 | ) | ||||
Advances received | 1,680 | (1,250 | ) | |||||
Withholdings | 1,844 | 80,571 | ||||||
Unearned revenue | (5,414 | ) | 2,280 | |||||
Other current liabilities | (22,760 | ) | (21,827 | ) | ||||
Derivative liabliities | 8,905 | — | ||||||
Payments of severance benefits | (105,397 | ) | (61,890 | ) | ||||
Plan assets | 36,811 | 42,819 | ||||||
Other non-current liabilities | (6,951 | ) | (3,097 | ) | ||||
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(363,768 | ) | |||||||
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35. Events after the reporting period
Pursuant to the resolution of the Board of Directors on November 6, 2020, the Company decided to pay interim cash dividends ofW1,500 per common share (total dividend:W117.7 billion).
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