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Exhibit 99.1
BUSINESS REPORT
(From January 1, 2020 to December 31, 2020)
THIS IS AN ENGLISH TRANSLATION OF THE BUSINESS 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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BUSINESS REPORT
(From January 1, 2020 to December 31, 2020)
To: Korean Financial Services Commission and Korea Exchange
/s/ Chang, In-Hwa |
Chang, In-Hwa |
President and Representative Director |
POSCO |
6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do, Korea
Telephone: +82-54-220-0114
/s/ Chung, Kyung-Jin |
Chung, Kyung-Jin |
Head of Finance Office |
POSCO |
6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do, Korea
Telephone: +82-2-3457-0114
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I. | 4 | |||||
II. | 10 | |||||
III. | 32 | |||||
IV. | 36 |
Independent auditors’ reports on both Consolidated and Separate financial statements were filed to the SEC respectively on March 15, 2021. |
• | Report for consolidated financial statements : |
File/Film Number 001-13368 21739706
• | Report for separate financial statements : |
File/Film Number 001-13368 21739710
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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, 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 five overseas offices as follows: |
United Arab Emirates(Dubai), Brazil(Rio de Janeiro), Argentina(Jujuy), European Union(Germany), and Australia(Perth).
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(3) | Major Changes in the Board of Directors (as of March 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, November 4, 2020, December 4, 2020, January 7, 2021, February 4, 2021)
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 December 31, 2020) | ||||
Authorized Shares | Issued Shares | |||
200,000,000 | 87,186,835 |
Currency of the Republic of Korea is Korean Won (“KRW”). |
Par Value: KRW 5,000 per share |
B. Treasury Stock Holding and Cancellation
(As of December 31, 2020) | ||||||||||||||||||||||
Method of Purchase | Type | Beginning Balance | Increased | Decreased | Cancelled | Ending Balance | ||||||||||||||||
Direct | Common | 7,071,194 | — | — | — | 7,071,194 | ||||||||||||||||
Trust Contract | Stock | — | 4,100,169 | * | — | — | 4,100,169 | |||||||||||||||
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Total | 7,071,194 | 4,100,169 | — | — | 11,171,363 | |||||||||||||||||
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* | The number of common shares held by the Trust Contract is based on the traded and closed volume as of December 31, 2020. |
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5. Voting Rights
(As of December 31, 2020) | ||||||
Classification | Number of Common Shares | Remarks | ||||
(1) Number of Issued Shares | 87,186,835 | — | ||||
(2) Shares without Voting Rights | 11,061,363 | Treasury stock and trust holding | ||||
(3) Shares with Voting Rights | 76,125,472 | * | — |
* | The above “(3) Shares with Voting Rights” is the number of shares based on holding voting rights as of December 31, 2020. |
6. Earnings and Dividends
(In millions of KRW) | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
(Consolidated) Profit* | 1,602,148 | 1,835,087 | 1,690,612 | |||||||||
(Separate) Profit | 965,863 | 1,175,712 | 1,072,592 | |||||||||
Earnings per Share (Consolidated, KRW) | 20,165 | 22,823 | 20,911 | |||||||||
Cash Dividend Paid | 620,287 | 801,156 | 800,009 | |||||||||
Pay-out Ratio (Consolidated, %) | 38.7 | 43.7 | 47.3 | |||||||||
Dividend per Share (KRW) | 8,000 | 10,000 | 10,000 | |||||||||
Dividend Yield (%) | 3.0 | 4.1 | 4.1 |
* | (Consolidated) Profit : Profit attributable to owners of the controlling company |
** | The above Cash Dividend Paid, Dividend per Share and the related indexes include the year-end cash dividend, KRW 4,500/share, which will be approved at the 53rd Ordinary General Meeting of Shareholders. |
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) | ||||||||||||||||||||||||||
July 2020 | August 2020 | September 2020 | October 2020 | November 2020 | December 2020 | |||||||||||||||||||||
Common share | Highest Price | 202,000 | 210,500 | 196,000 | 220,000 | 245,000 | 279,500 | |||||||||||||||||||
Lowest Price | 178,500 | 184,500 | 185,000 | 200,500 | 216,000 | 245,500 | ||||||||||||||||||||
Average Price | 189,522 | 198,075 | 189,690 | 208,711 | 234,810 | 267,738 | ||||||||||||||||||||
Trading volume | Daily highest | 810 | 656 | 953 | 903 | 627 | 663 | |||||||||||||||||||
Daily lowest | 189 | 196 | 200 | 191 | 222 | 252 | ||||||||||||||||||||
Monthly | 8,143 | 7,123 | 7,250 | 7,812 | 7,542 | 8,301 |
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B. New York Stock Exchange
(USD/ADS*, In thousands of ADS*) | ||||||||||||||||||||||||||
July 2020 | August 2020 | September 2020 | October 2020 | November 2020 | December 2020 | |||||||||||||||||||||
American Depositary Share (ADS) | Highest Price | 42.1 | 44.1 | 42.1 | 48.7 | 56.3 | 64.3 | |||||||||||||||||||
Lowest Price | 37.4 | 39.1 | 38.3 | 42.2 | 47.9 | 56.1 | ||||||||||||||||||||
Average Price | 39.5 | 41.8 | 40.0 | 45.1 | 52.8 | 61.2 | ||||||||||||||||||||
Trading volume | Daily highest | 295.9 | 196.2 | 419.4 | 246.1 | 212.9 | 246.9 | |||||||||||||||||||
Daily lowest | 102.6 | 74.3 | 88.2 | 66.4 | 58.4 | 23.8 | ||||||||||||||||||||
Monthly | 4,045 | 2,750 | 4,142 | 3,519 | 2,527 | 2,774 |
* | 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 | 2019 | 2018 | |||||||||||||||||||||
Sales | Operating Income (Loss) | Sales | Operating Income (Loss) | Sales | Operating Income (Loss) | |||||||||||||||||||
Steel | 28,892,877 | 1,372,852 | 32,078,453 | 2,786,517 | 32,358,009 | 4,536,318 | ||||||||||||||||||
Trading | 19,345,222 | 394,954 | 22,157,131 | 542,724 | 22,407,717 | 383,934 | ||||||||||||||||||
Engineering & Construction | 6,576,170 | 385,048 | 6,944,629 | 338,865 | 6,769,410 | 411,489 | ||||||||||||||||||
Others | 2,978,527 | 250,181 | 3,186,635 | 200,749 | 3,442,641 | 210,859 | ||||||||||||||||||
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Total | 57,792,796 | 2,403,035 | 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 68 consolidated companies in the steel segment, including 4 domestic companies including POSCO and POSCO C&C, and 64 overseas companies including POSCO (Zhangjiagang) Stainless 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.
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.
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The Korean steel market is tariff-free, and especially within the Northeast Asian region, there is little difference in logistics costs among Korea, China and Japan, so it can be viewed as an 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 55% of total sales and export sales are around 45%, and by export region, the proportion of China, Southeast Asia, and Japan is high. POSCO maintains order based production and sales system, and to secure stable sales, the proportion of direct sales to customers in domestic sales is maintained at about 60%.
The company will focus on the following management activities:
First, in order to maintain the leading position in the steel business, POSCO will secure a new competitive advantage. Second, in the group businesses, we will expand investment to focus on core growth businesses and accelerate the creation of business results. Third, POSCO will focus on fostering new businesses in Green & Mobility as the new growth business in the next-generation. Fourth, POSCO will promote structural and fundamental innovation for the company’s sustainable growth. Fifth, by putting safety as the top priority, POSCO will create the workplace as the base for happy lifestyle without industrial casualties, and actively respond to the low-carbon society as an exemplary company for sustainable growth.
(2) Market Share
(Millions of Tons, %) | ||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||
Category | Production | Market share | Production | Market share | Production | Market share | ||||||||||||||||||
Crude Steel Production | 67.1 | 100 | 71.4 | 100 | 72.5 | 100 | ||||||||||||||||||
POSCO | 35.9 | 53.5 | 38.0 | 53.2 | 37.7 | 52.0 | ||||||||||||||||||
Others | 31.2 | 46.5 | 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 | 2019 | Growth Rate | |||||||||
All Trading Companies in Korea | 512,789 | 542,233 | -5.4 | % | ||||||||
POSCO International Corp. | 5,339 | 6,414 | -16.8 | % |
Source: Korea International Trade Association |
(2) Summary of Businesses
POSCO International and its consolidated subsidiaries engage in three major businesses: trading, energy and others. In addition, POSCO International maintains a global network of over 80 subsidiaries and branches in major overseas regions. In the case of the trading business, POSCO International has been actively developing and expanding new businesses in fields such as agro-commodities, LNG trading, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. In the energy business, POSCO International conducts businesses such as natural gas and crude oil development, LNG infrastructure, natural resources and power generation infrastructure.
C. Engineering & Construction
POSCO E&C engages in primarily 4 businesses: construction, energy, civil engineering and plant.
In the construction business, based on its know-how in the construction of skyscrapers and commercial complexes, POSCO E&C involves in a new city and private complex development projects. In the energy business, it involves in various power generation plant projects including renewable energy projects. The civil engineering business is about constructing expressways, railroads and bridges. Plant business is the construction of integrated steel mills, EPC projects and industrial plants.
D. Others
(1) POSCO ENERGY
POSCO ENERGY started its commercial operation in February, 1972 as the only privately-owned power plant in Korea. Since the early 1990’s, POSCO ENERGY continuously remodeled and built additional power plants meeting the increased demand for electricity in Korea. POSCO ENERGY acquired the LNG terminal business from POSCO in 2019, providing an opportunity to expand the LNG value chain. The LNG terminal business operates stable business structure through businesses such as tank rental, small scale LNG business, and ship trial run. POSCO ENERGY plans to secure stable profit base through the expansion of the LNG terminal in the future and grow into a general energy company focused on gas and power.
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(2) POSCO ICT
Based on the competitiveness in ICT, POSCO ICT has expanded Smart Factory and provided IT solutions to POSCO and POSCO subsidiaries. POSCO ICT has expanded Smart Factory based on the world’s first continuous process platform “PosFrame” and next-generation production optimization system “MES 3.0”. POSCO ICT has been actively applying smart technology for strategic businesses in manufacturing, logistics, trade, and energy sectors, such as building MES at the POSCO CHEMICAL’s anode and cathode material factory, spreading the Smart Management of POSCO International, and spreading the Intelligent Power Plant of POSCO Energy in order to promote the digital transformation of POSCO subsidiaries and other businesses.
(3) POSCO CHEMICAL
POSCO CHEMICAL operates mainly 3 businesses: refractory, quicklime & chemical and energy material. In the refractory business, POSCO CHEMICAL produces and maintains refractories. In the quicklime & chemical business, POSCO CHEMICAL produces quicklime and chemical products such as coal tar and light oil. In the energy material business, POSCO CHEMICAL provides cathode and anode materials which are the main components for secondary cells: cathode, anode, electrolyte and separation membrane. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously.
(4) POSCO M-TECH
POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers. In the case of steel products packaging, POSCO M-TECH continuously develops packaging automated molding machines and applies environment-friendly packaging materials. In addition, aluminum deoxidizers engage in primarily 3 types : Pellet, Mini-Pellet and Ingot. POSCO M-TECH has expanded the sales of aluminum deoxidizers in overseas markets.
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3. Key Products
A. Sales of Key Products (The Year 2020)
(In hundred millions of KRW, %) | ||||||||||||
Business Area | Item | Specific Use | Total Sales | Ratio | ||||||||
Steel | Hot-rolled Product (HR) | Steel pipe, Shipbuilding, etc. | 77,031 | 17.40 | % | |||||||
Cold-rolled Product (CR) | Automobile , Home appliances, etc. | 139,678 | 31.56 | % | ||||||||
Stainless Steel Products | Tableware, pipes, etc. | 95,886 | 21.67 | % | ||||||||
Others | Plates, Wire rods, etc. | 129,987 | 29.37 | % | ||||||||
Gross Sum | 442,583 | 100.00 | % | |||||||||
Deduction of Internal Trade | (153,654 | ) | ||||||||||
Sub Total | 288,929 | |||||||||||
Trading | Steel, Metal | 233,943 | 72.45 | % | ||||||||
Chemical, Strategic Item, Energy | 34,143 | 10.57 | % | |||||||||
Others | 54,833 | 16.98 | % | |||||||||
Gross Sum | 322,920 | 100.00 | % | |||||||||
Deduction of Internal Trade | (129,468 | ) | ||||||||||
Sub Total | 193,452 | |||||||||||
Engineering & Construction | Domestic Construction | Architecture | 42,761 | 56.19 | % | |||||||
Plant | 12,887 | 16.93 | % | |||||||||
Civil Engineering | 6,177 | 8.12 | % | |||||||||
Others | 0 | 0.00 | % | |||||||||
Overseas Construction | 7,089 | 9.31 | % | |||||||||
Owned Construction | 4,840 | 6.36 | % | |||||||||
Others | 2,345 | 3.08 | % | |||||||||
Gross Sum | 76,100 | 100.00 | % | |||||||||
Deduction of Internal Trade | (10,338 | ) | ||||||||||
Sub Total | 65,762 | |||||||||||
Others | Electricity Sales, etc. | 55,885 | ||||||||||
Deduction of Internal Trade | (26,100 | ) | ||||||||||
Sub Total | 29,785 | |||||||||||
Total Sum | 577,928 |
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B. Price Movement Trends of Key Products
(In thousands of KRW/ Tons, KRW/kWh) | ||||||||||||||
Business Area | Products | 2020 | 2019 | 2018 | ||||||||||
Steel | Hot-rolled Product (HR) | 622 | 695 | 707 | ||||||||||
Cold-rolled Product (CR) | 759 | 800 | 807 | |||||||||||
Others | Electric Power | 72 | 94 | 100 | ||||||||||
Refractory | 965 | 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 | | 107,084 (59.6 | ) | Iron Ore, Coal | |||||
Sub-materials | Sub-materials for Iron-making, Steelmaking | | 31,421 (17.5 | ) | Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc. | |||||||
Stainless Steel Materials | Key Materials for STS Production | | 41,173 (22.9 | ) | Nickel, Ferrochrome, STS Scrap Iron, etc. | |||||||
Engineering & Construction | Raw Materials | Ready-mixed Concrete | Construction of Structure | | 2,765 (21.8 | ) | ||||||
Steel Reinforcement | Strengthening Concrete | | 1,990 (15.7 | ) | ||||||||
Cable | Electricity Transfer | | 226 (1.8 | ) | ||||||||
Steel Pile | Foundation of Structure | | 289 (2.3 | ) | ||||||||
Others | Construction of Pipe and Structure etc. | | 7,399 (58.4 | ) | ||||||||
Others | Raw Materials | LNG | Material for Power Generation | | 9,218 (40.8 | ) | ||||||
Limestone | Production of Lime | | 648 (2.9 | ) | ||||||||
Others | Engineering business etc. | | 12,711 (56.3 | ) |
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B. Price Movement Trends of Major Raw Materials
(In thousands of KRW) | ||||||||||||||
Business Area | Category | 2020 | 2019 | 2018 | ||||||||||
Steel | Iron Ore(per ton) | 120 | 102 | 76 | ||||||||||
Coal(per ton) | 147 | 207 | 228 | |||||||||||
Scrap Iron(per ton) | 348 | 347 | 395 | |||||||||||
Nickel(per ton) | 16,254 | 16,148 | 15,074 | |||||||||||
Engineering & Construction | Ready-mixed Concrete (per m3) | 65 | 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) | 484 | 668 | 768 | ||||||||||
Lime (per ton) | 19 | 20 | 19 |
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[Steel]
Price Movement Trend of Major Raw Materials |
(1) Iron Ore
(In US Dollars/ Tons) | ||||||||||||||||||||||||||||||||||||||||||||||||
’20.4Q | ’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | |||||||||||||||||||||||||||||||||||||
Trend of International Benchmark Price (Free On Board, “FOB”) | 126 | 110 | 88 | 83 | 80 | 92 | 94 | 77 | 64 | 57 | 58 | 68 |
(2) Coal
(In US Dollars/ Tons) | ||||||||||||||||||||||||||||||||||||||||||||||||
’20.4Q | ’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | |||||||||||||||||||||||||||||||||||||
Trend of International Benchmark Price (FOB) | 109 | 115 | 118 | 155 | 140 | 161 | 203 | 206 | 221 | 188 | 190 | 229 |
(3) Scrap Iron
(In US Dollars/ Tons) | ||||||||||||||||||||||||||||||||||||||||||||||||
’20.4Q | ’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | |||||||||||||||||||||||||||||||||||||
Trend of Purchase Price (Cost and Freight, “CFR”) | 361 | 289 | 254 | 274 | 270 | 290 | 312 | 325 | 343 | 350 | 364 | 379 |
(4) Nickel
’20.4Q | ’20.3Q | ’20.2Q | ’20.1Q | ’19.4Q | ’19.3Q | ’19.2Q | ’19.1Q | ’18.4Q | ’18.3Q | ’18.2Q | ’18.1Q | |||||||||||||
Trend of London Metal Exchange ( “LME”) Cash Price | USD 7.23 /lb USD 15,930/ton | USD 6.45 /lb USD 14,210/ton | USD 5.54 /lb USD 12,215/ton | USD 5.77 /lb USD 12,723/ton | USD 7.01 /lb USD 15,450/ton | USD 7.05 /lb USD 15,540/ton | USD 5.56 /lb USD 12,258/ton | USD 5.61 /lb USD 12,369/ton | USD 5.22 /lb USD 11,516/ton | USD 6.02 /lb USD 13,266/ton | USD 6.56 /lb USD 14,467/ton | USD 6.02 /lb USD 13,276/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, 9T, STP275, KS F 4602 | |
Steel Reinforcement | SD400 D10mm | |
Cable | TFR-3, 0.6/1KV, 2.5SQ, 2C |
[Others]
(1) | Criteria for Calculation |
<POSCO | ENERGY> |
LNG: | The average price between LNG purchased from Korea Gas Corporation and LNG purchased directly from foreign suppliers |
<POSCO CHEMICAL>
Refractory and lime: Purchase prices including freight costs
19
Table of Contents
5. Production and Facilities
A. Production Capacity
[Steel]
(Thousands of Tons) | ||||||||||||||
Business Area | Products | 2020 | 2019 | 2018 | ||||||||||
Steel | Crude Steel | 45,330 | 47,534 | 47,590 |
[Others]
(Electric Power: MW/year, Lime: Thousands of Tons/year) | ||||||||||||||||
Business Area | Products | 2020 | 2019 | 2018 | ||||||||||||
Power Generation | Electric Power | Incheon | 3,412 | 3,412 | 3,412 | |||||||||||
Gwangyang | — | 284 | 284 | |||||||||||||
Pohang | — | 290 | 290 | |||||||||||||
Lime | Lime | 2,196 | 2,190 | 2,190 |
B. Production Result and Capacity Utilization Rate
[Steel]
(1) Production
(Thousands of Tons) | ||||||||||||||
Products | 2020 | 2019 | 2018 | |||||||||||
Crude Steel | 40,579 | 42,948 | 42,867 | |||||||||||
Products | Hot-Rolled Steel | 9,128 | 8,739 | 8,716 | ||||||||||
Plate | 7,009 | 7,191 | 7,432 | |||||||||||
Wire Rod | 2,666 | 2,756 | 2,867 | |||||||||||
Pickled-Oiled Steel | 2,432 | 2,967 | 2,946 | |||||||||||
Cold-Rolled Products | 6,795 | 7,416 | 8,551 | |||||||||||
Coated Steel | 6,316 | 6,526 | 7,163 | |||||||||||
Electrical Steel | 826 | 819 | 1,078 | |||||||||||
Stainless Steel | 3,900 | 3,850 | 3,978 | |||||||||||
Others | 4,691 | 5,761 | 5,903 | |||||||||||
|
|
|
|
|
| |||||||||
Total | 43,763 | 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 | POSCO | 40,680 | 35,935 | 88.3 | ||||||||||
Production | POSCO (Zhangjiagang) Stainless Co., Ltd. | 1,100 | 989 | 89.9 | ||||||||||
PT.KRAKATAU POSCO | 3,000 | 3,100 | 103.3 | |||||||||||
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (Former, SS VINA JOINT STOCK | 550 | 554 | 100.8 | |||||||||||
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| |||||||||
Total | 45,330 | 40,579 | 89.5 | |||||||||||
|
|
|
|
|
|
Trade and Engineering & Construction businesses are not reflected on the table due to difficulties in measuring capacity, production and utilization rate of such businesses. |
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY had production capacity of crude steel 1,100 thousand tons/year: section steel 550 thousand tons/year and reinforcing bar 550 thousand tons/year. However, after the exit of the reinforcing bar business in November 2019, the current crude steel production capacity is 550 thousand tons/year. |
[Others]
(1) Production Result
(Gwh, Thousands of Tons) | ||||||||||||||
Business Area | Products | 2020 | 2019 | 2018 | ||||||||||
Power Generation | Electric Power | 13,998 | 15,928 | 15,297 | ||||||||||
Lime | Lime | 2,345 | 2,542 | 2,511 |
(2) Capacity Utilization Rate
(Hour, %) | ||||||||||||||
Business Area | Products | 2020 Capacity | 2020 Production | Utilization Rate | ||||||||||
Power Generation | Incheon Power Plant | 8,784 | 5,462 | 62.2 | % | |||||||||
Lime | Lime | 2,196 | 2,345 | 106.8 |
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 | 110,086 | (6 | ) | 3,490 | 2,013,822 | ||||||||||||||
Trade | 171,177 | 879 | (121,368 | ) | — | 50,688 | ||||||||||||||
Engineering & Construction | 25,528 | 912 | (861 | ) | — | 25,579 | ||||||||||||||
Others | 429,102 | 73,274 | (2,378 | ) | — | 499,998 |
[Buildings]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 3,312,799 | 267,904 | (36,036 | ) | (286,075 | ) | 3,258,592 | |||||||||||||
Trade | 477,497 | 9,440 | (99,832 | ) | (12,461 | ) | 374,644 | |||||||||||||
Engineering & Construction | 72,102 | 15,370 | (3,262 | ) | (2,508 | ) | 81,702 | |||||||||||||
Others | 353,056 | 131,988 | (16,074 | ) | (22,508 | ) | 446,462 |
[Structures]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 2,418,025 | 243,919 | (26,767 | ) | (202,036 | ) | 2,433,141 | |||||||||||||
Trade | 22,484 | 462 | (20,556 | ) | (319 | ) | 2,071 | |||||||||||||
Engineering & Construction | 13,175 | 385 | (7,541 | ) | (1,563 | ) | 4,456 | |||||||||||||
Others | 450,822 | 167,744 | (4,306 | ) | (28,702 | ) | 585,558 |
22
Table of Contents
[Machinery and Equipments]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 15,309,982 | 2,287,448 | (576,607 | ) | (2,155,894 | ) | 14,864,929 | |||||||||||||
Trade | 398,184 | 9,123 | (111,442 | ) | (29,017 | ) | 266,848 | |||||||||||||
Engineering & Construction | 5,267 | 6,226 | (4,992 | ) | (1,430 | ) | 5,071 | |||||||||||||
Others | 1,504,831 | 378,198 | (41,880 | ) | (120,690 | ) | 1,720,459 |
[Vehicles]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 20,095 | 20,381 | (8,869 | ) | (8,726 | ) | 22,881 | |||||||||||||
Trade | 5,852 | 4,319 | (3,081 | ) | (1,621 | ) | 5,469 | |||||||||||||
Engineering & Construction | 783 | 3,740 | (1,786 | ) | (1,604 | ) | 1,133 | |||||||||||||
Others | 5,555 | 7,285 | (2,519 | ) | (2,648 | ) | 7,673 |
[Tools and Fixtures]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 48,984 | 54,777 | (17,236 | ) | (32,359 | ) | 54,166 | |||||||||||||
Trade | 11,647 | 1,256 | (9,739 | ) | (1,801 | ) | 1,363 | |||||||||||||
Engineering & Construction | 599 | 1,665 | (896 | ) | (341 | ) | 1,027 | |||||||||||||
Others | 9,521 | 4,974 | (6,413 | ) | (4,337 | ) | 3,745 |
[Equipment]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 64,739 | 45,009 | (22,983 | ) | (20,620 | ) | 66,145 | |||||||||||||
Trade | 30,675 | 7,806 | (3,873 | ) | (9,310 | ) | 25,298 | |||||||||||||
Engineering & Construction | 4,055 | 5,144 | (3,667 | ) | (2,000 | ) | 3,532 | |||||||||||||
Others | 30,663 | 15,151 | (909 | ) | (12,421 | ) | 32,484 |
[Financial Lease Assets]
(In millions of KRW) | ||||||||||||||||||||
Business Area | Beginning Book Balance | Increased | Decreased | Depreciation | Ending Book Balance | |||||||||||||||
Steel | 417,805 | 139,272 | (6,081 | ) | (60,706 | ) | 490,290 | |||||||||||||
Trade | 81,002 | 70,229 | (18,312 | ) | (37,728 | ) | 95,191 | |||||||||||||
Engineering & Construction | 216,170 | (52,339 | ) | (40,681 | ) | (40,274 | ) | 82,876 | ||||||||||||
Others | 59,605 | 88,787 | (9,728 | ) | (33,321 | ) | 105,343 |
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 | 44,144 | (10,401 | ) | (7,971 | ) | 149,965 | |||||||||||||
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 | 2,491,236 | (2,472,464 | ) | (17,270 | ) | 1,438,271 | |||||||||||||
Trade | 105,280 | 25,905 | (73,035 | ) | — | 58,150 | ||||||||||||||
Engineering & Construction | 23,060 | 82 | (21,099 | ) | — | 2,043 | ||||||||||||||
Others | 364,638 | 249,859 | (495,421 | ) | — | 119,076 |
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/ Establish ment | June 2011 ~ December 2023 | P) Establishment of #6 Coke plant P) Establishment of by-product gas Power Plant | 14,789 | 4,562 | 10,227 | ||||||||||||
February 2017 ~ May 2024 | G) The renovation of #4 furnace P) Improvement of #3, #4 power plant, etc. | 11,953 | 5,212 | 6,741 |
P stands for Pohang Steel Works. |
G stands for Gwangyang Steel Works. |
Ongoing investments over KRW 10 billion as of December 31, 2020 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 | System improvement, IT facility purchase, etc. | 182 | 62 | — | ||||||||||||
Establishment/Expansion | January 2020 ~ December 2020 | Expansion of SM server | 316 | 86 | — | |||||||||||||
POSCO CHEMICAL | Establishment/Expansion | July 2020 ~ November 2022 | The 3rd stage of cathode material factory in Gwangyang | 2,895 | 77 | 2,818 | ||||||||||||
Establishment/Expansion | November 2020 ~ March 2024 | The 4th stage of cathode material factory in Gwangyang | 2,758 | 51 | 2,707 | |||||||||||||
Establishment/Expansion | November 2019 ~ December 2022 | The 2nd stage of production line up expansion in #2 anode material factory | 1,657 | 385 | 1,272 | |||||||||||||
Establishment/Expansion | February 2020 ~ May 2024 | Establishment of artificial graphite anode factory | 2,177 | 148 | 2,029 | |||||||||||||
Establishment/Expansion | November 2019 ~ October 2021 | Renovation of refractory factory for production increase | 483 | 104 | 379 | |||||||||||||
Establishment/Expansion | October 2020 ~ November 2022 | Facilities rationalization of refractory sintering plant in Pohang | 319 | — | 319 | |||||||||||||
POSCO Energy | Establishment/Expansion | March 2020 ~ December 2021 | Expansion of evaporator for Gwangyang LNG Terminal | 360 | 24 | 336 |
Ongoing investments over KRW 10 billion as of December 31, 2020 are listed on the table. |
25
Table of Contents
6. Product Sales
[Steel]
(In hundred millions of KRW) | ||||||||||||||
Items | 2020 | 2019 | 2018 | |||||||||||
Domestic | Hot-Rolled Products | 39,663 | 42,605 | 48,879 | ||||||||||
Cold-Rolled Products | 37,870 | 39,716 | 39,901 | |||||||||||
Stainless Steel | 23,746 | 21,167 | 21,281 | |||||||||||
Others | 63,111 | 77,026 | 77,230 | |||||||||||
Export | Hot-Rolled Products | 37,368 | 41,064 | 35,231 | ||||||||||
Cold-Rolled Products | 101,808 | 125,658 | 124,449 | |||||||||||
Stainless Steel | 72,140 | 80,181 | 79,931 | |||||||||||
Others | 66,877 | 70,667 | 77,310 | |||||||||||
Total | Gross Sum | 442,583 | 498,084 | 504,212 | ||||||||||
Internal Transaction | (153,654 | ) | (177,299 | ) | (180,632 | ) | ||||||||
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|
|
| |||||||||
Total | 288,929 | 320,785 | 323,580 | |||||||||||
|
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|
|
[Trading]
(In hundred millions of KRW) | ||||||||||||||
Items | 2020 | 2019 | 2018 | |||||||||||
Domestic | Merchandise | 33,565 | 29,315 | 40,328 | ||||||||||
Product | 2,028 | 5,120 | 4,612 | |||||||||||
Others | 240 | 1,101 | 1,712 | |||||||||||
Export | Merchandise | 75,922 | 69,347 | 153,336 | ||||||||||
Product | 528 | 205 | 354 | |||||||||||
Others | 1,191 | 638 | 6,597 | |||||||||||
Trades among the 3 countries | 209,446 | 270,522 | 176,250 | |||||||||||
Gross Sum | 322,920 | 376,248 | 383,189 | |||||||||||
Internal Transaction | (129,468 | ) | (154,677 | ) | (159,112 | ) | ||||||||
|
|
|
|
|
| |||||||||
Total | 193,452 | 221,571 | 224,077 | |||||||||||
|
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|
|
|
|
26
Table of Contents
[Engineering & Construction]
(In hundred millions of KRW) | ||||||||||||||
Items | 2020 | 2019 | 2018 | |||||||||||
Domestic | Building | 42,761 | 44,681 | 37,363 | ||||||||||
Plant | 12,887 | 10,953 | 10,238 | |||||||||||
Civil Engineering | 6,177 | 6,098 | 5,129 | |||||||||||
Others | — | — | 337 | |||||||||||
Overseas | 7,089 | 7,190 | 9,471 | |||||||||||
Own Construction | 4,866 | 5,712 | 7,568 | |||||||||||
Other Subsidiary company sales | 2,320 | 2,246 | 3,101 | |||||||||||
Gross Sum | 76,100 | 76,880 | 73,207 | |||||||||||
Internal Transaction | (10,338 | ) | (7,434 | ) | (5,513 | ) | ||||||||
|
|
|
|
|
| |||||||||
Total | 65,762 | 69,446 | 67,694 | |||||||||||
|
|
|
|
|
|
[Others]
(In hundred millions of KRW) | ||||||||||||
Items | 2020 | 2019 | 2018 | |||||||||
Electric Power Sales | 29,785 | 31,866 | 34,426 |
7. Derivatives
We use forward exchange contracts to hedge against the exchange rate risk for foreign currency loans. As of December 31, 2020, we assessed the fair value of our forward exchange contracts to be USD 0.55 billion (expiring April 2021), and a currency swap contracts to be USD 0.5 billion(expiring August 2023), USD 0.5 billion(expiring July 2024), USD 0.5 billion(expiring November 2022), USD 0.5 billion(expiring January 2023), USD 0.44 billion(expiring January 2025), and EUR 0.5 billion(expiring January 2024).
We recognized KRW 30,033 million of loss on valuations of forward exchange contracts. The transaction loss of forward exchange contracts is KRW 9,730 million. Also, we recognized KRW 80,038 million of valuation loss on currency swap contracts. The transaction gain of currency swap contracts is KRW 6,445 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 |
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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
| ||||
Investment on the 3rd stage development of A-1 / A-3 block in Myanmar gas field | June 2020 | 1) Investment amount: KRW 365,786,302,000 2) Development period: September 1, 2019 ~ December 31, 2024 3) Schedule : Installation Completion of low-pressure gas compression platform and commenced operation in 2024 4) Other Information • Location: North-west offshore, Myanmar • This investment is the 3rd stage of development, which consists of 3 stages in Myanmar gas field development. The purpose of investment is to maintain current gas production level stably by installing low-pressure gas compression platform. • In the first quarter of 2021, the design and production of the equipment for this work will be started, and it is planned to start operation in 2024. The “(2) Development period” above is the period including the basic design progress period, September 2019 to September 2020. • Participation rate of each company in gas production and offshore pipeline transportation business • POSCO International Corporation : 51.0% • ONGC VIDESH(Oil and Natural Gas Corporation Videsh Limited) : 17.0% • MOGE(Myanmar Oil and Gas Enterprise): 15.0% • GAIL (India) Limited : 8.5% • KOGAS(Korea Gas Corporation): 8.5% • Investment size of USD 315,170 thousand, applying the exchange rate of 1USD=1,160.60 KRW, which is the date of the BOD resolution. • Detailed information and future timeline on this resource development investment is subject to change. POSCO International disclosure date : September 22, 2020 (Decision on natural resources investment) |
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Table of Contents
POSCO ENGINEERING & CONSTRUCTION | Small scale merger with POSCO ENGINEERING CO., LTD. | November 2016 | 1) Purpose: Achieving sustainable profit and growth by enhancing competitiveness 2) Information: POSCO E&C merges with POSCO Engineering at the merger ratio of 1:0, and POSCO E&C will not be issuing new shares 3) Conclusion of a contract: November 23, 2016 4) Date of merger: February 1, 2017 5) Registration of merger: February 14, 2017
| |||
POSCO O&M | Small scale merger with Blue O&M and MegaAsset | February 2019 | 1) Purpose: Enhancing foundation of growth by improving management efficiency and creating synergies among businesses 2) Information: POSCO O&M merges with Blue O&M and MegaAsset 3) Date of merger: February 1, 2019 4) Registration of merger: February 11, 2019
| |||
POSCO ENERGY | Contract of Shares Transfer | July 2018 | 1) Contract Parties: Nonghyup Bank(The third agent of KIAMCO PowerEnergy Private Special Assets Investment Trust), Doosan Heavy Industries & Construction, POSCO E&C, Industrial Bank of Korea(The first agent of Multi Asset POSPower Samcheok coal-fired private investment trust) 2) Signed Date: July, August, 2018 3) Contract Amount : KRW 343,706 million 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 | |||
POSCO SPS | TMC Business Group | |||
Stainless Quality Technology Group | ||||
Engineering & Construction | POSCO Engineering & Construction,. LTD. | R&D Center | ||
POSCO A&C | R&D Center | |||
Others | POSCO ENERGY CO., LTD. | 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 (In millions of KRW)
Business Area | ||||||||||||||||||||
Category | Steel | Trade | Engineering & Construction | Others | Total | |||||||||||||||
Selling and Administrative Cost | 79,801 | 50 | 4,224 | 32,746 | 116,821 | |||||||||||||||
Manufacturing Cost | 347,889 | 45 | 3,823 | 104 | 351,861 | |||||||||||||||
R&D Cost (Intangible Assets) | 186,769 | — | — | (92 | ) | 186,677 | ||||||||||||||
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Total* | 614,459 | 95 | 8,047 | 32,758 | 655,359 | |||||||||||||||
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Government Subsidy | — | — | 548 | — | 548 | |||||||||||||||
R&D/Sales Ratio (%) | 2.13 | 0.00 | 0.12 | 1.10 | 1.13 |
* | Total includes government subsidy. |
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1. Consolidated Financial Statements
A. Summary
(In millions of KRW) | ||||||||||||
Account | 2020 | 2019 | 2018 | |||||||||
As of December 31, 2020 | As of December 31, 2019 | As of December 31, 2018 | ||||||||||
[Total current assets] | 35,830,815 | 34,842,374 | 33,651,002 | |||||||||
Cash and cash equivalents | 4,754,644 | 3,514,872 | 2,643,865 | |||||||||
Other receivables, net | 1,494,239 | 1,581,517 | 1,385,629 | |||||||||
Other short-term financial assets | 11,709,209 | 8,996,049 | 8,081,096 | |||||||||
Trade accounts and notes receivable, net | 8,120,619 | 9,078,351 | 9,282,609 | |||||||||
Inventories | 9,051,790 | 10,920,320 | 11,499,928 | |||||||||
Other current assets | 700,314 | 751,265 | 757,875 | |||||||||
[Total non-current assets] | 43,256,158 | 44,216,287 | 44,597,263 | |||||||||
Other receivables, net | 1,195,962 | 1,140,878 | 863,240 | |||||||||
Other long-term financial assets | 1,561,807 | 1,669,389 | 1,647,898 | |||||||||
Investments in associates and joint ventures | 3,876,249 | 3,927,755 | 3,650,003 | |||||||||
Property, plant and equipment, net | 29,400,141 | 29,925,973 | 30,018,273 | |||||||||
Intangible assets, net | 4,449,432 | 4,908,473 | 5,170,825 | |||||||||
Other non-current assets | 2,772,567 | 2,643,819 | 3,247,024 | |||||||||
Total assets | 79,086,973 | 79,058,661 | 78,248,265 | |||||||||
[Total current liabilities] | 16,854,968 | 16,323,690 | 18,937,985 | |||||||||
[Total non-current liabilities] | 14,557,413 | 14,940,264 | 12,550,729 | |||||||||
Total liabilities | 31,412,381 | 31,263,954 | 31,488,714 | |||||||||
[Equity attributable to owners of the controlling company] | 44,331,350 | 44,471,873 | 43,371,260 | |||||||||
Share capital | 482,403 | 482,403 | 482,403 | |||||||||
Capital surplus | 1,310,547 | 1,376,251 | 1,410,551 | |||||||||
Hybrid bonds | 199,384 | 199,384 | 199,384 | |||||||||
Retained earnings | 46,111,457 | 45,080,118 | 44,216,018 | |||||||||
Other equity attributable to owners of the controlling company | (3,772,441 | ) | (2,666,283 | ) | (2,937,096 | ) | ||||||
[Non-controlling Interests] | 3,343,242 | 3,322,834 | 3,388,291 | |||||||||
Total equity | 47,674,592 | 47,794,707 | 46,759,551 |
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From January 1, 2020 to December 31, 2020 | From January 1, 2019 to December 31, 2019 | From January 1, 2018 to December 31, 2018 | ||||||||||
Revenue | 57,792,796 | 64,366,848 | 64,977,777 | |||||||||
Operating profit | 2,403,035 | 3,868,855 | 5,542,600 | |||||||||
Profit | 1,788,152 | 1,982,637 | 1,892,064 | |||||||||
[Profit attributable to owners of the controlling company] | 1,602,147 | 1,835,086 | 1,690,612 | |||||||||
[Profit attributable to non-controlling interests] | 186,005 | 147,551 | 201,452 | |||||||||
Total comprehensive Income | 1,570,204 | 2,129,105 | 1,463,535 | |||||||||
[Total comprehensive income attributable to owners of the controlling company] | 1,415,132 | 1,997,731 | 1,271,495 | |||||||||
[Total comprehensive income attributable to non-controlling interests] | 155,072 | 131,374 | 192,040 | |||||||||
Earnings per share(KRW) | 20,165 | 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.
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2. Separate Financial Statements
A. Summary
(In millions of KRW) | ||||||||||||
Account | 2020 | 2019 | 2018 | |||||||||
As of December 31, 2020 | As of December 31, 2019 | As of December 31, 2018 | ||||||||||
[Total current assets] | 19,579,954 | 18,216,066 | 16,796,400 | |||||||||
Cash and Cash equivalents | 1,822,660 | 978,139 | 259,219 | |||||||||
Trade accounts and notes receivable, net | 3,693,535 | 3,987,041 | 3,968,372 | |||||||||
Other receivables, net | 279,555 | 321,352 | 206,432 | |||||||||
Other short-term financial assets | 9,607,632 | 7,858,979 | 7,025,143 | |||||||||
Inventories | 4,093,829 | 4,988,530 | 5,288,009 | |||||||||
Other current assets | 82,743 | 82,025 | 49,225 | |||||||||
[Total non-current assets] | 37,215,015 | 37,494,700 | 37,329,580 | |||||||||
Other receivables, net | 84,037 | 56,468 | 57,767 | |||||||||
Other long-term financial assets | 1,072,817 | 1,257,896 | 1,176,757 | |||||||||
Investments in Subsidiaries, associates, and joint ventures | 14,883,152 | 15,069,857 | 15,121,339 | |||||||||
Property, plant and equipment, net | 20,216,932 | 20,132,199 | 20,154,334 | |||||||||
Intangible assets, net | 621,926 | 708,915 | 645,222 | |||||||||
Other non-current assets | 336,151 | 269,365 | 174,161 | |||||||||
Total assets | 56,794,969 | 55,710,766 | 54,125,980 | |||||||||
[Total current liabilities] | 5,089,111 | 3,331,446 | 3,895,973 | |||||||||
[Total non-current Liabilities] | 6,591,154 | 6,765,135 | 4,957,905 | |||||||||
Total liabilities | 11,680,265 | 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] | 45,781,777 | 45,372,411 | 45,175,459 | |||||||||
[Other equity] | (2,688,149 | ) | (1,692,233 | ) | (1,739,919 | ) | ||||||
Total equity | 45,114,704 | 45,614,185 | 45,272,102 |
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Account | 2020 | 2019 | 2018 | |||||||||
From January 1, 2020 to December 31, 2020 | From January 1, 2019 to December 31, 2019 | From January 1, 2018 to December 31, 2018 | ||||||||||
Revenue | 26,509,920 | 30,373,511 | 30,659,425 | |||||||||
Operating profit | 1,135,197 | 2,586,359 | 3,809,376 | |||||||||
Profit | 965,863 | 1,175,712 | 1,072,592 | |||||||||
Earnings per share(KRW) | 12,123 | 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”).
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Table of Contents
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 March 4, 2021) |
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 December 31, 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 |
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Name | Experience | Relation with Majority Shareholder | Remarks | |||
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 |
(3) List of Key Activities of the Board of Directors (January 1, 2020 ~ March 4, 2021)
No. | Date | Agenda | Approval | |||
2020-1 | January 31, 2020 | • Deliberation Agenda
1. Approval of the 52nd financial statements and schedule for the general meeting of shareholders
• Report Agenda
1. The progress on implementing resolution made by the Board of Directors for the fiscal year of 2019
2. Business performance of the fiscal year of 2019
3. Report on internal control over financial reporting
4. Assessment on the effectiveness of internal control over financial reporting | All 1 Case Approved | |||
2020-2 | February 21, 2020 | • Deliberation Agenda
1. Agendas for the 52nd general meeting of shareholders
2. Recommendation of inside director candidates (Candidates other than representative director CEO) | All 2 Cases Approved | |||
2020-3 | March 27, 2020 | • 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 | |||
2020-4 | April 10, 2020 | • Deliberation Agenda
1. Decision on contract for share repurchase trust | All 1 Case Approved | |||
2020-5 | May 8, 2020 | • 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 | |||
2020-6 | August 7, 2020 | • 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 |
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2020-7 | November 6, 2020 | • 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 | |||
2020-8 | December 11, 2020 | • Deliberation Agenda
1. Mid-term business strategy and business plan for 2021
2. Year-end donation for the underpriviledged
3. Recommendation for the candidate of the Representative Director & CEO
• Report Agenda
1. The progress on implementing resolution made by the Board of Directors for the fiscal year of 2020
2. Review of the compliance system observance
3. POSCO 2050 Carbon Neutral Declaration and Communication Plan | All 3 Cases Approved | |||
2021-1 | January 20, 2021 | 1. Participation of capital increase with consideration of POSCO CHEMICAL | All 1 Case Approved | |||
2021-2 | January 28, 2021 | • Deliberation Agenda
1. Approval of the 53rd financial statements and schedule for the general meeting of shareholders
• Report Agenda
1. Business performance of the fiscal year of 2020
2. Report on internal control over financial reporting
3. Assessment on the effectiveness of internal control over financial reporting | All 1 Case Approved | |||
2021-3 | February 18, 2021 | 1. Plans to strengthen roles of the Board of Directors in relation to ESG
2. Recommendation of Inside Directors candidates (other than the candidate for the Representative Director & CEO
3. Agendas for the 53rd general meeting of shareholders | All 3 Cases Approved |
Major Activities of Outside Directors on the Board of Directors (January 1, 2020 ~ March 4, 2021) |
No. | Date | Participation of the Outside Directors (the Number of total Outside Directors) | Remarks | |||
2020-1 | January 31, 2020 | 7 (7) | — | |||
2020-2 | February 21, 2020 | 7 (7) | — | |||
2020-3 | March 27, 2020 | 6 (7) | Absence : Chung, Moon-Ki | |||
2020-4 | April 10, 2020 | 6 (7) | Absence : Chung, Moon-Ki | |||
2020-5 | May 8, 2020 | 7 (7) | — | |||
2020-6 | August 7, 2020 | 7 (7) | — | |||
2020-7 | November 6, 2020 | 7(7) | — | |||
2020-8 | December 11, 2020 | 7(7) | — | |||
2021-1 | January 20, 2021 | 7(7) | — | |||
2021-2 | January 28, 2021 | 7(7) | — | |||
2021-3 | February 18, 2021 | 7(7) | — |
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(4) | Special Committees under the BoD and Their Activities (From January 1, 2020 to March 4, 2021) |
• | Major Activities of Director Candidate Recommendation and Management Committee (January 1, 2020~March 4, 2021) |
Date | Agenda | Approval | ||
February 14 & 21, 2020 February 21, 2020 | [Deliberation] Qualification Assessment and Recommendation of Outside Director Candidates [Preliminary Review] Qualification Assessment of Inside Director Candidates | Approved — | ||
March 27, 2020 | [Preliminary Review] 1. Appointment of the Special Committees Members 2. Appointment of the Representative Directors | — — | ||
December 11, 2020 | [Deliberation] Operation of the Outside Director Candidate Recommendation Advisory Panel | Approved | ||
January 28, 2021 | [Deliberation] Qualification review and recommendation of the Outside Directors candidates | Approved | ||
February 18, 2021 | [Deliberation] Recommendation of the Outside Directors candidates [Preliminary Review] 1. Qualification review of the Inside Directors candidates 2. Plans to strengthen roles of the Board of Directors in relation to ESG | Approved — — |
• | Major Activities of Evaluation and Compensation Committee (January 1, 2020 ~ March 4, 2021) |
Date | Agenda | Approval | ||
January 22, 2020 | [Deliberation Agenda] Evaluation of the business performance for the fiscal year of 2019 | Approved | ||
January 27, 2021 | [Deliberation Agenda] Evaluation of the business performance for the fiscal year of 2020 | Approved |
• | Major Activities of Finance and Related Party Transaction Committee (January 1, 2020~March 4, 2021) |
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 | ||
December 11, 2020 | [Preliminary Review] Year-end donation for the underpriviledged [Deliberation] 1. LiB recycling business investment 2. Short-term borrowing limits set in 2021 3. POSCO brand license contract with POSCO E&C | — Approved Approved Approved |
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Date | Agenda | Approval | ||
January 28, 2021 | [Deliberation] Contribution to the Labor Welfare Fund | Approved |
• | Major Activities of Executive Management Committee (January 1, 2020 ~ March 4, 2021) |
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 — — |
(2) | Major Activities of the Audit Committee (January 1, 2020 ~ December 31, 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 |
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Session | Date | Agenda | Approval | |||
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 | |||
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 |
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Changes after December 31, 2020 (January 1, 2021 ~ March 4, 2021) |
Session | Date | Agenda | Approval | |||
1 | January 27 | • Deliberation Agenda
1. Consent to appoint the head of the internal audit department
2. Assessment of internal control over financial reporting in 2020
3. Approval of audit and non-audit services for POSCO and subsidiaries
• Report Agenda
1. Report of operation of internal control over financial reporting in 2020
2. Report on approval of POSCO E&C’s audit service contract
3. The result of internal audit for the fiscal year of 2020 and audit plans for the fiscal year of 2021
4. Audit Committee activities in 2020
5. The assessment on the executives’ and employees’ conformity to the code of ethics for the fiscal year of 2020 | All 3 Cases Approved | |||
2 | February 17 | • Deliberation Agenda
1. Internal audit result for the year 2020
• Report Agenda
1. External audit result for the year 2020 | Approved | |||
3 | February 18 | Review of the agendas for the Ordinary General Meeting of Shareholders | Approved |
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 | No. of people | Total payment | Average payment (Per person) | Ceiling amount approved at the general meeting of shareholders | Remarks | |||||||||||||
Inside Director | 5 | 6,500 | 1,300 | — | ||||||||||||||
Outside Director (Excluding Audit Committee Members) | 4 | 282 | 70 | 10,000 | — | |||||||||||||
Members of the Audit Committee | 3 | 211 | 70 | — |
No. of people : The number of Directors and the Audit Committee members who are in office as of December 31, 2020. |
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Total payment : The total amount of remuneration paid to all Directors, including the Audit Committee members, who served from January 1 to December 31, 2020. The remuneration for the registered Directors includes the three-year, from 2017 to 2019, long-term incentives paid in 2020. |
Average payment per person is calculated based on the paid amount to the current Directors and Audit Committee members as of December 31, 2020. |
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