Exhibit 99.1

QUARTERLY REPORT

(From January 1, 2012 to March 31, 2012)

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 NONCONSOLIDATED BASES IN ACCORDANCE WITH THE KOREAN-INTERNATIONAL FINANCIAL REPORTING STANDARDS (K-IFRS) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

QUARTERLY REPORT

(From January 1, 2012 to March 31, 2012)

To: Korean Financial Services Commission and Korea Exchange

/s/

Park, Han-Yong

President and Representative Director

POSCO

1 Koedong-dong, Pohang-si, Nam-gu, Kyungsangbuk-do, Korea

Telephone: +82-54-220-0114

/s/

Shim, Tong-Wook

Senior Vice President

POSCO

1 Koedong-dong, Pohang-si, Nam-gu, Kyungsangbuk-do, Korea

Telephone: +82-2-3457-0114

2

TABLE OF CONTENTS

I.	Overview
II.	Business	9
III.	Financial Statements	33
IV.	Corporate Governance and Company Affiliates	37

Attachment:	Independent Accountants’ Review Report
	(Non-consolidated and consolidated)

3

I. OVERVIEW

1. Scope of Business

A. POSCO (the “Company”)

	Business	Note
(1)	Production and sale of crude steel and stainless steel products
(2)	Port/harbor loading/unloading, warehousing and packaging	No engagement in this business during the first quarter in the fiscal year of 2012
(3)	Management of professional athletic organizations
(4)	Power generation, renewable energy projects, liquefied natural gas logistics and exploration and other incidental businesses
(5)	Real property lease business
(6)	Public energy services and distribution system
(7)	Marine transportation of mineral resources; domestic and overseas processing and sales of mineral resources
(8)	Educational services and other incidental services
(9)	Production and sale of non-ferrous metals
(10)	Other businesses incidental or related, directly or indirectly, to the foregoing businesses

B. POSCO Business Group

(1) Name of the Business Group: POSCO

(2) Companies Belonging to the Business Group

POSCO, POSCO COATED & COLOR STEEL Co., Ltd., SUNGJIN GEOTEC Co., Ltd., DAEWOO INTERNATIONAL CORPORATION, POSCO ICT COMPANY LTD., POSCO CHEMTECH COMPANY LTD., POSCO M-TECH CO., LTD., POSCO Engineering & Construction Co., Ltd., Seoung Gwang Co., Ltd., POSCO Research Institute, POSCO Processing & Service Co., Ltd., POSCO A&C Co., Ltd., POSCO Specialty Steel Co., Ltd., POSCO Plant Engineering Co., Ltd., POSCO TERMINAL Co., Ltd., POSTECH VENTURE CAPITAL CORPORATION, METAPOLIS Co., Ltd., POSMATE, POSCO Energy CORPORATION, SNNC Co., Ltd., Poscoenc Housing Planning Co., Ltd., POSBRO COMPANY LTD., Suwon Green Environment Co., Ltd., POSCO TMC CO., LTD., POSWITH CO., LTD., UITrans LRT co., POSCO-Nippon Steel RHF Joint Venture Co., Ltd., Pohang Fuelcell Power Corporation, Cheongna IBT Co., Ltd., MegaAsset Co., Ltd., Gunsan Steel Processing and Fabricating Center CO., LTD., POSCO ENGINEERING COMPANY CO., LTD., BASYS INDUSTRY CO., LTD., Pohang Steel Fabrication Center, POSCALCIUM Company, Ltd., DAKOS CO., LTD., SONGDO SE CO., Ltd., eNtoB Corporation, POSCO AST CO., LTD., DAIMYUNG TMS CO., LTD., POSCO LED COMPANY LTD., POSCO E&E, POMIC Co., Ltd., POS-HiMETAL CO., Ltd., POSFINE CO., Ltd., POS ECO HOUSING CO., Ltd., Mapo Hibroad Parking co., Ltd., Gwangyang Steel Processing and Fabricating Center Co., LTD., POSPlate Co., LTD., PLANT EST Co., Ltd., 9DIGIT CO., LTD., Sung Jin E&T Co., Ltd., ANJEONG DISTRICT DEVELOPMENT CO., LTD., POSGREEN Company, Ltd., Busan E&E Co., Ltd., POREKA Co., POSCO NST CO., LTD., Pohang Scrap Distribution Center Co., Ltd., PSC Energy Global Co., Ltd., SUNCHEON ECO TRANS Co., Ltd., POSMATEINSURE INSURANCE BROKER CO., LTD., Shinan Energy Co., Ltd., NewAltec Co., Ltd., PONUTech Co., Ltd., ReCO Metal Co., Ltd., Clean Gimpo Co., Ltd., Gale International( Korea), LLC., Songdo International Sports Club, LLC., POS-HiAl CO., LTD., Tamra Offshore Wind Power Co., Ltd., Blue O&M CO., LTD.,

(a) Changes in Companies Belonging to the Business Group before March 31, 2012

• Addition of Subsidiary: Blue O&M CO., LTD. (January 2, 2012)

• Addition of Subsidiary: POS-HiAl CO., LTD. (February 1, 2012)

• POSCO POWER CO., LTD. changed the company name to POSCO ENERGY CO., LTD. (February 7, 2012)

• Addition of Subsidiary: Tamra Offshore Wind Power Co., Ltd. (March 2, 2012)

• Exclusion of Subsidiary: DAIMYUNG TMS.CO.LTD. (March 22, 2012)

(b) Changes in Companies Belonging to the Business Group after March 31, 2012

• Addition of Subsidiary: POSCO ES Materials Co., Ltd. (May 2, 2012)

• Addition of Subsidiary: Clean Po-hang Co., Ltd. (May 2, 2012)

• Exclusion of Subsidiary: Cheongna IBT Co., Ltd. (May 10, 2012)

(3) Related Laws and Regulations

The Korea Fair Trade Commission has designated POSCO as a company subject to the limitations on Cross Shareholding and Debt Guarantee for Affiliates under the Monopoly Regulation and Fair Trade Act (the “MRFTA”).

ø 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 Finance or Insurance Companies (Article 11 of the MRFTA)

5

(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) Report on Status of Shareholding (Article 13 of the MRFTA)

2. Business Organization

A. Highlights of the Company’s Business Organization

(1) Date of the Establishment: April 1, 1968

(2) Location of the Headquarters: 1 Koedong-dong, Nam-gu, Pohang-si, Kyungsangbuk-do, Korea

(3) Steel Works and Offices

(a) Pohang Steel Works: 5 Dongchon-dong, Nam-gu, Pohang-si, Kyungsangbuk-do, Korea

(b) Gwangyang Steel Works: 700 Kumho-dong, Gwangyang-si, Chollanam-do, Korea

(c) Principal Executive Office: POSCO Center, 892 Daechi4 dong, Gangnam-gu, Seoul, Korea

(d) Overseas Offices: For the purpose of supporting international business transactions, the Company operates nine overseas offices as follows:

United Arab Emirates (Dubai), Czech Republic (Prague), the European Union (Dusseldorf, Germany), Brazil (Rio de Janeiro), Russia (Moscow), Egypt (Cairo), Mongolia (Ullaanbaatar), Australia (Perth), and the United States of America (Houston).

(4) Composition of the Board of Directors (as of March 16, 2012)

(a) Inside Directors

• Reelected members: Chung, Joon-Yang (3years) and Park, Han-Yong (1 year)

• New members: Cho, Noi-Ha (1 year), Park, Ki-Hong (2 years), and Kim, Joon-Sik (2 years)

(b) Outside Directors

• Reelected members: Han, Joon-Ho (2 years), Lee, Young-Sun (2 years), and Lee, Chang-Hee (3 years)

• New members: James B. Bemowski (3 years)

(c) Representative Directors

• Prior to March 16, 2012: Chung, Joon-Yang, Choi, Jong-Tae, Park, Han-Yong, and Oh, Chang-Kwan

• As of March 16, 2012: Chung, Joon-Yang and Park, Han-Yong

(5) Major Shareholders of POSCO

(a) National Pension Corporation holds the largest number of POSCO’s shares.

(b) Date of Disclosure: January 30, 2007

6

(For further reference, please refer to the public disclosures regarding the change of the major shareholders on 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, and January 31, 2012.)

B. Merger, Acquisition and Handover of Businesses

[None]

C. Major Changes in Production Facilities

There was no material change during the fiscal year of 2011.

3. Equity Capital

A. New Issuance of Registered Common Stock

There was no new issuance of registered common stock in the last five years.

B. Convertible Bonds

[None]

C. Bonds with Warrant

[None]

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4. Other Information Regarding Shares

A. Total Number of Shares

(As of December 31, 2011)
Authorized Shares	Outstanding Shares
200,000,000		87,186,835

ø The currency of the Republic of Korea is Korean Won ( “KRW”).

ø Par Value: KRW 5,000 per share

B. Treasury Stock Holding and Cancellation

* Treasury Stock Holding and Cancellation

				(As of March 31, 2012)
Method of Purchase	Type	Beginning ø		Increased		Decreased		Cancelled		Balance
Direct	Registered Common		7,449,117		—		—		—		7,449,117
Special Money Trust			2,493,274		—		—		—		2,493,274
Total			9,942,391		—		—		—		9,942,391

ø Beginning Balance: as of December 31, 2011

C. Voting Rights

	(As of March 31, 2012)
Classification of Shares	Number of Shares		Remarks
(1) Number of Outstanding Shares		87,186,835		—
(2) Shares without Voting Rights *		9,942,391		*Treasury Stock 9,942,391 shares
(3) Shares with Voting Rights		77,244,444		—

D. Earnings and Dividend

	(In millions of KRW)
	2011		2010			2009
Net Profit		3,188,845		3,784,361			3,172,264
Earnings per Share (KRW)		41,279		49,127			41,380
Cash Dividend Paid		772,444		770,329			615,569
Pay-out Ratio		24.2		20.4	%		19.4	%
Dividend per Share (KRW)		10,000		10,000			8,000
Dividend Yield		2.56		2.03	%		1.31	%

8

II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into four segments below:

Steel, Trading, Engineering & Construction, and Others

B. Segment Results

										(In millions of KRW)
Category	2012 (January 1, 2012 ~ March 31, 2012)					2011				2010
	Sales		Operating Income(Loss)			Sales		Operating Income(Loss)		Sales		Operating Income(Loss)
Steel		9,397,633		610,760			39,151,930		4,809,464		35,527,373		5,112,149
Trading		4,956,571		69,662			21,097,356		159,339		6,236,031		37,984
Engineering & Construction		804,708		(15,816	)		5,476,209		178,058		4,348,796		164,606
Others		1,149,732		123,173			3,213,230		261,240		1,775,056		118,781
Total		16,308,644		787,779			68,938,725		5,408,101		47,887,256		5,433,520

2. Current Situation

1) Steel

A. Domestic Market Share

									(Millions of Tons, %)
Category	2012 (January 1, 2012 ~ March 31, 2012)				2011				2010
	Production		Market share		Production		Market share		Production		Market share
Crude Steel Production		17.2		100		68.5		100		58.4		100
POSCO Others		9.4 7.8		55 45		37.3 31.2		54 46		33.7 24.7		58 42

ø Source: Korea Iron and Steel Association

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B. Characteristics of the Steel Market

The steel industry supplies materials to major industries such as the automobile, shipbuilding and electronic appliance industries.

C. Summary and Prospect of New Businesses

(1) Establishment of Steelworks in India

(a) The Company entered into a memorandum of understanding with the Orissa state government for the development of iron ore captive mines and for the development and construction of an integrated steelworks facility with an annual production capacity of 12 million tons. (June, 2005)

(b) The Company established POSCO-India Private Limited (“POSCO-India Pvt., Ltd.”). (August, 2005)

(2) Development of Iron Ore Captive Mines in India

(a) POSCO-India filed applications for mining exploration licenses for certain iron ore mines in the region of Khandadhar, Orissa (the “Khandadhar Licenses”). (September, 2005)

(b) The Orissa state government recommended the approval of the Khandadhar Licenses on behalf of POSCO-India to the Indian central government. (December, 2006)

(c) The Indian central government denied the approval for the Khandadhar Licenses and remanded the matter to the Orissa state government for further consideration. (July, 2007)

(d) The Orissa state government resubmitted its recommendation for the approval of the Khandadhar Licenses on behalf of POSCO-India to the Indian central government. (January, 2009)

(e) The third party applicant for the Khandadhar Licenses filed a suit against the Orissa State Government claiming that its right as the first applicant should be respected. (February, 2010)

(f) The Orissa High Court set aside the Orissa State Government’s recommendation to grant the approval of the Khandadhar Licenses to POSCO-India. (July, 2010)

(g) The Orissa State Government filed a special leave petition with the Indian Supreme Court. (November, 2010)

(h) The Orissa State Government and POSCO-India completed the submission of the counter affidavit and the rejoinder. (October, 2011)

(3) Establishment of Steelworks in India

(a) The Indian central government granted the approval for the environmental impact assessment for the construction of a captive port. (May, 2007)

(b) The Indian central government granted the approval for the environmental impact assessment for the construction of steel mills. (July, 2007)

(c) The Indian Supreme Court granted the transformation of the forest land with respect to 2,959 acres of the steel mill construction site. (August, 2008)

(d) The Indian central government granted the final approval for the deforestation of steel mill construction sites. (December, 2009)

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(e) Final plans for the rehabilitation and resettlement of indigenous population were approved by the Rehabilitation and Peripheral Development Advisory Committee (constituted by the Orissa state government). (July, 2010)

(f) The Forest Advisory Committee acting under the Ministry of Environment and Forest temporarily suspended activities at the construction site pending investigation into alleged violation of the Forest Regulation Act. (August, 2010)

(g) The Ministry of Environment and Forest of the Indian central government granted a conditional approval on the construction of the steel mills and the port. (January, 2011)

(h) The Ministry of Environment and Forest of the Indian central government granted the final approval on the construction of the steel mills and the port. (May, 2011)

(i) The Company cleared the crop fields designated for the construction of its steel mill site within the state owned property. (May, 2011).

(j) An environmental organization filed a lawsuit to nullify the approval for the environmental impact assessment in the National Green Tribunal. (August, 2011)

(k) The National Green Tribunal dismissed the lawsuit of nullifing the approval for the environmental impact assessment and ruled that the Ministry of Environment and Forest should reassess the conditions on which clearance was permitted for the project.

(4) Establishment of Steelworks in Indonesia

(a) The Company entered into a memorandum of agreement with Perseroan Terbatas Krakatau Steel, an Indonesian state owned company, to build an integrated steelwork with a total annual production capacity of 6 million tons of steel products in Indonesia. (December, 2009)

(b) The Company entered into a joint venture agreement. (August, 2010)

(c) The Company established PT. KRAKATAU POSCO. (September, 2010)

(d) PT. KRAKATAU POSCO held a groundbreaking ceremony for the establishment of steelworks in Indonesia. (October, 2010)

(e) The first phase of the construction of the steelworks with an annual production capacity of 3,000,000 tons began. The construction of the steelworks was scheduled to be completed by December, 2013. (July, 2011)

(f) PT. KRAKATAU POSCO has continuously conducted piling work for the main facilities and started working for the basic ground. (October, 2011)

(g) PT. KRAKATAU POSCO established a joint venture with Krakatau Industrial Estate Cilegon to build a Calcination factory at Cilegon, Indonesia. (December, 2011)

(h) PT. KRAKATAU POSCO began to build the steel frame for the steelworks (February, 2012)

(5) Establishment of POSCO-Maharashtra Steel Pvt., Ltd Continuous Galvanizing Line in India.

(a) POSCO-Maharashtra Steel Pvt., Ltd. started the construction of a continuous galvanizing line with an annual production capacity of 450 thousand tons. (March, 2010)

(b) The steel frame construction started. (October, 2010)

(c) The construction and the installation of production facilities for a continuous galvanizing line commenced. (February, 2011)

11

(d) POSCO-Maharashtra Steel Pvt., Ltd. launched a test-run of its continuous galvanizing line. (December, 2011)

(6) Establishment of Guangdong Pohang Continuous Galvanizing Line in China

(a) The establishment plan for Guangdong Pohang Continuous Galvanizing Line in China was approved by the Board of Directors. (July, 2010)

(b) The establishment plan for Guangdong Pohang Continuous Galvanizing Line in China was approved by the Chinese government. (October, 2010)

(c) The Company held a groundbreaking ceremony for the establishment of Guangdong Pohang Continuous Galvanizing Line in China. (March, 2011)

(d) The construction of electricity generation facility commenced. (November, 2011)

2) Trading

A. Market Share

					(Millions of Dollars)
Category	2011 (January 1, 2011  ~ March 31, 2011)		2012 (January 1, 2012  ~ March 31, 2012)		Growth rate
Whole Korean companies		130,986		134,861		3.0	%
Daewoo International		1,884		2,107		11.8	%

B. Summary and Prospect of New Businesses

By acquiring Daewoo International Corporation (“Daewoo International”), a global trading company primarily engaged in trading of steel and raw materials, the Company has benefited from the expansion of the steel market and the synergy effect for the Company and its subsidiaries engaged in engineering and construction, information technology and plantation businesses. Daewoo International’s accumulated sale increased to KRW 4,408 billion in the first quarter of fiscal year of 2012 and its operating income also increased to KRW 76 billion in the first quarter of fiscal year of 2012 on non-consolidated basis.

Daewoo International has newly entered into the food and forestry development business to secure the future food resources and green energy resources. Daewoo International will aggressively drive this successful momentum of active investment and trading by establishing plantations for agro-resources such as rice, soybean, wheat and corn as well as Oil Palm and afforestation businesses.

12

3) Engineering & Construction

A. Summary and Prospect of New Businesses

POSCO Engineering & Construction, established on February 1982, is currently expanding its business areas to civil engineering, architectural works, energy, urban development and low carbon & green growth businesses. In reference to the number of the oversea contracts signed by POSCO Engineering & Construction in 2011, the business performance of the POSCO Engineering & Construction in the global market has been satisfactory.

POSCO ENGINEERING COMPANY CO., LTD. succeeded in the development of a management system for the global market and the Engineering, Procurement & Construction (“EPC”) business. POSCO ENGINEERING COMPANY CO., LTD. planed out its global sales strategy and stabilized its global network through its local agencies and localization strategies. Recently, POSCO ENGINEERING COMPANY CO., LTD. expanded its business markets to the Southeastern Asian countries such as Thailand, Indonesia and Vietnam.

4) Others

A. POSCO Energy

POSCO Energy started its commercial operation in February, 1972 as the only privately-owned heat power plant in Korea. Since the early 90’s, POSCO Energy continuously remodeled and built more complex heat power plants meeting the increased demand of electricity in Korea.

B. POSCO ICT

To create a synergy between its information technology (“IT”) and its industrial engineering services, POSCO ICT Co., Ltd. has utilized an automation technology developing its competitiveness in the IT and manufacturing services. POSCO ICT Co., Ltd. is promoting new businesses for light emitting diode, smart grid, and cloud computing.

C. POSCO Chemtech

POSCO Chemtech Company Ltd., founded in 1963, specializes in manufacturing of refractories, lime used in steel manufacturing processes as well as a wide range of chemical and environmentally friendly products. POSCO Chemtech Company Ltd. provides refractories to a wide range of industries including steel, cement, and glass companies. To become a global company, POSCO Chemtech Company Ltd. is currently expanding its markets to Japan, China and Indonesia.

13

3. Key Products

A. Current Situation of Key Products

	(In hundred millions of KRW)
Business Area	Item	Specific Use	Total Sales			Ratio
Steel	Hot-rolled Product (HR)	Steel pipe, Shipbuilding, etc		27,473			19.9	%
	Cold-rolled Product (CR)	Automobile , Home appliances, etc		40,418			29.3	%
	Cold-rolled Product (CR)	Western tableware, etc		28,315			20.5	%
	By-Product	Cement material, etc		41,847			30.3	%
	Gross Sum			138,053			100.0	%
	Deduction of Internal Trade			(44,077	)		—
	Sub Total			93,976			—
International Trade	Steel, Metal			33,631			50.2	%
	Chemical, Strategic Item, Energy			11,233			16.8	%
	Etc			22,085			33.0	%
	Gross Sum			66,949			100.0	%
	Deduction of Internal Trade			(17,383	)		—
	Sub Total			49,566			—
Engineering & Construction	Domestic Construction	Architecture		2,872			19.7	%
		Plant		3,188			21.8	%
		Civil Engineering		2,047			14.0	%
	Overseas Construction			4,935			33.8	%
	Owned Construction			332			2.3	%
	Etc			1,238			8.5	%
	Gross Sum			14,612			100.0	%
	Deduction of Internal Trade			(6,565	)		—
	Sub Total			8,047			—
Others	Electricity Sales, etc			17,546			100.0	%
	Deduction of Internal Trade			(6,048	)		—
	Sub Total			11,497			—
	Total Sum			163,086			—

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B. Price Fluctuation Trend of Key Products

	(In thousands of KRW/Tons, kWh)
Business Area	Products	2012 (January 1, 2012 ~ March 31, 2012)	2011	2010
Steel Production	Hot-rolled Product (HR)	880	941	845
	Cold-rolled Product (CR)	1,042	1,090	987
Others	Electric Power	160	133	137
	Lime	103	105	112

ø Trading and engineering & construction businesses are not reflected on the table.

[Steel]

(1) Criteria for Calculation

(a) Subjects for Calculation: unit 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 during the given period.

(2) Factors of Price Fluctuations

In response to the increase in the price of raw materials such as coal and iron ore in the first and second quarters of 2011, the Company has raised its domestic steel price by KRW 160 thousand since April 22, 2011.

[Others]

* Criteria for Calculation

(a) Electric Power = price of electric power/total amount of generated power

(b) Lime: average sales price including shipping cost

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4. Major Raw Materials

A. Current Status of Major Raw Materials

(In hundred millions of KRW)
Business Area	Type of Purchase	Item	Specific Use	Purchase Amount (Portion)	Remarks
Steel Production	Raw Materials	Iron Ore	Iron Ore for Blast Furnaces	24,668 (28.6%)	BHP Billiton of Australia, Rio Tinto of Australia VALE of Brazil
		Coal	Coking Coal: Heat Source for Blast Furnaces	18,028 (20.9%)	Anglo of Australia, Rio Tinto of Australia, Teck of Canada
			Smokeless Coal: Sintering Fuel
		Stainless Steel Materials	Key Materials for STS Production	20,460(23.8%)	Nickel, Ferrochrome, STS Scrap Iron, etc.
		Other Minerals	Sub-materials for Iron-making, Steelmaking	22,984(26.7%)	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
Engineering & Construction	Raw Materials	Ready-mixed Concrete	Construction of Structure	278(14.8%)
		Steel Pile	Foundation of Structure	46(2.4%)
		Steel Reinforcement	Strengthening Concrete	412(21.8%)
		Cable	Electricity Transfer	21(1.1%)
		Etc.	—	1,131(59.9%)
Others	Raw Materials	LNG	Material for Power Generation	6,025
		Limestone	Production of Lime	231

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B. Price Fluctuation Trend of Major Raw Materials

				(In thousands of KRW)
Business Area	Category	2012 (January 1, 2012 ~ March 31, 2012)	2011	2010
Steel Production (per ton)	Iron Ore	187	194	157
	Coal	294	287	221
	Scrap Iron	557	565	481
	Nickel	23,011	25,670	25,308
Engineering & Construction	Ready-mixed Concrete (per m2)	57	54	52
	Steel Pile (per m)	80	82	72
	Steel Reinforcement (per kg)	1.0	0.8	0.7
	Cable (per m)	1.0	0.8	0.8
Others	LNG (per ton)	995	893	781
	Lime (per ton)	20	22	22

[Steel]

* Key Factors in Price Fluctuations

(1) Iron Ore

				(In Dollars/ Tons)
	2012 1Q (January 1, 2012 ~ March 31, 2012)	2011 4Q (October 1, 2011 ~ December 31, 2011)	2011 3Q (July 1, 2011 ~ September 30, 2011)	2011 2Q (April 1, 2011 ~ June 30, 2011)	2011 1Q (January 1, 2011 ~ March 31, 2011)	2010
Trend of International Benchmark Price (Free On Board, “FOB”)	135	130	168	171	173	136

- Platts Index (Fe 62%)

17

(2) Coal

				(In Dollars/ Tons)
	2012 1Q (January 1, 2012 ~ March 31, 2012)	2011 4Q (October 1, 2011 ~ December 31, 2011)	2011 3Q (July 1, 2011 ~ September 30, 2011)	2011 2Q (April 1, 2011 ~ June 30, 2011)	2011 1Q (January 1, 2011 ~ March 31, 2011)	2010
Trend of International Benchmark Price (FOB)	235	285	315	330	225	191

- Coal (FOB): based on Australian premium hard coking coal price

(3) Scrap Iron

					(In Dollars/ Tons)
	2012 1Q (January 1, 2012 ~ March 31, 2012)	2011 4Q (October 1, 2011 ~ December 31, 2011)	2011 3Q (July 1, 2011 ~ September 30, 2011)	2011 2Q (April 1, 2011 ~ June 30, 2011)	2011 1Q (January 1, 2011 ~ March 31, 2011)	2010
Trend of Purchase Price (Cost and Freight, “CFR”)	466	445	494	480	495	409

- Scrap Iron (CFR)

(4) Nickel

2012 1Q (January 1, 2012 ~ March 31, 2012)

2011 4Q (October 1, 2011 ~ December 31, 2011)

2011 3Q (July 1, 2011 ~ September 30, 2011)

2011 2Q (April 1, 2011 ~ June 30, 2011)

2011 1Q (January 1, 2011 ~ March 31, 2011)

2010

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

USD 8.92/lb USD 19,665/ton

USD 8.3/lb USD 18,307/ton

USD 10.01/lb USD 22,069/ton

USD 11.00/lb USD 24,227/ton

USD 12.20/lb USD 26,903/ton

USD 9.89/lb USD 21,809/ton

[Engineering and Construction]

* Criteria for Calculation

Products	Criteria for Calculation
Ready-mixed Concrete	Standard 25-210-15
Steel Pile	SPS400 406.4x7.9T
Steel Reinforcement	High Tensile Deformed Bar SD40 D10
Cable	CV 0.6/1kv 2.5mm2 2core

18

[Others]

(1) Criteria for Calculation

(a) Electric Power: purchase price of electricity from Korea Gas Corporation

*Increase in electricity price is due to the increase of raw material cost and foreign exchange rate.

(b) Lime: purchase price of lime and transportation fees

5. Production and Facilities

A. Production Capacity

[Steel]

						(Thousands of Tons)
Business Area	Products	2012 (January 1, 2012  ~ March 31, 2012)		2011		2010
Steel Production	Crude Steel		9,853		39,410		37,560

[Others]

					(MW, Thousands of Tons)
Business Area	Products		2012 (January 1, 2012  ~ March 31, 2012)		2011		2010
Power Generation	Electric Power	Incheon		3,052		3,052		1,800
		Gwangyang		284		284		284
Lime	Lime	—		548		2,190		2,190

19

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production

							(Thousands of Tons)
Business Area	Products		2012 (January 1, 2012  ~ March 31, 2012)		2011		2010
Steel Industry	Crude Steel			9,871		39,074		35,365
	Products	Hot-Rolled Products		2,077		8,456		8,762
		Plate		1,642		6,273		4,639
		Wire Rod		509		2,113		2,332
		Pickled-Oiled Steel Sheets		696		2,495		2,450
		Cold-Rolled Products		1,855		7,453		7,204
		Coated Steel		1,365		5,358		4,627
		Electrical Steel		343		1,396		1,211
		Stainless		1,067		3,165		2,745
		Others		799		3,150		3,066
	Total Products			10,352		39,860		37,036

(2) Capacity Utilization Rate for the first quarter of fiscal year 2012

					(Thousands of Tons)
Business Area	Capacity		Production		Utilization Rate
Crude Steel Production		9,853		9,871		100.2	%

- Capacity Utilization Rate = Production Result/ Production Capacity

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

20

[Others]

(1) Production Result

					(Gwh, Thousands of Tons)
Business Area	Products		2012 (January 1, 2012  ~ March 31, 2012)		2011		2010
Power Generation		Electric Power		4,032		12,066		4,863
Lime		Lime		612		2,425		2,256

(2) Capacity Utilization Rate for the first quarter of fiscal year of 2012

					(hr, Thousands of Tons)
Business Area	Products		Capacity		Production		Utilization Rate
Power Generation		Electric Power		4,368		3,330		72.7	%
Lime		Lime		546		612		112.1	%

C. Production Facilities

[Land]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation	Ending Book Balance
Steel Production		1,943,966		9,224						1,953,190
Trade		149,528				(4,855	)			144,673
Engineering & Construction		57,090		2,562						59,652
Others		398,595		3,907						402,502

[Building]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased	Depreciation			Ending Book Balance
Steel Production		3,453,365		89,075			(64,355	)		3,478,085
Trade		159,919		3,144			(1,868	)		161,195
Engineering & Construction		56,817		5,615			(622	)		61,810
Others		349,727		8,978			(4,430	)		354,275

21

[Structures]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel Production		2,060,849		49,120					(39,528	)		2,070,441
Trade		17,496				(3,283	)		(161	)		14,052
Engineering & Construction		6,004				(22	)		(95	)		5,887
Others		176,089		3,935					(2,515	)		177,509

[Machinery and Equipments]								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel Production		14,529,327		443,943					(379,343	)		14,593,927
Trade		144,292				(17,613	)		(4,569	)		122,110
Engineering & Construction		25,258		2,031					(1,723	)		25,566
Others		1,480,507		22,590					(31,045	)		1,472,052

[Vehicles]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased	Depreciation			Ending Book Balance
Steel Production		48,377		2,332			(3,373	)		47,336
Trade		5,659		55			(562	)		5,152
Engineering & Construction		5,855		39			(559	)		5,335
Others		6,853		759			(668	)		6,944

[Tools and Fixtures]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased	Depreciation			Ending Book Balance
Steel Production		54,471		2,751			(5,680	)		51,542
Trade		1,844		161			(185	)		1,820
Engineering & Construction		1,761		381			(223	)		1,919
Others		22,802		3,872			(2,930	)		23,744

[Equipment]						(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased	Depreciation			Ending Book Balance
Steel Production		96,468		11,452			(8,759	)		99,161
Trade		17,136		1,153			(1,538	)		16,751
Engineering & Construction		9,727		1,498			(1,074	)		10,151
Others		46,358		5,318			(3,865	)		47,811

22

[Financial Lease Assets]	(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel Production		17,990				(125	)		(345	)		17,520
Trade		634		154					(60	)		728
Engineering & Construction		9,307		4					(631	)		8,680
Others		10,612				(1,063	)		(1,908	)		7,641

(2) Major Capital Expenditures

(a) Investments under Construction

[Steel]		(In hundred millions of KRW)
Products		Date	Project	Total Investment		Invested Amount		Amount to  Be Invested
POSCO	Expansion	November, 2010 ~ July, 2014	G) Establishment of the Fourth Hot-coil Mill		16,262		2,705		13,557
		April, 2008~ September, 2016	P, G) Expansion of the Capacity of the Raw Materials Treatment Facilities		13,010		8,282		4,728
		October, 2008~ March, 2012	P) Establishment of a Pickling Galvanizing Line		2,472		2,418		54
		March, 2011~ January, 2014	P) Optimization of the Facilities		22,034		4,334		17,700
	Renovation / Replacement	December 2010 ~ June 2014	G) Renovation of the First & Fifth Furnace		10,595		1,940		8,655
		March 2011~March 2014	P) Renovation of the First STS Rolling Facilities		2,178		10		2,168
	Other Projects				21,399		6,742		14,657

23

POSCO Specialty Steel	Expansion	November, 2009 ~ April, 2012	Establishment of a New Mill (0.6 million ton)	2,725	2,331	394
	Renovation / Replacement	April 2010 ~ October 2012	Renovation / Replacement of New Equipments in the Existing Rolling Mill	1,447	990	457
POSCO COATED & COLOR STEEL Co., Ltd.	Expansion	April 2011 ~ September 2012	Establishment of the Metal Copper Clad Laminate (MCCL) Mill	643	189	454
POSCO AST CO., LTD.	Expansion	September 2011 ~ May 2013	Establishment of a Factory and Facilities	447	90	357
POSCO (Suzhou) Automotive Processing Center Co., Ltd.	Expansion	May 2011 ~ April 2012	Establishment of #3 Plant	164	112	52
PT. KRAKATAU STEEL POSCO	Expansion	September 2010 ~ December 2013	Establishment of a Steel Mill	30,266	26,829	3,437
POSCO Maharashtra Steel Private Limited	Expansion	March 2010 ~ May 2012	Installation of a Continuous Galvanizing Line (0.45 million ton)	2,651	2,439	212
		July 2011 ~ June 2014	Establishment of a Cold-Coiled Mill in India (1.8 million ton)	7,857	1,139	6,718
POSCO-Mexico Co., Ltd.	Expansion	November 2011 ~ June 2013	Installation of the Second Continuous Galvanizing Line	3,503	904	2,599

ø P stands for Pohang Steel Works.

ø G stands for Gwangyang Steel Works.

24

[Others]		(In hundred millions of KRW)
Items		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO Energy	Expansion	October 2011 ~ September 2013	P) Establishment of a Combined Cycle Power Plant		5,950		638		5,312
Daewoo International	Expansion	October 2009 ~ September 2014	Construction of Natural Gas Production and Transportation Facilities in A-1/A-3 Gas Field in Myanmar		17,090		10,126		6,964

(b) Future Investment Plans

[Steel]	(In hundred millions of KRW)
Company	Project		Planned Investments
			2012		2013		2014
POSCO	Expansion, Renovation and Replacement of Existing Facilities	Capacity Increase		18,361		24,475		6,088
		Others		4,079		6,500		3,094

[Engineering & Construction]	(In hundred millions of KRW)
Company	Project	Planned Investments
		2012		2013		2014
POSCO PLANTEC	Expansion, Renovation and Replacement of Existing Facilities		102		223		217

ø Share purchase is not reflected on the table.

25

6. Product Sales

[Steel]		(In hundred millions of KRW)
Items		2012 (January 1,  2012 ~ March 31, 2012)			2011 (January 1, 2011 ~ December 31, 2011)			2010 (January 1,  2010 ~ December 31, 2010)
Domestic	Hot-Rolled Products		17,972			72,471			49,940
	Cold-Rolled Products		14,703			65,580			77,936
	Stainless Steel		9,999			38,581			31,621
	Others		28,861			123,194			99,766
	Subtotal		71,534			299,826			259,263
Export	Hot-Rolled Products		9,501			42,665			22,084
	Cold-Rolled Products		25,715			101,980			89,059
	Stainless Steel		18,316			66,877			61,178
	Others		12,986			51,557			30,946
	Subtotal		66,518			263,079			203,267
Total	Gross Sum		138,053			562,905			462,530
	Internal Transaction		(44,077	)		(171,386	)		(107,256	)
	Total		93,976			391,519			355,274

26

[Trading]		(In hundred millions of KRW)
Items		2012 (January 1,  2012 ~ March 31, 2012)			2011 (January 1,  2011 ~ December 31, 2011)			2010 (January 1,  2010 ~ December 31, 2010)
Domestic	Product		236			1,026			217
	Merchandise		1,984			8,444			1,721
	Others		30			78			19
Export	Product		335			1,964			347
	Merchandise		23,881			93,622			22,653
	Others		61			706			64
Trade among Korea, China, Japan			40,422			180,390			69,082
Gross Sum			66,949			286,230			94,103
Internal Transaction			(17,383	)		(75,256	)		(31,743	)
Total			49,566			210,974			62,360

[Engineering & Construction]			(In hundred millions of KRW)
Items			2012 (January 1,  2012 ~ March 31, 2012)			2011 (January 1,  2011 ~ December 31, 2011)			2010 (January 1,  2010 ~ December 31, 2010)
Construction Contract Revenue	Domestic	Architecture		2,872			16,321			12,823
		Plant		3,188			23,716			32,811
		Civil Engineering		2,047			11,187			11,355
	Overseas			4,403			24,275			8,441
Own Construction				332			672			6,101
Other Subsidiary company sales				1,770			8,560			7,704
Gross Sum				14,612			84,731			79,235
Internal Transaction				(6,565	)		(29,969	)		(35,747	)
Total				8,047			54,762			43,488

27

[Others]	(In hundred millions of KRW)
Items	2012 (January 1,  2012 ~ March 31, 2012)		2011 (January 1,  2011 ~ December 31, 2011)		2010 (January 1,  2010 ~ December 31, 2010)
Electric Power		11,497		32,132		17,751

7. Derivatives - Currency Forward Contracts

If the Exchangeable Bonds to American Depository Receipts of SK Telecom issued in 2008 and 2011 had been converted on December 31, 2011, the derivative valuation of the profit would have been KRW 4,912 million.

8. Significant Contracts

Company	Contract	Date	Remarks
POSCO	Cooperation Agreement with Roy Hill Co., Ltd.	January 2010	-	The purpose of the Cooperation Agreement was to obtain 15% stake in Roy Hill Holdings Pty. Ltd. which was pursuing the development of Roy Hill iron ore mine in Western Australia.
		January 2012	-	POSCO decided to acquire certain additional equity interest in Roy Hill Holdings Pty. Ltd. (2nd phase), which amounts to approximately KRW 1,779 billion.
		March 2012	-	POSCO entered into a contract in March 2012 to invest an additional A$ 1,495 million to increase its interest to 15% of the total outstanding and common stocks of Roy Hill Holdings Pty. Ltd.
		April 2012	-	POSCO entered into a contract to dispose its 2.5% interest in the total outstanding and common stocks of Roy Hill Holdings Pty. Ltd. to China Steel Corporation for A$ 305 million.

28

DAEWOO INTERNATIONAL CORPORATION	Gas Sales and Purchase Agreement (“GSPA”) regarding Shwe, Shwe Phyu and Mya gas field in Myanmar	December 2008	1	)	Contract Parties
			-		Seller: Daewoo International (51%), ONGC Videsh Limited (17%), Myanmar Oil and Gas Enterprise (15%), GAIL (India) Limited (8.5%) and Korea Gas Corporation (8.5%)
			-		Buyer: China National United Oil Company (“CNUOC”)
			2	)	Signed Date: December 24, 2008
			3	)	Summary of the GSPA
			-		Gas production period is expected to be approximately 30 years.
			-		Gas sales price will be fluctuated and recalculated quarterly in accordance with the contractual base price, averaged oil price and consumer price.
			4	)	Remarks
			-		CNUOC is one of subsidiaries of China National Petroleum Corporation (“CNPC”) and CNPC guarantees CNUOC’s contractual obligations under gas sales and purchase agreement.
			-		Related Public Announcements: December 2, 2008; December 3, 2008; July 23, 2008; June 4, 2008; December 5, 2007; June 5, 2007; December 7, 2006; June 8, 2006; December 8, 2005; June 9, 2005; December 10, 2004; and June 11, 2004
	Investment for Construction of Facilities (Offshore Gas Production Platform and Onshore Gas Pipelines, etc)	August 2009	1	)	Total Investment: USD 1,679 million (Daewoo International’s Investment Amount)
			2	)	Purpose of Investment: construction of new facilities for gas production, processing and transportation
			3	)	Total Period of Investment: October 1, 2009 ~ September 30, 2014
			4	)	Remarks
			-		Location: the north-western offshore and onshore in Myanmar
			-		Main facilities: offshore platform (gas production capacity: 64,000ft3/day), offshore pipeline (diameter: 32inch, length: 110km), onshore pipeline (diameter: 40 inch, length: 825km)
			-		Date of Gas Supply: May 1, 2013; daily gas production rate during the plateau period: 50,000ft3/day
			-		The aforementioned investment is for the phase 1 development; the phase 2 ~ 4 developments will commence consequently approximately 10 years after the completion of the phase 1 development.
			-		Main business areas: Upstream offshore business (offshore platform, subsea system), Middle stream offshore business (gas pipeline, onshore gas terminal)
			-		Participants: Daewoo International (51%), ONGC Videsh Limited (17%), Myanmar Oil and Gas Enterprise (15%), GAIL (India) Limited (8.5%) and Korean Gas Corporation (8.5%)
	Sale of Daewoo Cement (Shandong) Company Limited	July 2011	1	)	Purpose of the Sale : sale of non-core business, divestiture and collection of long term debt
			2	)	Other information
			-		The sale price of all of the shares of Daewoo Cement (Shandong) Company Limited has not been determined; the separate disclosure regarding the sale price of Daewoo Cement (Shandong) Company Limited will be made when such information is available.
			-		The sale price of all of the shares of Daewoo Cement (Shandong) Company Limited is KRW 37,422,000,000 as of December 27, 2000. At the end of fiscal year 2010, the book value of all of the shares of Daewoo Cement (Shandong) Company Limited was KRW 5,471,000,000 under the K-IFRS.
			-		The official sale date of all of the shares of Daewoo Cement (Shandong) Company Limited has not been determined; actual sale date of all of the shares of Daewoo Cement (Shandong) Company Limited shall be set when the condition precedents of the share purchase agreement between Daewoo Cement (Shandong) Company Limited and a purchaser are satisfied.
			-		Sale agreement can be nullified when condition precedents of the contract (i.e. government approvals, etc) are not satisfied.

29

9. Research and Development

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

Business Area	Company		Organization	Staff
Steel	POSCO	POSCO’s Department	Technical Research Laboratory (Group)		842
			New Growth Technology Strategy Department		22
			Iron and Steel Technology Strategy Department		79
			Environment and Energy Department		35
			Total		978
	POSCO Specialty Steel		R&D Group		21
	POSCO COATED & COLOR STEEL		Product Research Group		11
	POSCO AST CO., LTD.		Product Research Team		4
	Zhangjiagang Pohang Stainless Steel Co., Ltd.		Product Development Group		6
	POSCO Thainox Public Company Ltd.		Product development and research		6
International Trade	DAEWOO International Corporation		Pusan Plant R&D Center Development Team		59
Engineering & Construction	POSCO Engineering & Construction		R&D Center		86
	POSCO Plant Engineering		Technology Innovation Group		11
	POSCO A&C		R&D Center, Quality Engineering Team		14
Others	POSCO POWER		R&D Center		38
	POSCO ICT		Information Control Lab		77
	POSCO CHEMTECH COMPANY		R&D Center		42
	POSCO M-TECH CO., LTD.		R&D Center		19
	POS-HiMETAL CO., Ltd.		Product Research Department		9
	PNR CO., Ltd.		Quality Innovation Department		2

30

B. R&D Expenses	(In millions of KRW)
Category	Business Area
	Steel			International Trade			Engineering & Construction			Others			Total
Selling and Administrative Cost		32,450			529			1,489			8,357			42,825
Manufacturing Cost		90,832			—			358			1,024			92,214
R&D Cost (Intangible Assets)		3,863			—			149			1,337			5,349
Total		127,145			529			1,996			10,718			140,388
R&D/Sales Ratio		1.35	%		0.01	%		0.25	%		0.93	%		0.86	%

31

III. Financial Statements

1. Non-consolidated Financial Statements

A. Summary on Fiscal Years of 2010~2011 and the First Quarter of Fiscal Year of 2012

							(In millions of KRW)
Account	2012(January 1, 2012~March 31, 2012)			2011			2010
[Current Assets]		13,188,904			13,924,795			12,993,605
Cash & Cash equivalents		1,537,870			1,137,882			672,427
Trade Accounts & Notes Receivable(net)		4,336,210			4,220,242			3,548,448
Other Current Financial Instruments		1,011,436			1,381,463			2,754,319
Inventories		6,241,889			7,144,709			5,998,545
Other Current Assets		61,499			40,501			19,866
[Non-current Assets]		39,504,820			38,803,081			36,092,622
Other Non-current Financial Instruments		4,095,131			3,833,058			5,015,783
Investment in Subsidiaries and Associates		13,200,504			12,824,776			10,470,156
Tangible Assets		21,592,613			21,533,135			20,011,110
Good Will & Other Intangible Assets		229,418			222,896			229,137
Other Non-current Assets		387,154			389,216			366,436
Total Assets		52,693,724			52,727,876			49,086,227
[Current Liabilities]		4,734,896			5,015,145			6,051,454
[Non-current Liabilities]		10,154,775			10,114,715			7,011,278
Total Liabilities		14,889,671			15,129,860			13,062,732
[Capital Stock]		482,403			482,403			482,403
[Capital Surplus]		1,227,692			1,227,692			1,158,539
[Retained Earnings]		38,094,712			38,122,620			35,706,778
[Other Equity]		(2,000,754	)		(2,234,699	)		(1,324,225	)

32

Account	2012(January 1, 2012~March 31, 2012)		2011		2010
Total Shareholders’ Equity		37,804,053		37,598,016		36,023,495
Total Sales		9,460,419		39,171,703		32,582,037
Operating Income		422,154		4,196,028		4,784,518
Net Income		538,559		3,188,845		3,784,361

B. The Standards Used for Reporting the Financial Statements

The company prepared its financial statements and its Certified Public Accountant’s audit opinions on financial statements in accordance with the Korean - International Financial Reporting Standards (the “K-IFRS”).

C. Non-consolidated Financial Statements

(1) Balance Sheet

Refer to the attached balance sheet for the first quarter of fiscal year of 2012.

(2) Income Statements

Refer to the attached income statement for the first quarter of fiscal year of 2012.

(3) The Note on the Financial Statement

Refer to the auditor’s note about the financial statement.

33

2. Consolidated Financial Statements

A. Summary on Fiscal Years of 2010~2011 and the First Quarter of Fiscal Year of 2012

					(In millions of KRW)
Account	2012(January 1, 2012~March 31, 2012)		2011		2010
[Current Assets]		33,335,047		33,556,911		27,672,377
Cash & Cash equivalents		5,042,890		4,598,682		3,521,045
Other Current Financial Instruments		3,044,025		3,656,270		4,383,302
Accounts Receivable		11,968,456		11,450,515		9,219,011
Inventories		11,487,897		12,283,644		9,559,206
Other Current Assets		1,791,779		1,567,800		989,813
[Non-current Assets]		46,143,911		44,851,927		41,746,049
Other Non-current Financial Instruments		5,495,372		5,125,672		6,417,038
Investment Securities		4,058,214		3,831,659		3,306,425
Tangible Assets		28,967,155		28,453,184		25,437,740
Good Will & Other Intangible Assets		5,435,365		5,244,928		4,619,169
Other Non-current Assets		2,187,805		2,196,484		1,965,677
Total Assets		79,478,958		78,408,838		69,418,426
[Current Liabilities]		19,785,874		19,605,357		18,276,777
[Non-current Liabilities]		18,314,356		18,073,561		12,604,482
Total Liabilities		38,885,800		37,678,918		30,881,259
[Controlling Interest]		38,908,025		38,356,350		36,575,685
Capital Stock		482,403		482,403		482,403
Capital Surplus		1,126,491		1,150,452		1,101,561
Retained Earnings		38,778,099		38,709,475		35,887,696

34

Other Controlling Interest	(1,501,193	)	(1,985,980	)	(895,975	)
[Minority Interest]	2,492,928		2,373,570		1,961,482
Total Shareholders’ Equity	41,378,728		40,729,920		38,537,167
Total Sales	16,308,644		68,938,725		47,887,255
Operating Income	787,779		5,408,101		5,433,520
Consolidated Net Profit	635,639		3,714,286		4,185,651
[Controlling Interest]	629,539		3,648,136		4,105,623
[Minority Interest]	6,100		66,150		80,029
Consolidated Total Comprehensive Income	1,164,105		2,442,377		4,765,441
[Controlling Interest]	1,112,868		2,530,437		4,639,672
[Minority Interest]	51,237		(88,060	)	125,769
Number of Consolidated Companies	222		220		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

(1) Consolidated Balance Sheet

Refer to the attached consolidated balance sheet for the first quarter of fiscal year of 2012.

(2) Consolidated Income Statements

Refer to the attached consolidated financial report for the first quarter of fiscal year of 2012.

35

IV. CORPORATE GOVERNANCE AND COMPANY AFFILIATES

1. Overview of Corporate Governance

A. Board of Directors

(1) Board of Directors

Our board of directors has the ultimate responsibility for management of our business affairs. Under our Articles of Incorporation, the board shall consist of five directors who also act as the executive officers (the “Inside Directorsectors has the ultimate responsibility for management of our business affairs. Under our Articles of Incorpoth Inside Directors and Outside Directors at a general meeting of shareholders. Candidates for the Inside Directors are recommended to shareholders by the board of directors after the board reviews such candidates Directors and Outside Directors the Outside Directors are recommended to the shareholders by a separate board committee consisted of three Outside Directors and one Inside Director (the s of Daewoo Cement (Shandong) Company Limited shall the Director Candidate Recommendation Committee reviews such candidates’ qualifications. Any shareholder holding an aggregate of 0.5% or more of our outstanding shares with voting rights for at least six months may recommend candidates for Outside Directors to the Director Candidate Recommendation Committee.

Our board of directors maintains the following six special committees:

(a) Director Candidate Recommendation Committee;

(b) Evaluation and Compensation Committee;

(c) Finance and Operation Committee;

(d) Executive Management Committee;

(e) Audit Committee; and

(f) Related Party Transaction Committee.

* Composition of the Special Committees under the Board of Directors and their Functions (2012.3.16)

Category	Composition	Directors	Major Functions
Director Candidate Recommendation Committee	3 Outside Directors; 1 Inside Director	Lee, Young-Sun Han, Joon-Ho Lee, Chang-Hee Kim, Joon-Sik	•      Reviews the qualifications of potential candidates for Directors •      Proposes nominees for the Outside Directors •      Advances the nomination process for the Inside Directors and members of the special committees
Evaluation and Compensation Committee	4 Outside Directors	Byun, Dae-Gyu Han, Joon-Ho Nam, YongPark, Sang-Kil	•      Executes management succession and development plans •      Establishes evaluation procedures of directors •      Reviews the retirement procedures and distribution of the allowance for directors

36

Finance and Operation Committee	3 Outside Directors; 2 Inside Directors	Nam, Yong Byun, Dae-Gyu James B. BemowskiCho, Noi-Ha Park, Ki-Hong	•      Advances deliberation of new investments in other companies •      Revises the internal regulations regarding the operation of the Board of Directors •      Deliberates financial matters and donations from the range of KRW 100 million and KRW 1 billion
Audit Committee	3 Outside Directors	Lee, Chang-Hee Park, Sang-Kil Lee, Young-Sun	•      Audits the accounting system and business operations •      Examines the agenda for financial statements and other reports to be submitted by the Board of Directors at each general meeting of shareholders
Related Party Transactions Committee	3 Outside Directors	Lee, Chang Hee Park, Sang-Kil Lee, Young-Sun	•      Reviews matters related to the internal transactions under the MRFTA.-Holds preliminary review on internal transactions exceeding the amount of KRW 10 billion. •      Holds a deliberation hearing on internal transactions exceeding KRW 3 billion but less than 10 billion.
Executive Management Committee	5 Inside Directors	Chung, Joon-Yang Park, Han-Yong Cho, Noi-Ha Park, Ki-Hong Kim, Joon-Sik	•      Oversees decisions with respect to our operational and management matters •      Reviews management’s proposal for new strategic initiatives •      Reviews deliberation over critical internal matters related to the organization structure and development of personnel •      Reviews and revises work and welfare policies

(2) Establishment and Composition of the Director Candidate Recommendation Committee

(a) Established the Director Candidate Recommendation Committee (March 17, 2000)

(b) Changed the name from the Director Candidate Recommendation Committee to the Director Candidate Recommendation and Evaluation Committee (March 15, 2002)

(c) Changed the name from the Director Candidate Recommendation and Evaluation Committee to the Director Candidate Recommendation Committee (March 12, 2004)

37

* Composition of the Director Candidate Recommendation Committee

• Effective Date: March 16, 2012

Lee, Young-Sun (Chairman)	Outside Director	<Satisfies the regulation requiring that more than 50% of directors should be Outside Directors>
Han, Joon-Ho (Member)	Outside Director	• Outside Directors (3), Inside Director (1):
Lee, Chang-Hee (Member)	Outside Director	Pursuant to Article 542-8 of the Korean Commercial Code
Kim, Joon-Sik (Member)	Inside Director

(3) List of Outside Directors (as of March 31, 2012)

Name	Experience	Relation with Majority Shareholder	Remarks
Han, Joon-Ho	•      CEO and Vice Chairman, Samchully Co., Ltd. •      Former Chairman and CEO, Korea Electric Power Corporation	None	Chairman Board of Directors
Lee, Young-Sun	•      Former President of Hallym University •      Former Professor of Yonsei University	None
Lee, Chang Hee	•      Professor of College of Law, Seoul National University •      Former International Director, Tax Law Association	None
Nam, Yong	•      Former Vice Chairman and CEO, LG Electronics •      Former President of Strategic Business Initiatives, LGCorporation Co., Ltd •      Former President and CEO, LG Telecom, Ltd.	None
Byun, Dae-Gyu	•      Chairman and CEO, Humax Co., Ltd. •      Member of National Science and Technology Council •      Full member of the National Academy of Engineering of Korea	None
Park, Sang-Kil	•      Attorney at Law, Kim and Chang •      Prosecutor General, Daejeon High Prosecutor’s Office •      Prosecutor General, Busan High Prosecutor’s Office	None

38

Name	Experience	Relation with Majority Shareholder	Remarks
James B. Bemowski	•      Vice Chairman & CEO, Business Operations Doosan Corporation •      Senior Executive Vice President and Chairman of SBB Mutual Southern Bank Berhad, Malaysia •      Senior Partner, McKinsey & Company	None

* List of Key Activities of the Board of Directors (January 1, 2012 – May 15, 2012)

Session	Date	Agenda	Approval
2012-1	January 17	1. Approval of the financial statements for the forty-fourth fiscal year and the convocation schedule for the forty-fourth general meeting of shareholders 2. Plan for capital increase in POSTECH VENTURE CAPITAL CORPORATION 3. Contribution plan for Pohang Scholarship Foundation 4. Contribution plan for POSCO Employee Welfare Fund 5. Investment plan for Roy Hill iron ore project (2nd Phase) 6. Investment for the establishment of POSCO-Africa 7. Contribution of the thermal surveillance equipment for Young-Il Bay 8. Recommendation of a candidate for the Inside Director position (Candidate for the Chief Executive Officer)	All 8 Cases Approved
2012-2	February 23	1. Recommendation of candidates for the Inside Director position (Excluding the candidate for the Chief Executive Officer) 2. Payment of special remuneration for meritorious services to the Late Honorary Chairman Park, Tae-Joon 3. Agenda for the forty-fourth general meeting of shareholders	All 3 Cases Approved
2012-3	March 16	1. Appointment of the chairman of the Board of Directors 2. Appointment of the special committee members 3. Approval of the designation of the Chief Executive Officer 4. Approval of designation of Representative Directors and Inside Directors 5. Contribution to the Foundation for Supporting Victims of Compulsory Mobilization by Japan	All 5 Cases Approved

39

2012-4 May 11 1. Amendment to the operating regulations for the Board of Directors’ Meeting 2. Appointment of a compliance officer & establishment of the compliance standards 3. Contribution to POSCO Educational Foundation 4. Contribution to Benefit Sharing Performance Reward 5. Plan for the transaction with Daewoo International in 2012 6. Change of the long-term incentives payment method All 6 Cases Approved

* Major Activities of the Outside Directors on the Board of Directors (January 1, 2012 – May 15, 2012)

2011-8	November 4	7
2011-9	December 16	7
2012-1	January 17	7
2012-2	February 23	7
2012-3	March 16	7
2012-4	May 11	6

(4) Composition of the Special Committees and their Activities

(a) Major Activities of Director Candidate Recommendation Committee (January 1, 2012 – May 15, 2012)

Session	Date	Agenda	Approval
2012-1	February 21	1. Assessment of qualifications of the Inside Directors 2. Assessment of qualifications and recommendation of the Outside Directors	— Approved
2012-2	March 16	1. Appointment of the special committee members 2. Approval of the designation of positions for the Representative Directors and Inside Directors	— —

(b) Major Activities of Evaluation and Compensation Committee (January 1, 2012 – May 15. 2012)

Session	Date	Agenda	Approval
2012-1	January 17	Evaluation of the management result for the fiscal year of 2011	Approved
2012-2	February 23	Payment of special remuneration for meritorious services to the Late Honorary Chairman Park, Tae-Joon	—
2012-3	May 11	Change of the long-term incentives payment method	—

(c) Major Activities of Finance and Operation Committee (January 1, 2012 – May 15, 2012)

40

Session	Date	Agenda	Approval
2012-1	January 16	1. Investment plan for Roy Hill iron ore project (2nd Phase) 2. Investment for the establishment of POSCO-Africa 3. Contribution of the thermal surveillance equipment for Young-Il Bay 4. Increased the upper limit for the guaranteed amount for POSCO Assan TST 5. Contribution to Disaster Relief Fund	— — — Approved Approved
		1. Amendment to the operating regulations for the Board of Directors’ Meeting 2. Contribution to Benefit Sharing Performance Reward
2012-2	May 11	3. Participation in the project to support the partnerships for the purpose of productivity innovation among large and small companies	Approved
		4. Donation to 2012 Pyongchang Winter Special Olympics Organizing Committee	Approved

(d) Major Activities of Related Party Transaction Committee (January 1, 2012 – May 15, 2012)

Session	Date	Agenda	Approval
2012-1	January 16	1. Plan for a capital increase in POSTECH VENTURE CAPITAL CORPORATION 2. Contribution plan for the Pohang Scholarship Foundation 3. Contribution plan for the POSCO Employee Welfare Fund 4. Review of the operation of the Fair Trading Program	—
2012-2	May 10	Contributionto POSCO Educational Foundation	—

(e) Major Activities of Executive Management Committee (January 1, 2012 – May 15, 2012)

Session	Date	Agenda	Approval
2012-1	January 31	1. Plan for POSPIA 3.0 business 2. Plan for the sale of technology to PT.KRAKATAU POSCO 3. Increase of investment amount for the establishment of a hot-rolled steel coil production line at Gwangyang Steel Works	Approved Approved Approved
2012-2	April 3	Disposalof the investment securities to improve the financial soundness	Approved
2012-3	May 4	Planfor capital increase in POSTECH VENTURE CAPITAL CORPORATION	Approved

B. Audit Committee

Under the Korean laws and our Articles of Incorporation, we are required to have an audit committee (the “Audit Committee”). The Audit Committee may be composed of three or more directors; all members of the Audit Committee must be of Outside Directors. Members of the Audit Committee must also meet the applicable independent criteria set forth under the rules and regulations of the Financial Investment Services

41

and Capital Markets Act. Members of the Audit Committee are elected by the shareholders at the general meeting of shareholders. Our current Audit Committee is composed of four Outside Directors. Members of our Audit Committee are Lee, Chang-Hee (chairman), Lee, Young-Sun and Park, Sang-Kil.

The duties of the Audit Committee include:

• Engaging independent auditors;

• Approving independent audit fees;

• Approving audit and non-audit services;

• Reviewing annual financial statements;

• Reviewing audit results and reports, including management comments and recommendations;

• Reviewing our system of controls and policies, including those covering conflicts of interest and business ethics;

• Reviewing and approving all related party transactions; and

• Examining improprieties or suspected improprieties.

Moreover, in connection with the general meeting of shareholders, the Audit Committee examines the agenda, financial statements and other reports to be submitted by the Board of Directors at each general meeting of stockholders. Our internal and external auditors report directly to the Audit Committee. The committee holds its regular meetings at least once each quarter and more frequently if needed.

(1) Composition of the Audit Committee (Auditors)

Name	Qualifications	Remarks
Lee, Chang-Hee Park, Sang-Kil Lee, Young-Sun	Satisfies the requirements stipulated in the articles of incorporation	Chairman

* Changes After December 31, 2011

• Lee, Chang-Hee was reelected, and Lee, Young-Sun was newly elected on March 16, 2012.

(2) Major Activities of the Audit Committee (Auditors) (January 1, 2012 – May 15, 2012)

42

Session	Date	Agenda	Approval
2012-1	January 16	•      Report Agenda •      Reporting of the operations of the internal accounting control system for the fiscal year of 2011
2012-2	February 13	•      Deliberation Agenda •      Assessment of the operations of the internal accounting control system for the fiscal year of 2011 •      Internal audit result for the non-consolidated financial statements of the fiscal year of 2011 •      Report Agenda •      Audit result for the non-consolidated financial statements of the fiscal year of 2011 by external auditors •      Compensation for damages for the acquisition of Daewoo International	Approved Approved
2012-3	February 23	•      Deliberation Agenda •      Internal audit result for the revised financial statements of the fiscal year of 2011	Approved
2012-4	March 16	•      Deliberation Agenda •      Appointment of a chairman of the Audit Committee	Approved
2012-5	March 22	•      Deliberation Agenda •      Approval of audit and non-audit services for POSCO and POSCO’s subsidiaries •      Report Agenda •      External audit result for the fiscal year of 2011 (Consolidated) •      Internal audit result for the fiscal year of 2011 (Consolidated)	Approved

C. Voting Rights by Shareholders

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

(2) Voting by Mail: The voting-by-mail system was introduced at the thirty sixth general meeting of shareholders on March 12, 2004.

D. Compensation of Directors and Officers

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

43

			(In KRW)
Category	Total Payment	Ceiling Amount Approved at the Shareholders Meeting	Remarks
Inside Director	2,149million	7 billion
Outside Director	375 million
Members of the Audit Committee	184 million
Total	2,708 million

* Payment Period: January 1, 2012 ~ March 31, 2012.

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

(2) List of Stock Options Presented to the Executives

						(As of March 31, 2012)
Date of Grant	Name	Number of Share			Exercising Period	Exercising Price
		Grant	Exercise	Remaining
April 28, 2005	Yong Ghul Yoon Noi Ha Cho Wook Sun Charles Ahn Jong Doo Choi	10,000 10,000 2,000 2,000 2,000	10,000— —   2,000 —   2,000	—   10,000 —   2,000 —	April 29, 2007 ~April 28, 2012	\194,900
	Total	26,000	14,000	12,000	—	—

* The stock option program was terminated on the thirty eighth general meeting of shareholders (February 24, 2006).

44

POSCO

and Subsidiaries

Consolidated Interim Financial Statements

(Unaudited)

March 31, 2012

(With Independent Auditors’ Review Report Thereon)

Table of Contents

	Page
Independent Auditors’ Review Report		1
Consolidated Interim Financial Statements
Consolidated Statements of Financial Position		3
Consolidated Statements of Comprehensive Income		5
Consolidated Statements of Changes in Equity		6
Consolidated Statements of Cash Flows		8
Notes to the Consolidated Interim Financial Statements		10

2

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

POSCO:

Reviewed financial statements

We have reviewed the accompanying consolidated interim financial statements of POSCO and its subsidiaries (the “Company”), which comprise the consolidated statement of financial position as of March 31, 2012, the consolidated statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2012 and 2011 and notes, comprising a summary of significant accounting policies and other explanatory information (“the consolidated interim financial information”).

Management’s responsibility

Management is responsible for the preparation and fair presentation of this separate interim financial information in accordance with Korean International Financial Reporting Standard (“K-IFRS”) 1034 “Interim Financial Reporting”. The Company’s management is also responsible for the internal controls determined necessary to prepare the separate interim financial statements free of material misstatements due to error or fraud.

Auditor’s review responsibility

Our responsibility is to issue a report on these 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 information 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 auditing standards generally accepted in the Republic of Korea 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 consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034, “Interim Financial Reporting”.

1

Other matters

The procedures and practices utilized in the Republic of Korea to review such consolidated interim financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated interim financial statements are for use by those knowledgeable about Korean auditing standards and their application in practice.

The statement of financial position of the Company as of December 31, 2011, 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 and our report thereon, dated March 8, 2012, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Company as of December 31, 2011, presented for comparative purposes, is not different from that audited by us in all material respects.

Seoul, Korea

May 25, 2012

This report is effective as of May 25, 2012, 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 consolidated interim financial information and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

2

POSCO

Consolidated Statements of Financial Position

As of March 31, 2012 and December 31, 2011

(Unaudited)

(in millions of Won)	Notes	March 31, 2012		December 31, 2011
Assets
Cash and cash equivalents	4,5,20	(Won)	5,042,890		4,598,682
Trade accounts and notes receivable, net	6,20,25,33		11,968,456		11,450,515
Other short-term financial assets	7,20,33		3,044,025		3,656,270
Inventories	8,15		11,487,897		12,283,644
Income tax refund receivable	31		22,337		18,621
Assets held for sale	9		299,817		329,037
Other current assets	14		1,469,625		1,220,142
Total current assets			33,335,047		33,556,911
Long-term trade accounts and notes receivable, net	6,20		172,816		183,061
Other long-term financial assets	7,20		5,495,371		5,125,672
Investments in associates	10,15		4,058,214		3,831,659
Investment property, net	11,15		516,377		527,533
Property, plant and equipment, net	12,15		28,967,155		28,453,184
Intangible assets, net	13		5,435,365		5,244,928
Deferred tax assets	31		854,413		855,603
Other long-term assets	14		644,200		630,287
Total non-current assets			46,143,911		44,851,927
Total assets	36	(Won)	79,478,958		78,408,838

See accompanying notes to consolidated interim financial statements (unaudited).

3

POSCO

Consolidated Statements of Financial Position, Continued

As of March 31, 2012 and December 31, 2011

(Unaudited)

(in millions of Won)	Notes	March 31, 2012			December 31, 2011
Liabilities
Trade accounts and notes payable	20,33	(Won)	3,912,447			4,397,279
Short-term borrowings and current installments of long-term borrowings	4,15,20		10,494,283			10,791,510
Other short-term financial liabilities	16,20,24,34		1,797,520			1,811,190
Current income tax liabilities	31		495,879			509,709
Liabilities related assets held for sale	9		236,332			226,607
Provisions	17		75,873			69,432
Other current liabilities	19,25		2,773,540			1,799,631
Total current liabilities			19,785,874			19,605,358
Long-term trade accounts and notes payable	20,33		378			383
Long-term borrowings, excluding current installments	4,15,20		16,065,958			16,020,207
Other long-term financial liabilities	16,20		339,733			350,560
Defined benefits liabilities	18		360,047			340,467
Deferred tax liabilities	31		1,384,794			1,168,097
Long-term provisions	17		99,690			109,343
Other long-term liabilities	19		63,756			84,503
Total non-current liabilities			18,314,356			18,073,560
Total liabilities	36	(Won)	38,100,230			37,678,918
Equity
Share capital	21	(Won)	482,403			482,403
Capital surplus	21		1,126,491			1,150,452
Reserves	22		890,213			405,426
Treasury shares	23		(2,391,406	)		(2,391,406	)
Retained earnings			38,778,099			38,709,475
Equity attributable to owners of the controlling company			38,885,800			38,356,350
Non-controlling interests			2,492,928			2,373,570
Total equity		(Won)	41,378,728			40,729,920
Total liabilities and equity		(Won)	79,478,958			78,408,838

See accompanying notes to consolidated interim financial statements (unaudited).

4

POSCO

Consolidated Statements of Comprehensive Income

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won, except per share information)	Notes	March 31, 2012			March 31, 2011
Revenue	26,33,36	(Won)	16,308,644			16,250,564
Cost of sales	29,33		(14,630,482	)		(14,078,500	)
Gross profit			1,678,162			2,172,064
Selling and administrative expenses	27,29
Administrative expenses	24		(514,713	)		(497,118	)
Selling expenses			(419,139	)		(372,377	)
			(933,852	)		(869,495	)
Other operating income	28,33		114,532			77,724
Other operating expenses	28,29,33		(71,064	)		(24,422	)
Operating profit			787,778			1,355,871
Non-operating income and expenses
Share of profit (loss) of equity-accounted investees	10		17,404			(21,347	)
Finance income	20,30		787,139			822,346
Finance costs	20,30		(716,809	)		(721,178	)
Profit before income tax expense			875,512			1,435,692
Income tax expense	31,36		(239,874	)		(342,630	)
Profit for the period	36		635,638			1,093,062
Other comprehensive income (loss), net of tax
Capital adjustment arising from investments in equity-method investees			100,752			18,458
Net changes in fair value of available-for-sale investments			306,227			(268,019	)
Foreign currency translation differences			110,775			(88,392	)
Defined benefit plan actuarial gains			10,713			72,762
Total comprehensive income for the period, net of tax		(Won)	1,164,105			827,871
Profit attributable to:
Owners of the controlling company		(Won)	629,538			1,090,722
Non-controlling interests			6,100			2,340
Profit for the period		(Won)	635,638			1,093,062
Total comprehensive income (loss) attributable to:
Owners of the controlling company		(Won)	1,112,868			967,171
Non-controlling interests			51,237			(139,300	)
Total comprehensive income for the period		(Won)	1,164,105			827,871
Basic and diluted earnings per share	32	(Won)	8,150			14,115

See accompanying notes to consolidated interim financial statements (unaudited).

5

POSCO

Consolidated Statements of Changes in Equity

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

	Owners of the Controlling Company																Non-
(in millions of Won)	Share Capital		Capital Surplus		Reserves			Treasury Shares			Retained Earnings			Sub Total			Controlling Interests			Total
Balance as of January 1, 2011	(Won)	482,403		1,101,561		1,507,288			(2,403,263	)		35,887,697			36,575,686			1,961,481			38,537,167
Comprehensive income:
Profit for the period		—		—		—			—			1,090,722			1,090,722			2,340			1,093,062
Net changes in accumulated comprehensive income (loss) of investments in associates, net of tax		—		—		19,722			—			—			19,722			(1,264	)		18,458
Net changes in fair value of available-for-sale investments, net of tax		—		—		(267,343	)		—			—			(267,343	)		(676	)		(268,019	)
Foreign currency translation differences, net of tax		—		—		48,815			—			—			48,815			(137,207	)		(88,392	)
Defined benefit plan actuarial gains (losses), net of tax		—		—		—			—			75,255			75,255			(2,493	)		72,762
Total comprehensive income		—		—		(198,806	)		—			1,165,977			967,171			(139,300	)		827,871
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—			—			(577,747	)		(577,747	)		(11,528	)		(589,275	)
Changes in subsidiaries		—		—		—			—			—			—			7,819			7,819
Changes in ownership interests in subsidiaries		—		3,641		—			—			—			3,641			(3,641	)		—
Paid in capital increase of subsidiaries		—		—		—			—			—			—			95,849			95,849
Acquistion of treasury shares		—		—		—			(61,296	)		—			(61,296	)		—			(61,296	)
Disposal of treasury shares		—		69,153		—			73,153			—			142,306			—			142,306
Others		—		631		5,114			—			(21,783	)		(16,038	)		1,365			(14,673	)
Total transactions with owners of the Company		—		73,425		5,114			11,857			(599,530	)		(509,134	)		89,864			(419,270	)
Balance as of March 31, 2011	(Won)	482,403		1,174,986		1,313,596			(2,391,406	)		36,454,144			37,033,723			1,912,045			38,945,768

See accompanying notes to consolidated interim financial statements (unaudited).

6

POSCO

Consolidated Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

	Owners of the Controlling Company																Non-
(in millions of Won)	Share Capital		Capital Surplus			Reserves		Treasury Shares			Retained Earnings			Sub Total			Controlling Interests			Total
Balance as of January 1, 2012	(Won)	482,403		1,150,452			405,426		(2,391,406	)		38,709,475			38,356,350			2,373,570			40,729,920
Comprehensive income:
Profit for the period		—		—			—		—			629,538			629,538			6,100			635,638
Net changes in accumulated comprehensive income of investments in associates, net of tax		—		—			64,135		—			—			64,135			36,617			100,752
Net changes in fair value of available-for-sale investments, net of tax		—		—			303,956		—			—			303,956			2,271			306,227
Foreign currency translation differences, net of tax		—		—			103,605		—			—			103,605			7,170			110,775
Defined benefit plan actuarial gains (losses), net of tax		—		—			—		—			11,634			11,634			(921	)		10,713
Total comprehensive income		—		—			471,696		—			641,172			1,112,868			51,237			1,164,105
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—			—		—			(579,333	)		(579,333	)		(14,044	)		(593,377	)
Changes in subsidiaries		—		—			—		—			—			—			6,264			6,264
Changes in ownership interests in subsidiaries		—		(22,052	)		—		—			—			(22,052	)		12,847			(9,205	)
Paid in capital increase of subsidiaries		—		—			—		—			—			—			61,309			61,309
Others		—		(1,909	)		13,091		—			6,785			17,967			1,745			19,712
Total transactions with owners of the Company		—		(23,961	)		13,091		—			(572,548	)		(583,418	)		68,121			(515,297	)
Balance as of March 31, 2012	(Won)	482,403		1,126,491			890,213		(2,391,406	)		38,778,099			38,885,800			2,492,928			41,378,728

See accompanying notes to consolidated interim financial statements (unaudited).

7

POSCO

Consolidated Statements of Cash Flows

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won)	Note		March 31, 2012			March 31, 2011
Cash flows from operating activities
Profit for the period			(Won)	635,638			1,093,062
Adjustments for:
Depreciation				566,399			491,352
Amortization				32,470			29,891
Finance income				(603,409	)		(613,368	)
Finance costs				538,850			519,144
Income tax expense				239,874			342,630
Share of profit or loss of equity-accounted investees				(17,404	)		21,347
Accrual of severance benefits				57,052			57,335
Bad debt expenses				4,144			12,939
Others				(26,517	)		52,214
				791,459			913,484
Changes in operating assets and liabilities		35		487,622			(1,322,714	)
Interest received				80,701			53,258
Interest paid				(220,963	)		(206,799	)
Dividends received				11,179			15,436
Income taxes paid				(114,028	)		(350,766	)
Net cash provided by operating activities				1,671,608			194,961
Cash flows from investing activities
Disposals of short-term financial instruments				1,393,314			2,503,461
Repayments of loans				132,387			106,057
Disposals of available-for-sale investments				13,245			11,419
Disposals of other investment assets				9			8
Disposals of property, plant and equipment				47,845			13,958
Disposals of intangible assets				717			2,148
Acquisitions of short-term financial instruments				(974,919	)		(1,364,017	)
Issuance of loans				(154,371	)		(19,482	)
Acquisitions of available-for-sale investments				(2,350	)		(151,352	)
Acquistions of other investment assets				(1,125	)		(10,561	)
Acquisitions of investments of equity-accounted investees				(149,339	)		(365,407	)
Acquisitions of property, plant and equipment				(1,058,432	)		(965,652	)
Acquisitions of intangible assets				(104,258	)		(96,567	)
Cash received from (payment for) acquisition of business, net of cash acquired				6,730			(55,004	)
Other, net				3,716			96,131
Net cash used by investing activities			(Won)	(846,831	)		(294,860	)

See accompanying notes to consolidated interim financial statements (unaudited).

8

POSCO

Consolidated Statements of Cash Flows

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won)	Note	March 31, 2012			March 31, 2011
Cash flows from financing activities
Proceeds from borrowings		(Won)	400,234			1,926,095
Disposals of treasury shares			—			164,384
Repayment of short-term borrowings			(23,829	)		(239,903	)
Repayment of long-term borrowings			(163,660	)		(517,174	)
Acquisition of treasury shares			—			(61,296	)
Payment of cash dividends			(581,333	)		(582,668	)
Other, net			20,195			(13,413	)
Net cash provided by (used by) financing activities		(Won)	(348,393	)		676,025
Cash flows from foreign currency translation			(32,176	)		(68,614	)
Net increase in cash and cash equivalents			444,208			507,512
Cash and cash equivalents at beginning of the period		(Won)	4,598,682			3,521,046
Cash and cash equivalents at end of the period		(Won)	5,042,890			4,028,558

See accompanying notes to consolidated interim financial statements (unaudited).

9

POSCO

Notes to Consolidated Interim Financial Statements

As of March 31, 2012

(Unaudited)

1. General Information

General information about POSCO, its 59 domestic subsidiaries (“the Company”) including POSCO Engineering & Construction Co., Ltd., 162 foreign subsidiaries including POSCO America Corporation and its 93 associates 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 1988. POSCO owns and operates two steel plants (Pohang and Gwangyang) and one office in Korea and it also operates internationally through nine of its overseas liaison offices.

As of March 31, 2012, the shares of POSCO are listed on the Korea Exchange, while its depository receipts are listed on the New York, Tokyo and London Stock Exchanges.

10

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Consolidated subsidiaries

Details of consolidated subsidiaries as of March 31, 2012 and December 31, 2011 are as follows:

		Ownership (%)
		March 31, 2012						December 31, 2011
	Principal Operations	POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Domestic]
POSCO E&C Co., Ltd.	Engineering and construction		89.53		—		89.53		89.53		—		89.53	Pohang
POSCO P&S Co., Ltd.	Steel sales and service		95.31		—		95.31		95.31		—		95.31	Seoul
POSCO Coated & Color Steel Co.,	Coated steel manufacturing		56.87		—		56.87		56.87		—		56.87	Pohang
POSCO Plant Engineering Co., Ltd.	Steel work maintenance and machinery installation		100.00		—		100.00		100.00		—		100.00	Pohang
POSCO ICT Co., Ltd.	Computer hardware and software distribution		72.54		—		72.54		72.54		—		72.54	Seongnam
POSCO Research Institute	Economic research_and consulting		100.00		—		100.00		100.00		—		100.00	Seoul
Seoung Gwang Co., Ltd.	Athletic facilities operation		69.38		30.62		100.00		69.38		30.62		100.00	Suncheon
POSCO Architects & Consultants Co., Ltd.	Architecture and consulting		100.00		—		100.00		100.00		—		100.00	Seoul
POSCO Specialty Steel Co., Ltd.	Steel manufacturing and Sales		100.00		—		100.00		100.00		—		100.00	Changwon
POSTECH Venture Capital Corp.	Investment in venture companies		95.00		—		95.00		95.00		—		95.00	Pohang
eNtoB Co., Ltd.	Electronic commerce		32.19		30.20		62.39		32.19		30.20		62.39	Seoul
POSCO Chemtec Company Ltd. (formerly, POSCO Refractories & Environment Co., Ltd.)	Manufacturing and sellings		60.00		—		60.00		60.00		—		60.00	Pohang
POSCO Terminal Co., Ltd.	Transporting and warehousing		51.00		—		51.00		51.00		—		51.00	Gwangyang
POSCO M-TECH Co., Ltd. (*1)	Packing materials manufacturing		48.85		—		48.85		48.85		—		48.85	Pohang
POSCO ENERGY Co., Ltd.	Generation of electricity		100.00		—		100.00		100.00		—		100.00	Seoul
Postech 2006 Energy Fund (*2)	Investment in new technologies		—		22.11		22.11		—		22.11		22.11	Seoul
PHP Co., Ltd.	Rental houses construction and managemet		—		100.00		100.00		—		100.00		100.00	Incheon
POSCO TMC Co., Ltd.	Component manufacturing		34.20		33.56		67.76		34.20		33.56		67.76	Cheonan
PNR Co., Ltd.	Steel manufacturing and sales		70.00		—		70.00		70.00		—		70.00	Pohang
Megaasset Co., Ltd.	Real estate rental and sales		—		100.00		100.00		—		100.00		100.00	Cheonan
POSCO Engineering Company	Construction and engneering service		—		95.56		95.56		—		95.56		95.56	Seongnam
Pohang Feul Cell Co. Ltd.	Generation of electricity		—		100.00		100.00		—		100.00		100.00	Pohang
Pohang SPFC Co., Ltd.	Steel manufacturing		—		90.00		90.00		—		90.00		90.00	Pohang
POSWITH Co., Ltd.	Industrial clean service		100.00		—		100.00		100.00		—		100.00	Pohang
BASYS INDUSTRY Co., Ltd.	Panel board, electric and control panel manufacturing		—		65.00		65.00		—		65.00		65.00	Seongnam
POSTECH BD Newundertaking fund	Bio diesel Industries		—		100.00		100.00		—		100.00		100.00	Pohang
POSBRO Co., Ltd.	Video game manufacturing		—		97.79		97.79		—		97.79		97.79	Seongnam
POSCO AST Co., Ltd.	Steel manufacturing and Sales		100.00		—		100.00		100.00		—		100.00	Ansan
DaiMyung TMS Co., Ltd.	Cold- rolling of stainless steel, nickel alloy		—		—		—		—		100.00		100.00	Siheung
POS-HiMETAL Co., Ltd.	Steel manufacturing and Sales		65.00		—		65.00		65.00		—		65.00	Gwangyang
POSCO E&E Co., Ltd.	Handling & disposal of waste matter		—		100.00		100.00		—		100.00		100.00	Seoul
POMIC Co., Ltd.	Education services		—		100.00		100.00		—		100.00		100.00	Pohang
POSFINE Co., Ltd.	Non metallic minerals manufacturing		69.23		—		69.23		69.23		—		69.23	Gwangyang
POS ECO HOUSING Co., Ltd.	Construction		85.25		—		85.25		85.25		—		85.25	Pohang
Mapo high broad parking Co., Ltd.	Construction		—		71.00		71.00		—		71.00		71.00	Seoul
Dakos Co., Ltd.	Railway equipment manufacturing		—		81.00		81.00		—		81.00		81.00	Seongnam
Kwang Yang SPFC Co., Ltd.	Steel manufacturing		—		65.84		65.84		—		65.84		65.84	Gwangyang
POSCALCIUM Company, Ltd.	Non metallic minerals manufacturing		—		70.00		70.00		—		70.00		70.00	Pohang
Plant Engineering service Technology Co., Ltd.	Engineering service		—		100.00		100.00		—		100.00		100.00	Pohang
9Digit Co., Ltd.	Steel manufacturing		—		86.49		86.49		—		86.49		86.49	Incheon
Postech Early Stage Fund (*2)	Financial investment		—		10.00		10.00		—		10.00		10.00	Pohang
Busan E&E Co., Ltd.	Handling & disposal of waste matter		70.00		—		70.00		70.00		—		70.00	Busan
POSCO Family Strategy Funds	Financial investment		69.93		30.07		100.00		69.93		30.07		100.00	Pohang
POREKA Co., Ltd.	Advertising agency		100.00		—		100.00		100.00		—		100.00	Seoul
Songdo SE Co., Ltd.	Cleaning service		100.00		—		100.00		100.00		—		100.00	Incheon
Posgreen Co., Ltd.	Plastic manufacuring		—		60.00		60.00		—		60.00		60.00	Gwangyang
Daewoo International Corporation	Trading, Energy & Resource development		66.56		—		66.56		66.56		—		66.56	Seoul
POSCOLED Co., Ltd.	LED lightning		16.70		63.33		80.03		16.70		63.33		80.03	Seongnam
Gunsan SPFC Co., Ltd.	Steel manufacturing		—		70.09		70.09		—		70.09		70.09	Gunsan
POSCO NST Co., Ltd.	Steel manufacturing		100.00		—		100.00		100.00		—		100.00	Busan
Pohang Scrap Recycling Center Co., Ltd.	Steel manufacturing		—		51.00		51.00		—		51.00		51.00	Pohang
PSC energy global Co., Ltd.	Business service		—		100.00		100.00		—		100.00		100.00	Pohang
Suncheon Ecotrans Co., Ltd.	Train manufacturing & management		100.00		—		100.00		100.00		—		100.00	Suncheon
Shinan Energy Co., Ltd.	manufacturing & management		—		100.00		100.00		—		100.00		100.00	Mokpo
Reco Metal Co., Ltd.	Steel manufacturing		—		88.58		88.58		—		88.58		88.58	Hwasung
NewAltec Co., Ltd.	Aluminum Products manufacturing and sales		—		60.10		60.10		—		60.10		60.10	Incheon
PONUTech Co., Ltd.	Nuclear power generation design and repair service		—		100.00		100.00		—		100.00		100.00	Ulsan
BLUE O&M Co., Ltd	Service		—		100.00		100.00		—		100.00		100.00	Ulsan
Tamra Offshore Wind Power Co.,	Electricity / wind power generation		—		64.00		64.00		—		—		—	Jeju
POS-HiAL Co., Ltd	Manufacture of Smelting Refining and Alloys of Aluminum		—		51.00		51.00		—		—		—	Yeongam

11

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

		Ownership (%)
		March 31, 2012						December 31, 2011
	Principal Operations	POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Foreign]
POSCO America Corporation	Steel trading		99.45		0.55		100.00		99.45		0.55		100.00	USA
POSCO Australia Pty. Ltd.	Iron ore sales & mine development		100.00		—		100.00		100.00		—		100.00	Australia
POSCO Canada Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Canada
POSCAN Elkveiw Coal Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Canada
POSCO Asia Co., Ltd.	Steel transit trading		100.00		—		100.00		100.00		—		100.00	HongKong
Dalian POSCO Steel Co., Ltd	Steel manufacturing		30.00		55.00		85.00		30.00		55.00		85.00	China
POSCO-CTPC Co., Ltd.	Steel manufacturing		56.60		43.40		100.00		56.60		43.40		100.00	China
POSCO-JKPC Co., Ltd.	Steel manufacturing		—		95.00		95.00		—		95.00		95.00	Japan
International Business Center Corporation	Leasing Service		—		60.00		60.00		—		60.00		60.00	Vietnam
POSCO E&C Vietnam Co., Ltd.	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	Vietnam
Zhangjiagang Pohang Stainless Steel Co., Ltd.	Stainless steel manufacturing		58.60		23.88		82.48		58.60		23.88		82.48	China
Guangdong Pohang Coated Steel Co., Ltd.	Plating steel sheet manufacturing		84.52		10.01		94.53		84.52		10.01		94.53	China
POSCO (Thailand) Company Ltd.	Steel manufacturing		85.62		14.38		100.00		85.62		14.38		100.00	Thailand
Myanmar POSCO Steel Co., Ltd	Zinc relief manufacturing		70.00		—		70.00		70.00		—		70.00	Myanmar
POSCO-JOPC Co., Ltd.	Steel manufacturing		—		56.84		56.84		—		56.84		56.84	Japan
POSCO Investment Co., Ltd.	Financial Service		100.00		—		100.00		100.00		—		100.00	HongKong
POSCO-MKPC SDN BHD.	Steel manufacturing		44.69		25.31		70.00		44.69		25.31		70.00	Malaysia
Qingdao Pohang Stainless Steel Co., Ltd.	Stainless steel manufacturing		70.00		30.00		100.00		70.00		30.00		100.00	China
POSCO (Suzhou) Automotive Processing Center Co., Ltd.	Steel manufacturing		90.00		10.00		100.00		90.00		10.00		100.00	China
POSCO BioVentures L.P.	Bio tech Industry		—		100.00		100.00		—		100.00		100.00	USA
PT. POSNESIA	Steel manufacturing		70.00		—		70.00		70.00		—		70.00	Indonesia
POSCO E&C—Hawaii Inc.	Real estate Industry		—		100.00		100.00		—		100.00		100.00	USA
POS-Qingdao Coil Center Co., Ltd.	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	China
POS-Ore Pty. Ltd.	Iron ore sales & mine development		—		100.00		100.00		—		100.00		100.00	Australia
POSCO-China Holding Corp.	A holding company		100.00		—		100.00		100.00		—		100.00	China
POSCO-Japan Co., Ltd.	Steel trading		100.00		—		100.00		100.00		—		100.00	Japan
POS-CD Pty. Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Australia
POS-GC Pty. Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Australia
POSCO-India Private Ltd.	Steel manufacturing		100.00		—		100.00		100.00		—		100.00	India
POSCO-India Pune Steel Processing Centre Pvt. Ltd.	Steel manufacturing		65.00		—		65.00		65.00		—		65.00	India
POSCO-JEPC Co., Ltd. (formerly,POSCO-JNPC Co., Ltd.)	Steel manufacturing		—		88.02		88.02		—		90.00		90.00	Japan
POSCO-Foshan Steel Processing	Steel manufacturing		39.60		60.40		100.00		39.60		60.40		100.00	China
POSCO E&C (China) Co., Ltd.	Construction and civil engineering		—		100.00		100.00		—		100.00		100.00	China
POSCO MPC S.A. de C.V.	Steel manufacturing		—		90.00		90.00		—		90.00		90.00	Mexico
Zhangjigang Pohang Port Co., Ltd.	Load and unload Industry		—		100.00		100.00		—		100.00		100.00	China
Qingdao Pujin Steel Material Co., Ltd	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	China
POSCO-Vietnam Co., Ltd.	Steel manufacturing		85.00		—		85.00		85.00		—		85.00	Vietnam
POSCO-Mexico Co., Ltd.	Mobile steel sheet manufacturing		84.83		15.17		100.00		80.68		19.32		100.00	Mexico
POSCO-India Delhi Steel Processing Centre Pvt. Ltd	Steel manufacturing		66.40		10.00		76.40		76.40		—		76.40	India
POSCO-Poland Wroclaw Steel Processing Center Co., Ltd	Steel manufacturing		60.00		—		60.00		60.00		—		60.00	Poland
POS-NP Pty. Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Australia
POSCO-Vietnam Processing Center Co., Ltd.	Steel manufacturing		89.58		—		89.58		89.58		—		89.58	Vietnam
POSCO (Chongqing) Automotive Processing Center Co, Ltd.	Steel manufacturing		90.00		10.00		100.00		90.00		10.00		100.00	China
Suzhou POS-CORE Technology Co., Ltd.	Component manufacturing		—		100.00		100.00		—		100.00		100.00	China
POSCO-JYPC Co., Ltd.	Steel manufacturing		—		—		—		—		82.37		82.37	Japan
POSCO-Malaysia SDN. BHD.	Steel manufacturing		80.07		13.34		93.41		80.07		13.34		93.41	Malaysia
POS-Minerals Corporation	Mine development & sales		—		100.00		100.00		—		100.00		100.00	USA
POSCO (Wuhu) Automotive Processing Center Co., Ltd.	Steel manufacturing		68.57		31.43		100.00		68.57		31.43		100.00	China
POSCO E&C India Private Ltd.	Construction and engineering		—		100.00		100.00		—		100.00		100.00	India
POSCO E&C SMART	Construction and engineering		—		100.00		100.00		—		100.00		100.00	Mexico
POSCO-Phillippine Manila Processing Center Inc.	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	Philippines
Dalian POSCON Dongbang Automatic Co., Ltd.	Electrotical control equipment manufacturing		—		70.00		70.00		—		70.00		70.00	China
SANPU TRADING CO.,LTD.	Transit trade		—		70.04		70.04		—		70.04		70.04	China
Zhangjiagang BLZ Pohang International Trading Co., Ltd.	Steel transit trading		—		100.00		100.00		—		100.00		100.00	China
POSCO Mexico Human Tech.	Service		80.00		20.00		100.00		80.00		20.00		100.00	Mexico
POSCO Mexico East Steel Distribution Center Co., Ltd	Steel product sales		—		56.81		56.81		—		56.81		56.81	Mexico

12

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

		Ownership (%)
		March 31, 2012						December 31, 2011
	Principal Operations	POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Foreign]
POSCO ICT-China	IT service and DVR business		—		100.00		100.00		—		100.00		100.00	China
DWEMEX S.A.DE C.V.	Construction		—		99.00		99.00		—		99.00		99.00	Mexico
POS MPC Servicios de C.V.	Steel manufacturing		—		61.00		61.00		—		61.00		61.00	Mexico
EUROTALY S.A.	Lumber manufacturing & sales		98.00		—		98.00		98.00		—		98.00	Uruguay
POSCO South East Asia Pte. Ltd.	Steel transit trading		—		51.00		51.00		—		51.00		51.00	Singapore
Europe Steel Distribution Center	Steel product sales		50.00		20.00		70.00		50.00		20.00		70.00	Slovenia
VECTUS Ltd.	PRT test track construction		—		99.57		99.57		—		99.57		99.57	England
Zeus(Cayman)	Service		100.00		—		100.00		100.00		—		100.00	Cayman Islands
POSCO VST Co., Ltd.	Stainless steel manufacturing		95.65		—		95.65		95.65		—		95.65	Vietnam
POSCO Maharashtra Steel Pvt. Ltd.	Steel manufacturing		100.00		—		100.00		100.00		—		100.00	India
POSCO India Chennai Steel Processing Centre Pvt. Ltd.	Steel manufacturing		100.00		—		100.00		100.00		—		100.00	India
POSCO Turkey Nilufer Processing Center Co., Ltd.	Steel manufacturing		100.00		—		100.00		100.00		—		100.00	Turkey
POSCO Vietnam Ha Noi Processing Center Co., Ltd.	Steel manufacturing		70.00		—		70.00		70.00		—		70.00	Vietnam
POSCO (Liaoning) Automotive Processing Center Co., Ltd.	Steel manufacturing		90.00		10.00		100.00		90.00		10.00		100.00	China
POSCO-Indonesia Jakarta Processing Center	Steel manufacturing		65.00		20.00		85.00		65.00		20.00		85.00	Indonesia
POSCO E&C Venezuela C.A	Construction and engineering		—		100.00		100.00		—		100.00		100.00	Venezuela
PT. MRI	mine development		65.00		—		65.00		65.00		—		65.00	Indonesia
POSCORE-INDIA	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	India
POSCO America Alabama Processing Center Co., Ltd.	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	USA
PT DEC Indonesia	Construction		—		95.00		95.00		—		95.00		95.00	Indonesia
POSCO (Yantai) Automotive Processing Center Co.,Ltd.	Steel manufacturing		90.00		10.00		100.00		90.00		10.00		100.00	China
POSCO India Steel Distribution Center Private Ltd.	Steel Logistics		—		100.00		100.00		—		100.00		100.00	India
POSCO China Dalian Plate Processing Center Co., Ltd.	Steel manufacturing		80.00		10.00		90.00		80.00		10.00		90.00	China
POSCO-South Asia Co., Ltd.	Steel product sales		100.00		—		100.00		100.00		—		100.00	Thailand
POSCO SS-VINA Co., LTD	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	Vietnam
POSCO-NCR Coal Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Canada
POSCO WA Pty. Ltd.	Iron ore sales & mine development		100.00		—		100.00		100.00		—		100.00	Australia
POSCO E&C - UZ	Construction		—		100.00		100.00		—		100.00		100.00	Uzbekistan
POSCO Australia GP Limited	Resource development		—		100.00		100.00		—		100.00		100.00	Australia
Daewoo International America Corp.	Trading business		—		100.00		100.00		—		100.00		100.00	USA
Daewoo International Deutschland GmbH	Trading business		—		100.00		100.00		—		100.00		100.00	Germany
Daewoo International Japan Corp.	Trading business		—		100.00		100.00		—		100.00		100.00	Japan
Daewoo International Singapore Pte. Ltd.	Trading business		—		100.00		100.00		—		100.00		100.00	Singapore
Daewoo Italia S.r.l.	Trading business		—		100.00		100.00		—		100.00		100.00	Italia
Daewoo Cement (Shandong) Co., Ltd.	Cement manufacturing		—		100.00		100.00		—		100.00		100.00	China
Daewoo (China) Co., Ltd.	Trading business		—		100.00		100.00		—		100.00		100.00	China
PT. RISMAR Daewoo Apparel	Clothing business		—		100.00		100.00		—		100.00		100.00	Indonesia
Daewoo Textile Fergana LLC	Textile manufacturing		—		100.00		100.00		—		100.00		100.00	Uzbekistan
Daewoo Textile Bukhara LLC	Textile manufacturing		—		100.00		100.00		—		100.00		100.00	Uzbekistan
Daewoo International Australia Holdings Pty. Ltd.	Resource Development		—		100.00		100.00		—		100.00		100.00	Australia
Ltd.	Paper industry		—		66.70		66.70		—		66.70		66.70	China
Tianjin Daewoo. Paper Co., Ltd	Paper industry		—		68.00		68.00		—		68.00		68.00	China
POSCO Mauritius Ltd.	Mine development & sales		—		100.00		100.00		—		100.00		100.00	Mauritius
PT. KRAKATAU STEEL POSCO	Steel manufacturing		70.00		—		70.00		70.00		—		70.00	Indonesia
MYANMAR Daewoo LTD.	Trading business		—		100.00		100.00		—		100.00		100.00	Myanmar
Dawwoo International MEXICO S.A. de C.V.	Trading business		—		100.00		100.00		—		100.00		100.00	Mexico
Daewoo International Guangzhou Corp.	Trading business		—		100.00		100.00		—		100.00		100.00	China
Daewoo Energy Central Asia	Resource Development		—		100.00		100.00		—		100.00		100.00	Uzbekistan
Daewoo STC & Apparel Vietnam	Textile manufacturing		—		100.00		100.00		—		100.00		100.00	Vietnam
MYANMAR Daewoo International Ltd.	Textile manufacturing		—		55.00		55.00		—		55.00		55.00	Myanmar
DAYTEK ELECTRONICS CORP.	Trading business		—		100.00		100.00		—		100.00		100.00	Canada
Daewoo (M) SDN. BHD.	Trading business		—		100.00		100.00		—		100.00		100.00	Malaysia
Daewoo CANADA LTD.	Trading business		—		100.00		100.00		—		100.00		100.00	Canada
Daewoo EL SALVADOR S.A. DE C.V.	Trading business		—		88.00		88.00		—		88.00		88.00	El Salvador
GEZIRA TANNERY CO., LTD.	Leather manufacturing		—		60.00		60.00		—		60.00		60.00	Sudan
POSCO (Zhangjiagang) Stainless	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	China
Daewoo International	Trading business		—		100.00		100.00		—		100.00		100.00	Malaysia
Daewoo International	Trading business		—		100.00		100.00		—		100.00		100.00	China
PGSF, LLC	Bio tech Industry		—		100.00		100.00		—		100.00		100.00	USA
Xenesys Inc.	Power generation equipment manufacturing		29.58		21.36		50.94		29.58		21.36		50.94	Japan
Daewoo International INDIA	Trading business		—		100.00		100.00		—		100.00		100.00	India

13

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

		Ownership (%)
		March 31, 2012						December 31, 2011
	Principal Operations	POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Foreign]
TECHREN Solar, LLC	Electrical Industry		—		99.98		99.98		—		99.97		99.97	USA
PT. POSCO E&C Indonesia	Construction		—		100.00		100.00		—		100.00		100.00	Indonesia
Hume Coal Pty. Ltd.	Raw material manufacturing		—		70.00		70.00		—		70.00		70.00	Australia
Daewoo HANDELS GmbH	Trading business		—		100.00		100.00		—		100.00		100.00	Germany
POSCO Foundation	Non-profit charitable organization		—		100.00		100.00		—		100.00		100.00	India
EPC EQUITIES LLP	Construction		—		70.00		70.00		—		70.00		70.00	England
SANTOS CMI Construction Trading LLP	Construction		—		99.90		99.90		—		99.90		99.90	England
SANTOS CMI INC. USA	Construction		—		100.00		100.00		—		100.00		100.00	USA
SANTOS CMI ENGENHARIA E CONSTRUCOES LTDA	Construction		—		99.98		99.98		—		99.98		99.98	Brazil
SANTOS CMI PERU S.A.	Construction		—		99.99		99.99		—		99.99		99.99	Peru
SANTOS CMI COSTA RICA S.A.	Construction		—		100.00		100.00		—		100.00		100.00	Coasta Rica
SANTOS CMI CONSTRUCCIONES S.A. (URUGUAY)	Construction		—		100.00		100.00		—		100.00		100.00	Uruguay
GENTECH International INC.	Construction		—		90.00		90.00		—		90.00		90.00	Panama
EPC INVESTMENTS C.V.	Construction		—		99.99		99.99		—		99.99		99.99	Netherlands
INGENIERiA Y CONSTRUCCION HOLAND CO S.A.	Construction		—		99.90		99.90		—		99.90		99.90	Ecuador
ASESORiA Y SERVICIOS EPC S.A CHILE	Construction		—		99.00		99.00		—		99.00		99.00	Chile
SANTOS CMI S.A.	Construction		—		70.00		70.00		—		70.00		70.00	Ecuador
SANTOS CMI CONSTRUCCIONES DE CHILE S.A.	Construction		—		99.00		99.00		—		99.00		99.00	Chile
S&K -SANTOS CMI S.A. DE C.V. (MEXICO)	Construction		—		99.00		99.00		—		99.00		99.00	Mexico
COMPANIA DE AUTOMATIZACION & CONTROL, GENESYS S.A.	Construction		—		90.00		90.00		—		90.00		90.00	Mexico
VAUTIDAMERICAS S.A.	Construction		—		51.00		51.00		—		51.00		51.00	Ecuador
SANTOS CMI Constructions Argentina S.A.	Construction		—		95.00		95.00		—		95.00		95.00	Ecuador
POSCO E&C Brazil Ltd.	Construction		—		100.00		100.00		—		100.00		100.00	Argentina
POSCO Electrical Steel India Private Limited	Electrical Steel Manufacturing		100.00		—		100.00		100.00		—		100.00	Brazil
Daewoo International Cameroon PLC	Resource Development		—		100.00		100.00		—		100.00		100.00	India
POSCO ASSAN TST STEEL Industry	Resource Development		60.00		10.00		70.00		60.00		10.00		70.00	Cameroon
HONG KONG POSCO E&C (CHINA) Investment Co., Ltd.	Investment		—		100.00		100.00		—		100.00		100.00	Turkey
POSCO Klappan Coal Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	HongKong
DAESAN (Cambodia) Co., Ltd.	Investment		—		100.00		100.00		—		100.00		100.00	Canada
Brazil Sao Paulo Steel Processing Center Co., Ltd	Steel manufacturing		—		76.00		76.00		—		76.00		76.00	Cambodia
POSCO(Dalian) IT Center Development Co., Ltd.	Investment		—		100.00		100.00		—		100.00		100.00	Brazil
PT.POSCO Resources Indonesia	Mine development		100.00		—		100.00		100.00		—		100.00	China
PT. POSCO ICT Indonesia	IT service and Electric Control Engineering		—		100.00		100.00		—		100.00		100.00	Indonesia
PT. POSCO M-Tech Indonesia	Steel manufacturing		—		100.00		100.00		—		100.00		100.00	Indonesia
PT. KRAKATAU POSCOPOWER	manufacturing & management		—		90.00		90.00		—		70.00		70.00	Indonesia
POSCO RUS LLC.	Trading business		90.00		10.00		100.00		90.00		10.00		100.00	Indonesia
POSCO Thainox Co., Ltd.	Steel manufacturing		94.93		—		94.93		94.93		—		94.93	Russia
Daewoo International Shanghai Waigaoqiao Co., Ltd.	merchandising trade		—		100.00		100.00		—		100.00		100.00	Thailand
PT. Bio Inti Agrindo	Forest resources Development		—		85.00		85.00		—		85.00		85.00	Thailand
POSCO E&C Australia Pty Ltd.	Iron ore sales		—		100.00		100.00		—		100.00		100.00	China
POSCO-TISCO (Jilin) Processing Center Co., Ltd.	Steel manufacturing		50.00		10.00		60.00		73.53		14.71		88.24	Indonesia
Hunchun POSCO Logistics Co., Ltd.	Logistics		—		80.00		80.00		—		80.00		80.00	Australia
USA SRDC Corporaion	Scrap sale		—		100.00		100.00		—		100.00		100.00	China
Daewoo International Vietnam Co., Ltd.	Trading business		—		100.00		100.00		—		100.00		100.00	Vietnam
PT. Krakatau POSCO Chemtech Calcination	Manufacturing and sellings		—		80.00		80.00		—		—		—	Indonesia
Posco Africa	Trading business		100.00		—		100.00		—		—		—	South Africa

(*1) In 2011, this company was included as a subsidiary as the Company has the power over more than half of the voting rights by virtue of an agreement with Postech, which has 4.72% of ownership.

(*2) These subsidiaries are included in the consolidated financial statements as the controlling company has control over them in consideration of the board of directors’ composition and others.

14

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Summarized financial information of subsidiaries as of March 31, 2012 and December 31, 2011 are as follows:

1) As of and for the three-month period ended March 31, 2012

(in millions of Won)

Company	Assets		Liabilities		Equity		Sales		Net income (loss)
[Domestic]
POSCO E&C Co., Ltd.	(Won)	5,874,452		3,253,786		2,620,665		948,201		46,953
POSCO P&S Co., Ltd.		454,872		340,940		113,932		738,283		15,802
POSCO Coated & Color Steel Co., Ltd.		490,361		159,546		330,814		213,836		(6,981	)
POSCO Plant Engineering Co., Ltd.		147,630		60,878		86,752		119,121		(1,354	)
POSCO ICT Co., Ltd.		593,467		425,569		167,898		192,772		(653	)
POSCO Research Institute		26,267		4,315		21,953		7,555		455
Seoung Gwang Co., Ltd.		81,855		31,920		49,936		2,575		148
POSCO Architects & Consultants Co., Ltd.		72,834		22,201		50,632		33,728		(1,724	)
POSCO Specialty Steel Co., Ltd.		1,369,351		478,230		891,120		381,233		42,316
POSTECH Venture Capital Corp.		30,040		664		29,376		—		1
eNtoB Co., Ltd.		47,202		39,835		7,367		132,683		1,003
POSCO Chemtec Company Ltd. (formerly, POSCO Refractories & Environment Co., Ltd.)		384,991		98,453		286,538		324,867		18,824
POSCO Terminal Co., Ltd.		102,107		12,108		89,999		30,398		7,824
POSCO M-TECH Co., Ltd.		247,841		152,850		94,991		129,592		3,218
POSCO ENERGY Co., Ltd.		2,661,202		2,184,524		476,678		720,443		79,500
Postech 2006 Energy Fund		21,221		29		21,192		—		30
PHP Co., Ltd.		67,273		60,688		6,585		923		27
POSCO TMC Co., Ltd.		193,236		105,136		88,100		51,964		(1,105	)
PNR Co., Ltd.		140,617		121,406		19,211		16,414		1,426
Megaasset Co., Ltd.		20,391		6,763		13,628		4,137		1,314
POSCO Engineering Company		631,696		300,859		330,836		176,209		(12,771	)
Pohang Feul Cell Co. Ltd.		11,437		8,432		3,005		980		(236	)
Pohang SPFC Co., Ltd.		13,069		494		12,576		12,451		143
POSWITH Co., Ltd.		3,314		2,281		1,032		3,644		(80	)
BASYS INDUSTRY Co., Ltd.		745		241		504		15		(88	)
POSTECH BD Newundertaking fund		89		—		89		—		(1	)
POSBRO Co., Ltd.		116		—		116		—		(13	)
POSCO AST Co., Ltd.		338,874		158,059		180,816		101,936		541
POS-HiMETAL Co., Ltd.		295,618		278,138		17,479		32,249		(11,165	)
POSCO E&E Co., Ltd.		22,462		108		22,354		—		46
POMIC Co., Ltd.		2,337		2,224		113		4,128		(249	)
POSFINE Co., Ltd.		61,565		49,444		12,122		1,691		(2,121	)
POS ECO HOUSING Co., Ltd.		6,788		1,147		5,641		1,596		(456	)
Mapo high broad parking Co., Ltd.		1,598		9		1,588		—		(53	)
Dakos Co., Ltd.		536		123		413		75		(14	)
Kwang Yang SPFC Co., Ltd.		70,865		52,340		18,524		7,729		(1,789	)
POSCALCIUM Company, Ltd.		8,338		7,270		1,068		27		(337	)
Plant Engineering service Technology Co., Ltd.		1,856		568		1,288		1,806		45
9Digit Co., Ltd.		35,430		24,877		10,553		69,917		639
Postech Early Stage Fund		10,018		—		10,018		—		(14	)
Busan E&E Co., Ltd.		98,539		12,307		86,233		—		29
POSCO Family Strategy Funds		57,528		—		57,528		—		56
POREKA Co., Ltd.		21,816		20,903		913		15,054		1,116
Songdo SE Co., Ltd.		1,646		310		1,336		763		(35	)
Posgreen Co., Ltd.		7,046		3,210		3,837		894		100
Daewoo International Corporation		10,292,740		6,676,649		3,616,091		4,407,760		6,237
POSCOLED Co., Ltd.		26,245		7,460		18,785		4,642		(2,262	)
Gunsan SPFC Co., Ltd.		57,514		29,630		27,884		14,463		536
POSCO NST Co., Ltd.		162,010		77,745		84,264		65,037		(1,399	)
Pohang Scrap Recycling Center Co., Ltd.		17,462		2,673		14,788		1,155		291

15

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Domestic]
PSC energy global Co., Ltd.	(Won)	37,865		15		37,849			—		(780	)
Suncheon Ecotrans Co., Ltd.		23,574		1,703		21,871			—		(13	)
Shinan Energy Co., Ltd.		10,223		10		10,214			66		(12	)
Reco Metal Co., Ltd.		18,690		13,913		4,778			1,093		(764	)
NewAltec Co., Ltd.		126,093		13,712		112,380			26,364		701
PONUTech Co., Ltd.		141,616		92,006		49,610			8,415		(353	)
BLUE O&M Co., Ltd		962		5		957			—		(31	)
Tamra Offshore Wind Power Co., Ltd.		13,142		—		13,142			—		(262	)
POS-HiAL Co., Ltd		779		65		714			—		(286	)
[Foreign]
POSCO America Corporation		323,210		271,988		51,222			187,576		2,918
POSCO Australia Pty. Ltd.		849,916		457,931		391,985			28,909		21,358
POSCO Canada Ltd.		434,656		60,595		374,061			46,700		18,861
POSCO Asia Co., Ltd.		190,822		445,606		(254,785	)		667,333		16
Dalian POSCO Steel Co., Ltd		36,086		45,979		(9,893	)		13,014		(2,471	)
POSCO-CTPC Co., Ltd.		82,213		14,551		67,662			29,472		106
POSCO-JKPC Co., Ltd.		83,133		46,163		36,970			28,686		1,902
International Business Center Corporation		92,422		38,375		54,047			6,184		3,007
POSCO E&C Vietnam Co., Ltd.		84,646		69,641		15,005			32,857		1,526
Zhangjiagang Pohang Stainless Steel Co., Ltd.		1,290,833		951,982		338,851			746,993		(32,606	)
Guangdong Pohang Coated Steel Co., Ltd.		410,717		144,845		265,872			53,441		(1,647	)
POSCO (Thailand) Company Ltd.		149,211		55,860		93,350			77,815		2,840
Myanmar POSCO Steel Co., Ltd		25,944		5,536		20,408			7,186		1,027
POSCO-JOPC Co., Ltd.		71,991		22,983		49,008			24,494		406
POSCO Investment Co., Ltd.		212,660		642,477		(429,817	)		3,332		1,121
POSCO-MKPC SDN BHD.		169,028		107,641		61,388			56,797		296
Qingdao Pohang Stainless Steel Co., Ltd.		238,114		49,165		188,949			148,835		(4,897	)
POSCO (Suzhou) Automotive Processing Center Co., Ltd.		280,457		122,537		157,920			103,204		1,905
POSCO BioVentures L.P.		15,947		—		15,947			—		(4	)
PT. POSNESIA		13,936		24		13,912			—		(8	)
POSCO E&C - Hawaii Inc.		474		2		472			—		27
POS-Qingdao Coil Center Co., Ltd.		49,728		16,699		33,029			23,839		(245	)
POS-Ore Pty. Ltd.		59,018		87,268		(28,250	)		43,609		19,099
POSCO-China Holding Corp.		206,833		174,978		31,855			40,283		279
POSCO-Japan Co., Ltd.		714,482		811,753		(97,271	)		398,268		(8,981	)
POS-CD Pty. Ltd.		74,247		11,399		62,848			6,917		(189	)
POS-GC Pty. Ltd.		83,730		11,482		72,248			4,209		(3,489	)
POSCO-India Private Ltd.		132,328		1,464		130,863			—		(1,107	)
POSCO-India Pune Steel Processing Centre Pvt. Ltd.		155,702		113,808		41,894			53,439		5,206
POSCO-JEPC Co., Ltd. (formerly, POSCO-JNPC Co., Ltd.)		241,306		79,915		161,392			96,964		4,721
POSCO-Foshan Steel Processing Center Co., Ltd.		193,663		69,312		124,351			114,882		37
POSCO E&C (China) Co., Ltd.		105,835		71,184		34,651			30,442		1,732
POSCO MPC S.A. de C.V.		201,438		110,256		91,183			87,459		(469	)
Zhangjigang Pohang Port Co., Ltd.		25,710		10,633		15,078			1,505		(208	)
Qingdao Pujin Steel Material Co., Ltd		13,065		7,216		5,849			13,537		(95	)
POSCO-Vietnam Co., Ltd.		636,413		384,648		251,764			185,658		(4,802	)
POSCO-Mexico Co., Ltd.		550,348		194,738		355,610			101,426		(5,888	)
POSCO-India Delhi Steel Processing Centre Pvt. Ltd		100,384		67,265		33,119			38,822		3,462
POSCO-Poland Wroclaw Steel Processing Center Co., Ltd		56,646		35,532		21,115			24,188		2,555

16

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Foreign]
POS-NP Pty. Ltd.	(Won)	62,613		13,222		49,391			10,072		880
POSCO-Vietnam Processing Center Co., Ltd.		71,284		14,522		56,761			23,561		262
POSCO (Chongqing) Automotive Processing Center Co, Ltd.		72,869		41,039		31,830			14,994		(379	)
Suzhou POS-CORE Technology Co., Ltd.		62,810		15,587		47,223			27,618		429
POSCO-Malaysia SDN. BHD.		77,654		45,368		32,285			42,749		582
POS-Minerals Corporation		112,144		—		112,144			—		(22	)
POSCO (Wuhu) Automotive Processing Center Co., Ltd.		58,965		29,855		29,111			18,855		(425	)
POSCO E&C India Private Ltd.		31,171		39,794		(8,623	)		12,891		1,245
POSCO E&C SMART		5,142		239		4,902			7,243		326
POSCO-Phillippine Manila Processing Center Inc.		25,912		2,699		23,213			9,444		74
Dalian POSCON Dongbang Automatic Co., Ltd.		8,123		3,015		5,108			654		67
SANPU TRADING CO., LTD.		1,837		8		1,828			23		13
Zhangjiagang BLZ Pohang International Trading Co., Ltd.		8,876		53		8,823			12,348		43
POSCO Mexico Human Tech.		571		432		138			1,456		(68	)
POSCO Mexico East Steel Distribution Center Co., Ltd		13,325		404		12,921			1,302		(26	)
POSCO ICT-China		1,729		1,566		163			1,034		(144	)
DWEMEX S.A.DE C.V.		231		63		167			—		(8	)
POS MPC Servicios de C.V.		76		539		(463	)		1,378		18
EUROTALY S.A.		16,375		189		16,187			—		(278	)
POSCO South East Asia Pte. Ltd.		10,685		1,624		9,061			22,530		126
Europe Steel Distribution Center		7,373		1,517		5,856			3,135		63
VECTUS Ltd.		4,605		3,867		738			997		(339	)
POSCO VST Co., Ltd.		418,126		154,080		264,046			64,224		(3,512	)
POSCO Maharashtra Steel Pvt. Ltd.		403,591		179,994		223,597			8		(19,273	)
POSCO India Chennai Steel Processing Centre Pvt. Ltd.		101,472		78,204		23,268			42,063		2,163
POSCO Turkey Nilufer Processing Center Co., Ltd.		46,346		5,328		41,018			10,218		1,491
POSCO Vietnam Ha Noi Processing Center Co., Ltd.		52,241		5,054		47,187			20,002		166
POSCO (Liaoning) Automotive Processing Center Co., Ltd.		80,964		21,839		59,126			26,738		213
POSCO-Indonesia Jakarta Processing Center		53,741		6,496		47,244			20,894		(943	)
POSCO E&C Venezuela C.A		136		—		136			—		—
PT. MRI		11,460		3,288		8,172			42		(289	)
POSCORE-INDIA		10,690		1,504		9,186			4,595		—
POSCO America Alabama Processing Center Co., Ltd.		56,579		37,657		18,921			24,403		(418	)
PT DEC Indonesia		4,373		4,608		(235	)		70		(65	)
POSCO (Yantai) Automotive Processing Center Co., Ltd.		34,448		3,954		30,494			13,360		(9	)
POSCO India Steel Distribution Center Private Ltd.		5,037		854		4,183			71		(33	)
POSCO China Dalian Plate Processing Center Co., Ltd.		74,890		6,683		68,206			13,179		(2,141	)
POSCO-South Asia Co., Ltd.		9,270		126		9,144			1,478		(620	)
POSCO SS-VINA Co., LTD		73,302		51		73,251			—		(504	)
POSCO WA Pty. Ltd.		221,321		14		221,307			—		(10,792	)
POSCO E&C - UZ		4,533		4,045		488			467		173
POSCO Australia GP Limited		85,788		5		85,783			—		(39,710	)
Daewoo International America Corp.		271,775		12,877		258,898			206,242		758
Daewoo International Deutschland GmbH		111,200		9,561		101,639			71,505		452

17

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Foreign]
Daewoo International Japan Corp.		(Won) 243,202		100,819		142,383			217,279		396
Daewoo International Singapore Pte. Ltd.		54,059		4,034		50,025			132,934		39
Daewoo Italia S.r.l.		80,175		892		79,283			72,777		65
Daewoo Cement (Shandong) Co., Ltd.		305,772		227,672		78,100			18,961		(6,138	)
Daewoo (China) Co., Ltd.		103,838		105,876		(2,039	)		19,241		347
PT. RISMAR Daewoo Apparel		21,007		9,269		11,738			18,776		328
Daewoo Textile Fergana LLC		95,922		57,745		38,177			32,284		(584	)
Daewoo Textile Bukhara LLC		48,289		40,265		8,024			11,680		(1,263	)
Daewoo International Australia Holdings Pty. Ltd.		137,082		13,923		123,159			674		(182	)
Daewoo Paper Manufacturing Co., Ltd.		64,021		46,695		17,326			15,387		(1,245	)
Tianjin Daewoo. Paper Co., Ltd		14,423		10,325		4,098			—		—
POSCO Mauritius Ltd.		24,657		2		24,654			—		—
PT. KRAKATAU STEEL POSCO		761,417		82,256		679,161			—		(662	)
MYANMAR Daewoo LTD.		5,873		135		5,737			273		7
Dawwoo International MEXICO S.A. de C.V.		58,487		43,328		15,158			76,742		1,099
Daewoo International Guangzhou Corp.		21,210		1,030		20,181			13,904		(431	)
Daewoo Energy Central Asia		15,044		—		15,044			—		—
Daewoo STC & Apparel Vietnam Ltd.		3,896		672		3,224			1,726		(157	)
MYANMAR Daewoo International Ltd.		9,511		178		9,333			2,620		281
POSCO (Zhangjiagang) Stainless Steel Processing Center Co., Ltd.		48,244		12,500		35,744			65,895		54
Daewoo International Corporation (M) SDN BHD		12,861		1,202		11,659			1,774		26
Daewoo International SHANGHAI CO., LTD.		44,159		33,637		10,521			37,702		304
PGSF, LLC		4,335		2		4,333			—		(607	)
Xenesys Inc.		11,020		236		10,783			558		(659	)
Daewoo International INDIA Private Ltd.		1,540		61		1,480			409		(229	)
TECHREN Solar, LLC		6,820		—		6,820			—		(582	)
PT. POSCO E&C Indonesia		44,786		64,097		(19,311	)		32,544		1,028
Hume Coal Pty. Ltd.		28,658		733		27,924			—		(115	)
POSCO Foundation		217		2		214			—		1
EPC EQUITIES LLP		48,977		3,686		45,291			—		(195	)
SANTOS CMI Construction Trading LLP		2,120		3,924		(1,804	)		—		(697	)
SANTOS CMI INC. USA		23,219		30,659		(7,440	)		7,299		733
SANTOS CMI ENGENHARIA E CONSTRUCOES LTDA		17,057		3,980		13,077			1,336		(2,280	)
SANTOS CMI PERU S.A.		45,808		38,879		6,929			24,509		1,379
SANTOS CMI COSTA RICA S.A.		11,864		346		11,519			—		—
SANTOS CMI CONSTRUCCIONES S.A. (URUGUAY)		121		2		119			—		1
GENTECH International INC.		297		306		(8	)		21		(280	)
INGENIERiA Y CONSTRUCCION HOLAND CO S.A.		10		1		8			—		(1	)
ASESORiA Y SERVICIOS EPC S.A CHILE		275		104		171			494		216
SANTOS CMI S.A.		43,997		26,681		17,317			10,227		40
SANTOS CMI CONSTRUCCIONES DE CHILE S.A.		5,530		3,868		1,662			468		(149	)
S&K -SANTOS CMI S.A. DE C.V. (MEXICO)		123		1		122			74		(18	)
COMPANIA DE AUTOMATIZACION & CONTROL, GENESYS S.A.		8,347		5,817		2,530			5,529		427

18

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Foreign]
VAUTIDAMERICAS S.A.	(Won)	3,226		1,061		2,165			337		(72	)
SANTOS CMI Constructions Argentina S.A.		81		14		68			—		11
POSCO E&C Brazil Ltd.		410,041		406,283		3,758			474		421
POSCO Electrical Steel Inida Private Limited		40,679		3,858		36,821			—		(196	)
Daewoo International Cameroon PLC		1,217		—		1,217			—		—
POSCO ASSAN TST STEEL Industry		141,380		2,968		138,412			—		(2,585	)
HONG KONG POSCO E&C (CHINA) Investment Co., Ltd.		13,679		174,736		(161,057	)		—		(5,454	)
DAESAN (Cambodia) Co., Ltd.		21,488		1,778		19,710			—		(3	)
Brazil Sao Paulo Steel Processing Center Co., Ltd		27,254		—		27,254			—		—
POSCO (Dalian) IT Center Development Co., Ltd.		153,097		424		152,673			—		(565	)
PT. POSCO Resources Indonesia		3,656		9		3,647			—		(217	)
PT. POSCO ICT Indonesia		2,170		159		2,011			—		(203	)
PT. POSCO M-Tech Indonesia		3,575		1,365		2,211			1,274		7
PT. KRAKATAU POSCOPOWER		54,213		201		54,012			—		(121	)
POSCO RUS LLC.		3,643		68		3,575			290		(319	)
POSCO Thainox Co., Ltd.		773,454		66,495		706,960			128,454		(7,492	)
Daewoo International Shanghai Waigaoqiao Co., Ltd.		9,646		12,909		(3,264	)		26,355		66
PT. Bio Inti Agrindo		35,321		8,781		26,540			—		284
POSCO E&C Australia Pty Ltd.		3,259		1,360		1,898			3,476		2,167
POSCO-TISCO (Jilin) Processing Center Co., Ltd.		18,270		104		18,166			—		(254	)
Hunchun POSCO Logistics Co., Ltd.		23,345		8		23,337			—		(112	)
USA SRDC Corporaion		307		—		307			—		—
Daewoo International Vietnam Co., Ltd.		4,382		26		4,356			544		55
PT. Krakatau POSCO Chemtech		9,271		25		9,246			—		56
Posco Africa		5,504		1		5,502			—		(177	)

19

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) As of and for the year ended December 31, 2011

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Domestic]
POSCO E&C Co., Ltd.	(Won)	6,819,542		4,260,627		2,558,915			6,142,026		109,921
POSCO P&S Co., Ltd.		1,017,070		472,175		544,895			3,141,999		19,234
POSCO Coated & Color Steel Co., Ltd.		521,471		297,947		223,524			956,179		(24,713	)
POSCO Plant Engineering Co., Ltd.		208,084		117,629		90,455			597,508		6,758
POSCO ICT Co., Ltd.		687,657		446,640		241,017			983,649		30,578
POSCO Research Institute		29,320		6,304		23,016			30,844		216
Seoung Gwang Co., Ltd.		82,671		34,868		47,803			14,652		2,522
POSCO Architects & Consultants Co., Ltd.		93,268		40,458		52,810			196,794		7,236
POSCO Specialty Steel Co., Ltd.		1,582,832		691,581		891,251			1,662,896		127,573
POSTECH Venture Capital Corp.		34,222		1,094		33,128			—		1,041
eNtoB Co., Ltd.		99,382		69,607		29,775			634,830		1,249
POSCO Chemtec Company Ltd. (formerly, POSCO Refractories & Environment Co., Ltd.)		479,615		152,416		327,199			1,186,623		92,391
POSCO Terminal Co., Ltd.		96,806		15,145		81,661			100,710		22,955
POSCO M-TECH Co., Ltd.		316,953		153,876		163,077			602,155		12,447
POSCO ENERGY Co., Ltd.		2,891,382		2,327,398		563,984			1,863,670		25,152
Postech 2006 Energy Fund		21,662		1,042		20,620			—		(202	)
PHP Co., Ltd.		66,461		58,521		7,940			4,456		483
POSCO TMC Co., Ltd.		204,738		113,595		91,143			219,580		5,746
PNR Co., Ltd.		159,076		129,198		29,878			74,013		13,366
Megaasset Co., Ltd.		23,757		9,354		14,403			63,667		5,794
POSCO Engineering Company (formerly Daewoo Engineering Company)		508,290		341,946		166,344			980,340		3,225
Pohang Feul Cell Co. Ltd.		12,061		8,592		3,469			2,235		(286	)
Pohang SPFC Co., Ltd.		10,021		4,221		5,800			38,117		1,170
POSWITH Co., Ltd.		5,129		2,460		2,669			13,745		151
BASYS INDUSTRY Co., Ltd.		967		266		701			2,500		369
POSTECH BD Newundertaking fund		90		—		90			—		(1	)
POSBRO Co., Ltd.		126		—		126			—		(54	)
POSCO AST Co., Ltd.		316,695		163,548		153,147			365,682		4,972
DaiMyung TMS Co., Ltd.		28,350		52,497		(24,147	)		6,265		(3,695	)
POS-HiMETAL Co., Ltd.		309,369		268,788		40,581			34,682		(28,857	)
POSCO E&E Co., Ltd.		22,435		127		22,308			—		508
POMIC Co., Ltd.		4,411		2,431		1,980			21,111		317
POSFINE Co., Ltd.		62,775		48,146		14,629			2,285		(3,847	)
POS ECO HOUSING Co., Ltd.		8,190		1,846		6,344			13,629		265
Mapo high broad parking Co., Ltd.		1,676		110		1,566			—		(355	)
Dakos Co., Ltd.		783		321		462			225		(58	)
Kwang Yang SPFC Co., Ltd.		68,279		52,806		15,473			4,686		(2,156	)
POSCALCIUM Company, Ltd.		8,403		7,004		1,399			106		(1,353	)
Plant Engineering service Technology Co., Ltd.		2,327		500		1,827			6,259		354
9Digit Co., Ltd.		33,820		27,091		6,729			58,341		(308	)
Postech Early Stage Fund		10,034		65		9,969			—		(31	)
Busan E&E Co., Ltd.		44,731		1,687		43,044			—		127
POSCO Family Strategy Funds		57,678		250		57,428			—		290
POREKA Co., Ltd.		15,131		12,880		2,251			20,785		1,158
Songdo SE Co., Ltd.		1,652		282		1,370			2,761		77
Posgreen Co., Ltd.		8,225		4,280		3,945			2,944		(33	)
Daewoo International Corporation		7,823,738		6,302,994		1,520,744			18,758,511		160,088
POSCOLED Co., Ltd.		28,717		5,917		22,800			14,063		(5,355	)
Gunsan SPFC Co., Ltd.		51,483		30,673		20,810			53,797		(236	)
POSCO NST Co., Ltd.		158,470		121,493		36,977			202,334		(803	)
Pohang Scrap Recycling Center Co., Ltd.		17,842		2,863		14,979			1,748		143

20

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Domestic]
PSC energy global Co., Ltd.	(Won)	38,780		—		38,780			—		(1,595	)
Suncheon Ecotrans Co., Ltd.		25,526		2,878		22,648			—		48
Shinan Energy Co., Ltd.		8,494		—		8,494			—		(56	)
Reco Metal Co., Ltd.		15,043		13,280		1,763			6,761		(2,658	)
NewAltec Co., Ltd.		114,744		17,171		97,573			92,849		638
PONUTech Co., Ltd.		9,919		182		9,737			—		(263	)
BLUE O&M Co., Ltd		988		—		988			—		(12	)
[Foreign]
POSCO America Corporation		416,078		223,968		192,110			419,258		8,866
POSCO Australia Pty. Ltd.		1,161,366		462,383		698,983			136,144		283,875
POSCO Canada Ltd.		565,424		82,867		482,557			304,274		133,660
POSCAN Elkveiw Coal Ltd.		—		—		—			—		—
POSCO Asia Co., Ltd.		540,685		504,059		36,626			2,968,097		6,523
Dalian POSCO Steel Co., Ltd		49,104		58,254		(9,150	)		90,990		(8,711	)
POSCO-CTPC Co., Ltd.		84,966		52,546		32,420			134,930		1,320
POSCO-JKPC Co., Ltd.		93,668		75,512		18,156			87,203		1,405
International Business Center Corporation		90,577		51,831		38,746			25,889		11,655
POSCO E&C Vietnam Co., Ltd.		77,583		77,679		(96	)		114,350		6,670
Zhangjiagang Pohang Stainless Steel Co., Ltd.		1,569,551		986,798		582,753			2,808,722		4,444
Guangdong Pohang Coated Steel Co., Ltd.		394,452		163,785		230,667			275,521		(7,849	)
POSCO (Thailand) Company Ltd.		140,260		98,044		42,216			231,144		1,227
Myanmar POSCO Steel Co., Ltd		27,519		9,580		17,939			30,967		5,885
POSCO-JOPC Co., Ltd.		80,896		76,118		4,778			92,296		768
POSCO Investment Co., Ltd.		787,069		688,482		98,587			10,792		10,509
POSCO-MKPC SDN BHD.		165,789		116,928		48,861			177,822		1,763
Qingdao Pohang Stainless Steel Co., Ltd.		268,411		155,877		112,534			615,532		(3,110	)
POSCO (Suzhou) Automotive Processing Center Co., Ltd.		305,690		220,468		85,222			384,705		11,046
POSCO BioVentures L.P.		16,851		—		16,851			—		(4,226	)
PT. POSNESIA		14,129		20		14,109			—		(28	)
POSCO E&C - Hawaii Inc.		914		503		411			—		(304	)
POS-Qingdao Coil Center Co., Ltd.		56,062		40,314		15,748			117,470		65
POS-Ore Pty. Ltd.		75,312		66,851		8,461			250,347		132,737
POSCO-China Holding Corp.		427,447		160,423		267,024			173,639		3,617
POSCO-Japan Co., Ltd.		1,157,755		1,017,990		139,765			1,686,385		13,518
POS-CD Pty. Ltd.		72,582		68,030		4,552			22,575		557
POS-GC Pty. Ltd.		79,517		32,397		47,120			10,263		(4,344	)
POSCO-India Private Ltd.		147,359		421		146,938			—		(1,034	)
POSCO-India Pune Steel Processing Centre Pvt. Ltd.		168,309		145,655		22,654			211,417		(16,626	)
POSCO-JNPC Co., Ltd.		192,177		176,268		15,909			207,654		716
POSCO-Foshan Steel Processing Center Co.,Ltd.		178,488		135,213		43,275			529,788		227
POSCO E&C (China) Co., Ltd.		120,135		82,361		37,774			104,055		1,898
POSCO MPC S.A. de C.V.		192,538		182,180		10,358			316,446		(6,587	)
Zhangjigang Pohang Port Co., Ltd.		26,801		11,327		15,474			6,244		222
Qingdao Pujin Steel Material Co., Ltd		14,209		11,997		2,212			79,732		13
POSCO-Vietnam Co., Ltd.		659,931		576,657		83,274			962,490		(46,976	)
POSCO-Mexico Co., Ltd.		488,782		422,155		66,627			396,897		(43,298	)
POSCO-India Delhi Steel Processing Centre Pvt. Ltd		85,349		75,582		9,767			129,434		(9,824	)
POSCO-Poland Wroclaw Steel Processing Center Co., Ltd		62,709		49,981		12,728			71,871		(1,483	)

21

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)
Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Foreign]
POS-NP Pty. Ltd.	(Won)	57,890		15,003		42,887			48,404		9,480
POSCO-Vietnam Processing Center Co., Ltd.		71,203		50,417		20,786			159,369		26
POSCO (Chongqing) Automotive Processing Center Co, Ltd.		69,253		59,468		9,785			62,795		(1,622	)
Suzhou POS-CORE Technology Co., Ltd.		60,082		33,980		26,102			96,008		781
POSCO-JYPC Co., Ltd.		67,587		64,165		3,422			102,700		781
POSCO-Malaysia SDN. BHD.		88,635		112,566		(23,931	)		140,709		(4,114	)
POS-Minerals Corporation		113,694		—		113,694			—		(808	)
POSCO (Wuhu) Automotive Processing Center Co., Ltd.		69,613		45,766		23,847			92,554		618
POSCO E&C India Private Ltd.		35,982		31,304		4,678			4,966		1,135
POSCO E&C SMART		4,670		4,034		636			4,421		135
POSCO-Phillippine Manila Processing Center Inc.		27,412		17,492		9,920			45,680		266
Dalian POSCON Dongbang Automatic Co., Ltd.		8,083		2,996		5,087			5,104		382
SANPU TRADING CO., LTD.		1,842		5		1,837			73		3
Zhangjiagang BLZ Pohang International Trading Co., Ltd.		15,720		10,881		4,839			100,833		116
POSCO Mexico Human Tech.		787		481		306			5,378		221
POSCO Mexico East Steel Distribution Center Co., Ltd		13,186		1,353		11,833			5,638		110
POSCO Gulf Logistics LLC.		—		—		—			—		—
POSCO ICT-China		1,737		1,294		443			4,920		114
DWEMEX S.A.DE C.V.		226		62		164			2		(29	)
POS MPC Servicios de C.V.		667		458		209			4,902		90
EUROTALY S.A.		16,733		127		16,606			24		(898	)
POSCO South East Asia Pte. Ltd.		5,232		2,633		2,599			62,235		256
Europe Steel Distribution Center		6,775		991		5,784			13,354		322
VECTUS Ltd.		3,066		5,126		(2,060	)		3,560		(1,530	)
Zeus(Cayman)		—		—		—			—		—
POSCO VST Co., Ltd.		356,484		268,005		88,479			264,616		(10,669	)
POSCO Maharashtra Steel Pvt. Ltd.		372,434		149,442		222,992			44		2,036
POSCO India Chennai Steel Processing Centre Pvt. Ltd.		89,782		80,514		9,268			134,409		(3,232	)
POSCO Turkey Nilufer Processing Center Co., Ltd.		49,588		40,578		9,010			38,729		(3,971	)
POSCO Vietnam Ha Noi Processing Center Co., Ltd.		47,931		40,500		7,431			55,239		902
POSCO (Liaoning) Automotive Processing Center Co., Ltd.		84,315		61,131		23,184			117,395		3,267
POSCO-Indonesia Jakarta Processing Center		62,550		55,069		7,481			64,597		216
POSCO E&C Venezuela C.A		138		—		138			—		—
PT. MRI		12,251		17,626		(5,375	)		458		(3,854	)
POSCORE-INDIA		10,917		8,446		2,471			15,186		(48	)
POSCO America Alabama Processing Center Co., Ltd.		63,014		50,007		13,007			85,381		(858	)
PT DEC Indonesia		4,577		4,752		(175	)		13,962		(267	)
POSCO (Yantai) Automotive Processing Center Co., Ltd.		40,586		24,355		16,231			32,301		172
POSCO India Steel Distribution Center Private Ltd.		5,224		2,204		3,020			786		(427	)
POSCO China Dalian Plate Processing Center Co., Ltd.		106,525		65,888		40,637			66,113		(165	)
POSCO-South Asia Co., Ltd.		13,703		199		13,504			8,015		1,039
POSCO SS-VINA Co., LTD		74,438		409		74,029			—		(1,122	)
POSCO-NCR Coal Ltd.		—		—		—			—		—
POSCO WA Pty. Ltd.		212,984		9		212,975			—		(33,142	)
POSCO E&C - UZ		2,279		1,789		490			2,046		104
POSCO Australia GP Limited		97,196		5		97,191			—		(8	)
Daewoo International America Corp.		283,653		241,259		42,394			984,378		5,372
Daewoo International Deutschland GmbH		115,256		105,288		9,968			482,585		314

22

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)
Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Foreign]
Daewoo International Japan Corp.	(Won)	245,086		236,533		8,553			804,864		981
Daewoo International Singapore Pte. Ltd.		43,647		38,982		4,665			902,315		481
Daewoo Italia S.r.l.		63,859		60,247		3,612			361,821		145
Daewoo Cement (Shandong) Co., Ltd.		221,807		291,000		(69,193	)		133,502		20,361
Daewoo (China) Co., Ltd.		150,079		101,449		48,630			54,521		726
PT. RISMAR Daewoo Apparel		17,767		18,417		(650	)		58,182		1,246
Daewoo Textile Fergana LLC		64,437		65,968		(1,531	)		132,866		(11,994	)
Daewoo Textile Bukhara LLC		51,939		49,630		2,309			51,312		(11,500	)
Daewoo International Australia Holdings Pty. Ltd.		151,462		12,964		138,498			1,935		199
Daewoo Paper Manufacturing Co., Ltd.		76,855		72,385		4,470			76,632		(5,210	)
Tianjin Daewoo. Paper Co., Ltd		14,589		33,029		(18,440	)		—		—
POSCO Mauritius Ltd.		24,648		2,839		21,809			—		(22	)
PT. KRAKATAU STEEL POSCO		819,899		44,918		774,981			—		(2,385	)
MYANMAR Daewoo LTD.		6,030		41		5,989			1,373		152
Dawwoo International MEXICO S.A. de C.V.		68,030		64,189		3,841			240,448		299
Daewoo International Guangzhou Corp.		7,666		7,473		193			61,554		(1,265	)
Daewoo Energy Central Asia		15,571		322		15,249			—		—
Daewoo STC & Apparel Vietnam Ltd.		3,848		1,313		2,535			9,435		94
MYANMAR Daewoo International Ltd.		7,651		2,240		5,411			11,947		759
DAYTEK ELECTRONICS CORP.		—		—		—			—		—
Daewoo (M) SDN. BHD.		—		—		—			—		—
Daewoo CANADA LTD.		—		—		—			—		—
Daewoo EL SALVADOR S.A. DE C.V.		—		—		—			—		—
GEZIRA TANNERY CO., LTD.		—		—		—			—		—
POSCO (Zhangjiagang) Stainless Steel Processing Center Co., Ltd.		63,505		51,088		12,417			67,175		15
Daewoo International Corporation (M) SDN BHD		8,831		6,469		2,362			21,190		157
Daewoo International SHANGHAI CO., LTD.		63,694		52,656		11,038			91,541		1,286
PGSF, LLC		3,138		1		3,137			—		280
Xenesys Inc.		11,804		240		11,564			2,494		(3,865	)
Daewoo International INDIA Private Ltd.		3,285		1,277		2,008			3,343		69
TECHREN Solar, LLC		5,184		—		5,184			—		(506	)
PT. POSCO E&C Indonesia		37,495		34,094		3,401			46,665		2,114
Hume Coal Pty. Ltd.		24,316		2,499		21,817			—		(9	)
Daewoo HANDELS GmbH		—		—		—			—		—
POSCO Foundation		213		3		210			—		3
EPC EQUITIES LLP		11,391		11,283		108			438		(2,743	)
SANTOS CMI Construction Trading LLP		13,851		13,742		109			2,750		(1,323	)
SANTOS CMI INC. USA		23,418		22,260		1,158			11,604		(155	)
SANTOS CMI ENGENHARIA E CONSTRUCOES LTDA		18,771		9,381		9,390			14,823		7,484
SANTOS CMI PERU S.A.		26,074		20,500		5,574			59,091		4,779
SANTOS CMI COSTA RICA S.A.		11,856		11,480		376			1,228		(1,794	)
SANTOS CMI CONSTRUCCIONES S.A. (URUGUAY)		122		73		49			—		(9	)
GENTECH International INC.		1,595		1,166		429			1,800		728
EPC INVESTMENTS C.V.		115		18		97			—		(6	)
INGENIERiA Y CONSTRUCCION HOLAND CO S.A.		115		2		113			—		(2	)
ASESORiA Y SERVICIOS EPC S.A CHILE		468		285		183			635		88
SANTOS CMI S.A.		42,766		30,495		12,271			34,879		(5,430	)
SANTOS CMI CONSTRUCCIONES DE CHILE S.A.		8,430		2,669		5,761			13,009		1,703
S&K -SANTOS CMI S.A. DE C.V. (MEXICO)		125		14		111			203		(208	)
COMPANIA DE AUTOMATIZACION & CONTROL, GENESYS S.A.		10,982		8,392		2,590			14,588		923

23

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)

Company	Assets		Liabilities		Equity			Sales		Net income (loss)
[Foreign]
VAUTIDAMERICAS S.A.	(Won)	2,374		1,620		754			1,765		141
SANTOS CMI Constructions Argentina S.A.		82		46		36			—		1
POSCO E&C Brazil Ltd.		87,817		87,284		533			6,200		(465	)
POSCO Electrical Steel India Private Limited		26,448		138		26,310			—		346
Daewoo International Cameroon PLC		1,233		—		1,233			—		—
POSCO ASSAN TST STEEL Industry		59,415		1,897		57,518			—		1,724
HONG KONG POSCO E&C (CHINA) Investment Co., Ltd.		171,127		174,814		(3,687	)		—		(3,466	)
POSCO Klappan Coal Ltd.		—		—		—			—		—
DAESAN (Cambodia) Co., Ltd.		30,145		35,652		(5,507	)		—		(946	)
Brazil Sao Paulo Steel Processing Center Co., Ltd		26,987		—		26,987			—		—
POSCO(Dalian) IT Center Development Co., Ltd.		152,725		1,271		151,454			—		(1,464	)
PT.POSCO Resources Indonesia		4,048		92		3,956			—		(415	)
PT. POSCO ICT Indonesia		3,480		2,661		819			—		(80	)
PT. POSCO M-Tech Indonesia		2,865		149		2,716			3,329		61
PT. KRAKATAU POSCOPOWER		45,041		42,874		2,167			—		(134	)
POSCO RUS LLC.		3,639		5		3,634			—		(273	)
POSCO Thainox Co., Ltd.		500,214		164,464		335,750			401,257		(22,466	)
Daewoo International Shanghai Waigaoqiao Co., Ltd.		13,804		13,256		548			22,354		343
PT. Bio Inti Agrindo		18,900		9,714		9,186			—		(1,486	)
POSCO E&C Australia Pty Ltd.		381		624		(243	)		—		(237	)
POSCO-TISCO (Jilin) Processing Center Co., Ltd.		12,587		12		12,575			—		(375	)
Hunchun POSCO Logistics Co., Ltd.		23,725		7		23,718			—		(229	)
USA SRDC Corporaion		311		—		311			—		—
Daewoo International Vietnam Co., Ltd.		4,613		—		4,613			—		—

24

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) Details of associates

Details of associates as of March 31, 2012 and December 31, 2011 are as follows:

		Ownership (%)
Investee	Category of Business	March 31, 2012		December 31, 2011		Region
[Domestic]
MIDAS Information Technology Co., Ltd.	Engineering		22.20		25.46	Seoul
Metapolis Co., Ltd.	Multiplex development		40.05		40.05	Hwaseong
Songdo New City Development Inc.	Real estate		29.90		29.90	Seoul
POSMATE Co., Ltd.	Services		30.00		30.00	Seoul
Gail International Korea Ltd.	Real estate		29.90		29.90	Seoul
SNNC Co., Ltd.	Raw material manufacturing and sale		49.00		49.00	Gwangyang
CHUNGJU ENTERPRISE CITY	Real estate		25.10		25.10	Chungju
Taegisan Wind Power Corporation	Wind power plant construction and management		50.00		50.00	Hoengseong
KOREASOLARPARK Co., Ltd.	Solar power plant construction and management		37.50		37.50	Youngam
Garolim Tidal Power Plant Co., Ltd.	Generation of electricity		32.13		32.13	Seosan
Cheongna IBT Co., Ltd. (*4)	Multiplex development		18.58		18.58	Incheon
PSIB Co., Ltd.	Non-resident building lease		49.00		49.00	Seoul
Universal Studios Resort Development Co., Ltd. (*3)	Construction		15.01		22.10	Hwaseong
Universal Studios Resort Asset Management Corp.	Real estate services		26.16		26.16	Seoul
Daewoo national car Gwangju selling Co., Ltd.	Real estate		50.00		50.00	Gwangju
Uitrans Co., Ltd.	Transporting		41.89		38.19	Seoul
Suwon Green Environment Co., Ltd.	Construction		27.50		27.50	Hwaseong
Pajoo & Viro Co., Ltd.	Construction		40.00		40.00	Paju
Green Gimpo Co., Ltd.	Construction		31.84		31.84	Gimpo
Busan-Gimhae Light Rail Transit Co., Ltd.	Transporting		25.00		25.00	Gimhae
Incheon-Gimpo Highway Co., Ltd.	Construction		25.82		25.82	Anyang
Green Jangryang Co., Ltd.	Sewerage treatment		25.00		25.00	Pohang
Green Tongyeong Enviro Co., Ltd.	Sewerage treatment		20.40		20.40	Tongyoung
POSPLATE Co., Ltd.	Services		48.95		48.95	Gwangyang
Pure Gimpo.Co., Ltd.	Construction		28.79		28.79	Seoul
Pohang Techno Valley AMC Co., Ltd.	Construction		29.50		29.50	Pohang
Sungjin Geotec Co., Ltd.	Industrial machinery manufacturing		33.02		36.69	Ulsan
Kyobo Life Insurance Co., Ltd.	Life insurance		24.00		24.00	Seoul
Dongbang Special Steel Co., Ltd.	Steel processing and sales		35.82		35.82	Pohang
Pure Iksan Co., Ltd.	Construction		23.50		23.50	Pohang
Gyeonggi CES Co., Ltd.	Facility construction		21.84		21.84	Yangju
Innovalley Co., Ltd.	Real estate developement		28.77		28.77	Yongin
Applied Science Corp.	Machinery manufacturing		28.27		29.30	Paju
SENTECH KOREA Corp.	Manufacturing		20.25		20.25	Paju
AROMA POSTECH RENEWABLE ENERGY Co., Ltd.	Other science research		28.57		28.57	Seoul
Hyundai Investment Network Private Equity Fund	Mine investment		50.00		50.00	Seoul
Pohang Techno Valley PFV Corporation	Real estate development		29.90		28.65	Pohang
BLUE OCEAN Private Equity Fund	Private Equity Financial		27.52		27.52	Seoul
SUNAM Co., Ltd.	Power Supply manufacturing		23.91		23.91	Seoul
Kones Corporation	Technical Service		41.67		41.67	Gyeongju
Daeho GM Co., Ltd. (*5)	Investment Advisory Service		35.82		—	Pohang
Mokpo-Daeyang Industrial esetate (*1)	Real estate developement		29.90		—	Mokpo
POSCO ES Materials Co., Ltd. (*1)	Secondary battery manufacturing		50.00		—	Gumi

25

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

		Ownership (%)
Investee	Category of Business	March 31, 2012		December 31, 2011		Region
[Foreign]
VSC POSCO Steel Corporation	Steel manufacturing and Sale		50.00		50.00	Vietnam
KOBRASCO	Facility lease		50.00		50.00	Brazil
USS-POSCO Industries	Material manufacturing and sale		50.00		50.00	USA
Poschrome Pty. Ltd.	Raw material manufacturing and sale		50.00		50.00	Republic of South Africa
POS-Hyundai Steel Manufacturing India Private Ltd.	Steel processing and sale		29.50		29.50	India
POSVINA Co., Ltd.	Plating steel sheet manufacturing		50.00		50.00	Vietnam
PT. POSMI Steel Indonesia	Steel processing and sale		36.69		36.69	Indonesia
CAML Resources Pty. Ltd.	Raw material manufacturing and sale		33.34		33.34	Austrailia
Nickel Mining Company SAS	Raw material manufacturing and sale		49.00		49.00	New Caledonia
Liaoning Rongyuan Posco Refractories Co., Ltd.	Manufacturing and sale		35.00		35.00	China
POSK (PingHu)Processing Center Co.,Ltd	Steel processing and sale		20.00		20.00	China
AN KHANH NEW CITY DEVELOPMENT	Highway construction and new town development		50.00		50.00	Vietnam
Henan Tsingpu Ferro Alloy Co., Ltd.	Raw material manufacturing and sale		49.00		49.00	China
United Spiral Pipe, LLC	Material manufacturing and sale		35.00		35.00	USA
Zhongyue POSCO(Qinhuangdau) Tinplate Industrial Co., Ltd.	Plating sheet manufacturing		34.00		34.00	China
BX STEEL POSCO Cold RolledSheet Co., Ltd.	Steel processing and sale		25.00		25.00	China
POSCO-SAMSUNG-Slovakia Processing Center	Steel processing and sale		30.00		30.00	Slovakia
Eureka Moly LLC	Raw material manufacturing and sale		20.00		20.00	USA
POSCO SAMSUNG Suzhou Steel Processing Center Co., Ltd.	Steel processing and sale		30.00		30.00	China
POSCO SeAH Steel Wire(Nantong) Co., Ltd.	Steel processing and sale		25.00		25.00	China
POS-GSFC LLC	Steel processing and sale		48.98		48.98	UAE
Yingkou Posrec Refractories Co., Ltd.	Refractory manufacturing		25.00		25.00	China
Zhangjiagang Pohang Refractories Co., Ltd.	Refractory manufacturing		50.00		50.00	China
Daewoo Engineering (THAILAND) Co., Ltd.	Development and contract		48.90		48.90	Thailand
Sebang Steel	Scrap sale		49.00		49.00	Japan
NCR LLC	Coal sale		29.41		20.00	Canada
AMCI (WA) Pty Ltd.	Iron ore sale & mine development		49.00		49.00	Austrailia
POSCO YongXin Rare Earth Metal Co., Ltd.	Energy & Resource development		31.00		31.00	China
Shanghai Lansheng Daewoo Coporation	Trading		49.00		49.00	China
Shanghai Waigaogiao Free Trade Zone Lansheng Daewoo Int’l Trading Co., Ltd.	Trading		49.00		49.00	China
Hanjung Power Pty., Ltd	Electric power manufacturing and sale		49.00		49.00	Papua New Guinea
Myanmar Korea Timber International Ltd.	Plating sheet manufacturing		45.00		45.00	Myanmar
General Medicines Company Ltd.	Medicine manufacturing and sale		33.00		33.00	Myanmar
KOREA LNG Ltd.	Gas production and sale		20.00		20.00	England
DMSA, AMSA (*2)	Energy & Resource development		4.00		4.00	Madagascar
KG Power(M) SDN. BHD	Energy & Resource development		20.00		20.00	Malaysia
Daewoo (THAILAND) CO., LTD.	Trading		49.00		49.00	Thailand
N.I.CO., LTD.	Trading		50.00		50.00	North Korea
South-East Asia Gas Pipeline Company Ltd.	Pipeline construction		25.04		25.04	Myanmar
GLOBAL KOMSCO Daewoo LLC	Mintage		35.00		35.00	Uzbekistan
POSUK TITANIUM B.V	Steel manufacturing		—		50.00	Netherland
POSCO-NPS Niobium LLC	Mine development		50.00		50.00	USA
POSCO-POGEN AMP	Steel manufacturing		26.00		26.00	India
Klappan Coal Joint Venture	Coal sale		20.00		20.00	Canada
AES-VCM Mong Duong Power Company Ltd.	Coal sale		30.00		30.00	Vietnam
CSP(Compania Siderurgica do Pecem)	Steel manufacturing and sale		20.88		20.00	Brazil
PT.INDONESIA POS CHOSUN Ref	Refractory manufacturing and sale		30.00		30.00	Indonesia
NS-Thainox Auto Co., Ltd.	Steel manufacturing and sale		49.00		49.00	Vietnam
Korea-Siberia Wood	Forest resources Development		50.00		50.00	Russia
PT. Tanggamus Electric Power	Construction and engneering service		20.00		20.00	Indonesia
PT. Wampu Electric Power	Construction and engneering service		20.00		20.00	Indonesia
Boulder Solar Power, LLC (*1)	Electric power manufacturing		25.00		—	USA
POSUK Titanium (*1)	Raw material manufacturing and sale		50.00		—	Kazahstan

(*1) These entities are newly established during the three-month periods ended March 31, 2012.

(*2) This investment is accounted for using the equity method of accounting even though the controlling company’s percentage of ownership is below 20%, because it is able to exercise significant influence on the investee.

(*3) This investment is excluded from associates due to decrease in ownership percentage during the three-month period ended March 31, 2012.

(*4) This investment is excluded from associates as the contract on entrusted voting rights expired during the three-month period ended March 31, 2012.

(*5) This entity split off from DongBang Special Steel Co., Ltd. during the three-month period ended March 31, 2012.

26

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) Consolidated subsidiaries acquired during the three-month period ended March 31, 2012 are as follows:

(in millions of Won)

Company	Date of Acquisition	Ownership (%)	Reason
Tamra Offshore Wind Power Co., Ltd.	January 2012	64.00	new investment
PT. Krakatau POSCO Chemtech Calcination	January 2012	80.00	new investment
POS-HiAL Co., Ltd	February 2012	51.00	new investment
Posco Africa	February 2012	100.00	new investment

(f) Cash inflows caused by the acquisitions

(in millions of Won)	Amounts
Consolidation transferred	(Won)	22,312
Less: cash and cash equivalent-acquired		(29,042	)
Total	(Won)	(6,730	)

(g) Subsidiaries that were excluded from consolidation during the three-month period ended March 31, 2012 are as follows:

Company	Date of Disposal	Reason
POSCO-JYPC Co., Ltd.	February 2012	Statutory merger by POSCO-JEPC CO., Ltd.
DaiMyung TMS Co., Ltd.	March 2012	Statutory merger by POSCO-AST CO., Ltd.

27

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2. Statement of Compliance

Statement of compliance

The 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 Corporations.

These consolidated interim financial statements have been prepared in accordance with K-IFRS 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-IFRS annual financial statements.

Basis of measurement

The consolidated interim financial statements have been prepared on the historical cost basis, except for the following material items in the statement of financial position, as described in the accounting policy below.

(a) Derivatives instruments are measured at fair value

(b) Financial instruments at fair value through profit or loss (FVTPL) are measured at fair value

(c) Available-for-sale financial assets are measured at fair value

(d) The liability for a cash-settled stock appreciation rights is measured at fair value

(e) Defined benefit obligations are measured at the present value of the defined benefit obligation less the fair value of the plan assets

Functional and presentation currency

These consolidated interim financial statements are presented in Korean won, which is POSCO’s functional currency and the currency of the primary economic environment in which POSCO operates.

28

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Use of estimates and judgements

The preparation of the 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 in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated interim financial statements is included in the following notes:

— Note 11 – Investment property

— Note 12 – Property, plant and equipment

— Note 13 – Impairment losses of goodwill

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next fiscal year is included in the following notes:

— Note 17 – Provisions

— Note 18 – Employee benefits

— Note 25 – Construction contracts

— Note 34 – Commitments and contingencies

29

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

3. Summary of Significant Accounting Policies

The significant accounting policies applied by the Company in preparation of its consolidated interim financial statements are included below. The accounting policies set out below are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2011.

Consolidation policy

(a) Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of the other entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. The financial statements of subsidiaries are included in the consolidated interim financial statements from the date that control commences until the date that control ceases.

If a member of the Company uses accounting policies other than those adopted in the consolidated interim financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated interim financial statements.

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated interim financial statements. Intra-group losses are recognized as expense if intra-group losses indicate an impairment that requires recognition in the consolidated interim financial statements.

(b) Non-controlling interests

Non-controlling interests in a subsidiary are accounted for separately from the parent’s ownership interests in a subsidiary. Each component of net profit or loss and other comprehensive income is attributed to the owners of the parent and non-controlling interest holders, even when the allocation reduces the non-controlling interest balance below zero.

(c) Associates

An associate is an entity in which the Company has significant influence, but not control, over the entity’s financial and operating policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another entity.

30

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

The investment in an associate is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss and changes in equity of the associate after the date of acquisition. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated interim financial statements. Intra-group losses recognized as expense if intra-group losses indicate an impairment that requires recognition in the consolidated interim financial statements.

If an associate uses accounting policies different from those of the Company for like transactions and events in similar circumstances, appropriate adjustments are made to the Company’s consolidated interim financial statements in applying the equity method.

When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has to make payments on behalf of the investee for further losses.

(d) Joint Ventures

Joint ventures are those entities over whose activities the Company has joint control, established by contractual agreement, and require unanimous consent for strategic financial and operating decisions. The Company recognizes its interest in a jointly controlled entity using proportionate consolidation by including separate line items for its share of the assets, liabilities, income and expenses of the jointly controlled entity in the consolidated interim financial statements.

31

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Business combination

(a) Business combination

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.

Each identifiable asset and liability is measured at its acquisition-date fair value except for below:

• Leases and insurance contracts are required to be classified on the basis of the contractual terms and other factors

• Only those contingent liabilities assumed in a business combination that are a present obligation and can be measured reliably are recognized

• Deferred tax assets or liabilities are recognized and measured in accordance with K-IFRS No. 1012 “Income Taxes”

• Employee benefit arrangements are recognized and measured in accordance with K-IFRS No.1019 “Employee Benefits”

• Indemnification assets are recognized and measured on the same basis as the indemnified liability or asset

• Reacquired rights are measured in accordance with special provisions

• Liabilities or equity instruments related to share-based payment transactions are measured in accordance with K-IFRS No. 1102 “Share-based Payment”

• Assets held for sale are measured at fair value less costs to sell in accordance with K-IFRS No. 1105 “Non-current Assets Held for Sale”

As of the acquisition date, non-controlling interests in the acquiree are measured as the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets.

The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity interests issued by the acquirer.

Acquisition-related costs are costs the acquirer incurs to effect a business combination. Those costs include finder’s fees; advisory, legal, accounting, valuation and other professional or consulting fees; general administrative costs, including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. Acquisition-related costs, other than those associated with the issue of debt or equity securities, are expensed in the periods in which the costs are incurred and the services are received. The costs to issue debt or equity securities are recognized in accordance with K-IFRS No.1032 “Financial Instruments: Presentation” and K-IFRS No.1039 “Financial Instruments: Recognition and Measurement”.

32

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Goodwill

The Company measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus

• the recognized amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

• the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, bargain purchase gain is recognized immediately in profit or loss.

Foreign currency transactions and translation

Foreign currency transactions are initially recorded using the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the original transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date fair value was initially determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss in the period in which they arise. When gains or losses on non-monetary items are recognized in other comprehensive income, exchange components of those gains or losses are recognized in other comprehensive income. Conversely, when gains or losses on non-monetary items are recognized in profit or loss, exchange components of those gains or losses are recognized in profit or loss.

33

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Foreign operations

If the presentation currency of the Company is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:

The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation is treated as assets and liabilities of the foreign operation. Thus they are expressed in the functional currency of the foreign operation and translated at the closing rate.

When a foreign operation is disposed of, the relevant amount in the translation is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.

Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net investment in the foreign operation, are recognized in other comprehensive income in the translation reserve.

34

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and short-term, investment in highly liquid securities that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Non-derivative financial assets

The Company recognizes and measures non-derivative financial assets by the following four categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets. The Company recognizes financial assets in the consolidated statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Upon initial recognition, non-derivative financial assets are measured at their fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the asset’s acquisition or issuance.

(a) Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss if they are held for trading or designated as such upon initial recognition. Upon initial recognition, transaction costs are recognized in profit or loss when incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.

(b) Held-to-maturity financial assets

A non-derivative financial asset with a fixed or determinable payment and fixed maturity, for which the Company has the positive intention and ability to hold to maturity, is classified as held-to-maturity. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortized cost using the effective interest method.

35

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method except for loans and receivables for which the effect of discounting is immaterial.

(d) Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified as financial assets at fair value through profit or loss, held-to-maturity securities or loans and receivables. Subsequent to initial recognition, they are measured at fair value, with changes in fair value, net of any tax effect, recorded in other comprehensive income in equity. Securities in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are measured at cost. When a financial asset is derecognized or impairment losses are recognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Dividends on an available-for-sale equity instrument are recognized in profit or loss when the Company’s right to receive payment is established.

(e) De-recognition of non-derivative financial assets

The Company derecognizes non-derivative financial assets when the contractual rights to the cash flows from the financial asset expire, or the Company transfers the rights to receive the contractual cash flows from the financial asset as well as substantially all the risks and rewards of ownership of the financial asset. Any interest in a transferred financial asset that is created or retained by the Company is recognized as a separate asset or liability.

If the Company retains substantially all the risks and rewards of ownership of the transferred financial assets, the Company continues to recognize the transferred financial assets and recognizes financial liabilities for the consideration received.

(f) Offsetting a financial asset and a financial liability

Financial assets and financial liabilities are offset and the net amount is presented in the consolidated statement of financial position only when the Company currently has a legally enforceable right to offset the recognized amounts, and there is the intention to settle on a net basis or to realize the asset and settle the liability simultaneously.

36

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Inventories

Inventories are measured at the lower of cost and net realizable value. Costs are determined by using the moving-weighted average method. The cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The allocation of fixed production overheads to the costs of finished goods or work in progress are based on the normal capacity of the production facilities.

When inventories are sold, the carrying amount of those inventories is recognized as cost of goods sold in the period in which the related revenue is recognized and the amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories arising from an increase in net realizable value is recognized as a reduction in the amount of inventories recognized as a cost of goods sold in the period in which the reversal occurs.

Investment property

Property held for the purpose of earning rentals is classified as investment property. Investment property is measured initially at its cost. Transaction costs are included in the initial measurement. Subsequently, investment property is carried at depreciated cost less any accumulated impairment losses.

Property, plant and equipment

Property, plant and equipment are initially measured at cost and after initial recognition, are carried at cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. In addition, in the preparation of the opening K-IFRS consolidated statement of financial position on the date of transition to K-IFRS, the Company measures certain machinery and equipment at fair value at the date of transition, which is deemed cost, in accordance with K-IFRS 1101.

The cost of replacing a part of an item is recognized in the carrying amount of the item of property, plant and equipment, if the following recognition criteria are met.

(a) it is probable that future economic benefits associated with the item will flow to the Company; and

(b) the cost can be measured reliably.

37

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

The carrying amount of the replaced part is derecognized at the time the replacement part is recognized. The costs of the day-to-day servicing of the item are recognized in profit or loss as incurred.

Other than land, the cost of an asset less its residual value are depreciated. Land is not depreciated. Depreciation of property, plant and equipment is recognized in profit or loss on a straight-line basis, which most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset, over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognized.

The estimated useful lives for the current and comparative periods are as follows:

Buildings	10-60 years
Structures	4-50 years
Machinery and equipment	2-25 years
Vehicles	3-10 years
Tools	4-10 years
Furniture and fixtures	3-10 years
Lease assets	3-18 years

The residual value and the useful lives are reviewed at least at the end of each reporting period and, if expectations differ from previous estimates, the changes are accounted for as changes in accounting estimates.

38

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Borrowing costs

The Company capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognized in expense as incurred. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use or sale. Financial assets and inventories that are manufactured or otherwise produced over a short period of time are not qualifying assets. Assets that are ready for their intended use or sale when acquired are not qualifying assets.

To the extent that the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the Company determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. The Company immediately recognizes other borrowing costs as an expense. To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Company shall determine the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset.

The capitalization rate shall be the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs that the Company capitalizes during a period shall not exceed the amount of borrowing costs incurred during that period.

Intangible assets

Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.

Amortization of intangible assets except for goodwill is calculated on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, as there are no foreseeable limits to the periods over which club memberships are expected to be available for use, this intangible asset is determined as having an indefinite useful life and not amortized.

Intellectual property rights	5-10 years
Development expenses	3-10 years
Port facilities usage rights	5-75 years
Other intangible assets	2-25 years

39

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes are accounted for as changes in accounting estimates.

(a) Research and development

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

(b) Subsequent expenditures

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

Exploration for and evaluation of mineral resources

The Company is engaged in exploration projects for mineral resources through equity ownership in the mines or other contractual arrangements. Expenditures related to the development of mineral resources are recognized as exploration or development intangible assets. The nature of these intangible assets are as follows:

(a) Exploration and evaluation assets

Exploration and evaluation assets consist of expenditures for topographical studies, geophysical studies and trenching. These assets are reclassified as development assets when it is proved that the exploration has identified an economically feasible mine.

(b) Development assets

Development assets consist of expenditures for the evaluation of oil fields, facility construction, drilling for viability and others. These development assets are reclassified as industrial rights (mining rights) at inception of the extraction.

40

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Impairment for financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. However, losses expected as a result of future events, regardless of likelihood, are not recognized.

Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the holder of the asset about the following loss events:

(a) significant financial difficulty of the issuer or obligor;

(b) a breach of contract, such as a default or delinquency in interest or principal payments;

(c) the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

(d) it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

(e) the disappearance of an active market for that financial asset because of financial difficulties; or

(f) observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group.

In addition, for an equity instrument classified as available-for-sale financial assets, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

If financial assets have objective evidence that they are impaired, impairment losses are measured and recognized.

(a) Financial assets carried at amortized cost

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flows discounted at the asset’s original effective interest rate. If it is not practicable to obtain the instrument’s estimated future cash flows, impairment losses would be measured by using prices from any observable current market transactions. The Company can recognize impairment losses directly or establish a provision to cover impairment losses. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment loss shall be reversed either directly or by adjusting an allowance account.

41

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Financial assets carried at cost

If there is objective evidence that an impairment loss has occurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

(c) Available-for-sale financial assets

When a decline in the fair value of an available-for-sale financial asset has been recognized in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment even though the financial asset has not been derecognized. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognized in profit or loss.

Impairments for non-financial assets

The carrying amounts of the Company’s non-financial assets, other than assets arising from employee benefits, inventories, deferred tax assets and non-current assets held for sale, are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amount to their carrying amount.

Management estimates the recoverable amount of an individual asset. If it is impossible to measure the individual recoverable amount of an asset, then management estimates the recoverable amount of a cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value-in-use and its fair value less costs to sell. The value-in-use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.

42

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergies arising from the goodwill acquired. Any impairment identified at the CGU level will first reduce the carrying value of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the assets or disposal groups must be available for immediate sale in their present condition and their sale must be highly probable. The assets or disposal groups that are classified as non-current assets held for sale are measured at the lower of their carrying amount and fair value less cost to sell.

The Company recognizes an impairment loss for any initial or subsequent write-down of disposal group to fair value less costs to sell, and a gain for any subsequent increase in fair value less costs to sell, up to the cumulative impairment loss previously recognized in accordance with K-IFRS No. 1036 “Impairment of Assets”.

A non-current asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).

Non-derivative financial liabilities

The Company classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial liabilities. The Company recognizes financial liabilities in the consolidated statement of financial position when the Company becomes a party to the contractual provisions of the financial liability.

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the acquisition are recognized in profit or loss as incurred.

43

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Non-derivative financial liabilities other than financial liabilities at fair value through profit of loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the effective interest method.

The Company derecognizes a financial liability from the consolidated statement of financial position when it is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).

Convertible bonds

The convertible bonds issued by the Company can be converted into equity securities at the option of the bond holders. The number of shares to be issued is adjusted according to the fair value of the common shares. The convertible bonds, which are compound financial instruments of bonds and conversion rights, are designated and measured at fair value through profit or loss.

Derivative financial instruments and hedges

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss.

(a) Embedded derivatives

Embedded derivatives are separated from the host contract and accounted for separately only if the following criteria have been met: (a) the economic characteristics and risks of the host contract and the embedded derivatives are not clearly and closely related to a separate instrument with the same terms as the embedded derivative that would meet the definition of a derivative, and (b) the hybrid (combined) instrument is not measured at fair value through profit or loss. Changes in the fair value of separable embedded derivatives from the host contract are recognized immediately in profit or loss. However, convertible rights of convertible bonds are not separated from the host contract and the compound financial instruments of bonds and convertible rights are designated and measured at fair value through profit and loss.

(b) Other derivatives

Changes in the fair value of a derivative that is not designated as a hedging instrument are recognized immediately in profit or loss.

44

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Leases

The Company classifies and accounts for leases as either a finance or operating lease, depending on the terms. Leases where the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

(a) Finance leases

At the commencement of the lease term, the Company recognizes as finance assets and finance liabilities the lower amount of the fair value of the leased property and the present value of the minimum lease payments, each determined at the inception of the lease. Any initial direct costs are added to the amount recognized as an asset.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the Company adopts for similar depreciable assets that are owned. If there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.

(b) Operating leases

Lease obligations under operating leases are recognized as an expense on a straight-line basis over the lease term. Contingent rents are charged as expenses in the periods in which they are incurred.

(c) Determining whether an arrangement contains a lease

Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether fulfillment of the arrangement is dependent on the use of a specific asset or assets (the asset) and the arrangement conveys a right to use the asset.

At inception or reassessment of the arrangement, management of the Company separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If management of the Company concludes for a financial lease that it is impracticable to separate the payments reliably, the Company recognizes an asset and a liability at an amount equal to the fair value of the underlying asset that was identified as the subject of the lease. Subsequently, the liability shall be reduced as payments are made and an imputed finance charge on the liability recognized using the purchaser’s incremental borrowing rate of interest.

45

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Construction work in progress

Construction work in progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognized to date less progress billings and recognized losses. Cost includes all expenditures related directly to specific projects and an allocation of fixed and variable overheads incurred in the Company’s contract activities based on normal operating capacity.

Construction work in progress is presented as part of trade accounts and notes receivable in the consolidated statement of financial position for all contracts in which costs incurred plus recognized profits exceed progress billings. If progress billings exceed costs incurred plus recognized profits, then the difference is presented as amounts due to customers for contract work in the consolidated statement of financial position.

Government grants

Government grants are not recognized unless there is reasonable assurance that the Company will comply with the grant’s conditions and that the grant will be received. Government grants whose primary condition is that the Company purchase, construct or otherwise acquire long-term assets are deducted from the carrying amount of the assets and recognized in profit or loss on a systematic and rational basis over the life of the depreciable assets.

Other government grants that compensate the Company for expenses incurred are recognized in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognized. A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which it becomes receivable.

46

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Employee benefits

(a) Short-term employee benefits

Short-term employee benefits are employee benefits that are due to be settled within twelve months after the end of the period in which the employees render the related service. When an employee has rendered service to the Company during an accounting period, the Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as profit or loss. If the Company has a legal or constructive obligation which can be reliably measured, the Company recognizes the amount of expected payment for profit-sharing and bonuses payable as liabilities.

(b) Other long-term employee benefits

Other long-term employee benefits include employee benefits that are settled beyond 12 months after the end of the period in which the employees render the related service, and are calculated at the present value of the amount of future benefit that employees have earned in return for their service in the current and prior periods, less the fair value of any related assets. The present value is determined by discounting the expected future cash flows using the interest rate of corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise.

(c) Retirement benefits: Defined contribution plans

For defined contribution plans, when an employee has rendered service to the Company during a period, the Company recognizes the contribution payable to a defined contribution plan in exchange for that service as an accrued expense, after deducting any contributions already paid. If the contributions already paid exceed the contribution due for service before the end of the reporting period, the Company recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

(d) Retirement benefits: Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of plan assets is deducted. The calculation is performed annually by an independent actuary using the projected unit credit method.

47

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

The discount rate is the yield at the reporting date on corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The Company recognizes all actuarial gains and losses arising from actuarial assumption changes and experiential adjustments in other comprehensive income when incurred.

When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Company recognizes an asset, to the extent of the total of cumulative unrecognized past service cost and the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan.

Past service costs, which are the change in the present value of the defined benefits obligation for employee service in prior periods, resulting in the current period from the introduction of, or change to post-employment benefits, are recognized as an expense on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits are already vested immediately following the introduction of, or changes to, a defined benefit plan, the Company recognizes the past service cost immediately.

Stock appreciation rights

The Company granted share options to executives as part of the reward for their services and is accounting for the options as cash-settled share-based payment transactions. For cash-settled share-based payment transactions, the Company measures the goods or services acquired and the liability incurred at the fair value of the liability and recognizes the employment benefits and the liability during the vesting period. Until the liability is settled, the Company remeasures the fair value of the liability at each reporting date and at the date of settlement, with any changes in fair value recognized in profit or loss for the period as well.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

Where some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement shall be recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset.

48

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Provisions are reviewed at the end of each interim reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

A provision for product warranties is recognized when the underlying products are sold. Management determines the Company’s provision for product warranties based on historical warranty data and a weighting of possible outcomes against their associated probabilities. Regarding the provision for construction warranties, the warranty period starts from the completion of construction in accordance with construction contracts. If the Company has an obligation for warranties, a provision for warranties is estimated based on historical warranty data and recorded as cost of construction and provision for warranties during the construction period.

Share capital

Common stock is classified as equity and the incremental costs arising directly attributable to the issuance of common stock less their tax effects are deducted from equity.

If the Company reacquires its own equity instruments, the amount of those instruments (“treasury shares”) are presented as a contra equity account. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of its own equity instruments. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase to equity, and the resulting surplus or deficit on the transaction is recorded in capital surplus.

Revenue

Revenue from the sale of goods, services provided and the use of assets is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates, which are not significant for all periods presented.

(a) Sale of goods

Revenue from the sale of goods in the ordinary course of activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. The appropriate timing for transfer of risks and rewards varies depending on the individual terms and conditions of the sales contract. For international sales, this timing depends on the type of international commercial terms of the contract.

49

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Services rendered

Service sales are recognized when services are rendered.

(c) Construction contracts

When the outcome of a construction contract can be estimated reliably, contract revenue is recognized in profit or loss in proportion to the stage of completion of the contract. Contract revenue includes the initial amount agreed in the contract plus any variation in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. The stage of completion of a contract is determined based on the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs.

When the outcome of a construction contract cannot be estimated reliably, the revenue is recognized only to the extent of contract costs incurred that it is probable will be recoverable. An expected loss on the construction contract shall be recognized as an expense immediately.

(d) Rental income

Rental income from investment property, net of lease incentives granted, is recognized in profit or loss on a straight-line basis over the term of the lease.

Finance income and finance costs

Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the Company’s right to receive payment is established.

Finance costs comprise interest expense on borrowings and changes in the fair value of financial assets at fair value through profit or loss. Borrowing costs are recognized in profit or loss using the effective interest rate method.

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

50

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(a) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit of future periods, and non-taxable or non-deductible items from the accounting profit.

(b) Deferred tax

Deferred tax is recognized, using the asset-liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which they can be utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable income.

The Company recognizes a deferred tax liability for all taxable temporary differences associated with securities in subsidiaries and associates except to the extent that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Company recognizes a deferred tax asset for deductible temporary differences arising from securities in subsidiaries and associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax liabilities and assets, and they relate to income taxes levied by the same tax authority and they intend to settle current tax liabilities and assets on a net basis.

Earnings per share

Management calculates basic earnings per share (“EPS”) data for the Company’s ordinary shares, which is presented at the end of the statement of comprehensive income. Basic EPS is calculated by dividing profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

51

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Operating segments

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenditures, including revenues and expenses that relate to transactions with any of the Company`s other components. All operating segments’ operating results are regularly reviewed by the Company’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. Management has determined that the CODM of the Company is the CEO.

Segment results that are reported to the CEO include items directly attributable to a segment and do not include allocated items. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

52

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

4. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

• credit risk

• liquidity risk

• market risk

• operational risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these consolidated interim financial statements.

(a) Risk management policy

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(b) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The default risk of a nation or an industry in which a customer operates its business does not have a significant influence on credit risk. The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for companies of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

53

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Liquidity risk management

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company’s cash flow from business, borrowing or financing is sufficient to meet the cash requirements for the Company’s strategic investments. Management believes that the Company is capable of raising funds by borrowing or financing if the Company is not able to generate cash flow requirements from its operations. The Company has committed borrowing facilities with various banks.

(d) Market risk management

Market risk means that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The goal of market prices management is optimization of profit and controlling the exposure to market risk within acceptable limits.

1) Currency risk

Each segment is influenced by a risk factor of changes in foreign currency exchange rates for the different directions due to the difference in structure of each industry regarding the cash inflows and cash outflows in foreign currency. The steel segment generally has a lack of foreign currency cash outflows, while the engineering and construction segments generally have excessive foreign currency inflows due to the nature of their respective business. Therefore, the result of the business is affected by the changes of foreign exchange rates. The trading segment is structured such that the cash inflows and outflows of foreign currencies are to be offset; however, the trading segment is exposed to a risk of changes in foreign currency exchange rates when there are differences in currencies on receiving and paying the foreign currency amount and time differences.

54

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

The Company’s policy in respect of foreign currency risks is a natural hedge whereby foreign currency income is offset with foreign currency expenditures. The remaining net exposures after the natural hedge have been hedged using derivative contracts such as forward exchange contracts. In addition, the Company’s derivative transactions are limited to hedging actual foreign currency transactions and speculative hedging is not permitted. Based on this policy, the Company entities have performed currency risk management specific to various characteristics of different segments. The entities in the steel industry, which has a lack of foreign currency cash flows, has foreign currency borrowings from banks and hedges foreign currency risks of the foreign currency borrowings by using foreign currency swaps. The entities in the engineering and construction segments, which have excessive foreign currency cash flows, have hedged foreign currency risks by using forward exchange contracts. Entities in the trading industry have hedged foreign currency risks by using forward exchange contracts when the foreign currencies received and paid are different.

2) Interest rate risk

The Company mostly borrows at fixed interest rates. The Company’s management monitors interest rate risks regularly.

(e) Management of capital risk

The fundamental goal of capital management is the maximization of shareholders’ value by means of the stable dividend policy and the retirement of treasury shares. The capital structure of the Company consists of equity and net debt, deducting cash and cash equivalents and current financial instruments from borrowings. The Company applied the same financial risk management strategy that was applied in the previous period.

The equity attributable to owners as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Total borrowings	(Won)	26,560,241			26,811,717
Less: Cash and cash equivalents		5,042,890			4,598,682
Net borrowings		21,517,351			22,213,035
Total equity		41,378,728			40,729,920
Net borrowing-to-equity ratio		52.00	%		54.54	%

55

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

5. Cash and Cash Equivalents

Cash and cash equivalents as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Cash	(Won)	65,194		23,954
Demand deposit and checking accounts		2,078,398		1,855,929
Time deposits		2,658,330		2,664,335
Other financial cash equivalents		240,968		54,464
	(Won)	5,042,890		4,598,682

6. Trade Accounts and Notes Receivable

(a) Trade accounts and notes receivable as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Current
Trade accounts and notes receivable	(Won)	10,809,995			10,265,421
Capital lease receivables		116,391			117,230
Due from customers for contract work		1,343,633			1,361,416
Less: Allowance for doubtful accounts		(301,563	)		(293,552	)
		11,968,456			11,450,515
Non-current
Trade accounts and notes receivable		45,955			45,061
Capital lease receivables		136,447			147,634
Less: Allowance for doubtful accounts		(9,586	)		(9,634	)
		172,816			183,061
	(Won)	12,141,272			11,633,576

Trade accounts and notes receivable sold to financial institutions for which the derecognition conditions were not met amounted to (Won)138,320 million and (Won)132,908 million as of March 31, 2012 and December 31, 2011, respectively, and are included in short-term borrowings (note 15).

(b) Capital lease receivables are as follows:

(in millions of Won)
Customer	Contents	March 31, 2012		December 31, 2011
Korea Electric Power	LNG Combined thermal power cycle 1~4	(Won)	186,264		199,141
Tenant of EXPO	Lease contract		66,574		65,723
		(Won)	252,838		264,864

56

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) The gross amount and present value of minimum lease payments as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Less than 1 year	(Won)	138,479			141,670
1 year - 5 years		156,982			169,265
Greater than 5 year		21,332			24,519
Unrealized interest income		(63,955	)		(70,590	)
Present value of minimum lease payment	(Won)	252,838			264,864

7. Other Financial Assets

(a) Other short-term financial assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Financial assets at fair value through profit or loss
Financial assets held for trading	(Won)	897			50,861
Derivatives assets held for trading		58,374			92,055
		59,271			142,916
Available-for-sale financial assets
Short-term available-for-sale securities (bonds)		32,980			31,651
Held-to-maturity investments
Current portion of held-to-maturity securities (bonds)		30,788			876
Loans and other receivables
Short-term financial instruments (*1,2,3)		1,288,594			1,757,744
Short-term loans		254,592			367,330
Other accounts receivable		1,059,706			1,067,163
Accrued income		61,611			59,028
Deposits		54,127			73,343
Other checking accounts		269,907			221,125
Allowance for bad debt accounts		(67,551	)		(64,906	)
		2,920,986			3,480,827
	(Won)	3,044,025			3,656,270

(*1) As of March 31, 2012 and December 31, 2011, short-term financial instruments amounting to (Won)1,670 million are collateral for long-term borrowings from a forestry association.

(*2) Short-term financial instruments of POSCOAST of (Won)400 million are provided as collateral to Kookmin bank related to a derivative instrument deposit.

(*3) As of March 31, 2012 and December 31, 2011, short-term financial instruments of (Won)12,224 million and (Won)17,175 million, respectively, are restricted for use in a government project.

57

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Other long-term financial assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Financial assets at fair value through profit or loss Derivatives asstes held for trading	(Won)	22,928			16,696
Available-for-sale financial assets
Long-term available-for-sale securities (equity instruments) (*1, 2)		4,901,442			4,509,197
Long-term available-for-sale securities (bonds)		24,466			25,847
Long-term available-for-sale securities (others)		41,594			41,902
		4,967,502			4,576,946
Held-to-maturity investments
Held-to-maturity securities (bonds)		4,785			34,698
Loans and other receivables
Long-term financial instruments		32,589			37,732
Long-term loans		303,108			298,106
Long-term other accounts receivable		85,781			86,922
Accrued income		1,387			956
Deposits		116,580			112,245
Allowance for bad debt accounts		(39,289	)		(38,629	)
		500,156			497,332
	(Won)	5,495,371			5,125,672

(*1) As of March 31, 2012, 2,186,546 shares equivalent to 19,678,919 American depository receipts (“ADRs”) of SK Telecom Co., Ltd. have been pledged as collateral for the exchangeable bonds issued.

(*2) The Company recorded impairment loss for securities of SK Telecom Co., Ltd. amounting to (Won)610,436 million as of December 31, 2011. During the three-month period ended March 31, 2012, there was a further significant decline in the fair value of shares of SK Telecom Co., Ltd. for a prolonged period, which was considered as objective evidence of impairment. As a result, an impairment losses of (Won)4,683 million was recognized in profit or loss for the three-month period ended March 31, 2012.

58

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

8. Inventories

(a) Inventories as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Finished goods	(Won)	1,533,291			1,556,573
Merchandise		1,110,607			1,185,496
Semi-finished goods		2,014,639			2,163,124
Raw materials		2,550,070			2,563,837
Fuel and materials		809,583			758,333
Construction inventories		1,299,569			1,245,546
Materials-in-transit		2,186,454			2,857,434
Others		179,581			168,895
		11,683,794			12,499,238
Less: allowance for inventories valuation		(195,897	)		(215,594	)
	(Won)	11,487,897			12,283,644

The amounts of valuation losses of inventories recognized in cost of goods sold for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are (Won)11,054 million and (Won)140,391 million, respectively.

59

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

9. Non-Current Assets Held for Sale

Details of non-current assets held for sale and related liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
	Subsidiaries (*1)		The controlling company (*2)		Subsidiaries (*1)		Total
Assets
Trade accounts and notes receivable and other financial assets	(Won)	49,389	(Won)	—		63,154		63,154
Inventories		22,561		—		23,186		23,186
Property, plant and equipment		162,066		16,887		172,538		189,425
Intangible assets		7,419		—		7,389		7,389
Other assets		58,382		—		45,883		45,883
		299,817		16,887		312,150		329,037
Liabilities
Trade accounts and note payables and other financial liabilities		25,402		—		28,509		28,509
Borrowings		154,939		—		144,920		144,920
Other liabilities		55,991		—		53,178		53,178
		236,332		—		226,607		226,607
Net assets	(Won)	63,485	(Won)	16,887		85,543		102,430

(*1) Daewoo International Corporation, one of the controlling company’s subsidiaries, determined to dispose of Daewoo Cement (Shandong) Co., Ltd. in order to close down its non-core business and collect long-term receivables and securities, pursuant to the board of director’s resolution on July 28, 2011. Daewoo International Corporation entered into a sales contract with China United Cement Group Co., Ltd. on August 9, 2011 and required approval from the Ministry of Commerce of the People’s Republic of China is in progress as of March 31, 2012.

(*2) The controlling company planned to dispose of equipments of existing steel manufacturing plants due to the completion and expected use of new plant. The relevant equipments were reclassified as non-current assets held for sale at December 31, 2011. Some of those non-current assets held for sale were disposed by sale, and others were reclassified as property, plant and equipment due to cancelation of plans to sell during the three-month period ended March 31, 2012.

60

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

10. Investments in Associates and Joint Ventures

(a) Details of investments in associates as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012								December 31, 2011
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
Kyobo Life Insurance Co., Ltd.		4,920,000		24.00	(Won)	1,266,900	(Won)	1,390,408	(Won)	1,377,114
Sungjin Geotec Co., Ltd.		17,193,510		33.02		239,877		198,526		194,942
SNNC Co., Ltd.		18,130,000		49.00		90,650		142,423		154,131
POSCO ES Materials Co., Ltd.		1,000,000		50.00		43,000		43,000		—
Busan-Gimhae Light Rail Transit Co., Ltd.		9,160,000		25.00		45,800		28,364		34,227
Cheongna IBT Co., Ltd.		—		—		—		—		35,564
Blue ocean PEF		333		27.52		33,300		36,156		35,971
METAPOLIS Co., Ltd.		4,229,280		40.05		15,410		10,294		15,674
POSMATE Co., Ltd.		214,286		30.00		7,233		22,028		22,409
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		2,008,000		25.10		10,040		18,763		21,026
Others								88,778		94,507
								1,978,740		1,985,565
[Foreign]
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		369,837		374,868
AMCI (WA) Pty Ltd.		49		49.00		213,446		159,214		168,212
CSP(Compania Siderurgica do Pecem)		364,606,690		20.88		237,188		221,764		124,231
Nickel Mining Company SAS		3,234,698		49.00		157,585		171,286		168,292
KOBRASCO		2,010,719,185		50.00		32,950		138,389		128,884
KOREA LNG Ltd.		2,400		20.00		137,993		237,288		127,901
Eureka Moly LLC		—		20.00		121,209		108,297		109,772
DMSA, AMSA		—		4.00		125,733		126,023		119,556
BX STEEL POSCO Cold RolledSheet Co., Ltd.		—		25.00		61,961		95,229		95,577
CAML Resources Pty. Ltd.		3,239		33.34		40,388		61,321		55,465
South-East Asia Gas Pipeline Company Ltd.		129,200,145		25.04		143,981		146,928		136,175
POSCHROME		43,350		50.00		19,859		25,885		24,674
USS-POSCO Industries		—		50.00		277,715		15,368		16,880
NCR LLC		—		29.41		30,319		30,932		24,107
Others								171,713		171,500
								2,079,474		1,846,094
							(Won)	4,058,214	(Won)	3,831,659

61

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) The movements of investments in associates for the three-month periods ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

1) March 31, 2012

(in millions of Won)
Company	Dec. 31, 2011 Book Value		Equity method Profits (Losses)			Other Increase (Decrease) (*1)			Mar. 31, 2012 Book Value
[Domestic]
Kyobo Life Insurance Co., Ltd.	(Won)	1,377,114	(Won)	12,066		(Won)	1,228		(Won)	1,390,408
Sungjin Geotec Co., Ltd.		194,942		(956	)		4,540			198,526
SNNC Co., Ltd.		154,131		8,626			(20,334	)		142,423
POSCO ES Materials Co., Ltd.		—		—			43,000			43,000
Busan-Gimhae Light Rail Transit Co., Ltd.		34,227		(5,864	)		1			28,364
Cheongna IBT Co., Ltd.		35,564		(729	)		(34,835	)		—
Blue ocean PEF		35,971		185			—			36,156
METAPOLIS Co., Ltd.		15,674		(5,380	)		—			10,294
POSMATE Co., Ltd.		22,409		(836	)		455			22,028
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		21,026		(2,227	)		(36	)		18,763
Others		94,507		521			(6,250	)		88,778
		1,985,565		5,406			(12,231	)		1,978,740
[Foreign]
POSCO-NPS Niobium LLC		374,868		10,287			(15,318	)		369,837
AMCI (WA) Pty Ltd.		168,212		(10,734	)		1,736			159,214
CSP(Compania Siderurgica do Pecem)		124,231		(465	)		97,998			221,764
Nickel Mining Company SAS		168,292		997			1,997			171,286
KOBRASCO		128,884		8,440			1,065			138,389
KOREA LNG Ltd.		127,901		3,616			105,771			237,288
Eureka Moly LLC		109,772		—			(1,475	)		108,297
DMSA, AMSA		119,556		197			6,270			126,023
BX STEEL POSCO Cold RolledSheet Co., Ltd.		95,577		690			(1,038	)		95,229
CAML Resources Pty. Ltd.		55,465		5,117			739			61,321
South-East Asia Gas Pipeline Company Ltd.		136,175		(47	)		10,800			146,928
POSCHROME		24,674		(45	)		1,256			25,885
USS-POSCO Industries		16,880		(761	)		(751	)		15,368
NCR LLC		24,107		(10	)		6,835			30,932
Others		171,500		(5,284	)		5,497			171,713
		1,846,094		11,998			221,382			2,079,474
	(Won)	3,831,659	(Won)	17,404		(Won)	209,151		(Won)	4,058,214

(*1) Other increase or decrease represents the changes in investments in associates due to acquisitions, disposals, dividends received, change in capital adjustments arising from translations of financial statements of foreign investees and others.

62

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) December 31, 2011

(in millions of Won)
	Dec. 31, 2010 Book Value		Equity method Profits (Losses)			Other Increase (Decrease) (*1)			Dec. 31, 2011 Book Value
[Domestic]
Kyobo Life Insurance Co., Ltd.	(Won)	1,314,808	(Won)	82,450		(Won)	(20,144	)	(Won)	1,377,114
Sungjin Geotec Co., Ltd.		227,245		(33,650	)		1,347			194,942
SNNC Co., Ltd.		145,466		49,605			(40,940	)		154,131
Busan-Gimhae Light Rail Transit Co., Ltd.		42,151		(7,924	)		—			34,227
Cheongna IBT Co., Ltd.		39,607		(4,043	)		—			35,564
Blue ocean PEF		—		1,478			34,493			35,971
METAPOLIS Co., Ltd.		32,666		(16,992	)		—			15,674
POSMATE Co., Ltd.		20,989		3,141			(1,721	)		22,409
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		21,317		(146	)		(145	)		21,026
Others		156,712		(4,290	)		(57,915	)		94,507
		2,000,961		69,629			(85,025	)		1,985,565
[Foreign]
POSCO-NPS Niobium LLC		—		5,658			369,210			374,868
AMCI (WA) Pty Ltd.		213,446		(32,879	)		(12,355	)		168,212
CSP(Compania Siderurgica do Pecem)		—		(1,661	)		125,892			124,231
Nickel Mining Company SAS		180,671		(7,073	)		(5,306	)		168,292
KOBRASCO		141,939		36,911			(49,966	)		128,884
KOREA LNG Ltd.		133,793		8,026			(13,918	)		127,901
Eureka Moly LLC		109,177		(754	)		1,349			109,772
DMSA, AMSA		100,536		38			18,982			119,556
BX STEEL POSCO Cold RolledSheet Co., Ltd.		89,313		1,797			4,467			95,577
CAML Resources Pty. Ltd.		67,401		15,517			(27,453	)		55,465
South-East Asia Gas Pipeline Company Ltd.		56,636		(25	)		79,564			136,175
POSCHROME		29,201		1,422			(5,949	)		24,674
USS-POSCO Industries		40,000		(31,585	)		8,465			16,880
NCR LLC		23,931		(85	)		261			24,107
Others		119,420		(14,367	)		66,447			171,500
		1,305,464		(19,060	)		559,690			1,846,094
	(Won)	3,306,425	(Won)	50,569		(Won)	474,665		(Won)	3,831,659

(*1) Other increase or decrease represents the changes in investment in associates due to acquisitions, disposals, dividends received, change in capital adjustments arising from translations of financial statements of foreign investees and others.

(c) The fair value of investments in associates for which there are published price quotations as of March 31, 2012 are as follows:

(in millions of Won)
Company	Fair value
Sungjin Geotec Co., Ltd.	(Won)	225,235

63

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) Summarized financial information of associates as of March 31, 2012 and December 31, 2011 are as follows:

1) March 31, 2012

(in millions of Won)
Company	Assets		Liabilities		Equity		Sales			Net income (loss)
[Domestic]
Kyobo Life Insurance Co., Ltd.	(Won)	62,395,610		57,268,335		5,127,275		2,630,247			80,556
Sungjin Geotec Co., Ltd.		762,922		596,514		166,408		147,169			3,701
SNNC Co., Ltd.		576,580		266,415		310,165		87,545			10,922
POSCO ES Materials Co., Ltd.		76,199		21,755		54,444		—			(301	)
Busan-Gimhae Light Rail Transit Co., Ltd.		805,725		692,271		113,454		3,083			(23,618	)
Blue ocean PEF		385,731		254,353		131,378		9,670			671
METAPOLIS Co., Ltd.		577,989		538,020		39,969		3,623			(4,497	)
POSMATE Co., Ltd.		90,382		16,271		74,111		23,438			1,267
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		300,946		259,278		41,668		(88	)		(4,537	)
[Foreign]
POSCO-NPS Niobium LLC		739,840		165		739,675		—			20,589
CSP(Compania Siderurgica do Pecem)		1,072,446		3,746		1,068,700		—			(2,347	)
Nickel Mining Company SAS		500,656		95,889		404,767		28,882			(8,938	)
KOBRASCO		327,217		50,438		276,779		57,890			16,745
KOREA LNG Ltd.		580,297		51		580,246		50,006			29,244
DMSA, AMSA		7,528,425		5,523,704		2,004,721		4,913			4,913
BX STEEL POSCO Cold RolledSheet Co., Ltd.		1,097,217		744,237		352,980		145,891			2,759
CAML Resources Pty. Ltd.		234,870		106,390		128,480		81,502			15,348
South-East Asia Gas Pipeline Company Ltd.		624,189		37,415		586,774		—			(189	)
POSCHROME		64,880		4,784		60,096		23,155			177
USS-POSCO Industries		456,857		424,974		31,883		277,529			(5,347	)

2) December 31, 2011

(in millions of Won)
Company	Assets		Liabilities		Equity		Sales		Net income (loss)
[Domestic]
Kyobo Life Insurance Co., Ltd.	(Won)	60,828,181		55,786,580		5,041,601		11,610,607		487,785
Sungjin Geotec Co., Ltd.		717,665		611,548		106,117		663,879		(58,894	)
SNNC Co., Ltd.		610,059		269,318		340,741		473,173		81,246
Busan-Gimhae Light Rail Transit Co., Ltd.		817,402		680,492		136,910		3,690		(31,696	)
Cheongna IBT Co., Ltd.		433,306		263,377		169,929		305		(20,527	)
Blue ocean PEF		385,060		254,353		130,707		79,583		5,371
METAPOLIS Co., Ltd.		579,241		534,775		44,466		21,333		(36,861	)
POSMATE Co., Ltd.		90,403		15,317		75,086		116,021		8,592
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		302,887		256,485		46,402		67,459		2,099
[Foreign]
POSCO-NPS Niobium LLC		749,737		—		749,737		11,433		11,317
CSP(Compania Siderurgica do Pecem)		622,810		1,657		621,153		—		1,302
Nickel Mining Company SAS		496,518		94,900		401,618		142,456		(12,983	)
KOBRASCO		314,458		56,691		257,767		130,725		73,978
KOREA LNG Ltd.		24,169		10,492		13,677		95,385		92,600
DMSA, AMSA		5,807,261		3,979,755		1,827,506		939		939
BX STEEL POSCO Cold RolledSheet Co., Ltd.		1,099,540		745,318		354,222		1,421,784		7,188
CAML Resources Pty. Ltd.		217,677		105,456		112,221		278,778		46,567
South-East Asia Gas Pipeline Company Ltd.		596,972		53,140		543,832		—		(99	)
POSCHROME		61,740		4,129		57,611		96,785		1,028
USS-POSCO Industries		470,963		434,722		36,241		1,062,110		(61,478	)

64

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) Details of investments in joint ventures as of March 31, 2012, are as follows:

Joint Venture	Category of Business		Ownership (%)		Region
Mt. Thorley J/V		Mining		20		Australia
POSMAC J/V		Mining		20		Australia
CD J/V		Mining		5		Australia
RUM J/V		Mining		10		Australia

11. Investment Property, Net

(a) Investment property as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Cost	(Won)	771,459			766,905
Less: Accumulated depreciation and accumulated impairment loss		(255,082	)		(239,372	)
Carrying value	(Won)	516,377			527,533

(b) Changes in the carrying value of investment property for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

1) For the three-month periods ended March 31, 2012

(in millions of Won)	Beginning		Acquisition		Business combination		Disposals			Depreciation (*1)			Others (*2)			Ending
Land	(Won)	219,477		—		1,444		(1,983	)		—			(3,320	)		215,618
Buildings		301,733		—		1,559		(1,789	)		(3,605	)		(2,805	)		295,093
Structures		6,323		55		—		—			(179	)		(533	)		5,666
Total	(Won)	527,533		55		3,003		(3,772	)		(3,784	)		(6,658	)		516,377

(*1) Impairment losses of investment property amounted to (Won)99 million are included.

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

2) For the year ended December 31, 2011

(in millions of Won)	Beginning		Acquisitions		Business combination		Disposals			Depreciation (*1)			Others (*2)			Ending
Land	(Won)	211,464		41,243		94		(57,905	)		(14,010	)		38,591			219,477
Buildings		278,361		109,757		—		(56,953	)		(22,783	)		(6,649	)		301,733
Structures		3,540		6,072		—		—			(640	)		(2,649	)		6,323
Total	(Won)	493,365		157,072		94		(114,858	)		(37,433	)		29,293			527,533

(*1) Impairment losses of investment property amounted to (Won)23,048 million are included.

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

65

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

12. Property, Plant and Equipment, Net

(a) Property, plant and equipment as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Cost	(Won)	52,725,755			51,653,789
Less: Accumulated depreciation and accumulated impairment loss		(23,693,109	)		(23,134,937	)
Less: Government grants		(65,491	)		(65,668	)
Carrying value	(Won)	28,967,155			28,453,184

(b) The changes in carrying value of property, plant and equipment as for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

(in millions of Won)	Beginning		Acquisitions (*1)		Business combination		Disposals			Depreciation			Others (*2)			Ending
Land	(Won)	2,549,178		12,987		2,370		(8,757	)		—			4,239			2,560,017
Buildings		4,019,829		29,801		1,961		(1,629	)		(71,275	)		76,679			4,055,366
Structures		2,260,437		46,512		—		(4,082	)		(42,299	)		7,322			2,267,890
Machinery and equipment		16,179,384		260,942		5		(46,338	)		(416,681	)		236,342			16,213,654
Vehicles		66,743		3,302		17		(558	)		(5,162	)		425			64,767
Tools		80,877		5,643		100		(97	)		(9,017	)		1,518			79,024
Furniture and fixtures		169,689		18,622		223		(550	)		(15,237	)		1,127			173,874
Lease assets		38,542		75		—		—			(2,944	)		(1,105	)		34,568
Construction-in-progress		3,088,505		1,003,176		—		—			—			(573,686	)		3,517,995
Total	(Won)	28,453,184		1,381,060		4,676		(62,011	)		(562,615	)		(247,139	)		28,967,155

(*1) Acquisition includes assets transferred from construction-in-progress.

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

2) For the year ended December 31, 2011

(in millions of Won)	Beginning		Acquisitions (*1)		Business combination		Disposals			Depreciation (*2)			Others (*3)			Ending
Land	(Won)	2,011,851		450,151		92,806		(55,751	)		—			50,121			2,549,178
Buildings		3,551,163		701,166		38,382		(38,755	)		(278,097	)		45,970			4,019,829
Structures		2,070,189		289,524		8,961		(10,775	)		(163,072	)		65,610			2,260,437
Machinery and equipment		13,777,382		2,892,960		204,871		(45,950	)		(1,605,342	)		955,463			16,179,384
Vehicles		64,173		21,041		1,981		(1,795	)		(17,894	)		(763	)		66,743
Tools		75,437		38,477		2,259		(1,477	)		(37,743	)		3,924			80,877
Furniture and fixtures		124,677		66,297		1,995		(1,657	)		(28,249	)		6,626			169,689
Lease assets		43,106		8,029		20		(145	)		(14,081	)		1,613			38,542
Construction-in-progress		3,719,762		4,593,524		10,536		—			—			(5,235,317	)		3,088,505
Total	(Won)	25,437,740		9,061,169		361,811		(156,305	)		(2,144,478	)		(4,106,753	)		28,453,184

(*1) Acquisition includes assets transferred from construction-in-progress.

(*2) Impairment losses of property, plant and equipment amounted to (Won)25,852 million are included.

66

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(*3) Includes reclassification for changing purpose of use, adjustment of foreign currency translation difference and others.

(c) Borrowing costs capitalized and the capitalized interest rate for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Weighted average expenditure	(Won)	837,121			1,433,877
Borrowing costs capitalized		27,859			78,777
Capitalization rate		3.33	%		5.49	%

(d) Assets pledged as collateral

(in millions of Won)	Collateral right holder	March 31, 2012		December 31, 2011
Land (*1)	Korean Development Bank and others	(Won)	348,015		381,096
Buildings and structures (*1)	Korean Development Bank and others		94,827		139,169
Machinery and equipment	The Export-Import Bank of Korea and others		187,021		218,816
		(Won)	629,863		739,081

(*1) Investment property are included.

67

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

13. Goodwill and Other Intangible Assets

(a) Goodwill and other intangible assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Acquisition cost	(Won)	5,681,735			5,457,923
Less: Accumulated depreciation and accumulated impairment loss		(243,393	)		(210,923	)
Less: Government grants		(2,977	)		(2,072	)
Book value	(Won)	5,435,365			5,244,928

(b) The changes in carrying value of goodwill and other intangible assets for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

			Increase						Decrease
(in millions of Won)	Beginning		Acquisitions		Developement		Business combination		Disposals			Amortization			Others (*3)			Ending
Goodwill (*1)	(Won)	1,656,817		—		—		80,059		—			—			2,507			1,739,383
Intellectual property rights		274,907		2,586		—		—		—			(4,348	)		(90,693	)		182,452
Premium in rental (*2)		139,144		814		—		25		(598	)		(61	)		(1,214	)		138,110
Development expense		45,583		5,754		42		—		(2	)		(5,652	)		1,287			47,012
Port facilities usage rights		94,746		—		—		—		—			(3,273	)		—			91,473
Exploratation and evaluation assets		473,192		453		—		—		—			—			(361	)		473,284
Mining development assets		1,414,315		77,488		—		—		—			—			102,694			1,594,497
Client relationships		807,068		—		—		—		—			(11,839	)		3,216			798,445
Other intangible assets		339,156		24,105		—		27,185		(117	)		(7,297	)		(12,323	)		370,709
	(Won)	5,244,928		111,200		42		107,269		(717	)		(32,470	)		5,113			5,435,365

(*1) The amounts in business combination include goodwill amounting to (Won)79,828 million related to the acquisition of business unit from PONUTech Co., Ltd.

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

(*3) Includes translation differences and other adjustments.

68

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) For the year ended December 31, 2011

			Increase						Decrease
(in millions of Won)	Beginning		Acquisitions		Developement		Business combination		Disposals			Amortization			Impairment			Others (*3)			Ending
Goodwill (*1)	(Won)	1,447,743		—		—		224,032		—			—			(14,958	)		—			1,656,817
Intellectual property rights		119,100		171,402		—		—		(7,544	)		(16,258	)		—			8,207			274,907
Premium in rental (*2)		159,761		15,355		—		9		(3,457	)		(8,391	)		—			(24,133	)		139,144
Development expense		49,275		13,978		252		688		(44	)		(20,092	)		—			1,526			45,583
Port facilities usage rights		108,161		—		—		—		—			(13,130	)		—			(285	)		94,746
Exploratation and evaluation assets		594,464		10,151		—		—		(38,563	)		—			—			(92,860	)		473,192
Mining development assets		1,058,354		357,681		—		—		(96	)		—			—			(1,624	)		1,414,315
Client relationships		778,080		—		—		75,836		—			(46,848	)		—			—			807,068
Other intangible assets		304,231		95,557		—		8,160		(5,684	)		(28,569	)		—			(34,539	)		339,156
	(Won)	4,619,169		664,124		252		308,725		(55,388	)		(133,288	)		(14,958	)		(143,708	)		5,244,928

(*1) Acquisition amounts include goodwill amounting to (Won)119,260 million related to the acquisition of POSCO Thainox Co., Ltd. in 2011. An impairment loss of (Won)14,958 million is related to the negative capital of DAESAN (CAMBODIA) Co. Ltd.

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

(*3) Includes translation differences and other adjustments.

(c) For the purpose of impairment testing, goodwill is allocated to individual operating entities determined to be CGUs. The goodwill amount as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Daewoo International Corporation	(Won)	1,163,922		1,163,922
POSCO Engeneering Company		194,637		194,637
POSCO-Thainox Public Company Limited.		122,838		119,260
Others		257,986		178,998
	(Won)	1,739,383		1,656,817

14. Other Assets

Other assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Other current assets
Advance payments	(Won)	1,143,897		1,035,846
Prepaid expenses		320,915		180,369
Others		4,813		3,927
		1,469,625		1,220,142
Other non-current assets
Long-term advance payments		2,871		2,895
Long-term prepaid expenses		194,397		190,741
Others (*1)		446,932		436,651
		644,200		630,287
	(Won)	2,113,825		1,850,429

(*1) Includes guarantee deposits of (Won)257,878 million as of March 31, 2012 and December 31, 2011 in relation to exploration of Australia Roy Hill iron ore mine.

69

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

15. Borrowings

(a) Short-term borrowings and current portion of long-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)		Interest	March 31,			December 31,
	Bank	Rate(%)	2012			2011
Short-term borrowings
Bank overdrafts	BOA, others	0.4~7.0	(Won)	218,830			233,804
Short-term borrowings (*1)	SH Bank, others	0.3~11.8		9,307,336			9,339,182
				9,526,166			9,572,986
Current portion of long-term liabilities
Current portion of long-term borrowings (*1)	Korean Development Bank, others	0.7~8.4		427,207			428,409
Current portion of foreign loan	NATIXIS	2.0		963			951
Current portion of debentures (*1)	Korean Development Bank, others	5.2~6.2		540,050			790,050
Less: Current portion of discount on debentures issued				(103	)		(886	)
				968,117			1,218,524
			(Won)	10,494,283			10,791,510

(*1) As of March 31, 2012, property, plant and equipment, investment in associates, inventories and investment property amounting to (Won)629,592 million, (Won)39,850 million, (Won)5,448 million and (Won)269 million, respectively, are provided as collateral related to short-term borrowings, long-term borrowings and debentures.

70

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Long-term borrowings, excluding current portion as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)			March 31,			December 31,
	Bank	Rate(%)	2012			2011
Long-term borrowings (*1)	Korean Development Bank, others	0.1~13.0	(Won)	4,511,035			4,614,391
Less: Present value discount				(45,778	)		(302,118	)
Foreign loan (*2)	NATIXIS	2.0		2,874			3,071
Debentures (*1, 3, 4)	Korean Development Bank, others	1.6~8.8		11,663,740			11,776,893
Less: Discount on debentures issued				(85,896	)		(94,356	)
Add: Premium on debentures redemption				19,983			21,493
Add: Premium on debentures issued				—			833
			(Won)	16,065,958			16,020,207

(*1) As of March 31, 2012, property, plant and equipment, investment in associates, inventories and investment property amounting to (Won)629,592 million, (Won)39,850 million, (Won)5,448 million and (Won)269 million, respectively, are provided as collateral related to short-term borrowings, long-term borrowings and debentures.

(*2) Korea Development Bank has provided guarantees related to this foreign loan.

(*3) In 2009, one of the controlling company`s subsidiaries, Daewoo International Corporation, issued convertible bonds with a face value of USD 300 million and a 5 year maturity. They are classified as fair value through profit or loss and measured at fair value ((Won)391,416 million) as of March 31, 2012.

(*4) The Company issued exchangeable bonds with SK Telecom Co., Ltd. ADRs in August 2011. The Company accounted for these exchangeable bonds as long-term debts under K-IFRS. The exchangeable bonds may be redeemed prior to maturity at 105.11% of their face value for three years from the issuance date at the option of the bondholders.

71

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

16. Other Financial Liabilities

Other financial liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Short-term financial liabilities
Accounts payable	(Won)	1,099,018		1,048,895
Accrued expenses		392,201		457,070
Dividends payable		40,601		5,822
Derivatives liabilities		107,493		146,903
Finance lease liabilities		22,696		15,295
Financial guarantee liabilities		6,431		7,510
Withholding		129,080		129,695
		1,797,520		1,811,190
Long-term financial liabilities
Accounts payable		154,949		149,308
Accrued expenses		14,051		20,068
Derivatives liabilities		54,687		48,934
Finance lease liabilities		26,702		29,504
Financial guarantee liabilities		24,711		24,732
Long-term withholding		64,633		78,014
		339,733		350,560
	(Won)	2,137,253		2,161,750

72

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

17. Provisions

(a) Provisions as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012				December 31, 2011
	Current		Non-current		Current		Non-current
Provision for bonus payments	(Won)	52,915		—		47,682		—
Provision for construction warranties		19,381		16,990		19,656		30,967
Provision for legal contingencies and claims (*1)		—		38,980		—		38,847
Others		3,577		43,720		2,094		39,529
	(Won)	75,873		99,690		69,432		109,343

(*1) As of March 31, 2012 and December 31, 2011, the amount includes provision of (Won)38,980 million and (Won)38,847 million, respectively, for a potential claim in connection to the spin-off of the trading division of Daewoo International Corporation in 2000.

(b) Changes in provisions for the three-month periods ended March 31, 2012 are as follows:

(in millions of Won)	Beginning		Increase		Decrease			Others(*1)			Ending
Provision for bonus payments	(Won)	47,682		28,027		(22,777	)		(17	)		52,915
Provision for construction warranties		50,623		1,843		(6,713	)		(9,382	)		36,371
Provision for legal contingencies and claims		38,847		133		—			—			38,980
Others		41,623		5,745		(73	)		2			47,297
	(Won)	178,775		35,748		(29,563	)		(9,397	)		175,563

(*1) Include changes in scope of subsidiaries and adjustments of foreign currency translation difference.

(c) Changes in provisions for the year ended December 31, 2011 are as follows:

(in millions of Won)	Beginning		Increase		Decrease			Others(*1)			Ending
Provision for bonus payments	(Won)	37,978		30,592		(20,888	)		—			47,682
Provision for construction warranties		49,068		30,724		(12,958	)		(16,211	)		50,623
Provision for legal contingencies and claims		126,626		—		—			(87,779	)		38,847
Others		2,286		371		(272	)		39,238			41,623
	(Won)	215,958		61,687		(34,118	)		(64,752	)		178,775

(*1) Include adjustments of foreign currency translation difference and transfer to non-current liability held for sale.

73

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

18. Employee Benefits

(a) Defined Contribution Plans

The Company partially operates a defined contribution plan for participating employees. Though the Company pays fixed contributions into a separate fund, employee benefits relating to employee service in the future are based on the contributions to the funds and the investment earnings on it. Plan assets are managed by a trustee within a fund separate from the Company’s assets. The expense related to post-employment benefit plans under defined contribution plans during the three-month period ended March 31, 2012 is (Won)2,962 million.

(b) Defined Benefit Plan

The Company partially operates a defined benefit pension plan for employees and uses the projected unit credit method in the actuarial valuation of plan assets and the defined benefit obligation.

(c) The amounts recognized in relation to defined benefit obligations in the statements of financial position as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Present value of funded obligations	(Won)	1,172,780			1,158,329
Fair value of plan assets		(833,969	)		(832,771	)
Present value of non-funded obligations		21,236			14,909
Net defined benefit obligations	(Won)	360,047			340,467

(d) The changes in present value of defined benefit obligations for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Defined benefit obligation at the beginning of period	(Won)	1,173,238			1,467,853
Current service cost		53,288			207,871
Interest costs		12,555			67,372
Actuarial gains and losses		(12,208	)		43,166
Business combinations		198			221
Benefits paid		(45,975	)		(593,369	)
Others		12,920			(19,876	)
Defined benefit obligation at the end of period	(Won)	1,194,016			1,173,238

74

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) The changes in fair value of plan assets for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Fair value of plan assets at the beginning of period	(Won)	832,771			964,727
Expected return on plan assets		8,791			38,244
Actuarial gains and losses		1,210			3,073
Contributions of participants		9,066			190,909
Business combinations		142			354
Others		4,749			14,059
Benefits paid		(22,760	)		(378,595	)
Fair value of plan assets at the end of period	(Won)	833,969			832,771

(f) The fair value of plan assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Equity instruments	(Won)	9,951		7,703
Debt instruments		108,213		103,074
Deposits		524,897		538,260
Others		190,908		183,734
	(Won)	833,969		832,771

(g) The amounts recognized in profit or loss for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Current service costs	(Won)	53,288			50,396
Interest costs		12,555			16,331
Expected return on plan assets		(8,791	)		(9,392	)
	(Won)	57,052			57,335

(h) The above expenses recognized in profit or loss are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Cost of goods sold	(Won)	41,329		42,378
Selling and administrative expenses		15,723		14,957
	(Won)	57,052		57,335

75

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(i) Accumulated actuarial gains and losses, net of tax, recognized in other comprehensive income as of and for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Beginning balance	(Won)	(182,702	)		(152,125	)
Current actuarial gains and losses		10,713			72,762
Ending balance	(Won)	(171,989	)		(79,363	)

(j) The principal actuarial assumptions as of March 31, 2012 and December 31, 2011 are as follows:

(%)	March 31, 2012		December 31, 2011
Discount rate		3.92~5.36		3.86~5.42
Expected return on plan assets		2.98~5.43		2.00~5.29
Expected future salary increases		1.07~7.35		1.03~7.35

19. Other Liabilities

Other liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Other current liabilities
Due to customers for contract work	(Won)	419,264		449,470
Advances received		1,876,345		973,427
Unearned revenue		41,756		36,935
Withholdings		169,394		114,941
Deferred revenue		329		362
Others (*1)		266,452		224,496
		2,773,540		1,799,631
Other long-term liabilities
Advances received		1,048		1,547
Unearned revenue		1,110		1,200
Others (*2)		61,598		81,756
		63,756		84,503
	(Won)	2,837,296		1,884,134

(*1) Includes other current liabilities amounting to (Won)241,621 million and (Won)204,653 million as of March 31, 2012 and December 31, 2011, respectively, due to proportionate consolidation of joint ventures which are owned by POSCO’s subsidiaries.

(*2) Includes other long-term liabilities amounting to (Won)15,194 million and (Won)14,857 million as of March 31, 2012 and December 31, 2011, respectively, due to proportionate consolidation of joint ventures which are owned by POSCO’s subsidiaries.

76

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

20. Financial Instruments

(a) Classification of financial instruments

1) Financial assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Financial assets at fair value through profit or loss
Financial assets held for trading	(Won)	897		50,861
Derivatives assets held for trading		81,302		108,751
		82,199		159,612
Available-for-sale financial assets		5,000,482		4,608,597
Held-to-maturity investments		35,573		35,574
Cash and cash equivalents, and loans and receivables		20,605,305		20,210,417
	(Won)	25,723,559		25,014,200

2) Financial liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Financial liabilities at fair value through profit or loss
Derivatives liabilities held for trading	(Won)	162,180		195,837
Designated as financial liabilities at fair value through profit or loss		391,416		333,004
		553,596		528,841
Financial liabilities evaluated as amortised cost
Trade accounts and notes payable		3,912,825		4,397,662
Borrowings		26,168,825		26,478,713
Financial guarantee liabilities		31,142		32,242
Others		1,943,931		1,933,671
		32,056,723		32,842,288
	(Won)	32,610,319		33,371,129

77

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

3) Financial profit and loss by category of financial instrument for the three-month periods ended March 31, 2012 and March 31, 2011 is as follows:

¨ March 31, 2012

(in millions of Won)	Financial income and costs
	Interest income (cost)			Dividend income		Gain and loss on foreign currency transactions			Gain and loss on foreign currency translations		Gain and loss on disposal			Others			Total			Other comprehensive income
Financial assets at fair value through profit or loss	(Won)	—			—		—			—		93,709			30,354			124,063			—
Available-for-sale financial assets		48			65,992		—			—		9,983			(59,872	)		16,151			306,227
Held-to-maturity investments		417			—		—			—		—			20			437			—
Loans and receivables		73,708			—		(104,339	)		6,930		(12,582	)		(41	)		(36,324	)		—
Financial liabilities at fair value through profit or loss		—			—		—			—		(88,145	)		(66,703	)		(154,848	)		—
Financial liabilities at amortised cost		(224,976	)		—		109,555			237,370		—			(1,098	)		120,851			—
	(Won)	(150,803	)		65,992		5,216			244,300		2,965			(97,340	)		70,330			306,227

¨ March 31, 2011

(in millions of Won)	Financial income and costs
	Interest income (cost)			Dividend income		Gain and loss on foreign currency transactions			Gain and loss on foreign currency translations			Gain and loss on disposal			Others			Total			Other comprehensive loss
Financial assets at fair value through profit or loss	(Won)	1			—		—			—			78,378			49,115			127,494			—
Available-for-sale financial assets		232			66,366		—			—			553			—			67,151			(268,019	)
Held-to-maturity investments		393			—		—			—			—			—			393			—
Loans and receivables		46,170			—		(45,272	)		(77,096	)		6,162			(53	)		(70,089	)		—
Financial liabilities at fair value through profit or loss		—			—		—			—			(108,115	)		(61,553	)		(169,668	)		—
Financial liabilities at amortised cost		(184,462	)		—		52,215			279,771			—			(1,638	)		145,886			—
	(Won)	(137,666	)		66,366		6,943			202,675			(23,022	)		(14,129	)		101,167			(268,019	)

78

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Credit risk

1) Credit risk exposure

The Company’s exposure to credit risk as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Cash and cash equivalents	(Won)	5,042,890		4,598,682
Financial assets at fair value through profit or loss		82,199		159,612
Available-for-sale financial assets		5,000,482		4,608,597
Held-to-maturity investments		35,573		35,574
Loans and other receivables		3,421,143		3,978,159
Trade accounts and notes receivable		11,968,456		11,450,515
Long-term trade accounts and notes receivable		172,816		183,061
	(Won)	25,723,559		25,014,200

The Company also provided financial guarantees for the repayment of loans of associates and another party. As of March 31, 2012 and December 31, 2011, the maximum exposure to credit risk of these guarantees are (Won)5,163,042 million and (Won)4,542,734 million, respectively.

2) Impairment losses on financial assets

¨ Allowance for doubtful accounts as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Trade accounts and notes receivable	(Won)	311,149		303,186
Other accounts receivable		43,081		36,453
Long-term loans		60,874		61,222
Other assets		2,885		5,860
	(Won)	417,989		406,721

79

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

‚ Impairment losses on financial assets for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Bad debt expenses on trade receivables	(Won)	7,026			31,290
Impairment of available-for-sale financial assets		59,872			—
Other bad debt expenses (*1)		5,404			—
Less: Reversal of allowance for doubtful accounts		(8,286	)		(18,350	)
Less: Impairment of held to maturity financial assets		(20	)		—
	(Won)	63,996			12,940

(*1) Other bad debt expenses are mainly related to other receivables and long-term loans.

ƒ The aging schedule and the impaired losses of trade accounts and notes receivables as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012				December 31, 2011
	Trade accounts and notes receivable		Impairment		Trade accounts and notes receivable		Impairment
Not due	(Won)	9,355,696		8,617		9,702,586		8,137
Over due less than 1 month		1,838,149		334		1,320,387		233
1 month - 3 months		404,605		3,585		256,022		1,506
3 months - 12 months		397,117		28,086		301,875		37,032
over 12 months		456,854		270,527		355,892		256,278
	(Won)	12,452,421		311,149		11,936,762		303,186

„ Changes in the allowance for doubtful accounts for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 were as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Beginning	(Won)	406,721			357,063
Bad debt expenses		7,026			103,848
Other bad debt expenses		5,404			28,081
Reversal of bad debt expenses		(8,286	)		(86,452	)
Other increase		7,124			4,181
Ending	(Won)	417,989			406,721

80

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Liquidity risk

1) Contractual maturities for non-derivative financial liabilities, including estimated interests, are as follows:

(in millions of Won)	Book value		Cash flow for contracts		Over due less than 1 year		1 year - 5 years		later than 5 years		Total
Current non-derivative financial liabilities
Trade accounts payable	(Won)	3,912,825		3,912,825		3,912,447		378		—		3,912,825
Financial guarantee liabilities (*1)		31,142		5,163,042		5,163,042		—		—		5,163,042
Other financial liabilities		1,943,931		1,943,931		1,683,596		255,914		4,421		1,943,931
Borrowings (*2)		26,560,241		29,736,172		11,386,960		13,530,497		4,818,715		29,736,172
	(Won)	32,448,139		40,755,970		22,146,045		13,786,789		4,823,136		40,755,970

(*1) For issued financial gurantee contracts, the maximum amount of the gurantee is allocated to the earliest period in which the guarantee could be called.

(*2) Includes cash flows of embedded derivative instruments in relation to exchangeable bonds (exchange right).

2) The maturity analysis of derivative financial liabilities is as follows:

(in millions of Won)	Over due less than 1 year		1 year - 5 years		later than 5 years		Total
Derivative financial liabilities
Currency forward	(Won)	96,502		25,409		—		121,911
Currency futures		93		—		—		93
Currency swaps		—		13,912		817		14,729
Others		10,898		14,549		—		25,447
	(Won)	107,493		53,870		817		162,180

(d) Currency risk

1) The Company has exposure to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The exposure to currency risk as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)	March 31, 2012				December 31, 2011
	Assets		Liabilities		Assets		Liabilities
USD	(Won)	3,779,040		11,248,419		3,852,909		10,912,882
EUR		375,965		402,023		275,012		610,454
JPY		246,781		2,184,876		236,046		2,353,794
Others		166,473		130,218		130,753		136,294

81

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) As of March 31, 2012 and December 31, 2011, provided that functional currency against foreign currencies other than functional currency hypothetically strengthens or weakens by 10%, the changes in gain or loss during the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012					December 31, 2011
	10% increase			10% decrease		10% increase			10% decrease
USD	(Won)	(746,938	)		746,938		(705,997	)		705,997
EUR		(2,606	)		2,606		(33,544	)		33,544
JPY		(193,810	)		193,810		(211,775	)		211,775

(e) Interest rate risk

1) The carrying amount of interest-bearing financial instruments as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Fixed rate
Financial assets	(Won)	6,857,956			7,086,835
Financial liabilities		(23,833,139	)		(24,169,245	)
		(16,975,183	)		(17,082,410	)
Variable rate
Financial liabilities	(Won)	(2,727,102	)		(2,642,472	)

2) Sensitivity analysis on the fair value of financial instruments with variable interest rates

As of March 31, 2012 and December 31, 2011, provided that other factors remain the same and the interest rate of borrowings with floating rates increases or decreases by 1%, the changes in gain or loss during the three-month periods ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012					December 31, 2011
	1% increase			1% decrease		1% increase			1% decrease
Variable rate financial instruments	(Won)	(27,271	)		27,271		(26,425	)		26,425

82

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(f) Fair value

1) Fair value and book value

The carrying amount and the fair value of financial instruments as of March 31, 2012 and December 31, 2011 are as follows

(in millions of Won)	March 31, 2012				December 31, 2011
	Book Value		Fair Value		Book Value		Fair Value
Assets measured fair value
Financial assets held for trading	(Won)	897		897		50,861		50,861
Available-for-sale financial assets		4,648,833		4,648,833		4,359,202		4,359,202
Derivatives assets held for trading		81,302		81,302		108,751		108,751
		4,731,032		4,731,032		4,518,814		4,518,814
Assets measured amortised cost
Cash and cash equivalents		5,042,890		5,042,890		4,598,682		4,598,682
Trade accounts and notes receivable		12,141,272		12,141,272		11,633,576		11,633,576
Loans and other receivables		3,421,143		3,421,143		3,978,159		3,978,159
Held-to-maturity investments		35,573		35,573		35,574		35,574
		20,640,878		20,640,878		20,245,991		20,245,991
Liabilities measured fair value
Derivatives liabilities held for trading		162,180		162,180		195,837		195,837
Convertible bonds		391,416		391,416		333,004		333,004
		553,596		553,596		528,841		528,841
Liabilities measured amortised cost
Trade accounts and notes payable		3,912,825		3,912,825		4,397,662		4,397,662
Borrowings		26,168,825		26,312,526		26,478,713		26,793,230
Financial guarantee liabilities		31,142		31,142		32,242		32,242
Others		1,943,931		1,943,931		1,933,671		1,933,671
	(Won)	32,056,723		32,200,424		32,842,288		33,156,805

2) Interest rates used for determining fair value

The interest rates used to discount estimated cash flows as of March 31, 2012 and December 31, 2011 are as follows:

	March 31, 2012	December 31, 2011
Interest rate of Borrowings (%)	1.47 ~ 4.50	1.8 ~ 4.62

3) The fair value hierarchy

¨ The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in measurements.

Level 1:	quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:	inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly.
Level 3:	inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

83

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

¨ The fair values of financial instruments, by valuation method as of March 31, 2012 and December 31, 2011 are as follows:

a. March 31, 2012

(in millions of Won)	Level 1		Level 2		Level 3		Total
Financial Assets
Financial assets held for trading	(Won)	—		897		—		897
Available-for-sale financial assets		3,735,600		—		913,233		4,648,833
Derivatives assets held for trading		—		81,302		—		81,302
		3,735,600		82,199		913,233		4,731,032
Financial Liabilities
Derivatives liabilities held for trading		—		162,180		—		162,180
Convertible bonds		391,416		—		—		391,416
	(Won)	391,416		162,180		—		553,596

b. December 31, 2011

(in millions of Won)	Level 1		Level 2		Level 3		Total
Financial Assets
Financial assets held for trading	(Won)	—		50,861		—		50,861
Available-for-sale financial assets		3,419,961		—		939,241		4,359,202
Derivatives assets held for trading		—		108,751		—		108,751
		3,419,961		159,612		939,241		4,518,814
Financial Liabilities
Derivatives liabilities held for trading		—		195,837		—		195,837
Convertible bonds		333,004		—		—		333,004
	(Won)	333,004		195,837		—		528,841

¨ Changes in fair value of financial instruments measured by Level 3 for the three-month periods ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

a. For the three-month periods ended March 31, 2012

(in millions of Won)	Beginning		Valuation			Acquisition and others		Disposal and others		Ending
Available-for-sale financial assets	(Won)	939,241		(26,008	)		—		—		913,233

b. For the year ended December 31, 2011

(in millions of Won)	Beginning		Valuation		Acquisition and others (*1)		Disposal and others (*1)			Ending
Available-for-sale financial assets	(Won)	805,160		157,329		98,242		(121,490	)		939,241

(*1) Included change in amounts due to change of fair value level.

84

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

21. Share Capital and Contributed Surplus

(a) Share capital

Under the Articles of Incorporation, the Company is authorized to issue 200 million shares of capital stock with a par value of (Won)5,000 per share. As of March 31, 2012, exclusive of retired stock, 87,186,835 shares of common stock have been issued.

The Company is authorized, with the Board of Directors’ approval, to retire treasury stock in accordance with applicable laws up to the maximum amount of certain undistributed earnings. The 9,293,790 shares of common stock were retired with the Board of Directors’ approval.

As of March 31, 2012, total shares of ADRs of 52,974,264 are equivalent to 13,243,566 of common shares.

As of March 31, 2012, the ending balance of capital stock amounts to (Won)482,403 million; however, it is different from par value of issued common stock, which amounted to (Won)435,934 million, due to retirement of treasury stock.

(b) Capital surplus

Capital surplus as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Share premium	(Won)	463,825			463,825
Gains on sale of treasury stock		763,867			763,867
Capital surplus		(101,201	)		(77,240	)
	(Won)	1,126,491			1,150,452

22. Reserves

(a) Reserves as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Accumulated comprehensive income (loss) of investments in associates	(Won)	47,949			(16,186	)
Changes in fair value of available-for-sale investments		458,572			154,617
Currency translation differences		388,047			283,516
Others		(4,355	)		(16,521	)
	(Won)	890,213			405,426

85

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Changes in fair value of available-for-sale investments for the three-month periods ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Beginning balance	(Won)	154,617			1,381,667
Changes in fair value of available-for-sale investments and reclassification upon impairment		304,707			(974,031	)
Reclassification to profit or loss upon disposal		—			(252,102	)
Others		(752	)		(917	)
Ending balance	(Won)	458,572			154,617

23. Treasury Shares

As of March 31, 2012, the Company holds 9,942,391 shares of treasury stock for price stabilization in accordance with the Board of Director’s resolution.

86

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

24. Stock Appreciation Rights

(a) The Company granted stock appreciation rights to its executive officers in accordance with the stock appreciation rights plan approved by the Board of Directors. The details of the stock appreciation rights granted are as follows:

1) Class of shares: registered common stock

2) The number of shares, Exercise price per share, Exercise period

(per share, won)	6th Grant
Granted	90,000
Exercised	78,000
Unexercised	12,000
Exercise price	(Won)194,900
Exercise period	2007.4.29~2012.4.28

(b) Expenses related to stock appreciation rights granted to executives incurred for the three-month period ended March 31, 2012 are as follows:

(in million of Won)	4th Grant			5th Grant			6th Grant			Total
Accumulated reversal of stock Compensation expense as of December 31, 2011		(83	)		(11,211	)		(6,156	)		(17,450	)
Reversal of stock compensation expenses for the three-month periods ended March 31, 2012		—			—			375			375

(c) The Company uses a fair value approach for calculating remuneration cost. The method and assumption for computing fair value of stock appreciation rights are as follows:

	6th Grant
Risk-free interest rate		3.43	%
Option life		33 days
Expected volatility		0.0778
Rate of expected dividends		2.63	%
Stock price	(Won)	380,000
Fair value of share options	(Won)	184,803

87

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

25. Construction Contracts

(a) Construction contracts in progress as of March 31, 2012 and December 31, 2011 are as follows:

(in million of Won)	March 31, 2012			December 31, 2011
Aggregate amount of costs incurred	(Won)	8,907,298			9,429,170
Add : Recognized profits		775,987			883,110
less : Recognize losses		(244,245	)		(250,387	)
Cumulative construction revenue		9,439,040			10,061,893
less: progress billing		(8,517,659	)		(9,056,857	)
Foreign currency gains and losses		223			—
Others		2,765			(93,090	)
	(Won)	924,369			911,946

(b) Amount due from and due to customers for contract work as of March 31, 2012 and December 31, 2011 are as follows:

(in million of Won)	March 31, 2012			December 31, 2011
Due from custormers for contract work	(Won)	1,343,633			1,361,416
Due to custormers for contract work		(419,264	)		(449,470	)
	(Won)	924,369			911,946

26. Revenue

Details of revenue for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Revenues
Goods sales	(Won)	14,563,467		14,410,999
Services sales		887,791		466,721
Construction sales		798,445		1,023,915
Rental income		8,538		9,789
Others		50,403		339,140
	(Won)	16,308,644		16,250,564

88

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

27. Selling and Administrative Expenses

(a) Administrative expenses

Administrative expenses for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Wages and salaries	(Won)	183,848		153,699
Expenses related to defined benefit plan		15,723		14,957
Other employee benefits		45,502		36,431
Travel		12,715		12,712
Depreciation		44,899		41,694
Communication		3,982		3,563
Electric power		2,618		1,608
Taxes and public dues		14,820		12,005
Rental		17,493		15,227
Repairs		3,077		2,534
Insurance premium		1,874		3,838
Entertainment		4,575		4,326
Advertising		15,292		17,329
Research & development		42,825		57,384
Service fees		64,345		53,960
Supplies		5,548		3,356
Vehicles maintenance		5,577		5,055
Industry association Fee		3,945		3,985
Training		4,754		4,819
Conference		5,097		5,134
Warranty expense		3,249		5,292
Bad debt allowance		7,026		31,290
Others		5,929		6,920
	(Won)	514,713		497,118

89

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Freight	(Won)	369,687		326,735
Operating expenses for distribution center		2,334		1,993
Sales commissions		18,869		19,979
Sales advertising		147		143
Sales promotion		3,423		3,574
Samples		1,988		1,614
Sales insurance premium		8,143		4,797
Contract cost		13,001		11,996
Others		1,547		1,546
	(Won)	419,139		372,377

28. Other Operating Income and Expenses

(a) Other operating income

Details of other operating income for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Gain on disposals of property, plant and equipment	(Won)	2,222		4,706
Gain on disposals of investment of equity-accounted investees		4,028		—
Reversal of allowance for doubtful amounts		8,286		18,350
Gain on disposals of wastes		2,273		284
Gain from claim compensations		14,700		—
Others		83,023		54,384
Total	(Won)	114,532		77,724

90

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Other operating expenses

Details of other operating expenses for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Loss on disposals of property, plant and equipment	(Won)	13,873		9,457
Loss on disposals of investment property		759		1,913
Loss on disposals of non-current assests held for sale		9,391		—
Cost of idle assets		6,594		894
Other bad debt expenses		5,404		—
Donations		24,605		4,541
Others		10,438		7,617
	(Won)	71,064		24,422

29. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling, general and administrative expenses and other operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Changes in inventories	(Won)	4,794,413		3,540,536
Cost of merchandises sold		5,041,686		6,131,827
Employee benefits expenses		762,977		677,573
Outsourced processing cost		1,402,266		1,678,824
Depreciation expenses (*1)		566,399		491,352
Amortization expenses		32,470		29,891
Freight and custody expenses		369,687		326,735
Commission paid		18,869		19,979
Loss on disposal of property, plant, and equipment		13,873		9,457
Donations		24,605		4,541
Other expenses		2,608,153		2,061,702
	(Won)	15,635,398		14,972,417

(*1) Includes depreciation expense of investment properties.

91

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

30. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Finance income
Interest income	(Won)	74,174			46,796
Dividend income		65,992			66,366
Gain on foreign currency transactions		183,174			208,978
Gain on foreign currency translations		328,415			367,321
Gain on transactions of derivatives		93,268			79,230
Gain on valuations of derivatives		30,812			51,376
Gain on disposals of available-for-sale investments		9,987			554
Others		1,317			1,725
		787,139			822,346
Finance costs
Interest expenses		(224,977	)		(184,462	)
Loss on foreign currency transactions		(177,958	)		(202,035	)
Loss on foreign currency translations		(84,115	)		(164,646	)
Loss on transactions of derivatives		(88,259	)		(109,439	)
Loss on valuations of derivatives		(8,388	)		(56,488	)
Impairment loss on available-for-sale investments		(59,872	)		—
Others		(73,240	)		(4,108	)
	(Won)	(716,809	)		(721,178	)

92

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

31. Income Taxes

(a) Income tax expense for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Current income taxes	(Won)	96,258			224,022
Deferred income tax due to temporary differences		231,943			112,277
Less: Items recorded directly to equity		(88,327	)		6,331
Income tax expense	(Won)	239,874			342,630

(b) The following table reconciles the expected amount of income tax expense based on statutory rates (24.2%) to the actual amount of taxes recorded by the Company for the three-month periods ended March 31, 2012 and March 31, 2011.

(in millions of Won)	March 31, 2012			March 31, 2011
Net income before income tax expense	(Won)	875,513			1,435,692
Income tax expense computed at statutory rate		211,874			347,437
Adjustments:		28,000			(4,807	)
Tax effects due to permanent differences		(8,609	)		(1,466	)
Tax credit		(19,004	)		(17,491	)
Non-recognition of deffered tax assets		42,251			36,788
Others		13,362			(22,638	)
Income tax expense	(Won)	239,874			342,630
Effective rate (%)		27.40			23.87

(c) The income taxes (charged) credited directly in equity for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Gain (loss) on valuation of available-for-sale investments	(Won)	85,969		(28,173	)
Others		2,358		9,919
	(Won)	88,327		(18,254	)

93

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) The movements in deferred tax assets (liabilities) for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012									December 31, 2011
	Beginning			Inc (Dec)			March 31, 2012			Beginning			Inc (Dec)			December 31, 2011
Deferred income tax due to temporary differences
Reserve for special repairs	(Won)	(29,659	)		173			(29,486	)		(27,776	)		(1,883	)		(29,659	)
Allowance for doubtful accounts		104,621			(2,428	)		102,193			80,349			24,272			104,621
Reserve for technology developments		(366,232	)		(3,602	)		(369,834	)		(269,892	)		(96,340	)		(366,232	)
Depreciation expense		(58,288	)		(1,022	)		(59,310	)		(61,129	)		2,841			(58,288	)
Share of profit or loss of equity-accounted investees		(224,136	)		(4,256	)		(228,392	)		(170,016	)		(54,120	)		(224,136	)
Reserve for inventory valuation		(1,514	)		4,421			2,907			1,484			(2,998	)		(1,514	)
Revaluation of assets		(570,403	)		(37,684	)		(608,087	)		(362,949	)		(207,454	)		(570,403	)
Prepaid expenses		21,437			8,517			29,954			18,733			2,704			21,437
Impairment loss on property, plant and equipment		25,492			197			25,689			24,858			634			25,492
Loss on foreign currency translation		95,787			(50,129	)		45,658			90,656			5,131			95,787
Accrued severance benefits		55,053			4,244			59,297			40,710			14,343			55,053
Group severance insurance deposits		(43,091	)		(243	)		(43,334	)		(36,232	)		(6,859	)		(43,091	)
Provision for construction losses		2,852			(582	)		2,270			1,697			1,155			2,852
Provision for construction warranty		15,902			(133	)		15,769			13,056			2,846			15,902
Appropriated retained earnings for technological development		(165	)		—			(165	)		(246	)		81			(165	)
Accrued income		(1,949	)		113			(1,836	)		(1,061	)		(888	)		(1,949	)
Others		376,107			(15,981	)		360,126			317,877			58,230			376,107
		(598,186	)		(98,395	)		(696,581	)		(339,881	)		(258,305	)		(598,186	)
Deferred income taxes recognized directly to equity Gain (loss) on valuation of available-for-sale investments		1,421			(85,969	)		(84,548	)		(305,406	)		306,827			1,421
Others		35,769			(2,358	)		33,411			4,141			31,628			35,769
		37,190			(88,327	)		(51,137	)		(301,265	)		338,455			37,190
Deferred tax from tax credit
Tax credit carryforward and others		256,877			12,079			268,956			280,295			(23,418	)		256,877
Deferred tax effect due to unrealized gains (losses) and others		(8,375	)		(43,245	)		(51,620	)		(129,000	)		120,625			(8,375	)
	(Won)	(312,494	)		(217,888	)		(530,382	)		(489,851	)		177,357			(312,494	)

94

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) Deferred tax assets and liabilities as of March 31, 2012 and December 31, 2011, are as follows:

(in millions of Won)	March 31, 2012								December 31, 2011
	Assets		Liabilities			Net			Assets		Liabilities			Net
Deferred income tax due to temporary differences
Reserve for special repairs	(Won)	—		(29,486	)		(29,486	)		—		(29,659	)		(29,659	)
Allowance for doubtful accounts		102,244		(51	)		102,193			104,672		(51	)		104,621
Reserve for technology developments		—		(369,834	)		(369,834	)		—		(366,232	)		(366,232	)
Depreciation expense		12,761		(72,071	)		(59,310	)		12,319		(70,607	)		(58,288	)
Share of profit or loss of equity-accounted investees		—		(228,392	)		(228,392	)		—		(224,136	)		(224,136	)
Reserve for inventory valuation		2,907		—			2,907			4,319		(5,833	)		(1,514	)
Revaluation of assets		—		(608,087	)		(608,087	)		—		(570,403	)		(570,403	)
Prepaid expenses		31,617		(1,663	)		29,954			23,045		(1,608	)		21,437
Impairment loss on property, plant and equipment		25,689		—			25,689			25,492		—			25,492
Loss on foreign currency translation		112,968		(67,310	)		45,658			176,621		(80,834	)		95,787
Accrued severance benefits		80,049		(20,752	)		59,297			75,912		(20,859	)		55,053
Group severance insurance deposits		—		(43,334	)		(43,334	)		—		(43,091	)		(43,091	)
Provision for construction losses		2,270		—			2,270			2,852		—			2,852
Provision for construction warranty		15,769		—			15,769			15,902		—			15,902
Appropriated retained earnings for technological development		—		(165	)		(165	)		—		(165	)		(165	)
Accrued income		10		(1,846	)		(1,836	)		—		(1,949	)		(1,949	)
Others		475,776		(115,650	)		360,126			382,735		(6,628	)		376,107
		862,060		(1,558,641	)		(696,581	)		823,869		(1,422,055	)		(598,186	)
Deferred income taxes recognized directly to equity Gain (loss) on valuation of available-for-sale investments		127,515		(212,063	)		(84,548	)		199,317		(197,896	)		1,421
Others		47,815		(14,404	)		33,411			49,898		(14,129	)		35,769
		175,330		(226,467	)		(51,137	)		249,215		(212,025	)		37,190
Deferred tax from tax credit
Tax credit carryforward and others		297,488		(28,532	)		268,956			292,255		(35,378	)		256,877
Deferred tax effect due to unrealized gains (losses) and others		466,120		(517,740	)		(51,620	)		494,450		(502,825	)		(8,375	)
	(Won)	1,800,998		(2,331,380	)		(530,382	)		1,859,789		(2,172,283	)		(312,494	)

(f) As of March 31, 2012, the Company did not recognize the income tax effects associated with taxable temporary differences of (Won)3,803,975 million (deferred tax liability (Won)920,562 million) mainly relating to undistributed earnings of subsidiaries since it is probable that the temporary difference will not reverse in the foreseeable future. As of March 31, 2011, the Company did not recognize the income tax effect associated with deductible temporary differences of (Won)1,529,937 million (deferred tax assets (Won)370,243 million) mainly relating to loss of subsidiaries and affiliates due to remote possibility of realization.

32. Earnings per Share

(a) Basic and diluted earnings per share for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won, except per share information)	March 31, 2012		March 31, 2011
Profit attribuete to controlling interest	(Won)	629,538		1,090,722
Weighted-average number of common shares outstanding (*1)		77,244,444		77,274,349
Basic and diluted earnings per share		8,150		14,115

95

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

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

	March 31, 2012			March 31, 2011
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(9,942,391	)		(9,912,486	)
Weighted-average number of common shares outstanding		77,244,444			77,274,349

33. Related Party Transactions

(a) Significant transactions with related companies for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

	Sales and others (*1)				Purchase and others (*2)
(in millions of Won)	March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011
Subsidiaries
POSCO E&C Co., Ltd.	(Won)	3,696		4,174		279,072		310,871
POSCO P&S Co., Ltd.		205,833		325,023		406,630		336,943
POSCO Coated & Color Steel Co., Ltd.		147,081		158,015		1,383		76
POSCO ICT Co., Ltd.		295		370		92,784		91,929
POSCO Chemtech Co., Ltd.		127,249		97,509		195,006		175,745
POSCO M-TECH CO., LTD.		6,675		—		79,066		—
POSCO TMC Co., Ltd.		46,071		40,095		225		77
POSCO AST Co., Ltd.		80,993		72,179		15,460		13,968
Daewoo International Corp.		1,091,888		798,888		2,850		334
POSCO NST.CO., LTD		63,844		21,372		923		1,282
POSCO America Corporation		177,861		64,689		8		—
POSCO Canada Ltd.		—		—		46,310		52,562
POSCO Asia Co., Ltd.		493,373		464,429		18,050		45,411
POSCO-Japan Co., Ltd.		350,250		308,515		6,547		14,939
POSCO-India Delhi Steel Processing Centre Pvt. Ltd.		40,175		17,405		2		—
POSCO-Mexico Co., Ltd.		64,948		60,964		—		—
Daewoo International Singapore Pte. Ltd.		—		—		9,904		75,798
Others		286,912		92,839		232,949		172,431
	(Won)	3,187,144		2,526,466		1,387,169		1,292,366
Associates
Posmate Co., Ltd.		246		283		12,081		12,904
POSCO M-TECH CO., LTD.		—		5,310		—		67,637
SNNC Co., Ltd.		540		270		87,545		66,862
SUNG JIN GEOTEC Co., Ltd.		7,435		8,204		—		—
DONG BANG METAL IND.CO., LTD.		28,835		8,258		—		—
USS-POSCO Industries (UPI)		85		122,233		101		—
Poschrome (Proprietary) Ltd.		—		—		17,374		16,801
Others		20,967		863		2,200		1,745
		58,108		145,421		119,301		165,949
	(Won)	3,245,252		2,671,887		1,506,470		1,458,315

(*1) Sales and others include sales and other operating income. Sales are mainly sales of steel products and these are priced on an arms length basis.

(*2) Purchase and others include purchase and overhead cost. Purchases and others are mainly related to purchase of construction services and purchase of raw materials to manufacture steel products. These are priced on an arms length basis.

(*3) As of March 31, 2012, the Company provides guarantees for certain related parties (note 34).

96

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) The related account balances as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	Receivables (*1)				Payables (*1)
	March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
Subsidiaries
POSCO E&C Co., Ltd.	(Won)	5,231		647		145,595		241,918
POSCO Processing&Service		104,747		88,838		10,478		1,512
POSCO Plantec		35		65		27,071		42,534
POSCO ICT Co., Ltd.		2,507		30		43,521		62,583
POSCO Coated & Color Steel Co., Ltd.		136,518		116,252		229		335
POSCO Chemtech Company Ltd.		46,060		37,808		80,781		82,048
POSCO TMC CO., LTD.		15,310		21,601		102		134
POSCO AST Co., Ltd.		44,577		33,266		9,100		7,090
Daewoo International Corp.		289,252		284,125		1,434		1,589
POSCO NST.CO., LTD		57,390		64,012		504		676
POSCO America Corporation		34,680		32,346		—		—
POSCO Asia Co., Ltd.		60,694		227,476		1,073		1,407
POSCO-TBPC Co., Ltd.		29,662		27,381		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		5,445		6,713		—		—
POSCO-Vietnam Co., Ltd.		441		422		—		—
POSCO-Japan Co., Ltd.		38,282		52,362		622		1,546
POSCO-India Delhi Steel Processing Centre Pvt. Ltd.		13,830		3,484		—		—
POSCO-Mexico Co., Ltd.		142,480		171,908		—		—
Others		72,494		81,255		72,202		83,201
	(Won)	1,099,635		1,249,991		392,712		526,573
Associate
Posmate Co., Ltd.		—		—		5,389		7,198
SNNC Co., Ltd.		150		223		4,452		23,187
DONG BANG METAL IND.CO., LTD.		21,853		17,038		—		—
Others		2,001		4,122		6,737		809
		24,004		21,383		16,578		31,194
	(Won)	1,123,639		1,271,374		409,290		557,767

(*1) Receivables include trade accounts and notes receivable and other receivables. Payables include trade accounts payables and other payables.

97

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Compensation to key management, which consists of normal wages and salaries, bonus and employee benefits for the three-month periods ended March 31, 2012 and March 31, 2011, details of compensation to key management officers are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Short-term benefits	(Won)	31,086		25,919
Retirement benefits		9,410		10,874
Long-term benefits		5,807		3,533
	(Won)	46,303		40,326

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. In addition to compensation described above, the Company provided stock appreciation rights to its executive officers and recorded reversal of stock compensation expenses amounted to (Won)375 million and (Won)1,669 million, respectively, for the three-month periods ended March 31, 2012 and March 31, 2011 (note 24).

98

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

34. Commitments and Contingencies

(a) Details of guarantees

Contingent liabilities on outstanding guarantees provided by the Company as of March 31, 2012, are as follows:

(in millions of Won)
Guarantors	Guarantee beneficiary	Financial institution	Foreign Currency		Won Equivalent
[The Company]
POSCO	Guangdong Pohang Coated Steel Co., Ltd.	SMBC and others	USD	122,600,000		139,494
	POSCO Investment Co., Ltd.	BOC and others	CNY	630,000,000		113,677
		HSBC	MYR	240,000,000		89,114
		HSBC and others	USD	255,000,000		290,139
	POSCO Maharashtra Steel Pvt. Ltd.	Export-Import Bank of Korea and others	USD	143,000,000		162,705
	POSCO VST Co., Ltd.	ANZ(Tapei) and others	USD	65,000,000		73,957
	POSCO-Mexico Co., Ltd.	HSBC and others	USD	60,000,000		68,268
	POSCO-VIETNAM Co., Ltd.	Export-Import Bank of Korea and others	USD	230,000,000		261,694
		MIZUHO and others	JPY	4,806,760,000		66,369
	Zhangjiagang Pohang Stainless Steel Co., Ltd	MIZUHO and others	USD	160,000,000		182,048
	Zeus (Cayman) Ltd.	Creditor	JPY	13,018,894,922		179,757
	Zeus (Cayman) II Ltd.	Creditor	JPY	25,779,278,600		355,945
Daewoo International Corporation	Daewoo (China) Co., Ltd.	Hana Bank	USD	18,997,000		21,615
	Daewoo Cement (Shandong) Co., Ltd.	Export-Import Bank of Korea and others	USD	29,832,409		33,943
		CACIB	EUR	22,786,238		34,486
	Daewoo International America Corp.	Shinhan Bank	USD	500,000		569
	Daewoo International Australia Holdings Pty. Ltd.	Korea Exchange Bank	USD	8,398,395		9,556
	Daewoo International Japan Corp.	Shinhan Bank	JPY	500,000,000		6,904
		SCB	JPY	200,000,000		2,761
		MIZUHO	JPY	3,000,000,000		41,422
		SMBC	JPY	2,000,000,000		27,615
	Daewoo International Shanghai Pty. Ltd.	MIZUHO	USD	10,000,000		11,378
	Daewoo Paper Manufacturing Co., Ltd.	HSBC	USD	12,500,000		14,223
	Daewoo Textile Bukhara LLC	Export-Import Bank of Korea	USD	29,100,000		33,110
	Daewoo International MEXICO S.A. de C.V.	SMBC	USD	25,000,000		28,445
	PT. Bio Inti Agrindo	Export-Import Bank of Korea	USD	7,000,000		7,965
POSCO E&C Co., Ltd.	POSCO E&C Vietnam Co., Ltd.	Korea Exchange Bank	USD	5,000,000		5,689
		Export-Import Bank of	USD	18,000,000		20,480
		Korea and others
		ANZ	USD	5,000,000		5,689
	HONG KONG POSCO E&C (CHINA) Investment Co., Ltd.	Woori Bank	USD	30,000,000		34,134
	International Business Center Corporation	Export-Import Bank of Korea and others	USD	20,000,000		22,756
	SANTOS CMI S.A	CITI Equador	USD	3,000,000		3,413
POSCO P&S Co., Ltd.	POSCO Canada Pty., Ltd.	Hana Bank	USD	12,484,500		14,205
POSCO ICT Co., Ltd.	POSCO ICT Indonesia	POSCO Investment Co., Ltd.	USD	1,500,000		1,707
	VECTUS Ltd.	POSCO Investment Co., Ltd.	USD	2,000,000		2,276
POSCO Energy Co., Ltd.	PSC Energy Global Co., Ltd	Other foreign banks	USD	126,184,939		143,573
	TECHREN Solar, LLC	Woori Bank	USD	9,571,600		10,891
Pos Calcium CO., Ltd.	Pos Calcium CO., Ltd	Seoul Guarantee Insurance Co., Ltd.	KRW	49		49
POSCO JAPAN Co., Ltd.	POSCO-JEPC Co., Ltd.	Mizuho Bank and others	JPY	3,137,368,806		43,319
	POSCO-JKPC Co., Ltd.	Higo bank and others	JPY	1,778,200,000		24,552
	POSCO-JOPC Co., Ltd.	Kiyo bank and others	JPY	1,776,250,000		24,525
Daewoo International Japan Corp.	Daewoo International Japan Corp.	MIZUHO	JPY	500,000,000		6,904
Daewoo Textile Fergana LLC	Daewoo Textile Bukhara LLC	NBU	UZS	6,519,920,000		4,014
POSCO E&C (CHINA) Co., Ltd.	HONG KONG POSCO E&C (China) Investment Co., Ltd.	KB Bank(Seoul)	KRW	102,000		102,000
		Woori Bank(Beijing branch)	USD	33,000,000		37,547

99

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)
Guarantors	Guarantee beneficiary	Financial institution	Foreign Currency		Won Equivalent
[Associates]
POSCO	BX STEEL POSCO Cold Rolled Sheet Co., Ltd.	BOC and others	CNY	216,580,000		39,080
			USD	93,940,000		106,885
	United Spiral Pipe, LLC	Shinhan Bank	USD	24,500,000		27,876
Daewoo International Corporation	DMSA, AMSA	Other Bank	USD	123,866,667		140,935
		Other oversea financial institution	USD	16,133,333		18,357
	GLOBAL KOMSCO Daewoo LLC	Export-Import Bank of Korea and others	USD	5,950,000		6,770
POSCO E&C Co., Ltd.	Taegisan Wind Power Corporation	Korea Development Bank	KRW	7,500		7,500
	PSIB Co., Ltd.	Hana Bank	KRW	356,600		356,600
	CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd.	NH Bank	KRW	25,434		25,434
	Pohang Technovalley Pvf Co. Ltd	Shinhan Bank	KRW	3,570		3,570
		ABCP	KRW	3,570		3,570
POSCO P&S Co., Ltd.	Sebang Steel Co., Ltd.	Fukuoka Bank	JPY	245,000,000		3,383
POSCO ICT Co., Ltd.	Uitrans LRT Co., Ltd.	Construction Guarantee Cooperative	KRW	64,638		64,638
	CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd.	NH Bank	KRW	2,530		2,530
POSCO Engineering Co., Ltd.	PT Wampu Electric Power	Export-Import Bank of Korea and SMBC	USD	7,996,848		9,099
Daewoo(China) Co., Ltd.	Shanghai Lansheng Daewoo Corporation	China Construction Bank	CNY	100,000,000		18,044
POSCO China Holding Corp.	POSCO SeAH Steel Wire (Nantong) Co., Ltd.	POSCO Investment Co., Ltd.	USD	7,500,000		8,534
[Others]
Daewoo International Corporation	Ambatovy Project Investments Limited	Export-Import Bank of Korea and others	USD	46,653,812		53,083
	Sherritt International Corporation	Export-Import Bank of Korea and others	USD	6,090,268		6,930
POSCO E&C Co., Ltd.	ALD PFV and others	Korea Exchange Bank and others	KRW	1,116,831		1,116,831
	THE GALE INVESTMENTS COMPANY, L.L.C. and others	Woori Bank	USD	50,000,000		56,890
POSCO P&S Co., Ltd.	Asia Speciality Steel Co., Ltd.	Yamaguchi Bank	JPY	2,700,000,000		37,280
	GIPI	Bank Muscat, Bank Sohar	USD	12,000,000		13,654
POSCO Plant Engineering Co., Ltd.	Gyeongpo wind power generation and others	KB Bank and others	KRW	248,783		248,783
	GS CALTEX HOU and others	Korea Exchange Bank and others	USD	6,453,697		7,343
POSCO ICT Co., Ltd.	BTL business and others	Kyobo Life Insurance Co.,Ltd and ot	KRW	2,224,990		2,224,990
POSCO M-TECH Co., Ltd.	PYUNGSAN SI Co., Ltd	Seoul Guarantee Insurance Co., Ltd.	KRW	442		442
	Hyundai Hysco Co., Ltd.	Seoul Guarantee Insurance Co., Ltd.	KRW	2,195		2,195
Posco Engineering Co., Ltd	Kwanma Solar Co., Ltd. and others	Hana Bank	KRW	57,232		57,232
	Hyundai ENG Co., Ltd.	Engineering Financial Cooperative	KRW	66,912		66,912
PHP Co., Ltd	Expo apt	KB Bank	KRW	387,849		387,849
Daewoo Cement (Shandong) Co., Ltd.	SDAC	Bank of China	USD	35,000,000		39,823
			CNY	946,580,000		170,801
			EUR	22,786,238		34,486
			JPY	59,441,752,328		820,736
			KRW	4,671,125		4,671,125
			MYR	240,000,000		89,114
			USD	1,878,753,468		2,137,648
			UZS	6,519,920,000		4,014

(b) POSCO E&C Co., Ltd. has provided the completion guarantees for Samsung C&T Corporation and Namkwang Engineering & Construction Co., Ltd. amounting to (Won)2,742,080 million. POSCO E&C Co., Ltd. provides payment guarantees on borrowings of customers such as Asset Backed Commercial Paper amounted to (Won)575,767 million and Project Financing loan amounted to (Won)444,836 million as of March 31, 2012.

100

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Other commitments

Details of other commitments of the company as of March 31, 2012, are as follows:

POSCO	POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. These contracts generally have terms of more than three years and provide for periodic price adjustments to the market price. As of March 31, 2012, 257 million tons of iron ore and 34.6 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.
	As of March 31, 2012, POSCO entered into commitments with Korea National Oil Corporation for long-term foreign currency borrowings, which are limited up to the amount of USD 6.86 million, USD 3.54 million and USD 4.12 million. The borrowings are related to the exploration of gas hydrates in Aral Sea, Uzbekistan, the exploration of gas hydrates in Namangan-Chust and the exploration of gas hydrates in Western Fergana-Chenavard, respectively. The repayment of the borrowings depends on the success of the projects. The Company is not liable for the repayment of full or part of the money borrowed if the respective projects fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements.
POSCO E&C Co., Ltd	POSCO E&C Co., Ltd. has bank overdraft agreements of up to (Won) 20,000 million with Woori Bank which is included in the limit of comprehensive loan agreements and (Won) 5,000 million with Korea Exchange Bank. Also POSCO E&C Co., Ltd. has comprehensive loan agreements of up to (Won) 360,000 million and USD 308 million with Woori Bank and (Won) 55,000 million with Korea Exchange Bank.
POSCO ICT Co., Ltd.	POSCO ICT Co., Ltd. has entered into the repayment agreement with SMS Energy Co., Ltd., which borrowed money from several lenders including Hana Bank, for its new and renewable energy business. According to the agreement, if the borrower cannot redeem the loan, POSCO ICT Co., Ltd. should repay or undertake it amounting to (Won) 300,126 million and should take charge of revenues from selling electric power after the repayment. Also, if the borrower cannot run the new and renewable energy business due to default and bankruptcy, POSCO ICT Co., Ltd. may acquire the business unit from the borrower.
POSCO Specialty Steel Co., Ltd.	POSCO Specialty Steel Co., Ltd. has a loan agreement, secured by trade accounts receivable, of up to (Won)400,000 million with Woori Bank and others. POSCO Specialty Steel Co., Ltd. has used (Won)117,267 million of this loan agreement.
	POSCO Specialty Steel Co., Ltd. has agreements with Woori Bank and seven other banks for opening letters of credit of up to USD 275 million, and for a loan of up to (Won)144,000 million. POSCO Specialty Steel Co., Ltd. has used USD 203 million, CHF 1.7 million and EUR 1.8 million for opening letters of credit. There is no used amount of Korean Won loans.

101

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) Litigation in progress

As of March 31, 2012, the Company and certain subsidiaries are defendants in legal actions arising from the normal course of business. Details of amount claimed are as follows:

(in millions of Won, in thousand of foreign currencies)
Company	Legal actions	Claim Amount		Korean Won equivalent		Description
POSCO	12	KRW	10,647		10,647	Lawsuit on the claim for damages
POSCO E&C Co., Ltd.	57	KRW	49,917		49,917	Lawsuit on the claim for payment
POSCO P&S Co., Ltd.	1	KRW	937		937	Lawsuit on the claim for damages
POSCO Plant Engineering Co., Ltd.	6	KRW	1,443		1,443	Lawsuit on the claim for payment
POSCO ICT Co., Ltd.	12	KRW	6,783		6,783	Lawsuit on the claim for payment
Seoung Gwang Co., Ltd.	2	KRW	2,277		2,277	Imposed high tax rate
POSCO E&C (China) Co., Ltd.	1	CNY	3,790		684	Lawsuit on the claim for payment of work compled related with the subcontractor and second subcontractor.
POSCO Engineering Co., Ltd.	4	KRW	6,907		6,907	Lawsuit on the claim for damages
POSBRO Co., Ltd.	1	KRW	435		435	Lawsuit on the claim for payment
Kwang Yang SPFC Co., Ltd.	1	KRW	5,693		5,693	Lawsuit on the claim for payment
Daewoo International Corporation	2	EUR	5,164		7,816
	1	INR	4,458,849		98,808	Lawsuit on the claim for damages
	1	USD	231		262

As of March 31, 2012, the Company believes that although the outcome of these matters is uncertain, the impacts of these matters are not expected to be material to the Company.

On April 25, 2012, Nippon Steel Corporation announced that it has filed civil lawsuits against the controlling company and two subsidiaries- POSCO America Corporation and POSCO Japan Co., Ltd. relating to claims of alleged improper acquisition and infringement of intellectual property rights related to the production of grain oriented electrical steel sheets. Nippon Steel Corporation announced that it is seeking an injunction to prohibit the Company from manufacturing and selling the allegedly infringing products as well as monetary damages. The Company has not received any petitions relating to these alleged claims.

(e) Other contingencies

Company	Description
POSCO	POSCO has provided three blank promissory notes and one blank check to Korea Resources Corporation and six blank promissory notes and three blank checks to Korea National Oil Corporation as collateral for outstanding loans.
POSCO E&C Co., Ltd.	As of March 31, 2012, POSCO E&C Co., Ltd. has provided ten blank promissory notes, ten blank checks and six other notes, approximately amounting to (Won)61,704 million, to Korea Housing Guarantee Co., Ltd. and other financial institutions as collateral for agreements and outstanding loans.
Daewoo International Corporation	As of March 31, 2012, Daewoo International Corporation has provided forty-five blank promissory notes and eleven blank checks to Korea National Oil Corporation as collateral for the guarantee on performance for contracts and others.
POSCO ICT Co., Ltd.	As of March 31, 2012, POSCO ICT Co., Ltd. has provided fifteen blank promissory notes to nine financial institutions as collateral for the guarantee on performance for contracts and others.
POSCO Engineering Co., Ltd.	As of March 31, 2012, POSCO Engineering Co., Ltd. has provided one note to Hana Tank Terminal Co., Ltd. as collateral for the guarantee on performance for contracts and others.
POSCO-JKPC Co., Ltd.	As of March 31, 2012, POSCO-JKPC Co., Ltd. has provided two hundreds-four notes as collateral for borrowings. (JPY 805,983,767, 45% of borrowings from the Kinakyushu Bank, Ltd., 30% of borrowings from Higo bank, Ltd.)
Daewoo International Japan Corp.	As of March 31, 2012, Daewoo International Japan Corp. has provided two hundreds-fourteen notes receivable (JPY 1,227,160,676) to Resona bank Ltd. as collateral for loans from banks.

102

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

35. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Trade accounts and notes receivable	(Won)	(545,367	)		(864,338	)
Other financial assets		82,000			230,363
Inventories		815,444			(859,331	)
Other current assets		(302,546	)		(303,218	)
Other long-term assets		(13,840	)		(39,087	)
Trade accounts payable		(484,837	)		585,703
Other financial liabilities		(15,783	)		(26,155	)
Other current liabilities		997,197			(22,172	)
Provisions		(3,212	)		4,295
Payment severance benefits		(29,221	)		(82,145	)
Plan assets		8,533			16,264
Other long-term liabilities		(20,746	)		37,107
	(Won)	487,622			(1,322,714	)

103

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

36. Operating Segments

(a) 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 engineering and 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, liquefied natural gas production, network and system integration and logistics.

(b) Segment profit and loss is determined the same way that consolidated net after tax profit for the period is determined under K-IFRS without any adjustment for corporate allocations. The accounting policies used by each segment are consistent with the accounting policies used in the preparation of the consolidated financial statements. Segment assets and liabilities are measured based on total assets and liabilities in accordance with K-IFRS without any adjustment for corporate allocations. Also, segment assets and liabilities are based on the separate financial statements of the entities instead of on consolidated basis. In addition, there are varying levels of transactions amongst the reportable segments. These transactions include sales of property, plant and assets, and rendering of construction service and so on. Inter-segment transactions are accounted for on an arm’s length basis.

(c) Information about reportable segments as March 31, 2012 and March 31, 2011 are as follows:

1) As of and for the three-month periods ended March 31, 2012

(in millions of Won)	Steel			Trading			Construction			Others			Total
External revenues	(Won)	9,397,634			4,956,571			804,708			1,149,731			16,308,644
Internal revenues		4,407,650			1,738,289			656,450			604,820			7,407,209
Total revenues		13,805,284			6,694,860			1,461,158			1,754,551			23,715,853
Interest income		44,208			19,065			8,470			6,038			77,781
Interest expenses		(141,834	)		(46,940	)		(12,865	)		(29,252	)		(230,891	)
Depreciation and amortization		(548,534	)		(9,999	)		(8,426	)		(52,990	)		(619,949	)
Impairment loss of property, plant and equipment and others		(103	)		—			(2,344	)		—			(2,447	)
Impairment of available-for-sale financial assets		(59,872	)		—			—			—			(59,872	)
Share of profit or loss of investment in associates and associates		(11,422	)		—			—			(51	)		(11,473	)
Income tax expense		(159,133	)		2,013			(14,255	)		(24,984	)		(196,359	)
Segments profit		527,870			(5,815	)		36,850			93,607			652,512
Segments assets		68,539,090			12,452,278			9,055,441			6,725,225			96,772,034
Investment in associates		14,691,409			1,927,645			902,839			289,445			17,811,338
Acquisition of non-current assets		888,556			155,157			18,463			135,960			1,198,136
Segments liabilities	(Won)	23,048,373			10,074,837			5,784,029			4,400,987			43,308,226

104

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) As of and for the three-month period ended March 31, 2011

(in millions of Won)	Steel			Trading			Construction			Others			Total
External revenues	(Won)	9,594,160			4,780,302			1,198,731			677,371			16,250,564
Internal revenues		3,663,265			1,988,302			522,459			504,778			6,678,804
Total revenues		13,257,425			6,768,604			1,721,190			1,182,149			22,929,368
Interest income		35,994			2,934			6,676			3,766			49,370
Interest expenses		(126,213	)		(25,023	)		(14,553	)		(24,806	)		(190,595	)
Depreciation and amortization		(508,625	)		(2,786	)		(6,126	)		(33,907	)		(551,444	)
Impairment loss of property, plant and equipment and others		(3	)		—			(337	)		—			(340	)
Share of profit or loss of investment in associates and associates		(8,514	)		—			—			(4,451	)		(12,965	)
Income tax expense		(283,016	)		(5,495	)		(19,942	)		(11,180	)		(319,633	)
Segments profit		1,060,243			27,040			62,015			51,954			1,201,252
Segments assets		62,124,678			9,798,603			6,927,203			5,607,399			84,457,883
Investment in associates		12,264,982			1,688,521			686,211			82,494			14,722,208
Acquisition of non-current assets		1,028,496			80,274			40,346			80,724			1,229,840
Segments liabilities	(Won)	20,365,856			7,754,994			3,999,632			3,934,495			36,054,977

(d) Reconciliations of total segment revenues, profit or loss, assets and liabilities, and other significant items to their respective consolidated financial statement line items are as follows:

1) Revenues

(in millions of Won)	March 31, 2012			March 31, 2011
Total revenue for reportable segments	(Won)	23,715,853			22,929,368
Elimination of inter-segment revenue		(7,407,209	)		(6,678,804	)
	(Won)	16,308,644			16,250,564

2) Profits for the three-month periods ended March 31, 2012 and March 31, 2011

(in millions of Won)	March 31, 2012			March 31, 2011
Total profit for reportable segments	(Won)	652,512			1,201,252
Goodwill and PP&E FV adjustments		(9,844	)		(385	)
Elimination of inter-segment profits		(7,029	)		(107,805	)
Income tax expense		239,874			342,630
Profit before income tax expense	(Won)	875,513			1,435,692

3) Assets

(in millions of Won)	March 31, 2012			March 31, 2011
Total assets for reportable segments(*1)	(Won)	96,772,034			84,457,883
Equity-accounted investees		(13,747,130	)		(11,059,161	)
Goodwill and PP&E FV adjustments		3,756,612			3,517,851
Elimination of inter-segment assets		(7,302,558	)		(5,766,587	)
	(Won)	79,478,958			71,149,986

105

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

4) Liabilities

(in millions of Won)	March 31, 2012			March 31, 2011
Total liabilities for reportable segments	(Won)	43,308,226			36,054,977
Goodwill and PP&E FV adjustments		340,177			334,230
Elimination of inter-segment liabilities		(5,548,173	)		(4,184,989	)
	(Won)	38,100,230			32,204,218

5) Other significant items

¨ For the three-month period ended March 31, 2012

(in millions of Won)	Total Segment			Goodwill and PP&E FV adjustments			Elimination of inter-segment			Consolidated
Interest income	(Won)	77,781			—			(3,607	)		74,174
Interest expenses		(230,891	)		970			4,944			(224,977	)
Depreciation and amortization		(619,949	)		(11,863	)		32,942			(598,870	)
Share of profit or loss of equity-accounted investees		(11,473	)		—			28,877			17,404
Income tax expense		(196,359	)		1,039			(44,554	)		(239,874	)
Impairment loss of property, plant and equipment and others		(2,447	)		—			—			(2,447	)
Impairment of available-for-sale financial assets		(59,872	)		—			—			(59,872	)
	(Won)	(1,043,210	)		(9,854	)		18,602			(1,034,462	)

¨ For the three-month period ended March 31, 2011

(in millions of Won)	Total Segment			Goodwill and PP&E FV adjustments			Elimination of inter-segment			Consolidated
Interest income	(Won)	49,370			—			(2,574	)		46,796
Interest expenses		(190,595	)		1,862			4,271			(184,462	)
Depreciation and amortization		(551,444	)		(14,798	)		44,999			(521,243	)
Share of profit or loss of equity-accounted investees		(12,965	)		—			(8,382	)		(21,347	)
Income tax expense		(319,633	)		2,459			(25,456	)		(342,630	)
Impairment of available-for-sale financial assets		(340	)		—			—			(340	)
	(Won)	(1,025,607	)		(10,477	)		12,858			(1,023,226	)

106

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) Revenue by geographic area for the three-month periods ended March 31, 2012 and March 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Domestic	(Won)	12,401,352		12,652,023
Japan		620,429		495,236
China		1,572,547		1,448,950
Asia		722,238		787,653
North America		378,251		279,947
Others		613,827		586,755
Total	(Won)	16,308,644		16,250,564

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers.

(f) Non-current assets by geographic area as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Domestic	(Won)	29,649,455		29,386,052
Japan		294,064		320,009
China		1,507,124		1,474,983
Asia		1,934,982		1,752,302
North America		113,521		110,702
Others		1,419,751		1,181,597
Total	(Won)	34,918,897		34,225,645

Non-current assets by geographic area include investment property, property, plant and equipment, goodwill and other intangible assets.

(g) There are no customers whose revenue is 10% or more of total consolidated revenues.

107

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

37. Business Combinations

The Company has acquired additional shares in POSCO-Thainox Public Company Limited from its previous largest shareholder on September 23, 2011 in order to expand its footprint in the cold-rolled stainless steel sheets and coils market in Southeast Asia and to achieve its synergy effects with its existing operations in the region. The Company obtained control of POSCO-Thainox Public Company Limited. since its voting interest increased from 15.39% to 75.32%. There is no contingent consideration. The results of operations of POSCO-Thainox Public Company Limited have been consolidated from the date of acquisition. Therefore, comparability with POSCO’s consolidated financial statements for prior years is impacted accordingly The amounts of revenues and net profit of POSCO-Thainox Public Company Limited since the acquisition date included in consolidated revenues and net profit amounted to (Won)92,798 million and (Won)11,658 million, respectively. Goodwill recognised in this business combination is as follows:

(in millions of Won)	Amount
I. Consideration transferred
Fair value of investment held before acquisition (*1)	(Won)	99,382
Cash		390,474
Total		489,856
II. Non-controlling interests (*2)		121,413
Total		611,269
III. Acquired identifiable assets and liabilities
[Assets]
Cash and cash equivalents		62,080
Trade accounts and notes receivable and other financial assets		102,464
Inventories		149,901
Property, plant and equipment and intangible assets		340,487
Other assets		20,129
Total		675,061
[Liabilities]
Trade accounts and notes payable and other financial liabilities		147,382
Borrowings		11,803
Other liabilities		23,867
Total		183,052
Total acquired net assets		492,009
IV. Goodwill recognized	(Won)	119,260

(*1) Upon acquisition of the business, a (Won)57,080 million re-measurement gain on the Company’s existing investment in the acquiree prior to acquisition date (acquisition cost: (Won)42,302 million) was recognized as finance income. The fair value of this existing investment was determined using quoted market price of the shares on acquisition date.

108

POSCO

Notes to Consolidated Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(*2) The non-controlling interests at the acquisition date were measured using their proportionate share in the recognized amounts of POSCO-Thainox Public Company Limited’s identifiable net assets

After obtaining control, Company acquired additional 19.61% of shares amounting to (Won)126,927 million through tender offer. In results, the percentage of shares increased from 75.32% to 94.93% as of December 31, 2011. Carrying value of POSCO-Thainox Public Company’s net assets is (Won)667,571 million. Regarding this transaction, non-controlling interests decreased by (Won)95,885 million and related differential amounts amounting to (Won)31,043 million was deducted from consolidated capital surplus since it is equity transaction between consolidated entities.

Pro-forma Information

The following summarized pro forma consolidated statement of comprehensive income information assumes that the POSCO-Thainox Public Company Limited acquisition occurred as of January 1, 2011. The pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense on assets acquired from POSCO-Thainox Public Company Limited resulting from the fair valuation of assets acquired in place on acquisition date, September 23, 2011. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of POSCO-Thainox Public Company Limited.

If the Company had acquired POSCO-Thainox Public Company Limited as of January 1, 2011, pro-forma consolidated revenues and pro-foram consolidated net profit for the year ended December 31, 2011 would have been (Won)69,243,204 million and (Won)3,726,225 million, respectively.

109

POSCO

Separate Interim Financial Statements

(Unaudited)

March 31, 2012

(With Independent Auditors’ Review Report Thereon)

Table of Contents

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

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

POSCO:

Reviewed financial statements

We have reviewed the accompanying separate statement of financial position of POSCO (the “Company”) as of March 31, 2012 and separate statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2012 and 2011 and notes, comprising a summary of significant accounting policies and other explanatory information (“the separate interim financial information”).

Management’s responsibility

Management is responsible for the preparation and fair presentation of this separate interim financial information in accordance with Korean International Financial Reporting Standard (“K-IFRS”) 1034 “Interim Financial Reporting”. The Company’s management is also responsible for the internal controls determined necessary to prepare the separate interim financial statements free of material misstatements due to error or fraud.

Auditor’s review responsibility

Our responsibility is to express a conclusion on this separate interim financial information based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly/Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information 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 auditing standards 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 separate interim financial information referred to above is not presented fairly, in all material respects, in accordance with K-IFRS 1034 “Interim Financial Reporting”.

1

Other matters

The procedures and practices utilized in the Republic of Korea to review such separate interim financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying separate interim financial statements are for use by those knowledgeable about Korean auditing standards and their application in practice.

The statement of financial position of the Company as of December 31, 2011, 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 and our report thereon, dated March 8, 2012, expressed an unqualified opinion. The accompanying separate statement of financial position of the Company as of December 31, 2011, presented for comparative purposes, is not different from that audited by us in all material respects.

Seoul, Korea

May 25, 2012

This report is effective as of May 25, 2012, 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 separate interim financial information and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

2

POSCO

Separate Statements of Financial Position

As of March 31, 2012 and December 31, 2011

(Unaudited)

(in millions of Won)
	Notes	March 31, 2012		December 31, 2011
Assets
Cash and cash equivalents	4,5,19	(Won)	1,537,870		1,137,882
Trade accounts and notes receivable, net	6,19,33		4,336,209		4,220,242
Other short-term financial assets	7,19,33		1,011,436		1,381,463
Inventories	8		6,241,889		7,144,709
Other current assets	9		61,499		23,612
Assets held for sale	12		—		16,887
Total current assets			13,188,903		13,924,795
Long-term trade accounts and notes receivable, net	6,19,33		24		24
Other long-term financial assets	7,19,33		4,095,131		3,833,058
Investments in subsidiaries and associates	10		13,200,504		12,824,776
Investment property, net	11		115,558		117,418
Property, plant and equipment, net	12		21,592,613		21,533,135
Intangible assets, net	13		229,418		222,896
Other non-current assets	9		271,572		271,774
Total non-current assets			39,504,820		38,803,081
Total assets		(Won)	52,693,723		52,727,876

See accompanying notes to separate interim financial statements.

3

POSCO

Separate Statements of Financial Position, Continued

As of March 31, 2012 and December 31, 2011

(Unaudited)

(in millions of Won)
	Notes	March 31, 2012			December 31, 2011
Liabilities
Trade accounts payable	19,33	(Won)	1,246,154			1,395,846
Short-term borrowings	4,6,14,19		2,307,243			2,294,380
Other short-term financial liabilities	15,19,24,33		866,083			1,089,298
Current income tax liabilities			219,570			182,715
Provisions	16		23,661			4,451
Other current liabilities	18		72,185			48,455
Total current liabilities			4,734,896			5,015,145
Long-term borrowings	4,7,14,19		9,160,833			9,338,016
Other long-term financial liabilities	15,19		186,415			147,299
Employee benefits	17		174,059			176,648
Deferred tax liabilities	31		629,358			448,552
Other long-term liabilities	18		4,109			4,200
Total non-current liabilities			10,154,774			10,114,715
Total liabilities			14,889,670			15,129,860
Shareholders’ Equity
Share capital	20		482,403			482,403
Capital surplus	20		1,227,692			1,227,692
Accumulated other comprehensive income	21		390,652			156,707
Treasury shares	22		(2,391,406	)		(2,391,406	)
Retained earnings	23		38,094,712			38,122,620
Total shareholders’ equity	4		37,804,053			37,598,016
Total liabilities and shareholders’ equity		(Won)	52,693,723			52,727,876

See accompanying notes to separate interim financial statements.

4

POSCO

Separate Statements of Comprehensive Income

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won, except per share amounts)	Notes	March 31, 2012			March 31, 2011
Revenue	25,33	(Won)	9,460,419			9,112,122
Cost of sales	27,29,33		(8,520,969	)		(7,770,423	)
Gross profit			939,450			1,341,699
Selling and administrative expenses
Administrative expenses	19,24,26,27,29		(221,716	)		(205,733	)
Selling expenses	26,29		(246,295	)		(212,020	)
Other operating income	28,33		10,436			11,317
Other operating expenses	19,28,29,33		(59,721	)		(14,291	)
Operating profit			422,154			920,972
Financial income and costs
Financial income	19,30		460,573			419,329
Financial costs	19,30		(202,455	)		(165,851	)
Profit before income tax			680,272			1,174,451
Income tax expense	31		(141,713	)		(247,095	)
Profit for the period			538,559			927,356
Other comprehensive income
Net changes in fair value of available-for-sale investments, net of tax	7,19,21		233,945			(117,677	)
Defined benefit plan actuarial gains, net of tax	17		12,866			85,265
Other comprehensive income, net of tax		(Won)	785,370			894,944
Basic and diluted earnings per share	32	(Won)	6,972			12,001

See accompanying notes to separate interim financial statements.

5

POSCO

Separate Statements of Changes in Equity

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won)	Share capital		Capital surplus		Accumulated other comprehensive income			Treasury shares			Retained earnings			Total
Balance as of January 1, 2011	(Won)	482,403		1,158,539		1,079,038			(2,403,263	)		35,706,778			36,023,495
Comprehensive income :
Profit for the period		—		—		—			—			927,356			927,356
Net changes in fair value of available-for-sale investments, net of tax		—		—		(117,677	)		—			—			(117,677	)
Defined benefit plan actuarial gains, net of tax		—		—		—			—			85,265			85,265
Total comprehensive income		—		—		(117,677	)		—			1,012,621			894,944
Transactions with owners of the Company,recognized directly in equity :
Year-end dividends		—		—		—			—			(577,747	)		(577,747	)
Acquisition of treasury shares		—		—		—			(61,296	)		—			(61,296	)
Disposal of treasury shares		—		69,153		—			73,153			—			142,306
Balance as of March 31, 2011	(Won)	482,403		1,227,692		961,361			(2,391,406	)		36,141,652			36,421,702
	Share capital		Capital surplus		Accumulated other comprehensive income			Treasury shares			Retained earnings			Total
Balance as of January 1, 2012	(Won)	482,403		1,227,692		156,707			(2,391,406	)		38,122,620			37,598,016
Comprehensive income :
Profit for the period		—		—		—			—			538,559			538,559
Net changes in fair value of available-for-sale investments, net of tax		—		—		233,945			—			—			233,945
Defined benefit plan actuarial gains, net of tax		—		—		—			—			12,866			12,866
Total comprehensive income		—		—		233,945			—			551,425			785,370
Transactions with owners of the Company, recognized directly in equity :
Year-end dividends		—		—		—			—			(579,333	)		(579,333	)
Balance as of March 31, 2012	(Won)	482,403		1,227,692		390,652			(2,391,406	)		38,094,712			37,804,053

See accompanying notes to separate interim financial statements.

6

POSCO

Separate Statements of Cash Flows

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won)	Note	March 31, 2012			March 31, 2011
Cash flows from operating activities
Profit for the period		(Won)	538,559			927,356
Adjustments for:
Accrual of severance benefits			27,084			33,849
Depreciation			445,460			413,132
Amortization			9,492			7,982
Finance income			(387,151	)		(335,217	)
Finance costs			147,815			105,350
Gain on disposal of property, plant and equipment			(1,765	)		(3,443	)
Loss on disposal of property, plant and equipment			14,362			10,742
Income tax expense			141,713			247,095
Others			14,255			1,545
Changes in operating assets and liabilities	35		527,650			(374,040	)
Interest received			32,110			41,980
Interest paid			(103,722	)		(75,623	)
Dividends received			32,796			16,872
Income taxes paid			(2,849	)		(277,238	)
Net cash provided by operating activities			1,435,809			740,342
Cash flows from investing activities
Disposals of short-term financial instruments			966,381			2,164,359
Disposals of available-for-sale investments			—			49
Repayments of long-term loans			4,710			2,723
Disposals of property, plant and equipment			10,856			1,097
Disposals of assets held for sale			3,378			—
Acquisitions of short-term financial investments			(601,358	)		(983,553	)
Acquisitions of available-for-sale instruments			(1,048	)		(141,210	)
Issuance of long-term loans			(2,398	)		(3,702	)
Acquisitions of investments in subsidiaries and associates			(334,490	)		(597,426	)
Acquisitions of property, plant and equipment			(523,866	)		(580,541	)
Acquisitions of intangible assets			(11,868	)		(6,370	)
Others			—			(717	)
Net cash used in investing activities		(Won)	(489,703	)		(145,291	)

See accompanying notes to separate interim financial statements.

7

POSCO

Separate Statements of Cash Flows

For the three-month periods ended March 31, 2012 and 2011

(Unaudited)

(in millions of Won)	Note	March 31, 2012			March 31, 2011
Cash flows from financing activities
Proceeds from borrowings		(Won)	1,072,414			1,501,609
Proceeds from long-term financial liabilities			1,172			1,399
Disposals of treasury shares			—			164,384
Repayments of borrowings			(1,039,893	)		(1,209,594	)
Repayments of long-term financial liabilities			(478	)		(8,335	)
Acquisitions of treasury shares			—			(61,296	)
Payment of cash dividends			(579,333	)		(577,747	)
Net cash used in financing activities			(546,118	)		(189,580	)
Net increase in cash and cash equivalents			399,988			405,471
Cash and cash equivalents
Cash and cash equivalents at beginning of the period			1,137,882			672,427
Cash and cash equivalents at end of the period		(Won)	1,537,870			1,077,898

See accompanying notes to separate interim financial statements.

8

POSCO

Notes to Separate Interim Financial Statements

As of March 31, 2012

(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 overseas markets.

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

As of March 31, 2012, the shares of the Company are listed on the Korea Exchange, while its depository receipts are listed on the New York, Tokyo and London Stock Exchanges.

2. Statement of Compliance

Statement of compliance

The 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 Corporations.

These separate interim financial statements have been prepared in accordance with K-IFRS 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-IFRS annual financial statements.

These interim financial statements are separate interim financial statements in accordance with K-IFRS 1027 “Consolidated and Separate Financial Statements” presented by a parent, an investor in an associate or a venture in a jointly controlled entity, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.

9

POSCO

Notes to Separate Interim Financial Statements

As of March 31, 2012

(Unaudited)

Basis of measurement

The separate financial statements have been prepared on the historical cost basis, except for the following material items in the statement of financial position, as described in the accounting policy below.

1) Derivatives instruments are measured at fair value

2) Financial instruments at fair value through profit or loss (FVTPL) are measured at fair value

3) Available-for-sale financial assets are measured at fair value

4) The liability for a cash-settled stock appreciation rights is measured at fair value

5) Defined benefit obligations are measured at the present value of the defined benefit obligations less the fair value of the plan assets.

Functional and presentation currency

These financial statements are presented in Korean won, which is the Company’s functional currency and the currency of the primary economic environment in which the Company operates.

Use of estimates and judgements

The preparation of the 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 in which the estimates are revised and in any future periods affected.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included in the following notes:

• Note 17– Employee Benefits

10

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

3. Summary of Significant Accounting Policies

The significant accounting policies applied by the Company in preparation of its separate financial statements are included below. The accounting policies set out below are the same as those applied by the Company in its separate financial statements as of and for the year ended December 31, 2011.

Investments in subsidiaries and associates

These separate financial statements are prepared and presented in accordance with K-IFRS No. 1027 “Consolidated and Separate Financial Statements”. The Company applied the cost method to investments in subsidiaries and associates in accordance with K-IFRS No. 1027. Dividends from a subsidiary or associate are recognized in profit or loss when the right to receive the dividend is established.

Foreign currency transactions and translation

Foreign currency transactions are initially recorded using the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the original transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date fair value is initially determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss in the period in which they arise. When gains or losses on non-monetary items are recognized in other comprehensive income, exchange components of those gains or losses are recognized in other comprehensive income. Conversely, when gains or losses on non-monetary items are recognized in profit or loss, exchange components of those gains or losses are recognized in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, checking deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Equity investments are excluded from cash and cash equivalents.

11

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Non-derivative financial assets

The Company recognizes and measures non-derivative financial assets by the following four categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. The Company recognizes financial assets in the separate statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Upon initial recognition, non-derivative financial assets are measured at their fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the asset’s acquisition or issuance.

(a) Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss if they are held for trading or designated as such upon initial recognition. Upon initial recognition, transaction costs are recognized in profit or loss when incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.

(b) Held-to-maturity financial assets

A non-derivative financial asset with a fixed or determinable payment and fixed maturity, for which the Company has the positive intention and ability to hold to maturity, are classified as held-to-maturity investments. Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method.

(c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method except for loans and receivables of which the effect of discounting is immaterial.

(d) Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified as financial assets at fair value through profit or loss, held-to-maturity investments or loans and receivables. Subsequent to initial recognition, they are measured at fair value, with changes in fair value, net of any tax effect, recorded in other comprehensive income in equity. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are measured at cost. When a financial asset is derecognized or impairment losses are recognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Dividends on an available-for-sale equity instrument are recognized in profit or loss when the Company’s right to receive payment is established.

12

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) Derecognition of non-derivative financial assets

The Company derecognizes non-derivative financial assets when the contractual rights to the cash flows from the financial asset expire, or the Company transfers the rights to receive the contractual cash flows from the financial asset as well as substantially all the risks and rewards of ownership of the financial asset. Any interest in a transferred financial asset that is created or retained by the Company is recognized as a separate asset or liability.

If the Company retains substantially all the risks and rewards of ownership of the transferred financial assets, the Company continues to recognize the transferred financial assets and recognizes financial liabilities for the consideration received.

(f) Offsetting a financial asset and a financial liability

Financial assets and financial liabilities are offset and the net amount is presented in the separate statement of financial position only when the Company currently has a legally enforceable right to offset the recognized amounts, and there is the intention to settle on a net basis or to realize the asset and settle the liability simultaneously.

Inventories

Inventories are measured at the lower of cost and net realizable value. Costs are determined by using the moving-weighted average method. The cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The allocation of fixed production overheads to the costs of finished goods or work in progress are based on the normal capacity of the production facilities.

When inventories are sold, the carrying amount of those inventories is recognized as cost of goods sold in the period in which the related revenue is recognized. Inventories are measured at the lower of cost and net realizable value. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories arising from an increase in net realizable value is recognized as a reduction in the amount of inventories recognized as a cost of goods sold in the period in which the reversal occurs.

13

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Non-current assets held for sale

Non-current assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. In order to be classified as held for sale, the asset must be available for immediate sale in its present condition and its sale must be highly probable. The assets that are classified as non-current assets held for sale are measured at the lower of their carrying amount and fair value less cost to sell.

The Company recognizes an impairment loss for any initial or subsequent write-down of an asset to fair value less costs to sell, and a gain for any subsequent increase in fair value less costs to sell, up to the cumulative impairment loss previously recognized in accordance with K-IFRS No. 1036 “Impairment of Assets”.

A non-current asset that is classified as held for sale is not depreciated.

Investment property

Property held for the purpose of earning rentals is classified as investment property. Investment property is measured initially at its cost. Transaction costs are included in the initial measurement. Subsequently, investment property is carried at depreciated cost less any accumulated impairment losses.

Property, plant and equipment

Property, plant and equipment are initially measured at cost and after initial recognition, are carried at cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

The cost of replacing a part of an item is recognized in the carrying amount of the item of property, plant and equipment, if the following recognition criteria are met.

(a) it is probable that future economic benefits associated with the item will flow to the Company; and

(b) the cost can be measured reliably.

The carrying amount of the replaced part is derecognized at the time the replacement part is recognized. The costs of the day-to-day servicing of the item are recognized in profit or loss as incurred.

14

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Other than land, the cost of an asset less its residual value are depreciated. Depreciation of property, plant and equipment is recognized in profit or loss on a straight-line basis, which most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset, over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized in profit or loss.

The estimated useful lives of the Company’s assets are as follows:

Buildings	20-40 years
Structures	20-40 years
Machinery and equipment	15 years
Vehicles	4-9 years
Tools	4 years
Furniture and fixtures	4 years
Lease assets	18 years

Depreciation methods, useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The change is accounted for as a change in an accounting estimate.

15

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Borrowing costs

The Company capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognized in expense as incurred. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use or sale. Financial assets and inventories that are manufactured or otherwise produced over a short period of time are not qualifying assets. Assets that are ready for their intended use or sale when acquired are not qualifying assets.

To the extent that the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the Company determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. The Company immediately recognizes other borrowing costs as an expense. To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Company shall determine the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset. The capitalization rate shall be the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs that the Company capitalizes during a period shall not exceed the amount of borrowing costs incurred during that period.

Intangible assets

Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.

Amortization of intangible assets except for goodwill is calculated on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, as there are no foreseeable limits to the periods over which club memberships are expected to be available for use, this intangible asset is determined as having indefinite useful lives and not amortized.

Intellectual property rights	5-10 years
Port facilities usage rights Development expenses	5-75 years 4 years
Other intangible assets	4-20 years

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes are accounted for as changes in accounting estimates.

16

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

Government grants

Government grants are not recognized unless there is reasonable assurance that the Company will comply with the grant’s conditions and that the grant will be received.

(a) Grants related to assets

Government grants whose primary condition is that the Company purchase, construct or otherwise acquire long-term assets are deducted from the carrying amount of the assets. The grants are recognized in profit or loss on a systematic and rational basis over the life of a depreciable assets.

(b) Grants related to income

Government grants that compensate the Company for expenses incurred are recognized in profit or loss as other income in the same periods in which the expenses are recognized.

17

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Leases

The Company classifies and accounts for leases as either a finance or operating lease, depending on the terms. Leases where the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

(a) Finance leases

At the commencement of the lease term, the Company recognizes as finance assets and finance liabilities the lower amount of the fair value of the leased property and the present value of the minimum lease payments, each determined at the inception of the lease. Any initial direct costs are added to the amount recognized as an asset.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the Company adopts for depreciable assets that are owned. If there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life. Management reviews the indication of whether the leased asset may be impaired each reporting period.

(b) Operating leases

Leases obligations under operating leases are recognized as an expense on a straight-line basis over the lease term. Contingent rents are charged as expenses in the periods in which they are incurred.

18

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Impairment for financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. However, losses expected as a result of future events, regardless of likelihood, are not recognized.

Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the holder of the asset about the following events:

(a) significant financial difficulty of the issuer or obligor

(b) a breach of contract, such as a default or delinquency in interest or principal payments

(c) the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider

(d) it becoming probable that the borrower will enter bankruptcy or other financial reorganization

(e) the disappearance of an active market for that financial asset because of financial difficulties

(f) observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group.

In addition, for an investment in an equity instrument classified as available-for-sale securities, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

If financial assets have objective evidence that they are impaired, impairment losses are measured and recognized.

(i) Financial assets measured at amortized cost

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flows discounted at the asset’s original effective interest rate. If it is not practicable to obtain the instrument’s estimated future cash flows, impairment losses would be measured by using prices from any observable current market transactions. The Company can recognize impairment losses directly or establish a provision to cover impairment losses. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment loss shall be reversed either directly or by adjusting an allowance account.

19

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(ii) Financial assets carried at cost

If there is objective evidence that an impairment loss has occurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses shall not be reversed.

(iii) Available-for-sale financial assets

When a decline in the fair value of an available-for-sale financial asset has been recognized in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment even though the financial asset has not been derecognized. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as available-for-sale shall not be reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognized in profit or loss.

Impairment for non-financial assets

The carrying amounts of the Company’s non-financial assets, other than assets arising from employee benefits, inventories, deferred tax assets and non-current assets held for sale, are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amount to their carrying amount.

Management estimates the recoverable amount of an individual asset, if it is impossible to measure the individual recoverable amount of an asset, then management estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate that reflect current market assessments of the time value of money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

20

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Derivative financial instruments

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss.

Embedded derivatives are separated from the host contract and accounted for separately only if the following criteria have been met: (a) the economic characteristics and risks of the host contract and the embedded derivatives are not clearly and closely related to a separate instrument with the same terms as the embedded derivative that would meet the definition of a derivative, and (b) the hybrid (combined) instrument is not measured at fair value through profit or loss. Changes in the fair value of separable embedded derivatives are recognized immediately in profit or loss.

Changes in the fair value of other derivative financial instruments not designated as a hedging instrument are recognized immediately in profit or loss.

Non-derivative financial liabilities

The Company classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial liabilities. The Company recognizes financial liabilities in the separate statement of financial position when the Company becomes a party to the contractual provisions of the financial liability.

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the acquisition are recognized in profit or loss as incurred.

Non-derivative financial liabilities other than financial liabilities at fair value through profit of loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the effective interest method.

The Company derecognizes a financial liability when it is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).

21

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are employee benefits that are due to be settled within twelve months after the end of the period in which the employees render the related service. When an employee has rendered service to the Company during an accounting period, the Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as profit or loss.

(ii) Retirement benefits: defined contribution plans

When an employee has rendered service to the Company during a period, the Company recognizes the contribution payable to a defined contribution plan in exchange for that service as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Company recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

(iii) Retirement benefits: defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of plan assets is deducted. The calculation is performed by annually by an independent actuary using the projected unit credit method.

The discount rate is the yield at the reporting date on corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The Company recognizes all actuarial gains and losses arising from actuarial assumption changes and experiential adjustments in other comprehensive income when incurred.

When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Company recognizes an asset, to the extent of the total of cumulative unrecognized past service cost and the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan.

Past service costs which are the change in the present value of the defined benefits obligation for employee service in prior period, resulting in the current period from the introduction of, or change to post-employment benefits, is recognized as an expense on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits are already vested immediately following the introduction of, or changes to, a defined benefit plan, the Company recognizes the past service costs immediately.

22

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Stock appreciation rights

The Company granted share options to executives as part of the reward for their services and is accounting for the options as cash-settled share-based payment transactions. For cash-settled share-based payment transactions, the Company measures the goods or services acquired and the liability incurred at the fair value of the liability and recognizes the employment benefits and the liability during the vesting period. Until the liability is settled, the Company remeasures the fair value of the liability at each reporting date and at the date of settlement, with any changes in fair value recognized in profit or loss for the period as well.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

Where some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement shall be recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

23

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Share capital

Common stock is classified as equity. Incremental costs directly attributable to the issuance of common stock are recognized as a deduction from equity, net of any tax effects.

When the Company repurchases its share capital, the amount of the consideration paid is recognized as a deduction from equity and classified as treasury shares. The profits or losses from the purchase, disposal, reissue, or retirement of treasury shares are not recognized as current profit or loss. If the Company acquires and retains treasury shares, the consideration paid or received is directly recognized in equity.

Revenue

The Company’s revenue from the sale of goods and the use of assets is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.

(a) Sale of goods

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. The appropriate timing for transfer of risks and rewards varies depending on the individual terms and conditions of the sales contract. For international sales, this timing depends on the type of incoterms of the contract.

(b) Services rendered

Service sales are mostly comprised of lease income. Lease income from investment property is recognized in profit or loss on a straight-line basis over the term of the leases.

Financial income and financial costs

Financial income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the Company’s right to receive payment is established.

Financial costs comprise interest expense on borrowings and changes in the fair value of financial assets at fair value through profit or loss. Borrowing costs are recognized in profit or loss using the effective interest method.

24

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income.

(i) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

(ii) Deferred tax

Deferred tax is recognized, using the asset-liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which they can be utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable income.

The Company recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Company recognizes a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries and associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities.

25

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax liabilities and assets, and they relate to income taxes levied by the same tax authority and they intend to settle current tax liabilities and assets on a net basis.

Earnings per share

The Company calculates basic earnings per share (“EPS”) data for its ordinary shares, which is presented at the end of the statement of comprehensive income. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, excluding treasury shares held.

4. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

• credit risk

• liquidity risk

• market risk

• operational risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

(a) Risk management policy

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(b) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

26

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

The default risk of a nation or an industry in which a customer operates its business does not have a significant influence on credit risk. The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for companies of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

(c) Liquidity risk management

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company’s cash flow from business, borrowing or financing is sufficient to meet the cash requirements for the Company’s strategy investments. Management believes that the Company is capable of raising funds by borrowing or financing if the Company is not able to generate cash flow requirements from its operations. The Company has committed borrowing facilities with various banks.

(d) Market risk management

Market risk means that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The goal of market risk management is optimization of profit and controlling the exposure to market risk within acceptable limits.

1) Currency risk

The Company is exposed to currency risk for sales, purchases and borrowings in a currency other than the functional currency, Korean Won. The Company’s general policy in respect of foreign currency risks is to use a natural hedge whereby foreign currency income is utilized for foreign currency expenditures. Remaining net exposures after the natural hedge are hedged using derivative contracts such as forward exchange contracts. The Company’s management monitors currency risk regularly for hedging foreign exchange exposure.

2) Interest rate risk

The Company mostly borrows at fixed interest rates. The Company’s management monitors interest rate risks regularly.

27

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) Management of capital risk

The fundamental goal of capital management is the maximization of shareholders’ value by means of the stable dividend policy and the retirement of treasury shares. The capital structure of the Company consists of equity and net debt, deducting cash and cash equivalents from borrowings. The Company applied the same financial risk management strategy that was applied in the previous period. The equity attributable to owners as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Total borrowings		11,468,076			11,632,396
Less: Cash and cash equivalents		1,537,870			1,137,882
Net borrowings		9,930,206			10,494,514
Total shareholders’ equity		37,804,053			37,598,016
Net borrowings-to-equity ratio		26.27	%		27.91	%

5. Cash and Cash Equivalents

Cash and cash equivalents as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Checking accounts	(Won)	4,525		149,982
Time deposits		840,000		810,000
Money market trust		462,700		157,900
Money market funds		230,645		20,000
	(Won)	1,537,870		1,137,882

28

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

6. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2012 and December 31 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Current
Trade accounts and notes receivable	(Won)	4,343,605			4,222,187
Less: Allowance for doubtful accounts		(7,396	)		(1,945	)
		4,336,209			4,220,242
Non-Current
Trade accounts and notes receivable		252			252
Less: Allowance for doubtful accounts		(228	)		(228	)
		24			24
	(Won)	4,336,233			4,220,266

Trade accounts and notes receivable sold to financial institution, for which the derecognition conditions were not met amounted to (Won)212,846 million and (Won)342,307 million as of March 31, 2012 and December 31, 2011, respectively, and are included in short-term borrowings (note 14).

29

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

7. Other Financial Assets

(a) Other short-term financial assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Financial assets at fair value through profit or loss
Financial assets held for trading	(Won)	—			50,132
Held-to-maturity investments
Current portion of held-to-maturity securities (bonds)		29,922			—
Loans and other receivables
Short-term financial instruments (*1)		622,039			982,111
Cash deposits (*2)		12,224			17,175
Other accounts receivable, net		348,818			330,616
Accrued income		7,589			10,585
Other checking accounts		1,415			1,415
Allowance account for credit losses		(10,571	)		(10,571	)
	(Won)	1,011,436		(Won)	1,381,463

(*1) As of March 31, 2012 and December 31, 2011, short-term financial instruments amounting to (Won)1,670 million are collateral for long-term borrowings from a forestry association.

(*2) As of March 31, 2012 and December 31, 2011, cash deposits are restricted for use in a government project.

30

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Other long-term financial assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Available-for-sale investments
Long-term available-for-sale securities (bonds)	(Won)	15,104			15,045
Long-term available-for-sale equity securities		4,005,476			3,716,014
Long-term available-for-sale securities (investment in capital)		500			500
Held-to-maturity investments
Held-to-maturity securities (bonds)		—			29,903
Loans and other receivables
Cash deposits (*1)		40			40
Long-term loans		70,788			68,717
Long-term other accounts receivable		3,619			3,674
Deposits		14,057			13,618
Allowance account for credit losses		(14,453	)		(14,453	)
	(Won)	4,095,131			3,833,058

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

31

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Long-term available-for-sale equity securities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)							Book Value
	Number of Shares		Ownership (%)		Acquisition cost		March 31, 2011		December 31, 2011
Marketable equity securities
Nippon Steel Corporation		238,352,000		3.50	(Won)	719,622		747,062		679,662
KB Financial group Inc.		15,454,067		4.00		715,356		639,026		560,983
SK Telecom Co., Ltd. (*1,2)		4,528,117		5.61		1,250,656		638,103		640,221
Hyundai Heavy Industries Co., Ltd.		1,477,000		1.94		343,506		474,856		379,589
Shinhan Financial group Inc.		4,369,881		0.92		228,778		191,182		173,703
Hana Financial group Inc.		4,663,776		1.92		29,998		199,143		165,797
Others (11 companies)						169,561		199,946		174,883
						3,457,477		3,089,318		2,774,838
Non-marketable equity securities
Nacional Minerios S.A. (*3)		30,784,625		6.48		668,635		667,792		695,583
The Siam United Steel (*3)		11,071,000		12.30		34,658		60,787		61,119
Dongbu Metal Inc.(*3)		3,000,000		10.00		98,242		100,932		98,817
Others (29 companies) (*4)						94,355		86,647		85,657
						895,890		916,158		941,176
					(Won)	4,353,367		4,005,476		3,716,014

(*1) As of March 31, 2012, 2,186,546 shares equivalent to 19,678,919 American depository receipts (“ADRs”) of SK Telecom Co., Ltd. have been pledged as collateral for the exchangeable bonds issued.

(*2) The Company recorded impairment loss for securities of SK Telecom Co., Ltd. amounting to (Won)610,436 million as of December 31, 2011. During the three-month period ended March 31, 2012, there was a further significant decline in the fair value of shares of SK Telecom Co., Ltd. for a prolonged period, which was considered as objective evidence of impairment. As a result, an impairment losses of (Won)4,683 million was recognized in profit or loss for the three-month period ended March 31, 2012.

(*3) The fair value of the investment is based on an analysis performed by an external professional evaluation agency.

(*4) These non-marketable equity securities are recorded at cost since fair value cannot be reliably measured.

32

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

8. Inventories

Inventories as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Finished goods	(Won)	943,224			974,585
Semi-finished goods		1,707,179			1,916,411
By-products		9,491			7,610
Raw materials		1,456,403			1,465,347
Fuel and materials		601,881			596,100
Materials-in-transit		1,524,530			2,184,547
Others		581			575
		6,243,289			7,145,175
Allowance for inventories valuation		(1,400	)		(466	)
	(Won)	6,241,889			7,144,709

The amount of valuation losses of inventories recognized in cost of goods sold during the three-month periods ended March 31, 2012 and December 31, 2011 are (Won)1,400 million and (Won)466 million, respectively.

9. Other Assets

Other current assets and other long-term assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Other current assets
Advance payment	(Won)	5,956			4,935
Prepaid expenses		55,543			18,677
		61,499			23,612
Other long-term assets
Long-term prepaid expenses		9,143			9,452
Others (*1)		262,442			262,335
Less : Allowance for doubtful accounts		(13	)		(13	)
	(Won)	271,572			271,774

(*1) Includes guarantee deposits of (Won)257,878 million as of March 31, 2012 and December 31, 2011 in relation to planned investment in Australia Roy Hill iron ore mine.

33

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

10. Investments in Subsidiaries and Associates

(a) Investments in subsidiaries and associates as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Subsidiaries		11,854,462		11,621,134
Associates		1,346,042		1,203,642
	(Won)	13,200,504		12,824,776

(b) Details of subsidiaries and carrying values as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	Country	Principal operations	Ownership (%)		March 31, 2012		December 31, 2011
[Domestic]
Daewoo International. Co., Ltd.	Korea	Trading		66.56	(Won)	3,371,481		3,371,481
POSCO E&C Co., Ltd.	Korea	Engineering and Construction		89.53		1,510,716		1,510,716
POSCO Energy Co., Ltd.	Korea	Generation of Electricity		100.00		649,148		649,148
POSCO Specialty Steel Co., Ltd.	Korea	Steel manufacturing and Sales		100.00		628,842		628,842
POSCO P&S Co., Ltd.	Korea	Steel sales and service		95.31		421,927		421,927
POSCOAST Co., Ltd.	Korea	Steel manufacturing and Sales		100.00		138,909		138,909
POSCO Coated & Color Steel Co., Ltd.	Korea	Coated steel manufacturing		56.87		108,421		108,421
POSCO M-TECH Co., Ltd (*1)	Korea	Packing materials manufacturing		48.85		107,278		107,278
POSCO Chemtec Company Ltd.	Korea	Manufacturing and sellings		60.00		100,535		100,535
POSCO ICT Co., Ltd.	Korea	Computer hardware		72.54		70,990		70,990
POS-HiMETAL CO., Ltd	Korea	Steel manufacturing and Sales		65.00		49,452		49,452
POSCO Family Strategy Fund	Korea	Financial investment		69.93		40,000		40,000
Busan E&E Co., Ltd. (*2)	Korea	Generation of Electricity		70.00		30,148		30,148
Others (17 companies)						312,286		312,286
					(Won)	7,540,133		7,540,133

34

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(in millions of Won)
	Country	Principal operations	Ownership (%)		March 31, 2012		December 31, 2011
[Foreign]
POSCO-Thainox Public Company Limited.	Thailand	Stainless steel manufacturing		94.93	(Won)	616,783		616,783
PT. KRAKATAU STEEL POSCO	Indonesia	Steel manufacturing and Sales		70.00		616,177		537,371
POSCO Australia Pty. Ltd.	Australia	Steel sellings and mine development		100.00		330,623		330,623
Zhangjiagang Pohang Stainless Steel Co., Ltd.	China	Stainless steel manufacturing		58.60		285,549		285,664
POSCO WA Pty. Ltd.	Australia	Mine development		100.00		256,002		238,821
POSCO China Holding Corp.	China	Investment management		100.00		223,436		223,436
POSCO Maharashtra Steel Pvt. Ltd.	India	Steel manufacturing and Sales		100.00		259,617		252,217
POSCO-India Private Ltd.	India	Steel manufacturing and Sales		100.00		184,815		184,815
Guangdong Pohang Coated Steel Co., Ltd.	China	Plate steel manufacturing		84.52		163,183		163,271
POSCO-Vietnam Co., Ltd.	Vietnam	Steel manufacturing		85.00		156,579		157,031
POSCO VST Co., Ltd.	Vietnam	Stainless steel manufacturing		95.65		145,603		145,649
POSCO America Corp.	USA	Trading-Steel		99.45		140,381		140,381
POSCO Investment Co., Ltd.	Hong Kong	Finance		100.00		88,054		88,797
POSCO-Mexico Co., Ltd.	Mexico	Plate steel manufacturing		84.83		141,800		86,163
POSCO-JAPAN Co., Ltd.	Japan	Trading-Steel		100.00		68,436		68,436
Qingdao Pohang Stainless Steel Co., Ltd.	China	Stainless steel manufacturing		70.00		65,982		65,982
POSCO-CSPC Co., Ltd.	China	Steel manufacturing and Sales		90.00		62,494		62,494
POSCO ASSAN TST STEEL Industry	Turkey	Steel manufacturing and Sales		60.00		92,800		37,201
POSCO China Dalian Plate Processing Center Co., Ltd.	China	Steel manufacturing and Sales		80.00		32,992		32,992
POSCO Asia Co., Ltd.	Hong Kong	Steel sellings		100.00		32,189		32,189
POSCO-Malaysia SDN. BHD.	Malaysia	Steel manufacturing and Sales		80.07		31,027		31,027
POSCO Electrical Steel Inida Private	India	Electric steel manufacturing and Sales		100.00		38,215		28,170
POSCO (Thailand) Company Ltd.	Thailand	Steel manufacturing and Sales		85.62		25,945		25,945
POSCO Turkey Nilufer Processing Center Co., Ltd.	Turkey	Steel manufacturing and Sales		100.00		19,983		19,983
EUROTALY S.A.	Uruguay	Timber manufacturing and Sales		98.00		17,715		17,715
Others (34 companies)						217,949		207,845
						4,314,329		4,081,001
					(Won)	11,854,462		11,621,134

(*1) As of March 31, 2012, this was classified as an investment in a subsidiary as the Company has control over of more than half of the voting rights by virtue of an agreement with Postech, which has 4.72% of ownership in POSCO M-TECH Co., Ltd.

(*2) As of March 31, 2012, this investment is collateral for the Company’s guarantee provided to certain borrowings of its subsidiary from banks.

35

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) Details of associates and carrying values as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	Country	Principal operations	Ownership (%)		March 31, 2012		December 31, 2011
[Domestic]
Sungjin Geotec Co., Ltd.	Korea	Industrial machinery manufacturing		23.71	(Won)	159,878		159,878
SNNC Co., Ltd.	Korea	Material manufacturing		49.00		100,655		100,655
Others (7 companies)						66,677		23,678
						327,210		284,211
[Foreign]
POSCO-NPS Niobium LLC.	USA	Mine development		50.00		364,609		364,609
NMC	New Caledonia	Raw material manufacturing and Sales		49.00		189,197		189,197
COMPANHIA SIDERURGICA DO PECEM (CSP)	Brazil	Steel manufacturing		20.88		237,188		132,891
KOBRASCO	Brazil	Facilities lease		50.00		98,962		98,962
BX Steel POSCO Cold Rolled Sheet Co., Ltd.	China	Steel manufacturing and Sales		25.00		63,946		63,983
Others (11 companies)						64,930		69,789
						1,018,832		919,431
					(Won)	1,346,042		1,203,642

36

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

11. Investment Property, Net

(a) Investment property as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Acquisition cost	(Won)	164,885			166,444
Less: Accumulated depreciation		(49,327	)		(49,026	)
Book value	(Won)	115,558			117,418

(b) Changes in the carrying value of investment property for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

(in millions of Won)	Beginning		Depreciation			Others (*1)			Ending
Land	(Won)	43,258		—			(405	)		42,853
Buildings		68,776		(711	)		(645	)		67,420
Structures		5,384		(48	)		(51	)		5,285
Total	(Won)	117,418		(759	)		(1,101	)		115,558

(*1) Mainly includes assets transferred from property, plant and equipment in relation to change in rental ratio.

2) For the year ended December 31, 2011

(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Others (*1)		Ending
Land	(Won)	41,877		—		—			—			1,381		43,258
Buildings		48,514		86		(153	)		(2,955	)		23,284		68,776
Structures		1,882		—		—			(195	)		3,697		5,384
Total	(Won)	92,273		86		(153	)		(3,150	)		28,362		117,418

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

37

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

12. Property, Plant and Equipment, Net

(a) Property, plant and equipment as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Cost	(Won)	43,056,148			42,575,270
Less : Accumulated depreciation		(21,462,406	)		(21,041,006	)
Less : Accumulated impairment		(1,129	)		(1,129	)
	(Won)	21,592,613			21,533,135

(b) The changes in carrying value of property, plant and equipment for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

(in millions of Won)	Beginning		Acquisitions (*1)		Disposals			Depreciation			Others(*2)			Ending
Land	(Won)	1,275,564		146		(8,581	)		—			406			1,267,535
Buildings		2,831,757		28,614		(1,279	)		(58,425	)		750			2,801,417
Structures		2,061,348		49,576		(1,164	)		(40,422	)		91			2,069,429
Machinery and equipment		12,916,329		214,269		(12,391	)		(332,705	)		6,530			12,792,032
Vehicles		19,341		247		—			(2,030	)		199			17,757
Tools		38,022		695		—			(3,779	)		—			34,938
Furniture and fixtures		72,334		10,110		(39	)		(7,181	)		—			75,224
Lease assets		8,281		—		—			(159	)		—			8,122
Construction-in-progress		2,310,159		523,866		—			—			(307,866	)		2,526,159
Total	(Won)	21,533,135		827,523		(23,454	)		(444,701	)		(299,890	)		21,592,613

(*1) Includes the acquisition cost of (Won)303,657 million for items transferred from construction-in-progress in relation to the expansion of raw materials processing facilities, establishment of 3FINEX facilities and others.

(*2) Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment as well as assets transferred from investment property and assets held for sale.

2) For the year ended December 31, 2011

(in millions of Won)	Beginning		Acquisitions (*1)		Disposals			Depreciation			Impairments			Others (*2,3)			Ending
Land	(Won)	1,068,294		209,599		(948	)		—			—			(1,381	)		1,275,564
Buildings		2,502,213		584,977		(3,194	)		(228,836	)		(273	)		(23,130	)		2,831,757
Structures		1,942,405		291,663		(10,229	)		(155,965	)		(142	)		(6,384	)		2,061,348
Machinery and equipment		11,736,629		2,556,617		(36,318	)		(1,301,849	)		(24,394	)		(14,356	)		12,916,329
Vehicles		22,753		5,407		(22	)		(8,797	)		—			—			19,341
Tools		27,807		24,307		(13	)		(14,077	)		(2	)		—			38,022
Furniture and fixtures		66,345		31,153		(4	)		(25,155	)		(5	)		—			72,334
Lease assets		8,918		—		—			(637	)		—			—			8,281
Construction-in-progress		2,635,746		3,393,445		—			—			—			(3,719,032	)		2,310,159
Total	(Won)	20,011,110		7,097,168		(50,728	)		(1,735,316	)		(24,816	)		(3,764,283	)		21,533,135

38

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(*1) Includes the acquisition cost of (Won)3,703,723 million for items transferred from construction-in-progress in relation to the expansion of Gwangyang sintering plates and coke establishment plants and others.

(*2) The Company plans to dispose of certain equipment at an existing steel manufacturing plant due to the completion and expected use of a new plant. Impairment losses amounting to (Won)24,816 million are recognized since the fair value less cost to sell exceeds the carrying amount. The remaining book value of this equipment is expected to be sold by the first half of 2012, for (Won)16,887 million, were reclassified to assets held for sale.

(*3) Includes assets transferred from construction-in-progress to intangible assets, other property, plant and equipment and investment property.

c) Borrowing costs capitalized and the capitalized interest rate for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Weighted average expenditure	(Won)	297,129			472,258
Borrowing costs capitalized		13,510			21,823
Capitalisation rate		4.55	%		4.62	%

13. Intangible Assets, Net

(a) Intangible assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Acquisition cost	(Won)	909,273			893,196
Less : Accumulated depreciation		(679,855	)		(670,300	)
	(Won)	229,418			222,896

39

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Changes in carrying values of intangible assets for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

(in millions of Won)			Increase (*2)				Decrease
	Beginning		Acquisitions		Development		Disposals			Depreciation			Ending
Intellectual property rights	(Won)	6,376		273		—		—			(216	)		6,433
Memberships (*1)		44,523		—		—		(63	)		—			44,460
Development expense		29,182		—		4,919		—			(4,029	)		30,072
Port facilities usage rights		99,553		—		—		—			(3,259	)		96,294
Other intangible assets		43,262		10,885		—		—			(1,988	)		52,159
	(Won)	222,896		11,158		4,919		(63	)		(9,492	)		229,418

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

(*2) Includes acquisition costs transferred from construction-in-progress amounting to (Won)4,209 million.

2) For the year ended December 31, 2011

(in millions of Won)			Increase (*2)				Decrease
	Beginning		Acquisitions		Development		Disposals			Depreciation			Reclassification (*3)			Ending
Intellectual property rights	(Won)	4,919		2,533		—		(319	)		(757	)		—			6,376
Memberships (*1)		56,494		—		—		(214	)		—			(11,757	)		44,523
Development expense		32,308		—		11,152		—			(14,278	)		—			29,182
Port facilities usage rights		112,683		—		—		—			(13,130	)		—			99,553
Other intangible assets		22,733		27,122		—		(1	)		(6,592	)		—			43,262
	(Won)	229,137		29,655		11,152		(534	)		(34,757	)		(11,757	)		222,896

(*1) Economic life of memberships is indefinite.

(*2) Includes acquisition costs transferred from construction-in-progress amounting to (Won)15,309 million.

(*3) Memberships required to be returned after a specific period are reclassified to financial instruments.

40

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

14. Borrowings

(a) Borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Short-term borrowings
Short-term borrowings	(Won)	1,797,743			1,786,590
Current portion of long-term borrowings		8,591			7,571
Current portion of loans from foreign financial institutions		963			951
Current portion of debentures		500,000			500,000
Less : Current portion of discount on debentures issued		(54	)		(732	)
		2,307,243			2,294,380
Long-term borrowings
Long-term borrowings		896,460			892,296
Foreign loans		2,874			3,071
Debentures		8,315,548			8,502,852
Less : Discount on debentures issued		(74,030	)		(81,696	)
Add : Premium on debentures redemption		19,981			21,493
		9,160,833			9,338,016
	(Won)	11,468,076			11,632,396

41

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Short-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
Bank	Issuance date		Maturity date		Annual interest rate  (%)	March 31, 2012		December 31, 2011
Mizho		2011.10.21		2012.01.19	1.51	(Won)	34,827		226,558
BOA		2011.10.10		2012.09.21	1.33~1.86		127,665		100,458
SMBC		2011.10.10		2012.08.06	1.38~1.86		112,815		114,352
JP Morgan		2011.11.04		2012.05.23	1.67~1.92		225,919		228,996
HSBC		2011.11.17		2012.06.05	1.58~1.74		161,090		91,269
DEUTSCHE		2012.01.05		2012.04.13	1.61		282,698		142,420
DBS		2011.10.10		2012.04.09	1.43		326,219		272,026
ANZ		2011.11.10		2012.06.28	1.54~1.76		—		54,393
RBS		2012.02.10		2012.09.14	1.47~1.85		105,401		106,837
CA and others							208,264		106,974
Others (discount on accounts receivable)							212,845		342,307
						(Won)	1,797,743		1,786,590

(c) Current portion of long-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	Borrowers	Issuance date		Maturity date		Annual interest rate  (%)		March 31, 2012		December 31, 2011
Borrowings	Korea Resources Corporation		2006.10.31		2021.09.15		1.00	(Won)	3,000		3,000
Borrowings	Korea Resources Corporation		2006.12.28		2021.12.15		1.00		1,510		1,510
Borrowings	Woori Bank		2009.06.11		2017.03.15		2.00		2,654		1,990
Borrowings	Woori Bank		2009.11.26		2017.03.15		2.00		880		660
Borrowings	Woori Bank		2009.12.31		2017.03.15		2.00		547		411
Loans from foreign financial institutions	NATIXIS (*1)		1984.06.30		2017.12.31		2.00		963		951
Debentures	Domestic debentures 287		2007.05.11		2012.05.11		5.26		499,946		499,268
								(Won)	509,500		507,790

(*1) As of March 31, 2012 and December 31, 2011, Korea Development Bank has provided guarantees for loans from foreign financial institutions.

42

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) Long-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	Borrowers	Issuance date	Maturity date	Annual interest rate  (%)	March 31, 2012		December 31, 2011
Borrowings	Woori Bank and others (*1)	2006.10.31~ 2011.08.11	2017.03.15~ 2039.08.11	1.25~2.25	(Won)	98,346		100,494
Borrowings	Korea National Oil Corporation	2007.12.27~ 2011.12.27	2022.12.29~ 2024.12.29	Government bond -2.25		10,301		10,441
Borrowings	Korea EXIM Bank	2010.02.18~ 2011.11.29	2017.02.28~ 2018.03.23	4.09~4.50		787,813		781,361
Loans from foreign financial institutions	NATIXIS (*2)	1984.06.30~ 1986.03.31	2014.12.30~ 2017.03.31	2.00		2,874		3,071
Debentures	Domestic debentures 301 and others	2008.08.05~ 2011.11.28	2013.08.05~ 2021.11.28	3.78~6.52		3,589,686		3,588,982
Debentures	Exchangeable Bonds (*3) and others	2006.06.28~ 2011.12.22	2013.06.28~ 2021.12.22	0~8.75		4,671,813		4,853,667
					(Won)	9,160,833		9,338,016

(*1) Short-term financial instruments of (Won)1,670 million are collateral for long-term borrowings from a forestry association as of March 31, 2012 and December 31, 2011.

(*2) As of March 31, 2012 and December 31, 2011, Korea Development Bank has provided guarantees for loans from foreign financial institutions.

(*3) The Company issued exchangeable bonds with SK Telecom Co., Ltd. ADRs through Zeus (Cayman) II Ltd., an SPV. The Company accounted for these exchangeable bonds as long-term debts under K-IFRS. The exchangeable bonds may be redeemed prior to maturity at 105.11% of their face value for three years from the issuance date at the option of the bondholders. Also, the Company provides guarantees for Zeus (Cayman) II Ltd.

15. Other Financial Liabilities

(a) Other short-term financial liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Financial guarantee liabilities	(Won)	9,218		6,336
Accounts payable		627,612		806,913
Accrued expenses		201,409		248,597
Dividends payable		6,023		6,050
Finance lease liabilities		1,108		1,108
Withholdings		9,815		9,396
Derivative liabilities		10,898		10,898
	(Won)	866,083		1,089,298

43

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Other long-term financial liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Financial guarantee liabilities	(Won)	53,510		11,163
Long-term accounts payable		87,862		86,871
Accrued expenses		13,601		19,618
Derivatives liabilities		14,548		12,771
Finance lease liabilities		7,352		7,824
Long-term withholdings		9,542		9,052
	(Won)	186,415		147,299

16. Provisions

The changes in provisions for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

(in millions of Won)	Beginning		Increase		Decrease			Ending
Estimated allowance at the end of period (*1)	(Won)	4,451		72,346		(53,136	)		23,661

(*1) Represents the provision for bonuses.

2) For the years ended December 31, 2011

(in millions of Won)	Beginning		Increase		Decrease			Ending
Estimated allowance at the end of period	(Won)	9,582		304,869		(310,000	)		4,451

44

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

17. Employee Benefits

The Company introduced a retirement pension program for all employees in June 2011. The employees and directors employed with the Company had an option to choose whether they would join the defined contribution plan or the defined benefit pension plan. The pension plan benefit is based on each employee’s accrued length of service, including their length of service under the previous severance plan.

(a) Defined contribution plans

The Company partially operates a defined contribution plan for participating employees. Though the Company pays fixed contributions into a separate fund, employee benefits relating to employee service in the future are based on the contributions to the funds and the investment earnings on it. Plan assets are managed by a trustee within a fund separate from the Company’s assets. The expense related to post-employment benefit plans under defined contribution plans during the three-month period ended March 31, 2012 is (Won)2,555 million.

(b) Defined benefit plans

The employees and directors who chose a defined benefit pension plan will receive a defined payment upon termination of their employment if they fulfill the condition to qualify as a recipient. Before their termination of employment, the Company recognizes the pension liability related to defined benefit plans at the end of a reporting period, and measures it at the present value of the defined benefit obligation less the fair value of the plan assets. The Company uses the projected unit credit method in the actuarial valuation of plan assets and the defined benefit obligation

(c) The amounts recognized in relation to defined benefit obligations in the statements of financial position as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012			December 31, 2011
Present value of funded obligations	(Won)	682,760			690,321
Fair value of plan assets		(508,701	)		(513,673	)
Net defined benefit obligations	(Won)	174,059			176,648

(d) The changes in present value of defined benefit obligations for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Defined benefit obligation at the beginning of period	(Won)	690,321			1,013,165
Current service costs (*1)		25,074			108,879
Interest costs		7,789			47,607
Actuarial losses (gains)		(15,728	)		6,157
Benefits paid		(24,696	)		(485,487	)
Defined benefit obligation at the end of period	(Won)	682,760			690,321

45

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(*1) The Company started the employee pension plan in June 2011. The gain on liquidation amounting to (Won)1,887 million was deducted from current service costs as the Company had liquidated prior pension plan.

(e) The changes in the fair value of plan assets for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Plan assets at the beginning of period	(Won)	513,673			689,162
Expected return on plan assets		5,779			26,886
Actuarial gains (losses)		1,246			(460	)
Contributions of participants		—			95,080
Benefits paid		(11,997	)		(296,995	)
Plan assets at the end of period	(Won)	508,701			513,673

(f) The fair value of plan assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Deposits	(Won)	508,635		513,607
Equity instruments		10		10
Others		56		56
Total	(Won)	508,701		513,673

(g) The amounts recognized in the statements of comprehensive income for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Current service costs	(Won)	25,074			28,669
Interest costs		7,789			11,902
Expected return on plan assets		(5,779	)		(6,722	)
Total	(Won)	27,084			33,849

46

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

The above expenses recognized in the statement of comprehensive income are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Cost of sales	(Won)	20,664		25,002
Selling and administrative expenses		5,422		7,235
Others		998		1,612
Total	(Won)	27,084		33,849

(h) Actuarial gains and losses recognized in other comprehensive income for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Beginning	(Won)	(103,947	)		(101,802	)
Current actuarial losses		16,974			109,313
Effect of change of tax rate		(4,108	)		(24,048	)
Ending	(Won)	(91,081	)		(16,537	)

(i) The principal actuarial assumptions as of March 31, 2012 and December 31, 2011 are as follows:

	March 31, 2012			December 31, 2011
Discount rate		4.34	%		4.32	%
Expected return on plan assets		4.32	%		3.95	%
Expected future increases in salaries		2.30	%		2.30	%

18. Other Liabilities

(a) Other current liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Other current liabilities
Advances received	(Won)	33,685		21,149
Withholdings		33,303		25,534
Unearned revenue		5,197		1,772
	(Won)	72,185		48,455

47

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Other long-term liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Other long-term liabilities
Unearned revenue	(Won)	1,110		1,200
Others		2,999		3,000
	(Won)	4,109		4,200

19. Financial Instruments

(a) Classification of financial instruments

1) Financial assets as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Financial assets at fair value through profit or loss	(Won)	—		50,132
Available-for-sale financial assets		4,021,080		3,731,559
Held-to-maturity investments		29,922		29,903
Cash and cash equivalents and loans and receivables		6,929,668		6,761,074
	(Won)	10,980,670		10,572,668

2) Financial liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Financial liabilities at fair value through profit or loss:
Derivatives liabilities held for trading	(Won)	25,446		23,669
Financial liabilities evaluated as amortised cost:
Trade accounts payable		1,246,154		1,395,846
Borrowings		11,468,076		11,632,396
Financial guarantee liabilities (*1)		62,728		17,499
Others		964,324		1,195,429
		13,741,282		14,241,170
	(Won)	13,766,728		14,264,839

48

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(*1) Financial guarantee contracts recognized in financial guarantee liabilities as of March 31, 2012 are as follows:

(in millions of Won)
Guarantee beneficiary	Financial institution	Foreign currency		Won equivalent
POSCO Maharashtra Steel Pvt. Ltd.	Comerica Bank	USD	143,000,000		162,706
United Spiral Pipe, LLC	Shinhan Bank	USD	24,500,000		27,876
	Export-Import Bank of Korea	USD	200,000,000		227,560
POSCO-Vietnam Co., Ltd.	MIZUHO	JPY	2,256,760,000		31,160
	SUMITOMO	JPY	2,550,000,000		35,209
BX STEEL POSCO Cold	China Construction Bank	CNY	34,080,000		6,150
RolledSheet Co., Ltd.	Corporation and others	USD	6,440,000		7,328
Zhangjiagang Pohang Stainless Steel Co., Ltd.	Mizuho and others	USD	160,000,000		182,048
	BOA and others	USD	135,000,000		153,603
POSCO Investment Co., Ltd.	BOC and others	CNY	630,000,000		113,677
	HSBC and others	USD	120,000,000		136,536
	HSBC	MYR	140,000,000		51,983
POSCO-VST Co., Ltd.	ANZ and others	USD	65,000,000		73,957
POSCO-Mexico S.A. DE C.V	HSBC and others	USD	60,000,000		68,268
POSCO(Guangdong) Coated Steel Co., Ltd.	SMBC and others	USD	122,600,000		139,494
PT. KRAKATAU POSCO	ANZ and others	USD	1,210,300,000		1,377,079
		USD	2,246,840,000		2,556,455
		JPY	4,806,760,000		66,369
		CNY	664,080,000		119,827
		MYR	140,000,000		51,983

49

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

3) Financial income and loss by category of financial instrument for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	Financial income and costs
	Interest income (cost)			Dividend income (*1)		Gain and loss on foreign currency transactions			Gain and loss on foreign currency translations		Gain and loss on disposal		Others			Total			Other comprehensive loss
Financial assets at fair value through profit or loss	(Won)	—			—		—			—		556		—			556			—
Available-for-sale financial assets		—			62,704		—			—		—		(20,161	)		42,543			233,945
Held-to-maturity investments		394			—		—			—		—		—			394			—
Loans and receivables		28,739			—		(25,250	)		2,399		—		(13	)		5,875			—
Financial liabilities at fair value through profit or loss		—			—		—			—		—		(1,777	)		(1,777	)		—
Financial liabilities at amortised cost		(105,740	)		—		43,806			196,319		—		(317	)		134,068			—
	(Won)	(76,607	)		62,704		18,556			198,718		556		(22,268	)		181,659			233,945

(*1) Financial income in the statement of comprehensive income also includes the dividends from subsidiaries and associates of (Won)76,460 million (note 30) for the three-month period ended March 31, 2012.

(in millions of Won)	Financial income and costs
	Interest income (cost)			Dividend income (*1)		Gain and loss on foreign currency transactions			Gain and loss on foreign currency translations			Gain and loss on disposal			Others			Total			Other comprehensive income
Financial assets at fair value through profit or loss	(Won)	—			—		—			—			471			550			1,021			—
Available-for-sale financial assets		—			58,508		—			—			—			—			58,508			(117,677	)
Held-to-maturity investments		420			—		—			—			—			—			420			—
Loans and receivables		25,674			—		(22,928	)		(8,493	)		(116	)		—			(5,863	)		—
Financial liabilities at fair value through profit or loss		—			—		—			—			—			604			604			—
Financial liabilities at amortised cost		(93,370	)		—		47,215			213,293			—			(1,148	)		165,990			—
	(Won)	(67,276	)		58,508		24,287			204,800			355			6			220,680			(117,677	)

(*1) Financial income in the statement of comprehensive income also includes the dividends from subsidiaries and associates of (Won)32,798 million (note 30) for the three-month period ended March 31, 2011.

50

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) Credit risk

1) Credit risk exposure

The Company’s on-balance-sheet exposure to credit risk as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Cash and cash equivalents	(Won)	1,537,870		1,137,882
Financial assets at fair value through profit or loss		—		50,132
Available-for-sale financial assets		4,021,080		3,731,559
Held-to-maturity investments		29,922		29,903
Loans and other receivables		1,055,565		1,402,927
Trade accounts and notes receivable		4,336,209		4,220,241
Long-term trade accounts and notes receivable		24		24
	(Won)	10,980,670		10,572,668

The Company also provided financial guarantees for the repayment of loans of subsidiaries and associates. As of March 31, 2012 and December 31, 2011, the maximum exposure to credit risk of these guarantees are (Won)2,794,634 million and (Won)1,500,058 million, respectively.

2) Impairment losses on financial assets

 Allowance for doubtful accounts as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)
	March 31, 2012		December 31, 2011
Accounts receivable	(Won)	7,624		2,174
Other accounts receivable		10,571		10,571
Long-term loans		14,453		14,453
Other assets		13		13
	(Won)	32,661		27,211

51

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

‚ Impairment losses on financial assets for the three-month period ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
(Reversal of) bad debt expenses	(Won)	5,450	(Won)	(2,629	)
Reversal of other bad debt expenses		—		(51	)
	(Won)	5,450	(Won)	(2,680	)

ƒ The aging schedule and the impaired losses of trade accounts and notes receivable as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012				December 31, 2011
	Trade accounts and notes receivable		Impairment		Trade accounts and notes receivable		Impairment
Not due	(Won)	3,944,277		—		3,890,405		—
Over due less than 1 month		121,341		—		210,630		—
1 month - 3 months		165,290		2,661		69,962		—
3 months - 12 months		102,964		2,789		40,521		—
over 12 months		9,985		2,174		10,921		2,173
	(Won)	4,343,857		7,624		4,222,439		2,173

„ Changes in the allowance for doubtful accounts for the three-month period ended March 31, 2012 and the year ended December 31, 2011 were as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Beginning	(Won)	27,211		30,013
(Reversal of) bad debt expenses		5,450		(2,804	)
Other decrease		—		2
Ending	(Won)	32,661		27,211

(c) Liquidity risk

1) The maturity analysis of non-derivative financial liabilities

(in millions of Won)	Book value		Cash flow for contracts		not later than 3 month		3 month - 6 months		6 months - 1 year		1 year - 5 years		later than 5 years
Non-derivative financial liabilities
Trade accounts payable	(Won)	1,246,154		1,246,154		1,246,154		—		—		—		—
Borrowings (*1)		11,468,076		13,359,651		1,850,639		675,860		206,586		8,017,517		2,609,049
Financial guarantee liabilities (*2)		62,728		2,794,634		2,794,634		—		—		—		—
Other financial liabilities		964,324		972,249		835,043		272		10,651		123,904		2,379
	(Won)	13,741,282		18,372,688		6,726,470		676,132		217,237		8,141,421		2,611,428

(*1) Includes cash flows of embedded derivative instruments in relation to exchangeable bonds (exchange right).

(*2) For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.

52

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) Currency risk

1) The Company has exposure to the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The exposure to currency risk as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)	March 31, 2012				December 31, 2011
	Assets		Liabilities		Assets		Liabilities
EUR	(Won)	28,516		7,060		23,790		11,449
USD		646,338		5,983,026		888,896		5,842,319
JPY		69,413		1,978,194		83,627		2,129,999
Others		1,030		503		1,363		18,590
	(Won)	745,297		7,968,783		997,676		8,002,357

2) For the three-month period ended March 31, 2012 and the year ended December 31, 2011, the effects of a hypothetical 10% strengthening or weakening of functional currency against foreign currencies other than functional currency on profit before tax were as follows:

(in millions of Won)	March 31, 2012						December 31, 2011
	10% increase			10% decrease			10% increase			10% decrease
EUR	(Won)	2,146			(2,146	)		1,234			(1,234	)
USD		(533,669	)		533,669			(495,342	)		495,342
JPY		(190,878	)		190,878			(204,637	)		204,637

(e) Interest rate risk

1) The book value of interest-bearing financial instruments as of March 31, 2012 and December 31, 2011 is as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Fixed rate
Financial assets	(Won)	2,273,535			2,286,554
Financial liabilities		(11,362,634	)		(11,525,827	)
		(9,089,099	)		(9,239,273	)
Variable rate
Financial liabilities	(Won)	(105,442	)		(106,569	)

53

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) Sensitivity analysis on the fair value of financial instruments with fixed interest rates

The Company does not account for derivative instruments such as interest swaps as hedges in fair value hedging accounting. Therefore, fluctuations in interest rates do not affect gain or loss.

3) Sensitivity analysis on the fair value of financial instruments with variable interest rates

As of March 31, 2012 and December 31, 2011, provided that other factors remain the same and the interest rate of borrowings with floating rates increases or decreases by 1%, the changes in interest expense during the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012					December 31, 2011
	1% increase			1% decrease		1% increase			1% decrease
Variable rate financial instruments		(1,054	)		1,054		(1,066	)		1,066

(f) Fair value

1) Fair value and book value

The carrying amount and the fair value of financial instruments as of March 31, 2012 and December 31, 2011 are as follows :

(in millions of Won)	March 31, 2012				December 31, 2011
	Book Value		Fair Value		Book Value		Fair Value
Assets measured at fair value
Financial assets held for trading	(Won)	—		—		50,132		50,132
Available-for-sale financial assets		3,918,829		3,918,829		3,630,357		3,630,357
		3,918,829		3,918,829		3,680,489		3,680,489
Assets measured amortised cost
Cash and cash equivalents		1,537,870		1,537,870		1,137,882		1,137,882
Current trade accounts and note receivable		4,336,233		4,336,233		4,220,265		4,220,265
Loans and other receivables		1,055,565		1,055,565		1,402,927		1,402,927
Held-to-maturity investments		29,922		29,922		29,903		29,903
		6,959,590		6,959,590		6,790,977		6,790,977
Liabilities measured fair value
Derivatives liabilities held for trading		25,446		25,446		23,669		23,669
Liabilities measured amortised cost
Trade accounts payable		1,246,154		1,246,154		1,395,846		1,395,846
Borrowings		11,468,076		11,657,307		11,632,396		12,048,152
Financial guarantee liabilities		62,728		62,728		17,499		17,499
Others		964,324		964,324		1,195,429		1,195,429
	(Won)	13,741,282		13,930,513		14,241,170		14,656,926

54

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

2) Interest rates for determining fair value

Interest rates to discount the estimated cash flows as of March 31, 2012 and December 31, 2011 are as follows:

	March 31, 2012	December 31, 2011
Borrowings	1.47 ~ 4.50	1.8 ~ 4.62

3) The fair value hierarchy

 The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in measurements.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly.

Level 3: inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

‚ The fair value measurements classified by fair value hierarchy as of March 31, 2012 and December 31, 2011 and are as follows:

a. March 31, 2012

(in millions of Won)	Level 1		Level 2		Level 3		Total
Financial Assets
Available-for-sale financial assets	(Won)	3,089,318		—		829,511		3,918,829
Financial Liabilities
Derivatives liabilities	(Won)	—		25,446		—		25,446

b. December 31, 2011

(in millions of Won)	Level 1		Level 2		Level 3		Total
Financial Assets
Financial assets held for trading	(Won)	—		50,132		—		50,132
Available-for-sale financial assets		2,774,838		—		855,519		3,630,357
Financial Liabilities
Derivatives liabilities	(Won)	—		23,669		—		23,669

55

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

ƒ Changes in financial assets classified as level 3 for the three-month period ended March 31, 2012 and for the year ended December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31 ,2011
Beginning	(Won)	855,519			603,747
Change to level 3		—			98,242
Other comprehensive income (loss)		(26,008	)		153,530
Ending	(Won)	829,511			855,519

20. Share Capital and Contributed Surplus

(a) Share capital

Under the Articles of Incorporation, the Company is authorized to issue 200 million shares of common stock with a par value of (Won)5,000 per share. As of March 31, 2012, exclusive of retired stock, 87,186,835 shares of common stock have been issued.

The Company is authorized, with the Board of Directors’ approval, to retire treasury stock in accordance with applicable laws up to the maximum amount of certain undistributed earnings. 9,293,790 shares of common stock were retired with the Board of Directors’ approvals.

As of March 31, 2012, total shares of ADRs of 52,974,264 are equivalent to 13,243,566 of common stock.

As of March 31, 2012, the ending balance of common stock amounts to (Won)482,403 million; however, it is different from par value of issued common stock, which amounted to (Won)435,934 million, due to retirement of treasury stock.

(b) Capital surplus

Capital surplus as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Share premium	(Won)	463,825		463,825
Gains on disposal of treasury shares		763,867		763,867
	(Won)	1,227,692		1,227,692

56

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

21. Accumulated Other Comprehensive Income

(a) Accumulated other comprehensive income as of March 31, 2012 and December 31, 2011 is comprised of the following:

(in millions of Won)	March 31, 2012		December 31, 2011
Accumulated changes in fair value of available-for-sale investments, net of tax	(Won)	390,652		156,707

(b) The changes in fair value of available-for-sale investments for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

1) For the three-month period ended March 31, 2012

(in millions of Won)	March 31, 2012
Beginning balance	(Won)	156,707
Changes in fair value of available-for-sale securities		288,473
Impairment of available-for-sale securities		20,161
Tax effects		(74,689	)
Ending balance	(Won)	390,652

2) For the year ended December 31, 2011

(in millions of Won)	December 31, 2011
Beginning balance	(Won)	1,079,038
Changes in fair value of available-for-sale securities		(952,484	)
Reclassification to profit or loss upon disposal		(331,977	)
Impairment of available-for-sale securities		107,377
Tax effects		254,753
Ending balance	(Won)	156,707

22. Treasury Shares

As of March 31, 2012, the Company holds 9,942,391 shares of treasury stock for price stabilization in accordance with the Board of Director’s resolution.

57

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

23. Retained Earnings

Retained earnings as of March 31, 2012 and December 31, 2011 are summarized as follows:

(in millions of Won)	March 31, 2012		December 31, 2011
Legal reserve	(Won)	241,202		241,202
Reserve for business rationalization		918,300		918,300
Reserve for research and manpower development		1,530,000		1,333,333
Appropriated retained earnings for business expansion		32,710,500		26,507,500
Appropriated retained earnings for dividends		1,858,726		1,626,993
Unappropriated retained earnings		835,984		7,495,292
	(Won)	38,094,712		38,122,620

24. Stock Appreciation Rights

(a) The Company granted stock appreciation rights to its executive officers in accordance with the stock appreciation rights plan approved by the Board of Directors. The details of the stock appreciation rights granted are as follows:

(per share, won)
	6th Grant
Granted		90,000
Exercised		78,000
Unexercised		12,000
Exercise price	(Won)	194,900
Exercise period		2007.4.29 ~ 2012.4.28

(b) Expenses related to stock appreciation rights granted to executives incurred for the three-month period ended March 31, 2012 and the year ended December 31, 2011 are as follows:

(in millions of Won)	4th Grant			5th Grant			6th Grant			Total
Accumulated reversal of stock compensation expenses as of december 31, 2011		(83	)		(11,211	)		(6,156	)		(17,450	)
Stock compensation expenses for the three-month period ended March 31, 2011		—			—			375			375

58

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) The Company uses a fair value approach for calculating remuneration cost. The method and assumption for computing fair value of stock appreciation rights are as follows:

	6th Grant
Risk-free rate of interest		3.43	%
Expected exercise period		33 days
Expected price-volatility		0.0778
Rate of expected dividends		2.63	%
Stock price	(Won)	380,000
Fair value	(Won)	184,803

25. Sales

Details of sales for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Revenues
Goods	(Won)	9,435,759		9,090,685
Others		24,660		21,437
	(Won)	9,460,419		9,112,122

59

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

26. Selling and Administrative Expenses

(a) Administrative expenses

Administrative expenses for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Wages and salaries	(Won)	45,555		42,894
Expenses related to defined benefit plan		5,422		7,235
Other employee benefits		17,498		15,497
Travel		4,063		4,776
Depreciation		6,236		5,311
Amortization		4,332		3,683
Rental		10,603		8,852
Repairs		2,803		2,910
Advertising		29,273		19,803
Research & development		31,931		41,066
Service fees		37,659		34,514
Supplies		3,322		3,497
Vehicles maintenance		1,831		1,677
Industry association fee		2,446		2,844
Training		3,425		3,339
Conference		1,455		1,756
(Reverse of) bad debt expenses		5,450		(2,629	)
Others		8,412		8,708
	(Won)	221,716		205,733

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Freight and custody expenses	(Won)	222,278		192,207
Operating expenses for distribution center		2,267		1,867
Sales commissions		17,543		13,372
Sales advertising		72		8
Sales promotion		1,233		1,123
Samples		271		728
Sales insurance premium		2,631		2,715
	(Won)	246,295		212,020

60

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

27. Research and Development Expenses

Research and development expenses recognized as expense for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Selling and administrative expenses	(Won)	31,931		41,066
Cost of sales		90,832		80,005
	(Won)	122,763		121,071

28. Other Operating Income and Expenses

(a) Other operating income

Details of other operating income for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Gain on disposals of property, plant and equipment	(Won)	1,765		3,443
Reversal of impairment of property, plant, and equipment		1,606		—
Miscellaneous income		5,915		7,874
Gain on disposals of assets held for sale		1,150		—
	(Won)	10,436		11,317

(b) Other operating expenses

Details of other operating expenses for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Loss on disposals of property, plant, and equipment	(Won)	14,362		10,742
Reversal of other bad debt expenses		—		(51	)
Donations		22,877		148
Idle tangible assets expenses		6,574		779
Miscellaneous loss		6,122		2,673
Loss on disposals of investment in subsidiaries and associates		395		—
Loss on disposals of assets held for sale		9,391		—
	(Won)	59,721		14,291

61

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

29. Expenses by nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses and other operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Changes in inventories (*1)	(Won)	239,645		(196,622	)
Raw materials and consumables used		6,424,231		6,487,133
Employee benefits expenses		308,701		324,533
Outsourced processing cost		494,391		451,555
Depreciation (*2)		445,460		413,132
Amortization		9,492		7,982
Research & development expenses		122,763		121,071
Electricity and water expenses		154,372		165,954
Service fees		52,582		50,058
Advertising expenses		29,274		19,803
Freight and custody expenses		222,278		192,207
Commission paid		17,543		13,372
Loss on disposal of property, plant, and equipment		14,362		10,742
Other expenses		513,607		141,547
	(Won)	9,048,701		8,202,467

(*1) Changes in inventories include changes in product, semi-finished products and by-product.

(*2) Includes depreciation of investment property.

62

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

30. Finance Income and Costs

(a) Details of finance income and costs for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Finance income
Interest income	(Won)	29,133			26,094
Dividend income		139,164			91,306
Gain on disposals of financial assets held for trading		556			471
Gain on valuations of financial assets held for trading		—			550
Gain on foreign currency transactions		72,866			83,641
Gain on foreign currency translations		218,847			216,663
Gain on valuations of derivatives		7			604
		460,573			419,329
Finance costs
Interest expenses		(105,740	)		(93,370	)
Loss on foreign currency transactions		(54,310	)		(59,354	)
Loss on foreign currency translations		(20,129	)		(11,863	)
Impairment loss of available-for-sale investments		(20,161	)		—
Others		(2,115	)		(1,264	)
	(Won)	(202,455	)		(165,851	)

31. Income Taxes

(a) Income tax expense for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Current income taxes (*1)	(Won)	39,704			151,464
Deferred income tax due to temporary differences		180,806			106,560
Items recorded directly to shareholders’ equity		(78,797	)		(10,929	)
Income tax expense	(Won)	141,713			247,095

(*1) Additional tax payments (or tax returns) arising from finalized tax assessments are added or deducted in current income taxes.

63

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) The following table reconciles the expected amount of income tax expense based on statutory rates to the actual amount of taxes recorded by the Company for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Net income before income tax expense	(Won)	680,272			1,174,451
Income tax expense computed at statutory rate		164,626			284,217
Adjustments:		(22,913	)		(37,122	)
Tax credit		(15,057	)		(16,582	)
Additional income taxes		2,923			—
Tax effects due to permanent differences		(6,250	)		(2,244	)
Difference from settlements of income tax accounts of prior periods		(5,746	)		(8,056	)
Others		1,217			(10,240	)
Income tax expense	(Won)	141,713			247,095
Effective rate (%)		20.80	%		21.00	%

(c) The income taxes charged directly to equity for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			March 31, 2011
Net changes in fair value of available-for-sale investments	(Won)	(74,689	)		33,191
Defined benefit plan actuarial gains		(4,108	)		(24,049	)
Gain on disposal of treasury shares		—			(20,071	)
	(Won)	(78,797	)		(10,929	)

64

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(d) The movements in deferred tax assets (liabilities) for the three-month periods ended March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012									December 31, 2011
	December 31, 2011			Inc (Dec)			March 31, 2012			December 31, 2010			Inc (Dec)			December 31, 2011
Deferred income tax due to temporary differences
Reserve for special repairs	(Won)	(29,659	)		173			(29,486	)		(27,776	)		(1,883	)		(29,659	)
Reserve for technology developments		(358,160	)		(3,832	)		(361,992	)		(264,000	)		(94,160	)		(358,160	)
Depreciation expense		(63,228	)		2,041			(61,187	)		(65,129	)		1,901			(63,228	)
Prepaid expenses		21,879			8,585			30,464			18,851			3,028			21,879
Reappraisal of property plant and equipment		(553,205	)		(38,235	)		(591,440	)		(345,058	)		(208,147	)		(553,205	)
Loss on foreign currency translation		93,911			(48,861	)		45,050			81,066			12,845			93,911
Defined benefit liability		102,738			1,271			104,009			130,271			(27,533	)		102,738
plan assets		(124,536	)		1,826			(122,710	)		(151,406	)		26,870			(124,536	)
Accrued revenue		(2,314	)		561			(1,753	)		(6,600	)		4,286			(2,314	)
Others		283,880			(22,444	)		261,436			332,126			(48,246	)		283,880
		(628,694	)		(98,915	)		(727,609	)		(297,655	)		(331,039	)		(628,694	)
Deferred tax from tax credit
Tax credit carryforward		196,986			(3,094	)		193,892			239,526			(42,540	)		196,986
		196,986			(3,094	)		193,892			239,526			(42,540	)		196,986
Deferred income taxes recognized directly to equity
Gain (loss) on valuation of available-for-sale securities		(50,030	)		(74,689	)		(124,719	)		(304,783	)		254,753			(50,030	)
Defined benefit plan actuarial gains (losses)		33,186			(4,108	)		29,078			28,713			4,473			33,186
		(16,844	)		(78,797	)		(95,641	)		(276,070	)		259,226			(16,844	)
	(Won)	(448,552	)		(180,806	)		(629,358	)		(334,199	)		(114,353	)		(448,552	)

(e) Deferred tax assets and liabilities as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	March 31, 2012							December 31, 2011
	Assets		liabilities		Net			Assets		liabilities		Net
Deferred income tax due to temporary differences
Reserve for special repairs		—		29,486		(29,486	)		—		29,659		(29,659	)
Reserve for technology developments		—		361,992		(361,992	)		—		358,160		(358,160	)
Depreciation expense		15,303		76,490		(61,187	)		15,661		78,889		(63,228	)
Prepaid expenses		30,464		—		30,464			21,879		—		21,879
Reappraisal of property, plant and equipment		—		591,440		(591,440	)		—		553,205		(553,205	)
Loss on foreign currency translation		159,383		114,333		45,050			173,776		79,865		93,911
Defined benefit liability		104,009		—		104,009			102,738		—		102,738
Plan assets		—		122,710		(122,710	)		—		124,536		(124,536	)
Accrued revenue		—		1,753		(1,753	)		—		2,314		(2,314	)
Others		261,436		—		261,436			583,540		299,660		283,880
		570,595		1,298,204		(727,609	)		897,594		1,526,288		(628,694	)
Deferred tax from tax credit
Tax credit carryforward		193,892		—		193,892			196,986		—		196,986
		193,892		—		193,892			196,986		—		196,986
Deferred income taxes recognized directly to equity
Gain (loss) on valuation of available-for-sale securities		—		124,719		(124,719	)		—		50,030		(50,030	)
Defined benefit plan actuarial losses		29,078		—		29,078			33,186		—		33,186
		29,078		124,719		(95,641	)		33,186		50,030		(16,844	)
		793,565		1,422,923		(629,358	)		1,127,766		1,576,318		(448,552	)

(f) As of March 31, 2012, the Company did not recognize the income tax effects associated with the taxable temporary differences of (Won)1,209,618 million (deferred tax liability (Won)173,981 million) relating to the valuation of equity method investments since it is remote that the taxable differences will be realized.

65

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

32. Basic and Diluted Earnings Per Share

(a) Basic and diluted earnings per share for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won, except per share information)	March 31, 2012		March 31, 2011
Net income	(Won)	538,559		927,356
Weighted-average number of common shares outstanding (*1)		77,244,444		77,274,349
Basic and diluted earnings per share		6,972		12,001

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

	March 31, 2012			March 31, 2011
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(9,942,391	)		(9,912,486	)
Weighted-average number of common shares outstanding	(Won)	77,244,444			77,274,349

66

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

33. Related Party Transactions

(a) Significant transactions, which occurred in the ordinary course of business, with related companies for the three-month periods ended March 31, 2012 and 2011 are as follows:

	Sales and others (*1)				Purchase and others (*2)
(in millions of Won)	March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011
Subsidiaries (*3)
POSCO E&C Co., Ltd.	(Won)	3,696		4,174		279,072		310,871
POSCO Processing&Service		205,833		325,023		406,630		336,943
POSCO Coated & Color Steel Co., Ltd.		147,081		158,015		1,383		76
POSCO ICT Co., Ltd.		295		370		92,784		91,929
POSCO Chemtech Co., Ltd.		127,249		97,509		195,006		175,745
POSCO M-TECH CO.,LTD.		6,675		—		79,066		—
POSCO TMC CO., LTD.		46,071		40,095		225		77
POSCOAST Co., Ltd.		80,993		72,179		15,460		13,968
Daewoo International Corp.		1,091,888		798,888		2,850		334
POSCONST.CO.,LTD		63,844		21,372		923		1,282
POSCO America Corporation		177,861		64,689		8		—
POSCO Canada Ltd.		—		—		46,310		52,562
POSCO Asia Co., Ltd.		493,373		464,429		18,050		45,411
POSCO-Japan Co., Ltd.		350,250		308,515		6,547		14,939
POSCO-India Delhi Steel Processing Centre Pvt. Ltd.		40,175		17,405		2		—
POSCO-Mexico Co., Ltd.		64,948		60,964		—		—
Daewoo International Singapore Pte. Ltd.		—		—		9,904		75,798
Others		286,912		92,839		232,949		172,431
	(Won)	3,187,144		2,526,466		1,387,169		1,292,366
Associates (*3)
Posmate Co., Ltd.		246		283		12,081		12,904
POSCO M-TECH CO.,LTD.		—		5,310		—		67,637
SNNC Co., Ltd.		540		270		87,545		66,862
SUNG JIN GEOTEC Co., Ltd.		7,435		8,204		—		—
DONG BANG METAL IND.CO.,LTD.		28,835		8,258		—		—
USS-POSCO Industries (UPI)		85		122,233		101		—
Poschrome(Proprietary) Ltd.		—		—		17,374		16,801
Others		20,967		863		2,200		1,745
		58,108		145,421		119,301		165,949
	(Won)	3,245,252		2,671,887		1,506,470		1,458,315

(*1) Sales and others include sales and insignificant other operating income. Sales are mainly sales of steel products and these are priced on an arms length basis.

(*2) Purchases and others includes purchases and overhead costs. Purchases and others are mainly related to purchases of construction services and purchases of raw materials to manufacture steel products. These are priced on an arms length basis.

(*3) As of March 31, 2012, the Company provides guarantees for certain related parties (note 19).

67

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(b) The related account balances as of March 31, 2012 and December 31, 2011 are as follows:

(in millions of Won)	Receivables (*1)				Payables (*1)
	March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
Subsidiaries
POSCO E&C Co., Ltd.	(Won)	5,231		647		145,595		241,918
POSCO Processing & Service		104,747		88,838		10,478		1,512
POSCO Plantec		35		65		27,071		42,534
POSCO ICT Co., Ltd.		2,507		30		43,521		62,583
POSCO Coated & Color Steel Co., Ltd.		136,518		116,252		229		335
POSCO Chemtech Company Ltd.		46,060		37,808		80,781		82,048
POSCO TMC CO., LTD.		15,310		21,601		102		134
POSCOAST Co., Ltd.		44,577		33,266		9,100		7,090
Daewoo International Corp.		289,252		284,125		1,434		1,589
POSCONST.CO.,LTD		57,390		64,012		504		676
POSCO America Corporation		34,680		32,346		—		—
POSCO Asia Co., Ltd.		60,694		227,476		1,073		1,407
POSCO-TBPC Co., Ltd.		29,662		27,381		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		5,445		6,713		—		—
POSCO-Vietnam Co., Ltd.		441		422		—		—
POSCO-Japan Co., Ltd.		38,282		52,362		622		1,546
POSCO-India Delhi Steel Processing Centre Pvt. Ltd.		13,830		3,484		—		—
POSCO-Mexico Co., Ltd.		142,480		171,908		—		—
Others		72,494		81,255		72,202		83,201
	(Won)	1,099,635		1,249,991		392,712		526,573
Associate
Posmate Co., Ltd.		—		—		5,389		7,198
SNNC Co., Ltd.		150		223		4,452		23,187
DONG BANG METAL IND.CO.,LTD.		21,853		17,038		—		—
Others		2,001		4,122		6,737		809
		24,004		21,383		16,578		31,194
	(Won)	1,123,639		1,271,374		409,290		557,767

(*1) Receivables include trade accounts and notes receivable and other receivables. Payables include trade accounts payable and other payables.

68

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(c) For the three-month periods ended March 31, 2012 and 2011, details of compensation to key management officers are as follows:

(in millions of Won)	March 31, 2012		March 31, 2011
Short-term benefits	(Won)	7,648		7,251
Long-term benefits		3,734		2,531
Retirement benefits		1,968		2,835
	(Won)	13,350		12,617

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. In addition to compensation described above, the Company provided stock appreciation rights to its executive officers and recorded reversal of stock compensation expenses amounted to (Won)375 million and (Won)1,669 million, respectively, for the three-month periods ended March 31, 2012 and March 31, 2011 (note 24).

34. Commitments and Contingencies

(a) The Company entered into long-term contracts to purchase iron ore, coal, nickel and others. These contracts generally have terms of more than three years and provide for periodic price adjustments to the market price. As of March 31, 2012, 257 million tons of iron ore and 34.6 million tons of coal remained to be purchased under such long-term contracts.

(b) 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.

(c) As of March 31, 2012, the Company entered into commitments with Korea National Oil Corporation for long-term foreign currency borrowings, which are limited up to the amount of USD 6.86 million, USD 3.54 million and USD 4.12 million. The borrowings are related to the exploration of gas hydrates in Aral Sea, Uzbekistan, the exploration of gas hydrates in Namangan-Chust and the exploration of gas hydrates in Western Fergana-Chenavard, respectively. The repayment of the borrowings depends on the success of the projects. The Company is not liable for the repayment of full or part of the money borrowed if the respective projects fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements.

(d) The Company is involved in 12 lawsuits and claims for alleged damages aggregating to (Won)10,647 million as of March 31, 2012 which arose in the ordinary course of business. The Company is unable to predict the possible outcome of the above claims. However, in the opinion of management, the foregoing lawsuits and claims will not have a material adverse effect on the Company’s financial position, operating results or cash flows. No provision is recorded in connection with the above lawsuits and claims as of March 31, 2012.

69

POSCO

Notes to Separate Interim Financial Statements, Continued

As of March 31, 2012

(Unaudited)

(e) As of March 31, 2012, the Company has provided three blank promissory notes and a blank check to Korea Resources Corporation as collateral for long-term domestic borrowings, and has provided six blank promissory notes and three blank checks to Korea National Oil Corporation as collateral for long-term foreign currency borrowings.

(f) On April 25, 2012, Nippon Steel Corporation announced that it has filed civil lawsuits against the Company relating to claims of alleged improper acquisition and infringement of intellectual property rights related to the production of grain oriented electrical steel sheets. Nippon Steel Corporation announced that it is seeking an injunction to prohibit the Company from manufacturing and selling the allegedly infringing products as well as monetary damages. The Company has not received any petitions relating to these alleged claims.

35. Cash Flows from Operating Activities

(a) Changes in operating assets and liabilities for the three-month periods ended March 31, 2012 and 2011 are as follows:

(in millions of Won)	March 31, 2012			December 31, 2011
Financial assets held for trading	(Won)	50,132			91,019
Trade accounts and notes receivable		(119,000	)		(83,811	)
Other accounts receivable		88,152			5,929
Advance payments		(1,021	)		(24,339	)
Prepaid expenses		(36,866	)		(46,593	)
Inventories		901,420			(590,683	)
Long-term guarantee deposits		(369	)		532
Other long-term assets		309			—
Trade accounts payable		(155,983	)		415,361
Dividends payable		(27	)		(38	)
Accounts payable		(179,567	)		(154,780	)
Accrued expenses		(49,621	)		13,945
Advances received		12,536			22,494
Withholdings		7,769			5,537
Unearned revenue		3,335			1,063
Other long-term liabilities		19,150			18,980
Payment severance benefits		(24,696	)		(65,140	)
Plan assets		11,997			16,484
	(Won)	527,650			(374,040	)

70