Enhanced Investments - Financial Portal

(4) Deliberation and resolution on bond issuance and important borrowings (including refinancing borrowings exceeding KRW 100 billion)

(5) Preliminary review on bond issuance and important borrowings (new long-term borrowings exceeding KRW 100 billion)

(6) Deliberation and resolution on offering non-current assets as collateral

(7) Deliberation and resolution on takeover of debt such as collateral, guarantee, etc. from invested company (excluding the case involving steel investment)

Audit Committee

3 Outside Directors

Sohn, Sung-Kyu

(Chairman)

Kim, Sung-Jin

Yoo, Jin- Nyong

(1) Setting the work scope of the committee

(2) Matters that the BoD or Representative Directors delegated

(3) Request for Extraordinary general meeting of shareholders

(4) Consulting of external experts

(5) Audit of the legitimacy of management’s business execution

(6) Review soundness and validity of the company’s financial activities and the appropriateness of financial reporting

(7) Review the validity of important accounting standards or changes in accounting estimates

(8) Evaluation of the operation status of the internal accounting management system

(9) Evaluation of the internal control system

(10) Agreement on appointment or dismissal of internal audit department representative

(11) Contract for appointment, remuneration and non-audit services of independent auditors

(12) Evaluation of independent auditors’ audit activities

(13) Report internal audit department’s annual audit plan and results

(14) Report on the evaluation results of the company’s ethical compliance

(15) An independent auditor reports on important facts of the company’s Directors’ misconduct or violation of laws or Articles of Incorporation

(16) Report that independent auditors violation of the company’s accounting standards

(17) Other matters deemed necessary by each committee member

Published: 2022-06-17 06:06:04 ET

<<< go to PKX company page

6-K 1 d262463d6k.htm FORM 6-K Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of June, 2022

Commission File Number: 1-13368

POSCO HOLDINGS INC.

(Translation of registrant’s name into English)

POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

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

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

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

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

POSCO is furnishing under cover of Form 6-K:

Exhibit 99.1: An English-translated documents of POSCO HODLINGS INC.’s 1^st Quarter Report for the year 2022

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		POSCO HOLDINGS INC.
		(Registrant)

Date: June 17, 2022	By	/s/ Han, Young-Ah
		(Signature)
		Name: Han, Young-Ah
		Title: Senior Vice President

Exhibit 99.1

LOGO

QUARTERLY REPORT

(From January 1, 2022 to March 31, 2022)

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

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON BOTH CONSOLIDATED AND NON-CONSOLIDATED BASIS IN ACCORDANCE WITH THE KOREAN-INTERNATIONAL FINANCIAL REPORTING STANDARDS (K-IFRS) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

QUARTERLY REPORT

(From January 1, 2022 to March 31, 2022)

To:	Korean Financial Services Commission and Korea Exchange

/s/ Chon, Jung-Son

Chon, Jung-Son

President and Representative Director

POSCO HOLDINGS INC.

POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

Telephone: +82-54-220-0114

/s/ Han, Young-Ah

Han, Young-Ah

Head of IR team, Senior Vice President

POSCO HOLDINGS INC.

POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

Telephone: +82-2-3457-0114

TABLE OF CONTENTS


I.		Overview

II.		Business

III.		Financial Statements

IV.		Corporate Governance

Attachment: Independent auditors’ review reports on consolidated financial statements

I. OVERVIEW

1.	Scope of Business

A.	POSCO HOLDINGS INC. (the “Company”, Former POSCO)¹⁾

1)	Change of the company name : POSCO (the “Company”) approved the vertical Spin-off plan at the Extraordinary General Meeting of Shareholders as proposed on January 28, 2022 and therefore, the name of the company has changed from ‘POSCO’ to ‘POSCO HODLINGS INC.’ as of March 2, 2022.

The Company’s business scope is as follows:


Before the vertical Spin-off (Beginning of 2022)		After the vertical Spin-off (As of the date of submission)
(1) To manufacture, market, promote, sell and distribute iron, steel and rolled products;		(1) To engage in holding business of controlling the business of, and guiding, organizing and improving the management of, subsidiaries by acquiring and owning the shares or ownership interests in subsidiaries (including sub-subsidiaries and companies controlled by such sub-subsidiaries; collectively “subsidiaries”);
(2) To engage in harbor loading and unloading, transportation and warehousing businesses;
(3) To engage in the management of professional athletic organizations;
(4) To engage in the supply of gas and power generation as well as in the distribution business thereof and in the resources development business;		(2) To engage in the management and licensing of intellectual property rights including brands and trademarks;
(5) To engage in leasing of real estate and distribution businesses;		(3) To engage in the investment related to start-up assistance and new technology;
(6) To engage in the supply of district heating business;		(4) To engage in market research, management advisory and consulting services;
(7) To engage in marine transportation, processing and sales of minerals within or outside of Korea;		(5) To engage in technology research and commissioned services;
(8) To engage in educational service and other services related to business;		(6) To engage in matters entrusted by subsidiaries to assist the subsidiaries’ businesses;
(9) To engage in manufacture, process and sale of non-ferrous metal;		(7) To engage in the supply of gas such as hydrogen and resources development business;
(10) To engage in technology license sales and engineering business; and		(8) To engage in leasing of real estate and distribution businesses; and
(11) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes		(9) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes.

B.	POSCO HOLDINGS INC.

(1)	Name of the Enterprise Group: POSCO HODLINGS INC.

(2)	Companies Belonging to the Enterprise Group

POSCO, POSCO STEELEON, POSCO M-TECH, POSCO Humans, POSCO NIPPON STEEL RHF JOINT VENTURE CO., Ltd., POSCO CHEMICAL CO., LTD, POSCO MITSUBISHI CARBON TECHNOLOGY, P&O Chemical Co., Ltd., POSCO ICT, POSCO INTERNATIONAL Corporation, Pohang Scrap Recycling Distribution Center Co., Ltd., POSCO MOBILITY SOLUTION (Former POSCO SPS), POSCO Research Institute, POSCO Capital, POSCO-Terminal Co., Ltd., POSCO ENGINEERING & CONSTRUCTION., LTD., UITrans LRT Co. Ltd., Gale International Korea, LLC, Songdo Development PMC (Project Management Company) LLC., Songdo Posco family Housing, POSCO A&C, POSCO O&M Co., Ltd., POSCO ENERGY CO., LTD., TANCHEON E&E, Samcheok Blue Power Co.,Ltd., Korea Fuel-Cell, SHINAN GREEN ENERGY, SNNC, Busan E&E Co., Ltd., Pohang Special Welding Co., Ltd., POSCO Group University, POSCO Research & Technology, eNtoB Corporation, POSCO Pilbara LITHUM SOLUTION (Former POSCO LITHIUM SOLUTION Co., Ltd), POSCO HY Clean Metal Co., Ltd., NEH Co., Ltd.

2.	Business Organization

A.	Highlights of the Company’s Business Organization

(1)	Location of the Headquarters


	Before the vertical Spin-off (Beginning of 2022)	After the vertical Spin-off (As of the date of submission)
Name	POSCO	POSCO HOLDINGS INC.

Location of the Headquarters	6261 Donghaean-ro (Goedong-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea	POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

(2)	Steel Works and Offices


	Before the vertical Spin-off (Beginning of 2022)	After the vertical Spin-off (As of the date of submission)
Date	POSCO	POSCO HOLDINGS INC.

March 2, 2022	(a) Pohang Steel Works: 6262 Donghaean-ro (Dongchon-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea (b) Gwangyang Steel Works: 20-26 Pokposarang-gil (Geumho-dong), Gwangyang-si, Jeollanam-do, Korea (c) Seoul Office: POSCO Center, 440 Teheran-ro (Daechi-dong), Gangnam-gu, Seoul, Korea (d) Overseas Offices: In order to support international businesses, the Company operates five overseas offices as follows: United Arab Emirates(Dubai), Brazil(Rio de Janeiro), Argentina(Jujuy), European Union(Germany), and Australia(Perth).	POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

(3)	Major Changes in the Board of Directors (as of March 18, 2022)


Date of Change	Type of General Meeting of Shareholders	Appointment		Expiration of Term
Date of Change	Type of General Meeting of Shareholders	New	Re-appointment	Expiration of Term
March 9, 2018	Ordinary	—	Representative Director Oh, In-Hwan	—
		—	Representative Director Chang, In-Hwa	—
		—	Inside Director Yu, Seong	—
		Inside Director Chon, Jung-Son	—	—
		—	—	Representative Director Choi, Jeong-Woo
		Outside Director Kim, Sung-Jin	—	—
		—	Outside Director Bahk, Byong-Won	—
		—	Outside Director Kim, Joo-Hyun	—
		—	—	Outside Director Shin, Chae-Chol
July 27, 2018	Extraordinary	Representative Director Choi, Jeong-Woo	—	—
July 27, 2018	Extraordinary	—	—	Representative Director Kwon, Oh-Joon
March 15, 2019	Ordinary	—	Representative Director Chang, In-Hwa	—
		—	Inside Director Chon, Jung-Son	—
		Inside Director Kim, Hag-Dong	—	—
		Inside Director Jeong, Tak	—	—
		—	—	Representative Director Oh, In-Hwan
		—	—	Inside Director Yu, Seong
		Outside Director Pahk, Heui-Jae	—	—
		—	Outside Director Kim, Shin-Bae	—
		—	Outside Director Chung, Moon-Ki	—
		—	—	Outside Director Lee, Myoung-Woo
March 27, 2020	Ordinary	—	Representative Director Chang, In-Hwa	—
		—	Inside Director Chon, Jung-Son	—
		—	Inside Director Kim, Hag-Dong	—
		—	Inside Director Jeong, Tak	—
		—	Outside Director Chang, Seung-Wha	—
		Audit Committee Member Pahk, Heui-Jae *	—	—


Date of Change	Type of General Meeting of Shareholders	Appointment		Expiration of Term
Date of Change	Type of General Meeting of Shareholders	New	Re-appointment	Expiration of Term
March 12, 2021	Ordinary	—	Representative Director Choi, Jeong- Woo	—
		—	Representative Director Kim, Hag-Dong	—
		—	Representative Director Chon, Jung-Son	—
		—	Inside Director Jeong, Tak	—
		Inside Director Chung, Chang-Hwa	—	—
		—	—	Inside Director Chang, In-Hwa
		—	Outside Director Kim, Sung-Jin **	—
		Outside Director Yoo, Young-Sook	—	—
		Outside Director Kwon, Tae-Kyun	—	—
		—	—	Outside Director Kim, Joo-Hyun
		—	—	Outside Director Bahk, Byong-Won
		—	Representative Director Chon, Jung-Son	—
		—	Inside Director Chung, Chang-Hwa	—
		Inside Director Yoo, Byeong-Og	—	—
		—	—	Representative Director Kim, Hag-Dong
March 18, 2022	Ordinary	—	—	Inside Director Jeong, Tak
		Non-standing Director Kim, Hag-Dong	—	—
		—	Outside Director Pahk, Heui-Jae
		Outside Director Yoo, Jin-Nyong	—
		Outside Director Sohn, Sung-Kyu	—
			—	Outside Director Kim, Shin-Bae
			—	Outside Director Chung, Moon-Ki

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

**	The Outside Director Sohn, Sung-Kyu was appointed as Audit Committee Member at the General Meeting of Shareholders held on March 18, 2022.

(4)	Changes of the Major Shareholders of POSCO HOLDINGS INC.

(a)

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

(b)

For further reference, please refer to the public disclosures of changes in common shares of the largest shareholder on Financial Supervisory Service website (http://dart.fss.or.kr) with the filing dates given below:

January 30, 2007, July 27, 2007, January 29, 2008, July 25, 2008, January 21, 2009, March 2, 2009, July 22, 2009, October 9, 2009, January 26, 2010, July 20, 2010, January 28, 2011, July 22, 2011, January 31, 2012, August 1, 2012, February 1, 2013, August 1, 2013, January 14, 2014, January 23, 2014, July 29, 2014,January 23, 2015, August 5, 2015, January 6, 2016, January 26, 2016, March 15, 2016, April 12, 2016, July 4, 2016, July 5, 2016, July 21, 2016, October 7, 2016, October 11, 2016, January 10, 2017, April 10, 2017, July 12, 2017, October 13, 2017, January 10, 2018, April 11, 2018, July 9, 2018, October 10, 2018, January 9, 2019, April 9, 2019, July 9, 2019, October 8, 2019, January 8, 2020, February 10, 2020, March 11, 2020, April 7, 2020, May 8, 2020, June 3, 2020, July 7, 2020, August 6, 2020, September 7, 2020, and October 8, 2020, November 4, 2020, December 4, 2020, January 7, 2021, February 4, 2021, March 5, 2021, April 6, 2021, May 6, 2021, June 2, 2021, July 6, 2021, July 28, 2021, August 9, 2021, August 12, 2021, October 8, 2021

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

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

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

(3)	March 2022 : Completion of Vertical Spin-off


Classification	Company Name	Business Unit
Surviving Company	POSCO Holdings Inc.	Development of future business portfolios and management of group’s businesses
New Company	POSCO	Production and sale of steel

C.	Major Changes in Production Facilities

Refer to the ‘II. Business (5. Production and Facilities)’

3.	Equity Capital

A.	New Issuance of Registered Common Stock

[None]

4.	Other Information Regarding Shares

A. Total Number of Shares


	(As of March 31, 2022)
Authorized Shares	Issued Shares
200,000,000		87,186,835

Currency of the Republic of Korea is Korean Won (“KRW”).

Par Value: KRW 5,000 per share

B.	Treasury Stock Holding and Cancellation


								(As of March 31, 2022)
Method of Purchase	Type	Beginning Balance		Increased		Decreased		Cancelled		Ending Balance
Direct	Common		7,071,194		—		223,605		—		6,847,589
Trust Contract	Stock		4,490,069		—		—		—		4,490,069

Total			11,561,263		—		223,605		—		11,337,658

*	The company has disposed of 223,605 treasury stocks to the employee stock ownership association on February 25, 2022.

Aforementioned number of treasury stocks includes 3,032,613 treasury stocks which are subject to the exchange of exchangeable bonds issued by the company on September 1, 2021. The treasury stock subject to this exchange is finalized at the time the exchange right is exercised and is currently deposited with the Korea Securities Depository.

Notice of change as of the reporting date

According to the resolution of the board of directors on May 13, 2022, 42,956 treasury stocks subject to exchange of exchange bonds were additionally deposited as cash dividends (4,000 won per share) in the first quarter, and the number of deposited stocks was 3,075,569 as of the date of submission of the disclosure documents. For further reference, please refer to the public disclosures of ‘Adjustments of Conversion Price, Warrant Exercise Price or Exchange Price’ on Financial Supervisory Service website (http://dart.fss.or.kr) with the filing dates of May 13, 2022.

5.	Voting Rights


			(As of March 31, 2022)
Classification	Number of Common Shares		Remarks
(1) Number of Issued Shares		87,186,835	—
(2) Shares without Voting Rights		11,337,658	Treasury stock and trust holding
(3) Shares with Voting Rights		75,849,117	—

*	The above “(3) Shares with Voting Rights” is the number of shares based on holding voting rights as of March 31, 2022.

6.	Earnings and Dividends


					(In millions of KRW)
	2022.1Q		2021		2020
(Consolidated) Profit*		1,711,611		6,617,239		1,602,148
(Separate) Profit		-1,404,227		5,181,227		965,863
Earnings per Share (Consolidated, KRW)		22,593		87,330		20,165
Cash Dividend Paid		303,397		1,285,635		620,287
Pay-out Ratio (Consolidated,%)		17.7		19.4		38.7
Dividend per Share (KRW)		4,000		17,000		8,000
Dividend Yield (%)		1.3		6.0		3.0

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

Notice of change as of the reporting date

On May 13, 2022 at the Board of Directors meeting, POSCO HOLDINGS INC. resolved to pay cash dividend of the 1st quarter for the fiscal year 2022 as follows:


Cash Dividend per Share (KRW)			4,000
Dividend Yield (%)			1.3
Record Date			March 31, 2022
Provisional Dividend Payment Date			June 2, 2022
Total Cash Dividend Amount (KRW)			303,396,708,000

7.	Stock Prices and Trading Volumes

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

A.	The Korean Stock Market


								(KRW/share, In thousands of shares)
		October 2021		November 2021		December 2021		January 2022		February 2022		March 2022
Common share	Highest Price		328,000		300,500		295,000		306,500		290,000		306,500
	Lowest Price		296,000		261,000		274,500		257,500		267,000		276,500
	Average Price		315,868		281,795		283,932		287,525		278,222		289,857
Trading volume	Daily highest		791		755		1,158		1,038		542		520
	Daily lowest		244		220		159		256		190		182
	Monthly		7,259		8,417		9,557		8,346		5,751		6,379

B.	New York Stock Exchange


								*(USD/ADS, In thousands of ADS)*
		October 2021		November 2021		December 2021		January 2022		February 2022		March 2022
American Depositary Share (ADS)	Highest Price		69.5		63.5		61.8		64.9		60.7		62.4
	Lowest Price		63.3		55.2		57.5		54.6		55.7		54.7
	Average Price		67.0		59.6		60.0		59.8		58.1		59.0
Trading volume	Daily highest		258.9		791.9		334.0		389.4		766.3		669.4
	Daily lowest		78.8		112.8		98.8		106.6		127.7		123.1
	Monthly		3,546		5,176		4,080		4,565		5,849		5,510

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

II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into four segments:

Steel, Green Infra, Green Materials and Energy, and Others.

B. Summary of Financial Status of Segment


									(In millions of KRW)
Segment	2022.1Q				2021				2020
Segment	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Steel		7,325,070		619,400		41,093,405		8,123,117		28,892,877		1,372,852
Green Infra		9,036,665		422,818		33,525,252		1,009,937		27,660,861		978,195
Green Materials and Energy		461,094		14,841		1,241,957		69,510		771,575		22,818
Others		4,515,241		1,200,591		471,731		35,525		467,483		29,170
Total		21,338,070		2,257,650		76,332,345		9,238,089		57,792,796		2,403,035

2. Business Status of Segments

A. Steel

(1) Summary of Business

There are 62 consolidated companies in the steel segment, including POSCO and POSCO Steeleon, and overseas companies including POSCO (Zhangjiagang) Stainless Steel Co., Ltd. in China and overseas processing centers. POSCO produces steel materials such as hot rolled, cold rolled and stainless steel at Pohang Works and Gwangyang Works. POSCO Steeleon is a company specializing in manufacturing surface-treated steel products, POSCO (Zhangjiagang) Stainless Steel Co., Ltd., is a stainless steel sheet manufacturer and seller, and there are other overseas processing centers that process and sell steel materials.

The steel industry is a key industry that has taken pivotal roles in the national economic development since the 1970s. Steel is used as a basic material in various manufacturing fields such as automobiles, shipbuilding, home appliances, and construction, and has a close connection with the front industry due to its characteristics.

Though the global crude steel production has decreased in 2020 affected by COVID-19, it has increased by +4.6% year-on-year to 1.951 billion tons in 2021 due to the economic recovery. Meanwhile, crude steel production in the first quarter of 2002 fell 28 million tons year-on-year to 459 million tons as China decreased production for carbon neutrality.

The steel industry is affected by the business cycle and the ups and downs of the demand industry.

Therefore, steel demand is not only related to trend of market economy, but also to situation of demand industries like shipbuilding, automobiles, home appliances, constructions and etc.

The steel industry is a capital and technology-intensive industry that requires enormous initial investments. Steel companies are focusing on reducing production costs and securing price competitiveness. In the meantime, protectionism is intensifying, with the U.S. and Europe building trade barriers to protect their steel industries. In Asia, there is little difference in logistic costs, and the trading is relatively active among countries. Therefore, POSCO is focusing on defending imports and expanding domestic market share.

Environmental regulations especially cooperation system for carbon neutrality for the steel industry are being strengthened. To protect the environment, POSCO has continuously invested in environmental facilities and has been actively responding to future environmental changes such as low-carbon and green growth by commercializing the world’s first eco-friendly steel manufacturing process, FINEX and starting development of hydrogen reduction process (HyREX).

All iron ore and coking coal that are the main raw materials for steel manufacturing, are imported. In order to secure stable raw materials sourcing and consider company’s new growth strategy and ESG policy, POSCO maintains an appropriate ratio of investment in raw material development by acquiring or selling shares of overseas raw material companies

In the first quarter of 2022, economic instability remained, with raw material prices soaring due to the pandemic of Covid-19 and Russia-Ukraine conflict. Meanwhile, international steel prices remained strong due to tight global steel supply mainly influenced by China’s regulation on steel production.

POSCO strengthened response ability to the market by closely monitoring the trend of demand industry and focused on selling high value-added products. In addition, POSCO is striving to expand the market share of fast-growing eco-friendly industries such as electric vehicles and LNG through active marketing activities. As a result, sales of WTP(World Premium Product) and eco-friendly products are growing continuously.

In the steel industry, automobiles, shipbuilding, and construction are the main demand industries, and steel products are used as raw materials for these demand industries. In terms of sales, the proportion of domestic sale is 60% of total sales and export sales are around 40%, and by export region, the proportion of Southeast Asia, China, and Japan is high. POSCO maintains order based production and sales system, and to secure stable sales, the proportion of direct sales to customers in domestic sales is maintained at about 60%.

POSCO is the No. 1 global steel company that can maintain its competitiveness in the midst of rapidly changing business environments such as the transition to a low-carbon eco-friendly era, accelerating technological innovation, and strengthening ESG management. The company’s competitive advantages include followings:

First, POSCO has the ability to change current steelmaking process to a low-carbon, eco-friendly process. Second, not only being the world’s largest integrated mill, POSCO is building ‘intelligent Smart mill’ Third, we have a portfolio for ‘premium product competitiveness’. We are proactively responding to the increasing customer demand of eco-friendly products by expanding the development of high-end products and Green transition solutions. Fourth, POSCO has been strengthening ESG oriented management. We are strengthening ESG management by establishing a framework for ESG management practice in nine key areas, including carbon neutrality, eco-friendly material development, safety, corporate citizenship management, and diversity.

(2) Market Share


											(Millions of Tons, %)
Category	2022.1Q					2021					2020
Category	Production		Market share			Production		Market share			Production		Market share
Crude Steel Production		16.9		100	%		70.6		100	%		67.1		100	%
POSCO		8.8		52.1	%		38.3		54.2	%		35.9		53.5	%
Others		8.1		47.9	%		32.3		45.8	%		31.2		46.5	%

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

∎ POSCO STEELEON

POSCO Steeleon provides differentiated value through technology development and new market development with design/solution provision in both domestic and overseas surface treatment steel market. In addition, POSCO Steeleon is strengthening sales system of WTP (World Top Premium) products through joint marketing with POSCO. In line with POSCO Group’s strategy that strengthens the sales base for high-end steel materials for construction use, POSCO Steeleon is striving to strengthen its competitiveness in the high-end construction/exterior materials through research and development based on customers.

B. Green Infra Business

There are 76 subsidiaries on consolidated basis including POSCO International, POSCO E&C, and POSCO Energy.

∎ POSCO INTERNATIONAL

(1) Market Share


			(Millions of US Dollars)
Category	2022.1Q		2021.1Q		Growth Rate
All Trading Companies in Korea		172,917		146,405		18.11	%
POSCO International Corp.		2,614		1,861		40.46	%

Source: Korea International Trade Association

(2) Summary of Businesses

POSCO International and its consolidated subsidiaries engage in three major businesses: trading, energy and investment (food resources, mineral resource development and etc). In addition, POSCO International maintains a global network of over 80 subsidiaries and branches in major overseas regions. In the case of the trading business, POSCO International has not only been securing stable supply line in steel business but also been actively developing and expanding new businesses such as secondary battery business, agro-commodities, LNG trading, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. In the energy business, POSCO International conducts businesses such as natural gas and crude oil development, LNG infrastructure, natural resources and power generation infrastructure. In regard to investment business, POSCO International mainly focus on food resource business in which developing palm farm in Indonesia, and other food value chain in North America. In addition, the company invests in mineral resource development in Australia and power generation infrastructure overseas.

∎ POSCO E&C

There are 24 subsidiaries on consolidated basis including POSCO E&C and POSCO A&C.

POSCO E&C engages in primarily 3 businesses: plant, civil engineering(infrastructure) and construction.

Plant business is the construction of integrated steel mills, EPC projects and industrial plants. Plant business used to focus on small investment of existing facilities but there will be more new investments in Electric furnace and hydrogen reduction process followed by global green trend. The civil engineering business is about constructing expressways, railroads and bridges. With the government’s Green New Deal policy, the infrastructure industry is expected to increase investment in eco-friendly facilities such as water treatment and waste treatment, and investment in roads and railways is expected to increase as well. In regard to construction business, the demand of urban maintenance projects such as reconstruction, redevelopment, and remodeling is increasing as real estate prices rise in Korea. There may be volatility in the market depending on the global economy and financial environment in the future, but it is expected that there will be a steady opportunity to participate in construction projects in emerging countries.

∎ POSCO ENERGY

POSCO ENERGY started its commercial operation in February, 1972 as the only privately-owned power plant in Korea. Since the early 1990’s, POSCO ENERGY continuously remodeled and built additional power plants meeting the increased demand for electricity in Korea. POSCO ENERGY acquired the LNG terminal business from POSCO in 2019, providing an opportunity to expand the LNG value chain. The LNG terminal business operates stable business structure through businesses such as tank rental, small scale LNG business, and ship trial run. POSCO ENERGY plans to secure stable profit base through the expansion of the LNG terminal in the future and grow into a general energy company focused on gas and power. Furthermore, POSCO ENERGY has been running businesses such as fuel cell facility installation, long-term O&M service provision, and fuel cell power plant operation after it has established fuel cell business division in 2007. POSCO Energy is strengthening its expertise and enhancing its management efficiency through Korea Fuel Cell Co., Ltd., which was established in November 2019.

∎ POSCO ICT

There are 5 subsidiaries on consolidated basis including POSCO ICT and four of them are located overseas.

POSCO ICT has both IT and OT technologies and has secured competitiveness in its manufacturing-based business on the convergence of IT and OT technologies. The experiences operating POSCO’s Smart Factory based on PosFrame system, an AI-based platform, led the company to have a strength in the area of continuous process. The company took this advantage to expand this technology to assembly process and F&B manufacturing. With its experiences in POSCO’s smart factory construction, POSCO ICT is planning to to support the mass production system of eco-friendly materials such as lithium and nickel. In addition, POSCO ICT will apply POSCO’s production quality management system that is controlled by edge computing-based smart factory solution to steel production and processing centers overseas.

C. Green Materials and Energy

∎ POSCO CHEMICAL

POSCO CHEMICAL operates mainly 3 businesses: refractory, quicklime & chemical and energy material. In the refractory business, POSCO CHEMICAL produces and maintains refractories. In order to keep price competitiveness in the domestic market, the company has expanded its business to China. In the quicklime & chemical business, POSCO CHEMICAL produces quicklime and chemical products such as coal tar and light oil. In the energy material business, POSCO CHEMICAL provides cathode and anode materials which are the main components for secondary cells: cathode, anode, electrolyte and separation membrane. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously. In particular, the secondary battery market for electric vehicles is expected to grow 29% annually from about 2 million in 2018 to about 15 million in 2025 due to China’s strong electric vehicle industry development policy, European CO2 emission regulations, and global OEMs’ proportion of electric vehicle. In 2021, POSCO CHEMICAL has focused on investing in large-scale expansion of energy materials for future growth under a difficult business environment. In the meantime, the company conducted various activities to improve profitability and sustainable management and therefore, achieved its highest sales volume of KRW 19,89.5 billion and operating profit of KRW 121.7 billion (consolidated basis) since its foundation.

Secondary Cell Market Growth Trend and Outlook

LOGO

(SNE Research)

D. Others

∎ POSCO M-TECH

POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers. In the case of steel products packaging, POSCO M-TECH continuously develops packaging automated molding machines and applies environment-friendly packaging materials. POSCO M-TECH has expanded the sales of aluminum deoxidizers in overseas markets. POSCO M-TECH’s business performance is closely related to the steel industry, and the business situation of the steel industry could have both direct or indirect impact on POSCO M-TECH’s business performance.

3. Key Products

A. Sales of Key Products (2022.1Q)


			(In hundred millions of KRW, %)
Business Area	Item	Specific Use	Total Sales			Ratio
Steel	Hot-rolled Product (HR)	Steel pipe, Shipbuilding, etc.		13,020			12.7	%
	Cold-rolled Product (CR)	Automobile , Home appliances, etc.		33,044			32.2	%
	Stainless Steel Products	Tableware, pipes, etc.		27,202			26.5	%
	Others	Plates, Wire rods, etc.		29,211			28.5	%
	Gross Sum			102,476			100.0	%
	Deduction of Internal Trade			(29,225	)

	Sub Total			73,251

Green Infra	Trading	Steel, Metal		103,448			78.3	%
		Chemical, Strategic Item, Energy		11,695			8.8	%
		Others		17,025			12.9	%
	Construction	Architecture (Domestic)		8,077			5.0	%
		Plant (Domestic)		3,574			2.2	%
		Civil Engineering (Domestic)		1,776			1.1	%
		Others (Domestic)		2,901			1.8	%
		Overseas Construction		2,114			1.3	%
		Owned Construction		183			0.1	%
		Others		399			0.2	%
	Electricity Sales, etc.			8,534			5.3	%
	Others			2,338			1.4	%
	Gross Sum			162,065			100.0	%
	Deduction of Internal Trade			(71,698	)

	Sub Total			90,367

Green Materials and Energy	Secondary battery materials and etc.			7,108			99.5	%
	Others			36			0.5	%
	Gross Sum			7,144			100.0	%
	Deduction of Internal Trade			(2,533	)

	Sub Total			4,611

Others	Others			87,237
	Gross Sum			87,237
	Deduction of Internal Trade			(42,085	)
	Sub Total			45,152

Total Sum				213,381

B. Price Movement Trends of Key Products


			(In thousands of KRW/ Tons, KRW/kWh)
Business Area	Products	2022.1Q	2021	2020
Steel	Hot-rolled Product (HR)	1,107	970	622
Steel	Cold-rolled Product (CR)	1,263	1,035	759
Green Infra	Electric Power	204	98	72
Green Materials and Energy	Refractory	1,076	913	965
Green Materials and Energy	Lime	131	104	106

Other sectors are omitted because it is difficult to measure changes in product prices due to the nature of the project

Price movement trend of secondary battery material business is not indicated due to risk of information leakage

[Steel]

(1) Criteria for Calculation

(a)

Subjects for Calculation: Unit sales prices of the standard hot-rolled product and cold-rolled product

(b)

Calculation Method and Unit: The average price of each product based on its total sales including the freight costs during the given period.

(2) Factors of Price Changes

Key products prices increased sharply year-on-year due to rapid recovery of demand industries that were negatively influenced by COVID-19 and tight supply affected by Chinese government’s control of steel production control and export regulation. In the 1^st quarter of 2022, steel prices remained strong due to rise of major raw materials prices and supply disruptions caused by the Russia-Ukraine conflict.

[Green Infra]

(1) Criteria for Calculation

(a)

Subjects for Calculation: Price of electric power

(b)

Calculation Method and Unit: Unit price per electric power ÷ Net power volume generated

(2) Factors of Price Changes

Power : Korea Gas Corporation cost, etc.

•

The cost consists of introduction cost, supply cost, etc., and is affected by crude oil and exchange rates

[Green Materials and Energy]

(1) Criteria for Calculation

(a)

Subjects for Calculation: Unit price of refractory and quicklime

(b)

Calculation Method and Unit: The average price of each product based on its total sales including the freight costs during the given period.

(2) Factors of Price Changes

Price of refractories is affected by business condition of front industry and raw material cost. Quicklime price is mainly influenced by utility unit price and raw materials cost. The price fluctuation of quicklime is small.

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	Purchase Portion, (%)	Remarks
Steel	Raw Materials	Materials for Iron-making	Iron Ore for Blast Furnaces	20,307	49.90%	Iron Ore, Coal
		Sub-materials	Sub-materials for Iron-making, Steelmaking	8,232	20.20%	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
		Stainless Steel Materials	Key Materials for STS Production	12,178	29.90%	Nickel, Ferrochrome, STS Scrap Iron, etc.
Green Infra	Raw Materials	Ready-mixed Concrete	Construction of Structure	397	4.20%	—
		Steel Reinforcement	Strengthening Concrete	607	6.50%	—
		Cable	Electricity Transfer	16	0.20%	—
		Steel Pile	Foundation of Structure	110	1.20%	—
		LNG	Material for Power Generation	4,414	47.20%	—
		Others	Others	3,811	40.70%	—
Green Materials and Energy	Raw Materials	NCM, etc.	anode material manufacturing	3,092	80.40%	—
		Graphite, etc.	cathode material manufacturing	224	5.80%	—
		Limestone	Quicklime manufacturing	253	6.60%	—
		Others	refractory manufacturing	276	7.20%	—


Others	Raw Materials	Materials for Iron-making	Iron Ore for Blast Furnaces	30,627	64.70%	Iron Ore, Coal
		Sub-materials	Sub-materials for Iron-making, Steelmaking	8,958	18.90%	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
		Stainless Steel Materials	Key Materials for STS Production	7,256	15.30%	Nickel, Ferrochrome, STS Scrap Iron, etc.
		Others	Others	491	1.00%	—

Among the steel sector above, POSCO’s purchase amount is as of March 2022 which is after the vertical spin-off.

Among other sectors above, POSCO Holdings’ purchase amount is performance of POSCO from Jan-Feb 2022 before the spin-off.

B. Price Movement Trends of Major Raw Materials


				(In thousands of KRW)
Business Area	Category	2022.1Q		2021		2020
Steel	Iron Ore(per ton)		159		169		120
	Coal(per ton)		588		257		147
	Scrap Iron(per ton)		677		563		348
	Nickel(per ton)		31,791		21,130		16,254
Green Infra	Ready-mixed Concrete (per m³)		68		68		65
	Steel Pile (per m)		238		272		102
	Steel Reinforcement (per kg)		1		1		1
	Cable (per m)		1		1		1
	LNG (per ton)		1,446		702		484
Green Materials and Energy	Limestone (per ton)		22		19		19
Green Materials and Energy	Others (per ton)		486		320		294

Price movement trend of secondary battery material business is not indicated due to risk of information leakage

[Steel]

Price Movement Trend of Major Raw Materials

(1) Iron Ore


																			(In US Dollars/ Tons)
	‘22.1Q		‘21.4Q		‘21.3Q		‘21.2Q		‘21.1Q		‘20.4Q		‘20.3Q		‘20.2Q		‘20.1Q		‘19.4Q		‘19.3Q		‘19.2Q		‘19.1Q
Trend of International Benchmark Price (Free On Board, “FOB”)		132		96		148		188		158		126		110		88		83		80		92		94		94

(2) Coal


																			(In US Dollars/ Tons)
	‘22.1Q		‘21.4Q		‘21.3Q		‘21.2Q		‘21.1Q		‘20.4Q		‘20.3Q		‘20.2Q		‘20.1Q		‘19.4Q		‘19.3Q		19.2Q		‘19.1Q
Trend of International Benchmark Price (FOB)		488		369		264		137		127		109		115		118		155		140		161		203		206

(3) Scrap Iron


																			(In US Dollars/ Tons)
	‘22.1Q		‘21.4Q		‘21.3Q		‘21.2Q		‘21.1Q		‘20.4Q		‘20.3Q		‘20.2Q		‘20.1Q		‘19.4Q		‘19.3Q		‘19.2Q		‘19.1Q
Trend of Purchase Price (Cost and Freight, “CFR”)		562		527		500		497		443		361		289		254		274		270		290		312		325

(4) Nickel


																			(US Dollars/lb, US Dollars/ Tons)
	‘22.1Q		‘21.4Q		‘21.3Q		‘21.2Q		‘21.1Q		‘20.4Q		‘20.3Q		‘20.2Q		‘20.1Q		‘19.4Q		‘19.3Q		‘19.2Q		‘19.1Q
Trend of London Metal Exchange (“LME”) Cash Price		11.98		8.99		8.68		7.87		7.97		7.23		6.45		5.54		5.77		7.01		7.05		5.56		5.61
		26,395		19,821		19,125		17,359		17,570		15,930		14,210		12,215		12,723		15,450		15,540		12,258		12,369

LME : London Metal Exchange

[Green Infra]


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

(1) Criteria for Calculation

•

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

(2) Factors of Price Changes

•

Korea Gas Corporation cost, etc. (The cost consists of introduction cost, supply cost, etc., and is affected by crude oil and exchange rates)

[Green Materials and Energy]

(1) Criteria for Calculation

•

Refractory and lime: Purchase prices including freight costs

(2) Factors of Price Changes

•

Limestone : Raw material price fluctuation is not extreme and it varies slightly depending on the freight cost

•

Other (refractory raw materials) : Price fluctuations and compositional costs of raw materials in China

The trend of material price in the secondary battery material sector is not indicated due to risk of information leakage

5. Production and Facilities

A. Production Capacity

[Steel]

∎ POSCO

(Thousands of Tons)

Business Area

Products

2022.1Q

2021

2020

Steel

Crude Steel

11,197

45,330

∎ POSCO STEELEON

(Thousands of Tons)

Business Area

Products

Plant

2022.1Q

2021

2020

Steel

Galvanized / Color-

coated Steel

Pohang

237

960

Myanmar

Total

254

1,030

[Green Infra]

∎ POSCO ENERGY

(Electric Power: MW/year)

Business Area

Products

2022.1Q

2021

2020

Power Generation

Electric Power

Incheon

853

3,412

[Green Materials and Energy]

∎ POSCO CHEMICAL


Business Area	Products	Place of Business	2022.1Q		2021		2020
Refractory	Brick and etc.	Pohang		28,250		113,000		115,000
LIME	Quicklime	Pohang		270,000		1,095,000		1,098,000
LIME	Quicklime	Gwangyang		270,000		1,095,000		1,098,000

Total				568,250		2,303,000		2,311,000

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production


				(Thousands of Tons)
Products		2022.1Q		2021		2020
Crude Steel			9,892		42,964		40,579
Products	Hot-Rolled Steel		2,037		9,243		9,128
	Plate		1,651		6,832		7,009
	Wire Rod		611		2,688		2,666
	Pickled-Oiled Steel		686		2,880		2,432
	Cold-Rolled Products		1,941		7,898		6,795
	Coated Steel		1,900		7,446		6,316
	Electrical Steel		264		1,032		826
	Stainless Steel		1,023		4,099		3,900
	Others		686		3,106		4,691

	Total		10,801		45,224		43,763

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

POSCO’s production result includes production of POSCO HOLDINGS before the spin-off date (March 1, 2022), and production of POSCO after the spin-off date.

•

Before the spin-off (POSCO HOLDINGS) : HR 1,286, Plate 135, STS 343, Others 105

•

After the spin-off (POSCO) : HR 751, Plate 390, Wire Rod 192, PO 210, CR 488, Coated Steel 466, Electrical Steel 72, STS 180, Others 46

(2) Capacity Utilization Rate


						(Thousands of Tons, %)
	Company	Capacity		Production		Utilization Rate
Crude Steel Production	POSCO		10,031		8,770		87.4
	PT.KRAKATAU POSCO		754		783		103.9
	POSCO YAMATO VINA STEEL JOINT STOCK COMPANY		138		90		65.7
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.		275		249		90.6

	Total		11,198		9,892		88.3

POSCO INTERNATIONAL and POSCO E&C businesses are not reflected on the table due to difficulties in measuring capacity, production and utilization rate of such businesses.

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

POSCO’s production result includes production of POSCO HOLDINGS before the spin-off date (March 1, 2022)z, and production of POSCO after the spin-off date.

•

Before the spin-off (POSCO HOLDINGS) : 5,928

•

After the spin-off (POSCO) : 2,842

[Green Infra]

∎ POSCO ENERGY

(1) Production Result

(Gwh, Thousands of Tons)

Business Area

Products

2022.1Q

2021

2020

Power Generation

Electric Power

2,439

13,493

13,998

(2) Capacity Utilization Rate

(Hour, %)

Business Area

Products

2021.1Q
Capacity

2020.1Q
Production

Utilization Rate

Power Generation

Incheon Power Plant

2,160

996

46.1

[Green Materials and Energy]

∎ POSCO CHEMICAL

(1) Production Result


							(Thousands of Tons)
Business Area	Products	Place of Business	2022.1Q		2021		2020
Refractory	Brick and etc.	Pohang		20		84		81
LIME	Quicklime	Pohang Gwangyang		288		1,151		1,102
LIME	Quicklime	Pohang Gwangyang		283		1,296		1,243

Total				591		2,531		2,426

In the case of the secondary battery material business, detailed descriptions are not included due to risk of information leakage

(2) Capacity Utilization Rate (Current Business Year)


			(Thousands of Tons)
Business Area	Capacity		Production		Utilization Rate
Refractory Factory		28		20		73	%
Quicklime Factory (Pohang)		270		288		107	%
Quicklime Factory (Gwangyang)		270		283		105	%

Total		568		591		—

C. Production Facilities

(1) The current status of production facilities

[Land]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation		Ending Book Balance
Steel		1,843,612		—		(118,345	)		—		1,725,267
Green Infra		576,983		960		(3,522	)		—		574,421
Green Materials and Energy		174,851		5,293		—			—		180,144
Others		107,269		122,380		(1	)		—		229,648

[Buildings]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		3,207,094		8,885		(122,617	)		(34,442	)		3,058,920
Green Infra		745,973		13,540		(302	)		(7,491	)		751,720
Green Materials and Energy		208,793		11,850		—			(2,180	)		218,463
Others		42,590		158,684		(15,878	)		(35,533	)		149,863

[Structures]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		2,508,316		8,634		(20,182	)		(22,545	)		2,474,223
Green Infra		495,594		794		—			(7,102	)		489,286
Green Materials and Energy		16,691		190		(32	)		(302	)		16,547
Others		111,194		43,748		(5,749	)		(32,890	)		116,303

[Machinery and Equipments]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		14,248,995		111,282		(241,071	)		(211,254	)		13,907,952
Green Infra		1,557,832		18,121		(2,496	)		(31,060	)		1,542,397
Green Materials and Energy		526,329		3,599		(151	)		(10,601	)		519,176
Others		87,000		431,508		(107,652	)		(314,338	)		96,518

[Vehicles]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		31,115		3,155		(2,698	)		(1,627	)		29,945
Green Infra		8,254		2,787		(1,566	)		(655	)		8,820
Green Materials and Energy		4,786		381		(275	)		(546	)		4,346
Others		1,875		3,139		(1,481	)		(1,692	)		1,841

[Tools and Fixtures]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		44,910		4,954		(6,444	)		(2,715	)		40,705
Green Infra		24,819		4,428		(516	)		(2,984	)		25,747
Green Materials and Energy		7,625		698		(201	)		(928	)		7,194
Others		441		5,487		(3,473	)		(1,959	)		496

[Equipment]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		107,865		6,661		(16,813	)		(4,084	)		93,629
Green Infra		41,290		8,127		(1,698	)		(3,088	)		44,631
Green Materials and Energy		8,918		1,460		(570	)		(690	)		9,118
Others		8,089		15,465		(930	)		(2,085	)		20,539

[Financial Lease Assets]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel		609,664		17,106		(12,392	)		(12,756	)		601,622
Green Infra		194,885		52,912		(25,666	)		(18,246	)		203,885
Green Materials and Energy		59,070		4,099		(1,827	)		(3,547	)		57,795
Others		4,127		34,760		(1,949	)		(7,763	)		29,175

[Biological Assets]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation			Ending Book Balance
Steel						—
Green Infra		154,682		2,571		(1	)		(2,341	)		154,911
Green Materials and Energy						—
Others						—

[Assets under Construction]


								(In millions of KRW)
Business Area	Beginning Book Balance		Increased		Decreased			Depreciation		Ending Book Balance
Steel		1,109,181		283,988		(52	)		0		1,393,117
Green Infra		70,700		28,185		—			—		98,885
Green Materials and Energy		642,904		152,269		—			—		795,173
Others		2,382		33,850		(69	)		0		36,163

(2) New Facility Establishment, Purchase, Etc.

(a) Investments under Construction

[Steel]

(In hundred millions of KRW)


Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO	Expansion/ Establishment	October 2008 ~December 2026	P) Establishment of #6 Coke plant		17,381		8,277		9,104
		November 2021 ~December 2025	G) Increased production capacity of electrical steel for eco-friendly vehicles in Gwangyang		8,682		60		8,622
	Maintenance/ Improvement	June 2019 ~October 2028	P) Improvement of #2 Hot strip mill furnace		8,896		1,542		7,354
		August 2020 ~August 2022	G) 2^nd renovation of #4 Furnace		3,288		2,405		883
PT. KRAKATAU POSCO	Expansion/ Establishment	July 2021 ~November 2022	Establishment of SPM (Skin Pass Mill)		120		32		87

P stands for Pohang Steel Works.

G stands for Gwangyang Steel Works.


[Green Infra]		(In hundred millions of KRW)


Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO MOBILITY SOLUTION	Expansion/ Establishment	June 2021- ~May 2022	Mechanical Equipment _Press (Pohang)		152		93		59
		January 2022 ~March 2023	Mechanical Equipment _Press/Molding/Assembling (Gwangyang)		130		0		130
POSCO ICT	Expansion/ Establishment	January 2022- ~December 2022	Other business and etc.		178		17		161
		January 2022- ~December 2022	Expansion of SM server		160		14		146
POSCO INTERNATIONAL TEXTILE LLC.	Expansion/ Establishment	March 2022- ~December 2022	Fixed assets		116		0		116
	Maintenance/ Improvement	September 2021 ~September 2022	Fixed assets		100		36		64
PT. BIO INTI AGRINDO	Expansion/ Establishment	June 2021- ~October 2022	CPO Mill		268		62		205
POSCO Energy	Expansion/ Establishment	January 2021- ~May 2024	Gwangyang LNG #6 Tank		1,437		393		1,044


[Green Materials and Energy]		(In hundred millions of KRW)


Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested
POSCO CHEMICAL	Establishment/ Expansion	December 2021 ~ June 2024	cathode material factory in Pohang		3,263		250		3,013
		July 2020 ~November 2022	The 3rd stage of cathode material factory in Gwangyang		2,895		1,948		947
		November 2020 ~March 2024	The 4^th stage of cathode material factory in Gwangyang		2,758		1,392		1,366
		February 2020 ~May 2024	Establishment of new Artificial Graphite Anode line		2,177		1,197		980
		November 2019 ~December 2022	The 2^nd stage of production line up expansion in #2 anode material factory		1,651		1,380		271
		October 2020 ~November 2022	Facilities rationalization of refractory sintering plant in Pohang		327		23		304
Zhejiang POSCO-HUAYOU New Energy Co., Ltd	Establishment/ Expansion	December 2021 ~December 2024	#2 new factory with capacity of 29 thousand tons		3,112		959		2,153
POSCO ARGENTINA	Establishment/ Expansion	January 2022 ~April 2024	Brine lithium commercialization plant stage 1		10,167		81		10,086


[Others]		(In hundred millions of KRW)

Company

Date

Project

Total
Investment

Invested
Amount

Amount
to Be
Invested

POSCO MTECH

Establishment/ Expansion

November 2021

~ June 2023

Investment in new facilities

113

POSCO O&M

Establishment/ Expansion

January 2022

~ December 2022

Other current investments

220

218

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

6. Product Sales

[Steel]


		(In hundred millions of KRW)
Items		2022.1Q			2021			2020
Domestic	Hot-Rolled Products		6,379			70,117			39,663
	Cold-Rolled Products		6,406			54,864			37,870
	Stainless Steel		4,805			35,722			23,746
	Others		9,463			94,737			63,111
Overseas	Hot-Rolled Products		6,641			55,180			37,368
	Cold-Rolled Products		26,637			144,421			101,808
	Stainless Steel		22,397			86,712			72,140
	Others		19,748			93,736			66,876
Total	Gross Sum		102,476			635,489			442,583
	Internal Transaction		(29,225	)		(224,555	)		(153,654	)
	Total		73,251			410,934			288,929

[Green Infra]


		(In hundred millions of KRW)
Items		2022.1Q			2021		2020
Domestic Trading	Merchandise		16,233			63,137		33,565
	Product		2,684			8,757		2,028
	Others		84			1,174		240
Overseas Trading	Merchandise		33,439			137,741		75,922
	Product		202			1,223		528
	Others		1			207		1,192
Trades among the 3 countries			79,525			240,665		209,446
Domestic Construction	Building		8,077			35,633		42,761
	Plant		3,574			13,272		12,887
	Civil Engineering		1,776			6,771		6,177
	Others		2,901			9,860		7,116
Overseas			2,114			7,736		4,866
Own Construction			582			853		2,292
Electric Power Sales			8,534			20,422		15,949
Others			2,338			8,722		9,737
Gross Sum			162,065			556,174		424,706
Deduction of Internal Transaction			(71,698	)		-220,938		(148,098	)

Total			90,367			335,236		276,609

[Green Materials and Energy]


	(In hundred millions of KRW)
Items	2022.1Q			2021			2020
Secondary Battery Materials		7,108			20,830			16,136
Others		36			61			1
Gross Sum		7,144			20,892			16,137
Deduction of Internal Transaction		(2,533	)		(8,472	)		(8,421	)
Total		4,611			12,420			7,716

[Others]


	(In hundred millions of KRW)
Items	2022.1Q			2021			2020
Others		87,237			17,843			14,062
Gross Sum		87,237			17,843			14,062
Deduction of Internal Transaction		(42,085	)		(13,109	)		(9,387	)
Total		45,152			4,734			4,675

LOGO Domestic and overseas categorized by the sales area.

LOGO Sales of POSCO International’s foreign branches are included in ‘trade among the 3 countries’ under Green Infra part

7. Derivatives

We use forward exchange contracts to hedge against the exchange rate risk for foreign currency loans. As of March 31, 2022, we assessed the fair value of our currency swap contracts to be USD 0.5 billion(expiring August, 2023), USD 0.5 billion(expiring July, 2024) USD 0.5 billion(expiring November, 2022), USD 0.5 billion(expiring January, 2023), USD 0.44 billion(expiring January, 2025), and EUR 0.5 billion(expiring January, 2024).

The transaction loss of forward exchange contracts is KRW 6,149 million(expiring March, 2022). Also, we recognized KRW 16,490 million of valuation gain on currency swap contracts.

8. Significant Contracts


Company	Contract	Date	Remarks
POSCO INTERNATIONAL	Investment on the 3^rd stage development of A-1 / A-3 block in Myanmar gas field	June 2020	1) Investment amount: KRW 365,786,302,000 2) Development period: September 1, 2019 ~ December 31, 2024 3) Schedule : Installation Completion of low-pressure gas compression platform and commenced operation in 2024 4) Other Information - Location: North-west offshore, Myanmar - This investment is the 3^rd stage of development, which consists of 3 stages in Myanmar gas field development. The purpose of investment is to maintain current gas production level stably by installing low-pressure gas compression platform. - In the first quarter of 2021, the design and production of the equipment for this work was started, and it is planned to start operation in 2024. The “(2) Development period” above is the period including the basic design progress period, September 2019 to September 2020. - Participation rate of each company in gas production and offshore pipeline transportation business • POSCO International Corporation : 51.0% • ONGC VIDESH(Oil and Natural Gas Corporation Videsh Limited) : 17.0% • MOGE(Myanmar Oil and Gas Enterprise): 15.0% • GAIL (India) Limited : 8.5% • KOGAS(Korea Gas Corporation): 8.5% - Investment size of USD 315,170 thousand, applying the exchange rate of 1USD=1,160.60 KRW, which is the date of the BOD resolution. - Detailed information and future timeline on this resource development investment is subject to change. POSCO International disclosure date : September 22, 2020 (Decision on natural resources investment)
POSCO INTERNATIONAL	Decision to acquire shares of Senex Energy (Australia)	December 2021	1) Purpose : To specialize in steel processing business by splitting-off business division 2) Method : Cash acquisition 3) Resolution date of Board of Directors : December 10, 2021 4) Acquisition amount : KRW 371,077,996,186 5) Number of shares acquired : 96,178,946Shares 6) Date of acquisition : April 1, 2022 7) equity structure (after acquisition of shares) : - POSCO International : 50.1% - Hancock Energy (Australia) : 49.9% POSCO International disclosure date : March 31, 2022 (Decision on Acquisition of Shares or Investment Certificates of Other Corporations)


POSCO ENERGY	Merger	May 2020	1) Contract counterpart : PSC Energy Global Co., Ltd. 2) Signed date : May 26, 2020 3) Date of merger : August 1, 2020 4) Merger ratio : 1.0000000 : 0.0000000 5) Information : POSCO ENERGY merges PSC Energy Global Co., Ltd., a wholly owned subsidiary of POSCO ENERGY
POSCO FLOW (Former POSCO TERMINAL)	Transfer of all logistics tasks such as arranging logistics and performing related services	December 2021	1) Contract counterpart : POSCO (POSCO HOLDINGS INC.) 2) Signed date : December 22, 2021 3) Date of Transfer : January 1, 2022 4) Transfer amount : 2,945 million won 5) Information : Transfer of all logistics tasks such as arranging logistics and performing related services
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY	Joint stock contract with YAMATO KOGYO CO., LTD. and SIAM YAMATO STEEL CO., LTD. to improve business structure	March 2020	1) Purpose: To improve business structure by collaborating with leading company in section steels 2) Information: POSCO’s 100% share of POSCO SS VINA changes to 51% YAMATO KOGYO CO., LTD. takes 30% of shares and SIAM YAMATO STEEL CO., LTD. takes 19% of shares. 3) Conclusion of a contract: March 18, 2020 4) Registration of joint stock company : April 28, 2020

9. Research and Development

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


Business Area	Company	Organization
Steel	POSCO	Steel Production & Technology Strategy Office
		R&D Center
		Steel Product R&D Center
		Low-Carbon Process R&D Center
		Automotive Steel R&D Center
		Steel Solution R&D Center

	POSCO STEELEON (Former POSCO COATED & COLOR STEEL Co,. Ltd).	Production & Marketing Strategy Office

	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.	R&D Center

	POSCO MOBILITY SOLUTION	STS Business Office R&D Group
		Core Business Office Product Process Development Group
		Core Business Office Mold Research Group

Green Infra	POSCO ENGINEERING & CONSTRUCTION	R&D Center
Green Infra	POSCO A&C	R&D Center
	POSCO ENERGY	Business Development Division
	POSCO ICT	R&D Center

Green Materials and Energy	POSCO CHEMICAL	Basic Material R&D Center
Green Materials and Energy	POSCO CHEMICAL	Energy Material R&D Center

Others	POSCO M-TECH	Pohang Steel Business Office

B. R&D Expenses in 2022.1Q (In millions of KRW)


Category	Business Area
Category	Steel			Green Infra			Green Materials and Energy			Others			Total
Selling and Administrative Cost		4,144			4,013			5,596			19,816			33,570
Manufacturing Cost		30,577			296			—			60,300			91,173
R&D Cost (Intangible Assets)		(7,223	)		(13	)		1,071			13,296			7,131
Total*		27,498			4,296			6,667			93,412			131,874
Government Subsidy		—			5			—			—			5
R&D/Sales Ratio (%)		0.38	%		0.05	%		1.45	%		2.07	%		0.62	%

*	Total includes government subsidy.

III. Financial Statements

1. Consolidated Financial Statements

A. Summary


	(In millions of KRW)
Account	2022.1Q		2021		2020
	As of March 31, 2022		As of December 31, 2021		As of December 31, 2020
[Total current assets]		50,928,763		46,621,631		35,830,815
Cash and cash equivalents		6,329,536		4,775,166		4,754,644
Other receivables, net		2,103,933		2,104,609		1,494,239
Other short-term financial assets		13,427,957		13,447,717		11,709,209
Trade accounts and notes receivable, net		11,708,327		10,061,98		8,120,619
Inventories		16,078,571		15,215,09		9,051,790
Other current assets		1,280,439		1,017,05		700,314
[Total non-current assets]		47,697,874		44,849,983		43,256,158
Other receivables, net		1,482,233		1,415,143		1,195,962
Other long-term financial assets		2,370,949		2,119,674		1,561,807
Investments in associates and joint ventures		4,894,880		4,514,647		3,876,249
Property, plant and equipment, net		29,708,585		29,596,698		29,400,141
Intangible assets, net		4,205,737		4,166,309		4,449,432
Other non-current assets		5,035,490		3,037,512		2,772,567
Total assets		98,626,637		91,471,614		79,086,973
[Total current liabilities]		23,576,679		21,083,623		16,854,968
[Total non-current liabilities]		17,888,243		15,583,048		14,557,413


Total liabilities		41,464,922			36,666,671			31,412,381
[Equity attributable to owners of the controlling company]		51,993,519			50,427,355			44,331,350
Share capital		482,403			482,403			482,403
Capital surplus		1,397,054			1,387,960			1,310,547
Hybrid bonds		—			199,384			199,384
Retained earnings		52,794,697			51,532,888			46,111,457
Other equity attributable to owners of the controlling company		(2,680,635	)		(3,175,280	)		(3,772,441	)
[Non-controlling Interests]		5,168,196			4,377,588			3,343,242
Total equity		57,161,715			54,804,943			47,674,592
	From January 1, 2022 to March 31, 2022			From January 1, 2021 to December 31, 2021			From January 1, 2020 to December 31, 2020
Revenue		21,338,070			76,332,345			57,792,796
Operating profit		2,257,650			9,238,089			2,403,035
Profit		1,906,884			7,195,890			1,788,152
[Profit attributable to owners of the controlling company]		1,711,612			6,617,239			1,602,147
[Profit attributable to non-controlling interests]		195,272			578,651			186,005
Total comprehensive Income		2,298,514			8,013,489			1,570,204
[Total comprehensive income attributable to owners of the controlling company]		2,083,583			7,384,572			1,415,132
[Total comprehensive income attributable to non-controlling interests]		214,931			628,917			155,072
Earnings per share(KRW)		—			87,330			20,165
Number of Consolidated Companies		173			170			167

B. The Standards Used for Reporting the Financial Statements

The Company prepared its financial statements in accordance with the Korean-International Financial Reporting Standards (the “K-IFRS”) and applied it to each Company’s final financial statements.

2. Separate Financial Statements

A. Summary


	(In millions of KRW)
Account	2022.1Q		2021		2020
	As of March 31, 2022		As of December 31, 2021		As of December 31, 2020
[Total current assets]		5,875,724		25,918,880		19,579,954
Cash and Cash equivalents		532,410		2,042,274		1,822,660
Trade accounts and notes receivable, net		238,967		6,017,508		3,693,535
Other receivables, net		138,698		545,341		279,555
Other short-term financial assets		4,963,495		9,605,522		9,607,632
Inventories		—		7,623,202		4,093,829
Other current assets		2,154		85,033		82,743
[Total non-current assets]		47,458,142		38,323,879		37,215,015
Other receivables, net		211,969		274,253		84,037
Other long-term financial assets		1,300,389		1,326,565		1,072,817
Investments in Subsidiaries, associates, and joint ventures		45,561,505		16,002,640		14,883,152
Property, plant and equipment, net		143,759		19,772,299		20,216,932
Intangible assets, net		13,677		551,410		621,926


Account	2022.1Q			2021			2020
Other non-current assets		226,843			396,712			336,151
Total assets		53,333,866			64,242,759			56,794,969
[Total current liabilities]		1,740,014			7,868,269			5,089,111
[Total non-current Liabilities]		4,467,710			7,339,065			6,591,154
Total liabilities		6,207,724			15,207,334			11,680,265
[Share capital]		482,403			482,403			482,403
[Capital surplus]		1,348,780			1,339,289			1,339,289
[Hybrid bonds]		—			199,384			199,384
[Retained earnings]		47,871,561			49,734,492			45,781,777
[Other equity]		(2,576,602	)		(2,720,143	)		(2,688,149	)
Total equity		47,126,142			49,035,425			45,114,704
	From January 1, 2022 to March 31, 2022			From January 1, 2021 to December 31, 2021			From January 1, 2020 to December 31, 2020
Revenue		7,779,277			39,920,201			26,509,920
Operating profit		1,069,678			6,649,600			1,135,197
Profit		(1,404,227	)		5,181,227			965,863
Earnings per share(KRW)		(18,562	)		68,360			12,123

B. The Standards Used for Reporting the Financial Statements

The company prepared its financial statements in accordance with the Korean - International Financial Reporting Standards (the “K-IFRS”).

IV. CORPORATE GOVERNANCE

1. Overview of Corporate Governance

A. Board of Directors (“BoD”)

(1) Board of Directors

The Board of Directors consists of five inside directors (Choi, Jeong-Woo, Chon, Jung-Son, Chung, Chang-Hwa, Yoo, Byeong-Og), one non-standing director (Kim, Hag-Dong), and seven outside directors (Kim, Sung-Jin, Chang, Seung-Wha , Pahk, Heui-Jae, Yoo, Young-Sook, Kwon, Tae-Kyun, Yoo, Jin-Nyong, Sohn, Sung-Kyu)

The Board of Directors manages the following five Special Committees:

(a) ESG Committee

(b) Director Candidate Recommendation Committee

(d) Finance Committee

(e) Audit Committee

LOGO Composition of the Special Committees under the BoD and their Functions(as of May 13, 2022)

Category

Composition

Directors

Major Functions

ESG Committee

3 Outside Directors,

1 Inside Director

Yoo, Young-Sook

(Chairman)

Kim, Sung-Jin

Kwon, Tae-Kyun

Yoo, Byeong-Og

(1) Preliminary review of the operation of BoD and Special Committees

A. Development of agenda and establishment of operation standards for the BoD and Special Committees

B. Preliminary review of amendment or repeal of the Operational Regulations of the BoD

C. Preliminary review of establishment and operation of Special Committees within the BoD

(2) Execution monitoring and report publication related to ESG

(3) Deliberation and resolution on donations exceeding KRW 100 million and KRW 1 billion and less, as well as preliminary review on donations exceeding KRW 1 billion (Internal transaction review is excluded)

(4) Matters related with internal transactions (Provision or transaction of funds, securities, and assets for a related person) in accordance with the Monopoly Regulation and Fair Trade Act

A. Review of issues and improvement measures in relation to internal transactions

B. Preliminary review of internal transactions (KRW 100 billion or more in transaction amount)

C. Deliberation and resolution on internal transactions (KRW 5 billion or more and less than KRW 100 billion in transaction amount)

(5) Appointment of fair trade compliance officer

[Matters to Report]

1. Important matters concerning ESG of subsidiaries



Director Candidate Recommendation Committee	3 Outside Directors	Kwon, Tae-Kyun (Chairman) Chang, Seung-Wha Yoo, Jin- Nyong	(1) Qualification assessment of Outside Director candidates and candidate nomination at the general meeting of shareholders (2) Pre-screening and qualification assessment of Inside Director candidates (3) Preliminary review of appointing the Committees members (4) Preliminary review of appointing the Representative Directors among Inside Directors (excluding the CEO) (5) Operation of the Outside Director Candidate Recommendation Advisory Group (6) Other matters necessary to nominate Outside Director candidates

Evaluation and Compensation Committee	4 Outside Directors	Chang, Seung-Wha (Chairman) Pahk, Heui-Jae Yoo, Young-Sook Sohn, Sung-Kyu	(1) Development of management succession and executive development plans (2) Establishment and execution of executive evaluation and compensation plans (3) Preliminary review on compensation and retirement allowance of Directors

Finance Committee	3 Outside Directors; 1 Inside Director	Pahk, Heui-Jae (Chairman) Yoo, Young-Sook Kwon, Tae-Kyun Chon, Jung-Son	(1) Establishment of policies for company’s internal values and financial soundness (2) Preliminary review in case of filing in litigation or arbitration, or responding to reconciliation or mediation in the process of trial or taking any equivalent level of legal actions with the amount of KRW 100 billion or more (3) Investments A. Preliminary review of investment plans for new projects (KRW 100 billion or more. Investment and capital increase include borrowings and liabilities that the company takes) B. Preliminary review of investment plans for existing projects (KRW 100 billion or more. Investment and capital increase include borrowings and liabilities that the company takes) C. Approval of new investment (From KRW 50 billion to less than KRW 100 billion. Investment and capital increase includes borrowings and liabilities that the company takes) D. Approval of investment in existing project (From KRW 100 billion to less than KRW 200 billion. Investment and capital increase includes borrowings and liabilities that the company takes) E. Preliminary review of acquisition and disposal of tangible and intangible fixed assets and important investment assets (over KRW 200 billion, based on book value per unit of investment assets) capital increase and disposal of share in the invested entity executed by a non-steel business division (KRW 100 billion or more. Investment and capital increase include borrowings and liabilities that the company takes)

In order to reorganize the role of the board of directors followed by company’s vertical spin-off, the special committee was reorganized at the General Meeting of Shareholders held on March 18, 2022.

•

Before : ESG Committee, Director Candidate Recommendation Committee, Evaluation and Compensation Committee, Finance Committee, Audit Committee, Executive Management Committee

•

After : ESG Committee, Director Candidate Recommendation Committee, Evaluation and Compensation Committee, Finance Committee, Audit Committee

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

(January 1, 2022 ~ March 31, 2022)


No.	Date	Agenda	Approval
2022-1	January 4, 2022	• Deliberation Agenda 1. Amendment of articles of incorporation of new steel subsidiary related to vertical spin-off	All 1 Case Approved
2022-2	January 28, 2022	• Deliberation Agenda 1. Approval of the 54th financial statements and schedule for the general meeting of shareholders 2. Disposal of treasury stocks in accordance with employee stock ownership program implementation • Report Agenda 1. Business performance of the fiscal year of 2021 2. Report on internal control over financial reporting 3. Assessment on the effectiveness of internal control over financial reporting	All 2 Cases Approved
2022-3	February 17, 2022	• Deliberation Agenda 1. Recommendation of Inside Directors candidates and Non-Standing Director candidate 2. Agendas for the 54th general meeting of shareholders • Report Agenda 1. Amendment of the Operational Regulation of Board of Directors in accordance with conversion to a holding company	All 2 Cases Approved
2022-4	March 2, 2022	• Deliberation Agenda 1. Approval of public notice replacing general shareholder’s meeting to report the completion of Spin-off and inaugural general meeting 2. Approval of registration of relocation of Headquarters	All 2 Cases Approved

At the 54^th General Meeting of Shareholders which was held on March 18, 2022, Outside Director Kim, Shin-Bae and Chung, Moon-Ki, and Inside Director Jeong, Tak and Kim, Hag-Dong retired due to expiration of the terms. Outside Directors Yoo, Jin- Nyong, Sohn, Sung-Kyu, Inside Director Yoo, Byeong-Og, and Non-standing Director Kim, Hag-Dong were newly elected.

(March 18, 2022 ~ May 14, 2022)


No.	Date	Agenda	Approval
2022-5	March 18	• Deliberation Agenda 1. Appointment of the Chairman of the BoD 2. Appointment of Special Committees members 3. Appointment of Representative Directors and Inside Directors 4. Revision of the Board of Directors Operation Regulations in accordance with the transition to the holding company	All 4 Cases Approved
2022-6	April 8 May 13	• Deliberation Agenda 1. Revision of Operation Regulations of Succession Council	Approved
	April 8	2. Second investment in POSCO lithium solution • Report Agenda Investment status of secondary battery material business	Approved
2022-7	May 13	• Deliberation Agenda 1. Appointment of a compliance officer 2. Dividends in the first quarter of 2022 • Report Agenda Business performance and Group’s ESG performance of the 1^st quarter of 2022 1. Joint investment of anode materials in North America 2. Performance and evaluation results of the board of directors in 2021 3. The performance and assessment of Board of Directors for 2021	All 2 Cases Approved

LOGO Major Activities of Outside Directors on the Board of Directors (January 1, 2022 ~ May 13, 2022)


No.	Date	Participation of the Outside Directors (the Number of total Outside Directors)	Remarks
2022-1	January 4	7 (7)	—
2022-2	January 28	7 (7)	—
2022-3	February 17	7 (7)	—
2022-4	March 2	7 (7)	—
2022-5	March 18	7 (7)	—
2022-6	April 8, May 13	7 (7)	—
2022-7	May 13	7 (7)

(4) Special Committees under the BoD and Their Activities (From January 1, 2022 to May 13, 2022)

•

ESG Committee (January 1, 2022 ~ March 17, 2022)


Date	Agenda	Approval
January 28, 2022	• Deliberation Agenda 1. Contribution to the Labor Welfare Fund(Internal Transaction)	Approved
	2. Financial contribution to the joint labor welfare fund with partner companies (Internal Transaction)	Approved

•

ESG Committee (March 18, 2022~ May 13, 2022)


Date	Agenda	Approval
March 29, 2022	• Deliberation Agenda Lease contract for POSCO Center in 2022	Approved
May 13, 2022	• Deliberation Agenda 1. Appointment of Fair Trade Self-Compliance Manager	Approved
	2. POSCO HOLDINGS’ Publication of Corporate Citizenship Report • Report Agenda Group ESG performance in the first quarter of 2022	Approved

•

Director Candidate Recommendation and Management Committee (January 1, 2022~March 17, 2022)


Date	Agenda	Approval
January 28, 2022	• Deliberation Agenda 1. Qualification review and recommendation of the Outside Directors candidates	Approved
February 17, 2022	• Deliberation Agenda 1. Recommendation of the Outside Directors candidates	Approved
February 17, 2022	• Preliminary Review 1. Qualification review of the Inside Directors candidates and Non-Standing Director candidate	—

•

Evaluation and Compensation Committee (January 1, 2022 ~ March 17, 2022)

Date

Agenda

Approval

January 27, 2022

• Deliberation Agenda

1. Evaluation of the business performance for the fiscal year of 2021

Approved

•

Finance Committee (January 1, 2022~March 17, 2022)

Date

Agenda

Approval

February 17, 2022

• Deliberation Agenda

1. Equity investment in an all-solid-state battery manufacturing company

Approved

B. Audit Committee

(1) Composition of the Audit Committee

Name

Qualifications

Remarks

Sohn, Sung-Kyu

Kim, Sung-Jin

Yoo, Jin- Nyong

Satisfies the requirements stipulated in the Korean Commercial Act

Chairman

—

(2) Major Activities of the Audit Committee (January 1, 2022 ~ March 31, 2022)


Session	Date	Agenda	Approval
1	January 27	• Deliberation Agenda 1. Assessment of internal control over financial reporting in 2021 2. Review of the agendas for the extraordinary General Meeting of Shareholders 3. Approval of audit and non-audit services for POSCO and subsidiaries 4. Audit Committee activities in 2021 5. The assessment on the executives’ and employees’ conformity to the code of ethics for the fiscal year of 2021 • Report Agenda	All 5 Cases Approved
		1. Report of operation of internal control over financial reporting in 2021	—

2	February 16	• Deliberation Agenda 1. Internal audit result for the year 2021 • Report Agenda	Approved
		1. External audit result for the year 2021	—

3	February 17	• Deliberation Agenda 1. Review of the agendas for the Ordinary General Meeting of Shareholders	Approved

- At the 54^th general meeting of shareholders held on March 18, 2022, due to Chung, Moon-Ki and Pahk, Heui-Jae’s expiration of term in the Audit Committee, a new Audit Committee member, Sohn, Sung-Kyu and Yoo, Jin- Nyong was elected.


Session	Date	Agenda	Approval
4	March 18	• Deliberation Agenda 1. Appointment of the chairman of the audit committee	Approved
		2. Consent to appoint a person in charge of internal audit department	Approved
5	April 5	• Deliberation Agenda 1. Approval of POSCO HOLDINGS audit service contract change and POSCO audit, non-audit service contract	Approved
6	Aril 27	• Deliberation Agenda 1. Results of internal audit on the consolidated financial statements for the 1st quarter of 2022 • Report Agenda The results of the 20-F audit for 2021 and the results of external reviews on the consolidated financial statements for the 1st quarter of 2022	Approved

C. Voting Rights of Shareholders

(1) The Cumulative Voting System: The cumulative voting system was introduced at the 36th general meeting of shareholders on March 12, 2004.

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

(3) The Electronic Voting System: The electronic voting system was determined at the Board of Directors meeting on February 20, 2019.

D. Compensation of Directors and Officers

Remuneration for directors and audit committee members are not included in the quarterly report in accordance with corporate disclosure guide and it will be included in the half-year/business report instead.

POSCO HOLDINGS INC.

and Subsidiaries

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2022

(With Independent Auditors’ Review Report Thereon)

Table of Contents


			Page
Independent Auditors’ Review Report			1

Condensed Consolidated Interim Financial Statements

Condensed Consolidated Interim Statements of Financial Position			3

Condensed Consolidated Interim Statements of Comprehensive Income			5

Condensed Consolidated Interim Statements of Changes in Equity			6

Condensed Consolidated Interim Statements of Cash Flows			8

Notes to the Condensed Consolidated Interim Financial Statements			10

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO HOLDINGS INC.:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of POSCO HOLDINGS INC. and its subsidiaries (the “Company”), which comprise the condensed consolidated interim statement of financial position as of March 31, 2022, the condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2022 and 2021, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

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

Auditor’s review responsibility

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

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

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No. 1034 “Interim Financial Reporting”.

Emphasis of matter

Without qualifying our review conclusion, we draw attention to Note 1 to the consolidated financial statements, which describes the spin-off by the former POSCO, the controlling company on March 1, 2022. Upon completion of the spin-off, the surviving company was renamed as POSCO HOLDINGS INC., and a new subsidiary, POSCO, was established.

Other matters

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

The consolidated statement of financial position of the Company as of December 31, 2021, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 10, 2022, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Company as of December 31, 2021, presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

LOGO

Seoul, Korea

May 16, 2022

This report is effective as of May 16, 2022, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of March 31, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes		March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents		21	W	6,329,536		4,775,166
Trade accounts and notes receivable, net		4,21,26,27,34		11,708,327		10,061,982
Other receivables, net		5,21,34		2,103,933		2,104,610
Other short-term financial assets		6,21		13,427,956		13,447,717
Inventories		7		16,078,571		15,215,098
Current income tax assets				16,580		23,229
Assets held for sale		8		74,373		78,470
Other current assets		14		1,189,487		915,358

Total current assets				50,928,763		46,621,630

Long-term trade accounts and notes receivable, net		4,21		36,263		63,205
Other receivables, net		5,21		1,482,233		1,415,143
Other long-term financial assets		6,21		2,370,949		2,119,674
Investments in associates and joint ventures		9		4,894,880		4,514,647
Investment property, net		11		1,108,198		1,086,077
Property, plant and equipment, net		12		29,708,584		29,596,698
Intangible assets, net		13		4,205,737		4,166,309
Defined benefit assets, net		19		124,220		255,858
Deferred tax assets				3,598,215		1,433,766
Other non-current assets		14		168,595		198,607

Total non-current assets				47,697,874		44,849,984

Total assets			W	98,626,637		91,471,614

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued

As of March 31, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes	March 31, 2022			December 31, 2021
Liabilities
Trade accounts and notes payable	21,34	W	5,684,917			5,468,175
Short-term borrowings and current installments of long-term borrowings	4,15,21		11,098,252			8,830,067
Other payables	16,21,34		2,583,407			2,189,361
Other short-term financial liabilities	17,21		176,001			111,641
Current income tax liabilities			1,602,581			2,139,718
Liabilities directly associated with the assets held for sale	8		4			189
Provisions	18,35		384,075			399,984
Other current liabilities	20,26,27		2,047,442			1,944,488

Total current liabilities			23,576,679			21,083,623

Long-term trade accounts and notes payable	21		709			694
Long-term borrowings, excluding current installments	15,21		12,895,070			12,911,149
Other payables	16,21		707,162			679,009
Other long-term financial liabilities	17,21		17,338			23,996
Defined benefit liabilities, net	19		58,911			50,842
Deferred tax liabilities			3,526,634			1,271,775
Long-term provisions	18,35		588,732			589,092
Other non-current liabilities	20,26		93,687			56,491

Total non-current liabilities			17,888,243			15,583,048

Total liabilities			41,464,922			36,666,671

Equity
Share capital	22		482,403			482,403
Capital surplus	22		1,397,054			1,387,960
Hybrid bonds	23		—			199,384
Reserves	24		(220,854	)		(666,985	)
Treasury shares	25		(2,459,781	)		(2,508,294	)
Retained earnings			52,794,696			51,532,887

Equity attributable to owners of the controlling company			51,993,518			50,427,355
Non-controlling interests	23		5,168,197			4,377,588

Total equity			57,161,715			54,804,943

Total liabilities and equity		W	98,626,637			91,471,614

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won, except per share information)	Notes	March 31, 2022			March 31, 2021
Revenue	26,27,34,37	W	21,338,070			16,068,723
Cost of sales	7,27,31,34		(18,409,305	)		(13,930,948	)

Gross profit			2,928,765			2,137,775
Selling and administrative expenses	31,34
Reversal of (impairment loss) on trade accounts and notes receivable			(5,919	)		6,155
Other administrative expenses	28		(589,025	)		(506,321	)
Selling expenses	28		(76,171	)		(85,168	)

Operating profit			2,257,650			1,552,441
Share of profit of equity-accounted investees, net	9		247,980			78,000
Finance income and costs	21,29
Finance income			857,185			795,544
Finance costs			(1,001,985	)		(866,299	)
Other non-operating income and expenses	34
Impairment loss on other receivables			(403	)		(6,606	)
Other non-operating income	30		178,005			129,971
Other non-operating expenses	30,31		(74,424	)		(123,492	)

Profit before income tax	37		2,464,008			1,559,559
Income tax expense	32,37		(557,124	)		(420,780	)

Profit			1,906,884			1,138,779
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans	19		(69,324	)		(1,725	)
Net changes in fair value of equity investments at fair value through other comprehensive income	21		104,421			92,006
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees			167,032			88,099
Foreign currency translation differences			189,450			162,706
Gains or losses on valuation of derivatives	21		51			(14	)

Other comprehensive income, net of tax			391,630			341,072

Total comprehensive income		W	2,298,514			1,479,851

Profit attributable to :
Owners of the controlling company		W	1,711,612			1,024,736
Non-controlling interests			195,272			114,043

Profit		W	1,906,884			1,138,779

Total comprehensive income attributable to :
Owners of the controlling company		W	2,083,567			1,350,510
Non-controlling interests			214,947			129,341

Total comprehensive income		W	2,298,514			1,479,851

Earnings per share (in Won)	33
Basic earnings per share (in Won)			22,593			13,477
Diluted earnings per share (in Won)		W	21,676			13,477

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal			controlling interests			Total
Balance as of January 1, 2021	W	482,403		1,310,547			199,384		(1,380,918	)		(2,391,523	)		46,111,457			44,331,350			3,343,242			47,674,592
Comprehensive income:
Profit		—		—			—		—			—			1,024,736			1,024,736			114,043			1,138,779
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			(254	)		(254	)		(1,471	)		(1,725	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		90,686			—			—			90,686			(2,587	)		88,099
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		94,108			—			(2,102	)		92,006			—			92,006
Foreign currency translation differences, net of tax		—		—			—		143,370			—			—			143,370			19,336			162,706
Gains or losses on valuation of derivatives, net of tax		—		—			—		(34	)		—			—			(34	)		20			(14	)

Total comprehensive income		—		—			—		328,130			—			1,022,380			1,350,510			129,341			1,479,851

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(342,565	)		(342,565	)		(57,375	)		(399,940	)
Changes in ownership interest in subsidiaries		—		52,182			—		—			—			—			52,182			539,053			591,235
Interest of hybrid bonds		—		—			—		—			—			(2,268	)		(2,268	)		(1,799	)		(4,067	)
Acquisition of treasury shares		—		—			—		—			(116,771	)		—			(116,771	)		—			(116,771	)
Others		—		(5,691	)		—		—			—			(4,594	)		(10,285	)		856			(9,429	)

Total transactions with owners of the controlling company		—		46,491			—		—			(116,771	)		(349,427	)		(419,707	)		480,735			61,028

Balance as of March 31, 2021	W	482,403		1,357,038			199,384		(1,052,788	)		(2,508,294	)		46,784,410			45,262,153			3,953,318			49,215,471

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won)	Attributable to owners of the controlling company																				Non- controlling interests			Total
	Share capital		Capital surplus			Hybrid bonds			Reserves			Treasury shares			Retained earnings			Subtotal			Non- controlling interests			Total
Balance as of January 1, 2022	W	482,403		1,387,960			199,384			(666,985	)		(2,508,294	)		51,532,887			50,427,355			4,377,588			54,804,943
Comprehensive income:
Profit		—		—			—			—			—			1,711,612			1,711,612			195,272			1,906,884
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—			—			—			(74,164	)		(74,164	)		4,840			(69,324	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—			161,772			—			—			161,772			5,260			167,032
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—			102,930			—			1,475			104,405			16			104,421
Foreign currency translation differences, net of tax		—		—			—			179,894			—			—			179,894			9,556			189,450
Gains or losses on valuation of derivatives, net of tax		—		—			—			48			—			—			48			3			51

Total comprehensive income		—		—			—			444,644			—			1,638,923			2,083,567			214,947			2,298,514

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—			—			—			(378,128	)		(378,128	)		(68,621	)		(446,749	)
Changes in subsidiaries		—		—			—			—			—			—			—			403,554			403,554
Changes in ownership interest in subsidiaries		—		(490	)		—			—			—			—			(490	)		43,530			43,040
Interest of hybrid bonds		—		—			—			—			—			(1,487	)		(1,487	)		(2,580	)		(4,067	)
Changes from spin-off		—		—			(199,384	)		—			—			—			(199,384	)		199,384			—
Disposal of treasury shares		—		9,491			—			—			48,513			—			58,004			—			58,004
Others		—		93			—			1,487			—			2,501			4,081			395			4,476

Total transactions with owners of the controlling company		—		9,094			(199,384	)		1,487			48,513			(377,114	)		(517,404	)		575,662			58,258

Balance as of March 31, 2022	W	482,403		1,397,054			—			(220,854	)		(2,459,781	)		52,794,696			51,993,518			5,168,197			57,161,715

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes		March 31, 2022			March 31, 2021
Cash flows from operating activities
Profit			W	1,906,884			1,138,779
Adjustments for:
Depreciation				785,050			788,318
Amortization				103,295			110,780
Finance income				(484,267	)		(517,135	)
Finance costs				509,680			601,541
Income tax expense				557,124			420,780
Impairment loss on property, plant and equipment				3			16,892
Gain on disposal of property, plant and equipment				(9,838	)		(3,323	)
Loss on disposal of property, plant and equipment				17,967			18,657
Impairment loss on intangible assets				4			7,183
Gain on disposal of investments in subsidiaries, associates and joint ventures				(5,205	)		(3,842	)
Loss on disposal of investments in subsidiaries, associates and joint ventures				6,128			1,104
Share of profit of equity-accounted investees				(247,980	)		(78,000	)
Expenses related to post-employment benefit				58,930			62,493
Impairment loss on trade and other receivables				6,324			451
Loss on valuation of inventories				71,811			26,977
Increase to provisions				20,854			(2,502	)
Others, net				(47,787	)		(23,156	)

				1,342,093			1,427,218

Changes in operating assets and liabilities		36		(2,333,906	)		(1,883,160	)
Interest received				104,062			51,813
Interest paid				(109,386	)		(119,697	)
Dividends received				86,363			90,685
Income taxes paid				(986,695	)		(134,770	)

Net cash provided by operating activities			W	9,415			570,868

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes		March 31, 2022			March 31, 2021
Cash flows from investing activities
Acquisitions of short-term financial instruments			W	(25,890,581	)		(10,444,413	)
Proceeds from disposal of short-term financial instruments				26,091,507			8,993,223
Increase in loans				(20,936	)		(160,590	)
Collection of loans				83,621			235,136
Acquisitions of securities				(167,374	)		(90,882	)
Proceeds from disposal of securities				85,137			170,646
Acquisitions of long-term financial instruments				(14,657	)		—
Acquisitions of investment in subsidiaries, associates and joint ventures				(172,606	)		(26,897	)
Proceeds from disposal of investment in subsidiaries, associates and joint ventures				2,219			4,421
Acquisitions of investment property				(45	)		—
Acquisitions of property, plant and equipment				(829,891	)		(537,878	)
Proceeds from disposal of property, plant and equipment				(776	)		(3,940	)
Acquisitions of intangible assets				(133,707	)		(43,161	)
Proceeds from disposal of intangible assets				46			3,357
Proceeds from disposal of assets held for sale				—			29
Collection of lease receivables				9,679			16,202
Others, net				6,055			528

Net cash used in investing activities				(952,309	)		(1,884,219	)

Cash flows from financing activities
Proceeds from borrowings				874,862			559,981
Repayment of borrowings				(318,708	)		(488,762	)
Proceeds from short-term borrowings, net				1,522,176			574,287
Capital contribution from non-controlling interests				459,200			597,356
Payment of cash dividends				(304	)		(1,567	)
Acquisition of treasury shares				—			(116,771	)
Payment of interest of hybrid bonds				(4,087	)		(4,087	)
Repayment of lease liabilities				(62,132	)		(63,340	)
Others, net				(2,164	)		(5,067	)

Net cash provided by financing activities				2,468,843			1,052,030

Effect of exchange rate fluctuation on cash held				28,421			52,815

Net increase(decrease) in cash and cash equivalents				1,554,370			(208,506	)
Cash and cash equivalents at beginning of the period		8		4,775,720			4,755,578

Cash and cash equivalents at end of the period		8	W	6,330,090			4,547,072

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

As of March 31, 2022

(Unaudited)

1. General Information

General information about POSCO HOLDINGS INC., its 40 domestic subsidiaries including POSCO, 132 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 136 associates and joint ventures are as follows:

(a)	The controlling company

POSCO HOLDINGS INC., the controlling company, was established on April 1, 1968, under the Commercial Code of the Republic of Korea. The shares of the Company have been listed on the Korea Exchange since June 10, 1988. The Company operates an investment business that controls and manages through ownership of shares of subsidiaries etc.

The Company established a new subsidiary, POSCO, by a vertical spin-off of its steel business on March 1, 2022, and changed the name of the surviving company to POSCO HOLDINGS INC..

As of March 31, 2022, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchanges.

(b)	Consolidated subsidiaries acquired or newly established during the three-month period ended March 31, 2022, were as follows:


Company	Date of inclusion		Ownership (%)	Reason
K-A Energy 1 Pty Ltd		January 2022	50.10		New establishment
POSCO		March 2022	100.00		Spin-off from the
					controlling company
Posco Mexico e-Mobility S.A DE C.V.		March 2022	100.00		New establishment

2. Statement of Compliance

Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audit of Stock Companies, etc. in the Republic of Korea.

These condensed consolidated interim financial statements have been prepared in accordance with K-IFRS No. 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the last annual consolidated financial statements as of and for the year ended December 31, 2021. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

Use of estimates and judgments

(a)	Judgments, assumptions and estimation uncertainties

The preparation of the condensed consolidated interim financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.

The significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

(b)	Measurement of fair value

The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the financial officer.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of K-IFRS including the level in the fair value hierarchy in which such valuation techniques should be classified.

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

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

•

Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities.

•

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly.

•

Level 3 - inputs for the assets or liabilities that are not based on observable market data.

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

3. Summary of Significant Accounting Policies

Except as described in K-IFRS No. 1034 “Interim Financial Reporting” and below, the accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2021.

Changes in accounting policies

The changes in accounting policies described below will be applied to the consolidated financial statements as of and for the year ending December 31, 2022.

(a)	K-IFRS No. 1016 “Property, plant and equipment”

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the Company is preparing the asset for its intended use. The cumulative effect of the initial application of the amendment is recognized by adjusting the beginning balance of retained earnings on the comparative statements of financial position and the amendments did not have any impact on the Company’s financial statements.

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

The definition of assets and liabilities to be recognized is amended to refer to the revised conceptual framework for financial reporting. However, the amendments add an exception which allows K-IFRS No. 1037 “Provisions, contingent liabilities and contingent assets” and K-IFRS No. 2121 “Levies” to be applied to the liabilities and contingent liabilities included in the scope of these standards. The amendments also clarify that contingent assets should not be recognized at the acquisition date. The amendments are applied to business combination occurred on or after January 1, 2022.

(c)	K-IFRS No. 1037 “Provisions, Contingent Liabilities and Contingent Assets” — Onerous Contracts : Cost of Fulfilling a Contact

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The cumulative effect of the initial application of the amendment is recognized by adjusting the beginning balance of retained earnings on the date of initial application, and the amendments did not have any impact on the Company’s financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

New standards and interpretations not yet adopted

A number of new standards are effective for annual periods beginning after January 1, 2022 and earlier application is permitted but the Company has not early adopted the new or amended standards in preparing these financial statements.

(a)	K-IFRS No. 1012 “Income Tax” – Deferred Tax related to Assets and Liabilities arising from a Single Transaction

The amendment clarifies the coverage of initial recognition exemptions accounting for deferred tax related to both assets and liabilities arising from a single transaction. A transaction that is not a business combination may lead to the initial recognition of deferred tax asset and deferred tax liability, and at the time of the transaction, affect neither accounting profit nor tax profit. The amendment is effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

(b)	K-IFRS No. 1001 “Presentation of Financial Statements”—Classification of Liabilities as Current or Non-current

The amendment clarifies that the classification of current and non-current liabilities is determined by the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and in order for the debtor to have the “right to defer settlement of the liability”, the condition of complying with the contract must be met at the end of the reporting period. In addition, the classification of liabilities is not affected by the possibility of exercising the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and the amendment clarifies that settlement of a liability includes transferring a company’s own equity instruments to the counterparty. The amendment is effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The Company expects that its exchangeable bond (W1,430,117 million as of March 31, 2022) will be reclassified from non-current liabilities to current liabilities upon the adoption of the amendments.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Current
Trade accounts and notes receivable	W	10,750,298			9,266,729
Finance lease receivables		—			126
Due from customers for contract work		1,280,490			1,110,082
Less: Allowance for doubtful accounts		(322,461	)		(314,955	)

	W	11,708,327			10,061,982

Non-current
Trade accounts and notes receivable	W	86,283			113,370
Less: Allowance for doubtful accounts		(50,020	)		(50,165	)

	W	36,263			63,205

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position, because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. As of March 31, 2022, and December 31, 2021, the carrying amounts of such secured borrowings are W282,968 million and W270,101 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

5. Other Receivables

Other receivables as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Current
Loans	W	297,757			331,692
Other accounts receivable		1,337,608			1,305,383
Accrued income		357,316			350,301
Deposits		138,880			130,011
Others		17,578			17,706
Lease receivables		57,437			63,568
Less: Allowance for doubtful accounts		(102,643	)		(94,051	)

	W	2,103,933			2,104,610

Non-current
Loans	W	942,690			884,990
Other accounts receivable		210,634			196,018
Accrued income		151,548			121,041
Deposits		359,704			390,971
Lease receivables		71,324			80,317
Less: Allowance for doubtful accounts		(253,667	)		(258,194	)

	W	1,482,233			1,415,143

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

6. Other Financial Assets

Other financial assets as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Derivatives assets	W	173,765		66,558
Debt securities		154,612		157,895
Deposit instruments(*1,2)		3,600,991		2,709,171
Short-term financial instruments(*2)		9,498,588		10,514,093

	W	13,427,956		13,447,717

Non-current
Derivatives assets	W	163,583		182,538
Equity securities(*3)		1,617,620		1,466,061
Debt securities		3,968		3,968
Other securities(*3)		540,544		430,998
Deposit instruments(*2)		45,234		36,109

	W	2,370,949		2,119,674

(*1)	As of March 31, 2022 and December 31, 2021, W3,828 million and W4,314 million, respectively, are restricted in use for government project.

(*2)	As of March 31, 2022 and December 31, 2021, financial instruments amounting to W884,347 million and W83,738 million, respectively, are restricted in use for financial arrangements, pledge and others.

(*3)	As of March 31, 2022 and December 31, 2021, W193,284 million and W189,198 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.

7. Inventories

Inventories as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Finished goods	W	2,828,486			2,583,191
Merchandise		1,265,788			1,326,736
Semi-finished goods		3,016,754			2,902,717
Raw materials		4,333,512			3,777,112
Fuel and materials		976,648			917,906
Construction inventories		649,512			716,446
Materials-in-transit		3,038,358			3,051,786
Others		106,432			101,133

		16,215,490			15,377,027

Less: Allowance for inventories valuation		(136,919	)		(161,929	)

	W	16,078,571			15,215,098

The amounts of loss on valuation of inventories recognized in cost of sales during the three-month period ended March 31, 2022 and the year ended December 31, 2021 were W71,811 million and W78,783 million, respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

8. Assets Held for Sale

Details of assets held for sale as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
	Subsidiaries		The controlling		Subsidiaries
	*(3,6)**		*company(1,2,3)**		*(6)**		Total
Asset
Cash and cash equivalents(*4)	W	554		—		554		554
Trade accounts and notes receivables		956		—		956		956
Investment in joint ventures(*5)		13,307		—		13,044		13,044
Property, plant and equipment		56,251		29,236		30,995		60,231
Intangible assets		3,150		553		2,977		3,530
Others		155		—		155		155

	W	74,373		29,789		48,681		78,470

Liability
Others	W	4		185		4		189

(*1)	During the year ended December 31, 2021, the Company sold the land in the Yanghak Neighborhood Park development reserve area that was classified as asset held for sale and the Company recognized W43,760 million of gain on disposal.

(*2)	During the year ended December 31, 2021, the Company decided to trade and exchange the emission rights and reclassified the emission rights to assets held for sale. After that, the Company recognized W1,316 million loss on disposal of assets held for sale.

(*3)

During the year ended December 31, 2021, the Company decided to dispose Synthetic Natural Gas (SNG) facility for which use was discontinued, and classified as asset held for sale for W24,000 million. Meanwhile, the facility was transferred to the newly established company (POSCO) through vertical spin-off during the three-month period ended March 31, 2022. During March 2022, the Company disposed of a portion of the assets held for sale for W803 million. As of March 31, 2022, the remaining amount W23,197 million is included in assets held for sale.

(*4)	Cash and cash equivalents in the statement of cash flows include cash and cash equivalents that are classified as assets held for sale as of March 31, 2022 and December 31, 2021.

(*5)

During the year ended December 31, 2021, the Company decided to dispose of interests of POSCO(Guangdong) Automotive Steel Co, Ltd. which is classified investment in joint ventures as asset held for sale for W13,044 million. As of March 31, 2022, the investment in joint venture is included in assets held for sale.

(*6)	During the year ended December 31, 2021, the Company decided to dispose land, buildings and intangible assets of HUME COAL PTY LTD, a subsidiary, and classified as assets held for sale for W33,972 million. As of March 31, 2022, the assets are included in assets held for sale.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

9. Investments in Associates and Joint ventures

(a)	Details of investments in associates as of March 31, 2022 and December 31, 2021 are as follows:


									December 31,
(in millions of Won)	March 31, 2022								2021
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund		178,691,901,565		42.82	W	178,787	W	175,733		176,136
Samcheok Blue Power Co., Ltd.(*1)		4,507,138		34.00		429,904		376,969		382,887
SNNC		18,130,000		49.00		90,650		176,793		171,332
QSONE Co.,Ltd.		200,000		50.00		84,395		86,251		86,058
Chun-cheon Energy Co., Ltd(*1)		17,308,143		49.10		86,541		13,608		9,571
Western Inland highway CO., LTD.(*2)		—		—		—		—		53,563
Pocheon-Hwado Highway Corp.(*1)		5,878,095		23.27		29,390		28,220		28,813
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		2,008,000		29.53		10,040		19,881		19,191
Daesung Steel(*3)		108,038		17.54		14,000		19,310		19,073
PCC Amberstone Private Equity Fund 1(*3)		8,322,390,955		8.80		8,204		9,223		9,251
Others (61 companies)(*1)								138,394		107,035

								1,044,382		1,062,910

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		132,907		252,250		238,601
AES-VCM Mong Duong Power Company Limited(*1)		—		30.00		164,303		191,001		182,639
9404-5515 Quebec Inc.(*3)		114,452,000		10.40		124,341		136,405		135,738
FQM Australia Holdings Pty Ltd		186,000,030		30.00		109,568		100,992		91,052
Eureka Moly LLC		—		20.00		240,123		13,924		13,633
AMCI (WA) PTY LTD		49		49.00		209,664		70,335		67,972
NCR LLC		—		22.10		117,367		122,982		102,319
KOREA LNG LTD.		2,400		20.00		135,205		36,372		31,340
Nickel Mining Company SAS		3,234,698		49.00		157,585		44,453		48,249
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		429,580,000		40.00		78,117		78,837		22,769
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,200,000		34.00		9,517		19,638		19,099
PT. Wampu Electric Power(*1)		8,708,400		20.00		10,054		16,709		15,851
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		9,421		9,140
Others (30 companies)(*1)								204,872		161,962

								1,298,191		1,140,364

							W	2,342,573		2,203,274

(*1)	As of March 31, 2022 and December 31, 2021, investments in associates amounting to W638,829 million and W629,832 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2)	During the three-month period ended March 31, 2022, investment in this associate was transferred to equity security since the Company lost significant influence due to a decline in ownership upon capital increase in the associate in which the Company did not participate.

(*3)	As of March 31, 2022, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering its structure of the Board of Directors and others.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b)	Details of investments in joint ventures as of March 31, 2022 and December 31, 2021 are as follows:


									December 31,
(in millions of Won)	March 31, 2022								2021
	Number		Ownership		Acquisition
Company	of shares		(%)		cost		Book value		Book value
[Domestic]
POSCO MITSUBISHI CARBON TECHNOLOGY		11,568,000		60.00	W	115,680	W	148,664		169,838
Others (5 companies)								6,263		6,676

								154,927		176,514

[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672		1,417,781		1,346,712
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		393,636		393,793
KOBRASCO		2,010,719,185		50.00		32,950		97,076		68,296
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961		111,513		107,650
DMSA/AMSA(*1)		—		3.89		346,880		26,312		24,144
CSP - Compania Siderurgica do Pecem		1,578,377,432		20.00		676,060		148,347		52,257
HBIS-POSCO Automotive Steel Co.Ltd		—		50.00		170,760		171,631		110,769
Others (10 companies)								31,084		31,238

								2,397,380		2,134,859

							W	2,552,307		2,311,373

(*1)	As of March 31, 2022 and December 31, 2021, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(c)	The movements of investments in associates and joint ventures for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)
Company	December 31, 2021 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			March 31, 2022 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	176,136		—		—			(403	)		—			175,733
Samcheok Blue Power Co., Ltd.		382,887		—		(2,416	)		(3,502	)		—			376,969
SNNC		171,332		—		(5,348	)		10,809			—			176,793
QSONE Co., Ltd.		86,058		—		—			193			—			86,251
Chun-cheon Energy Co., Ltd		9,571		—		—			4,037			—			13,608
Western Inland highway CO., LTD.		53,563		—		—			(125	)		(53,438	)		—
Pocheon-Hwado Highway Corp.		28,813		—		—			(593	)		—			28,220
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		19,191		—		—			690			—			19,881
Daesung Steel		19,073		—		—			237			—			19,310
PCC Amberstone Private Equity Fund 1		9,251		—		(165	)		191			(54	)		9,223
POSCO MITSUBISHI CARBON TECHNOLOGY		169,838		—		(24,000	)		2,826			—			148,664
Others (66 companies)		113,711		36,253		(3,705	)		884			(2,486	)		144,657

		1,239,424		36,253		(35,634	)		15,244			(55,978	)		1,199,309

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		238,601		—		—			8,512			5,137			252,250
AES-VCM Mong Duong Power Company Limited		182,639		—		(12,317	)		17,555			3,124			191,001
9404-5515 Quebec Inc.		135,738		—		—			(2,245	)		2,912			136,405
FQM Australia Holdings Pty Ltd		91,052		—		—			7,808			2,132			100,992
Eureka Moly LLC		13,633		—		—			—			291			13,924
AMCI (WA) PTY LTD		67,972		—		—			(1,369	)		3,732			70,335
NCR LLC		102,319		18,630		—			(882	)		2,915			122,982
KOREA LNG LTD.		31,340		—		(3,697	)		3,707			5,022			36,372
Nickel Mining Company SAS		48,249		—		—			(4,078	)		282			44,453
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,769		55,695		—			(239	)		612			78,837
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		19,099		—		—			95			444			19,638
PT. Wampu Electric Power		15,851		—		—			490			368			16,709
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		9,140		—		—			5			276			9,421
Roy Hill Holdings Pty Ltd		1,346,712		—		(112,985	)		82,440			101,614			1,417,781
POSCO-NPS Niobium LLC		393,793		—		(12,196	)		3,472			8,567			393,636
KOBRASCO		68,296		—		—			14,206			14,574			97,076
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		107,650		—		—			1,585			2,278			111,513
DMSA/AMSA		24,144		—		—			1,644			524			26,312
CSP - Compania Siderurgica do Pecem		52,257		—		—			78,100			17,990			148,347
HBIS-POSCO Automotive Steel Co. Ltd		110,769		61,703		—			(3,288	)		2,447			171,631
Others (40 companies)		193,200		26,542		(14,248	)		25,218			5,244			235,956

		3,275,223		162,570		(155,443	)		232,736			180,485			3,695,571

	W	4,514,647		198,823		(191,077	)		247,980			124,507			4,894,880

(*1)	Other increase or decrease represents the changes in investments in associates and joint ventures due to disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the year ended December 31, 2021


(in millions of Won)
Company	December 31, 2020 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			December 31, 2021 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	175,939		—		—			197			—			176,136
Samcheok Blue Power Co., Ltd.		145,092		250,495		(405	)		(4,248	)		(8,047	)		382,887
SNNC		160,332		—		(18,243	)		29,314			(71	)		171,332
QSONE Co.,Ltd.		86,004		—		(1,140	)		1,194			—			86,058
Chun-cheon Energy Co., Ltd		23,913		—		—			(15,094	)		752			9,571
Western Inland highway CO., LTD.		45,070		4,031		—			(1,981	)		6,443			53,563
Nextrain Co., Ltd.		47,364		—		—			(127	)		(47,237	)		—
Pocheon-Hwado Highway Corp.		13,721		13,954		—			(2,679	)		3,817			28,813
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd		17,137		—		—			2,054			—			19,191
Daesung Steel		16,990		—		—			2,083			—			19,073
PCC Amberstone Private Equity Fund 1		9,230		—		(674	)		977			(282	)		9,251
POSCO MITSUBISHI CARBON TECHNOLOGY		153,457		—		—			16,243			138			169,838
Others (62 companies)		117,486		38,021		(7,159	)		6,399			(41,036	)		113,711

		1,011,735		306,501		(27,621	)		34,332			(85,523	)		1,239,424

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		199,342		—		(27,828	)		48,159			18,928			238,601
AES-VCM Mong Duong Power Company Limited		158,777		—		(28,623	)		35,959			16,526			182,639
9404-5515 Quebec Inc.		123,296		—		(16,999	)		18,071			11,370			135,738
FQM Australia Holdings Pty Ltd		—		109,568		—			(17,997	)		(519	)		91,052
Eureka Moly LLC		43,520		—		—			(32,607	)		2,720			13,633
AMCI (WA) PTY LTD		71,732		—		—			(5,986	)		2,226			67,972
NCR LLC		46,608		44,797		—			(2,016	)		12,930			102,319
KOREA LNG LTD.		42,229		—		(9,178	)		9,145			(10,856	)		31,340
Nickel Mining Company SAS		40,890		—		—			7,243			116			48,249
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,147		—		—			(1,838	)		2,460			22,769
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		15,181		—		—			1,752			2,166			19,099
PT. Wampu Electric Power		12,716		—		—			1,389			1,746			15,851
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		7,110		—		—			675			1,355			9,140
Roy Hill Holdings Pty Ltd		1,418,056		—		(522,947	)		392,887			58,716			1,346,712
POSCO-NPS Niobium LLC		353,725		—		(20,479	)		28,729			31,818			393,793
KOBRASCO		54,400		—		(39,059	)		52,118			837			68,296
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		91,270		—		—			6,291			10,089			107,650
DMSA/AMSA		31,104		—		—			674			(7,634	)		24,144
CSP - Compania Siderurgica do Pecem		—		19,176		—			22,398			10,683			52,257
HBIS-POSCO Automotive Steel Co. Ltd		—		109,057		—			1,636			76			110,769
Others (38 companies)		132,411		12,184		(4,713	)		48,555			4,763			193,200

		2,864,514		294,782		(669,826	)		615,237			170,516			3,275,223

	W	3,876,249		601,283		(697,447	)		649,569			84,993			4,514,647

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(d)	Summarized financial information of associates and joint ventures as of and for the three-month period ended March 31, 2022 and the year ended December 31, 2021 are as follows:

March 31, 2022


(in millions of Won) Company	Assets		Liabilities		Equity (deficit)		Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	399,371		547		398,824		—		(941	)
Samcheok Blue Power Co.,Ltd.		2,679,592		2,009,884		669,708		—		(1,192	)
SNNC		681,041		277,949		403,092		212,243		22,658
QSONE Co.,Ltd.		252,952		80,451		172,501		4,235		385
Chun-cheon Energy Co., Ltd		637,571		542,121		95,450		147,406		8,022
Pocheon-Hwado Highway Corp.		247,236		124,690		122,546		—		(337	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		50,068		13,055		37,013		17,189		2,335
Daesung Steel		178,913		100,215		78,698		37,398		1,353
PCC Amberstone Private Equity Fund 1		104,906		51		104,855		2,750		2,174
POSCO MITSUBISHI CARBON TECHNOLOGY		475,903		223,224		252,679		58,007		7,971
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,605,679		598,300		1,007,379		91,992		33,991
AES-VCM Mong Duong Power Company Limited		1,799,837		1,179,770		620,067		130,998		58,264
9404-5515 Quebec Inc.		1,388,561		64,815		1,323,746		—		(21,586	)
FQM Australia Holdings Pty Ltd		1,471,748		1,112,109		359,639		128,371		26,026
KOREA LNG LTD.		160,356		224		160,132		18,970		18,536
Nickel Mining Company SAS		477,689		308,256		169,433		54,503		208
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		241,947		44,520		197,427		6,287		(595	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		104,781		41,677		63,104		35,899		271
PT. Wampu Electric Power		208,971		128,468		80,503		4,929		2,449
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		91,641		55,680		35,961		35,852		(44	)
Roy Hill Holdings Pty Ltd		10,156,296		2,960,929		7,195,367		1,945,146		701,106
POSCO-NPS Niobium LLC		787,068		—		787,068		—		6,944
KOBRASCO		211,887		18,341		193,546		42,368		28,411
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		711,918		292,733		419,185		469,160		6,339
DMSA/AMSA		2,787,563		2,111,096		676,467		364,239		42,331
CSP - Compania Siderurgica do Pecem		4,405,996		3,696,122		709,874		547,340		389,700
HBIS-POSCO Automotive Steel Co.Ltd		617,634		255,758		361,876		104,306		(5,538	)

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

December 31, 2021


(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)		Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	400,339		574		399,765		—		5,411
Samcheok Blue Power Co.,Ltd.		2,301,783		1,620,752		681,031		—		(6,226	)
SNNC		628,075		236,726		391,349		869,815		75,125
QSONE Co.,Ltd.		251,158		79,042		172,116		17,962		2,388
Chun-cheon Energy Co., Ltd		616,111		528,683		87,428		327,534		(5,424	)
Western Inland highway CO.,LTD.		305,166		42,052		263,114		—		(2,137	)
Pocheon-Hwado Highway Corp.		217,888		95,005		122,883		—		(929	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		56,418		21,740		34,678		45,543		6,957
Daesung Steel		176,458		99,112		77,346		113,706		11,868
PCC Amberstone Private Equity Fund 1		105,169		—		105,169		11,910		11,110
POSCO MITSUBISHI CARBON TECHNOLOGY		470,330		185,622		284,708		172,441		28,699
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,604,624		651,751		952,873		439,974		192,322
AES-VCM Mong Duong Power Company Limited		1,677,096		1,084,900		592,196		366,205		119,863
9404-5515 Quebec Inc.		1,317,335		3		1,317,332		—		173,763
FQM Australia Holdings Pty Ltd		1,348,138		1,021,630		326,508		243,611		(64,143	)
KOREA LNG LTD.		157,060		357		156,703		47,843		45,724
Nickel Mining Company SAS		475,751		307,570		168,181		328,570		31,688
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		129,618		72,965		56,653		28,488		(4,680	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		92,850		31,260		61,590		174,511		5,193
PT. Wampu Electric Power		209,172		132,917		76,255		20,288		6,946
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		89,809		54,517		35,292		117,461		2,595
Roy Hill Holdings Pty Ltd		9,165,759		2,227,659		6,938,100		8,839,084		3,740,696
POSCO-NPS Niobium LLC		787,383		—		787,383		—		52,451
KOBRASCO		194,022		57,430		136,592		165,224		104,507
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		727,958		324,222		403,736		2,044,978		25,165
DMSA/AMSA		3,631,856		2,068,847		1,563,009		749,634		636,113
CSP-Compania Siderurgica do Pecem		3,777,391		3,542,398		234,993		2,570,010		653,370
HBIS-POSCO Automotive Steel Co.Ltd		502,645		261,765		240,880		482,696		3,272

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

10. Joint Operations

Details of significant joint operations that the Company is participating in as a party to a joint arrangement as of March 31, 2022 are as follows:


Joint operations	Operation	Ownership (% )	Location
Myanmar A-1/A-3 mine	Mine development and gas production	51.00	Myanmar
Offshore midstream	Gas transportation facility	51.00	Myanmar
Greenhills mine	Mine development	20.00	Canada
Arctos Anthracite coal project	Mine development	50.00	Canada
Mt. Thorley J/V	Mine development	20.00	Australia
POSMAC J/V	Mine development	20.00	Australia
Samcheok Thermal Power Plant EPC (Unit 1,2) Construction work	Construction	49.00	Korea
Sinansan Line Double Track Train Private Investment project construction work	Construction	32.00	Korea
Panama Metro Line 3 Project construction work	Construction	20.00	Panama
2*600 MW Matarbari Ultra Super Critical Coal-Fired Power construction work	Construction	67.00	Bangladesh
Yangsan Sasong 2nd Apartment Project (B5,6,7,9 Block) Construction work	Construction	49.00	Korea
Yangsan Sasong Apartment Project (C1,B3,B4 Block) Construction work	Construction	49.00	Korea
Yongmun 123 Construction work	Construction	70.00	Korea
Songdo B5 Block officetel Project Construction work	Construction	80.00	Korea
Particle Accelerator Facility Construction work	Construction	55.00	Korea
Anyang Jinheung Apartment Construction work	Construction	45.00	Korea

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

11. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Acquisitions		Depreciation			*Others(1)**		Ending
Land	W	332,308		—		—			6,621		338,929
Buildings		584,549		45		(5,605	)		18,637		597,626
Structures		753		—		(332	)		1,029		1,450
Right-of-use assets		168,467		—		(1,669	)		3,395		170,193

	W	1,086,077		45		(7,606	)		29,682		1,108,198

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

(b) For the year ended December 31, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			*Others(1)**			Ending
Land	W	279,397		83,497		(1,092	)		—			(29,494	)		332,308
Buildings		559,584		11,378		(2,264	)		(21,362	)		37,213			584,549
Structures		1,199		—		—			(598	)		152			753
Right-of-use assets		154,601		—		—			(4,364	)		18,230			168,467

	W	994,781		94,875		(3,356	)		(26,324	)		26,101			1,086,077

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

12. Property, Plant and Equipment, Net

(a)	Changes in the carrying amount of property, plant and equipment for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			*Others(1)**			Ending
Land	W	2,702,715		4,769		(49	)		—			2,045			2,709,480
Buildings		4,204,450		4,219		(1,284	)		(79,646	)		51,227			4,178,966
Structures		3,131,795		2,310		(286	)		(62,839	)		25,379			3,096,359
Machinery and equipment		16,420,156		19,508		(3,315	)		(567,253	)		196,947			16,066,043
Vehicles		46,030		3,009		(346	)		(4,520	)		779			44,952
Tools		77,795		5,994		(1,303	)		(8,586	)		242			74,142
Furniture and fixtures		166,162		6,838		(682	)		(9,947	)		5,546			167,917
Lease assets		867,746		74,188		(4,753	)		(42,312	)		(2,392	)		892,477
Bearer plants		154,682		—		—			(2,341	)		2,570			154,911
Construction-in-progress		1,825,167		710,759		(121	)		—			(212,468	)		2,323,337

	W	29,596,698		831,594		(12,139	)		(777,444	)		69,875			29,708,584

(*1)	Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

2)	For the year ended December 31, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1,2,3)			*Others(4)**			Ending
Land	W	2,590,087		66,015		(117	)		—			5,670			41,060			2,702,715
Buildings		4,161,400		22,559		(4,001	)		(316,999	)		(32,863	)		374,354			4,204,450
Structures		3,025,226		15,728		(15,727	)		(233,370	)		(4,900	)		344,838			3,131,795
Machinery and equipment		16,857,307		206,564		(31,769	)		(2,283,704	)		(77,173	)		1,748,931			16,420,156
Vehicles		37,156		14,896		(832	)		(15,242	)		(58	)		10,110			46,030
Tools		60,301		21,802		(782	)		(30,864	)		(69	)		27,407			77,795
Furniture and fixtures		127,459		28,178		(1,630	)		(47,135	)		(667	)		59,957			166,162
Lease assets		773,700		224,667		(8,320	)		(172,443	)		(1,547	)		51,689			867,746
Bearer plants		149,965		—		(24,876	)		(9,264	)		—			38,857			154,682
Construction-in-progress		1,617,540		2,838,175		(10,789	)		—			(190,556	)		(2,429,203	)		1,825,167

	W	29,400,141		3,438,584		(98,843	)		(3,109,021	)		(302,163	)		268,000			29,596,698

(*1)

The Company estimated the recoverable amount of individual assets that it ceased their use due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2021. During the year ended December 31, 2021, the Company recognized impairment losses on damaged assets caused by the fire accident.

(*2)	During the year ended December 31, 2021, the Company decided to stop the intended use for Synthetic Natural Gas (SNG) facility and sell the related assets. The Company estimated the recoverable amount based on expected sale price and recognized W217,564 million of impairment loss.

(*3)

During the year ended December 31, 2021, evidence of impairment has occurred due to changes in the quality of bituminous coal and changes in production plans at Narrabri Coal Mine where POSCO INTERNATIONAL AUSTRALIA HOLDINGS PTY. LTD, a subsidiary of the Company, participates as a non-operating party. The Company recognized an impairment loss of W27,672 million since recoverable amounts are less than their carrying amounts.

(*4)	Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b)	Changes in the carrying amount of right of use assets presented as investment property and property, plant and equipment for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	391,446		10,180		(4,191	)		(307	)		397,128
Buildings and structures		143,854		30,117		(14,496	)		(1,224	)		158,251
Machinery and equipment		256,205		4,053		(8,948	)		(9,325	)		241,985
Vehicles		14,753		3,233		(2,141	)		6,289			22,134
Ships		210,056		23,793		(4,170	)		—			229,679
Others		19,899		2,812		(10,035	)		817			13,493

	W	1,036,213		74,188		(43,981	)		(3,750	)		1,062,670

For the year ended December 31, 2021


(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	371,719		14,161		(14,191	)		19,757			391,446
Buildings and structures		171,760		30,912		(61,261	)		2,443			143,854
Machinery and equipment		239,181		13,543		(41,721	)		45,202			256,205
Vehicles		11,456		12,159		(8,657	)		(205	)		14,753
Ships		106,555		120,217		(16,716	)		—			210,056
Others		27,630		33,675		(34,261	)		(7,145	)		19,899

	W	928,301		224,667		(176,807	)		60,052			1,036,213

(c)	The amounts recognized in profit or loss related to leases for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Interest on lease liabilities	W	7,557		8,954
Expenses relating to short-term leases		6,853		5,294
Expenses relating to leases of low-value assets		3,862		3,827

	W	18,272		18,075

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

13. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill and other intangible assets for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

(a)

For the three-month period ended March 31, 2022


(in millions of Won)											Impairment
	Beginning		Acquisitions		Disposals			Amortization			loss		*Others(2)**			Ending
Goodwill	W	735,969		—		—			—			—		3,538			739,507
Intellectual property rights		2,225,808		111,929		(576	)		(62,879	)		—		14,562			2,288,844
Membership(*1)		142,370		638		(22	)		(36	)		824		(2,292	)		141,482
Development expense		153,973		3,782		(13	)		(17,176	)		—		1,453			142,019
Port facilities usage rights		216,021		—		—			(3,700	)		—		86			212,407
Exploratation and evaluation assets		61,957		623		—			—			—		520			63,100
Customer relationships		285,720		—		—			(11,119	)		—		49			274,650
Other intangible assets		344,491		14,975		(17	)		(8,385	)		—		(7,336	)		343,728

	W	4,166,309		131,947		(628	)		(103,295	)		824		10,580			4,205,737

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

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

(b)

For the year ended December 31, 2021


(in millions of Won)											Impairment
	Beginning		Acquisitions		Disposals			Amortization			*loss(2,4,5)**			*Others(3)**			Ending
Goodwill	W	903,893		17,804		—			—			(189,167	)		3,439			735,969
Intellectual property rights		2,170,738		281,544		(574	)		(271,931	)		(20,005	)		66,036			2,225,808
Membership(*1)		138,703		7,457		(4,198	)		(137	)		145			400			142,370
Development expense		227,111		11,301		—			(72,294	)		(4,027	)		(8,118	)		153,973
Port facilities usage rights		236,272		—		—			(20,581	)		—			330			216,021
Exploratation and evaluation assets		57,140		3,649		—			—			(374	)		1,542			61,957
Customer relationships		330,247		—		—			(44,478	)		—			(49	)		285,720
Other intangible assets		385,328		68,253		(14,818	)		(34,679	)		(10,032	)		(49,561	)		344,491

	W	4,449,432		390,008		(19,590	)		(444,100	)		(223,460	)		14,019			4,166,309

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

(*2)	During the year ended December 31, 2021, the Company decided to sell a portion of purchased emission rights and recognized W7,180 million of impairment loss since book value exceeded fair value less costs to sell.

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

(*4)

During the year ended December 31, 2021, evidence of impairment has occurred due to changes in the quality of bituminous coal and changes in production plans at Narrabri Coal Mine where POSCO INTERNATIONAL AUSTRALIA HOLDINGS PTY. LTD, a subsidiary of the Company, participates as a non-operating party. The Company recognized an impairment loss of W20,006 million since recoverable amounts are less than their carrying amounts.

(*5)	During the year ended December 31, 2021, impairment loss of W184,770 million on goodwill of POSCO INTERNATIONAL Corporation, a subsidiary included in trading segment, was recognized as the recoverable amount is less than the carrying amount of the CGU.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

14. Other Assets

Other assets as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Advance payments	W	683,793		564,196
Prepaid expenses		413,638		274,023
Firm commitment asset		25,292		11,323
Others		66,764		65,816

	W	1,189,487		915,358

Non-current
Long-term advance payments	W	21,739		47,752
Long-term prepaid expenses		73,373		76,739
Others(*1)		73,483		74,116

	W	168,595		198,607

(*1)

As of March 31, 2022 and December 31, 2021, the Company recognized tax assets amounting to W4,722 million based on the Company’s best estimate of the tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification are finalized.

15. Borrowings

(a)	Short-term borrowings and current portion of long-term borrowings and others as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)
	Lenders	Interest rate (% )		March 31, 2022			December 31, 2021
Short-term borrowings
Bank overdrafts	JP Morgan and others		0.76 ~ 4.65	W	207,883			118,558
Short-term borrowings	HSBC and others		0.04 ~ 7.80		6,478,489			4,991,866

					6,686,372			5,110,424

Current portion of long-term liabilities
Current portion of long-term borrowings	Export-Import Bank of Korea and others		0.70 ~ 8.50		1,131,931			992,154
Current portion of debentures	Goldman sachs Group, Inc. and others		1.27 ~ 3.35		3,283,834			2,731,321
Less: Current portion of discount on debentures issued					(3,885	)		(3,832	)

					4,411,880			3,719,643

				W	11,098,252			8,830,067

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b)	Long-term borrowings, excluding current portion and others as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)
	Lenders	Interest rate (% )		March 31, 2022			December 31, 2021
Long-term borrowings	Export-Import Bank of Korea and others		0.19 ~ 8.50	W	3,937,882			3,841,375
Less: Present value discount					(11,230	)		(12,530	)
Bonds	KB Securities co.,Ltd. and others		0.50 ~ 4.00		7,560,881			7,671,755
Less: Discount on debentures issued					(22,580	)		(24,644	)
Exchangeable bonds(*1)	Foreign currency exchangeable bonds				1,430,117			1,435,193

				W	12,895,070			12,911,149

(*1)	The issuance conditions of the exchangeable bonds issued by the Company are as follows:


		Foreign currency exchangeable bonds
Type of bond		Exchangeable bonds

Aggregate principal amount		EUR 1,065,900,000

Interest rate		- Coupon rate : -

		- Yield to Maturity : (0.78%)

Maturity date		September 1, 2026

Redemption		1) Redemption at Maturity : Outstanding bond principal, which is not repaid early or which call option is not exercised on, is repaid at maturity as a lump sum

		2) Prepayment : The issuer has call option and the bondholders have put option

Exchange rate		100%

Exchange price (Won/share)		478,124

Underlying shares exchange		Registered common shares(treasury shares)

Exchange period		From October 12, 2021 to August 22, 2026

Adjustments for exchange price		Adjusting the exchange price according to the terms and conditions of the bond in the events of reason for adjusting the exchange price such as, bonus issue, share split, share consolidation, change of share type, issuance of options or warranties to shareholders, share dividend, cash dividend, issuance of new shares under the market price.

Put option by bondholders		- 3 years(September 1, 2024) from the closing date

		- In the event of a change of control of the Company

		- Where the shares issued by the Company are delisted (or suspended for more than 30 consecutive trading days)

Call option by the Issuer		- Share price(based on closing price) is higher than 130% of exchange price for more than 20 trading days during 30 consecutive trading days in a row, after 3 years (September 1, 2024) from the closing day to 30 business days before the maturity of bonds.

		- When the outstanding balance of outstanding bonds is less than 10% of the total issuance(Clean Up Call)

		- Where additional reasons for tax burden arise due to the amendment of relevant laws and regulations, etc.

The Company has designated exchangeable bonds listed on the Singapore Stock Exchange as financial liabilities measured at fair value through profit or loss. The quoted transaction price is used in fair value measurement, and changes in fair value are recognized in profit or loss.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)


(in millions of Won)	Lenders	Book value		Pledged amount
Property, plant and equipment and Investment property	Korea Development Bank and others	W	4,373,451		5,447,830
Trade accounts and notes receivable	Korea Development Bank and others		282,968		282,968
Financial instruments	KB Kookmin Bank and others		20,856		21,005

		W	4,677,275		5,751,803

16. Other Payables

Other payables as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Accounts payable	W	1,068,167		1,034,823
Accrued expenses		743,141		835,226
Dividend payable		451,150		4,046
Lease liabilities		174,397		181,774
Withholdings		146,552		133,492

	W	2,583,407		2,189,361

Non-current
Accounts payable	W	16,886		17,312
Accrued expenses		8,431		8,760
Lease liabilities		623,003		596,240
Long-term withholdings		58,843		56,697

	W	707,163		679,009

17. Other Financial Liabilities

Other financial liabilities as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Derivative liabilities	W	152,241		91,739
Financial guarantee liabilities		23,760		19,902

	W	176,001		111,641

Non-current
Derivative liabilities	W	11,553		18,300
Financial guarantee liabilities		5,785		5,696

	W	17,338		23,996

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

18. Provisions

(a)	Provisions as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022				December 31, 2021
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	54,239		36,289		93,502		45,031
Provision for construction warranties		6,780		231,716		14,519		222,141
Provision for legal contingencies and claims(*1)		12,681		61,906		24,441		69,050
Provision for the restoration(*2,3)		5,409		147,776		5,918		153,613
Others(*4,5)		304,966		111,045		261,604		99,257

	W	384,075		588,732		399,984		589,092

(*1)	The Company recognized probable outflow of resources amounting to W50,853 million and W61,911 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of March 31, 2022 and December 31, 2021, respectively.

(*2)

Due to contamination of lands near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery, W12,222 million as provisions for restoration as of March 31, 2022. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available for now to recover the land. In addition, the Company has applied a discount rate of 2.67%~3.26% to measure present value of these costs.

(*3)	Due to contamination of river water quality near Greenhills mine owned by POSCO Canada Ltd., the Company recognized present value of estimated costs for recovery amounting to W72,328 million as provisions for improvement as of March 31, 2022.

(*4)	As of March 31, 2022 and December 31, 2021, POSCO ENERGY CO.,LTD. and Korea Fuel Cell, recognized W83,476 million and W80,727 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow of resources.

(*5)	The Company has recognized emission liabilities of W96,071 million for green house gas emissions exceeding the quantity of emission quota rights as of March 31, 2022.

(b)	Changes in provisions for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Increase		Utilization			Reversal			*Others(1)**			Ending
Provision for bonus payments	W	138,533		44,453		(90,276	)		(1,939	)		(243	)		90,528
Provision for construction warranties		236,660		13,892		(11,494	)		(553	)		(9	)		238,496
Provision for legal contingencies and claims		93,491		2,355		(22,289	)		(1,348	)		2,378			74,587
Provision for the restoration		159,531		3,009		(1,600	)		(16,144	)		8,389			153,185
Others		360,861		88,284		(241	)		(50,541	)		17,648			416,011

	W	989,076		151,993		(125,900	)		(70,525	)		28,163			972,807

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the year ended December 31, 2021


(in millions of Won)	Beginning		Increase		Utilization			Reversal			*Others(1)**			Ending
Provision for bonus payments	W	121,951		160,893		(138,003	)		(4,989	)		(1,319	)		138,533
Provision for construction warranties		227,097		79,518		(67,196	)		(3,080	)		321			236,660
Provision for legal contingencies and claims		87,450		66,395		(28,400	)		(32,731	)		777			93,491
Provision for the restoration		139,745		29,456		(7,646	)		(11,129	)		9,105			159,531
Others		389,999		291,284		(185,066	)		(119,633	)		(15,723	)		360,861

	W	966,242		627,546		(426,311	)		(171,562	)		(6,839	)		989,076

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

19. Employee Benefits

(a)	Defined contribution plans

The expenses related to post-employment benefit plans under defined contribution plans for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Expense related to post-employment benefit plans under defined contribution plans	W	13,602		12,181

(b)	Defined benefit plans

The amounts recognized in relation to net defined benefit assets in the statements of financial position as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Present value of funded obligations	W	2,422,184			2,401,261
Fair value of plan assets(*1)		(2,499,000	)		(2,620,046	)
Present value of non-funded obligations		11,506			13,770

Net defined benefit liabilities	W	(65,310	)		(205,015	)

(*1)	As of March 31, 2022 and December 31, 2021, the Company recognized net defined benefit assets amounting to W124,220 million and W255,858 million respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

Changes in present value of defined benefit obligations for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Defined benefit obligations at the beginning of period	W	2,415,031			2,453,353
Current service costs		60,268			243,029
Interest costs		15,893			52,118
Remeasurements		87,533			(78,888	)
Benefits paid		(135,598	)		(253,208	)
Others		(9,437	)		(1,373	)

Defined benefit obligations at the end of period	W	2,433,690			2,415,031

Changes in fair value of plan assets for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Fair value of plan assets at the beginning of period	W	2,620,046			2,397,717
Interest on plan assets		17,232			51,580
Remeasurement of plan assets		(8,900	)		(9,529	)
Contributions to plan assets		121			417,486
Benefits paid		(129,854	)		(230,938	)
Others		355			(6,270	)

Fair value of plan assets at the end of period	W	2,499,000			2,620,046

The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022			March 31, 2021
Current service costs	W	60,268			62,339
Net interest costs		(1,339	)		154

	W	58,929			62,493

20. Other Liabilities

Other liabilities as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Due to customers for contract work	W	984,395		995,311
Advances received		488,470		475,800
Unearned revenue		94,476		106,574
Withholdings		444,977		340,107
Firm commitment liability		27,749		11,852
Others		7,375		14,844

	W	2,047,442		1,944,488

Non-current
Unearned revenue	W	26,641		27,908
Others		67,046		28,583

	W	93,687		56,491

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

21. Financial Instruments

(a)	Classification and fair value of financial instruments

The carrying amount and fair values of financial assets and financial liabilities by fair value hierarchy as of March 31, 2022 and December 31, 2021 are as follows:

①

March 31, 2022


(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	288,912		—		288,912		—		288,912
Short-term financial instruments		9,498,588		—		9,498,588		—		9,498,588
Debt securities		7,434		—		—		7,434		7,434
Other securities		540,544		30,680		1,022		508,842		540,544
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments(*2)		48,436		—		48,436		—		48,436
Fair value through other comprehensive income
Equity securities		1,617,620		1,397,948		—		219,672		1,617,620
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		6,329,536		—		—		—		—
Trade accounts and notes receivable		10,500,797		—		—		—		—
Other receivables		2,863,842		—		—		—		—
Debt securities		151,146		—		—		—		—
Deposit instruments		3,646,225		—		—		—		—

	W	35,495,080		1,428,628		9,836,958		737,948		12,003,534

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	98,240		—		98,241		—		98,241
Borrowings		1,430,117		1,430,117		—		—		1,430,117
Derivative hedging instruments(*2)		65,553		—		65,553		—		65,553
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		5,685,626		—		—		—		—
Borrowings		22,563,205		—		22,473,047		—		22,473,047
Financial guarantee liabilities		29,545		—		—		—		—
Others		3,084,716		—		—		—		—

	W	32,957,002		1,430,117		22,636,841		—		24,066,958

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

(*2)

The Company applies hedge accounting which uses forward contracts as hedging instrument in order to hedge the risk of changes in fair value of product prices regarding firm commitments or purchase commitments. Also, the Company applies cash flow hedge accounting which uses currency swap as hedging instrument in order to hedge the risk of interest rate and foreign exchange rate changes in foreign currency which influences cash flow from borrowings.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

②

December 31, 2021


(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	241,541		—		241,541		—		241,541
Short-term financial instruments		10,514,093		—		10,514,093		—		10,514,093
Debt securities		10,717		—		—		10,717		10,717
Other securities		430,998		37,343		1,022		392,633		430,998
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments		7,555		—		7,555		—		7,555
Fair value through other comprehensive income
Equity securities		1,466,061		1,250,497		—		215,564		1,466,061
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		4,775,166		—		—		—		—
Trade accounts and notes receivable		9,051,708		—		—		—		—
Other receivables		2,761,566		—		—		—		—
Debt securities		151,146		—		—		—		—
Deposit instruments		2,745,280		—		—		—		—

	W	32,157,831		1,287,840		10,764,211		620,914		12,672,965

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	93,236		—		93,236		—		93,236
Borrowings		1,435,193		1,435,193		—		—		1,435,193
Derivative hedging instruments		16,803		—		16,803		—		16,803
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		5,468,869		—		—		—		—
Borrowings		20,306,023		—		20,393,246		—		20,393,246
Financial guarantee liabilities		25,598		—		—		—		—
Others		2,693,163		—		—		—		—

	W	30,038,885		1,435,193		20,503,285		—		21,938,478

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

Finance income and costs by category of financial instrument for the three-month periods ended March 31, 2022 and 2021 were as follows:

①

For the three-month period ended March 31, 2022


(in millions of Won)	Finance income and costs																		Other
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Others			Total			comprehensive income (loss)
Financial assets at fair value through profit or loss	W	60,573			(6,804	)		—			2,086			23,026			78,881			—
Derivative assets		—			124,339			—			124,585			—			248,924			—
Financial assets at fair value through other comprehensive income		—			—			—			—			(16,541	)		(16,541	)		104,421
Financial assets measured at amortized cost		49,232			—			155,891			(7,053	)		(21,988	)		176,082			—
Financial liabilities at fair value		—			14,378			268			—			—			14,646			—
Derivative liabilities		—			(104,953	)		—			(215,191	)		—			(320,144	)		51
Financial liabilities measured at amortized cost		(106,021	)		—			(219,082	)		—			(1,545	)		(326,648	)		—

	W	3,784			26,960			(62,923	)		(95,573	)		(17,048	)		(144,800	)		104,472

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

②

For the three-month period ended March 31, 2021


(in millions of Won)	Finance income and costs																		Other
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Others			Total			comprehensive income (loss)
Financial assets at fair value through profit or loss	W	35,335			(4,851	)		—			(462	)		70			30,092			—
Derivative assets		—			101,315			—			65,846			—			167,161			—
Financial assets at fair value through other comprehensive income		—			—			—			—			22,269			22,269			92,005
Financial assets measured at amortized cost		19,287			—			237,962			(3,370	)		(38	)		253,841			—
Derivative liabilities		—			28,515			—			(72,981	)		—			(44,466	)		(14	)
Financial liabilities measured at amortized cost		(129,317	)		—			(363,852	)		—			(6,483	)		(499,652	)		—

	W	(74,695	)		124,979			(125,890	)		(10,967	)		15,818			(70,755	)		91,991

(b)	Financial risk management

The Company is exposed to credit risk, liquidity risk and market risk arising from financial assets and liabilities. The Company’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as of and for the year ended December 31, 2021.

22. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2022 and December 31, 2021 are as follows:


(in Won, except share information)	March 31, 2022		December 31, 2021
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1)	As of March 31, 2022, total shares of ADRs of 26,101,884 outstanding in overseas stock market are equivalent to 6,525,471 shares of common stock.

(*2)	As of March 31, 2022, the difference between the ending balance of common stock and the par value of issued common stock is W46,469 million due to retirement of 9,293,790 treasury stocks.

(b)	Capital surplus as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		806,114		796,623
Other capital surplus		127,115		127,512

	W	1,397,054		1,387,960

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

23. Hybrid Bonds

(a)

The Company issued hybrid bonds, which are classified as equity in the consolidated financial statements. During the three-month period ended March 31, 2022, the hybrid bonds were transferred to a newly established company(POSCO) upon a vertical spin-off. Accordingly, the ownership interests of the controlling company as of December 31, 2021 were reclassified to non-controlling interests as of March 31, 2022. Hybrid bonds classified as equity as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		March 31, 2022			December 31, 2021
Hybrid bond 1-2(*1)		2013-06-13		2043-06-13		4.60	W	200,000			200,000
Issuance cost								(616	)		(616	)

							W	199,384			199,384

(*1)	Details of issuance of hybrid bonds of POSCO as of March 31, 2022 are as follows:


		Hybrid bond 1-2
Maturity date		30 years (The issuer has a right to extend the maturity date)

Interest rate		Issue date ~ 2023-06-12 : 4.60%
		Reset every 10 years as follows;
		• After 10 years : return on government bond of Republic of Korea (10 years) + 1.40%
		• After 10 years : additionally +0.25% according to Step-up clauses
		• After 30 years : additionally +0.75%

Interest payments condition		Quarterly (Optional deferral of interest payment is available to the Company)

Others		The issuer can call the hybrid bond at year 10th anniversary of issuance and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common stockholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2022 amounts to W479 million.

(b)	POSCO ENERGY CO., LTD., a subsidiary of the Company, issued hybrid bonds which are classified as non-controlling interests in the consolidated financial statements. Hybrid bonds as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		March 31, 2022			December 31, 2021
Hybrid bond 1-4(*1)		2013-08-29		2043-08-29		5.21	W	140,000			140,000
Issuance cost								(429	)		(429	)

							W	139,571			139,571

(*1)	Details of hybrid bonds of POSCO ENERGY CO., LTD. as of March 31, 2022 are as follows:


		Hybrid bond 1-4
Maturity date		30 years (The issuer has a right to extend the maturity date)

Interest rate		Issue date ~ 2023-08-29 : 5.21%
		Reset every 10 years as follows;
		• After 10 years : return on government bond of the Republic of Korea (10 years) + 1.55%
		• After 10 years : additionally +0.25% according to Step-up clauses
		• After 30 years : additionally +0.75%

Interest payments condition		Quarterly (Optional deferral of interest payment is available to the Company)

Others		The issuer can call the hybrid bond at year 10th anniversary of issuance and interest payment date afterwards

The hybrid bond holders’ preference in the event of liquidation is senior to the common stockholders, but subordinated to other creditors. The interest accumulated but not paid on the hybrid bonds as of March 31, 2022 amounts to W619 million.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

24. Reserves

Reserves as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Accumulated comprehensive loss of investments in associates and joint ventures	W	(371,061	)		(532,833	)
Changes in fair value of equity investments at fair value through other comprehensive income		(50,429	)		(153,359	)
Foreign currency translation differences		187,656			7,762
Gains or losses on valuation of derivatives		(407	)		(455	)
Others		13,387			11,900

	W	(220,854	)		(666,985	)

25. Treasury Shares

Based on the Board of Directors’ resolution, the Company holds treasury shares for business purposes including price stabilization. The changes in treasury shares for three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:


(shares, in millions of Won)	March 31, 2022						December 31, 2021
	Number of shares			Amount			Number of shares		Amount
Beginning		11,561,263		W	2,508,294			11,171,363	W	2,391,523
Acquisition of treasury shares		—			—			389,900		116,771
Disposal of treasury shares		(223,605	)		(48,513	)		—		—

Ending		11,337,658		W	2,459,781			11,561,263	W	2,508,294

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

26. Revenue

(a)	Disaggregation of revenue

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended March 31, 2022 and 2021 were as follows:

March 31, 2022


(in millions of Won)	Steel		Trading		Construction		*Others(1)**		Total
Types of revenue
Revenue from sales of goods	W	7,191,030		6,288,807		—		4,715,093		18,194,930
Revenue from services		128,484		147,149		17,994		996,691		1,290,318
Revenue from construction contract		—		—		1,643,946		8,746		1,652,692
Others		5,556		87,858		759		105,957		200,130

	W	7,325,070		6,523,814		1,662,699		5,826,487		21,338,070

Timing of revenue recognition
Revenue recognized at a point in time	W	7,196,586		6,376,665		18,218		4,821,050		18,412,519
Revenue recognized over time		128,484		147,149		1,644,481		1,005,437		2,925,551

	W	7,325,070		6,523,814		1,662,699		5,826,487		21,338,070

(*1)	Others include the Company’s revenue of W4,339,780 million before spin-off.

March 31, 2021


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	8,334,495		5,085,746		—		317,943		13,738,184
Revenue from services		126,860		98,955		12,380		493,142		731,337
Revenue from construction contract		—		—		1,447,417		12,896		1,460,313
Others		15,158		61,747		508		61,476		138,889

	W	8,476,513		5,246,448		1,460,305		885,457		16,068,723

Timing of revenue recognition
Revenue recognized at a point in time	W	8,349,653		5,147,493		18,622		379,419		13,895,187
Revenue recognized over time		126,860		98,955		1,441,683		506,038		2,173,536

	W	8,476,513		5,246,448		1,460,305		885,457		16,068,723

(b)	Details of contract assets and liabilities from contracts with customers as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Receivables
Account receivables	W	10,500,797		9,051,708
Contract assets
Due from customers for contract work		1,243,793		1,073,479
Contract liabilities
Advance received		496,242		483,375
Due to customers for contract work		984,395		995,311
Unearned revenue		120,434		133,765

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

27. Revenue – Contract Balances

(a)	Details of outstanding contracts as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022						December 31, 2021
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	32,679,214			67,544			32,687,274			81,478
Accumulated contract profit		3,372,397			12,030			3,302,005			14,932
Accumulated contract loss		(873,633	)		(17,802	)		(1,227,883	)		(16,904	)
Accumulated contract revenue		35,177,978			61,772			34,761,396			79,506

(b)	Details of due from customers for contract work and due to customers for contract work as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022						December 31, 2021
	Construction segment			Others			Construction segment			Others
Due from customers for contract	W	1,225,065			55,425			1,069,343			40,739
Due to customers for contract work		(914,472	)		(69,923	)		(937,337	)		(57,974	)

	W	310,593			(14,498	)		132,006			(17,235	)

(c)	Details of the provisions of construction loss as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Construction segment	W	27,088		26,656
Others		14,873		16,229

	W	41,961		42,885

(d)

Due to the factors causing the variation of costs for the three-month period ended March 31, 2022, the estimated total contract costs have changed. Details of changes in estimated total contract costs and the impact on profit before income taxes for the three-month period ended March 31, 2022 and future periods are as follows:


(in millions of Won)					Changes in profit of contract
	Changes in total contract revenues		Changes in estimated total contract costs		Net income		Future income		Total
Construction segment	W	235,948		210,706		16,799		8,443		25,242
Others		6,351		5,548		85		718		803

	W	242,299		216,254		16,884		9,161		26,045

The effect on the current and future profit is estimated based on the circumstances that have occurred from the commencement date of the contract to March 31, 2022. The estimation is evaluated for the total contract costs and expected total contract revenue as of the end of the period. Also, it may change during future periods.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(e)	Uncertainty of estimates

Total contract revenues

Total contract revenues are measured based on contractual amount initially agreed. However, the contract revenues can increase due to additional contract work, claims and incentive payments, or decrease due to penalty when the completion of contract is delayed due to the Company’s fault. Therefore, this measurement of contract revenues is affected by the uncertainty of the occurrence of future events.

Total contract costs

Contract revenues are recognized based on the percentage of completion, which is measured on the basis of the gross cost amount incurred to date. Total contract costs are estimated based on estimates of future material costs, labor costs, outsourcing costs and others. There is uncertainty in estimates on future contract costs due to various internal and external factors such as fluctuation of market, the risk of business partner and the experience of project performance and others. The significant assumptions including uncertainty of the estimate of total contract costs are as follows:


		Method of significant assumption
Material cost		Assumption based on recent purchasing price and quoted market price
Labor cost		Assumption based on standard monthly and daily labor cost
Outsourcing cost		Assumption based on the past experience rate of similar project and market price

Management reviews the assumptions used in estimated contract costs at each reporting period end and adjusts them, if necessary.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

28. Selling and Administrative Expenses

(a)	Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Wages and salaries	W	263,917		221,427
Expenses related to post-employment benefits		23,446		32,919
Other employee benefits		64,511		46,348
Travel		5,533		4,283
Depreciation		36,386		36,624
Amortization		22,835		27,648
Communication		2,817		2,151
Electricity		2,393		1,887
Taxes and public dues		24,241		21,759
Rental		10,317		4,938
Repairs		2,444		2,348
Entertainment		3,029		2,174
Advertising		26,067		16,074
Research & development		33,565		32,342
Service fees		44,644		35,006
Vehicles maintenance		1,315		1,263
Industry association fee		3,681		3,368
Conference		3,810		2,887
Increase to provisions		473		327
Others		13,601		10,548

	W	589,025		506,321

(b)	Selling expenses

Selling expenses for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Freight and custody expenses	W	26,316		39,596
Operating expenses for distribution center		557		1,746
Sales commissions		22,918		18,680
Sales advertising		302		136
Sales promotion		1,547		1,526
Sample		507		514
Sales insurance premium		10,176		9,253
Contract cost		10,943		11,099
Others		2,905		2,618

	W	76,171		85,168

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

29. Finance Income and Costs

Details of finance income and costs for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Finance income
Interest income(*1)	W	109,805		54,622
Dividend income		6,485		22,339
Gain on foreign currency transactions		271,753		211,935
Gain on foreign currency translations		176,137		214,996
Gain on derivatives transactions		127,513		68,470
Gain on valuations of derivatives		142,465		212,849
Others		23,027		10,333

	W	857,185		795,544

Finance costs
Interest expenses	W	106,021		129,317
Loss on foreign currency transactions		248,383		180,270
Loss on foreign currency translations		262,430		372,551
Loss on derivatives transactions		218,119		75,605
Loss on valuation of derivatives		123,079		83,019
Loss on disposal of trade accounts and notes receivable		7,053		3,370
Others		36,900		22,167

	W	1,001,985		866,299

(*1)	Interest income calculated using the effective interest method for the three-month periods ended March 31, 2022 and 2021 were W49,232 million and W19,287 million, respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

30. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Other non-operating income
Gain on disposals of assets held for sale	W	57		797
Gain on disposals of investment in subsidiaries, associates and joint ventures		5,205		3,842
Gain on disposals of property, plant and equipment		9,838		3,323
Gain on valuation of firm commitment		139,268		50,596
Reversal of other provisions		2,276		176
Gain on insurance settlements		712		544
Others(*1)		20,649		70,693

	W	178,005		129,971

Other non-operating expenses
Loss on disposals of investments in subsidiaries, associates and joint ventures	W	6,128		1,104
Loss on disposals of property, plant and equipment		17,967		18,657
Impairment loss on property, plant and equipment		3		16,892
Impairment loss on intangible assets		4		7,183
Loss on valuation of firm commitment		31,438		43,765
Idle tangible asset expenses		4,844		5,192
Increase to provisions		1,109		6,301
Donations		12,454		5,641
Others		477		18,757

	W	74,424		123,492

(*1)	During the three-month period ended March 31, 2021, the Company recognized W28,366 million of non-operating income for refund of other than income tax as a result of administrative litigation for tax audits.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

31. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses, impairment loss on other receivables and other non-operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2022 and 2021 were as follows (excluding finance costs and income tax expense):


(in millions of Won)	March 31, 2022		March 31, 2021
Raw material used, changes in inventories and others	W	12,778,047		9,564,810
Employee benefits expenses		985,312		943,053
Outsourced processing cost		1,951,729		1,714,478
Electricity and water expenses		240,760		173,898
Depreciation(*1)		785,050		785,185
Amortization		103,295		110,787
Freight and custody expenses		184,485		339,624
Sales commissions		22,918		18,680
Loss on disposal of property, plant and equipment		17,967		18,657
Donations		12,454		5,641
Others		2,075,797		971,401

	W	19,157,814		14,646,214

(*1)	Includes depreciation expense of investment property.

32. Income Taxes

The effective tax rates of the Company for the three-month periods ended March 31, 2022 and 2021 were 22.61% and 26.98%, respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

33. Earnings per Share

(a)	Basic earnings per share for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in Won except per share information)	March 31, 2022			March 31, 2021
Profit attributable to controlling interest	W	1,711,611,321,575			1,024,735,682,380
Interests of hybrid bonds, net of tax		(1,078,164,383	)		(1,644,657,534	)
Weighted-average number of common shares outstanding(*1)		75,710,045			75,911,805

Basic earnings per share	W	22,593			13,477

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


(shares)	March 31, 2022			March 31, 2021
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(11,476,790	)		(11,275,030	)

Weighted-average number of common shares outstanding		75,710,045			75,911,805

(b)	Diluted earnings per share for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in Won, except share information)	March 31, 2022			March 31, 2021
Profit attributable to controlling interest	W	1,711,611,321,575			1,024,735,682,380
Interests of hybrid bonds, net of tax		(1,078,164,383	)		(1,644,657,534	)
Gain or loss from exchange rate on and revaluation of exchangeable bonds		(3,679,866,922	)		—
Adjusted weighted-average number of common shares(*1)		78,742,658			75,911,805

Diluted earnings per share	W	21,676			13,477

(*1)	The weighted-average number of common shares used to calculate diluted earnings

per share are as follows:


(shares)	March 31, 2022		March 31, 2021
Weighted-average number of common shares outstanding		75,710,045		75,911,805
Weighted-average number of potential common share		3,032,613		—

Adjusted weighted-average number of common shares		78,742,658		75,911,805

The Company holds exchangeable bonds as potential common stocks with a diluting effect as of March 31, 2022. Meanwhile, since there were no potential shares of common stock which had dilutive effects as of March 31, 2021, diluted earnings per share is equal to basic earnings per share.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

34. Related Party Transactions

(a)	Significant transactions between the controlling company and related companies for the three-month periods ended March 31, 2022 and 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	*Sales and others(1)**						*Purchase and others(2)**
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
*Subsidiaries(3)**
POSCO	W	1,467		—		—		—		—		—		3
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		1,505		16,555		7		—		85,302		—		9,711
POSCO STEELEON Co.,Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		131,512		—		215		—		—		7,656		6
POSCO ICT(*4)		336		4,970		18		—		24,115		10,190		32,403
eNtoB Corporation		2		24		—		60,649		9,698		32		3,197
POSCO CHEMICAL CO., LTD		80,582		13,878		44		84,301		4,757		56,325		908
POSCO ENERGY CO., LTD.		762		—		—		6,682		—		—		3,925
POSCO MOBILITY SOLUTION		175,738		—		—		—		—		8,802		28
POSCO INTERNATIONAL Corporation		2,099,457		62,093		—		244,230		—		768		1,049
POSCO Thainox Public Company Limited		48,679		—		—		—		—		—		1
POSCO Canada Ltd.		—		—		139		77,703		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		32,423		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		28,790		—		—		835		—		—		16
POSCO-VIETNAM Co., Ltd.		43,769		—		53		—		—		—		—
POSCO MEXICO S.A. DE C.V.		102,428		—		16		—		—		—		—
POSCO Maharashtra Steel Private Limited		170,671		—		66		—		—		—		120
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		42,320		—		—		—		—		—		15
POSCO VST CO., LTD.		27,906		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		417		380,061		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		47,018		—		60		—		—				8
Others		189,573		963		1,174		61,471		13,042		53,139		199,484

		3,224,938		98,483		2,209		915,932		136,914		136,912		250,874

*Associates and joint ventures(3)**
SNNC		3,122		5,348		8		148,239		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		25,614		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		90,388		—		210,455		—		—		—
Others		76,723		8,617		3,373		16,485		—		—		301

		105,459		104,353		3,381		375,179		—		—		301

	W	3,330,397		202,836		5,590		1,291,111		136,914		136,912		251,175

(*1)	Sales and others mainly consist of sales of steel products (before spin-off), trademark usage income, rental income and dividend income to subsidiaries, associates and joint ventures

(*2)	Purchases and others mainly consist of subsidiaries’ purchases of construction services and purchases of raw materials to manufacture steel products.

(*3)	As of March 31, 2022, the Company provided guarantees to related parties (Note 35).

(*4)	Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the three-month period ended March 31, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	W	1,614		11,037		32		—		88,862		60		6,463
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		123,426		1,706		328		—		—		7,447		161
POSCO ICT		447		4,970		20		—		34,290		10,706		49,422
eNtoB Corporation		4		—		—		60,190		9,647		14		4,507
POSCO CHEMICAL CO., LTD		57,959		11,208		5,072		114,065		1,389		74,295		1,426
POSCO ENERGY CO., LTD.		760		—		689		2,129		—		—		5,605
POSCO MOBILITY SOLUTION		148,773		—		—		—		—		10,694		206
POSCO INTERNATIONAL Corporation		1,898,357		54,331		—		166,152		—		347		536
POSCO Thainox Public Company Limited		60,873		—		—		—		—		—		20
POSCO Canada Ltd.		—		—		491		34,796		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		40,948		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		357,971		—		1		7,601		4		—		480
POSCO-VIETNAM CO., Ltd.		80,910		—		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		92,791		—		34		—		—		—		—
POSCO Maharashtra Steel Private Limited		168,852		—		84		—		—		—		89
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		28,512		—		—		—		—		—		—
POSCO VST CO., LTD.		56,408		—		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		610		350,571		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		65,532		—		49		8		—		—		10
Others		341,735		19,712		1,709		34,716		9,752		60,982		20,974

		3,525,872		102,964		9,458		770,228		143,944		164,545		89,907

Associates and joint ventures
SNNC		7,513		1,469		574		151,759		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		12,649		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		116,076		—		486,975		—		—		—
Others		8,837		11,577		1,362		21,723		—		—		9,173

		28,999		129,122		1,936		660,457		—		—		9,173

	W	3,554,871		232,086		11,394		1,430,685		143,944		164,545		99,080

(b)	The related account balances of significant transactions between the controlling company and related companies as of March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022


(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Accounts payable		Others		Total
Subsidiaries
POSCO	W	1,614		14,663		16,277		77,846		—		77,846
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		17,029		—		17,029		—		—		—
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		109		—		109		—		—		—
POSCO ICT		4,324		—		4,324		—		917		917
eNtoB Corporation		24		—		24		—		—		—
POSCO CHEMICAL CO., LTD		14,006		—		14,006		—		636		636
POSCO ENERGY CO., LTD.		291		—		291		—		1,593		1,593
POSCO MOBILITY SOLUTION		22		—		22		—		—		—
POSCO INTERNATIONAL Corporation		62,189		—		62,189		—		502		502
Qingdao Pohang Stainless Steel Co., Ltd.		12		—		12		—		—		—
POSCO Maharashtra Steel Private Limited		43		1,084		1,127		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		6		984		990		—		—		—
PT.KRAKATAU POSCO		—		14,630		14,630		—		—		—
Others		1,759		2,800		4,559		552		3,334		3,886

		101,428		34,161		135,589		78,398		6,982		85,380

Associates and joint ventures
SNNC		5,355		—		5,355		—		—		—
Roy Hill Holdings Pty Ltd		90,388		—		90,388		—		—		—
FQM Australia Holdings pty Ltd		—		181,620		181,620		—		—		—
Others		8		14,754		14,762		—		—		—

		95,751		196,374		292,125		—		—		—

	W	197,179		230,535		427,714		78,398		6,982		85,380

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

December 31, 2021


(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	W	5,692		10		5,702		—		97,007		507		97,514
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		95,001		—		95,001		—		154		5,082		5,236
POSCO ICT		221		3		224		3,736		155,064		27,562		186,362
eNtoB Corporation		—		—		—		1,683		23,851		—		25,534
POSCO CHEMICAL CO., LTD		35,895		3,664		39,559		12,969		57,498		17,990		88,457
POSCO ENERGY CO., LTD.		1,485		292		1,777		—		6,169		10,066		16,235
POSCO MOBILITY SOLUTION		133,608		—		133,608		71		2,232		5,104		7,407
POSCO INTERNATIONAL Corporation		1,279,463		4		1,279,467		4,831		483		502		5,816
POSCO Thainox Public Company Limited		54,804		—		54,804		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		35,423		—		35,423		—		83		—		83
POSCO MEXICO S.A. DE C.V.		179,428		251		179,679		—		—		—		—
POSCO Maharashtra Steel Private Limited		530,693		1,048		531,741		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		14		14		169,565		90		—		169,655
POSCO ASSAN TST STEEL INDUSTRY		220,481		951		221,432		—		—		—		—
PT.KRAKATAU POSCO		1,395		14,750		16,145		—		—		—		—
Others		366,857		7,011		373,868		22,583		48,274		84,778		155,635

		2,940,446		27,998		2,968,444		215,438		390,905		151,591		757,934

Associates and jointventures
SNNC		420		65		485		52,396		—		—		52,396
Roy Hill Holdings Pty Ltd		—		34,356		34,356		436,774		—		—		436,774
FQM Australia Holdings Pty Ltd		—		181,122		181,122		—		—		—		—
Others		168,167		15,895		184,062		5,549		187		—		5,736

		168,587		231,438		400,025		494,719		187		—		494,906

	W	3,109,033		259,436		3,368,469		710,157		391,092		151,591		1,252,840

(c)	Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended March 31, 2022 and 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	64,467		—		—		—		24
SNNC		31,322		—		5		62,539		715
Noeul Green Energy Co., Ltd.		1,575		—		—		—		416
CSP-Compania Siderurgica do Pecem		4,077		—		—		49,361		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		9,182		—		—		12,662		—
POS-SEAHSTEELWIRE(TIANJIN)CO., Ltd		2,404		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		8,672		—		—		93		—
South-East Asia Gas Pipeline Company Ltd.		—		—		—		—		1,205
POSCO MITSUBISHI CARBON TECHNOLOGY		23,343		24,000		—		1,303		156
Samcheok Blue Power Co., Ltd.		95,450		2,416		26		—		—
Pocheon-Hwado Highway Corp.		14,476		—		—		—		—
UITrans LRT Co., Ltd.		—		—		—		1,359		—
Roy Hill Holdings Pty Ltd		—		22,597		—		142,794		—
Others		112,558		34,131		1,724		93,521		6,627

	W	367,526		83,144		1,755		363,632		9,143

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the three-month period ended March 31, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	46,219		—		—		—		41
SNNC		9,655		—		53		4,017		5,387
Noeul Green Energy Co., Ltd.		1,512		—		—		—		522
CSP-Compania Siderurgica do Pecem		1,915		—		—		—		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		6,570		—		—		8,309		5,683
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		2,911		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		9,790		—		—		39		—
South-East Asia Gas Pipeline Company Ltd.		—		5,656		2,328		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		8,716		—		7		1,012		50
Samcheok Blue Power Co., Ltd.		58,064		—		—		—		—
TK CHEMICAL CORPORATION (*1)		14,906		—		—		2,292		—
Pocheon-Hwado Highway Corp.		9,553		—		—		—		—
UITrans LRT Co., Ltd.		8,935		—		—		—		—
Roy Hill Holdings Pty Ltd		—		29,019		—		—		—
Others		35,814		2,435		315		6,849		4,063

	W	214,560		37,110		2,703		22,518		15,746

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

(d)	The related account balances of significant transactions between the Company, excluding the controlling company, and related companies as of March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022


(in millions of Won)	Receivables								Payables
	Trade accounts and notes receivable		Loans		Others		Total		Trade accounts and notes payable		Others		Total
Associates and joint ventures
New Songdo International City Development, LLC	W	—		—		16,261		16,261		10,964		7		10,971
Chuncheon Energy Co., Ltd.		—		—		—		—		344		—		344
Samcheok Blue Power Co., Ltd.		162,524		—		—		162,524		—		2,424		2,424
Nickel Mining Company SAS		—		63,021		140		63,161		37		—		37
CSP-Compania Siderurgica do Pecem		—		—		—		—		14,103		—		14,103
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		11,733		—		—		11,733		5,469		—		5,469
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		13,571		—		—		13,571		105		—		105
South-East Asia Gas Pipeline Company Ltd.		—		35,226		—		35,226		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		9,813		—		40		9,853		1,297		20		1,317
Pocheon-Hwado Highway Corp.		16,006		—		—		16,006		—		—		—
UITrans LRT Co., Ltd.		5,689		31,529		—		37,218		—		—		—
Roy Hill Holdings Pty Ltd		—		—		22,725		22,725		220,005		—		220,005
SNNC		14,360		—		57		14,417		52,463		66		52,529
Others		126,638		185,546		104,258		416,442		58,220		19,543		77,763

	W	360,334		315,322		143,481		819,137		363,007		22,060		385,067

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

December 31, 2021


(in millions of Won)	Receivables								Payables
	Trade accounts and notes receivable		Loans		Others		Total		Trade accounts and notes receivable		Others		Total
Associates and joint ventures
New Songdo International City Development, LLC	W	49,748		—		16,261		66,009		—		—		—
Chuncheon Energy Co., Ltd.		—		—		—		—		257		—		257
Samcheok Blue Power Co., Ltd.		120,672		—		—		120,672		—		23,683		23,683
Nickel Mining Company SAS		—		62,611		477		63,088		—		—		—
CSP-Compania Siderurgica do Pecem		—		—		—		—		3,144		—		3,144
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		9,108		—		—		9,108		4,393		—		4,393
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		19,271		—		—		19,271		—		18		18
South-East Asia Gas Pipeline Company Ltd.				47,423				47,423		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		8,183		—		—		8,183		1,083		—		1,083
Pocheon-Hwado Highway Corp.		14,162		—		—		14,162		—		—		—
UITrans LRT Co., Ltd.		7,048		29,099		—		36,147		—		—		—
Roy Hill Holdings Pty Ltd		—		—		8,589		8,589		—		—		—
SNNC		4,708		—		—		4,708		143		—		143
Others		34,254		179,036		106,186		319,476		97		31,047		31,144

	W	267,154		318,169		131,513		716,836		9,117		54,748		63,865

(e)	Significant financial transactions between the Company, excluding the controlling company, and related companies for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Lend		Collect			*Others(1)**		Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	29,099		—		—			2,430		31,529
South-East Asia Gas Pipeline Company Ltd.		47,423		—		(12,624	)		427		35,226
PT. Tanggamus Electric Power		4,690		—		—			100		4,790
PT. Wampu Electric Power		5,651		—		—			121		5,772
PT. POSMI Steel Indonesia		2,371		—		(2,371	)		—		—
Nickel Mining Company SAS		62,611		—		—			410		63,021
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		4,742		—		—			101		4,843
POS-SeaAH Steel Wire (Thailand) Co., Ltd.		7,113		—		—			152		7,265
AMCI (WA) PTY LTD		91,665		1,221		—			5,400		98,286
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,928		—		—			126		6,054
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		9,484		—		—			202		9,686
Hyo-chun Co., Ltd.		2,382		—		—			—		2,382
POS-AUSTEM Suzhou Automotive Co., Ltd		17,783		—		(5,928	)		252		12,107
FQM Australia Holdings PTY LTD		27,227		5,321		—			1,813		34,361

	W	318,169		6,542		(20,923	)		11,534		315,322

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the year ended December 31, 2021


(in millions of Won)	Beginning		Lend		Collect			*Others(1)**			Ending
Associates and jointventures
UITrans LRT Co., Ltd.	W	23,452		5,682		—			(35	)		29,099
South-East Asia Gas Pipeline Company Ltd.		91,003		—		(49,928	)		6,348			47,423
PT. Batutua Tembaga Raya(*2)		35,355		—		—			(35,355	)		—
PT. Tanggamus Electric Power		4,304		—		—			386			4,690
PT. Wampu Electric Power		5,186		—		—			465			5,651
PT. POSMI Steel Indonesia		2,176		—		—			195			2,371
Nickel Mining Company SAS		62,420		—		—			191			62,611
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		5,440		—		—			(698	)		4,742
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,528		—		—			585			7,113
AMCI (WA) PTY LTD		83,291		6,154		—			2,220			91,665
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,440		—		—			488			5,928
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		8,704		—		—			780			9,484
Hyo-chun Co., Ltd.		2,382		—		—			—			2,382
POS-AUSTEM Suzhou Automotive Co., Ltd		16,320		—		—			1,463			17,783
CAML RESOURCES PTY LTD		3,312		—		(3,312	)		—			—
Shinahn Wind Power Generation(*3)		37		60		—			(97	)		—
FQM Australia Holdings Pty Ltd		—		27,242		—			(15	)		27,227

	W	355,350		39,138		(53,240	)		(23,079	)		318,169

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

(*2)	PT. Batutua Tembaga Raya was excluded from the association due to the sale of its shares during the year ended December 31, 2021. Meanwhile, the uncollected loan was offset and written off from the loan loss provisions set in the previous period, and these effects are included in Others.

(*3)	Shinahn Wind Power Generation was excluded from the association due to the sale of its shares during the year period ended December 31, 2021.

(f)	For the three-month periods ended March 31, 2022 and 2021, details of compensation to key management officers were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Short-term benefits	W	50,783		27,181
Long-term benefits		3,072		4,533
Retirement benefits		6,590		6,515

	W	60,445		38,229

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

35. Commitments and Contingencies

(a)	Details of guarantees

Contingent liabilities on outstanding guarantees provided by the Company as of March 31, 2022 are as follows:


(in millions of Won)			Guarantee limit				Guarantee amount
Guarantor	Guarantee beneficiary	Financial institution	Foreign currency		Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO HOLDINGS INC.	POSCO Asia Co., Ltd.	Credit Agricole and others	USD	200,000,000		242,160		—		—
	POSCO-VIETNAM Co., Ltd.	SMBC and others	USD	156,000,000		188,885		140,000,000		169,512
	POSCO MEXICO S.A. DE C.V.	BOA and others	USD	120,000,000		145,296		100,000,001		121,080
	POSCO COATED STEEL (THAILAND) CO., LTD.	SMBC and others	THB	5,501,000,000		199,908		5,021,000,001		182,464
	POSCO Maharashtra Steel Private Limited	SMBC and others	USD	139,784,000		169,250		139,784,000		169,250
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others	USD	2,150,300,000		2,603,584		1,426,992,234		1,727,801
	POSCO ASSAN TST STEEL INDUSTRY	SOCIETE GENERALE and others	USD	131,874,750		159,674		131,874,750		159,674
POSCO INTERNATIONAL Corporation	POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD.	Export-Import Bank of Korea and others	USD	201,000,000		243,371		201,000,000		243,371
	POSCO INTERNATIONAL POWER (PNGLAE) LIMITED	KDB bank	USD	53,517,404		64,799		32,717,404		39,614
	GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Shinhan Bank and others	USD	11,000,000		13,319		11,000,000		13,319
	PT. Bio Inti Agrindo	BTPN and others	IDR	2,057,400,000,000		173,645		2,057,400,000,000		173,645
	POSCO ASSAN TST STEEL INDUSTRY	ING	USD	14,652,750		17,742		14,652,750		17,742
	POSCO INTERNATIONAL Deutschland GmbH	Bank Mendes Gans Amsterdam						8,937,143		10,821
	POSCO INTERNATIONAL AMERICA Corp.							15,010,626		18,175
	POSCO INTERNATIONAL JAPAN Corp.							8,207,247		9,937
	POSCO INTERNATIONAL SINGAPORE Pte. Ltd.		USD	50,000,000		60,540		—		—
	POSCO INTERNATIONAL Malaysia SDN BHD							—		—
	POSCO INTERNATIONAL Italia S.R.L.							—		—
	POSCO INTERNATIONAL MEXICO S.A. de C.V.							—		—
	GRAIN TERMINAL HOLDING PTE. LTD.	Export-Import Bank of Korea and others	USD	27,000,000		32,692		27,000,000		32,692
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	POSCO Asia Co., Ltd. and others	USD	36,000,000		43,589		36,000,000		43,589
	PT. POSCO E&C INDONESIA	POSCO Asia Co., Ltd. and others	USD	25,900,000		31,360		25,900,000		31,360
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd. and others	USD	1,500,000		1,816		1,500,000		1,816
POSCO CHEMICAL CO., LTD	PT.Krakatau Posco Chemical Calcination	POSCO Asia Co., Ltd. and others	USD	15,200,000		18,404		4,000,000		4,843
POSCO STEELEON CO.,LTD. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.	USD	13,986,947		16,935		13,986,947		16,935
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	POSCO Asia Co., Ltd. and others	USD	77,002,839		93,235		77,002,839		93,235

[Associates and joint ventures]
POSCO HOLDINGS INC.	CSP—Compania Siderurgica do Pecem	Export-Import Bank of Korea and others	USD	420,000,000		508,534		365,765,800		442,870
		BNDES	BRL	464,060,000		117,774		464,060,000		117,774
	LLP POSUK Titanium	SMBC	USD	13,500,000		16,346		13,500,000		16,346
	Nickel Mining Company SAS	SMBC	EUR	46,000,000		62,152		46,000,000		62,152
POSCO INTERNATIONAL Corporation	GLOBAL KOMSCO Daewoo LLC	Hana Bank	USD	8,225,000		9,959		6,650,000		8,052
POSCO ENGINEERING	Chun-cheon Energy Co., Ltd	Kookmin Bank and others	KRW	149,200		149,200		145,900		145,900
	New Songdo International City Development LLC.	Shinhan Bank and others	KRW	133,256		133,256		77,189		77,189

[Others]
POSCO INTERNATIONAL Corporation	SHERRITT INTERNATIONAL CORP.	Export-Import Bank of Korea	USD	21,818,182		26,417		1,292,614		1,565
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Busan Sanseong Tunnel and others	Balhae Infrastructure Fund and others	KRW	1,754,267		1,754,267		757,660		757,660
POSCO ICT	Busan Sanseong Tunnel	Kookmin Bank	KRW	7,618		7,618		6,391		6,391
POSCO AUSTRALIA PTY LTD	Department of Trade and Investment (NSW Government) and others	Woori Bank and others	AUD	14,665,095		13,331		14,665,095		13,331
PT. Bio lnti Agrindo	KSU Mandob	Bank Muamalat	IDR	80,000,000,000		6,752		80,000,000,000		6,752
POSCO Maharashtra Steel Private Limited	MAHARASHTRA STATE ELECTRICITY and others	HSBC and others	INR	482,882,773		7,712		482,882,773		7,712

			USD	3,888,261,872		4,707,907		2,802,774,355		3,393,599
			KRW	2,044,341		2,044,341		987,140		987,140
			IDR	2,137,400,000,000		180,397		2,137,400,000,000		180,397
			INR	482,882,773		7,712		482,882,773		7,712
			THB	5,501,000,000		199,908		5,021,000,001		182,464
			EUR	46,000,000		62,152		46,000,000		62,152
			AUD	14,665,095		13,331		14,665,095		13,331
			BRL	464,060,000		117,774		464,060,000		117,774

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

Contingent liabilities on debt acquisition, financial support agreement provided by the Company as of March 31, 2022 are as follows:


(in millions of Won)			Agreed amount				Executed amount
Provider	Recipient	Lender	Foreign currency		Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	JB CLARK HILLS	HSBC and others	USD	35,500,000		42,983		35,500,000		42,983

[Associates and joint ventures]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	New Songdo International City Development, LLC	Others	KRW	645,000		645,000		554,700		554,700
	POHANG E&E Coi., LTD	Heungkuk Life Insurance Co., Ltd.	KRW	65,430		65,430		53,792		53,792
	UITrans LRT Co., Ltd	Kookmin Bank and others	KRW	205,068		205,068		185,266		185,266
	Pocheon-Hwado Highway Corp.	Lotte Insurance Co., Ltd and others	KRW	276,033		276,033		53,825		53,825
	RPSD	Plan-up Sinsajeilcha Co., Ltd	KRW	45,000		45,000		37,000		37,000
	Pureun Tongyeong Enviro Co., Ltd.	KDB Bank and others	KRW	22,714		22,714		13,808		13,808
	Pure Gimpo.Co.,Ltd	KDB Bank and others	KRW	44,740		44,740		28,670		28,670
	Clean Iksan Co.,Ltd	SAMSUNG FIRE & MARINE
		INSURANCE and others	KRW	44,054		44,054		27,680		27,680
POSCO ICT	UITrans LRT Co., Ltd	Kookmin Bank	KRW	41,965		41,965		35,494		35,494

[Others]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Incheon—Gimpo Expressway Co., Ltd and others	Kookmin Bank and others	KRW	3,981,816		3,981,816		1,716,408		1,716,408
POSCO ICT	Incheon—Gimpo Expressway Co., Ltd and others	Kookmin Bank and others	KRW	237,866		237,866		89,262		89,262

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b)	Other commitments

Details of other commitments of the Company as of March 31, 2022 are as follows:


Company		Description

POSCO HOLDINGS INC.		As of March 31, 2022, POSCO HOLDINGS INC. entered into a commitment with KOREA ENERGY AGENCY for long-term foreign currency borrowings, which are limited up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowings depends on the success of the projects. POSCO HOLDINGS INC. is not liable for the repayment of full or part of the amount borrowed if the respective projects fail. POSCO HOLDINGS INC. has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of March 31, 2022, the ending balance of the borrowing amounts to USD 1.02 million.
		POSCO HOLDINGS INC. has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors, including Norddeutsche Landesbank, for seamless funding to POSCO ENERGY Co., Ltd., a subsidiary of the Company, under construction of new power plant.
		POSCO HOLDINGS INC. has deposited 3,032,613 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of March 31, 2022.

POSCO		POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. The contracts of iron ore and coal generally have terms of more than three years and the contracts of nickel have terms of more than one year. These contracts provide for periodic price adjustments based on the market price. As of March 31, 2022, 90 million tons of iron ore and 4 million tons of coal remained to be purchased under such long-term contracts.
		POSCO entered into an agreement with Tangguh Liquefied Natural Gas (LNG) Consortium in Indonesia to purchase 550 thousand tons of LNG annually for 20 years commencing in August 2005. The purchase price is subject to change, based on changes of the monthly standard oil price (JCC) and with a price ceiling.
		POSCO has a long-term service contract for the transportation of raw material. As of March 31, 2022, there are 37 vessels under contract, and the average remaining contract period is about 8 years.

POSCO INTERNATIONAL Corporation		POSCO INTERNATIONAL Corporation operates a ship-to-ship business in which ships are chartered from ship’s owners and leased out to shippers. The Company has entered into a ship purchase agreement with the ship owners and the shippers, which obliges the shippers to pay the agreed amount either at the end of the contract terms or at the agreed termination and to take over the ownership of the vessel from the ship owners. Only if the shipper fails to fulfill its obligation including payment obligation for the purchase of the vessel, the Company is obliged to take over the ship based on the condition that the shipper’s contractual obligations and rights are transferred to the Company. As of March 31, 2022, the amount which is exposed to the ship purchase agreements entered into is USD 170 million.
		The Company invested in the Ambatovy Nickel Project (DMSA/AMSA) in Madagascar through the Korea Ambatovy Consortium (KAC) formed with Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR) and STX Corporation. SHERRITT INTERNATIONAL CORP., the operator, transferred a portion of the project’s interests to Sumitomo and AHL (Ambatovy Holdings Limited) in November 2017, and transferred the remaining interests of the project to Sumitomo and AHL2 (Ambatovy Holdings II Limited) in August 2020. KAC has the rights and obligations to the 15.33% stake held by AHL and AHL2.

POSCO ENGINEERING & CONSTRUCTION CO., LTD.		As of March 31, 2022, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency guarantees of up to USD 2,411 million provided by financial institutions and uses USD 714 million with Woori Bank and others.
		As of March 31, 2022, according to the project agreements related to redevelopment and reconstruction projects, the Company has an agreement to compensate the Korea Housing and Urban Guarantee Corporation for damages of principal and interest amounting to W1,495,410 million (limited to W3,170,189 million). Futhermore, the Company provides agreements of construction completion (compensation for non- performance) in connection with a number of implementation and union business projects.

POSCO ICT		As of March 31, 2022, in relation to contract enforcement, POSCO ICT is provided with a guarantee of W125,702 million, W29,685 million, W305 million from Software credit union and Seoul guarantee insurance, Engineering credit union respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(c)	Litigation in progress

Request for Arbitration of NSC Investment and TGC In March 2019, NSC Investment and TGC ("Applicant”), a former joint venture partner of POSCO ENGINEERING & CONSTRUCTION CO., LTD., in connection with the Songdo International City Development Project in Incheon, filed an arbitration (mediation price: approximately USD 2 billion) for alleged violations of contract by POSCO ENGINEERING & CONSTRUCTION CO., LTD. As of March 31, 2022, the Company has determined that the applicant’s claim is without merit, and did not recognize a provision.

Other litigation The Company is involved in 311 lawsuits aggregating to W1,016.2 billion as defendant as of March 31, 2022, which arise from the ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting to W50.9 billion for 64 lawsuits based on its reliable estimate of outflow of resources. However, the Company has not recognized any provisions for the other lawsuits and claims since the Company believes that it does not have a present obligation as of March 31, 2022.

(d)	Other Contingencies

Other major contingencies for the Company as of March 31, 2022 are as follows:


Company		Description
POSCO HOLDINGS INC.		POSCO HOLDINGS INC. has provided 3 blank checks to Korea Energy Agency as collateral for long-term foreign currency borrowings.
		The Company is jointly liable for guarantees of indebtedness (including financial guarantee contracts) before the spin off date of POSCO.

POSCO INTERNATIONAL Corporation		As of March 31, 2022, POSCO INTERNATIONAL Corporation has provided 30 blank promissory notes and 23 blank checks to Korea Energy Agency and others as collateral for the guarantee on performance for contracts and others.

POSCO ENGINEERING & CONSTRUCTION CO., LTD.		As of March 31, 2022, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided 36 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee of W 9,102,295 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.

POSCO ICT		As of March 31, 2022, POSCO ICT has provided 8 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022			March 31, 2021
Trade accounts and notes receivable	W	(1,681,291	)		(799,397	)
Other receivables		120,578			17,827
Inventories		(737,789	)		(1,105,301	)
Other current assets		(269,128	)		(117,150	)
Other non-current assets		(21,943	)		(48,845	)
Trade accounts and notes payable		146,618			(67,002	)
Other payables		53,553			39,893
Other current liabilities		143,072			288,235
Provisions		(83,386	)		(87,458	)
Payments of severance benefits		(135,598	)		(95,599	)
Plan assets		129,733			72,278
Other non-current liabilities		1,675			19,359

	W	(2,333,906	)		(1,883,160	)

37. Operating Segments

The Company’s operating businesses are organized based on the nature of markets and customers. The Company has four reportable operating segments—steel, trading, construction and others.

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

(a)	Information about reportable segments for the three-month periods ended March 31, 2022 and 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	Steel		Trading		Construction		Others			Total
External revenues	W	7,325,070		6,523,814		1,662,699		5,826,487			21,338,070
Internal revenues		2,922,542		6,692,962		239,774		4,698,843			14,554,121
Inter segment revenue		1,872,711		3,361,358		225,888		3,926,792			9,386,749
Total revenues(*1)		10,247,612		13,216,776		1,902,473		10,525,330			35,892,191
Segment profits (losses)(*2)		562,103		190,775		110,589		(1,208,552	)		(345,085	)

(*1)	Segment total revenues in others include W7,542,729 million before spin-off.

(*2)	Segment profits in others include W623,016 million before spin-off.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the three-month period ended March 31, 2021


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

(b)	Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022			March 31, 2021
Total profit for reportable segments	W	(345,085	)		1,381,718
Corporate fair value adjustments		(16,523	)		(11,015	)
Elimination of inter-segment profit		2,268,492			(231,924	)
Income tax expense		557,124			420,780

Profit before income tax expense	W	2,464,008			1,559,559

38. Events after the reporting period

Pursuant to the resolution of the Board of Directors on May 13, 2022, the Company decided to pay interim cash dividends of W4,000 per common share (total dividend: W303.4 billion).

POSCO HOLDINGS INC.

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2022

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page

Independent Auditors’ Review Report		1

Condensed Separate Interim Financial Statements

Condensed Separate Interim Statements of Financial Position		3

Condensed Separate Interim Statements of Comprehensive Income		5

Condensed Separate Interim Statements of Changes in Equity		6

Condensed Separate Interim Statements of Cash Flows		7

Notes to the Condensed Separate Interim Financial Statements		9

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO HOLDINGS INC.:

Reviewed financial statements

We have reviewed the accompanying condensed separate interim financial statements of POSCO HOLDINGS INC. (the “Company”), which comprise the condensed separate interim statement of financial position as of March 31, 2022, the condensed separate interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2022 and 2021, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

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

Auditor’s review responsibility

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

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No. 1034 “Interim Financial Reporting”.

Emphasis of matter

Without qualifying our review conclusion, we draw attention to Note 1 and Note 35 to the separate financial statements, which describes the spin-off by the former POSCO, the controlling company on March 1, 2022. Upon completion of the spin-off, the surviving company was renamed as POSCO HOLDINGS INC., and a new subsidiary, POSCO, was established.

Other matters

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

The separate statement of financial position of the Company as of December 31, 2021, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 10, 2022, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2021, presented for comparative purposes, is consistent, in all material respect, with the audited separate financial statements from which it has been derived.

LOGO

Seoul, Korea

May 16, 2022

This report is effective as of May 16, 2022, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Financial Position

As of March 31, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	20	W	532,410		2,042,274
Trade accounts and notes receivable, net	4,14,20,25,32		238,967		6,017,508
Other receivables, net	5,20,32		138,698		545,341
Other short-term financial assets	6,20		4,963,495		9,605,522
Inventories	7,29		—		7,623,202
Assets held for sale	8		—		29,789
Other current assets	13		2,154		55,244

Total current assets			5,875,724		25,918,880

Long-term trade accounts and notes receivable, net	4,20		—		5,675
Other receivables, net	5,20		211,969		274,253
Other long-term financial assets	6,20		1,300,389		1,326,565
Investments in subsidiaries, associates and joint ventures	9		45,561,504		16,002,640
Investment property, net	10		226,832		144,140
Property, plant and equipment, net	11		143,759		19,772,299
Intangible assets, net	12		13,677		551,410
Defined benefit assets, net	18		—		212,531
Other non-current assets	13		12		34,366

Total non-current assets			47,458,142		38,323,879

Total assets		W	53,333,866		64,242,759

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Financial Position, Continued

As of March 31, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes	March 31, 2022			December 31, 2021
Liabilities
Trade accounts and notes payable	20,32	W	—			2,453,068
Short-term borrowings and current installments of long-term borrowings	4,14,20		1,236			2,072,354
Other payables	15,20,32		498,241			1,267,459
Other short-term financial liabilities	16,20		10,327			13,755
Current income tax liabilities			1,224,571			1,832,078
Liabilities directly associated with the assets held for sale	8		—			185
Provisions	17		4,776			84,409
Other current liabilities	19,25		863			144,961

Total current liabilities			1,740,014			7,868,269

Long-term borrowings, excluding current installments	14,20		1,430,117			6,129,778
Other payables	15,20		—			399,144
Other long-term financial liabilities	16,20		20,712			21,991
Defined benefit liabilities, net	18		6,666			—
Deferred tax liabilities			3,009,177			747,653
Long-term provisions	17,33		1,037			36,755
Other non-current liabilities	19,25		—			3,744

Total non-current liabilities			4,467,709			7,339,065

Total liabilities			6,207,723			15,207,334

Equity
Share capital	21		482,403			482,403
Capital surplus	21		1,348,780			1,339,289
Hybrid bonds	22		—			199,384
Reserves	23		(118,308	)		(211,849	)
Treasury shares	24		(2,459,781	)		(2,508,294	)
Other capital adjustments			1,488			—
Retained earnings			47,871,561			49,734,492

Total equity			47,126,143			49,035,425

Total liabilities and equity		W	53,333,866			64,242,759

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Comprehensive Income

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won, except per share informations)	Notes	March 31, 2022			March 31, 2021
Operating revenue	25,32
Revenue		W	7,779,277			7,800,447
Operating expenses	7,29,32
Cost of sales			(6,465,260	)		(6,466,896	)
Reversal of trade accounts and notes receivable			—			31
Other administrative expenses	26		(206,745	)		(209,903	)
Selling expenses	26		(37,594	)		(50,795	)

			(6,709,599	)		(6,727,563	)

Operating profit			1,069,678			1,072,884
Finance income and costs
Finance income	20,27		170,313			569,274
Finance costs	20,27		(150,318	)		(318,759	)
Other non-operating income and expenses
Impairment loss on other receivables			(128	)		(348	)
Other non-operating income	28		15,368			35,248
Other non-operating expenses	28,29		(26,757	)		(52,197	)

Profit before income tax			1,078,156			1,306,102
Income tax expense	30		(2,482,383	)		(353,926	)

Profit (loss)			(1,404,227	)		952,176
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans	18		(80,011	)		(291	)
Net changes in fair value of equity investments at fair value through other comprehensive income	6,20,23		94,463			75,307
Total comprehensive income (loss)		W	(1,389,775	)		1,027,192

Earnings (loss) per share (in Won)	31
Basic earnings (loss) per share (in Won)			(18,562	)		12,522
Diluted earnings (loss) per share (in Won)		W	(18,562	)		12,522

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Changes in Equity

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


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

Balance as of March 31, 2021	W	482,403		1,339,289		199,384			(219,218	)		(2,508,294	)		46,386,728			—		45,680,292

Balance as of January 1, 2022	W	482,403		1,339,289		199,384			(211,849	)		(2,508,294	)		49,734,492			—		49,035,425
Comprehensive income:
Loss		—		—		—			—			—			(1,404,227	)		—		(1,404,227	)
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—			—			—			(80,011	)		—		(80,011	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—			93,541			—			922			—		94,463
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—			—			—			(378,128	)		—		(378,128	)
Interest of hybrid bonds		—		—		—			—			—			(1,487	)		—		(1,487	)
Disposal of treasury shares		—		9,491		—			—			48,513			—			—		58,004
Changes from spin-off		—		—		(199,384	)		—			—			—			—		(199,384	)
Others		—		—		—			—			—			—			1,488		1,488

Balance as of March 31, 2022	W	482,403		1,348,780		—			(118,308	)		(2,459,781	)		47,871,561			1,488		47,126,143

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Cash Flows

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes		March 31, 2022			March 31, 2021
Cash flows from operating activities
Profit (loss)			W	(1,404,227	)		952,176
Adjustments for :
Expenses related to post-employment benefit				17,505			31,405
Depreciation				384,886			573,174
Amortization				16,653			27,201
Impairment loss on trade and other receivables				128			317
Finance income				(125,556	)		(219,540	)
Dividend income				(232,591	)		(252,271	)
Finance costs				109,946			244,304
Loss on valuation of inventories				1,722			1,276
Gain on disposal of property, plant and equipment				(5,443	)		(2,770	)
Loss on disposal of property, plant and equipment				18,281			23,756
Impairment loss on property, plant and equipment				3			3,113
Impairment loss on intangible assets				—			7,180
Impairment loss on investments in subsidiaries, associates and joint venture				—			1,500
Gain on disposal of assets held for sale				(2,706	)		(790	)
Loss on disposal of emission rights				—			2,095
Increase to provisions				6,051			4,128
Income tax expense				2,482,383			353,926
Employee benefits				61,603			—
Others				(954	)		277
Changes in operating assets and liabilities		34		(770,472	)		(1,584,803	)
Interest received				38,674			31,087
Interest paid				(50,424	)		(51,859	)
Dividends received				49,432			88,181
Income taxes paid				(810,025	)		(8,287	)

Net cash provided by(used in) operating activities			W	(215,131	)		224,776

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes	March 31, 2022			March 31, 2021
Cash flows from investing activities
Decrease in deposits		W	449,966			592,164
Proceeds from disposal of short-term financial instruments			13,514,351			7,935,148
Proceeds from disposal of long-term financial instruments			5			2
Proceeds from disposal of equity securities			2,356			12,372
Proceeds from disposal of debt security			50,050			121,813
Collection of short-term loans			1,416			1,774
Proceeds from disposal of investments in subsidiaries, associates and joint ventures			—			720
Proceeds from disposal of emissions rights			—			3,094
Proceeds from disposal of assets held for sale			3,074			—
Proceeds from disposal of derivatives			—			851
Increase in deposits			(550,571	)		(573,250	)
Acquisition of short-term financial instruments			(12,364,858	)		(7,525,719	)
Acquisition of debt securities			(50,000	)		(50,033	)
Acquisition of other securities			(16,785	)		(5,430	)
Payment of long-term loans			(3,618	)		(6,446	)
Acquisition of investment in subsidiaries, associates and joint ventures			(349,670	)		(728,714	)
Acquisition of property, plant and equipment			(355,822	)		(370,230	)
Payment for disposal of property, plant and equipment			(14,485	)		(16,804	)
Acquisition of intangible assets			(8,668	)		(18,805	)
Cash outflow for spin-off			(1,910,211	)		—

Net cash used in investing activities		W	(1,603,470	)		(627,493	)

Cash flows from financing activities
Proceeds from borrowings			537,165			1,139,670
Increase in long-term financial liabilities			15,515			755
Receipt of government grants			—			12
Repayment of borrowings			(232,976	)		(605,118	)
Decrease in long-term financial liabilities			(279	)		(792	)
Repayment of lease liabilities			(7,493	)		(11,549	)
Proceeds from disposal of derivatives			(7,103	)		—
Payment of cash dividends			(10	)		(17	)
Acquisition of treasury shares			—			(116,771	)
Payment of interest of hybrid bonds			—			(2,268	)

Net cash provided by financing activities		W	304,819			403,922

Effect of exchange rate fluctuation on cash held			3,918			5,018
Net increase(decrease) in cash and cash equivalents			(1,509,864	)		6,223
Cash and cash equivalents at beginning of the period			2,042,274			1,822,660

Cash and cash equivalents at end of the period		W	532,410			1,828,883

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements

As of March 31, 2022

(Unaudited)

1. Reporting Entity

POSCO HOLDINGS INC. (the “Company”) was incorporated on April 1, 1968 under the Commercial Code of the Republic of Korea. The shares of the Company have been listed on the Korea Exchange since June 10, 1988. The Company operates an investment business that controls and manages through ownership of shares of subsidiaries etc.

The Company established a new subsidiary, POSCO, by a vertical spin-off of its steel business on March 1, 2022, and changed the name of the surviving company to POSCO HOLDINGS INC..

As of March 31, 2022, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchanges.

2. Statement of Compliance

Statement of compliance

The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audit of Stock Companies, Etc. in the Republic of Korea.

These condensed separate interim financial statements have been prepared in accordance with K-IFRS No. 1034 “Interim Financial Reporting” as part of the period covered by the Company’s K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the last annual separate financial statements as of and for the year ended December 31, 2021. These condensed separate interim financial statements do not include all of the disclosures required for full annual financial statements.

These condensed interim financial statements are separate interim financial statements prepared in accordance with K-IFRS No. 1027 “Separate Financial Statements” presented by a parent, an investor with joint control of, or significant influence over, an investee, in which the investments are accounted for at cost.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

Use of estimates and judgments

(a)	Judgments, assumptions and estimation uncertainties

The preparation of the condensed interim financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

(b)	Measurement of fair value

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


		•		Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.

		•		Level 2 – inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly.

		•		Level 3 – inputs for the assets or liabilities that are not based on observable market data.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

3. Summary of Significant Accounting Policies

Except as described in K-IFRS No. 1034 “Interim Financial Reporting” and below, the accounting policies applied by the Company in these condensed separate interim financial statements are the same as those applied by the Company in its separate financial statements as of and for the year ended December 31, 2021.

Revenue from contracts with customers

As the Company vertically spun off its steel business at the spin-off date on March 1, 2022, the Company’s main business has changed from manufacturing and sales of steel, rolled products, and plates to investment business that controls and manages through ownership of shares of subsidiaries etc., and rental business for real estate, etc.

Revenue is measured based on the consideration promised in the contract with the customer. The Company recognizes revenue when the control over a good or service is transferred to the customer. The following are the revenue recognition policies for performance obligations in the contracts with customers in accordance with K-IFRS No. 1115.

(a)	Accounting policies applicable from March 1, 2022

Dividend income

Dividend income from subsidiaries and others is recognized as revenue when the Company’s right to receive the dividend is established.

Rental income

Rental income from the Company’s real estate is recognized as revenue over the service offering period.

Trademark usage income

Trademark usage income is recognized in accordance with the related arrangements over the term of use of trademark.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b)	Accounting policies applicable before March 1, 2022

Steel products

For domestic sales, the control of the product is usually transferred to the customer when the product is delivered to the customer, at which point in time revenue is recognized. Invoices are generally due within 10 to 90 days. When a customer makes payment prior to the due date, they are offered a discount at certain percentage of the invoice amount. Only when the price discount period has passed, only the amount of the cumulative revenue that has already been recognized, income recognized including income.

For export sales, revenue is recognized at the time when control of the product is transferred to the customer based on the “International Incoterms for Interpretation of Trade Terms” prescribed in the respective contracts, and the Company’s export contract generally transfers control to the customer at the shipping of the product. Invoices are usually issued at the date of bill of lading and revenues are recognized based on the terms of Letter of Credit (L / C), Acceptance Condition (D / A), Payment Condition (D / P), Telegraphic Transfer (T / T) and others.

Transportation services

For the performance obligation for transportation services included in the Company’s product sales contracts, revenue is recognized over the period when the services are provided and the revenue is measured by reference to the degree to which the service has been completed. The billing date and payment terms for the service charge are the same as the billing date and payment terms for sale of steel products.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

New standards and interpretations not yet adopted

(a)	K-IFRS No. 1012 “Income Tax” – Deferred Tax related to Assets and Liabilities arising from a Single Transaction

(b)	K-IFRS No. 1001 “Presentation of Financial Statements”—Classification of Liabilities as Current or Non-current

The amendment clarifies that the classification of current and non-current liabilities is determined by the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and in order for the debtor to have the “right to defer settlement of the liability”, the condition of complying with the contract must be met at the end of the reporting period. In addition, the classification of liabilities is not affected by the possibility of exercising the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and the amendment clarifies that settlement of a liability includes transferring a company’s own equity instruments to the counterparty. The amendment is effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The Company expects that its exchangeable bond(W1,430,117 million as of March 31, 2022) will be reclassified from non-current liabilities to current liabilities upon the adoption of the amendments.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Trade accounts and notes receivable	W	238,967		6,031,878
Less: Allowance for doubtful accounts		—		(14,370	)

	W	238,967		6,017,508

Non-current
Trade accounts and notes receivable	W	—		7,901
Less: Present value discount		—		(1,555	)
Less: Allowance for doubtful accounts		—		(671	)

	W	—		5,675

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. The carrying amounts of such secured borrowings are none as of March 31, 2022 and W214,465 million as of December 31, 2021, which are presented in the statements of financial position as short-term borrowings.

5. Other Receivables

Other receivables as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Other accounts receivable	W	104,370		506,040
Others		34,328		41,361
Less: Allowance for doubtful accounts		—		(2,060	)

	W	138,698		545,341

Non-current
Loans	W	188,834		244,895
Long-term other accounts receivable		23,121		34,260
Others		14		4,185
Less: Allowance for doubtful accounts		—		(9,087	)

	W	211,969		274,253

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

6. Other Financial Assets

(a) Other financial assets as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Debt securities	W	101,400		154,750
Deposit instruments(*1)		51		1,436,915
Short-term financial instruments		4,862,044		8,013,857

	W	4,963,495		9,605,522

Non-current
Long-term derivative assets	W	—		170,471
Equity securities		1,212,112		1,084,574
Other securities		88,277		71,492
Deposit instruments(*2)		—		28

	W	1,300,389		1,326,565

(*1)	As of March 31, 2022 and December 31, 2021, W51 million and W3,195 million, respectively, are restricted in use for government projects.

(*2)	As of December 31, 2021, the Company is required to provide deposits to maintain checking accounts and accordingly the withdrawal of these deposits is restricted.

(b)	Equity securities as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022													December 31, 2021
	Number of shares		Ownership (%)		Acquisition cost		Fair value		Net changes in fair value of equity securities			Book value		Book value
Marketable equity securities
Nippon Steel Corporation		15,698,500		1.65	W	473,962		338,340		(135,622	)		338,340		303,814
KB Financial group Inc.		3,863,520		0.93		178,839		236,834		57,995			236,834		212,493
Woori Financial Group Inc.		20,280,000		2.79		244,447		311,298		66,851			311,298		257,556
CSN Mineracao S.A.		102,186,675		1.83		206,265		156,382		(49,883	)		156,382		146,550
SAMWONSTEEL Co., Ltd.		5,700,000		14.25		8,930		18,440		9,510			18,440		18,041
DONGKUK INDUSTRIES COMPANY		2,611,989		4.82		11,911		9,103		(2,808	)		9,103		9,260
Kyeong Nam Steel Co., LTD. (*1)		1,329,604		4.90		2,216		7,127		4,911			7,127		—
Others (8 companies)						62,753		53,146		(9,607	)		53,146		51,717

						1,189,323		1,130,670		(58,653	)		1,130,670		999,431

Non-marketable equity securities
POSCO PLANTEC Co., Ltd.		18,337,912		10.99		19,437		19,437		—			19,437		19,437
Korea Nickel CO.LTD		75,600		14.00		10,194		10,194		—			10,194		10,194
Poongsan Special Metal Corp.		315,790		5.00		7,657		7,657		—			7,657		7,657
HANKUM.CO.LTD		21,000		4.99		4,599		4,599		—			4,599		4,599
Core-Industry Co., Ltd.		490,000		19.84		4,214		4,214		—			4,214		4,214
Others (26 companies)						139,870		35,341		(104,529	)		35,341		39,042

						185,971		81,442		(104,529	)		81,442		85,143

					W	1,375,294		1,212,112		(163,182	)		1,212,112		1,084,574

(*1)	During the three-month period ended March 31, 2022, the Company acquired new shares by exercising the right to convert convertible bonds of Kyeong Nam Steel Co., LTD.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

7. Inventories

Inventories as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Finished goods	W	—		1,164,685
Semi-finished goods		—		2,227,433
By-products		—		19,317
Raw materials		—		1,682,946
Fuel and materials		—		459,784
Materials-in-transit		—		2,073,218
Others		—		673

		—		7,628,056
Less: Allowance for inventories valuation		—		(4,854	)

	W	—		7,623,202

The amount of loss on valuation of inventories recognized in cost of sales during the three-month period ended March 31, 2022 and the year ended December 31, 2021 were W1,722 million and W4,854 million, respectively.

8. Assets Held for Sale

Assets held for sale as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Assets
Property, plant and equipment(*1)	W	—		29,236
Intangible Assets		—		553

		—		29,789

Liabilities
Others		—		185

	W	—		185

(*1)

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

9. Investments in Subsidiaries, Associates and Joint ventures

(a)	Details of subsidiaries and carrying amounts as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)								December 31,
				March 31, 2022				2021
	Country		Principal operations	Ownership (%)		Book value		Book value
[Domestic]
POSCO(*1)		Korea	Steel, rolled products, and plates manufacturing and sales		100.00	W	29,441,678		—
POSCO INTERNATIONAL Corporation		Korea	Trading and natural resources exploration		62.91		3,156,434		3,156,434
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		Korea	Engineering and construction		52.80		1,014,314		1,014,314
POSCO ENERGY CO., LTD.		Korea	Power generation, fuel cell manufacturing and sales		89.02		658,176		658,176
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)(*2,5)		Korea	Coated steel manufacturing and sales		—		—		108,421
POSCO Venture Capital Co., Ltd.		Korea	Investment in venture companies		95.00		103,780		103,780
POSCO CHEMICAL CO., LTD		Korea	Refractory and anode/cathode material manufacturing and sales		59.72		895,707		895,707
POSCO O&M Co., Ltd(*3)		Korea	Business facility maintenance		47.17		73,374		73,374
POSCO ICT		Korea	Computer hardware and software distribution		65.38		70,990		70,990
POSCO M-TECH(*2)		Korea	Packing materials manufacturing and sales		—		—		107,278
Busan E&E Co,. Ltd.		Korea	Municipal solid waste fuel and power generation		70.00		30,148		30,148
POSCO-Pilbara LITHIUM SOLUTION (formerly, POSCO Lithium Solution Co., Ltd.)(*6)		Korea	Lithium manufacturing and sales		100.00		150,000		150,000
Others (11 companies)(*2)							372,094		384,735

							35,966,695		6,753,357

[Foreign]
PT. KRAKATAU POSCO		Indonesia	Steel manufacturing and sales		70.00		633,421		633,421
POSCO WA PTY LTD		Australia	Iron ore sales and mine development		100.00		646,574		646,574
POSCO Maharashtra Steel Private Limited		India	Steel manufacturing and sales		100.00		722,569		722,569
POSCO Canada Ltd.		Canada	Coal sales		100.00		560,879		560,879
POSCO AUSTRALIA PTY LTD		Australia	Iron ore sales and mine development		100.00		330,623		330,623
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd.		China	Stainless steel manufacturing and sales		58.60		283,845		283,845
POSCO Thainox Public Company Limited		Thailand	Cold rolled STS manufacturing and sales		74.56		178,785		178,785
POSCO-China Holding Corp.		China	Holding company		100.00		593,841		593,841
POSCO-India Private Limited		India	Steel manufacturing and sales		99.99		75,567		75,567
POSCO MEXICO S.A. DE C.V.		Mexico	Plate steel manufacturing and sales		83.28		180,072		180,072
POSCO America Corporation		USA	Researching and consulting		99.45		192,156		192,156
POSCO-VIETNAM Co., Ltd.		Vietnam	Steel manufacturing and sales		100.00		160,572		160,572
POSCO VST CO., LTD.		Vietnam	Stainless steel manufacturing and sales		95.65		144,573		144,573
POSCO COATED STEEL (THAILAND) CO., LTD.		Thailand	Plate steel manufacturing and sales		100.00		121,592		121,592
POSCO Asia Co., Ltd.		Hong Kong	Activities Auxiliary to financial service		100.00		117,710		117,710
POSCO ASSAN TST STEEL INDUSTRY		Turkey	Steel manufacturing and sales		60.00		71,707		71,707
POSCO JAPAN Co., Ltd.		Japan	Steel marketing, demand development, and technology research		100.00		68,436		68,436
Qingdao Pohang Stainless Steel Co., Ltd.		China	Stainless steel manufacturing and sales		70.00		65,982		65,982
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		China	Steel manufacturing and sales		90.00		62,494		62,494
POSCO AFRICA (PROPRIETARY) LIMITED		South Africa	Mine development		100.00		50,297		50,297
POSCO-Malaysia SDN. BHD.		Malaysia	Steel manufacturing and sales		81.79		45,479		45,479
POSCO Argentina S.A.U.(*4)		Argentina	Mineral exploration, manufacturing and sales		100.00		630,264		376,906
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY		Vietnam	Steel manufacturing and sales		51.00		130,526		130,526
Others (29 companies)							529,080		529,080

							6,597,044		6,343,686

						W	42,563,739		13,097,043

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(*1)	During the three-month period ended March 31, 2022, the Company acquired the shares of the newly established company(POSCO) by a vertical spin-off of its steel business.

(*2)	During the three-month period ended March 31, 2022, the shares of POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.), POSCO M-TECH, POSCO Humans and POSCO NIPPON STEEL RHF JOINT VENTURE.CO.,Ltd. were transferred to the newly established company(POSCO) by a vertical spin-off.

(*3)

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

(*4)	During the three-month period March 31, 2022, the Company acquired investments in subsidiary amounting to W253,358 million by participating in POSCO Argentina S.A.U‘s capital increase to invest in an Argentine brine lithium commercialization plant.

(*5)	During the three-month period March 31, 2022, POSCO COATED & COLOR STEEL Co., Ltd. changed the name to POSCO STEELEON Co., Ltd..

(*6)	During the April 2022, POSCO Lithium Solution Co., Ltd. changed the name to POSCO-Pilbara LITHIUM SOLUTION.

(b)	Details of associates and carrying amounts as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)								December 31,
				March 31, 2022				2021
	Country		Principal operations	Ownership (%)		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund		Korea	Investment in venture companies		40.57	W	169,316		169,316
SNNC		Korea	STS material manufacturing and sales		49.00		100,655		100,655
QSONE Co.,Ltd.		Korea	Real estate rental business and facility management		50.00		85,550		85,550
Others (8 companies)							48,106		21,331

							403,627		376,852

[Foreign]
Nickel Mining Company SAS		New Caledonia	Raw material manufacturing and sales		49.00		189,197		189,197
9404-5515 Quebec Inc.(*1)		Canada	Investments		10.40		124,341		124,341
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		China	Tinplate manufacturing and sales		24.00		11,003		11,003
FQM Australia Holdings Pty Ltd		Australia	Non ferrous metal mining		30.00		109,568		109,568
Others (8 companies)							51,761		48,071

							485,870		482,180

						W	889,497		859,032

(*1)	As of March 31, 2022, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering the structure of its Board of Directors and others.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(c)	Details of joint ventures and carrying amounts as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)								December 31,
				March 31, 2022				2021
	Country		Principal operations	Ownership (%)		Book value		Book value
Roy Hill Holdings Pty Ltd(*1)		Australia	Natural resources exploration		10.00	W	1,225,464		1,225,464
CSP - Compania Siderurgica do Pecem		Brazil	Steel manufacturing and sales		20.00		175,990		175,990
POSCO-NPS Niobium LLC		USA	Foreign investments in mining		50.00		364,609		364,609
KOBRASCO		Brazil	Steel materials manufacturing and sales		50.00		98,962		98,962
HBIS-POSCO Automotive Steel Co., Ltd		China	Steel manufacturing and sales		50.00		170,760		109,057
Others (3 companies)							72,483		72,483

						W	2,108,268		2,046,565

(*1)	As of March 31, 2022 and December 31, 2021, the investments in joint ventures amounting to W1,225,464 million were provided as collateral in relation to revolving loan of Roy Hill Holdings Pty Ltd.

10. Investment Property, Net

Changes in the carrying amount of investment property for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		*Depreciation(1)**			Spin-off			*Transfer(2)**		Ending
Land	W	87,568		—			(3,639	)		46,908		130,837
Buildings		48,989		(1,164	)		(4,990	)		46,372		89,207
Structures		7,583		(127	)		(4,304	)		3,636		6,788

	W	144,140		(1,291	)		(12,933	)		96,916		226,832

(*1)	The useful life and depreciation method of investment property are identical to those of property, plant and equipment.

(*2)	Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio and the purpose of use.

(b)	For the year ended December 31, 2021


(in millions of Won)	Beginning		*Depreciation(1)**			*Transfer(2)**			Ending
Land	W	89,848		—			(2,280	)		87,568
Buildings		51,417		(3,998	)		1,570			48,989
Structures		8,352		(598	)		(171	)		7,583

	W	149,617		(4,596	)		(881	)		144,140

(*1)	The useful life and depreciation method of investment property are identical to those of property, plant and equipment.

(*2)	Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio and the purpose of use.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

11. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Spin-off			*Others(1)**			Ending
Land	W	1,349,266		—		—			—			(1,250,818	)		(46,907	)		51,541
Buildings		2,175,291		—		(1,045	)		(34,626	)		(2,079,343	)		(24,464	)		35,813
Structures		2,096,662		—		(117	)		(31,444	)		(2,075,346	)		16,247			6,002
Machinery and equipment		12,299,612		2,178		(1,110	)		(302,225	)		(12,046,595	)		59,191			11,051
Vehicles		18,357		622		—			(1,523	)		(17,410	)		6			52
Tools		24,891		102		—			(1,923	)		(23,763	)		693			—
Furniture and fixtures		88,524		9		—			(4,252	)		(72,237	)		892			12,936
Lease assets		448,328		966		—			(7,602	)		(440,464	)		(1,228	)		—
Construction-in-progress		1,271,368		264,182		—			—			(1,403,761	)		(105,425	)		26,364

	W	19,772,299		268,059		(2,272	)		(383,595	)		(19,409,737	)		(100,995	)		143,759

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

(b)	For the year ended December 31, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			*Impairment(1,2)**			*Others(3)**			Ending
Land	W	1,401,605		—		(49,131	)		—			—			(3,208	)		1,349,266
Buildings		2,080,843		5,870		(514	)		(206,062	)		(17,406	)		312,560			2,175,291
Structures		2,073,097		1,287		(14,384	)		(182,926	)		(3,733	)		223,321			2,096,662
Machinery and equipment		12,651,431		52,534		(27,432	)		(1,812,571	)		(42,126	)		1,477,776			12,299,612
Vehicles		14,486		3,290		(5	)		(7,670	)		—			8,256			18,357
Tools		24,333		4,652		(14	)		(11,283	)		—			7,203			24,891
Furniture and fixtures		44,426		8,126		(159	)		(17,745	)		—			53,876			88,524
Lease assets		331,588		130,610		—			(46,654	)		—			32,784			448,328
Construction-in-progress		1,595,123		1,987,316		(6,027	)		—			(164,906	)		(2,140,138	)		1,271,368

	W	20,216,932		2,193,685		(97,666	)		(2,284,911	)		(228,171	)		(27,570	)		19,772,299

(*1)

The Company estimated the recoverable amount of individual assets that it ceased their use due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value, and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2021. During the year ended December 31, 2021, the Company recognized impairment losses on damaged assets caused by the fire.

(*2)

The Company decided to stop the intended use for Synthetic Natural Gas (SNG) facility and sell the related assets. The Company estimated the recoverable amount based on expected sale price and recognized W223,273 million of impairment loss in 2021. The remaining balances were classified as assets held for sale as of December 31, 2021.

(*3)	Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment, assets transferred from investment properties, assets transferred to assets held for sale, and others.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

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

Right-of-use assets

①

Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the three-month period ended March 31, 2022 were as follows.


(in millions of Won)	Beginning		Acquisitions		Depreciation			Spin-off			Others			Ending
Land	W	8,402		—		(49	)		(7,874	)		(479	)		—
Buildings		67,658		—		(1,207	)		(66,451	)		—			—
Structures		54,009		—		(869	)		(53,140	)		—			—
Machinery and equipment		83,290		—		(1,592	)		(81,698	)		—			—
Vehicles		5,755		—		(83	)		(5,672	)		—			—
Ships		210,058		—		(2,781	)		(207,277	)		—			—
Furniture and fixtures		19,156		966		(1,021	)		(18,352	)		(749	)		—

	W	448,328		966		(7,602	)		(440,464	)		(1,228	)		—

②

Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the year ended December 31, 2021 were as follows.


(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	8,703		—		(301	)		—			8,402
Buildings		71,431		3,471		(7,244	)		—			67,658
Structures		59,221		—		(5,212	)		—			54,009
Machinery and equipment		54,698		—		(8,532	)		37,124			83,290
Vehicles		6,255		—		(500	)		—			5,755
Ships		106,555		120,217		(16,714	)		—			210,058
Furniture and fixtures		24,725		6,922		(8,151	)		(4,340	)		19,156

	W	331,588		130,610		(46,654	)		32,784			448,328

Amount recognized in profit or loss

The amounts recognized in profit or loss related to leases for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Interest on lease liabilities	W	1,969		3,015
Expenses relating to short-term leases		564		723
Expenses relating to leases of low-value assets		1,197		1,523

	W	3,730		5,261

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

12. Intangible Assets, Net

Changes in the carrying amount of intangible assets for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment		Spin-off			*Others(2)**			Ending
Intellectual property rights	W	22,846		—		(525	)		(1,160	)		—		(24,180	)		3,455			436
Membership(*1)		84,758		—		—			—			828		(73,968	)		—			11,618
Development expense		176,812		—		—			(12,486	)		—		(164,135	)		619			810
Port facilities usage rights		212,808		—		—			(2,476	)		—		(210,332	)		—			—
Construction-in-progress		32,392		8,074		—			—			—		(33,497	)		(6,156	)		813
Other intangible assets		21,794		726		—			(531	)		—		(21,288	)		(701	)		—

	W	551,410		8,800		(525	)		(16,653	)		828		(527,400	)		(2,783	)		13,677

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

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

(b)	For the year ended December 31, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			*Impairment(2)**			*Others(3)**			Ending
Intellectual property rights	W	22,758		—		(573	)		(6,145	)		—			6,806			22,846
Membership(*1)		81,795		3,690		(727	)		—			—			—			84,758
Development expense		224,854		2,000		—			(76,588	)		—			26,546			176,812
Port facilities usage rights		233,447		—		—			(20,639	)		—			—			212,808
Construction-in-progress		34,924		28,590		(4,770	)		—			—			(26,352	)		32,392
Other intangible assets		24,148		15,775		(10,030	)		(4,093	)		(7,180	)		3,174			21,794

	W	621,926		50,055		(16,100	)		(107,465	)		(7,180	)		10,174			551,410

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

(*2)	During the year ended December 31, 2021, the Company decided to sell a portion of purchased emission rights and recognized impairment loss which is the difference between carrying amount and net fair value.

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

13. Other Assets

Other assets as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Advance payments	W	1,617		17,398
Prepaid expenses		537		25,405
Emission rights		—		12,441

		2,154		55,244

Non-current
Long-term prepaid expenses		3		3,659
Others		9		30,707

	W	12		34,366

14. Borrowings

(a)	Borrowings as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Short-term borrowings
Short-term borrowings	W	—		672,303
Current portion of debentures		—		1,402,750
Less: Current portion of discount on debentures issued		—		(2,699	)
Current portion of long-term borrowings		1,236		—

	W	1,236		2,072,354

Long-term borrowings
Long-term borrowings	W	—		1,210
Debentures		1,430,117		6,146,233
Less: Discount on debentures issued		—		(17,665	)

	W	1,430,117		6,129,778

(b) Short-term borrowings as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)			Issuance		Maturity		Annual
	Lenders		date		date		interest rate (%)		March 31, 2022		December 31, 2021
Transfers of account receivables that do not qualify for derecognition		—		—		—		—	W	—		214,465
Borrowings in foreign trade		—		—		—		—		—		457,838

									W	—		672,303

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)


(in millions of Won)		Issuance		Maturity		Annual
	Lenders	date		date		interest rate (%)		March 31, 2022		December 31, 2021
Debentures	—		—		—		—	W	—		809,447
Foreign debentures	—		—		—		—		—		590,604
Foreign borrowings	KOREA ENERGY AGENCY		2007.12.27~ 2008.12.29		2022.12.29		3 year Government bond		1,236		—

								W	1,236		1,400,051

(d)	Long-term borrowings and others excluding current portion, as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)		Issuance		Maturity		Annual
	Lenders	date		date		interest rate (%)		March 31, 2022		December 31, 2021
Foreign borrowings	—		—		—		—	W	—		1,210
Debentures	—		—		—		—		—		1,736,868
Foreign debentures	—		—		—		—		—		2,956,507
Exchangeable bonds(*1)	Foreign currency exchangeable bonds		2021.09.01.		2026.09.01.		—		1,430,117		1,435,193

								W	1,430,117		6,129,778

(*1) The issuance conditions of the exchangeable bonds issued by the Company are as follows:


		Foreign currency exchangeable bonds
Type of bond		Exchangeable bonds
Aggregate principal amount		EUR 1,065,900,000
Interest rate		- Coupon rate : -
		- Yield to maturity : (0.78%)
Maturity date		September 1, 2026
Redemption		- Redemption at maturity : Outstanding bond principal, which is not repaid early or which call option
		is not excercised on, is repaid at maturity as a lump sum
		- Prepayment : The issuer has call option and the bondholders have put option
Exchange rate		100%

Exchange price		478,124
(Won/share)
Underlying shares		Registered common shares(treasury shares)
Exchange period		From October 12, 2021 to August 22, 2026
Adjustments for exchange price		Adjusting the exchange price according to the terms and conditions of the bond in the events
		of reason for adjusting the exchange price such as, bonus issue, share split, share consolidation,
		change of share type, issuance of options or warranties to shareholders, share dividend,
		cash dividend, issuance of new shares under the market price.

Put option by bondholders		- 3 years(September 1, 2024) from the closing date
		- In the event of a change of control of the Company
		- Where the shares issued by the Company are delisted (or suspended for more than 30
		consecutive trading days)

Call option by the issuer		- Share price(based on closing price) is higher than 130% of exchange price for more than
		20 trading days during 30 consecutive trading days in a row, after 3 years (September 1, 2024)
		from the closing day to 30 business days before the maturity of bonds
		- When the outstanding balance of outstanding bonds is less than 10% of the total issuance
		(Clean Up Call)
		- Where additional reasons for tax burden arise due to the amendment of relevant laws and
		regulations, etc

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

15. Other Payables

Other payables as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Accounts payable	W	86,982		727,844
Accrued expenses		4,203		475,056
Dividend payable		380,876		3,237
Lease liabilities		—		48,062
Withholdings		26,180		13,260

	W	498,241		1,267,459

Non-current
Long-term accrued expenses	W	—		27
Lease liabilities		—		398,513
Long-term withholdings		—		604

	W	—		399,144

16. Other Financial Liabilities

Other financial liabilities as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Derivative liabilities	W	—		3,429
Financial guarantee liabilities		10,327		10,326

	W	10,327		13,755

Non-current
Financial guarantee liabilities	W	20,712		21,991

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

17. Provisions

(a)	Provisions as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022				December 31, 2021
	Current		Non-current		Current		Non-current
Provision for bonus payments(*1,2)	W	2,184		151		21,365		25,155
Provision for restoration(*3)		2,592		886		5,902		6,601
Emission liabilities(*4)		—		—		34,059		—
Provision for product warranties(*5)		—		—		23,083		4,999

	W	4,776		1,037		84,409		36,755

(*1)	Represents the provision for bonuses limited to 100% of annual salaries for executives.

(*2)	The Company estimated the present value of estimated future cash payments about the long-term service award, based on actuarial measurement.

(*3)

Due to contamination of land near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery as provisions for restoration as of March 31, 2022. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available for now to recover the land. In addition, the Company has applied discount rates of 2.67% to assess present value of these costs.

(*4)	The Company has recognized emission liabilities for greenhouse gas emissions exceeding the quantity of the quantity of emission quota rights as of December 31, 2021.

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

(b)	Changes in provisions for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:

1)	For the three-month period ended March 31, 2022


(in millions of Won)	Beginning		Increase		Reversal			Utilization			Spin-off			Ending
Provision for bonus payments	W	46,520		17,549		(325	)		(29,796	)		(31,613	)		2,335
Provision for restoration		12,503		1,144		—			(1,325	)		(8,844	)		3,478
Provision for legal contingencies and claims		—		417		—			—			(417	)		—
Emission liabilities		34,059		1,510		—			—			(35,569	)		—
Provision for product warranties		28,082		2,980		—			—			(31,062	)		—

	W	121,164		23,600		(325	)		(31,121	)		(107,505	)		5,813

2)	For the year ended December 31, 2021


(in millions of Won)	Beginning		Increase		Reversal			Utilization			Ending
Provision for bonus payments	W	48,979		74,240		—			(76,699	)		46,520
Provision for restoration		17,561		291		(186	)		(5,163	)		12,503
Provision for legal contingencies and claims		6,989		2,500		(2,052	)		(7,437	)		—
Emission liabilities		20,224		34,059		(19,391	)		(833	)		34,059
Provision for product warranties		22,453		27,434		—			(21,805	)		28,082

	W	116,206		138,524		(21,629	)		(111,937	)		121,164

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

18. Employee Benefits

(a)	Defined contribution plans

The expense related to post-employment benefit plans under defined contribution plans for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Expense related to post-employment benefit plans under defined contribution plans	W	6,134		8,556

(b)	Defined benefit plans

1)	The amounts recognized in relation to net defined benefit liabilities (assets) in the statements of financial position as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Present value of funded obligations	W	25,090			1,330,938
Fair value of plan assets		(18,424	)		(1,543,469	)

Net defined benefit liabilities (assets)	W	6,666			(212,531	)

2)	Changes in present value of defined benefit obligations for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Defined benefit obligation at the beginning of period	W	1,330,938			1,378,597
Current service costs		18,741			123,312
Interest costs		5,468			28,892
Remeasurement		106,795			(49,259	)
Reclassification to liabilities directly related to assets held for sale		—			(5,675	)
Benefits paid		(58,210	)		(144,929	)
Spin-off		(1,378,642	)		—

Defined benefit obligation at the end of period	W	25,090			1,330,938

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

3)	Changes in the fair value of plan assets for the three-month period ended March 31, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Fair value of plan assets at the beginning of period	W	1,543,469			1,455,098
Interest on plan assets		6,704			31,145
Remeasurement of plan assets		(3,565	)		(4,534	)
Contributions to plan assets		—			200,000
Reclassification to liabilities directly related to assets held for sale		—			(5,490	)
Benefits paid		(51,222	)		(132,750	)
Spin-off		(1,476,962	)		—

Fair value of plan assets at the end of period	W	18,424			1,543,469

4)	The amounts recognized in the statements of comprehensive income for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022			March 31, 2021
Current service costs	W	18,741			32,051
Net interest costs		(1,236	)		(646	)

	W	17,505			31,405

19. Other Liabilities

Other liabilities as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Current
Advances received	W	6		24,807
Withholdings		857		60,535
Unearned revenue		—		59,619

	W	863		144,961

Non-current
Unearned revenue	W	—		3,744

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

20. Financial Instruments

(a)	Classification and fair value of financial instruments

1)	The carrying amount and the fair values of financial assets and financial liabilities by fair value hierarchy as of March 31, 2022 and December 31, 2021 are as follows:

①

March 31, 2022


(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Short term financial instruments	W	4,862,044		—		4,862,044		—		4,862,044
Debt securities		1,400		—		—		1,400		1,400
Other securities		88,277		—		—		88,277		88,277
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,212,112		1,130,670		—		81,442		1,212,112
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		532,410		—		—		—		—
Trade accounts and notes receivable		221,904		—		—		—		—
Debt securities		100,000		—		—		—		—
Other receivables		271,099		—		—		—		—
Deposit instruments		51		—		—		—		—

	W	7,291,297		1,130,670		4,862,044		173,119		6,165,833

Financial liabilities
Fair value through profit or loss
Borrowings		1,430,117		1,430,117		—		—		1,430,117
Financial liabilities measured at amortized cost(*1)
Borrowings		1,236		—		—		—		—
Financial guarantee liabilities		31,039		—		—		—		—
Others		495,423		—		—		—		—

	W	1,957,815		1,430,117		—		—		1,430,117

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

②

December 31, 2021


(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	170,471		—		170,471		—		170,471
Short-term financial instruments		8,013,857		—		8,013,857		—		8,013,857
Debt securities		4,750		—		—		4,750		4,750
Other securities		71,492		—		—		71,492		71,492
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,084,574		999,431		—		85,143		1,084,574
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		2,042,274		—		—		—		—
Trade accounts and notes receivable		6,005,022		—		—		—		—
Debt securities		150,000		—		—		—		—
Other receivables		495,306		—		—		—		—
Deposit instruments		1,436,943		—		—		—		—

	W	19,476,689		999,431		8,184,328		163,385		9,347,144

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	3,429		—		3,429		—		3,429
Borrowings		1,435,193		1,435,193		—		—		1,435,193
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		2,453,068		—		—		—		—
Borrowings		6,766,939		—		6,875,206		—		6,875,206
Financial guarantee liabilities		32,317		—		—		—		—
Others		1,546,986		—		—		—		—

	W	12,237,932		1,435,193		6,878,635		—		8,313,828

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

2)	Financial liabilities were recognized in connection with financial guarantee contracts as of March 31, 2022. The details of the amount of guarantees provided are as follows:


(in millions of Won)		Guarantee limit					Guarantee amount
Guarantee beneficiary	Financial institution	Foreign currency			Won equivalent		Foreign currency		Won equivalent
Subsidiaries
POSCO Maharashtra	DBS		USD	35,000,000		42,378		35,000,000		42,378
Steel Private Limited	SMBC		USD	35,000,000		42,378		35,000,000		42,378
	BNP		USD	30,000,000		36,324		30,000,000		36,324
	CITI		USD	20,000,000		24,216		20,000,000		24,216
	SC		USD	19,784,000		23,954		19,784,000		23,954
POSCO ASSAN TST	SOCIETE GENERALE		USD	37,800,000		45,768		37,800,000		45,768
STEEL INDUSTRY	CITI		USD	36,000,000		43,589		36,000,000		43,589
	ING		USD	36,000,000		43,589		36,000,000		43,589
	BNP		USD	22,074,750		26,728		22,074,750		26,728
POSCO Asia Co., Ltd.	Credit Agricole		USD	50,000,000		60,540		—		—
	ING		USD	50,000,000		60,540		—		—
	MIZUHO		USD	50,000,000		60,540		—		—
	Shinhan		USD	50,000,000		60,540		—		—
POSCO MEXICO S.A. DE C.V	BOA		USD	30,000,000		36,324		25,000,000		30,270
	Citi BANAMEX		USD	30,000,000		36,324		25,000,000		30,270
	ANZ		USD	20,000,000		24,216		16,666,667		20,180
	MIZUHO		USD	20,000,000		24,216		16,666,667		20,180
	SMBC		USD	20,000,000		24,216		16,666,667		20,180
POSCO-VIETNAM Co., Ltd.	Credit Agricole		USD	40,000,000		48,432		35,897,436		43,465
	SMBC		USD	50,000,000		60,540		35,897,436		43,465
	MUFG		USD	26,000,000		31,481		32,307,692		39,118
	CITI		USD	20,000,000		24,216		17,948,718		21,732
	MIZUHO		USD	20,000,000		24,216		17,948,718		21,732
PT. KRAKATAU POSCO	Export-Import Bank of Korea		USD	757,000,000		916,576		454,192,580		549,936
	SMBC		USD	290,000,000		351,132		215,332,522		260,725
	HSBC		USD	221,000,000		267,587		171,780,870		207,992
	SC		USD	110,000,000		133,188		110,000,000		133,188
	SCB		USD	107,800,000		130,524		50,548,522		61,204
	MUFG		USD	60,000,000		72,648		60,000,000		72,648
	BTMU		USD	119,000,000		144,085		54,636,522		66,154
	MIZUHO		USD	165,000,000		199,782		108,208,696		131,019
	ANZ		USD	103,500,000		125,318		64,800,348		78,460
	Credit Suisse		USD	91,000,000		110,183		41,780,870		50,588
	BOA		USD	105,000,000		127,134		86,069,565		104,213
	The Tokyo Star Bank		USD	21,000,000		25,427		9,641,739		11,674
POSCO COATED STEEL	ANZ		THB	1,175,000,000		42,700		1,072,473,187		38,974
(THAILAND) CO., LTD.	MUFG		THB	1,175,000,000		42,700		1,072,473,187		38,974
	SC		THB	1,175,000,000		42,700		1,072,473,187		38,974
	SMBC		THB	1,175,000,000		42,700		1,072,473,187		38,974
	CITI		THB	801,000,000		29,108		731,107,253		26,568
Associates
LLP POSUK Titanium	SMBC		USD	13,500,000		16,346		13,500,000		16,346
Nickel Mining Company SAS	SMBC		EUR	46,000,000		62,152		46,000,000		62,152
Joint ventures
CSP - Compania	BNDES		BRL	464,060,000		117,774		464,060,000		117,774
Siderurgica do Pecem	Export-Import Bank of Korea		USD	182,000,000		220,364		159,984,600		193,710
	BNP		USD	47,600,000		57,634		41,156,200		49,832
	MIZUHO		USD	47,600,000		57,634		41,156,200		49,832
	Santander		USD	47,600,000		57,634		41,156,200		49,832
	Credit Agricole		USD	20,000,000		24,216		17,292,600		20,938
	KfW		USD	20,000,000		24,216		17,292,600		20,938
	SOCIETE GENERALE		USD	20,000,000		24,216		17,292,600		20,938
	BBVA Seoul		USD	17,600,000		21,310		15,217,400		18,425
	ING		USD	17,600,000		21,310		15,217,400		18,425

			USD	3,331,458,750		4,033,729		2,317,916,785		2,806,533
			THB	5,501,000,000		199,908		5,021,000,001		182,464
			BRL	464,060,000		117,774		464,060,000		117,774
			EUR	46,000,000		62,152		46,000,000		62,152

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

3)	Finance income and costs by category of financial instrument for the three-month periods ended March 31, 2022 and 2021 were as follows:

①

For the three-month period ended March 31, 2022


(in millions of Won)	Finance income and costs																Other comprehensive income (loss)
(in millions of Won)	Interest income (expense)			Gain and loss on foreign currency			Gain and loss on disposal			Gain and loss on valuation		Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	41,350			—			204			19,774		—		61,328			—
Financial assets at fair value through other comprehensive income		—			—			—			—		—		—			94,463
Financial assets measured at amortized cost		7,828			58,797			—			—		—		66,625			—
Financial liabilities at fair value through profit or loss		—			(9,302	)		(4,188	)		11,358		—		(2,132	)		—
Financial liabilities measured at amortized cost		(24,469	)		(83,927	)		—			—		2,569		(105,827	)		—

	W	24,709			(34,432	)		(3,984	)		31,132		2,569		19,994			94,463

②

For the three-month period ended March 31, 2021


(in millions of Won)	Finance income and costs																	Other comprehensive income (loss)
(in millions of Won)	Interest income (expense)			Dividend income(*1)		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	30,166			—		—			166		42,811		—		73,143			—
Financial assets at fair value through other comprehensive income		—			19,940		—			92		—		—		20,032			75,307
Financial assets measured at amortized cost		2,758			—		103,734			—		—		—		106,492			—
Financial liabilities at fair value through profit or loss		—			—		—			1,674		86,957		—		88,631			—
Financial liabilities measured at amortized cost		(47,307	)		—		(224,098	)		—		—		1,291		(270,114	)		—

	W	(14,383	)		19,940		(120,364	)		1,932		129,768		1,291		18,184			75,307

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures of W232,331 million for the three-month period ended March 31, 2021.

(b) Financial risk management

The Company is exposed to credit risk, liquidity risk and market risk arising from financial assets and liabilities. The Company’s financial risk management objectives and policies are consistent with those disclosed in the separate financial statements as of and for the year ended December 31, 2021.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

21. Share Capital and Capital Surplus

(a) Share capital as of March 31, 2022 and December 31, 2021 are as follows:


(in Won, except share information)	March 31, 2022		December 31, 2021
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1)	As of March 31, 2022, total shares of ADRs of 26,101,884 are equivalent to 6,525,471 shares of common stock.

(*2)	As of March 31, 2022, the difference between the ending balance of common stock and the par value of issued common stock is W46,469 million due to retirement of 9,293,790 treasury stocks.

(b) Capital surplus as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Share premium	W	463,825			463,825
Gain on disposal of treasury shares		806,114			796,623
Gain from merger		80,628			80,628
Loss on disposal of hybrid bonds		(1,787	)		(1,787	)

	W	1,348,780			1,339,289

22. Hybrid Bonds

Hybrid bonds classified as equity as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Rate of interest (%)		March 31, 2022		December 31, 2021
Hybrid bond 1-2(*1)		2013-06-13		2043-06-13		4.60	W	—		200,000
Issuance cost								—		(616	)

							W	—		199,384

(*1)	During the three-month period ended March 31, 2022, it was transferred to a newly established company(POSCO) upon a vertical spin-off.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

23. Reserves

Reserves as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022			December 31, 2021
Changes in fair value of equity investments at fair value through other comprehensive income	W	(118,308	)		(211,849	)

24. Treasury Shares


(shares, in millions of Won)	March 31, 2022						December 31, 2021
	Number of shares			Amount			Number of shares		Amount
Beginning		11,561,263		W	2,508,294			11,171,363	W	2,391,523
Acqusition of treasury shares		—			—			389,900		116,771
Disposal of treasury shares		(223,605	)		(48,513	)		—		—

Ending		11,337,658		W	2,459,781			11,561,263	W	2,508,294

25. Revenue

(a)	Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Types of revenue
Sales of steel product	W	7,262,347		7,512,143
Transportation services		241,733		244,129
Dividend income		232,591		—
Others		42,606		44,175

	W	7,779,277		7,800,447

Timing of revenue recognition
Revenue recognized at a point in time	W	7,513,655		7,540,281
Revenue recognized over time		265,622		260,166

	W	7,779,277		7,800,447

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b)	Details of contract assets and liabilities from contracts with customers as of March 31, 2022 and December 31, 2021 are as follows:


(in millions of Won)	March 31, 2022		December 31, 2021
Receivables
Account receivables	W	221,904		6,005,022
Contract assets
Account receivables		17,063		18,161
Contract liabilities
Advance received		6		24,807
Unearned income		—		63,363

26. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Wages and salaries	W	67,495		63,308
Expenses related to post-employment benefits		6,816		10,571
Other employee benefits		17,654		12,958
Travel		1,785		2,243
Depreciation		7,361		6,602
Amortization		5,161		18,852
Rental		12,474		15,421
Repairs		1,108		1,584
Advertising		14,563		12,844
Research & development		19,924		18,623
Service fees		33,954		36,773
Supplies		137		514
Vehicles maintenance		861		1,138
Industry association fee		1,412		1,465
Training		812		244
Conference		1,014		977
Others		14,214		5,786

	W	206,745		209,903

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(b) Selling expenses

Selling expenses for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Freight and custody	W	20,724		30,580
Operating expenses for distribution center		935		1,533
Sales commissions		14,486		16,664
Sales advertising		29		49
Sales promotion		201		295
Sample		133		233
Sales insurance premium		1,086		1,441

	W	37,594		50,795

27. Finance income and costs

Details of finance income and costs for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Finance income
Interest income(*1)	W	49,178		32,924
Dividend income		—		252,271
Gain on foreign currency transactions		44,563		97,128
Gain on foreign currency translations		37,270		48,847
Gain on valuation of derivatives		21,631		134,140
Others		17,671		3,964

	W	170,313		569,274

Finance costs
Interest expenses	W	24,469		47,307
Loss on foreign currency transactions		39,852		73,714
Loss on foreign currency translations		76,413		192,625
Others		9,584		5,112

	W	150,318		318,758

(*1)	Interest income calculated using the effective interest method for the three-month periods ended March 31, 2022 and 2021 were W7,828 million and W2,757 million, respectively.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

28. Other Non-Operating income and expenses

Details of other non-operating income and expenses for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Other non-operating income
Gain on disposals of property, plant and equipment	W	5,443		2,770
Gain on disposals of assets held for sale		2,706		790
Gain on insurance settlements		8		287
Others(*1)		7,211		31,401

	W	15,368		35,248

Other non-operating expenses
Loss on disposals of property, plant and equipment	W	18,281		23,756
Impairment loss on property, plant and equipment		3		3,113
Impairment loss on investment in subsidiaries, associates and joint ventures		—		1,500
Donations		19		2,004
Impairment loss on intangible assets		—		7,180
Others		8,454		14,644

	W	26,757		52,197

(*1)	During the three-month period ended March 31, 2021, the Company recognized W28,366 million of non-operating income for refund of other than income tax as a result of administrative litigation for tax audits.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

29. Expenses by nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses and other non-operating expenses in the statements of comprehensive income for the three-month periods ended March 31, 2022 and 2021 were as follows (excluding finance costs and income tax expenses):


(in millions of Won)	March 31, 2022			March 31, 2021
Changes in inventories(*1)	W	(3,222	)		(216,576	)
Raw materials and consumables used		4,881,888			4,695,958
Employee benefits expenses		319,856			463,321
Outsourced processing cost		429,127			589,023
Depreciation(*2)		384,886			573,174
Amortization		16,653			27,201
Electricity and water expenses		80,787			71,855
Service fees		40,594			52,133
Rental		19,090			24,732
Advertising		14,563			12,844
Freight and custody expenses		207,320			200,802
Sales commissions		14,486			16,664
Loss on disposals of property, plant and equipment		18,281			23,756
Other expenses		312,175			245,221

	W	6,736,484			6,780,108

(*1)	Changes in inventories are the changes in product, semi-finished products and by-products.

(*2)	Includes depreciation of investment property.

30. Income taxes

The effective tax rates of the Company for the three-month periods ended March 31, 2022 and 2021 were 230.24% and 27.10% respectively.

The Company’s vertical spin-off meets the requirements for qualified spin-off under the Corporate Tax Act. Accordingly, transfer gains of W8,166,109 million under the Corporate Tax Act were incurred for the net asset transferred to the newly established company, and the Company simultaneously set a provision for accelerated depreciation on the transfer gains and recognized deferred tax liabilities of W2,245,680 million.

Deductible temporary differences related to the investment in newly established company (POSCO) which is caused by transfer gains under the Corporate Tax Act were not recognized as deferred tax assets, since it is not probable they will reverse through disposal or liquidation. The effect of our estimation and accounting for the recoverability of temporary differences on the increase in corporate tax costs for the three-month period ended March 31, 2022 is W2,245,680 million.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

31. Earnings per Share

Basic earnings(loss) per share for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in Won, except share information)	March 31, 2022			March 31, 2021
Profit(loss) for the period	W	(1,404,227,032,116	)		952,175,503,207
Interests of hybrid bonds, net of tax		(1,078,164,383	)		(1,644,657,534	)
Weighted-average number of common shares outstanding(*1)		75,710,045			75,911,805
Basic earnings(loss) per share	W	(18,562	)		12,522

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


(shares)	March 31, 2022			March 31, 2021
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(11,476,790	)		(11,275,030	)

Weighted-average number of common shares outstanding		75,710,045			75,911,805

The Company holds exchangeable bonds as potential common stocks with a diluting effect as of three-month period ended March 31, 2022, but the Company did not calculate diluted loss per share due to anti-dilutive effect. Meanwhile, since there were no potential shares of common stock which had dilutive effects as of March 31, 2021, diluted earnings per share is equal to basic earnings per share.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

32. Related Party Transactions

(a)	Significant transactions with related companies for the three-month periods ended March 31, 2022 and 2021 were as follows:

For the three-month period ended March 31, 2022


(in millions of Won)	*Sales and others(1)**						*Purchase and others(2)**
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
*Subsidiaries(3)**
POSCO	W	1,467		—		—		—		—		—		3
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		1,505		16,555		7		—		85,302		—		9,711
POSCO STEELEON CO., Ltd (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		131,512		—		215		—		—		7,656		6
POSCO ICT(*4)		336		4,970		18		—		24,115		10,190		32,403
eNtoB Corporation		2		24		—		60,649		9,698		32		3,197
POSCO CHEMICAL CO., LTD		80,582		13,878		44		84,301		4,757		56,325		908
POSCO ENERGY CO., LTD.		762		—		—		6,682		—		—		3,925
POSCO MOBILITY SOLUTION		175,738		—		—		—		—		8,802		28
POSCO INTERNATIONAL Corporation		2,099,457		62,093		—		244,230		—		768		1,049
POSCO Thainox Public Company Limited		48,679		—		—		—		—		—		1
POSCO Canada Ltd.		—		—		139		77,703		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		32,423		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		28,790		—		—		835		—		—		16
POSCO-VIETNAM Co., Ltd.		43,769		—		53		—		—		—		—
POSCO MEXICO S.A. DE C.V.		102,428		—		16		—		—		—		—
POSCO Maharashtra Steel Private Limited		170,671		—		66		—		—		—		120
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		42,320		—		—		—		—		—		15
POSCO VST CO., LTD.		27,906		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		417		380,061		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		47,018		—		60		—		—		—		8
Others		189,573		963		1,174		61,471		13,042		53,139		199,484

		3,224,938		98,483		2,209		915,932		136,914		136,912		250,874

*Associates and joint ventures(3)**
SNNC		3,122		5,348		8		148,239		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		25,614		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		90,388		—		210,455		—		—		—
Others		76,723		8,617		3,373		16,485		—		—		301

		105,459		104,353		3,381		375,179		—		—		301

	W	3,330,397		202,836		5,590		1,291,111		136,914		136,912		251,175

(*1)	Sales and others mainly consist of sales of steel products(before spin-off), trademark usage income, rental income, and dividend income to subsidiaries, associates and joint ventures.

(*2)	Purchase and others mainly consist of subsidiaries’ purchases of construction services and purchases of raw materials to manufacture steel products.

(*3)	As of March 31, 2022, the Company provided guarantees to related companies (Note 20).

(*4)	Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

For the three-month period ended March 31, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1,614		11,037		32		—		88,862		60		6,463
POSCO STEELEON CO., Ltd (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		123,426		1,706		328		—		—		7,447		161
POSCO ICT		447		4,970		20		—		34,290		10,706		49,422
eNtoB Corporation		4		—		—		60,190		9,647		14		4,507
POSCO CHEMICAL CO., LTD		57,959		11,208		5,072		114,065		1,389		74,295		1,426
POSCO ENERGY CO., LTD.		760		—		689		2,129		—		—		5,605
POSCO MOBILITY SOLUTION		148,773		—		—		—		—		10,694		206
POSCO INTERNATIONAL Corporation		1,898,357		54,331		—		166,152		—		347		536
POSCO Thainox Public Company Limited		60,873		—		—		—		—		—		20
POSCO Canada Ltd.		—		—		491		34,796		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		40,948		—				—		—		—		—
POSCO JAPAN Co., Ltd.		357,971		—		1		7,601		4		—		480
POSCO-VIETNAM Co., Ltd.		80,910		—		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		92,791		—		34		—		—		—		—
POSCO Maharashtra Steel Private Limited		168,852		—		84		—		—		—		89
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		28,512		—		—		—		—		—		—
POSCO VST CO., LTD.		56,408		—		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		610		350,571		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		65,532		—		49		8		—		—		10
Others		341,735		19,712		1,709		34,716		9,752		60,982		20,974

		3,525,872		102,964		9,458		770,228		143,944		164,545		89,907

Associates and joint ventures
SNNC		7,513		1,469		574		151,759		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		12,649		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		116,076		—		486,975		—		—		—
Others		8,837		11,577		1,362		21,723		—		—		9,173

		28,999		129,122		1,936		660,457		—		—		9,173

	W	3,554,871		232,086		11,394		1,430,685		143,944		164,545		99,080

(b)	The related account balances of significant transactions with related companies as of March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022


(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Accounts payable		Others		Total
Subsidiaries
POSCO	W	1,614		14,663		16,277		77,846		—		77,846
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		17,029		—		17,029		—		—		—
POSCO STEELEON CO., Ltd (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		109		—		109		—		—		—
POSCO ICT		4,324		—		4,324		—		917		917
eNtoB Corporation		24		—		24		—		—		—
POSCO CHEMICAL CO., LTD		14,006		—		14,006		—		636		636
POSCO ENERGY CO., LTD.		291		—		291		—		1,593		1,593
POSCO MOBILITY SOLUTION		22		—		22		—		—		—
POSCO INTERNATIONAL Corporation		62,189		—		62,189		—		502		502
Qingdao Pohang Stainless Steel Co., Ltd.		12		—		12		—		—		—
POSCO Maharashtra Steel Private Limited		43		1,084		1,127		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		6		984		990		—		—		—
PT. KRAKATAU POSCO		—		14,630		14,630		—		—		—
Others		1,759		2,800		4,559		552		3,334		3,886

		101,428		34,161		135,589		78,398		6,982		85,380

Associates and joint ventures
SNNC		5,355		—		5,355		—		—		—
Roy Hill Holdings Pty Ltd		90,388		—		90,388		—		—		—
FQM Australia Holdings Pty Ltd		—		181,620		181,620		—		—		—
Others		8		14,754		14,762		—		—		—

		95,751		196,374		292,125		—		—		—

	W	197,179		230,535		427,714		78,398		6,982		85,380

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

December 31, 2021


(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	W	5,692		10		5,702		—		97,007		507		97,514
POSCO STEELEON CO., Ltd (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		95,001		—		95,001		—		154		5,082		5,236
POSCO ICT		221		3		224		3,736		155,064		27,562		186,362
eNtoB Corporation		—		—		—		1,683		23,851		—		25,534
POSCO CHEMICAL CO., LTD		35,895		3,664		39,559		12,969		57,498		17,990		88,457
POSCO ENERGY CO., LTD.		1,485		292		1,777		—		6,169		10,066		16,235
POSCO MOBILITY SOLUTION		133,608		—		133,608		71		2,232		5,104		7,407
POSCO INTERNATIONAL Corporation		1,279,463		4		1,279,467		4,831		483		502		5,816
POSCO Thainox Public Company Limited		54,804		—		54,804		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		35,423		—		35,423		—		83		—		83
POSCO MEXICO S.A. DE C.V.		179,428		251		179,679		—		—		—		—
POSCO Maharashtra Steel Private Limited		530,693		1,048		531,741		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		14		14		169,565		90		—		169,655
POSCO ASSAN TST STEEL INDUSTRY		220,481		951		221,432		—		—		—		—
PT.KRAKATAU POSCO		1,395		14,750		16,145		—		—		—		—
Others		366,857		7,011		373,868		22,583		48,274		84,778		155,635

		2,940,446		27,998		2,968,444		215,438		390,905		151,591		757,934

Associates and joint ventures
SNNC		420		65		485		52,396		—		—		52,396
Roy Hill Holdings Pty Ltd		—		34,356		34,356		436,774		—		—		436,774
FQM Australia Holdings Pty Ltd		—		181,122		181,122		—		—		—		—
Others		168,167		15,895		184,062		5,549		187		—		5,736

		168,587		231,438		400,025		494,719		187		—		494,906

	W	3,109,033		259,436		3,368,469		710,157		391,092		151,591		1,252,840

(c)	For the three-month periods ended March 31, 2022 and 2021, details of compensation to key management officers were as follows:


(in millions of Won)	March 31, 2022		March 31, 2021
Short-term benefits	W	26,477		11,217
Long-term benefits		—		1,383
Retirement benefits		2,903		4,835

	W	29,380		17,435

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.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

33. Commitments and Contingencies

(a)	Commitments

As of March 31, 2022, the Company entered into commitments with KOREA ENERGY AGENCY for long-term foreign currency borrowing, which is limited up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowing depends on the success of the project. The Company is not liable for the repayment of full or part of the money borrowed if the respective project fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of March 31, 2022, the ending balance of the borrowing amounts to USD 1.02 million.

The Company has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors, including Norddeutsche Landesbank, for seamless funding to the construction of new power plant by POSCO ENERGY CO., LTD.

The Company has deposited 3,032,613 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of March 31, 2022.

(b)	As of March 31, 2022, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral for long-term foreign currency borrowings.

(c)	Litigation in progress

The Company is involved in 1 lawsuit for validity of Board of Directors’ approval amounted to W100 million as defendant as of March 31, 2022. However, the Company has not recognized any provisions for the lawsuit since the Company does not believe it has a present obligation as of March 31, 2022.

(d)	The Company is jointly liable for guarantees of indebtedness (including financial guarantee contracts) before the spin-off date of POSCO.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

34. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the three-month periods ended March 31, 2022 and 2021 were as follows:


(in millions of Won)	March 31, 2022			March 31, 2021
Trade accounts and notes receivable, net	W	(450,186	)		(392,886	)
Other accounts receivable		(94,448	)		(22,993	)
Accrued revenues		(2,129	)		(5,140	)
Inventories		354,262			(663,730	)
Prepaid expenses		(41,384	)		(13,893	)
Other current assets		(1,041	)		40
Long-term guarantee deposits		17			(26	)
Derivative assets		5,781			(3,574	)
Other non-current assets		126			(18,614	)
Trade accounts and notes payable		(417,714	)		(250,809	)
Other accounts payable		(30,194	)		(171,395	)
Accrued expenses		(60,428	)		(22,664	)
Advances received		(3,599	)		(411	)
Withholdings		(5,926	)		3,472
Unearned revenue		(2,731	)		5,029
Other current liabilities		(13,607	)		(17,147	)
Derivative liabilities		—			6,523
Payments of severance benefits		(58,204	)		(48,770	)
Plan assets		51,222			32,499
Other non-current liabilities		(289	)		(314	)

	W	(770,472	)		(1,584,803	)

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

35. Spin-off

(a)	On March 1, 2022, the Company executed the spin-off for the purpose of production and sales of steel rolled products and plates, and established a new wholly owned subsidiary with the name of POSCO.


		Details

Method		Vertical Spin-off

Related Entities		POSCO HOLDINGS INC. (surviving company after the spin-off)

		POSCO (newly established entity for the spin-off)

Board of Directors date		December 10, 2021

Approval of shareholders’ meeting		January 28, 2022

Effective spin-off date		March 1, 2022

(b)	Assets and liabilities transferred to the newly established company through spin-off and its value

Assets and liabilities were carried over to the newly established company as specified in the spin-off plan approved by the shareholders on January 28, 2022. Changes in assets and liabilities related to the division, which occur as a result of operations until the spin-off date, were adjusted.

(c)	Accounting of spin-off

①

Assets and liabilities transferred to the newly established company were measured at their carrying amount prior to the spin-off.

②

Among the deferred tax assets (liabilities) related to the transferred assets and liabilities, only those items that can be transferred under the Corporate Tax Act were transferred to the newly established company.

(d)	Rights and obligations transferred to the newly established company

Active and passive assets, other rights and obligations including rights and obligations under public law, and factual relations with monetary value (including licensing, labor relations, contract relations, litigation and others), which are related to the business subject to divide, are carried over to the newly established company. Otherwise, it is carried over to the surviving company.

(e)	Obligations of the Company as a result of the spin-off

Pursuant to Article 530-3(1) of the Commercial Code of the Republic of Korea, the spin-off shall be approved by the special resolution at the shareholders’ meeting. The surviving company and the newly established company are jointly liable for the liabilities of the Company before the spin-off date under Article 530(9)(1) of the Commercial Code of the Republic of Korea.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

(f)	Details of assets and liabilities transferred to the newly established company as of the spin-off date are as follows:


(in millions of Won)	March 1, 2022
Assets
Cash and cash equivalents	W	1,910,211
Trade accounts and notes receivable, net		6,469,413
Other receivables, net		477,252
Other short-term financial assets		3,589,789
Inventories		7,268,929
Assets held for sale		24,250
Other current assets		96,266

Total current assets		19,836,110

Long-term trade accounts and notes receivable, net		5,374
Other receivables, net		81,731
Other long-term financial assets		184,487
Investments in subsidiaries, associates and joint ventures		236,174
Investment property, net		12,933
Property, plant and equipment, net		19,409,737
Intangible assets, net		527,400
Defined benefit assets, net		98,320
Other non-current assets		34,232

Total non-current assets		20,590,388

Total assets	W	40,426,498

Liabilities
Trade accounts and notes payable	W	2,042,473
Short-term borrowings and current installments of long-term borrowings		2,994,566
Other payables		956,789
Other short-term financial liabilities		3,534
Provisions		70,000
Other current liabilities		126,904

Total current liabilities		6,194,266

Long-term borrowings, excluding current installments		4,127,763
Other payables		395,278
Long-term provisions		37,505
Deferred tax liabilities		26,926
Other non-current liabilities		3,698

Total non-current liabilities		4,591,170

Total liabilities		10,785,436

Equity
Hybrid bonds		199,384

Total equity		199,384

Total liabilities and equity	W	10,984,820

Net assets transferred (Investment in subsidiary)	W	29,441,678

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of March 31, 2022

(Unaudited)

36. Events after the reporting period

Pursuant to the resolution of the Board of Directors on May 13, 2022, the Company decided to pay interim cash dividends of W 4,000 per common share (total dividend: W 303.4 billion).