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Published: 2022-03-16 10:58:58 ET

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EX-99.1 2 d281877dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

POSCO HOLDINGS INC.

(Formerly, POSCO)

and Subsidiaries

Consolidated Financial Statements

December 31, 2021 and 2020

(With Independent Auditors’ Report Thereon)

Table of Contents


	Page
Independent Auditors’ Report		1

Consolidated Financial Statements

Consolidated Statements of Financial Position		7

Consolidated Statements of Comprehensive Income		9

Consolidated Statements of Changes in Equity		10

Consolidated Statements of Cash Flows		12

Notes to the Consolidated Financial Statements		14

Independent Auditors’ Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO HOLDINGS INC.:

Opinion

We have audited the consolidated financial statements of POSCO HOLDINGS INC. (formerly, POSCO) and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as of December 31, 2021 and 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing (“KSAs“). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 1 and Note 41 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. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements as of and for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

(a) Assessment of goodwill impairment in the POSCO INTERNATIONAL Corporation cash generating unit

As described in note 15(c) to the consolidated financial statements, goodwill amounted to W735,969 million as of December 31, 2021, which includes goodwill allocated to the cash generating unit (“CGU”) of POSCO INTERNATIONAL Corporation in the amount of W578,046 million. The Company recognized impairment loss on goodwill allocated to the CGU of POSCO INTERNATIONAL Corporation of W184,770 million during the year ended December 31, 2021.

The Company performed goodwill impairment test for POSCO INTERNATIONAL Corporation CGU by estimating its value-in-use. In estimating the value-in-use, management’s judgment is involved in determining the key assumptions such as estimated sales, discount rate and terminal growth rate that have significant impacts on the estimated value-in-use. Considering significant degree of judgment in estimating value-in-use and the likelihood of existence of management bias, we identified assessment of goodwill impairment related to POSCO INTERNATIONAL Corporation CGU as a key audit matter.

The primary procedures we performed to address this key audit matter included the following:

•

Testing certain internal controls over the Company’s goodwill impairment assessment process;

•

Evaluating the key assumptions (including estimated sales) used to determine the value-in -use by comparison with the latest financial budgets approved by the Board of Directors, historical performance and industry reports;

•

Comparing the estimated sales prepared in prior year with the current year’s performance to assess the Company’s ability to accurately forecast;

•

Assessing the terminal growth rate by comparison with observable market information

•

Performing sensitivity analysis on the discount rate, terminal growth rate and estimated sales applied to assess the impact of changes in these key assumptions on the results of management’s impairment assessment; and

•

Engaging our valuation specialists to assist us in evaluating the discount rate used in the valuation by comparing it against a discount rate that was independently developed using observable information.

(b) Estimation of percentage-of-completion by the input method

As described in notes 3 (“Construction work in progress” and “Revenue from contracts with customers”), 28 and 29 to the consolidated financial statements, revenue from construction contract amounted to W6,263,778 million, which was approximately 8.2% of consolidated sales for the year ended December 31, 2021. Such revenue is primarily related to POSCO ENGINEERING & CONSTRUCTION CO., LTD., a subsidiary of the Company. In connection with the Company’s production-to-order revenue transactions, when the outcome of a construction contract can be estimated reliably, the Company recognizes contract revenues and contract costs over time based on the percentage-of-completion method. The percentage-of-completion is calculated based on the ratio of contract costs incurred for work performed to date excluding costs incurred that do not contribute to the progress in satisfying the Company’s performance obligation over the estimated total contract costs.

Construction contracts generally have a long-term duration, and the total contract costs are estimated based on estimated future expenditures for materials, labor, outsourced services and others which are expected to be incurred during the construction period. Considering the impact on revenue recognition from the uncertainty in connection with the long-term contracts and changes in estimated costs, we identified estimation of percentage-of-completion by the input method as a key audit matter.

The primary procedures we performed to address this key audit matter included the following:

•

Testing certain internal controls over the Company’s estimation and review on the estimated total contract costs, and review on construction costs incurred and cost allocation to the projects;

•

Inspecting the documents prepared by the person in charge of construction field regarding rationale and reliability of the estimated total contract costs for major construction projects;

•

Inquiring and inspecting the documents regarding rationale and reliability of the estimates such as material costs, labor costs and outsourcing costs included in the estimated total contract costs on the new major-construction projects;

•

Inquiring the person in charge of construction field and inspecting documents as to the cause of significant changes in total contract cost for contracts with such changes;

•

Inquiring the person in charge of construction field and inspecting documents as to the cause of significant differences between estimated total cost and the actual total cost for completed projects; and

•

For selected samples, testing the cut-off and assessing whether contract costs incurred that are used for calculation of percentage-of-completion through inspection of supporting documentation.

Other Matter

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

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

•

Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Se Hong Choi.

Seoul, Korea

March 10, 2022

This report is effective as of March 10, 2022, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2021 and 2020


(in millions of Won)	Notes		December 31, 2021		December 31, 2020
Assets
Cash and cash equivalents		4,5,23	W	4,775,166		4,754,644
Trade accounts and notes receivable, net		6,17,23,29,37		10,061,982		8,120,619
Other receivables, net		7,23,37		2,104,610		1,494,239
Other short-term financial assets		8,23		13,447,717		11,709,209
Inventories		9		15,215,098		9,051,790
Current income tax assets		35		23,229		49,481
Assets held for sale		10		78,470		34,210
Other current assets		16		915,358		616,623

Total current assets				46,621,630		35,830,815

Long-term trade accounts and notes receivable, net		6,23		63,205		86,423
Other receivables, net		7,23,37		1,415,143		1,195,962
Other long-term financial assets		8,23		2,119,674		1,561,807
Investments in associates and joint ventures		11		4,514,647		3,876,249
Investment property, net		13		1,086,077		994,781
Property, plant and equipment, net		14,33		29,596,698		29,400,141
Intangible assets, net		15,33		4,166,309		4,449,432
Defined benefit assets, net		21		255,858		86,149
Deferred tax assets		35		1,433,766		1,335,154
Other non-current assets		16		198,607		270,060

Total non-current assets				44,849,984		43,256,158

Total assets			W	91,471,614		79,086,973

See accompanying notes to the consolidated financial statements

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Financial Position, Continued

As of December 31, 2021 and 2020


(in millions of Won)	Notes	December 31, 2021			December 31, 2020
Liabilities
Trade accounts and notes payable	23,37	W	5,468,175			3,755,513
Short-term borrowings and current installments of long-term borrowings	4,17,23		8,830,067			8,677,529
Other payables	18,23		2,189,361			1,845,266
Other short-term financial liabilities	19,23,37		111,641			141,404
Current income tax liabilities	35		2,139,718			366,476
Liabilities directly associated with the assets held for sale			189			25
Provisions	20		399,984			443,273
Other current liabilities	22,29		1,944,488			1,625,482

Total current liabilities			21,083,623			16,854,968

Long-term trade accounts and notes payable	23,37		694			22,323
Long-term borrowings, excluding current installments	4,17,23		12,911,149			11,820,078
Other payables	18,23		679,009			558,924
Other long-term financial liabilities	19,23		23,996			133,588
Defined benefit liabilities, net	21		50,842			141,785
Deferred tax liabilities	35		1,271,775			1,320,726
Long-term provisions	20		589,092			522,969
Other non-current liabilities	22		56,491			37,020

Total non-current liabilities			15,583,048			14,557,413

Total liabilities			36,666,671			31,412,381

Equity
Share capital	24		482,403			482,403
Capital surplus	24		1,387,960			1,310,547
Hybrid bonds	25		199,384			199,384
Reserves	26		(666,985	)		(1,380,918	)
Treasury shares	27		(2,508,294	)		(2,391,523	)
Retained earnings			51,532,887			46,111,457

Equity attributable to owners of the controlling company			50,427,355			44,331,350
Non-controlling interests	25		4,377,588			3,343,242

Total equity			54,804,943			47,674,592

Total liabilities and equity		W	91,471,614			79,086,973

See accompanying notes to the consolidated financial statements.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020


(in millions of Won, except per share information)	Notes	2021			2020
Revenue	28,29,37	W	76,332,345			57,792,796
Cost of sales	29,31,34,37		(64,451,219	)		(53,072,390	)

Gross profit			11,881,126			4,720,406
Selling and administrative expenses	30,34
Impairment loss on trade accounts and notes receivable	23		(40,153	)		(829	)
Other administrative expenses	31		(2,209,809	)		(1,939,602	)
Selling expenses			(393,075	)		(376,940	)

Operating profit			9,238,089			2,403,035
Share of profit of equity-accounted investees, net	11		649,569			133,297
Finance income and costs	23,32
Finance income			2,730,110			2,677,499
Finance costs			(2,765,175	)		(2,892,402	)
Other non-operating income and expenses	33
Reversal of (impairment loss) on other receivables	23		12,975			(53,105	)
Other non-operating income			577,997			402,336
Other non-operating expenses	34		(1,027,492	)		(645,574	)

Profit before income tax			9,416,073			2,025,086
Income tax expense	35		(2,220,183	)		(236,934	)

Profit			7,195,890			1,788,152
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans	21		51,155			36,575
Net changes in fair value of equity investments at fair value through other comprehensive income	23		214,888			(77,627	)
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees			165,106			(28,609	)
Foreign currency translation differences			386,141			(147,956	)
Gains or losses on valuation of derivatives	23		309			(331	)

Other comprehensive income (loss), net of tax			817,599			(217,948	)

Total comprehensive income		W	8,013,489			1,570,204

Profit attributable to:
Owners of the controlling company		W	6,617,239			1,602,148
Non-controlling interests			578,651			186,004

Profit		W	7,195,890			1,788,152

Total comprehensive income attributable to :
Owners of the controlling company		W	7,384,571			1,415,132
Non-controlling interests			628,918			155,072

Total comprehensive income		W	8,013,489			1,570,204

Earnings per share (in Won)	36
Basic earnings per share (in Won)			87,330			20,165
Diluted earnings per share (in Won)		W	85,377			20,165

See accompanying notes to the consolidated financial statements.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2021 and 2020


(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share		Capital			Hybrid					Treasury			Retained						controlling
	capital		surplus			bonds		Reserves			shares			earnings			Subtotal			interests			Total
Balance as of January 1, 2020	W	482,403		1,376,251			199,384		(1,157,980	)		(1,508,303	)		45,080,117			44,471,872			3,322,835			47,794,707
Comprehensive income:
Profit		—		—			—		—			—			1,602,147			1,602,147			186,005			1,788,152
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			44,704			44,704			(8,129	)		36,575
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		(16,760	)		—			—			(16,760	)		(11,849	)		(28,609	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		(74,210	)		—			(3,417	)		(77,627	)		—			(77,627	)
Foreign currency translation differences, net of tax		—		—			—		(137,071	)		—			—			(137,071	)		(10,885	)		(147,956	)
Gains or losses on valuation of derivatives, net of tax		—		—			—		(261	)		—			—			(261	)		(70	)		(331	)

Total comprehensive income		—		—			—		(228,302	)		—			1,643,434			1,415,132			155,072			1,570,204

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(320,462	)		(320,462	)		(60,517	)		(380,979	)
Interim dividends		—		—			—		—			—			(277,723	)		(277,723	)		—			(277,723	)
Changes in subsidiaries		—		—			—		—			—			—			—			22,303			22,303
Changes in ownership interest in subsidiaries		—		(27,716	)		—		—			—			—			(27,716	)		162,674			134,958
Repayment of redeemable convertible preferred shares		—		(33,581	)		—		—			—			—			(33,581	)		(245,000	)		(278,581	)
Interest of hybrid bonds		—		—			—		—			—			(9,225	)		(9,225	)		(7,354	)		(16,579	)
Acquisition of treasury shares		—		—			—		—			(883,220	)		—			(883,220	)		—			(883,220	)
Others		—		(4,407	)		—		5,364			—			(4,684	)		(3,727	)		(6,771	)		(10,498	)

Total transactions with owners of the controlling company		—		(65,704	)		—		5,364			(883,220	)		(612,094	)		(1,555,654	)		(134,665	)		(1,690,319	)

Balance as of December 31, 2020	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

See accompanying notes to the consolidated financial statements.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Changes in Equity, Continued

For the years ended December 31, 2021 and 2020


(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share		Capital			Hybrid					Treasury			Retained						controlling
	capital		surplus			bonds		Reserves			shares			earnings			Subtotal			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		—		—			—		—			—			6,617,239			6,617,239			578,651			7,195,890
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			44,405			44,405			6,749			51,154
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		160,343			—			—			160,343			4,764			165,107
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		205,924			—			8,948			214,872			16			214,888
Foreign currency translation differences, net of tax		—		—			—		347,469			—			—			347,469			38,672			386,141
Gains or losses on valuation of derivatives, net of tax		—		—			—		243			—			—			243			66			309

Total comprehensive income		—		—			—		713,979			—			6,670,592			7,384,571			628,918			8,013,489

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(342,565	)		(342,565	)		(62,230	)		(404,795	)
Interim dividends		—		—			—		—			—			(907,507	)		(907,507	)		—			(907,507	)
Changes in subsidiaries		—		—			—		—			—			—			—			15,034			15,034
Changes in ownership interest in subsidiaries		—		83,547			—		—			—			—			83,547			459,917			543,464
Interest of hybrid bonds		—		—			—		—			—			(9,200	)		(9,200	)		(7,254	)		(16,454	)
Acquisition of treasury shares		—		—			—		—			(116,771	)		—			(116,771	)		—			(116,771	)
Others		—		(6,134	)		—		(46	)		—			10,110			3,930			(39	)		3,891

Total transactions with owners of the controlling company		—		77,413			—		(46	)		(116,771	)		(1,249,162	)		(1,288,566	)		405,428			(883,138	)

Balance as of December 31, 2021	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

See accompanying notes to the consolidated financial statements.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020


(in millions of Won)	Notes		2021			2020
Cash flows from operating activities
Profit				W 7,195,890			1,788,152
Adjustments for:
Depreciation				3,135,345			3,156,181
Amortization				444,100			465,558
Finance income				(1,270,044	)		(1,185,934	)
Finance costs				1,257,112			1,390,983
Income tax expense				2,220,183			236,934
Impairment loss on property, plant and equipment				311,520			27,040
Gain on disposal of property, plant and equipment				(12,016	)		(15,548	)
Loss on disposal of property, plant and equipment				95,720			142,126
Impairment loss on goodwill and other intangible assets				224,328			197,776
Gain on disposal of investments in subsidiaries, associates and joint ventures				(85,981	)		(88,836	)
Loss on disposal of investments in subsidiaries, associates and joint ventures				12,882			14,632
Share of profit of equity-accounted investees				(649,569	)		(133,297	)
Impairment loss on assets held for sale				—			5,030
Gain on disposal of assets held for sale				(60,208	)		—
Expenses related to post-employment benefit				243,567			248,324
Impairment loss on trade and other receivables				27,178			53,934
Loss on valuation of inventories				78,783			54,014
Increase to provisions				159,592			184,984
Others, net				(37,287	)		(21,076	)

				6,095,205			4,732,825

Changes in operating assets and liabilities		39		(7,070,574	)		2,803,586
Interest received				279,554			368,539
Interest paid				(433,794	)		(624,399	)
Dividends received				782,053			267,923
Income taxes paid				(588,969	)		(650,889	)

Net cash provided by operating activities				W 6,259,365			8,685,737

See accompanying notes to the consolidated financial statements.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2021 and 2020


(in millions of Won)	Notes		2021			2020
Cash flows from investing activities
Acquisitions of short-term financial instruments			W	(41,797,503	)		(43,307,727	)
Proceeds from disposal of short-term financial instruments				40,336,417			40,500,759
Increase in loans				(526,643	)		(329,236	)
Collection of loans				568,536			138,270
Acquisitions of securities				(300,807	)		(338,063	)
Proceeds from disposal of securities				273,935			448,125
Acquisitions of long-term financial instruments				(289,612	)		—
Acquisitions of investment in subsidiaries, associates and joint ventures				(492,435	)		(141,785	)
Proceeds from disposal of investment in subsidiaries, associates and joint ventures				61,013			18,401
Acquisitions of investment property				(91,880	)		(976	)
Proceeds from disposal of investment property				3,809			250
Acquisitions of property, plant and equipment				(3,068,591	)		(3,154,412	)
Proceeds from disposal of property, plant and equipment				(11,117	)		(42,530	)
Acquisitions of intangible assets				(431,122	)		(300,645	)
Proceeds from disposal of intangible assets				9,485			79,011
Proceeds from disposal of assets held for sale				67,293			37,680
Collection of lease receivables				97,701			61,567
Payment for acquisition of business, net of cash acquired				5,472			—
Cash received from disposal of business, net of cash transferred				—			77,488
Others, net				2,542			(5,442	)

Net cash used in investing activities				(5,583,507	)		(6,259,265	)

Cash flows from financing activities		39
Proceeds from borrowings				4,358,955			4,410,387
Repayment of borrowings				(3,719,542	)		(3,644,057	)
Proceeds from (repayment of) short-term borrowings, net				(329,897	)		35,525
Capital contribution from non-controlling interests				660,488			176,062
Payment of cash dividends				(1,310,920	)		(659,145	)
Acquisition of treasury shares				(116,771	)		(883,219	)
Payment of interest of hybrid bonds				(16,493	)		(16,539	)
Repayment of lease liabilities				(281,288	)		(217,312	)
Repayment of redeemable convertible preferred shares				—			(278,581	)
Others, net				(13,198	)		(13,989	)

Net cash provided by financing activities				(768,666	)		(1,090,868	)

Effect of exchange rate fluctuation on cash held				112,950			(95,272	)

Net increase in cash and cash equivalents				20,142			1,240,332
Cash and cash equivalents at beginning of the period		5,10		4,755,578			3,515,246

Cash and cash equivalents at end of the period		5,10	W	4,775,720			4,755,578

See accompanying notes to the consolidated financial statements.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements

As of December 31, 2021 and 2020

1. General Information

General information about POSCO HOLDINGS INC. (formerly, POSCO), its 39 domestic subsidiaries including POSCO ENGINEERING & CONSTRUCTION CO., LTD., 130 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 131 associates and joint ventures are as follows:

(a)

The controlling company

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

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

POSCO HOLDINGS INC. (formerly, POSCO) 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 December 31, 2021, POSCO HOLDINGS INC.’s shareholders are as follows:


Shareholder’s name	Number of shares		Ownership (%)
National Pension Service		8,063,521		9.25
BlackRock Fund Advisors(* 1)		4,312,713		4.95
Nippon Steel Corporation		2,894,712		3.32
The Government of Singapore		2,889,467		3.31
Samsung group(* 1)		1,325,407		1.52
Others		67,701,015		77.65

		87,186,835		100.00

(*1)	Includes shares held by subsidiaries and others.

As of December 31, 2021, the shares of POSCO HOLDINGS INC. are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchange.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Consolidated subsidiaries

Details of consolidated subsidiaries as of December 31, 2021 and 2020 are as follows:


		Ownership (%)
		December 31, 2021						December 31, 2020
	Principal operations	POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Domestic]
POSCO ENGINEERING & CONSTRUCTION., CO., LTD.	Engineering and construction		52.80		—		52.80		52.80		—		52.80	Pohang
POSCO COATED & COLOR STEEL Co., Ltd.	Coated steel manufacturing		56.87		—		56.87		56.87		—		56.87	Pohang
POSCO ICT	Computer hardware and software distribution		65.38		—		65.38		65.38		—		65.38	Pohang
POSCO Research Institute	Economic research and consulting		100.00		—		100.00		100.00		—		100.00	Seoul
POSCO O&M CO.,Ltd.	Business facility maintenance		47.17		52.83		100.00		47.17		52.83		100.00	Seoul
POSCO A&C	Architecture and consulting		45.66		54.34		100.00		45.66		54.34		100.00	Seoul
POSCO Venture Capital Co., Ltd.	Investment in venture companies		95.00		—		95.00		95.00		—		95.00	Pohang
eNtoB Corporation	Electronic commerce		7.50		59.94		67.44		7.50		59.94		67.44	Seoul
POSCO CHEMICAL CO., LTD.	Refractories manufacturing and sales		59.72		—		59.72		61.26		—		61.26	Pohang
POSCO-Terminal Co., Ltd.	Transporting and warehousing		100.00		—		100.00		51.00		—		51.00	Gwangyang
POSCO M-TECH	Packing materials manufacturing and sales		48.85		—		48.85		48.85		—		48.85	Pohang
POSCO ENERGY CO., LTD.	Generation of electricity		100.00		—		100.00		100.00		—		100.00	Seoul
PNR	Steel by product manufacturing and sales		70.00		—		70.00		70.00		—		70.00	Pohang
Future Creation Fund Postech Early Stage account	Investment in venture companies		—		40.00		40.00		—		40.00		40.00	Seoul
POSCO WOMAN’S FUND	Investment in venture companies		—		40.00		40.00		—		40.00		40.00	Seoul
SPH Co, LTD.	House manufacturing and management		—		100.00		100.00		—		100.00		100.00	Incheon
POSCO Group University	Education service and real estate business		100.00		—		100.00		100.00		—		100.00	Incheon
Growth Ladder POSCO K-Growth Global Fund	Investment in venture companies		—		50.00		50.00		—		50.00		50.00	Pohang
2015 POSCO New technology II Fund	Investment in venture companies		—		25.00		25.00		—		25.00		25.00	Pohang
POSCO Research & Technology	Intellectual Property Services and consulting		100.00		—		100.00		100.00		—		100.00	Seoul
TANCHEON E&E	Refuse derived fuel and power generation		—		100.00		100.00		—		100.00		100.00	Seoul
POSCO Humans	Construction		75.49		24.51		100.00		75.49		24.51		100.00	Pohang
Mapo Hibroad Parking Co., Ltd.	Construction		—		71.00		71.00		—		71.00		71.00	Seoul
Busan E&E Co., Ltd.	Refuse derived fuel and power generation		70.00		—		70.00		70.00		—		70.00	Busan
POSCO INTERNATIONAL Corporation	Trading, energy & resource development and others		62.91		0.03		62.94		62.91		0.03		62.94	Incheon
Pohang Scrap Recycling Distribution Center Co., Ltd.	Steel processing and sales		—		51.00		51.00		—		51.00		51.00	Pohang
Songdo Development PMC (Project Management Company) LLC.	Housing business agency		—		100.00		100.00		—		100.00		100.00	Incheon
Korea Fuel Cell	Fuel cell		—		100.00		100.00		—		100.00		100.00	Pohang
POSCO GEM fund no1	Investment in venture companies		98.81		1.19		100.00		98.81		1.19		100.00	Pohang
POSCO MOBILITY SOLUTION (formerly, POSCO SPS CORPORATION)	STC, TMC, Plate manufacturing and sales		—		100.00		100.00		—		100.00		100.00	Cheonan
P&O Chemical Co., Ltd.	Chemical production		—		51.00		51.00		—		51.00		51.00	Gwangyang
Posco New Growth	Investment in venture companies		99.66		0.34		100.00		88.89		11.11		100.00	Seoul
IMP Fund I	Investment in venture companies		98.04		—		98.04		98.04		—		98.04	Pohang
POSCO Lithium Solution Co., Ltd.	Lithium manufacturing and sales		100.00		—		100.00		—		—		—	Gwangyang
POSCO-HY Clean Metal Co., Ltd.	Non-ferrous metal smelting		65.00		—		65.00		—		—		—	Gwangyang
Consus Pf private Real Estate Fund	REITs		—		66.67		66.67		—		—		—	—
New Energy Hub	Electricity and gas supply		87.44		12.56		100.00		—		—		—	Gwangyang
Posco Busan Newdeal Fund	Investment in venture companies		—		32.00		32.00		—		—		—	Pohang
Shinan Green Energy Co., LTD	Electricity production		—		54.53		54.53		—		—		—	Shinahn
Suncheon Eco Trans Co. Ltd	Train manufacturing and management		—		—		—		100.00		—		100.00	Suncheon


		Ownership (%)
		December 31, 2021						December 31, 2020
	Principal operations	POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Foreign]
POSCO America Corporation	Research&Consulting		99.45		0.55		100.00		99.45		0.55		100.00	USA
POSCO AUSTRALIA PTY LTD	Raw material sales & mine development		100.00		—		100.00		100.00		—		100.00	Australia
POSCO Canada Ltd.	Coal sales		100.00		—		100.00		100.00		—		100.00	Canada
POSCAN ELKVIEW COAL LTD.	Coal sales		—		100.00		100.00		—		100.00		100.00	Canada
POSCO Asia Co., Ltd.	Finance		100.00		—		100.00		100.00		—		100.00	China
POSCO-CTPC Co., Ltd.	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	China
POSCO E&C Vietnam Co., Ltd.	Steel structure manufacturing and sales		—		100.00		100.00		—		100.00		100.00	Vietnam
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd.	Stainless steel manufacturing and sales		58.60		23.88		82.48		58.60		23.88		82.48	China
POSCO (Thailand) Company Limited	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	Thailand
POSCO-MKPC SDN BHD	Steel manufacturing and sales		70.00		—		70.00		70.00		—		70.00	Malaysia
Qingdao Pohang Stainless Steel Co., Ltd.	Stainless steel manufacturing and sales		70.00		30.00		100.00		70.00		30.00		100.00	China
POSCO(Suzhou) Automotive Processing Center Co., Ltd.	Steel manufacturing and sales		90.00		10.00		100.00		90.00		10.00		100.00	China
POSCO-China Qingdao Processing Center Co.Ltd.	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	China
POS-ORE PTY LTD	Iron ore development and sales		—		100.00		100.00		—		100.00		100.00	Australia
POSCO-China Holding Corp.	Holding company		100.00		—		100.00		100.00		—		100.00	China
POSCO JAPAN Co., Ltd.	Steel trading		100.00		—		100.00		100.00		—		100.00	Japan
POS-CD PTY LTD	Coal sales		—		100.00		100.00		—		100.00		100.00	Australia
POS-GC PTY LTD	Coal sales		—		100.00		100.00		—		100.00		100.00	Australia
POSCO-India Private Limited	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	India
POSCO-India Pune Processing Center. Pvt. Ltd.	Steel manufacturing and sales		65.00		—		65.00		65.00		—		65.00	India
POSCO Japan PC CO.,LTD	Steel manufacturing and sales		—		86.12		86.12		—		86.12		86.12	Japan
POSCO-CFPC Co., Ltd.	Steel manufacturing and sales		39.60		60.40		100.00		39.60		60.40		100.00	China
POSCO E&C CHINA Co., Ltd.	Civil engineering and construction		—		100.00		100.00		—		100.00		100.00	China
POSCO MPPC S.A. de C.V.	Steel manufacturing and sales		21.02		75.29		96.31		21.02		75.29		96.31	Mexico
Zhangjigang Pohang Port Co., Ltd.	Loading and unloading service		—		100.00		100.00		—		100.00		100.00	China

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020


	Principal operations	Ownership (%)
		December 31, 2021						December 31, 2020
		POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Foreign]
POSCO-VIETNAM Co., Ltd.	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	Vietnam
POSCO MEXICO S.A. DE C.V.	Automotive steel sheet manufacturing and sales		83.28		14.88		98.16		83.28		14.88		98.16	Mexico
POSCO-Poland Wroclaw Processing Center Sp. z o. o.	Steel manufacturing and sales		60.00		—		60.00		60.00		—		60.00	Poland
POS-NP PTY LTD	Coal sales		—		100.00		100.00		—		100.00		100.00	Australia
DAEWOO INTERNATIONAL SHANGHAI WAIGAOQIAO CO., LTD	Intermediary trade & bonded warehouse operation		—		100.00		100.00		—		100.00		100.00	China
PT. Bio Inti Agrindo	Forest resources development		—		85.00		85.00		—		85.00		85.00	Indonesia
POSCO ENGINEERING AND CONSTRUCTION AUSTRALIA (POSCO E&C AUSTRALIA) PTY LTD	Construction and engineering service		—		100.00		100.00		—		100.00		100.00	Australia
POSCO-TISCO (JILIN) PROCESSING CENTER Co., Ltd.	Steel manufacturing and sales		50.00		10.00		60.00		50.00		10.00		60.00	China
POSCO Thainox Public Company Limited	STS cold-rolled steel manufacturing and sales		74.56		—		74.56		74.56		—		74.56	Thailand
Hunchun Posco Hyundai International Logistics Co.,LTD	Logistics		—		81.55		81.55		—		80.00		80.00	China
POSCO INTERNATIONAL VIETNAM CO., LTD	Trading business		—		100.00		100.00		—		100.00		100.00	Vietnam
POSCO(Chongqing) Automotive Processing Center Co., Ltd.	Steel manufacturing and sales		90.00		10.00		100.00		90.00		10.00		100.00	China
SUZHOU POSCO-CORE TECHNOLOGY CO., LTD.	Component manufacturing and sales		33.91		66.09		100.00		84.85		15.15		100.00	China
PT.Krakatau Posco Chemical Calcination (formerly, PT.Krakatau Posco Chemtech Calcination)	Quicklime manufacturing and sales		—		80.00		80.00		—		80.00		80.00	Indonesia
POSCO AFRICA (PROPRIETARY) LIMITED	Mine development		100.00		—		100.00		100.00		—		100.00	South Africa
POSCO ICT BRASIL	IT service and engineering		—		100.00		100.00		—		100.00		100.00	Brazil
POSCO Center Beijing	Real estate development, rental and management		—		100.00		100.00		—		100.00		100.00	China
POSCO-Malaysia SDN. BHD.	Steel manufacturing and sales		81.79		13.63		95.42		81.79		13.63		95.42	Malaysia
PT KRAKATAU BLUE WATER	Wastewater treamtment facilities operation and maintenance		—		67.00		67.00		—		67.00		67.00	Indonesia
POSCO INTERNATIONAL MYANMAR CO.,LTD.	Trading business		—		100.00		100.00		—		100.00		100.00	Myanmar
POSCO-Italy Processing Center	Stainless steel sheet manufacturing and sales		88.89		11.11		100.00		88.89		11.11		100.00	Italy
Myanmar POSCO C&C Company,Limited.	Steel manufacturing and sales		—		70.00		70.00		—		70.00		70.00	Myanmar
POSCO ICT VIETNAM	IT service and electric control engineering		—		100.00		100.00		—		100.00		100.00	Vietnam
POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE.LTD. (formerly, Daewoo Global Development. Pte., Ltd)	Real estate development		—		75.00		75.00		—		75.00		75.00	Singapore
Myanmar POSCO Engineering & Construction Company, Limited.	Construction and engineering service		—		100.00		100.00		—		100.00		100.00	Myanmar
POS-Minerals Corporation	Mine development management and sales		—		100.00		100.00		—		100.00		100.00	USA
POSCO(Wuhu) Automotive Processing Center Co., Ltd.	Steel manufacturing and sales		68.57		31.43		100.00		68.57		31.43		100.00	China
POSCO Engineering and Construction India Private Limited	Civil engineering and construction		—		100.00		100.00		—		100.00		100.00	India
POSCO COATED STEEL (THAILAND) CO., LTD.	Vehicle steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	Thailand
POSCO INTERNATIONAL AMARA Co., Ltd.	Real estate development		—		85.00		85.00		—		85.00		85.00	Myanmar
POSMATE-CHINA CO., LTD	Business facility maintenance		—		100.00		100.00		—		100.00		100.00	China
POSCO-Mexico Villagran Wire-rod Processing Center	Steel manufacturing and sales		56.75		10.00		66.75		56.75		10.00		66.75	Mexico
POSCO ChengDu Processing Center	Steel manufacturing and sales		33.00		10.00		43.00		33.00		10.00		43.00	China
POSCO(Suzhou) Steel Processing Center CO., LTD.	Steel manufacturing and sales		30.00		70.00		100.00		30.00		70.00		100.00	China
POSCO E&C SMART S DE RL DE CV	Civil engineering and construction		—		100.00		100.00		—		100.00		100.00	Mexico
POSCO Philippine Manila Processing Center, Inc.	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	Philippines
POSCO E&C HOLDINGS CO.,Ltd.	Holding company		—		100.00		100.00		—		100.00		100.00	Thailand
POSCO INTERNATIONAL POWER (PNGLAE) LTD.	Electricity production		—		100.00		100.00		—		100.00		100.00	Papua New Guinea
PT.Krakatau Posco Social Enterprise	Social enterprise		—		100.00		100.00		—		100.00		100.00	Indonesia
Ventanas Philippines Construction Inc	Construction		—		100.00		100.00		—		100.00		100.00	Philippines
SANPU TRADING Co., Ltd.	Raw material trading		—		70.04		70.04		—		70.04		70.04	China
Zhangjiagang BLZ Pohang International Trading	Steel Intermediate trade		—		100.00		100.00		—		100.00		100.00	China
POSCO RU Limited Liability Company	Trade and business development		100.00		—		100.00		100.00		—		100.00	Russia
GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Rice processing		—		60.00		60.00		—		60.00		60.00	Myanmar
POSCO ICT-China CO.,LTD	IT service and DVR business		—		100.00		100.00		—		100.00		100.00	China
Pos-Sea Pte Ltd	Steel Intermediate trade		—		100.00		100.00		—		100.00		100.00	Singapore
POSCO Europe Steel Distribution Center	Logistics & Steel sales		50.00		20.00		70.00		50.00		20.00		70.00	Slovenia
POSCO ENGINEERING (THAILAND) CO., LTD.	Construction and engineering service		—		100.00		100.00		—		100.00		100.00	Thailand
POSCO VST CO., LTD.	Stainless steel sheet manufacturing and sales		95.65		—		95.65		95.65		—		95.65	Vietnam
POSCO INTERNATIONAL UKRAINE, LLC.	Grain sales		—		100.00		100.00		—		100.00		100.00	Ukraine
Zhangjiagang Pohang Refractories Co., Ltd.	Refractory materials sales & furnace maintenance		—		51.00		51.00		—		51.00		51.00	China
POSCO Maharashtra Steel Private Limited	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	India
POSCO INDIA PROCESSING CENTER PRIVATE LIMITED	Steel manufacturing and sales		93.34		1.98		95.32		93.34		1.98		95.32	India
POSCO TNPC Otomotiv Celik San. Ve Tic. A.S	Steel manufacturing and sales		100.00		—		100.00		100.00		—		100.00	Turkey
POSCO Vietnam Processing Center. Co.,Ltd	Steel manufacturing and sales		94.05		5.95		100.00		83.54		5.29		88.83	Vietnam
POSCO(Liaoning) Automotive Processing Center Co., Ltd.	Steel manufacturing and sales		90.00		10.00		100.00		90.00		10.00		100.00	China
POSCO-Indonesia Jakarta Processing Center	Steel manufacturing and sales		70.51		21.69		92.20		70.51		21.69		92.20	Indonesia
PT.MRI	Mine development		65.00		—		65.00		65.00		—		65.00	Indonesia
POSCO TMC INDIA PRIVATE LIMITED	Steel manufacturing and sales		—		100.00		100.00		—		100.00		100.00	India
POSCO AMERICA ALABAMA PROCESSING CENTER CO., LTD.	Steel manufacturing and sales		—		97.80		97.80		—		97.80		97.80	USA
POSCO(Yantai）Automotive Processing Center Co., Ltd.	Steel manufacturing and sales		90.00		10.00		100.00		90.00		10.00		100.00	China
POSCO India Steel Distribution Center Private Ltd.	Steel logistics		—		100.00		100.00		—		100.00		100.00	India
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (formerly, POSCO SS VINA JOINT STOCK COMPANY)	Steel manufacturing and sales		51.00		—		51.00		51.00		—		51.00	Vietnam
PT.POSCO ICT INDONESIA	IT service and electric control engineering		—		66.99		66.99		—		66.99		66.99	Indonesia
POSCO NCR Coal Ltd.	Coal sales		—		100.00		100.00		—		100.00		100.00	Canada
POSCO WA PTY LTD	Iron ore sales & mine development		100.00		—		100.00		100.00		—		100.00	Australia
POSCO AUSTRALIA GP PTY LIMITED	Resource development		—		100.00		100.00		—		100.00		100.00	Australia

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020


	Principal operations	Ownership (%)
		December 31, 2021						December 31, 2020
		POSCO		Subsidiaries		Total		POSCO		Subsidiaries		Total		Region
[Foreign]
PT. KRAKATAU POSCO ENERGY	Electricity production construction and operation		—		90.00		90.00		—		90.00		90.00	Indonesia
POSCO INTERNATIONAL AMERICA CORP.	Trading business		—		100.00		100.00		—		100.00		100.00	USA
POSCO INTERNATIONAL Deutschland GMBH	Trading business		—		100.00		100.00		—		100.00		100.00	Germany
POSCO INTERNATIONAL JAPAN CORP.	Trading business		—		100.00		100.00		—		100.00		100.00	Japan
POSCO INTERNATIONAL SINGAPORE PTE. LTD.	Trading business		—		100.00		100.00		—		100.00		100.00	Singapore
POSCO INTERNATIONAL ITALIA S.R.L.	Trading business		—		100.00		100.00		—		100.00		100.00	Italy
POSCO INTERNATIONAL (CHINA) CO., LTD	Trading business		—		100.00		100.00		—		100.00		100.00	China
POSCO INTERNATIONAL TEXTILE LLC.	Textile manufacturing		—		100.00		100.00		—		100.00		100.00	Uzbekistan
POSCO INTERNATIONAL AUSTRALIA HOLDINGS PTY. LTD.	Resource development		—		100.00		100.00		—		100.00		100.00	Australia
POSCO MAURITIUS LIMITED	Coal development and sales		—		100.00		100.00		—		100.00		100.00	Mauritius
PT. KRAKATAU POSCO	Steel manufacturing and sales		70.00		—		70.00		70.00		—		70.00	Indonesia
POSCO INTERNATIONAL MEXICO, S.A de C.V	Trading business		—		100.00		100.00		—		100.00		100.00	Mexico
POSCO INTERNATIONAL MALAYSIA SDN BHD	Trading business		—		100.00		100.00		—		100.00		100.00	Malaysia
PT.POSCO INDONESIA INTI	Consulting		100.00		—		100.00		100.00		—		100.00	Indonesia
POSCO INTERNATIONAL SHANGHAI CO., LTD.	Trading business		—		100.00		100.00		—		100.00		100.00	China
PGSF, L.P.	Investment in bio tech Industry		—		100.00		100.00		—		100.00		100.00	USA
POSCO INTERNATIONAL INDIA PVT. LTD	Trading business		—		100.00		100.00		—		100.00		100.00	India
POSCO(Dalian) IT Center Development Co., Ltd.	Real estate development and investment		—		100.00		100.00		—		100.00		100.00	China
PT. POSCO E&C INDONESIA	Civil engineering and construction		—		100.00		100.00		—		100.00		100.00	Indonesia
HUME COAL PTY LTD	Raw material manufacturing		—		100.00		100.00		—		100.00		100.00	Australia
Brazil Sao Paulo Steel Processing Center	Steel manufacturing and sales		—		76.00		76.00		—		76.00		76.00	Brazil
POSCO ENGINEERING & CONSTRUCTION DO BRAZIL LTDA.	Construction		—		100.00		100.00		—		100.00		100.00	Brazil
POSCO ASSAN TST STEEL INDUSTRY	Steel manufacturing and sales		60.00		10.00		70.00		60.00		10.00		70.00	Turkey
HONG KONG POSCO E&C (CHINA) INVESTMENT Co., Ltd.	Real estate development and investment		—		100.00		100.00		—		100.00		100.00	Hongkong
JB CLARK HILLS	Apartment construction		—		70.00		70.00		—		70.00		70.00	Philippines
POS-LT Pty Ltd	Lithium mining investment		—		100.00		100.00		—		100.00		100.00	Australia
ZHEJIANG POSCO-HUAYOU ESM CO., LTD	Anode material manufacturing		60.00		—		60.00		60.00		—		60.00	China
POSCO Argentina S.A.U.	Mineral exploration/manufacturing/sales		100.00		—		100.00		100.00		—		100.00	Argentina
GRAIN TERMINAL HOLDING PTE. LTD.	Trading business		—		75.00		75.00		—		75.00		75.00	Singapore
Mykolaiv Milling Works PJSC.	Grain trading		—		100.00		100.00		—		100.00		100.00	Ukraine
Yuzhnaya Stevedoring Company Limited LLC.	Cargo handling		—		100.00		100.00		—		100.00		100.00	Ukraine
Posco International (Thailand) Co., Ltd.	Trade		—		100.00		100.00		—		100.00		100.00	Thailand
PT POSCO INTERNATIONAL INDONESIA	Trade		—		100.00		100.00		—		100.00		100.00	Indonesia
PEC POWERCON SDN. BHD.	Construction and engineering service		—		100.00		100.00		—		100.00		100.00	Malaysia
POSCO CHEMICAL Free Zone Enterprise	Refractory Construction		—		100.00		100.00		—		100.00		100.00	Nigeria
Poland Legnica Sourcing Center Sp. z o.o	Non-ferrous metal Smetling		100.00		—		100.00		—		—		—	Poland
POSCO INTERNATIONAL E&P MALAYSIA SDN. BHD.	Extraction of Crude petroleum and Natural gas		—		100.00		100.00		—		—		—	Malaysia
AGPA PTE. LTD.	Holding company		—		100.00		100.00		—		—		—	Singapore
POSCO AMERICA COMERCIALIZADORA S DE RL DE CV	Workforce services		—		—		—		—		100.00		100.00	Mexico
POSCO(Guangdong) Automotive Steel Co., Ltd.	Vehicle steel manufacturing and sales		—		—		—		83.64		10.00		93.64	China
POSCO E&C Mongolia	Construction and engineering service		—		—		—		—		100.00		100.00	Mongolia
POSCO INTERNATIONAL POWER (PNGPOM) LTD.	Electricity production		—		—		—		—		100.00		100.00	Papua New Guinea
DAESAN (CAMBODIA) Co., Ltd.	Real estate development and investment		—		—		—		—		100.00		100.00	Cambodia

The controlling company’s interests in the subsidiaries increased by W83,547 million (POSCO CHEMICAL CO., LTD and others) and decreased W27,716 million (POSCO Thainox Public Company Limited and others)in 2021 and 2020, respectively, as a result of changes in the Company’s ownership investment in subsidiaries that did not result in a loss of control.

POSCO received dividends of W133,125 million and W93,674 million from its subsidiaries in aggregate in 2021 and 2020, respectively.

As of December 31, 2021, there are no restrictions on the ability of subsidiaries to transfer funds to the controlling company, such as in the form of cash dividends, repayment of loans or payment of advances.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	Summarized financial information of principal subsidiaries as of and for the years ended December 31, 2021 and 2020 are as follows:

1) December 31, 2021


(in millions of Won)
										Net income
Company	Assets		Liabilities		Equity			Sales		(loss)
[Domestic]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		6,634,620		3,521,099		3,113,521			7,018,744		249,472
POSCO COATED & COLOR STEEL Co., Ltd.		566,959		251,038		315,921			1,328,999		95,790
POSCO ICT		628,144		274,578		353,566			839,245		(15,534	)
POSCO A&C		86,952		55,099		31,853			179,006		2,423
eNtoB Corporation		149,177		94,500		54,677			862,069		7,465
POSCO CHEMICAL CO., LTD.		3,761,333		1,430,012		2,331,321			1,939,524		119,124
POSCO M-TECH		156,334		51,769		104,565			323,878		13,064
POSCO ENERGY CO., LTD.		3,934,447		2,475,850		1,458,597			1,895,577		172,496
POSCO INTERNATIONAL Corporation		9,144,515		6,001,763		3,142,752			30,527,683		201,231
POSCO MOBILITY SOLUTION (formerly, POSCO SPS CORPORATION)		845,109		249,843		595,266			1,179,596		31,838
[Foreign]
POSCO America Corporation		107,281		6,970		100,311			18,421		9,813
POSCO AUSTRALIA PTY LTD(*1)		860,920		97,200		763,720			140,423		35,287
POSCO Asia Co., Ltd.		1,144,213		922,686		221,527			124,569		3,898
POSCO-CTPC Co., Ltd.		142,857		88,068		54,789			272,549		1,836
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd.		1,145,166		406,252		738,914			3,747,283		124,368
POSCO(Thailand) Company Limited		186,378		89,264		97,114			487,608		17,202
Qingdao Pohang Stainless Steel Co., Ltd.		189,037		53,859		135,178			418,547		12,427
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		458,874		287,330		171,544			841,973		8,509
POSCO-China Holding Corp.		783,937		246,649		537,288			50,833		(468	)
POSCO JAPAN Co., Ltd.		779,133		592,434		186,699			1,630,156		14,596
POSCO-India Pune Processing Center. Pvt. Ltd.		174,293		134,868		39,425			403,041		11,077
POSCO Japan PC CO.,LTD		371,800		299,430		72,370			553,263		10,701
POSCO-CFPC Co., Ltd.		366,616		300,028		66,588			1,105,299		6,765
POSCO MPPC S.A. de C.V.		421,707		332,152		89,555			596,680		6,296
POSCO-VIETNAM Co., Ltd.		435,512		384,377		51,135			1,198,970		42,190
POSCO MEXICO S.A. DE C.V.		668,843		445,641		223,202			630,312		3,405
POSCO Thainox Public Company Limited		490,646		142,881		347,765			715,151		31,584
POSCO Center Beijing		461,076		288,032		173,044			39,401		12,464
POSCO COATED STEEL (THAILAND) CO., LTD.		351,464		268,985		82,479			413,326		3,644
POSCO INTERNATIONAL AMARA Co., Ltd.		298,524		353,658		(55,134	)		27,408		(26,954	)
POSCO VST CO., LTD.		327,059		258,702		68,357			640,725		27,909
POSCO Maharashtra Steel Private Limited		1,486,478		962,899		523,579			1,679,472		149,007
POSCO INDIA PROCESSING CENTER PRIVATE LIMITED		286,619		218,463		68,156			674,205		20,581
POSCO Vietnam Processing Center. Co.,Ltd		282,202		201,443		80,759			609,033		23,557
POSCO(Liaoning) Automotive Processing Center Co., Ltd.		112,969		66,962		46,007			267,115		3,125
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY		524,012		249,863		274,149			473,386		37,741
PT. KRAKATAU POSCO ENERGY		264,092		108,594		155,498			32,428		16,207
POSCO INTERNATIONAL AMERICA CORP.		597,758		509,778		87,980			2,304,487		10,531
POSCO INTERNATIONAL Deutschland GMBH		381,367		374,284		7,083			645,792		2,952
POSCO INTERNATIONAL JAPAN CORP.		228,615		218,718		9,897			892,322		5,821
POSCO INTERNATIONAL SINGAPORE PTE. LTD.		416,495		407,243		9,252			4,285,372		3,094
POSCO INTERNATIONAL ITALIA S.R.L.		247,485		236,625		10,860			678,388		1,494
POSCO INTERNATIONAL (CHINA) CO., LTD		63,411		38,682		24,729			352,561		6,703
PT. KRAKATAU POSCO		3,158,351		2,933,782		224,569			2,694,601		476,391
POSCO INTERNATIONAL MALAYSIA SDN BHD		24,215		21,479		2,736			346,271		81
POSCO INTERNATIONAL INDIA PVT. LTD		13,263		19,775		(6,512	)		29,093		(7,671	)

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020


(in millions of Won)
									Net income
Company	Assets		Liabilities		Equity		Sales		(loss)
[Foreign]
POSCO ASSAN TST STEEL INDUSTRY		602,089		567,616		34,473		707,384		93,802
POSCO AMERICA ALABAMA PROCESSING CENTER CO., LTD.		145,715		125,091		20,624		229,046		(766	)
POSCO Argentina S.A.U.		376,010		2,079		373,931		109		(9,252	)
POSCO-MKPC SDN BHD		149,755		95,831		53,924		165,893		8,798
POSCO INTERNATIONAL VIETNAM CO.,LTD.		32,462		25,938		6,524		509,873		3,316
POSCO INTERNATIONAL SHANGHAI CO.,LTD.		59,700		49,128		10,572		152,676		1,811

(*1)	Summarized financial information of POSCO AUSTRALIA PTY LTD, a subsidiary of POSCO, is based on its consolidated financial information. The financial information of the other entities is based on separate financial statements of each entity.

2) December 31, 2020


(in millions of Won)
									Net income
Company	Assets		Liabilities		Equity		Sales		(loss)
[Domestic]
POSCO ENGINEERING & CONSTRUCTION., CO., LTD.		6,153,939		3,272,409		2,881,530		7,268,310		242,298
POSCO COATED & COLOR STEEL Co., Ltd.		463,458		238,481		224,977		870,212		4,503
POSCO ICT		673,669		304,016		369,653		942,950		13,289
POSCO A&C		87,422		56,353		31,069		153,605		4,816
eNtoB Corporation		111,897		64,745		47,152		606,432		1,246
POSCO CHEMICAL CO., LTD.		1,992,168		1,032,785		959,383		1,524,146		54,225
POSCO M-TECH		130,303		33,903		96,400		255,400		9,410
POSCO ENERGY CO., LTD.		3,815,748		2,522,350		1,293,398		1,446,576		128,986
POSCO INTERNATIONAL		7,205,951		4,184,237		3,021,714		19,224,845		203,975
POSCO MOBILITY SOLUTION (formerly, POSCO SPS CORPORATION)		680,006		118,357		561,649		673,694		8,389


(in millions of Won)
										Net income
Company	Assets		Liabilities		Equity			Sales		(loss)
[Foreign]
POSCO America Corporation		117,803		35,091		82,712			380,400		3,759
POSCO AUSTRALIA PTY LTD(*1)		611,146		27,217		583,929			94,357		25,769
POSCO Asia Co., Ltd.		2,005,836		1,806,421		199,415			3,397,863		(2,528	)
POSCO-CTPC Co., Ltd.		96,217		48,052		48,165			233,512		3,998
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd. (formerly, Zhangjiagang Pohang Stainless Steel Co., LTD)		974,572		429,295		545,277			3,033,552		11,226
POSCO(Thailand) Company Limited		148,558		66,585		81,973			304,381		1,520
Qingdao Pohang Stainless Steel Co., Ltd.		159,973		50,499		109,474			339,284		2,170
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		343,038		197,279		145,759			786,412		5,621
POSCO-China Holding Corp.		756,300		272,061		484,239			275,069		(28,936	)
POSCO JAPAN Co., Ltd.		560,796		385,749		175,047			1,320,360		8,945
POSCO-India Pune Processing Center. Pvt. Ltd.		112,679		86,539		26,140			267,423		2,608
POSCO Japan PC CO.,LTD		290,835		227,603		63,232			460,653		2,185
POSCO-CFPC Co., Ltd.		230,643		177,323		53,320			970,333		2,365
POSCO MPPC S.A. de C.V.		344,621		268,419		76,202			503,688		(331	)
POSCO-VIETNAM Co., Ltd.		332,237		325,429		6,808			631,348		3,102
POSCO MEXICO S.A. DE C.V.		591,513		389,906		201,607			383,933		(11,292	)
POSCO Thainox Public Company Limited		394,696		71,935		322,761			516,368		(1,049	)
POSCO Center Beijing		414,377		270,997		143,380			36,974		2,962
POSCO COATED STEEL (THAILAND) CO., LTD.		349,932		269,367		80,565			284,450		(5,440	)
POSCO INTERNATIONAL AMARA Co., Ltd.		297,229		322,196		(24,967	)		25,851		(19,531	)
POSCO VST CO., LTD.		248,677		212,482		36,195			472,181		(150	)
POSCO Maharashtra Steel Private Limited		1,068,777		723,441		345,336			874,914		(25,464	)
POSCO INDIA PROCESSING CENTER PRIVATE LIMITED (formerly, POSCO INDIA HOLDINGS PRIVATE LIMITED)		205,357		161,540		43,817			463,550		(369	)
POSCO VIETNAM HOLDINGS CO., LTD		168,543		112,326		56,217			497,626		4,442

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020


(in millions of Won)
										Net income
Company	Assets		Liabilities		Equity			Sales		(loss)
[Foreign]
POSCO(Liaoning) Automotive
Processing Center Co., Ltd.		97,827		59,437		38,390			232,309		1,508
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (formerly, POSCO SS VINA JOINT STOCK COMPANY)		395,583		179,871		215,712			323,801		(17,515	)
PT. KRAKATAU POSCO ENERGY		262,752		113,696		149,056			35,400		14,294
POSCO INTERNATIONAL AMERICA CORP.		312,286		241,556		70,730			1,224,752		5,592
POSCO INTERNATIONAL Deutschland GMBH		203,112		199,086		4,026			466,391		(6,994	)
POSCO INTERNATIONAL JAPAN CORP.		158,083		153,844		4,239			663,297		(109	)
POSCO INTERNATIONAL SINGAPORE PTE. LTD.		379,777		374,228		5,549			2,886,275		1,516
POSCO INTERNATIONAL ITALIA S.R.L.		131,484		122,135		9,349			515,133		(358	)
POSCO INTERNATIONAL (CHINA) CO., LTD.		47,311		31,453		15,858			218,521		38
PT. KRAKATAU POSCO		2,709,506		2,958,075		(248,569	)		1,690,249		(204,6I7	)
POSCO DAEWOO MALAYSIA SDN. BHD.		58,015		55,497		2,518			246,135		(577	)
POSCO INTERNATIONAL INDIA PVT. LTD		21,866		20,575		1,291			212,579		(3,436	)
POSCO ASSAN TST STEEL INDUSTRY		512,360		573,495		(61,135	)		475,749		124
POSCO AMERICA ALABAMA PROCESSING CENTER CO., LTD.		117,291		97,635		19,656			179,081		(5,975	)
POSCO Argentina S.A.U.		351,318		2,607		348,711			76		(5,832	)
POSCO-MKPC SDN BHD		101,862		58,909		42,953			165,752		1,781
POSCO INTERNATIONAL VIETNAM CO.,LTD.		26,248		23,480		2,768			221,603		118
POSCO INTERNATIONAL SHANGHAI CO.,LTD.		38,850		31,078		7,772			181,736		(1,046	)

(*1)	Summarized financial information of POSCO AUSTRALIA PTY LTD, a subsidiary of POSCO, is based on its consolidated financial information. The financial information of the other entities is based on separate financial statements of each entity.

(d)	Details of non-controlling interests by entity as of and for the years ended December 31, 2021 and 2020 are as follows:

1) December 31, 2021


(in millions of Won)	POSCO INTERNATIONAL Corporation			PT. KRAKATAU POSCO			POSCO CHEMICAL CO., LTD			POSCO ENGINEERING & CONSTRUCTION CO., LTD.			POSCO ICT			Others			Total
Current assets		5,952,771			968,129			2,071,307			4,423,461			423,422			9,496,214			23,335,304
Non-current assets		3,322,590			2,388,139			1,708,558			1,900,316			185,508			4,772,409			14,277,520
Current liabilities		(4,537,785	)		(1,155,003	)		(604,333	)		(2,913,223	)		(263,794	)		(7,918,852	)		(17,392,990	)
Non-current liabilities		(1,666,455	)		(1,778,668	)		(835,222	)		(576,143	)		(10,051	)		(1,706,779	)		(6,573,318	)
Equity		3,071,121			422,597			2,340,310			2,834,411			335,085			4,642,992			13,646,516
Non-controlling interests		1,138,360			126,779			942,660			1,337,867			116,000			1,542,960			5,204,626
Sales		30,545,740			2,694,601			1,939,524			7,017,077			832,127			28,538,963			71,568,032
Profit (loss) for the period		223,845			500,801			128,960			286,729			(18,802	)		690,197			1,811,730
Profit (loss) attributable to non-controlling interests		82,972			150,240			51,944			135,339			(6,509	)		189,590			603,576
Cash flows from operating activities		(235,359	)		151,393			36,745			113,021			(18,494	)		130,828			178,134
Cash flows from investing activities		(91,619	)		(4,022	)		(639,965	)		(243,463	)		(17,309	)		(86,585	)		(1,082,963	)
Cash flows from financing activities
(before dividends to non-controlling interest)		279,529			(81,187	)		595,521			36,359			(226	)		9,604			839,600
Dividends to non-controlling interest		(32,004	)		—			(7,370	)		(9,867	)		(2,628	)		(7,671	)		(59,540	)
Effect of exchange rate fluctuation on cash held		1,937			3,916			6			3,048			3			6,216			15,126
Net increase (decrease) in cash and cash equivalents		(77,516	)		70,100			(15,063	)		(100,902	)		(38,654	)		52,392			(109,643	)

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

2) December 31, 2020


(in millions of Won)	POSCO INTERNATIONAL Corporation			PT. KRAKATAU POSCO			POSCO CHEMICAL CO., LTD			POSCO ENGINEERING & CONSTRUCTION CO., LTD.			POSCO ICT			Others			Total
Current assets		3,992,996			503,633			774,817			4,040,470			465,158			7,207,141			16,984,215
Non-current assets		3,410,528			2,366,359			1,229,349			1,800,539			187,415			4,789,484			13,783,674
Current liabilities		(2,649,187	)		(1,722,805	)		(203,443	)		(2,577,173	)		(278,335	)		(6,354,111	)		(13,785,054	)
Non-current liabilities		(1,816,160	)		(1,235,948	)		(833,857	)		(667,395	)		(24,132	)		(1,727,139	)		(6,304,631	)
Equity		2,938,177			(88,761	)		966,866			2,596,441			350,106			3,915,375			10,678,204
Non-controlling interests		1,089,082			(26,628	)		374,582			1,225,543			121,200			1,330,280			4,114,059
Sales		19,230,652			1,691,310			1,524,146			7,269,843			935,958			21,059,978			51,711,887
Profit (loss) for the period		173,155			(179,403	)		29,720			354,799			8,961			(44,660	)		342,572
Profit (loss) attributable to non-controlling interests		64,183			(53,821	)		11,514			167,468			3,102			(19,899	)		172,547
Cash flows from operating activities		324,822			62,276			11,021			451,803			21,403			123,108			994,433
Cash flows from investing activities		(38,535	)		212			(162,861	)		(398,937	)		(4,841	)		(93,565	)		(698,527	)
Cash flows from financing activities (before dividends to non-controlling interest)		(99,765	)		(45,207	)		122,736			9,475			(302	)		(192,311	)		(205,374	)
Dividends to non-controlling interest		(32,004	)		—			(9,451	)		(9,867	)		(2,628	)		(6,102	)		(60,052	)
Effect of exchange rate fluctuation on cash held		(2,425	)		(1,421	)		(398	)		(2,220	)		(74	)		702			(5,836	)
Net increase (decrease) in cash and cash equivalents		152,093			15,860			(38,953	)		50,254			13,558			(168,168	)		24,644

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	Details of associates and joint ventures

1) Associates

Details of associates as of December 31, 2021 and 2020 are as follows:

Ownership (%)

Investee

Category of business

2021

2020

Region

[Domestic]

New Songdo International City Development, LLC

Real estate rental

29.90

Incheon

Gale International Korea, LLC

Real estate rental

29.90

Incheon

SNNC

Raw material manufacturing and sales

49.00

Gwangyang

KONES, Corp.

Technical service

26.72

Gyeongju

CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd

Real estate development

29.53

Chungju

DAEHO GLOBAL MANAGEMENT CO., LTD.

Investment advisory service

35.82

Pohang

Mokpo Deayang Industrial Corporation

Real estate development and rental

27.40

Mokpo

Gunggi Green Energy(* 1)

Electricity generation

19.00

Hwaseong

Pohang Special Welding Co.,Ltd.

Welding material and tools manufacturing and sales

50.00

Pohang

KoFC POSCO HANWHA KB Shared Growth NO. 2. Private Equity Fund(* 3)

Investment in new technologies

—

12.50

Seoul

EQP POSCO Global NO1 Natural Resources Private Equity Fund

Investment in new technologies

42.82

36.34

Seoul

KC Chemicals CORP.(* 1)

Machinery manufacturing

19.00

Hwaseong

POSTECH Social Enterprise Fund(* 1)

Investment in new technologies

9.17

Seoul

QSONE Co.,Ltd.

Real estate rental and facility management

50.00

Seoul

Chun-cheon Energy Co., Ltd

Electricity generation

49.10

Chuncheon

Keystone NO.1 Private Equity Fund(* 3)

Private equity financial

—

52.58

Seoul

Noeul Green Energy(* 1)

Electricity generation

10.00

Seoul

Posco-IDV Growth Ladder IP Fund(* 1)

Investment in new technologies

17.86

Seoul

Daesung Steel(* 1)

Steel sales

17.54

Busan

Pohang E&E Co., LTD

Investment in waste energy

30.00

Pohang

POSCO Energy Valley Fund

Investment in new technologies

20.00

Pohang

Hyundai Invest Guggenheim CLO Qualified Private Special Asset Trust No.2

Investment in new technologies

38.47

38.45

Seoul

Posco Agri-Food Export Fund

Investment in new technologies

30.00

Seoul

Posco Culture Contents Fund

Investment in new technologies

31.67

Seoul

PCC_Centroid 1st Fund(* 3)

Investment in new technologies

—

24.10

Seoul

PCC Amberstone Private Equity Fund 1(* 1)

Investment in new technologies

8.80

Seoul

UITrans LRT Co., Ltd.

Transporting

38.19

Seoul

POSCO Advanced Technical Staff Fund(* 1)

Investment in new technologies

15.87

Seoul

POSCO 4th Industrial Revolution Fund

Investment in new technologies

20.00

Seoul

Pureun Tongyeong Enviro Co., Ltd.

Sew erage treatment

20.40

Tongyeong

Pure Gimpo Co., Ltd.

Construction

28.79

Gimpo

Posgreen Co., Ltd.(* 1)

Lime and plaster manufacturing

19.00

Gwangyang

Clean Iksan Co., Ltd.

Construction

23.50

Iksan

Innovalley Co., Ltd.

Real estate development

28.77

Yongin

BLUE OCEAN Private Equity Fund

Private equity financial

27.52

Seoul

Western Inland highway CO.,LTD.

Construction

20.39

29.82

Incheon

Pocheon-Hwado Highway Corp. (Formerly, Metropolitan Outer Ring Expressway co., ltd.)(* 5)

Investment in Expressway

23.27

21.27

Incheon

INNOPOLIS Job Creation Fund II(* 1)

Investment in new technologies

6.13

Seoul

Samcheok Blue Power Co.,Ltd.

Generation of electricity

34.00

Samcheok

INKOTECH, INC.(* 1)

Electricity generation and sales

10.00

Seoul

PCC Social Enterprise Fund II(* 1)

Investment in new technologies business

16.67

Seoul

PCC Amberstone Private Equity Fund II(* 1)

Private equity trust

19.91

Seoul

NEXTRAIN Co.,Ltd(* 4)

Service maintenance and management

—

21.26

Incheon

TK CHEMICAL CORPORATION(* 4)

Chemical

—

5.01

Daegu

PCC-Conar No.1 Fund(* 1)

Investment in new technologies business

14.68

13.64

Pohang

HYOCHUN Co., Ltd(* 1)

Screen door operation and other

18.00

Seoul

RPSD Project Co., Ltd

Real estate development

29.00

Incheon

PCC EV Fund(* 1)

Investment in new technologies business

18.18

Pohang

IBKC-PCC 1st Fund(* 1)

Investment in new technologies business

18.18

Pohang

2019 PCC Materials and Parts Fund(* 1)

Investment in new technologies business

8.70

Pohang

Shinahn wind Power generation(* 4)

Electric, gas, steam

—

19.00

Suwon

2019 PCC New technology Fund(* 3)

Investment in new technologies business

—

4.76

Pohang

PCC-Woori LP secondary Fund(* 1)

Investment in new technologies business

18.85

Pohang

KPGE Inc.

Wholesales and retail, generator material, trade

25.00

Busan

CURO CO.,LTD.(* 1)

Manufacturing, construction

0.54

Ulsan

The Blue Gimpo Co., Ltd.(* 4)

Construction and engineering service

—

33.33

Incheon

Link City PFV Inc.

Contruction, housing construction and sales

44.00

Uijeongbu

BNH-POSCO Bio Healthcare Fund(* 1)

Investment in new technologies business

18.14

Pohang

PCC-BM Project Fund(* 1)

Investment in new technologies business

8.77

Pohang

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Ownership (%)

Investee

Category of business

2021

2020

Region

[Domestic]

Energy Innovation Fund I(* 1)

Investment in new technologies business

10.11

Pohang

ConsusPSdevelopment Professional Private Real Estate Fund

Real estate development

50.00

Seoul

POSTECH Holdings 4th Fund

Private Investment Association

40.00

Pohang

SNU STH IP Fund

Private Investment Association

33.33

Seoul

PCC-BM Project Fund 2(* 1)

Investment in new technologies business

13.70

Pohang

G&G Technology Innovation Fund No.1(* 1)

Investment in new technologies business

13.97

Seongnam

NPX-PCC Edutech Fund(* 1)

Investment in new technologies business

19.96

Pohang

C&-PCC I Fund(* 1)

Investment in new technologies business

0.68

Pohang

2020 POSCO-MOORIM Bio New Technology Fund(* 1)

Investment in new technologies business

5.00

Pohang

PCC-KAI Secondary I Fund(* 1)

Investment in new technologies business

19.12

Seoul

Human Eco-Land Co., Ltd.(* 2)

Sew age facilities management

27.95

—

Ansan

2021 PCC Bio New Technology Fund(* 1,2)

Investment in new technologies

5.45

—

Pohang

Consus BG Private Real Estate Fund No.2(* 2)

Real estate development

50.00

—

Seoul

Consus OS Private Real Estate Fund(* 2)

Real estate development

50.00

—

Seoul

Consus New Deal Infra Development Specialized Private Special Asset Investment Trust 1(* 2)

Investment Association

40.00

—

Seoul

Hybrid ESG Secondary Fund No.1(*1,2)

Investment Association

18.27

—

Pohang

Ownership (%)

Investee

Category of business

2021

2020

Region

[Foreign]

VSC POSCO Steel Corporation

Steel processing and sales

50.00

Vietnam

POSCHROME (PROPRIETARY) LIMITED

Raw material manufacturing and sales

50.00

South Africa

CAML RESOURCES PTY LTD

Raw material manufacturing and sales

33.34

Australia

Nickel Mining Company SAS

Raw material manufacturing and sales

49.00

New Caledonia

PT. Wampu Electric Power

Construction and civil engineering

20.00

Indonesia

POSK(Pinghu) Steel Processing Center Co., Ltd.

Steel processing and sales

20.00

China

PT.INDONESIA POS CHEMTECH CHOSUN Ref

Refractory manufacturing and sales

30.19

Indonesia

NS-Thainox Auto Co., Ltd.

Steel manufacturing and sales

49.00

Thailand

Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd

Tinplate manufacturing and sales

34.00

China

PT. Tanggamus Electric Power(* 1)

Construction and civil engineering

17.50

Indonesia

LLP POSUK Titanium

Titanium manufacturing and sales

35.30

Kazakhstan

LI3 ENERGY INC(* 4)

Resource development

—

26.06

Peru

IMFA ALLOYS FINLEASE LTD

Raw material manufacturing and sales

24.00

India

KRAKATAU POS-CHEM DONG-SUH CHEMICAL(* 1)

Chemical by-product manufacturing and sales

19.00

Indonesia

9404-5515 Quebec Inc.(* 1)

Investments management

10.40

Canada

Hamparan Mulya

Resource development

45.00

Indonesia

POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd.

Steel manufacturing and sales

25.00

China

Eureka Moly LLC

Raw material manufacturing and sales

20.00

USA

PT. Batutua Tembaga Raya(* 4)

Raw material manufacturing and sales

—

22.00

Indonesia

KIRIN VIETNAM CO., LTD(* 1)

Panel manufacturing

19.00

Vietnam

POSCO SeAH Steel Wire(Nantong) Co., Ltd.

Steel processing and sales

25.00

China

POS-SeAH Steel Wire (Thailand) Co., Ltd.

Steel manufacturing and sales

25.00

Thailand

Jupiter Mines Limited(* 1)

Resource development

6.89

Australia

SAMHWAN VINA CO., LTD(* 1)

Steel manufacturing and sales

19.00

Vietnam

Saudi-Korean Company for Maintenance Properties Management LLC(* 1)

Building management

19.00

Saudi Arabia

NCR LLC

Coal sales

22.10

29.40

Canada

AMCI (WA) PTY LTD

Iron ore sales & mine development

49.00

Australia

SHANGHAI LANSHENG DAEWOO CORP.

Trading

49.00

China

SHANGHAI WAIGAOQIAO FREE TRADE ZONE LANSHENG DAEWOO IN’L TRADING CO., LTD.

Trading

49.00

China

General Medicines Company Ltd.

Medicine manufacturing and sales

33.00

Sudan

KOREA LNG LTD.

Gas production and sales

20.00

England

AES-VCM Mong Duong Power Company Limited

Electricity generation

30.00

Vietnam

South-East Asia Gas Pipeline Company Ltd.

Pipeline construction and management

25.04

Myanmar

GLOBAL KOMSCO Daewoo LLC

Cotton celluloid manufacturing and sales

35.00

Uzbekistan

POSCO-Poggenamp Electrical Steel Pvt. Ltd.

Steel processing and sales

26.00

India

Qingdao Pohang DGENX Stainless SteelPipeCo., Ltd

Exhaust meter manufacturing

40.00

China

SHINPOONG DAEWOO PHARMA VIETNAM CO.,LTD(* 1)

Medicine production

3.42

Vietnam

ZHEJIANG HUAYOU-POSCO ESM CO., LTD

Cathode material Production

40.00

China

MONG DUONG FINANCE HOLDINGS B.V.

Financial Holdings

30.00

Netherlands

FQM Australia Holdings Pty Ltd(* 2)

Non-ferrous metal Mining

30.00

—

Australia

Qingdao ZhongShou New Energy Technology Co.,Ltd (* 1,2)

Artificial Graphite manufacturing

19.09

—

China

Black Rock Mining LTD(* 1,2)

Mining

14.81

—

Australia

(*1)	The Company has less than 20% of the voting rights; however, the Company has determined that it has significant influence because it has meaningful representation on the board of the investee.

(*2)	During the year ended December 31, 2021, the entity was newly classified to associates.

(*3)	During the year ended December 31, 2021, the entity was excluded from associates due to liquidation.

(*4)	During the year ended December 31, 2021, the entity was excluded from associates due to sale of interest, etc.

(*5)	During the year ended December 31, 2021, Metropolitan Outer Ring Expressway co., ltd. changed its name to Pocheon-Hwado Highway Corp.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

2) Joint ventures

Details of joint ventures as of December 31, 2021 and 2020 are as follows:

Investee

Category of business

Ownership (%)

Region

2021

2020

[Domestic]

POSCO MITSUBISHI CARBON TECHNOLOGY

Steel processing and sales

60.00

Gwangyang

POSCO-SGI Falcon Pharmaceutic Bio Secondary Fund 1(* 1)

Investment in new technologies

—

25.00

Seoul

POSCO-KB Shipbuilding Restructuring Fund

Investment in new technologies

18.75

Seoul

POSCO-NSC Venture Fund

Investment in new technologies

16.67

Seoul

PoscoPlutus Project 3rd Project fund

Investment in new technologies

5.96

Seoul

PCC Bio 2nd Fund

Investment in new technologies

19.72

Seoul

PCC Material 3rd Fund(* 1)

Investment in new technologies

—

2.38

Seoul

Union PCC Portfolio Fund

Investment in new technologies

14.12

Seoul

[Foreign]

KOBRASCO

Steel materials manufacturing and sales

50.00

Brazil

PT. POSMI Steel Indonesia

Steel processing and sales

36.69

Indonesia

CSP - Compania Siderurgica do Pecem

Steel manufacturing and sales

20.00

Brazil

BX STEEL POSCO Cold Rolled Sheet Co., Ltd.

Steel processing and sales

25.00

China

POSCO-SAMSUNG-Slovakia Processing Center

Steel processing and sales

30.00

Slovakia

YULCHON MEXICO S.A. DE C.V.

Tube for automobile manufacturing

11.85

Mexico

Hyunson Engineering & Construction HYENCO

Construction

4.89

Algeria

POSCO E&C Saudi Arabia

Civil engineering and construction

40.00

Saudi Arabia

Pos-Austem Suzhou Automotive Co., Ltd

Automotive parts manufacturing

19.90

China

POS-InfraAuto (Suzhou) Co., Ltd

Automotive parts manufacturing

16.20

China

POS-AUSTEM YANTAI AUTOMOTIVE CO., LTD

Automotive parts manufacturing

11.10

China

POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD

Automotive parts manufacturing

7.43

China

Kwanika Copper Corporation

Energy & resource development

34.04

Canada

DMSA/AMSA

Energy & resource development

3.89

4.27

Madagascar

Roy Hill Holdings Pty Ltd

Energy & resource development

12.50

Australia

POSCO-NPS Niobium LLC

Mine development

50.00

USA

HBIS-POSCO Automotive Steel Co., Ltd(* 2)

Steel manufacturing and sales

50.00

—

China

POSCO(Guangdong) Automotive Steel Co., Ltd.(* 2)

Vehicle steel manufacturing and sales

10.00

—

China

(*1)	Excluded from joint ventures due to liquidation during the year ended December 31, 2021.

(*2)	During the year ended December 31, 2021, the entity was newly classified to joint ventures.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(f)	New subsidiaries

Consolidated subsidiaries acquired or newly established during the year ended December 31, 2021 are as follows:


Company	Date of addition	Ownership (%)		Reason
Poland Legnica Sourcing Center Sp. z o.o	February 2021		100.00	New establishment
POSCO Lithium Solution Co., Ltd.	April 2021		100.00	New establishment
POSCO-HY Clean Metal Co., Ltd.	May 2021		65.00	New establishment
Consus Pf private Real Estate Fund	October 2021		66.67	New establishment
New Energy Hub	October 2021		100.00	New establishment
POSCO INTERNATIONAL E&P MALAYSIA SDN.BHD.	November 2021		100.00	New establishment
Posco Busan Newdeal Fund	December 2021		32.00	New establishment
AGPA PTE. LTD.	December 2021		100.00	New establishment
Shinan Green Energy Co., LTD	December 2021		54.53	New addition

(g)	Loss of controls

Subsidiaries for which the Company has lost control during the year ended December 31, 2021 are as follows:


Company	Date of exclusion	Reason
POSCO E&C Mongolia	January 2021	Liquidation
Suncheon Eco Trans Co. Ltd	May 2021	Loss of Control due to filing for bankruptcy
POSCO AMERICA COMERCIALIZADORA S DE RL DE CV	July 2021	Merged into POSCO INTERNATIONAL MEXICO S.A. de C.V
DAESAN (CAMBODIA) Co., Ltd.	October 2021	Liquidation
POSCO(Guangdong) Automotive Steel Co., Ltd.	December 2021	Loss of Control due to contributing interests into HBIS-POSCO Automotive Steel Co. Ltd
POSCO INTERNATIONAL POWER (PNGPOM) LTD.	December 2021	Liquidation

2. Statement of Compliance

The consolidated 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.

The consolidated financial statements were authorized for issue by the Board of Directors on January 28, 2022 and will be submitted for approval at the shareholders’ meeting to be held on March 18, 2022.

Basis of measurement

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

(a)	Derivatives instruments measured at fair value

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

(c)	Financial instruments measured at fair value through other comprehensive income

(d)	Defined benefit liabilities measured at the present value of the defined benefit obligation less the fair value of the plan assets

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Functional and presentation currency

The financial statements of POSCO and subsidiaries are prepared in functional currency of the respective operation. These consolidated financial statements are presented in Korean Won, which is POSCO’s functional currency which is the currency of the primary economic environment in which POSCO operates.

Use of estimates and judgments

The preparation of the consolidated 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.

(a)

Judgments

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

•

Note 1 - Subsidiaries, associates and joint ventures

•

Note 11 - Investments in associates and joint ventures

•

Note 12 - Joint operations

(b)	Assumptions and estimation uncertainties

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

•

Note 9 - Inventory

•

Note 11 - Investments in associates and joint ventures

•

Note 14 - Property, plant and equipment, net

•

Note 15 - Goodwill and other intangible assets, net

•

Note 20 - Provisions

•

Note 21 - Employee benefits

•

Note 23 - Financial instruments

•

Note 29 - Revenue – contract balances

•

Note 35 - Income taxes

•

Note 38 - Commitments and contingencies

(c)	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.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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 liability, either directly or indirectly.

•

Level 3 - inputs for the assets or liability 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.

Information about the assumptions made in measuring fair values is included in the following note:

•

Note 23 - Financial instruments

Changes in Accounting Policies

Except for the standards and amendments applied for the first time for the reporting period beginning on January 1, 2021 described below, the accounting policies applied by the Company in these consolidated financial statements are the same as those applied by the Company in its consolidated financial statements as of and for the year ended December 31, 2020.

(a)	‘Phase 2 Interest Rate Benchmark Reform’(K-IFRS No. 1109 “Financial Instruments”, K-IFRS No. 1039 “Financial Instruments : Recognition and Measurement”, K-IFRS No. 1107 “Financial Instruments : Disclosures”, K-IFRS No. 1104 “Insurance Contracts” and K-IFRS No. 1116 “Lease”)

The Company has applied ‘Phase 2 Interest Rate Benchmark Reform’(K-IFRS No. 1109 “Financial Instruments”, K-IFRS No. 1039 “Financial Instruments : Recognition and Measurement” , K-IFRS No. 1107 “Financial Instruments : Disclosures” , K-IFRS No. 1104 “Insurance Contracts” and K-IFRS No. 1116 “Lease”) for the first time for the reporting period commenced January 1, 2021. The Company has applied the amendments retrospectively.

However the Company did not restate the comparative financial statements for 2020 according to the transitional provisions in the amendments and the adoption of the amendments did not have any impact on the beginning balance of retained earnings.

The Company reflects the changes in the basis for determining contractual cash flows of financial assets and financial liabilities as a result of interest rate benchmark reform by updating the effective interest rate.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

A change in the basis for determining the contractual cash flows is required by the interest rate benchmark reform if the following conditions are met:

(a)	the change is necessary as a direct consequence of the reform; and

(b)	the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e. the basis immediately before the change.

When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Company first updates the effective interest rate, and then applies the policies on accounting for modifications to the additional changes.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

3. Summary of Significant Accounting Policies

The significant accounting policies applied by the Company in preparation of its consolidated financial statements are included below. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, except for those as disclosed in note 2.

Basis of consolidation

(a)	Business combinations

The Company accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Company. In determining whether a particular set of activities and assets is a business, the Company assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Company has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based measure of the replacement awards compared with the market-based measure of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.

(b)	Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Changes in the Company’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	Subsidiaries

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

(d)	Loss of control

When the Company loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

(e)	Interests in equity-accounted investees

The Company’s interests in equity-control investees comprise interests in associates and joint ventures. Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Company has joint control, whereby the Company has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

Interests in associates and joint ventures are accounted for using the equity method. They are recognized initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence or joint control ceases.

(f)	Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

Foreign currency transactions and translation

(a)	Foreign currency transactions

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Foreign operations

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

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

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

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

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

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and short-term investments in highly liquid securities that are readily convertible to known amounts of cash with maturities of three months or less from the acquisition date and which are subject to an insignificant risk of changes in value. Equity investments are excluded from cash and cash equivalents.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Non-derivative financial assets

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets are initially recognized when the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus, for an item not at financial assets measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

On initial recognition, a financial asset is classified as measured at amortized cost, debt instruments measured at fair value through other comprehensive income, equity instruments measured at fair value through other comprehensive income or financial assets measured at fair value through profit or loss.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the reporting period following the change in the business model.

(a)	Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at fair value through profit or loss.

•

it is held within a business model whose objective is to hold assets to collect contractual cash flows, and

•

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets measured at amortized cost are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, gains and losses on foreign currency translation and impairment losses are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(b)	Debt instruments measured at fair value through other comprehensive income

A debt instrument is measured at fair value through other comprehensive income if it meets both of the following conditions and is not designated as at fair value through profit or loss.

•

it is held within a business model whose objective is achieved by both collection contractual cash flows and selling financial assets, and

•

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments measured at fair value through other comprehensive income are subsequently measured at fair value. Interest income which is calculated using the effective interest method, gains and losses from foreign currency translation and impairment losses are recognized in profit or loss and other net profit or loss is recognized in other comprehensive income. At the time of elimination, other accumulated comprehensive income is reclassified to profit or loss.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	Equity instruments measured at fair value through other comprehensive income

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis.

Equity instruments measured at fair value through other comprehensive income are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and never reclassified to profit or loss.

(d)	Financial assets measured at fair value through profit or loss

All financial assets not classified as measured at amortized cost of fair value through other comprehensive income as described above are measured at fair value through profit or loss. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at fair value through other comprehensive income as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets measured at fair value through profit or loss are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

(e)	Derecognition of financial assets

Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. If a transfer does not result in derecognition because the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the Company continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received.

(f)	Offsetting a financial asset and a financial liability

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Inventories

Inventory costs, except materials-in-transit in which costs are determined by using specific identification method, are determined by using the moving-weighted average method. The cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The allocation of fixed production overheads to the costs of finished goods or work in progress are based on the normal capacity of the production facilities.

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

The carrying amount of those inventories is recognized as cost of goods sold in the period in which the related revenue is recognized.

Non-current assets held for sale

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

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Investment property

Property held to earn rentals or for capital appreciation or both is classified as investment property. Investment property is measured initially at its cost. Transaction costs are included in the initial measurement. Subsequently, investment property is carried at depreciated cost less any accumulated impairment losses.

Subsequent costs are recognized in the carrying amount of investment property at cost or, if appropriate, as separate items if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.

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

Property, plant and equipment

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

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

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

(b) the cost can be measured reliably.

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

Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of self-constructed assets, from the date that the asset is completed and ready for use. Other than land, the costs of an asset less its estimated residual value are depreciated. Depreciation of property, plant and equipment is recognized in profit or loss on a straight-line basis, which most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset, over the estimated useful lives of each component of an item of property, plant and equipment. Land is not depreciated.

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

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

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


Buildings			5-50 years
Structures			4-50 years
Machinery and equipment			4-25 years
Vehicles			3-20 years
Tools			3-10 years
Furniture and fixtures			3-20 years
Lease assets			2-30 years
Bearer plants			20 years

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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

Borrowing costs

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Intangible assets

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

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


Intellectual property rights			4-25 years
Development expense			3-5 years
Port facilities usage rights			4-75 years
Other intangible assets			2-15 years

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

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

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

Exploration for and evaluation of mineral resources

POSCO is engaged in exploration projects for mineral resources through subsidiaries, associates and joint ventures or other contractual arrangements. Expenditures related to the development of mineral resources are recognized as exploration or development intangible assets. The nature of these intangible assets are as follows:

(a)	Exploration and evaluation assets

Exploration and evaluation assets consist of expenditures for topographical studies, geophysical studies and trenching. These assets are reclassified as development assets when it is proved that the exploration has identified commercially viable mineral deposit.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Development assets

When proved reserves are determined and development is sanctioned, development expenditures incurred are capitalized. These expenditures include evaluation of oil fields, construction of oil/gas wells, drilling for viability and others. On completion of development and inception of extraction for commercial production of developed proved reserves, the development assets are reclassified as either property, plant and equipment or as intellectual property rights (mining rights) under intangible assets based on the nature of the capitalized expenditure.

The respective property, plant and equipment and intellectual property (mining rights) are each depreciated and amortized based on proved reserves on a unit of production basis.

Government grants

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

(a)	Grants related to assets

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

(b)	Grants related to income

Government grants which are intended to compensate the Company for expenses incurred are deducted from the related expenses.

Leases

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for considerations.

As a lessee

At inception or reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset of to restore the underlying asset or the site on which it is located.

The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as that of property and equipment. In addition, the right- of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

The Company determines its incremental borrowing rate by obtaining interest rates from various external sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the followings:

•

fixed payments

•

variable lease payments that depend on an index or a rate

•

amounts expected to be payable under a residual value guarantee; and

•

the exercise price under a purchase option that the Company’s is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit of loss if the carrying amount of the right-of-use asset has been reduced to zero. The lease liability is remeasured when there is:

•

a revised in-substance fixed lease payment,

•

a change in future lease payments arising from a change in an index or rate,

•

a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or

•

a change in the Company’s assessment of whether it will exercise a purchase, extension or termination option

The Company presents right-of-use assets in the same line item as is presents underlying assets of the same nature that it owns, and lease liabilities are included in other payables on the consolidated statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

As a lessor

At inception or the effective date of a modification that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. The classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

The Company leases out its investment properties. The Company classifies these leases as operating leases.

The Company provides subleases certain leased vessels and others.

Impairment for financial assets

The Company recognizes loss allowances for expected credit losses on:

•

financial assets measured at amortized cost

•

debt instruments measured at fair value through other comprehensive income

•

lease receivables, contractual assets, loan commitments, and financial guarantee contracts

If credit risk has increased significantly since the initial recognition, a loss allowance for lifetime expected credit loss is required to be measured at the end of every reporting period. If credit risk has not increased significantly since the initial recognition, a loss allowance is measured based on 12-month expected credit loss.

If the financial instrument has low credit risk at the end of the reporting period, the Company may assume that the credit risk has not increased significantly since initial recognition. However, a loss allowance for lifetime expected credit losses is required for contract assets or trade receivables that do not contain a significant financing component.

(a)	Judgments on credit risk

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realizing security (if any is held). The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to investment grade defined by reliable credit rating agencies.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Measurement of expected credit losses

Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. 12-month expected credit losses are the portion of lifetime expected credit losses that result from default that are possible within the 12 months after the reporting date. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls such as the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive.

Expected credit losses for financial assets measured at amortized cost are recognized in profit or loss. Loss allowances for financial assets measured at amortized cost are deducted from carrying amount of the assets. For debt instruments measured at fair value through other comprehensive income, the loss allowance is charged to profit or loss and is recognized in other comprehensive income.

(c)	Credit-impaired financial assets

At each reporting date, the Company assesses whether financial assets measured at amortized cost and debt instrument measured at fair value through other comprehensive income are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Objective evidence that a financial asset or group of financial assets are impaired includes:

•

significant financial difficulty of the issuer or borrower

•

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

•

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

•

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

•

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

(d)

Write-off

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in entirety or a portion. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery based on continuous payments and extinct prescriptions. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Impairment for non-financial assets

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

Management estimates the recoverable amount of an individual asset. If it is impossible to measure the individual recoverable amount of an asset, then management estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Company determined that individual operating entities are CGUs.

The recoverable amount of an asset or CGU is the greater of its value-in-use and its fair value less costs to sell. The value-in-use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.

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

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

Derivative financial instruments, including hedge accounting

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized as describe below.

(a) Hedge accounting

The Company holds forward exchange contracts, currency swaps and commodity future contracts to manage foreign exchange risk and commodity fair value risk. The Company designated derivatives as hedging instruments to hedge the risk of changes in the fair value of assets, liabilities or firm commitments (a fair value hedge) and foreign currency risk of highly probable forecasted transactions or firm commitments (a cash flow hedge).

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

On initial designation of the hedge, the Company formally documents the relationship between the hedging instruments and hedged items, including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

① Fair value hedge

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The gain or loss from remeasuring the hedging instrument at fair value for a derivative hedging instrument and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss in the same line item of the consolidated statement of comprehensive income.

The Company discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, or if the hedge no longer meets the criteria for hedge accounting. Any adjustment arising from gain or loss on the hedged item attributable to the hedged risk is amortized to profit or loss from the date the hedge accounting is discontinued.

② Cash flow hedge

When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.

(b)	Other derivatives

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

Non-derivative financial liabilities

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

(a)	Financial liabilities measured at fair value through profit or loss

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

A financial liability is classified as at fair value through profit or loss if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the acquisition are recognized in profit or loss as incurred.

(b)	Financial liabilities measured at amortized cost

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

(c)	Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expired. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Construction work in progress

The gross amount due from customers for contract work is presented for all contracts in which profits multiply cumulative percentage-of-completion exceed progress billings. If progress billings exceed profits multiply cumulative percentage-of-completion, then the gross amount due to customers for contract work is presented. Cost includes all expenditures related directly to specific projects and an allocation of fixed and variable overheads incurred in the Company’s contract activities based on normal operating capacity.

The Company accounts for the remaining rights and performance obligation on the contract with the customers on a net basis. Due from customers for contract work and due to customers for contract work for same contract are offset and presented on a net basis.

Employee benefits

(a)	Short-term employee benefits

Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render the related service. When an employee has rendered service to the Company during an accounting period, the Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as profit or loss. If the Company has a legal or constructive obligation which can be reliably measured, the Company recognizes the amount of expected payment for profit-sharing and bonuses payable as liabilities.

(b)	Other long-term employee benefits

Other long-term employee benefits include employee benefits that are settled beyond twelve months after the end of the period in which the employees render the related service, and are calculated at the present value of the amount of future benefit that employees have earned in return for their service in the current and prior periods, less the fair value of any related assets. Any actuarial gains and losses are recognized in profit or loss in the period in which they arise.

(c)	Retirement benefits: Defined contribution plans

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(d)	Retirement benefits: Defined benefit plans

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

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

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

Remeasurements of net defined benefit liabilities, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments, net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss in curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Provisions

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

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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

A Provision for warranties is recognized when the underlying products or services are sold, based on historical warranty data and a weighting of possible outcomes against their associated probabilities.

Regarding provision for construction warranties, warranty period starts from the completion of construction in accordance with construction contracts. If the Company has an obligation for warranties, provision for warranties which are estimated based on historical warranty data are recorded as cost of construction and provision for warranties during the construction period.

If the estimated total contract cost of the construction contract exceeds the total contract revenue, the estimated contract cost exceeding the contract revenue is recognized as a provision for construction losses in the remaining contract for which construction has not proceeded.

A provision for restoration regarding contamination of land is recognized in accordance with the Company’s announced Environment Policy and legal requirement as needed.

A provision is used only for expenditures for which the provision was originally recognized.

Emission Rights

The Company accounts for greenhouse gases emission right and the relevant liability as follows pursuant to the Act on Allocation and Trading of Greenhouse Gas Emission which became effective in Korea in 2015.

(a)	Greenhouse Gases Emission Right

Greenhouse Gases Emission Right consists of emission allowances which are allocated from the government free of charge and those purchased from the market. The cost includes any directly attributable costs incurred during the normal course of business.

Emission rights held for the purpose of performing the obligation are classified as intangible asset and initially measured at cost and subsequently carried at cost less accumulated impairment losses. The Company derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government when the future economic benefits are no longer expected to be probable.

(b)	Emission liability

Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. Emission liability is recognized when there is a high possibility of outflows of resources in performing the obligation and the costs required to perform the obligation are reliably estimable. Emission liability is an amount of estimated obligations for emission rights to be submitted to the government for the performing period. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The emission liability is derecognized when submitted to the government.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Equity instruments

(a)	Share capital

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

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

(b)	Hybrid Bonds

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of financial liability and an equity instrument. When the Company has an unconditional right to avoid delivering cash or another financial asset to settle a contractual obligation, the instruments are classified as equity instruments.

Revenue from contracts with customers

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) Sale of good

The goods sold by the Company consist mainly of steel products from the steel segment and products such as steel, chemicals, auto parts and machinery in the trade segment.

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.

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.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

The Company provides certain discount when the customer prepays according to the payment terms. The Company recognized revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when discount period expires.

(b) Transportation service

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

In the case of construction contracts where the Company renders construction services for plants, etc., the customer controls the assets as they are being constructed. This is because under those contracts, the Company is able to perform construction or design services to meet the customer’s specifications, and if a contract is terminated by the customer, the Company is entitled to reimbursement of all costs incurred to date, including a reasonable margin. When the contract can be reliably estimated, the company recognizes the contract revenue and contract cost as revenue and costs based on the progress of the contract activity as of the end of the reporting period. The percentage of completion is determined based on the proportion that contract costs incurred for work performed excluding contract cost incurred that do not reflect the stage of completion to date bear to the estimated total contract costs.

If the outcome of the contract cannot be reliably estimated, the revenue is recognized only to the extent of the contract costs that are probable to be recovered. If the total contract cost is likely to exceed the total contract revenue, expected losses are immediately recognized as a cost.

The Company issues an invoice when the customer has completed a progress confirmation and generally the payment is due within 45 days from the invoice date.

(d) Certain construction contracts for apartments

For certain construction service contracts for apartments where the criterion of an enforceable right to payment for performance is met under K-IFRS No. 1115, even if the legal ownership or physical occupancy of the incomplete construction is not transferred to the customer during the construction period, revenue is recognized based on percentage of completion by considering the terms and conditions described in the relevant law and contracts such as the guarantee for sale policy, government approval on business plan, payment and termination terms. For certain construction contracts for apartments and shopping centers where the criterion of an enforceable right to payment for performance is not met during the construction period, the Company recognizes revenue upon completion of construction when the control of the apartments and shopping centers are transferred to customers.

In the meantime, the billing point and settlement terms of the pre-sale contract differ depending on the contract terms.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Finance income and finance costs

The Company’s finance income and finance costs include:

•

interest income;

•

interest expense;

•

dividend income;

•

the foreign currency gain or loss on financial assets and financial liabilities;

•

the net gain or loss on financial assets measured at fair value through profit or loss;

•

hedge ineffectiveness recognized in profit or loss; and

•

the net gain or loss on the disposal of investments in debt securities measured at fair value through other comprehensive income.

Interest income or expense is recognized using the effective interest method. Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

•

the gross carrying amount of the financial asset; or

•

the amortized cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Income taxes

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

The Company recognizes interest and penalties related to corporate tax as if it is applicable

to the income taxes, the Company applies K-IFRS 1012 “Income Taxes”, if it is not applicable to the income taxes, the Company applies K-IFRS 1037 “Provisions Contingent Liabilities and Contingent Assets”.

(a)	Current income tax

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

The Company offsets current tax assets and current tax liabilities if, and only if, the Company:

•

has a legally enforceable right to set off the recognized amounts, and

•

intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Deferred income tax

The measurement of deferred income tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. The Company recognizes a deferred income tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and joint ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Company recognizes a deferred income tax asset for deductible temporary differences arising from investments in subsidiaries, associates and joint ventures, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable income.

A deferred income tax asset is recognized for the carryforward of unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, tax credits and deductible temporary differences can be utilized. The future taxable profit depends on reversing taxable temporary differences. When there are insufficient taxable temporary differences, the probability of future taxable profit (including the reversal of temporary differences) should be considered.

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

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current income tax liabilities and assets, and they relate to income taxes levied by the same tax authority and they intend to settle current income tax liabilities and assets on a net basis.

Earnings per share

Management calculates basic earnings per share (“EPS”) data for POSCO’s common shares, which is presented at the end of the statement of comprehensive income. Basic EPS is calculated by dividing profit attributable to common shareholders of POSCO by the weighted average number of common shares outstanding during the period, adjusted for own shares held. Diluted earnings per share is calculated by adjusting basic EPS and weighted average number of common shares, concerning the effect of all dilutive potential common shares.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Segment Reporting

Information of each operating segment is reported in a manner consistent with the internal business segment reporting provided to the chief operating decision-maker (Note 40). Operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

New standards and interpretations not yet adopted

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

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

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

(b)	K-IFRS No. 1103 “Business 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 should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

(c)	K-IFRS No. 1037 (Provisions, Contingent Liabilities and Contingent Assets) 一 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 amendment is effective for annual periods beginning on or after January 1, 2022. Early application is permitted. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

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

The amendment clarifies that 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, and that the debtor’s right to defer settlement of the liability does not affect the classification of debt liquidity. The amendment is effective for annual periods beginning on or after January 1, 2023. Early application is permitted. The Company does not expect the effect of the amendments to the consolidated financial statements to be significant.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	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. If temporary differences arise, which are offsetting the same amount at the time of transaction, the Company would recognize deferred tax even if it is not a business combination and affects neither accounting profit nor taxable profit(tax loss). The amendment is effective for annual periods beginning on or after January 1, 2023. Early application is permitted. The Company does not expect the effect of the amendments to the financial statements to be significant.

4. Financial risk management

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

•

credit risk

•

liquidity risk

•

market risk

•

capital risk

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

(a)	Financial risk management

Risk management framework

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. In addition, credit risk arises from finance guarantees.

The Company implements a credit risk management policy under which the Company only transacts business with counterparties that have a certain level of credit rate evaluated based on financial condition, historical experience, and other factors. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The default risk of a nation or an industry in which a customer operates its business does not have a significant influence on credit risk. The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness.

The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for companies of similar assets in respect of losses that have been incurred.

Credit risk also arises from transactions with financial institutions, and such transactions include transactions of cash and cash equivalents, various deposits, and financial instruments such as derivative contracts. The Company manages its exposure to this credit risk by only entering into transactions with banks that have high international credit ratings. The Company’s treasury department authorizes, manages, and overseas new transactions with financial institutions with whom the Company has no previous relationship.

Furthermore, the Company limits its exposure to credit risk of financial guarantee contracts by strictly evaluating their necessity based on internal decision making processes, such as the approval of the Board of Directors.

Liquidity risk

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Market risk

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

①

Currency risk

The Company’s policy in respect of foreign currency risks is a natural hedge whereby foreign currency income is offset with foreign currency expenditures. The remaining net exposures after the natural hedge have been hedged using derivative contracts such as forward exchange contracts. In addition, the Company’s derivative transactions are limited to hedging actual foreign currency transactions and speculative hedging is not permitted. Based on this policy, the Company has performed currency risk management specific to various characteristics of different segments. The entities in the steel segment reduces the foreign currency exposure by repayment of foreign currency borrowings subjected to investment in overseas when its maturities come. The entities in the engineering and construction segment have hedged foreign currency risks by using forward exchange contracts. Entities in the trading segment have hedged foreign currency risks by using forward exchange contracts when the foreign currencies received and paid are different.

②

Interest rate risk

The Company manages the exposure to interest rate risk by adjusting of borrowing structure ratio between borrowings at fixed interest rate and variable interest rate. The Company monitors interest rate risks regularly in order to avoid exposure to interest rate risk on borrowings at variable interest rate.

③

Interest rate benchmark reform risk

A fundamental reform of major interest rate benchmark is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as “IBOR reform”). The publication of overnight and 1, 3, 6, and 12 months USD LIBOR will cease on June 30, 2023 and all other LIBOR publication has ceased on December 31, 2021. As a result of the reform, Korea Overnight Financing Repo Rate (KOFR) has been selected as the benchmark for the domestic CD rate, which has been published by Korea Securities since November 26, 2021. The details of when and how to KOFR are unclear.

The Company plans to modify the clause in a contract or change the LIBOR rate to alternative benchmark rate for the financial instruments for which LIBOR settings are not yet ceased to be published. The market trend of CD rate related financial instruments is monitored, and if needed, the Company plans to modify the clause in the contract or change the interest rate from CD rate to KOFR.

As of December 31, 2021, the financial instruments with USD LIBOR and CD rate as the benchmark rates are mostly associated with interest rate benchmark reform risk. The Company is exposed to a variety of risks: legal risk, process risk, and operational risk, due to the modification of contract. In addition, the Company is exposed to risk associated with monitoring the market trend related to alternative benchmark rate for risk management of new alternative benchmark rate and establishing appropriate risk management strategy.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

The Company monitors and manages its transition to alternative rates. The Company evaluates the extent to which contracts reference IBOR cash flows, whether such contracts will need to be amended as a result of IBOR reform and how to manage communications about IBOR reform with counterparties.

As of December 31, 2020, USD LIBOR and CD floating rate loans, borrowings, and derivatives are exposed to interest rate benchmark reform risk. For some USD LIBOR floating rate financial instruments, the Company completed the modification of contracts by December 31, 2021. The termination of the publication of USD LIBOR date is expected to be June 30, 2023 but is subject to change. The Company plans to replace USD LIBOR with SOFR immediately after cessation.

In July 2019, changes related to the methodologies to determine Euribor were made and Belgium Financial Services and Markets Authority granted the continuity of Euribor usage based on the European Union Benchmark Regulation. The Company did not make a transition from Eurbior to alternative benchmark rate, and expects to continue to use Euribor.

The Company manages the alternative benchmark rate transition by modifying the clause, IBOR related to uncompleted interest rate benchmark reform. The progress of transition is managed by comparing the financial instruments with transition not yet completed and financial instruments with modification of clause completed. The Company classifies the financial instruments, with IBOR as the benchmark rate, as transition not yet completed even if the clause in the contract has been modified.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Financial instruments classified as transition not yet completed as of December 31, 2021 are as follows:


(in millions of Won)	*USD LIBOR (3)**				*OTHER LIBOR (4)**
*Category(5)**	Transition not yet completed		Modification of clause completed		Transition not yet completed			Modification of clause completed
*Non-derivative financial assets (1)**
Loans	W	4,742		—		—			—
*Non-derivative financial liabilities (1)**
Borrowings		2,328,046		18,968		51,512			51,512
*Derivatives (2)**
Interest rate swap		6,372		—		—			—
Foreign currency swap		—		—		(2,548	)		(2,548	)

(*1)	Based on nominal amount

(*2)	Based on related financial assets(liabilities) amount

(*3)	Excluded financial instruments with maturity date before June 30, 2023

(*4)	Financial instruments using LIBOR until the interest rate renewal

(*5)	Excluded financial instruments not obligated to use alternative benchmark rate as of December 31, 2021

The USD LIBOR related financial instruments with maturity date before June 30, 2023, and transition not yet completed include borrowings of W1,696,750 million, loans of W48,368 million, and derivative assets of W9,721 million. The transition to alternative benchmark rate is not needed as the USD LIBOR publishment will continue until maturity.

④

Other market price risk

Equity price risk arises from fluctuation of market price of listed equity securities. Management of the Company measures regularly the fair value of listed equity securities and the risk of variance in future cash flow caused by market price fluctuations. Significant investments are managed separately and all buy and sell decisions are approved by management of the Company.

(b)	Management of capital

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Net borrowing-to-equity ratio as of December 31, 2021 and 2020 is as follows:


(in millions of Won)	2021			2020
Total borrowings	W	21,741,216			20,497,607
Less: Cash and cash equivalents		4,775,166			4,754,644

Net borrowings		16,966,050			15,742,963
Total equity		54,804,943			47,674,592
Net borrowings-to-equity ratio		30.96	%		33.02	%

5. Cash and Cash Equivalents

Cash and cash equivalents as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Cash	W	8,940		3,100
Demand deposits and checking accounts		2,310,431		2,344,259
Time deposits		947,904		1,108,111
Other cash equivalents		1,507,891		1,299,174

	W 4,775,166		4,754,644

As of December 31, 2021, cash and cash equivalents amounting to W1,819 million of subsidiaries of the Company, such as POSCO E&C CHINA Co., Ltd., is restricted.

6. Trade Accounts and Notes Receivable

(a)	Trade accounts and notes receivable as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021			2020
Current
Trade accounts and notes receivable	W	9,266,729			7,471,916
Finance lease receivables		126			41,841
Due from customers for contract work		1,110,082			948,879
Less: Allowance for doubtful accounts		(314,955	)		(342,017	)

	W	10,061,982			8,120,619

Non-current
Trade accounts and notes receivable	W	113,370			131,010
Finance lease receivables		—			46
Less: Allowance for doubtful accounts		(50,165	)		(44,633	)

	W	63,205			86,423

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position, because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. As of December 31, 2021 and December 31, 2020, the carrying amounts of such secured borrowings are W 270,101 million and W 328,807 million, respectively, which are presented in the statements of financial position as short-term borrowings.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Finance lease receivables are as follows:


(in millions of Won)
Customer	Leased items	2021		2020
Rental contractor (executives and employees)	Songdo rental apartment contract	W	75		41,624
ZHAOHUUI PROSPERITY INT’L LTD	Office lease		51		263

		W	126		41,887

(c)	As of December 31, 2021 and 2020, the Company’s total lease investment and net lease investment are as follows:


(in millions of Won)	2021		2020
Less than 1 year	W	126		41,847
1 year—3 years				47

Undiscounted lease payments		126		41,894
Unrealized fianace income		—		(7	)

Net Investment in the lease	W	126		41,887

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

7. Other Receivables

(a)

The details of other receivables as of December 31, 2021 and 2020, are as follows:


(in millions of Won)	2021			2020
Current
Loans	W	331,692			258,735
Other accounts receivable		1,305,383			835,791
Accrued income		350,301			298,157
Deposits		130,011			82,884
Others		17,706			18,015
Lease receivables		63,568			68,198
Less: Allowance for doubtful accounts		(94,051	)		(67,541	)

	W	2,104,610			1,494,239

Non-current
Loans	W	884,990			798,287
Other accounts receivable		196,018			197,304
Accrued income		121,041			86,920
Deposits		390,971			284,588
Lease receivables		80,317			128,366
Less: Allowance for doubtful accounts		(258,194	)		(299,503	)

	W	1,415,143			1,195,962

(b)

The details of lease receivables are as follows:

Customer

Leased items

2021

2020

HEUNG-A SHIPPING CO., LTD., HEUNG-A LINE CO., LTD., MSC

6 Container ships, 4
Tankers

153,395

166,077

KOGAS, ONGC Videsh Limited, GAIL(India) Limited, Myanmar Oil and Gas Enterprise

Helicopter, Ship,
Office, Jetty

23,679

30,487

177,074

196,564

(c)

As of December 31, 2021 and 2020, total lease investment and net lease investment are as follows:


(in millions of Won)	2021			2020
Less than 1 year	W	68,782			70,378
1 year—3 years		55,270			101,049
3 years—5 years		5,388			28,922
Over 5 years		52,634			9,969

Undiscounted lease payments		182,074			210,318
Unrealized interest income		(5,000	)		(13,754	)

Present value of minimum lease payment	W	177,074			196,564

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

8. Other Financial Assets

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


(in millions of Won)	2021		2020
Current
Derivatives assets	W	66,558		99,324
Debt securities		157,895		154,154
Deposit instruments(* 1,2)		2,709,171		2,322,327
Short-term financial instruments(* 2)		10,514,093		9,133,404

	W	13,447,717		11,709,209

Non-current
Derivatives assets	W	182,538		18,551
Equity securities(* 3)		1,466,061		1,120,968
Debt securities		3,968		20,260
Other securities(* 3)		430,998		364,404
Deposit instruments(* 2)		36,109		37,624

	W	2,119,674		1,561,807

(*1)	As of December 31, 2021 and 2020, W4,314 million and W4,881 million, respectively, are restricted in use for a government project.

(*2)	As of December 31, 2021 and 2020, financial instruments amounting to W83,738 million and W46,855 million, respectively, are restricted in use for financial arrangements, pledge and others.

(*3)	As of December 31, 2021 and 2020, W189,198 million and W113,674 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

9. Inventories

(a)	Inventories as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021			2020
Finished goods	W	2,583,191			1,285,552
Merchandise		1,326,736			751,245
Semi-finished goods		2,902,717			1,626,855
Raw materials		3,777,112			1,980,518
Fuel and materials		917,906			876,593
Construction inventories		716,446			936,813
Materials-in-transit		3,051,786			1,664,770
Others		101,133			61,086

		15,377,027			9,183,432

Less: Allowance for inventories valuation		(161,929	)		(131,642	)

	W	15,215,098			9,051,790

(b)	The changes of allowance for inventories valuation for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Beginning	W	131,642			216,143
Loss on valuation of inventories		78,783			54,014
Utilization on sale of inventories		(49,528	)		(132,707	)
Others		1,032			(5,808	)

Ending	W	161,929			131,642

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

10. Assets Held for Sale

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


(in millions of Won)	2021						2020
	The controlling *company(1,2,3,4)**		*Subsidiaries(7)**		Total		The controlling company(*3)		Subsidiaries		Total
Asset
Cash and cash equivalents(*5)	W	—		554		554		—		934		934
Account receivables and other receivbles		—		956		956		—		273		273
Investment stock in joint ventures(*6)		—		13,044		13,044		—		—		—
Tangible assets		29,236		30,995		60,231		32,244		40		32,284
Intangible assets		553		2,977		3,530		—		—		—
Others		—		155		155		—		719		719

	W	29,789		48,681		78,470		32,244		1,966		34,210

Liability
Others	W	185		4		189		—		25		25

(*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, 2019, the Company decided to dispose individual assets for which use was discontinued, such as CEM plants, and classified the assets as held for sale. During the year ended December 31, 2020 the Company recognized W5,030 million of impairment loss for the difference between the fair value less cost to sell and the carrying amount of the assets. During the year ended December 31, 2021, the Company disposed of the assets held for sale for W25,767 million.

(*4)	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.

(*5)	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 December 31, 2021 and 2020.

(*6)	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.

(*7)	The Company decided to dispose tangible/intangible assets of HUME COAL PTY LTD, a subsidiary, and classified as assets held for sale for W33,972 million.

11. Investments in Associates and Joint ventures

(a)	Investments in associates and joint ventures as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Investments in associates	W	2,203,274		1,732,833
Investments in joint ventures		2,311,373		2,143,416

	W	4,514,647		3,876,249

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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


(in millions of Won)	2021								2020
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources
Private Equity Fund		178,691,901,565		42.82	W	178,787	W	176,136		175,939
Samcheok Blue Power Co.,Ltd.(* 1)		4,507,138		34.00		429,904		382,887		145,092
SNNC		18,130,000		49.00		90,650		171,332		160,332
QSONE Co.,Ltd.		200,000		50.00		84,395		86,058		86,004
Chun-cheon Energy Co., Ltd(* 1)		17,308,143		49.10		86,541		9,571		23,913
Western Inland highway Co.,Ltd.		10,988,115		20.39		54,941		53,563		45,070
NEXTRAIN Co., Ltd.(* 2)		—		—		—		—		47,364
Pocheon-Hwado Highway Corp. (formerly, Metropolitan Outer Ring Expressway co., ltd.)(* 1)		5,878,095		23.27		29,390		28,813		13,721
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		2,008,000		29.53		10,040		19,191		17,137
Daesung Steel(* 3)		108,038		17.54		14,000		19,073		16,990
PCC Amberstone Private Equity Fund 1(* 3)		8,375,982,634		8.80		8,258		9,251		9,230
Others (57 companies)(* 1)								107,035		103,472

								1,062,910		844,264

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		132,907		238,601		199,342
AES-VCM Mong Duong Power Company Limited(* 1)		—		30.00		164,303		182,639		158,777
9404-5515 Quebec Inc.(* 3)		114,452,000		10.40		124,341		135,738		123,296
FQM Australia Holdings Pty Ltd(* 4)		186,000,030		30.00		109,568		91,052		—
Eureka Moly LLC		—		20.00		240,123		13,633		43,520
AMCI (WA) PTY LTD		49		49.00		209,664		67,972		71,732
NCR LLC		—		22.10		98,737		102,319		46,608
KOREA LNG LTD.		2,400		20.00		135,205		31,340		42,229
Nickel Mining Company SAS		3,234,698		49.00		157,585		48,249		40,890
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		134,400,000		40.00		22,423		22,769		22,147
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		10,200,000		34.00		9,517		19,099		15,181
PT. Wampu Electric Power(* 1)		8,708,400		20.00		10,054		15,851		12,716
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		9,140		7,110
Others (27 companies)(* 1)								161,962		105,021

								1,140,364		888,569

							W	2,203,274		1,732,833

(*1)	As of December 31, 2021 and 2020, investments in associates amounting to W629,832 million and W410,573 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2)	During the year ended December 31, 2021, investment in this associate was transferred to financial assets at fair value through other comprehensive income due to decline in ownership upon capital increase in the associate in which the Company did not participate.

(*3)	As of December 31, 2021, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering the structure of its Board of Directors and others.

(*4)	During the year ended December 31, 2021, the Company acquired shares of FQM Australia Holdings Pty Ltd and classified the investment as investment in an associate

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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


(in millions of Won)	2021								2020
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
POSCO MITSUBISHI CARBON TECHNOLOGY		11,568,000		60.00	W	115,680	W	169,838		153,457
Others (5 companies)								6,676		14,014

								176,514		167,471

[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672		1,346,712		1,418,056
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609		393,793		353,725
KOBRASCO		2,010,719,185		50.00		32,950		68,296		54,400
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961		107,650		91,270
DMSA/AMSA(*1,2)		—		3.89		346,880		24,144		31,104
CSP-Compania Siderurgica do Pecem		1,578,377,432		20.00		676,060		52,257		—
HBIS-POSCO Automotive Steel Co., Ltd(*3)		—		50.00		109,057		110,769		—
Others (11 companies)								31,238		27,390

								2,134,859		1,975,945

							W	2,311,373		2,143,416

(*1)	As of December 31, 2021 and December 31, 2020, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings.

(*2)

All of the shareholders of the joint venture entered into supplemental funding agreement to extend the maturity of the loans to the joint venture by the lenders. However, the Company believed the shareholders’ supplemental funding agreement was invalid and was in arbitration process for annulment. Pursuant to the final judgement from the arbitration, the Company received a refund of the previously provided supplement funding which was subsequently converted to shares. Upon receipt of such capital distribution, the Company recognized decrease in the investment on joint venture, which also resulted in decrease in the Company’s ownership in the investee.

(*3)

During the year ended December 31, 2021, the Company newly acquired interests in HBIS-POSCO Automotive Steel Co., Ltd through investment in kind with shares in POSCO(Guangdong) Automotive Steel Co., Ltd which was a subsidiary. Meanwhile, the residual interests in POSCO(Guangdong) Automotive Steel Co., Ltd owned by POSCO-China Holding Corp. which is a subsidiary are classified as assets held for sale.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(d)	The movements of investments in associates and joint ventures for the years ended December 31, 2021 and 2020 were as follows:

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.
(formerly, Metropolitan Outer Ring Expressway co., ltd.)		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 due from translations of financial statements of foreign investees and others.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

2)	For the year ended December 31, 2020


(in millions of Won)
Company	December 31, 2019 Book value		Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(* 1)			December 31, 2020 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	175,907		—		—			34			(2	)		175,939
Samcheok Blue Power Co.,Ltd.		161,280		—		—			(5,262	)		(10,926	)		145,092
SNNC		142,602		—		(2,901	)		18,701			1,930			160,332
QSONE Co.,Ltd.		85,887		—		(1,140	)		1,257			—			86,004
Chun-cheon Energy Co., Ltd		56,679		—		—			(33,173	)		407			23,913
Western Inland highway CO.,LTD.		5,115		42,246		—			(2,294	)		3			45,070
NEXTRAIN Co., Ltd.		41,447		7,910		—			(2,786	)		793			47,364
Pocheon-Hwado Highway Corp. (formerly, Metropolitan Outer Ring Expressway co., ltd.)		8,343		5,573		—			(195	)		—			13,721
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		17,824		—		—			(687	)		—			17,137
Daesung Steel		15,375		—		—			(514	)		2,129			16,990
PCC Amberstone Private Equity Fund 1		9,570		—		(715	)		589			(214	)		9,230
POSCO MITSUBISHI CARBON TECHNOLOGY		182,648		—		(19,401	)		(9,794	)		4			153,457
Others (65 companies)		135,890		22,145		(1,328	)		(28,128	)		(11,093	)		117,486

		1,038,567		77,874		(25,485	)		(62,252	)		(16,969	)		1,011,735

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		225,933		—		(56,760	)		45,941			(15,772	)		199,342
AES-VCM Mong Duong Power Company Limited		178,892		—		(16,053	)		37,092			(41,154	)		158,777
9404-5515 Quebec Inc.		131,529		—		(11,672	)		10,963			(7,524	)		123,296
Eureka Moly LLC		85,349		—		—			(39,801	)		(2,028	)		43,520
AMCI (WA) PTY LTD		72,937		—		—			(6,561	)		5,356			71,732
NCR LLC		46,391		4,196		—			(1,452	)		(2,527	)		46,608
KOREA LNG LTD.		46,557		—		(7,755	)		7,681			(4,254	)		42,229
Nickel Mining Company SAS		37,940		—		—			1,473			1,477			40,890
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,356		—		—			(384	)		175			22,147
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		15,128		—		—			(80	)		133			15,181
PT. Wampu Electric Power		13,363		—		(559	)		1,411			(1,499	)		12,716
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		6,755		—		—			279			76			7,110
Roy Hill Holdings Pty Ltd		1,235,682		—		(113,985	)		234,693			61,666			1,418,056
POSCO-NPS Niobium LLC		376,410		—		(11,244	)		11,449			(22,890	)		353,725
KOBRASCO		115,641		—		(37,922	)		8,443			(31,762	)		54,400
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		88,935		—		—			1,790			545			91,270
DMSA/AMSA		12,189		60,278		—			(33,305	)		(8,058	)		31,104
CSP - Compania Siderurgica do Pecem		—		62,711		—			(60,708	)		(2,003	)		—
Others (37 companies)		177,201		—		(12,114	)		(23,375	)		(9,301	)		132,411

		2,889,188		127,185		(268,064	)		195,549			(79,344	)		2,864,514

	W	3,927,755		205,059		(293,549	)		133,297			(96,313	)		3,876,249

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	Summarized financial information of associates and joint ventures as of and for the years ended December 31, 2021 and 2020 are as follows:

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. (formerly, Metropolitan Outer Ring Expressway co., ltd.)		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. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

December 31, 2020


(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)			Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	473,415		575		472,840			—		8,534
Samcheok Blue Power Co.,Ltd.		1,169,343		700,266		469,077			—		(5,994	)
SNNC		592,568		238,971		353,597			698,712		39,826
QSONE Co.,Ltd.		251,190		79,182		172,008			17,075		2,513
Chun-cheon Energy Co., Ltd		609,815		516,963		92,852			222,066		(24,617	)
Western Inland highway CO.,LTD.		158,679		2,534		156,145			—		(1,714	)
NEXTRAIN Co., Ltd.		303,359		74,738		228,621			—		(2,636	)
Pocheon-Hwado Highway Corp. (formerly, Metropolitan Outer Ring Expressway co., ltd.)		98,510		34,360		64,150			—		(920	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		54,832		27,111		27,721			6,672		(2,326	)
Daesung Steel		172,088		106,611		65,477			85,158		(2,930	)
PCC Amberstone Private Equity Fund 1		104,933		5		104,928			12,280		6,694
POSCO MITSUBISHI CARBON TECHNOLOGY		446,067		190,289		255,778			112,173		(15,603	)
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,515,828		719,745		796,083			458,806		183,465
AES-VCM Mong Duong Power Company Limited		1,599,095		1,086,440		512,655			336,174		121,644
9404-5515 Quebec Inc.		1,197,702		3		1,197,699			—		105,411
KOREA LNG LTD.		211,497		353		211,144			40,086		38,370
Nickel Mining Company SAS		445,140		308,885		136,255			223,427		(8,353	)
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		72,001		16,812		55,189			3,236		(1,086	)
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		71,805		21,486		50,319			104,537		(237	)
PT. Wampu Electric Power		199,841		139,264		60,577			20,272		7,057
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		68,036		38,843		29,193			78,954		1,156
Roy Hill Holdings Pty Ltd		9,271,788		2,161,353		7,110,435			5,993,950		2,299,529
POSCO-NPS Niobium LLC		707,247		—		707,247			—		25,406
KOBRASCO		118,676		9,875		108,801			32,854		16,887
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		873,174		534,961		338,213			1,252,189		7,856
DMSA/AMSA		4,924,371		2,294,881		2,629,490			204,820		(772,396	)
CSP - Compania Siderurgica do Pecem		3,142,831		3,657,314		(514,483	)		1,402,742		(623,381	)

(f)	Changes in accumulated losses of equity-accounted investees that were not recognized since the Company discontinued the use of the equity method for the year ended December 31, 2021 were as follows:


(in millions of Won)
Company	Beginning balance		Increase or decrease			Ending balance
New Songdo International City Development, LLC	W	259,341		(59,858	)		199,483
Mokpo Deayang Industrial Corporation		84		(67	)		17
UITrans LRT Co., Ltd.		32,334		7,769			40,103
Clean Iksan Co., Ltd.		714		83			797
HYOCHUN Co.,Ltd.		3,505		332			3,837
Shinahn wind power generation		843		(843	)		—
CSP - Compania Siderurgica do Pecem		168,737		(168,737	)		—
KIRIN VIETNAM CO., LTD		67		33			100
INKOTECH, INC.		341		271			612
POSCO-Poggenamp Electrical Steel Pvt. Ltd.		96		205			301
Gunggi Green Energy		—		448			448

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

12. Joint Operations

Details of significant joint operations that the Company is participating in as a party to a joint arrangement as of December 31, 2021 are as follows:


Joint operations	Operation	Ownership (%)	Location
Myanmar A-1/A-3 mine	Mine development and gas production	51.00	Myanmar
Offshore midstream	Gas transportation facility	51.00	Myanmar
Greenhills mine	Mine development	20.00	Canada
Arctos Anthracite coal project	Mine development	50.00	Canada
Mt. Thorley J/V	Mine development	20.00	Australia
POSMAC J/V	Mine development	20.00	Australia
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
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

13. Investment Property, Net

(a)	Investment property as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021							2020
	Acquisition cost		Accumulated depreciation and impairment loss			Book value		Acquisition cost		Accumulated depreciation and impairment loss			Book value
Land	W	349,026		(16,718	)		332,308		296,115		(16,718	)		279,397
Buildings		803,156		(218,607	)		584,549		746,698		(187,114	)		559,584
Structures		3,213		(2,460	)		753		4,268		(3,069	)		1,199
Right of use assets		196,344		(27,877	)		168,467		175,026		(20,425	)		154,601

	W	1,351,739		(265,662	)		1,086,077		1,222,107		(227,326	)		994,781

As of December 31, 2021, the fair value of investment property is W2,497,206 million.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Changes in the carrying amount of investment property for the years ended December 31, 2021 and 2020 were as follows:

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.

For the year ended December 31, 2020


(in millions of Won)	Beginning		Acquisitions		Disposals			*Depreciation( 1)**			*Others( 2)**			Ending
Land	W	278,465		2,814		(183	)		—			(1,699	)		279,397
Buildings		598,159		385		—			(9,681	)		(29,279	)		559,584
Structures		1,178		—		—			(610	)		631			1,199
Right of use assets		425		—		(56	)		(3,206	)		157,438			154,601

	W	878,227		3,199		(239	)		(13,497	)		127,091			994,781

(*1)	Includes reversal of impairment loss on investment property recognized by POSCO(Dalian) IT Center Development Co., Ltd., a subsidiary, in relation to its office lease amounting to W14,953 million.

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

14. Property, Plant and Equipment, Net

(a)	Property, plant and equipment as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021										2020
	Acquisition cost		Accumulated depreciation and impairment			Government grants			Book value		Acquisition cost		Accumulated depreciation and impairment loss			Government grants			Book value
Land	W	2,702,768		(53	)		—			2,702,715		2,592,705		(2,618	)		—			2,590,087
Buildings		9,802,539		(5,592,600	)		(5,489	)		4,204,450		9,417,295		(5,250,281	)		(5,614	)		4,161,400
Structures		6,683,546		(3,551,692	)		(59	)		3,131,795		6,363,370		(3,338,075	)		(69	)		3,025,226
Machinery and equipment		50,090,721		(33,663,244	)		(7,321	)		16,420,156		48,435,445		(31,570,233	)		(7,905	)		16,857,307
Vehicles		324,073		(277,437	)		(606	)		46,030		310,078		(272,705	)		(217	)		37,156
Tools		453,297		(375,212	)		(290	)		77,795		423,927		(363,360	)		(266	)		60,301
Furniture and fixtures		752,314		(585,881	)		(271	)		166,162		670,079		(542,217	)		(403	)		127,459
Lease assets		1,288,639		(420,893	)		—			867,746		1,093,817		(320,117	)		—			773,700
Bearer plants		185,234		(30,552	)		—			154,682		171,160		(21,195	)		—			149,965
Construction-in-progress		1,961,033		(125,620	)		(10,246	)		1,825,167		2,474,766		(850,839	)		(6,387	)		1,617,540

	W	74,244,164		(44,623,184	)		(24,282	)		29,596,698		71,952,642		(42,531,640	)		(20,861	)		29,400,141

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Changes in the carrying amount of property, plant and equipment for the years ended December 31, 2021 and 2020 were as follows:

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)

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 in 2021. The remaining balances were classified as assets held for sale as of December 31, 2021.

(*3)

During the year ended December 31, 2021, evidence of impairment 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. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

For the year ended December 31, 2020


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Impairment loss(*1)			*Others(2)**			Ending
Land	W	2,526,059		29,639		(2,633	)		—			3,490			33,532			2,590,087
Buildings		4,215,454		13,825		(6,296	)		(319,774	)		(3,778	)		261,969			4,161,400
Structures		2,904,506		85,958		(6,661	)		(231,737	)		(883	)		274,043			3,025,226
Machinery and equipment		17,218,264		138,533		(27,966	)		(2,298,951	)		(8,080	)		1,835,507			16,857,307
Vehicles		32,285		6,475		(546	)		(14,599	)		—			13,541			37,156
Tools		70,751		20,230		(211	)		(38,838	)		—			8,369			60,301
Furniture and fixtures		130,132		23,352		(2,908	)		(43,832	)		(519	)		21,234			127,459
Lease assets		774,582		204,699		(9,300	)		(172,029	)		—			(24,252	)		773,700
Bearer plants		124,193		118		(155	)		(7,971	)		—			33,780			149,965
Construction-in-progress		1,929,747		2,835,921		(7,001	)		—			(17,270	)		(3,123,857	)		1,617,540

	W	29,925,973		3,358,750		(63,677	)		(3,127,731	)		(27,040	)		(666,134	)		29,400,141

(*1)

The Company estimated the recoverable amount of individual assets that it ceased their use due to the disposal plan and others at fair value less costs to sell based on sale price or scrap value and recognized an impairment loss since recoverable amounts are less than their carrying amounts for the year ended December 31, 2020. During the year ended December 31, 2020, the Company recognized impairment losses on damaged assets caused by a fire accident.

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

(c)	Borrowing costs capitalized and the capitalized interest rate for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Weighted average expenditure	W	1,230,145		932,298
Borrowing costs capitalized		31,295		29,653
Capitalization rate (%)		2.25 ~ 3.16		3.14 ~ 3.18

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(d)	Property, plant and equipment and investment property pledged as collateral as of December 31, 2021 and 2020 are as follows:


		Book value
(in millions of Won)	Collateral right holder	2021		2020
Land	Korean Development Bank and others	W	933,560		867,820
Buildings and structures	Korean Development Bank and others		1,598,040		1,464,551
Machinery and equipment	Korean Development Bank and others		2,286,656		2,263,383

		W	4,818,256		4,595,754

As of December 31, 2021, assets pledged as collateral related to the Company’s borrowings and others amounting to W5,637,044 million include investment properties and other assets such as right to use land.

(e)	Changes in the carrying amount of right of use assets presented as investment property and property, plant and equipment for the years ended December 31, 2021 and 2020 were as follows:

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

For the year ended December 31, 2020


(in millions of Won)	Beginning		Acquisitions		Depreciation			Others			Ending
Land	W	341,767		18,962		(16,397	)		27,387			371,719
Buildings and structures		171,112		47,374		(57,593	)		10,867			171,760
Machinery and equipment		215,828		86,373		(38,909	)		(24,111	)		239,181
Vehicles		14,105		6,186		(9,486	)		651			11,456
Ships		24,082		111,537		(29,064	)		—			106,555
others		8,113		45,803		(23,786	)		(2,500	)		27,630

	W	775,007		316,235		(175,235	)		12,294			928,301

(f)	The amount recognized in profit or loss related to leases for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Interest on lease liabilities	W	32,331		36,373
Expenses related to short-term leases		20,885		18,809
Expenses related to leases of low-value assets		18,577		14,375

	W	71,793		69,557

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

15. Goodwill and Other Intangible Assets, Net

(a)	Goodwill and other intangible assets as of December 31, 2021 and 2020 are as follows:


	2021										2020
(in millions of Won)	Acquisition cost		Accumulated amortization and impairment loss			Government grants			Book value		Acquisition cost		Accumulated amortization and impairment loss			Government grants			Book value
Goodwill	W	1,648,119		(912,150	)		—			735,969		1,626,876		(722,983	)		—			903,893
Intellectual property rights		3,987,689		(1,761,881	)		—			2,225,808		3,628,121		(1,457,383	)		—			2,170,738
Membership		146,043		(3,673	)		—			142,370		143,403		(4,700	)		—			138,703
Development expense		656,712		(502,739	)		—			153,973		652,492		(425,381	)		—			227,111
Port facilities usage rights		685,540		(469,519	)		—			216,021		685,210		(448,938	)		—			236,272
Exploration and evaluation assets		280,092		(218,135	)		—			61,957		274,691		(217,551	)		—			57,140
Customer relationships		865,622		(579,902	)		—			285,720		865,671		(535,424	)		—			330,247
Other intangible assets		1,098,320		(753,790	)		(39	)		344,491		1,101,595		(716,190	)		(77	)		385,328

	W	9,368,137		(5,201,789	)		(39	)		4,166,309		8,978,059		(4,528,550	)		(77	)		4,449,432

(b)	The changes in carrying amount of goodwill and other intangible assets for the years ended December 31, 2021 and 2020 were as follows:

For the year ended December 31, 2021


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss(*2,4)			*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 paid-in 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.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

For the year ended December 31, 2020


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment loss			*Others(2)**			Ending
Goodwill	W	1,097,809		—		—			—			(189,379	)		(4,537	)		903,893
Intellectual property rights		2,279,210		136,195		(3,617	)		(282,594	)		(7,727	)		49,271			2,170,738
Membership(*1)		148,078		3,416		(12,340	)		(107	)		244			(588	)		138,703
Development expense		94,339		1,315		(16	)		(56,329	)		(206	)		188,008			227,111
Port facilities usage rights		281,398		—		—			(44,893	)		—			(233	)		236,272
Exploratation and evaluation assets		77,271		14,886		—			—			—			(35,017	)		57,140
Customer relationships		374,875		—		—			(44,478	)		—			(150	)		330,247
Other intangible assets		555,493		159,590		(61,692	)		(37,157	)		—			(230,906	)		385,328

	W	4,908,473		315,402		(77,665	)		(465,558	)		(197,068	)		(34,152	)		4,449,432

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

(*2)	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.

(c)	For the purpose of impairment testing, goodwill is allocated to individual operating entities each of which is determined to be a CGU. The goodwill amounts as of December 31, 2021 and 2020 are as follows:


(in millions of Won)
Reporting segments	Total number of CGUs
Reporting segments	2021		2020		CGUs	2021		2020
Steel		7		7	POSCO VST CO., LTD.	W	36,955		36,955
					Others		12,542		12,498
Trading		3		3	POSCO INTERNATIONAL Corporation(* 1)		578,046		762,816
					GRAIN TERMINAL HOLDING PTE. LTD.		21,516		23,726
					PT. Bio Inti Agrindo		7,468		6,955
E&C		2		2	POSCO ENGINEERING & CONSTRUCTION CO., LTD.		24,868		24,868
					POSCO Center Beijing		178		159
					POSCO ENERGY CO., LTD.		26,471		26,471
Others		5		4	Others		27,925		9,445

		17		16		W	735,969		903,893

(*1)

The recoverable amount of POSCO INTERNATIONAL Corporation, a subsidiary included in trading segment, is determined based on its value in use. As of December 31, 2021, the value in use is estimated by applying a 8.14%(2020: 6.92%) post-tax discount rate to the future cash flows estimated from management’s 5-year business plan and terminal growth rate of 2.0% (2020: 1.9%) thereafter. The terminal growth rate does not exceed long-term growth rate of its industry. During the year ended December 31, 2021, impairment loss on goodwill of W184,770 million was recognized as the recoverable amount is less than the carrying amount of the CGU.

The Company calculated the value in use by discounting the post-tax cash flows at the post-tax discount rate, which is consistent with and materially the same as applying pre-tax discount rate of 10.56% (2020: 8.77%) to pre-tax cash flows.

The value in use of the CGU is sensitive to the assumptions such as discount rate, terminal growth and estimated revenue used in discount cash flow model. If the discount rate increases by 0.5%, the value in use would decrease by W188,559 million or 5.97% and if the terminal growth rate decreases by 0.5%, the value in use would decrease by W87,806 million or 2.78%.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

16. Other Assets

Other current assets and other non-current assets as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Current
Advance payments	W	564,196		348,753
Prepaid expenses		274,023		181,985
Firm commitment asset		11,323		23,506
Others		65,816		62,379

	W	915,358		616,623

Non-current
Long-term advance payments	W	47,752		21,587
Long-term prepaid expenses		76,739		92,774
Others(* 1)		74,116		155,699

	W	198,607		270,060

(*1)

As of December 31, 2021 and 2020, the Company recognized tax assets amounting to W4,722 million and W121,225 million, respectively, based on the Company’s best estimate of the tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification are finalized.

17. Borrowings

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

(in millions of Won)

Lenders

Issuance date

Maturity date

Interest
rate (%)

2021

2020

Short-term borrowings

Bank overdrafts

JP Morgan and others

May, 2021~
December,

2021

January, 2022~December,

2022

0.51~5.50

118,558

146,762

Short-term borrowings

HSBC and others

January, 2021~
December, 2021

January, 2022~December,
2022

0.17~5.35

4,991,866

5,047,633

5,110,424

5,194,395

Current portion of long-term liabilities

Current portion of long-term borrowings

Export-Import Bank
of Korea and
others

November, 2004~

January, 2022~December,
2022

0.70~8.50

992,154

1,067,338

Current portion of debentures

Merrill lynch and
others

April, 2015~October,
2020

March, 2022~November,
2022

1.29~3.70

2,731,321

2,417,339

Less: Current portion of discount on debentures issued

(3,832

)

(1,543

)

3,719,643

3,483,134

W8,830,067

8,677,529

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

(in millions of Won)

Lenders

Issuance date

Maturity date

Interest
rate (%)

2021

2020

Long-term borrowings

Export-Import Bank
of Korea and others

September, 2001~

February, 2023~
March, 2040

0.20~8.50

3,841,375

3,366,400

Less: Present value discount Bonds

KB Securities co.,Ltd.

and others

October, 2013~
October, 2021

January, 2023~
October, 2029

0.50~4.00

(12,530)
7,671,755

(16,058)
8,505,485

Less: Discount on debentures issued

(24,644

)

(35,749)

Exchangeable bonds(* 1)

Foreign currency
exchangeable
bonds

1,435,193

—

12,911,149

11,820,078

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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


		Foreign currency exchangable bonds
Type of bond		Exchangable 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
Exchange rate		2) Prepayment : The issuer has call option and the bondholders have put option 100%

Exchange price (Won/share)		486,539 (*)

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, issuannce 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 law s and regulations, etc.

(*)	The exchange price has changed due to cash dividends during the year ended December 31, 2021.

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.

(c)	Assets pledged as collateral with regard to the borrowings as of December 31, 2021 are as follows:


(in millions of Won)	Lenders	Book value		Pledged amount
Property, plant and equipment and Investment property	Korea Development Bank and others		4,557,948		5,503,093
Trade accounts and notes receivable	Korea Development Bank and others		270,101		270,101
Financial instruments	KB Kookmin Bank and others		20,985		21,158

		W4,849,034		5,794,352

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

18. Other Payables

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


(in millions of Won)	2021		2020
Current
Accounts payable	W	1,034,823		800,439
Accrued expenses		835,226		697,087
Dividend payable		4,046		2,703
Lease liabilities		181 ,774		244,548
Withholdings		133,492		100,489

	W	2,189,361		1,845,266

Non-current
Accounts payable	W	17,312		5,572
Accrued expenses		8,760		4,953
Lease liabilities		596,240		495,127
Long-term withholdings		56,697		53,272

	W	679,009		558,924

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

19. Other Financial Liabilities

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


(in millions of Won)	2021		2020
Current
Derivative liabilities	W	91,739		82,859
Financial guarantee liabilities		19,902		58,545

	W	111,641		141,404

Non-current
Derivative liabilities	W	18,300		129,505
Financial guarantee liabilities		5,696		4,083

	W	23,996		133,588

20. Provisions

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


(in millions of Won)	2021				2020
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	93,502		45,031		73,441		48,510
Provision for construction warranties		14,519		222,141		9,662		217,435
Provision for legal contingencies and claims(*1)		24,441		69,050		24,275		63,175
Provision for the restoration(*2,3)		5,918		153,613		5,307		134,438
Others(*4,5)		261,604		99,257		330,588		59,411

	W	399,984		589,092		443,273		522,969

(*1)	The Company recognized probable outflow of resources amounting to W61,911 million and W59,221 million as provisions for legal contingencies and asserted claims as of December 31, 2021 and 2020, respectively.

(*2)

Due to contamination of lands near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery amounting to W12,503 million as provisions for restoration as of December 31, 2021. 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 2.08%~2.34% 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 W81,300 million as provisions for improvement as of December 31, 2021.

(*4)	As of December 31, 2021 and 2020, POSCO ENERGY CO., LTD., and Korea Fuel Cell, recognized W80,727 million and W80,842 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow of resources.

(*5)	As of December 31, 2021 and 2020, the Company has recognized emission liabilities amounting to W84,364 million and W78,646 million, respectively, for expected greenhouse gas emissions exceeding the quantity of free quota emission rights.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	The following are the key assumptions concerning the future and other key sources of estimation uncertainties at the end of the reporting period.


		Key assumptions for the estimation
Provision for bonus payments		Estimations based on financial performance and service provided

Provision for construction warranties		Estimations based on historical warranty data

Provision for legal contingencies and claims		Estimations based on the degree of probability of an unfavorable outcome and the ability to make a sufficient reliable estimate of the amount of loss

(c)	Changes in provisions for the years ended December 31, 2021 and 2020 were as follows:

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

	W966,242		627,546		(426,311)			(171,562)			(6,839)			989,076

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

For the year ended December 31, 2020


(in millions of Won)	Beginning		Increase		Utilization			Reversal			*Others(1)**			Ending
Provision for bonus payments	W	123,669		106,855		(109,835	)		(6,334	)		7,596			121,951
Provision for construction warranties		170,428		86,691		(23,916	)		(5,311	)		(795	)		227,097
Provision for legal contingencies and claims		84,484		30,894		(16,444	)		(9,087	)		(2,397	)		87,450
Provision for the restoration		87,303		67,501		(6,525	)		(15,811	)		7,277			139,745
Others		352,765		349,639		(142,440	)		(133,294	)		(36,671	)		389,999

	W818,649		641,580		(299,160)			(169,837)			(24,990)			966,242

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

21. Employee Benefits

(a)	Defined contribution plans

The expenses related to post-employment benefit plans under defined contribution plans for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Expense related to post-employment benefit plans under defined contribution plans	W	54,527		50,694

(b)	Defined benefit plans

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


(in millions of Won)	2021			2020
Present value of funded obligations	W	2,401,261			2,439,938
Fair value of plan assets(*1)		(2,620,046	)		(2,397,717	)
Present value of non-funded obligations		13,770			13,415

Net defined benefit liabilities	W	(205,015	)		55,636

(*1)	As of December 31, 2021 and 2020, the Company recognized net defined benefit assets amounting to W255,858 million and W86,149 million, respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations.

Changes in present value of defined benefit obligations for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Defined benefit obligations at the beginning of period	W	2,453,353			2,431,880
Current service costs		243,029			245,047
Interest costs		52,118			47,485
Remeasurements :		(78,888	)		(52,732	)
- Loss (gain) from change in financial assumptions		(159,154	)		(76,744	)
- Loss (gain) from change in demographic assumptions		1,512			27,399
- Loss (gain) from change in others		78,754			(3,387	)
Benefits paid		(253,208	)		(225,293	)
Others		(1,373	)		6,966

Defined benefit obligations at the end of period	W	2,415,031			2,453,353

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Changes in fair value of plan assets for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Fair value of plan assets at the beginning of period	W	2,397,717			2,255,149
Interest on plan assets		51,580			44,208
Remeasurement of plan assets		(9,529	)		(600	)
Contributions to plan assets		417,486			307,367
Benefits paid		(230,938	)		(213,246	)
Others		(6,270	)		4,839

Fair value of plan assets at the end of period	W	2,620,046			2,397,717

The Company expects to make an estimated contribution of W267,486 million to the defined benefit plan assets in 2022.

The fair value of plan assets as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Equity instruments	W	23,980		17,886
Debt instruments		811,498		696,583
Deposits		1,724,245		1,614,796
Others		60,323		68,452

	W	2,620,046		2,397,717

The amounts recognized in consolidated statement of comprehensive income for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Current service costs	W	243,029		245,047
Net interest costs(*1)		538		3,277

	W	243,567		248,324

(*1)	The actual return on plan assets amounted to W42,051 million and W43,608 million for the years ended December 31, 2021 and 2020, respectively.

The above expenses by function were as follows:


(in millions of Won)	2021		2020
Cost of sales	W	166,734		177,223
Selling and administrative expenses		76,265		69,256
Others		568		1,845

	W243,567		248,324

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Accumulated actuarial gains (losses), net of tax recognized in other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Beginning	W	(553,220)		(589,796	)
Remeasurements of defined benefit plans		51,155		36,576

Ending	W	(502,065)		(553,220	)

The principal actuarial assumptions as of December 31, 2021 and 2020 are as follows:


(%)	2021		2020
Discount rate		1.25 ~ 7.84		0.53 ~ 13.00
Expected future increase in salaries(* 1)		1.50 ~ 11.50		1.92 ~ 11.00

(*1) The expected future increase in salaries is based on the average salary increase rate for the past 5 years.

All assumptions are reviewed at the end of the reporting period. Additionally, the total estimated defined benefit obligation includes actuarial assumptions associated with the long-term characteristics of the defined benefit plan.

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding the other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:


(in millions of Won)	1% Increase						1% Decrease
	Amount			Percentage(%)			Amount			Percentage(%)
Discount rate	W	(167,127	)		(6.9	)		192,542			8.0
Expected future increase in salaries		192,838			8.0			(170,207	)		(7.0	)

As of December 31, 2021 the maturity of the expected benefit payments are as follows:


(in millions of Won)	Within 1 year		1 year - 5 years		5 years - 10 years		10 years - 20 years		After - 20 years		Total
Benefits to be paid	W	280,973		847,689		610,187		1,105,470		457,677		3,301,996

The maturity analysis of the defined benefit obligation was nominal amounts of defined benefit obligations using expected remaining period of service of employees.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

22. Other Liabilities

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


(in millions of Won)	2021		2020
Current
Due to customers for contract work	W	995,311		807,465
Advances received		475,800		416,960
Unearned revenue		106,574		24,433
Withholdings		340,107		332,327
Firm commitment liability		11,852		35,993
Others		14,844		8,304

	W	1,944,488		1,625,482

Non-current
Unearned revenue	W	27,908		17,953
Others		28,583		19,067

	W	56,491		37,020

23. Financial Instruments

(a) Classification and fair value of financial instruments

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

① 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(* 2)		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(* 2)		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.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(*2)

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

② December 31, 2020


(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	79,995		—		79,995		—		79,995
Short-term financial instruments		9,133,404		—		9,133,404		—		9,133,404
Debt securities		20,797		—		—		20,797		20,797
Other securities		364,404		47,321		2,242		314,841		364,404
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments		37,880		—		37,880		—		37,880
Fair value through other comprehensive income
Equity securities		1,120,968		729,342		—		391,626		1,120,968
Debt securities		2,471		—		—		2,471		2,471
Financial assets measured at amortized cost(* 1)
Cash and Cash Equivalents		4,754,644		—		—		—		—
Trade accounts and notes receivable		7,332,890		—		—		—		—
Other receivables		2,300,515		—		—		—		—
Debt securities		151,146		—		—		—		—
Deposit instruments		2,359,951

	W	27,661,065		776,663		9,253,521		731,735		10,761,919

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	180,773		—		180,773		—		180,773
Derivative hedging instruments		31,591		—		31,591		—		31,591
Financial liabilities measured at amortized cost(* 1)
Trade accounts and notes payable		3,777,836		—		—		—		—
Borrowings		20,497,607		—		20,821,353		—		20,821,353
Financial guarantee liabilities		62,629		—		—		—		—
Others		2,347,244		—		—		—		—

	W26,897,680		—		21,033,717		—		21,033,717

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

Financial assets and financial liabilities classified as fair value hierarchy Level 2 Fair values of derivatives are measured using the derivatives instrument valuation models such as market approach method and discounted cash flow method. Inputs of the financial instrument valuation model include forward rate, interest rate and others. The fair value of derivatives may change depending on the type of derivatives and the nature of the underlying assets.

Financial assets and financial liabilities classified as fair value hierarchy Level 3

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

①

Value measurement method and significant but not observable inputs for the financial assets classified as fair value hierarchy Level 3 as of December 31, 2021 are as follows:

(in millions of Won)

Fair value

Valuation technique

Inputs

Range of inputs

Effect on fair value assessment

with unobservable input

Financial assets at fair value

65,910

Discounted cash flows

Growth rate

0% ~ 1%

As growth rate increases, fair value increases

Discount rate

6.19%~ 20.24%

As discount rate increases, fair value decreases

56,162

Peer group multiples method

Price multiples

0.817

As price multiples increases, fair value increases

498,842

Asset value approach

—

②

Sensitivity analysis of financial assets and financial liabilities classified as Level 3 of fair value hierarchy

If other inputs remain constant as of December 31, 2021 and one of the significant but not observable input is changed, the effect on fair value measurement is as follows:


(in millions of Won)	Input variable	Favorable changes		Unfavorable changes
Financial assets at fair value	Fluctuation 0.5% of growth rate	W	229		190
	Fluctuation 0.5% of discount rate		4,790		4,371

③

Changes in fair value of financial assets and financial liabilities classified as Level 3 for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)
(in millions of Won)	2021			2020
Beginning	W	731,735			793,950
Acquisition		138,473			78,241
Gain (loss) on valuations of financial assets		5,292			(41,537	)
Other comprehensive income (loss)		1,581			(44,469	)
Disposal and others		(256,167	)		(54,450	)

Ending	W	620,914			731,735

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Finance income and costs by category of financial instrument for the years ended December 31, 2021 and 2020 were as follows:

①

For the year ended December 31, 2021


(in millions of Won)	Finance income and costs
	Interest income (expense)			Gain and loss on valuation			Gain and loss on foreign currency			Gain and loss on disposal			Others			Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	158,121			(12,093	)		—			12,119			26,170			184,317			—
Derivative assets		—			213,724			—			370,547			—			584,271			—
Financial assets at fair value through other comprehensive income		—			—			—			—			48,281			48,281			214,888
Financial assets measured at amortized cost		134,122			—			651,435			(17,769	)		(7,149	)		760,639			—
Financial liabilities at fair value		—			54,057			33,069			—			(15,876	)		71,250			—
Derivative liabilities		—			55,858			—			(465,174	)		—			(409,316	)		309
Financial liabilities measured at amortized cost		(439,826	)		—			(846,202	)		(16	)		11,537			(1,274,507	)		—

	W	(147,583	)		311,546			(161,698	)		(100,293	)		62,963			(35,065	)		215,197

②

For the year ended December 31, 2020


(in millions of Won)	Finance income and costs
	Interest income (expense)		Gain and loss on valuation		Gain and loss on foreign currency		Gain and loss on disposal		Others		Total		Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	165,160		(15,883)		—		9,979		329		159,585		—
Derivative assets		—		56,273		—		318,820		—		375,093		—
Financial assets at fair value through other comprehensive income		—		—		—		—		38,019		38,019		(77,627)
Financial assets measured at amortized cost		207,014		—		(222,215)		(15,779)		(5,821)		(36,801)		—
Derivative liabilities		—		(170,155)		—		(376,823)		—		(546,978)		(331)
Financial liabilities measured at amortized cost		(638,797)		—		450,984		—		(16,010)		(203,823)		—

	W	(266,623)		(129,765)		228,769		(63,803)		16,517		(214,905)		(77,958)

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Credit risk

Credit risk exposure

The carrying amount of financial assets represents the Company’s maximum exposure to credit risk. The maximum exposure to credit risk as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Cash and cash equivalents	W	4,775,166		4,754,644
Derivative assets		249,096		117,875
Short-term financial instrument		10,514,093		9,133,404
Debt securities		161,863		174,414
Other securities		430,998		364,404
Other receivables		2,763,566		2,302,515
Trade accounts and notes receivable		9,051,708		7,332,890
Deposit instruments		2,745,280		2,359,951

	W	30,691,770		26,540,097

The Company provided financial guarantee for the repayment of loans of associates, joint ventures and third parties. As of December 31, 2021 and 2020, the maximum exposure to credit risk related to the financial guarantee amounted to W4,122,774 million and W4,069,562 million, respectively.

Impairment losses on financial assets and contract assets

The Company assesses expected credit losses by estimating the default rate based on the credit loss experience of prior periods and overdue conditions and considers the credit default swap (CDS) premium to reflect changes in credit risk by sector. For credit-impaired assets and significant receivables where there was a significant increase in credit risk, credit losses are individually assessed.

①

Allowance for doubtful accounts as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Trade accounts and notes receivable	W	365,120		386,650
Other accounts receivable		171,273		177,037
Loans		172,162		184,610
Others		8,810		5,396

	W	717,365		753,693

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

②

Impairment losses on financial assets for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Bad debt expenses	W	40,153			829
Other bad debt expenses(* 1)		19,704			71,092
Less: Recovery of allowance for other bad debt accounts		(32,679	)		(17,987	)

	W	27,178			53,934

(*1)	Other bad debt expenses are mainly related to loans and other accounts receivable.

③

The aging and allowance for doubtful accounts of trade accounts and notes receivable as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021				2020
	Trade accounts and notes receivable		Allowance for doubtful accounts		Trade accounts and notes receivable		Allowance for doubtful accounts
Not due	W	9,564,773		28,866		7,052,689		82,836
Over due less than 1 month		289,716		6,537		279,548		4,238
1 month-3 months		132,509		2,821		198,807		4,775
3 months-12 months		85,339		22,212		286,274		21,042
Over 12 months		417,970		304,684		776,375		273,759

	W	10,490,307		365,120		8,593,693		386,650

④

The aging and allowance for doubtful accounts of other receivables as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021				2020
	Loans and other account receivable		Allowance for doubtful accounts		Loans and other account receivable		Allowance for doubtful accounts
Not due	W	2,239,492		99,661		1,836,372		132,209
Over due less than 1 month		33,276		373		50,858		199
1 month - 3 months		86,517		71		39,053		100
3 months - 12 months		289,810		12,227		47,978		10,033
Over 12 months		466,716		239,913		695,297		224,502

	W	3,115,811		352,245		2,669,558		367,043

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

⑤

Changes in the allowance for doubtful accounts for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Beginning		W753,693			898,274
Bad debt expenses		40,153			829
Other bad debt expenses (reversal)		(12,975	)		53,105
Others(* 1)		(63,506	)		(198,515	)

Ending	W	717,365			753,693

(*1)	Others for the year ended December 31, 2021 and 2020 included decreases mainly due to write-off amounting to W86,111 million and W150,417 million, respectively.

(c)

Liquidity risk

Contractual maturities for non-derivative financial liabilities are as follows:


(in millions of Won)	Book value		Contractual cash flow		Within 1 year		1 year - 5 years		After 5 years
Trade accounts and notes payable	W	5,468,869		5,469,700		5,469,006		694		—
Borrowings		21,741,216		22,109,986		8,711,485		12,479,283		919,218
Financial guarantee liabilities(* 1)		25,598		4,122,774		4,122,774		—		—
Lease liabilities		778,014		1,041,367		212,332		465,206		363,829
Other financial liabilities		1,915,149		1,915,668		1,832,601		83,067		—

	W	29,928,846		34,659,495		20,348,198		13,028,250		1,283,047

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

Contractual maturities for derivative financial liabilities are as follows:


(in millions of Won)	Within 1 year		1 year - 5 years		After 5 years		Total
Currency forward	W	80,276		14,511		—		94,787
Currency swap		5,746		3,789		—		9,535
Interest swap		4,974		—		—		4,974
Others		744		—		—		744

	W	91,740		18,300		—		110,040

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(d)	Currency risk

The Company has exposure to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in foreign exchange rates. The exposure to currency risk as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021				2020
	Assets		Liabilities		Assets		Liabilities
USD		W5,237,890		7,879,302		4,331,058		6,768,169
EUR		622,749		2,620,254		459,423		939,160
JPY		156,007		545,622		110,569		644,675
Others		849,744		467,053		714,324		461,162

As of December 31, 2021 and 2020, provided that functional currency against foreign currencies other than functional currency hypothetically strengthens or weakens by 10%, the changes in gain or loss for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021					2020
	10% increase			10% decrease		10% increase			10% decrease
USD		W(264,141	)		264,141		(243,711	)		243,711
EUR		(199,751	)		199,751		(47,974	)		47,974
JPY		(38,962	)		38,962		(53,411	)		53,411

(e)	Interest rate risk

The carrying amount of interest-bearing financial instruments as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021			2020
Fixed rate
Financial assets		W20,677,076			17,291,726
Financial liabilities		(16,092,096	)		(14,601,638	)

		4,584,980			2,690,088

Variable rate
Financial liabilities		W(6,427,133	)		(6,635,644	)

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

Sensitivity analysis on the cash flows of financial instruments with variable interest rate

The Company’s interest rate risk mainly arises from borrowings with variable interest rate. As of December 31, 2021 and 2020, provided that other factors remain the same and the interest rate of borrowings with floating rates increases or decreases by 1%, the changes in interest expense for the years ended December 31, 2021 and 2020 were as follows:

(in millions of Won)

2021

2020

1% increase

1% decrease

1% increase

1% decrease

Variable rate financial instruments

(64,271)

64,271

(66,356

)

66,356

24. Share Capital and Capital Surplus

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


(Share, in Won)	2021		2020
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1)	As of December 31, 2021, total number of ADRs of 26,067,848 outstanding in overseas stock market are equivalent to 6,516,962 shares of common stock.

(*2)	As of December 31, 2021, the difference between the ending balance of common stock and the aggregate par value of issued common stock is W46,469 million due to retirement of 9,293,790 treasury stocks.

(b)	The changes in issued common stock for the years ended December 31, 2021 and 2020 were as follows:


(share)	2021								2020
	Issued shares		Treasury shares			Number of outstanding shares			Issued shares		Treasury shares			Number of outstanding shares
Beginning		87,186,835		(11,171,363	)		76,015,472			87,186,835		(7,071,194	)		80,115,641
Acquisition of treasury shares		—		(389,900	)		(389,900	)		—		(4,100,169	)		(4,100,169	)

Ending		87,186,835		(11,561,263	)		75,625,572			87,186,835		(11,171,363	)		76,015,472

(c)	Capital surplus as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		796,623		796,623
Other capital surplus		127,512		50,099

	W	1,387,960		1,310,547

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

25. Hybrid Bonds

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


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		2021			2010
Hybrid bond 1-2(*1)		2013-06-13		2043-06-13		4.60		200,000			200,000
Issuance cost								(616	)		(616	)

							W	199,384			199,384

(*1)	Details of issuance of hybrid bonds as of December 31, 2021 are as follows:


		Hybrid bond 1-2

Maturity date		30 years (The Company has a right to extend the maturity date)

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

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

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

The hybrid bond holder’s 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 December 31, 2021 amounts to W479 million.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(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 December 31, 2021 and 2020 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		2021			2020
Hybrid bond 1-4(*1)		2013-08-29		2043-08-29		5.21		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 December 31, 2021 are as follows:


		Hybrid bond 1-4

Maturity date		30 years (The issuer has a right to extend the maturity date)

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

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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

26. Reserves

(a)	Reserves as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021			2020
Accumulated comprehensive loss of investments in associates and joint ventures	W	(532,833)			(693,176	)
Changes in fair value of equity investments at fair value through other comprehensive income		(153,359	)		(359,283	)
Foreign currency translation differences		7,762			(339,707	)
Gains or losses on valuation of derivatives		(455	)		(699	)
Others		11,900			11,947

	W	(666,985)			(1,380,918	)

(b)	Changes in fair value of equity investments at fair value through other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Beginning balance	W	(359,283)		(285,073	)
Changes in unrealized fair value of equity investments		201,144		(72,808	)
Reclassification upon disposal		1,667		2,726
Others		3,113		(4,128	)

Ending balance	W	(153,359)		(359,283	)

27. Treasury Shares

Based on the Board of Directors’ resolution, POSCO holds treasury shares for business purposes including price stabilization. The changes in treasury shares for the years ended December 31, 2021 and 2020 were as follows:


(shares, in millions of Won)	2021				2020
	Number of shares		Amount		Number of shares		Amount
Beginning		11,171,363	W	2,391,523		7,071,194	W	1,508,303
Acquisition of treasury shares		389,900		116,771		4,100,169		883,219

Ending		11,561,263	W	2,508,294		11,171,363	W	2,391,522

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

28. Revenue

(a)	Disaggregation of revenue

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the years ended December 31, 2021 and 2020 were as follows:

①

For the year ended December 31, 2021


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	40,305,393		24,233,531		—		1,438,050		65,976,974
Revenue from services		680,513		547,369		58,807		2,133,164		3,419,853
Revenue from construction contract		—		—		6,337,194		27,967		6,365,161
Others		107,499		284,708		2,365		175,785		570,357

	W	41,093,405		25,065,608		6,398,366		3,774,966		76,332,345

Timing of revenue recognition
Revenue recognized at a point in time	W	40,412,892		24,518,239		134,588		1,613,835		66,679,554
Revenue recognized over time		680,513		547,369		6,263,778		2,161,131		9,652,791

	W	41,093,405		25,065,608		6,398,366		3,774,966		76,332,345

②

For the year ended December 31, 2020


(in millions of Won)	Steel		Trading		Construction		Others		Total
Types of revenue
Revenue from sales of goods	W	28,394,790		18,796,522		—		917,307		48,108,619
Revenue from services		462,489		388,222		45,359		1,811,380		2,707,450
Revenue from construction contract		—		—		6,523,615		27,949		6,551,564
Others		35,599		160,478		7,196		221,890		425,163

	W	28,892,878		19,345,222		6,576,170		2,978,526		57,792,796

Timing of revenue recognition
Revenue recognized at a point in time	W	28,430,389		18,957,000		141,916		1,139,197		48,668,502
Revenue recognized over time		462,489		388,222		6,434,254		1,839,329		9,124,294

	W	28,892,878		19,345,222		6,576,170		2,978,526		57,792,796

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


(in millions of Won)	2021		2020
Receivables
Account receivables	W	9,051,708		7,332,890
Contract assets
Due from customers for contract work		1,073,479		874,152
Contract liabilities
Advance received		483,375		418,777
Due to customers for contract work		995,311		807,465
Unearned revenue		133,765		42,040

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

29. Revenue – Contract Balances

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


(in millions of Won)	2021						2020
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	32,687,274			81,478			30,780,560			247,737
Accumulated contract profit		3,302,005			14,932			3,034,148			49,692
Accumulated contract loss		(1,227,883	)		(16,904	)		(1,260,451	)		(2,482	)
Accumulated contract revenue		34,761,396			79,506			32,554,257			294,947

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


(in millions of Won)	2021						2020
	Construction segment			Others			Construction segment			Others
Due from customers for contract	W	1,069,343			40,739			915,285			33,594
Due to customers for contract work		(937,337	)		(57,974	)		(765,818	)		(41,647	)

	W	132,006			(17,235	)		149,467			(8,053	)

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


(in millions of Won)	2021		2020
Construction segment	W	26,656		70,818
Others		16,229		437

	W	42,885		71,255

(d)

Due to the factors causing the variation of costs during the year ended December 31, 2021, the estimated total contract costs have changed. Details of changes in estimated total contract costs and the impact on profit before income taxes for the year ended December 31, 2021 and future periods are as follows:


(in millions of Won)					Changes in profit (loss) of contract
	Changes in total contract revenues		Changes in estimated total contract costs		Net income		Future income (loss)			Total
Construction segment	W	844,783		603,225		135,016		106,542			241,558
Others		37,258		34,646		8,495		(5,883	)		2,612

	W	882,041		637,871		143,511		100,659			244,170

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 the end of reporting period. The estimation is evaluated for the total contract costs and expected total contract revenue as of the end of the reporting period. Also, it may change during future periods.

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	As of December 31, 2021, revenue expected to be recognized in the future in relation to performance obligations that have not been fulfilled (or partially fulfilled) is as follows:


(in millions of Won)	2022		2023		2024		After 2025		Total
Construction segment	W	6,802,458		5,822,364		4,192,938		1,667,862		18,485,622
Others		98,750		80,401		18,913		55,581		253,645

	W	6,901,208		5,902,765		4,211,851		1,723,443		18,739,267

(f)	Uncertainty of estimates

1) Total contract revenues

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

2) Total contract costs

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


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

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

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

30. Selling and Administrative Expenses

(a)	Other administrative expenses

Other administrative expenses for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Wages and salaries	W	941,824		828,667
Expenses related to post-employment benefits		142,606		83,037
Other employee benefits		207,074		187,075
Travel		18,916		17,513
Depreciation		144,037		146,483
Amortization		87,232		115,254
Communication		9,898		10,390
Electricity		7,398		7,968
Taxes and public dues		85,808		59,274
Rental		28,682		34,966
Repairs		12,604		8,952
Entertainment		10,186		8,328
Advertising		89,218		71,743
Research & development		123,092		116,273
Service fees		187,271		156,530
Vehicles maintenance		5,336		4,880
Industry association fee		9,691		9,586
Conference		14,479		11,576
Increase to provisions		8,936		12,285
Others		75,521		48,822

	W	2,209,809		1,939,602

(b)	Selling expenses

Selling expenses for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Freight and custody expenses	W	192,973		180,503
Operating expenses for distribution center		7,382		6,977
Sales commissions		65,404		86,851
Sales advertising		3,620		1,284
Sales promotion		6,264		7,086
Sample		2,164		1,650
Sales insurance premium		41,069		30,364
Contract cost		61,450		46,247
Others		12,749		15,978

	W	393,075		376,940

100

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

31. Research and Development Expenditures Recognized as Expenses

Research and development expenditures recognized as expenses for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Administrative expenses	W	123,092		116,273
Cost of sales		345,457		351,861

	W	468,549		468,134

32. Finance Income and Costs

Details of other finance income and costs for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Finance income
Interest income(*1)	W	292,243		372,174
Dividend income		74,451		38,348
Gain on foreign currency transactions		1,079,939		1,147,692
Gain on foreign currency translations		298,452		574,463
Gain on derivatives transactions		402,171		352,005
Gain on valuations of derivatives		370,780		115,642
Gain on disposals of financial assets at fair value through profit of loss		20,070		15,550
Gain on valuations of financial assets at fair value through profit or loss		101,717		51,581
Gain on valuations of financial liabilities at fair value through profit or loss		54,057		—
Others		36,230		10,044

	W	2,730,110		2,677,499

Finance costs
Interest expenses	W	439,826		638,797
Loss on foreign currency transactions		985,179		1,067,907
Loss on foreign currency translations		554,910		425,479
Loss on derivatives transactions		496,798		410,008
Loss on valuation of derivatives		101,198		229,524
Loss on disposal of trade accounts and notes receivable		17,769		15,816
Loss on disposals of financial assets at fair value through profit or loss		7,951		5,571
Loss on valuations of financial assets at fair value through profit or loss		113,810		67,464
Others		47,734		31,836

	W	2,765,175		2,892,402

(*1)	Interest income calculated using the effective interest method for the years ended December 31, 2021 and 2020 were W134,121 million and W207,014 million, respectively.

101

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

33. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Other non-operating income
Gain on disposals of assets held for sale	W	60,208		841
Gain on disposals of investment in subsidiaries, associates and joint ventures		85,981		88,836
Gain on disposals of property, plant and equipment		12,016		15,548
Gain on disposals of intangible assets		273		815
Gain on valuation of firm commitment		169,485		107,511
Gain on disposals of emission rights		567		24,851
Reversal of other provisions		33,887		5,154
Premium income		38,115		25,253
Others(*1)		177,465		133,527

	W	577,997		402,336

Other non-operating expenses
Impairment loss on assets held for sale	W	—		5,030
Loss on disposals of investments in subsidiaries, associates and joint ventures		12,882		14,632
Loss on disposals of property, plant and equipment		95,720		142,126
Impairment loss on property, plant and equipment		311,520		27,040
Impairment loss on intangible assets		224,328		197,776
Loss on valuation of firm commitment		111,542		93,098
Idle tangible asset expenses		23,843		19,276
Increase to provisions		37,962		30,536
Donations		101,258		45,652
Others		108,437		70,408

	W	1,027,492		645,574

(*1)	During the year ended December 31, 2021, the Company recognized W46,283 million of non-operating income for refund of taxes other than income tax as a result of administrative litigation for tax audits.

102

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

34. 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 years ended December 31, 2021 and 2020 were as follows (excluding finance costs and income tax expense):


(in millions of Won)	2021		2020
Raw material used, changes in inventories and others	W	44,763,646		34,829,420
Employee benefits expenses(*2)		4,023,167		3,624,953
Outsourced processing cost		7,690,334		7,808,343
Electricity and water expenses		744,207		656,121
Depreciation(*1)		3,135,346		3,156,181
Amortization		444,100		465,558
Freight and custody expenses		1,580,200		1,428,012
Sales commissions		65,404		86,851
Loss on disposal of property, plant and equipment		95,720		142,126
Impairment loss on property, plant and equipment		311,520		27,040
Impairment loss on intangible assets		224,328		197,776
Donations		101,258		45,652
Other expenses		4,962,223		3,638,393

	W	68,141,453		56,106,426

(*1)	Includes depreciation expense of investment property.

(*2)	The details of employee benefits expenses for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021		2020
Wages amd salaries	W	3,684,894		3,316,364
Expenses related to post-employment benefits		338,273		308,589

	W	4,023,167		3,624,953

103

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

35. Income Taxes

(a)	Income tax expense for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Current income taxes(*1)	W	2,470,416			692,869
Deferred income tax due to temporary differences		(147,562	)		(468,640	)
Items credited directly to equity		(102,671	)		12,705

Income tax expense	W	2,220,183			236,934

(*1)	Refund (additional payment) of income taxes when filing a final corporation tax return is credited (charged) directly to current income taxes.

(b)	The income taxes credited (charged) directly to equity for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Net changes in fair value of equity investments at fair value through other comprehensive income(*1)	W	(83,532	)		26,850
Remeasurements of defined benefit plans(*1)		(17,685	)		(13,327	)
Others		(1,454	)		(818	)

	W	(102,671	)		12,705

(*1)	Those amounts were recognized in other comprehensive income.

104

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	The following table reconciles the calculated income tax expense based on POSCO’s statutory rate (27.5%) to the actual amount of taxes recorded by the Company for the years ended December 31, 2021 and 2020.


(in millions of Won)	2021			2020
Profit before income tax expense	W	9,416,073			2,025,086
Income tax expense computed at statutory rate		2,579,058			546,537
Adjustments:
Tax credit		(313,205	)		(90,093	)
Refund of taxes for prior years		(42,667	)		(14,362	)
Tax effect from tax audit		5,635			11,796
Investment in subsidiaries, associates and joint ventures		(111,938	)		147,874
Tax effect due to permanent differences		17,811			2,591
Others(*1)		85,489			(367,409	)

		(358,875	)		(309,603	)

Income tax expense	W	2,220,183			236,934

Effective tax rate (%)		23.58	%		11.7	%

(*1)	Due to changes in estimation on deductibility of temporary difference related to Synthetic Natural Gas (SNG) facility and business combination of Off-gas Power Station Business Sector, W328,453 million of income tax benefit is recognized for the year ended December 31, 2020.

105

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(d)	The movements in deferred tax assets (liabilities) for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021									2020
	Beginning			Increase (decrease)			Ending			Beginning			Increase (decrease)			Ending
Deferred income tax due to temporary differences
Allowance for doubtful account	W	147,224			(3,866	)		143,358			153,136			(5,912	)		147,224
PPE-Depreciation		32,236			(1,328	)		30,908			22,211			10,025			32,236
Share of profit or loss of equity-accounted investees		219,431			5,135			224,566			119,114			100,317			219,431
Allowance for inventories valuation		11,542			11,441			22,983			9,445			2,097			11,542
PP&E-Revaluation		(1,733,999	)		130,616			(1,603,383	)		(1,818,461	)		84,462			(1,733,999	)
Prepaid expenses		19,831			(301	)		19,530			15,212			4,619			19,831
PP&E-Impairment loss		383,503			70,166			453,669			137,326			246,177			383,503
Gain or loss on foreign currency translation		(51,645	)		50,540			(1,105	)		7,036			(58,681	)		(51,645	)
Defined benefit liabilities		(121,820	)		(26,521	)		(148,341	)		(95,683	)		(26,137	)		(121,820	)
Provision for construction losses		17,605			(7,415	)		10,190			7,303			10,302			17,605
Provision for construction warranty		63,515			10,845			74,360			61,801			1,714			63,515
Accured income		(41,176	)		(9,276	)		(50,452	)		(30,816	)		(10,360	)		(41,176	)
Others		545,042			(85,423	)		459,619			432,799			112,243			545,042

		(508,711	)		144,613			(364,098	)		(979,577	)		470,866			(508,712	)

Deferred income taxes recognized directly to equity
Net changes in fair value of equity investments at fair value through other comprehensive income		156,991			(83,532	)		73,459			130,141			26,850			156,991
Others		153,876			(19,139	)		134,737			168,021			(14,145	)		153,876

		310,867			(102,671	)		208,196			298,162			12,705			310,867

Deferred tax from tax credit
Tax credit carry-forward and others		72,406			458			72,864			91,839			(19,433	)		72,406
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures		139,867			105,162			245,029			135,364			4,503			139,867

	W	14,429			147,562			161,991			(454,212	)		468,641			14,428

106

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	Deferred tax assets and liabilities for the years ended December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021								2020
	Asset		Liabilities			Net			Asset		Liabilities			Net
Deferred income tax due to temporary differences
Allowance for doubtful account	W	143,526		(168	)		143,358			147,243		(19	)		147,224
PPE–Depreciation		97,713		(66,805	)		30,908			84,890		(52,654	)		32,236
Share of profit or loss of equity-accounted investees		294,505		(69,939	)		224,566			281,049		(61,618	)		219,431
Allowance for inventories valuation		22,983		—			22,983			11,542		—			11,542
PP&E-Revaluation		—		(1,603,383	)		(1,603,383	)		—		(1,733,999	)		(1,733,999	)
Prepaid expenses		19,604		(74	)		19,530			19,859		(28	)		19,831
PP&E-Impairment loss		453,669		—			453,669			383,503		—			383,503
Gain or loss on foreign currency translation		87,947		(89,052	)		(1,105	)		101,244		(152,889	)		(51,645	)
Defined benefit liabilities		459,074		(607,415	)		(148,341	)		478,144		(599,964	)		(121,820	)
Provision for construction losses		10,190		—			10,190			17,605		—			17,605
Provision for construction warranty		74,360		—			74,360			63,515		—			63,515
Accured income		—		(50,452	)		(50,452	)		—		(41,176	)		(41,176	)
Others		699,099		(239,480	)		459,619			726,516		(181,474	)		545,042

		2,362,670		(2,726,768	)		(364,098	)		2,315,110		(2,823,821	)		(508,711	)

Deferred income taxes recognized directly to equity
Net changes in fair value of equity investments at fair value through other comprehensive income		143,956		(70,497	)		73,459			167,070		(10,079	)		156,991
Others		159,793		(25,056	)		134,737			177,938		(24,062	)		153,876

		303,749		(95,553	)		208,196			345,008		(34,141	)		310,867

Deferred tax from tax credit
Tax credit carry-forward and others		72,864		—			72,864			72,406		—			72,406
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures		513,884		(268,855	)		245,029			422,338		(282,471	)		139,867

	W	3,253,167		(3,091,176	)		161,991			3,154,862		(3,140,433	)		14,429

(f)

As of December 31, 2021, deductible temporary differences of W6,346,230 million and taxable temporary differences of W8,365,483 million related to investments in subsidiaries and associates were not recognized as deferred tax assets or liabilities, because it is not probable they will reverse in the foreseeable future.

(g)	The Company recognized current tax payable or receivable at the amount expected to be paid or received that reflects uncertainty related to income taxes.

107

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

36. Earnings Per Share

(a)	Basic earnings per share for the years ended December 31, 2021 and 2020 were as follows:


(in Won except per share information)
	2021			2020
Profit attributable to controlling interest	W	6,617,238,627,273			1,602,147,657,531
Interests of hybrid bonds, net of tax		(6,669,999,999	)		(6,688,273,972	)
Weighted-average number of common shares outstanding(*1)		75,696,150			79,120,963

Basic earnings per share	W	87,330			20,165

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


(shares)	2021			2020
Total number of common shares issued		87,186,835			87,186,835
Weighted-average number of treasury shares		(11,490,685	)		(8,065,872	)

Weighted-average number of common shares outstanding		75,696,150			79,120,963

(b)	Diluted earnings per share for the years ended December 31, 2021 and 2020 were as follows:


(in Won, except share information)	2021			2020
Profit attributable to controlling interest	W	6,617,238,627,273			1,602,147,657,531
Interests of hybrid bonds, net of tax		(6,669,999,999	)		(6,688,273,972	)
Gain or loss from exchange rate on and revaluation of exchangeable bonds		(63,166,690,813	)		—
Adjusted weighted-average number of common shares(*1)		76,688,340			79,120,963

Diluted earnings per share	W	85,377			20,165

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


(shares)	2021		2020
Weighted-average number of common shares outstanding	W	75,696,150		79,120,963
Weighted-average number of potential common share		992,190		—

Adjusted weighted-average number of common shares	W	76,688,340		79,120,963

The Company holds exchangeable bonds as potential common stocks with a diluting effect as of December 31, 2021. Meanwhile, since there were no potential shares of common stock which had dilutive effects as of December 31, 2020, diluted earnings per share is equal to basic earnings per share.

108

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

37. Related Party Transactions

(a)	Significant transactions between the controlling company and related companies for the years ended December 31, 2021 and 2020 were as follows:

1) For the year ended December 31, 2021


(in millions of Won)	*Sales and others(1)**				*Purchase and others(2)**
	Sales		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
*Subsidiaries(3)**
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	5,859		11,113		—		491,624		158		32,328
POSCO COATED & COLOR STEEL Co., Ltd.		695,451		2,602		—		—		39,014		627
POSCO ICT(*4)		1,605		4,996		—		324,275		46,037		181,221
eNtoB Corporation		14		—		381,633		65,254		115		25,242
POSCO CHEMICAL CO., LTD		318,808		31,917		462,013		14,358		298,431		3,724
POSCO ENERGY CO., LTD.		5,207		1,450		11,271		—		—		26,137
POSCO MOBILITY SOLUTION (formerly, POSCO SPS CORPORATION)		807,925		—		—		—		45,758		914
POSCO INTERNATIONAL Corporation		9,750,636		54,331		1,299,561		—		988		8,968
POSCO Thainox Public Company Limited		309,295		—		—		—		—		69
POSCO Canada Ltd.		—		1,372		202,523		—		—		—
POSCO Asia Co., Ltd.		19,142		426		417		—		—		1,648
Qingdao Pohang Stainless Steel Co., Ltd.		188,470		8		—		—		—		83
POSCO JAPAN Co., Ltd.		1,613,634		1		27,937		1,726		—		4,894
POSCO-VIETNAM Co., Ltd.		441,758		975		—		—		—		46
POSCO MEXICO S.A. DE C.V.		460,773		548		—		—		—		1,494
POSCO Maharashtra Steel Private Limited		899,675		903		—		—		—		229
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		161,808		—		—		—		—		2
POSCO VST CO., LTD.		201,517		—		—		—		—		20
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		1,453		1,704,193		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		278,749		734		8		—		—		24
Others		1,337,458		56,161		220,000		63,116		276,202		153,677

		17,497,784		168,990		4,309,556		960,353		706,703		441,347

*Associates and joint ventures(3)**
SNNC		72,797		2,514		736,441		—		—		107
POSCO-SAMSUNG-Slovakia Processing Center		72,342		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		418,044		2,338,625		—		—		—
Others		37,410		63,298		107,637		—		—		49,741

		182,549		483,856		3,182,703		—		—		49,848

	W	17,680,333		652,846		7,492,259		960,353		706,703		491,195

(*1)	Sales and others mainly consist of sales of steel products to subsidiaries, associates and joint ventures.

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

(*3)	As of December 31, 2021, the company provided guarantees to related parties (Note 38)

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

109

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

2) For the year ended December 31, 2020


(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	6,790		11,123		15		772,846		220		63,467
POSCO COATED & COLOR STEEL Co., Ltd.		418,619		1,820		—		—		28,523		639
POSCO ICT		2,747		4,996		—		374,914		41,384		181,554
eNtoB Corporation		15		60		214,750		34,217		76		25,870
POSCO CHEMICAL CO., LTD		258,154		34,944		456,780		23,003		304,135		4,816
POSCO ENERGY CO., LTD.		1,262		2,396		14,011		3		—		23,336
POSCO MOBILITY SOLUTION (formerly, POSCO SPS CORPORATION)		381,591		—		—		—		32,325		1,500
POSCO INTERNATIONAL Corporation		5,644,017		56,322		342,520		—		11,371		4,375
POSCO Thainox Public Company Limited		311,924		137		2,538		—		—		—
POSCO Canada Ltd.		—		1,325		162,385		—		—		—
POSCO Asia Co., Ltd.		1,514,154		1,060		151,373		4,331		1,508		3,915
Qingdao Pohang Stainless Steel Co., Ltd.		145,006		66		—		—		—		305
POSCO JAPAN Co., Ltd.		1,076,987		—		37,210		5,277		—		6,225
POSCO-VIETNAM CO., Ltd.		253,060		605		—		—		—		96
POSCO MEXICO S.A. DE C.V.		168,188		403		—		—		—		2,000
POSCO Maharashtra Steel Private Limited		328,943		2,507		—		—		—		479
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		112,925		—		—		—		—		—
POSCO VST CO., LTD.		208,464		218		—		—		—		156
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		600,580		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		264,786		948		2,314		—		—		18
Others		806,672		22,069		71,261		45,695		238,496		135,429

		11,904,304		140,999		2,055,737		1,260,286		658,038		454,180

Associates and joint ventures
SNNC		5,651		4,739		545,001		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		40,512		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		91,188		1,300,296		—		—		—
Others		34,620		69,151		64,861		84,839		4,086		44,068

		80,783		165,078		1,910,158		84,839		4,086		44,068

	W	11,985,087		306,077		3,965,895		1,345,125		662,124		498,248

110

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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

1) 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 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 (formerly, POSCO SPS CORPORATION)		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 LTE.		—		14		14		169,565		90		—		169,655
POSCO ASSAN TST STEEL INDUSTRY		220,481		951		221,432		—		—		—		—
Others		368,252		21,761		390,013		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(*1)		—		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

(*1)	It includes W177,825 million in acquisition of First Quantum Minerals Ltd. loans under the agreement for the purpose of investing in nickel mines in Australia during the year ended December 31, 2021.

2) December 31, 2020


(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Trade accounts and notes payable		Accounts payable		Others		Total
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		6,010		11		6,021		—		81,608		394		82,002
POSCO COATED & COLOR STEEL Co., Ltd.		63,520		—		63,520		—		180		3,709		3,889
POSCO ICT		245		1		246		2,820		118,720		31,411		152,951
eNtoB Corporation		—		—		—		1,361		35,846		18		37,225
POSCO CHEMICAL CO., LTD		19,406		3,434		22,840		13,066		55,515		18,531		87,112
POSCO ENERGY CO., LTD.		261		122		383		—		2,995		12,508		15,503
POSCO MOBILITY SOLUTION (formerly, POSCO SPS CORPORATION)		72,009		—		72,009		—		2,352		4,175		6,527
POSCO INTERNATIONAL Corporation		534,531		—		534,531		2,713		—		—		2,713
POSCO Thainox Public Company Limited		39,920		—		39,920		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		25,838		—		25,838		—		—		—		—
POSCO MEXICO S.A. DE C.V.		71,307		397		71,704		—		—		—		—
POSCO Maharashtra Steel Private Limited		173,285		2,006		175,291		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		13		13		42,596		—		—		42,596
POSCO ASSAN TST STEEL INDUSTRY		258,563		1,845		260,408		—		—		—		—
Others		467,135		29,002		496,137		2,926		30,691		82,716		116,333

		1,732,030		36,831		1,768,861		65,482		327,907		153,462		546,851

Associates and jointventures
SNNC		106		228		334		33,380		—		—		33,380
Roy Hill Holdings Pty Ltd		—		52,076		52,076		201,924		—		—		201,924
Others		818		17,882		18,700		6,704		—		—		6,704

		924		70,186		71,110		242,008		—		—		242,008

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

111

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	Significant transactions between the Company, excluding the controlling company, and related companies for the years ended December 31, 2021 and 2020 were as follows:

1) For the year ended December 31, 2021


(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	286,731		266		—		165
SNNC		75,129		743		19,720		40,090
Noeul Green Energy Co., Ltd.		6,127		—		—		1,896
CSP-Compania Siderurgica do Pecem		4,660		—		96,179		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		46,323		—		33,316		5,686
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		14,673		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		39,887		—		164		—
DMSA/AMSA		—		—		9,875		—
South-East Asia Gas Pipeline Company Ltd.		—		35,392		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		65,746		10		4,347		180
Samcheok Blue Power Co., Ltd.		263,730		405		—		4
TK CHEMICAL CORPORATION		14,906		—		2,292		—
Pocheon-Hwado Highway Corp. (formerly, Metropolitan Outer Ring Expressway Co., Ltd)		62,829		—		—		—
UITrans LRT Co., Ltd.		10,736		—		—		—
Roy Hill Holdings Pty Ltd		—		104,903		—		—
Others		184,606		64,480		31,379		18,505

	W	1,076,083		206,199		197,272		66,526

2) For the year ended December 31, 2020


(in millions of Won)	Sales and others				Purchase and others
	Sales		Others		Purchase of material		Others
Associates and joint ventures
POSCO PLANTEC Co., Ltd.	W	2,558		—		5		—
New Songdo International City Development, LLC		125,909		26,451		—		137
SNNC		61,332		30		48,764		126,060
Chuncheon Energy Co., Ltd.		213		211		—		—
Noeul Green Energy Co., Ltd.		6,059		—		—		829
CSP-Compania Siderurgica do Pecem		47,243		11,432		165,269		14,399
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		42,189		—		37,509		151
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		—		5,780		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		8,757		—		—		—
PT. Batutua Tembaga Raya		—		1,061		28,174		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		29,964		—		384		—
DMSA/AMSA		—		—		29,189		—
South-East Asia Gas Pipeline Company Ltd.		7		71,299		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		31,068		19,530		3,608		701
Samcheok Blue Power Co., Ltd.		220,372		—		—		—
TK CHEMICAL CORPORATION		104,749		—		26,863		—
Pocheon-Hwado Highway Corp. (formerly, Metropolitan Outer Ring Expressway Co., Ltd)		17,631		—		—		—
UITrans LRT Co., Ltd.		2,263		—		—		—
Roy Hill Holdings Pty Ltd		—		22,797		—		—
Others		162,257		49,158		49,315		37,582

	W	862,571		201,969		394,860		179,859

112

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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

1) December 31, 2021


(in millions of Won)	*Receivables(1)**								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	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. (formerly, Metropolitan Outer Ring Expressway Co., Ltd)		14,162		—		—		14,162		—		—		—
UITrans LRT Co., Ltd.		7,048		29,099		—		36,147		—		—		—
Others		38,962		179,036		114,775		332,773		240		31,047		31,287

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

(*1)	As of December 31, 2021, the Company recognizes bad-debt allowance for receivables amounting to W114,315 million.

2) December 31, 2020


(in millions of Won)	*Receivables(1)**								Payables
	Trade accounts and notes receivable		Loans		Others		Total		Trade accounts and notes receivable		Others		Total
Associates and joint ventures
New Songdo International City Development, LLC	W	23,866		—		20,592		44,458		—		3		3
Chuncheon Energy Co., Ltd.		—		—		—		—		444		—		444
Samcheok Blue Power Co., Ltd.		92,715		—		—		92,715		—		40,536		40,536
Nickel Mining Company SAS		—		62,420		143		62,563		—		—		—
CSP–Compania Siderurgica do Pecem		19,704		—		—		19,704		—		—		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		6,534		—		—		6,534		1,023		150		1,173
PT. Batutua Tembaga Raya		—		35,355		—		35,355		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		13,889		—		—		13,889		193		—		193
South-East Asia Gas Pipeline Company Ltd.		—		91,003		—		91,003		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		2,799		—		—		2,799		783		—		783
TK CHEMICAL CORPORATION		21,916		—		—		21,916		429		—		429
Pocheon-Hwado Highway Corp. (formerly, Metropolitan Outer Ring Expressway Co., Ltd)		6,299		—		—		6,299		—		—		—
UITrans LRT Co., Ltd.		6,908		23,452		102		30,462		—		—		—
Others		65,545		143,120		110,981		319,646		7,035		11,446		18,481

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

(*1)	As of December 31, 2020, the Company recognizes bad-debt allowance for receivables amounting to W133,997 million.

113

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	Significant financial transactions between the Company, excluding the controlling company, and related companies for the years ended December 31, 2021 and 2020 were as follows:

1) December 31, 2021


(in millions of Won)	Beginning		Lend		Collect			*Others(1)**			Ending
Associates and joint ventures
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-SeaAH 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 years 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 years period ended December 31, 2021.

2) December 31, 2020


(in millions of Won)	Beginning		Lend		Collect			*Others(2)**			Ending
Associates and jointventures
UITrans LRT Co., Ltd.	W	10,579		12,873		—			—			23,452
DMSA/AMSA(*1)		57,999		—		—			(57,999	)		—
South-East Asia Gas Pipeline Company Ltd.		147,367		—		(47,539	)		(8,825	)		91,003
PT. Batutua Tembaga Raya		36,291		—		—			(936	)		35,355
PT. Tanggamus Electric Power		4,580		—		—			(276	)		4,304
PT. Wampu Electric Power		5,519		—		—			(333	)		5,186
PT. POSMI Steel Indonesia		2,316		—		—			(140	)		2,176
Nickel Mining Company SAS		60,516		—		—			1,904			62,420
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		6,947		—		(1,239	)		(268	)		5,440
POS-SeAH Steel Wire (Thailand) Co., Ltd.		6,947		—		—			(419	)		6,528
AMCI (WA) PTY LTD		78,553		5,550		—			(812	)		83,291
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,789		—		—			(349	)		5,440
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		9,262		—		—			(558	)		8,704
Hyo-chun Co., Ltd.		2,382		—		—			—			2,382
Chun-cheon Energy Co., Ltd.		8,234		—		(8,234	)		—			—
POS-AUSTEM Suzhou Automotive Co., Ltd		5,789		11,805		—			(1,274	)		16,320
CAML RESOURCES PTY LTD		—		3,219		—			93			3,312
Shinahn Wind Power Generation		—		37		—			—			37

	W	449,070		33,484		(57,012	)		(70,192	)		355,350

(*1)	During the year ended December 31, 2020, loans amounting to W60,278 million have been converted to shares of DMSA/AMSA, which is presented in others.

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

114

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Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(f)	For the years ended December 31, 2021 and 2020, details of compensation to key management officers were as follows:


(in millions of Won)	2021		2020
Short-term benefits	W	111,900		109,546
Long-term benefits		18,115		15,288
Retirement benefits		22,239		16,238

	W	152,254		141,072

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.

38. Commitments and Contingencies

(a)	Contingent liabilities

Contingent liabilities may develop in a way not initially expected. Therefore, management continuously assesses contingent liabilities to determine whether an outflow of resources embodying economic benefits has become probable. If it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability, a provision is recognized in the consolidated financial statements of the period in which the change in probability occurs (except in the extremely rare circumstances where no reliable estimate can be made).

Management makes estimates and assumptions that affect disclosures of commitments and contingencies. All estimates and assumptions are based on the evaluation of current circumstances and appraisals with the supports of internal specialists or external consultants.

Management regularly analyzes current information about these matters and provides for probable contingent losses including the estimate of legal expense to resolve the matters. Internal and external lawyers are used for these assessments. In making the decision regarding the need for a provision, management considers whether the Company has an obligation as a result of a past event, whether it is probable that an outflow or cash or other resources embodying economic benefits will be required to settle the obligation and the ability to make a reliable estimate of the amount of the obligation.

115

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Details of guarantees

1) Contingent liabilities on outstanding guarantees provided by the Company as of December 31, 2021 are as follows:


(in millions of Won)				Guarantee limit				Guarantee amount
Guarantor	Guarantee beneficiary	Financial institution	Foreign currency			Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO HOLDINGS INC.	POSCO Asia Co., Ltd.	Credit Agricole and others	USD		200,000,000		237,100		—		—
	POSCO-VIETNAM Co., Ltd.	SMBC and others	USD		156,000,000		184,938		140,000,000		165,969
	POSCO MEXICO S.A. DE C.V.	BOA and others	USD		120,000,000		142,260		100,000,001		118,550
	POSCO COATED STEEL (THAILAND) CO., LTD.	SMBC and others	THB		5,501,000,000		195,672		5,021,000,001		178,597
	POSCO Maharashtra Steel Private Limited	SMBC and others	USD		139,784,000		165,715		139,784,000		165,715
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others	USD		2,150,300,000		2,549,186		1,426,992,234		1,691,699
	POSCO ASSAN TST STEEL INDUSTRY	SOCIETE GENERALE and others	USD		146,527,500		173,708		131,874,750		156,338
POSCO INTERNATIONAL Corporation	POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD.	Export-Import Bank of Korea and others	USD		180,000,000		213,390		180,000,000		213,390
	POSCO INTERNATIONAL POWER (PNGLAE) LIMITED	KDB bank	USD		53,517,404		63,445		32,717,404		38,786
	GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Shinhan Bank and others	USD		11,000,000		13,041		11,000,000		13,041
	PT. Bio Inti Agrindo	BTPN and others	IDR		2,057,400,000,000		170,970		2,057,400,000,000		170,970
	POSCO ASSAN TST STEEL INDUSTRY	ING	USD		14,652,750		17,371		14,652,750		17,371
	POSCO INTERNATIONAL Deutschland GmbH	Bank Mendes Gans							9,053,769		10,733
	POSCO INTERNATIONAL AMERICA Corp.								—		—
	POSCO INTERNATIONAL JAPAN Corp.								8,692,517		10,305
	POSCO INTERNATIONAL SINGAPORE Pte. Ltd.								—		—
	POSCO INTERNATIONAL Malaysia SDN BHD								—		—
	POSCO INTERNATIONAL Italia S.R.L.								—		—
	POSCO INTERNATIONAL MEXICO S.A. de C.V.		USD		50,000,000		59,275		—		—
	GRAIN TERMINAL HOLDING PTE. LTD.	Export-Import Bank of Korea and others	USD		27,000,000		32,009		27,000,000		32,009
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	POSCO Asia Co., Ltd. and others	USD		36,000,000		42,678		36,000,000		42,678
	PT. POSCO E&C INDONESIA	POSCO Asia Co., Ltd. and others	USD		25,900,000		30,704		25,900,000		30,704
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd. and others	USD		1,500,000		1,778		600,000		711
POSCO CHEMICAL CO., LTD	PT.Krakatau Posco Chemical Calcination	POSCO Asia Co., Ltd. and others	USD		15,200,000		18,020		4,800,000		5,690
POSCO COATED & COLOR STEEL Co., Ltd.	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.	USD		13,986,947		16,582		13,986,947		16,582
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	POSCO Asia Co., Ltd. and others	USD		77,002,839		91,287		77,002,839		91,287
[Associates and joint ventures]
POSCO HOLDINGS INC.	CSP—Compania Siderurgica do Pecem	Export-Import Bank of Korea and others	USD		420,000,000		497,911		368,324,800		436,651
		BNDES	BRL		464,060,000		98,743		464,060,000		98,743
	LLP POSUK Titanium	SMBC	USD		13,500,000		16,004		13,500,000		16,004
	Nickel Mining Company SAS	SMBC	EUR		46,000,000		61,748		46,000,000		61,748
POSCO INTERNATIONAL Corporation	GLOBAL KOMSCO Daewoo LLC	Hana Bank	USD		8,225,000		9,751		7,000,000		8,299
POSCO ENGINEERING	Chun-cheon Energy Co., Ltd	Kookmin Bank	KRW		149,200		149,200		145,900		145,900
[Others]
POSCO INTERNATIONAL Corporation	SHERRITT INTERNATIONAL CORP.	Export-Import Bank of Korea	USD		21,818,182		25,865		1,724,349		2,044
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Busan Sanseong Tunnel and others	Balhae Infrastructure Fund and others	KRW		1,720,802		1,720,802		707,054		707,054
POSCO ICT	Busan Sanseong Tunnel	Hana Bank and others	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		14,665,087		12,596		14,665,095		12,596
PT. Bio lnti Agrindo	KSU Mandob	Bank Muamalat	IDR		80,000,000,000		6,648		80,000,000,000		6,648
POSCO Maharashtra Steel Private Limited	MAHARASHTRA STATE ELECTRICITY and others	HSBC and others	INR		482,882,773		7,692		482,882,773		7,692

			USD		3,881,914,622		4,602,018		2,770,606,360		3,284,556
			KRW		1,877,620		1,877,620		859,345		859,345
			IDR		2,137,400,000,000		177,618		2,137,400,000,000		177,618
			INR		482,882,773		7,692		482,882,773		7,692
			THB		5,501,000,000		195,672		5,021,000,001		178,597
			EUR		46,000,000		61,748		46,000,000		61,748
			AUD		14,665,087		12,596		14,665,095		12,596
			BRL		464,060,000		98,743		464,060,000		98,743

2) Contingent liabilities on debt acquisition, financial support agreement provided by the Company as of December 31, 2021 are as follows:


(in millions of Won)					Agreed amount				Executed amount
Provider	Recipient	Creditor	Foreign currency				Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	JB CLARK HILLS	HSBC and others		USD		51,000,000		60,461		35,500,000		42,085
[Associates and joint ventures]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	New Songdo International City Development, LLC	Others		KRW		620,000		620,000		537,000		537,000
	POHANG E&E Coi., LTD	Heungkuk Life Insurance Co., Ltd.		KRW		71,930		71,930		54,903		54,903
	UITrans LRT Co., Ltd	Kookmin Bank and others		KRW		200,632		200,632		184,416		184,416
	Western Inland highway CO., LTD.	Nonghyup Bank and others		KRW		672,496		672,496		8,820		8,820
	Pocheon-Hwado Highway Corp.
	(formerly, Metropolitan Outer Ring Expressway Co., Ltd)	Lotte Insurance Co., Ltd and others		KRW		276,033		276,033		39,649		39,649
	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		14,067		14,067
	Pure Gimpo.Co., Ltd	KDB Bank and others		KRW		44,740		44,740		29,153		29,153
	Clean Iksan Co., Ltd	SAMSUNG FIRE & MARINE		KRW		44,054		44,054		28,198		28,198
		INSURANCE
POSCO ICT	UITrans LRT Co., Ltd	Kookmin Bank		KRW		38,147		38,147		38,147		38,147
	Western Inland highway CO., LTD.	Kookmin Bank		KRW		47,348		47,348		600		600
	Pocheon-Hwado Highway Corp.
	(formerly, Metropolitan Outer Ring Expressway Co., Ltd)	Woori Bank		KRW		24,920		24,920		1,308		1,308
[Others]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Incheon—Gimpo Expressway Co., Ltd and others	Kookmin Bank and others		KRW		3,117,808		3,117,808		1,554,052		1,554,052
POSCO ICT	Incheon—Gimpo Expressway Co., Ltd and others	Kookmin Bank and others		KRW		166,678		166,678		85,687		85,687

116

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Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	Other commitments

Details of other commitments of the Company as of December 31, 2021 are as follows:


Company		Description
POSCO HOLDINGS INC.		POSCO HOLDINGS INC. 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 December 31, 2021, 32 million tons of iron ore and 5 million tons of coal remained to be purchased under such long-term contracts.

		POSCO HOLDINGS INC. 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 HOLDINGS INC. has a long-term service contract for the transportation of raw material. As of December 31, 2021, there are 37 vessels under contract, and the average remaining contract period is about 9 years.

		As of December 31, 2021, 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 December 31, 2021, 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 2,980,162 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of December 31, 2021.

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 December 31, 2021, the amount which is exposed to the ship purchase agreements entered into is USD 170 million.

		The Company invested in the Ambatovy Nickel Project (DMSA/AMSA) in Madagascar through the Korea Ambatovy Consortium (KAC) formed with Korea 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 Holdins 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 December 31, 2021, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency guarantees of up to USD 2,419 million provided by financial institutions and uses USD 758 million with Woori Bank and others.

		As of December 31, 2021, 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 W1,383,070 million(limited to W3,002,609 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 December 31, 2021, in relation to contract enforcement, POSCO ICT is provided with a guarantee of W147,108 million, W26,464 million, W305 million from Software credit union and Seoul guarantee insurance, Engeneering credit union respectively.

117

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(d)	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 December 31, 2021, the Company has determined that the applicant’s claim is without merit, and did not recognize any provision.

Other litigation

As of December 31, 2021, litigations in progress that POSCO HOLDINGS INC. and certain subsidiaries are defendants in legal actions arising from the normal course of business are as follows:


(in millions of Won, in thousands of foreign currencies)
Company	Legal actions	Claim amount			Won equivalent		Descrioption
POSCO HOLDINGS INC.	36		KRW	140,410		140,410	Law suit on claim for employee right and others
POSCO INTERNATIONAL Corporation	1		BRL	72,774		15,485	Law suit on claim for payment for goods
	1		CAD	79,000		73,518	Law suit on claim for damages
	2		CNY	21,605		4,024	Law suit on claim for damages and others(*1)
	2		INR	4,469,396		71,197	Law suit on claim for payment on guarantees and others(*1)
	9		KRW	26,235		26,235	Litigation for confirmation of deposit bond and others
	6		USD	73,511		87,148	Law suit on claim for damages and others(*1)
	1		PKR	124,775		830	Law suit on claim for damages
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	98		KRW	397,711		397,711	Law suit on claim for damages and others(*1)
POSCO ICT	1		BRL	7,586		1,614	Law suit on claim for damage(*1)
	8		KRW	5,637		5,637	Law suit on claim for damages and others(*1)
POSCO A&C	10		KRW	13,097		13,097	Law suit on claim for payment on construction and others(*1)
POSCO America Corporation	1		USD	—		—	Law suit on claim for labor
POSCO ENERGY CO., LTD.	4		KRW	14,357		14,357	Law suit on claim for damages and others
	2		USD	400,000		474,200	Law suit on claim for damages and others
POSCO E&C CHINA CO., LTD.	4		CNY	31,051		5,784	Law suit over contract dispute and others(*1)
POSCO O&M Co., Ltd.	4		KRW	2,256		2,256	Law suit on claim for damages and others
POSCO ENGINEERING (THAILAND) CO., LTD.	1		THB	160,929		5,724	Law suit on claim for payment on construction
eNtoB Corporation	2		KRW	133		133	Law suit on claim for damages
POSCO E&C Vietnam Co., Ltd.	1		USD	211		250	Law suit on claim for payment on construction
POSCO SOUTH EAST ASIA PTE. LTD	2		USD	15,900		18,849	Law suit over contract dispute
POSCO TNPC Otomotiv Celik San. Ve Tic. A.S	4		TRY	232		21	Law suit over industrial accidents and others(*1)
Brazil Sao Paulo Steel Processing Center	4		BRL	3,844		818	Law suit on claim for labor and others
POSCO ENGINEERING & CONSTRUCTION DO BRAZIL LTDA.	89		BRL	194,834		41,457	Law suit on claim for payment on construction and others(*1)
POSCO ASSAN TST STEEL INDUSTRY	1		USD	180		214	Law suit on compensation(*1)
POSCO TMC INDIA PRIVATE LIMITED	2		INR	—		—	Law suit on claim for employee laid-off and others
POSCO INDIA PROCESSING CENTER PRIVATE LIMITED	1		INR	54,420		867	Law suit on claim for damages
POSCO-India Pune Processing Center. Pvt. Ltd.	1		INR	2,197,800		35,011	Law suit over contract dispute
POSCO CHEMCAL CO., LTD	1		KRW	15,383		15,383	Calculation of stock purchase value
POSCO M-TECH	2		KRW	70		70	Law suit on claim for damages and others
POSCO Engineering and Construction India Private Limited	2		INR	493,968		7,869	Law suit on claim for payment and others
POSCO INTERNATIONAL AMERICA Corp.	1		USD	2,500		2,964	Law suit on claim for damages
HONG KONG POSCO E&C (CHINA) INVESTMENT Co., Ltd.	1		KRW	3,305		3,305	Law suit on claim for payment
POSCO Thainox Public Company Limited	1		THB	3,000		107	Law suit on invalidation of a check
POSCO MOBILITY SOLUTION
(formerly, POSCO SPS CORPORATION)	2		KRW	300		300	Law suit on claim for damages and others
POSCO INTERNATIONAL VIETNAM CO., LTD.	1		VND	579,407		30	Law suit over contract dispute
QINGDAO POHANG STAINLESS STEEL CO., LTD.	5		CNY	56,194		10,467	Law suit over contract dispute and others
POSCO(Yantai) Automotive Processing Center Co., Ltd	2		CNY	313		58	Law suit on claim for labor and others
POSCO INTERNATIONAL (CHINA) CO., LTD	1		CNY	12,350		2,300	Law suit over contract dispute
POSCO(Dalian) IT Center Development Co., Ltd.	1		CNY	54		10	Law suit on claim for damages

(*1)	The Company made a reliable estimate in 71 lawsuits by considering the possibility and amount of expected outflow of resources and recognized W61,911 million as provision for legal contingencies and claims.

For all the other lawsuits and claims, management does not believe the Company has any present obligations and therefore, the Company has not recognized any provisions as of December 31, 2021 for the matters.

118

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(e)	Other contingencies

Other major contingencies for the Company as of December 31, 2021 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.

POSCO INTERNATIONAL Corporation		As of December 31, 2021, 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 December 31, 2021, 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 9,241,211 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.

POSCO ICT		As of December 31, 2021, POSCO ICT has provided 8 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

39. Statements of Cash Flows

(a)	Changes in operating assets and liabilities for the years ended December 31, 2021 and 2020 were as follows:


(in millions of Won)	2021			2020
Trade accounts and notes receivable	W	(1,565,327	)		816,797
Other receivables		(441,412	)		210,630
Inventories		(6,049,837	)		1,717,885
Other current assets		(210,614	)		51,750
Other non-current assets		(246,066	)		(92,068	)
Trade accounts and notes payable		1,401,942			594,414
Other payables		170,209			(78,997	)
Other current liabilities		410,745			(27,932	)
Provisions		(154,471	)		(82,146	)
Payments of severance benefits		(253,207	)		(225,293	)
Plan assets		(186,548	)		(94,121	)
Other non-current liabilities		54,012			12,667

	W	(7,070,574)			2,803,586

119

POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(b)	Changes in liabilities arising from financial activities for the year ended December 31, 2021 and 2020 were as follows:

1) December 31, 2021


(in millions of Won)	Liabilities												Derivatives that hedge borrowings
	Short-term borrowings			Long-term borrowings			Dividend payable			Finance lease liabilities			Derivatives that hedge borrowings
Beginning	W	5,194,395			15,303,212			2,703			739,675			178,988
Changes from financing cash flows		(329,897	)		639,414			(1,327,414	)		(281,288	)		(11,338	)
Changes arising from obtaining or losing control of subsidiaries or other business		—			41,359			—			—			—
The effect of changes in foreign exchange rates		245,926			689,078			—			57,814			—
Changes in fair values		—			(54,057	)		—			—			(59,668	)
Other changes:
Decrease in retained earnings		—			—			1,259,272			—			—
Decrease in non-controlling interest		—			—			69,485			—			—
Interest expenses		—			11,786			—			22			—
Increase in lease assets		—			—			—			261,791			—

Ending	W	5,110,424			16,630,792			4,046			778,014			107,982

2) December 31, 2020


(in millions of Won)	Liabilities												Derivatives that hedge borrowings
	Short-term borrowings			Long-term borrowings			Dividend payable			Finance lease liabilities			Derivatives that hedge borrowings
Beginning	W	5,486,333			14,955,280			3,105			675,470			15,524
Changes from financing cash flows		35,525			766,330			(675,684	)		(217,312	)		4,096
Changes arising from obtaining or losing control of subsidiaries or other business		—			—			—			—			—
The effect of changes in foreign exchange rates		(327,463	)		(432,082	)		—			(29,728	)		—
Changes in fair values		—			—			—			—			159,368
Other changes:
Decrease in retained earnings		—			—			607,411			—			—
Decrease in non-controlling interest		—			—			67,871			—			—
Interest expenses		—			13,684			—			10			—
Increase in lease assets		—			—			—			311,235			—

Ending	W	5,194,395			15,303,212			2,703			739,675			178,988

40. Operating Segments and Geographic Information

(a)

The Company’s operating businesses are organized based on the nature of markets and customers. The Company has four reportable operating segments—steel, construction, trading and others. The steel segment includes production of steel products and revenue of such products. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects and commercial and residential buildings, both in Korea and overseas. The trading segment consists of exporting and importing a wide range of steel products and raw materials that are both obtained from and supplied to POSCO, as well as between other suppliers and purchasers in Korea and overseas. Other segments include power generation, network and system integration and logistics.

(b)

The segment profit or loss does not reflect the consolidation adjustments allocated to each entity and is determined in the same way as the consolidated profit determined by K-IFRS. Segment assets and liabilities are determined based on separate financial statements. There are various transactions of transactions between reporting segments, including disposal of property, plant and equipment and provision of construction services.

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Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(c)	Information about reportable segments as of and for the years ended December 31, 2021 and 2020 were as follows:

1) As of and for the year ended December 31, 2021


(in millions of Won)	Steel			Trading			Construction			Others			Total
External revenues	W	41,093,405			25,065,608			6,398,366			3,774,966			76,332,345
Internal revenues		22,455,511			20,224,841			1,014,148			3,012,917			46,707,417
Including inter segment revenue		14,940,813			10,653,742			940,408			2,800,594			29,335,557
Total revenues		63,548,916			45,290,449			7,412,514			6,787,883			123,039,762
Interest income		179,841			30,265			72,830			35,305			318,241
Interest expenses		(313,769	)		(100,419	)		(39,134	)		(61,152	)		(514,474	)
Depreciation and amortization		(3,000,179	)		(343,489	)		(69,777	)		(271,898	)		(3,685,343	)
Impairment loss on property, plant and equipment and others		(249,645	)		(66,157	)		(10	)		(36,774	)		(352,586	)
Share of loss of equity-accounted investees, net		(261,363	)		(70,321	)		(45,778	)		(11,874	)		(389,336	)
Income tax expense		(2,045,079	)		(101,622	)		(116,799	)		(66,927	)		(2,330,427	)
Segment profit		6,587,903			324,888			164,276			360,883			7,437,950
Segment total assets		80,953,507			16,373,409			8,136,549			11,923,740			117,387,205
Investment in subsidiaries, associates and joint ventures		16,567,555			2,066,688			538,484			1,195,600			20,368,327
Acquisition of non-current assets		2,194,346			478,278			10,233			928,947			3,611,804
Segment total liabilities		25,714,577			11,049,017			4,451,055			5,379,210			46,593,859

2) As of and for the year ended December 31, 2020


(in millions of Won)	Steel			Trading			Construction			Others			Total
External revenues	W	28,892,877			19,345,222			6,576,170			2,978,527			57,792,796
Internal revenues		15,365,443			12,946,803			1,033,821			2,609,941			31,956,008
Including inter segment revenue		10,545,577			6,413,835			965,409			2,442,961			20,367,782
Total revenues		44,258,320			32,292,025			7,609,991			5,588,468			89,748,804
Interest income		233,833			44,528			103,974			22,607			404,942
Interest expenses		(467,767	)		(127,800	)		(60,768	)		(69,152	)		(725,487	)
Depreciation and amortization		(3,040,316	)		(313,134	)		(71,144	)		(236,763	)		(3,661,357	)
Impairment loss on property, plant and equipment and others		(37,623	)		(8,226	)		(32,184	)		(224	)		(78,257	)
Share of loss of equity-accounted investees, net		(409,889	)		(116,074	)		(65,409	)		(17,631	)		(609,003	)
Income tax expense		(77,682	)		(92,589	)		(57,178	)		(72,929	)		(300,378	)
Segment profit		711,883			157,152			150,021			293,513			1,312,569
Segment total assets		71,105,618			13,152,462			7,658,130			9,356,528			101,272,738
Investment in subsidiaries, associates and joint ventures		15,425,607			1,958,333			603,752			907,645			18,895,337
Acquisition of non-current assets		2,819,217			180,005			36,385			451,158			3,486,765
Segment total liabilities		20,976,864			8,804,555			4,260,003			4,896,040			38,937,462

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POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

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

1) Revenues


(in millions of Won)	2021			2020
Total revenue for reportable segments	W	123,039,762			89,748,804
Elimination of inter-segment revenue		(46,707,417	)		(31,956,008	)

	W	76,332,345			57,792,796

2) Profit


(in millions of Won)	2021			2020
Total profit for reportable segments	W	7,437,950			1,312,569
Goodwill and corporate FV adjustments		(62,500	)		(74,685	)
Elimination of inter-segment profit		(179,560	)		550,268
Income tax expense		2,220,183			236,934

Profit before income tax expense	W	9,416,073			2,025,086

3) Assets


(in millions of Won)	2021			2020
Total assets for reportable segments	W	117,387,205			101,272,738
Investment in subsidiaries, associates and joint ventures		(15,532,200	)		(14,697,612	)
Goodwill and corporate FV adjustments		2,411,729			2,518,590
Elimination of inter-segment assets		(12,795,120	)		(10,006,743	)

	W	91,471,614			79,086,973

4) Liabilities


(in millions of Won)	2021			2020
Total liabilities for reportable segments	W	46,593,859			38,937,462
Goodwill and corporate FV adjustments		236,833			263,490
Elimination of inter-segment liabilities		(10,164,021	)		(7,788,571	)

	W	36,666,671			31,412,381

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POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

5) Other significant items

a)	December 31, 2021


(in millions of Won)	Total segment			Goodwill and corporate FV adjustments			Elimination of inter-segment transactions			Consolidated
Interest income	W	318,241			—			(25,999	)		292,242
Interest expenses		(514,474	)		605			74,044			(439,825	)
Depreciation and amortization		(3,685,343	)		(88,927	)		194,824			(3,579,446	)
Share of profit of equity-accounted investees, net		(389,336	)		—			1,038,905			649,569
Income tax expense		(2,330,427	)		25,719			84,525			(2,220,183	)
Impairment loss on property, plant and equipment and others		(352,586	)		—			(183,262	)		(535,848	)

December 31, 2020


(in millions of Won)	Total segment			Goodwill and corporate FV adjustments			Elimination of inter-segment transactions			Consolidated
Interest income	W	404,942			—			(32,768	)		372,174
Interest expenses		(725,487	)		806			85,884			(638,797	)
Depreciation and amortization		(3,661,357	)		(102,385	)		142,002			(3,621,740	)
Share of profit of equity-accounted investees, net		(609,003	)		—			742,300			133,297
Income tax expense		(300,378	)		27,655			35,789			(236,934	)
Impairment loss on property, plant and equipment and others		(78,257	)		(761	)		(150,828	)		(229,846	)

(e)

Revenue by geographic area for the years ended December 31, 2021 and 2020 was as follows:


(in millions of Won)	2021		2020
Domestic	W	49,732,699		36,806,651
Japan		2,200,855		1,788,839
China		7,146,695		7,238,063
Indonesia		2,546,732		1,385,059
Asia-other		8,878,781		6,511,982
North America		2,083,309		1,308,943
Europe		2,172,064		1,649,140
Others		1,571,210		1,104,119

	W	76,332,345		57,792,796

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POSCO HOLDINGS INC. (formerly, POSCO) and Subsidiaries

Notes to the Consolidated Financial Statements, Continued

As of December 31, 2021 and 2020

(f)

Non-current assets by geographic area as of December 31, 2021 and 2020 are as follows:


(in millions of Won)	2021		2020
Domestic	W	27,806,262		27,652,233
Japan		155,556		168,269
China		1,175,593		1,245,181
Indonesia		2,376,777		2,386,862
Asia-other		1,822,205		1,897,618
North America		313,356		275,245
Europe		271,035		266,368
Others		928,300		952,578

	W	34,849,084		34,844,354

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

(g)

There are no customers whose revenue is 10% or more of the consolidated revenue.

41. Events after the Reporting Period

Pursuant to board of directors meeting resolution on December 10, 2021 and approval in the Extraordinary General Meeting of Shareholders on January 28, 2022, POSCO decided to, by way of a vertical spin-off, transform to a holding company under the new name of POSCO HOLDINGS INC. (tentative). The purpose of the spin-off is to establish corporate governance to seek long-term balanced growth of the group businesses. The expected date of the Spin-off is March 1, 2022.

124