POSCO 6K Current report | PKX 15 Sep 22

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of September, 2022

Commission File Number: 1-13368

POSCO HOLDINGS INC.

(Translation of registrant’s name into English)

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

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

Form 20-F ☒ Form 40-F ☐

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

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

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

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

POSCO HOLDINGS INC. is furnishing under cover of Form 6-K:

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

SIGNATURES

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


		POSCO HOLDINGS INC.
		(Registrant)

Date: September 14, 2022	By	/s/ Han, Young-Ah
		(Signature)
		Name: Han, Young-Ah
		Title: Senior Vice President

Exhibit 99.1

LOGO

INTERIM REPORT

(From January 1, 2022 to June 30, 2022)

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

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

INTERIM REPORT

(From January 1, 2022 to June 30, 2022)

To:	Korean Financial Services Commission and Korea Exchange

/s/ Chon, Jung-Son

Chon, Jung-Son

President and Representative Director

POSCO HOLDINGS INC.

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

Telephone: +82-2-3457-0114

/s/ Han, Young-Ah

Han, Young-Ah

Senior Vice President

POSCO HOLDINGS INC.

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

Telephone: +82-2-3457-0114

TABLE OF CONTENTS


I.		Overview

II.		Business

III.		Financial Statements

IV.		Corporate Governance

Attachment: Independent auditors’ review reports on consolidated and separate financial statements

I. OVERVIEW

1. Scope of Business

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

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

The Company’s business scope is as follows:


Before the vertical Spin-off (Beginning of 2022)		After the vertical Spin-off (As of the date of submission)
(1) To manufacture, market, promote, sell and distribute iron, steel and rolled products;		(1) To engage in holding business of controlling the business of, and guiding, organizing and improving the management of, subsidiaries by acquiring and owning the shares or ownership interests in subsidiaries (including sub-subsidiaries and companies controlled by such sub-subsidiaries; collectively “subsidiaries”);
(2) To engage in harbor loading and unloading, transportation and warehousing businesses;
(3) To engage in the management of professional athletic organizations;

(4) To engage in the supply of gas and power generation as well as in the distribution business thereof and in the resources development business;		(2) To engage in the management and licensing of intellectual property rights including brands and trademarks;

(5) To engage in leasing of real estate and distribution businesses;		(3) To engage in the investment related to start-up assistance and new technology;

(6) To engage in the supply of district heating business;		(4) To engage in market research, management advisory and consulting services;

(7) To engage in marine transportation, processing and sales of minerals within or outside of Korea;		(5) To engage in technology research and commissioned services;

(8) To engage in educational service and other services related to business;		(6) To engage in matters entrusted by subsidiaries to assist the subsidiaries’ businesses;

(9) To engage in manufacture, process and sale of non-ferrous metal;		(7) To engage in the supply of gas such as hydrogen and resources development business;

(10) To engage in technology license sales and engineering business; and		(8) To engage in leasing of real estate and distribution businesses; and

(11) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes		(9) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes.

2. Business Organization

A. Highlights of the Company’s Business Organization

(1) Location of the Headquarters


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

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

(2) Steel Works and Offices


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

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

(3) Major Changes in the Board of Directors


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


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

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

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

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

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

(a) From SK Telecom to National Pension Service

(b) Date of Change: January 30, 2007

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

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

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

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

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


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

New Company	POSCO	Production and sale of steel

3. Changes in Share Capital

There has been no changes in share capital in the last 5 years.


	(Unit : Share, KRW/Share, In millions of KRW)
Type	Details	As of June 30, 2022		As of December 31, 2021		As of December 31, 2020
Common Stock	Total number of issued shares		87,186,835		87,186,835		87,186,835
	Par value		5,000		5,000		5,000
	Share capital		482,403		482,403		482,403
Preferred Stock	Total number of issued shares		—		—		—
	Par value		—		—		—
	Share capital		—		—		—
Others	Total number of issued shares		—		—		—
	Par value		—		—		—
	Share capital		—		—		—
Sum	Share capital		482,403		482,403		482,403

Changes after the record date (June 30, 2022) of the disclosure

Due to the decision to cancel treasury shares by the resolution of the board of directors on August 12, 2022, the total number of shares issued by the company will decrease from 87,186,835 to 84,571,230, and there will be no change in capital. For more information, please refer to the ‘Retirement of Stocks’ disclosure on August 12, 2022.

4. Other Information Regarding Shares

A. Total Number of Shares


		(As of June 30, 2022)
Authorized Shares		Issued Shares
200,000,000		87,186,835

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

Par Value: KRW 5,000 per share

B. Treasury Stock Acquisition and Disposal

(As of June 30, 2022)


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

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

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

Aforementioned number of treasury stocks includes 3,075,569 treasury stocks which are subject to the exchange of exchangeable bonds issued by the company on September 1, 2021. The treasury stock subject to this exchange is finalized at the time the exchange right is exercised and is currently deposited with the Korea Securities Depository.

Changes after the record date (June 30, 2022) of the disclosure

On August 12, 2022 at the Board of Directors meeting, POSCO HOLDINGS INC. resolved to pay cash dividend of the 2nd quarter for the fiscal year 2022 as KRW 4,000 per share. 53,145 treasury stocks which are subject to the exchange of exchangeable bonds are additionally deposited and therefore, 3,128,714 shares are deposited as of the date of this report’s submission. For more information, please refer to the ‘Adjustment of Conversion Price, Exercise Price of Preemptive Rights, and Exchange Price’ disclosure on August 12, 2022.

5. Voting Rights


	(As of June 30, 2022)
Classification	Number of Common Shares		Remarks
(1) Number of Issued Shares		87,186,835		—
(2) Shares without Voting Rights		11,337,658		Treasury stock
(3) Shares with Voting Rights		75,849,117		—

*	The above “(3) Shares with Voting Rights” is the number of shares based on holding voting rights as of June 30, 2022.

6. Earnings and Dividends


	(In millions of KRW)
	2022.1H		2021		2020
(Consolidated) Profit*		3,300,042		6,617,239		1,602,148
(Separate) Profit		-1,225,149		5,181,227		965,863
Earnings per Share (Consolidated, KRW)		43,533		87,330		20,165
Cash Dividend Paid		606,793		1,285,635		620,287
Pay-out Ratio (Consolidated,%)		18.4		19.4		38.7
Dividend per Share (KRW)		8,000		17,000		8,000
Dividend Yield (%)		3.3		6.0		3.0

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

*	Cash Dividends includes quarterly dividends

1Q, 2022 : Cash Dividend Paid : KRW 303,397 million Dividend per Share : KRW 4,000

2Q, 2022 : Cash Dividend Paid : KRW 303,397 million Dividend per Share : KRW 4,000

7. Stock Prices and Trading Volumes

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

A. The Korean Stock Market

(KRW/share, In thousands of shares)


		January 2022	February 2022	March 2022	April 2022	May 2022	June 2022
Common share	Highest Price	306,500	290,000	306,500	299,000	294,000	290,000
	Lowest Price	257,500	267,000	276,500	278,000	273,000	230,500
	Average Price	287,525	278,222	289,857	286,881	286,690	260,075
Trading volume	Daily highest	1,038	542	520	444	695	627
	Daily lowest	256	190	182	129	155	152
	Monthly	8,346	5,751	6,379	5,225	4,952	6,362

B. New York Stock Exchange

(USD/ADS*, In thousands of ADS*)


		January 2022	February 2022	March 2022	April 2022	May 2022	June 2022
American Depositary Share (ADS)	Highest Price	64.9	60.7	62.4	60.5	59.1	58.3
American Depositary Share (ADS)	Lowest Price	54.6	55.7	54.7	55.0	52.4	44.5
	Average Price	59.8	58.1	59.0	57.9	56.3	51.1
Trading volume	Daily highest	389.4	766.3	669.4	324.0	295.0	438.7
	Daily lowest	106.6	127.7	123.1	115.9	99.3	83.1
	Monthly	4,565	5,849	5,510	3,868	3,767	4,267

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

II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into four segments:

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

Green Infrastructure is subdivided into Construction, Trading, and Energy and others.

B. Summary of Financial Status of Segment


									(In millions of KRW)
Business Segment	2022.1H				2021				2020
Business Segment	Sales		Operating Income (Loss)		Sales		Operating Income (Loss)		Sales		Operating Income (Loss)
Steel		24,068,875		3,416,844		41,093,405		8,123,117		28,892,877		1,372,852
Green Infrastructure (Construction)		3,727,043		240,101		6,398,366		424,085		6,576,170		385,048
Green Infrastructure (Trading)		13,740,607		471,801		25,065,608		488,884		19,345,222		394,954
Green Infrastructure (Energy and others)		1,689,885		164,610		2,061,277		96,968		1,739,469		198,192
Green Materials and Energy		1,035,836		52,790		1,241,957		69,510		771,575		22,818
Others		85,878		9,739		471,732		35,525		467,484		29,171
Total		44,348,124		4,355,884		76,332,345		9,238,089		57,792,796		2,403,035

2. Business Status of Segments

A. Steel

There are 76 consolidated companies in the steel segment, including POSCO and POSCO Steeleon, and overseas companies including PT.Krakatau POSCO in Indonesia, POSCO (Zhangjiagang) Stainless Steel Co., Ltd. in China and overseas processing centers.

∎ POSCO

(1) Summary of Business

POSCO produces steel materials such as hot rolled, cold rolled and stainless steel at Pohang Works and Gwangyang Works.

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

Global crude steel production in the first half of 2022 fell 5.5 million tons year-on-year to 949 million tons as China decreased production for carbon neutrality.

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

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

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

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

In the first half of 2022, raw material prices soared due to the Russia-Ukraine war, and the steel market instability continued, with demand falling due to China’s ‘Zero-Covid Policy’. POSCO responded flexibly to market fluctuations by adjusting sales prices and sales mix of the steel products in consideration of global market situation as well as regional market conditions. POSCO monitors trends and changes in each demand industry in order to focus on selling WTP (World Top Premium) steels and also strives to preoccupy new markets by strengthening proactive marketing activities for green industries such as electric vehicles, wind power, and solar power.

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

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

First, POSCO has the ability to change current steelmaking process to a low-carbon, eco-friendly process.

Second, not only being the world’s largest integrated mill, POSCO is building ‘intelligent Smart mill’

Third, POSCO has a portfolio for ‘premium product competitiveness’. POSCO is proactively responding to the increasing customer demand of eco-friendly products by expanding the development of high-end products and Green transition solutions. Fourth, POSCO has been strengthening ESG oriented management. POSCO is strengthening ESG management by establishing a framework for ESG management practice in nine key areas, including carbon neutrality, eco-friendly material development, safety, corporate citizenship management, and diversity.

(2) Market Share


	(Millions of Tons, %)

Category	2022.1H
Category	Production		Market share
Crude Steel Production		33.8		100	%
POSCO		17.3		51.2	%
Others		16.5		48.8	%

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

∎ POSCO STEELEON

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

∎ POSCO M-TECH

(1) Summary of Business

POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers which is needed to remove oversaturated oxygen in steelmaking process. In the case of steel products packaging, POSCO M-TECH continuously develops packaging automated molding machines and applies environment-friendly packaging materials. POSCO M-TECH has expanded the sales of aluminum deoxidizers in overseas markets. POSCO M-TECH’s business performance is closely related to the steel industry, and the business situation of the steel industry could have both direct or indirect impact on POSCO M-TECH’s business performance. In the case of the packaging business, the operating performance may vary depending on the change in the production of steel coils and the sales of steel raw materials may also affected by the production of crude steel.

(2) Market Share

(Tons)



Category	2022.1H					2021					2020
Category	Sales Volume		Market share			Sales Volume		Market share			Sales Volume		Market share
POSCO M-TECH		13,263		53.9	%		34,846		49.0	%		31,044		53.0	%
PJ Metal		11,342		46.1	%		36,257		51.0	%		27,576		47.0	%

Total		24,605		100.0	%		71,102		100.0	%		58,620		100.0	%

It is difficult to calculate exact market share of Aluminum deoxidizers as total production and sales volume of the domestic market are not counted. The market share stated above is calculated based on supply to POSCO.

B. Green Infrastructure Business

There are 75 subsidiaries on consolidated basis including trading sector (36 subsidiaries including POSCO International), construction sector (25 subsidiaries including POSCO E&C) and energy sector (14 subsidiaries including POSCO Energy).

∎ POSCO INTERNATIONAL

(1) Market Share

(Millions of US Dollars)

Category

2022.1Q

2021.1Q

Growth Rate

All Trading Companies in Korea

292,614

303,135

-3.47

POSCO International Corp.

4,352

4,027

8.07

Source: Korea International Trade Association

(2) Summary of Businesses

While focusing on trading which is its main business, POSCO International is engaged in resource development, production processing, and infrastructure development and operation.

POSCO International and its consolidated subsidiaries engage in three major businesses: trading, energy and investment(food resources, motor core for EV, mineral resource development and etc). In addition, POSCO International maintains a global network of over 80 subsidiaries and branches in major overseas regions. In the case of the trading business, POSCO International has not only been securing stable supply line in steel business but also been actively developing and expanding new businesses such as secondary battery business, agro-commodities, LNG trading, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. In the energy business, POSCO International conducts businesses such as natural gas and crude oil development, LNG infrastructure, natural resources and power generation infrastructure. In regard to investment business, POSCO International mainly focus on food resource business in which developing palm farm in Indonesia, and other food value chain in North America. Together with POSCO Mobility Solution, POSCO International started engaging into motor core business for EV. In addition, the company invests in mineral resource development in Australia and power generation infrastructure overseas. To be specific, POSCO International has been participating in the Ambatobi Nickel Mine Project, the world’s third-largest nickel mine in the mineral resource development project with a 6.1% stake since 2006. In addition, POSCO International is searching for new business opportunities in secondary battery materials which is considered to be POSCO Group’s core business in the future.

∎ POSCO E&C

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

Plant business is the construction of integrated steel mills, EPC projects and industrial plants. Plant business used to focus on small investment of existing facilities but there will be more new investments in Electric furnace and hydrogen reduction process followed by global green trend. As nuclear power generation is getting attention again, the development of small nuclear power plants is expected to become active.

The civil engineering business is about constructing expressways, railroads and bridges. With the government’s Green New Deal policy, the infrastructure industry is expected to increase investment in eco-friendly facilities such as water treatment and waste treatment, and investment in roads and railways is expected to increase as well. In regard to construction business, the demand of urban maintenance projects such as reconstruction, redevelopment, and remodeling is increasing as real estate prices rise in Korea. There may be volatility in the market depending on the global economy and financial environment in the future, but it is expected that there will be a steady opportunity to participate in construction projects in emerging countries.

∎ POSCO ENERGY

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

∎ POSCO ICT

There are 5 subsidiaries on consolidated basis including POSCO ICT and four of them are located overseas. POSCO ICT has both IT and OT technologies and has secured competitiveness in its manufacturing-based business on the convergence of IT and OT technologies. The experiences operating POSCO’s Smart Factory based on PosFrame system, an AI-based platform, led the company to have a strength in the area of continuous process. The company took this advantage to expand this technology to assembly process and F&B manufacturing. With its experiences in POSCO’s smart factory construction, POSCO ICT is planning to to support the mass production system of eco-friendly materials such as lithium and nickel. In addition, POSCO ICT will apply POSCO’s production quality management system that is controlled by edge computing-based smart factory solution to steel production and processing centers overseas.

C. Green Materials and Energy

∎ POSCO CHEMICAL

POSCO CHEMICAL operates mainly 3 businesses: refractory, quicklime & chemical and energy material. In the refractory business, POSCO CHEMICAL produces and maintains refractories. In order to keep price competitiveness in the domestic market, the company has expanded its business to China. In the quicklime & chemical business, POSCO CHEMICAL produces quicklime and chemical products such as coal tar and light oil. In the energy material business, POSCO CHEMICAL provides cathode and anode materials which are the main components for secondary battery: cathode, anode, electrolyte and separation membrane. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously. In particular, the secondary battery market for electric vehicles is expected to grow 29% annually from about 2 million in 2018 to about 15 million in 2025 due to China’s strong electric vehicle industry development policy, European CO₂ emission regulations, and global OEMs’ proportion of electric vehicle. In 2021, POSCO CHEMICAL has focused on investing in large-scale expansion of energy materials for future growth under a difficult business environment. In the meantime, the company conducted various activities to improve profitability and sustainable management and therefore, achieved its highest sales volume of KRW 1,989.5 billion and operating profit of KRW 121.7 billion (consolidated basis) since its foundation.

Global EV Market Outlook

(Ten thousand vehicles)

LOGO

(SNE Research)

D. Others

In Others segment, there are 13 subsidiaries in total, including POSCO HOLDINGS. POSCO HOLDING is focusing on investment in new growth businesses and opportunities

3. Key Products

A. Sales of Key Products (2022.1H)

(In hundred millions of KRW, %)


Business Segment	Item / Business Sector	Specific Use	Total Sales		Ratio
Steel	Hot-rolled Product (HR)	Steel pipe, Shipbuilding, etc.		70,572	18.7%
	Cold-rolled Product (CR)	Automobile, Home appliances, etc.		112,315	29.7%
	Stainless Steel Products	Tableware, pipes, etc.		77,666	20.6%
	Others	Plates, Wire rods, etc.		116,986	31.0%
	Gross Sum			377,539	100.0%
	Deduction of Internal Trade			-136,850

	Sub Total			240,689

Green Infrastructure	Trading	Steel, Metal		205,661	58.5%
		Chemical, Strategic Item, Energy		27,087	7.7%
		Others		42,617	12.1%
	Construction	Architecture (Domestic)		17,810	5.1%
		Plant (Domestic)		7,210	2.1%
		Civil Engineering (Domestic)		4,292	1.2%
		Others (Domestic)		820	0.2%
		Overseas Construction		7,102	2.0%
		Owned Construction		4,083	1.2%
		Others		1,686	0.5%
	Energy and etc.	Electricity Sales, etc.		32,939	9.4%
	Gross Sum			351,307	100.0%
	Deduction of Internal Trade			-159,732

	Sub Total			191,575

Green Materials and Energy	Gross Sum			15,248	100.0%
	Deduction of Internal Trade			-4,890

	Sub Total			10,358


Business Segment	Item / Business Sector	Specific Use	Total Sales		Ratio
Others	Gross Sum			4,369
	Deduction of Internal Trade		-3,510

	Sub Total		859

Total Sum			443,481

*	The steel segment above includes POSCO’s performance before the spin-off (January to February).

B. Price Movement Trends of Key Products

(In thousands of KRW/ Tons, KRW/kWh)


Business Segment	Products	2022.1H		2021		2020
Steel	Hot-rolled Product (HR)		1,204		970		622
Steel	Cold-rolled Product (CR)		1,343		1,035		759
Green Infrastructure	Electric Power		187		98		72
Green Materials and Energy	Refractory		983		913		965
Green Materials and Energy	Lime		122		104		106

Trade and Engineering & Construction sector in Green Infrastructure segment are not reflected on the table above due to difficulties in measuring the price movement trend.

[Steel]

(1) Criteria for Calculation

(a)

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

(b)

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

(2) Factors of Price Changes

The price of steel has been raised in consideration of concerns over disruptions in the steel supply in the market due to the Russia-Ukraine conflict and rising prices of major raw materials.

[Green Infrastructure]

(1) Criteria for Calculation

(a)

Subjects for Calculation: Price of electric power

(b)

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

(2) Factors of Price Changes

Power : Korea Gas Corporation cost, etc.

•

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

[Green materials and Energy]

(1) Criteria for Calculation

(a)

Subjects for Calculation: Unit price of refractory and quicklime

(b)

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

(2) Factors of Price Changes

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

4. Major Raw Materials

A. Current Status of Major Raw Materials


							(In hundred millions of KRW)
Business Segment		Type of Purchase	Item	Specific Use	Purchase Amount (Portion, %)		Portion (%)			Remarks
		Raw Materials	Materials for Iron-making	Iron Ore for Blast Furnaces		109,482		58.82	%	Iron Ore, Coal
Steel			Sub-materials	Sub-materials for Iron-making, Steelmaking		35,924		19.30	%	Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
			Stainless Steel Materials	Key Materials for STS Production		40,736		21.88	%	Nickel, Ferrochrome, STS Scrap Iron, etc.
Green Infrastructure	Construction	Raw Materials	Ready-mixed Concrete	Construction of Structure		1,061		15.15	%	—
			Steel Reinforcement	Strengthening Concrete		1,455		20.77	%	—
			Cable	Electricity Transfer		28		0.40	%	—
			Steel Pile	Foundation of Structure		194		2.77	%	—
			Others	Construction of Pipe and Structure etc.		4,268		60.91	%	—
	Trading	Raw Materials	Others	For other use		1,126		100.00	%	—
	Trading	Raw Materials	LNG	Material for Power Generation		8,423		76.00	%	—
	Energy	Raw Materials	Others	For other use		2,660		24.00	%	—


Green Materials and Energy	Raw Materials	NCM and etc.	Production of cathode materials	7,334	73.12	%	—
		Graphite and etc.	Production of anode materials	574	5.72	%	—
		Limestone and etc.	Production of Lime	486	4.84	%	—
		Others	Production of refractory	1,637	16.32	%	—

*	The steel segment above includes POSCO’s performance before the spin-off (January to February).

B. Price Movement Trends of Major Raw Materials

(In thousands of KRW)


Business Segment		Category	2022.1H	2021	2020
		Iron Ore (per ton)	159	169	120
		Coal (per ton)	575	257	147
Steel		Scrap Iron (per ton)	673	563	348
		Nickel (per ton)	34,078	21,130	16,254
Green Infrastructure	Construction	Ready-mixed Concrete (per m³)	77	68	65
		Steel Pile (per m)	250	272	102
		Steel Reinforcement (per kg)	1.1	1.0	0.7
		Cable (per m)	1.3	1.2	1.0
	Energy and etc.	LNG (per ton)	1,314	702	484
Green Materials and Energy		Limestone (per ton)	22	19	19
		Refractory (per ton)	434	320	294

Trading and Others parts of Green Infrastructure are omitted due to its difficulties of measuring raw materials fluctuations. In the case of the secondary battery material business, detailed descriptions are not included due to risk of information leakage

[Steel]

Price Movement Trend of Major Raw Materials

(1) Iron Ore


																	(In US Dollars/ Tons)
	’22.2Q		’22.1Q		’21.4Q		’21.3Q		’21.2Q		’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q
Trend of International Benchmark Price (Free On Board, “FOB”)		126		132		96		148		188		158		126		110		88		83		80		92

(2) Coal


																	(In US Dollars/ Tons)
	’22.2Q		’22.1Q		’21.4Q		’21.3Q		’21.2Q		’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q
Trend of International Benchmark Price (FOB)		446		488		369		264		137		127		109		115		118		155		140		161

(3) Scrap Iron


																	(In US Dollars/ Tons)
	’22.2Q		’22.1Q		’21.4Q		’21.3Q		’21.2Q		’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q
Trend of Purchase Price (Cost and Freight, “CFR”)		531		562		527		500		497		443		361		289		254		274		270		290

(4) Nickel


											(In US Dollars/lb, US Dollars/Tons)
	’22.2Q		’22.1Q		’21.4Q		’21.3Q		’21.2Q		’21.1Q		’20.4Q		’20.3Q		’20.2Q		’20.1Q		’19.4Q		’19.3Q
Trend of London Metal Exchange (“LME”) Cash Price		13.13		11.98		8.99		8.68		7.87		7.97		7.23		6.45		5.54		5.77		7.01		7.05
Trend of London Metal Exchange (“LME”) Cash Price		28,940		26,395		19,821		19,125		17,359		17,570		15,930		14,210		12,215		12,723		15,450		15,540

LME : London Metal Exchange

[Green Infrastructure]

(1)	Criteria for Calculation


Business Sector	Products	Criteria for Calculation	Factors of Price Changes
Construction	Ready-mixed Concrete	Standard 25-210-15	Raise of price agreed in Seoul metropolitan area
	Steel Pile	SPIRAL,609.6,12T,STP275,KS F 4602,STEEL PILE	Changes in unit price due to increase in raw material (coil) price
	Steel Reinforcement	SD400 10mm	Increase the price of raw materials (scrap)
	Cable	TFR-3, 0.6/1KV, 2.5SQ, 2C	Increase the price of raw materials
Energy and etc.	LNG	Average purchase price and LNG direct purchase price of Korea Gas Corporation	Cost of Korea Gas Corporation (cost consists of introduction cost, supply cost, etc. and is affected by crude oil, exchange rate, etc.)

[Green Materials and Energy]

(1) Criteria for Calculation

- Based on the receiving amount

(2) Factors of Price Changes

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

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

5. Production and Facilities

A. Production Capacity

[Steel]

∎ POSCO

(Thousands of Tons)

Business Area

Products

2022.1H

2021

20120

Steel

Crude Steel

20,061

40,680

*	The steel production above includes POSCO’s performance before the spin-off (January to February).

∎ POSCO STEELEON


			(Thousands of Tons)
Business Area	Products	Plant	2022.1H		2021		2020
Steel	Galvanized / Color- coated Steel	Pohang		476		960		960
	Galvanized / Color- coated Steel	Myanmar		34		70		70

Total				510		1,030		1,030

∎ POSCO M-TECH

(Tons)

Business Area

Products

2022.1H

2021

20120

Raw materials for steel production

Ingot and etc.

21,358

38,080

38,232

[Green Infrastructure]

∎ POSCO ENERGY

(Electric Power: MW)

Business Area

Products

2022.1H

2021

2020

Power Generation

Electric Power

Incheon

3,412

[Green Materials and Energy]

∎ POSCO CHEMICAL


Business Area	Products	Place of Business	2022.1H		2021		2020
Refractory	Brick and etc.	Pohang		56,500		113,000		115,000
LIME	Quicklime	Pohang Gwangyang		543,000		1,095,000		1,098,000
LIME	Quicklime	Pohang Gwangyang		543,000		1,095,000		1,098,000

Total				1,142,500		2,303,000		2,311,000

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

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production


		(Thousands of Tons)
Products		2022.1H		2021		2020
Crude Steel			19,569		42,964		40,579
Products	Hot-Rolled Steel		4,183		9,243		9,128
	Plate		3,367		6,832		7,009
	Wire Rod		1,261		2,688		2,666
	Pickled-Oiled Steel		1,343		2,880		2,432
	Cold-Rolled Products		3,746		7,898		6,795
	Coated Steel		3,661		7,446		6,316
	Electrical Steel		521		1,032		826
	Stainless Steel		1,974		4,099		3,900
	Others		1,478		3,106		4,691

	Total		21,533		45,224		43,763

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

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

(2) Capacity Utilization Rate


						(Thousands of Tons, %)


	Company	Capacity		Production		Utilization Rate
Crude Steel Production	POSCO		20,061		17,315		86.3	%
	PT.KRAKATAU POSCO		1,545		1,552		100.5	%
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.		550		501		91.2	%
	POSCO YAMATO VINA STEEL JOINT STOCK COMPANY		275		200		72.9	%

	Total		22,431		19,569		87.2	%

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

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

[Green Infrastructure]

∎ POSCO ENERGY

(1) Production Result

(Gwh)

Business Area

Products

2022.1H

2021

2020

Power Generation

Electric Power

5,122

13,493

13,998

(2) Capacity Utilization Rate


								(Hour, %)

Business Area

Products

2022.1H
Capacity

2022.1H
Production

Utilization Rate

Power Generation

Incheon Power Plant

4,344

2,145

49.4

[Green Materials and Energy]

∎ POSCO CHEMICAL

(1) Production Result


							(Tons)
Business Area	Products	Place of Business	2022.1Q		2021		2020
Refractory	Brick and etc.	Pohang		41,053		83,884		80,587
LIME	Quicklime	Pohang		562,182		1,151,419		1,101,589
LIME	Quicklime	Gwangyang		560,260		1,295,720		1,243,402

Total				1,163,495		2,531,023		2,425,578

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

(2) Capacity Utilization Rate (Current Business Year)


			(Tons)
Business Area	Capacity		Production		Utilization Rate
Refractory Factory		56,500		41,053		73	%
Quicklime Factory (Pohang)		543,000		562,182		104	%
Quicklime Factory (Gwangyang)		543,000		560,260		103	%

Total		1,142,500		1,163,495		—

C. Production Facilities

(1) The current status of production facilities


[Land]								(In millions of KRW)
Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			1,856,469		11,768		-102,638		—		1,765,599
Green Infrastructure	Construction		122,399		6,264		—		—		128,663
	Trading		176,007		801		—		—		176,808
	Energy and etc.		372,989		114		-50		—		373,053
Green Materials and Energy			174,851		5,522		—		—		180,373
Others			—		121,038		—		—		121,038

[Buildings]


								(In millions of KRW)
Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			3,245,693		37,897		-84,390		-105,510		3,093,690
Green Infrastructure	Construction		85,033		3,277		-1,890		-722		85,698
	Trading		460,474		39,026		-465		-6,776		492,259
	Energy and etc.		197,846		2,492		—		-6,593		193,745
Green Materials and Energy			208,793		21,697		—		-4,088		226,402
Others			6,611		336,183		-196,102		-35,140		111,552

[Structures]


								(In millions of KRW)
Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			2,510,527		95,980		-7,025		-77,646		2,521,836
Green Infrastructure	Construction		24,430		635		-128		-922		24,015
	Trading		25,313		40,197		—		-1,771		63,739
	Energy and etc.		554,835		1,457		—		-12,910		543,382
Green Materials and Energy			16,690		589		-70		-609		16,600
Others			—		43,685		-5,749		-31,515		6,421

[Machinery and Equipments]


								(In millions of KRW)
Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			14,286,899		841,918		-175,441		-744,589		14,208,787
Green Infrastructure	Construction		8,640		452		-11		-1,031		8,050
	Trading		373,354		33,955		-4,369		-21,372		381,568
	Energy and etc.		1,224,934		9,184		—		-40,415		1,193,703
Green Materials and Energy			526,329		130,537		-9,256		-22,063		625,547
Others			—		422,245		-107,195		-302,461		12,589

[Vehicles]


								(In millions of KRW)
Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			32,036		8,617		-5,672		-4,732		30,249
Green Infrastructure	Construction		2,297		2,639		-2,160		-358		2,418
	Trading		5,894		4,089		-1,359		-981		7,643
	Energy and etc.		1,014		333		-276		-177		894
Green Materials and Energy			4,786		1,127		-302		-1,098		4,513
Others			3		1,603		—		-1,562		44


[Tools and Fixtures]		(In millions of KRW)

Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			45,388		14,535		-9,416		-7,630		42,877
Green Infrastructure	Construction		1,447		328		-179		-277		1,319
	Trading		21,496		8,402		-2,524		-5,488		21,886
	Energy and etc.		1,840		104		—		-271		1,673
Green Materials and Energy			7,624		1,925		-302		-1,941		7,306
Others			—		5,406		-3,451		-1,923		32


[Equipment]		(In millions of KRW)

Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			111,762		10,074		-11,692		-12,239		97,905
Green Infrastructure	Construction		5,995		5,071		-2,753		-1,731		6,582
	Trading		22,143		10,371		-1,102		-3,915		27,497
	Energy and etc.		16,267		3,201		-502		-1,776		17,190
Green Materials and Energy			8,916		3,327		-1,172		-1,437		9,634
Others			1,079		18,308		-875		-4,916		13,596


[Financial Lease Assets]		(In millions of KRW)

Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			622,803		15,649		-86,773		-14,968		536,711
Green Infrastructure	Construction		66,477		160,714		-119,059		-20,769		87,363
	Trading		83,790		250,870		-50,921		-22,591		261,148
	Energy and etc.		35,466		9,514		-2,903		-5,224		36,853
Green Materials and Energy			59,070		9,645		-1,875		-10,073		56,767
Others			140		42,412		-10,490		-8,741		23,321

[Biological Assets]

(In millions of KRW)

Business Segment

Beginning Book
Balance

Increased

Decreased

Depreciation

Ending Book
Balance

Steel

—

Green Infrastructure

Construction

Trading

154,682

7,512

—

-4,756

157,438

Energy and etc.

Green Materials and Energy

—

Others

—


[Assets under Construction]		(In millions of KRW)

Business Segment		Beginning Book Balance		Increased		Decreased		Depreciation		Ending Book Balance
Steel			1,111,470		217,060		-281		—		1,328,249
Green Infrastructure	Construction		2,166		13,011		—		—		15,177
	Trading		36,295		37,507		-191		—		73,611
	Energy and etc.		32,332		21,492		—		—		53,824
Green Materials and Energy			642,904		253,505		—		—		896,409
Others			—		160,023		-128,216		—		31,807

(2) New Facility Establishment, Purchase, Etc.

(a) Investments under Construction

[Steel]

(In hundred millions of KRW)

Company

Date

Project

Total Investment

Invested
Amount

Amount
to Be
Invested

POSCO

Expansion/
Establishment

October 2008

~ December 2026

P) Establishment of #6 Coke plant

13,054

4,913

8,141

November 2021

~ December 2025

G) Increased production capacity of electrical steel for eco-friendly vehicles in Gwangyang

8,704

610

8,094

Maintenance/

Improvement

October 2019
~ October 2028

P) Improvement of #2 Hot strip mill furnace

12,521

4,169

8,352

May 2022
~ October 2024

G,P) The first phase of the sealing of raw material yards for both Pohang and Gwangyang Works

3,739

—

3,739

POSCO

M-TECH

Expansion/ Establishment

November 2021
~ June 2023

New facility investment (comprehensive packing line)

113

—

113

PT. KRAKATAU POSCO

Expansion/ Establishment

July 2021
~ November 2022

Establishment of SPM (Skin Pass Mill)

126

P stands for Pohang Steel Works.

G stands for Gwangyang Steel Works.

[Green Infrastructure]


					(In hundred millions of KRW)
Business Area	Company		Date	Project	Total Investment	Invested Amount	Amount to Be Invested
Trading	PT. BIO INTI AGRINDO	Expansion/ Establishment	June 2021- ~October 2022	CPO Mill	276	127	149
	POSCO MOBILITY SOLUTION	Expansion/ Establishment	February 2021 ~January 2022	Building_Cheonan Factory	122	122	—
			February 2021 ~January 2022	Building_Pohang Factory	164	164	—
			June 2021- ~May 2022	Mechanical Equipment _Press (Pohang)	152	115	36
			January 2022 ~March 2023	Mechanical Equipment _Press/Molding/ Assembling (Gwangyang)	130	27	103
	POSCO INTERNATIONAL TEXTILE LLC.	Maintenance/ Improvement	September 2021 ~ September 2022	Fixed assets	107	61	47
	POSCO INTERNATIONAL TEXTILE LLC.	Expansion/ Establishment	March 2022 ~ December 2022	Fixed assets	124	57	67
Construction	POSCO O&M	Expansion/ Establishment	January 2022 ~ December 2022	Other current investments	220	45	175
Energy and etc.	POSCO ICT	Expansion/ Establishment	January 2022 ~ December 2022	Other business and current investments	118	46	72
	POSCO ICT	Expansion/ Establishment	January 2022 ~ December 2022	Expansion of SM servers, etc	145	30	115
	POSCO Energy	Expansion/ Establishment	March 2020 ~December 2021	Carburetor expansion at Gwangyang LNG Terminal	360	304	56
	POSCO Energy	Expansion/ Establishment	January 2021- ~May 2024	Gwangyang LNG #6 Tank	1,437	424	1,013

[Green Materials and Energy]


			(In hundred millions of KRW)
Company		Date	Project	Total Investment		Invested Amount		Amount to Be Invested

POSCO CHEMICAL	Expansion / Establishment	November 2019 ~December 2022	The 2nd stage of production line up expansion in #2 anode material factory		2,711		1,493		1,218
POSCO CHEMICAL	Expansion / Establishment	February 2020 ~May 2024	Establishment of new Artificial Graphite Anode material line		2,177		1,219		958
		July 2020 ~November 2022	The 3rd stage of cathode material factory in Gwangyang		2,895		2,256		639
		October 2020 ~November 2022	Facilities rationalization of refractory sintering plant in Pohang		327		25		302
		November 2020 ~March 2024	The 4th stage of cathode material factory in Gwangyang		2,758		2,014		744
		December 2021 ~June 2024	cathode material factory in Pohang		3,263		338		2,925
Zhejiang POSCO-HUAYOU New Energy Co., Ltd	Expansion / Establishment	December 2021 ~December 2024	#2 new factory with capacity of 29 thousand tons		3,157		973		2,184
POSCO ARGENTINA	Expansion / Establishment	January 2022 ~April 2024	Brine lithium commercialization plant stage 1 (25,000 tons of lithium hydroxide production)		9,694		531		9,163

Ongoing investments over KRW 10 billion as of June 31, 2022 are listed on the table.

6. Product Sales

[Steel]


		(In hundred millions of KRW)
Items		2022.1H		2021		2020
Domestic	Hot-Rolled Products		37,772		70,117		39,663
	Cold-Rolled Products		30,688		54,864		37,870
	Stainless Steel		25,468		35,722		23,746
	Others		60,380		94,737		63,111
Overseas	Hot-Rolled Products		32,800		55,180		37,368
	Cold-Rolled Products		81,627		144,421		101,808
	Stainless Steel		52,198		86,712		72,140
	Others		56,606		93,736		66,876
Total	Gross Sum		377,539		635,489		442,583
	Internal Transaction		-136,850		-224,555		-153,654

	Total		240,689		410,934		288,929

[Green Infrastructure]


			(In hundred millions of KRW)
Business Area	Items		2022.1H		2021		2020
Trading	Domestic Trading	Merchandise		36,094		63,137		33,565
		Product		4,885		8,757		2,028
		Others		297		1,174		240
	Overseas Trading	Merchandise		67,596		137,741		75,922
		Product		545		1,223		528
		Others		5		207		1,192
	Trades among the 3 countries			165,943		240,665		209,444
Construction	Domestic Construction	Building		17,810		35,633		42,761
		Plant		7,210		13,272		12,887
		Civil Engineering		4,292		6,771		6,177
		Others		820		1,763		—
	Overseas			7,102		8,097		7,089
	Own Construction			5,769		8,589		7,185
Energy and etc.	Electric Power Sales			32,939		29,145		25,688
Total	Gross Sum			351,307		556,174		424,706
	Deduction of Internal Transaction			-159,732		-220,938		-148,097

	Total			191,575		335,236		276,609

[Green Materials and Energy]


	(In hundred millions of KRW)
Items	2022.1H		2021		2020
Gross Sum		15,248		20,892		16,137
Deduction of Internal Transaction		-4,890		-8,472		-8,421
Total		10,358		12,420		7,716

[Others]


	(In hundred millions of KRW)
Items	2022.1H		2021		2020
Gross Sum		4,369		17,842		14,062
Deduction of Internal Transaction		-3,510		-13,109		-9,388
Total		859		4,733		4,674

Domestic and overseas categorized by the sales area.

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

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

7. Derivatives

POSCO use forward exchange contracts to hedge against the exchange rate risk for foreign currency loans. As of June 30, 2022, we assessed the fair value of our currency swap contracts to be USD 0.5 billion(expiring November, 2022), USD 0.5 billion(expiring January 2023), USD 0.5 billion (expiring August, 2023), USD 0.5 billion(expiring July, 2024) USD 0.44 billion(expiring January, 2025), EUR 0.5 billion(expiring January, 2024). The transaction gain of forward exchange contracts is KRW 285 million(expiring March, 2022). Also, we recognized KRW 209,683 million of valuation gain on currency swap contracts.

8. Significant Contracts

[Steel]

∎ POSCO M-TECH


Contract	Contract Date	Remarks
Outsourcing of Products Packaging Contract with Pohang and Gwangyang Steelworks	November 26, 2021	(1) Contract Counterparty: POSCO (2) Purpose: Service concerning packaging of steel products, supply of packaging materials, maintenance of packaging facilities, etc Packaging work for Pohang and Gwangyang Steelworks (3) Contract period: July 1, 2021~June 30, 2022 (4) Transaction amount: KRW 174,209 million
Consign management of Ferromanganese Plant	December 30, 2021	(1) Contract counterparty: POSCO (2) Purpose: Collective consignment of plant facilities and operations (3) Contract period: July 1, 2021~June 30, 2022 (4) Transaction amount: KRW 27,412 million
Consign management of copperplate factory	December 1, 2021	(1) Contractual Counterparty: POSCO (2) Purpose: Collective consignment of plant facilities and operations (3) Contract period: November 1, 2021~October 31, 2022 (4) Transaction amount: KRW 740 million
Supply contract of aluminum deoxidizer	November 30, 2021	(1) Contract Counterparty: POSCO Co., Ltd (2) Purpose: Production and sale of sub-materials that remove supersaturated oxygen in steel making process (3) Contract period: January 1, 2022~June 30, 2022 (4) Transaction amount: KRW 55,500 million

∎ POSCO YAMATO VINA STEEL JOINT STOCK COMPANY

Contract

Date

Remarks

Joint stock contract with POSCO, YAMATO KOGYO CO., LTD. and SIAM YAMATO STEEL CO., LTD. to improve business structure

March 2020

1) Purpose: To improve business structure by collaborating with leading company in
section steels

2) Information: POSCO’s 100% share of POSCO SS VINA changes to 51%

YAMATO KOGYO CO., LTD. takes 30% of shares and SIAM YAMATO STEEL CO., LTD. takes 19% of shares.

3) Signed date of the contract: March 18, 2020

4) Registration of joint stock company : April 28, 2020

[Green Infrastructure]

∎ POSCO INTERNATIONAL

Contract

Date

Remarks

Investment on the 3^rd stage development of

A-1 / A-3 block

September 2020

1) Investment amount: KRW 365,786,302,000

2) Development period: September 1, 2019 ~ December 31, 2024

3) Schedule : Installation Completion of low-pressure gas compression platform and
commenced operation in 2024


Contract	Date	Remarks
in Myanmar gas field		4) Other Information - Location: North-west offshore, Myanmar - This investment is the 3^rd stage of development, which consists of 3 stages in Myanmar gas field development. The purpose of investment is to maintain current gas production level stably by installing low-pressure gas compression platform. - In the first quarter of 2021, the design and production of the equipment for this work was started, and it is planned to start operation in 2024. The “(2) Development period” above is the period including the basic design progress period, September 2019 to September 2020. - Participation rate of each company in gas production and offshore pipeline transportation business • POSCO International Corporation : 51.0% • ONGC VIDESH(Oil and Natural Gas Corporation Videsh Limited) : 17.0% • MOGE(Myanmar Oil and Gas Enterprise): 15.0% • GAIL (India) Limited : 8.5% • KOGAS(Korea Gas Corporation): 8.5% - Investment size of USD 315,170 thousand, applying the exchange rate of 1USD=1,160.60 KRW, which is the date of the BOD resolution. - Detailed information and future timeline on this resource development investment is subject to change. POSCO International disclosure date : September 22, 2020 (Decision on natural resources investment)
Decision to acquire shares of Senex Energy (Australia)	December 2021	1) Purpose : Production and Development of land gas field in eastern Australia 2) Method : Cash acquisition 3) Resolution date of Board of Directors : December 10, 2021 4) Acquisition amount : KRW 371,077,996,186 5) Number of shares acquired : 96,178,946Shares 6) Date of acquisition : April 1, 2022 7) equity structure (after acquisition of shares) : - POSCO International : 50.1% - Hancock Energy (Australia) : 49.9% POSCO International disclosure date : March 31, 2022 (Decision on Acquisition of Shares or Investment Certificates of Other Corporations)
Decision on Merger	August 2022	1) Purpose : The purpose of the merger is to consolidate the energy business within the group and complete the value chain of the LNG business, thereby strengthening competitiveness, improving management efficiency and laying the foundation for sustainable growth. 2) Method of Merger : POSCO Energy Co., Ltd. (“POSCO Energy”) will be merged with and into POSCO International Co., Ltd. (“POSCO International”). 3) Date of board resolution (decision Date) : August 12, 2022 4) Merger ratio : POSCO International : POSCO Energy = 1 : 1.1626920 5) Record date of merger : January 1, 2023 6) Scheduled date of merger registration : January 2, 2023

[Green Materials and Energy]

∎ POSCO ENERGY

Contract

Date

Remarks

Merger

May 2020

1) Contract counterpart : PSC Energy Global Co., Ltd.

2) Signed date : May 26, 2020

3) Date of merger : August 1, 2020

4) Merger ratio : 1.0000000 : 0.0000000

5) Information : POSCO ENERGY merges PSC Energy Global Co., Ltd., a wholly
owned subsidiary of POSCO ENERGY

∎ POSCO FLOW

Contract

Date

Remarks

Transfer of all
logistics tasks
such as
arranging
logistics and
performing
related
services

December
2021

1) Contract counterpart : POSCO (POSCO HOLDINGS INC.)

2) Signed date : December 22, 2021

3) Date of Transfer : January 1, 2022

4) Transfer amount : KRW 2,945 million

5) Information : Transfer of all logistics tasks such as arranging logistics and performing related services

9. Research and Development

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


Business Segment	Company	Organization
Steel	POSCO	Steel Production & Technology Strategy Office
		R&D Center
		Steel Product R&D Center
		Low-Carbon Process R&D Center
		Automotive Steel R&D Center
		Steel Solution R&D Center
	POSCO (Zhangjiagang) Stainless Steel Co., Ltd.	R&D Center
	POSCO MOBILITY SOLUTION	STS Business Office R&D Group
		Core Business Office Product Process Development Group
		Core Business Office Mold Research Group
	POSCO STEELEON	Production & Marketing Strategy Office
	POSCO M-TECH	Pohang Steel Business Division

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

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

Others	POSCO HOLDINGS INC.	AI R&D Laboratories, New Experience of Technology Hub
		LiB Materials R&D Laboratories, New Experience of Technology Hub
		Hydrogen and Low-Carbon Energy R&D Laboratories, New Experience of Technology Hub

B. R&D Expenses in 2022.1H


																(In millions of KRW)
Category	Business Segment
	1. Steel			2. Green Infrastructure									3. Green Materials and Energy			4. Others			Total
	1. Steel			Construction			Trading			Energy and etc.			3. Green Materials and Energy			4. Others			Total
Selling and Administrative Cost		27,248			2,161			282			6,904			14,353			21,311			72,259
Manufacturing Cost		176,280			162			251			20			2			—			176,715
R&D Cost (Intangible Assets)		12,504			-12			—			—			1,484			0			13,976
Total*		216,032			2,311			533			6,924			15,839			21,311			262,950
Government Subsidy		—			1,100			—			—			—			—			1,100
R&D/Sales Ratio (%)		0.90	%		0.06	%		0.00	%		0.41	%		1.53	%		24.82	%		0.59	%

*	Total includes government subsidy.

III. Financial Statements

1. Consolidated Financial Statements

A. Summary


					(In millions of KRW)
Account	2022.1H		2021		2020
	As of June 30, 2022		As of December 31, 2021		As of December 31, 2020
[Total current assets]		52,146,962		46,621,631		35,830,815
Cash and cash equivalents		5,769,474		4,775,166		4,754,644
Other receivables, net		2,286,974		2,104,609		1,494,239
Other short-term financial assets		12,521,035		13,447,717		11,709,209
Trade accounts and notes receivable, net		12,394,411		10,061,982		8,120,619
Inventories		17,962,484		15,215,098		9,051,790
Other current assets		1,212,584		1,017,059		700,314
[Total non-current assets]		49,723,431		44,849,983		43,256,158
Other receivables, net		1,588,001		1,415,143		1,195,962
Other long-term financial assets		2,299,783		2,119,674		1,561,807
Investments in associates and joint ventures		5,217,075		4,514,647		3,876,249
Property, plant and equipment, net		30,407,053		29,596,698		29,400,141
Intangible assets, net		5,221,730		4,166,309		4,449,432
Other non-current assets		4,989,789		3,037,512		2,772,567
Total assets		101,870,393		91,471,614		79,086,973
[Total current liabilities]		25,756,920		21,083,623		16,854,968
[Total non-current liabilities]		17,363,986		15,583,048		14,557,413
Total liabilities		43,120,906		36,666,671		31,412,381
[Equity attributable to owners of the controlling company]		53,256,128		50,427,355		44,331,350
Share capital		482,403		482,403		482,403


Capital surplus		1,388,581			1,387,960			1,310,547
Hybrid bonds		—			199,384			199,384
Retained earnings		54,089,419			51,532,888			46,111,457
Other equity attributable to owners of the controlling company		(2,704,275	)		(3,175,280	)		(3,772,441	)
[Non-controlling Interests]		5,493,359			4,377,588			3,343,242
Total equity		58,749,487			54,804,943			47,674,592

	From January 1, 2022 to June 30, 2022			From January 1, 2021 to December 31, 2021			From January 1, 2020 to December 31, 2020
Revenue		44,348,124			76,332,345			57,792,796
Operating profit		4,355,884			9,238,089			2,403,035
Profit		3,705,826			7,195,890			1,788,152
[Profit attributable to owners of the controlling company]		3,300,041			6,617,239			1,602,147
[Profit attributable to non-controlling interests]		405,785			578,651			186,005
Total comprehensive Income		4,133,696			8,013,489			1,570,204
[Total comprehensive income attributable to owners of the controlling company]		3,664,294			7,384,572			1,415,132
[Total comprehensive income attributable to non-controlling interests]		469,402			628,917			155,072
Earnings per share(KRW)		43,533			87,330			20,165
Number of Consolidated Companies		176			170			167

B. The Standards Used for Reporting the Financial Statements

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

2. Separate Financial Statements

A. Summary


	(In millions of KRW)
Account	2022.1H			2021			2020
	As of June 30, 2022			As of December 31, 2021			As of December 31, 2020
[Total current assets]		4,060,604			25,918,880			19,579,954
Cash and Cash equivalents		251,505			2,042,274			1,822,660
Trade accounts and notes receivable, net		56,977			6,017,508			3,693,535
Other receivables, net		65,831			545,341			279,555
Other short-term financial assets		3,681,782			9,605,522			9,607,632
Inventories		—			7,623,202			4,093,829
Other current assets		4,509			85,033			82,743
[Total non-current assets]		47,422,658			38,323,879			37,215,015
Other receivables, net		226,097			274,253			84,037
Other long-term financial assets		1,100,410			1,326,565			1,072,817
Investments in Subsidiaries, associates, and joint ventures		45,714,797			16,002,640			14,883,152
Property, plant and equipment, net		143,189			19,772,299			20,216,932
Intangible assets, net		13,514			551,410			621,926
Other non-current assets		224,651			396,712			336,151
Total assets		51,483,262			64,242,759			56,794,969
[Total current liabilities]		345,619			7,868,269			5,089,111
[Total non-current Liabilities]		4,318,127			7,339,065			6,591,154
Total liabilities		4,663,746			15,207,334			11,680,265
[Share capital]		482,403			482,403			482,403
[Capital surplus]		1,348,780			1,339,289			1,339,289
[Hybrid bonds]		—			199,384			199,384
[Retained earnings]		47,747,804			49,734,492			45,781,777
[Other equity]		(2,759,471	)		(2,720,143	)		(2,688,149	)


Account	2022.1H			2021		2020
Total equity		46,819,516			49,035,425		45,114,704

		From January 1, 2022 to June 30, 2022			From January 1, 2021 to December 31, 2021		From January 1, 2020 to December 31, 2020
Revenue		7,921,663			39,920,201		26,509,920
Operating profit		1,145,959			6,649,600		1,135,197
Profit		(1,225,149	)		5,181,227		965,863
Earnings per share(KRW)		(16,181	)		68,360		12,123

B. The Standards Used for Reporting the Financial Statements

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

IV. CORPORATE GOVERNANCE

1. Overview of Corporate Governance

A. Board of Directors (“BoD”)

(1) Board of Directors

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

The Board of Directors manages the following five Special Committees:

(a) ESG Committee

(b) Director Candidate Recommendation Committee

(d) Finance Committee

(e) Audit Committee

LOGO Composition of the Special Committees under the BoD and their Functions (as of August 16, 2022)

Category

Composition

Directors

Major Functions

ESG Committee

3 Outside Directors,

1 Inside Director

Yoo, Young-Sook (Chairman)

Kim, Sung-Jin

Kwon, Tae-kyun

Yoo, Byeong-Og

[Deliberation Items]

(1) Matters related to Operations of BoD and Special Committees

A. Agenda development and establishment of operating standards of the BoD and Special Committees

B. Prior deliberation on revision or repeal of the Operational Regulations of the Board of Directors

C. Prior deliberation of the composition and operation of the Special Committees under the BoD

(2) ESG-related implementation monitoring and report publication

(3) Deliberation and resolution of donation from over KRW 100 million to KRW 1 billion and Prior deliberation of donation over KRW 1 billion

(4) Internal transactions under Monopoly Regulation and Fair Trade Act (The act of providing or trading funds, securities, or assets with related party as business counterpart or for related party)

A. Review of internal transaction-related issues and improvement measures

B. Prior deliberation on internal transaction (Amount KRW 100 billion or more)

C. Deliberation and resolution of internal transactions (Amount from KRW 5 billion to less than KRW 100 billion)

(5) Appointment of Fair Trade Compliance Officer.

[Report Items]

1. Major ESG issues of affiliates



Director Candidate Recommendation Committee	3 Outside Directors	Kwon, Tae-Kyun (Chairman) Chang, Seung-Wha Yoo, Jin-Nyong	(1) Qualification review of Outside Director candidates and recommendation to GMoS (2) Preliminary review and qualification review of Inside Director candidates (3) Prior deliberation on appointment of members of Special Committees (4) Prior deliberation of appointment of Representative Directors other than the Representative Director and CEO (5) Operation of Outside Director Candidate Recommendation Advisory Panel (6) Other matters necessary for recommending candidates for Outside Directors

Evaluation and Compensation Committee	4 Outside Directors	Chang, Seung-Wha (Chairman) Pahk, Heui-Jae Yoo, Young-Sook Sohn, Sung-Kyu	(1) Establishment of management succession and management training plan (2) Establishment of plan for management evaluation and compensation, and execution (3) Prior deliberation on remuneration and retirement allowance of Directors

Finance Committee	3 Outside Directors; 1 Inside Director	Pahk, Heui-Jae (Chairman) Yoo, Young-Sook Kwon, Tae-kyun Chon, Jung-Son	(1) Developing policies for soundness of company’s internal value and finance (2) Prior deliberation in case of filing in litigation or arbitration, or responding to reconciliation or mediation in the process of trial or taking any equivalent level of legal actions with the amount of KRW 100 billion or more (3) Regarding investment activities A. Prior deliberation on new investments (KRW 100 billion or more. Investment and capital increase includes borrowings and liabilities that the company takes) B. Prior deliberation on existing external investments (KRW 200 billion or more. Investment and capital increase includes borrowings and liabilities that the company takes) C. Approval of new investments (more than KRW 50 billion and less than KRW 100 billion, Investment and capital increase includes borrowings and liabilities that the company takes) D. Approval of new investments (more than KRW 100 billion and less than KRW 200 billion, Investment and capital increase includes borrowings and liabilities that the company takes) E. Preliminary deliberation on the acquisition and disposal of tangible and intangible fixed assets and important investment assets (over 200 billion won, based on book value per unit of investment assets) (4) Deliberation and resolution on bond issuance and important borrowings (including refinancing borrowings exceeding KRW 100 billion) (5) Prior deliberation on bond issuance and important borrowings (new long-term borrowings exceeding KRW 100 billion) (6) Deliberation and resolution on offering non-current assets as collateral (7) Deliberation and resolution on takeover of debt such as collateral, guarantee, etc. from invested company (excluding the case involving steel investment).

Audit Committee

3 Outside Directors

Sohn, Sung-Kyu (Chairman)

Kim, Sung-Jin

Yoo, Jin-Nyong

(1) Setting the work scope of the committee

(2) Matters that the BoD or Representative Directors delegated

(3) Request for Extraordinary GMoS

(4) Consulting of external experts

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

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

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

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

(9) Evaluation of the internal control system

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

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

(12) Evaluation of independent auditors’ audit activities

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

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

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

(16) Report that independent auditors have violated the company’s accounting standards

(17) Enactment, amendment or repeal of internal accounting management regulations

(18) Other items deemed necessary by each committee member

*	In order to strengthen the roles of the Board of Director, the Special Committees were reorganized at the General Meeting of Shareholders held on March 18, 2022.

•

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

•

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

(2) List of Key Activities of the Board of Directors (January 1, 2022 ~ August 16, 2022)

(January 1, 2022 ~ March 17, 2022)


No.	Date	Agenda	Approval
2022-1	January 4, 2022	• Deliberation Agenda\ 1. Amendment of articles of incorporation of new steel subsidiary related to vertical spin-off	Approved
2022-2	January 28, 2022	• Deliberation Agenda 1. Approval of the 54th financial statements and schedule for the general meeting of shareholders 2. Disposal of treasury stocks in accordance with employee stock ownership program implementation • Report Agenda 1. Status of implementation of the resolved agendas in 2021 by the BoD 2. Business performance of the fiscal year of 2021 3. Report on internal control over financial reporting 4. Assessment on the effectiveness of internal control over financial reporting	Approved

2022-3

February 17,
2022

• Deliberation Agenda

1. Recommendation of Inside Directors candidates and Non-Standing Director candidate

2. Agendas for the 54th general meeting of shareholders

• Report Agenda

1. Amendment of the Operational Regulation of Board of Directors in accordance with conversion to a holding company

Approved

2022-4

March 2,
2022

• Deliberation Agenda

1. Approval of public notice replacing general shareholder’s meeting to report the completion of Spin-off and inaugural general meeting

2. Approval of registration of relocation of Headquarters

Approved

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

(March 18, 2022 ~ August 16, 2022)


No.	Date	Agenda	Approval
2022-5	March 18	• Deliberation Agenda 1. Appointment of the Chairman of the BoD 2. Appointment of Special Committees members 3. Appointment of Representative Directors and Inside Directors 4. Revision of the Board of Directors Operation Regulations in accordance with the transition to the holding company	Approved
2022-6	April 8 May 13	• Deliberation Agenda 1. Revision of Operation Regulations of Succession Council	Approved
	April 8	2. Second investment in POSCO lithium solution ^○ Report Agenda Investment status of secondary battery material business	Approved
2022-7	May 13	• Deliberation Agenda 1. Appointment of a compliance officer 2. Dividends in the 1^st quarter of 2022 ^○ Report Agenda Business performance and Group’s ESG performance of the 1^st quarter of 2022 1. Business performance and Group’s ESG performance of the 1^st quarter of 2022 2. Joint investment of anode materials in North America 3. Performance and evaluation results of the board of directors in 2021	Approved
2022-8	August 12	• Deliberation Agenda 1. Merger plan of POSCO International and POSCO Energy 2. Sale of stake of CSP 3. Cancellation of Treasury Shares 4. Dividends in the 2^nd quarter of 2022 ^○ Report Agenda 1. Business performance of the 1^st quarter of 2022 and outlook of second half of 2022 2. Major business performance of subsidiaries

Major Activities of Outside Directors on the Board of Directors (January 1, 2022 ~ August 16, 2022)


No.	Date	Participation of the Outside Directors (the Number of total Outside Directors)	Remarks
2022-1	January 4	7 (7)	—
2022-2	January 28	7 (7)	—
2022-3	February 17	7 (7)	—
2022-4	March 2	7 (7)	—
2022-5	March 18	7 (7)	—
2022-6	April 8, May 13	7 (7)	—
2022-7	May 13	7 (7)	—
2022-8	August 12	7(7)	—

(3) Special Committees under the BoD and Their Activities (From January 1, 2022 to August 16, 2022)


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


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


^○		ESG Committee (March 18, 2022 ~ August 16, 2022)


Date	Agenda	Approval
March 29, 2022	• Deliberation Agenda 1. Lease contract for POSCO Center for 2022	Approved
May 13, 2022	• Deliberation Agenda 1. Appointment of Fair Trade Self-Compliance Manager	Approved
	2. POSCO HOLDINGS’ Publication of Corporate Citizenship Report • Report Agenda 1. Group ESG performance in the 1^st quarter of 2022
July 7, 2022	• Report Agenda 1. Current Status and Prospects of Emissions Trading System in Korea
	2. Progress of POSCO HOLDINGS Corporate Citizenship Report
August 12, 2022	• Report Agenda 1. Operation status of the Fair Trade Self-compliance Program in the first half of 2022
	2. Group ESG Performance in 2^nd quarter of 2022
	3. Report on POSCO HOLDINGS Corporate Citizenship Report


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

Date

Agenda

Approval

January 28, 2022

• Deliberation Agenda

1. Qualification review and recommendation of the Outside Directors candidates

Approved


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


^○		Director Candidate Recommendation and Management Committee (March 18, 2022 ~ August 16, 2022)


Date	Agenda	Approval
—	Not Applicable	—


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

Date

Agenda

Approval

January 27, 2022

• Deliberation Agenda

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

Approved


^○		Evaluation and Compensation Committee (March 18, 2022 ~ August 16, 2022)


Date	Agenda	Approval
—	Not Applicable	—


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

Date

Agenda

Approval

February 17, 2022

• Deliberation Agenda

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

Approved


^○		Finance Committee (March 18, 2022 ~ August 16, 2022)

Date

Agenda

Approval

August 10, 2022

• Preliminary Review

1. Sale of stake of CSP

—

B. Audit Committee

(1) Composition of the Audit Committee

Name

Qualifications

Remarks

Sohn, Sung-Kyu

Kim, Sung-Jin

Yoo, Jin-Nyong

Satisfies the requirements stipulated in the Korean Commercial Act

Chairman

—

(2) Major Activities of the Audit Committee (January 1, 2022 ~ March 17, 2022)


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

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

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

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

(March 18, 2022 ~ August 16, 2022)


Session	Date	Agenda	Approval
4	March 18	• Deliberation Agenda 1. Appointment of the chairman of the audit committee	Approved
		2. Consent to appoint a person in charge of internal audit department
5	April 5	• Deliberation Agenda 1. Approval of POSCO HOLDINGS audit service contract change and POSCO audit, non-audit service contract	Approved
6	April 27	• Deliberation Agenda 1. Results of internal audit on the consolidated financial statements for the 1^st quarter of 2022 • Report Agenda 1. The results of the 20-F audit for 2021 and the results of external reviews on the consolidated financial statements for the 1st quarter of 2022	Approved
7	June 10	• Report Agenda 1. Audit trends and pending issues such as PCAOB monitoring cases
8	June 24	• Deliberation Agenda 1. Approval of POSCO’s non-audit service contract	Approved
		2. Approval of POSCO E&C’s Audit Service Contract
9	August 11	• Deliberation Agenda 1. Internal audit performance for the 1st half of 2022 and plans for the 2nd half of 2022 2. Results of internal audit on the consolidated financial statements for the 2nd quarter of 2022 3. Audit activity evaluation results of the independent auditor for the year 2021 • Report Agenda 1. Results of external audit on consolidated financial statements for the 2nd quarter of 2022	Approved

C. Voting Rights of Shareholders

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

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

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

D. Compensation of Directors and Officers

(1) The Salary of Directors and Audit Committee Members


	(In millions KRW)
Category	No. of people		Total payment		Average payment (Per person)		Ceiling amount approved at the general meeting of shareholders		Remarks
Inside Director		5		5,901		1,249		10,000		—
Outside Director (Excluding Audit Committee Members)		4		202		46				—
Audit Committee Members		3		154		51				—

No. of people : The number of Directors and the Audit Committee members who are in office as of June 30, 2022.

Total payment : The total amount of remuneration paid to all Directors, including the Audit Committee members, who served from January 1 to June 30, 2022.

Average payment per person is calculated based on the paid amount to the current Directors and AuditCommittee members as of June 30, 2022.

POSCO HOLDINGS INC.

and Subsidiaries

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 2022

(With Independent Auditors’ Review Report Thereon)

Table of Contents


			Page
Independent Auditors’ Review Report			1

Condensed Consolidated Interim Financial Statements

Condensed Consolidated Interim Statements of Financial Position			3

Condensed Consolidated Interim Statements of Comprehensive Income			5

Condensed Consolidated Interim Statements of Changes in Equity			6

Condensed Consolidated Interim Statements of Cash Flows			8

Notes to the Condensed Consolidated Interim Financial Statements			10



		KPMG SAMJONG Accounting Corp.		Tel +82 (2) 2112 0100
		152, Teheran-ro, Gangnam-gu, Seoul 06236		Fax +82 (2) 2112 0101
		(Yeoksam-dong, Gangnam Finance Center 27th Floor)		www.kr.kpmg.com
		Republic of Korea

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO HOLDINGS INC.:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of POSCO HOLDINGS INC. and its subsidiaries (the “Company”), which comprise the condensed consolidated interim statement of financial position as of June 30, 2022, the condensed consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021, the condensed consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2022 and 2021, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

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

Auditor’s review responsibility

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

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

Conclusion

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

LOGO

Emphasis of matter

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

Other matters

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

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

LOGO

Seoul, Korea

August 12, 2022

This report is effective as of August 12, 2022, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of June 30, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes		June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents		21	W	5,769,474		4,775,166
Trade accounts and notes receivable, net		4,21,26,27,34		12,394,411		10,061,982
Other receivables, net		5,21,34		2,286,974		2,104,610
Other short-term financial assets		6,21		12,521,035		13,447,717
Inventories		7		17,962,484		15,215,098
Current income tax assets				21,628		23,229
Assets held for sale		8		34,593		78,470
Other current assets		14		1,156,363		915,358

Total current assets				52,146,962		46,621,630

Long-term trade accounts and notes receivable, net		4,21		28,023		63,205
Other receivables, net		5,21		1,588,001		1,415,143
Other long-term financial assets		6,21		2,299,783		2,119,674
Investments in associates and joint ventures		9		5,217,075		4,514,647
Investment property, net		11		1,089,239		1,086,077
Property, plant and equipment, net		12		30,407,053		29,596,698
Intangible assets, net		13		5,221,730		4,166,309
Defined benefit assets, net		19		116,159		255,858
Deferred tax assets				3,593,217		1,433,766
Other non-current assets		14		163,151		198,607

Total non-current assets				49,723,431		44,849,984

Total assets			W	101,870,393		91,471,614

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued

As of June 30, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes	June 30, 2022			December 31, 2021
Liabilities
Trade accounts and notes payable	21,34	W	6,752,857			5,468,175
Short-term borrowings and current installments of long-term borrowings	4,15,21		13,167,045			8,830,067
Other payables	16,21,34		2,230,663			2,189,361
Other short-term financial liabilities	17,21		131,203			111,641
Current income tax liabilities			967,730			2,139,718
Liabilities directly associated with the assets held for sale	8		4			189
Provisions	18,35		400,558			399,984
Other current liabilities	20,26,27		2,106,860			1,944,488

Total current liabilities			25,756,920			21,083,623

Long-term trade accounts and notes payable	21		696			694
Long-term borrowings, excluding current installments	15,21		12,318,695			12,911,149
Other payables	16,21		812,800			679,009
Other long-term financial liabilities	17,21		20,152			23,996
Defined benefit liabilities, net	19		14,805			50,842
Deferred tax liabilities			3,449,227			1,271,775
Long-term provisions	18,35		589,368			589,092
Other non-current liabilities	20,26		158,242			56,491

Total non-current liabilities			17,363,985			15,583,048

Total liabilities			43,120,905			36,666,671

Equity
Share capital	22		482,403			482,403
Capital surplus	22		1,388,581			1,387,960
Hybrid bonds	23		—			199,384
Reserves	24		(244,494	)		(666,985	)
Treasury shares	25		(2,459,781	)		(2,508,294	)
Retained earnings			54,089,419			51,532,887

Equity attributable to owners of the controlling company			53,256,128			50,427,355
Non-controlling interests	23		5,493,360			4,377,588

Total equity			58,749,488			54,804,943

Total liabilities and equity		W	101,870,393			91,471,614

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income

For the three-month and six-month periods ended June 30, 2022 and 2021

(Unaudited)


			For the three-month period						For the six-month period
			ended June 30						ended June 30
(in millions of Won, except per share information)	Notes		2022			2021			2022			2021
Revenue		26,27,34,37	W	23,010,054			18,292,466			44,348,124			34,361,189
Cost of sales		7,27,31,34		(20,276,914	)		(15,469,223	)		(38,686,219	)		(29,400,171	)

Gross profit				2,733,140			2,823,243			5,661,905			4,961,018
Selling and administrative expenses		31,34
Reversal of (impairment loss) on trade accounts and notes receivable				877			1,368			(5,042	)		7,523
Other administrative expenses		28		(579,926	)		(516,069	)		(1,168,951	)		(1,022,390	)
Selling expenses		28		(55,857	)		(107,953	)		(132,028	)		(193,121	)

Operating profit				2,098,234			2,200,589			4,355,884			3,753,030
Share of profit of equity-accounted investees, net		9		193,733			187,869			441,713			265,869
Finance income and costs		21,29
Finance income				1,581,536			379,944			2,438,721			1,175,488
Finance costs				(1,531,127	)		(433,678	)		(2,533,112	)		(1,299,977	)
Other non-operating income and expenses		34
Reversal of (impairment loss) on other receivables				1,391			(6,143	)		988			(12,749	)
Other non-operating income		30		118,723			203,827			296,728			333,798
Other non-operating expenses		30,31		(124,956	)		(134,569	)		(199,380	)		(258,061	)

Profit before income tax		37		2,337,534			2,397,839			4,801,542			3,957,398
Income tax expense		32,37		(538,592	)		(590,667	)		(1,095,716	)		(1,011,447	)

Profit				1,798,942			1,807,172			3,705,826			2,945,951
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		19		29,370			(1,053	)		(39,954	)		(2,778	)
Net changes in fair value of equity investments at fair value through other comprehensive income		21		(229,110	)		76,883			(124,689	)		168,889
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees				51,055			(15,387	)		218,087			72,712
Foreign currency translation differences				185,244			(15,937	)		374,694			146,769
Gains or losses on valuation of derivatives		21		(319	)		239			(268	)		225

Other comprehensive income, net of tax				36,240			44,745			427,870			385,817

Total comprehensive income			W	1,835,182			1,851,917			4,133,696			3,331,768

Profit attributable to:
Owners of the controlling company			W	1,588,430			1,664,343			3,300,042			2,689,079
Non-controlling interests				210,512			142,829			405,784			256,872

Profit			W	1,798,942			1,807,172			3,705,826			2,945,951

Total comprehensive income attributable to:
Owners of the controlling company			W	1,580,727			1,718,526			3,664,294			3,069,036
Non-controlling interests				254,455			133,391			469,402			262,732

Total comprehensive income			W	1,835,182			1,851,917			4,133,696			3,331,768

Earnings per share (in Won)		33
Basic earnings per share (in Won)				20,942			21,986			43,533			35,447
Diluted earnings per share (in Won)			W	19,321			21,986			40,994			35,447

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Attributable to owners of the controlling company																			Non-
	Share capital		Capital surplus			Hybrid bonds		Reserves			Treasury shares			Retained earnings			Subtotal			controlling interests			Total
Balance as of January 1, 2021	W	482,403		1,310,547			199,384		(1,380,918	)		(2,391,523	)		46,111,457			44,331,350			3,343,242			47,674,592
Comprehensive income:
Profit		—		—			—		—			—			2,689,079			2,689,079			256,872			2,945,951
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—		—			—			(5,007	)		(5,007	)		2,229			(2,778	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—		76,587			—			—			76,587			(3,875	)		72,712
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—		170,940			—			(2,066	)		168,874			15			168,889
Foreign currency translation differences, net of tax		—		—			—		139,339			—			—			139,339			7,430			146,769
Gains or losses on valuation of derivatives, net of tax		—		—			—		164			—			—			164			61			225

Total comprehensive income		—		—			—		387,030			—			2,682,006			3,069,036			262,732			3,331,768

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—		—			—			(342,565	)		(342,565	)		(59,835	)		(402,400	)
Interim dividends		—		—			—		—			—			(226,877	)		(226,877	)		—			(226,877	)
Changes in subsidiaries		—		—			—		—			—			—			—			16,800			16,800
Changes in ownership interest in subsidiaries		—		51,243			—		—			—			—			51,243			538,054			589,297
Interest of hybrid bonds		—		—			—		—			—			(4,562	)		(4,562	)		(3,597	)		(8,159	)
Acquisition of treasury shares		—		—			—		—			(116,771	)		—			(116,771	)		—			(116,771	)
Others		—		(5,602	)		—		—			—			1,270			(4,332	)		1,363			(2,969	)

Total transactions with owners of the controlling company		—		45,641			—		—			(116,771	)		(572,734	)		(643,864	)		492,785			(151,079	)

Balance as of June 30, 2021	W	482,403		1,356,188			199,384		(993,888	)		(2,508,294	)		48,220,729			46,756,522			4,098,759			50,855,281

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Attributable to owners of the controlling company																				Non-
	Share capital		Capital surplus			Hybrid bonds			Reserves			Treasury shares			Retained earnings			Subtotal			controlling interests			Total
Balance as of January 1, 2022	W	482,403		1,387,960			199,384			(666,985	)		(2,508,294	)		51,532,887			50,427,355			4,377,588			54,804,943
Comprehensive income:
Profit		—		—			—			—			—			3,300,042			3,300,042			405,784			3,705,826
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—			—			—			—			(60,088	)		(60,088	)		20,134			(39,954	)
Capital adjustment arising from investments in equity-accounted investees, net of tax		—		—			—			203,853			—			—			203,853			14,234			218,087
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—			—			(126,538	)		—			1,849			(124,689	)		—			(124,689	)
Foreign currency translation differences, net of tax		—		—			—			344,918			—			—			344,918			29,776			374,694
Gains or losses on valuation of derivatives, net of tax		—		—			—			258			—			—			258			(526	)		(268	)

Total comprehensive income		—		—			—			422,491			—			3,241,803			3,664,294			469,402			4,133,696

Transactions with owners of the controlling company, recognized directly in equity:
Year-end dividends		—		—			—			—			—			(378,128	)		(378,128	)		(81,308	)		(459,436	)
Interim dividends		—		—			—			—			—			(303,397	)		(303,397	)		—			(303,397	)
Changes in subsidiaries		—		—			—			—			—			—			—			406,554			406,554
Changes in ownership interest in subsidiaries		—		(8,835	)		—			—			—			—			(8,835	)		130,191			121,356
Interest of hybrid bonds		—		—			—			—			—			(1,487	)		(1,487	)		(6,732	)		(8,219	)
Changes from spin-off		—		—			(199,384	)		—			—			—			(199,384	)		199,384			—
Disposal of treasury shares		—		9,491			—			—			48,513			—			58,004			—			58,004
Others		—		(35	)		—			—			—			(2,259	)		(2,294	)		(1,719	)		(4,013	)

Total transactions with owners of the controlling company		—		621			(199,384	)		—			48,513			(685,271	)		(835,521	)		646,370			(189,151	)

Balance as of June 30, 2022	W	482,403		1,388,581			—			(244,494	)		(2,459,781	)		54,089,419			53,256,128			5,493,360			58,749,488

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes		June 30, 2022			June 30, 2021
Cash flows from operating activities
Profit			W	3,705,826			2,945,951
Adjustments for:
Depreciation				1,571,178			1,557,056
Amortization				226,033			220,474
Finance income				(1,363,722	)		(577,967	)
Finance costs				1,219,391			657,286
Income tax expense				1,095,716			1,011,447
Impairment loss on property, plant and equipment				3			16,892
Gain on disposal of property, plant and equipment				(13,760	)		(6,939	)
Loss on disposal of property, plant and equipment				65,101			36,147
Impairment loss on intangible assets				200			7,220
Gain on disposal of investments in subsidiaries, associates and joint ventures				(11,912	)		(26,054	)
Loss on disposal of investments in subsidiaries, associates and joint ventures				—			7,569
Share of profit of equity-accounted investees				(441,713	)		(265,869	)
Gain on disposal of assets held for sale				(54,532	)		(45,743	)
Expenses related to post-employment benefit				115,473			120,595
Impairment loss on trade and other receivables				4,054			5,226
Loss on valuation of inventories				114,936			27,835
Increase to provisions				61,279			43,414
Others, net				(25,951	)		(48,199	)

				2,561,774			2,740,390

Changes in operating assets and liabilities		36		(4,145,572	)		(3,295,393	)
Interest received				199,623			112,130
Interest paid				(226,514	)		(243,277	)
Dividends received				369,076			276,792
Income taxes paid				(2,180,561	)		(321,483	)

Net cash provided by operating activities			W	283,652			2,215,110

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes		June 30, 2022			June 30, 2021
Cash flows from investing activities
Acquisitions of short-term financial instruments			W	(38,456,950	)		(19,204,164	)
Proceeds from disposal of short-term financial instruments				39,710,406			18,077,010
Increase in loans				(599,981	)		(418,390	)
Collection of loans				776,751			547,258
Acquisitions of securities				(297,201	)		(133,571	)
Proceeds from disposal of securities				78,420			216,672
Acquisitions of long-term financial instruments				(15,669	)		(8,927	)
Acquisitions of investment in associates and joint ventures				(372,964	)		(91,734	)
Proceeds from disposal of investment in associates and joint ventures				16,219			37,756
Acquisitions of investment property				(569	)		(565	)
Proceeds from investment property				—			2,591
Acquisitions of property, plant and equipment				(1,791,308	)		(1,224,620	)
Proceeds from disposal of property, plant and equipment				(6,235	)		(10,164	)
Acquisitions of intangible assets				(251,775	)		(124,012	)
Proceeds from disposal of intangible assets				2,632			12,861
Proceeds from disposal of assets held for sale				99,141			58,750
Collection of lease receivables				31,355			61,849
Cash outflow from business combination, net of cash acquired				(761,093	)		—
Others, net				1,494			1,064

Net cash used in investing activities				(1,837,327	)		(2,200,336	)

Cash flows from financing activities
Proceeds from borrowings				1,276,194			631,374
Repayment of borrowings				(1,264,164	)		(1,939,753	)
Proceeds from short-term borrowings, net				2,797,930			734,001
Capital contribution from non-controlling interests				541,993			614,259
Payment of cash dividends				(759,470	)		(629,243	)
Acquisition of treasury shares				—			(116,771	)
Payment of interest of hybrid bonds				(8,204	)		(8,204	)
Repayment of lease liabilities				(168,075	)		(113,657	)
Others, net				(27,791	)		13,958

Net cash provided by (used in) financing activities				2,388,413			(814,036	)

Effect of exchange rate fluctuation on cash held				159,570			66,755

Net increase(decrease) in cash and cash equivalents				994,308			(732,507	)
Cash and cash equivalents at beginning of the period		8		4,775,720			4,755,578

Cash and cash equivalents at end of the period		8	W	5,770,028			4,023,071

See accompanying notes to the condensed consolidated interim financial statements.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

As of June 30, 2022

(Unaudited)

1. General Information

General information about POSCO HOLDINGS INC., its 42 domestic subsidiaries including POSCO, 132 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 136 associates and joint ventures are as follows:

(a)	The controlling company

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

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

As of June 30, 2022, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchanges.

(b)	Consolidated subsidiaries acquired or newly established during the six-month period ended June 30, 2022, were as follows:


Company	Date of inclusion		Ownership (%)	Reason
Senex Holdings PTY LTD and the subsidiaries (*1, 2)		January 2022	50.10		New establishment
POSCO		March 2022	100.00		Spin-off from the controlling Company
Posco Mexico e-Mobility S.A DE C.V.		March 2022	100.00		New establishment
eSteel4U		April 2022	100.00		New establishment
POSCO social investment fund		April 2022	70.00		New establishment
POSCO CHEMICAL CANADA INC.		June 2022	100.00		New establishment

(*1)	During the six-month period ended June 30, 2022, K-A Energy 1 PTY LTD changed the name to Senex Holdings PTY LTD.

(*2)	The subsidiary acquired 100% shares of Senex Energy Limited in April 2022.

2. Statement of Compliance

Statement of compliance

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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

Use of estimates and judgments

(a)	Judgments, assumptions and estimation uncertainties

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

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

(b)	Measurement of fair value

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

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

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

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

•

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

•

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

•

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

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.

3. Summary of Significant Accounting Policies

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

Changes in accounting policies

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

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

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

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

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

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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

New standards and interpretations not yet adopted

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

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

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

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

The amendment clarifies that the classification of current and non-current liabilities is determined by the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and in order for the debtor to have the “right to defer settlement of the liability”, the condition of complying with the contract must be met at the end of the reporting period. In addition, the classification of liabilities is not affected by the possibility of exercising the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and the amendment clarifies that settlement of a liability includes transferring a company’s own equity instruments to the counterparty. The amendment is effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The Company expects that its exchangeable bond (W1,332,446 million as of March 31, 2022) will be reclassified from non-current liabilities to current liabilities upon the adoption of the amendments.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022				December 31, 2021
Current
Trade accounts and notes receivable	W	11,256,731				9,266,729
Finance lease receivables		—				126
Due from customers for contract work		1,464,808				1,110,082
Less: Allowance for doubtful accounts		(327,128	)			(314,955	)

	W	12,394,411		��		10,061,982

Non-current
Trade accounts and notes receivable	W	79,086				113,370
Less: Allowance for doubtful accounts		(51,063	)			(50,165	)

	W	28,023				63,205

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position, because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. As of June 30, 2022, and December 31, 2021, the carrying amounts of such secured borrowings areW408,094 million andW270,101 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

5. Other Receivables

Other receivables as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Current
Loans	W	312,920			331,692
Other accounts receivable		1,463,850			1,305,383
Accrued income		412,423			350,301
Deposits		116,881			130,011
Others		19,322			17,706
Lease receivables		52,321			63,568
Less: Allowance for doubtful accounts		(90,743	)		(94,051	)

	W	2,286,974			2,104,610

Non-current
Loans	W	962,049			884,990
Other accounts receivable		225,767			196,018
Accrued income		118,079			121,041
Deposits		470,493			390,971
Lease receivables		76,420			80,317
Less: Allowance for doubtful accounts		(264,807	)		(258,194	)

	W	1,588,001			1,415,143

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

6. Other Financial Assets

Other financial assets as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Derivatives assets	W	351,024		66,558
Debt securities		171,234		157,895
Deposit instruments(*1,2)		3,304,062		2,709,171
Short-term financial instruments(*2)		8,694,715		10,514,093

	W	12,521,035		13,447,717

Non-current
Derivatives assets	W	283,187		182,538
Equity securities(*3)		1,364,093		1,466,061
Debt securities		78,206		3,968
Other securities(*3)		546,524		430,998
Deposit instruments(*2)		27,773		36,109

	W	2,299,783		2,119,674

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

(*2)	As of June 30, 2022 and December 31, 2021, financial instruments amounting toW96,321 million andW83,738 million, respectively, are restricted in use for financial arrangements, pledge and others.

(*3)	As of June 30, 2022 and December 31, 2021,W201,385 million andW189,198 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.

7. Inventories

Inventories as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Finished goods	W	2,707,805			2,583,191
Merchandise		1,426,576			1,326,736
Semi-finished goods		3,253,457			2,902,717
Raw materials		4,820,201			3,777,112
Fuel and materials		1,055,938			917,906
Construction inventories		595,816			716,446
Materials-in-transit		4,187,218			3,051,786
Others		97,984			101,133

		18,144,995			15,377,027

Less: Allowance for inventories valuation		(182,511	)		(161,929	)

	W	17,962,484			15,215,098

The amounts of loss on valuation of inventories recognized in cost of sales during the six-month period ended June 30, 2022 and the year ended December 31, 2021 wereW114,936 million andW78,783 million, respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

8. Assets Held for Sale

Details of assets held for sale as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
	Subsidiaries (*3,6)		The controlling company(*1,2,3)		Subsidiaries (*6)		Total
Asset
Cash and cash equivalents(*4)	W	554		—		554		554
Trade accounts and notes receivables		887		—		956		956
Investment in joint ventures(*5)		13,498		—		13,044		13,044
Property, plant and equipment		19,429		29,236		30,995		60,231
Intangible assets		—		553		2,977		3,530
Others		225		—		155		155

	W	34,593		29,789		48,681		78,470

Liability
Others	W	4		185		4		189

(*1)	During the year ended December 31, 2021, the Company sold the land in the Yanghak Neighborhood Park development reserve area that was classified as asset held for sale and the Company recognizedW43,760 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 recognizedW1,316 million loss on disposal of assets held for sale.

(*3)

During the year ended December 31, 2021, the Company decided to dispose Synthetic Natural Gas (SNG) facility for which use was discontinued, and classified as asset held for sale forW24,000 million. Meanwhile, the facility was transferred to the newly established company (POSCO) through vertical spin-off during the six-month period ended June 30, 2022. During the six-month period ended June 30, 2022, the Company disposed of the assets held for sale forW4,817 million. As of June 30, 2022, the remaining amountW19,183 million is included in assets held for sale.

(*4)	Cash and cash equivalents in the statement of cash flows include cash and cash equivalents that are classified as assets held for sale as of June 30, 2022 and December 31, 2021.

(*5)

During the year ended December 31, 2021, the Company decided to dispose of interests of POSCO(Guangdong) Automotive Steel Co, Ltd. which is classified investment in joint ventures as asset held for sale forW13,044 million. As of June 30, 2022, the investments in joint venture are included in assets held for sale.

(*6)

During the year ended December 31, 2021, the Company decided to dispose tangible and intangible assets of HUME COAL PTY LTD, a subsidiary, and classified as assets held for sale forW33,972 million. The Company disposed of the assets held for sale, and recognizedW54,475 million of gain on disposal during the six-month period ended June 30, 2022.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

9. Investments in Associates and Joint ventures

(a)	Details of investments in associates as of June 30, 2022 and December 31, 2021 are as follows:

(b)


(in millions of Won)	June 30, 2022								December 31, 2021
Company	Number of shares		Ownership (%)		Acquisition cost		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund		178,691,901,565		47.69	W	178,787	W	177,750		176,136
Samcheok Blue Power Co.,Ltd.(*1)		4,507,138		34.00		429,904		367,101		382,887
SNNC		18,130,000		49.00		90,650		195,793		171,332
QSONE Co.,Ltd.		200,000		50.00		84,395		85,777		86,058
Chun-cheon Energy Co., Ltd(*1)		17,308,143		49.10		86,541		11,075		9,571
Western Inland highway CO.,LTD.(*2)		—		—		—		—		53,563
Pocheon-Hwado Highway Corp.(*1)		6,981,975		27.64		34,910		29,826		28,813
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		1,181,160		29.53		5,906		15,706		19,191
Daesung Steel(*3)		108,038		17.54		14,000		19,732		19,073
PCC Amberstone Private Equity Fund 1(*3)		8,248,618,766		8.80		8,131		9,240		9,251
Others (59 companies)(*1)								138,959		107,035

								1,050,959		1,062,910

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		135,219,000		25.04		132,907		287,108		238,601
AES-VCM Mong Duong Power Company Limited(*1)		—		30.00		164,303		216,238		182,639
9404-5515 Quebec Inc.		260,118,182		23.64		296,656		319,244		135,738
FQM Australia Holdings Pty Ltd		186,000,030		30.00		109,568		105,821		91,052
Eureka Moly LLC		—		20.00		240,123		14,868		13,633
AMCI (WA) PTY LTD		49		49.00		209,664		67,053		67,972
NCR LLC		—		22.10		135,897		149,495		102,319
KOREA LNG LTD.		2,400		20.00		135,205		38,540		31,340
Nickel Mining Company SAS		3,234,698		49.00		157,585		66,916		48,249
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		429,580,000		40.00		78,117		80,269		22,769
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd (*4)		—		—		—		—		19,099
PT. Wampu Electric Power(*1)		8,708,400		20.00		10,054		16,307		15,851
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		50		25.00		4,723		9,482		9,140
Others (29 companies)(*1)								217,485		161,962

								1,588,826		1,140,364

							W	2,639,785		2,203,274

(*1)	As of June 30, 2022 and December 31, 2021, investments in associates amounting toW653,577 million andW629,832 million, respectively, are provided as collateral in relation to the associates’ borrowings.

(*2)	During the six-month period ended June 30, 2022, investment in this associate was transferred to equity security because the Company lost significant influence due to a decline in ownership upon capital increase in the associate in which the Company did not participate.

(*3)	As of June 30, 2022, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering its structure of the Board of Directors and others.

(*4)	During the six-month period ended June 30, 2022, the Company disposed of investments in associates of Zhongyue POSCO (Qinhuangdao)Tinplate Industrial Co., Ltd, and recognizedW1,771 million of gain on disposal.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Details of investments in joint ventures as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022							December 31, 2021
Company	Number of shares		Ownership (%)		Acquisition cost		Book value	Book value
[Domestic]
POSCO MITSUBISHI CARBON TECHNOLOGY		11,568,000		60.00	W	115,680	W158,349		169,838
Others (5 companies)							6,330		6,676

							164,679		176,514

[Foreign]
Roy Hill Holdings Pty Ltd(*1)		13,117,972		12.50		1,528,672	1,422,166		1,346,712
POSCO-NPS Niobium LLC		325,050,000		50.00		364,609	420,311		393,793
KOBRASCO		2,010,719,185		50.00		32,950	96,422		68,296
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		—		25.00		61,961	111,171		107,650
DMSA/AMSA(*1)		—		3.89		346,880	31,159		24,144
CSP - Compania Siderurgica do Pecem		1,578,377,432		20.00		676,060	137,814		52,257
HBIS-POSCO Automotive Steel Co.Ltd		—		50.00		170,760	168,811		110,769
Others (9 companies)							24,757		31,238

							2,412,611		2,134,859

							W2,577,290		2,311,373

(*1)	As of June 30, 2022 and December 31, 2021, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(c)	The movements of investments in associates and joint ventures for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

For the six-month period ended June 30, 2022


(in millions of Won)
Company	December 31, 2021 Book value			Acquisition		Dividends			Share of profits (losses)			Other increase (decrease)(*1)			June 30, 2022 Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	176,136			—		—			1,614			—			177,750
Samcheok Blue Power Co.,Ltd.		382,887			—		(2,416	)		(8,568	)		(4,802	)		367,101
SNNC		171,332			—		(5,348	)		29,809			—			195,793
QSONE Co.,Ltd.		86,058			—		(1,100	)		819			—			85,777
Chun-cheon Energy Co., Ltd		9,571			—		—			1,314			190			11,075
Western Inland highway CO.,LTD.		53,563			—		—			(125	)		(53,438	)		—
Pocheon-Hwado Highway Corp.		28,813			5,519		—			(2,022	)		(2,484	)		29,826
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		19,191			—		—			649			(4,134	)		15,706
Daesung Steel		19,073			—		—			659			—			19,732
PCC Amberstone Private Equity Fund 1		9,251			—		(329	)		446			(128	)		9,240
POSCO MITSUBISHI CARBON TECHNOLOGY		169,838			—		(24,000	)		12,511			—			158,349
Others (64 companies)		113,711			39,313		(3,847	)		(373	)		(3,515	)		145,289

		1,239,424	��		44,832		(37,040	)		36,733			(68,311	)		1,215,638

[Foreign]
South-East Asia Gas Pipeline Company Ltd.		238,601			—		—			25,618			22,889			287,108
AES-VCM Mong Duong Power Company Limited		182,639			—		(12,317	)		29,243			16,673			216,238
9404-5515 Quebec Inc.		135,738			172,315		(10,411	)		3,179			18,423			319,244
FQM Australia Holdings Pty Ltd		91,052			—		—			5,947			8,822			105,821
Eureka Moly LLC		13,633			—		—			—			1,235			14,868
AMCI (WA) PTY LTD		67,972			—		—			(2,757	)		1,838			67,053
NCR LLC		102,319			37,160		—			(1,606	)		11,622			149,495
KOREA LNG LTD.		31,340			—		(9,287	)		9,218			7,269			38,540
Nickel Mining Company SAS		48,249			—		—			18,435			232			66,916
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		22,769			55,695		—			54			1,751			80,269
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		19,099			—		—			213			(19,312	)		—
PT. Wampu Electric Power		15,851			—		(2,474	)		583			2,347			16,307
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		9,140			—		—			(129	)		471			9,482
Roy Hill Holdings Pty Ltd		1,346,712			—		(148,581	)		154,917			69,118			1,422,166
POSCO-NPS Niobium LLC		393,793			—		(12,196	)		3,542			35,172			420,311
KOBRASCO		68,296			—		(12,312	)		27,659			12,779			96,422
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		107,650			—		—			3			3,518			111,171
DMSA/AMSA		24,144			—		—			4,600			2,415			31,159
CSP - Compania Siderurgica do Pecem		52,257			—		—			75,070			10,487			137,814
HBIS-POSCO Automotive Steel Co.Ltd		110,769			61,703		—			(8,556	)		4,895			168,811
Others (38 companies)		193,200			27,476		(39,371	)		59,747			1,190			242,242

		3,275,223			354,349		(246,949	)		404,980			213,834			4,001,437

	W	4,514,647			399,181		(283,989	)		441,713			145,523			5,217,075

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

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

2)	For the year ended December 31, 2021


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

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

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

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

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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(d)	Summarized financial information of associates and joint ventures as of and for the six-month period ended June 30, 2022 and the year ended December 31, 2021 are as follows:

1) June 30, 2022


(in millions of Won)
Company	Assets		Liabilities		Equity (deficit)		Sales		Net income (loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund	W	360,983		566		360,417		—		9,425
Samcheok Blue Power Co.,Ltd.		3,036,429		2,379,078		657,351		—		(2,452	)
SNNC		720,724		279,476		441,248		547,793		60,814
QSONE Co.,Ltd.		251,368		79,813		171,555		8,895		1,639
Chun-cheon Energy Co., Ltd		613,835		524,131		89,704		253,235		2,276
Pocheon-Hwado Highway Corp.		299,729		177,445		122,284		—		(600	)
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd		49,229		26,355		22,874		17,189		2,196
Daesung Steel		181,925		100,823		81,102		64,226		3,756
PCC Amberstone Private Equity Fund 1		105,043		—		105,043		5,863		5,066
POSCO MITSUBISHI CARBON TECHNOLOGY		450,420		184,241		266,179		118,108		21,471
[Foreign]
South-East Asia Gas Pipeline Company Ltd.		1,716,247		569,659		1,146,588		189,878		102,308
AES-VCM Mong Duong Power Company Limited		1,807,948		1,103,757		704,191		233,424		97,223
9404-5515 Quebec Inc.		1,423,585		—		1,423,585		—		88,924
FQM Australia Holdings Pty Ltd		1,508,677		1,156,261		352,416		188,142		(3,498	)
KOREA LNG LTD.		171,216		244		170,972		47,113		46,088
Nickel Mining Company SAS		540,958		314,842		226,116		203,381		56,904
ZHEJIANG HUAYOU-POSCO ESM CO., LTD		242,265		41,173		201,092		9,572		219
PT. Wampu Electric Power		224,281		145,776		78,505		10,313		2,916
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		87,319		51,424		35,895		64,194		(618	)
Roy Hill Holdings Pty Ltd		9,825,213		2,452,145		7,373,068		3,925,118		1,367,557
POSCO-NPS Niobium LLC		840,419		—		840,419		—		7,085
KOBRASCO		234,828		42,590		192,238		82,964		55,317
BX STEEL POSCO Cold Rolled Sheet Co., Ltd.		753,429		335,611		417,818		2,189,884		14
DMSA/AMSA		3,080,495		2,279,454		801,041		792,646		118,270
CSP - Compania Siderurgica do Pecem		4,616,400		3,956,905		659,495		1,584,797		374,798
HBIS-POSCO Automotive Steel Co.Ltd		624,274		257,598		366,676		235,139		(5,941	)

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2) December 31, 2021


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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

10. Joint Operations

Details of significant joint operations that the Company is participating in as a party to a joint arrangement as of June 30, 2022 are as follows:


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

11. Investment Property, Net

Changes in the carrying amount of investment property for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Acquisitions		Depreciation			*Others(1)**			Ending
Land	W	332,308		—		—			(6,188	)		326,120
Buildings		584,549		671		(12,153	)		17,512			590,579
Structures		753		—		(368	)		922			1,307
Right-of-use assets		168,467		—		(2,949	)		5,715			171,233

	W	1,086,077		671		(15,470	)		17,961			1,089,239

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	For the year ended December 31, 2021


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

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

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

12. Property, Plant and Equipment, Net

(a)	Changes in the carrying amount of property, plant and equipment for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Acquisitions		Business combination(*2)		Disposals			Depreciation			*Others(1)**			Ending
Land	W	2,702,715		6,274		—		(49	)		—			36,594			2,745,534
Buildings		4,204,450		7,190		—		(2,382	)		(158,830	)		152,918			4,203,346
Structures		3,131,795		7,486		38,212		(1,985	)		(125,373	)		125,858			3,175,993
Machinery and equipment		16,420,156		24,663		—		(11,796	)		(1,131,931	)		1,129,152			16,430,244
Vehicles		46,030		6,373		15		(379	)		(8,908	)		2,630			45,761
Tools		77,795		10,330		—		(1,071	)		(17,530	)		5,569			75,093
Furniture and fixtures		166,162		14,999		1,788		(871	)		(26,014	)		16,340			172,404
Lease assets		867,746		111,623		188,085		(13,203	)		(82,366	)		(69,722	)		1,002,163
Bearer plants		154,682		—		—		—			(4,756	)		7,512			157,438
Construction-in-progress		1,825,167		1,683,673		11,041		(472	)		—			(1,120,332	)		2,399,077

	W	29,596,698		1,872,611		239,141		(32,208	)		(1,555,708	)		286,519			30,407,053

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

(*2)	Represents increases in property, plant and equipment due to business combination upon acquisition of Senex Energy Limited during the six-month period ended June 30, 2022.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

For the year ended December 31, 2021


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

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

(*1)

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

(*2)	During the year ended December 31, 2021, the Company decided to stop the intended use for Synthetic Natural Gas (SNG) facility and sell the related assets. The Company estimated the recoverable amount based on expected sale price and recognizedW217,564 million of impairment loss.

(*3)

During the year ended December 31, 2021, evidence of impairment has occurred due to changes in the quality of bituminous coal and changes in production plans at Narrabri Coal Mine where POSCO INTERNATIONAL AUSTRALIA HOLDINGS PTY. LTD, a subsidiary of the Company, participates as a non-operating party. The Company recognized an impairment loss ofW27,672 million since recoverable amounts are less than their carrying amounts.

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Changes in the carrying amount of right of use assets presented as investment property and property, plant and equipment for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Acquisitions		Business combination(*1)		Depreciation			Others			Ending
Land	W	391,446		20,614		—		(8,439	)		9,276			412,897
Buildings and structures		143,854		47,128		6,714		(24,289	)		(8,139	)		165,268
Machinery and equipment		256,205		9,599		175,795		(22,966	)		(81,220	)		337,413
Vehicles		14,753		7,307		98		(7,080	)		3,598			18,676
Ships		210,056		23,793		—		(9,176	)		—			224,673
Others		19,899		3,182		5,478		(13,365	)		(725	)		14,469

	W	1,036,213		111,623		188,085		(85,315	)		(77,210	)		1,173,396

(*1)	Represents increases in right in use assets due to business combination upon acquisition of Senex Energy Limited during the six-month period ended June 30, 2022.

For the year ended December 31, 2021


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

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

(c)	The amounts recognized in profit or loss related to leases for the three-month and the six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(in millions of Won)	2022		2021		2022		2021
Interest on lease liabilities	W	9,562		8,179		17,119		17,133
Expenses related to short-term leases		8,269		4,636		15,122		9,930
Expenses related to leases of low-value assets		4,550		3,918		8,412		7,745

	W	22,381		16,733		40,653		34,808

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

13. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill and other intangible assets for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

(a)

For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Acquisitions		Business combination(*3)		Disposals			Amortization			Impairment loss			*Others(2)**			Ending
Goodwill	W	735,969		—		—		—			—			—			2,795			738,764
Intellectual property rights		2,225,808		206,931		912,965		(576	)		(145,393	)		—			14,353			3,214,088
Membership(*1)		142,370		7,945		—		(1,023	)		(75	)		824			517			150,558
Development expense		153,973		992		—		(13	)		(33,993	)		(38	)		5,079			126,000
Port facilities usage rights		216,021		—		—		—			(7,429	)		—			392			208,984
Exploratation and evaluation assets		61,957		3,477		21,266		—			—			(158	)		(98	)		86,444
Development assets		—		—		76,591		—			—			—			(1,524	)		75,067
Customer relationships		285,720		—		—		—			(22,239	)		—			74			263,555
Other intangible assets		344,491		31,539		5,887		(277	)		(16,904	)		—			(6,466	)		358,270

	W	4,166,309		250,884		1,016,709		(1,889	)		(226,033	)		628			15,122			5,221,730

(*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.

(*3)	Represents increases in intangible assets due to business combination upon acquisition of Senex Energy Limited during the six-month period ended June 30, 2022.

(b)

For the year ended December 31, 2021


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

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

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

(*2)	During the year ended December 31, 2021, the Company decided to sell a portion of purchased emission rights and recognizedW7,180 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 ofW20,006 million since recoverable amounts are less than their carrying amounts.

(*5)	During the year ended December 31, 2021, impairment loss ofW184,770 million on goodwill of POSCO INTERNATIONAL Corporation, a subsidiary included in trading segment, was recognized as the recoverable amount is less than the carrying amount of the CGU.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

14. Other Assets

Other assets as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Advance payments	W	699,288		564,196
Prepaid expenses		414,973		274,023
Firm commitment asset		11,989		11,323
Others		30,113		65,816

	W	1,156,363		915,358

Non-current
Long-term advance payments	W	21,513		47,752
Long-term prepaid expenses		66,448		76,739
Others(*1)		75,190		74,116

	W	163,151		198,607

(*1)

As of June 30, 2022, and December 31, 2021, the Company recognized tax assets amounting toW4,260 million andW4,722 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.

15. Borrowings

(a)	Short-term borrowings and current portion of long-term borrowings and others as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Lenders		Interest rate (%)		June 30, 2022			December 31, 2021
Short-term borrowings
Bank overdrafts		JP Morgan and others		1.20 ~ 6.15	W	115,739			118,558
Short-term borrowings		HSBC and others		0.04 ~ 7.80		7,877,691			4,991,866

						7,993,430			5,110,424

Current portion of long-term liabilities
Current portion of long-term borrowings		Export-Import Bank of Korea and others		0.70 ~ 8.50		1,478,720			992,154
Current portion of debentures		Goldman sachs Group, Inc. and others		1.27 ~ 3.28		3,698,022			2,731,321
Less: Current portion of discount on debentures issued						(3,127	)		(3,832	)

						5,173,615			3,719,643

					W	13,167,045			8,830,067

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Long-term borrowings, excluding current portion and others as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Lenders	Interest rate (%)		June 30, 2022			December 31, 2021
Long-term borrowings	Export-Import Bank of Korea and others		0.19 ~ 8.50	W	3,560,213			3,841,375
Less: Present value discount					(11,151	)		(12,530	)
Bonds	KB Securities co.,Ltd. and others		0.50 ~ 4.00		7,448,106			7,671,755
Less: Discount on debentures issued					(20,919	)		(24,644	)
Exchangeable bonds(*1)	Foreign currency exchangeable bonds				1,342,446			1,435,193

				W	12,318,695			12,911,149

(*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 : -
Interest rate		- Yield to Maturity : (0.78%)

Maturity date		September 1, 2026

Redemption		1) Redemption at Maturity : Outstanding bond principal, which is not repaid early or which call option is not exercised on, is repaid at maturity as a lump sum 2) Prepayment : The issuer has call option and the bondholders have put option

Exchange rate		100%

Exchange price (Won/share)		471,446

Underlying shares exchange		Registered common shares(treasury shares)

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

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

Put option by bondholders		- 3 years(September 1, 2024) from the closing date - In the event of a change of control of the Company - Where the shares issued by the Company are delisted (or suspended for more than 30 consecutive trading days)

Call option by the Issuer		- Share price(based on closing price) is higher than 130% of exchange price for more than 20 trading days during 30 consecutive trading days in a row, after 3 years (September 1, 2024) from the closing day to 30 business days before the maturity of bonds. - When the outstanding balance of outstanding bonds is less than 10% of the total issuance(Clean Up Call) - Where additional reasons for tax burden arise due to the amendment of relevant laws and regulations, etc.

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(c)	Assets pledged as collateral with regard to the borrowings as of June 30, 2022 are as follows:


(in millions of Won)	Lenders	Book value		Pledged amount
Property, plant and equipment and Investment property	Korea Development Bank and others	W	4,690,427		5,979,852
Trade accounts and notes receivable	Korea Development Bank and others		408,094		408,094
Financial instruments	KB Kookmin Bank and others		22,888		23,013

		W	5,121,409		6,410,959

16. Other Payables

Other payables as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Accounts payable	W	1,033,552		1,034,823
Accrued expenses		891,674		835,226
Dividend payable		7,422		4,046
Lease liabilities		170,198		181,774
Withholdings		127,817		133,492

	W	2,230,663		2,189,361

Non-current
Accounts payable	W	16,321		17,312
Accrued expenses		8,878		8,760
Lease liabilities		727,619		596,240
Long-term withholdings		59,982		56,697

	W	812,800		679,009

17. Other Financial Liabilities

Other financial liabilities as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Derivative liabilities	W	111,335		91,739
Financial guarantee liabilities		19,868		19,902

	W	131,203		111,641

Non-current
Derivative liabilities	W	15,522		18,300
Financial guarantee liabilities		4,630		5,696

	W	20,152		23,996

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

18. Provisions

(a)	Provisions as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022				December 31, 2021
	Current		Non-current		Current		Non-current
Provision for bonus payments	W	88,963		34,555		93,502		45,031
Provision for construction warranties		20,373		236,150		14,519		222,141
Provision for legal contingencies and claims(*1)		13,187		59,789		24,441		69,050
Provision for the restoration(*2,3)		3,181		163,676		5,918		153,613
Others(*4,5)		274,854		95,198		261,604		99,257

	W	400,558		589,368		399,984		589,092

(*1)	The Company recognized probable outflow of resources amounting toW50,758 million andW61,911 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of June 30, 2022 and December 31, 2021, respectively.

(*2)

Due to contamination of lands near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery,W9,068 million as provisions for restoration as of June 30, 2022. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available for now to recover the land. In addition, the Company has applied a discount rate of 3.95%~4.28% 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 toW62,217 million as provisions for improvement as of June 30, 2022.

(*4)	As of June 30, 2022, and December 31, 2021, POSCO ENERGY CO., LTD and Korea Fuel Cell, recognizedW85,741 million andW80,727 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow of resources.

(*5)	The Company has recognized emission liabilities ofW40,790 million for greenhouse gas emissions exceeding the quantity of free quota emission rights expected to be submitted as of June 30, 2022.

(b) Changes in provisions for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Increase		Utilization			Reversal			*Others(1)**			Ending
Provision for bonus payments	W	138,533		83,918		(96,739	)		(2,521	)		327			123,518
Provision for construction warranties		236,660		29,919		(21,362	)		(712	)		12,018			256,523
Provision for legal contingencies and claims		93,491		6,552		(23,941	)		(1,782	)		(1,344	)		72,976
Provision for the restoration		159,531		5,512		(5,424	)		(29,636	)		36,874			166,857
Others		360,861		115,976		(56,672	)		(33,725	)		(16,388	)		370,052

	W	989,076		241,877		(204,138	)		(68,376	)		31,487			989,926

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2)	For the year ended December 31, 2021


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

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

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

19. Employee Benefits

(a)	Defined contribution plans

The expenses related to post-employment benefit plans under defined contribution plans for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:

For the three-month periods
ended June 30

For the six-month periods
ended June 30

(in millions of Won)

2022

2021

2022

2021

Expense related to post-employment benefit plans under defined contribution plans

8,053

12,369

21,655

24,550

(b)	Defined benefit plans

1)	The amounts recognized in relation to net defined benefit assets in the statements of financial position as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Present value of funded obligations	W	2,391,435			2,401,261
Fair value of plan assets(*1)		(2,502,090	)		(2,620,046	)
Present value of non-funded obligations		9,300			13,770

Net defined benefit liabilities	W	(101,355	)		(205,015	)

(*1)	As of June 30, 2022 and December 31, 2021, the Company recognized net defined benefit assets amounting toW116,159 million andW255,858 million respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

Changes in present value of defined benefit obligations for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Defined benefit obligations at the beginning of period	W	2,415,031			2,453,353
Current service costs		117,771			243,029
Interest costs		33,871			52,118
Remeasurements		35,809			(78,888	)
Benefits paid		(193,399	)		(253,208	)
Others		(8,348	)		(1,373	)

Defined benefit obligations at the end of period	W	2,400,735			2,415,031

Changes in fair value of plan assets for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Fair value of plan assets at the beginning of period	W	2,620,046			2,397,717
Interest on plan assets		36,169			51,580
Remeasurement of plan assets		(22,639	)		(9,529	)
Contributions to plan assets		46,722			417,486
Benefits paid		(178,332	)		(230,938	)
Others		124			(6,270	)

Fair value of plan assets at the end of period	W	2,502,090			2,620,046

The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month periods ended June 30					For the six-month periods ended June 30
(in millions of Won)	2022			2021		2022			2021
Current service costs	W	57,503			58,066		117,771			120,405
Net interest costs		(959	)		36		(2,298	)		190

	W	56,544			58,102		115,473			120,595

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

20. Other Liabilities

Other liabilities as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Due to customers for contract work	W	917,758		995,311
Advances received		542,334		475,800
Unearned revenue(*1)		136,712		106,574
Withholdings		457,547		340,107
Firm commitment liability		42,562		11,852
Others		9,947		14,844

	W	2,106,860		1,944,488

Non-current
Unearned revenue(*1)	W	90,234		27,908
Others		68,008		28,583

	W	158,242		56,491

(*1)	As of June 30, 2022, the Company recognized liability assumed in the business combination amounted toW93,216 million due to unfavorable terms of a customer contract relative to market terms upon the acquisition of Senex Energy Limited.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

21. Financial Instruments

(a)	Classification and fair value of financial instruments

The carrying amount and fair values of financial assets and financial liabilities by fair value hierarchy as of June 30, 2022 and December 31, 2021 are as follows:

①

June 30, 2022


(in millions of Won)			Fair value
	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	553,428		—		553,428		—		553,428
Short-term financial instruments		8,694,715		—		8,694,715		—		8,694,715
Debt securities		78,311		—		70,809		7,502		78,311
Other securities		546,524		21,174		2,266		523,084		546,524
Other receivables		2,000		—		—		2,000		2,000
Derivative hedging instruments(*2)		80,783		—		80,783		—		80,783
Fair value through other comprehensive income
Equity securities		1,364,093		1,075,796		—		288,297		1,364,093
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		5,769,474		—		—		—		—
Trade accounts and notes receivable		10,995,447		—		—		—		—
Other receivables		3,021,267		—		—		—		—
Debt securities		171,129		—		—		—		—
Deposit instruments		3,331,835		—		—		—		—

	W	34,609,006		1,096,970		9,402,001		820,883		11,319,854

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	111,552		—		111,552		—		111,552
Borrowings		1,342,446		1,342,446		—		—		1,342,446
Derivative hedging instruments(*2)		15,305		—		15,305		—		15,305
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		6,753,552		—		—		—		—
Borrowings		24,143,293		—		23,913,971		—		23,913,971
Financial guarantee liabilities		24,498		—		—		—		—
Others		2,793,532		—		—		—		—

	W	35,184,178		1,342,446		24,040,828		—		25,383,274

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

(*2)

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

②

December 31, 2021


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

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

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

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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

Finance income and costs by category of financial instrument for the six-month periods ended June 30, 2022 and 2021 were as follows:

①

For the six-month period ended June 30, 2022


(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	120,021			(33,662	)		—			2,331			1,065			89,755			—
Derivative assets		—			427,865			—			311,045			—			738,910			—
Financial assets at fair value through other comprehensive income		—			—			—			—			31,160			31,160			(124,689	)
Financial assets measured at amortized cost		107,521			—			645,499			(21,805	)		(22,733	)		708,482			—
Financial liabilities at fair value through profit or loss		—			100,396			(7,915	)		—			—			92,481			—
Derivative liabilities		—			(103,593	)		—			(423,884	)		—			(527,477	)		(268	)
Financial liabilities measured at amortized cost		(235,411	)		—			(985,364	)		—			(6,927	)		(1,227,702	)		—

	W	(7,869	)		391,006			(347,780	)		(132,313	)		2,565			(94,391	)		(124,957	)

②

For the six-month period ended June 30, 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	76,894			(10,092	)		—			1,834			7,834			76,470			—
Derivative assets		—			86,297			—			179,226			—			265,523			—
Financial assets at fair value through other comprehensive income		—			—			—			—			21,691			21,691			168,889
Financial assets measured at amortized cost		39,493			—			227,861			(6,417	)		(89	)		260,848			—
Derivative liabilities		—			44,500			—			(230,286	)		—			(185,786	)		225
Financial liabilities measured at amortized cost		(235,613	)		—			(341,254	)		—			13,632			(563,235	)		—

	W	(119,226	)		120,705			(113,393	)		(55,643	)		43,068			(124,489	)		169,114

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

Finance income and costs by category of financial instrument for the three-month periods ended June 30, 2022 and 2021 were as follows:

①

For the three-month period ended June 30, 2022


(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	59,448			(26,858	)		—			245			(21,961	)		10,874			—
Derivative assets		—			303,526			—			186,460			—			489,986			—
Financial assets at fair value through other comprehensive income		—			—			—			—			47,702			47,702			(229,110	)
Financial assets measured at amortized cost		58,289			—			489,608			(14,752	)		(744	)		532,401			—
Financial liabilities at fair value through profit or loss		—			86,018			(8,183	)		—			—			77,835			(319	)
Derivative liabilities		—			1,360			—			(208,693	)		—			(207,333	)		—
Financial liabilities measured at amortized cost		(129,390	)		—			(766,282	)		—			(5,384	)		(901,056	)		—

	W	(11,653	)		364,046			(284,857	)		(36,740	)		19,613			50,409			(229,429	)

②

For the three-month period ended June 30, 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	41,559			(5,241	)		—			2,296			7,764			46,378			—
Derivative assets		—			(15,018	)		—			113,380			—			98,362			—
Financial assets at fair value through other comprehensive income		—			—			—			—			(578	)		(578	)		77,997
Financial assets measured at amortized cost		20,206			—			(10,101	)		(3,047	)		(51	)		7,007			—
Derivative liabilities		—			15,985			—			(157,305	)		—			(141,320	)		239
Financial liabilities measured at amortized cost		(106,296	)		—			22,598			—			20,115			(63,583	)		—

	W	(44,531	)		(4,274	)		12,497			(44,676	)		27,250			(53,734	)		78,236

(b)	Financial risk management

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

22. Share Capital and Capital Surplus

(a)	Share capital as of June 30, 2022 and December 31, 2021 are as follows:


(in Won, except share information)	June 30, 2022		December 31, 2021
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1)	As of June 30, 2022, total shares of ADRs of 25,720,008 outstanding in overseas stock market are equivalent to 6,430,002 shares of common stock.

(*2)	As of June 30, 2022, the difference between the ending balance of common stock and the par value of issued common stock isW46,469 million due to retirement of 9,293,790 treasury stocks.

(b)	Capital surplus as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Share premium	W	463,825		463,825
Gain on disposal of treasury shares		806,114		796,623
Other capital surplus		118,642		127,512

	W	1,388,581		1,387,960

23. Hybrid Bonds

(a)

The Company issued hybrid bonds, which are classified as equity in the consolidated financial statements. During the six-month period ended June 30, 2022, the hybrid bonds were transferred to a newly established company (POSCO) by a vertical spin-off. Accordingly, the ownership interests of the controlling company as of December 31, 2021 have been replaced by non-controlling interests as of June 30, 2022. Hybrid bonds classified as equity as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		June 30, 2022			December 31, 2021
Hybrid bond 1-2(*1)		2013-06-13		2043-06-13		4.60	W	200,000			200,000
Issuance cost								(616	)		(616	)

							W	199,384			199,384

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(*1)	Details of issuance of hybrid bonds as of June 30, 2022 are as follows:


		Hybrid bond 1-2
Maturity date		30 years (The issuer has a right to extend the maturity date)
Interest rate		Issue date ~ 2023-06-12 : 4.60%
		Reset every 10 years as follows;
		• After 10 years : return on government bond of Republic of Korea (10 years) + 1.40%
		• After 10 years : additionally +0.25% according to Step-up clauses
		• After 30 years : additionally +0.75%

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

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

The hybrid bond holders’ preference in the event of liquidation is senior to the common stockholders, but subordinate to other creditors. The interest accumulated but not paid on the hybrid bonds as of June 30, 2022 amounts toW454 million.

(b)	POSCO ENERGY CO., LTD., a subsidiary of the Company, issued hybrid bonds which are classified as non-controlling interests in the consolidated financial statements. Hybrid bonds as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Interest rate (%)		June 30, 2022			December 31, 2021
Hybrid bond 1-4(*1)		2013-08-29		2043-08-29		5.21	W	140,000			140,000
Issuance cost								(429	)		(429	)

							W	139,571			139,571

(*1)	Details of hybrid bonds of POSCO ENERGY CO., LTD. as of June 30, 2022 are as follows:


		Hybrid bond 1-4
Maturity date		30 years (The issuer has a right to extend the maturity date)
Interest rate		Issue date ~ 2023-08-29 : 5.21%
		Reset every 10 years as follows;
		• After 10 years : return on government bond of Republic of Korea (10 years) + 1.55%
		• After 10 years : additionally +0.25% according to Step-up clauses
		• After 30 years : additionally +0.75%

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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

24. Reserves

Reserves as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Accumulated comprehensive loss of investments in associates and joint ventures	W	(328,980	)		(532,833	)
Changes in fair value of equity investments at fair value through other comprehensive income		(279,897	)		(153,359	)
Foreign currency translation differences		352,680			7,762
Gains or losses on valuation of derivatives		(197	)		(455	)
Others		11,900			11,900

	W	(244,494	)		(666,985	)

25. Treasury Shares

Based on the Board of Directors’ resolution, the Company holds treasury shares for business purposes including price stabilization. The changes in treasury shares for six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:


(shares, in millions of Won)	June 30, 2022						December 31, 2021
	Number of shares			Amount			Number of shares		Amount
Beginning		11,561,263		W	2,508,294			11,171,363	W	2,391,523
Acquisition of treasury shares		—			—			389,900		116,771
Disposal of treasury shares		(223,605	)		(48,513	)		—		—

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

26. Revenue

(a)	Disaggregation of revenue

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the six-month periods ended June 30, 2022 and 2021 were as follows:

①

For the six-month period ended June 30, 2022


(in millions of Won)			Green Infrastructure						Green Materials
	Steel		Construction		Trading		Energy and others		and Energy		Others		Total
Types of revenue
Revenue from sales of goods	W	23,457,093		—		13,177,551		18,611		1,017,857		—		37,671,112
Revenue from services		553,431		13,196		300,281		1,641,142		2,644		11,958		2,522,652
Revenue from construction contract		—		3,634,339		—		—		15,335		—		3,649,674
Others		58,351		79,508		262,775		30,132		—		73,920		504,686

	W	24,068,875		3,727,043		13,740,607		1,689,885		1,035,836		85,878		44,348,124

Timing of revenue recognition
Revenue recognized at a point in time	W	23,515,444		105,743		13,440,326		48,743		1,017,857		73,921		38,202,034
Revenue recognized over time		553,431		3,621,300		300,281		1,641,142		17,979		11,957		6,146,090

	W	24,068,875		3,727,043		13,740,607		1,689,885		1,035,836		85,878		44,348,124

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

②

For the six-month periods ended June 30, 2021


(in millions of Won)			Green Infrastructure						Green Materials
	Steel		Construction		Trading		Energy and others		and Energy		Others		Total
Types of revenue
Revenue from sales of goods	W	18,049,216		—		10,987,566		4,881		562,980		99,417		29,704,060
Revenue from services		265,205		26,988		236,072		860,565		1,971		50,757		1,441,558
Revenue from construction contract		—		2,947,135		—		—		19,706		—		2,966,841
Others		25,509		1,006		137,359		8,306		—		76,550		248,730

	W	18,339,930		2,975,129		11,360,997		873,752		584,657		226,724		34,361,189

Timing of revenue recognition
Revenue recognized at a point in time	W	18,074,725		20,756		11,124,925		13,187		562,980		175,967		29,972,540
Revenue recognized over time		265,205		2,954,373		236,072		860,565		21,677		50,757		4,388,649

	W	18,339,930		2,975,129		11,360,997		873,752		584,657		226,724		34,361,189

Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month periods ended June 30, 2022 and 2021 were as follows:

①

For the three-month period ended June 30, 2022


(in millions of Won)			Green Infrastructure						Green Materials
	Steel		Construction		Trading		Energy and others		and Energy		Others		Total
Types of revenue
Revenue from sales of goods	W	12,004,230		—		6,890,664		14,128		567,160		—		19,476,182
Revenue from services		293,529		5,835		162,245		766,548		992		3,185		1,232,334
Revenue from construction contract		—		1,990,393		—		—		6,589		—		1,996,982
Others		26,483		48,643		176,802		4,652		—		47,976		304,556

	W	12,324,242		2,044,871		7,229,711		785,328		574,741		51,161		23,010,054

Timing of revenue recognition
Revenue recognized at a point in time	W	12,030,713		57,419		7,067,466		18,780		567,160		47,977		19,789,515
Revenue recognized over time		293,529		1,987,452		162,245		766,548		7,581		3,184		3,220,539

	W	12,324,242		2,044,871		7,229,711		785,328		574,741		51,161		23,010,054

②

For the three-month period ended June 30, 2021


(in millions of Won)			Green Infrastructure						Green Materials
	Steel		Construction		Trading		Energy and others		and Energy		Others		Total
Types of revenue
Revenue from sales of goods	W	9,714,721		—		5,901,820		—		288,849		60,486		15,965,876
Revenue from services		138,345		14,608		137,117		390,130		794		29,227		710,221
Revenue from construction contract		—		1,499,718		—		—		6,810		—		1,506,528
Others		10,351		498		75,612		1,981		—		21,399		109,841

	W	9,863,417		1,514,824		6,114,549		392,111		296,453		111,112		18,292,466

Timing of revenue recognition
Revenue recognized at a point in time	W	9,725,072		2,134		5,977,432		1,981		288,849		81,885		16,077,353
Revenue recognized over time		138,345		1,512,690		137,117		390,130		7,604		29,227		2,215,113

	W	9,863,417		1,514,824		6,114,549		392,111		296,453		111,112		18,292,466

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Details of contract assets and liabilities from contracts with customers as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Receivables
Account receivables	W	10,995,447		9,051,708
Contract assets
Due from customers for contract work		1,426,987		1,073,479
Contract liabilities
Advance received		550,185		483,375
Due to customers for contract work		917,758		995,311
Unearned revenue		226,244		133,765

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

27. Revenue – Contract Balances

(a)	Details of outstanding contracts as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022						December 31, 2021
	Construction segment			Others			Construction segment			Others
Accumulated cost	W	32,864,883			70,894			32,687,274			81,478
Accumulated contract profit		3,326,780			13,657			3,302,005			14,932
Accumulated contract loss		(893,667	)		(14,766	)		(1,227,883	)		(16,904	)
Accumulated contract revenue		35,297,996			69,785			34,761,396			79,506

(b)	Details of due from customers for contract work and due to customers for contract work as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022						December 31, 2021
	Construction segment			Others			Construction segment			Others
Due from customers for contract work	W	1,401,302			63,506			1,069,343			40,739
Due to customers for contract work		(826,609	)		(91,149	)		(937,337	)		(57,974	)

	W	574,693			(27,643	)		132,006			(17,235	)

(c)	Details of the provisions of construction loss as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Construction segment	W	17,792		26,656
Others		12,772		16,229

	W	30,564		42,885

(d)

Due to the factors causing the variation of costs for the six-month period ended June 30, 2022, the estimated total contract costs have changed. Details of changes in estimated total contract costs and the impact on profit before income taxes for the six-month period ended June 30, 2022 and future periods are as follows:


(in millions of Won)					Changes in profit (loss) of contract
	Changes in total		Changes in estimated
	contract revenues		total contract costs		Net income		Future income(loss)			Total
Construction segment	W	591,186		582,441		31,050		(22,305	)		8,745
Others		6,371		3,488		1,773		1,110			2,883

	W	597,557		585,929		32,823		(21,195	)		11,628

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 June 30, 2022. The estimation is evaluated for the total contract costs and expected total contract revenue as of the end of the period. Also, it may change during future periods.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(e)	Uncertainty of estimates

1) Total contract revenues

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

2) Total contract costs

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


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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

28. Selling and Administrative Expenses

(a)	Other administrative expenses

Other administrative expenses for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	For the three-month period ended June 30				For the six-month period ended June 30
	2022		2021		2022		2021
Wages and salaries	W	233,350		209,721		497,267		431,148
Expenses related to post-employment benefits		16,613		38,229		40,059		71,148
Other employee benefits		54,160		46,941		118,671		93,289
Travel		10,108		4,454		15,641		8,737
Depreciation		34,791		33,979		71,177		70,603
Amortization		22,742		22,100		45,577		49,748
Communication		2,230		2,191		5,047		4,342
Electricity expenses		2,527		1,744		4,920		3,631
Taxes and public dues		31,136		25,043		55,377		46,802
Rental		9,766		7,314		20,083		12,252
Repairs		3,824		2,673		6,268		5,021
Entertainment		3,021		2,182		6,050		4,356
Advertising		26,468		20,436		52,535		36,510
Research & development		37,594		28,030		71,159		60,372
Service fees		64,785		50,876		109,429		85,882
Vehicles maintenance		1,523		1,238		2,838		2,501
Industry association fee		2,862		2,416		6,543		5,784
Conference		5,437		3,233		9,247		6,120
Increase to provisions		1,377		2,494		1,850		2,821
Others		15,612		10,775		29,213		21,323

	W	579,926		516,069		1,168,951		1,022,390

(b) Selling expenses

Selling expenses for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	For the three-month period ended June 30				For the six-month period ended June 30
	2022		2021		2022		2021
Freight and custody expenses	W	13,596		55,226		39,912		94,822
Operating expenses for distribution center		541		1,793		1,098		3,539
Sales commissions		10,793		19,082		33,711		37,762
Sales advertising		525		253		827		389
Sales promotion		2,675		1,598		4,222		3,124
Sample		446		474		953		988
Sales insurance premium		9,759		9,965		19,935		19,218
Contract cost		14,070		16,003		25,013		27,102
Others		3,452		3,559		6,357		6,177

	W	55,857		107,953		132,028		193,121

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

29. Finance Income and Costs

Details of finance income and costs for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	For the three-month period ended June 30					For the six-month period ended June 30
	2022		2021			2022		2021
Finance income
Interest income(*1)	W	117,737		61,765			227,542		116,387
Dividend income		25,741		7,186			32,226		29,525
Gain on foreign currency transactions		549,833		189,030			821,586		400,965
Gain on foreign currency translations		274,023		(11,130	)		450,160		203,866
Gain on derivatives transactions		194,470		130,573			321,983		199,043
Gain on valuations of derivatives		328,389		(24,615	)		470,854		188,235
Gain on valuation of financial liabilities at fair value through profit of loss		86,018		—			100,396		—
Others		5,325		27,135			13,974		37,467

	W	1,581,536		379,944			2,438,721		1,175,488

Finance costs
Interest expenses	W	129,390		106,296			235,411		235,613
Loss on foreign currency transactions		578,723		200,031			827,106		380,301
Loss on foreign currency translations		529,990		(34,628	)		792,420		337,923
Loss on derivatives transactions		216,703		174,498			434,822		250,103
Loss on valuation of derivatives		23,503		(25,581	)		146,582		57,438
Loss on disposal of trade accounts and notes receivable		14,752		3,047			21,805		6,417
Others		38,067		10,015			74,966		32,182

	W	1,531,128		433,678			2,533,112		1,299,977

(*1)	Interest income calculated using the effective interest method for the six-month periods ended June 30, 2022 and 2021 wereW107,521 million andW39,493 million, respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

30. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	For the three-month period ended June 30				For the six-month period ended June 30
	2022		2021		2022		2021
Other non-operating income
Gain on disposals of assets held for sale	W	54,475		44,946		54,532		45,743
Gain on disposals of investments in subsidiaries, associates and joint ventures		6,707		22,212		11,912		26,054
Gain on disposals of property, plant and equipment		3,922		3,616		13,760		6,939
Gain on valuation of firm commitment		35,498		68,057		174,766		118,653
Reversal of other provisions		751		2,223		3,026		2,399
Premium income		898		2,088		1,610		20,549
Others(*1)		16,472		60,685		37,122		113,461

	W	118,723		203,827		296,728		333,798

Other non-operating expenses
Loss on disposals of investments in subsidiaries, associates and joint ventures	W	—		6,465		—		7,569
Loss on disposals of property, plant and equipment		47,134		17,490		65,101		36,147
Impairment loss on property, plant and equipment		—		—		3		16,892
Impariment loss on intangible assets		196		37		200		7,220
Loss on valuation of firm commitment		56,888		33,552		88,326		77,318
Idle tangible asset expenses		5,352		7,476		10,196		12,669
Increase to provisions		4,637		4,175		5,746		10,476
Donations		1,127		9,887		13,581		15,528
Others		9,622		55,487		16,227		74,242

	W	124,956		134,569		199,380		258,061

(*1)	During the six-month period ended June 30, 2021, the Company recognizedW48,771 million of non-operating income for refund of other than income tax as a result of administrative litigation for tax audits.

31. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses, impairment loss on other receivables and other non-operating expenses in the statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows (excluding finance costs and income tax expense):


(in millions of Won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2022		2021		2022		2021
Raw material used, changes in inventories and others	W	15,003,738		10,951,324		27,781,785		20,516,134
Employee benefits expenses		1,002,003		899,138		1,987,315		1,842,191
Outsourced processing cost		2,285,127		1,807,732		4,236,856		3,522,210
Electricity and water expenses		242,194		188,318		482,954		362,216
Depreciation(*1)		786,128		771,871		1,571,178		1,557,056
Amortization		122,738		109,687		226,033		220,474
Freight and custody expenses		842,264		377,597		1,505,821		717,221
Sales commissions		10,793		19,082		33,711		37,762
Loss on disposal of property, plant and equipment		47,134		17,490		65,101		36,147
Donations		1,127		9,887		13,581		15,528
Other expenses		694,348		1,081,087		2,291,073		2,052,488

	W	21,037,594		16,233,213		40,195,408		30,879,427

(*1)	Includes depreciation expense of investment property.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

32. Income Taxes

The effective tax rates of the Company for the six-month periods ended June 30, 2022 and 2021 were 22.82% and 25.56%, respectively.

33. Earnings per Share

(a)	Basic earnings per share for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in Won except per share information)	For the three-month periods ended June 30					For the six-month periods ended June 30
	2022		2021			2022			2021
Profit attributable to controlling interest	W	1,588,430,453,065		1,664,343,793,496			3,300,041,774,640			2,689,079,475,876
Interests of hybrid bonds, net of tax		—		(1,662,931,506	)		(1,078,164,383	)		(3,307,589,040	)
Weighted-average number of common shares outstanding (*1)		75,849,177		75,625,572			75,779,995			75,767,898

Basic earnings per share	W	20,942		21,986			43,533			35,447

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


(Shares)	For the three-month periods ended June 30						For the six-month periods ended June 30
	2022			2021			2022			2021
Total number of common shares issued		87,186,835			87,186,835			87,186,835			87,186,835
Weighted-average number of treasury shares		(11,337,658	)		(11,561,263	)		(11,406,840	)		(11,418,937	)

Weighted-average number of common shares outstanding		75,849,177			75,625,572			75,779,995			75,767,898

(b)	Diluted earnings per share for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in Won, except share information)	For the three-month period ended June 30						For the six-month period ended June 30
	2022			2021			2022			2021
Profit attributable to controlling interest	W	1,588,430,453,065			1,664,343,793,496			3,300,041,774,640			2,689,079,475,876
Interests of hybrid bonds, net of tax		—			(1,662,931,506	)		(1,078,164,383	)		(3,307,589,040	)
Gain or loss from exchange rate on and revaluation of exchangeable bonds		(63,561,697,501	)		—			(67,241,564,423	)		—
Adjusted weighted-average number of common shares(*1)		78,924,274			75,625,572			78,833,968			75,767,898

Diluted earnings per share	W	19,321			21,986			40,994			35,447

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


(shares)	For the three-month period ended June 30				For the six-month period ended June 30
	2022		2021		2022		2021
Weighted-average number of common shares outstanding		75,849,177		75,625,572		75,779,995		75,767,898
Weighted-average number of potential common share		3,075,097		—		3,053,973		—

Adjusted weighted-average number of common shares		78,924,274		75,625,572		78,833,968		75,767,898

The Company holds exchangeable bonds as potential common stocks with a diluting effect as of June 30, 2022. Meanwhile, since there were no potential shares of common stock which had dilutive effects as of June 30, 2021, diluted earnings per share is equal to basic earnings per share.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

34. Related Party Transactions

(a)	Significant transactions between the controlling company and related companies for the six-month periods ended June 30, 2022 and 2021 were as follows:

For the six-month period ended June 30, 2022


(in millions of Won)	*Sales and others(1)**						*Purchase and others(2)**
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
*Subsidiaries(3)**
POSCO	W	8,167		—		—		—		—		—		567
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		2,365		16,555		7		—		85,302		—		10,282
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		131,991		—		215		—		—		7,656		6
POSCO ICT(*4)		496		4,970		18		—		38,091		10,190		32,403
eNtoB Corporation		2		24		—		60,649		9,698		32		3,207
POSCO CHEMICAL CO., LTD		81,504		13,878		44		84,301		4,757		56,325		908
POSCO ENERGY CO., LTD.		762		—		—		6,682		—		—		3,925
POSCO MOBILITY SOLUTION		175,955		—		—		—		—		8,802		28
POSCO INTERNATIONAL Corporation		2,099,890		62,093		—		244,230		—		768		1,049
POSCO Thainox Public Company Limited		49,085		22,372		—		—		—		—		1
POSCO Canada Ltd.		—		—		139		77,703		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		32,534		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		28,790		—		—		835		—		—		16
POSCO-VIETNAM Co., Ltd.		44,617		—		283		—		—		—		—
POSCO MEXICO S.A. DE C.V.		102,635		—		203		—		—		—		—
POSCO Maharashtra Steel Private Limited		171,287		—		284		—		—		—		120
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		42,320		—		—		—		—		—		15
POSCO VST CO., LTD.		28,212		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		417		380,061		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		47,180		—		268		—		—		—		8
Others		194,327		1,716		3,527		61,471		13,042		53,139		205,528

		3,242,119		121,608		5,405		915,932		150,890		136,912		258,063

*Associates and joint ventures(3)**
SNNC		3,129		5,348		8		148,239		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		25,614		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		125,984		—		210,455		—		—		—
Others		77,244		32,440		8,041		16,485		—		—		301

		105,987		163,772		8,049		375,179		—		—		301

	W	3,348,106		285,380		13,454		1,291,111		150,890		136,912		258,364

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

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

(*3)	As of June 30, 2022, the Company provided guarantees to related parties (Note 35).

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

For the six-month period ended June 30, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	2,796		11,037		45		—		202,735		69		13,481
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		291,173		1,706		379		—		—		17,346		431
POSCO ICT		837		4,970		22		—		94,130		20,828		90,417
eNtoB Corporation		7		—		—		136,794		21,607		21		9,603
POSCO CHEMICAL CO., LTD		128,745		11,208		10,238		226,321		5,555		147,420		2,296
POSCO ENERGY CO., LTD.		3,214		—		966		3,538		—		—		11,199
POSCO MOBILITY SOLUTION		337,690		—		—		—		—		21,405		439
POSCO INTERNATIONAL Corporation		4,222,135		54,331		—		424,428		—		541		2,839
POSCO Thainox Public Company Limited		150,184		—		—		—		—		—		20
POSCO Canada Ltd.		—		—		681		81,745		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		81,402		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		722,496		—		1		14,322		287		—		1,044
POSCO-VIETNAM CO., Ltd.		187,544		—		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		197,177		—		71		—		—		—		86
POSCO Maharashtra Steel Private Limited		377,857		—		180		—		—		—		101
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		66,647		—		—		—		—		—		—
POSCO VST CO., LTD.		96,247		—		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		853		746,681		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		120,944		—		110		8		—		—		10
Others		677,994		49,628		2,994		60,543		25,211		122,229		54,327

		7,665,089		132,880		16,879		1,694,380		349,525		329,859		186,301

Associates and joint ventures
SNNC		20,052		1,469		873		295,657		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		31,193		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		256,138		—		1,040,468		—		—		—
Others		22,340		18,999		4,576		47,172		—		—		19,833

		73,585		276,606		5,449		1,383,297		—		—		19,886

	W	7,738,674		409,486		22,328		3,077,677		349,525		329,859		206,187

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Significant transactions between the controlling company and related companies for the three-month periods ended June 30, 2022 and 2021 were as follows:

For the three-month period ended June 30, 2022


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO	W	6,700		—		—		—		—		—		564
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		860		—		—		—		—		—		571
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		479		—		—		—		—		—		—
POSCO ICT		160		—		—		—		13,976		—		—
eNtoB Corporation		—		—		—		—		—		—		10
POSCO CHEMICAL CO., LTD		922		—		—		—		—		—		—
POSCO ENERGY CO., LTD.		—		—		—		—		—		—		—
POSCO MOBILITY SOLUTION		217		—		—		—		—		—		—
POSCO INTERNATIONAL Corporation		433		—		—		—		—		—		—
POSCO Thainox Public Company Limited		406		22,372		—		—		—		—		—
POSCO Canada Ltd.		—		—		—		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		111		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		—		—		—		—		—		—		—
POSCO-VIETNAM Co., Ltd.		848		—		230		—		—		—		—
POSCO MEXICO S.A. DE C.V.		207		—		187		—		—		—		—
POSCO Maharashtra Steel Private Limited		616		—		218		—		—		—		—
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		—		—		—		—		—		—		—
POSCO VST CO., LTD.		306		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		—		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		162		—		208		—		—		—		—
Others		4,754		753		2,353		—		—		—		6,044

		17,181		23,125		3,196		—		13,976		—		7,189

Associates and joint ventures
SNNC		7		—		—		—		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		—		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		35,596		—		—		—		—		—
Others		521		23,823		4,668		—		—		—		—

		528		59,419		4,668		—		—		—		—

	W	17,709		82,544		7,864		—		13,976		—		7,189

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

For the three-month period ended June 30, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1,182		—		13		—		113,873		9		7,018
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		167,747		—		51		—		—		9,899		270
POSCO ICT		390		—		2		—		59,840		10,122		40,995
eNtoB Corporation		3		—		—		76,604		11,960		7		5,096
POSCO CHEMICAL CO., LTD		70,786		—		5,166		112,256		4,166		73,125		870
POSCO ENERGY CO., LTD.		2,454		—		277		1,409		—		—		5,594
POSCO MOBILITY SOLUTION		188,917		—		—		—		—		10,711		233
POSCO INTERNATIONAL Corporation		2,323,778		—		—		258,276		—		194		2,303
POSCO Thainox Public Company Limited		89,311		—		—		—		—		—		—
POSCO Canada Ltd.		—		—		190		46,949		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		40,454		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		364,525		—		—		6,721		283		—		564
POSCO-VIETNAM Co., Ltd.		106,634		—		—		—		—		—		—
POSCO MEXICO S.A. DE C.V.		104,386		—		37		—		—		—		86
POSCO Maharashtra Steel Private Limited		209,005		—		96		—		—		—		12
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		38,135		—		—		—		—		—		—
POSCO VST CO., LTD.		39,839		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		243		396,110		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		55,412		—		61		—		—		—		—
Others		336,259		29,916		1,285		25,827		15,459		61,247		33,353

		4,139,217		29,916		7,421		924,152		205,581		165,314		96,394

Associates and joint ventures
SNNC		12,539		—		299		143,898		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		18,544		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		140,062		—		553,493		—		—		—
Others		13,503		7,422		3,214		25,449		—		—		10,660

		44,586		147,484		3,513		722,840		—		—		10,713

	W	4,183,803		177,400		10,934		1,646,992		205,581		165,314		107,107

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(c)	The related account balances from significant transactions between the controlling company and related companies as of June 30, 2022 and December 31, 2021 are as follows:

June 30, 2022


(in millions of Won)	Receivables						Payables
	Trade accounts and notes receivable		Others		Total		Account payable		Others		Total
Subsidiaries
POSCO	W	—		1,370		1,370		—		14,663		14,663
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		2,658		—		2,658		621		—		621
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		255		—		255		—		—		—
POSCO ICT		54		—		54		—		917		917
eNtoB Corporation		—		—		—		11		—		11
POSCO CHEMICAL CO., LTD		531		—		531		—		5,086		5,086
POSCO ENERGY CO., LTD.		134		—		134		—		1,593		1,593
POSCO MOBILITY SOLUTION		180		—		180		—		—		—
POSCO INTERNATIONAL Corporation		299		—		299		—		502		502
Qingdao Pohang Stainless Steel Co., Ltd.		98		—		98		—		—		—
POSCO Maharashtra Steel Private Limited		418		1,237		1,655		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		85		1,120		1,205		—		—		—
PT. KRAKATAU POSCO		427		16,475		16,902		—		—		—
Others		4,009		3,012		7,021		2,185		3,335		5,520

		9,148		23,214		32,362		2,817		26,096		28,913

Associates and joint ventures
SNNC		38		—		38		—		—		—
Roy Hill Holdings Pty Ltd		35,596		—		35,596		—		—		—
FQM Australia Holdings Pty Ltd		—		203,803		203,803		—		—		—
Others		12,470		22,723		35,193		—		—		—

		48,104		226,526		274,630		—		—		—

	W	57,252		249,740		306,992		2,817		26,096		28,913

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

December 31, 2021


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

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

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

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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(d)	Significant transactions between the Company, excluding the controlling company, and related companies for the six-month periods ended June 30, 2022 and 2021 were as follows:

For the six-month period ended June 30, 2022


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	145,929		—		—		—		93
SNNC		77,471		—		88		318,036		715
Noeul Green Energy Co., Ltd.		5,376		—		—		—		771
CSP - Compania Siderurgica do Pecem		4,089		—		—		89,269		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd(*1)		17,824		—		—		24,190		—
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		6,970		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		18,978		—		—		93		—
South-East Asia Gas Pipeline Company Ltd.		—		—		2,100		—		1,205
POSCO MITSUBISHI CARBON TECHNOLOGY		58,049		24,000		—		2,270		159
Samcheok Blue Power Co., Ltd.		238,689		2,416		26		—		—
Pocheon-Hwado Highway Corp.		39,679		—		—		—		—
UITrans LRT Co., Ltd.		142		—		—		1,359		—
Roy Hill Holdings Pty Ltd		—		22,597		—		435,356		—
Others		255,343		67,625		1,794		256,163		62,808

	W	868,539		116,638		4,008		1,126,736		65,751

(*1)	Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd was excluded from the associates due to the disposal of its shares during the six-month period ended June 30, 2022.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

For the six-month period ended June 30, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	128,044		—		266		—		81
SNNC		33,020		—		53		15,256		15,166
Noeul Green Energy Co., Ltd.		3,045		—		—		—		1,041
CSP - Compania Siderurgica do Pecem		4,557		—		—		30,569		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		24,394		—		—		16,647		6,736
POS-SEAHSTEELWIRE(TIANJIN)CO., Ltd		7,125		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		17,982		—		—		130		—
South-East Asia Gas Pipeline Company Ltd.		—		5,656		4,360		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		23,067		—		7		2,050		110
Samcheok Blue Power Co., Ltd.		107,568		—		—		—		—
TK CHEMICAL CORPORATION(*1)		14,906		—		—		2,292		—
Pocheon-Hwado Highway Corp.		22,480		—		—		—		—
UITrans LRT Co., Ltd.		10,443		—		—		—		—
Roy Hill Holdings Pty Ltd		—		64,553		—		—		—
Others		82,933		18,917		660		20,741		9,035

	W	479,564		89,126		5,346		87,685		32,169

(*1)	TK CHEMICAL CORPORATION was excluded from the associates due to disposal of its shares during the six-month period ended June 30, 2021.

(e)	Significant transactions between the Company, excluding the controlling company, and related companies for the three-month periods ended June 30, 2022 and 2021 were as follows:

For the three-month period ended June 30, 2022


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	81,462		—		—		—		69
SNNC		46,149		—		83		255,497		—
Noeul Green Energy Co., Ltd.		3,801		—		—		—		355
CSP - Compania Siderurgica do Pecem		12		—		—		39,908		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		8,642		—		—		11,528		—
POS-SEAHSTEELWIRE(TIANJIN)CO., Ltd		4,566		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		10,306		—		—		—		—
South-East Asia Gas Pipeline Company Ltd.		—		—		2,100		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		34,706		—		—		967		3
Samcheok Blue Power Co., Ltd.		143,239		—		—		—		—
Pocheon-Hwado Highway Corp.		25,203		—		—		—		—
UITrans LRT Co., Ltd.		142		—		—		—		—
Roy Hill Holdings Pty Ltd		—		—		—		292,562		—
Others		142,785		33,494		70		162,642		56,181

	W	501,013		33,494		2,253		763,104		56,608

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2) For the three-month period ended June 30, 2021


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Others
Associates and joint ventures
New Songdo International City Development, LLC	W	81,825		—		266		—		40
SNNC		23,365		—		—		11,239		9,779
Noeul Green Energy Co., Ltd.		1,533		—		—		—		519
CSP - Compania Siderurgica do Pecem		2,642		—		—		30,569		—
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd		17,824		—		—		8,338		1,053
POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd		4,214		—		—		—		—
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		8,192		—		—		91		—
South-East Asia Gas Pipeline Company Ltd.		—		—		2,032		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		14,351		—		—		1,038		60
Samcheok Blue Power Co., Ltd.		49,504		—		—		—		—
Pocheon-Hwado Highway Corp.		12,927		—		—		—		—
UITrans LRT Co., Ltd.		1,508		—		—		—		—
Roy Hill Holdings Pty Ltd		—		35,534		—		—		—
Others		47,119		16,482		345		13,892		4,972

	W	265,004		52,016		2,643		65,167		16,423

(f)	The related account balances from significant transactions between the Company, excluding the controlling company, and related companies as of June 30, 2022 and December 31, 2021 are as follows:

June 30, 2022


(in millions of Won)	Receivables								Payables
	Trade accounts and notes receivable		Loans		Others		Total		Trade accounts and notes payable		Others		Total
Associates and joint ventures
New Songdo International City Development, LLC	W	60,473		—		16,259		76,732		—		42,680		42,680
Chuncheon Energy Co., Ltd.		—		—		—		—		—		439		439
Samcheok Blue Power Co., Ltd.		211,998		—		—		211,998		—		64,270		64,270
Nickel Mining Company SAS		—		62,971		148		63,119		—		358		358
CSP - Compania Siderurgica do Pecem		—		—		—		—		—		3,070		3,070
POSCO SeAH Steel Wire(Nantong) Co., Ltd.		11,955		—		—		11,955		—		—		—
South-East Asia Gas Pipeline Company Ltd.		—		23,509		—		23,509		—		—		—
POSCO MITSUBISHI CARBON TECHNOLOGY		12,122		—		8		12,130		496		2		498
Pocheon-Hwado Highway Corp.		28,340		—		—		28,340		—		—		—
UITrans LRT Co., Ltd.		5,748		33,712		—		39,460		—		5,705		5,705
Roy Hill Holdings Pty Ltd		—		—		8,895		8,895		373,340		—		373,340
SNNC		7,677		—		134		7,811		37,521		646		38,167
Others		121,894		184,511		129,770		436,175		67,464		1,086		68,550

	W	460,207		304,703		155,214		920,124		478,821		118,256		597,077

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

December 31, 2021


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

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

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(g)	Significant financial transactions between the Company, excluding the controlling company, and related companies for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

June 30, 2022


(in millions of Won)	Beginning		Lend		Collect			*Others(1)**			Ending
Associates and joint ventures
UITrans LRT Co., Ltd.	W	29,099		4,661		(3	)		(45	)		33,712
South-East Asia Gas Pipeline Company Ltd.		47,423		—		(25,065	)		1,151			23,509
PT. Tanggamus Electric Power		4,690		—		—			425			5,115
PT. Wampu Electric Power		5,651		—		(2,095	)		512			4,068
PT. POSMI Steel Indonesia(*2)		2,371		—		(2,371	)		—			—
KRAKATAU POS-CHEM DONG-SUH CHEMICAL		62,611		—		—			359			62,970
Nickel Mining Company SAS		4,742		—		(1,264	)		401			3,879
POS-SeAH Steel Wire (Thailand) Co., Ltd.		7,113		—		—			644			7,757
AMCI (WA) PTY LTD		91,665		3,029		—			3,256			97,950
POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD		5,928		—		—			537			6,465
POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD		9,484		—		—			859			10,343
Hyo-chun Co., Ltd.		2,382		—		—			—			2,382
POS-AUSTEM Suzhou Automotive Co., Ltd		17,783		—		(6,069	)		1,215			12,929
FQM Australia Holdings Pty Ltd		27,227		5,245		—			1,152			33,624

	W	318,169		12,935		(36,867	)		10,466			304,703

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

(*2)	PT. POSMI Steel Indonesia was excluded from the associates due to disposal of its shares during the six-month period ended June 30, 2022.

December 31, 2021


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

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

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

(*2)	PT. Batutua Tembaga Raya was excluded from the associates due to disposal of 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 associates due to disposal of shares during the years ended December 31, 2021.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(h)	For the six-month periods ended June 30, 2022 and 2021, details of compensation to key management officers were as follows:


(in millions of Won)	June 30, 2022		June 30, 2021
Short-term benefits	W	99,312		53,218
Long-term benefits		4,580		9,424
Retirement benefits		13,022		10,244

	W	116,914		72,886

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.

35. Commitments and Contingencies

(a) Details of guarantees

Contingent liabilities on outstanding guarantees provided by the Company as of June 30, 2022 are as follows:


(in millions of Won)			Guarantee limit				Guarantee amount
Guarantor	Guarantee beneficiary	Financial institution	Foreign currency		Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO HOLDINGS INC.	POSCO Asia Co., Ltd.	Credit Agricole and others	USD	200,000,000		258,580		—		—
	POSCO-VIETNAM Co., Ltd.	SMBC and others	USD	156,000,000		201,692		140,000,000		181,007
	POSCO MEXICO S.A. DE C.V.	BOA and others	USD	120,000,000		155,148		100,000,000		129,290
	POSCO COATED STEEL (THAILAND) CO., LTD.	SMBC and others	THB	5,501,000,000		202,052		5,021,000,001		184,421
	POSCO Maharashtra Steel Private Limited	SMBC and others	USD	139,784,000		180,728		139,784,000		180,728
	PT. KRAKATAU POSCO	Export-Import Bank of Korea and others	USD	2,150,300,000		2,780,124		1,348,618,203		1,743,629
	POSCO ASSAN TST STEEL INDUSTRY	SOCIETE GENERALE and others	USD	131,874,750		170,500		131,874,750		170,500
POSCO INTERNATIONAL Corporation	POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD.	Export-Import Bank of Korea and others	USD	180,000,000		232,722		180,000,000		232,722
	POSCO INTERNATIONAL POWER (PNGLAE) LIMITED	KDB bank	USD	53,517,404		69,193		27,517,404		35,577
	GOLDEN LACE POSCO INTERNATIONAL CO., LTD.	Shinhan Bank and others	USD	11,000,000		14,222		11,000,000		14,222
	PT. Bio Inti Agrindo	BTPN and others	IDR	2,057,400,000,000		179,200		2,057,400,000,000		179,200
	POSCO ASSAN TST STEEL INDUSTRY	ING	USD	14,652,750		18,945		14,652,750		18,945
	POSCO INTERNATIONAL Deutschland GmbH	Bank Mendes Gans Amsterdam	USD	50,000,000		64,645		8,353,624		10,800
	POSCO INTERNATIONAL AMERICA Corp.							10,003,508		12,934
	POSCO INTERNATIONAL JAPAN Corp.							7,322,259		9,467
	POSCO INTERNATIONAL SINGAPORE Pte. Ltd.							7,062,178		9,131
	POSCO INTERNATIONAL Malaysia SDN BHD							—		—
	POSCO INTERNATIONAL Italia S.R.L.							—		—
	POSCO INTERNATIONAL MEXICO S.A. de C.V.							—		—
	GRAIN TERMINAL HOLDING PTE. LTD.	Export-Import Bank of Korea and others	USD	27,000,000		34,908		27,000,000		34,908
	POSCO INTERNATIONAL E&P MALAYSIA SDN. BHD.	SC, Malaysia	USD	6,000,000		7,757		6,000,000		7,757
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	POSCO E&C Vietnam Co., Ltd.	POSCO Asia Co., Ltd. and others	USD	36,000,000		46,544		36,000,000		46,544
	PT.POSCO E&C INDONESIA	POSCO Asia Co., Ltd. and others	USD	25,900,000		33,486		25,900,000		33,486
POSCO ICT	PT.POSCO ICT INDONESIA	POSCO Asia Co., Ltd. and others	USD	1,500,000		1,939		600,000		776
POSCO CHEMICAL CO., LTD	PT.Krakatau Posco Chemical Calcination	POSCO Asia Co., Ltd. and others	USD	15,200,000		19,652		3,200,000		4,137
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)	Myanmar POSCO C&C Company, Limited.	POSCO Asia Co., Ltd.	USD	13,986,947		18,084		13,986,947		18,084
POSCO ENERGY CO., LTD	PT. KRAKATAU POSCO ENERGY	POSCO Asia Co., Ltd. and others	USD	71,052,555		91,864		71,052,555		91,864

[Associates and joint ventures]
POSCO HOLDINGS INC.	CSP - Compania Siderurgica do Pecem	Export-Import Bank of Korea and others	USD	420,000,000		543,015		365,765,800		472,897
		BNDES	BRL	464,060,000		115,769		464,060,000		115,769
	LLP POSUK Titanium	SMBC	USD	13,500,000		17,454		13,250,000		17,131
	Nickel Mining Company SAS	SMBC	EUR	46,000,000		62,102		46,000,000		62,102
POSCO INTERNATIONAL Corporation	GLOBAL KOMSCO Daewoo LLC	Hana Bank	USD	6,650,000		8,598		6,650,000		8,598
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Chun-cheon Energy Co., Ltd.	Kookmin Bank and others	KRW	149,200		149,200		145,900		145,900
	New Songdo International City Development, LLC	Shinhan Bank and others	KRW	120,513		120,513		82,971		82,971

[Others]
POSCO INTERNATIONAL Corporation	SHERRITT INTERNATIONAL CORP.	Export-Import Bank of Korea and others	USD	21,818,182		28,209		1,292,614		1,671
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Busan Sanseong Tunnel and others	Balhae Infrastructure Fund and others	KRW	1,624,959		1,624,959		608,957		608,957
POSCO ICT	Busan Sanseong Tunnel	Kookmin Bank	KRW	7,621		7,621		6,390		6,390
POSCO AUSTRALIA PTY LTD	Department of Trade and Investment (NSW Government) and others	Woori Bank and others	AUD	27,169,000		24,167		27,169,000		24,167
PT. Bio lnti Agrindo	KSU Mandob	Bank Muamalat	IDR	80,000,000,000		6,968		80,000,000,000		6,968
POSCO Maharashtra Steel Private Limited	MAHARASHTRA STATE ELECTRICITY and others	HSBC and others	INR	609,310,473		9,981		609,310,473		9,981

			USD	3,865,736,588		4,998,009		2,696,886,592		3,486,805
			KRW	1,902,293		1,902,293		844,218		844,218
			IDR	2,137,400,000,000		186,168		2,137,400,000,000		186,168
			INR	609,310,473		9,981		609,310,473		9,981
			THB	5,501,000,000		202,052		5,021,000,001		184,421
			EUR	46,000,000		62,102		46,000,000		62,102
			AUD	27,169,000		24,167		27,169,000		24,167
			BRL	464,060,000		115,769		464,060,000		115,769

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

Contingent liabilities on debt acquisition, financial support agreement provided by the Company as of June 30, 2022 are as follows.


(in millions of Won)			Agreed amount				Executed amount
Provider	Recipient	Lender	Foreign currency		Won equivalent		Foreign currency		Won equivalent
[The Company]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	JB CLARK HILLS	HSBC and others	USD	35,500,000		45,898		32,200,000		41,631
[Associates and joint ventures]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	New Songdo International City Development, LLC	Others	KRW	620,000		620,000		545,800		545,800
	POHANG E&E Coi., LTD	Heungkuk Life Insurance Co., Ltd.	KRW	71,930		71,930		52,642		52,642
	UITrans LRT Co., Ltd	Kookmin Bank and others	KRW	205,051		205,051		182,381		182,381
	Pocheon-Hwado Highway Corp.	Lotte Insurance Co., Ltd and others	KRW	276,033		276,033		68,887		68,887
	Pureun Tongyeong Enviro Co., Ltd.	KDB Bank and others	KRW	22,714		22,714		13,553		13,553
	Pure Gimpo.Co.,Ltd	KDB Bank and others	KRW	51,559		51,559		29,187		29,187
	Clean Iksan Co.,Ltd	SAMSUNG FIRE & MARINE INSURANCE and others	KRW	44,054		44,054		28,400		28,400
POSCO ICT	UITrans LRT Co., Ltd	Kookmin Bank	KRW	41,965		41,965		34,940		34,940

[Others]
POSCO ENGINEERING & CONSTRUCTION CO., LTD.	Incheon—Gimpo Expressway Co., Ltd and others	Kookmin Bank and others	KRW	4,181,724		4,181,724		1,837,171		1,837,171
POSCO ICT	Incheon—Gimpo Expressway Co., Ltd and others	Kookmin Bank and others	KRW	237,971		237,971		94,716		94,716

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Other commitments

Details of other commitments of the Company as of June 30, 2022 are as follows:


Company		Description

POSCO HOLDINGS INC.		As of June 30, 2022, POSCO HOLDINGS INC. entered into a commitment with KOREA ENERGY AGENCY for long-term foreign currency borrowings, which are limited up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowings depends on the success of the projects. POSCO HOLDINGS INC. is not liable for the repayment of full or part of the amount borrowed if the respective projects fail. POSCO HOLDINGS INC. has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of June 30, 2022, the ending balance of the borrowing amounts to USD 1.02 million.

		POSCO HOLDINGS INC. has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors, including Norddeutsche Landesbank, for seamless funding to POSCO ENERGY Co., Ltd., a subsidiary of the Company, under construction of new power plant.

		POSCO HOLDINGS INC. has deposited 3,075,569 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of June 30, 2022.

POSCO		POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. The contracts of iron ore and coal generally have terms of more than three years and the contracts of nickel have terms of more than one year. These contracts provide for periodic price adjustments based on the market price. As of June 30, 2022, 87 million tons of iron ore and 2 million tons of coal remained to be purchased under such long-term contracts.

		POSCO entered into an agreement with Tangguh Liquefied Natural Gas (LNG) Consortium in Indonesia to purchase 550 thousand tons of LNG annually for 20 years commencing in August 2005. The purchase price is subject to change, based on changes of the monthly standard oil price (JCC) and with a price ceiling.

		POSCO has a long-term service contract for the transportation of raw material. As of June 30, 2022, there are 37 vessels under contract, and the average remaining contract period is about 8 years.

POSCO INTERNATIONAL Corporation		POSCO INTERNATIONAL Corporation operates a ship-to-ship business in which ships are chartered from ship’s owners and leased out to shippers. The Company has entered into a ship purchase agreement with the ship owners and the shippers, which obliges the shippers to pay the agreed amount either at the end of the contract terms or at the agreed termination and to take over the ownership of the vessel from the ship owners. Only if the shipper fails to fulfill its obligation including payment obligation for the purchase of the vessel, the Company is obliged to take over the ship based on the condition that the shipper’s contractual obligations and rights are transferred to the Company. As of June 30, 2022, the amount which is exposed to the ship purchase agreements entered into is USD 170 million.

		The Company invested in the Ambatovy Nickel Project (DMSA/AMSA) in Madagascar through the Korea Ambatovy Consortium (KAC) formed with Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR) and STX Corporation. SHERRITT INTERNATIONAL CORP., the operator, transferred a portion of the project’s interests to Sumitomo and AHL (Ambatovy Holdings Limited) in December 2017, and transferred the remaining interests of the project to Sumitomo and AHL2 (Ambatovy Holdings II Limited) in August 2020. KAC has the rights and obligations to the 15.33% stake held by AHL and AHL2.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)



POSCO ENGINEERING & CONSTRUCTION CO., LTD.		As of June 30, 2022, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has foreign currency guarantees of up to USD 2,378 million provided by financial institutions and uses USD 823 million with Woori Bank and others.

		As of June 30, 2022, according to the project agreements related to redevelopment and reconstruction projects, the Company has an agreement to compensate the Korea Housing and Urban Guarantee Corporation for damages of principal and interest amounting toW1,548,677 million(limited toW3,068,521 million). Futhermore, the Company provides agreements of construction completion (compensation for non-performance) in connection with a number of implementation and union business projects.

		As of June 30, 2022, according to the investor agreement for the construction of Samcheok Thermal Power Plant, POSCO ENGINEERING & CONSTRUCTION CO., LTD is obligated to make contibutions for core capital, unqualified investment, excess expenses occurred for business, and accelaration of payment. Among them, the remaining amount of the core capital investment obligation isW43,189 million, and the payment period is expected to be in the first quarter of 2024.

POSCO ICT		As of June 30, 2022, in relation to contract enforcement, POSCO ICT is provided with a guarantee ofW122,477 million,W31,922 million,W305 million from Software credit union and Seoul guarantee insurance, Engineering credit union respectively.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(c)	Litigation in progress

Request for Arbitration of NSC Investment and TGC

In March 2019, NSC Investment and TGC(“Applicant”), a former joint venture partner of POSCO ENGINEERING & CONSTRUCTION CO., LTD., in connection with the Songdo International City Development Project in Incheon, filed an arbitration (mediation price: approximately USD 2.3 billion) for alleged violations of contract by POSCO ENGINEERING & CONSTRUCTION CO., LTD. As of June 30, 2022, the Company has determined that the applicant’s claim is without merit, and did not recognize a provision.

Other litigation

The Company is involved in 322 lawsuits aggregating toW1,092.5 billion as defendant as of June 30, 2022, which arise from the ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting toW50.8 billion for 58 lawsuits based on its reliable estimate of outflow of resources. However, the Company has not recognized any provisions for the other lawsuits and claims since the Company believes that it does not have a present obligation as of June 30, 2022.

(d)	Other Contingencies

Other major contingencies for the Company as of June 30, 2022 are as follows:


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

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

POSCO ENGINEERING & CONSTRUCTION CO., LTD.		As of June 30, 2022, POSCO ENGINEERING & CONSTRUCTION CO., LTD. has provided 36 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee ofW 8,759,657 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.

POSCO ICT		As of June 30, 2022, POSCO ICT has provided 8 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	June 30, 2022			June 30, 2021
Trade accounts and notes receivable	W	(2,034,899	)		(1,198,404	)
Other receivables		(49,796	)		(26,525	)
Inventories		(2,506,654	)		(2,320,629	)
Other current assets		(257,450	)		(170,744	)
Other non-current assets		(93,408	)		(78,575	)
Trade accounts and notes payable		803,265			449,503
Other payables		14,567			(105,362	)
Other current liabilities		125,856			374,639
Provisions		(87,455	)		(205,979	)
Payments of severance benefits		(193,399	)		(153,324	)
Plan assets		131,610			114,386
Other non-current liabilities		2,191			25,621

	W	(4,145,572	)		(3,295,393	)

37. Operating Segments

The Company’s operating businesses are organized based on the nature of markets and customers. The Company changed the internal organization and composition of the reporting segment and classified the operating segments according to reporting level provided to the management for decision-making. The Company restated the reporting segments information for the six-month period ended June 30, 2021, in accordance with the change in operating segments.

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

The Company has four reportable operating segments—Steel, Green infrastructure, Green Materials and Energy and Others.

(a)	Information about reportable segments for the six-month periods ended June 30, 2022 and 2021 were as follows:

For the six-month period ended June 30, 2022


	Steel		Green Infrastructure						Green Materials and Energy		Others			Total
(in millions of Won)	Steel		Construction		Trading		Energy and others		Green Materials and Energy		Others			Total
External revenues	W	24,068,875		3,727,043		13,740,607		1,689,885		1,035,836		85,878			44,348,124
Internal revenues		13,685,014		573,277		13,795,928		1,603,960		488,953		351,018			30,498,150
Inter segment revenues		9,643,528		515,949		7,143,574		1,587,417		487,219		344,444			19,722,131
Total revenues		37,753,889		4,300,320		27,536,535		3,293,845		1,524,789		436,896			74,846,274
Segment profits (losses)		2,508,811		205,428		391,702		172,296		90,672		(1,847,135	)		1,521,774

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

For the six-month period ended June 30, 2021

①

The disclosed details of the previous period are as follows:


(in millions of Won)	Steel		Trading		Construction		Others		Total
External revenues	W	18,339,930		11,360,997		2,975,129		1,685,133		34,361,189
Internal revenues		10,041,974		9,029,601		401,891		1,292,307		20,765,773
Inter segment revenues		6,258,571		4,665,212		371,847		1,202,965		12,498,595
Total revenues		28,381,904		20,390,598		3,377,020		2,977,440		55,126,962
Segment profits		2,908,707		223,607		72,446		134,497		3,339,257

②

The restated details of the previous period due to the change of the operating segments are as follows:


	Steel		Green Infrastructure						Green Materials and Energy		Others		Total
(in millions of Won)	Steel		Construction		Trading		Energy and others		Green Materials and Energy		Others		Total
External revenues	W	18,339,930		2,975,129		11,360,997		873,752		584,657		226,724		34,361,189
Internal revenues		10,041,974		401,891		9,029,601		357,409		411,737		523,161		20,765,773
Inter segment revenues		6,258,571		371,847		4,665,212		346,140		409,664		513,469		12,564,903
Total revenues		28,381,904		3,377,020		20,390,598		1,231,161		996,394		749,885		55,126,962
Segment profits		2,908,707		72,446		223,607		66,384		64,555		3,558		3,339,257

(b)	Reconciliations of total segment profit or loss, to their respective consolidated financial statement line items for the six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	June 30, 2022			June 30, 2021
Total profit for reportable segments	W	1,521,774			3,339,257
Corporate fair value adjustments		(32,793	)		(28,142	)
Elimination of inter-segment profits (losses)		2,216,845			(365,164	)
Income tax expense		1,095,716			1,011,447

Profit before income tax expense	W	4,801,542			3,957,398

38. Events after the reporting period

(a)	Pursuant to the resolution of the Board of Directors on August 12, 2022, the Company decided to pay interim cash dividends ofW4,000 per common share (total dividend:W303.4 billion).

(b)	Pursuant to the resolution of the Board of Directors on August 12, 2022, the Company decided the cancellation of 2,615,605 treasury shares (total cancellation amount:W567.5 billion).

(c)

POSCO, a subsidiary of the Company, issued the 312-1st non-guaranteed bond (issued amountW650 billion) and the 312-2nd non-guaranteed bond (issued amountW150 billion) on July 7, 2022. In addition, POSCO issued a non-guaranteed senior dollar bond (issued amount USD 1 billion) on August 4, 2022. The maturity of the bonds is August 4, 2025, USD 700 million, and August 4, 2027, USD 300 million.

POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(d)

POSCO, a subsidiary of the Company, lost lawsuits regarding the first and second confirmation of employee status in the Supreme Court of Korea on July 28, 2022. The Company cannot reasonably estimate financial impact on the consolidated financial statements, given the outflow of resources and amount of this lawsuits are uncertain as of June 30, 2022.

POSCO HOLDINGS INC.

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 2022

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page

Independent Auditors’ Review Report		1

Condensed Separate Interim Financial Statements

Condensed Separate Interim Statements of Financial Position		3

Condensed Separate Interim Statements of Comprehensive Income		5

Condensed Separate Interim Statements of Changes in Equity		6

Condensed Separate Interim Statements of Cash Flows		7

Notes to the Condensed Separate Interim Financial Statements		9

KPMG SAMJONG Accounting Corp.

152, Teheran-ro, Gangnam-gu, Seoul 06236

(Yeoksam-dong, Gangnam Finance Center 27th Floor)

Republic of Korea

Tel +82 (2) 2112 0100

Fax +82 (2) 2112 0101

ww.kr.kpmg.com

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO HOLDINGS INC.

Reviewed financial statements

We have reviewed the accompanying condensed separate interim financial statements of POSCO HOLDINGS INC. (the “Company”), which comprise the condensed separate interim statement of financial position as of June 30, 2022, the condensed separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021, the condensed separate interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2022 and 2021, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

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

Auditor’s review responsibility

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

Conclusion

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

LOGO

Emphasis of matter

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

Other matters

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

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

LOGO

Seoul, Korea

August 12, 2022

This report is effective as of August 12, 2022, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Financial Position

As of June 30, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes	June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	20	W	251,505		2,042,274
Trade accounts and notes receivable, net	4,14,20,25,32		56,977		6,017,508
Other receivables, net	5,20,32		65,831		545,341
Other short-term financial assets	6,20		3,681,782		9,605,522
Inventories	7,29		—		7,623,202
Assets held for sale	8		—		29,789
Other current assets	13		4,509		55,244

Total current assets			4,060,604		25,918,880

Long-term trade accounts and notes receivable, net	4,20		—		5,675
Other receivables, net	5,20		226,097		274,253
Other long-term financial assets	6,20		1,100,410		1,326,565
Investments in subsidiaries, associates and joint ventures	9		45,714,797		16,002,640
Investment property, net	10		224,643		144,140
Property, plant and equipment, net	11		143,189		19,772,299
Intangible assets, net	12		13,514		551,410
Defined benefit assets, net	18		—		212,531
Other non-current assets	13		9		34,366

Total non-current assets			47,422,659		38,323,879

Total assets		W	51,483,263		64,242,759

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Financial Position, Continued

As of June 30, 2022 and December 31, 2021

(Unaudited)


(in millions of Won)	Notes		June 30, 2022			December 31, 2021
Liabilities
Trade accounts and notes payable		20,32	W	—			2,453,068
Short-term borrowings and current installments of long-term borrowings		4,14,20		1,319			2,072,354
Other payables		15,20,32		63,719			1,267,459
Other short-term financial liabilities		16,20		10,520			13,755
Current income tax liabilities				259,424			1,832,078
Liabilities directly associated with the assets held for sale		8		—			185
Provisions		17		9,075			84,409
Other current liabilities		19,25		1,562			144,961

Total current liabilities				345,619			7,868,269

Long-term borrowings, excluding current installments		14,20		1,342,446			6,129,778
Other payables		15,20		846			399,144
Other long-term financial liabilities		16,20		19,175			21,991
Defined benefit liabilities, net		18		8,153			—
Deferred tax liabilities				2,947,065			747,653
Long-term provisions		17,33		442			36,755
Other non-current liabilities		19,25		—			3,744

Total non-current liabilities				4,318,127			7,339,065

Total liabilities				4,663,746			15,207,334

Equity
Share capital		21		482,403			482,403
Capital surplus		21		1,348,780			1,339,289
Hybrid bonds		22		—			199,384
Reserves		23		(299,689	)		(211,849	)
Treasury shares		24		(2,459,781	)		(2,508,294	)
Retained earnings				47,747,804			49,734,492

Total equity				46,819,517			49,035,425

Total liabilities and equity			W	51,483,263			64,242,759

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Comprehensive Income

For the three-month periods and six-month periods ended June 30, 2022 and 2021

(Unaudited)


			For the three-month periods ended June 30						For the six-month periods ended June 30
(in millions of Won, except per share informations)	Notes		2022			2021			2022			2021
Operating revenue		25,32
Revenue			W	142,386			9,277,353			7,921,663			17,077,800
Operating expenses		7,29,32
Cost of sales				190			(7,412,042	)		(6,465,070	)		(13,878,939	)
Impairment loss on trade accounts and notes receivable				—			(37	)		—			(6	)
Other administrative expenses		26		(66,295	)		(207,409	)		(273,040	)		(417,312	)
Selling expenses		26		—			(49,792	)		(37,594	)		(100,587	)

				(66,105	)		(7,669,280	)		(6,775,704	)		(14,396,844	)

Operating profit				76,281			1,608,073			1,145,959			2,680,956
Finance income and costs
Finance income		20,27		136,600			270,466			306,913			839,740
Finance costs		20,27		(2,964	)		(82,518	)		(153,282	)		(401,276	)

Other non-operating income and expenses		32
Reversal of (impairment loss) on other receivables				—			27			(128	)		(321	)
Other non-operating income		28		5,983			76,644			21,351			111,891
Other non-operating expenses		28,29		(450	)		(42,238	)		(27,207	)		(94,435	)

Profit before income tax				215,450			1,830,454			1,293,606			3,136,555
Income tax expense		30		(36,372	)		(512,294	)		(2,518,755	)		(866,220	)

Profit (loss)				179,078			1,318,160			(1,225,149	)		2,270,335
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		18		(36	)		(11,072	)		(80,047	)		(11,362	)
Net changes in fair value of equity investments at fair value through other comprehensive income		6,20,23		(180,783	)		44,653			(86,320	)		119,960
Total comprehensive income (loss)			W	(1,741	)		1,351,741			(1,391,516	)		2,378,933

Earnings (loss) per share (in Won)		31
Basic earnings (loss) per share (in Won)				2,361			17,408			(16,181	)		29,921
Diluted earnings (loss) per share (in Won)			W	1,464			17,408			(16,408	)		29,921

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Share capital		Capital surplus		Hybrid bonds			Reserves			Treasury shares			Retained earnings			Total
Balance as of January 1, 2021	W	482,403		1,339,289		199,384			(296,626	)		(2,391,523	)		45,781,777			45,114,704
Comprehensive income:
Profit		—		—		—			—			—			2,270,335			2,270,335
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—			—			—			(11,362	)		(11,362	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—			122,038			—			(2,078	)		119,960
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—			—			—			(342,565	)		(342,565	)
Interim dividends		—		—		—			—			—			(226,877	)		(226,877	)
Interest of hybrid bonds		—		—		—			—			—			(4,562	)		(4,562	)
Acquisition of treasury shares		—		—		—			—			(116,771	)		—			(116,771	)

Balance as of June 30, 2021	W	482,403		1,339,289		199,384			(174,588	)		(2,508,294	)		47,464,668			46,802,862

Balance as of January 1, 2022	W	482,403		1,339,289		199,384			(211,849	)		(2,508,294	)		49,734,492			49,035,425
Comprehensive income:
Loss		—		—		—			—			—			(1,225,149	)		(1,225,149	)
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax		—		—		—			—			—			(80,047	)		(80,047	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax		—		—		—			(87,840	)		—			1,520			(86,320	)
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends		—		—		—			—			—			(378,128	)		(378,128	)
Interim dividends		—		—		—			—			—			(303,397	)		(303,397	)
Interest of hybrid bonds		—		—		—			—			—			(1,487	)		(1,487	)
Disposal of treasury shares		—		9,491		—			—			48,513			—			58,004
Changes from spin-off		—		—		(199,384	)		—			—			—			(199,384	)

Balance as of June 30, 2022	W	482,403		1,348,780		—			(299,689	)		(2,459,781	)		47,747,804			46,819,517

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Cash Flows

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes		June 30, 2022			June 30, 2021
Cash flows from operating activities
Profit (loss)			W	(1,225,149	)		2,270,335
Adjustments for :
Expenses related to post-employment benefit				18,904			60,154
Depreciation				387,645			1,146,592
Amortization				16,816			54,868
Impairment loss on trade and other receivables				128			327
Finance income				(258,484	)		(250,635	)
Dividend income				(356,756	)		(431,642	)
Finance costs				110,868			231,212
Loss on valuation of inventories				1,722			837
Gain on disposal of property, plant and equipment				(5,443	)		(5,687	)
Loss on disposal of property, plant and equipment				18,281			46,270
Impairment loss on property, plant and equipment				3			3,113
Impairment loss on intangible assets				—			7,180
Gain on investments in subsidiaries, associates and joint venture				(3,358	)		—
Impairment loss on investments in subsidiaries, associates and joint venture				—			1,500
Gain on disposal of assets held for sale				(2,706	)		(45,736	)
Loss on disposal of emission rights				—			5,843
Increase to provisions				5,562			5,284
Income tax expense				2,518,755			866,220
Employee benefits				61,603			—
Others				(954	)		5,254
Changes in operating assets and liabilities		34		(723,180	)		(2,509,304	)
Interest received				62,434			66,343
Interest paid				(50,424	)		(100,350	)
Dividends received				343,866			339,108
Income taxes paid				(1,805,338	)		(81,599	)

Net cash provided by (used in) operating activities			W	(885,205	)		1,685,487

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2022 and 2021

(Unaudited)


(in millions of Won)	Notes	June 30, 2022			June 30, 2021
Cash flows from investing activities
Decrease in deposits		W	450,017			1,092,636
Proceeds from disposal of short-term financial instruments			18,814,019			15,642,485
Proceeds from disposal of long-term financial instruments			5			2
Collection of short-term loans			1,416			3,216
Proceeds from disposal of debt securities			50,000			150,070
Proceeds from disposal of long-term debt securities			—			1,743
Proceeds from disposal of equity securities			3,229			12,868
Proceeds from disposal of other securities			19,439			2,534
Proceeds from disposal of derivatives			—			1,482
Proceeds from disposal of investments in subsidiaries, associates and joint ventures			9,396			720
Proceeds from disposal of intangible assets			—			727
Proceeds from disposal of assets held for sale			3,074			58,721
Proceeds from disposal of emissions rights			—			5,503
Increase in deposits			(550,571	)		(1,066,139	)
Acquisition of short-term financial instruments			(16,383,014	)		(14,854,667	)
Payment of long-term loans			(3,618	)		(13,207	)
Acquisition of debt securities			(50,000	)		(50,033	)
Acquisition of equity securities			(63,849	)		(8,385	)
Acquisition of other securities			(22,625	)		(16,806	)
Acquisition of investment in subsidiaries, associates and joint ventures			(520,510	)		(944,171	)
Acquisition of property, plant and equipment			(355,822	)		(753,743	)
Payment for disposal of property, plant and equipment			(14,485	)		(31,684	)
Acquisition of intangible asstes			(8,667	)		(23,448	)
Cash outflow for spin-off			(1,910,211	)		—

Net cash used in investing activities		W	(532,777	)		(789,576	)

Cash flows from financing activities
Proceeds from borrowings			537,165			2,338,590
Increase in long-term financial liabilities			15,515			843
Proceeds from disposal of derivatives			—			14,725
Receipt of government grants			—			12
Repayment of borrowings			(232,976	)		(2,689,014	)
Decrease in long-term financial liabilities			(279	)		(1,235	)
Repayment of lease liabilities			(7,493	)		(23,009	)
Payment for disposal of derivatives			(7,103	)		—
Payment of cash dividends			(681,534	)		(569,466	)
Acquisition of treasury shares			—			(116,771	)
Payment of interest of hybrid bonds			—			(4,587	)

Net cash used in financing activities		W	(376,705	)		(1,049,912	)

Effect of exchange rate fluctuation on cash held			3,918			12,467
Net decrease in cash and cash equivalents			(1,790,769	)		(141,534	)
Cash and cash equivalents at beginning of the period			2,042,274			1,822,660

Cash and cash equivalents at end of the period		W	251,505			1,681,126

See accompanying notes to the condensed separate interim financial statements.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements

As of June 30, 2022

(Unaudited)

1. Reporting Entity

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

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

As of June 30, 2022, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchanges.

2. Statement of Compliance

Statement of compliance

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

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

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

Use of estimates and judgments

(a)	Judgments, assumptions and estimation uncertainties

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

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

(b)	Measurement of fair value

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)


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

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

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

3. Summary of Significant Accounting Policies

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

Revenue from contracts with customers

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

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(a)	Accounting policies applied from March 1, 2022

Dividend income

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

Rental income

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

Trademark usage income

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

(b)	Accounting policies applied before March 1, 2022

Steel products

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

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

Transportation services

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

New standards and interpretations not yet adopted

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

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

The amendment clarifies that the classification of current and non-current liabilities is determined by the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and in order for the debtor to have the “right to defer settlement of the liability”, the condition of complying with the contract must be met at the end of the reporting period. In addition, the classification of liabilities is not affected by the possibility of exercising the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and the amendment clarifies that settlement of a liability includes transferring a company’s own equity instruments to the counterparty. The amendment is effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The Company expects that an exchangeable bond(W1,342,446 million as of June 30, 2022) will be reclassified from non-current liabilities to current liabilities with the adoption of the amendments.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Trade accounts and notes receivable	W	56,977		6,031,878
Less: Allowance for doubtful accounts		—		(14,370	)

	W56,977		6,017,508

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

	W	—		5,675

The Company sold trade accounts and notes receivable with recourse to financial institutions. These trade accounts and notes receivable have not been derecognized from the statement of financial position because the Company retains substantially all of the risks and rewards associated with the transferred assets. The amounts received on transfer have been recognized as secured borrowings. The carrying amounts of such secured borrowings are none as of June 30, 2022 andW214,465 million as of December 31, 2021, which are presented in the statements of financial position as short-term borrowings.

5. Other Receivables

Other receivables as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Other accounts receivable	W	25,641		506,040
Others		40,190		41,361
Less: Allowance for doubtful accounts		—		(2,060	)

	W	65,831		545,341

Non-current
Loans	W	201,343		244,895
Long-term other accounts receivable		24,740		34,260
Others		14		4,185
Less: Allowance for doubtful accounts		—		(9,087	)

	W	226,097		274,253

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

6. Other Financial Assets

(a)	Other financial assets as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Debt securities	W	101,250		154,750
Deposit instruments(*1)		—		1,436,915
Short-term financial instruments		3,580,532		8,013,857

	W	3,681,782		9,605,522

Non-current
Long-term derivative assets	W	—		170,471
Equity securities		1,025,532		1,084,574
Other securities		74,878		71,492
Deposit instruments(*2)		—		28

	W	1,100,410		1,326,565

(*1)	As of December 31, 2021,W3,915 million are restricted in relation to government assigned project.

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

(b)	Equity securities as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022													December 31, 2021
	Number of shares		Ownership (%)		Acquisition cost		Fair value		Net changes in fair value of equity securities			Book value		Book value
Marketable equity securities
Nippon Steel Corporation		15,698,500		1.65	W	473,962		282,150		(191,812	)		282,150		303,814
KB Financial group Inc.		3,863,520		0.94		178,839		186,028		7,189			186,028		212,493
Woori Financial Group Inc.		20,280,000		2.79		244,447		245,388		941			245,388		257,556
CSN Mineracao S.A.		102,186,675		1.83		206,265		98,401		(107,864	)		98,401		146,550
SAMWONSTEEL Co., Ltd.		5,700,000		14.25		8,930		14,621		5,691			14,621		18,041
DONGKUK INDUSTRIES COMPANY		2,611,989		4.82		11,911		7,823		(4,088	)		7,823		9,260
Kyeong Nam Steel Co., LTD. (*1)		1,329,604		4.93		2,216		4,248		2,032			4,248
Others (8 companies)						62,753		41,830		(20,923	)		41,830		51,717

						1,189,323		880,489		(308,834	)		880,489		999,431

Non-marketable equity securities
POSCO PLANTEC Co., Ltd.		18,337,912		10.99		19,437		19,437		—			19,437		19,437
Korea Nickel CO.LTD		75,600		14.00		10,194		10,194		—			10,194		10,194
Poongsan Special Metal Corp.		315,790		5.00		7,657		7,657		—			7,657		7,657
HANKUM.CO.LTD		21,000		4.99		4,599		4,599		—			4,599		4,599
Core-Industry Co., Ltd.		490,000		19.84		4,214		4,214		—			4,214		4,214
PROLOGIUM HOLDING INC. (*2)		1,968,290		2.06		63,876		63,876		—			63,876		—
Others (24 companies)						139,596		35,066		(104,530	)		35,066		39,042

						249,573		145,043		(104,530	)		145,043		85,143

					W	1,438,896		1,025,532		(413,364	)		1,025,532		1,084,574

(*1)	During the six-month period ended June 30, 2022, the Company acquired new shares by exercising the right to convert convertible bonds of Kyeong Nam Steel Co., LTD.

(*2)	During the six-month period ended June 30, 2022, the Company acquired new shares of PROLOGIUM HOLDING INC., which operates Solid-state battery business in Taiwan.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

7. Inventories

Inventories as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Finished goods	W	—		1,164,685
Semi-finished goods		—		2,227,433
By-products		—		19,317
Raw materials		—		1,682,946
Fuel and materials		—		459,784
Materials-in-transit		—		2,073,218
Others		—		673

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

	W	—		7,623,202

The amount of loss on valuation of inventories recognized in cost of sales during the six-month period ended June 30, 2022 and the year ended December 31, 2021 wereW1,722 million andW4,854 million, respectively. Meanwhile, inventories were transferred to the newly established company (POSCO) upon a vertical spin-off during the six-month period ended June 30, 2022.

8. Assets Held for Sale

Assets held for sale as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Assets
Property, plant and equipment(*1)	W	—		29,236
Intangible assets		—		553

	W	—		29,789

Liabilities
Others	W	—		185

(*1)

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

9. Investments in Subsidiaries, Associates and Joint ventures

(a)	Details of subsidiaries and carrying amounts as of June 30, 2022 and December 31, 2021 are as follows:


				June 30, 2022				December 31, 2021
(in millions of Won)	Country		Principal operations	Ownership (%)		Book value		Book value
[Domestic]
POSCO(*1)		Korea	Steel, rolled products, and plates manufacturing and sales		100.00	W	29,441,678		—
POSCO INTERNATIONAL Corporation		Korea	Trading and natural resources exploration		62.91		3,156,434		3,156,434
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		Korea	Engineering and construction		52.80		1,014,314		1,014,314
POSCO ENERGY CO., LTD.		Korea	Power generation, fuel cell manufacturing and sales		89.02		658,176		658,176
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)(*2,5)		Korea	Coated steel manufacturing and sales		—		—		108,421
POSCO Venture Capital Co., Ltd.		Korea	Investment in venture companies		95.00		103,780		103,780
POSCO CHEMICAL CO., LTD		Korea	Refractory and anode/cathode material manufacturing and sales		59.72		895,707		895,707
POSCO O&M Co., Ltd(*3)		Korea	Business facility maintenance		47.17		73,374		73,374
POSCO ICT		Korea	Computer hardware and software distribution		65.38		70,990		70,990
POSCO M-TECH(*2)		Korea	Packing materials manufacturing and sales		—		—		107,278
Busan E&E Co,. Ltd.		Korea	Municipal solid waste fuel and power generation		70.00		30,148		30,148
POSCO-Pilbara LITHIUM SOLUTION (formerly, POSCO Lithium Solution Co., Ltd.)(*6)		Korea	Lithium manufacturing and sales		82.00		314,940		150,000
Others (12 companies)(*2)							377,558		384,735

							36,137,099		6,753,357

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

							6,597,044		6,343,686

						W	42,734,143		13,097,043

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(*1)

During the six-month period ended June 30, 2022, the Company acquired the shares of the newly established company(POSCO) by a vertical spin-off of its steel business. The acquisition cost of the investments in subsidiary was calculated by deducting the book value of liabilities and hybrid bonds from the assets succeeded to the newly established company(POSCO) by a vertical spin-off.

(*2)	During the six-month period ended June 30, 2022, the shares of POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.), POSCO M-TECH, POSCO Humans and POSCO NIPPON STEEL RHF JOINT VENTURE.CO.,Ltd. were transferred to the newly established company(POSCO) by a vertical spin-off.

(*3)

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

(*4)	During the six-month period June 30, 2022, the Company acquiredW253,358 million in additional subsidiary investment shares by participating in POSCO Argentina S.A.U‘s capital increase to invest in an Argentine brine lithium commercialization plant.

(*5)	During the six-month period June 30, 2022, POSCO COATED & COLOR STEEL Co., Ltd. changed the name to POSCO STEELEON Co., Ltd..

(*6)

During the six-month period June 30, 2022, POSCO Lithium Solution Co., Ltd. changed the name to POSCO-Pilbara LITHIUM SOLUTION. Meanwhile, the Company acquiredW164,732 million in additional subsidiary investment shares by participating in POSCO-Pilbara LITHIUM SOLUTION’s paid-in capital increase during the six-month period June 30, 2022.

(b)	Details of associates and carrying amounts as of June 30, 2022 and December 31, 2021 are as follows:


								December 31,
				June 30, 2022				2021
(in millions of Won)	Country		Principal operations	Ownership (%)		Book value		Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund		Korea	Investment in venture companies		45.18	W	169,316		169,316
SNNC		Korea	STS material manufacturing and sales		49.00		100,655		100,655
QSONE Co.,Ltd.		Korea	Real estate rental business and facility management		50.00		85,550		85,550
Others (8 companies)							48,556		21,331

							404,077		376,852

[Foreign]
Nickel Mining Company SAS		New Caledonia	Raw material manufacturing and sales		49.00		189,197		189,197
9404-5515 Quebec Inc.(*1)		Canada	Investments		10.40		124,341		124,341
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd (*2)		China	Tinplate manufacturing and sales		—		—		11,003
FQM Australia Holdings Pty Ltd		Australia	Non ferrous metal mining		30.00		109,568		109,568
Others (8 companies)							51,752		48,071

							474,858		482,180

						W	878,935		859,032

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(*1)	As of June 30, 2022, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering the structure of its Board of Directors and others.

(*2)	During the six-month period ended June 30, 2022, the Company disposed of investments in associates of Zhongyue POSCO (Qinhuangdao)Tinplate Industrial Co., Ltd, and recognizedW510 million of gain on disposal.

(c)	Details of joint ventures and carrying amounts as of June 30, 2022 and December 31, 2021 are as follows:


								December 31, 2021
				June 30, 2022				December 31, 2021
(in millions of Won)	Country		Principal operations	Ownership (%)		Book value		Book value
Roy Hill Holdings Pty Ltd(*1)		Australia	Natural resources exploration		10.00	W	1,225,464		1,225,464
CSP - Compania Siderurgica do Pecem		Brazil	Steel manufacturing and sales		20.00		175,990		175,990
POSCO-NPS Niobium LLC		USA	Foreign investments in mining		50.00		364,609		364,609
KOBRASCO		Brazil	Steel materials manufacturing and sales		50.00		98,962		98,962
HBIS-POSCO Automotive Steel Co., Ltd		China	Steel manufacturing and sales		50.00		170,760		109,057
Others (2 companies)							65,934		72,483

						W	2,101,719		2,046,565

(*1)	As of June 30, 2022 and December 31, 2021, the investments in joint ventures amounting toW1,225,464 million were provided as collateral in relation to revolving loan of Roy Hill Holdings Pty Ltd.

10. Investment Property, Net

Changes in the carrying amount of investment property for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		*Depreciation(1)**			Spin-off			*Transfer(2)**		Ending
Land	W	87,568		—			(3,639	)		46,908		130,837
Buildings		48,989		(2,717	)		(4,990	)		46,027		87,309
Structures		7,583		(216	)		(4,304	)		3,434		6,497

	W	144,140		(2,933	)		(12,933	)		96,369		224,643

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

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	For the year ended December 31, 2021


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

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

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

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

11. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Acquisitions		Disposals			Depreciation			Spin-off			*Others(1)**			Ending
Land	W	1,349,266		—		—			—			(1,250,818	)		(46,907	)		51,541
Buildings		2,175,291		—		(1,045	)		(35,121	)		(2,079,343	)		(23,946	)		35,836
Structures		2,096,662		—		(117	)		(31,515	)		(2,075,346	)		16,277			5,961
Machinery and equipment		12,299,612		2,178		(1,110	)		(302,463	)		(12,046,595	)		59,191			10,813
Vehicles		18,357		622		—			(1,533	)		(17,410	)		6			42
Tools		24,891		102		—			(1,923	)		(23,763	)		693			—
Furniture and fixtures		88,524		9		—			(4,555	)		(72,237	)		891			12,632
Lease assets		448,328		966		—			(7,602	)		(440,464	)		(1,228	)		—
Construction-in-progress		1,271,368		264,182		—			—			(1,403,761	)		(105,425	)		26,364

	W	19,772,299		268,059		(2,272	)		(384,712	)		(19,409,737	)		(100,448	)		143,189

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	For the year ended December 31, 2021


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

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

(*1)

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

(*2)

The Company decided to stop the intended use for Synthetic Natural Gas (SNG) facility and sell the related assets. The Company estimated the recoverable amount based on expected sale price and recognizedW223,273 million of impairment loss in 2021. The remaining balances were classified as assets held for sale as of December 31, 2021.

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

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

Right-of-use assets

①

Changes in the carrying amount of right-of-use assets presented as property, plant and equipment for the six-month period ended June 30, 2022 were as follows.


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

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

②

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


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

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

Amount recognized in profit or loss

The amounts recognized in profit or loss related to leases for the three-month and the six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(in millions of Won)	2022		2021		2022		2021
Interest on lease liabilities	W	—		3,195		1,969		6,210
Expenses related to short-term leases		116		909		680		1,632
Expenses related to leases of low-value assets		307		1,691		1,504		3,214

	W	423		5,795		4,153		11,056

12. Intangible Assets, Net

Changes in the carrying amount of intangible assets for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

(a)	For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Acquisitions		Disposals			Amortization			Impairment		Spin-off			*Others(2)**			Ending
Intellectual property rights	W	22,846		—		(525	)		(1,194	)		—		(24,180	)		3,455			402
Membership(*1)		84,758		—		—			—			828		(73,968	)		—			11,618
Development expense		176,812		—		—			(12,615	)		—		(164,135	)		619			681
Port facilities usage rights		212,808		—		—			(2,476	)		—		(210,332	)		—			—
Construction-in-progress		32,392		8,074		—			—			—		(33,497	)		(6,156	)		813
Other intangible assets		21,794		726		—			(531	)		—		(21,288	)		(701	)		—

	W	551,410		8,800		(525	)		(16,816	)		828		(527,400	)		(2,783	)		13,514

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

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	For the year ended December 31, 2021


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

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

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

(*2)	During the year ended December 31, 2021, the Company decided to sell a portion of purchased emission rights and recognized impairment loss which is the difference between carrying amount and net fair value.

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

13. Other Assets

Other assets as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Advance payments	W	4,149		17,398
Prepaid expenses		360		25,406
Emission rights purchased from the market		—		12,441

	W	4,509		55,245

Non-current
Long-term prepaid expenses	W	1		3,659
Others		8		30,707

	W	9		34,366

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

14. Borrowings

(a)	Borrowings as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Short-term borrowings
Short-term borrowings	W	—		672,303
Current portion of debentures		—		1,402,750
Less: Current portion of discount on debentures issued		—		(2,699	)
Current portion of long-term borrowings		1,319		—

	W	1,319		2,072,354

Long-term borrowings
Long-term borrowings	W	—		1,210
Debentures		1,342,446		6,146,233
Less: Discount on debentures issued		—		(17,665	)

	W	1,342,446		6,129,778

(b)	Short-term borrowings as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Lenders		Issuance date		Maturity date		Annual interest rate (%)		June 30, 2022		December 31, 2021
Transfers of account receivables that do not qualify for derecognition		—		—		—		—	W	—		214,465
Borrowings in foreign trade		—		—		—		—		—		457,838

									W	—		672,303

(c)	Current portion of debentures and long-term borrowings as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Lenders		Issuance date		Maturity date		Annual interest rate (%)		June 30, 2022		December 31, 2021
Debentures		—		—		—		—	W	—		809,447
Foreign debentures		—		—		—		—		—		590,604
Foreign borrowings		KOREA ENERGY AGENCY		2007.12.27 ~ 2008.12.29		2022.12.29		3 year Government bond		1,319		—

									W	1,319		1,400,051

(d)	Long-term borrowings and others excluding current portion, as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Lenders		Issuance date		Maturity date		Annual interest rate (%)		June 30, 2022		December 31, 2021
Foreign borrowings		—		—		—		—	W	—		1,210
Debentures		—		—		—		—		—		1,736,868
Foreign debentures		—		—		—		—		—		2,956,507
Exchangeable bonds(*1)		Foreign currency exchangeable bonds		2021.09.01.		2026.09.01.		—		1,342,446		1,435,193

									W	1,342,446		6,129,778

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)


		Foreign currency exchangeable bonds
Type of bond		Exchangeable bonds
Aggregate principal amount		EUR 1,065,900,000
Interest rate		- Coupon rate : -
		- Yield to maturity : (0.78%)
Maturity date		September 1, 2026
Redemption		- Redemption at maturity : Outstanding bond principal, which is not repaid early or which call option is not excercised on, is repaid at maturity as a lump sum
		- Prepayment : The issuer has call option and the bondholders have put option
Exchange rate		100%

Exchange price		471,446
(Won/share)		471,446
Underlying shares		Registered common shares(treasury shares)
Exchange period		From October 12, 2021 to August 22, 2026
Adjustments for exchange price		Adjusting the exchange price according to the terms and conditions of the bond in the events of reason for adjusting the exchange price such as, bonus issue, share split, share consolidation, change of share type, issuance of options or warranties to shareholders, share dividend, cash dividend, issuance of new shares under the market price.

Put option by bondholders		- 3 years(September 1, 2024) from the closing date
		- In the event of a change of control of the Company
		- Where the shares issued by the Company are delisted (or suspended for more than 30 consecutive trading days)

Call option by the issuer		- Share price(based on closing price) is higher than 130% of exchange price for more than 20 trading days during 30 consecutive trading days in a row, after 3 years (September 1, 2024) from the closing day to 30 business days before the maturity of bonds
		- When the outstanding balance of outstanding bonds is less than 10% of the total issuance (Clean Up Call)
		- Where additional reasons for tax burden arise due to the amendment of relevant laws and regulations, etc

15. Other Payables

Other payables as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Accounts payable	W	16,838		727,844
Accrued expenses		18,798		475,056
Dividend payable		2,748		3,237
Lease liabilities		—		48,062
Withholdings		25,335		13,260

	W	63,719		1,267,459

Non-current
Long-term accrued expenses	W	—		27
Lease liabilities		—		398,513
Long-term withholdings		846		604

	W	846		399,144

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

16. Other Financial Liabilities

Other financial liabilities as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Derivative liabilities	W	—		3,429
Financial guarantee liabilities		10,520		10,326

	W	10,520		13,755

Non-current
Financial guarantee liabilities	W	19,175		21,991

17. Provisions

(a)	Provisions as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022				December 31, 2021
	Current		Non-current		Current		Non-current
Provision for bonus payments(*1,2)	W	6,952		151		21,365		25,155
Provision for restoration(*3)		2,123		291		5,902		6,601
Emission liabilities(*4)		—		—		34,059		—
Provision for product warranties(*5)		—		—		23,083		4,999

	W	9,075		442		84,409		36,755

(*1)	Represents the provision for bonuses limited to 100% of annual salaries for executives.

(*2)	The Company estimated the present value of estimated future cash payments about the long-term service award, based on actuarial measurement.

(*3)

Due to contamination of land near the Company’s magnesium smelting plant located in Gangneung province, the Company recognized present values of estimated costs for recovery as provisions for restoration as of June 30, 2022. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available for now to recover the land. In addition, the Company has applied discount rates of 3.95% to assess present value of these costs.

(*4)	The Company has recognized emission liabilities for greenhouse gas emissions exceeding the quantity of free quota emission rights expected to be submitted as of December 31, 2021.

(*5)	As of December 31, 2021, the Company recognized the expected claim cost to be charged as a provision.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Changes in provisions for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:

1)	For the six-month period ended June 30, 2022


(in millions of Won)	Beginning		Increase		Reversal			Utilization			Spin-off			Ending
Provision for bonus payments	W	46,520		22,317		(325	)		(29,796	)		(31,613	)		7,103
Provision for restoration		12,503		1,144		(489	)		(1,900	)		(8,844	)		2,414
Provision for legal contingencies and claims		—		417		—			—			(417	)		—
Emission liabilities		34,059		1,510		—			—			(35,569	)		—
Provision for product warranties		28,082		2,980		—			—			(31,062	)		—

	W	121,164		28,368		(814	)		(31,696	)		(107,505	)		9,517

2)	For the year ended December 31, 2021


(in millions of Won)	Beginning		Increase		Reversal			Utilization			Ending
Provision for bonus payments	W	48,979		74,240		—			(76,699	)		46,520
Provision for restoration		17,561		291		(186	)		(5,163	)		12,503
Provision for legal contingencies and claims		6,989		2,500		(2,052	)		(7,437	)		—
Emission liabilities		20,224		34,059		(19,391	)		(833	)		34,059
Provision for product warranties		22,453		27,434		—			(21,805	)		28,082

	W	116,206		138,524		(21,629	)		(111,937	)		121,164

18. Employee Benefits

(a)	Defined contribution plans

The expense related to post-employment benefit plans under defined contribution plans for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:

For the three-month periods

For the six-month periods

ended June 30

(in millions of Won)

2022

2021

2022

2021

Expense related to post-employment benefit plans under defined contribution plans

9,073

6,144

17,629

(b)	Defined benefit plans

1)	The amounts recognized in relation to net defined benefit liabilities(assets) in the statements of financial position as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Present value of funded obligations	W	26,530			1,330,938
Fair value of plan assets		(18,377	)		(1,543,469	)

Net defined benefit liabilities (assets)	W	8,153			(212,531	)

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2)	Changes in present value of defined benefit obligations for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Defined benefit obligation at the beginning of period	W	1,330,938			1,378,597
Current service costs		20,156			123,312
Interest costs		5,606			28,892
Remeasurement		106,795			(49,259	)
Reclassification to liabilities directly related to assets held for sale		—			(5,675	)
Benefits paid		(58,323	)		(144,929	)
Spin-off		(1,378,642	)		—

Defined benefit obligation at the end of period	W	26,530			1,330,938

3)	Changes in the fair value of plan assets for the six-month period ended June 30, 2022 and the year ended December 31, 2021 were as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Fair value of plan assets at the beginning of period	W	1,543,469			1,455,098
Interest on plan assets		6,858			31,145
Remeasurement of plan assets		(3,614	)		(4,534	)
Contributions to plan assets		—			200,000
Reclassification to liabilities directly related to assets held for sale		—			(5,490	)
Benefits paid		(51,374	)		(132,750	)
Spin-off		(1,476,962	)		—

Fair value of plan assets at the end of period	W	18,377			1,543,469

4)	The amounts recognized in the statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month periods						For the six-month periods
	ended June 30						ended June 30
(in millions of Won)	2022			2021			2022			2021
Current service costs	W	1,415			29,230			20,156			61,281
Net interest costs		(16	)		(481	)		(1,252	)		(1,127	)

	W	1,399			28,749			18,904			60,154

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

19. Other Liabilities

Other liabilities as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Current
Advances received	W	413		24,807
Withholdings		810		60,535
Unearned revenue		339		59,619

	W	1,562		144,961

Non-current
Unearned revenue	W	—		3,744

20. Financial Instruments

(a)	Classification and fair value of financial instruments

1)	The carrying amount and the fair values of financial assets and financial liabilities by fair value hierarchy as of June 30, 2022 and December 31, 2021 are as follows:

①

June 30, 2022


			Fair value
(in millions of Won)	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Short term financial instruments	W	3,580,532		—		3,580,532		—		3,580,532
Debt securities		1,250		—		—		1,250		1,250
Other securities		74,878		—		—		74,878		74,878
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,025,532		880,489		—		145,043		1,025,532
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		251,505		—		—		—		—
Trade accounts and notes receivable		49,009		—		—		—		—
Debt securities		100,000		—		—		100,000		100,000
Other receivables		288,914		—		—		—		—

	W	5,373,620		880,489		3,580,532		323,171		4,784,192

Financial liabilities
Fair value through profit or loss
Borrowings		1,342,446		1,342,446		—		—		1,342,446
Financial liabilities measured at amortized cost(*1)
Borrowings		1,319		—		1,319		—		1,319
Financial guarantee liabilities		29,695		—		—		—		—
Others		51,740		—		—		—		—

	W	1,425,200		1,342,446		1,319		—		1,343,765

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

②

December 31, 2021


			Fair value
(in millions of Won)	Book value		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit or loss
Derivative assets	W	170,471		—		170,471		—		170,471
Short-term financial instruments		8,013,857		—		8,013,857		—		8,013,857
Debt securities		4,750		—		—		4,750		4,750
Other securities		71,492		—		—		71,492		71,492
Other receivables		2,000		—		—		2,000		2,000
Fair value through other comprehensive income
Equity securities		1,084,574		999,431		—		85,143		1,084,574
Financial assets measured at amortized cost(*1)
Cash and cash equivalents		2,042,274		—		—		��		—
Trade accounts and notes receivable		6,005,022		—		—		—		—
Debt securities		150,000		—		—		—		—
Other receivables		495,306		—		—		—		—
Deposit instruments		1,436,943		—		—		—		—

	W	19,476,689		999,431		8,184,328		163,385		9,347,144

Financial liabilities
Fair value through profit or loss
Derivative liabilities	W	3,429		—		3,429		—		3,429
Borrowings		1,435,193		1,435,193		—		—		1,435,193
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable		2,453,068		—		—		—		—
Borrowings		6,766,939		—		6,875,206		—		6,875,206
Financial guarantee liabilities		32,317		—		—		—		—
Others		1,546,986		—		—		—		—

	W	12,237,932		1,435,193		6,878,635		—		8,313,828

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2)	Financial liabilities were recognized in connection with financial guarantee contracts as of June 30, 2022. The details of the amount of guarantees provided are as follows:


(in millions of Won)		Guarantee limit					Guarantee amount
Guarantee beneficiary	Financial institution	Foreign currency			Won equivalent		Foreign currency		Won equivalent
Subsidiaries
POSCO Maharashtra	DBS		USD	35,000,000		45,252		35,000,000		45,252
Steel Private Limited	SMBC		USD	35,000,000		45,252		35,000,000		45,252
	BNP		USD	30,000,000		38,787		30,000,000		38,787
	CITI		USD	20,000,000		25,858		20,000,000		25,858
	SC		USD	19,784,000		25,579		19,784,000		25,579
POSCO ASSAN TST	SOCIETE GENERALE		USD	37,800,000		48,872		37,800,000		48,872
STEEL INDUSTRY	CITI		USD	36,000,000		46,544		36,000,000		46,544
	ING		USD	36,000,000		46,544		36,000,000		46,544
	BNP		USD	22,074,750		28,540		22,074,750		28,540
POSCO Asia Co., Ltd.	Credit Agricole		USD	50,000,000		64,645		—		—
	ING		USD	50,000,000		64,645		—		—
	MIZUHO		USD	50,000,000		64,645		—		—
	Shinhan		USD	50,000,000		64,645		—		—
POSCO MEXICO S.A. DE C.V	BOA		USD	30,000,000		38,787		25,000,000		32,323
	Citi BANAMEX		USD	30,000,000		38,787		25,000,000		32,323
	ANZ		USD	20,000,000		25,858		16,666,667		21,548
	MIZUHO		USD	20,000,000		25,858		16,666,667		21,548
	SMBC		USD	20,000,000		25,858		16,666,667		21,548
POSCO-VIETNAM Co., Ltd.	Credit Agricole		USD	40,000,000		51,716		35,897,436		46,412
	SMBC		USD	50,000,000		64,645		35,897,436		46,412
	MUFG		USD	26,000,000		33,615		32,307,692		41,771
	CITI		USD	20,000,000		25,858		17,948,718		23,206
	MIZUHO		USD	20,000,000		25,858		17,948,718		23,206
PT. KRAKATAU POSCO	Export-Import Bank of Korea		USD	757,000,000		978,725		421,168,507		544,529
	SMBC		USD	290,000,000		374,941		207,165,956		267,845
	HSBC		USD	221,000,000		285,731		166,558,261		215,343
	SC		USD	110,000,000		142,219		110,000,000		142,219
	SCB		USD	107,800,000		139,375		44,229,956		57,185
	MUFG		USD	60,000,000		77,574		60,000,000		77,574
	BTMU		USD	119,000,000		153,855		47,806,956		61,810
	MIZUHO		USD	165,000,000		213,329		102,182,609		132,112
	ANZ		USD	103,500,000		133,815		60,450,305		78,156
	Credit Suisse		USD	91,000,000		117,654		36,558,261		47,266
	BOA		USD	105,000,000		135,755		84,060,870		108,682
	The Tokyo Star Bank		USD	21,000,000		27,151		8,436,522		10,908
POSCO COATED STEEL	ANZ		THB	1,175,000,000		43,158		1,072,473,187		39,392
(THAILAND) CO., LTD.	MUFG		THB	1,175,000,000		43,158		1,072,473,187		39,392
	SC		THB	1,175,000,000		43,158		1,072,473,187		39,392
	SMBC		THB	1,175,000,000		43,158		1,072,473,187		39,392
	CITI		THB	801,000,000		29,420		731,107,253		26,853
Associates
LLP POSUK Titanium	SMBC		USD	13,500,000		17,454		13,250,000		17,131
Nickel Mining Company SAS	SMBC		EUR	46,000,000		62,102		46,000,000		62,102
Joint ventures
CSP - Compania	BNDES		BRL	464,060,000		115,769		464,060,000		115,769
Siderurgica do Pecem	Export-Import Bank of Korea		USD	182,000,000		235,305		159,984,600		206,840
	BNP		USD	47,600,000		61,542		41,156,200		53,211
	MIZUHO		USD	47,600,000		61,542		41,156,200		53,211
	Santander		USD	47,600,000		61,542		41,156,200		53,211
	Credit Agricole		USD	20,000,000		25,858		17,292,600		22,358
	KfW		USD	20,000,000		25,858		17,292,600		22,358
	SOCIETE GENERALE		USD	20,000,000		25,858		17,292,600		22,358
	BBVA Seoul		USD	17,600,000		22,755		15,217,400		19,675
	ING		USD	17,600,000		22,755		15,217,400		19,675

			USD	3,331,458,750		4,307,241		2,239,292,754		2,895,182
			THB	5,501,000,000		202,052		5,021,000,001		184,421
			BRL	464,060,000		115,769		464,060,000		115,769
			EUR	46,000,000		62,102		46,000,000		62,102

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

3)	Finance income and costs by category of financial instrument for the six-month periods ended June 30, 2022 and 2021 were as follows:

①

For the six-month period ended June 30, 2022


	Finance income and costs
(in millions of Won)	Interest income (expense)			Gain and loss on foreign currency			Gain and loss on disposal			Gain and loss on valuation		Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	66,906			—			204			19,774		—		86,884			—
Financial assets at fair value through other comprehensive income		—			—			—			—		—		—			(86,320	)
Financial assets measured at amortized cost		11,946			74,440			—			—		—		86,386			—
Financial liabilities at fair value through profit or loss		—			(7,648	)		(4,188	)		97,376		—		85,540			—
Financial liabilities measured at amortized cost		(24,469	)		(85,656	)		—			—		4,946		(105,179	)		—

	W	54,383			(18,864	)		(3,984	)		117,150		4,946		153,631			(86,320	)

②

For the six-month period ended June 30, 2021


	Finance income and costs
(in millions of Won)	Interest income (expense)			Dividend income(*1)		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	58,424			—		—			1,168		28,481		—		88,073			—
Financial assets at fair value through other comprehensive income		—			29,336		—			92		—		—		29,428			119,960
Financial assets measured at amortized cost		7,227			—		83,603			—		—		—		90,830			—
Financial liabilities at fair value through profit or loss		—			—		—			18,177		92,087		—		110,264			—
Financial liabilities measured at amortized cost		(85,908	)		—		(199,560	)		—		—		3,030		(282,438	)		—

	W	(20,257	)		29,336		(115,957	)		19,437		120,568		3,030		36,157			119,960

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures ofW402,306 million for the six-month period ended June 30, 2021.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

4)	Finance income and costs by category of financial instrument for the three-month periods ended June 30, 2022 and 2021 were as follows:

①

For the three-month period ended June 30, 2022


	Finance income and costs
(in millions of Won)	Interest income (expense)		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation		Others		Total		Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	25,556		—			—		—		—		25,556		—
Financial assets at fair value through other comprehensive income		—		—			—		—		—		—		(180,783	)
Financial assets measured at amortized cost		4,118		15,643			—		—		—		19,761		—
Financial liabilities at fair value through profit or loss		—		1,653			—		86,018		—		87,671		—
Financial liabilities measured at amortized cost		—		(1,729	)		—		—		2,377		648		—

	W	29,674		15,567			—		86,018		2,377		133,636		(180,783	)

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

②

For the three-month period ended June 30, 2021


	Finance income and costs
(in millions of Won)	Interest income (expense)			Dividend income(*1)		Gain and loss on foreign currency			Gain and loss on disposal		Gain and loss on valuation			Others		Total			Other comprehensive income (loss)
Financial assets at fair value through profit or loss	W	28,258			—		—			1,002		(14,330	)		—		14,930			—
Financial assets at fair value through other comprehensive income		—			9,396		—			—		—			—		9,396			44,653
Financial assets measured at amortized cost		4,469			—		(20,131	)		—		—			—		(15,662	)		—
Financial liabilities at fair value through profit or loss		—			—		—			16,503		5,130			—		21,633			—
Financial liabilities measured at amortized cost		(38,601	)		—		24,538			—		—			1,739		(12,324	)		—

	W	(5,874	)		9,396		4,407			17,505		(9,200	)		1,739		17,973			44,653

(*1)	Finance income in the statement of comprehensive income includes the dividends from subsidiaries, associates and joint ventures ofW169,975 million for the three-month period ended June 30, 2021.

(b)	Financial risk management

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

21. Share Capital and Capital Surplus

(a)	Share capital as of June 30, 2022 and December 31, 2021 are as follows:


(in Won, except share information)	June 30, 2022		December 31, 2021
Authorized shares		200,000,000		200,000,000
Par value	W	5,000		5,000
Issued shares(*1)		87,186,835		87,186,835
Shared capital(*2)	W	482,403,125,000		482,403,125,000

(*1)	As of June 30, 2022, total shares of ADRs of 25,720,008 are equivalent to 6,430,002 shares of common stock.

(*2)	As of June 30, 2022, the difference between the ending balance of common stock and the par value of issued common stock isW46,469 million due to retirement of 9,293,790 treasury stocks.

(b)	Capital surplus as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Share premium	W	463,825			463,825
Gain on disposal of treasury shares		806,114			796,623
Gain from merger		80,628			80,628
Loss on disposal of hybrid bonds		(1,787	)		(1,787	)

	W	1,348,780			1,339,289

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

22. Hybrid Bonds

Hybrid bonds classified as equity as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	Date of issue		Date of maturity		Rate of interest (%)		June 30, 2022		December 31, 2021
Hybrid bond 1-2(*1)		6/13/2013		6/13/2043		4.60	W	—		200,000
Issuance cost								—		(616	)

							W	—		199,384

(*1)	During the six-month period ended June 30, 2022, it was transferred to a newly established company(POSCO) upon a vertical spin-off.

23. Reserves

Reserves as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022			December 31, 2021
Changes in fair value of equity investments at fair value through other comprehensive income	W	(299,689	)		(211,849	)

24. Treasury Shares


	June 30, 2022						December 31, 2021
(shares, in millions of Won)	Number of shares			Amount			Number of shares		Amount
Beginning		11,561,263		W	2,508,294			11,171,363	W	2,391,523
Acqusition of treasury shares		—			—			389,900		116,771
Disposal of treasury shares		(223,605	)		(48,513	)		—		—

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

25. Revenue

(a)	Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month periods				For the six-month periods
	ended June 30				ended June 30
(in millions of Won)	2022		2021		2022		2021
Types of revenue
Sales of steel product	W	—		8,932,553		7,262,347		16,444,696
Transportation services		—		298,446		241,733		542,575
Dividend income		124,165		—		356,756		—
Others		18,221		46,354		60,827		90,529

	W	142,386		9,277,353		7,921,663		17,077,800

Timing of revenue recognition
Revenue recognized at a point in time	W	124,252		8,961,641		7,637,907		16,501,922
Revenue recognized over time		18,134		315,712		283,756		575,878

	W	142,386		9,277,353		7,921,663		17,077,800

(b)	Details of contract assets and liabilities from contracts with customers as of June 30, 2022 and December 31, 2021 are as follows:


(in millions of Won)	June 30, 2022		December 31, 2021
Receivables
Account receivables	W	49,009		6,005,022
Contract assets
Account receivables		7,968		18,161
Contract liabilities
Advance received		413		24,807
Unearned income		339		63,363

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

26. Selling and Administrative Expenses

(a)	Other administrative expenses

Other administrative expenses for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month period ended June 30				For the six-month period ended June 30
(in millions of Won)	2022		2021		2022		2021
Wages and salaries	W	12,832		58,692		80,327		122,000
Expenses related to post-employment benefits		1,462		7,498		8,278		18,069
Other employee benefits		1,652		13,521		19,306		26,479
Travel		784		1,848		2,569		4,091
Depreciation		2,584		7,074		9,945		13,676
Amortization		163		6,731		5,324		25,583
Rental		414		10,358		12,888		25,779
Repairs		1		1,836		1,109		3,420
Advertising		5,943		15,985		20,506		28,829
Research & development		17,600		17,045		37,524		35,668
Service fees		8,565		38,162		42,519		74,935
Supplies		25		209		162		723
Vehicles maintenance		328		1,302		1,189		2,440
Industry association fee		463		1,661		1,875		3,126
Training		156		10,038		968		10,282
Conference		523		1,158		1,537		2,135
Others		12,800		14,291		27,014		20,077

	W	66,295		207,409		273,040		417,312

(b)	Selling expenses

Selling expenses for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month period ended June 30				For the six-month period ended June 30
(in millions of Won)	2022		2021		2022		2021
Freight and custody	W	—		28,600		20,724		59,180
Operating expenses for distribution center		—		1,553		935		3,086
Sales commissions		—		17,349		14,486		34,013
Sales advertising		—		209		29		258
Sales promotion		—		350		201		645
Sample		—		238		133		471
Sales insurance premium		—		1,493		1,086		2,934

	W	—		49,792		37,594		100,587

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

27. Finance Income and Costs

Details of finance income and costs for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month period ended June 30					For the six-month period ended June 30
(in millions of Won)	2022		2021			2022		2021
Finance income
Interest income(*1)	W	29,674		32,727			78,852		65,651
Dividend income		—		179,372			—		431,642
Gain on foreign currency transactions		3,673		59,796			48,236		156,924
Gain on foreign currency translations		14,542		(7,822	)		51,812		41,024
Gain on valuation of derivatives		—		(13,572	)		21,631		120,568
Gain on transactions of derivatives		—		16,503			194		18,351
Others		88,711		3,462			106,188		5,580

	W	136,600		270,466			306,913		839,740

Finance costs
Interest expenses	W	—		38,601			24,469		85,908
Loss on foreign currency transactions		1,725		94,889			41,577		168,604
Loss on foreign currency translations		922		(47,324	)		77,335		145,301
Others		317		(3,648	)		9,901		1,463

	W	2,964		82,518			153,282		401,276

(*1)	Interest income calculated using the effective interest method for the six-month periods ended June 30, 2022 and 2021 wereW 11,966 million andW 7,227 million, respectively.

28. Other Non-Operating income and expenses

Details of other non-operating income and expenses for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


	For the three-month period ended June 30				For the six-month period ended June 30
(in millions of Won)	2022		2021		2022		2021
Other non-operating income
Gain on disposals of property, plant and equipment	W	—		2,917		5,443		5,687
Gain on disposals of subsidiaries, associates and joint ventures		3,358		—		3,358		—
Gain on disposals of assets held for sale		—		44,946		2,706		45,736
Premium income		—		2,017		8		2,304
Reversal of other provisions		489		2,052		489		2,052
Others(*1)		2,136		24,712		9,347		56,112

	W	5,983		76,644		21,351		111,891

Other non-operating expenses
Loss on disposals of property, plant and equipment	W	—		22,514		18,281		46,270
Impairment loss on property, plant and equipment		—		—		3		3,113
Impairment loss on investment in subsidiaries, associates and joint ventures		—		—		—		1,500
Donations		—		123		19		2,127
Impairment loss on intangible assets		—		—		—		7,180
Others		450		19,601		8,904		34,245

	W	450		42,238		27,207		94,435

(*1)	During the six-month period ended June 30, 2021, the Company recognizedW48,771 million of non-operating income for refund of other than corporate tax as a result of administrative litigation for tax audits.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

29. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses, and other non-operating expenses in the statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows (excluding finance costs and income tax expenses):


	For the three-month period ended June 30					For the six-month period ended June 30
(in millions of Won)	2022		2021			2022			2021
Changes in inventories(*1)	W	—		(169,269	)		(3,222	)		(385,845	)
Raw materials and consumables used		—		5,419,575			4,881,888			10,115,533
Employee benefits expenses		15,490		441,312			365,606			904,633
Outsourced processing cost		—		620,482			429,841			1,209,505
Depreciation(*2)		2,759		573,418			387,645			1,146,592
Amortization		163		27,667			16,816			54,868
Electricity and water expenses		—		87,612			80,909			159,467
Service fees		8,565		61,386			51,401			113,519
Rental		414		19,438			19,684			44,170
Advertising		5,942		15,985			20,506			28,829
Freight and custody expenses		—		238,873			207,320			439,675
Sales commissions		—		17,349			14,486			34,013
Loss on disposals of property, plant and equipment		—		22,514			18,281			46,270
Other expenses		33,222		335,150			311,878			580,371

	W	66,555		7,711,492			6,803,039			14,491,600

(*1)	Changes in inventories are the changes in product, semi-finished products and by-products.

(*2)	Includes depreciation of investment property.

30. Income taxes

The effective tax rates of the Company for the six-month periods ended June 30, 2022 and 2021 were 194.71% and 27.62%, respectively.

The Company’s vertical spin-off meets the requirements for qualified spin-off under the Corporate Tax Act. Accordingly, transfer gains ofW8,292,895 million under the Corporate Tax Act were incurred for the net asset transferred to the newly established company (POSCO), and the Company simultaneously set a provision for accelerated depreciation on the transfer gains and recognized deferred tax liabilities ofW2,240,232 million.

Deductible temporary differences related to the investment in newly established company which is caused by transfer gains under the Corporate Tax Act were not recognized as deferred tax assets, since it is not probable they will reverse through disposal of the investment in subsidiary or liquidation of the newly established company. The effect of our estimation and accounting for the recoverability of temporary differences on the increase in corporate tax costs for the six-month period ended June 30, 2022 isW2,240,232 million.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

31. Earnings per Share

(a)	Basic earnings(loss) per share for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in Won, except share information)	For the three-month period ended June 30					For the six-month period ended June 30
(in Won, except share information)	2022		2021			2022			2021
Profit(loss) for the period	W	179,077,627,009		1,318,159,603,103			(1,225,149,405,107	)		2,270,335,106,310
Interests of hybrid bonds, net of tax		—		(1,662,931,506	)		(1,078,164,383	)		(3,307,589,040	)
Weighted-average number of common shares outstanding(*1)		75,849,177		75,625,572			75,779,995			75,767,898
Basic earnings(loss) per share	W	2,361		17,408			(16,181	)		29,921

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


(shares)	For the three-month period ended June 30						For the six-month period ended June 30
(shares)	2022			2021			2022			2021
Total number of common shares issued		87,186,835			87,186,835			87,186,835			87,186,835
Weighted-average number of treasury shares		(11,337,658	)		(11,561,263	)		(11,406,840	)		(11,418,937	)

Weighted-average number of common shares outstanding		75,849,177			75,625,572			75,779,995			75,767,898

(b)	Diluted earnings(loss) per share for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


(in Won, except share information)	For the three-month period ended June 30						For the six-month period ended June 30
(in Won, except share information)	2022			2021			2022			2021
Profit(loss) for the period	W	179,077,627,009			1,318,159,603,103			(1,225,149,405,107	)		2,270,335,106,310
Interests of hybrid bonds, net of tax		—			(1,662,931,506	)		(1,078,164,383	)		(3,307,589,040	)
Gain or loss from exchange rate on and revaluation of exchangeable bonds		(63,561,697,501	)		—			(67,241,564,423	)		—
Adjusted weighted-average number of common shares(*1)		78,924,274			75,625,572			78,833,968			75,767,898
Diluted earnings(loss) per share	W	1,464			17,408			(16,408	)		29,921

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


(shares)	For the three-month period ended June 30				For the six-month period ended June 30
(shares)	2022		2021		2022		2021
Weighted-average number of common shares outstanding		75,849,177		75,625,572		75,779,995		75,767,898
Weighted-average number of potential common share		3,075,097		—		3,053,973		—

Adjusted weighted-average number of common shares		78,924,274		75,625,572		78,833,968		75,767,898

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

32. Related Party Transactions

(a)	Significant transactions with related companies for the six-month periods ended June 30, 2022 and 2021 were as follows:

1)	For the six-month period ended June 30, 2022


(in millions of Won)	*Sales and others(1)**						*Purchase and others(2)**
(in millions of Won)	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
*Subsidiaries(3)**
POSCO	W	8,167		—		—		—		—		—		567
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		2,365		16,555		7		—		85,302		—		10,282
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		131,991		—		215		—		—		7,656		6
POSCO ICT(*4)		496		4,970		18		—		38,091		10,190		32,403
eNtoB Corporation		2		24		—		60,649		9,698		32		3,207
POSCO CHEMICAL CO., LTD		81,504		13,878		44		84,301		4,757		56,325		908
POSCO ENERGY CO., LTD.		762		—		—		6,682		—		—		3,925
POSCO MOBILITY SOLUTION		175,955		—		—		—		—		8,802		28
POSCO INTERNATIONAL Corporation		2,099,890		62,093		—		244,230		—		768		1,049
POSCO Thainox Public Company Limited		49,085		22,372		—		—		—		—		1
POSCO Canada Ltd.		—		—		139		77,703		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		32,534		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		28,790		—		—		835		—		—		16
POSCO-VIETNAM Co., Ltd.		44,617		—		283		—		—		—		—
POSCO MEXICO S.A. DE C.V.		102,635		—		203		—		—		—		—
POSCO Maharashtra Steel Private Limited		171,287		—		284		—		—		—		120
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		42,320		—		—		—		—		—		15
POSCO VST CO., LTD.		28,212		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		417		380,061		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		47,180		—		268		—		—		—		8
Others		194,327		1,716		3,527		61,471		13,042		53,139		205,528

		3,242,119		121,608		5,405		915,932		150,890		136,912		258,063

*Associates and joint ventures(3)**
SNNC		3,129		5,348		8		148,239		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		25,614		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		125,984		—		210,455		—		—		—
Others		77,244		32,440		8,041		16,485		—		—		301

		105,987		163,772		8,049		375,179		—		—		301

	W	3,348,106		285,380		13,454		1,291,111		150,890		136,912		258,364

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

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

(*3)	As of June 30, 2022, the Company provided guarantees to related parties (Note 20).

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2)	For the six-month period ended June 30, 2021


(in millions of Won)	Sales and others						Purchase and others
(in millions of Won)	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	2,796		11,037		45		—		202,735		69		13,481
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		291,173		1,706		379		—		—		17,346		431
POSCO ICT		837		4,970		22		—		94,130		20,828		90,417
eNtoB Corporation		7		—		—		136,794		21,607		21		9,603
POSCO CHEMICAL CO., LTD		128,745		11,208		10,238		226,321		5,555		147,420		2,296
POSCO ENERGY CO., LTD.		3,214		—		966		3,538		—		—		11,199
POSCO MOBILITY SOLUTION		337,690		—		—		—		—		21,405		439
POSCO INTERNATIONAL Corporation		4,222,135		54,331		—		424,428		—		541		2,839
POSCO Thainox Public Company Limited		150,184		—		—		—		—		—		20
POSCO Canada Ltd.		—		—		681		81,745		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		81,402		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		722,496		—		1		14,322		287		—		1,044
POSCO-VIETNAM Co., Ltd.		187,544		—		339		—		—		—		—
POSCO MEXICO S.A. DE C.V.		197,177		—		71		—		—		—		86
POSCO Maharashtra Steel Private Limited		377,857		—		180		—		—		—		101
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		66,647		—		—		—		—		—		—
POSCO VST CO., LTD.		96,247		—		—		—		—		—		8
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		853		746,681		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		120,944		—		110		8		—		—		10
Others		677,994		49,628		2,994		60,543		25,211		122,229		54,327

		7,665,089		132,880		16,879		1,694,380		349,525		329,859		186,301

Associates and joint ventures
SNNC		20,052		1,469		873		295,657		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		31,193		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		256,138		—		1,040,468		—		—		—
Others		22,340		18,999		4,576		47,172		—		—		19,833

		73,585		276,606		5,449		1,383,297		—		—		19,886

	W	7,738,674		409,486		22,328		3,077,677		349,525		329,859		206,187

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Significant transactions with related companies for the three-month periods ended June 30, 2022 and 2021 were as follows:

1)	For the three-month period ended June 30, 2022


(in millions of Won)	Sales and others						Purchase and others
	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO	W	6,700		—		—		—		—		—		564
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.		860		—		—		—		—		—		571
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		479		—		—		—		—		—		—
POSCO ICT		160		—		—		—		13,976		—		—
eNtoB Corporation		—		—		—		—		—		—		10
POSCO CHEMICAL CO., LTD		922		—		—		—		—		—		—
POSCO ENERGY CO., LTD.		—		—		—		—		—		—		—
POSCO MOBILITY SOLUTION		217		—		—		—		—		—		—
POSCO INTERNATIONAL Corporation		433		—		—		—		—		—		—
POSCO Thainox Public Company Limited		406		22,372		—		—		—		—		—
POSCO Canada Ltd.		—		—		—		—		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		111		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		—		—		—		—		—		—		—
POSCO-VIETNAM Co., Ltd.		848		—		230		—		—		—		—
POSCO MEXICO S.A. DE C.V.		207		—		187		—		—		—		—
POSCO Maharashtra Steel Private Limited		616		—		218		—		—		—		—
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		—		—		—		—		—		—		—
POSCO VST CO., LTD.		306		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		—		—		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		162		—		208		—		—		—		—
Others		4,754		753		2,353		—		—		—		6,044

		17,181		23,125		3,196		—		13,976		—		7,189

Associates and joint ventures
SNNC		7		—		—		—		—		—		—
POSCO-SAMSUNG-Slovakia Processing Center		—		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		35,596		—		—		—		—		—
Others		521		23,823		4,668		—		—		—		—

		528		59,419		4,668		—		—		—		—

	W	17,709		82,544		7,864		—		13,976		—		7,189

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2)	For the three-month period ended June 30, 2021


(in millions of Won)	Sales and others						Purchase and others
(in millions of Won)	Sales		Dividends		Others		Purchase of material		Purchase of fixed assets		Outsourced processing cost		Others
Subsidiaries
POSCO ENGINEERING & CONSTRUCTION CO.,LTD.	W	1,182		—		13		—		113,873		9		7,018
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		167,747		—		51		—		—		9,899		270
POSCO ICT		390		—		2		—		59,840		10,122		40,995
eNtoB Corporation		3		—		—		76,604		11,960		7		5,096
POSCO CHEMICAL CO., LTD		70,786		—		5,166		112,256		4,166		73,125		870
POSCO ENERGY CO., LTD.		2,454		—		277		1,409		—		—		5,594
POSCO MOBILITY SOLUTION		188,917		—		—		—		—		10,711		233
POSCO INTERNATIONAL Corporation		2,323,778		—		—		258,276		—		194		2,303
POSCO Thainox Public Company Limited		89,311		—		—		—		—		—		—
POSCO Canada Ltd.		—		—		190		46,949		—		—		—
Qingdao Pohang Stainless Steel Co., Ltd.		40,454		—		—		—		—		—		—
POSCO JAPAN Co., Ltd.		364,525		—		—		6,721		283		—		564
POSCO-VIETNAM Co., Ltd.		106,634		—		—		—		—		—		—
POSCO MEXICO S.A. DE C.V.		104,386		—		37		—		—		—		86
POSCO Maharashtra Steel Private Limited		209,005		—		96		—		—		—		12
POSCO(Suzhou) Automotive Processing Center Co., Ltd.		38,135		—		—		—		—		—		—
POSCO VST CO., LTD.		39,839		—		—		—		—		—		—
POSCO INTERNATIONAL SINGAPORE PTE LTD.		—		—		243		396,110		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		55,412		—		61		—		—		—		—
Others		336,259		29,916		1,285		25,827		15,459		61,247		33,353

		4,139,217		29,916		7,421		924,152		205,581		165,314		96,394

Associates and joint ventures
SNNC		12,539		—		299		143,898		—		—		53
POSCO-SAMSUNG-Slovakia Processing Center		18,544		—		—		—		—		—		—
Roy Hill Holdings Pty Ltd		—		140,062		—		553,493		—		—		—
Others		13,503		7,422		3,214		25,449		—		—		10,660

		44,586		147,484		3,513		722,840		—		—		10,713

	W	4,183,803		177,400		10,934		1,646,992		205,581		165,314		107,107

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(c)	The related account balances of significant transactions with related companies as of June 30, 2022 and December 31, 2021 are as follows:

1)	June 30, 2022


(in millions of Won)	Receivables						Payables
(in millions of Won)	Trade accounts and notes receivable		Others		Total		Accounts payable		Others		Total
Subsidiaries
POSCO	W	—		1,370		1,370		—		14,663		14,663
POSCO ENGINEERING & CONSTRUCTION CO., LTD.		2,658		—		2,658		621		—		621
POSCO STEELEON Co., Ltd. (formerly, POSCO COATED & COLOR STEEL Co., Ltd.)		255		—		255		—		—		—
POSCO ICT		54		—		54		—		917		917
eNtoB Corporation		—		—		—		11		—		11
POSCO CHEMICAL CO., LTD		531		—		531		—		5,086		5,086
POSCO ENERGY CO., LTD.		134		—		134		—		1,593		1,593
POSCO MOBILITY SOLUTION		180		—		180		—		—		—
POSCO INTERNATIONAL Corporation		299		—		299		—		502		502
Qingdao Pohang Stainless Steel Co., Ltd.		98		—		98		—		—		—
POSCO Maharashtra Steel Private Limited		418		1,237		1,655		—		—		—
POSCO ASSAN TST STEEL INDUSTRY		85		1,120		1,205		—		—		—
PT. KRAKATAU POSCO		427		16,475		16,902		—		—		—
Others		4,009		3,012		7,021		2,185		3,335		5,520

		9,148		23,214		32,362		2,817		26,096		28,913

Associates and joint ventures
SNNC		38		—		38		—		—		—
Roy Hill Holdings Pty Ltd		35,596		—		35,596		—		—		—
FQM Australia Holdings Pty Ltd		—		203,803		203,803		—		—		—
Others		12,470		22,723		35,193		—		—		—
										��
		48,104		226,526		274,630		—		—		—

	W	57,252		249,740		306,992		2,817		26,096		28,913

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

2)	December 31, 2021


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

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

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

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

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

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(d)	For the six-month periods ended June 30, 2022 and 2021, details of compensation to key management officers were as follows:


(in millions of Won)	June 30, 2022		June 30, 2021
Short-term benefits	W	32,995		21,991
Long-term benefits		—		2,956
Retirement benefits		3,978		6,938

	W	36,973		31,885

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

33. Commitments and Contingencies

(a)	Commitments

As of June 30, 2022, the Company entered into commitments with KOREA ENERGY AGENCY for long-term foreign currency borrowing, which is limited up to the amount of USD 4.12 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowing depends on the success of the project. The Company is not liable for the repayment of full or part of the money borrowed if the respective project fail. The Company has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of June 30, 2022, the ending balance of the borrowing amounts to USD 1.02 million.

The Company has provided a supplemental funding agreement, as the largest shareholder, as requested from the creditors, including Norddeutsche Landesbank, for seamless funding to the construction of new power plant by POSCO ENERGY CO., LTD.

The Company has deposited 3,075,569 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of June 30, 2022.

(b)	As of June 30, 2022, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral for long-term foreign currency borrowings.

(c)	Litigation in progress

The Company is involved in 4 lawsuits for compensatory damage amounted toW10.1 billion as defendant as of June 30, 2022. However, the Company has not recognized any provisions for the lawsuit since the Company does not believe it has a present obligation as of June 30, 2022.

(d)	The Company is jointly liable for guarantees of indebtedness (including financial guarantee contracts) before the spin-off date of POSCO.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

34. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the six-month periods ended June 30, 2022 and 2021 were as follows:


(in millions of Won)	June 30, 2022			June 30, 2021
Trade accounts and notes receivable, net	W	(439,323	)		(1,225,365	)
Other accounts receivable		(3,517	)		(304	)
Accrued revenues		(2,129	)		948
Inventories		354,262			(1,225,946	)
Prepaid expenses		(41,207	)		(13,783	)
Other current assets		(3,616	)		(559	)
Long-term guarantee deposits		17			265
Derivative assets		5,781			(3,575	)
Other non-current assets		129			(18,359	)
Trade accounts and notes payable		(417,714	)		53,076
Other accounts payable		(88,071	)		(99,328	)
Accrued expenses		(58,100	)		28,984
Advances received		(3,192	)		4,484
Withholdings		(5,972	)		4,214
Unearned revenue		(2,392	)		11,387
Other current liabilities		(10,902	)		(20,395	)
Derivative liabliities		—			8,572
Payments of severance benefits		(58,317	)		(87,606	)
Plan assets		51,373			72,901
Other non-current liabilities		(290	)		1,085

	W	(723,180	)		(2,509,304	)

35. Spin-off

(a)	On March 1, 2022, the Company executed the spin-off for the purpose of production and sales of steel rolled products and plates, and established a new wholly owned subsidiary with the name of POSCO.


		Details

Method		Vertical Spin-off

Related Entities		POSCO HOLDINGS INC. (surviving company after the spin-off)

		POSCO (newly established entity for the spin-off)

Board of Directors date		December 10, 2021

Approval date of shareholders’ meeting		January 28, 2022

Effective spin-off date		March 1, 2022

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(b)	Assets and liabilities transferred to the newly established company through spin-off and its value

Assets and liabilities were carried over to the newly established company as specified in the spin-off plan approved by the shareholders on January 28, 2022. Changes in assets and liabilities related to the division, which occur as a result of operations until the spin-off date, were adjusted.

①

Assets and liabilities transferred to the newly established company were measured at their carrying amount prior to the spin-off.

②

Among the deferred tax assets (liabilities) related to the transferred assets and liabilities, only those items that can be transferred under the Corporate Tax Act were transferred to the newly established company.

(d)	Rights and obligations transferred to the newly established company

Active and passive assets, other rights and obligations including rights and obligations under public law, and factual relations with monetary value (including licensing, labor relations, contract relations, litigation and others), which are related to the business subject to divide, are carried over to the newly established company. Otherwise, it is carried over to the surviving company.

(e)	Obligations of the Company as a result of the spin-off

Pursuant to Article 530-3(1) of the Commercial Code of the Republic of Korea, the spin-off shall be approved by the special resolution at the shareholders’ meeting. The surviving company and the newly established company are jointly liable for the liabilities of the Company before the spin-off date under Article 530(9)(1) of the Commercial Code of the Republic of Korea.

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

(f)	Details of assets and liabilities transferred to the newly established company as of the spin-off date are as follows:


(in millions of Won)	March 1, 2022
Assets
Cash and cash equivalents	W	1,910,211
Trade accounts and notes receivable, net		6,469,413
Other receivables, net		477,252
Other short-term financial assets		3,589,789
Inventories		7,268,929
Assets held for sale		24,250
Other current assets		96,266

Total current assets		19,836,110

Long-term trade accounts and notes receivable, net		5,374
Other receivables, net		81,731
Other long-term financial assets		184,487
Investments in subsidiaries, associates and joint ventures		236,174
Investment property, net		12,933
Property, plant and equipment, net		19,409,737
Intangible assets, net		527,400
Defined benefit assets, net		98,320
Other non-current assets		34,232

Total non-current assets		20,590,388

Total assets	W	40,426,498

Liabilities
Trade accounts and notes payable	W	2,042,473
Short-term borrowings and current installments of long-term borrowings		2,994,566
Other payables		956,789
Other short-term financial liabilities		3,534
Provisions		70,000
Other current liabilities		126,904

Total current liabilities		6,194,266

Long-term borrowings, excluding current installments		4,127,763
Other payables		395,278
Long-term provisions		37,505
Deferred tax liabilities		26,926
Other non-current liabilities		3,698

Total non-current liabilities		4,591,170

Total liabilities		10,785,436
Equity
Hybrid bonds		199,384

Total equity		199,384

Total liabilities and equity	W	10,984,820

Net assets transferred (Investment in subsidiary)	W	29,441,678

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of June 30, 2022

(Unaudited)

36. Events after the reporting period

(a)	Pursuant to the resolution of the Board of Directors on August 12, 2022, the Company decided to pay interim cash dividends ofW 4,000 per common share (total dividend:W 303.4 billion).

(b)	Pursuant to the resolution of the Board of Directors on August 12, 2022, the Company decided the cancellation of 2,615,605 treasury shares (total cancellation amount:W 567.5 billion).

POSCO (PKX) 6-KCurrent report (foreign)