Equibles

6-K

POSCO HOLDINGS INC. (PKX)

6-K 2023-12-07 For: 2023-12-07
View Original
Added on April 08, 2026
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OFFOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR15D-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of December, 2023

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

(Address of principal executive offices)

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  ☐

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

Exhibit 99.1: An English-language translated documents of POSCO HOLDINGS INC.’s 3Q Quarterly Report for the year 2023.

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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: December 7, 2023 By /s/ Han, Young-Ah
(Signature)
Name:  Han, Young-Ah
Title:    Senior Vice President
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Exhibit 99.1

LOGO

QUARTERLY REPORT

(From January 1, 2023 to September 30, 2023)

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

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

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QUARTERLY REPORT

(From January 1, 2023 to September 30, 2023)

To: Korean Financial Services Commission and Korea Exchange
/s/ Jeong, Ki-Seop
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Jeong, Ki-Seop
President and Representative Director
POSCO HOLDINGS INC.
6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do,<br>Korea
Telephone: +82-54-220-0114
/s/ Han, Young-Ah
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Han, Young-Ah
Head of IR team, Senior Vice President
POSCO HOLDINGS INC.
6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do,<br>Korea
Telephone: +82-054-220-0114

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TABLE OF CONTENTS

I. Overview 4
II. Business 7
III. Financial Statements 38
Attachment: Independent auditors’ review reports on consolidated and separate financial statements<br>
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I. OVERVIEW

1. Company Overview

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.

2. Business Organization

A. Highlights of the Company’s Business Organization

(1) Name of the Enterprise Group : POSCO HODLINGS INC.
(2) Location of the Headquarters : 6261 Donghaean-ro (Goedong-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea
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(3) Summary of consolidated subsidiaries
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(Number of companies)
--- --- --- --- --- --- --- --- --- --- ---
Number of consolidated subsidiaries Number of<br>major subsidiaries
Jan 1, 2023 Increase Decrease September 30,<br>2023
Listed 6 — — 6 6
Unlisted 174 12 4 182 80
Total 180 12 4 188 86
* The number of consolidated companies above does not include POSCO HOLDINGS
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* Among listed corporations, there is one overseas corporation
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(5 domestic corporations and 1 overseas corporation).

* Newly included : QSONE Co.,Ltd., POSCO PS Tech, POSCO PR Tech, POSCO PH Solution, POSCO GYS Tech, POSCO GYR<br>Tech, POSCO GY Solution, PT AGPA REFINERY COMPLEX        , Port Hedland Green Steel Pty Ltd, POSCO MOBILITY SOLUTION POLAND Sp. z o.o., PCC Facilities Component Fund, PT POSCO INTERNATIONAL ENP INDONESIA<br>
* Excluded subsidiaries : POSCO Energy, POS-CD PTY LTD, POSCO ICT BRASIL,<br>PGSF, L.P.
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(4) Major Shareholders of POSCO HOLDINGS INC.
(a) Since January 30, 2007, National Pension Service holds the largest number of common shares of POSCO<br>HOLDINGS INC.
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(As of September 30, 2023)
--- --- --- --- --- --- --- --- --- ---
Major Shareholder Share type Dec 31, 2022 September 30, 2023
Number of<br>Shares owned Percentage of<br>ownership (%) Number of<br>Shares owned Percentage of<br>ownership (%)
National Pension Service Common stock 7,706,725 9.11 6,135,482 7.25
* The percentage of ownership is based on the total number of issued shares, and there is no ownership of shares<br>by related parties.
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(b) For further reference, please refer to the public disclosures of changes in common shares of the largest<br>shareholder on Financial Supervisory Service website (http://dart.fss.or.kr)
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3. Other Information Regarding Shares

A. Total Number of Shares

(As of September 30, 2023)
Authorized Shares Issued Shares
200,000,000 84,571,230
Currency of the Republic of Korea is Korean Won (“KRW”).
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Par Value: KRW 5,000 per share
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B. Treasury Stock Holding and Cancellation

(As of September 30, 2023)

Method of Purchase Type Beginning<br>Balance Increased Decreased Cancelled Ending<br>Balance
Direct Common Stock 5,406,179 — 27,030 — 5,379,149
Trust Contract 3,315,874 — — — 3,315,874
Total 8,722,053 — 27,030 — 8,695,023
* The number of treasury stock has decreased from 8,722,053 to 8,695,023 due to provision of stock grant to the<br>executive officers of POSCO Holdings and subsidiaries
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* Aforementioned number of treasury stocks includes 3,211,795 treasury stocks which are subject to the exchange<br>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.<br>

4. Earnings and Dividends

(In millions of KRW)
2023.3Q 2022 2021
(Consolidated) Profit* 1,904,353 3,144,087 6,617,239
(Separate) Profit 885,431 -467,852 5,181,227
Earnings per Share (Consolidated, KRW) 25,101 41,456 87,330
Cash Dividend Paid 569,072 910,190 1,285,635
Pay-out Ratio (Consolidated,%) 29.9 28.9 19.4
Dividend per Share (KRW) 7,500 12,000 17,000
Dividend Yield (%) 1.3 4.1 6.0
* (Consolidated) Profit : Profit attributable to owners of the controlling company
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Notice of change as of the reporting date
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On November 3, 2023 at the Board of Directors meeting, POSCO HOLDINGS INC. resolved to pay cash dividend of the 3^rd^ quarter for the fiscal year 2023 as follows:

Cash Dividend per Share (KRW) 2,500
Dividend Yield (%) 0.4
Record Date September 30, 2023
Provisional Dividend Payment Date November 23, 2023
Total Cash Dividend Amount (KRW) 189,690,517,500

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II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into six segments:

Steel segment, Green Infrastructure (Trading segment), Green Infrastructure (Construction segment),

Green Infrastructure (Logistics and etc. segment), Green Materials and Energy, and Others.

B. Summary of Financial Status of Segment

(In millions of KRW)
Business Segment 2023.3Q 2022 2021
Sales Operating<br>Income (Loss) Sales Operating<br>Income (Loss) Sales Operating<br>Income (Loss)
Steel 48,119,360 2,211,116 70,649,647 3,236,220 63,548,935 8,365,445
Green Infrastructure (Trading) 32,621,768 938,816 49,589,760 872,279 45,290,449 619,675
Green Infrastructure (Construction) 7,472,996 166,399 8,885,491 293,344 7,412,514 428,669
Green Infrastructure (Logistics and etc.) 2,802,565 135,732 7,425,508 377,919 2,914,400 195,474
Green Materials and Energy 3,668,319 7,806 3,388,760 143,452 2,089,162 112,641
Others 1,346,963 1,034,184 1,169,536 843,682 1,784,321 59,252
Total 96,031,971 4,494,053 141,108,702 5,766,896 123,039,781 9,781,156
* It is based on aggregated basis including internal transactions among affiliates .
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* Since POSCO Energy has been merged into POSCO International as of January 2023, the performance of POSCO Energy<br>prior to the merger has been included into Green Infrastructure (Logistics and etc.).
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2. Business Status of Segments

A. Steel

There are 83 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 ofBusiness

POSCO produces steel materials such as hot rolled, cold rolled and stainless steel at Pohang Steelworks and Gwangyang Steelworks which is the largest steel mill in the world.

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.

Despite of expected demand increase from reopening in the first half of 2023, the demand turned weaker after 3rd quarter due to prolonged global economic uncertainty so that global crude steel production from January to September 2023 recorded 1,406 million tons which is similar to the same period last year

Global Crude Steel Production

(Millions of Tons, %)
Crude Steel Production 2020 2021 2022 2023.3Q
Global 1,864 1,951 1,832 1,406
Korea<br><br><br>(Ratio) 67<br> <br>(3.6 %) 71<br> <br>(3.6 %) 66<br> <br>(3.6 %) 50<br> <br>(3.6 %)
Source: World Steel Association (www.worldsteel.org)
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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.

POSCO aims to maintain its competitive edge in the domestic market by strengthening long-term partnerships with key and leading customers and responding to global protectionism based on comprehensive response systems such as marketing, R&D, technology services, and production. In addition, we are expanding steel processing centers to meet the needs of global front industries such as automobiles, shipbuilding, home appliances, and construction, while strengthening our global sales network by operating steel production bases Indonesia(upstream) and India(cold-rolling mills).

The company plans to upgrade its customer and market structure by expanding its high value-added World Top Premium products, while responding to customers’ diverse needs by launching an eco-friendly product line Greenate and developing hydrogen-reduced steel HyREX technology in line with the global low-carbon trend.

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

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sale is 55% of total sales and export sales are around 45%, and by export region, the proportion of Southeast Asia, Japan, Europe and China 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 continues to strive to strengthen 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 is promoting great transformation from current steelmaking process to a low-carbon, eco-friendly process.

Second, POSCO will complete establishing ‘intelligent Smart mill’

Third, POSCO will upgrade portfolio for ‘premium product competitiveness’. In order to proactively respond to the increasing customer demand of eco-friendly products and expand the development of high-end products and Green transition solutions, POSCO launched three green steel brands that are : INNOVILT, e Autopos, and Greenable. In November 2022, Greenate which is a masterbrand representing POSCO’s “net-zero carbon 2050 was newly launched. Greenate is a brand that encompasses all departmental efforts and products for producing low-carbon, eco-friendly steel in the process of converting to eco-friendly EV battery materials and hydrogen-reduced steel, as well as the three major eco-friendly steel brands represented by e Autopos, INNOVILT, and Greenable. POSCO Group plans to systematically communicate its efforts and achievements to achieve 2050 carbon neutrality internally and externally with Greenate. In addition, in June 2023, the nation’s first carbon-reduced distributed steel product “Greenate certified steel” was launched, and we plans to launch Greenate carbon reduced steel(EAF Type) in 2026, which combines steel produced in furnace and electric furnace steel to reduce furnace usage.

Lastly, POSCO has been strengthening ESG oriented management. POSCO, As an unlisted company, has no obligation to establish special committee under the board of directors, but it has not only established an ESG committee to strengthen its external communication with interested parties but also established an audit committee to support ESG governance.

(2) Market Share

(Millions of Tons, %)
Category 2023.3Q 2022
Production Market share Production Market share
Crude Steel Production 50.4 100 % 65.9 100 %
POSCO 26.7 52.9 % 34.2 51.9 %
Others 23.7 47.1 % 31.7 48.1 %
Source: World Steel Association (www.worldsteel.org)
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∎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

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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 case of steel products packaging, POSCO M-TECH continuously develops packaging machines and materials. The cost competitiveness of its steel packaging business has strengthened by reducing packaging materials and developing technology to improve packaging quality. The steel packaging business has enhanced cost competitiveness by reducing packaging materials and improving packaging quality, while the packaging equipment business has focused on developing automation equipment for packaging.

(2) Business Areas

Business Areas Major Goods and Services Major Customer
Steel raw material business Aluminum deoxidizer pellets, mini pellets, ingots and etc. POSCO
Steel product packaging business Steel packaging service, maintenance of packaging facilities and etc.
Engineering business Steel Packaging Engineering, Mechanical Equipment and etc.
Consignment operation business Ferromanangan factory and etc.

(3) Market Share

(Tons)

Category 2023.3Q 2022 2021
Sales Volume Market share Sales Volume Market share Sales Volume Market share
POSCO M-TECH 23,202 39.6 % 31,245 44.0 % 34,846 49.0 %
PJ Metal 34,560 60.4 % 39,700 56.0 % 36,257 51.0 %
Total 57,762 100.0 % 70,945 100.0 % 71,103 100.0 %
It is difficult to calculate exact market share of Aluminum deoxidizers as total production and sales volume of<br>the domestic market are not counted.
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B. Green Infrastructure [Trading segment]

There are 39 subsidiaries in trading segment including POSCO International, 26 subsidiaries in construction segment including POSCO E&C and 12 subsidiaries of logistics and etc. segment including POSCO Flow.

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∎POSCO INTERNATIONAL

(1) Market Share

(Millions of US Dollars)
Category 2023.3Q 2022.3Q Growth Rate
All Trading Companies in Korea 464,278 524,536 -11.49 %
POSCO International Corp. 7,022 7,752 -9.42 %
Source: Korea International Trade Association (www.kita.net)
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(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.

[Global Business Sector]

- Trading business : POSCO International has not only been securing stable supply line in steel business<br>but also been actively developing and expanding new businesses such as secondary battery business, agro-commodities, and industrial materials based on the know-how accumulated over a long period of time in the<br>traditional trading business and through its vast overseas networks. POSCO International is also carrying out agro-commodities trading and food resource development projects in order to secure sustainable future food resources. As a result, the<br>company has diversified its sales outlets in Korea, China, Southeast Asia, and MENA, while expanding food import volume.
- Motor core business: Together with POSCO Mobility Solution which is a subsidiary of POSCO International,<br>POSCO International started engaging into motor core business for EV. It is expected to expand motor core production to 7 million by 2030.
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- Palm farm in Indonesia: POSCO International is developing a palm plantation in Indonesia and gradually<br>expanding sales by establishing a local palm oil production system. In December 2022, another CPO (Crude Palm Oil) mill, enabling the production of approximately 250,000 tons of CPO annually is newly established, and the company is pursuing<br>environmentally friendly palm farming through RSPO certification.
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- Grain Terminal in Ukraine : In 2019, POSCO International acquired a 75% stake in a Ukrainian grain<br>export terminal capable of shipping 2.5 million tons annually, making us the first Korean company to enter the Ukrainian grain terminal business. Although operations have been suspended due to the Russia-Ukraine conflict, POSCO International is<br>gradually resuming operations as the situation gets better.
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- Textile Business in Uzbekistan

POSCO International Textile in Uzbekistan has 4 manufacturing factories located in the city of Fergana, the villages of Tashlak, Kumtepa and a branch in the city of Bukhara. In order to secure raw cotton procurement and enhance the competitiveness of the cotton business, the raw cotton cluster project is planned to continue to be expanded.

- Online Steel Sales Business

POSCO International has established eSTEEL4U which is an online platform for steel sales in April 2022. The company will lead the digital transformation of steel sales by strengthening the cooperation system with partners to improve customer service satisfaction and continuously expanding online sales volume.

- Ambatovy Nickel Mine Project : POSCO International has been participating in the Ambatovy Nickel Mine<br>Project, the world’s third-largest nickel mine in the mineral resource development project with a 3.9% stake. In addition, POSCO International is searching for new opportunities in EV battery material business.
- Australian Narrabri bituminous coal mining project
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POSCO International has 5% stake in the Australian Narabri Coal Production Project, which began commercial production in October 2012, producing about 6 million tonnes of bituminous coal per year.

- Myanmar hotel business : POSCO INTERNATIONAL AMARA Co., Ltd., located in Yangon, Myanmar, owns the Lotte<br>Hotel Yangon in Myanmar. The Lotte Hotel Yangon currently consists of 343 hotel rooms and 315 residences for long-term stay guests. Since its opening in September 2017, the hotel has been in operation under a<br>10-year hotel management contract with Hotel Lotte.

[Energy Sector]

The company has classified its business units into the energy sector, including the Gas Business Unit, Energy Project Development Unit, Energy Infrastructure Unit, and domestic and overseas investment corporations related to power generation such as SENEX Energy.

- Myanmar Gas Field business : Since its production of the first gas in July 2013, gas fields supplies an<br>average of approximately 500 million standard cubic feet of gas per day. In addition, through the second phase of development undertaken to maintain stable gas production, the addition of seven gas production wells was successfully completed in<br>August 2022, maintaining a production capacity system of up to 600 million cubic feet per day.
- LNG Business : The company began LNG trading in 2017 based on Its expertise in developing international<br>energy sources, specialty in trading, and the LNG demand of POSCO Group. In 2023, POSCO international merged with POSCO Energy and obtained an additional value chain across all aspects of the LNG business, from LNG import terminals to generation.<br>
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- Onshore gas business in Australia : To execute the group’s carbon neutrality and hydrogen business<br>strategies in a timely manner and expand its existing energy business centered in Myanmar, the company has acquired Senex Energy Limited in Australia. Senex Energy Limited is an energy company located in Brisbane on the east coast of Australia,<br>producing gas from onshore oil and gas fields in eastern Australia for domestic and overseas customers. Recognizing the rising gas demand and high gas prices in the east coast of Australia, the company has launched additional development projects<br>with a targeted three-fold increase in gas production by 2025.
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[New business investment]

In addition, POSCO International is searching for new opportunities in four new growth businesses areas which include smart farm, green materials, green mobility and hydrogen.

B. Green Infrastructure [Construction segment]

∎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. According to the government’s policy to strengthen regional competitiveness, the construction of regional hubs such as Gadeokdo New Airport, Daegu Gyeongbuk New Airport, and Jeju 2nd Airport will begin, and the road network expansion project such as the Seoul Metropolitan Railway (GTX) will continue to connect major metropolitan areas. It is expected that more favorable overseas construction market would be created for the domestic construction companies as demand of infrastructure development is increasing in Asia, Middle East, Americas as well as in Europe.

Housing demand is shrinking after a sharp rate hike, and number of unsold households are increasing around areas where supply has been concentrated. Recently, concerns have been growing that new orders will shrink as funding has been suspended due to the financial market crunch. Housing market conditions rapidly deteriorated due to sudden interest rate increases, rising construction costs, and a slump in the construction PF market. In terms of overseas market, domestic construction companies have entered Southeast Asia, where urbanization is actively underway, but for now, construction companies’ risk management is expected to be the top priority due to growing economic uncertainties around the world.

B. Green Infrastructure [Logistics and etc. segment]

∎POSCO DX

POSCO DX has both IT and OT technologies and has secured competitiveness in its manufacturing-based business on the convergence of IT and OT technologies. When domestic ICT market size is estimated to be KRW 39 trillion, POSCO DX is expected to take about 3.0% of domestic ICT market share (ICT market for local corporates only). POSCO DX will continue to adopt POSCO Group’s capabilities in digital transformation, logistics automation, and industrial robot system engineering businesses to create new success stories for sustainable growth even in business environments lots of uncertainties. Based on POSCO Group’s One IT strategy, POSCO DX is expecting to add value by developing IT infrastructure and strengthening the competitiveness of Smart Factory business.

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The experiences operating POSCO’s Smart Factory based on big data, IoT and AI-based platform, led the company to have a strength in the area of continuous and automation process. With its experiences in POSCO’s smart factory construction, POSCO DX is planning to support the mass production system of EV battery materials. In addition, POSCO DX will expand the logistics automation business market with the successful completion of the logistics business in progress. While diversifying logistic business sectors POSCO DX will actively participate new airport BHS project and contribute to the groups’ advancement of the group’s logistic system.

C. Green Materialsand Energy

Green Materials and Energy segment include the business related to EV battery materials, such as lithium, nickel, cathode material, anode material, and recycling, and there are a total of 16 subsidiaries, including POSCO Future M and POSCO Argentina.

∎POSCOFuture M

POSCO Future M **** operates mainly 2 businesses: basic material business and energy material business.

[Basic industrial materials business]

- Refractory production : Refractories maintain their chemical properties and strength even at high<br>temperatures making them indispensable materials for industrial facilities including the furnaces in steelworks and petrochemical plants. In the refractory business, POSCO Future M produces and maintains refractories. In order to keep price<br>competitiveness in the domestic market, the company has expanded its business to China.
- Lime business : In the quicklime & chemical business, POSCO Future M is currently doing<br>consignment operation of cokes plants where purify coke oven gas (COG) in Pohang and Gwangyang. With the chemical products generated in during the purification process, POSCO Future M operates cokes business.
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[Energy material business]

In the energy material business, POSCO Future M provides cathode and anode materials which are the main components for secondary cell: cathode, anode, electrolyte and separation membrane. It is planned to expand its production of natural graphite anode materials from 74 thousand ton/year in 3Q 2023 to 182 thousand ton/year in 2030. In addition, artificial graphite production is expected to have a production capacity of 168 thousands ton/year in total by 2025. Furthermore, cathode material production is expected to increase from 105 thousands ton/year to 1,000 thousands ton/year by 2030. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously.

According to the battery market research company SNE Research, LG Energy Solution, our major revenue source, recorded the 3rd highest global market share (12.3%) in EV batteries as of 2022, indicating a decrease compared to the previous year. However, battery usage continues to show steady growth with a 9.7% increase compared to the same period last year. Along with this growth, in April 2023, POSCO Future M also signed a

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long-term contract worth approximately KRW 30 trillion for cathode materials. Furthermore, POSCO Future M has recently diversified the sales sources including Samsung SDI and plan to supply approximately 40 trillion won worth of cathode materials (NCA) over the next 10 years.

The secondary battery market for electric vehicles is expected to grow due to China’s strong electric vehicle industry development policy, European CO2 emission regulations, and global OEMs’ proportion of electric vehicle.

POSCO Group has established full battery material value chain from raw materials business to battery materials and recycling business. As the only domestic producer of graphite-based anode materials, which are considered to have the highest degree of difficulty in achieving independence from Chinese imports, POSCO Future M is expected to expand its sales revenues in working with global automakers and battery producers.

In specific, POSCO Future M established a joint venture (Ulium CAM) with GM in August 2022 to begin construction of high nickel cathode plant in Canada with a production capacity of a 30 thousand ton per year.

It is planned to be completed in the second half of 2024 and to start production in the first half of 2025. In addition, for lithium, which is a raw material for anode materials, POSCO HOLDINGS (the largest shareholder of POSCO Future M) plans to establish a 71 thousand tons production system in 2024 through investment in Argentine salt lakes and Australian mines and expand its production capacity to 423 thousand tons by 2030.

Considering POSCO Future M’s cathode material production capacity and lithium input amount, lithium self-sufficiency rate is expected to exceed 100% by 2030. In addition, POSCO HOLDINGS plans to establish a 240 thousand ton nickel production system by 2030 by expanding its investment in securing nickel through mining, smelting and recycling.

Global Cathode and Anode Material Market Outlook

(Ten thousand Tons)

LOGO

(SNE Research)

D. Others

In Others segment, there are 12 subsidiaries in total, including POSCO HOLDINGS. POSCO HOLDINGS is focusing on investment in new growth businesses and opportunities.

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3. Key Products

A. Sales of Key Products (2023.3Q)

(Inhundred millions of KRW, %)

BusinessArea Item Specific Use Total Sales Ratio
Steel Hot-rolled Product (HR) Steel pipe, Shipbuilding, etc. 102,117 21.2%
Cold-rolled Product (CR) Automobile, Home appliances, etc. 147,209 30.6%
Stainless Steel Products Tableware, pipes, etc. 82,772 17.2%
Others Plates, Wire rods, etc. 149,096 31.0%
Gross Sum 481,194 100.0%
Deduction of Internal Trade -174,328
Sub Total 306,866
Green Infra Trading Steel, Metal 243,190 56.7%
Chemical, Strategic Item, Energy 21,857 5.1%
Others 59,383 13.8%
Construction Architecture (Domestic) 31,924 7.4%
Plant (Domestic) 16,941 3.9%
Civil Engineering (Domestic) 8,367 2.0%
Others (Domestic) 1,400 0.3%
Overseas Construction 11,358 2.6%
Owned Construction 2,046 0.5%
Others 2,693 0.6%
Logistics and etc. Others 29,813 6.9%
Gross Sum 428,973 100.0%
Deduction of Internal Trade -181,515
Sub Total 247,458
Green Gross Sum 36,683 100.0%
Materials and Deduction of Internal Trade -7,288
Energy Sub Total 29,395
Others Gross Sum 13,470 100.0%
Deduction of Internal Trade -12,558
Sub Total 912
Total Sum 584,631

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B. Price Movement Trends of Key Products

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

BusinessSegment Products 2023.3Q 2022 2021
Steel Hot-rolled Product (HR) 984 1,105 970
Cold-rolled Product (CR) 1,165 1,293 1,035
Green Infrastructure Electric Power 215 224 98
Green Materials and Energy Refractory 1,006 1,022 913
Lime 147 117 104
Above price movement trend of steel segment in 2022 is based on the price between March 1 to<br>December 31, 2022 (HR and CR price in 3Q 2022 is 1,163 and 1,300 thousand won)
---
Construction and Logistics and etc. segments of Green Infrastructure are omitted due to its difficulties of<br>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]

(1) Criteria for Calculation

(a) Subjects for Calculation: Unit sales prices of the standard hot-rolled<br>product and cold-rolled product
(b) Calculation Method and Unit: The average price of each product based on its total sales including the freight<br>costs during the given period.
--- ---

(2) Factors of Price Changes

The company partially adjusted the price of major steel products in the second quarter, in consideration of the overall steel market, such as the delay in economic recovery due to the continued high-interest rate trend and the production of global steel companies. As the company has a high proportion of long-term contracts, the price adjustment in the second quarter is expected to be reflected in the third quarter sales.

[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<br>
--- ---

(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<br>

17

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[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<br>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.<br>
- Quicklime price is mainly influenced by utility unit price and raw materials cost. The price fluctuation of<br>quicklime is small.
--- ---
- Raw materials for energy materials are subject to price fluctuations depending on the international supply of<br>mineral resources.
--- ---

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4. Major Raw Materials

A. Current Status of Major Raw Materials

(In hundred millions of KRW)
Business Segment Type of<br>Purchase Item Specific Use Purchase<br>Amount<br>(Portion, %) Portion (%) Remarks
Raw<br>Materials Materials for<br> <br>Iron-making Iron Ore for Blast<br> <br>Furnaces 131,025 60.8 % Iron Ore, Coal
Steel Sub-materials Sub-materials for<br> <br>Iron-making,<br><br><br>Steelmaking 43,821 20.3 % Iron Material, Alloy Iron,<br> <br>Non-ferrous Metal,<br><br><br>Limestone, etc.
Stainless Steel<br>Materials Key Materials for<br> <br>STS Production 40,777 18.9 % Nickel, Ferrochrome,<br>STS Scrap Iron, etc.
Green Infrastructure Trading Raw<br>Materials LNG Material for Power<br>Generation 16,332 100.0 % —
Construction Raw<br>Materials Ready-mixed<br>Concrete Construction of<br>Structure 2,607 20.5 % —
Steel<br> <br>Reinforcement Strengthening<br>Concrete 2,618 20.6 % —
Cable Electricity<br>Transfer 146 1.2 % —
Steel Pile Foundation of<br>Structure 98 0.8 % —
Others Construction of<br>Pipe and Structure<br>etc. 7,239 57.0 % —
Logistics<br>and etc. Raw<br>Materials Others For other use 7,176 100.0 % —
Green Materials and Energy Raw<br>Materials NCM and etc. Production of<br>cathode materials 30,909 91.5 % —
Graphite and<br>etc. Production of<br> <br>anode materials 853 2.5 % —
Limestone and<br>etc. Production of<br>Lime 858 2.5 % —
Others Production of<br>refractory 1,150 3.4 % —
* Amount: CIF + customs duties + stevedoring fees + other incidental expenses
--- ---

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B. Price Movement Trends of Major Raw Materials

(In thousands of KRW)

Business Segment Category 2023.3Q 2022 2021
Steel Iron Ore(per ton) 142 143 169
Coal(per ton) 369 472 257
Scrap Iron(per ton) 532 605 563
Nickel(per ton) 29,763 33,147 21,130
Green Infrastructure Trading LNG<br><br><br>(per ton) 1,507 1,594 702
Construction Ready-mixed Concrete<br><br><br>(per m^3^) 85 77 68
Steel Pile<br><br><br>(per m) 165 180 272
Steel Reinforcement<br><br><br>(per kg) 1.0 1.0 1.0
Cable<br><br><br>(per m) 0.9 0.9 1.2
Green Materials and Energy Refractory<br><br><br>(per ton) 358 479 320
Limestone<br><br><br>(per ton) 25 22 19
Green Infrastructure (Logistics and etc. segment) and Others segment are omitted due to its difficulties of<br>measuring raw materials fluctuations. In the case of the EV battery material business, detailed descriptions are not included due to risk of information leakage
---

20

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[Steel]

Price Movement Trend of Major Raw Materials

(1) Iron Ore: Iron ore prices rose 4% quarter-on-quarter to U$106/ton in the third quarter of 2023 due to the demand for inventory stockpiling before the Chinese National Day holiday and expectations of an economic recovery from government stimulus measures.

(In US Dollars/ Tons)
‘23.3Q ‘23.2Q ‘23.1Q ‘22.4Q ‘22.3Q ‘22.2Q ‘22.1Q ‘21.4Q ‘21.3Q ‘21.2Q ‘21.1Q
106 102 118 90 94 126 132 96 148 188 158

(2) Coal: While production disruptions of some Australian mining companies led to a drop in supply, raw coal prices rose 9% quarter-on-quarter to U$264/ton in the third quarter of 2023, with continued solid demand from India/Southeast Asia.

(In US Dollars/ Tons)
‘23.3Q ‘23.2Q ‘23.1Q ‘22.4Q ‘22.3Q ‘22.2Q ‘22.1Q ‘21.4Q ‘21.3Q ‘21.2Q ‘21.1Q
264 243 344 278 250 446 488 369 264 137 127

(3) Scrap: Iron scrap prices fell 5% quarter-on-quarter to U$385/ton in the third quarter of 2023 due to continued sluggish construction industry and lower demand for iron scrap due to steelmaking production cuts.

(In US Dollars/ Tons)
‘23.3Q ‘23.2Q ‘23.1Q ‘22.4Q ‘22.3Q ‘22.2Q ‘22.1Q ‘21.4Q ‘21.3Q ‘21.2Q ‘21.1Q
385 403 438 387 394 531 562 527 500 497 443

(4) Nickel: While demand slumped due to continued austerity measures in major countries, nickel prices fell 9% quarter-on-quarter to U$20,344/ton in the third quarter of 2023 due to increased supply, such as increased LME inventories and increased production of NPIs in Indonesia.

(In US Dollars/lb, US Dollars/Tons)
‘23.3Q ’23.2Q ‘23.1Q ‘22.4Q ‘22.3Q ‘22.2Q ‘22.1Q ‘21.4Q ‘21.3Q ‘21.2Q ‘21.1Q
9.23 10.12 11.79 11.48 10.01 13.13 11.98 8.99 8.68 7.87 7.97
20,344 22,308 25,983 25,292 22,063 28,940 26,395 19,821 19,125 17,359 17,570
LME: London Metal Exchange
---

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[Green Infrastructure]

(1) Criteria for Calculation

Business Sector Products Criteria for Calculation Factors of Price Changes
Trading 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.)
Construction Ready-mixed Concrete Standard 25-210-15 No change in price
Steel Pile SPIRAL,609.6,12T,STP275,KS F 4602,STEEL PILE Changes in unit price due to decrease in raw material (coil) price
Steel Reinforcement SD400 10mm Decrease the price of raw materials (scrap)
Cable TFR-3, 0.6/1KV, 2.5SQ, 2C The LME market price fluctuates due to a slight decline and a rise in the exchange rate, but it does not have a significant impact on the price fluctuations

[Green Materials and Energy]

(1) Criteria for Calculation

  • Refractory and lime: Purchase prices including freight costs

(2) Factors of Price Changes

  • Refractory raw materials: Price fluctuations and compositional costs of raw materials in China

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

  • Energy materials: Price trends are not disclosed considering concerns about information leakage

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5. Production and Facilities

A. Production Capacity

[Steel]

∎ POSCO

(Thousands of Tons)
Business Area Products 2023.3Q 2022 2021
Steel Crude Steel 30,426 40,680 40,680
* The steel production above includes POSCO’s performance before the<br>spin-off (January to February).
--- ---

∎ POSCO STEELEON

(Thousands of Tons)
Business<br><br><br>Area Products Plant 2023.3Q 2022 2021
Steel Galvanized / Color-<br><br><br>coated Steel Pohang 718 960 960
Myanmar 52 70 70
Total 770 1,030 1,030

∎ POSCO M-TECH

(Tons)
Business Area Products 2023.3Q 2022 2021
Raw materials for steel production Ingot and etc. 31,683 39,058 38,080

[Green Infrastructure]

∎ POSCO ENERGY

(Electric Power: MW/year)
Business Area Products 2023.3Q 2022 2021
Power Generation Electric Power Incheon 3,412 3,412 3,412

[Green Materials and Energy]

∎ POSCO FUTURE M

(Thousands of Tons)
Business<br><br><br>Area Products Place of Business 2023.3Q 2022 2021
Refractory Brick and etc. Pohang 87,180 116,560 113,000
LIME Quicklime Pohang 819,000 1,095,000 1,095,000
Gwangyang 819,000 1,095,000 1,095,000
Total 1,725,180 2,306,560 2,303,000
* In the case of the energy materials sector, detailed notation was omitted in consideration of technology and<br>information leakage concerns.
--- ---

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B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production ****

(Thousands of Tons)
Products 2023.3Q 2022 2021
Crude Steel 29,891 37,928 42,964
Products Hot-Rolled Steel 8,534 9,268 9,243
Plate 4,841 5,857 6,832
Wire Rod 1,774 1,988 2,688
Pickled-Oiled Steel 2,101 2,847 2,880
Cold-Rolled Products 4,827 7,623 7,898
Coated Steel 5,443 6,708 7,446
Electrical Steel 619 1,005 1,032
Stainless Steel 2,486 3,400 4,099
Others 1,308 3,261 3,106
Total 31,933 41,957 45,224
The amount of products is the aggregate amount of POSCO’s production and production of POSCO’s<br>subsidiaries, which may include interested parties’ transactions.
---
POSCO’s production result includes production of POSCO HOLDINGS before the<br>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 30,426 26,662 87.6 %
PT.KRAKATAU POSCO 2,270 2,273 100.1 %
POSCO (Zhangjiagang) Stainless Steel Co., Ltd. 825 647 78.4 %
POSCO YAMATO VINA STEEL JOINT STOCK COMPANY 413 309 75.0 %
Total 33,934 29,891 88.1 %

[Green Infrastructure]

Since it is difficult to measure production result and operating rates of Green Infrastructure (Construction),<br>and Green Infrastructure (Logistics and etc.) segments considering the nature of the business, they are omitted in this part.

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∎ POSCO INTERNATIONAL

(1) Production Result ****

(Gwh)
Business Area Products 2022.3Q 2022 2021
Power Generation Electric Power 8,455 11,189 13,493

(2) Capacity Utilization Rate

(Hour, %)
Business Area Products 2023.3Q<br>Capacity 2023.3Q<br>Production Utilization Rate
Power Generation Incheon Power Plant 6,552 3,704 56.6 %

[Green Materials and Energy]

∎ POSCO FUTURE M

(1) Production Result ****

(Tons)
Business<br><br><br>Area Products Place of Business 2023.3Q 2022 2021
Refractory Brick and etc. Pohang 59,381 81,094 83,884
LIME Quicklime Pohang 846,494 1,043,109 1,151,419
Gwangyang 925,477 1,176,611 1,295,720
Total 1,831,352 2,300,814 2,531,023
Coke oven gas (COG) facility is a simple consignment operation for POSCO facilities, so production performance<br>is omitted
---
In the case of the EV battery material business, detailed descriptions are not included due to risk of<br>information leakage
---

(2) Capacity Utilization Rate (2023.3Q)

(Tons,%)
Business Area Capacity Production Utilization Rate
Refractory Factory 87,180 59,381 68
Quicklime Factory (Pohang) 819,000 846,494 103
Quicklime Factory (Gwangyang) 819,000 925,477 113
Total 1,725,180 1,831,352 —
Coke oven gas (COG) facility is a simple consignment operation for POSCO facilities, so production performance<br>is omitted
---
In the case of the EV battery material business, detailed descriptions are not included due to risk of<br>information leakage
---

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C. Production Facilities

(1) The current status of production facilities

[Land] (In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 1,814,272 84,032 -5,989 — 1,892,315
Green Infrastructure Trading 185,495 289,918 — — 475,413
Construction 382,586 1,693 — — 384,279
Logistics and etc. 399,389 — -290,779 — 108,610
Green Materials and Energy 200,438 87,043 — — 287,481
Others 120,985 54,835 — — 175,820
[Buildings]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 3,081,547 240,770 -76,417 -228,007 3,017,893
Green Infrastructure Trading 486,865 385,869 -278,024 -14,159 580,551
Construction 75,728 10,021 -204 -2,257 83,288
Logistics and etc. 187,725 2,350 -76,418 -5,874 107,783
Green Materials and Energy 231,104 225,903 -21,624 -11,155 424,228
Others 111,925 289 -4,896 -1,406 105,912
[Structures]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 2,515,379 155,060 -39,923 -190,626 2,439,890
Green Infrastructure Trading 62,033 1,165,465 -736,243 -17,895 473,360
Construction 26,888 25,508 -3,530 -1,366 47,500
Logistics and etc. 531,573 330 -419,274 -7,019 105,610
Green Materials and Energy 20,865 22,394 -57 -1,724 41,478
Others 6,189 4,011 -2,059 -136 8,005
[Machinery and Equipments]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 14,230,273 1,639,209 -597,698 -1,691,688 13,580,096
Green Infrastructure Trading 392,562 2,907,839 -1,976,755 -111,632 1,212,014
Construction 7,321 957 -369 -1,269 6,640
Logistics and etc. 1,150,735 3,056 -833,498 -35,235 285,058
Green Materials and Energy 629,658 604,198 -26,564 -70,943 1,136,349
Others 12,281 — -10,681 -714 886

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[Vehicles]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 33,443 45,180 -9,414 -13,615 55,594
Green Infrastructure Trading 8,592 8,492 -1,417 -1,973 13,694
Construction 4,599 4,920 -1,957 -1,121 6,441
Logistics and etc. 863 426 -139 -171 979
Green Materials and Energy 4,620 6,675 -711 -2,266 8,318
Others 14 — -1 -5 8
[Tools and Fixtures]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 55,774 49,500 -20,629 -20,704 63,941
Green Infrastructure Trading 25,494 17,060 -7,544 -10,271 24,739
Construction 1,148 492 -140 -416 1,084
Logistics and etc. 2,026 3,113 -1,290 -708 3,141
Green Materials and Energy 6,488 29,009 -126 -7,352 28,019
Others 31 1 — — 32
[Equipment]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 101,743 48,986 -23,199 -26,354 101,176
Green Infrastructure Trading 27,791 24,396 -16,183 -7,816 28,188
Construction 8,329 4,412 -2,641 -2,304 7,796
Logistics and etc. 13,197 5,077 -2,664 -1,995 13,615
Green Materials and Energy 8,872 4,823 -67 -2,868 10,760
Others 13,413 1,087 -98 -1,003 13,399

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Table of Contents
[Financial Lease Assets]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 508,323 47,644 -269,219 -33,641 253,107
Green Infrastructure Trading 250,884 276,488 -92,691 -39,059 395,622
Construction 50,171 86,038 -63,222 -29,375 43,612
Logistics and etc. 34,406 184,539 -3,255 -5,292 210,398
Green Materials and Energy 54,708 65,641 -7,834 -16,657 95,858
Others 22,706 871 -133 -1,932 21,512
[Biological Assets]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel — — — — —
Green Infrastructure Trading 141,720 10,507 — -7,217 145,010
Construction — — — — —
Logistics and etc. — — — — —
Green Materials and Energy — — — — —
Others — — — — —
[Assets under Construction]
(In millions of KRW)
Business Segment Beginning BookBalance Increased Decreased Depreciation Ending BookBalance
Steel 1,780,285 2,446,802 -1,149,448 — 3,077,639
Green Infrastructure Trading 129,279 211,918 -60,509 — 280,688
Construction 21,292 49,534 -31,615 — 39,211
Logistics and etc. 88,692 67,788 -60,879 — 95,601
Green Materials and Energy 1,487,942 1,756,548 -977,681 — 2,266,809
Others 30,535 16,781 -7,657 — 39,659

(2) New Facility Establishment, Purchase, Etc.

(a) Investments under Construction**** **** **** **** ****

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[Steel] (In hundred millions of KRW)
Company Date Project TotalInvestment Invested<br>Amount Amountto Be<br>Invested
POSCO Expansion/<br><br><br>Establishment November 2021<br><br><br>~ December 2025 G) Increased production capacity of electrical steel for eco-friendly vehicles in Gwangyang 9,088 7,355 1,733
February 2023 ~December 2025 G) Establishment of Electric arc furnace 6,420 240 6,180
February 2020<br><br><br>~ August 2025 P) Establishment of #6 Coke plant 12,706 10,426 2,280
Maintenance/<br><br><br>Improvement October 2020<br>~ March 2026 G,P) The first phase of the sealing of raw material yards for both Pohang and Gwangyang Works 24,953 6,238 18,715
August 2021<br>~ September 2029 P) Improvement of #2 Hot strip mill furnace 3,084 168 2,916
P stands for Pohang Steel Works.
---
G stands for Gwangyang Steel Works.
---

[Green Infrastructure (Trading / Logistics and etc.)]

(In hundred millions of KRW)
Company Date Project TotalInvestment Invested<br>Amount Amount toBe<br>Invested
POSCO International Expansion/ Establishment January 2021-<br>~June 2024 Gwangyang LNG #6 Tank 1,437 924 513
NEH Expansion/ Establishment May 2022<br>~July 2026 Gwangyang LNG terminal 8,668 694 7,974

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[Green Materials andEnergy]

(In hundred millions of KRW)
Company Date Project TotalInvestment Invested<br>Amount Amount<br>to BeInvested
POSCO Future M Expansion/<br><br><br>Establishment March 2023~January 2025 The 2-1 stage of cathode material factory in Pohang 3,920 164 3,756
March 2020~June 2025 Establishment of new Artificial Graphite Anode material line in Pohang 3,458 1,774 1,684
July 2022~February 2025 #2 precursor factory in Gwangyang 3,262 926 2,336
December 2021~May 2024 #1 cathode material factory in Pohang 3,215 2,659 556
August 2020~September 2023 The 3rd stage of cathode material factory in Gwangyang 2,895 2,673 222
November 2020~August 2023 The 4th stage of cathode material factory in Gwangyang 2,758 2,658 100
November 2019~June 2023 The 2-2 stage of Natural Graphite anode material factory in Sejong 2,711 2,686 25
July 2023~October 2025 The 5th stage of cathode material factory in Gwangyang 6,834 — 6,834
April 2023~August 2025 The 2nd stage of production line up expansion in #2 cathode material factory 6,148 104 6,044
ZHEJIANG POSCO-HUAYOU<br><br><br>ESM CO., LTD Expansion/<br><br><br>Establishment August 2021~June 2025 The 2nd stage of cathode material factory 1,769 1,081 688
POSCO FUTURE<br>MATERIALS CANADA INC. Expansion/<br><br><br>Establishment May 2022~March 2025 The 1st stage of cathode material factory in Canada 3,512 2,604 908
POSCO FUTURE<br>MATERIALS CANADA INC. Expansion/<br><br><br>Establishment June 2023~May 2027 The 2nd stage of cathode material factory in Canada 10,005 682 9,323
POSCO-Pilbara LITHIUM SOLUTION Expansion/<br><br><br>Establishment April 2021~February 2024 Construction of hard rock lithium commercialization plant 9,188 6,487 2,701
POSCO<br><br><br>ARGENTINA Expansion/<br><br><br>Establishment January 2022~June 2025 Brine lithium commercialization plant stage 1 and stage 2 26,272 7,092 19,179
POSCO LITHIUM SOLUTION Expansion/<br><br><br>Establishment December 2022~June 2025 Brine lithium commercialization plant stage 2 (downstream) 5,751 732 5,019
Ongoing investments over KRW 100 billion as of June 30, 2023 are listed on the table.<br>
---
Investments in China and Canada are based on the payment of POSCO Future M’s capital.<br>
---

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6. Product Sales

[Steel]

(In hundred millions of KRW)
Items 2023.3Q 2022 2021
Domestic Hot-Rolled Products 44,710 68,784 70,117
Cold-Rolled Products 40,419 55,997 54,864
Stainless Steel 23,621 42,481 35,722
Others 76,632 110,202 94,737
Overseas Hot-Rolled Products 57,407 66,871 55,180
Cold-Rolled Products 106,790 162,588 144,421
Stainless Steel 59,082 92,279 86,712
Others 68,983 107,294 93,736
Total Gross Sum 481,194 706,496 635,489
Internal Transaction -174,328 -261,026 -224,555
Total 306,866 445,470 410,934

[Green Infrastructure]

(In hundred millions of KRW)
Business Area Items 2023.3Q 2022 2021
Trading Domestic<br> <br>Trading Merchandise 42,110 65,401 63,137
Product 30,101 9,825 8,757
Others 991 647 1,174
Overseas<br> <br>Trading Merchandise 90,655 137,635 137,741
Product 2,158 1,058 1,223
Others 33 10 207
Trades among the 3 countries 160,169 281,321 240,665
Construction Domestic<br><br><br>Construction Building 31,924 35,061 35,633
Plant 16,941 15,706 13,272
Civil Engineering 8,367 9,321 6,771
Others 1,400 1,823 1,763
Overseas 11,358 15,938 8,097
Own Construction 4,739 11,006 8,589

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Logistics and etc. Others 29,813 74,256 29,145
Total Gross Sum 428,973 659,008 556,174
Deduction of Internal Transaction -181,515 -282,787 -220,938
Total 247,458 376,221 335,236

[Green Materials andEnergy]

(In hundred millions of KRW)
Items 2023.3Q 2022 2021
Gross Sum 36,683 33,888 20,892
Deduction of Internal Transaction -7,288 -9,370 -8,472
Total 29,395 24,518 12,420

[Others]

(In hundred millions of KRW)
Items 2023.3Q 2022 2021
Gross Sum 13,470 11,695 17,842
Deduction of Internal Transaction -12,558 -10,402 -13,109
Total 912 1,293 4,733
Domestic and overseas categorized by the sales area.
---
Sales of POSCO International’s foreign branches are included in ‘trade among the 3 countries’<br>under Green Infrastructure part
---
As of January 2023, POSCO Energy was merged into POSCO International. As a result, the performance of POSCO<br>Energy before the merger was included in Green Infrastructure (Logistics and etc. segment).
---

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7. Derivatives

POSCO HOLDINGS use forward exchange contracts and currency swap contracts to hedge against the exchange rate risk for foreign currency loans. However those derivative contracts were transferred to POSCO followed by vertical spin-off on March, 2022.

POSCO use currency swap contracts in order to hedge against the exchange rate risk for long-term and short-term foreign currency loans. The currency swap valuation gains reflected in our financial statements at the end of September amounted to KRW 260,958 million, while the valuation losses amounted to KRW 2,363 million, and transaction gains amounted KRW20,754 million while transaction losses amounted to KRW 11,034 million.

POSCO also has been hedging against exchange rate risks for expected sales revenue and foreign currency borrowings by trading in currency forward products. The derivative valuation gains reflected in our financial statements at the end of September amounted to KRW 63,932 million. The transaction losses for the existing maturity date currency forward derivatives that we’ve subscribed to were KRW 8,851 million.

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8. Significant Contracts

[Major management contracts]

• Transfer contract of steel business related shares or investment certificates of POSCO HOLDINGS (2023)<br>

(1) Contract Counterparty: POSCO

(2) Transaction amount: KRW 1.1320 trillion

(3) Purpose: In order to improve the management efficiency of the steel business as a following step of the vertical spin-off on March 2022.

(4) Contract period: August 18, 2023 ~ September 25, 2023

(5) Payment method: Cash payment

(6) Company subject to transfer: PT.KP, P-Mexico, P-IJPC, P-MVWPC (4 overseas companies)

* The above contract amount is the amount applied to the exchange rate based on July 31, 2023, and overseas assets are traded by applying the exchange rate on the day of the transaction.

• Sales contract of CSP shares

(1) Contract Counterparty: ArcelorMittal Brazil

(2) Purpose: Improving asset efficiency through the sales of non-core assets with no management right

(3) Contract period: July 28, 2022 (transaction completed on March 10, 2023)

(4) Transaction amount: and payment method

ArcelorMittal Brazil acquired shares in shareholder companies free of charge on the condition that ArcelorMittal Brazil succeed CSP’s debts. In addition, the shareholder companies will additionally pay US$102 million.

* POSCO HOLDNGS paid US$20.4 million equivalent to a 20 percent stake

• Transfer contract of steel business related shares or investment certificates of POSCO HOLDINGS (2022)<br>

(1) Contract Counterparty: POSCO

(2) Transaction amount: KRW 1.1377 trillion

(3) Purpose: In order to improve the management efficiency of the steel business as a following step of the vertical spin-off on March 2022.

(4) Contract period: November 18, 2022 ~ March 31, 2023

(5) Payment method: Cash payment

(6) Company subject to transfer: POSCO YAMATO VINA STEEL JOINT STOCK COMPANY, POSCO Thainox Public Company Limited, POSCO COATED STEEL (THAILAND) CO., and etc. (32 domestic companies, 25 overseas companies)

* The above contract amount is the amount applied to the exchange rate based on November 3, 2022, and overseas assets are traded by applying the exchange rate on the day of the transaction.

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[Green Infrastructure (Trading)]

∎ POSCO INTERNATIONAL

Contract Date Remarks
Investment on the 3^rd^ stage development of<br><br><br>A-1 / A-3 block<br><br><br>in Myanmar gas field September<br><br><br>2020 1) Investment amount: KRW 365,786,302,000<br> <br>2)<br>Development period: September 1, 2019 ~ December 31, 2024<br> <br>3) Schedule : Installation Completion of<br>low-pressure gas compression platform and<br>                      commenced operation in 2024<br><br><br>4) Other Information<br><br><br>-  Location: North-west offshore, Myanmar<br><br><br>-  This investment is the 3^rd^ stage of development,<br>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.<br><br><br>-  In the first quarter of 2021, the design and production of the equipment for this work was started, and<br>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.<br><br><br>-  Participation rate of each company in gas production and offshore pipeline transportation business<br><br><br>•   POSCO International Corporation : 51.0%<br><br><br>•   ONGC VIDESH(Oil and Natural Gas Corporation Videsh Limited) : 17.0%<br><br><br>•   MOGE(Myanmar Oil and Gas Enterprise): 15.0%<br><br><br>•   GAIL (India) Limited : 8.5%<br><br><br>•   KOGAS(Korea Gas Corporation): 8.5%<br><br><br>-  Investment size of USD 315,170 thousand, applying the exchange rate of 1USD=1,160.60 KRW, which is<br>the date of the BOD resolution.<br> <br>-  Detailed information and future timeline on this resource<br>development investment is subject to change.<br> <br><br><br><br>LOGO<br>  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<br><br><br>2) Method : Cash acquisition<br> <br>3) Resolution date of Board of<br>Directors : December 10, 2021<br> <br>4) Acquisition amount : KRW 371,077,996,186<br><br><br>5) Number of shares acquired : 96,178,946Shares<br> <br>6) Date of<br>acquisition : April 1, 2022<br> <br>7) equity structure (after acquisition of shares) :<br><br><br>-  POSCO International : 50.1%<br><br><br>-  Hancock Energy (Australia) : 49.9%<br><br><br><br><br><br>LOGO<br>  POSCO International disclosure date : March 31, 2022 (Decision on Acquisition of Shares or Investment Certificates of Other Corporations)
Decision on<br><br><br>Merger of<br> <br>POSCO Energy August<br><br><br>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<br>business, thereby strengthening competitiveness, improving management efficiency and laying the foundation for sustainable growth.<br> <br>2) Method of Merger :<br>POSCO Energy Co., Ltd. (“POSCO Energy”) will be merged with and into POSCO International Co., Ltd. (“POSCO International”).<br> <br>3) Date of<br>board resolution (decision Date) : August 12, 2022<br> <br>4) Date of General Shareholders Meeting for merger approval : November 4, 2022<br><br><br>4) Merger ratio : POSCO International : POSCO Energy = 1 : 1.1626920<br><br><br>5) Record date of merger : January 1, 2023<br> <br>6) Scheduled date<br>of merger registration : January 2, 2023<br> <br><br><br><br>LOGO<br>  POSCO International disclosure date : January 2, 2023

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[Green Infrastructure (Logistics and etc.)]

∎ POSCO FLOW

Contract Date Remarks
Transfer of all<br>logistics tasks<br>such as<br>arranging<br>logistics and<br>performing<br>related<br>services December<br>2021 1) Contract counterpart : POSCO (POSCO HOLDINGS INC.)<br><br><br>2) Signed date : December 22, 2021<br> <br>3) Date of Transfer :<br>January 1, 2022<br> <br>4) Transfer amount : KRW 2,945 million<br><br><br>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
Technical Research Laboratories
Steel Product R&D Center
Process R&D Center
Automotive Steel R&D Center
Low-Carbon Process R&D Center
Steel Solution R&D Center
POSCO (Zhangjiagang) Stainless Steel Co., Ltd. R&D Center
POSCO STEELEON Solution Group
POSCO M-TECH Al Analysis Center
Automation R&D Center
Green Infrastructure POSCO MOBILITY SOLUTION STS Business Office R&D Group
Core Business Office Product Process Development Group
Core Business Office Mold Research Group
POSCO Eco & Challenge R&D Center
POSCO A&C Smart Housing Business Department
POSCO DX R&D Center
Green Materials and Energy POSCO Future M R&D Center
Energy Material R&D Center
Others POSCO HOLDINGS INC. New Experience of Technology Hub
AI R&D Laboratories,<br><br><br>New Experience of Technology Hub
LiB Materials R&D Laboratories<br><br><br>New Experience of Technology Hub
Hydrogen and Low-Carbon Energy R&D Laboratories, New Experience of Technology Hub

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B. R&D Expenses in 2023.3Q

(In millions of KRW)
Category Business Segment
1. Steel 2. Green<br>Infrastructure 3. GreenMaterials<br>and Energy 4. Others Total
Trading Construction Logistics<br>and etc.
Selling and Administrative Cost 20,687 1,427 3,023 11,194 28,851 56,098 121,280
Manufacturing Cost 239,321 405 282 — 40 — 240,048
R&D Cost (Intangible Assets) 49,884 1,247 15,904 4,907 4,815 1,529 78,286
Total* 309,892 3,079 19,209 16,101 33,706 57,627 439,614
Government Subsidy — 344 — — — 344
R&D/Sales Ratio (%) 1.01 % 0.02 % 0.31 % 4.76 % 1.15 % 63.25 % 0.75 %
* Total includes government subsidy. ****
--- ---

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III. Financial Statements

1. Consolidated Financial Statements

A. Summary

(In millions of KRW)
Account 2023.3Q 2022 2021
As of September 30, 2023 As of December 31, 2022 As of December 31, 2021
[Total current assets] 48,609,034 47,649,466 46,621,631
Cash and cash equivalents 7,146,999 8,053,108 4,775,166
Other receivables, net 1,891,699 2,112,697 2,104,609
Other short-term financial assets 12,833,434 10,909,920 13,447,717
Trade accounts and notes receivable, net 11,453,126 9,769,553 10,061,982
Inventories 14,154,318 15,472,417 15,215,098
Other current assets 1,129,458 1,331,771 1,017,059
[Total non-current assets] 54,362,242 50,757,315 44,849,983
Other receivables, net 1,592,313 1,520,331 1,415,143
Other long-term financial assets 2,777,866 2,332,538 2,119,674
Investments in associates and joint ventures 5,242,164 4,996,551 4,514,647
Property, plant and equipment, net 34,326,109 31,781,196 29,596,698
Intangible assets, net 4,880,790 4,838,451 4,166,309
Other non-current assets 5,543,000 5,288,248 3,037,512
Total assets 102,971,276 98,406,781 91,471,614
[Total current liabilities] 22,060,417 23,188,190 21,083,623
[Total non-current liabilities] 20,582,212 16,961,190 15,583,048

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Total liabilities 42,642,629 40,149,380 36,666,671
[Equity attributable to owners of the controlling company] 54,707,167 52,512,116 50,427,355
Share capital 482,403 482,403 482,403
Capital surplus 1,619,145 1,400,832 1,387,960
Hybrid bonds 0 — 199,384
Retained earnings 54,334,034 52,965,180 51,532,888
Other equity attributable to owners of the controlling company -1,728,415 -2,336,299 -3,175,280
[Non-controlling Interests] 5,621,480 5,745,285 4,377,588
Total equity 60,328,647 58,257,401 54,804,943
From January 1, 2023<br><br><br>to September 30, 2023 From January 1, 2022<br><br><br>to December 31, 2022 From January 1, 2021<br><br><br>to December 31, 2021
Revenue 58,463,080 84,750,204 76,332,345
Operating profit 3,227,148 4,850,053 9,238,089
Profit 2,166,772 3,560,484 7,195,890
[Profit attributable to owners of the controlling company] 1,904,353 3,144,087 6,617,239
[Profit attributable to non-controlling<br>interests] 262,419 416,397 578,651
Total comprehensive Income 2,893,131 3,794,358 8,013,489
[Total comprehensive income attributable to owners of the controlling company] 2,569,048 3,380,649 7,384,572
[Total comprehensive income attributable to<br>non-controlling interests] 324,083 413,709 628,917

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Earnings per share(KRW) 25,101 41,456 87,330
Number of Consolidated Companies 189 181 170

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 FinancialStatements

A. Summary

(In millions of KRW)
Account 2023.3Q 2022 2021
As of September 30,<br><br><br>2023 As of December 31,<br><br><br>2022 As of December 31,<br><br><br>2021
[Total current assets] 4,957,066 4,308,290 25,918,880
Cash and Cash equivalents 620,852 1,415,201 2,042,274
Trade accounts and notes receivable, net 199,153 128,991 6,017,508
Other receivables, net 48,047 40,288 545,341
Other short-term financial assets 4,060,761 2,515,375 9,605,522
Inventories — — 7,623,202
Other current assets 28,253 208,435 85,033
[Total non-current assets] 47,180,102 46,840,829 38,323,879
Other receivables, net 235,694 209,057 274,253
Other long-term financial assets 1,316,159 1,062,530 1,326,565
Investments in Subsidiaries, associates, and joint ventures 45,180,651 45,187,628 16,002,640
Property, plant and equipment, net 138,892 145,006 19,772,299
Intangible assets, net 17,709 15,902 551,410
Other non-current assets 290,997 220,706 396,712
Total assets 52,137,168 51,149,119 64,242,759

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Account 2023.3Q 2022 2021
[Total current liabilities] 1,976,339 118,993 7,868,269
[Total non-current Liabilities] 2,446,182 3,858,263 7,339,065
Total liabilities 4,422,521 3,977,256 15,207,334
[Share capital] 482,403 482,403 482,403
[Capital surplus] 1,368,060 1,360,894 1,339,289
[Hybrid bonds] — — 199,384
[Retained earnings] 47,764,108 47,409,675 49,734,492
[Other equity] -1,899,924 -2,081,109 -2,720,143
Total equity 47,714,647 47,171,863 49,035,425
From January 1, 2023<br> <br>to September 30, 2023 From January 1, 2022<br> <br>to December 31, 2022 From January 1, 2021<br> <br>to December 31, 2021
Revenue 1,268,513 8,589,819 39,920,201
Operating profit 1,035,668 1,674,893 6,649,600
Profit 885,431 -467,852 5,181,227
Earnings per share(KRW) 11,671 -6,185 68,360

B. The Standards Used for Reporting the Financial Statements

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

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POSCO HOLDINGS INC.

and Subsidiaries

Condensed Consolidated InterimFinancial Statements

(Unaudited)

September 30, 2023

(With IndependentAuditors’ Review Report Thereon)

Table of Contents

Table of Contents

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

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 September 30, 2023, the condensed consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2023 and 2022, the condensed consolidated interim statements of changes in equity and cash flows for the nine-month periods ended September 30, 2023 and 2022, and notes, comprising a summary of material accounting policy information 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”, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

Our responsibility is to issue a report on these 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 information consists of making inquiries primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with 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”.

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Other matters

The consolidated statement of financial position of the Company as of December 31, 2022, 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 9, 2023, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Company as of December 31, 2022, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

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.

Seoul, Korea

November 14, 2023

This report is effective as of November 14, 2023, 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 and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of September 30, 2023 and December 31, 2022

(Unaudited)

(in millions of Won) Notes September 30, 2023 December 31, 2022
Assets
Cash and cash equivalents 21 ~~W~~ 7,146,999 8,053,108
Trade accounts and notes receivable, net 4,21,26,27,34 11,453,126 9,769,553
Other receivables, net 5,21,34 1,891,699 2,112,697
Other short-term financial assets 6,21 12,833,434 10,909,920
Inventories 7 14,154,318 15,472,417
Current income tax assets 83,709 243,829
Assets held for sale 8 — 12,003
Other current assets 14 1,045,749 1,075,939
Total current assets 48,609,034 47,649,466
Long-term trade accounts and notes receivable, net 4,21 46,749 24,033
Other receivables, net 5,21 1,592,313 1,520,331
Other long-term financial assets 6,21 2,777,866 2,332,538
Investments in associates and joint ventures 9 5,242,164 4,996,551
Investment property, net 11 1,617,376 1,074,031
Property, plant and equipment, net 12 34,326,109 31,781,195
Intangible assets, net 13 4,880,790 4,838,451
Defined benefit assets, net 19 425,868 520,659
Deferred tax assets 3,300,173 3,502,152
Other non-current assets 14 152,834 167,374
Total non-current assets 54,362,242 50,757,315
Total assets ~~W~~ 102,971,276 98,406,781

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued

As of September 30, 2023 and December 31, 2022

(Unaudited)

(in millions of Won) Notes September 30, 2023 December 31, 2022
Liabilities
Trade accounts and notes payable 21,34 ~~W~~ 5,295,207 5,520,807
Short-term borrowings and current installments of long-term borrowings 4,15,21 12,086,430 11,915,994
Other payables 16,21,34 2,507,709 2,865,868
Other short-term financial liabilities 17,21 51,605 106,527
Current income tax liabilities 313,918 502,685
Liabilities directly associated with the assets held for sale 8 — 5
Provisions 18,35 409,867 515,988
Other current liabilities 20,26,27 1,395,681 1,760,316
Total current liabilities 22,060,417 23,188,190
Long-term trade accounts and notes payable 21 — 15
Long-term borrowings, excluding current installments 15,21 15,841,953 12,389,667
Other payables 16,21 907,829 790,402
Other long-term financial liabilities 17,21 96,774 87,052
Defined benefit liabilities, net 19 55,322 37,707
Deferred tax liabilities 2,995,126 2,924,552
Long-term provisions 18,35 568,249 579,918
Other non-current liabilities 20,26 116,959 151,877
Total non-current liabilities 20,582,212 16,961,190
Total liabilities 42,642,629 40,149,380
Equity
Share capital 22 482,403 482,403
Capital surplus 22 1,619,145 1,400,832
Reserves 24 158,029 (443,990 )
Treasury shares 25 (1,886,444 ) (1,892,308 )
Retained earnings 54,334,034 52,965,179
Equity attributable to owners of the controlling company 54,707,167 52,512,116
Non-controlling interests 23 5,621,480 5,745,285
Total equity 60,328,647 58,257,401
Total liabilities and equity ~~W~~ 102,971,276 98,406,781

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income

For the three-month and nine-month periods ended September 30, 2023 and 2022

(Unaudited)

For the three-month period<br>ended September 30 For the nine-month period<br>ended September 30
(in millions of Won, except per share information) Notes 2023 2022 2023 2022
Revenue 26,27,34,37 ~~W~~ 18,960,831 21,154,535 58,463,080 65,502,659
Cost of sales 7,27,31,34 (17,049,781 ) (19,546,575 ) (53,144,751 ) (58,232,794 )
Gross profit 1,911,050 1,607,960 5,318,329 7,269,865
Selling and administrative expenses 31,34
Reversal of (impairment loss) on trade accounts and notes receivable 1,013 4,882 (10,087 ) (160 )
Other administrative expenses 28 (661,518 ) (625,981 ) (1,906,913 ) (1,794,932 )
Selling expenses 28 (54,329 ) (67,324 ) (174,181 ) (199,352 )
Operating profit 1,196,216 919,537 3,227,148 5,275,421
Share of profit (loss) of equity-accounted investees, net 9 101,216 (13,050 ) 282,931 428,663
Finance income and costs 21,29
Finance income 578,348 2,149,392 3,239,157 4,588,113
Finance costs (993,392 ) (2,145,375 ) (3,704,869 ) (4,678,487 )
Other non-operating income and expenses 34
Impairment loss on other receivables (6,463 ) (6,093 ) (17,057 ) (5,105 )
Other non-operating income 30 33,558 24,182 345,953 320,910
Other non-operating expenses 30,31 (78,367 ) (301,371 ) (510,993 ) (500,751 )
Profit before income tax 37 831,116 627,222 2,862,270 5,428,764
Income tax expense 32,37 (280,614 ) (35,584 ) (695,498 ) (1,131,300 )
Profit 550,502 591,638 2,166,772 4,297,464
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees (11,946 ) 5 (10,199 ) 4,291
Foreign currency translation differences 18,846 100,923 56,927 130,699
Remeasurements of defined benefit plans 19 10,828 15,348 (6,338 ) (24,606 )
Net changes in fair value of equity investments at fair value through other comprehensive<br>income 21 62,306 109,960 212,172 (14,729 )
Items that are or may be reclassified subsequently to profit or loss:
Capital adjustment arising from investments in equity-accounted investees 49,535 370,730 261,809 584,531
Foreign currency translation differences 36,059 518,818 214,529 863,736
Gains or losses on valuation of derivatives 21 (1,361 ) 2,568 (2,541 ) 2,300
Other comprehensive income, net of tax 164,267 1,118,352 726,359 1,546,222
Total comprehensive income ~~W~~ 714,769 1,709,990 2,893,131 5,843,686
Profit attributable to:
Owners of the controlling company ~~W~~ 488,201 509,914 1,904,353 3,809,956
Non-controlling interests 62,301 81,724 262,419 487,508
Profit ~~W~~ 550,502 591,638 2,166,772 4,297,464
Total comprehensive income attributable to :
Owners of the controlling company ~~W~~ 626,868 1,496,126 2,569,048 5,160,420
Non-controlling interests 87,901 213,864 324,083 683,266
Total comprehensive income ~~W~~ 714,769 1,709,990 2,893,131 5,843,686
Earnings per share (in Won) 33
Basic earnings per share (in Won) ~~W~~ 6,434 6,723 25,101 50,247
Diluted earnings per share (in Won) 6,434 6,723 25,101 47,716

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Attributable to owners of the controlling company Non-<br>controlling<br>interests Total
Share<br>capital Capital<br>surplus Hybrid<br>bonds Reserves Treasury<br>shares Retained<br>earnings Subtotal
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 — — — — — 3,809,956 3,809,956 487,508 4,297,464
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax — — — — — (54,300 ) (54,300 ) 29,694 (24,606 )
Capital adjustment arising from investments in equity-accounted investees, net of tax — — — 554,717 — — 554,717 34,105 588,822
Net changes in fair value of equity investments at fair value through other comprehensive income,<br>net of tax — — — 102,216 — (116,928 ) (14,712 ) (17 ) (14,729 )
Foreign currency translation differences, net of tax — — — 863,736 — — 863,736 130,699 994,435
Gains or losses on valuation of derivatives, net of tax — — — 1,023 — — 1,023 1,277 2,300
Total comprehensive income — — — 1,521,692 — 3,638,728 5,160,420 683,266 5,843,686
Transactions with owners of the controlling company, recognized directly inequity:
Year-end dividends — — — — — (378,128 ) (378,128 ) (81,557 ) (459,685 )
Interim dividends — — — — — (606,794 ) (606,794 ) — (606,794 )
Changes in subsidiaries — — — — — — — 422,994 422,994
Changes in ownership interest in subsidiaries — (8,073 ) — — — — (8,073 ) 149,822 141,749
Interest of hybrid bonds — — — — — (1,487 ) (1,487 ) (10,850 ) (12,337 )
Changes from spin-off — — (199,384 ) — — — (199,384 ) 199,384 —
Disposal of treasury shares — 9,491 — — 48,513 — 58,004 — 58,004
Retirement of treasury shares — — — — 567,473 (567,473 ) — — —
Others — (440 ) — — — 1,975 1,535 (1,407 ) 128
Total transactions with owners of the controlling company — 978 (199,384 ) — 615,986 (1,551,907 ) (1,134,327 ) 678,386 (455,941 )
Balance as of September 30, 2022 ~~W~~ 482,403 1,388,938 — 854,707 (1,892,308 ) 53,619,708 54,453,448 5,739,240 60,192,688

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Attributable to owners of the controlling company Non-<br>controlling<br>interests Total
Share<br>capital Capital<br>surplus Reserves Treasury<br>shares Retained<br>earnings Subtotal
Balance as of January 1, 2023 ~~W~~ 482,403 1,400,832 (443,990 ) (1,892,308 ) 52,965,179 52,512,116 5,745,285 58,257,401
Comprehensive income:
Profit — — — — 1,904,353 1,904,353 262,419 2,166,772
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax — — — — (2,978 ) (2,978 ) (3,360 ) (6,338 )
Capital adjustment arising from investments in equity-accounted investees, net of tax — — 242,802 — — 242,802 8,808 251,610
Net changes in fair value of equity investments at fair value through other comprehensive income,<br>net of tax — — 211,817 — 355 212,172 — 212,172
Foreign currency translation differences, net of tax — — 214,529 — — 214,529 56,927 271,456
Gains or losses on valuation of derivatives, net of tax — — (1,830 ) — — (1,830 ) (711 ) (2,541 )
Total comprehensive income — — 667,318 — 1,901,730 2,569,048 324,083 2,893,131
Transactions with owners of the controlling company, recognized directly inequity:
Year-end dividends — — — — (151,698 ) (151,698 ) (94,287 ) (245,985 )
Interim dividends — — — — (379,381 ) (379,381 ) — (379,381 )
Changes in ownership interest in subsidiaries — 212,033 — — — 212,033 (9,933 ) 202,100
Interest of hybrid bonds — — — — — — (8,925 ) (8,925 )
Repayment of hybrid bonds — — — — — — (339,408 ) (339,408 )
Disposal of treasury shares — 4,083 — 5,864 — 9,947 — 9,947
Share based payments — 3,084 — — — 3,084 — 3,084
Others — (887 ) (65,299 ) — (1,796 ) (67,982 ) 4,665 (63,317 )
Total transactions with owners of the controlling company — 218,313 (65,299 ) 5,864 (532,875 ) (373,997 ) (447,888 ) (821,885 )
Balance as of September 30, 2023 ~~W~~ 482,403 1,619,145 158,029 (1,886,444 ) 54,334,034 54,707,167 5,621,480 60,328,647

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Notes September 30, 2023 September 30, 2022
Cash flows from operating activities
Profit ~~W~~ 2,166,772 4,297,464
Adjustments for:
Depreciation 2,502,740 2,368,731
Amortization 369,038 356,011
Finance income (1,724,525 ) (2,522,702 )
Finance costs 2,186,124 2,548,610
Income tax expense 695,498 1,131,300
Impairment loss on property, plant and equipment 152,469 131,966
Gain on disposal of property, plant and equipment (5,747 ) (16,873 )
Loss on disposal of property, plant and equipment 90,104 80,483
Impairment loss on goodwill and other intangible assets 4,792 261
Gain on disposal of investments<br>in subsidiaries, associates and joint ventures (196,562 ) (12,273 )
Loss on disposal of investments<br>in subsidiaries, associates and joint ventures 8,776 18
Share of profit of equity-accounted investees (282,931 ) (428,663 )
Gain on disposal of assets held for sale — (55,124 )
Loss on disposal of assets held for sale 103,366 3,968
Expenses related to post-employment benefit 150,464 168,748
Impairment loss on trade and other receivables 27,144 5,265
Loss on valuation of inventories 102,855 272,724
Increase to provisions 63,234 150,324
Gain on insurance claim (4,391 ) —
Others, net (31,955 ) 21,624
4,210,493 4,204,398
Changes in operating assets and liabilities 36 (1,695,289 ) (3,314,450 )
Interest received 316,526 294,212
Interest paid (804,486 ) (379,448 )
Dividends received 484,552 501,229
Income taxes paid (398,969 ) (2,580,738 )
Net cash provided by operating activities ~~W~~ 4,279,599 3,022,667

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Notes September 30, 2023 September 30, 2022
Cash flows from investing activities
Acquisitions of short-term financial instruments ~~W~~ (37,117,290 ) (55,565,108 )
Proceeds from disposal of short-term financial instruments 35,902,804 55,639,967
Increase in loans (536,420 ) (593,352 )
Collection of loans 706,250 836,825
Acquisitions of securities (328,351 ) (400,743 )
Proceeds from disposal of securities 153,581 82,011
Acquisitions of long-term financial instruments (4,029 ) (16,813 )
Acquisitions of investment in associates and joint ventures (386,572 ) (493,649 )
Proceeds from disposal of investment in associates and joint ventures 13,646 27,227
Acquisitions of investment property (56,018 ) (1,122 )
Proceeds from disposal of investment property 520 2,250
Acquisitions of property, plant and equipment (4,545,134 ) (2,735,137 )
Proceeds from disposal of property, plant and equipment (15,187 ) (17,917 )
Acquisitions of intangible assets (269,671 ) (369,695 )
Proceeds from disposal of intangible assets 27,722 2,993
Proceeds from disposal of assets held for sale 1,446 116,701
Collection of lease receivables 38,930 43,826
Cash outflow from business combination, net of cash acquired (150,201 ) (901,207 )
Cash inflow from insurance claim 4,391 —
Others, net (7,331 ) 4,694
Net cash used in investing activities (6,566,914 ) (4,338,249 )
Cash flows from financing activities
Proceeds from borrowings 7,433,578 3,834,065
Repayment of borrowings (4,773,516 ) (2,193,610 )
Proceeds from (repayment of ) short-term borrowings, net (548,790 ) 2,819,827
Capital contribution from non-controlling<br>interests 228,473 576,185
Payment of cash dividends (624,667 ) (1,066,482 )
Repayment of hybrid bonds (340,000 ) —
Payment of interest of hybrid bonds (10,043 ) (12,362 )
Repayment of lease liabilities (154,912 ) (228,535 )
Others, net 83,229 (51,292 )
Net cash provided by financing activities 1,293,352 3,677,796
Effect of exchange rate fluctuation on cash held 87,680 357,937
Net increase (decrease) in cash and cash equivalents (906,283 ) 2,720,151
Cash and cash equivalents at beginning of the period 8 8,053,282 4,775,720
Cash and cash equivalents at end of the period ~~W~~ 7,146,999 7,495,871

See accompanying notes to the condensed consolidated interim financial statements.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

As of September 30, 2023

(Unaudited)

1. General Information

General information about POSCO HOLDINGS INC., its 52 domestic subsidiaries including POSCO, 136 foreign subsidiaries including POSCO America Corporation (collectively “the Company”) and its 120 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.

On March 2, 2022, the Company established a new subsidiary, POSCO, by a vertical spin-off of its steel business (The surviving company owns 100% of shares) on March 1, 2022, and changed the name of the surviving company to POSCO HOLDINGS INC.

As of September 30, 2023, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchange.

(b) Consolidated subsidiaries acquired or newly established during the nine-month period ended September 30,<br>2023, were as follows:
Company Date of inclusion Ownership (%) Reason
--- --- --- --- --- ---
QSONE Co., Ltd. March 2023 100.00 Reclassification from associate
POSCO PS Tech April 2023 100.00 New establishment
POSCO PR Tech April 2023 100.00 New establishment
POSCO PH Solution April 2023 100.00 New establishment
POSCO GYS Tech April 2023 100.00 New establishment
POSCO GYR Tech April 2023 100.00 New establishment
POSCO GY Solution April 2023 100.00 New establishment
PT AGPA REFINERY COMPLEX May 2023 100.00 New establishment
Port Hedland Green Steel Pty Ltd June 2023 100.00 New establishment
POSCO MOBILITY SOLUTION POLAND Sp. z o.o., July 2023 100.00 New establishment
PCC Facilities Component Fund July 2023 60.00 New establishment
PT POSCO INTERNATIONAL ENP INDONESIA September 2023 100.00 New establishment
(c) Subsidiaries for which the Company lost control during the nine-month period ended September 30, 2023 are<br>as follows:
--- ---
Company Date of exclusion Reason
--- --- --- --- ---
POSCO ENERGY CO., LTD. January 2023 Merged into POSCO INTERNATIONAL Corporation(*1)
POS-CD PTY LTD January 2023 Liquidation
POSCO ICT BRASIL August 2023 Divestiture
PGSF, L.P. September 2023 Liquidation
(*1) As a result of the merger transaction, the ownership of the Company in POSCO INTERNATIONAL Corporation<br>increased from 62.92% to 73.21%.
--- ---

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

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, 2022. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

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.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

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<br>liabilities, either directly or indirectly.
--- ---
• Level 3 - inputs for the assets or liabilities that are not based on observable market data.<br>
--- ---

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 Material Accounting PolicyInformation

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, 2022.

Changes in accounting policies

Except for the standards and amendments applied for the first time for the reporting period beginning on January 1, 2023 described below, the accounting policies applied by the Company in these financial statements are the same as those applied by the Company in its financial statements as of and for the year ended December 31, 2022.

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

From January 1, 2023, the Company has applied the amendments related to deferred tax arising from assets and liabilities in a single transaction under K-IFRS No. 1012 “Income Tax”. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences. The Company recognized deferred tax assets for lease liabilities and deferred tax liabilities for right-of-use assets, respectively, and there is no impact on the statement of financial position as the requirements for offsetting are met in accordance with K-IFRS No. 1012 “Income Tax”.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) K-IFRS No. 1001 “Presentation of Financial Statements”<br>– Disclosure of Accounting Policies

Material accounting policy information is defined as information that is expected to influence the decision-making of primary users of financial statements considering with other information included in the financial statements, and is required to be disclosed. The Company plans to disclose material accounting policies in the annual financial statements for the year ending December 31, 2023.

(c) K-IFRS No. 1008 “Accounting Policies, Changes in Accounting<br>Estimates and Errors” – Definition of Accounting Estimates

For accounting estimates defined as monetary amounts in the financial statements, a change in measurement methods or inputs are clarified as changes in accounting estimates unless they result from the correction of prior period errors. The amendment is applied prospectively to the changes in accounting estimates that occur after the effective date. The amendments did not have any impact on the consolidated financial statements.

Newstandards and interpretations not yet adopted

A number of new standards are effective for annual periods beginning after January 1, 2023 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. 1001 “Presentation of Financial Statements” -<br>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, 2024. Early application is permitted. The Company does not expect the effect of the amendments to the financial statements to be significant.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) K-IFRS No. 1012 “Income Tax” – Global Minimum Top<br>– Up Tax

The International Accounting Standards Board (IASB) issued amendments to IAS 12 “Income Tax” on May 23, 2023 that provided a temporary mandatory exception from accounting for deferred tax arising from legislation implementing the Pillar Two taxes and new disclosure requirements in the annual financial statements. The Korea Accounting Standards Board (KASB) is currently preparing an amendment to K-IFRS No. 1012 “Income Tax”. In 2022, the corporate income tax law in the Republic of Korea was amended to reflect the global minimum top-up tax of the Pillar Two Model Rules and will be effective for fiscal years starting on or after January 1, 2024. However, as of September 30, 2023, the enforcement decree of the related law has not yet been enacted. Therefore, it is determined that the related law has not been substantively enacted due to the insufficient legislation to calculate the global minimum top-up tax.

The Company is closely monitoring developments related to the implementation of the international tax reforms introducing the global minimum top-up tax. However, since none of the jurisdictions in which the Company operates has enacted or substantively enacted the tax legislation related to the top-up tax at the date when the accompanying interim financial statements were authorized for issue, there is no impact on the Company’s condensed interim financial statements. In light of the exception from the deferred tax accounting, the Company’s management is focusing its assessment on the potential current tax impacts of the top-up tax. Once changes to the tax laws in any jurisdiction in which the Company operates are enacted or substantively enacted, the Company may be subject to the top-up tax.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Trade accounts and notes receivable ~~W~~ 9,929,378 8,696,067
Due from customers for contract work 1,841,003 1,407,278
Less: Allowance for doubtful accounts (317,255 ) (333,792 )
~~W~~ 11,453,126 9,769,553
Non-current
Trade accounts and notes receivable ~~W~~ 99,345 68,342
Less: Allowance for doubtful accounts (52,596 ) (44,309 )
~~W~~ 46,749 24,033

The Company sold trade accounts and notes receivable with recourse to financial institutions. This transaction has a right of recourse because the Company has an obligation to pay the amount to financial institutions if the relevant receivables are not collected at maturity, so the transaction was recognized as secured borrowings. As of September 30, 2023, and December 31, 2022, the carrying amounts of such secured borrowings are ~~W~~155,376 million and ~~W~~215,133 million, respectively, which are presented in the statements of financial position as the short-term borrowings.

5. Other Receivables

Other receivables as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Short-term loans ~~W~~ 244,743 278,346
Other accounts receivable 1,314,687 1,381,804
Accrued income 314,635 334,741
Deposits 61,417 131,468
Others 22,817 23,201
Lease receivables 32,284 46,764
Less: Allowance for doubtful accounts (98,884 ) (83,627 )
~~W~~ 1,891,699 2,112,697
Non-current
Long-term loans ~~W~~ 1,141,871 1,082,139
Other accounts receivable 211,503 237,161
Accrued income 118,093 121,783
Deposits 297,090 292,722
Lease receivables 88,185 55,312
Less: Allowance for doubtful accounts (264,429 ) (268,786 )
~~W~~ 1,592,313 1,520,331

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

6. Other Financial Assets

Other financial assets as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Derivatives assets ~~W~~ 216,592 223,771
Debt securities 261,319 121,122
Deposit instruments(*1) 5,365,679 2,558,946
Short-term financial instruments(*1) 6,989,844 8,006,081
~~W~~ 12,833,434 10,909,920
Non-current
Derivatives assets ~~W~~ 252,063 136,224
Equity securities(*2) 1,795,571 1,462,088
Debt securities 85,056 78,901
Other securities(*2) 619,847 632,469
Deposit instruments(*1) 25,329 22,856
~~W~~ 2,777,866 2,332,538
(*1) As of September 30, 2023 and December 31, 2022, financial instruments amounting to<br>~~W~~103,681 million and ~~W~~73,192 million, respectively, are restricted in use for financial arrangements, pledge and others.
--- ---
(*2) As of September 30, 2023 and December 31, 2022,<br>~~W~~183,197 million and ~~W~~153,640 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others.<br>
--- ---

7. Inventories

Inventories as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Finished goods ~~W~~ 2,586,597 2,508,370
Merchandise 999,119 1,237,203
Semi-finished goods 3,126,326 3,453,150
Raw materials 3,067,397 4,171,049
Fuel and materials 1,175,290 1,109,100
Construction inventories 311,635 470,790
Materials-in-transit 2,971,941 2,738,439
Others 109,910 100,873
14,348,215 15,788,974
Less: Allowance for inventories valuation (193,897 ) (316,557 )
~~W~~ 14,154,318 15,472,417

The amounts of loss on valuation of inventories recognized in cost of sales during the nine- month period ended September 30, 2023 and the year ended December 31, 2022 were ~~W~~102,855 million and ~~W~~354,956 million, respectively. During the year ended December 31, 2022, ~~W~~95,278 million of damage caused by the flooding of the Naengcheon stream in Pohang was included in loss on valuation of inventories.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

8. Assets Held for Sale

Details of assets held for sale as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Asset
Cash and cash equivalents(*3) ~~W~~ — 174
Account reveivables and other receivables — 648
Investment in joint ventures(*1) — —
Property, plant and equipment(*2) — 10,552
Others — 629
~~W~~ — 12,003
Liability
Others ~~W~~ — 5
(*1) During the year ended December 31, 2022, the Company decided to dispose of CSP - Compania Siderurgica do<br>Pecem and recognized full impairment loss of ~~W~~160,415 million, which is the difference between carrying amount and recoverable amount. The Company reclassified the investment to assets held for sale. Meanwhile,<br>during the nine-month period ended September 30, 2023, the Company disposed of CSP - Compania Siderurgica do Pecem, and recognized ~~W~~103,366 million of loss on disposal of assets held for sale. The loss on<br>disposal of assets held for sale recognized as profit or loss includes ~~W~~102,470 million, which was reclassified from accumulated other comprehensive loss arising from translating the financial statements of<br>foreign operation.
--- ---
(*2) During the past period, the Company decided to dispose Synthetic Natural Gas (SNG) facility for which use was<br>discontinued, and classified as assets held for sale for ~~W~~10,305 million. Meanwhile, during the nine-month period ended September 30, 2023, the Company disposed of the assets held for sale for<br>~~W~~9,684 million and reclassified the remaining amount ~~W~~621 million to property, plant and equipment.
--- ---
(*3) Cash and cash equivalents in the statement of cash flows include cash and cash equivalents that are classified<br>as assets held for sale as of December 31, 2022.
--- ---

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

9. Investments in Associates and Joint ventures

(a) Details of investments in associates as of September 30, 2023 and December 31, 2022 are as follows:<br>
(in millions of Won) September 30, 2023 December 31,<br>2022
--- --- --- --- --- --- --- --- --- --- ---
Company Number<br>of shares Ownership<br>(%) Acquisition<br>cost Book value Book value
[Domestic]
Samcheok Blue Power Co., Ltd.(*1) 4,507,138 34.00 ~~W~~ 429,904 ~~W~~ 331,568 352,500
SNNC 18,130,000 49.00 90,650 127,595 182,414
Chun-cheon Energy Co., Ltd(*1) 17,308,143 49.10 86,541 9,329 9,513
Pocheon-Hwado Highway Corp.(*1) 6,981,975 27.64 34,910 25,371 27,165
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd 1,181,160 29.53 5,906 14,267 14,605
DaeSung SnM Co., Ltd (formerly, Daesung Steel)(*2) 108,038 17.54 14,000 20,219 20,469
PCC Amberstone Private Equity Fund 1(*2) 7,761,916,670 8.80 7,644 8,908 9,326
Others (50 companies)(*1) 141,087 238,086
678,344 854,078
[Foreign]
South-East Asia Gas Pipeline Company Ltd. 135,219,000 25.04 132,907 303,979 290,318
AES-VCM Mong Duong Power Company Limited(*1) — 30.00 164,303 253,458 209,594
9404-5515 Quebec Inc. 284,463,243 25.85 328,509 378,060 331,261
FQM Australia Holdings Pty Ltd 186,000,030 24.32 109,568 79,145 98,103
Eureka Moly LLC — 20.00 240,123 15,465 14,574
AMCI (WA) PTY LTD 49 49.00 209,664 59,795 57,830
NCR LLC — 22.10 225,646 239,744 187,372
KOREA LNG LTD. 2,400 20.00 135,205 19,716 29,124
Nickel Mining Company SAS 3,234,698 49.00 157,585 93,059 90,636
ZHEJIANG HUAYOU-POSCO ESM CO., LTD 648,530,000 40.00 120,072 109,921 98,933
PT. Wampu Electric Power(*1) 8,708,400 20.00 10,054 17,246 16,659
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 50 25.00 4,723 8,671 8,590
Others (28 companies)(*1) 226,888 231,834
1,805,147 1,664,828
~~W~~ 2,483,491 2,518,906
(*1) As of September 30, 2023 and December 31, 2022, investments in associates amounting to<br>~~W~~650,116 million and ~~W~~628,573 million, respectively, are provided as collateral in relation to the associates’ borrowings.
--- ---
(*2) As of September 30, 2023, it was classified as an associate even though the Company’s ownership<br>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.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) Details of investments in joint ventures as of September 30, 2023 and December 31, 2022 are as<br>follows:
(in millions of Won) September 30, 2023 December 31,<br>2022
--- --- --- --- --- --- --- --- --- --- ---
Company Number<br>of shares Ownership<br>(%) Acquisition<br>cost Book value Book value
[Domestic]
POSCO MC MATERIALS<br>(formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 11,568,000 60.00 ~~W~~ 115,680 ~~W~~ 165,311 161,465
Others (6 companies) 7,917 8,845
173,228 170,310
[Foreign]
Roy Hill Holdings Pty Ltd(*1) 13,117,972 12.50 1,528,672 1,375,064 1,418,022
POSCO-NPS Niobium LLC 325,050,000 50.00 364,609 437,207 412,002
KOBRASCO 2,010,719,185 50.00 32,950 95,401 103,044
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. — 25.00 61,961 119,336 111,219
DMSA/AMSA(*1) — 3.89 346,880 22,423 23,740
HBIS-POSCO Automotive Steel Co. Ltd — 50.00 235,251 215,823 216,138
PT NICOLE METAL INDUSTRY(*2) 76,382,353 49.00 292,780 295,294 —
Others (9 companies) 24,897 23,170
2,585,445 2,307,335
~~W~~ 2,758,673 2,477,645
(*1) As of September 30, 2023 and December 31, 2022, the investments in joint ventures are provided as<br>collateral in relation to the joint ventures’ borrowings.
--- ---
(*2) During the nine-month period ended September 30, 2023, the Company acquired 49% shares of PT NICOLE METAL<br>INDUSTRY, for ~~W~~292,780 million and classified the investment as an investment in joint ventures.
--- ---

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(c) The movements of investments in associates and joint ventures for the nine-month period ended<br>September 30, 2023 and the year ended December 31, 2022 were as follows:
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Company December 31,<br>2022<br>Book value Acquisition Dividends Share of<br>profits (losses) Other increase<br>(decrease)(*1) September 30,<br>2023<br>Book value
[Domestic]
Samcheok Blue Power Co., Ltd. ~~W~~ 352,500 — (7,494 ) (13,306 ) (132 ) 331,568
SNNC 182,414 — — (54,819 ) — 127,595
QSONE Co., Ltd.(*2) 86,378 — — 245 (86,623 ) —
Chun-cheon Energy Co., Ltd 9,513 — — (735 ) 551 9,329
Pocheon-Hwado Highway Corp. 27,165 — — (1,794 ) — 25,371
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd 14,605 — — (338 ) — 14,267
DaeSung SnM Co., Ltd (formerly, Daesung Steel) 20,469 — — (250 ) — 20,219
PCC Amberstone Private Equity Fund 1 9,326 — (469 ) 288 (237 ) 8,908
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 161,465 — — 3,846 — 165,311
Others (56 companies) 160,553 7,475 (2,403 ) 1,415 (18,036 ) 149,004
1,024,388 7,475 (10,366 ) (65,448 ) (104,477 ) 851,572
[Foreign]
South-East Asia Gas Pipeline Company Ltd. 290,318 — (40,971 ) 36,761 17,871 303,979
AES-VCM Mong Duong Power Company Limited 209,594 — (11,876 ) 31,205 24,535 253,458
9404-5515 Quebec Inc. 331,261 — (3,202 ) 16,983 33,018 378,060
FQM Australia Holdings Pty Ltd 98,103 — — (31,930 ) 12,972 79,145
Eureka Moly LLC 14,574 — — — 891 15,465
AMCI (WA) PTY LTD 57,830 — — 451 1,514 59,795
NCR LLC 187,372 44,111 — (4,448 ) 12,709 239,744
KOREA LNG LTD. 29,124 — (16,417 ) 16,372 (9,363 ) 19,716
Nickel Mining Company SAS 90,636 — — (2,967 ) 5,390 93,059
ZHEJIANG HUAYOU-POSCO ESM CO., LTD 98,933 15,640 — (5,833 ) 1,181 109,921
PT. Wampu Electric Power 16,659 — (593 ) 479 701 17,246
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 8,590 — — (119 ) 200 8,671
Roy Hill Holdings Pty Ltd 1,418,022 — (257,174 ) 201,308 12,908 1,375,064
POSCO-NPS Niobium LLC 412,002 — (29,016 ) 28,505 25,716 437,207
KOBRASCO 103,044 — (36,471 ) 16,029 12,799 95,401
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. 111,219 — — 5,875 2,242 119,336
DMSA/AMSA 23,740 — — (2,679 ) 1,362 22,423
HBIS-POSCO Automotive Steel Co. Ltd 216,138 — — (3,728 ) 3,413 215,823
PT NICOLE METAL INDUSTRY — 292,780 — 15 2,499 295,294
Others (37 companies) 255,004 — (49,133 ) 46,100 (186 ) 251,785
3,972,163 352,531 (444,853 ) 348,379 162,372 4,390,592
~~W~~ 4,996,551 360,006 (455,219 ) 282,931 57,895 5,242,164
(*1) Other increase or decrease represents the changes in investments in associates and joint ventures due to<br>disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others.
--- ---
(*2) During the nine-month period ended September 30, 2023, the Company additionally acquired 50% of the shares<br>held by external shareholders of QSONE Co., Ltd., which was previously classified as an investment in associate. Accordingly, the entity was newly included in consolidated subsidiary due to obtaining control of the entity.
--- ---

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the year ended December 31, 2022
(in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Company December 31,<br>2021<br>Book value Acquisition Dividends Share of<br>profits (losses) Other increase<br>(decrease)(*1) December 31,<br>2022<br>Book value
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund(*3) ~~W~~ 176,136 — (143,170 ) 145,822 (178,788 ) —
Samcheok Blue Power Co., Ltd. 382,887 — (9,992 ) (19,354 ) (1,041 ) 352,500
SNNC 171,332 — (5,348 ) 15,484 946 182,414
QSONE Co., Ltd. 86,058 — (1,100 ) 1,420 — 86,378
Chun-cheon Energy Co., Ltd 9,571 — — (802 ) 744 9,513
Western Inland highway CO., LTD. 53,563 — — (125 ) (53,438 ) —
Pocheon-Hwado Highway Corp. 28,813 5,519 — (4,683 ) (2,484 ) 27,165
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd 19,191 — — (453 ) (4,133 ) 14,605
DaeSung SnM Co., Ltd (formerly, Daesung Steel) 19,073 — — 1,396 — 20,469
PCC Amberstone Private Equity Fund 1 9,251 — (652 ) 1,104 (377 ) 9,326
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 169,838 — (24,000 ) 15,604 23 161,465
Others (64 companies) 113,711 45,563 (4,368 ) (3,931 ) 9,578 160,553
1,239,424 51,082 (188,630 ) 151,482 (228,970 ) 1,024,388
[Foreign]
South-East Asia Gas Pipeline Company Ltd. 238,601 — (14,541 ) 50,143 16,115 290,318
AES-VCM Mong Duong Power Company Limited 182,639 — (33,174 ) 45,382 14,747 209,594
9404-5515 Quebec Inc.(*2) 135,738 172,316 (31,949 ) 25,195 29,961 331,261
FQM Australia Holdings Pty Ltd 91,052 — — 166 6,885 98,103
Eureka Moly LLC 13,633 — — — 941 14,574
AMCI (WA) PTY LTD 67,972 — — (3,964 ) (6,178 ) 57,830
NCR LLC 102,319 82,798 — (2,338 ) 4,593 187,372
KOREA LNG LTD. 31,340 — (21,161 ) 21,027 (2,082 ) 29,124
Nickel Mining Company SAS 48,249 — — 42,169 218 90,636
ZHEJIANG HUAYOU-POSCO ESM CO., LTD 22,769 82,010 — (1,302 ) (4,544 ) 98,933
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd 19,099 — — 213 (19,312 ) —
PT. Wampu Electric Power 15,851 — (2,474 ) 823 2,459 16,659
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 9,140 — — (220 ) (330 ) 8,590
Roy Hill Holdings Pty Ltd 1,346,712 — (233,592 ) 273,084 31,818 1,418,022
POSCO-NPS Niobium LLC 393,793 — (34,909 ) 25,884 27,234 412,002
KOBRASCO 68,296 — (21,287 ) 48,267 7,768 103,044
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. 107,650 — — 6,527 (2,958 ) 111,219
DMSA/AMSA 24,144 — — (2,108 ) 1,704 23,740
CSP - Compania Siderurgica do Pecem 52,257 — — (90,395 ) 38,138 —
HBIS-POSCO Automotive Steel Co. Ltd 110,769 126,195 — (10,515 ) (10,311 ) 216,138
Others (37 companies) 193,200 29,975 (56,527 ) 96,740 (8,384 ) 255,004
3,275,223 493,294 (449,614 ) 524,778 128,482 3,972,163
~~W~~ 4,514,647 544,376 (638,244 ) 676,260 (100,488 ) 4,996,551
(*1) Other increase or decrease represents the changes in investments in associates and joint ventures due to<br>disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others during the year ended December 31, 2022.
--- ---
(*2) During the year ended December 31, 2022, it was additionally acquired due to the in-kind dividend of EQP POSCO Global NO1 Natural Resources Private Equity Fund, and the Company classified it as other increase or decrease.
--- ---
(*3) During the year ended December 31, 2022, dividends were declared prior to liquidation. The Company<br>recognized impairment loss of ~~W~~10,065 million since recoverable amount was less than its carrying amount.
--- ---

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(d) Summarized financial information of associates and joint ventures as of and for the nine-month period ended<br>September 30, 2023 and the year ended December 31, 2022 are as follows:
1) September 30, 2023
--- ---
(in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- ---
Company Assets Liabilities Equity<br>(deficit) Sales Net<br>income<br>(loss)
[Domestic]
Samcheok Blue Power Co., Ltd. ~~W~~ 4,134,540 3,555,541 578,999 3,514 (20,041 )
SNNC 596,900 337,097 259,803 587,940 (132,836 )
Chun-cheon Energy Co., Ltd 616,413 487,278 129,135 459,597 21,484
Pocheon-Hwado Highway Corp. 533,353 412,803 120,550 — (1,158 )
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd 21,015 3,001 18,014 2,609 (1,143 )
DaeSung SnM Co., Ltd (formerly, Daesung Steel) 183,835 99,957 83,878 82,316 (1,425 )
PCC Amberstone Private Equity Fund 1 105,148 3,879 101,269 8,837 3,280
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 430,057 153,211 276,846 145,408 4,471
[Foreign]
South-East Asia Gas Pipeline Company Ltd. 1,850,777 636,814 1,213,963 321,930 146,802
AES-VCM Mong Duong Power Company Limited 1,787,398 988,166 799,232 344,352 104,016
9404-5515 Quebec Inc. 1,538,837 805 1,538,032 — 78,704
FQM Australia Holdings Pty Ltd 1,454,824 1,131,802 323,022 343,826 (113,939 )
KOREA LNG LTD. 98,721 141 98,580 83,975 81,858
Nickel Mining Company SAS 522,608 272,109 250,499 212,543 (23,077 )
ZHEJIANG HUAYOU-POSCO ESM CO., LTD 322,969 47,661 275,308 127,226 (14,577 )
PT. Wampu Electric Power 215,751 132,580 83,171 14,509 2,395
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 81,542 47,937 33,605 82,304 (357 )
Roy Hill Holdings Pty Ltd 10,507,251 2,783,522 7,723,729 5,884,317 1,977,651
POSCO-NPS Niobium LLC 874,210 — 874,210 — 51,593
KOBRASCO 251,556 61,360 190,196 45,196 32,058
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. 781,549 331,072 450,477 1,201,123 23,501
DMSA/AMSA 3,260,067 2,683,662 576,405 863,432 (68,875 )
HBIS-POSCO Automotive Steel Co. Ltd 771,947 328,791 443,156 218,493 (5,658 )
PT NICOLE METAL INDUSTRY 423,454 20,042 403,412 — 31

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) December 31, 2022
(in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- ---
Company Assets Liabilities Equity<br>(deficit) Sales Net<br>income<br>(loss)
[Domestic]
EQP POSCO Global NO1 Natural Resources Private Equity Fund ~~W~~ 9,471 480 8,991 — 425,366
Samcheok Blue Power Co., Ltd. 3,515,861 2,885,218 630,643 — (8,447 )
SNNC 667,440 274,801 392,639 986,557 10,273
QSONE Co., Ltd. 253,078 80,322 172,756 18,753 2,840
Chun-cheon Energy Co., Ltd 634,842 527,190 107,652 585,610 20,224
Pocheon-Hwado Highway Corp. 366,163 244,455 121,708 — (1,175 )
CHUNGJU ENTERPRISE CITY DEVELOPMENT Co., Ltd 24,926 5,769 19,157 17,189 (1,521 )
DaeSung SnM Co., Ltd (formerly, Daesung Steel) 175,429 90,126 85,303 128,401 7,957
PCC Amberstone Private Equity Fund 1 106,024 — 106,024 13,877 12,546
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 447,604 175,229 272,375 252,246 27,628
[Foreign]
South-East Asia Gas Pipeline Company Ltd. 1,705,670 546,262 1,159,408 447,696 200,246
AES-VCM Mong Duong Power Company Limited 1,701,272 1,019,227 682,045 417,021 151,022
9404-5515 Quebec Inc. 1,397,061 — 1,397,061 — 182,708
FQM Australia Holdings Pty Ltd 1,458,318 1,131,628 326,690 493,202 (22,768 )
KOREA LNG LTD. 145,845 225 145,620 107,295 105,135
Nickel Mining Company SAS 539,318 279,291 260,027 379,922 91,008
ZHEJIANG HUAYOU-POSCO ESM CO., LTD 305,740 57,932 247,808 45,771 (3,176 )
PT. Wampu Electric Power 209,815 129,520 80,295 21,760 4,115
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 79,116 45,677 33,439 136,663 (992 )
Roy Hill Holdings Pty Ltd 9,859,888 2,152,428 7,707,460 7,706,908 2,542,223
POSCO-NPS Niobium LLC 823,800 — 823,800 — 49,341
KOBRASCO 262,724 57,242 205,482 147,843 96,534
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. 663,509 245,499 418,010 1,881,946 26,106
DMSA/AMSA 3,022,659 2,412,377 610,282 1,368,730 (54,212 )
CSP - Compania Siderurgica do Pecem 4,422,752 3,678,956 743,796 3,101,132 500,082
HBIS-POSCO Automotive Steel Co. Ltd 712,633 270,668 441,965 473,494 (15,515 )

23

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

10. Joint Operations

Details of significant joint operations that the Company is participating in as a party to a joint arrangement as of September 30, 2023 are as follows:

Joint operations Operation Ownership (%) Location
Myanmar A-1/A-3<br>mine Mine development and gas production 51.00 Myanmar
Offshore midstream Gas transportation facility 51.00 Myanmar
Greenhills mine Mine development 20.00 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 36.00 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
Yongmun 123 Construction work Construction 70.00 Korea
Songdo B5 Block office Complex 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 nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(a) For the nine-month period ended September 30, 2023
(in millions of Won) Beginning Acquisitions Business<br>Combination(*2) Disposals Depreciation Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 308,523 54,834 473,301 (18 ) — (64,428 ) 772,212
Buildings 593,505 827 83,739 (304 ) (21,322 ) 17,143 673,588
Structures 1,356 — — — (738 ) 1,277 1,895
Right-of-use<br>assets 170,647 219 — (51 ) (4,103 ) 2,969 169,681
~~W~~ 1,074,031 55,880 557,040 (373 ) (26,163 ) (43,039 ) 1,617,376
(*1) Includes reclassification resulting from changing purpose of use, adjustment of foreign currency translation<br>difference and others.
--- ---
(*2) Represents increases in investment property due to business combination upon reclassification of QSONE Co.,<br>Ltd. into a subsidiary during the nine-month period ended September 30, 2023.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) For the year ended December 31, 2022
(in millions of Won) Beginning Acquisitions Disposals Depreciation Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 332,308 — (2,921 ) — (20,864 ) 308,523
Buildings 584,549 1,661 (34 ) (28,336 ) 35,665 593,505
Structures 753 — — (797 ) 1,400 1,356
Right-of-use<br>assets 168,467 — (21,151 ) (6,888 ) 30,219 170,647
~~W~~ 1,086,077 1,661 (24,106 ) (36,021 ) 46,420 1,074,031
(*1) Includes reclassification resulting from changing purpose of use, adjustment of foreign currency translation<br>difference and others.
--- ---

12. Property, Plant and Equipment, Net

(a) Changes in the carrying amount of property, plant and equipment for the nine-month period ended<br>September 30, 2023 and the year ended December 31, 2022 were as follows:
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Beginning Acquisitions Business<br>Combination(*2) Disposals Depreciation Impairment<br>loss(*3) Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 3,103,165 41,363 32,565 (1,611 ) — — 148,436 3,323,918
Buildings 4,174,894 32,472 5,770 (3,237 ) (242,445 ) (20,413 ) 372,614 4,319,655
Structures 3,162,927 12,149 3,651 (4,888 ) (194,403 ) (24,363 ) 160,770 3,115,843
Machinery and equipment 16,422,830 104,890 — (38,803 ) (1,805,680 ) (105,801 ) 1,643,607 16,221,043
Vehicles 52,131 33,602 — (414 ) (19,151 ) — 18,866 85,034
Tools 90,961 28,777 — (402 ) (39,385 ) (66 ) 41,071 120,956
Furniture and fixtures 173,345 23,390 655 (1,042 ) (42,340 ) — 20,926 174,934
Lease assets 921,198 211,793 — (712 ) (125,956 ) — 13,786 1,020,109
Bearer plants 141,720 — — — (7,217 ) — 10,507 145,010
Construction-in-progress 3,538,025 4,326,254 — (1,108 ) — — (2,063,564 ) 5,799,607
~~W~~ 31,781,196 4,814,690 42,641 (52,217 ) (2,476,577 ) (150,643 ) 367,019 34,326,109
(*1) Represents assets transferred from<br>construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign<br>currency translation differences and others.
--- ---
(*2) Represents increases in property, plant and equipment upon reclassification of QSONE Co., Ltd., which was<br>previously an associate, into a subsidiary by acquiring additional shares during the nine-month period ended September 30, 2023.
--- ---
(*3) The Company terminated operations of certain portions of the lithium production facilities located in Gwangyang<br>and Argentina due to changes in operational plans. The Company estimated the recoverable amount of these assets at the net fair value, and recognized an impairment loss of ~~W~~143,257 million since recoverable<br>amounts are less than their carrying amounts.
--- ---

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the year ended December 31, 2022
(in millions of Won) Beginning Acquisitions Business<br>Combination(*2) Disposals Depreciation Impairment<br>loss(*3) Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 2,702,715 89,357 248,858 (1,247 ) — — 63,482 3,103,165
Buildings 4,204,450 127,837 37,741 (9,957 ) (317,350 ) (11,230 ) 143,403 4,174,894
Structures 3,131,795 82,130 38,535 (3,274 ) (253,996 ) (5,084 ) 172,821 3,162,927
Machinery and equipment 16,420,156 597,172 1,216 (33,511 ) (2,303,917 ) (184,706 ) 1,926,420 16,422,830
Vehicles 46,030 15,592 902 (1,017 ) (18,717 ) (123 ) 9,464 52,131
Tools 77,795 32,386 203 (187 ) (37,170 ) (351 ) 18,285 90,961
Furniture and fixtures 166,162 33,936 1,963 (1,175 ) (59,359 ) (1,990 ) 33,808 173,345
Lease assets 867,746 184,260 193,572 (22,029 ) (168,521 ) — (133,830 ) 921,198
Bearer plants 154,682 — — — (9,691 ) — (3,271 ) 141,720
Construction-in-progress 1,825,167 3,947,703 11,111 (383 ) — (9,699 ) (2,235,875 ) 3,538,024
~~W~~ 29,596,698 5,110,373 534,101 (72,780 ) (3,168,721 ) (213,183 ) (5,293 ) 31,781,195
(*1) Represents assets transferred from<br>construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign<br>currency translation differences and others.
--- ---
(*2) Represents increases in property, plant and equipment due to business combination upon acquisition of Senex<br>Energy Limited during the year ended December 31, 2022.
--- ---
(*3) The Company estimated the recoverable amount of damaged assets due to the flooding of Naengcheon stream in<br>Pohang at the net fair value, and recognized an impairment loss of ~~W~~207,072 million since recoverable amounts are less than their carrying amounts.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) Changes in the carrying amount of right of use assets presented as investment property and property, plant and<br>equipment for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Beginning Acquisitions Depreciation Others Ending
--- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 368,167 10,568 (11,947 ) 4,563 371,351
Buildings and structures 163,648 35,027 (33,638 ) (10,187 ) 154,850
Machinery and equipment 319,021 66,101 (43,950 ) 21,757 362,929
Vehicles 18,652 35,757 (11,347 ) 1,320 44,382
Ships 215,496 28,178 (16,905 ) — 226,769
Others 6,862 36,381 (12,272 ) (1,462 ) 29,509
~~W~~ 1,091,846 212,012 (130,059 ) 15,991 1,189,790
2) For the year ended December 31, 2022
--- ---
(in millions of Won) Beginning Acquisitions Business<br>Combination(*1) Depreciation Others Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 391,446 18,077 — (16,843 ) (24,513 ) 368,167
Buildings and structures 143,854 74,454 6,714 (50,397 ) (10,977 ) 163,648
Machinery and equipment 256,205 43,088 175,795 (56,333 ) (99,734 ) 319,021
Vehicles 14,753 12,467 98 (12,015 ) 3,349 18,652
Ships 210,056 23,793 — (18,355 ) 2 215,496
Others 19,899 12,381 10,965 (21,467 ) (14,916 ) 6,862
~~W~~ 1,036,213 184,260 193,572 (175,410 ) (146,789 ) 1,091,846
(*1) Represents increases in right of use assets upon acquisition of Senex Energy Limited during the year ended<br>December 31, 2022.
--- ---
(c) The amounts recognized in profit or loss related to leases for the three-month and the nine-month periods ended<br>September 30, 2023 and 2022 were as follows:
--- ---
For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- ---
(in millions of Won) 2023 2022 2023 2022
Interest on lease liabilities ~~W~~ 19,465 8,769 39,103 25,888
Expenses related to short-term leases 12,857 6,498 37,822 21,620
Expenses related to leases of low-value assets 6,601 1,359 16,069 9,771
~~W~~ 38,923 16,626 92,994 57,279

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

13. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill and other intangible assets for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(a) For the nine-month period ended September 30, 2023
(in millions of Won) Beginning Acquisitions Disposals Amortization Impairment<br>loss Others(*2) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill ~~W~~ 442,487 — — — — 435 442,922
Intellectual property rights 3,136,072 132,523 — (237,746 ) — 197,271 3,228,120
Membership(*1) 132,942 7,130 (1,857 ) (130 ) 28 112 138,225
Development expense 116,171 9,781 (34 ) (54,791 ) — 45,450 116,577
Port facilities usage rights 197,211 — — (11,100 ) — — 186,111
Exploratation and evaluation assets 100,991 17,336 — — (1,208 ) (1,159 ) 115,960
Development assets 78,970 27,180 — — — (96,406 ) 9,744
Customer relationships 241,311 — — (33,359 ) — 19 207,971
Other intangible assets 392,296 75,019 (708 ) (31,912 ) (3,536 ) 4,001 435,160
~~W~~ 4,838,451 268,969 (2,599 ) (369,038 ) (4,716 ) 149,723 4,880,790
(*1) Includes membership with indefinite economic useful life.
--- ---
(*2) Represents assets transferred from<br>construction-in-progress to intangible assets and assets transferred from property, plant and equipment, adjustments of foreign currency translation difference and<br>others.
--- ---
(b) For the year ended December 31, 2022
--- ---
(in millions of Won) Beginning Acquisitions Business<br>Combination<br>(*3,4) Disposals Amortization Impairment<br>loss(*5) Others(*2) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill ~~W~~ 735,969 — 66,206 — — (369,337 ) 9,649 442,487
Intellectual property rights 2,225,808 354,179 912,971 (582 ) (326,494 ) 379 (30,189 ) 3,136,072
Membership(*1) 142,370 9,230 — (2,082 ) (145 ) 854 (17,285 ) 132,942
Development expense 153,973 1,800 — (13 ) (67,446 ) (1,046 ) 28,903 116,171
Port facilities usage rights 216,021 — — — (14,800 ) — (4,010 ) 197,211
Exploratation and evaluation assets 61,957 24,583 21,266 — — — (6,815 ) 100,991
Development assets — 6,607 76,591 — — — (4,228 ) 78,970
Customer relationships 285,720 — — — (44,478 ) — 69 241,311
Other intangible assets 344,491 99,388 26,649 (145 ) (35,472 ) (232 ) (42,383 ) 392,296
~~W~~ 4,166,309 495,787 1,103,683 (2,822 ) (488,835 ) (369,382 ) (66,289 ) 4,838,451
(*1) Includes membership with indefinite economic useful life.
--- ---
(*2) Represents assets transferred from<br>construction-in-progress to intangible assets and assets transferred from property, plant and equipment, adjustments of foreign currency translation difference and<br>others.
--- ---
(*3) Represents increases in intangible assets upon acquisition of Senex Energy Limited during the year ended<br>December 31, 2022.
--- ---
(*4) Represents increases in intangible assets upon acquisition of POSCO Silicon Solution Co., Ltd during the year<br>ended December 31, 2022.
--- ---
(*5) During the year ended December 31, 2022, impairment loss of ~~W~~337,953 million on<br>goodwill of POSCO INTERNATIONAL Corporation, a subsidiary included in trading segment of green infrastructure, was recognized as the recoverable amount is less than the carrying amount of the CGU.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

14. Other Assets

Other assets as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Advance payments ~~W~~ 726,906 782,439
Prepaid expenses 288,057 263,536
Firm commitment asset 11,458 9,674
Others 19,328 20,290
~~W~~ 1,045,749 1,075,939
Non-current
Long-term advance payments ~~W~~ 25,869 23,429
Long-term prepaid expenses 35,190 53,803
Others(*1) 91,775 90,142
~~W~~ 152,834 167,374
(*1) As of December 31, 2022, the Company recognized tax asset amounting to<br>~~W~~6,764 million based on the Company’s best estimate of the tax amount 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<br>claim for rectification are finalized.
--- ---

15. Borrowings

(a) Short-term borrowings and current portion of long-term borrowings and others as of September 30, 2023 and<br>December 31, 2022 are as follows:
(in millions of Won) Lenders Issuance date Maturity date Interest rate (%) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Short-term borrowings
Bank overdrafts JP Morgan and others December, 2022~<br>September, 2023 October, 2023~<br>July, 2024 3.65 ~ 7.60 ~~W~~ 147,427 197,718
Short-term borrowings HSBC and others October, 2022~<br>September, 2023 October, 2023~<br>September, 2024 0.20 ~ 33.60 6,162,787 6,635,402
6,310,214 6,833,120
Current portion of long-term liabilities
Current portion of long-term borrowings Export-Import Bank of Korea and others September, 2001~<br>August, 2023 October, 2023~<br>September, 2024 0.75 ~ 16.50 1,203,890 2,302,592
Current portion of debentures Goldman sachs and others October, 2013~<br>September, 2021 October, 2023~<br>September, 2024 0.50 ~ 3.64 2,693,260 2,782,049
Less: Current portion of discount on debentures issued (2,545 ) (1,767 )
Current portion of exchangable bonds Foreign currency exchangable bonds September, 2021 September, 2026 1,881,611 —
5,776,216 5,082,874
~~W~~ 12,086,430 11,915,994

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) Long-term borrowings, excluding current portion and others as of September 30, 2023 and December 31, 2022<br>are as follows:
(in millions of Won) Lenders Issuance date Maturity date Interest rate (%) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- ---
Long-term borrowings Export-Import Bank of Korea and others September, 2001~<br>September, 2023 October, 2024~<br>March, 2040 0.19 ~ 8.75 ~~W~~ 4,500,721 2,718,212
Less: Present value discount (9,953 ) (8,951 )
Bonds KB Securities co., Ltd. and others July, 2015~<br>September, 2023 October, 2024~<br>January, 2033 1.64 ~ 6.57 11,405,988 8,351,006
Less: Discount on debentures issued (54,803 ) (28,894 )
Exchangeable bonds(*1,2) Foreign currency exchangeable bonds September, 2021 September, 2026 — 1,358,294
~~W~~ 15,841,953 12,389,667
(*1) As of September 30, 2023, exchangeable bonds were reclassified as current liabilities because the<br>bondholders’ put option for redemption is exercisable within 12 months.
--- ---
(*2) The issuance conditions of the exchangeable bonds issued by the Company are as follows:
--- ---
Foreign currency exchangable bonds
--- ---
Type of bond Exchangable bonds
Aggregate principal amount EUR 1,065,900,000
Interest rate - Coupon rate : -
- Yield to Maturity : (0.78%)
Maturity date September 1, 2026
Redemption - 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
- Prepayment : The issuer has call option and the bondholders have put option
Exchange rate 100%
Exchange price (Won/share) 451,450(*)
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<br>options or warranties to shareholders, share dividend, cash dividend, issuance of new shares under the market price.
Put option by bondholders - After 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<br>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 exchange price has changed due to cash dividends during the nine-month period ended September 30,<br>2023.
--- ---

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.

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POSCO HOLDINGS INC. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(c) Assets pledged as collateral with regard to the borrowings as of September 30, 2023 are as follows:<br>
(in millions of Won) Lenders Book value Pledged amount
--- --- --- --- --- ---
Property, plant and equipment and Investment property Korea Development Bank and others ~~W~~ 4,417,817 5,982,379
Trade accounts and notes receivable Standard Chartered Bank Korea and others 155,376 155,376
Financial instruments Woori Bank and others 35,540 35,540
~~W~~ 4,608,733 6,173,295

16. Other Payables

Other payables as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Accounts payable ~~W~~ 1,098,685 1,423,402
Accrued expenses 903,096 981,609
Dividend payable 3,951 4,371
Lease liabilities 165,237 149,384
Withholdings 336,740 307,102
~~W~~ 2,507,709 2,865,868
Non-current
Accounts payable ~~W~~ 16,018 15,713
Accrued expenses 7,956 8,102
Lease liabilities 790,408 674,098
Long-term withholdings 93,447 92,489
~~W~~ 907,829 790,402

17. Other Financial Liabilities

Other financial liabilities as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Derivative liabilities ~~W~~ 46,630 95,157
Financial guarantee liabilities 4,975 11,370
~~W~~ 51,605 106,527
Non-current
Derivative liabilities ~~W~~ 17,166 79,984
Financial guarantee liabilities 5,655 7,068
Others(*1) 73,953 —
~~W~~ 96,774 87,052
(*1) The Company recognized other financial liabilities in connection with the put option agreement which POSCO<br>FUTURE MATERIALS CANADA INC. (formerly, POSCO CHEMICAL CANADA INC.), a subsidiary, entered into with GM Battery Raw Materials Corporation. ****
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

18. Provisions

(a) Provisions as of September 30, 2023 and December 31, 2022 are as follows:
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- ---
Current Non-current Current Non-current
Provision for bonus payments ~~W~~ 116,836 34,112 136,275 33,157
Provision for construction warranties 44,360 146,625 35,702 170,272
Provision for legal contingencies and claims(*1) 46,143 57,901 46,823 59,518
Provision for the restoration(*2,3) 8,297 250,298 6,049 185,097
Others(*4,5,6) 194,231 79,313 291,139 131,874
~~W~~ 409,867 568,249 515,988 579,918
(*1) The Company recognized probable outflow of resources amounting to<br>~~W~~50,829 million and ~~W~~52,530 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of September 30, 2023 and<br>December 31, 2022, respectively.
--- ---
(*2) Due to contamination of lands near the Company’s magnesium smelting plant located in Gangneung province<br>and others, the Company recognized present values of estimated costs for recovery, ~~W~~17,924 million as provisions for restoration as of September 30, 2023. In order to determine the estimated costs, the<br>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 4.27%~4.46% 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<br>recognized present value of estimated costs for recovery amounting to ~~W~~110,863 million as provisions for improvement as of September 30, 2023.
--- ---
(*4) As of September 30, 2023 and December 31, 2022, POSCO INTERNATIONAL Corporation and Korea Fuel Cell,<br>recognized ~~W~~83,945 million and ~~W~~97,928 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow<br>of resources.
--- ---
(*5) As of September 30, 2023 and December 31, 2022, the Company has recognized emission liabilities<br>amounting to ~~W~~10,375 million and ~~W~~14,178 million respectively, for expected greenhouse gas emissions exceeding the quantity of free quota emission rights.<br>
--- ---
(*6) According to the Act on the promotion of the development, use and diffusion of new and renewable energy, POSCO<br>INTERNATIONAL Corporation is obliged to supply a certain amount of power generated by new and renewable energy. In accordance with the Act, POSCO INTERNATIONAL Corporation estimated the cost required to fulfill its obligations, such as insufficient<br>supply of power using new and renewable energy to be borne, and as of September 30, 2023 and December 31, 2022, the Company recognized ~~W~~60,933 million and<br>~~W~~123,073 million respectively, as provision liabilities.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) Changes in provisions for the nine-month period ended<br>September 30, 2023 and the year ended December 31, 2022 were as follows:
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Beginning Increase Utilization Reversal Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Provision for bonus payments ~~W~~ 169,432 135,381 (148,455 ) (4,933 ) (477 ) 150,948
Provision for construction warranties 205,974 32,043 (42,995 ) (4,684 ) 647 190,985
Provision for legal contingencies and claims 106,341 6,649 (8,751 ) (2,410 ) 2,215 104,044
Provision for the restoration 191,146 59,989 (6,533 ) 4,120 9,873 258,595
Others 423,013 115,556 (180,822 ) (87,423 ) 3,220 273,544
~~W~~ 1,095,906 349,618 (387,556 ) (95,330 ) 15,478 978,116
(*1) Includes adjustments of foreign currency translation differences and others.
--- ---
2) For the year ended December 31, 2022
--- ---
(in millions of Won) Beginning Increase Utilization Reversal Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Provision for bonus payments ~~W~~ 138,533 176,677 (137,092 ) (5,813 ) (2,873 ) 169,432
Provision for construction warranties 236,660 52,438 (73,853 ) (8,287 ) (984 ) 205,974
Provision for legal contingencies and claims 93,491 47,344 (33,175 ) (8,654 ) 7,335 106,341
Provision for the restoration 159,531 45,130 (43,168 ) (1,299 ) 30,952 191,146
Others 360,861 317,621 (203,985 ) (60,738 ) 9,254 423,013
~~W~~ 989,076 639,210 (491,273 ) (84,791 ) 43,684 1,095,906
(*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 nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Expense related to post-employment benefit plans under defined contribution plans ~~W~~ 16,290 21,983 50,259 43,638

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) Defined benefit plans
1) The amounts recognized in relation to net defined benefit assets in the statements of financial position as of<br>September 30, 2023 and December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Present value of funded obligations ~~W~~ 2,256,971 2,200,127
Fair value of plan assets(*1) (2,645,527 ) (2,703,639 )
Present value of non-funded obligations 18,010 20,560
Net defined benefit liabilities ~~W~~ (370,546 ) (482,952 )
(*1) As of September 30, 2023 and December 31, 2022, the Company recognized net defined benefit assets<br>amounting to ~~W~~425,868 million and ~~W~~520,659 million, respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of<br>defined benefit obligations.
--- ---
2) Changes in present value of defined benefit obligations for the nine-month period ended September 30, 2023<br>and the year ended December 31, 2022 were as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Defined benefit obligations at the beginning of period ~~W~~ 2,220,687 2,415,031
Current service costs 173,013 235,007
Interest costs 71,709 71,348
Remeasurements 20,096 (192,339 )
Benefits paid (219,124 ) (300,353 )
Others 8,600 (8,007 )
Defined benefit obligations at the end of period ~~W~~ 2,274,981 2,220,687
3) Changes in fair value of plan assets for the nine-month period ended<br>September 30, 2023 and the year ended December 31, 2022 were as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Fair value of plan assets at the beginning of period ~~W~~ 2,703,639 2,620,046
Interest on plan assets 94,258 77,745
Remeasurement of plan assets 12,014 (57,335 )
Contributions to plan assets 14,967 346,773
Benefits paid (184,056 ) (287,312 )
Others 4,705 3,722
Fair value of plan assets at the end of period ~~W~~ 2,645,527 2,703,639
4) The amounts recognized in condensed consolidated interim statements of comprehensive income for the three-month<br>and nine-month periods ended September 30, 2023 and 2022 were as follows:
--- ---
For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- --- --- --- --- ---
(in millions of Won) 2023 2022 2023 2022
Current service costs ~~W~~ 59,180 55,661 173,013 173,432
Net interest costs (7,926 ) (2,386 ) (22,549 ) (4,684 )
~~W~~ 51,254 53,275 150,464 168,748

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

20. Other Liabilities

Other liabilities as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Due to customers for contract work ~~W~~ 571,271 761,393
Advances received 387,174 535,885
Unearned revenue 71,350 62,030
Withholdings 323,969 369,067
Firm commitment liability 20,342 7,566
Others(*1) 21,575 24,375
~~W~~ 1,395,681 1,760,316
Non-current
Unearned revenue ~~W~~ 9,941 22,203
Others(*1) 107,018 129,674
~~W~~ 116,959 151,877
(*1) As of September 30, 2023 and December 31, 2022, the Company recognized the acquired liability<br>amounted to ~~W~~59,125 million and ~~W~~71,248 million, respectively related to unfavorable terms of a customer contract relative to market-terms upon the acquisition of Senex<br>Energy Limited.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

21. Financial Instruments

(a) Classification and fair value of financial instruments
1) The carrying amount and fair values of financial assets and financial liabilities by fair value hierarchy as of<br>September 30, 2023 and December 31, 2022 are as follows:
--- ---
① September 30, 2023
--- ---
(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~~ 455,770 — 455,770 — 455,770
Short-term financial instruments 6,989,844 — 6,989,844 — 6,989,844
Equity securities 88,579 51,548 — 37,031 88,579
Debt securities 85,599 — 72,459 13,140 85,599
Other securities 619,847 — 287 619,560 619,847
Derivative hedging instruments(*2) 12,885 — 12,885 — 12,885
Fair value through other comprehensive income
Equity securities 1,706,992 1,500,169 — 206,823 1,706,992
Financial assets measured at amortized cost(*1)
Cash and cash equivalents 7,146,999 — — — —
Trade accounts and notes receivable 9,677,155 — — — —
Other receivables 2,724,766 — — — —
Debt securities 260,776 — — — —
Deposit instruments 5,391,008 — — — —
~~W~~ 35,160,220 1,551,717 7,531,245 876,554 9,959,516
Financial liabilities
Fair value through profit or loss
Derivative liabilities ~~W~~ 60,004 — 60,004 — 60,004
Borrowings 1,881,611 1,881,611 — — 1,881,611
Other financial Liabilities 73,953 — — 73,953 73,953
Derivative hedging instruments(*2) 3,792 — 3,792 — 3,792
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable 5,295,207 — — — —
Borrowings 26,046,771 — 25,868,271 — 25,868,271
Financial guarantee liabilities 10,630 — — — —
Others 3,200,173 — — — —
~~W~~ 36,572,141 1,881,611 25,932,067 73,953 27,887,631
(*1) Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their<br>carrying amounts.
--- ---
(*2) The Company applies fair value hedge accounting which uses forward contracts as hedging instrument in order to<br>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<br>rate and foreign exchange rate changes in foreign currency which influences cash flow from borrowings.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

② December 31, 2022
(in millions of Won) Fair value
--- --- --- --- --- --- --- --- --- --- ---
Book value Level 1 Level 2 Level 3 Total
Financial assets
Fair value through profit or loss
Derivative assets ~~W~~ 350,149 — 350,149 — 350,149
Short-term financial instruments 8,006,081 — 8,006,081 — 8,006,081
Debt securities 75,876 — 69,926 5,950 75,876
Other securities 632,469 29,687 1,022 601,760 632,469
Other receivables 2,000 — — 2,000 2,000
Derivative hedging instruments(*2) 9,846 — 9,846 — 9,846
Fair value through other comprehensive income
Equity securities 1,462,088 1,210,124 — 251,964 1,462,088
Financial assets measured at amortized cost(*1)
Cash and cash equivalents 8,053,108 — — — —
Trade accounts and notes receivable 8,414,946 — — — —
Other receivables 2,458,227 — — — —
Debt securities 124,147 — — — —
Deposit instruments 2,581,802 — — — —
~~W~~ 32,170,739 1,239,811 8,437,024 861,674 10,538,509
Financial liabilities
Fair value through profit or loss
Derivative liabilities ~~W~~ 157,036 — 157,036 — 157,036
Borrowings 1,358,294 1,358,294 — — 1,358,294
Derivative hedging instruments(*2) 18,105 — 18,105 — 18,105
Financial liabilities measured at amortized cost(*1)
Trade accounts and notes payable 5,520,821 — — — —
Borrowings 22,947,368 — 22,331,771 — 22,331,771
Financial guarantee liabilities 18,438 — — — —
Others 2,789,195 — — — —
~~W~~ 32,809,257 1,358,294 22,506,912 — 23,865,206
(*1) Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their<br>carrying amounts.
--- ---
(*2) The Company applies fair value hedge accounting which uses forward contracts as hedging instrument in order to<br>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<br>rate and foreign exchange rate changes in foreign currency which influences cash flow from borrowings.
--- ---
2) Finance income and costs by category of financial instrument for the<br>nine-month periods ended September 30, 2023 and 2022 were as follows:
--- ---
① For the nine-month period ended September 30, 2023<br>
--- ---
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income<br>(expense) Gain and loss<br>on valuation Gain and loss on<br>foreign currency Gain and loss<br>on disposal Others Total Other<br>comprehensive<br>income (loss)
Financial assets at fair value through profit or loss ~~W~~ — 364,273 — 161,168 555 525,996 —
Derivative assets — 299,466 — 219,202 — 518,668 —
Financial assets at fair value through other comprehensive income — — — — 45,658 45,658 212,172
Financial assets measured at amortized cost 352,767 — 420,835 (56,032 ) 10,884 728,454 —
Financial liabilities at fair value through profit or loss — (429,985 ) (93,331 ) — — (523,316 ) —
Derivative liabilities — 41,412 — (219,034 ) — (177,622 ) (2,541 )
Financial liabilities measured at amortized cost (753,583 ) — (803,049 ) — (26,918 ) (1,583,550 ) —
~~W~~ (400,816 ) 275,166 (475,545 ) 105,304 30,179 (465,712 ) 209,631

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

② For the nine-month period ended September 30, 2022
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income<br>(expense) Gain and loss<br>on valuation Gain and loss on<br>foreign currency Gain and loss<br>on disposal Others Total Other<br>comprehensive<br>income (loss)
Financial assets at fair value through profit or loss ~~W~~ 184,364 (48,819 ) 1,304 4,495 601 141,945 —
Derivative assets — 823,329 — 594,857 — 1,418,186 —
Financial assets at fair value through other comprehensive income — — — — 36,729 36,729 (14,729 )
Financial assets measured at amortized cost 160,149 — 1,634,168 (41,443 ) (29,289 ) 1,723,585 —
Financial liabilities at fair value through profit or loss — 126,746 (65,054 ) — — 61,692 —
Derivative liabilities — (76,580 ) — (551,388 ) — (627,968 ) 2,300
Financial liabilities measured at amortized cost (407,058 ) — (2,433,802 ) — (3,683 ) (2,844,543 ) —
~~W~~ (62,545 ) 824,676 (863,384 ) 6,521 4,358 (90,374 ) (12,429 )
3) Finance income and costs by category of financial instrument for the three-month periods ended September 30,<br>2023 and 2022 were as follows:
--- ---
① For the three-month period ended September 30, 2023
--- ---
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income<br>(expense) Gain and loss<br>on valuation Gain and loss on<br>foreign currency Gain and loss<br>on disposal Others Total Other<br>comprehensive<br>income (loss)
Financial assets at fair value through profit or loss ~~W~~ — 16,113 — 27,484 98 43,695 —
Derivative assets — 39,601 — 93,727 — 133,328 —
Financial assets at fair value through other comprehensive income — — — — 16,675 16,675 62,306
Financial assets measured at amortized cost 126,731 — (32,519 ) (14,796 ) 4,457 83,873 —
Financial liabilities at fair value through profit or loss — (309,681 ) (10,877 ) — — (320,558 ) —
Derivative liabilities — 43,517 — (52,354 ) — (8,837 ) (1,360 )
Financial liabilities measured at amortized cost (252,638 ) — (97,781 ) — (12,801 ) (363,220 ) —
~~W~~ (125,907 ) (210,450 ) (141,177 ) 54,061 8,429 (415,044 ) 60,946
② For the three-month period ended September 30, 2022
--- ---
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income<br>(expense) Gain and loss<br>on valuation Gain and loss on<br>foreign currency Gain and loss<br>on disposal Others Total Other<br>comprehensive<br>income (loss)
Financial assets at fair value through profit or loss ~~W~~ 64,343 (15,157 ) 1,304 2,164 (464 ) 52,190 —
Derivative assets — 395,464 — 283,812 — 679,276 —
Financial assets at fair value through other comprehensive income — — — — 5,570 5,570 109,960
Financial assets measured at amortized cost 52,628 — 988,669 (19,638 ) (6,555 ) 1,015,104 —
Financial liabilities at fair value through profit or loss — 26,350 (57,139 ) — — (30,789 ) —
Derivative liabilities — 27,013 — (127,504 ) — (100,491 ) 2,568
Financial liabilities measured at amortized cost (171,647 ) — (1,448,438 ) — 3,242 (1,616,843 ) —
~~W~~ (54,676 ) 433,670 (515,604 ) 138,834 1,793 4,017 112,528
(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, 2022.

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

22. Share Capital and Capital Surplus

(a) Share capital as of September 30, 2023 and December 31, 2022 are as follows:
(share, in Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Authorized shares 200,000,000 200,000,000
Par value ~~W~~ 5,000 5,000
Issued shares(*1) 84,571,230 84,571,230
Shared capital(*2) ~~W~~ 482,403,125,000 482,403,125,000
(*1) As of September 30, 2023, total number of ADRs of 18,903,088 outstanding in overseas stock market are<br>equivalent to 4,725,772 shares of common stock.
--- ---
(*2) As of September 30, 2023, the difference between the ending balance of common stock and the aggregate par<br>value of issued common stock is ~~W~~59,547 million due to retirement of 11,909,395 treasury shares.
--- ---
(b) Capital surplus as of September 30, 2023 and December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Share premium ~~W~~ 463,825 463,825
Gain on disposal of treasury shares 810,197 806,114
Other capital surplus 345,123 130,893
~~W~~ 1,619,145 1,400,832

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

23. Hybrid Bonds

(a) As of December 31, 2022, POSCO, a subsidiary of the Company, held hybrid bonds, which were classified as non-controlling interests in the consolidated financial statements. During the nine-month period ended September 30, 2023, the call option on the hybrid bonds was exercised and redeemed. Hybrid bonds as of<br>September 30, 2023 and December 31, 2022 are as follows:
(in millions of Won) Date of issue Date of maturity Interest rate (%) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- ---
Hybrid bond 1-2(*1,2) 2013-06-13 2043-06-13 4.60 ~~W~~ — 200,000
Issuance cost — (616 )
~~W~~ — 199,384
(*1) During the nine-month period ended September 30, 2023, call option on the hybrid bonds was exercised and<br>redeemed by POSCO, a subsidiary of the Company.
--- ---
(*2) Details of issuance of hybrid bonds are as follows:
--- ---
Hybrid bond1-2
--- ---
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<br>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
(b) As of December 31, 2022, POSCO INTERNATIONAL Corporation, a subsidiary of the Company, held hybrid bonds,<br>which were classified as non-controlling interests in the consolidated financial statements. During the nine-month period ended September 30, 2023, the call option on the hybrid bonds was exercised and<br>redeemed. POSCO ENERGY CO., LTD., which issued hybrid bonds, was merged with POSCO INTERNATIONAL Corporation during the nine-month period ended September 30, 2023. Hybrid bonds as of September 30, 2023 and December 31, 2022 are as<br>follows:
--- ---
(in millions of Won) Date of issue Date of maturity Interest rate (%) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- ---
Hybrid bond 1-4(*1,2) 2013-08-29 2043-08-29 5.21 ~~W~~ — 140,000
Issuance cost — (429 )
~~W~~ — 139,571
(*1) During the nine-month period ended September 30, 2023, call option on the hybrid bonds was exercised and<br>redeemed by POSCO INTERNATIONAL Corporation, a subsidiary of the Company.
--- ---
(*2) Details of issuance of hybrid bonds are as follows:
--- ---
Hybrid bond1-4
--- ---
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<br>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

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

24. Reserves

Reserves as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Accumulated comprehensive loss of investments in associates and joint ventures ~~W~~ (163,753 ) (406,555 )
Changes in fair value of equity investments at fair value through other comprehensive<br>income 107,974 (103,843 )
Foreign currency translation differences 275,016 60,487
Gains or losses on valuation of derivatives (1,833 ) (3 )
Others(*1) (59,375 ) 5,924
~~W~~ 158,029 (443,990 )
(*1) POSCO FUTURE MATERIALS CANADA INC. (formerly POSCO CHEMICAL CANADA INC.), a subsidiary, entered into a put<br>option agreement with GM Battery Raw Materials Corporation. The effect of the agreement to other financial liabilities has been adjusted in other equity adjustments.
--- ---

25. Treasury Shares

Based on the Board of Directors’ resolution, the Company holds treasury shares for business purposes including price stabilization. Changes in treasury shares for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(shares, in millions of Won) September 30, 2023 December 31, 2022
Number of shares Amount Number of shares Amount
Beginning 8,722,053 ~~W~~ 1,892,308 11,561,263 ~~W~~ 2,508,294
Disposal of treasury shares (27,030 ) (5,864 ) (223,605 ) (48,513 )
Retirement of treasury shares — — (2,615,605 ) (567,473 )
Ending 8,695,023 ~~W~~ 1,886,444 8,722,053 ~~W~~ 1,892,308

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

26. Revenue

(a) Disaggregation of revenue
1) Details of revenue disaggregated by types of revenue and timing of revenue recognition for the nine-month<br>periods ended September 30, 2023 and 2022 were as follows:
--- ---
① For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Green Infrastructure Green Materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Steel Trading Construction Logistics and<br>others Others Total
Types of revenue
Revenue from sales of goods ~~W~~ 29,949,006 15,904,486 — 15,062 2,905,453 — 48,774,007
Revenue from services 608,097 2,371,617 102,345 286,901 3,127 15,687 3,387,774
Revenue from construction contract — — 6,014,918 — 30,950 — 6,045,868
Others 129,499 3,846 10,449 36,212 — 75,425 255,431
~~W~~ 30,686,602 18,279,949 6,127,712 338,175 2,939,530 91,112 58,463,080
Timing of revenue recognition
Revenue recognized at a point in time ~~W~~ 30,078,505 15,908,332 54,700 51,274 2,905,453 75,425 49,073,689
Revenue recognized over time 608,097 2,371,617 6,073,012 286,901 34,077 15,687 9,389,391
~~W~~ 30,686,602 18,279,949 6,127,712 338,175 2,939,530 91,112 58,463,080
② For the nine-month period ended September 30, 2022
--- ---
(in millions of Won) Green Infrastructure Green Materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Steel Trading Construction Logistics and<br>others Others Total
Types of revenue
Revenue from sales of goods ~~W~~ 34,190,192 19,322,322 — 18,920 1,846,513 — 55,377,947
Revenue from services 719,390 466,986 18,805 2,715,726 4,432 11,957 3,937,296
Revenue from construction contract — — 5,429,421 — 20,845 — 5,450,266
Others 85,738 398,216 122,033 45,991 — 85,172 737,150
~~W~~ 34,995,320 20,187,524 5,570,259 2,780,637 1,871,790 97,129 65,502,659
Timing of revenue recognition
Revenue recognized at a point in time ~~W~~ 34,275,930 19,720,538 203,470 64,911 1,846,513 85,170 56,196,532
Revenue recognized over time 719,390 466,986 5,366,789 2,715,726 25,277 11,959 9,306,127
~~W~~ 34,995,320 20,187,524 5,570,259 2,780,637 1,871,790 97,129 65,502,659
2) Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month<br>periods ended September 30, 2023 and 2022 were as follows:
--- ---
① For the three-month period ended September 30, 2023
--- ---
(in millions of Won) Green Infrastructure Green Materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Steel Trading Construction Logistics and<br>others Others Total
Types of revenue
Revenue from sales of goods ~~W~~ 9,627,210 5,186,527 — 2,088 1,074,456 — 15,890,281
Revenue from services 194,227 714,770 31,546 82,846 880 3,484 1,027,753
Revenue from construction contract — — 1,963,620 — 6,827 — 1,970,447
Others 43,864 1,160 4,165 11,289 — 11,872 72,350
~~W~~ 9,865,301 5,902,457 1,999,331 96,223 1,082,163 15,356 18,960,831
Timing of revenue recognition
Revenue recognized at a point in time ~~W~~ 9,671,074 5,187,687 6,800 13,150 1,074,456 11,873 15,965,040
Revenue recognized over time 194,227 714,770 1,992,531 83,073 7,707 3,483 2,995,791
~~W~~ 9,865,301 5,902,457 1,999,331 96,223 1,082,163 15,356 18,960,831

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

② For the three-month period ended September 30, 2022
(in millions of Won) Green Infrastructure Green Materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Steel Trading Construction Logistics and<br>others Others Total
Types of revenue
Revenue from sales of goods ~~W~~ 10,733,098 6,144,771 — 309 828,655 — 17,706,833
Revenue from services 165,959 166,705 5,609 1,074,584 1,788 — 1,414,645
Revenue from construction contract — — 1,795,082 — 5,510 — 1,800,592
Others 27,388 135,441 42,525 15,859 — 11,252 232,465
~~W~~ 10,926,445 6,446,917 1,843,216 1,090,752 835,953 11,252 21,154,535
Timing of revenue recognition
Revenue recognized at a point in time ~~W~~ 10,760,486 6,280,212 97,727 16,168 828,655 11,252 17,994,500
Revenue recognized over time 165,959 166,705 1,745,489 1,074,584 7,298 — 3,160,035
~~W~~ 10,926,445 6,446,917 1,843,216 1,090,752 835,953 11,252 21,154,535
(b) Details of contract assets and liabilities from contracts with customers as of September 30, 2023 and<br>December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Receivables
Account receivables ~~W~~ 9,677,155 8,414,946
Contract assets
Due from customers for contract work 1,822,720 1,378,640
Contract liabilities
Advance received 388,224 547,874
Due to customers for contract work 571,271 761,393
Unearned revenue 81,222 84,195

27. Revenue – Contract Balances

(a) Details of outstanding contracts as of September 30, 2023 and December 31, 2022 are as follows:<br>
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Construction<br>segment Others Construction<br>segment Others
Accumulated cost ~~W~~ 27,529,502 227,048 30,239,570 110,414
Accumulated contract profit 2,447,115 32,667 2,664,024 17,916
Accumulated contract loss (687,084 ) (11,021 ) (879,882 ) (5,266 )
Accumulated contract revenue 29,289,533 248,694 32,023,712 123,064
(b) Details of due from customers for contract work and due to customers for contract work as of September 30,<br>2023 and December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Construction<br>segment Others Construction<br>segment Others
Due from customers for contract work ~~W~~ 1,770,749 70,254 1,321,160 86,118
Due to customers for contract work (560,276 ) (10,995 ) (674,697 ) (86,696 )
~~W~~ 1,210,473 59,259 646,463 (578 )
(c) Details of the provisions of construction loss as of September 30, 2023 and December 31, 2022 are as<br>follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Construction segment ~~W~~ 38,954 66,124
Others 3,694 11,342
~~W~~ 42,648 77,466

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(d) During the nine-month period ended September 30, 2023, the total contract revenues and the estimated total<br>contract costs have changed. The impact of these changes on profit before income tax for the nine-month period ended September 30, 2023 and the 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 loss Total
Construction segment ~~W~~ 613,690 672,487 (70,944 ) 12,147 (58,797 )
Others 22,326 16,803 4,794 729 5,523
~~W~~ 636,016 689,290 (66,150 ) 12,876 (53,274 )

The effect on current and future profit is calculated based on the total estimated contract costs based on situations that occurred from the commencement date of the contract to September 30, 2023 and the total contract revenue as of September 30, 2023.

(e) Uncertainty of estimates
1) Total contract revenues
--- ---

Total contract revenues are initially measured based on contractual amount agreed upon. However, the actual contract revenues may increase due to additional work, claims and incentive payments, or decrease due to penalties in case of delayed completion caused by the Company’s fault. Therefore, the measurement of contract revenues is subject to uncertainty resulting from the possibility of future events.

2) Total contract costs

Contract revenues are recognized based on the percentage-of-completion method, which is determined based on the total amount of costs incurred to date. The total contract costs are estimated based on projections of future costs, including material costs, labor costs, outsourcing costs, among other factors. There is uncertainty associated with estimating future contract costs due to a variety of internal and external factors, including market fluctuations, risks associated with business partners and past experience of project performance, among 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.

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

28. Selling and Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Wages and salaries ~~W~~ 288,681 291,176 837,310 788,444
Expenses related to post-employment benefits 19,410 19,577 67,333 59,636
Other employee benefits 65,096 53,914 194,549 172,585
Travel 11,915 11,454 32,797 27,096
Depreciation 41,615 38,818 117,541 109,994
Amortization 23,898 23,760 69,875 69,337
Communication 2,621 2,550 7,983 7,597
Electricity 3,632 2,491 9,439 7,411
Taxes and public dues 23,034 17,241 77,402 72,618
Rental 12,421 8,119 39,035 28,201
Repairs 4,069 5,066 11,318 11,334
Entertainment 3,764 4,107 11,088 10,157
Advertising 26,011 25,474 71,384 78,010
Research & development 44,999 49,634 120,936 120,793
Service fees 63,609 49,333 159,180 158,762
Vehicles maintenance 1,720 1,992 5,716 4,830
Industry association fee 2,115 1,212 9,856 7,755
Conference 5,014 5,238 14,762 14,486
Others 17,894 14,825 49,409 45,886
~~W~~ 661,518 625,981 1,906,913 1,794,932
(b) Selling expenses
--- ---

Selling expenses for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Freight and custody expenses ~~W~~ 17,448 18,178 42,657 58,089
Operating expenses for distribution center 891 678 3,959 1,777
Sales commissions 8,159 15,890 48,879 49,601
Sales advertising 1,535 1,002 2,678 1,829
Sales promotion 2,305 3,159 6,781 7,381
Sample 760 501 1,754 1,455
Sales insurance premium 8,015 9,727 24,373 29,662
Contract cost 15,037 14,702 34,040 39,715
Others 179 3,487 9,060 9,843
~~W~~ 54,329 67,324 174,181 199,352

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

29. Finance Income and Costs

Details of finance income and costs for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periodsended September 30 For the nine-month periodsended September 30
2023 2022 2023 2022
Finance income
Interest income(*1) ~~W~~ 126,731 116,971 352,767 344,513
Dividend income 16,773 5,104 46,213 37,330
Gain on foreign currency transactions 354,184 725,043 1,268,870 1,546,629
Gain on foreign currency translations (152,643 ) 539,200 341,904 989,360
Gain on derivatives transactions 118,673 287,549 257,568 609,532
Gain on valuations of derivatives 91,311 439,523 406,524 910,377
Gain on disposals of financial assets at fair value through profit or loss 30,249 5,274 173,368 9,442
Gain on valuation of financial assets at fair value through profit or loss (10,960 ) 182 379,237 1,329
Gain on valuation of financial liabilities at fair value through profit or loss — 26,350 — 126,746
Others 4,030 4,196 12,706 12,855
~~W~~ 578,348 2,149,392 3,239,157 4,588,113
Finance costs
Interest expenses ~~W~~ 252,638 171,647 753,583 407,058
Loss on foreign currency transactions 367,003 672,361 1,194,669 1,499,467
Loss on foreign currency translations (24,285 ) 1,107,486 891,650 1,899,906
Loss on derivatives transactions 77,300 131,241 257,400 566,063
Loss on valuation of derivatives 8,193 17,046 65,646 163,628
Loss on disposal of trade accounts and notes receivable 14,796 19,638 56,032 41,443
Loss on disposals of financial assets at fair value through profit or loss 2,765 3,109 12,200 4,946
Loss on valuation of financial assets at fair value through profit or loss (27,073 ) 15,339 14,964 50,148
Loss on valuation of financial liabilities at fair value through profit or loss 309,681 — 429,985 —
Others 12,374 7,508 28,740 45,828
~~W~~ 993,392 2,145,375 3,704,869 4,678,487
(*1) Interest income calculated using the effective interest method for the nine-month periods ended<br>September 30, 2023 and 2022 were ~~W~~352,767 million and ~~W~~160,149 million, respectively.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

30. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Other non-operating income
Gain on disposals of assets held for sale ~~W~~ — 592 — 55,124
Gain on disposals of investments in subsidiaries, associates and joint ventures(*1) 11,718 361 196,562 12,273
Gain on disposals of property, plant and equipment 248 3,113 5,747 16,873
Gain on valuation of firm commitment 4,300 2,980 9,862 177,746
Reversal of other provisions 249 1,416 10,007 4,442
Premium income 1,612 849 10,542 2,459
Gain on bargain purchase(*1) — — 32,965 —
Gain on disposals of emission rights 1,796 — 25,855 —
Others 13,635 14,871 54,413 51,993
~~W~~ 33,558 24,182 345,953 320,910
Other non-operating expenses
Loss on disposals of assets held for sale(*2) ~~W~~ 896 — 103,366 —
Loss on disposals of investments in subsidiaries, associates and joint ventures 4,375 18 8,776 18
Loss on disposals of property, plant and equipment 22,438 15,382 90,104 80,483
Impairment loss on property, plant and equipment 9,212 131,963 152,469 131,966
Impariment loss on intangible assets 20 61 4,792 261
Loss on valuation of firm commitment 13,951 52,146 36,221 140,472
Idle tangible asset expenses 3,600 4,035 15,883 14,231
Increase to provisions 711 56,872 7,256 62,618
Donations 11,850 29,938 44,482 43,517
Others 11,314 10,956 47,644 27,185
~~W~~ 78,367 301,371 510,993 500,751
(*1) During the nine-month period ended September 30, 2023, QSONE Co., Ltd., which had been previously<br>classified as an investment in associates was reclassified as consolidated subsidiaries. As a result, the Company recognized ~~W~~184,556 million of gain on disposals of investment in associates and<br>~~W~~32,965 million of gain on bargain purchase.
--- ---
(*2) During the nine-month period ended September 30, 2023, the Company dispose of CSP - Compania Siderurgica<br>do Pecem, which was classified as assets held for sale during the year ended December 31, 2022, and recognized ~~W~~103,366 million of loss on disposals of assets held for sale. The loss on disposal of assets held for sale<br>recognized as profit or loss includes ~~W~~102,470 million, which was reclassified from accumulated other comprehensive loss arising from translating the financial statements of foreign operation.
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

31. Expenses by Nature

Expenses that are recorded by nature as cost of sales, selling and administrative expenses, impairment loss on other receivables and other non-operating expenses in the statements of comprehensive income for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows (excluding finance costs and income tax expense):

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Raw material used, changes in inventories and others ~~W~~ 11,411,955 14,343,343 36,825,660 42,125,128
Employee benefits expenses 1,191,894 1,166,351 3,329,080 3,153,666
Outsourced processing cost 2,491,243 1,912,579 7,476,099 6,149,435
Electricity and water expenses 250,569 216,051 815,238 699,005
Depreciation(*1) 856,916 797,553 2,502,740 2,368,731
Amortization 126,561 129,978 369,038 356,011
Freight and custody expenses 558,360 947,834 1,643,893 2,453,655
Sales commissions 8,159 15,890 48,879 49,601
Loss on disposal of property, plant and equipment 22,438 15,382 90,104 80,483
Impairment loss on property, plant and equipment 9,212 131,963 152,469 131,966
Impairment loss on intangible assets 20 61 4,792 261
Donations 11,850 29,936 44,482 43,517
Other expenses 912,797 835,625 2,464,593 3,126,495
~~W~~ 17,851,974 20,542,546 55,767,067 60,737,954
(*1) Includes depreciation expense of investment property.
--- ---

32. Income Taxes

The effective tax rates of the Company for the nine-month periods ended September 30, 2023 and 2022 were 24.30% and 20.84%, respectively.

33. Earnings per Share

(a) Basic earnings per share for the three-month and nine-month periods ended September 30, 2023 and 2022 were<br>as follows:
(in Won, except share information) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- --- ---
2023 2022 2023 2022
Profit attributable to controlling interest ~~W~~ 488,201,057,965 509,914,196,033 1,904,353,303,522 3,809,955,970,673
Interests of hybrid bonds, net of tax — — — (1,078,164,383 )
Weighted-average number of common shares outstanding(*1) 75,876,207 75,849,177 75,867,296 75,803,309
Basic earnings per share ~~W~~ 6,434 6,723 25,101 50,247
(*1) The weighted-average number of common shares used to calculate basic earnings per share are as follows:<br>
--- ---
(Shares) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- --- --- --- --- ---
2023 2022 2023 2022
Total number of common shares issued 84,571,230 84,571,230 84,571,230 84,571,230
Weighted-average number of treasury shares (8,695,023 ) (8,722,053 ) (8,703,934 ) (8,767,921 )
Weighted-average number of common shares outstanding 75,876,207 75,849,177 75,867,296 75,803,309

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) The Company has potentially issuable common shares due to its exchangeable bonds as of September 30, 2023<br>and 2022 and Stock Grant program as of September 30, 2023. Diluted earnings per share is equal to basic earnings per share for the three-month periods ended September 30, 2023 and 2022, and nine-month period ended September 30, 2023<br>due to anti-dilutive effect. Meanwhile, diluted earnings per share for the nine-month period ended September 30, 2022 were as follows:
(in Won, except share information) For the nine-month periodended September 30, 2022
--- --- --- ---
Profit attributable to controlling interest ~~W~~ 3,809,955,970,673
Interests of hybrid bonds, net of tax (1,078,164,383 )
Loss from exchange rate on and revaluation of exchangeable bonds (44,920,175,663 )
Adjusted weighted-average number of common shares(*1) 78,882,275
Diluted earnings per share ~~W~~ 47,716
(*1) The weighted-average number of common shares used to calculate diluted earnings per share are as follows:<br>
--- ---
(shares) For the nine-month periodended September 30, 2022
--- --- ---
Weighted-average number of common shares outstanding 75,803,309
Weighted-average number of potential common shares 3,078,966
Adjusted weighted-average number of common shares 78,882,275

49

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

34. Related Party Transactions

(a) Significant transactions between the controlling company and related companies for the nine-month periods ended<br>September 30, 2023 and 2022 were as follows:
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Sales and others(*1) Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase of<br>fixed assets Others
Subsidiaries(*2)
POSCO ~~W~~ 115,159 325,043 — — 11,362
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 6,432 11,037 440 8,117 4,166
POSCO STEELEON CO., Ltd 1,641 — — — 93
POSCO DX(formerly, POSCO ICT) 2,367 7,455 — 3,382 5,663
eNtoB Corporation — — 40 70 1,396
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 2,872 13,878 — — —
POSCO Mobility Solution Corporation 739 — 55 — —
POSCO INTERNATIONAL Corporation 7,753 77,616 — — 44
POSCO Maharashtra Steel Private Limited 692 — 353 — —
POSCO ASSAN TST STEEL INDUSTRY Inc. 17 — 430 — —
Others 9,504 6,084 4,874 6,519 29,494
147,176 441,113 6,192 18,088 52,218
Associates and joint ventures(*2)
SNNC 696 — 55 — —
Roy Hill Holdings Pty Ltd — 205,739 — — —
Others 236 69,485 11,566 — 90
932 275,224 11,621 — 90
~~W~~ 148,108 716,337 17,813 18,088 52,308
(*1) Sales and others mainly consist of trademark usage income, rental income, and dividend income to subsidiaries,<br>associates and joint ventures.
--- ---
(*2) As of September 30, 2023, the Company provided guarantees to related companies (Note 35).<br>
--- ---

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the nine-month period ended September 30, 2022
(in millions of Won) Sales and others(*1) Purchase and others(*2)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase of<br>material Purchase offixed assets Outsourced<br>processing<br>cost Others
Subsidiaries
POSCO ~~W~~ 14,126 — — — — — 1,742
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 3,694 16,555 7 — 85,302 — 11,517
POSCO STEELEON CO., Ltd 132,326 — 215 — — 7,656 18
POSCO DX(formerly, POSCO ICT)(*3) 798 4,970 18 — 39,908 10,190 33,444
eNtoB Corporation 3 24 — 60,649 9,698 32 3,209
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 81,960 13,878 44 84,301 4,757 56,325 908
POSCO ENERGY CO., LTD. 762 — — 6,682 — — 3,925
POSCO Mobility Solution Corporation 176,045 — — — — 8,802 28
POSCO INTERNATIONAL Corporation 2,100,190 62,093 — 244,230 — 768 1,049
POSCO Thainox Public Company Limited 49,152 22,372 — — — — 1
POSCO Canada Ltd. — — 139 77,703 — — —
Qingdao Pohang Stainless Steel Co., Ltd. 32,583 — — — — — —
POSCO JAPAN Co., Ltd. 28,790 — — 835 — — 16
POSCO-VIETNAM Co., Ltd. 44,827 — 427 — — — —
POSCO MEXICO S.A. DE C.V. 102,670 — 255 — — — —
POSCO Maharashtra Steel Private Limited 171,579 — 427 — — — 120
POSCO(Suzhou) Automotive Processing Center Co., Ltd. 42,320 — — — — — 15
POSCO VST CO., LTD. 28,287 — — — — — —
POSCO INTERNATIONAL SINGAPORE PTE LTD. — — 417 380,061 — — —
POSCO ASSAN TST STEEL INDUSTRY Inc. 47,223 — 403 — — — 8
Others 196,968 2,452 5,065 61,488 14,021 53,139 214,083
3,254,303 122,344 7,417 915,949 153,686 136,912 270,083
Associates and joint ventures
SNNC 3,148 5,348 8 148,239 — — —
POSCO-SAMSUNG-Slovakia Processing Center 25,614 — — — — — —
Roy Hill Holdings Pty Ltd — 163,413 — 210,455 — — —
Others 77,910 48,602 12,236 16,485 — — 301
106,672 217,363 12,244 375,179 — — 301
~~W~~ 3,360,975 339,707 19,661 1,291,128 153,686 136,912 270,384
(*1) Sales and others mainly consist of sales of steel products (before<br>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<br>raw materials to manufacture steel products.
--- ---
(*3) Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System.<br>
--- ---
(b) Significant transactions between the controlling company and related companies for the three-month periods<br>ended September 30, 2023 and 2022 were as follows:
--- ---
1) For the three-month period ended September 30, 2023
--- ---
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase offixed assets Others
Subsidiaries
POSCO ~~W~~ 35,913 — — — 4,087
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 2,113 — — 6,340 456
POSCO STEELEON CO., Ltd 707 — — — 50
POSCO DX(formerly, POSCO ICT) 720 — — 1,583 1,969
eNtoB Corporation — — — 44 933
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 1,094 — — — —
POSCO Mobility Solution Corporation 229 — — — —
POSCO INTERNATIONAL Corporation 2,600 — — — 12
POSCO Maharashtra Steel Private Limited — — 87 — —
POSCO ASSAN TST STEEL INDUSTRY Inc. — — 145 — —
Others 3,651 63 1,519 5,662 11,191
47,027 63 1,751 13,629 18,698
Associates and joint ventures
SNNC 133 — — — —
Roy Hill Holdings Pty Ltd — 68,800 — — —
Others 64 25,813 7,753 — —
197 94,613 7,753 — —
~~W~~ 47,224 94,676 9,504 13,629 18,698

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the three-month period ended September 30, 2022
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase ofmaterial Purchase offixed assets Outsourced<br>processing<br>cost Others
Subsidiaries
POSCO ~~W~~ 5,959 — — — — — 1,175
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 1,329 — — — — — 1,235
POSCO STEELEON CO., Ltd 335 — — — — — 12
POSCO DX(formerly, POSCO ICT) 302 — — — 1,817 — 1,041
eNtoB Corporation 1 — — — — — 2
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 456 — — — — — —
POSCO Mobility Solution Corporation 90 — — — — — —
POSCO INTERNATIONAL Corporation 300 — — — — — —
POSCO Thainox Public Company Limited 67 — — — — — —
Qingdao Pohang Stainless Steel Co., Ltd. 49 — — — — — —
POSCO-VIETNAM Co., Ltd. 210 — 144 — — — —
POSCO MEXICO S.A. DE C.V. 35 — 52 — — — —
POSCO Maharashtra Steel Private Limited 292 — 143 — — — —
POSCO VST CO., LTD. 75 — — — — — —
POSCO ASSAN TST STEEL INDUSTRY Inc. 43 — 135 — — — —
Others 2,641 736 1,538 17 979 — 8,555
12,184 736 2,012 17 2,796 — 12,020
Associates and joint ventures
SNNC 19 — — — — — —
Roy Hill Holdings Pty Ltd — 37,429 — — — — —
Others 666 16,162 4,195 — — — —
685 53,591 4,195 — — — —
~~W~~ 12,869 54,327 6,207 17 2,796 — 12,020
(c) The related account balances of significant transactions between the controlling company and related companies<br>as of September 30, 2023 and December 31, 2022 are as follows:
--- ---
1) September 30, 2023
--- ---
(in millions of Won) Receivables Payables
--- --- --- --- --- --- --- --- --- --- --- --- ---
Trade
accounts
and notes Accounts
receivable Others Total payable Others Total
Subsidiaries
POSCO ~~W~~ 86,754 16,339 103,093 — 20,102 20,102
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 6,340 2,753 9,093 8,117 111 8,228
POSCO STEELEON CO., Ltd 961 8 969 4 — 4
POSCO DX(formerly, POSCO ICT) 938 10 948 206 1,828 2,034
eNtoB Corporation — — — 288 2 290
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 7,586 36 7,622 — 756 756
POSCO Mobility Solution Corporation 685 — 685 — — —
POSCO INTERNATIONAL Corporation 4,945 32 4,977 — 2,531 2,531
POSCO Maharashtra Steel Private Limited — 429 429 — — —
POSCO ASSAN TST STEEL INDUSTRY Inc. — 544 544 — — —
PT. KRAKATAU POSCO — 4,308 4,308 — — —
Others 2,862 11,310 14,172 2,602 3,937 6,539
111,071 35,769 146,840 11,217 29,267 40,484
Associates and joint ventures
SNNC 401 — 401 — — —
Roy Hill Holdings Pty Ltd 68,800 — 68,800 — — —
FQM Australia Holdings Pty Ltd(*1) — 228,305 228,305 — — —
Others 18,402 572 18,974 — — —
87,603 228,877 316,480 — — —
~~W~~ 198,674 264,646 463,320 11,217 29,267 40,484
(*1) FQM Australia Holdings Pty Ltd’s other receivable consists of long-term loans. During the nine-month<br>period ended September 30, 2023, the Company provided additional loan to its associates by ~~W~~6,448 million.
--- ---

52

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) December 31, 2022
(in millions of Won) Receivables Payables
--- --- --- --- --- --- --- --- --- --- --- --- ---
Trade
accounts
and notes Accounts
receivable Others Total payable Others Total
Subsidiaries
POSCO ~~W~~ 75,343 6,600 81,943 5,678 14,663 20,341
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 3,808 660 4,468 — — —
POSCO STEELEON CO., Ltd 818 — 818 — — —
POSCO DX(formerly, POSCO ICT) 687 — 687 859 705 1,564
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 8,550 — 8,550 — 5,086 5,086
POSCO Mobility Solution Corporation 489 — 489 — — —
POSCO INTERNATIONAL Corporation 2,002 — 2,002 — 502 502
Qingdao Pohang Stainless Steel Co., Ltd. — — — 122 — 122
POSCO Maharashtra Steel Private Limited — 466 466 486 — 486
POSCO ASSAN TST STEEL INDUSTRY Inc. — 513 513 104 — 104
PT. KRAKATAU POSCO — 8,967 8,967 391 — 391
Others 5,318 6,080 11,398 11,874 4,928 16,802
97,015 23,286 120,301 19,514 25,884 45,398
Associates and joint ventures
SNNC 94 — 94 — — —
Roy Hill Holdings Pty Ltd 23,400 — 23,400 — — —
FQM Australia Holdings Pty Ltd(*1) — 202,562 202,562 — — —
Others 190 761 951 74 — 74
23,684 203,323 227,007 74 — 74
~~W~~ 120,699 226,609 347,308 19,588 25,884 45,472
(*1) FQM Australia Holdings Pty Ltd’s other receivable consists of long-term loans. During the year ended<br>December 31, 2022, the Company provided additional loan to its associates by ~~W~~12,116 million.
--- ---
(d) Significant transactions between the Company, excluding the controlling company, and related companies for the<br>nine-month periods ended September 30, 2023 and 2022 were as follows:
--- ---
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Purchase of
Sales Dividends Others material Others
Associates and joint ventures
New Songdo International City Development, LLC ~~W~~ 148,716 — 1,484 — 267
SNNC 120,958 — 32 453,382 1,317
Noeul Green Energy Co., Ltd. 6,499 — 12 — 1,315
POS-SEAHSTEELWIRE(TIANJIN)CO., Ltd 11,514 — — — —
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 31,586 — — 74 —
South-East Asia Gas Pipeline Company Ltd. — 40,971 — — —
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 76,036 — — 5,059 1,564
Samcheok Blue Power Co., Ltd. 410,672 7,494 — — —
Pocheon-Hwado Highway Corp. 93,754 — — — —
Roy Hill Holdings Pty Ltd — 51,435 — 1,261,855 —
UITrans LRT Co., Ltd. 186 — — — —
Others 338,242 80,095 2,533 426,554 79,658
~~W~~ 1,238,163 179,995 4,061 2,146,924 84,121

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the nine-month period ended September 30, 2022
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Purchase of
Sales Dividends Others material Others
Associates and joint ventures
New Songdo International City Development, LLC ~~W~~ 226,543 — — — 116
SNNC 112,786 — 383 442,616 812
Noeul Green Energy Co., Ltd. 5,453 — — — 1,055
CSP - Compania Siderurgica do Pecem(*2) 4,089 — — 126,123 —
Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd(*1) 17,824 — — 24,190 —
POS-SEAHSTEELWIRE(TIANJIN) CO., Ltd 11,721 — — — —
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 26,087 — — 320 —
South-East Asia Gas Pipeline Company Ltd. — 6,075 2,676 — 1,205
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 102,290 24,000 — 3,811 159
Samcheok Blue Power Co., Ltd. 388,438 7,494 26 — —
Pocheon-Hwado Highway Corp. 57,537 — — — —
UITrans LRT Co., Ltd. 613 — — 1,359 —
Roy Hill Holdings Pty Ltd — 40,878 — 965,823 —
Others 422,028 89,196 2,121 411,738 105,372
~~W~~ 1,375,409 167,643 5,206 1,975,980 108,719
(*1) Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd was excluded from associates due to the sale of its<br>shares during the year ended December 31, 2022.
--- ---
(*2) CSP - Compania Siderurgica do Pecem was excluded from joint ventures due to the sale of its shares during the<br>nine-month period ended September 30, 2023.
--- ---
(e) Significant transactions between the Company, excluding the controlling company, and related companies for the<br>three-month periods ended September 30, 2023 and 2022 were as follows:
--- ---
1) For the three-month period ended September 30, 2023
--- ---
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Purchase of
Sales Dividends Others material Others
Associates and joint ventures
New Songdo International City Development, LLC ~~W~~ 48,763 — 1,484 — 47
SNNC 32,843 — — 150,081 —
Noeul Green Energy Co., Ltd. — — 12 — 133
POS-SEAHSTEELWIRE(TIANJIN) CO., Ltd 4,009 — — — —
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 11,461 — — — —
South-East Asia Gas Pipeline Company Ltd. — — — — —
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 27,965 — — 1,272 1,489
Samcheok Blue Power Co., Ltd. 119,628 2,498 — — —
Pocheon-Hwado Highway Corp. 45,875 — — — —
Roy Hill Holdings Pty Ltd — 17,200 — 422,972 —
UITrans LRT Co., Ltd. — — — — —
Others 100,145 22,995 825 169,138 24,113
~~W~~ 390,689 42,693 2,321 743,463 25,782

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the three-month period ended September 30, 2022
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Purchase of
Sales Dividends Others material Others
Associates and joint ventures
New Songdo International City Development, LLC ~~W~~ 80,614 — — — 23
SNNC 35,315 — 295 124,580 97
Noeul Green Energy Co., Ltd. 77 — — — 284
CSP - Compania Siderurgica do Pecem — — — 36,854 —
POS-SEAHSTEELWIRE(TIANJIN) CO., Ltd 4,751 — — — —
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 7,109 — — 227 —
South-East Asia Gas Pipeline Company Ltd. — 6,075 576 — —
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 44,241 — — 1,541 —
Samcheok Blue Power Co., Ltd. 149,749 5,078 — — —
Pocheon-Hwado Highway Corp. 17,858 — — — —
UITrans LRT Co., Ltd. 471 — — — —
Roy Hill Holdings Pty Ltd — 18,281 — 530,467 —
Others 166,685 21,571 327 155,575 42,564
~~W~~ 506,870 51,005 1,198 849,244 42,968
(f) The related account balances from significant transactions between the Company, excluding the controlling<br>company, and related companies as of September 30, 2023 and December 31, 2022 are as follows:
--- ---
1) September 30, 2023
--- ---
(in millions of Won) Receivables Payables
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Trade Trade
accounts accounts
and<br>notes receivable Loans Others Total and<br>notes payable Others Total
Associates and joint ventures
New Songdo International City Development, LLC ~~W~~ 36,042 — 800 36,842 — 50,245 50,245
Samcheok Blue Power Co., Ltd. 209,796 — 200 209,996 — 13,814 13,814
Nickel Mining Company SAS — 63,977 23 64,000 — 358 358
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 13,243 — — 13,243 — — —
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 9,574 — 235 9,809 2,597 — 2,597
Pocheon-Hwado Highway Corp. 15,745 — — 15,745 — — —
UITrans LRT Co., Ltd. — 43,898 75 43,973 — 1,813 1,813
Roy Hill Holdings Pty Ltd — — 17,200 17,200 280,927 1,053 281,980
SNNC 10,950 — 70 11,020 18,788 1,646 20,434
POSCO(Guangdong) Automotive Steel Co., Ltd. 48,725 — — 48,725 41,491 — 41,491
Others 31,529 181,063 134,447 347,039 9,761 20,705 30,466
~~W~~ 375,604 288,938 153,050 817,592 353,564 89,634 443,198
2) December 31, 2022
--- ---
(in millions of Won) Receivables Payables
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Trade<br><br><br>accounts Trade<br><br><br>accounts
and and
notes receivable Loans Others Total notes receivable Others Total
Associates and joint ventures
New Songdo International City Development, LLC ~~W~~ 63,413 — 16,858 80,271 — 39,664 39,664
Chuncheon Energy Co., Ltd. — — — — — 50 50
Samcheok Blue Power Co., Ltd. 107,119 — — 107,119 — 18,224 18,224
Nickel Mining Company SAS — 63,024 263 63,287 — 358 358
CSP - Compania Siderurgica do Pecem 3 — — 3 — — —
POSCO SeAH Steel Wire(Nantong) Co., Ltd. 7,096 — — 7,096 — — —
POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) 12,589 — 52 12,641 1,198 4 1,202
Pocheon-Hwado Highway Corp. 16,297 — — 16,297 — — —
UITrans LRT Co., Ltd. — 36,510 — 36,510 — 1,999 1,999
Roy Hill Holdings Pty Ltd — — 7,110 7,110 571,084 — 571,084
SNNC 7,827 — 51 7,878 44,124 198 44,322
POSCO(Guangdong) Automotive Steel Co., Ltd. — 35,131 — 35,131 — — —
Others 98,920 185,022 112,538 396,480 54,708 25,241 79,949
~~W~~ 313,264 319,687 136,872 769,823 671,114 85,738 756,852

55

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(g) Significant financial transactions between the Company, excluding the controlling company, and related<br>companies for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:
1) September 30, 2023
--- ---
(in millions of Won) Beginning Lend Collect Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- ---
Associates and joint ventures
UITrans LRT Co., Ltd. ~~W~~ 36,510 7,388 — — 43,898
PT. Tanggamus Electric Power 5,014 — (270 ) 289 5,033
PT. Wampu Electric Power 3,988 — (4,063 ) 75 —
Nickel Mining Company SAS 63,024 — (2,322 ) 3,275 63,977
KRAKATAU POS-CHEM<br>DONG-SUH CHEMICAL 3,802 — (1,323 ) 211 2,690
POS-SeAH Steel Wire (Thailand) Co., Ltd. 7,604 — — 465 8,069
AMCI (WA) PTY LTD 104,281 4,658 — (1,260 ) 107,679
POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD 10,138 — — 620 10,758
Hyo-chun Co., Ltd. 2,382 — — — 2,382
POS-AUSTEM Suzhou Automotive Co., Ltd 12,673 — (6,477 ) 528 6,724
FQM Australia Holdings Pty Ltd 35,040 1,266 — 53 36,359
POHANG E&E Co. , LTD 100 1,269 — — 1,369
POSCO(Guangdong) Automotive Steel Co., Ltd. 35,131 — (35,131 ) — —
~~W~~ 319,687 14,581 (49,586 ) 4,256 288,938
(*1) Includes adjustments of foreign currency translation differences and others.
--- ---
2) December 31, 2022
--- ---
(in millions of Won) Beginning Lend Collect Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- ---
Associates and joint ventures
UITrans LRT Co., Ltd. ~~W~~ 29,099 7,460 (5 ) (44 ) 36,510
South-East Asia Gas Pipeline Company Ltd. 47,423 — (45,639 ) (1,784 ) —
PT. Tanggamus Electric Power 4,690 — — 324 5,014
PT. Wampu Electric Power 5,651 — (1,876 ) 213 3,988
PT. POSMI Steel Indonesia 2,371 — (2,371 ) — —
Nickel Mining Company SAS 62,611 — — 413 63,024
KRAKATAU POS-CHEM<br>DONG-SUH CHEMICAL 4,742 — (1,264 ) 324 3,802
POS-SeAH Steel Wire (Thailand) Co., Ltd. 7,113 — — 491 7,604
AMCI (WA) PTY LTD 91,665 6,975 — 5,641 104,281
POS-AUSTEM YANTAI AUTOMOTIVE CO., LTD 5,928 — (6,548 ) 620 —
POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD 9,484 — — 654 10,138
Hyo-chun Co., Ltd. 2,382 — — — 2,382
POS-AUSTEM Suzhou Automotive Co., Ltd 17,783 — (6,069 ) 959 12,673
FQM Australia Holdings Pty Ltd 27,227 7,935 — (122 ) 35,040
POHANG E&E Co. , LTD — 100 — — 100
POSCO(Guangdong) Automotive Steel Co., Ltd. — 35,131 — — 35,131
~~W~~ 318,169 57,601 (63,772 ) 7,689 319,687
(*1) Includes adjustments of foreign currency translation differences and others.
--- ---
(h) For the nine-month periods ended September 30, 2023 and 2022, details of compensation to key management<br>officers were as follows:
--- ---
(in millions of Won) September 30, 2023 September 30, 2022
--- --- --- --- ---
Short-term benefits ~~W~~ 147,078 132,016
Long-term benefits 6,903 7,074
Retirement benefits 23,183 17,913
~~W~~ 177,164 157,003

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.

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

35. Commitments and Contingencies

(a) Details of guarantees
1) Contingent liabilities on outstanding guarantees provided by the Company as of September 30, 2023 are as<br>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 205,000,000 275,684 — —
POSCO Maharashtra Steel Private Limited SMBC and others USD 139,784,000 187,982 59,784,000 80,397
POSCO ASSAN TST STEEL INDUSTRY SOCIETE GENERALE and others USD 131,874,750 177,345 131,874,750 177,345
POSCO Argentina S.A.U HSBC and others USD 411,900,000 553,924 246,895,483 332,026
POSCO POSCO MEXICO S.A. DE C.V. BOA and others USD 60,000,000 80,688 60,000,000 80,688
POSCO-VIETNAM Co., Ltd. SMBC and others USD 110,000,000 147,928 110,000,000 147,928
PT. KRAKATAU POSCO Export-Import Bank of Korea and others USD 2,188,300,000 2,942,826 1,186,870,143 1,596,103
POSCO COATED STEEL (THAILAND) CO., LTD. SMBC and others THB 4,800,000,000 177,360 4,800,000,000 177,360
POSCO INTERNATIONAL Corporation POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD. Export-Import Bank of Korea and others USD 180,000,000 242,064 150,000,000 201,720
POSCO INTERNATIONAL POWER (PNGLAE) LIMITED KDB bank USD 20,880,000 28,079 13,400,000 18,020
GOLDEN LACE POSCO INTERNATIONAL CO., LTD. Shinhan Bank and others USD 13,200,000 17,751 11,000,000 14,793
PT. Bio Inti Agrindo BTPN and others IDR 1,232,000,000,000 106,938 1,160,000,000,000 100,688
POSCO ASSAN TST STEEL INDUSTRY ING USD 14,652,750 19,705 14,652,750 19,705
POSCO INTERNATIONAL Deutschland GmbH Bank Mendes Gans Amsterdam 19,084,801 25,665
POSCO INTERNATIONAL AMERICA Corp. 5,089,505 6,844
POSCO INTERNATIONAL JAPAN Corp. 6,708,832 9,022
POSCO INTERNATIONAL SINGAPORE Pte. Ltd. — —
POSCO INTERNATIONAL Malaysia SDN BHD — —
POSCO INTERNATIONAL Italia S.R.L. — —
POSCO INTERNATIONAL MEXICO S.A. de C.V. USD 50,000,000 67,240 17,069,323 22,955
GRAIN TERMINAL HOLDING PTE. LTD. Export-Import Bank of Korea and others USD 27,000,000 36,310 27,000,000 36,310
POSCO INTERNATIONAL E&P MALAYSIA SDN. BHD. SC MALAYSIA USD 6,000,000 8,069 6,000,000 8,069
PT. KRAKATAU POSCO ENERGY POSCO Asia Co., Ltd. and others USD 88,903,407 119,557 59,151,987 79,548
Posco International Mexico e-Mobility S.A DE C.V. Export-Import Bank of Korea and others USD 27,000,000 36,310 16,000,000 21,517
PT POSCO INTERNATIONAL ENP INDONESIA BNI USD 750,000 1,009 750,000 1,009
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) POSCO E&C Vietnam Co., Ltd. POSCO Asia Co., Ltd. and others USD 36,000,000 48,413 31,000,000 41,689
PT. POSCO E&C INDONESIA POSCO Asia Co., Ltd. and others USD 25,900,000 34,830 25,900,000 34,830
POSCO STEELEON CO., LTD. Myanmar POSCO C&C Company, Limited. POSCO Asia Co., Ltd. USD 13,986,947 18,810 11,952,170 16,073
POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.) POSCO Seoul Guarantee Insurance KRW 30 30 30 30
[Associates and joint ventures]
POSCO HOLDINGS INC. Nickel Mining Company SAS SMBC EUR 46,000,000 65,399 46,000,000 65,399
POSCO LLP POSUK Titanium SMBC USD 13,250,000 17,819 13,250,000 17,819
POSCO INTERNATIONAL Corporation GLOBAL KOMSCO Daewoo LLC Hana Bank USD 6,650,000 8,943 6,300,000 8,472
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) Chun-cheon Energy Co., Ltd Kookmin Bank and others KRW 149,200 149,200 137,500 137,500
[Others]
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) Busan Sanseong Tunnel and others Balhae Infrastructure Fund and others KRW 1,591,914 1,591,914 610,626 610,626
POSCO DX(formerly, POSCO ICT) Busan Sanseong Tunnel Kookmin Bank KRW 7,621 7,621 6,394 6,394
POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.) Korea Electric Power Corporation and others Seoul Guarantee Insurance KRW 1,894 1,894 1,894 1,894
POSCO AUSTRALIA PTY LTD Department of Trade and Investment (NSW Government) and others Woori Bank and others AUD 16,754,695 14,409 16,754,695 14,409
PT. Bio lnti Agrindo KSU Mandob Bank Muamalat IDR 80,000,000,000 6,944 80,000,000,000 6,944
POSCO Maharashtra Steel Private Limited Gail India and others HSBC and others INR 808,823,105 13,054 808,823,105 13,054
USD 3,771,031,854 5,071,286 2,229,733,744 2,998,547
KRW 1,750,659 1,750,659 756,444 756,444
IDR 1,312,000,000,000 113,882 1,240,000,000,000 107,632
INR 808,823,105 13,054 808,823,105 13,054
THB 4,800,000,000 177,360 4,800,000,000 177,360
EUR 46,000,000 65,399 46,000,000 65,399
AUD 16,754,695 14,409 16,754,695 14,409

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) Contingent liabilities on debt acquisition, financial support agreement provided by the Company as of<br>September 30, 2023 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 Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO., LTD.) JB CLARK HILLS HSBC and others USD 27,500,000 36,982 27,500,000 36,982
[Associates and joint ventures]
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO., LTD.) New Songdo International City Development, LLC Others KRW 520,000 520,000 470,500 470,500
POHANG E&E Co., LTD Heungkuk Life Insurance Co., Ltd. KRW 71,930 71,930 48,461 48,461
UITrans LRT Co., Ltd Kookmin Bank and others KRW 205,051 205,051 167,913 167,913
Pocheon-Hwado Highway Corp. Lotte Insurance Co., Ltd and others KRW 319,526 319,526 205,633 205,633
Pureun Tongyeong Enviro Co., Ltd. KDB Bank and others KRW 22,714 22,714 12,495 12,495
Pure Gimpo. Co., Ltd KDB Bank and others KRW 51,559 51,559 25,706 25,706
Clean Iksan Co., Ltd SAMSUNG FIRE & MARINE INSURANCE and others KRW 44,054 44,054 26,200 26,200
POSCO DX(formerly, POSCO ICT) UITrans LRT Co., Ltd Kookmin Bank KRW 38,147 38,147 33,529 33,529
[Others]
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO., LTD.) Western Inland highway CO., LTD. and others NH Bank and others KRW 3,701,842 3,701,842 1,879,419 1,879,419
POSCO DX (formerly, POSCO ICT) Jeonnong schoo keeper co. and others Northeast Asia Infrastructure Private Placement Special Asset InvestmentTrust and others KRW 201,431 201,431 104,521 104,521

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As of September 30, 2023

(Unaudited)

(b) Other commitments

Details of other commitments of the Company as of September 30, 2023 are as follows:

Company Description
POSCO HOLDINGS INC. As of September 30, 2023, 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 1.05 million. The borrowing is related<br>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<br>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 September 30, 2023, the ending balance of the borrowing amounts to USD<br>1.02 million.
POSCO HOLDINGS INC. has deposited 3,211,795 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of September 30, 2023.
POSCO POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. The long-term purchase contract period is more than two years for iron ore, three years for coal, and one year for nickel. These contracts provide<br>for periodic price adjustments based on the market price. As of September 30, 2023, 53 million tons of iron ore and 17 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. Due to decrease of purchase volume in 2023,<br>the purchase volume will be 190 thousand tons from September 2025 to December 2026. 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 September 30, 2023, there are 36 vessels under contract, and the average remaining contract period is about 7 years.
POSCO entered into an agreement (LNG SPA) with POSCO INTERNATIONAL SINGAPORE PTE LTD. to purchase 370 thousand tons of LNG annually for 15 years commencing in November 2026. The purchase price is subject to change based on<br>changes of U.S. Henry Hub Natural Gas Spot Price. POSCO has extension option of extending the purchase contract by five years. Meanwhile, POSCO INTERNATIONAL Corporation has signed an LNG SPA with Cheniere Marketing, LLC for the purpose of supplying<br>LNG to POSCO. As an actual buyer of LNG, POSCO provides performance guarantee for POSCO INTERNATIONAL Corporation’s SPA to producer, Cheniere Marketing, LLC. The performance guarantee contract period is from September 30, 2022 to the date<br>of expiration of SPA contract which is September 30, 2046, or the date of termination of payment obligation under the guarantee contract.
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<br>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<br>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<br>obligations and rights are transferred to the Company. As of September 30, 2023, 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<br>INTERNATIONAL CORP., the operator, transferred a portion of the project’s interests to Sumitomo and AHL (Ambatovy Holdings Limited) in November 2017, and transferred the remaining interests of the project to Sumitomo and AHL2 (Ambatovy Holdings<br>II Limited) in August 2020. KAC has the rights and obligations to the 15.33% stake held by AHL and AHL2.
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO.,LTD.) As of September 30, 2023, POSCO Eco & Challenge Co., Ltd. has foreign currency guarantees of up to USD 1,528 million provided by financial institutions and uses USD 631 million with Woori Bank and<br>others.
As of September 30, 2023, 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<br>principal and interest amounting to ~~W~~1,970,768 million (limited to ~~W~~3,521,950 million). Furthermore, the Company provides agreements of construction completion (compensation for non- performance) in connection<br>with a number of implementation and union business projects.
As of September 30, 2023, according to the investor agreement for the construction of Samcheok Thermal Power Plant, POSCO Eco & Challenge Co., Ltd. is obligated to make contributions for core capital, unqualified<br>investment, excess expenses occurred for business, and acceleration of payment. Among them, the remaining amount of the core capital investment obligation is ~~W~~43,189 million, and the payment period and amounts are expected to<br>be ~~W~~25,700 million in the fourth quarter of 2023 and ~~W~~17,489 million in the first quarter of 2024.

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

Company Description
POSCO DX (formerly, POSCO ICT) As of September 30, 2023, in relation to contract enforcement, POSCO DX is provided with a guarantee of ~~W~~108,938 million, ~~W~~55,213 million, and ~~W~~5,594 million<br>from Korea Software Financial Cooperative, Seoul guarantee insurance, and Construction Guarantee Cooperative respectively.
POSCO FUTURE MATERIALS CANADA INC. (formerly, POSCO CHEMICAL CANADA INC.) In accordance with the GP Shareholders Agreement between POSCO FUTURE MATERIALS CANADA INC. and GM Battery Raw Materials Corporation (hereinafter referred to as GM), if, POSCO FUTURE M CO., LTD. (POSCO FUTURE MATERIALS CANADA<br>INC’s shareholder) fails to obtain approval for the export of national core technology under the ‘Act On Prevention Of Divulgence And Protection Of Industrial Technology’ in Korea within two years from the date of signing the<br>agreement, GM may sell its shares of ULTIUM CAM GP INC. and ULTIUM CAM LIMITED PARTNERSHIP held by Posco Future Materials Canada Inc. GM has the right to exercise this put option until the 27th month from the date of signing the agreement. When GM<br>exercises the put option, Posco Future Materials Canada Inc. is required to immediately purchase GM’s shares at a price of the fair market value of GM’s shares or 125% of the total amount of capital contributions made by GM before the<br>closing of the sale, whichever amount is greater. As of September 30, 2023, the Company recognized ~~W~~73,953 million as other financial liabilities related to the terms of this agreement.
(c) Litigation in progress
--- ---

The Company is involved in 313 lawsuits aggregating to ~~W~~1,250 billion as defendant as of September 30, 2023, which arise from the ordinary course of business such as claim for confirmation of employee status. The Company has recognized provisions amounting to ~~W~~50.8 billion for 59 lawsuits based on its reliable estimate of outflow of resources. However, the Company has not recognized any provisions for the other lawsuits and claim since the Company believes that it does not have a present obligation as of September 30, 2023.

(d) Other Contingencies

Other major contingencies for the Company as of September 30, 2023 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 has a joint obligation with the company newly established through spin-off, POSCO, to discharge all liabilities (including financial guarantee contracts) incurred prior to the spin-off date.
POSCO INTERNATIONAL Corporation As of September 30, 2023, POSCO INTERNATIONAL Corporation has provided 29 blank promissory notes and 18 blank checks to Korea Energy Agency and others as collateral for the guarantee on performance for contracts and<br>others.
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO.,LTD.) As of September 30, 2023, POSCO Eco & Challenge Co., Ltd. has provided 34 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans, and has provided joint guarantee of<br>~~W~~6,989,760 million for guarantee that partners had issued from Korea Housing & Urban Guarantee Corporation and others.
POSCO DX (formerly, POSCO ICT) As of September 30, 2023, POSCO DX has provided 7 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others.

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

36. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) September 30, 2023 September 30, 2022
Trade accounts and notes receivable ~~W~~ (1,541,321 ) (281,879 )
Other receivables 250,895 61,365
Inventories 1,487,683 (1,611,545 )
Other current assets (145,844 ) (269,314 )
Other non-current assets (39,956 ) (18,141 )
Trade accounts and notes payable (476,744 ) (831,586 )
Other payables (700,610 ) (23,447 )
Other current liabilities (233,150 ) (58,403 )
Provisions (227,116 ) (222,851 )
Payments of severance benefits (219,124 ) (228,744 )
Plan assets 169,089 159,792
Other non-current liabilities (19,091 ) 10,303
~~W~~ (1,695,289 ) (3,314,450 )

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

37. Operating Segments

The Company’s operations are organized based on the nature of markets and customers. During the nine-month period ended September 30, 2023, the Company changed its internal organization and internal reporting structures. As a result, operating segments were re-categorized according to the revised reporting materials provided to the management for decision-making. The Company restated the reporting segments information for the nine-month period ended September 30, 2022, to conform to the new reporting segmentation.

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 classified the business segment and the subsidiaries in each segment as follows:

Operating segments Main Business
Steel Manufacture and sales of steel products
Green infrastructure Trading Supply and purchase transactions between domestic and foreign companies, power generation, and resource development
Construction Design, production and construction of steel mills and their facilities, commercial and residential facilities, etc.
Logistics and others Logistics, network and system integration business
Green Materials and energy EV battery materials such as lithium, nickel, negative/cathode materials, and hydrogen business
Others POSCO HOLDINGS. INC., Controlling company and Investment business
(a) Information about reportable segments for the nine-month periods ended September 30, 2023 and 2022 were as<br>follows:
--- ---
1) For the nine-month period ended September 30, 2023
--- ---
Green Infrastructure Green materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(in millions of Won) Steel Trading Construction Logistics and others Others Total
External revenues ~~W~~ 30,686,602 18,279,949 6,127,712 338,175 2,939,530 91,112 58,463,080
Internal revenues 17,432,758 14,341,819 1,345,284 2,464,390 728,789 1,255,851 37,568,891
Inter segment revenues 11,693,650 6,790,495 1,263,327 2,462,010 725,224 1,241,031 24,175,737
Total revenues 48,119,360 32,621,768 7,472,996 2,802,565 3,668,319 1,346,963 96,031,971
Segment profits 1,374,771 682,697 138,130 119,966 20,848 897,578 3,233,990
2) For the nine-month period ended September 30, 2022
--- ---
① The segment results as previously disclosed are as follows:
--- ---
Green Infrastructure Green materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(in millions of Won) Steel Construction Trading Energy and others Others Total
External revenues ~~W~~ 34,995,320 5,570,260 20,187,524 2,780,636 1,871,790 97,129 65,502,659
Internal revenues 20,542,536 846,160 19,184,700 2,446,507 708,956 445,858 44,174,717
Inter segment revenues 14,288,902 759,457 9,694,579 2,485,776 696,725 433,217 28,358,656
Total revenues 55,537,856 6,416,420 39,372,224 5,227,143 2,580,746 542,987 109,677,376
Segment profits (losses) 2,681,464 235,895 485,970 254,631 154,916 (1,815,743 ) 1,997,133

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

② The restated segment results due to the change of the operating segments are as follows:
Green Infrastructure Green materials<br>and Energy
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(in millions of Won) Steel Trading Construction Logistics and others Others Total
External revenues ~~W~~ 34,995,320 22,638,664 5,570,260 329,496 1,871,790 97,129 65,502,659
Internal revenues 20,542,536 19,219,010 846,160 2,412,197 708,956 445,858 44,174,717
Inter segment revenues 14,288,902 9,112,771 759,457 2,463,246 696,725 433,217 27,754,318
Total revenues 55,537,856 41,857,674 6,416,420 2,741,693 2,580,746 542,987 109,677,376
Segment profits (losses) 2,681,464 651,040 235,895 89,561 154,916 (1,815,743 ) 1,997,133
(b) Reconciliations of total segment profit or loss, to their respective consolidated financial statement line<br>items for the nine-month periods ended September 30, 2023 and 2022 were as follows:
--- ---
(in millions of Won) September 30, 2023 September 30, 2022
--- --- --- --- --- --- ---
Total profit for reportable segments ~~W~~ 3,233,990 1,997,133
Corporate fair value adjustments 160,686 (51,102 )
Elimination of inter-segment profit (loss) (1,227,904 ) 2,351,433
Income tax expense 695,498 1,131,300
Profit before income tax expense ~~W~~ 2,862,270 5,428,764

38. Business combination

(a) General Information

As of March 30, 2023, the Company acquired 50% of the remaining shares of QSONE Co., Ltd. which had previously been classified as an associate, and classified the entity as a wholy owned subsidiary. QSONE Co., Ltd. owns POSCO Tower Yeoksam, located in Seoul, South Korea, and operates in the business of real estate rental and facility management. With QSONE Co., Ltd.’s inclusion as a subsidiary, the Company plans to reallocate some of consolidated entities which are dispersed due to space limitation, and expects that the Company will ultimately be able to promote collaboration and improve work efficiency.

Had QSONE Co., Ltd. been acquired on January 1, 2023, the Company’s revenue and profit would have been ~~W~~58,466,535 million and ~~W~~2,167,815 million. In addition, revenue and profit based on separate financial statements of QSONE Co., Ltd. after the acquisition are ~~W~~12,476 million and ~~W~~4,363 million.

(b) Consideration transferred

As of the acquisition date, the fair values of the major categories of the consideration transferred in the acquisition are as follows:

(in millions of Won) March 30, 2023
Cash ~~W~~ 152,749
Investments in associates(*1) 268,951
(*1) As a result of reassessing 50% of the shares previously held by the Company at fair value, a gain on disposal<br>of ~~W~~184,556 million has been recognized as other non-operating income in the consolidated statement of comprehensive income.
--- ---

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As of September 30, 2023

(Unaudited)

(c) Identifiable assets acquired and liabilities assumed

The fair value of the identifiable assets acquired and liabilities assumed as of the date of acquisition is as follows:

(in millions of Won) March 30, 2023
Assets
Cash and cash equivalents ~~W~~ 2,220
Trade accounts, notes receivable and other receivables, net 205
Other financial assets 12,000
Other current assets 132
Total current assets 14,557
Other receivables, net 41
Investment property, net 557,040
Property, plant and equipment, net 42,641
Deferred tax assets 10
Total non-current assets 599,732
Total assets ~~W~~ 614,289
Liabilities
Short-term borrowings ~~W~~ 10,000
Other payables 5,612
Current income tax liabilities 401
Other current liabilities 812
Total current liabilities 16,825
Long-term borrowings 48,000
Other payables 6,546
Other non-current liabilities 967
Deferred tax liabilities 85,127
Total non-current liabilities 140,640
Total liabilities ~~W~~ 157,465
Net assets ~~W~~ 456,824

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Notes to the Condensed Consolidated Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(d) Gain on bargain purchase

The acquisition cost for the remaining 50% shares held by the seller was determined by comprehensively considering factors based on the sales contract, such as the fair value increase of POSCO Tower Yeoksam during the seller’s investment period, target earnings which is calculated by deducting amounts paid by QSONE Co., Ltd. to the seller as a right of shareholder and creditor, from the seller’s initial investment. Therefore, gain on bargain purchase from this business combination is ~~W~~32,965 million which the Company recognized as other non-operating income.

(e) Costs related to business combination

During nine-month period ended September 30, 2023 expenses related to the business combination, including evaluation fees were ~~W~~179 million, which the Company recognized as other administrative expenses in the consolidated statements of comprehensive income.

39. Events after the reporting period

Pursuant to the resolution of the Board of Directors on November 3, 2023, the Company decided to pay interim cash dividends of ~~W~~2,500 per common share (total dividend: ~~W~~189.7 billion).

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POSCO HOLDINGS INC.

Condensed Separate Interim Financial Statements

(Unaudited)

September 30, 2023

(With Independent Auditors’ Review Report Thereon)

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Page
Independent Auditors’ Review Report 1
Condensed Separate Interim Financial Statements
Condensed Separate Interim Statements of Financial<br>Position 3
Condensed Separate Interim Statements of Comprehensive<br>Income 5
Condensed Separate Interim Statements of Changes in<br>Equity 6
Condensed Separate Interim Statements of Cash Flows 7
Notes to the Condensed Separate Interim Financial<br>Statements 9
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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 September 30, 2023, the condensed separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2023 and 2022, the condensed separate interim statements of changes in equity and cash flows for the nine-month periods ended September 30, 2023 and 2022, and notes, comprising a summary of material accounting policy information 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”, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

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

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with 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 separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No. 1034 “Interim Financial Reporting”.

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Other matters

The separate statement of financial position of the Company as of December 31, 2022, 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 9, 2023, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2022, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

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.

Seoul, Korea

November 14, 2023

This report is effective as of November 14, 2023, the review report date. Certain subsequent events or circumstances, which may occur between the review<br>report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above<br>review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

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POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Financial Position

As of September 30, 2023 and December 31, 2022

(Unaudited)

(in millions of Won) Notes September 30,<br>2023 December 31,<br>2022
Assets
Cash and cash equivalents 18 ~~W~~ 620,852 1,415,201
Trade accounts and notes receivable, net 4,18,22,29 199,153 128,991
Other receivables, net 5,18,29 48,047 40,288
Other short-term financial assets 6,18 4,060,761 2,515,375
Current income tax assets 20,249 203,263
Other current assets 11 8,004 5,172
Total current assets 4,957,066 4,308,290
Other receivables, net 5,18 235,694 209,057
Other long-term financial assets 6,18 1,316,159 1,062,530
Investments in subsidiaries, associates and joint ventures 7 45,180,651 45,187,627
Investment property, net 8 287,404 220,699
Property, plant and equipment, net 9 138,892 145,006
Intangible assets, net 10 17,709 15,902
Other non-current assets 11 3,593 8
Total non-current assets 47,180,102 46,840,829
Total assets ~~W~~ 52,137,168 51,149,119

See accompanying notes to the condensed separate interim financial statements.

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POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Financial Position, Continued

As of September 30, 2023 and December 31, 2022

(Unaudited)

(in millions of Won) Notes September 30,<br>2023 December 31,<br>2022
Liabilities
Short-term borrowings and current installments of long-term borrowings 12,18 ~~W~~ 1,881,611 —
Other payables 13,18,29 77,975 64,597
Other short-term financial liabilities 14,18 1,462 5,815
Provisions 15 11,378 45,388
Other current liabilities 17,22 3,914 3,193
Total current liabilities 1,976,340 118,993
Long-term borrowings, excluding current installments 12,18 1,372 1,359,587
Other long-term financial liabilities 14,18 5,802 3,668
Defined benefit liabilities, net 16 3,322 3,761
Deferred tax liabilities 2,430,947 2,480,379
Long-term provisions 15,30 4,738 10,868
Total non-current liabilities 2,446,181 3,858,263
Total liabilities 4,422,521 3,977,256
Equity
Share capital 19 482,403 482,403
Capital surplus 19 1,368,060 1,360,894
Reserves 20 (13,481 ) (188,801 )
Treasury shares 21 (1,886,444 ) (1,892,308 )
Retained earnings 47,764,109 47,409,675
Total equity 47,714,647 47,171,863
Total liabilities and equity ~~W~~ 52,137,168 51,149,119

See accompanying notes to the condensed separate interim financial statements.

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POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Comprehensive Income

For the three-month and nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won, except per share informations) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
Notes 2023 2022 2023 2022
Operating revenue 22,29
Revenue ~~W~~ 473,685 74,515 1,268,512 7,996,178
Operating expenses 26,29
Cost of sales — 951 — (6,464,119 )
Other administrative expenses 23 (77,730 ) (63,606 ) (232,845 ) (336,646 )
Selling expenses 23 — — — (37,594 )
(77,730 ) (62,655 ) (232,845 ) (6,838,359 )
Operating profit 395,955 11,860 1,035,667 1,157,819
Finance income and costs 18,24
Finance income 46,435 110,104 251,632 417,017
Finance costs (321,519 ) (67,842 ) (527,402 ) (221,124 )
Other non-operating income and expenses 29
Impairment loss on other receivables (2,351 ) — (2,351 ) (128 )
Other non-operating income 25 2,407 2,020 11,478 23,371
Other non-operating expenses 25,26 (3,726 ) (230,938 ) (5,164 ) (258,145 )
Profit (loss) before income tax 117,201 (174,796 ) 763,860 1,118,810
Income tax revenue (expense) 27 36,184 206,473 121,571 (2,312,282 )
Profit (loss) 153,385 31,677 885,431 (1,193,472 )
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans 16 (41 ) (103 ) (254 ) (80,150 )
Net changes in fair value of equity investments at fair value through other comprehensive<br>income 6,18,20 96,590 (13,309 ) 175,656 (99,629 )
Total comprehensive income (loss) ~~W~~ 249,934 18,265 1,060,833 (1,373,251 )
Earnings (loss) per share (in Won) 28
Basic earnings (loss) per share (in Won) ~~W~~ 2,022 418 11,671 (15,759 )
Diluted earnings (loss) per share (in Won) 2,022 418 11,671 (15,759 )

See accompanying notes to the condensed separate interim financial statements.

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POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Changes in Equity

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Share<br>capital Capital<br>surplus Hybrid<br>bonds Reserves Treasury<br>shares Retained<br>earnings Total
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 — — — — — (1,193,472 ) (1,193,472 )
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax — — — — — (80,150 ) (80,150 )
Net changes in fair value of equity investments at fair value through other comprehensive income,<br>net of tax — — — (2,723 ) — (96,906 ) (99,629 )
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends — — — — — (378,128 ) (378,128 )
Interim dividends — — — — — (606,794 ) (606,794 )
Interest of hybrid bonds — — — — — (1,487 ) (1,487 )
Disposal of treasury shares — 9,491 — — 48,513 — 58,004
Retirement of treasury shares — — — — 567,473 (567,473 ) —
Changes from spin-off — — (199,384 ) — — — (199,384 )
Balance as of September 30, 2022 ~~W~~ 482,403 1,348,780 — (214,572 ) (1,892,308 ) 46,810,082 46,534,385
Balance as of January 1, 2023 ~~W~~ 482,403 1,360,894 — (188,801 ) (1,892,308 ) 47,409,675 47,171,863
Comprehensive income:
Profit — — — — — 885,431 885,431
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax — — — — — (254 ) (254 )
Net changes in fair value of equity investments at fair value through other comprehensive income,<br>net of tax — — — 175,320 — 336 175,656
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends — — — — — (151,698 ) (151,698 )
Interim dividends — — — — — (379,381 ) (379,381 )
Disposal of treasury shares — 4,082 — — 5,864 — 9,946
Share-based payment — 3,084 — — — — 3,084
Balance as of September 30, 2023 ~~W~~ 482,403 1,368,060 — (13,481 ) (1,886,444 ) 47,764,109 47,714,647

See accompanying notes to the condensed separate interim financial statements.

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POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Cash Flows

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Notes September 30,<br>2023 September 30,<br>2022
Cash flows from operating activities
Profit (loss) ~~W~~ 885,431 (1,193,472 )
Adjustments for :
Expenses related to post-employment benefit 4,766 20,530
Depreciation 8,227 390,406
Amortization 897 16,977
Impairment loss on other receivables 2,351 128
Finance income (245,324 ) (359,096 )
Dividend income (1,113,179 ) (419,121 )
Finance costs 523,797 176,139
Loss on valuation of inventories — 1,722
Gain on disposal of property, plant and equipment — (5,443 )
Loss on disposal of property, plant and equipment 2,254 18,281
Impairment loss on property, plant and equipment — 3
Gain on disposal of investments in subsidiaries, associates and joint venture (236 ) (4,748 )
Impairment loss on investments in subsidiaries, associates and joint venture — 175,990
Gain on disposal of assets held for sale — (2,706 )
Loss on disposal of assets held for sale 998 —
Increase (decrease) to provisions (7,568 ) 59,839
Income tax expense (benefit) (121,571 ) 2,312,282
Employee benefits — 61,603
Share-based payments expense 5,904 —
Others (135 ) (954 )
Changes in operating assets and liabilities 31 (4,585 ) (743,190 )
Interest received 34,492 87,251
Interest paid — (50,424 )
Dividends received 1,049,770 417,515
Income taxes received (paid) 201,097 (2,045,228 )
Net cash provided by (used in) operating activities ~~W~~ 1,227,386 (1,085,716 )

See accompanying notes to the condensed separate interim financial statements.

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POSCO HOLDINGS INC.

Condensed Separate Interim Statements of Cash Flows, Continued

For the nine-month periods ended September 30, 2023 and 2022

(Unaudited)

(in millions of Won) Notes September 30,<br>2023 September 30,<br>2022
Cash flows from investing activities
Decrease in deposits ~~W~~ 600,000 450,017
Proceeds from disposal of short-term financial instruments 4,872,223 23,789,014
Proceeds from disposal of long-term financial instruments — 5
Collection of short-term loans 1,249 1,416
Collection of long-term loans 2,000 —
Proceeds from disposal of debt securities — 50,000
Proceeds from disposal of equity securities — 4,903
Proceeds from disposal of other securities 564 19,589
Proceeds from disposal of investments in subsidiaries, associates and joint ventures 869,550 10,787
Proceeds from disposal of assets held for sale — 3,074
Increase in deposits (2,190,000 ) (550,571 )
Acquisition of short-term financial instruments (4,661,764 ) (20,510,014 )
Acquisition of long-term financial instruments (2 ) —
Increase in long-term loans — (3,618 )
Acquisition of debt securities — (50,000 )
Acquisition of other securities (21,492 ) (89,914 )
Acquisition of investments in subsidiaries, associates and joint ventures (895,987 ) (661,172 )
Acquisition of investment properties (54,834 ) —
Acquisition of property, plant and equipment (12,613 ) (356,942 )
Payment for disposal of property, plant and equipment — (14,485 )
Acquisition of intangible asstes (2,966 ) (9,519 )
Cash outflow for spin-off — (1,910,211 )
Net cash provided by (used in) investing activities ~~W~~ (1,494,072 ) 172,359
Cash flows from financing activities
Proceeds from borrowings — 537,165
Increase in long-term financial liabilities 3,781 15,515
Repayment of borrowings — (232,976 )
Decrease in long-term financial liabilities — (279 )
Repayment of lease liabilities — (7,493 )
Payment for disposal of derivatives — (7,103 )
Payment of cash dividends (531,444 ) (984,929 )
Net cash used in financing activities ~~W~~ (527,663 ) (680,100 )
Effect of exchange rate fluctuation on cash held — 3,918
Net decrease in cash and cash equivalents (794,349 ) (1,589,539 )
Cash and cash equivalents at beginning of the period 1,415,201 2,042,274
Cash and cash equivalents at end of the period ~~W~~ 620,852 452,735

See accompanying notes to the condensed separate interim financial statements.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements

As of September 30, 2023

(Unaudited)

1. Reporting Entity

POSCO HOLDINGS INC. (the “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.

On March 2, 2022, the Company established a new subsidiary, POSCO, by a vertical spin-off of its steel business (The surviving company owns 100% of shares) on March 1, 2022, and changed the name of the surviving company to POSCO HOLDINGS INC. Meanwhile, operating revenue in the statements of comprehensive income for the nine-month period ended September 30, 2022, includes sales of ~~W~~7,542,729 million from the steel business before the vertical spin-off.

As of September 30, 2023, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchange.

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, 2022. 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.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(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.

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.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

• Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.<br>
• Level 2 – inputs other than quoted prices included in Level 1 that are observable for the assets or<br>liabilities, either directly or indirectly.
--- ---
• Level 3 – inputs for the assets or liabilities that are not based on observable market data.<br>
--- ---

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 Material Accounting PolicyInformation

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, 2022.

Changes in Accounting Policies

Except for the standards and amendments applied for the first time for the reporting period beginning on January 1, 2023 described below, the accounting policies applied by the Company in these financial statements are the same as those applied by the Company in its financial statements as of and for the year ended December 31, 2022.

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

From January 1, 2023, the Company has applied the amendments related to deferred tax arising from assets and liabilities in a single transaction under K-IFRS No. 1012 “Income Tax”. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences. The amendment does not any impact on the statement of financial position.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) K-IFRS No. 1001 “Presentation of Financial Statements”<br>– Disclosure of Accounting Policies

Material accounting policy information is defined as information that is expected to influence the decision-making of primary users of financial statements considering with other information included in the financial statements, and is required to be disclosed. The Company plans to disclose material accounting policies in the annual financial statements for the year ending December 31, 2023.

(c) K-IFRS No. 1008 “Accounting Policies, Changes in Accounting<br>Estimates and Errors” – Definition of Accounting Estimates

For accounting estimates defined as monetary amounts in the financial statements, a change in measurement methods or inputs are clarified as changes in accounting estimates unless they result from the correction of prior period errors. The amendment is applied prospectively to the changes in accounting estimates that occur after the effective date. The amendments did not have any impact on the financial statements.

New standards andinterpretations not yet adopted

A number of new standards are effective for annual periods beginning after January 1, 2023 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. 1001 “Presentation of Financial Statements”<br>– 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, 2024. Early application is permitted. The Company does not expect the effect of the amendments to the financial statements to be significant.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) K-IFRS No. 1012 “Income Tax” – Global Minimum Top-Up Tax

The International Accounting Standards Board (IASB) issued amendments to IAS 12 “Income Tax” on May 23, 2023 that provided a temporary mandatory exception from accounting for deferred tax arising from legislation implementing the Pillar Two taxes and new disclosure requirements in the annual financial statements. The Korea Accounting Standards Board (KASB) is currently preparing an amendment to K-IFRS No. 1012 “Income Tax”. In 2022, the corporate income tax law in the Republic of Korea was amended to reflect the global minimum top-up tax of the Pillar Two Model Rules and will be effective for fiscal years starting on or after January 1, 2024. However, as of September 30, 2023, the enforcement decree of the related law has not yet been enacted. Therefore, it is determined that the related law has not been substantively enacted due to the insufficient legislation to calculate the global minimum top-up tax.

The Company is closely monitoring developments related to the implementation of the international tax reforms introducing the global minimum top-up tax. However, since none of the jurisdictions in which the Company operates has enacted or substantively enacted the tax legislation related to the top-up tax at the date when the accompanying interim financial statements were authorized for issue, there is no impact on the Company’s condensed interim financial statements. In light of the exception from the deferred tax accounting, the Company’s management is focusing its assessment on the potential current tax impacts of the top-up tax. Once changes to the tax laws in Republic of Korea in which the Company operates are substantively enacted, the Company may be subject to the top-up tax.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

4. Trade Accounts and Notes Receivable

Trade accounts and notes receivable as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Trade accounts and notes receivable ~~W~~ 90,545 30,049
Unbilled receivables (contract assets) 108,608 98,942
~~W~~ 199,153 128,991

5. Other Receivables

Other receivables as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Other accounts receivable ~~W~~ 37,104 38,676
Others 10,943 1,612
~~W~~ 48,047 40,288
Non-current
Loans ~~W~~ 226,587 205,379
Long-term other accounts receivable 11,449 3,668
Less: Allowance for doubtful accounts (2,352 ) —
Others 10 10
~~W~~ 235,694 209,057

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

6. Other Financial Assets

(a) Other financial assets as of September 30, 2023 and December 31, 2022 are as follows:<br>
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Current
Deposit instruments ~~W~~ 1,590,000 —
Short-term financial instruments 2,470,761 2,515,375
~~W~~ 4,060,761 2,515,375
Non-current
Equity securities ~~W~~ 1,113,775 885,942
Other securities 202,382 176,588
Deposit instruments 2 —
~~W~~ 1,316,159 1,062,530
(b) Equity securities as of September 30, 2023 and December 31, 2022 are as follows:<br>
--- ---
(in millions of Won) September 30, 2023 December 31,2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Number of<br>shares Ownership<br>(%) Acquisition<br>cost Fair<br>value Net changes in<br>fair value of<br>equity securities Book<br>value Book<br>value
Marketable equity securities
Nippon Steel Corporation 15,698,500 1.65 ~~W~~ 473,962 496,431 22,469 496,431 342,963
KB Financial group Inc. 3,863,520 0.96 178,839 213,653 34,814 213,653 187,381
Woori Financial Group Inc. 20,280,000 2.67 244,447 248,632 4,185 248,632 234,234
CSN Mineracao S.A. 102,186,675 1.86 206,265 133,640 (72,625 ) 133,640 99,945
1,103,513 1,092,356 (11,157 ) 1,092,356 864,523
Non-marketable equity securities
POSCO PLANTEC Co., Ltd. 18,337,912 10.99 19,437 19,437 — 19,437 19,437
Intellectual Discovery Co., Ltd. 200,000 6.00 5,000 1,350 (3,650 ) 1,350 1,350
Pos-hyundai Steel Manufacturing India Private<br>Limited 1,055,496 6.00 612 612 — 612 612
S&M MEDIA Co., Ltd. 2,000 2.67 20 20 — 20 20
XG Sciences 300,000 5.06 2,724 — (2,724 ) — —
27,793 21,419 (6,374 ) 21,419 21,419
~~W~~ 1,131,306 1,113,775 (17,531 ) 1,113,775 885,942

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

7. Investments in Subsidiaries, Associates and Joint ventures

(a) Details of subsidiaries and carrying amounts as of September 30, 2023 and December 31, 2022 are as<br>follows:
September 30, 2023 December 31,<br>2022
--- --- --- --- --- --- --- --- --- ---
(in millions of Won) Country Principal operations Ownership (%) Book value Book value
[Domestic]
POSCO(*10) Korea Steel, rolled products, and plates manufacturing and sales 100.00 ~~W~~ 29,700,868 29,699,590
POSCO INTERNATIONAL Corporation(*1) Korea Trading, power generation and natural resources exploration 70.71 3,740,110 3,081,933
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO.,<br>LTD.)(*2) Korea Engineering and construction 52.80 1,013,739 1,014,314
POSCO ENERGY CO., LTD.(*1) Korea Power generation, fuel cell manufacturing and sales — — 658,176
POSCO Venture Capital Co., Ltd. Korea Investment in venture companies 100.00 115,955 103,780
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD.)(*3) Korea Refractory and anode/cathode material manufacturing and sales 59.72 895,707 895,707
POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.)(*4,5) Korea Business facility maintenance 47.17 73,374 73,374
POSCO DX(formerly, POSCO ICT)(*6) Korea Computer hardware and software distribution 65.38 70,990 70,990
Busan E&E Co., Ltd. Korea Municipal solid waste fuel and power generation 70.00 30,148 30,148
POSOCO-Pilbara LITHIUM SOLUTION Co., Ltd. Korea Lithium manufacturing and sales 82.00 314,940 314,940
POSCO LITHIUM SOLUTION Korea Lithium hydroxide manufacturing and sales 100.00 287,550 287,550
QSONE Co., Ltd.(*7) Korea Real estate rental and facility management 100.00 238,478 —
Others (12 companies)(*9) 529,546 455,893
37,011,405 36,686,395
[Foreign]
PT. KRAKATAU POSCO(*10) Indonesia Steel manufacturing and sales — — 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-China Holding Corp. China Holding company 100.00 593,841 593,841
POSCO MEXICO S.A. DE C.V.(*10) Mexico Plate steel manufacturing and sales — — 180,072
POSCO America Corporation USA Researching and consulting 99.45 192,156 192,156
POSCO VST CO., LTD. Vietnam Stainless steel manufacturing and sales 95.65 144,573 144,573
POSCO Asia Co., Ltd. Hong<br>Kong Activities Auxiliary to financial service 100.00 117,710 117,710
POSCO ASSAN TST STEEL INDUSTRY Turkiye 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<br>Africa Mine development 100.00 50,297 50,297
POSCO Argentina S.A.U.(*8) Argentina Mineral exploration, manufacturing and sales 100.00 1,045,944 715,414
Others (18 companies)(*10) 301,013 356,274
5,258,643 5,796,867
~~W~~ 42,270,048 42,483,262
(*1) During the nine-month period ended September 30, 2023, POSCO INTERNATIONAL Corporation merged with POSCO<br>ENERGY CO., LTD..
--- ---
(*2) During the nine-month period ended September 30, 2023, POSCO ENGINEERING & CONSTRUCTION CO., LTD.<br>changed the name to POSCO Eco & Challenge Co., Ltd..
--- ---
(*3) During the nine-month period ended September 30, 2023, POSCO CHEMICAL CO., LTD. changed the name to POSCO<br>FUTURE M CO., LTD..
--- ---
(*4) During the nine-month period ended September 30, 2023, POSCO O&M Co., Ltd. changed the name to POSCO<br>WIDE Co., Ltd..
--- ---
(*5) The Company classified POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.) as the investments in a<br>subsidiary, considering additional facts and circumstances, such as the relative size of the voting rights held by the Company, structure of its Board of Directors and the degree of diversification of other voting rights holders, although the<br>Company holds less than half of the voting rights of POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.).
--- ---

16

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(*6) During the nine-month period ended September 30, 2023, POSCO ICT changed the name to POSCO DX.<br>
(*7) During the nine-month period ended September 30, 2023, the Company additionally acquired 50% of the shares<br>held by external shareholders of QSONE Co., Ltd., which was previously classified as an investment in associate, for ~~W~~152,928 million. Meanwhile, ~~W~~85,550 million<br>previously classified as an investment in associate was reclassified as investments in subsidiaries.
--- ---
(*8) During the nine-month period ended September 30, 2023, the Company acquired<br>~~W~~330,530 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.<br>
--- ---
(*9) During the nine-month period ended September 30, 2023, the Company acquired<br>~~W~~59,052 million in additional subsidiary investment shares by participating in POSCO Silicon Solution Co., Ltd.‘s capital increase.
--- ---
(*10) During the nine-month period ended September 30, 2023, the Company disposed of 5 subsidiaries, including<br>PT. KRAKATAU POSCO, PT. POSCO INDONESIA JAKARTA PROCESSING CENTER, and POSCO MEXICO S.A DE C.V., to POSCO, a subsidiary. Meanwhile, the Company recognized ~~W~~338,789 million of gain on disposal from the<br>transaction as dividend income, and ~~W~~7,787 million of loss on disposal were added to the acquisition cost of the POSCO.
--- ---
(b) Details of associates and carrying amounts as of September 30, 2023 and December 31, 2022 are as<br>follows:
--- ---
(in millions of Won) September 30, 2023 December 31,2022
--- --- --- --- --- --- --- --- ---
Country Principal operations Ownership (%) Book value Book value
[Domestic]
SNNC Korea STS material manufacturing and sales 49.00 ~~W~~ 100,655 100,655
QSONE Co., Ltd.(*1) Korea Real estate rental and facility management — — 85,550
Others (6 companies) 37,836 37,916
138,491 224,121
[Foreign]
Nickel Mining Company SAS New Caledonia Raw material manufacturing and sales 49.00 189,197 189,197
9404-5515 Quebec Inc.(*2) Canada Investment in venture companies 12.61 156,194 156,194
FQM Australia Holdings Pty Ltd Australia Non ferrous metal mining 24.32 109,568 109,568
Others (3 companies) 36,221 37,133
491,180 492,092
~~W~~ 629,671 716,213
(*1) During the nine-month period ended September 30, 2023, the Company additionally acquired 50% of the shares<br>held by external shareholders and reclassified as investments in subsidiaries.
--- ---

17

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(*2) As of September 30, 2023, it was classified as an associate even though the Company’s ownership<br>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.
(c) Details of joint ventures and carrying amounts as of September 30, 2023 and December 31, 2022 are as<br>follows:
--- ---
(in millions of Won) September 30, 2023 December 31,<br>2022
--- --- --- --- --- --- --- --- ---
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(*2) Brazil Steel manufacturing and sales 20.00 — —
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 50.00 235,251 235,251
BX STEEL POSCO Cold Rolled Sheet Co., Ltd. China Steel manufacturing and sales 25.00 63,866 63,866
PT NICOLE METAL INDUSTRY(*3) Indonesia Nickel smelting 49.00 292,780 —
~~W~~ 2,280,932 1,988,152
(*1) As of September 30, 2023 and December 31, 2022, the investments in joint ventures amounting to<br>~~W~~1,225,464 million were provided as collateral in relation to revolving loan of Roy Hill Holdings Pty Ltd.
--- ---
(*2) During the year ended December 31, 2022, the Company decided to dispose of CSP - Compania Siderurgica do<br>Pecem and recognized full impairment loss of ~~W~~175,990 million, which is the difference between carrying amount and recoverable amount. The Company reclassified the investment to assets held for sale. Meanwhile,<br>during the nine-month period ended September 30, 2023, the Company disposed of CSP - Compania Siderurgica do Pecem, and recognized ~~W~~998 million of loss on disposal of assets held for sale.<br>
--- ---
(*3) During the nine-month period ended September 30, 2023, the Company acquired 49% shares of PT NICOLE METAL<br>INDUSTRY, for ~~W~~292,780 million and classified the investment as an investment in joint ventures.
--- ---

18

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

8. Investment Property, Net

Changes in the carrying amount of investment property for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(a) For the nine-month period ended September 30, 2023
(in millions of Won) Beginning Acquisitions Depreciation(*1) Transfer(*2) Ending
--- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 131,069 54,834 — — 185,903
Buildings 83,528 — (4,882 ) 14,352 92,998
Structures 6,102 — (373 ) 2,774 8,503
~~W~~ 220,699 54,834 (5,255 ) 17,126 287,404
(*1) The useful life and depreciation method of investment property are identical to those of property, plant and<br>equipment.
--- ---
(*2) Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio<br>and the purpose of use.
--- ---
(b) For the year ended December 31, 2022
--- ---
(in millions of Won) Beginning Depreciation(*1) Spin-off Transfer(*2) Ending
--- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 87,568 — (3,639 ) 47,140 131,069
Buildings 48,989 (5,823 ) (4,990 ) 45,352 83,528
Structures 7,583 (395 ) (4,304 ) 3,218 6,102
~~W~~ 144,140 (6,218 ) (12,933 ) 95,710 220,699
(*1) The useful life and depreciation method of investment property are identical to those of property, plant and<br>equipment.
--- ---
(*2) Mainly includes assets transferred from property, plant and equipment in relation to changes in rental ratio<br>and the purpose of use.
--- ---

19

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

9. Property, Plant and Equipment, Net

Changes in the carrying amount of property, plant and equipment for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(a) For the nine-month period ended September 30, 2023
(in millions of Won) Beginning Acquisitions Disposals Depreciation Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 51,310 — — — — 51,310
Buildings 39,277 289 (53 ) (1,412 ) (11,526 ) 26,575
Structures 6,036 11 (700 ) (140 ) 1,067 6,274
Machinery and equipment 10,504 — — (716 ) — 9,788
Vehicles 11 — — (5 ) — 6
Furniture and fixtures 12,573 142 — (699 ) 560 12,576
Construction-in-progress 25,295 15,893 — — (8,825 ) 32,363
~~W~~ 145,006 16,335 (753 ) (2,972 ) (18,724 ) 138,892
(*1) Represents assets transferred from<br>construction-in-progress to other property, plant and equipment, assets transferred to investment property, and other expenses.
--- ---
(b) For the year ended December 31, 2022
--- ---
(in millions of Won) Beginning Acquisitions Disposals Depreciation Spin-off Others(*1) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 1,349,266 — — — (1,250,818 ) (47,138 ) 51,310
Buildings 2,175,291 — (2,964 ) (36,112 ) (2,079,343 ) (17,595 ) 39,277
Structures 2,096,662 — (117 ) (31,656 ) (2,075,346 ) 16,493 6,036
Machinery and equipment 12,299,612 2,178 (1,110 ) (302,940 ) (12,046,595 ) 59,359 10,504
Vehicles 18,357 622 (17 ) (1,548 ) (17,410 ) 7 11
Tools 24,891 102 — (1,923 ) (23,763 ) 693 —
Furniture and fixtures 88,524 16 (1 ) (5,122 ) (72,237 ) 1,393 12,573
Lease assets 448,328 966 — (7,602 ) (440,464 ) (1,228 ) —
Construction-in-progress 1,271,368 271,769 — — (1,403,761 ) (114,081 ) 25,295
~~W~~ 19,772,299 275,653 (4,209 ) (386,903 ) (19,409,737 ) (102,097 ) 145,006
(*1) Represents assets transferred from<br>construction-in-progress to intangible assets and other property, plant and equipment, assets transferred from investment properties, and others.
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(c) Information on lease agreements for which the Company is a lessee is as follows:
1) Right-of-use assets<br>
--- ---
① During the nine-month period ended September 30, 2023, there are no right-of-use assets listed as property, plant and equipment.
--- ---
② Changes in the carrying amount of<br>right-of-use assets presented as property, plant and equipment for the year ended December 31, 2022 were as follows.
--- ---
(in millions of Won) Beginning Acquisitions Depreciation Spin-off Others Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land ~~W~~ 8,402 — (49 ) (7,874 ) (479 ) —
Buildings 67,658 — (1,207 ) (66,451 ) — —
Structures 54,009 — (869 ) (53,140 ) — —
Machinery and equipment 83,290 — (1,592 ) (81,698 ) — —
Vehicles 5,755 — (83 ) (5,672 ) — —
Ships 210,058 — (2,781 ) (207,277 ) — —
Furniture and fixtures 19,156 966 (1,021 ) (18,352 ) (749 ) —
~~W~~ 448,328 966 (7,602 ) (440,464 ) (1,228 ) —
2) Amount recognized in profit or loss
--- ---

The amounts recognized in profit or loss related to leases for the three-month and the nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Interest on lease liabilities ~~W~~ — — — 1,969
Expenses related to short-term leases 1,011 44 1,116 724
Expenses related to leases of low-value assets 944 513 2,091 2,017
~~W~~ 1,955 557 3,207 4,710

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

10. Intangible Assets, Net

Changes in the carrying amount of intangible assets for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(a) For the nine-month period ended September 30, 2023
(in millions of Won) Beginning Acquisitions Amortization Others(*2) Ending
--- --- --- --- --- --- --- --- --- --- --- --- ---
Intellectual property rights ~~W~~ 504 — (112 ) 146 538
Membership(*1) 11,618 — — — 11,618
Development expense 1,400 — (612 ) 1,723 2,511
Construction-in-progress 1,476 2,731 — (1,896 ) 2,311
Other intangible assets 904 — (173 ) — 731
~~W~~ 15,902 2,731 (897 ) (27 ) 17,709
(*1) Economic useful life of membership is indefinite.
--- ---
(*2) Represents assets transferred from<br>construction-in-progress to intangible assets and assets transferred to other expenses.
--- ---
(b) For the year ended December 31, 2022
--- ---
(in millions of Won) Beginning Acquisitions Disposals Amortization Impairment Spin-off Others(*2) Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Intellectual property rights ~~W~~ 22,846 — (525 ) (1,262 ) — (24,180 ) 3,625 504
Membership(*1) 84,758 — — — 828 (73,968 ) — 11,618
Development expense 176,812 — — (12,892 ) — (164,135 ) 1,615 1,400
Port facilities usage rights 212,808 — — (2,476 ) — (210,332 ) — —
Construction-in-progress 32,392 9,835 — — — (33,497 ) (7,254 ) 1,476
Other intangible assets 21,794 726 — (550 ) — (21,288 ) 222 904
~~W~~ 551,410 10,561 (525 ) (17,180 ) 828 (527,400 ) (1,792 ) 15,902
(*1) Economic useful life of membership is indefinite.
--- ---
(*2) Represents assets transferred from<br>construction-in-progress to intangible assets and assets transferred from property, plant and equipment, and others.
--- ---

22

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

11. Other Assets

Other assets as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Advance payments ~~W~~ 5,000 5,165
Prepaid expenses 3,004 7
~~W~~ 8,004 5,172
Non-current
Long-term advance payments ~~W~~ 3,558 —
Long-term prepaid expenses 27 —
Others 8 8
~~W~~ 3,593 8

12. Borrowings

(a) Borrowings as of September 30, 2023 and December 31, 2022 are as follows:
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Short-term borrowings
Exchangeable bonds(*1) ~~W~~ 1,881,611 —
Long-term borrowings
Long-term borrowings ~~W~~ 1,372 1,293
Exchangeable bonds — 1,358,294
~~W~~ 1,372 1,359,587
(*1) As of September 30, 2023, exchangeable bonds were reclassified as current liabilities because the<br>bondholders’ put option for redemption is exercisable within 12 months.
--- ---
(b) Current portion of debentures as of September 30, 2023 and December 31, 2022 are as follows:<br>
--- ---
(in millions of Won) Lenders Issuance<br>date Maturity<br>date Annual<br>interest rate (%) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- ---
Exchangeable bonds(*1) Foreign currency exchangeable bonds 2021.09.01. 2026.09.01. — ~~W~~ 1,881,611 —
(c) Long-term borrowings and others excluding current portion, as of September 30, 2023 and December 31,<br>2022 are as follows:
--- ---
(in millions of Won) Lenders Issuance<br>date Maturity<br>date Annual<br>interest rate (%) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Foreign borrowings KOREA ENERGY AGENCY 2011.12.27. 2026.12.26. 3 year<br>Government<br>bond ~~W~~ 1,372 1,293
Exchangeable bonds(*1) Foreign currency<br>  exchangeable bonds 2021.09.01. 2026.09.01. — — 1,358,294
~~W~~ 1,372 1,359,587

23

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(*1) The issuance conditions of the exchangeable bonds issued by the Company are as follows:
Foreign currency exchangeable bonds
--- ---
Type of bond Exchangeable bonds
Aggregate principal amount EUR 1,065,900,000
Interest rate - Coupon rate : -
- Yield to maturity : (0.78%)
Maturity date September 1, 2026
Redemption - Redemption at maturity : Outstanding bond principal, which is not repaid early or which call option is not excercised on, is repaid at maturity as a lump sum
- Prepayment : The issuer has call option and the bondholders have put option
Exchange rate 100%
Exchange price 451,450(*)
(Won/share)
Underlying shares Registered common shares (treasury shares)
Exchange period From October 12, 2021 to August 22, 2026
Adjustments for exchange price Adjusting the exchange price according to the terms and conditions of the bond in the events of reason for adjusting the exchange price such as, bonus issue, share split, share consolidation, change of share type, issuance of<br>options or warranties to shareholders, share dividend, cash dividend, issuance of new shares under the market price.
Put option by bondholders - After 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<br>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 exchange price has changed due to cash dividends during the nine-month period ended September 30,<br>2023.
--- ---

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.

13. Other Payables

Other payables as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Accounts payable ~~W~~ 18,765 23,033
Accrued expenses 26,533 12,304
Dividend payable 2,715 3,079
Withholdings 29,962 26,181
~~W~~ 77,975 64,597

24

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

14. Other Financial Liabilities

Other financial liabilities as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Financial guarantee liabilities ~~W~~ 1,462 5,815
Non-current
Financial guarantee liabilities ~~W~~ 5,802 3,668

15. Provisions

(a) Provisions as of September 30, 2023 and December 31, 2022 are as follows:
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- ---
Current Non-current Current Non-current
Provision for bonus payments(*1) ~~W~~ 3,826 — 5,667 —
Provision for restoration(*2) 7,552 4,738 4,997 10,868
Others(*3) — — 34,724 —
~~W~~ 11,378 4,738 45,388 10,868
(*1) Represents the provision for bonuses limited to 100% of annual salaries for executives.
--- ---
(*2) Due to contamination of land near the Company’s magnesium smelting plant located in Gangneung province,<br>the Company recognized present values of estimated costs for recovery as provisions for restoration as of September 30, 2023. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials<br>available for now to recover the land. In addition, the Company has applied discount rates of 4.46% to assess present value of these costs.
--- ---
(*3) During the year ended December 31, 2022, the Company decided to dispose of CSP – Compania Siderurgica<br>do Pecem, an investment in joint venture and recognized the expected repayment of borrowings to be borne by disposal as a provision. Meanwhile, the disposal of CSP – Compania Siderurgica do Pecem has been completed during the nine-month period ended September 30, 2023, resulting in a final payment of ~~W~~26,566 million. The Company recognized ~~W~~8,158 million, which is the<br>difference between the final payment and previously recognized provision, as a reversal of other provisions.
--- ---
(b) Changes in provisions for the nine-month period ended September 30, 2023 and the year ended<br>December 31, 2022 were as follows:
--- ---
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Beginning Increase Reversal Utilization Ending
--- --- --- --- --- --- --- --- --- --- --- --- ---
Provision for bonus payments ~~W~~ 5,667 7,925 — (9,766 ) 3,826
Provision for restoration 15,865 590 — (4,165 ) 12,290
Others 34,724 — (8,158 ) (26,566 ) —
~~W~~ 56,256 8,515 (8,158 ) (40,497 ) 16,116

25

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the year ended December 31, 2022
(in millions of Won) Beginning Increase Reversal Utilization Spin-off Ending
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Provision for bonus payments ~~W~~ 46,520 24,770 (579 ) (33,431 ) (31,613 ) 5,667
Provision for restoration 12,503 16,054 (489 ) (3,359 ) (8,844 ) 15,865
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 ) —
Others — 39,600 (4,876 ) — — 34,724
~~W~~ 121,164 85,331 (5,944 ) (36,790 ) (107,505 ) 56,256

16. Employee Benefits

(a) Defined contribution plans

The expense related to post-employment benefit plans under defined contribution plans for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Expense related to post-employment benefit plans under defined contribution plans ~~W~~ 17 14 101 6,158
(b) Defined benefit plans
--- ---
1) The amounts recognized in relation to net defined benefit liabilities in the statements of financial position<br>as of September 30, 2023 and December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Present value of funded obligations ~~W~~ 39,772 27,503
Fair value of plan assets (36,450 ) (23,742 )
Net defined benefit liabilities ~~W~~ 3,322 3,761
2) Changes in present value of defined benefit obligations for the nine-month period ended September 30, 2023<br>and the year ended December 31, 2022 were as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Defined benefit obligation at the beginning of period ~~W~~ 27,503 1,330,938
Current service costs 5,080 23,366
Interest costs 598 5,882
Remeasurement — 104,564
Amount transferred from associate 14,226 730
Benefits paid (7,635 ) (59,335 )
Spin-off — (1,378,642 )
Defined benefit obligation at the end of period ~~W~~ 39,772 27,503

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

3) Changes in the fair value of plan assets for the nine-month period ended September 30, 2023 and the year<br>ended December 31, 2022 were as follows:
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Fair value of plan assets at the beginning of period ~~W~~ 23,742 1,543,469
Interest on plan assets 912 7,166
Remeasurement of plan assets (326 ) (3,100 )
Contributions to plan assets — 2,000
Amount transferred from associate 14,226 3,515
Benefits paid (2,104 ) (52,346 )
Spin-off — (1,476,962 )
Fair value of plan assets at the end of period ~~W~~ 36,450 23,742
4) The amounts recognized in the statements of comprehensive income for the three-month and nine-month periods<br>ended September 30, 2023 and 2022 were as follows:
--- ---
(in millions of Won) For the three-month periodsended September 30 For the nine-month periodsended September 30
--- --- --- --- --- --- --- --- --- --- --- --- ---
2023 2022 2023 2022
Current service costs ~~W~~ 1,064 1,642 5,080 21,798
Net interest costs (105 ) (16 ) (314 ) (1,268 )
~~W~~ 959 1,626 4,766 20,530

17. Other Liabilities

Other liabilities as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Current
Advances received ~~W~~ 60 379
Withholdings 2,134 1,028
Unearned revenue 1,720 1,786
~~W~~ 3,914 3,193

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

18. 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<br>as of September 30, 2023 and December 31, 2022 are as follows:
--- ---
① September 30, 2023
--- ---
(in millions of Won) Fair value
--- --- --- --- --- --- --- --- --- --- ---
Book value Level 1 Level 2 Level 3 Total
Financial assets
Fair value through profit or loss
Short term financial instruments ~~W~~ 2,470,761 — 2,470,761 — 2,470,761
Other securities 202,382 — — 202,382 202,382
Fair value through other comprehensive income
Equity securities 1,113,775 1,092,356 — 21,419 1,113,775
Financial assets measured at amortized cost(*1)
Cash and cash equivalents 620,852 — — — —
Trade accounts and notes receivable 90,545 — — — —
Other receivables 280,107 — — — —
Deposit instruments 1,590,002 — — — —
~~W~~ 6,368,424 1,092,356 2,470,761 223,801 3,786,918
Financial liabilities
Fair value through profit or loss
Borrowings ~~W~~ 1,881,611 1,881,611 — — 1,881,611
Financial liabilities measured at amortized cost(*1)
Borrowings 1,372 — 1,372 — 1,372
Financial guarantee liabilities 7,264 — — — —
Others 65,135 — — — —
~~W~~ 1,955,382 1,881,611 1,372 — 1,882,983
(*1) Fair value of financial assets and liabilities measured at amortized cost approximates their carrying amounts.<br>
--- ---
② December 31, 2022
--- ---
(in millions of Won) Fair value
--- --- --- --- --- --- --- --- --- --- ---
Book value Level 1 Level 2 Level 3 Total
Financial assets
Fair value through profit or loss
Short term financial instruments ~~W~~ 2,515,375 — 2,515,375 — 2,515,375
Other securities 176,588 — — 176,588 176,588
Other receivables 2,000 — — 2,000 2,000
Fair value through other comprehensive income
Equity securities 885,942 864,523 — 21,419 885,942
Financial assets measured at amortized cost(*1)
Cash and cash Equivalents 1,415,201 — — — —
Trade accounts and notes receivable 30,049 — — — —
Other receivables 243,273 — — — —
~~W~~ 5,268,428 864,523 2,515,375 200,007 3,579,905
Financial liabilities
Fair value through profit or loss
Borriwings ~~W~~ 1,358,294 1,358,294 — — 1,358,294
Financial liabilities measured at amortized cost(*1)
Borrowings 1,293 — 1,293 — 1,293
Financial guarantee liabilities 9,483 — — — —
Others 63,245 — — — —
~~W~~ 1,432,315 1,358,294 1,293 — 1,359,587
(*1) Fair value of financial assets and liabilities measured at amortized cost approximates their carrying amounts.<br>
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) Financial liabilities were recognized in connection with financial guarantee contracts as of September 30,<br>2023. The details of the amount of guarantees provided are as follows:
(in millions of Won) Guarantee limit Guarantee amount
--- --- --- --- --- --- --- --- --- --- ---
Guarantee beneficiary Financial institution Foreign<br>currency Won<br>equivalent Foreign<br>currency Won<br>equivalent
Subsidiaries
POSCO Maharashtra BNP USD 30,000,000 40,344 12,830,653 17,255
Steel Private Limited CITI USD 20,000,000 26,896 8,553,769 11,503
DBS USD 35,000,000 47,068 14,969,095 20,130
SC USD 19,784,000 26,606 8,461,388 11,379
SMBC USD 35,000,000 47,068 14,969,095 20,130
POSCO ASSAN TST BNP USD 22,074,750 29,686 22,074,750 29,686
STEEL INDUSTRY CITI USD 36,000,000 48,413 36,000,000 48,413
ING USD 36,000,000 48,413 36,000,000 48,413
SOCIETE GENERALE USD 37,800,000 50,833 37,800,000 50,833
POSCO Asia Co., Ltd. Credit Agricole USD 50,000,000 67,240 — —
ING USD 55,000,000 73,964 — —
Mizuho USD 50,000,000 67,240 — —
Shinhan USD 50,000,000 67,240 — —
POSCO Argentina S.A.U. BNP USD 20,000,000 26,896 11,988,127 16,122
CITI USD 97,975,000 131,757 58,726,839 78,976
Credit Agricole USD 97,975,000 131,757 58,726,839 78,976
HSBC USD 97,975,000 131,757 58,726,839 78,976
JPM USD 97,975,000 131,757 58,726,839 78,976
Associates
Nickel Mining Company SAS SMBC EUR 46,000,000 65,399 46,000,000 65,399
USD 888,558,750 1,194,935 438,554,233 589,768
EUR 46,000,000 65,399 46,000,000 65,399
3) Finance income and costs by category of financial instrument for the nine-month periods ended<br>September 30, 2023 and 2022 were as follows:
--- ---
① For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income Gain and loss on<br>foreign currency Gain and loss on<br>disposal Gain and loss on<br>valuation Others Total Other<br>comprehensive<br>income
Financial assets at fair value<br>through profit or loss ~~W~~ — 3,875 34,582 132,751 — 171,208 —
Financial assets at fair value<br>through other comprehensive income — — — — — — 175,656
Financial assets measured at<br>amortized cost 51,125 20,603 — — — 71,728 —
Financial liabilities at fair value<br>through profit or loss — (93,331 ) — (429,985 ) — (523,316 ) —
Financial liabilities measured at<br>amortized cost — (325 ) — — 4,935 4,610 —
~~W~~ 51,125 (69,178 ) 34,582 (297,234 ) 4,935 (275,770 ) 175,656

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

② For the nine-month period ended September 30, 2022
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income<br>(expense) Gain and loss on<br>foreign currency Gain and loss<br>on disposal Gain and loss<br>on valuation Others Total Other<br>comprehensive<br>loss
Financial assets at fair value through profit or loss ~~W~~ 89,691 — 3,922 19,774 — 113,387 —
Financial assets at fair value through other comprehensive income — — — — — — (103,345 )
Financial assets measured at amortized cost 17,075 112,638 — — — 129,713 —
Financial liabilities at fair value through profit or loss — (64,787 ) (4,188 ) 123,726 — 54,751 —
Financial liabilities measured at amortized cost (24,469 ) (84,802 ) — — 7,313 (101,958 ) —
~~W~~ 82,297 (36,951 ) (266 ) 143,500 7,313 195,893 (103,345 )
4) Finance income and costs by category of financial instrument for the three-month periods ended<br>September 30, 2023 and 2022 were as follows:
--- ---
① For the three-month period ended September 30, 2023
--- ---
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income Gain and loss on<br>foreign currency Gain and loss on<br>disposal Gain and loss on<br>valuation Others Total Other<br>comprehensive<br>income
Financial assets at fair value through profit or loss ~~W~~ — 1,600 1,421 17,890 — 20,911 —
Financial assets at fair value through other comprehensive income — — — — — — 96,590
Financial assets measured at amortized cost 17,493 5,277 — — — 22,770 —
Financial liabilities at fair value through profit or loss — (10,877 ) — (309,681 ) — (320,558 ) —
Financial liabilities measured at amortized cost — 9 — — 1,784 1,793 —
~~W~~ 17,493 (3,991 ) 1,421 (291,791 ) 1,784 (275,084 ) 96,590
② For the three-month period ended September 30, 2022
--- ---
(in millions of Won) Finance income and costs
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest income Gain and loss on<br>foreign currency Gain and loss on<br>disposal Gain and loss<br>on valuation Others Total Other<br>comprehensive<br>loss
Financial assets at fair value through profit or loss ~~W~~ 22,785 — 3,718 — — 26,503 —
Financial assets at fair value through other comprehensive income — — — — — — (17,025 )
Financial assets measured at amortized cost 5,128 38,199 — — — 43,327 —
Financial liabilities at fair value through profit or loss — (57,138 ) — 26,350 — (30,788 ) —
Financial liabilities measured at amortized cost — 853 — — 2,368 3,221 —
~~W~~ 27,913 (18,086 ) 3,718 26,350 2,368 42,263 (17,025 )
(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, 2022.

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

19. Share Capital and Capital Surplus

(a) Share capital as of September 30, 2023 and December 31, 2022 are as follows:
(share, in Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Authorized shares 200,000,000 200,000,000
Par value ~~W~~ 5,000 5,000
Issued shares(*1) 84,571,230 84,571,230
Shared capital(*2) ~~W~~ 482,403,125,000 482,403,125,000
(*1) As of September 30, 2023, total shares of ADRs of 18,903,088 are equivalent to 4,725,772 shares of common<br>stock.
--- ---
(*2) As of September 30, 2023, the difference between the ending balance of common stock and the par value of<br>issued common stock is ~~W~~59,547 million due to retirement of 11,909,395 treasury shares.
--- ---
(b) Capital surplus as of September 30, 2023 and December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Share premium ~~W~~ 463,825 463,825
Gain on disposal of treasury shares 810,196 806,114
Gain from merger 80,627 80,627
Loss on disposal of hybrid bonds (1,787 ) (1,787 )
Share-based payment 15,199 12,115
~~W~~ 1,368,060 1,360,894

20. Reserves

Reserves as of September 30, 2023 and December 31, 2022 are as follows:

(in millions of Won) September 30, 2023 December 31, 2022
Changes in fair value of equity investments at fair value through other comprehensive<br>income ~~W~~ (13,481 ) (188,801 )

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

21. Treasury Shares

Based on the Board of Directors’ resolution, the Company holds treasury shares for business purposes including price stabilization. Changes in treasury shares for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 were as follows:

(shares, in millions of Won) September 30, 2023 December 31, 2022
Number of shares Amount Number of shares Amount
Beginning 8,722,053 ~~W~~ 1,892,308 11,561,263 ~~W~~ 2,508,294
Disposal of treasury shares (27,030 ) (5,864 ) (223,605 ) (48,513 )
Retirement of treasury shares — — (2,615,605 ) (567,473 )
Ending 8,695,023 ~~W~~ 1,886,444 8,722,053 ~~W~~ 1,892,308

22. Revenue

(a) Details of revenue disaggregated by types of revenue and timing of revenue recognition for the three-month and<br>nine-month periods ended September 30, 2023 and 2022 were as follows:
For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- ---
(in millions of Won) 2023 2022 2023 2022
Types of revenue
Sales of steel product ~~W~~ — — — 7,262,347
Transportation services — — — 241,733
Dividend income 424,155 62,365 1,113,179 419,121
Others 49,530 12,150 155,333 72,977
~~W~~ 473,685 74,515 1,268,512 7,996,178
Timing of revenue recognition
Revenue recognized at a point in time ~~W~~ 424,158 60,372 1,113,189 7,698,278
Revenue recognized over time 49,527 14,143 155,323 297,900
~~W~~ 473,685 74,515 1,268,512 7,996,178
(b) Details of contract assets and liabilities from contracts with customers as of September 30, 2023 and<br>December 31, 2022 are as follows:
--- ---
(in millions of Won) September 30, 2023 December 31, 2022
--- --- --- --- ---
Receivables
Account receivables ~~W~~ 90,545 30,049
Contract assets
Account receivables 108,608 98,942
Contract liabilities
Advance received 60 379
Unearned income 1,720 1,786

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

23. Administrative Expenses

(a) Other administrative expenses

Other administrative expenses for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Wages and salaries ~~W~~ 18,791 13,952 54,261 94,279
Expenses related to post-employment benefits 1,248 1,894 5,700 10,172
Other employee benefits 4,232 2,196 10,034 21,502
Travel 1,806 1,101 4,080 3,670
Depreciation 2,522 2,569 7,595 12,514
Amortization 314 162 897 5,485
Rental 898 557 2,150 13,445
Repairs 93 158 314 1,267
Advertising 7,304 6,208 17,957 26,714
Research & development 23,851 20,477 66,237 58,000
Service fees 13,692 11,259 43,054 53,778
Supplies 157 31 329 193
Vehicles maintenance 695 397 1,904 1,586
Industry association fee 550 18 2,042 1,893
Training 472 518 825 1,487
Taxes and public dues (268 ) 402 13,038 22,278
Others 1,373 1,707 2,428 8,383
~~W~~ 77,730 63,606 232,845 336,646
(b) Selling expenses
--- ---

Selling expenses for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Freight and custody ~~W~~ — — — 20,724
Operating expenses for distribution center — — — 935
Sales commissions — — — 14,486
Sales advertising — — — 29
Sales promotion — — — 201
Sample — — — 133
Sales insurance premium — — — 1,086
~~W~~ — — — 37,594

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

24. Finance Income and Costs

Details of finance income and costs for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Finance income
Interest income(*1) ~~W~~ 17,493 27,913 51,125 106,766
Gain on foreign currency transactions 736 9,491 6,308 57,727
Gain on foreign currency translations 7,006 40,034 21,417 91,846
Gain on valuation of derivatives — — — 21,631
Gain on transactions of derivatives — — — 194
Gain on disposals of financial assets at fair value through profit of loss 1,421 3,718 34,743 3,718
Gain on valuations of financial assets at fair value through profit or loss 17,975 — 132,836 —
Others 1,804 28,948 5,203 135,135
~~W~~ 46,435 110,104 251,632 417,017
Finance costs
Interest expenses ~~W~~ — — — 24,469
Loss on foreign currency transactions 1,120 2,341 3,338 43,918
Loss on foreign currency translations 10,613 65,271 93,565 142,606
Loss on disposals of financial assets at fair value through profit or loss — — 161 —
Loss on valuations of financial assets at fair value through profit or loss 85 — 85 —
Loss on valuations of financial liabilities at fair value through profit or loss 309,681 — 429,985 —
Others 20 230 268 10,131
~~W~~ 321,519 67,842 527,402 221,124
(*1) Interest income calculated using the effective interest method for the nine-month periods ended<br>September 30, 2023 and 2022 were ~~W~~51,125 million and ~~W~~17,075 million, respectively.
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

25. Other Non-Operating income and expenses

Details of other non-operating income and expenses for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Other non-operating income
Gain on disposals of property, plant and equipment ~~W~~ — — — 5,443
Gain on disposals of subsidiaries, associates and joint ventures 236 1,390 236 4,748
Gain on disposals of assets held for sale — — — 2,706
Premium income — — — 8
Reversal of other provisions — — 8,158 489
Others 2,171 630 3,084 9,977
~~W~~ 2,407 2,020 11,478 23,371
Other non-operating expenses
Loss on disposals of property, plant and equipment ~~W~~ 2,254 — 2,254 18,281
Impairment loss on property, plant and equipment — — — 3
Impairment loss on investment in subsidiaries, associates and joint ventures — 175,990 — 175,990
Donations — — — 19
Loss on disposals of assets held for sale 896 — 998 —
Increase of other provisions 60 54,277 590 54,760
Others 516 671 1,322 9,092
~~W~~ 3,726 230,938 5,164 258,145

35

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

26. 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 nine-month periods ended September 30, 2023 and 2022 were as follows (excluding finance costs and income tax expenses):

(in millions of Won) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
2023 2022 2023 2022
Changes in inventories(*1) ~~W~~ — — — (3,222 )
Raw materials and consumables used — — — 4,881,888
Employee benefits expenses 26,106 17,377 69,976 382,983
Outsourced processing cost — — — 429,841
Depreciation(*2) 2,772 2,760 8,227 390,406
Amortization 314 162 897 16,977
Electricity and water expenses 3 2 4 80,911
Service fees 14,068 11,327 43,540 62,728
Rental 2,175 578 3,650 20,262
Advertising 7,304 6,208 17,957 26,714
Freight and custody expenses — — — 207,320
Sales commissions — — — 14,486
Impairment loss on investment in subsidiaries, associates and joint ventures — 175,990 — 175,990
Loss on disposals of property, plant and equipment 2,254 — 2,254 18,281
Research & development 15,924 24,998 53,734 82,215
Other expenses 12,887 54,191 42,274 308,852
~~W~~ 83,807 293,593 242,513 7,096,632
(*1) Changes in inventories are the changes in product, semi-finished products and<br>by-products.
--- ---
(*2) Includes depreciation of investment property.
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

27. Income taxes

The effective tax rates of the Company for the nine-month periods ended September 30, 2023 and 2022 were 0% and 206.67%, respectively.

The Company’s vertical spin-off during the year ended December 31, 2022 meets the requirements for qualified spin-off under the Corporate Tax Act. Accordingly, transfer gains of ~~W~~8,452,339 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 Corporate Tax Act based provision for accelerated depreciation on the transfer gains and recognized deferred tax liabilities of ~~W~~2,284,103 million.

Deductible temporary differences related to the investment in newly established company (POSCO) which is caused by transfer gains under the Corporate Tax Act were not recognized as deferred tax assets, since it is not probable they will reverse through disposal or liquidation. The effect of our estimation and accounting for the recoverability of temporary differences on the increase in corporate tax costs for the year ended December 31, 2022 is ~~W~~2,284,103 million.

28. Earnings per Share

(a) Basic earnings (loss) per share for the three-month and nine-month periods ended September 30, 2023 and<br>2022 were as follows:
(in Won, except share information) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- --- ---
2023 2022 2023 2022
Profit (loss) for the period ~~W~~ 153,385,707,998 31,677,793,765 885,431,452,822 (1,193,471,611,342 )
Interests of hybrid bonds, net of tax — — — (1,078,164,383 )
Weighted-average number of common shares outstanding(*1) 75,876,207 75,849,177 75,867,296 75,803,309
Basic earnings (loss) per share ~~W~~ 2,022 418 11,671 (15,759 )
(*1) The weighted-average number of common shares used to calculate basic earnings (loss) per share are as follows:<br>
--- ---
(shares) For the three-month periods<br>ended September 30 For the nine-month periods<br>ended September 30
--- --- --- --- --- --- --- --- --- --- --- --- ---
2023 2022 2023 2022
Total number of common shares issued 84,571,230 84,571,230 84,571,230 84,571,230
Weighted-average number of treasury shares (8,695,023 ) (8,722,053 ) (8,703,934 ) (8,767,921 )
Weighted-average number of common shares outstanding 75,876,207 75,849,177 75,867,296 75,803,309
(b) The Company has potentially issuable common shares due to its exchangeable bonds as of September 30, 2023<br>and 2022 and Stock Grant program as of September 30, 2023. Diluted earnings (loss) per share is equal to basic earnings per share for the three-month and nine-month periods ended September 30, 2023 and 2022 due to anti-dilutive effect.<br>
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

29. Related Party Transactions

(a) Significant transactions with related companies for the nine-month periods ended September 30, 2023 and<br>2022 were as follows:
1) For the nine-month period ended September 30, 2023
--- ---
(in millions of Won) Sales and others(*1) Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase of fixed<br>assets Others
Subsidiaries(*2)
POSCO ~~W~~ 115,159 325,043 — — 11,362
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 6,432 11,037 440 8,117 4,166
POSCO STEELEON CO., Ltd 1,641 — — — 93
POSCO DX(formerly, POSCO ICT) 2,367 7,455 — 3,382 5,663
eNtoB Corporation — — 40 70 1,396
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 2,872 13,878 — — —
POSCO Mobility Solution Corporation 739 — 55 — —
POSCO INTERNATIONAL Corporation 7,753 77,616 — — 44
POSCO Maharashtra Steel Private Limited 692 — 353 — —
POSCO ASSAN TST STEEL INDUSTRY Inc. 17 — 430 — —
Others 9,504 6,084 4,874 6,519 29,494
147,176 441,113 6,192 18,088 52,218
Associates and joint ventures(*2)
SNNC 696 — 55 — —
Roy Hill Holdings Pty Ltd — 205,739 — — —
Others 236 69,485 11,566 — 90
932 275,224 11,621 — 90
~~W~~ 148,108 716,337 17,813 18,088 52,308
(*1) Sales and others mainly consist of trademark usage income, rental income, and dividend income to subsidiaries,<br>associates and joint ventures.
--- ---
(*2) As of September 30, 2023, the Company provided guarantees to related companies (Note 18).<br>
--- ---

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Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the nine-month period ended September 30, 2022

(in millions of Won) Sales and others(*1) Purchase and others(*2)
Sales Dividends Others Purchaseof material Purchase of fixed<br>assets Outsourced<br>processing cost Others
Subsidiaries
POSCO ~~W~~ 14,126 — — — — — 1,742
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 3,694 16,555 7 — 85,302 — 11,517
POSCO STEELEON CO., Ltd 132,326 — 215 — — 7,656 18
POSCO DX(formerly, POSCO ICT)(*3) 798 4,970 18 — 39,908 10,190 33,444
eNtoB Corporation 3 24 — 60,649 9,698 32 3,209
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 81,960 13,878 44 84,301 4,757 56,325 908
POSCO ENERGY CO., LTD. 762 — — 6,682 — — 3,925
POSCO Mobility Solution Corporation 176,045 — — — — 8,802 28
POSCO INTERNATIONAL Corporation 2,100,190 62,093 — 244,230 — 768 1,049
POSCO Thainox Public Company Limited 49,152 22,372 — — — — 1
POSCO Canada Ltd. — — 139 77,703 — — —
Qingdao Pohang Stainless Steel Co., Ltd. 32,583 — — — — — —
POSCO JAPAN Co., Ltd. 28,790 — — 835 — — 16
POSCO-VIETNAM Co., Ltd. 44,827 — 427 — — — —
POSCO MEXICO S.A. DE C.V. 102,670 — 255 — — — —
POSCO Maharashtra Steel Private Limited 171,579 — 427 — — — 120
POSCO(Suzhou) Automotive Processing Center Co., Ltd. 42,320 — — — — — 15
POSCO VST CO., LTD. 28,287 — — — — — —
POSCO INTERNATIONAL SINGAPORE PTE LTD. — — 417 380,061 — — —
POSCO ASSAN TST STEEL INDUSTRY Inc. 47,223 — 403 — — — 8
Others 196,968 2,452 5,065 61,488 14,021 53,139 214,083
3,254,303 122,344 7,417 915,949 153,686 136,912 270,083
Associates and joint ventures
SNNC 3,148 5,348 8 148,239 — — —
POSCO-SAMSUNG-Slovakia Processing Center 25,614 — — — — — —
Roy Hill Holdings Pty Ltd — 163,413 — 210,455 — — —
Others 77,910 48,602 12,236 16,485 — — 301
106,672 217,363 12,244 375,179 — — 301
~~W~~ 3,360,975 339,707 19,661 1,291,128 153,686 136,912 270,384
(*1) Sales and others mainly consist of sales of steel products (before<br>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<br>raw materials to manufacture steel products.
--- ---
(*3) Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System.<br>
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

(b) Significant transactions with related companies for the three-month periods ended September 30, 2023 and<br>2022 were as follows:
1) For the three-month period ended September 30, 2023
--- ---
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase of fixedassets Others
Subsidiaries
POSCO ~~W~~ 35,913 — — — 4,087
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO.,LTD.) 2,113 — — 6,340 456
POSCO STEELEON CO., Ltd 707 — — — 50
POSCO DX(formerly, POSCO ICT) 720 — — 1,583 1,969
eNtoB Corporation — — — 44 933
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 1,094 — — — —
POSCO Mobility Solution Corporation 229 — — — —
POSCO INTERNATIONAL Corporation 2,600 — — — 12
POSCO Maharashtra Steel Private Limited — — 87 — —
POSCO ASSAN TST STEEL INDUSTRY Inc. — — 145 — —
Others 3,651 63 1,519 5,662 11,191
47,027 63 1,751 13,629 18,698
Associates and joint ventures
SNNC 133 — — — —
Roy Hill Holdings Pty Ltd — 68,800 — — —
Others 64 25,813 7,753 — —
197 94,613 7,753 — —
~~W~~ 47,224 94,676 9,504 13,629 18,698

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Table of Contents

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) For the three-month period ended September 30, 2022
(in millions of Won) Sales and others Purchase and others
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Sales Dividends Others Purchase of<br>material Purchase of fixed<br>assets Outsourced<br>processing cost Others
Subsidiaries
POSCO ~~W~~ 5,959 — — — — — 1,175
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 1,329 — — — — — 1,235
POSCO STEELEON CO., Ltd 335 — — — — — 12
POSCO DX(formerly, POSCO ICT) 302 — — — 1,817 — 1,041
eNtoB Corporation 1 — — — — — 2
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 456 — — — — — —
POSCO Mobility Solution Corporation 90 — — — — — —
POSCO INTERNATIONAL Corporation 300 — — — — — —
POSCO Thainox Public Company Limited 67 — — — — — —
Qingdao Pohang Stainless Steel Co., Ltd. 49 — — — — — —
POSCO-VIETNAM Co., Ltd. 210 — 144 — — — —
POSCO MEXICO S.A. DE C.V. 35 — 52 — — — —
POSCO Maharashtra Steel Private Limited 292 — 143 — — — —
POSCO VST CO., LTD. 75 — — — — — —
POSCO ASSAN TST STEEL INDUSTRY Inc. 43 — 135 — — — —
Others 2,641 736 1,538 17 979 — 8,555
12,184 736 2,012 17 2,796 — 12,020
Associates and joint ventures
SNNC 19 — — — — — —
Roy Hill Holdings Pty Ltd — 37,429 — — — — —
Others 666 16,162 4,195 — — — —
685 53,591 4,195 — — — —
~~W~~ 12,869 54,327 6,207 17 2,796 — 12,020
(c) The related account balances of significant transactions with related companies as of September 30, 2023<br>and December 31, 2022 are as follows:
--- ---
1) September 30, 2023
--- ---
(in millions of Won) Receivables Payables
--- --- --- --- --- --- --- --- --- --- --- --- ---
Trade accounts<br>and notes<br>receivable Others Total Accountspayable Others Total
Subsidiaries
POSCO ~~W~~ 86,754 16,339 103,093 — 20,102 20,102
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION<br>CO.,LTD.) 6,340 2,753 9,093 8,117 111 8,228
POSCO STEELEON CO., Ltd 961 8 969 4 — 4
POSCO DX(formerly, POSCO ICT) 938 10 948 206 1,828 2,034
eNtoB Corporation — — — 288 2 290
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 7,586 36 7,622 — 756 756
POSCO Mobility Solution Corporation 685 — 685 — — —
POSCO INTERNATIONAL Corporation 4,945 32 4,977 — 2,531 2,531
POSCO Maharashtra Steel Private Limited — 429 429 — — —
POSCO ASSAN TST STEEL INDUSTRY Inc. — 544 544 — — —
PT. KRAKATAU POSCO — 4,308 4,308 — — —
Others 2,862 11,310 14,172 2,602 3,937 6,539
111,071 35,769 146,840 11,217 29,267 40,484
Associates and joint ventures
SNNC 401 — 401 — — —
Roy Hill Holdings Pty Ltd 68,800 — 68,800 — — —
FQM Australia Holdings Pty Ltd(*1) — 228,305 228,305 — — —
Others 18,402 572 18,974 — — —
87,603 228,877 316,480 — — —
~~W~~ 198,674 264,646 463,320 11,217 29,267 40,484
(*1) FQM Australia Holdings Pty Ltd’s other receivable consists of long-term loans. During the nine-month<br>period ended September 30, 2023, the Company provided additional loan to its associates by ~~W~~6,448 million.
--- ---

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

2) December 31, 2022
(in millions of Won) Receivables Payables
--- --- --- --- --- --- --- --- --- --- --- --- ---
Trade accounts<br>and notes<br>receivable Others Total Accounts<br>payable Others Total
Subsidiaries
POSCO ~~W~~ 75,343 6,600 81,943 5,678 14,663 20,341
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,<br>LTD.) 3,808 660 4,468 — — —
POSCO STEELEON CO., Ltd 818 — 818 — — —
POSCO DX(formerly, POSCO ICT) 687 — 687 859 705 1,564
POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) 8,550 — 8,550 — 5,086 5,086
POSCO Mobility Solution Corporation 489 — 489 — — —
POSCO INTERNATIONAL Corporation 2,002 — 2,002 — 502 502
Qingdao Pohang Stainless Steel Co., Ltd. — — — 122 — 122
POSCO Maharashtra Steel Private Limited — 466 466 486 — 486
POSCO ASSAN TST STEEL INDUSTRY Inc. — 513 513 104 — 104
PT. KRAKATAU POSCO — 8,967 8,967 391 — 391
Others 5,318 6,080 11,398 11,874 4,928 16,802
97,015 23,286 120,301 19,514 25,884 45,398
Associates and joint ventures
SNNC 94 — 94 — — —
Roy Hill Holdings Pty Ltd 23,400 — 23,400 — — —
FQM Australia Holdings Pty Ltd(*1) — 202,562 202,562 — — —
Others 190 761 951 74 — 74
23,684 203,323 227,007 74 — 74
~~W~~ 120,699 226,609 347,308 19,588 25,884 45,472
(*1) FQM Australia Holdings Pty Ltd’s other receivable consists of long-term loans. During the year ended<br>December 31, 2022, the Company provided additional loan to its associates by ~~W~~12,116 million.
--- ---
(d) For the nine-month periods ended September 30, 2023 and 2022, details of compensation to key management<br>officers were as follows:
--- ---
(in millions of Won) September 30, 2023 September 30, 2022
--- --- --- --- ---
Short-term benefits ~~W~~ 25,871 39,437
Retirement benefits 4,221 5,280
~~W~~ 30,092 44,717

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.

42

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POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

30. Commitments and Contingencies

(a) Commitments
1) As of September 30, 2023, the Company entered into commitments with KOREA ENERGY AGENCY for long-term<br>foreign currency borrowing, which is limited up to the amount of USD 1.05 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.<br>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<br>September 30, 2023, the ending balance of the borrowing amounts to USD 1.02 million.
--- ---
2) The Company has deposited 3,211,795 treasury shares for exchange with the Korea Securities Depository in<br>relation to foreign currency exchangeable bonds as of September 30, 2023.
--- ---
(b) As of September 30, 2023, the Company has provided three blank checks to KOREA ENERGY AGENCY as collateral<br>for long-term foreign currency borrowings.
--- ---
(c) Litigation in progress
--- ---

The Company is involved in 4 lawsuits for compensatory damages amounted to ~~W~~9.9 billion as defendant as of September 30, 2023. However, the Company has not recognized any provisions for the lawsuit since the Company does not believe it has a present obligation as of September 30, 2023.

(d) The Company has a joint obligation with the company newly established through<br>spin-off, POSCO, to discharge all liabilities (including financial guarantee contracts) incurred prior to the spin-off date.

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Table of Contents

POSCO HOLDINGS INC.

Notes to the Condensed Separate Interim Financial Statements, Continued

As of September 30, 2023

(Unaudited)

31. Cash Flows from Operating Activities

Changes in operating assets and liabilities for the nine-month periods ended September 30, 2023 and 2022 were as follows:

(in millions of Won) September 30, 2023 September 30, 2022
Trade accounts and notes receivable, net ~~W~~ (6,440 ) (442,912 )
Other accounts receivable 12,376 (4,531 )
Accrued revenues — (8,107 )
Inventories — 354,262
Prepaid expenses (3,026 ) (41,038 )
Other current assets 165 (7,056 )
Short-term guarantee deposits (656 ) —
Long-term guarantee deposits — 17
Derivative assets — 5,781
Other non-current assets (3,558 ) 129
Trade accounts and notes payable — (417,714 )
Other accounts payable 3,446 (92,574 )
Accrued expenses 6,112 (61,613 )
Advances received (319 ) (3,363 )
Withholdings (1,084 ) (5,064 )
Unearned revenue (66 ) (235 )
Other current liabilities (6,004 ) (11,981 )
Payments of severance benefits (7,635 ) (58,542 )
Plan assets 2,104 51,641
Other non-current liabilities — (290 )
~~W~~ (4,585 ) (743,190 )

32. Events after the reporting period

Pursuant to the resolution of the Board of Directors on November 3, 2023, the Company decided to pay interim cash dividends of ~~W~~2,500 per common share (total dividend: ~~W~~189.7 billion).

44

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