Exhibit 99.1

POSCO HOLDINGS INC.

Separate Financial Statements

December 31, 2023 and 2022

(With Independent Auditors’ Report Thereon)

Table of Contents

 

		Page
Independent Auditors’ Report			1
Separate Financial Statements
Separate Statements of Financial Position			5
Separate Statements of Comprehensive Income			7
Separate Statements of Changes in Equity			8
Separate Statements of Cash Flows			9
Notes to the Separate Financial Statements			11
Independent Auditors’ Report on Internal Control over Financial Reporting			78
Report on the Operating Status of Internal Control over Financial Reporting			80

Independent Auditors’ Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders

POSCO HOLDINGS INC.:

Opinion

We have audited the separate financial statements of POSCO HOLDINGS INC. (the “Company”), which comprise the separate statements of financial position as of December 31, 2023 and 2022, the separate statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising summary of material accounting policy information and other explanatory information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as of December 31, 2023 and 2022, and its separate financial performance and its separate cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

We also have audited, in accordance with Korean Standards on Auditing (“KSAs“), the Company’s internal control over financial reporting (“ICFR”) as of December 31, 2023 based on the criteria established in Conceptual Framework for Designing and Operating Internal Control over Financial Reporting issued by the Operating Committee of Internal Control over Financial Reporting in the Republic of Korea, and our report dated March 13, 2024 expressed an unmodified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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

 

1

Key Audit Matters

The key audit matter communicated below is a matter that, in our professional judgment, was of most significance in our audit of the separate financial statements as of and for the year ended December 31, 2023. This matter was addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Assessment of impairment on investments in subsidiaries, associates and joint ventures

As described in notes 11 to the separate financial statements, the carrying amount of investments in subsidiaries, associates and joint ventures is 45,321,370 million as of December 31, 2023. The Company recognized impairment loss on investments in subsidiaries, associates and joint ventures of 109,568 million during the year ended December 31, 2023.

The Company identifies whether there is any indication for impairment at the end of each reporting period and performs impairment test over investments in subsidiaries, associates and joint ventures when impairment indicator exists. The Company measures the impairment loss as the difference between the recoverable amount and the carrying amount, if the carrying amount exceeds the recoverable amount. Recoverable amount is the greater of value-in-use and fair value less costs to sell. In estimating the value-in-use, management’s judgment is involved in determining the key assumptions such as estimated sales, discount rate and terminal growth rate each has a significant impact on the estimated value-in-use. Considering significant degree of management’s judgements required in estimating value-in-use and likelihood of existence of management bias, we identified assessment of impairment on investments in subsidiaries, associates and joint ventures as a key audit matter.

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

 

•

Testing certain internal controls over the Company’s impairment assessment process of investments in subsidiaries, associates and joint ventures;

 

•

Assessing whether the impairment tests have been completely performed on investments of which indication of impairment exists;

 

•

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

 

•

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

 

•

Evaluating the discount rates used in the valuation by comparing it against discount rates that were independently developed using observable information;

 

•

Assessing the terminal growth rates by comparison with observable market information; and,

 

2

•

Performing sensitivity analysis on the discount rates and terminal growth rates applied to assess the impact of changes in these key assumptions on the results of management’s impairment assessments.

Other Matter

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

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

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

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

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

Auditors’ Responsibilities for the Audit of the Separate Financial Statements

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

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

 

•

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

 

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

 

3

•

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

 

•

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

 

•

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

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

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

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

The engagement partner on the audit resulting in this independent auditors’ report is Jae Nam Hwang.

Seoul, Korea

March 13, 2024

 

 

4

POSCO HOLDINGS INC.

Separate Statements of Financial Position

As of December 31, 2023 and 2022

 

 

(in millions of Won)		Notes				December 31, 2023				December 31, 2022
Assets
Cash and cash equivalents			4,5,22				376,914				1,415,201
Trade accounts and notes receivable, net			6,22,36				238,332				128,991
Other receivables, net			7,22,36				68,821				40,288
Other short-term financial assets			8,22				3,940,743				2,515,375
Current income tax assets			34				32,015				203,263
Other current assets			15				1,074				5,172
Total current assets							4,657,899				4,308,290
Other receivables, net			7,22				6,955				209,057
Other long-term financial assets			8,22				1,131,074				1,062,530
Investments in subsidiaries, associates and joint ventures			11				45,321,370				45,187,627
Investment property, net			12				309,900				220,699
Property, plant and equipment, net			13				197,787				145,006
Intangible assets, net			14				19,341				15,902
Other non-current assets			15				1,872				8
Total non-current assets							46,988,299				46,840,829
Total assets							51,646,198				51,149,119

See accompanying notes to the separate financial statements.

 

5

POSCO HOLDINGS INC.

Separate Statements of Financial Position, Continued

As of December 31, 2023 and 2022

 

 

(in millions of Won)		Notes				December 31, 2023				December 31, 2022
Liabilities
Short-term borrowings and current installments of long-term borrowings			4,16,22,38				1,756,691				—
Other current payables			17,22,36,38				39,739				64,597
Other short-term financial liabilities			18,22,38				1,571				5,815
Provisions			19				14,983				45,388
Other current liabilities			21				6,686				3,193
Total current liabilities							1,819,670				118,993
Long-term borrowings, excluding current installments			4,16,22,38				1,316				1,359,587
Other non-current payables			17,22,38				26,804				—
Other long-term financial liabilities			18,22,38				6,968				3,668
Defined benefit liabilities, net			20				4,283				3,761
Deferred tax liabilities			34				2,281,500				2,480,379
Long-term provisions			19				2,634				10,868
Other non-current liabilities			21				3,158				—
Total non-current liabilities							2,326,663				3,858,263
Total liabilities							4,146,333				3,977,256
Equity
Share capital			23				482,403				482,403
Capital surplus			23,26				1,370,557				1,360,894
Reserves			24				30,678				(188,801	)
Treasury shares			25				(1,889,658	)			(1,892,308	)
Retained earnings			27				47,505,885				47,409,675
Total equity							47,499,865				47,171,863
Total liabilities and equity							51,646,198				51,149,119

See accompanying notes to the separate financial statements.

 

6

POSCO HOLDINGS INC.

Separate Statements of Comprehensive Income

For the years ended December 31, 2023 and 2022

 

 

(in millions of Won, except per share informations)		Notes		2023				2022
Operating revenue		28,36
Revenue					1,454,079				8,589,819
Operating expenses		9,33,36
Cost of sales		33			—				(6,463,246	)
Other administrative expenses		26,29			(347,450	)			(414,086	)
Selling expenses		29			—				(37,594	)
					(347,450	)			(6,914,926	)
Operating profit					1,106,629				1,674,893
Finance income and costs		22,31
Finance income					315,828				392,984
Finance costs					(405,881	)			(434,963	)
Other non-operating income and expenses
Impairment loss on other receivables					(221,251	)			(128	)
Other non-operating income		32			23,469				33,699
Other non-operating expenses		32,33			(135,071	)			(347,002	)
Profit before income tax					683,723				1,319,483
Income tax expense (revenue)		34			115,854				(1,787,336	)
Profit (loss)					799,577				(467,853	)
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		20			(97	)			(75,271	)
Net changes in fair value of equity investments at fair value through other comprehensive income		8,22			236,979				(37,054	)
Total comprehensive income (loss)					1,036,459				(580,178	)
Earnings (loss) per share (in Won)		35
Basic earnings (loss) per share (in Won)					10,539				(6,185	)
Diluted earnings (loss) per share (in Won)					10,539				(6,649	)

See accompanying notes to the separate financial statements.

 

7

POSCO HOLDINGS INC.

Separate Statements of Changes in Equity

For the years ended December 31, 2023 and 2022

 

 

(in millions of Won)		Share capital				Capital surplus				Hybrid bonds				Reserves				Treasury shares				Retained earnings				Total
Balance as of January 1, 2022			482,403				1,339,289				199,384				(211,849	)			(2,508,294	)			49,734,492				49,035,425
Comprehensive income:
Loss			—				—				—				—				—				(467,853	)			(467,853	)
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax			—				—				—				—				—				(75,271	)			(75,271	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax			—				—				—				23,048				—				(60,102	)			(37,054	)
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends			—				—				—				—				—				(378,128	)			(378,128	)
Interim dividends			—				—				—				—				—				(758,491	)			(758,491	)
Interest of hybrid bonds			—				—				—				—				—				(1,486	)			(1,486	)
Disposal of treasury shares			—				9,491				—				—				48,512				—				58,003
Retirement of treasury shares			—				—				—				—				567,474				(583,486	)			(16,012	)
Changes from spin-off			—				—				(199,384	)			—				—				—				(199,384	)
Share-based payment			—				12,114				—				—				—				—				12,114
Balance as of December 31, 2022			482,403				1,360,894				—				(188,801	)			(1,892,308	)			47,409,675				47,171,863
Balance as of January 1, 2023			482,403				1,360,894				—				(188,801	)			(1,892,308	)			47,409,675				47,171,863
Comprehensive income:
Profit			—				—				—				—				—				799,577				799,577
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax			—				—				—				—				—				(97	)			(97	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax			—				—				—				219,479				—				17,500				236,979
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends			—				—				—				—				—				(151,698	)			(151,698	)
Interim dividends			—				—				—				—				—				(569,072	)			(569,072	)
Disposal of treasury shares			—				2,880				—				—				2,650				—				5,530
Share-based payment			—				6,783				—				—				—				—				6,783
Balance as of December 31, 2023			482,403				1,370,557				—				30,678				(1,889,658	)			47,505,885				47,499,865

See accompanying notes to the separate financial statements.

 

8

POSCO HOLDINGS INC.

Separate Statements of Cash Flows

For the years ended December 31, 2023 and 2022

 

 

(in millions of Won)		Notes				2023				2022
Cash flows from operating activities
Profit (loss)							799,577				(467,853	)
Adjustments for :
Expenses related to post-employment benefit							7,568				22,082
Depreciation							11,310				393,121
Amortization							1,247				17,180
Impairment loss on other receivables							221,251				128
Finance income							(308,827	)			(346,942	)
Dividend income							(1,254,239	)			(909,846	)
Finance costs							401,716				369,038
Loss on valuation of inventories							—				1,722
Gain on disposal of property, plant and equipment							—				(5,464	)
Loss on disposal of property, plant and equipment							2,360				20,211
Impairment loss on property, plant and equipment							10,657				3
Gain on disposal of investments in subsidiaries, associates and joint ventures							(230	)			(13,933	)
Impairment loss on investments in subsidiaries, associates and joint ventures							109,568				263,263
Loss on disposal of assets held for sale							998				—
Gain on disposal of assets held for sale							—				(2,706	)
Increase (decrease) to provisions							(7,303	)			55,196
Income tax expense (benefit)							(115,854	)			1,787,336
Employee benefits							—				61,603
Share-based payments expense			26				5,351				4,394
Others							(11,632	)			(1,350	)
Changes in operating assets and liabilities			38				(43,024	)			(808,142	)
Interest received							45,517				44,615
Interest paid							—				(50,424	)
Dividends received							1,188,338				891,019
Income taxes received (paid)							25,687				(2,054,488	)
Net cash provided by (used in) operating activities							1,090,036				(730,237	)

See accompanying notes to the separate financial statements.

 

9

POSCO HOLDINGS INC.

Separate Statements of Cash Flows, Continued

For the years ended December 31, 2023 and 2022

 

 

(in millions of Won)		Notes				2023				2022
Cash flows from investing activities
Decrease in deposits							890,000				450,017
Proceeds from disposal of short-term financial instruments							6,255,711				28,806,313
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							—				151,100
Proceeds from disposal of equity securities							261,612				166,358
Proceeds from disposal of other securities							4,501				49,961
Proceeds from disposal of investments in subsidiaries, associates and joint ventures							957,353				804,754
Proceeds from disposal of assets held for sale							—				3,074
Increase in deposits							(2,640,002	)			(550,571	)
Acquisition of short-term financial instruments							(5,717,490	)			(25,457,214	)
Increase in long-term loans							—				(3,618	)
Payment of short-term lease security deposits							(691	)			—
Acquisition of debt securities							—				(50,000	)
Acquisition of other securities							(26,282	)			(104,197	)
Acquisition of investments in subsidiaries, associates and joint ventures							(1,237,817	)			(1,042,298	)
Acquisition of investment properties							(54,892	)			—
Acquisition of property, plant and equipment							(102,192	)			(359,532	)
Payment for disposal of property, plant and equipment							—				(14,447	)
Acquisition of intangible asstes							(4,402	)			(10,195	)
Cash outflow for spin-off							—				(1,910,211	)
Net cash provided by (used in) investing activities							(1,411,342	)			930,715
Cash flows from financing activities
Proceeds from borrowings							—				537,165
Increase in long-term financial liabilities							3,781				15,515
Repayment of borrowings							—				(232,977	)
Decrease in long-term financial liabilities							—				(279	)
Repayment of lease liabilities							—				(7,493	)
Payment for disposal of derivatives							—				(7,102	)
Payment of cash dividends							(720,762	)			(1,136,298	)
Net cash used in financing activities			38				(716,981	)			(831,469	)
Effect of exchange rate fluctuation on cash held							—				3,918
Net decrease in cash and cash equivalents							(1,038,287	)			(627,073	)
Cash and cash equivalents at beginning of the period			5				1,415,201				2,042,274
Cash and cash equivalents at end of the period			5				376,914				1,415,201

See accompanying notes to the separate financial statements.

 

10

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

As of December 31, 2023 and 2022

 

 

1. Reporting Entity

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.. Meanwhile, operating revenue in the statements of comprehensive income for the year ended December 31, 2022, includes sales of 7,542,729 million from the steel business before the vertical spin-off.

As of December 31, 2023, major shareholders are as follows:

 

Shareholder’s name		Number of shares				Ownership (%)
National Pension Service			5,393,999				6.38
BlackRock Fund Advisors(*1)			4,206,522				4.97
Nippon Steel Corporation			2,894,712				3.42
Pohang University of Science and Technology			1,981,047				2.34
The Government of Singapore (GIC)			1,759,571				2.08
Others			68,335,379				80.81
			84,571,230				100.00

 

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

As of December 31, 2023, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchanges.

2. Statement of Compliance

Statement of compliance

The separate 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 financial statements are separate 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.

The separate financial statements were authorized for issue by the Board of Directors on January 31, 2024, and will be submitted for approval at the shareholders’ meeting to be held on March 21, 2024.

 

11

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

Basis of measurement

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

 

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

 

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

 

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

Functional and presentation currency

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

Use of estimates and judgments

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

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

 

(a)

Judgments

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

 

•

Note 11—Investments in subsidiaries, associates and joint ventures

 

12

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

(b)	Assumptions and estimation uncertainties

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

 

•

Note 11—Investments in subsidiaries, associates and joint ventures

 

•

Note 19—Provisions

 

•

Note 20—Employee benefits

 

•

Note 22—Financial Instruments

 

•

Note 34—Income taxes

 

•

Note 37—Commitments and contingencies

 

(c)	Measurement of fair value

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

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

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

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

 

•

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

 

•

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

 

•

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

 

13

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

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

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

 

•

Note 22 – Financial instruments

Changes in Accounting Policies

Except for the standards and amendments applied for the first time for the reporting period commenced 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 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.

 

(b)	K-IFRS No. 1001 “Presentation of Financial Statements” – 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. Therefore, the Company selectively disclosed material accounting policies in the annual financial statements for the year ended December 31, 2023. For further information, refer to note 3.

 

14

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

(c)	K-IFRS No. 1008 “Accounting Policies, Changes in Accounting 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.

 

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

The amendments include a temporary mandatory exception from accounting for deferred tax arising from global minimum top-up tax, and new disclosure requirements of the exposure information of the Company in relation to the Pillar Two taxes in the annual financial statements. Refer to note 34 for information on the new disclosure requirements provided by revised accounting standards.

3. Summary of Material Accounting Policy Information

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

Investments in subsidiaries, associates and joint ventures

These separate financial statements are prepared and presented in accordance with K-IFRS No. 1027 “Separate Financial Statements”. The Company applied the cost method to investments in subsidiaries, associates and joint ventures in accordance with K-IFRS No. 1027.

Gain on disposals from share transactions between entities under common control is recognized as dividend income, and loss on disposals is recognized as acquisition cost of investments in the related entity.

Cash and cash equivalents

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

 

15

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

Non-derivative financial assets

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

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

 

(a)	Financial assets measured at amortized cost

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

 

•

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

 

•

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

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

 

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

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

 

•

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

 

•

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

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

 

16

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

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

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

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

 

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

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

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

 

17

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

Investment property

Investment property is measured initially at its cost. Transaction costs are included in the initial measurement. Subsequently, investment property is carried at depreciated cost less any accumulated impairment losses. The depreciation methods, useful lives and residual values of investment property are the same as those used for property, plant and equipment.

Property, plant and equipment

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

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

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

(b) the cost can be measured reliably.

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

Other than land, the costs of an asset less its estimated residual value are depreciated. Depreciation of property, plant and equipment is recognized in profit or loss on a straight-line basis, which most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset, over the estimated useful lives of each component of an item of property, plant and equipment.

The estimated useful lives for the current period are as follows:

 

Buildings			5-40 years
Structures			5-40 years
Machinery and equipment			15 years
Vehicles			4 years
Fixtures			4 years

Intangible assets

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

 

18

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

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

 

Intellectual property rights			5-7 years
Development expense			4 years
Other intangible assets			4 years

Government grants

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

Leases

 

1)	As a lessee

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

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. Generally, the Company uses its incremental borrowing rate as the discount rate.

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

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

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

 

2)	As a lessor

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

 

19

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

The Company leases out its investment properties. The Company classified these leases as operating leases. The Company recognize lease payments received under lease agreements as revenue on a straight-line basis over the lease term.

Impairment for financial assets

The Company recognizes loss allowances for expected credit losses on:

 

•

financial assets measured at amortized cost

 

•

debt instruments measured at fair value through other comprehensive income

 

•

contractual assets

 

(a)	Judgments on credit risk

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

 

(b)	Expected credit losses

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

 

(c)	Credit-impaired financial assets

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

 

20

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

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

 

•

significant financial difficulty of the issuer or borrower

 

•

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

 

•

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

 

•

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

 

•

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

 

(d)

Write-off

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

Impairment for non-financial assets

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

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

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

 

21

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

Non-derivative financial liabilities

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

Employee benefits

The calculation of defined benefit liabilities is performed annually by an independent actuary using the projected unit credit method.

Provisions

Provision for restoration related to contaminated area is recognized when the area meets the Company’s policy and legal standards of contamination.

 

22

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

Revenue from contracts with customers

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

 

1)

Dividend income

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

 

2)

Rental income

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

 

3)

Trademark usage income

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

Finance income and finance costs

The Company’s finance income and finance costs include:

 

•

interest income;

 

•

interest expense;

 

•

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

 

•

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

 

•

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

Interest income or expense is recognized using the effective interest method.

Income tax

The Company recognizes interest and penalties related to corporate tax as if it is applicable to the income taxes, the Company applies K-IFRS No. 1012 “Income Taxes”, if it is not applicable to the income taxes, the Company applies K-IFRS No. 1037 “Provisions Contingent Liabilities and Contingent Assets”.

 

23

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

New standards 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.

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

The amendment clarifies that the classification of current and non-current liabilities is determined by the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and in order for the debtor to have the “right to defer settlement of the liability”, the condition of complying with the contract must be met at the end of the reporting period. In addition, the classification of liabilities is not affected by the possibility of exercising the right to defer settlement of the liability for more than 12 months after the end of the reporting period, and the amendment clarifies that settlement of a liability includes transferring a company’s own equity instruments to the counterparty. The amendment is effective for annual periods beginning on or after January 1, 2024. Early application is permitted. The Company does not expect the effect of the amendments to the financial statements to be significant.

 

24

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

4. Financial Risk Management

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

 

•

Credit risk

 

•

Liquidity risk

 

•

Market risk

 

•

Capital risk

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

(a) Financial risk management

 

1)

Risk management framework

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

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

 

2)

Credit risk

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

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

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

 

25

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

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

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

 

3)

Liquidity risk

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

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

 

4)

Market risk

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

 

①

Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of the Company, Korean Won. The Company monitors the related foreign currencies regularly in order to avoid exposure to currency risk.

 

②

Interest rate risk

The Company manages the exposure to interest rate risk by adjusting of borrowing structure ratio between borrowings at fixed interest rate and variable interest rate.

 

26

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

③

Other market price risk

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

 

(b)

Management of capital

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

Net borrowing-to-equity ratio as of December 31, 2023 and 2022 is as follows:

 

(in millions of Won)		2023				2022
Total borrowings			1,758,007				1,359,587
Less: Cash and cash equivalents			376,914				1,415,201
Net borrowings			1,381,093				(55,614	)
Total equity			47,499,865				47,171,863
Net borrowings-to-equity ratio(*1)			2.91	%			0.00	%

 

(*1)	As of December 31, 2022, Cash and cash equivalents exceeded the borrowing amount, so the net borrowings-to-equity ratio is disclosed as 0%.

5. Cash and Cash Equivalents

Cash and cash equivalents as of December 31, 2023 and 2022 are as follows:

 

(in millions of Won)		2023				2022
Demand deposits and checking accounts(*1)			1,216				56,664
Time deposits			—				1,070,000
Other cash equivalents			375,698				288,537
		376,914				1,415,201

 

(*1)	As of December 31, 2023 and 2022, cash and cash equivalents of 472 million and 990 million, respectively, are restricted for use in relation to government assigned project.

 

27

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

6. Trade Accounts and Notes Receivable

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

 

(in millions of Won)		2023				2022
Current
Trade accounts and notes receivable			100,323				30,049
Unbilled receivables (contract assets)			138,009				98,942
			238,332				128,991

7. Other Receivables

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

 

(in millions of Won)		2023				2022
Current
Other accounts receivable			51,530				38,676
Others(*1)			21,193				1,612
Less: Allowance for doubtful accounts			(3,902	)			—
			68,821				40,288
Non-current
Loans(*1)			217,349				205,379
Long-term other accounts receivable			6,945				3,668
Others			10				10
Less: Allowance for doubtful accounts			(217,349	)			—
			6,955				209,057

 

(*1)	Due to the continuous operating losses and deteriorating business environment of FQM Australia Holdings Pty Ltd, an associate, the Company assessed the recoverability of the related loans and accrued interest and recognized a full allowance for doubtful accounts of 218,900 million.

 

28

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

8. Other Financial Assets

 

(a)	Other financial assets as of December 31, 2023 and 2022 are as follows:

 

(in millions of Won)		2023				2022
Current
Deposit instruments			1,750,000				—
Short-term financial instruments			2,190,743				2,515,375
			3,940,743				2,515,375
Non-current
Equity securities			926,752				885,942
Other securities			204,320				176,588
Deposit instruments			2				—
			1,131,074				1,062,530

 

(b)	Equity securities and available-for-sale securities (equity instruments) as of December 31, 2023 and 2022 are as follows:

 

(in millions of Won)		2023																								2022
		Number of shares				Ownership (%)				Acquisition cost				Fair value				Net changes in fair value of equity securities				Book value				Book value
Marketable equity securities
Nippon Steel Corporation			15,698,500				1.65				473,962				462,775				(11,187	)			462,775				342,963
KB Financial group Inc.			3,863,520				0.96				178,839				209,016				30,177				209,016				187,381
Woori Financial Group Inc.(*1)			—				—				—				—				—				—				234,234
CSN Mineracao S.A.			102,186,675				1.86				206,265				212,617				6,352				212,617				99,945
											859,066				884,408				25,342				884,408				864,523
Non-marketable equity securities
PLANTEC Co., Ltd.(*2)			18,337,912				10.99				19,437				40,362				20,925				40,362				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 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				42,344				14,551				42,344				21,419
											886,859				926,752				39,893				926,752				885,942

 

(*1)	During the year ended December 31, 2023, the Company disposed of the shares of Woori Financial Group Inc. to POSCO, a subsidiary.

(*2)	The entity was assessed by fair value determined by an external valuation firm.

 

29

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

9. Inventories

During the year ended December 31, 2022, inventories were transferred to the newly established company (POSCO) upon a vertical spin-off. Therefore, there are no inventories held by the Company as of December 31, 2023 and 2022.

10. Assets Held for Sale

 

(a)	As of December 31, 2023 and 2022 the carrying amounts classified as assets held for sale are zero (0).

 

(b)

During the year ended December 31, 2022, the Company decided to dispose of interests of CSP-Compania Siderurgica do Pecem which was previously classified investment in joint ventures and fully impaired. It was classified as held-for-sale assets as of December 31, 2022. Meanwhile, during the year ended December 31, 2023, the Company disposed of CSP - Compania Siderurgica do Pecem, and recognized 998 million of loss on disposals of assets held for sale.

 

(c)	During the year ended December 31, 2022, the Company decided to dispose Korea Nickel CO.LTD, and classified as assets held for sale for 13,910 million. During the year ended December 31, 2022, these equity securities have all been disposed.

 

30

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements, Continued

As of December 31, 2023 and 2022

 

 

11. Investments in Subsidiaries, Associates and Joint ventures

 

(a)	Investments in subsidiaries, associates and joint ventures as of December 31, 2023 and 2022 are as follows:

 

(in millions of Won)		2023				2022
Investment in subsidiaries			42,519,521				42,483,262
Investment in associates			520,380				716,213
Investment in joint ventures			2,281,469				1,988,152
			45,321,370				45,187,627

There are no significant restrictions on the ability of subsidiaries, associates and joint ventures to transfer funds to the controlling company, such as in the forms of cash dividends and repayment of loans or payment of advances.

 

(b)	Details of subsidiaries and carrying amounts as of December 31, 2023 and 2022 are as follows:

 

(in millions of Won)								2023																				2022
		Country				Principal operations		Number of shares				Ownership (%)				Net asset value				Acquisition cost				Book value				Book value
[Domestic]
POSCO			Korea			Steel, rolled products, and plates manufacturing and sales			96,480,625				100.00				33,108,929				29,698,113				29,698,113				29,699,590
POSCO INTERNATIONAL Corporation(*1)			Korea			Trading, power generation and natural resources exploration			124,396,358				70.71				5,394,884				4,268,588				3,740,020				3,081,933
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.)(*2)			Korea			Engineering and construction			22,073,568				52.80				3,406,499				1,013,453				1,013,453				1,014,314
POSCO ENERGY CO., LTD.(*1)			Korea			Power generation, fuel cell manufacturing and sales			—				—				—				—				—				658,176
POSCO Venture Capital Co., Ltd.(*3)			Korea			Investment in venture companies			20,736,842				100.00				194,077				115,931				115,931				103,780
POSCO FUTURE M CO.,LTD. (formerly, POSCO CHEMICAL CO., LTD.)(*4)			Korea			Refractory and anode/cathode material manufacturing and sales			46,261,601				59.72				2,428,682				985,000				895,687				895,707
POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.)(*5,6)			Korea			Business facility maintenance			1,914,211				100.00				263,372				308,843				308,843				73,374
POSCO DX(formerly, POSCO ICT)(*7)			Korea			Computer hardware and software distribution			99,403,282				65.38				452,897				70,990				70,990				70,990
Busan E&E Co., Ltd.			Korea			Municipal solid waste fuel and power generation			6,029,660				70.00				55,892				30,148				30,148				30,148
POSOCO-Pilbara LITHIUM SOLUTION Co., Ltd.			Korea			Lithium manufacturing and sales			62,946,316				82.00				339,852				314,940				314,940				314,940
POSCO LITHIUM SOLUTION			Korea			Lithium hydroxide manufacturing and sales			57,510,000				100.00				293,323				287,550				287,550				287,550
QSONE Co.,Ltd.(*8)			Korea			Real estate rental and facility management			400,000				100.00				179,202				238,478				238,478				—
Others (11 companies)(*10,12)																	1,009,484				442,847				442,847				455,893
																	47,127,093				37,774,881				37,157,000				36,686,395
[Foreign]
PT. KRAKATAU POSCO(*11)			Indonesia			Steel manufacturing and sales			—				—				—				—				—				633,421
POSCO WA PTY LTD			Australia			Iron ore sales and mine development			631,160,435				100.00				598,118				646,574				646,574				646,574
POSCO Maharashtra Steel Private Limited			India			Steel manufacturing and sales			361,789,958				100.00				527,801				722,514				722,514				722,569
POSCO Canada Ltd.			Canada			Coal sales			1,099,885				100.00				918,045				560,879				560,879				560,879
POSCO AUSTRALIA PTY LTD			Australia			Iron ore sales and mine development			761,775				100.00				1,188,769				330,623				330,623				330,623
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd.			China			Stainless steel manufacturing and sales			2,285,407,454				58.60				477,664				283,792				283,792				283,845
POSCO-China Holding Corp.			China			Holding company			—				100.00				470,891				593,816				593,816				593,841
POSCO MEXICO S.A. DE C.V.(*11)			Mexico			Plate steel manufacturing and sales			—				—				—				—				—				180,072
POSCO America Corporation			USA			Researching and consulting			437,941				99.45				145,920				192,136				192,136				192,156
POSCO VST CO., LTD.			Vietnam			Stainless steel manufacturing and sales			—				95.65				55,143				144,552				144,552				144,573
POSCO Asia Co., Ltd.			Hong Kong			Activities Auxiliary to financial service			9,360,000				100.00				267,995				117,690				117,690				117,710
POSCO ASSAN TST STEEL INDUSTRY			Turkiye			Steel manufacturing and sales			144,579,160				60.00				14,158				92,779				71,686				71,707
POSCO JAPAN Co., Ltd.			Japan			Steel marketing, demand development, and technology research			90,438				100.00				195,884				68,410				68,410				68,436
Qingdao Pohang Stainless Steel Co., Ltd.			China			Stainless steel manufacturing and sales			—				70.00				105,367				65,982				65,982				65,982
POSCO (Suzhou) Automotive Processing Center Co., Ltd.			China			Steel manufacturing and sales			—				90.00				173,283				62,469				62,469				62,494
POSCO AFRICA (PROPRIETARY) LIMITED			South Africa			Mine development			1,390				100.00				27,451				50,297				50,297				50,297
POSCO Argentina S.A.U.(*9)			Argentina			Mineral exploration, manufacturing and sales			14,724,925				100.00				1,116,354				1,150,087				1,150,087				715,414
Others (18 companies)(*11)																	1,052,128				314,191				301,014				356,274
																	7,334,971				5,396,791				5,362,521				5,796,867
																	54,462,064				43,171,672				42,519,521				42,483,262

 

(*1)	During the year ended December 31, 2023, POSCO INTERNATIONAL Corporation merged with POSCO ENERGY CO., LTD..

(*2)	During the year ended December 31, 2023, POSCO ENGINEERING & CONSTRUCTION CO.,LTD. changed the name to POSCO Eco & Challenge Co., Ltd..

 

31