POSCO HOLDINGS INC.

Separate financial statements

for the years ended December 31, 2025 and 2024

with the independent auditor’s report

Table of Contents

 

		Page
Independent Auditor’s Report			1
Separate Financial Statements
Separate Statements of Financial Position			6
Separate Statements of Comprehensive Income			8
Separate Statements of Changes in Equity			9
Separate Statements of Cash Flows			10
Notes to the Separate Financial Statements			12
Independent Auditor’s Report on Internal Control over Financial Reporting			80
Report on the Operating Status of Internal Control over Financial Reporting			82

Independent auditor’s report

(English translation of a report originally issued in Korean)

The Shareholders and Board of Directors

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, 2025 and 2024, and the separate statements of comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2025, and notes to the separate financial statements, including a summary of material accounting policy information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2025 in accordance with International Financial Standards as adopted by the Republic of Korea (KIFRS).

We also have audited the Company’s internal control over financial reporting (ICFR) as of December 31, 2025 based on the Conceptual Framework for Design and Operation of ICFR established by the Operating Committee of ICFR in the Republic of Korea, in accordance with Korean Standards on Auditing (KSA), and our report dated March 11, 2026 expressed an unqualified opinion thereon.

Basis for opinion

We conducted our audits in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s 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 the 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 matter

A key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the separate financial statements of the current period. 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.

Impairment assessment on investments in subsidiaries

As described in note 10 to the separate financial statements, the carrying amount of the Company’s investments in subsidiaries is W43,478,793 million. The Company recognized W187,832 million of impairment loss on investments in subsidiaries for the current period.

The Company assesses annually whether there is any indication for impairment over investments in subsidiaries and performs impairment test over investments in subsidiaries when an impairment indicator exists. The Company measures the impairment loss of investments as the difference between the carrying amount and the recoverable amount which is the higher of fair value less costs to sell and value-in-use. Since estimation of value-in-use involves management’s significant judgment and assumptions such as determination of discount rates and revenue estimates, management bias may exist. Therefore, we have identified impairment assessment on investments in subsidiaries as a key audit matter.

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

 

•

Understanding and assessing accounting policies and internal controls over the Company’s identification of impairment indicators over investments in subsidiaries, impairment assessment, and evaluation of assessment results;

 

•

Evaluating the competence and objectivity of independent external specialists involved by management for the assessment;

 

•

Evaluating the reasonableness of sales estimates by comparing key assumptions used to calculate revenue estimates with the latest business plan approved by management, historical performance and external data;

 

•

Evaluating the appropriateness of discount rates used by management by comparing them against discount rates that were independently recalculated using observable information;

 

•

Assessing the appropriateness of terminal growth rates used by management by comparing them with observable market information;

 

•

Performing independent recalculation of the recoverable amount presented by management; and,

 

•

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.

 

2

 

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 KIFRS, 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.

Auditor’s 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 auditor’s 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 KSA 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 KSA, 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.

 

•

Evaluate the appropriateness of accounting policies used 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 auditor’s 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 auditor’s 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.

 

3

 

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 to 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 auditor’s 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 auditor’s report is Yongwoo Lee.

Seoul, Korea

March 11, 2026

 

 

4

POSCO HOLDINGS INC.

Separate financial statements

for the years ended December 31, 2025 and 2024

 

 

“The accompanying separate financial statements, including all footnotes and disclosures, have been prepared by, and are the responsibility of, the Company.”

Ju Tae Lee

Representative Director & President

POSCO HOLDINGS INC.

POSCO HOLDINGS INC.

Separate Statements of Financial Position

as of December 31, 2025 and 2024

 

(in millions of Won)		Notes				December 31, 2025				December 31, 2024
Assets
Cash and cash equivalents			4,5,21,35			W	184,416				409,387
Trade accounts and notes receivable, net			6,21,33,35				157,668				178,822
Other receivables, net			7,21,33,35				146,146				21,388
Other short-term financial assets			8,21,35				3,454,794				2,686,420
Assets held for sale			9				—				467,796
Current income tax assets			31				—				27,940
Other current assets			14				2,099				1,716
Total current assets							3,945,123				3,793,469
Other receivables, net			7,21,33				17,414				14,894
Other long-term financial assets			8,21				506,736				421,822
Investments in subsidiaries, associates and joint ventures			10				46,290,253				45,631,965
Investment property, net			11				319,392				328,372
Property, plant and equipment, net			12,35				703,140				415,993
Intangible assets, net			13,35				29,659				21,461
Other non-current assets			14				3,869				5,821
Total non-current assets							47,870,463				46,840,328
Total assets						W	51,815,585				50,633,797

(continued)

 

6

POSCO HOLDINGS INC.

Separate Statements of Financial Position

as of December 31, 2025 and 2024 (Continued)

 

(in millions of Won)		Notes				December 31, 2025				December 31, 2024
Liabilities
Short-term borrowings and current installments of long-term borrowings			4,15,21,35			W	45,973				39,053
Other current payables			16,33,35				53,466				50,356
Other short-term financial liabilities			17,21				21,545				18,302
Provisions			18				46,421				46,268
Current tax liabilities			31				72,404				—
Other current liabilities			20				5,819				8,852
Total current liabilities							245,628				162,831
Long-term borrowings, excluding current installments			4,15				993,857				1,500
Other non-current payables			16,21,33,35				35,037				30,783
Defined benefit liabilities, net			19				5,533				1,296
Deferred tax liabilities			31				2,592,964				2,246,030
Long-term provisions			18				2,947				—
Other non-current liabilities			20				1,350				2,327
Total non-current liabilities							3,631,688				2,281,936
Total liabilities							3,877,316				2,444,767
Equity
Share capital			22				482,403				482,403
Capital surplus			22				1,367,990				1,367,990
Accumulated other comprehensive loss			23				(45,874	)			(62,645	)
Treasury shares			24				(1,176,316	)			(1,550,862	)
Retained earnings			25				47,310,066				47,952,144
Total equity							47,938,269				48,189,030
Total liabilities and equity						W	51,815,585				50,633,797

The accompanying notes are an integral part of separate financial statements.

 

7

POSCO HOLDINGS INC.

Separate Statements of Comprehensive Income

for the years ended December 31, 2025 and 2024

 

(in millions of Won, except per share informations)		Notes		2025				2024
Operating revenue		26,33		W	1,403,310				1,997,128
Operating expenses		27			(426,485	)			(400,707	)
Operating profit					976,825				1,596,421
Finance income and costs
Finance income		21,28			233,286				482,945
Finance costs		21,28			(99,533	)			(89,388	)
Other non-operating income and expenses
Other non-operating income		29			3,274				3,249
Other non-operating expenses		29			(320,959	)			(437,151	)
Profit before income tax					792,893				1,556,076
Income tax benefit (expense)		31			(298,015	)			65,206
Profit					494,878				1,621,282
Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans		19			(2,528	)			(3,948	)
Net changes in fair value of equity investments at fair value through other comprehensive income		8,23			13,096				(75,167	)
Total comprehensive income				W	505,446				1,542,167
Earnings per share (in Won)		32
Basic earnings per share (in Won)					6,544				21,398
Diluted earnings per share (in Won)				W	6,544				18,999

The accompanying notes are an integral part of separate financial statements.

 

8

POSCO HOLDINGS INC.

Separate Statements of Changes in Equity

for the years ended December 31, 2025 and 2024

 

(in millions of Won)		Share capital				Capital surplus				Accumulated Other Comprehensive Income (loss)				Treasury shares				Retained earnings				Total
Balance as of January 1, 2024		W	482,403				1,370,557				30,678				(1,889,658	)			47,505,885				47,499,865
Comprehensive income:
Profit			—				—				—				—				1,621,282				1,621,282
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax			—				—				—				—				(3,948	)			(3,948	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax			—				—				(93,323	)			—				18,156				(75,167	)
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends			—				—				—				—				(189,691	)			(189,691	)
Interim dividends			—				—				—				—				(568,433	)			(568,433	)
Acquisition of treasury shares			—				—				—				(92,311	)			—				(92,311	)
Retirement of treasury shares			—				—				—				431,107				(431,107	)			—
Share-based payment			—				(2,567	)			—				—				—				(2,567	)
Balance as of December 31, 2024		W	482,403				1,367,990				(62,645	)			(1,550,862	)			47,952,144				48,189,030
Balance as of January 1, 2025		W	482,403				1,367,990				(62,645	)			(1,550,862	)			47,952,144				48,189,030
Comprehensive income:
Profit			—				—				—				—				494,878				494,878
Other comprehensive income (loss)
Remeasurements of defined benefit plans, net of tax			—				—				—				—				(2,528	)			(2,528	)
Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax			—				—				16,771				—				(3,675	)			13,096
Transactions with owners of the Company, recognized directly in equity:
Year-end dividends			—				—				—				—				(189,052	)			(189,052	)
Interim dividends			—				—				—				—				(567,156	)			(567,156	)
Retirement of treasury shares			—				—				—				374,546				(374,545	)			—
Balance as of December 31, 2025		W	482,403				1,367,990				(45,874	)			(1,176,316	)			47,310,066				47,938,268

The accompanying notes are an integral part of separate financial statements.

 

9

POSCO HOLDINGS INC.

Separate Statements of Cash Flows

for the years ended December 31, 2025 and 2024

 

(in millions of Won)		Notes				2025				2024
Cash flows from operating activities
Profit						W	494,878				1,621,282
Adjustments for :
Expenses related to post-employment benefit							10,179				6,438
Depreciation							18,087				14,272
Amortization							2,342				1,712
Impairment loss (reversal) on other receivables							(82	)			106
Finance income							(205,749	)			(474,656	)
Dividend income							(1,234,259	)			(1,812,999	)
Finance costs							70,915				79,200
Loss on disposal of property, plant and equipment							1,282				341
Gain on disposal of intangible assets							—				(141	)
Loss on disposal of intangible assets							22				266
Impairment loss on investments in subsidiaries, associates and joint venture							288,464				392,075
Loss on disposal of assets held for sale							9,883				—
Increase to provisions							341				36,981
Income tax expense (benefit)							298,015				(65,206	)
Others							2,224				(3	)
Changes in operating assets and liabilities			35				8,742				2,023
Interest received							67,154				92,618
Interest paid							(27,137	)			—
Dividends received							1,230,173				1,866,004
Income taxes received							60,808				57,563
Net cash provided by operating activities						W	1,096,282				1,817,876

(continued)

 

10

POSCO HOLDINGS INC.

Separate Statements of Cash Flows

for the years ended December 31, 2025 and 2024 (Continued)

 

(in millions of Won)		Notes				2025				2024
Cash flows from investing activities
Decrease in deposit instruments						W	3,330,000				3,050,000
Proceeds from disposal of short-term financial instruments							894,933				5,471,006
Proceeds from disposal of equity securities							1,082				194,230
Proceeds from disposal of other securities							11,053				9,016
Proceeds from disposal of investments in subsidiaries, associates and joint ventures							62,847				590,429
Proceeds from disposal of intangible assets							—				1,677
Proceeds from disposal of assets held for sale							458,831				—
Collection of short-term lease security deposits							17				491
Increase in deposits							(4,190,000	)			(2,550,000	)
Acquisition of short-term financial instruments							(560,426	)			(4,619,699	)
Increase in long-term loans							—				(106	)
Acquisition of other securities							(15,871	)			(21,850	)
Acquisition of investments in subsidiaries, associates and joint ventures							(1,011,924	)			(1,263,572	)
Acquisition of property, plant and equipment							(295,005	)			(249,048	)
Acquisition of intangible assets							(10,563	)			(6,209	)
Acquisition of investment properties							—				(1,200	)
Increase in long-term and short-term lease security deposits							(741	)			(536	)
Acquisition of current portion of debt securities							(230,000	)			—
Net cash provided by (used in) investing activities						W	(1,555,767	)			604,629
Cash flows from financing activities
Increase in long-term financial liabilities							3,278				3,148
Proceeds from bonds							987,117				—
Payment of cash dividends							(756,084	)			(758,194	)
Repayment of current installments of long-term borrowings							—				(1,542,400	)
Acquisition of treasury shares							—				(92,311	)
Net cash provided by (used in) financing activities			35			W	234,311				(2,389,757	)
Effect of exchange rate fluctuation on cash held							203				(275	)
Net increase (decrease) in cash and cash equivalents							(224,971	)			32,473
Cash and cash equivalents at beginning of the period			5				409,387				376,914
Cash and cash equivalents at end of the period			5			W	184,416				409,387

The accompanying notes are an integral part of separate financial statements.

 

11

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024

 

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 its subsidiaries and other investments through its ownership of shares in the investees.

On March 2, 2022, the Company established a wholly-owned subsidiary, POSCO, through a vertical spin-off of its steel manufacturing business, and changed its name to POSCO HOLDINGS INC.

As of December 31, 2025, major shareholders are as follows:

 

Shareholder’s name		Number of shares				Ownership (%)
National Pension Service			6,441,610				7.96
BlackRock, Inc(*1)			4,206,522				5.20
CITIBANK.N.A			2,289,755				2.83
Pohang University of Science and Technology			1,981,047				2.45
Samsung Group			1,861,979				2.30
Others			64,152,039				79.26
			80,932,952				100.00

 

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

As of December 31, 2025, the shares of the Company are listed on the Korea Exchange, while its ADRs are listed on the New York Stock Exchange.

2. Basis of preparation

Statement of compliance

The separate financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (KIFRS), as enacted by the Act on External Audit of Stock Companies in the Republic of Korea.

These separate financial statements are prepared in accordance with KIFRS 1027 “Separate Financial Statements” under which an investor accounts for investments in subsidiaries, joint ventures and associates at cost.

The separate financial statements were authorized for issue by the Board of Directors on February 3, 2026, and will be submitted for approval at the shareholders’ meeting, which is scheduled to be held on March 24, 2026.

 

12

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

2. Basis of preparation (cont’d)

 

Basis of measurement

The separate financial statements have been prepared on a historical cost basis, except for the following material items in the separate 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 KIFRS 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 10—Investments in subsidiaries, associates and joint ventures

 

13

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

2. Basis of preparation (cont’d)

 

(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 reporting period year is included in the following notes:

 

•

Note 10—Investments in subsidiaries, associates and joint ventures

 

•

Note 18—Provisions

 

•

Note 19—Employee benefits

 

•

Note 21—Financial Instruments

 

•

Note 31—Income taxes

 

•

Note 34—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 the 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, the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of KIFRS 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 to the greatest extent possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

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

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

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

 

14

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

2. Basis of preparation (cont’d)

 

Changes in Accounting Policies

Except for the standards and amendments applied for the first time for the reporting period commenced January 1, 2025 described below, the accounting policies applied by the Company in the financial statements are the same as those applied to the separate financial statements as of and for the year ended December 31, 2024.

 

(a)	Amendments to KIFRS 1021: Lack of Exchangeability

For annual reporting periods beginning on or after January 1, 2025, Amendments to KIFRS 1021 The Effects of Changes in Foreign Exchange Rates—Lack of Exchangeability specifies how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments also require disclosure of information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows. The amendments had no impact on the Company’s separate financial statements.

 

(b)	Amendments to KIFRS 1117 Insurance Contracts: Disclosure of Estimation Techniques for Inputs Used in Measuring Insurance Contract

For annual reporting periods ending on or after December 31, 2025, Amendments to KIFRS 1117 Insurance Contracts introduce additional disclosure requirements. In certain circumstances, an entity may have insufficient historical data or experience available for specific insurance products. In such cases, insurance-related laws or regulations may require the application of principle-based estimation techniques. Where the estimation techniques used by the entity to determine inputs applied in the measurement of insurance contracts differ from the principle-based estimation techniques required by applicable insurance-related regulations, and the entity concludes that information about such differences is relevant and material to users of the financial statements, the entity is required to disclose the following information:

 

•

the estimation techniques for inputs used based on significant judgments by the entity including the basis for those judgments and how they differ from the principle-based estimation techniques required by applicable regulations; and

 

•

the effects on the estimates of future cash flows, the contractual service margin, insurance revenue and insurance service expenses that would arise if the principle-based estimation techniques required by applicable regulations had been applied.

However, these amendments are effective only until the annual reporting periods ending on December 31, 2029. The amendments had no impact on the Company’s separate financial statements.

 

15

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. 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 separate 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 KIFRS 1027 Separate Financial Statements. The Company applied the cost method to investments in subsidiaries, associates and joint ventures in accordance with KIFRS 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.

 

16

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

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.

 

17

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

(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.

Assets held for sale

Non-current assets or disposal groups are classified as assets held for sale if their carrying amount is highly probable recovered primarily through a sale rather than through continued use. This condition is considered met only when the asset or disposal group is available for immediate sale in its present condition and when the sale is highly probable.

Prior to the initial classification as held for sale, the asset or disposal group is measured at the lower of its carrying amount and fair value less costs to sell. If the fair value less costs to sell of an asset initially classified decreases, an impairment loss is recognized immediately in profit or loss. Conversely, if the fair value less costs to sell increases, a reversal of the impairment loss is recognized in profit or loss, up to the cumulative amount of impairment losses previously recognized. Non-current assets classified as held for sale, or those that are part of a disposal group classified as held for sale, are not depreciated or amortized.

 

18

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

Investment property

Investment property is property held to earn rental income or for capital appreciation, or both. 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			2,15 years
Vehicles			4 years
Fixtures			4 years

 

19

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

Intangible assets

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

Amortization of intangible assets except for goodwill is calculated on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, certain intangible assets(i.e., club membership) do not have foreseeable limitations on the periods during which they can be utilized, therefore, if the useful life of these intangible assets is assessed as indefinite, they are not being 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 purchases, constructs or otherwise acquires 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

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

 

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 it 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.

 

20

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

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 a major part of the economic life of the asset.

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

Impairment of 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.

 

21

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

(c)	Credit-impaired financial assets

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

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

 

•

significant financial difficulty of the issuer or borrower

 

•

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

 

•

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

 

•

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

 

•

the disappearance of an active market for the financial assets 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 its 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.

 

22

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

Impairment of 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.

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 areas is recognized when the area meets the Company’s policy and legal standards of contamination.

 

23

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

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 an investment business that controls and manages its investees and a rental business for real properties.

 

1)

Dividend income

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

 

2)

Rental income

Rental income from leasing the Company’s real properties 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;

 

•

dividend income;

 

•

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

 

•

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

 

•

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.

 

24

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

Income tax

Income tax expense consists of current tax and deferred tax and is recognized in profit or loss, except to the extent that it relates to transactions and events recognized directly in other comprehensive income or equity.

The Company recognizes interest and penalties related to corporate tax as if it is applicable to the income taxes, the Company applies KIFRS 1012 Income Taxes, if it is not applicable to the income taxes, the Company applies KIFRS 1037 Provisions Contingent Liabilities and Contingent Assets.

The Company applies a consolidated tax filing system under which the Company and its subsidiaries are treated as a single taxable entity and their taxable incomes are aggregated for corporate income tax purposes when they are economically integrated.

 

(a)	Current income tax

Under the consolidated tax filing system, the Company calculates current income tax for the consolidated tax entity, which includes the Company and its domestic subsidiaries that meet the requirements for consolidated taxation under the Corporate Income Tax Law, and recognizes such amount as the Company’s current income tax liability, as the Company is obligated to pay corporate income tax.

Current income tax is calculated based on taxable income for the year. Taxable income differs from profit before income tax as reported in the statement of comprehensive income, as it excludes income and expenses that will be included in or deducted from taxable income in other tax periods, as well as non-taxable income and non-deductible expenses.

Unpaid current income taxes related to current income tax are calculated using tax rates that have been enacted or substantively enacted.

Current income tax assets and current income tax liabilities are offset only when the Company has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

 

25

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

(b)	Deferred income tax

Deferred income tax assets and deferred income tax liabilities are measured based on the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amounts of the related assets and liabilities.

Deferred income tax liabilities are recognized for all taxable temporary differences related to investments in subsidiaries and associates, except to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets arising from deductible temporary differences are recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and that taxable income will be available against which the temporary differences can be utilized.

However, deferred income tax is not recognized for temporary differences arising from the initial recognition of goodwill or from the initial recognition of assets or liabilities in transactions that are not business combinations and that, at the time of the transaction, affect neither accounting profit nor taxable income.

Deferred income tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable income will be available against which such unused tax losses, unused tax credits and deductible temporary differences can be utilized.

Future taxable income is determined by the reversal of related taxable temporary differences. If such taxable temporary differences are not sufficient to fully recognize deferred income tax assets, the Company considers the probability of generating future taxable income, taking into account the reversal of existing temporary differences reflected in the Company’s business plans.

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

Deferred income tax assets and deferred income tax liabilities are measured using tax rates that are expected to apply in the period in which the assets are realized or the liabilities are settled, based on tax laws that have been enacted or substantively enacted as of the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset only when they relate to income taxes levied by the same taxation authority, the Company has a legally enforceable right to offset the recognized amounts, and intends to settle current income tax assets and liabilities on a net basis.

 

26

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s separate financial statements are disclosed below. The Company has not early adopted the new or amended standards in preparing these separate financial statements.

 

(a)	Amendments to KIFRS 1109 Financial Instruments and 1107: Financial Instruments: Disclosures – Classification and Measurement of Financial Instruments

These amendments include the following:

 

•

Clarification that a financial liability is derecognized on the settlement date and the introduction of an accounting policy choice to derecognize financial liabilities that are settled by using electronic payment system before the settlement date (if specific criteria are met);

 

•

Additional guidance as to how to assess contractual cash flows of financial assets with environmental, social and corporate governance (ESG) and similar features;

 

•

Clarification on what constitutes non-recourse feature and the characteristics of contractually linked financial instruments; and

 

•

Introduction of disclosures on financial instruments with contingent features and additional disclosure requirements for equity instruments measured at fair value through other comprehensive income.

The amendments are effective for annual periods beginning on or after January 1, 2026. Early adoption is permitted, but only for the classification of financial assets and the related disclosures. The Company does not plan to early adopt the amendments.

 

(b)	Annual Improvements to KIFRS – Volume 11

Annual Improvements to KIFRS - Volume 11 have been announced for the purpose of improving consistency of requirements set out in each standard, enhancing clarity, and providing better understanding of the amendments.

 

•

Amendments to KIFRS 1101 First-time adoption of KIFRS: Hedge accounting by a first-time adopter

 

•

Amendments to KIFRS 1107 Financial Instruments: Disclosures: Gain or loss on derecognition, Guidance for application of amendments in practice

 

•

Amendments to KIFRS 1109 Financial Instruments: Accounting for derecognition of lease liabilities and definition of transaction prices

 

•

Amendments to KIFRS 1110 Consolidated Financial Statements: Determination of a ‘de facto agent’

 

•

Amendments to KIFRS 1007 Statement of Cash Flows: Cost Method

 

27

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

The amendments will be effective for the annual periods beginning on or after January 1, 2026. Early adoption is permitted but will need to be disclosed. The amendments are not expected to have a material impact on the Company’s separate financial statements.

 

(c)	Amendments to KIFRS 1109 Financial Instruments and KIFRS 1107 Financial Instruments: Disclosures – Contracts Referencing Nature-dependent Electricity

The key amendments are as follows:

 

•

Clarification on the application of the ‘own-use’ requirements for contracts within the scope;

 

•

Amendment to the designation criteria for designating cash flow hedge items in cash flow hedge relationships for contracts within the scope; and

 

•

Introduction of new disclosure requirements to enable users of financial statements to understand the effects of these contracts on the entity’s financial performance and cash flows.

The amendments will be effective for the annual periods beginning on or after January 1, 2026. Early adoption is permitted but will need to be disclosed. The amendments related to the ‘own-use exception’ are to be applied retrospectively, while the amendments relating to hedge accounting are to be applied prospectively to new hedge relationships designated after the date of initial application. In addition, the disclosure amendments in KIFRS 1107 shall be applied together with the amendments to KIFRS 1109. When comparative information is not restated, comparative information for the related disclosures is not required to be presented.

The amendments are not expected to have a material impact on the Company’s separate financial statements.

 

(d)	Standards to KIFRS 1118 Presentation and Disclosure in Financial Statements

KIFRS 1118 Presentation and Disclosure in Financial Statements, which replaces KIFRS 1001 Presentation of Financial Statements, has been issued. KIFRS 1118 introduces new requirements for the presentation of the income statement, including specified totals and subtotals. In addition, an entity is required to classify all income and expenses in the income statement into one of five categories: operating, investing, financing, income taxes, and discontinued operations—with the first three categories newly introduced. KIFRS 1118 further requires the disclosure of newly defined management defined performance measures and subtotals of income and expenses and introduces new requirements for aggregating and disaggregating financial information, based on the identified ‘roles’ of the primary financial statements and the notes.

 

28

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

3. Material Accounting Policy Information (cont’d)

 

As a consequence of the issuance of KIFRS 1118, limited-scope amendments have been made to KIFRS 1007 Statement of Cash Flows. For example, changing the starting point for determining cash flows from operating activities under the indirect method from profit or loss for the period to operating profit or loss, and removing accounting policy choices relating to the classification of cash flows arising from dividends and interest. Further consequential amendments have also been made to other Standards.

KIFRS 1118 and the related amendments to other standards will be effective for the annual periods beginning on or after January 1, 2027. Early adoption is permitted but will need to be disclosed. KIFRS 1118 is to be applied retrospectively upon initial application.

The Company is currently assessing the impact of these amendments on its separate financial statements and the related notes. Items expected to have a material impact on the Company’s separate financial statements upon initial application include the following:

 

•

Rental income, fair value changes of investment properties, and share of profit or loss of equity-accounted associates and joint ventures will be classified within the investing category in the income statement.

 

•

Foreign exchange differences will be classified in the same category as the income and expenses of the item that gave rise to those differences.

 

•

The following new disclosures will be required:

 

(a)

Management-defined performance measures (MPMs);

 

(b)

Where expenses in the operating category of the income statement are presented by function, specified expenses by nature; and

 

(c)

A reconciliation for each separately presented line item in the income statement between the amounts previously presented under KIFRS 1001 and the restated amounts applying KIFRS 1118.

 

•

In the statement of cash flows, interest received and interest paid will be classified as investing activities and financing activities, respectively.

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

 

29

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

4. Financial Risk Management (cont’d)

 

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 risks, and the Company’s capital management. 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.

 

30

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

4. Financial Risk Management (cont’d)

 

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 oversees 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, to the greatest extent 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. Meanwhile, the Company has entered into credit line agreements with multiple banks.

 

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 the borrowing structure ratio between borrowings at fixed interest rate and variable interest rate.

 

31

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

4. Financial Risk Management (cont’d)

 

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 (total borrowings after deducting cash and cash equivalents). 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, 2025 and 2024 is as follows:

 

(in millions of Won)		2025				2024
Total borrowings		W	1,039,830				40,554
Less: Cash and cash equivalents			184,416				409,387
Net borrowings			855,414				(368,833	)
Total equity		W	47,938,268				48,189,030
Net borrowings-to-equity ratio(*1)			1.78	%			—

 

(*1)	As of the end of the prior year, cash and cash equivalents exceeded the borrowing amount, so the net borrowings-to-equity ratio is not calculated.

 

32

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

5. Cash and Cash Equivalents

Cash and cash equivalents as of December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025				2024
Demand deposits and checking accounts(*1)		W	2,249				4,962
Other cash equivalents			182,167				404,425
		W	184,416				409,387

 

(*1)	As of December 31, 2025 and 2024, cash and cash equivalents of W273 million and W304 million, respectively, are restricted for use in relation to government projects.

6. Trade Receivable and Notes Receivable

Trade receivable and notes receivable as of December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025				2024
Current
Trade accounts and notes receivable		W	41,384				48,349
Unbilled receivables (contract assets)			116,284				130,473
Less: Allowance for doubtful accounts			—				—
		W	157,668				178,822

 

33

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

7. Other Receivables

Other receivables as of December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025				2024
Current
Other accounts receivable(*1)		W	103,109				12,535
Others(*2)			47,379				13,301
Less: Allowance for doubtful accounts(*2)			(4,342	)			(4,448	)
		W	146,146				21,388
Non-current
Loans(*2)		W	241,717				247,569
Long-term other accounts receivable			16,365				14,585
Others			1,049				309
Less: Allowance for doubtful accounts(*2)			(241,717	)			(247,569	)
		W	17,414				14,894

 

(*1)	Other accounts receivable include the amounts to be collected from each domestic subsidiary in accordance with the consolidated taxation system.

(*2)	The Company assessed the recoverability of other receivables from FQM Australia Pty Ltd., an associate, and has recognized an allowance for doubtful accounts for such other receivables from the entity.

8. Other Financial Assets

 

(a)	Other financial assets as of December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025				2024
Current
Deposit instruments		W	3,120,000				2,260,000
Short-term financial instruments			104,794				426,420
Debt securities			230,000				—
		W	3,454,794				2,686,420
Non-current
Equity securities		W	170,819				158,761
Other securities			258,164				263,059
Derivative assets			77,751				—
Deposit instruments			2				2
		W	506,736				421,822

 

34

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

8. Other Financial Assets (cont’d)

 

 

(b)	Equity securities as of December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025																								2024
		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(*1)			—				—			W	—				—				—				—				—
CSN Mineracao S.A.			102,186,675				1.86				206,265				145,885				(60,380	)			145,885				125,219
											206,265				145,885				(60,380	)			145,885				125,219
Non-marketable equity securities
PLANTEC Co., Ltd.(*2)			18,337,912				10.99				19,437				23,564				4,127				23,564				31,560
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(*3)			—				—				—				—				—				—				612
S&M Media Co.,Ltd.			2,000				2.67				20				20				—				20				20
XG Sciences			300,000				5.06				2,724				—				(2,724	)			—				—
											27,181				24,934				(2,247	)			24,934				33,542
										W	233,446				170,819				(62,627	)			170,819				158,761

 

(*1)	During the year ended December 31, 2024, the Company decided to dispose of its equity investment in Nippon Steel Corporation and classified the investee as assets held for sale. The Company completed the disposal during the year ended December 31, 2025 (see Note 9).

(*2)	The Company measured fair value of the equity investment by using recent transaction prices.

(*3)	The Company disposed of the equity shares in the investee during the year ended December 31, 2025.

9. Assets Held for Sale

Assets held for sale as of December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025				2024
Beginning		W	467,796				—
Transfers			—				467,796
Valuations			918				—
Disposals			(468,714	)			—
Ending		W	—				467,796

For the year ended December 31, 2024, the Company classified as assets held for sale the entire carrying amount of its long-term investment in Nippon Steel Corporation, which amounted to W467,796 million. For the year ended December 31, 2025, the Company disposed of all of its equity interests and recognized a loss on disposal of assets held for sale of W9,883 million.

 

35

POSCO HOLDINGS INC.

Notes to the Separate Financial Statements

for the years ended December 31, 2025 and 2024 (continued)

 

10. Investments in Subsidiaries, Associates and Joint ventures

 

(a)	Investments in subsidiaries, associates and joint ventures as of and for the year December 31, 2025 and 2024 are as follows:

 

(in millions of Won)		2025				2024
Investment in subsidiaries(*1)		W	43,478,793				42,787,174
Investment in associates			212,855				208,129
Investment in joint ventures			2,598,605				2,636,662
		W	46,290,253				45,631,965

 

(*1)	The amount of impairment loss on investments in subsidiaries incurred during the year ended December 31, 2025 was W187,832 million.

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 and for the year December 31, 2025 and 2024 are as follows:

 

(in millions of Won)								2025																				2024
		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			W	33,864,306				29,918,622				29,918,622				29,918,622
POSCO INTERNATIONAL Corporation			Korea			Trading, power generation and natural resources exploration			124,396,358				70.71				5,793,962				4,268,588				3,740,020				3,740,020
POSCO Eco & Challenge Co., Ltd.			Korea			Engineering and construction			22,073,568				52.80				2,925,358				1,014,963				1,014,963				1,014,963
POSCO Venture Capital Co., Ltd.			Korea			Investment in venture companies			20,736,842				100.00				199,652				115,931				115,931				115,931
POSCO FUTURE M CO.,LTD.(*1)			Korea			Refractory and anode/cathode material manufacturing and sales			51,747,787				58.18				3,900,757				2,013,868				1,924,555				1,395,687
POSCO WIDE Co., Ltd.			Korea			Business facility maintenance			1,914,211				100.00				261,920				308,843				308,843				308,843
POSCO DX			Korea			Computer hardware and software distribution			99,403,282				65.47				561,662				70,990				70,990				70,990
Busan E&E Co., Ltd.			Korea			Municipal solid waste fuel and power generation			6,029,660				70.00				52,594				30,148				30,148				30,148
POSOCO-Pilbara LITHIUM SOLUTION Co., Ltd.(*1)			Korea			Lithium manufacturing and sales			128,546,316				82.00				375,234				642,940				642,940				314,940
POSCO LITHIUM SOLUTION			Korea			Lithium hydroxide manufacturing and sales			57,510,000				100.00				291,978				287,550				287,550				287,550
QSONE Co.,Ltd.			Korea			Real estate rental and facility management			400,000				100.00				197,687				238,478				238,478				238,478
POSCO CNGR Nickel Solution(*2)			Korea			Nickel refining			—				—				—				—				—				49,520
POSCO ZT AIR SOLUTION			Korea			Manufacturing and Sales of High-Purity Rare Gases			12,603,551				75.10				80,562				63,481				63,481				63,481
Others																	769,804				542,168				511,889				446,037
																	49,275,476				39,516,570				38,868,410				37,995,210
[Foreign]
POSCO WA PTY LTD			Australia			Iron ore sales and mine development			631,160,435				100.00				732,022				646,574				646,574				646,574
POSCO Canada Ltd.			Canada			Coal sales			1,099,885				100.00				682,872				560,879				560,879				560,879
POSCO AUSTRALIA PTY LTD			Australia			Iron ore sales and mine development			761,775				100.00				1,176,054				330,623				330,623				330,623
POSCO (Zhangjiagang) Stainless Steel Co.,Ltd.(*3)			China			Stainless steel manufacturing and sales			2,285,407,454				58.60				189,151				283,792				259,819				283,792
POSCO-China Holding Corp.			China			Holding company			—				100.00				505,221				593,816				593,816				593,816
POSCO America Corporation			USA			Researching and consulting			437,941				99.45				170,026				192,136				192,136				192,136
POSCO VST CO., LTD.			Vietnam			Stainless steel manufacturing and sales			—				95.65				64,041				144,552				66,060				66,060
POSCO Asia Co., Ltd.			Hong Kong			Activities Auxiliary to financial service			9,360,000				100.00				303,294				117,690				117,690				117,690
POSCO JAPAN Co., Ltd.			Japan			Steel marketing, demand development, and technology research			90,438				100.00				205,512				68,410				68,410				68,410
Qingdao Pohang Stainless Steel Co., Ltd.(*3)			China			Stainless steel manufacturing and sales			—				70.00				72,948				65,982				65,982				65,982
POSCO (Suzhou) Automotive Processing Center Co., Ltd.			China			Steel manufacturing and sales			—				90.00				199,721				62,469				62,469				62,469
POSCO AFRICA (PROPRIETARY) LIMITED			South Africa			Mine development			1,390				100.00				25,266				50,297				50,297				50,297
POSCO Argentina S.A.U.(*4)			Argentina			Mineral exploration, manufacturing and sales			37,568,921				100.00				1,163,878				1,510,551				1,352,943				1,510,551
Others																	889,570				255,862				242,685				242,685
																	6,379,576				4,883,633				4,610,383				4,791,964
																W	55,655,052				44,400,203				43,478,793				42,787,174

 

(*1)	The Company acquired additional equity interest in POSCO FUTURE M Co., Ltd., POSCO-Pilbara LITHIUM SOLUTION Co., Ltd., and POSCO GS Eco Materials Co., Ltd. during the year ended December 31, 2025.

(*2)	POSCO CNR Nickel Solution Co., Ltd. was liquidated during the year ended December 31, 2025 and has been excluded from consolidation.

 

36