REG - Lotte Shopping CoLtd - 2014 1H Semi Annual Report <Origin Href="QuoteRef">023530.KS</Origin> - Part 3
29/10/2014 14:40
- Part 3: For the preceding part double click ID:nRSZ6978Sb
1962.04 Senior Managing Director Mart Strategy support 32
Chunseok Choi 1960.03 Senior Managing Director Representative Director (Supermarket) 86
Wonchun Cha 1957.12 Senior Managing Director Representative Director (Cinema)
Gap Lee 1962.09 Managing Director Operations 105
Chungik Lee 1964.11 Managing Director Vision Strategy 24
Inkwon Kim 1969.01 Managing Director Legal
Jonghyeon Kang 1964.05 Managing Director Operations
Seokhwan Lee 1967.08 Managing Director Communications
Jinsung Lee 1969.02 Managing Director Strategy & Insight Center
Gwanggi Min 1956.01 Managing Director Department Store Daegu Business 2 127
Wansin Lee 1960.10 Managing Director Department Store Marketing 86
Janghwa Lee 1959.06 Managing Director Department Store Business 3
Hoju Jang 1960.08 Managing Director Department Store Finance
Yoonnchul Noh 1961.04 Managing Director Department Store New business
Donghyuk Jeong 1962.07 Managing Director Department Store Business 2 32
Jaechan Lee 1960.02 Managing Director Mart Customer
Yeongheon Lee 1960.10 Managing Director Mart Southeast Asia
Changhui Nam 1966.10 Managing Director Mart Product 96
Yeongheon Lee 1958.12 Managing Director Overseas supermarket business 0
Seungbok Hong 1957.09 Managing Director Supermarket sales 16
Seunghee Kim 1965.04 Managing Director Supermarket development
Ikwoo Nam 1962.01 Director Operations
Gyungmoon Jung 1964.02 Director Vision Strategy
Sungho Choo 1964.02 Director Communications
Wonkyu Ki 1966.02 Director Human resources 62
Taewan Kim 1965.03 Director Vision Strategy
Woochul Cha 1968.01 Director Audit Director 16
Yongseok Hwang 1970.02 Director Corporate culture 16
Changyong Kim 1967.03 Director Audit Director
Youngchul Jung 1971.05 Director Secretary
Byeonghui Lee 1969.03 Director Communications
Chanseo Park 1969.03 Director Finance
Insoo Baek 1965.06 Director Strategy & Insight Center
Gwangchul Shin 1967.11 Director Strategy & Insight Center 29
Chansoo Kim 1965.03 Director Distribution CFD
Unseong Baek 1965.06 Director Welfare 71
Soohoi Ku 1958.02 Director Department Store Vietnam 86
Junwon Lim 1962.05 Director Pyeonchon branch
Taehak Cho 1961.03 Director Shenyang branch 86
Suhyun Jang 1964.06 Director Main branch 104
Bumseok Hwang 1965.09 Director Youngdeungpo branch 71
Hyungsik Jeon 1963.08 Director Busan main branch 79
Younsung Jung 1965.03 Director Avenuel World Tower branch 79
Gyuwan Hwang 1965.02 Director Jamsil branch 71
Jun Jang 1958.12 Director Department Store Design 32
Changwon Yoo 1968.02 Director Department Store GF business
Daehun Park 1964.08 Director Cheongnyangri branch 62
Minyeol Ryu 1966.03 Director Gwangju branch 71
Youngjae Cho 1966.04 Director Department Store Planning 80
Younggeun Hwang 1967.01 Director Department Store Home appliances 71
Hoseol Lee 1970.07 Director Department Store Men's sports 63
Giljo Woo 1966.08 Director Department Store Food products
Wonil Choi 1962.09 Director Dongrae branch
Chanseok Lee 1961.12 Director Changwon branch 79
Sungsoo Kim 1964.01 Director Ulsan branch 79
Taeheung Nam 1964.08 Director Chengdu World Center branch
Hyeonseok Min 1967.06 Director Department Store Russia
Wookyung Kim 1967.02 Director IR Team 12
Jaeyoung Gu 1962.05 Director Gwangbok branch 20
Daesu Kim 1967.09 Director Nowon branch
Jungho Song 1966.03 Director Department Store MD strategy 409
Hyungkyu Lee 1967.01 Director Daejeon branch
Wansu Park 1968.07 Director Department Store Management support 100
Jaeok Lee 1969.01 Director Department Store women's fashion 25
Seondae Lee 1970.01 Director Department Store Public relations
Gidae Nam 1967.02 Director Guri branch 55
Gilmo Han 1967.07 Director Department Store Merchandise 55
Yonghwan Lee 1967.10 Director Suwon branch 55
Jonghyeok Hyeon 1969.10 Director Pohang branch
Sangbyeong Park 1970.07 Director Shopping mall East Busan
Yeongsu Ha 1969.09 Director Ilsan branch 3
Yeongtaek Yu 1969.06 Director Department Store Ethical management
Jieun Kim 1969.08 Director Department StoreOverseas fashion
Gijeong Park 1964.02 Director Department Store GF business
Jongdo Park 1961.05 Director Mart China development 86
Jonghwan Kim 1962.05 Director Mart Gwangju Honam customer 32
Daesik Jang 1966.12 Director Mart Seoul Gangwon customer
Byeongmoon Hahn 1963.06 Director Mart overseas cooperation 32
Pyungkyu Hong 1962.11 Director Mart development in South East Asia 80
Ilgeun Oh 1968.07 Director Mart site development 1 39
Wonsik Hong 1966.06 Director Mart Vietnam 32
Jookyung Yoon 1965.04 Director Mart Indonesia retail 71
Seungsun Song 1971.06 Director Online mart
Byeongho Ryu 1966.03 Director Mart Central China 24
Chansik Bang 1966.02 Director Mart Eastern China
Jinkyung Kim 1964.09 Director Mart ethical innovation
Joohee Woo 1967.03 Director Mart fresh foods 1 32
Minhee Lee 1969.08 Director Mart VIC Market product
Soonjin Jung 1961.10 Director Mart business development 10
Minho Kang 1968.11 Director Mart Human resources strategy 10
Hakjae Lee 1966.04 Director Mart Northern China 32
Gwangho Wang 1965.08 Director Mart site development 2 32
Heekyung Kim 1962.05 Director Mart Daejeon Chungcheong customer 166
Gwanghui Seong 1964.06 Director Mart Lifestyle 71
Eunmo Yang 1967.06 Director Mart processed foods 31
Yeongsik Park 1964.02 Director Mart clothing & merchandise
Seungmu Heo 1965.02 Director Mart Finance 32
Gwani Lee 1969.01 Director Mart Fresh foods 2
Gyeongu Yu 1966.10 Director Mart business development 2
Yeongbae Ham 1962.02 Director Mart Southeast Asia integrated finance
Yeongjun Cho 1971.01 Director Mart China strategy
Wonho Jung 1969.02 Director Supermarket marketing 55
Jaehyung Seo 1964.10 Director Supermarket membership
Hyungseok Han 1965.06 Director Supermarket processed foods 16
Yonggu Kim 1960.10 Director Supermarket Yeongnam 16
Minsu Kang 1965.02 Director Supermarket Planning 15
Cheolho Park 1966.04 Director Supermarket fresh foods
Eunggeol Kim 1967.03 Director Supermarket management support
Seungchul You 1962.02 Director Cinema management support 32
Gwanro Lee 1963.02 Director Cinema theatre 32
Sangmoo Lee 1968.09 Director Cinema movie
Hyeongsu Ji 1965.10 Director Cinea new business
Eungyo Lee 1967.08 Director Cinema management strategy
Eungyo Lee
1967.08
Director
Cinema management strategy
※ Changes since 31 March 2014: Wonjun Lee was newly appointed as President on 25 April 2014.
2. Employees
(As of 30 June 2014)
(Unit: persons, year, thousand Won)
Department Store(2) Male 2,199 2 - 2,201 11.8 69,247,624 31,780
Female 3,380 480 - 3,860 8.9 54,424,113 14,556
Discount Store Male 3,613 466 - 4,079 6.9 92,777,000 22,762
Female 5,613 3,585 - 9,198 4.1 86,446,000 11,005
Others Male 1,920 311 - 2,231 5.0 41,132,872 18,234
Female 3,069 1,464 - 4,533 3.5 42,887,636 9,487
Total 19,794 6,308 - 26,102 5.9 386,915,245 15,712
3.5
42,887,636
9,487
Total
19,794
6,308
-
26,102
5.9
386,915,245
15,712
Notes:
(1) Based on eight hour work days and an average total of 24,626 employees.
(2) Includes former employees of Lotte Midopa Co., Ltd., which was acquired by the Company on 1 January 2013.
※ Starting from the Company's 2010 annual report, the Company disclosed data for both full-time and contract employees.
Prior to the Company's 2010 annual report, it only disclosed data for full-time employees. As such, readers should note
the differences when comparing the number of employees, average number of years worked, aggregate annual compensation and
average compensation per person.
※ The above table excludes temporary workers.
B. Compensation
Compensation of Directors
(Unit: million Won)
Category Number of directors Amount paid Average per person
Registered Director 5 2,177 435
Outside Director 3 99 33
Audit Committee Member 3 95 32
Total 11 2,371 216
Compensation of Individual Directors
(Unit: million Won)
Name Position Amount paid Note
Kyukho Shin Executive Chairman 800 Consisting of W800 million in salary
Dongbin Shin Chairman 500 Consisting of W500 million in salary
Heon Shin Former Representaive Director 1,994 Consisting of W198 million in salary and W1,796 million in severance pay
VIII. Transactions with Interested Parties
A. Transactions with the Largest Shareholder and its Affiliates
Not applicable.
B. Collateral
Not applicable.
C. Guarantee of Obligations
(Unit: USD 1,000, RMB 1,000)
Company name Relation Transaction details Note
Beginning Increase Decrease Ending
Lotte Properties (Chengdu) HK Limited Consolidated subsidiary company USD 140,000 - - USD 140,000 Agreed interest is included
USD 50,000 - - USD 50,000
Lotte Shopping RUS Ltd. Company under the equity method USD 10,000 - USD 10,000 - Agreed interest is included
- USD 5,000 - USD 5,000
Shandong Longzhile Cinema Co., Ltd. Company under the equity method - RMB 24,000 - RMB 24,000 Agreed interest is included
Lotte Shopping Holdings(Hongkong) Co., Ltd. Consolidated subsidiary company - USD 38,136 - USD 38,136 Agreed interest is included
- USD 38,135 - USD 38,135
- USD 38,135 - USD 38,135
- USD 38,135 - USD 38,135
Lotte Shopping Business Management (Hong Kong) Limited Consolidated subsidiary company RMB 750,000 - - RMB 750,000 Agreed interest is included
IX. Other Relevant Matters
A. Summary of the Minutes from the General Meeting of Shareholders
Date Matters Decision
Extraordinary General Meeting of Shareholders(10 June 2014) Agenda No.1: Appointment of inside director Approved
44th General Meeting of Shareholders(21 March 2014) Agenda No. 1: Approval of the Company's 44th fiscal year financial statementsAgenda No. 2: Approval of amendments to articles of incorporationAgenda No. 3: Appointment of directors -No. 3-1: Appointment of inside directors Approved
-No. 3-2: Appointment of outside directors
-No. 3-3: Appointment of audit committee membersAgenda No. 4: Approval of compensation limit for directorsAgenda No. 5: Approval of amendments to severance pay
B. Contingent Liabilities
1. Major legal proceedings
The Company's management does not believe that the final outcome of the lawsuits that it is currently involved in would
significantly affect the Company's financial condition.
a. Major lawsuits where the Company is the plaintiff
(Unit: thousand Won)
Department store Lotte Shopping Claim related to cancellation of gross real estate tax (and 7 other cases) 14,107,335
Discount store Lotte Shopping Claim related to cancellation of construction permits (and 38 other cases) 2,102,870
Finance Lotte Card Debt collection claim (and 294 other cases) 1,801,163
eB Card Claim related to payment 780,935
Electronics Lotte Hi-mart Damages claim (and 3 other cases) 14,092,223
Others Lotte Shopping (Super) Claim related to cancellation of business hours restriction (and 14 other cases) 4,219,057
Lotte Shopping (Cinema) Claim related cancellation fee (and 4 other cases) 9,511,749
Korea Seven Claim on return of rental deposit (and 49 other cases) 4,096,318
Buy the Way Claim on return of rental deposit (and 4 other cases) 95,401
4,096,318
Buy the Way
Claim on return of rental deposit (and 4 other cases)
95,401
b. Major lawsuits where the Company is the defendant
(Unit: thousand Won)
Department store Lotte Shopping Damages claim (and 8 other cases) 1,311,072
Discount store Lotte Shopping Damages claim (and 5 other cases) 10,483,815
Finance Lotte Card Damages claim (and 94 other cases) 62,380,972
eB Card Claim related to remuneration (and 2 other case) 3,016,200
Electronics Lotte Hi-mart Damages claim (and 3 other cases) 6,279,935
Others Lotte Shopping (Super) Damages claim (and 2 other cases) 3,111,074
Lotte Shopping (Cinema) Damages claim (and 3 other cases) 3,876,047
Korea Seven Claim related to cancellation of business hours restriction (and 35 other cases) 3,620,713
Buy the Way Eviction (and 9 other cases) 363,419
Woori Home Shopping Claim regarding reimbursement (and 2 other cases) 344,386
363,419
Woori Home Shopping
Claim regarding reimbursement (and 2 other cases)
344,386
2. Bills or checks provided as collateral
(As of 30 June 2014)
(Unit: million Won)
Category Place to submit Number of instruments Amount Note
Others Korea Seven Corporation 1 500 Promissory note provided to guarantee a Korea University Foundation lease agreement.
※ If there is an event of default or a delinquent payment under Lotte Card's asset-backed securities, Lotte Card may be
liable under the guarantee it provided for the asset-back securities. If the asset-backed securities are based on a trust,
the trustee may request Lotte Card to pledge certain additional assets if the speciality of the existing assets fall below
a certain level. In addition, a limited company specialized in asset-backed securities has to bear obligations for early
redemption if the circumstance provided in the related agreement are met, such as the average portfolio profitability for
three settlement periods in a row becomes lower than the average basic cost ratio for the same period in case of
asset-backed securities or the balance of the adjusted principal amount of asset-backed securities at the end of every
settlement period becomes lower than the minimum balance of principal amount of such asset-backed securities.
3. Use of proceeds from private placements
(As of 30 June 2014)
(Unit: million Won)
Convertible bond issue 5 July 2011 960,003 Overseas investment and repayment of foreign currency borrowings Overseas investment and repayment of foreign currency borrowings
Convertible bond issue
5 July 2011
960,003
Overseas investment and repayment of foreign currency borrowings
Overseas investment and repayment of foreign currency borrowings
※ The exchange rates in effect on the remittance date (5 July 2011), of US$ 1.00 = Won 1,063.8 and JPY 1 = Won 13.1724,
were applied.
4. Other Contingent Liabilities
a. Detail of payment guarantees on behalf of specially related parties
Details of guarantee or payment guarantees provided by the Company in favour of its specially related parties are as
follows. There are no guarantee or payment guarantees provided by such specially related parties in favour of the
Company.
Company name Guarantor Guaranteed amount Term ofguarantee Remarks
Lotte Shopping Rus Ltd. Korea Exchange Bank USD 5,000,000 2 May 2014 to 2 May 2017 Payment guarantees for funding
Shandong Longzhile Cinema Co., Ltd. Shinhan Bank RMB 24,000,000 23 June 2014 to 23 June 2017 Payment guarantees for funding
In addition to the above, D Cinema of Korea Co., Ltd. entered into a VPF agreement with Twentieth Century Fox Film
Corporation in October 2008, and D Cinema's performance thereunder was guaranteed by CJ CGV Co., Ltd. and the Company (50%
each). In addition, the Company has guaranteed Burger King Japan Co., Ltd.'s royalty contract with BK ASIAPAC PTE. Ltd
(3.0% of sales and US$25,000 per store opened). Furthermore, the Company, Lotte Hotel and Lotte Construction have entered
into a joint supplemental funding agreement in connection with the Won 700 million Lotte Incheon Development asset backed
securities due 23 February 2018 issued by HND Able 2nd Limited in case HND Able 2nd Limited is unable to pay principal or
interest on the securities.
5. Issuance of hybrid securities recognized as equity
(As of 30 June 2014)
(Unit: million Won)
Issuance number Issue No. 1-1, 2 of Lotte Shopping subordinated hybrid securities
Issuance date 15 November 2013
Issued amount Won 270 billion (No. 1-1: Won 240 billion, No. 1-2: Won 30 billion)
Purpose of issuance Repayment of borrowings and general corproate purposes
Type of offering Private placement
Listed/Unlisted Unlisted
Recognition as equity for accounting purposes Issued securities were recognized as equity shares as they are not considered as part of assets that may be collected for money owed to creditors. However, no dividend may be paid until all interests have been paid.
Unpaid accumulated interest None
Maturity and early redemption Maturity: 30 years (but may be extended)
Call options are exercisable five years after issuance date.
Interest rate (with conditions for rate adjustment) 4.723% (the rate will be recalculated every five years after issuance date as 5-year government bond yield＋1.5%, with an additional 1% at 10 years after issuance)
Seniority Issued securities will be considered pari passu with preferred stock of the Company.
Seniority
Issued securities will be considered pari passu with preferred stock of the Company.
6. Sanctions and Fines
a. Lotte Shopping
In July 2013, the Seoul Regional Tax Office commenced a regular tax investigation into the Company and assessed additional
taxes, which were paid in full by the Company in February 2014.
b. Lotte Card
Business segment Company Date Sanction / fine Reason Measures taken to prevent reoccurrence
Card Lotte Card 22 March 2010 Advisory from the Financial Supervisory Service Advisory from the Financial Supervisory Service in connection with excessive credit card recruiting offers. Termination of employment of the relevant recruiter. Employee training.
21 January 2014 Advisory from the Financial Supervisory Service Improper operation of board of directors. Strengthening of management of board of directors operation.
11 February 2014 Warning from the Financial Supervisory Service Insurance solicitation with misleading information about insurance products. Employee training.
16 Feburary 2014 Partial suspension of operations for 3 months from the Financial Services Commission Leaking of customer information. Reinforcement of information security (physical and IT-related).
※ The above table summary does not include minor sanctions and fines.
C. Inventory Status
(Unit: million Won)
Department store Merchandise 1,357,826 1,406,355 1,247,970
Goods
Goods in process
Half-finished goods
Raw materials
Component materials
Stored goods
Goods not delivered
Unsold property
Completed property
Uncompleted property
Land site
Sub-total 1,357,826 1,406,355 1,247,970
Discount store Merchandise 596,979 716,340 643,236
Goods
Goods in process
Half-finished goods
Raw materials
Component materials
Stored goods 299 562 819
Goods not delivered 656 413 235
Unsold property
Completed property
Uncompleted property 30,063 36,068 23,931
Land site 26,066 35,130 46,137
Sub-total 654,063 788,513 714,358
Finance Merchandise 3,046 2,506 3,679
Goods
Goods in process
Half-finished goods
Raw materials
Component materials
Stored goods
Goods not delivered
Unsold property
Completed property
Uncompleted property
Land site
Sub-total 3,046 2,506 3,679
Electronics Merchandise 452,655 339,729 252,196
Goods
Goods in process
Half-finished goods
Raw materials
Component materials
Stored goods
Goods not delivered
Unsold property
Completed property
Uncompleted property
Land site
Sub-total 452,655 339,729 252,196
Others Merchandise 226,240 239,866 209,781
Goods 9,056 9,303 9,361
Goods in process 678 1,288 978
Half-finished goods
Raw materials 735 1,166 1,454
Component materials 3 712 452
Stored goods 1,489 2,867 1,478
Goods not delivered 83 68
Unsold property
Completed property
Uncompleted property 193,553 322,104
Land site 308,529
Sub-total 431,754 577,389 532,101
Total Merchandise 2,636,746 2,704,796 2,356,862
Goods 9,056 9,303 9,361
Goods in process 678 1,288 978
Half-finished goods
Raw materials 735 1,166 1,454
Component materials 3 712 452
Stored goods 1,788 3,429 2,297
Goods not delivered 656 496 303
Unsold property
Completed property
Uncompleted property 223,616 358,172 23,931
Land site 26,066 35,130 354,666
Sub-total 2,899,344 3,114,492 2,750,304
Inventory as percentage of total assets (%) Inventory÷Assets×100 7.43% 7.99% 7.46%
Inventory turnover (times)[Annualized cost of sales÷{(Period start inventory＋Period end inventory)÷2}] 6.3 6.7 7.3
7.46%
Inventory turnover (times)[Annualized cost of sales÷{(Period start inventory＋Period end inventory)÷2}]
6.3
6.7
7.3
Due diligence of inventories
Business unit Department store Discount store Others
Date of due diligence - - 15 January - 25 June
※ The Company reviews its inventories in the presence of its independent auditors at the end of each financial year but not
for any interim period.
D. Securities Issuances
1. Amount of Outstanding Commercial Paper
(As of 30 June 2014)
(Unit: million Won)
Remaining maturity period Under 10 days Over 10 but under 30 days Over 30 but under 90 days Over 90 but under 180 days Over 180 days but under 1 year Over 1 but under 2 years Over 2 but under 3 years Over 3 years Total
Amount outstanding 350,000 610,000 200,000 35,000 164,000 118,000 - 160,000 1,637,000
2. Amount of Outstanding Corporate Bonds
(As of 30 June 2014)
(Unit: million Won)
Remaining maturity period Under 1 year Over 1 but under 2 years Over 2 but under 3 years Over 3 but under 4 years Over 4 but under 5 years Over 5 but under 10 years Over 10 years Total
Amount outstanding 2,174,059 2,091,860 2,515,186 1,636,405 530,000 220,000 - 9,167,510
3. Amount of Outstanding Hybrid Securities
(As of 30 June 2014)
(Unit: million Won)
Remaining maturity period Under 1 year Over 1 but under 5 years Over 5 but under 10 years Over 10 but under 15 years Over 15 but under 20 years Over 20 but under 30 years Over 30 years Total
Amount outstanding - - - - - 270,000 - 270,000
This information is provided by RNS
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