023530 — Lotte Shopping Co News Story

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REG - Lotte Shopping CoLtd - 3rd Quarter Results <Origin Href="QuoteRef">023530.KS</Origin> - Part 1

Lotte Shopping CoAnnouncement

03/03/2016 14:45

RNS Number : 9644J

Lotte Shopping Co. Ltd

23 December 2015

Quarterly Report

(46^th fiscal year)

For the nine month period ended 30 September 2015

Click on, or paste the following links into your web browser, to view the associated PDF documents.
http://www.rns-pdf.londonstockexchange.com/rns/9644J_-2015-12-23.pdf
http://www.rns-pdf.londonstockexchange.com/rns/9644J_1-2015-12-23.pdf

To: Financial Services Commission of Korea
KRX KOSPI Market 16 November 2015

Company Name : Lotte Shopping Co., Ltd.

CEO : Wonjun Lee

Head Office : 81, Namdaemun-ro, Jung-gu, Seoul
(Tel) +82 2-771-2500
(Homepage) http://www.lotteshopping.com

Prepared by : (Position) Head of Investor Relations (Name) Wookyung Kim
(Tel) +82 2-2118-2025

On 16November2015, Lotte Shopping Co., Ltd. (the "Company") filed its business report for the firstnine monthsof 2015(the "Business Report") with the Financial Services Commission of Korea (the "FSC") and the KRX KOSPI Market of the Korea Exchange. This is a summary of the Business Report translated into English. Except where indicated otherwise, financial information contained in this summary and in the attached condensed consolidated interim financial statements of the Company as of and for theninemonth period ended30 September 2015has been prepared in accordance with the Korean equivalent of International Financial Reporting Standards ("Korean IFRS"). References to "3Q" of a fiscal year are references to theninemonth period ended 30Septemberor, as the context requires, 30Septemberof such fiscal year.

I. Overview of the Company

A. Main Businesses of the Company

The Company had 56 subsidiaries as of 30 September 2015, and the Company and its subsidiaries (on a consolidated basis, the "Group") may be divided into the following segments: department store segment, discount store segment, finance (credit card service) segment, electronics segment, convenience store segment and other business segment.

B. Subsidiaries and Affiliates of the Company

1. Consolidated Subsidiaries

See Note 1 of the notes to the attached condensed consolidated interim financial statements of the Company as of and for nine month period ended 30 September 2015.

2. Affiliates

The Company has 86 affiliates.

a. Listed companies

Business category	Affiliates	Number of companies
Food	Lotte Confectionary, Lotte Food, Lotte Chilsung Beverage	3
Petrochemical	Lotte Chemical	1
Retail	Lotte Shopping, Lotte Hi-mart	2
Finance / Insurance	Lotte Insurance	1
Communications	Hyundai Information Technology	1

b. Unlisted companies

Business category	Affiliates	Number of companies
Food / Pharmaceutical	Lotteria, CH Beverage, MJA Wine, HUI, Chung-buk Soju, Cinema Food, Baekhak Beverage, Lotte-Nestle Korea	8
Tourism / Leisure	Lotte Hotel, Lotte Giants, Lotte Hotel Busan, Lotte Corporation, Lotte Cinema Trading, D-Cinema Korea, Lotte JTB, Lotte Gimhae Development, Universal Studios Korea Development	9
Retail	Lotte International, Lotte Station Building, Korea Seven, Lotte.com, Lotte Asahi Liquor, FRL Korea, Woori Home Shopping, Buy the Way, Korea STL, Lotte Suwon Station Shopping Town, Lotte DF Global, Lotte DF Retail, S&S International, NCF, Lotte Songdo Shopping Town, CS Mart , Lotte Department Store Masan, Lotte Shopping Town Daegu, Lotte Duty Free Jeju	19
Chemical	Korea Fuji Film, Sambark LFT	2
Machinery / Electronics	Lotte Aluminium, Canon Korea Business Solutions	2
Construction / Real Estate	Lotte Engineering & Construction, Lotte Asset Development, Lotte Incheon Development, Universal Studios Korea Resort Asset Management Corporation, Donggyo Cheonggiwa PFV, Incheon Town, Magok District PFV, Eunpyeong PFV	8
Advertising	Daehong Communications, Mobizap Media, M.Hub	3
Communications	Lotte Data Communication, Han Paysys	2
Financial	Lotte Capital, Lotte Card, Lotte PS Net, Mybi, Busan Hanaro Card, eB Card, Gyeonggi Smartcard, Incheon Smartcard, Jang Kyo PFV, Lotte auto lease	10
Petrochemicals	Seetec, KP Chemtech, Daesan MMA, Lotte Mitsui Chemicals, Lotte Versalis Elastomers	5
Manufacturing	DACC Aerospace, Angel With	2
Logistics	Lotte Logistics, , HyundaiLogistics, Hyundai Cosco Logistics	3
Non-financial holding company	Aegis First	1
Repair Service	Lotte auto care	1
Rental Service(Except for Real Estate)	LotteRental, Green Car	2
Others	Lotte Members	1

Since the last business report, LotteShopping TownDaegu, Lotte Duty Free Jeju, Lotte auto lease, Lotte auto care, LotteRental and Green Car became affiliates of the Company.

C. Recent Changes in Management

Summary of the appointment of the board of directors at the annual general shareholders' meeting held on March 2015:

Appointment of inside director: Kyukho Shin

Appointment of outside directors: Hyeryun Kang, Chungsook Moon

D. Recent Acquisitions by the Company

On 19 January 2012, the Company acquired a 97.37% equity interest in CS Mart Co., Ltd. and became its controlling shareholder.

On 31 October 2012, the Company acquired a 65.25% equity interest in Hi-mart Co., Ltd. and became its controlling shareholder.

Control over the Lotte.com was acquired by owning 50.01% of the stocks through the additional acquisition of the stocks of Lotte.com by participating in the capital increase through issuance of new stock on February 17, 2015 of Lotte.com that pursues mail-order business (additional acquisition of forfeited stock on February 26).

E. Changes in Capital Stock

1. Increase (decrease) in share capital

(As of 30 September 2015) (Unit: Won, shares)

Date of new stock issuance	Type of issue	Details of the newly issued stock
Date of new stock issuance	Type of issue	Type	Quantity	Par value per share	Issued value	Remarks
9 February 2006	Paid-in capital increase (public subscription)	Common stock	6,857,143	5,000	400,000	LSE listed (GDS)
9 February 2006	Paid-in capital increase (public subscription)	Common stock	1,714,286	5,000	400,000	KRX listed
16 March 2006	Paid-in capital increase (public subscription)	Common stock	471,945	5,000	400,000	LSE listed (GDS)
22 January 2013	-	Common stock	2,447,518	5,000	-	KRX listed

The Company's Global Depositary Shares ("GDSs") were issued at US$20.67 per GDS, at the ratio of one share of common stock to 20 shares of GDSs. (Applying an exchange rate of Won 967.8 per US$1.00).

On 22 January 2013, additional shares of the Company that were issued in connection with the Company's acquisition of Lotte Midopa were listed on the Korea Exchange.

2. Issuance of convertible bonds

(As of 30 September 2015) (Unit: thousand Won, shares, %)

Type of issue	Date of issuance	Date of maturity	Total face amount	Type of convertible stock	Conversion period	Conversion terms		Outstanding bonds
						Rate	Price	Face amount	Shares upon conversion
First Overseas Convertible Bond	5 July 2011	5 July 2016	978,969,250	Unregistered common stock	5 July 2012 ~ 24 June 2016	100%	648	149,412,924	230,583

The number of shares upon conversion was calculated by dividing the total principal amount by the conversion price, disregarding fractional shares.

Conversion based on the fixed exchange rates of US$ 1.00 = Won 1,083.50 and JPY 100 = Won 1,345.29, which were the exchange rates announced by the Seoul Money Brokerage Services, Ltd. on 15 June 2011 (the date of the board of directors resolution in connection with the issuance).

In accordance with Korean IFRS 1032, the number of shares to be issued and the amount in connection with the exercise of a conversion right on a convertible security must be fixed for the conversion right to be classified as an equity security. In the Company's case, while the number of shares to be issued is fixed, the amount of principal to be paid upon maturity if the bonds remain unconverted will vary depending on the exchange rate. As such, the convertible bonds must be classified as a debt security, and the Company recognizes the bonds in its liability accounts, instead of in its equity account.

On 5 July 2014, holders exercised their early redemption option and redeemed US$480,800,000 and JPY 22,940,000,000 aggregate principal amount of the convertible bonds.

F. Total Number of Shares

(As of 30 September 2015) (Unit: shares)

Type	Number of shares
Type	Common shares	Total
Number of shares authorized	60,000,000	60,000,000
Total issued shares	32,236,362	32,236,362
Total number of shares withdrawn	745,470	745,470
Number of issued shares	31,490,892	31,490,892
Number of treasury shares	1,938,688	1,938,688
Number of issued and outstanding	29,552,204	29,552,204

G. Voting Rights

(As of 30 September 2015) (Unit: shares)

Type		Number of shares	Remarks
Total issued shares (A)	Common stock	31,490,892	-
Total issued shares (A)	Preferred stock	-	-
Shares without voting rights (B)	Common stock	1,938,688	Treasury stock
Shares without voting rights (B)	Preferred stock	-	-
Shares without voting rights pursuant to the Company's articles of incorporation (C)	Common stock	-	-
	Preferred stock	-	-
Shares with restricted voting rights pursuant to law (D)	Common stock	-	-
Shares with restricted voting rights pursuant to law (D)	Preferred stock	-	-
Shares with restored voting rights (E)	Common stock	-	-
Shares with restored voting rights (E)	Preferred stock	-	-
Shares with exercisable voting rights (F = A - B - C - D + E)	Common stock	29,552,204	-
	Preferred stock	-	-

H. Dividends

1. Dividends for the past three years

Subject		46^thfiscal year(3Q)	45^thfiscal year	44^rdfiscal year
Par value per share (Won)		5,000	5,000	5,000
(Consolidated)Net profit (million Won)		172,526	526,650	788,445
Earnings per share (Won)		5,516	17,391	26,674
Total cash dividend (million Won)		-	59,104	44,328
Total stock dividend (million Won)		-	-	-
(Consolidated)Cash dividend payout ratio (%)		-	11.2	5.6
Cash dividend yield (%)	Common stock	-	0.72	0.38
Cash dividend yield (%)	Preferred stock	-	-	-
Stock dividend yield (%)	Common stock	-	-	-
Stock dividend yield (%)	Preferred stock	-	-	-
Cash dividend per share (Won)	Common stock	-	2,000	1,500
Cash dividend per share (Won)	Preferred stock	-	-	-
Stock dividend per share	Common stock	-	-	-
Stock dividend per share	Preferred stock	-	-	-

Prepared on a separate basis in accordance with Korean IFRS.

2. Calculation of earnings per share for the current period

Category	2015(3Q)
Net profit for the period	172,526,866,730
Interest on issued hybrid securities	(9,510,698,627)
Weighted average number of common stock (excluding treasury stock)	29,552,204
Earnings per common share	5,516

II. Business Description

A. Business Overview

The following table is a summary of the Company's main businesses and subsidiaries organized by business segment.

Business segment	Subsidiaries	Main businesses
Department store	Lotte Shopping (department store)	Department store establishment, management and distribution businesses
Discount store	Lotte Shopping (discount store)	Large discount store establishment, management and distribution businesses
	LOTTE VIETNAM SHOPPING CO., LTD.	Discount store business in Vietnam
	Qingdao LOTTE Mart Commercial Co., Ltd.	Discount store business in China
	LOTTE MART COMPANY LIMITED
	Lotte Mart China Co., Ltd. and 42 other entities
	Liaoning LOTTE Mart Co., Ltd.
	Jilin LOTTE Mart Co., Ltd.
	Lotte Mart (ChongQing) Commercial Company Co. Ltd.
	LOTTE MART(CHENGDU) COMMERCIAL COMPANY LIMITED
	PT. LOTTE SHOPPING INDONESIA	Discount store business in Indonesia
	PT. LOTTE MART INDONESIA	Discount store business in Indonesia
Finance	Lotte Card	Credit card business
Finance	eB Card Co., Ltd.	Electronic payment and transportation card system (AFC system) businesses
Electronics	Lotte Hi-mart Co., Ltd.	A wholesale and retail company for electronics and household appliances
convenience store	Korea Seven Co., Ltd.	Convenience store business
convenience store	Buy the Way Inc.	Convenience store business
Other	Lotte Shopping (supermarket)	Supermarket establishment, management and distribution businesses, including supermarket real estate and leasing
	CS Mart
	Lotte Shopping (cinema)	Producing, investing and distributing movies; management of cinemas
	Woori Home Shopping & Television Co., Ltd.	TV home shopping, online shopping and catalogue shopping businesses
	Lotte.com	Logistics industry in accordance with the basic law on electronic trading such as businesses on the operation of internet shopping mall, etc.
	Lotte Members	Open type affiliation (point) business and professional analysis business, etc.
	Lotte Songdo Shopping Town Co., Ltd.	Development and management of Lotte Mall Songdo
	Lotte Suwon Station Shopping Town	Operation and consigned management of real estate
	LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD.	Investing in retail businesses in Vietnam, India and Indonesia
	Lotte Shopping Holdings (Hong Kong) Co., Limited	Investing in retail businesses in China
	LHSC Limited.	Investing in home shopping businesses in China
	LOTTE HOTEL & RETAIL VIETNAM PTE. LTD.	A holding company investing in new industries and business expansions in Vietnam

The following table is a summary of the Company's financial condition by business segment.

(Unit: million Won, %)

Business segment	Division	46^th fiscal year (3Q)		45^th fiscal year (3Q)		45^th fiscal year		44^rd fiscal year
Business segment	Division	Amount	Percentage of total	Amount	Percentage of total	Amount	Percentage of total	Amount	Percentage of total
Department Store	Sales	5,666,036	26.2	5,713,101	27.6	8,043,745	28.6	8,172,110	29.0
	Operating income	282,145	42.4	425,877	44.5	602,558	50.7	698,694	47.0
	Total assets	16,781,777	40.5	16,217,052	41.4	16,794,731	41.9	15,667,182	40.2
Discount Store	Sales	6,347,810	29.3	6,172,565	29.8	8,208,956	29.2	8,836,455	31.3
	Operating income	(30,632)	-4.6	90,260	9.4	67,075	5.6	220,431	14.8
	Total assets	10,615,864	25.7	10,752,547	27.4	10,412,802	26.0	11,008,450	28.2
Finance	Sales	1,359,522	6.3	1,284,567	6.2	1,760,811	6.3	1,694,060	6.0
	Operating income	143,926	21.7	171,756	18.0	202,636	17.1	200,749	13.5
	Total assets	9,282,599	22.4	8,200,479	20.9	8,575,013	21.4	8,537,358	21.9
Electronics	Sales	2,890,369	13.4	2,798,933	13.5	3,754,295	13.4	3,519,060	12.5
	Operating income	133,728	20.1	114,711	12.0	144,391	12.2	184,804	12.4
	Total assets	2,887,674	7.0	2,804,670	7.2	2,774,637	6.9	2,755,424	7.1
Convenience store	Sales	2,512,144	11.6	1,986,815	9.6	2,685,504	9.6	2,554,261	9.1
	Operating income	47,663	7.2	30,860	3.2	37,554	3.2	55,867	3.8
	Total assets	1,236,866	3.0	1,185,040	3.0	1,157,632	2.9	1,104,231	2.8
Others ⁽¹⁾	Sales	2,871,425	13.2	2,734,087	13.3	3,646,256	12.9	3,435,756	12.1
	Operating income	87,904	13.2	123,123	12.9	134,165	11.2	124,716	8.5
	Total assets	581,862	1.4	22,697	0.1	357,511	0.9	(100,079)	-0.2
Total	Sales	21,647,306	100.0	20,690,068	100.0	28,099,567	100.0	28,211,702	100.0
	Operating income	664,734	100.0	956,587	100.0	1,188,379	100.0	1,485,261	100.0
	Total assets	41,386,642	100.0	39,182,485	100.0	40,072,326	100.0	38,972,566	100.0

(1) Represents adjustments for consolidation.

1. Department store business segment

a. Lotte Shopping (department store)

i. Industry overview

The following tables show the market size and number of department stores in Korea.

Department store market size in Korea

(Unit: trillion Won, %)

Category	2013	2014	2015(3Q)
Market size	29.8	29.2	20.8
Growth rate	4.6%	-2.0%	-1.9%

Source: National Statistics Office

Excludes data for outlets.

Number of department stores in Korea

(Unit: stores)

Category	2013	2014	2015(3Q)
Number of department stores	93	95	96
Increase (decrease)	+4	+2	+1

Source: National Statistics Office

Excludes data for outlets.

ii. Company overview

Trends in market share

(Unit: %)

Category	2012	2013	2014
Lotte department store's market share	44.4%	45.8%	48.6%

Source: National Statistics Office and Company data.

Sales from the Company's department stores are gross sales (including sales from leased shops).

The revenue of Lotte Department Stores includes 31 stores owned by the Company, as well as two Young Plaza stores, 15 outlet stores, and two stores operated by the Company pursuant to management contracts with Lotte Station Building (an affiliate of the Company).

2. Discount stores business segment

a. Lotte Shopping (discount store)

i. Industry overview

The following tables show the market size and number of discount stores in Korea.

Discount store market size in Korea

(Unit: trillion Won, %)

Category	2013	2014	2015(3Q)
Market size	45.1	46.6	36.1
Growth rate	2.0%	3.3%	1.8%

Source: National Statistics Office

Based on data for large marts (defined as having retail space of 3,000 square meters or more - includes certain duty free shops and outlets).

Number of discount stores in Korea

(Unit: stores)

Category	2013	2014	2015(3Q)
Number of discount stores	511	528	547
Increase (decrease)	+13	+17	+19

Source: National Statistics Office

Based on data for large marts (defined as having retail space of 3,000 square meters or more - includes certain duty free shops and outlets).

ii. Company overview

The following table shows the market share of Lotte Mart in the discount store market in Korea.

Trends in market share

(Unit: %)

Category	2012	2013	2014
Lotte Mart's market share	15.9%	15.9%	15.4%

Source: National Statistics Office and Company data

Includes data for 111 domestic discount stores and five VIC Market stores.

b.LOTTE VIETNAM SHOPPING CO., LTD.

i. Industry overview

Trends in market size in Vietnam

Category	2013	2014	2015⁽¹⁾
Population (million people)	90	91	92
GDP (USD 100 million)	1,717	1,917	2,134
Per capita (USD)	1,914	2,115	2,330
Growth rate (%)	5.4	5.5	5.6
Consumer price index (%)	6.6	5.2	5.2

Note:

(1) Projected

Source: Planet Retail and the General Statistics Office of Vietnam

ii. Company overview

The Company opened its first store in Vietnam in south Saigon in December 2008 followed by its second store in Phu Tho in July 2010. The Company has selected Vietnam as one of its target countries for expansion of the discount store business and plans to enhance its presence in Vietnam through aggressive expansion and localization. As of 30 September 2015, the Company operated ten stores in Vietnam.

Status of LOTTE VIETNAM SHOPPING CO., LTD. stores

(Unit: stores)

Category	2013	2014	2015 (3Q)
Number of stores	6	10	10
Increase (decrease)	+2	+4	+0

c. QingdaoLOTTE Mart Commercial Co., Ltd./LOTTE MART COMPANY LIMITED / Lotte Mart China Co., Ltd. and42 other entities/ Liaoning LOTTE Mart Co., Ltd. / Jilin LOTTE Mart Co., Ltd. / Lotte Mart (Chongqing) Commercial Co., Ltd. / LOTTE MART (CHENGDU) COMMERCIAL COMPANY LIMITED

i. Industry overview

Trends in market size in China

Category	2013	2014	2015⁽¹⁾
Population (thousand people)	1,360,320	1,367,520	1,374,310
GDP (USD 100 million)	92,058	104,917	115,111
Per capita (USD)	6,767	7,672	8,376
Growth rate (%)	8.2	7.4	6.8
Increase in consumer price index (%)	3.0	2.3	2.5

Note:

(1) Projected

Source: Planet Retail

ii. Company overview

The Company has been actively expanding into the Chinese market, starting with the acquisition of eight Makro stores in China in June 2008. The Company acquired Times Ltd.'s discount stores in 2009. The Company operated 100 stores in China As of 30 September 2015 and plans to continually expand in the regions where its stores are already located and also improve its customer service and competitiveness.

Status of stores in China

(Unit: stores)

Category		2013	2014	2015(3Q)
Number of stores	Shanghai	77	72	74
	Qingdao	7	6	0
	Beijing	12	12	12
	Beijing(super)	-	-	16
	Shenyang	9	8	8
	Chongqing	2	5	6
Total		107	103	116
Increase (decrease)		+5	-4	+13

d. PT.LOTTE SHOPPING INDONESIA and PT. LOTTE MART INDONESIA

i. Industry overview

Trends in the market size in Indonesia

Category	2013	2014	2015⁽¹⁾
Population (million people)	248	251	255
GDP (USD 100 million)	8,739	8,507	9,080
Increase in consumer price index (%)	6.4	6.0	6.8

Note:

(1) Projected

Source: Planet Retail (June 2015)

ii. Company overview

The Company acquired 19 Makro stores in Indonesia in November 2008 and opened 12 stores through its local retail business subsidiary in 2010, 2011 and 2012. As of 30 September 2015, the Company operated 39 stores in Indonesia and plans to continually expand in Indonesia.

Status of stores in Indonesia

(Unit: stores)

Category	2013	2014	2015(3Q)
Number of stores	36	38	39
Increase (decrease)	+5	+2	+1

3. Financial business sector segment

a. Lotte Card

i. Industry overview

Status of credit card business

(As of 30 September 2015)

Type	Company name	Number of companies
Dedicated credit card companies	Lotte Card, Samsung Card, Hyundai Card, Shinhan Card, Hana SK Card, BC Card, KDB Capital, KB Kookmin Card, Woori Card	9
Banks with credit card business	Kyongnam Bank, Kwangju Bank, Industrial Bank of Korea, Daegu Bank, Busan Bank, Suhyup Bank, Standard Chartered Bank, Citibank Korea,Jeonbuk Bank, Jeju Bank, NH Nonghyup Bank	11

Source: Press Release from the Credit Finance Association

Credit card issuances and usage data

Year	Number of credit cards (ten thousand cards)	Number of card holders(ten thousand persons)	Credit card charge volumes (trillion Won)
2012	11,623	8,406	577.7
2013	10,203	7,589	585.6
2014	9,232	7,012	594.1

Source: Press release from the Financial Supervisory Service

ii. Company overview

Lotte Card, a subsidiary of the Company, is a leading credit card company in Korea with the largest distribution and service network.

Trends in market share

(Unit: trillion Won, %)

Category	2013	2014	2015 (2Q)
Credit card market size in Korea by charge volumes	585.6	594.1	303.3
Lotte Card's charge volumes	54.1	53.5	27.6
Lotte Card's market share	9.2%	9.0%	9.1%

Source: Financial Statistics Information System of the Financial Supervisory Service

Based on credit purchases (including lump-sum payments, instalments and corporate purchases) and cash loans (including cash services and card loans).

b. eB Card

i. Industry overview

Prepaid cards use electronic money to pay for transportation services. Prepaid cards are used in the transportation and distribution sectors throughout Korea.

Competitivesituation

Comparisons of competitors in2015(3Q)	MYbi	eB Card	Korea Smart Card
Card name	MYbi Card	Cash Bee	T Money
Service area	Busan, Ulsan, Gyeongnam Province, etc.	Gyeonggi Province, Incheon, Chungnam Province, etc.	Seoul, Jeju, Pohang, etc.
Bus	9,182 buses	18,552 buses	11,053 buses
Taxi	52,078 taxies	34,194 taxies	122,225 taxies
Subway	128 stations	-	441 stations

ii. Company overview

eB Card, a subsidiary of the Company, provides electronic money services for store and transportation networks. In December 2010, eB Card issued a new pre-paid card brand called "Cash Bee." Unlike then prepaid transportation cards existing before, Cash Bee cards can be used to make purchases at convenience stores and retail outlets in addition to paying for transportation fares. As of 30 September 2015, Cash Bee cards are accepted at 72,500 places.

In addition, in May 2011, eB Card introduced Near Field Communication (NFC) based pre-paid mobile Cash Bee for NFC compatible mobile smartphones. Users of pre-paid mobile Cash Bee can download the mobile Cash Bee application on to their NFC compatible mobile smartphones to make purchases at convenience stores and retail outlets in addition to paying for transportation fares.

Trendsin market share

(Unit: 100 million Won, %)

Category	2012	2013	2014
Market size for prepaid cards in Korea based on sales ⁽¹⁾	2,641	2,678	2,974
EB Card	589	692	857
EB Card's market share	22.3	25.8	28.8

Notes:

(1) Based on disclosure of MYbi, eB Card and Korea Smart Card.

4. Electronics

a. Lotte Hi-mart

i. Industry overview

Market size of household / consumer electronics in Korea

(Unit: trillion Won)

Category	2011	2012	2013	2014
Household electronics	15.6	15.5	16.8	16.8
Computer and communication devices	23.0	24.4	21.8	19.7

Source: National Statistics Office

ii. Company overview

Lotte Hi-Mart was established in 1987. Since then, it quickly established itself as an electronics specialty store with a nationwide store network. Lotte Hi-Mart, which had initially sold large electronic products such as TVs, refrigerators and washing machines, began to offer personal computers in 2001 and other IT products. In 2007, Lotte Hi-Mart began selling mobile products, such as smartphones, tablet PCs and related products, and is continually expanding sales in this area.

In the third quarter of 2015, Hi-mart's revenue increased by approximately 3.3% on a consolidated basis compared to the third quarter of 2014, largely due to the continued growth of household electronics and appliances such as refrigerators and washing machines. as of 30 September 2015, operated 437 stores in total.

Lotte Hi-Mart currently operates 11 logistic centres and implements a CS Master system for training and management of specialized installation teams. As of 30 September 2015, 599 household electronics installation teams and 1,618 air conditioner installation teams were in charge of installation. In addition, there were 11 service centres for electronics repair services.

The online shopping mall was launched in 2000 to expand into the rapidly-growing online market and attract young customers who are familiar with the use of the Internet. The shopping mall currently operates through a website (www.e-himart.co.kr).

Market share of household / consumer electronics among household / consumer electronics stores

Store	2012	2013	2014
Lotte HiMart	47.0	46.6	48.6
Electronics Land	7.1	7.3	7.0
Living Plaza	26.8	26.7	25.5
Hi Plaza	19.0	19.4	18.9

Source: Audit reports of respective companies

5. convenience store Segment

a. Korea Seven / Buy the Way

i. Industry overview

Increase of household debts and residential costs have been main factors to cause hindrance to people's consumption. Slowing down of consumer confidence and decrease of consumption came thereafter appear as 'recession typed consumption pattern' and the portion of small purchase and planned purchase is on the rise.

Domestic convenience store market records growth in these difficult situations. It can be explained that this growth is due to expansion of consumption pattern of short distance, aging population and decrease in the number of household members.

These days, convenience stores, as representative distribution channel for short distance small purchase, are recognized by its significant competitiveness of differentiated products development and sales coping with customers' life style.

Sales of HMR product (convenience food) have been increased by the increase of single households, expansion of five-day workweek and camping culture. Convenience stores are recognized as a place where people can buy a meal and the portion of sales in convenience food is on the rise. In addition, global omni channel trend breaks the boundaries between online and offline shopping. Coping with this age of 40 million smartphone users, mobile market gets bigger and the boundaries between online and offline shopping brakes more quickly. Consumers become to do shopping while moving in and out channels freely. In order to quickly adopt this need of consumers, convenience store industry will try to satisfy the need of consumers laying emphasis on convenience and practicality by adopting O2O (Online-To-Office) service.

While overall recession of retail businesses due to shrunken consumer confidence caused by regulations on distribution and economic downturn, domestic convenience market continues to grow alone. It is expected that convenience market will continue to grow due to expansion of small purchase pattern because of increase of single households and development of convenience stores specialized in various format suitable to the need of customers.

ii. Company overview

Different to other distribution businesses, convenience stores is a type of business having a concept that it can provide various services and conveniences to proper place and in prompt time. Considering that it provides additional services in addition to sales of ordinary products, convenience stores cannot be operated independently without a foundation of social infrastructure including IT and is a business type which appears only when certain level of national income is achieved.

In Korea, since '7-Eleven'- the first convenience store- appeared within the Olympic District of Jamsil in May, 1989, the number of stores and sales have continued to grow by more than two digits each year. Even though the growth faltered for a while after IMF crisis in 1997, convenience store business could rather establish its foundation of rapid growth by attracting unemployed population from economic crisis. Since then, convenience stores could continue its quality growth through remarkable growth of IT technology, increase in single household and expansion of service items due to receipt of public utility charges and financial computerization.

Along with aggressive expansion of stores for external growth, the convenience stores took over Buy the Way, the same business entity, in May, 2010 and established external expansion by itself. Since then, due to continuous growth, the competition landscape within convenience market changed into the structure of competition of 3 parties: Korea Seven, CU and GS25.

In order to maximize the synergy, Korea Seven, as global brand of '7-Eleven', tries to maintain its differentiated position within the industry by connecting with 7-Eleven licensees and utilizing Global Network such as common sourcing of products, facilities and equipments, sharing information of new products and best seller ones, and sharing information related to customer trend.

Moreover, through store efficiency enhancement and product differentiation, the company tries to become selected as first priority and makes its best efforts in making a contribution to increase profits of franchisees, in addition.

Recent trend of market scale

Year	Number of store		Sales
Year	Performance (number)	Growth rate (%)	Performance (100 million won)	Growth rate (%)
2012	24,559	15.7	117,385	15.8
2013	24,859	1.2	128,101	9.1
2014	26,020	4.7	138,361	8.0

6. Other Business Segment

a. Lotte Super, CS Mart

i. Industry overview

Large supermarket chains are growing at a slower rate than the industry rate due to stricter laws protecting local merchants that restrict the opening of new stores by large supermarket chains. Overall, the industry was slow to grow due poor consumption levels, mandatory days of closure and shorter hours of business. Accordingly, the industry is seeking various ways to continue growing, such as store diversification and new business development. The sluggish growth is expected to continue in 2015 for large supermarket chains. As such, they are making efforts to boost sales by diversifying new stores, developing new products that follow consumption trends and pioneering new businesses as well as increase profits by improving store operation efficiency and cutting costs.

ii. Company overview

Lotte Super started its supermarket business in April 2000. Starting with the Jeonnong store as its first store, Lotte Super has built up many stores across Korea, including through the acquisition of the chain store business of Hanwha Stores in 2004 and Big Mart and Nice Mart in 2007.

In addition, Lotte Super entered the online supermarket business by opening an online shopping mall in 2009. In 2010, Lotte Super started a new franchise model to strengthen its cooperation with small and medium-sized merchants and contribute to regional communities through increased employment and service improvements, among others. In 2012, Lotte Super strengthened its leading market position by acquiring CS Distribution and thereby creating synergy effects from the newly acquired businesses such as the voluntary franchise business. In March 2013, Lotte Super launched a mobile application to enhance convenience for customers and became the first player in the industry to pave the new avenue of mobile supermarket shopping.

b. Lotte Cinema

i. Industry overview

As for the third-quarter of the 2015 Korean film industry, the number of audiences increased by 5.6% compared to last year from 69,180,000 to 73,060,000; the sales record increased by 5.4% compared to last year, which is 569,200,000 won.

ii. Company overview

As of 30 September 2015, Lotte Cinema operated 105 movie cinemas. In addition, Lotte Cinema entered the Vietnamese market in May 2008 and was the first Korean company to do so. In December 2010, Lotte Cinema opened its first overseas cinema in Songshan, China, as part of its plan to expand in overseas markets. In 2014, Lotte Cinema opened two new cinemas in China and five new cinemas in Vietnam. As of 30 September 2015, Lotte Cinema operated 28 overseas cinemas.

Trends in market share

(Unit: 10,000 persons, %)

Category	2013	2014	2015 (3Q)
Number of movie tickets sold in the cinema industry in Korea	21,335	21,506	7,306
Number of movie tickets sold by Lotte Cinema⁽¹⁾	6,376	6,300	2,245
Lotte Cinema's market share	29.9%	29.3%	30.7%

Note:

(1) Includes the number of movie tickets sold by cinemas managed but not owned by Lotte Cinema.

c. Woori Home Shopping

i. Industry overview

(1) TV home shopping

There are six TV home shopping companies in Korea. Korea Home Shopping (currently GS Home Shopping) and Home Shopping (currently CJ O Shopping) started in 1995, three companies, Woori Home Shopping, Hyundai Home Shopping and NS Home Shopping, joined the market in 2001 and Home & Shopping joined the market in 2011. TV home shopping companies, under the approval of the Korea Communications Commission, furnish customers with product information through TV channels, receive orders, mostly through phone calls, and then deliver the ordered products to customers at their desired locations. Therefore, TV home shopping business operation requires infrastructure, such as broadcasting facilities and logistics systems, strategic products planning and a variety of customer services.

(2) Online shopping mall

Online shopping malls deliver product information directly to consumers through wholesalers and Internet and allow customers to purchase at their convenience and at cheaper prices.

(3) Catalogue

Catalogue companies send catalogues describing products to select customers, and customers can order and purchase products through the catalogues that they receive. Increasing customer base and delivering the optimal product information to customers are important elements in this business.

ii. Company overview

Woori Home Shopping, a subsidiary of the Company, sells a variety of consumer goods and services by means of TV home shopping. In addition, Woori Home Shopping also operates an online shopping mall and catalogue shopping business.

Trends in market share

(Unit: 100 million Won, %)

Category	2013	2014	2015 (2Q)
Market size of the home shopping industry in Korea	38,829	41,000	19,536
Woori Home Shopping sales	7,732	8,692	4,180
Woori Home Shopping market share	19.9%	21.2%	21.4%

Estimated based on publicly disclosed estimated total sales data for the Company's competitors in Korea (excluding NS Home Shopping and Home & Shopping).

d. Lotte.com

i. Industry overview

The size of the on-line shopping market, which is subjected to less limitations in terms of time and space in comparison to the off-line outlets, is increasing extremely rapidly since the emergence of the mobile shopping in the mid-2000's. Customers can get access to a diverse range of product information at anytime and anywhere, and enjoy very high level of convenience of shopping through the One-stop services for ordering and delivery. In addition, being able to purchase goods at significantly lower price in comparison to the off-line outlets is also one of the biggest attractions of the on-line shopping. Although the mobile/internet shopping market can be affected by the consumer sentiments for consumption in accordance with the economic situations of the time, it is possible to cope with the fluctuation in the economic situations by means of its outstanding price competitiveness in comparison to other off-line distribution channels.

ii. Company overview

In the on-line shopping market, extensive range of players including not only the companies specializing only on the pure on-line shopping but also off-line distribution companies such as department stores and discount outlets, as well as home shopping companies are competing in the area of B2C. In the internet shopping market, extensive range of players including not only the companies specializing only on the pure on-line shopping but also off-line distribution companies such as department stores and discount outlets, as well as home shopping companies are competing in the area of B2C. Moreover, there is markedly rapid growth of social commerce companies that uses the concept of cooperative purchasing since 2010. The annual volume of transaction of the on-line shopping market in 2014 was 45.2 trillion Won, which is a growth by approximately 14% from the previous year with continued growth every year.

e.Lotte Members

i. Industry overview

Recently, 'Omni-channel consumption' in which the on and off-line channels are used simultaneously, 'Mobile shopping' through which consumers can access the shopping sites at anytime and anywhere, 'Global consumption' including direct purchase from overseas sources, etc., 'Rational consumption' through exhaustive comparison of prices and 'Malling consumption' of enjoying leisure and cultural life along with shopping are establishing themselves as the key industrial trend for the distribution and logistics industry.

With the full-fledged commencement of the era of mobile platform-based cultural contents, enormous changes have been brought into the production and consumption of contents. With the continued launching of O2O services with built-in lT technology and settlement services, off-line companies are unfolding Omni-channel strategy that combines on-line services. On the other hand, the Fin-tech market is growing rapidly in Korea in accordance with the alleviation of the regulations and the strategy for nurturing of the Fin-tech market by the government, with the creation of new markets through the activation of the competition and alliance between financing companies and IT companies in order to secure vantage point in the Fin-tech market.

f. Lotte Songdo Shopping Town

The Company completed its land purchases in connection with the construction of Lotte Mall Songdo in July 2011. In December 2013, the Company completed the first-stage of construction, the mart section, which is currently open for business. The second stage of this project is currently undergoing earthworks and is scheduled to be completed by the second half of 2017.

g. Lotte Suwon Station Shopping Town

It was incorporated on March 16, 2005, acquired the approval for the construction of Lotte Mall Suwon on January 3, 2012, permission for occupation and use of the mall on November 21, opened the Lotte Mall Suwon on November 27, 2014 for business, and is currently operating and managing the Lotte Mall Suwon.

h. LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD./ Lotte Shopping Holdings (Hong Kong) Co.,Limited / LHSC Limited/LOTTE HOTEL & RETAIL VIETNAM PTE. LTD.

As of 30 September 2015, LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD. held shares in distribution companies in India, Indonesia and Vietnam (including LOTTE HOTEL & RETAIL VIETNAM PTE. LTD., a holding company established to pursue and expand new business opportunities in Vietnam), while Lotte Shopping Holdings (Hong Kong) Co., Limited holds shares in distribution companies in China as well as LHSC Limited, a holding company established for the acquisition of a home shopping company, Lucky Pai, in China.

(Unit: million Won,%)

Name of holding company	Name of subsidiaries	Shareholding ratio	Book value for investment stock	Business Type
LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD.	Lotte Shopping India Private Limited	100.0	18	Distribution (department store)
	LOTTEMART C&C INDIA PRIVATE LIMITED	100.0	269	Distribution (mart)
	PT. LOTTE SHOPPING INDONESIA	25.0	85,377	Distribution (mart)
	PT. LOTTE MART INDONESIA	99.0	94,604	Distribution (mart)
	LOTTE HOTEL & RETAIL VIETNAM PTE. LTD.	40.0	29,576	Investment company
	PT. LOTTE Shopping Avenue Indonesia	99.0	52,032	Distribution (department store)
	Lotte Shopping Plaza Vietnam Co., Ltd.	100.0	33,745	Distribution (department store)
	International Business Center Company Limited	50.0	64,178	Real estate lease
Lotte Shopping Holdings (Hong Kong) Co., Limited	Lotte Business Management (Tianjin) Co., Ltd.	100.0	47,780	Distribution (department store)
	Lotte Mart China Co., Ltd. 42	100.0	417,265	Distribution (mart)
	LHSC Limited	51.1	104,498	Investment company
	Liaoning LOTTE Mart Co., Ltd.	60.0	-	Distribution (mart)
	Qingdao LOTTE Mart Commercial Co., Ltd.	46.2	-	Distribution (mart)
	Lotte Department Store(Shenyang) Co., Ltd.	100.0	83,615	Distribution (department store)
	Lotte International Department Store(Weihai) Co., Ltd.	100.0	35,835	Distribution (department store)
	Jilin LOTTE Mart Co., Ltd.	100.0	17,918	Distribution(mart)
	Lotte Shopping Business Management(Hong Kong) Limited	100.0	12	Bond issuances (SPC)
	LOTTE DEPARTMENT STORE (TIANJIN) CO., LTD.	100.0	59,725	Distribution (department store)
	Lotte Department Store (Chengdu) Co., Ltd.	100.0	47,780	Distribution (department store)
	Lotte Mart (Chongqing) Commercial Co., Ltd.	100.0	23,890	Distribution (mart)
	LOTTE MART (CHENGDU) COMMERCIAL COMPANY LIMITED	100.0	14,334	Distribution (mart)

As of 30 September 2015 (exchange rate of USD 1.00 = KRW 1,194.50)

Financial statements prepared on a separate basis under Singapore FRS and HK FRS.

B. Production and Facilities

1. Plans for the establishment of new stores

Category	Store	Location	Expected establishment date
Discount Store	Yangdeok	Yangdeok-dong, Masanhoiwon-gu, Changwon City, Gyeongnam	November 2015
Cinema	Gayang	Yangcheon-ro, Gangseo-gu, Seoul	October 2015
	Suraksan	Sanggye-dong, Nowon-gu, Seoul	November 2015
	Sangin	Sangin-dong, Dalseo-gu, Daegu	December 2015

The above plans are subject to change based on future business conditions.

2. Plans for new establishment and purchase of facilities

a. Investments under progress

(Unit: 100 million Won)

Category

Type

Investment period

Investment asset

Investment effect

Total investment

Prior

Investment

Future investment

Department store

New
investment

2015 - 2017

Tangible assets

Increase in sales

18,093

2,592

15,501

Discount store

New
investment

2015 - 2017

Tangible assets

Increase in sales

8,311

591

7,720

The above plans are subject to change based on future business conditions.

The above plans are for new domestic investments only, and do not include plans for ordinary or overseas investments or capital injections or additional investments to existing investments.

b. Future investment plans

(Unit: 100 million Won)

Business segment	Project name	Expected investment		Expected annual investment			Effect
Business segment	Project name	Asset type	Amount	2015	2016	2017	Effect
Department store	New and ordinary investments	Tangible and other assets	24,643	6,350	7,050	11,243	Increase in sales
Discount store	New and ordinary investments	Tangible and other assets	12,128	2,166	2,733	7,229	Increase in sales

The above plans are subject to change based on future business conditions.

C. Sales

(Unit: million Won)

Business segment	Type	Product		46^th Fiscal Year (3Q)	45^th Fiscal Year (3Q)
Department Store	Products	Clothes, etc.	Export	-	-
			Domestic	4,893,623	5,074,698
			Total	4,893,623	5,074,698
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	-	-
			Domestic	772,413	638,403
			Total	772,413	638,403
	Total			5,666,036	5,713,101
Discount Store	Products	Food, etc.	Export	-	-
			Domestic	5,920,369	5,743,437
			Total	5,920,369	5,743,437
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	-	-
			Domestic	427,441	429,128
			Total	427,441	429,128
	Total			6,347,810	6,172,565
Finance	Products		Export	-	-
			Domestic	2,886	3,231
			Total	2,886	3,231
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Fees and commissions, etc.	Export	-	-
			Domestic	1,356,636	1,281,336
			Total	1,356,636	1,281,336
	Total			1,359,522	1,284,567
Electronics	Products	Electronics, etc.	Export	-	-
			Domestic	2,878,773	2,787,286
			Total	2,878,773	2,787,286
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	-	-
			Domestic	11,596	11,647
			Total	11,596	11,647
	Total			2,890,369	2,798,933
convenience store	Products	Electronics, etc.	Export	11	-
			Domestic	2,307,974	1,817,807
			Total	2,307,985	1,817,807
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	-	-
			Domestic	204,159	169,008
			Total	204,159	169,008
	Total			2,512,144	1,986,815
Others⁽¹⁾	Products	Food, etc.	Export	6,436	-
			Domestic	1,895,749	1,846,314
			Total	1,902,185	1,846,314
	Goods	Food, etc.	Export	-	-
			Domestic	34,325	72,098
			Total	34,325	72,098
	Others	Rental fees, etc.	Export	-	-
			Domestic	934,915	815,675
			Total	934,915	815,675
	Total			2,871,425	2,734,087
Total	Products	Clothes, food, etc.	Export	6,447	-
			Domestic	17,899,374	17,272,773
			Total	17,905,821	17,272,773
	Goods	Clothes, food, etc.	Export	-	-
			Domestic	34,325	72,098
			Total	34,325	72,098
	Others	Rental fees, etc.	Export	-	-
			Domestic	3,707,160	3,345,197
			Total	3,707,160	3,345,197
	Total			21,647,306	20,690,068

Note:

(1) Represents adjustments for consolidation.

D. Risk Management

See Note 39 of the notes to the attached condensed consolidated interim financial statements of the Company as of and for nine month period ended As of 30 September 2015.

E. Derivative Instruments and Hedge Accounting

See Note 21 of the notes to the attached condensed consolidated interim financial statements of the Company as of and for nine month period ended As of 30 September 2015.

F. Important Management Contracts

1. Department store business

The Company has entered into management agreements to manage certain department stores owned by its subsidiary Lotte Station Building. In return, the Company receives management fees from Lotte Station Building equal to 10% of the operating income (before depreciation expenses) for the relevant department store, which is accounted for as other operating income.

2. Credit card business

Lotte Card has entered into card issuance agreements with American Express Company, Master Card International, Visa International and UNIONPAY INTERNATIONAL whereby these companies receive from Lotte Card certain percentage of the credit purchase amounts made on the credit cards issued pursuant to such agreements.

3. Other businesses

a. Woori Home Shopping

Woori Home Shopping has entered into an operating lease agreement with Lotte Capital, KT Rental Corporation and a joint card issuance agreement with Shinhan Card Co., Ltd., Lotte card wable on an annual basis. It has also entered into delivery service agreements with Lotte Logistics, Hyundai Logistics Co., Ltd. and CJ Korea Express Corporation, as well as broadcasting programsupply agreements with multiple cable TV stations .

b. Korea Seven

Korea Seven has entered into trademark and operational technology licensing agreements with 7-Eleven, Inc., pursuant to which Korea Seven pays 0.6% of net sales amount as license fees. Also, Korea Seven has granted 7-Eleven, Inc. the right to purchase the shares of Korea Seven up to 10% of its total outstanding shares on January 1 of each year starting from 2003. Korea Seven has also entered into franchising contracts with franchisees and agency agreements with Lotte Logistics for delivery of products to both company-run and franchise stores.

c. NCF

NCF has a royalty agreement with Nice Claup Co., Ltd. pursuant to which NCF pays Nice Claup a sales royalty fee of 2.2% and a production royalty fee of 0.3% of net sales from 1 December 2010 to 31 March 2016.

d. Buy the Way

Buy the Way has entered into a guarantee agreement with Sportstoto guaranteeing payment of delivered goods and the agreement is renewed every year.

III. Financial Matters

Please refer to the Company's condensed consolidated interim financial statements of the Company as of and for nine month period ended 30 September 2015 and the related notes attached to this report.

IV. Auditor's Opinion

A. Audit (Review) Opinion on Consolidated Financial Statements

1. Name of auditor / accountants

46^th fiscal year (3Q)	45^th fiscal year	44^rd fiscal year
KPMG Samjong	KPMG Samjong	KPMG Samjong

2. Audit (review) opinion

a. Audit (review) for the current business year

The auditor has reviewed the consolidated statements of financial positionAs of 30 September 2015 and 30 September 2014, as well as the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows of Lotte Shopping Co., Ltd. and its subsidiaries for the nine months ended 30September 2015 and 2014.

3. Auditcontracts

(Unit: million Won, hours)

Fiscal year	Auditor	Description	Fee	Total hours
46^th fiscal year (3Q)	Samjong KPMG	Review of quarterly and semi-annual financial statements Review of non-consolidated and consolidated financial statements	670	7,100
45^th fiscal year	Samjong KPMG	Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements	670	12,000
44^th fiscal year	Samjong KPMG	Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements	620	10,600

4. Contracts regarding non-audit services with outside auditor

(Unit: million Won)

Fiscal year	Date of contract	Description	Service period	Fee
46^thfiscal year (3Q)	15.03.10	Acquisition related tax accountingdue diligence task	15.03.10 ~ 15.06.30	25
46^thfiscal year (3Q)	15.03.16	Agreed procedure on the royalty for TOYS "R" US	15.03.16~ 15.03.20	9
45^thfiscal year	14.07.23	Support and consultation related to the drafting of combined financial statements of Lotte Group	14.07.23~ 14.08.31	40
45^thfiscal year	14.12.01	Taxation review on the transaction between Lotte Shopping and FRL Korea	14.12.01~ 14.12.31	20
44^rd fiscal year	-	-	-	-

V. Corporate Governance and Affiliates

A. Matters regarding Board of Directors

1. Overview of Board of Directors

a. Composition of Board of Directors

Currently, the Company's board of directors (the "Board of Directors") is composed of 10 directors, of whom five are outside directors.

The Board of Directors decides important matters according to the basic management policies of the Company, matters delegated from the general meeting of shareholders and matters required by the Articles of Incorporation or applicable laws.

b. The Board of Director committees

The Board of Directors may have subcommittees to achieve efficient and timely decision-making. The Company currently has an Audit Committee, an Outside Director Nomination Committee and an Internal Transaction Committee. Details regarding operations, authority and composition of such committees are decided by the Board of Directors or relevant laws.

2. Matters regarding Board of Directors committees

a. Name, directors, objectives and authority

Name of committee	Composition	Name	Objectives and authority	Remarks
Audit Committee	Three or more directors (at least two-thirds of whom must be outside directors) 2 outside directors at present	Sukeun Kwak, Byungkee Ko (from 21 March 2014)	The committee audits the Company's accounting and operations. The committee reviews the appropriateness of its performances and regulations every year. If necessary, it proposes revisions to the Board of Directors. In addition to carrying out the activities specified in items 1 and 2 above, the committee also carries out activities specified by law, the Company's articles of incorporations and the Board of Directors.	Interim resignation of Dongyeol Park on 2015.09.24, an inspection commissioner of the audit committee
Outside Director Nomination Committee	Two or more directors (at least half of whom must be outside directors) 2 outside directors and 1 full-time director at present	Wonjun Lee, Byungkee Ko, Hyeryun Kang (from 20 March 2015)	The committee recommends candidates for outside directors to the general meeting of shareholders. The committee must recommend those candidates recommended by shareholders with applicable rights under Article 542 Clause 6 of the Commercial Code. In addition to carrying out the activities specified in items 1 and 2 above, the committee also carries out activities specified by law, the Company's articles of incorporations and the Board of Directors.	-
Internal Transaction Committee	Three or more directors (at least two-thirds of whom must beoutside directors)	Wonjun Lee, Taehyeon Kim, Chungsook Moon (from 20 March 2015)	In case of contract between the company and its specially related persons for more than certain scale, fair trade order shall be maintained by suggesting standards for selection of opposite party In case of concluding a private contract exceeding 10 billion won with affiliated companies in the area of construction/logistics/advertisement/system, a deliberation and approval may be made.	-

As of 30 September 2015

Interim resignation of Dongyeol Park on 2015.09.24, an inspection commissioner of the audit committee.

B. Affiliated Companies

1. Overview of affiliates

(As of 30 September 2015) (Unit: %)

Division		Investee company
Division		Lotte Confectionery	Lotte Chilsung Beverage	Lotte Food	Lotte Aluminum	Lotte Construction	Hotel Lotte	Lotte International	Lotte Shopping	Lotte Giants	Lotteria	Lotte Chemical	Korea Fuji Film	Daehong Communications	Canon Korea Business Solutions	Lotte Station Building	Lotte Corporation	Lotte.Com	Lotte Logistics	Lotte Capital	Lotte Data Communication
Investor company	Lotte Confectionary	1.0	18.3	9.3					7.9	30.0	13.6		0.9			8.9		8.5	4.6		6.1
	Lotte Chilsung Beverage			9.3		3.0			3.9	20.0	2.2		5.0					5.3	4.6	1.5	1.5
	Lotte Food			0.0						5.0				10.0		7.5			5.0	1.8
	Lotte Aluminum	15.3	8.4			9.0		6.2		5.0			2.6		5.6
	Lotte Construction								1.0											11.8
	Hotel Lotte	3.2	5.8	8.9	13.0	39.1	0.2	34.6	8.8		18.8	12.7	7.1	12.8	28.9		31.1	13.1	8.8	26.6	2.9
	Busan Lotte Hotel			4.4	3.9		0.6		0.8		11.3					1.0				11.5
	Lotte International												56.8		1.0					0.2
	Lotte Shopping			3.4	12.0			27.7	6.2	30.0	38.7			34.0		25.0		50.0	4.6	22.4
	Lotte Logistics							13.7							9.0
	Lotteria									1.0			2.1	12.5					17.3	2.6	34.5
	Lotte Chemical			1.0	13.2	32.0						1.7							4.6
	Korea Fuji Film								7.9	9.0				3.5						1.7
	Daehong Communications	3.3														2.9		13.9		8.2	28.5
	Lotte Corporation											31.3
	Lotte Capital
	Lotte Data Communication					4.8			4.8						5.6	0.2
	Lotte Card
	Lotte.Com
	Lotte Station Building
	Lotte Insurance
	Sambark LFT
	MYbi
	Korea Seven
	Lotte Asset Development
	Buy the Way
	Lotte DF Global
	eB Card
	Hyundai Information Technology
	Chungbuk Soju
	Lotte Incheon Development
	Canon Korea Business Solutions
	Lotte Himart
	Aegis First
	HyundaiLogistics
	LotteRental
	Woori Home Shopping
	Lotte Members
Total		22.8	32.6	36.4	42.1	87.9	0.7	82.2	41.2	100.0	84.5	45.7	74.5	72.8	50.0	45.5	31.1	90.8	49.7	88.3	73.6

Division			Investee Company
Division		Korea Seven	Lotte Asahi Liquor	Lotte Card	Seetec	KP Chemtech	FRL Korea	Daesan MMA	Woori Home Shopping	Lotte JTB	Lotte Assets Development	DCinema of Korea	Lotte Insurance	Lotte PS Net	CH Beverage	MJA Wine	Sambark LFT	MYbi	Busan Hanaro Card	Busan Lotte Hotel	Han Paysys
Investor Company	Lotte Confectionary	16.5									7.2
	Lotte Chilsung Beverage		50.0								14.2				100.0	100.0
	Lotte Food
	Lotte Aluminum
	Lotte Construction										11.8
	Hotel Lotte										7.2		23.7
	Busan Lotte Hotel			1.0									5.5					3.9		0.0
	Lotte International
	Lotte Shopping	51.1		93.8			49.0		53.0		39.1	50.0
	Lotte Logistics	13.8
	Lotteria
	Lotte Chemical				50.0	100.0		50.0			20.5						99.5
	Korea Fuji Film
	Daehong Communications												16.2
	Lotte Corporation
	Lotte Capital			4.6
	Lotte Data Communication													31.3				43.3			36.3
	Lotte Card			0.0													0.2	4.8
	Lotte.Com									50.0				31.3
	Lotte Station Building												7.1
	Lotte Insurance												0.9
	Sambark LFT
	MYbi																		80.0		22.6
	Korea Seven													32.3
	Lotte Asset Development
	Buy the Way
	Lotte DF Global
	eB Card																	12.5
	Hyundai Information Technology
	Chungbuk Soju
	Lotte Incheon Development
	Canon Korea Business Solutions
	Lotte Himart
	Aegis First
	HyundaiLogistics
	LotteRental
	Woori Home Shopping
	Lotte Members
Total		81.4	50.0	99.4	50.0	100.0	49.0	50.0	53.0	50.0	100.0	50.0	53.4	94.9	100.0	100.0	99.7	64.4	80.0	0.0	58.8

Division			Investee Company
Division		Universal Studios Korea Resort Development	Lotte Gimhae Development	Buy the Way	Lotte Suwon Station Shopping Town	Lotte DF Global	Lotte DF Retail	eB Card	Gyeonggi Smartcard	Incheon Smartcard	Chungnam Smartcard	Universal Studios Korea Resort Asset Management Corporation	DACC Aerospace	NCF	Lotte Mitsui	Mobizap Media	Hyundai Information Technology	M.Hub	Lotte Songdo Shopping Town	Chungbuk Soju	HUI
Bu Investor Company	Lotte Confectionary
	Lotte Chilsung Beverage																		100.0
	Lotte Food
	Lotte Aluminum
	Lotte Construction
	Hotel Lotte	46.1				100.0															46.1
	Busan Lotte Hotel
	Lotte International
	Lotte Shopping		100.0		95.0								99.8					56.3
	Lotte Logistics
	Lotteria
	Lotte Chemical											100.0		50.0
	Korea Fuji Film
	Daehong Communications														70.0		99.9
	Lotte Corporation
	Lotte Capital
	Lotte Data Communication							5.0								52.3
	Lotte Card							95.0
	Lotte.Com
	Lotte Station Building																	30.0
	Lotte Insurance
	Sambark LFT
	MYbi
	Korea Seven			100.0
	Lotte Asset Development	20.2			5.0						30.2							9.4			20.2
	Buy the Way
	Lotte DF Global						97.7
	eB Card							-	100.0	100.0
	Hyundai Information Technology															0.0
	Chungbuk Soju																			90.0
	Lotte Incheon Development																	4.3
	Canon Korea Business Solutions
	Lotte Himart
	Aegis First
	HyundaiLogistics
	LotteRental
	Woori Home Shopping
	Lotte Members
Total		66.2	100.0	100.0	100.0	100.0	97.7	100.0	100.0	100.0	30.2	100.0	99.8	50.0	70.0	52.3	99.9	100.0	100.0	90.0	66.2

Division		Investee Company
Division		Korea STL	CS Mart	Jangkyo PFV	Lotte Himart	Lotte Incheon Development	Angel With	Versalis Elastomers	Dongyocheongkiwa PFVI	Baekhak Beverage	Lotte Incheon Town	Lotte-Nestle Korea	Magok District PFV	Eunpyeong PFV	Lotte Department Store Masan	Aegis First	HyundaiLogistics	Hyundai Cosco Logistics	Lotte Members	LotteShopping TownDaegu	LotteDuty Free Jeju	Lotte Rental	Lotte auto lease	Lotte auto care	Green Car
Investor Company	Lotte Confectionary															1.8
	Lotte Chilsung Beverage									86.1						1.8
	Lotte Food											50.0				1.9
	Lotte Aluminum
	Lotte Construction					4.8					14.9
	Hotel Lotte			85.5		28.8			85.0		12.5					6.9					100.0	20.8
	Busan Lotte Hotel																		1.0			10.8
	Lotte International
	Lotte Shopping	50.0	99.9		60.2	28.8					27.5			17.5	100.0	1.8			93.8
	Lotte Logistics															5.5
	Lotteria															6.7
	Lotte Chemical							50.0								8.6
	Korea Fuji Film
	Daehong Communications
	Lotte Corporation
	Lotte Capital																		4.6
	Lotte Data Communication
	Lotte Card
	Lotte.Com
	Lotte Station Building
	Lotte Insurance																					4.9
	Sambark LFT
	MYbi
	Korea Seven
	Lotte Asset Development			9.5					10.0				94.5	69.5						100.0
	Buy the Way
	Lotte DF Global
	eB Card
	Hyundai Information Technology
	Chungbuk Soju
	Lotte Incheon Development
	Canon Korea Business Solutions						100.0
	Lotte Himart																					4.9
	Aegis First																88.8
	HyundaiLogistics																	51.0
	LotteRental																						100.0	100.0	56.6
	Woori Home Shopping																					8.6
	Lotte Members																		0.0
otal		50.0	99.9	95.0	60.2	62.5	100.0	50.0	95.0	86.1	54.9	50.0	94.5	87.0	100.0	35.0	88.8	51.0	99.4	100.0	100.0	50.0	100.0	100.0	56.6

Cinema Trading, S&S International, Cinema Food and L Properties are excluded from the list of investee companies as they have no shares owned by other affiliates.
For Lotte Shopping, there is change in the shares of Lotte Himart, due to the loan made related to convertible bonds but its equity interest is 65.25%

2. Equity investments

(As of 30 September 2015) (Unit: Shares, million Won, %)

Name of company	Date of initial acquisition (yyyy.mm.dd)	Purpose	Amount of initial acquisition	Beginning balance			Increase (decrease)			Ending balance			Financial status of the most recent fiscal year
				Number of shares	Equity ratio	Book value	Acquisition (disposal)		Evaluation	Number of shares	Equity ratio	Book value	Total assets	Current year net income
				Number of shares	Equity ratio	Book value	Quantity	Amount	Gain/loss	Number of shares	Equity ratio	Book value	Total assets	Current year net income
Lotte Station Building (unlisted)	1986.09.15	Equity investment	250	900,000	25.00	157,380	-	-	-	900,000	25.00	157,380	736,102	49,127
Daehong Communications (unlisted)	1996.12.23	Equity investment	6,277	13,600	34.00	28,785	-	-	-	13,600	34.00	28,785	536,859	14,236
Lotte.com (unlisted)	2000.01.05	Equity investment	2,000	1,600,000	34.39	11,610	1,464,000	11,567	-	3,064,000	50.01	23,177	186,312	-3,103
Lotte Card (unlisted)	2002.11.30	Equity investment	34,701	70,934,391	93.78	1,012,153	-845,538	-12,064	-	70,088,853	93.78	1,000,089	8,438,539	148,742
Lotte Capital (unlisted)⁽²⁾	2001.12.31	Equity investment	6,259	7,445,072	22.36	77,413	-	-	-	7,445,072	22.36	77,413	5,484,625	74,618
Lotteria (unlisted)⁽²⁾	2001.12.27	Equity investment	39,719	186,062	38.68	112,864	-	-	-	186,062	38.68	112,864	905,505	34,082
FRL Korea (unlisted)	2004.12.16	Equity investment	2,940	2,352,000	49.00	24,827	-	-	-	2,352,000	49.00	24,827	582,704	118,410
Woori Home Shopping (unlisted)	2006.07.03	Equity investment	28,600	4,242,796	53.03	393,213	-	-	-	4,242,796	53.03	393,213	993,086	84,034
Lotte Assets Development (unlisted)⁽²⁾	2007.07.31	Equity investment	30	11,861,031	39.14	53,319	3,914,243	19,571	-	15,775,274	39.14	72,890	325,216	-1,422
Zara Retail Korea (unlisted)	2007.01.18	Equity investment	130	302,600	20.00	16,106	-	-	-	302,600	20.00	16,106	178,893	2,032
Korea Seven (unlisted)	2009.09.25	Equity investment	28,184	18,526,176	51.14	82,473	-	-	-	18,526,176	51.14	82,473	938,615	23,097
Lotte Gimhae Development (unlisted)	2010.03.18	Equity investment	300	60,000	100.00	300	-	-	-	60,000	100.00	300	1,138	180
Lotte Suwon Station Shopping Town (unlisted)	2010.04.30	Equity investment	48	19,000,000	95.00	94,810	-	-	-	19,000,000	95.00	94,810	368,805	-2,194
NCF (unlisted)	2010.12.30	Equity investment	18,876	589,800	98.30	19,715	9,000	343	-	598,800	99.80	20,058	43,291	451
Lotte Giants (unlisted)	1982.04.21	Equity investment	30	6,000	30.00	823	-	-	-	6,000	30.00	823	29,226	-890
Lotte Songdo Shopping Town (unlisted)⁽²⁾	2011.06.27	Equity investment	40,000	12,000,000	56.30	60,000	-	-	-	12,000,000	56.30	60,000	253,521	-2,968
STL (unlisted)	2011.08.24	Equity investment	1,000	800,000	50.00	4,000	-	-	-	800,000	50.00	4,000	5,477	-1,337
Lotte International(unlisted)	2006.11.30	Equity investment	1,000	247,915	27.68	92,782	-	-	-	247,915	27.68	92,782	865,114	6,102
CS Mart (unlisted)	2012.01.16	Equity investment	244,880	12,761,250	99.95	255,826	-	-	-	12,761,250	99.95	255,826	159,859	9,796
Lotte Hi-mart (listed)	2012.10.31	Equity investment	1,248,068	15,403,274	65.25	1,248,068	-	-	-	15,403,274	65.25	1,248,068	2,774,637	96,438
D-Cinema of Korea (unlisted)	2008.01.28	Equity investment	1,500	300,000	50.00	-	-	-	-	300,000	50.00	0	48,430	454
M Venture Cultural Vitalization Investment Association (unlisted)	2009.10.01	Equity investment	2,500	175	25.00	1,750	-	-	-	175	25.00	1,750	6,585	527
Capital One Diversity Cinema Special Investment Association (unlisted)	2010.03.18	Equity investment	1,000	100	20.00	1,000	-	-636	-	100	20.00	364	3,178	-697
So Big Contents Investment Union (unlisted)	2011.01.03	Equity investment	4,000	400	26.67	4,000	-	-	-	400	26.67	4,000	18,460	1,901
Capital One Middle-Low Budget Cinema Fund (unlisted)	2011.05.24	Equity investment	3,000	30	25.00	3,000	-	-	-	30	25.00	3,000	11,206	-2,876
CJ Venture Investments Union No. 14 (unlisted)	2011.11.02	Equity investment	6,000	60	30.00	6,000	-	-	-	60	30.00	6,000	20,164	-1,108
BS Financial Group (listed)	1987.09.23	Equity investment	2,775	6,561,494	2.80	95,142	-	-	-5,249	6,561,494	2.80	89,893	4,539,500	356,414
Shinhan Financial Group (listed)	1997.12.31	Equity investment	637	311,118	0.07	13,829	-	-	-949	311,118	0.07	12,880	27,094,548	662,623
M Cieta Development (unlisted)	2006.09.01	Equity investment	1,960	499,800	4.82	2,499	-499,800	-2,499	-	-	-	-	40,924	-936
Bichae Nuri Development (unlisted)	2008.06.09	Equity investment	150	171,600	3.00	-	-	-	-	171,600	3.00	-	3,979	-6,688
Sparx Investment (unlisted)⁽²⁾	2009.03.27	Equity investment	8,165	65,680	7.76	15,423	-	-	4	65,680	7.76	15,427	49,037	924
Lotte Aluminum (unlisted)⁽²⁾	2000.11.23	Equity investment	3,000	125,016	12.05	71,374	-	-	15,550	125,016	12.05	86,924	1,687,214	8,210
Lotte Logistics (after the merge) (unlisted)	2007.09.28	Equity investment	4,000	66,308	4.64	10,278	-	-	1,215	66,308	4.64	11,493	698,739	14,202
CJ Venture Investment No. 12 Global Contents Investment Partnership (unlisted)	2009.11.20	Equity investment	1,500	15	3.58	1,500	-	-	-	15	3.58	1,500	34,745	520
East Gate Media Contents & Technology Fund (unlisted)	2010.08.30	Equity investment	5,000	50	14.71	5,000	-	-	-	50	14.71	5,000	32,415	-2,886
ISU-Renaissance Contents Fund (unlisted)	2011.01.13	Equity investment	2,000	40	13.33	2,000	-	-	-	40	13.33	2,000	8,489	-1,635
Union Global Contents Fund (unlisted)	2011.11.04	Equity investment	4,000	1,600	16.18	16,000	400	4,000	-	2,000	16.18	20,000	90,284	-6,204
Michigan Global Contents Fund #3 (unlisted)	2012.08.24	Equity investment	2,000	200	13.33	2,000	-	-	-	200	13.33	2,000	14,880	1,852
Leading Asia Contents Fund (unlisted)	2012.09.18	Equity investment	4,000	400	21.01	4,000	-	-	-	400	21.01	4,000	17,690	-1,450
Bank Foundation for Young Entrepreneurs Culture Contents Investment Union (unlisted)	2013.08.29	Equity investment	4,000	40	15.09	4,000	-	-	-	40	15.09	4,000	26,470	-199
LOTTE VIETNAM SHOPPING CO., LTD. (unlisted)⁽¹⁾	2006.12.15	Equity investment	3,749	-	100.00	125,243	-	-	-	-	100.00	125,243	382,772	-7,491
Lotte Europe Holdings B.V. (unlisted)	2008.05.30	Equity investment	124,379	217,882	30.97	88,817	31,513	10,855	-	249,395	26.98	99,672	496,240	-265,135
Lotte Shopping Holdings(Hong Kong) Co., Limited (unlisted)	2008.10.27	Equity investment	259	1,050,568,831	100.00	720,125	44,892,000	53,049	-	1,095,460,831	100.00	773,174	1,179,121	-343,921
LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD. (unlisted)	2008.10.28	Equity investment	101	302,975,194	100.00	336,974	2,000,000	2,173	-	304,975,194	100.00	339,147	333,054	1,469
Coralis S.A. (unlisted)	2009.10.29	Equity investment	17,418	787,461	45.00	55,131	-	-	-	787,461	45.00	55,131	432,119	-13,170
Qingdao LOTTE Mart Commercial Co., Ltd.(unlisted)⁽¹⁾	2008.01.18	Equity investment	33,219	-	53.84	-	-	-	-	-	53.84	0	80,221	-40,741
Lotte Mart Co., Ltd.(unlisted)⁽¹⁾	2008.06.02	Equity investment	183,033	-	100.00	111,636	-	-	-	-	100.00	111,636	163,345	-22,715
Liaoning LOTTE Mart Co., Ltd. (unlisted)⁽¹⁾	2008.07.24	Equity investment	2,107	-	40.00	-	-	-	-	-	40.00	0	60,073	-17,184
PT.Lotte Shopping Indonesia (unlisted)	2008.11.20	Equity investment	219,737	2,622,812	55.00	214,068	-	-	-	2,622,812	55.00	214,068	269,554	10,294
Lotte Cinema Vietnam Co., Ltd. (unlisted)⁽¹⁾	2008.05.02	Equity investment	3,000	-	90.00	15,066	-	-	-	-	90.00	15,066	53,650	-641
Lotte Properties (Shenyang) Limited (unlisted)	2009.01.16	Equity investment	29,018	29,928,756	17.93	41,919	-	-	-	29,928,756	17.93	41,919	769,869	15,835
Shenyang SL Cinema Investment Management Co., Ltd. (unlisted)⁽¹⁾	2010.11.16	Equity investment	752	-	49.00	1,496	-	-	-	-	49.00	1,496	2,351	-26
Hubei XL Cinema Co., Ltd. (unlisted)⁽¹⁾	2011.06.24	Equity investment	2,048	-	49.00	9,423	-	-	-	-	49.00	9,423	17,185	-614
Hemisphere Film Investors II LLC (unlisted)⁽¹⁾	2011.07.29	Equity investment	578	-	100.00	26,740	-	-5,714	-	-	100.00	21,026	26,073	-275
LOTTE PROPERTIES (CHENGDU) HK LIMITED (unlisted)	2012.02.14	Equity investment	40,878	144,901,152	73.46	160,391	-	-	-	144,901,152	73.46	160,391	422,148	-7,263
Lotte (China) Management Ltd. (unlisted)⁽¹⁾	2012.03.19	Equity investment	6,232	-	70.00	6,232	-	-	-	-	70.00	6,232	7,800	229
Fubon Multimedia Technology Co., Ltd. (unlisted)	2012.03.07	Equity investment	38,771	7,319,420	5.15	85,187	-	-	-33,633	7,319,420	5.15	51,554	348,097	40,589
Shandong Longzhile Cinema Co., Ltd. (unlisted)⁽¹⁾	2012.09.19	Equity investment	1,735	-	49.00	6,736	-	437	-	-	49.00	7,173	18,777	-2,749
Lotte Incheon Development Co., Ltd. (unlisted)	2012.12.11	Equity investment	50	3,000,000	37.50	15,000	-	-	-	3,000,000	37.50	15,000	966,984	-6,647
Lotte Food Co., Ltd.	2013.01.01	Equity investment	-	47,180	3.45	27,364	-	-	22,127	47,180	3.45	49,491	1,193,151	59,873
Hyundai Green Food Co., Ltd.	2013.01.01	Equity investment	-	132,326	0.14	2,508	-	-	880	132,326	0.14	3,388	1,457,238	53,014
LOTTE HOTEL & RETAIL VIETNAM PTE. LTD. (unlisted)	2013.01.01	Equity investment	-	12,380,000	20.00	14,185	-	-	-	12,380,000	20.00	14,185	71,696	5,649
LHSC Limited (unlisted)	2013.01.01	Equity investment	-	27,425,378	16.02	31,942	-	-	-	27,425,378	16.02	31,942	194,100	-4
Lotte Shopping Reit Management Singapore PTE. LTD (unlisted)	2014.01.02	Equity investment	-	2,000,000	100.00	1,660	-	-1,305	-355	-	-	-	1,194	-459
Lotte Incheon Town Co., Ltd. (unlisted)	2014.05.19	Equity investment	50	10,000	100.00	50	690,000	3,450	-	700,000	35.00	3,500	46	-5
Lotte Department Store Masan (unlisted)	2014.09.16	Equity investment	4,200	900,000	100.00	4,500	2,400,000	12,000	-	3,300,000	100.00	16,500	4,298	-183
Aegis First (unlisted)⁽²⁾	2014.09.25	Equity investment	6,074	121,477	-	5,992	-	-	-117	121,477	-	5,875	630,729	-10,505
Eunpyeong PFV (unlisted)	2014.09.12	Equity investment	3,500	350,000	20.11	3,500	-	-	-	350,000	20.11	3,500	181,593	-4,550
Lotte Members(unlisted)	2015.01.01	Equity investment	12,065	-	-	-	845,537	12,065	-	845,537	93.78	12,065	-	-
Total				-	-	6,117,148	-	107,292	- 527	-	-	6,223,912	-	-

Notes:

(1) Shares not issued in accordance with the applicable local laws.

(2) The Company owns preferred shares of Aegis No.1 Co., Ltd. and, while calculating equity share, they are to be excluded. The Company's equity interest of the preferred shares is 2.55% by owning 121,477 shares out of total preferred shares of 4,769,368.

Cost-value method applied to the carrying amount of the above investee companies (except for the carrying amount of investee companies where market price or fair value valuation was applicable).

Loss impairment for Lotte Shopping Holdings (Hong Kong) Co., Limited, Liaoning LOTTE Mart Co., Ltd., Lotte Europe Holdings B.V was recorded last year.

Fiscal year ends in August for FRL Korea, January for Zara Retail Korea, February for STL and March for Sparx Investment.

VI. Shareholders

A. The Largest Shareholder and Specially Related Parties

(As of 30 September 2015) (Unit: shares, %)

Name	Relationship	Type of shares	Shareholding				Reason for Change
			At the beginning of the period		At the end of the period
			Number of Shares	Shareholding Ratio	Number of Shares	Shareholding Ratio
Dongbin Shin	Himself	Common shares	4,237,627	13.46	4,237,627	13.46	-
Dongju Shin	Relative	Common shares	4,235,883	13.45	4,235,883	13.45	-
Kyukho Shin	Relative	Common shares	293,877	0.93	293,877	0.93	-
Youngja Shin	Relative	Common shares	232,818	0.74	232,818	0.74	-
Wonjun lee	Director	Common shares	0	0.00	300	0.00	-
Hotel Lotte Co., Ltd.	Related company	Common shares	2,781,947	8.83	2,781,947	8.83	-
Korea Fuji Film Co., Ltd.	Related company	Common shares	2,474,543	7.86	2,474,543	7.86	-
Lotte Confectionary Co., Ltd.	Related company	Common shares	2,474,543	7.86	2,474,543	7.86	-
Lotte Data Communication Company	Related company	Common shares	1,515,653	4.81	1,515,653	4.81	-
Lotte Chilsung Co., Ltd.	Related company	Common shares	1,237,272	3.93	1,237,272	3.93	-
Lotte Construction Co., Ltd.	Related company	Common shares	300,019	0.95	300,019	0.95	-
Busan Lotte Hotel, Co., Ltd.	Related company	Common shares	246,720	0.78	246,720	0.78	-
Seonyun Jang	Relative	Common shares	700	0.00	700	0.00	-
Yumi Shin	Relative	Common shares	28,903	0.09	28,903	0.09	-
Lotte Samdong Welfare Foundation	Foundation	Common shares	47,888	0.15	47,888	0.15	-
Yuwon Industry Co., Ltd.	Other	Common shares	3,000	0.01	3,000	0.01	-
Mikyeong Seo	Other	Common shares	30,531	0.10	30,531	0.10	-
Jaeyoung Jang	Other	Common shares	950	0.00	950	0.00	-
Juyoung Yu	Other	Common shares	499	0.00	499	0.00	-
Treasury stock	Other	Common shares	1,938,688	6.16	1,938,688	6.16	-
Total		Common shares	22,082,061	70.12	22,082,361	70.12	-
Total		Preferred shares	0	0	0	0	-

The number of specially related parties: 18

The largest shareholder: Dongbin Shin

B. Change in the largest shareholder

There has not been any change in the largest shareholder during the reporting period (for the recent three business years).

C. Distribution of Shares

Shareholders owning more than 5% of the Company's shares

(As of 30 September 2015) (Unit: shares, %)

Name	Number of shares	Equity interest
Dongbin Shin	4,237,627	13.46%
Dongju Shin	4,235,883	13.45%
Hotel Lotte Co., Ltd.	2,781,947	8.83%
Korea Fuji Film Co., Ltd.	2,474,543	7.86%
Lotte Confectionary Co., Ltd.	2,474,543	7.86%

.The employee stock ownership association has 40,937 shares, which is equal to a 0.13% interest in the Company.

1. Stock Price and Transaction Record

a. Domestic Stock Market

(Unit: Won, shares)

Category		April 2015	May 2015	June 2015	July 2015	August 2015	September 2015
Common stock price	Maximum	272,500	273,500	247,500	258,000	268,500	293,000
	Minimum	229,000	249,000	220,500	223,500	204,500	268,500
	Average	253,818	262,694	230,250	233,978	242,350	283,725
Transaction volume	Daily maximum	145,923	153,240	116,141	374,492	575,672	277,867
	Daily minimum	35,215	33,218	36,373	25,728	88,932	35,403
	Monthly total	1,628,407	1,217,039	1,288,050	2,014,846	3,956,859	2,077,692

b. Overseas Stock Market

Exchange: London Stock Exchange (Unit: USD)

Category		April 2015	May 2015	June 2015	July 2015	August 2015	September 2015
Common stock price	Maximum	12.50	12.45	10.95	10.70	11.30	12.10
	Minimum	10.25	11.40	9.80	9.59	9.22	11.05
	Average	11.65	11.89	10.28	10.04	10.07	11.94

VII. Executives and Employees

A. Status of Executives and Employees

1. Executives

Registered Executives

(As of 30 September 2015) (Unit: shares)

Name	Date of Birth (yyyy.mm)	Position	Status as Director	Shares		Duration of tenure	End of term as director (yyyy.mm.dd)
Name	Date of Birth (yyyy.mm)	Position	Status as Director	Common shares	Preferred shares	Duration of tenure	End of term as director (yyyy.mm.dd)
Kyukho Shin	1922.10	Executive Chairman	Representative Director	293,877	-	-	2017.03.20
Dongbin Shin	1955.02	Chairman	Inside Director	4,237,627	-	-	2016.03.21
Inwon Lee	1947.08	Vice-Chairman	Representative Director	-	-	-	2016.03.21
Wonjoon Lee	1956.11	President	Representative Director	300	-	-	2016.03.21
Youngja Shin	1942.10	Inside Director	Inside Director	232,818	-	-	2016.03.21
Taehyeon Kim	1955.06	Outside Director	Outside Director	-	-	3 years 6months	2016.03.21
Sukeun Kwak	1953.08	Outside Director	Outside Director	-	-	1 year 6months	2016.03.21
Byungkee Ko	1955.04	Outside Director	Outside Director	-	-	1 year 6months	2016.03.21
Chungsook Moon	1955.03	Outside Director	Outside Director	-	-	6months	2017.03.20
Hyeryun Kang	1957.07	Outside Director	Outside Director	-	-	6months	2017.03.20

.. Please note the interim resignation of Dongyeol Park on 2015.09.24, an inspection commissioner of the audit committee.

Non-registered Executives

(As of 30 September 2015)

(Unit: shares)

Name	Date of birth (yyyy.mm)	Position	Duties	Common shares
Gakgyu Hwang	1955.04	President	Operations	65
Jinse So	1950.05	President	External Coordiantion	142
Jaehwa Kim	1954.07	President	Audit Director
Jongmin Yoon	1960.11	Vice President	Human resources
Bongcheol Lee	1958.05	Vice President	Support
Heetae Gang	1959.04	Vice President	Department Store China	111
Jongin Kim	1963.03	Vice President	Mart Executive President	24
Jaedon Ryu	1960.08	Senior Managing Director	Secretary
Ilmin Lee	1959.06	Senior Managing Director	Secretary	47
Byungyeon Lim	1964.09	Senior Managing Director	Vision Strategy
Gap Lee	1962.09	Senior Managing Director	Operations	85
Jaechan Lee	1960.02	Senior Managing Director	Communications
Jaeyoon Suh	1958.06	Senior Managing Director	China
Changrak Kim	1957.12	Senior Managing Director	Department Store Business 1	219
Hosung Park	1958.09	Senior Managing Director	Department Store Product 1	202
Wansin Lee	1960.10	Senior Managing Director	Department Store Marketing	386
Janghwa Lee	1959.06	Senior Managing Director	Department Store Business 3
Yongpyo Moon	1962.04	Senior Managing Director	Mart Product	32
Chunseok Choi	1960.03	Senior Managing Director	Representative Director (Supermarket)	86
Wonchun Cha	1957.12	Senior Managing Director	Representative Director (Cinema)
Jonghyeon Kang	1964.05	Managing Director	Operations
SoochanKo	1962.09	Managing Director	Operations
Seokhwan Lee	1967.08	Managing Director	Communications
Ikwoo Nam	1962.01	Managing Director	Operations
Gyungmoon Jung	1964.02	Managing Director	Vision Strategy
JonghyunLee	1963.04	Managing Director	Public relation
HyunokKim	1969.07	Managing Director	Legal
Jinsung Lee	1969.02	Managing Director	Strategy & Insight Center
Hoju Jang	1960.08	Managing Director	Department Store Finance	100
Yoonnchul Noh	1961.04	Managing Director	Department Store New business	200
Donghyuk Jeong	1962.07	Managing Director	Department Store Business 2	40
JunWon Lim	1962.05	Managing Director	Department Store Daegu branch
Taehak Cho	1961.03	Managing Director	Department Store Shenyang branch	86
Suhyun Jang	1964.06	Managing Director	Department Store Main branch	154
Yeongkyun Kim	1960.10	Managing Director	Mart Southeast Asia
Changhui Nam	1966.10	Managing Director	Mart Marketing	96
Byungmoon Han	1963.06	Managing Director	Mart Customer	32
Seunghee Kim	1965.04	Managing Director	Supermarket development 1
Jonghuan Kim	1962.05	Managing Director	Supermarket sales	32
Sunghyun Kang	1970.01	Managing Director	Lohbs Executive President
Taewan Kim	1965.03	Director	Vision Strategy
Wonkyu Ki	1966.02	Director	Human resources	62
Woochul Cha	1968.01	Director	Audit Director	16
Yongseok Hwang	1970.02	Director	Corporate culture	16
SunghackLee	1965.12	Director	Communications
Chansoo Kim	1965.03	Director	Distribution CFD
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
InKu Park	1967.10	Director	Vision Strategy
hongchulKim	1970.01	Director	Audit Director
YounghwanLee	1970.06	Director	Human resources	55
Unseong Baek	1965.06	Director	Welfare	71
Gwangchul Shin	1967.11	Director	Strategy & Insight Center	29
Changhee Choi	1972.03	Director	Strategy & Insight Center
MyeongseobShim	1970.01	Director	Strategy & Insight Center
ByungukLee	1970.01	Director	Strategy & Insight Center
Sangseon Yoon	1969.11	Director	China
Hyungsik Jeon	1963.08	Director	Department Store Busan main branch	164
Younsung Jung	1965.03	Director	Department Store Avenuel World Tower branch	119
Gyuwan Hwang	1965.02	Director	Department Store Jamsil branch	121
Jun Jang	1958.12	Director	Department Store Design	32
Choulwon Jang	1963.08	Director	Department Store GF business	41
Daehun Park	1964.08	Director	Department Store Cheongnyangni	172
Minyeol Ryu	1966.03	Director	Department Store Youngdeungpo branch	171
Youngjae Cho	1966.04	Director	Department Store Planning	156
Hoseol Lee	1970.07	Director	Department Store Men's sports	94
Giljo Woo	1966.08	Director	Department Store Product 2	50
Taeheung Nam	1964.12	Director	Department Store Chengdu World Center branch
Daesu Kim	1967.09	Director	Department Store Nowon branch	50
Jungho Song	1966.03	Director	Department Store MD strategy	752
Wansu Park	1968.11	Director	Department Store Management support	123
Jaeok Lee	1970.01	Director	Department Store women's fashion	35
Hyeonseok Min	1967.06	Director	Department Store Russia
Wookyung Kim	1967.02	Director	Department Store IR Team	62
Hyungkyu Lee	1967.01	Director	Department Store Pyeonchon branch	30
Seondae Lee	1970.01	Director	Department Store Public relations
Gidae Nam	1967.02	Director	Department Store Food products	132
Gilmo Han	1967.07	Director	Department Store Shopping mall East Busan branch	55
Yonghwan Lee	1967.10	Director	Department Store Suwon branch	112
Jonghyeok Hyeon	1969.10	Director	Department Store Ulsan branch	40
Yeongsu Ha	1970.06	Director	Department Store Home appliances	53
Sangbyeong Park	1970.07	Director	Department StoreNew businessIncheon Project	40
Yeongtaek Yu	1969.06	Director	Department Store Gwangju branch	40
Jieun Kim	1969.08	Director	Department StoreOverseas fashion	50
Joohyuk Park	1968.01	Director	Department Store Dongrae branch	60
Younghwan Park	1968.11	Director	Department Store Gwangbok branch	55
Jaiwook Kang	1968.01	Director	Department Store Daejeon branch	40
Jinyup Kim	1970.04	Director	Department Store merchandise	65
Junseok Cho	1970.03	Director	Department Store Premium Outlets Paju branch	74
Deoghyung E	1970.06	Director	Department Store Premium Outlets Gimhae branch	100
Kyoung Choi	1970.04	Director	Department Store Centum City branch	10
Sangsoo Kim	1971.08	Director	Department Store Changwon branch	80
Hyun Park	1971.09	Director	Department Store overseas business	50
Chimin Shin	1967.11	Director	Department Store Ethical management	40
Daesik Jang	1966.12	Director	Mart ethical innovation
Pyungkyu Hong	1962.11	Director	Mart Lifestyle	80
Ilgeun Oh	1968.07	Director	Mart Daejeon Chungcheong customer	39
Wonsik Hong	1966.06	Director	Mart Vietnam	32
Jookyung Yoon	1965.04	Director	Mart Indonesia retail	71
Seungsun Song	1971.06	Director	Mart Online
Jinkyeng Kim	1964.09	Director	Mart Seoul customer
Minhee Lee	1969.08	Director	Mart VIC Market product
Minho Kang	1968.11	Director	Mart management support	10
Gwangho Wang	1965.08	Director	Mart site development	32
Chansik Bang	1966.02	Director	Mart Northern China
Joohee Woo	1967.03	Director	Mart fresh foods 1	32
Soonjin Jung	1961.10	Director	Mart business development	10
Hakjae Lee	1966.04	Director	Mart Northern China	32
Heekyung Kim	1962.05	Director	Mart gyeonggi Southern customer	166
Gwanghui Seong	1964.06	Director	Mart Incheon customer	71
Eunmo Yang	1967.06	Director	Mart processed foods	31
Yeongsik Park	1964.02	Director	Mart clothing & merchandise
Seungmu Heo	1965.02	Director	Mart Southeast Asia integrated finance	32
Gwani Lee	1969.01	Director	Mart Fresh foods 2
Gyeongu Yu	1966.10	Director	Mart overseas cooperation
Yeongbae Ham	1962.02	Director	Mart Finance
Yeongjun Cho	1971.01	Director	Mart China product innovation
Gwonhee Cho	1965.01	Director	Mart yeongnam easten part customer
Sungmin Im	1968.03	Director	Mart gwangju honam customer
Jaewoo Jeong	1971.08	Director	Mart marketing
Jaechul Lim	1972.11	Director	Mart business strategy
Sanghae Kim	1968.10	Director	Mart Yeongnam western part Customer
Seonmee Jeong	1966.02	Director	Mart global education
HyunsunSeo	1971.09	Director	Mart VMD strategy
Wonho Jung	1969.02	Director	Supermarket product	55
Jaehyung Seo	1964.10	Director	Supermarket marketing
Hyungseok Han	1965.06	Director	Supermarket membership development	16
Minsu Kang	1965.02	Director	Supermarket central district	15
Eunggeol Kim	1967.03	Director	Supermarket Planning
Youseok Jeon	1964.09	Director	Supermarket fresh foods
Yoojin Kim	1965.06	Director	Supermarket development 2
Jongun Kim	1970.09	Director	Supermarket capital area 1	15
Jongyoon An	1967.07	Director	Supermarket management support
Kiwook Lee	1969.10	Director	Lohbs 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

2. Employees

(As of 30 September 2015) (Unit: persons, year, thousand Won)

Business segment	Gender	The number of employees				Average number of years worked	Aggregate annual compensation	Average compensation per person⁽¹⁾
Business segment	Gender	Full-time	Contracted	Other	Total	Average number of years worked	Aggregate annual compensation	Average compensation per person⁽¹⁾
Department Store⁽²⁾	Male	2,109	-	-	2,109	12.3	115,530,047	54,547
Department Store⁽²⁾	Female	3,043	381	-	3,424	9.8	93,629,022	26,789
Discount Store	Male	3,937	-	-	3,937	8	141,175,401	35,775
Discount Store	Female	9,698	-	-	9,698	4.7	154,616,046	18,633
Others	Male	2,056	252	-	2,308	5.5	68,115,097	29,494
Others	Female	3,238	1,477	-	4,715	3.8	73,020,295	15,878
Total		24,081	2,110	-	26,191	6.3	646,085,908	26,088

Notes:

(1) Based on eight hour work days and an average total of24,766 employees.

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.

Super Market, Cinema, and H&B Business are included in "Others."

B. Compensation

Compensation of Directors

(Unit: million Won)

Category	Number of directors	Amount paid	Average per person
Registered Director	5	3,493	699
Outside Director	3	152	51
Audit Committee Member	3	140	47
Total	11	3,784	344

Compensation of Individual Directors

(Unit: million Won)

Name	Position	Amount paid	Note
Kyukho Shin	Executive Chairman	1,200	Consisting of W1,200 million in salary
Dongbin Shin	Chairman	750	Consisting of W750 million in salary
Inwon Lee	Vice-Chairman	717	Consisting of W717 million in salary

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, CNY 1,000)

Company name	Relation	Transaction details				Note
Company name	Relation	Beginning	Increase	Decrease	Ending	Note
Lotte Properties (Chengdu) HK Limited	Consolidated subsidiary company	USD 140,000	-	-	USD 140,000	Agreed interest is included
Lotte Properties (Chengdu) HK Limited	Consolidated subsidiary company	USD 50,000	-	-	USD 50,000	Agreed interest is included
Lotte Shopping RUS Ltd.	Company under the equity method	USD 5,000	-	-	USD 5,000	Agreed interest is included
PT. LOTTE Shopping Avenue Indonesia	Consolidated subsidiary company	USD 20,000			USD 20,000	Agreed interest is included
Shandong Longzhile Cinema Co., Ltd.	Company under the equity method	CNY 24,000	-	-	CNY 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
		-	USD 120,214	-	USD 120,214
LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD.	Consolidated subsidiary company	KRW 52,949		KRW 52,949	-	Performance guaranty for full payment of taking-over
Lotte Shopping Business Management (Hong Kong) Limited	Consolidated subsidiary company	CNY 750,000	-	CNY 750,000	-	Agreed interest is included
International Business Center Company Limited	Company under the equity method	-	USD 18,500	-	USD18,500	Agreed interest is included
International Business Center Company Limited	Company under the equity method	-	USD 1,500	-	USD 1,500	Agreed interest is included
Lotte Business Management (Tianjin) Co., Ltd	Consolidated subsidiary company	-	CNY 200,000	-	CNY 200,000	Agreed interest is included
LOTTE DEPARTMENT STORE (TIANJIN) CO., LTD.	Consolidated subsidiary company	-	CNY 110,000	-	CNY 110,000	Agreed interest is included

IX. Other Relevant Matters

A. Summary of the Minutes from the General Meeting of Shareholders

Date

Matters

Decision

45^hGeneral Meeting of Shareholders

(20 March 2015)

Agenda No. 1: Approval of the Company's 45^hfiscal year financial statements

Agenda No. 2 Appointment of directors

-No. 2-1: Appointment of inside directors
-No. 2-2: Appointment of outside directors
Agenda No. 3: Approval of compensation limit for directors

Approved

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)

Business segment	Company (Plaintiff)	Lawsuit details	Claimed amount
Department store	Lotte Shopping	Claim related to cancellation of gross real estate tax (and 18 other cases)	17,252,112
Department store	Lotte Department Store Masan	Damages claim (and 1 other cases)	80,354
Discount store	Lotte Shopping	Claim related to cancellation of construction permits (and 10 other cases)	2,427,118
Finance	Lotte Card	Debt collection claim (and 382 other cases)	2,507,903
Finance	eB Card	Claim related to payment (and 3 other cases)	1,006,695
Electronics	Lotte Hi-mart	Damages claim (and 2 other cases)	368,904
Others	Lotte Shopping (Super)	Claim related to cancellation of business hours restriction (and 3 other cases)	136,144
	Lotte Shopping (Cinema)	Claim related to cancellation fee (and 8 other cases)	8,265,982
	Korea Seven	Claim on return of rental deposit (and 36 other cases)	2,099,536
	Buy the Way	Claim on termination of franchise agreement and uncollected balance (and 6 other cases)	247,218
	Woori home shopping	Administrative litigations related to deliberation and decision of Fair Trade Commission (FTC) (and 1 other cases)	1,400,000
	Cs mart	Claim for payment of goods(and 3 other cases)	282,985

b. Major lawsuits where the Company is the defendant

(Unit: thousand Won)

Business segment	Company (Defendant)	Lawsuit details	Claimed amount
Department store	Lotte Shopping	Damages claim (and 13 other cases)	6,080,300
Department store	Lotte Department Store Masan	Retirement claim(and 1 other cases)	78,000
Discount store	Lotte Shopping	Damages claim (and 13 other cases)	14,735,490
	LOTTE MART COMPANY LIMITED	Damages claim (and 1 other cases)	5,436,828
	Lotte Mart (Chongqing) Commercial Co., Ltd.	Damages claim (and 1 other cases)	18,771,000
Finance	Lotte Card	Damages claim (and 100 other cases)	42,957,619
Finance	eB Card	Claim related to remuneration (and 4 other case)	3,044,406
Electronics	Lotte Hi-mart	Damages claim (and 6 other cases)	1,696,680
Others	Lotte Shopping (Super)	Damages claim (and 4 other cases)	2,453,818
	Lotte Shopping (Cinema)	Damages claim (and 1 other cases)	85,569
	Korea Seven	Damages claim (and 38 other cases)	2,365,306
	Buy the Way	Eviction(and 2 other cases)	182,599
	Woori Home Shopping	Damages claim (and 4 other cases)	3,038,342
	Cs mart	Claim for payment	39,548

2. Bills or checks provided as collateral

(1) Lotte Card, which is a subordinate company, bears the warranty responsibility in the event of failure of asset backed card debenture to equip itself with appropriate requisites or in the event of occurrence of causes such as overdue. In the case of trust format of liquidation, the trust company can request Lotte Card to put assets in excess of a prescribed amount into trust additionally if the assets being assigned fail to be maintained at or above a prescribed level. In addition, in the event of asset liquidation, if prescribed causes such as when the average portfolio profit rate over the 3 continuous settlement terms falls below the average basic cost rate over the same period or when the revised balance of the principal of liquefied assets as of the date of the termination date of each of the settlement terms falls below the minimum balance of the principal of liquefied assets, etc. agreed upon under the relevant contract materialize, then, the limited company specializing in asset liquidation shall bear the responsibility for early redemption of the asset backed securities.

(2) Lotte Shopping has the right to purchase 5.1% of the entire stocks of Hyundai Logistics Co., Ltd. that Aegis First owns. Aegis First, unless the Lotte Shopping does not exercise call option for the said equity, has the right to sell it to Lotte Shopping. On the other hand, the entire amount of the stocks of Aegis First(with book value of 5,875,427,000 Won) that Lotte Shopping owns has been offered as collateral to the Mizuho Bank in relations to the loan by Aegis First

3. Use of proceeds from private placements

(As of 30 September 2015) (Unit: million Won)

Type

Remittance date

Remittance amount

Planned use of proceeds

Actual use of proceeds

Convertible bond issue

2011.07.05

960,003

Overseas investment and repayment of foreign currency borrowings

Exchangeable

Bond issue

2013.01.24

321,200

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.
On 5 July 2014, holders exercised their early redemption option and redeemed US$480,000,000 and JPY 22,940,000,000 aggregate principal amount of the convertible bonds.

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	2014.05.02~2017.05.02	Payment guarantees for funding
Shandong Longzhile Cinema Co., Ltd.	Shinhan Bank	CNY 24,000,000	2014.06.23~2017.06.23
International Business Center Company limited	KOREA EXIM BANK	USD 18,500,000	2015.03.01~2016.04.06
International Business Center Company limited	KEXIM (Vietnam)	USD 1,500,000	2015.03.01~2016.04.06

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 September 2015) (Unit: million Won)

Category	Details
Issuance number	Issue No. 1-1, 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 corporate purposes
Type of offering	Private placement
Listed/Unlisted	Unlisted
Nonredemption Balance	Won 270 billion (No. 1-1: Won 240 billion, No. 1-2: Won 30 billion)
Recognition Capital Related Issue	Reason for the Accounting management	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.
Recognition Capital Related Issue	The recognition capital ratio of the credit-rating agencies, etc.	Moody's : 50%, Fitch : 50%
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 yield1.5%, with an additional 1% at 10 years after issuance)
Seniority	When liquidating a company, it is on the same level as the last back burner among the preferred stocks that are related to the distribution of the residuary estate. It is in the prior order than the common stock of the company; subordinated over the rest of the debts except for the debts specified to be entrusted in the same order as the existing preferred stocks of the company.
The influence on the financial structure when classifying debt	Debt ratio increased (from 66% to 69%, based on the data from the end of September, 2015.)

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	2014.01.21	Advisory from the Financial Supervisory Service and imposition of fine (W500 million)	Improper operation of board of directors. (Specialized Credit Finance Business Act Article 50)	Strengthening of management of board of directors operation.
		2014.01.21	One employee was issued a "cautionary warning"
		2014.02.11	Warning from the Financial Supervisory Service and imposition of fine (W1,000 million)	Insurance solicitation with misleading information about insurance products. (Insurance Business Act Article 97)	Employee training.
		2014.02.11	One employee was issued an official "reprimand"		Employee training.
		2014.02.16	Partial suspension of operations for 3 months from the Financial Services Commission	Leaking of customer information. (Specialized Credit Finance Business Act Article 24, Use and Protection of Credit Information Act Article 19)	Reinforcement of information security (physical and IT-related).
		2014.10.28	Imposition of penalty surcharge (W50,000,000) and fine (W 6,000,000) from the Financial Services Commission	Violation of the prohibited acts relating to credit card businesses, etc., Violation of duty to maintain sound business practice in recruiting credit card holders (Specialized Credit Finance Business Act Article 24, etc.)	Reinforcement of relevant standards. Employee training. Strengthening of management supervision.
		2014.10.28	Three managing directors - Former managing director (13 years and 7 months of tenure), an official "reprimand" -Former managing director (12 years of tenure), three months of salary reduction -Current managing director (15 years and 5 months of tenure), an official "reprimand"
		2014.10.28	Two representative directors -Former representative director (5 years and 8 months of tenure), an equivalent of "cautionary warning" -Former representative director (10 years and 11 months of tenure), an equivalent of recommendation of discharge	Lack of supervision and management with regard to developing and maintaining measures for personal credit information protection	Replacement of representative directors. Strengthening of management supervision
		2014.10.28	Five managing directors -Former managing director (12 years of tenure), three months of salary reduction -Former managing director (7 years and 6 months of tenure), an equivalent of an official "reprimand" -Former managing director (6 years and 4 months of tenure), an equivalent of dismissal -Current managing director (10 years and 2 months of tenure), an official "reprimand" -Current managing director (10 years and 4 months of tenure), three months of salary reduction	Neglectful supervision, development and management of security measures with regard to user personal information usage, Failing to convert user information when testing the electronic system. Lack of supervision, etc.	Expansion of IT security infrastructures and work force. Regular employee training. Strengthening of internal regulation.
		2014.10.30	Imposition of fine (W 12,000,000) from the Ministry of Security and Public Administration	Violation of the rules relevant to personal information retention, etc.	Regular employee training. Strengthening of internal regulation.
		2015.02.12	Cautioned and imposition of fine (5 million Won)by the Financial Supervisor Service	Failure to exhaustively manage and monitor the recruitment of members for issuance of credit card, etc.	Full time education for the staffs and reinforcement of internal control

c. Woori Homeshopping

	Company	Date	Target person for punishment or measures	Cause of ground laws and regulations	Details of punishment or measures			Response of company to punishment or measures	Preventive measures for prevention of recurrence
Distribution	Woori Homeshopping	2015.03.25	Woori Homeshopping	Act on Large Scale Distribution - non issuance of prior document and contract form (delayed issuance) and advance oral order, delayed payment for sale money, burden shift of costs for sales promotion, demand of business management information and provision of disadvantage through method of receipt of fees and inducement of mobile order Period: 12.01.1~14.12.4		Correction order/notice order/penalty 37.4 billion won	Paid penalty, organized TFT fair trade and took measures against disadvantages to subcontractors		organized TFT fair trade (carried out making efforts in improving)
		2015.05.14		Act on Signs and Advertisement- omission of significant information items notification: guide costs, selective tourist expenses and tourism products; important sign item in broadcasting Period: 14.09.01~11.09		Penalty : 62.50 million won	Paid penalty and indication of omitted items		Indicated omitted items
		2015.06.12		Ecommerce Act- false and exaggerative ad in TV broadcasting sales/Liricos ample cosmetics- made false and exaggerative ad in broadcasting by pretending genuine cosmetics while giving sample ones. Period : 14.11.23		Correction order/penalty 8 million won	Paid penalty/took disciplinary measures against responsible person through personnel committee		Personnel committee carries out follow-up measures (intensifying broadcasting and broadcasting review process)

The above table summary does not include minor sanctions and fines.

C. Inventory Status

(Unit: million Won)

Business segment	Account	46^thfiscal year (3Q)	45^thfiscal year	44^rd fiscal year
Department store	Merchandise	1,635,709	1,645,156	1,406,355
	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	1,635,709	1,645,156	1,406,355
Discount store	Merchandise	652,218	645,588	716,340
	Goods	-	-	-
	Goods in process	-	-	-
	Half-finished goods	-	-	-
	Raw materials	-	-	-
	Component materials	-	-	-
	Stored goods	534	417	562
	Goods not delivered	3,707	530	413
	Unsold property	32,255	-	-
	Completed property	-	-	-
	Uncompleted property	465	23,756	36,068
	Land site	1,643	16,061	35,130
	Sub-total	690,822	686,352	788,513
Finance	Merchandise	3,124	2,564	2,506
	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	3,124	2,564	2,506
Electronics	Merchandise	447,155	357,113	339,729
	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	447,155	357,113	339,729
convenience store	Merchandise	67,687	53,173	49,876
	Goods	-	-	-
	Goods in process	-	-	-
	Half-finished goods	-	-	-
	Raw materials	-	-	-
	Component materials	-	-	-
	Stored goods	840	787	695
	Goods not delivered	-	-	-
	Unsold property	-	-	-
	Completed property	-	-	-
	Uncompleted property	-	-	-
	Land site	-	-	-
	Sub-total	68,527	53,960	50,571
Others	Merchandise	187,668	174,114	189,990
	Goods	10,243	12,227	9,303
	Goods in process	1,423	943	1,288
	Half-finished goods	-	-	-
	Raw materials	1,655	873	1,166
	Component materials	20	9	712
	Stored goods	1,409	964	2,172
	Goods not delivered	325	1,676	83
	Unsold property	-	-	-
	Completed property	-	-	-
	Uncompleted property	288,183	225,103	322,104
	Land site	-	-	-
	Sub-total	490,926	415,909	526,818
Total	Merchandise	2,993,561	2,877,708	2,704,796
	Goods	10,243	12,227	9,303
	Goods in process	1,423	943	1,288
	Half-finished goods	-	-	-
	Raw materials	1,655	873	1,166
	Component materials	20	9	712
	Stored goods	2,783	2,168	3,429
	Goods not delivered	4,032	2,206	496
	Unsold property	32,255	-	-
	Completed property	-	-	-
	Uncompleted property	288,648	248,859	358,172
	Land site	1,643	16,061	35,130
	Sub-total	3,336,263	3,161,054	3,114,492
Inventory as percentage of total assets (%)[InventoryAssets100]		8.06%	7.89%	7.99%
Inventory turnover (times) [Annualized cost of sales{(Period start inventoryPeriod end inventory)2}]		6.1	6.2	6.7

Due diligence of inventories

Business unit

Department store

Discount store

Others

Date of due diligence

17 June,

23 June ~ 24 June

15 January - 26 March

15 April - 30 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 September 2015) (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	-	8,000	230,000	203,010	-	-	115,000	150,000	706,010

2. Amount of electronic short-term debenture

(As of 30 September 2015) (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	Total	Limitations in issuance	Limitations on balance
Amount outstanding	-	-	-	-	-	-	-	-

3. Amount of Outstanding Corporate Bonds

(As of 30 September 2015) (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	2,161,237	2,115,500	2,201,150	1,160,000	900,000	540,000	0	9,077,887

4. Amount of Outstanding Hybrid Securities

(As of 30 September 2015) (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

5. Amount of Outstanding Conditional Capital Stocks Balance

(As of 30 September 2015) (Unit: million Won)

Remaining maturity period	Under 1 year	Over 1 but under 2years	Over 2 but under 3years	Over 3 but under 4years	Over 4 but under 5years	Over 5 but under 10years	Over 10 but under 20years	Over 20 but under 30years	Over 30 years	Total
Amount outstanding	-	-	-	-	-	-	-	-	-	-

This information is provided by RNS

The company news service from the London Stock Exchange

END

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