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

22/12/2016 07:45

RNS Number : 5561S

Lotte Shopping Co. Ltd

22 December 2016

Quarterly Report

(47^th fiscal year)

For the nine month period ended 30 September 2016

Click on, or paste the following links into your web browser, to view the associated PDF documents.

http://www.rns-pdf.londonstockexchange.com/rns/5561S_-2016-12-22.pdf
http://www.rns-pdf.londonstockexchange.com/rns/5561S_1-2016-12-22.pdf

To: Financial Services Commission of Korea
KRXKOSPIMarket 14 November 2016

Company Name : Lotte Shopping Co., Ltd.

CEO : Wonjoon Lee

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

Prepared by : (Position) Head of Planning Division

(Name) Sang Soo Kim
(Tel) +82 2-2118-2025

On 14 November 2016, Lotte Shopping Co., Ltd. (the "Company") filed its business report for thefirst nine monthsof 2016 (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 thenine monthsperiod ended30 September 2016has 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 the ninemonth period ended30 Septemberor, as the context requires,30 Septemberof such fiscal year.

I. Overview of the Company

A. Main Businesses of the Company

The Company had 71 subsidiaries as of 30 September 2016, 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 storesegment 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 2016.

2. Affiliates

The Company has 94 affiliates.

a. Listed companies

Business category

Affiliates

Number of companies

listed company

Lotte Confectionary, Lotte Food, Lotte Chilsung Beverage

Lotte Chemical

Lotte Shopping, Lotte Hi-mart

Lotte Insurance

Hyundai Information Technology

Lotte finechemical

b. Unlisted companies

Business category	Affiliates	Number of companies
unlistedcompany	Lotteria, CH Beverage, MJA Wine, HUI, Chung-buk Soju, Baekhak Beverage, Lotte-Nestle Korea, Lotte Hotel, Lotte Giants, Lotte Hotel Busan, Lotte Corporation, D-Cinema Korea, Lotte JTB, Lotte Gimhae Development, Universal Studios Korea Development, Lotte International, Lotte Station Building, Lotte Logistics, 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, Korea Fuji Film, Sambark LFT, Lotte Aluminium, Canon Korea Business Solutions, Lotte Engineering & Construction, Lotte Asset Development, Lotte Incheon Development, Universal Studios Korea Resort Asset Management Corporation, Donggyo Cheonggiwa PFV, Lotte Incheon Town, Magok District PFV, Daehong Communications, Mobizap Media, M.Hub Lotte Data Communication, Han Paysys, Lotte Capital, Lotte Card, Lotte PS Net, Mybi, Busan Hanaro Card, eB Card, Gyeonggi Smartcard, Incheon Smartcard, Jang Kyo PFV Seetec, KP Chemtech, Lotte MRC, Lotte Mitsui Chemicals, Lotte Versalis Elastomers, DACC Aerospace, Angel With, HyundaiLogistics, Hyundai Cosco Logistics, Aegis First, Lotte Members, Lotte shopping town Daegu, Lotte Duty Free Jeju, Lotte Town Dongtan, Lotte Autolease, Lotte Rental, Lotte Auto Care, Green Car, SDJ, JG Industrial, development, Lotte Accelerator, Hantok Chemical, S-EnPol, Lotte Ulsan Development, Sweet with, Lotte Advanced Materials, Eunpyeong PFV	85

Business category

Affiliates

Number of companies

unlistedcompany

Lotteria, CH Beverage, MJA Wine, HUI, Chung-buk Soju, Baekhak Beverage, Lotte-Nestle Korea, Lotte Hotel, Lotte Giants, Lotte Hotel Busan, Lotte Corporation, D-Cinema Korea, Lotte JTB, Lotte Gimhae Development, Universal Studios Korea Development,

Lotte International, Lotte Station Building, Lotte Logistics, 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, Korea Fuji Film, Sambark LFT, Lotte Aluminium, Canon Korea Business Solutions, Lotte Engineering & Construction, Lotte Asset Development, Lotte Incheon Development, Universal Studios Korea Resort Asset Management Corporation, Donggyo Cheonggiwa PFV, Lotte Incheon Town, Magok District PFV, Daehong Communications, Mobizap Media, M.Hub

Lotte Data Communication, Han Paysys, Lotte Capital, Lotte Card, Lotte PS Net, Mybi, Busan Hanaro Card, eB Card, Gyeonggi Smartcard, Incheon Smartcard, Jang Kyo PFV

Seetec, KP Chemtech, Lotte MRC, Lotte Mitsui Chemicals, Lotte Versalis Elastomers, DACC Aerospace, Angel With, HyundaiLogistics, Hyundai Cosco Logistics, Aegis First, Lotte Members, Lotte shopping town Daegu, Lotte Duty Free Jeju, Lotte Town Dongtan, Lotte Autolease, Lotte Rental, Lotte Auto Care, Green Car, SDJ, JG Industrial, development, Lotte Accelerator, Hantok Chemical, S-EnPol, Lotte Ulsan Development, Sweet with, Lotte Advanced Materials, Eunpyeong PFV

Since the last business report, Lotte Advanced Materialsbecame 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 2016:

Appointment of inside director: Dongbin Shin, Youngja Shin, Inwon Lee, Wonjoon Lee

Appointment of outside directors: Soogeun Kwak, JaeWon Lee, JaeWan Bahk, SeokYoung Choi

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). Accordingly, the controlling company has additionally acquired the controlling power over the Lotte PS Net Co., Ltd.

E. Changes in Capital Stock

1. Increase (decrease) in share capital

(As of 30 September 2016) (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.

F. Total Number of Shares

(As of 30 September 2016) (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 2016) (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		47^thfiscal year (3Q)	46^thfiscal year	45^rd fiscal year
Par value per share (Won)		5,000	5,000	5,000
(Consolidated)Net profit (million Won)		226,546	-383,067	526,650
Earnings per share (Won)		5,448	-13,393	17,391
Total cash dividend (million Won)		-	59,104	59,104
Total stock dividend (million Won)		-	-	-
(Consolidated)Cash dividend payout ratio (%)		-	-	11.2
Cash dividend yield (%)	Common stock	-	0.83	0.72
Cash dividend yield (%)	Preferred stock	-	-	-
Stock dividend yield (%)	Common stock	-	-	-
Stock dividend yield (%)	Preferred stock	-	-	-
Cash dividend per share (Won)	Common stock	-	2,000	2,000
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	2016 (3Q)
Net profit for the period	Won 170,556,270,976
Interest on issued hybrid securities	Won (9,545,635,887)
Weighted average number of common stock (excluding treasury stock)	Shares 29,552,204
Earnings per common share	Won 5,448

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 JOINT STOCK COMPANY	Discount store business in Vietnam
	LOTTE MART COMPANY LIMITED	Discount store business in China
	Swift Harvest Ltd. and 8 other entities	Discount store and real estate businesses in China
	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
	Lotte Shopping (LOHB's)	Retail business for consumer goods, such as cosmetics, food, and other merchandise
	Woori Home Shopping & Television Co., Ltd.	TV home shopping, online shopping and catalogue shopping businesses
	Lotte.com	Distribution businesses under the Electronic Transactions Act, such as online shopping mall management business
	Lotte Members	Membership point-system and professional analysis businesses, marketing platform business, global membership business and L.pay business
	Lotte Songdo Shopping Town Co., Ltd.	Development and management of Lotte Mall Songdo
	Lotte Suwon Shopping Town Co., Ltd.	Property management and trust administration
	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 Properties (Chengdu) Limited	Mixed-use development of Chengdu Banseongang project in China
	LOTTE PROPERTIES (CHENGDU) HK LIMITED	Mixed-use development and investment in Chengdu Banseongang project in China
	Kotobuki Holding (HK) Ltd.	Investing in hotel businesses in Hong Kong
	Hai Thanh - Kotobuki Joint Venture Company	Hotel business in Vietnam

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

(Unit: million Won, %)

Business segment	Division	47^th fiscal year (3Q)		46^th fiscal year (3Q)		46^th fiscal year		45^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	5,689,661	25.9	5,666,036	26.2	8,032,532	27.6	8,043,745	28.6
	Operating income	296,913	53.5	282,145	42.4	513,129	60.1	602,558	50.7
	Total assets	16,356,675	39.9	16,781,777	40.5	16,704,343	41.1	16,794,731	41.9
Discount Store	Sales	6,291,628	28.6	6,347,810	29.3	8,323,692	28.6	8,208,956	29.2
	Operating income	(87,286)	-15.7	(30,632)	-4.6	(61,431)	-7.2	67,075	5.6
	Total assets	9,672,960	23.6	10,615,864	25.7	9,742,640	23.9	10,412,802	26.0
Finance	Sales	1,384,190	6.3	1,359,522	6.3	1,789,948	6.1	1,760,811	6.3
	Operating income	114,826	20.7	143,926	21.7	165,698	19.4	202,636	17.1
	Total assets	9,960,805	24.3	9,282,599	22.4	9,402,558	23.1	8,575,013	21.4
Electronics	Sales	2,959,835	13.5	2,890,369	13.4	3,896,137	13.4	3,754,295	13.4
	Operating income	135,221	24.4	133,728	20.1	160,180	18.8	144,391	12.2
	Total assets	2,947,310	7.2	2,887,674	7.0	2,905,213	7.1	2,774,637	6.9
Convenience Store	Sales	2,767,500	12.6	2,512,144	11.6	3,314,814	11.4	2,685,504	9.6
	Operating income	43,394	7.8	47,663	7.2	45,707	5.4	37,554	3.2
	Total assets	1,252,434	3.1	1,236,866	3.0	1,149,742	2.8	1,157,632	2.9
Others ⁽¹⁾	Sales	2,891,517	13.1	2,871,425	13.2	3,770,532	12.9	3,646,256	12.9
	Operating income	51,653	9.3	87,904	13.2	30,430	3.5	134,165	11.2
	Total assets	801,951	1.9	581,862	1.4	788,870	2.0	357,511	0.9
Total	Sales	21,984,331	100.0	21,647,306	100.0	29,127,655	100.0	28,099,567	100.0
	Operating income	554,721	100.0	664,734	100.0	853,713	100.0	1,188,379	100.0
	Total assets	40,992,135	100.0	41,386,642	100.0	40,693,366	100.0	40,072,326	100.0

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	2015	2014	2013
Market size	29.2	29.3	29.8
Growth rate	-0.3	-1.7	4.6

Source: National Statistics Office

Excludes data for outlets.

Number of department stores in Korea

(Unit: stores)

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

Source: National Statistics Office

Excludes data for outlets.

ii. Company overview

Trends in market share

(Unit: %)

Category	2015	2014	2013
Lotte department store's market share	51.5	48.5	45.8

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, 17 outlet stores, and 3 stores operated by the Company pursuant to management contracts with Lotte Station Building and Lotte Department Store Masan (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	2015	2014	2013
Market size	48.6	46.6	45.1
Growth rate	4.3	3.3	2.0

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	2015	2014	2013
Number of discount stores	544	528	511
Increase (decrease)	16	+17	+13

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	2015	2014	2013
Lotte Mart's market share	23.8	23.4	23.4

Source: National Statistics Office and Company data.

Based on (Homeplus, E-Mart, Lotte Mart) three companies, Lotte Mart including 112 discount stores and five vic market stores

b. LOTTE VIETNAM SHOPPING JOINT STOCK COMPANY

Industry overview

Trends in market size in Vietnam

Category	2015	2014	2013
Population (million people)	92	91	90
GDP (USD 100 million)	2,134	1,917	1,717
Per capita (USD)	2,330	2,115	1,914
Growth rate (%)	6.7	5.5	5.4
Consumer price index (%)	2.0	5.2	6.6

Source: Planet Retail and the General Statistics Office of Vietnam

i. 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 2016, the Company operated 13 stores in Vietnam.

Status of LOTTE VIETNAM SHOPPING CO., LTD. stores

(Unit: stores)

Category	2016(3Q)	2015	2014
Number of stores	13	11	10
Increase (decrease)	+2	+1	+4

c.LOTTE MART COMPANY LIMITED / Swift Harvest Ltd and8 other entities

i. Industry overview

Trends in market size in China

Category	2016(E)	2015	2014
Population (thousand people)	1,373,540	1,374,620	1,367,520
GDP (USD 100 million)	113,830	112,119	104,917
Per capita (USD)	8,240	8,154	7,672
Growth rate (%)	6.7	6.9	7.4
Increase in consumer price index (%)	1.9	1.8	2.3

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 2016(Not included 16 Beijing Super) 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		2016(3Q)	2015	2014
Number of stores	Shanghai	74	74	72
	Qingdao	0	0	6
	Beijing	12	12	12
	Beijing(super)	16	16	-
	Shenyang	8	8	8
	Chongqing	6	6	5
Total		116	116	103
Increase (decrease)		0	+13	-4

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

i. Industry overview

Trends in the market size in Indonesia

Category	2015	2014	2013
Population (million people)	252	251	248
GDP (USD 100 million)	9,080	8,507	8,739
Increase in consumer price index (%)	3.4	6.0	6.4

Source: Planet Retail (June 2015)

ii. Company overview

The Company acquired 19 Makro stores in Indonesia in November 2008 and opened 16 stores through its local retail business subsidiary in 2010~ 2015. As of 30 September 2016, the Company operated 43 stores in Indonesia and plans to continually expand in Indonesia.

Status of stores in Indonesia

(Unit: stores)

Category	2016(3Q)	2015	2014
Number of stores	43	41	38
Increase (decrease)	+2	+3	+2

3. Financial business sector segment

a. Lotte Card

i. Industry overview

Status of credit card business

(As of 30 September 2016)

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	Economically active population (ten thousand persons)	Number of Credit card (ten thousand card)	per credit card number of Economically active population(card)
2015	2,691	9,314	3.5
2014	2,654	9,232	3.5
2013	2,587	10,203	3.9

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	2015	2014	2013
Credit card market size in Korea by charge volumes	630.7	594.1	585.6
Lotte Card's charge volumes	56.6	53.5	54.1
Lotte Card's market share	9.0	9.0	9.2

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 in 2016 (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	9,200 buses	19,421 buses	11,053 buses
Taxi	55,789 taxies	31,905 taxies	122,225 taxies
Subway	129 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 2016, Cash Bee cards are accepted at 80,958 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	2015	2014	2013
Market size for prepaid cards in Korea based on sales ⁽¹⁾	3,434	2,974	2,678
EB Card	932	857	692
EB Card's market share	27.1	28.8	25.8

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	2015	2014	2013
Household electronics	17.8	16.9	16.8
Computer and communication devices	19.8	19.7	21.8

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 3Q of 2016, Steady growth of sales of Household electronics and outside factors and changes in trend, Hi-mart's revenue increased by approximately 2.4% on a consolidated basis compared to the 3Q of 2015, largely due to the expansion of SKU(Stock Keeping Unit).

Lotte Hi-mart as of 30 September 2016, operated 448 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 2016, 579 household electronics installation teams and 1,329 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).

In addition, our company is providing smart pick services at all of our outlets. This service allows the customers to designate the outlet and the date of the visit of the outlet after having ordered products through the on-line shopping mall, and to collect the products on the corresponding date. Currently, this service is provided for products including PCs, cameras, cleaners, electric heaters and shavers, etc., and we are planning to continuously expand the range of products to be included in the service.

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

Store	2015	2014	2013
Lotte HiMart	48.5%	48.6%	46.6%
Electronics Land	6.4%	7.0%	7.3%
Living Plaza	27.1%	25.5%	26.7%
Hi Plaza	18.1%	18.9%	19.4%

Source: Audit reports of respective companies

5. Convenience Store

Korea Seven / Buy the Way

i. Industry overview

The convenience store industry in Korea faces challenges including market saturation, new government regulations on store openings and conflicts with franchisees. In addition to market maturity which led to a slump in monthly store opening rates, the enforcement of the amended Franchise Act which restricts store openings have forced industry players to shift their strategy from quantitative growth to qualitative growth. Under such environment, the convenience store industry's plans for store openings have shifted from large cities to mid- and small-sized cities and focus has been placed on increasing sales in current stores by diversifying products and increasing price competitiveness. Increased disputes with franchisees have also spurred franchisor companies to seek out new ways to achieve shared growth with their franchisees.

ii. Company overview

Korea Seven, a subsidiary of the Company, has operated a chain of convenience stores in Korea under the brand name 7-Eleven since 1989. Korea Seven acquired 100% of the capital stock of Buy the Way, which also operates convenience stores in Korea, in 2010.

Trends in market share

(Unit: %)

Category	2015	2014	2013
Korea Seven and Buy the Way's market share	27.6	27.8	28.8

Estimated based on Company data and includes acquired Buy the Way stores.

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 2016 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. Beginning with the 'Lotte Premium Food Market' No. 1 in June 2016, we are providing differentiated products and services including more than 7,000 domestic and foreign premium level food items by entering the premium food market, which is undergoing new growth in alignment with the changes in the domestic consumption environment.

b. Lotte Cinema

i. Industry overview

The Korean film industry recorded sales of Won 579 billion in the 3Q of 2016, 1.8% increase from the same period in 2015. In the 3Q quarter of 2016, 72.4 million movie tickets were sold, showing a 0.9% decrease from the same period in 2015.

ii. Company overview

As of 30 September 2016, Lotte Cinema operated 109 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 2016, Lotte Cinema operated 39 overseas cinemas.

Trendsin market share

_{(Unit: 1}_0,_{000 persons, %)}

_Category	2015	2014	2013
_{Number of movie tickets sold in the cinema industry in Korea}	21,729	21,506	21,335
_{Number of movie tickets sold by Lotte Cinema(1)}	6,529	6,300	6,376
_{Lotte Cinema's market share}	30.0	29.3	29.9

Note:

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

c. Lotte Shopping (LOHB's)

i. Industry overview

Health & Beauty specialty stores ("H&Bs") are the Korean distribution channel for overseas drug stores that focus on the retail of cosmetics and other beauty products. In 2015, the H&B industry increased 40% to Won 1 trillion compared to 2014. While other distribution industries have seen stagnation in growth due to the recent economic slowdown and severe price discounting resulting from intense competition, the H&B industry expects to continue expanding by catering to recent conscious consumption trends focused on pricing and quality. CJ's Olive Young and GS's Watson's are the leaders in the industry, and Lotte's LOHB's and Shinsegae's Boons, later market entrants, are also expanding.

ii. Company overview

LOHB's entered the H&B business when it opened its first store in Seoul in May 2013. As of 30 September 2016, LOHB's operated 78 stores in Korea.

Trendsin market share

(Unit: stores, %)

Category	2016(3Q)	2015	2014
Number of stores owned by major Korean H&B companies⁽¹⁾	901	732	565
Number of stores owned by LOHB's	78	53	30
LOHB's market share	8.7%	7.2%	5.3%

Note:

Estimates based on Company data.

(1) Major companies refer to Olive Young (CJ), Watsons (GS), LOHB's (Lotte) and Boons (Shinsegae).

d. Woori Home Shopping

i. Industry overview

(1) TV home shopping

There are seven TV home shopping companies in Korea. Korea Home Shopping (currently GS Home Shopping) and 39 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, Home & Shopping joined the market in 2011 and IM Shopping joined the market in 2015. 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	2015	2014	2013
Market size of the home shopping industry in Korea	40,682	41,000	38,829
Woori Home Shopping sales	8,646	8,692	7,732
Woori Home Shopping market share	21.3	21.2	19.9

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

e. 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.

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 2016.2Q was 30.5 trillion Won, which is a growth by approximately 20.5% from the previous year with continued growth every year.

Company overview

f. Lotte Members

ii. 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.

h. 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.

i. 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.

j. LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD./ Lotte Shopping Holdings (Hong Kong) Co.,Limited / LHSC Limited

As of 30 September 2016, LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD. held shares in distribution companies in India, Indonesia and 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	90.0	16	Distribution (department store)
	LOTTEMART C&C INDIA PRIVATE LIMITED	100.0	247	Distribution (mart)
	PT. LOTTE SHOPPING INDONESIA	80.0	249,582	Distribution (mart)
	PT. LOTTE MART INDONESIA	99.0	46,346	Distribution (mart)
	LOTTE HOTEL & RETAIL VIETNAM PTE. LTD.	40.0	27,144	Investment company
	PT. LOTTE Shopping Avenue Indonesia	99.0	47,755	Distribution (department store)
	Lotte Shopping Plaza Vietnam Co., Ltd.	100.0	30,970	Distribution (department store)
	LOTTE VIETNAM SHOPPING JOINT STOCK COMPANY	99.9	54,348	Distribution (mart)
	LOTTE E-COMMERCE VIETNAM CO.,LTD.	100.0	5,482	Distribution (Lotte.com)
	PT. INDO LOTTE MAKMUR	50.0	5,482	Distribution (Lotte.com)
	International Business Center Company Limited	50.0	58,902	Real estate lease
Lotte Shopping Holdings (Hong Kong) Co., Limited	Lotte Business Management (Tianjin) Co., Ltd.	100.0	62,489	Distribution (department store)
	Lotte Mart China Co., Ltd.	100.0	160,942	Distribution (mart)
	Swift Harvest Ltd. and 8 other entities	100.0	0	Distribution (mart)
	Hong Fung Ltd. and 2 other entities	100.0	12,776	Distribution (mart)
	Nantong Meili Properties Limited	100.0	4,188	Distribution (mart)
	Zhuji Decheng Properties Limited	100.0	2,759	Distribution (mart)
	Nantong Yaodong Properties Limited	100.0	8,751	Distribution (mart)
	Nantong Fuhua Properties Limited and 1 other entities	100.0	5,698	Distribution (mart)
	Nantong Jinyou Properties Limited and 1 other entities	100.0	7,814	Distribution (mart)
	Nantong Branda Properties Limited and 1 other entities	100.0	1,745	Distribution (mart)
	Nantong Fortune Trade Properties Limited	100.0	3,387	Distribution (mart)
	Nantong Fine Spring Properties Limited	100.0	3,042	Distribution (mart)
	Nantong Fine Port Properties Limited and 1 other entities	100.0	3,757	Distribution (mart)
	Huai An Full Faith Properties Limited	100.0	5,214	Distribution (mart)
	LHSC Limited	51.1	0	Investment company
	Liaoning LOTTE Mart Co., Ltd.	100.0	0	Distribution (mart)
	Qingdao LOTTE Mart Commercial Co., Ltd.	75.2	0	Distribution (mart)
	Lotte Department Store (Shenyang) Co., Ltd.	100.0	76,741	Distribution (department store)
	Lotte International Department Store (Weihai) Co., Ltd.	100.0	32,889	Distribution (department store)
	Jilin LOTTE Mart Co., Ltd.	100.0	0	Distribution (mart)
	Lotte Shopping Business Management(Hong Kong) Limited	100.0	11	Bond issuances (SPC)
	LOTTE DEPARTMENT STORE (TIANJIN) CO., LTD.	100.0	54,815	Distribution (department store)
	Lotte Department Store (Chengdu) Co., Ltd.	100.0	43,852	Distribution (department store)
	Lotte mart (Chongqing) Commercial Co., Ltd.	100.0	21,926	Distribution (mart)
	Lotte Mart Co., Ltd.	100.0	109,981	Distribution (mart)
	LOTTE MART (CHENGDU) COMMERCIAL COMPANY LIMITED	100.0	13,156	Distribution (mart)

As of 30 September 2016 (exchange rate of USD 1.00 = KRW 1,096.30)

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

k. Kotobuki Holding (HK) Ltd./ Hai Thanh - Kotobuki Joint Venture Company

In October 2012, LOTTE HOTEL & RETAIL VIETNAM PTE. LTD. acquired Kotobuki Holding (HK) Ltd., the holding company of Hai Thanh-Kotobuki Joint Venture Company. Hai Thanh-Kotobuki Joint Venture Company operates hotels in Ho Chi Minh City, Vietnam, including Lotte Legend Hotel Saigon. As of 30 September 2016, Kotobuki Holding (HK) Ltd. owned 70% of Hai Thanh-Kotobuki JV Company.

l. Lotte Properties (Chengdu) Limited/ LOTTE PROPERTIES (CHENGDU) HK LIMITED

LOTTE PROPERTIES (CHENGDU) HK LIMITED was established for the Chengdu Banseongang mixed-usedevelopment project in October 2009 with a paid-in capital of US$197 million, 73.5% of which was invested by Lotte Shopping, 16.2% by Lotte Hotel, 5.3% by Lotte Station Building and 5.0% by Lotte Asset Development.

Lotte Properties (Chengdu) Limited, established in May 2012 through a 100% investment by LOTTE PROPERTIES (CHENGDU) HK LIMITED, purchased 21,000 pyeong of land in the Chengdu Banseongang district and is leading a mixed-use development project with 68,000 pyeong for residence and 103,000 pyeong for business.

B. Production and Facilities

1. Plans for the establishment of new stores

Category	Store	Location	Expected establishment date
Outlets	Nam-ak	Namak-ri, Samhyang-eup, Muan-gun, Jeollanam-do	December 2016
Discount Store	Siheung Gunja	Jeongwang-dong, Siheung-si, Gyeonggi-do	December 2016
	Eunpyeong New Town	Jingwan-dong, Eunpyeong-gu, Seoul	December 2016
	Mokpo Namak	Namak-ri, Samhyang-eup, Muan-gun, Jeollanam-do	November 2016
Cinema	Cheongju Yongam	Yongam-dong, Sangdang-gu, Chungcheongbuk-do	November 2016
Cinema	Eunpyeong New Town	Jingwan-dong, Eunpyeong-gu, Seoul	November 2016

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

2016 - 2018

Tangible assets

Increase in sales

17,400

2,500

14,900

Discount store

New
investment

2016 - 2018

Tangible assets

Increase in sales

5,534

897

4,637

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	2016	2017	2018	Effect
Department store	Newandordinary investments	Tangible and other assets	25,875	7,705	8,330	9,840	Increase in sales
Discount store	New and ordinary investments	Tangible and other assets	9,137	2,711	2,201	4,225	Increase in sales

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

C. Sales

(Unit: million Won)

Business segment	Type	Product		47^th (3Q)	46^th (3Q)
Department Store	Products	Clothing, etc.	Export	610	-
			Domestic	4,839,029	4,893,623
			Total	4,839,639	4,893,623
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	26	-
			Domestic	849,996	772,413
			Total	850,022	772,413
	Total			5,689,661	5,666,036
Discount Store	Products	Food, etc.	Export	17	-
			Domestic	5,862,458	5,920,369
			Total	5,862,475	5,920,369
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	-	-
			Domestic	429,153	427,441
			Total	429,153	427,441
	Total			6,291,628	6,347,810
Finance	Products		Export	-	-
			Domestic	4,847	2,886
			Total	4,847	2,886
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Fees and commissions, etc.	Export	-	-
			Domestic	1,379,343	1,356,636
			Total	1,379,343	1,356,636
	Total			1,384,190	1,359,522
Electronics	Products	Electronics, etc.	Export	-	-
			Domestic	2,948,154	2,878,773
			Total	2,948,154	2,878,773
	Goods		Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fee, etc.	Export	-	-
			Domestic	11,681	11,596
			Total	11,681	11,596
	Total			2,959,835	2,890,369
Convenience store	Products	Food, etc.	Export	-	11
			Domestic	2,596,609	2,307,974
			Total	2,596,609	2,307,985
	Goods	Food, etc.	Export	-	-
			Domestic	-	-
			Total	-	-
	Others	Rental fees, etc.	Export	-	-
			Domestic	170,891	204,159
			Total	170,891	204,159
	Total			2,767,500	2,512,144
Others⁽¹⁾	Products	Food, etc.	Export	13,809	6,436
			Domestic	1,881,648	1,895,749
			Total	1,895,457	1,902,185
	Goods	Food, etc.	Export	-	-
			Domestic	37,948	34,325
			Total	37,948	34,325
	Others	Rental fees, etc.	Export	-	-
			Domestic	958,112	934,915
			Total	958,112	934,915
	Total			2,891,517	2,871,425
Total	Products	Clothing, food, etc.	Export	14,436	6,447
			Domestic	18,132,745	17,899,374
			Total	18,147,181	17,905,821
	Goods	Clothing, food, etc.	Export	-	-
			Domestic	37,948	34,325
			Total	37,948	34,325
	Others	Rental fees, etc.	Export	26	-
			Domestic	3,799,176	3,707,160
			Total	3,799,202	3,707,160
	Total			21,984,331	21,647,306

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 Six month period ended 30 September 2016.

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 Six month period ended 30 September 2016.

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% of net sales from 1 April 2016 to 1 March 2020.

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 three month period ended 30 September 2016 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

47^th fiscal year (3Q)	46^th fiscal year	45^th 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 position as of 30 September 2016 and 31 December 2015, 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 30 September 2016 and 2015.

3. Audit contracts

(Unit: million Won, hours)

Fiscal year	Auditor	Description	Fee	Total hours
47^th fiscal year (3Q)	Samjong KPMG	Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements	705	6,400
46^th fiscal year	Samjong KPMG	Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements	670	12,100
45^thfiscal year	Samjong KPMG	Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements	670	12,000

4. Contracts regarding non-audit services with outside auditor

(Unit: million Won)

Fiscal year	Date of contract	Description	Service period	Fee
47^thfiscal year (3Q)	16.02.17	Agreed upon proceedings with regard to royalties to Toys"R"Us	16.02.17 ~ 16.02.19	9
46^thfiscal year	15.03.10	Tax accounting due diligence related to acquisition	15.03.10 ~ 15.06.30	25
46^thfiscal year	15.03.16	Agreed upon proceedings with regard to royalties to Toys"R"Us	15.03.16 ~ 15.03.20	9
45^rd fiscal 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^rd fiscal year	14.12.01	Taxation review on the transaction between Lotte Shopping and FRL Korea	14.12.01~ 14.12.31	20

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 six 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)	Sukeun Kwak, JaeWan Bahk, SeokYoung Choi (from 22 March 2016)	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.	-
Outside Director Nomination Committee	Two or more directors (at least half of whom must be outside directors)	Wonjun Lee, Hyeryun Kang JaeWan Bahk, (from 22 March 2016)	The committee recommends candidates for outside directors to the general meetingof 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, Chungsook Moon JaeWon Lee (from 22 March 2016)	This committee is responsible for reviewing and approving the following: Internal transactions as defined under Article 11 Clause 2 of the Monopoly Regulation and Fair Trade Act and Article 17 Clause 8 of the related enforcement decree. Transactions worth more Won 10 billion involving agreements with certain affiliates as defined under Article 2 of the Monopoly Regulation and Fair Trade Act and Article 3 of the related enforcement decree. Any matters as required for the operation of the other committees.	-

As of 30 September 2016

B. Affiliated Companies

1. Overview of affiliates

a. Domestic

See list of affiliates on page 2.

b. Overseas

(As of 30 September 2016)

Name of Investing Company	Name of Invested Company	Share Ratio
Chocolaterie Guylian N.V	Aimee BVBA	99.00%
Rakhat JSC	Almaty Sweets LLC	100.00%
Lotte Confectionary Co., Ltd.	BIBICA Corporation	44.00%
Burger King Japan Holdings Co.,Ltd.	Burger King Japan Co., Ltd.	100.00%
Lotteria Co., Ltd.	Burger King Japan Holdings Co.,Ltd.	100.00%
Hyundai Logistics Co., Ltd.	CHANGWAN CONTAINER SERVICE LIMITED	70.00%
Lotte Chemical Titan International Limited	Chemical Brothers Limited	100.00%
Chocolaterie Guylian N.V	Chocolaterie Guylian Deutschland GmbH	100.00%
Lotte Confectionery Holdings (Europe) B.V.	Chocolaterie Guylian N.V	100.00%
Lucky Pai (Shanghai) Trading Co.,Ltd.	Chongqing Yujia Lucky Pai Commercial Co., Ltd.	74.20%
HYUNDAI LOGISTICS (GERMANY) GMBH	CONTAINER DEPOT UND REPARATUR HAMBURG GMBH	100.00%
Lotte Shopping Co., Ltd.	Coralis S.A.	45.00%
Coralis S.A.	Coralis Vietnam Co.,Ltd.	100.00%
Daehong Communications Co., Ltd.	DAEHONG COMMUNICATIONS VIETNAM CO., LTD.	95.00%
BIBICA Corporation	East BIBICA One Member Co.,Ltd	100.00%
Chocolaterie Guylian N.V	Guylian Asia Ltd	99.90%
Chocolaterie Guylian N.V	Guylian Iberia, LDA	99.30%
Chocolaterie Guylian N.V	Guylian UK Ltd	100.00%
Chocolaterie Guylian N.V	Guylian USA, Inc	100.00%
Kotobuki Holding (HK) Ltd	Hai Thanh-Kotobuki Joint Venture Co.	70.00%
Lotte Shopping Co., Ltd.	Hemisphere Film Investors II, LLC	100.00%
Hemisphere Film Investors II, LLC	Hemisphere Film Investors LLC	50.00%
HYUNDAI LOGISTICS (UK) HOLDINGS LTD.	HLC (GERMANY) GmbH	51.00%
Lotte Shopping Holdings (Hong Kong) Co., Limited	Hong Fung Ltd.	100.00%
Hotel Lotte Co., Ltd.	Hotel & Resort Joetsumyoko Co., Ltd.	100.00%
Hotel Lotte Co., Ltd.	HOTEL LOTTE Holdings HK Limited	100.00%
Hyundai Information Technology Co., Ltd.	Hyundai Information Technology Vietnam Corporation	100.00%
HYUNDAI LOGISTICS (AMERICA), INC.	Hyundai Intermodal, INC	70.00%
HYUNDAI LOGISTICS (UK) HOLDINGS LTD.	HYUNDAI LOGISTICA BRASIL LTDA	51.00%
Hyundai Logistics Co., Ltd.	HYUNDAI LOGISTICS (AMERICA), INC.	100.00%
HYUNDAI LOGISTICS (HK) HOLDINGS LIMITED	HYUNDAI LOGISTICS (CAMBODIA) CO.,LTD.	51.00%
Hyundai Logistics Co., Ltd.	HYUNDAI LOGISTICS (GERMANY) GMBH	100.00%
Hyundai Logistics Co., Ltd.	HYUNDAI LOGISTICS (HK) HOLDINGS LIMITED	100.00%
HYUNDAI LOGISTICS (HK) HOLDINGS LIMITED	HYUNDAI LOGISTICS (HK) INT'L LIMITED	51.00%
HYUNDAI LOGISTICS UK LIMITED	HYUNDAI LOGISTICS (ITALY) SRL	100.00%
Hyundai Logistics Co., Ltd.	HYUNDAI LOGISTICS (MALAYSIA) SDN. BHD.	100.00%
HYUNDAI LOGISTICS (UK) HOLDINGS LTD.	HYUNDAI LOGISTICS (NETHERLANDS) B.V.	51.00%
HYUNDAI LOGISTICS (HK) HOLDINGS LIMITED	HYUNDAI LOGISTICS (SINGAPORE) PTE. LTD.	51.00%
Hyundai Logistics Co., Ltd.	HYUNDAI LOGISTICS (UK) HOLDINGS LTD.	100.00%
HYUNDAI LOGISTICS (AMERICA), INC.	HYUNDAI LOGISTICS (USA), INC.	70.60%
HYUNDAI LOGISTICS (HK) HOLDINGS LIMITED	HYUNDAI LOGISTICS INDIA PRIVATE LIMITED	51.00%
HYUNDAI LOGISTICS (UK) HOLDINGS LTD.	HYUNDAI LOGISTICS UK LIMITED	51.00%
Hyundai Logistics Co., Ltd.	HYUNDAI VINATRANS LOGISTICS CO.,LTD	51.00%
Lotte Shopping Holdings (Singapore)Pte., Ltd	INTERNATIONAL BUSINESS CENTER COMPANY LIMITED	50.00%
Lotte Europe Holdings B.V.	JSC Lotte RUS	100.00%
Lotteria Co., Ltd.	KKD Lotte Holdings	100.00%
Lotte Chemical Corporation	Kor-Uz Gas Chemical Investment Ltd.	49.00%
Lotte Hotel & Retail Vietnam Pte. Ltd.	Kotobuki Holding (HK) Ltd	100.00%
Lotte Holdings Co., Ltd.	LS(Thailand) Co.,Ltd.	49.00%
LOTTE Chemical USA Corporation	LACC, LLC	90.00%
Lotte Food Holding Co.,Ltd.	LH Foods Co.,Ltd	50.00%
Lotte Shopping Holdings (Hong Kong) Co., Limited	LHSC Limited	51.10%
Lotte Co., Ltd.	Lotte (MALAYSIA) Sdn., Bhd.	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	Lotte Advanced Materials (Thailand) Co., Ltd.	49.30%
LOTTE ADVANCED MATERIALS CO., LTD.	Lotte Advanced Materials Dongguan Co., Ltd.	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	LOTTE ADVANCED MATERIALS EUROPE GMBH	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	Lotte Advanced Materials hungary LLC.	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	Lotte Advanced Materials Japan Co., Ltd.	100.00%
LOTTE ADVANCED MATERIALS USA, INC.,	Lotte Advanced Materials Mexico S.A. de C.V.	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	Lotte Advanced Materials Shanghai Co., Ltd.	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	Lotte Advanced Materials Tianjin Co., Ltd.	100.00%
LOTTE ADVANCED MATERIALS CO., LTD.	LOTTE ADVANCED MATERIALS USA, INC.,	100.00%
Lotte International Co., Ltd.	Lotte Agro Holdings B.V.	100.00%
Lotte Agro Holdings B.V.	Lotte Agro RUS LLC	99.00%
Lotte Asset Development Co., Ltd.	LOTTE ASSET MANAGEMENT (HK) LIMITED	100.00%
Lotte Chilsung Beverage Co., Ltd.	LOTTE BEVERAGE AMERICA CORP.	100.00%
Lotte Chilsung Beverage Co., Ltd.	LOTTE Beverage Holdings (Singapore) Pte. Ltd.	100.00%
Lotte Chemical Corporation	Lotte Chemical Alabama Corporation	100.00%
LOTTE Chemical USA Corporation	LOTTE Chemical Louisiana, LLC	100.00%
Lotte Chemical Corporation	Lotte Chemical Pakistan Limited	75.00%
Lotte Chemical Corporation	LOTTE CHEMICAL POLAND SP. ZO.O	100.00%
Lotte Chemical Titan (M) Sdn. Bhd.	Lotte Chemical Singapore Pte. Ltd.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Lotte Chemical Titan (M) Sdn. Bhd.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Lotte Chemical Titan Capital (L) Limited	100.00%
Lotte Chemical Corporation	Lotte Chemical Titan Holding Sdn. Bhd.	100.00%
PT. Lotte Chemical Titan Tbk	Lotte Chemical Titan International Limited	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Lotte Chemical Titan International Sdn. Bhd.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Lotte Chemical Titan Trading Sdn. Bhd.	100.00%
Lotte Chemical Corporation	Lotte Chemical UK Limited	100.00%
Lotte Chemical Corporation	LOTTE Chemical USA Corporation	60.00%
Lotte Confectionary Co., Ltd.	Lotte Confectionery (S.E.A.) Pte Ltd	100.00%
Lotte Confectionary Co., Ltd.	Lotte Confectionery Holdings (Europe) B.V.	51.00%
Lotte Co., Ltd.	Lotte Confectionery Pilippinas Corp.	100.00%
Lotte Europe Holdings B.V.	Lotte Confectionery RUS	100.00%
Lotte Information Technology Co., Ltd.	Lotte Data Communication Company Limited Vietnam	100.00%
Woori Home Shopping	Lotte DatViet Homeshopping Co.,Ltd.	90.00%
Lotte Holdings Co., Ltd.	Lotte Do Brasil Alimentos, Ltda.	99.00%
LOTTE DUTY FREE SINGAPORE PTE. LTD.	Lotte Duty Free (Thailand) Co., Ltd	49.00%
LOTTE HOTEL HOLDINGS USA CO., LTD.	Lotte Duty Free Guam, LLC	0.00%
HOTEL LOTTE Holdings HK Limited	Lotte Duty Free Hong Kong Ltd.	100.00%
LOTTE DUTY FREE SINGAPORE PTE. LTD.	Lotte Duty Free Japan Co., Ltd.	80.00%
LOTTE DUTY FREE SINGAPORE PTE. LTD.	Lotte Duty Free Kansai Co., Ltd.	100.00%
Hotel Lotte Co., Ltd.	LOTTE DUTY FREE SINGAPORE PTE. LTD.	100.00%
Lotte Engineering & Construction Co., Ltd.	Lotte E&C Malaysia Sdn. Bhd.	100.00%
Lotte Shopping Holdings (Singapore)Pte., Ltd	LOTTE E-COMMERCE VIETNAM CO., LTD	100.00%
Lotte Engineering & Construction Co., Ltd.	Lotte Engineering and Construction India Pvt. Ltd.	100.00%
Lotte Engineering & Construction Co., Ltd.	Lotte Engineering and Construction Vietnam Co., Ltd	100.00%
Lotte Engineering & Construction Co., Ltd.	Lotte Engineering Construction Mongolia LLC	100.00%
Hotel Lotte Co., Ltd.	Lotte Europe Holdings B.V.	37.90%
Lotte Europe Holdings B.V.	Lotte Europe Investment	100.00%
Lotte fine Chemical Corporation	LOTTE Fine Chemical Europe GmbH	100.00%
Lotte fine Chemical Corporation	LOTTE Fine Chemical Trading(Shanghai) Co., Ltd.	100.00%
Lotte Confectionary Co., Ltd.	Lotte Food Holding Co.,Ltd.	100.00%
Lotte Co., Ltd.	Lotte Four Seas Ltd.(MKG)	70.00%
Lotte Properties(Shenyang) Ltd.	Lotte Glory Properties(Shenyang) Ltd.	100.00%
Hotel Lotte Co., Ltd.	Lotte Hotel & Retail Vietnam Pte. Ltd.	40.00%
LOTTE HOTEL HOLDINGS USA CO., LTD.	Lotte Hotel Guam LLC.	100.00%
Hotel Lotte Co., Ltd.	LOTTE HOTEL HOLDINGS USA CO., LTD.	100.00%
LOTTE HOTEL HOLDINGS USA CO., LTD.	LOTTE HOTEL NEW YORK PALACE, LLC	100.00%
Lotte Europe Holdings B.V.	Lotte Hotel Saint Petersburg LLC	100.00%
LOTTE DUTY FREE SINGAPORE PTE. LTD.	LOTTE HOTEL VIETNAM COMPANY LIMITED	100.00%
Lotte Confectionary Co., Ltd.	Lotte India Co., Ltd.	98.60%
Lotte International Co., Ltd.	Lotte International America Corp.	100.00%
Lotte International Co., Ltd.	LOTTE INTERNATIONAL OCEANIA PTY LTD.	100.00%
Lotte Confectionary Co., Ltd.	Lotte Kolson(Private) Limited	96.50%
Lotte Asset Development Co., Ltd.	Lotte Land (Singapore) Private Limited	100.00%
Lotte Chilsung Beverage Co., Ltd.	LOTTE LIQUOR JAPAN CO.,LTD	100.00%
Lotte (Beijing) Logistics Co., Ltd.	LOTTE Logistics (HongKong) Co., Limited	90.00%
Lotte Logistics Corporation	Lotte Logistics Kazakhstan Co. Ltd	100.00%
Lotte Logistics Corporation	Lotte Logistics Vietnam CO.,LTD	100.00%
Lotte Shopping Holdings (Singapore)Pte., Ltd	Lotte Mart C&C India Private Limited	100.00%
Lotte Shopping Holdings (Hong Kong) Co., Limited	Lotte Mart China Co., Ltd.	100.00%
Lotte Card Co., Ltd.	Lotte Members Vietnam Co.,Ltd.	100.00%
LOTTE Beverage Holdings (Singapore) Pte. Ltd.	LOTTE MGS Beverage (Myanmar) Co., Ltd.	76.60%
Lotte Holdings Co., Ltd.	Lotte Netherlands Holdings B.V.	100.00%
Nugget Food Corporation	Lotte Philippines Co.,Inc.	49.00%
Lotte Shopping Co., Ltd.	LOTTE PROPERTIES (CHENGDU) HK LIMITED	73.50%
Lotte Asset Development Co., Ltd.	LOTTE PROPERTIES (HANOI) SINGAPORE PTE. LTD.	100.00%
Lotte Asset Development Co., Ltd.	Lotte Properties(Shenyang) Ltd.	37.20%
Lotte Rental Co., Ltd.	LOTTE Rent-A-Car (Thailand) Co.,Ltd.	49.00%
Lotte Rental Co., Ltd.	Lotte Rental (Vietnam) Company Limited	100.00%
Lotte Shopping Holdings (Hong Kong) Co., Limited	Lotte Shopping Business Management (Hong Kong) Limited	100.00%
Lotte Shopping Co., Ltd.	Lotte Shopping Holdings (Hong Kong) Co., Limited	100.00%
Lotte Shopping Co., Ltd.	Lotte Shopping Holdings (Singapore)Pte., Ltd	100.00%
Lotte Shopping Holdings (Singapore)Pte., Ltd	Lotte Shopping India Pvt.,Ltd	90.00%
Lotte Shopping Holdings (Singapore)Pte., Ltd	Lotte Shopping Plaza Vietnam Co.,Ltd.	100.00%
Lotte Europe Holdings B.V.	Lotte Shopping RUS Ltd.	100.00%
Lotte Holdings Co., Ltd.	Lotte Singapore pte. Ltd.	100.00%
Lotte Confectionary Co., Ltd.	Lotte Taiwan Co.,Ltd.	50.00%
Lotte Co., Ltd.	Lotte U.S.A. INC.	100.00%
Lotte Chemical Corporation	LOTTE UBE SYNTHETIC RUBBER SDN. BHD.	40.00%
Lotte Co., Ltd.	Lotte Vietnam Co., Ltd.	60.50%
Lotte Shopping Holdings (Singapore)Pte., Ltd	LOTTE VIETNAM SHOPPING JOINT STOCK COMPANY	99.99%
Lotte International Co., Ltd.	Lotte Vina International Co., Ltd.	100.00%
Lotte Netherlands Holdings B.V.	Lotte Wedel sp.zo.o	100.00%
Lotte Shopping Co., Ltd.	LotteCinema Vietnam Co., Ltd.	90.00%
Hyundai Information Technology Co., Ltd.	Lotte-HPT High Tech. Vietnam Shareholding Company	50.00%
Lucky Pai Ltd.	Lucky Pai (Shanghai) Information Technology Co.,Ltd.	100.00%
Lucky Pai Ltd.	Lucky Pai (Shanghai) Network Technology Co.,Ltd.	100.00%
Lucky Pai Ltd.	Lucky Pai (Shanghai) Trading Co.,Ltd.	100.00%
LHSC Limited	Lucky Pai Ltd.	100.00%
Lucky Pai Ltd.	Lucky Pai(Shanghai) Commercial Co.,Ltd.	100.00%
Lotte Chilsung Beverage Co., Ltd.	Pepsi-Cola Products Philippines, Inc.	38.90%
Lotte Wedel sp.zo.o	Pijalnie Czekolady Wedel Sp.zo.o.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	PT LOTTE CHEMICAL INDONESIA	99.67%
Chemical Brothers Limited	PT LOTTE CHEMICAL TITAN NUSANTARA	99.90%
Lotte Confectionary Co., Ltd.	PT LOTTE RND CENTER INDONESIA	33.30%
Lotte Shopping Holdings (Singapore)Pte., Ltd	PT LOTTE SHOPPING AVENUE INDONESIA	99.00%
Daehong Communications Co., Ltd.	PT. Daehong Communications Indonesia	99.00%
Lotte Shopping Holdings (Singapore)Pte., Ltd	PT. INDO LOTTE MAKMUR	50.00%
Lotte Capital Co., Ltd.	PT. LOTTE CAPITAL INDONESIA	78.10%
Lotte Chemical Titan International Sdn. Bhd.	PT. Lotte Chemical Titan Tbk	90.40%
Lotte Logistics Corporation	PT. Lotte Logistics Indonesia	99.00%
Lotte Aluminium Co., Ltd.	PT. Lotte Packaging	99.40%
Lotte Shopping Holdings (Singapore)Pte., Ltd	PT. Lotte Shopping Indonesia	80.00%
LOTTE DUTY FREE SINGAPORE PTE. LTD.	PT. SJ Indonesia	90.00%
PT. Lotte Chemical Titan Tbk	PT. Titan Trading	99.60%
Lotte Information Technology Co., Ltd.	PT.Lotte Data Communication Company Indonesia	99.80%
Lotte Co., Ltd.	PT.Lotte Indonesia	98.30%
Lotte Shopping Holdings (Singapore)Pte., Ltd	PT.Lotte Mart Indonesia	99.00%
Lotte Card Co., Ltd.	PT.LOTTE MEMBERS INDONESIA	99.00%
Lotte Co., Ltd.	PT.Lotte Trade and Distribution	60.00%
Lotteria Co., Ltd.	PT.Lotteria Indonesia	99.00%
Lotte Confectionary Co., Ltd.	Rakhat JSC	92.40%
Rakhat JSC	Rakhat TR	99.90%
Rakhat JSC	Rakhat Trading House LLP	100.00%
Rakhat JSC	Rakhat-Aktau LLP	100.00%
Rakhat JSC	Rakhat-Aktobe LLP	100.00%
Rakhat JSC	Rakhat-Astana LLP	100.00%
Rakhat JSC	Rakhat-Karaganda LLP	100.00%
Rakhat JSC	Rakhat-Oral LLP	100.00%
Rakhat JSC	Rakhat-Shymkent LLP	100.00%
Rakhat JSC	Rakhat-Shymkent Trading House LLP	100.00%
Rakhat JSC	Rakhat-Taldykorgan LLP	100.00%
Hyundai Logistics Co., Ltd.	Shaghai Hyundai Asia Shipping International Freight Forwarding Co.Ltd.	66.00%
Lucky Pai (Shanghai) Information Technology Co.,Ltd.	Shanghai Jijie Commercial Trading Co.,Ltd.	100.00%
Lucky Pai (Shanghai) Information Technology Co.,Ltd.	Shanghai Jirong Commercial Trading Co.,Ltd.	100.00%
Lucky Pai (Shanghai) Information Technology Co.,Ltd.	Shanghai Wenxuan Co., Ltd.	100.00%
Chemical Brothers Limited	South Wealth Finance Limited	100.00%
Lotte Shopping Holdings (Hong Kong) Co., Limited	Swift Harvest Ltd.	100.00%
Lotte Co., Ltd.	Thai Lotte Co., Ltd.	98.20%
Thai Okashiland Holdings Ltd.	Thai Okashi Land Ltd.	50.90%
Lotte Chemical Titan Holding Sdn. Bhd.	Titan Chemicals International Limited	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Titan Ethylene Glycol Sdn. Bhd.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Titan Leasing Ltd.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Titan Petrochemicals Sdn. Bhd.	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Titan Styrene Sdn. Bhd.	100.00%
Lotte Chemical Titan Trading Sdn. Bhd.	Titan Trading Corp. Limited	100.00%
Lotte Chemical Titan Holding Sdn. Bhd.	Titan Vinyl Sdn. Bhd.	100.00%
Lotteria Co., Ltd.	Vietnam Lotteria. Ltd.	99.70%
Swift Harvest Ltd.	Jiaxing Lotte Mart Co., Ltd.	100.00%
Swift Harvest Ltd.	Gang So Lotte Ma Teuk Sang Eop Ltd.	100.00%
Nam Tong Hui Hang Chi Eop Ltd.	Gang Eon Si Gwang Won Chi Eop Ltd.	100.00%
Gang So Lotte Ma Teuk Sang Eop Ltd.	Gyedong Lotte Mart Co., Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Jilin Lotte Mart Co., Ltd.	100.00%
Lotte Logistics Corporation	Lotte (Beijing) Logistics Co., Ltd.	100.00%
LH Foods Co.,Ltd	Lotte Food (Shanghai) Ltd.	90.00%
Lotte Shopping Co., Ltd.	Lotte Corporation Management (China) Ltd.	70.00%
Lotte Confectionary Co., Ltd.	Lotte Food (Shanghai) Ltd.	47.20%
Lotte Food Holding Co.,Ltd.	Lotte Corporation Management (China) Ltd.	100.00%
Lotte Confectionary Co., Ltd.	Lotte Food (Chengdu) Ltd.	90.00%
Lotte Card Co., Ltd.	LOTTE Members China	100.00%
KKD Lotte Holdings	Lotte GaYeJaChanEum Management (Shanghai) Ltd.	100.00%
Lotte Construction (Beijing) Ltd.	Lotte Construction (Shenyang) Ltd.	100.00%
Lotte Chemical Corporation	Lotte GongJeongSoRyo (Gaheung) Ltd.	100.00%
Lotte Chemical Corporation	Lotte GongJeongSoRyo (Shenyang) Ltd.	100.00%
Lotte Chemical Corporation	Lotte GongJeongSoRyo (Hapbi) Ltd.	50.00%
Lotte Confectionary Co., Ltd.	Lotte NaengEum (Shandong) Ltd.	65.00%
Lotteria Co., Ltd.	Lotte LiChanEum Management (Beijing) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte MaTeuk Trade (Sungdo) Ltd.	100.00%
Gang So Lotte Ma Teuk Sang Eop Ltd.	Lotte MaTeuk Mart (Soju) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte MaTeuk Trade (Chungkyung) Ltd.	100.00%
Lotte Properties(Shenyang) Ltd.	Lotte Logistics Management (Shenyang) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte Department Store (Chengdu) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte Department Store (Shenyang) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte Department Store (Tianjin) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte Trade Management (Uihae) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte Trade Management (Tianjin) Ltd.	100.00%
Lotte Engineering & Construction Co., Ltd.	Lotte Sung Construction (Beijing) Ltd.	100.00%
Lotte Information Technology Co., Ltd.	Lotte New Technology (Beijing) Ltd.	100.00%
Lotte New Technology (Beijing) Ltd.	Lotte New Technology (Shenyang) Ltd.	100.00%
Swift Harvest Ltd.	Lotte Younghang Mart (Shanghai) Ltd.	100.00%
Lotte Chilsung Beverage Co., Ltd.	Lotte Oh Deo Ri Beverage Ltd.	100.00%
HOTEL LOTTE Holdings HK Limited	Lotte Yu Rak (Shenyang) Ltd.	100.00%
HOTEL LOTTE Holdings HK Limited	Lotte Duty Free Beijing Co., Ltd.	100.00%
Lotte Capital Co., Ltd.	Lotte Yoong Ja JoIm (China) Ltd.	100.00%
Lotte Chilsung Beverage Co., Ltd.	Lotte Changbaek Beverage Ltd.	100.00%
Lotte Chilsung Beverage Co., Ltd.	Lotte JuEop (Beijing) Ltd.	100.00%
LOTTE PROPERTIES (CHENGDU) HK LIMITED	Lotte Jisan (Chengdu) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Lotte Mart Co., Ltd.	100.00%
Lotte Aluminium Co., Ltd.	Lotte PoJang (Beijing) Ltd.	40.00%
LOTTE ASSET MANAGEMENT (HK) LIMITED	Lotte HangMokJaSoon (Shanghai) Ltd.	100.00%
Lotte Chemical Corporation	Lotte Chemical (Gaheung) Ltd.	100.00%
Nam Tong Gang Poong Chi Eop Ltd.	Nam Tong Gang Poong Changjeo Ltd.	100.00%
Hong Fung Ltd.	Nam Tong Gang Poong Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Geum Woo Chi Eop Ltd.	100.00%
Gang So Lotte Ma Teuk Sang Eop Ltd.	Nam Tong Deok Shin Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Mi Rim Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Bu Mu Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Bu Hwa Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Bun Dal Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Yo Dong Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Chun Hwi Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Nam Tong Hwi Hang Chi Eop Ltd.	100.00%
Daehong Communications Co., Ltd.	Daehong Advertisement (Shanghai) Ltd.	100.00%
Lotte Holdings Co., Ltd.	Lotte Corporation	100.00%
Lotte Strategic Investment Co., Ltd.	Lotte Real Estate Corporation	100.00%
Lotte Holdings Co., Ltd.	Lotte International Co., Ltd.	100.00%
Lotte Chemical Corporation	Samkang Lotte Huagong Ltd.	50.00%
Shaghai Hyundai Asia Shipping International Freight Forwarding Co.Ltd.	Shanghai Hyundai ARyun Logistics Ltd.	100.00%
Gang So Lotte Ma Teuk Sang Eop Ltd.	Seoju Lotte Mart Co., Ltd.	100.00%
Lotte Shopping Co., Ltd.	Shim Yang Shim Lak Jeon Young Investment Management Ltd.	49.00%
NamTong Deok Shin Chi Eop Ltd.	Yeon Woon HangIk Sang Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Yo Nyeong Lotte Mart Co., Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Je Gi Deok Sung Chi Eop Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 10th Investment Company Co., Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 11th Investment Company Co., Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 12th Investment Company Co., Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 1st Investment Company Co., Ltd.	100.00%
Lotte Holdings Co., Ltd.	L 2nd Investment Company Co., Ltd.	100.00%
L 2nd Investment Company Co., Ltd.	L 3rd Investment Company Co., Ltd.	100.00%
L 2nd Investment Company Co., Ltd.	L 4th Investment Company Co., Ltd.	100.00%
L 2nd Investment Company Co., Ltd.	L 5th Investment Company Co., Ltd.	100.00%
L 2nd Investment Company Co., Ltd.	L 6th Investment Company Co., Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 7th Investment Company Co., Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 8th Investment Company Co., Ltd.	100.00%
Lotte Strategic Investment Co., Ltd.	L 9th Investment Company Co., Ltd.	100.00%
Lotte Holdings Co., Ltd.	Ginza Cozy Corner Corp.	100.00%
Lotte Holdings Co., Ltd.	Lotte Co., Ltd.	100.00%
Lotte Co., Ltd.	Lotteria Co., Ltd.	100.00%
Lotte Co., Ltd.	Lotte Service Co., Ltd.	100.00%
Lotte Holdings Co., Ltd.	Lotte Strategic Investment Co., Ltd.	31.00%
Lotte Holdings Co., Ltd.	Lotte Ice Co., Ltd.	100.00%
Kwangyoon Co., Ltd.	Lotte Holdings Co., Ltd.	28.10%
Lotte Holdings Co., Ltd.	Meri Chocolate Company Co., Ltd.	100.00%
Lotte Co., Ltd.	Chiba Lotte Marines Corp.	81.90%
Lotte Strategic Investment Co., Ltd.	Family Corp.	24.90%
NanTong Bu Hua Chi Eop Ltd.	Ji Ju Shibu Hua Chi Eop Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Chengdu Lotte Mart Co., Ltd.	75.20%
NanTong Bun Dal Chi Eop Ltd.	Chi Bak Bun Dal Chi Eop Ltd.	100.00%
Lotte Co., Ltd.	Krispy Kreme Doughnuts Japan Corp.	20.00%
Lotte Chemical Corporation	Ho Seok Chemical Trade (Shanghai) Ltd.	100.00%
Lotte Shopping Holdings (Hong Kong), Ltd	Hoe An Man Shin Chi Eop Ltd.	100.00%
NanTong Bu Hua Chi Eop Ltd.	Heung Hwa Shi Baek Chang Chi Eop Ltd.	100.00%

The data is current as of late September, 2016. Share ratio is based on the biggest investor.
The investor with highest share in Kwangyoon Co., Ltd., Midori Trade Co., Ltd., Lotte Green Service Co. Ltd., Market Vision Co., Ltd., LOTTE HOTEL BEVERAGE (NYP), LLC are individuals.

c. Executives holding concurrent positions in affiliates

Name	Name of Affiliates	Positions	Full-time/Part-time
Kyukho Shin	Busan Lotte Hotel, Co., Ltd.	Internal Director	Part-time
	Lotte Engineering & Construction Co., Ltd	Non-standing Executive Director	Part-time
	Lotte Giants Co., Ltd.	Internal Director	Part-time
	Lotte Aluminium Co., Ltd.	Non-standing Executive Director	Part-time
Dongbin Shin	Hotel Lotte Co., Ltd.	Representative Director	Full-time
	Canon Korea Business Solution INC.	Internal Director	Part-time
	FLR Korea Co., Ltd.	Non-standing Executive Director	Part-time
	Lotte Chemical Co., Ltd.	Representative Director	Full-time
	Lotte Confectionary Co., Ltd.	Representative Director	Full-time
	Lotte Culture Foundation	Director	Part-time
Youngja Shin	Lotte Engineering & Construction Co., Ltd	Non-standing Executive Director	Part-time
	Lotte Giants Co., Ltd.	Internal Director	Part-time
	Daehong Communications Co., Ltd.	Non-standing Executive Director	Part-time
	Lotteria Co., Ltd.	Non-standing Executive Director	Part-time
	S&S International Co.,Ltd.	Representative Director	Full-time
	Lotte Welfare Foundation	Director	Full-time
	Lotte Scholarship Foundation	Director	Full-time
	Lotte Samdong Welfare Foundation	Director	Full-time

d. Share ratio of affiliates

(As of 30 September 2016) (Unit: %)

Division		Investee company
Division		Lotte Confectionery	Lotte Chilsung Beverage	Lotte Food	Lotte Aluminium	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		18.3	9.3					7.9	30.0	13.6					8.9		8.5	4.6		6.1
	Lotte Chilsung Beverage			9.3		3.2			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 Aluminium	15.3	8.4			9.6		6.2		5.0			2.6		5.6
	Lotte Construction								1.0											11.8
	Hotel Lotte	3.2	5.8	8.9	25.0	41.4	0.2	34.6	8.8		18.8	12.7	8.0	16.3	28.9		31.1	13.1	8.8	26.6	2.9
	Hotel Lotte Pusan			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				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	33.9						1.7							4.6
	Korea Fuji Film								7.9	9.0										1.7
	Daehong Communications	3.3														2.9		13.9		8.2	28.5
	Lotte Corporation											31.3
	Lotte Capital
	Lotte Data Communication					5.1			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 Hi-mart
	Aegis First
	Hyundai Logistics
	Lotte rental
	Woori Home Shopping
	Lotte Members
	Lotte Fine Chemical
Total		21.8	32.6	36.4	42.1	93.1	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	Lotte MRC	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	Hotel Lotte Pusan	Han Paysys
Investor Company	Lotte Confectionary	16.5									7.2
	Lotte Chilsung Beverage		50.0								14.2				100.0	100.0
	Lotte Food
	Lotte Aluminium
	Lotte Construction										11.8
	Hotel Lotte										7.2		23.7
	Hotel Lotte Pusan			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																	22.7
	Hyundai Information Technology
	Chungbuk Soju
	Lotte Incheon Development
	Canon Korea Business Solutions
	Lotte Hi-mart
	Aegis First
	Hyundai Logistics
	Lotte rental
	Woori Home Shopping
	Lotte Members
	Lotte Fine Chemical
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	74.7	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	Inchon 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	STL
Investor Company	Lotte Confectionary
	Lotte Chilsung Beverage																		100.0
	Lotte Food
	Lotte Aluminium
	Lotte Construction
	Hotel Lotte	46.7				100.0
	Hotel Lotte Pusan
	Lotte International
	Lotte Shopping		100.0		95.0								99.8					56.3			50.0
	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								59.7
	Lotte Card							95.0
	Lotte.com
	Lotte Station Building																	30.0
	Lotte Insurance
	Sambark LFT
	MYbi
	Korea Seven			100.0
	Lotte Asset Development	20.4			5.0						30.2							9.4
	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 Hi-mart
	Aegis First
	Hyundai Logistics
	Lotte rental
	Woori Home Shopping
	Lotte Members
	Lotte Fine Chemical
Total		67.1	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	59.7	99.9	100.0	100.0	90.0	50.0

Division		Investee Company
Division		CS Mart	Jangkyo PFV	Lotte Hi-mart	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	Hyundai Logistics	Hyundai Costco Logistics	Lotte Members	Lotte Shopping Town Daegu	Lotte Duty Free Jeju	Lotte rental
Investor Company	Lotte Confectionary														1.8
	Lotte Chilsung Beverage								86.1						1.8
	Lotte Food										50.0				1.9
	Lotte Aluminium
	Lotte Construction				4.8					14.9
	Hotel Lotte		85.5		28.8			85.0		12.5					6.9					100.0	20.8
	Hotel Lotte Pusan																	1.0			10.8
	Lotte International
	Lotte Shopping	99.9		65.3	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				95.0	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 Hi-mart																				4.9
	Aegis First															88.8
	Hyundai Logistics																51.0
	Lotte rental
	Woori Home Shopping																				8.6
	Lotte Members																	0.0
	Lotte Fine Chemical
Total		99.9	95.0	65.3	62.5	100.0	50.0	95.0	86.1	54.9	50.0	95.0	87.0	100.0	35.0	88.8	51.0	99.4	100.0	100.0	50.0

Division		Investee Company
Division		Lotte Auto Lease	Lotte Auto Care	Green Car	Lotte Town Dongtan	JG Industrial development	Lotte Accelerator	Lotte Fine Chemical	Hantok Chemical	S-EnPol	Lotte Ulsan Development	Sweet with	Lotte Advanced Materials
Investor Company	Lotte Confectionary											100.0
	Lotte Chilsung Beverage
	Lotte Food
	Lotte Aluminium
	Lotte Construction				40.0						2.0
	Hotel Lotte						16.7
	Hotel Lotte Pusan
	Lotte International
	Lotte Shopping				50.0		16.7				96.0
	Lotte Logistics
	Lotteria
	Lotte Chemical						16.7	31.1					90.0
	Korea Fuji Film
	Daehong Communications
	Lotte Corporation
	Lotte Capital
	Lotte Data Communication
	Lotte Card
	Lotte.com						16.7
	Lotte Station Building
	Lotte Insurance
	Sambark LFT
	MYbi
	Korea Seven
	Lotte Asset Development				10.0
	Buy the Way
	Lotte DF Global
	eB Card
	Hyundai Information Technology
	Chungbuk Soju
	Lotte Incheon Development
	Canon Korea Business Solutions
	Lotte Hi-mart
	Aegis First
	Hyundai Logistics
	Lotte rental	100.0	100.0	92.0		100.0
	Woori Home Shopping
	Lotte Members
	Lotte Fine Chemical							1.3	50.0	100.0
Total		100.0	100.0	92.0	100.0	100.0	66.7	32.4	50.0	100.0	98.0	100.0	90.0

S&S International and SDJ are excluded from the list of investee companies as they have no shares owned by other affiliates.

2. Equity investments

(As of 30 September 2016) (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	157,380	-	-	-	900,000	25	157,380	728,223	42,185
Daehong Communications (unlisted)	1996.12.23	Equity investment	6,277	13,600	34	28,785	-	-	-	13,600	34	28,785	681,051	14,572
Lotte.com (unlisted)	2000.01.05	Equity investment	2,000	3,064,000	50.01	23,177	-	-	-	3,064,000	50.01	23,177	194,553	3,878
Lotte Card (unlisted)	2002.11.30	Equity investment	34,701	70,088,853	93.78	1,000,089	-	-	-	70,088,853	93.78	1,000,089	9,402,558	119,811
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	6,360,125	88,858
Lotteria (unlisted)⁽²⁾	2001.12.27	Equity investment	39,719	186,062	38.68	112,864	-	-	-	186,062	38.68	112,864	1,067,537	-14,013
FRL Korea (unlisted)	2004.12.16	Equity investment	2,940	2,352,000	49	24,827	-	-	-	2,352,000	49	24,827	654,489	91,461
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	839,646	22,317
Lotte Assets Development (unlisted)⁽²⁾	2007.07.31	Equity investment	30	15,775,274	39.14	72,890	-	-	-	15,775,274	39.14	72,890	614,741	-14,299
Zara Retail Korea (unlisted)	2007.01.18	Equity investment	130	302,600	20	16,106	-	-	-	302,600	20	16,106	173,144	-2,676
Korea Seven (unlisted)	2009.09.25	Equity investment	28,184	18,526,176	51.14	82,473	-	-	-	18,526,176	51.14	82,473	1,088,339	10,365
Lotte Gimhae Development (unlisted)	2010.03.18	Equity investment	300	60,000	100	300	-	-	-	60,000	100	300	1,296	157
Lotte Suwon Station Shopping Town (unlisted)	2010.04.30	Equity investment	48	19,000,000	95	94,810	-	-	-	19,000,000	95	94,810	355,624	-12,943
NCF (unlisted)	2010.12.30	Equity investment	18,876	598,800	99.8	20,059	-	-	-	598,800	99.8	20,059	45,827	191
Lotte Giants (unlisted)	1982.04.21	Equity investment	30	6,000	30	823	1,800,000	9,000	-	1,806,000	30	9,823	30,157	-15,931
Lotte Songdo Shopping Town (unlisted)⁽²⁾	2011.06.27	Equity investment	40,000	12,000,000	56.3	60,000	-	-	-	12,000,000	56.3	60,000	240,931	-1,911
STL (unlisted)	2011.08.24	Equity investment	1,000	800,000	50	4,000	-	-	-	800,000	50	4,000	4,623	-1,458
Lotte International (unlisted)	2006.11.30	Equity investment	1,000	247,915	27.68	92,782	-	-	-	247,915	27.68	92,782	1,204,857	16,096
CS Mart (unlisted)	2012.01.16	Equity investment	244,880	12,761,250	99.95	255,826	-	-	-	12,761,250	99.95	255,826	156,077	10,119
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	2,905,213	106,595
D-Cinema of Korea (unlisted)	2008.01.28	Equity investment	1,500	300,000	50	-	-	-	-	300,000	50	0	35,074	6,931
S.M.CONTENTS INVESTMENT (unlisted)	2009.10.01	Equity investment	2,500	175	25	1,750	-	-	-	175	25	1,750	6,522	-59
Capital One Diversity Cinema Special Investment Association (unlisted)	2010.03.18	Equity investment	1,000	100	20	364	-	-	-	100	20	364	3,233	-719
UNION INVESTMENT PARTNERS (unlisted)	2011.01.03	Equity investment	4,000	400	26.67	4,000	-	-	-	400	26.67	4,000	14,157	-1,358
Capital One Middle-Low Budget Cinema Fund (unlisted)	2011.05.24	Equity investment	3,000	30	25	3,000	-	-1,350	-	30	25	1,650	10,053	-1,413
TW No.14 Culture Contents Fund (formerly, CJ Venture Investment No.14 Culture Contents Fund) (unlisted)	2011.11.02	Equity investment	6,000	60	30	6,000	-	-	-	60	30	6,000	16,706	-3,677
BNK Financial Group (formerly, BS Financial Group) (listed)	1987.09.23	Equity investment	2,775	6,561,494	2.56	55,248	1,982,332	14,138	-437	8,543,826	2.62	68,949	90,279,548	530,471
Shinhan Financial Group (listed)	1997.12.31	Equity investment	637	311,118	0.07	12,305	-	-	-483	311,118	0.07	11,822	370,539,622	2,445,958
Bichae Nuri Development (unlisted)	2008.06.09	Equity investment	150	171,600	3	-	-	-	-	171,600	3	-	3,513	-388
SPARX Asset Management Korea Co., Ltd. (formerly, Cosmo Investment) (unlisted)⁽²⁾	2009.03.27	Equity investment	8,165	65,680	7.76	15,107	-	-	-43	65,680	7.76	15,064	50,549	1,733
Lotte Logistics (unlisted)	2007.09.28	Equity investment	4,000	66,308	4.64	13,865	-	-	1,690	66,308	4.64	15,555	849,151	27,742
TW No.12 Global Contents Fund (formerly, CJ Venture Investment No.12 Global Contents Fund) (unlisted)	2009.11.20	Equity investment	1,500	15	3.58	1,500	-	-	-	15	3.58	1,500	27,603	-7,178
East Gate Media Contents & Technology Fund (unlisted)	2010.08.30	Equity investment	5,000	50	14.71	5,000	-	-1,324	-	50	14.71	3,676	29,198	-3,199
ISU-Renaissance Contents Fund (unlisted)	2011.01.13	Equity investment	2,000	40	13.33	2,000	-	-	-	40	13.33	2,000	9,325	784
Union Global Contents Fund (unlisted)	2011.11.04	Equity investment	4,000	2,000	16.18	20,000	-	-	-	2,000	16.18	20,000	113,521	-2,794
Michigan Global Contents Fund #3 (unlisted)	2012.08.24	Equity investment	2,000	200	13.33	2,000	-	-	-	200	13.33	2,000	12,204	-2,707
Leading Asia Contents Fund (unlisted)	2012.09.18	Equity investment	4,000	400	21.01	4,000	-	-	-	400	21.01	4,000	15,726	-2,047
D.CAMP (unlisted)	2013.08.29	Equity investment	4,000	40	15.09	4,000	-	-	-	40	15.09	4,000	26,109	-361
LOTTE VIETNAM SHOPPING JOINT STOCK COMPANY (formerly, LOTTE VIETNAM SHOPPING CO., LTD.) (unlisted)⁽¹⁾	2006.12.15	Equity investment	3,749	-	100	125,243	-	-125,243	-	-	-	-	435,575	-26,417
Lotte Europe Holdings B.V. (unlisted)	2008.05.30	Equity investment	124,379	249,395	26.98	87,504	-	-	-	249,395	26.98	87,504	490,633	-105,768
Lotte Shopping Holdings(Hong Kong) Co., Limited (unlisted)	2008.10.27	Equity investment	259	1,150,460,831	100	376,712	158.319.920	68,725	-75,255	1,308,780,751	100	370,182	1,195,329	-430,468
LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD. (unlisted)	2008.10.28	Equity investment	101	304,975,194	100	298,959	205,757,937	339,311	-	510,733,131	100	638,270	318,693	-37,416
Coralis S.A. (unlisted)	2009.10.29	Equity investment	17,418	787,461	45	55,131	45	4,474	-	787,506	45	59,605	437,966	-55,063
Qingdao LOTTE Mart Commercial Co., Ltd.(unlisted)⁽¹⁾	2008.01.18	Equity investment	33,219	-	36.79	-	-	-	-	-	24.80	-	20,399	-72,610
Lotte Mart Co., Ltd.(unlisted)⁽¹⁾	2008.06.02	Equity investment	183,033	-	100	-	-	-	-	-	-	-	149,837	-26,008
Liaoning LOTTE Mart Co., Ltd. (unlisted)⁽¹⁾	2008.07.24	Equity investment	2,107	-	40	-	-	-	-	-	-	-	61,173	-22,050
PT.Lotte Shopping Indonesia (unlisted)	2008.11.20	Equity investment	219,737	2,622,812	55	214,068	-2,622,812	-214,068	-	-	-	-	269,260	11,039
Lotte Cinema Vietnam Co., Ltd. (unlisted)⁽¹⁾	2008.05.02	Equity investment	3,000	-	90	19,298	-	10,299	-	-	90	29,597	69,634	-3,509
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	983,482	-27,991
Shenyang SL Cinema Investment Management Co., Ltd. (unlisted)⁽¹⁾	2010.11.16	Equity investment	752	-	49	1,496	-	-	-	-	49	1,496	2,470	40
Hubei XL Cinema Co., Ltd. (unlisted)⁽¹⁾	2011.06.24	Equity investment	2,048	-	49	9,423	-	-	-	-	49	9,423	17,597	791
Hemisphere Film Investors II LLC (unlisted)⁽¹⁾	2011.07.29	Equity investment	578	-	100	19,727	-	-1,738	-	-	100	17,989	19,359	-1,043
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	436,070	-6,998
Lotte (China) Management Ltd. (unlisted)⁽¹⁾	2012.03.19	Equity investment	6,232	-	70	6,232	-	-	-	-	70	6,232	7,945	-7
momo.com Inc (formerly, Fubon Multimedia Technology Co., Ltd.) (unlisted)	2012.03.07	Equity investment	38,771	7,319,420	5.15	55,491	-	-	-1,688	7,319,420	5.15	53,803	322,837	37,796
Shandong Longzhile Cinema Co., Ltd. (unlisted)⁽¹⁾	2012.09.19	Equity investment	1,735	-	49	7,173	-	884	-	-	49	8,057	18,252	-1,403
Lotte Incheon Development Co., Ltd. (unlisted)	2012.12.11	Equity investment	50	3,000,000	37.5	15,000	-	-	-	3,000,000	37.5	15,000	977,008	-6,897
Lotte Food Co., Ltd.⁽²⁾	2013.01.01	Equity investment	-	47,180	3.45	44,774	-	-	-12,361	47,180	3.45	32,413	1,287,586	50,274
Hyundai Green Food Co., Ltd.	2013.01.01	Equity investment	-	132,326	0.14	3,282	-	-	-1,152	132,326	0.14	2,130	1,954,105	91,455
LOTTE HOTEL & RETAIL VIETNAM PTE. LTD. (unlisted)⁽²⁾	2013.01.01	Equity investment	-	12,380,000	20	14,185	-	-	-	12,380,000	20	14,185	72,949	-20
LHSC Limited (unlisted)⁽²⁾	2013.01.01	Equity investment	-	27,425,378	16.02	-	-	-	-	27,425,378	16.02	-	30,455	-164,324
Lotte Incheon Town Co., Ltd. (unlisted)	2014.05.19	Equity Investment	50	700,000	35	3,500	-	-	-	700,000	35	3,500	98,994	52
Lotte Department Store Masan (unlisted)	2014.09.16	Equity Investment	4,200	3,300,000	100	16,500	-	-	-	3,300,000	100	16,500	67,825	-4,225
Aegis First (unlisted)⁽²⁾	2014.09.25	Equity Investment	6,074	121,477	-	5,477	-	-	-905	121,477	-	4,572	1,150,497	10,089
Eunpyeong PFV (unlisted)	2014.09.12	Equity Investment	3,500	350,000	20.11	3,500	-	-	-	350,000	20.11	3,500	259,180	-6,589
Lotte Members (unlisted)	2015.01.01	Equity investment	12,065	845,537	93.78	12,065	-	-	-	845,537	93.78	12,065	179,446	153
Lotte Town Dongtan (unlisted)	2015.10.22	Equity investment	35,000	3,500,000	50	35,000	-	-	-	3,500,000	50	35,000	69,167	-483
Lotte Accelerator (unlisted)	2016.01.29	Equity investment	2,500	-	-	-	500,000	2,500	-	500,000	16.67	2,500	-	-
Lotte Ulsan Development (unlisted)	2016.02.25	Equity investment	10,000	-	-	-	4,780,000	23,900	-	4,780,000	95.98	23,900	-	-
Busan Lotte Creative Film Fund (unlisted)	2016.02.26	Equity investment	2,500	-	-	-	600	6,000	-	600	47.62	6,000	-	-
Korea Investment Global Contents Investment Cooperation (unlisted))	2016.03.01	Equity investment	2,400	-	-	-	420	4,200	-	420	6.22	4,200	-	-
Desirelab (unlisted)	2016.04.04	Equity Investment	30	-	-	-	1,714	30	-	1,714	15.01	30	-	-
IBK-ISU Contents Fund	2016.09.20	Equity Investment	1,750	-	-	-	175	1,750		175	35.00	1,750	-	-
Total				-	-	5,548,074	-	141,488	-85,608	-	-	5,603,954	-	-

Notes:

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

(2) The Company owns preferred shares of Aegis First and thus is excluded from the computation of share ratio. The Company owns 121,477 shares out of 4,765,308 total preferred shares, and its preferred share ratio is 2.55%.

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).

The share ratios of the above investee companies are based on common shares and exclude redeemable preferred shares.

Loss impairment for Lotte Shopping Holdings (Hong Kong) Co., Limited and SPARX Asset Management Korea Co., Ltd. was recorded last year.

Fiscal year ends in August for FRL Korea, January for Zara Retail Korea, February for STL and March for SPARX Asset Management Korea Co., Ltd.

Financial positions of the above investee companies for the recent business year are based on the year ended 31 December 2015.

VI. Shareholders

A. The Largest Shareholder and Specially Related Parties

(As of 30 September 2016) (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	300	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 Engineering & 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	22,082,361	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 2016) (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 38,881 shares, which is equal to a 0.12% interest in the Company.

1. Stock Price and Transaction Record

a. Domestic Stock Market

(Unit: Won, shares)

Category		April 2016	May 2016	June 2016	July 2016	August 2016	September 2016
Common stock price	Maximum	272,000	264,500	229,000	202,500	208,500	209,500
	Minimum	253,500	223,500	198,500	193,000	193,000	198,000
	Average	263,600	237,050	212,905	197,298	200,000	204,421
Transaction volume	Daily maximum	79,112	242,498	209,726	118,447	237,417	95,766
	Daily minimum	17,697	26,212	31,261	29,523	32,807	33,282
	Monthly total	770,715	1,286,599	1,485,785	1,266,264	1,757,740	1,008,415

b. Overseas Stock Market

Exchange: London Stock Exchange (Unit: USD)

Category		April 2016	May 2016	June 2016	July 2016	August 2016	September 2016
Common stock price (US $)	Maximum	11.70	11.20	9.64	8.60	9.15	9.28
	Minimum	10.85	9.39	8.29	8.41	8.49	8.76
	Average	11.27	10.00	9.02	8.54	8.79	9.00
Common stock price (won)	Maximum	13,627	13,045	11,228	9,428	10,031	10,174
	Minimum	12,637	10,937	9,655	9.220	9,308	9,604
	Average	13,131	11,650	10,502	9.359	9,631	9,862
Transaction volume	Daily maximum	1,800	11,600	900	1.893	1,530	1,499
	Daily minimum	16	29	1	110	100	100
	Monthly total	8,339	15,729	2,901	2,673	4,228	5,455

As of 30 September 2016 (exchange rate of USD 1.00 = KRW 1,096.30)

GDS (global depositary share) per share 20 issued with a ratio per 1GDS was issued to the 20.67
(exchange rate of USD 1.00 = KRW 967.8)

VII. Executives and Employees

A. Status of Executives and Employees

1. Executives

Registered Executives

(As of 30 September 2016)

(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	-	2015.3.20 ~ 2017.3.19	2017.03.19
Dongbin Shin	1955.02	Chairman	Inside Director	4,237,627	-	2016.3.22 ~ 2018.3.21	2018.03.21
Wonjoon Lee	1956.11	President	Representative Director	300	-	2016.3.22 ~ 2018.3.21	2018.03.21
Youngja Shin	1942.10	Inside Director	Inside Director	232,818	-	2016.3.22 ~ 2018.3.21	2018.03.21
Soogeun Kwak	1953.08	Outside Director	Outside Director	-	-	2016.3.22 ~ 2018.3.21	2018.03.21
Jeongsuk Moon	1955.03	Outside Director	Outside Director	-	-	2015.3.20 ~ 2017.3.19	2017.03.19
Hyeryeon Kang	1957.07	Outside Director	Outside Director	-	-	2015.3.20 ~ 2017.3.19	2017.03.19
JaeWon Lee	1958.02	Outside Director	Outside Director	-	-	2016.3.22 ~ 2018.3.21	2018.03.21
JaeWan Bahk	1955.01	Outside Director	Outside Director	-	-	2016.3.22 ~ 2018.3.21	2018.03.21
SeokYoung Choi	1955.10	Outside Director	Outside Director	-	-	2016.3.22 ~ 2018.3.21	2018.03.21

Outside directors Taehyeon Kim and Byungkee Ko resigned on 18 March 2016.

Dongbin Shin, Youngja Shin, Inwon Lee, Wonjoon Lee were reappointed as representative and inside director on 18 March 2016, and Soogeun Kwak was reappointed as outside director, and JaeWon Lee, JaeWan Bahk, SeokYoung Choiwere appointed as outside directors on the same date.

2016.09.08 Inwon Lee, vice president, was excluded from registered officer.

Executivesholdingconcurrent positions in other companies

Name	Name of Affiliates	Positions
Kyukho Shin	Busan Lotte Hotel, Co., Ltd.	Internal Director
	Lotte Engineering & Construction Co., Ltd	Non-standing Executive Director
	Lotte Giants Co., Ltd.	Internal Director
	Lotte Aluminium Co., Ltd.	Non-standing Executive Director
Dongbin Shin	Hotel Lotte Co., Ltd.	Representative Director
	Canon Korea Business Solution INC.	Internal Director
	FLR Korea Co., Ltd.	Non-standing Executive Director
	Lotte Chemical Co., Ltd.	Representative Director
	Lotte Confectionary Co., Ltd.	Representative Director
	Lotte Culture Foundation	Director
Youngja Shin	Lotte Engineering & Construction Co., Ltd	Non-standing Executive Director
	Lotte Giants Co., Ltd.	Internal Director
	Daehong Communications Co., Ltd.	Non-standing Executive Director
	Lotteria Co., Ltd.	Non-standing Executive Director
	S&S International Co., Ltd.	Representative Director
	Lotte Welfare Foundation	Director
	Lotte Scholarship Foundation	Director
	Lotte Samdong Welfare Foundation	Director
Soogeun Kwak	LS Co., Ltd.	Outside Director
Jaewan Park	Samsung Electronics Co., Ltd.	Outside Director

As of 30 September 2016

Non-registered Executives

(As of 30 September 2016) (Unit: shares)

Name	Date of birth (yyyy.mm)	Position	Duties	Common shares
Jinse So	1950.05	President	External Coordination	142
Gakgyu Hwang	1955.04	President	Operations	65
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
Jaechan Lee	1960.02	Senior Managing Director	Communications
Jonghyeon Kang	1964.05	Senior Managing Director	Operations
Jaeyoon Suh	1958.06	Senior Managing Director	China
Changrak Kim	1957.12	Senior Managing Director	Department Store Product 1	219
Wansin Lee	1960.10	Senior Managing Director	Department Store Marketing	386
Janghwa Lee	1959.06	Senior Managing Director	Department Store Business 1	100
Hoju Jang	1960.08	Senior Managing Director	Department Store Finance	100
Yoonnchul Noh	1961.04	Senior Managing Director	Department Store New business
Yongpyo Moon	1962.04	Senior Managing Director	Mart Customer	32
Yeongkyun Kim	1960.10	Senior Managing Director	Mart MD strategy	30
Hosung Park	1958.09	Senior Managing Director	Mart VIC Market product	202
Chunseok Choi	1960.03	Senior Managing Director	Representative Director (Supermarket)	86
Wonchun Cha	1957.12	Senior Managing Director	Representative Director (Cinema)
Soochan Ko	1962.09	Managing Director	Operations
Seokhwan Lee	1967.08	Managing Director	Communications
Ikwoo Nam	1962.01	Managing Director	Operations
Jonghyun Lee	1963.04	Managing Director	Public relation
Hyunok Kim	1969.07	Managing Director	Legal
Taewan Kim	1965.03	Managing Director	Vision Strategy
Wonkyu Ki	1966.02	Managing Director	Human resources
Youngjae Cho	1966.04	Managing Director	Operations	156
Woochul Cha	1968.01	Managing Director	Audit Director	16
Yongseok Hwang	1970.02	Managing Director	Corporate culture	16
Chansoo Kim	1965.03	Managing Director	Distribution CFD
Jinsung Lee	1969.02	Managing Director	Future Strategy Center
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	186
Minyeol Ryu	1966.03	Managing Director	Department Store Business 3	171
Giljo Woo	1966.08	Managing Director	Department Store MD strategy	50
Jun Jang	1958.12	Managing Director	Department Store Design	87
Changhui Nam	1966.10	Managing Director	Mart Grocery MD	96
Jookyung Yoon	1965.04	Managing Director	Mart Indonesia retail	71
Daesik Jang	1966.12	Managing Director	Mart law observance
Seunghee Kim	1965.04	Managing Director	Supermarket membership development
Jonghuan Kim	1962.05	Managing Director	Supermarket sales	32
Wonho Jung	1969.02	Managing Director	Supermarket product	55
Gwanro Lee	1963.02	Managing Director	Cinema sales	32
seonghyeon Gang	1970.01	Managing Director	lohb's Executive President
Sunghack Lee	1965.12	Director	Communications
Youngchul Jung	1971.05	Director	Secretary
Byeonghui Lee	1969.03	Director	Communications
seokkyun Kim	1968.07	Director	Finance
InKu Park	1967.10	Director	Strategy & Insight Center
hongchul Kim	1970.01	Director	Audit Director
Younghwan Lee	1970.06	Director	Human resources	55
Wonjae Kim	1968.04	Director	Finance
Jaehong Lee	1970.05	Director	Strategy & Insight Center
Jinsung Heo	1970.06	Director	Audit Director
Unseong Baek	1965.06	Director	Welfare	71
Gwangchul Shin	1967.11	Director	Strategy & Insight Center	29
Changhee Choi	1972.03	Director	Future Strategy Center
Myeongseob Shim	1970.01	Director	Future Strategy Center
Hyeyoung Kim	1969.11	Director	Future Strategy Center
Hyungsik Jeon	1963.08	Director	Department Store Product 2	164
Younsung Jung	1965.03	Director	Department Store Jamsil branch	119
Gyuwan Hwang	1965.02	Director	Department Store main branch	121
Choulwon Jang	1963.08	Director	Department Store GF business	41
Hoseol Lee	1970.07	Director	Department Store Youngdeungpo branch	94
Taeheung Nam	1964.12	Director	Department Store Cheongnyangni	90
Daesu Kim	1967.09	Director	Department Store Nowon branch	50
Jungho Song	1966.03	Director	Department Store Busan main branch	752
Wansu Park	1968.11	Director	Department Store Management support	123
Jaeok Lee	1970.01	Director	Department Store women's fashion	35
Seondae Lee	1970.01	Director	Department Store Public relations
Gidae Nam	1967.02	Director	Department Store Food products	132
Yeongsu Ha	1970.06	Director	Department Store Home appliances	53
Yeongtaek Yu	1969.06	Director	Department Store Gwangbok	40
Hyungkyu Lee	1967.01	Director	Department Store Pyeongchon branch	50
Younghwan Lee	1967.1	Director	Department Store Suwon branch	112
Jonghyeok Hyeon	1969.10	Director	Department Store Ulsan branch	40
Jieun Kim	1969.08	Director	Department StoreOverseas fashion	50
Joohyuk Park	1968.01	Director	Department Store gangnam branch	60
Younghwan Park	1968.11	Director	Department Store Marketing	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	174
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 Planning	80
Hyun Park	1971.09	Director	Department Store overseas business	77
Chimin Shin	1967.11	Director	Department Store Ethical management	40
Sangyoung Park	1968.02	Director	Department Store Men's sports
Junghyun Kim	1966.03	Director	Department Store Gwangju branch	100
Dongho Jang	1967.06	Director	Department Store Chengdu World Center branch	85
Yeon Na	1967.05	Director	Department Store Shopping mall East Busan branch	81
Eulgyoung Son	1970.02	Director	Department Store MD strategy
Woojin Bae	1971.04	Director	Department Store independence MD	50
Younghee Kim	1970.1	Director	Department Store Bundang branch	41
Myungg Kim	1975.06	Director	Department Store omni-channel
Gwani Lee	1969.01	Director	Mar Mobile business
Pyungkyu Hong	1962.11	Director	Mart Seoul sales	80
Wonsik Hong	1966.06	Director	Mart Vietnam	32
Minho Kang	1968.11	Director	Mart business strategy	10
Changyong Kim	1967.03	Director	Mart management support
Jihyun Han	1967.11	Director	Mart home furnishing
Joohee Woo	1967.03	Director	Mart fresh foods	32
Hakjae Lee	1966.04	Director	Mart overseas cooperation	32
Kyeongwoo Ryu	1966.10	Director	Mart Cooperation
Jaewoo Jeong	1971.08	Director	Mart processed foods	40
Heekyung Kim	1962.05	Director	Mart gyeonggi Southern sales	166
Eunmo Yang	1967.06	Director	Mart Incheon sales	31
Seungmu Heo	1965.02	Director	Mart china Finance	32
Yeongbae Ham	1962.02	Director	Mart Indonesia/Vietnam Finance
Yeongjun Cho	1971.01	Director	Mart China Hwa-dong
Gwonhee Cho	1965.01	Director	Mart yeongnam easten part sales	20
Sungmin Im	1968.03	Director	Mart Gwangju Honam Sales
Jaechul Lim	1972.11	Director	Mart Finance	10
Sanghae Kim	1968.10	Director	Mart yeongnam westen part sales
Seonmee Jeong	1966.02	Director	Mart global education	50
Hyunsun Suh	1971.09	Director	Mar MD innovation
Yoonkyung Kim	1970.03	Director	Mart marketing
Byeongjoon Choi	1971.03	Director	Mart SCM
Jeonghan Kim	1968.02	Director	Mart gyeonggi northern sales
Wonheon Jeong	1972.06	Director	Mart MobileMD
Heonseo Kang	1972.01	Director	Mart Daejeon Chungcheong sales	40
Kuneung Kim	1972.04	Director	Mart PB Sourcing	40
Jaehyung Seo	1964.10	Director	Supermarket marketing
Eunggeol Kim	1967.03	Director	Supermarket Planning
Youseok Jeon	1964.09	Director	Supermarket honam
Yoojin Kim	1965.06	Director	Supermarket development
Jongyoon An	1967.07	Director	Supermarket management support
Jong Un Kim	1970.09	Director	Supermarket development 1	15
Dong Ha Kim	1970.07	Director	Supermarket fresh foods	8
Jae Guk Lee	1971.12	Director	Supermarket development 2	15
Sangmoo Lee	1968.09	Director	Cinema movie	50
Hyeongsu Ji	1965.10	Director	Cinema management support
Eungyo Lee	1967.08	Director	Cinema management strategy	20
Heeseong Oh	1970.12	Director	Cinema new business
Kiwook Lee	1969.10	Director	Lohb's management support

2. Employees

(As of 30 September 2016) (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⁾
		Employees without fixed terms		Fixed-term employees		Total
		Total	Part-time employees	Total	Part-time employees	Total
Department Store	Male	2,038	-	-	0	2,038	12.9	118,272,557	58,091
Department Store	Female	3,092	-	277	0	3,369	10.4	96,048,886	28,922
Discount Store	Male	3,869	384	-	0	3,869	8.8	156,521,992	40,320
Discount Store	Female	9,785	8,694	-	0	9,785	5.3	168,997,211	20,869
Others	Male	2,124	-	234	0	2,358	5.8	73,017,226	31,458
Others	Female	3,564	-	1,180	0	4,743	4.1	83,053,789	17,680
Total		24,472	9,078	1,691	0	26,162	7.0	695,911,660	28,573

Notes:

(1) Based on eight hour work days and an average total of24,588 employees.

The above table excludes temporary workers.

Up until the third quarter of 2014 with respect to the Company's discount mart business, employees who had worked less than two years were classified as contract employees according to the Company's internal standards. Since the third quarter of 2014, those workers are now classified as employees without fixed terms as they are essentially under an indefinite term contract.

Other businesses include the supermarket business, cinema business and H&B business.

Payment amounts in this report were prepared in accordance with accounting standards.

B. Compensation

Compensation of Directors

(Unit: million Won)

Category	Number of directors	Amount paid	Average per person
Registered Director	5	9,816	1,963
Outside Director	3	150	50
Audit Committee Member	3	133	44
Total	11	10,099	918

Compensation of 1 retired Director included on total Compensation of Directors

Compensation of Individual Directors

(Unit: million Won)

Name	Position	Amount paid	Note
Kyukho Shin	Executive Chairman	1,200	Consisting of1,200 million won in salary
Dongbin Shin	Chairman	1,000	Consisting of1,000 million won in salary
Inwon Lee	Vice-Chairman	6,770	Consisting of6,770 million won in salary

VIII. Transactions with Interested Parties

A. Transactions with the Largest Shareholder and its Affiliates

Not applicable.

B. Collateral

(Unit : 1 million Won)

Name(Corporation)	Relationship	Security providing asset	Security rights holder	Transactions					Others
Name(Corporation)	Relationship	Security providing asset	Security rights holder	Basic	Increase	Decrease	Evaluation	End of term	Others
IGIS CORPORATION	Affiliates	Stock	Mizuho Bank Ltd.	5,477	-	-	(905)	4,572

The entire cost of stocks of IGIS I CORPORATION that Lotte Shopping Co., Ltd. retains (book value: 4,571,544,000 KRW) is provided as security to Mizuho Bank Ltd. regarding the loan of IGIS I CORPORATION.

C. Guarantee of Obligations

(Unit : local currency)

Company name (Debtor)	Guarantee	Guaranteed amount	Term of guarantee
Lotte Shopping RUS Ltd.	KEB	USD 5,000,000	2014.05.02. ~ 2017.05.02.
Shandong Longzhile Cinema Co., Ltd.	Shinhan Bank	CNY 24,000,000	2014.06.23. ~ 2017.06.23.
International Business Center Company limited	KEXIM	USD 15,000,000	2016. 04.06. ~ 2019 04.06.
International Business Center Company limited	Standard Chartered Bank Korea	VND 110,000,000,000	2016.04.06. ~ 2017.04.06.
Lotte Properties(Shenyang) Limited	KEXIM	USD 30,500,000	2016. 03.30. ~ 2019. 03.30.
	Woori Bank	USD 31,500,000	2016. 04.25. ~ 2019. 04.25.
	Korea Development Bank	USD 57,500,000	2016. 05.04. ~ 2019. 05.04.
LOTTE PROPERTIES (CHENGDU)HK LIMITED	KEB	USD 140,000,000	2014. 03. 20. ~ 2017. 03. 20.
LOTTE PROPERTIES (CHENGDU)HK LIMITED	Shinhan Bank	USD 50,000,000	2014. 03. 20. ~ 2017. 03. 20.
Lotte Shopping Holdings (Hong Kong) Co., Limited	Standard Chartered Bank Korea	USD 38,135,750	2014. 06. 03. ~ 2017. 06. 02.
	BNP Paribas	USD 38,135,000
	Citibank, N.A. , Hong Kong Branch	USD 38,135,000
	SMBC	USD 38,135,000
	ING	USD 120,213,804	2015. 01. 20. ~ 2018. 01. 19.
	Shinhan Bank	HKD 8,000,000	2015. 11. 10. ~ 2017. 11. 10.
	HSBC	USD 95,297,610	2015. 11. 30. ~ 2018. 11. 30.
	BNP Paribas	USD 104,818,169	2016.05.16. ~ 2019.05.16.
PT. LOTTE Shopping Avenue Indonesia	DBS	USD 20,000,000	2014. 09. 23. ~ 2017. 09. 23.
PT. LOTTE Shopping Avenue Indonesia	JP Morgan	IDR 200,000,000,000	2015. 12. 21. ~ 2018. 12. 21.
Lotte Business Management (Tianjin) Co., Ltd.	BNP Paribas	CNY 150,000,000	2016.06.21. ~ 2018.06.21.
LOTTE DEPARTMENT STORE (TIANJIN) CO., LTD.	KEB Hana Bank	CNY 170,000,000	2016.06.15. ~ 2018.06.15.
Lucky Pai (Shanghai) Trading Co., Ltd.	KEB Hana Bank	CNY 58,000,000	2015. 11. 26. ~ 2017. 11. 26.
	KEB Hana Bank	CNY 39,900,000
	KEB Hana Bank	CNY 20,100,000
	KEB Hana Bank	CNY 57,000,000	2016.02.29.~ 2017.03.06.
	Shinhan Bank	CNY 14,000,000	2015.11.19. ~ 2016.11.15.
	Industriall Bank of Korea	CNY 46,000,000	2016.01.15. ~ 2017.01.13
	Woori Bank	CNY 15,000,000	2016.03.03. ~ 2017.03.02
Lotte Department Store (Shenyang) Co., Ltd.	BNP Paribas	CNY 50,000,000	2016.07.11 ~2018.07.11
Jiangsu Times Supermarket Co., Ltd	DBS	CNY 330,000,000	2016.08.30 ~ 2017.08.29

Besides the above guarantee of payment, the Company has guaranteed on the execution of contract of THE CINEMA OF KOREA with CJ CGV by 50% each during the VPF contract signing with THE CINEMA OF KOREA and the Twentieth Century Fox Film Corporation in October 2008.
The Company has guaranteed the execution of the contract of Burger King Japan Co., Ltd. regarding the loyalty contract (3.0% of the net sales, 25,000 USD per an opening of a new store) between Burger King Japan Co., Ltd. and BK ASIAPAC, PTE. Ltd.
As of the end of the current quarter, the Company has a contract of supplementing capital in case of difficulty of returning the original principal and interest by the issuing companies of H&D Able 2nd Corporation, Suwon Landmark 2nd Corporation, Invest Farmland Corporation, and KS 1nd Corporation, regarding the asset-backed corporate paper of Lotte Incheon Development Co., Ltd (face value of 700 billion KRW, due to expire on 23 February 2018), asset-backed corporate paper of Lotte Suwon Stn. Shopping Town (face value of 250 billion KRW, due to expire on 28 May 2018), electronic short-term private loan of Lotte Incheon Town (face value of 34 billion KRW, due to expire on 29 Dec 2016), and asset-backed corporate paper of Lotte Ulsan Development Co., Ltd (face value of 266 billion KRW, due to expire on 23 Nov 2018).
The Company has been providing a payment guarantee from 2014 on the rent that the Lotte Suwon Stn. Shopping Town has to pay to the landlord during the lending peiord (20 years).

d. Transaction of tangible assets

(Unit : 1 million Won)

Name (Corporation Name)	Relationship	Purpose of trade	Trade period	Object of trade	Trade amount
Lotte Engineering & Construction Co., Ltd.	Affiliate	Capital purchase	2016.01.01~2016.09.30	Tangible assets	199,545
Lotte Logistics Corporation	Affiliate	Capital purchase	2016.01.01~2016.09.30	Tangible assets	1,571
Lotte Department Store Masan	Affiliate	Capital purchase	2016.01.01~2016.09.30	Intangible assets	536
Lotte Aluminium Co., Ltd.	Affiliate	Capital purchase	2016.01.01~2016.09.30	Tangible assets	6,061
Lotte Data Communications Company	Affiliate	Capital purchase	2016.01.01~2016.09.30	Tangible assets	31,799
Daehong Communications	Affiliate	Capital purchase	2016.01.01~2016.09.30	Tangible assets	475
Hotel Lotte Co., Ltd.	Affiliate	Disposal of Capital	2016.01.01~2016.09.30	Tangible assets	143

Transactions under 100 million Won have been omitted. (Writing guide VII 10-1-2)

e. Sales of stocks and bonds

(Unit : 1 million Won)

Name (Corporation Name)	Relationship	Type of trade	Trade date	Object of trade	No. of stocks (*1)	Trade amount
Lotte Shopping Holdings (Hong Kong) Co., Limited	Consolidated subsidiary	Recapitalization	29 Jan 2016	Lotte Shopping Holdings (Hong Kong) Co., Limited common stock	34,000,000	41,025
Lotte Accelerator	Equity method applicable company	Recapitalization	31 Jan 2016	Lotte Accelerator common stock	500,000	2,500
Lotte Ulsan Development	Consolidated subsidiary	Recapitalization	25 Feb 2016	Lotte Ulsan Development common stock	2,000,000	10,000
Coralis S.A.	Equity method applicable company	Recapitalization	29 Feb 2016	Coralis S.A. common stock	45	4,474
Lotte Giants	Equity method applicable company	Recapitalization	7 Mar 2016	Lotte Giants common stock	1,800,000	9,000
LOTTE CINEMA VIETNAM CO., LTD.	Consolidated subsidiary	Recapitalization	31 March 2016	LOTTE CINEMA VIETNAM CO., LTD. common stock	-	10,299
Lotte Shopping Holdings(Hong Kong) Co., Limited	Consolidated subsidiary	Recapitalization	4 May 2016	Lotte Shopping Holdings (Hong Kong) Co., Limited common stock	24,000,000	27,700
LOTTE SHOPPING HOLDINGS(SINGAPORE) PTE. LTD.	Consolidated subsidiary	Investment in kind	13 May 2016	PT. LOTTE SHOPPING INDONESIA common stock	(2,622,812)	(214,068)
				LOTTE VIETNAM SHOPPING JOINT STOCK COMPANY common stock	-	(125,243)
				LOTTE SHOPPING HOLDINGS (SINGAPORE) PTE. LTD. common stock	205,757,937	339,311
Shandong LongzhileCinema Co., Ltd.	Equity method applicable company	Recapitalization	27 May 2016	Shandong Longzhile Cinema Co., Ltd. common stock	-	884
Hemisphere FilmInvestors II LLC	Equity method applicable company	capitalreduction	31 May 2016	Hemisphere Film Investors II LLC common stock	-	(654)
Hemisphere FilmInvestors II LLC	Equity method applicable company	capitalreduction	26 July 2016	Hemisphere Film Investors II LLC common stock		(1,085)
Lotte Ulsan Development	Consolidated subsidiary	Recapitalization	29 August 2016	Lotte Ulsan Development common stock	2,780,000	13,900

Transactions under 100 million Won have been omitted. (Writing guide VII 10-1-2)
(*1) Foreign corporations do not issue stocks due to the local regulations.

f. Operational trades with the major stockholder
- N/A.

g. Trades with concerned parties besides the major stockholder
- N/A.

IX. Other Relevant Matters

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

Date

Matters

Decision

46^hGeneral Meeting of Shareholders

(18March 2016)

Agenda No. 1: Approval of the Company's 46^hfiscal year financial statements

Agenda No. 2 Appointment of directors

-No. 2-1: Appointment of standing directors
-No. 2-2: Appointment of outside directors

-No. 2-3: Appointment of audit committee members

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

(1) Lotte Shopping Co., Ltd.
1) Cancellation of denial of rectification of VAT (Supreme Court 2015Du58959)

Classification	Content
Litigation date	- 09 Dec 2015
Litigants	- Plaintiff : Lotte Shopping Co., Ltd. and 1 other, Defendants : Head of Namdaemun Tax Office and 91 others.
Content of litigation	- Claim of rectification of VAT regarding transactions made with mileage and presented gift certificates, as they are considered as discounted transactions
Amount of litigation	- 10.7 billion won
Proceedings	- 1st trial on 24 Oct 2014 (2013GuHap57389): Lost - 2nd trial on 29 Oct 2015 (2014Nu71704): Lost - 3rd trial on 09 Dec 2015 (2015Du58959): in progress - 2016. 04. 21 Case was filed with Supreme Cout En Banc - 2016. 08. 26 Supreme Court vacate and remand the case to lower court
Further schedule and plan of litigation	- Currently, Supreme Court vacate and remand the case and oral proceedings will be expected in High Court
Impact of outcome on the Company	- As it is a litigation regarding a claim of rectification after the relevant VAT had already been paid, no additional loss is expected in case of a defeat.

2)Cancellation of denial of rectification of VAT (Seoul Administrative Court, 2015GuHap74999)

Classification	Content
Litigation date	- 24 Sep 2015
Litigants	- Plaintiff : Lotte Shopping Co., Ltd. and 1 other, Defendants : Head of Gangnam Tax Office and 107 others.
Content of litigation	- Claim of rectification of VAT regarding transactions made with mileage and presented gift certificates, as they are considered as discounted transactions
Amount of litigation	- 20.7 billion won
Proceedings	- 1st trial (Seoul Administrative Court 2015GuHap74999): In progress
Further schedule and plan of litigation	- A similar case of our Company is in progress (high court 2016Nu61817). We will respond based on the outcome.
Impact of outcome on the Company	- As it is a litigation regarding a claim of rectification after the relevant VAT had already been paid, no additional loss is expected in case of a defeat.

3)Claim for damages (Seoul Central District Court, 2014GaHap532526)

Classification	Content
Litigation date	- 14 May 2014
Litigants	- Plaintiff: Choongang Industrial Development Co., Ltd. Defendants: Rits Industrial Co., Ltd., Kyungdong Civil Engineering and Construction Co., Ltd., Lotte Shopping Co., Ltd., City of Cheongju
Content of litigation	- Claim for damage from violation of contract during exchange of implementation rights among implementing companies and implementation of project
Amount of litigation	- 24.1 billion won
Proceedings	- 1st trial in progress
Further schedule and plan of litigation	- 24 November 2016 will be the date of argument. Planning to respond based on the final outcome.
Impact of outcome on the Company	- Due to the low probability of defeat, a loss is not expected; will reasonably gauge the possibility of defeat and appropriate provisions.

4)Claim for damages (Seoul Central District Court, 2016GaHap527467 and 7 other cases)

Classification	Content
Litigation date	- 16 May 2016 and other dates
Litigants	- Plaintiff: Kang, Chan Ho and 475 others. Defendants: Lotte Shopping Co., Ltd and 22 others.
Content of litigation	- In relation to the damages incurred due to the cleansing agent for a humidifier (death and diseases), the bereaved families have filed a damage compensation suit against the manufacturer, seller and the government.
Amount of litigation	- 17.0 billion won
Proceedings	- 1st trial in progress
Further schedule and plan of litigation	- Procedures to reach an agreement on the compensation to be made is currently being carried out for the victim(s) with a ratings determination by the Korea Environmental Industry and Technology Institute
Impact of outcome on the Company	- It is a group litigation with 22 persons other than the Korean government as the defendants, and it is currently compute with the total value of the compensation to be agreed upon. (Impossible to confirm the details of the claims since it is a formative petition that has been filed.)

(2) Lotte Card Co., Ltd.
1) Claim for damages (Seoul Central District Court, 2014GaHap11067 and 70 other cases)

Classification	Content
Litigation date	- 20 January 2014 and other dates
Litigants	- Eunyoung Kim and 48,201 others
Content of litigation	- Claim for psychological damage due to personal information leakage
Amount of litigation	- 22.9 billion won
Proceedings	- Seoul Central District Court, 2014GaHap11067 and 70 other cases in progress
Further schedule and plan of litigation	- 25 August 2016 Oral proceeding of representative case was proceeded in appellate court . Planning to respond based on the final outcome.
Impact of outcome on the Company	- The Company cannot reasonably predict the outcome of the 71 cases regarding personal information leakage, and 4.1 billion won has been appropriated for provision.

(3) Lotte Hi-mart Co., Ltd.

1) Claim for damages (Supreme Court, 2016Da24515)

Classification	Content
Litigation date	- 6 March 2013
Litigants	- Plaintiff : Lotte HiMart Co., Ltd. Defendant : Jonggu Seon
Content of litigation	- A suit was filed for wage increase without resolution of board of directors and breach of duty made by former CEO
Amount of litigation	- 16.8 billion won
Proceedings	-2015.07.03. Company partially won the case in the first instance court (2013 KaHab17761 Seoul Central District Court) -2015.08.05. Company filed an appleal and the case is under 2^nd instant court -2016.06.30. Courts judgment was delivered (Company partially won the case) -2016.07.06. Company was awarded 1.7 billion won additionally (including interest and litigation cost) -2016.07.22. Both parties appealed to the Supreme Court respectively
Further schedule and plan of litigation	-Currently, legal principles are reviewed by a bench in the Supreme Court and we have a plan to respond thereto depending on how things go
Impact of outcome on the Company	- Based on the judgment delivered by the Supreme Court, additional profit or cost may be gained or incurred

Standard for important litigations of the Company: Litigations that significantly affect the finance of the Company, or litigations with a litigation amount over 10 billion won.
Further information can be found in note 36 (on contingent liabilities and contract details) of 3. Group Accounts and note 35 (on contingent liabilities and contract details) of 5. Financial Statements of III. Finance-related contents.

2. Bills or checks provided as collateral

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. With the advent of the period of exercising during the current half year, exercising of the call option was notified to Aegis First and the procedure for the stock purchase contract in accordance with the exercising of the call option as at the end of the current half year is being carried out. On the other hand, the entire amount of the stocks of Aegis First (with book value of 4,571,544,000 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

- N/A

4. Other Contingent Liabilities

a. Detail of paymentguarantees 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.

(Unit : local currency)

Company name (Debtor)	Guarantee Institution	Guaranteed amount	Guarantee period	Others
Lotte Shopping RUS Ltd.	KEB	USD 5,000,000	2014.05.02. ~ 2017.05.02.	Guarantee of payment for financing
Shandong Longzhile Cinema Co., Ltd.	Shinhan Bank	CNY 24,000,000	2014.06.23. ~ 2017.06.23.
International Business Center Company limited	KEXIM	USD 15,000,000	2016. 04.06. ~ 2019 04.06.
International Business Center Company limited	Standard Chartered Bank Korea	VND 110,000,000,000	2016.04.06. ~ 2017.04.06.
Lotte Properties(Shenyang) Limited	KEXIM	USD 30,500,000	2016. 03.30. ~ 2019. 03.30.
	Woori Bank	USD 31,500,000	2016. 04.25. ~ 2019. 04.25.
	Korea Development Bank	USD 57,500,000	2016. 05.04. ~ 2019. 05.04.
LOTTE PROPERTIES (CHENGDU)HK LIMITED	KEB	USD 140,000,000	2014. 03. 20. ~ 2017. 03. 20.
LOTTE PROPERTIES (CHENGDU)HK LIMITED	Shinhan Bank	USD 50,000,000	2014. 03. 20. ~ 2017. 03. 20.
Lotte Shopping Holdings (Hong Kong) Co., Limited	Standard Chartered Bank Korea	USD 38,135,750	2014. 06. 03. ~ 2017. 06. 02.
	BNP Paribas	USD 38,135,000
	Citibank, N.A. , Hong Kong Branch	USD 38,135,000
	SMBC	USD 38,135,000
	ING	USD 120,213,804	2015. 01. 20. ~ 2018. 01. 19.
	Shinhan Bank	HKD 8,000,000	2015. 11. 10. ~ 2017. 11. 10.
	HSBC	USD 95,297,610	2015. 11. 30. ~ 2018. 11. 30.
	BNP Paribas	USD 104,818,169	2016.05.16. ~ 2019.05.16.
PT. LOTTE Shopping Avenue Indonesia	DBS	USD 20,000,000	2014. 09. 23. ~ 2017. 09. 23.
PT. LOTTE Shopping Avenue Indonesia	JP Morgan	IDR 200,000,000,000	2015. 12. 21. ~ 2018. 12. 21.
Lotte Business Management (Tianjin) Co., Ltd.	BNP Paribas	CNY 150,000,000	2016.06.21. ~ 2018.06.21.
LOTTE DEPARTMENT STORE (TIANJIN) CO., LTD.	KEB Hana Bank	CNY 170,000,000	2016.06.15. ~ 2018.06.15.
Lucky Pai (Shanghai) Trading Co., Ltd.	KEB Hana Bank	CNY 58,000,000	2015. 11. 26. ~ 2017. 11. 26.
	KEB Hana Bank	CNY 39,900,000
	KEB Hana Bank	CNY 20,100,000
	KEB Hana Bank	CNY 57,000,000	2016.02.29.~ 2017.03.06.
	Shinhan Bank	CNY 14,000,000	2015.11.19. ~ 2016.11.15.
	Industriall Bank of Korea	CNY 46,000,000	2016.01.15. ~ 2017.01.13
	Woori Bank	CNY 15,000,000	2016.03.03. ~ 2017.03.02
Lotte Department Store (Shenyang) Co., Ltd.	BNP Paribas	CNY 50,000,000	2016.07.11 ~2018.07.11
Jiangsu Times Supermarket Co., Ltd	DBS	CNY 330,000,000	2016.08.30 ~ 2017.08.29

Besides the above guarantee of payment, the Company has guaranteed the execution of contract of THE CINEMA OF KOREA with CJ CGV by 50% each during the VPF contract signing with THE CINEMA OF KOREA and the Twentieth Century Fox Film Corporation in October 2008.
The Company has guaranteed the execution of the contract of Burger King Japan Co., Ltd. regarding the loyalty contract (3.0% of the net sales, 25,000 USD per an opening of a new store) between Burger King Japan Co., Ltd. and BK ASIAPAC, PTE. Ltd.

As of the end of the current quarter, the Company has a contract of supplementing capital in case of difficulty of returning the original principal and interest by the issuing companies of H&D Able 2nd Corporation, Suwon Landmark 2nd Corporation, Invest Farmland Corporation, and KS 1nd Corporation, regarding the asset-backed corporate paper of Lotte Incheon Development Co., Ltd (face value of 700 billion KRW, due to expire on 23 February 2018), asset-backed corporate paper of Lotte Suwon Stn. Shopping Town (face value of 250 billion KRW, due to expire on 28 May 2018), electronic short-term private loan of Lotte Incheon Town (face value of 34 billion KRW, due to expire on 29 Dec 2016), and asset-backed corporate paper of Lotte Ulsan Development Co., Ltd (face value of 266 billion KRW, due to expire on 23 Nov 2018).

The Company has been providing a payment guarantee from 2014 on the rent that the Lotte Suwon Stn. Shopping Town has to pay to the landlord during the lending peiord (20 years).

Issuance of hybrid securities recognized as equity

(As of 30 September 2016) (Unit: million Won)

Category	Details
Issuance number	Issue No. 1-1, 2 of Lotte Shopping subordinated hybrid securities
Issuance date	15 November 2013
Issued amount	Won 270 billion (No. 1-1: Won 240 billion, No. 1-2: Won 30 billion)
Purpose of issuance	Repayment of borrowings and general corporate purposes
Type of offering	Private placement
Listed/Unlisted	Unlisted
Outstanding balance	Won 270 billion (No. 1-1: Won 240 billion, No. 1-2: Won 30 billion)
Equity recognition	Recognition for accounting purposes	Issued securities were recognized as equity shares as they are not considered as part of assets that may be collected for money owed to creditors. However, no dividend may be paid until all interest has been paid.
Equity recognition	Credit rating agencies' equity recognition ratios	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	Issued securities will be considered pari passu with the lowest ranked preferred stock of the Company and are senior to common stock of the Company. Subordinated to all other obligations of the Company other than existing preferred shares and other obligations specified to be pari passu with the securities.
Impact on financial structure after debt classification	Debt ratio increase (An increase to 64.99% from 67.90% As of 30 September 2016)

5. 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 Home Shopping

Categories	Companies	Dates	Grounds and relevant laws	Punishment or measures to be taken	Current status of the execution of the punishment or measures to be taken by the company
Distribution	Woori Home Shopping	2015.03.25	Large scale distribution business act - Failure to issue in writing in advance, etc. and failure to issue a contract (delayed issuance) and oral placement of an order in advance, delayed payment of the amount for sales, passing on of the sales promotional cost, demanding of management information, method of receiving of fees, and provision of disadvantages through inducing of mobile orders Subject period: 12.01.1~14.12.4	Correction order / Notification order Fine imposed: 3.74 Billion Won	Payment of the fine Inauguration of TFT for fair trading Currently reducing the disadvantages of the cooperative companies
		2015.05.14	Indicated advertisement law - Omission of public announcement of important information of broadcasting of tour package products including the cost of guide and cost of elective tour items, etc. Subject period: 14.09.01~11.09	Imposition of the fine of 62.5 million Won	Fine paid Indication of omitted items
		2015.06.12	Electronic trading law -Falsified and exaggerated advertisement and TV broadcasting sales / Lirikos ample cosmetic products Broadcasting of the falsified and exaggerated advertisement of appearing to offer commercially sold item when in fact only sample products are handed out Subjected broadcasting: Nov. 23, 2014	Corrective order / Imposition of fine of 8 million Won	Payment of fine Disciplinary action taken on the personnel in charge through the Personnel Management Committee
		2016.05.27	Re-approval that is inappropriate to the broadcasting law and omission of the broadcasting business operator / reapproved business plan item although the criminal activities and history of criminal punishment that was imposed on the current and former executive company need to be included in the application of the re-approval of the business plan, the business plan was written differently from the actual facts and submitted. Accordingly, re-approval was acquired in falsified and other unjust methods.	Stoppage in business for 6 hours a day from 8~11 AM and 8~11 PM everyday over a period of 6 months (prohibition of transmittance of broadcasting on introduction and sales of products), grant of a 4 month grace period from the date of the notification of the measures to be taken (stoppage from Sep. 28, 2016)	Submit a petition for provisional injunction against the stoppage of business Aug. 5, 2016 Must be strict in preparation for administrative suit citing application for provisional disposition with the court (09/07/2016)

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

C. Inventory Status

(Unit: million Won)

Business segment	Account	47^thfiscal year (3Q)	46^thfiscal year	45^thfiscal year
Department store	Merchandise	1,643,582	1,631,087	1,645,156
	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	1,643,582	1,631,087	1,645,156
Discount store	Merchandise	651,861	633,462	645,588
	Goods	-	-	-
	Goods in process	-	-	-
	Half-finished goods	-	-	-
	Raw materials	-	-	-
	Component materials	-	-	-
	Stored goods	38	42	417
	Goods not delivered	4,067	1,122	530
	Unsold property	10,286	29,412	-
	Completed property	-	-	-
	Uncompleted property	-	-	23,756
	Land site	-	-	16,061
	Sub-total	666,252	664,038	686,352
Finance	Merchandise	4,307	3,049	2,564
	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	4,307	3,049	2,564
Electronics	Merchandise	493,851	416,081	357,113
	Goods	-	-	-
	Goods in process	-	-	-
	Half-finished goods	-	-	-
	Raw materials	-	-	-
	Component materials	-	-	-
	Stored goods	-	-	-
	Goods not delivered	207	142	-
	Unsold property	-	-	-
	Completed property	-	-	-
	Uncompleted property	-	-	-
	Land site	-	-	-
	Sub-total	494,058	416,223	357,113
Convenience store	Merchandise	79,142	71,258	53,173
	Goods	-	-	-
	Goods in process	-	-	-
	Half-finished goods	-	-	-
	Raw materials	-	-	-
	Component materials	-	-	-
	Stored goods	706	755	787
	Goods not delivered	-	-	-
	Unsold property	-	-	-
	Completed property	-	-	-
	Uncompleted property	-	-	-
	Land site	-	-	-
	Sub-total	79,848	72,013	53,960
Others	Merchandise	193,505	176,103	174,114
	Goods	9,340	12,780	12,227
	Goods in process	918	968	943
	Half-finished goods	-	-	-
	Raw materials	1,320	848	873
	Component materials	-	23	9
	Stored goods	917	1,447	964
	Goods not delivered	429	886	1,676
	Unsold property	-	-	-
	Completed property	-	-	-
	Uncompleted property	319,719	286,532	225,103
	Land site	-	-	-
	Sub-total	526,148	479,587	415,909
Total	Merchandise	3,066,248	2,931,040	2,877,708
	Goods	9,340	12,780	12,227
	Goods in process	918	968	943
	Half-finished goods	-	-	-
	Raw materials	1,320	848	873
	Component materials	-	23	9
	Stored goods	1,661	2,244	2,168
	Goods not delivered	4,703	2,150	2,206
	Unsold property	10,286	29,412	-
	Completed property	-	-	-
	Uncompleted property	319,719	286,532	248,859
	Land site	-	-	16,061
	Sub-total	3,414,195	3,265,997	3,161,054
Inventory as percentage of total assets (%)[InventoryAssets100]		8.33%	8.03%	7.89%
Inventory turnover (times) [Annualized cost of sales{(Period start inventoryPeriod end inventory)2}]		6.0	6.3	6.2

Due diligence of inventories

Business unit

Department store

Discount store

Others

Date of due diligence

15 June

22 January - 29 March (Supermarket),

15 April ~ 29 June (Supermarket),

15 July ~ 27 September (Supermarket)

7 January - 30 March (LOHB's),

2 April ~ 27 June (LOHB's)

1 July ~ 28 September (LOHB's)

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 2016) (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	-	5,000	200,000	248,000	160,000	115,000	280,000	120,000	1,128,000

2. Amount of electronic short-term debenture

(As of 30 September 2016) (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	-	-	-	-	-	-	1,200,000	1,200,000

3. Amount of Outstanding Corporate Bonds

(As of 30 September 2016) (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	2,568,627	2,643,174	2,658,150	900,000	380,000	910,000	-	10,059,951

4. Amount of Outstanding Hybrid Securities

(As of 30 September 2016) (Unit: million Won)

Remaining maturity period	Under 1 year	Over 1 but under 5 years	Over 5 but under 10 years	Over 10 but under 15 years	Over 15 but under 20 years	Over 20 but under 30 years	Over 30 years	Total
Amount outstanding	-	-	-	-	-	270,000	-	270,000

This information is provided by RNS

The company news service from the London Stock Exchange

END

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