REG - Lotte Shopping CoLtd - Half-year Report <Origin Href="QuoteRef">023530.KS</Origin> - Part 5
23/09/2016 07:20
- Part 5: For the preceding part double click ID:nRSW6468Kd
asset-backed corporate paper of Lotte Incheon Development Co.,
Ltd (face value of 700 billion KRW, due to expire on 23 February 2018), corporate bill securities of Lotte Suwon Stn.
Shopping Town (face value of 250 billion KRW, due to expire on 28 May 2018), and electronic short-term private loan of
Lotte Incheon Town (face value of 34 billion KRW, due to expire on 29 Dec 2016).
※ 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 June 2016) (Unit: million Won)
Issuance number Issue No. 1-1, 2 of Lotte Shopping subordinated hybrid securities
Issuance date 15 November 2013
Issued amount Won 270 billion (No. 1-1: Won 240 billion, No. 1-2: Won 30 billion)
Purpose of issuance Repayment of borrowings and general 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.
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 yield＋1.5%, 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 65.96% from 63.09% As of 30 June 2016)
Impact on financial structure after debt classification
Debt ratio increase (An increase to 65.96% from 63.09% As of 30 June 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.
One employee was issued a "cautionary warning"
2014.02.11 Warning from the Financial Supervisory Service and imposition of fine (W1,000 Insurance solicitation with misleading information about insurance products.(Insurance Business Act Article 97) Employee training.
million)
One employee was issued an official "reprimand"
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 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.
Financial Services Commission
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 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
tenure), an equivalent of "cautionary warning" -Former representative director (10
years and 11 months of tenure), an equivalent of recommendation of discharge
2014.10.28 Five managing directors-Former managing director (12 years of tenure), three months 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.
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
2014.10.30 Imposition of fine (W 12,000,000) from the Ministry of Security and Public Violation of the rules relevant to personal information retention, etc. Regular employee training.Strengthening of internal regulation.
Administration
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 educationfor the staffs and reinforcement of internal control
C, Woori Home Shopping
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 Correction order / Notification order Payment of the fine
Subject period: 12.01.1~14.12.4 Fine imposed: 3.74 Billion Won 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 Imposition of the fine of 62.5 million Won Fine paid
information of broadcasting of tour package products including the cost of guide and Indication of omitted items
cost of elective tour items, etc.
Subject period: 14.09.01~11.09
2015.06.12 Electronic trading law -Falsified and exaggerated advertisement and TV broadcasting Corrective order / Payment of fine
sales / Lirikos ample cosmetic productsBroadcasting of the falsified and exaggerated Imposition of fine of 8 million Won Disciplinary action taken on the personnel in charge through the Personnel Management Committee
advertisement of appearing to offer commercially sold item when in fact only sample
products are handed out
Subjected broadcasting: Nov. 23, 2014
2016.05.27 Re-approval that is inappropriate to the broadcasting law and omission of the 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) Prepare the means of coping with the measures ordered (Acquisition of the approval of the Board of Directors for an administration litigation including a petition for provisional injunction against the stoppage of business, etc.)
broadcasting business operator / reapproved business plan itemalthough 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.
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 itemalthough 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)
Prepare the means of coping with the measures ordered (Acquisition of the approval of the Board of Directors for an
administration litigation including a petition for provisional injunction against the stoppage of business, etc.)
The above table summary does not include minor sanctions and fines.
C. Inventory Status
(Unit: million Won)
Department store Merchandise 1,439,954 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 1,439,954 1,631,087 1,645,156
Discount store Merchandise 682,380 633,462 645,588
Goods - - -
Goods in process - - -
Half-finished goods - - -
Raw materials - - -
Component materials - - -
Stored goods 41 42 417
Goods not delivered 5,587 1,122 530
Unsold property 12,748 29,412 -
Completed property - - -
Uncompleted property - - 23,756
Land site - - 16,061
Sub-total 700,756 664,038 686,352
Finance Merchandise 4,288 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 4,288 3,049 2,564
Electronics Merchandise 553,627 416,081 357,113
Goods - - -
Goods in process - - -
Half-finished goods - - -
Raw materials - - -
Component materials - - -
Stored goods - - -
Goods not delivered 407 142 -
Unsold property - - -
Completed property - - -
Uncompleted property - - -
Land site - - -
Sub-total 554,034 416,223 357,113
Convenience store Merchandise 74,055 71,258 53,173
Goods - - -
Goods in process - - -
Half-finished goods - - -
Raw materials - - -
Component materials - - -
Stored goods 717 755 787
Goods not delivered - - -
Unsold property - - -
Completed property - - -
Uncompleted property - - -
Land site - - -
Sub-total 74,772 72,013 53,960
Others Merchandise 173,087 176,103 174,114
Goods 9,107 12,780 12,227
Goods in process 869 968 943
Half-finished goods - - -
Raw materials 818 848 873
Component materials - 23 9
Stored goods 943 1,447 964
Goods not delivered 587 886 1,676
Unsold property - - -
Completed property - - -
Uncompleted property 329,388 286,532 225,103
Land site - - -
Sub-total 514,799 479,587 415,909
Total Merchandise 2,927,391 2,931,040 2,877,708
Goods 9,107 12,780 12,227
Goods in process 869 968 943
Half-finished goods - - -
Raw materials 818 848 873
Component materials - 23 9
Stored goods 1,701 2,244 2,168
Goods not delivered 6,581 2,150 2,206
Unsold property 12,748 29,412 -
Completed property - - -
Uncompleted property 329,388 286,532 248,859
Land site - - 16,061
Sub-total 3,288,603 3,265,997 3,161,054
Inventory as percentage of total assets (%) Inventory÷Assets×100 8.15% 8.03% 7.89%
Inventory turnover (times)[Annualized cost of sales÷{(Period start inventory＋Period end inventory)÷2}] 6.0 6.3 6.2
7.89%
Inventory turnover (times)[Annualized cost of sales÷{(Period start inventory＋Period 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),7 January - 30 March (LOHB's),2 April ~ 27 June (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 June 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 25,000 45,000 203,006 - 305,000 115,000 330,000 120,000 1,143,006
2. Amount of electronic short-term debenture
(As of 30 June 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 70,000 20,000 - - - 90,000 1,200,000 1,130,000
3. Amount of Outstanding Corporate Bonds
(As of 30 June 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 1,934,775 2,946,442 2,649,995 1,330,000 580,000 610,000 - 10,051,212
4. Amount of Outstanding Hybrid Securities
(As of 30 June 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
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