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Semi-annual Report

(42nd

fiscal year, 1st half)

For the six months ended 30 June 2011

To: Financial Services Commission of Korea KRX KOSPI Market 29 August 2011

Company Name : Lotte Shopping Co., Ltd.

CEO : Lee, Cheolwoo

Head Office : 1, Sogong-dong, Jung-gu, Seoul (Tel) +82 2-771-2500 (Homepage) http:// www.lotteshopping.com

Prepared by : (Position) Head of Strategic Planning (Name) Kim, Sewan (Tel) +82 2-2118-2019

On 29 August 2011, Lotte Shopping Co., Ltd. (the “Company”) filed its business report for the first half of 2011 (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 the six month period ended 30 June 2011 has been prepared in accordance with the Korean equivalent of International Financial Reporting Standards (“Korean IFRS”).

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I. Overview of the Company

A. Overview

1. Main business

As of 30 June 2011, the Company operated 29 department stores, four outlet malls, 92 discount stores, 315 supermarkets and 70 cinemas in Korea. In April 2011, the Company opened its first Lifestyle Centre, Lotte Esiapolis, and the Company plans to open additional stores and is moving forward with its outlet mall, complex shopping mall (i.e., a shopping mall located in a suburban or a redevelopment area that has both leisure and shopping facilities), “category killer” (i.e., specialty stores) and fashion brand businesses.

With respect to overseas business activities, the Company opened its first overseas department store in Moscow, Russia, in September 2007. The Company opened its first department store in China in Beijing in August 2008 and its second department store in China in Tianjin in July 2011. As of 30 June 2011, with respect to its discount store business, the Company operated 82 discount stores in China, two discount stores in Vietnam and 23 discount stores in Indonesia through separate corporate entities established in each jurisdiction. The Company is examining various methods, including engaging in new developments, leases and management contracts to increase its overseas store openings.

As of 30 June 2011, the Company had 39 consolidated subsidiaries. See Note 1 of the notes to the consolidated financial statements of the Company as of and for the six month period ended 30 June 2011 attached hereto.

2. Affiliates

The Company has 82 affiliates, which together are part of the Lotte Group.

a. Listed companies

Business category Affiliates Number of companies

Food Lotte Confectionary, Lotte Samkang, Lotte Chilsung Beverage 3

Petrochemical Honam Petrochemical, KP Chemical 2

Retail Lotte Shopping, Lotte Midopa 2

Financial / Insurance Lotte Insurance 1

b. Unlisted companies

Business category Affiliates Number of companies

Food / Pharmaceutical

Lotte Ham, Lotteria, Lotte Fresh Delica, Lotte Boulangerie, Lotte Pharm., Wellga, Sanjung Beverage, Changdae Trading, Lotte Liquor BG, CH Beverage, Lotte Wine Sales, KIRIN, Pasteur Milk, Bliss, HUI, Chung-buk Soju

16

Tourism / Leisure Lotte Hotel, Lotte Giants, Lotte Hotel Busan, Lotte Corporation, Lotte Cinema, D-Cinema Korea, Lotte JTB, Lotte Jeju Resort, Lotte Buyeo Resort, Universal Studios Korea Development, Lotte Gimhae Development

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Retail Lotte International, Lotte Station Building, Lotte Logistics, Korea Seven, Lotte.com, Lotte Asahi Liquor, FRL Korea, Woori Home Shopping, Buy the way, Lotte Square, Lotte Suwon Station Shopping Town, Lotte DF Global, AK Retail, S&S International, NCF, Lotte Songdo Shopping Town

16

Chemistry Korea Fuji Film, Howtech, Sambark, Sambark LFT 4

Equipment / Lotte Aluminium, Canon Korea Business Solutions 2

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Electronics

Construction Lotte Engineering & Construction, Lotte Asset Management 2

Advertising Daehong Communications, Mobizap Media, M.Hub 3

Communications Lotte Data Communication, Han Paysys, Hyundai Information Technology, Hyunjung RNS

4

Financial Lotte Capital, Lotte Card, KI Bank, Mybi, Busan Hanaro Card, eB Card, Gyeonggi Smartcard, Inchon Smartcard, Chungnam Smartcard

9

Petrochemicals Seetec, KP Chemtech, Daesan MMA, Honam Mitsui Chemicals 4

Energy Cheongna Energy 1

Real Estate Universal Studios Korea Resort Asset Management Corporation 1

Manufacturing DACC Aerospace 1

※ Changes that occurred from 1 April 2011 to 30 June 2011:

– Added as affiliates: Hyundai Information Technology (5 April 2011), Hyunjung RNS (5 April 2011), M.Hub (2 May 2011), Lotte Songdo Shopping Town (2 May 2011), HUI (1 May 2011), Chung-buk Soju (1 June 2011)

3. Recent credit ratings

The following sets forth the credit ratings of the Company’s corporate bonds and commercial paper for the first half of 2011.

Date (yyyy.mm.dd)

Securities subject to rating Credit rating Rating agency Type

2011.06.28 Commercial paper A1 NICE Investors Service Primary rating

2011.06.28 Corporate bonds AA+ NICE Investors Service Regular rating

2011.06.27 Corporate bonds AA+ Korea Investors Service Regular rating

2011.06.27 Commercial paper A1 Korea Investors Service Primary rating

2011.06.23 Corporate bonds AA+ Korea Ratings Regular rating

2011.03.07 Corporate bonds AA+ Korea Investors Service Primary rating

2011.03.07 Corporate bonds AA+ Nice Investors Service Primary rating

B. Recent Changes in Management

Summary of the appointment of the board of directors at the 41st shareholders’ meeting held on 18 March

2011:

- Re-appointment of director: Shin, Gyukho - Appointment of outside director: Ye, Jongsuk

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C. Changes in Capital Stock

1. Increase (decrease) in share capital

(As of 30 June 2011) (Unit: Won, shares)

Date of new stock issuance

Type of issue

Details of the newly issued stock

Type Quantity Par value per share (Won)

Issued value (Won)

Remarks

8 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)

※ 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).

2. Insurance of convertible bonds

(As of 30 June 2011) (Units: Won, share)

Type of issue

Date of issuance

(yyyy.mm.dd)

Date of maturity

(yyyy.mm.dd)

Face value Type of stock to be converted to

Conversion period

(yyyy.mm.d

d)

Conversion conditions Convertible bonds not yet converted

Conversion ratio

Conversion price

(in Won)

Face value Number of common stock issuable upon

conversion

No. 1 unsecured overseas convertible bond issuance

2011.07.04 2016.07.04 978,969,250,000 Unregistered common stock

2012.07.05~2016.06.24

100% 650,000 978,969,250,000 1,506,106

Total - - 978,969,250,000 - - 100% 650,000 978,969,250,000 1,506,106

※ Conversion based on the fixed exchange rates of US$ 1.00 = Won 1,083 and JPY 100 = Won 1,345.29, which are the exchange rates announced by the Seoul Money Brokerage Services, Ltd. on 15 June 2011 (the date of the board of directors resolution in connection with the issuance).

D. Total Number of Shares

As of 30 June 2011, the total number of authorized shares was 60,000,000, the total number of issued

shares was 29,788,844 and the total number of outstanding shares was 29,043,374. All shares were classified as common shares.

E. Voting Rights

(As of 30 June 2011) (Unit: shares)

Type Number of shares Remarks

Total issued shares (A) Common stock 29,043,374

- Preferred stock -

Shares without voting rights (B) Common stock - -

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Preferred stock -

Shares with restricted voting rights under the stock exchange act and other laws (C)

Common stock -

- Preferred stock

Shares with reestablished voting Rights (D)

Common stock -

Preferred stock

Shares with exercisable voting rights

(E = A – B – C + D)

Common stock 29,043,374 -

Preferred stock -

F. Dividends

1. Dividends for the past three years

Subject 42

nd fiscal year

(1H) 41

st fiscal year 40

th fiscal year

Par value per share (Won) 5,000 5,000 5,000

Net profit (million Won) 600,815 1,010,144 716,422

Earnings per share (Won) 20,687 34,781 24,667

Total cash dividend (million Won) - 43,565 36,304

Total stock dividend (million Won) - - -

Cash dividend payout ratio (%) - 4.31 5.07

Cash dividend yield (%) Common stock - 0.32 0.36

Preferred stock - - -

Stock dividend yield (%) Common stock - - -


Cash dividend per share (Won)

Common stock - 1,500 1,250


Stock dividend per share Common stock - - -


※ The financial data for the first half of 2011 were prepared on a consolidated basis under K-IFRS (attributable to owners of the parent company), while the financial data for 2010 and 2009 were prepared on a non-consolidated basis under Korean GAAP.

2. Calculation of earnings per share for the current year

Category

Current net profit for common stock

Won 600,815 million

Weighted average number of common stock

29,043,374 shares

Earnings per share Won 20,687

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II. Business Description

A. Business Overview

The following table is a summary of the Company’s major businesses and subsidiaries organized by business category.

Business category

Subsidiaries Main businesses

Department store

Lotte Shopping (department store) Department store establishment, management and distribution businesses Lotte Midopa

Lotte Square

Discount store Lotte Shopping (discount store) Large discount store establishment, management and distribution businesses

Lotte Vietnam Shopping Discount store business in Vietnam

Qingdao Lotte Mart Commercial Discount store business in China

Lotte Mart

Lotte Mart China

PT Lotte Shopping Indonesia Discount store business in Indonesia

PT Lotte Mart Indonesia

Finance Lotte Card Issuing and managing credit cards; collecting and managing credit payments

eB Card Co., Ltd. Issuing electronic money; managing transportation card system (AFC system)

Others

Lotte Shopping (Supermarket) Supermarket establishment, management and distribution businesses

Lotte Shopping (Cinema) Producing, investing and distributing movies; management of cinemas

Woori Home Shopping & Television Co., Ltd.

TV home shopping, internet shopping and catalogue shopping businesses

Korea Seven Co., Ltd. Convenience store business

Buy the way Inc. Convenience store business

Lotte Boulangerie Co., Ltd. In-store bakery and franchise businesses

Lotte Songdo Shopping Town Co., Ltd.

Development and management of Lotte Songdo Shopping Town

Lotte Shopping Holdings (Singapore), Ltd.

Investing in distribution businesses in Vietnam, India and Indonesia

Lotte Shopping Holdings (Hongkong), Ltd.

Investing in distribution businesses in China

LHSC Limited Investing in home shopping businesses in China

Lucky Pai Ltd. and 15 other entities Home shopping business in China

The following table is a summary of the Company’s financial condition by business category.

(Unit: million Won)

Category Total sales Operating profit Net income

2011 (1H) 2010 (2H)(1)

2011 (1H) 2010 (2H)(1)

2011 (1H) 2010 (2H)(1)

Department store 3,952,844 3,365,944 464,099 450,550 399,735 367,465

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Discount store 4,124,646 3,391,160 172,764 146,141 70,094 44,533

Finance 766,226 638,539 143,193 112,256 106,592 81,943

Others 2,206,799 1,495,332 107,232 76,039 83,162 59,804

Total 11,050,515

8,890,976 887,287 784,985 659,583 553,745

Consolidation adjustment (174,379) (129,406) (2,482) (1,580) (16,431) 2,670

Amount after consolidation adjustment

10,876,136 8,761,570 884,805 783,405 643,151 556,415

Note:

(1) Unreviewed.

1. Department store business segment

a. Lotte Shopping (department store), Lotte Midopa and Lotte Square

i. Industry overview

While growth of the department store business has slowed in developed countries such as the U.S. and Japan in recent years, the department store business in Korea has increased due to continuous strengthening of customer management, differentiation from other retailers and implementation of a high class strategy. In 2009, the department store business in Korea increased by 9.0% in 2009 compared to 2008, 12.6% in 2010 compared to 2009 and 13.8% in the first half of 2011 compared to the first half of 2010 (while GDP increased by 3.4% in the first half of 2011 compared to the first half of 2010). The size of the department store business was approximately Won 13.2 trillion for the first half of 2011.

Department store market size in Korea

(Unit: trillion Won, %)

2007 2008 2009 2010 2011 (1H)

Market Size 19.0 19.8 21.6 24.3 13.2

Growth Rate 3.1% 4.2% 9.0% 12.6% 13.8%

※ Source: National Statistics Office

Number of department stores in Korea

(Unit: stores)

2007 2008 2009 2010 2011 (1H)

Number of Department Stores 79 78 81 83 82

Increase (Decrease) 2 (1) 3 2 (1)


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ii. Company overview

Market share

(Unit: 100 million Won, %)

Category 2007 2008 2009 2010 2011 (1H)

Total Department Store Market Size 190,052 197,999 215,865 243,168 132,490

Lotte Department Store Market Share 78,093 83,071 91,978 107,174 59,435

Lotte Department Store Market Share (%)

41.1% 42.0% 42.6% 44.1% 44.9%

※ Source: National Statistics Office, Lotte Shopping

※ The revenue of the department stores includes those of leased shops.

※ The market share of Lotte Department Stores includes the 23 stores owned by the Company, as well as six stores operated by the Company pursuant to management contracts with Lotte Midopa, Lotte Station Building and Lotte Square, which are affiliates of the Company.

2. Discount stores business segment

a. Lotte Shopping (discount store)


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

Discount store market size in Korea


2007 2008 2009 2010 2011 (1H)

Market size 28.4 30.1 31.3 33.7 18.0

Growth rate (%) 10.3% 6.1% 3.9% 7.7% 10.3%


Number of discount stores in Korea

(Unit: stores)

2007 2008 2009 2010 2011 (1H)

Number of discount stores 325 355 372 392 399

Increase (Decrease) 32 30 17 20 7



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

Market share

(Unit: 100 million Won, %)

2007 2008 2009 2010 2011 (1H)

Discount store market size (100 million Won) 283,865 301,138 312,733

337,330 180,456

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Lotte Mart (100 million Won) 42,553 45,489 48,370 58,795 33,959

Market share (%) 15.0% 15.1% 15.5% 17.5% 18.8%

※ Source: National Statistics Office, Lotte Shopping

※ The revenue of the discount stores includes those of leased shops.

b. Lotte Vietnam Shopping Co., Ltd.


As of the end of 2010, Vietnam had a population of 89 million people, GDP of USD 98.5 billion and a retail market size of Won 70.07 trillion. The discount store industry accounts for Won 930 billion, which is 1.3% of the retail market in Vietnam. The retail market in Vietnam is expanding in size due to the rapid increase in consumer spending, and it is expected that competition will increase as more multinational companies enter the market.

Trends in market size in Vietnam

2008 2009 2010

Population (Million people) 86 88 89

GDP (USD 100 million) 884 894 985

Per capita (USD) 1,024 1,021 1,110

Growth rate (%) 6.2 3.3 4.0

Consumer price index (%) 23.1 6.0 5.0

Size of retail market (10 billion Won) 4,683 5,938 7,007

Discount store (10 billion Won) 54 66 93


Starting with the opening of its South Saigon store in December 2008, the Company opened the Phu Tho store in July 2010 as its second store in the region. The Company has selected Vietnam as a strategic market and plans to actively enter the discount store market through aggressive store openings and rapid localization.

Status of Lotte Vietnam Shopping Co., Ltd. stores (Unit: stores)

Division 2008 2009 2010 2011 (1H)

Number of stores 1 1 2 2

Increase or decrease 1 - 1 -

c. Qingdao Lotte Mart Commercial Co., Ltd., Lotte Mart Co., Ltd. and Lotte Mart China

Co., Ltd.


As of the end of 2010, China had a population of 1,354 million people, GDP of USD 5,267.1 billion and a retail market size of Won 2,771 trillion. The discount store industry accounts for Won 164

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trillion, which is 5.9% of the retail market in China. Based on China’s GDP growth, the retail market has shown rapid increase in size.

Trends in market size in China

2008 2009 2010

Population (Million people) 1,328 1,334 1,354

GDP (USD 100 million) 42,641 46,654 52,671

Per capita (USD) 3,212 3,497 3,889

Growth rate (%) 9.0 7.5 8.5


Size of retail market (Trillion Won) 2,170 2,452 2,771

Discount store (Trillion Won) 105 131 164


Starting with the acquisition of eight Makro stores in China in June 2008, the Company opened one discount store in Beijing and two discount stores in Qingdao through separate corporate entities. In December 2009, the Company acquired a large mart chain, Times, to secure its position in China. As of the end of the first half of 2011, the Company was operating 81 discount stores (plus one store operated by Jilin Lottemart Co., Ltd.) in China. The Company plans to actively advance into the China market.

Status of stores in China

(Unit: stores)

Division 2008 2009 2010 2011 (1H)

Number of stores

Shanghai - 68 69 69

Qingdao - 2 3 2

Beijing 8 9 9 9

Shenyang - - 1 1

Total 8 79 82 81

Increase (decrease) 8 71 3 (1)

d. PT Lotte Shopping Indonesia and PT Lotte Mart Indonesia


As of the end of 2010, Indonesia had a population of 234 million people, GDP of USD 578.3 billion and a retail market size of Won 114 trillion. The discount store industry accounts for Won 930 million, which is 1.3% of the retail market in Indonesia. Indonesia has been showing steady economic growth in recent years, which has contributed to the growth of its retail market.

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Trends in the market size in Indonesia

2008 2009 2010

Population (Million people) 228 231 234

GDP (USD 100 million) 5,115 5,274 5,783

Per capita (USD) 2,245 2,285 2,474

Growth rate (%) 6.1 2.5 3.5


Size of retail market (Trillion Won) 108 111 114

Discount store (Trillion Won) 2 2 2


In Indonesia, the Company acquired 19 Makro stores in November 2008 and opened up three stores in 2010 and one store in 2011. As of the end of the first half of 2011, the Company was operating 23 stores. The Company plans to actively advance into the Indonesian market.

Status of stores in Indonesia

(Unit: stores)

Division 2008 2009 2010 2011 (1H)

Number of stores 19 19 22 23

Increase (decrease) 19 - 3 1

3. Financial business sector segment

a. Lotte Card


Status of credit card business (As of end of December 2010)

Type Company Name Number of companies

Dedicated credit card companies

Lotte, Samsung, Hyundai, Shinhan, Hana SK, BC, KDB Capital

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Banks with credit card business

Kyongnam Bank, Kookmin Bank, Industrial Bank, Nonghyup Bank, Daegu Bank, Busan Bank, Woori Bank, SC Jeil Bank, Citibank Korea, Suhyup Bank, Jeonbuk Bank, Kwangju Bank, Korea Exchange Bank

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Source: Press Release from the Credit Finance Association (published August 2011)

Credit card issues issuance and usage data

Year Number of credit cards (thousand cards)

Number of card holders (thousand persons)

Credit card charge volume (trillion Won)

2007 8,956 6,608 413.4

2008 9,624 7,351 463.3

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Year Number of credit cards (thousand cards)

Number of card holders (thousand persons)

Credit card charge volume (trillion Won)

2009 10,699 7,795 470.9

2010 11,659 8,428 517.4

2011 1Q 11,950 N/A(1)

133.7

Source: Press Release from Financial Supervisory Service (published August 2011)

Note:

(1) Data unavailable for interim periods.


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


Division 2009 2010 2011 (1Q)

Credit card market size by charge volume 470.9 517.4 133.7

Lotte Card’s charge volume 30.7 38.7 22.9

Market share (%) 6.5% 7.5% 8.2%

_________________ Note: Accumulated total of records for the domestic and foreign payment handling on the lump-sum payments, instalments, cash services, card loans, etc. Source: Financial Statistics Information System, Financial Supervisory Service

※ Statistical data for the second quarter of 2011 has not been announced by the Financial Supervisory Service.

Lotte Card cardholder trend (Unit: million persons)

2006 2007 2008 2009 2010 2011 (1H)

Number of cardholders

(1)

5.8 6.1 6.8 7.8 10.0 10.3

__________________ Notes: (1) Calculated based on internal reporting standard and not the Financial Supervisory Service’s standards.

b. eB Card


A prepaid card is one of the electronic currencies used for transportation service payments. Prepaid cards are expected to be used in the transportation and distribution sectors throughout Korea.

Competitive situation

Comparisons of competitors in 2010

MYBI eB Card Korea Smart Card

Card Name MYBI Card Cash Bee T Money

Service area Busan, Ulsan, Gyeongnam Gyeonggi Province, Seoul, Jeju, Pohang,

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Comparisons of competitors in 2010

MYBI eB Card Korea Smart Card

Province, etc. Incheon, Chungnam Province, etc.

etc.

Number of cards in distribution

23.37 million cards 10.51 million cards 36.71 million cards

Amount in use Won 1.2 trillion Won 1.697 trillion Won 2.85 trillion

Bus 9,800 buses 17,201 buses 9,000 buses

Taxi 43,379 taxies 32,217 taxies 82,395 taxies

Subway 93 stations 441 stations


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,” and as of April 2011, eB Card had issued 440,000 Cash Bee cards. Card users can use and recharge Cash Bee cards anywhere in Korea and link their cards with their Lotte membership to accumulate points. In addition, eB Card builds and manages automatic fare collection (AFC) systems. Based on the build-operate-transfer (BOT) model, eB Card recoups it building costs and receives profits though the commission it receives with each transaction incurred during the contracted operating period of its transportation card system for buses and taxies. The business areas for eB Card include Gyeonggi province, Incheon metropolitan city, Chungnam province and Gangwon province. Recently, eB Card has been selected to build AFC systems for the subway system, and as such eB Card intends to expand in this business sector.


(Unit: million Won, %)

Division 2009 2010 2011 (1H)

Market size for prepaid cards 1,654 1,914 1,190

EB Card 322 388 233

Market share (%) 19.4% 20.2% 19.5%

4. Other Business Areas

a. Lotte Super


In 2010, the size of the supermarket segment of the Korean retail market was estimated at Won 24.4 trillion and showed a growth rate of approximately 4.3%, which was less than originally expected due to competition between supermarket companies and small/medium-sized merchants. The market for the supermarket business in 2011 is expected to show a growth lower than that in previous years due to difficulties in the store opening for supermarket companies following the amendments to laws related to the supermarket industry. Accordingly, the industry is seeking various ways, including the diversification of store formats and new business developments, among others, to increase its business.

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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 internet 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.

b. Lotte Cinema


Although the number of moviegoers in Korea decreased to 146.81 million in 2010 from 154.91 million in the previous year, sales from moviegoers increased to a record Won 1,150.1 billion in 2010, an increase of 5.1% compared to the previous year. The increased sales were a result of diversification of movie formats, such as 3D and IMAX among others, which allowed cinemas to charge higher ticket prices.


As of the first half of 2011, Lotte Cinema operated 70 movie cinemas. In addition, Lotte Cinema has entered the Vietnamese market in May 2008 and was the first Korean company to do so. In December 2010, Lotte Cinema opened its first cinema in Songshan, China, as part of its plan to expand in overseas markets.


(Unit: 1,000 persons, %)

Division 2009 2010 2011 (1H)

Size of the movie cinema market

154,907 146,808 68,300

Lotte Cinema 35,797 36,978 17,955

Market share (%) 23.1% 25.2% 26.3%

* Based on number of audiences, and including cinemas operated on commissioned basis.

c. Woori Home Shopping


(1) TV home shopping

Five companies are currently running businesses in the TV home shopping industry in Korea; Woori Home Shopping, Hyundai Home Shopping and NS Home Shopping joined the market in 2001, while Korea Home Shopping (currently GS Home Shopping) and 39 Home Shopping (currently CJ Home Shopping) started their businesses in 1995. TV home shopping companies are program providers who run their business under the approval from Korea Communications Commission.

(2) Internet shopping mall

The internet shopping business delivers product information directly to consumers through from wholesalers, among others, using computers and provides increased shopping convenience for customers.

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(3) Catalogue

The catalogue business sends catalogues describing information for various products to selected customers and receives orders for products through those catalogues and sells products.


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 internet shopping mall and catalogue shopping business.

Trend in market share


Division 2009 2010 2011 (1H)

Market size 2,287,871 2,636,619 1,503,096

Lotte Home Shopping 434,091 549,844 308,299

Market share (%) 18.97% 20.85% 20.51%

※ Based on publicly disclosed total sales data for the Company’s competitors in Korea (excluding NS Home Shopping).

d. Korea Seven / Buy the way


Convenience stores differ from other retailing formats in that they provide various services and conveniences on a timely and assessable basis in addition to products, and are expected to continue to steadily grow in Korea due to favorable socioeconomic trends. However, since 2010, increased competition regarding store openings has resulted in accelerated market fragmentation which has also impacted sales at existing stores.


Korea Seven, a subsidiary of the Company, has operated a chain of convenience stores in Korea under the brand name 7-Eleven since 1999. Korea Seven acquired 100% of the capital stock of Buy the way, which also operates convenience stores in Korea, in 2010. As of the end of the first half of 2011, the Company was operating 5,360 convenience stores throughout Korea.


(Unit: stores, %)

Division 2009 2010 2011 (1H)

Market size for convenience stores 14,123 16,898 18,226

Korea Seven 2,186 3,145 3,754

Market share (%) 15.5% 18.6% 20.6%

Buy the way 1,494 1,655 1,606

Market share (%) 10.6% 9.8% 8.6%

※ Estimated based on publicly available sales data for competitors published by Retail Magazine and the Convenience Store

Association.

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e. Lotte Boulangerie


The bakery industry in Korea is expected to continue its stable growth, as demand for baked goods further increases as the diet of Korean consumers continue to be westernized and rice consumption decreases. The bakery industry can be divided into franchise, individual and in-store bakeries sectors. In-store bakeries have shown rapid growth corresponding to the rapid growth of large discount stores, but currently appear to be stagnant due to the limited number of new in-store locations that become available. Franchise bakeries, which account for approximately 65% to 70% of the bakery industry, have shown continuous growth, whereas the relative proportion of individual bakeries is gradually decreasing.


Lotte Boulangerie, a subsidiary of the Company, provides customers with fresh baked goods through production and supply of dough baked goods to various sales outlets. Lotte Boulangerie operates in-store bakeries in Lotte Department Stores and Lotte Marts among others, while also operating franchise shops.



Division 2009 2010 2011 (1H)

Market size for bakery 2,112,266 2,470,656 1,450,000

Lotte Boulangerie 74,266 87,890 51,553

Market share (%) 3.52% 3.56% 3.56%

※ Based on total sales data publicly disclosed by the Company’s competitors (including Paris Croissant, Crown Bakery, Shilla Bakery, Tous les jours, Chosun Hotel Bakery, Artisee Boulangerie and Fauchon).

f. Lotte Shopping Holdings (Singapore) and Lotte Shopping Holdings (Hongkong)

As of 30 June 2011, Lotte Shopping Holdings (Singapore) holds shares in distribution companies in India, Indonesia and Vietnam, while Lotte Shopping Holdings (Hongkong) 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)

Lotte Shopping India Pvt., Ltd.

100% 16 Distribution

PT Lotte Shopping Indonesia

25% 77,057 Distribution (mart)

PT Lotte Mart Indonesia 99% 85,386 Distribution (mart)

Lotte Hotel & Retail Vietnam PTE. LTD.

40% 43,124 Investment company

PT Lotte Shopping Plaza Indonesia

99% 16,010 Distribution (department store)

HONGKONG:169002.4

16

Name of holding company

Name of subsidiaries Shareholding

ratio* Book value for

investment stock Business

Type

Lotte Shopping Holdings (Hongkong)

Lotte Business Management (Tianjin) Co., Limited*


Lotte Mart China Co., Limited


LHSC Ltd. 49.46% 68,779 Investment company

LotteMart Global Sourcing Center Co., Limited

100% 539 Distribution

Liaoning Lotte Mart Co., Limited

59.22% 16,172 Distribution (mart)

Qingdao Lotte Mart Co., Limited


Lotte Department Store (Shenyang) Co., Ltd


Lotte International Department Store (Weihai) Co., Ltd


Jilin Lottemart Co., Ltd. 100% 16,172 Distribution (mart)

LHSC Ltd.

Lucky Pai Ltd. 63.22% 128,102 Distribution (home shopping)

* As of June 2011 (exchange rate of 1USD = KRW 1,078.1) * Financial statements are prepared separately under Singapore FRS and HK FRS

g. Lotte Songdo Shopping Town

The Company is planning to construct Lotte Songdo Shopping Town, a mixed-use shopping complex in Songdo, Incheon, and has completed its land purchases in connection with this project. The Company is aiming to open the Lotte Songdo Shopping Town complex in or after 2015.

h. Lucky Pai Limited

Lucky Pai Limited, a subsidiary of the Company in China, has its headquarters in Shanghai and operates its businesses in Chongqing and the Shandong, Yunnan, Henan, and Heilongjiang provinces in China.

(1) TV home shopping

With respect to Lucky Pai’s TV home shopping business, Lucky Pai has partnered with Chongqing TV, which has a nationwide home shopping broadcasting license to obtain ability to broadcast nationwide in China. Lucky Pai plans to gradually expand its geographical scope of operations in light of China’s current logistics and shipping environment.

HONGKONG:169002.4

17

(2) Internet shopping mall

Although Lucky Pai’s current internet shopping mall business is limited, Lucky Pai intends to expand its internet shopping mall business, beginning in Chongqing. Lucky Pai is undergoing system upgrades and improvements to its operations and intends to expand its operations geographically as such upgrades and improvements are completed.

(3) Catalogue

Lucky Pai’s catalogue business is still under development. Lucky Pai intends to expand its catalogue business following the stabilization of its TV home shopping and internet shopping mall businesses.

B. Production and Facilities

1. Plans for the establishment of new stores

Division Store Location Expected establishment date

Remarks

Department Stores

Gimpo Sky Park Store

Banghwa-dong, Gangseo-gu, Seoul, Korea

December 2011

Outlet Paju Premium Outlet

Munbal-ri, Gyoha-eup, Paju-si, Gyeongi-do, Korea

December 2011

Discount Stores

Wonju Commercial Land in Bonghwa Housing Land Development District, Dangye-dong, Wonju-shi, Korea

October 2011

Yesan Sanseong-ri, Yesan-eup, Yesan-gun, Chungnam, Korea

October 2011

Namwon Hyanggyo-dong, Namwon-shi, Jeonbuk, Korea

November 2011

Busan Dadea Dadae-dong, Saha-gu, Busan, Korea

December 2011

Cheongju Biha

Biha-dong, Heungdeok-gu, Cheong-shi, Korea December 2011

Naju Songwol-dong, Naju-shi, Jeonnam, Korea December 2011

Gimpo Sky Banghwa-dong, Gangseon-gu, Seoul, Korea December 2011

* The above plans may change subject to market conditions.

2. Plans for new establishment and purchase of facilities

a. Investments under progress

(Unit: 100 million Won)

Division Type Investment period (years)

Investment asset

Investment effect

Total investment

Prior Investment

Future investment

HONGKONG:169002.4

18

Department store

New investment

2011 Tangible asset

Increase of sale

8,216 2,562 5,654

Discount store (domestic)

New investment

2011 Tangible asset

Increase of sale

5,035 676 4,359

※ The above plans may change subject to market conditions.

b. Future investment plans

(Unit: 100 million Won)

Business area

Project name

Expected investment Expected yearly investment Effect

Asset type Amount 2011 2012 2013

Department store

New openings and ordinary investments

Tangible asset 29,937 13,268 10,008 6,660 Sales

increase

Discount store

New openings and ordinary investments

Tangible asset 14,664 6,525 4,733 3,406 Sales

increase

※ The above plans may change subject to market conditions.

C. Sales

(Unit: million Won)

Division Type Product 42

nd Fiscal Year

(first half) 41

st Fiscal Year

(first half)

Department Store

Products Clothes, etc.

Export

Domestic 3,703,662 3,151,041

Total 3,703,662 3,151,041

Goods

Export

Domestic - -

Total - -

Others Rental fee, etc.

Export

Domestic 249,182 214,903

Total 249,182 214,903

Total 3,952,844 3,365,944

Discount Store

Products Food, etc.

Export

Domestic 3,918,120 3,223,965

Total 3,918,120 3,223,965

Goods

Export

Domestic - -

Total - -


Export

Domestic 206,526 167,195

Total 206,526 167,195

Total 4,124,646 3,391,160

HONGKONG:169002.4

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Division Type Product 42

nd Fiscal Year

(first half) 41

st Fiscal Year

(first half)

Financial

Products

Export

Domestic 2,609

Total 2,609 -

Goods

Export

Domestic -

Total - -

Others Fees and commissions, etc.

Export

Domestic 763,617 638,539

Total 763,617 638,539

Total 766,226 638,539

Misc.

Products Food, etc.

Export

Domestic 1,613,456 1,023,710

Total 1,613,456 1,023,710

Goods Food, etc.

Export

Domestic 37,785 42,484

Total 37,785 42,484


Export

Domestic 381,179 299,733

Total 381,179 299,733

Total 2,032,420 1,365,927

Total

Products Clothes, food, etc.

Export - -

Domestic 9,237,847 7,398,716

Total 9,237,847 7,398,716

Goods Clothes, food, etc.

Export - -

Domestic 37,785 42,484

Total 37,785 42,484


Export - -

Domestic 1,600,504 1,320,370

Total 1,600,504 1,320,370

Total 10,876,136 8,761,570

D. Risk Management

See Note 6 of the notes to the attached condensed consolidated interim financial statements of the Company as of and for the sixth-month period ended 30 June 2011.

E. Derivative Instruments and Hedge Accounting

1. Currency swap contracts

(Unit: million Won, except per share amounts or as otherwise indicated)

Date of contract

(YYYY/MM/DD)

Date of expiration

(YYYY/MM/DD)

Purchased currency

Purchased amount Swap price Sold

currency Sold amount (in millions)

Gain/Loss from cash flow risk a

version Contracting bank

Prior period

(10 years)

Increase (decrease)

Total

2008/09/29 2011/09/29 KRW 111,672 10 JPY 11,000 (1,153) 824 (329) Mizuho Corporate Bank

Total 111,672 - - 11,000 (1,153) 824 (329)

HONGKONG:169002.4

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Date of contract

(YYYY/MM/DD)

Date of expiration

(YYYY/MM/DD)

Purchased currency

Purchased amount Swap price Sold

currency Sold amount (in millions)

Gain/Loss from cash flow risk a

version Contracting bank

Prior period

(10 years)

Increase (decrease)

Total

2008/10/17 2011/10/17 KRW 55,650 1,113 USD 50 (1,594) 446 (1,148) BNP Paribas bank

2008/10/17 2011/10/17 KRW 55,650 1,113 USD 50 (1,560) 395 (1,165) DBS bank

2008/10/17 2011/10/17 KRW 55,650 1,113 USD 50 (1,590) 441 (1,149) ING bank

2008/10/17 2011/10/17 KRW 55,650 1,113 USD 50 (1,535) 380 (1,155) CREDIT AGRICOLE

2008/10/17 2011/10/17 KRW 56,400 1,128 USD 50 (2,669) 1,437 (1,232) Bank of Nova Scotia

2008/10/17 2011/10/17 KRW 55,650 1,113 USD 50 (1,321) 182 (1,139) Bank of America

Total 334,650 - - 300 (10,269) 3,282 (6,987)

2009-06-26 2012-06-26 KRW 131,000 13 JPY 10,000 (587) 833 246 Mizuho Corporate Bank

Total 131,000 - - 10,000 (587) 833 246

2010-05-20 2013-05-20 KRW 111,700 1,117 USD 100 (4,518) 1,915 (2,603) Mizuho Corporate Bank

Total 111,700 - - 100 (4,518) 1,915 (2,603)

2010-06-29 2012-06-29 KRW 122,500 1,225 USD 100 (2,289) 989 (1,300) BNP Paribas bank

Total 122,500 - - 100 (2,289) 989 (1,300)

2010-09-30 2011-09-30 KRW 116,400 1,164 USD 100 (813) (132) (945) CREDIT AGRICOLE

Total 116,400 - - 100 (813) (132) (945)

2011-03-17 2014-03-17 KRW 112,500 1,125 USD 100 (3,156) (3,156) Mizuho Corporate Bank

2011-03-17 2014-03-17 KRW 112,500 1,125 USD 100 (3,180) (3,180) Bank of Tokyo-

Mitsubishi UFJ

Total 112,500 - - 100 0 (6,336) (6,336)

2. Put option contracts

See Note 22 of the notes to the attached condensed consolidated interim financial statements of the Company as of and for the six month period ended 30 June 2011.

F. Important Management Contracts

1. Department store business

HONGKONG:169002.4

21

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

In addition, the Company has entered into a management contract to allow International Business Centre Corporation to manage the Diamond Plaza department store in Vietnam. The Company receives management fees of US$372,690 per year pursuant to this contact, which is also accounted for as other operating profits.

The Company has also entered into lease agreements with Lotte Midopa and Lotte Building Station in connection with the Young Plaza stores.

(Unit: thousand Won)

Category Address Lease Start Date

Lease End Date

Lease Deposit

Monthly Lease

Lotte Midopa Namdaemunro, Jung-gu, Seoul, Korea

18 November 2003

17 November 2023

36,500,000 355,000

Lotte Station Building

Nammunno, Sangdang-gu, Cheongju-si, Chungbuk, Korea

23 February 2007

22 February 2027

5,800,000 231,063

2. Credit card business

Lotte Card, a subsidiary of the Company, has entered into card issuance agreements with American Express Company, Master Card International, Visa International and JCB International. Lotte Card pays a fixed royalty rate based on the transaction amount.

3. Miscellaneous businesses

a. Woori Home Shopping

Woori Home Shopping, a subsidiary of the Company, has entered into cooperation and joint card agreements with BC Card and Shinhan Card. In addition, Woori Home Shopping has entered into a distribution agreement with Korea Express. Woori Home Shopping has also entered into multiple broadcasting agreements with cable TV operators.

b. Korea Seven

Korea Seven, a subsidiary of the Company, entered into an agreement with 7-Eleven, Inc. to use the 7-Eleven trademark and related operation technology to operate 7-Eleven convenience stores. Pursuant to the agreement, Korea Seven pays between 0.6% and 1% of its gross sales as a licensing fee for using 7-Eleven technology.

In addition, since 1 January 2003, 7-Eleven Inc. has an option to purchase 10% of Korea Seven’s shares on 1 January of each year, provided that it may not purchase more than 10% of such shares in the aggregate.

See Note 34 of the notes to the attached condensed consolidated interim financial statements of the Company as of and for the six month period ended 30 June 2011.

HONGKONG:169002.4

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III. Financial Matters

Please refer to the Company’s condensed consolidated interim financial statements as of and for the six month period ended 30 June 2011 and the related notes attached to this report.

HONGKONG:169002.4

23

IV. Auditor’s Opinion

A. Audit (Review) Opinion on Consolidated Financial Statements

1. Name of Auditor / Accountants

42nd

fiscal year (1st

half) 41st

fiscal year 40th

fiscal year

Samjong KPMG Samjong KPMG Samjong KPMG

2. Audit (Review) Opinion

a. Audit (Review) for the Current Business Half-year

The auditor has reviewed the consolidated statements of financial position of Lotte Shopping Co., Ltd. and its subsidiary companies as attached as of 30 June 2011 and 31 December 2010 and the consolidated statements of income, consolidated statements of changes in equity and consolidated statements of cash flows as of 30 June 2011 and 2010. See the independent auditor’s review report included in the attached condensed consolidated interim financial statements of the Company as of and for the six month period ended 30 June 2011.

3. Audit Contracts

(Unit: million Won, hours)

Term Auditor Division Fee Total hours

42nd

fiscal year (1

st half)

Samjong KPMG

Semi-annual financial statements 500 4,750

41st fiscal year Samjong

KPMG Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements

500 6,300

40th fiscal year Samjong

KPMG Review of quarterly and semi-annual financial statements Audit of non-consolidated and consolidated financial statements

500 6,620

4. Contracts regarding Non-Audit Services with Outside Auditor

(Unit: million Won)

Term Date of conclusion

Division Service period

Fee Remarks

42nd

fiscal year (1

st half)

N/A

41st fiscal year

N/A

40th fiscal year N/A

HONGKONG:169002.4

24

V. Corporate Governance and Affiliates Companies

A. Matters regarding Board of Directors

1. Overview of Board of Directors

a. Composition of Board of Directors

1. Currently, the Company’s board of directors (the “Board of Directors”) is comprised of 11 directors, of whom six are outside directors.

2. 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 and an Outside Director Nomination 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) Currently composed of 3 outside directors

Park, Kyungbeom; Kim, Sehun; Lee, Hongroh (from 26 March 2010)

① The committee audits the Company’s

accounting and operations. ② The committee reviews the

appropriateness of its performances and regulations every year. If necessary, it proposes revisions to the Board of Directors. ③ The committee handles the issues

specified in the Paragraph 1, 2 or by laws or the Articles of Incorporation and issues delegated by the Board of Directors.

Outside Director Nomination Committee

Two or more directors (at least half of whom must be outside directors) Currently composed of 1 outside director and 1 standing director

Lee, Chulwoo; Park, Kyungbeom (from 26 March 2010)

① The committee recommends candidates

for outside directors to the general meeting of shareholders. ② The committee must recommend those

candidates recommended by shareholders with applicable rights under Clause 2 of Article 542 of the Commercial Code. ③ The committee handles the issues

specified in Paragraphs 1 and 2 above or by laws or Articles of Incorporation and issues delegated by the Board of Directors.

HONGKONG:169002.4

25

B. Affiliated Companies

1. Overview of affiliates

(As of 30 June 2011) (Unit: %)

Division

Investee company

Lotte Confectionery Co., Ltd.

Lotte Chilsung Beverage Co. Ltd.

Lotte Samkang Co., Ltd.

Lotte Aluminum Co., Ltd.

Lotte Ham Co., Ltd.

Lotte Construction Co., Ltd.

Lotte International Co., Ltd.

Lotte Shopping Co., Ltd.

Lotte Giants Co., Ltd.

Lotteria Co., Ltd.

Honam Petrochemical Corp

Korea Fuji Film Corp

Daehong Communications

Lotte Cannon Co., Ltd.

Lotte Station Building Co., Ltd.

Lotte Corporation Co., Ltd.

Lotte.com Co., Ltd.

Lotte Logistics Co., Ltd.

Lotte Capital Co., Ltd.

Lotte Data Communication Company

Korea seven Co., Ltd.

Lotte Fresh Delica Co., Ltd.

Lotte Boulangerie Co., Ltd.

Lotte Asahi Liquor Co., Ltd.

Lotte Pharm

Co., Ltd.

Lotte Midopa Co., Ltd.

Lotte Card Co., Ltd.

Si-tech Co., Ltd.

Inv

es

tor c

om

pan

y

Lotte Confectionary Co., Ltd.

1.0 11.7 (8.1)

9.8 1.4 8.5 30.0 9.8 0.9 8.9 0.0 11.3 4.6 6.1 16.6 9.0 100.0


- 9.8 0.1 3.1 1.9 4.3 20.0 1.3 5.0 0.0 7.0 4.6 1.5 1.5 9.0 85.0


0.0 0.4 5.0 7.5 1.2 0.4 9.0


15.3 8.9 (3.9)

- 11.3 6.2 5.0 2.6 5.6

Lotte Ham Co., Ltd.

45.0 1.2 10.0 0.5


1.3 0.5 - 6.0 1.0 11.8

Hotel Lotte Co., Ltd.

3.2 5.9 (4.8)

8.6 13.0 0.3 38.3 34.6 9.6 19.6 13.6 7.1 12.8 28.9 31.1 17.2 8.8 26.6 2.9 27.1 1.2

Busan Lotte Hotel Co., Ltd.

4.8 3.9 0.8 11.8 1.0 11.5 1.0

Lotte International Co., Ltd

- 1.0 56.8 1.0 0.2


6.0 10.6 - 30.0 32.2 30.0 25.0 34.4 4.6 20.2 51.4 90.5 79.0 92.5

Lotte Logistics Corp.

0.9 13.7 9.0 - 13.9

Lotteria Co., Ltd.

2.0 0.2 1.0 - 2.1 12.5 17.3 2.6 34.5

Honam Petrochemical Corp.

29.5 - 4.6 27.1 50.0

Korea Fuji Film Co., Ltd.

0.1 8.5 9.0 - 3.5 1.7

Daehong Communications Inc.

0.8 3.1 1.1 - 2.9 18.3 8.2 28.1


33.6 -

HONGKONG:169002.4

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Division

Investee company

Lotte Confectionery Co., Ltd.




Lotte Ham Co., Ltd.


Lotte International Co., Ltd.


Lotte Giants Co., Ltd.

Lotteria Co., Ltd.

Honam Petrochemical Corp

Korea Fuji Film Corp

Daehong Communications

Lotte Cannon Co., Ltd.



Lotte.com Co., Ltd.

Lotte Logistics Co., Ltd.



Korea seven Co., Ltd.



Lotte Asahi Liquor Co., Ltd.

Lotte Pharm

Co., Ltd.



Si-tech Co., Ltd.


- 4.6


5.0 1.1 5.2 5.6 0.2 -

KP Chemical Corp.

8.1 1.2


1.6 (0.3)

-

Lotte.com Co., Ltd.

0.8 -


3.0 6.0 3.7 6.0 4.4 8.2 2.1 -


0.5 -


5.0 -


0.8 -

Lotte Insurance Co., Ltd.

Lotte Liquor BG Co., Ltd.

Sambark LFT Co., Ltd.

Mybi Co., Ltd.

Korea Seven Co., Ltd.

Lotte Asset Development Co., Ltd.

Buy the way Inc.

Lotte DF Global Co., Ltd.

eB Card Co., Ltd.

Hyundai Information Technology

Chung-buk Soju

Total 24.6 34.1

(17.1) 36.7 42.1 46.8 91.0 82.2 38.0 100.0 83.8 47.3 74.5 68.8 50.0 45.5 31.1 88.1 49.7 88.3 73.6 81.9 81.4 90.5 85.0 100.0 79.0 99.4 50.0

※ The preferred stock equity ratio for Lotte Chilsung Beverage Co. Ltd is indicated separately in parentheses.

HONGKONG:169002.4

27

Investee company

KP Chemical Corp

KP Chemtech

FRL Korea

Wellga Cheongra Energy

Daesan MMA

Woori Home Shopping Co. Ltd

Lotte JTB Co., Ltd.

Lotte Assets Development Co., Ltd.

D-Cinema of Korea

Lotte Insurance

Sanjung Beverage

Hayo Technology

Changdae Trading Co., Ltd.

KI Bank Co., Ltd.

Lotte Jeju Resort

Lotte Buyeo Resort


CH beverage Lotte Wine

Sambark Sambark LFT

Inve

sto

r com

pa

ny


7.2 12.5 11.1

Lotte Chilsung Beverage Co. Ltd

14.1 100.0 100.0 12.5 11.1 100.0 100.0


100.0


Lotte Ham Co., Ltd.


50.0 11.8 12.5 22.2


7.2 27.7 37.5 22.2


2.0


11.1


49.0 53.0 32.0 50.0 12.5 22.2


Lotteria Co., Ltd.


51.9 50.0 14.4 91.0 93.3 76.5


Daehong Communications INC.

4.6 12.5




27.6

KP Chemical Corp.

- 100.0 6.2


2.9

Lotte.com Co., Ltd.

50.0 27.6


7.2




22.7

HONGKONG:169002.4

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Investee company

KP Chemical Corp

KP Chemtech

FRL Korea

Wellga Cheongra Energy

Daesan MMA

Woori Home Shopping Co. Ltd

Lotte JTB Co., Ltd.

Lotte Assets Development Co., Ltd.

D-Cinema of Korea

Lotte Insurance

Sanjung Beverage

Hayo Technology

Changdae Trading Co., Ltd.

KI Bank Co., Ltd.

Lotte Jeju Resort

Lotte Buyeo Resort


CH beverage Lotte Wine

Sambark Sambark LFT


5.0


- 100.0


6.7 -

Mybi Co., Ltd.



Buy the way Inc.


eB Card Co., Ltd.


Chung-buk Soju

Total 51.9 100.0 49.0 100.0 50.0 50.0 53.0 50.0 100.0 50.0 62.0 100.0 93.9 100.0 55.2 100.0 100.0 100.0 100.0 100.0 100.0 76.5

Investee company

Mybi Busan Hanaro Card

Busan Lotte Hotel

Kirin Han Paysys

Universal Studios Korea Resort Development

Lotte Gimhae Development

Buy the way Inc.

Lotte Square

Lotte Suwon Station Shopping Town

Lotte DF Global

Lotte DF Retail

eB Card Gyeonggi Smartcard

Inchon Smartcard

Chungnam Smartcard

Universal Studios Korea Resort Asset Management Corporation

DACC Bliss NCF Co. Ltd.

Pasteur Milk

Honam Mitsui Chemicals

Mobizap Media


Hyunjung RNS

M.Hub

Lotte Songdo Shopping Town

Chung-buk Soju

HUI

Inve

sto

r com

pa

ny


100.0

Lotte Chilsung Beverage Co. Ltd


100.0


Lotte Ham Co., Ltd.



0.0 33.9 91.9


4.1



100.0 100.0 95.0 30.0 94.5 39.2

HONGKONG:169002.4

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Investee company


Busan Lotte Hotel

Kirin Han Paysys



Buy the way Inc.

Lotte Square


Lotte DF Global

Lotte DF Retail


Inchon Smartcard

Chungnam Smartcard



Pasteur Milk


Mobizap Media


Hyunjung RNS

M.Hub


Chung-buk Soju

HUI


Lotteria Co., Ltd.


56.0 50.0


Daehong Communications INC.

60.0 82.6




45.1 31.5 5.0 52.3

KP Chemical Corp.


5.0 95.0

Lotte.com Co., Ltd.


19.6




31.4



100.0


Mybi Co., Ltd. - 60.0 19.6


100.0


14.8 5.0 30.2 9.8

Buy the way Inc.


96.4

eB Card Co., Ltd.

100.0 100.0 100.0


100.0

HONGKONG:169002.4

30

Investee company


Busan Lotte Hotel

Kirin Han Paysys



Buy the way Inc.

Lotte Square


Lotte DF Global

Lotte DF Retail


Inchon Smartcard

Chungnam Smartcard



Pasteur Milk


Mobizap Media


Hyunjung RNS

M.Hub


Chung-buk Soju

HUI

Chung-buk Soju - 72.0

Total 54.1 60.0 0.0 100.0 51.1 48.7 100.0 100.0 100.0 100.0 91.9 96.4 100.0 100.0 100.0 100.0 30.2 56.0 30.0 94.5 100.0 50.0 60.0 52.3 100.0 82.6 100.

0 100.0 72.0

※ Hotel Lotte, Cinema Trading and S&S International are excluded from the list of investee companies as they have no shares owned by other affiliates.

※ Changes in the affiliates during 1 April 2011 – 30 June 2011 (76 companies → 82 companies):

- Companies added as affiliates: Hyundai Information Technology, Hyunjung RNS, M.Hub, Lotte Songdo Shopping Town, HUI, Chung-buk Soju

2. Equity investments

(As of 30 June 2011) (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 The most recent fiscal

year Financial Status

Number of Shares

Equity Ratio

Book Value

Acquisition (disposal) Evaluation Number of

Shares Equity Ratio

Book Value

Total Assets

Current year Net

Income Qty Amount Gain/loss

Lotte Station Building (unlisted) 1986.09.15 Equity

investment 250 900,000 25.00 157,380 - - - 900,000 25.00 157,380 948,170 75,541

Daehong Communications (unlisted)

1996.12.23 Equity investment

6,277 12,000 30.00 27,285 - - - 12,000 30.00 27,285 461,036 17,468

Lotte.com (unlisted) 2000.01.05 Equity

investment 2,000 1,600,000 34.39 11,610 - - - 1,600,000 34.39 11,610 103,340 (545)

Lotte Boulangerie (unlisted) 2000.09.05 Equity

investment 3,000 4,020,222 90.54 9,530 - - - 4,020,222 90.54 9,530 49,911 (864)

Lotte Midopa (listed) 2002.10.15 Equity

investment 257,379 51,475,843 79.01 582,875 - - - 51,475,843 79.01 582,875 987,626 58,913

Lotte Card (unlisted) 2002.11.30 Equity

investment 34,701 69,995,159 92.54 982,950 - - - 69,995,159 92.54 982,950 5,848,505 138,037

Lotte Capital (unlisted) 2001.12.31 Equity

investment 6,259 6,731,600 20.22 70,214 - - - 6,731,600 20.22 70,214 3,335,257 63,936

Lotteria (unlisted) 2001.12.27 Equity

investment 39,719 148,212 32.17 83,333 - - - 148,212 32.17 83,333 713,830 13,920

FRL Korea (unlisted) 2004.12.16 Equity

investment 2,940 2,352,000 49.00 24,827 - - - 2,352,000 49.00 24,827 113,166 27,201

Woori Home Shopping (unlisted) 2006.07.03 Equity

investment 28,600 4,242,796 53.03 393,213 - - - 4,242,796 53.03 393,213 518,490 73,772

HONGKONG:169002.4

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Name of Company



Amount of initial

acquisition



Number of Shares

Equity Ratio

Book Value


Shares Equity Ratio

Book Value

Total Assets

Current year Net


Lake Park (unlisted) 2006.12.29 Equity

investment 1,912 860,400 23.90 5,636 - - - 860,400 23.90 5,636 35,939 (1,783)

Lotte Assets Development (unlisted)


30 8,234,153 31.31 36,233 1,449,420 7,247 - 9,683,573 31.96 43,480 170,495 (13,285)

Zara Retail Korea (unlisted) 2007.01.18 Equity

investment 130 302,600 20.00 16,106 - - - 302,600 20.00 16,106 112,015 5,307

Korea Seven (unlisted) 2009.09.25 Equity

investment 28,184 18,526,176 50.12 82,471 - - - 18,526,176 51.44 82,471 633,455 19,847

Lotte Buyeo Resort (unlisted) 2008.10.21 Equity

investment 6,667 3,333,333 22.22 16,673 - - - 3,333,333 22.22 16,673 162,620 ( 6,685)

Lotte Gimhae Development (unlisted)


300 60,000 100.00 300 - - - 60,000 100.00 300 515 35

Lotte Suwon Station Shopping Town (unlisted)


48 475,000 95.00 48 28,500,000 14,250 - 28,975,000 95.00 14,298 2,807 79

Lotte Square (unlisted) 2010.04.23 Equity

investment 50 1,733,473 100.00 520,042 - - - 1,733,473 100.00 520,042 707,748 4,082

Bliss (unlisted) 2010.12.30 Equity

investment 150 30,000 30.00 150 - - - 30,000 30.00 150 473 (46)

NCF (unlisted) 2010.12.30 Equity

investment 18,876 567,000 94.50 18,876 - - - 567,000 94.50 18,876 28,835 2,993

Lotte Giants (unlisted) 1982.04.21 Equity

investment 30 6,000 30.00 823 - - - 6,000 30.00 823 6,752 1,131

Lake Park Asset Management (unlisted)


72 14,340 23.90 72 - - - 14,340 23.90 72 1,552 0

Lotte Songdo Shopping Town 2011.06.27 Equity

investment 40,000 - - - 8,000,000 40,000 - 8,000,000 39.22 40,000 - -

Isu Entertainment (unlisted)


3,000 30 37.50 1,962 - 30 (1,962) - - - - 5,395 162

D-cinema of Korea (unlisted)


1,500 300,000 50.00 - - - - 300,000 50.00 - 68,139 (2,530)

M Venture Cultural Vitalization Investment Association (unlisted)


2,500 250 25.00 2,500 - - - 250 25.00 2,500 10,100 77

Capital One Diversity Cinema Special Investment Association (unlisted)


1,000 100 20.00 1,000 - - - 100 20.00 1,000 4,868 (169)

So Big 5 Contents Investment Union (unlisted)


4,000 - - - 400 4,000 - 400 26.67 4,000 - -

Capital One Middle-Low Budget Cinema Fund (unlisted)


3,000 - - - 30 3,000 - 30 25.00 3,000 - -

Busan Bank (listed)


2,775 5,259,597 2.82 75,475 - - 3,945 5,259,597 2.82 79,420 34,726,071 333,518

Shinhan Financial Group (listed) 1997.12.31 Equity

investment 637 311,118 0.07 16,458 - - (622) 311,118 0.07 15,836 29,616,670 2,381,184

The Korea Express (listed)


49,910 332,046 1.46 31,279 - - 4,582 332,046 1.46 35,861 2,684,140 68,281

Agentrics (unlisted)


879 1,913,479 1.91 346 (1,913,479) (346 - - - 0 22,118 (4,692)

HONGKONG:169002.4

32

Name of Company



Amount of initial

acquisition



Number of Shares

Equity Ratio

Book Value


Shares Equity Ratio

Book Value

Total Assets

Current year Net


M Cieta Development (unlisted)


1,960 499,800 5.55 2,499 - - - 499,800 5.55 2,499 40,984 (2,016)

Corona Development (unlisted)


100 172,000 2.00 860 - - - 172,000 2.00 860 18,282 (1,345)

Union Arc Development (unlisted)


1,815 362,980 1.10 1,815 - - - 362,980 1.10 1,815 85,640 (2,742)

Bichae Nuri Development (unlisted)


150 171,600 3.00 858 - - - 171,600 3.00 858 104,683 (3,593)

Daol Union Ark Private Equity Real Estate Investment No. 1 (unlisted)


1,320 1,319,920,000 3.99 1,320 - - - 1,319,920,000 3.99 1,320 - -

Cosmo Investment (unlisted)


8,165 32,840 3.88 9,811 - - 17 32,840 3.88 9,828 86,930 12,427

Lotte International (unlisted)


1,638 94,785 10.58 51,831 - - (15,755) 94,785 10.58 36,075 1,448,172 40,994

Lotte Aluminum (unlisted)


3,000 62,609 6.03 34,576 - - 1,850 62,609 6.03 36,426 1,350,367 19,584

Lotte Logistics (after the merge) (unlisted)


4,000 66,308 4.64 6,340 - - 184 66,308 4.64 6,524 330,623 18,275

Lotte Jeju Resort (unlisted) 2008.09.19 Equity

investment 2,500 1,000,000 12.50 5,000 - - - 1,000,000 12.50 5,000 114,752 (85)

CJ Venture Investment No. 12 Global Contents Investment Partnership (unlisted)


1,500 15 3.58 1,500 - - - 15 3.58 1,500 41,474 (718)

East Gate Media Contents & Technology Fund (unlisted)


5,000 50 14.71 5,000 - - - 50 14.71 5,000 34,072 72

ISU-Renaissance Contents Fund (unlisted)


2,000 - - - 40 2,000 - 40 13.33 2,000 - -

Sovic Media Contents Investment Association No.5 (unlisted)


1,800 18 18.00 1,800 - - - 18 18.00 1,800 8,535 (288)

Lotte Europe Holdings B.V. (unlisted)

2008.05.30 Investment in holding company

124,379 177,322 30.81 110,908 - - - 177,322 30.81 110,908 830,626 (40,532)

Intime Lotte Department Store (unlisted)

(1)

2008.08.30 Investment in

department store

10,339 - 50.00 - - - - - 50.00 0 44,231 (33,626)

Lotte Shopping Holdings (Hongkong) (unlisted)


259 750,033,135 100.00 874,318 53,000,000 57,806 - 803,033,135 100.00 932,124 1,348,240 (44,165)

Lotte Shopping Holdings (Singapore) (unlisted)


101 131,014,763 100.00 147,826 74,650,000 82,236 - 205,664,763 100.00 230,063 144,566 (6,409)

Coralis (unlisted) 2009.10.29 Equity

investment 17,418 573,750 45.00 43,808 213,711 11,323 - 787,461 45.00 55,131 71,810 (710)

HONGKONG:169002.4

33

Name of Company



Amount of initial

acquisition



Number of Shares

Equity Ratio

Book Value


Shares Equity Ratio

Book Value

Total Assets

Current year Net


Lotte Vietnam Shopping (unlisted)

(1)

2006.12.15 Investment in discount

store

3,749 - 80.00 - - - - - 80.00 0 124,756 (15,862)

Qingdao Lotte Mart Commercial (unlisted)

(1)


store

33,219 - 55.43 30,048 - - - - 55.43 30,048 99,079 (16,645)

Lotte Mart (unlisted)(1)

2008.06.02 Investment

in discount store

183,033 - 100.00 158,134 - - - - 100.00 158,134 138,499 (6,077)

Liaoning Lotte Mart (unlisted)(1)

2008.07.24 Investment

in discount store

2,107 - 77.24 10,841 - - - - 40.78 10,841 21,570 (3,544)

PT Lotte Shopping Indonesia (unlisted)


store

219,737 2,622,812 55.00 214,068 - - - 2,622,812 55.00 214,068 204,618 13,277

Lotte Cinema Vietnam (unlisted)

(1)

2008.05.02 Investment in cinema

3,000 - 90.00 3,248 - - - - 90.00 3,248 7,199 (1,602)

Shenyang SL Cinema Investment Management (unlisted)

(1)

2010.11.16 Investment in cinema

752 - 49.14 752 - 744 - - 49.00 1,496 3,735 (133)

Wuhan Cinema (unlisted) 2011.06.24 Investment in cinema

2,048 - - - - 2,048 - - 49.00 2,048 - -

Lotte Properties (Shenyang) Limited (unlisted)

(1)


29,018 29,928,756 17.93 41,919 - - - 29,928,756 17.93 41,919 253,442 (2,115)

Total 2,420,470,470 4,928,745 163,900,092 222,346 (5,798) 2,584,370,562 - 5,145,292

- -

Note:

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

※ 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 is applicable).

※ The financial data in the above table was prepared under K-GAAP.

HONGKONG:169002.4

34

VI. Shareholders

A. The Largest Shareholder and Specially Related Parties

(As of 30 June 2011) (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

Shin, Dongbin Himself Common share 4,237,627 14.59 4,237,627 14.59 -

Shin, Dongju Relative Common share 4,235,883 14.58 4,235,883 14.58 -

Shin, Kyukho Relative Common share 293,877 1.01 293,877 1.01 -

Shin, Yeongja Relative

Common share 229,005 0.79 231,818 0.80

Purchase on the stock exchange (2,813 shares)


Related company Common share

2,781,947 9.58 2,781,947 9.58 -



2,474,543 8.52 2,474,543 8.52 -



2,474,543 8.52 2,474,543 8.52 -


Related company

Common share 1,515,653 5.22 1,515,653 5.22 -

Lotte Chilsung Co., Ltd.


1,237,272 4.26 1,237,272 4.26 -



300,019 1.03 300,019 1.03 -

Busan Lotte Hotel, Co., Ltd.

Related company

Common share

246,720 0.85 246,720 0.85 -

Jang, Seonyun Relative Common share 900 0.00 900 0.00 -

Shin, Yumi Relative Common share 28,903 0.10 28,903 0.10 -

Kim, Seho Board of Directors

Common share 421 0.00 469 0.00

Purchase on the stock exchange (48

shares)

Park, Kyungbeom Board of Directors Common share 27 0.00 27 0.00 -

Lotte Samdong Welfare Foundation

Foundation Common share

47,888 0.16 47,888 0.16 -

Yuwon Industry Co., Ltd.

Other Common share

3,000 0.01 3,000 0.01 -

Seo, Mikyeong Other Common share 30,531 0.11 30,531 0.11 -

Jang, Jaeyoung Other Common share 950 0.00 950 0.00 -

Yu, Juyoung Other Common share 499 0.00 499 0.00 -

Total

Common share 20,140,208 69.35 20,143,069 69.36 Purchase on the stock exchange (2,861 shares)

Preferred Share 0 0 0 0

Other 0 0 0 0

※ The number of specially related parties: 19

※ The largest shareholder: Shin, Dongbin

HONGKONG:169002.4

35

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 June 2011) (Unit: shares, %)

Name Common Shares Remarks

Number of Shares Shareholding Ratio

Shin, Dongbin 4,237,627 14.59

Shin, Dongju 4,235,883 14.58

Hotel Lotte Co., Ltd. 2,781,947 9.58

Korea Fuji Film Co., Ltd. 2,474,543 8.52

Lotte Confectionary Co., Ltd. 2,474,543 8.52

Lotte Data Communication Company 1,515,653 5.22

* The employee stock ownership association has 62,305 shares, which is equal to a 0.21% interest in the Company.

1. Share Price and Transactions

a. Domestic Stock Market

(Unit: Won, shares)

Type January 2011

February 2011

March 2011

April 2011

May 2011

June 2011

Common Stock price

Maximum 474,000 448,000 449,000 488,500 511,000 532,000

Minimum 426,000 392,000 378,000 421,500 467,500 483,000

Average 448,381 416,559 421,023 457,595 492,300 504,690

Transaction volume

Maximum 150,507 148,118 163,980 168,286 110,087 405,988

Minimum 41,326 49,482 39,829 63,665 36,186 41,778

Average 1,925,789 1,305,158 1,867,544 2,167,060 1,498,321 2,089,820

b. Overseas Stock Market

Exchange: London Stock Exchange (Unit: USD)

Type January 2011

February 2011

March 2011 April 2011

May 2011

June 2011

Common Stock price

Maximum 21.08 20.5 20 22.02 23.05 24.28

Minimum 19 17.16 16.82 19.35 21.07 21.77

Average 19.92 18.70 18.55 20.58 22.31 23.02

HONGKONG:169002.4

36

VII. Executives and Employees

A. Status of Executives and Employees

1. Executives

Registered Executives

(As of 30 June 2011) (Unit: shares) Name Date of

Birth (yyyy.mm)

Position Status as Director Shares Duration of

tenure

Ending date of term as director

(yyyy/mm/dd)

Common shares

Preferred shares

Shin, Kyukho 1922.10 Executive Chairman Representative Director 293,877 _ _ 2013/03/17

Shin, Dongbin 1955.02 Chairman Representative Director 4,237,627 _ _ 2012/03/25

Lee, Inwon 1947.08 Vice-Chairman Representative Director _ _ _ 2012/03/25

Lee, Cheolwoo 1943.04 President Representative Director _ _ _ 2012/03/25

Shin, Youngja 1942.10 President Standing Director 231,818 _ _ 2012/03/25

Park, Kyungbeom 1949.02 Outside Director Outside Director 27 _ 1 year 3 months

2012/03/25

Kim, Sehun 1950.10 Outside Director Outside Director _ _ 1 year 3 months

2012/03/25

Jwa, Seunghee 1946.04 Outside Director Outside Director _ _ 3 years 3 months

2012/03/25

Lee, Hongroh 1952.12 Outside Director Outside Director _ _ 1 year 3 months

2012/03/25

Kim, Seho 1953.06 Outside Director Outside Director 469 _ 3 years 3 months

2012/03/25

Ye, Jongsuk 1953.12 Outside Director Outside Director _ _ 3 months 2013/03/17

Changed matters

※ Decisions made in the 41st General Shareholders Meeting held on 18 March 2011:

- Reappointment of director : Shin, Kyukho - Reappointment of outside director: Ye, Jongsuk - Resigning outside director (due to completion of term): Lim, Jong-In

Non-registered Executives

Name Date of Birth (yyyy.mm)

Position Duties Shares

Remarks Common shares

Preferred shares

Chae, Jungbyung 1950.11 President In charge of Support

Hwang, Gakgyu 1955.04 President In charge of International 65

Noh, Byungyong 1951.06 President Executive President 10

So, Jinse 1950.05 Representative President

142

Head Manager of Korea Seven Co., Ltd. and Buy the way Inc. (concurrently employed)

HONGKONG:169002.4

37




Preferred shares

Son, Gwangik 1954.09 Representative Executive Officer

Lee, Wonjun 1956.11 Vice-President General Manager of Business Development

135 Managing Director of Lotte Station and Lotte Midopa (concurrently employed)

Kim, Sunghoi 1943.06 Senior Managing Director In charge of Secretary

Kim, Jaehwa 1954.07 Senior Managing Director Audit Director

Appointed in February 2011

Kim, Chihyun 1955.12 Senior Managing Director In charge of operations


Yoon, Jongmin 1960.11 Senior Managing Director In charge of Human Resources

Kim, Youngjun 1960.08 Senior Managing Director Economic Research Institution

Park, Gilyong 1953.08 Senior Managing Director Head of Design Team 72

Gang, Heetae 1959.04 Senior Managing Director Head of Products

111

Head Manager of Lotte Square (concurrently employed)

Gu, Jayoung 1955.08 Senior Managing Director Head of China mart business 270

Park, Donggi 1957.12 Managing Director In charge of Labor 41

Lee, Bongchul 1958.05 Managing Director In charge of Finance

Yoo, Jedon 1960.08 Managing Director In charge of Secretary

Lee, Changwon 1959.03 Managing Director In charge of Promotion

Lee, Ilmin 1959.06 Managing Director In charge of Secretary 47

Jang, Sunwook 1958.01 Managing Director In charge of Operation

Cha, Wonchun 1957.12 Managing Director In charge of Operation

Park, Hyunchul 1960.10 Managing Director In charge of Operation

Lim, Byungyeon 1964.09 Managing Director In charge of International

Lee, Chungik 1964.11 Managing Director In charge of International 24

Min, Gwanggi 1956.01 Managing Director Head of Business in China 127

Kim, Changrak 1957.12 Managing Director Head of Headquarters 119

Lee, Dongwoo 1960.09 Managing Director Head of Management Support 111

Kim, Hyunsoo 1956.06 Managing Director Head of Finance Department 96

Jung, Seungin 1958.06 Managing Director In charge of Marketing 92

Kim, Sungwang 1959.08 Managing Director Head of overseas luxury business 94

Park, Hosung 1958.09 Managing Director Head of Jamsil branch 102

Lee, Gap 1962.09 Managing Director In charge of merchandise for women 85

Kwon, Kyungyeol 1960.12 Managing Director Head of Yeungdeungpo branch

Choi, Choonseok 1960.03 ggagMnaM rnDceriD (Standing) In charge of Products Division 86

Park, Yoonseong 1957.02 Managing Director (Standing)

Head of customer service 127

Kim, Jongin 1963.03 Managing Director Head of strategy 24

Kim, Kyunghwan 1961.02 Managing Director Head of New Business 50

Moon, Yongpyo 1962.04 Managing Director Head of South East Asia 32

Kim, Ilhwan 1951.09 Managing Director Head of Product Division 45

Cho, Sungyeop 1955.01 Managing Director Head of Overseas Business 40

Lee, Sungkwan 1956.07 Managing Director Head of Movie Business

Kim Inkwon 1969.01 Director In charge of Judicial Affairs

Kim, Gisuk 1962.01 Director In charge of Operation

Choi, Kirim 1965.01 Director In charge of Legal Affairs

Jeon, Young min 1967.05 Director In charge of HR

Kim, Inho 1967.01 Director In charge of International 40 Kim, Taehyun 1965.05 Director Audit Director

32 Appointed in February 2011

Oh, Ilgeun 1968.07 Director In charge of property management 39


HONGKONG:169002.4

38




Preferred shares

Lee, Jinsung

1969.02 Director In charge of Economic Research Institution

Kang Sunghyun 1970.01 Director In charge of Economic Research Institution

Huh, Byungtak 1963.01 Director In charge of welfare


Lee, Gwangyoung 1962.12 Director In charge of CP Project 118

Lee, Wansin 1960.10 Director Head of Busan Headquarter Branch 86

Park, Geumsoo 1962.01 Director In charge of International Business 40

Jung, Donghyuk 1962.07 Director Head of Russia Business 32

Chin, Changbum 1958.10 Director Head of GF Business 94

Ku, Soohoi 1958.02 Director Head of Business in Vietnam Team Leader of Hanoi Project

86

Lee, Janghwa 1959.06 Director Head of Nowon branch 86

Go, Gwanghoo 1962.05 Director Head of Gwangju branch

Noh, Yoonchul 1961.04 Director In charge of New Business

Kim, Sewan 1965.04 Director In charge of Planning 71

Lee, Jaechan 1960.02 Director Head of Youngnam Jeju region

Woo, Kyungjoo 1961.06 Director Member in charge of Development 1

Jang, Youngtae 1958.07 Director Member in charge of Development 2 86

Kim, Youngkyun 1960.10 Director Head of PB Development Division

Hyun, Guwon 1955.06 Director Head of Digital Business 94

Kim, Gyusung 1960.01 Director Head of Apparels Division

Park, Jongdo 1961.05 Director General Manager of Beijing Corporation

86

Nam, Changhee 1966.10 Director In charge of Product Managing

96

Lee, Younghyun 1958.12 Director Head of Planning 24

Kang, Jonghyun 1964.05 Director In charge of Support 40

Hong, Sungbok 1957.09 Director Head of Sales 1 16

Kim, Seunghee 1965.04 Director Head of Development

Lee, Dongho 1962.06 Director Head of Management Support 40

Seol, Pungjin 1961.04 Director Head of Gwangbok City 86

Cho, Taehak 1961.03 Director Team Leader of Shenyang Project 86

Lee, Donggu 1958.02 Director Head of Chungyangri Station branch 103

Guk, Jungbeom 1958.10 Director Head of Ulsan branch 40

Jang, Soohyun 1964.06 Director Head of Men Sports Business 104

Choi, Wonil 1962.09 Director In charge of Food

Kim, Taehwa 1959.12 Director Head of the Skypark Project 86

Cho, Hakhyun 1959.03 Director Head of the Dongrae branch 24

Koh, Yooncheol 1960.03 Director Head of China Division

Jang, Jun 1958.12 Director Head of Design Management 32

Hong, Sungho 1962.02 Director Head of Daegu Branch 86


Jeon, Hyungsik 1963.08 Director Head of Living Fashion 79


Park, Daehun 1964.08 Director Head of S&O 75


Hwang, Beomsik 1965.09 Director Team Leader of CP Project 71


Baek, Insoo 1965.06 Director Head of Distribution Strategy Research Center

15 Appointed in February 2011

Jung, Yunsung 1965.03 Director Head of Tianjin Store 79


Hwang, Youngguen

1967.01 Director Head of Ilsan Branch 71


Hwang, Gyuwan 1965.02 Director Head of Merchandise 71


Lee, Inchul 1959.06 Director In charge of Supporting 47

HONGKONG:169002.4

39




Preferred shares

Hahn, Byeongmoon

1963.06 Director Head of Advertising 32

Lee, Hyunkyo 1963.10 Director Head of customer service for Seoul / Kangwon region

Kim, Jonghwan 1962.05 Director Head of Processed Food 32


Hong, Pyungkyu 1962.09 Director Head of Vietnam Corp. 55


Jung, Byunghwa 1964.02 Director President of Indonesian Corp.


Ryu, Byungho 1966.03 Director Head of Chongqing Office 24


Jo, Dohang 1962.11 Director Head of Finance


Song,Youngtak 1965.07 Director Grocery & Living Goods Division 40

Jung, Wonho 1969.02 Director Head of Marketing 55


Seo, Jaehyung 1964.10 Director Head of Strategic Innovation


You, Seungchul 1962.02 Director Head of Cinema Center Business


※ The status of above non-registered executives is as of the day of submission of this report to the FSC.

2. Employees

(As of 30 June 2011) (Unit: persons, year, thousand Won)

Division Gender

The number of staff Average number of years worked

Aggregate annual compensation

Average compensation per person

Remarks Full-

time Contracted Other Total

Department Store

Male 1,867 12 - 1,879 9.2 56,695,681 30,173 -

Female 1,906 1,056 - 2,962 8.2 40,904,971 13,810 -

Discount Store

Male 3,331 353 - 3,684 6.2 73,939,200 20,070 -

Female 841 6,734 - 7,575 3.7 60,452,800 7,981 -

Other Male 1,865 326 - 2,191 3.4 34,885,769 15,921 -

Female 335 3,998 - 4,333 2.2 33,274,672 7,680 -

Total 10,145 12,479 - 22,624 4.8 300,153,093 13,267 -

- Starting from the Company’s 2010 annual report, the Company has disclosed data for both full-time and contract employees. Prior to the Company’s 2010 annual report, it only disclosed data for full-time employees. As such, readers should note the differences when comparing the number of employees, average number of years worked, aggregate annual compensation and average compensation per person.

B. Compensation

Compensation of Directors

(Unit: million Won)

Category Number of Directors Amount Paid Average per Person

Registered Director 5 3,873 775

Outside Director 3 72 24

HONGKONG:169002.4

40

Audit Committee Member 3 66 22

Total 11 4,011 365

HONGKONG:169002.4

41

VIII. Transactions with Interested Parties

A. Transactions with the Largest Shareholder and its Affiliates

(Unit: USD10,000)

Company Name

Relation Account Changed detail Accrued

interest Note

Beginning Increase Decrease Ending

Lotte Vietnam Shopping Co., Ltd.

Overseas affiliate

Loan 2,600 2,600

Intime Department Store Co., Ltd.

Overseas affiliate

Loan 732 732 87 Loan term: 2009.01.23~2011.07.20

Total 3,332 2,600 732 87

B. Collateral

(Unit: million Won, RMB1,000)

Company Name

Relation Details of Transactions

Note Beginning Increase Decrease Ending


Affiliate RMB 78,000

KRW 12,000

RMB 78,000

KRW 12,000

ㆍ Collateral granted in favour of

Woori Bank Beijing Branch

ㆍ Collateral type: Savings

ㆍ Period of collateral: 29 April 2011

to 27 April 2012

C. Guarantee of Obligations

(Unit: USD1,000, RMB1,000, IDR100 million, VND100 million)

Company Name Relation Details of Transactions

Note Beginning Increase Decrease Ending



RMB 70,000 Agreed interest is included

Lotte Vietnam Shopping Co., Ltd

Affiliate USD 60,000 USD 60,000 Agreed interest is included

VND 2,600 VND 2,600 Agreed interest is included

USD 27,000

USD 27,000 Agreed interest is included

Lotte Shopping RUS Affiliate USD 10,000 USD 10,000 Agreed interest is included

PT. Lotte Mart Indonesia

Affiliate IDR 3,500 IDR 3,500 Agreed interest is not included

HONGKONG:169002.4

42

Liaoning Lotte Mart Co., Ltd.


RMB 52,000

RMB 48,000 Agreed interest is not included

HONGKONG:169002.4

43

IX. Other Relevant Matters

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

Date Matters Decision Remarks

41st general meeting of

shareholders (18 March 2011)

Agenda No. 1: Approval of the 41st fiscal year financial

statements Agenda No. 2: Amendments to the Articles of Incorporation Agenda No. 3: Appointment of directors -Agenda No. 3-1: Appointment of outside directors -Agenda No. 3-2: Appointment of standing directors Agenda No. 4: Approval of compensation limit for directors

Approved

B. Contingent Liabilities

1. Major Legal Proceedings

Pending litigations as of 30 June 2011 include 349 lawsuits in which the Company is the plaintiff (the aggregate claim amount of which is approximately Won 13.6 billion) and 41 lawsuits in which the Company is the defendant (the aggregate claim amount of which is approximately Won 9.4 billion). The Company’s management does not believe that the final outcome of these lawsuits would significantly affect the Company’s financial condition.

2. Bills or Checks Provided as Collateral

As of 30 June 2011 (Unit: million Won)

Place to

submit

No. of

sheets Amount Note

Department Store

Lotte Midopa

(1)

Bank 653 - Bill

Bank 93 Check

Misc. Korea Seven Corporation 1 500

Promissory note provided to guarantee the Korea University Foundation’s lease agreement.

Note:

(1) The Company’s management believes that foreclosure on bills and checks provided as collateral regarding Lotte Midopa is unlikely, as

Lotte Midopa has repaid all of the debts for which such collateral was provided as of 30 June 2011.

3. Use of proceeds from private placements

As of 30 June 2011 (Unit: Won)

Type

Remittance Date

(yyyy.mm.dd)

Remittance Amount Planned Use of Proceeds Actual Use of Proceeds

HONGKONG:169002.4

44

Type

Remittance Date

(yyyy.mm.dd)

Remittance Amount Planned Use of Proceeds Actual Use of Proceeds

Convertible bond

issue

2011.07.04 960,003,000,000

Overseas investment and

repayment of foreign currency

borrowings

Overseas investment and repayment

of foreign currency borrowings

※ The exchange rates in effect on the remittance date (4 July 2011), of US$ 1:00 = Won 1,063.8 and JPY 1 =

Won 13.1724, were applied.

4. Other Contingent Liabilities

a. Detail of payment guarantees on behalf of specially related parties

Details of guarantee or payment guarantees provided by the Company in favour of its specially related parties are as follows. (There are no guarantee or payment guarantees provided by such specially related parties in favour of the Company.)

(As of 30 June 2011)

Company Name

Guarantor Guaranteed Amount

Term of Guarantee

Remarks

Lotte Vietnam Shopping Co., Ltd.

Citibank N.A. Ho Chi Minh

USD 35,000,000 of principal and interest

24 March 2010 to 23 March 2012

Payment guarantees for funding


14 December 2010 to 14 December 2012


ANZ Bank VND 260,000,000,000

23 October 2010 to 22 October 2011


Shinhan Bank USD 27,000,000 21 March 2011 to 20 March 2012


Liaoning Lotte Mart Co., Ltd.

ANZ Bank RMB 48,271,630 15 March 2011 to 17 January 2012


Lotte Shopping Rus Ltd.

Korea Development Bank

USD 10,000,000 13 May 2010 to 12 May 2013


Intime Lotte Department Store Co., Ltd.

Woori Bank RMB 78,000,000 29 April 2010 to 27 April 2011

Collateral for long term credit products

Standard Chartered RMB 70,000,000 1 April 2011 to 31 March 2011


PT Lotte Mart Indonesia

Korea Exchange Bank IDR 350,000,000,000

26 July 2010 to 5 July 2011


HONGKONG:169002.4

45

Lotte Cinema Vietnam

Export-Import Bank of Korea


30 June 2011 to 30 June 2012


In addition to the above, D Cinema of Korea Co., Ltd. entered into a VPF agreement with Twentieth Century Fox

Film Corporation in October 2008, and D Cinema’s performance thereunder was guaranteed by CJ CGV Co.,

Ltd. and the Company (50% each). In addition, the Company has guaranteed Burger King Japan Co., Ltd.’s

royalty contract with BK ASIAPAC PTE. Ltd (3.5% of sales and US$25,000 per store opened).

5. Sanctions and Fines

Division Company Date Sanction / fine Reason Measures taken to prevent reoccurrence

Card Lotte Card 5 March 2008 Corrective order and fine

Price fixing in violation of article 19, paragraph 1, clause 1 of the Monopoly Regulation and Fair Trade Act in connection with commissions paid to VAN. Fined Won 205 million.

Employee training

22 March 2010

Warning from the Financial Supervisory Service

Warning from the Financial Supervisory Service in connection with excessive credit card recruiting offers.

Termination of employment of the relevant recruiter. Employee training.

Misc. Woori Home Shopping

24 March 2011

Failure to distribute advertisement contract in advance

Violation of article 23, paragraph 1, clause 4 of the Monopoly Regulation and Fair Trade Act.

Completed improvements to related processes.

C. Inventory Status

1. Inventory Status

(Unit: million Won)

Business area Account 42

nd fiscal year (1

st

half) 41

st fiscal year

40th

fiscal year

Remarks

Department store

Merchandise 957,809 1,029,977 848,173

Goods - - -

Goods in process - - -

Half-finished goods - - -

Raw materials - - -

HONGKONG:169002.4

46


nd fiscal year (1

st

half) 41

st fiscal year

40th

fiscal year

Remarks

Component materials

- - -

Stored goods - - -

Goods not delivered - - -

Unsold property - - -

Incomplete property - - -

Completed property

Land site - - -

Sub-total 957,809 1,029,977 848,173

Discount store

Merchandise 364,835 485,643 193,686

Goods - - -



Raw materials - - -

Component materials

- - -

Stored goods - 1,367 -

Goods not delivered 318 115 557

Unsold property 3,977 2,610 -

Incomplete property - - 1,757

Completed property - - -

Land site - - -

Sub-total 369,130 - 196,000

Financial

Merchandise 848 377 -

Goods - - -



Raw materials - - -

Component materials

- - -

Stored goods - - -

Goods not delivered - - -

Unsold property - - -



Land site - - -

Sub-total 848 - -

Misc.

Merchandise 259,996 141,162 56,240

Goods 4,219 5,405 -

Goods in process 694 565 -


Raw materials 1,455 1,145 -

Component materials

280 188 -

Stored goods 2,400 1,246 895

HONGKONG:169002.4

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nd fiscal year (1

st

half) 41

st fiscal year

40th

fiscal year

Remarks

Goods not delivered 1 - -

Unsold property 30 - -



Land site - - -

Sub-total 269,075 149,710 57,136

Total

Merchandise 1,583,489 1,657,158 1,098,099

Goods 4,219 5,405 -

Goods in process 694 565 -


Raw materials 1,455 1,145 -

Component materials

280 188 -

Stored goods 2,400 2,613 895

Goods not delivered 320 115 557

Unsold property 4,008 2,610 -

Incomplete property - - 1,757


Land site - - -

Sub-total 1,596,862 1,669,798 1,101,309

Inventory as percentage of total assets (%)[Inventory÷Assets×100]

5.35% 5.74% 5.90%

Inventory turnover (times) [Annualized cost of sales÷{(Period start

inventory＋Period end inventory)÷2}]

9.2 8.4 7.4

a. Due Diligence of Inventories

1. Date of due diligence

Business unit Department Store Discount Store Others

Date of due diligence 15 June 2011 - 1 June – 30 June 2011

The Company does not review its inventories in the presence of its independent auditors on a quarterly or half-yearly basis but does so at the end of the fiscal year.

D. Commercial Paper Securities Issuances

1. Schedule of Recent Commercial Paper Securities Issuances

(As of 30 June 2011) (Unit: million Won, %)

Date of Issuance (yyyy/mm/dd)

Issue Size (Face Value)

Interest Rate Rating Maturity Date (yyyy/mm/dd)

Issue Status

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

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Issue Status

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 10,000 3.73% A1 2011.04.21 Repaid

2011.01.20 20,000 2.88% A1 2011.01.21 Repaid

2011.01.28 50,000 3.72% A1 2011.04.28 Repaid

2011.01.28 50,000 3.72% A1 2011.04.28 Repaid

2011.01.28 20,000 3.67% A1 2011.04.28 Repaid

2011.01.28 20,000 3.67% A1 2011.04.28 Repaid

2011.01.28 20,000 3.67% A1 2011.04.28 Repaid

2011.01.28 20,000 3.67% A1 2011.04.28 Repaid

2011.01.28 20,000 3.67% A1 2011.04.28 Repaid

2011.01.31 50,000 2.96% A1 2011.02.01 Repaid

2011.01.31 13,000 3.20% A1 2011.02.01 Repaid

2011.01.31 25,000 3.20% A1 2011.02.01 Repaid

2011.02.21 50,000 2.97% A1 2011.02.22 Repaid

2011.02.21 10,000 2.97% A1 2011.02.22 Repaid

2011.02.21 10,000 2.97% A1 2011.02.22 Repaid

2011.02.21 10,000 2.97% A1 2011.02.22 Repaid

HONGKONG:169002.4

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Issue Status

2011.02.21 10,000 2.97% A1 2011.02.22 Repaid

2011.02.21 10,000 2.97% A1 2011.02.22 Repaid

2011.02.21 10,000 2.97% A1 2011.02.22 Repaid

2011.02.21 10,000 3.00% A1 2011.02.24 Repaid

2011.02.21 40,000 2.97% A1 2011.02.22 Repaid

2011.02.21 39,000 2.97% A1 2011.02.22 Repaid

2011.02.22 10,000 2.97% A1 2011.02.23 Repaid

2011.02.22 10,000 2.97% A1 2011.02.23 Repaid

2011.02.22 10,000 2.97% A1 2011.02.23 Repaid

2011.02.22 10,000 2.97% A1 2011.02.23 Repaid

2011.02.22 10,000 2.97% A1 2011.02.24 Repaid

2011.02.22 38,000 2.97% A1 2011.02.24 Repaid

2011.02.25 10,000 3.08% A1 2011.03.02 Repaid

2011.02.25 10,000 3.08% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.02.28 10,000 3.03% A1 2011.03.02 Repaid

2011.03.02 10,000 2.97% A1 2011.03.03 Repaid

2011.03.02 15,000 2.97% A1 2011.03.03 Repaid

2011.03.30 10,000 3.18% A1 2011.03.31 Repaid

HONGKONG:169002.4

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Issue Status

2011.03.30 10,000 3.18% A1 2011.03.31 Repaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.21 10,000 4.15% A1 2011.07.21 Unpaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.60% A1 2011.06.30 Repaid

2011.04.28 10,000 3.61% A1 2011.06.30 Repaid

2011.05.25 36,000 3.25% A1 2011.05.26 Repaid

2011.05.31 12,000 3.31% A1 2011.06.01 Repaid

2011.06.20 26,500 3.42% A1 2011.06.21 Repaid

HONGKONG:169002.4

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Issue Status

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.74% A1 2011.09.30 Unpaid

2011.06.30 10,000 3.65% A1 2011.07.01 Unpaid

2011.06.30 40,000 3.70% A1 2011.07.01 Unpaid

- 1,254,500 - - - -

2. Amount of Outstanding Commercial Paper

(As 30 June 2011) (Unit: million Won)

Remaining maturity period

Under 10 days

Under 30 days

Under 90 days

Under 180 days

Under 1 year

More than 1 year

Total

Amount outstanding

- 250,000 - - - - 250,000

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