LOTTE SHOPPING CO., LTD. and SUBSIDIARIES Condensed Consolidated Interim Financial Statements
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LOTTE SHOPPING CO., LTD. AND SUBSIDIARIES Condensed Consolidated Interim Financial Statements March 31, 2015 and 2014 (Unaudited) (With Independent Auditors’ Review Report Thereon) Contents Page Independent Auditors’ Review Report 1 Condensed Consolidated Interim Statements of Financial Position 3 Condensed Consolidated Interim Statements of Comprehensive Income 5 Condensed Consolidated Interim Statements of Changes in Equity 6 Condensed Consolidated Interim Statements of Cash Flows 8 Notes to the Condensed Consolidated Interim Financial Statements 12 Independent Auditors’ Review Report Based on a report originally issued in Korean The Board of Directors and Shareholders Lotte Shopping Co., Ltd.: Reviewed financial statements We have reviewed the accompanying condensed consolidated interim financial statements of Lotte Shopping Co., Ltd. and its subsidiaries (the “Group”), which comprise the condensed consolidated statement of financial position as of March 31, 2015, the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2015 and 2014 and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s responsibility Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ review responsibility Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews. We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K- IFRS No.1034, ‘Interim Financial Reporting’. Other matters The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries. The statement of financial position of the Group as of December 31, 2014, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 10, 2015, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2014 presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. KPMG Samjong Accounting Corp. Seoul, Korea May 13, 2015 This report is effective as of May 13, 2015, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any. 2 LOTTE SHOPPING CO., LTD. AND SUBSIDIARIES Condensed Consolidated Interim Statements of Financial Position As of March 31, 2015 and December 31, 2014 (Unaudited) Korean won (millions) Notes March 31, 2015 December 31, 2014 Assets ₩ Cash and cash equivalents 4,7,34,39 1,217,053 1,928,136 Trade and other receivables 4,5,7,38,39 1,013,832 912,952 Other financial assets 6,7,21,39 8,525,434 8,598,854 Inventories 4,8 3,267,816 3,161,054 Income tax refund receivable 2,592 1,037 Other non-financial assets 9 425,670 373,610 Total current assets 14,452,397 14,975,643 Investments in associates and joint ventures 4,10,11 1,231,090 1,163,477 Other financial assets 6,7,21,39 1,914,448 1,919,623 Property, plant and equipment, net 4,12,38 16,033,841 15,900,974 Investment property, net 13 509,120 537,191 Goodwill 4,14 3,291,310 3,277,238 Other intangible assets, net 4,14 886,858 878,845 Other non-financial assets 9 1,379,292 1,365,900 Deferred tax assets 51,620 53,435 Total non-current assets 25,297,579 25,096,683 Total assets ₩ 39,749,976 40,072,326 See accompanying notes to the condensed consolidated interim financial statements. 3 LOTTE SHOPPING CO., LTD. AND SUBSIDIARIES Condensed Consolidated Interim Statements of Financial Position, Continued As of March 31, 2015 and December 31, 2014 (Unaudited) Korean won (millions) Notes March 31, 2015 December 31, 2014 Liabilities Borrowings and debentures, net of debenture issuance costs 4,7,16,36,38,39 ₩ 4,325,359 4,569,650 Trade and other payables 4,7,15,38,39 5,549,230 5,623,106 Other financial liabilities 7,21,39 525,089 612,689 Income tax payables 160,963 228,573 Unearned revenues 17 236,581 235,713 Provisions 18 55,773 54,913 Other non-financial liabilities 19 1,307,810 1,209,270 Total current liabilities 12,160,805 12,533,914 Borrowings and debentures, net of debentures issuance costs 7,16,36,38,39 8,098,165 8,156,914 Other financial liabilities 7,21,39 288,079 257,516 Employee benefit liabilities 4,20 106,738 82,141 Deferred tax liabilities 1,401,728 1,371,924 Unearned revenues 17 10,544 11,150 Provisions 18 28,073 26,803 Other non-financial liabilities 19 94,795 88,087 Total non-current liabilities 10,028,122 9,994,535 Total liabilities 22,188,927 22,528,449 Equity Common stock of ₩5,000 par value Authorized - 60,000,000 shares Issued and outstanding – 31,490,892 shares 1,22 157,454 157,454 Capital surplus 22 3,910,752 3,910,752 Hybrid securities 23 269,118 269,118 Capital adjustments 24 (78,601) (78,452) Retained earnings 25 12,403,551 12,360,095 Accumulated other comprehensive income 26 84,397 106,836 Stockholders' equity attributable to owners of the Company 16,746,671 16,725,803 Non-controlling interests 814,378 818,074 Total equity 17,561,049 17,543,877 Total liabilities and equity ₩ 39,749,976 40,072,326 See accompanying notes to the condensed consolidated interim financial statements. 4 LOTTE SHOPPING CO., LTD. AND SUBSIDIARIES Condensed Consolidated Interim Statements of Comprehensive Income For the three-month periods ended March 31, 2015 and 2014 (Unaudited) Korean won (millions, except for earnings per share) Notes 2015 2014 Sales 28,35,36,38 ₩ 6,935,373 6,785,880 Cost of sales 8,28,31,38 (4,765,029) (4,660,879) Gross profit 2,170,344 2,125,001 Selling, general and administrative expenses 29,31,38 (1,903,164) (1,785,561) Operating profit 267,180 339,440 Other income 30,38 16,700 13,457 Other expenses 30,38 (48,015) (24,323) Finance income 32 43,499 45,260 Finance costs 32 (87,654) (117,050) Equity method income (loss) of investments in associates 10,11 198 (4,792) Profit before income tax 191,908 251,992 Income tax expense 33 (76,471) (108,036) Profit for the period 115,437 143,956 Other comprehensive income (loss) : Items that will never be reclassified to profit or loss: Remeasurements of net defined benefit liabilities 20 (199) (2,250) Net change in equity of equity method investments (710) (91) Income tax on items that will never be reclassified to profit or loss 284 206 Total items that will never be reclassified to profit or loss (625) (2,135) Items that are or may be reclassified to profit or loss: Net change in unrealized fair value of available-for-sale financial assets (41,330) (1,791) Exchange rate differences on translating foreign operations (5,781) 13,324 Effective portion of unrealized changes in fair values of cash flow hedges 21 3,595 (614) Net change in equity of equity method investments (7,901) (10,902) Income tax on items that are or may be reclassified to profit or loss 15,916 2,405 Total items that are or may be reclassified to profit or loss (35,501) 2,422 Other comprehensive income (loss) for the period, net of tax (36,126) 287 Total comprehensive income for the period 79,311 144,243 Profit attributable to: - Owners of the Company 106,189 128,986 - Non-controlling interests 9,248 14,970 115,437 143,956 Total comprehensive income attributable to: - Owners of the Company 83,298 129,739 - Non-controlling interests (3,987) 14,504 79,311 144,243 Earnings per share 27 - Basic earnings per share (in won) 3,512 4,283 - Diluted earnings per share (in won) ₩ 3,458 4,282 See accompanying notes to the condensed consolidated interim financial statements. 5 LOTTE SHOPPING CO., LTD. AND SUBSIDIARIES Condensed Consolidated Interim Statements of Changes in Equity For the three-month