Lotte Corporation

2021.4Q Earning Release

Mar 17, 2022
Disclaimer

This document contains Lotte Corporation’s (hereinafter referred to as “the Company”)

subjective judgment and future prospects for the recent business situation. Please be aware
that actual future performance may differ from those stated or implied in this document due to
changes in the business environment and mid to long-term plans in the future.

Therefore, this material may be used only for the purpose of understanding the company, and
investors are solely responsible for any investment results arising from the information
provided in this material.

Please be informed that the Company does not provide any guarantee or responsibility to
investors for the contents of this material, and does not take any responsibility for the actions
of third parties arising from the use of the information provided by the Company.

1
 CONTENTS

1. LOTTE 4. ESG
• Overview • ESG Performance
Corporation
• History • ESG Achievement
• Mission & Vision • ESG Activities

2. Performance • 2021 Separate 5. Appendix • IR Website

• 2021 Consolidated • Financial Statements

(separate)
• Management status
• Financial Statements
(consolidated)

3. Major
Subsidiaries • Korea Seven
• GRS

2
LOTTE Corporation

 Company Overview and Ownership Structure

Company Overview Ownership Structure

Establishment • Mar.24 1967 (Oct.1 2017,divided &newly established) End of Dec 2021
Category Shares2 %
Business • Pure holding company
Dong Bin Shin 13,683,202 13.04
Employee • 193
LOTTE Hotel 11,644,662 11.10
Subsidiary • 72 (Subsidiary 19, Grandchild subsidiary 53) LOTTE Aluminum 5,313,478 5.06

Listed Subsidiary • 9 (Confectionery, Chemical, Shopping etc.) LOTTE Corp. 34,103,937 32.51
Others 13,085,407 12.47
Credit Rating • AA0
Total 77,830,686 74.19
Website • https://www.lotte.co.kr
Category Executive Directors Non- executive Directors

Dong Bin Shin, Yong Dok

CEO -
Song, Dong Woo Lee LOTTE Corporation
JangYung Lee*, YounHo Lee,
Audit Committee -
ChangSoo KIM

Nominating Committee Yong Dok Song YounHo Lee*, O-Gon Kwon

LOTTE LOTTE LOTTE LOTTE
Corporate Governance O-Gon Kwon*, ChangSoo Others
Committee
-
Kim , ByungDo Kim Confectionery Shopping Chilsung Food
Compensation ByungDo Kim*,
Dong Woo Lee
Committee JangYung Lee
ChangSoo KIM*,
ESG Committee -
ByungDo KIM
Enhance Respond to
Reduce
DooHwan Park, SooChan Ko, Management Environmental
Execution Committee
Yong Dok Song*,
EunJae Park, Hyun Chul Park, governance risk
Dong woo Lee Efficiency Changes
Hoonki Lee, JeongWook Go

1. *Head of Committee, 2. No. of Common Share 3

Corporate History – Main Events

2017 Establishment of the LOTTE Corporation

(Oct) Founded LOTTE Corporation by splitting the investment business sector of shopping, Chilsung, Foods, and Confectionery

2018 Improvement of management efficiency through corporate governance reorganization

(Apr) Merged the investment sectors of GRS, International, Logistics, FUJIFILM Korea, and Daehong Communications
(Oct) Transferred a partial amount of Chemical stock owned by LOTTE Hotels & Resorts and LOTTE Property & Development
(Incorporated to an affiliate corporation of LOTTE Chemical)
(Nov) Retired a partial amount of treasury stock for the shareholder value improvement
(Dec) Acquired a partial amount of Daehong Communications stock owned by LOTTE Foundation

2019 Strengthening the role of a holding company (in compliance with behavioral control)
(Mar) Acquired a partial amount of LOTTE Logistics stock from Chemical, GRS, Foods, and Chilsung Beverage

2020 Management of affiliates’ core businesses and expansion of controlling power

(Feb) Acquired a partial amount of LOTTE Chemical stock owned by LOTTE Hotels & Resorts through stock exchange
(May) Acquired a partial amount of LOTTE Foods stock owned by LOTTE Hotels & Resorts and LOTTE Hotel Busan through
off-hours block trading -> Changed from an affiliated to a subsidiary corporation

2021 Stabilization of a holding company by expanding controlling power

(May) Subsidiaries that were transferred to LOTTE Corp. on the establishment → Re-transferred to the previous parent company
(Chilsung , Foods, International) through contribution in kind
(Sep) Acquired a partial amount of Lotte Chilsung stock through stock exchange → Changed from an affiliated to a Subsidiary corporation
4
Mission & Vision of LOTTE

We enrich people‘s lives by providing

Mission
Superior products and services

Vision

Create Create Create

Guidelines on
sustainable Economic future value
Quality Growth
growth value

Create social value

Transparent Strengthening Value-Based On-Site

Core
Management Management Management
Competencies

5
4Q 2021 Results (Separate)

 4Q21 Operating Revenue 40bn KRW (+19.2% YoY), Operating Expense 48bn KRW(+25.0% YoY)

Operating Revenue Operating Expense

[Units: KRW billion] [Units: KRW billion]

4Q20: 33bn KRW 4Q21: 40bn KRW 4Q20: 38bn KRW 4Q21: 48bn KRW

Rental
Others 4 Commission
Rental 1 (10.2%) 9
Others Commission
1 4 (2.1%) 6 Advertising
(18.0%)
(2.6%) (12.1%) 16
Management Trademark (14.7%)
Others Others
Trademark (33.3%)
Management Service 26 Advertising 7
7
Service 21 9 20 (14.2%)
7 배당 (64.4%) (22.6%) (65.0%) (18.1%)
(52.3%)
(21.0%) Labor cost Labor Cost
6 17
(80.5%)
(15.0%) (34.6%)

6
 2021 Results (Separate)

 2021 Operating Revenue 251bn KRW (▲13.5% YoY), Operating Expense 140bn KRW (+9.7% YoY)

Operating Revenue Operating Expense

[Units: KRW billion] [Units: KRW billion]

2020: 291bn KRW 2021: 251bn KRW 2020: 127bn KRW 2021: 139bn KRW

Trademark Commission
Advertising
Dividend Income Commission
86 Dividend Income Trademark 25
Advertising 28 41
(29.4%) 98 (19.8%) 43 (20.4%)
(29.2%)
155 103
(39.0%) (33.7%)
(53.2%) (41.1%) Others Others
배당 Mgmt. Service 27 27 Labor Cost
Rental 31 (10.7%) Mgmt. Service Labor Cost
(21.1%)
16 Rental
30 (19.4%) 43
(80.5%) (5.5%) Others 16 32
(1.2 %)
3 (6.4%) (12.1%) (25.5%) (30.9%)
Others
3 (1.4%)

7
[4Q21 Consolidated P&L] Group

 4Q21 Sales 2,472 bn KRW (+4.0% YoY), Operating Loss 12bn KRW
[Units: KRW billion]

Sales Operating Profit Income Before Tax

Category
4Q 20 4Q 21 YoY 4Q 20 4Q 21 YoY 4Q 20 4Q 21 YoY

LOTTE Corp. 33 40 19.2% -5 -8 - -385 -105 -

LOTTE Conf. 521 549 5.2% 21 13 -38.7% -3 -29 -

LOTTE Foods1 396 431 8.8% -0 -9 - -5 -37 -

Korea Seven 1,007 1,065 5.7% -9 -1 - -17 -54 -

LOTTE Data
212 241 13.7% 10 3 -73.8% 8 2 -77.8%
Communication

GRS 163 177 8.4% -8 -18 - -8 -43 -

Others2 46 -30 - -9 8 - 90 -244 -

LOTTE Corp.
2,378 2,472 3.9% -1 -12 - -320 -509 -
Consolidated
1. LOTTE Foods added to Lotte Corp’s Consolidated Financial Statement since 3Q20, 2.Others Internal Transaction and other consolidated adjustment are included,
3. Gain or Loss from equity method for 4Q21: +22bn KRW YoY (Shopping +62bn, Chilsung -32bn, Global Logistics -5bn etc.) 8
[2021 Consolidated P&L] Group

 2021 Sales 9,925bn KRW (+9.2% YoY), Operating Profit 216bn KRW (+38.5% YoY)
[Units: KRW billion]

Sales Operating Profit Income Before Tax

Category
2020 2021 YoY 2020 2021 YoY 2020 2021 YoY

LOTTE Corp. 290 251 -13.5% 163 112 -31.4% -339 -50 -

LOTTE Conf. 2,076 2,145 3.3% 113 108 -3.6% 56 54 -3.3%

LOTTE Foods1 869 1,789 105.9% 20 39 89.7% 13 6 -55.1%

Korea Seven 4,068 4,278 5.1% -9 2 - 4 -56 -

LOTTE Data
850 930 9.5% 39 40 3.1% 38 44 16.4%
Communication

GRS 683 676 -1.1% -20 -26 - -38 -52 -

Others2 250 -145 - -151 -59 - -25 123 -

LOTTE Corp. Turned to

9,087 9,925 9.2% 156 216 38.5% -290 69
Consolidated Profit
1. LOTTE Foods added to Lotte Corp’s Consolidated Financial Statement since 3Q20, 2.Others Internal Transaction and other consolidated adjustment are included,
3. Gain or Loss from equity method for 2021: +486bn KRW YoY (Chemical +266bn , Shopping +201bn, Chilsung +6bn, Global Logistics +5bn, etc.) 9
LOTTE Corporation Borrowings

 Dec 2021 Net debt ratio is increased by +8.67%p (+391bn KRW) compared to the end of 2020

■ Statement of Financial Position (Separate)

[Units: KRW billion]

Category Dec.2020 Dec.2021 Diff.

Deposits Bank & Security Corp. 650 662 +12

Bank Loan 350 370 +20

Commercial Paper 682 710 +28

Borrowings
Corporate Bond 1,363 1,718 +355

Total 2,395 2,798 +403

Net Debt 1,745 2,136 +391

Total Equity 5,035 4,929 -106

Net Debt Ratio 34.65% 43.32% +8.67%p

Debt Ratio 57.63% 68.47% +10.85%p

10
 Listed (10)
Subsidiary (19)
4Q 2021 Major Changes in the Ownership Structure Grandchild Subsidiary (53)

1 Chilsung: Change in the rate of stock ownership due to additional stock acquisition of LOTTE Chilsung(43.36%→45.00%) (DEC 2021),
MJA Wine is merged into Chilsung(NOV 2021)
2 Foods: Fresh Deli 1-4 are consolidated into Foods(DEC 2021)
3 Property and Development: Capital injection for the purpose of financial stabilization of the P&D (60.5%→89.4%) (OCT 2021)
Food Retail Chemical Service

48% 40% 45% 26% 69%

Station
Conf. Shopping Chemical Daehong
BuildingLtd.
100% 80% Mobizap 100%
49% Korea Seven Handok 50%
Sweet With FRL Korea Media
Chemical
45% 86% Culture 50% 99%
1 Chilsung 50% M Hub
Korea STL Works CETEC
50% 99% 50%
Stick 68%
Asahi Town 100% CS Retail Mitsui Interactive
Dongtan Chemical 95%
100% Sanchung 100% Gimhae 50% Giants
Home 53%
Beverage Develop MCC
86% Shopping 65% Data
Baekhak 99% 50% Communication
Songdo 100% GFR
Beverage Versalies
100% Shopping 45%
ChungBuk 100% Incheon 100% International
Soju 65% Sambark
Himart Town 76%
100% LFT
CH Beverage 94% Fuji Film
Lotte Ulsan 97% Members KP 100%
100% Develop Chemtech 100% Institute of
Green With 3 Property& 89% 32% Economy
Suwon 100%
Develop. Fine Chem 46%
40% Shopping GlobalLogistics
Food 51%
DMC 95% 100% Magok PFV GS Chem COSCO 51%
100% Develop
Food With Shipping
Incheon 100% 100% Geoje PFV 44%
Construction 40%
50% Nestle Develop EasyGo
Korea 50% 100% Eunpyeong
100% REITs PFV Seoul 38%
Fresh Deli 1~4 2 IntergratedPFV
Shopping 100% 100% Seoul
Magok L PFV 38%
54%
GRS Daegu IntergratedAMC
50% Canon
Tour 100%
Angel
50% With
JTB
100%
AMC
Note: As of Dec 2021. Total number of affiliates including LOTTE Corp. is 73
11
[Shareholder Policies] Shareholder-Friendly policies for LOTTE group

Category Shareholder Friendly Policy

 An Improvement of corporate governance (selection of 4 main assignments)
2015 – Eradicate Circular Ownership structure, switching to the holding company, Improve governance transparency,
Encourage IPO of Lotte Hotel

2016  Stock Split of LOTTE confectionery (5,000KRW 500 KRW by 1/10)

 Enhancing Governance transparency by shifting into Holding company structure

2017  Promotion of both Progressive Dividend Policy and Interim Dividend distribution
(aims for 30% of dividend payout ratio)

 An improvement of the shareholder value through the treasury stock retirement

※ Stocks acquired with buyback request must retired within 5 years after the acquisition (11,657,000 stocks, 10%)
 Acceleration of Governance transparency by incorporating an additional affiliate corporation
2018
- The incorporation of six unlisted companies1 (Apr 18Y)/ Incorporation of LOTTE chemical(Oct 18Y)
/Complete eradication of circular ownership structure
 The listing of LOTTE Data Communication : to improve the shareholder value

 The stock split of LOTTE Chilung Beverage (5,000 KRW 500 KRW, by 1/10)
2019
 First Interim dividend of LOTTE Corporation have paid

 Acquired additional stake in LOTTE Food for consolidation (additional equity of 13.29%)
2020
 Share liquidation to be compliance with the behavioral control regulations

 Acquired treasury stock of LOTTE HIMART (472,000 stocks, 2%)

2021  The listing of LOTTE Rental
 Acquired additional stake in LOTTE Chilsung for consolidation (additional equity of 5.74%)
1. GRS, international, Logistics, Fuji film, Daehong communication, IT tech 12
Shareholder Return Policy : Dividend of LOTTE Group’s Listed companies

 LOTTE group aims at a dividend payout ratio of at least 30% based on separate Profit and loss
[Units: KRW billion]
2019 2020 2021

Category Dividend Dividend Dividend

Payout Payout Payout
Dividend Yield Dividend Yield Dividend Yield
ratio ratio ratio
ratio ratio ratio
LOTTE Corp. 79 37% 2.8% 72 - 2.9% 107 - 4.9%
Confectionery 8 75% 0.9% 10 28% 1.6% 10 34% 1.3%
Chilsung 22 - 1.9% 26 - 2.5% 30 24% 2.2%
Foods 11 29% 2.9% 11 15% 3.5% 10 696%1 2.8%
Shopping 107 - 2.8% 79 - 2.8% 79 - 3.1%
Himart 24 - 3.2% 28 99% 3.8% 23 - 3.9%
Chemical. 230 58% 3.0% 123 107% 1.3% 285 34% 3.6%
Fine Chem. 43 22% 3.7% 38 24% 2.8% 59 22% 3.0%
Data
11 29% 1.7% 11 35% 1.8% 11 30% 2.0%
Communication

REIT 18 152% - 56 178% 6.0% 73 206% 2.7%

Rental 2 16% - 4 18% - 33 35% 2.4%
계 555 52% 2.5% 458 63% 2.9% 719 135% 2.9%
1. Payout ratio of 31% if exclude one off costs 2..Dividend yield ratio is based on common stock 3. Payout ratio is based on separate P&L
13
Performance of Korea Seven Co. LTD

 Income Statement  Balance Sheet

[Units : KRW billion] [Units : KRW billion]

Category 4Q 20 4Q 21 YoY 2020 2021 YoY Category 2020 2021 Diff

Asset 1,784 1,707 -78

Sales 1,007 1,065 5.7% 4,068 4,278 5.1%
Cash and Cash
187 130 -58
Equivalent1
Operating Turned
-9 -1 - -9 2 Liability 1,389 1,364 -25
Profit to Profit
Borrowings
Income 475 495 21
-17 -54 - 4 -56 - (excluding lease)
before Tax
Equity 395 343 -52
Net Income -15 -52 - 7 -53 -
Debt Ratio 350.5% 397.8% 47.3%p

 Decreased amount of Cash & Cash Equivalent /

 Increased in total sales is driven by new opening
Increased amount of borrowings :
stores and increased in sales per store.
used for loan repayment and Working Capital
※ No. of stores: 11,173 stores as of 2021, +672 stores YoY
→ Additional borrowings160bn KRW
 Decreased in Income before tax due to one-off costs
→ Loan repayment 144bn KRW
- Goodwill Impairment of 47bn KRW on 21Y

1. Cash and Cash Equivalent : Cash and Cash Equivalent, short term financial products 14
Korea Seven : Current Situation of the Korean convenience store industry
 Despite the continuous growth in convenience stores, the business entered the maturity period after 2017
→ Switching to a qualitative competition based on product differentiation

■ Development trend of the convenience stores1 ■ Convenience store franchises

Sales Equity
Stores YoY(%) Category Store Major history
(Trillion KRW) structure
ㆍOpened the 1st store in 89Y
Growth Maturity LOTTE ㆍAcquired LOTTE in 94Y
Sales CAGR(2003~2016) Sales CAGR(2017~2021) 11,173 Corporation
14.2% 6.4% Korea (79.66%) ㆍAcquired LAWSON in 00Y
49,539 Seven ㆍAcquired BuyTheWay in 10Y
ㆍOpened the 1st store in 90Y
GS
36,824 15,453 ㆍChanged the brand and corporate
(57.9%)
32,611 name in 05Y (LG25 → GS25)
GS Retail
28.5
BGF (30.0%)
22.3 Hong SukJo ㆍOpened the 1st store in 90Y
20.3 15,816 (7.4%) ㆍChanged the brand and corporate
Relatives name in 12Y (Familymart → CU)
7,200 BGF Retail (17.6%)
ㆍOpened the 1st store in 03Y
emart
29.4% 5,891 ㆍChanged the brand and corporate
(100.0%)
name in 17Y (with me → emart24)
3.6
18.2% Ministop(JP) ㆍOpened the 1st store in 90Y
5.5%
9.7% (96.1%) ㆍAcquired by AEON Group in 04Y
2,602
'03 '16 '17 '21 (E) Mitsubishi(JP) (Daesang → AEON)
(3.9%)

The growth based on differentiation

Quanti- The growth oriented by store expansion Quali-
- open new stores in neighborhood location - Rise in single households and the expansion
tative tative
of value-based consumption
growth - Advancement of the convenience store industry growth
- Food and HMR market growth

1. Source: Korea Association of the Convenience Store Industry 15

Korea Seven : 3 major strategies

A 1stclass convenience store that creates sustainable future value

Future value creation

Overview Sustainable store Competitive products
service

Image

Integrated the lunchbox brand Futuristic Convenience Store

Premium food store, ‘Food Dream’ ‘DT LAB STORE’
‘Han Kki LAB’

ㆍDifferentiation of product composition ㆍImprove quality of lunchbox ㆍAdvanced construction progress

- Lunchbox, instant food, fruits/desserts, - Launching a professional brand & Improving for Seven App
HMR, etc. side dish composition - Chatbot_inventory updates,
- SevenMeal subscription services etc.
ㆍFood Dream : Strategies for the leading ㆍPromotion of 7 new growing categories ㆍReinforcement of differentiated service
Content stores situated in a local area ※ Wine, HMR, fresh foods, desserts, coffee, fried chicken platform
- Expanding specialized stores, quality
- Food, drink, and service platforms - Online order & delivery system. Courier service
improvement, independent brand management
ㆍExpansion of opening larger stores ㆍLaunching mega-hit products ㆍDT LAB Store_ Futuristic convenience store
- Advancement of franchise operation through
- Improvement of the operation & customer’s - Strengthening the taste and quality of products
- Develop trendy PB products digital technology innovation
shopping environment

16
Korea Seven: The acquisition effects of Ministop

 The acquisition of Ministop to strengthen the competitiveness of retail business and create
group synergies
Ministop Overview Acquisition Effects
Operates 2,602 stores in total, Ranked top 5 in Korea
 Improve Gross Margin
Gross - Improve purchase unit price for each product categories by
Ministop
(5%) Margin comparing margin rate for both in Ministop & Korea Seven
Emart24
- Enhancing Profitability by increasing Bargaining Power
(12%)
CU
(31%) Convenience
No. of Stores  Group Synergy
Store
Seven - Increase logistics fees lead to increase in sales of
CU 15,816 Group
Eleven LOTTE Global Logistics
(22%) GS25 15,453 Synergy
- Additional supply to Ministop lead to Increase in sales of
7-eleven 11,173
food-related affiliates
GS25 Emart 24 5,891
(30%) Ministop 2,602
 Retail channel → Lifestyle Platform
· Bigger in size of a store and have a higher sales per Strategic - Expand product range : Fresh food, wine, HMR etc
store than other convenience stores direction
- Offer daily life services : EV charging station, Finance,
· The First “Fresh food + convenience” store Laundry service etc
- Served hot and fresh food(chicken) for the first time in
convenience store since 08Y
- Operating ‘Super bites’ stores specialized in Fast food since 20Y

17
Performance of LOTTE GRS (Consolidated)

 Income Statement  Balance Sheet

[Units : KRW billion] [Units : KRW billion]

Category 4Q 20 4Q 21 YoY 2020 2021 YoY Category 2020 2021 Diff

Asset 844 761 -82

Sales 163 177 +8.4% 683 676 -1.1%
Cash and Cash
189 147 -43
Equivalent1
Operating
-8 -18 - -20 -26 - Liability 616 575 -41
Profit
Borrowings
Income 298 301 3
-8 -43 - -38 -52 - (excluding lease)
before Tax
Equity 228 187 -41
Net Income -12 -34 - -34 -45 -
Debt Ratio 270.1% 307.7% 37.6%p

 Decreased in sales due to the reclassification of

 Decrease in Cash and Cash Equivalent by 43bn KRW
discontinued operation (TGIF, sales volume of 11bn KRW)
- Increased in investment by 20bn KRW
 Increase in Cost of sales due to quality improvement - payment to vendor : 23bn KRW
(Cost of sales ratio 47.8%→51.8%, 4%p↑)
 Change in total number of stores (-60 stores)
 Decrease in Profit compared to 4Q 20
- Rental Deposit decreased by 5bn KRW
- Retirement Cost & Provision for employment benefit -10bn KRW
- Right of use -50bn KRW, Lease liability -28bn KRW
- Asset Impairment loss -4bn KRW
- Gain on asset disposal (20Y 12bn KRW, 21Y -1bn KRW)
 Asset to be sold decreased by 4bn KRW
1. 현금및현금성자산: 현금및현금성자산, 단기금융상품 18
LOTTE GRS : LOTTERIA

 QSR Industry : Average annual growth of 7.4%, change in consumption trend due to
pandemic in 2021 * QSR : Quick Service Restaurant
■ QSR Stores (Units : Store, %)
■Current Trend

Category
No. of stores
10Yr CAGR
 The hamburger market will experience consistent growth in
as of 20Y the future
Market
LOTTERIA 1,330 3.3 - Change in the consumption trend : increased delivery and contactless
Situation consumption
McDonald 408 5.0
- High possibility of recovering the number of in-store customers after
Burger King 408 14.7
the pandemic
Mom’s touch 1,327 19.1  Intensified competition within the hamburger market
KFC 189 2.8 - Consistent emergence of new players
POPEYES 15 -21.3 - Aggressive stores expansion by post players
Total 3,677 7.4 - Competition in delivery : continuous expansion of QSR delivery stores
(Source : Company Website, No of Lotteria stores at the end of 4Q21 are 1,326)

Enhancing Product Power Improving Customer

Advancing Brand Power
And cost effectiveness Satisfaction

· Re-establishment of ㆍ Increase cost effectiveness of the ㆍ Expanding brand experience

marketing/Brand strategy flagship burger → Opening of landmark stores
Strategy
→ brand oriented advertising (K-burger) ㆍ Store Improvement(renewal)
→ Reinforcement of the flagship ㆍ Strengthening product quality → Improvement of low efficiency stores

burger brand (Bulgogi Burger) → Improvement of ingredient quality ㆍ Reinforcement of customer

loyalty and target marketing

Establish Store Foundation and Strengthen Brand Power → Improve sales per store
19
LOTTE GRS : Angel-in-us

 Café industry : Average annual growth of 11.7%, decrease in sales due to the pandemic
■ Café stores (Units: Store, %) ■ Current trend
No. of stores
Category 10Yr CAGR
as of 20Y  A slowdown in growth in the past 3 years (5.6%)
Angel-in-us 513 -0.6
Market  Clear dichotomy between premium and low end market
Starbucks 1,508 16.0
Situation  Need to secure competitiveness through additional menus
Twosome 1,381 23.5
Hollys 597 7.0  Provide a space to form a customer community (premium)
EDIYA 2,825 23.4
Pascucci, etc. 1,101 0.8  Reduced sales in 2021 due to the pandemic (business
restrictions, quarantine lifestyle) (-40~45%)
Total 7,925 11.7
(Source : Company Website, No. of ‘Angel in us’ stores as of 4Q21 are 458)

Expand Customer
Enhancing Brand Power Enhancing Product Power
Contact Points
ㆍ Promote Coffee excellence ㆍ Expansion of new stores
ㆍIncrease No. of Landmark store - operation of roastery ㆍ Expansion of Franchisee
Strategy
and strengthening publicity - broaden range of selection - support opening cost

- A’lement store, LAB1004, ㆍ Product diversification - offer broad range of store selection
Lotte Outlet time villas etc. - Diversify side menu ㆍ Reinforcement of customer
(desert, salad, sandwich, bakery) loyalty and target marketing

Strengthening Brand Image through Positive Brand experience → Expansion of new stores
20
LOTTE GRS : Angel-in-us

1) Angel in us x Chef Yoon’s Bakery (Renewed June 21) 2) A’lement DongTan Store (Opened Aug 21)
- Collaboration with Chef Yoon’s Bakery - Cultural complex + Eco Friendly Store
- Increased incoming customers seek for bakery (Enhance ESG)
ㆍVegan Mug, Bamboo Tooth brush
Eco
Friendly
Product

ㆍ’NO Plastic’ : Paper cups/straw,

Eco Wooden Forks etc
Friendly
Disposables

3) LOTTE outlet Time Villas (Opened Sep 21) 4) LAB1004 (Opened Oct 21)

- New BI + Specialized in sandwich and salad - Roastery + laboratory Store (Test and Training Center)

Product ㆍTest newly produced product

For sale ㆍWide variety of Sandwich & salad

Eco Friendly
ㆍNo Logo and No Plastic
Disposables

ㆍSupply Coffee beans after

Roastery
roasting to all angel in us stores

21
LOTTE GRS : Angel-in-us

5) LOTTEWORLD Mall B1 (Opened Dec 21) 6) HONGDAE L7 (Opened Jan 22)

- Landmark of Jamsil + Art Gallery - Healing in the city + Specialized in Sandwich & salad
- Showcase Store : variety concepts of store
- Improve Customer Experience
→ strategies to attract franchisees

Store Area
(430m2)

7) Island (Opened Jan 22)

- Healing in the city + Specialized in Sandwich & salad
ㆍOperating Roastery & Flagship menus
Specialized ㆍUse of local product :
MD - Cup fruits, RTE berry-ades etc

ㆍFlagship Coffee & Drinks ㆍSell and display famous pottery

ㆍCollaboration with Bakery store ㆍCollaboration with Bakery store
Operating ㆍOrder-made sandwich & salad
Menu Bakery
- HOT & COLD Sandwich
- Fresh Salad and variety of toppings
[바질&치즈깜빠뉴] [딸기몽블랑] [천사의 날개] [버터 프레첼]

22
 2021 ESG Performance

 LOTTE is engaging in ESG management in a more systematic and active way

Declaration of Establishment of ESG performance Enhancing External
ESG management ESG management management communication

 Carbon Neutral by 2040
 Reflection of ESG performance
 Operation of ESG oriented team
 Establishment of ESG Committee
under the boards
 Establishment of ESG rating
system
- Listed affiliates1) : Evaluate ESG
performance based on MSCI
 Publication of sustainability
report
- 2021 (6 affiliates) / 2022(4 affiliates)

in CEO’s KPI - Lotte corporation held its first
ESG committee on Nov 2021
 Becoming a global leader in
 Operation of ESG consulting
group & held sustainability
ESG, 2025 seminar
 Establishment of ESG R&R
→ The first conglomerate where all listed
- Unlisted affiliates2) : ESG performance
affiliates have established ESG committee

based on KCGS
include ESG performance & published sustainability report
indicator to Group KPI (From
2022)  Diversification of
→ to be expanded to all Lotte affiliates
communication channel

Establishment of preemptive ‘ESG Risk management’

1) Confectionery, Food, Chilsung Beverage, Chemical, Fine Chemical, Shopping, Data Communicaation, Himart, Rental, + 2 unlisted affiliates : Construction, Hotel(Hotel, Resorts, Duty Free, World)
2) LGL, Home Shopping, Cinema, K7, Capital, Property and development, Hotel-busan, Aluminium, GRS, Daehong Communications
3) MSCI (Morgan Stanley Capital International)
23
 2021 ESG Achievement

 Quick-wins through the strategic ESG management → KCGS & MSCI have upgraded ESG Rating of Lotte

Updates of ESG rating

·9 listed affiliates of LOTTE have received KCGS ESG rating of ‘A’

ESG Rating of
- placed in the top 25% among 765 domestic companies in total Lotte Group have upgraded

KCGS1) 21年 Upgraded

A 100% ESG rating Main attributions
67% (9 affiliates)
grade (6 affiliates) (From B+ to A )
Lotte corporation,
`20Y `21Y Chemical, Chilsung Environment Mgmt
(Carbon Neutral etc)

·MSCI upgrades ESG rating of main affiliates of LOTTE (Chemical,Shopping)

- ESG grade of LOTTE is higher than its peer group Enhanced disclosure
- Expecting Continuous improvement in ESG rating (Sustainability Report etc)

MSCI2) Categories `21年 `20年 Peer Group

Chemical BBB (↑) BB LG Chemical (BBB)

Improved Governance
(ESG committee etc)
Shopping BB (↑) B Shinsegae(B)

Fine Chem B (-) B OCI(BB), KCC(CCC)

1) KCGS (Korea Corporate Governance Service) 2) MSCI (Morgan Stanley Capital International) 24
2021 ESG Program
Environmental
Resource Circulation Project
• Eco friendly packaging (label free)
• Building a virtuous cycle of recycling
plastics
Activating Green Mgmt.
• Greenhouse gas emission mgmt.
• Expansion of energy mgmt. system
Issued Green Bonds
• Purpose of build and developing
eco-friendly building
• Issued 60bn KRW in2021
LOTTE Group has been carrying out diverse ESG activities to meet the recently prevalent ESG trend
Social
Innovative/tolerable mgmt.
• Respecting human rights & diversity
- Launched CSR brand “EasyMom”
for women raising children
Mutual Growth & Coexistence
• Provide advance payment
• Operating “shared growth fund” to
support partners
Expansion of Social Contributions
• Lifetime Value Creator
- Youth libraries for Korean Army
Governance
Governance Stabilization
• Organizing transparent mgmt and
Securing independence of BOD
selection process
Transparent & Ethical Mgmt.
• Rewrote and enforced
LOTTE’s Code of Conduct
Governance Systematization
• Established ESG committee under BOD
• Reflection of ESG performance
indicator to CEO’s KPI
• Expansion of sustainability reports
25
[APPENDIX] IR Website of LOTTE Group’s Listed Companies

Category IR Website

LOTTE Corp. https://www.lotte.co.kr/ir/irRefList.do

Confectionery https://www.lotteconf.co.kr/invest/ir

Chilsung https://company.lottechilsung.co.kr/kor/invest/irreport/list.do

Food http://www.lottefoods.co.kr/company/investment/ir_list.asp

Shopping http://www.lotteshoppingir.com/data/data_01.jsp

Himart https://company.himart.co.kr/ir/ir/presentation

Chemical https://www.lottechem.com/ko/ir/ir_archive.do

Fine Chem https://www.lottefinechem.com/information/IR

Data
https://www.ldcc.co.kr/company/investment/newir
Communication

REIT http://www.lottereit.co.kr/ir.html

26
[APPENDIX] Separated Financial statement for 2021

■ Balance Sheet ■ Income Statement

[Units : KRW billion] [Units : KRW billion]
Category 2020 4Q 21 Diff. Category 4Q 20 4Q 21 YoY 2020 2021 YoY
Current Asset 703 697 -6 Operating
33 40 19.2% 290 251 -13.5%
Cash &Equivalents 44 57 12 Revenue

Others 659 641 -18 Cost of Operating 38 48 25.0% 127 139 9.7%
Non Current Asset 7,233 7,607 374
PP&E 88 195 107 Operating Profit -5 -8 - 163 112 -31.4%
Intangible Assets 25 24 -1
Right of use 33 74 41 Financial Income 15 23 55.1% 39 82 110.8%
Others 7,087 7,314 227
Financial Expense 42 3 -92.1% 86 109 26.5%
Total Assets 7,936 8,304 368
Current Liabilities 876 1,037 161
Other Income 75 77 2.8% 140 85 -39.1%
Borrowings & Bonds 715 950 235
Others 161 87 -74 Other Expense 428 193 -54.9% 595 221 -62.9%
Non Current Liabilities 2,025 2,338 313
Income before
Borrowings & Bonds 1,657 1,842 185 -385 -105 - -339 -50 -
Tax
Others 369 496 128
Income Tax
Total Liabilities 2,901 3,375 474 -11 -10 - -32 -14 -
Expense
Total Equity 5,035 4,929 -106
Net income -374 -94 - -307 -36 -
Debt Ratio (%) 57.6% 68.5% 10.8%p

27
[APPENDIX] Consolidated Financial Statement for 2021

■ Balance Sheet ■ Income Statement

[Units : KRW billion] [Units : KRW billion]

Category 2020 2021 Diff. Category 4Q 20 4Q 21 YoY 2020 2021 YoY

Current Asset 4,903 4,772 -130 Sales 2,378 2,472 3.9% 9,087 9,925 9.2%
Cash &Equivalents 900 1,394 495
Cost of Sales 1,772 1,836 3.6% 6,595 7,297 10.7%
Others 4,003 3,378 -625
Gross Profit 607 636 4.9% 2,492 2,628 5.4%
Non Current Asset 11,777 15,149 3,372
S&A Expenses 608 648 6.7% 2,336 2,411 3.2%
PP&E 6,214 6,478 264
Intangible Assets 4,305 7,080 2,775 Operating Profit -1 -12 - 156 216 38.5%

Others 1,258 1,592 333 Financial Income 40 33 -16.5% 91 135 48.0%

Total Assets 16,680 19,922 3,242 Financial Expense 81 21 -73.4% 229 199 -13.3%
Current Liabilities 4,745 4,567 -178 142 466 228.9% 420 592 41.1%
Other Income
Borrowings & Bonds 1,686 2,074 388
Other Expense 258 834 223.0% 471 904 92.2%
Others 3,060 2,493 -567
Gain/Loss Valuation
-161 -140 - -257 229 -
Non Current Liabilities 4,103 5,726 1,622 on Equity Method
Borrowings & Bonds 2,944 4,149 1,205 Income before Tax -320 -509 - -290 69 -

Others 1,160 1,577 417 Income Tax Expense -25 -132 - -51 -81 -
Total Liabilities 8,849 10,293 1,444 Net Income -295 -377 - -239 150 -
Total Equity 7,831 9,629 1,798 Net income on
Controlling -234 -129 - -198 309 -
Debt Ratio (%) 113.0%p 106.9%p -6.1%p shareholder
28