Four subsidiaries of Lotte Group -- Lotte Confectionary, Lotte Shopping, Lotte Chilsung and Lotte Food -– announced in a public disclosure on August 17 that they will more than double their dividend payout ratios in order to raise shareholder value and will implement a mid-dividend payment plan ahead of converting into a holding company to enhance shareholder value.
Their average dividend payout ratios over the past two years were 12 to 13%, so are expected to rise to 30% in the future. A dividend payout ratio is the ratio of dividends to net profit.
Previously, in April, the four companies’ boards of directors resolved to split and merge themselves to convert into a holding company. If the companies are converted into a holding company structure, shares of affiliates owned by four companies including Lotte Confectionary will be disposed and most of the circular shareholdings links will be removed.
The Lotte Group is planning to launch Lotte Group Co., an integrated corporation through the four companies’ general shareholders meeting on August 29.
The holding company will play the roles of management evaluation, business support and brand license management to enhance the corporate value of subsidiaries.
"The measures to enhance shareholder value are showing Lotte Group's strong will to strengthen shareholder-oriented management," said Hwang Gak-gyu, a managing director of the Lotte Group. “We will make every effort to ensure that there is no disruption to their conversion into a holding company."