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DD-MERIDIAN PARKDEVELOPMENT CORP.(A Subsidiary of DoubleDragon Properties Corp.)INTERIM FINANCIAL STATEMENTSAs at September 30, 2020 and December 31, 2019 andFor the Nine Months Ended September 30, 2020 and 2019Wi h I de e deA diRet
R.G. Manabat & Co.The KPMG Center, 9/F6787 Ayala Avenue, Makati CityPhilippines 1226Telephone 63 (2) 8885 7000Fax 63 (2) 8894 omREPORT OF INDEPENDENT AUDITORSThe Board of Directors and StockholdersDD-Meridian Park Development Corp.DD Headquarters, 10th Floor, Tower 1, DoubleDragon PlazaDD Meridian Park Corner Macapagal Avenue & EDSA ExtensionBay Area, Pasay City, Metro ManilaOpinionWe have audited the interim financial statements of DD-Meridian Park DevelopmentCorp. ( he C m a ), a b idiaf D bleD ag P e ie C ., hich c m i ethe interim statements of financial position as at September 30, 2020 and December 31,2019, and the interim statements of comprehensive income, interim statements ofchanges in equity and interim statements of cash flows for the nine months endedSeptember 30, 2020 and 2019, and notes, comprising significant accounting policiesand other explanatory information.In our opinion, the accompanying interim financial statements present fairly, in allmaterial respects, the financial position of the Company as at September 30, 2020 andDecember 31, 2019, and its financial performance and its cash flows for the nine monthsended September 30, 2020 and 2019 in accordance with Philippine Financial ReportingStandards (PFRS).Basis for OpinionWe conducted our audits in accordance with Philippine Standards on Auditing (PSA).Our responsibilities under those standard a e f he de c ibed i he A diResponsibilities for the Audit of Interim the Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics forProfessional Accountants in the Philippines (Code of Ethics) together with the ethicalrequirements that are relevant to our audits of the interim financial statements in thePhilippines, and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.Firm Regulatory Registration & Accreditation:PRC-BOA Registration No. 0003, valid until November 21, 2023SEC Accreditation No. 0003-SEC, Group A, valid for five (5) years covering the audit of 2020 to 2024financial statements (2019 financial statements are covered by SEC Accreditation No. 0004-FR-5)IC Accreditation No. 0003-IC, Group A, valid for five (5) years covering the audit of 2020 to 2024financial statements (2019 financial statements are covered by IC Circular Letter (CL) No. 2019-39, Transition clause)BSP Accreditation No. 0003-BSP, Group A, valid for five (5) years covering the audit of 2020 to 2024financial statements (2019 financial statements are covered by BSP Monetary Board Resolution No. 2161, Transition clause)R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firmsaffiliated with KPMG International Limited, a private English company limited by guarantee
Responsibilities of Management and Those Charged with Governance for the InterimFinancial StatementsManagement is responsible for the preparation and fair presentation of the interimfinancial statements in accordance with PFRS, and for such internal control asmanagement determines is necessary to enable the preparation of interim financialstatements that are free from material misstatement, whether due to fraud or error.In preparing the interim financial statements, management is responsible for assessinghe C m aabilic i e a a g i g c ce , di cl i g, a applicable, mattersrelated to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations, or has norealistic alternative but to do so.Those charged with governance are responsible for overseei g he C m afinancial reporting process.A di oReinterimon ibili ie fo the Audit of the Interim Financial StatementsOur objectives are to obtain reasonable assurance about whether the interim financialstatements as a whole are free from material misstatement, whether due to fraud ore,a d ie a a dieha i cl der opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted inaccordance with PSA will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these interim financial statements.As part of an audit in accordance with PSA, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:Identify and assess the risks of material misstatement of the interim financialstatements, whether due to fraud or error, design and perform audit proceduresresponsive to those risks, and obtain audit evidence that is sufficient and appropriateto provide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations or the override ofinternal control.Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances, but not for the purposeof expressing an i ihe effec i e ef he C m ai e al cl.Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.Conclude on the appropriateness of managemee f he g i g c ce ba iof accounting and, based on the audit evidence obtained, whether a materialuncertainty exists related to events or conditions that may cast significant doubt onhe C m aabilic i e a a g i g c ce . If we conclude that a materialuncertainty exists, we are required to d a a e i ia dieherelated disclosures in the interim financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidenceb ai edhe da e fa die. However, future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the interim financialstatements, including the disclosures, and whether the interim financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.We communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that we identify during our audit.R.G. MANABAT & CO.DARWIN P. VIROCELPartnerCPA License No. 0094495SEC Accreditation No. 94495-SEC, Group A, valid for five (5) yearscovering the audit of 2019 to 2023 financial statementsTax Identification No. 912-535-864BIR Accreditation No. 08-001987-031-2019Issued August 7, 2019; valid until August 6, 2022PTR No. MKT 8116787Issued January 2, 2020 at Makati CityDecember 11, 2020
DD-MERIDIAN PARK DEVELOPMENT CORP.(A Subsidiary of DoubleDragon Properties Corp.)INTERIM STATEMENTS OF FINANCIAL POSITIONNoteSeptember 302020December 31201956, 953,386,93538,146,890,505ASSETSCurrent AssetsCash and cash equivalentsReceivablesDue from Parent CompanyPrepaid expenses and other current assetsTotal Current AssetsNoncurrent AssetsProperty and equipment - netInvestment propertyOther noncurrent assets8910Total Noncurrent AssetsP45,555,074,630 P42,270,538,795LIABILITIES AND EQUITYCurrent LiabilitiesAccounts payable and other current liabilitiesDividends payableDue to related partiesIncome tax payable1115Total Current LiabilitiesNoncurrent LiabilitiesDeferred tax liability - netOther noncurrent liabilities1712Total Noncurrent LiabilitiesTotal LiabilitiesEquityCapital stockRetained earningsTotal 87P45,555,074,630 P42,270,538,795See Notes to the Interim Financial Statements.
DD-MERIDIAN PARK DEVELOPMENT CORP.(A Subsidiary of DoubleDragon Properties Corp.)INTERIM STATEMENTS OF COMPREHENSIVE INCOMEFOR THE NINE MONTHS ENDEDSEPTEMBER 30, 2020 AND 2019Note20202019INCOMEUnrealized gains from changes in fair values ofinvestment property9Rent income9, 12, 16Interest income5Other 94,725,329COST AND EXPENSESGeneral and administrative expensesInterest expenseMarketing expenses141213INCOME BEFORE INCOME TAXINCOME TAX EXPENSE17NET INCOME AND TOTAL COMPREHENSIVEINCOMEBASIC AND DILUTED EARNINGS PER SHAREATTRIBUTABLE TO THE EQUITY HOLDERSOF THE COMPANYSee Notes to the Interim Financial 25P0.99
DD-MERIDIAN PARK DEVELOPMENT CORP.(A Subsidiary of DoubleDragon Properties Corp.)INTERIM STATEMENTS OF CHANGES IN EQUITYFOR THE NINE MONTHS ENDEDSEPTEMBER 30, 2020 AND 2019NoteCAPITAL STOCK - P1 par valueAuthorized - 17,830,000,000 sharesIssued and outstanding - 17,827,465,406 sharesin 2020 and 5,348,274,622 shares in 2019Subscribed - 12,479,190,784 shares in 2019, netof subscription receivableRETAINED EARNINGSBalance at beginning of periodNet income/total comprehensive income for theperiodDividends declaredBalance at end of period2020201918 ,208(786,191,225)12,623,500,604P35,161,907,002 P29,063,453,433See Notes to the Interim Financial Statements.
DD-MERIDIAN PARK DEVELOPMENT CORP.(A Subsidiary of DoubleDragon Properties Corp.)INTERIM STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS ENDEDSEPTEMBER 30, 2020 AND 2019NoteCASH FLOWS FROM OPERATING ACTIVITIESIncome before income taxAdjustments for:Unrealized gains from changes in fair values ofinvestment property9Interest expense12Interest income5Depreciation and amortization8, 10, 14Operating income before working capital changesDecrease (increase) in:ReceivablesDue from Parent CompanyPrepaid expenses and other current assetsIncrease (decrease) in:Accounts payable and other current liabilitiesDue to related partiesOther noncurrent liabilitiesCash generated from operationsInterest receivedIncome tax paidNet cash provided by operating activitiesCASH FLOWS FROM INVESTING ACTIVITIESAdditions to investment propertyDecrease in other noncurrent assetsAcquisition of property and equipment98Net cash used in investing activitiesCASH FLOWS FROM FINANCING ACTIVITIESCollection of subscription receivableDividends paid1818Net cash provided by (used in) financing activitiesNET INCREASE (DECREASE) IN CASHAND CASH EQUIVALENTSCASH AND CASH EQUIVALENTSAT BEGINNING OF PERIODCASH AND CASH EQUIVALENTSAT END OF PERIODSee Notes to the Interim Financial 75P1,459,002,928P1,708,981,663
DD-MERIDIAN PARK DEVELOPMENT CORP.(A Subsidiary of DoubleDragon Properties Corp.)NOTES TO THE INTERIM FINANCIAL STATEMENTS1. Reporting EntityDD-Meridian Park De el meC . ( he C m a ) as incorporated andregistered with the Philippine Securities and Exchange Commission (SEC) onOctober 27, 2014 primarily to engage in the business of real estate developmentincluding but not limited to residential and condominium projects, to acquire bypurchase or lease land and interest in land, to own, hold, impose, promote, develop,subdivide and manage any land owned, held or occupied by the Company, toconstruct, manage or administer buildings such as condominiums, apartments,hotels, restaurants, stores or other structures and to mortgage, sell, lease orotherwise dispose of land, interests in land and buildings or other structures at anytime. The Company is incorporated primarily to construct DD Meridian Park, a4.75 hectare ongoing, mixed-use development real estate property situated in PasayCity (Note 9).The Company is a 70%-owned subsidiary of DoubleDragon Properties Corp.( DDPa e C m a ), a domestic corporation primarily engaged in thebusiness of real estate development and real estate investment. DD became apublicly-listed company on April 7, 2014. DD is also the ultimate parent of theCompany.On November 11, 2020, the Board of Directors (BOD) and shareholders approved tooffer, subject to compliance with existing laws, and the rules and regulations of theSEC, up to 5,942,488,469 secondary common shares, with an over-allotment optionup to 594,248,847 secondary common shares through an initial public offering at theprice up to P2.25 per share. On November 23, 2020, the Company filed itsRegistration Statement with the SEC covering its initial public offering. As atDecember 11, 2020, the Company is in the process of obtaining approvals with theSEC.On the same date, the BOD and shareholders approved to amend the Company sArticles of Incorporation (AOI). Relevant amendments include:Change in the Company s name to DDMP REIT, Inc;Amendment of the primary purpose of the Company. The amended primarypurpose of the Company is now:To engage in the business of a real estate investment trust (REIT), asprovided under Republic Act No. 9856 (the Real Estate Investment Trust Actof 2009), including its implementing rules and regulations (the REIT Act ),and other applicable lawsChange of corporate term to perpetual existence;Increase in the number of BOD to nine (9) and inclusion of independentdirectors;Compliance with the lock-up requirements under the Listing Rules of thePhilippine Stock Exchange, Inc.;Removal of the contractual restrictions on the disposition of shares; andInclusion of additional restriction on transfer of shares as provided under REITAct.On November 16, 2020, the SEC approved the amendment of the Company s AOI.
The Company s office address is DD Headquarters, 10th Floor, Tower 1,DoubleDragon Plaza, DD Meridian Park Corner Macapagal Avenue and EDSAExtension, Bay Area, Pasay City, Metro Manila.2. Basis of PreparationStatement of ComplianceThe accompanying interim financial statements have been prepared in compliancewith Philippine Financial Reporting Standards (PFRS). PFRS are based onInternational Financial Reporting Standards (IFRS) issued by the InternationalAccounting Standards Board (IASB). PFRS consist of PFRS, Philippine AccountingStandards (PAS), and Philippine Interpretations.Authorization for Issuance of the Interim Financial StatementsThe interim financial statements were approved and authorized for issuance by theBoard of Directors (BOD) on December 11, 2020.Basis of MeasurementThe interim financial statements have been prepared using the historical cost basisof accounting, except for investment property which is measured at fair value.Functional and Presentation CurrencyThe interim financial statements are presented in Philippine peso, which is theCompafunctional currency. All financial information expressed in Philippine pesohas been rounded off to the nearest peso, unless otherwise stated.3. Summary of Significant Accounting PoliciesThe accounting policies set out below have been applied consistently to all theperiods presented in these interim financial statements, except for the changes inaccounting policies as explained below.Adoption of New or Revised Standards, Amendments to Standards and InterpretationsThe Company has adopted the following new or revised standards, amendments tostandards and interpretations starting January 1, 2020 and accordingly, changed itsaccounting policies. Except as otherwise indicated, the adoption did not havesignificant impact on the C m ainterim financial statements. The Company hasnot early adopted any standards, interpretations or amendments that have beenissued but are not yet effective.Amendments to References to Conceptual Framework in PFRS set outamendments to PFRS, their accompanying documents and PFRS practicestatements to reflect the issuance of the revised Conceptual Framework forFinancial Reporting in 2018 (2018 Conceptual Framework). The 2018Conceptual Framework includes: (a) a new chapter on measurement; (b)guidance on reporting financial performance; (c) improved definitions of an assetand a liability, and guidance supporting these definitions; and (d) clarifications inimportant areas, such as the roles of stewardship, prudence and measurementuncertainty in financial reporting.-2-
Some standards, their accompanying documents and PFRS practice statementscontain references to, or quotations from, the International Accounting StandardsCommittee F ame ork for the Preparation and Presentation of FinancialStatements adopted by the International Accounting Standards Board (IASB) in2001 or the Conceptual Framework for Financial Reporting issued in 2010. Theamendments update some of those references and quotations so that they referto the 2018 Conceptual Framework and make other amendments to clarify whichversion of the Conceptual Framework is referred to in particular documents.Definition of Material (Amendments to PAS 1, Presentation of FinancialStatements, and PAS 8, Accounting Policies, Changes in Accounting Estimatesand Errors). The amendments refine the definition of what is considered material.The amended definition of what is considered material states that suchinformation is material if omitting, misstating or obscuring it could reasonably beexpected to influence the decisions that the primary users of general purposefinancial statements make on the basis of those financial statements, whichprovide financial information about a specific reporting entity. The amendmentsclarify the definition of what is considered material and its application by:(a) raising the threshold at which information becomes material by replacing thee m c ld i fl e cei h c ld eaabl be e ected to infl e ce ;(b) i cl di g he c cef b c i g i forma ial g ide the concept ofmi i g a d mi a i g information in the definition; (c) clarifying that the usersto which the definition refers are the primary users of general purpose financialstatements referred to in the Conceptual Framework; (d) clarifying theexplanatory paragraphs accompanying the definition; and (e) aligning thewording of the definition of what is considered material across PFRS and otherpublications. The amendments are expected to help entities make bettermateriality judgments without substantively changing existing requirements.New and Amended Standards and Interpretation Not Yet AdoptedA number of new and amended standards and interpretation are effective for annualperiods beginning after Jan
R.G. Manabat & Co. The KPMG Center, 9/F 6787 Ayala Avenue, Makati City Philippines 1226 Telephone 63 (2) 8885 7000 Fax 63 (2) 8894 1985
