QUILAB & GARSUTA C E R T I F I E D P U B L I C A C C O U N T A N T S

quilabgarsuta.com

Financial Statements of

Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) December 31, 2019 and 2018

And Report of Independent Auditors

STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) is responsible for the preparation and fair presentation of its financial statements for the years ended December 31, 2019 and 2018, in accordance with Philippine Financial Reporting Framework for Cooperatives (PFRF for Cooperatives), 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. In preparing the financial statements, management is responsible for assessing the Cooperative’s ability to continue as a going concern, disclosing (as applicable) matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Cooperative or to cease operations, or has not realistic alternative but to do so. The Board of Directors is responsible for overseeing the Cooperative’s financial reporting process. The Board of Directors reviews and approves the financial statements and submits the same to the members of the Cooperative. Quilab & Garsuta, CPAs, appointed by the Board of Directors for the periods December 31, 2019 and 2018, have audited the financial statements of the Cooperative in accordance with Philippine Standards on Auditing, and in their reports to the Board of Directors and members, have expressed their opinions on the fairness of presentation upon completion of such audits. February 7, 2020, Bugo, Cagayan de Oro City, Philippines. MR. ROLANDO R. JARDIOLIN JR. MR. JONATHAN I. TABANERA Chairperson, Board of Directors Chairperson, Audit Committee

MS. DAISY C. GAMOTIN Manager

C e r t i f i e d   P u b l i c  A c c o u n t a n t s  

 

qui l abga r su ta . c om

AccreditationsPRC/BOA  7787  07.05.20  

SEC  Group  C  0358‐F  07.15.21  

BIR  16‐007506‐000‐2019  2.15.22  

NEA  2017‐10‐0043  10.09.20  

IC  2017‐004‐O  12.07.20  

BSP  Group  B  07.31.20  

CDA  119‐AF  10.17.20  

MISEREOR  

QUILAB & GARSUTA

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Members Del Monte Philippines Incorporated Employees and Community

Credit Cooperative (DMPI-ECCC) Opinion We have audited the financial statements of Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC), which comprise the statements of financial condition as at December 31, 2019 and 2018, and the statements of operations, statements of changes in equity and statements of cash flows for the years then ended, and notes to financial statements comprising of a summary of significant accounting policies and other explanatory notes. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial condition of Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) as of December 31, 2019 and 2018, and of its financial performance and its cash flows for the years then ended in accordance with Philippine Financial Reporting Framework for Cooperatives (PFRF for Cooperatives). Basis for Opinion We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Cooperative in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with PFRF for Cooperatives 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. In preparing the financial statements, management is responsible for assessing the Cooperative’s ability to continue as a going concern, disclosing (as applicable) matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Cooperative or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Cooperative’s financial reporting process. Auditors’ Responsibilities for the Audits of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

QUILAB & GARSUTA, CPAs

- 2 -

CAGAYAN DE ORO CITY OFFICE: 2F, Executive Centrum Building, J. R. Borja Street, 9000 Contact Addresses: (088) 856-4401, 231-6365, (08822) 72-7515, qcb_co@yahoo.com, ricopquilab@gmail.com GENERAL SANTOS CITY OFFICE: MF, RDRDC Building, Pioneer Avenue, 9500 Contact Addresses: (083) 552-4043, 09175966762, fhg@quilabgarsuta.com, fgarsuta@yahoo.com

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Cooperative’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Cooperative’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Cooperative to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.

PTR No. 4556063 A January 2, 2020 Cagayan de Oro City

February 7, 2020 Cagayan de Oro City, Philippines

STATEMENTS OF FINANCIAL CONDITION Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) December 31 2019 2018

ASSETS

Current Assets Cash and cash equivalents (Note 4) P=73,201,934 P=56,301,474 Loans and other receivables (Note 5) 44,919,013 39,756,572 Prepayment and other current assets (Note 6) 412,974 366,331 Total Current Assets 118,533,921 96,424,377 Non-Current Assets Loans receivable (Note 5) 270,366,200 276,190,397 Financial assets (Note 7) 84,689,468 80,592,252 Property and equipment (Note 9) 8,354,527 8,912,590 Retirement plan assets – net (Note 12) 6,048,552 5,574,241 Total Non-Current Assets 369,458,747 371,269,480 P=487,992,668 P=467,693,857 LIABILITIES AND MEMBERS’ EQUITY Current Liabilities Members’ deposits (Note 10) P=194,729,328 P=187,911,072 Interest on share capital and patronage refund payable (Note 17) 32,479,451 31,147,094 Trade and other payables (Note 11) 6,249,362 5,745,317 Total Current Liabilities 233,458,141 224,803,483 Members' Equity Share capital (Note 13) 200,384,138 193,885,384 Statutory reserves (Note 14) 54,150,389 49,004,990 Total Members’ Equity 254,534,527 242,890,374 P=487,992,668 P=467,693,857 See Notes to Financial Statements.

STATEMENTS OF OPERATION Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) Years Ended December 31 2019 2018 REVENUE Savings and Credit Operations Interest income on loans (Note 5) P=41,530,009 P=41,141,003 Interest paid on members’ deposits (Note 10) (6,158,058) (6,112,924) Net 35,371,951 35,028,079 Service fees on loans (Note 5) 5,144,509 5,787,013 Fines, penalties and surcharges (Note 5) 3,446,492 3,281,011 Provision for probable loan losses (Note 5) (500,000) (500,000) Gross Income from Savings and Credit Operations 43,462,952 43,596,103 Interest income from deposits and investments (Notes 4, 7 and 12) 7,340,968 2,971,433 Other income (Note 15) 152,034 593,824 GROSS INCOME 50,955,954 47,161,360 OPERATING EXPENSES Salaries, wages and employees’ benefits (Note 16) 3,661,052 3,693,959 Members’ benefits 1,875,730 1,698,510 General Assembly, Board and other meetings 1,653,579 1,394,792 Retirement benefit contributions (Note 12) 958,331 300,000 Depreciation (Note 9) 620,643 604,342 Light and power 349,011 563,021 General support services 280,191 264,818 Stationery and supplies 157,056 154,172 Professional fees 144,900 162,900 Insurance 127,286 24,035 Communication 93,462 92,520 Transportation and travel 27,842 31,930 Miscellaneous 534,131 272,294 Total Operating Expenses 10,483,214 9,257,293 SURPLUS FROM OPERATION 40,472,740 37,904,067 SUBSIDY FROM OPTIONAL FUND (Note 14) 126,573 126,573 UNDISTRIBUTED NET SURPLUS P=40,599,313 P=38,030,640 DISTRIBUTION OF NET SURPLUS (Note 17) Statutory funds (Note 14) P=7,104,879 P=5,932,780 CETF Payable (Note 11) 1,014,983 950,766 Interest on share capital and patronage refund 32,479,451 31,147,094 P=40,599,313 P=38,030,640 See Notes to Financial Statements.

STATEMENTS OF CHANGES IN EQUITY Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) December 31 2019 2018

SHARE CAPITAL (Note 13) Ordinary Shares Opening balances P=117,817,000 P=112,912,000 Net transactions during the year 1,637,000 4,905,000 Closing balances 119,454,000 117,817,000 Preference Shares Opening balances 76,068,000 71,379,000 Net transactions during the year 4,861,000 4,689,000 Closing balances 80,929,000 76,068,000 Deposits for Future Subscriptions 1,138 384 Total Share Capital 200,384,138 193,885,384 STATUTORY RESERVES (Note 14) Opening balances 49,004,990 45,508,324 Distribution of net surplus during the year (Note 17) 7,104,879 5,932,780 Subsidies and expenses during the year (Note 14) (1,959,480) (2,436,114) Closing balances 54,150,389 49,004,990 P=254,534,527 P=242,890,374 See Notes to Financial Statements.

STATEMENTS OF CASH FLOWS Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) Years Ended December 31 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Undistributed net surplus P=40,599,313 P=38,030,640 Add (deduct) adjustments for: Depreciation (Note 9) 620,643 604,342 Provision for retirement benefits (Note 12) 958,331 300,000 Provision for probable loan losses (Note 5) 500,000 500,000 Interest income on deposits and investments (Notes 4, 7 and 12) (7,340,968) (2,971,433) Operating income before changes in working capital 35,337,319 36,463,549 Add (deduct) changes in working capital excluding cash: Decrease (increase) in: Loans and receivables (Note 5) 161,756 (3,212,948) Prepayment and other current assets (Note 6) (46,643) (36,922) Increase (decrease) in: Members’ deposits (Note 10) 6,818,256 1,451,415 Trade and other payables (Note 11) 504,046 (698,242) Interest on share capital and patronage refund payable (Note 17) 1,332,356 (2,563,786) Net Cash Provided from Operating Activities 44,107,090 31,403,066 CASH FLOWS FOR INVESTING ACTIVITIES Additions to property and equipment – net (Note 9) (62,580) (78,345) Increase in retirement plan assets (Note 12) (474,311) (1,356,296) Increase in financial assets (Note 7) (4,097,216) (4,791,145) Interest income on deposits and investments (Notes 4 and 7) 7,340,968 2,971,433 Increase in retirement benefit obligation during the year - net (Note 12) (958,331) (300,000) Net Cash Used for Investing Activities 1,748,530 (3,554,353) CASH FLOWS FROM FINANCING ACTIVITIES Additional payments of paid-up capital subscriptions: (Note 13) Common shares subscription 1,637,020 4,904,407 Preference shares subscription 4,861,734 4,688,271 Distribution of net surplus (Note 17) (40,599,313) (38,030,640) Changes in statutory reserves (Note 14) 5,145,399 3,496,666 Net Cash Used for Financing Activities (28,955,160) (24,941,296) NET INCREASE IN CASH AND CASH EQUIVALENTS 16,900,460 2,907,417 OPENING CASH AND CASH EQUIVALENTS 56,301,474 53,394,057 CLOSING CASH AND CASH EQUIVALENTS (Note 4) P=73,201,934 P=56,301,474 See Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) Years Ended December 31, 2019 and 2018 Note 1 General Information

Organization The Del Monte Philippines Incorporated Employees and Community Credit Cooperative (DMPI-ECCC) was organized in 1963 under Presidential Decree No. 175, for the exclusive membership of the employees of Del Monte Philippines, Inc. (DMPI). It was registered with the Cooperatives Development Authority (CDA) on March 25, 1991, pursuant to Republic Act (R. A.) No. 6938, otherwise known as the Cooperative Code of the Philippines and re-registered on September 30, 2009 in accordance with the provisions of Republic Act (R.A.) No. 9520, Philippine Cooperative Code of 2008, obtaining its Registration No. 9520-10000104. Membership The membership in the Cooperative is classified as regular and associate. The regular membership is open to all Del Monte Philippines, Inc. (DMPI) Bugo regular employees, regular employees of its affiliates or branch offices, regular employees of the Cooperative and its sister cooperative, the Allied Services Multipurpose Cooperative of Northern Mindanao, as well as open to associate members who meet the requirements of regular membership who signifies their intentions to be considered or re-considered as regular members. Associate membership is also open to all separated employees of the Cooperative and its sister cooperative, the children or spouses of regular or associate members who are of legal ages, as well as regular employees of other cooperatives of DMPI and its affiliates. As at December 31, 2019, the Cooperative has 1,687 regular members and 1,111 associate members.

Office Address The Cooperative holds office at the 2nd floor of DMPI Cooperatives Building located at Bugo, Cagayan de Oro City, which it co-owns with Allied Multi Purpose Cooperative of Northern Mindanao. Tax Exemptions The Cooperative is a holder of Certificate of Tax Exemption COOP No. 00019-16-RR16-RDO 98 which entitles it with tax exemptions for five (5) years until August 18, 2021. As a cooperative transacting business with members only, it is entitled to the following tax exemptions and tax incentives provided for under Article 60 of R. R. No. 9520, as implemented by Section 7 of the Joint Rules and Regulations Implementing Articles 60, 61 and 144 of R.A. No. 9520:

(a) Income tax on income from CDA-registered operations; (b) Value-Added Tax (VAT) under Section 109 pars. (r), (s), (t) and (u) of the Tax Code of 1997 on CDA-

registered sales or transactions; (c) Three percent (3%) Percentage Tax under Section 116 of the Tax Code of 1997; (d) Donor’s tax on donations to duly accredited charitable, research and educational institutions, and

reinvestment to socio-economic projects within the area of operation of the cooperative; (e) Excise tax under Title VI of the Tax Code of 1997 of which it is directly liable; (f) Documentary Stamp Tax imposed under Title VII of the Tax Code, provided, however, that the other

party of the taxable document/transaction who is not exempt shall be the one directly liable for the tax;

- 2 -

(g) Annual Registration Fee of P=500 under Section 236(B) of the Tax Code of 1997; and (h) Exemption from all taxes on transactions with insurance companies and banks, including but not

limited to 20% final tax on interest deposits and 7.5% final income tax on interest income derived from a depository bank under the expanded foreign currency deposit system.

Note 2 Summary of Significant Accounting Policies The principal accounting policies applied in the preparation of these financial statements are set out below. Statement of Compliance The financial statements have been prepared in accordance with Philippine Financial Reporting Framework for Cooperatives (PFRF for Cooperatives), which was developed from the Philippine Financial Reporting Standards for Small and Medium-Sized Enterprises (PFRS for SMEs) with certain modifications made on several provisions to address considerations from cooperative laws, rules, regulations and principles.

Basis of Preparation The accompanying financial statements have been prepared under historical cost conventions. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The financial statements are presented in Philippine peso, which is the Cooperative’s functional and presentation currency and all values are recorded to the nearest peso except when otherwise indicated.

The preparation of financial statements in conformity with PFRF for Cooperatives requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

Cash and Cash Equivalents Cash and cash equivalents are carried in the statement of financial condition at cost. Cash and cash equivalents consist of cash on hand, cash in banks and other short-term liquid investments with original maturities of three months or less, from dates of placements and that are known amounts of cash that are subject to insignificant risk of changes in value.

Loans Receivables Loans receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Cooperative provides money directly to member/borrowers with no intensions of trading the receivables. These loans and receivables are carried at their original amounts less provisions made for impairment losses. An impairment loss is established where there is objective evidence that the Cooperative would not be able to collect the amounts due.

Trade and Other Accounts Receivable The receivable from Del Monte Philippines, Inc. for the unremitted collections from the members’ payrolls and receivables from other debtors are carried at their original assessments less provisions made for impairment of these receivables. A provision for impairment losses is established where there is objective evidence that the Cooperative would not be able to collect the amounts due. Basic Financial Instruments The Cooperative’s investments in equity securities include investments in stock of other cooperatives, federations and organizations which are not more than 20% of their total equity. The Cooperative intends to hold on to the investments for a longer period. A financial instrument is a contract that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Basic financial instruments include the following: cash; demand and fixed-

- 3 -

term deposits; commercial paper and bills; accounts and notes receivable and payable; debt instruments where returns to the holder are fixed or referenced to an observable rate; investments in nonconvertible and non-puttable ordinary and preference shares, and most commitments to receive a loan. Basic financial assets and financial liabilities are initially measured at the transaction price (including transaction costs except in the initial measurement of financial assets and liabilities that are measured at fair value through profit or loss) unless the arrangement constitutes, in effect, a financing transaction. A financing transaction may be indicated in relation to the sale of goods or services, for example, if payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. If the arrangement constitutes a financing transaction, the financial asset or financial liability are measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Subsequent to initial recognition the following are the measurements:

(a) Debt instruments are measured at amortized cost using the effective or straight-line interest amortization method. Debt instruments that are classified as current assets or current liabilities are measured at the undiscounted amount of the cash or other consideration expected to be paid or received (i.e. net of impairment) unless the arrangement constitutes, in effect, a financing transaction. If the arrangement constitutes a financing transaction, the Cooperative will measure the debt instrument at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

(b) Investments in publicly-traded securities shall be measured at fair value with changes in fair value

recognized in profit or loss. In determining fair values of financial instruments, the Cooperative is guided by the following: (a) the most reliable is a quoted price in an active market; (b) when a quoted price is not available the most recent transaction price provides evidence of fair value, and (c) if there is no active market or recent market transactions, a valuation technique may be used.

(c) Investment in non-publicly-traded securities, mutual fund and other externally-managed funds shall be measured at cost less impairment.

The Cooperative tests all amortized cost instruments for impairment. Previously recognized impairment is reversed if an event occurring after the impairment was first recognized causes the original impairment loss to decrease. The Cooperative derecognizes a financial asset when: (a) the contractual rights to the cash flows from the financial asset expire or are settled; (b) the Cooperative transfers to another party all of the significant risks and rewards relating to the financial asset; or (c) the Cooperative, despite having retained some significant risks and rewards relating to the financial asset, has transferred the ability to sell the asset in its entirety to an unrelated third party who is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. The Cooperative derecognizes a financial liability when the obligation is discharged, cancelled, or expires.

Interest in Joint Operations The Cooperative is a party to a joint operation in the administration of the DMPI Cooperatives Building which is under the joint control of the Cooperative and Allied Services Multi-Purpose Cooperative of Northern Mindanao (ASMPC), a sister cooperative. Each Cooperative is represented equally in the Executive Committee that oversees the operation of the building. Both parties agreed on a 50/50 sharing ratio and appointed a manager to oversee the operation of the DMPI Cooperatives Building.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

- 4 -

In respect of the jointly-controlled assets, the Cooperative recognizes in its financial statements: (a) its share of the jointly controlled assets, accordingly classified according to nature of the assets; (b) its share of any liabilities that it has incurred’ and (c) its share of the Building Maintenance Restricted Fund which both Cooperatives reserves for the purpose of maintaining the whole building and, possibly, for building replacement. The restricted fund assumed the income and expenses from building use and disburses for building maintenance and related expenses. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Such cost includes the cost of replacing part of such property and equipment when that cost is incurred, if the recognition criteria are met. Interests incurred on borrowed funds used to finance the construction of properties during the construction period are capitalized. Other borrowing costs are expensed. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: (a) buildings – 25 years, (b) office furniture, fixture and equipment – 5 years, and (c) transportation equipment – 10 years. The carrying values of property and equipment are reviewed for impairment when changes in circumstances indicate the carrying value may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s net selling price and value in use. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repairs and maintenance are charged to income during the period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits arising from the renovations will flow to the organization. Interests incurred on borrowed funds used to finance the construction of properties during the construction period are capitalized. Other borrowing costs are expensed.

Impairment of Non-Financial Assets Assets that are subject to depreciation or amortization are assessed at each reporting date to determine whether there is any indication that the assets are impaired. When there is any indication that an asset may be impaired, the carrying value of the asset is tested for impairment. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets are suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Share Capital Share capital is determined using the nominal value of shares that have been issued. An applicant for regular membership is required to subscribe at least fifty (50) common shares with a total value of P=5,000 and make an initial contribution of P=300. The capital pledged balance which shall be fully paid (in cash or through payroll deductions) at a minimum of P=200 per month until fully paid. This minimum subscription entitles the member to full rights and privileges of a member. As provided for under R. A. 9520, a member may, for any valid reason, withdraw his membership from the Cooperative by giving due notice to the Board of Directors. Subject to the By-Laws of the Cooperative, the withdrawing member shall be entitled to a refund of his share capital contribution and all other interest in the Cooperative.

- 5 -

Statutory Funds The Cooperative establishes the statutory funds as provided by Republic Act (R.A.) No. 9520, Philippine Cooperative Code of 2008. Normally, the funds are augmented yearly by their share of the current year’s net surplus. Expenses paid for by funds from the Statutory Funds accounts are recorded in the books with corresponding credits to subsidy account in the Statement of Operations. The following are the nature of these reserves:

º General Reserve Fund (GRF) The General Reserve Fund, which receives 10% allocation every year from the net surplus of the Cooperative, is intended for the stability of the Cooperative and to meet losses in its operations. The General Assembly may decrease the amount allocated to the General Reserve Fund when the Fund already exceeds the authorized share capital, such fund may be used at any time for any project that would expand the operations of the cooperative upon the resolution of the General Assembly. Any sum recovered on items previously charged to the reserve fund shall be credited to such fund. The Fund shall not be utilized for investments other than those allowed by the Cooperative Code. Upon the dissolution of the Cooperative, the General Reserve Fund shall not be distributed to members. However, the General Assembly may resolve to establish a usufructuary trust fund for the benefit of any federation or union to which the Cooperative is affiliated, or to donate, contribute, or otherwise dispose of the amount for the benefit of the community where the Cooperative operates. If the General Assembly cannot decide upon the disposal of the Fund, the same shall go to the federation or union to which the Cooperative is affiliated.

º Cooperative Education and Training Fund (CETF) The Cooperative Education and Training Fund, which also receives 10% allocation from the net surplus of the Cooperative every year, is intended for the education and training and other purposes of the Cooperative's members. Half of the allocation to the Fund is remitted to the Cooperative Education and Training Fund of the federation or union to which the Cooperative is affiliated. Upon the dissolution of the Cooperative, the unspent balance of the Fund shall be credited to the Cooperative Education and Training Fund of the federation or union to which the Cooperative is affiliated.

° Community Development Fund (CDF)

The CDF receives 3% allocation from the net surplus of the Cooperative every year and is intended to be used for projects or activities that will benefit the community where the Cooperative operates.

° Optional Fund The Optional Fund is intended either for land and building or any purposes. It receives 7% allocation from the net surplus of the Cooperative every year.

Revenue and Cost Recognition Revenue is recognized to the extent that it is probable that economic benefits will flow to the Cooperative and the revenue can be reasonably measured. The following specific criteria are also met in recognizing revenue:

(a) In accordance with PFRF for Cooperatives, interest income on loans is recognized based on the cash method of accounting; no interest is accrued on uncollected accounts.

(b) Service fees are generally recognized when loan services are provided to members and are

recognized as revenue as the service is provided. (c) Donations received from various donors and benefactors, if any, are valued at fair market value at the

time the donations are received.

(d) Interest income from bank deposits and investments is recognized when the right of the Cooperative to receive payments is established.

- 6 -

(e) Revenue from other sources is recognized on the accrual method.

(f) Interest on members’ deposits is calculated using the average daily balance method.

(g) Cost and expenses are recognized in the statement of operations upon utilization of the service or at the date they are incurred.

Employee Benefits The Cooperative’s employees are provided with the following benefits:

º Retirement Benefit Obligation

Retirement benefits are provided to employees through a defined benefit plan. A defined benefit plan is a retirement plan that defines an amount of retirement benefit an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and salary. The legal obligation for the benefits of the retirement plan remains with the Cooperative, even if plan assets for funding the defined benefit plan have been acquired. Plan assets may include assets specifically designated to a long-term benefit fund, as well as qualifying insurance policies. The Cooperative’s defined benefit retirement plan covers all regular.

º Termination Benefits. Termination benefits are payable when employment is terminated by the Cooperative before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Cooperative recognizes termination benefits when it is demonstrably committed to either: (a) terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or (b) providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value.

º Compensated Absences Compensated absences are recognized for the number of paid leave days (including holiday entitlement) remaining at the reporting date. The amounts recognized are included in Trade and Other Payables account in the statement of financial condition at the undiscounted amount that the Cooperative expects to pay as a result of the unused entitlement

Distribution of Net Surplus As provided for in its Amended By-Laws, the Cooperative distributes its net surplus in the following manner:

(1) At least Ten percent (10%) is set aside as General Reserve Fund, to provide for the stability of the

Cooperative and to absorb losses in its operations, if any; (2) Not more than ten percent (10%) is set aside for Cooperative education and training, with half of the

amount to be used for the Cooperative’s own education and training activities and the other half to be remitted to the Cooperative Education and Training Fund (CETF);

(3) Not more than seven percent (7%) is set aside as Optional Fund, which is optional, and (4) At least three percent (3%) is set aside for Community Development Fund. (5) The remainder is allocated for interest and/or patronage refund as determined by the Board of

Directors, provided that the interest on capital shall not exceed the normal rate of return on investments prescribed by the CDA.

Note 3 Key Sources of Estimation Uncertainty and Judgments The Cooperative makes judgments and estimates that affect amounts reported in the financial statements and related notes. Judgments and estimates are continually evaluated and are based on historical experience and

- 7 -

other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may ultimately differ from these estimates. The critical accounting estimates and judgments having the most significant effect on the amounts recognized in the financial statements pertain to the following: Impairment Losses on Trade and Other Receivables The Cooperative reviews its receivables to assess impairment at least on an annual basis. In determining whether an impairment loss should be recorded in the income statement, the Cooperative makes judgment as to whether there is any observable data indicating that there has been an adverse change in the payment status of members that correlates with defaults on assets in the Cooperative. Impairment of Investment in Equity Securities The Cooperative determines that investments in equity securities are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Cooperative evaluates among other factors, when there is evidence of deterioration in the financial health of the investee organizations and its operational and financing cash flows. Retirement Benefits The determination of the Cooperative’s obligation and cost for pension had not been computed actuarially. The amount allocated from annual income may not be enough to cover actual obligations when the employees would eventually retire. Even when computed actuarially, the assumptions that would be used would include, among others, discount rates, expected return on plan assets and salary increases. While these assumptions would appear reasonable and appropriate, significant differences in the actual experience or significant changes in assumptions may materially affect retirement obligations.

Note 4 Cash and Cash Equivalents This account is composed of the following:

December 31 2019 2018

Revolving funds P=6,250,164 P=9,846,600 Cash in banks 13,190,560 13,507,212 Short-term investments 53,761,210 32,947,662 P=73,201,934 P=56,301,474 Cash in banks earn interests at prevailing market rates. A total interest income of P=47,689 was earned in 2019 and P=27,095 in 2018. Short-term investments represent time deposits placed with cooperative banks and other cooperatives that can be pre-terminated anytime with insignificant risk to the Cooperative, broken down as follows:

December 31 2019 2018

Cooperative Organizations PERA Multi-Purpose Cooperative P=11,236,712 P=– Oro Integrated Cooperative 8,000,000 6,119,076 Lorenzo Tan Multi-Purpose Cooperative 6,000,000 11,226,849 Tagum Cooperative 5,753,401 5,388,669 Sun Life Financial 5,033,699 – Bukidnon Pharmaceutical Multipurpose Cooperative (BUPHARCO) 1,013,562 4,000,000 Phil. Fed. of Credit Coops (PFCCO) Mindanao League 120,602 120,602 (Carried Forward.)

- 8 -

(Brought Forward.) December 31 2019 2018

Cooperative Organizations

MASSPECC –

P=1,000,000

37,157,376

27,855,196

Local Commercial Bank Bank of Commerce 16,603,834 5,092,466 P=53,761,210 P=32,947,662 These time deposits cover the funding requirements of the Cooperative’s General Reserve Fund (GRF) as required by CDA Memorandum No. 2009-4. (See Note 14). Time deposits with cooperative banks and cooperative organizations earn interest ranging from 3% to 9% per annum. Total interest earned amounted P=2,676,481 in 2019 and P=1,660,989 in 2018. The Cooperative has determined that its short-term investments are not impaired since none of the investee cooperative organizations is experiencing going-concern issues.

Note 5 Loans and Receivables This account consists of the following:

December 31 2019 2018

Loans receivable – net P=302,434,692 P=303,614,069 Other receivables – net 12,850,521 12,332,900 Total 315,285,213 315,946,969 Portion maturing in 12 months 44,919,013 39,756,572 Portion maturing in more than 12 months P=270,366,200 P=276,190,397 The loans and receivables maturing in 12 months are classified in the statement of financial condition under current assets; those that are maturing in more than 12 months are classified as noncurrent assets. Breakdown of Loans Receivable December 31 2019 2018

Maxi loans P=220,922,846 P=221,465,739 Regular/enhanced regular loans 22,535,404 22,748,274 Members Account Reform (MAR) 16,924,402 25,143,269 Special loans 2,610,013 3,533,707 Other kinds of loans 42,138,499 33,330,775 Total 305,131,164 306,221,764 Less allowance for impairment losses (2,605,554) (2,521,008) Less unearned interest on loans (90,918) (86,687) Total Loans Receivable P=302,434,692 P=303,614,069 These loans bear annual interest rates ranging from 7% to 24% and are collectible over a period of 1 year to 20 years. Total interest income from loans amounted P=41,530,009 in 2019 and P=41,141,003 in 2018. Service fees from the release of the loans granted amounted P=5,144,509 in 2019 and P=5,787,013 in 2018.

- 9 -

These loans are guaranteed by the members’ savings or time deposits and share capital in the Cooperative, as well as by the assignment of the members’ future employment benefits from Del Monte Philippines, Inc. Maturity Profile of the Loans

December 31 2019 % 2018 %

Due more than 12 months P=273,062,672 89.49 P=278,798,092 91.04 Due within 12 months 32,068,492 10.51 27,423,672 8.96 P=305,131,164 100.00 P=306,221,764 100.00 The fair values of these loans are not individually determined at the end of the reporting periods, but their carrying amounts are reasonable approximation of their fair values. Allowance for Impairment Losses At the end of each year, the loans were individually reviewed for indicators of impairment using allowance for loan losses (APLL) based on Portfolio At Risk (PAR) with a 30-day grace period. PAR is the amount of the loan portfolio with one day missed payment. The APLL was computed in accordance with the prescribed formula and allocation percentage provided in the Manual of Rules and Regulations for Cooperatives with Savings and Credit Services in the Philippines that requires 100% APLL for accounts with more than twelve (12) months past due and 35% APLL for accounts with one (1) to twelve (12) months past due using PAR. Past due loans with corresponding deposits and members’ share capital were not provided with APLL. The APLL during 2019 and 2018 were computed as follows:

December 31 2019 2018

Past due accounts (12 months or less, net of share capital/deposits) P=885,451 P=201,117 APLL rate applicable 35% 35% APLL on past due below 12 months 309,908 70,391 APLL on past due over 12 months, net of share capital/deposits (100%) 2,153,333 2,474,453 Required loan loss provisioning 2,463,241 2,544,844 Balance of allowance for impairment losses 2,605,554 2,521,008 (Over) Under Provision (considered immaterial; no provision was added) (P=142,313) P=23,836 The reconciliation of the allowance for impairment losses for loans receivable during the year is as follows:

December 31 2019 2018

Opening balances P=2,521,008 P=3,683,149 Provision for impairment losses during the year 500,000 500,000 Accounts written off (415,454) (1,662,141) Closing balances P=2,605,554 P=2,521,008 The accounts written-off represent the balances of members’ account after exhausting their deposits and share capital. The write-off of the accounts was approved by the Cooperative’s Board of Directors. Other Receivables December 31 2019 2018

Due from Del Monte Philippines, Inc. P=7,535,623 P=7,989,005 Advances to members 3,838,585 3,772,493 Accrued interest receivable 1,400,653 538,690 Others 45,660 32,712 P=12,850,521 P=12,332,900

- 10 -

The Cooperative’s transactions with Del Monte Philippines, Inc. (DMPI) consist of accepting deposits from its employees who are mostly members of the Cooperative and granting them loans at prevailing market rates and obtaining free services from DMPI to account and process the members’ check-off list. These receivables are generally collected a few days after the payroll periods of DMPI. Advances to members represent cash advances chargeable against their interest on capital and patronage refunds that are normally distributed after the Annual General Assembly. Management considers the other receivables as generally unimpaired at the end of the year. Collection of Fines, Penalties and Surcharges. The Cooperative’s loan administration policies collected fines, penalties and surcharges from delinquent members amounting P=3,446,492 in 2019 and P=3,281,011 in 2018.

Note 6 Details of Prepayment and Other Current Assets December 31 2019 2018

Prepaid insurance and other expenses P=279,681 P=209,706 Unused office supplies 133,293 156,625 P=412,974 P=366,331

Note 7 Financial Assets This account consists of investments in the following organizations recorded in the books originally at cost plus acquisition costs:

December 31 2019 2018

Equity Investments in Cooperative Organizations – Amortized Cost CLIMBS Life and General Insurance Cooperative (common shares) P=14,314,487 P=13,794,834 Cooperative Insurance System of the Phil. (CISP) (common shares) 12,510,669 11,255,943 Mindanao Consolidated Cooperative Bank (MCCB) (common shares) 5,000,000 – MASS-SPECC Cooperative Development Center (share capital) 4,021,802 3,703,694 Consolidated Cooperative Bank 1,529,000 1,529,000 Mindanao Consolidated Cooperative Bank (MCCB) (preference shares) 1,379,700 1,000,000 Memorial Services Cooperative (common shares) 1,232,383 1,032,383 Metro South Cooperative Bank (common shares) 1,101,655 1,101,655 Northern Mindanao Surety Cooperative Federation (share capital) 1,013,665 1,013,665 CLIMBS Investment Management and Advisory Corp. (mutual funds) 890,511 883,959 Philac Service Cooperative (share capital) 357,251 346,600 Metro Cagayan de Oro Water Service Cooperative (common shares) 250,192 250,000 Phil. Fed. of Credit Coops (PFCCO) Mindanao League (share capital) 100,756 90,767 Cooperative Bank of Misamis Oriental – 5,363,000 Other cooperative organizations 962,000 862,000 44,819,871 42,227,500 Equity Investments in Mutual Funds and Insurance Products – Fair Values Bank of Commerce (preference shares and corporate bond) 11,876,185 12,000,000 Manulife 4,321,398 4,189,088 Sun Life Financial 3,237,205 3,189,362 China Trust Banking Corporation (long term negotiable cert of dep) 3,000,000 3,000,000 (Carried Forward.)

- 11 -

(Brought Forward.) December 31 2019 2018

Bank of Philippine Islands (equity value fund) 1,990,017 1,937,098

PHILAMLIFE strategic growth fund 1,945,978 1,902,379

FWD Index Fund 1,865,089 1,347,847 Pru Life UK 1,606,971 1,368,046 AXA Philippines 963,148 950,373 32,808,254 31,886,456 Debt Instruments – Cooperative Organizations – Amortized Cost Oro Integrated Cooperative (OIC) 7,061,343 6,478,296 P=84,689,468 P=80,592,252 Equity Investments in Cooperative Organizations The equity investments in cooperative (secondary) organizations consist of investments in non-puttable ordinary and preference shares which are accounted in the books at amortized cost, being less than 20% of the investees’ total equity. None of the foregoing cooperatives are undergoing going-concern issues. As at December 31, 2019 and 2018, the carrying amounts of the investments were determined to approximate their fair values. Total interest on share capital received from these cooperative organizations during 2019 and 2018 amounted P=2,145,696 and P=2,550,660, respectively. Equity Investments in Mutual Funds and Life Insurance Products The investments in mutual funds and life insurance products were made in various dates from 2013 to 2019 and are recorded in the books fair values of the investments determined at the end of year. Presented below are the net asset values of the investments in 2019, determined from the reports of investee companies: December 31, Net Asset Value Fair Values in 2018 Increase (Decrease)

Bank of Commerce P=11,876,185 P=-12,000,000 (P=123,815) Manulife 4,321,398 -4,189,088 132,310 Sun Life Financial 3,237,205 -3,189,362 47,843 ChinaTrust Banking Corporation 3,000,000 -3,000,000 – Philippine National Bank 2,002,263 -2,002,263 – Bank of Philippine Islands 1,990,017 -1,937,098 52,919 PHILAMLIFE strategic growth fund 1,945,978 -1,902,379 43,599 FWD Life Insurance 1,865,089 -1,347,847 517,242 Pru Life UK 1,606,971 -1,368,046 238,925 AXA Philippines 963,148 -950,373 12,775

P=32,808,254 P=31,886,456 P=921,798 Total revenue earned from the investments in mutual funds and life insurance products, net of fair value losses, amounted to a net gain of P=1,335,534 in 2019 and a net loss of P=1,779,467 in 2018. Debt Instruments – Cooperative Organizations – Amortized Cost The long-term time deposit placement in Oro Integrated Cooperative (OIC) earns interest at 9% per annum for five (5) years until June 6, 2021 and is unsecured. The Cooperative management has determined that the investments have not been impaired at the end of the year. Total interest income earned from this deposit amounted P=583,047 in 2019 and P=534,905 in 2018.

- 12 -

Note 8 Interest in Joint Operations The summary of the operations of DMPI Cooperative Building (a jointly-controlled operation with Allied Services Multi-Purpose Cooperative of Northern Mindanao), follows: Years Ended December 31, 2019 2018

Revenue Revenue from building use P=1,632,773 P=1,502,848 Other income 245,477 95,533 1,878,250 1,598,381 Expenses Security services 763,114 695,578 Janitorial services 135,282 128,281 Repairs and maintenance 117,176 171,577 Insurance 44,764 44,792 Miscellaneous 258,023 257,233 1,318,359 1,297,461

Net Surplus (Loss) 559,891 300,920

Building Maintenance Fund (Restricted)

Opening balances, as originally stated 4,156,380 3,855,460 Add adjustments on written-off accounts (24,291) – As restated 4,132,089 3,855,460

Closing Balances P=4,691,980 P=4,156,380 Accounting of Half of the Building Maintenance Fund (Restricted) December 31, 2019 2018

Cash on hand and in bank P=1,928,109 P=1,743,669 Accounts receivable from building users 231,505 211,187 Other assets 262,708 148,893 Accounts payable (76,332) (25,559) Building Maintenance Fund (Restricted) (Note 11) P=2,345,990 P=2,078,190 Half of the assets and liabilities of the Building Maintenance Restricted Fund have been consolidated with the financial statements of the Cooperative.

Note 9 Property and Equipment – At Cost The property and equipment account consist of the following: December 31 2019 2018

Land P=717,500 P=717,500 Building 11,043,671 11,043,671 Office furniture, fixtures and equipment 3,266,833 3,204,253 15,028,004 14,965,424 Less accumulated depreciation 6,673,477 6,052,834 P=8,354,527 P=8,912,590

- 13 -

The reconciliation of the movements of the accounts during the year follows:

December 31, 2019 Opening Balances Additions Net Adjustments Closing Balances

Cost Land P=717,500 P=– P=– P=717,500 Building 11,043,671 11,043,671 Office furn., fixtures and equipment 3,204,253 62,580 3,266,833 P=14,965,424 62,580 – P=15,028,004 Accumulated Depreciation Building 3,972,870 472,122 4,444,992 Office furn., fixtures and equipment 2,079,964 148,521 2,228,485 6,052,834 620,643 – 6,673,477 Net Book Value P=8,912,590 (P=558,063) P=– P=8,354,527

December 31, 2018

Cost Land P=717,500 P=– P=– P=717,500 Building 11,043,671 11,043,671 Office furn., fixtures and equipment 3,125,908 78,345 3,204,253 P=14,887,079 78,345 – P=14,965,424 Accumulated Depreciation Building 3,500,748 472,122 3,972,870 Office furn., fixtures and equipment 1,947,744 132,220 2,079,964 5,448,492 604,342 – 6,052,834 Net Book Value P=9,438,587 (P=525,997) P=– P=8,912,590

Note 10 Members’ Deposits This account consists of the following deposits of members:

December 31 2019 2018

Savings deposits P=85,284,900 P=83,386,570 Time deposits 109,444,428 104,524,502 P=194,729,328 P=187,911,072 Savings deposits earn interest from 2.5% to 3.0% per annum while time deposits earn interest from 3.0% to 4.0%. These deposits are all due in one year; these are used as collateral to the employees’ loans. Total interest incurred on savings and time deposits amounted P=6,158,058 in 2019 and P=6,112,924 in 2018.

Note 11 Details of Trade and Other Payables December 31 2019 2018

Building maintenance fund (restricted) (Note 8) P=2,345,990 P=2,078,190 Accrued interest payable (Note 10) 2,056,382 2,035,449 CETF payable (Note 17) 1,022,799 950,766 Accrued expenses 490,240 305,630 Insurance payable to CLIMBS Life and General Insurance Cooperative 29,627 123,381 Others 304,324 251,901 P=6,249,362 P=5,745,317

- 14 -

Note 12 Retirement Benefit Obligation

The Cooperative's retirement benefit is a funded, non-contributory defined benefit plan covering substantially all its regular employees. The DMPI Employees Credit Cooperative Retirement Plan is a retirement plan managed by Bank of Commerce–Trust Services Group under an Investment Trust Agreement signed by the Cooperative. The Plan is intended to finance the retirement costs of the cooperatives’ regular employees. The benefits from the Plan are based on the employees’ compensation and number of years in service. The principal actuarial assumptions used to determine pension benefits were salary increases of 7.0% per annum, compounded annually, and an investment rate of 8.0% per annum, compounded annually. Actuarial valuations are made at least every 2 years. Contributions to the plan are based on pre-determined amounts recommended by the actuary. The following is the accounting of the Cooperative's retirement benefit obligations:

December 31 2019 2018

Opening balances P=3,030,380 P=4,343,992 Provisions during the year 958,331 300,000 Retirement payments during the year (757,399) (1,613,612) Net retirement benefit obligations 3,231,312 3,030,380 Less fair value of retirement plan assets 9,279,864 8,604,621 Excess of Retirement Plan Assets over Retirement Benefit Obligations (P=6,048,552) (P=5,574,241) Details of Retirement Plan Assets December 31 2019 2018

Retirement trust fund – Bank of Commerce P=7,702,587 P=8,604,621 Life insurance policies – FWD Life Insurance Corporation: Prepaid premiums 1,097,892 – Investment fund (at Fair Value) 479,385 – Excess of Retirement Plan Assets over Retirement Benefit Obligations P=9,279,864 P=8,604,621 The net changes in net assets of the Retirement Trust Fund – Bank of Commerce amounting P=552,521 in 2019 and P=42,684 in 2018, are recognized in investment income. During 2019, the Cooperative purchased nine (9) units of life insurance policies covering nine (9) regular employees, payable for five years at annual premium payments of P=1,711,000. The life insurance plan contain a derivative investment portion termed ‘Variable Unit Linked Investment Funds’, representing 30% of the premium payments. The investment fund is managed by the insurance company and invested at its full discretion. The Cooperative accounted separately the investment component of its life insurance policies (representing 30% of the premium payments) and amortized for five years the net annual premium payments. For 2019, the Cooperative recognized investment fund of P=513,300 and prepaid insurance expense of P=1,197,700, of which a total of P=99,808 was charged to operations. The investment fund component of the life insurance policy was determined by management to have been valued at P=479,385.29 at the end of 2019. A loss of P=33,618 was charged to operations. The insurance policy guarantees death benefits to the covered employees and varies for every employee at P=1 million pesos for death and supplementary benefits of P=500 thousand critical illness benefits.

- 15 -

Note 13 Share Capital The Cooperative’s share capital is broken down as follows:

December 31 2019 2018

Common Shares Authorized, 4,796,237 shares, P=100 par value Issued and outstanding – 1,194,540 in 2018; 1,178,170 in 2019 P=119,454,000 P=117,817,000

Preference Shares Authorized, 1,598,745 shares, P=100 par value Issued and outstanding – 809,290 shares in 2019; 760,680 in 2018 80,929,000 76,068,000

Deposits for Future Subscriptions 1,138 384 P=200,384,138 P=193,885,384 Common shares are held by regular members. Preference shares are held by associate members, who are mostly retired and separated employees of Del Monte Philippines, Inc. and former regular members of the Cooperative.

Note 14 Statutory Reserves This consists of the following:

December 31 2019 2018

General reserve fund P=44,028,790 P=39,968,859 Optional fund 7,228,000 6,542,586 Cooperative education and training fund 1,491,736 1,137,120 Community development fund 1,401,863 1,356,425 P=54,150,389 P=49,004,990 The movements of the accounts are as follows:

December 31, 2019 Opening Balances Income Distribution Net Changes Closing Balances

General Reserve Fund P=39,968,859 P=4,059,931 P=– P=44,028,790 Optional fund 6,542,586 811,986 (126,572) 7,228,000 Coop. Education & Training Fund 1,137,120 1,014,983 (660,367) 1,491,736 Community Dev. Fund 1,356,425 1,217,979 (1,172,541) 1,401,863 P=49,004,990 P=7,104,879 (P=1,959,480) P=54,150,389

December 31, 2018

General Reserve Fund P=36,165,795 P=3,803,064 P=– P=39,968,859 Optional fund 6,631,128 38,031 (126,573) 6,542,586 Coop. Education & Training Fund 1,189,818 950,766 (1,003,464) 1,137,120 Community Dev. Fund 1,521,583 1,140,919 (1,306,077) 1,356,425 P=45,508,324 P=5,932,780 (P=2,436,114) P=49,004,990 The subsidy from Optional fund for the depreciation of the DMPI Cooperative Building amounted P=126,573 in 2019 and P=126,573 in 2018. Time deposits totaling P=48,728,111 in 2019 and P=32,947,662 in 2018 (See Note 4) are funding the requirements of the GRF as required by CDA Memorandum No. 2009-4.

- 16 -

Note 15 Details of Other Income Other income consists membership fees, commissions and incomes generated from the sale of passbook and jackets and other miscellaneous income.

Note 16 Details of Salaries, Wages and Employee Benefits Years Ended December 31 2019 2018

Salaries and wages P=2,453,524 P=2,574,126 SSS, PHIC and HDMF counterpart contributions 217,781 200,812 Other employees’ benefits 989,747 919,021 P=3,661,052 P=3,693,959

Note 17 Distribution of Net Surplus Years Ended December 31 2019 2018

General Reserve Fund P=4,059,931 10.0% P=3,803,064 10.0% Optional fund 811,986 2.0% 38,031 0.1% Cooperative education and training fund 1,014,983 2.5% 950,766 2.5% Community development fund 1,217,979 3.0% 1,140,919 3.0% Total for Statutory Reserves 7,104,879 17.5% 5,932,780 15.6% Cooperative education and training fund payable 1,014,983 2.5% 950,766 2.5% Interest on share capital and patronage refund 32,479,451 80.0% 31,147,094 81.9% P=40,599,313 100.00% P=38,030,640 100.00%

The Board of Directors approved to distribute the interest on share capital and patronage refund under the following factors:

Years Ended December 31 2019 2018

Factor for Patronage refund 0.212076 0.233086 Factor for Interest on share capital: Common shares 0.130201 0.123870 Preference shares 0.080000 0.100000

Note 18 Related Party Transactions In the ordinary course of trade or business, the Cooperative has transactions with related parties. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party, or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. The significant related party transactions are summarized below:

a. In the ordinary course of trade or business, the Cooperative has loan transactions with its related

parties which include its directors, officers, related interest and employees. These loan transactions were made substantially on the same terms and conditions as with other members of comparable

- 17 -

risks. None of the transactions incorporate special terms and conditions and no guarantee is given or received. Outstanding balances are usually settled in cash.

b. The Cooperative has transactions with Del Monte Philippines, Incorporated (DMPI) consisting of accepting deposits from and granting of loans to its employees who are mostly members of the Cooperative and obtaining its free services to account and process the Cooperative members’ deduction lists and remit the amount to the Cooperative. The amounts of remittance receivable from DMPI as at December 31, 2019 and 2018 amounted P=7,565,623 and P=7,989,004, respectively. (Note 5)

c. The Cooperative’s members are also members of Allied Services Multi-Purpose Cooperative of Northern Mindanao (ASMPC), which sells consumer goods under normal credit terms at prevailing market prices, among other services. Transactions with ASMPC include advances for certain common expenses. The recorded balances of these transactions amounted P=23,020 in 2019 and P=14,257 in 2018, presented as part of other receivables in Note 5 to the financial statements.

d. The key management compensation consisting of salaries and wages and other short-term benefits amounted P=355,422 for 2019 and P=281,370 for 2018.

Note 19 Significant Financial Ratios

The financial ratios of the Cooperative for the years 2019 and 2018 have been computed as follows:

Years Ended December 31 2019 2018

Liquidity Ratios Quick ratios (cash + receivables/current liabilities) 0.48 : 1 0.43 : 1 Current ratios (current assets/current liabilities) 0.49 : 1 0.43 : 1

Profitability Ratios Net surplus Margin (net surplus for the year/gross profit) 79.68% 80.64% Return on Investments (net surplus for the year/average share capital) 14.03% 20.11% Return on Fixed Assets (net surplus for the rear/average fixed assets) 304.05% 414.48% Overall Profitability (net surplus for the year/total revenue) 70.47% 70.72%

Solvency Ratios Debt to total assets ratio (total liabilities/ total assets) 0.478 : 1 0.496 : 1 Debt to equity ratio (total liabilities/ave. share capital) .917 : 1 .926 : 1

Note 20 Events After Reporting Date There were no events after reporting date that would require disclosures or adjustments on the financial statements of the Cooperative.

Note 21 Authorization of Financial Statements The Cooperative’s financial statements as of and for the year ended December 31, 2019, were presented to the Board of Directors on February 3, 2020, and was authorized for release by the Executive Committee of the Board of Directors, on recommendation by the Audit Committee, on February 7, 2020.

- 18 -

Note 22 Details of Taxes, Licenses and Fees In accordance with RR 15-2010, series of 2010, the Cooperative discloses the following information regarding taxes, licenses and fees paid during 2019:

Years Ended December 31 2019 2018

Taxes withheld on compensation P=5,390 P=18,793

Business permits 16,982 9,480 BIR annual registration 1,000 1,000 Fire and safety fee 700 454 Community tax certificate 100 60 18,782 10,994 P=24,172 P=29,787 The Cooperative has no pending assessments or on-going examinations conducted by the Bureau of Internal Revenue (BIR).