RFM Corp Sees 1998-As Another Banner Year

March 26, 1998 PSE CIRCULAR FOR BROKERS NO. 489-98 March 25, 1998 RFM CORP SEES 1998-AS ANOTHER BANNER YEAR "We see 1998 as a banner year for RFM Corporation." said Jose A. Concepcion III, President and Chief Executive Officer of the food and beverage giant. In a report to shareholders, RFM officials reported a 19% rise in sales from P13.7 billion in 1996 to P16.2 billion in 1997, on the back of sustained economic growth during the first half of 1997 which is the peak demand period for its major products such as softdrinks, ice cream juice, chicken and flour. Net income after tax reached P625 million, up 24% from P503 million recorded the previous year, resulting from lower raw material costs, better operating efficiencies and lower selling and distribution expenses. Without the one-time charging of unrealized foreign exchange losses arising out of the sudden devaluation of the peso in July, RFM's net income would have increased by 75% to P881 million, in line with market expectations. "RFM intends to raise close to P5 billion in cash this year by welcoming the investments of key strategic and financial investors into the parent company, Cosmos, Selecta and Swift." Concepcion said. "RFM also intends to list PSI Technologies in the tech-heavy NASDAQ exchange sometime towards the end of this year of the first quarter of 1999, in order for us to partly cash in on our investment in this company." Concepcion added. RFM presently owns 51% of the electronics exporter, which is the largest producer of power semiconductors in the Philippines and in Southeast Asia today. Concepcion also mentioned the possible sale of its 2% stake in Bonifacio Land Corporation to a foreign investor, as another transaction in the works that will contribute to the raising of cash reserves this year. "The overriding objective of RFM is to continually improve shareholder value through our participation in the food and beverage industry which is probably the largest and most stable industry in the Philippines today." Concepcion explained. "Our goal is to be considered among the index stocks by the year 2000, and to bring RFM's market capitalization to P15-20 billion as we enter the next millennium. Concepcion stated that this objective will be attained by focusing resources and management attention on the core food and beverage business of RFM, strengthening the fundamentals of its businesses, and strengthening its balance sheet with the raising of cash and the paying down of debt. The RFM CEO mentioned that talks with possible strategic and financial investors are now underway for substantial equity positions in RFM, Cosmos, Swift and Selecta. Concepcion stressed that RFM intends to ideally maintain at least 75% of its listed subsidiaries, but this percentage may go up or down depending on their relative valuations. "The entry of strategic financial investors may dilute RFM's holdings temporarily but it is our intention to buy back our stock in our subsidiaries until we get back to 75% in each." Concepcion added. Company officials explained that these strategic-investors are being allowed entry into RFM and its subsidiaries because they will take the company's business to a higher level with more capital, technology transfer and access to new markets. The company also plans to rationalize its investments in non-core business and re-channel these resources into the growth of the core food and beverage subsidiaries. LLjur "The PSI listing is an example of this rationalization. Down the road we are looking out reducing our equity ownership in Consumers Savings Bank by welcoming the investment of a strategic partner who can take over majority ownership. For Philtown, our plan is to keep it focused on redeveloping and managing our corporate land assets so that RFM can maximize the value we can derive from eventually selling off these assets in the future." Concepcion said This will make RFM a focused food and beverage play, participating in a major way in the country's largest industry, which is consistently growing as the economy sustains its growth.