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RFM CORPORATION

STATEMENT OF CHANGES IN EQU


For the Year Ended December 31, 2

Capital Stock
BALANCES AT JANUARY 1, 2011 3,160,404
Net income (loss) for the year, as previously reported –
Effect of adoption of Revised PAS 19 (Note 2) –
Net income (loss) for the year, as restated –
Other comprehensive income (loss):
Remeasurement losses on defined benefit plan, as previously reported (Note 27) –
Effect of adoption of Revised PAS 19 (Note 2) –
Remeasurement losses on defined benefit plan, as restated (Note 27) –
Net changes in fair value of AFS financial assets (Note 12) –
Total comprehensive income (loss) for the year, as restated –
Property dividends (Note 21) –
Cash dividends (Note 21) –
Effect of acquisition of additional shares of stock of a subsidiary (Note 2) –
Share-based compensation plan –
BALANCES AT DECEMBER 31, 2011, AS RESTATED 3,160,404
Effect of adoption of Revised PAS 19 (Note 2) –
Net income (loss) for the year, as previously reported –
Effect of adoption of Revised PAS 19 (Note 2) –
Net income (loss) for the year, as restated –
Other comprehensive income (loss):
Remeasurement gains on defined benefit plan, as previously reported (Note 27) –
Effect of adoption of Revised PAS 19 (Note 2) –
Remeasurement gains on defined benefit plan, as
restated (Note 27) –
Valuation gains realized through profit or loss (Note 12) –
Net changes in fair value of AFS financial assets (Note 12) –
Total comprehensive income (loss) for the year, as restated –
Property dividends (Note 21) –
Cash dividends (Note 21) –
Share-based compensation plan –
BALANCES AT DECEMBER 31, 2012, AS RESTATED 3,160,404
Effect of adoption of Revised PAS 19 (Note 2) –
BALANCES AT DECEMBER 31, 2012, AS RESTATED 3,160,404
Net income (loss) for the year –
Other comprehensive income (loss):
Remeasurement gain on defined benefit plans (Note 27) –
Revaluation of land –
Valuation gains realized through profit or loss (Note 12) –
Net changes in fair value of AFS financial
assets (Note 12) –
Total comprehensive income (loss) for the year –
Cash dividends (Note 21) –
Deposit for stock subscriptions (Note 21) –
Share-based compensation plan –
BALANCES AT DECEMBER 31, 2013 3,160,404
RFM CORPORATION
STATEMENT OF CHANGES IN EQUITY
For the Year Ended December 31, 2013

Capital in Net Changes In Fair


Excess of Par Deposit for Stock Equity Value Of AFS Revaluation Share-based
Value Subcriptions Reserve Financial Assets Increment on Land Compensation
788,643 – – 28,051 568,942 277
– – – – – –
– – – – – –
– – – – – –

– – – – – –
– – – – – –
– – – – – –
– – – (2,307) – –
– – – (2,307) – –
– – – – – –
– – – – – –
– – (7,075) – – –
– – – – – (97)
788,643 – (7,075) 25,744 568,942 180
– – – – – –
– – – – – –
– – – – – –
– – – –

– – – – – –
– – – – – –

– – – – – –
– – – (25,744) – –
– – – 1,906 – –
– – – (23,838) – –
– – – – – –
– – – – – –
– – – – – 180
788,643 (7,075) 1,906 568,942 360
– – – – – –
788,643 (7,075) 1,906 568,942 360
– – – – – –
– – – – – –
– – – – 717,404 –
– – – (1,905) – –

– – – (656) – –
– – – (2,561) 717,404 –
– – – –
– 1,599,945 – – – –
– – – – – 313
788,643 1,599,945 (7,075) (655) 1,286,346 673
Non-
Retained controlling
Earnings Subtotal Interest Total Equity
1,172,385 5,718,702 4,714 5,723,416
509,580 509,580 (1,275) 508,305
(4,541) (4,541) – (4,541)
505,039 505,039 (1,275) 503,764

(36,851) (36,851) – (36,851)


3,179 3,179 – 3,179
(33,672) (33,672) – (33,672)
– (2,307) – (2,307)
471,367 469,060 (1,275) 467,785
(834,913) (834,913) – (834,913)
(187,503) (187,503) – (187,503)
– (7,075) – (7,075)
– (97) – (97)
621,336 5,158,174 3,439 5,161,613
(1,362) (1,362) – (1,362)
685,750 685,750 (3,479) 682,271
(9,645) (9,645) – (9,645)
676,105 676,105 (3,479) 672,626

29,345 29,345 – 29,345


6,752 6,752 – 6,752

36,097 36,097 – 36,097


– (25,744) – (25,744)
– 1,906 – 1,906
712,201 688,363 (3,479) 684,884
(143,388) (143,388) – (143,388)
(152,491) (152,491) (2,505) (154,996)
– 180 – 180
1,037,658 5,550,838 (2,545) 5,548,293
(4,256) (4,256) – (4,256)
1,037,658 5,550,838 (2,545) 5,548,293
787,889 787,889 (1,964) 785,925
(34,849) (34,849) – (34,849)
– 717,404 – 717,404
– (1,905) – (1,905)

– (656) – (656)
753,040 1,467,883 (1,964) 1,465,919
(188,440) (188,440) (2,109) (190,549)
– 1,599,945 – 1,599,945
– 313 – 313
1,602,258 8,430,539 (6,618) 8,468,214
RFM CORPORATION
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2013

2013
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax 1,016,379
Adjustments for:
Depreciation and amortization (Notes 9, 10 and 25) 346,297
Interest expense (Notes 15, 18, 19 and 25) 62,715
Loss on sale of property and equipment (Notes 9 and 25) 10,113
Loss on sale of investment property (Notes 10 and 25) 1,608
Unrealized foreign exchange loss (gain) - net 919
Share-based compensation (Note 28) 313
Gain on sale of investments in shares of stock (Note 11) (80)
Interest and financing income (Note 25) (17,789)
Equity in net earnings of an associate (Note 25) (11,935)
Gain on sale of trademark (Note 30) –
Impairment loss on AFS financial assets (Note 11) –
Impairment loss on property and equipment (Note 9) –
Mark-to-market loss (gain) on derivative liability
(Notes 25 and 33) –
Dividend income (Note 11) –
Loss on retirement of property and equipment –
Movement in net pension obligation (Note 27) 33,558
Movement in provisions (61,982)
Operating income before working capital changes 1,380,116
Decrease (increase) in:
Accounts receivable 379,921
Inventories 241,511
Other current assets (4,431)
Increase (decrease) in:
Accounts payable and accrued liabilities (72,136)
Customers’ deposits 17,638
Security deposits –
Cash generated from operations 1,942,619
Income taxes paid, including creditable withholding taxes (206,773)
Interest paid (70,192)
Interest received 17,604
Net cash from operating activities 1,683,258
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of:
Trademark (Note 30) –
Property and equipment 41,738
Investments in shares of stocks 44,686
Investment property 27,298
Acquisition of property and equipment
and investment properties (Notes 9 and 10) (718,073)
Decrease (increase) in:
Other noncurrent assets (16,603)
Investments –
Acquisition of AFS financial assets (Note 11) (33,405)
Acquisition of investment in joint venture (Note 12) (3,123)
Dividends received (Note 11) –
Acquisition of additional shares of stock of a subsidiary (Note 2) –
Net cash from (used) in investing activities (657,482)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Availment of bank loans (Note 15) 22,597,000
Availment of long-term debts (Note 19) 395,000
Deposit for stock subscriptions 1,599,945
Payments of:
Bank loans (Note 15) (22,760,500)
Long-term debts and obligations (Notes 18 and 19) (1,298,015)
Trust receipts payable –
Dividends paid (Note 21) (115,724)
Advances from (payments to) related parties (Note 26) (32,058)
Net cash from (used in) financing activities 385,648
EFFECT OF EXCHANGE RATE CHANGES ON CASHAND CASH EQUIVALENTS (919)
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,410,505
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,474,713
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6) 2,885,218
2012 2011

933,817 710,313

315,595 251,614
117,368 128,772
708 (1,649)
– –
377 (1,982)
180 (97)
(35,819) (19,717)
(22,076) (17,681)
(11,172) (12,451)
(600,000) –
545,861 –
5,243 –

(1,732) (10,895)
(825) (552)
– 866
(24,123) (2,170)
15,825 50,066
1,239,227 1,074,437

(682,660) (169,977)
(183,826) 105,463
147,993 (54,503)

528,468 84,843
60,868 (7,559)
(1,271) 820
1,108,799 1,033,524
(302,232) (170,546)
(119,681) (152,791)
21,926 21,023
708,812 731,210

600,000 –
52,648 3,546
43,746 36,000
– –

(437,258) (1,016,050)
49,004 (55,303)
13,508 11,904
(15,000) –

825 552
79 (8,659)
307,552 (1,028,010)

15,863,755 27,171,000
160,000 650,000
– –

(15,855,250) (26,661,005)
(505,104) (5,952)
– (417,189)
(135,460) (187,503)
117,788 (79,864)
(354,271) 469,487
(377) 1,838
661,716 174,525
812,997 638,472
1,474,713 812,997
RFM CORPORATION
STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2013
2013 2012
(As Restated - Note 2)
NET INCOME FOR THE YEAR 785,925 672,626
OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified subsequently to profit and loss:
Valuation gains realized through profit or loss (Note 11) (1,905) (25,744)
Net changes in fair value of AFS financial assets (Note 11) (656) 1,906
Items that willincrement
Revaluation not be reclassified to profit
on land - net and loss:
of deferred income tax effect of
=326,139P (Note 9)
Remeasurement gain (loss) on defined benefit plans - net of deferred 717,404 –
income tax effect of =14,936,Pand 2011, respectively (Note 27) (34,849) 36,097
679,994 12,259
TOTAL COMPREHENSIVE INCOME 1,465,919 684,885

Total comprehensive income (loss) attributable to:


Equity holders of the Parent Company 1,467,883 688,364
Non-controlling interests (1,964) (3,479)
1,465,919 684,885
2011
(As Restated - Note 2)
503,764P


(2,307)


(33,672)
(35,979)
467,785

69,060
(1,275)
467,785
RFM CORPORATION
INCOME STATEMENT
For the Year Ended December 31, 2013

2,012
2,013 (As Restated -
REVENUE Note 2)
Manufacturing 10,178,891 10,965,933
Services and others 61,067 32,116
10,239,958 10,998,049
COST OF SALES AND SERVICES (Note 22)
Manufacturing (6,459,168) (7,222,341)
Services and others (111,033) (47,908)
(6,570,201) (7,270,249)
GROSS PROFIT 3,669,757 3,727,800

OPERATING EXPENSES
Selling and marketing (Note 23) (1,769,554) (1,783,241)
General and administrative (Note 24) (890,861) (1,065,407)
OTHER INCOME (CHARGES)
Interest expense (Notes 15, 18, 19 and 25) (62,715) (117,368)
Interest and financing income (Note 25) 17,789 22,076
Gain on sale of investments in shares of stock (Note 11) 80 35,819
Gain on sale of trademark (Note 30) – 600,000
Impairment loss on:
AFS financial assets – (545,861)
Other noncurrent asset (3,072) –
Reversal of allowance for:
Doubtful accounts (Note 34) 20,938 37,143
Inventory obsolescence (Note 7) 12,505 26,255
Other income (charges) - net (Note 25) 21,512 (3,399)
INCOME BEFORE INCOME TAX 1,016,379 933,817
PROVISION FOR INCOME TAX (Note 29)
Current 209,028 276,419
Deferred 21,426 (15,228)
230,454 261,191
NET INCOME 785,925 672,626

Net income (loss) attributable to:


Equity holders of the Parent Company 787,889 676,105P
Non-controlling interests (1,964) (3,479)
785,925 672,626

Basic/Diluted Earnings Per Share (Note 32) 0.25 0.21


2,011
(As Restated -
Note 2)
10,310,477
25,845
10,336,322

(7,019,647)
(38,293)
(7,057,940)
3,278,382

(1,601,241)
(891,029)

(128,772)
17,681
19,717


12,843
791
1,941
710,313

187,374
19,175
206,549
503,764

505,039
(1,275)
503,764

0.16
RFM CORPORATION
STATEMENT OF FINANCIAL POSITION
For the Year Ended December 31, 2013

2013
ASSETS
Current Assets
Cash and cash equivalents (Note 5) 2,885,218
Accounts receivable (Note 6) 2,207,947
Advances to related parties (Note 26) 140,015
Inventories (Note 7) 1,547,535
Other current assets (Note 8) 214,788
Total Current Assets 6,995,503
Noncurrent Assets
Property, plant and equipment (Note 9):
At cost 3,077,305
At appraised value 2,564,222
Investment properties (Note 10) 35,545
AFS financial assets (Note 11) 315,993
Investment in associate and joint venture (Note 12) 141,857
Deferred income tax assets - net (Note 29) 82,722
Other noncurrent assets (Note 14) 268,460
Total Noncurrent Assets 6,486,104
TOTAL ASSETS 13,481,607

LIABILITIES AND EQUITY


Current Liabilities
Bank loans (Note 15) 725,000
Accounts payable and accrued liabilities (Note 16) 2,614,209
Income tax payable (Note 29) 56,723
Advances from related parties (Note 26) 88,482
Customers’ deposits (Note 17) 96,844
Current portion of:
Long-term debts (Note 19) 265,846
Finance lease obligations (Note 18) –
Provisions (Note 20) 6,000
Total Current Liabilities 3,853,104
Noncurrent Liabilities
Long-term debts - net of current portion (Note 19) 651,801
Deferred income tax liabilities - net (Note 29) 504,717
Net pension obligation (Note 27) 45,995
Security deposits 2,069
Finance lease obligations - net of current portion (Note 18) –
Total Noncurrent Liabilities 1,204,582
Total Liabilities 5,057,686
Equity Attributable to Equity Holders of the Parent Company
Capital stock (Note 21) 3,160,404
Capital in excess of par value 788,643
Deposit for stock subscriptions (Note 21) 1,599,945
Equity reserve (Note 2) (7,075)
Net changes in fair value of AFS financial assets (Note 11) (655)
Revaluation increment on land (Note 9) 1,286,346
Share-based compensation (Note 28) 673
Retained earnings (Note 21) 1,602,258
Non-controlling Interests (Note 21) 8,430,539
(6,618)
Total Equity 8,423,921
TOTAL LIABILITIES AND EQUITY 13,481,607
12/31/2012
(As Restated -
Note 2)

1,474,713
2,587,683
89,252
1,789,046
192,278
6,132,972

2,758,376
1,539,359
56,927
329,705
138,852
88,378
305,338
5,216,935
11,349,907

888,500
2,613,354
36,389
69,777
79,208

546,078
7,261
67,982
4,308,549

1,265,393
196,410
28,148
1,183
1,931
1,493,065
5,801,614
3,160,404
788,643

(7,075)
1,906
568,942
360
1,037,658
5,550,838
(2,545)
5,548,293
11,349,907
Dividend Policy

RFM CORPORATION
Schedule J. Reconciliation of Retained Earnings Available for Dividend Declaration For the year Ended Decemb
(Amounts in Thousand Pesos unless otherwise stated)

Retained Earnings, 1 January 2013

Add (Deduct) Reconciling Items:


Cumulative actuarial gain recognized in Retained Earnings
Unrealized mark-to-market gain on derivative liability
Deferred income tax asset

Retained Earnings Available for Dividends, 1 January 2013

Add: Net Income actually earned/realized during the period


Net income during the period closed to Retained Earnings

Add (Less):
Dividend declarations during the year
Appropriations of RE during the year
Reversals of appropriations
Effects of prior period adjustments

TOTAL RETAINED EARNINGS AS OF 31 DECEMBER 2013


AVAILABLE FOR DIVIDEND
1,176,054

(28,241)

(59,525)

1,088,288

898,523

###

1,798,371
Significant Transactions
· In 2011, the Parent Company acquired additional 10.53% ownership interest in RLC, a subsidiary, at a total cost
· As of December 31, 2013 and 2012, investment properties include the portion of the RFM Corporate Center bu
income from the investment property amounted to P13.16 million and P11.17 million in 2013 and 2012, respectivel
ended December 31, 2013 and 2012, respectively.
· In 2012, Double Dragon Properties Corporation assigned to RIBI a condominium unit with a total floor area of 1
· In 2012, the Parent Company sold its quoted shares of stock with a cost of P6.04 million for P41.86 million w
recycled to the statement of income following the sale of these shares.
· In May 2012, RIBI acquired additional investments from Sun Life Prosperity Balanced Fund aggregating 4,953,
are shown as “Net changes in fair value of AFS financial assets” in the equity section of the consolidated balance she
· Engrain-RFM Pacific, Inc.
In 2013, the Parent Company entered into a joint arrangement with Engrain LLC to form a new corporation named E
market. The Parent Company has a 50% equity interest in the said arrangement. The Parent Company has accounte
2014. Investment in Engrain-RFM Pacific, Inc. amounted to P3.13 million as of December 31, 2013.
· The Parent Company entered into a management agreement with ICC under which the Parent Company shall r
million and P30.00 million in 2013, 2012 and 2011, respectively.
· In addition, ICC leases its production facility and warehouse from the Parent Company for its manufacturing o
respectively. Net payable to ICC amounted to P29.72 million as of December 31, 2012. Net receivable from ICC amo
· The Parent Company utilizes RLC for its lighterage requirements. Service fee to RLC amounted to P35.61 milli
million as of December 31, 2011.
· The Parent Company has availments/extensions of both interest-bearing and non-interest-bearing cash advance
subject to annual interest of 9% on the monthly outstanding balance. Total interest earned by the Parent Company am
· Distribution services provided by the Parent Company to URICI for the export of frozen dairy dessert/mellorine
for the years ended December 31, 2013, 2012 and 2011, respectively.
· Management services of the Parent Company to RIBI wherein RIBI pays the Parent Company a yearly managem
31, 2013, 2012 and 2011 amounted to P0.38 million, P0.50 million and P0.50 million, respectively.

· Sale of “Swift” Trademark - On October 16, 2012, the Parent Company entered into a Trademark and Asset Purc
equipment. The agreement covers the sale of the Swift brand at P600 million, specific processed meat equipment at P
in the 2012 statement of income, amounted to P600 million, particularly from the sale of the trademark. Raw material
· Commitments
a. The Parent Company entered into license agreements with Sunkist Growers, Inc., Rovio Entertainment Ltd., and
products. The Company agreed to pay a fixed amount of royalty every year, as stipulated in the agreeements. Roya
“Other accrued liabilities” account, amounted to P=1.94 million and P=1.91 million as of December 31, 2013 and 201
b. The Parent Company entered into distribution agreements with Dole Philippines, Inc. (Dole) and Marca Piña C
2013 and shall expire on April 30, 2014 and the agreement with Marca Piña commenced on April 15, 2013 and shall e
· Noncash Investing Activities
a. In 2012, Double Dragon Properties Corporation assigned to RIBI a condominium unit with a total floor area of 1
b. The Group’s noncash investing activity in 2011 pertains to acquisitions of property and equipment amounting
consolidated balance sheet.
· Events after the Balance Sheet Date
a. In January 2014, the Parent Company purchased the Royal brand from the Unilever Group for P2.10 billion cove
b. In 2014, the Parent Company sold its parcel of land where the Manggahan plant in Pasig City is situated for P200
c. In January 2014, the SEC confirmed that the proposed issuance of shares discussed in Note 21 is exempted from
Financial Transactions
· On February 12, 2013, the Parent Company availed of a loan from a local bank amounting to P370.00 million. T
a certain spread or (2) the BSP overnight reverse repurchase rate. The payments are to be made in sixteen (16) equal q
· On May 13, 2011, the Parent Company availed of an additional loan from a local bank amounting to P=500.00
payments are to be made in seventeen (17) equal quarterly installments of P=29.41 million each to commence at the e
· On October 26, 2010, several bank institutions granted the Parent Company a Peso-denominated floating rate no
years and one day from and after the issue date with interest rate of 6.12%. The payments are to be made in sixteen (1
· On January 28, 2013, through the concurrence of the leaders, the Parent Company made a partial prepayment of
· On March 15, 2011, ICC obtained a P150.00 million unsecured and interest-bearing long-term debt from a loca
annum subject to repricing every quarter. The proceeds of the debt were used by ICC to finance the acquisitions of ne
· On October 19, 2012, ICC obtained another unsecured and interest-bearing long-term debt from the same local
month PDST-F + 1.75% per annum subject to repricing per quarter. Interest rates for the period October 15 to Dece
equipment. The proceeds of the loan are to be drawn by ICC based on a committed drawdown date. As of December
Cost of Capital
Cost of Capital
Earnings per Share

Net income attributable to equity holders of the Parent Company (a)


Weighted average number of common shares outstanding (b)
Basic/diluted earnings per share (a/b)

1 Current Ratio
2 Debt-to-Equity Ratio
3 Asset to Equity Ratio
4 Interest Rate Coverage Ratio
5 Gross Profit Rate
6 Net income Rate
2013 2012 2011
787,889 676,105 505,039
3,160,403,866 3,160,403,866 3,160,403,866
0.249 0.214 0.16

2013 2012
1.82 1.42
0.6 1.04
1.6 2.04
16.43 7.57
35.84% 33.91%
7.68% 6.20%