" SanMlguel. Pure Foods October 12, THE PHILIPPINE STOCK EXCHANGE, INC. Philippine Stock Exchange Plaza Ayala Triangle Ayala Avenue, Makati City

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1 " SanMlguel Pure Foods October 12, 2011 THE PHILIPPINE STOCK EXCHANGE, INC. Philippine Stock Exchange Plaza Ayala Triangle Ayala Avenue, Makati City Attention: Ms. Marsha M. Resurreccion Head, Listings Department Ms. Janet A. Encarnacion Head, Disclosure Department Re: Quarterly Progress Report on the Application of Proceeds of Preferred Shares Offer For the Quarter Ended September 30, 2011 Ladies and Gentlemen: Please be advised that as at September 30, 2011, San Miguel Pure Foods Company, Inc. has fully disbursed the proceeds from the offering of the Company's Preferred Shares ("PFP Offering") amounting to FIFTEEN BILLION PESOS(P15,OOO,OOO,OOO.00). The details of the disbursements made from the PFP Offering total proceeds are as follows: PFPOffering Proceeds Php 15,000,000, Less: PFP-related disbursements Underwriting fees Php 144,958, PSElisting and processing fees 15,050, Legal and other professional fees 5,159, SECfiling and legal research fees 4,365, DST 750, Other expenses 2,091, ,374, Full payment of food-related brands and other intellectual property rights acquired from San Miguel Corporation (SMC) 2,880,000, Balance on the acquisition of the Vietnam food business through San Miguel Pure Foods International, Limited (SMPFIL) 720,605, Purchase of Manila Electric Company (MERALCO) shares from SMC 11,227,019, Balance of Proceeds from PFP Offering as at September 30, 2011 Php 0.00 San Miguel Pure Foods Company. Inc. 23rd Fir., The JMT Corporate Condominium, ADB Avenue Ortigas Center, Paslg City, Metro Manila, Philippines 1605 Tel. No.: (632) Fax No.: SAN MIGUEl CORPORATION

2 SAN MIGUEL PURE FOODS COMPANY, INC. NOTES TO QUARTERLY SUMMARY OF APPLICATION OF PROCEEDS FOR THE QUARTER SEPTEMBER 30, ) BACKGROUND On September 15, 2010, the Board of Directors (lithe Board") of San Miguel Pure Foods Company, Inc. (SMPFC or lithe Company") approved, among others, the (i) reclassification of up to 75,000,000 authorized and unissued common shares into cumulative, non-participating, non-voting and nonconvertible preferred shares with par value of Pl0.00 per share, (ii) issuance of preferred shares with total issue size of up to P50,OOO.0million, part of the proceeds of which will be used to settle the Company's remaining 90% balance relating to the purchase of SMC's food-related brands and intellectual property rights (the "Brands Acquisition"), and the acquisition from SMC of San Miguel Pure Foods (Vn) Co., Ltd. (SMPFVN) through San Miguel Pure Foods International, Limited (SMPFIL)(the "SMPFVN Acquisition"), (iii) listing of such preferred shares at the appropriate exchanges, and (iv) amendment of the Company's Articles of Incorporation to reflect the reclassification of such common shares to preferred shares and the denial of pre-emptive rights of shareholders for the proposed issuanceof said preferred shares. On November 3, 2010, the Company's stockholders approved, among others, the (i) reclassification of 40,000,000 authorized and unissued common shares of the Company into non-voting, cumulative and non-participating preferred shares with par value of PlO.OOper share, (ii) issuance of such preferred shares and the listing thereof at the appropriate exchanges, and (iii) amendment of the Company's Articles of Incorporation to reflect the reclassification of 40,000,000 common shares to preferred shares and the denial of pre-emptive rights of shareholders for the proposed issuance of said preferred shares (lithe Amendment"). On December 23,2010, the Securities and ExchangeCommission (SEC)approved the Amendment of the Articles of Incorporation of the Company. On January 20, 2011, the SECfavorably considered the Company's Registration Statement covering the registration of 15,000,000 preferred shares with a par value of Pl0.00 per share. On January 26, 2011, the Philippine Stock Exchange, Inc. (PSE)approved, subject to certain conditions set out in its Notice of Approval (the "Notice of Approval"), the application of the Company to list up to 15,000,000 preferred shares with a par value of Pl0.00 per share to cover the Company's follow-on preferred shares offering at an offer price of Pl,OOO.OOper share and with a dividend rate determined by management on the dividend rate setting date. On February 9, 2011, the Prospectus for the preferred shares offer was submitted to the SECand the PSE. On February 10, 2011, the SEC issued the order for the registration of the Company's 15,000,000 preferred shares with a par value of Pl0.00 per share and released the Certificate of Permit to Offer Securities for Sale.

On February 11, 2011, the Board approved the terms of the preferred shares offer as set out in the Prospectus (the "Terms of the Offer"), as well as the amendment of the Amended Articles of

3 On February 11, 2011, the Board approved the terms of the preferred shares offer as set out in the Prospectus (the "Terms of the Offer"), as well as the amendment of the Amended Articles of Incorporation of the Company to reflect the additional optional redemption features of the preferred shares, to align with the Terms of the Offer. The stockholders of the Company later approved the said amendment during its annual meeting on May 13, On March 3, 2011, the Company's 15,000,000 preferred shareswith par value of Pl0.00 per share were issued and listed on the PSE. On June 2, 2011, the SECissued the Certificate of Filing of Amended Articles of Incorporation, approving the additional optional redemption features of the preferred shares of the Company, as provided in Article Seventh thereof, as amended. In view of the foregoing and in compliance with the PSENotice of Approval, the Company is hereby submitting to the PSEvia the Online Disclosure System (ODiSy),this quarterly progress report on the application of the proceeds from the preferred shares offering ("the PFPProceeds"), on or before the first fifteen (15) days following the third quarter of ) RELEVANTINFORMATION Expenditures from the PFPProceeds are discussedbelow: a] Nature of the Expenditures PFP Proceeds were used mainly to pay an outstanding obligation to SMC relating to the Brands Acquisition, Vietnam Acquisition and the purchase of MERALCOshares. The following are the classifications of expenditures from the PFPProceeds: i. Acquisition of SMC'sfood-related brands and other intellectual property rights In July 2010, SMC and SMPFCentered into an Intellectual Property Rights Transfer Agreement ("the Agreement") for the transfer to SMPFCof SMC's food-related brands and intellectual property rights at a purchase price of P3,200.0 million. Pursuant to the Agreement, 10% of the purchase price was paid in July 2010 and the 90% balance shall be payable (1) upon change in controlling interest of SMPFCto any third person other than an affiliate or (2) two years from July 30, 2010, subject to a floating interest rate based on one-year PDSTFplus an agreed margin after one year, whichever comes first. The 90% balance amounting to P2,880.0 million was subsequently settled by SMPFC on March 8, 2011, the funding of which came from the PFPProceeds. In this regard, in compliance with the PSENotice of Approval, the Company disclosed on the same date to the PSEvia the ODiSy,such disbursement made in connection with the planned use of the PFPProceeds. ii. Acquisition of Vietnam food businessthrough SMPFIL In July 2010, the Company, through its wholly-owned subsidiary, SMPFIL,acquired SMC's 51% interest (through San Miguel Foods and Beverage International limited [SMFBll]) in San Miguel Pure Foods Investment (BVI) limited (SMPFIlimited) for US$18.6 million. SMPFI limited owns

100% of SMPFVN. Pursuant to the Sale and Purchase Agreement between SMFBIL and SMPFIL, 10% of the purchase price was paid in July 2010 and the balance of US$ 16.

4 100% of SMPFVN. Pursuant to the Sale and Purchase Agreement between SMFBIL and SMPFIL, 10% of the purchase price was paid in July 2010 and the balance of US$ 16.8 million shall be payable (i) upon change in controlling interest of SMPFIL to any third person other than an affiliate or (ii) two years from July 30, 2010, subject to floating interest rate based on one-year LlBOR plus an agreed margin after one year, whichever comes first. The 90% balance amounting to US$16.8 million (or equivalent to P720.6 million) was subsequently settled by SMPFC on May 9, 2011, the funding of which came from the PFP Proceeds. In this regard, in compliance with the PSENotice of Approval, the Company disclosed on the same date to the PSE via the ODiSy, such disbursement made in connection with the planned use of the PFP Proceeds. iii. Purchase of Manila Electric Company (MERALCO) shares from SMC In August 2011, SMC and SMPFC executed a Share Purchase Agreement (the "SPA") covering the sale by SMC to the Company of fifty nine million ninety thousand nine hundred nine (59,090,909) MERALCO shares of stock at Two Hundred Twenty Pesos (P220.00) per Share. Of the total consideration amounting to Twelve Billion Nine Hundred Ninety Nine Million Nine Hundred Ninety Nine Thousand Nine Hundred Eighty Pesos (P12,999,999,980.00) paid upon the execution of the SPA, Eleven Billion Two Hundred Twenty Seven Million Nineteen Thousand Two Hundred Twenty Five Pesos and Eighty Nine Centavos (Pll,227,019,225.89) was disbursed out of the proceeds from the PFPOffering in favor of SMC. The balance, amounting to One Billion Seven Hundred Seventy Two Million Nine Hundred Eighty Thousand Seven Hundred Fifty Four Pesos and Eleven Centavos (P1,772,980,754.11), was disbursed to SMC out of internally-generated funds of the Company. iv. PFP-related Disbursements These are actual payments made in connection with the registration, offer, listing and issuance of the preferred shares. b) Payment of Expenses Incurred before Listing of the Preferred Shares with the PSE Prior to the official listing of the Company's 15,000,000 preferred shares on March 3, 2011, a total of P19,415, were disbursed from the PFP Proceeds to cover various SECand PSEfees.

5 ACKNOWLEDGEMENT REPUBLICOF THE PHILIPPINES ) CITY OF MANDALUYONG ) 5.5. At the City of Madaluyong this day of act , personally appeared before me ZENAIDA M. POSTRADO, with Philippine Passport No. XX issued in Manila and expiring on October 19, 2014, in her capacity as Treasurer and Chief Finance Officer of SAN MIGUEL PURE FOODS COMPANY, INC., personally known to me and avowed under penalty of law to the whole truth of the contents of the foregoing certificate. WITNESS MY HAND AND SEALat the place and date first above written. 41f Doc. No. Page No. Book No. ]I Series of B1 ALFXAND~G.B- Commission No Notary Public for Manda1uyoog City Until Dec. 31,2012 SMC, 40 San Migucl Ave., MandaluyoDg at)' Roll No PTR No ; 01/03/11; Ma.t1da1uyoog City mp No ; ; MakBti City

6 Manabat Sanagustin & Co., CPAs The KPMG Center, 9/F 6787 Ayala Avenue Makati City 1226, Metro Manila, Philippines Branches: Subic. Cebu. Bacolod. Iloilo Telephone Fax Internet +63 (2) (2) INDEPENDENT ASSURANCE REPORT PROVIDED ON THE QUARTERLY PROGRESS REPORT The Board of Directors and Stockholders San Miguel Pure Foods Company, Inc. JMT Corporate Condominium ADB Avenue, Ortigas Center, Pasig City Introduction We were engaged to provide moderate assurance on the accompanying Quarterly Progress Report of San Miguel Pure Foods Company, Inc. (the "Company") for the quarter ended September 30,2011, and the accompanying explanatory notes with respect to the Company's use of the proceeds from its recent public offering of Preferred Shares ("PFP Offering Proceeds"). Management is responsible for the preparation and fair presentation of such report in accordance with the planned use ofpfp Offering Proceeds as presented in the Offering Prospectus of the Company. Our responsibility is to carry out a moderate assurance engagement and to express a conclusion based on the work performed. Summary of Work Performed We conducted our engagement in accordance with Philippine Standard on Assurance Engagements 3000, Assurance Engagements other than Audits or Reviews of Historical Information. This Standard requires that we comply with applicable ethical requirements, including independence requirements, and that we plan and perform the engagement to obtain moderate assurance about whether the report is free from material misstatement. A moderate assurance engagement consists of making inquiries, primarily of persons responsible for the preparation of information presented in the report, and using a combination of inspection, observation and re-calculation. A moderate assurance engagement is substantially less in scope than an audit conducted in accordance with Philippine Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Manabat Sanagustin & Co., CPAs, a Philippine partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG Intemational"), a Swiss entity.

7 Conclusion Based on the procedures performed, as described above, nothing has come to our attention that causes us to believe that the accompanying Quarterly Progress Report of San Miguel Pure Foods Company, Inc. is not presented fairly, in all material respects, the information on the use ofpfp Offering Proceeds for the quarter ended September 30,2011, in accordance with the planned use of such proceeds as presented in the Offering Prospectus of the Company. MANABAT SANAGUSTIN & CO., CP As artner t' J lcense N. 00 ~~~ SEC Accreditation No AR-2 Tax Identification No BIR Accreditation No Issued June 30, 2010; Valid until June 29, 2013 PTR No MB Issued January 3,2011 at Makati City October 14, 2011 Makati City, Metro Manila 2

SECURITIES AND EXCHANGE COMMISSION

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