Lopez Holdings

 

MINUTES OF THE ANNUAL STOCKHOLDERS MEETING

 1. Call to Order

Amb. Manuel M. Lopez, the Chairman of the Board, called the meeting to order and presided over the same. The Secretary, Mr. Enrique I. Quiason, recorded the minutes of the proceedings.

2. Certification of Service of Notice

The Secretary certified that for purposes of the meeting, proper notices of the same were sent to all stockholders of record in accordance with the provisions of the by-laws.

3. Certification of the Presence of Quorum

The Secretary certified that there being present at the meeting, in person or by proxy, stockholders owning 3,077,011,195 shares out of the 4,594,678,897 shares issued and outstanding or 67 % of the total issued and outstanding shares, a quorum was present for the transaction of any business at hand.

Aside from Amb. Manuel M. Lopez, the Chairman, Chief Executive Officer, and Chairman of the Compensation and Remuneration Committee, the following directors were present: Messrs. Oscar M. Lopez, Chairman Emeritus and Chairman of the Nomination, Election and Governance Committee, Cesar E.A. Virata , independent director and Chairman of the Audit Committee, and Salvador G. Tirona, President, Chief Operating Officer and Chief Finance Officer.

Securities Transfer Services, Inc. was appointed to count and validate the votes.

The Secretary informed the stockholders that a number of proxies that were submitted and validated carried approvals for, abstentions or oppositions to, the matters to be discussed during the voting. While they do not affect the results of the voting, they will be made part of the records and noted in the minutes for each item in the agenda.

The Secretary also explained that the manner of voting is non-cumulative, except as to the election of directors, and each stockholder shall have one vote for each share entitled to vote and registered in his name. Unless a motion is duly made and seconded, the voting shall be made viva voce and counted manually by the Corporate Secretary. Voting shall be done by balloting upon motion duly made and seconded, and the transfer agent shall count and canvass the ballots.

In the election of directors, the top seven nominees with the most number of votes will be elected as directors. On the election of directors, cumulative voting is allowed.

4. Reading and Approval of Minutes of Previous Stockholders Meeting

The reading of the minutes of the annual meeting of the stockholders held on June 16, 2014 was dispensed with and, upon motion duly made and seconded, the stockholders approved the same.

Stockholders in person or by proxy representing 3,077,011,195 shares or 100% of the shares present or represented at the meeting voted in favor of approval of the said minutes.

5. Message of the Chairman of the Board and Report of Management

The Chairman delivered his message to the stockholders:

Fellow shareholders:

There is a surplus of good news in the air. Our country is in a much better place today than it was almost five years ago. I don’t know if you have noticed but there really is a positive momentum for the Philippine brand arising from governance reforms and economic growth that seems to be appreciated more by foreign observers.

To those of us who are based abroad and are in constant contact with economic doers and shakers in the world economy, we often hear positive statements about how our economy is doing.

Coming from financial analysts working for banks and financial institutions, we take all the good reviews as positive signs that our country is now being taken seriously and that there is reason for every Filipino to feel proud.

As the Philippine Ambassador to Japan, I have constantly projected our country as a worthy investment haven for Japanese companies actively looking for manufacturing hubs in Southeast Asia. Recently, I have noticed a marked increase in interest from Japanese companies wishing to relocate to our Calabarzon export zones coming from China.

Indeed, the Japanese Chamber of Commerce and Industry of the Philippines announced some of the firms have already started to move to the Philippines. Most of the Japanese companies relocating from China are in information technology, automotive and parts manufacturing. Japanese watchmaker Citizen was reported to have also shut down its China factories and decided to move to our country. Bicycle maker Shimano opened a P1.2 billion manufacturing facility in Batangas. As our executives running our industrial park in Batangas will tell you, the demand from locators has increased tremendously so that we now must look for more land to develop.

In its latest World Economic Outlook report that was released in January 2015, the IMF (International Monetary Fund) said the Philippines could again lead the five largest economies in the ASEAN (Association of Southeast Asian Nations) in terms of growth rate at 6.6% this year. That forecast outpaces the 5.2% average the IMF estimates for ASEAN-5 consisting of Malaysia, Indonesia, Singapore, Thailand, and the Philippines.

Last year, Philippine gross domestic product (GDP) growth came in at 6.1%, a few points shy of the government’s 6.5-7.5% target even as the fourth quarter growth came in at a five-quarter-high of 6.9%. The economy is anticipated to gain further traction in 2015 because of strong fundamentals: a stable macroeconomic framework (a regime of low inflation and larger fiscal space); continued rise in remittances from Filipino workers abroad (around US$23 billion in 2013); a resurgent manufacturing sector and wellperforming service sector, notably the BPO sector; a consistent build-up of foreign exchange reserves (currently at over US$80 billion) and credit rating upgrades from international credit rating agencies.

Communications, construction, manufacturing, real estate, and transportation, among others, are expected to sustain the momentum. In addition, the approval of the post- Yolanda rehabilitation plan is expected to increase government spending and boost the economy.

Of course a good economy is reflected in the daily trading in the Philippine Stock Exchange. The PSE index has been breaking record levels from the start of the year. And share prices of Lopez Holdings and associates have kept pace with the local stock market.

We and our associates have begun to reap the benefits of prudent investments made in the last three to four years. For example, EDC (Energy Development Corporation) successfully commissioned its Burgos Wind Project last November (2014). This project will make an additional 150 MW of electricity available to the Luzon grid, using a renewable resource.

After years of technical and market tests, ABS-CBN Corporation became the first to launch its digital terrestrial TV (DTT) offering, ABS-CBN TVPlus in February 2015, or less than two months after the NTC (National Telecommunications Commission) issued the Implementing Rules and Regulations for the DTT service in December 2014.

Still, much remains to be done to support the steady growth of our country. This is why our group of companies remains to be in investment mode.

First Gen Corporation is doing its share to meet a growing economy’s energy requirements, with its San Gabriel and Avion projects. First Gen will be spending about US$150 million for the 97 MW Avion plant, and about US$600 million for the San Gabriel project.

These investments are necessary if the country is expected to sustain its growth trajectory. The economy expanded by an average of 6.7% in the last three years (2012-2014). Power supply scarcity will only slow it down. That is why it is important for businesses like ours to support inclusive growth so that our fellow Filipinos can find more, better, and appropriate jobs, and become optimally productive as the country progresses.

The work of First Philippine Industrial Park (FPIP), an associate of First Philippine Holdings Corporation, must continue, whether in its present location where it is again running out of land to sell, or elsewhere. We must attract more manufacturers to invest in the Philippines. Such direct investments create jobs, transfer technology and equitably redistribute wealth in a globalized economy.

Rockwell Primaries is the new brand intended to expand Rockwell Land Corporation’s reach to the broader market. We have seen robust demand for Rockwell living spaces as more of our families aspire to live in refreshingly green and spacious, safe and secure urban communities. ABS-CBN’s foray into the digital space also deserves our full support. The DTT technology is considered a great equalizer, giving users who would normally not be able to afford cable programming, vivid pictures, clear sound and a bigger menu of news and entertainment content. Tests of DTT in select areas since 2008 show that consumers were very satisfied with the easy-to-use, plug-and-play DTT service. They invariably preferred DTT over analog broadcast. Now they have a choice, and it is ABS-CBN that is first to provide that choice to them.

The other important work of ABS-CBN in the near term is training citizen journalists or Bayan patrollers in schools and communities reached by its regional stations. We want to support a vigilant citizenry to ensure that social and economic reforms can be sustained and benefit every single Filipino, male or female, young or old, rich or poor.

Yes, we did well in 2014, and expect to do well again in 2015. Yet, we all know that much remains to be done.

For one, post-Yolanda rehabilitation work must continue and even accelerate. The sheer magnitude of the devastation and the dispersed locations of the affected communities require continuous rehabilitation of damaged infrastructure for the local economies to catch up with the rest of the country.

There is consensus among many development economists that we could have done even better if government expenditure in infrastructure kept up with the plans. But then again, the administration had to take a more cautious stance on expenditures specially of big ticket infrastructure to make sure every centavo is well spent and corruption eradicated.

To achieve sustainable growth, for our country, our people, and our businesses, it is essential to align the interests of our many stakeholders — customers, employees, communities, regulators, local governments, creditors, suppliers, affiliates and shareholders. Only by working together can we fulfill our common aspiration of a progressive and just society.

Rest assured that your company and its associates will pursue investments and initiatives with integrity, prudence and genuine malasakit for the future of our country and our people.

That said, let me inform you that your board approved just this morning a cash dividend of ten-centavos per share. The record date is on June 15. And it will be paid out on June 27 (next month).

Thank you for your unwavering support for your board and management team. And thank you for joining us today.

The Chairman next requested Mr. Salvador G. Tirona, the President and Chief Operating Officer, to give the management’s report on the performance of the Company for the year 2014. Mr. Tirona gave the following report:

Good morning, fellow shareholders and Kapamilya! For the year ended December 31, 2014, Lopez Holdings Corporation and its associates achieved good numbers. We continue to lay the groundwork for a sustainable future.

For the year ended December 31, 2014, Lopez Holdings Corporation and its associates achieved good numbers. We continue to lay the groundwork for a sustainable future.

Your company reported P3.760 billion in net income attributable to equity holders of the Parent for the year 2014. This is 94% higher than the P1.943 billion in net income attributable to equity holders of the Parent recorded in 2013. A primary factor for the increase was a onetime booking of a P2.052 billion reversal of impairment of Northern Negros Geothermal Plants (NNPG) assets in 2014.

The consolidated revenues increased by 7% to P100.654 billion from P94.269 billion, as FPH subsidiaries contributed to higher revenues in 2014. Meantime, equity in net earnings of associates which represents primarily the company’s economic interest in ABS-CBN held through Lopez, Inc. surged by about 11% for the year ended 2014.

For the first quarter of 2015, your company reported P1.095 billion in net income attributable to equity holders of the Parent. This is 25% higher than the P877 million in net income attributable to equity holders of the Parent reported for the same period last year. This was primarily due to the solid performance of business units associated with First Philippine Holdings Corporation (FPH) and the 6% increase in ABS-CBN’s net income for the period. Lopez Holdings’ total consolidated assets grew to P338.724 billion in 2014 from P305.942 billion in 2013. This figure mainly includes assets of FPH. Debt-to-equity ratio was at 3.88 x in 2014 versus 3.73x in 2013 . On the other hand, book value per share was up at P10.63 a share at the end of 2014 from a value of P9.75 a share in 2013.

It is also worthy to note that Lopez Holdings’ total consolidated assets as of March 31, 2015 grew to P357.06 billion from P338.72 billion as of December 2014. On the other hand, longterm interest bearing loans and borrowings stood at P152.67 billion as of the end of the first quarter of 2015 from P143.16 billion as of the end of 2014.

On a stand-alone Parent Company’s financial position accounted for at equity method, Lopez Holdings total assets as of March 31, 2015 stood at P45.82 billion. It is composed of Current assets which is mainly cash and cash equivalents and Noncurrent assets representing our carrying value of investments in ABS-CBN and First Philippine Holdings.

Total equity attributable to Parent stood at P43.36 billion as of March 31, 2015.

In 2014, we received P801 million in cash dividends from our major investees, conglomerates First Philippine Holdings Corporation (FPH) and ABS-CBN Corporation (ABS-CBN). In the same year, we paid out P463 million in cash dividends to shareholders. This marked the fourth consecutive year that your company paid cash dividends since the completion of its major debt restructuring in 2010.

Investments made in the last three to four years have borne fruit. Energy Development Corporation (EDC), which persevered in seeking a proper, long-term solution to rehabilitate the BacMan geothermal power plants, saw all three units working at capacity and significantly, increasing availability and reliability. Equally important, EDC’s wind power project in Burgos, Ilocos Norte, was completed on schedule in November 2014. ABS-CBN Digital Terrestrial Television (DTT), which locally tested both the European and the Japanese standards for DTT for several years, became first to market the innovation as ABS-CBN TV Plus earlier this year.

As investors recognized the potential of the FPH group and ABS-CBN for further growth,

their stock prices, and consequently ours, rose and outperformed the market. While the Philippine Stock Exchange Index (PSEi) improved by only 23% over the 2013 level, both FPH and Lopez Holdings share prices advanced by two-thirds or 67% during the same period. On the other hand, share prices of First Gen Corporation almost doubled at 95% in value while those of EDC went up by 54% year-on-year.

Over the period end-2010 to end-2014, Lopez Holdings’ stock price gained 26% while the PSEi gained 72%. This shows that despite the recent run-up in share prices, the company and its associates remain to be significantly undervalued vis-à-vis the market. Investments continue at the level of FPH group and ABS-CBN.

In 2014, First Gen Corporation broke ground on San Gabriel, a combined-cycle, natural gasfired power plant which will cost US$600 million. It also committed another US$150 million for Avion, a fast-track open cycle natural gas-fired power plant. Avion will be able to run on natural gas or liquid fuel.

The property investments of FPH are also busy with expansion. First Philippine Industrial Park continues to grow its land bank. As premium provider of land, infrastructure and services for light industry, it is increasing its recurring revenue base by offering more readybuilt factories. Meanwhile, Rockwell Land Corporation signed last December 2014 an agreement to purchase control of the remaining portion of the Tribeca development in Muntinlupa City. This will become Primaries South, consisting of 6.5 hectares of land, and makes the Rockwell brand which is known for quality development, available to a new market segment.

Other than TV Plus, ABS-CBN continues to work on its new businesses, including ABSCBN mobile and Kidzania, an educational park for children that will open soon at the Bonifacio Global City. Meantime, Sky Cable Corporation is studying the market for the rollout of direct-to-home (DTH) services with the aim of reaching areas too expensive to cable and providing more consumers the opportunity to experience Sky Cable’s vast program lineup.

As for Bayan Telecommunications, Inc. (Bayan), Globe Telecom, Inc. remains 38% owner of the company as of year end-2014, through the conversion of a portion of its debt into equity done in the previous year. The Amended Rehabilitation Plan, filed jointly by Bayan and Globe, was approved by the Court in 2013. Meantime, Globe is prepared to convert further its remaining debt into equity and awaits the decision of the National Telecommunications Commission (NTC) on the proposed additional conversion as this will result in a change of control of Bayan. Once approved, this will finally complete the financial rehabilitation of Bayan which started in 2004 and will ensure the uninterrupted service to its customers.

Our obligations remain manageable, and we continue to provide support to our associates as they pursue sustainable strategic initiatives aligned with our mission to improve the lives of our fellow Filipinos.

As at December 31, 2014, your company had direct obligations of US$23 million in restructured notes and P1.13 billion in short-term loans.

To date, Lopez Holdings owns 46% of FPH and 56% of ABS-CBN. These investees provide genuine service to our customers around the globe. They are the main vehicles for our investments in our country and in the communities in which we operate. We are proud of their track record and fully support their aspirations for sustainable growth. Thank you for keeping faith in your company and with your management team.

The Chairman then opened the floor for any questions from the stockholders on the annual report and the audited financial statements, which have been distributed to the stockholders.

Mr. Jose Ferrer, a stockholder, inquired about whether or not the feed-in-tariff of P8.53 per kwh of EDC’s wind power project in Burgos, Ilocos Norte is an additional revenue of EDC. The Mr. Nestor H. Vasay, Senior Vice President of EDC, replied that the tariff of P8.53 per kwh is the revenue that EDC received for the supply of power to the grid. EDC is required to sell the power generated from the Burgos wind project to the grid through whole sale spot market.

Another stockholder commented and thanked Mr. Cesar E.A. Virata for coming early for the 9:00
a.m. meeting. He also congratulated the Corporation for doubling the earnings per share in 2014. He said
that he appreciates the technology for rock planting as shown in the cover of the 2014 annual report.

Another stockholder complained that while Sky Cable has posted advertising throughout Makati City about the availability of internet service, he was informed that Sky Cable is not available in his area in Makati City. He inquired if this is part of the deal with Globe Telecoms that Sky internet will not be available in Makati. The Chief Operating Officer of Sky Cable Corporation, Mr. Ray Montinola said that there is no deal or agreement with Globe Telecoms that Sky internet will not be available in Makati. He said that it may be just a matter of the timing of the project. Mr. Montinola said that he will get the stockholders address to verify when Sky internet services will be available in his area.

Another stockholder inquired about the SGV fee as external auditors. Ms. Ma. Victoria Marcilino, Vice President for Financial Controls of the Corporation, said that the fee is P1.15 million for the year 2014.

Another stockholder complained that as a subscriber of Destiny Cable, they do not have access to ANC News Service. Mr. Ray Montinola replied that the stockholder may still have an analogue box. If he exchanges the analogue box for a digital box, he will be able to watch ANC News. While there is a charge for the digital box of P1,500 there are no additional fees for the subscription to ANC News.

6. Ratification of the Acts of the Board and of Management

Upon motion duly made and seconded, stockholders in person or by proxy representing 3,069,650,895 shares or 99.76 % of the shares present or represented at the meeting voted to ratify the acts of the Board of Directors and of Management for the year 2014 as reflected in the Report of Management, the Annual Report and the minutes of the meetings of the Board of Directors. There were 1,182,500 votes (0.038%) against said ratification, and 6,177,800 votes (0.2%) for abstention.

7. Election of Directors

The meeting proceeded to the election of directors for the ensuing year 2015 to 2016. The Secretary informed the body that pursuant to the pertinent provisions of the By-laws, nominations of the following stockholders as Directors were received by him at least ten days before the meeting:

Mr. Oscar M. Lopez
Mr. Manuel M. Lopez
Mr. Eugenio Lopez III
Mr. Cesar E. A. Virata
Mr. Washington Z. SyCip
Mr. Monico V. Jacob
Mr. Salvador G. Tirona

The Corporate Secretary said that Mr. Virata, Mr. SyCip and Mr. Jacob were duly nominated as independent directors in accordance with the rules of the Securities and Exchange Commission.

There being no other nominations, it was duly moved and seconded that the seven (7) stockholders who were nominated as directors for the ensuing year be declared elected as Directors for the seven board seats of the Corporation.

There being no objection, the Chairman directed the Secretary to cast the relevant votes in favor of the following stockholders duly nominated as Directors of Lopez Holdings Corporation for the ensuing year and declared them as duly elected members of the Board of Directors of the Company to act as such until their successors shall have been duly elected and shall have qualified. The votes for the directors were as follows:

 

FOR

AGAINST

ABSTAIN

Oscar M. Lopez

3,042,508,151
98.87%

34,503,044
1.12%

0

Manuel M. Lopez

3,038,558,085
98.75%

37,270,610
1.21%

1,182,500
0.03%

Eugenio Lopez III

3,051,799,985
99.18%

25,211,210
0.82%

0
0

Salvador G. Tirona

3,077,011,195
100%

0

0

Washington Z. Sycip

3,032,664,737
98.56%

44,346,458
1.44%

0

Cesar E.A. Virata

3,077,011,195
100%

0

0

Monico V. Jacob

3,047,565,851
99.04%

29,445,344
0.96%

0

8. Appointment of External Auditors

Upon motion made and duly seconded, the firm of SyCip Gorres Velayo & Co. was retained as external auditor of the Company.

Stockholders in person or by proxy representing 3,077,011,195 shares or 100% of the shares present or represented at the meeting voted in favor of the motion to approve the motion for the appointment of SyCip Gorres Velayo & Co. as external auditors.

9. Other Matters

The Chairman entertained additional questions from the stockholders.

A stockholder said that the present policy is that the stockholder or the proxy must be present to claim the give-aways distributed during the annual stockholders meeting. He asked if the Corporation could give due consideration to long-time stockholders to be able to claim the give-aways without being present. Another stockholder disagreed to proposal and said that the stockholder or his proxy should be present when claiming the give-aways. The Chairman said that the request will be taken into consideration.

Another stockholder said suggested that Lopez Holdings, Rockwell Land, First Philippine Holdings Corporation hold their annual stockholders’ meeting on the same day so that common stockholders will only have to travel to the venue only once. The meetings of the said corporations were held one day after the other and she had to travel to Makati three times within the week. The Chairman said that after this was raised by the same stockholder during the Rockwell Land annual meeting, the Rockwell Land Board took the matter up and this will be under consideration. The Chairman said that the Board also has to consider the schedules of the other companies and they want good attendance. He said that annual meetings are scheduled during the mornings only since the weather is cooler in the morning and the traffic is less heavy. This matter will be taken into consideration.

10. Adjournment

There being no further business to transact, upon motion duly made and seconded, the meeting was adjourned.

 

ENRIQUE I. QUIASON
Corporate Secretary

ATTEST:
MANUEL M. LOPEZ
Chairman of the Board

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CONTACT US

Lopez Holdings Corporation (formerly Benpres Holdings Corporation)
4/F Benpres Building, Exchange Road, 1605 Pasig City, Philippines

  • Trunkline: (632) 449-2345
  • Fax: (632) 634-3009