Manila Electric Company (MER) Earnings Call Transcript & Summary

Good morning, and a warm welcome to all of you to the 63rd Annual Stockholders Meeting of the company. We will start the meeting with the Philippine National Anthem followed by the Meralco Hymn to be signed by the Meralco Chorale and an invocation to be led by [ Ms. Karisa Mindo ]. [ Ms. Mindo ] was a One Meralco Foundation scholar and now serves as a relay technician at Meralco's Pasig Sub-transmission Services. Please stand. [Presentation]

We shall now begin the 2026 Annual Stockholders Meeting. Ladies and gentlemen, presiding over this meeting is the Chairman of the company, Mr. Manuel V. Pangilinan.

Thank you, Jeff. Good morning, and a warm welcome to all of you to the 63rd Annual Stockholders Meeting of the company. We are conducting the meeting face-to-face at the Meralco Theater, Lopez Building, Ortigas Avenue, Pasig City and virtually as we simultaneously highlight stream here through our [ Serve ] platform. Thank you to all our stockholders who are joining us today and participating in this meeting. At this time, allow me to introduce to you our directors who are here with me at the theater as follows: Ms. Jun Sheryl Cabarilla; Dr. Lydia Echauz, Dr. Espinosa; Mr. Patrick Henry Go, Mr. Lance Gokongwei, Attorney Rey Espinosa, Mr. Patrick Henry Go, Mr. Lance Gokongwei, Mr. Jose Maria Lim, Retired Chief Justice Artemio Panganiban, Mr. Victorico Barrios. Also joining us online are Mr. Pedro Emillio Roxas, who is abroad; and Mr. James Go, also abroad. Retired Chief Justice Artemio Panganiban also serves as the Chairman of our Audit Committee. Now let me introduce our other corporate officers who are also on stage. Our Chief Finance Officer, Ms. Betty Siy-Yap; our Corporate Secretary, Attorney Simeon Ken Ferrer; our Assistant Corporate Secretary, Attorney William Pamintuan; our Chief Operating Officer, Ronnie Aperocho; the President and CEO, Meralco Power Gen, Mr. Emmanuel Rubio. Other corporate officers and executives of the company, as well as the company's external auditor, SyCip Gorres Velayo & Co. are also present in this meeting and are seated in the front part of this theater. Please stand to be recognized. Let me now formally begin this meeting, and I call the 2026 Annual Stockholders Meeting to order. The proposed resolutions for this meeting are contained in our Definitive Information Statement, a copy of which has been placed uploaded in our website, www.meralco.com.ph to make it accessible to all stockholders and stakeholders. We have also posted the proposed resolutions at the registration area of this building. This practice is in line with the company's commitment to good governance and its desire to encourage broader participation of its stockholders in deciding fundamental matters affecting this company. Now I'd like to ask our Corporate Secretary to read the ground rules and voting procedures for this meeting.

Thank you, Mr. Chairman. The ground rules and voting procedures are set forth in the company's definitive information statement and in the rationale and explanation of the agenda, which form part of the notice of Annual Stockholders Meeting. Let me just highlight the following points for our stockholders. Attendance in this meeting shall be either in person or via remote means. Stockholders attending in person may register on site. Stockholders attending and voting via remote means, on the other hand, must have registered at the Meralco Serve platform found at https://company.meralco.com.ph/corporate-governance/voting-in-absentia from June 5, 2026 to June 27, 2026. The Serve platform provides a live stream video service that allows the stockholders or their proxies to participate and vote electronically on the matters to be passed upon in the Annual Stockholders' Meeting and to elect members of the company's Board of Directors. The record date set by the Board of Directors for the determination of stockholders entitled to notice and to vote at this meeting is April 10, 2026, while the deadline for submission of proxy is on June 2, 2026. Voting on the agenda items for all stockholders shall be through electronic means. Stockholders attending in person shall be given access to electronic devices at the meeting venue on the day of the meeting, allowing them to exercise their right to vote electronically, while those attending via remote communication may use our Serve platform. Due to time constraints, only stockholders or their proxies attending in person may make a motion or second such motion at the meeting. Any stockholder who wishes to take the floor must wait to be acknowledged by the Chairman. If acknowledged, he must identify himself first and address these concerns to the Chairman. Questions from the stockholders shall be entertained subject to the following: All questions and clarifications will be entertained during the question-and-answer portion, which will take place before other matters. Only questions relevant to a particular item in the agenda being discussed shall be allowed. Hence, questions irrelevant to the agenda shall be considered out of order. For expediency, stockholders attending in person are encouraged to write their questions or concerns on a piece of paper and submit them to the ushers during the answer and question portion. All concerns should be raised by way of question so that these can be properly addressed. Questions and clarifications, which could not be entertained due to constraints may be sent via e-mail to [email protected] or through Meralco's Serve platform for our remote attendees. Given the level of complexity and the time needed to resolve questions on customer service, dividend delivery, invitations to or notice of the Annual Stockholders' Meeting and other operational matters, stockholders attending in person with concerns or questions on these are requested to approach our customer desk or stockholder concerns desk near the registration area at the lobby. They may also write their concerns with their contact details and submit the same to the ushers nearest to them. And these concerns will be forwarded to the responsible person of the company. As indicated in notice and the electronic ballot, there are five resolutions proposed for the adoption of the stockholders in this meeting. Each proposed resolution will be shown on the screen as the same is being taken up. The Chairman may waive or allow exceptions to the foregoing rules if in his judgment, he deems it necessary or proper under the circumstances. For our voting procedure, the company's outstanding common shares entitled the stockholder to 1 vote for 1 share. The affirmative vote of the stockholders representing at least a majority of the outstanding voting shares shall be needed to pass and approve each proposed resolution unless the law provides otherwise. For the election of directors, stockholders may vote such number of shares for as many persons as there are directors to be elected or accumulate his votes in favor of one or some candidates. Election of directors shall be by plurality of votes. All votes received shall be tabulated by our Serve platform and validated by the Office of the Corporate Secretary and the accounting firm, [ Reyes Apandong & Company ], which was duly appointed to act as such for this Annual Stockholders' Meeting. As we take up each item on the agenda, I, as Corporate Secretary, will report on the votes received and tabulated as of 9:00 a.m. today. The minutes of the meeting will, however, reflect the final tally of votes. Voting will close when the meeting is adjourned. Finally, may we remind everyone to observe properly quorum and due courtesy during this meeting.

Thank you, Mr. Secretary. Can you please advise stockholders who are served with the notice of this meeting in accordance with the company's bylaws and by the pertinent regulations?

Yes, Mr. Chairman. Stockholders of record as of April 10, 2026, who have provided us with their e-mail address were furnished a copy of the notice of this meeting through electronic mail. The notice was also published in the Business Mirror and Philippine Star print and online editions on June 8 and 9, 2026, and posted on the company's website. Accordingly, all stockholders have been duly notified of the meeting in accordance with applicable laws such as the Revised Corporation Code and the Securities Regulation Code, our bylaws and our internal guidelines for participation in meetings in person via remote communication and for voting in abstentia, which are embodied in the company's definitive information statement as approved by the Securities and Exchange Commission. The rationale and explanation for each agenda item, which requires shareholders' approval were provided in the notice of meeting.

Thank you, Mr. Secretary. The next order of business is the determination of quorum. Mr. Secretary, do you have a quorum for purposes of this meeting?

Mr. Chairman, there are present in person through remote communications and by proxy at this meeting, stockholders who own or hold a total of 935,942,065 shares or 83.03% of the 1,127,271,117 issued and outstanding shares of the company entitled to vote. The minutes of the meeting -- of this meeting will reflect the final tally of our attendance together with the corresponding percentage as against the total number of issued and outstanding shares of the company entitled to vote.

Thank you again, Mr. Secretary. There being a quorum, we shall now proceed with Item #3 on the agenda today. Item #3 on our agenda is the approval of the Minutes of the Annual Stockholders Meeting held last year on May 27. Copies of the Minutes have been made available during office hours at the office of the Corporate Secretary and the company's website within 24 hours from the conduct of such meeting. Stockholders may also find the Minutes in the definitive information statement submitted to the Securities and Exchange Commission. It is also available at the registration area at the lobby of this building. May I hear a motion for approval of the minutes? Microphone 3.

Good morning, Mr. Chairman. I am Raniel Santos. Since copies of the minutes of the Annual Stockholders Meeting held on May 27, 2025, have already been made available at the office of the Corporate Secretary and the definitive information statement and posted at the company's website in the registration area. I move that we dispense with the reading of the said minutes and the same be approved as recorded. And for this purpose, resolution #2026-1 be adopted.

Any second?

I second the motion, Mr. Chairman.

Thank you. It has been moved and seconded that the reading of the minutes of the Annual Stockholders Meeting held on May 27, 2025, be dispensed with and that the same be approved as recorded and that for this purpose, resolution #2026-1 be adopted. Mr. Secretary, do we have the voting results on this particular item of the agenda?

Yes, Mr. Chairman. At this point, we have received and tabulated the following number of votes. For those in favor of the motion, 934,481,645 shares or 82.89%. Those who voted against 3,305 shares or 0.00%. Those who abstained, 1,433,268 shares or 0.12%. Mr. Chairman, the Minutes of this Meeting will reflect the final tally of votes for all the matters taken up at this meeting.

Thank you, Mr. Secretary. With stockholders owning more than a majority of the total outstanding capital stock having voted for the motion, the motion is carried. Resolution #2026-1 has been approved and is hereby adopted. Proceeding now to the next item, Item #4, I would like to call on Meralco's Chief Operating Officer, Ronnie Aperocho; and Meralco Power Gen President and CEO, Mr. Emmanuel Rubio, to present the significant milestones and key achievements of the company for the year 2025.

Mr. Chairman, members of the Board, fellow Meralco leaders and our valued stockholders, good morning. It is an honor to report our 2025 performance highlights. Our report is titled Beyond 2025 because 2025 was not only a year of strength and resilience, but also a year of our pivot towards positioning the company to a more distributed, intelligent and customer-driven energy future. Financially, Meralco delivered another strong year despite a challenging business environment. Consolidated core net income was a record PHP 50.6 billion, coming from a revenue of PHP 497.3 billion and core EBITDA of PHP 86.4 billion. We also returned value to our shareholders through a higher total dividend of PHP 28 per share, representing 62.4% of core earnings per share. 2025 also recognized the growing [ CC&I ] contribution from our power generation group. Our consolidated energy sales stood at 53,997 gigawatt hours, demonstrating resilience of our customer base despite external factors that weigh on electricity demand, such as the extreme weather shifts, softer economic conditions and the accelerating adoption of rooftop solar. But this also tells us that demand patterns are evolving. Customers are consuming differently. Weather patterns are becoming less predictable and distributed energy resources are beginning to reshape load and demand profiles. This is the new operating reality for the distribution utility. We ended the year with 8.22 million customers, a 2.2% increase from the prior year. In addition, we expanded energy access and brought power to areas that have long waited for it. We energized the [ Cagbalete ] Island microgrid in time for the Christmas festivities, powering more than 1,000 homes, small businesses, schools and essential facilities through a hybrid solar plus battery system. That moment reminded us why we exist because at the heart of our business is not infrastructure, it is impact. And we must remain steadfast in ensuring that no one will be left behind in the dark. In 2025, system loss stood at 5.85% marking our 18th consecutive year below the regulatory cap, delivering over PHP 6.5 billion in savings for our customers. System loss is a key indicator of our operational efficiency. Every percentage point we protect in system loss is value preserved for our customers. Service reliability remains one of our strongest operational achievements. Last year, we recorded 0.911x System Average Interruption Frequency Index or SIFI, and 97.5 minutes System Average Interruption Duration Index or SIDI, our all-time best performance. These numbers surpassed the gold standard for utilities globally of 1 SIFI and 100 SIDI. This means that our customers experience fewer and shorter power interruptions. Achieving another all-time best reliability performance exhibits our sustained investments in our core business. We implemented a record PHP 28.5 billion in CapEx, our highest ever. We built four new and expanded seven existing substations, upgraded four sub-transmission lines, hardened facilities against storms and calamities and modernized the electric distribution infrastructure. At the same time, we recognize that building the future grid is not only about physical infrastructure. It is also about building the digital layer. 2025 marked a significant leap in our digital journey, 36 transformation projects were successfully deployed, supported by PHP 2.92 billion in digital investments, 35 innovation initiatives were pursued and 50 AI-driven use cases were identified across the enterprise. These digital investments are important because the utility of the future will be much more complex. We will need to manage more data, more customer touch points, more distributed resources and more real-time operational decisions. Our Customer Satisfaction Index, or CSI, reached 7.97. While this score indicates continued customer trust, we are also cognizant that customer expectations are rising. Customers today expect not only reliable electricity, but also faster service, clearer information, more convenient digital channels and greater support in managing their energy consumption. Hence, we're making sure that our investments in the physical grid and the digital layer translate into better customer experience. Let me now move to the regulatory and investment framework that will support the next chapter of the [ DU ] business. Meralco has completed the filing for the first regulatory period covering the regulatory years 2027 to 2030 with implementation expected to begin on July 1, 2026. With a proposed maximum average price of PHP 2.34 per kilowatt hour, a weighted average cost of capital of 14.6% and PHP 242 billion in new capital expenditures, this rate reset outlines the investments needed to modernize the grid. And we continue to engage with the ERC and stakeholders to ensure that the first [ RP ] reset shall support both customer interest and the long-term growth of the [ DU ] business. Growing the [ DU ] business also means expanding our franchise through strategic partnerships. Meralco's expansion road map is anchored in bringing Meralco's brand of reliable service to underserved areas. We are working on opportunities to acquire or partner with utilities and eco zones. For Meralco, franchise expansion is not only about geographic reach, it is about extending the proven Meralco operating model and to new growth corridors. On our retail electricity supply business, we delivered 6,692 gigawatt hours in energy sales and served 782 customers in 2025, reflecting solid growth from the previous year. Looking ahead, the market is moving toward greater customer choice. Through the retail aggregation program, more customers, particularly those with smaller individual demand can now aggregate and participate in the competitive retail electricity market. Retail aggregation is an important growth area for us. Through our rest, we are preparing to serve this broader market with competitive and reliable supply solutions. Meralco continues to drive growth through its power and unpowered subsidiaries. Clark Electric Development Corporation, [ Simtrak ] Power Corporation and Meralco Eco Zone Power are key enablers of growth and progress in Clark Freeport Zone, New Clark City and Cavite Economic Zone, respectively. [ CEDC ] prides itself in providing the lowest retail rate and the lowest system loss among all private distribution utilities in the country. [ Meralco ] is well positioned to grow as an execution arm for major energy infrastructure and renewable energy build-out. They're also helping connect power generation projects, including the MTerra Solar project. MSERV conducted over 200 energy audits nationwide, helping businesses achieve higher energy efficiency. MSERV is also supporting the new NAIA modernization project. MSpectrum will be critical in our broader solarization efforts. This strengthened Meralco's solar growth platform for commercial and industrial segments. We target to add 600-megawatt peak of C&I rooftop solar in the next 5 years. MSpectrum is also positioning to expand solar panel installations to million hub homes nationwide. [ Moven ] is building our e-mobility platform with EV charging stations now being deployed in residential and commercial developments. Radius expanded digital connectivity through strategic partnerships and by that evolved into a full-fledged digital financial ecosystem. Beyond operational and financial metrics, we remain deeply committed to our role as a partner in nation building, spreading light where needed. In 2025, through One Meralco Foundation, we directly served 52,304 families, completed 170 electrification projects and implemented 240 community relations initiatives. Our commitment to sustainability also continues through the [ One for Trees ], where we have now planted and nurtured more than 3 million trees since 2019. And as we mark the 15th anniversary of the [ MBP AAA ], we celebrated thousands of young achievers. We also continued to support education through the Balik Eskwela program, reaching 7,342 public school students in 2025. And as the Philippines explores nuclear energy as part of its long-term energy strategy, we will need Filipino engineers and professionals who understand the science, the discipline, the safety culture and the global standards required for nuclear energy. Our [ Fission ] scholars, Amiela Nicodemos and Gener Atienza just completed their degrees in Master of Engineering in Nuclear Energy Systems at the University of Illinois Urbana Champagne with flying colors. As we look forward to the graduation of the rest of our scholars in Canada, France, Korea and China, we are already preparing for the reintegration into our nuclear adoption program as we monitor the exciting developments in the small modular reactor or SMR technology happening nowadays. After walking through our 2025 performance, we now come to the bigger picture. We are seeing a fundamental shift in the energy landscape. More customers are installing rooftop solar. We are seeing the exponential growth of electric vehicles. Households and businesses are managing their own energy usage more actively. New technologies are coming in. All of these realities point us to one direction, Meralco must evolve. This means redefining our role from simply delivering electricity to orchestrating a dynamic decentralized energy ecosystem. We need to transform Meralco's traditional DU business into a distributed energy platform operator that is enabled by cutting-edge technologies, big data and artificial intelligence. In doing all this, we must work closely with policymakers and regulators to help shape policies that unlock innovation and value. It is essential because the future distribution utility will require a regulatory framework that recognizes and rewards flexibility, resilience and customer participation. In closing, 2025 was a banner year for Meralco. But more importantly, 2025 was the year when we flipped the new chapter of our story. The road ahead is not easy, but we are ready. With the support and guidance of our Chairman, MVP, our members of the Board and the hard work and [Foreign Language] of all of the men and women of Meralco, we will succeed. Beyond 2025, Meralco will continue to do what it has always done best, power lives, enable progress and build the energy future our country deserves, [Foreign Language] Meralco.

Chairman MVP, valued shareholders, members of the Board, colleagues, partners and friends, good morning. During last year's Annual Stockholders Meeting, we said that MGen is building a legacy by transforming into a future-ready powerhouse. In 2025, we began showing what that means. It was the first full year of our revitalized organization, a new MGen with a clear goal to become a leading power generation company, not just in the Philippines, but in the region. When we reintroduced MGen, we committed to building a stronger, more focused and a more future-proof organization. We aligned our people around a clear vision, a renewed mission and our power values. Our results reflect the strength of this renewed direction. MGen ended 2025 with consolidated core net income at PHP 16.8 billion, reflecting a significant 52% growth from the previous year. This was driven by three things. First, our plants remained available for an average of 95.2% throughout the year, 3 percentage points higher compared to the previous year and well within world-class standards. Second, we delivered 27,289 gigawatt hours of energy, a significant 78% increase compared to the previous year, driven by our new investments in gas-to-power technology in the Philippines. And third, we had our first full year participation in the reserve market. The closing of the Chromite Gas Holdings deal drove significant growth to MGen's portfolio in the past year. Through [ LNGPH ], the country's first and largest integrated liquefied natural gas import and regasification terminal, we now power the Luzon grid with 27,475 megawatts of energy, which is serving at least 18% of Luzon's power needs. This investment is a testament to our commitment to reliability and sustainability supporting the country's energy transition. With the recent global developments affecting the energy industry, it reminded us why reliability cannot depend on one source of power alone. The geopolitical tensions in the Middle East showed how quickly energy conditions can shift. And for a growing economy like the Philippines, this reinforces the need for dependable baseload capacity. Baseload power helps keep the system running, manage supply risks and support affordability when markets become volatile. We are strengthening this further through energy storage. Just last month, we successfully energized Toledo Battery Energy Storage System in Cebu. This facility utilizes advanced lithium ion technology to store electricity from both renewable and conventional power sources through the wholesale electricity spot market, making energy available when the grid requires additional support. And speaking of battery storage, we now move to renewables. Renewables is the fastest-growing technology in MGen's energy portfolio and with the Department of Energy's goal of increasing renewable energy to 35% of the country's energy mix by 2030 and 50% by 2040, MGen remains on track to support this direction. And at the center of this is our flagship project, MTerra Solar. As of end May 2026, Phase 1 of MTerra Solar is almost 90% complete with 2,090 megawatts DC of solar PV installed, 741 battery energy storage system units deployed and 89, 500 kV towers built. We have done this in less than 2 years, a feat that we in One Meralco achieved. And we are proud to say that it has already started delivering energy to Meralco with 93.3 gigawatt hours of energy since its energy station in March of this year. This is a major milestone delivered by our employees and contractors. Projects of this scale usually take years to develop, build and bring to the grid. But MTerra Solar began delivering energy in just 16 months after groundbreaking, proof that Filipinos can build big and build fast. To date, MTerra Solar is already the largest operational integrated PV and battery energy storage system facility in the world, and we are already preparing for what comes next. As part of our renewable energy expansion, we have secured land options and are eyeing more than 1,000 hectares for future projects. This allows us to continue building our pipeline and sustain our growth in renewables beyond MTerra Solar. This is how MGen is moving in the renewable space, leading the country's energy transition with projects that are large scale, already delivering and built for the long term. In 2024, MGen had 2,417 megawatts of capacity. With our new gas and solar investments, we ended 2025 with more than doubling that capacity to 5,069 megawatts. Once MTerra Solar Phase 1 is completed, we will increase our capacity to 6,800 megawatts this year and continue to ramp up to more than 10,000 megawatts of capacity by 2030. We are looking at what comes next for our future portfolio. And as part of our long-term view, studies are already being conducted on small modular reactors and the role of nuclear can potentially play in supporting our country's energy needs. We have taken the challenge of our Chairman, MVP and our stakeholders to be the engine of growth for One Meralco and our team intends to deliver on these growth projects. And as we move forward with growth trajectory, we are also looking beyond generation. This year, we have started looking for synergies with the retail electricity supply business and generation more deliberately. This is important because it allows us to connect what we generate with what our customers need. Within One Meralco, we are present across the energy value chain. MGen supplies energy, Meralco distributes power. [ NESCor ] builds transmission, distribution and network services. Empower, [ MGenWest ] and MSERV provide retail supply and other energy solutions, while MSpectrum brings integrated solar solutions to the households and businesses. And we can also further strengthen our capabilities in trading and origination by leveraging AI and other technologies to generate accurate forecasts. With Empower opt-in as local [ RES and MGE RES ] serving customers outside of the franchise area, we are able to reach more customers across the country with more competitive products and services, especially now that the contestability threshold has been lowered to 100 kilowatts. Our synergies across One Meralco give us a competitive edge, allowing us to serve clients better, create more value and provide solutions that cover the full energy value chain. We are in a stronger position to serve the contestable market through end-to-end solutions from generation to supply and distribution of energy to meet our customers' needs. So this is what we call the power of many. It is what happens when the different parts of One Meralco work together in one direction. On their own, each business already has a clear role. But together, we bring in something much stronger. This is our strength as One Meralco. For customers, it means better and more complete energy solutions. For the business, it means stronger customer relationships, more integrated opportunities and more ways for each One Meralco company to grow from solutions we deliver together. And for our shareholders, it means we are building something bigger than individual business units. We are building a total energy ecosystem, one that is positioned to grow with the market and serve the country's energy needs for the long term. Our mission is powering a better tomorrow, and this is what it means for us at MGen. And in closing, allow me to introduce to you Nanay Elisa Falcon from Nueva Ecija. Through our project charter, a rent-free community marketplace, Elisa now earns by serving food to the thousands of workers building the MTerra Solar project. Her husband helps prepare the meals and three of their children work in ships with her at the marketplace. And through the same project, two more of our children have also found work, one as a certified solar PV installer and another as a certified first either. For the Falcon family, MTerra Solar is not just a project near their community. It has become a source of livelihood, employment and stability for the entire family. The Falcon family is just one of many. Across all our projects, this is the kind of impact we want to create, energy delivered to the grid, value delivered to our shareholders and opportunities delivered to communities. This is the power of many. And this is what we mean when we say we are powering a better tomorrow. This is your MGen [Foreign Language].

Thank you, Ronnie and Manny, for your respective reports. So that concludes the report on the company's performance, financial and operating for the year 2025. Let me just give you a short summary of our outlook for 2026 because this morning, we had a Board meeting before this stockholders' meeting. And we review the year-to-date numbers actual as of May and the estimate for June. And I'm pleased to report that the numbers in terms of profits and EBITDA are ahead of last year. Despite very difficult economic conditions, we all know that for 2026 and even carrying on towards 2027, especially as 2028 is going to be a presidential year. So the DU sales volume has recovered in May and in June. As you know, it was soft in the first 3 or 4 months. this year. So they have recovered. Power generation results are ahead of last year and even rest profits are looking quite good. So thank you to the people of Meralco and to the senior management team of Meralco. Item #5 on the agenda is the approval of the company's audited consolidated financial statements for the period ended December 31, 2025, the highlights of which were previously explained in the reports and in our definitive information statement. Can I have a motion, please on this particular item? Microphone 1.

Good morning, Mr. Chairman. I am David Palentino. I move that the company's audited consolidated financial statements for the year ended December 31, 2025, as approved by the Board of Directors and presented to the stockholders be approved. And for this purpose, resolution #2026-2 be adopted.

Any second? Microphone 4.

I second the motion, Mr. Chairman.

Thank you. It has been moved and seconded that the audited consolidated financial statements for the year ended 31st December 2025 be approved and that resolution #2026-2 be adopted. Mr. Secretary, do we have the voting results on this item of the agenda?

Yes, Mr. Chairman. We have received and tabulated the following number of votes. 934,217,773 votes or 82.87% voted in favor, 178,355 or 0.01% voted against the resolution and 1,522,090 votes or 0.13% abstained.

Thank you, Mr. Secretary. With stockholders owning more than a majority of the total outstanding capital stock having voted for the motion, the motion is carried. Resolution #2026-2 is hereby adopted. Item #6 on the agenda today is the ratification and approval of the acts, resolutions and deeds of the Board of Directors, its Board committees and the management of the company since the last annual meeting held on May 27, 2025, until today. I would like to request our Corporate Secretary to explain this matter to our shareholders.

Mr. Chairman, the Board of Directors and management respectfully seek the ratification of all acts, resolutions and deeds of the Board, its committees as well as all acts of management since the May 27, 2025 Annual Stockholders Meeting until today. These acts are provided for in the Minutes of the Meetings of the Board, its committees and the management. These include, among others, the approval of contracts and agreements, projects and investment, treasury matters, dividend declaration and disclosures to the Securities Stock Exchange Commission and the Philippines Stock Exchange. For the benefit of our stockholders, the highlights of these acts of the Board and management are now being flashed on the screen. Acts of management pertain to those taken to implement the resolutions, directives and instructions of the Board and its committees and those done in the regular course of the company's business.

Thank you, Mr. Secretary. Can I hear a motion for the approval of this particular item? Microphone 2.

Mr. Chairman, I am Ann Margaret Parina. I move that all acts, resolutions and needs of the Board of Directors, its committees and the management of the company from the Annual Stockholders Meeting held on May 27, 2025, up to this meeting in all respects, be confirmed, ratified and approved. And for this purpose, resolution #2026-3 be adopted.

Thank you. Any second?

Mr. Chairman, I second the motion.

Thank you. It has been moved and seconded that all acts to resolutions and needs of the Board of Directors, its committees and management of the company from May 27, 2025 until today be confirmed, ratified and approved and that for this purpose, resolution #2026-3 be adopted. Mr. Secretary, do we have the results of the stockholders' votes on this item?

Yes, Mr. Chairman. We have received and tabulated the following number of votes: 933,261,129 votes or 82.78% of total outstanding voting stock of the company voted in favor. 1,005,099 votes or 0.09% of total outstanding voting shares voted against and 1,598,990 votes or 0.14% of the total outstanding capital stock of the company abstained.

Thank you, Mr. Secretary. With stockholders owning more than a majority of the total outstanding capital stock of the company having voted for the motion, the motion is carried. Stockholders resolution #2026-3 is hereby adopted. We now come to Item #7 of the agenda, which is the election of the members of your Board of Directors for the ensuing year. The company's articles of incorporation provide for 11 directors. The company's shareholders, including shareholders in the minority, were given the opportunity to nominate candidates for election to the Board. All for nomination was posted in the company's website last January 26, 2026, calling for the submission of the proposed agenda and nomination of qualified candidates on or before April 10, 2026. I would like to request Dr. Lydia Echauz of our Nomination and Governance Committee to discuss this particular matter.

Mr. Chairman, in accordance with the company's bylaws and manual of corporate governance as well as the revised Corporation Code and the Securities Regulation Code, the following stockholders were duly nominated as members of the company's Board of Directors to serve as such for the ensuing term. Number one, Ms. June Cheryl A. Cabal-Revilla, nominated by Beacon Electric Asset Holdings and Metro Pacific Investments Corporation; Dr. Lydia B. Echauz, nominated by Miriam D.M. Manito; Attorney Ray C. Espinosa, nominated by Beacon Electric Asset Holdings, Inc. and Metro Pacific Investments Corporation; Mr. James L. Go, nominated by JG Summit Holdings, Inc.; Mr. Patrick Henry C. Go, nominated by JG Summit Holdings, Inc.; Mr. Lance Y. Gokongwei, nominated by JG Summit Holdings, Inc.; Mr. Jose Maria K. Lim, nominated by Beacon Electric Asset Holdings, Inc. and Metro Pacific Investments Corporation; Mr. Mr. Bernido H. Liu, nominated by Maria G. Panganiban; Mr. Manuel V. Pangilinan, nominated by Beacon Electric Asset Holdings, Inc. and Metro Pacific Investments Corporation. Ms. Bernadine T. Siy, nominated by Maria G. Panganiban; and Mr. Victorico P. Vargas, nominated by Beacon Electric Asset Holdings, Inc. and Metro Pacific Investments Corporation. Mr. Liu and Ms. Siy yours truly were nominated as independent directors. The Nomination and Governance Committee had evaluated the qualifications of the nominees, including the nominees for independent directors and determined that they have all the qualifications and none of the disqualifications to serve as directors of the company. All these nominees have given their consent to their nomination. Their profiles stating their age, qualifications, experience, date of first appointment to the company's Board and directorships in other publicly listed companies or subsidiaries, whether listed or nonlisted within the group of companies were made available as part of the definitive information statement distributed to the stockholders.

Thank you, Lydia. Mr. Secretary, do we have the votes for each of the nominees?

Yes, Mr. Chairman. The votes obtained by each of the nominees are as follows: Ms. June Cheryl A. Cabal-Revilla, 892,344,781 votes; Dr. Lydia B. Echauz, 922,699,568 votes; Attorney Ray C. Espinosa, 894,548,587 votes; Mr. James L. Go, 894,722,105 votes; Mr. Patrick Henry C. Go, 892,344,318 votes; Mr. Lance Y. Gokongwei, 892,522,008 votes; Mr. Jose Maria K. Lim, 892,340,333 votes; Mr. Bernido H. Liu, 933,880,178 votes; Mr. Manuel V. Pangilinan,924,899,728 votes; Ms. Bernadine T. Siy, 919,859,922 votes; and Mr. Victorico P. Vargas, 892,687,188 votes.

Thank you, Mr. Secretary. May I hear a motion on this particular item? Microphone 2.

Good morning, Mr. Chairman. I am Lance Montemayor. Based on the report of our Corporate Secretary on the votes garnered by the 11 nominees from the stockholders, I move that all the nominees be declared duly elected directors of the company for the ensuing year until their successors are elected and qualified. And for this purpose, resolution #2026-4 be adopted.

Thank you. Any second? Microphone 4.

I second the motion, Mr. Chairman.

Thank you. It has been moved and seconded that the 11 nominees to the Board be declared duly elected directors of the company for the ensuing year 2026 until their successors are elected and qualified. Accordingly, resolution #2026-4 is hereby adopted and the following: I declare duly elected members of the Board of Directors. First, Ms. June Cheryl A. Cabal-Revilla, Dr. Lydia B. Echauz, Attorney Ray C. Espinosa, Mr. James Go, Mr. Patrick Henry C. Go, Mr. Lance Y. Gokongwei, Mr. Jose Maria K. Lim, Mr. Manuel V. Pangilinan, Ms. Bernadine T. Siy, Mr. Victorico P. Vargas. We are proud that we now have three lady directors on our Board out of the 11 directors. Fortunately or unfortunately, all three are elected as independent directors. On behalf of the Board, thank you for your votes and for your support. On this note, we recognize and thank our two of our independent directors whose many years of service have helped shape and strengthen the company and made it what it is today. First and foremost, retired Chief Justice Artemio Panganiban. He joined the Board in 2028, I think quite a turbulent year as I understand it, and has served as our Lead Independent Director and Chairman of the Audit Committee with integrity, discernment and quiet strength has drawn from his distinguished career in the judiciary to provide guidance and promote accountability and transparency across the organization. In addition to his key leadership roles, he has also contributed actively as a member of the various Board committees. We also honor and thank Mr. Pedro Emillio Roxas, who has been with the company since 2010 and has since led the Nomination and Governance Committee. firm advocate of good governance has played a pivotal role in advancing policies and practices that kept the company aligned with evolving standards across the ASEAN region. These efforts have been instrumental in the company's receipt of numerous governance awards and recognitions. As they conclude their service on the Board today, we express our sincere gratitude and highest regard to Chief Justice Panganiban and Mr. Pedro Roxas for their dedication, professionalism and invaluable contributions. Their legacy will continue to guide the company in the many years ahead. On behalf of the Board, the management, the people of Meralco and our stockholders, we thank them both and wish them all the best in their future endeavors. Before we proceed to the next item on the agenda, we should like to formally welcome and introduce our newly independent elected independent directors, Ms. Bernadine Siy and Mr. Bernido Liu from Cebu, also known as Mr. [ Penshoppe ], right? As reflected on the screen, both are distinguished professionals with impressive accomplishments, strong reputations and extensive leadership experience in their respective fields. Beyond their credentials, they bring independence, objectivity and sound judgment essential to effective corporate governance. We are confident that their expertise and insights will further strengthen the Board and contribute to the continued growth and long-term success of Meralco. So welcome Bern and Bernie to the role. Moving on to the next order of business, which is the appointment of the company's external auditor. I'd like to request the Chairman of our Audit Committee Retired Chief Justice Artemio Panganiban to advise the shareholders on this particular item.

Mr. Chairman, fellow directors, for the information of our stockholders, the company had paid an audit fee of about PHP 26,900,000 to our incumbent external auditors, SyCip Gorres Velayo & Co. for the year ended December 31, 2025. The Audit Committee has evaluated their performance during the past year and was satisfied with their performance. As such, the Audit Committee and the Board of Directors hereby endorsed the reappointment of SyCip Gorres Velayo & Co. as our external auditor for the coming year 2026.

Thank you, Chief Justice Panganiban. May I hear a motion on this matter. Microphone 1.

Good morning, Mr. Chairman. I'm Patricia Ko. I move that our present external auditor, SGV & Company, certified public accountants be retained as the company's external auditor. And for this purpose, resolution #2026-5 be adopted.

Thank you. Any second?

I second the motion, Mr. Chairman.

Thank you. It has been moved and seconded that [indiscernible] certified public accountants be retained as the company's external auditor and for this purpose, resolution #2026-5 be adopted. Mr. Secretary, do we have the voting results on this item of the agenda?

Yes, Mr. Chairman. We have received and tabulated the following number of votes. 933,700,070 votes or 82.82% of the total outstanding voting stock voted in favor of the resolution. 781,235 votes or 0.06% of the total outstanding voting shares voted against and 1,436,930 votes or 0.12% of the total outstanding voting shares abstained.

Thank you, Mr. Secretary. With stockholders owning more than a majority of the total outstanding capital stock have been voted for the motion, the motion is carried. Resolution #2026-5 is hereby adopted. Before we close and before we move on to the next item in the agenda, we will now entertain questions or clarifications on issues or concerns that stockholders may have with respect to the company's performance. Attorney Pamintuan, are there any questions or concerns represent to us via e-mail or platform or received in the registration area this morning, which are submitted to us?

Yes, Mr. Chairman, we have received several questions sent via e-mail or through the Serve platform and some submitted at the registration area and to the users today, Mr. Chairman. The first question comes from stockholder, Ms. Lorna Lundayan and Ms. Maria Luisa Villanueva on a similar topic. What measure is Meralco taking to address customer concerns regarding the sudden spikes in electricity consumption and billing? And how can customers independently verify the accuracy of their bills?

To answer that question, we follow or implement a 3-pronged approach to ensure that the bills are accurate and easily understood by our customers. First is making sure that we have rigorous meter reading and bill validation process to ensure that the bills that we provide to our customers are accurate. The meter readings are conducted by trained personnel and are subjected to multiple validation checks and system controls before we release them to customers. Second is that we proactively issue advisories to our customers. to help our customers anticipate and better understand the different factors driving their consumption and bill amount. Ahead of the summer season this year, as early as March of this year, we have provided reminders, advisories to our customers on how the hotter weather during the summer months could lead to increased usage, more frequent usage or even longer usage of cooling appliances that result to higher consumption reflected in their bills. Together with that, we have also issued advisories to remind customers of potential electricity rate movements that they might experience, especially given the impact of the global events like the Middle East war that affect power prices. And together with these advisories, we have also issued practical energy efficiency and energy conservation tips to our customers to help manage their consumption. Third, we have provided also the tools and information to our customers. Part of that is the simple consumption chart that shows the consumption history of our customers that are very visible on the first page of their monthly bills and also in the My Meralco app for those who are enrolled in the app. The explanations on the detailed bill charges are also available in our website. And we have also released communication materials or educational materials on how our own customers can read their own meters as a way of verifying their meter reading and comparing them with what the readings reflected on the bills. And lastly, we will continue with the deployment of smart meters to our customers that will allow us to do the readings remotely and also empower our customers with their consumption information through the daily notifications that we can provide them so that they can have the basis for verifying their monthly bills and being able to manage their consumptions given the daily consumption information made available to them. That's all.

The next question, Mr. Chairman, comes from stockholder Joel Villa Martinez, and his question is on MTerra Solar. Given the recent commissioning of the initial 250 megawatts tranche of MTerra Solar, are subsequent phases tracking on time and within the projected CapEx budget to achieve full capacity. What are the exact contracted offtake rates for the power from this facility? And how quickly will it begin significantly to contribute to Meralco's consolidated net income?

Well, following the initial energization of MTerra Solar last March, which allowed us to dispatch 250 megawatts. We're now allowed by NGCP to dispatch 500 megawatts of commissioning energy to the grid. We are actually ready to dispatch more than that, 750. And we expect that 750 to be evacuated within the next few days upon completion of NGCP in installing a system integrity protection system in the Luzon grid. Although we are -- we already have more than 1,350 megawatts AC of PV on the ground, we expect that by July, this whole facility will be energized, both to supply the grid up to 750 megawatts of energy on a block from 8 a.m. to 9:00 p.m. and the rest to charge the battery so we can optimize the whole facility to still provide beyond the 9:00 p.m. requirement of Meralco. All of this capacity since its commissioning is all being nominated to Meralco based on their demand. And the full impact of MTerra Solar will be felt when we declare COD, hopefully, within the next 2 to 3 months as we have communicated. COD commercial operations.

Thank you, Manny. The next question, Mr. Chairman, comes from stockholder Criselda Pinez, which we received through our Serve platform. Given our full year profit trajectory, can management commit to maintaining or expanding our 50% core EPS dividend payout ratio despite the heavy capital requirement -- capital expenditure requirements for power generation projects.

Thank you for that question. So in general, our dividend decisions are typically a balance among our current profitability, our free cash flow, future capital expenditure, debt service, desired capital structure and shareholder returns. So essentially, management proposes and the Board approves if there is sufficient sustainable cash flow, to fund future growth as well as provide returns to our shareholders. Note that for power generation, in general, our projects are project financed on a 70-30 basis, which means 70% debt and 30% funded by equity. For the distribution utility, recovery is through the tariff as approved by the ERC. As you may recall, our Board of Directors back in February of 2010, actually approved a dividend policy, which is 50% of core net income with a look back. The look back allows us to declare dividends beyond the 50%. And if you good note, historically, we've always paid more than the 50%. So moving forward, I would say that we would be guided by the approvals of the Board, these guidelines and incorporate and we have incorporated the 50% dividend payout in our budget, and we'll always try to consider if we could pay more.

Thank you, Betty. The next question is from stockholder Ronaldo Marinay, which we received via e-mail. How is MGen maximizing the value of its battery storage investments?

MGen views the investments in battery as a strategic value multiplier. We have identified locations where batteries are actually really -- will play a critical role as more and more variable renewable energy is injected into the grid to balance the variability. We have recently invested in a stand-alone battery in Cebu. We're able to deliver it in 6 months. And it's now participating in WESM as an arbitrage player charging in the day and releasing in the evening where it's actually needed and also certified to provide contingency and regulating reserves. We've identified a number of locations, and we will inform our shareholders on future investments in batteries. But yes, this is something that we see as a requirement and a value generator for MGen.

Thank you, Manny. The next question that we received via e-mail is from stockholder, Ms Liticia Lito. and her question is on advanced metering. What role does advanced metering play in Meralco's future?

Well, it will definitely play a very critical role in our future. AMI or advanced metering infrastructure is, of course, a major foundational component of the Meralco Smart Grid program. Of course, we cannot implement our smart grid program without the smart meters. The smart grid, the smart meters provide the digital backbone or digital layer of our business. And there are so many benefits, especially not only on the utility side, but more so on the customer side. As emphasized by [ Chi ] earlier, one major benefit -- [Foreign Language] in the future, we can avoid these bill shocks, [Foreign Language] social media. So with smart meters, customers will be duly advised on a day-to-day basis how they are using their -- how they are consuming power. [Foreign Language] by the end of the month, [Foreign Language] consumptions. So we can provide, I would say, greater visibility to their consumption, Meralco can provide them some sort of an alert or a notification and [Foreign Language]. So that I think that's very, very important. And aside from that, smart meters will really empower our customers. Take note that we already -- the ERC has already lowered the threshold for contestability, meaning about [Foreign Language] Retail Aggregation Program where customers and even residential customers can aggregate their demand and become contestable customers. And we can only enable that. We can only do that with the use of smart meters. So that's really our main justification to ERC why Meralco has to implement smart metering because this will really empower customers. On the DU side, there are multiple benefits also because take note that we have this increasing penetration of renewable energy, rooftop solar, EVs and many other DERs. And it's very, very difficult job for -- it's very, very difficult in the part of Meralco and other distribution utilities to manage the intermittent nature of the grid because of this rooftop solar are intermittent without the use of smart meters, without this digital layer, without this intelligent systems driven by smart metering program and smart grid. And also, we expect to somehow improve our operational excellence. We can lower cost because we won't be sending meter readers because right away, we can read the meters of the customers. We can do remote connect and disconnect. We can monitor consumption, we can monitor the voltage, we can measure power quality. And by having smart metering and of course, smart grid, we avoid deterioration of service. We avoid deterioration of service reliability even with the increasing penetration of intermittent variable renewable energy resources such as solar panels. So this will be a core system for Meralco moving forward, smart grid and smart metering or in mind. Thank you.

Thank you, Ronnie. Related to that question, we have question #6 coming from a stockholder, Ms. Amy Tuazon who submitted it on site. How does Meralco balance renewable energy growth with grid reliability?

Good morning, everyone. To answer the question of Ms. Amy Tuazon, Meralco balances renewable energy growth with grid security and reliability through one, visibility; second is compliance to standards and the most important one is grid modernization. So we ensure the safe integration of renewable energy into our grid, and we ensure that they comply with technical standards and requirements. At the same time, which is the most important one, grid modernization, okay? So we filed in the first regulatory period CapEx investments in AMI, Advanced Metering Infrastructure, as mentioned by our COO, Mr. Ronnie Aperocho, terms distributed energy resources management system to be acquired next year. And of course, our platform, GEOCC, Grid Edge Operations and Control Center. This is actually the twin of our system control center on the existing one. And with this, we would have an enhanced visibility, monitoring and operational control of a more dynamic grid, more decentralized grid. Right now, we have around 800 megawatts of renewable energy integrated into our system, and they will continue to grow exponentially. That's why we really need to prepare for this. That's why we have terms, we have AMI and we have GEOCC.

In the interest of time, we will entertain the last question from Ms. Elvira Cruz. Question is, how does nuclear energy fit into Meralco's long-term strategy for supporting the country's future energy requirement? What factor is management considering in evaluating the potential role of small modular reactors in the Philippine energy mix?

Thank you, Bill, and thank you, Elvira, for that question. So our strategy is very much aligned with the government's policy that addresses three things. First is, of course, issue on affordability. Number two is security and number three is sustainability, which is basically the energy trilemma. And of course, we know coal is affordable, but of course, it's not clean, and the government has already imposed a moratorium against coal. And we're looking at natural gas, but our indigenous supply is not enough and a large chunk of our requirement is imported. Imported subjects as fluctuations, just like what we're -- just like what is happening right now because of the Middle East crisis. And besides the government considered LNG as a transition fuel only. We have hydro and geothermal, but also these are not enough. And take note hydro [Foreign Language] summer months [Foreign Language] supply. Renewables are clean, but of course, [Foreign Language] intermittent, so we need additional cost for the ancillary services and of course, storage. And so the most viable source of energy, especially for baseload energy requirement that we're currently looking at is, of course, nuclear. And we are positioning Meralco to somehow help the government push that agenda on nuclear adoption. So in fact, the Philippine Energy Plan that was released by the DOE prescribed a 4.8 gigawatt nuclear, I would say, nuclear share in the total energy mix from 2032 moving forward up to 2050. And we are now already positioning Meralco to be a major player in the nuclear energy adoption. In fact, we have already created this NEST, the Nuclear Energy Strategic Transition. And focus is to build internal capabilities. That's why we have sent already scholars abroad. At the same time, we have to understand the technology. And the last but not the least is, of course, to engage with key stakeholders. I think our Chairman will be meeting [ Baller Atomics ] in the next few days because of very positive developments in the SMR technology of [ Baller Atomics ]. But of course, we're open to discuss other SMR technologies. We're not just limiting to a single partner in terms of the SMR technology. So that's basically our broad strategy in terms of the nuclear energy adoption. Thank you. And I think just another question. On SMR, there are six very important considerations or several factors in our approach in the SMR adoption. Number one is regulatory and policy readiness. We will be aligning with the Philippine nuclear policy in terms of licensing and, of course, the institutional capability. Number two is very, very important in safety and public acceptance. We will definitely adhere to international safety standards, and we have to build public confidence in nuclear technologies. Number three, which is very important is the cost. So we have to look into life cycle costs relative to other baseload and renewable options. Number four, technology maturity and global track record. I think this is very, very important. We are monitoring the progress of the SMR deployments and the proven operating experience. [Foreign Language] SMR. So we have to look into I would say, the track record of our potential partners in terms of SMR adoption. And fifth, experience with MTerra Solar, the grid interconnection is very, very important also. So we have to really work closely with NGCP for the overall design in terms of really integrating nuclear energy resources into the grid. And the last but not the least is about strategic partnerships and capability building. So in this area, we have already taken initial steps, and we're lucky to have been granted by the [ USDA ] for the 2.7 million funding for the feasibility study of SMR adoption in the country. So I think we're moving in the right direction. And I think this will be a very promising growth agenda for Meralco in the future also. Thank you so much.

Thank you, Ronnie. That is all we have Mr. Chairman, other questions not taken up will be referred to the responsible officers and will be answered through e-mail. Thank you, sir.

Thank you, may I hear a motion to close the discussion. Microphone 1.

Good morning, Mr. Chairman. I am Diane Farol. In as much as there has been sufficient discussion on the items in the agenda, I move to close the discussion and to proceed to other matters.

Any second? Microphone 3.

I second the motion, Mr. Chairman.

Thank you. Upon motion duly made and seconded and there being no objection, the discussion is hereby closed. And moving on to other matters. Mr. Secretary, is there any other business to consider in this meeting?

Mr. Chairman, based on the agenda, there is no other item to consider in this meeting.

Thank you, Mr. Secretary. I think you hear the noise is setting us to get out. May I hear a motion to adjourn this year's stockholders' meeting?

Mr. Chairman, good morning. I'm Jay Santos. Since there is no other business to consider, I move that the stockholders' meeting be adjourned.

Any second? Microphone 2.

I second the motion, Mr. Chairman.

Thank you. It has been moved and seconded that this Annual Stockholders' Meeting be adjourned. Is there any objection? There being none. And upon motion duly made and seconded, this Annual Stockholders Meeting is hereby adjourned. Thank you for your attendance today. We look forward to seeing you next year. We have prepared some refreshments for you outside.

To ensure everybody's safety, we ask everyone to exit the theater through the site exits. The ushers will call your role and guide you to your designated exits where you may claim your refreshments. Thank you.