The following management’s discussion and analysis (“MD&A”) of Manila Water Company Inc. and subsidiaries’ (“Group”) financial condition and results of operations should be read in conjunction with the Group’s audited financial statements, including related notes. This report may contain forward-looking statements that involve risks and uncertainties. The actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to, economic, regulatory, socio-political, financial and other risk factors.

Any references in this MD&A to “our”, “us”, “we”, “MWCI” or the “Group” shall refer to Manila Water Company, Inc., including its subsidiaries. Any reference to “Manila Water Company”, “Manila Water”, “MWC” or the “Company” shall refer to the parent company only.

Additional information about the Group, including recent disclosures of material events and annual/ quarterly reports, are available at our corporate website at


Manila Water Company holds the exclusive right to provide water and used water services to the eastern side (“East Zone”) of Metro Manila under a Concession Agreement (“CA”) entered into between the Company and Metropolitan Waterworks and Sewerage System (“MWSS”) in August 1997. The original term of the concession was for a period of 25 years to expire in 2022. The Company’s concession was extended by another 15 years by MWSS and the Philippine Government in 2009, thereby extending the term from May 2022 to May 2037.

The Company provides water treatment, water distribution, sewerage and sanitation services to more than six million people in the East Zone, comprising a broad range of residential, commercial and industrial customers. The East Zone encompasses 23 cities and municipalities spanning a 1,400-square kilometer area that includes Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, most parts of Quezon City, portions of Manila, as well as the following towns of Rizal: Angono, Antipolo, Baras, Binangonan, Cainta, Cardona, Jala-Jala, Morong, Pililia, Rodriguez, San Mateo, Tanay, Taytay and Teresa.

Under the terms of the CA, the Company has the right to the use of land and operational fixed assets, and the exclusive right, as agent of MWSS, to extract and treat raw water, distribute and sell water, and collect, transport, treat and dispose used water, including reusable industrial effluent discharged by the sewerage system in the East Zone. The Company is entitled to recover over the concession period its operating, capital maintenance and investment expenditures, business taxes, and concession fee payments, and to earn a rate of return on these expenditures for the remaining term of the concession.

Aside from the East Zone, the Group has a holding company for all its domestic operating subsidiaries through Manila Water Philippine Ventures, Inc. (“MWPV”). Currently under MWPV are LagunaAAA Water Corporation (“Laguna Water”), Boracay Island Water Company (“Boracay Water”), Clark Water Corporation (“Clark Water”), and Manila Water Consortium (“MW Consortium”). Cebu Manila Water Development (“CMWD”), a subsidiary of MW Consortium that provides bulk water in the province of Cebu, commenced operations on January 5, 2015. In 2015, the Group added two new projects to its portfolio, namely the Zamboanga City performance-based nonrevenue water reduction project, and the Tagum City bulk water supply project.

The Group also has a holding company for its international ventures through Manila Water Asia Pacific Pte. Ltd. (“MWAP”). Included under MWAP are two affiliated companies in Vietnam, namely Thu Duc Water B.O.O Corporation (“Thu Duc Water”) and Kenh Dong Water Supply Joint Stock Company (“Kenh Dong Water”), both supplying treated water to Saigon Water Company (SAWACO) under a take-or-pay arrangement. Also under MWAP are Saigon Water Infrastructure Corporation (“Saigon Water”), a holding company listed in the Ho Chi Minh City Stock Exchange, Cu Chi Water Supply Sewerage Company, Ltd. (“Cu Chi Water”) and another company tasked to pursue non-revenue water reduction projects in Vietnam called Asia Water Network Solutions. Meanwhile, the Company’s pilot leakage reduction project in Ho Chi Minh City which started in 2008 was completed in August 2014.

Lastly, the Group has Manila Water Total Solutions Corporation (“MWTS”), a wholly-owned subsidiary that handles after-the-meter products and services. Among its products is Healthy Family Purified Drinking Water which sells five-gallon packaged water in pilot areas in Metro Manila.


The Group’s key financial performance indicators are discussed below:

  For the years ended December 31
(in thousand Pesos)
2015 2014 Increase/
Total operating revenues 16,935,883 16,357,145 578,738 4%
Total cost and expenses (excluding depreciation and amortization) 5,848,990 5,087,759 761,231 15%
Other income (expense) - net 582,872 291,349 291,523 100%
Equity share in net income of associates 403,515 357,298 46,216 13%
Others 179,360 (65,949) 245,309 -372%
EBITDA 11,669,765 11,560,736 109,029 1%
Depreciation and amortization 2,600,213 2,443,987 156,226 6%
Income before other income/expenses 9,069,554 9,116,748 (47,194) -1%
Interest income (expense) - net (1,140,591) (1,450,501) 309,910 -21%
Income before income tax 7,928,963 7,666,247 262,716 3%
Provision for income tax 1,794,924 1,836,298 (41,374) -2%
Net income 6,134,039 5,829,949 304,090 5%
Non-controlling interest 176,260 16,860 159,400 945%
Net income atttributable to MWC 5,957,780 5,813,089 144,690 2%

Consolidated net income grew by 2% to P5,958 million in 2015 from P5,813 million the previous year on the back of a 4% growth to P16,936 million in consolidated operating revenues. The growth in revenues was driven by the continued expansion in the East Zone, with its billed volume rising by 3%. Furthermore, the domestic operating subsidiaries and MWTS contributed P2,067 million in revenues, higher by 43% year-on-year.

A breakdown of the revenue drivers is shown below:

  For the years ended December 31
2015 2014 Increase/
Water 13,220,230 12,847,210 373,020 3%
Environmental charges 2,374,388 2,303,873 70,515 3%
Sewer 434,749 419,720 15,030 4%
Revenue from management contracts - 25,488 (25,488) -100%
Other operating income 906,515 760,853 145,662 19%
Total operating revenues 16,935,883 16,357,145 578,737 4%

The Group derived 78% of its operating revenues from the sale of water, while 17% came from environmental and sewer charges. Other revenues, which accounted for the balance of 5%, were from after-the-meter services, connection fees and septic sludge disposal, among others.

On the other hand, consolidated operating costs and expenses (excluding depreciation and amortization) rose by 15% to P5,849 million in 2015. Non-personnel costs led the growth with an increase of 15%, primarily because of higher direct costs, materials and supplies. The biggest contributors to the increase in direct costs include the start-up expenses of the packaged water business under MWTS, increased contractual services due to the expansion of water and used water facilities as well as IT maintenance. Higher premises cost, due to the payment of back rentals of the San Juan stock yard in the second quarter which resolved a long outstanding matter with MWSS relating to turned over assets, also contributed to the increase. For salaries, wages and employee benefits, the increase was due to the reclassification of department-related personnel costs from capital expenditures to operating expenses, and additional manpower for the new subsidiaries.

Below is a summary of the operating expenses incurred during the period:

  For the years ended December 31
2015 2014 Increase/
Salaries, wages and employee benefits 1,639,183 1,377,649 261,534 19%
Non-personnel costs 3,793,147 3,286,172 506,975 15%
Power, light and water 989,603 1,051,434 (61,831) -6%
Other direct costs, materials and supplies 1,430,263 1,145,261 285,002 25%
Overhead 983,928 905,395 78,533 9%
Premises 389,352 184,082 205,270 112%
Other expenses 416,660 423,938 (7,278) -2%
Total operating expenses 5,848,990 5,087,759 761,231 15%

Meanwhile, other income (net of expense) rose by 100% to P583 million in 2015 from P291 million in 2014 due to the reversal of contingent liability of a subsidiary. The two bulk water companies in Vietnam, Thu Duc Water and Kenh Dong Water, with the addition of SII, contributed P404 million in net income, growing by 13% from the previous year.

The movements in operating revenues and expenses, as well as other income that increased by 100%, resulted in a consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) of P11,670 million in 2015, growing by 1% from the previous year. EBITDA margin, however, slightly declined to 69% from 71%.

Results of operations detailed as to business segment are shown below:

  For the years ended December 31
(in thousand Pesos)
East Zone
Head office
Revenue 14,910,074 2,025,809 - 16,935,883
Operating expenses (including depreciation and amortization) 7,066,555 1,330,752 51,893 8,449,200
Operating income 7,843,519 695,057 (51,893) 8,486,683
Revenue from rehabilitation works 3,834,841 1,384,517 - 5,219,358
Cost of rehabilitation works (3,834,841) (1,384,517) - (5,219,358)
Interest income 100,468 216,476 - 316,944
Interest expense (1,311,938) (145,597) - (1,457,535)
Share in equity income of associates - 403,515 - 403,515
Others 24,325 155,032 - 179,357
Income before income tax 6,656,374 1,324,483 (51,893) 7,928,964
Provision for tax 1,693,184 101,740 - 1,794,924
Net income (loss) 4,963,190 1,222,743 (51,893) 6,134,040
Other comprehensive income        
Actuarial gain (loss) on pension liabilities - net (36,907) 16,179 - (20,728)
Income tax effect - 285 - 285
Cumulative translation adjustment - 278,620 - 278,620
Total comprehensive income 4,926,283 1,517,827 (51,893) 6,392,217
Total comprehensive net income attributable to:        
Equity holders of MWCI 4,926,283 1,341,567 (51,893) 6,215,957
Noncontrolling interest - 176,260 - 176,260
  4,926,283 1,517,827 (51,893) 6,392,217
Segment assets, exclusive of deferred assets 63,278,437 10,526,958 155,055 73,960,450
Investments in asociates - 5,723,534 - 5,723,534
Deferred tax assets 853,139 71,363 - 924,502
  64,131,576 16,321,855 155,055 80,608,486
Segment liabilities, exclusive of deferred liabilities 34,653,561 6,120,466 43,554 40,817,581
Deferred tax liabilities - 71,912 - 71,912
  34,653,561 6,192,378 43,554 40,889,493
Segment additions to equipment and SCA 4,156,950 1,789,508 - 5,946,458
Depreciation and amortization 2,331,131 269,079 - 2,600,210
Noncash expenses other than depreciation and amortization (20,453) 33,734 - 13,281

East Zone Head Office

  For the years ended December 31
2015 2014 Increase/
Operating Highlights        
Billed volume
(in million cubic
461.4 449.0 12.4 3%
    Domestic 301.7 292.9 8.8 3%
    Semi-Commercial 50.6 47.3 3.3 7%
    Commercial 89.7 91.0 -1.3 1%
    Industrial 19.4 17.7 1.7 10%
Number of water
976,321 949,230 27,091 3%
11% 11% 0% pts  
Financial Highlights (in thousand Pesos)        
Revenues 14,910,074 14,882,023 28,051 0%
Cost and expenses 4,711,099 4,428,431 282,668 6%
EBITDA 10,198,975 10,453,592 (254,617) -2%
Net income 4,963,190 5,148,502 (185,312) -4%

East Zone’s billed volume, reported in millions of cubic meters (“mcm”), increased by 3% in 2015. The number of water connections grew by 3% to 976,321 customers at the end of the period, mostly from the expansion areas of Pasig, Marikina and Taguig. Average consumption was maintained 43.2 cubic meters per connection while average effective tariff dropped slightly by 1% due to implementation of the arbitral ruling reducing the basic water charge beginning June 1, 2015.

Aside from the continued growth in residential customers, billed volume growth was also driven by the improvement in semi-commercial accounts by 7% with the completion of new residential buildings and the conversion of deep well users in the areas of Pasig and Marikina, as well as the 10% growth of industrial customers. Billed volume from commercial accounts saw a decline of 1% year-on-year due to the reclassification of some commercial accounts to semi-commercial.

The level of system losses, as measured by the nonrevenue water (“NRW”) ratio, was recorded at 11.2% at the end of 2015, which was almost the same level at the end of 2014 at 11.3%. The maintenance of NRW at this level is a result of continuous repair works done at the distribution lines.

Collection efficiency in 2015 was strong at 100%. Meanwhile, average accounts receivable days was at 19 days which was the same number of days registered in the previous year.

Manila Water received on April 21, 2015 the decisionof the Appeals Panel in the arbitration proceedings between the Company and MWSS. The decision concluded a three-year rate rebasing process that began in March 2012 with the submission of a business plan by Manila Water to MWSS and which subsequently resulted in arbitration. The final award of the Appeals Panel resulted in the setting of the rate rebasing adjustment for the period 2013 to 2017 at a negative 11.05% from Manila Water’s 2012 average basic water charge of P25.07 per cubic meter. This translates to a decrease of P2.77 per cubic meter in the basic water charge for implementation in the following manner: (a) negative P1.66 per cubic meter in 2015, (b) negative P0.55 per cubic meter in 2016, and (c) negative P0.55 per cubic meter in 2017.

The negative P1.66 per cubic meter adjustment was implemented on June 1, 2015 together with a CPI adjustment of 4.19% on top of the basic water charge equivalent to P1.08 per cubic meter.

Boracay Island Water Company (Boracay Water)

  For the years ended December 31
2015 2014 Increase/
Operating Highlights        
Billed volume (in
million cubic meters)
4.3 4.0 0.3 8%
Number of water
6,379 6,125 254 4%
Non-revenue water 21% 17% (4% pts)  
Financial Highlights (in thousand Pesos)        
Revenues 401,304 327,270 74,034 23%
Cost and expenses 206,548 140,068 66,480 47%
EBITDA 194,755 187,202 7,553 4%
Net income 69,855 96,059 (26,204) -27%

Boracay Water posted a billed volume growth of 8% in 2015 to 4.3 mcm from 4.0 mcm in 2014. The growth was driven by a 4% expansion in water service connections and 6% growth in tourist arrivals that reached almost 1.6 million during the year. NRW, however, increased to 21% at the end of December 2015 from 17% at the end of 2014 due to leaks in the main line and defective meters that are due for replacement. Boracay Water spent P399 million in capital expenditures in 2015 mostly for the expansion of used water services, growing by 385% year-on-year.

The growth in billed volume coupled with a higher average tariff led to a 23% improvement in total revenues to P401 million. Boracay Water implemented a scheduled tariff adjustment as part of the February 2013 rate rebasing resulting in an increase in average effective tariff by 16% to P78.25 per cubic meter. Operating expenses increased by 47% to P207 million due to higher direct and overhead costs, particularly higher treatment cost and maintenance cost of used water facilities. Notwithstanding the rise in operating expenses, EBITDA still improved by 4% to P195 million. However, due to higher depreciation and amortization, net income dropped by 27% to P70 million in 2015.

Clark Water Corporation (Clark Water)

  For the years ended December 31
2015 2014 Increase/
Operating Highlights        
Billed volume (in
million cubic meters)
12.8 11.6 1.3 11%
Number of water
1,978 1,978 - 0%
Non-revenue water 4% 5% 1% pt  
Financial Highlights (in thousand Pesos)        
Revenues 400,036 382,592 17,444 5%
Cost and expenses 206,731 197,648 9,083 5%
EBITDA 193,306 184,944 8,362 5%
Net income 116,927 100,185 16,742 17%

Clark Water posted billed volume growth of 11% to 12.8 mcm with the higher consumption of key commercial accounts and the sale of bulk water to residential subdivisions outside the Clark Freeport Zone in nearby Angeles City, Pampanga. The sale of bulk water outside the Zone reduced average tariff by 6% to P30.70 per cubic meter. Nevertheless, Clark Water continued to be very efficient in its non-revenue water reduction efforts as the NRW level declined further to 4% at the end 2015 from 5% at the end of 2014. Clark Water disbursed P305 million for capital expenditures in 2015 mostly for the expansion of the water and used water networks. Capital expenditures in 2015 was 52% higher than the P200 million spent in the previous year.

The increase in billed volume that was tempered by lower average tariff led to a revenue growth of 5% from P383 million in 2014 to P400 million in 2015. Meanwhile, operating expenses increased by 5% to P207 million thereby resulting in a 5% growth in EBITDA to P193 million. With lower depreciation and amortization due to the extension of the Concession Agreement, net income of Clark Water in 2015 rose by 17% to P117 million.

Laguna AAAWater Corporation (Laguna Water)

  For the years ended December 31
2015 2014 Increase/
Operating Highlights        
Billed volume (in
million cubic meters)
36.2 31.8 4.4 14%
Number of water
107,263 90,016 17,247.0 19%
Non-revenue water 11% 12% 1% pt  
Financial Highlights (in thousand Pesos)        
Revenues 827,671 676,883 150,788 22%
Cost and expenses 383,078 322,976 60,102 19%
EBITDA 444,592 353,908 90,684 26%
Net income 203,207 165,160 38,047 23%

Billed volume of Laguna Water grew by 14% to 36.2 mcm in 2015 largely brought about by additional service connections totaling more than 17,000 that raised billed volume in the base business to 22.3 mcm, growing by 20% year-on-year. The balance of 13.9 mcm came from the 164 industrial customers of Laguna Technopark, Inc. (LTI), growing by 5% from the previous year. NRW improved further by one percentage point at the end of 2015 to 11% from 12% at the end of 2014 despite the higher number of water service connections due to continuing leak repair programs. Laguna Water maintained its level of expenditures in 2015, disbursing P760 million during the year mostly for the development of new water sources and network expansion.

Revenues grew by 22% in 2015 to P828 million as a result of the higher billed volume, service connection fees and other income, more than offsetting the 3% decline in average effective tariff to P17.14 per cubic meter. On the other hand, operating expenses grew by 19% to P383 million, resulting in an EBITDA growth of 26% to P445 million. Net income of Laguna Water reached P203 million in 2015, growing by 23% from the previous year.

On June 30, 2015, Laguna Water signed an amendment to its Concession Agreement with the Provincial Government of Laguna expanding the scope of its concession from the cities of Biñan, Cabuyao and Sta. Rosa to cover all cities and municipalities in the entire Province of Laguna. The amendment likewise included the provision of wastewater services and the establishment of an integrated sewage and septage system in the province.

Thu Duc Water B.O.O Corporation (Thu Duc Water)

  For the years ended December 31
2015 2014 Increase/
Operating Highlights        
Billed volume (in
million cubic meters)
109.9 119.7 (9.8) -8%
Financial Highlights
(in million VND)
Revenues 312,310 331,240 (18,930) -6%
Cost and expenses 105,918 101,418 4,500 4%
EBITDA 206,392 229,822 (23,430) -10%
Net income 97,470 116,617 (19,147) -16%
in PFRS (in thousand Pesos)        
Net income
(49% contribution)
215,207 217,705 (2,498) -1%

Thu Duc Water sold a total of 110.0 mcm in 2015, dropping by 8% from the 119.7 mcm billed volume the previous year. The decline was due to the lower water intake of Saigon Water Corporation (“SAWACO”) which was slightly over the take-or-pay contract of 300 million liters per day (mld), at 301 mld, against the previous year’s average of 328 mld.

Under Vietnamese Accounting Standards (VAS), revenues declined by 6% to VND312 billion while operating expenses increased by 4% to VND106 billion due to lower higher direct costs particularly power, raw materials and maintenance costs. This led to a drop of 10% in EBITDA and a decline of 16% in net income to VND97 billion. In peso terms, the PFRS-translated income reflected in the consolidated financial statements as equity share in net income of associates amounted to P215 million, equivalent to Manila Water’s 49% stake in Thu Duc Water.

Kenh Dong Water Supply Joint Stock Company (Kenh Dong Water)

  For the years ended December 31
2015 2014 Increase/
Operating Highlights        
Billed volume (in
million cubic meters)
55.1 55.2 (0.1) 0%
Financial Highlights
(in million VND)
Revenues 203,981 203,018 963 0%
Cost and expenses 57,776 52,120 5,656 11%
EBITDA 146,205 150,898 (4,693) -3%
Net income 54,860 46,619 8,241 18%
in PFRS (in thousand Pesos)        
Net income
(47% contribution)
118,957 111,800 7,157 6%

Kenh Dong Water registered a billed volume of 55.1 mcm in 2015 which was almost the same level posted in 2014. The billed volume, at 151 million liters per day (mld), is slightly higher than the guaranteed minimum consumption of 150 mld under the bulk water supply take-or-pay arrangement with SAWACO.

Under Vietnamese Accounting Standards (VAS), Kenh Dong Water posted revenues of VND204 billion and an EBITDA of VND146 billion. With lower interest expense, this led to a net income of VND55 billion, growing by 18% year-on-year. Similar to TDW, income from Kenh Dong Water is translated into PFRS and is reported as equity share in net income of associates in the consolidated financial statements. In peso terms, the PFRS-translated income of Manila Water’s 47.35% stake in Kenh Dong Water amounted to P119 million.

The consolidated balance sheet as of the end of 2015 remained strong and supportive of future expansion. Strong cash inflows attributable to the high collection efficiency during the year and lower capital expenditure due to the delay in the approval of the East Zone’s business plan brought cash and cash equivalents to P6.8 billion. Total assets rose by 8% or P6.0 billion to P80.6 billion as the Company continued to undertake additional capital investments for headline projects. Liabilities, on the other hand, increased by 3% to P40.9 billion.

The Company continued to be compliant with its loan covenants. Debt to equity ratio stood at 0.85x, excluding concession obligations, while net bank debt to equity registered at 0.50x.

The Company signed a seven-year JPY40 billion loan facility on September 30, 2015 with three international banks to finance capital expenditures for 2016 and 2017. The Company has yet to draw from the facility as of the end of 2015.

Under the Company’s cash dividend policy, common shares are entitled to annual cash dividends equivalent to 35% of the prior year’s net income, payable semiannually. This translated to dividend payments of P0.815 per common share and P0.0815 per preferred share in 2015.

The Company’s East Zone spent a total of P4,224 million (inclusive of concession fee payments) for capital expenditures in 2015, 2% more than the P4,135 million spent the previous year. The bulk of capital expenditures was spent on headline projects such as wastewater expansion, network reliability and overhead projects, which accounted for 79% of the total. The balance of 21% was accounted for by concession fees paid to MWSS. Capital expenditures in the next two years is expected to increase with an approved business plan in place following the conclusion of the 2013 Rate Rebasing exercise.

Meanwhile, total capital expenditures of the domestic operating subsidiaries grew by 38% to P1,464 million from the P1,062 million spent in 2014. Of the total amount, P760 million was used by Laguna Water for its network coverage expansion, while Boracay Water and Clark Water disbursed P399 million and P305 million, respectively.

Report of the Audit and Governance Committee
to the Board of Directors For the year ended December 31, 2015

The Audit & Governance Committee’s roles, responsibilities and authority are defined in the Audit and Governance Committee Charter approved by the Board of Directors. The Committee
provides assistance to the Board of Directors in fulfilling their oversight responsibility to the shareholders relating to the:

  • integrity of the Manila Water Company, Inc.’s (“Company’s”) financial statements and the financial reporting process;
  • appointment, remuneration, independence and performance of internal audit and of the independent auditors, and integrity of the audit process
  • effectiveness of the systems of internal controls and enterprise risk management process
  • compliance with applicable legal and regulatory requirements and other reporting standards
  • performance and leadership of the internal control function
  • preparation of a year-end report of the Committee for approval of the Board and to be included in the annual report.

In compliance with the Audit and Governance Committee Charter, the Committee confirms that:

  • An independent director chairs the Audit and Governance Committee. The Committee has three out of four members who are independent directors;
  • The Committee had four meetings during the year with the following attendance rate:
Directors No. of Meetings Attended/Held Percent Present
Oscar S. Reyes 5/5 100%
Jose L. Cuisia, Jr. 4/5 80%
Jaime C. Laya 4/5 80%
Victoria P. Garchitorena 5/5 100%
  • The Committee reviewed and approved the quarterly unaudited consolidated financial statements and the annual Audited Consolidated Financial Statements of Manila Water Company, Inc. and subsidiaries, including Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended December 31, 2015, with the Company’s Management, internal auditors, and SGV& Co. These activities were conducted in the following context:
    • That, Management has the primary responsibility for the financial statements and the reporting process
    • That, SGV & Co. is responsible for expressing an opinion on the conformity of the Company’s audited consolidated financial statements with the Philippine Financial Reporting Standards.
  • The Committee reviewed and approved the Management representation letter before submission to the Company’s independent external auditors.
  • The Committee recommended to the Board of Directors the re-appointment of SGV & Co. as independent external auditors for 2015 based on its review of SGV’s performance and qualifications, including consideration of Management’s recommendation.
  • The Committee reviewed and approved all audit and auditrelated services provided by SGV & Co. to the Company and the related fees for such services.
  • The Committee discussed and approved the overall scope and the respective audit plans of the Company’s internal auditors and of SGV & Co., the results of their audits and their assessment of the Company’s internal controls, and the overall quality of the financial reporting process.
  • The Committee discussed the reports of the internal auditors, and ensured that Management is taking appropriate actions in a timely manner, including addressing internal control and compliance issues. All the activities performed by Internal Audit were conducted in conformance with the International Standards for the Professional Practice of Internal Auditing.
  • The Audit and Governance Committee, through the audits conducted by SGV & Company and Internal Audit, has reviewed Management’s system of internal controls and the Committee found the internal control system to be adequate and effective.
  • The Committee discussed with Management the adequacy and effectiveness of the Enterprise Risk Management process, including significant risk exposures, the related risk-mitigation efforts and initiatives, and the status of the mitigation plans. The review was undertaken in the context that Management is primarily responsible for the risk management process.
  • The Committee reviewed and confirmed that the existing Audit and Governance and Internal Audit Charters are sufficient to accomplish the Committee’s and Internal Audit’s objectives. The A&GC Charter is in compliance with the Securities and Exchange Commission Memo Circular No. 04 (2012).
  • The Committee conducted a self-assessment of its performance to confirm that the Committee continues to meet the expectations of the Board, Management and shareholders.

Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Audit and Governance Committee recommended to the Board of Directors the inclusion of the Company’s audited consolidated financial statements in the Company’s Annual Report to the Stockholders for the year ended December 31, 2015 and the filing thereof with the Securities and Exchange Commission.

February 24, 2016


Chairman, Audit &
Governance Committee


Independent Director


Independent Director



Statement Of Management’s Responsibility for Financial Statements

The management of Manila Water Company, Inc. and its subsidiaries is responsible for the preparation and fair presentation of the consolidated financial statements for the years ended December 31, 2015 and 2014, including the additional components attached therein, in accordance with Philippine Financial Reporting Standards. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

The Board of Directors reviews and approves the consolidated financial statements and submits the same to the stockholders.

SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, has examined the consolidated financial statements of the Company and its subsidiaries in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such examination.


Chairman of the Board


President and Chief Executive Officer


Chief Finance Officer


2015 Financial Statements
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