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/
(Decrease)/
(Decrease)
%
Operating Highlights        
Billed volume (in
million cubic meters)
12.8 11.6 1.3 11%
Number of water
connections
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/
(Decrease)/
(Decrease)
%
Operating Highlights        
Billed volume (in
million cubic meters)
36.2 31.8 4.4 14%
Number of water
connections
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/
(Decrease)/
(Decrease)
%
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/
(Decrease)/
(Decrease)
%
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.

BALANCE SHEET
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.

CAPITAL EXPENDITURES
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.