2017 Annual Report TABLE OF CONTENTS METRO PACIFIC INVESTMENTS CORPORATION is a Philippine-based, publicly-listed investment and 1 Our Business management company registered with the Philippine 2 Five-Year Consolidated Performance Securities and Exchange Commission on 20 March 2006. 3 Share in Operating Core Income We are a leading infrastructure holding company in the Philippines with a diverse set of infrastructure assets through 4 2017 Key Highlights our investments in power, toll roads, water utilities, hospital 6 Corporate Structure operations, light rail, and logistics. We are committed to investing through acquisitions and strategic partnerships 9 Significant Events in prime infrastructure assets with the potential to provide 12 Message from the Chairman synergies with our existing operations.
16 Message from the President and Chief Executive Officer 22 Message from the Chief Financial Officer OUR MISSION We are the leading infrastructure investment firm. We 26 Power manage, transform and grow our companies while 32 Toll Roads continuously seeking investment opportunities to create 38 Water long-term value for our shareholders.
44 Hospitals OUR 48 Light Rail VISION We have a stellar portfolio of infrastructure assets, each being 53 Summary of Major Expansion Projects the dominant player in its field. We are admired globally for excellence in investing and transforming infrastructure. We 54 Corporate Social Responsibility attract, retain and develop world-class talent. Through our 68 Milestones companies and foundation, we significantly contribute to the 76 Board of Directors economic development of the Philippines and thereby uplift the quality of life of every Filipino. 84 Senior Executives
90 Management Teams OUR VALUE 92 Corporate Governance 96 Whistle-Blowing Policy TEAMWORK AND EMPOWERMENT • We recognize the diverse strengths and abilities within 100 MPIC Awards and Recognitions the team. 102 Risk Management • We enable and inspire people to achieve superior results.
106 Risk Management Committee Report INTEGRITY AND TRANSPARENCY • We adhere to the highest ethical and corporate 107 Financial Statements governance standards. ENTREPRENEURSHIP • We innovate, take risks, act quickly and decisively, and are customer focused. FINANCIAL DISCIPLINE AND ACCOUNTABILITY • We employ rigorous financial analysis to arrive at sound business decision. *Digital document file of detailed Financial Statements are attached • We are results-driven and meet our commitments. OUR BUSINESS Powering commerce and households. Connecting people and places. Ensuring clean and safe water. Making excellent hospitals available for everyone. Managing a reliable light rail system. Increasing efficiencies in the movement of goods. As we continue to invest in critical infrastructure, we also anchor our efforts on all-encompassing growth: that our investments benefit all stakeholders—from consumers with basic services, employees in an inclusive and merit-based organization, to shareholders with reasonable returns.
2017 GROUP WIDE FINANCIAL HIGHLIGHTS (Aggregate including Associates and Joint Ventures)
REVENUES CORE EBITDA P373.1 billion P72.5 billion
CORE INCOME REPORTED INCOME P36.9 billion P37.7 billion
2017 CONTRIBUTION TO MPIC
POWER 52%
LIGHT RAIL AND OTHERS 1% P17.8
HOSPITALS 4% billion TOLL ROADS 22%
WATER 21%
2017 Annual Report 1 Five-Year Consolidated Performance
REVENUES CORE INCOME REPORTED INCOME (In P Millions) (In P Millions) (In P Millions) 13,151 14,104 62,512 11,456 12,106 9,546 10,346 44,820 7,940 8,508 37,239 7,229 7,209 33,832 30,877
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
DILUTED EARNINGS DIVIDEND PER SHARE TOTAL CONSOLIDATED PER SHARE (In Centavo) (In Centavo) ASSETS (In P Millions) 41.67 11.05 10.00 38.06 503,751 9.30 34.45 30.44 27.72 351,602 6.30 302,180 234,012 3.70 200,584
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2 Metro Pacific Investments Corporation TOTAL CONSOLIDATED SHARE IN OPERATING CORE INCOME EQUITY (In P Millions) (In P Millions)
POWER TOLL ROADS 215,679 3,901 9,378 188,081 3,517 7,229 150,777 2,828 129,572 113,280 2,239 1,874 4,543 3,027 2,333 2013 2014 2015 2016 2017
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
MARKET CAPITALIZATION (In P Millions) WATER HOSPITAL / LIGHT RAIL / OTHERS 835 823 4,819 215,847 4,376 209,815 3,789 3,733 581 3,564 145,004 454 437 119,808 112,428
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2017 Annual Report 3 2017 Key Highlights
POWER
MANILA ELECTRIC COMPANY (MERALCO) GLOBAL BUSINESS POWER CORPORATION* P8,951MN 6.33 million P427MN Contribution to MPIC Number of customers Contribution to MPIC
42,102GWH 8.39 4,465GWH Energy Sales Customer Satisfaction Index Energy Sales (All-time High)
REVENUES CORE INCOME REVENUES CORE INCOME (In P Millions) (In P Millions) (In P Millions) (In P Millions) 2,883 23,794 2,843 282,556 20,213 257,181 19,583 18,887 258,399 17,637
2015 2016 2017 2015 2016 2017 2016 2017 2016 2017
*Acquired in 2016
TOLL ROADS – METRO PACIFIC TOLLWAYS CORPORATION
P3,901MN 237,046 Contribution to MPIC Average Daily Vehicle REVENUES CORE INCOME Entries - NLEX (In P Millions) (In P Millions) 139,208 13,107
Average Daily Vehicle 458,175 3,935 11,902
Entries - CAVITEX Average Daily Vehicle 3,276 9,691
Entries - DMT / CII / 2,571 NUSANTARA
54,566 2015 2016 2017 2015 2016 2017 Average Daily Vehicle Entries - SCTEX
4 Metro Pacific Investments Corporation WATER - MAYNILAD WATER SERVICES, INC.
REVENUES CORE INCOME P3,733MN 31.7% (In P Millions) (In P Millions) Contribution to MPIC Non-Revenue Water (period-end at District
Metered Area level) 20,774 20,224 19,098 9,683 7,171 512MCM 1,358,758 7,379 Billed Volume Billed Customers 2015 2016 2017 2015 2016 2017
HOSPITALS - METRO PACIFIC HOSPITAL HOLDINGS, INC.
MN REVENUES CORE INCOME P685 8,057 (In P Millions) (In P Millions) Contribution to MPIC Number of Accredited Doctors
3,211 3,085,638 22,464 2,046 19,641
Number of Beds Number of Out-Patients 1,756 15,272 68.3% 173,939 1,309 Average Occupancy Rate Number of In-Patients 2015 2016 2017 2015 2016 2017
LIGHT RAIL - LIGHT RAIL MANILA CORPORATION**
REVENUES CORE INCOME P283MN 435,199 (In P Millions) (In P Millions) Contribution to MPIC Average Daily Ridership 514 505 3,155 3,016 109 897
Number of Light Rail 80 Vehicles 2015 2016 2017 2015 2016 2017
**Acquired in September 2015
2017 Annual Report 5 Corporate Structure (As of April 2018)
POWER
45.5% 62.4% Manila Electric Company (MERALCO) is the largest Global Business Power Corporation is a electric distribution company in the Philippines, leading power producer in the Visayas Region distributing 55% of Philippine energy sales. It holds a and Mindoro Island, with a combined gross 25-year franchise to construct, operate, and maintain dependable capacity of 854 MW. the electric distribution system of 36 cities and 75 municipalities, including Metro Manila.
TOLL ROADS
75.2% 99.9% NLEX Corporation, formerly Manila North Tollways CAVITEX Infrastructure Corporation holds Corporation, holds the concession rights to construct, the concession rights for the operation and operate and maintain the North Luzon Expressway maintenance of the Cavite Expressway. (NLEX), Subic-Clark-Tarlac Expressway (SCTEX), and the NLEX-SLEX Connector Road. 99.9% MPCALA Holdings, Inc. holds the concession to 72.5% design, finance, construct, operate and maintain the Tollways Management Corporation is engaged in the Cavite-Laguna Expressway. operations and maintenance of toll roads, its facilities, interchanges and all related works. It currently operates and maintains the NLEX and SCTEX. 99.9% Cebu Cordova Link Expressway Corporation holds the 44.9% concession rights to construct, operate and maintain CII Bridges and Roads is engaged in the construction, the Cebu Cordova Link Expressway. development and operation of the urban infrastructure sector in Vietnam. 29.5% Don Muang Tollway Public Company Limited holds 48.3% the concession rights to operate toll road services PT Nusantara is a listed Indonesian infrastructure from Din Daeng to National Memorial Monument in company with investments in tollroads, telecom towers, Thailand. water, ports, and energy.
WATER
52.8% 100.0% Maynilad Water Services, Inc. is the largest water MetroPac Water Investments Corporation is an concessionaire in terms of customer base in the investment holding company which operates, Philippines, providing water and sewerage services to manages, maintains and rehabilitates waterworks, 9.9 million customers across cities and municipalities in sewerage and sanitation systems and services for the West Service Area of Metro Manila. water districts outside Metro Manila.
6 Metro Pacific Investments Corporation HOSPITALS
51.4% Asian Hospital and Medical Center is the first major 19.7% private hospital with tertiary care facilities in the Makati Medical Center is a leading hospital that Southern Luzon corridor of metropolitan Manila. services the primary central business district in Metro Manila.
30.7% Central Luzon Doctors’ Hospital is a tertiary, Level 4 46.9% private hospital with teaching and training facilities in Bacolod City’s premier medical institution, Family Medicine and Pediatrics. Riverside Medical Center is a level 3 tertiary teaching hospital providing quality patient care for the Negrense since 1954. 60.1% Cardinal Santos Medical Center is one of the 48.1% Philippines’ leading hospitals specializing in the St. Elizabeth Hospital is a tertiary hospital in General fields of Brain, Spine, Heart, Cancer and Minimally Santos City with 249-bed capacity. Invasive Surgery.
30.7% 21.2% Sacred Heart Hospital of Malolos, Inc. is a 72-bed Davao Doctors Hospital is a privately-owned, tertiary capacity, Level 2 Hospital located in Malolos City, level and multi-specialty hospital located in the heart province of Bulacan. of Davao City, the business hub of Mindanao.
60.1% 30.7% West Metro Medical Center is the second largest tertiary De Los Santos Medical Center is a mid-market teaching hospital in Zamboanga. and training hospital in Quezon City.
60.1% 56.0% Our Lady of Lourdes Hospital is a mid-market hospital Marikina Valley Medical Center is a prominent tertiary which services communities in East Manila. hospital in Marikina which grew to become one of the leading hospitals on the eastern side of the National Capital Region. 12.0% Manila Doctors Hospital is a premier private tertiary 39.1% hospital located along United Nations Avenue in the Dr. Jesus C. Delgado Memorial Hospital is a tertiary City of Manila with a capacity of 500 beds. general hospital in Quezon City with 70 bed capacity and approximately 240 physicians.
15.33% 46.9% Mega Clinic is the largest and most complete urgent Una Konsulta is Riverside Medical Center’s primary care and walk-in health center in the country. care clinic at SM City Bacolod.
24.0% 30.1% TopHealth is a full-service, mall-based multi-diagnostic Lipa Medix Cancer Center is an oncology treatment medical facility located in the SM San Lazaro Mall. center in Lipa City, Batangas.
2017 Annual Report 7 Corporate Structure (As of April 2018)
LIGHT RAIL
55.0% Light Rail Manila Corporation (LRMC) holds a 32-year concession to operate, rehabilitate and maintain the existing 20.7 kilometers encompassing 20 stations of the LRT Line 1. LRMC is also extending this line to the south for an additional 11.7 km with 8 additional stations.
OTHERS
100.0% MetroPac Movers, Inc. is primarily involved in areas of logistics, warehousing, toll manufacturing, transportation and distribution to major fast-moving consumer goods companies in the Philippines.
20.0% AF Payments Inc. operates and maintains an electronic payment clearing and settlement system through a contactless automated fare collection system for public utility, including a generic contactless micropayment solution.
25.0% Indra Philippines, Inc. is one of the leading providers of information technology solutions to various businesses and industries in the Philippines, with engagements in utilities and telecommunications, financial services and public administration.
8 Metro Pacific Investments Corporation Significant Events
2017
JANUARY Metro Pacific Hospital Holdings, Inc. (MPHHI) acquired 65.0% of Delgado Clinic Inc., owner and operator of the Dr. Jesus C. Delgado Memorial Hospital in Quezon City.
FEBRUARY MARCH Metro Pacific Investments Corporation (MPIC) declared cash dividends of P0.068 per common share payable to stockholders as of the record date FEBRUARY of 30 March 2017 payable on 26 April 2017. APRIL NLEX Corporation (NLEX Corp) and Tollways MPIC also declared cash dividends amounting to Management Corporation (TMC), signed the plan P4.6 million in favor of preferred shareholders. of merger and articles of merger, with NLEX as the surviving corporation. MetroPac Water Investments Corporation (MPW) received the Notice of Award for the 30-year Cagayan de Oro 100 MLD Bulk Water Project. This involves the acquisition and construction of a water treatment plant and the construction of new FEBRUARY water transmission lines and rehabilitation of the JUNE Camaman-an Reservoir, to supply the Cagayan de MPIC acquired the remaining 25.0% stake of PLDT Oro Water District (COWD). Communications and Energy Ventures in Beacon Electric Asset Holdings (Beacon Electric). This was MPIC’s consortium with Covanta Energy, LLC and partially funded by MPIC from the proceeds from Macquarie Group, Ltd. received Original Proponent the overnight placement of 4.5% of its directly held Status from the Quezon City Government to design, MERALCO shares. This brought MPIC economic construct, finance, and operate an Integrated Solid interest in MERALCO to approximately 45.5% and Waste Management facility. This facility will be in Global Business Power Corporation to 62.4%. capable of processing and converting up to 3,000 metric tons per day of municipal solid waste into 42MW of renewable energy.
FEBRUARY JULY FEBRUARY In the arbitration between the Republic of the APRIL Philippines (the Republic) and Maynilad Water MetroPac Movers, Inc. (MMI) acquired certain assets Services, Inc. (Maynilad), the three-man Arbitral and business of Ace Logistics, Inc. Tribunal (the Tribunal) unanimously upheld
2017 Annual Report 9 Significant Events
SEPTEMBER MPW received the Certificate of Acceptance and the conferment of the Original Proponent Status for the Pampanga Bulk Water Supply Project from the Office of the Governor of Pampanga.
FEBRUARY OCTOBER
FEBRUARY MPHHI acquired 54.0% stake in St. Elizabeth Hospital, Inc. – a 248-bed tertiary level hospital in JULY General Santos City. the validity of Maynilad’s claim against the Undertaking Letter issued by the Republic, through the Department of Finance, to compensate Maynilad for the delayed implementation of FEBRUARY its relevant tariffs for the rebasing period 2013 NOVEMBER to 2017. The Tribunal ordered the Republic to reimburse Maynilad the amount of P3.4 billion Together with earlier share transactions, MPTC for losses from 11 March 2015 to 31 August 2016, acquired 48.27% of PT Nusantara Infrastructure without prejudice to any rights that Maynilad may Tbk (PT Nusantara) – an Indonesian have to seek recourse against MWSS for losses infrastructure holding company with interests incurred from 1 January 2013 to 10 March 2015. in toll roads, port operations, water, energy and Further, the Tribunal ruled that Maynilad is entitled telecommunications. to recover from the Republic its losses from 1 September 2016 onwards. MPW entered into a Share Purchase Agreement for the acquisition of 45.0% of the outstanding capital stock of BOO Phu Ninh Water Treatment Plan Joint Stock Company (PNW). PNW has been granted a license to serve clean water demand FEBRUARY in the Chu Lai Open Economic Zone, and urban AUGUST areas, industrial zones and adjacent rural areas MPIC declared cash dividends of P0.0345 per in Quang Nam province in Vietnam. common share payable to stockholders as of the record date of 1 September 2017 payable on 26 Global Business Power Corporation completed September 2017. the acquisition of 50.0% of Alsons Thermal Power Corporation. MPIC also declared cash dividends amounting to P4.6 million in favor of preferred shareholders.
Metro Pacific Tollways Corporation (MPTC) formed a special Committee to review potential toll road infrastructure investments in the Philippines and the ASEAN region.
10 Metro Pacific Investments Corporation FEBRUARY DECEMBER FEBRUARY Maynilad signed an P18.5 billion Notes Facility MPTC, through its subsidiary Cebu Cordova Link with various banks to refinance its existing peso- Expressway Corporation, received the Notice of denominated loans it issued in 2013 and fund Award for the 8.5 kilometer Cebu-Cordova Link other general corporate requirements. Expressway – this bridge will connect Cebu City to the Municipality of Cordova in the island of Mactan.
MPIC entered into separate agreements to secure FEBRUARY 10-year fixed-rate loan facilities in the aggregate amount of P10.0 billion, proceeds of which will be MARCH used to finance its investment in various projects MPIC declared cash dividends of P0.076 per and for other general corporate purposes: (i) P5.0 common share payable to stockholders as of the billion from BDO Unibank, Inc. and; (ii) P5.0 billion record date of 28 March 2018 payable on 26 April from Union Bank of the Philippines 2018.
MPW received from Metro Iloilo Water District MPIC also declared cash dividends amounting to (MIWD) the Notice of Award for the rehabilitation, P4.6 million in favor of preferred shareholders. operation, maintenance, and expansion of MIWD’s existing water distribution system and construction NLEX Corporation filed with the Securities and of wastewater facilities. Exchange Commission a registration statement for (i) the shelf registration of Philippine Peso MPIC agreed to form a consortium with Aboitiz denominated fixed rate bonds with an aggregate InfraCapital Inc., AC Infrastructure Holdings principal amount of P25.0 billion and (ii) the public Corporation, Alliance Global Group Inc., AEDC, offer and issuance of the initial tranche of the Filinvest Development Corporation and JG Summit NLEX Bond Program comprising of Bonds with an Holdings Inc. for the rehabilitation, operation, and aggregate principal amount of P4.0 billion, with an maintenance of the Ninoy Aquino International oversubscription option of up to P2.0 billion, to be Airport (NAIA) through an unsolicited proposal to issued out of the NLEX Bond Program. the Department of Transportation.
2018 APRIL FEBRUARY MPW entered into a Share Purchase Agreement for JANUARY the acquisition of 49.0% of the outstanding capital stock of Tuan Loc Water Resources Investment Joint MPIC signed 10-year and 15-year syndicated term Stock Company (TLW). TLW is one of the largest loan facilities totaling P10.0 billion to partially water companies in Vietnam, with 310 MLD of finance the redemption of the outstanding debt installed capacity. obligations of Beacon Electric Asset Holdings, Inc., a wholly-owned subsidiary of MPIC and for other general corporate purposes.
2017 Annual Report 11 Message from the Chairman
The overwhelming demand for the services we provide, aided by strong economic growth, underpins our outlook in the near-term. The strong operational fundamentals of our companies allow us to be well-positioned to ride the growth wave in the coming years.
12 Metro Pacific Investments Corporation TO MY FELLOW SHAREHOLDERS,
The Philippines remains to be among the fastest growing GROWTH STRATEGY economies in Asia, against a backdrop of a slowing global Recognizing the need for better infrastructure in the economy. Based on latest World Banki estimates, global country, each of our businesses at Metro Pacific Investments growth is projected to edge up to 3.1% in 2018, as the cyclical Corporation is actively contributing to the fabric of our nation recovery continues, but thereafter moderate to an average and enhancing its capacity to serve the public. of 3.0% in 2019-2020. According to studies conducted by the United Nationsii, growth in advanced economies is In Power, we are looking to execute on at least 1,600 projected to slow, as labor market slack diminishes and megawatts of predominantly ultra-supercritical coal-fired relaxed monetary policy is gradually unwound to give way generating capacity by 2022; continue to actively participate to rising interest rates. Consequently, potential growth rates in the Retail Electricity Sales market; and solidify our position are likely to be subdued, constrained by aging populations, as the Philippines leading Power Company. weak productivity trends, and problematic global trade issue. Against this global setting, the Philippines reported In Toll Roads, we are focusing on the resolution of our a commendable 6.7% GDP growth in 2017 and for the sixth outstanding toll rate issues to unlock the value of our straight year, sustained economic growth over 6.0%. World existing concessions. We are also gaining momentum on the Bank also estimates that this momentum can be sustained all construction of new toll road expansions designed to shorten the way through to 2020 on the back of strong fundamentals travel times, alleviate traffic congestion, and enhance traffic and a monetary policy supportive of growth. growth in our entire network.
That said, out of 137 countries, the Philippines ranks 97th We are also continuing to invest in our high growth smaller on Infrastructure, and 83rd on Technological Readiness businesses such as Water projects outside Metro Manila, – lagging behind our ASEAN peers Singapore, Malaysia, Hospitals and Logistics. Thailand, Indonesia and Vietnam in the 2017-2018 Global Competitiveness Reportiii. Inadequate supply of The overwhelming demand for the services we provide, infrastructure is still considered to be one of the most aided by strong economic growth, underpins our outlook in problematic factors for doing business in the country. It is no the near-term. The strong operational fundamentals of our surprise then that the Philippine Government has launched companies allow us to be well-positioned to ride the growth the boldest, most ambitious infrastructure program in wave in the coming years. However, we also recognize that Philippine history, earmarking over P8.0 to P9.0 trillioniv in our success will be largely dependent on our ability to be public spending from 2017 until 2022. This “Build, Build, proactive and responsive to changing economic conditions Build” program is envisioned to increase the productive and the increasing shift to digital transformation, as well as capacity of the economy, create jobs, increase incomes, and having collaborative partnerships with Government in respect strengthen the investment climate leading – all leading to of our tariff adjustments. sustained inclusive growth.
i. World Bank Global Economic Prospects – January 2018 iii. World Economic Forum – The Global Competitiveness Report 2017-2018 ii. United Nations World Economic Situation and Prospects 2018 iv. www.build.gov.ph
2017 Annual Report 13 MESSAGE FROM THE CHAIRMAN
INNOVATIONS roads can now use Easy Trip RFID, Beep cards, and Mastercard We have continued to prudently invest in our network contact-less debit, prepaid, and credit cards, including their with the goal of making our operations more efficient. In Smart Mastercard powered by PayMaya. This is aligned the process, we have learned that technology and digital with the National Retail Payment System program of the transformation are re-shaping every industry, and ours is Bangko Sentral ng Pilipinas that aims to transform 20% of the no exception. Thus, we have made a conscious decision to country’s payment transactions to electronic means by 2020. embrace these revolutionary changes to ensure that our customers are served best and can enjoy the benefits of the In Water Treatment, this involves utilization of various latest in relevant technology. technologies that effectively convert raw water into potable drinking water - dissolved air flotation, biological activated In Electricity Distribution, this means smart meters, distributed filtration, ultrafiltration, reverse osmosis and chlorination. smart grid, smart cities, e-vehicles and the requisite charging This is in response to changing climate conditions which have infrastructure. We aim to increasingly serve customers made the quality of raw water more variable. digitally: on-demand, on-line and on-the-go. In Hospitals, this includes migration to Electronic Medical In Power Generation, this means increasing Renewable Energy Records, implementation of integrated information (solar, wind, run-of-river, hydro, biomass and battery storage management systems and RFID-based systems to monitor as this continues to mature), and the latest highly efficient and patient flow in certain departments and improve billing and environmentally-responsive baseload and mid-merit coal and collection functions. gas-fired plants. In Rail, this means implementing a comprehensive In Toll Roads, this encompasses the use of digital payments, rehabilitation and modernization program for the existing ushering a new era of toll road operations in the country LRT-1 system, including station rehabilitation, complete where consumers can enjoy faster, more secure and more track replacement and upgrade of signaling systems. This convenient electronic transactions. Motorists on our toll will help to increase the lifespan of light rail vehicles, avoid
Growth Strategy
Major direction in the next five (5) years:
RESOLVE regulatory EXECUTE on new power DEVELOP high growth drag and EXECUTE generation projects smaller businesses such on new toll road (coal and renewables), as Water projects outside construction for traffic SUCCEED in the Retail Metro Manila, Hospitals, growth, network gains, Electricity Sales market, and Logistics and value development and SOLIDIFY position as the Philippines leading Power company
14 Metro Pacific Investments Corporation unnecessary wear and tear of the rolling stock, ensuring the collaboration in which our various Public-Private sector projects reliability of the whole train system. were conceived.
Amidst these challenges, the hard work, dedication and COLLABORATIVE PARTNERSHIP focus on customer service of our many employees continue Operating in highly-regulated industries is admittedly to be evident, and is reflected in the improving service proving to be more difficult than we had anticipated. Much metrics of all our operations. We hope that this is something as we are trying to fully support the “Build, Build, Build” that we as shareholders can be proud of – that in spite of agenda of the Government, the reality is that our investors uncertainties and setbacks, your Company remains resilient, (many of whom are hardworking Filipino savers and continues to uplift lives, and strives to create long-term pensioners by the way) and our creditors (mainly Philippine value for our stakeholders. We are indeed grateful for your banks) need confidence that our various concession continued support and trust. contracts and franchise agreements will be adhered to. The protracted delay in resolving our various regulatory issues is eroding this confidence, as evidenced by our share price during the significant drop in our first four months of 2018.
That said, our constraint to our mission to build and operate well-run and needed infrastructure, offering good value for the public, remains as strong and steadfast as ever. However, it is becoming more apparent that the combination of sizeable capital expenditures and cost reduction programs in recent years must be matched with contracted tariffs for our shareholders to receive the returns they are due, and are fair. We MANUEL V. PANGILINAN will be open to discussing ways to resolve these matters, but Chairman we do need our partners in Government to nourish the spirit of
FUND on fixed capital SELECTIVELY PURSUE base via MAXIMUM safe new solicited / use of leverage, eventual unsolicited infrastructure IPO of hospitals, projects – PPP or other SELL-DOWN of Maynilad models and REGULATORY RESOLUTION to boost cash flows
2017 Annual Report 15 Message from the President and Chief Executive Officer
Our Core Income was boosted by an expanded power portfolio following further investment in Beacon Electric Asset Holdings Inc.; robust traffic growth on all roads held by Metro Pacific Tollways Corporation; and continuing growth in the Hospital business.
16 Metro Pacific Investments Corporation TO MY FELLOW SHAREHOLDERS,
I am pleased to report to you that your Company, Metro GBPC sold 4,465 gigawatt hours, an increase of 22% from a Pacific Investments Corporation recorded a 17% increase year earlier while Core Income for 2017 rose 1% to P2.9 billion. in consolidated Core Income to P14.1 billion for the year ended 31 December 2017 from P12.1 billion in 2016 on the TOLL ROADS strength of its increased presence in the power industry. Our toll roads business accounted for 22% of operating income at P3.9 billion. This was an 11% increase in Our Core Income was boosted by an expanded power contribution from P3.5 billion in 2016. portfolio following further investment in Beacon Electric Asset Holdings Inc. (Beacon Electric); robust traffic growth On a stand-alone basis, MPTC’s Core Income increased by on all roads held by Metro Pacific Tollways Corporation 20% from the P3.3 billion recorded a year earlier on the back (MPTC); and continuing growth in the Hospital business. of robust traffic growth in all our toll roads and tight cost controls. System-wide vehicle entries increased by 64% to an OPERATIONAL REVIEW average of over 900,000 a day due mainly to the investment in PT Nusantara Infrastructure in Indonesia. POWER Our power business contributed 52% of our 2017 earnings, For our domestic toll roads – traffic on the North Luzon which is almost P9.4 billion, an increase of 30% from the Expressway (NLEX) grew 8% while traffic on the Subic- previous year, driven by the various step-up investments in Clark-Tarlac Expressway (SCTEX) surged by 21% following Manila Electric Company (MERALCO) and Global Business integration of these two roads in 2016. Traffic on the Cavite Power Corporation (GBPC); and the higher share in Expressway (CAVITEX) rose 9% driven by growth in residential dividend income from preferred shares in Beacon Electric. communities in Cavite and tourism in Batangas.
In June 2017, we further deepened our participation in the For our regional toll roads – Don Muang Tollways in Bangkok Philippine power sector by acquiring the remaining 25% reported a 2% increase in daily traffic to 97,919 while CII ownership in Beacon Electric. This brought our economic Bridges & Roads in Vietnam delivered an 8% increase to interest in MERALCO to 46% and in GBPC to 62%. 52,788 in 2017.
On a stand-alone basis, MERALCO’s Core Income grew by 3% to P20.2 billion. This was driven by a 5% increase WATER in energy sales to 42,102 gigawatt hours. All sectors P3.7 billion or approximately 21% of MPIC’s earnings are contributed to this increase on the back of rapid real estate attributable to our water business for 2017. This was a 5% growth, continued expansion of the business process increase from last year’s contribution. outsourcing and gaming sectors and robust performance of the semiconductor, food and beverage and basic metals On a stand-alone basis, Maynilad Water Services Inc.’s industries. (Maynilad) billed volumes grew 3% to 511.7 million cubic
2017 Annual Report 17 MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
meters as compared with last year while the number of water investment together with our continuing emphasis on connections rose 4% to 1.5 million at the end of 2017. Core operational efficiencies. In light of this strong performance, Income increased 3% to P7.4 billion due to tight control of our Board of Directors declared a final dividend for 2017 of operating expenses. 7.6 centavos per share – 12% higher than 2016 and marking a payout ratio of 25% of Core Income per share. HOSPITALS The contribution from Metro Pacific Hospital Holdings Inc. (MPHHI) GROWTH AND EXPANSION grew by 16% to P685.0 million from P589.0 million in 2016. POWER On a total aggregate level, Core Income surged by 17% to We are continuing the development of power related P2.0 billion in 2017 compared with the same period last services and investments in the Philippines with the year. Of the increase in Core Income, 4% was attributable to combination of distribution, generation and retail the contribution from new hospital acquisitions, including electricity sales across Luzon, the Visayas and Mindanao. Marikina Valley Medical Center, Dr. Jesus C. Delgado Memorial Hospital and St. Elizabeth Hospital, while 13% was through In November 2017, GBPC completed its acquisition of a organic growth driven by lower interest expense, cost savings 50% stake in Alsons Thermal Energy Corp., the holding from purchasing synergies and increasing patient numbers. company for Alsons Consolidated Resources, Inc.’s Outpatient visits increased by 14% to 3,085,638, and in-patient baseload coal-fired power plant assets in Mindanao. Its admissions rose 8% to 173,939. subsidiary, Panay Energy Development Corporation, also began operations of its 150 megawatt expansion plant in LIGHT RAIL the first quarter of 2017. Final plant acceptance is expected Our Light Rail business contributed P283.0 million pesos to within 2018. Core Income for the year. This was supported by a 6% increase in ridership following the rehabilitation of Light Rail Vehicles In March 2017, an MPIC-led consortium was granted augmented by higher advertising income and lower repairs Original Proponent Status by the Quezon City Government and maintenance expenses. for a 42 MW energy-from-waste project. The project is expected to be subjected to competitive challenge within Our earnings growth in 2017 reflects significant volume 2018. We are also talking with other local government units increases for all our businesses, supported by years of high to develop similar projects.
18 Metro Pacific Investments Corporation MERALCO continues to increase the scope of its power acquired 48.3% of PT Nusantara, a publicly listed limited projects and is looking to develop at least 1,500 MW of liability company in Indonesia. PT Nusantara’s infrastructure additional generation capacity by 2021. We are committed portfolio generates approximately 80% of its Core Income to providing reliable and economic power generation from tollroads, which attract over 300,000 vehicle entries a throughout the Philippines. Coal, even with the clean coal day. Our presence now in the Philippines, Thailand, Vietnam technologies we are committed to, may not be popular with and Indonesia means we are well on the way to establishing certain segments of society but remains for the time being a PAN-ASEAN Tollways group. the most efficient way to supply the essential base load to provide stable power to homes and businesses throughout WATER the country. We are also committed to seeking increased Much of our capital expenditure in 2017 for the water investment in renewable energy compatible with the demand business was directed to upgrading and building reservoirs profile of the Philippines. and pumping stations, laying primary pipelines and construction of wastewater facilities to improve public TOLL ROADS health. Maynilad is currently building six new sewage We focused our recent investments in the toll roads space treatment plants. Once completed, these new wastewater on meeting rising demand. We added an additional 64 lane facilities will be able to serve over 1.3 million customers. kilometers to the NLEX and are further expanding our toll plazas. We also completed rehabilitation of the entire SCTEX MetroPac Water Investments Corporation (MPW), our pavement from Tipo to Tarlac and modernized the SCTEX and unit focused on investing in water projects outside CAVITEX Traffic Control Rooms. Lastly, we have diversified Metro Manila, continues to progress on its water project electronic payment options enabling motorists to pay tollway development program. In Metro Iloilo, we now have a fees using Easy Trip RFID, Beep cards, and Mastercard and bulk water supply project for potentially 170 million liters Smart Mastercard. per day (MLD) when completed, as well as a concession for water distribution and wastewater services for Progress is underway for our new toll road expansions. approximately 38,000 connections across Iloilo City and Construction of the NLEX Harbour Link Segment 10 running nearby municipalities. Laguna Water District Aquatech from Valenzuela City to C3 in Caloocan City is expected to be Resources Corporation has expanded its coverage to substantially completed by the third quarter of 2018. Direct additional barangays in Nagcarlan, increased water travel between the Ports of Manila and the NLEX will then pressure in several locations and improved 24/7 water be reduced to only 10 minutes. Construction is ongoing for availability coverage from 57% to 95%. In August 2017, CAVITEX C5 Link Expressway and Cavite Laguna Expressway MPW signed a joint venture agreement to undertake the with expected completion in 2020. We are also looking to supply of up to 100 MLD of bulk treated water to address begin construction of the NLEX Harbour Link Radial Road 10, the requirements of Cagayan de Oro City. In the same NLEX-SLEX Connector Road and Cebu Cordova Link Expressway month, MPW was also granted Original Proponent status within the year assuming right-of-way is duly secured. for the Pampanga Bulk Water Supply Project by the Office of the Governor of Pampanga. MPTC will be spending over P100 billion for all these projects in the next five years to add approximately 86 kilometers of In November 2017, MPW entered into an agreement for the new toll roads in the Philippines. This amount of investment is acquisition of 45% of BOO Phu Ninh Water Treatment Plant an estimate that assumes the satisfactory resolution of various Joint Stock Company or PNW. PNW has a license to serve overdue tariff adjustments, now ranging between 20% and clean water demand in the Chu Lai Open Economic Zone 48% on different parts of the network. and adjacent areas in Quang Nam province. To date, MPW’s projects have a total contracted or potential capacity to As part of our push to build an ASEAN tollroad portfolio we provide more than 390 MLD of water – equivalent to 28% of have now also invested in Indonesia. In November 2017, MPTC Maynilad’s current billed volume of 1,402 MLD.
2017 Annual Report 19 MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
HOSPITALS and most important thoroughfares in Manila. In September In January 2017, Metro Pacific Hospitals acquired 65% of Dr. 2017, MPIC was granted the original proponent status for Jesus C. Delgado Memorial Hospital. This investment will the rehabilitation, operation and maintenance of MRT-3. The enable the 68-year-old hospital to upgrade its equipment proposal consists of the full and comprehensive rehabilitation and facilities and expand its capacity to serve its surrounding of MRT3 and its operation and maintenance under a 30-year communities. We also completed the acquisition of a 54% concession. Due diligence on the line is largely complete but stake in St. Elizabeth Hospital, a 248-bed tertiary level our proposal however, must first be endorsed to the National hospital located in General Santos City last October, and Economic and Development Authority. further increased our stake to 80% in December 2017. Our hospitals group has now grown to 14 hospitals, with NAIA AIRPORT BID approximately 3,300 beds – eight hospitals in Metro Manila In December 2017, MPIC agreed to form a consortium with and six around the country. Our portfolio also includes two Aboitiz InfraCapital, AC Infrastructure, Alliance Global, AEDC, healthcare colleges, three primary care clinics – Megaclinic in Filinvest and JG Summit for the rehabilitation, operation, SM Megamall Ortigas, TopHealth in SM San Lazaro and Una and maintenance of the Ninoy Aquino International Airport Konsulta in Bacolod; and a newly built Cancer Center in a joint (NAIA) through an unsolicited proposal which was submitted venture with Lipa Medix in Batangas. to the Department of Transportation in February 2018. Total project cost over the life of the concession is estimated to be LIGHT RAIL approximately P350.0 billion pesos and will be executed in two Further improvements in the overall riding experience are phases. Phase 1 will focus on the improvement and expansion expected when we complete the rail replacement project by of terminals in the current NAIA land area while Phase 2 will the second quarter of 2018. This will enable us to increase train cover the development of an additional runway, taxiways, running speeds to 60 kilometers per hour, further reducing passenger terminals and associated support infrastructure. The passenger waiting time with an expected rise in the number consortium believes that NAIA will continue to be a strategic of daily trips. We expect to begin construction of our 11.7 gateway and a key hub of airline operations for the Philippines. kilometer LRT1 South Extension Project by the middle of 2018 With proper upgrades and strategic improvements, NAIA can assuming the Government delivers a sufficient portion of the easily accommodate an additional 11 million passengers to necessary right-of-way. We are also seeking to replicate our the current 39.5 million passengers annually, and can increase success with LRT1 in the Metro Rail Transit Line 3 or MRT-3, the its hourly aircraft movements from 40 movements to 48 most heavily utilized metro line traversing one of the busiest movements per hour.
20 Metro Pacific Investments Corporation REGULATORY MATTERS is necessary for us to remain on track with our investment On 09 February 2018, the Philippine Republic filed an program and the benefits it will bring for the whole country. application with the High Court of Singapore to set aside the Arbitral Award dated 24 July 2017 issued by a unanimous Tribunal in the arbitration between Maynilad OUTLOOK and the Republic. Furthermore, the Republic also filed an Without regulatory resolution, we can only expect modest interlocutory application for the Court files of the main earnings growth in 2018 on the back of stable volumes across setting aside application to be sealed. The Arbitral Award all our businesses. We assure you, however, that we will that the Republic is seeking to set aside upheld the validity continue to exert all efforts to set our tariffs on a corrective of Maynilad’s claim and ordered the Republic, through the path towards restoring the value of our equity. We thank you Department of Finance, to compensate Maynilad for its for continuing to trust us to deliver on our potential every year revenue losses from 11 March 2015 onwards. These losses amidst a less than favorable regulatory environment and for resulted from the refusal of the Metropolitan Waterworks your patience as we navigate through these uncertainties. and Sewerage System (MWSS) to implement Maynilad’s relevant tariffs. We had thought we were close to resolution of most of our regulatory issues. However, this late and unexpected appeal by Government to vacate the award Maynilad received is, we are advised, without merit, and it may take several months to work this through.
We are facing similar regulatory challenges in our toll road business where we want to finance tens of billions of pesos of new roads to help grow our national economy. We are in constructive discussions with the Government JOSE MA. K. LIM and are working through the practicalities of long- President and CEO delayed but achievable price increases while being fair to tax payers. We and the Government share the same objective: to provide fairly-priced infrastructure to the public. Resolution of our various regulatory challenges
2017 Annual Report 21 Message from the Chief Financial Officer
Consolidated Core Income for 2017 increased by 17% to P14.1 billion driven by an 18% increase in contribution from operations to P17.8 billion as a result of our expanded power portfolio following further investment in Beacon Electric and strong performances from all our core businesses.
22 Metro Pacific Investments Corporation TO MY FELLOW SHAREHOLDERS,
The majority of this Annual Report deals with the Audited from operations to P17.8 billion as a result of our Consolidated Financial Statements of the Group and the expanded power portfolio following further investment interpretation of these statements for our shareholders in Beacon Electric and strong performances from all our in terms of the various components of our Core Income. core businesses. This focus on Core Income is our attempt to communicate with our shareholders on what we consider to be the true Non-recurring charges of P953 million were recorded, and fair underlying earnings of the Group, stripped of substantially comprising refinancing expenses, project one-off gains and losses, including the effect of foreign expenses and separation costs of a redundancy exchange fluctuations. Without doing this, it is difficult for program at Maynilad, largely offset by a realized gain on our shareholders to form a view on which to base our future sale of shares in MERALCO. earnings outlook. AUDITED CONSOLIDATED FINANCIAL STATEMENTS All numbers presented are in Peso Billions, except as MPIC generally doesn’t own 100% of its subsidiaries and otherwise stated. equity accounts for its largest investment and profit contributor, MERALCO. As such, while the Consolidated Financial Statements provide interesting metrics, it’s also difficult to see through these as to how each MPIC Consolidated Net Income (In P Billions) business directly affects the holding company. 2017 2016 Variance Core Income 14.1 12.1 17% The business is managed by reference to the holding company finances with operating management Non-core Expense (0.9) (0.6) 47% devolved to the operating units, each of which has Net Income 13.2 11.5 15% self-contained balance sheets without recourse to attributable to MPIC MPIC. There are no cross-default provisions in the portfolio from one investment to another. The holding company’s financial position and leverage capacity is Consolidated Core Income for 2017 increased by 17% to then set by reference to the ability of each investment P14.1 billion driven by an 18% increase in contribution to remit dividends to it and is the focus of this report.
2017 Annual Report 23 MESSAGE FROM THE CHIEF FINANCIAL OFFICER
Parent Cash Flow Information (In P Billions) 2017 2016 Directional Commentaries Dividends from Investments MPTC 1.6 2.3 Dividend income from MPTC increased but cash flows declined with the timing of payment of dividends as 2016 cash flow included dividends declared in 2015. MPTC requires significant capital for expansion Maynilad 1.6 1.0 Regular dividends increased despite pending arbitration award due to tight control of operating expenses and CAPEX. Capacity to further increase dividends is constrained until arbitration award is operationalized Beacon Electric / MERALCO 5.2 4.4 Higher dividends in 2017 from Beacon Electric preferred shares following increase in shareholding and reduced debt at Beacon Electric Hospitals 0.1 0.1 SUB-TOTAL 8.5 7.8 Interest and Operating Expenses Net Interest (2.2) (1.8) Interest will increase in 2018 in line with rising leverage Operating expenses and others (1.1) (1.3) Expected to increase in 2018 in line with general expansion SUB-TOTAL (3.3) (3.1) CASH INFLOW BEFORE INVESTMENT, 5.2 4.7 CAPITAL RAISING AND DIVIDEND PAYMENTS Dividends paid (3.2) (2.7) P0.0680 final 2016 dividend per common share declared 1 March 2017. Interim 2017 dividend of P0.0345 per common share declared 4 August 2017. CASH FLOW EXCLUDING CAPITAL 2.0 2.0 RAISING AND NET DEBT MOVEMENT
Net Debt Position (In P Billions) 2017 2016 Directional Commentaries Bank debt 46.8 36.7 Borrowings will increase in 2018 in line with expansion projects in the power, water, toll roads, rail and logistics businesses Cash and short-term investments (14.5) (4.1) Cash was drawn in late 2017 in anticipation of outgoings in the first quarter of 2018 to utilize long arranged term loan facilities NET DEBT 32.3 32.6
24 Metro Pacific Investments Corporation Parent Company Statement of Financial Position (In P Billions) 2017 2016 Directional Commentaries Investments Power 110.6 105.8 Acquired the remaining 25% investment in Beacon Electric net of 4.5% sell-down of MERALCO Water 19.7 18.5 Equity infusion in MetroPac Water Investments Corporation for water projects outside Maynilad’s concession area Toll Roads 32.3 30.9 Equity infusion to fund various toll road projects Hospitals 4.0 4.0 Rail 2.4 2.4 Logistics 2.9 1.8 Net investment in the logistics business TOTAL 171.9 163.4 Other Assets 17.4 7.1 TOTAL ASSETS 189.3 170.5 Bank debt (46.8) (36.7) Debt drawn to fund toll road projects and partially fund acquisition of Beacon Electric Other liabilities (18.4) (10.5) Deferred purchase consideration to PCEV for the acquisition of the remaining 25% interest in Beacon Electric NET ASSETS 124.1 123.3
REGULATORY RISK LEVERAGE We continue to grapple with overdue tariff adjustments Our usual borrowing currency is Philippine Peso using ten-year on many of our businesses. Discussions with the fixed interest rate or ten-year maturity with a five-year re-price. Government continue and there is agreement that our capital expenditures are essential and that contracts will The Parent Company’s primary loan covenant limits are a be honored. However, as illustrated by the Republic of the maximum debt to equity of 70:30 and minimum debt service Philippines (ROP) decision to appeal Maynilad’s arbitration coverage ratio (DSCR) of 1.1 times. The practical borrowing award in Singapore, the position of some Government constraint is the DSCR. For debt capacity planning, we take agencies appears to be to exhaust every conceivable legal a conservative view on timing of tariff resolution on the avenue prior to reaching settlement. By any measure, the capability of our investments to pay dividends to us. increasing revenue shortfall for some of our businesses is material and increases our assessment of risk. In turn, this is DIVIDEND POLICY reflected in lower bid premiums for those projects on which The combined interim and final dividends per share for 2017 we remain willing to bid, slower capital expenditure rates were increased by 11%, to bring the regular dividend pay-out and lower use of leverage than would be the case in a more ratio to 25% of Core Income per share for 2017, meeting our predictable environment. promise to maintain the dividend at this level. We anticipate maintaining this pay-out ratio for the foreseeable future. Resolution of these matters will be essential to supporting continued investment in regulated industries in the Philippines by the private sector. MPIC is examining further investment in other ASEAN infrastructure markets and DAVID J. NICOL shorter-term return projects in the Philippines such Executive Vice President and as Logistics. Chief Financial Officer
2017 Annual Report 25 EFFICIENT and SUFFICIENT Energy
POWER REVENUES
MERALCO P282.6 BN GBPC P23.8 BN
CORE EBITDA
MERALCO P34.6 BN GBPC P9.2 BN
26 CORE INCOME REPORTED INCOME MERALCO GBPC MERALCO GBPC P20.2 BN P2.9 BN P20.4 BN P2.8 BN
2017 Annual Report 27 POWER
POWER Metro Pacific Investments Corporation (MPIC) Asset Holdings Inc. (Beacon) at an aggregate began investing in the Power business in 2009 purchase price of P21.8 billion. Beacon directly through the acquisition of a stake in Manila holds approximately 35% of MERALCO and 56% of Electric Company (MERALCO) – the largest GBPC. Following the transaction, MPIC’s effective power distribution franchise in the Philippines, economic interest in MERALCO now stands at 46% distributing over 55% of the power consumed and in GBPC at 62%. in the country. MPIC is now ideally positioned to pursue the In May 2016, MPIC deepened its investment in further development of power related services and the Philippine power sector with an increase investments in the Philippines with its combination in its effective ownership in MERALCO to 41% of distribution, generation and retail electricity and the acquisition of a 42% interest in Global sales across Luzon and the Visayas. Business Power Corporation (GBPC) – the leading power supplier in the Visayas region The increase in MPIC’s stake in MERALCO; lower and Mindoro Island. interest costs; and the earnings from GBPC combined to increase the power business In June 2017, MPIC further increased its stake contribution to MPIC in 2017 by 30% to P9.4 in MERALCO and GBPC by acquiring the billion and represents 52% of MPIC’s total net remaining 25% ownership of Beacon Electric operating income.
OUR PERFORMANCE IN 2017
MERALCO ENERGY SALES 42,102 GWH
GBPC ENERGY SALES 4,465 GWH
NUMBER OF MERALCO CUSTOMERS 6.33 MN
28 POWER
MANILA ELECTRIC COMPANY (MERALCO) three existing substations (San Miguel, Balintawak, Veinte MERALCO’s total Revenues rose 10% to P282.6 billion Reales). on higher energy sales and pass-through generation charges driven by sharply higher fuel prices caused by the To enable residential customers in lease arrangements, scheduled maintenance shutdown of the Malampaya gas condominiums, dormitories and those whose lifestyles facilities, increased coal and oil prices and the depreciation are fit for prepaid service, MERALCO launched “Prepaid of the Philippine Peso against the U.S. dollar. Distribution Electricity Service” in February 2014. As at 31 December 2017, Revenues grew 5% in line with volume growth on flat tariffs cumulative prepaid meters installed within the franchise area which combined with an improved result from associated was 89,717, of which 48,735 were activated during the year. companies (CIS Bayad Center, Inc. and Radius Telecoms, Inc.) to increase Core Income for the period. The 5% increase MERALCO has implemented mobility solutions, automation, in energy sales was noted across all customer classes. and smart meters to its network to improve operations and Residential growth was driven by the increasing number maintenance, grid reliability and enable the integration of of condominiums, apartments and government housing. renewables. MERALCO is continuously looking for ways to The commercial sector grew on continued expansion of the improve its processes through modern technologies. Business Process Outsourcing and Gaming sectors while the Industrial sector was anchored on the robust performance GROWTH AND EXPANSION of the semiconductor, food & beverage, and basic metal In addition to the anticipated steady growth in the industries. Core Income for 2017 rose 3% to P20.2 billion. distribution utility driven by energy sales, growth in MERALCO will be coming from its continued participation OPERATIONAL IMPROVEMENTS in Retail Competition and Open Access (RCOA) and the MERALCO spent P12.1 billion on capital expenditures in execution of its Power Generation agenda. 2017 to address critical loading of existing facilities and to support growth in demand and customer connections. MERALCO’s local Retail Electricity Supply (RES) unit Among others, this included the construction of two new MPower and affiliate RES, Vantage Energy Solutions and additional substations (Lucena and Pulilan) and a 115 Management, Inc., served 294 customers with aggregate kiloVolt line from the Paco substation; and the expansion of sales of 5,120 GWh in 2017.
REVENUES CORE INCOME CONTRIBUTION TO MPIC (In P Millions) (In P Millions) (In P Millions) 8,951 20,213 19,583 18,887 298,636 18,128 282,556 17,023 257,181 266,336 258,399 6,740 4,543 3,027 2,333
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2017 Annual Report 29 POWER
To help ensure adequate, efficient and reliable power considered as a project of national importance for energy supply for Luzon, MERALCO is executing on at least security. 1,600 megawatts of additional coal-generating capacity under MERALCO PowerGen Corporation (MGen) and The pending PSAs are required to be in place by the target exploring further opportunities in Renewable Energy commercial operations date of the plant. MGen and its (solar, wind, run-of-river, hydro, biomass and battery partners, as well as other industry participants, remain storage as this continues to mature). hopeful that these PSAs will be acted upon in a timely manner in support of the country’s demand requirements. SAN BUENAVENTURA POWER LIMITED (SBPL) SBPL a joint venture between MGen and Thailand’s GLOBAL BUSINESS POWER CORPORATION (GBPC) New Growth B.V., a subsidiary of Electricity Generating GBPC sold 4,465 GWH in 2017, an increase of 22% from a Company Limited of Thailand (EGCO), is developing year earlier. Core Income for 2017 rose 1% to P2.9 billion. the country’s first supercritical 455 MW (net) coal- fired power plant in Mauban, Quezon. Construction is GBPC’s subsidiary, Panay Energy Development Corporation, proceeding as scheduled, with commercial operations began operation of its 150 MW expansion plant in the first due in the middle of 2019. The plant capacity is quarter of 2017. Rectification works are close to completion contracted under an Energy Regulatory Commission with the final plant acceptance expected within the second (ERC)-approved Power Supply Agreement (PSA) with quarter of 2018. MERALCO. In November 2017, GBPC completed acquisition of a 50% ATIMONAN ONE ENERGY, INC. (A1E) stake in Alsons Thermal Energy Corporation (Alsons). A1E which is located in Aitmonan, Quezon will be the The investment in Alsons is an opportunity for GBPC to country’s first ultra-supercritical coal-fired power plant accelerate its entry into fast growing energy markets in with a capacity of 2x600 MW (net). Public hearings, Mindanao. With the planned interconnection between the Technical Working Group review and assessment of Visayas and Mindanao grids, the partnership will greatly the PSA and the tariff; and other regulatory processes benefit power consumers as we work towards maximizing have essentially been completed. Notice to Proceed for use of energy resources and optimizing power supply. the Engineering, Procurement and Construction will be issued upon final approval of the PSA from ERC. The GBPC is looking at several projects to expand its energy PSA for the entire capacity is contracted by MERALCO. portfolio through investment in solar, bagasse, pumped storage, hydro and run of river energy sources as part of the MERALCO has a number of other PSAs pending ERC company’s commitment to offer flexible energy solutions to approval but its immediate focus is on A1E which is its customers.
30 Metro Pacific Investments Corporation POWER
2017 Annual Report 31 FIRST-CLASS and ACCESSIBLE Toll Roads
TOLL ROADS
REVENUES P13.1 BN
CORE EBITDA P8.6 BN
32 FIRST-CLASS and ACCESSIBLE Toll Roads
CORE INCOME REPORTED INCOME P3.9 BN P5.4 BN TOLL ROADS
TOLL ROADS
METRO PACIFIC TOLLWAYS CORPORATION Metro Pacific Tollways Corporation (MPTC), in which Metro Pacific Investments Corporation (MPIC) owns 99.9%, is the largest toll road operator in the Philippines. The Company is engaged in the development, design, construction, finance, operation and management of toll road projects. Its portfolio of existing toll road assets consists of:
Length 2017 Average Concession TOLL ROAD Ownership (In km) Daily Vehicles End PHILIPPINES North Luzon Expressway (NLEX) 75.3% 97.7 237,046 2037 Subic Clark Tarlac Expressway 75.3% 93.8 54,566 2043 (SCTEX) Cavite Expressway (CAVITEX) 100.0% 13.5 139,208 2033 - 2046 REGIONAL Don Muang Tollway (DMT) 29.5% 21.9 97,919 2034 CII Bridges & Roads (CII B&R) 44.9% 144.8* 52,788 2018 - 2034 PT Nusantara Infrastructure 48.3% 34.5 307,468 2028 - 2042 (Nusantara) * includes pre and on-going construction
OUR PERFORMANCE IN 2017
AVERAGE DAILY VEHICLE ENTRIES - NLEX 237,046
AVERAGE DAILY VEHICLE ENTRIES - SCTEX 54,566
AVERAGE DAILY VEHICLE ENTRIES - CAVITEX 139,208
AVERAGE DAILY VEHICLE ENTRIES - DMT/CII/NUSANTARA 458,175 TOLL ROADS
FINANCIAL PERFORMANCE systems to allow for diversified electronic payment options The toll roads business accounted for 22% of MPIC’s which will enable motorists to pay toll fees using Easy Trip operating income at P3.9 billion. This was an 11% increase RFID, BeepTM cards, and Mastercard contact-less debit, in contribution from P3.5 billion in 2016. On a stand-alone prepaid, and credit cards, including their Smart Mastercard basis, Toll Revenues grew by 10% year-over-year to P13.1 powered by PayMaya. In 2017, MPTC made substantial billion from P11.9 billion. Core Income increased by 20% progress in the construction of the NLEX Harbour Link to P3.9 billion from the P3.3 billion recorded a year earlier Segment 10, an elevated expressway linking MacArthur on the back of robust traffic growth in all its toll roads and Highway in Valenzuela City and C-3 Road in Caloocan City. tight cost controls. System-wide vehicle entries increased by This 5.8 kilometer extension to NLEX with a project cost 64% to an average of over 900,000 a day due mainly to the of approximately P10.5 billion is expected to operational investment in PT Nusantara Infrastructure in Indonesia. within 2018. Upon completion, this road will alleviate traffic congestion in Metro Manila and drive commerce between For the domestic toll roads – traffic on the NLEX grew the Harbour area and Central and North Luzon. Direct travel 8% while traffic on the SCTEX surged by 21% following between the Ports of Manila and the NLEX will be reduced to integration of these two roads in 2016. Traffic on CAVITEX only 10 minutes and will serve to advance transport logistics rose 9% driven by growth in residential communities in and facilitate efficient delivery of goods. Cavite and tourism in Batangas. For the regional toll roads, Don Muang Tollways in Bangkok reported a 2% increase in GROWTH AND EXPANSION daily traffic to 97,919 while CII Bridges & Roads in Vietnam Sizeable pending tariff adjustments have accumulated on delivered an 8% increase to 52,788 in 2017. all domestic toll roads through successive failures to raise tariffs since 2012. On the NLEX these amount to 21%; on OPERATIONAL IMPROVEMENTS the CAVITEX they amount to 25% on R1 and 42% on the R1 MPTC invested P4.4 billion in capital expenditure in 2017 to Extension; and on the SCTEX they amount to 48%. MPTC meet rising demand. An additional 64 lane kilometers to the is working closely with the Government to resolve these NLEX was constructed and further expansions to toll plazas outstanding tariff matters in a fair way that will be beneficial were completed to ease bottlenecks. MPTC also completed to all. This resolution will do much to ease future funding the rehabilitation of the entire SCTEX pavement from Tipo constraints and allow MPTC to execute on an additional 86 to Tarlac and modernized the SCTEX and CAVITEX Traffic kilometers of toll roads in the Philippines with total project Control Rooms. The Company also invested in improved IT cost of approximately P107.6 billion.
REVENUES CORE INCOME CONTRIBUTION TO MPIC (In P Millions) (In P Millions) (In P Millions) 3,901 3,935 13,107 3,517 11,902 3,276 9,691 2,828 8,641 2,571 8,154 2,239 2,154 1,963 1,874
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2017 Annual Report 35 TOLL ROADS
Length Project Cost Target Right of Way Progress PROJECTS UNDER DEVELOPMENT (In Km) (In P Billions) Completion (as of 31 March 2018) Expansions to existing roads NLEX Harbour Link (Segment 10) 5.8 10.5 2018 70% NLEX Harbour Link (Radial Road 10) 2.6 6.7 2019 70% NLEX Lane Widening Phase 2 N/A 2.0 2020 N/A CAVITEX - C5 South Link 7.7 12.6 2020 48% CAVITEX Segment 4 1.3 1.2 2020 89% NLEX Citi Link 7.5 8.0 2023 0% Stand-alone road projects Cavite Laguna Expressway 44.6 16.9 2020 21% NLEX-SLEX Connector Road 8.0 23.3 2020 0%* Cebu Cordova Link Expressway 8.3 26.3 2021 91% TOTAL 85.8 107.5
* To increase to 60% once agreement with Philippine National Railway is signed
Construction is ongoing for CAVITEX C5 Link Expressway UNSOLICITED Length Project Cost and Cavite Laguna Expressway with expected completion PROPOSALS (In Km) (In P Billions) in 2020. The groundbreaking ceremony for the Cebu- NLEX Port Expressway 15.0 90.2 Cordova Link Expressway was held in March 2017 with President Rodrigo Duterte in attendance. This is one of the C5 Expressway 22.0 92.8 biggest infrastructure projects outside Metro Manila and Cavite-Tagaytay- 50.7 22.0 will be completed by 2021. MPIC is also looking to begin Batangas Expressway construction of the NLEX Harbour Link Radial Road 10 and TOTAL 87.7 205.0 the NLEX-SLEX Connector Road within 2018 assuming right-of-way is duly secured. The toll roads business is considered to be the fastest growing and most transformative among the businesses MPTC is continuously exploring the development of new in MPIC’s current portfolio. The completion of these road projects in line with its strategic vision of building expansion projects and the resolution of its outstanding a seamless network of toll roads from North to South of tariff issues will serve as the foundation of value creation Metro Manila. MPIC is looking to invest approximately in this portfolio and accelerate earnings growth in the next P205.0 billion to build an additional 87.7 kilometers of toll three to five years. roads through the outstanding unsolicited proposals it has submitted to the Government to date.
36 Metro Pacific Investments Corporation TOLL ROADS
2017 Annual Report 37 SAFE and SUSTAINABLE Water
WATER
REVENUES P20.8 BN
CORE EBITDA P14.1 BN
38 CORE INCOME REPORTED INCOME P7.4 BN P6.9 BN
2017 Annual Report 39 WATER
WATER
MAYNILAD WATER SERVICES, INC. Maynilad Water Services, Inc. (Maynilad), a 53% owned subsidiary of Metro Pacific Investments Corporation (MPIC), is the water and wastewater services provider for the West Zone of the Greater Metro Manila area. It is the largest water concessionaire in terms of customer base in the Philippines – currently at 1,358,758 service connections or more than nine million people.
FINANCIAL PERFORMANCE The Water business contributed P3.7 billion and accounted for 21% of MPIC’s net operating income in 2017. Total Revenues in 2017 rose 3% to P20.8 billion from P20.2 billion in 2016 due to the higher billed volume and inflationary increases in tariff. Billed volume for 2017 was 3% higher at 512 million cubic meters (MCM) from 499 MCM in 2016. Core Income also grew by 3% to P7.4 billion from P7.2 billion mainly due to lower tax expense from the use of the Optional Standard Deduction method in the calculation of taxable income.
OUR PERFORMANCE IN 2017 BILLED VOLUME 512 MCM
BILLED CUSTOMERS 1,358,758
NON-REVENUE WATER (Period end at District Metered Area Level) 31.7%
TOTAL NON-REVENUE WATER (Period end) 39.0% WATER
OPERATIONAL IMPROVEMENTS year Business Plan period, together with the two related Under MPIC’s leadership and together with its partners arbitration awards in its favor, remain unresolved. In 2015, – DMCI Holdings Inc. and Marubeni Corp. – Maynilad Maynilad received an arbitration award in its favor against launched one of the largest and most ambitious Non- the Metropolitan Waterworks and Sewerage System (MWSS), Revenue Water (NRW) reduction programs in Asia and which centered on treatment of Corporate Income Tax as an successfully brought down its NRW at the District Metered expense to be recovered through the tariff. MWSS did not Area level to 31.7% by the end of December 2017. As a act on this award and so Maynilad, in accordance with its result of its continuous NRW reduction efforts, Maynilad concession agreement, called on the Undertaking provided repaired 26,792 pipe leaks across its concession area in by the Republic of the Philippines. The Republic likewise 2017 and installed 38 kilometers of water pipes, expanding failed to act on this so Maynilad, with reluctance, launched its distribution line to 7,675 kilometers. At the end of 2017, an arbitration claim in Singapore seeking full recovery of drinking water supply and sewerage coverage were 93% forgone revenues. On 24 July 2017, Maynilad was notified and 15% of its population, respectively. 24-hour service was that all three members of the arbitration panel voted at 98% while average water pressure of over 7 pounds per unanimously to uphold its claim. On 9 February 2018, the square inch was maintained at 100%. Republic applied to the High Court in Singapore seeking to have the award in Maynilad’s favor vacated. The Republic Capital expenditure for 2017 stood at P12.0 billion, much also filed an interlocutory application for the Court files of of it directed to upgrading and building reservoirs and the main setting aside application to be sealed. pumping stations, laying primary pipelines and construction of wastewater facilities to improve public health. Maynilad Maynilad is currently in rate rebasing negotiations with a is currently building six new sewage treatment plants. Once newly revitalized MWSS regarding the 2018-2022 five-year completed, these new wastewater facilities will be able to Business Plan. However, it appears that the matter of the serve approximately 1.3 million Maynilad customers. Corporate Income Tax recoverability through the tariff and the now sizeable (P6.7 billion as of 31 December 2017) cash REGULATORY MATTERS claim from the Republic will take further time to resolve. Despite Maynilad’s excellent record of service delivery, the While Maynilad strives to meet its service obligations, the matter of Maynilad’s tariffs for the entire 2013-2017 five- ongoing refusal of MWSS and the Republic to address either
REVENUES CORE INCOME CONTRIBUTION TO MPIC (In P Millions) (In P Millions) (In P Millions) 4,819 9,683 20,774 20,224 8,777 4,376 19,098 18,363 3,789 7,171 3,733 7,503 7,379 16,895 3,564
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2017 Annual Report 41 WATER
the tariff matter or the revenue claim is hampering financing Over the life of the concession, MPW sees significant of the required capital expenditures. potential in increasing service coverage and reducing NRW from current levels of 23.0% and 50.0%, respectively. GROWTH AND EXPANSION Near-term growth will be driven by increase in billed MPW serves five municipalities in Laguna through Laguna volume in line with population growth and expansion Water District Aquatech Resources Corporation (LARC). in unserved and underserved areas. Execution of water Since LARC began operations in January 2016, it has resiliency programs will be vital in ensuring that volume expanded its coverage to additional barangays in Nagcarlan, demands are met. increased water pressure in several locations, and improved 24/7 water availability coverage from 57.0% of customers As the leading water concessionaire in the Philippines, pre-takeover to 95.0%. In 2017, LARC served a total of Maynilad will continue working on its mission to provide more than 35,000 service connections, supplied 24 MLD to safe, affordable and sustainable water solutions that customers in its service area, and maintained NRW at 26.0%. enable the customers they serve to lead healthier, more comfortable lives. In August 2017, MPW signed a joint venture agreement to undertake the supply of up to 100 MLD of bulk water to METROPAC WATER INVESTMENTS CORPORATION address the requirements of Cagayan de Oro City, a first MetroPac Water Investments Corporation (MPW), a wholly class highly urbanized city in Northern Mindanao with a owned subsidiary of MPIC, was created to explore water and population close to 900,000. The project has a minimum wastewater infrastructure projects outside Metro Manila. term of 30 years commencing on 31 December 2017. On 1 January 2018, Cagayan de Oro Bulk Water Inc. (COBI) - the Philippines joint venture company implementing the project – began MPW’s existing Philippine portfolio includes bulk water supplying about 40 MLD to Cagayan de Oro City Water supply projects in Metro Iloilo and Cagayan De Oro, and a District (COWD). full concession project covering some areas of Laguna. MPW was also recently awarded the Metro Iloilo full concession In August 2017, MPW was also granted Original Proponent project. Status for the Pampanga Bulk Water Supply Project by the Office of the Governor of Pampanga. Detailed negotiations MPW has bulk water supply contract to supply up to 170 are ongoing. million liters per day (MLD) to Metro Iloilo Water District (MIWD) over a minimum term of 25 years. Metro Iloilo Bulk Vietnam Water Supply Corporation (MIB), the joint venture company In November 2017, MPW entered into an agreement for the that is implementing the project, officially took over water acquisition of 45% of BOO Phu Ninh Water Treatment Plant production in July 2016, and consistently supplied 38 MLD Joint Stock Company (PNW). PNW has a license to serve to MIWD in 2017. The project covers the rehabilitation clean water demand in the Chu Lai Open Economic Zone of existing facilities and the construction of new water and adjacent areas in Quang Nam province. PNW is close to production facilities. After the rehabilitation works are completing the construction of a water treatment plant with completed by the third quarter of 2018, production capacity capacity of 25 MLD and has potential to increase capacity to is targeted to increase to up to 61 MLD. 300 MLD. Closing of this acquisition is expected to happen in the second quarter of 2018. In December 2017, MPW was also awarded the Metro Iloilo full concession project covering water and sanitation To date, MPW’s projects have a total contracted or services in Iloilo City and nearby municipalities, which in potential capacity to provide more than 390 MLD of water aggregate have an estimated population of more than – equivalent to 28% of Maynilad’s current billed volume of 800,000 and existing service connections of around 38,000. 1,402 MLD. MPW continues to build lasting partnerships
42 Metro Pacific Investments Corporation WATER
with communities and stakeholders, and is developing a full pipeline of projects to deliver on its aspiration of providing access to clean water and sanitation coverage to people in key cities outside Metro Manila and in selected Asean markets.
Project Population Potential Number of Development Equivalent Volume Projects Pipeline (In Millions) (In MLD) Concession 6 3.3 550 Bulk Water 11 7.5 910 Industrial and 3 8.9 660 Wastewater BOO/BOT TOTAL 20 19.7 2,120
2017 Annual Report 43 ADVANCED and WORLD-CLASS Hospitals
HOSPITALS
REVENUES P22.5 BN
CORE EBITDA P4.9 BN
44 CORE INCOME REPORTED INCOME P2.0 BN P2.1 BN HOSPITALS
HOSPITALS
METRO PACIFIC HOSPITAL HOLDINGS INC. FINANCIAL PERFORMANCE Metro Pacific Hospital Holdings Inc. (MPHHI) Contribution to MPIC operating income from MPHHI is a 60% owned subsidiary of Metro Pacific grew by 16% to P685.0 million from P589.0 million in Investments Corporation (MPIC) established 2016. On an aggregate level, Revenues increased by to invest in and operate a group of Healthcare 14% year-over-year to P22.5 billion. Of this increase, assets. MPHHI has successfully built a 10% came from organic growth led by increased profitable portfolio through the acquisition outpatient numbers across all hospitals: outpatient of both underperforming and healthy visits increased by 14% to 3,085,638, and in-patient hospitals; implementation of management admissions rose 8% to 173,939. The remaining 4% efficiencies; and the upgrade and expansion Revenue increase was attributable to new hospital of facilities and equipment. MPPHI is now the acquisitions: Marikina Valley Medical Center (93% largest private hospital group in the country equity shareholding acquired in July 2016), Dr. comprising of 14 premier hospitals, two Jesus C. Delgado Memorial Hospital (65% equity healthcare colleges, three primary care clinics, shareholding acquired in January 2017) and St. and one cancer center with a total capacity Elizabeth Hospital (SEHI) (54% equity shareholding of approximately 3,300 beds, a pool of 8,000 initially acquired in October 2017; additional capital doctors, 6,600 nurses, and 10,500 employees, infusion will increase MPHHI ownership to 80%, all focused on serving approximately 3.0 pending SEC approval of SEHI’s application to million patients a year. increase authorized capital stock).
OUR PERFORMANCE IN 2017
NUMBER OF BEDS 3,211
NUMBER OF OUT-PATIENTS 3,085,638
NUMBER OF IN-PATIENTS 173,939 HOSPITALS
Core Income surged by 17% to P2.0 billion in 2017, driven by lower within Makati Medical Center. This initiative aims to centralize the interest expense and cost savings from purchasing synergies. group’s clinical laboratory operations and align its hospitals further with best practices in many first world countries. This is expected OPERATIONAL IMPROVEMENTS to reduce laboratory costs via economies of scale and machine In line with its goal of making healthcare more geographically utilization, improve quality and turn-around time, and make more accessible; and ensuring that the hospitals in its network are tests available to its patients. MPHHI also intends to eventually open continuously improving the scope and quality of services offered to this service to other hospitals. its patients, the MPHHI group invested approximately P3.5 billion in capital expenditures in 2017. These investments include the GROWTH AND EXPANSION new hospital acquisitions as outlined above; the acquisition and MPHHI will continue investing in more hospital acquisitions to establishment of two diagnostic clinics, one in partnership with achieve its 5,000-bed target in the next three to five years. MPHHI Sanitas of Spain (TopHealth Clinic in SM San Lazaro) and another, has begun laying the groundwork for further expansions to its the establishment by Riverside Medical Center Inc. of a greenfield existing hospitals through the purchase of some lots adjacent to their clinic ‘Una Konsulta’ in SM Bacolod, and; one cancer center (a facilities which will allow the group to add at least 500 additional joint venture project with Lipa Medix). Further improvements beds by 2022. Together with its partners, MPHHI will also continue implemented in some of MPHHI’s existing hospitals include to explore further investment in specialized facilities which it could additional patient rooms to augment capacity; and the purchase link to its hospital network. MPHHI is also working on synergy and of new equipment such as the Positron Emission Tomography efficiency projects to centralize hospital operations particularly in / Computed Tomography Machine to enhance Cancer Care. the area of standardized and integrated Information Technology The hospital network continues to benefit from MPHHI’s group systems (RFID-based Patient Systems, Electronic Medical Records, purchasing initiative – its most notable synergy project to date. Electronic Prescriptions, Telehealth). Finally, MPHHI is now studying Instead of each hospital negotiating individually with suppliers, the possibility of investing in the construction of greenfield hospitals, MPHHI organizes group purchases to enable its hospitals to buy in addition to its traditional strategy of investing in existing hospitals. medicines, supplies, and equipment at possibly the lowest cost in This pipeline of projects will solidify growth in this business in the the country. Savings from this initiative enable MPHHI hospitals to near term and underpin increasing contributions to MPIC’s bottom invest in newer technologies, and, most importantly, reduce prices line. Operating in a country with only one hospital bed per 1,000 for their customers. In September 2017, MPHHI also embarked capita, MPHHI is best positioned to take the standards of Philippine on a new synergy project in partnership with LSI Medience and healthcare forward and provide dependable and affordable service Marubeni Corp. through the establishment of Medilinx Central Lab to a growing population.
REVENUES CORE INCOME CONTRIBUTION TO MPIC (In P Millions) (In P Millions) (In P Millions) 685 22,464 581 589 19,641 1,756 473 2,046 465 1,309 15,272 14,096 12,493 1,007 879
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2017 Annual Report 47 RELIABLE and CONVENIENT Rail
LIGHT RAIL
REVENUES P3.2 BN
CORE EBITDA P1.0 BN
48 CORE INCOME REPORTED INCOME P0.5 BN P0.5 BN LIGHT RAIL
LIGHT RAIL
LIGHT RAIL MANILA CORPORATION Light Rail Manila Corporation (LRMC), a consortium established by Metro Pacific Investments Corporation (MPIC) (55.0%) with AC Infrastructure Holdings Corporation (35.0%) and Macquarie Infrastructure Holdings (Philippines) PTE Ltd. (10.0%), took over the operations and maintenance of the existing 20.7 kilometer LRT-1 rail line on 12 September 2015.
FINANCIAL PERFORMANCE In 2017, the Rail business contributed P283 million to MPIC’s operating income, a 4% increase from its P273 million contribution in 2016. On a stand-alone basis, Rail Revenues grew by 5% to P3.2 billion driven by a 6% improvement in ridership. LRT-1 served an average daily ridership of 435,000 in 2017 from 410,000 in 2016 while the highest daily ridership was 578,000 (2016: 533,000). Core EBITDA grew faster at 31% to P961 million due to higher advertising income and lower repairs and maintenance expense. Core Income year-over-year grew by 2% to P514 million in 2017 due to higher tax expense.
OUR PERFORMANCE IN 2017
NUMBER OF LRVs 109
AVERAGE DAILY RIDERSHIP 435,000 LIGHT RAIL
OPERATIONAL IMPROVEMENTS availability of spare parts and save on materials cost, the Since LRMC took over LRT-1 operations, it has improved Company also began doing in-house fabrication of Timer efficiencies resulting in increased number of trains and Relay Modules, Switch Modules and Perception Head Boards trips, reduced passenger waiting time, improved safety and for Generation 1 trains. This has resulted in significant cleanliness of the stations, increased ridership, extended savings for the Company and allowed them to facilitate the operating hours and increased customer satisfaction all repairs more swiftly. while achieving ISO certifications. LRT-1 is the first and only railway system in the Philippines to have achieved the ISO After completing the rail repacement and safety assessment, certifications Quality Management Systems (ISO 9001:2015) LRT-1 will be able to increase the maximum speed of the and Environmental Management Systems (ISO 14001:2015), system to 60 kilometers per hour (kph), a 50% increase following a two-year company-wide program to improve from its current maximum speed of 40 kph. This project operational efficiencies in Manila’s oldest light rail system. involves the complete replacement of the line’s 32-year old As at the end of 2017, LRMC has successfully restored 32 26-kilometer track and is expected to shorten travel and Light Rail Vehicles (LRVs), bringing the total available to 109 waiting time and add more trips per day. LRVs. Passenger waiting time was reduced by 7% from 3.6 minutes to 3.4 minutes while total cycle time dropped from LRMC is also on track with its P750-million Station 109 minutes to 101 minutes. As a result, average daily trips Improvement Project. This covers the redesign, structural increased by 11% from 478 to 530 in 2017, contributing to repair, replacement of lighting fixtures, repainting, the decrease of train load factor by 7% and allowing more restoration of elevators and escalators, and general cleaning room for passengers. Further improvements in the overall of LRT-1 stations. LRMC has already completed stations riding experience are expected as the Company is on track Doroteo Jose, UN, Gil Puyat, Abad Santos, Pedro Gil and R. with its overall rehabilitation plan for the LRT-1 existing line. Papa. Rehabilitation of the remaining 14 stations will be LRMC will be investing P450 million for the rehabilitation of completed by the fourth quarter of 2018 and will serve to 24 additional LRVs over the next two years. This will be the improve overall riding experience. first overhaul of the Generation 2 fleet’s propulsion system since the Philippine Government bought the Generation-2 In its effort to create a safe environment for its employees, trains from Hyundai and Adtranz Sweden in 1999. To ensure LRMC also successfully achieved five million safe man hours
REVENUES CORE INCOME CONTRIBUTION TO MPIC (In P Millions) (In P Millions) (In P Millions) 514 283 273 505 3,155 3,016 897 41 80
2015 2016 2017 2015 2016 2017 2015 2016 2017
2017 Annual Report 51 LIGHT RAIL
without a Lost Time Injury (LTI) as of 31 October 2017. An around the rail stations. LRMC signed the engineering, LTI is an injury suffered by an employee on the job that procurement, and construction contract with Bouygues results in a fatality, permanent disability, or time lost from Travaux Publics and is set to begin construction of this work. The LTI reference is recognized globally as a key P28.0 billion project in 2018, assuming Government indicator of a company’s safety performance. delivers a sufficient portion of the necessary Right-of- Way. LRMC and the contractors are currently doing the GROWTH AND EXPANSION detailed design as well as the necessary survey works Pursuant to its Concession Agreement with the for the project. The LRT-1 South Extension Projected is Government, LRMC will construct an additional 11.7 expected to be completed by 2021. Focus in the near- kilometer extension from the present end-point at term will be on the completion of rehabilitation projects Baclaran to the Niog area in Bacoor, Cavite. A total of to optimize operations and boost ridership in the existing eight new stations will be built along the extension, line. Advertising, Station Partnership Programs and Retail which traverses the cities of Parañaque and Las Piñas Space Plans are also being intensified to increase non-rail up to Bacoor, Cavite. The extended rail line is envisioned revenues and enhance overall profitability. Meaningful to help ease the worsening traffic conditions in the contribution to MPIC profitability from this business is Parañaque-Las Piñas-Cavite corridor. It is also expected expected once overall ridership ramps up and operations to increase and enhance commercial development of the fully-extended line are in full swing.
52 Metro Pacific Investments Corporation Metro Pacific Investments Corporation Summary of Major Expansion Projects
POWER San Buenaventura Atimonan Development of at least Power Limited One Energy 1,500 MW 455 MW 2x600 MW of additional power generation capacity
TOLL ROADS NLEX NLEX NLEX CAVITEX Construction of Harbour Link Radial Road Citi Link C5 South Link approximately 5.8 km 2.6 km 7.5 km 7.7 km 86 km of new toll roads CAVITEX Cavite Laguna NLEX-SLEX Cebu Cordova Segment 4 Expressway Connector Road Link Expressway 1.3 km 44.6 km 8.0 km 8.3 km
WATER Iloilo Laguna Cagayan Development of over Full Concession Water de Oro 2,100MLD of clean Project District Bulk Water water supply projects Project outside of Metro Manila
HOSPITALS Expansion of Construction of Acquisition of primary care new cancer hospitals to achieve clinic network centers 5,000-bed target
LIGHT RAIL LRT1 South Construction of 8 additional stations Extension equivalent to approximately 11.7 km Project
2017 Annual Report 53 MEANINGFUL and LIFE CHANGING
CSR 10 LOCATIONS NATIONWIDE
2,800 JUNIOR ENVIRONMENTAL SCOUTS
54 MEANINGFUL and LIFE CHANGING
5,324 HA 84,883 PROTECTED VOLUNTEERS MANGROVES NATIONWIDE CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITY
2017 Annual Report 55 CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
Believing that growth should be all-encompassing, MPIC and its portfolio companies consistently put much effort into fulfilling and strengthening their Corporate Social Responsibility. They manage to maintain this ideal in the heart of what they do, thereby not only contributing to national economic development but also supporting social development; not only building the business but also building a shared future.
Implementing various projects and activities that cover education, healthcare, environment, and even disaster response, MPIC and each of its businesses work to give back to community stakeholders. Taking initiative, reaching out, and effecting change.
56 CORPORATE SOCIAL RESPONSIBILITY
SHORE IT UP (Batangas), Cordova (Cebu), and Medina (Misamis Oriental), capped Shore It Up, reached a milestone with the celebration of its by the signing of a Memorandum of Agreement to open new tenth year as the environmental advocacy arm of Metro Pacific opportunities for collaboration. Investments Foundation (MPIF). In just a decade since it was established, Shore It Up has leveled up from a simple beach and From this, the participating stakeholders — local government units, underwater cleanup drive to a number of sustainable programs national government agencies, community organizations, scientific for the environment, such as mangrove and tree planting, giant organizations, students, and civil society groups -- were able to: clam rearrangement, reef restoration, environmental awareness for better appreciate directions on sustainable eco-tourism, chart paths school children (through the Junior Environmental Scouts or JES), for comprehensive and long-term environmental programs, and livelihood for coastal villagers. Most significant of these endeavors synergize their actions to attain the goals of Shore It Up. Inspiring has been the establishment of mangrove centers. In that time, the them in the process were the words of Senator Cynthia Villar, program has also encouraged over 75,000 volunteers from MPIC current chairperson of the Senate Committee on Environment and companies, as well as from government, the academe, civil society Natural Resources, who keynoted the event with examples from groups and community members. her efforts to protect and preserve the Las Piñas-Parañaque Critical Habitat and Ecotourism Area (LPPCHEA). Participants were able Having reached this milestone, MPIF – through its newly-formed to directly bring up their concerns for the environment, to which Board of Advisors and with inputs from its coastal communities Senator Villar committed to help on the policy and legislation side – saw the need and opportunity to deepen relationships with its to ensure the projects will be implemented and sustained. Learning stakeholders while enhancing their capabilities to better nurture more about Shore It Up projects, she promised to support and work the environment. closely with MPIF. Metro Pacific Investment Corporation, through its President Jose Ma. K. Lim, in turn, pledged to support the LPPCHEA CONFLUENCE wetlands advocacy of Sen. Cynthia Villar. In March of 2017, MPIF gathered its various Shore It Up partners at the First Pacific Leadership Academy in Antipolo City in what was DIVING RESORT AND TRAVEL EXPO 2017 billed as a Confluence, a meeting of minds towards further learning For the first time, Shore It Up joined as an exhibitor for the 2017 and better collaboration. It particularly gave local government Dive, Resort & Travel Expo in Mandaluyong City. This three-day units (LGUs) a platform to present their agenda and ideas for activity sought to build and improve awareness about Shore It sustainable development. Alaminos City in Pangasinan and Del Up and its work on the environment. The SIU booth provided an Carmen in Surigao del Norte—where the business group helped opportunity for networking with diving enthusiast and marine put up a Mangrove Propagation and Information Center—shared conservationists, among others, as well as encourage people to join their success stories, including how Shore It Up helped protect Shore It Up’s advocacy. its coastal and marine environment, as well as boost ecotourism in their areas. It was also an opportunity to put the spotlight on The booth attracted over 800 visitors throughout its three-day new partners for Shore It Up, namely, the municipalities of Mabini participation. Its membership program, likewise, successfully
2017 Annual Report 57 CORPORATE SOCIAL RESPONSIBILITY
attracted applicants, with over 200 signing up to be Shore abbreviation of the first letters of Misamis Oriental. It also It Up member volunteers. Among them were 65 certified gave residents a sense of ownership and responsibility to Professional Association of Diving Instructors, giving become more caring and responsible for those that they them the ability to assist SIU in underwater clean ups and own. Through the project, volunteer scuba divers from the even with coral reef restoration efforts. Aside from on-site Manny Pangilinan group conducted an assessment of the application, many also applied for membership even after the area’s underwater condition and organized an underwater event. Today, Shore It Up has a total of 250 of members under and coastal clean-up along the nine coastal barangays of its membership program. Medina. MPIF also held eco-tourism workshops to help the municipality boost and develop its eco-tourism. This was SHORE IT UP MEDINA MO complemented by the inauguration of the JES program to In 2017, MPIF paid special focus on solid waste management develop young environmental advocates in their schools and in the province of Misamis Oriental through Shore It Up, with communities. the conduct of a major clean-up activity held simultaneously in Medina town’s coastal barangays and underwater in Duka As a bonus, the Municipality of Medina won an award from Reef. It also involved an eco-tourism learning session and the BusinessWeek for its Outstanding Tourism Promotion and inauguration of 200 JES. Business Development in Mindanao during the last quarter of 2017. Medina Mayor Donato Chan cited Shore It Up’s MPIF trained its sights on preserving and protecting Duka support as a contributing factor in getting the recognition. Reef, a 30-hectare marine fishery reserve located in Medina, a fourth class municipality of Misamis Oriental. This Marine PAINTING A CREATIVE LEARNING ENVIRONMENT Protected Area (MPA) boasts a wealth of marine biodiversity, MPIF continues to sustain its long-standing partnership with with some 2,000 species of clams, mollusks, and crustaceans, MANO AMIGA, a non-profit organization that provides quality 22 whale and dolphin species, over 900 seaweed species and education to children from low-income families. With the more than 200 coral species. The MPA has long been a subject support of MPIC and MPIF, Mano Amiga in 2016 was able to of coral research studies and yielded promising results. Yet a complete and transfer into a larger campus in in Parañaque devastating northeast monsoon “cold storm” in 2009 brought City. Following the school’s relocation, MPIF felt the need to major damages to this marine ecosystem. Combined with transform the classrooms into a more creative learning space the negative effects of a growing population from its coastal for the students. communities such as domestic pollution, the MPA faced considerable natural and man-made threats to its existence. A novelty solution was to engage the students and teachers into adding color and enlivening their classrooms through To aid the municipality of Medina, MPIF, through Shore It a mural painting activity. MPIF saw this as an opportunity Up, created project Shore It Up Medina MO – “MO” being an to transform the new classrooms of Mano Amiga into more
58 Metro Pacific Investments Corporation CORPORATE SOCIAL RESPONSIBILITY
creative learning spaces with designs based on three themes — • Completed the electrification of 8,276 households (up environment, progress, and careers. At the same time, this aimed by 22.5% from 6,756 in 2016) in the MERALCO franchise to inspire students to care for the environment even at a young area, increasing the number of community beneficiaries age as well as to dream of a better future. from 132 in 2016 to 140 in 2017. • Partnered with Project Liwanag PH for the solar Thus grades 1, 2, and 3 Mano Amiga students, along with their electrification of four Aeta communities in Capas, Tarlac: teachers and MPIC volunteers, turned three 9 feet x 4 feet walls Sitio Tarucan 75HH, Sitio Balatong 30HH, Sitio Bulacan into giant art “canvasses” where the young “artists” channeled their 55HH, Sitio Settler 30HH. creativity, much to the pleasant surprise and delight of their teachers. • Energized 36 remote mountain and island public schools (Luzon: 21, Visayas: 4, Mindanao: 11). UPCYCLE YOUR TRASH 2017 CHRISTMAS • The MERALCO Employees’ Fund for Charity (MEFCI) TREECYCLING CONTEST continues to support the multimedia packages with a The 2017 Yuletide season once again became a green Christmas total donation of P1.4 million. for MPIC as it conducted a group-wide competition to come up • Distributed more than 1,500 solar lamps donated by with the best environment-friendly holiday display. First held in MERALCO employees to 23 smaller, off-grid schools in 2015, the friendly but serious competition Upcycle Your Trash three provinces (These were the remaining lamps out of encouraged departments to help reduce waste, promote a green the 10,000 solar lamps that were donated by MERALCO Christmas, and reinforce MPIC’s environmental advocacy. In the employees in 2016). process, it also promoted teamwork, creativity, and camaraderie • Donated 58 computer sets to various institutional among MPIC employees. beneficiaries. • Planted 6,902 trees in the MERALCO franchise area Divided into seven teams, over 60 employees worked together spearheaded by various Sectors and BCs. to design and put up their respective Christmas trees made of • Provided relief goods and hygiene kits to 9,443 families recyclable materials. Participating departments included: 6,878 families affected by fires in partnership with MERALCO BCs. • Investor Relations • Trained 348 young athletes through basketball clinics in • Public Relations partnership with NLEX (120), SCTEX (120), and CAVITEX • Office of the President (108). • Finance • “Laging Handa,” a Back-to-School program, benefited a • Legal Department total of 5,201 children • Human Resources • Provided power restoration assistance to local • Metropac Water Investments Corporation cooperatives and distributed relief goods in areas • Metro Pacific Hospitals Holdings, Inc. affected by major disasters. • Donated equipment and line materials amounting OTHER CSR ACTIVITIES to P3.7 million to Lanao del Sur Electric Cooperative (LASURECO) through the Department of Energy (DOE) POWER for power restoration in Marawi City. This benefited 8,000 households. MERALCO • Provided immediate relief to 9,443 families affected by MERALCO’s CSR actively pays special attention to positive disasters (Typhoon: 500 families; Earthquake: 815 families; change that empowers communities. It strongly believes in Fire: 6,878 families; Marawi Conflict: 1,250 families). the power of electricity to considerably improve the quality • Provide financial assistance through the DU30 Cabinet of life and in its role in ensuring that this is realized. It thereby Spouses Association to the 25 families of fallen soldiers implemented numerous projects and activities that contribute who served in the Marawi Crisis. P20,000 financial to the welfare of communities which it serves. Notably, in 2017, support was given to each family. MERALCO’s electrification project benefited more low-income • A total of P683,816 from 1,032 MERALCO employees households reaching even indigenous communities. was donated for the “One for Marawi Campaign.”
2017 Annual Report 59 CORPORATE SOCIAL RESPONSIBILITY
WATER equip residents with the right skills to start their own backyard gardens, with or without a plot of land. MAYNILAD WATER SERVICES • Teamed-up with the Pasig River Rehabilitation Maynilad along with its subsidiaries are committed to leading Commission (PRRC) and the Manila Bay SUNSET a broad range of initiatives, including advocating Water, Partnership Program, Inc. (MBSPPI) to promote the Sanitation, and Hygiene (W.A.S.H. agenda), watershed and significance of Maynilad’s wastewater services to waterways conservation, as well as social, entrepreneurship, Pasig River and Manila Bay’s steady rehabilitation. and disaster response. Each company forged partnerships and stepped up to spur innovative initiatives in the Philippine • Co-organized with PRRC the first “Puso Para Sa Ilog water sector. Pasig Run,” which garnered over 1,000 runners from the government and private sector. • Spent about P2 million in aiding disaster survivors (about 3,425 families) through the provision of much- • Worked with the MBSPPI and DENR to conduct needed water and water-access solutions. several Manila Bay clean-up activities, including the International Coastal Clean-up campaign. • Initiated the Green Badge livelihood, which upcycles old Maynilad uniforms and converts them into usable • Continued to empower the Dumagat sculptors of Ipo clothing for disaster victims, complementing the relief Watershed through art. After the success of Sining water that the company typically provides. Partnering Ipo’s sungka series and the mentorship under artist with Samahang Tubig Maynilad-Riverview in Quezon Tata Raul Funilas, the sculptors have added wall City, initial outputs were donated to the victims of the and desk clocks, fruit bowls, and lamp shades to Marawi conflict in Mindanao. their product lineup, eventually becoming part of Maynilad’s 2017 Christmas giveaways. • Through its Lingkod Eskwela, installed 71 drink-wash facilities in the most populous and resource-deficient • STM-Tondo, makers of Kapwa, represented Maynilad public schools in the West Zone, benefitting some in various social entrepreneurship events. 106,500 students. • Received accreditation from the Cooperative • Deployed volunteers to refurbish classrooms and Development Authority for two of its livelihood upgrade water and sanitation facilities in 88 public communities, Kapwa and Sining Ipo. schools, benefiting some 132,000 students, in support of Department of Education Brigada Eskwela 2017 program.
• Through its GinhaW.A.S.H. project, installed more than 500 bidets in select public schools and government establishments to reinforce better hygiene and installed 20 drinking fountains in transport terminals, including six LRT stations, for the benefit of commuters.
• Implemented FAITH (Food Always In The Home) Gardens—a home food security program in partnership with Parañaque City government—in eight daycare centers to complement the 16 FAITH Gardens installed in the various barangays of the city. Maynilad also conducted Ginhawa Gardening workshops to
60 Metro Pacific Investments Corporation CORPORATE SOCIAL RESPONSIBILITY
• Engaged more than 14,000 elementary and high school students about the importance of water, good hygiene and caring for water resources through Daloy Dunong, Maynilad’s award-winning water education program. For 2017, special executions that promoted Maynilad’s wastewater service and the rehabilitation of critical waterways were done in 25 schools through partnerships with PRRC and MBSPPI.
• Converted more than 1,000 informal settler families in Bacoor, Cavite into legitimate customers through the “Pag-asa sa Patubig Partnerships” program.
• Co-conceptualized with “Mamamayan Para sa Lambat at Dagat Cooperative” the 4th Mandaragat Olympics to promote the livelihood of Bacoor’s poor fisherfolk and involve coastal communities in efforts to clean-up Bacoor Bay (the southern inlet of Manila Bay). More than 200 fisherfolk customers participated in events such as boat races and a shellfish cook-off side-event. • Piloted two technologies at the Apalit Technology Research (TRF), the country’s first and only R&D METROPAC WATER INVESTMENTS facility dedicated to testing emerging water • Spearheaded the Collaborative Innovation Program or CIP, which aims to develop culture of innovation and wastewater technologies for Philippine among water professionals, particularly among local applications. One of the technologies tested water districts. became the basis for developing potable water supply for the whole of Pampanga province. • Held a Water Technology Summit at the annual convention of the Philippine Association of Water LAGUNA AQUATECH RESOURCES CORP. Districts. The summit aims to help water districts • Drew over 1,000 participants for the clean-up of learn and discover technologies and solutions Laguna Lake tributaries in commemoration of to address pressing problems. A total of 19 World Water Day through the Dalayday: Linis Ilat technologies (two of which are proudly Filipino- initiative of LARC. made) were presented to 500 delegates from 100 water districts. • Partnered with the Municipality of Los Baños to provided its residents technical skills training • Launched a confluence, complementing the Water through LARC’s Alalay sa Barangay. Technology Summit, for general managers and officers of the largest water districts to develop • Joined the Brigada Eskwela and Balik Eskwela innovation leadership. in over 38 public schools, helping with school improvement and providing new school supplies • Sponsored collaborative trials, testing technologies to over 300 students. screened and presented at the Water Technology Summit. Notable is the first-ever collaborative trial • Provided free medical check-up to over 600 hosted by a local utility: Tagaytay City Water District residents within its service area. piloted and tested the use of R-TAP, a smart network • Launched a photo-slogan contest and poem- pressure management technology developed by writing competition to promote awareness on Filipino startup Hiraya Water Technologies. Laguna Lake rehabilitation.
2017 Annual Report 61 CORPORATE SOCIAL RESPONSIBILITY
METRO ILOILO BULK WATER on road safety promotion, clean environment awareness, • Recycled used chlorine drums and converted them into community engagement and sports development. rainwater harvesting stations, equipped with small scale water treatment technologies. To date, 12 stations have • Launched a new road safety initiative called See been deployed in various schools within Metro Iloilo’s Clearly. Drive Safely: NLEX-SCTEX Eye Care Program service area. in partnership with Cardinal Medical Charities Foundation. It aims to provide free comprehensive eye • Planted 500 seedlings in Maasin, Iloilo as part of its check-up to public transport drivers who regularly ply commitment to watershed management and to secure the NLEX-SCTEX and instill in them the importance of its water sources. good eyesight when driving, not only for their own safety but also for the welfare of other motorists. The launch served 250 drivers from Provincial Bus ECOSYSTEM TECHNOLOGIES INTERNATIONAL INC. Operators Association of the Philippine and Jeepney • Donated, through the Kapit Bisig Para sa Ilog Pasig Association groups. project in partnership with the ABS-CBN Lingkod Kapamilya Foundation, a water reclamation facility to • Conducted 24 sessions of Kaligtasan sa Daan help recharge the Estero de Paco in Manila with clean (KalSaDa), drawing 2,180 participants from NLEX water and, consequently, provide the community with and SCTEX communities. KalSaDA is a community water for cleaning the premises and hydrating the education program that focuses on road safety laws plants along the linear park. and practices.
• Delivered emergency aid to victims of a fire in Estero • Organized an emergency first aid and basic life de Paco, 10 of whom were River Warriors of Kapit Bisig support training participated by 51 volunteers Para sa Ilog Pasig Program. from Concepcion, Tarlac City and facilitated by the Philippine Red Cross. It was part of the Gusto Ko. Ligtas Ka, a capacity building program that promotes TOLL ROADS safety even outside the expressway by enhancing the emergency response of the community health centers NLEX Corporation believes that to be a responsible corporate in NLEX-SCTEX communities. citizen, one must strive to implement programs and project that will deliver excellent service to customers at all times, and • Partnered with Ang-Hortaleza Foundation to provide engage the communities to help uplift their lives. Aside from basic cosmetology training for 100 unemployed this, the Tollways group continues to implement CSR programs women from Valenzuela City and Bulacan. It serves as part of the NLEX-SCTEX Ganda Mo. Hanap Buhay Ko. Program, aiming to provide alternative livelihood opportunity for residents of host communities.
• Provided NLEX and SCTEX communities an alternative means of livelihood through the Kawayanihan sa NLEX- SCTEX, a bamboo planting and propagation program. Among its beneficiaries are cooperative members from Barangay Pio in Porac, Pampanga and Cristina Village, Barangay Sipat in Plaridel, Bulacan. Barangay Pio, in particular, earned as much P60K from the 2,000 pieces of propagate seedlings sold to ALC Foundation.
• Promoted wellness and camaraderie among the youth through the summer basketball clinic and tournament, Batang NLEX-SCTEX. In 2017, the program toured
62 Metro Pacific Investments Corporation CORPORATE SOCIAL RESPONSIBILITY
19 different barangays with a total of 228 youth Quality Management Area to aid in improving its water quality to participants. Thirty-two best performing players from fit the standards set for ambient quality of surface water each team underwent 3-day extensive basketball training/clinic from PBA veteran Coach Jojo Lastimosa. • Led over 500 volunteers in cleaning up a sector of the seven-kilometer Estero de Tripa de Gallina (ETG), one of the • Conducted NLEX basketball clinics with NLEX Road 47 tributaries of the Pasig River. It hauled over 4,000 kilos of Warriors (NRW), Coach Yeng Guiao and Jojo Lastimosa. non-biodegradable waste. The free comprehensive basketball clinic benefitted varsity players from Mabalacat City Colleges and • Initiated livelihood seminars on Mabuhay Balls and Vetiver Holy Angels University, which were taught advance Pontoons to over 200 volunteers from the community and training and techniques on basketball; while youth partner agencies. communities of Magalang, Pampanga were trained on the basics of basketball. • Initiated a coastal clean-up and planting of 2, 000 mangrove propagules in Lobo, Batangas. • With NRW coaches and players, initiated outreach programs at the Philippine Cerebral Palsy which • Advocated waste management to the barangay brought joy to 45 cerebral-palsy stricken children; and community members and university students through 5S at Tahanang Walang Hagdanan (TWH) wherein NRW seminars players participated as coaches during a wheelchair • Installed 16 2x2 vetiver pontoons along ETG to absorb basketball game among TWH players. water pollutants and trap waste materials; and dispersed • Conducted Christmas Gift-giving activities for Aeta more than 200 Mabuhay Balls to break down toxins and communities in Pastolan, Hermosa, Bataan; Villa food waste. Maria, Porac, Pampanga; and Sitio Target, Mabalacat, Pampanga. HOSPITALS
LIGHT RAIL Operating hospitals under MPIC continued to move forward with its social responsibility, especially taking on an active role for Light Rail Manila Corporation, eager to reinforce its community healthier, more sustainable communities. Each hospital broadened and environmental engagement, strengthened the Live for the its efforts to extend expertise beyond the hospital walls and bring Rivers Movement Coalition in an effort to revive, rehabilitate, quality healthcare within reach of indigent communities. They and revitalize Estero de Tripa de Gallina—Manila’s longest implemented multiple programs and took part in various activities creek. Part of LRMC’s objective is to enlist the creek as a Water fully aligned for social good and community development.
2017 Annual Report 63 CORPORATE SOCIAL RESPONSIBILITY
ASIAN HOSPITAL AND MEDICAL CENTER AND ASIAN • Provided health education on non-communicable diseases, nutrition, and stress management to almost HOSPITAL CHARITIES, INC. (AHCI) • Developed the E-programs (Educate, Enrich, Embrace, and 200 public school teachers, students, and parents Environment) Educate – improving health awareness and • Extended assistance in medical missions conducted practices; Embrace – providing sustainable care by adopting by the MP Cala Holdings, Inc. with 256 beneficiaries, communities and medical assistance through AHCI; Enrich Mayor Fresnedi’s Kalinga Caravan with 500 beneficiaries; – building alliances for sustainable programs (forming Integrated Microelectronics Inc. with 1,000 beneficiaries; linkages with the LGUs and other NGOs) Environment – and Office for the Senior Citizens Affairs (OSCA) with 100 creating a healthy community. beneficiaries. Provided medical assistance to 730 indigent patients • • Formed the AHMC Volunteer’s Circle composed of including 63 women who were provided with Breast doctors and employees and organized the Annual Ultrasound and Digital Mammography under the Breast Appreciation Day recognizing the AHMC Volunteer’s Cancer Awareness Campaign of AHCI and the Gender Circle; and the AHMC Volunteer’s Circle 1st General and Development of City of Muntinlupa; 166 residents of Assembly. Marillac Hills National Training School for Girls provided with Eye screening by Ophthalmologists of AHMC while • Organized a Origami Workshop to raise funds of AHCI’s 22 others availed of various diagnostic tests; 266 athletes medical assistance program. received medical check-up and sports assessment under Kalingang Pangkalusugan of the Youth Affairs and Sports Development Office; 180 flu vaccines administered to CARDINAL SANTOS MEDICAL CENTER the residents of Marillac Hills National Training School for • Provided free Out Patient Medical Services including Girls; 18 walk-in patients were provided with specialized diagnostic to 11,905 patients. medical/surgical/treatment services such as Radiotherapy/ Chemotherapy for Cancer patients, MRI, Angiogram, • Subsidized hospitalization of 707 deserving indigent Orbitotomy using the image guided surgery technology; patients. and 20 adult and pediatric patients from the Residency • Implemented the Share A Meal Program, a 120 days Program of AHMC. supplemental feeding program that benefitted 175 • Provided therapeutic sessions through painting of kacha malnourished children from Brgy. Batis, San Juan City bags, clay pots, and canvas to almost 70 residents of and San Juan Elementary School. Marillac Hills National Training School for Girls. The kacha • Implemented Health Advocacy and Literacy, a bags were put for sale to raise funds for both the center Health Education and Disease Prevention Campaign, and AHCI, clay pots were distributed to inpatients of AHMC reaching out to a total of 700 participants from during Valentine’s Day, and canvas paintings were given as various Barangay in San Juan City. token of appreciation to donors and supporters of AHCI. • Served 1,600 patients from different outreach • Provided health education such as Empowerment through missions conducted in partnership with Archdiocese Sports, Teen Pregnancy and HIV Awareness, Basic Life of Manila-Ministry of Health for “World Day of the Support and First Aid, and Skin Care 101 to almost 110 Sick” Health Mission at Intramuros Manila and in Brgy. residents of Marillac Hills National Training School for Girls. Corazon De Jesus in San Juan City; NMTC Drive Safely,
64 Metro Pacific Investments Corporation CORPORATE SOCIAL RESPONSIBILITY
See Clearly Ophtha Mission for PUV Drivers and DAVAO DOCTORS HOSPITAL Industry partners; People Management Association • Participated in St. Jude Parish’s medical mission. of the Philippines (PMAP) Medical Mission at Guadalupe, Makati City; Phil. Asia International • Advocated Cancer awareness campaigns through the Ribbon Foundation Medical Mission for student scholars of Hope Campaign via several community-based activities held at Benpress Compound, Ortigas Pasig City; and including Fun Run for a Smoke Free Davao, Smoke Free Maynilad Grandparents Day Health Outreach at San Philippines; Ribbon Ride (Bike ride event) in partnership with Andres Complex, City of Manila. Balik-Alay and Cycle for Life Davao; Ribbon of Hope joins Kadayawan; Ribbon of Hope Lay Forums; and Christmas Tree • Engaged 590 employees in various CSR programs of Hope. and activities, generating a total of 1,946 volunteer th hours. • Participated in the culminating activity of the 14 Anniversary of the Anti-smoking Campaign in Davao. • Conducted Blood Donation Campaign with 138 successful donors. • Conducted free clinics year-round including an Annual Hospital Anniversary Clinic, Screening and Alis Bukol, • Participated in Department of Education’s Brigada Optha Day, Glaucoma Week, and Blood Pressure Check-ups Eskwela for the benefit of San Juan Elementary (Mondays). School, San Juan City. • Initiated annual bloodletting activities in partnership with City • Implemented a monthly Soup Kitchen for Charity Health Office, City Blood Bank and Davao Doctors College. Patients both in Out Patient Department and San Lorenzo Charity Ward of CSMC. • Participated in environmental activities such as Earth Hour and National Clean Up Day. • Actively participated in all MVP CSR Council activities including MVP Thanksgiving Day at Mt. Carmel • Raised community awareness by initiating various seminars. Shrine, New Manila Quezon City; Tabak Mission Among which are Kid’s Summer Camp, Anti-Smoking Lay (Psycho Social Program for Marawi Children), Taguig Forum, Breastfeeding Seminar, and LATCH Breastfeeding City; and Paskong Kapatid for Alagang Kapatid Street Workshop and Lay Forum. Dwellers beneficiaries, Quezon City. • Reached out to its hospital community through the • Donated to Caritas Manila Segunda Mana Program in observance of World Day of the Sick, giving gifts to admitted support of Youth Servant Leadership Program. patients; Annual Halloween Party for pediatrics ward patients; monthly Lay Forums and Learning Sessions; and Installation of • Partnered with Caritas Manila Margins (Social Family Welfare Committee. Enterprise for the Poor) to sell products and Artworks of inmates for the Restorative Justice Program. • Engaged in multiple Philanthropic Programs including Mt. Apo Rescue Operation, Brgy 5-A Donation Drive, Share Love: • Donated medicine and or medical supply to San Mindanao Association for the Blind, Palma Gil Brigada Eskwela, Felipe Neri Charity Clinic, Mandaluyong City; Brgy. Gift Giving at Missionaries of Jesus, Balik-Alay Foundation Corazon De Jesus Health Center, San Juan City; San Dinner for a Cause, Gift Giving at BJMP Maa City Jail, Giving at Juan Elementary School Clinic , San Juan City; and the Living Saints, Donation Drive: PMAP, Children’s Christmas Brgy. Batis Health Center, San Juan City. Party, Barangyayan with Radyo Singko Free Clinic
2017 Annual Report 65 CORPORATE SOCIAL RESPONSIBILITY
DELOS SANTOS MEDICAL CENTER • Participated in the MVP Group’s annual “Paskong Kapatid,” providing free consultation with OB-GYN, Pediatrics, and • Volunteered in ABS-CBN’s Salamat Dok medical Adult Medicine doctors for 300 patients; hygiene kits for missions, providing free consultation for 100 700 participants; as well as entertainment (clown and patients and conducting operation tuli to five patients magic act) popcorn, cotton candy, and ice cream carts for from UNTV Action Center. participants to enjoy. • Served as part of the MVP Group’s CSR Council, Partnered with UNTV’s Doctors on TV, to provide diagnostic in celebration of MVP’s birthday provided free • and medical services to around 20 indigent patients. consultation to 50 Pediatrics patients as well as consultation with Adult Medicine doctors for the children’s parents. ST. ELIZABETH HOSPITAL • Participated in Medical Mission for Members of the • Focused on funding the Saint Elizabeth of Hungary Media, in partnership with ABS-CBN’s Ahwel Paz. It Hospital Foundation, which extends free surgical provided consultation services with doctors of OB- operations to deserving and qualified indigent children Gyne, Adult Medicine, Dermatology, and Urology; as suffering from cleft lip and palate deformities. The well as diagnostic services such as laboratory tests, Foundation also provides post-operative care in the fields X-ray and ECG for 70 media personalities of psychological reformation, endodontics and speech therapy. • Partnered with DZMM Lingkod Kapamilya for a medical mission in Ormoc, Leyte. It provided • Contributed to raising funds that allowed the Foundation consultation with OBGyne, Adult Medicine and to operate on 45 children. As of 2017, it has operated on a Surgery for 800 patients; and distributed medicine for total of 1,200 cases. 1,000 patients. • Took an active part in providing post-operative care for the • Conducted a medical mission with Bantay Bata, children by providing assistance on speech therapy and providing consultation with Adult Medicine doctors wound dressings. for 700 patients while pharmacists distributed medicines to participants at San Isidro Elementary • Initiated a donation drive to help provide for the children’s School, Parañaque. needs in school.
66 Metro Pacific Investments Corporation CORPORATE SOCIAL RESPONSIBILITY
MAKATI MEDICAL CENTER island provinces, from Dapitan, Zamboanga del • Lead multiple medical missions in Metro Manila and Norte in the north, to Bongao, Tawi-tawi in the south. nearby provinces, helping more than 6,309 patients Launched West Metro Cares, a program to offer who undergone medical, dental, and surgical • free minor excision surgery to indigent patients in check-ups and procedures. The biggest among partnership with a group of surgeons in the city. This them benefitted 1,354 patients from Iligan City in program is ongoing. partnership with Marawi Mercy Mission; and 1,200 patients from Tondo, Manila in partnership with • Initiated the West Metro Pop Up Clinic, a program Family Cooperation Health Services Foundation Inc. that provides mobile medical services during various • Initiated Give a Gift that Gives Back in partnership events and outreach activities. In 2017, it conducted with CANVAS, a nonprofit organization dedicated free diagnostic clinic for members of the Zamboanga to promoting greater awareness and appreciation Press Club and their families; and provided free for Philippine art, culture, and the environment. diagnostic services and first aid station at the The program sold ruled journals and sets of 12 Philippine Heart Association Zumba Party as well as unique cards that features artwork from the at the Zamboanga Hermosa Festival. country’s top artists, with ample space to write • Organized a workshop on Swaddle Bathing and messages to loved ones. Touch Therapy attended by public health nurses • Initiated Help Us Help Others, wherein individuals and midwives and pregnant women and mothers of were allowed to give cash donations directly to the young infants. MMC Foundation. • Organized two mass blood-letting activities in partnership with the Armed Forces of the Philippines. WEST METRO MEDICAL CENTER • Organized a public forum on interfaith dialogue • Organized the West Metro Medical Symposium, called Health Professionals Delivering Total Patient an annual event that is first of its kind in Western Care in a Multicultural and Multi Religious Setting as Mindanao. It is held to assist doctors, especially those part of the 2018 World Interfaith Harmony Week. It from the barrios, acquire Continuing Professional was held on February 7, 2018 and attended by health Development points required for renewal of their professionals and university professors. The unique licenses. In average, it is attended by 250 medical situation of Zamboanga City allows the medical doctors from all over the region, including Sulu, practitioners to experience and practice what is Basilan, and Tawi-tawi. discussed in the classroom to actual patient cases.
• Conducted KwestMania for the third year, a free educational hospital tour for grade school children held annually every September to October. It educates the youth on the inner workings of a hospital and raises appreciation for health professionals.
• Organized the Battle of the Nightingales, an annual inter-nursing school quiz bowl on the nursing arts. It is participated in by universities and colleges from all over Western Mindanao and the neighboring ARMM
2017 Annual Report 67 Milestones
2006 2008
March January • Metro Pacific Investments Corporation (MPIC) is • MPIC acquires 33.0% of MDI with the conversion of incorporated and registers with the Securities the notes subscribed in 2007. and Exchange Commission. February November • Maynilad exits from court administered • MPIC establishes DMCI-MPIC Water Company rehabilitation. (DMWC) as a Joint Venture to acquire interest in Maynilad Water Services, Inc. May • MPIC acquired 34.0% of Davao Doctors Hospital December (DDH) • MPIC effectively lists with the Philippines Stock Exchange (PSE) by way of introduction. November • MPIC completes purchase of 99.8% of Metro Pacific Tollways Corporation (MPTC). December 2007 • MPIC directly acquires additional 5.9% of Maynilad bringing its effective ownership to 56.8% January • MPIC acquires 42.0% effective ownership of Maynilad though DMWC. May 2009 • MPIC subscribes to P750 million of convertible notes March of Medical Doctors, Inc. (MDI) – Makati Medical • MPIC establishes Colinas Verdes Hospital Managers Center – which entitles the Company to up to 33.0% Corporation (CVHMC) under MDI and enters into a of equity interest in MDI. 20-year contract to manage and operate Cardinal Santos Medical Center (CSMC).
68 Metro Pacific Investments Corporation June PLDT Communication and Energy Ventures (PCEV), • MPIC divests 17.0% of its interest in LandCo. bringing for the sole purpose of holding their respective its effective ownership down to 34.0%. holdings in Meralco, totalling 34.8%. July April • NLEX Corporation’s (NLEX Corp) income tax holiday is • Maynilad’s concession term is extended by an extended until December 2010. additional 15 years to 2037. September May • MPIC international roadshow sets record equity • MPIC acquires 51.0% of Riverside Medical Center Inc. placing for 2009 with issue size of US $300 million. (RMCI). October June • MPIC issues additional 6.9% of its outstanding • Segment 8.1, an extension of North Luzon capital stock to Metro Pacific Holdings, Inc. (MPHI) in Expressway (NLEX), commences operations. exchange for MERALCO shares. • MPIC divests its entire interest in MNHPI. • MPIC wins bid, together with Harbour Centre Port Terminal, to develop, manage nd operate the North July Harbour under Manila North Harbour Port, Inc. • Maynilad’s Putatan Water Treatment Facility begins operations. December • MPIC acquires additional DDH shares increasing its August effective ownership to 34.9%. • MPIC divests an additional 15.0% of LandCo. bringing its effective ownership down to 19.0%. • MPIC declares its first divident of P0.010 per common share to stockholders of record as of 19 August 2010. 2010 November January • MPIC establishes East Manila Hospital Managers • Maynilad is granted a six-year income tax holiday. Corporation and enters into a 20-year contract to manage and operate Our Lady of Lourdes Hospital. March • MPIC establishes Beacon Electric Asset Holdings Inc. (Beacon Electric), a Joint Venture between MPIC and
2017 Annual Report 69 Milestones
2011 2012
February January • Formal unveiling of Maynilad’s Putatan Water • MPIC and PCEV purchases an additional 2.7% of Treatment Plant. MERALCO through Beacon Electric. This brings Beacon Electric’s sharehildings in MERALCO to 48.0%. May • Beacon Electric increases ownership of MERALCO to March 38.9%. • MPIC launches its tender offer to the shareholders of AHI at a purchase price of P1.39 per tender offer July share. • MPIC places 2,400 million shares at P3.60 each, raising P8.6 billion in new equity – bringing public May float to 40.8%. • MPIC forms a joint venture corporation with Ayala Corporation for the purpose of pursuing the LRT 1 October Expansion Project. • Beacon electric acquires 68.8 million shares from PCEV comprising approximately 6.1%, of MERALCO. June In addition, PCEV subscribes to 1.20 billion preferred • MPIC purchases from PCEV 282 million preferred shares of Beacon Electric for an issue value of P15.1 shares of stock in Beacon Electric for an aggregate billion. This brings Beacon Electric’s shareholdings in purchase price of P3.6 billion. This brings MPIC MERALCO to 45.4%. ownership of both common and preferred shares to 50.0% in Beacon Electric. November • MPIC acquires 100.0% of CVHMC (operator of CSMC) August from its associate MDI. • MPIC, through its appointed depositary, Deutsche Bank, launches its American Depositary Receipts December Level 1 Program. • MPIC acquires 56.5% of Asian Hospital Inc. (AHI). • Maynilad signs a Share Purchase Agreement for the acquisition of 100% of Philippine Hydro, Inc.
70 Metro Pacific Investments Corporation December April • MPIC establishes presence in the southern toll road • MPIC is included in the Morgan Stanley Capital system by entering into a P6.8 billion Financing and International Index. Cooperation Agreement Cavitex Holdings. May • MPIC acquires 51.0% of De Los Santos Medical Center, a Level 3 teaching and training hospital in 2013 Quezon City.
January October • MPIC places 1,330 million shares at P4.60 each, raising • MPIC acquired 51.0% of Central Luzon Doctor’s P6.1 billion in new equity – bringing public float to Hospital (CLDH) in Tarlac City. 43.8%. November • Maynilad is declared as the winning bidder for the • First Pacific and MPIC form a joint venture to sale of Olongapo City’s 10.0% stake in Subic Water and acquire a 29.4% stake in Don Muang Tollway Sewerage Co., Inc. for a total purchase price of P210.6 Public Company Ltd. of Thailand. million. December • MPTC secures 100% control of Cavitex Infrastracture • AF Payments, Inc (AFPI) is declared as the Corporation by virue of a Management Letter winning bidder of the P1.7 billion Automated Agreement. Fare Collection System (AFCS) Project. February • Marubeni purchases 20.0% of Maynilad reducing MPIC’s economic interest from 56.8% to 52.8%. 2014 March January • MERALCO, though a joint venture with First Pacific • MPTC purchases an additional 3.9% of NLEX Company Limited (First Pacific), acquires 70.0% of Corpo from Egis Projects SA, for an aggregate PacificLight Power Co. (PacificLight) Ltd. – formerly GMR purchase price of P1.4 billion. This brings MPTC’s Energy (Singapore) Pte. Ltd. At acquision, PacificLight ownership in NLEX Corp to 71.0%. was finishing construction of a 2x400MW Liquefied Natural Gas Combined Cycle Combustion Turbine Power Plant located in Jurong Island, Singapore.
2017 Annual Report 71 March October • AFPI signs a ten-year concession agreement to build • LRMC signs the Concession Agreement for the P65.0 and implement the AFCS project for the LRT and MRT billion Light Rail Transil Line 1 Cavite Extension and lines in Metro Manila. Operations and Maintenance Project. June December • MPIC purchases from Beacon Electric 56.4 million • MetroPac Water Investments Corporation (MPW) enters shares, comprising approximately 5.0%, in MERALCO into an agreement to operate and maintain the 100 MLD at P235 per share for an aggregate consideration (million liters per day) bulk water facility of Rio Verde of P13.2 billion. This brings MPIC’s ownership in Water Corporation located in Baungon, Bukidnon. MERALCO to 27.5%. • The Arbitration Panel of the Metropolitan Waterworks July and Sewerage System (MWSS) and Maynilad upholds • GIC, through its affiliate, invests P3.7 billion for a the alternative rebasing adjustment of Maynilad 14.4% stake in MPHHI and advanced to MPIC P6.5 resulting in a 9.8% increase in the 2013 per cu.m., billion by way of Exchangeable Bond which can be inclusive of the P1.00 Currency Exchange Rate exchanged into a 25.5% stake in MPHHI. Adjustment. • MPIC acquires remaining 75.0% of FPM Infrastracture Holdings Ltd. which holds a 100.0% economic interest in AIF Toll Road Holdings (Thailand) Co., Ltd. This 2015 brings MPIC’s effective ownership of DMT to 29.5%. • Metro Pacific Tollways Development Corporation January acquires equity interest equivalent to 50.0% plus • MPTC acquires 45.0% of CII Bridges and Roads. one share of the capital stock of Easytrip Services February Corporation. • NLEX Corp and the Bases Conversion and September Development Authority (BCDA) ink agreement to • The Department of Transportation and integrate NLEX and Subic-Clark-Tarlac Expressway Communications (DOTC) officially awards the 32-year (SCTEX) toll systems. concession for the LRT Linr 1 project to the Light Rail • MPIC places 1,812 million shares at P4.90 each, Manila Cosortium (LRMC). raising P8.9 billion in new equity – bringing public float to 47.9%.
72 Metro Pacific Investments Corporation • NLEX Corp receives Notice of Award for the June management, operation and maintenance of the • MPCALA Holdings, Inc. (MPCALA) received Notice of 94-kilometer SCTEX. Award for the Cavite-Laguna Expressway (CALAEX) Project. March • NLEX Corp signs Business Agreement with BCDA for • MPHHI subscribes to an additional 209,802 shares out the management services, toll collection, traffic safety of the 230,413 new RMCI shares at P1.7 per share. This and security management, toll road and facilities brings MPHHI’s equity ownership in RMCI to 78.0%. maintenance, including all necessary support services of SCTEC over a 29-year period until 2043. July • MPCALA signs the Concession Agreement for the • Segment 9, an extension of NLEX, commences CALAEX Project. operations. September • Maynilad files a Notice of Arbitraion and Stement of • LRMC takes over the operations and maintenance of Claim from the Republic for its revenue losses due to the LRT Line 1. the delay of MWSS to implement the arbitral awrd that was issued on 29 December 2014 upholding October Maynilad’s alternative rate rebasing adjustment. • MPIC acquires 25.0% of Indra Philippines, Inc. from MERALCO. • MPHHI signs a lease agreement with West Metro Medical Center, a 110-bed hospital in Zamboanga November City. • MPW receives Notice of Award from the Iloilo Bulk Water Supply Project from the Metro Iloilo Water • MPHHI acquires an aditional 12.4% in Riverside District. Medical Center, Inc. RMCI. December April • MPHHI acquires 51.0% of Sacred Heart Hospital of • MPIC purchases 112.7 million shares from Beacon Malolos, Inc. Electric, representing approximately 10.0% of MERALCO. This brings MPIC’s ownership in MERALCO • MPHHI acquires 20.0% of Manila Medical Services, to 32.5%. Inc., the corporation that owns and operates Manila Doctors Hospital.
2017 Annual Report 73 Milestones
May • MPW signs a Joint-Venture Agreement with Metro 2016 Iloilo Water District (MIWD) for the formation of a Joint-Venture Company that will rehabilitate, January expand, operate, and maintain MIWD’s existing water • MPTC receives the Notices of Award from both the production facilities for 25 years. City of Cebu and the Municipality of Cordova for the financing, design, construction, implementation, • MetroPac Movers, Inc. (MMI) completes the acquisition operation and maintenance of the Cebu-Cordova of assets and key contracts of Basic Logistics Bridge - an 8.3 kilometer toll road in Cebu. Corporation, A1Move Logistics, Inc., Philflash Logistics, Inc. and BasicLog Trading and Marketing Enterprise. April • NLEX Corp issues a Notice of Arbitration and • MPIC places 3.6 billion shares to GT Capital Holdings, Statement of Claim to the Republic of the Philippines, Inc. (GT Capital) at P6.10 each. acting by and through the Toll Regulatory Board (TRB), to obtain compensation for TRB’s inaction on • Metro Pacific Holdings, Inc. (MPHI) sells 1.3 billion lawful toll rate adjustments which were due since 1 shares to GT Capital, bringing effective ownership of January 2013. GT Capital in MPIC to 15.6% • Cavitex Infrastructure Corporation (CIC) issues a • MPHI subscribes to 4.1 billion Class “A” voting Notice of Arbitration and Statement of Claim to the preferred shares. Republic of the Philippines, acting by and through • Beacon Electric Asset Holdings Inc. (Beacon Electric), the TRB, to obtain compensation for TRB’s inaction through a wholly owned subsidiary Beacon on lawful toll rate adjustments which were due 1 PowerGen Holdings Inc., enters into a Share Purchase January 2012, 1 January 2014, and 1 January 2015. Agreement with GT Capital to acquire 56.0% of Global Business Power Corporation (GBPC). • MPIC acquires a further 25.0% interest in Beacon Electric from PLDT Communication and Energy Ventures (PCEV).
74 Metro Pacific Investments Corporation June • MPW acquires 65.0% of Eco-System Technologies International, Inc. (ESTII). ESTII is engaged in the business of designing, supplying, constructing, installing, and operating and maintaining wastewater and sewage treatment plant facilities. July • MPHHI acquires 93.0% of Marikina Valley Medical Center, Inc. September • NLEX Corp receives the Notice of Award for the NLEX- SLEX Connector Road Project from the Department of Public Works and Highways (DPWH) - an 8-kilometer elevated toll expressway over the Philippine National Railways. November • NLEX Corp signs the Concession Agreement for the NLEX-SLEX Connector Road Project with the DPWH. • Maynilad Water Services, Inc. and PT Moya Indonesia signs a JV Agreement for the establishment of a joint venture company in Indonesia. December • NLEX Corp acquires an additional 14.0% of TMC bringing its ownership to 60.0%.
2017 Annual Report 75 Board of Directors
MANUEL V. PANGILINAN Chairman
JOSE MA. DAVID K. LIM J. NICOL President and Executive Chief Executive Officer Vice President and Chief Financial Officer
76 Metro Pacific Investments Corporation AUGUSTO RAMONCITO P. PALISOC, JR. S. FERNANDEZ Director Director
RAY C. ESPINOSA Director ROBERT C. NICHOLSON Director
2017 Annual Report 77 Board of Directors
ARTEMIO V. PANGANIBAN LYDIA B. Lead Independent ECHAUZ Director Independent Director
EDWARD S. GO WASHINGTON Independent Director Z. SYCIP Independent Director
78 Metro Pacific Investments Corporation ALFRED ALBERT V. TY F. DEL ROSARIO Vice-Chairman Director
RODRIGO FRANCISCO E. FRANCO C. SEBASTIAN Director Director
2017 Annual Report 79 Board of Directors
Finance Officer of FBDC’s parent company, Metro Pacific MANUEL V. PANGILINAN, 71 Corporation (MPC) on a concurrent basis. He was then elected President and CEO of MPC in June 2003. In 2006, MPC was Mr. Pangilinan founded First Pacific in 1981 and serves as reorganized into Metro Pacific Investments Corporation its Managing Director and Chief Executive Officer. Within (MPIC), where he continues to serve as President and CEO. the First Pacific Group, he holds positions of President
Commissioner of P.T. Indofood Sukses Makmur, the largest He is a founding member of the Shareholders Association food company in Indonesia. of the Philippines and an active member in various business
organizations. He is currently the Chairman of the Board of Trustees of the
San Beda College. In August 2016, the Samahang Basketbol He was awarded by the Corporate Governance Asia as the ng Pilipinas (SBP) – the National Sport Association for Best CEO for Investors Relations for five (5) consecutive years basketball requested Mr. Pangilinan to be its Chairman from 2012-2016. Emeritus after serving as President since February 2007.
Effective January 2009, MVP assumed the Chairman of the Amateur Boxing Association of the Philippines (ABAP), a DAVID J. NICOL, 58 governing body of amateur boxers in the country. In October 2009, Mr. Pangilinan was appointed as Chairman of the Accomplished and versatile business leader having Philippine Disaster Resiliency Foundation, Incorporated successfully held CEO and CFO positions in a wide range of (PDRF), a non-profit foundation established to formulate and industries in Europe and Asia. Voted by Institutional Investor implement a reconstruction strategy to rehabilitate areas as the top Conglomerate CFO all Asia in 2012 and 2013 and devastated by floods and other calamities. Mr. Pangilinan is Finance Asia as the top CFO in the Philippines in 2016. Chairman of Philippine Business for Social Progress (PBSP), the largest private sector social action organization made Mr. Nicol began his career with PricewaterhouseCoopers up of the country’s largest corporations. In June 2012, where he served for 10 years in London, New York and Hong he was appointed as Co-Chairman of the US-Philippines Kong. He joined First Pacific Company Limited in 1991 and in Business Society (USPS), a non-profit society which seeks 1994 moved to their Thai affiliate Berli Jucker PCL where he to broaden the relationship between the United States and served as CFO until 1998 and then as Group CEO until 2002 the Philippines in the areas of trade, investment, education, when First Pacific exited Thailand. foreign and security policies and culture.
From 2002 until 2010 when Mr. Nicol joined MPIC, he held positions as CEO Europe and Asia for SIRVA, Inc., CEO of JOSE MA. K. LIM, 66 Pinnacle Regeneration group and as a director of Reconomy Limited in the UK’s waste and recycling sector. He has a Mr. Lim worked as a senior officer for various local and consistent record of building shareholder value through foreign banking institutions from 1988 to 1995. He was operational improvement, restructuring, mergers and Director for Investment Banking of the First National Bank of acquisitions and entering new markets. Boston from 1994 to 1995, and prior to that, Vice President of Equitable Banking Corporation.
In 1995, Mr. Lim joined Fort Bonifacio Development AUGUSTO P. PALISOC JR., 60 Corporation (FBDC) as Treasury Vice President and eventually Mr. Palisoc has been with the First Pacific group of companies was appointed Chief Finance Officer in 2000. In 2001, Mr. for 35 years. He is currently an Executive Director of MPIC and is Lim assumed the position of Group Vice President and Chief
80 Metro Pacific Investments Corporation the President & Chief Executive Officer and Director of Metro He is the chairman of the Philstar Daily Incorporated and Pacific Hospital Holdings Inc, which is the group’s holding BusinessWorld Publishing Corporation, chairman of the Finance company for all hospital and healthcare investments. Committee of Meralco, and chairman of the Audit Committee of Lepanto. He is also the General Counsel of Meralco, Head of PLDT’s Prior to joining MPIC, he was the Executive Vice President of Regulatory Affairs and Policy Office and a trustee of the Beneficial Berli Jucker Public Company Limited in Thailand from 1998 Trust Fund of PLDT. Mr. Espinosa joined First Pacific in June 2013. to 2001. Mr. Palisoc served as President and CEO of Steniel He is First Pacific Group’s Head of Government and Regulatory Manufacturing Corporation in the Philippines from 1997 to Affairs and Head of Communications Bureau for the Philippines. 1998. He has held various positions within the First Pacific group as Group Vice President for Corporate Development of First Pacific Company Limited in Hong Kong, and Group ROBERT C. NICHOLSON, 62 Managing Director of FP Marketing (Malaysia) Sdn. Bhd. in Malaysia. Before he joined First Pacific in 1983, he was Vice Mr. Nicholson is qualified as a solicitor in England and Wales President of Monte Real Investors, Inc. in the Philippines. and in Hong Kong. He is a Chairman of Goodman Fielder Pty Limited (since March 2015),and a Commissioner of PT Indofood Sukses Makmur Tbk and a Director of Philex Mining RAMONCITO S. FERNANDEZ, 62 Corporation, PXP Energy Corporation, Pacific Light Power Pte. Ltd. and Forum Energy Limited, all of which are First Pacific Ramoncito S. Fernandez is the current President and Chief Group subsidiaries, associates or joint venture. Mr. Nicholson Executive Officer of Maynilad Water Services, Inc.. He is is also an Independent Non- Executive Director of Pacific the 2009 PISM GAWAD SINOP Awardee, the highest award Basin Shipping Limited and Lifestyle Properties Development conferred by the Foundation of the Society of Fellows in Limited. Previously, he was a senior partner of Reed Smith Supply Management and the Philippine Institute for Supply Richards Butler from 1985 to 2001 where he established Management to outstanding achievers in the field of supply the corporate and commercial department, and was also management. a senior advisor to the board of directors of PCCW Limited between August 2001 and September 2003. Mr. Nicholson Mr. Fernandez was head of the Tollroad business of the has wide experience in corporate finance and cross-border group from 2008 to 2015; growing its portfolio inside and transactions, including mergers and acquisitions, regional outside the Philippines. He is an advocate of customer telecommunications, debt and equity capital markets, satisfaction, operating efficiency and innovation. Mr. corporate reorganizations and privatization in China. Mr. Fernandez has been with the MVP Group since 1994, first Nicholson joined First Pacific’s Board in 2003. under the packaging business and later to the Telecoms Group before moving to MPIC. ARTEMIO V. PANGANIBAN, 81
RAY C. ESPINOSA, 60 A consistent scholar, retired Chief Justice Panganiban obtained his Associate in Arts “With Highest Honors” and later He was a partner of SyCip Salazar Hernandez & Gatmaitan his Bachelor of Laws with “Cum Laude” and “Most Outstanding from 1982 to 2000, a foreign associate at Covington and Student” honors. He placed sixth among 4,200 candidates Burling (Washington, D.C., USA) from 1987 to 1988, and who took the 1960 bar examinations. A well-known campus a law lecturer at the Ateneo de Manila School of Law leader, he founded and headed the National Union of from 1983 to 1985 and 1989. He ranked first in the 1982 Students of the Philippines. He is also the recipient of several Philippine Bar examination. honorary doctoral degrees.
2017 Annual Report 81 Board of Directors
In 1995, he was appointed Justice of the Supreme Court, and in 2005, Chief Justice of the Philippines. Aside from being a EDWARD S. GO, 79 prodigious decision writer, he also authored eleven books Mr. Go has over 40 years of management experience in banking while serving on the highest court of the land. His judicial and finance, starting as Executive Trainee with Citibank N.A. and philosophy is “Liberty and Prosperity Under the Rule of Law.” became President of Philippine Bank of Communications in 1974 He believes that the legal profession and the judiciary must and Chairman and Chief Executive Officer of Chinabank in 1985. not only safeguard the liberty of our people but must also Mr. Go is also Chairman of the Audit Committee of MPIC and PCEV. nurture their prosperity and economic well-being. To him, justice and jobs, ethics and economics, democracy and development, nay, liberty and prosperity must always go WASHINGTON Z. SYCIP , 95 together; one is useless without the other. On his retirement on 7 December 2006, his colleagues acclaimed him Mr. SyCip is the founder of the SGV Group. He is Chairman unanimously as the “Renaissance Jurist of the 21st Century.” Emeritus of the Board of Trustees and Board of Governors of the
AIM, Philippines. He is a member of the Board of Overseers of the Prior to entering public service, Chief Justice Panganiban Columbia University Graduate School of Business, Vice Chairman was a prominent practicing lawyer, law professor, business of the Board of Trustees of The Conference Board (2000-2004), entrepreneur, civic leader and Catholic lay worker. He was the member of the International Advisory Board of the Council on only Filipino appointed by the late Pope John Paul II to be a Foreign Relations (1995-2010), and a Honorary Life Trustee of member of the Vatican-based Pontifical Council for the Laity The Asia Society, all in New York. He is a member of the Board of for the 1996-2001 term. At present, he is a much sought-after Directors of a number of major corporations in the Philippines independent director and adviser of business firms, and writes and other parts of the world. He served in the MPIC Board until his a column in the Philippine Daily Inquirer. passing on October 2017.
LYDIA B. ECHAUZ, 69 ALFRED V. TY, 50
Lydia Echauz is retired from academe. She was for ten years Mr. Ty is a director of the Metropolitan Bank & Trust Company, Vice- President of Far Eastern University and its three other affiliate Chairman of GT Capital Holdings Incorporated, Vice-Chairman of schools. Prior to joining FEU in 2002, she served as Dean of De Toyota Motor Philippines Corporation, Chairman of Lexus Manila La Salle University Graduate School of Business for sixteen (16) Incorporated, Chairman of Federal Land Group of Companies, years, Associate Director of the Ateneo de Manila University Chairman of Property Company of Friends Incorporated and Graduate School of Business for five (5) years, and Associate Vice-Chairman of Global Business Power Corporation. He holds a Professor of the University of the East, College of Business Bachelor of Science degree in Business Administration from the Administration for twelve (12) years. She is currently a member University of Southern California. of the board of a few organizations, life member and former governor of the Management Association of the Philippines, and past President of the Association of Southeast Asian ALBERT F. DEL ROSARIO, 78 Institutions of Higher Learning, RP Council. She has been awarded most outstanding Filipino and most distinguished Mr. Del Rosario served as Secretary of Foreign Affairs of the alumna of ADMU, DLSU, and St. Theresa’s College. Philippines from February 2011 to March 2016 and as Philippine
82 Metro Pacific Investments Corporation Ambassador to the United States of America from October 2011 of the Manila North Tollways Corp. (MNTC), the concession to August 2006. Prior to entering public service, Amb. del Rosario company for the NLEX project, he was also involved in identifying was on the Board of Directors of over 50 firms. His business career and mitigating risk exposure of the company, managing for over four decades has spanned the insurance, banking, real relationship with the shareholders and other stakeholders, and estate, shipping, telecommunications, advertising, consumer developing solutions for Finance-related issues. In 2009, he products, retail, pharmaceutical and food industries. He also eventually became the President and CEO of MNTC and led the headed the development of Pacific Plaza Towers. He is Co- company in eventually securing the SCTEX concession. In 2016, founder of Gotuaco del Rosario Insurance Brokers Inc., Chairman he was appointed concurrent President & CEO of Metro Pacific of Philippine Stratbase ADR Institute, Inc. and a Director of First Tollways Corp., the toll road holding company of MPIC. He now Pacific Company, Indra Philippines, Inc. PLDT Inc., Metro Pacific leads MPIC’s Tollways team which has become a premier private Tollways Corporation, Cavitex Infrastructure Corporation, and sector infrastructure developer in the country. Sarimonde Foods Corporation. Before joining MNTC in April 2003, Rod spent 20 years with Amb. del Rosario was conferred the Order of Sikatuna, Rank of JPMorgan Chase Bank. He was Vice President for Investment Datu, Order of Lakandula with a Rank of Grand Cross (Bayani) Banking when he left the Manila branch of JPMorgan Chase by and was recipient of EDSA II Presidential Heroes Award. He the end of 2002. While in JPMorgan Chase, he assisted several was granted the 2013 Professional Chair for Public Service Philippine companies raise funds from the international loan and Governance by Ateneo School of Government and the and capital markets, and had been involved in originating and Metrobank Foundation, 2014 Management Man of the Year by executing a number of mergers and acquisitions, equity capital Management Association of the Philippines, 2016 Outstanding markets and loan and bond restructuring transactions. Government National Official, 2016 Asia CEO Awards as Life Contributor, and Manuel L. Quezon Gawad Parangal as Quezon City’s Most Outstanding Citizens for 2016. He was FRANCISCO C. SEBASTIAN, 64 also elevated to the Xavier Hall of Fame in New York City in 2006 and received the AIM Washington Sycip Distinguished Mr. Sebastian is concurrently the Chairman of First Metro Management Leadership Award in 2011. He was conferred Investment Corporation, Vice Chairman of Metropolitan Bank & Doctor of Laws (Honoris Causa) for “principled commitment to Trust Company and Chairman of GT Capital Holdings Inc. democracy, integrity and the rule of law by the College of Mount Saint Vincent, New York City in 2015. He received the Rotary He joined the Metrobank Group in 1997 when he was appointed Club Makati West’s first “Albert del Rosario Award” in 2016, the as President of First Metro Investment Corporation, a position Outstanding Leadership in Diplomatic Service award by Miriam which he held for 13 years until 2011 when he became Chairman. College Department of International Studies and Philippine Tatler’s Diamond Award. Mr. Sebastian joined the Ayala Group in 1975, and was seconded in 1977 to Hong Kong by Ayala Investment and Development Corporation. He worked as an investment banker in Ayala RODRIGO E. FRANCO, 58 International Finance Limited and then Filinvest Finance (HK) Ltd. until 1984. He then started his own corporate and financial Mr. Franco started his toll road career in 2003 when he assumed advisory firm based in Hong Kong, Integrated Financial Services responsibility for managing the NLEX project finance facilities Ltd., which he managed until he returned after 20 years to the from multilateral and commercial banking sources. As the CFO Philippines to join the Metrobank Group in 1997.
2017 Annual Report 83 Senior Executives
From left to right: JOSEPH J. LACSON Chief Investment Officer; RICARDO M. PILARES III Vice President | Legal; MELODY M. DEL ROSARIO Vice President | Public Relations and Corporate Communications; KARIM G. GARCIA Vice President | Business Development; MAIDA B. BRUCE Vice President | Group Controller; MELANIE G. BENDIJO Assistant Vice President | Treasury; MARICRIS C. ALDOVER-YSMAEL Assistant Vice President | Investor Relations
84 Metro Pacific Investments Corporation From left to right: KRISTINE A. PINEDA-FRAGANTE Assistant Vice President | Finance; LOUDETTE T. MALIKSI-ZOILO Vice President | Human Resources; SANTHEA V. DELOS SANTOS Assistant Vice President | Chief Risk Officer;ARMIN F. TULIO-UY Assistant Vice President | Finance; JOSE MARIA NIÑO JESUS P. MADARA Assistant Vice President | Business Development; ANTONIO A. PICAZO Corporate Secretary; EDWARD A. TORTORICI Executive Advisor; JOSE JESUS G. LAUREL Corporate Governance Officer
2017 Annual Report 85 Senior Executives
JOSEPH J. LACSON RICARDO M. PILARES III Chief Investment Officer Vice President | Legal
Mr. Lacson joined MPIC as Chief Investment Officer in Mr. Pilares graduated Valedictorian from the Ateneo Law School December 2016, returning to Manila after having spent in 2006 and passed the Philippine Bar Examinations in 2007 with the previous 22 years in the United States, Europe and the second highest ranking. Before joining MPIC in 2010, Mr. Singapore. Joseph is responsible for monitoring, analyzing Pilares was an associate in ACCRA Law Offices, and subsequently and optimizing the current Investment Portfolio (strategic, in Puno & Puno Law Offices, where he handled litigation cases operations, financial, publicity mileage), spearheads forays and special corporate projects for various clients. He also acts into new and promising markets segments, and leads Group- as legal counsel of the various subsidiaries of MPIC. He is also a wide synergy initiatives. He has had executive leadership member of the faculty of the Ateneo Law School. roles in a number of leading multi-national companies as well as privately-held family conglomerates in diverse industries such as consumer goods, technology, infrastructure MELODY M. DEL ROSARIO development, shipping, oil and gas, and real estate. Joining Vice President | Public Relations and Corporate Procter & Gamble after college, Joseph rose to become brand Communications manager of Rejoice Shampoo. Joseph began his post-MBA career working directly for Steve Ballmer at Microsoft. From Ms. Del Rosario has been with the Metro Pacific Group since there, Joseph took on increasingly progressive roles in the 1993, and has over 21 years of experience heading MPIC’s technology industry including Product Planner at Slate.com, public and media relations, corporate communications, General Manager at Exodus / Cable and Wireless, and CFO of advertising and corporate social responsibility (CSR). In MSNBC Interactive. Joseph joined FAST Search, at that time these various capacities, Ms. del Rosario is in charge of the largest listed Norwegian technology company, as Head strengthening the credibility and corporate public image of Strategy and Business Development, before moving up to of MPIC by planning and overseeing the implementation the CFO role where he oversaw a turnaround and successful of strategic corporate communication programs, handling sale to Microsoft for $1.3 billion. Moving back to Asia, Joseph reputation and crisis management, as well as working closely became Commercial Director (Head of Sales, Business with the corporate communication teams and CSR heads of Development and Marketing) at the RGE Group, a leading the group. Ms. del Rosario is also the Corporate Information South East Asian privately held conglomerate with over $15 Officer of MPIC for the Philippine Stock Exchange and is billion in assets, where he was responsible specifically for the the President of the MPIC Foundation where she actively multi-billion pulp and paper business. He was also a Partner implements institutional programs on education, economic and the Chief Investment Officer at Frontier Investments empowerment and environmental awareness. and Development Partners where he put together deals in IndoChina and Mongolia. Before returning to the Philippines, Joseph was the Group CFO of IMC Pan Asia Alliance, a leading KARIM G. GARCIA private company spearheaded by the Tsao family, engaged Vice President | Business Development in shipping, industrial supply chain solutions, real estate and lifestyle. Joseph earned an MBA with High Distinction (Baker Mr. Garcia is responsible for new business development and Scholar) from the Harvard Business School and has taken integration into MPIC’s businesses. His mandate is to increase further post-graduate studies at Wharton, the University of shareholder value, by exploring new business ventures, and Pennsylvania. executing the development of Solicited and Unsolicited
86 Metro Pacific Investments Corporation experience in the banking industry under Citigroup Australia PPPs, Greenfield Projects and Merger and Acquisition (M&A) and Manila. She was Vice President for Special Purpose transactions, especially those with synergies to our existing Vehicles under the Financial Control Department of Citigroup businesses. Within the energy industry, Karim has over a Australia and has handled several roles and responsibilities decade worth of experience. While living in Houston, Texas, also in Citibank Manila. She was part of a pioneer team he managed the development of several international power that implemented, supported and continuously upgraded projects, with a combined generation capacity of a 1000 a proprietary global financial reporting system to multiple MW, as well as executed energy venture capital M&A deals in countries in the Asia-Pacific region. She started her career as a South East Asia. Prior to joining MPIC, he was Vice President junior auditor of Ernst and Young here in the Philippines. She for Strategic Planning, responsible for the development of received her Bachelor of Accountancy Degree from St. Paul power projects for Phinma Energy. As MPIC’s Vice President College of Manila. of Business Development, Karim is growing our rail business, advancing our foray into airports, and acquiring both fossil and renewable energy assets. He is also diversifying MPIC’s portfolio into deregulated and scalable infrastructure MELANIE G. BENDIJO Assistant Vice President | Treasury investments such as Bio-waste to Energy, and is currently exploring the development of the first Liquified Natural Gas Ms. Bendijo has been with Metro Pacific Group since 2004 and (LNG) Import Terminal in the Philippines. Karim is a member has over 14 years of experience in the field of Treasury and Fund of the Executive Committee of Light Rail Manila Corporation Management. She is responsible for the Company’s overall which owns and operates the Light Rail Transit 1 system, Treasury Operations and Controls. She has been instrumental and Global Business Power Corporation. And he is the CEO in various fund raising activities of the Company’s major of our newly formed bio-energy company, METPower. Karim investments, including securing a foreign loan to support our Don holds a Bachelor’s of Science in Business Administration, Muang Tollway investment. from Boston University, and obtained a Masters of Business Administration (MBA) from the Marshall School of Business at the University of Southern California. MARICRIS C. ALDOVER-YSMAEL Assistant Vice President | Investor Relations
MAIDA B. BRUCE Ms. Maricris Aldover-Ysmael joined MPIC’s Investor Relations Vice President | Group Controller team in 2010. Since then, she has been an integral part of the Company’s IR function and was appointed as Head of the Ms. Bruce joined MPIC in November 2009 as the Vice department in January 2017. She is responsible for managing President Group Controller and IT Head, where she is relationships with investors and investment analysts; and responsible for strengthening and overseeing financial spearheading efforts to align their interests with that of senior reporting, budgeting and forecasting, and systems management. She provides support to the CEO and CFO and enhancement processes. In 2017, she was also appointed as represents MPIC in international investor conferences and Data Protection Officer of MPIC. She is also a director and/or roadshows. She also maintains the underlying detailed financial Chief Finance Officer and Treasurer of several subsidiaries of models that drive MPIC’s internal net asset valuation. She has MPIC including MPIC Foundation and Ideaspace Foundation. been instrumental in developing the Company’s key messaging Prior to joining MPIC, Ms. Bruce was the CFO of the Strategic points and facilitates events that are designed to keep investors Landbank Management group and some subsidiaries of and analysts updated on Company developments, growth Ayala Land, one of the largest real estate developers in the opportunities, risks and challenges. Prior to MPIC, Ms. Aldover- Philippines. She has more than thirteen years of extensive Ysmael was an Associate Director in SGV & Co. (Ernst & Young
2017 Annual Report 87 Senior Executives
Philippines) specializing in Assurance and Business Advisory improvements in policies and procedures of the group. Services. She has over 14 years of combined experience in Prior to joining MPIC, she was the HR Head of Jollibee Investor Relations, Finance and External Audit. She holds a Worldwide Services, a shared-service organization of the Bachelor of Science degree in Accountancy, a Bachelor of Arts Jollibee Group of Companies. degree in Philosophy from De La Salle University - Manila and is a Certified Public Accountant. SANTHEA V. DELOS SANTOS Assistant Vice President | Chief Risk Officer KRISTINE A. PINEDA-FRAGANTE Assistant Vice President | Finance Ms. Delos Santos has over 18 years of extensive experience in finance, audit and Enterprise Risk Management (ERM) Ms. Pineda-Fragante has been MPIC’s financial planning combined. She joined MPIC in February 2007. As one head since 2014. She built financial models to assist of the early members of MPIC Finance team, she set up management in achieving a deeper understanding of the the Company’s processes in financial and management various concession agreements and other revenue-cost reporting, planning, and budget. In 2014, she assumed structures to further maximize value drivers and make the role of MPIC’s Chief Risk Officer. In this position, she is timely, relevant and informed decisions. She has been responsible for the implementation of the ERM program of instrumental in structuring various Parent Company deals, the holding company and advocates adoption of the same ensuring all aspects enhance company value. Ms. Pineda- across the Group. She has contributed in crafting investment Fragante graduated cum laude from De La Salle University and funding strategies and in assessing key enterprise risks Manila in 2008 and placed first in the May 2008 Licensure for the Group. The early years in her career were spent at Examination for Certified Public Accountants. She joined SGV & Co. where she gained her audit experience. She is a the company as an Investor Relations Specialist in 2009. Certified Public Accountant, a Certified Financial Consultant and a Certified Risk Manager.
LOUDETTE T. MALIKSI-ZOILO Vice President | Human Resources ARMIN F. TULIO-UY Assistant Vice President | Finance Ms. Maliksi-Zoilo joined MPIC in September 2009. She currently heads the MPIC HR team and has been Ms. Tulio-Uy is responsible for the Company’s overall instrumental in managing and improving the MPIC accounting operations and financial reporting compliance. organization’s people related organizational strategies. She graduated cum laude from the University of the She brings with her 18 years of HR experience, gained Philippines Diliman in 2000 and was a CPA board topnotcher from PricewaterhouseCoopers where she was a Manager in 2001. Before joining MPIC in 2013, she was a Senior of the Global Human Resources Solutions team, an HR Director in SGV & Company where she gained over 10 years Consulting team of the firm which services a vast array of of experience in external audit. Aside from external audit, she industries including but not limited to, Utilities, Consumer, was one of the team leaders of SGV’s Capital Markets Group Banking, Government, non-government organizations responsible for assisting clients in cross border capital market and others. Her project exposure included HR Consulting, transactions and local initial public offerings. As a member of Risk Management and Process Improvement projects. SGV’s Accounting Standards Group, she was a lead trainer for She was also part of the management team of Corporate local and regional IFRS and US GAAP workshops. She has had Human Resources Group of Philamlife who oversaw the international assignments with Ernst & Young Hong Kong, HR function of almost 21 affiliates where she instituted Ernst & Young US and Shell Shared Services India.
88 Metro Pacific Investments Corporation He has served in a variety of senior and executive management JOSE MARIA NIÑO JESUS P. MADARA positions, including Corporate Vice President for Crocker Bank Assistant Vice President | Business Development and Managing Director positions at Olivetti Corporation of America and Fairchild Semiconductor Corporation. Mr. Madara joined MPIC’s Business Development team in January 2015. He currently is focused on building up MPIC’s Mr, Tortorici subsequently founded EA Edwards Associates, an environmental infrastructure / Energy from Waste portfolio. international management and consulting firm specializing Prior to joining MPIC, Mr. Madara worked as an Investment in strategy formulation and productivity improvement with Banker with the Investment & Capital Corporation of the offices in USA, Europe and Middle East. In 1987, he joined Philippines advising on transactions with cumulative value First Pacific as an Executive Director for strategic planning and of over PhP20 billion, spanning various industries, including, corporate restructuring, and launched the Group's entry into Power, Banking and Finance, Construction Materials, and Real the telecommunications and technology sectors. Presently, he Estate Development. Mr. Madara also worked in the assurance oversees corporate strategy of First Pacific and guides the Group's practice of Ernst & Young LLP in San Francisco, California, strategic planning and corporate development activities. Mr. focusing on the Technology and Biotechnology sectors. He Tortorici serves as a Commissioner of Indofoof and as Director holds a Bachelor’s of Science in Business Administration of MPIC, Philex Mining Corporation, Maynilad, FEC Resources Degree, cum laude, with a concentration in accounting and Incorporated of Canada and AIM-listed Forum Energy Plc. finance from the University of San Francisco in California. Mr. Tortorici serves as a Trustee of the Asia Society Philippines and is on the Board of Advisors of the Southeast Asia Division of ANTONIO A. PICAZO the Center for Strategic and International Studies, a Washington Corporate Secretary D.C. non-partisan think tank. He also served as a Commissioner of the U.S. Association of Southeast Asian Nations Strategy Mr. Picazo obtained his Bachelor of Laws degree from the Commissions. University of the Philippines. He placed 5th in the 1964 Philippine Bar Examinations. In 1967, he obtained a Master of Laws degree, Major in Taxation from the University of Pennsylvania. In 1976, he JOSE JESUS G. LAUREL also completed the Management Development Program course Corporate Governance Officer at AIM. Mr Picazo is currently a Senior Partner of Picazo Buyco Tan Fider and Santos Law Offices. He serves as a Director and/ Prior to joining MPIC, Atty. Laurel was Vice President for Legal or Corporate Secretary of several large Philippine corporations, and External Affairs, General Counsel and Corporate Secretary including MPIC, a position he as held since 2006. He is currently for Petron Corporation and concurrently President of Petron also a member of the Board of the PGH Medical Foundation, Foundation. Before working for Petron, he was Vice President for Haribon Foundation and the Gerry Roxas Foundation. Corporate Services of Energy Development Corporation where he headed Legal, Human Resources, Purchasing, Planning and Finance. Prior to EDC, he served at the Securities and Exchange EDWARD A. TORTORICI Commission for 9 years as securities analyst, prosecutor, hearing Executive Advisor officer and as deputy executive director (General Counsel). Concurrent with the above positions, he also served as Law Dean Mr. Tortorici served as an Executive Director of MPIC from of Lyceum of the Philippines and law professor for 27 years at November 2009 to 2016. Ateneo de Manila Law School. He graduated from Ateneo de Manila with degrees in A.B. Economics and Law. He placed 6th in Mr. Torotici received a Bachelor of Science degree from New York the 1981 bar. He also has a Master of Laws from Yale University. City and a Master of science degree from Fairfield University.
2017 Annual Report 89 Management Teams
OSCAR S. REYES BETTY C. ROGELIO L. JAIME T. AZURIN BENHUR M. SIMON President and Chief SIY-YAP SINGSON President and Chief Chief Financial Officer Executive Officer Chief Financial President and Chief Executive Officer Officer Executive Officer, MERALCO Powergen
LAURENCE R. ROGERO MIKKEL M. GUTIERREZ AUGUSTO REYMUNDO JOSE NOEL President and Chief Executive Chief Operating Officer/ P. PALISOC JR. S. COCHANGCO C. DE LA PAZ Officer Director-Corporate President and Chief Chief Financial Officer Director for Development Executive Officer Business Development
90 Metro Pacific Investments Corporation RODRIGO E. FRANCO CHRISTOPHER C. LIZO RAMONCITO RANDOLPH RICARDO President and Chief Executive Chief Financial Officer, S. FERNANDEZ T. ESTRELLADO F. DELOS REYES Officer, MPTC/NLEX Corp MPTC/CIC/MPCALA President and Chief Chief Operating Officer Chief Financial Officer Executive Officer
JUAN F. ALFONSO FATIMA P. AGBAYANI MARILYN ALBERT JOHN CRISIAN President and Chief Chief Financial Officer V. AQUINO W.L. PULIDO B. CASUPANG Executive Officer President and Chief Chief Financial Chief Operating Officer Executive Officer Officer
2017 Annual Report 91 Corporate Governance
Corporate Governance at MPIC is defined as the framework we use FOR SHAREHOLDERS to ensure the following: We keep a running two-way dialogue with shareholders. We keep minority shareholders abreast of developments and any changes Internal Standards to strategy. From the over 269 meetings we have had with them 1. Long-term strategy is for the benefit of all stakeholders – in 2017, we aggregate their concerns and bring those up to Senior with shareholders at the forefront Management and our Board for review. Although we do not run 2. Align the interests of management with shareholders our company via focus group discussions, these concerns are 3. Sufficient Board oversight of management’s tactical taken into consideration when we implement our strategy. In the implementation process, management is given aggressive targets and is required to provide constant updates in order to measure progress and quickly External Evaluation address any concerns. They are evaluated against those targets and 1. Clearly communicate strategy and business drivers to equity compensation is driven by a mixture of core income progression analysts and shareholders and share price performance. 2. Join organizations to benchmark versus best practices and peers FOR MANAGEMENT Having clear moral guidelines, aggressive targets and a transparent Our commitment to Corporate Governance is borne out of our culture make for a fertile ground to nurture and sustain talent. belief in its importance to our success. We invest in and manage Cream rises to the top and self-policing becomes the norm as companies that provide basic services and are, to one extent or everyone is incentivized to push the company forward and keep another, regulated by Government. Because of this, we and our stakeholders happy. We have continuously done several initiatives investee companies operate under intense government and public to improve access to information and strengthen processes for our scrutiny. In addition, our situation is different to most companies shareholders. listed in developed markets. We have a majority shareholder who is well represented on our Board of Directors and we therefore put a To improve access to information, we have consistently updated higher priority on minority shareholder rights than principal-agent our website. Statistics on financial and operating information is issues between equity holders and management. now more easily viewable for each of our investee companies and we have included the ability to download historical information. As a result, we have focused on putting together a framework Our Board has always reviewed the Risk profile of the Company as that emphasizes transparency, accountability and integrity. The well as its portfolio investments. Company confirms its full-compliance with the Revised Manual on Corporate Governance as mandated by the Securities and BOARD OF DIRECTORS Exchange Commission, the Philippine Stock Exchange and other Our Board sets strategy, oversees implementation by management applicable government regulatory agencies. and ensures that the Company implements a robust governance framework. It is made up of fifteen members, four of whom are FOR THE GOVERNMENT AND THE PUBLIC independent directors. They represent a wide spectrum of skills at All our dealings with Government are in the public domain the highest level and include leaders of each of our business lines and we provide consumers with enough information for them to ensure the Board is in tune with developments in our portfolio. to determine our performance versus service standards. Our companies stand behind their products and take pro-active steps to rectify any service issues. In addition, we are invested in the Country just as much as in our companies and we are always pushing ourselves to take positions that benefit everyone and not just our bottom line.
92 Metro Pacific Investments Corporation BOARD ATTENDANCE The schedule for board of directors meetings for the coming year are approved by the Board during the last meeting of the previous year taking into consideration the scheduled meetings of the subsidiaries and other operating companies in order to ensure that conflicts in meeting schedules will be avoided. The dissemination/reminder of the scheduled board of directors meetings are handled by the office of the Corporate Secretary as assisted by the PR and Corporate Communications Department of the Company. For 2018, the following is the approved board meeting schedule for the year:
Activity MPIC’s Board Meeting Date FY 2017 Results March 1, 2018 (Thursday) 1Q 2018 Results May 3, 2018 (Thursday) Pre-AGM Meeting May 18, 2018 (Friday) 1H 2018 Results August 2, 2018 (Thursday) 3Q 2018 Results and 2019 Budget November 7, 2018 (Thursday)
The MPIC Board meetings for 2017 and the corresponding attendance of directors therein are provided below:
Number of Number of Board Position Name Date of Election Meetings Held % Meetings Attended During the Year Chairman Manuel V. Pangilinan May 26, 2017 9 8 89% Member Jose Ma. K. Lim May 26, 2017 9 9 100% Member David J. Nicol May 26, 2017 9 9 100% Member Ray C. Espinosa May 26, 2017 9 8 89% Member Ramoncito S. Fernandez May 26, 2017 9 8 89% Member Robert C. Nicholson May 26, 2017 9 5 56% Member Augusto P. Palisoc Jr. May 26, 2017 9 8 89% Member Alfred V. Ty May 26, 2017 9 6 67% Independent Director Lydia B. Echauz May 26, 2017 9 9 100% Independent Director Edward S. Go May 26, 2017 9 8 89% Independent Director Washington Z. Sycip May 26, 2017 9 4 44% Independent Director Artemio V. Panganiban May 26, 2017 9 8 89% Member Albert F. Del Rosario May 26, 2017 9 8 89% Member Rodrigo E. Franco May 26, 2017 9 7 78% Member Francisco C. Sebastian May 26, 2017 9 9 100%
Several committees have been set-up to help the Board oversee and evaluate the performance of the Company and management. Each committee is chaired by an Independent Director to ensure impartial execution of each committee’s function.
2017 Annual Report 93 Corporate Governance
Corporate Governance Committee – ensures overall governance The audit fees include the year-end audit and quarterly review of framework is robust and compares favorably with best in class the Company’s financial statements, and other services that are practices. An integral part of that is the annual review and normally provided by the independent auditor in connection with implementation of the Company’s Revised Manual on Corporate statutory and regulatory filings or engagements. This category Governance and sponsorship of any improvements for the Board also includes advice on audit and accounting matters that arose of Directors’ approval. Pursuant to the mandate of its Charter, during, or as a result of, the audit or the review of interim financial the Corporate Governance Committee designed an orientation statements. program for new directors to brief and update them on important details and processes relating to the Company, the functions and It is important to note that during the Company’s recent calendar relevant mechanisms of the Company’s board committees and the years or any subsequent interim periods, there was no instance dealings of the Company with its investors and business partners. when the Company’s public accountants have resigned or have indicated that they decline to stand for re-election or have been CORPORATE GOVERNANCE COMMITTEE dismissed or where the Company had any disagreement with its public accountants on financial disclosure issues. No. of Meetings No. of Meetings Name % Held Attended Effective July 1, 2015, the Board approved the appointment of Artemio V. Panganiban 2 2 100% Tessa G. Acosta as the Company’s Internal Auditor who reports Edward S. Go 2 2 100% directly to the Audit Committee on the soundness and adequacy of Lydia B. Echauz 2 2 100% the Company’s internal control processes and procedures.
Audit Committee – has oversight of financial reporting, internal No. of Meetings No. of Meetings controls of the Company. It is responsible for recommending Name % Held Attended the external auditor and ensuring that non audit work does not Edward S. Go 5 5 100% compromise their independence. The Audit Committee also Lydia B. Echauz 5 5 100% approves the Internal Audit function and its scope of work. Francisco C. Sebastian 5 4 80%
The Audit Committee reviews and pre-approves all audit services Risk Management Committee - assists the Board in fulfilling of our independent and external auditor, Sycip Gorres Velayo & Co. its oversight responsibilities over the Company’s enterprise risk (SGV) before these services are performed. In connection with this, management policy and execution of risk management strategies the Committee approved the audit and non-audit related fees of and practices including regulatory and ethical compliance P29.8 million for 2017 and P25.9 million for 2016, broken down as monitoring. The Committee investigates the risk exposures of the follows: Company and evaluates the steps the management is taking in managing and controlling such exposures. Year Audit Fees Non-Audit Fees 2017 P25 million P4.8 million 2016 P24 million P1.9 million
94 Metro Pacific Investments Corporation As part of their oversight of Risk Management, the Committee discharge its functions, duties and responsibilities including the appointed Santhea Delos Santos as Chief Risk Officer (CRO). For Risk authority to obtain advice from external consultants and functional Management, the goal is to identify risk exposures and the steps specialists within the Corporation. The Nomination Committee that need to be undertaken to monitor and mitigate them. The regularly meets prior to the scheduled Annual Stockholders’ CRO is periodically conducting a company-wide risk assessment for Meeting to review the qualifications of the individuals nominated evaluation by the Risk Management Committee. as the Corporation’s regular and independent directors. Particularly for the latter, the Committee assesses the independence of No. of Meetings No. of Meetings Independent Directors. Name % Held Attended Edward S. Go 2 2 100% No. of Meetings No. of Meetings Name % Lydia B. Echauz 2 2 100% Held Attended Alfred V. Ty 2 2 100% Robert C. Nicholson 2 2 100% Lydia B. Echauz 2 2 100% Compensation Committee – directly oversees compensation and Edward S. Go 2 2 100% Jose Ma. K. Lim 2 2 100% bonus of senior executives and overall compensation framework (non-voting) for all employees. They ensure bonus targets are set aggressively and management is motivated for the long term. As mandated by Each of the five committees adopted its own Charter to guide the its Charter, the Compensation Committee also exercises functional Committee members in the performance of their functions and oversight on matters pertaining to the areas of leadership to formalize the applicable procedural mechanisms and oversight development, including but not limited to the development and function of each committee. All of the Charters were presented to administration of leadership/succession. and approved by the Board.
No. of Meetings No. of Meetings Name % As we implement our governance framework, we continuously test Held Attended against best practices and peers by joining organizations focused Albert F. Del Rosario 2 2 100% Lydia B. Echauz 2 2 100% on Corporate Governance and submitting to outside evaluation Manuel V. Pangilinan 2 2 100% against our peers and recognized standards. To date we have joined, through our Corporate Governance Officer, the Institute of Nomination Committee – responsible for vetting and Corporate Directors (ICD) and the Ethics and Compliance Initiative recommending members for nomination to the Board of Directors, (ECI) and the Good Governance Advocates and Practitioners of the including membership in the various Board Committees. The Philippines (GGAPP). These institutions regularly meet to discuss Nomination Committee has the authority to utilize professional current best practices and conduct seminars on developments in search firms or other external sources of candidates when Corporate Governance. In addition, our employees have attended searching for candidates to the board of directors pursuant to various seminars on governance throughout the year in order to its Charter which provides that the Nomination Committee has expand their knowledge of past misdeeds and potential pitfalls in the authority to avail of resources and authorities appropriate to order to better prepare for any eventuality.
2017 Annual Report 95 Corporate Governance - Whistle-blowing Policy
INTRODUCTION Metro Pacific Investments Corporation (the “Corporation”) is committed to achieving and maintaining the highest standards of openness, probity and accountability. Employees at all levels are expected to conduct themselves with integrity, impartiality and honesty. It is every employee’s responsibility and in all interest of the Corporation to ensure that any inappropriate behavior that compromise the interest of the shareholders, investors, customers and the wider public does not occur. It is also critical to maintain a good corporate image and raise the standard of corporate governance of the Corporation. To this end, the Corporation has devised a whistleblowing policy (the “Policy”).
PURPOSE The purpose of formulating the Policy is to increase the awareness of maintaining internal corporate justice and regard this as a kind of internal control mechanism. It provides the employees of the Corporation with reporting channels and guidance on whistleblowing.
The term “whistleblowing” refers to a situation where an employee decides to report serious concerns about any suspected misconduct, malpractice or irregularity which he has become aware of or genuinely suspects that the Corporation has been or may become involved in. This Policy is designed to encourage employees to raise serious concerns internally, in a responsible and effective manner, rather than overlooking a problem or blowing the whistle outside the organization. The content of this Policy is applicable to all employees of the Corporation and its subsidiaries.
POLICY This Policy is intended to assist individual employees (permanent or temporary employees) to disclose information relevant to suspected misconduct, malpractice or irregularity through a confidential reporting channel. It is not designed to further any personal disputes, question financial or business decisions taken by the Corporation nor should it be used to reconsider any staff matters which have been addressed under the grievance procedure already in place. Whistleblowing matters may include but are not confined to:
1. Malpractice, impropriety or fraud relating to internal controls, accounting, auditing and financial matters 2. Violation of the rules and regulations of the Corporation or the Code of Business Conduct and Ethics of the Corporation 3. Improper conduct or unethical behavior likely to prejudice the standing of the Corporation 4. Breach of legal or regulatory requirements 5. Criminal offenses, breach of civil law and miscarriage of justice 6. Endangerment of the health and safety of an individual 7. Damage caused to the environment 8. Deliberate concealment of any of the above
PROTECTION AND CONFIDENTIALITY It is the Corporation’s policy to make every effort to treat all disclosures in a confidential and sensitive manner after employee reports concern about any of the above matters. The identity of the individual employee making genuine and appropriate allegation under this Policy are assured of fair treatment. In addition, employees are also assured of protection against unfair dismissal, victimization or unwarranted disciplinary action, even if the concerns raised turned out to be unsubstantiated.
96 Metro Pacific Investments Corporation Corporation reserves the right to take appropriate actions against anyone who initiates or threatens to initiate retaliation against those who have raised concerns under this Policy. In particular, employees who initiate or threaten retaliation will be subject to disciplinary actions, which may include summary dismissal.
Management will support all employees and encourage them to raise concerns without fear of reprisals.
PROCEDURE
1. Reporting Channel for the Corporation
Employee who has a legitimate malpractice concern can raise the matter directly with the officer of the Corporate Governance Committee. The officer will review the complaint and decide how the investigation should proceed. Depending on the circumstances, the Corporate Governance Committee may consider nominating an appropriate investigating officer or set up a special committee to investigate the matter independently.
2. Reporting Format and Supporting Documentation
Disclosures can be made in writing or by using the standard form (Whistleblower Report Form) attached to this Policy. While the Corporation does not expect the employee to have absolute proof or evidence of the misconduct, malpractice or irregularity reported, the report should show reasons for the concerns and full disclosure of any relevant details and supporting documentation.
The disclosure should be sent to the Chairman of the Corporate Governance Committee at 10/F MGO Building Legaspi cor. Dela Rosa Streets Makati City, 0721 Philippines in a sealed envelope clearly marked “Strictly Private and Confidential – to be opened by Addressee Only” to ensure confidentiality, or through sending emails to [email protected]. Employees should ensure all the attachments to the emails should have passwords in order to ensure confidentiality. Employees are required to put their name to any disclosures they make. Anonymous complaints are usually not considered.
The Company will hold it a serious disciplinary offense for any person who seeks to prevent a communication of malpractice concerned reaching to the designated person, or to impede any investigation which he or anyone on his behalf may make.
3. Investigation Procedure
The format and length of an investigation will vary depending upon the nature and particular circumstances of each complaint made. The matters raised may: i. be investigated internally; ii. be referred to the External Auditor;and/or iii. form the subject of an independent inquiry
2017 Annual Report 97 Corporate Governance - Whistle-blowing Policy
Chairman of the Corporate Governance Committee or the person designated to investigate the complaint will write to the complainant whenever reasonably practicable of the concern being received: i. acknowledging that the concern has been received; ii. advising whether or not the matter is to be investigated further and if so what the nature of the investigation will be; iii. giving an estimate of how long the investigation will take to provide a final response telling the complainant whether any initial inquiries have been made, and whether further investigation will take place, and if not, why not.
FALSE REPORTS If an employee makes a false report maliciously, with an ulterior motive, or for personal gain, the Corporation reserves the right to take appropriate actions against the employee to recover any loss or damage as a result of the false report. In particular, the employee may face disciplinary action, including dismissal, where appropriate.
ANONYMOUS REPORTS As the Corporation takes reporting of misconducts, malpractices, and irregularities seriously and wants to conduct warranted investigations of both potential and actual violations, it is preferred that these reports are not made anonymously. However, it is recognized that for any number of reasons, employees may not feel comfortable reporting potential violations directly to the Chairman of the Corporate Governance Committee. In these cases, anonymous reports may be submitted to the HR Department.
RECORD RETENTION Records shall be kept for all reported misconducts, malpractices, and irregularities by the relevant parties in the Corporation. In the event a reported irregularity leads to an investigation, the party responsible for leading/conducting the investigation shall ensure that all relevant information relating to the case is retained, including details of corrective action taken for a period not exceeding six years (or whatever other period may be specified by any relevant legislation).
APPROVAL, IMPLEMENTATION AND REVIEW OF POLICY This policy has been approved and adopted by the Board of the Corporation. The Corporate Governance Committee has the overall responsibility for implementation, monitoring and periodic review of this Policy. In addition, the Audit Committee has delegated the day-to- day responsibility for administration of the Policy to the Chairman of the Corporate Governance Committee.
98 Metro Pacific Investments Corporation WHISTLEBLOWER REPORT FORM (CONFIDENTIAL)
Metro Pacific Investment Corporation (Corporation) is committed to achieving and maintaining the highest possible standards of openness, probity and accountability. In line with that commitment, the Corporation encourages employees of to raise concerns and report in confidence, about misconducts, malpractices or irregularities in any matters related to the Corporation.
The Whistleblowing Policy has been established to encourage and assist Whistleblowers to disclose information relevant to the misconducts, malpractices or irregularities through a confidential reporting channel (to the extent possible). The Corporation will handle this report with care and will treat the Whistleblower’s concerns fairly and properly.
If you wish to make a written report, please use the report form below. Once completed, this report becomes confidential. You may send the report, marked “Strictly Private and Confidential – to be opened by Addressee Only” and addressed to the Chairman of the Corporate Governance Committee, by post to the relevant address below or by email to “[email protected].”
To: Metro Pacific Investments Corporation 10/F MGO Building, Legaspi cor. Dela Rosa Streets, Makati City 0721 Philippines Your Name/Contact Telephone Number and Email
We encourage you to provide your name with this report. Concerns expressed anonymously are much less powerful but they will be considered as far as practicable.
Name: Address: Tel No: Email: Date:
The names of those involved (if known): Details of concerns:
Please provide full details of your concerns: Names, dates and places and the reasons for the concerns (continue on separate sheet if necessary) together with any supporting evidence/documents.
2017 Annual Report 99 MPIC Awards and Recognitions
Institutional Investor IR Magazine Awards
• Best IR Professional – Albert W. L. Pulido, 2016 • Best IR in the Philippines – 1st Place, 2016 • Most Honored Company in Asia – 2017 • Best Investor Relations (Small/Mid Cap) for Southeast Asia – 2nd Place, 2017 • Philippines’ Best Investor Relations (Industrials, sell side) 1st Place, 2017 • Best Investor Event in South East Asia (Investor Day) – 2nd Place, 2017 • Philippines’ Best Investor Relations (Industrials, combined buy side and sell side) – 1st Place, 2017 • Best IR for Utilities Sector – 1st Place, 2017 • Philippines’ Best IR Professional (Industrials, sell side) – • Best IR Officer – 3rd Place, 2017 1st Place, 2017
• Philippines’ Best CEO (Industrials, sell side) – 1st Place, 2017 • Philippines’ Best CFO (Industrials, combined buy side and sell side) – 1st Place, 2017
100 Metro Pacific Investments Corporation Finance Asia Public Relations Society of the Philippines • Best Managed Companies in the Philippines – 1st Place, 2017 • Gold Anvil Award, Public Relations Programs: On a Sustained Basis | Environment/Science and Technology Mangrove Eco • Most Committed to Corporate Governance – 1st Place, 2017 Guides – 2016 • Best Investor Relations – 1st Place, 2017 • Gold Anvil Award, Public Relations Programs: On a Sustained st • Best Corporate Social Responsibility – 1 Place, 2017 Basis | Environment/Science and Technology Mangrove • Best CEO – Jose Ma. K. Lim – 2nd Place, 2017 Protection and Propagation Information Center – 2016 • Best CFO – David Nicol – 1st Place, 2017 • Gold Anvil Award, Public Relations Programs: On a Sustained Basis | Environment/Science and Technology Shore It Up 2016 Corporate Governance Asia – Coral Restoration Field Laboratory and the Buoy Project – 2016 • Corporate Governance Asia Annual Recognition Awards 2015 Asian Corporate Director of the Year – Jose Maria K. Lim – 2015 • Silver Anvil Award, Category: Public Relations Tools: Publications | CSR Publication Junior Environmental Scouts’ • 6th Asian Excellence Awards Best CFO – David J. Nicol – 2015 Workbook – Ang Kwento ni Jes – 2016 • 6th Asian Excellence Awards Best CSR - 2015 • Silver Anvil Award, Category: Public Relations Tools: th • 6 Asian Excellence Awards Best Investor Relations Company – Publications | Handbook/Manual Mangrove Protection and 2015 Information Center – Standard Operating Manual – 2016 th • 6 Asian Excellence Awards Best Investor Relations Professional • Silver Anvil Award, Category: Public Relations Tools: – Albert W. L. Pulido – 2015 Publications | External Annual Report 2015 MPIC Annual • Benchmark of Excellence in Investor Relations, Environmental Report – The Portfolio of Growth – 2016 Communications, and Corporate Governance – 2017 IABC Philippines Alpha South East Asia • Award of Merit: Shore It Up! | Division 1: Communication • 9th Annual Best Financial Institution Awards - 2015 Management, Category 11: Government Relations, 2017 | 15th Philippine Quill Awards
Annual Corporate Awards • Award of Excellence: MPIC 10th Listing Anniversary: Sulong • Most Organized Investor Relations; Best Senior Management Pilipinas | Division 4: Communication Skills, Category 20: IR Support; Most Consistent Dividend Policy; and Best Annual Special Events, 2017 | 15th Philippine Quill Awards Report in the Philippines –2015 Singapore HR Excellence Awards
• HR Excellence in Work Life Balance – Bronze, 2017 • HR Excellence in Employee Healthcare – Silver, 2017
2017 Annual Report 101 Risk Management
RISK MANAGEMENT STRUCTURE
Board of Directors
Risk Management Committee
President & CEO
CFO
Enterprise Risk Management
Chief Risk Officer
Investees/Opcos‘ Legal and Governance Chief Risk Officers/Designated Finance and IT Risk Champions Public Relations Investor Relations Business Development Human Resources
RESPONSIBILITIES MPIC’s Chief Risk Officer (CRO) leads the implementation of the ERM Policy, as approved by the RMC of the holding company and The Board of Directors of Metro Pacific Investments Corporation advocates adoption of the same by the MPIC investee companies. (MPIC or the Company), through the Risk Management Committee (RMC), oversees and monitors MPIC management’s adoption of a Each of MPIC’s principal operating companies has their own ERM risk management system. Management is primarily responsible for unit and ERM Policy, under the oversight of their respective RMCs. the design, implementation, and maintenance of risk management Regular reviews of the ERM Policies and risk management practices procedures and their continuous improvement. of MPIC’s major investees are conducted by the CRO to ensure consistency of the salient provisions of the holding Company’s MPIC Management is adopting a pragmatic approach to Enterprise ERM Policy and if possible, align certain risk management practices Risk Management (ERM) seeking to ensure genuine value added, across the Group. beyond compliance, given the nature of the business.
102 Metro Pacific Investments Corporation MPIC’s ERM system aims to identify, analyze, evaluate and manage MPIC’s investments involve - in varying degrees - a partnership risks that may affect the achievement of the Company’s business approach with MPIC taking a controlling position and key objectives, through a practical approach. The ERM process operating partners providing operational and technological input implemented is based on International Standards Organization thereby mitigating risks associated with investing in new business (ISO) 31000. areas. These partners are equity partners - and having co-invested with the Company in a particular opportunity, they participate in OVERVIEW OF RISK MANAGEMENT AT MPIC the risks and rewards of the business alongside MPIC.
As an investment management and holding company, MPIC Financing for new investments is through a combination of debt undertakes risk management at a number of distinct levels: and/or equity by reference to the underlying strength of the cash flow of the target business and the overall financing position of 1. On entering new investments MPIC itself. 2. Ongoing management of the financial stability of the holding company MPIC’s geographic focus is still predominantly the Philippines 3. Risk management within the operating companies within which its management team has extensive experience. 4. Financial risk management Recently, MPIC has increased its presence in Southeast Asia with its recent investment in Indonesia’s PT Nusantara Infrastructure Each of these is dealt in detail below. The risk management Tbk (PT Nusantara), adding to its position in Thailand’s Don Muang of the operations is primarily managed within each portfolio Tollway Public Ltd (DMT) and Vietnam’s CII Bridges and Roads company with the most material risks being reported to the Risk Investment Joint Stock Company (CII B&R). MPIC is mitigating its Management Committee of MPIC. foreign investment risk through partnerships with reputable local firms in these foreign countries and engaging strong and reputable The active risk management for MPIC itself is focused on new advisers. investments and holding company liquidity. 2. ONGOING MANAGEMENT OF THE FINANCIAL STABILITY OF RISK FACTORS THE HOLDING COMPANY
1. ON ENTERING NEW INVESTMENTS MPIC does not guarantee the borrowings of its investee companies and there are no cross-default provisions from one investee Prior to making a new investment, any business to be acquired operating company to another. Financial stability of the holding is subject to an extensive due diligence including financial, company, including its dividend commitment to shareholders, is operational, regulatory and risk assessment as well as dispute managed by reference to the ability of the investee companies resolution mechanisms. Risks to investment returns are then to remit dividends to MPIC to cover operating costs and service calibrated and specific measures to manage these risks are borrowings. MPIC avoids currency and investment cycle determined. The Company is highly selective in the investment mismatches by borrowing mostly in Pesos using primarily long- opportunities it examines. Due diligence is conducted on a phased term instruments with fixed rates. basis to minimize costs of evaluating opportunities that may ultimately not be pursued.
2017 Annual Report 103 Risk Management
MPIC sets the level of debt on the Parent Company’s balance sheet As of December 31, 2017, the Group has a sizeable amount of to withstand variability of dividend receipts from its operating pending claims accumulated for the Company’s water, toll and rail companies (opcos) associated with regulatory and other risks businesses. described below. The Group is primarily mitigating this risk by scrupulously 3. RISK MANAGEMENT WITHIN THE OPERATING COMPANIES delivering its metrics based on its signed concession and franchise agreements, maintaining open communication lines with the Operational Risks various government sectors (in resolving differences) while Each of the operating companies has a full management team protecting the rights of its other stakeholders, its investors and which is responsible for having their own plan to manage risk creditors, in particular, who have invested in the Company on the which is reviewed annually by their respective Risk Management basis of its signed agreements. Committees and periodically by MPIC. On a broader strategy, MPIC is closely scanning its business Political and Regulatory Risks environments to detect, earlier on, any potential political instability, The majority of MPIC’s invested capital is deployed into businesses changes on the macro-economic factors, and potential shifts in which are directly regulated by arms of the state: electricity policies that may have negative distribution; water supply and distribution along with sewage implications to the Group’s financial condition. treatment; tollroads; and light rail. Each of these businesses has concession or franchise agreements which involve a degree of Competition and Market operating performance obligation in order to retain our rights There is strong competition in bidding for the various Public- and earn our expected returns. In some cases, these agreements Private Partnership (PPP) projects offered by the Philippine provide for retrospective assessment of the extent of our overall Government which has reduced forecast equity returns for winning operational and financial performance sometimes over a period of bids. MPIC manages the risks associated with this by adhering to years. the holding company’s investment disciplines.
Risks arising from these types of businesses include the potential Competition risks in MPIC’s relevant opcos are discussed in each for differences with regulators involving interpretation of the operating company’s section in MPIC’s 2017 SEC Form 17-A (which relevant agreements – either during the period in question or in can be accessed on PSE’s edge website - http://edge.pse.com.ph/). retrospect. To manage these risks, the investee companies have established dedicated regulatory management groups with experienced personnel. Their duty is to manage the relationship with regulators, keep management up-to-date on the status of the relationship and ensure companies are well prepared for any forthcoming regulatory changes or challenges.
104 Metro Pacific Investments Corporation Supply risk Other risks associated with the Group’s operations, specifically MPIC’s water company, Maynilad Water Services, Inc. (Maynilad), on its Environmental, Social and Governance (ESG) aspects, are has some supply side risk in that: (i) it secures almost all of its discussed in the Company’s 2017 Sustainability Report which can supply from a single source – the Angat dam; and (ii) this water be accessed on MPIC’s website - http://www.mpic.com.ph/. source is shared by another water concessionaire, a hydroelectric plant, and the needs of farmers for irrigation. A water usage 4. FINANCIAL RISKMANAGEMENT protocol is in place to ensure all users receive water as expected within the constraints of available supply. Following significant MPIC’s investee companies’ financial risks are primarily: interest rate water supply disruptions in the past, the business has experienced risk, foreign currency risk, liquidity risk, credit risk and equity price periods of lower water supply than allowed for in its concession. We risk (see Note 32 to MPIC’s 2017 Audited Consolidated Financial have worked to moderate our reliance on Angat by developing the Statements for more details of these risks and on part 1, item 1 of Putatan Water Treatment Plant. In addition, the Sumag Diversion the Company’s 2017 SEC Form 17-A, which can be accessed on Project, which was initiated by the Government, aims to provide PSE’s edge website-http://edge.pse.com.ph/). additional 188 MLD, was jointly implemented by Maynilad and Manila Water.
The power generation companies in the MPIC portfolio depend on varying grades of coal for their fuel. Primary supply sources are backed up by alternative supply sources and carrying appropriate inventories.
Other operational risks In LRMC, there are also risks to projected financial returns through late delivery of Government procured items such as Rights of Way, additional Light Rail Vehicles (LRVs), and the Common Station. Plans to mitigate these risks include consistently engaging the regulators on the status of the projects’ milestones and joint regular performance reviews by both parties – the Concessionaire (LRMC) and the Grantors (the Department of Transportation and Communications or DOTC and the Light Rail Transit Authority or LRTA).
2017 Annual Report 105 Risk Management - Committee Report
The Board of Directors Metro Pacific Investments Corporation (MPIC)
MPIC’s Risk Management Committee (RMC) is composed of three directors, two of whom are independent and one of whom is a non- executive director, as determined by the Board of Directors, and each of whom possesses the professional qualifications necessary to fulfill their role.
For the year ended 31st December 2017, the RMC had two regular meetings and one joint committee meeting with Audit and Corporate Governance Committees.
We confirm the following for the year ended 31st December 2017:
• We reviewed and approved the MPIC RMC Charter and the Enterprise Risk Management (ERM) Policy of MPIC.
• We also reviewed the MPIC Group Risk Management Structure, criteria in assessing the achievement of the approved risk management objectives, risk analysis and evaluation criteria as well as the common risk language used throughout the Group.
• We also reviewed the top risks of MPIC as linked with MPIC’s Corporate Objectives, which in turn a realigned with MPIC’s Vision and Mission.
• Were viewed and discussed the key risk profile of MPIC Group which we endorsed for approval by the MPIC Board.
• We also reviewed and approved the monitoring processes for MPIC’s top risks.
• On the basis of our review and subject to the limitation of our role, we confirmed the adequacy and effectiveness of MPIC Group’s risk management practice.
• As part of our oversight responsibilities under the RMC Charter, and together with the Audit Committee, we also reviewed and assessed MPIC Group’s processes for monitoring compliance with laws and regulations; executing related party transactions; and business practices and ethical standards. We have no matter to report to the Board as a result of these reviews.
LYDIA B. ECHAUZ EDWARD S. GO ALFRED V. TY Chairman Member Member
106 Metro Pacific Investments Corporation Financial Statements
Contents 108 Audit Committee Report
109 Statement of Management’s Responsibility for the Consolidated Financial Statements
110 Independent Auditors’ Report
116 Consolidated Statements of Financial Position
117 Consolidated Statements of Comprehensive Income
118 Consolidated Statements of Changes in Equity
119 Consolidated Statements of Cash Flows
2017 Annual Report 107 Audit Committee Report
The Board of Directors Metro Pacific Investments Corporation
MPIC’s Audit Committee (AC) is composed of three directors, two of whom are independent and one is a non-executive director, as determined by the Board of Directors, and each of whom possess the professional qualifications as required by the applicable corporate governance laws and rules necessary to fulfill their role.
For the year ended 31st December 2017, we confirm that the AC had four regular meetings and one special meeting.
Further, we confirm the following for the year ended 31st December 2017:
• We reviewed and approved all audit and review services provided by SGV & Co. to MPIC, and the related fees for such services;
• We reviewed and discussed the unaudited quarterly financial statements of the Group as of and for the three quarters ended March 31, 2017, June 30, 2017 and September 30, 2017, as reviewed by SGV & Co., and the audited financial statements of MPIC Group as of and for the year ended December 31, 2017 with the MPIC Group’s management, which has the primary responsibility for the financial statements, and with SGV & Co., the MPIC Group’s independent auditor, who is responsible for expressing an opinion on the conformity of the MPIC Group’s audited financial statements with Philippine Financial Reporting Standards (PFRS);
• We discussed with SGV & Co. the matters required to be discussed by the prevailing applicable Auditing Standard, and we have received written disclosures and the letter from SGV & Co. as required by the prevailing applicable Independence Standards (Statement as to Independence) and discussed with SGV & Co. its independence from the MPIC Group and MPIC Group’s management;
• Based on the reviews and discussions referred to above, in reliance on the MPIC Group’s management, and SGV & Co., and subject to the limitations of our role, we recommended to the Board of Directors and the Board has approved, the inclusion of the MPIC Group’s audited financial statements as of and for the year ended December 31, 2017 in the MPIC Group’s Annual Report to the Stockholders and to the Philippine Securities and Exchange Commission (SEC) on Form 17-A;
• Based on a review of SGV & Co.’s performance and qualifications, including consideration of management’s recommendation, we recommended the appointment of SGV & Co. as External Auditor of MPIC, for approval of the Board of Directors and then the shareholders of MPIC;
• We obtained assurance on the adequacy and effectiveness of the Company’s internal control system and evaluated its effectiveness based on our review of internal audit reports and discussion with the Company’s outsourced Internal Auditor and with MPIC Group’s management;and
• Together with the Risk Management Committee, we also reviewed and assessed MPIC Group’s processes of monitoring compliance with laws and regulations, as well as business practices and ethical standards.
EDWARD S. GO LYDIA B. ECHAUZ FRANCISCO C. SEBASTIAN Chairman Member Member
108 Metro Pacific Investments Corporation Statement of Management’s Responsibility for the Consolidated Financial Statements
The Management of Metro Pacific Investments Corporation and Subsidiaries (the Company) is responsible for the preparation and fair presentation of the consolidated financial statements including the schedules attached therein, as at December 31, 2017 and 2016 and for the three years in the period ended December 31, 2017, in accordance with the prescribed financial reporting framework indicated therein, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company’s financial reporting process.
The Board of Directors reviews and approves the consolidated financial statements including the schedules attached therein, and submits the same to the stockholders.
SyCip Gorres Velayo & Co., the independent auditors, appointed by the stockholders has audited the consolidated financial statements of the Company 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.
Signed under oath by the following:
MANUEL V. PANGILINAN Chairman of the Board
JOSE MA. K. LIM DAVID J. NICOL President and CEO Chief Financial Officer
Signed this 1st day of March 2018
SUBSCRIBED AND SWORN to before me this 16th day of April 2018 affiant(s) exhibiting to me his/their Residence Certificates, as follows:
NAMES PASSPORT NO. DATE OF ISSUE PLACE OF ISSUE Manuel V. Pangilinan EC1452578 June 20, 2014 Manila Jose Ma. K. Lim EC6540076 January 21, 2016 Manila David J. Nicol E4115548 October 22, 2013 Australia
Doc. No. 13 Page No. 4 Book No. 428 Series of 2018
2017 Annual Report 109 Independent Auditors’ Report
The Board of Directors and Stockholders Metro Pacific Investments Corporation
Opinion
We have audited the consolidated financial statements of Metro Pacific Investments Corporation and its subsidiaries (the Company), which comprise the consolidated statements of financial position as at December 31, 2017 and 2016, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December 31, 2017, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for each of the three years in the period ended December 31, 2017 in accordance with Philippine Financial Reporting Standards (PFRSs).
Basis for Opinion
We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
Recoverability of goodwill and service concession assets (SCAs) not yet available for use
The Company’s goodwill, mainly arising from its acquisition of long term investments in water and tollways business, amounted to P25.4 billion and this is allocated to different cash generating units (CGUs). In addition, the Company has entered into several service concession agreements with the Philippine Government and/or its agencies or instrumentalities, of which P39.3 billion of these SCAs are not yet available for use. Under Philippine Accounting Standard (PAS) 36, Impairment of Assets, the Company is required to perform annual impairment test on the amount of goodwill and the SCAs not yet available for use. These annual impairment tests are significant to our audit because the amounts are material to the consolidated financial statements. In addition, the determination of the recoverable amounts of the CGUs to which the goodwill belong or as it relates to the SCAs , involves significant assumptions about the future results of business such as revenue growth and discount rates which are applied to the cash flow forecasts. The assumptions on revenue growth mainly relates to the expected volume of traffic for the toll roads, ridership for the rail, and billed water volume for the water concession.
Refer to Note 14 to the consolidated financial statements for the details on goodwill and SCAs and the assumptions used in the forecasts.
110 Metro Pacific Investments Corporation Audit response
We obtained an understanding of the Company’s impairment assessment process and the related controls. We also involved our internal specialist in evaluating the methodologies and the assumptions used. These assumptions include the expected volume of traffic for the toll roads, ridership for the rail, billed water volume for the water concession, growth rate and discount rates. We compared the forecast revenue growth against the historical data of the CGUs and inquired from management and operations personnel about the plans to support the forecast revenues. We also compared the Company’s key assumptions such as traffic volume, rail ridership and water volume against historical data and against available studies by independent parties that were commissioned by the respective subsidiaries. We reviewed the weighted average cost of capital (WACC) used in the impairment test by comparing it with WACC of other comparable companies in the regions. Furthermore, we reviewed the Company’s disclosures about those assumptions to which the outcome of the impairment test is most sensitive, specifically those that have the most significant effect on determining the recoverable amounts of the goodwill and SCAs not yet available for use.
Amortization of SCAs using the ‘units of production (UOP)’ method
The SCAs related to the toll roads and water concession agreements of the Company are being amortized using the UOP method. For the toll roads concession assets, amortization is based on the ratio of the actual traffic volume to the total expected traffic volume of the underlying toll expressways over the remaining period of the concession agreement. On the other hand, the Company amortizes the water- related concession asset based on the actual billed volume over the estimated billable water volume for remaining period of the concession agreement. The UOP amortization method is a key audit matter as the method involves significant management judgment and estimates, particularly in determining the total expected traffic volume and the total estimated volume of billable water over the remaining periods of the concession agreements. The Company reviews annually the total expected traffic volume with reference to traffic projection reports and billable water volume with reference to water volume forecasts. It considers different factors such as population growth, supply and consumption, and service coverage including ongoing and future expansions.
Refer to Note 12 to the consolidated financial statements for the details of SCAs and Note 3 for the discussion of management estimate relating to amortization of SCAs.
Audit response
We obtained an understanding of management’s processes and controls in the estimation of billable water and traffic volume. We reviewed the report of the management’s specialists and gained an understanding of the methodology and the basis of computing the forecasted volumes. We also evaluated the competence, capabilities, and objectivity of management’s specialists who estimated the forecasted volumes. Furthermore, we compared the billable water volume and traffic volume during the year against the data generated from the billing system for water and from the toll collection system for tollways. We recalculated the amortization expense for the year and the SCAs as of year-end based on the established billable water volume and traffic volume.
Accounting for acquisitions of an associate and a subsidiary
In 2017, the Company acquired additional 25% interest in Beacon Electric Assets Holdings, Inc. (Beacon Electric) for an aggregate purchase price of P21.8 billion. As a result of the acquisition, the Company now holds 100% of the common and preferred shares of Beacon Electric. Consequently, the Company’s effective ownership interest in Manila Electric Company (Meralco) increased to 45.5% and in Global Business Power Corporation (GBPC) to 62.4%. In addition, through its wholly-owned subsidiary PT Metro Pacific Tollways Indonesia, the Company acquired 49.5% interest in PT Nusantara Infrastructure Tbk (PT Nusantara), a listed Indonesian company primarily engaged in the infrastructure development industry, for P6.9 billion. The Company accounted for these acquisitions as ‘business’ acquisitions. The goodwill arising from these acquisitions are subsumed under the investment accounts. These transactions are significant to our audit as these are new and major acquisitions during the year and the amounts are material to the consolidated financial statements. In addition, accounting for these acquisitions required significant management judgment and estimates. These include allocating the purchase consideration to the assets acquired and liabilities assumed based on fair values and the Company’s share in the net fair value of the investee’s identifiable assets and liabilities.
2017 Annual Report 111 Independent Auditors’ Report
Refer to Notes 4 and 10 to the consolidated financial statements for details of the acquisitions and Note 3 for the discussion of management estimate relating to the acquisitions.
Audit response
We evaluated management’s judgment on whether these acquisitions qualify as businesses, and how these should be accounted for, by reference to the purchase agreements and documents related to these acquisitions. In applying the acquisition method, we reviewed the identification of the underlying assets and liabilities of the investees based on our understanding of the businesses. Where the Company used its specialists to perform the purchase price allocation and involved them in the valuation of the intangible assets, or engaged independent appraisers to value the property and equipment, we assessed the competence, capabilities, and objectivity of such Company specialists and the independent appraisers. We also involved our internal specialists in reviewing the valuation methodology and key inputs, such as revenue growth, margins and discount rates related to the valuation of the intangible assets. We compared the revenue growth and margins to the historical performance of the investees. We tested the parameters used in the determination of the discount rate against market data. We also reviewed the disclosures in the notes to the consolidated financial statements.
Provisions and contingencies
The Company is involved in certain proceedings for which the Company has recognized provisions for probable costs and/or expenses, which may be incurred, and/or has disclosed relevant information about such contingencies. This matter is significant to the audit because the assessment of potential outcome or liability involves significant management judgment and estimation. Notes 16 and 29 to the consolidated financial statements provide the relevant disclosures related to this matter.
Audit response
Our audit procedures included understanding the Company’s processes and controls over the identification and evaluation of regulatory proceedings. We involved our internal specialist in evaluating management’s assessment on whether provisions on the contingencies should be recognized, and the estimation of such amount. We also discussed with management the status of the regulatory proceedings and dispute arbitration. In addition, we obtained correspondences with the relevant government agencies, including tax authorities, replies from third party legal counsels, and any relevant historical and recent judgments issued by the courts/tax authorities on similar matters.
West Service Area water and sewerage service revenue recognition
About 34% of the Company’s consolidated revenues comprises water and sewerage service revenues from the Metropolitan Waterworks and Sewerage System (MWSS) West Service Area. The recognition of water and sewerage service revenues involves processing large volumes of data from multiple locations. Different rates apply to different customers that are classified as residential, semi-business, commercial or industrial. The billing rates for each class of customers depend on the customer type and are determined using the formula provided in the service concession agreement and regulated by the MWSS Regulatory Office. This matter is significant to our audit because water and sewerage service revenues depend on the completeness of data captured during monthly meter readings, which occur on different billing cut-off dates for different customers; the propriety of the application of rates to billable consumption; and the reliability of the systems involved in processing bills and recording revenues.
Audit response
We obtained an understanding of the water and sewerage service revenue process, which includes maintaining the customer database, capturing billable water consumption, uploading captured billable water consumption to the billing system, calculating billable amounts based on MWSS approved rates, and uploading data from the billing system to the financial reporting system. We also evaluated the design of and tested the relevant controls over this process. In addition, we performed test recalculation of the billed amounts using the MWSS approved rates and formulae, and compared them with the amounts reflected in the billing statements. Moreover, we involved our internal specialist in performing the aforementioned procedures on the automated aspects of this process.
112 Metro Pacific Investments Corporation Investment in a significant associate
The Company has an investment in Meralco that is accounted for under the equity method. For the year ended December 31, 2017, the Company’s effective share in the net income of Meralco amounted to P5.4 billion and accounts for 28% of the Company’s consolidated net income. The Company’s share in Meralco’s net income is significantly affected by Meralco’s revenue from the sale of electricity which arise from its service contracts with a large number of customers who are classified as either commercial, industrial or residential customers. Note 29 provides relevant disclosures related to the rate-making regulations and regulatory policies of the Energy Regulatory Commission (ERC). The revenue recognized depends on (a) the complete capture of electric consumption based on the meter readings over the franchise area taken on various dates; (b) the propriety of rates computed and applied across customer classes; and (c) the reliability of the information technology (IT) systems involved in processing the billing transaction.
In addition, the Company’s share in Meralco’s net income is also significantly affected by Meralco’s recognition of provisions for probable costs and/or expenses. The assessment of the potential outcome or liability involves significant management judgment and estimation. Note 29 to the consolidated financial statements provides the relevant disclosures related to this matter.
Audit response
We obtained the consolidated financial information of Meralco for the year ended December 31, 2017 and performed recomputation of the Company’s equity in net earnings of Meralco. We obtained an understanding of and evaluated the design and tested the controls over the customer master file maintenance, accumulation and processing of meter data, and interface of data from the billing system to the financial reporting system. In addition, we performed test recalculation of the billed amounts using the ERC approved rates and formulae, actual costs incurred, and compared them with the amounts reflected in the billing statements. We involved our internal specialist in understanding the IT processes and in understanding and testing of the IT general controls over the IT systems supporting the revenue process.
We evaluated management’s assessment of the possible outcomes and the related estimates of the probable costs and/or expenses that are recognized. In addition, we evaluated the input data supporting the assumptions used, such as tariffs, tax rates, historical experience, regulatory rulings and other developments, against Meralco’s internal and external data, and performed recalculations and inspection of relevant supporting documents.
Other Information
Management is responsible for the other information. The other information comprises the information included in the SEC Form 20‑IS (Definitive Information Statement), SEC Form 17‑A and Annual Report for the year ended December 31, 2017, but does not include the consolidated financial statements and our auditor’s report thereon. The SEC Form 20‑IS (Definitive Information Statement), SEC Form 17‑A and Annual Report for the year ended December 31, 2017 are expected to be made available to us after the date of this auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits, or otherwise appears to be materially misstated.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with PFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
2017 Annual Report 113 Independent Auditors’ Report
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
114 Metro Pacific Investments Corporation We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Marydith C. Miguel.
SYCIP GORRES VELAYO & CO.
Marydith C. Miguel Partner CPA Certificate No. 65556 SEC Accreditation No. 0087-AR-4 (Group A), May 1, 2016, valid until May 1, 2019 Tax Identification No. 102-092-270 BIR Accreditation No. 08-001998-55-2018, February 26, 2018, valid until February 25, 2021 PTR No. 6621301, January 9, 2018, Makati City
March 1, 2018
2017 Annual Report 115 ConsolidatedMETRO PACIFIC INVESTMENTSMETRO CORPORATION PACIFIC INVESTMENTS AND Statements SUBSIDIARIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTSCONSOLIDATED OF FINANCIAL POSITION STATEMENTS OF FINANCIAL POSITION of(Amounts Financial in Millions) (Amounts in Millions)Position (Amounts in Millions)
December 31 December 31 2017 2016 2017 2016
ASSETS ASSETS
Current Assets Current Assets Cash and cash equivalents and short-termCash and cash deposits equivalents (Notes 7,and 32 short-term and 33) deposits (Notes 7, 32 and 33) P=49,317 =19,469P P=49,317 =19,469P Restricted cash (Notes 7, 30, 32 andRestricted 33) cash (Notes 7, 30, 32 and 33) 4,047 2,432 4,047 2,432 Receivables (Notes 8, 32 and 33)Receivables (Notes 8, 32 and 33) 10,899 5,171 10,899 5,171 Other current assets (Notes 9, 32Other and 33) current assets (Notes 9, 32 and 33) 10,432 4,728 10,432 4,728 74,695 31,800 74,695 31,800 Assets held for sale (Note 30) Assets held for sale (Note 30) 250 – 250 – Total Current Assets Total Current Assets 74,945 31,800 74,945 31,800
Noncurrent Assets Noncurrent Assets Restricted cash (Notes 7, 30, 32 andRestricted 33) cash (Notes 7, 30, 32 and 33) – 889 – 889 Investments and advances (NotesInvestments 10, 32 and and33) advances (Notes 10, 32 and 33) 150,971 126,556 150,971 126,556 Service concession assets (NotesService 1, 12 and concession 14) assets (Notes 1, 12 and 14) 168,783 152,693 168,783 152,693 Property, plant and equipment (NoteProperty, 13) plant and equipment (Note 13) 67,606 10,480 67,606 10,480 Goodwill (Note 11) Goodwill (Note 11) 25,384 21,004 25,384 21,004 Intangible assets (Note 11) Intangible assets (Note 11) 4,637 1,934 4,637 1,934 Deferred tax assets (Note 26) Deferred tax assets (Note 26) 1,045 467 1,045 467 Other noncurrent assets (Notes 8,Other 9, 23, noncurrent 32, 33 and assets 34) (Notes 8, 9, 23, 32, 33 and 34) 10,380 5,779 10,380 5,779 Total Noncurrent Assets Total Noncurrent Assets 428,806 319,802 428,806 319,802
P=503,751 =351,602P P=503,751 =351,602P
LIABILITIES AND EQUITY LIABILITIES AND EQUITY
Current Liabilities Current Liabilities Accounts payable and other currentAccounts liabilities payable (Notes and 15, other 32 and current 33) liabilities (Notes 15, 32 and 33) P=27,142 =14,965P P=27,142 =14,965P Income tax payable Income tax payable 1,415 466 1,415 466 Due to related parties (Notes 19,Due 32 and to related 33) parties (Notes 19, 32 and 33) 3,879 1,713 3,879 1,713 Current portion of: Current portion of: Provisions (Note 16) Provisions (Note 16) 5,997 5,229 5,997 5,229 Long-term debt (Notes 18, 32 and Long-term 33) debt (Notes 18, 32 and 33) 15,573 3,797 15,573 3,797 Service concession fees payable Service(Notes 17,concession 32 and 33) fees payable (Notes 17, 32 and 33) 871 874 871 874 Total Current Liabilities Total Current Liabilities 54,877 27,044 54,877 27,044
Noncurrent Liabilities Noncurrent Liabilities Noncurrent portion of: Noncurrent portion of: Provisions (Note 16) Provisions (Note 16) 2,106 239 2,106 239 Service concession fees payable Service(Notes 17,concession 32 and 33) fees payable (Notes 17, 32 and 33) 28,873 28,000 28,873 28,000 Long-term debt (Notes 18, 32 and Long-term 33) debt (Notes 18, 32 and 33) 173,510 93,219 173,510 93,219 Due to related parties (Notes 19,Due 32 and to related 33) parties (Notes 19, 32 and 33) 11,767 6,726 11,767 6,726 Deferred tax liabilities (Note 26)Deferred tax liabilities (Note 26) 6,836 3,925 6,836 3,925 Other long-term liabilities (NotesOther 15, 23, long-term 32, 33 and liabilities 34) (Notes 15, 23, 32, 33 and 34) 10,103 4,368 10,103 4,368 Total Noncurrent Liabilities Total Noncurrent Liabilities 233,195 December 31136,477 233,195 December 31136,477 Total Liabilities Total Liabilities 288,0722017 163,5212016 288,0722017 163,5212016
Equity(Forward)(Note 20) Equity(Forward)(Note 20) Owners of the Parent Company:Owners of the Parent Company: Capital stock Capital stock P=31,626 =31,619P P=31,626 =31,619P Additional paid-in capital Additional paid-in capital 68,465 68,438 68,465 68,438 Treasury shares Treasury shares (167) (167) (167) (167) Equity reserves Equity reserves 5,742 6,282 5,742 6,282 Retained earnings Retained earnings 53,894 43,889 53,894 43,889 Other comprehensive income reserve Other comprehensive income reserve 1,684 1,971 1,684 1,971 Total equity attributable to owners Total of equitythe Parent attributable Company to owners of the Parent Company 161,244 152,032 161,244 152,032 Non-controlling interest Non-controlling interest 54,435 36,049 54,435 36,049 Total Equity Total Equity 215,679 188,081 215,679 188,081
P=503,751 =351,602P P=503,751 =351,602P
See accompanying Notes to ConsolidatedSee accompanying Financial Statements. Notes to Consolidated Financial Statements. 116 Metro Pacific Investments Corporation METRO PACIFIC INVESTMENTS CORPORATION AND SUBSIDIARIES CONSOLIDATEDConsolidated STATEMENTS OF COMPREHENSIVE Statements INCOME (Amountsof Comprehensive in Millions, Except Earnings Per Share Figures) Income (Amounts in Millions, Except Earning Per Share Figures) Years Ended December 31 2017 2016 2015 OPERATING REVENUES (Notes 1 and 37) Water and sewerage services revenue P=20,926 =20,280P =19,098P Toll fees 13,107 11,902 9,691 Power and coal sales 13,042 – – Hospital revenue 10,737 8,967 7,553 Rail revenue 3,155 3,016 897 Logistics and other revenue 1,545 655 – 62,512 44,820 37,239 COST OF SALES AND SERVICES (Note 21) (29,374) (18,370) (14,026) GROSS PROFIT 33,138 26,450 23,213 General and administrative expenses (Note 22) (12,126) (9,062) (8,047) Interest expense (Note 24) (7,995) (5,328) (4,925) Share in net earnings of equity method investees (Note 10) 8,045 6,808 5,014 Dividend income (Note 10) 2,631 1,353 580 Interest income (Note 24) 623 417 460 Construction revenue (Note 3) 19,344 16,799 12,130 Construction costs (Note 3) (19,344) (16,799) (12,130) Others (Note 24) 360 299 604 INCOME BEFORE INCOME TAX 24,676 20,937 16,899 PROVISION FOR INCOME TAX (Note 26) Current 5,390 4,091 1,522 Deferred 259 67 303 5,649 4,158 1,825 NET INCOME 19,027 16,779 15,074 OTHER COMPREHENSIVE INCOME (LOSS) - NET (Note 25) To be reclassified to profit or loss in subsequent periods 482 444 (222) Not to be reclassified to profit or loss in subsequent periods (948) 1,024 (133) (466) 1,468 (355) TOTAL COMPREHENSIVE INCOME P=18,561 =18,247P =14,719P Net income attributable to: Owners of the Parent Company P=13,151 =11,456P =9,546P Non-controlling interest 5,876 5,323 5,528 P=19,027 =16,779P =15,074P Total comprehensive income attributable to: Owners of the Parent Company P=12,864 =12,917P =9,220P Non-controlling interest 5,697 5,330 5,499 P=18,561 =18,247P =14,719P EARNINGS PER SHARE (Note 27) Basic Earnings Per Common Share, Attributable to Owners of the Parent Company P=0.4171 =0.3810P =0.3447 P Diluted Earnings Per Common Share, Attributable to Owners of the Parent Company P=0.4167 =0.3806P =0.3445 P
See accompanying Notes to Consolidated Financial Statements.
2017 Annual Report 117 METROConsolidated PACIFIC INVESTMENTS CORPORATION AND SUBSIDIARIES Statements of Change in Equity CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR(Amounts THE YEARS ENDED in DECEMBERMillions) 31, 2017, 2016 AND 2015 (Amounts in Millions)
Year Ended December 31, 2017 Attributable to Owners of the Parent Company Additional Other Non- Paid-in Treasury Retained Comprehensive controlling Capital Stock Capital Shares Equity Earnings Income Reserve Interest Total (Note 20) (Note 20) (Note 20) Reserves (Note 20) (Note 20) Total (NCI) Equity At January 1, 2017 P=31,619 P=68,438 (P=167) P=6,282 P=43,889 P=1,971 P=152,032 P=36,049 P=188,081 Total comprehensive income for the year: Net income – – – – 13,151 – 13,151 5,876 19,027 Other comprehensive income (Note 25) – – – – – (287) (287) (179) (466) Executive Stock Option Plan (Note 28) 7 27 – (5) – – 29 – 29 Restricted Stock Unit Plan (Note 28) – – – 67 – – 67 – 67 Cash dividends declared (Note 20) – – – – (3,239) – (3,239) – (3,239) Business combinations and other movements in NCI (Note 4) – – – – 93 – 93 17,138 17,231 Acquisition of non-controlling interest (Notes 4 and 39) – – – (360) – – (360) 48 (312) Deferred tax on equity transaction (Note 26) – – – (242) – – (242) – (242) Dividends declared to non-controlling stockholders (Note 6) – – – – – – – (4,497) (4,497) At December 31, 2017 P=31,626 P=68,465 (P=167) P=5,742 P=53,894 P=1,684 P=161,244 P=54,435 P=215,679
Year Ended December 31, 2016 Attributable to Owners of the Parent Company Other Additional Comprehensive Paid-in Treasury Retained Income Non- Capital Stock Capital Shares Equity Earnings Reserve controlling Total (Note 20) (Note 20) (Note 20) Reserves (Note 20) (Note 20) Total Interest (NCI) Equity At January 1, 2016 =27,935P =49,980P =–P =6,248P =35,149P =510P =119,822 P =30,955P =150,777 P Total comprehensive income for the year: Net income – – – – 11,456 – 11,456 5,323 16,779 Other comprehensive income (Note 25) – – – – – 1,461 1,461 7 1,468 Issuance of shares Common shares 3,600 18,360 – – – – 21,960 – 21,960 Preferred shares 41 – – – – – 41 – 41 Transaction costs on issuance of shares – (84) – – – – (84) – (84) Executive Stock Option Plan (Note 28) 43 182 – (33) – – 192 – 192 Restricted Stock Unit Plan (Note 28) – – – 67 – – 67 – 67 Treasury shares – – (167) – – – (167) – (167) Cash dividends declared (Note 20) – – – – (2,716) – (2,716) – (2,716) Business combinations and other movements in NCI (Note 4) – – – – – – – 1,401 1,401 Dividends declared to non-controlling stockholders (Note 6) – – – – – – – (1,637) (1,637) At December 31, 2016 =31,619P =68,438P (P=167) =6,282P =43,889P =1,971P =152,032 P =36,049P =188,081 P
Year Ended December 31, 2015 Attributable to Owners of the Parent Company Other Additional Comprehensive Paid-in Retained Income Capital Stock Capital Equity Earnings Reserve Non-controlling (Note 20) (Note 20) Reserves (Note 20) (Note 20) Total Interest (NCI) Total Equity At January 1, 2015 =26,096P =42,993P =6,245P =27,525P =836P =103,695P =25,877P =129,572P Total comprehensive income for the year: Net income – – – 9,546 – 9,546 5,528 15,074 Other comprehensive income (Note 25) – – – – (326) (326) (29) (355) Executive Stock Option Plan (ESOP) (Note 38): Exercise of stock option 27 78 (30) – – 75 – 75 Cost of ESOP – – 21 – – 21 – 21 Expiration of ESOP – 10 (15) 5 – – – – Equity raising (Note 20) 1,812 6,899 – – – 8,711 – 8,711 Cash dividends declared (Note 20) – – – (1,927) – (1,927) – (1,927) Additional investment from NCI – – – – – – 1,125 1,125 Dividends declared to non-controlling stockholders (Note 6) – – – – – – (1,593) (1,593) Gain on acquisition of NCI and others (Note 4) – – 27 – – 27 47 74 At December 31, 2015 =27,935P =49,980P =6,248P =35,149P =510P =119,822P =30,955P =150,777P
See accompanying Notes to Consolidated Financial Statements.
118 Metro Pacific Investments Corporation METRO PACIFIC INVESTMENTS CORPORATION AND SUBSIDIARIES CONSOLIDATEDConsolidated STATEMENTS OF CASH FLOWSStatements of Cash Flows (Amounts in Millions) in Millions)
Years Ended December 31 2017 2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=24,676 =20,937P =16,899P Adjustments for: Interest expense (Note 24) 7,995 5,328 4,925 Amortization of service concession assets (Note 21) 3,909 3,679 3,317 Depreciation and amortization (Notes 1, 13, 21 and 22) 3,379 1,334 1,076 Impairment of goodwill and nonfinancial assets (Notes 3, 10 and 11) 763 774 – Long Term Incentive Plan expense (Note 23) 629 533 568 Unrealized foreign exchange loss – net 65 2 149 Share in net earnings of equity method investees (Note 10) (8,045) (6,808) (5,014) Dividend income (2,631) (1,353) (580) Gain on sale of investments (Note 10) (732) – – Interest income (Note 24) (623) (417) (460) Others 558 (165) 156 Operating income before working capital changes 29,943 23,844 21,036 Increase in: Restricted cash (775) (18) (47) Receivables (761) (694) (574) Due from related parties and other current assets (1,338) (604) (1,309) Increase (decrease) in: Accounts payable and other current liabilities 2,884 729 699 Provisions and accrued retirement cost 1,104 (726) (348) Net cash generated from operations 31,057 22,531 19,457 Income taxes paid (5,145) (4,042) (1,359) Interest received 596 429 446 Net cash from operating activities 26,508 18,918 18,544
CASH FLOWS FROM INVESTING ACTIVITIES Dividends received from: Equity method investees (Note 10) 6,903 5,679 2,283 Beacon Electric’s preferred shares (Note 10) 2,541 – 405 Available-for-sale financial assets (Notes 32 and 33) 144 136 121 Collection of or proceeds from sale/disposal of: Available-for-sale financial assets (Notes 32 and 33) 14,968 14,679 21,618 Investment in associate (net of transaction cost; Note 10) 12,403 – – Redemption of preferred shares (Note 10) 3,500 – – Property, plant and equipment (Note 13) 22 21 7 Notes receivable – – 118 Acquisition of subsidiaries, net of cash acquired (Note 4) (5,958) (4,812) – Additions to/issuance of: Available-for-sale financial assets (Note 11) (20,409) (13,823) (17,801) Service concession assets (Note 12) (18,707) (17,757) (21,448) Investments in equity method investees (Note 10) (12,652) (21,587) (28,194) Property, plant and equipment (Note 13) (3,689) (2,536) (1,568) Decrease (increase) in short-term deposits 11,574 3,048 (3,095) Increase in other noncurrent assets (3,488) (163) (353) Net cash used in investing activities (12,848) (37,115) (47,907) (Forward)
2017 Annual Report 119 Consolidated Statements of Cash Flows (Amounts in Millions)
Years Ended December 31 2017 2016 2015
CASH FLOWS FROM FINANCING ACTIVITIES Receipt of or proceeds from: Long-term debt (Note 18) P=36,504 =13,415P =33,476P Contribution from non-controlling stockholders and other movements (Notes 4, 6 and 30) 37 777 1,125 Issuance of shares (Notes 20 and 28) 29 22,193 8,954 Payments of/for: Long-term debt (Note 18) (9,822) (4,030) (6,757) Interest and other financing charges (6,544) (4,155) (3,799) Dividends paid to owners of the Parent Company (Note 20) (3,239) (2,716) (1,927) Due to related parties (2,001) (4,243) – Dividends paid to non-controlling stockholders (Note 6) (1,999) (2,050) (1,468) Service concession fees payable (Note 17) (1,007) (1,209) (1,094) Debt issuance cost (Note 18) (238) (516) (178) Treasury shares (Note 20) – (167) – Transaction costs on issuance of shares – (84) (168) Acquisition of non-controlling interests (Note 4) – (32) (57) Net cash from financing activities 11,720 17,183 28,107
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 25,380 (1,014) (1,256)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR(Note 7) 15,455 16,469 17,725
CASH AND CASH EQUIVALENTS AT END OF YEAR(Note 7) P=40,835 =15,455P =16,469P
See accompanying Notes to Consolidated Financial Statements.
120 Metro Pacific Investments Corporation Corporate Information
HEADQUARTERS: AMERICAN DEPOSITARY RECEIPTS: LEGAL ADVISERS: 10th floor, Makati General Office Building ADR Ticker: MPCIY Picazo, Buyco, Tan, Fider & Santos Legazpi corner Dela Rosa Streets CUSIP: US59164L2007 19th floor, Liberty Center Legazpi Village, 0721 Makati City Ratio: 1 ADR : 200 ordinary shares 104 H.V. De la Costa Street Philippines Depositary Bank: Deutsche Bank Trust Legazpi Village, Makati City Telephone (632) 888-0888 and Company Americas Telephone (632) 888-0999 Facsimile (632) 888-0813 Facsimile (632) 888-1011 Email [email protected] AUDITORS: [email protected] SyCip Gorres Velayo & Co. Sycip Salazar Hernandez & Gatmaitan Website http://www.mpic.com.ph 6769 Ayala Avenue SSHG Law Center 1226 Makati City 105 Paseo de Roxas SHARE LISTING INFORMATION: Philippines Makati City, 1226 Metro Manila Metro Pacific Investments Corporation Telephone (632) 817-9811 is traded in the Philippine Stock Exchange PRINCIPAL BANKERS: Facsimile (632) 818-7562 under the ticker symbol “MPI” Banco de Oro Universal Bank Listing date: 15 December 2006 Metropolitan Bank and Trust Company STOCK TRANSFER AGENT: Philippine National Bank Stock Transfer Services, Inc. Union Bank of the Philippines 34th Floor, Unit D Rufino Pacific Tower 6784 Ayala Avenue, Makati City Telephone (632) 403-2410/ (632) 403-2412 10th Floor, Makati General Office Building Legazpi corner Dela Rosa Streets Legaspi Village, 0721 Makati City, Philippines www.mpic.com.ph