Changing Tides 2 TIDESCHANGING CHANGING MAYNILAD WATER SERVICES, INC
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CHANGING TIDES CHANGING 1 TIDES Annual Inc. 2012 Report Services, Maynilad Water MAYNILAD WATER SERVICES, INC. 2012 ANNUAL REPORT 2 Changing Tides Changing Tides The past five years of Maynilad after re-privatization have been focused on transforming water and wastewater services in the West Zone. Investments were poured into the construction of vital infrastructure, resulting in improved service levels and giving more people access to potable water. With this transformation accomplished, the Company is now moving toward dynamic CHANGING expansion, as the opportunity to grow the business outside of its TIDES concession area beckons. CHANGING The Maynilad organization is gearing itself up for this new 1 TIDES ReportAnnual 2012 Inc. Service, Water Maynilad challenge—to successfully ride the changing tides of the industry. Its past accomplishments now enable the Company to confidently look forward from a position of strength and take advantage of these MAYNILAD WATER SERVICES, INC. 2012 ANNUAL REPORT growth prospects. 3 Maynilad Water Services, Inc. 2012 Annual Inc. 2012 Report Services, Maynilad Water 3 Year 2012 at a Glance 5 Milestones 7 Letter from the Chairman 11 President’s Report 16 Key Figures 16 Strategies for Growth 17 Operational Highlights 31 Financial Review and Analysis 39 Corporate Social Responsibility 50 Awards Received in 2012 51 The Road Ahead 55 Board of Directors 57 Top Management Team 59 Financial Statements THE COMPANY IN BRIEF Maynilad is the largest private water concessionaire in the Philippines in terms of customer base. It is a concessionaire of the Metropolitan Waterworks and Sewerage System (MWSS) given exclusive right to manage water and wastewater operations in the West Zone of the Greater Manila Area. The West Zone concession covers 540 square kilometers and is composed of the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting from the Districts of the Holy Spirit and Batasan Hills), Makati (west of South Super Highway), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon—all in Metro Manila; the cities of Cavite, Bacoor and Imus, and the towns of Kawit, 1 Noveleta and Rosario—all in Cavite Province. Maynilad is managed by DMCI-MPIC Water Company, Inc.—a joint venture between Metro Pacific Investments Corporation (MPIC) and DMCI Holdings, Inc. (DMCI). The MPIC-DMCI consortium officially took control of Maynilad on January 19, 2007, with the completion date under the MWSS Selection Process taking place in a ceremony Changing Tides held at Malacañan Palace on January 24, 2007. Our Vision We are the leading water solutions company in the Philippines with a strong presence across Asia. Our Mission We provide safe, affordable, and sustainable water solutions that enable those we serve to lead healthier, more comfortable lives. Our Corporate Values Honesty and Integrity We deal with our stakeholders with honesty and integrity. We will always do what is right and fair for the sake of our customers, shareholders and the environment. Customer Service We consider our customers as our growth partners. Only by providing them with affordable, high-quality water solutions can we continue generating value for our company and shareholders. Entrepreneurship We encourage creative thinking and deliberate execution. We expect our people to manage our company’s resources with a strong sense of initiative, ownership, and accountability in order to balance the needs of 2 our customers with those of our other stakeholders. Maynilad Water Services, Inc. 2012 Annual Inc. 2012 Report Services, Maynilad Water Commitment to Excellence We view excellence as a means and not an end. To maintain our operational efficiency and industry leadership, we push our people to excel by being diligent and innovative in their work. Teamwork We value our people and consider their success as our own. This is why we provide them with the support, responsibilities, and opportunities that will allow them to develop individually and with the company. Love for Country We actively partner with the public sector so that we can provide even more Filipinos with water solutions that will spur national development and secure the environment. YEAR 2012 AT A GLANCE Net Income in billion pesos 6.39 5.86 9 % Change 2011 2012 Billed Volume in million cubic meters 428.42 404.73 3 6 % Change 2011 2012 Number of Billed Services Changing Tides 1,073,508 1,005,350 7 % Change 2011 2012 Average Non-Revenue Water (%) 47.8 43.4 10 % Change 2011 2012 24-hour water availability (%) 96 84 14 4 % Change Maynilad Water Services, Inc. 2012 Annual Inc. 2012 Report Services, Maynilad Water 2011 2012 Water pressure over 7 psi (%) 100 96 4 % Change 2011 2012 MILESTONES JANUARY FEBRUARY • Maynilad marks its 5th year of re-privatization • Maynilad wins five Anvil Awards for its communications tools • The combined sewerage interceptor project in Paco, Manila, is and programs implemented in 2011. completed. • The NRW management programs of Maynilad are presented • The primary line along Marcos Alvarez in Las Piñas is energized during the Water Loss 2012 Conference. after gaps are filled in the network. MAY JUNE • Maynilad and the LLDA sign an agreement to implement • The laying of the combined sewerage interceptor system for watershed restoration activities in Muntinlupa. Paltok STP is completed. • The Patindig Araw Pumping Station in Imus, Cavite, is • A new Samahang Tubig Maynilad (STM) community is energized. inaugurated at Sitio Bakal, Quezon City. • Construction of Baesa Sewage Treatment Plant (STP) and • North Caloocan Business Area passes the first surveillance interceptor system is completed. audit of its ISO 9001, ISO 14001 and OHSAS 18001. 5 SEPTEMBER OCTOBER Maynilad starts rehabilitation of Ipo Dam facility. Maynilad’s Water Service Transformation program is conferred Changing Tides • • the Global Honour Award. • Land Bank of the Philippines, MWCI and Maynilad sign a subsidiary loan agreement for the Metro Manila Wastewater Management Project. • Maynilad formally takes over the operations of Philippine Hydro, Inc. (PhilHydro). MARCH APRIL • Maynilad and the DENR lead the World Water Day celebration • Maynilad wins as overall champion of the MVP Olympics for the at the Quirino Grandstand, Manila. second straight year. • DDSSTP passes the recertification audit of its OHSAS 18001 and • The installation of a primary line along Tirona Highway surveillance audit of ISO 9001 and ISO 14001. increases coverage in Bacoor, Cavite. • The Pagcor Pumping Station discharge line is energized, improving service levels in the south. J ULY AUGUST • Maynilad’s Water Service Transformation Program wins in the • The water distribution system of Maynilad is awarded ISO Project Innovation Awards (Asia Pacific). 9001, ISO 14001 and OHSAS 18001 certifications. • The construction of an STP at A. Samson in Quezon City is • Due to heavy rainfall, turbidity of raw water supply from Angat completed. Dam increases to 1,200 NTU. • Maynilad launches its new Corporate Vision, Mission, and • Construction of wash-and-drink stations for 40 public schools Values statements. in the West Zone is completed. 6 Maynilad Water Services, Inc. 2012 Annual Inc. 2012 Report Services, Maynilad Water NOVEMBER DECEMBER • Two Maynilad communications initiatives are declared Finalists • Maynilad’s first Sustainability Report for year 2011 receives a at the 11th Philippine Quill Awards. GRI check level B. • MWIC and Manila Water Consortium sign a Share Purchase • The Human Resources Division passes the certification audit Agreement to implement the Carmen Bulk Water Supply for ISO 9001. Project. • DOLE confers three “Secretary’s Awards of Distinction” to • Maynilad is hailed as Overall Winner in the Drinking Water Maynilad during the 8th GKK Awards. Safety Awards. LETTER 7 FROM THE CHAIRMANManuel V. Pangilinan Changing Tides Chairman To all our Stakeholders, The year 2012 marks the end of impact of our Company, and ride our transformation phase. the changing tides, so we can continue delivering world-class In a span of five years, we water services to those who need implemented an aggressive it most. water service rehabilitation program that is now delivering Against Organizational Inertia unprecedented improvements Successful companies have a to our customers. We also natural tendency to preserve engineered a dramatic corporate gains by holding on to current turnaround that has resulted in routines. Having exclusive rights our strong financial position. over a service area could drive this tendency towards corporate Whilst we take great pride in inertia. But Maynilad is an what we have accomplished, exception to this orthodoxy. we must also acknowledge the 8 immense challenges that lie This year, we challenged our ahead of us. people to go beyond their Annual Inc. 2012 Report Services, Maynilad Water comfort zones by redefining who The rate of growth in new and what we are as a Company. connections and billed volume We believe that a change in are starting to slow down, as we our motivation and mindset approach the saturation point of will enable us to resist such our coverage and begin to service organizational inertia. From being the lower income segments of our a basic service provider, we now market. In that light, we need to envision ourselves as the leading identify new opportunities that water solutions company in the will drive the value and social Philippines, with a strong presence in the Philippines and eventually, This early, we are studying how in certain parts of Asia. the operations of PhilHydro can be improved and expanded so We want our people to capitalize that more communities in Bulacan, on their newfound expertise in Legazpi City, Nueva Vizcaya and non-revenue water management, Nueva Ecija can have access water supply operations and to piped-in water supply. We wastewater management, recognize the strategic value of so that Maynilad can deliver this company and look forward to safe, sustainable water to even unlocking its full potential.