Manila Water Company: What's New

What's New

Manila Water Joins Governance Forum

Manila Water participated in a Governance Forum held at the University of Makati on September 22, 2008, with the theme ‘New Governance: Tapping the Strengths of Public and Civic Partnership’. Atty. Jewel C. Ferrnandez-Austria, the head of the company’s Legal and Corporate Governance Department, was a resource speaker on private sector initiatives in the forum. She presented Manila Water’s platform of corporate governance as anchored on its Manual of Corporate Governance and Code of Business Conduct and Ethics. She also discussed Manila Water’s recent initiatives to enhance its corporate governance practices.

The other resource speakers were Makati Councilor Jejomar Binay, Jr. (governance in the public sector), Prof. Lloyd Bautista (role of the academe), and Gawad Kalinga Executive Director Jose Luis Oquiñena (role of citizen’s organization). The forum was organized by the University of Makati College of Governance and Public Policy, Master in Public Administration Student Society and Political Science Organization.

Board Meeting

Manila Water’s board of directors held its regular meeting on July 22, 2008. At the meeting, the Board declared cash dividends on its common and preferred shares. The Board also increased the number of members of the Remuneration Committee to four, and elected Mr. Cielito Habito, an independent director, as the additional member. The Board also elected Mr. Oscar Reyes, an independent director, as chairman of the Remuneration Committee, to replace Mr. Fernando Zobel de Ayala who will remain as committee member. The Board further elected Mr. Habito as a member of the Nomination Committee.

At the meeting, Manila Water President Antonino T. Aquino presented the company’s risk management program, including the risk management framework and key strategies adopted by the company. He discussed the components of the major risks that have been identified by the company as well as the measures that have been put in place to address the risks. Lyn Almario, Manila Water’s Sustainable Development Manager, also presented the company’s sustainable development program. She presented the company’s key strategies, framework and various programs such as the Tubig Para sa Barangay, Lingap Eskwela, and livelihood and environment programs.

The Board also discussed (i) Manila Water’s financial and operating highlights; (ii) updates on expansion projects; (iii) corporate governance initiatives; and (iv) administrative matters.

Audit and Governance Committee Meeting

The Audit and Governance held its regular meeting on July 18, 2008. In addition to the risk management and sustainable development programs that were also presented to the Board, CFO Sherisa Nuesa presented the company’s liability management plan for the year. She reported on the company’s loan profile and funding strategies. The Committee also discussed the Internal Audit Accomplishment Report for the second quarter and the Corporate Governance Report for the first semester.

Corporate Governance Report July 2008

For the first semester of the year, Manila Water has engaged in several activities to enhance its corporate governance practices across the organization.

Board Evaluation for 2007

One of the enhancements introduced when Manila Water revised its Corporate Governance Manual last year was the annual evaluation of the board of directors. The evaluation is to be conducted by the Audit and Governance Committee in coordination with the Corporate Governance Office.

At the start of the year, the Committee sent the Board a survey form to rate a director’s individual and the Board’s collective performance. The directors were asked to rate themselves and the Board in terms of independence, leadership, expertise and governance. The survey also included an assessment of Manila Water’s support services on board matters, specifically on the quality, quantity and timing of information sent and/or presented to the Board, as well as the conduct of board meetings.

The Committee chair, Mr. Cielito F. Habito, reported the results of the evaluation at the organizational meeting of the Board in March 2008.

Board Meeting

Manila Water’s Board of Directors had its organizational meeting on March 31, 2008. As part of the agenda for the meeting, the President, Mr. Antonino T. Aquino, presented the company’s strategies, programs and plans. He discussed the risks and challenges faced by the company from 2008 to 2012 and the measures to address them. He also reported that the company has added “improving lives” as part of its business model. Hence, in addition to aligning its business goals and social and environmental objectives, the company will also align its pursuit of shareholder value with its program to improve lives. Mr. Aquino further discussed the drivers of the company’s returns and the growth pipeline to increase shareholder value.

The President’s report on business strategy was included in the agenda as part of the company’s initiative to provide the Board with more information to enable the Board to better understand, evaluate and advise on the relevant issues facing the company. Other items of special concern that have been lined up for inclusion in the agenda for the subsequent board meetings are: sustainability, wastewater, people development, and risk management.

Board Committee Meetings

The Audit and Governance Committee held its quarterly meetings in March and May 2008. At the March meeting, the head of the Corporate Governance Office, Atty. Jewel C. Fernandez-Austria, presented the proposed mechanics for the conduct of the evaluation of the Board, as well as the contents of the survey form. At the May meeting, Ms. Austria gave the Committee an update on some of the major cases that have been investigated by the Corporate Governance Office, in coordination with the Internal Audit Department and HR Group. These cases have been filed pursuant to the company’s policy on the reporting of fraudulent and dishonest acts.

The Remuneration Committee also had its first meeting in May 2008. The Remuneration Committee was newly-created by the Board at its organizational meeting, in line with the company’s thrust to adopt best practices in corporate governance. The Committee is tasked with the power and duty to determine and approve all matters relating to the remuneration and benefits of the company’s officers and directors

Corporate Governance Office

To better focus on improving corporate governance across the organization, Manila Water has re-organized its Compliance and Governance Section and formed a Corporate Governance Office. The Office formulates and implements initiatives and policies on corporate governance. It reports to the Audit and Governance Committee which performs oversight functions over Manila Water’s corporate governance system.

Risk Officer

As Manila Water embarks on expansion projects locally and internationally, it saw a need to appoint a Risk Officer who will be in charge of identifying the major risks in the company’s business development projects. As proposed by the Risk Officer, the company has adopted a risk assessment framework under which the Risk Officer coordinates with the Business Development Group to evaluate the legal, financial technical and other major risks in a project before it is presented to the management for approval.

Manila Water’s Risk Officer is Atty. Jewel C. Fernandez-Austria, who also heads the Corporate Governance Office.

Corporate Governance Cluster

Manila Water has created a corporate governance cluster, a cross-functional team tasked to identify the gaps and challenges on corporate governance across the organization, as well as propose recommendations to improve the company’s policies and practices. All six groups of the company – Business, Finance, HR, Operations and Project Delivery, and Regulatory – are represented in the cluster.

For its first project, the cluster agreed to conduct a dialogue and survey with its project contractors, with the aim of obtaining the contractors’ assessment of the Company’s policies and processes involving contractors. The dialogue and survey will likewise serve as a venue for the contractors to air any grievances they may have, as well as propose recommendations for Manila Water to improve its relationship with its valued business partners.

Audit by United Utilities

United Utilities conducted a five-day audit of Manila Water in April 2008. UU’s Corporate Audit group performed a high-level review of the strength of Manila Water’s over-all governance and the adequacy of the internal control environment operating within the company.

The review focused on the following areas: financial control environment; corporate governance framework, with particular regard to budgeting and planning, procurement, risk management, business continuity, health and safety, and internal audit; and documented policies and procedures.

Special Corporate Governance Session for the Ayala Group of Companies

The Management Committee of Manila Water Company (composed of its President and Group Directors for all departments) attended a whole-day Special Corporate Governance Session on May 26, 2008 at the Ayala Tower. The seminar was conducted by the Institute of Corporate Directors (ICD) for the Ayala Group of Companies.

Mr. Francisco C. Eizmendi, Jr, the president of ICD, and Dr. Jesus P. Estanislao, the chairman of ICD, conducted the seminar. The presentors discussed the drivers of corporate governance and methods to improve corporate governance practices at the level of the Board and Board committees, as well as the recommendations on how to evaluate a company’s corporate governance.

In addition to the Management Committee of Manila Water, representatives from other Ayala companies such as Ayala Corporation, Ayala Land, Bank of the Philippine Islands, and Integrated Microelectronics Inc. also participated in the seminar.

Major Incident Preparedness Drill

Manila Water conducted two drills on June 21, 2008: one for the Information and Communication Technology Department (ICTD) and another for the business areas (BAs). The ICTD drill is a disaster recovery drill to test Manila Water’s ability to transfer over data and redirect user access to critical software systems to the disaster recovery site in the event of an incident that renders the main office inoperable. The drill also served to validate Manila Water’s ability to meet its customer service standard of restoring vital applications within four hours from the report of a system downtime event.

On the other hand, the BA drill is a Major Incident Preparedness Drill to sustain the incident awareness and preparedness of the employees and contractors as well as test Manila Water’s incident command system from the main office to the disaster recovery site. The drill will be conducted in all the BAs.

Sustainability Report 2007

Manila Water launched its Sustainability Report for 2007. The Report benchmarks the company’s performance against international best practices in environmental and social initiatives, as well as corporate governance. It highlights Manila Water’s programs on community building, environmental protection, health and safety promotion and people development. The Report fully complies and adheres to guidelines issued by the Global Reporting Initiatives on Corporate Social Responsibility.

Citations

Manila Water received three awards for corporate governance in the first semester of 2008.

Corporate Governance Asia Annual Recognition Awards 2008

Manila Water has been chosen to be one of the recipients of the Corporate Governance Asia Annual Recognition Awards 2008. This marks the second straight year that Manila Water was cited by Corporate Governance Asia (please see below).

This year, Corporate Governance Asia included the following items to its criteria for the award:

Rights of shareholders
Disclosure and transparency
Board and management discipline
Audit and remuneration committee
Independent, non-executive directors
Public impression
Investor relations
Corporate governance as a business proposition
Corporate social responsibility and environmental practices.

The award was given to Manila Water in recognition of its continuing commitment to the development of corporate governance in the region.

Corporate Governance Asia is the only journal currently specializing in corporate governance in the region. It evaluated the performance of key companies and listed those that have contributed significantly to the over-all development of corporate governance during the past year. In the Philippines, eight companies were chosen. Along with Manila Water, Ayala Corporation, Globe, Banco de Oro, Metrobank, PLDT, San Miguel Corporation and SM Investments were also cited.

2007 Corporate Governance Scorecard Project

Manila Water received two awards at the Institute of Corporate Directors’ (ICD) Annual Dinner on May 28, 2008. Manila Water was among the 20 companies given an award for garnering the highest ratings in the 2007 Corporate Governance Scorecard Project, jointly conducted by the ICD, Philippine Stock Exchange and Securities and Exchange Commission among 138 publicly-listed companies. From its average rating of 71% in the 2006 Corporate Governance Scorecard Project where Manila Water ranked 7th out of 64 listed companies, Manila Water’s rating jumped to 85% in 2007.

Manila Water was also one of 11 companies to receive a citation for its active participation in the ICD Companies’ Circle, composed of publicly-listed companies who have committed to strengthen corporate governance practices in the country. The Companies’ Circle meets monthly and undertakes projects such as the review of the SEC Code of Corporate Governance and the SEC Manual of Corporate Governance.