Message from the Chairman
To our dear stakeholders,
Year 2022 has been a landmark period for us in a number of ways. It was our year of recovery, as we started rising above the lingering impacts of the pandemic on our operations. It also marked the 15th year of Maynilad’s re-privatization, as well as the official grant to Maynilad of a 25-year franchise by Congress. Throughout all of these developments, our people have soldiered on, and there are a lot of accomplishments that we can look back upon with pride.
Milestone: 15th Year of Reprivatization
Over the past 15 years since our re-privatization, we have spent aroundPhP 210 billion in capital expenditure projects that significantly improved water and wastewater services in the West Zone. We witnessed remarkable growth in water coverage and availability, with water service coverage increasing from 80.5% in 2007 to 94.6% in 2022, and the number of billed water service connections likewise going up by 116% between 2007 and 2022. Meanwhile, our efforts to manage water losses have borne fruit, as non-revenue water (NRW) went down from a high of 66% in 2007 to as low as 30.3% in 2022 at the District Meter Area. We have also been working towards sustained expansion of sewerage coverage, effectively increasing it from 6.8% of the water-served population in 2007 to 22.6% in 2022.
These achievements had a significant positive impact on the communities we serve. Not only did our infrastructure project sustain the water services needed to stimulate the economy, it also created over 397,000 jobs (direct and indirect) during this period. Our employees’ hard work and dedication are key driving factors behind such significant growth despite the financial, regulatory, operational, and environmental challenges that we have faced through the years.
2022 Key Developments
The 25-year legislative franchise grants Maynilad the authority to establish, operate, and maintain a waterworks system, as well as sewerage and sanitation services in the West Zone service area. This franchise introduced provisions that reshaped the business paradigm, including the removal ofCorporate Income Tax from recoverable operating expenses, and the replacement of the 12% VAT on customer bills with the smaller local and national franchise tax.
Following a successful rate rebasing exercise, we have obtained approval for our 2023 to 2027 Business Plan and a tariff increase. This enables us to secure funding for critical projects needed for us to meet our service obligations. With a substantial capital expenditure allocation of approximately Php 163 billion over the next five years, we will focus on expanding water sources, improving infrastructure, and enhancing wastewater facilities to provide reliable services, meet growing demand, and achieve sustainability goals.
Financial Performance
We made significant strides in our financial performance and overall operations. We achieved a 4% increase in revenues from PhP 22.0 billion in 2021to PhP 22.9 billion in 2022, with both our water service revenues and sewer service revenues growing by the same rate.
We also managed to perform with a higher operating income from PhP10.5billion in 2021 to PhP11.0 billion in 2022 by incurring lower amortization costs. We continue to support the Capex programs through sufficient funding and maintaining a healthy debt-equity ratio level of 1.3.
Water Services Improvement and Recognitions
In 2022, we delivered 928 million cubic meters (MCM) of potable water to 1.5 million billed service connections, or around 10 million people within our coverage area.
We have expended considerable investments in the water treatment space to improve our facilities and services. Our efforts were recognized at the 2022Europa Awards—organized by the European Chamber of Commerce Philippines to recognize companies with exceptional performance and contributions in promoting sustainability—when Maynilad landed as a finalist under the Water ResourceManagement category. We are also very proud and pleased that our project on design and construction improvements for our La Mesa Treatment Plant 1 was declared as “Project of the Year” at the 2022 International Federation ofConsulting Engineers (FIDIC) Contract Users Award, which is granted to organizations that strictly comply with the FIDIC golden principles on project execution.
Enhanced Customer Experience
We treat customers as our growth partners and prioritize good customer experience. In line with this, we launched in 2022 a new QR code facility for easy bill payments via contactless transactions, and also established a partnership with SMART Communications to allow customers free access to Maynilad’s “My Water Bill” online customer service portal.
The year 2022 has been a time of learning, progress and growth. In this year’s sustainability report, we sought to provide insights into our approach to materiality, sustainability performance and goals. We conscientiously track and monitor data across all our operations, and are committed to disclose more meaningful insights in our future reports.
We aim to continue developing innovative solutions for existing and new challenges in the water industry. We will persist in investing in service enhancement projects, research and development, in pursuit of our mission to provide safe, affordable and sustainable water solutions that enable those we serve to lead healthier, more comfortable lives.
We look forward to this sustainability journey together.
SGD.
Manuel V. Pangilinan
Chairman
