2019 Analysis

In March 2019, the large decline in La Mesa dam water levels caused service availability in the East Zone
to drop significantly. The company announced a one-time voluntary Bill Waiver Program on March 26,
2019 in order to ease the inconvenience of the customers affected by the decline in La Mesa dam water
levels. In April 2019, MWSS BOT (MWSS Resolution No. 2019-055-CO and MWSS Resolution No. 2019-
056-CO) imposed a financial penalty of ₱534.05 million on the Parent Company for its failure to meet its
service obligation to provide 24/7 water supply.

Consolidated operating revenues grew 11% to P21,950 million in 2019 from ₱19,821 million the
previous year, on account of the higher revenue contribution of the domestic businesses, 75% of its
operating revenues from the sale of water (net of Bill Waiver), while 16% came from environmental and
sewer charges. Other revenues, which accounted for the balance, are comprised of supervision fees,
after-the-meter services, connection fees and septic sludge disposal, among others.

Consolidated costs and expenses (excluding depreciation and amortization) increased by 22% to ₱9,830
million in 2019. This increase was primarily due to the penalty imposed by MWSS in relation to the
recent water shortage in the Manila Concession in the first half of 2019, coupled with additional costs
for service recovery and operations augmentation and estimates for potential losses which arose in the
ordinary course of business. Total assets as of end of 2019 stood ₱134.6 billion, an increase of 10%
against last year driven by the 13% increase in service concession assets to ₱93.5 billion from ₱82.5
billion. Total liabilities as of December 31, 2019 is ₱78.6 billion. The Group ended 2019 with total capital
expenditures of ₱12,636 million, with 78% of said amount accounted for by the Manila Concession.
EBITDA margin declined to 58% from 64% in 2018.

In the midst of the challenges faced during the year, the Manila Water Company continued to
work towards operating efficiency. Overall, the company's financial ratios are not favorable in
2019, primarily because of the challenges they faced this year.

quick ratio = asset/liability = 0.64

current ratio =