A Five Year Financial Plan of Manila Water Inc. and Subsidiaries. 6

Financial Planning (BSBA major in Finance and Treasury Management). Pamantasan ng Lungsod ng Maynila, 2013. 56

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EXECUTIVE SUMMARY: Manila Water Inc. and Subsidiaries is a water, sewerage and sanitation provider company that services the commercial, industrial and residential areas in the East Zone, as well as the other specific locations in and out of the country. It entered into a 25 year concession agreement with the Metropolitan Waterworks and Sewerage System (MWSS) in 1997 and recently extended it for another 15 years. This company established a well-known status in the water industry by means of its performance in the stock market, corporate governance, credit rating and human resources. Despite of being a well-known and well-accomplished company, they are also experiencing some problems. The company is mismanaging its investments which further resulted to losses. Based on the computed ratio analysis, the use of the company's cash and marketable securities in relation to the company's operations are inefficient. This means that it takes too long before the company realizes the use of its cash and marketable securities. This directed the company to dispose their Available for Sale financial assets earlier that its maturity and yield lower return than expected. Another challenge faced by MWCU is its high exposure to foreign exchange risk which resulted to losses. In the company's financial statement, it has incurred loans in different countries payable in three different currencies in order to avail of property, equipment and facilities for the expansion of their operations. These loans are exposed to fluctuating interest rates and resulted to losses. Aside from this, the company is also experiencing losses on their joint venture in India. After identifying the problems, weighing each of the alternative courses of action and considering all the circumstances, the proponents strongly recommend the adoption of hedging strategies like foreign exchange swaps, towards and futures in order to minimize the company's foreign exchange risk and losses. As with the losses incurred on the joint venture in India, the company as of now, has no other resources but to wait until their contract ends. This can serve as a lesson for the company for their future investments. For the slow turnover of cash and markable securities and low return of the company's disposal on Available for Sale financial assets, the company can restructure and redirect their portfolio into a moderately conservative strategy. This portfolio mux could improve MWCI's liquidity and efficiency in the utilization of their marketable securities.

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