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Central Luzon State University

Science City of Muñoz, Nueva Ecija


College of Business Administration and Accountancy

POSITION PAPER ON THE ETHICAL


PERFORMANCE AND GOOD
GOVERNANCE PRACTICES OF DMCI
HOLDINGS INC.
(8096 MNGT 340)

Moneda, John Carlo C.


Osorio, Ericka Hazel L.
Pacis, Janna J.
Paraso, Ronalyn T.
Pascual, Mia S.
BSAT 4-1

Eva DF. Avellanoza


Lecturer

November 2018
INTRODUCTION

Background of the Company

DMCI Holdings, Inc., the company, was incorporated on March 8. 1995 as a holding
company to consolidate all construction business, construction component companies and
related of the Consunji Family. It was listed on the Philippine Stock Exchange on December
18, 1995.

David M. Consunji acquired the knowledge of construction when he was a young,


concrete inspector. He was armed with in-depth facts and the precise system about
construction through his Civil Engineering degree that he earned from the University of the
Philippines. After some time, he decided to eventually start his own contracting company. He
incorporated David M. Consunji Incorporated (DMCI) which was founded on December 24,
1954 in a quaint room in Pandacan, Manila. He had a vision of “Building a generation of
Filipinos.” DMCI started building chicken houses for the Bureau of Animal Industry. This
earned him a reputation for timeliness of service delivery and punctuality, and quality output.
After that, the Tacloban Coca-Cola Plant and Bacnotan Cement Plant projects were awarded
to the company.

Through DMCI’s unwavering quest for progression, its development and research
aspect paved the way for the pioneering of several advanced construction application
technologies in the Philippines. Now, DMCI enjoys the patronage of both its new and repeat
institutional clients.

In the year 1999, DMCI expanded with its housing division, which was called DMCI
Homes. Its aim was to build progressive condominiums and house and lots. It all began with
Lake View Manors (1999) followed by more innovations like Hampstead Gardens (2001). By
the beginning of the year 2003, DMCI Homes became stronger, more aggressive and even
more competitive. They constructed the East Ortigas Mansions and added more amenities
and facilities for its residents. Villa Alegre Homes and Mayfield Park were then erected in
2004 with more improvements and amenities such as the installation of elevators.

As the company kept expanding its business operations, DMCI Homes grew as a
household name in the real estate industry. It began to carve itself a niche in the real estate
business. All in a span of seven years, DMCI Homes has built the most comfortable, resort-
like residential spaces for urban dwellers. The rapid growth rate of DMCI Homes can be

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attributed to its thrust to continuously delight its customers. DMCI Homes will perpetually
continue to create modern residential spaces in the heart of the city on a budget.

The company’s head office is located in Bangkal, Makati, though it has several sales
and property management offices across Metro Manila. Isidro Consunji presides as the
president of DMCI Homes. He is also the president and Chief Executive Officer (CEO) of
DMCI Holdings.

In only a few year after incorporation, the company has expanded its business
organization to include four major subsidiaries, namely D.M Consunji, Inc., DMCI Project
Developer Inc., Semirara Mining and Power Corporation and DMCI Mining Corporation.

Their businesses are key players in industries that promote economic growth and
social development: construction, real estate, energy, mining and water distribution. Their
ability to generate construction-related projects allows us to deliver superior gross profit
margins and more predictable revenue streams. Their expertise, scale and allied investments
enable us to deliver products, services and returns that meet — and even exceed, market
standards.

DMCI, a wholly owned subsidiary, is engaged in general construction services- the


Group’s core business. It is also engaged in various construction component businesses such
as the production and trading of concrete products and electrical and foundation works.
Incorporated and founded in 1954, DMCI is currently one of the leaders in Philippine
construction industry, noted for quality projects delivered on time and its pioneering
application of advanced engineering methodology. In addition, DMCI, together with its
affiliate PDI, is actively engaged in real estate sales and development, launching its
component- DMCI Homes, in early 2002.

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Organizational Chart

DMCI Holdings

Isidro A. Consunji
CHAIRMAN/ PRESIDENT

Victor Limlingan
MANAGING DIRECTOR

Cherubim Mojica Herbert M. Consunji


VP & CORPORATE
EXECUTIVE VP & CHIEF
COMMNUCATION
FINANCING OFFICER
OFFICER

Tara Ann Reyes Brian Lim


INVESTOR RELATION
Senior Finance Officer
OFFICER

Ma. Edwina
Laperal
TREASURER

Ma. Cristina
Gotianum
ASSISTANT TREASURER

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DMCI Holdings Business Structure

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NATURE OF BUSINESS

Business Logo

The key elements of our logo embody the fundamental principles we live by:
speed, symbolized by the rocket-like silhouette – an emblem of the timely
delivery of their work; skills, signified by the perfectly crafted ellipse – the
mark of ingenuity and expertise characterizing all their endeavours; and
responsibility, symbolized by the rectangular frame – a seal of their steadfast
commitment to provide basic services vital to national development. The
corporate color, royal blue, reflects our long-standing tradition to serve.

Residential Development

Providing quality homes at best value with first-rate amenities and lush greeneries
make DMCI Homes as one of the most sought-after resort-inspired residential developers in
the country today.

Launched in 1999, DMCI Homes is the brand name of the company DMCI Project
Developers, Inc., the real estate subsidiary of the conglomerate and publicly-listed DMCI
Holdings, Inc. which was borne from the expertise and success of the late Engineer David M.
Consunji, known today as the Philippines’ Builder of Landmarks and founder of the
country’s pioneering construction company DM Consunji, Inc. Established to address the
rapid growth of urban dwellers and underserved middle income earners, DMCI Homes is a
multi-awarded and innovative real estate firm that has been committed to provide high-
quality and best value homes in fully-serviced, resort-inspired communities in thriving urban
areas in the country.

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Guided by its mission and vision, DMCI Homes has been committed to be the best
provider of residential communities designed to create quality lifestyle that is responsive to
the changing needs and preferences of the market.

Thus, the real-estate company has been dedicated to ensure customer satisfaction,
achieve a sustainable growth on shareholders’ investment and maintain a mutually beneficial
relationship with partners in business. DMCI Homes has also vowed to care for the
environment, promote the growth of the people while building an organization that espouses
Integrity, Excellence, Interdependence and Customer Orientation.

To uphold its promise of delivering quality homes and superior living to its residents
in an environment-friendly community, DMCI Homes has created proprietary innovations
such as Lumiventt® Design Technology and a 102-point inspection quality management
system.

Often present in high-rise condominiums of DMCI Homes, the Lumiventt® Design


Technology enhances natural light and airflow accentuated by three storey-high sky patios,
breezeways and atriums. The DMCI Homes Quality Seal, meanwhile, guarantees that quality
and excellence have been achieved even in the smallest detail through the stringent
proprietary 102-point inspection quality management system for every DMCI Homes project.
Recognized as the country’s first Quadruple A developer, the highest license given to a
contractor that meets the stringent requirements of the Philippine government, DMCI Homes
has completed since its launch more than 50 resort-inspired projects in Baguio City, Boracay,
Davao City and Mega Manila which has become a sanctuary of more than 50,000 residents.

Over the years, DMCI Homes has also received recognitions from various reputable
institutions that share the company’s common goal of ensuring customer satisfaction through
high-quality and sustainable communities. Among these are the Reader’s Digest Most
Trusted Brand, BCI Asia Top 10 Best Developer, and Urban Land Institute Philippines’
Healthy Places Awards.

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Some of the condominiums that DMCI made:

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Construction

D.M. Consunji, Inc. (DMCI) is known today as one of the Philippines’ leading
construction companies. Throughout its
corporate life, DMCI has demonstrated
its capability to construct a wide variety
of projects ranging from simple chapels
and residences to multi-storey hotels and
condominiums, irrigation dams to
kilometer-long concrete bridges, power
transmission lines to industrial plants,
theaters to large commercial complexes. Through continuing research, DMCI is a pioneer in
the application of advanced construction technologies in the Philippines. It is renowned for
completing technologically complex projects on or ahead of schedule. It enjoys the patronage
of both new and repeat institutional clients.

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With more than five decades of solid track record in the construction business, DMCI
enjoyed the continued patronage of institutional clients such as the Ayala Group, SM Group,
Kuok Group, Robinson’s Group, San Miguel Corporation; banking institutions such as the
Citibank, N.A., BPI, Equitable and Urban Bank; educational institutions such as the
University of the Philippines, and De La Salle University; multinationals such as the John
Laing, Obayashi, Mitsubishi Heavy, Oriken, Nippon Steel. Also, industrial companies and
some government agencies had sought the services of DMCI and still are using the
company’s services.

Some infrastructures DMCI has made:

A seminar conducted for the workers that is intended to train them harder

A photo of DMCI workers as they build the condominium.

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A seminar conducted for the workers that is intended to train them harder

One of the infrastructures that they are currently building is one of the skyways on Metro Manila

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Mining (Coal and Nickel)

DMCI Mining is another wholly owned subsidiary engaged in ore and mineral mining
and exploration. It was incorporated on May 29, 2007. It has entered into joint venture with
Rusina Mining Ltd., a listed company in Australia, in which the corporation agreed to be the
independent contractor to directly undertake the mining operations in the municipalities of
Sta. Cruz and Candelaria Zambales. The mining operation is an open pit extraction of nickel,
chromite, and iron laterite of direct shipping.

COAL

Semirara Mining and Power Corporation (SMPC) is an emerging key player in the
Philippine power industry, with its significant
coal reserves and increasing power generation
capacity.

Incorporated in the Philippines on 26


February 1980, SMPC has exclusive rights to
explore, extract and develop the largest coal mine
in the country. The mine site is located in
Semirara Island in Antique province. After
commencing commercial operations in 1983, the
Company struggled through operational
inefficiencies, debt restructuring, loan
foreclosures, falling coal prices and the
devaluation of the Philippine Peso.

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In April 1997, Philippine Stock Exchange-listed DMCI Holdings, Inc. (DMC)
acquired a 40% interest in SMPC’s Common Shares, including PHP2.5 billion of its
outstanding loans. Following SMPC’s sustained financial difficulties, DMC agreed to a debt-
to-equity conversion in 1998, raising its total interest in SMPC to 74%. After gaining a
controlling interest in SMPC, DMC appointed a new management team in August 1999. The
team was composed of local and expatriate staff.

Since then, SMPC has adopted flexible, cost-efficient and more advanced mining
techniques to increase the quantity and improve the quality of its coal production. From an
initial annual product coal production of 806,451 tons run-of-mine (ROM) coal in 1997, the
Company was able to produce 7.12 million MT ROM coal in 2013. DMC currently holds 56%
ownership of SMPC.

NICKEL

DMCI Mining Corp. was


incorporated on May 29, 2007
primarily to carry on the business of
mining, developing, exploiting,
extracting, milling, concentrating,
preparing for market, manufacturing,
buying, shipping and transporting, all
kinds of ores, metals and minerals. It
involves surface mining and direct
shipping of nickel laterite ore and is
conducted through simple benching operation using excavators and trucks in Sta. Cruz and
Candelaria, Zambales.

With significant operations in the Zambales and Palawan provinces, DMCI Mining
has been a continuing contributor to local government and community projects providing
significant assistance not just in infrastructure but also in job generation among others. It is
also compliant to national and local environmental regulations.

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DMCI Mining to increase nickel ore exports

DMCI Holdings maintains positive outlook for 2017 mining operations

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Power

DMCI Power, a wholly-owned subsidiary of the company, is engaged in the business


of power generation which designs, construct, invest in, and operate power plants. On
January 15, 2007, the National Power Corporation (NPC) awarded to DMCI Power the
Masbate Power Generation, one of the small utilities group (SPUG) of NPC. DPC shall take
over of the power supply obligation in Masbate with a 15- year Power Supply Agreement
with Masbate Electric Cooperative (MASELCO). Masbate Power Generation has a total
contract of 13000 Kilowatt of Guaranteed Dependable Company (GDC).

DMCI sets bigger capex, largely for plant expansion in Palawan

Completed DMCI power plant at Mindoro

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Water Services
Maynilad Water Holding Company Inc. (Maynilad),formerly DMCI- MPIC Water
Company, is a consortium with Metro Pacific Investment Corporation and Marubeni
Philippines Corporation which owns 93% equity at Maynilad Water Services, Inc.
(Maynilad). The company’s economic interest I MWSI decreased to 25% from 41%, after
Marubeni acquired 20% of economic interest in Maynilad last February 2013.

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OBJECTIVES

1. To assess the possible flaws, in terms of governance and social responsibility, of the
chosen company and provide opinions on how we think might help the company.

2. To enhance our critical thinking by assessing and evaluating the company’s ethical
performance and its governance.

3. To measure the validity and reliability of the chosen company’s objectives by evaluating
its corporate social responsibility.

4. To learn new techniques on how the business works properly with balanced of earning
profit and providing good governance and social responsibility that we can use in the near
future.

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IV. PRESENTATION OF DATA

DMCI Holdings, Inc. is committed to doing business in accordance with the highest
professional standards, business conduct and ethics and all applicable laws, rules, and
regulations in the Philippines. The Company, its directors, officers, and employees are
dedicated to promote and adhere to the principles of good corporate governance by observing
and maintaining its core business principles of accountability, integrity, fairness, and
transparency

Corporate Governance

The company has made a new manual on corporate governance. This Manual was approved
by the Board on August 13, 2O18 and shall take effect on August 13, 2018. This manual is
use as the governing rules of the company on their operations.

New Manual on Corporate Governance

The Board of Directors and Management of DMCI Holdings, Inc. hereby commit themselves
to the principles and best practices contained in this Manual, and acknowledge that the same
shall serve as a guide in the attainment of the company’s corporate goals.

This Code of Business Conduct and Ethics sets forth the Company’s business principles
and values which shall guide and govern all business relationships of the Company, its
directors, officers and employees in carrying out their duties and responsibilities effectively.

Principle and Values

Accountability

The Company shall take full responsibility for all its business decisions,
actions/inactions, and conduct, and shall perform its duties and functions with utmost
responsibility, integrity, honesty, loyalty and efficiency. The Company’s principal objective
is to enhance economic value to all its stakeholders - employees, customers, shareholders and
business partners – by making the most efficient use of resources and meeting its
environment, community, and social obligations.

Transparency and Disclosure

The Company’s annual reports should disclose true and fair accounting information
prepared in accordance with applicable standards; consider substance over form in the

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presentation of accounts; disclose and discuss all material risks; disclose and explain the
rationale for all material estimates; show manner of compliance, or explain deviations, if any,
with applicable corporate governance codes; discuss goals, plans, and progress; and provide
access to the register of shareholders showing beneficial ownership.

STANDARDS OF BUSINESS CONDUCT

Observance of Law

Directors, Executive Officers and Employees must carry out their duties with
professionalism and in accordance with ethical standards. They must conduct business in
accordance with the law, the charter of the Company, and a high standard of commercial
morality. They shall at all times act with loyalty to the Company, ensuring that its goals,
strategies, policies and practices are moral, proper, and legal.

Conflict of Interest

Directors, Executive Officers and Employees owe a fiduciary duty to the Company
that requires them to act in the best interest of the Company. Actual and potential conflicts of
interest should be avoided or otherwise identified, disclosed, and explained in sufficient detail
to enable valid judgments to be made on their adverse impact.

Compliance

All Directors, Executive Officers and Employees should strive to identify and raise
potential issues before they become problems and should ask about the application of this
Code whenever in doubt. Any Director, Executive Officer or Employee who becomes aware
of any existing or potential violation of this Code shall promptly notify the Company’s
Compliance Officer. The Company will not tolerate retaliation for reports of violations of this
Code made in good faith.

Fair Dealings

The Company does not seek competitive advantages through illegal or unethical
business practices. Each Director, Executive Officer and Employee should endeavor to deal
fairly with the Company’s customers, service providers, suppliers, and competitors. No
Director, Executive Officer or Employee should take unfair advantage of anyone through
manipulation, concealment, abuse of privilege information, misrepresentation of material
facts, or any unfair dealing practices.

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Intellectual Property Rights

The Company’s corporate identity and intellectual property are among its valuable
assets and are essential to maintaining its competitive advantage. Each Director, Executive
Officer and Employee must comply, to the extent permitted by law, with the exclusivity of
the methods, processes, systems, business strategies that they develop while performing their
responsibilities in the Company. Employees are responsible to protect the Company’s
intellectual property and must report to the Legal Counsel any unauthorized use of the
Company’s trademarks, copyrights, patents and trade secrets.

Confidentiality

Directors, Executive Officers, and Employees must observe the confidentiality of


non-public information and not disclose it to any other person without the authority of the
Board. A Director, Executive Officer or Employee who has a special allegiance to a
particular shareholder may not disclose confidential information to that particular shareholder
without the authority of the Board.

Corporate Opportunities

Each Director, Executive Officer and Employee owes a duty to advance the
Company’s legitimate interests when the opportunity to do so arises. He may not: (a) receive
or seek to receive a benefit from opportunities that are discovered through his involvement
with the Company (including, without limitation, his use of the Company’s property,
information, or his position); or (b) compete with the Company, directly or indirectly, for
business opportunities in the areas (or lines) of business in which the Company is engaged or
in new areas (or lines) of business in which the Company has disclosed its intent or plans to
engage.

Code of Business Conduct and Ethics


1. Company Policies The Company is committed to respect the rights of its
stakeholders. It develops policies and practices in order to protect their rights and interests.

Rights of Stakeholders
Customer The Company is committed to meeting client requirements in a
Welfare- mutually fair and satisfactory manner. Through our subsidiaries, we aim
to provide construction, real estate, power, mining and water

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clients/consumers with superior quality products and service at a
reasonable price.

Supplier and The Company values its relationship with its suppliers and contractors.
Contactor Towards this end, we shall uphold accountability, integrity, fairness and
Relations Policy- transparency in our business dealings with our suppliers and contractors
in the procurement of goods and services. This Supplier/Contractor
Relations Policy outlines the practices that shall guide and govern all
business relationships of the Company, its directors, officers and
employees, including their decisions and actions when dealing with the
suppliers and contractors of the Company.

Sustainability is embedded in the way we conduct our business. In


Environmentally generating positive social and economic value for our stakeholders, we
Friendly Value make sure that our procedures and practices are environmental-friendly.
Chain- We also reduce our environmental footprint through energy
conservation, responsible water use, recycling, among others.

We consider our host community as our growth partner, and contribute


Community to its social development agenda by paying appropriate taxes and
Interaction- complying with relevant laws, regulations, resolutions and ordinances.
Through our subsidiaries, we also empower the local communities
where they operate by providing employment, livelihood opportunities
and basic services that will help improve their quality of life.

The Company seeks to manage its liquidity profile to be able to service


Safeguarding its maturing debts and to finance capital requirements. The Company
Creditors’ maintains a level of cash and cash equivalents deemed sufficient to
Rights-. finance operations. A significant part of the Company’s financial assets
that are held to meet the cash outflows include cash equivalents and
accounts receivables.

The Company believes that bribery and corruption are unethical,


Anti- corruption unacceptable and inconsistent with our founding principles. We are
and bribery committed to maintaining the highest possible ethical standards and
complying with all applicable laws. In our operations, we seek to avoid

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even the appearance of impropriety with respect to the actions of our
directors, officers and employees. This policy prohibits corrupt
payments in all circumstances when dealing with government officials
or private sector individuals.

THE BOARD’S GOVERNANCE RESPONSIBILITIES

The Board of Directors (the “Board”) is primarily responsible for the


ESTABLISHING A governance of the Corporation. It is the Board’s responsibility to
COMPETENT foster the long-term success of the corporation, and to sustain its
BOARD competitiveness and profitability in a manner consistent with its
corporate objectives and the long-term best interests of its
shareholders and other stakeholders.
2.1 Roles and Responsibilities of the Board
It shall be the Board’s responsibility to foster the long-term success of
the Corporation and secure its sustained competitiveness in a manner
consistent with its fiduciary responsibility, which it shall exercise in
ESTABLISHING A the best interest of the Corporation, its stockholders and other
COMPETENT stakeholders.
BOARD 2.2 Specific Duties and Responsibilities of the Board
A Director’s office is one of trust and confidence. A director should
act in the best interest of the Corporation in a manner characterized by
transparency, accountability and fairness. He should also exercise
leadership, prudence and integrity in directing the corporation towards
sustained progress.
2.3 The Chairman of the Board
2.4 Nomination and Election of the Board of Directors
The Corporation shall provide clear protocols and procedures for the
nomination and election of Directors that are consistent with the
Company’s By-laws.
2.5 Board Meetings and Quorum Requirement
The members of the Board should attend its regular and special
meetings in person or through teleconferencing conducted in

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accordance with the rules and regulations of the Commission.
2.6 Compensation of Directors
Each director receives a reasonable per diem for his attendance at
every meeting of the Board and Committee meeting.
The Board shall establish board committees that focus on specific
board functions to aid in the optimal performance of its roles and
responsibilities. The Board shall adopt the following
ESTABLISHING committees:
BOARD  Audit and Related Party Transaction
COMMITTEES  Board Risk Oversight
 Corporate Governance (with functions of the nomination and
election and the compensation committees)
 Executive Committee

To show full commitment to the company, the directors should devote


FOSTERING the time and attention necessary to properly and effectively perform
COMMITMENT their duties and responsibilities, including sufficient time to be
familiar with the corporation’s business.

5.1 The Board should have at least two (2) independent directors, or
such number as maybe required by the SEC.
REINFORCING 5.2 The Board should ensure that its independent directors possess the
BOARD necessary qualifications and none of the disqualifications for an
INDEPENDENCE independent director to hold the position.
5.3 The Board’s independent directors should serve for a maximum
cumulative term of nine years. The cumulative period shall start from
the year 2012 in accordance with the rules and circulars of the SEC.
5.4 President

5.5 The Board shall designate a lead director among the independent
directors if the Chairman of the Board is not independent, including if
the positions of the Chairman of the Board and President are held by
one person.
5.6 A director with a material interest in any transaction affecting the
corporation should abstain from taking part in the deliberations for the

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same.
5.7 The non-executive directors (NEDs) should have separate periodic
meetings with the external auditor and heads of the internal audit,
compliance and risk functions, without any executive directors present
to ensure that proper checks and balances are in place within the
corporation..
The best measure of the Board’s effectiveness is through an
ASSESSING assessment process. The Board should regularly carry out evaluations
BOARD to appraise its performance as a body, and assess whether it possesses
PERFORMANCE the right mix of backgrounds and competencies.
STENGTHENING Members of the Board are duty-bound to apply high ethical standards,
BOARD ETHICS taking into account the interests of all stakeholders.

DISCLOSURE AND TRANSPARENCY

ENHANCING COMPANY DISCLOSURE POLICIES AND PROCEDURES

The Company should establish corporate disclosure policies and procedures that are
practical and in accordance with the best practices and regulatory expectations.

STRENGTHENING THE EXTERNAL AUDITOR’S INDEPENDENCE AND


IMPROVING AUDIT QUALITY

The Board is primarily accountable to the stockholders. It should provide a balanced


and comprehensible assessment of the Corporation’s performance, position and prospects on
a quarterly basis, including interim and other repost that could adversely affect its business,
as well as reports to regulators that are required by law.

INCREASING FOCUS ON NON-FINANCIAL AND SUSTAINABILITY


REPORTING

The Corporation shall have a policy on disclosure of non-financial information with


emphasis on the management of economic, environmental, social and governance (EESG)
issues of its business, which underpin sustainability.

PROMOTING A COMPREHENSIVE AND COST-EFFICIENT ACCESS TO


RELEVANT INFORMATION

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The Corporation shall have comprehensive and cost-efficient channels of
communication to ensure the timely and accurate dissemination of public material and
relevant Information to its shareholders and other investors such as but not limited to
company websites and media and analysts' briefings.

INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT FRAMEWORK

STRENGTHENING THE INTERNAL CONTROL SYSTEM AND ENTERPRISE


RISK MANAGEMENT FRAMEWORK

To ensure the integrity, transparency and proper governance in the conduct of its
affairs, the company shall have a strong and effective internal control system and enterprise
risk management framework.

DUTIES TO STAKEHOLDERS
RESPECTING The rights of stakeholders established by law, by contractual relations
RIGHTS OF THE and through voluntary commitments must be respected. Where
STAKEHOLDERS stakeholders’ rights and/or interests are at stake, stakeholders should
AND EFFECTIVE have the opportunity to obtain prompt effective redress for the
REDRESS FOR violation of their rights.
VIOLATION OF
STAKEHOLDERS’
RIGHTS

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The Corporation shall develop a mechanism for employee
participation to create a symbiotic environment, realize the company’s
goals and participate on its corporate governance processes.
15.1 The Board shall establish policies, programs and procedures that
encourage employees to actively participate in the realization of the
company's goals and in its governance. This will cover, among others:
ENCOURAGING a. Health, safety and welfare
EMPLOYEES’ b. Training and development
PARTICIPATION c. Reward/compensation for employees
15.2 The Board shall adopt an Anti-Corruption Policy to mitigate
corrupt practices such as, but not limited to bribery, fraud, extortion,
collusion, conflict of interest and money laundering.
15.3 The Board shall establish a suitable framework for
whistleblowing that allows employees to freely communicate their
concerns about illegal or unethical practices, without fear of retaliation
and to have direct access to an independent member of the Board or a
unit created to handle whistleblowing concerns

ENCOURAGING The Corporation shall be socially responsible in all its dealings with
SUSTAINABILITY the communities where it operates. It shall ensure that its interaction
AND SOCIAL serve its environment and stakeholders in a positive and progressive
RESPONSIBILITY manner that is fully supportive of Its comprehensive and balanced
development.
17.1 Each Committee shall report regularly to the Board.
MONITORING 17.2 The Compliance Officer shall establish an evaluation system to
AND determine and measure compliance with this Manual.
ASSESSMENT 17.3 The establishment of such evaluation system, including the
features thereof, shall be disclosed in the company's annual report
(SEC Form 17-A) or in such form of report that is applicable to the

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Corporation.
17.4 This Manual shall be subject to quarterly review unless the Board
amends the same frequency.

PROGRAMS

CORPORATE SUSTAINABILITY AND RESPONSIBILITY

1. No Poverty and Reduced Inequalities

- DMCI Homes donated construction materials to build the new shelter of Cribs Foundation,
a non-profit organization that takes care of abandoned, neglected, surrendered and female
minor survivors of sexual abuse.

- Over P1.5 million was contributed to the Orani Suhay Foundation, Inc., a non-profit
organization that promotes the welfare and development of marginalized communities in
Orani, Bataan and nearby areas.

2. Zero Hunger

- Maynilad and the Parañaque City Government inaugurated eight FAITH (Food Always In
The Home) Gardens in eight daycare centers in the area. To help families grow their own
food, they also conducted a series of workshops on practical urban gardening technique.
- Free seedlings and technical assistance were given to the host communities.

3. Good Health and Well- being

- DMCI Homes, under its Kaakbay sa Kalusugan: Medical Mission program, provided over
5,700 medicines, wheelchairs, nebulizers and other medical devices and supplies to indigent
residents in Guadalupe Viejo, Makati City.
-Semirara Mining and Power Corporation maintains and operates the only health facility in
Semirara Island.

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4. Quality Education

- DMCI Power provided 985 public elementary school students with backpacks containing
notebooks and pencils, to encourage enrolment and foster student retention in its host
communities.

- DMCI Homes established a fund that will augment the salary of top instructors at the
Institute of Civil Engineering of the University of the Philippines in Diliman. - Sem-Calaca
Power Corporation (SCPC) donated various equipment to foster learning in its host
community.

5. Clean Water and Sanitation

- Under its Lingkod Eskwela program, Maynilad provided 106,500 students in 71 public
schools with access to potable water by installing drink-wash facilities in the most populous
and resource-deficient public schools in its service area.
- In support to the Brigada Eskwela, Maynilad deployed employee-volunteers to refurbish
classrooms and upgrade water and sanitation facilities in public schools across its service area.

6. Affordable Clean Energy

- Semirara Mining and Power Corporation (SMPC) operates and maintains a 15MW
conventional power plant in Semirara Island. The facility uses circulating fluidized bed (CFB)
technology to generate safe, reliable electricity for the island residents.

7. Decent Work and Economic Growth

- DMCI Power maintains a swine dispersal program to Sipag Pa Aborlan Organization in


Brgy. Magbabadil in Aborlan, Palawan to help residents generate additional income for their
families.

8. Industry, Innovation and Infrastructure

- DM. Consunji, Inc. (DMCI) to build a disaster resistant hanging bridge in Brgy. Iraya, an
agricultural islet classified as one of the poorest communities in the country.
- DMCI provided the steel cables used to suspend the 30-meter steel and concrete bridge.

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- DMCI Homes spent over P20 million to complete the construction of the lecture room,
canteen and theater of the Institute of Civil Engineering at the University of the Philippines
College of Engineering in Diliman, Quezon City.

9. Sustainable Cities and Communities

- D.M. Consunji, Inc. builds infrastructures that support urban development. Some of its
high-impact projects include toll roads, railway systems,etc.
- DMCI Homes helps provide decent housing to less fortunate families by supporting
Habitat for Humanity Philippines, Gawad Kalinga and various local government units (LGU).
- Maynilad partners with civil society groups to provide urban poor communities with access
to affordable potable water.
- Sem-Calaca Power Corporation donated 300 assorted vegetable seedlings to Calantas
Elementary School to support their “Gulayan sa Paaralan Program”.

10. Climate Action and Life on Land

- DMCI Holdings adopted a climate change policy that will enable our subsidiary and
affiliate companies to make meaningful contributions towards addressing the reality of
climate change.
- Semirara Mining and Power Corporation protects over 300 hectares of naturally grown
mangroves in Semirara Island.
- Maynilad keeps a Greenhouse Gas (GHG) and Air Pollutants inventory that monitors and
reports its emissions.
- Semirara Mining and Power Corporation (SMPC) has a reforestation program that involves
the planting of endemic, ornamental and fruit bearing trees in areas directly or indirectly
affected by its operations.

11. Life Below Water

- Semirara Mining and Power Corporation (SMPC) propagates and reseeds endangered giant
clams in the waters of Semirara Island.

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12. Peace, Justice and Strong Institution

- The DMCI group of companies fully commits to good corporate governance by aligning our
governance framework with international standards and best practices. We also adhere to a
code of conduct that promotes ethical behaviour, justice and human rights.
- DMCI Project Developers, Inc. has a pending case with the regional trial court to compel
the Bases Conversion Development Authority to arbitrate its unresolved issue.
-DMCI Holdings, including its subsidiaries and affiliate companies, regularly partner with the
public, private and non-profit sectors to foster sustainable development in the areas where we
operate.

FINANCIAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS


Years Ended December 31 (Amounts in Millions Php except Earnings Per Share)

2013 2014 2015 2016 2017

TOTAL 123 750 759 137 157 148 557 158 034 171 815
ASSETS

TOTAL 63 547 682 70 564 73 782 74 685 78 208


LIABILITIES

TOTAL 60 203 077 66 592 74 775 83 349 93 607


EQUITY

REVENUE 55 970 630 56 561 57 204 64 899 80 703

COST OS 34 224 968 37 998 31 804 38 371 46 233


SALES AND
SERVICES

GROSS PROFIT 21 745 662 18 563 25 400 26 528 34 470

OPERATING 8 591 332 8 090 8 547 6 967 8 687


EXPENSES

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GOVERNMENT - - - 2 650 4 307
SHARE

INCOME 24 361 409 14 891 20 528 19 805 24 177


BEFORE
INCOME TAX

PROVISION 2 104 650 1 088 3 605 2 278 3 262


FOR INCOME
TAX

NET INCOME 22 256 759 13 803 16 923 17 527 20 915


BEFORE
MINORITY

NET INCOME 18 937 380 10 775 12 835 12 185 14 765


AFTER
MINORITY

EARNINGS 7.13 0.81 0.97 - -


PER SHARE

ONE-TIME - - - 111 -
INVESTMENT
GAINS

NET INCOME - - - 12 074 14 765


EXCLUDING
ONE-TIME
INVESTMENT
GAIN

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EVALUATION

DMCI Holdings is a diversified engineering conglomerate and among the publicly- listed
holding companies in the Philippines, it is the only one that has construction as its core
investment. As builders, they have a different approach to investing as their strategy. They
choose industries that allow them to leverage their engineering and management expertise
and cons resources, while promoting development. They engage and retain their employees
by investing in skills development and career opportunities. They pursue businesses with
unrealized value that could be unlocked through innovative engineering and management.
And lastly, they manage their businesses in accordance with relevant government standards
on environment, safety, quality, and corporate governance.

CORPORATE GOVERNANCE

Being one of the top performing company when it comes to its industry, DMCI Holding
Inc. clearly shows how it takes consideration to its every stakeholder from the company itself
up to the employees even the public. Evaluating the performance of the company, it is clearly
seen that they have built a good reputation by implementing strictly the rules, regulations, and
strategies that have been built not only to be useful to the company, but also to its
stakeholders. The good effect that is seen vividly by the results of the operations won't lie,
that the strategies and policies are strictly implemented.

CORPORATE SOCIAL RESPONSIBILITY

DMCI Holdings are committed to making a positive contribution to our country and the
environment. As their CSR Strategy, DMCI Holdings optimize the impact of their CSR
efforts across the group and they focus their social contribution on five key areas where their
expertise, resources and partnerships can contribute in a meaningful way because they
believe that it is the crucial to creating long-term value for their stakeholders. The five key
areas are infrastructure, emergency and disaster preparedness, environmental stewardship,
education and training and welfare and livelihood.

DMCI Holdings Inc. Corporate Sustainable Responsibility might be the same throughout
many years that have passed, but it is clearly seen that it has been evolving and transforming
in to more meaningful programs which result to their company to build a good image to the
society and also they helped a lot in different barangays and communities. They have projects
to fight poverty, protect the environment, to give quality education, clean water and sanitation,

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infrastructure, and to give work and help to the economic growth. All of these are achieved
through the subsidiaries of DMCI Holdings which are Semirara Mining and Power
Corporation, DMCI Homes, Maynilad, Zambales Diversified Metals Corporation, Sem-
Calaca Power Corporation and Berong Nickel Corporation and also to other affliates and
partnerships.

FINANCIAL STATEMENTS

DMCI Holdings financial highlights through the past five years, we can see that it is
increasing as to its best. Year 2017 for DMCI Holdings was a year of remarkable gains which
it is the second most profitable year ever after year 2013. But if they exclude the one-time
gain on partial sale of Maynilad shares on 2013, year 2017 net income will actually the
highest in their 22 years’ corporate history.

Most of the earnings of DMCI Holdings came from integrated energy business, followed
by real estate, water distribution, and construction. Inspite of many challenges in every
subsidiary, DMCI Holdings make their own way to achieved their goal income every year.
And it is because of their strategy and policies they made in their company. They value not
the quick profit but the satisfaction of doing their own work and doing it well, doing it
honestly and proudly.

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RECOMMENDATION

1. The company shall possess fiduciary roles, responsibilities and accountabilities of the
Board as provided under the law, the company’s articles and by-laws, and other legal
pronouncements and guidelines should be clearly made known to all directors as well
as to stockholders and other stakeholders.

Directors must act on a fully informed basis, in good faith, with due diligence and
care, and in the best interest of the company. Board shall have a clearly defined and
updated vision, mission and core values for them to know what their purpose is.

2. Board committees should be set up to the extent possible to support the effective
performance of the Board’s functions, particularly with respect to audit, risk
management, and related party transactions.

Board shall establish board committees that focus on specific board functions to aid in
the optimal performance of its roles and responsibilities. Board must establish an
Audit Committee to enhance its oversight capability over the company’s financial
reporting, internal control system, internal and external audit processes, and
compliance with applicable laws and regulations. Also they should provide a
Corporate Governance Committee tasked to assist the Board in the performance of its
corporate governance responsibilities, including the functions that were formerly
assigned to a Nomination and Remuneration Committee.

3. The board should endeavor to exercise an objective and independent judgment on all
corporate affairs.

The independent directors possess all the qualifications and none of the
disqualifications to hold the positions. They should not be biased and think only for
the benefit of the company and not for their own desires.

4. The best measure of the Board’s effectiveness is through an assessment process. The
Board should regularly carry out evaluations to appraise its performance as a body,
and assess whether it possesses the right mix of backgrounds and competencies.

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Board shall conduct an annual self-assessment of its performance as a whole. Also the
Chairman must conduct a self-assessment of his performance for him to be able to
analyze himself. The individual members shall conduct a self-assessment of their
performance if their goals are still the same as the company.

5. The company should decrease the cutting of trees for coal production and over
deforestation for building residential areas.

They should possess an ethical behavior for them to gain more customers. Also we
believe that being ethical is one of the most important investments that a company
should have and it is a kind of investment that has no loss.

CONCLUSION

Having a good corporate governance helps the company to gain better image in public
eyes as a self-policing company that is responsible and worthy. DMCI Holding Inc.
being one of the top performing company to its industry and possess a good image to
the public because of the promising result of their work, the customer entrusts their
lives to them. It is a company that take consideration to their stakeholders and
employees. Both stakeholders and employees’ follows a strict code of conduct that
promotes ethical behavior, justice and human rights.

DMCI Holdings Inc. engage themselves in helping the society by conducting some
activities and programs like “no poverty and reduced inequalities” where in DMCI
Homes donated construction materials to build the new shelter of Cribs Foundation, a
non-profit organization that takes care of abandoned, neglected, surrendered and
female minor survivors of sexual abuse. Zero Hunger, Good Hunger and Well-being,
Quality Education, Clean water and Sanitation are some of their programs that are
created to help the society. The end result of all this activity was to improved
standards of living as well as the alleviation of poverty.

All of these are indication that DMCI Holding Inc. is not just for profit organization
but a company that cares to people. As builders, they ensure that their work is safe
and their customer can live a comfortable life without worry. And lastly, they manage
their businesses in accordance with relevant government standards on environment,
safety, quality, and corporate governance.

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