Lopez Holdings

investor relations banner 2016

FINANCIALS

2013 Corporate Governance

Since 2002, the board of directors of Lopez Holdings adopted the company’s Manual of Corporate Governance to
institutionalize corporate governance principles. It is used in practice as a reference and guide for the conduct of
all business. Amendments to the Manual were adopted in 2009, 2011, 2013 and January 2014.

The Board, management, employees, and shareholders believe that good corporate governance is a necessary
component of sound strategic business management and improves the economic and commercial prosperity of
the corporation and its stockholders.

Audit Committee
The Audit Committee checks all financial reports against its compliance with both the internal financial management handbook and pertinent accounting standards, including regulatory requirements. It performs oversight financial management functions specifically in the areas of managing credit, market, liquidity, operational, legal and other risks of the Corporation, and crisis management. It consists of three Board members, all of whom are independent directors. The internal audit group of affiliate First Philippine Holdings Corporation serves as internal auditor of Lopez Holdings Corporation.


Mr. Cesar E. A. Virata – Chairman
Mr. Washington Z. SyCip - Member
Mr. Monico V. Jacob - Member 

Nomination, Election and Governance Committee
The Nomination, Election and Governance Committee pre-screens and shortlists all candidates nominated to become a member of the board of directors. It consists of three Board members, two of whom are independent directors. The committee undertakes the process of identifying the qualification of directors which are aligned with the company’s strategic directions. The following guidelines are used in determining the eligibility of nominees: the nature of the business of the corporations in which he is a director; age of the director; number of directorships/ active memberships and officerships in other corporations or organizations; and possible conflict of interest.


Mr. Oscar M. Lopez – Chairman
Mr. Cesar E.A. Virata – Member
Mr. Washington Z. SyCip – Member

Compensation and Remuneration Committee
The Compensation Committee has established a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of corporate officers and directors. It has three members, two of whom are independent directors.


Mr. Manuel M. Lopez – Chairman
Mr. Cesar E.A. Virata – Member
Mr. Washington Z. SyCip – Member

 

Risk Management Committee
The Risk Management Committee performs oversight financial management functions specifically in the areas of managing credit, market, liquidity, operational, legal and other risks of the Corporation. It has three members, all of whom are independent directors.


Mr. Monico V. Jacob – Chairman
Mr. Cesar E.A. Virata – Member
Mr. Washington Z. SyCip – Member

Risk Management

The executive officers and staff members of Lopez Holdings Corporation have been implementing a corporate risk management program since 2002, in line with an enterprise-wide risk management system. Risks that may hinder the achievement of corporate goals and objectives are identified and reviewed regularly to ensure mitigation measures are in place to adequately respond to and manage such risks.

Top Risks
Through continuous monitoring and management, the top risks evaluated by the company to be the most significant and/or most likely remain at two. Appropriate mitigation strategies were prepared and/or implemented to address them.

Accounting Risk
The implementation of PFRS (Philippine Financial Reporting Standards) 10 in 2013 meant a change in parameters for the consolidation or non-consolidation of associated companies. The financial statements of the investees were prepared for the same reporting period as the Group. When necessary, adjustments were made to bring the accounting policies in line with those of the Group.

Customer (Stakeholder) Wants/Satisfaction Risk
Requirements of Lopez Holdings stakeholders vary and the company may be unable to meet all requirements in a timely manner. Regulators require compliance with rules and regulations; creditors require the settlement of all obligations; shareholders require a fair return on their investment; associated companies require financial and other forms of support; senior management requires current and accurate information on group-wide operations; employees require compensation and benefits. With total debt at a manageable level, this risk has been greatly reduced. Lopez Holdings adequately served the needs of shareholders, employees, associated companies, regulators and senior management in 2013.

Other Risks
In 2013, the following risks mandated for assessment by International Financial Reporting Standards (IFRS) were deemed to be less significant and/or less likely:

Capital Availability or Cash Flow (Liquidity) Risk
This refers to the company’s exposure to the risk of lower returns on its investments or the necessity to borrow due to shortfalls in cash or expected cash flows, or variances in their timing. There is risk that cash flows from dividends and asset sales may not come in as expected. The outstanding obligations of Lopez Holdings in the amount of 2 billion as of end-2013 is deemed manageable with respect to required interest payments.

Foreign Currency Exchange Risk and Foreign Currency Revaluation Risk
Volatility in foreign currency exchange rates mayexpose Lopez Holdings to economic and accounting losses related to direct and indirect obligations. Extraordinary fluctuations in foreign currency exchange rates may affect reported operational profits and deficit, potentially reducing the ability of associated companies to declare dividends. The company’s restructured foreign currencydenominated debt of US$23 million is deemed manageable. It is also monitoring the mitigation plans of associated companies in relation to foreign currency revaluation risk.

Interest Rate Risk
Fluctuations in interest rates may affect the company’s capital availability or cash flow risk as they expose the company to variable cash requirements in relation to debt with floating interest rates. This risk was considered less significant in 2013 given the manageable level of company debt, as well as the low interest rate environment. As of December 31, 2013 and 2012, approximately 57% and 48% of the Group’s borrowings are subject to fixed interest rate.

Credit Risk
Lopez Holdings has advances in associated companies but these comprise less than 5% of assets. Trade receivables refer to accounts under FPH, which are managed at the FPH level. Lopez Holdings does not offer credit terms for the provision of services as a holding company.

Capital Management Risk
The company has no material commitments for capital expenditures and has not made any major investments since 2002.

Audit Committee Statement on External Auditors
Lopez Holdings paid or accrued audit fees to its external auditors in the past three years for professional services rendered in the amount of 1.5 million in 2013, 1.1 million in 2012 and in 2011, respectively.

SyCip Gorres Velayo & Co. was engaged by Lopez Holdings solely to audit its annual financial statements. It was not engaged to provide any other (non-audit) services for Lopez Holdings in 2013, 2012, and 2011.

Quality Management
In 2003, Lopez Holdings was certified against the standards of the International Organization for Standardization or ISO 9001:2000 for the provision of management services in Finance and Accounting, Public Relations, and Human Resources as a holding company. In 2006, Lopez Holdings was re-certified for the provision of the same management services, and added Legal Services to the audited processes in its quality management system since. In 2009, Lopez Holdings was again certified compliant with the updated ISO 9001:2008 standard. It was re-certified to
the same standard in 2012, and successfully passed a surveillance audit in 2013.

As part of continuing compliance with its ISO-certified quality management system, the company adopted the following Quality Policy:

Lopez Holdings exists to lead in quality management practices and adheres to good corporate governance
in the conduct of all business.

We shall innovate and continually pursue improvements in all our services and processes to achieve business excellence.

Mailing List

Please enter your email address to join our mailing list and receive our corporate updates.

CONTACT US

Lopez Holdings Corporation (formerly Benpres Holdings Corporation)
4/F Benpres Building, Exchange Road, 1605 Pasig City, Philippines

  • Trunkline: (632) 449-2345
  • Fax: (632) 634-3009