Watercare shames most listed companies

By David McEwen

Friday 8th November 2002

Watercare is a water supply utility that's not listed on the NZSE and so is not subject to the high levels of disclosure required by publicly listed companies. However, its level of disclosure would shame most listed companies.

Everything is detailed, from the impact on the environment and the analysis of Auckland's water to the age profile of its employees.

The substantial human resources report contains the "dirty laundry" seldom aired by other large corporations. Charts drawn from internal interviews show there is virtually no bullying and harassment within Watercare but plenty of problems related to inflexible work policies and company culture.

Part of the annual report reads like a scientist's log book, charting and analysing the water we drink and waste. And while all this flows over your average reader's head, it will mean a lot to the people who understand what it means.

Watercare earns its revenue for supplying drinking water to the Auckland area and collecting, treating and disposing of wastewater.

As price rises are restricted to below the inflation rate, growth has to come from growing consumption and cost cutting within Watercare. Next year and in the following two years, Watercare has set itself the formidable task of restricting its water and wastewater price increases to 2% below the inflation rate.

Despite these constraints, revenues rose $3.4 million to $160.4 million last year to end June, and the after-tax profit was $26.4 million compared with $24.2 million previously.

The past four years have been very profitable for Watercare, compared with the previous four. Watercare racked up losses every year from 1995 to 1998 totalling $95 million largely because its operating costs were out of line with sales.

Those costs have fallen sharply over the past four years as Watercare became fixated on efficiency.

All in all, this annual report combines the big picture and important smaller details in a very impressive way. It talks about the future of bringing water to Auckland but also about the fate of an unfortunate boy who fell through a pump station skylight and tragically was killed.

Listed companies can learn a lot from the Watercare report.

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