Manukau Water Limited reports CCO ahead of budget

Manukau Water Limited, in its first half-yearly report, is $1.14 million ahead of budget for the financial year to December 2006.

The Council-controlled organisation (CCO) has recorded a loss of $3.29 million against a target loss of $4.44 million.

The company was established on the basis that it would record losses in the early years of its existence. This reflects the large depreciation expense associated with nearly $1 billion of assets. However, Manukau Water Limited’s cash-flows are sufficient to ensure the company can adequately provide the service levels required and keep its assets well maintained.

Director Strategy Grant Taylor says the CCO had made a smooth transition from a council business unit to a CCO, and had met 24 of its 26 Statement of Intent performance targets.

“The reason for establishing Manukau Water Limited was not so it might earn substantial profits, but so that it might operate more efficiently and provide better services to its customers and the people of Manukau,” Mr Taylor says.

“Its performance in its first six months of operation has demonstrated the company’s determination to meet these objectives.”

During its first six months Manukau Water Limited has kept its costs below budget by $1.1 million.

“This is a major achievement and one the council is very happy with,” Mr Taylor said.

In addition revenue from other sources such as new meter connections and gains on the sale of excess inventory was ahead of budget by $1 million.

During the period revenue from sales to domestic and commercial customers fell. Commercial customers who are now paying for waste water on a volume basis have reduced their demand.

“This is good for conservation,” Mr Taylor says “but has reduced revenue by $1.19 million.”

Residential water sales have also fallen by $297,000. This is probably the result of the charges for waste water now appearing on customers’ water bills rather than on the rates bill making them more aware of the benefits of conservation.

Manukau Water was unable to meet its target to complete 90% of capital expenditure on time due to the delays in securing the consent of the KawaKawa Bay waste water treatment plant. However, more than 90% of other capital expenditure was completed on time. Manukau Water has also had to extend its response time for customer enquiries to between15 to 20 days due to the volume of calls arising from the new water bills. It is expected that as customers become more familiar with the new bills that response times will return to the target of within 10 days.

“Manukau Water Limited is addressing these issues,” Mr Taylor says.

ENDS

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