Christchurch's City Care arm on the block

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Christchurch City Council will sell 100% of City Care through a competitive sale process starting in the New Year.

Councillors agreed a few weeks ago to take the infrastructure and roading subsidiary off its list of “strategic” assets.

Although asset sales are opposed by some groups, the sale of City Care is unlikely to stir widespread discontent.

A group called Keep Our Assets is opposed to sales of any city assets, and also opposed to any private sector involvement in such things as providing buildings for libraries and service centres.

KOA spokesman Murray Horton says although he doesn’t support City Care’s corporate empire building the city needs to retain a city works division.

Christchurch Mayor Lianne Dalziel says in a prepared statement the sale is a result of Christchurch’s post-earthquake financial position.

At the same time, she reiterates the city’s, sea port, airport and Orion, remain on the strategic list of assets.

An adviser will be appointed to lead the sale process, aiming for completion by the end of the financial year in June 2016.

No decision has been made to sell any other assets.

Red Bus and Enable Networks were two other subsidiaries released from the council’s strategic list.

KOA opposes the sale of these assets too.

A report by Cameron Partners also highlights other methods of capital raising.

Christchurch City Holdings chief executive Bob Lineham says City Care is expected to generate strong interest from potential buyers.

"City Care is an attractive asset, with a presence nationally and expertise across a range of portfolios including parks maintenance, facilities management, civil construction, building construction, landscape development, water and wastewater and roading. Any sale needs to meet price expectations but we are anticipating strong interest in City Care. "

City Care provides infrastructure services from 16 locations throughout the country.

Established in 1999, City Care is a Council Controlled Trading Organisation.

A few months ago it lost the parks maintenance contracts it had held with Christchurch City Council since 1999 to Recreational Services and Dunedin City Council-owned Delta Utility Services.

At the time, the company said it would result in the loss of 70 jobs.

Among its many contracts, City Care provides Aucklanders with their Watercare service maintenance workers.

It is one of many contracts the organisation holds outside Christchurch. 

City Care contractors wear Watercare-branded uniforms and drive Watercare-branded cars.

This year City Care paid a $54.7 million dividend to the council, the same level as last year.

This was in spite of failing to achieve its revenue target and posting $333.5 million compared with last year’s $366.4 million.

The profit after tax and expenses was $10.2 million - down on the 2014 result of $12.8 million.

This was achieved thanks to expenses reducing to $19.2 million from $30.8 million the previous year, the result of lower payments to suppliers and employees, and reduced financing costs.

The after tax return on average equity sits at 19.2%.

During the year City Care acquired Apex Environmental and Command Building Services.

Timaru-based Apex Environmental is a specialist industrial water and wastewater consultancy business operating across industrial markets including dairy, textiles, wineries, food and beverage and local authorities.

Another arm, Command Building Services, provides heating, ventilation and air conditioning (HVAC) services in Wellington and Christchurch.

City Care also has a facilities management contract with service station chain Z Energy. 

c.hutch@clear.net.nz

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