CHALLENGE: "Maintaining an excellence in customer service in a business which is being constrained by price regulation," says Dr Bond "This means we have to look at new opportunities to grow using existing technical skills and financial resources." He says the water industry has looked hard at the need to focus on customer satisfaction first then shareholder value. "We operate in a highly politicised world," says Dr Bond. The water industry regulator Ofwat issued its price review last week covering 2000 to 2005. Yorkshire Water, which has 4.5 million customers, has to cut its prices by an average of 3 per cent over the period with the biggest cut, of 15.2 per cent, due in 2000.
Yorkshire Water will meet the director-general of Ofwat in September. This year the average water and sewerage bill in its region is pounds 234.50, which the company says is pounds 11.50 cheaper than the national average. In the year to March 31, 1999, Yorkshire Water made better than expected pre-tax profits of pounds 221.6m, an increase of 7.8 per cent. The dividend rose by 9.8 per cent with a 15.6p final payment, making 22.35p for the year. Yorkshire's dividend has been growing steadily by 6 to 8 per cent above inflation.
CORPORATE BACKGROUND: Dr Bond became chief executive of Yorkshire Water plc in January 1997. He joined Yorkshire Water Services on 1 April 1996, as chairman and managing director at a low point in its public profile, after the poor handling of drought water supplies in the region by the previous board.
He had been chief executive of the National Rivers Authority. Dr Bond started as a policeman in 1972 and left as a chief superintendent in 1990. He is also a director of Leeds TEC.
STRATEGY: Over the past few years Yorkshire Water has developed related but non-regulated businesses, including waste management, a European laboratory business and an embryonic renewable energy business. The company is also the UK market leader in clinical waste management.
Last year, non-regulated businesses produced a near 25 per cent improvement in profit before interest and tax to pounds 25m. Yorkshire Water also bought Aquarion, a small American water company that supplies the upmarket area of New England. This is to be the platform for developing a business in the US based on the UK model, says Dr Bond.
The companies had been working closely for three years, making performance comparisons and swapping executives. Other British water companies have looked closely at the fragmented American water market with less success.
Dr Bond said that in the past 18 months Yorkshire Water had moved from being a regional-based company to being an international company. The key was fixing service delivery at home first.
Dr Bond says the sector and particularly Yorkshire Water "is almost a business school case study". He added: "I hope we have moved from identification of the problems - how not to do things, but how to do things. The recovery is complete. The strategy roll-out is underway."
A combination of organic growth and acquisition is expected to be the norm. In acquisitions, Dr Bond said the focus was on "good companies with excellent management". He feels good management is the most valuable asset in business.
MANAGEMENT STYLE: Dr Bond says he is "hugely demanding of people in terms of energy and standards of service delivery". He does not want the company to be second to anybody. But he is conscious a reliable team has to be built. He sees his role as motivating and strategic leadership.
MOST ADMIRES IN BUSINESS: In historical terms, some of the great military leaders are the great managers, said Dr Bond. They were dealing with huge operational problems, focusing logistics and resources and working towards an end result. He says business today has to cope with many similar issues but with the added dimensions of time pressure, the speed of information and capital movement, and the fact that often business takes place across continents. "In essence you are playing a multi-dimensional game of chess."
CITY VERDICT: Now the uncertainty surrounding Ofwat's price review has been removed, City analysts think Yorkshire Water could face a takeover bid and American-owned Midlands Electricity is a potential suitor. European and other US groups are also thought to be interested in expanding into the British water industry. There are doubts over whether Yorkshire Water can diversify quickly enough to keep the interest of shareholders used to bumper dividend growth. The company is thought to face a tough challenge in building up operating profits from unregulated activities of pounds 35m to pounds 40m by 2005.Reuse content