NIWA successes: record return and reinvestment in science

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NIWA (the National Institute of Water and Atmospheric Research) today reported a record consolidated net profit of $7.037 million in the year to June 30, an increase of 33 percent over the previous year, while making significant investments in the atmospheric and aquatic sciences.

Re-investment in science included:

  • Purchase of the most powerful supercomputer in the southern hemisphere for sophisticated scientific research
  • Launch of a seasonal climate forecasting service
  • Establishment of a subsidiary company in the United States
  • Setting up of a joint postgraduate institute in partnership with the University of Auckland
  • Establishment of partnerships with four prestigious US science institutions.

Mr Hargreaves says net profit after tax was $4.693 million ($3.586 million the previous year). Gross revenue from research, consulting, and other business activities was $65.139 million ($58.458`million), an increase of 11.4 percent.

Shareholders’ funds at 30 June 1999 amounted to $46.349 million ($41.656 million) and total assets stood at $57.772 million ($52.214 million).

After-tax return on shareholders’ equity was 10.7 percent, including NIWA’s vessel operating subsidiary.

Mr Hargreaves says the improvement against the 1997-98 performance arose from increases in public good science fund and commercial revenues, offsetting a further decline in fisheries research revenue.

"Costs throughout NIWA have generally been well contained, and strong emphasis continues to be maintained on effective project control, which is fundamental to our ability to operate profitably."

He says the 41 percent growth in NIWA’s PGSF revenue (including Non-Specific Output Funding) from $24.9 million in 1992-93 to $35.1 million in 1998-99, has been essential to NIWA’s success as a Crown Research Institute.

"Maintenance and enhancement of our PGSF funding is of key importance to NIWA’s future. The opportunity for PGSF research attracts and keeps many of our best scientists. PGSF funding also leads to the creation of many of the products and skills we sell as scientific services to a wide variety of customers throughout New Zealand.

"NIWA achieved outstanding success in the 1998-2000 Foundation bidding round, gaining an increase of $3.8 million (exclusive of GST) in the 1998-99 year and a further increase of $1.35 million in the 1999-2000 year. The increase for the 1999-2000 budget has since been confirmed and our PGSF programmes, some of which stretch forward for up to six years, are proceeding."

Chairman Don Sollitt says NIWA’s success in winning contracts from the PGSF arises from well conceived science strategies supported by very committed people.

Mr Sollitt says some have questioned the need for CRIs to earn profits on their activities, on the grounds that this could affect their research prowess.

"We argue that the CRI reforms introduced in 1992 have allowed NIWA to conduct its affairs in a way that has enabled profits to be reinvested in the institute in greatly improved technology and equipment that has only served to advance science.

"Our strategic capital investment programme over the past five years is testimony to this, and the most recent acquisition, a Cray supercomputer, will be a most important strategic science asset for NIWA and New Zealand. All of these very significant investments have been funded from within the company, and at no point have we had to seek grants from central Government."

Mr Sollitt says none of NIWA’s "exciting, fresh initiatives" would have been possible if NIWA had not been operating as a strongly profitable company with a capacity to reinvest and leverage its intellectual knowledge.

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