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Western Australian Treasury Corporation 2012 Annual Report - Page 10Western Australian Treasury Corporation 2012 Annual Report - Page 11
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CONTINUED CHAIRPERSON'S AND CHIEF EXECUTIVE OFFICER'S REVIEW FINANCIAL PERFORMANCE AND KEY PERFORMANCE INDICATORS PROFIT BEFORE TAX FOR THE YEAR WAS $25.0 MILLION, AN INCREASE OVER LAST YEAR'S $16.2 MILLION. THIS WILL PROVIDE FOR A RETURN TO THE STATE OF JUST BELOW $19 MILLION IN TAX EQUIVALENT PAYMENTS AND DIVIDENDS ON THE APPROXIMATE $95 MILLION OF AVERAGE CAPITAL DEPLOYED AT WATC FOR THE YEAR. IN SPITE OF BALANCE SHEET GROWTH IN EXCESS OF 30 PER CENT, WATC'S ADMINISTRATIVE COSTS WERE BROADLY SIMILAR IN ABSOLUTE TERMS (+1.1 PER CENT) TO LAST YEAR, IN PART SUPPORTING THE WESTERN AUSTRALIAN GOVERNMENT'S EFFICIENCY DIVIDEND INITIATIVE. THIS REPRESENTS INCREASED PRODUCTIVITY OF RESOURCES DEPLOYED AT WATC. WATC'S OTHER THREE FINANCIAL KPIS WERE ALL ACHIEVED THIS YEAR, INCLUDING A RETURN ON CAPITAL MEASURE OF 29.4 PER CENT AGAINST A TARGET MINIMUM OF 8.9 PER CENT. THE ADMINISTRATION COST RATIO WAS 0.056 PER CENT AS A PERCENTAGE OF FUNDS LENT TO CLIENTS, AN IMPROVEMENT FROM 0.063 PER CENT LAST YEAR AND WELL BELOW THE REDUCED 0.10 PER CENT TARGET. IN WATC'S ESTIMATION, THIS IS THE LOWEST COST RATIO FOR ANY AUSTRALIAN CENTRAL BORROWING AUTHORITY SINCE 1996. SIMILARLY, THE ESTIMATED INTEREST RATE SAVINGS AGAIN EXCEEDED BENCHMARKS ESTABLISHED IN PREVIOUS YEARS. WATC'S SECOND EMPLOYEE OPINION SURVEY CONDUCTED WITH AON HEWITT DEMONSTRATED SIGNIFICANT IMPROVEMENT. ALTHOUGH THE HEADLINE NUMBER SHOWED 55 PER CENT OF STAFF WERE 'ENGAGED', AGAINST A TARGET OF 65 PER CENT, THIS REPRESENTS A 45 PER CENT INCREASE ON THE 38 PER CENT DEFINED AS ENGAGED IN THE INITIAL SURVEY LAST FINANCIAL YEAR. IT SHOULD ALSO BE NOTED THAT 'ENGAGEMENT' IS NOT A MEASURE OF STAFF SATISFACTION, RATHER A MEASURE OF THE NUMBER OF STAFF WILLING TO APPLY DISCRETIONARY EFFORT TO MEET WATC'S GOALS. THE INCREASE REFLECTED CONSULTATION WITH AND WORK UNDERTAKEN BY STAFF THROUGHOUT THE YEAR TO ACTION ITEMS IDENTIFIED AS AREAS FOR IMPROVEMENT. THESE, AND OTHER TOPICS, INCLUDING REWARD AND RECOGNITION, ARE RECEIVING FOCUS TO FURTHER IMPROVE ENGAGEMENT IN THE FUTURE. WATC'S THIRD ANNUAL CLIENT SURVEY USING PETER LEE ASSOCIATES WAS CONDUCTED WITH MIDDLE-TIER LOCAL GOVERNMENT CLIENTS. THE RESULTS WERE AGAIN VERY POSITIVE AND ARE USED TO HELP WATC IDENTIFY WAYS TO IMPROVE ITS CLIENT SERVICE PROPOSITION. IT IS INTENDED TO REVISIT EACH CLIENT SEGMENT EVERY THREE YEARS TO MEASURE SPECIFIC IMPROVEMENTS AND IDENTIFY FUTURE OPPORTUNITIES. WE THANK WATC EMPLOYEES AND THE BOARD FOR THEIR HARD WORK AND DEDICATION AGAIN THIS YEAR TO ACHIEVE THESE POSITIVE OUTCOMES FOR THE STATE OF WESTERN AUSTRALIA, OF WHICH WE REMAIN VERY PROUD. JOHN COLLINS CHIEF EXECUTIVE OFFICER AND DIRECTOR T M MARNEY CHAIRPERSON WESTERN AUSTRALIAN TREASURY CORPORATION 22 AUGUST 2012 J M COLLINS CHIEF EXECUTIVE OFFICER WESTERN AUSTRALIAN TREASURY CORPORATION 22 AUGUST 2012 8 WESTERN AUSTRALIAN TREASURY CORPORATION PERTH CITY SKYLINE
OVERVIEW OF WESTERN AUSTRALIAN TREASURY CORPORATION WATC FULFILS THE ROLE OF THE STATE'S CORPORATE TREASURY SERVICES PROVIDER, WORKING WITH ITS PUBLIC SECTOR CLIENTS TO ASSIST THEM TO ACHIEVE SOUND FINANCIAL RISK MANAGEMENT. WITHIN THIS BROADER ROLE, WATC'S PRINCIPAL ACTIVITIES INVOLVE DEBT AND INTEREST RATE RISK MANAGEMENT, THE INVESTMENT OF THE STATE'S SURPLUS FUNDS, ASSISTING CLIENTS IN THE MANAGEMENT OF FOREIGN EXCHANGE RISK AND THE PROVISION OF FINANCIAL ADVISORY SERVICES. ENABLING LEGISLATION WATC WAS ESTABLISHED ON 1 JULY 1986 UNDER THE WESTERN AUSTRALIAN TREASURY CORPORATION ACT 1986 (THE ACT) AS THE STATE'S CENTRAL BORROWING AUTHORITY. AMENDMENTS TO THE ACT DURING 1998 EXPANDED WATC'S ROLE TO INCLUDE THE PROVISION OF FINANCIAL MANAGEMENT SERVICES TO THE WESTERN AUSTRALIAN PUBLIC SECTOR. RESPONSIBLE MINISTER THE HON TROY BUSWELL, BEC, MLA; TREASURER; MINISTER FOR TRANSPORT; EMERGENCY SERVICES. PURPOSE TO PROVIDE EFFICIENT DEBT FUNDING, EFFECTIVE FINANCIAL SOLUTIONS AND LEADERSHIP IN FINANCIAL RISK MANAGEMENT TO THE PUBLIC SECTOR FOR THE BENEFIT OF ALL WESTERN AUSTRALIANS. SERVICES PROVIDED TO THE PUBLIC SECTOR IN WESTERN AUSTRALIA WATC PROVIDES A RANGE OF FINANCIAL SERVICES TO THE PUBLIC SECTOR IN WESTERN AUSTRALIA, PRINCIPALLY: • LENDING TO CLIENTS THROUGH A RANGE OF DEBT FUNDING STRUCTURES; • PROVIDING FINANCIAL RISK MANAGEMENT SERVICES (PRIMARILY INTEREST RATE RISK MANAGEMENT AND THE MANAGEMENT OF FOREIGN EXCHANGE RISK); • INVESTING ITS CLIENTS' AND THE STATE'S SHORT TO MEDIUM-TERM CASH SURPLUSES WITH THE AIM OF MAXIMISING RETURNS WITHIN A CONSERVATIVE RISK MANAGEMENT FRAMEWORK; AND • PROVIDING ADVICE TO ITS CLIENTS AND THE STATE. BOARD OF DIRECTORS AT 30 JUNE 2012, WATC'S BOARD COMPRISED: THE SECRETARY TO THE BOARD WAS STEVEN L LUFF, CHIEF FINANCIAL OFFICER. STATE GUARANTEE UNDER SECTION 13(1) OF THE ACT, THE FINANCIAL LIABILITIES INCURRED OR ASSUMED BY WATC ARE GUARANTEED BY THE TREASURER ON BEHALF OF THE STATE. THIS GUARANTEE IS SECURED UPON THE CONSOLIDATED ACCOUNT OF THE STATE. CREDIT RATINGS THE DEBT OF WATC IS RATED AS FOLLOWS: THE ICONIC BEATTY PARK LEISURE CENTRE IS UNDERGOING A MAJOR REDEVELOPMENT INVOLVING A NUMBER OF UPGRADES AND ADDITIONS TO CREATE A STATE-OF-THE-ART, MODERN AND COMPETITIVE LEISURE CENTRE TO MEET THE CURRENT AND FUTURE NEEDS OF PATRONS. WATC IS SUPPORTING THE CITY OF VINCENT IN THIS MAJOR PROJECT WITH THE PROVISION OF LOAN FUNDS FOR STAGE 1 OF THE REDEVELOPMENT. TIMOTHY M MARNEY CHAIRPERSON ANTHONY M KANNIS DEPUTY CHAIRPERSON JOHN M COLLINS CHIEF EXECUTIVE OFFICER GAYE M MCMATH CATHERINE A NANCE GRAHAME J SEARLE RATING AGENCY LONG-TERM SHORT-TERM STANDARD & POOR'S AAA A-1+ MOODY'S INVESTORS SERVICE AAA PRIME-1 ALL LONG-TERM CREDIT RATINGS CURRENTLY HAVE A 'STABLE' RATING OUTLOOK. ANNUAL REPORT 2012 9 PHOTO: CITY OF VINCENT
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