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Western Australian Treasury Corporation 2012 Annual Report - Page 6Western Australian Treasury Corporation 2012 Annual Report - Page 7
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PERFORMANCE AGAINST TARGETS FOR 2011/12 THE BOARD SETS ANNUAL PERFORMANCE TARGETS FOR WATC. THESE TARGETS FORM PART OF THE STATEMENT OF CORPORATE INTENT WHICH IS PUBLISHED AT THE START OF EACH FINANCIAL YEAR IN ACCORDANCE WITH SECTION 16(1) OF THE WESTERN AUSTRALIAN TREASURY CORPORATION ACT 1986. ESTIMATED INTEREST RATE SAVINGS IN ORDER TO GAUGE ITS EFFECTIVENESS IN PROVIDING COMPETITIVELY PRICED LOAN FUNDS TO CLIENTS, WATC CALCULATES THE ESTIMATED INTEREST RATE SAVINGS TO CLIENTS BORROWING FROM WATC COMPARED TO THE ESTIMATED COST TO CLIENTS OF BORROWING IN THE CORPORATE BOND MARKET. THE FOLLOWING TABLE SHOWS THE AVERAGE OF THE ESTIMATED MONTH-END SAVINGS FOR THE YEAR. (SEE PAGE 71 FOR A MORE DETAILED EXPLANATION.) RETURN ON CAPITAL WATC OPERATES TO ACHIEVE A RETURN ON CAPITAL CONSISTENT WITH THE RISK CARRIED WITHIN ITS BUSINESS. THE CAPITAL ASSET PRICING MODEL IS USED AS THE BASIS FOR THE DETERMINATION OF THIS RETURN TARGET. RETURN (%) = PRE-TAX PROFIT X 100 ADJUSTED AVERAGE CAPITAL 1 FOR THE YEAR ADJUSTED AVERAGE CAPITAL FOR THE YEAR IS OPENING EQUITY ADJUSTED TO TAKE INTO ACCOUNT THE TIMING AND AMOUNT OF ANY DIVIDENDS PAID TO GOVERNMENT DURING THE YEAR. ADMINISTRATION COST RATIO WATC MONITORS ITS ADMINISTRATIVE EFFICIENCY BY MEASURING ITS ADMINISTRATION COST RATIO. THE ADMINISTRATION COST RATIO IS A MEASURE OF THE AVERAGE ADMINISTRATIVE ON-COST THAT MUST BE BORNE BY WATC'S CLIENTS. TARGET: OUTCOME: SAVINGS > 0.00% REFER TO TABLE 1 BELOW. ADMINISTRATION COST RATIO (%) = NET ADMINISTRATION EXPENSE AVERAGE LENDING ASSETS X 100 1 TARGET: OUTCOME: RETURN = 8.9% RETURN = 29.4% TABLE 1: 2011/12 ESTIMATED INTEREST RATE SAVINGS TO CLIENTS BY REFERENCE BOND CREDIT RATING AND TERM TO MATURITY* * A BLANK ENTRY IN THE TABLE MEANS THERE IS NO REFERENCE BOND AVAILABLE IN THE CORPORATE BOND MARKET FOR COMPARATIVE PURPOSES. NET ADMINISTRATION EXPENSE IS DEFINED AS TOTAL ADMINISTRATION EXPENSES LESS NON-INTEREST REVENUE. AVERAGE LENDING ASSETS IS DEFINED AS THE AVERAGE OF THE OPENING AND CLOSING BOOK VALUE OF LOANS TO CLIENTS FOR THE PERIOD. TARGET: ADMINISTRATION COST RATIO < 0.10% OUTCOME: ADMINISTRATION COST RATIO = 0.06% CLIENT SATISFACTION WATC UNDERTAKES REGULAR SURVEYS TO FORMALLY MEASURE CLIENT SATISFACTION. THE 2011/12 SURVEY RESULTS INDICATED THAT WATC IS WELL ABOVE RELATED INDUSTRY BENCHMARKS IN TERMS OF QUALITY OF SERVICE, UNDERSTANDING OF CLIENTS' FINANCIAL NEEDS AND RELATIONSHIP MANAGEMENT. MATURITY BUCKET (YEARS) AAA AA+ AA AA- 1 TO 2 0.66% 0.88% 1.83% 2 TO 3 0.68% 1.25% 1.40% 2.43% 3 TO 4 1.20% 1.34% 1.46% 2.29% 4 TO 5 1.18% 1.43% 1.43% 5 TO 6 0.84% 1.98% 1.61% 6 TO 7 1.13% 1.58% 7 TO 8 1.03% 1.15% 1.75% 1.76% 8 TO 9 0.51% TARGET: OUTCOME: 90% CLIENT SATISFACTION LEVEL 87% EXCELLENT OR ABOVE AVERAGE SATISFACTION WITH THE ALIGNMENT OF DEBT FINANCE PRODUCTS TO CLIENT NEEDS. 100% EXCELLENT OR ABOVE AVERAGE SATISFACTION WITH THE OVERALL QUALITY OF SERVICE PROVIDED. 4 WESTERN AUSTRALIAN TREASURY CORPORATION
WATC PROVIDED LOAN FUNDING TO FACILITATE THE CONSTRUCTION OF A NEW CIVIC AND ADMINISTRATION CENTRE TO IMPROVE THE FUNCTIONING OF SHIRE ADMINISTRATION, INCREASE STAFF ACCOMMODATION, IMPROVE CUSTOMER SERVICE AND PRESENT A MORE PROFESSIONAL SERVICE AND IMAGE TO THE COMMUNITY. THE ADMINISTRATION BUILDING AND CIVIC CENTRE RECENTLY WON THE 2012 AIA WA ARCHITECTURAL AWARD FOR THE BEST PUBLIC BUILDING IN WA AND THE 2012 MBA WA REGIONAL BUILDING EXCELLENCE AWARD FOR THE BEST COMMERCIAL PROJECT. WATC WAS INSTRUMENTAL IN ASSISTING THE ART GALLERY OF WESTERN AUSTRALIA TO MANAGE THE FOREIGN CURRENCY RISKS ASSOCIATED WITH SECURING TWO MAJOR WORLD-CLASS EXHIBITIONS IN 2011/12. 'PRINCELY TREASURES' WAS THE GALLERY'S SECOND INSTALMENT OF THE GREAT COLLECTIONS OF THE WORLD SERIES AND WAS PROVIDED BY THE VICTORIA AND ALBERT MUSEUM. 'PICASSO TO WARHOL' IS THE FIRST LARGE-SCALE EXHIBITION IN A SERIES OF SIX EXHIBITIONS TO BE HELD IN PARTNERSHIP WITH THE MUSEUM OF MODERN ART (MOMA). WATC CONTINUED ITS SUPPORT OF THE FORMER REDEVELOPMENT AUTHORITIES BY PROVIDING DEBT FUNDING AND FOREIGN EXCHANGE ADVICE TO THE RECENTLY FORMED MRA FOR MAJOR URBAN REVITALISATION PROJECTS, INCLUDING ELIZABETH QUAY, PERTH CITY LINK, SUBI CENTRO, MIDLAND WORKSHOPS AND RIVERSIDE, THAT AIM TO CREATE PLACES WHERE PEOPLE WANT TO LIVE, WORK AND RECREATE. ANNUAL REPORT 2012 5 PHOTO: SHIRE OF AUGUSTA–MARGARET RIVER PHOTO: METROPOLITAN REDEVELOPMENT AUTHORITY PHOTO: ART GALLERY OF WESTERN AUSTRALIA
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