Chairperson and CEO’s Report
Using our EPIC values as a guide, WATC consistently delivered on our vision this financial year.
During 2017/18, WATC sourced new funding of $4.9 billion (compared to the initially estimated $5.7 billion requirement), along with the refinancing of $5.3 billion in maturities, to total $10.2 billion in funding.
Investor marketing continued to be emphasised this year, with good results. WATC’s April 2018 issuance of a new $1.3 billion 2028 benchmark bond attracted $3.0 billion in bids. Offshore interest from eleven countries comprised 38% of the allocated volume. This compares with an estimated historic 20-25% offshore interest.
The spread in interest rate differentials between WATC and other Australian states continued to improve throughout the year, as the market’s assessment of WA’s economic and fiscal outlook became more positive.
Balance sheet metrics of debt maturing within 12 months of 15.4% and liquid asset portfolio cover of 123.3% (153.9% with additional State assets) were comfortably within WATC Board targets of less than 20% and above 100% respectively.
Net profit before tax was double the amount from last year, at $34.8 million. Reported balance sheet growth was less this year, as $1.0 billion in pre-funding occurred last year and a significant portion of the WATC component of the State’s liquid asset portfolio was used to fund the maturity of the July 2017 benchmark bond.
WATC will contribute $10.4 million in tax equivalent income to the State this year, and $18.3 million in dividends next year, as a result of this year’s performance – a total of $28.7 million. This equates to $410,000 for each of our 70 employees at year-end.
For the first time, all six of our current performance targets were achieved. The outlier had been the Staff Engagement Survey, which this year exceeded the 55% target by a small margin. The target for this element has now been increased to 65%, consistent with our desire for continuous improvement.
Headcount increased from 65 to 70 people during the year, including two people on extended leave, while two people (soon to be five) are on placements in other government agencies to work on key whole-of-government priority projects.
One key departure (retirement) was Deputy CEO Melvin Nunes, one of WATC’s original members, who had also worked for the State Tax and Treasury departments during a career spanning 41-years. Although his contributions will be greatly missed, the many benefactors of his mentorship leave WATC in good stead.
Ross Moulton was welcomed to the WATC team as the Chief Operating Officer in March 2018. One of his first tasks is to lead a project to select and install an improved Treasury Management System (TMS). Our current system has served us well for almost twenty years but it is now time to consider process efficiencies that a system change can offer. The TMS project will probably take 18 months to enter the operational phase.
From a client standpoint, the rollout of our Client Portal continued, with over 60 clients now able to request transactions and access confirmations and reporting via the internet.
The work of WATC’s specialist Advisory Services team continues to benefit clients across the WA public sector by allowing them to make more effective financial decisions in a range of interesting projects.
Thanks to all of our people, Board members, clients, auditors, investors, banks and other suppliers of goods and services to WATC who have contributed strongly to our successful year.
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| Michael Barnes Chairperson 17 August 2018 |
John Collins V Chief Executive Officer 17 August 2018 |