Agenda item

Annual Treasury Management Review 2017-18


The Committee was informed of the treasury management activity during 2017-18 in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA’s) revised code on Treasury Management 2009.


The Principal Accountant (HRA & Exchequer) outlined the following key points:


  • Despite the low Bank of England rate, the council was able to generate a good level of investment return;
  • As at 31 March 2018 the three Property Fund investments in Lothbury, CCLA and Hermes, achieved an average return of 4.13%.  In addition to the income received from each fund, there has also been capital growth of 6.47% across the funds since the initial deposits were placed. The capital growth on Lothbury was 6.08%, Hermes saw a growth of 9.84% and CCLA saw capital growth of 2.29%
  • Towards the end of the financial year £10 million was placed in Multi-Asset Funds which saw a rate of investment return at 5.78%, but also saw a dip in capital value of £254K.  It was emphasised that these types of investments are held for the long term, so a short term dip in capital value should not be of concern at this time.
  • The internally managed investments made a rate of return at 0.448%, outperforming the benchmark of 0.286%.
  • Total investment return were £154K above the budgeted value
  • The Council undertook no borrowing during 2017-18 and the level of debt held by the Council was reduced. On 26 March 2018, a further loan the Council had taken on as a result of HRA self financing matured??. Loan principal totalling £3,504,000 was repaid. The Council has made a voluntary contribution of Minimum Revenue Provision (MRP) equal to the loan principal in order to reduce the CFR accordingly
  • There were two amended figures on Appendix A for the 2017-18 Actual ‘Ratio of Financing costs to net revenue stream’


-       Non-HRA – 3.93%

-       HRA – 24.34%


The Principal Accountant advised she wished to add an additional item to the agenda in relation to the Annual Treasury Management Review 2017-18 item; it pertained to the investment balance for the Treasury Management Strategy that was previously agreed by the F&A Committee and recommended to Full Council.


The Principal Accountant advised that the council had recently reached agreement in relation to the redevelopment of the St George’s Shopping Centre which has resulted in an amount being deposited with the Council to forward fund the development and to support the rental income of the centre.  At the moment there are constraints with the Council’s ability to invest these sums due to the investment limits set in the Treasury Management Strategy. 


Following a discussion, it was agreed by the Committee that a report would be taken to Full Council on 26 June 2018 requesting an amendment to the Treasury Management Strategy Statement to increase in the investment limits of the Council.  It was agreed that finalisation of this report would be carried out in conjunction with the Chairman and Vice-Chairman of the Finance & Audit Committee as well Cllr John Burden.


The Assistant Director (Corporate Services) also advised that there two more property acquisitions being considered that would be prudent additions to the property portfolio of the Council. These have been discussed with the Property Acquisitions Cross Party Working Group and a report will be presented to the next Full Council to seek approval to extend the portfolio funding to enable these two acquisitions to take place.


After questioning by a Member, the Assistant Director stated that options are still being looked into for the commercialisation of activity down at the Brookvale Depot as part of the service review process. Their main focus has been the waste rollout scheme over the last year. In relation to EDC building offices near the Brookvale space, the deal has been taken off the table due to their internal review. However, if it is discovered there is a potential market for an office building on that site, all options will be investigated and sources of funding considered at that time, including borrowing. 


Resolved that Members noted the contents of the report.


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