Meeting documents

To consider the attached report.

Contact Officer:  Nuala Donnelly (01296) 585164

The Committee received a report, in line with the Treasury Management Strategy that required an annual report to Council after year end, on the performance of the Treasury Management section for the 2018/19 financial year.

The objectives for the Treasury Management team for 2018/19 had been agreed by the Council in February 2018 in the Treasury Management Strategy.  The main activities continued to be:-

·                    Foremost, to maintain, the security of the Council’s deposits by only depositing with trusted financial institutions and limiting the size and length of deposit with each organisation.

·                    To directly manage a range of deposits in order to provide sufficient flexibility to meet day to day operational needs.

·                    To only undertake new long term borrowing where the business case justifies it.

Actual performance was in line with the plan, namely:-

·                    The Council placed deposits in a decreasing market by spreading its deposits thinly across many trusted institutions in accordance with its policy.

·                    The authority did not undertake any new long term borrowing.

·                    The in-house team achieved interest rates above the 7 day LIBOR rate.

The report included information:-

·                    on the average monthly balances deposited by the in house team generated by the in-house team.

·                    on the average weighed rate of return received over the financial year compared to the LIBOR rates.  Over the financial year, the rate of return had increased, and credit risk reduced.  For March 2019, the weighted average rate of return for the Council was 0.87% (on investment of £25.7). This compares to Benchmarking data where, across 231 authorities, the weighted average rate of return was also 0.86%, on investment average of £83.3m.

·                    on the Council performance against capital and treasury indicators, as indicated by the Council Balance sheet, as at 31 March 2019.

·                    In-House Treasury team performance: with interest rates still at low levels, the actual amount of deposit income generated was £375,867.  This was £15,867 higher than planned and £100,781 higher than in 2017-18. This was due to the high level of money available for deposit from unspent reserves and balances held to meet capital programme obligations.

·                    Money Market Funds.

·                    New Borrowings: no new borrowing had been taken out during the year, and loans of £5m had been repaid in May 2018.

·                    Fund Manager Performance: the Council did not use Fund Managers to aid its investment decisions.

·                    Treasury Management Strategy 2019/20: had been approved by full Council in February 2019.

·                    that Cabinet had decided in November 2018 to utilise the Interest Equalisation reserve to support cost pressures arising from the unitary decision.  Whilst there was some risk in terms of financial volatility in delivery of planned investment returns, in recent times there had been better than expected investment income and the expected outlook did not signify a significant risk in the short term.  The reserve had been held to smooth out fluctuations in interest rates.

Members sought additional information and were informed:-

(i)            that all of the Council’s loans were with the Public Works Loans Board and would not be affected by changes in the pound sterling exchange rate with foreign currencies.

(ii)           that AVDC Officers were involved on the Unitary Working Groups that were looking at putting together a framework Treasury Management Strategy for the new Council.  This included looking at all large investments and borrowings and re-looking at investments.

RESOLVED –

(1)          That the Council’s in-house Treasury Management team be thanked for excellent work during the last year.

(2)          That the performance against the Treasury Management Strategy for 2018/19 be noted.