Meeting documents
Cabinet
Wednesday, 7th June, 2006
APPENDIX 8
Treasury Management - Outturn Report 2005/06
1 THE ISSUE
1.1 This report gives details of performance against the Council's Treasury Management Strategy and Annual Investment Plan for 2005/06
2 RECOMMENDATION
2.1 That the Council Executive accepts the treasury management report to 31st March 2006 prepared in accordance with the CIPFA Treasury Code of Practice and notes the performance.
3 FINANCIAL IMPLICATIONS
3.1 Included in the report.
4 TREASURY PERFORMANCE
4.1 An amount of £3.66m was included in the Councils 2005/06 revenue budget for the cost of borrowing1 . As previously reported, a planned slowing down of the capital programme resulted in the delayed need for further borrowing producing an underspend against budget. The total cost of borrowing was £2.13m giving a saving of £1.53m. Funds were also borrowed internally from the Pension fund and schools and the interest paid was deducted from investment income.
4.2 The Council's investment position as at 31st March 2006 is given in Annex 1.
4.3 Gross interest earned on investments for the year totalled £1,208,000. Interest of £222,000 was also received from Somer Housing in respect of last year's right-to-buy sales giving a total of £1,430,000. Net interest, after deduction of amounts due to the pension fund, schools and other internal funds e.g fostered children savings was £137,000. The average rate of interest earned over this period was 4.64%, which is 0.10% above the benchmark rate of average 7 day LIBID (4.54%).
4.4 The Council's external borrowing as at 31st March 2006 is detailed in Annex 3. £30 million of borrowing was undertaken during the financial year to support the Council's capital programme.
4.5 Performance against the Treasury Management Indicators agreed as part of the annual Treasury Management Strategy is provided in Annex 4. The current position is within all the limits shown in Annex 4.
5 RISK MANAGEMENT
5.1 The Council's lending & borrowing list was last reviewed at the start of this financial year and credit ratings are monitored throughout the year. All lending/borrowing transactions are within approved limits and with approved institutions. Investment & Borrowing advice is provided by our Treasury Management consultants SECTOR.
6 RATIONALE
6.1 The Prudential Code and CIPFA's Code of Practice on Treasury Management requires regular monitoring and reporting of Treasury Management activities.
7 OTHER OPTIONS CONSIDERED
7.1 None
8 CONSULTATION
8.1 None
9 REASONS FOR URGENCY
|
Contact person |
Gary Adams - 01225 477107 |
|
Background papers |
Treasury Management Strategy & Annual Investment Plan 2005/06. |
APPENDIX 8 - ANNEX 1
The Council's Investment position at 31st March 2006
|
Balance at 31st March 2006 |
|
|
£'000's |
|
|
Notice (instant access funds) |
9,950 |
|
Up to 1 month |
00 |
|
1 month to 3 months |
00 |
|
Over 3 months |
0 |
|
Total |
9,950 |
The investment figure of £9.950 million is made up as follows :
£,000's
B&NES -16,617
Schools 10,806
Pension Fund 15,761
Total 9,950
|
The Council had an average net negative balance of £3.3m during the period April 2005 to March 2006. |
APPENDIX 8 - ANNEX 2
Average rate of return for 2005/06
|
April % |
May % |
June % |
July % |
Aug % |
Sept % |
|
|
Average rate of interest earned |
4.80% |
4.79% |
4.79% |
4.78% |
4.65% |
4.53% |
|
Average 7 Day LIBID rate (source:Sector City Watch publication) |
4.72% |
4.69% |
4.69% |
4.66% |
4.47% |
4.47% |
|
Performance against 7 Day LIBID % |
0.08% |
0.10% |
0.10% |
0.12% |
0.18% |
0.06% |
|
Oct % |
Nov % |
Dec % |
Jan |
Feb |
Mar |
Average for period % |
|
|
Average rate of interest earned |
4.54% |
4.56% |
4.56% |
4.56% |
4.54% |
4.59% |
4.64% |
|
Average 7 Day LIBID rate |
4.42% |
4.45% |
4.52% |
4.46% |
4.42% |
4.47% |
4.54% |
|
Performance against 7 Day LIBID % |
0.12% |
0.11% |
0.04% |
0.10% |
0.12% |
0.12% |
0.10% |
APPENDIX 8 - ANNEX 3
Councils External Borrowing at 31st March 2006
|
LONG TERM |
Amount |
Start Date |
Fixed Term |
Interest Rate |
Variable Term |
Interest Rate |
|
PWLB |
10,000,000 |
15/10/2004 |
30 yrs |
4.75% |
n/a |
n/a |
|
PWLB |
10,000,000 |
20/05/2005 |
30 yrs |
4.45% |
n/a |
n/a |
|
PWLB |
10,000,000 |
15/02/2006 |
50 yrs |
3.85% |
n/a |
n/a |
|
KBC Bank N.V* |
5,000,000 |
8/10/2004 |
2 yrs |
3.15% |
48 yrs |
4.5% |
|
KBC Bank N.V* |
5,000,000 |
8/10/2004 |
3 yrs |
3.72% |
47 yrs |
4.5% |
|
Eurohypo Bank |
10,000,000 |
27/04/2005 |
3 yrs |
3.49% |
47yrs |
4.5% |
|
TOTAL |
50,000,000 |
|||||
|
TEMPORARY |
NIL |
|||||
|
TOTAL |
50,000,000 |
*Deutsche Bank transferred the rights of these Loans to KBC Bank N.V during 2005/06.
APPENDIX 8 - ANNEX 4
Performance against Treasury Management Indicators agreed in Treasury Management Strategy Statement
1. Authorised limit for external debt
These limits include current commitments and proposals in the budget report for capital expenditure, plus additional headroom over & above the operational limit for unusual cash movements.
|
2005/06 Prudential Indicator |
2005/06 Actual as at 31st Mar 2006 |
|
|
£'000 |
£'000 |
|
|
Borrowing |
70,000 |
50,000 |
|
Other long term liabilities |
3,000 |
0 |
|
Cumulative Total |
73,000 |
50,000 |
2. Operational limit for external debt
The operational boundary for external debt is based on the same estimates as the authorised limit but without the additional headroom for unusual cash movements.
|
2005/06 Prudential Indicator |
2005/06 Actual as at 31st Mar 2006 |
|
|
£'000 |
£'000 |
|
|
Borrowing |
60,000 |
50,000 |
|
Other long term liabilities |
3,000 |
0 |
|
Cumulative Total |
63,000 |
50,000 |
3. Upper limit for fixed interest rate exposure
This is the maximum % of total borrowing which can be at fixed interest rate.
|
2005/06 Prudential Indicator |
2005/06 Actual as at 31st Mar 2005 |
|
|
% |
% |
|
|
Fixed interest rate exposure |
100 |
100 |
4. Upper limit for variable interest rate exposure
While fixed rate borrowing contributes significantly to reducing uncertainty surrounding interest rate changes, the pursuit of optimum performance levels may justify keeping a degree of flexibility through the use of variable interest rates. This is the maximum % of total borrowing which can be at variable interest rates.
|
2005/06 Prudential Indicator |
2005/06 Actual as at 31st Mar 2005 |
|
|
% |
% |
|
|
Variable interest rate exposure |
50 |
0 |
5. Upper limit for total principal sums invested for over 364 days
Given the Councils' financial position, i.e. of having low cash balances, any lending is likely to be the result of the phasing of cash flow. Investment periods are unlikely to be more than 6 months. This is the maximum % of total investments which can be over 364 days.
|
2005/06 Prudential Indicator |
2005/06 Actual as at 31st Mar 2006 |
|
|
% |
% |
|
|
Investments over 364 days |
20 |
0 |
6. Maturity Structure of new fixed rate borrowing during 2005/06
|
Upper Limit |
Lower Limit |
2005/06 Actual as at 31st Mar 2005 |
|
|
% |
% |
% |
|
|
Under 12 months |
20 |
Nil |
Nil |
|
12 months and within 24 months |
25 |
Nil |
Nil |
|
24 months and within 5 years |
50 |
Nil |
40 |
|
5 years and within 10 years |
50 |
Nil |
Nil |
|
10 years and above |
100 |
30 |
60 |
7. Capital Financing as % of Net Revenue Stream
|
2005/06 Prudential Indicator |
2005/06 Projection as at 31st Mar 2006 |
|
|
% |
% |
|
|
Capital Financing as % of Net Revenue Stream |
3.39 |
2.67 |
Note: Capital financing includes the amount paid to Bristol City Council in respect of Ex-Avon Debt.
1 This excludes the Council's proportion of debt relating to the former Avon County Council for which £2.45m is included in the 2005/06 budget.