Issue - meetings

2018-19 Treasury Management half-year position

Meeting: 05/02/2019 - Cabinet (Item 657)

657 2018-19 Treasury Management Half-Year Report pdf icon PDF 147 KB

The Cabinet is requested to consider the agenda report with its appendix and to make the following resolution:




That the Treasury Management activity and performance for 2018-2019 to date and the comments made by Corporate Governance and Audit Committee set out in the agenda report be noted.





That the Treasury Management activity and performance for 2018-19 to date and the comments made by the Corporate Governance and Audit Committee be considered and noted.


This item was presented by Mr Wilding. Mr Catlow was also in attendance.


Mr Wilding explained that the report presents a summary of the council’s Treasury activity for the six months to September 2018. The summary of the investment portfolio as at 28 September 2018 is detailed in table 1 on page 65 of the agenda pack. It details the split between short term and long term investments and the increase in treasury funds under management over the first half of the year to nearly £70 million. Mr Wilding clarified that the reason the position reverses from December onwards is due to local taxation receipts which fall in February and March. The council has a significant amount of funds in short term investments which are yielding a low rate of interest.


Mr Wilding then explained that a summary of the investment portfolio performance is detailed in tables 2 and 3 on page 67 of the agenda pack. Table 2 shows the percentage return across the entire portfolio over the last four quarters and table 3 shows the investment performance of the council’s external pooled funds since they were purchased. The fair value of investments had fallen £400,800 at the end of September partly due to the transaction costs associated with the Local Authority Property Fund and also due to wider economic factors such as interest rate expectations and concerns over global trade and tariffs. Over the same period the investments yielded an income of £1,340,425 which outweighs the loss of fair value.


Mr Wilding confirmed the latest position of the Local Authority Property Fund. The capital loss has reduced to £73,000 from £229,100 in September. He explained that the council had invested in the pooled funds in the knowledge that economic cycles can affect fair values and the council’s projected cash flows do not indicate there will be any need for a forced disposal of these investments over the next four to five years. Following the announcement by MHCLG in November 2018 that a statutory accounting override to IFRS9 would be approved until 2023 any losses on the funds are deferred until they are sold.


Mr Wilding then confirmed that the performance of the council’s portfolio of External Pooled Funds was discussed at the Corporate Governance and Audit Committee in January 2019. As set out in paragraph 4.2 of the report the Committee suggested initial scope for a review. It is proposed that John Ward, Helen Belenger and Mark Catlow with support from Arlingclose should carry out the following by the end of July 2019:


·       Review the objectives for investing in external pooled funds.

·       Evaluate whether the existing investments have met these objectives.

·       Investigate whether other investment options might better meet the objectives in the future.

·       If appropriate, consider how the council would extend its investment in External Pooled Funds in terms of the type of funds and the timing of the investments.


Mr Wilding explained that as per section 7 of the report all Treasury activity was conducted within  ...  view the full minutes text for item 657