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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 09/11/2006
TREASURY MANAGEMENT – BORROWING AND INVESTMENT
TRANSACTIONS AND PERFORMANCE MEASUREMENT



Summary & Purpose
The purpose of this report is to summarise Waverley’s investment performance in accordance with Waverley’s Treasury Management Policy and the Code of Practice on Treasury Management in Local Authorities.

APPENDIX D
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 9TH NOVEMBER 2006

Title:
TREASURY MANAGEMENT – BORROWING AND INVESTMENT
TRANSACTIONS AND PERFORMANCE MEASUREMENT
[Wards Affected: N/A]

Summary and purpose:

The purpose of this report is to summarise Waverley’s investment performance in accordance with Waverley’s Treasury Management Policy and the Code of Practice on Treasury Management in Local Authorities.

Environmental Implications:

There are no direct environmental implications arising from this report.

Social/community Implications:

There are no direct social/community implications arising from this report.

E-Government Implications:

There are no e-government implications.

Resource and legal Implications:

There are no direct resource implications and the financial areas are covered in the report.

Introduction and Background

1. In 2002, the Council adopted the Chartered Institute of Public Finance and Accountancy’s (CIPFA’s) Code of Practice on Treasury Management in the Public Services.

2. Included within the Policy was that regular reports on performance and transactions were to be prepared. This report shows the rate of return from the Council’s investments for the half-year ended 30th September 2006 compared to Waverley's target. A summary has also been prepared to show the total investments during the same half-yearly period.

Investments – Performance Measurement

3. The annual rate of return on the Council’s investments for the half-year ended 30th September 2006 was 4.70%. Waverley’s criteria for comparative purposes is the London Inter-Bank Bid Rate (LIBID) seven-day rate. This has been calculated at 4.61%. This comparison is used as it gives a good indication of the average rates achieved in the investment market that is most relevant to Waverley’s investment activity. The return of 4.70% at the half-year is a good achievement as rates have been increasing in recent months and many of Waverley’s investments are fixed at rates which reflect the market conditions before these increases. Therefore, whilst the target rate increases almost immediately following a rise in the base rate, Waverley’s performance is generally slower to pick-up due to the time-lag. However, as these investments mature, officers are currently securing rates which exceed the target return of 0.25% above the LIBID rate.

4. As can be seen in Annexe 1, the rate achieved by the Council compares favourably with the pre-determined rates. However, it is slightly below the target due to the market conditions arising from an increase in rates. Also included in the Annexe is the average 3 month rate for comparison.

5. For information, the Local Performance Indicator (LOBT3) which relates to investment performance is shown below:-

Full Description of PI
2004/2005
Actual
2005/2006
Target
2005/2006
Actual
2006/2007
To date
Average rate of return on the Council’s investments compared with the average seven-day LIBID rate (London Inter-Bank Bid Rate)
0.23% above the LIBID rate
0.50% above the LIBID rate
0.21% above the LIBID rate
0.25% above the LIBID rate

Investment Transactions

6. The analysis below shows the total transactions during the period 1st April 2006 to 30th September 2006 in respect of all external investments undertaken by the Council, together with balances outstanding as at 30th September 2006.

Investments

Balance at
1st April
2006
Total Lent


Total Repaid


Balance at 30th September 2006
Temporary
Investments
31,650,000
48,500,000
45,150,000
35,000,000

7. The temporary investments (i.e. investments repayable to the Council within one year) outstanding as at 30th September 2006, comprise 18,000,000 invested with building societies and 17,000,000 with approved banks which is in accordance with the Council’s approved Investment Policy.

8. In addition, the investments are further classified as being 19,000,000 “specified” investments and 16,000,000 “non-specified” which is well within the Council’s approved limit of 22,000,000 for “non-specified” investments.

Recommendation

It is recommended that the Executive notes the report.


Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.


CONTACT OFFICER:

Name: Paul Wenham Telephone: 01483 523238

E-mail: pwenham@waverley.gov.uk

comms/executive/2006-2007/168