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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 08/11/2005
TREASURY MANAGEMENT
INVESTMENT TRANSACTIONS AND PERFORMANCE AND UPDATE TO POLICY



APPENDIX B

WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 8TH NOVEMBER 2005

Title:
TREASURY MANAGEMENT
INVESTMENT TRANSACTIONS AND PERFORMANCE AND UPDATE TO POLICY
[Wards Affected: N/A]

Summary and purpose:

The purpose of this report is to summarise Waverley’s investment performance for the first half-year in accordance with Waverley’s Treasury Management Policy and, to update this Policy to comply with new requirements.


Environmental implications:

There are no environmental implications arising from this report.

Social/Community implications:

There are no social/community implications.

E-Government implications:

There are no e-government implications.

Resource and legal implications:

There are no direct resource implications as a result of this monitoring report but the actual return received from Waverley’s investments forms a key element of the Council’s finances.


Introduction and Background

1. In September 2002, the Council adopted the Chartered Institute of Public Finance and Accounting’s (CIPFA’s) Code of Practice on Treasury Management in the Public Services and it revised its Policy to meet these requirements.

2. Included within the Policy was an undertaking 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 2005, 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 2005 was 4.82%. Waverley’s criteria for comparative purposes is the London Inter-Bank Bid Rate (LIBID) seven-day rate. This has been calculated at 4.55%. 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 4.82% in the half-year is a good achievement, particularly given the levelling of rates across the range of investment periods in recent months.

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 the decrease in rates. Also included in the annexe is the average 7-day rate for comparison.

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

Full Description of PI
2003/2004
Actual
2004/2005
Target
2004/2005
Actual
2005/2006
Target
Average rate of return on the Council’s investments compared with the average seven-day LIBID rate (London Inter-Bank Bid Rate)
0.32% above the LIBID rate
0.50% above the LIBID rate
0.23% above the LIBID rate
0.50% above the LIBID rate

Investment Transactions

6. The analysis below shows the total transactions during the period 1st April 2005 to 30th September 2005 in respect of all external investments undertaken by the Council, together with balances outstanding as at 30th September 2005.

Investments

Balance at
1st April
2005
Total Lent


Total Repaid


Balance at 30th September 2005
Temporary
Investments
27,200,000
87,650,000
80,700,000
34,150,000

7. The temporary investments (i.e. investments repayable to the Council within one year) outstanding as at 30th September 2005 comprise 22,750,000 invested with building societies and 11,400,000 with approved banks which is in accordance with the Council’s approved Investment Policy.

8. In addition, the investments are further classified as being 20,400,000 “specified” investments and 13,750,000 “non-specified” which is well within the Council’s approved limit of 22,000,000 for “non-specified” investments.


Update of Treasury Management Policy

9. The Money Laundering Regulations 2003 require the introduction of procedures to prevent money laundering in organisations. Whilst these requirements are not as onerous for local authorities as they are for many financial and legal institutions, there are still precautions to take to manage the risk and Waverley’s Treasury Management Policy needs to be updated to accommodate this. It is proposed to add a new section to the Policy as follows:

“TMP 12 – Waverley is alert to the possibility that it could become the subject of an attempt to involve it in a transaction involving the laundering of money. Accordingly, it will maintain procedures for verifying and recording the identity of counter-parties and reporting suspicions, and will ensure that staff involved in this are properly trained.”

Recommendation

It is recommended that:


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/exec/2005-06/160