Download Investment returns - Rother District Council

Agenda Item: 7.7
Rother District Council
Report to
-
Audit Committee
Date
-
30 March 2011
Report of the
-
Director of Resources
Subject
-
Treasury Management Report
Recommendation: It be RESOLVED: That the report be noted
Head of Service: Robin Vennard
Introduction
1.
Cabinet approved the Council’s 2010/11 Investment Strategy in February this
year. As part of the review for the new strategy, it was agreed that regular
reports would be presented to this Committee on the Council’s treasury
management activities. Members are also reminded that investment activity is
also reported through the Members’ Bulletin.
Review of Investment Performance
Investment returns – in-house managed funds
2.
Appendix 1 details the Sector report which explains the current economic
environment. The in-house managed funds total £11.9m and the return for the
year to the end of February 2011 is 1.04%. The current deposits are analysed
below:
Rother's
Limits
Still able to
Invest
Currently
Invested
£
£
£
Unlimited
Unlimited
Banks
Nat West - TRO (Treasury Reserve Office)
Santander - CALL ACCOUNT
Santander - Deposit
650,189.23
12,000,000
10,349,811
Santander - Deposit 2
Nat West SIBA (Special Interest-Bearing A/c)
0.00
Unlimited
Unlimited
Bank of Scotland (HBOS) - CALL ACCOUNT
Bank of Scotland (HBOS) - DEPOSIT 1
1,000,000.00
8,795,096.00
10,554.40
12,000,000
10,489,446
1,500,000.00
Bank of Scotland (HBOS) - DEPOSIT 2
0.00
Bank of Scotland (HBOS) - DEPOSIT 3
0.00
TOTALS
24,000,000
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20,839,257
11,955,839.63
Investment Returns - Investec
3.
The performance for Investec for the year to February 2011 is a return of
around 0.84% based on a fund of around £12.3m. A full breakdown of the
current investments is shown at Appendix 2. The following table analyses the
fund over the various types of investment and shows the capital returns and
losses as well as the interest earned:
£
Opening Capital Balance 01/04/10
£
12,198,291.97
Fixed Interest Securities & Floating Rate
Notes
Realised Capital Gain
Interest Received
Purchased Interest
Change in Accrued Interest
Capital Appreciation / Depreciation
10,406.73
44,745.94
-28,300.10
2,956.84
-6,002.50
23,806.91
Certificates of Deposit & Commercial Paper
Realised Capital Gain/Loss
Interest Received
Change in Accrued Interest
Capital Appreciation/Depreciation
-10,256.07
90,622.60
13,403.00
5,247.59
99,017.12
2,169.57
-52.64
2,116.93
-18,741.03
-3,279.68
-22,020.71
Deposit Account
Interest Received
Interest Accrued
Expenses
Management Fee
VAT on Management Fee
Total Fund at 28 February 2011
12,301,212.22
Borrowing
4.
The Council has not entered into any new borrowing activity since becoming
debt free in April 2002.
Forecast
5.
Sectors forecast for base rate is shown below and shows that interest rates
are not expected to rise until quarter 3 of 2011.
6.
This means for the current financial year it is likely that the Council will
underachieve its investment budget by £200,000 and this has already been
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reported to Cabinet. The Interest Equalisation reserve will be depleted during
2011/12 and the impact of this has been considered in setting next years
budget.
7.
The use of capital resources over the next 5 years will also reduce the amount
the Council achieves in investment returns. As part of the resetting work
currently underway this to will need to be addressed to reduce reliance in the
revenue budget on investment returns. Members are asked to refer to the
Revenue and Capital Monitoring report (Agenda item 7.5) presented to
Cabinet earlier this month for further details.
Malcolm Johnston
Director of Resources
Risk Assessment Statement
There are no direct risks arising from this report. Failure to follow the Council’s
investment strategy could increase the risk of financial loss.
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