Issue - meetings

Cabinet, at its meeting on 12 August 2016, considered the report on the outturn performance of the treasury management function for the financial year 2015/16.

The report of the head of finance, which Cabinet considered on 12 August 2016, is attached.

RECOMMENDATION to Council

(a)       To approve the treasury management outturn report for 2015/16; and

(b)       To approve the actual 2015/16 prudential indicators within the report. 

Council considered Cabinet’s recommendation, made at its meeting on 12 August 2016, on the outturn performance of the treasury management function for the financial year 2015/16.

Councillor Robert Sharp, Cabinet member for finance, provided the following responses to questions submitted in advance of the meeting:

·         Can you explain the loss in investment property net book value of £12.4 million over the past year?  

Answer - The value of investment property we hold has fallen due to the sale of Emcor house and re-classifications of property.

·         What was the net book value lost there on the sale of Emcor House? 

Answer - There was no loss on the sale of Emcor House.  It was sold during 2015/16 and therefore was not in the asset register as at 31 March 2016, causing the reduction in total value of the portfolio. It was included in the opening asset value of £20.6million (31 March 2015), with a net book value of £800,000 at the point of sale.

·         Land in Botley was reclassified, which led to a net book value loss of how much? Why does reclassification result in a loss of value in 2015/16?

Answer - The land at Botley has not been disposed of and there is no loss in value arising from the reclassification of this asset out of investment property to other land & buildings due to its regenerative nature.  The value transferred was £7million.

·         In section 14, how do the void periods in Old Abbey House affect net book value, or is it only income that's affected? 

Answer - This loss of income does not affect the value of investment properties held and is mentioned only in relation to reduced income during 2015/16.

RESOLVED: to

1.    approve the treasury management outturn report for 2015/16;

2.    approve the actual 2015/16 prudential indicators within the report.

To consider the head of finance’s report. 

Cabinet considered the head of finance’s report on the treasury management performance during 2015/16. 

It was noted the interest rate forecast as at March 2016, set out at Appendix A, would need to be updated in the light of the recent reduction in base rate and the expectation that rates would not increase in the short term.

Despite the current economic conditions the council had achieved a return of £130,000 on treasury investment income, 31% higher than the original budget and generated income of £0.5million on its investment properties, equivalent to a gross return of 6.6%.

RECOMMENDED to Council

(a)       To approve the treasury management outturn report for 2015/16; and

(b)       To approve the actual 2015/16 prudential indicators within the report.