To consider and scrutinise the Council’s financial performance information for the second quarter of 2017/18. 

That the financial performance information for the second quarter of 2017/18, along with the half year treasury management report, be NOTED.

61.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 15-35, highlighted the quarter two financial performance and half year treasury management report which Members were asked to consider.

61.2           The Committee was advised that the summary showed an increase of £90,000 surplus in quarter two against quarter one with all expenditure headings looking good. Particular attention was drawn to income which was below target with planning income showing a deficit against the planned budget. Currently there was also a deficit against the garden waste budget but this had been expected due to the annual renewals being changed so they were all aligned to April. In terms of the corporate codes, the impact of treasury management activity during the year had now been included in the mid-year figures rather than just at the year-end; so far the Council was £88,815 ahead of budget – this was largely due to cheap borrowing rates as well as the use of more lucrative funds for cash investments. The Council also had a target for the acquisition of additional investment property and, whilst the quarter two figures showed the Council being behind target due to bids on properties being unsuccessful, it had recently acquired three new properties which would generate nearly £820,000 of income per year; this would mean the Council would exceed its budget target for the current year and that position would be reflected in the quarter three report. Appendix 2 showed the capital position which was currently underspent against the profiled budget as a result of certain projects, such as the refurbishment of the Council Offices, not starting within the expected timescales. The reserves position was shown at Appendix 3 and, whilst the quarter two position showed that there remained a significant balance on the reserves, the expectation was that those balances would be spent in the near future. The Finance Team had requested updates from all departments about their plans to ensure earmarked reserves were either used for their intended purpose or released back to the general fund.

61.3           In terms of the mid-year treasury investment activities, an average return of 1.08% had been gained which, at the end of September, totalled £17,575,000 generating interest of £77,000 in the first half of the year against the budget estimate of £13,800. The investment performance had been boosted by an investment of £2million into the CCLA property investment fund which was producing monthly income returns of approximately 4.6%; Officers were confident that the capital value would return to the investment level in the near future and growth would be maintained thereafter. The Council’s drive to invest in commercial property had resulted in a requirement to borrow funds to cover direct investments and day-to-day cashflow. The budget had anticipated a borrowing cost of £42,000 at the mid-year point but, as a result of the delay in property purchase, the efficient management of borrowing requirements and the extremely low borrowing rates available to the Council, actual borrowing costs  ...  view the full minutes text for item 61