PAPER D2

 

                                                                                                              Purpose: For Information

 

Committee:     EXECUTIVE

 

Date:               10 SEPTEMBER 2002

 

Title:                TREASURY MANAGEMENT 2001/02

 

PORTFOLIO HOLDER - RESOURCES

 

 

1.         SUMMARY

 

This report summarises Treasury Management Activities for the year ended 31st March 2002.

 

2.         INTRODUCTION

 

            The Code of Practice for Treasury Management adopted by the Council provides for the Strategic Director for Finance and Information to report annually on the exercise of the Treasury Management powers delegated to him.  Set out below are the principal features of the years activities.

 

3.         INTEREST RATES

 

            Having regard to anticipated falls in interest rates, it was decided to delay taking new borrowing until later in the financial year.  Bank base rate started the year at 53/4% and fell on six occasions reaching the current base rate of 4% on the 8th November 2001.

 

4.         LONG TERM LOANS

 

            A total of two new long term fixed interest PWLB loans were taken during the year amounting to £5.0 million, the details of which are contained below:

 

            Date of Loan               Amount                        Period              Rate

            18.12.01                      2,000,000                    15 years          47/8

            15.01.02                      3,000,000                    25 years          5%

 

            The above loans are both fixed interest maturity loans, and the loan periods taken were in order to take advantage of current low interest rates.

 

            In addition to the above a Money Market Loan of £5 million was taken up on the 23rd November 2001.  This is a 40 year loan with interest initially fixed at 4.27% for the first four years.  The lender has the option to increase this rate after four years, but should the rate increase the Council has the option to repay with no penalty.

 

            In total £10 million of borrowing approval was taken up in the year at an average interest rate of 4.6%. 

 

5.         SHORT TERM MONEY

 

            During the year a total of £20.3 million of temporary loans were raised to facilitate short term borrowing requirements.

 

           


There were a total of 103 short term advances (over a period of less than twelve months), which were invested in accordance with the Council’s agreed Treasury Strategy.  At the 31st March 2002 a total of £25.1 million was invested externally.

 

6.         OUTTURN POSITION

 

            At the 31st March 2002 total outstanding external borrowing stood at £97.1 million, with £25.1 million being invested in approved institutions, leaving a net outstanding loan debt of £72 million.  The external loan interest paid in 2001/02 amounted to £5,269,314 and the average interest rate applicable to these loans was 5.83%.  Statistics compiled by the Chartered Institute of Public Finance and Accountancy (CIPFA) for the 2000/01 year show this Council’s average interest rate at 6.4% compared with an average rate of 7.36% for English Unitary Authorities.  This represents an annual saving of £932,000 on external borrowing compared to the average Unitary (equal to over 2% annual Council Tax saving).

 

7.         In the year the total borrowing and interest exposure requirements were contained within the limits approved by the Executive Committee in February 2001.  All new loans taken in the year carry fixed interest rates, and take advantage of locking into long term periods at the lowest interest rates for a generation. 

 

Contact:          Gareth Hughes (Tel. No. (01983) 823604)

 

 

 

                     JOHN PULSFORD                                                   R R BARRY

                        Strategic Director                                Portfolio Holder for Resources

          Finance and Information and County

                            Treasurer