ANNUAL TREASURY MANAGEMENT REVIEW 2016/17

Annex 1: Prudential and Treasury Indicators

 

1.            During 2016/17, the Council complied with its legislative and regulatory requirementsapart from exceeding the bank overdraft benchmark as referred to in section 9.2 of the main report. The key actual prudential and treasury indicators detailing the impact of capital expenditure activities during the year, with comparators, are shown in Table 1.

 

Table 1 – Prudential and Treasury Indicators

Actual prudential and treasury indicators

2015/16

Actual

£000

2016/17

Budget

£000

2016/17

Actual

£000

Capital expenditure

·             GF

·             HRA

·             Total

 

12,720

5,030

17,750

12,311

22,177

34,488

8,087

5,156

13,243

 

Capital Financing Requirement:

·             GF

·             HRA

·             Total

 

 

 

27,067

20,241

47,308

 

 

29,189

27,477

56,666

 

 

26,706

20,377

47,083

External debt

29,220

40,434

31,669

 

Investments

·             Longer than 1 year

·             Under 1 year

·             Total

 

 

0

28,612

28,612

 

 

0

25,000

25,000

 

 

 

0

37,988

37,988

 

Net borrowing / (investment)

608

15,434

(6,319)

 

HRA: The 2016/17 capital expenditure budget includes £14.5m subsequently re-profiled to 2017/18 in the Budget and Medium Term Financial Strategy 2017/21. This re-profiled amount was due to increase the Capital Financing Requirement by £6.7m.

 

GF: The 2016/17 capital expenditure budget includes £2.2m subsequently re-profiled to 2017/18 in the Budget and Medium Term Financial Strategy 2017/21.

 

2.            Gross borrowing and the CFR- in order to ensure that borrowing levels are prudent over the medium term and only for a capital purpose, the Council should ensure that its gross external borrowing does not, except in the short term, exceed the total of the capital financing requirement in the preceding year (2016/17) plus the estimates of any additional capital financing requirement for the current (2017/18) and next two financial years.  This essentially means that the Council is not borrowing to support revenue expenditure.  This indicator allows the Council some flexibility to borrow in advance of its immediate capital needs in 2016/17

 

 

3.            The authorised limit- the authorised limit is the “affordable borrowing limit” required by s3 of the Local Government Act 2003.  Once this has been set, the Council does not have the power to borrow above this level.  The table below demonstrates that during 2016/17 the Council has maintained gross borrowing within its authorised limit.

 

4.            The operational boundary– the operational boundary is the expected borrowing position of the Council during the year.  Periods where the actual position is either below or over the boundary is acceptable subject to the authorised limit not being breached.

 

5.            Actual financing costs as a proportion of net revenue stream - this indicator identifies the trend in the cost of capital (borrowing and other long term obligation costs net of investment income) against the net revenue stream.

 

Table 2 – Borrowing position / limit and financing costs

 

£000

2016/17

Authorised limit

66,000

Maximum gross borrowing position

31,980

Operational boundary

58,000

Average gross borrowing position

31,587

Financing costs as a proportion of net revenue stream - GF

6.7%

Financing costs as a proportion of net revenue stream - HRA

5.6%

 

            Table 3 – Overall Treasury Position as at 31 March 2017

 

31 March 2016 Principal

Rate/ Return

Average Life yrs

31 March 2017 Principal

Rate/ Return

Average Life yrs

Fixed rate funding:

 

 

 

 

 

 

      -PWLB

24,720

3.71%

12.9

27,169

3.63%

12.5

      -Market

4,500

4.19%

0.5

4,500

4.19%

0.5

Variable rate funding:

 

 

 

 

 

 

      -PWLB

0

 

 

0

 

 

      -Market

0

 

 

0

 

 

Total debt

29,220

3.78%

11.0

31,669

3.71%

10.8

CFR

47,308

 

 

47,083

 

 

Over/ (under) borrowing

(18,088)

 

 

(15,414)

 

 

Total investments

28,612

0.55%

 

37,988

0.49%

 

Net debt / (investment)

608

 

 

(6,319)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.            The maturity structure of the debt portfolio was as shown in Table 4.

 

Table 4 – Maturity Structure of Debt Portfolio

£000

31 March 2016

actual

2016/17

upper limits

31 March 2017

actual

Under 1 year

4,980

15,835

5,123

1 year to under 2 years

480

15,835

623

2 years to under 5 years

6,239

15,835

10,215

5 years to under 10 years

6,975

17,418

3,249

10 years to under 20 years

6,626

15,835

6,539

20 years to under 30 years

1,000

15,835

3,000

30 years to under 40 years

1,920

15,835

1,920

40 years to under 50 years

1,000

15,835

1,000

50 years and above

0

15,835

0

Total debt

29,220

 

31,669

 

7.            All investments at both the 2015/16 and 2016/17 year-ends were for under one year.

 

8.            The exposure to fixed and variable rates was as shown in Table 5.

 

Table 5 – Exposure to Fixed and Variable Rates

 

31 March 2016

Actual

£000

2016/17

Limits

£000

31 March 2017

Actual

£000

Fixed rate

29,220 debt

11,757 investments

66,000 debt

45,000 investments

31,669 debt

12,811 investments

Variable rate

0 debt

16,855 investments

66,000 debt

50,000 investments

0 debt

25,177 investments