The Head of Finance presented the Treasury Outturn Report 2022/23. Committee Members were invited to ask questions:
· A Member asked if the report could be made more easily readable, if possible, in future.
· The Member asked about Broadway Partners Ltd. which had recently moved into administration and queried if there were any implications/risks arising from this. The Head of Finance explained that the Council entered a
commercial loan special purpose vehicle in Spring 2020 with Broadway Partners. Two tranche payments totalling £1.15 million were drawn down. Repayments on the loan have been made monthly until it was announced that administrators had been appointed in April 2023 when loan repayments ceased and are now overdue. The Investment Committee resolved to defer the loan repayments to allow the special purpose vehicle to remain solvent in the administration process. The total outstanding loan at the current time is around £745,000 with accrued interest of £15,000. There is regular communication with the administrators. The Deputy Chief Executive commented that the administrators are in a process of seeking interest from prospective purchasers.
· Referring to the Capital Financing requirement, a Member asked how close the authority is to the borrowing ceiling. The Head of Finance confirmed that the borrowing levels are affordable and prudent noting that there is an indicator in the treasury strategy at the start of the year. That, and the impact on the revenue budget, is monitored regularly.
· Addressing a question around the unrealised capital loss of £401,000 and pooled funds, the Head of Finance confirmed the position noting that the regulations have been extended both by UK government and Welsh Government for at least two Financial years and that allows the unrealized loss to be carried forward on the balance sheet. If an opportunity arose, the authority may look to undo that position over the medium term. In the meantime, the returns are satisfactory, and a treasury reserve is held to cover the risk of the unrealised loss materializing and the position with volatility of the markets is kept under review. In response to a question, it was confirmed that the treasury risk reserve is approximately £590,000.
· In response to a question, the Head of Finance noted that returns on commercial and investment properties are in the report (s.10). There are variable returns from the solar farm and Newport Leisure Park. There was a net loss on Castlegate Business Park
· A question was asked about the advice from our advisors recommending a maximum duration limit for unsecured deposits within banking institutions of 35 days and queried if this was unduly risk adverse. The Head of Finance confirmed that there are regular updates from the treasury advisers. The authority keeps its investments liquid linked to the internal borrowing position and staying very close to the £10million minimum investments requirement. Referring to the 35 days, the authority is comfortable with the professional advice and would not wish to take action which could adversely impact levels of liquidity at this time.
· The Head of Finance was able to confirm that the authority has complied with the treasury policy during 2022/23 and the learning from this period has been
applied to treasury strategy this year. Treasury management indicators and strategy were set at the start of the year and have been fully complied with.
As per the report recommendations, the Governance & Audit committee reviewed the results of treasury management activities and the performance achieved in 2022/23 as part of its delegated responsibility to provide scrutiny of treasury policy, strategy and activity on behalf of Council.