Agenda item

Consider report by Chief Financial Officer (copy attached).

There had been circulated copies of a report by the Chief Financial Officer providing the details of income and expenditure for the Selkirk Common Good Fund for the year to 31 March 2017, including balance sheet values to 31 March 2017 and proposed budget for 2017/18.   Senior Finance Officer, John Yallop, highlighted the main points of the report and appendices.  Appendix I to the report provided the actual income and expenditure for 2016/17.  This showed a surplus of £21,557 for the year, which was £5,052 more than projected at the last meeting, due to lower than anticipated property costs and grant expenditure.  A surplus of £36,943 was projected for 2017/18.  Appendix 2 to the report provided a projected Balance Sheet value as at 31 March 2017.  It showed a decrease in the reserves of £56,203 due mainly to the depreciation adjustment. A breakdown of the property portfolio showing actual rental income and property expenditure to 31 March 2017 and the 2016/17 depreciation charge was detailed in Appendix 3 to the report.  Appendix 4 showed the value of the Newton Fund to 31 March 2017.  The report explained that although the medium term, 12 month annualised return at the end of March 2017 was 2.9% against a benchmark of 4.4%, the fund’s performance over a 5 year period was positive against benchmark, 4.6% against 4.5%.  This was in line with the objective of the fund which “was managed to seek a minimum return of 1 month GBP LIBOR rate + 4%”.  At the end of March this equated to 4.3%. Appendix 5 contained a chart detailing the Newton Fund’s performance over the quarter to March 2017 and also over the medium to long term.  The improved performance in the last quarter had put Newton in the mid-range against its peers.  However, their performance in the last two quarters of 2016 had placed Newton outside the broad range of returns generated by its peers in the last year.  This had also had the effect of dragging down the medium to long term performance. Given this information, the Council’s Investment advisor KPMG had been commissioned to evaluate and report on the continued suitability of the Newton Fund going forward.  In a discussion of the financial report and with reference to the cash balance of £82,865 Members considered whether a further amount of cash should be transferred to the investment fund.  It was agreed to review the situation following the financial report to the next meeting of the Sub Committee in September.

DECISION

(a)          NOTED:-

(i)            the actual income and expenditure for 2016/17 in Appendix 1 to the report;

(ii)          the final Balance Sheet value to 31 March 2017 in Appendix 2;

(iii)         the summary of the property portfolio in Appendix 3;

(iv)         the current position of the investment in the Newton Fund in Appendix 4; and

(v)          the short, medium and long term performance of the Newton Fund against its peers in Appendix 5.

(b)          AGREED:-

(i)             the proposed budget for 2017/18 as shown in Appendix 1; and

(ii)              to review the cash balance at the next meeting and to consider   whether to transfer a further amount into the investment fund.