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1 Public Document Pack WILLIAM HILL TRUST SUB-COMMITTEE THURSDAY, 21 SEPTEMBER 217 A MEETING of the WILLIAM HILL TRUST SUB-COMMITTEE will be held in the CONVENER'S OFFICE, COUNCIL HEADQUARTERS, NEWTOWN ST BOSWELLS on THURSDAY, 21 SEPTEMBER 217 at 2. pm J. J. WILKINSON, Clerk to the Council, 14 September 217 BUSINESS 1. Apologies for Absence. 2. Order of Business. 3. Declarations of Interest. 4. Appointment of Chairman and Vice-Chairman. 3 mins 5. Minute. (Pages 1-2) 2 mins Minute of 7 June 216 for noting. (Copy attached.) 6. Financial Monitoring Report for 12 Months to 31 March 217. (Pages 3-1) 1 mins Consider report by the Chief Financial Officer. (Copy attached.) 7. Applications for Financial Assistance. (a) Melrose Festival (Pages 11-14) Consider an application for financial assistance from Melrose Festival Committee. (Copy attached.) (b) Melrose Waverley Tennis Club (Pages 15-24) Consider an application for financial assistance from Melrose Waverley Tennis Club. (Copy attached.) 8. Any Other Items Previously Circulated. 1 mins 1 mins 9. Any Other Items which the Chairman Decides are Urgent.

2 NOTES 1. Timings given above are only indicative and not intended to inhibit Members discussions. 2. Members are reminded that, if they have a pecuniary or non-pecuniary interest in any item of business coming before the meeting, that interest should be declared prior to commencement of discussion on that item. Such declaration will be recorded in the Minute of the meeting. Membership of Committee:- Councillors D. Parker, K. Drum and T. Miers. Mr W. Windram. Please direct any enquiries to Pauline Bolson Tel: pbolson@scotborders.gov.uk

3 SCOTTISH BORDERS COUNCIL WILLIAM HILL TRUST SUB-COMMITTEE Agenda Item 5 MINUTES of Meeting of the WILLIAM HILL TRUST SUB-COMMITTEE held in The Leader's Office, Council Headquarters, Newtown St Boswells on Tuesday, 7th June, 216 at 2.35pm Present:- Apologies:- In Attendance:- Councillors I. Gillespie (Chairman), D. Parker and J. Torrance. Community Councillor W. Windram. Capital and Investment Manager (K Robb), Principal Solicitor (H MacLeod), Democratic Services Officer (P Bolson). 1. MINUTE There had been circulated copies of the Minute of 23 February 216. DECISION NOTED for signature by the Chairman. 2. FINANCIAL MONITORING REPORT FOR TWELVE MONTHS TO 31 MARCH 216 There had been circulated copies of a report by the Chief Financial Officer giving details of the income and expenditure for the William Hill Trust Fund for the year 215/16 to 31 March 216, including the proposed budget for 216/17 and the projected balance sheet values at 31 March 216. Appendix 1 to the report detailed the income and expenditure position for 215/16 and Mrs Robb explained that this showed a surplus of 8,654 with a projected deficit of 15,433 for 216/17 directly related to the payment schedule for work undertaken at the Gibson Park in Melrose. Appendix 2 contained the balance sheet value to 31 March 216 showing a projected increase in reserves of 6,168 due to movements in the value of investments. Appendix 3 showed the value of the Newton Fund investment to 31 March 216. Ms Robb advised that overall, 215/16 had been a successful year for the William Hill Trust Fund with dividends of 3,643 being received in total from the Newton Fund. The proposed budget for 216/17 was based on a distribution from the Newton Fund of 2.% of the market value at 31 March 215. Ms Robb went on to advise that the Newton Fund managers would be visiting Scottish Borders Council in September 216 and Members would have an opportunity to raise questions with them at that time. Confirmation of details would be circulated in due course. DECISION NOTED:- (a) NOTED the report and detail in Appendices 1 to 3 to the report. (b) AGREED the proposed budget for 216/17 as detailed in Appendix APPLICATION FOR FINANCIAL ASSISTANCE. There had been circulated copies of a request for financial assistance on behalf of Melrose Rugby Football Club (RFC). The application explained the history of Melrose RFC and listed the range of community activities that the Club was involved in locally. The application further explained that the financial assistance being sought was to enable the Club to take forward plans under a major 1983 Legacy Project. This Project would focus on celebrating that Melrose was the worldwide home of rugby and that the 7s game would be played as part of the Olympic Games for the first time this year. Melrose RFC wanted to (a) create new facilities at the Greenyards in Melrose which would allow people to train and play rugby and football on a daily basis; and (b) further develop their Clubhouse to provide a community based facility which would take account of local consultation responses. Consultation would be required to take this project forward. The Page 1

4 financial assistance that had been requested would be used to employ two consultancy companies to (i) undertake a local consultation and assist in the development of a Business Model; and (ii) to provide the technical resource in association with the project development. The total fees for the afore-mentioned consultations amounted to 2,826 (+ VAT). Funding of 5, each from the William Hill Trust Fund and the Community Grant Scheme had been requested to match fund Melrose Rugby Club's own commitment to the Project of 1,826. The application included Melrose RFC's Accounts for year ending 31 March 215 along with detail of the fees to be charged by the consultants. Discussion followed in relation to the plans being proposed by Melrose RFC and some clarification was provided in response to questions by Members. DECISION AGREED that the application for financial assistance submitted by Melrose Rugby Football Club be approved in the sum of 5,. The meeting concluded at 3.5 pm Page 2

5 Agenda Item 6 Monitoring Report for 12 Months to 31 March 217 Report by the Chief Financial Officer WILLIAM HILL TRUST FUND SUB-COMMITTEE 21 September PURPOSE AND SUMMARY 1.1 This report provides the details of the income and expenditure for the William Hill Trust Fund for the year 216/17 as well as a balance sheet as at 31 March 217 and proposed budget for 217/ Appendix 1 provides the actual income and expenditure for 216/17. This shows an overall deficit of 16,45 for the year. 1.3 Appendix 2 provides a balance sheet value as at 31 March 217. It shows a decrease in the reserves of 17, Appendix 3 shows the value of the Newton Fund to 31 March RECOMMENDATIONS 2.1 It is recommended that the William Hill Sub-Committee: (a) (b) (c) (d) (e) Notes the actual income and expenditure for 216/17 in Appendix 1; Agrees the proposed budget for 217/18 as shown in Appendix 1; Notes the final balance sheet value as at 31 March 217 in Appendix 2; Notes the current position of the investment in the Newton Fund in Appendix 3; and Notes the short, medium and long term performance of the Newton Fund against its peers in Appendix 3. Page 3 William Hill Trust Fund Sub Committee TBC 217 1

6 3 BACKGROUND 3.1 This report provides the Committee with financial information for the period to 31 March 217 and proposed budgets for 217/18. The report also contains a projected balance sheet for the Trust Fund as at 31 March FINANCIAL POSITION 216/ Appendix 1 provides detail on income and expenditure for the 216/17 financial year as well as the proposed budget for 217/ Income & Expenditure Income The final outturn shows a total income of 14,365. This includes dividends received from the Newton Investment, see para 4.3, as well as donations received from other Melrose trusts amounting to 1,25. These are detailed in Appendix 1. Income was also received relating to interest on cash held by Scottish Borders Council, amounting to 42. The annual rate of interest applied to the cash deposits is.31%. 4.3 The capital reserve is invested in the Newton Fund and distributions are made twice a year in September and February. Dividends of 4,74 were received in total to 31 March 217. Considering dividend returns across all Common Good & Trust Funds in 216/17, the proposed budget for 217/18 is based on a distribution of 2.4% of the Market Value at 31 March Income & Expenditure Grants & Other Donations The grants and other donations distributed to 31 March 217 are shown below. Grant Recipients Approved Approved and Paid to 31 March 217 Date Fund 1 Fund 2 Fund 3 Upkeep of Family Grave Grants to Individuals- Sports Champion Melrose Primary Melrose RFC Legacy Project Gibson Park Play Area Melrose Town Centre Traders Total Paid to 31 March 217 Budget 216/17 Unallocated/(Overallocated) Budget Annual Annual Annual 7/6/16 23/2/16 1/6/ , 24,75 8 TOTAL ,59 3,77 24,92 (5,85) Proposed 217/18 Budget Approved but not yet paid Upkeep of Family Grave Grants to Individuals Sports Champion Melrose Primary ,5 4.5 Appendix 2 provides the balance sheet value at 31 March 217 and a projected balance at 31 March 218. Page 4 William Hill Trust Fund Sub Committee TBC 217 2

7 4.6 Balance Sheet Newton Investment a) Short term performance during the quarter to 31 March 217 yielded a positive return of 2.2% against benchmark of 1.%. This was followed by a further positive return of 1.2% for the quarter to 3 June 217. b) was again dominated by political and economic uncertainties, primarily the US Presidential election and the Brexit vote in this country. Although the medium term, 12 month annualised return at the end of March 217 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 is in line with the objective of the fund which is managed to seek a minimum return of 1 month GBP LIBOR rate + 4%. c) Newton continues to believe that the investment strategy in place for the Real Return Fund has the ability to continue to provide returns which meet the objective of the fund. However, given recent performance figures generated by the fund, ongoing performance has been closely monitored throughout 216/17. Appendix 3 contains a chart detailing the Newton Funds performance over the quarter to March 217 and also over the medium to long term. The improved performance in the last quarter has put Newton in the mid-range against its peers. However, their performance in the last two quarters of 216 has placed Newton outside the broad range of returns generated by its peers in the last year. This has also had the effect of dragging down the medium to long term performance. d) Given this information, the Councils Investment advisor KPMG was commissioned to evaluate and report on the continued suitability of the Newton Fund going forward. KPMG have concluded this assessment and have indicated there are more attractive options available within the market which would provide improved performance, whilst continuing to provide reasonable rates of income (through dividends) as well as capital preservation, i.e. within the previously approved Investment Strategy. e) A further report will be produced to seek approval to undertake a procurement exercise. 4.7 Balance Sheet Cash Balance The cash held by the fund is 19,169, an in-year net decrease of 15,85. The cash movement for 216/17 is as follows: Cash Balance Opening Balance at 1 April ,974 Repayment of Principal (Long Term Debtors) Melrose Golf Club Loan 6 Deficit for year from Income & Expenditure Statement (16,45) Closing Balance at 31 March , Balance Sheet Capital Reserve The Capital Reserves include the unrealised gain for the Newton Fund as at 31 March 217. Page 5 William Hill Trust Fund Sub Committee TBC 217 3

8 5 IMPLICATIONS 5.1 Financial In addition to the financial implications explained in section 4, costs may be incurred for the procurement of a new Investment Fund Manager. 5.2 Risk and Mitigations There is a risk that investments in the Newton Fund may reduce in value due to market or investment performance. This risk cannot be fully mitigated; however, it is being managed by the selection of a Fund Manager with a clear objective of preserving capital values while aiming to produce returns in line with the benchmark. 5.3 Equalities It is anticipated that there are no adverse equality implications arising from the proposals contained in this report. 5.4 Acting Sustainably Whilst there are no economic, social or environmental effects arising from the proposals contained in this report, there are, through the activities reported upon, positive impacts upon the economy through protection of employment, positive impacts upon the quality of community life and improvements in local amenities and nurturing of local talent. The potential improvement in levels of income through the use of the new investment fund will act to make the Trust Fund more sustainable in the future. 5.5 Carbon Management There are no effects on carbon emissions arising from the proposals contained in this report. 5.6 Rural Proofing There are no effects on rural proofing arising from the proposals contained in this report. 5.7 Changes to Scheme of Administration or Scheme of Delegation There are no changes required to the Scheme of Administration or Scheme of Delegation arising from the proposals contained in this report. Page 6 William Hill Trust Fund Sub Committee TBC 217 4

9 6 CONSULTATION 6.1 The Monitoring Officer, the Chief Legal Officer, the Chief Officer Audit and Risk, the Chief Officer HR and the Clerk to the Council have been consulted and their appropriate comments have been incorporated into this report. Approved by David Robertson Chief Financial Officer Signature Author(s) Kirsty Robb John Yallop Capital and Investments Manager Tel: Senior Finance Officer Treasury & Investments Tel: Extn 5933 Background Papers: Previous Minute Reference: William Hill Trust Fund Committee 7 June 216. Note You can get this document on tape, in Braille, large print and various computer formats by contacting the address below. We can also give information on other language translations as well as providing additional copies. Contact us at Corporate Finance, Council Headquarters, Newtown St Boswells, Melrose, TD6 SA. Tel: Fax: treasuryteam@scotborders.gov.uk Page 7 William Hill Trust Fund Sub Committee TBC 217 5

10 WILLIAM HILL TRUST FUND APPENDIX 1 INCOME AND EXPENDITURE 216/17 INCOME Interest on Cash deposited with Council Fund 1 Fund 2 Fund 3 Total Interest Actuals at 31/3/17 (1) (41) (42) Full Year Budget 216/17 (1) (125) (126) Over/ (Under) Spend 216/ Proposed Budget 217/18 (33) (33) Para Ref Commentary /18 Calculated at.3% Newton Fund Investment Dividends Fund 1 Fund 2 Fund 3 Total Dividends Received Page 8 Donations from Other Trusts Fund 3 Fraser Bequest (1) Fund 3 Gibson Park Trust Fund 3 Greenyards Trust (5) (153) (3,916) (4,74) (286) (9,86) (158) (1,25) (5) (155) (4,65) (4,225) (255) (4,744) (136) (5,135) (31) (5,62) (22) (5,115) (5) (145) (3,71) (3,86) (286) (9,86) (158) (1,25) /18 Calculated at 2.4% /18 Calculated at previous year values TOTAL INCOME (14,365) (9,486) (4,879) (14,143) EXPEDITURE Grants & Other Donations Fund 1- Grave Upkeep Fund 2 - Pensioners Fund 3 - General Fund , ,915 (175) (5,675) TOTAL EXPENDITURE 3,77 24,92 5,85 22 Total Net (Surplus)/Deficit for year 16,45 15, (13,923) William Hill Trust Fund Sub Committee TBC 217 6

11 WILLIAM HILL TRUST FUND PROJECTED BALANCE SHEET VALUE AT 31 March 217 Opening Movement Balance at in Year 1/4/16 216/17 Investment in Newton Fund Fund 1 Fund 2 Fund 3 Total Investment 2 5, , , Closing Balance at 31/3/17 2 5, , , APPENDIX 2 Projected Balances at 31/3/18 2 5, , , Unrealised Gain/(Loss) Fund 1 Fund 2 Fund 3 Total Unrealised Gain/(Loss) ,23 6,473 (1) (25) (638) (664) ,591 5, ,591 5,89 Total Market Value 161,473 (664) 16,89 16,89 Long Term Debtors Loan to Melrose Golf Club 1,8 (6) 1,2 6 Current Assets Debtors Total Cash deposited with SBC 34,974 (15,85) 19,169 33,692 Current Liabilities Creditors Net Assets 198,247 (17,69) 181, ,11 Funded by: Reserves Revenue Reserve Fund Capital Reserve Fund (71,646) (126,61) 16, (55,241) (125,937) (69,164) (125,937) Total Reserves (198,247) 17,69 (181,178) (195,11) Page 9 William Hill Trust Fund Sub Committee TBC 217 7

12 WILLIAM HILL TRUST FUND APPENDIX 3 INVESTMENTS EXTERNALLY MANAGED IN NEWTON REAL RETURN FUND Cost of Investment Units Initial Investment - 13 December 213 Fund 1 Fund 2 Fund 3 Disinvestment - 21 March 216 Fund ,111 82, , ,983 (2,577) (5,) Total Invested to 31 March , , Value of Investment 31 March March ,474 16,89 Increase/(Decrease) from Total Cash Invested 5,89 The graph below has been produced by KPMG and shows the fund s performance against peers as mentioned in paragraph 4.6 (c). Page 1 William Hill Trust Fund Sub Committee TBC 217 8

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