45
NOTE 16: CONTINUED
(b) Key management and directors
No directors or senior management have entered into
related party transactions with the Company.
(c) Other related parties
No related party debts have been written off or forgiven
during the year.
NOTE 17: FINANCIAL INSTRUMENTS
City Care Ltd is party to financial instruments as part of
its everyday operation. These include instruments such
as bank balances, investments, accounts receivable,
accounts payable and term loans.
The company has a series of policies providing risk
management for interest rates and the concentration
of credit.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument will fluctuate due to the changes in market
interest rates. This could particularly impact on the cost
of borrowing or the return from investments.
The interest rates on the company's borrowings are
disclosed in notes 10 and 11.
The directors do not consider there is any significant
exposure to interest rate risk on the company's
borrowings.
Currency risk
Currency risk is the risk that the value of a financial
instrument will fluctuate due to changes in foreign
exchange rates.
City Care Ltd has no exposure to currency risk.
Credit risk
Credit risk is the risk that a third party will default on
its obligation to the company, causing the company to
incur a loss.
Financial instruments which potentially subject the
company to credit risk consist principally of cash and
trade receivables.
NOTE 17: CONTINUED
Concentrations of credit risk with respect to
accounts receivable are high due to the reliance on
the Christchurch City Council for 63% of City Care
Ltd revenue. However, Christchurch City Council is
considered a high credit quality entity.
Fair value
For all financial instruments the carrying amount is
assessed as being fair value.
NOTE 18: STATEMENT OF PERFORMANCE
The Statement of Corporate Intent, agreed between
the directors of City Care Ltd and the Christchurch City
Council, provided the following performance targets:
(1) Financial performance
Actual Target
$000's $000's
Operating revenues
62,654 59,500
Net operating profit after tax (NOPAT)
2,062 1,750
Shareholders funds to total assets
44%
55%
(2) Non-financial performance
Maintenance of accreditation of:
ISO 9001 Quality management
Maintained
ISO 14001 Environmental management
Maintained
NZS4801 Health & safety management
Maintained
ACC tertiary health and safety
Maintained
management standard
Enviromark diamond certification
Maintained
Achieve unqualified financial audit report
Achieved
NOTE 19: POST BALANCE DATE EVENTS
On 25th July 2004 the company issued 2,500,000
redeemable preference shares to Christchurch City
Holdings for total consideration of $2,500,000.
Other than this no significant events have occurred
since balance date.