Gross sovereign-issued debt (GSID) was broadly in line with forecast at $35.7 billion (23.1% of GDP).

2 June 2006 MEDIA STATEMENT Embargoed until 10:00am, Friday 2 June 2006 Dr Peter Bushnell Deputy Secretary to the Treasury FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE TEN MONTHS ENDED 30 APRIL 2006 The Financial Statements of the Government of New Zealand for the ten months ended 30 April 2006 were released by the Treasury today. The results up to 31 March 2006 were incorporated into the annual forecasts released with the Budget on 18 May 2006. These monthly financial statements are compared against updated monthly forecast tracks based on the Budget annual forecasts. $ million April April 2006 2006 Variance June 2006 June 2005 Actual YTD Forecast YTD $m Forecast Actual Net cash flow from core operating and investing activity 3,212 2,779 433 1,755 3,104 Gross sovereign-issued debt 35,652 35,842 (190) 35,952 35,045 % of GDP 23.1 23.3 (0.2) 23.0 23.2 Net core Crown debt 7,897 8,497 (600) 9,016 10,771 % of GDP 5.1 5.5 (0.4) 5.8 7.1 Net core Crown debt with NZS Fund assets (1,609) (964) (645) (999) 4,216 % of GDP (1.0) (0.6) (0.4) (0.6) 2.8 Total Crown debt 38,878 37,631 1,247 38,889 36,864 Operating balance 9,384 9,279 105 8,486 6,247 OBERAC 7,442 7,413 29 5,924 8,873 Net worth 59,360 59,265 95 58,485 49,983 Net cash flow from core operating and investing activity was slightly ahead of forecast at $3.2 billion, due to delays in capital investment into District Health Boards and purchases of physical assets including Defence equipment and Corrections facilities. A portion of this delay in investment is expected to reverse in the coming months. Gross sovereign-issued debt (GSID) was broadly in line with forecast at $35.7 billion (23.1% of GDP). 1 The Terrace PO Box 3724 Wellington New Zealand tel. 64-4-472 2733 fax. 64-4-473 0928 www.treasury.govt.nz

Net core Crown debt was $7.9 billion which was $0.6 billion lower than forecast, largely due to higher net cash flow from core operating and investing activity of $0.4 billion (detailed above) and higher issues of circulating currency and unrealised FX gains (the latter two are not forecast as a matter of policy). The operating balance of $9.4 billion higher than forecast by $0.1 billion due to: higher than forecast gains in investment income ($0.2 billion from Reserve Bank activity and $0.1 billion from NZS Fund) were only partially offset by lower taxes and levies ($0.1 billion) and other revenues; and expenses were higher than forecast due to foreign exchange losses ($0.2 billion) and finance costs ($0.1 billion) more than offsetting delays in operating expenses of $0.2 billion lower than forecast, which was spread across a number of departments. The OBERAC was $7.4 billion, which was $1.9 billion lower than the operating balance, reflecting the removal of Meridian Energy s gain on sale of Southern Hydro, net investment gains on the asset portfolios held by the NZS Fund, ACC, EQC and GSF, and net unrealised foreign exchange gains by the Reserve Bank, Debt Management Office and NZS Fund and liability revaluations of GSF and ACC. ENDS Officer for enquiries: Kamlesh Patel Budget and Macroeconomic Branch Telephone: 64 4 471-5094 Facsimile: 64 4 499-0992 E-mail: kamlesh.patel@treasury.govt.nz 2

Financial Statements of the Government of New Zealand For the Ten Months Ended 30 April 2006 2 June 2006 Prepared by The Treasury Printed by PrintLink ISBN 0-478-18298-8 This document is available on the New Zealand Treasury s Internet site. The URL for this site is http://www.treasury.govt.nz

CONTENTS Commentary Crown Financial Statements April 2006 4 Summary 5 Breakdown of Indicators 6 Comparison with Prior Year 8 Monthly Forecast Tracks for 2005/06 Financial Year 10 Financial Statements Statement of Accounting Policies (including an explanation of changes to presentation) 12 This section outlines the summary accounting policies underpinning the preparation of the Crown financial statements. It includes an explanation of the changes to the basis of these accounts from past presentational formats. Statement of Financial Performance 14 The statement outlines the operating results of the total Crown (ie, revenues and expenses of all departments + Reserve Bank + GSF (core Crown), SOEs (including Air New Zealand) and Crown entities). Expense by sector is also shown for total Crown and core Crown. Statement of Cash Flows 16 Statement of Movements in Equity 17 Statement of Financial Position 18 The statement outlines balance sheet results of the total Crown (ie, assets and liabilities of the core Crown, SOEs and Crown entities added together). Additional information is provided on the NZS Fund and debt indicators. Statement of Borrowings 20 The statement outlines total borrowings (split by sovereign-guaranteed and non-sovereign guaranteed and categorised as domestic and foreign) less all financial assets. The net result does not represent net (core) Crown debt. Net (core) Crown numbers are shown in the information with the Statement of Financial Position and Segment information. Statement of Commitments 21 Statement of Contingent Liabilities and Assets 21 Statement of Segments 22 A new statement that outlines the operating results and balance sheet by each institutional segment (ie, core Crown, SOEs and Crown entities). Notes to the Financial Statements 26 Core Crown Government Bonds Reconciliation 36 The statement outlines the core Crown operating and investing flows and the amount available for debt repayment. It is reconciled to the NZDMO Government Stock programme. Officers for Enquiries Glenn Phillips (phone 64-4-471-5102) (E-mail: glenn.phillips@treasury.govt.nz) Budget and Macroeconomic Branch The Treasury (1 The Terrace) PO Box 3724, Wellington NEW ZEALAND Facsimile: 64-4-499-0992

COMMENTARY

CROWN FINANCIAL STATEMENTS APRIL 2006 The Government of New Zealand has a series of long term fiscal objectives, including objectives on the operating balance, revenue, expenses, debt and net worth, to maintain fiscal responsibility. To enable progress towards these long term objectives, the Government has outlined where its focus will be. Taken together this enables interested parties to assess the picture of the fiscal performance of the Government. In summary, given the long term debt to GDP objective and a policy of prefunding future expenses (ie, the purpose of the NZS Fund) it requires a level of operating balance sufficient to generate cashflow to cover capital investment. Within the full set of financial statements, each individual statement provides a different set of information to assess the overall performance (eg, expenses in the operating statement gives an indication of size of Government and the cashflow from operating and investing provides the amount left over or required to be financed after all spending, operating and capital, is taken into account). These financial statements provide a snap-shot of progress towards the long term fiscal objectives and the performance against the latest set of fiscal forecasts released in the Budget Economic and Fiscal Update on 18 May 2006. A summary of the long term objectives are outlined below. Long-term fiscal objectives Operating balance: Operating surplus on average over the economic cycle sufficient to meet the requirements for contributions to the NZS Fund and ensure consistency with the long-term debt objective. Revenue: Ensure sufficient revenue to meet the operating balance objective. Expenses: Ensure expenses are consistent with the operating balance objective. Debt: Manage total debt at prudent levels. Gross sovereign-issued debt as a percentage of GDP slowly reducing over the longer term and passing through 20% of GDP before 2015. Net worth: Increase net worth consistent with the operating balance objective. To achieve the objectives of fiscal policy, the Government s high-level focus is on: Operating surpluses (measured by the OBERAC) during the build-up phase of the NZS Fund. The focus is on core Crown revenues and expenses, with tax-to-gdp and core Crown expenses-to-gdp around current levels. Because the OBERAC surplus includes the net (after-tax) return on the NZS Fund, which the NZS Fund will retain, the Government is effectively targeting OBERAC surpluses excluding the NZS Fund s retained investment returns. A robust, broad-based tax system that raises revenue in a fair and efficient way. State Owned Enterprises (SOEs) and Crown entities contributing to surpluses, consistent with their legislation and Government policy. SOEs will have debt structures that reflect best commercial practice. Changes in the level of debt will reflect specific circumstances. Gross sovereign-issued debt-to-gdp will be reducing during the period ahead of the major demographic changes associated with population ageing. Net debt, with NZS Fund assets, is expected to fall towards minus 15% of GDP by 2015 (ie, a net financial asset position). Increasing net worth consistent with the operating balance objective will see net worth at above 50% of GDP by 2015. The NZS Fund is expected to be 21% of GDP by 2015. Consistent with the net worth objective, there will also be a focus on quality investment. 4 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

SUMMARY The Crown financial statements for the ten months ended 30 April 2006 are compared against forecasts based on the 2006 Budget Economic and Fiscal Update (Budget Update). Table 1 Summary Fiscal Indicators $ million April April 2006 2006 Variance June 2006 June 2005 Actual YTD Forecast YTD $m Forecast Actual Net cash flow from core operating and investing activity 3,212 2,779 433 1,755 3,104 Gross sovereign-issued debt 35,652 35,842 (190) 35,952 35,045 % of GDP 23.1 23.3 (0.2) 23.0 23.2 Net core Crown debt 7,897 8,497 (600) 9,016 10,771 % of GDP 5.1 5.5 (0.4) 5.8 7.1 Net core Crown debt with NZS Fund assets (1,609) (964) (645) (999) 4,216 % of GDP (1.0) (0.6) (0.4) (0.6) 2.8 Total Crown debt 38,878 37,631 1,247 38,889 36,864 Operating balance 9,384 9,279 105 8,486 6,247 OBERAC 7,442 7,413 29 5,924 8,873 Net worth 59,360 59,265 95 58,485 49,983 Net cash flow from core operating and investing activity was slightly ahead of forecast at $3.2 billion, due to delays in capital investment into District Health Boards and purchases of physical assets including Defence and Corrections facilities. A portion of this delay in investment is expected to reverse in the coming months. Gross sovereign-issued debt (GSID) was broadly in line with forecast at $35.7 billion (23.1% of GDP). Net core Crown debt was $7.9 billion which was $0.6 billion lower than forecast, largely due to higher net cash flow from core operating and investing activity of $0.4 billion (detailed above) and higher issues of circulating currency and unrealised FX gains (the latter two are not forecast as a matter of policy). The operating balance of $9.4 billion higher than forecast by $0.1 billion due to: higher than forecast gains in investment income ($0.2 billion from Reserve Bank activity and $0.1 billion from NZS Fund) were only partially offset by lower taxes and levies ($0.1 billion) and other revenues; and expenses were higher than forecast due to foreign exchange losses ($0.2 billion) and finance costs ($0.1 billion) more than offsetting delays in operating expenses of $0.2 billion lower than forecast, which was spread across a number of departments. The OBERAC was $1.9 billion lower than the operating balance as unrealised investment gains of the NZS Fund, GSF, EQC and ACC are removed from the OBERAC calculation. Similar to the operating balance, the OBERAC is broadly in line with forecasts. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 5

BREAKDOWN OF INDICATORS DEBT Core Crown Cash flow from operating and investing activities (page 36) was $3.2 billion. This represents $45.6 billion of receipts (including tax receipts of $43 billion) being utilised on: Operating payments including finance costs of $25.1 billion; and Subsidies and transfer payments (eg, NZ Superannuation and Unemployment benefit) of $12.4 billion, giving a cashflow from operating activities of $8.1 billion. This was then used to fund: Contributions to the NZS Fund for partially funding future NZS payments of $1.9 billion Purchase of physical assets (eg, prisons, schools) of $1.4 billion; and Other investment activity (including hospitals, housing, student loans and Reserve Bank reserves) of around $1.5 billion. Gross sovereign issued debt (page 19) was $35.7 billion (23.1% of GDP) made up of: $22.8 billion of domestic debt (including Government Stock and Treasury Bills); and $12.8 billion of foreign denominated debt. Net core crown debt (page 19) was $7.9 billion made up of: Gross sovereign issued debt of $35.7 billion; offset by financial assets including Marketable securities and deposits and cash of $19.3 billion; and Advances (including student loans) of $8.4 billion. The cashflow is the primary driver of the movement in both debt indicators. On a month by month basis, the movement can be seen in net debt only, as the borrowing programme (which drives gross sovereign issued debt) is set on an annual basis, and reviewed six monthly (at the time of the Economic and Fiscal Updates). 6 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

OPERATING BALANCE The operating balance (page 14) was $9.4 billion, which represents: $48.0 billion of core Crown revenue (including tax revenue of $42.6 billion and $3.7 billion of investment income) $3.9 billion net surpluses (after payment of dividend to the Government) of state-owned enterprises and Crown entities (excluding ACC liability revaluation movements); offset by $28.7 billion of core Crown operating (including finance costs) and personnel expenses; $12.5 billion of subsidies and transfer payments; and $1.2 billion of valuation expense movements of GSF and ACC. The OBERAC was $7.4 billion, which was $1.9 billion lower than the operating balance, reflecting the removal of Meridian Energy s gain on sale of Southern Hydro, net investment gains on the asset portfolios held by the NZS Fund, ACC, EQC and GSF and net foreign exchange gains by the Reserve Bank, Debt Management Office and NZS Fund and liability revaluations of GSF and ACC.. NET WORTH Net worth is the difference between assets and liabilities. Net worth is currently $59.4 billion. Net worth is affected by two sources: operating balance and revaluations. Revaluations tend to occur at year end and are not forecast as a matter of policy. Therefore the primary driver of variances in net worth during the financial year is the operating balance. The major assets the Government invests in include: Financial assets (including student loans and marketable securities) of $28 billion Government Superannuation Fund portfolio of $4 billion New Zealand Superannuation Fund of $9.7 billion Physical assets (including prisons and schools) of $22.6 billion, including $8.8 billion of revaluations Investment in state owned enterprises and Crown entities of $24 billion, including asset portfolios in Accident Compensation Corporation and Earthquake Commission, physical assets including roading, hospitals, housing and liabilities including the ACC outstanding claims liability. 1 The Government also has liabilities, primarily gross sovereign issued debt ($35.7 billion), the pension liability of the Government Superannuation Fund ($15.2 billion) and other liabilities of $10.9 billion. 1 A further breakdown of the nature of the assets and liabilities of State owned enterprises and Crown entities can be found in the statement of segments on pages 22 to 25. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 7

COMPARISON WITH PRIOR YEAR Table 2 Comparison with prior year 30 April 30 April 2006 2005 Actual Actual Change Change $m $m $m % Statement of Financial Performance Core Crown revenue Taxation revenue 42,644 39,831 2,813 7.1 Other revenue 5,401 3,735 1,666 44.6 Total core Crown Revenue 48,045 43,566 4,479 10.3 Core Crown expenses Social security and welfare 12,748 11,972 (776) (6.5) GSF pension expenses (excl valuation) 1,246 815 (431) (52.9) GSF unfunded liability movement 346 492 146 29.7 Health 7,865 7,184 (681) (9.5) Education 8,511 6,617 (1,894) (28.6) Core government services 1,679 1,509 (170) (11.3) Law and order 1,783 1,605 (178) (11.1) Defence 1,115 1,041 (74) (7.1) Transport and communications 1,453 1,131 (322) (28.5) Economic and industrial services 1,257 1,141 (116) (10.2) Primary services 344 300 (44) (14.7) Heritage, culture and recreation 981 571 (410) (71.8) Housing and community development 140 119 (21) (17.6) Other 41 25 (16) (64.0) Finance costs 1,982 1,891 (91) (4.8) Net foreign-exchange losses/(gains) 32 - (32) - Total core Crown Expenses 41,523 36,413 (5,110) (14.0) ACC unfunded liability movement (997) (1,506) (509) (33.8) Net surplus of SOE/CE's 3,859 1,887 1,972 104.5 Operating Balance 9,384 7,534 1,850 24.6 OBERAC 7,442 7,804 (362) (4.6) Cash flows from operating and investing 3,212 4,140 (928) (22.4) Debt indicators Gross sovereign-issued debt 35,652 33,511 (2,141) (6.4) Net core Crown debt 7,897 9,995 2,098 21.0 Taxation revenue was $2.8 billion (growth of 7.1%) higher than comparable period from the previous financial year. This mainly comprised of growth in source deductions reflecting strength in the labour market, growth in companies tax driven by strong returns and growth in goods and services tax. Other revenue was $1.7 billion higher than the previous year, mainly due to higher investment income earned by the NZS Fund and GSF reflecting strong returns in the New Zealand and international equity markets. 8 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

Total core Crown expenses (excluding GSF unfunded liability movement) were $4.8 billion (growth of 13.3%.) higher than the comparable period from the previous financial year. Significant movements within core Crown functional expenses were: Social security and welfare expenses were $0.8 billion higher than the previous year mainly due to the indexation of welfare benefits, partially offset by lower unemployment benefits due to the low unemployment rate; Health expenses were $0.7 billion higher than the previous year mainly due to the increase in payments to District Health Boards, reflecting increased funding to maintain and improve existing services levels; Education expenses were $1.9 billion higher than the previous year largely due to the fair value impact of the interest free student loan scheme (refer page 39 of the Half Year Update); Transport and communications expenses were $0.3 billion higher than the previous year, largely due to higher spending on maintaining local roads, state highways, passenger transport and upgrade of rail network; and Heritage, culture and recreation expenses were $0.4 billion higher than the previous year, largely due to the impact on the Kyoto liability of the removal of the carbon tax and changes to deforestation projections. In addition all other core Crown functional expenses have increased due to policy initiatives from the 2004 and 2005 Budgets. Net surplus of SOE/CE s were $2.0 billion higher than the previous year, mainly due to the gain on sale of Southern Hydro by Meridian Energy and higher investment income from financial institutions including ACC and EQC. Cash flow from operating and investing activities were $0.9 billion lower than the previous year, mainly due to lower cashflow from operations, higher advances to District Health Boards, higher capital spending on purchase of physical assets and the purchase of Reserve Bank reserves. Gross sovereign-issued debt (GSID) was $2.1 billion higher than the previous year mainly due to the Reserve Bank raising the settlement cash level. Net core Crown debt has reduced by $2.1 billion mainly due to: accumulating cash flow from operating activity of $8.1 billion; offset by purchase of physical assets of $1.7 billion; purchase of investments (excluding RB reserves) of $2.8 billion ($2.3 billion in NZSF and $0.3 billion in District Health Boards and Housing NZ Corporation); and student loan fair value write down of $1.5 billion. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 9

MONTHLY FORECAST TRACKS FOR 2005/06 FINANCIAL YEAR These monthly financial statements are compared against forecast tracks based on the 2006 Budget Update released on 18 May 2006. The table below details the key indicators for the remaining months of the 2005/06 financial year. These will form the basis of comparison to forecast for the May and June financial statements. Table 3 Forecast key indicators $ million April May Budget 2006 2006 June 2006 Forecast YTD Forecast YTD Forecast Net cash flow from core operating and investing activity 3,212 2,779 1,755 Gross sovereign-issued debt 35,842 36,353 35,952 % of GDP 23.3 23.6 23.0 Net core Crown debt 8,497 9,189 9,016 % of GDP 5.5 6.0 5.8 Net core Crown debt with NZS Fund assets (964) (600) (999) % of GDP (0.6) (0.4) (0.6) Total Crown debt 37,631 38,215 38,889 Operating balance 9,365 8,992 8,486 OBERAC 7,337 7,040 5,924 Net worth 59,351 58,979 58,485 It is expected that the operating balance/oberac and cashflow from core operating and investing activity will decrease over the last two months of the financial year to arrive at the estimated actuals reported in the 2006 Budget Update. The major factor driving the decrease in these indicators from April to June is that expenses are expected to exceed revenues over the next two months. This reflects the usual seasonal pattern where most of the tax revenue is recognised in the first nine months of the financial year, while expenses continue at a constant rate over the whole year. To illustrate this seasonal trend we can compare monthly OBERAC results from the past three years. Figure 1 illustrates the OBERAC generally spikes in November and March, reflecting the recognition of provisional tax revenue for taxpayers with 31 March balance dates. The graph also shows that there is usually a decrease in the OBERAC over the last two months of the year. Figure 1 illustrates the general trend of a decrease in the OBERAC from April to June over past years with an extrapolation of the decrease in OBERAC to the final year end position for 2006. Figure 1 OBERAC comparison $ millions 10,000 2005 9,000 2004 8,000 7,000 6,000 2006 5,000 4,000 3,000 2,000 2003 1,000 0 S O N D J F M A M J 10 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

FINANCIAL STATEMENTS

STATEMENT OF ACCOUNTING POLICIES as at 30 April 2006 1 Reporting Entity These Financial Statements are for the Crown reporting entity as specified in Part III of the Public Finance Act 1989. This comprises: Ministers of the Crown Reserve Bank of New Zealand Government Superannuation Fund Crown entities Departments State-owned enterprises Air New Zealand Limited New Zealand Superannuation Fund A schedule of entities included in the Crown reporting entity was set out on pages 98 and 99 of the Financial Statements of the Government of New Zealand for the year ended 30 June 2005. 2 General Accounting Policies These Financial Statements comply with generally accepted accounting practice. The measurement base applied is historical cost adjusted for revaluations of property, plant and equipment (where appropriate), commercial forests and marketable securities, deposits & equity investments held for trading purposes. The accrual basis of accounting has been used unless otherwise stated. These Financial Statements have been prepared on a going concern basis and the policies have been applied consistently throughout the period. 3 Specific Accounting Policies The specific accounting policies of the Crown were described on pages 41 to 48 of the Financial Statements of the Government of New Zealand for the year ended 30 June 2005. There has been a change in the accounting policy for student loans to better reflect their value under the new no-interest policy. Further information on the nature of the change is disclosed on page 39 of the Half Year Update and the impact of the change is reflected in note 9 on page 31. 4 Forecast Results and Assumptions The forecast results in these Financial Statements have been derived from the forecasts released in the 2006 Budget Update, on 18 May 2006. The assumptions underlying the preparation of forecasts are set out in the Statement of Accounting Policies and Forecast Assumptions reproduced in full on Treasury s website www.treasury.govt.nz/forecasts/befu/2006/. 12 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

STATEMENT OF ACCOUNTING POLICIES (CONTINUED) as at 30 April 2006 5 Comparative Figures Comparative figures for the previous financial year to 30 June 2005 and comparative year-to-date period are presented in these Financial Statements. Percentage variances between the actual and prior year balances exceeding 500% are not shown. 6 Outstanding Issues While the fully consolidated Crown actuals and forecasts include the same reporting entities as previously, there are some issues still to be worked through. These issues may impact on the final form of the fully consolidated Crown forecasts and Crown Financial Statements. The most significant issue is whether to combine tertiary education institution s (TEIs) in the Crown Financial Statements. The issue is not clear-cut. The Treasury, the Ministry of Education and TEIs are currently working through the issue, as outlined on page 59 of the 30 June 2005 Crown Financial Statements. The forecasts and actuals are continuing with the method of equity accounting TEIs. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 13

STATEMENT OF FINANCIAL PERFORMANCE for the ten months ended 30 April 2006 Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Note Actual Forecast Variance $m $m $m $m $m % $m Revenue Levied through the Crown s Sovereign Power 46,624 39,380 Taxation revenue 1 42,229 42,322 (93) (0.2) 49,607 3,115 2,596 Levies, fees, fines and penalties 1 2,673 2,648 25 0.9 3,128 Total Revenue Levied through 49,739 41,976 the Crown's Sovereign Power 1 44,902 44,970 (68) (0.2) 52,735 Earned through the Crown s Operations 11,331 8,937 Sales of goods and services 2 10,593 9,944 649 6.5 12,585 3,814 2,444 Investment income 3 5,937 5,356 581 10.8 6,190 2,181 2,093 Other revenue 4 2,040 2,239 (199) (8.9) 2,577 Total Revenue Earned through 17,326 13,474 the Crown s Operations 18,570 17,539 1,031 5.9 21,352 67,065 55,450 Total Crown Revenue 63,472 62,509 963 1.5 74,087 Expenses By input type 15,844 13,046 Subsidies and transfer payments 5 13,854 13,941 87 0.6 17,047 13,562 11,158 Personnel expenses 6 12,547 12,604 57 0.5 14,846 25,314 19,581 Operating expenses 7 24,193 23,725 (468) (2.0) 29,644 - - Forecast for future new spending - - - - 7 2,760 2,238 Finance costs 2,301 2,059 (242) (11.8) 2,792 Net foreign-exchange (17) 11 (gains)/losses (39) (331) (292) (88.2) (198) 1,410 492 Movement in total GSF liability 14 346 346 - - 409 2,037 1,506 Movement in total ACC liability 15 997 997 - - 1,187 60,910 48,032 Total Crown Expenses 54,199 53,341 (858) (1.6) 65,734 6,155 7,418 Revenues less Expenses 9,273 9,168 105 3.1 8,353 133 116 Net surplus TEIs 111 111 - - 133 Operating Balance (including 6,288 7,534 minority interest) 9,384 9,279 105 1.1 8,486 (41) - Minority interest - - - - - 6,247 7,534 Operating Balance 9,384 9,279 105 1.1 8,486 The accompanying Notes and Accounting policies are an integral part of these Statements. 14 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

STATEMENT OF FINANCIAL PERFORMANCE (CONTINUED) for the ten months ended 30 April 2006 Below is an analysis of total Crown expenses and core Crown expenses by functional classification. This information reconciles to the segment information within the Statement of Segments. Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Note Actual Forecast Variance $m $m $m $m $m % $m Total Crown expenses By functional classification 18,522 14,952 Social security and welfare 15,363 15,431 68 0.4 18,744 2,442 1,307 GSF pension expenses 1,592 1,577 (15) (1.0) 1,710 8,444 6,913 Health 7,540 7,434 (106) (1.4) 9,284 8,619 7,057 Education 9,328 9,407 79 0.8 10,852 2,085 1,453 Core government services 1,551 1,625 74 4.6 2,011 2,131 1,758 Law and order 1,924 1,949 25 1.3 2,418 1,229 1,004 Defence 1,079 1,069 (10) (0.9) 1,317 5,948 4,560 Transport and communications 4,913 5,107 194 3.8 6,201 Economic and industrial 4,859 3,671 services 5,152 4,527 (625) (13.8) 6,340 1,128 1,099 Primary services 999 988 (11) (1.1) 1,190 2,032 1,419 Heritage, culture and recreation 1,854 1,841 (13) (0.7) 2,253 Housing and community 697 564 development 602 614 12 2.0 761 31 26 Other 40 44 4 9.1 52 2,760 2,238 Finance costs 2,301 2,059 (242) (11.8) 2,792 Net foreign-exchange (17) 11 (gains)/losses (39) (331) (292) (88.2) (198) - - Forecast for future new spending - - - - 7 60,910 48,032 Total Crown Expenses 54,199 53,341 (858) (1.6) 65,734 Core Crown expenses By functional classification 14,682 11,972 Social security and welfare 12,748 12,768 20 0.2 15,702 2,442 1,307 GSF pension expenses 1,592 1,577 (15) (1.0) 1,710 8,813 7,184 Health 7,865 7,883 18 0.2 9,563 7,930 6,617 Education 8,511 8,540 29 0.3 10,039 2,217 1,509 Core government services 1,679 1,754 75 4.3 2,198 1,977 1,605 Law and order 1,783 1,808 25 1.4 2,233 1,275 1,041 Defence 1,115 1,109 (6) (0.5) 1,378 1,635 1,131 Transport and communications 1,453 1,455 2 0.1 1,910 Economic and industrial 1,444 1,141 services 1,257 1,305 48 3.7 1,725 394 300 Primary services 344 342 (2) (0.6) 446 991 571 Heritage, culture and recreation 981 949 (32) (3.4) 1,162 Housing and community 163 119 development 140 156 16 10.3 214 32 25 Other 41 45 4 8.9 52 2,274 1,891 Finance costs 1,982 1,887 (95) (5.0) 2,156 Net foreign-exchange (35) - losses/(gains) 32 (139) (171) (123.0) (50) - - Forecast for future new spending - - - - 7 46,234 36,413 Total Core Crown Expenses 41,523 41,439 (84) (0.2) 50,445 The accompanying Notes and Accounting policies are an integral part of these Statements. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 15

STATEMENT OF CASH FLOWS for the ten months ended 30 April 2006 Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Actual Forecast Variance $m $m $m $m $m % $m Cash Flows From Operations Cash was provided from 46,867 39,977 Total tax receipts (refer Note 1) 42,367 42,319 48 0.1 49,460 2,974 2,607 Total other sovereign receipts (refer Note 1) 2,702 2,731 (29) (1.1) 3,136 1,642 1,456 Interest 1,462 1,195 267 22.3 1,546 66 53 Dividends 62 86 (24) (27.9) 84 11,517 9,032 Sales of goods and services 10,865 10,206 659 6.5 12,884 2,186 1,596 Other operating receipts 1,913 2,054 (141) (6.9) 2,767 65,252 54,721 Total cash provided from operations 59,371 58,591 780 1.3 69,877 Cash was disbursed to 15,717 12,861 Subsidies and transfer payments 13,673 13,854 181 1.3 17,167 35,052 28,618 Personnel and operating payments 32,317 32,210 (107) (0.3) 39,594 2,294 1,758 Finance costs 1,815 1,604 (211) (13.2) 2,477 - - Forecast for future new spending - - - - 7 53,063 43,237 Total cash disbursed to operations 47,805 47,668 (137) (0.3) 59,245 12,189 11,484 Net Cash Flows From Operations 11,566 10,923 643 5.9 10,632 Cash Flows From Investing Activities Cash was provided from 316 194 Sale of physical assets 1,754 1,780 (26) (1.5) 1,824 316 194 Total cash provided from investing activities 1,754 1,780 (26) (1.5) 1,824 Cash was disbursed to 4,862 3,671 Purchase of physical assets 4,776 5,705 929 16.3 6,359 1,061 898 Net increase in advances 1,391 1,580 189 12.0 1,764 Net purchase/(sale) of marketable securities, 6,677 6,164 deposits & equity investments 6,063 4,631 (1,432) (30.9) 6,024 - - Capital contingency provision - - - - - 12,600 10,733 Total cash disbursed to investing activities 12,230 11,916 (314) (2.6) 14,147 (12,284) (10,539) Net Cash Flows From Investing Activities (10,476) (10,136) (340) (3.4) (12,323) Net Cash Flows From (95) 945 Operating and Investing Activities 1,090 787 303 38.5 (1,691) Cash Flows From Financing Activities Cash was Provided From 188 240 Issues of circulating currency 306 211 95 45.0 211 (951) (1,261) Net issues/(repayment) of Government stock 1 (616) (785) 169 21.5 17 (763) (1,021) Total cash provided from financing activities (310) (574) 264 46.0 228 Cash was Disbursed to Net (issues)/repayment of foreign-currency (1,913) 669 borrowing 1,448 1,090 (358) (32.8) 415 Net repayment/(issues) of other New Zealand- 829 (805) dollar borrowing (1,853) (776) 1,077 138.8 (1,483) (1,084) (136) Total cash disbursed to financing activities (405) 314 719 229.0 (1,068) 321 (885) Net Cash Flows From Financing Activities 95 (888) 983 110.7 1,296 226 60 Net Movement in Cash 1,185 (101) 1,286 - (395) 3,450 3,450 Opening Cash Balance 3,710 3,710 - - 3,710 Foreign-exchange (losses)/gains on 34 18 opening cash 33 3 30-4 3,710 3,528 Closing Cash Balance 4,928 3,612 1,316 36.4 3,319 1 Net issues of Government stock include movements within government stock holdings of entities such as NZS Fund, GSF, ACC and EQC. The Bonds reconciliation at the end of these accounts outlines NZDMO issues. The accompanying Notes and Accounting policies are an integral part of these Statements. 16 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

STATEMENT OF CASH FLOWS (CONTINUED) for the ten months ended 30 April 2006 Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Actual Forecast Variance $m $m $m $m $m % $m Reconciliation Between the Net Cash Flows from Operations and the Operating Balance 12,189 11,484 Net Cash Flows from Operations 11,566 10,923 643 6 10,632 Items included in the operating balance but not in net cash flows from operations Valuation changes (1,410) (492) (Increase)/decrease in pension liabilities (346) (346) - - (409) (2,037) (1,506) (Increase)/decrease in ACC liabilities (997) (997) - - (1,187) (53) - National Provident Fund guarantee - - - - - (23) - Revaluation of commercial forests - - - - - 4 (76) Unrealised net foreign-exchange (losses)/gains 84 (68) 152 224 42 528 344 Other valuation changes 1,145 1,174 (29) (2) 1,352 (2,991) (1,730) Total valuation changes (114) (237) 123 51.9 (202) Property, plant & equipment asset movements (2,528) (2,057) Depreciation (2,190) (2,237) 47 2.1 (2,715) - - Gain/(loss) on sale of Southern Hydro 630 630 - - 630 (2) - Gain/(loss) on sale of physical assets - - - - - (2,530) (2,057) Total property, plant & equipment movements (1,560) (1,607) 47 2.9 (2,085) Other Non-cash Items (188) (70) Student loans (1,688) (1,657) (31) (1.9) (1,740) (97) (77) Amortisation of goodwill (74) (75) 1 1.3 (89) 492 - Accrued income from NZS Fund 1,064 1,019 45 4.4 1,123 133 116 Other 111 111 - - 133 340 (31) Total Other Non-cash Items (587) (602) 15 2.5 (573) Movements in Working Capital (202) (661) Increase/(decrease) in taxes receivable 433 35 398-50 498 568 (Decrease)/increase in other receivables 17 (409) 426 104.2 (500) 58 63 Increase/(decrease) in inventories 31 66 (35) (53.0) 76 (1,115) (102) Decrease/(increase) in payables (402) 1,110 (1,512) (136.2) 1,088 (761) (132) Total movements in working capital 79 802 (723) (90.1) 714 6,247 7,534 Operating Balance 9,384 9,279 105 1.1 8,486 STATEMENT OF MOVEMENTS IN EQUITY for the ten months ended 30 April 2006 35,463 35,463 Opening Crown Balance 49,983 49,983 - - 49,983 6,247 7,534 Operating balance for the period 9,384 9,279 105 1.1 8,486 41 - Minority interest in operating balance - - - - - 35 - Increase in minority interest - - - - - 8,197 601 Net revaluations (7) 3 (10) (333.3) 16 Total Recognised Revenues 14,520 8,135 and Expenses 9,377 9,282 95 1.0 8,502 49,983 43,598 Closing Crown Balance 59,360 59,265 95 0.2 58,485 The accompanying Notes and Accounting policies are an integral part of these Statements. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 17

STATEMENT OF FINANCIAL POSITION as at 30 April 2006 Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Note Actual Forecast Variance $m $m $m $m $m % $m Assets 3,710 3,528 Cash and bank balances 8 4,928 3,612 1,316 36.4 3,319 Marketable securities, deposits 33,062 31,278 & equity investments 8 43,672 42,117 1,555 3.7 42,016 8,536 8,515 Advances 9 8,279 8,364 (85) (1.0) 8,930 10,883 10,494 Receivables 10 11,333 10,509 824 7.8 10,433 946 951 Inventories 977 1,012 (35) (3.5) 1,022 221 216 Other investments 11 232 250 (18) (7.2) 267 67,494 59,794 Property, plant & equipment 12 68,854 69,909 (1,055) (1.5) 70,109 5,010 4,496 Investment in TEIs 5,121 5,121 - - 5,150 232 250 Commercial forests 232 232 - - 232 737 742 Intangible assets 538 525 13 2.5 521 - - Forecast for new capital - - - - - 130,831 120,264 Total Assets 144,166 141,651 2,515 1.8 141,999 Liabilities 14,451 13,683 Payables and provisions 13 14,736 13,657 (1,079) (7.9) 13,275 3,197 3,249 Currency issued 3,503 3,408 (95) (2.8) 3,408 Borrowings - sovereign 28,645 27,364 guaranteed 29,801 29,724 (77) (0.3) 30,025 Borrowings - non-sovereign 8,219 7,483 guaranteed 9,077 7,907 (1,170) (14.8) 8,864 14,952 14,034 GSF Pension liability 14 15,298 15,298 - - 15,361 11,384 10,853 ACC liability 15 12,391 12,392 1-12,581 80,848 76,666 Total Liabilities 84,806 82,386 (2,420) (2.9) 83,514 Total Assets less 49,983 43,598 Total Liabilities 59,360 59,265 95 0.2 58,485 Net Worth 21,780 23,040 Taxpayer funds 31,194 31,061 133 0.4 30,281 27,988 20,419 Revaluation reserve 16 27,951 27,989 (38) (0.1) 27,989 215 139 Minority interest 215 215 - - 215 49,983 43,598 Net Worth 59,360 59,265 95 0.2 58,485 The accompanying Notes and Accounting policies are an integral part of these Statements. 18 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

STATEMENT OF FINANCIAL POSITION (CONTINUED) as at 30 April 2006 Following is an analysis of the NZS Fund and Gross and Net Debt information. The notes to the accounts provide breakdown of other key items. Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Actual Forecast Variance $m $m $m $m $m % $m New Zealand Superannuation Fund Within MSDs & equity investments is the NZS Fund (except for cross holdings of investments with other parts of the Crown, for example the NZS Fund may hold NZ Government Stock). The following information includes all investments and income, including cross-holdings of NZ Government Stock and accrued interest on such stock. 3,956 3,956 Opening balance 6,555 6,555 - - 6,555 2,107 1,702 Gross contribution 1,887 1,887 - - 2,337 492 244 Income after tax 1,064 1,019 45 4.4 1,123 6,555 5,902 NZS Fund balance 9,506 9,461 45 0.5 10,015 Gross and Net Debt information Definitions of debt: Total Crown gross debt is the total borrowings (both sovereign-guaranteed and non-sovereign guaranteed) of the total Crown. This equates to the amount in the total Crown balance sheet and represents the complete picture of whole-of-crown debt obligations to external parties. The balance sheet splits total Crown debt into sovereign-guaranteed and non-sovereign-guaranteed debt. This split reflects the fact that debt held by SOEs and Crown entities is not explicitly guaranteed by the Crown. Any such debt that may be guaranteed is included in the sovereign-guaranteed total. No debt of SOEs and Crown entities is currently guaranteed by the Crown. Gross sovereign-issued debt is debt issued by the sovereign (i.e., core Crown) and includes Government stock held by the NZS Fund, GSF, ACC or EQC for example. In other words, the total sovereign-issued debt does not eliminate any internal cross-holdings held by these entities. The Government's debt objective uses this measure of debt. Total Crown Debt 36,864 34,847 Total Crown gross debt 38,878 37,631 1,247 3.3 38,889 35,045 33,511 Gross sovereign-issued debt 35,652 35,842 (190) (0.5) 35,952 Core Crown Debt 35,045 33,511 Gross sovereign-issued debt 35,652 35,842 (190) (0.5) 35,952 (33,078) (31,963) Financial assets (40,532) (39,856) (676) (1.7) (39,556) 1,967 1,548 (4,880) (4,014) (866) (21.6) (3,604) NZS Fund and GSF 8,804 8,447 financial assets 12,777 12,511 266 2.1 12,620 10,771 9,995 Net Core Crown Debt 7,897 8,497 (600) (7.1) 9,016 The accompanying Notes and Accounting policies are an integral part of these Statements. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 19

STATEMENT OF BORROWINGS as at 30 April 2006 Prior Year Actual Annual 30 30 Current Year Actual vs Forecast Forecast June April 2005 2005 Actual Forecast Variance $m $m $m $m $m % $m Sovereign-Guaranteed Debt New Zealand-Dollar Debt 16,058 15,802 Government stock 16,275 15,808 (467) (3.0) 16,814 5,245 5,522 Treasury bills 5,226 5,549 323 5.8 5,262 (6,123) 3,860 Loans and foreign-exchange contracts (5,069) (8,655) (3,586) (41.4) (9,030) 583 597 Retail stock 556 535 (21) (3.9) 513 15,763 25,781 Total New Zealand-Dollar Debt 16,988 13,237 (3,751) (28.3) 13,559 Foreign-Currency Debt 7,906 (992) United States dollars 4,881 8,811 3,930 44.6 8,808 252 444 Japanese yen 343 508 165 32.5 508 4,724 2,131 European and other currencies 7,589 7,168 (421) (5.9) 7,150 12,882 1,583 Total Foreign-Currency Debt 12,813 16,487 3,674 22.3 16,466 28,645 27,364 Total Sovereign-Guaranteed Debt 29,801 29,724 (77) (0.3) 30,025 Non-Sovereign-Guaranteed Debt 5,601 5,059 New Zealand dollars 6,631 5,263 (1,368) (26.0) 6,762 1,541 1,633 United States dollars 2,184 1,890 (294) (15.6) 1,962 324 184 Japanese yen 139 - (139) - - 753 607 European and other currencies 123 754 631 83.7 140 8,219 7,483 Total Non-Sovereign Debt 9,077 7,907 (1,170) (14.8) 8,864 36,864 34,847 Total Borrowings (Gross Debt) 38,878 37,631 (1,247) (3.3) 38,889 Less Financial Assets (including restricted assets) Marketable Securities, Deposits and Equity Investments 6,487 17,691 New Zealand dollars 12,832 7,800 5,032 64.5 7,402 9,733 180 United States dollars 6,453 11,150 (4,697) (42.1) 11,019 789 760 Japanese yen 637 753 (116) (15.4) 1,037 4,455 1,951 European and other currencies 7,476 6,301 1,175 18.6 7,010 702 777 Reserve position at IMF 430 282 148 52.5 281 2,385 2,161 NZ equity investments 2,906 2,943 (37) (1.3) 3,160 8,511 7,758 Foreign equity investments 12,938 12,888 50 0.4 12,107 Total Marketable Securities 33,062 31,278 Deposits & Equity Investments 43,672 42,117 1,555 3.7 42,016 Advances and Cash 6,465 6,526 Student loans 5,431 5,417 14 0.3 5,472 2,071 1,989 Other advances 2,848 2,947 (99) (3.4) 3,458 3,710 3,528 Cash 4,928 3,612 1,316 36.4 3,319 12,246 12,043 Total Advances and Cash 13,207 11,976 1,231 10.3 12,249 45,308 43,321 Total Financial Assets 56,879 54,093 2,786 5.2 54,265 (8,444) (8,474) Borrowings less Financial Assets (18,001) (16,462) 1,539 9.3 (15,376) (13) (1,452) Net New Zealand-dollar debt (5,561) (4,410) 1,151 26.1 (3,432) (8,431) (7,022) Net foreign-currency debt (12,440) (12,052) 388 3.2 (11,944) (8,444) (8,474) Borrowings less Financial Assets (18,001) (16,462) 1,539 9.3 (15,376) The accompanying Notes and Accounting policies are an integral part of these Statements. 20 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

STATEMENT OF COMMITMENTS as at 30 April 2006 As at As at As at 30 April 30 June 30 April 2006 2005 2005 $m $m $m Capital Commitments Specialist military equipment 616 825 886 Land and buildings 619 1,440 1,797 Other property, plant and equipment 2,422 2,432 899 Other capital commitments 209 69 104 TEIs 125 125 60 Total Capital Commitments 3,991 4,891 3,746 Operating Commitments Non-cancellable accommodation leases 2,150 1,972 1,475 Other non-cancellable leases 2,383 2,606 2,327 Non-cancellable contracts for the supply of goods and services 4,119 1,721 4,655 Other operating commitments 2,787 4,054 2,502 TEIs 1,052 1,052 325 Total Operating Commitments 12,491 11,405 11,284 Total Commitments 16,482 16,296 15,030 Total Commitments by Institutional Segment Core Crown 6,179 2,627 6,189 Crown entities 6,823 10,061 6,663 State-owned enterprises 3,480 3,608 2,178 Total Commitments 16,482 16,296 15,030 STATEMENT OF CONTINGENT LIABILITIES AND ASSETS as at 30 April 2006 Quantifiable Contingent Liabilities As at As at As at 30 April 30 June 30 April 2006 2005 2005 $m $m $m Guarantees and Indemnities 151 149 157 Uncalled Capital 2,473 2,233 2,160 Legal Proceedings and Disputes 650 586 782 Other Contingent Liabilities 1,945 1,502 1,472 Total Quantifiable Contingent Liabilities 5,219 4,470 4,571 Total Quantifiable Contingent Liabilities by Institutional Segment Core Crown 5,089 4,330 4,300 Crown entities 15 36 11 State-owned enterprises 115 104 260 Total Quantifiable Contingent Liabilities 5,219 4,470 4,571 Quantifiable Contingent Assets Core Crown - Education and Transport 111 107 121 Total Quantifiable Contingent Assets 111 107 121 The accompanying Notes and Accounting policies are an integral part of these Statements. Financial Statements of the Government of New Zealand ten months ended 30 April 2006 21

STATEMENT OF SEGMENTS Financial Performance and Financial Position by institutional form Statement of Financial Performance (institutional form) for the ten months ended 30 April 2006 (actual to forecast) Current Year-To-Date Actual vs Forecast Core Crown Crown entities Actual Forecast Actual Forecast April April April April 2005/06 2005/06 2005/06 2005/06 ($ million) $m $m $m $m Revenue Taxation revenue 42,644 42,705 - - Other sovereign levied income 539 577 2,177 2,115 Sales of goods and services 641 625 1,405 1,475 Investment income 3,655 3,329 1,915 1,898 Other revenues 566 646 15,211 15,395 Total revenue 48,045 47,882 20,708 20,883 Expenses by input type Subsidies and transfer payments 12,469 12,514 1,385 1,427 Personnel expenses 4,846 4,881 6,202 6,178 Operating expenses 21,848 21,950 10,255 10,581 Finance costs 1,981 1,887 246 254 FX losses/(gains) 33 (139) (72) (152) GSF and ACC liability revaluation movts 346 346 997 997 Total expenses 41,523 41,439 19,013 19,285 Expenses by functional classification Social security and welfare 12,748 12,768 3,006 3,041 Health 7,865 7,883 6,545 6,546 Education 8,511 8,540 5,475 5,558 Other functional classifications 10,385 10,501 3,813 4,038 Forecast for future new spending - - - - Finance costs and FX losses/(gains) 2,014 1,747 174 102 Total expenses 41,523 41,439 19,013 19,285 Net surplus of TEIs - - 111 111 Minority interest - - - - Operating balance 6,522 6,443 1,806 1,709 Statement of Financial Position (institutional form) as at 30 April 2006 (actual to forecast) Core Crown Crown entities Actual Forecast Actual Forecast April April April April 2005/06 2005/06 2005/06 2005/06 ($ million) $m $m $m $m Assets Financial assets 40,532 39,856 17,558 17,350 Physical assets 22,580 22,866 32,780 32,871 Investment in SOEs & CE (including TEIs) 23,987 23,972 5,121 5,121 Other assets 9,587 8,761 1,971 2,190 Total assets 96,686 95,455 57,430 57,532 Liabilities Borrowings 34,536 34,618 3,933 3,973 Other liabilities 27,334 26,088 16,757 16,853 Total liabilities 61,870 60,706 20,690 20,826 Net worth 34,816 34,749 36,740 36,706 Taxpayer funds 26,026 25,950 21,219 21,170 Revaluation reserves 8,790 8,799 15,521 15,536 Minority interest - - - - Net worth 34,816 34,749 36,740 36,706 Analysis of financial assets and borrowings Advances and cash 8,643 8,534 2,164 1,990 MSDs and equity investments 31,889 31,322 15,394 15,360 Total financial assets 40,532 39,856 17,558 17,350 Borrowings - Sovereign guaranteed 34,536 34,618 - - Borrowings - Non-sovereign guaranteed - - 3,933 3,973 Total borrowings 34,536 34,618 3,933 3,973 Borrowings less financial assets (5,996) (5,238) (13,625) (13,377) Net Crown debt 7,897 8,497 Net Crown debt and gross sovereign-issued debt differ from the analysis above due to elimination of cross-holdings of Govt Gross sovereign-issued debt 35,652 35,842 stock and adding back the NZS Fund and GSF assets. 22 Financial Statements of the Government of New Zealand ten months ended 30 April 2006

STATEMENT OF SEGMENTS (CONTINUED) Financial Performance and Financial Position by institutional form for the ten months ended 30 April 2006 (actual to forecast) State-owned enterprises Inter-segment elimins Total Crown Actual Forecast Actual Forecast Actual Forecast April April April April April April 2005/06 2005/06 2005/06 2005/06 2005/06 2005/06 ($ million) $m $m $m $m $m $m Revenue Taxation revenue - - (415) (383) 42,229 42,322 Other sovereign levied income - - (43) (44) 2,673 2,648 Sales of goods and services 8,919 8,242 (372) (398) 10,593 9,944 Investment income 1,004 838 (637) (709) 5,937 5,356 Other revenues 682 716 (14,419) (14,518) 2,040 2,239 Total revenue 10,605 9,796 (15,886) (16,052) 63,472 62,509 Expenses by input type Subsidies and transfer payments - - - - 13,854 13,941 Personnel expenses 1,504 1,549 (5) (4) 12,547 12,604 Operating expenses 7,336 6,536 (15,246) (15,342) 24,193 23,725 Finance costs 439 345 (365) (427) 2,301 2,059 FX losses/(gains) - (40) - - (39) (331) GSF and ACC liability revaluation movts - - - - 1,343 1,343 Total expenses 9,279 8,390 (15,616) (15,773) 54,199 53,341 Expenses by functional classification Social security and welfare - - (391) (378) 15,363 15,431 Health - - (6,870) (6,995) 7,540 7,434 Education 12 12 (4,670) (4,703) 9,328 9,407 Other functional classifications 8,828 8,072 (3,320) (3,270) 19,706 19,341 Forecast for future new spending - - - - - - Finance costs and FX losses/(gains) 439 306 (365) (427) 2,262 1,728 Total expenses 9,279 8,390 (15,616) (15,773) 54,199 53,341 Net surplus of TEIs - - - - 111 111 Minority interest - - - - - - Operating balance 1,326 1,406 (270) (279) 9,384 9,279 Statement of Financial Position (institutional form) as at 30 April 2006 (actual to forecast) Current Year-To-Date Actual vs Forecast State-owned enterprises Inter-segment elimins Total Crown Actual Forecast Actual Forecast Actual Forecast April April April April April April 2005/06 2005/06 2005/06 2005/06 2005/06 2005/06 ($ million) $m $m $m $m $m $m Assets Financial assets 6,061 4,314 (7,272) (7,427) 56,879 54,093 Physical assets 13,494 14,172 - - 68,854 69,909 Investment in SOEs & CE (including TEIs) - - (28,876) (28,861) 232 232 Other assets 2,303 2,166 4,340 4,300 18,201 17,417 Total assets 21,858 20,652 (31,808) (31,988) 144,166 141,651 Liabilities Borrowings 7,681 6,467 (7,272) (7,427) 38,878 37,631 Other liabilities 3,006 3,012 (1,169) (1,198) 45,928 44,755 Total liabilities 10,687 9,479 (8,441) (8,625) 84,806 82,386 Net worth 11,171 11,173 (23,367) (23,363) 59,360 59,265 Taxpayer funds 7,316 7,304 (23,367) (23,363) 31,194 31,061 Revaluation reserves 3,640 3,654 - - 27,951 27,989 Minority interest 215 215 - - 215 215 Net worth 11,171 11,173 (23,367) (23,363) 59,360 59,265 Analysis of financial assets and borrowings Advances and cash 4,807 3,862 (2,407) (2,410) 13,207 11,976 MSDs and equity investments 1,254 452 (4,865) (5,017) 43,672 42,117 Total financial assets 6,061 4,314 (7,272) (7,427) 56,879 54,093 Borrowings - Sovereign guaranteed - - (4,735) (4,894) 29,801 29,724 Borrowings - Non-sovereign guaranteed 7,681 6,467 (2,537) (2,533) 9,077 7,907 Total borrowings 7,681 6,467 (7,272) (7,427) 38,878 37,631 Borrowings less financial assets 1,620 2,153 - - (18,001) (16,462) Financial Statements of the Government of New Zealand ten months ended 30 April 2006 23