11 March 2014 MEDIA STATEMENT Embargoed until 10.00am, Tuesday 11 March 2014 Fergus Welsh Acting Chief Government Accountant The Treasury Financial Statements of the Government of New Zealand for the Seven Months Ended 31 January 2014 The Financial Statements of the Government of New Zealand for the seven months ended 31 January 2014 were released by the Treasury today. These statements are compared against forecasts based on the Half Year Economic and Fiscal Update (HYEFU), released on 17 December 2013. The operating balance before gains and losses (OBEGAL) was in deficit by $1.1 billion, which was $637 million more than expected, mainly due to lower core Crown tax revenue across most tax types. This result was partially offset by lower core Crown expenses and higher returns from Crown Entities. At this stage, it is difficult to determine how much of the lower than forecast tax is temporary versus permanent but we expect this to become clearer over the next few months. Timing issues are likely to see some of the current variance narrow by year end. Factors contributing to these timing issues include mismatching in the timing of GST refunds and receipts relating to both export products and the Canterbury rebuild, as well as tax revenue from some large corporate taxpayers not yet being visible to the IRD owing to their use of tax pooling schemes. Following on the trend in recent months, continued strength in equity markets saw gains recorded on financial instruments of $2.8 billion, which was $1.3 billion ahead of forecast. As a result, the operating balance surplus was $629 million higher than forecasts at $3.4 billion. Net debt was $631 million higher than forecast at $59.9 billion or 27.7% of GDP. This was primarily due to a higher than forecast residual cash deficit driven by lower than expected core Crown tax receipts and higher than expected operating payments. Delays in insurance proceeds being returned to the core Crown also contributed to the higher than forecast residual cash deficit. At 31 January, total Crown assets were $246.9 billion and liabilities were $171.8 billion and the Crown’s share of net worth strengthened to $70.6 billion. January 2014 $ million Actual1 Year to date January 2014 Variance HYEFU to HYEFU Forecast1 $m Variance to HYEFU Full Year June 2014 HYEFU % Forecast2 Core Crown Core Crown tax revenue 34,982 35,858 (876) (2.4) 62,491 Core Crown revenue Core Crown expenses 38,277 39,169 (892) (2.3) 68,493 40,127 40,265 138 0.3 72,181 Core Crown residual cash (4,112) (3,250) (863) (26.6) (4,076) Gross debt3 as a percentage of GDP 83,333 83,450 117 0.1 81,628 38.6% 38.6% Net debt4 as a percentage of GDP 59,897 59,266 (631) (1.1) 59,983 27.7% 27.4% (1,063) (426) Total Crown Operating balance before gains and losses Operating balance Net worth attributable to the Crown 35.8% 26.3% (637) (149.5) (2,320) 3,372 2,743 629 22.9 1,639 70,627 70,242 385 0.5 69,165 1 Using GDP for the year ended 30 September 2013 of $216,134 million (Source: Statistics New Zealand). 2 Using forecast GDP for the year ended 30 June 2014 of $227,793 million (Source:  Treasury). 3 Gross sovereign‐issued debt excluding settlement cash and Reserve Bank bills. 4 Net core Crown debt excluding student loans and other advances.  Net debt may fluctuate during the year largely reflecting  the timing of tax receipts. ENDS For enquiries: Kamlesh Patel Office of the Government Accountant Telephone: +64 4 917 6094 E-mail: kamlesh.patel@treasury.govt.nz 2 Financial Statements  of the Government of New Zealand For the Seven Months Ended  31 January 2014 Prepared by the Treasury 11 March 2014   978‐0‐478‐42139‐2 (Print)  978‐0‐478‐42140‐8 (Online)  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  Summary  2  Analysis  3  Year‐on‐Year Perspective  7  Financial Statements  Statement of Financial Performance  10  The statement outlines the operating results of the total Government (ie, the revenues and expenses of all  departments + Reserve Bank + NZS Fund (core Crown), SOEs (including Air New Zealand), and Crown entities).   Expense by functional class is also shown for total Crown and core Crown.  Analysis of Expenses by Functional Classification  11  Breakdown of expenses by function for total Crown and core Crown.  Statement of Comprehensive Income  12  The statement reports changes in net worth due to the operating balance, items of income or expense that are  recognised directly in net worth, the effect of certain accounting changes, and corrections of errors.  Statement of Cash Flows  13  The statement sets out the cash flows that result from the operating, investing and financing activities of the  Government.  The net cash flows from operations are reconciled to the operating balance reported in the  statement of financial performance.  Statement of Changes in Net Worth  15  The statement provides a reconciliation of opening and closing net worth for the period.  Statement of Financial Position  16  The statement outlines the balance sheet of the total Government (ie, the assets and liabilities of the core Crown,  SOEs, and Crown entities).  Statement of Borrowings  17  The statement outlines total borrowings (split by sovereign‐guaranteed debt and non sovereign‐guaranteed  debt), including the calculation of the core Crown debt indicators.  Statement of Commitments  18  The statement outlines the commitments of the total Government by type and segment.  Statement of Contingent Liabilities and Assets  18  The statement outlines the contingent liabilities and assets of the total Government by type and segment.  Notes to the Financial Statements  19  The notes are an integral part of the financial statements, providing further explanatory material to that  provided in the main statements.  Officer for Enquiries  Kamlesh Patel (phone 64‐4‐917‐6094) (E‐mail: Kamlesh.patel@treasury.govt.nz)  Office of the Government Accountant  The Treasury (1 The Terrace), PO Box 3724, Wellington  NEW ZEALAND  Facsimile:  64‐4‐473‐1151  COMMENTARY SUMMARY  The Financial Statements of the Government provide a record of the Government’s financial performance for the  seven months ended 31 January 2014 and its financial position as at that date.  The January results are reported against forecasts based on the 2013 Half Year Economic and Fiscal Update (HYEFU),  published on 17 December 2013.  At a Glance  Table 1 – Key indicators for the seven months ended 31 January 2014 compared to HYEFU  January 2014 Year to date January 2014 Variance HYEFU to HYEFU Variance to HYEFU Full Year June 2014 HYEFU Actual1 Forecast1 $m % Forecast2 Core Crown tax revenue 34,982 35,858 (876) (2.4) 62,491 Core Crown revenue Core Crown expenses 38,277 39,169 (892) (2.3) 68,493 40,127 40,265 138 0.3 72,181 Core Crown residual cash (4,112) (3,250) (863) (26.6) (4,076) Gross debt as a percentage of GDP 83,333 83,450 117 0.1 81,628 38.6% 38.6% Net debt4 as a percentage of GDP 59,897 59,266 27.7% 27.4% $ million Core Crown 3 Total Crown Operating balance before gains and losses Operating balance Net worth attributable to the Crown (1,063) 35.8% (631) (1.1) 59,983 26.3% (426) (637) (149.5) (2,320) 3,372 2,743 629 22.9 1,639 70,627 70,242 385 0.5 69,165 1 Using GDP for the year ended 30 September 2013 of $216,134 million (Source: Statistics New Zealand). 2 Using forecast GDP for the year ended 30 June 2014 of $227,793 million (Source:  Treasury). 3 Gross sovereign‐issued debt excluding settlement cash and Reserve Bank bills. 4 Net core Crown debt excluding student loans and other advances.  Net debt may fluctuate during the year largely reflecting  the timing of tax receipts. Core Crown includes Ministers, Departments, Offices of Parliament, the NZS Fund and the Reserve Bank of  New Zealand but excludes State‐owned enterprises and Crown entities.  Results for the seven months ended 31 January 2014  The operating balance before gains and losses (OBEGAL) was in deficit by $1.1 billion, which was $637 million more  than expected, mainly due to lower core Crown tax revenue across most tax types.  This result was partially offset by  lower core Crown expenses and higher returns from Crown Entities.     At this stage, it is difficult to determine how much of the lower than forecast tax is temporary versus permanent but  we expect this to become clearer over the next few months.  Timing issues are likely to see some of the current  variance narrow by year end.  Factors contributing to these timing issues include mismatching in the timing of GST  refunds and receipts relating to both export products and the Canterbury rebuild, as well as tax revenue from some  large corporate taxpayers not yet being visible to the IRD owing to their use of tax pooling schemes.    Following on the trend in recent months, continued strength in equity markets saw gains recorded on financial  instruments of $2.8 billion, which was $1.3 billion ahead of forecast.  As a result, the operating balance surplus was  $629 million higher than forecasts at $3.4 billion.  2 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   Net debt was $631 million higher than forecast at $59.9 billion or 27.7% of GDP.  This was primarily due to a higher  than forecast residual cash deficit driven by lower than expected core Crown tax receipts and higher than expected  operating payments.  Delays in insurance proceeds being returned to the core Crown also contributed to the higher  than forecast residual cash deficit.  Further analysis of the January results follows.  ANALYSIS  Table 2 – Key indicator variances for the seven months ended 31 January 2014 compared to HYEFU:    Item/indicator  Variance1  Key drivers  Core Crown      Core Crown  revenue   ($892 million)  (lower than forecast)  Core Crown revenue was lower than forecast mainly due to lower core  Crown tax revenue of $876m spread across all tax types.  The most  significant variances were:   GST was $354m (3.7%) below forecast, with around a third of this  variance likely related to earthquake‐related insurance refunds,  which could grow further, exacerbating this variance. Approximately  another third of the variance likely relates to a timing difference,  which should reverse out by the end of June. The remainder of the  variance reflects underlying weakness in the tax type.     Corporate tax was $135m (2.8%) below forecast.  This variance has  remained steady from last month.  The variance is largely the result  of a few large taxpayers whose provisional tax assessments are not  visible to the IRD as a result of being in tax pooling schemes.  We  expect that this variance should reverse out by the end of June once  these taxpayers file their annual returns.     Source deductions were $85m (0.6%) below forecast.  This variance  has reduced from last month and should reverse out over the  coming months of the fiscal year.   Other individuals’ tax was $141m (5.5%) below forecast.  At this stage  we believe that some variance will continue but should reduce in the  second half of the fiscal year due to forecast economic growth.   Customs and excise duties were $155m (5.7%) below forecast.  The  majority of this variance is in relation to tobacco excise, which was  forecast to increase at HYEFU however this has not eventuated.  We  expect approximately $80m of this to be permanent.  Core Crown  expenses  $138 million  (lower than forecast)  Overall core Crown expenses were tracking close to forecast.  Looking  through the top‐down expense2  adjustment of $450m, underlying  expenses were $588m lower than expected spread across a number of  departments.    The largest variance was in relation to treaty settlement expenses  which were around $114m below forecast largely due to delays in  finalising negotiations.    In addition, defence spending was $94m below forecast as a result of  reduced services in the first half of the year.  This variance is expected  to reverse later in the year as New Zealand Defence Force’s operational  activities increase.  1  Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.  2   The top‐down adjustment is an adjustment to expenditure forecasts to reflect the extent to which departments use appropriations (upper    spending limits) when preparing their forecasts.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 3 Item/indicator  Variance1  Key drivers  Core Crown  residual cash  deficit  ($863 million)  (higher than forecast)  The residual cash deficit was $863m higher than forecast largely due to  the following:   Core Crown tax receipts were tracking below forecast ($462m).  The  main portion of this was a lower GST intake ($198m) and customs  and excise duties ($111m) consistent with the lower tax revenue.   When the taxes received from the NZS Fund are included (which  reflected their strong year to date performance) the variance  reduces to $295m below forecast.         Other receipts were $110m higher than forecast across a number of  departments.  This includes $77m cash received in relation to the  sale of assets arising from the Deposit Guarantee Scheme.   While core Crown expenses were close to forecast, personnel and  other operating payments were $366m higher than forecast across  a number of departments.  At this stage we expect most of  this is  due to timing factors with some departments making payments  earlier than forecast.   Net purchase of investments were higher than forecast largely due  to Canterbury earthquake insurance receipts of $290m forecast to  be returned to Ministry of Health from the DHBs in December now  being delayed.  Gross debt   $117 million  (lower than forecast)  Gross debt at $83.3b was close to forecast with only a 0.1% variance  from expectation.    Net debt  ($631 million)  (higher than forecast)  Net debt was higher than forecast at $59.9b, or 27.7% of GDP.  The  $631m higher than forecast net debt was largely due to the higher than  expected residual cash deficit explained earlier, while being offset by  more currency in circulation from the holiday period.  Total Crown      Operating  balance before  gains and losses  deficit  ($637 million)  (higher than forecast)  The OBEGAL deficit at $1.0b was $637m higher than forecast.  Operating  balance  $629 million  (higher than forecast)  While the OBEGAL deficit was $637m higher than forecast, net gains  were tracking $1.3b ahead, leading to the operating balance surplus  being $629m above forecast.    The key driver of the OBEGAL variance was lower core Crown revenue  partly offset by lower core Crown expenses as previously discussed.   Also offsetting this, ACC had a $97m higher than forecast OBEGAL  largely due to higher than forecast levies and lower than forecast  insurance expenses.  In addition, EQC and Southern Response had  higher than forecast OBEGAL ($41m and $25m respectively).  The NZS Fund net gains were $961m above forecast, with the rest of  the favourable variance spread across a number of entities.  Net worth  attributable to  the Crown  4 $385 million  (higher than forecast)  Net worth was higher than forecast, at $70.6b, largely reflecting the  operating balance result mentioned above.  In addition, revaluations of  specialist military equipment were performed at December resulting in  a decrease in the revaluation reserve of around $300m.     Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 Table 3 – Fiscal strategy and financial results  Fiscal Strategy 31 Jan 2014 Ref Financial Results Taxation as a % of GDP 31 Jan 2014 Annual    Actual Forecast Variance $m $m $m 2 Variance % Forecast $m 34,982  35,858  (876) (2.4) 62,491  ... combined with other core  Crown revenue ... 3,295  3,311  (16) (0.5) 6,002  (40,127) (40,265) 138 0.3 (72,181) ... and with SOE and Crown  entity results and core Crown  gains and losses... 5,222  3,839  1,383 36.0 5,327  ... result in an operating  surplus or deficit... 3,372  2,743  629 22.9 1,639  ...with income in SOEs, CEs and the NZS Fund retained... (6,157) (4,562) (1,595) (35.0) (6,513) ... and some items do not  impact cash ... (1,159) (1,601) 442 27.6 2,618  ... leaving operating cash  flows  to ... (3,944) (3,420) (524) (15.3) (2,256) (1,075) (940) (135) (14.4) (2,447) (691) (489) (203) (41.5) (1,863) 1,598  1,599  (1) (0.1) 2,490  With the residual cash  ... (4,112) (3,250) (863) (26.6) (4,076) ... when combined with  opening net debt ... 55,835  55,835  (50) 181  232 ... results in a closing net  debt   ... 59,897  59,266  (631) ...  and as a % of GDP Debt Manage total debt at prudent  levels ensuring net debt  remains consistently below  35% of GDP and then brought  back to a level no higher than  20% of GDP by 2020 Core Crown taxation revenue  ... ... and receive proceeds from  government share offers .... Operating balance Return to an operating  surplus sufficient to meet the  Government's net capital  requirements, including  contributions to the New  Zealand Superannuation  Fund, and ensure consistency  with the debt objective 28.4% ... and make advances (e.g. to  ... make advances (e.g. to  students and DHBs) students and DHBs)... Operating expenses To control the growth in  spending so that over time, core Crown expenses are  reduced to below 30% of GDP 27.7% ... meet the capital  expenditure budget ... Operating revenue Ensure sufficient operating  revenue to meet the operating  balance objective 27.7% 27.4% ... fund core Crown  expenses... ... and fair value movements   and other changes in  financial assets and financial  liabilities ... 1 27.4% ‐   ‐   55,835 127.8 (1.1) 72  59,983  26.3%   1 GDP for the seven months ended 31 January 2014 (actual and forecast) is the actual data for the year ended 30 September 2013 (Source:  Statistics New Zealand) pro‐rated for seven months.  2 Percentage variances between the actual and comparative balances exceeding 500% are not shown.    Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 5 Figure 1 – Application of core Crown cash flows ($billions)  This diagram shows how the Operating Balance translates into cash available to the core Crown and how this cash  was spent.  Operating balance surplus Back out SOE/CE NZSF retained surpluses Non‐cash items working capital movements Core Crown operating cash deficit Core Crown cash proceeds and (distributions) for capital items (1.1) Residual cash deficit (funding required) Purchase of  physical assets (eg  schools) 3.4 + (6.2) + (1.2) = (3.9) 1.6 (0.7) Net proceeds from  government share  offers Advances and  capital injections (eg  student loans, DHBs) Note:  These numbers may not add across due to rounding.   6 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 = (4.1) YEAR‐ON‐YEAR PERSPECTIVE  Table 4 – Comparison with previous year  January 2014 Actual  $m  January 2013 Actual  $m  Change1 $m Change % Statement of Financial Performance Core Crown revenue Taxation revenue Other revenue Total Core Crown Revenue 34,982 3,295 38,277 33,109 2,922 36,031 1,873 373 2,246 5.7 12.8 6.2 Core Crown expenses Social security and welfare GSF pension expenses Health Education Core government services Law and order Defence Transport and communications Economic and industrial services Primary services Heritage, culture and recreation Environmental protection Housing and community development Other Finance costs Total Core Crown Expenses 13,445 149 8,569 6,661 2,270 2,023 1,057 1,157 1,211 387 507 261 222 120 2,088 40,127 13,201 161 8,393 6,567 2,272 1,968 1,018 1,146 1,202 358 503 250 181 159 2,140 39,519 244 (12) 176 94 (2) 55 39 11 9 29 4 11 41 (39) (52) 608 1.8 (7.5) 2.1 1.4 (0.1) 2.8 3.8 1.0 0.7 8.1 0.8 4.4 22.7 (24.5) (2.4) 1.5 787 977 (190) (19.4) (1,063) (2,511) 1,448 57.7 Total gains/(losses) Other operating items 4,297 138 6,507 175 (2,210) (37) (34.0) (21.1) Operating Balance 3,372 4,171 (799) (19.2) Core Crown residual cash (4,112) (6,698) Gross debt2  83,333 83,943 Net debt3 59,897 57,303 Net surplus of SOE/CE's (and inter‐segment  eliminations) OBEGAL 2,586 38.6 Debt indicators 1 4.5   Gross sovereign‐issued debt excluding settlement cash and Reserve Bank bills.  3 2,594 (0.7) Due to the seasonal nature of some expenditure it is not appropriate to annualise these changes.  2 (610) Net core Crown debt excluding NZS Fund, student loans and other advances.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 7 Revenue and Expenses  Core Crown taxation revenue for the seven months ended 31 January 2014 increased by $1,873 million (5.7%) on the  same period last year.  Source deductions continued to show strong growth, up 7.1% on last year.  In addition,  corporate tax, GST, and other individuals’ tax also showed growth, up 7.0%, 4.8%, and 3.8% respectively.   Total core Crown expenses increased by 1.5% on the same period last year.  The main increase related to social  security and welfare which increased $244 million from the previous year, largely due to indexation of welfare  benefits and increases in recipient numbers.  Health and Education spending increased by $176 million and  $94 million respectively from the previous year due to funding provided in the 2013 budget to maintain and improve  existing service levels.  Other functional classifications were similar to last year.  Gains  Total net gains were $4,297 million in the seven months to January 2014, which was $2,210 million lower than the  previous year.  Net gains in relation to financial instruments were around $1.9b lower than in the prior year due  largely to substantial gains in January 2013.  Net gains on the Crown’s long‐term liabilities were around $300 million  lower than in the prior year largely due to actuarial valuation movements.  Debt  Gross debt has decreased by $610 million or 0.7% from January 2013.  Net debt has increased by $2,594 million over  the same time, primarily owing to the reduction in financial assets and increases in borrowings in order to meet cash  deficits.    8 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 FINANCIAL STATEMENTS STATEMENT OF FINANCIAL PERFORMANCE  for the seven months ended 31 January 2014  Year to 30 Jun 2013 Actual $m 58,134 5,172 63,306 16,713 7 months to 31 Jan 2013 Actual $m Revenue 32,766 Taxation revenue 2,997 Other sovereign revenue Current Year Actual vs Forecast Note 3,697 % 34,592 35,562 (970) (2.7) 61,969 2 3,225 3,111 114 3.7 5,276 37,817 38,673 (856) (2.2) 67,245 9,286 9,371 (85) (0.9) 16,592 1,774 1,962 (188) (9.6) 3,378 2,098 2,058 40 1.9 3,767 13,158 50,975 13,391 52,064 (233) (1,089) (1.7) (2.1) 23,737 90,982 9,171 Sales of goods and services 1,659 Interest revenue and dividends Variance $m 2 Total Revenue Levied through the 35,763      Crown's Sovereign Power 2,939 Actual Forecast $m $m Annual Forecast $m 3 2,016 Other revenue 23,349 86,655 Total revenue earned through 12,846      the Crown's operations 48,609 Total revenue (excluding gains) 22,708 Expenses Social assistance and official 13,261      development assistance 4 13,509 13,537 28 0.2 23,338 19,935 11,642 Personnel expenses 5 11,855 11,867 12 0.1 20,246 6 2,515 2,597 82 3.2 4,666 6 19,775 20,481 706 3.4 38,350 4,812 36,163 2,643 Depreciation and amortisation 19,185 Other operating expenses 4,358 2,503 Interest expenses 7 2,580 2,565 (15) (0.6) 4,418 3,031 1,886 Insurance expenses 8 1,804 1,893 89 4.7 3,439 ‐   ‐   Forecast new operating spending 6 ‐   ‐   ‐   ‐   220 ‐   ‐   Top‐down expense adjustment 6 ‐   (450) (450) (100.0) (1,375) 91,007 (62) (4,414) 51,120 Total expenses (excluding losses) 52,038 0.9 ‐   ‐   ‐   ‐   (1,063) (2,511) Operating balance before gains/(losses) 452 ‐   Minority interests share of operating ‐        balance before gains/losses 52,490 93,302 (426) (637) (149.5) (2,320) 7,270 Net gains/(losses) on financial 4,743      instruments 9 2,840 1,419 1,421 100.1 2,234 3,706 Net gains/(losses) on non‐financial 1,764      instruments 10 1,457 1,620 (163) (10.1) 1,486 4,297 3,039 1,258 41.4 3,720 138 130 8 6.2 239 ‐   ‐   ‐   ‐   ‐   2,743 629 22.9 1,639 10,976 395 (32) 6,925 6,507 Total gains/(losses) Net surplus/(deficit) from associates 175      and joint ventures ‐   Minority interests share of net gains/losses 4,171 Operating balance 3,372           The accompanying notes and accounting policies are an integral part of these statements.  10 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   ANALYSIS OF EXPENSES BY FUNCTIONAL CLASSIFICATION  for the seven months ended 31 January 2014  Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m 26,268 286 13,856 13,366 3,960 3,670 1,766 9,052 8,375 2,351 1,579 989 528 603 4,358 ‐   ‐   91,007 15,119 165 8,119 7,063 2,262 2,091 999 5,162 4,478 1,436 718 610 236 159 2,503 ‐   ‐   51,120 Current Year Actual vs Forecast Annual Actual Forecast Variance Forecast $m $m $m % $m Total Crown expenses Social security and welfare GSF pension expenses Health Education Core government services Law and order Defence Transport and communications Economic and industrial services Heritage, culture and recreation Primary services Housing and community development Environmental protection Other Finance costs Forecast new operating spending Top‐down expense adjustment Total Crown expenses excluding losses 15,574 155 8,299 7,415 2,043 2,148 1,034 5,029 4,324 1,387 993 676 261 120 2,580 ‐   ‐   52,038 15,684 154 8,262 7,457 2,238 2,209 1,123 5,119 4,541 1,409 987 682 276 234 2,565 ‐   (450) 52,490 110 (1) (37) 42 195 61 89 90 217 22 (6) 6 15 114 (15) ‐   (450) 452 0.7 (0.6) (0.4) 0.6 8.7 2.8 7.9 1.8 4.8 1.6 (0.6) 0.9 5.4 48.7 (0.6) ‐   (100.0) 0.9 27,305 291 14,464 13,369 4,755 3,820 1,852 9,285 8,096 2,398 1,838 1,157 603 806 4,418 220 (1,375) 93,302 Below is an analysis of core Crown expenses by functional classification.  Core Crown expenses include expenses incurred by the Crown, Departments and the Reserve Bank, but not Crown entities and SOEs. Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m 22,741 278 14,498 12,504 4,294 3,456 1,804 2,255 1,978 804 659 283 530 603 3,619 ‐   ‐   70,306 13,201 161 8,393 6,567 2,272 1,968 1,018 1,146 1,202 503 358 181 250 159 2,140 ‐   ‐   39,519 Current Year Actual vs Forecast Actual Forecast $m $m Core Crown expenses Social security and welfare GSF pension expenses Health Education Core government services Law and order Defence Transport and communications Economic and industrial services Heritage, culture and recreation Primary services Housing and community development Environmental protection Other Finance costs Forecast new operating spending Top‐down expense adjustment Core Crown expenses excluding losses 13,445 149 8,569 6,661 2,270 2,023 1,057 1,157 1,211 507 387 222 261 120 2,088 ‐   ‐   40,127 13,487 149 8,591 6,696 2,448 2,070 1,151 1,149 1,243 545 391 232 275 234 2,054 ‐   (450) 40,265 % Annual Forecast $m 0.3 ‐   0.3 0.5 7.3 2.3 8.2 (0.7) 2.6 7.0 1.0 4.3 5.1 48.7 (1.7) ‐   (100.0) 0.3 23,246 282 14,997 12,558 5,067 3,630 1,901 2,285 2,226 882 816 434 602 806 3,604 220 (1,375) 72,181 Variance $m 42 ‐   22 35 178 47 94 (8) 32 38 4 10 14 114 (34) ‐   (450) 138     The accompanying notes and accounting policies are an integral part of these statements.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 11  STATEMENT OF COMPREHENSIVE INCOME for the seven months ended 31 January 2014  Year to 30 Jun 2013 Actual $m 7,019 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m Operating Balance (including minority 4,171      interest) 3,372 Variance $m 2,743 % 629 22.9 Annual Forecast $m 1,639 Other comprehensive income 1,367 (44) Revaluation of physical assets (348) (114) (234) (205.3) (74) 42 60.9 41 305 Effective portion of changes in value of cash 44      flow hedges (27) (69) (7) Net change in fair value of cash flow hedges 2      transferred to operating balance (2) (2) ‐   (18) Net change in fair value of cash flow hedges ‐        transferred to the hedged item 4 2 2 100.0 2 ‐   (1) ‐   Foreign currency translation differences (4)       for foreign operations (30) (7) (23) (328.6) (6) 36 Valuation gains/(losses) on investments 6      available for sale taken to reserves (104) (10) (94) ‐   (3) 52 (455) (14) (214) 66 (241) 471.4 (112.6) 46 5 7 1,690 (1) Other movements 3 Total other comprehensive income 8,709 4,174 Total comprehensive income 2,917 2,529 388 15.3 1,644 153 8,556 8,709 Attributable to: ‐    ‐ minority interest 4,174  ‐ the Crown 4,174 Total comprehensive income ‐   2,917 2,917 ‐   2,529 2,529 ‐   388 388 ‐   15.3 15.3 ‐   1,644 1,644                     The accompanying notes and accounting policies are an integral part of these statements.  12 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   STATEMENT OF CASH FLOWS  for the seven months ended 31 January 2014  Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m Variance $m % Annual Forecast $m 56,413 4,806 16,651 2,694 5,933 31,721 3,055 9,646 1,519 3,193 Cash Flows From Operations  Cash was provided from Taxation receipts Other sovereign receipts Sales of goods and services Interest and dividends Other operating receipts 33,794 3,073 9,281 1,668 3,569 34,165 3,058 9,487 1,854 3,960 (371) 15 (206) (186) (391) (1.1) 0.5 (2.2) (10.0) (9.9) 61,139 4,831 16,476 3,112 6,565 86,497 49,134 Total cash provided from operations 51,385 52,524 (1,139) (2.2) 92,123 14,100 36,079 2,210 ‐   ‐   52,389 14,101 37,344 2,241 ‐   (450) 53,236 1 1,265 31 ‐   (450) 847 ‐   3.4 1.4 ‐   (100.0) 1.6 23,787 63,974 4,395 220 (1,375) 91,001 (1,004) (712) (292) (41.0) 1,122 (3,127) (4,838) (344) (214) 59 1,498 ‐   ‐   (6,966) (3,656) (6,920) (300) (706) 145 1,498 ‐   180 (9,759) 529 2,082 (44) 492 (86) ‐   ‐   (180) 2,793 14.5 30.1 (14.7) 69.7 (59.3) ‐   ‐   (100.0) 28.6 (7,423) (5,284) (563) (2,085) 27 2,490 (206) 450 (12,594) (7,970) (10,471) 2,501 23.9 (11,472) 382 5,875 243 5,872 139 3 57.2 0.1 246 4,947 172 453 (281) (62.0) 170 (903) ‐   5,526 361 ‐   6,929 (1,264) ‐   (1,403) (350.1) ‐   (20.2) 1,698 ‐   7,061 5,940 Net movement in cash 10,686 Opening Cash Balance Foreign‐exchange gains/(losses) on (152)      opening cash  (2,444) 14,924 (3,542) 14,924 1,098 ‐   31.0 ‐   (4,411) 14,924 75 25.3 16,474 Closing Cash Balance 12,259 1,173 10.6 (292) 10,221 22,780 58,450 4,369 ‐   ‐   85,599 898 Cash was disbursed to Social assistance and official development       assistance Personnel and operating payments Interest payments Forecast new operating spending Top‐down expense adjustment 13,838 34,938 2,186 ‐   ‐   50,962 Total cash disbursed to operations (1,828) Net cash flows from operations (5,169) 6,342 (581) (1,405) 280 1,547 ‐   ‐   1,014 (3,026) 1,766 (265) (1,017) 76 ‐   ‐   ‐   (2,466) 1,912 (4,294) 234 5,476 271 10,312 (2,926) 1,040 (634) (20) 2,130 (1,389) ‐   10,234 4,042 10,686 196 14,924 Cash Flows From Investing Activities Cash was provided from/(disbursed to) Net purchase of physical assets Net purchase of shares and other securities Net purchase of intangible assets Net (issue)/repayment of advances Net acquisition of investments in associates  Net proceeds from Government share offer Forecast new capital spending Top‐down capital adjustment Net cash flows from investing activities Net cash flows from     operating and investing activities Cash Flows From Financing Activities Cash was provided from/(disbursed to) Issues of circulating currency Net issue/(repayment) of Government bonds Net issue/(repayment) of foreign currency      borrowing Net issue/(repayment) of other New Zealand      dollar borrowing Dividends paid to minority interests Net cash flows from financing activities (221) (296) 11,086   The accompanying notes and accounting policies are an integral part of these statements.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 13  STATEMENT OF CASH FLOWS (CONTINUED)  for the seven months ended 31 January 2014  Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m Variance $m % Annual Forecast $m Reconciliation Between the Net Cash Flows from  Operations and the Operating Balance 898 7,270 3,706 10,976 (1,828) Net Cash Flows from Operations Items included in the operating balance      but not in net cash flows from operations Gains/(losses) 4,743 Gains/(losses) on financial instruments Gains/(losses) on non‐financial 1,764      instruments 6,507 Total gains/(losses) 385 1,106 299 (4,203) Other Non‐cash Items in Operating Balance (2,643) Depreciation and amortisation Write‐down on initial recognition of (272)      financial assets Impairment of financial assets 7      (excluding receivables) Non‐cash movement in defined benefit 237      retirement plan liabilities 1,937 Non‐cash movement in insurance liabilities 171 Other (563) Total other non‐cash Items (1,302) 257 (94) 32 (2) 363 (746) (3,133) (179) 30 225 82 3,030 55 6,925 4,171 Operating Balance (4,812) (684) (497) Movements in Working Capital Increase/(decrease) in receivables Increase/(decrease) in accrued interest Increase/(decrease) in inventories Increase/(decrease) in prepayments Decrease/(increase) in deferred revenue Decrease/(increase) in payables/provisions Total movements in working capital (1,004) (712) 2,840 1,419 1,457 4,297 1,620 3,039 (2,515) (2,597) (301) (5) (292) (41.0) 1,122 1,421 100.1 2,234 (163) 1,258 (10.1) 41.4 1,486 3,720 82 3.2 (4,666) (274) (27) (9.9) (785) (42) 37 88.1 (130) 289 2,392 132 (8) 260 3,249 131 727 29 (857) 1 (735) 11.2 (26.4) 0.8 (101.1) 484 2,956 387 (1,754) (2,400) (263) 70 245 51 2,384 87 (1,776) (217) 31 137 77 1,437 (311) (624) (46) 39 108 (26) 947 398 (35.1) (21.2) 125.8 78.8 (33.8) 65.9 128.0 (1,166) 243 8 (2) 19 (551) (1,449) 3,372 2,743 629 22.9 1,639                 The accompanying notes and accounting policies are an integral part of these statements.  14 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   STATEMENT OF CHANGES IN NET WORTH  for the seven months ended 31 January 2014  Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m 59,780 7,019 1,367 260 59,780 4,171 (44) 50 (10) 73 8,709 167 3 (6) 4,174 ‐   1,371 (16) 70,011 ‐   ‐   63,954 1,940 68,071 70,011 Attributable to: 432  ‐ minority interest 63,522  ‐ the Crown 63,954 Closing net worth Current Year Actual vs Forecast Actual Forecast $m $m Opening net worth Operating balance (including minority interest) Net revaluations Transfers to/(from) reserves (Gains)/losses transferred to the    statement of financial performance Other movements Total comprehensive income Gain/(loss) on Government share offers in SOEs Increase in minority interest from Government    share offers Transactions with minority interests Closing net worth Variance $m Annual Forecast % $m 70,011 3,372 (348) (131) 70,011 2,743 (114) (79) ‐   629 (234) (52) ‐   22.9 (205.3) (65.8) 70,011 1,639 (74) (8) (2) 26 2,917 (361) (2) (19) 2,529 (358) ‐   45 388 (3) ‐   236.8 15.3 (0.8) (1) 88 1,644 (550) 2,423 105 75,095 2,422 98 74,702 1 7 393 ‐   7.1 0.5 3,676 114 74,895 4,468 70,627 75,095 4,460 70,242 74,702 8 385 393 0.2 0.5 0.5 5,730 69,165 74,895                               The accompanying notes and accounting policies are an integral part of these statements.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 15  STATEMENT OF FINANCIAL POSITION  as at 31 January 2014  As at 30 Jun 2013 Actual $m As at 31 Jan 2013 Actual $m Current Year Actual vs Forecast Note Assets 16,474 Cash and cash equivalents 17,444 Receivables Marketable securities, deposits and 44,000 45,040      derivatives in gain 17,359 16,224 Share investments 22,613 22,569 Advances 1,140 1,264 Inventory 2,295 2,455 Other assets 109,833 108,602 Property, plant & equipment 9,593 9,625 Equity accounted investments 1  2,776 2,583 Intangible assets and goodwill ‐   ‐   Forecast for new capital spending ‐   ‐   Top‐down capital adjustment 244,416 242,280 Total assets 14,924 19,883 4,691 11,160 1,714 100,087 37,712 11,903 7,138 174,405 4,728 10,307 1,629 104,615 37,777 13,112 6,158 178,326 Liabilities Issued currency Payables Deferred revenue Borrowings Insurance liabilities Retirement plan liabilities Provisions Total liabilities 70,011 Net Worth 7,749 Taxpayer funds 55,898 Revaluation reserve (125) Other reserves 68,071 70,011 Net worth attributable to 432     minority interest 63,954 Total net worth 11,086 18,286 1,173 (1,543) 10.6 (8.4) 10,221 18,968 12 12 12 47,846 19,874 23,316 1,210 2,634 110,418 9,745 2,859 ‐   ‐   246,904 46,916 19,924 23,478 1,171 2,476 111,232 9,729 2,785 ‐   (180) 246,903 930 (50) (162) 39 158 (814) 16 74 ‐   180 1 2.0 (0.3) (0.7) 3.3 6.4 (0.7) 0.2 2.7 ‐   100.0 ‐   44,522 21,289 24,359 1,148 2,268 113,277 9,876 2,878 206 (450) 248,562 5,072 10,342 1,664 103,354 34,181 11,075 6,121 171,809 4,933 10,252 1,637 105,065 33,136 11,104 6,074 172,201 (139) (90) (27) 1,711 (1,045) 29 (47) 392 (2.8) (0.9) (1.6) 1.6 (3.2) 0.3 (0.8) 0.2 4,936 11,955 1,695 104,354 33,430 10,880 6,417 173,667 75,095 74,702 393 0.5 74,895 13,986 56,685 (44) 13,268 56,944 30 718 (259) (74) 70,627 70,242 385 0.5 69,165 4,468 4,460 8 0.2 5,730 75,095 74,702 393 0.5 74,895 13 15 16 17 18 18 18 18 1.  Tertiary education institutions constitute most equity accounted investments.                   The accompanying notes and accounting policies are an integral part of these statements.  16 % Annual Forecast $m 12,259 16,743 63,522 Total net worth attributable to the Crown 1,940 Forecast        Variance $m $m 12 12 63,954 Total assets less total liabilities 10,862 57,068 141 Actual $m Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 5.4 (0.5) (246.7) 12,080 56,911 174   STATEMENT OF BORROWINGS  as at 31 January 2014  As at As at 30 Jun 31 Jan 2013 2013 Actual Actual $m $m 57,377 60,223 4,084 4,824 199 204 7,575 7,183 3,188 2,567 1,454 1,401 26,210 28,213 100,087 104,615 75,684 24,403 100,087 Current Year Actual vs Forecast Government bonds1 Treasury bills Government retail stock Settlement deposits with Reserve Bank Derivatives in loss Finance lease liabilities Other borrowings Total borrowings 79,721 Sovereign‐guaranteed debt 24,894 Non sovereign‐guaranteed debt Actual Forecast $m $m 61,551 61,998 3,391 3,526 190 196 6,849 7,094 2,482 2,396 1,437 1,468 27,454 28,387 103,354 105,065 Variance $m 447 135 6 245 (86) 31 933 1,711 Annual Forecast % $m 0.7 60,456 3.8 3,470 3.1 196 3.5 7,094 (3.6) 2,187 2.1 1,535 3.3 29,416 1.6 104,354 1.1 3.1 1.6 104,354 78,194 25,160 103,354 104,615 Total borrowings 79,098 25,967 105,065 904 807 1,711 77,526 26,828 89,653 89,637 (16) ‐   87,571 (587) 84,286 Net Debt: 90,556 Core Crown borrowings2 Add back NZS Fund holdings of sovereign‐ (885)      issued debt and NZS Fund borrowings 89,671 Gross sovereign‐issued debt3 (675) 88,978 (478) 89,159 197 181 41.2 0.2 (449) 87,122 62,984 66,274 Less core Crown financial assets4 66,498 65,219 1,279 2.0 63,660 21,302 23,397 Net core Crown debt 22,480 23,940 1,460 6.1 23,462 13,126 13,218 Core crown advances 13,231 13,231 35,711 37,171 1,460 3.9 37,247 24,186 22,095 (2,091) (9.5) 22,736 59,897 59,266 (631) (1.1) 59,983 88,978 89,159 181 0.2 87,122 (7,245) (7,309) (64) (0.9) (7,094) 1,600 1,600 ‐   ‐   83,333 83,450 84,873 34,428 21,407 55,835 84,286 (7,902) 1,600 36,615 Net core Crown debt (incl NZS Fund) 5 Add back NZS Fund holdings of core Crown 20,688    financial assets and NZS Fund fin assets6 Net core Crown debt (excl NZS Fund and  57,303 advances)7 Gross Debt: 89,671 Gross sovereign‐issued debt3 Less Reserve Bank settlement cash and  (7,328)      Reserve Bank bills Add back changes to DMO borrowing due  1,600      to settlement cash8 Gross sovereign‐issued debt excluding Reserve  Bank settlement cash and Reserve bank bills Notes on gross and net debt: 77,984 83,943 ‐   117 ‐   0.1 13,785 1,600 81,628 1.  Government bonds includes $395 million of infrastructure bonds. 2.  Core Crown borrowings in this instance includes unsettled purchases of securities (classified as accounts payable in the statement of financial position). 3.  Gross Sovereign‐Issued Debt (GSID) represents debt issued by the sovereign (the core Crown) and includes Government stock held by the New Zealand Superannuation Fund (NZS Fund), ACC and EQC.  4.  Core Crown financial assets exclude receivables. 5.  Net Core Crown Debt represents GSID less financial assets.  This can provide information about the sustainability of the Government's accounts, and is used by some international agencies when determining the creditworthiness of a country. 6.  Adding back the NZS Fund assets provides the financial liabilities less financial assets of the Core Crown, excluding those assets set aside to meet part of the future cost of New Zealand superannuation.  7.  Net Core Crown Debt (excluding NZS Fund and advances) excludes financial assets which are held for public policy rather than treasury management purposes. 8.  The Reserve Bank has used $1.6 billion of settlement cash to purchase reserves that were to have been funded by the NZ Debt Management Office borrowing. Therefore, the impact of settlement cash on GSID is adjusted by this amount.   The accompanying notes and accounting policies are an integral part of these statements.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 17  STATEMENT OF COMMITMENTS  as at 31 January 2014  As at 31 Jan 2014 $m Capital Commitments Specialist military equipment Land and buildings Other property, plant and equipment Other capital commitments Tertiary Education Institutions Total capital commitments Operating Commitments Non‐cancellable accommodation leases Other non‐cancellable leases Tertiary Education Institutions Total operating commitments Total commitments Total Commitments by Segment Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total commitments   As at 30 Jun 2013 $m As at 31 Jan 2013 $m 358 877 5,136 933 169 7,473 549 717 5,478 790 169 7,703 145 773 6,400 754 255 8,327 2,668 2,564 466 5,698 2,792 2,735 466 5,993 2,549 3,458 282 6,289 13,171 13,696 14,616 4,370 5,320 5,020 (1,539) 13,171 4,226 5,296 5,078 (904) 13,696 3,666 6,308 5,535 (893) 14,616     STATEMENT OF CONTINGENT LIABILITIES AND ASSETS  as at 31 January 2014  As at 31 Jan 2014 $m As at 30 Jun 2013 $m As at 31 Jan 2013 $m 183 6,048 686 424 7,341 225 6,286 707 432 7,650 186 6,012 404 275 6,877 7,055 52 234 ‐   7,341 7,350 35 265 ‐   7,650 6,685 81 111 ‐   6,877 Quantifiable Contingent Assets Core Crown Crown entities  State owned enterprises Inter‐segment eliminations 201 4 ‐   Total quantifiable contingent assets 205 245 4 21 ‐   270 161 154 ‐   ‐   315 Quantifiable Contingent Liabilities Guarantees and indemnities Uncalled capital Legal proceedings and disputes Other contingent liabilities Total quantifiable contingent liabilities Total Quantifiable Contingent Liabilities by Segment Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total quantifiable contingent liabilities A list of unquantified contingent liabilities is included on the Treasury's website  http://www.treasury.govt.nz/government/financialstatements/yearend/jun13/067.htm The accompanying notes and accounting policies are an integral part of these statements.  18 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   NOTES TO THE FINANCIAL STATEMENTS    NOTE 1:  Accounting Policies  Reporting Entity  These financial statements are the consolidated financial statements for the Government reporting entity as specified  in Part III of the Public Finance Act 1989.  This comprises:   Ministers of the Crown   Crown Entities (excluding Tertiary Education Institutions)    Government Departments   State‐Owned Enterprises (SOEs)   Offices of Parliament    Air New Zealand Limited   New Zealand Superannuation Fund   Organisations listed in Schedule 4 and 4A of the Public Finance  Act 1989   Reserve Bank of New Zealand    Organisations listed in Schedule 5 of the Public Finance Act 1989  A schedule of the entities that are included in the Government reporting entity was set out on pages 87 ‐ 89 of the  2013 Half Year Economic and Fiscal Update released on 17 December 2013.  With the exception of the 30 June 2013 comparative figures, all actual, forecast and comparative figures presented in  these financial statements are unaudited.  Basis of Preparation and General Accounting Policies  These unaudited interim financial statements of the Government reporting entity comply with generally accepted  accounting practice and with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) as  applicable for public benefit entities, including NZ IAS 34 Interim Financial Reporting.  The Government reporting  entity is a public benefit entity.  The measurement base applied is historical cost adjusted for revaluations of property, plant and equipment (where  appropriate), commercial forests; and marketable securities, deposits and 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.  These interim financial statements have  been prepared using the same accounting policies and methods of computation as, and should be read in conjunction  with, the information included in the Financial Statements of the Government of New Zealand for the year ended  30 June 2013.  Specific Accounting Policies  The specific accounting policies of the Crown are detailed on the Treasury’s internet site:  http://www.treasury.govt.nz/publications/guidance/reporting/accounting  Forecasts  The annual forecasts in these financial statements are for the year to 30 June 2014.  The accounting policies underlying the preparation of forecasts are set out in the Statement of Accounting Policies  reproduced in full on the Treasury’s internet site http://www.treasury.govt.nz/budget/forecasts/hyefu2013.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 19  NOTES TO THE FINANCIAL STATEMENTS    NOTE 1:  Accounting Policies (continued)  Comparative Figures  When presentation or classification of items in the financial statements is amended or accounting policies are  changed voluntarily, comparative figures have been restated to ensure consistency with the current period unless it is  impracticable to do so.  Variance Percentages  Percentage variances between the actual and comparative balances exceeding 500% are not shown.  Judgements and Estimates  The preparation of these financial statements requires judgements, estimates and assumptions that affect the  application of policies and reported amounts of assets and liabilities, income and expenses.  For example, the present  value of large cash flows that are predicted to occur a long time into the future, as with the settlement of ACC  outstanding claim obligations and Government Superannuation retirement benefits, depends critically on judgements  regarding future cash flows, including inflation assumptions and the risk free discount rate used to calculate present  values.  The estimates and associated assumptions are based on historical experience and various other factors that  are believed to be reasonable under the circumstances.  Actual results may differ from these estimates.   A second area of uncertainty relates to the immature nature of the claims experience available to assist in estimating  the claims and provisions arising from the Canterbury earthquakes.  Actuarial valuations of these liabilities using the  best available information have been used, however it is common in such cases for adjustments to be required as the  claims experience develops.  The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are  recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the  revision and future periods if the revision affects both current and future periods.  20 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 NOTES TO THE FINANCIAL STATEMENTS     Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m Variance $m % Annual Forecast $m NOTE 2:  Sovereign Revenue (Accrual) Taxation Revenue (accrual) Individuals Source deductions Other persons Refunds Fringe benefit tax Total individuals 22,330 5,210 (1,644) 480 26,376 13,087 2,886 (795) 263 15,441 8,747 (151) 420 2 9,018 3,854 (74) 237 1 4,018 1,631 516 2,147 Other Income Tax 895 Resident w/holding tax on interest income 208 Resident w/holding tax on dividend income 1,103 Total other income tax Corporate Tax Gross companies tax Refunds Non‐resident withholding tax Foreign‐source dividend w/holding payments Total corporate tax 14,019 2,867 (694) 270 16,462 14,108 2,994 (672) 263 16,693 (89) (127) (22) 7 (231) (0.6) (4.2) (3.3) 2.7 (1.4) 23,825 5,263 (1,465) 480 28,103 4,105 (97) 271 (1) 4,278 4,374 (94) 220 (1) 4,499 (269) (3) 51 ‐   (221) (6.1) (3.2) 23.2 ‐   (4.9) 9,197 (193) 394 2 9,400 899 234 1,133 926 221 1,147 (27) 13 (14) (2.9) 5.9 (1.2) 1,673 460 2,133 37,541 20,562 Total income tax 21,873 22,339 (466) (2.1) 39,636 25,125 (9,920) 15,205 Goods and Services Tax 14,684 Gross goods and services tax (5,911) Refunds 8,773 Total goods and services tax 15,643 (6,446) 9,197 15,876 (6,326) 9,550 (233) (120) (353) (1.5) (1.9) (3.7) 27,298 (10,700) 16,598 695 910 539 987 106 126 108 33 18 3,522 673 953 530 1,107 108 131 111 41 19 3,673 22 (43) 9 (120) (2) (5) (3) (8) (1) (151) 3.3 (4.5) 1.7 (10.8) (1.9) (3.8) (2.7) (19.5) (5.3) (4.1) 1,155 1,618 901 1,401 168 208 183 65 36 5,735 1,066 1,529 913 1,235 178 214 174 45 34 5,388 620 883 568 972 113 128 104 25 18 3,431 Other Taxation Road user charges Petroleum fuels excise1 Alcohol excise1 Tobacco excise1 Other customs duty Gaming duties Motor vehicle fees Approved issuer levy and cheque duty Energy resources levies Total other indirect taxation 20,593 12,204 Total indirect taxation 12,719 13,223 (504) (3.8) 22,333 58,134 32,766 Total taxation revenue 34,592 35,562 (970) (2.7) 61,969 2,144 211 159 711 3,225 2,077 210 157 667 3,111 67 1 2 44 114 3.2 0.5 1.3 6.6 3.7 3,444 338 268 1,226 5,276 37,817 38,673 (856) (2.2) 67,245 3,437 331 242 1,162 5,172 63,306 1,992 207 129 669 2,997 Other Sovereign Revenue (accrual) ACC levies Fire Service levies EQC levies Other miscellaneous items Total other sovereign revenue 35,763 Total sovereign revenue 1.  Includes excise on domestic production and excise‐equivalent duties on imports. Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   21  NOTES TO THE FINANCIAL STATEMENTS     Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m Variance $m % Annual Forecast $m NOTE 2 (continued):  Sovereign Receipts (Cash) Income Tax Receipts (cash) Individuals Source deductions Other persons Refunds Fringe benefit tax Total individuals 22,188 5,194 (2,251) 465 25,596 12,916 2,529 (1,378) 322 14,389 8,665 (597) 451 1 8,520 4,643 (340) 282 ‐   4,585 1,635 516 2,151 Other Income Tax 925 Resident w/holding tax on interest income 222 Resident w/holding tax on dividend income 1,147 Total other income tax Corporate Tax Gross companies tax Refunds Non‐resident withholding tax Foreign‐source dividend w/holding payments Total corporate tax 13,811 2,742 (1,319) 338 15,572 13,852 2,770 (1,304) 336 15,654 (41) (28) (15) 2 (82) (0.3) (1.0) (1.2) 0.6 (0.5) 23,715 5,667 (2,084) 478 27,776 4,884 (309) 225 ‐   4,800 5,023 (349) 220 ‐   4,894 (139) 40 5 ‐   (94) (2.8) 11.5 2.3 ‐   (1.9) 9,516 (641) 392 2 9,269 923 244 1,167 945 230 1,175 (22) 14 (8) (2.3) 6.1 (0.7) 1,672 460 2,132 36,267 20,121 Total income tax 21,539 21,723 (184) (0.8) 39,177 24,539 (9,783) 14,756 Goods and Services Tax 14,092 Gross goods and services tax (5,955) Refunds 8,137 Total goods and services tax 14,956 (6,312) 8,644 14,892 (6,170) 8,722 64 (142) (78) 0.4 (2.3) (0.9) 26,428 (10,200) 16,228 671 1,160 1,475 124 127 36 18 3,611 673 1,240 1,505 129 111 43 19 3,720 (2) (80) (30) (5) 16 (7) (1) (109) (0.3) (6.5) (2.0) (3.9) 14.4 (16.3) (5.3) (2.9) 1,155 1,887 2,201 206 183 66 36 5,734   1,064 1,818 2,035 216 179 44 34 5,390 618 1,208 1,363 131 102 23 18 3,463 Other Taxation Road user charges Excise duties Customs duty Gaming duties Motor vehicle fees Approved issuer levy and cheque duty Energy resources levies Total other indirect taxation 20,146 11,600 Total indirect taxation 12,255 12,442 (187) (1.5) 21,962 56,413 31,721 Total tax receipts collected 33,794 34,165 (371) (1.1) 61,139 2,248 212 168 445 3,073 2,223 210 170 455 3,058 25 2 (2) (10) 15 1.1 1.0 (1.2) (2.2) 0.5 3,423 338 271 799 4,831 36,867 37,223 (356) (1.0) 65,970 3,524 331 274 677 4,806 61,219 22 2,242 207 171 435 3,055 Other Sovereign Receipts (cash) ACC levies Fire Service levies EQC levies Other miscellaneous items Total other sovereign receipts 34,776 Total sovereign receipts Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   NOTES TO THE FINANCIAL STATEMENTS    Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m 2,382 557 2,939 NOTE 3:  Interest Revenue and Dividends By type 1,374 Interest revenue 285 Dividends 1,659 Total interest revenue and dividends 2,104 1,270 856 (1,291) 2,939 1,122 695 488 (646) 1,659 By source  Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total interest revenue and dividends Variance $m Annual Forecast % $m 1,425 349 1,774 1,535 427 1,962 (110) (78) (188) (7.2) (18.3) (9.6) 2,689 689 3,378 1,362 635 509 (732) 1,774 1,532 650 507 (727) 1,962 (170) (15) 2 (5) (188) (11.1) (2.3) 0.4 (0.7) (9.6) 2,501 1,187 873 (1,183) 3,378 6,325 999 809 714 63 52 29 29 1,128 312 681 386 224 301 766 12,818 6,329 1,003 807 713 63 52 29 29 1,126 303 683 388 224 305 802 12,856 4 4 (2) (1) ‐   ‐   ‐   ‐   (2) (9) 2 2 ‐   4 36 38 0.1 0.4 (0.2) (0.1) ‐   ‐   ‐   ‐   (0.2) (3.0) 0.3 0.5 ‐   1.3 4.5 0.3 10,890 1,697 1,416 1,233 63 52 29 29 1,966 547 1,156 670 379 548 1,295 21,970 497 462 (35) (7.6) 795 194 13,509 219 13,537 25 28 11.4 0.2 573 23,338 3,612 6,537 1,714 (8) 11,855 3,643 6,537 1,691 (4) 11,867 31 ‐   (23) 4 12 0.9 ‐   (1.4) 100.0 0.1 6,155 11,190 2,908 (7) 20,246 NOTE 4:  Transfer Payments and Subsidies 10,235 ‐   ‐   ‐   1,738 1,330 782 812 2,018 575 1,177 611 384 596 1,290 21,548 723 437 22,708 5,935 ‐   ‐   ‐   1,038 782 462 496 1,183 313 698 364 227 347 834 12,679 New Zealand superannuation Jobseeker support and emergency benefit Supported living payment Sole parent support Domestic purposes benefit Invalids benefit Sickness benefit Unemployment benefit Family tax credit Other working for families tax credits Accommodation assistance  Income related rents Disability assistance Student allowances Other social assistance benefits Total social assistance grants Subsidies 412 KiwiSaver Other transfer payments 170 Official development assistance 13,261 Total transfer payments and subsidies NOTE 5:  Personnel Expenses 6,037 10,966 2,949 (17) 19,935 3,473 6,446 1,730 (7) 11,642 Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total personnel expenses Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   23  NOTES TO THE FINANCIAL STATEMENTS    Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m Current Year Actual vs Forecast Actual Forecast $m $m Variance $m % Annual Forecast $m NOTE 6:  Operating Expenses 4,812 36,163 ‐   ‐   40,975 2,643 19,185 ‐   ‐   21,828 By type Depreciation and amortisation Other operating expenses Forecast new operating spending Top‐down expense adjustment Total operating expenses 2,515 19,775 ‐   ‐   22,290 2,597 20,481 ‐   (450) 22,628 82 706 ‐   (450) 338 3.2 3.4 ‐   (100.0) 1.5 4,666 38,350 220 (1,375) 41,861 37,943 18,649 11,539 (27,156) 40,975 20,640 10,351 6,101 (15,264) 21,828 By source Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total operating expenses 20,920 10,899 6,004 (15,533) 22,290 21,030 10,991 6,194 (15,587) 22,628 110 92 190 (54) 338 0.5 0.8 3.1 (0.3) 1.5 39,078 19,439 11,086 (27,742) 41,861 2,558 22 2,580 2,540 25 2,565 (18) 3 (15) (0.7) 12.0 (0.6) 4,371 47 4,418 2,088 129 664 (301) 2,580 2,054 131 688 (308) 2,565 (34) 2 24 (7) (15) (1.7) 1.5 3.5 (2.3) (0.6) 3,604 221 1,198 (605) 4,418 4,312 46 4,358 NOTE 7:  Interest Expenses By type 2,478 Interest on financial liabilities 25 Interest unwind on provisions 2,503 Total interest expenses 3,619 235 1,248 (744) 4,358 2,140 143 650 (430) 2,503 By source Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total interest expenses NOTE 8:  Insurance Expenses 3,133 (103) (22) 19 4 3,031 5,081 1,192 354 643 7,270 24 1,731 161 (3) 11 (14) 1,886 By entity ACC EQC Southern Response  Other insurance expenses Inter‐segment eliminations Total insurance expenses 1,818 (52) 29 9 ‐   1,804 1,867 (33) 52 7 ‐   1,893 49 19 23 (2) ‐   89 2.6 57.6 44.2 (28.6) ‐   4.7 3,457 (38) 6 14 ‐   3,439 3,245 1,203 46 249 4,743 NOTE 9:  Gains and Losses on Financial        Instruments By source  Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Net gains/(losses) on financial instruments 2,332 301 125 82 2,840 1,187 14 15 203 1,419 1,145 287 110 (121) 1,421 96.5 ‐   ‐   (59.6) 100.1 1,982 111 19 122 2,234 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   NOTES TO THE FINANCIAL STATEMENTS    Year to 30 Jun 2013 Actual $m 7 months to 31 Jan 2013 Actual $m   Current Year Actual vs Forecast Actual $m Forecast $m Variance $m % Annual Forecast $m NOTE 10:  Gains and Losses on Non‐Financial      Instruments 1,251 By type 190 Actuarial gains/(losses) on GSF liability 1 3,706 1,473 Actuarial gains/(losses) on ACC liability 2 101 Other Net gains/(losses) on non‐financial 1,764      instruments 1,298 2,309 100 (1) 359 1,410 (5) ‐   3,706 1,764      instruments 2,369 86 371 5,877 614 63 6,925 148 3,863 418 (258) 4,171 By source  Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Net gains/(losses) on non‐financial NOTE 11: Operating Balance By source  Core Crown Crown entities  State‐owned Enterprises Inter‐segment eliminations Total operating balance 539 539 ‐   ‐   539 1,139 (221) 1,326 (245) (187) 24 (14.1) 9.8 1,326 (379) 1,457 1,620 (163) (10.1) 1,486 326 1,136 (5) ‐   322 1,298 (6) 6 4 (162) 1 (6) 1.2 (12.5) 16.7 (100.0) 266 1,221 (26) 25 1,457 1,620 (163) (10.1) 1,486 853 2,626 560 (667) 3,372 458 2,332 424 (471) 2,743 395 294 136 (196) 629 86.2 12.6 32.1 (41.6) 22.9 (1,356) 2,832 614 (451) 1,639 1.  The most recent GSF valuation was as at 30 September 2013. 2.  The most recent ACC valuation was as at 31 December 2013, updated monthly for changes to discount rates. Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   25  NOTES TO THE FINANCIAL STATEMENTS    As at 30 June 2013 $m As at 31 Jan 2013 $m Current Year Actual vs Forecast Actual $m 12,259 8,226 8,517 8,339 14,023 3,299 2,324 954 19,874 3,336 38,887 120,038 11,086 9,088 9,198 8,300 14,205 2,475 2,334 973 19,924 3,279 38,828 119,690 % Annual Forecast $m 1,173 (862) (681) 39 (182) 824 (10) (19) (50) 57 59 348 10.6 (9.5) (7.4) 0.5 (1.3) 33.3 (0.4) (2.0) (0.3) 1.7 0.2 0.3 10,221 8,712 10,256 8,484 14,784 2,167 2,524 1,091 21,289 2,845 36,986 119,359 Forecast $m Variance $m NOTE 12:  Financial Assets and Sovereign Receivables 14,924 8,184 11,699 8,288 13,202 3,588 2,291 1,123 17,359 3,775 34,346 118,779 16,474 7,254 10,190 8,414 12,939 2,503 2,171 1,216 16,224 5,552 34,814 117,751 Cash and cash equivalents  Tax receivables Trade and other receivables Student loans Kiwibank mortgages  Long‐term deposits IMF financial assets Other advances1 Share investments Derivatives in gain Other marketable securities  Total financial assets and sovereign receivables 17,799 19,342 22,549 23,209 (7,788) 75,111 27,304 19,404 21,987 20,705 (12,529) 76,871 Debt Management Office Reserve Bank of New Zealand NZ Superannuation Fund Other core Crown Intra‐segment eliminations Total core Crown segment 19,492 19,022 25,175 22,941 (8,003) 78,627 19,500 18,417 24,160 22,728 (5,872) 78,933 (8) 605 1,015 213 (2,131) (306) ‐   3.3 4.2 0.9 (36.3) (0.4) 18,319 18,509 24,899 21,307 (6,835) 76,199 28,243 5,401 9,075 (1,422) 41,297 26,896 6,422 10,677 (3,689) 40,306 ACC portfolio EQC portfolio Other Crown entities Intra‐segment eliminations Total Crown entities segment 28,893 4,403 8,845 (1,791) 40,350 28,473 3,528 8,188 (1,762) 38,427 420 875 657 (29) 1,923 1 25 8 (1.6) 5.0 30,752 2,035 8,008 (1,929) 38,866 20,058 19,260 Total State‐owned Enterprises segment 20,348 20,666 (318) (1.5) 21,558 (17,687) (18,686) Inter‐segment eliminations (19,287) (18,336) (951) (5.2) (17,264) 118,779 117,751 Total financial assets  120,038 119,690 348 0.3 119,359 Financial assets by entity 1.  Other advances include finance lease receivables. 26 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 NOTES TO THE FINANCIAL STATEMENTS    As at 30 June 2013 $m Current Year Actual vs Forecast As at 31 Jan 2013 $m Actual $m Forecast $m % Variance $m Annual Forecast $m 35,085 26,322 19,049 13,673 4,166 3,186 2,563 2,657 1,128 5,448 113,277 NOTE 13:  Property, Plant and Equipment Net Carrying Value By class of asset: Land (valuation)1 Buildings (valuation) State highways (valuation) ‐ excluding land Electricity generation assets (valuation) Electricity distribution network (cost) Specialist military equipment (valuation) Specified cultural and heritage assets (valuation) Aircraft (excl military) (valuation) Rail network (valuation) ‐ excluding land Other plant and equipment (cost) Total net carrying value 34,444 34,391 25,683 25,925 18,543 18,541 13,527 13,666 4,006 4,075 2,796 3,031 2,621 2,554 2,366 2,483 1,098 1,166 5,334 5,400    110,418    111,232 53 (242) 2 (139) (69) (235) 67 (117) (68) (66) (814) 0.2 (0.9) ‐   (1.0) (1.7) (7.8) 2.6 (4.7) (5.8) (1.2) (0.7) 34,453 25,784 17,930 13,555 3,865 3,094 2,617 2,296 1,035 5,204 109,833 33,464 24,916 17,832 14,420 3,574 3,095 2,494 2,272 983 5,552 108,602        29,507        51,823        28,503               ‐      109,833            29,069            50,263            29,270                 ‐        108,602 By source: Core Crown Crown entities State‐owned Enterprises Inter‐segment eliminations Total net carrying value 29,371 52,296 28,751 ‐      110,418     29,686     52,510     29,036            ‐    111,232 (315) (214) (285) ‐   (814) (1.1)     30,562 (0.4)     53,485 (1.0)     29,230 ‐              ‐ (0.7)    113,277            9,580 8,003            5,364            3,256            2,887            1,374            3,989        34,453             8,713 8,353             5,430             3,256             2,702             1,435             3,575          33,464 Land breakdown by usage 1 Housing stock State highway corridor land Conservation estate Rail network corridor land Schools Commercial (SOE) excluding rail Other Total land        9,579        9,570        8,003        8,003        5,359        5,364        3,257        3,252        2,866        2,883        1,397        1,410        3,983        3,909        34,444        34,391 9 ‐   (5) 5 (17) (13) 74 53 0.1        9,539 ‐   8,153 (0.1) 5,389 0.2 3,232 (0.6)        2,880 (0.9)        1,414 1.9        4,478 0.2        35,085 1.  Land relating to state highways, the rail network and conservation which had previously been included within the state highways, rail network and  specified cultural and heritage assets categories has been reclassified to the Land category.      121,717            5,779         (1,471)         (2,047)         (1,182)      122,796        121,717             2,794               (398)                 (94)               (399)        123,620 Schedule of movements Cost or valuation Opening balance Additions Disposals Net revaluations Other Total cost or valuation        13,133              (659)         (3,587)            3,697              379        12,963            13,133               (108)                 ‐             2,288               (295)          15,018 Accumulated depreciation and impairment Opening balance Eliminated on disposal Eliminated on revaluation Depreciation expense and impairment losses Other Total accumulated depreciation and impairment      109,833        108,602 Total property, plant and equipment 122,796 3,407 (493) (511) (31)    125,168   122,796        3,786          (244)            (26)          (101)    126,211 ‐   (379) (249) (485) 70 (1,043) ‐   122,796 (10.0) 7,925 (102.0) (496) ‐   12 69.3 25 (0.8)    130,262      12,963          (201)          (158)        2,155              (9)        14,750     12,963          (109)            ‐        2,237          (112)        14,979 ‐   (92) (158) (82) 103 (229) ‐   12,963 (84.4) (52) ‐     ‐   (3.7) 4,030 92.0 44 (1.5)        16,985 (814) (0.7)    113,277    110,418    111,232 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   27  NOTES TO THE FINANCIAL STATEMENTS    As at 30 June 2013 $m Current Year Actual vs Forecast As at 31 Jan 2013 $m Actual $m Forecast $m Variance $m % Annual Forecast $m NOTE 13 (continued):  Property, Plant and Equipment            2,041            1,521              472              578              201              966          5,779             1,005                672                305                338                  60                414              2,794 Additions ‐ by functional classification Transport and communications Economic and industrial services Education Health Defence Other Total additions 1,143 1,250 627 778 266 245 289 470 163 176 919 867         3,407         3,786 (107) (151) 21 (181) (13) 52 (379) (8.6) 2,609 (19.4) 1,301 8.6 688 (38.5) 746 (7.4) 506 6.0 2,075 (10.0)         7,925 NOTE 14:  NZ Superannuation Fund 595 (983) (165) 4,374 3,821 318 (699) (69) 2,875 2,425 18,703 3,821 25 22,549 18,703 2,425 (1) 21,127 23,419 (2,055) 1,185 22,549 21,987 (2,047) 1,187 21,127 64,149 595 983 64,537 36,031 318 699 36,412 (4,414) 595 142 983 (3,884) (2,511) 318 47 699 (2,083) Revenue Less: current tax expense Less: other expenses1 Add gains/(losses) Operating balance 420 (594) (77) 2,091 1,840 470 (343) (95) 1,130 1,162 (50) 251 (18) 961 1,144 (10.6) 73.2 (18.9) 85.0 98.5 782 (554) (159) 1,776 1,845 Opening net worth Operating balance Other movements in reserves Closing net worth 22,549 1,840 (6) 24,383 22,549 1,162 11 23,722 ‐   678 (17) 661 ‐   58.3 (154.5) 2.8 22,549 1,845 19 24,413 comprising: Financial assets Financial liabilities Net other assets Closing net worth 25,175 (1,969) 1,177 24,383 24,160 (1,602) 1,164 23,722 1,015 (367) 13 661 4.2 (22.9) 1.1 2.8 24,899 (1,632) 1,146 24,413 Core Crown revenue (excl NZS Fund) 38,277 420 594 38,451 39,169 470 343 39,042 (892) (50) 251 (591) (2.3) (10.6) 73.2 (1.5) 68,493 782 554 68,265 OBEGAL excluding NZS Fund Total Crown OBEGAL Less NZS Fund revenue Add back NZS Fund external expenses Add back NZS Fund tax OBEGAL excluding NZS Fund (1,063) 420 79 594 (810) (426) 470 90 (343) (1,149) (637) (50) (11) 251 (347) (149.5) (10.6) (12.2) 73.2 (30.2) (2,320) 782 150 554 (2,398) Core Crown revenue (excl NZS Fund) Core Crown revenue Less NZS Fund revenue Add back NZS Fund intra‐segment revenue 1.  NZS Fund other expenses include deferred tax expense/(credits) 28 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   NOTES TO THE FINANCIAL STATEMENTS    As at 30 June 2013 $m As at 31 Jan 2013 $m Current Year Actual vs Forecast % Annual Forecast $m (307) 217 (90) (4.4) 6.5 (0.9) 7,568 4,387 11,955 27,266 4,777 1,440 61 (408) 33,136 (125) (799) (117) 2 (6) (1,045) (0.5) (16.7) (8.1) 3.1 (1.5) (3.2) 29,146 3,152 1,071 61 ‐   33,430 398 945 2,870 395 977 2,928 (3) 32 58 (0.8) 3.3 2.0 488 987 3,177 Actual $m Forecast $m 7,242 3,100 10,342 6,935 3,317 10,252 27,391 5,576 1,557 59 (402) 34,181 Variance $m NOTE 15:  Payables 7,616 3,544 11,160 7,588 Accounts payable 2,719 Taxes repayable 10,307 Total payables NOTE 16:  Insurance liabilities 29,446 6,869 1,744 67 (414) 37,712 28,302 8,013 1,879 43 (460) 37,777 ACC liability EQC property damage liability Southern Response (formerly AMI Insurance) Other insurance liabilities Inter‐segment eliminations Total insurance liabilities NOTE 17:  Provisions 81 467 101 458 20 (9) 19.8 (2.0) ‐   391 123 1,494 14 Provision for ETS Credits1 1,043 Provision for National Provident Fund guarantee 2,846 Provision for employee entitlements Provision for Canterbury Red Zone support 930      package 374 Provision for Infrastructure costs Provision for weathertight services 187      financial assistance package 764 Other provisions  121 1,239 120 1,095 (1) (144) (0.8) (13.2) 114 1,260 7,138 6,158 Total provisions 6,121 6,074 (47) (0.8) 6,417 179 977 3,374 222 769 1.  Further information on the ETS, and the Kyoto net asset (included as an intangible asset in these financial statements) can be found on the Ministry for the Environment's climate change website www.climatechange.govt.nz NOTE 18: Changes in Net Worth 3,520 6,925 167 250 10,862 56,001 1,335 (268) 57,068 432 1,508 1,940 (173) 314 141 3,520 Opening taxpayers funds 4,171 Operating balance excluding minority interests Gain/(loss) on Government share offers in  ‐       state‐owned enterprises 58 Transfers from/(to) other reserves 7,749 Closing taxpayers funds 56,001 (44) (59) 55,898 Opening revaluation reserve Net revaluations Transfers from/(to) other reserves Closing revaluation reserve 432 Opening minority interests ‐   Net movements 432 Closing minority interests (173) Opening other reserves 48 Net movements (125) Closing other reserves 10,862 3,372 10,862 2,743 ‐   629 ‐   22.9 10,862 1,639 (361) 113 13,986 (358) 21 13,268 (3) 92 718 (0.8) 438.1 5.4 (550) 129 12,080 57,068 (348) (35) 56,685 57,068 (114) (10) 56,944 ‐   (234) (25) (259) ‐   (205.3) (250.0) (0.5) 57,068 (74) (83) 56,911 1,940 2,528 4,468 1,940 2,520 4,460 ‐   8 8 ‐   0.3 0.2 1,940 3,790 5,730 141 (185) (44) 141 (111) 30 ‐   (74) (74) ‐   (66.7) (246.7) 141 33 174 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014   29  NOTES TO THE FINANCIAL STATEMENTS    Year to 30 Jun 2013 $m 7 months to 31 Jan 2013 $m Current Year Actual vs Forecast % Annual Forecast $m (295) 17 (37) 130 1 84 26 ‐   (450) (524) (0.8) 4.1 (3.6) 11.8 ‐   0.3 1.4 ‐   (100.0) (15.3) 62,314 728 1,604 2,795 (23,787) (43,446) (3,619) (220) 1,375 (2,256) (1,120) (61) (428) 1,599 ‐   180 170 45 25 (228) (1) ‐   (180) (339) 4.0 41.5 (53.3) (0.1) ‐   (100.0) (198.8) (2,691) (842) (1,021) 2,490 (206) 450 (1,820) (4,112) (3,250) (863) (26.6) (4,076) 5,875 ‐   (715) 6,385 (513) (235) (510) 513 (480) (8.0) 100.0 (204.3) 8,013 (3,067) (235) 5,160 5,637 (477) (8.5) 4,711 ‐   ‐   ‐   ‐   (50) ‐   ‐   100.0 ‐   ‐   (745) (100) ‐   5,160 (50) 5,587 ‐   50 ‐   50 (427) 100.0 (7.6) (845) 3,866 (760) (485) (275) (56.7) (138) (3,047) Other borrowing cash flows Net (repayment)/issue of other New Zealand 2,537      dollar borrowing Net (repayment)/issue of foreign currency (1,171)      borrowing 216 417 (201) (48.2) 113 1,447 1,366 Total other borrowing cash flows (544) (68) (476) (104.9) (25) 5,699 234 (1,311) 4,622 Investing cashflows Other net sale/(purchase) of marketable 2,306      securities and deposits 271 Issues of circulating currency (5,289) Decrease/(increase) in cash (2,712) Total investing cash flows (2,768) 382 1,882 (504) (3,815) 243 1,303 (2,269) 1,048 139 579 1,766 27.5 57.2 44.4 (1,446) 246 1,435 235 5,742 6,698 Residual cash deficit funding 4,112 3,250 863 Actual $m NOTE 19:  Core Crown residual cash    Core Crown Cash Flows from Operations Tax receipts Other sovereign receipts Interest, profits and dividends Sale of goods & services and other receipts Transfer payments and subsidies Personnel and operating costs Finance costs Forecast for future new operating spending Top‐down expense adjustment Net core Crown operating cash flows 57,808 651 1,553 2,385 (22,780) (40,412) (3,729) ‐   ‐   (4,524) 32,258 398 831 1,364 (13,839) (24,528) (1,815) ‐   ‐   (5,331) (1,231) (342) (1,308) 1,663 ‐   ‐   (1,218) (606) 225 (986) ‐   ‐   ‐   (1,367) (5,742) (6,698) Residual cash deficit Net purchase of physical assets Net increase in advances Net purchase of investments Net proceeds from partial share sales  Forecast for future new capital spending Top‐down capital adjustment Net Core Crown capital cash flows Forecast $m 34,633 430 1,005 1,232 (14,100) (25,347) (1,797) ‐   ‐   (3,944) 34,928 413 1,042 1,102 (14,101) (25,431) (1,823) ‐   450 (3,420) (1,075) (35) (656) 1,598 ‐   ‐   (168) Variance $m The residual cash deficit is funded as follows: 15,458 (9,982) (5,404) 72 ‐   (499) 100 (399) (327) 4,494 Debt programme cash flows Market: 10,312      Issue of government bonds ‐        Repayment of government bonds (2,268)      Net issue/(repayment) of short‐term borrowing1 8,044 Total market debt cash flows Non market: ‐        Issue of government bonds ‐        Repayment of government bonds ‐        Net issue/(repayment) of short‐term borrowing ‐   Total non‐market debt cash flows 8,044 Total debt programme cash flows 1.  Short‐term borrowing consists of Treasury Bills and Euro‐Commercial Paper (ECP)     30 Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 77.8 26.6 4,076   NOTES TO THE FINANCIAL STATEMENTS    Note 20:   Government Share Offer Programme  Meridian Energy Limited  On 23 October 2013 the price and allocations in relation to Meridian Energy Limited (Meridian) instalment receipts  that were sold were confirmed (settled on 30 October for the NZX portion and 31 October for the ASX portion).  The  Government sold instalment receipts representing 48.98% of its shares in Meridian and will receive gross cash  proceeds of $1.883 billion once the final instalment is paid.  The Crown has received $1,255 million cash proceeds  from the first instalment with the final instalment of $627.5 million payable on 15 May 2015.  The table below outlines the net assets of Meridian and the summary core Crown results of the partial share  sale:   Meridian  At date of share issue             $m  Property, plant and equipment  Financial assets  Other assets  Borrowings  Other liabilities  Net Assets  Carrying amount of minority interests (48.98%)    Gross proceeds  6,790   519   130   (1,297)  (1,546)  4,596  2,251    1,883  (33)  (21)  1,829  422  2,251  Present value discounting for the deferral of final instalment1  Estimated direct costs2  Net proceeds  Estimated loss on disposal to minority interests  Carrying amount of minority interests (48.98%)    Air New Zealand Limited  The Air New Zealand partial share sale was completed by 25 November 2013.  The Government sold around  221 million of the shares it owned in Air New Zealand at a sale price of $1.65.  The sale raised approximately  $365 million in gross proceeds for the Government and resulted in an estimated gain on disposal of $52 million.  Year to date impact  Overall, the estimated impact of the partial sale on the Government’s key fiscal indicators at 31 January 2014 was as  follows:  Indicator  Residual Cash  Net Debt  Excluding proceeds from sales  $m  (5,710)  61,495  Impact of sales  Including proceeds from sales  $m  $m 1,598  (4,112)  (1,598)  59,897    The core Crown has recorded an estimated loss on disposal of $370 million from both sales.  In addition to the core  Crown’s direct investment, a number of Crown Financial Institutions (CFI’s) have also invested in the companies as  part of their normal investment activities.  These investments have the effect of reducing the total Crown’s estimated  loss on disposal to $360 million.  1   The present value discount represents the difference between the present value of the receivable in today’s dollars of $594.5 million and the  nominal value of $627.5 million to be received in May 2015.  2   Direct costs are the costs that were deducted from the share sale proceeds received by the Crown.  Financial Statements of the Government of New Zealand – seven months ended 31 January 2014 31