Her Majesty The Queen In Right Of New Zealand 18-K/A Annual report (foreign governments) (amended)

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Exhibit 99.4(D)(2)

Financial Statements of the
Government of New Zealand

For the Six Months Ended
31 December 2001



8 February 2002

ISBN 0-478-11824-4

CONTENTS

Commentary

Overview

Comparison with Forecast

Comparison with Previous Year

Financial Statements

Statement of Financial Performance

Statement of Financial Position

Statement of Movements in Equity

Statement of Cash Flows

Statement of Borrowings

Statement of Commitments

Statement of Contingent Liabilities

Statement of Accounting Policies

Notes to the Financial Statements

Officers for Enquiries

Glenn Phillips/Steve Leith
Budget and Macroeconomic Branch
The Treasury (1 The Terrace)
PO Box 3724, Wellington
NEW ZEALAND

Telephone: 64-4-471-5102
Telephone: 64-4-471-5254
Facsimile: 64-4-499-0992

E-mail: glenn.phillips@treasury.govt.nz

E-mail: steve.leith@treasury.govt.nz

Internet

This document will be made available on the New Zealand Treasury's Internet site.

The URL for this site is http://www.treasury.govt.nz

COMMENTARY

OVERVIEW—SIX MONTHS TO DECEMBER 2001

	December 2001 Actual YTD	December 2001 Forecast YTD	Variance $m	June 2002 Forecast	June 2001 Actual
Operating balance	1,458	1,289	169	985	1,409
Net worth	12,971	12,746	225	12,442	11,463
Net Crown debt	20,364	21,019	655	21,703	19,971

        The operating balance for the period to December was $1,458 million, which was $169 million higher than the December Economic and Fiscal Update (DEFU) forecast. This was due to:

•

revenue being $28 million above forecast;



•

expenses being $34 million below forecast; and



•

SOE/CE surplus being $107 million above forecast.

        Within total revenue, tax revenue was $7 million higher than forecast. The main components were:

•

other persons tax being higher-than-forecast by $62 million; and



•

source deductions being higher-than-forecast by $48 million.

        These variances were partially offset by Goods and services tax being lower-than-forecast by $99 million. The remaining variance was spread across a number of tax types.

        Total expenses were $34 million below forecast. The variance was spread across various functional classifications.

Net Crown debt (gross debt less financial assets excluding assets of the NZS Fund) was $655 million lower than forecast largely due to:

•

additional issues of circulating currency ($471 million) which are not forecast as a matter of policy. This was due to cover the demand for additional currency over the Christmas period and a portion of this variance is expected to reverse in the coming months; and



•

higher-than-forecast net cash flows from operations of $401 million.

        These were partially offset by variances in other financing and investing activities.

        Net Crown debt was estimated to be 17.6% of GDP at 31 December, compared to a forecast of 18.1%.

The New Zealand Superannuation Fund (NZS Fund)

        The NZS Fund is the vehicle for implementing the Governments policy to partially pre-fund future New Zealand Superannuation costs.

        The New Zealand Debt Management Office (NZDMO) has been accumulating the contributions that will be made to the NZS Fund once the Guardians of New Zealand Superannuation are appointed and determine the investment strategy for the fund.

        As at 31 December 2001 the amounts held by NZDMO totalled $304 million (including interest accrued at the official cash rate).

COMPARISON WITH FORECAST

Financial Performance

        The financial statements for the six months ended 31 December 2001 are compared against forecasts based on the 2001 December Economic and Fiscal Update (DEFU). The operating balance comprised:

Operating Balance	Actual $million	Forecast $million	Variance $million
Revenue	20,558	20,530	28
Expenses	19,315	19,349	34
SOEs and Crown entities	215	108	107
Operating balance	1,458	1,289	169

Revenue

        Overall revenue was $28 million higher than forecast.

Tax Revenue

        Tax revenue was higher-than-forecast by $7 million. The components of the year-to-date variance were:

Variances Against Forecast	$million
Goods and services tax	(99	)
Net other persons tax	62
Net company tax	(53	)
Source deductions	48
Other taxation	49
Total Taxation Variance	7

•

Goods and services tax was lower-than-forecast by $99 million. Some of this variance was likely to be due to timing differences in revenue recognition. With strong retail sales over Christmas, which will likely to be recognised in January and increasing consumer confidence levels, this variance is expected to reverse in the coming months.



•

Net other persons tax was higher-than-forecast by $62 million. Much of this variance was due to unexpected strength in taxpayer's provisional assessments.



•

net company tax was lower-than-forecast by $53 million. The IRD has recently completed its semi-annual external audit, which identified some overstatement of company tax collection. The forecast was completed on a pre-audited base. We expect some of the variance to remain throughout the financial year.



•

source deductions were higher-than-forecast by $48 million, which was within the normal range of variance for this large tax type.

Expenses

        Total expenses for the period were $34 million lower than forecast. Key movements included:

        Social security and welfare expenses were lower-than-forecast by $46 million. This comprised of a number of minor variances over various benefit types (refer note 5).

        Defence and health expenses were lower-than-forecast by $26 million and $20 million respectively, which were due to timing issues and are expected to reverse in the coming months.

        These variances have been partially offset by educations expenses being higher-than-forecast by $49 million. This primarily related to student loan provisioning. It is also expected that most of this variance will reverse in the coming months.

State-Owned Enterprises (SOEs) and Crown Entities

        The SOEs and Crown entities net surplus less distributions was as follows:

SOEs and Crown Entities		Actual $million		Forecast $million		Variance
SOEs
	Surplus	238		184		54
	Distributions	(196	)	(196	)	—
		42		(12	)	54
Crown Entities
	Surplus	183		130		53
	Distributions	(10	)	(10	)	—
		173		120		53
Net Surplus		215		108		107

        The SOEs and Crown entities net surplus was higher-than-forecast by $107 million. The key components of the variance were:

•

Net surpluses from SOEs being higher-than-forecast by $54 million. The variance was spread across a number of entities.



•

Net surpluses from Crown entities being higher than forecast by $53 million. This was largely due to higher than forecast investment returns from ACC and EQC.

Net Cash Flows

        Net cash flows for the six months ended 31 December 2001 were as follows:

					Variance
Net Cash Flows	Actual $million		Forecast $million
					$million		%
Operating activities	109		(292	)	401		137.3
Investing activities (excluding net (purchases)/sales of marketable securities and deposits)	(1,471	)	(1,425	)	(46	)	3.2
Amount required to be financed	(1,362	)	(1,717	)	355		20.7
Net sales/(purchases) of marketable securities and deposits	522		956		(434	)	(45.4	)
Financing activities	1,156		1,042		114		10.9
Net Movement in Cash	316		281		35		12.5

Net cashflows from operating activities were higher-than-forecast by $401 million due to:

•

higher-than-forecast taxation receipts of $236 million;



•

higher-than-forecast other receipts of $63 million; and



•

lower-than-forecast cash disbursed to operations of $102 million.

        The favourable taxation receipts variance mainly comprised of:

•

other indirect tax being $64 million higher than forecast, largely due to payment of tobacco excise in December. This resulted from increased November production due to changes in some organisational structures in the tobacco industry. This variance is timing in nature and is expected to reverse in the coming months;



•

companies tax being $63 million higher than forecast some of this is likely to be due to timing and may reverse out in the future; and



•

goods and services tax being $52 million higher than forecast.

Net cash outflows from investing activities (excluding net (purchases)/sales of marketable securities and deposits) was $46 million higher than forecast, which was mainly due to higher purchase of physical assets.

        As a result, the amount required to be financed was $355 million lower than forecast.

Financial Position

        The Statement of Financial Position recording the Crown's assets, liabilities and net worth as at 31 December 2001 was made up of:

			Variance
Financial Position	Actual $million	Forecast $million
			$million		%
SOEs and Crown entities	14,464	14,392	72		0.5
Physical assets	16,193	16,076	117		0.7
Financial assets	17,120	16,987	133		0.8
Other assets	19,232	19,494	(262	)	(1.3	)
Total Assets	67,009	66,949	60		0.1
Gross debt	37,180	37,702	522		1.4
Pension liabilities	8,487	8,487	—		—
Other liabilities	8,371	8,014	(357	)	(4.5	)
Total Liabilities	54,038	54,203	165		0.3
Crown Balance (net worth)	12,971	12,746	225		1.8

Net Crown debt was $655 million lower than forecast. This was largely due to:

•

additional issues of circulating currency of $471 million; and



•

higher-than-forecast net cash flows from operations of $401 million (refer to previous page for explanation).

        These have been partially offset by variances in other financing and investing activities, including movement in student loan provisions, purchase of physical assets, net advances and foreign exchange gains and losses.

        Net Crown debt was estimated to be 17.6% of GDP at 31 December, compared to a forecast of 18.1%. This ratio is calculated using the actual nominal GDP number to September 2001, based on the latest GDP series released by Statistics New Zealand.

Net Crown Debt		Actual $m		Forecast $m		Variance $m
Gross Borrowings		37,180		37,702		522
Less
	Marketable securities/ deposits1	11,126		10,944		182
	Advances and cash2	5,690		5,739		(49	)
Financial Assets		16,816		16,683		133
Net Crown Debt		20,364		21,019		655
Net Crown Debt to GDP Ratio		17.6	%	18.1	%	0.5	%

1

The New Zealand Superannuation Funds financial assets of $304 million held by the New Zealand Debt Management Office are excluded from the calculation of net Crown debt.

2

POST BALANCE DATE EVENT

The Air New Zealand advance of $300 million is currently reported as net debt neutral. The total recapitalisation package was approved by Air New Zealand shareholders. The advance has converted to new preference shares on 31 January 2002. The accrued interest on the advance has also converted to preference shares. An additional $585 million of ordinary shares was purchased by the Crown on 31 January 2002. This will have the effect of increasing net debt, as the total investment will be recorded as an equity investment, which does not meet the definition of a financial asset.

COMPARISON WITH PREVIOUS YEAR

		December YTD								Year Ended 30 June
		2001/02		2000/01		$m		%		2000/01		1999/00		1998/99		1997/98
		$m		$m						$m		$m		$m		$m
Operating Statement
Total taxation revenue		19,070		18,455		615		3.3		36,738		34,035		32,156		32,982
	% of GDP	16.5	%	17.4	%					32.5	%	32.1	%	31.7	%	33.1	%
Total non tax revenue		1,488		1,327		161		12.1		2,754		2,491		4,201		2,599
Total Revenue		20,558		19,782		776		3.9		39,492		36,526		36,357		35,581
	% of GDP	17.7	%	18.6	%					35.0	%	34.4	%	35.9	%	35.7	%
Social security and welfare		6,798		6,591		(207	)	(3.1	)	13,216		12,896		12,906		12,509
GSF pension expenses		342		333		(9	)	(2.7	)	855		478		1,132		494
Health		3,808		3,624		(184	)	(5.1	)	7,342		6,874		6,573		6,001
Education		3,487		3,286		(201	)	(6.1	)	6,690		6,310		5,899		5,714
Core government services1		766		675		(91	)	(13.5	)	1,817		1,710		1,705		1,562
Other		2,889		2,713		(176	)	(6.5	)	5,830		5,592		5,141		5,114
Finance costs		1,194		1,274		80		6.3		2,483		2,373		2,516		2,804
Net foreign exchange (gains) losses		31		(12	)	(43	)	358.3		(47	)	(62	)	(47	)	13
Total Expenses		19,315		18,484		(831	)	(4.5	)	38,186		36,171		35,825		34,211
% of GDP		16.7	%	17.4	%					33.8	%	34.1	%	35.3	%	34.3	%
SOE/Crown entities net surplus		215		234		(19	)	(8.1	)	523		575		1,245		1,164
ACC Valuation movement		—		—		—		—		(420	)	519		—		—
Operating Balance		1,458		1,532		(74	)	(4.8	)	1,409		1,449		1,777		2,534
% of GDP		1.3	%	1.4	%					1.2	%	1.4	%	1.8	%	2.5	%
OBERAC		1,458		1,532		(74	)	(4.8	)	884		246		2,191		1,904
% of GDP		1.3	%	1.4	%					0.8	%	0.2	%	2.2	%	1.9	%
Financial Position
SOEs and Crown entities		14,464		14,598		(134	)	(0.9	)	14,077		14,392		12,917		19,022
Physical assets		16,193		16,118		75		0.5		16,102		15,972		15,258		14,962
Other assets		36,352		33,475		2,877		8.6		34,902		30,059		30,048		28,372
Total Assets		67,009		64,191		2,818		4.4		65,081		60,423		58,223		62,356
Total Liabilities		54,038		54,122		84		0		53,618		51,840		52,201		52,435

Crown Balance (net worth)		12,971		10,069		2,902		29		11,463		8,583		6,022		9,921
	% of GDP	11.2	%	9.5	%					10.2	%	8.1	%	5.9	%	10.0	%
Net Crown debt		20,364		21,665		(1,301	)	(6	)	19,971		21,396		21,701		24,069
	% of GDP	17.6	%	20.4	%					17.7	%	20.2	%	21.4	%	24.1	%
GDP		115,853		106,073						112,873		106,073		101,386		99,696

        Taxation revenue was $615 million higher than the six months ended December 2000, largely reflecting growth in wages, employment and goods and services tax.

        Social security and welfare expenses were $207 million higher than the previous year, due to the CPI increase across benefits on 1 April 2001 and new policy initiatives.

        Education expenses were $201 million higher than the previous year. The increase in expenditure reflects demographic changes as well as new policy initiatives.

        Health expenses were $184 million higher than the previous year, due to the provision of new services and maintaining existing service levels as a result of demographic, price inflations and technology growth pressures.

        Other expenses were $176 million higher than previous years. This was largely due to changes to provisioning by Maori Development and Courts.

        The investment in SOEs and Crown entities was $134 million lower than the previous years, primarily due to the increase in the ACC outstanding claims liability valuation and asset revaluations at the end of the 2000/01 financial year. This has been offset by additional capital contributions to SOE/CE's during the current year.

        Net Crown debt has reduced primarily due to the improved cash flows from operations reported in the 30 June 2001 Crown Financial Statements, combined with improvements in net cashflows from operating activities and circulating currency for the current financial year.

1    An error was identified in last year's December Financial Statements that understated core government services by $102 million. The error was corrected in the 2001 January Financial Statements.

FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL PERFORMANCE

for the six months ended 31 December 2001

						Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000										Annual Forecast
					Note	Actual	Forecast	Variance
$m		$m				$m	$m	$m		%		$m
				Revenue
				Levied through the Crown's     Sovereign Power
23,863		12,261		Direct taxation	1	12,398	12,299	99		0.8		24,226
12,875		6,194		Indirect taxation	2	6,672	6,764	(92	)	(1.4	)	13,345
36,738		18,455		Total taxation revenue		19,070	19,063	7		—		37,571
385		176		Compulsory fees, fines, penalties     and levies		286	283	3		1.1		519
37,123		18,631		Total Revenue Levied through     the Crown's Sovereign Power		19,356	19,346	10		0.1		38,090
				Earned through the Crown's     Operations
1,369		628		Investment income	3	682	697	(15	)	(2.2	)	1,207
659		324		Sales of goods and services		338	328	10		3.0		670
381		199		Other operational revenue	4	182	159	23		14.5		323
(40	)	—		Unrealised (losses)/gains arising     from revaluations of commercial     forests		—	—	—		—		—
2,369		1,151		Total Revenue Earned through     the Crown's Operations		1,202	1,184	18		1.5		2,200
39,492		19,782		Total Revenue		20,558	20,530	28		0.1		40,290
				Expenses
				By functional classification
13,216		6,591		Social security and welfare		6,798	6,844	46		0.7		13,649
855		333		GSF pension expenses		342	342	—		—		748
7,342		3,624		Health		3,808	3,828	20		0.5		7,797
6,690		3,286		Education		3,487	3,438	(49	)	(1.4	)	7,041
1,817		675		Core government services		766	767	1		0.1		1,611
1,560		781		Law and order		883	900	17		1.9		1,737
1,267		539		Defence		546	572	26		4.5		1,162
1,026		517		Transport and communications		434	436	2		0.5		1,103
1,141		531		Economic and industrial services		573	575	2		0.3		1,258
287		126		Primary services		145	147	2		1.4		337
424		176		Heritage, culture and recreation		240	244	4		1.6		495
50		19		Housing and community     development		44	48	4		8.3		92
75		24		Other		24	9	(15	)	(166.7	)	137
2,483		1,274		Finance costs	5	1,194	1,198	4		0.3		2,345
(47	)	(12	)	Net foreign-exchange     losses/(gains)		31	1	(30	)	—		1
—		—		Provision for future initiatives		—	—	—		—		90
38,186		18,484		Total Expenses	5	19,315	19,349	34		0.2		39,603
1,306		1,298		Revenue Less Expenses		1,243	1,181	62		5.2		687
103		234		Net surplus, less distributions,     attributable to state-owned     enterprises and Crown entities	8	215	108	107		99.1		298
1,409		1,532				1,458	1,289	169		13.1		985

The accompanying Notes are an integral part of these Statements

STATEMENT OF FINANCIAL POSITION

as at 31 December 2001

				Current Year Actual vs Forecast
Prior Year 30 June 2001	Actual 31 December 2000									Annual Forecast
			Note	Actual	Forecast	Variance
$m	$m			$m	$m	$m		%		$m
		Assets
115	61	Cash and bank balances		433	419	14		3.3		169
12,060	12,133	Marketable securities and     deposits1		11,430	11,248	182		1.6		9,821
4,615	4,118	Advances	6	5,257	5,320	(63	)	(1.2	)	6,026
6,197	7,192	Receivables	7	7,267	7,507	240		3.2		6,125
193	265	Inventories		201	203	(2	)	(1.0	)	207
14,077	14,598	State-owned enterprises and     Crown entities	8	14,464	14,392	72		0.5		14,713
354	371	Other investments	9	358	378	(20	)	(5.3	)	471
16,102	16,118	Physical assets	10	16,193	16,076	117		0.7		16,303
310	370	Commercial forests		310	310	—		—		310
11,055	8,963	State highways	11	11,093	11,093	—		—		11,131
3	2	Intangible assets		3	3	—		—		3
—	—	Capital contingency provision		—	—	—		—		1,269
65,081	64,191	Total Assets		67,009	66,949	60		0.1		66,548
		Liabilities
5,831	4,947	Payables and provisions	12	5,235	5,349	114		2.1		5,811
2,539	2,875	Currency issued		3,136	2,665	(471	)	(17.7	)	2,665
36,761	37,977	Borrowings		37,180	37,702	522		1.4		37,105
8,487	8,323	Pension liabilities		8,487	8,487	—		—		8,525
53,618	54,122	Total Liabilities		54,038	54,203	165		0.3		54,106
		Total Assets less
11,463	10,069	Total Liabilities		12,971	12,746	225		1.8		12,442
		Crown Balance
3,456	1,922	Accumulated operating balance		4,917	4,746	171		3.6		4,442
8,007	8,147	Revaluation reserve	13	8,054	8,000	54		0.7		8,000
11,463	10,069	Crown Balance		12,971	12,746	225		1.8		12,442

1

Contributions to the New Zealand Superannuation Fund to 31 December 2001 are included as marketable securities and deposits. As at 31 December 2001 the New Zealand Debt Management Office hold $304 million marketable securities and deposits on behalf of the New Zealand Superannuation Fund.

The accompanying Notes are an integral part of these Statements

STATEMENT OF MOVEMENTS IN EQUITY

for the six months ended 31 December 2001

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000								Annual Forecast
					Actual	Forecast		Variance
$m		$m			$m	$m		$m	%	$m
8,583		8,583		Opening Crown Balance	11,463	11,463		—	—	11,463
1,650		—		State highway recognition policy change	—	—		—	—	—
10,233		8,583		Adjusted Operating Crown Balance	11,463	11,463		—	—	11,463
1,409		1,532		Operating balance for the period	1,458	1,289		169	13.1	985
(179	)	(46	)	Net revaluations	50	(6	)	56	—	(6	)
1,230		1,486		Total Recognised Revenues and     Expenses	1,508	1,283		225	17.5	979
11,463		10,069		Closing Crown Balance	12,971	12,746		225	1.8	12,442

The accompanying Notes are an integral part of these Statements.

STATEMENT OF CASH FLOWS

for the six months ended 31 December 2001

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				Cash Flows From Operations
				Cash was provided from Direct Taxation
				Individuals
13,748		6,709		Source deductions	7,152		7,131		21		0.3		14,380
4,221		1,877		Other persons	1,935		1,916		19		1.0		4,300
(1,175	)	(689	)	Refunds	(697	)	(703	)	6		0.9		(1,158	)
338		190		Fringe benefit tax	173		173		—		—		340
17,132		8,087		Total Individuals	8,563		8,517		46		0.5		17,862
				Corporate
5,377		2,791		Gross companies	2,758		2,692		66		2.5		5,255
(785	)	(349	)	Refunds	(367	)	(364	)	(3	)	(0.8	)	(692	)
738		270		Non-resident withholding payment	286		288		(2	)	(0.7	)	714
				Foreign-source dividend
98		19		withholding payment	78		61		17		27.9		108
5,428		2,731		Total Corporate	2,755		2,677		78		2.9		5,385
1,043		476		Withholding taxes	492		496		(4	)	(0.8	)	1,009
2		1		Other direct taxation	1		1		—		—		2
23,605		11,295		Total Direct Taxation	11,811		11,691		120		1.0		24,258
				Indirect Taxation
				Goods and services tax
14,604		6,408		Gross goods and services tax	7,106		7,028		78		1.1		15,257
(5,657	)	(2,643	)	Refunds	(3,020	)	(2,994	)	(26	)	(0.9	)	(5,846	)
8,947		3,765		Total goods and services tax	4,086		4,034		52		1.3		9,411
3,698		1,967		Other indirect taxation	2,117		2,053		64		3.1		3,851
12,645		5,732		Total Indirect Taxation	6,203		6,087		116		1.9		13,262
36,250		17,027		Total Taxation Receipts	18,014		17,778		236		1.3		37,520
				Compulsory fees, fines, penalties
324		153		and levies	181		173		8		4.6		345
				Other Receipts
892		390		Interest, profits and dividends	602		557		45		8.1		1,017
622		341		Sales of goods and services	339		323		16		5.0		647
383		180		Other operating receipts	230		236		(6	)	(2.5	)	362
1,897		911		Total Other Receipts	1,171		1,116		55		4.9		2,026
38,471		18,091		Total cash provided from     operations	19,366		19,067		299		1.6		39,891

			Cash was disbursed to
4,749	2,182		Departmental outputs	2,571	2,548		(23	)	(0.9	)	5,107
16,008	8,265		Other outputs	8,525	8,636		111		1.3		16,802
2,499	1,281		Finance costs	1,185	1,184		(1	)	(0.1	)	2,311
133	69		Subsidies	54	64		10		15.6		168
			Current transfers
12,910	6,765		Social assistance grants	6,814	6,811		(3	)	—		13,502
250	103		Other transfers	108	116		8		6.9		258
-	—		Provision for future initiatives	—	—		—		—		90
36,549	18,665		Total cash disbursed to     operations	19,257	19,359		102		0.5		38,238
1,922	(574	)	Net Cash Flows From     Operations	109	(292	)	401		137.3		1,653

The accompanying notes are an integral part of these Statements.

STATEMENT OF CASH FLOWS (CONTINUED)

for the six months ended 31 December 2001

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
1,922		(574	)	Subtotal (brought forward)	109		(292	)	401		137.3		1,653
				Cash Flows From Investing     Activities
				Cash was provided from
174		55		Net (purchase)/sale of     investments	(175	)	(209	)	34		16.3		(440	)
(1,001	)	(1,439	)	Net sale/(purchase) of marketable     securities and deposits1	522		956		(434	)	(45.4	)	2,289
75		37		Sale of physical assets	47		51		(4	)	(7.8	)	94
(752	)	(1,347	)	Total cash provided	394		798		(404	)	(50.6	)	1,943
				Cash was disbursed to
617		139		Net increase in advances	680		654		(26	)	(4.0	)	1,323
1,205		533		Purchase of physical assets	663		613		(50	)	(8.2	)	1,456
—		—		Capital contingency provision	—		—		—		—		1,269
1,822		672		Total cash disbursed	1,343		1,267		(76	)	(6.0	)	4,048
				Net Cash Flows From
(2,574	)	(2,019	)	Investing Activities	(949	)	(469	)	(480	)	(102.3	)	(2,105	)
(652	)	(2,593	)	Net Cash Flows From     Operating and Investing     Activities	(840	)	(761	)	(79	)	(10.4	)	(452	)
				Cash Flows From Financing     Activities
				Cash was Provided From
303		639		Issues of circulating currency	597		126		471		373.8		126
4,233		1,431		Issues of Government stock	1,896		1,806		90		5.0		1,056
574		233		Other New Zealand-dollar     borrowing2	328		—		328		—		(103	)
3,884		2,546		Borrowing in foreign currencies2	171		4		167		—		(596	)
8,994		4,849		Total Cash Provided	2,992		1,936		1,056		54.5		483
				Cash was Disbursed to
3,167		165		Repayment of Government stock	885		788		(97	)	(12.3	)	—
879		496		Repayment of other     New Zealand-dollar     borrowing2	459		106		(353	)	(333.0	)	—
4,398		1,734		Repayment of foreign-currency     borrowing2	492		—		(492	)	—		—
8,444		2,395		Total Cash Disbursed	1,836		894		(942	)	(105.4	)	—
550		2,454		Net Cash Flows From     Financing Activities	1,156		1,042		114		10.9		483

(102	)	(139	)	Net Movement in Cash	316	281	35		12.5		31
210		210		Opening Cash Balance	115	115	—		—		115
7		(10	)	Foreign-exchange gains/(losses)     on opening cash	2	23	(21	)	(91.3	)	23
115		61		Closing Cash Balance	433	419	14		3.3		169

1

Net sale/(purchase) of marketable securities and deposits includes the purchases made on behalf of the New Zealand Superannuation Fund of $300 million.

2

Issues and repayments of other New Zealand-dollar borrowing and foreign-currency borrowing are forecast on a net basis. Actual issues and repayments are reported on a gross basis.

The accompanying notes are an integral part of these statements.

STATEMENT OF CASH FLOWS (CONTINUED)

for the six months ended 31 December 2001

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				Reconciliation Between the Net Cash Flows from Operations and the Operating Balance
1,922		(574	)	Net Cash Flows from Operations	109		(292	)	401		137		1,653
				Items included in the operating balance but not in net cash flows from operations
				Valuation Changes
(164	)	—		(Increase)/decrease in pension     liabilities	—		—		—		—		(38	)
(40	)	—		Revaluation of commercial forests	—		—		—		—		—
100		175		Unrealised net foreign-exchange     gains	(74	)	—		(74	)	—		—
(253	)	—		National Provident Fund guarantee	—		—		—		—		—
(357	)	175		Total Valuation Changes	(74	)	—		(74	)	—		(38	)
				Physical Asset Movements
(925	)	(404	)	Depreciation	(455	)	(461	)	6		1.3		(965	)
(7	)	(3	)	(Loss)/gain on sale of physical     assets	(1	)	(1	)	—		—		(1	)
(932	)	(407	)	Total Physical Asset Movements	(456	)	(462	)	6		1.3		(966	)
				Other Non-cash Items
103		234		Net surplus, less distributions,     attributable to state-owned     enterprises and Crown entities	215		108		107		99.1		298
(103	)	—		Loss on writedown of defence     equipment	—		—		—		—		—
(61	)	—		Student loans	31		(40	)	71		177.5		7
55		40		Other	—		—		—		—		—
(6	)	274		Total Other Non-cash Items	246		68		178		261.8		305
177		3		Total other investing and     financing items	(54	)	—		(54	)	—		—
				Movements in Working Capital
737		1,615		Increase/(decrease) in taxes     receivable	998		1,296		(298	)	(23.0	)	(1	)
(62	)	57		Increase/(decrease) in other     receivables	72		14		58		414.3		(71	)
(81	)	(9	)	Increase/(decrease) in inventories	8		10		(2	)	(20.0	)	14
11		398		Decrease/(increase) in payables	609		655		(46	)	(7.0	)	89
605		2,061		Total movements in working     capital	1,687		1,975		(288	)	(14.6	)	31
1,409		1,532		Operating Balance	1,458		1,289		169		13.1		985

The accompanying Notes are an integral part of these Statements.

STATEMENT OF CASH FLOWS (continued)

for the six months ended 31 December 2001

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				Reconciliation of Net Cash Flow
				From Operations With Net Cash
				Proceeds From Domestic Bonds
1,922		(574	)	Net Cash Flows From Operations	109		(292	)	401		137.3		1,653
				Investing flows
				Net advances
(27	)	(16	)	Housing New Zealand Corporation	(291	)	(261	)	(30	)	(11.5	)	—
—		—		Contact Energy Limited	70		70		—		—		—
(668	)	(151	)	Student loans	(170	)	(186	)	16		8.6		—
51		—		Residual Health Management Unit	—		—		—		—		—
(24	)	—		District health boards	—		—		—		—		—
—		—		Air New Zealand	(300	)	(300	)	—		—		—
—		—		Solid Energy New Zealand Limited	19		19		—		—		—
51		28		Other	(8	)	4		(12	)	(300.0	)	(1,323	)
(617	)	(139	)	Total Net Advances	(680	)	(654	)	(26	)	(4.0	)	(1,323	)
(1,130	)	(496	)	Net purchase of physical assets	(616	)	(562	)	(54	)	(9.6	)	(1,362	)
				Net investments
(41	)	(17	)	District health boards	(66	)	(79	)	13		16.5		—
50		50		At Work Insurance Limited	7		—		7		—		—
—		—		New Zealand Post Limited	(72	)	(72	)	—		—		—
140		—		2GHz radio spectrum rights auction     proceeds	—		—		—		—		—
25		22		Other	(44	)	(58	)	14		24.1		(440	)
—		—		Capital contingency provision	—		—		—		—		(1,269	)
174		55		Net (purchase)/sale of Investments	(175	)	(209	)	34		16.3		(1,709	)
349		(1,154	)	(Required to be financed)/Available     for debt repayment	(1,362	)	(1,717	)	355		20.7		(2,741	)
				Used in:
(1,001	)	(1,439	)	Net sale/(purchase) of marketable     securities and deposits	522		956		(434	)	(45.4	)	2,289
(652	)	(2,593	)	Total Investing activities	(840	)	(761	)	(79	)	(10.4	)	(452	)
(305	)	(263	)	Net (repayment)/issue of other New     Zealand-dollar borrowing	(131	)	(106	)	(25	)	(23.6	)	(103	)
(514	)	812		Net (repayment)/issue of foreign     currency borrowing	(321	)	4		(325	)	—		(596	)
102		139		(Increase)/decrease in cash	(316	)	(281	)	(35	)	(12.5	)	(31	)
303		639		Issues of circulating currency	597		126		471		373.8		126
(414	)	1,327			(171	)	(257	)	86		33.5		(604	)
(1,066	)	(1,266	)	Net (Cash Proceeds     from)/Repayments of     Domestic Bonds	(1,011	)	(1,018	)	7		0.7		(1,056	)

				Gross Cash Proceeds from     Domestic Bonds
3,572		1,306		Domestic bonds (market)	1,698		1,708		(10	)	(0.6	)	4,156
661		125		Domestic bonds (non-market)	199		98		101		103.1		98
—		—		Inflation bonds	—		—		—		—		—
4,233		1,431		Total Gross Cash Proceeds from     Domestic Bonds	1,897		1,806		91		5.0		4,254
(2,651	)	(165	)	Repayment of domestic bonds     (market)	(680	)	(606	)	(74	)	(12.2	)	(2,590	)
(516	)	—		Repayment of domestic bonds     (non-market)	(206	)	(182	)	(24	)	(13.2	)	(608	)
1,066		1,266		Net Cash Proceeds     from/(Repayments of)     Domestic Bonds	1,011		1,018		(7	)	(0.7	)	1,056

The accompanying Notes are an integral part of these Statements.

STATEMENT OF BORROWINGS

as at 31 December 2001

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				Outstanding Debt
				New Zealand-Dollar Debt
23,331		23,507		Government stock	24,351		24,355		4		—		24,406
5,558		5,425		Treasury bills	5,456		5,467		11		0.2		5,466
(272	)	(60	)	Loans and foreign-exchange     contracts	(369	)	(340	)	29		8.5		(342	)
498		461		Retail stock	581		541		(40	)	(7.4	)	527
29,115		29,333		Total New Zealand-Dollar Debt	30,019		30,023		4		—		30,057
				Foreign-Currency Debt
4,780		4,455		United States dollars	4,329		4,448		119		2.7		4,170
1,432		2,309		Japanese yen	1,326		1,432		106		7.4		1,079
1,434		1,880		European and other currencies	1,506		1,799		293		16.3		1,799
7,646		8,644		Total Foreign-Currency Debt	7,161		7,679		518		6.7		7,048
36,761		37,977		Total Outstanding Debt	37,180		37,702		522		1.4		37,105
				Less
				Financial Assets
				Marketable Securities and Deposits
3,971		3,122		New Zealand dollars	3,926		3,028		898		29.7		1,862
5,093		4,379		United States dollars	4,538		4,583		(45	)	(1.0	)	4,358
1,548		2,444		Japanese yen	1,186		1,458		(272	)	(18.7	)	1,105
1,448		2,188		European and other currencies	1,476		1,875		(399	)	(21.3	)	1,882
12,060		12,133		Total Marketable Securities and     Deposits1	11,126		10,944		182		1.7		9,207
				Advances and Cash
				Advances to state-owned
261		237		enterprises and Crown entities	533		504		29		5.8		922
4,143		3,669		Student loans	4,282		4,376		(94	)	(2.1	)	4,870
211		212		Other advances	442		440		2		0.5		234
115		61		Cash	433		419		14		3.3		169
4,730		4,179		Total Advances and Cash	5,690		5,739		(49	)	(0.9	)	6,195
16,790		16,312		Total Financial Assets	16,816		16,683		133		0.8		15,402
19,971		21,665		Net Crown Debt	20,364		21,019		655		3.1		21,703
20,495		22,031		Net New Zealand-dollar debt	20,943		21,256		313		1.5		22,000
(524	)	(366	)	Net foreign-currency debt	(579	)	(237	)	342		144.3		(297	)
19,971		21,665		Net Crown Debt	20,364		21,019		655		3.1		21,703

1

The New Zealand Superannuation (NZS) Funds marketable securities and deposits as at 31 December of $304 million are excluded from the calculation of net Crown debt.

The accompanying Notes are an integral part of these Statements.

STATEMENT OF BORROWINGS (CONTINUED)

as at 31 December 2001

Movements in Net Crown Debt Since 30 June 2001

	As at 1 July 2001	Net Increases/ (Decreases)		Foreign Exchange Contracts	Currency Realignment		Unamortised Premiums		As at December 2001
	$m	$m		$m	$m		$m		$m
Outstanding Debt
By Type
New Zealand-dollar debt	29,115	908		—	—		(4	)	30,019
Foreign-currency debt	7,646	(290	)	—	(219	)	24		7,161
Total Outstanding Debt	36,761	618		—	(219	)	20		37,180
Less
Financial Assets
Marketable securities and deposits	12,060	(787	)	—	84		73		11,126
Advances and cash	4,730	920		—	2		—		5,690
Total Financial Assets	16,790	133		—	86		73		16,816
Net Crown Debt	19,971	485		—	(305	)	(53	)	20,364

STATEMENT OF COMMITMENTS

as at 31 December 2001

	As at 31 December 2001	As at 30 June 2001	As at 31 December 2000
	$m	$m	$m
Capital Commitments
Specialist military equipment	586	639	401
Land and buildings	539	383	89
Other plant and equipment	32	41	42
Investments	18	15	196
State-owned enterprises and Crown entities	648	619	850
Total Capital Commitments	1,823	1,697	1,578
Operating Commitments
Non-cancellable accommodation leases	812	842	769
Other non-cancellable leases	1,762	1,713	1,840
Non-cancellable contracts for the supply of goods and services	1,780	367	688
Other operating commitments	1,717	2,213	1,141
State-owned enterprises and Crown entities	2,422	2,471	2,414
Total Operating Commitments	8,493	7,606	6,852
Total Commitments	10,316	9,303	8,430

        Commitments of the Reserve Bank of New Zealand, state-owned enterprises and Crown entities are included in the Statement of Commitments. Commitments to state-owned enterprises and Crown entities are excluded.

STATEMENT OF CONTINGENT LIABILITIES

as at 31 December 2001

Quantifiable Contingent Liabilities

	As at 31 December 2001	As at 30 June 2001	As at 31 December 2000
	$m	$m	$m
Guarantees and Indemnities	400	371	405
Uncalled Capital	3,504	3,594	3,412
Legal Proceedings and Disputes	467	571	505
Other Contingent Liabilities	1,909	1,965	2,302
Total Quantifiable Contingent Liabilities	6,280	6,501	6,624

        Contingent liabilities of the Reserve Bank of New Zealand, state-owned enterprises and Crown entities are included in the Statement of Contingent Liabilities. Contingent liabilities to state-owned enterprises and Crown entities are excluded.

The accompanying Notes are an integral part of these Statements.

STATEMENT OF CONTINGENT LIABILITIES (CONTINUED)

as at 31 December 2001

Quantifiable Contingent Liabilities

	31 December 2001	30 June 2001
	$m	$m
Guarantees and indemnities	400	371
Uncalled capital	3,504	3,594
Legal proceedings and disputes	467	571
Other contingent liabilities	1,909	1,965
Total Quantifiable Contingent Liabilities	6,280	6,501

        Only contingent liabilities involving amounts of $10 million or more in any one year are separately disclosed. Contingent liabilities below $10 million are included in the "other" totals. Comparatives have been adjusted where appropriate to align with the disclosure of new "material" contingent liabilities. The total amount of comparative contingent liabilities remains unchanged.

        Contingent liabilities are costs which the Crown will have to face if a particular event occurs. Typically, contingent liabilities consist of guarantees and indemnities, uncalled capital and legal disputes and claims. The contingent liabilities facing the Crown are a mixture of operating and balance sheet risks, and they can vary greatly in magnitude and likelihood of realisation. In general, if a contingent liability were realised it would have a negative impact on the operating balance, net Crown debt and net worth. However, in the case of contingencies for uncalled capital, the negative impact would be restricted to net Crown debt.

        Where contingent liabilities have arisen as a consequence of legal action being taken against the Crown, the amount shown is the amount claimed and thus the maximum potential cost. It does not represent either an admission that the claim is valid or an estimation of the possible amount of any award against the Crown.

        Contingent liabilities of the Reserve Bank of New Zealand, state-owned enterprises and Crown entities are included in the Statement of Contingent Liabilities. Contingent Liabilities to state-owned enterprises and Crown entities are excluded.

Guarantees and indemnities

Cook Islands—Asian Development Bank (ADB) Loans

        Before 1992, the New Zealand Government guaranteed the Cook Islands' borrowing from the ADB. These guarantees have first call on New Zealand's Official Development Assistance to the Cook Islands.

        $25 million at 31 December 2001 ($26 million at 30 June 2001).

Huntly East mine subsidence

        Claims from private landowners concerning property damage or loss of value.

        $22 million at 31 December 2001 ($22 million at 30 June 2001).

Indemnification of receivers and managers—Terralink Limited

        The Crown has issued a Deed of Receivership indemnity to the appointed receivers of Terralink Limited.

        $10 million at 31 December 2001 ($10 million at 30 June 2001).

Ministry of Transport—Funding guarantee

        The Minister of Finance has issued a guarantee of $10 million to the Transport Accident Investigation Commission. The guarantee allows the Commission to assure payment to suppliers of specialist salvage equipment in the event of the Commission initiating an urgent investigation of any future significant transport accident.

$10 million at 31 December 2001 (nil at 30 June 2001).

Post Office Bank (PostBank)—guaranteed deposits

        In the sale of PostBank to ANZ Banking Group Limited (ANZ), the Crown agreed to continue its guarantee, under the Post Office Bank Act 1987, for certain PostBank deposits lodged with the Bank before 1 July 1988. ANZ agreed to indemnify the Crown for the cost of any liability that may arise from the Crown guarantee. The amount guaranteed reduces as deposits mature.

        $16 million at 31 December 2001 ($16 million at 30 June 2001).

Guarantees and indemnities of state-owned enterprises and Crown entities

        $266 million at 31 December 2001 ($243 million at 30 June 2001).

Other guarantees and indemnities

        $51 million at 31 December 2001 ($54 million at 30 June 2001).

Uncalled capital

        The Crown's uncalled capital subscriptions are as follows:

	Uncalled Capital at 31 December 2001	Uncalled Capital at 31 June 2001
	$m	$m
Asian Development Bank	1,514	1,553
European Bank for Reconstruction and Development	15	15
International Bank for Reconstruction and Development	1,975	2,026

Legal proceedings and disputes

        The amounts under quantifiable contingent liabilities for legal proceedings and disputes are shown exclusive of any interest and costs that may be claimed if these cases were decided against the Crown.

        Where contingent liabilities have arisen as a consequence of legal action being taken against the Crown, the amount shown is the amount claimed and thus the maximum potential cost. It does not represent either an admission that the claim is valid or an estimation of the possible amount of any award against the Crown.

Agriculture and Forestry—legal claims

        Claims against the Ministry of Agriculture and Forestry for alleged legal or administrative faults.

        $19 million at 31 December 2001 ($26 million at 30 June 2001).

Education—legal claims

        Claims against the Crown in respect of the reduction of dental subsidies.

        $16 million at 31 December 2001 ($10 million at 30 June 2001).

Health—Legal claims

        Claims against the Crown in respect of people allegedly contracting Hepatitis C through contaminated blood and blood products, and claims arising from the Gisborne inquiry.

        $124 million at 31 December 2001 ($72 million at 30 June 2001).

Maori Development—Maori Reserved Land

        The Maori Reserved Land Amendment Act 1997 provides for compensation to lessees for the move to market rents for land, for shorter review periods and for additional transaction costs. In addition, Schedule 5 to the Act recognises that Maori have not been obtaining fair market rents for their land and that this issue will be dealt with by the Government as part of its consideration of historical grievances.

        $94 million at 31 December 2001 ($94 million at 30 June 2001).

New Zealand Defence Force—legal claims

        Claims against the New Zealand Defence Force for alleged legal or administrative faults.

        $10 million at 31 December 2001 ($15 million at 30 June 2001).

Police—legal claims

        Claims against the Police for alleged legal or administrative faults.

        $49 million at 31 December 2001 ($56 million at 30 June 2001).

Tax in dispute

        Represents 50% of the outstanding debt of those tax assessments raised, against which an objection has been lodged and legal action is proceeding.

        $68 million at 31 December 2001 ($77 million at 30 June 2001).

Other legal claims

        $87 million at 31 December 2001 ($221 million at 30 June 2001).

Other quantifiable contingent liabilities

Reserve Bank—demonetised currency

        The Crown has a contingent liability for the face value of the demonetised $1 and $2 notes issued which have yet to be repatriated.

        $25 million at 31 December 2001 ($24 million at 30 June 2001).

International finance organisations

        The Crown has lodged promissory notes with the following international finance organisations:

	31 December 2001	30 June 2001
	$m	$m
Asian Development Bank	nil	12
International Monetary Fund	1,788	1,810

        Payment of the notes depends upon the operation of the rules of the individual organisations.

Other quantifiable contingent liabilities

        $96 million at 31 December 2001 ($119 million at 30 June 2001).

Unquantifiable Contingent Liabilities

        This part of the Statement provides details of those contingent liabilities of the Crown which cannot be quantified.

Institutional guarantees

        The following institutional guarantees have been provided through legislation.

Commerce Commission—indemnity for damages

        Under a Deed of Indemnity dated 12 November 1991, the Minister of Finance agreed to indemnify the Commission when it gives an undertaking as to damages when seeking injunctions under the Fair Trading and Commerce Acts, and subsequently the Court orders the Commission to pay damages. The sum payable under this Deed is limited to an amount up to $40 million per case taken to Court. The Commerce Act was amended with effect from 26 May 2001, to remove the need for the Commission to provide such undertakings.

District Court Judges, Justices of the Peace, Coroners and Dispute Tribunals

        Section 119 of the District Courts Act 1947 indemnifies District Court Judges acting in their civil jurisdiction. Section 196A of the Summary Proceedings Act 1957 also indemnifies District Court Judges for any liabilities arising as a result of an act done by a Judge in excess of, or without, jurisdiction.

        Section 35 of the Coroners Act 1988 confers on Coroners acting within the Coroner Act 1988 the same privileges and immunities as District Court Judges under the Summary Proceedings Act 1957.

        Under section 197 of the Summary Proceedings Act 1957, Justices of the Peace are similarly covered as long as a High Court Judge certifies that they have acted in good faith and ought to be indemnified.

        Section 58 of the Disputes Tribunal Act 1988 confers on Disputes Tribunal referees acting within the Disputes Tribunal Act 1988 the same protection as Justices of the Peace under the Summary Proceedings Act 1957.

Earthquake Commission

        The Crown is liable to meet any deficiency in the Earthquake Commission's assets in meeting the Commission's financial liabilities (section 16 of the Earthquake Commission Act 1993).

Fletcher Challenge Limited (FCL)

        Under the sale and purchase agreement for the sale of Forestry Corporation of New Zealand Limited, the Crown has indemnified FCL for the cost of cleaning up on-site environmental contamination incurred up to settlement date (27 September 1996). The Crown is to pay for half of any cost over $30 million and for all costs over $50 million. The on-site indemnity runs until 1 January 2020. The Crown has also indemnified FCL in respect of off-site environmental costs and losses incurred up until settlement date. The off-site indemnity is unlimited as to amount and time.

Ministry of Fisheries—indemnity provided for delivery of registry services

        The Crown has indemnified Commercial Fisheries Services Limited against claims made by third parties arising from Commercial Fisheries Services undertaking registry services under contract to the Chief Executive of the Ministry of Fisheries. This indemnity, provided under the Fisheries Acts 1983 and 1996, expires on 30 October 2006 unless varied, in which case it will expire on 30 September 2008.

National Provident Fund

        The Crown guarantees the benefits payable by all National Provident Fund Board schemes (section 60 of the National Provident Fund Restructuring Act 1990). The Crown also guarantees investments and interest thereon deposited with the National Provident Fund Board prior to 1 April 1991 (section 61 of the same Act).

        A provision has been made in these Financial Statements in respect of the actuarially assessed deficit in the DBP (Annuitants') Scheme (refer Note 12 of the Financial Statements).

Persons exercising investigating powers

        Section 63 of the Corporations (Investigation and Management) Act 1989 indemnifies the Securities Commission, the Registrar and Deputy Registrar of Companies, members of advising committees within the Act, every statutory manager of a corporation, and persons appointed pursuant to sections 17 to 19 of the Act, in the exercise of investigating powers, unless the power has been exercised in bad faith.

Public Trust Office

        The Crown is liable to meet any deficiency in the Public Trust Office's Common Fund (section 36 of the Public Trust Office Act 1957).

Reserve Bank of New Zealand (the Reserve Bank)

        Under section 146 of the Reserve Bank of New Zealand Act 1989, every statutory manager of a Registered Bank, every person appointed under section 99 or section 101 of the Act and every member of an advisory committee, shall be indemnified by the Crown in respect of any liability arising from the exercise, purported exercise or omission to exercise of any power conferred by Part V of the Act, unless that power has been exercised in bad faith.

        The Crown pays to the Reserve Bank any exchange losses incurred by the Reserve Bank as a result of dealing in foreign exchange under sections 17, 18 and 21(2) of the Act.

Other unquantifiable contingent liabilities

Accident Compensation Corporation (ACC)

        A court decision has determined that the ACC practice, prior to the Accident Insurance Act 1998, of allowing for familial responsibility when determining attendant care entitlements was not legitimate. The decision is likely to apply to a number of seriously injured claimants.

Bank of New Zealand (BNZ)

        A deed, entered into by the Crown, Fay Richwhite and Company Limited and National Australia Group Limited (the purchaser of BNZ), provides for the sharing of certain costs arising from defined risks that pre-date the sale of the BNZ. These risks are associated with New Zealand taxation and specified litigation.

Contaminated sites

        Under common law and various statutes, the Crown may have responsibility to remedy adverse effects on the environment arising from Crown activities. The Discussion Document on Contaminated Sites Management discusses the possibility of the Crown contributing to funding the clean-up of "orphan" contaminated sites.

Crown research institutes (CRIs)

        The Crown has indemnified the CRIs for any costs arising from certain third-party claims that are the result of acts or omissions prior to the transfer date, for costs of complying with statutes, ordinances and bylaws which relate to or affect certain buildings, and (subject to certain limitations) for the costs of obtaining title to land.

DFC New Zealand Limited (under statutory management) (DFC)

        DFC and the National Provident Fund have been indemnified for certain potential tax liabilities.

District health boards (DHBs)

        The Crown has provided transitional indemnities to directors and officers of some DHBs, for liabilities arising from inherited assets and business practices under the Building Act 1991 and the Health and Safety in Employment Act 1992.

Electricity Corporation of New Zealand Limited (ECNZ)

        The ECNZ Sale and Purchase Agreement provides for compensation to ECNZ for any tax, levy, royalty or impost imposed on ECNZ for the use of water or geothermal energy for plants in existence or under construction at the date of the Sale and Purchase Agreement. The Agreement also provides for compensation for any net costs to ECNZ arising from resumption of assets pursuant to the Treaty of Waitangi (State Enterprises) Act 1988.

        The Deed of Assumption and Release between ECNZ, Contact Energy Limited and the Crown provides that the Crown is no longer liable to ECNZ in respect of those assets transferred to Contact Energy. As a result of the split of ECNZ in 1999, Ministers have transferred the benefits of the Deed to ECNZ's successors—Meridian Energy Limited, Mighty River Power Limited, and Genesis Power Limited.

        Under the Transpower New Zealand Limited (Transpower) Sale and Purchase and Debt Assumption Agreements, the Crown has indemnified ECNZ for any losses resulting from changes in tax rules applicable to transactions listed in the Agreements. Additionally, the Crown has indemnified the directors and officers of ECNZ for any liability they may incur in their personal capacities as a result of the Transpower separation process.

        Following the split of ECNZ in 1999 into three new companies, the Crown has indemnified ECNZ in relation to all ECNZ's pre-split liabilities, including:

•

existing debt and swap obligations



•

hedge contracts and obligations



•

any liabilities that arise out of the split itself.

Housing New Zealand Corporation (HNZC)

        The Crown has indemnified the following entities in respect of the accuracy of information provided on the sale of various parcels of HNZC (formerly Housing Corporation of New Zealand) mortgages: Countrywide Bank, TSB Bank, and Westpac Banking Corporation.

        The Crown has indemnified the directors and officers of HNZC against any liabilities in respect of the sale of mortgages to ANZ Bank and Mortgage Corporation.

        Under the sale of mortgages to Westpac, HNZC has insured the purchaser against certain credit losses with the Crown standing behind this obligation.

        Legal proceedings have been initiated against a number of defendants, including the Crown, alleging breach of fiduciary duties in respect of the transfer of the Agreement for Sale and Purchase and mortgage agreements to HNZC under the Housing Assets Transfer Act 1993.

        In addition, the Crown has provided a warranty in respect of title to the assets transferred to HNZC (formerly Housing New Zealand) and has indemnified the company against any breach of this warranty. The Crown has indemnified the company against any third party claims that are as a result of acts or omissions prior to 1 November 1992. It has also indemnified the directors and officers of the company against any liability consequent upon the assets not complying with statutory requirements, provided they are taking steps to rectify any non-compliance.

Indemnities against acts of war and terrorism

        The Crown has indemnified Air New Zealand against claims arising from acts of war and terrorism, that cannot be met from insurance, up to a limit of US$2 billion in respect of any one claim.

        The Crown has offered non-airline aviation companies indemnities against acts of war, terrorism and related causes where commercial cover has been withdrawn following the events in the USA on Sept 11 2001. The indemnities are for a maximum of US$200 million for each party. At 31 December 2001, indemnities had been signed with Airways Corporation, Auckland International Airport, Christchurch International Airport, and Wellington International Airport. Further indemnities may be offered to eligible parties.

Pharmaceutical Management Agency Limited (Pharmac)—indemnity

        Section 99 of the Social Security Act 1964 provided for the fixing of prices for pharmaceutical products by way of a list specified by the Minister of Health ("the Drug Tariff"). This list was superseded by a list ("the Pharmaceutical Schedule") developed and issued by Pharmac, a company owned by the Crown and having various powers under the New Zealand Public Health and Disability Act 2000.

        Under the Transfer Agreement between Pharmac and the Crown, the Crown has indemnified Pharmac against any liability in respect of operations, activities, decisions and policies relating to the Drug Tariff and the Pharmaceutical Schedule.

        A number of legal claims have been lodged against Pharmac. If these claims are successful, the Crown's financial position may be adversely affected by any damages arising either directly through the indemnity, or indirectly through its ownership of Pharmac.

Purchasers of Crown operations

        The Crown has indemnified the purchasers of various Crown operations for losses owing to changes in legislation which uniquely and adversely affect those purchasers.

Sale of Crown assets

        On the sale of Crown assets and the corporatisation of Crown assets into state-owned enterprises and Crown entities, the Crown has generally provided a warranty that the Crown was the rightful owner of the assets transferred, and that the assets were free of encumbrances.

Tax liabilities

        The Crown has granted to the purchasers of the State Insurance Office Limited, and the Rural Banking and Finance Corporation Limited an indemnity for certain potential tax liabilities.

Treaty of Waitangi claims

        Under the Treaty of Waitangi Act 1975, any Maori may lodge claims relating to land or actions counter to the principles of the Treaty with the Waitangi Tribunal. Where the Tribunal finds a claim is well founded, it may recommend to the Crown that action be taken to compensate those affected. The Tribunal can make recommendations that are binding on the Crown with respect to land which has been transferred by the Crown to a state-owned enterprise or tertiary institution, or is subject to the Crown Forest Assets Act 1989.

Settlement relativity payments

        The Deeds of Settlement negotiated with Waikato-Tainui and Ngai Tahu include a relativity mechanism. The mechanism provides that, where the total redress amount for all historical Treaty settlements exceeds $1 billion in 1994 present-value terms, the Crown is liable to make payments to maintain the real value of Ngai Tahu's and Waikato-Tainui's settlements as a proportion of all Treaty settlements. The agreed relativity proportions are 17% for Waikato-Tainui and approximately 16% for Ngai Tahu. The non-quantifiable contingent liability relates to the risk that total settlement redress, including binding recommendations from the Waitangi Tribunal, will trigger these relativity payments.

Works Civil Construction

        The Crown has provided an indemnity to the purchasers of Works Civil Construction in relation to the activities of the Ministry of Works and Development prior to 1 April 1989. In addition, an indemnity has been provided against certain costs, claims or damages in relation to the Clyde and Ohaaki power projects.

Works Consultancy Services

        The Crown has provided an indemnity to the purchasers of Works Consultancy Services in relation to the activities of the Ministry of Works and Development prior to 1 April 1989.

STATEMENT OF ACCOUNTING POLICIES

as at 31 December 2001

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



•

Departments



•

Offices of Parliament



•

Reserve Bank of New Zealand



•

State-owned enterprises



•

Crown entities



•

Public Trust Office

        A schedule of entities included in the Crown reporting entity was set out on pages 112 and 113 of the 2001 December Economic and Fiscal Update (DEFU) published on 18 December 2001.

General Accounting Policies

        These Financial Statements comply with generally accepted accounting practice. The measurement base applied is historical cost adjusted for revaluations of assets.

        Revaluations are made to reflect the service potential or economic benefit obtained through control of the assets. 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.

Specific Accounting Policies

        The specific accounting policies of the Crown were described on pages 125 to 138 of the 2001 DEFU. There have been no changes in accounting policies during the period 1 July 2001 to 31 December 2001.

Forecast Results and Assumptions

        The forecast results in these Financial Statements have been derived from the forecasts released in the 2001 DEFU, on 18 December 2001.

        The assumptions underlying the preparation of forecasts are set out in the Statement of Accounting Policies and Forecast Assumptions on pages 125 to 138 of the 2001 DEFU.

Comparative Figures

        Comparative figures for the previous financial year are also presented in these Financial Statements.

        Percentage variances between the actual and prior year balances exceeding 500% are not shown.

NOTES TO THE FINANCIAL STATEMENTS

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				NOTE 1: Direct Taxation
				Income Tax
				Individuals
13,703		6,749		Source deductions	7,192		7,144		48		0.7		14,380
3,871		2,088		Other persons	2,076		1,999		77		3.9		3,921
(790	)	(422	)	Refunds	(435	)	(420	)	(15	)	(3.6	)	(779	)
342		207		Fringe benefit tax	173		168		5		3.0		349
17,126		8,622		Total Individuals	9,006		8,891		115		1.3		17,871
				Corporate
4,954		2,806		Gross companies	2,539		2,577		(38	)	(1.5	)	4,625
(123	)	(40	)	Refunds	(83	)	(68	)	(15	)	(22	)	(115	)
760		371		Non-residents' income	373		364		9		2.5		715
71		20		Foreign-source dividends	67		67		—		—		123
5,662		3,157		Total Corporate	2,896		2,940		(44	)	(1.5	)	5,348
				Withholding Taxes
990		457		Residents' interest income	505		478		27		5.6		982
83		24		Residents' dividend income	(10	)	(11	)	1		9.1		23
1,073		481		Total Withholding Taxes	495		467		28		6.0		1,005
23,861		12,260		Total Income Tax	12,397		12,298		99		0.8		24,224
				Other Direct Taxation
2		1		Estate and gift duties	1		1		—		—		2
2		1		Total Other Direct Taxation	1		1		—		—		2
23,863		12,261		Total Direct Taxation	12,398		12,299		99		0.8		24,226
				NOTE 2: Indirect Taxation
				Goods and Services Tax
15,133		7,384		Gross goods and services tax	7,975		8,034		(59	)	(0.7	)	15,517
(6,007	)	(3,143	)	Refunds	(3,371	)	(3,331	)	(40	)	(1.2	)	(6,046	)
9,126		4,241		Total Goods and Services Tax	4,604		4,703		(99	)	(2.1	)	9,471
				Excise Duties
810		407		Petroleum fuels	417		429		(12	)	(2.8	)	825
764		402		Tobacco products	456		469		(13	)	(2.8	)	806
436		244		Alcoholic beverages	255		253		2		0.8		446
2,010		1,053		Total Excise Duties	1,128		1,151		(23	)	(2.0	)	2,077
				Other Indirect Taxation
648		364		Customs duty	361		336		25		7.4		656

532	260	Road user charges	282	272	10		3.7		551
206	100	Gaming duties	116	118	(2	)	(1.7	)	239
181	89	Motor vehicle fees	93	90	3		3.3		180
111	55	Energy resources levy	58	58	—		—		107
61	32	Stamp, cheque and credit card     duties	30	36	(6	)	(16.7	)	64
1,739	900	Total Other Indirect Taxation	940	910	30		3.3		1,797
12,875	6,194	Total Indirect Taxation	6,672	6,764	(92	)	(1.4	)	13,345

NOTES TO THE FINANCIAL STATEMENTS

			Current Year Actual vs Forecast
Prior Year 30 June 2001	Actual 31 December 2000								Annual Forecast
			Actual	Forecast	Variance
$m	$m		$m	$m	$m		%		$m
		NOTE 3: Investment Income
		Interest Income
463	238	Marketable securities, deposits,     mortgages and cash balances	226	195	31		15.9		351
		Advances
289	140	Student loans	164	165	(1	)	(0.6	)	334
48	27	Other entities	47	47	—		—		80
800	405	Total Interest Income	437	407	30		7.4		765
		Dividend Income
		Dividends from state-owned     enterprises
45	—	Electricity Corporation of New     Zealand Limited	—	—	—		—		—
15	7	Genesis Power Limited	16	16	—		—		—
19	11	Landcorp Farming Limited	10	10	—		—		—
68	29	Meridian Energy Limited	142	142	—		—		—
21	21	Mighty River Power Limited	—	—	—		—		—
7	—	New Zealand Post Limited	—	—	—		—		—
32	15	Television New Zealand Limited	4	4	—		—		—
87	42	Transpower New Zealand Limited	16	16	—		—		—
10	7	Other	8	8	—		—		365
12	12	Housing New Zealand     Corporation	9	9	—		—		—
9	2	Other dividends	17	18	(1	)	(5.6	)	—
325	146	Total Dividend Income	222	223	(1	)	(0.4	)	365
		Other Investment Income
102	76	Gains/(losses) on marketable     securities and deposits	16	62	(46	)	(74.2	)	62
—	—	NZS Fund investment income	4	4	—		—		14
140	—	2 GHz radio spectrum rights     auction proceeds	—	—	—		—		—
2	1	Other	3	1	2		200.0		1
244	77	Total Other Investment Income	23	67	(44	)	(65.7	)	77
1,369	628	Total Investment Income	682	697	(15	)	(2.2	)	1,207
		NOTE 4: Other Operational     Revenue
106	55	Recoveries from Accident     Compensation Corporation	55	53	2		3.8		105
16	11	Contributions to Government     Superannuation Fund	10	7	3		42.9		50
82	47	Petroleum royalties	28	23	5		21.7		42
29	15	Cost recovery income from     fisheries	15	15	—		—		30

10	5	Income from Earthquake     Commission	5	5	—	—	10
138	66	Other	69	56	13	23.2	86
381	199	Total Other Operational     Revenue	182	159	23	14.5	323

NOTES TO THE FINANCIAL STATEMENTS

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				NOTE 5: Expenses by Input     Type
13,274		6,616		Subsidies and transfer payments     (see analysis below)	6,808		6,857		49		0.7		13,740
17,719		8,418		Operating expenses (see analysis     below)	8,937		8,956		19		0.2		18,619
				Personnel
2,632		1,286		Personnel expenses (excluding     pension expenses)	1,369		1,366		(3	)	(0.2	)	2,783
855		333		GSF Pension expenses	342		342		—		—		710
—		—		Movement in GSF unfunded     pension liability	—		—		—		—		38
56		31		Other pension expenses	34		28		(6	)	(21.4	)	53
				Depreciation
751		362		Physical assets	365		371		6		1.6		786
174		42		State highways	90		90		—		—		179
282		131		Rental and leasing costs	144		139		(5	)	(3.6	)	258
7		3		Loss/(gain) on sale of assets	1		1		—		—		1
2,483		1,274		Finance costs (see analysis below)	1,194		1,198		4		0.3		2,345
404		70		Net foreign-exchange     (gains)/losses on liabilities	(250	)	11		261		—		11
(451	)	(82	)	Net foreign-exchange     losses/(gains) on assets	281		(10	)	(291	)	—		(10	)
—		—		Provision for future initiatives	—		—		—		—		90
38,186		18,484		Total Expenses	19,315		19,349		34		0.2		39,603
				Analysis of Subsidies and     Transfer Payments
				Social Assistance Grants
5,273		2,640		New Zealand superannuation	2,729		2,730		1		—		5,452
1,444		723		Domestic purposes benefit	745		746		1		0.1		1,450
1,849		939		Community wage	—		—		—		—		—
—		—		Unemployment benefit	716		724		8		1.1		1,484
878		454		Family support	446		455		9		2.0		879
391		199		Student allowances	207		208		1		0.5		417
3,073		1,493		Other social assistance grants	1,804		1,817		13		0.7		3,653
115		65		Subsidies	54		63		9		14.3		145
				Other Transfer Payments
226		93		Official development assistance	93		99		6		6.1		227
25		10		Other	14		15		1		6.7		33
13,274		6,616		Total Subsidies and Transfer     Payments	6,808		6,857		49		0.7		13,740
				Analysis of Operating Expenses
				Education purchases
331		166		Early childhood education	177		176		(1	)	(0.6	)	356

3,505	1,625	Primary and secondary education	1,827	1,834	7		0.4		3,683
1,508	746	Tertiary education and training	828	834	6		0.7		1,685
6,807	3,412	Health purchases	3,466	3,482	16		0.5		7,072
467	229	Science purchases	234	234	—		—		478
5,101	2,240	Other operating expenses	2,405	2,396	(9	)	(0.4	)	5,345
17,719	8,418	Total Operating Expenses	8,937	8,956	19		0.2		18,619
		Analysis of Finance Costs
		Interest
2,035	1,033	New Zealand dollars	1,008	1,017	9		0.9		2,011
428	231	Foreign currencies	164	163	(1	)	(0.6	)	304
20	10	Other finance costs	22	18	(4	)	(22.2	)	30
2,483	1,274	Total Finance Costs	1,194	1,198	4		0.3		2,345

NOTES TO THE FINANCIAL STATEMENTS

			Current Year Actual vs Forecast
Prior Year 30 June 2001	Actual 31 December 2000								Annual Forecast
			Actual	Forecast	Variance
$m	$m		$m	$m	$m		%		$m
		NOTE 6: Advances
		Advances to state-owned     enterprises and Crown entities
163	152	Housing New Zealand Corporation	454	424	30		7.1		645
45	43	Solid Energy New Zealand Limited	26	26	—		—		—
29	39	Residual Health Management Unit	29	29	—		—
24	—	District health boards	24	25	(1	)	(4.0	)	274
—	3	Terralink NZ Limited	—	—	—		—		3
261	237	Total Advances to state-owned enterprises and Crown entities	533	504	29		5.8		922
		Other Advances
4,143	3,669	Student loans	4,282	4,376	(94	)	(2.1	)	4,870
—	—	Air New Zealand Limited	300	300	—		—		—
118	117	Contact Energy Limited	48	48	—		—		48
38	39	Maori development rural lending	40	40	—		—		43
29	26	Forestry encouragement loans	30	30	—		—		30
8	8	Catchment authorities	8	8	—		—		—
18	22	Other	16	14	2		14.3		113
4,354	3,881	Total Other Advances	4,724	4,816	(92	)	(1.9	)	5,104
4,615	4,118	Total Advances	5,257	5,320	(63	)	(1.2	)	6,026
		NOTE 7: Receivables
4,962	5,840	Taxes receivable	5,960	6,258	(298	)	(4.8	)	4,961
1,024	1,086	Accounts receivable	1,040	994	46		4.6		950
111	119	Receivable from the sale and purchase     of Maui gas	102	107	(5	)	(4.7	)	116
100	147	Prepayments	165	148	17		11.5		98
6,197	7,192	Total Receivables	7,267	7,507	(240	)	(3.2	)	6,125

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8: Ownership Interest in State-owned Enterprises and Crown Entities

	Investment as at 1 July 2001	Net surplus	Distributions to Crown		Net surplus after distributions	Net revaluations to revaluation reserve	Net capital contributions /(withdrawals) by Crown	Investment as at 31 December 2001
	$m	$m	$m		$m	$m	$m	$m
State-owned enterprises	5,554	238	(196	)	42	—	65	5,661
Crown entities	8,523	183	(10	)	173	—	107	8,803
Total State-owned     Enterprises and     Crown Entities	14,077	421	(206	)	215	—	172	14,464

NOTES TO THE FINANCIAL STATEMENTS

			Current Year Actual vs Forecast
Prior Year 30 June 2001	Actual 31 December 2000								Annual Forecast
			Actual	Forecast	Variance
$m	$m		$m	$m	$m		%		$m
		NOTE 9: Other Investments
128	118	International Bank for     Reconstruction and     Development	125	128	(3	)	(2.3	)	128
72	78	Public Trust Office	72	72	—		—		47
117	107	Asian Development Bank	114	129	(15	)	(11.6	)	129
37	68	Other	47	49	(2	)	(4.1	)	167
354	371	Total Other Investments	358	378	(20	)	(5.3	)	471
		NOTE 10: Physical Assets
		By Type
		Cost or Valuation
1,844	1,860	Land	1,877	1,857	20		1.1		1,840
464	431	Properties intended for sale	445	444	1		0.2		447
8,654	8,325	Buildings	8,871	8,860	11		0.1		9,156
2,686	2,892	Specialist military equipment	2,733	2,726	7		0.3		2,829
2,213	2,210	Other plant and equipment	2,329	2,275	54		2.4		2,442
2,688	2,637	Other assets	2,695	2,688	7		0.3		2,683
18,549	18,355	Total Cost or Valuation	18,950	18,850	100		0.5		19,397
		Accumulated Depreciation
729	568	Buildings	898	903	5		0.6		1,076
421	406	Specialist military equipment	497	499	2		0.4		590
1,292	1,261	Other plant and equipment	1,355	1,365	10		0.7		1,421
5	2	Other assets	7	7	—		—		7
2,447	2,237	Total Accumulated Depreciation	2,757	2,774	17		0.6		3,094
		Net Book Value
1,844	1,860	Land	1,877	1,857	20		1.1		1,840
464	431	Properties intended for sale	445	444	1		0.2		447
7,925	7,757	Buildings	7,973	7,957	16		0.2		8,080
2,265	2,486	Specialist military equipment	2,236	2,227	9		0.4		2,239
921	949	Other plant and equipment	974	910	64		7.0		1,021
2,683	2,635	Other assets	2,688	2,681	7		0.3		2,676
16,102	16,118	Total Net Book Value	16,193	16,076	117		0.7		16,303
		Movements since 30 June 2001
		Cost or Valuation
18,507	18,507	Opening balance	18,549	18,549	—		—		18,549
905	278	Net additions	352	301	51		16.9		848

(863	)	(430	)	Net Revaluations	49		—		49	—	—
18,549		18,355		Total Cost or Valuation	18,950		18,850		100	0.5	19,397
				Accumulated Depreciation
2,535		2,535		Opening balance	2,447		2,447		—	—	2,447
(145	)	(278	)	Disposals	(54	)	(50	)	4	8.0	(145	)
751		362		Depreciation charged for the period	365		371		6	1.6	786
(694	)	(382	)	Net Revaluations	(1	)	6		7	116.7	6
2,447		2,237		Total Accumulated Depreciation	2,757		2,774		17	0.6	3,094
16,102		16,118		Net Physical Assets	16,193		16,076		117	0.7	16,303

NOTES TO THE FINANCIAL STATEMENTS

				Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000								Annual Forecast
				Actual	Forecast	Variance
$m		$m		$m	$m	$m		%		$m
			NOTE 11: State Highways
			Cost or Valuation
8,911		8,911	Opening balance	11,055	11,055	—		—		11,055
1,650		—	Recognition adjustment	—	—	—		—		—
300		94	Net additions	128	128	—		—		255
194		—	Net revaluations	—	—	—		—		—
11,055		9,005	Total Cost or Valuation	11,183	11,183	—		—		11,310
			Accumulated Depreciation
—		—	Opening balance	—	—	—		—		—
174		42	Depreciation charged for the period	90	90	—		—		179
(174	)	—	Net revaluations	—	—	—		—		—
—		42	Total Accumulated Depreciation	90	90	—		—		179
11,055		8,963	Net State Highways	11,093	11,093	—		—		11,131
			NOTE 12: Payables and     Provisions
1,907		1,868	Taxes repayable	1,855	1,929	74		3.8		2,397
1,631		1,519	Accounts payable	1,410	1,474	64		4.3		382
1,193		669	Accruals and provisions	867	847	(20	)	(2.4	)	1,938
686		480	National Provident Fund guarantee	686	686	—		—		686
—		35	National Provident Fund Board     indemnity	—	—	—		—		—
414		376	Provision for employee     entitlements	417	413	(4	)	(1.0	)	408
5,831		4,947	Total Payables and Provisions	5,235	5,349	114		2.1		5,811

NOTES TO THE FINANCIAL STATEMENTS

					Current Year Actual vs Forecast
Prior Year 30 June 2001		Actual 31 December 2000											Annual Forecast
					Actual		Forecast		Variance
$m		$m			$m		$m		$m		%		$m
				NOTE 13: Revaluation Reserve
8,201		8,201		Opening Balance	8,007		8,007		—		—		8,007
				Net Revaluations
368		—		State highways	—		—		—		—		—
85		(48	)	Land and buildings	46		(6	)	52		—		(6	)
(258	)	—		Specialist military equipment	—		—		—		—		—
4		—		Other assets	4		—		4		—		—
(378	)	2		State-owned enterprises and Crown     entities	—		—		—		—		—
(179	)	(46	)	Total Net Revaluations	50		(6	)	56		—		(6	)
(15	)	(8	)	Transfers to accumulated operating     balance	(3	)	(1	)	(2	)	(200	)	(1	)
8,007		8,147		Closing Revaluation Reserve	8,054		8,000		54		0.7		8,000

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Exhibit 99.4(D)(2) Financial Statements of the Government of New Zealand For the Six Months Ended 31 December 2001 8 February 2002

COMMENTARY
FINANCIAL STATEMENTS