Province Of Manitoba 18-K/A Annual report (foreign governments) (amended)

Exhibit 99.1

Province of Manitoba

2011/12 Quarterly Financial Report
April to June 2011

CONTENTS

Introduction
Quarterly Financial Results
Economic Performance and Outlook

INTRODUCTION

Budget 2011 provided the financial overview of the Government Reporting Entity (GRE), which includes core government and Crown organizations, government business entities and public sector organizations such as regional health authorities, school divisions, universities and colleges. Manitoba’s summary budget aligns with the accounting standards set by the Public Sector Accounting Board and fully reflects Generally Accepted Accounting Principles (GAAP). A summary budget presents a more complete picture of how the provincial government and the other related entities operate as a whole and what the total cost is of providing services and programs to people in Manitoba.

The financial information in this quarterly financial report is presented in the same format as the budget. The first quarter financial report presents information on the GRE for the three months ending June 30, 2011. The report also contains an economic performance and outlook. Consistent with prior years, an updated projection for the year end will be provided in the second quarter report.

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

GOVERNMENT REPORTING ENTITY (GRE)

The unprecedented flooding in 2011 has resulted in unbudgeted expenditures for flood fighting, mitigation work and compensation programs that will affect the budgeted results for 2011/12. While the net impact will depend on the results of ongoing consultations with Canada respecting cost-sharing, preliminary forecasts indicate a net provincial cost of $154 million after anticipated federal cost-shared recoveries of $478 million.

The 2011/12 projection for unbudgeted expenditures includes Building and Recovery Action Plan and Disaster Financial Assistance costs of $455 million to support homeowners, businesses, First Nation communities and municipalities as well as $177 million for AgriRecovery programs to support livestock and crop producers.

Infrastructure expenditures will include the restoration of bridges, roads and dikes and $100 million for the construction of an outlet channel to alleviate the pressure on Lake Manitoba and Lake St. Martin.

A Special Warrant has been issued to provide authority for the flood related expenditures. The overall financial situation will continue to be monitored in light of the magnitude and continuing effects of the natural disaster, as well as pressures in supports for families and corrections. More complete information on expenditure and revenue projections will provide the basis for a revised year end result in the second quarter report.

Projection of Summary Net Income/(Loss)
For the Fiscal Year Ending March 31, 2012
UNAUDITED

	2011/12 Budget
	Core			Consolidation Impacts and
(Millions of Dollars)	Government			Other Reporting Entities			Summary
Revenue		10,772			2,622			13,394
Expenditure		11,348			2,626			13,974
In-Year Adjustment/Lapse		(65	)		(80	)		(145	)
NET RESULT FOR THE YEAR		(511	)		76			(435	)
2011 Spring Flood Contingency
Expenditures		(30	)		—			(30	)
Recovery From Disaster Financial Assistance		27			—			27
Total 2011 Spring Flood Estimate		(3	)		—			(3	)
Transfer from Fiscal Stabilization Account		50			(50	)		—
NET INCOME (LOSS)		(464	)		26			(438	)

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

QUARTERLY FINANCIAL RESULTS

The unaudited net result of the Government Reporting Entity for the first three months of the fiscal year is $(491) million, $103 million better than estimated. The variance is the net result of revenue being $20 million higher than anticipated and expenditure being $83 million lower than estimated.

The three-month revenue variance is a combined result of higher net income of Government Business Enterprises as a result of timing of receipts and expenditures, partially offset by lower than estimated federal transfers and fees and other revenue as a result of timing. Expenditure variances are primarily the result of timing of core government expenditures.

Government Reporting Entity Operating Statement
UNAUDITED

	Year-to-Date to June 30
	2011/12									2010/11
($000s)	Actual			Estimated			Variance			Actual
Revenue
Income Taxes		756,183			756,183			—			668,199
Other Taxes		696,067			701,732			(5,665	)		623,638
Fees and Other Revenue		402,231			439,553			(37,322	)		417,371
Federal Transfers		891,052			919,803			(28,751	)		955,826
Net Income of Government Business Enterprises		167,362			84,324			83,038			180,128
Sinking Funds and Other Earnings		68,085			59,565			8,520			57,111
Total Revenue		2,980,980			2,961,160			19,820			2,902,273
Expenditure
Health and Healthy Living		1,307,719			1,357,776			(50,057	)		1,252,676
Education		1,075,895			1,116,684			(40,789	)		947,790
Family Services and Consumer Affairs		345,474			367,539			(22,065	)		324,531
Community, Economic and Resource Development		397,457			358,545			38,912			272,302
Justice and Other Expenditures		179,730			188,547			(8,817	)		142,256
Debt Servicing Costs		165,377			165,482			(105	)		181,043
Total Expenditure		3,471,652			3,554,573			(82,921	)		3,120,598
In-Year Adjustment/Lapse		—			—			—			—
Net Result		(490,672	)		(593,413	)		102,741			(218,325	)

Core government revenue and expenditure details are provided in Appendix I and II on pages 9 and 10.

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

Infrastructure and Capital Asset Renewal

Expenditures for infrastructure and capital asset renewal in 2011/12 are budgeted to be $1.8 billion to support continued economic growth and provide for the services Manitobans need in the future. The projects are supported by $107 million in federal funding.

Based on principles of sound financial management, Manitoba has been able to increase the assets of the province while maintaining a manageable level of debt. Budget 2011 continues to provide the resources for upgrading Manitoba’s roads and highways, wastewater treatment plants, health facilities across the province, building and restoring much needed social housing and modernizing our schools and post-secondary institutions.

As borrowings may be used to finance capital related projects, net debt may grow in absolute terms from time to time as needed investments in capital assets — like the Red River Floodway, highway infrastructure and economic stimulus investments — are made. It is therefore important to measure change in net debt against the growth of the economy. As a result of the decision to continue to invest in infrastructure projects to create jobs and stimulate the economy, an increase in the net debt to GDP ratio to 26.2% was projected in Budget 2011.

Core government capital investment details are provided in Appendix III on page 11.

SPECIAL ACCOUNTS

Fiscal Stabilization

The budgeted draw for 2011/12 includes health-related programming of $25 million and $8 million for requirements related to ecoTrust funds.

Manitoba’s Five-Year Economic Plan incorporated a legislated requirement to dedicate at least $600 million of the funds set aside in this Account to retire a portion of the debt and interest expense associated with the core government operating shortfalls during the economic recovery period. In 2011/12, $110 million will be withdrawn for debt repayment as well as $14 million for the interest expense associated with the core government operating shortfall.

Pension Assets

The trust conditions of the funds held in the Pension Asset Fund are irrevocably restricted for pension purposes only. As a result of this restriction, these funds are classified as pension assets and will be accounted for and reported in keeping with GAAP for senior governments.

The fund balance is projected to increase in 2011/12 as government continues to address the unfunded liability for the Civil Service Superannuation Fund and net investment earnings.

Net investment earnings include the expected rate of return during the year and adjustments to market related value. Under GAAP, market fluctuations of pension assets are not recorded in the year in which they occur but are recognized over the employee average remaining service life (EARSL).

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

PROVINCIAL BORROWINGS, GUARANTEES AND OBLIGATIONS

Manitoba’s borrowing requirement identified in the 2011 Budget was $3.8 billion including refinancing of $2.0 billion and new cash requirements of $2.7 billion, offset by prefunding of $489 million and estimated repayments of $412 million.

New cash requirements are necessary for general government purposes, capital investments by departments, health facilities, post-secondary institutions, Manitoba Hydro and for the funding of the unfunded pension liability for the Civil Service Superannuation Plan. Estimated repayments are primarily for general purpose borrowings and departmental capital investment.

While the total of outstanding provincial borrowings fluctuates during the fiscal year as a result of the timing of borrowing activities of the province, the year end forecast remains unchanged from that stated in the budget as shown in the table on the following page.

An updated forecast for 2011/12 with comparative date for 2010/11 actual results will be provided in the second quarter report.

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

Provincial Borrowings, Guarantees and Obligations

	2011/12 Budget
	$ millions			$ Per Capita*
Provincial Borrowings, Guarantees and Obligations1
General Government Programs		7,309			5,842
General Government Programs — Pensions2		2,595			2,074
Manitoba Hydro		8,901			7,115
Other Crown Organizations		1,868			1,493
Health Facilities		1,264			1,010
Government Enterprises and Other3		41			33
Capital Investments		3,183			2,544
Subtotal		25,161			20,111
Other Obligations
Pension Liability		6,901
Pension Asset Fund		(5,185	)
Net Pension Liability		1,716
Debt incurred for and repayable by the Manitoba Hydro Electric Board, net of sinking funds		(8,663	)
Education and Health Debt held by Government Enterprises		496
Other Debt of Crown Organizations, net of sinking funds		255
Subtotal		(6,196	)
Total Provincial Borrowings, Guarantees and Obligations		18,965
Adjustments to arrive at Summary Net Debt
Guarantees		(241	)
Net Financial Assets		(3,920	)
Summary Net Debt		14,804			11,833
Summary Net Debt as a percentage of GDP		26.2	%

Notes: Provincial Borrowings, Guarantees and Obligations
1.	Provincial borrowings, guarantees and obligations are net of sinking funds.
2.	In 2011/12, the Government plans to allocate an additional $240 million to address pension obligations for the civil service.
3.	Provincial Borrowings and Guarantees are payable in Canadian and U.S. dollars. As at June 30, 2011, total provincial borrowings and guarantees were payable 92% in Canadian dollars and 8% in U.S. dollars. Of this total, General Government Program borrowing and Other Crown organizations borrowings was 100% payable in Canadian dollars. Manitoba Hydro borrowings were payable 79% in Canadian dollars (77% at March 31, 2011) and 21% in U.S. dollars (23% at March 31, 2011).
*	Per capita is based upon projected annual population figures at July 1, 2011, included in Budget 2011.

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

ECONOMIC PERFORMANCE AND OUTLOOK

Manitoba’s economic growth is expected to be relatively strong over the next two years. The Manitoba Finance survey of economic forecasters, conducted June 27, 2011, projects that Manitoba`s real GDP will expand 2.8% this year, slightly above the projected national increase of 2.7%. In 2012, Manitoba’s real GDP is expected to increase 2.7%, matching the projected national increase. For 2010, Manitoba Bureau of Statistics estimates Manitoba’s real GDP increased 2.5%.

Despite the relatively favourable outlook for Manitoba, the current global economic circumstances remain fragile with substantial downside risks in several key regions. In the U.S., Manitoba’s largest foreign export market, the continuing high level of unemployment coupled with fiscal uncertainty for federal and state governments could undermine growth over the medium term. Similarly, disruptions in a number of European countries associated with the sovereign debt problem could also restrain global growth. In Manitoba, the challenges include the effects of the strengthening Canadian dollar and economic consequences of flooding associated with high levels of precipitation.

A review of major economic indicators shows that economic developments in Manitoba through the first half of 2011 continue to be positive. Manitoba`s employment expanded 1.1%, through July of this year, following 1.9% growth in 2010. The national increase in 2011 is 1.7%. Manitoba’s full-time employment is up 1.6% while part-time employment is down 1.3%. The unemployment rate has averaged 5.4% in 2011, second-lowest among provinces and below the national rate of 7.6%. Manitoba’s youth unemployment rate is 11.8%, third lowest in Canada.

Manitobans’ average weekly earnings have improved in 2011 with 3.9% year-to-date growth compared to 2.0% in 2010. Nationally, average weekly earnings have increased 3.5% in 2011. The combination of good employment growth and stronger average weekly earnings has boosted labour income earned in Manitoba by 4.9% so far in 2011.

Manitoba’s retail sales rose 3.9% in the first five months of 2011. National retail sales increased 3.0% over the same period. Manitoba’s increase is fifth highest among provinces.

After increasing by 41.1% in 2010 to a 23 year record 5,888 units, Manitoba housing starts have declined 6.1% in the first half of 2011. An increase in construction of multiple units (apartments and semi-detached homes) is offset by a decrease in single detached family unit starts. Canada’s housing starts are down by 4.6% on a year-to-date basis in 2011.

Capital investment spending is expected to moderate in 2011. Statistics Canada’s survey of investor intentions indicates a 1.1% increase in capital spending in 2011. Private investment is expected to increase 0.6% and public investment by 1.9%. By industry, manufacturing is expected to post the strongest increase with 29.4% growth.

Manitoba has posted the steadiest growth in private capital investment among provinces, posting only one annual decline in private investment over a twenty year period. Between 2005 and 2010, Statistics Canada estimates that private investment in the province grew 35.5%, three times the rate of increase for Canada as a whole the second-highest increase in private investment among provinces.

Despite the strengthening Canadian currency, Manitoba’s manufacturing sector turned around in 2010 and has continued to expand in 2011. With strength across a broad range of manufacturing industries, Manitoba sales

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PROVINCE OF MANITOBA APRIL TO JUNE 2011

increased 8.8% during the first five months of 2011, compared to the same period in 2010. Canada sales increased 7.4% so far in 2011.

Corresponding to an increase in manufacturing sales, the value of foreign merchandise exports increased 13.1% in the first five months of 2011. Manitoba exports to the U.S. are up 4.3% while non-U.S. exports increased 30.5%.

Given the growth in exports to non-U.S. destinations, Manitoba has been successful in finding diversified markets for its products. Ten years ago, non-U.S. markets accounted for 22% of total exports. In 2010, that proportion has increased to 36%, well above the 25% non-U.S. share for Canada.

In the first quarter of 2011, Manitoba farm cash receipts declined 4.0%. Crop receipts decreased 8.7% due to declines in canola and flax receipts. Livestock receipts were up 3.1% with strength in hog receipts partially offset by weakness in cattle receipts. Direct payments (crop insurance and other programs) increased 8.3%.

The Consumer Price Index has increased by 2.8% on a year-to-date basis in 2011, below the national increase of 3.0%. For 2011, Manitoba Finance’s survey of economic forecasts indicates CPI inflation will average about 2.2% in Manitoba and 2.4% in Canada.

On April 1 of this year, Manitoba’s population reached 1,246,396, an annual increase of 16,121 persons. The year-over-year gain in population is the highest in at least 40 years. Manitoba’s population grew 1.31%, from the previous year, ahead of Canada’s increase of 1.06% and third among provinces.

For updates and more details please see the Manitoba Economic Highlights at: http://www.gov.mb.ca/finance/pdf/highlights.pdf

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PROVINCE OF MANITOBA	APRIL TO JUNE 2011
2011/12 Core Government Revenue by Source	Appendix I
UNAUDITED

	Year-to-Date to June 30									Full Year
			2011/12					2010/11		2011/12
($000s)	Actual		Estimated		Variance			Actual		Budget
Income taxes
Individual Income Tax		661,797		661,797		—			604,389		2,724,800
Corporation Income Tax		94,386		94,386		—			63,810		423,400
Subtotal: Income Taxes		756,183		756,183		—			668,199		3,148,200
Other Taxes
Corporations Taxes		40,935		42,735		(1,800	)		60,564		188,000
Fuel Taxes		59,403		58,295		1,108			35,878		247,200
Land Transfer Tax		15,721		14,766		955			14,500		62,500
Levy for Health and Education		92,772		93,447		(675	)		59,191		395,400
Mining Tax		14,068		13,982		86			3,480		35,000
Retail Sales Tax		425,235		425,864		(629	)		252,531		1,671,100
Tobacco Tax		60,661		65,443		(4,782	)		39,602		253,400
Other Taxes		7,611		7,539		72			2,504		11,490
Subtotal: Other Taxes		716,406		722,071		(5,665	)		468,250		2,864,090
Fees and Other Revenue
Fines and Costs and Other Legal		11,510		11,510		—			12,008		50,582
Minerals and Petroleum		11,916		11,916		—			8,510		22,314
Automobile and Motor Carrier Licences and Fees		39,204		40,000		(796	)		36,039		130,026
Parks: Forestry and Other Conservation		3,008		3,008		—			3,819		29,379
Water Power Rentals		29,006		23,400		5,606			24,120		115,000
Service Fees and Other Miscellaneous Charges		17,574		14,803		2,771			24,573		135,842
Revenue Sharing from SOAs		6,358		6,545		(187	)		6,358		26,180
Subtotal: Fees and Other Revenue		118,576		111,182		7,394			115,427		509,323
Federal Transfers
Equalization		416,480		416,480		—			456,506		1,941,700
Canada Health Transfer (CHT)		250,540		250,540		—			238,340		1,002,200
Canada Social Transfer (CST)		104,002		104,002		—			101,174		416,000
Health Funds		2,258		2,258		—			2,540		9,000
Infrastructure Renewal		—		—		—			—		66,500
Economic Stimulus		—		—		—			—		17,903
Manitoba Floodway Expansion		—		—		—			—		22,491
Shared Cost and Other Transfers		48,311		24,394		23,917			26,254		172,022
Subtotal: Federal Transfers		821,591		797,674		23,917			824,814		3,647,816
Net Income of Government
Business Enterprises (GBEs)
Manitoba Liquor Control Commission		18,057		14,200		3,857			15,700		254,800
Manitoba Lotteries Corporation		84,000		84,000		—			76,750		348,300
Subtotal: Net Income of GBEs		102,057		98,200		3,857			92,450		603,100
Total Revenue		2,514,813		2,485,310		29,503			2,169,140		10,772,529

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PROVINCE OF MANITOBA	APRIL TO JUNE 2011
2011/12 Core Government Expenditure by Sector/Department	Appendix II
UNAUDITED

	Year-to-Date to June 30												Full Year
	2011/12									2010/11			2011/12
($000s)	Actual			Estimated			Variance			Actual2			Budget1
Health and Healthy Living
Health		1,179,492			1,237,128			(57,636	)		1,125,492			4,925,016
Healthy Living, Youth and Seniors		24,435			21,114			3,321			16,656			77,897
Total Health and Healthy Living		1,203,927			1,258,242			(54,315	)		1,142,148			5,002,913
Education
Advanced Education and Literacy		131,746			127,345			4,401			122,156			661,537
Education		552,826			569,298			(16,472	)		548,513			1,586,218
Total Education		684,572			696,643			(12,071	)		670,669			2,247,755
Family Services and Consumer Affairs		342,014			364,044			(22,030	)		319,609			1,389,378
Community, Economic and Resource Development
Aboriginal and Northern Affairs		10,430			11,537			(1,107	)		8,625			38,551
Agriculture, Food and Rural Initiatives		26,281			18,332			7,949			16,068			230,549
Conservation		32,650			39,479			(6,829	)		28,713			130,736
Entrepreneurship, Training and Trade		25,760			32,516			(6,756	)		25,472			142,452
Housing and Community Development		24,233			24,283			(50	)		15,928			83,076
Infrastructure and Transportation		156,839			144,770			12,069			115,529			594,299
Innovation, Energy and Mines		23,614			23,854			(240	)		20,276			90,022
Local Government		38,796			48,588			(9,792	)		27,019			307,952
Water Stewardship		8,382			13,036			(4,654	)		6,932			35,450
Total Community, Economic and Resource Development		346,985			356,395			(9,410	)		264,562			1,653,087
Justice and Other Expenditures
Legislative Assembly		10,141			10,773			(632	)		8,817			55,284
Executive Council		1,728			1,628			100			828			3,827
Civil Service Commission		4,888			4,902			(14	)		4,656			21,656
Culture, Heritage and Tourism		20,942			17,878			3,064			20,066			64,100
Employee Pensions and Other Costs		(2,093	)		(2,948	)		855			(1,033	)		15,817
Finance		30,751			31,322			(571	)		(4,050	)		87,557
Justice		81,987			89,666			(7,679	)		68,187			431,972
Labour and Immigration		11,046			12,907			(1,861	)		11,122			62,863
Sport		2,684			3,087			(403	)		2,729			11,959
Enabling Appropriations		708			2,284			(1,576	)		3,289			12,246
Other Appropriations		—			—			—			5,770			30,151
Total Justice and Other Expenditures		162,782			171,499			(8,717	)		120,381			797,432
Debt Servicing Costs		28,170			28,275			(105	)		55,839			257,785
Total Expenditure		2,768,450			2,875,098			(106,648	)		2,573,208			11,348,350
Subtract: Total Revenue Estimate (Appendix 1)		2,514,813			2,485,310			29,503			2,169,140			10,772,529
In-Year Adjustment/Lapse		—			—			—			—			(65,000	)
Net Result for the Year		(253,637	)		(389,788	)		136,151			(404,068	)		(510,821	)
2011 Spring Flood Contingency
Expenditure		(11,861	)		(16,000	)		4,139			—			(30,000	)
Recovery from Disaster Financial Assistance		—			—			—			—			27,000
Total 2011 Spring Flood Contingency		(11,861	)		(16,000	)		4,139			—			(3,000	)
Transfer from Fiscal Stabilization Account		—			—			—			—			49,500
NET INCOME (LOSS)		(265,498	)		(405,788	)		140,290			(404,068	)		(464,321	)

1.	Budget figures are adjusted to include Enabling Appropriations.
2.	For comparative purposes the 2010/11 Actual has been re-stated to reflect the 2011/12 appropriation structure.

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PROVINCE OF MANITOBA	APRIL TO JUNE 2011
2011/12 Core Government Capital Investment	Appendix III
UNAUDITED

	Year-to-Date to June 30									Full Year
	2011/12							2010/11		2011/12
($000s)	Actual		Estimated		Variance			Actual		Budget
General Assets
Government Services Capital Projects		23,178		22,582		596			21,762		147,336
Transportation Equipment and Aircraft		7,266		6,850		416			6,545		76,403
Information Technology Projects		756		4,189		(3,433	)		1,361		20,455
Other Equipment and Buildings		218		382		(164	)		116		21,816
		31,418		34,003		(2,585	)		29,784		266,010
Infrastructure Assets
Provincial Roads, Highways and Airport Infrastructure		21,242		55,175		(33,933	)		58,223		368,000
Manitoba Floodway Expansion		25,000		18,000		7,000			15,000		133,133
Water Control Infrastructure		4,625		3,500		1,125			251		24,150
Parks, Cottage and Camping Projects		2,903		1,005		1,898			724		16,757
		53,770		77,680		(23,910	)		74,198		542,040
Total Capital Investment		85,188		111,683		(26,495	)		103,982		808,050

1. Budget figures are adjusted to include Enabling Appropriations.

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