THE CITY OF WINNIPEG CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31 (in thousands of dollars) 2012 FINANCIAL ASSETS Cash

and cash equivalents (Note 3) Accounts receivable (Note 4) Land held for resale Investmen ts (Note 5) Investment in government businesses (Note 6) LIABILITIES Accounts pa yable and accrued liabilities (Note 7) Deferred revenue (Note 8) Debt (Note 9) O ther liabilities (Note 10) Accrued employee benefits and other (Note 11) $ 392,0 41 208,579 13,664 303,849 31,446 949,579 205,789 55,079 793,161 56,990 164,165 1 ,275,184 NET FINANCIAL LIABILITIES NON-FINANCIAL ASSETS Tangible capital assets (Note 13) Inventories Prepaid expenses and deferred charges (325,605) 5,203,625 15,977 18,511 5,238,113 ACCUMULATED SURPLUS (Note 14) Commitments and contingenc ies (Notes 10, 15 and 16) See accompanying notes and schedules to the consolidat ed financial statements Approved on behalf of the Audit Committee: $ 4,912,508 $ $ 2011 437,346 197,927 14,861 292,495 23,783 966,412 186,463 64,825 558,400 55, 435 156,465 1,021,588 (55,176) 4,747,795 16,385 6,086 4,770,266 4,715,090 MAYOR CHAIRPERSON STANDING POLICY COMMITTEE ON FINANCE 6

THE CITY OF WINNIPEG CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLU S For the years ended December 31 (in thousands of dollars) Budget 2012 (Unaudited) Actual 2012 $ 587,578 483,339 158,975 40,865 32,897 1,303,654 416,265 338,028 28 3,042 105,685 71,390 51,518 33,795 1,299,723 3,931 121,262 72,225 193,487 197,41 8 4,715,090 $ 4,912,508 $ $ Actual 2011 563,779 460,452 159,475 40,449 48,269 1,272,424 388,089 334,154 287, 847 103,436 70,404 47,257 42,047 1,273,234 (810) 138,611 58,575 197,186 196,376 4,518,714 4,715,090 REVENUES Taxation (Note 16) Sales of services and regulatory fees (Note 17) Gove rnment transfers (Note 18) Investment income Land sales and other revenue (Note 6) Total Revenues EXPENSES Protection and community services Utility operations Public works Property and development Finance and administration Civic corporati ons General government Total Expenses (Note 19) Annual Surplus (Deficit) Before Other OTHER Government transfers related to capital (Note 18) Developer contribu tions-in-kind related to capital (Note 13) $ 587,519 470,348 161,673 37,844 63,475 1,320,859 415,871 353,364 280,998 132,165 80,102 48,649 47,179 1,358,328 (37,469) 122,506 58,000 180,506 Annual Surplus ACCUMULATED SURPLUS, BEGINNING OF YEAR ACCUMULATED SURPLUS, END O F YEAR $ 143,037 See accompanying notes and schedules to the consolidated financial statements 7

THE CITY OF WINNIPEG CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended December 31 (in thousands of dollars) 2012 NET INFLOW (OUTFL OW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES: OPERATING Annual surplus Non-ca sh charges to operations Amortization Write-down of tangible capital assets Othe r Net change in non-cash working capital balances related to operations Cash pro vided by operating activities CAPITAL Acquisition of tangible capital assets Pro ceeds on disposal of tangible capital assets Cash used in capital activities FIN ANCING Increase in sinking fund investments Debenture and serial debt retired Si nking fund and serial debenture issued Service concession arrangements financing Other Cash provided by financing activities INVESTING Increase of investments C ash used in investing activities (Decrease) increase in cash and cash equivalent s CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR $ $ 197,418 188,432 9,862 395,712 (14,205) 381,507 (653,993) 4,462 (649,53 1) (21,509) (21,448) 137,784 109,362 32,820 237,009 (14,290) (14,290) (45,305) 4 37,346 392,041 $ $ 196,376 175,765 5,779 21,562 399,482 52,467 451,949 (486,320) 2,451 (483,869) (23,841) (20,672) 50,000 50,000 6,594 62,081 (14,940) (14,940) 15,221 422,125 437,346 2011 See accompanying notes and schedules to the consolidated financial statements 8

THE CITY OF WINNIPEG CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL LIABILITI ES For the years ended December 31 (in thousands of dollars) Budget 2012 (Unaudited) Actual 2012 $ 197,418 188,432 4,462 5,269 (12,017) (653,993) (270,429) (55,176) $ (325,605) $ $ Actual 2011 196,376 175,765 2,451 5,779 2,525 (355) (486,320) (103,779) 48,603 ( 55,176) ANNUAL SURPLUS Amortization of tangible capital assets Proceeds on disposal of t angible capital assets Write-down of tangible capital assets Loss on sale of tan gible capital assets Change in inventories, prepaid expenses and deferred charge s Acquisition of tangible capital assets INCREASE IN NET FINANCIAL LIABILITIES N ET FINANCIAL (LIABILITIES) ASSETS, BEGINNING OF YEAR NET FINANCIAL LIABILITIES, END OF YEAR $ 143,037 185,528 30,160 1,053 (800) (456,027) (97,049) (55,176) $ (152,225) See accompanying notes and schedules to the consolidated financial statements 9

THE CITY OF WINNIPEG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2012 (all tabular amounts are in thousands of dollars, unless other wise noted) 1. Status of The City of Winnipeg The City of Winnipeg (the "City") is a municipality that was created on January 1, 1972 pursuant to The City of Wi nnipeg Act, a statute of the Legislature of the Province of Manitoba (the "Provi nce"). The City continued as a body corporate by virtue of the enactment by the Province of The City of Winnipeg Charter on January 1, 2003. The City provides m unicipal services such as police, fire, ambulance, public works, urban planning, parks and recreation, library and other general government operations. The City owns and operates a number of public utilities, has designated reserves and pro vides funding support for other entities involved in economic development, recre ation, entertainment, convention, tourism and housing activities. 2. Significant Accounting Policies These consolidated financial statements have been prepared by management in accordance with Canadian public sector accounting standards. Th e significant accounting policies are summarized as follows: a) Basis of consoli dation The consolidated financial statements include the assets, liabilities, re serves, surpluses/deficits, revenues and expenses of those City funds and govern mental functions or entities which have been determined to comprise a part of th e aggregate City operations based upon control exercised by the City except for the City's government businesses which are accounted for on the modified equity basis of accounting. Inter-fund and inter-corporate balances and transactions ha ve been eliminated. i) Consolidated entities The organizations included in the c onsolidated financial statements are as follows: Assiniboine Park Conservancy In c. CentreVenture Development Corporation Economic Development Winnipeg Inc. The Convention Centre Corporation ii) Government businesses The investments in North Portage Development Corporation and River Park South Developments Inc. are repo rted as government business partnerships and Winnipeg Housing Rehabilitation Cor poration as a government business enterprise. These businesses are accounted for using the modified equity method. Under this method, the government businesses' accounting principles are not adjusted to conform with those of the City and in ter-corporate transactions are not eliminated (Note 6). iii) Employees' pension funds The employees' pension funds of the City are administered on behalf of the pension plan participants by the Board of Trustees of the Winnipeg Civic Employ ees' Benefits Program (the "EBB") (Pension Fund) for the payment of pension bene fits and accordingly are not included in the consolidated financial statements. Winnipeg Arts Council Inc. Winnipeg Enterprises Corporation Winnipeg Public Libr ary Board 10

2. Significant Accounting Policies (continued) iv) Group life insurance funds The g roup life insurance funds of the City are administered by the EBB for the paymen t of life insurance and accordingly are not included in the consolidated financi al statements. b) Basis of accounting The consolidated financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the c reation of a legal obligation to pay. c) School taxes The City is required by Th e Public Schools Act to bill, collect and remit provincial education support lev ies in respect of residential and other properties on behalf of the Province, an d school division special levies on behalf of school divisions. The City has no jurisdiction or control over the school divisions' operations or their mill rate increases. Therefore, the taxation, other revenues, expenses, assets and liabil ities with respect to the operations of school boards are not reflected in these consolidated financial statements. d) Cash equivalents Cash equivalents consist of crown corporation bonds; Canada treasury bills; provincial government bonds; City of Winnipeg municipal bonds; other municipal bonds; schedule 1 bank bonds and bankers' acceptances; schedule 2 bankers' acceptances; and asset-backed comm ercial paper. Cash equivalents are recorded at cost, which approximates their qu oted market value, and are redeemable on demand. e) Land held for resale Land he ld for resale is recorded at the lower of cost and net realizable value. Cost in cludes amounts for land acquisition and improvements to prepare the land for sal e or servicing. f) Investments Bonds are carried at amortized cost. Discounts an d premiums arising on the purchase of these investments are amortized over the r emaining terms to maturity with annual amortization computed at amounts which, w hen combined with actual income received, result in a constant effective yield o n the amortized book value. g) Unamortized premium on debt Debt is reported at f ace value and is adjusted by premiums which are amortized on a straight-line bas is over the term to maturity of the respective debt instrument. The correspondin g amortization is recorded as interest expense. h) Solid waste landfills The obl igation to close and maintain solid waste landfill sites is based on estimated f uture expenses in current dollars, adjusted for estimated inflation, and are cha rged to expenses as the landfill site's capacity is used. 11

2. Significant Accounting Policies (continued) i) Environmental provisions The City provides for the cost of compliance with environmental legislation when conditi ons are identified which indicate non-compliance with environmental legislation and costs can be reasonably determined. The estimated amounts of future restorat ion costs are reviewed regularly, based on available information and governing l egislation. j) Deferred revenue Government transfers, contributions and other am ounts are received from third parties pursuant to legislation, regulation or agr eement and may only be used in the conduct of certain programs, in the completio n of specific work or for the acquisition and construction of tangible capital a ssets. In addition, certain user charges and fees are collected for which the re lated services have yet to be performed. Revenue is recognized in the period whe n the related expenses are incurred, services performed or the tangible capital assets are acquired. k) Employee benefit plans The Winnipeg Civic Employees' Ben efits Program is a multi-employer contributory defined benefit program and accor dingly contributions are expensed as incurred. The costs of other pensions and o ther retirement benefits have been accounted for based on actuarially determined amounts using the projected benefit method prorated on services and management' s best estimate of retirement ages of employees, salary escalation and plan inve stment performance. Actuarial gains and losses are amortized on a straight-line basis over the average remaining service period. l) Non-financial assets Non-fin ancial assets are not available to discharge existing liabilities and are held f or use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations . The change in non-financial assets during the year, together with the annual s urplus, provides the consolidated change in net financial liabilities for the ye ar. i) Tangible capital assets Tangible capital assets are recorded at cost whic h includes all amounts that are directly attributable to acquisition, constructi on, development or betterment of the asset. The cost, less residual value, of th e tangible capital assets is amortized on a straight-line basis over their estim ated useful lives as follows: Buildings Vehicles Transit buses Other vehicles Co mputer hardware and software Other Machinery and equipment Land improvements 10 to 50 years 18 years 5 to 10 years 5 to 10 years 10 years 10 to 30 years 12

2. Significant Accounting Policies (continued) Water and waste plants and facilitie s Underground networks Sewage treatment plants and lift stations Water pumping s tations and reservoirs Flood stations and other infrastructure Transportation Ro ads Bridges and other structures 50 to 100 years 50 to 75 years 50 to 75 years 5 0 to 75 years 10 to 50 years 25 to 75 years Assets under construction are not amortized until the asset is available for pro ductive use. In certain circumstances, capital project work is charged an admini stration fee equal to 1% of specific costs of the project to a maximum of $100 t housand on any individual project. In addition, interim financing charges of 2% are also capitalized as part of the project cost funded by the City. a) Contribu tions of tangible capital assets Developer-contributed tangible capital assets a re recorded at their fair value at the date of receipt. The contribution is reco rded as revenue. b) Leases Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the related lease payments are charged to expenses as incurred. c) Service concession arrangements Service concession arr angements are long-term performance-based approaches for procuring public infras tructure, where the City contracts with a private sector partner who assumes a m ajor share of the responsibility for the delivery of the infrastructure. The ope rator is compensated over the period of the arrangements. The arrangements are g overned by a contract that sets out performance standards and mechanisms for adj usting prices. The contract is binding on the parties to the arrangement and obl iges the operator to maintain the tangible capital asset on behalf of the City. In the case of tangible capital assets, where the operator bears the constructio n risk, the timing of initial recognition of the service concession asset by the City will be when the tangible capital asset is available for productive use. i i) Inventories Inventories held for consumption are recorded at the lower of cos t and replacement cost. m) Assessment appeals Property taxation revenue is based on market assessments that are subject to appeal therefore, a provision has bee n estimated for assessment appeals outstanding as at December 31. By their natur e, these estimates are subject to measurement uncertainty and the impact on futu re financial statements could be material (Note 2o). 13

2. Significant Accounting Policies (continued) n) Government transfers Government t ransfers are the transfer of assets from the senior levels of government that ar e not the result of an exchange transaction, are not expected to be repaid in th e future or are not the result of a direct financial return. Government transfer s are recognized in the consolidated financial statements as revenue in the fina ncial period in which events giving rise to the transfer occur, providing the tr ansfers are authorized, any eligibility criteria have been met including perform ance and return requirements, and reasonable estimates of the amounts can be det ermined. o) Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make e stimates and assumptions on such areas as employee benefits, the useful life of tangible capital assets, assessment appeals, lawsuits and environmental provisio ns. These estimates and assumptions are based on the City's best information and judgment and may differ significantly from actual results. p) Budget The 2012 b udget is included on the consolidated statements of operations and accumulated s urplus and change in net financial liabilities. The budget is compiled from City Council-approved Operating Budget, estimates for controlled entities, adjustmen ts to report the budget on a full accrual basis including capital revenue adjust ments, assets capitalized on the statement of financial position, amortization o f tangible capital assets and accruals for unfunded liabilities and administrati ve adjustments to provide for proper comparison to actuals presented herein. 3. Cash and Cash Equivalents 2012 Cash Cash equivalents $ $ 11,894 380,147 392,041 $ $ 2011 7,753 429,593 437,346 The average effective interest rate for cash equivalents at December 31, 2012 is 1.3% (2011 - 1.3%). Cash and cash equivalents exclude $109.7 million (2011 - $1 89.5 million) which has been received from various entities including EBB. The f unds are invested on a pooled basis to obtain maximum investment returns. Cash r eceived for interest during the year is $41.2 million (2011 - $41.6 million). 14

4. Accounts Receivable 2012 Property, payments-in-lieu and business taxes receivabl e Allowance for property, payments-in-lieu and business tax arrears $ 37,960 (3, 351) 34,609 Trade accounts and other receivables Province of Manitoba Government of Canada Allowance for doubtful accounts 110,503 51,182 21,280 (8,995) 173,970 $ 208,579 $ $ 2011 34,747 (2,629) 32,118 105,768 57,505 10,294 (7,758) 165,809 197,927 5. Investments 2012 Marketable securities Provincial bonds and bond coupons Municip al bonds Manitoba Hydro long-term receivable Other $ a) Marketable securities Th e aggregate market value of marketable securities at December 31, 2012 is $86.2 million (2011 $72.9 million) and their maturity dates range from 2013 to 2042. b ) Manitoba Hydro long-term receivable On February 27, 2002, City Council approve d Manitoba Hydro's proposal to purchase Winnipeg Hydro. The terms of the proposa l included payments to the City of $25 million per annum commencing in 2002 and for the next four years thereafter; $20 million per annum for years six through nine; and $16 million per annum for years ten and continuing in perpetuity. The Manitoba Hydro investment represents the sum of the discounted future cash flows of the above annual payments to the City, discounted at the City's historical a verage long-term borrowing rate. $ 6,713 75,726 82,439 220,238 1,172 303,849 $ $ 2011 6,680 61,475 68,155 220,238 4,102 292,495 6. Investment in Government Businesses a) North Portage Development Corporation Nor th Portage Development Corporation (the "NPDC") is a government partnership that is owned equally by the Government of Canada, the Province of Manitoba and The City of Winnipeg. The mission of NPDC is to act as a catalyst, encouraging activ ities for people in the downtown through public and private partnerships and to work to ensure financial self-sufficiency. NPDC is responsible for the continuin g renewal and stewardship of two sites in Winnipeg's downtown: the North Portage area and The Forks. NPDC is involved in certain business and core activities re garding the ownership, development and management of its two sites that include land investment properties and public amenities. 15

6. Investment in Government Businesses (continued) The condensed supplementary fina ncial information of NPDC is as follows: 2012 Financial position Property, plant and equipment and investment in properties and infrastructure enhancements Shor t-term investments Other assets $ 75,171 12,536 3,565 91,272 17,179 11,753 5,337 34,269 Net equity $ 57,003 91,272 2012 Comprehensive income Revenues Expenses O perating income before the following Interest expense Amortization Other Net los s for the year b) River Park South Developments Inc. On April 21, 2011, the City and Qualico Developments (Winnipeg) Ltd. entered into an agreement to jointly d evelop and sell residential land owned by the partners in the River Park South c ommunity of Winnipeg. c) Winnipeg Housing Rehabilitation Corporation Winnipeg Ho using Rehabilitation Corporation (the "WHRC") is a non-profit developer and mana ger of affordable housing in Winnipeg. WHRC was founded by the City. Pursuant to operating agreements, WHRC receives subsidies from Canada Mortgage and Housing Corporation and Manitoba Housing. $ $ 11,075 9,472 1,603 (718) (2,381) 883 (613) $ $ $ $ 2011 76,574 12,891 3,107 92,572 17,862 12,075 5,019 34,956 57,616 92,57 2 2011 11,385 9,465 1,920 (745) (2,240) 757 (308) $ Deferred contributions from shareholders Long-term mortgage payable Current an d other liabilities $ $ $ 16

6. Investment in Government Businesses (continued) The condensed supplementary fina ncial information of WHRC is as follows: 2012 Financial position Capital assets Current and other assets $ $ Long-term debt Current and other liabilities $ 26,9 25 6,505 33,430 24,568 4,019 28,587 Replacement Reserves WHRC Building and Acqui sition Reserve Unrestricted deficit 4,011 1,026 (194) 4,843 $ 33,430 2012 Result s of operations Revenues Expenses Excess of revenues over expenses for the year Change to Replacement Reserves during the year Change to WHRC Building and Acqui sition Reserve during the year $ $ 7,656 7,568 88 231 33 352 $ $ $ $ $ $ 2011 28 ,284 6,347 34,631 25,861 4,279 30,140 3,780 993 (282) 4,491 34,631 2011 7,573 7, 477 96 124 16 236 During the year, the City paid WHRC an operating grant of $200 thousand (2011 $200 thousand). In addition, the City has guaranteed WHRC's operating line of cr edit to a value of $2.0 million (2011 - $2.0 million). As at March 31, 2012, WHR C has utilized $585 thousand of this line of credit. Summary of investment in go vernment businesses 2012 North Portage Development Corporation (1/3 share) River Park South Developments Inc. (1/2 share) Winnipeg Housing Rehabilitation Corpor ation $ 19,001 7,602 4,843 31,446 $ 2011 19,292 4,491 23,783 $ Summary of results of operations $ 2012 North Portage Development Corporation (1/3 share) River Park South Developm ents Inc. (1/2 share) Winnipeg Housing Rehabilitation Corporation 17 2011 $ (16) 236 220 $ (291) 3,985 352 4,046 $ $

6. Investment in Government Businesses (continued) The results of operations are in cluded in the Consolidated Statement of Operations and Accumulated Surplus as la nd sales and other revenue. NPDC and WHRC report their activities based on a Mar ch 31 year-end. 7. Accounts Payable and Accrued Liabilities 2012 Accrued liabilities Trade accounts payable Accrued interest payable $ 97,688 94,843 13,258 205,789 $ 2011 86,721 8 6,292 13,450 186,463 $ 8. Deferred Revenue $ 2012 Federal gas tax transfer Province of Manitoba Other $ 28,924 15,433 10,722 55,079 $ 2011 39,049 14,765 11,011 64,825 $ 9. Debt Sinking fund debentures outstanding Term 1993-2013 1994-2014 1995-2015 1997-2017 Maturity Date Feb. 11 Jan. 20 May 12 Nov. 17 Rate of Interest 9.375 8 .000 9.125 6.250 5.200 5.200 5.150 4.300 3.853 3.759 Series VN VQ VR VU VZ VZ WB WC WC WC By-Law No. 6090/93 6300/94 6620/95 7000/97 183/2004 and 72/2006 $ Amount of Debt 2012 2011 $ 90,000 85,000 88,000 30,000 60,000 100,000 60,000 50, 000 50,000 75,000 688,000 $ 90,000 85,000 88,000 30,000 60,000 100,000 60,000 50 ,000 563,000 (242,528) 320,472 2006-2036 July 17 2008-2036 July 17 2010-2041 June 3 2011-2051 Nov. 15 2012-2051 Nov. 15 2012-2051 Nov. 15 72/2006B 183/2008 72/06, 183/08 and 150/09 93/2011 120/09, 93/11 and 138/11 Equity in The Sinking Funds (Notes 9a and b) Net sinking fund debentures outstan ding (264,037) 423,963 18

9. Debt (continued) Other debt outstanding Serial and installment debt issued by th e City with varying maturities up to 2019 and a weighted average interest rate o f 4.70% (2011 - 4.78%) Bank loans, Province and other with varying maturities up to 2026 and a weighted average interest rate of 2.90% (2011 - 3.46%) Capital le ase obligations (Note 9c) Service concession arrangement obligation (Notes 9d an d 15d) 56,884 116,427 26,592 158,759 782,625 78,332 83,108 26,488 50,000 558,400 $ 558,400 Unamortized premium on debt (Note 9e) $ Debt segregated by fund/organization: 10,536 793,161 2012 General Capital Fund Waterworks System Transit System Special operating age ncies and other Solid Waste Disposal Sewage Disposal System $ 430,019 154,529 91 ,180 86,525 13,025 7,347 782,625 $ 2011 215,302 161,142 94,551 72,635 262 14,508 558,400 $ Debt to be retired over the next five years: 2013 Sinking fund debentures $ Ot her debt 90,000 70,717 $ 160,717 $ 2014 85,000 24,327 $ 109,327 $ 2015 88,000 19 ,813 $ 107,813 $ $ 2016 22,231 22,231 $ $ $ 2017 30,000 15,274 45,274 $ $ 2018+ 395,000 206,300 601,300 a) As at December 31, 2012, sinking fund assets have a market value of $270.9 mi llion (2011 - $254.0 million). Sinking fund assets are mainly comprised of gover nment and government-guaranteed bonds and debentures, which include City of Winn ipeg debentures with a carrying value of $28.1 million (2011 - $27.3 million) an d a market value of $29.4 million (2011 - $28.9 million). b) The City of Winnipe g Charter requires the City to make annual payments to The Sinking Fund Trustees of The City of Winnipeg on debt outstanding as at December 31, 2002. Sinking fu nd arrangements after December 31, 2002 are managed in a separate fund by the Ci ty. The City is currently paying between one to three percent on its outstanding sinking fund debentures. These annual payments are invested for the retirement of the debenture issues on their maturity dates. 19

9. Debt (continued) c) Future minimum lease payments together with the balance of t he obligation due under the capital leases are as follows: Capital Leases 2013 2 014 2015 2016 2017 Thereafter Total future minimum lease payments Amount represe nting interest at a weighted average rate of 8.18% Capital lease obligations d) Service concession arrangement obligations are as follows: 2012 DBF2 - Chief Peg uis Trail Plenary Roads Winnipeg GP - Disraeli Bridges $ $ Chief Peguis Trail Ex tension The City has entered into a fixed-price contract with DBF2 Limited Partn ership (DBF2) to design, build, finance and maintain the Chief Peguis Trail Extens ion. The contract was executed in September 2010 and terminates in January 2042. The Chief Peguis Trail Extension was commissioned for use in 2011. The $108.5 m illion project will have been financed through a grant of $23.9 million from PPP Canada, a Provincial government transfer of $9.0 million, sinking fund debentur es (Series WC) of $18.7 million, a $50.0 million service concession arrangement obligation to DBF2 and cash consideration paid by the City of $6.9 million. As a t December 31, 2012, $104.7 million was capitalized (Note 13). Monthly capital a nd interest performance-based payments totalling $4.5 million annually, for the service concession arrangement obligation to DBF2 commenced in January 2012, com mensurate with commissioning the project and are payable to termination of the c ontract with DBF2. Overall, taking into account the various forms of funding and financing for the project, the effective interest rate incurred by the City bas ed on the full $108.5 million project is 4.6%. Specifically, the sinking fund de bt and service concession arrangement obligation to DBF2 bear a combined weighte d average interest rate of 7.2%. The City will also make DBF2 a monthly performa nce-based maintenance payment as disclosed in Note 15d. 49,577 109,182 158,759 $ $ 2011 50,000 50,000 $ $ 2,473 2,476 2,476 2,476 2,502 37,579 49,982 (23,390) 2 6,592 20

9. Debt (continued) Disraeli Bridges The City has entered into a fixed-price contra ct with Plenary Roads Winnipeg GP (PRW) to design, build, finance and maintain the Disraeli Bridges Project. The contract was executed in March 2010 and terminate s in October 2042. The Disraeli Bridges Project was commissioned for use in 2012 with decommissioning of the old structures and construction of a separate pedes trian bridge to follow in 2013. The $195.0 million project will have been financ ed through sinking fund debentures (Series WC) of $25.0 million, a $109.4 millio n service concession arrangement obligation to PRW, Federal gas tax revenue of $ 50.0 million, and cash consideration paid by the City of $10.6 million. As at De cember 31, 2012, $169.4 million was capitalized for commissioned works (Note 13) . A total amount of $14.3 million is included for the pedestrian bridge and fina l roadwork expected to be completed in 2013. Monthly capital and interest perfor mance-based payments totalling $9.8 million annually, for the service concession arrangement obligation to PRW commenced in October 2012, commensurate with comm issioning the project and are payable to termination of the contract with PRW. O verall, taking into account the various forms of funding and financing for the p roject, the effective interest rate incurred by the City based on the $195.0 mil lion project is 5.2%. Specifically, the sinking fund debt and service concession arrangement obligation to PRW bear a combined weighted average interest rate of 7.5%. The City will also make PRW a monthly performance-based maintenance payme nt as disclosed in Note 15d. e) Included in the Consolidated Statement of Financ ial Position is investments of $12.8 million that will be used for making semi-a nnual debt service payments on the sinking fund debentures issued in 2012. f) In terest on debt recorded in the Consolidated Statement of Operations and Accumula ted Surplus in 2012 is $53.6 million (2011 - $44.0 million) and cash paid for in terest during the year is $53.8 million (2011 - $43.6 million). 10. Other Liabilities 2012 Environmental liabilities Developer deposits Expropri ation and other $ 20,000 8,599 28,391 56,990 $ 2011 19,200 8,228 28,007 55,435 $ $ Included in environmental liabilities is $19.3 million (2011 - $18.3 million) fo r the estimated total landfill closure and post-closure care expenses. The estim ated liability for these expenses is recognized as the landfill site's capacity is used. Estimated total expenses represent the sum of the discounted future cas h flows for closure and post-closure care activities discounted at the City's av erage long-term borrowing rate of 6.0% (2011 - 6.0%). Landfill closure and postclosure care requirements have been defined in accordance with the Environment A ct and include final covering and landscaping of the landfill, pumping of ground , methane gas and leachate management, and ongoing environmental monitoring, sit e inspection and maintenance. The reported liability is based on estimates and a ssumptions with respect to events extending over a 100-year period using the bes t information available to management. Future events may result in significant c hanges to the estimated total expenses, capacity used or total capacity and the estimated liability, and would be recognized prospectively, as a change in estim ate, when applicable. 21

10. Other Liabilities (continued) The estimated capacity of the City's one remai ning landfill, the Brady Road Landfill Site, is 93% of its total capacity and it s remaining life is approximately 93 years, after which perpetual post-closure m aintenance is required. The Brady Landfill Site Rehabilitation Reserve was estab lished for the purpose of providing funding for the future development of the Br ady Road Landfill Site. The reserve is financed through a transfer from the Soli d Waste Disposal Fund and is based upon residential and commercial tonnes. As at December 31, 2012, the reserve had a balance of $4.6 million (2011 - $4.3 milli on). 11. Accrued Employee Benefits and Other 2012 Retirement allowance - accrued obligation Unamortized net actuarial loss Retirement allowance - accrued liabil ity Vacation Workers' compensation Compensated absences Other $ $ 94,554 (8,295) 86,259 46,392 16,963 8,568 5,983 164,165 $ $ 2011 96,497 (12,646) 83,851 44,216 14,675 7,990 5,733 156,465 Under the retirement allowance programs, qualifying employees become entitled to a cash payment upon retirement, death or termination of service under certain c onditions (not resignation). In addition, adjustments arising from plan amendmen t, changes in assumptions, and experience gains and losses are amortized on a st raight-line basis over 13.0 years, which represents the expected average remaini ng service life of the employee group. Amortization is calculated beginning in t he year following the year of occurrence of the actuarial gains or losses. The C ity measures its accrued retirement allowance obligation as at December 31 of ea ch year. An actuarial valuation of the obligation was calculated as of July 31, 2011. The results of this valuation were extrapolated to the financial reporting date of December 31, 2012 using year-end assumptions. Information about the Cit y's retirement allowance benefit plan is as follows: 2012 Retirement allowance accrued liability Balance, beginning of year Current service cost Interest cost Amortization of net actuarial loss Benefit payments Balance, end of year $ 83,8 51 5,130 3,471 1,745 (7,938) 86,259 $ 2011 80,829 5,068 3,422 1,372 (6,840) 83,8 51 $ $ 22

11. Accrued Employee Benefits and Other (continued) Retirement allowance expense consists of the following: 2012 Current service cost Interest cost Amortization of net actuarial loss $ 5,130 3,471 1,745 10,346 $ 2011 5,068 3,422 1,372 9,862 $ $ The significant actuarial assumptions adopted in measuring the retirement allowa nce obligation for the year ended December 31 are as follows: 2012 2011 Discount rate on liability General increases in pay 3.60% 3.50% 3.60% 3.50% Demographic assumptions such as utilization of sick leave credits, salary increa ses as a result of increments and promotion, continuation of employment and the probability of retirement or death in future years are based on employment exper ience. Compensated absences represent benefits expected to be paid during future employee absences in respect of sick leave days earned in previous years. 12. P ension Costs and Obligations a) Winnipeg Civic Employees' Benefits Program The W innipeg Civic Employees' Benefits Program is a multi-employer benefits program g overned by an independent board of trustees and a trust agreement that limits th e City's contribution rate. Accordingly, the Program is accounted for similar to a defined contribution benefits program. The Program provides pension and disab ility benefits to all City of Winnipeg employees, other than police officers, an d to employees of certain other participating employers. During 2012, members co ntributed 8.55% of their Canada Pension Plan earnings and 10.6% of pensionable e arnings in excess of Canada Pension Plan earnings. Member's contribution rates a re scheduled to increase to an average of 9.5% of pensionable earnings in 2013 a nd 10.0% of pensionable earnings in 2014 and future years. The City and particip ating employers are required to make matching contributions. An actuarial valuat ion of the Program was prepared as at December 31, 2011, which indicated an exce ss of actuarial value of program assets over actuarial liabilities of $216.0 mil lion. The Pension Trust Agreement specifies how actuarial surpluses can be used but does not attribute actuarial surpluses to individual employers. However, a p ortion of actuarial surpluses is allocated to a City Account that the City and o ther participating employers may use to finance reductions in their contribution s. In the event of unfavourable financial experience, additional amounts may be transferred from the City Account to cover a funding deficiency. The balance of the City Account at December 31, 2012 was $60.1 million (2011 - $70.2 million). Total contributions by the City to the Program in 2012 were $23.1 million (2011 - $ 22.7 million), which were expensed as incurred. 23

12. Pension Costs and Obligations (continued) b) Winnipeg Police Pension Plan Th e Winnipeg Police Pension Plan is a contributory defined benefit plan, providing pension benefits to police officers. Members are required to make contributions at the rate of 8% of pensionable earnings. The City is required to finance the cost of the plans benefits other than cost-of-living adjustments and to contribut e 1% of pensionable earnings in respect of cost-of-living adjustments. A contrib ution stabilization reserve has been established to maintain the Citys contributi on rate at 8% of pensionable earnings, when permitted under provincial pension l egislation. The Plan incorporates a risk-sharing arrangement under which actuari al surpluses are first allocated to maintain cost-of-living adjustments to pensi ons at 75% of the inflation rate and maintain the contribution stabilization res erve and thereafter are shared equally between the City and Plan members. Fundin g deficiencies are resolved through reductions in the contribution stabilization reserve and the rate of cost-of-living adjustments to pensions. An actuarial va luation of the Plan was prepared as of December 31, 2011. The valuation revealed a funding deficiency, which, in accordance with the terms of the Plan, was reso lved through a reduction in the contribution stabilization reserve and by reduci ng the rate of cost-of-living adjustments to pensions from 71.2% to 66.2% of the inflation rate. An actuarial valuation of the Plan as of December 31, 2012 is t o be prepared and filed with the Pension Commission of Manitoba in 2013. In addi tion to a calculation of the actuarial surplus or funding deficiency, in accorda nce with pension legislation in Manitoba, the Plan must also be valued under the hypothetical scenario that the Plan is wound up and members' benefit entitlemen ts settled on the valuation date. It is anticipated that the actuarial valuation will show that the Plan has a solvency deficiency at December 31, 2012 under th is wind-up scenario, which would need to be addressed over the next five years b y the City either by an increase in contributions starting in 2013, or by obtain ing a letter of credit with face value equal to the value of additional contribu tions cumulatively otherwise required. City Council has approved the letter of c redit option. The results of the December 31, 2011 actuarial valuation of the Pl an were extrapolated to December 31, 2012. In accordance with the terms of the P lan, extrapolated deficiencies are resolved through transfers from the contribut ion stabilization reserve and reductions in the rate of cost-of-living adjustmen ts to pensions. The principal long-term assumptions on which the extrapolation w as based were: discount rate of 6.00% per year (2011 - 6.25%); inflation rate of 2.00% per year (2011 - 2.00%); and general pay increases of 3.50% per year (201 1 - 3.50%). The accrued pension obligation was valued using the projected benefi t method pro-rated on services. Based on this valuation and extrapolation, the P lan's assets, accrued pension obligation and pension expenses are as follows: 20 12 2011 Plan assets: Fair value, beginning of year $ 894,619 $ 922,233 Employer contributions 17,129 9,758 Employee contributions and transfers 11,376 9,870 Ben efits and expenses paid (43,229) (39,904) Net investment income 73,396 (7,338) F air value, end of year Actuarial adjustment Actuarial value, end of year $ 953,2 91 27,121 980,412 $ 894,619 58,297 952,916 24

12. Pension Costs and Obligations (continued) 2012 Accrued pension obligation: B eginning of year Current period benefit cost Benefits and expenses paid Interest on accrued pension obligation Actuarial loss (gain) End of year Funded status L ess: contribution stabilization reserve Actuarial surplus Expenses related to pe nsions: Current period benefit cost Amortization of actuarial losses (gains) Les s: employee contributions and transfers Pension benefit expense Interest on accr ued benefit obligation Expected return on plan assets Pension interest expense T otal expenses related to pensions $ $ 933,487 32,689 (43,229) 57,459 6 980,412 $ 2011 896,897 28,748 (39,904) 55,403 (7,657) 933,487 19,429 (19,429) $ $ $ $ $ $ $ 32,689 (2,546) (11,376) 18,767 57,459 (59,097) (1,638) 17,129 $ 28,748 (6,471) (9,870) 12,407 55,403 (58,052) (2,649) $ 9,758 The actuarial value of the Plan's assets is determined by averaging over five ye ars differences between the pension fund's net investment income and expected in vestment income based on the expected rate of return. Total contributions made b y the City to the Plan in 2012 were $17.1 million (2011 - $9.8 million). Total e mployee contributions to the Plan in 2012 were $11.4 million (2011 - $9.9 millio n). Benefits paid from the Plan in 2012 were $42.2 million (2011 - $39.1 million ). The expected rate of return on Plan assets in 2012 was 6.25% (2011 - 6.25%). The actual rate of return, net of investment expenses, on the fair value of Plan assets in 2012 was 8.27% (2011 -0.80%). As the City's contribution to the Plan each year are equal to its pension expense, no accrued pension asset or liabilit y is reflected in the Consolidated Statement of Financial Position. c) Councillo rs' Pension Plan i) Pension Plan Established Under By-Law Number 3553/83 On Nove mber 2, 1992, the pension plan provided to members of City Council was terminate d, thereby not allowing new members to be accepted to the plan and current membe rs being entitled to receive retirement benefits once they become eligible. In 2 012, the City paid out $0.4 million (2011 - $0.4 million). An actuarial determin ed pension obligation of $3.9 million (2011 $3.9 million) has been reflected in the Consolidated Statement of Financial Position. 25

12. Pension Costs and Obligations (continued) ii) Pension Plan Established Under By-Law Number 7869/01 On November 22, 2000, City Council adopted the policy tha t effective January 1, 2001, a Council Pension Plan be created for all members o f City Council for The City of Winnipeg. An accrued pension obligation has been reflected in the Consolidated Statement of Financial Position. d) Group Life Ins urance Plan Employees of the City who are members of the Civic Employees' Benefi ts Pension Plan or the Winnipeg Police Pension Plan must become members of the C ivic Employees' Group Life Insurance Plan and the Police Employees' Group Life I nsurance Plan, respectively. These plans provide life insurance for members whil e employed and can be continued into retirement at the employees' option. Plan m embers and the City share the cost of basic life insurance. An actuarial valuati on indicated that this post-retirement liability is fully funded. An actuarial v aluation of the plan was prepared as of December 31, 2010 and the results were e xtrapolated to December 31, 2012. The principal long-term assumptions on which t he valuation was based were: discount rate of 3.80% per year (2011 - 3.90%); and general pay increases of 3.50% per year (2011 - 3.50%). The accrued group life insurance obligation was valued using the projected benefit method pro-rated on services. Based on this valuation and extrapolation, the funded status of the pl an is as follows: 2012 2011 Group life insurance plan assets, at actuarial value Accrued post-retirement life insurance obligations 13. Tangible Capital Assets Net Book Value 2012 2011 General Land Buildings Vehicles Computer Other Infrastr ucture Plants and facilities Roads Underground and other networks Bridges and ot her structures $ 211,731 321,653 176,634 35,271 164,657 594,574 1,102,727 1,864, 604 522,596 4,994,447 Assets under construction $ 209,178 5,203,625 $ $ 202,897 318,846 178,251 40,754 120,934 598,277 987,930 1,815,433 384,570 4,647,892 99,90 3 4,747,795 $ $ 135,613 119,377 $ $ 134,992 111,580 For additional information, see the Consolidated Schedule of Tangible Capital As sets (Schedule 1). During the year, $nil (2011 - $5.8 million) of tangible capit al assets were written-down. Interest capitalized during 2012 was $3.0 million ( 2011 - $2.6 million). In addition, roads and underground networks contributed to the City totalled $72.2 million in 2012 (2011 - $58.6 million) and were capital ized at their fair value at the time of receipt. 26

13. Tangible Capital Assets (continued) Included in the above net book values ar e $274.1 million (2011 - $97.4 million) of tangible capital assets that were acq uired through service concession arrangements. 14. Accumulated Surplus Accumulat ed surplus consists of individual fund surplus/(deficit) and reserves as follows : 2012 Invested in tangible capital assets Reserves Capital Reserves Environment al Projects Sewer System Rehabilitation Rapid Transit Infrastructure Transit Bus Replacement Other Special Purpose Reserves General Purpose Perpetual Maintenanc e Fund - Brookside Cemetery Destination Marketing Insurance (Note 20) Multi-Fami ly Dwelling Tax Investment Land Operating Commitment Heritage Investment Other S tabilization Reserve Financial Stabilization Total Reserves Surplus Manitoba Hyd ro long-term receivable Sewage Disposal System Waterworks System North Portage D evelopment Corporation CentreVenture Development Corporation Solid Waste Disposa l Equipment and Material Services Other Unfunded expenses Canadian Museum for Hu man Rights grant Environmental liabilities Accrued employee benefits and other T otal Surplus $ $ 4,397,884 $ 2011 4,197,895 58,927 29,630 9,882 6,678 9,790 114,907 15,921 13,935 12,729 6,604 6,073 4,803 4 ,598 2,920 22,636 90,219 80,404 285,530 220,238 76,878 56,422 19,001 13,980 8,03 4 3,247 21,977 (10,756) (19,980) (159,947) 229,094 4,912,508 $ 45,547 31,801 11,147 8,655 10,566 107,716 11,063 12,944 10,186 5,103 4,683 10,90 1 2,345 5,468 19,288 81,981 85,305 275,002 220,238 77,144 62,161 19,292 15,587 4 ,630 3,227 23,002 (11,025) (19,160) (152,903) 242,193 4,715,090 27

14. Accumulated Surplus (continued) Invested in tangible capital assets represen ts equity in non-financial assets, which is either a portion or the entire accum ulated surpluses of specific funds consolidated in these statements. For those f unds, where a portion of their accumulated surplus is allocated to invested in t angible capital assets, the amount is determined based on tangible capital asset s less debt. 15. Commitments and Contingencies The significant commitments and c ontingencies that existed at December 31, 2012 are as follows: a) Operating leas es The City had entered into a number of lease agreements mainly for the lease o f accommodations for civic offices and office equipment. Future minimum lease pa yments are as follows: Operating Leases 2013 2014 2015 2016 2017 and thereafter $ 5,328 4,387 3,901 3,738 48,218 65,572 $ b) Legal obligations As part of the normal course of operations, lawsuits are pending against the Cit y. The final outcome with respect to actions that will arise from these lawsuits as at December 31, 2012 cannot be predicted with certainty. Where the occurrenc e of future events is considered likely to result in a loss with respect to an e xisting condition and the amount of loss can be reasonably estimated, amounts ha ve been recorded in the consolidated financial statements. c) Loan guarantees Th e City has also unconditionally guaranteed the payment of principal and interest on capital improvement loans for several organizations. The outstanding balance on these loans as at December 31, 2012 is $6.6 million (2011 - $6.9 million). d ) Service concession arrangements (i) As disclosed in Note 9d, the City will pay PRW a monthly performance-based maintenance payment related to the Disraeli Bri dges Project contract. The monthly payment totalling $1.7 million annually is to be adjusted by CPI, is payable commencing October 2012 until the termination of the contract with PRW in October 2042. (ii) As disclosed in Note 9d, the City w ill pay DBF2 a monthly performance-based maintenance payment related to the Chie f Peguis Trail Extension contract. The monthly payment, totalling $1.4 million a nnually is to be adjusted by CPI and is payable commencing January 2012 until th e termination of the contract with DBF2 in January 2042. 28

15. Commitments and Contingencies (continued) e) Veolia agreement On April 20, 2 011, the City entered into an agreement with VWNA Winnipeg Inc. (Veolia) for the p rovision of expert advice to the City to assist with construction and operating improvements to the Citys sewage treatment system (the Program). The agreement is e ffective May 1, 2011, and has a term of 30 years, subject to certain termination provisions. The Citys sewage treatment system treats and handles wastewater and resulting residuals at its existing three major sewage treatment facilities, the South End, West End and North End Water Pollution Control Centres (the Facilitie s). Veolias role will be to provide services to the City and representatives of Ve olia will work collaboratively with representatives of the City providing advice and recommendations to the City in respect of the City's (i) management and ope ration of the Facilities for the handling and treatment of wastewater; (ii) asse ssment, planning and delivery of upgrades and capital modification to the Facili ties; and (iii) assessment, planning and delivery of operational improvements to the Facilities during the term of this agreement. The Program will not include the Citys supply of water or its waterworks system or work relating to the collec tion system or land drainage system. Under the agreement, the City will: retain complete ownership of all the sewage system assets; continue to exercise control over the sewage treatment systems by means of the City Council budget approvals and by the setting of service quality standards that will be reported publicly on a regular basis; continue to control operating and maintenance parameters by which the sewage system shall operate; and retain full accountability for compli ance with regulatory permits and licenses. Decisions for the sewage treatment sy stem will be made by the City based upon the best advice of City management and Veolia experts working together. The agreement provides both parties with a vari ety of responsibilities, rights, protections, and obligations reflecting reasona ble commercial terms. Compensation to Veolia under the Agreement includes the fo llowing components: 1. Reimbursement of Veolias actual direct costs related to th e Program (Direct Costs); 2. An agreed upon margin percentage which is applied to Direct Costs of the Program. The quantum of the margin percentage is dependent o n the nature of the cost (Fee); 3. For operations and capital projections under th e Program, a target cost will be set. Veolia will receive a share of the savings when actual operating costs and/or capital costs are below target costs (Gainsha re). Veolia will receive a share of expense when actual operating costs and/or ca pital costs are above target costs (Painshare); and 4. Key performance indicators (KPIs) will be established under the Program. Veolia will earn amounts for exceedi ng established KPIs (KPI earnings), and will be deducted amounts for failing to ac hieve minimum KPIs (KPI Deductions). The agreement only guarantees payment to Veol ia in respect of the Direct Costs incurred by it in providing services as indica ted in Item 1 described in the above paragraph. Amounts earned by Veolia over th e term of the agreement (Fee, Gainshare, and KPI earnings) are credited to an Ea rning at Risk Account (EARA). Painshare and KPI deductions reduce the EARA. All of these amounts are not guaranteed to be paid to Veolia, and by their nature, are dependent on the financial and overall results of the Program. Veolias withdrawa ls of amounts from the EARA are subject to certain limits and security posting r equirements. 29

15. Commitments and Contingencies (continued) If at the end of the 30-year term the EARA is negative, Veolia must repay the City this amount. The agreement esta blished a Performance Guarantee Security (PGS), which is a letter of credit and pe rformance bond that together provide security to the City. In addition to the PG S, Veolia is providing a Parental Guarantee by its parent company. f) Forgivable loans The City has received funding from the federal and provincial governments for the purchase of certain properties. Repayment of this funding is not requir ed as long as the properties operate as an affordable housing complex or offer s ervices for the homeless. As at December 31, 2012, the forgivable loans totalled $6.2 million (2011 - $6.6 million). 16. Taxation 2012 Municipal and school prop erty taxes Payments-in-lieu of property (municipal and school) and business taxe s $ 932,410 42,883 975,293 Payments to Province and school divisions Net propert y taxes and payments-in-lieu of property taxes available for municipal purposes Business tax and license-in-lieu of business taxes Local improvement and frontag e levies Electricity and natural gas sales taxes Amusement and accommodation tax es and mobile home licence $ (521,322) 453,971 56,783 42,776 17,984 16,064 587,5 78 $ $ 2011 888,178 40,291 928,469 (497,237) 431,232 55,534 42,542 18,004 16,467 563,779 The property tax roll includes school taxes of $495.0 million (2011 - $473.8 mil lion) assessed and levied on behalf of the Province and school divisions. Paymen ts-in-lieu of school taxes assessed in 2012 totalled $26.3 million (2011 - $23.4 million) and are treated the same as school taxes. School taxes and payments-in -lieu of school taxes are remitted to the Province and school divisions based up on a formula and schedule set by the Province. If property taxes are reduced due to an assessment reduction, the City is required by legislation to fund the rep ayment of both the municipal and school taxes with applicable interest. 30

17. Sales of Services and Regulatory Fees 2012 Water sales and sewage services O ther sales of goods and services Transit fares Regulatory fees $ 230,040 116,201 72,672 64,426 483,339 $ 2011 216,084 114,063 69,946 60,359 460,452 $ 18. Government Transfers $ 2012 Operating Province of Manitoba Ambulance, libraries and other Building Mani toba Fund Transit Unconditional Support Support for provincial programs Governme nt of Canada Other Total Operating Capital Province of Manitoba Government of Ca nada Federal gas tax revenue Other capital funding PPP Canada $ 60,822 56,604 33 ,164 19,888 11,893 (23,650) 158,721 254 158,975 63,187 50,577 7,498 58,075 Total Capital $ 121,262 280,237 $ $ 2011 63,314 56,704 30,820 19,888 11,535 (23,650) 158,611 864 159,475 79,018 28,1 74 9,210 22,209 59,593 138,611 298,086 In accordance with the recommendations of the Public Sector Accounting Board, go vernment transfers and developer contributions-in-kind related to capital acquis itions are required to be recognized as revenue in the consolidated financial st atements in the period in which the tangible capital assets are acquired. 19. Ex penses by Object 2012 Salaries and benefits Goods and services Amortization of t angible capital assets Interest Other expenses $ 695,849 344,217 188,432 53,587 17,638 1,299,723 $ 2011 664,221 357,008 175,765 43,954 32,286 1,273,234 $ $ 31

20. Property and Liability Insurance The City purchases comprehensive insurance coverage for property and liability with a self-insured retention level of $250 thousand per claim for most of the policies. The City has established an Insuran ce Reserve Fund (Note 14) that enables the City to carry a large self-insured re tention level which mitigates the effect of poor claims experience in any given year. 21. Segmented Information The City of Winnipeg is a diversified municipal government institution that provides a wide range of services to its citizens, i ncluding police, fire, ambulance, public transit and water. For management repor ting purposes the City's operations and activities are organized and reported by fund. Funds were created for the purpose of recording specific activities to at tain certain objectives in accordance with special regulations, restrictions or limitations. City services are provided by departments and their activities are reported in these funds. Certain departments that have been separately disclosed in the segmented information, along with the services they provide, are as foll ows: Protection Protection is comprised of the Police Service and Fire Paramedic Service departments. The mandate of the Police Service department is to ensure the safety of the lives and property of citizens; preserve peace and good order; prevent crimes from occurring; detect offenders; and enforce the law. The Fire Paramedic Service department is responsible for providing fire suppression servi ce; fire prevention programs; and training and education related to prevention, detection or extinguishment of fires. It is also responsible for pre-hospital em ergency paramedical care and the transport of the sick and injured; for handling hazardous materials incidents; for the mitigation of calamitous incidents; and for the evacuation of people when in charge at an incident. Community Services T he Community Services department provides public services that contribute to nei ghbourhood development and sustainability through the provision of recreation an d leisure services such as fitness and aquatic programs. It provides public serv ices that contribute to healthy communities through partnerships, promotion, pre vention, protection and enforcement. The department also contributes to the info rmation needs of the City's citizens through the provision of library services. Planning The Planning, Property and Development department provides a diverse bu ndle of services. It manages urban development for business interests, environme ntal concerns, heritage matters, local neighbourhoods and the downtown through c ity planning, community development and parks and riverbank planning. It ensures an acceptable quality of building construction and maintenance of properties th rough enforcement of construction codes and building standards. It facilitates e conomic development by providing services for the approval of all land developme nt plans, the processing of building permit applications and the provision of ge omatics services, as well as providing cemetery services to citizens. Public Wor ks and Water The Public Works department is responsible for the delivery of muni cipal public works services related to the planning, development and maintenance of roadway systems, the maintenance of parks and open space, and street lightin g. 32

21. Segmented Information (continued) Transit System Fund The Transit department is responsible for providing local public transportation service. Water and Was te Funds The Water and Waste department consists of three distinct utilities - w ater, wastewater and solid waste disposal. The department provides drinking wate r to citizens of Winnipeg, collects and treats wastewater, and provides collecti on, disposal and waste minimization programs and facilities for solid waste. The ir land drainage and garbage collection operations are reported in the General R evenue Fund and are included in the Public Works and Water segment. For each rep orted segment, revenues and expenses represent both amounts that are directly at tributable to the segment and amounts that are allocated on a reasonable basis. Therefore, certain allocation methodologies are employed in the preparation of s egmented financial information. The General Revenue Fund reports on municipal se rvices that are funded primarily by taxation such as property and business tax r evenues. Taxation and payments-in-lieu of taxes are apportioned to General Reven ue Fund services based on the Fund's net surplus. Certain government transfers, transfers from other funds, and other revenues have been apportioned based on a percentage of budgeted expenses. The accounting policies used in these segments are consistent with those followed in the preparation of the consolidated financ ial statements as disclosed in Note 2. For additional information, see the Conso lidated Schedule of Segment Disclosure - Service (Schedule 2). 22. Funds Held in Trust Trust funds administered by the City for the benefit of external parties, which total $0.4 million (2011 $0.4 million), are not included in the consolida ted financial statements. 33

THE CITY OF WINNIPEG CONSOLIDATED SCHEDULE OF TANGIBLE CAPITAL ASSETS As at December 31 (in thousands of dollars) General Land Cost Balance, beginning of year Add: Additions during the year Less: Dispos als during the year Balance, end of year Accumulated amortization Balance, begin ning of year Add: Amortization Less: Accumulated amortization on disposals Balan ce, end of year Net Book Value of Tangible Capital Assets $ $ 202,897 11,130 2,2 96 211,731 $ Buildings 592,533 25,712 12,533 605,712 $ Vehicles 335,198 20,735 8,731 347,202 $ Computer 138,371 5,458 2,771 141,058 $ Other 197,851 62,477 2,870 257,458 211,731 $ 273,687 20,753 10,381 284,059 321,653 $ 156,947 22,043 8,422 170,568 176,634 $ 97,617 10,941 2,771 105,787 35,271 $ 76,917 18,755 2,871 92,801 164,657 34

Schedule 1 Infrastructure Underground and Other Networks $ 2,716,082 88,277 4,126 2,800,233 Bridges and Other Structures $ 600,814 151,795 28,756 723,853 Assets Under Cons truction $ 99,903 109,275 209,178 $ Totals Plants and Facilities $ 819,067 12,376 831,443 Roads $ 1,862,434 166,758 4,527 2,024,665 2012 7,565,150 653,993 66,610 8,152,533 $ 2011 7,107,156 486,320 28,326 7,565,150 220,790 16,079 236,869 $ 594,574 874,504 49,642 2,208 921,938 $ 1,102,727 900,649 38,134 3,154 935,629 $ 1,864,604 $ 216,244 12,085 27,072 201,257 522,596 $ 209,178 $ 2,817,355 188,432 56,879 2,948,908 5,203,625 $ 2,659,161 175,765 17,571 2,817,355 4,747,795 35

THE CITY OF WINNIPEG CONSOLIDATED SCHEDULE OF SEGMENT DISCLOSURE - SERVICE For the year ended December 31, 2012 (in thousands of dollars) General Revenue F und Community Public Works Services Planning and Water $ 76,910 16,391 10,718 2, 824 4,279 111,122 36,870 8,395 284 45,710 19,863 111,122 $ $ $ 1,908 27,116 2,98 9 11,896 2,004 45,913 20,847 4,943 1,351 15,785 2,987 45,913 $ $ 165,578 5,712 1 9,647 22,359 8,546 221,842 68,063 106,481 12,525 41,950 (7,177) 221,842 Protection REVENUES Taxation Sales of services and regulatory fees Government tr ansfers (Note 18) Transfer from other funds Other EXPENSES (Note 19) Salaries an d benefits Goods and services Interest Transfer to other funds Other $ 238,241 5 2,641 65,604 8,718 14,500 379,704 325,106 36,159 1,382 12,785 4,272 379,704 ANNU AL SURPLUS For the year ended December 31, 2011 (in thousands of dollars) $ Protection REVENUES Taxation Sales of services and regulatory fees Government tr ansfers (Note 18) Transfer from other funds Other EXPENSES (Note 19) Salaries an d benefits Goods and services Interest Transfer to other funds Other $ 217,581 4 7,076 66,870 3,313 13,687 348,527 295,694 35,451 1,234 10,702 5,446 348,527 ANNU AL SURPLUS $ $ $ Community Services General Revenue Fund Public Works Planning and Water $ 22,576 17,275 292 40,143 20,582 2,622 794 13,616 2,529 40,143 $ $ $ 175,786 10,963 20,289 16,999 8,527 23 2,564 71,478 118,083 12,307 36,351 (5,655) 232,564 67,609 17,542 10,932 954 4,001 101,038 37,497 8,262 248 35,983 19,048 101,038 36

Schedule 2 Finance and Administration $ 103,051 11,661 12,969 4,879 12,217 144,777 36,300 1 2,600 653 70,164 25,060 144,777 $ Transit System Fund $ 75,228 45,055 67,418 1,292 188,993 89,389 43,324 7,370 13, 593 17,210 170,886 $ 18,107 Water and Other Funds and Waste Funds Corporations $ 256,549 14,842 32,328 36,90 7 340,626 59,692 94,729 19,109 82,131 35,666 291,327 $ 49,299 $ $ 14,619 90,521 152,169 319,524 84,333 661,166 49,788 86,976 28,106 172,909 169,717 507,496 153, 670 $ $ Eliminations (12,729) (52,480) (43,756) (469,946) (18,091) (597,002) 9,794 (49,3 90) (17,193) (455,027) (61,528) (573,344) (23,658) Consolidated $ 587,578 483,339 280,237 145,987 1,497,141 695,849 344,217 53,587 206,070 1,299,723 $ 197,418 Finance and Administration $ 107,261 11,838 18,606 3,257 12,374 153,336 38,176 1 2,865 1,650 67,654 32,991 153,336 $ Transit System Fund $ 72,222 41,482 56,992 1,638 172,334 84,040 43,864 6,234 13, 892 14,117 162,147 $ 10,187 Water and Waste Funds $ 241,497 14,617 34,970 25,802 316,886 58,537 94,431 19,20 8 76,348 39,856 288,380 $ 28,506 Other Funds and Corporations $ 13,687 85,311 151,480 805,942 98,080 1,154,500 48,358 89,667 20,0 06 669,968 160,723 988,722 $ 165,778 $ $ Eliminations (18,145) (48,573) (26,190) (939,702) (17,108) (1,049,718) 9,859 (48 ,237) (17,727) (924,514) (61,004) (1,041,623) (8,095) $ $ Consolidated 563,779 460,452 298,086 147,293 1,469,610 664,221 357,008 43,954 20 8,051 1,273,234 196,376 37