46  Annual Report d.  Annual leave gratuity has been reclassified into a separate provision as required under NZ IFRS. e.   Sick leave was not recognised as a liability under previous NZ GAAP. NZ IAS 19 requires the Law Commission to recognise employees unused sick leave entitlement that can be carried forward at balance date, to the extent that the Law Commission anticipates it will be used by staff to cover future absences. f. The deemed costs exemption has been applied to all revaluation reserves as at 1 July 2006. Reconciliation of surplus/(deficit) for the year ended 30 June 2007 P  revious n  Z gaa P e  FF e  CT o  F T  ransi T  ion T  o   n  Z i F  rs n  Z i F  rs 30 June 2007 30 June 2007 30 June 2007 $ $ $ Operating revenue 5,659,318 0 5,659,318 Operating expenditure 4,606,451 545 4,606,996 n  et surplus 1,052,867 (545) 1,052,322 Statement of cash flows On transition to NZ IFRS the statement of cash flows presents short term deposits with maturities of less than three months as part of cash and cash equivalents. The impact on the statement of cash flows for the year ended 30 June 2007 is to: change the net movement in cash from an increase of $913,063 to a decrease of $236,937 decrease the cash and the cash equivalents from $1,550,699 to $400,699 There have been no other material adjustments to the statement of cash flows for the year ended 30 June 2007, on transition to NZ IFRS.