ACCOUNTING POLICIES
All significant accounting policies have been applied on a basis consistent with those used in the audited financial statements for the year ended 30 June 1998.

The interim financial statements for the six months ended 31 December 1998 have been prepared in accordance with the Institute of Chartered Accountants of New Zealand Financial Reporting Standard 24 “Interim Financial Statements” and should be read in conjunction with the group’s annual financial report for the year ended 30 June 1998.

INTERIM DIVIDEND
The directors have approved a fully imputed interim dividend for the 1998/99 financial year of 17 cents per ordinary share (31 December 1997 : 12 cents; 30 June 1998 final dividend : 17 cents).

REVENUE
Sales exclude the retail value of rooms, food, beverage and other promotional allowances provided on a complimentary basis to customers. The value of complimentaries for the six months to 31 December 1998 was $3,043,000 (31 December 1997 : $3,308,000; 30 June 1998 : $6,624,000).

COMMITMENTS
Contractual commitments of up to $25,300,000 are outstanding as at 31 December 1998 (31 December 1997 : $2,523,000; 30 June 1998 : $2,966,000). These relate to purchases of plant and equipment for the Auckland complex and costs associated with Riverside Casino Limited which is an applicant for a casino premises licence in Hamilton. Prior to 31 December 1998 Sky City entered into agreements to acquire up to 55% of the shares of Riverside Casino Limited. The total commitment in relation to Riverside Casino Limited is contingent upon the issue of a casino premises licence and the terms of the purchase agreements.

CONTINGENT LIABILITIES
For the year ended 30 June 1998 income tax was recognised in the Statement of Financial Performance on the basis that various non-recurring expenditure items are deductible for tax purposes.

The Inland Revenue Department has indicated that some or all of the approximately $15,000,000 of income tax credit claimed in relation to these expenses will be challenged. The directors have received professional advice that it is not appropriate to recognise a liability and the company is contesting any challenge received.

EARNINGS PER SHARE
The company has 96,249,100 shares on issue (31 December 1997 : 100,000,000; 30 June 1998 : 98,018,300). The group operating surplus per share for the six months to 31 December 1998 is 23.1cents (31 December 1997 : 16.8 cents; 30 June 1998 : 2.5 cents).