Accounting Policies
The interim financial report has been prepared in accordance with FRS134 " Interim Financial Reporting " and paragraph 9.22 of the Bursa Malaysia Securities Berhad Listing Requirements, and should be read in conjunction with the audited financial statements of the Group for the financial period ended 30 June 2006.

As announced on 19 August 2005, the Company has changed its financial year-end from 31 December to 30 June. Pursuant to the change in the financial year-end, comparative figures for the current quarter and the cumulative period are not presented.

These explanatory notes attached to the interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the financial period ended 30 June 2006.

The accounting policies and methods of computation adopted by the Group in this interim financial report are consistent with those adopted in the annual financial statements for the financial period ended 30 June 2006 except for the adoption of the eighteen (18) new/revised FRSs that are effective for the financial period beginning 1 July 2006.

The adoption of the new/revised FRSs did not have significant impact on the Group except for the following: -

(a) FRS 3 - Business Combinations
ceased to amortise goodwill on consolidation. Goodwill on consolidation is now carried at cost or previously amortised amount less accumulated impairment losses.

In addition to the above, any excess of fair value of the Group's share of identifiable net assets over the cost of acquisition, refered to as "negative goodwill", is recognised to the income statement. The Group's previously recognised negative goodwill amounting to RM0.4 million has been credited to the opening retained earnings. The effect of this adjustment is disclosed in (e) below in conjuction with the application of IC Interpretations 112.

This change in accounting policy has been accounted for prospectively.

(b) FRS 101 - Presentation of Financial Statements
The adoption of the revised FRS 101 has affected the presentation of minority interests, share of net after-tax results of associates and jointly controlled entity and other disclosures. In the consolidated balance sheet, minority interests are now presented within total equity. In the consolidated income statement, minority interests are presented as an allocation of the total profit or loss for the period. In the statement of changes in equity, total recognised income and expenses for the period attributable to equity holders of the parent and to minority interest is shown separately.

The presentation of the Group's current quarter financial statements is based on the revised requirement of FRS 101 with the comparatives restated
accordingly.

(c) FRS 116 - Property, Plant and Equipment
The adoption of FRS 116 has resulted in a change in accounting estimate for the Group's hotel properties. Prior to this, hotel properties were stated at cost and no depreciation was provided. The Group 's hotel properties are now stated at cost less accumulated depreciation and impairment losses.

This change in accounting estimate has been accounted for prospectively. Depreciation charges on hotel properties in respect of current quarter ended 30 September 2006 is approximately RM1.22 million (net of Minority Interest).

(d) FRS 140 - Investment Properties
The adoption of FRS 140 has resulted in a change in accounting policy for investment properties. Investment properties are now stated at fair value, representing market value determined by external valuers. The Group has adjusted the gain arising from the revaluation to the opening balance of retained earnings upon the adoption of this standard. Subsequent gains or losses arising from the changes in fair values of investment properties are recognised in profit or loss in the period in which they arise.

With the adoption of FRS 140, a net gain of RM261.5 million (net of deferred tax and minority interest) has been credited directly to retained earnings.

(e) IC Interpretation 112 - Special Purpose Entities ("SPE")
On 30 October 2002, the Group has completed an asset-backed securitisation exercise ("ABS exercise") involving disposal of six properties including the plant and equipment together with its lease rights and redeemable preference shares to an SPE, ABS Real Estate Berhad ("AREB"), for a total consideration of RM891.6 million, which was satisfied by RM425.4 million cash and the issuance of RM466.2 million Subordinate Class D Notes.

In accordance to IC Interpretation 112, which is effective for the financial period beginning 1 July 2006, AREB has been consolidated with the Group. The effects of the consolidation has resulted a decrease of RM159.5 million to the Group retained earnings.

The above changes in accounting policy except for item (c) above, have been accounted for retrospectively and the Group has restated the following items in the opening balance sheet:

Contingent Liabilities and Assets
There were no material changes in contingent liabilities since the last annual balance sheet date.
There were no contingent assets.

Review of Performance
The Group recorded a revenue of RM298.7 million for the current quarter ended 30 September 2006 and profit before taxation of RM66.2 million, mainly contributed by the property development and property investment segments.

Dividend
No dividend has been proposed by the Board of Directors for the 1st quarter and financial year-to-date.

Earnings per share
The calculation of the earnings per share for the Group is based on profit after taxation and minority interests on the weighted average number of ordinary shares in issue during the period.