CHARTER HALL GROUP - Annual Report 2007

APPENDIX 4E – PRELIMINARY FINAL REPORT

YEAR ENDING 30 JUNE 2007

Charter Hall Group (CHC) – comprising the stapling of ordinary shares in Charter Hall Limited (CHL)(ACN 113 531 150) and units in Charter Hall Property Trust (CHPT) (ARSN 113 339 147)

1. Results for announcement to the market

	% change	30 June 2007 $000’s
Revenue	Increase 61% to	60,829
Profit from ordinary activities after tax attributable to members beforefair value adjustments	Increase 76 % to	31,675
Profit from ordinary activities aftertaxattributable tomembers	Increase 248 % to	43,168

Distributions Cents per stapled security

Final distribution in respect of a CHPT unit 5.67 Final dividend in respect of a CHL share nil Interim distribution in respect of a CHPT unit 4.77 Interim dividend in respect of a CHL share nil There were no distributions for the previous corresponding period. _ Payable 31 August 2007 ** Paid 28 February 2007_ Record date for determining entitlements to distributions - 29 June 2007

2. Entities over which control has been gained or lost during the period

Charter Hall Core Plus Office Fund (CPOF) ceased to be a controlled sub-trust on 1 July 2006. As at 30 June 2007 CHPT held 23.0% of the units in CPOF.

Charter Hall Core Plus Industrial Fund (CPIF) ceased to be a controlled sub-trust on 23 April 2007. As at 30 June 2007 CHPT held 32.1% of the units in CPIF.

Charter Hall Core Plus Retail Fund (CPRF) was set up as a wholly owned sub trust of Charter Hall Property Trust on 7 September 2006.

3. Associates & Joint venture entities

The Group did not have any holdings in joint venture entities as at 30 June 2007. Refer to the attached financial report for details regarding interests in associates.

All other information required to be disclosed by the Group in the Appendix 4E is either not applicable or has been included in the attached financial report.

Charter Hall Group Comprising Charter Hall Limited (ABN: 57 113 531 150) and its controlled entities

Financial report - 30 June 2007

Page Corporate directory Directors' report Corporate governance statement Financial report Directors' declaration Independent audit report to the members Shareholder information

Corporate directory

Directors K Roxburgh Chairman R Woodhouse Deputy Chairman A Biet P Derrington G Fraser C Fuchs Executive Director D Harrison (Appointed 30/8/06) Joint Managing Director C McGowan P McMahon (Resigned 30/8/06) D Southon (Appointed 30/8/06) Joint Managing Director Company Secretary N Francis Notice of annual general meeting The annual general meeting of Charter Hall Group will be held at The Hilton Sydney Level 4, Room 1 488 George St, Sydney Time 2:00pm Date Thursday 25 October 2007 Principal registered office in Australia Level 11, 333 George Street Sydney NSW 2000 (02) 8908 4000 Registry Link Market Services Level 8, 580 George Street Sydney 2000 1300 664 498 Auditor PricewaterhouseCoopers Darling Park Tower 2 201 Sussex Street Sydney 1171 Solicitors Allens Arthur Robinson Level 28, Deutsche Bank Place Cnr of Hunter & Phillip Streets Sydney 2000 Bankers National Australia Bank Level 24, NAB House, 255 George Street Sydney 2000 Stock exchange listings Charter Hall Group stapled securities are listed on the Australian Stock Exchange (code CHC). Website address www.charterhall.com.au

Charter Hall Group Directors' report 30 June 2007

Directors' report

Your directors present their report on the consolidated entity (referred to hereafter as the Group or Charter Hall Group) consisting of Charter Hall Limited (the Company) and the entities it controlled at the end of, or during, the period ended 30 June 2007.

The Group includes Charter Hall Funds Management Limited as the Responsible Entity of Charter Hall Property Trust (the Trust). Charter Hall Limited and Charter Hall Funds Management Limited have identical Boards of Directors. The term Board hereafter should be read as references to both these Boards.

Directors

The following persons were directors of Charter Hall Limited during the whole of the period and up to the date of this report:

K Roxburgh - Chairman

R Woodhouse - Deputy Chairman A Biet

P Derrington G Fraser C Fuchs D Harrison - Joint Managing Director (Appointed 30/8/06)

C McGowan

P McMahon (Resigned 30/8/06)

D Southon - Joint Managing Director (Appointed 30/8/06)

Principal activities

During the period the principal continuing activities of the Group consisted of:

(a) Property investment
(b) Funds management
(c) Development management
(d) Property investment banking and property management

No significant changes in the nature of the activities of the Group occurred during the period.

Distributions - Charter Hall Group

Distributions paid / declared to members during the period were as follows:

		2007	2006
		$'000	$’000
-	Interim ordinary distribution for the period ended 31 December 2006 of
	4.77 cents per security paid on 28 February 2007	17,440	-
-	Final ordinary distribution for the 6 months ended 30 June 2007 of 5.67
	cents per security expected to be paid on 31 August 2007	20,632	-
-	Interim ordinary distribution for the period ended 31 December 2005 of
	3.73 cents per security paid on 28 February 2006	-	9,849
-	Final ordinary distribution for the 6 months ended 30 June 2006 of 3.82
	cents per security paid on 30 August 2006	-	10,182
		38,072	20,031

Results

The Group has reported a solid financial result for the year to 30 June 2007. The distribution per security of 10.44c for the 12 months to 30 June 2007 (30 June 2006: 7.55c) is 9.5% above the forecast of 9.53c provided in the PDS/Prospectus dated 19 May 2006.

The financial report includes separate financial statements for Charter Hall Limited (CHL) as an individual entity and the consolidated entity consisting of CHL and its subsidiaries and controlled entities including Charter Hall Funds Management Limited as Responsible Entity for Charter Hall Property Trust (CHPT). CHL was incorporated on 24 March 2005 therefore the comparative financial results of the parent company in this financial report are from 24 March 2005 to 30 June 2006. CHL and CHPT commenced on 24 March 2005 but there was no activity until 6 June 2005 when the listing occurred and Charter Hall Holdings Pty Limited (CHH) was purchased by CHL. The comparative consolidated financial results are for the period 24 March 2005 to 30 June 2006 but include CHH from 6 June 2005.

Distribution

The distribution for the year is 10.44 cents per security (30 June 2006: 7.55 cents per security).

Charter Hall Group Directors' report 30 June 2007 (continued)

Financial Performance - 1 July 2006 to 30 June 2007

The Group recorded a net profit after tax for the financial year of $31.7m (before fair value adjustments) (2006: $18.0m). After adjusting for income tax expense on an unrealised gain in the Group’s investment in Axiom Properties Limited, the net profit after tax was $32.5m, or 4.4% above the PDS/Prospectus (PDS) dated 19 May 2006. Under Australian equivalents to International Financial Reporting Standards (AIFRS) the Group is required to revalue properties and write off property acquisition costs through the income statement. After adjusting for revaluations and acquisition costs totalling a net gain of $11.5m (30 June 2006: $5.6m net loss) the AIFRS reported Group result is a profit after tax for the period of $43.2m (2006: $12.4m). This was $13.3m higher than the income statement forecast for the period 1 July 2006 to 30 June 2007 that was included in the PDS. The Group recorded solid gains in its directly owned properties and its investments in Charter Hall managed funds (Charter Hall Core Plus Office Fund (CPOF), Charter Hall Core Plus Industrial Fund (CPIF) and Charter Hall Diversified Property Fund (DPF).

Three properties have been independently externally revalued as at 30 June 2007 namely 570 Bourke Street, Melbourne, 56 Anzac Street, Chullora and Menai Central, Menai. The Bunnings portfolio properties that were purchased on 20 June 2007 and 27 June 2007 are carried at the valuation that was completed on 1 June 2007 (refer note 18).

Significant gains were recorded on the Group’s investments in Charter Hall managed unlisted funds and in its investment in Axiom Properties Limited (Axiom).

the value of the group’s 23.0% investment in CPOF increased $7m (19% annualised) to $80.0m
the value of the group’s 32.1% investment in CPIF increased $1m (10% annualised) to $46.0m
the value of the group’s 4.9% investment in Axiom increased $2.8m (75% annualised) to $7.9m
the value of the group’s 11.7% investment in DPF increased $0.2m (4% for the full year) to $5.2m

The 30 June 2007 financial results with comparatives can be summarised as follows:

		2007	2006
Gross revenue ($m)	*(i)*	61	38
Net profit after tax ($m)	*(i)*	43	12
Distribution ($m)	*(i)*	38	20
AIFRS earnings per stapled security including fair value adjustments (cents)	*(i),(ii)*	12.00	4.61
Underlying EPS excluding fair value adjustments		9.51	6.47
Distribution per stapled security (cents)	*(ii),(iii)*	10.44	7.55
Total Assets ($m)		650	505
Total Liabilities ($m)		189	226
Net Assets ($m)		461	279
NTA per security ($)	*(iii)*	1.12	0.85
Gearing – borrowings to total assets		24.4%	27.7%
Assets under Management ($bn)		2.8	1.3

(i) – Comparative period is 6 June 2005 to 30 June 2006.

(ii) – DPS reflects distribution of CHPT (the trust) profit only and nil dividends from CHL (the company). CHL recorded a loss for the period and hence reduces Group EPS.

(iii) – excludes stapled securities issued under LTI Plan in accordance with AASB 2.

(iv) – comparative period is 1 July 2005 to 20 June 2007

Distribution Re-investment Plan (DRP)

The DRP is currently de-activated.

Charter Hall Group Directors' report 30 June 2007 (continued)

Review of operations

During the period the Group launched 4 new property funds comprising Charter Hall Opportunity Fund No.5 (CHOF5) and three additional investment funds Charter Hall Core Plus Industrial Fund (CPIF), Charter Hall Core Plus Retail Fund (CPRF) and Charter Hall Umbrella Fund (CHUF). The Group has further expanded its diverse sources of equity, providing institutional, wholesale, retail and high net worth clients with these new products.

CHUF is a retail fund in which Charter Hall Property Trust (CHPT) holds a 47% interest and a major financial institution holds 50%.

The $300m oversubscribed raising for CHOF5 reinforced Charter Hall’s position as the pre-eminent opportunity fund manager in Australia and reinforced the Group’s access to wholesale equity. In addition $350m in equity has been raised for CPIF from wholesale investors. CPRF is currently 100% owned by CHPT with assets of $165m which including CHPT directly owned retail assets comprise a $400m seed portfolio of CPRF assets, which are intended to go off CHPT balance sheet during FY08.

The Group raised $350m in equity for CPIF in April 2007 which at 30 June 2007 had been called to 40% to purchase industrial assets.

The Group raised $133m in June 2007 via a placement offer, the proceeds of which have provided funding for additional seed assets for CPRF and the purchase of 50% of Commercial and Industrial Property Pty Ltd.

CPOF, in which CHPT holds a 23% interest, recently acquired its 11[th] asset bringing the total asset value to nearly $1bn (on a fully developed basis) having increased from $140m at 1 July 2006.

DPF, in which CHPT holds a 12% interest, recently acquired its 11[th] property which in total are valued at approximately $123m.

CPIF, in which CHPT holds a 32% interest, recently acquired its 8[th] asset bringing the total fund size to $270m (on a fully developed basis).

The Group entered the New Zealand market for the first time during the year, agreed to purchase 2 properties within CPRF for a combined total of $41m. The Group intends to raise wholesale equity during FY08, consistent with the strategy of seeding assets before selling down interests to external investors. The Group will retain an interest of at least 20% in CPRF.

Total assets under management as at 30 June 2007 have grown to $2.8 billion. As foreshadowed in the PDS/Prospectus, Charter Hall Group has utilised its balance sheet capacity to secure and warehouse a number of quality assets for new investment funds, such as CPIF and CPRF as well as investing $5m in Axiom Properties Limited to secure development deal flow. This has underpinned the success of these new funds and will accelerate the growth in the Group’s funds under management, with a continued focus on security holder returns.

Environmental regulation

The principal activities of the group are property investment, funds management and development management. Funds management involves minimal environmental impact. The group ensures compliance with applicable environmental standards and regulations in its property investment and development management activities.

Significant changes in the state of affairs

Significant changes in the state of affairs of the Group during the period, in addition to the review of operations, above were as follows:

The Group raised $133m in June 2007 via the placement of 44,444,445 securities at $3.00 per security.

Matters subsequent to the end of the period

Since 30 June 2007 CHPT has completed the following transactions:

Settlement of Foodtown Auckland for NZ$28m on 4 July 2007
Settlement of Ipswich Super Centre site for $8m in CPRF on 14 August 2007
The purchase of 50% of Commercial and Industrial Property Pty Ltd for $40m

Except for the matters discussed above, no other matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:

(a) the Group's operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Group's state of affairs in future financial years.

Likely developments and expected results of operations

Further information on likely developments in the operations of the Group and the expected results of operations have not been included in this annual financial report because the directors believe it would be likely to result in unreasonable prejudice to the Group.

Charter Hall Group Directors' report 30 June 2007 (continued)

Information on directors

K Roxburgh Chairman - non-executive. Age 65.

Experience and expertise

Independent non-executive director and Chairman appointed 12 April 2005. For 11 years between 1996 to 2007 one of the founders of E*TRADE in Australia as Chief Executive prior to becoming Chairman in 2000, retiring in June this year following its takeover by the ANZ Bank. For 10 years from 1986 to 1995 an Executive Chairman of their stockbroker, James Capel Australia and 5 years as Managing Director of their corporate finance subsidiary. Between 1964 to 1986 practiced as a Chartered Accountant for 4 years at Arthur Andersen followed by 18 years as a partner at Mann Judd in Sydney. Experienced in the financial markets and the financial management of the insurance, healthcare, technology, property and resource sectors. Bachelor of Commerce, MBA and Practitioner Member of the Securities & Derivatives Institute of Australia.

Other current listed company directorships

Babcock and Brown Capital Limited (since February 2006) Non-executive director of Ramsay Health Care Ltd (since 1997) Non-executive director of Everest Babcock and Brown Group (since 2005).

Former listed company directorships in last 3 years

Non-executive Chairman of E*TRADE Australia (from 1996 until June 2007) Everest Babcock and Brown Alternative Investment Trust (2005-2006)

Special responsibilities

Chairman of the Board. Chairman of remuneration and nominations committee. Member of the audit risk and compliance committee

Interests in securities

50,000 securities in Charter Hall Group.

R Woodhouse Deputy Chairman – non-executive. Age 60.

Experience and expertise

Appointed non-executive director and deputy Chairman of the Group on 6 April 2005. Worked for the Ballieu family for 30 years in senior executive capacities from 1975 including Director L.J. Hooker, Managing Director Knight Frank Australia and Chairman Knight Frank Australia. Fellow of the Institute of Company Directors.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Deputy Chairman of the Board

Member of remuneration and nominations committee

Interests in securities

366,666 securities in Charter Hall Group.

C McGowan Independent non executive director. Age 61.

Experience and expertise

Independent non-executive director since 6 April 2005. Formerly CEO of the listed AMP Diversified Property Trust, Executive Vice President of Bankers Trust (Australia), founding Fund Manager of the BT Property Trust and founding Fund Manager of the Advance Property Fund. Fellow of the Australian Property Institute and Senior Fellow of the Financial Services Institute of Australasia.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Member of remuneration and nominations committee

Interests in securities

Nil securities in Charter Hall Group.

Charter Hall Group Directors' report 30 June 2007 (continued)

A Biet Non-executive director. Age 58.

Experience and expertise

Co-founder of Charter Hall and Managing Director of the Group from 1991 to 2005. Has over 25 years of property experience and was previously the Managing Director of the Heine Group’s property arm (now part of ING) and previously Director of Operations for Leighton Properties. He is a Fellow of the Australian Institute of Company Directors, a Fellow of the Australian Property Institute and holds a Bachelors degree in Economics and an MBA. Changed during the year from an executive to non-executive director.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Nil

Interests in securities

5,559,724 securities in Charter Hall Group via direct and indirect interests including 350,000 vested securities in the Charter Hall Executive Loan Security Plan.

P Derrington Independent non-executive director. Age 51.

Experience and expertise

Independent non-executive director since 6 April 2005. Currently the CEO of Penrith Lakes Development Corporation Limited. Formerly Managing Director of the US asset management firm Spears, Benzak, Salomon and Farrell, formerly Vice President in the Real Estate Finance Group at Chemical Bank (now J.P. Morgan Chase) and in 1997 founded the Victory Real Estate Investment Fund. Holds an MBA from Harvard University and a Ph. D from U.C. Berkeley.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Non-executive Director of AmeriVest Properties based in Denver, Colorado. Commenced in 2003.

Special responsibilities

Chair of audit, risk and compliance committee.

Interests in securities

Nil securities in Charter Hall Group.

G Fraser Non-executive director. Age 50.

Experience and expertise

Non-executive director of the Group since 6 April 2005. Joined Transfield Holdings in 1996 where he was formerly the CFO and General Manager – Finance, Property Development and is currently a member of its Advisory Board. Previously was the principal of a finance advisory business Perry Development Finance Pty Limited. Member of the Institute of Chartered Accountants in Australia and the Institute of Company Directors.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Member of audit, risk and compliance committee.

Interests in securities

225,000 securities in Charter Hall Group via direct and indirect interests.

Charter Hall Group Directors' report 30 June 2007

(continued)

C Fuchs Executive director. Age 63.

Experience and expertise

Co-founder of Charter Hall in 1991. Executive director of the Group since 6 April 2005. Has over 40 years experience in property investment and financial services. Is involved in the Group’s funds management business and is a member of the Investment Committee for the Charter Hall opportunity funds. Previously worked at the Heine Group’s property arm and Leighton Properties.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Nil

Interests in securities

5,486,595 securities in Charter Hall Group via direct and indirect interests including 350,000 securities in the Charter Hall Executive Loan Security Plan which have vested. A further interest in 1,456,019 securities in the Plan which will vest upon the satisfaction of performance and service criteria. The issue of 362,319 securities in the Plan is subject to security holder approval at the Annual General Meeting.

D Harrison Executive director. Age 41. (appointed 30/8/06)

Experience and expertise

Joint Managing Director and heads up the Funds Management Division & Property Management Division. Has more than 19 years of experience in the Australian commercial property markets. Prior to joining Charter Hall in 2004, was the Managing Director of Savills in Australia. Holds a Land Economics degree from the University of Western Sydney, a graduate Diploma in Applied Finance and is a Fellow of the Australian Property Institute.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Nil

Interests in securities

8,666,809 securities in Charter Hall Group via direct and indirect interests including 491,667 securities in the Charter Hall Executive Loan Security Plan which have vested. A further interest in 4,837,141 securities in the Plan will vest upon the satisfaction of performance and service criteria. The issue of 2,717,391 securities in the Plan is subject to security holder approval at the Annual General Meeting.

D Southon Executive director. Age 41. (appointed 30/8/06)

Experience and expertise

David is a founding member of Charter Hall. As a Joint Managing Director David heads up the Development Division and Property Investment Banking Division and has over 19 years of property industry experience. Prior to co-founding Charter Hall in 1991 worked at the Heine Group’s property arm (now part of ING) and Leighton Properties. Holds a Land Economics degree from the University of Western Sydney.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Nil

Interests in securities

8,754,870 securities in Charter Hall Group via direct and indirect interests including 491,667 securities in the Charter Hall Executive Loan Security Plan which have vested. A further interest in 4,817,456 securities in the Plan will vest upon the satisfaction of performance and service criteria. The issue of 2,717,391 securities in the Plan is subject to security holder approval at the Annual General Meeting.

Company secretary

The company secretary is Mr N Francis, a member of the Institute of Chartered Accountants in Australia who was appointed to the position of Company Secretary of the Group on 6 April 2005. Before joining Charter Hall Group he was the Finance and Asset Manager at Quantum Property Group and prior to that gained seven years experience with PricewaterhouseCoopers in audit and transactions services.

Charter Hall Group Directors' report 30 June 2007 (continued)

Meetings of directors

The numbers of meetings of the Group’s board of directors and of each board committee held during the period ended 30 June 2007, and the numbers of meetings attended by each director were:

Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors	Meetings of committees Full meetings of Directors
Investment Audit Remuneration Nominations
	A	B	A	B	A	B	A B	A	B

K Roxburgh	10	10	6	12	4	4	1 1	1	1
R Woodhouse	10	10	11	12	*	*	1 1	1	1
A Biet	9	10	11	12	*	*		*	*
P Derrington	9	10	1	12	5	5		*	*
G Fraser	10	10	5	12	5	5		*	*
C Fuchs	10	10	7	12	*	*		*	*
C McGowan	10	10	12	12	*	*	1 1	1	1
P McMahon (Resigned 30/8/06)	1	2	0	0	1	1		*	*
D Harrison (Appointed 30/8/06)	8	8	12	12	*	*		*	*
D Southon (Appointed 30/8/06)	8	8	9	12	*	*		*	*

A = Number of meetings attended

B = Number of meetings held during the time the director held office or was a member of the committee during the year

= Not a member of the relevant committee

The investment committee is made up of A Biet, C Fuchs, C McGowan, R Woodhouse, D Harrison and D Southon.

Remuneration report

The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Security-based compensation E Additional information.

The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures . These disclosures have been transferred from the financial report and have been audited. The disclosures in Section E are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which have not been audited.

A Principles used to determine the nature and amount of remuneration (audited)

The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for securityholders, and conforms with market best practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

competitiveness and reasonableness
acceptability to security holders
performance linkage / alignment of executive compensation
transparency
capital management.

In consultation with external remuneration consultants, the Group has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the organisation.

Alignment to security holders’ interests:

has economic profit as a core component of plan design
focuses on sustained growth in security holder wealth, consisting of distributions and dividends and growth in security price, and delivering constant return on assets as well as focusing the executive on key non-financial drivers of value
attracts and retains high calibre executives.

Charter Hall Group Directors' report 30 June 2007 (continued)

Alignment to program participants’ interests:

rewards capability and experience
reflects competitive reward for contribution to growth in security holder wealth
provides a clear structure for earning rewards
provides recognition for contribution.

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executives gain seniority with the Group, the balance of this mix shifts to a higher proportion of ''at risk'' rewards.

Non-executive directors

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments will be reviewed annually by the Board. The Board has also reviewed independent remuneration research to ensure non-executive directors’ fees and payments are appropriate and in line with the market. The Chairman’s fees are determined independently to the fees of non-executive directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration. Non-executive directors are not a part of the Charter Hall Limited Executive Loan Security Plan.

Directors’ fees

The current base remuneration was last reviewed with effect from 1 July 2006. Non-executive directors who are part of a committee receive additional yearly fees.

Retirement allowances for directors There are no retirement allowances for non-executive directors.

Executive pay

The executive pay and reward framework has four components:

base pay and other benefits
short-term performance incentives (STI)
long-term incentives (LTI) through participation in the Charter Hall Limited Executive Loan Security Plan, and
• other remuneration such as superannuation.

The combination of these comprises the executive’s total remuneration. The Group intends to revisit its long-term equity-linked performance incentives specifically for executives during the year ending 30 June 2008.

Base pay

Executives are offered a competitive base pay where reference is made to latest salary trends and salary surveys to ensure base pay is set to reflect the market for a comparable role. Other benefits include provision of car parking spaces at the office location.

There are no guaranteed base pay increases included in any senior executives’ contracts.

Short-term incentives (STI)

Cash incentives (bonuses) are payable in July depending on Group and individual performance for the year to 30 June. Executives have a target STI opportunity depending on the accountabilities of the role and impact on the organisation.

Each year, the remuneration committee and Managing Directors will consider the appropriate targets and key performance indicators (KPI’s) to link the STI plan and the level of payout if targets are met. This includes setting any maximum payout under the STI plan, and minimum levels of performance to trigger payment of STI.

For the period ended 30 June 2007, the KPI’s linked to STI plans were based on group and personal objectives. The KPI’s required performance in achieving specific targets.

The Managing Directors and remuneration committee are responsible for assessing whether the KPI’s are met. To help make this assessment, the committee receives detailed reports on performance from management.

The short-term bonus payments may be adjusted up or down in line with under or over achievement against the target performance levels. This is at the discretion of the remuneration committee.

The STI target annual payment is reviewed annually.

STI - Executive Directors

The Executive Directors (Cedric Fuchs, David Harrison and David Southon) short term incentive is linked to a percentage of distribution growth above the relevant PDS/Prospectus forecast or Board approved budget. The Remuneration Committee has approved an FY07 bonus for the Executive Directors of 15% in the aggregate (6% David Harrison, 6% David Southon, 3% Cedric Fuchs) of the amount that the distribution for the 12 months to 30 June 2007 exceeds the distribution forecast in the most recent PDS/Prospectus dated 19 May 2006. Once the 30 June 2007 distribution is approved by the Board the bonus will be able to be calculated and paid in FY08.

==> picture [480 x 33] intentionally omitted <==

Charter Hall Group Directors' report 30 June 2007

(continued)

For the year to 30 June 2006 Andre Biet, Cedric Fuchs, David Harrison and David Southon were entitled to a bonus of 20% (to be shared evenly) of the amount that the distribution for the 12 months to 30 June 2006 exceeded the distribution forecast in the IPO PDS/Prospectus dated 27 May 2005. The total amount of the bonus was $212,235, expensed in FY06.

Charter Hall Limited Executive Loan Security Plan

Information on the Charter Hall Limited Executive Loan Security Plan is set out in note 38 to the financial statements.

B Details of remuneration (audited)

Amounts of remuneration

Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of Charter Hall Group are set out in the following tables.

The key management personnel of Charter Hall Group includes the directors as per pages 6 - 9 above and the following executive officers, who with the executive directors are also the 5 highest paid executives of the Group:

M Winnem – Fund Manager and Development Director
R Champion – Fund Manager and Retail Director
The cash bonuses are dependent on the satisfaction of performance conditions as set out in the section headed Short-term incentives above. All other elements of remuneration are not directly related to performance.

Key management personnel of the Group

2007*	Short-term benefits	Short-term benefits	Post-employment	Security-based
			benefits	payment
	Cash	Cash	Super-
Name	salary and fees	bonus	annuation	Securities	Total
	$	$	$	$	$
Non-executive directors
K Roxburgh_Chairman_	106,422	-	9,376	-	115,798
**R Woodhouse
Deputy Chairman	13,761	-	826	-	14,587
P Derrington	59,174	-	5,326	-	64,500
**G Fraser	13,761	-	826	-	14,587
C McGowan	22,019	-	48,981	-	71,000
P McMahon	14,220	-	1,280	-	15,500
*A Biet (from 1/1/07)	22,892	-	4,579	-	27,471
Sub-total non-executive
directors	252,249	-	71,194	-	323,443
Executive directors
*A Biet (until 31/12/06)	335,742	-	40,000	33,904	409,646
C Fuchs	183,813	-	103,500	70,813	358,126
D Harrison	437,314	-	12,686	156,509	606,509
D Southon	437,314	-	12,686	152,448	602,448
Other key management
personnel
R Champion	343,702	60,000	12,686	51,673	468,061
M Winnem	237,314	60,000	12,686	22,146	332,146
Totals	2,227,448	120,000	265,438	487,493	3,100,379

Remuneration period is 1 July 2006 to 30 June 2007. Short term benefits to Non-Executive Directors include Director and committee fees. A Biet transitioned from executive to non-executive director on 31 December 2006 and was paid an eligible termination payment of $300,000 upon termination of his contract. The table above divides the remuneration received by A Biet into that received as an executive director and as a nonexecutive director.

** Roy Woodhouse and Glenn Fraser had agreed to waive Director and Committee Fees for a period of 2 years from the date they were appointed as Directors of the Board (6 April 2005).

Charter Hall Group Directors' report 30 June 2007 (continued)

Key management personnel of the Group

2006	Short-term benefits	Short-term benefits	Post-employment	Security-based
			benefits	payment
	Cash	Cash	Super-
Name	salary and fees	bonus	annuation	Securities	Total
	$	$	$	$	$
Non-executive directors
K Roxburgh_Chairman_	77,895	-	7,011	-	84,906
*R Woodhouse
Deputy Chairman	-	-	-	-	-
P Derrington	58,046	-	5,224	-	63,270
*G Fraser	-	-	-	-	-
C McGowan	60,550	-	5,450	-	66,000
P McMahon	59,046	-	5,314	-	64,360
Sub-total non-executive
directors	255,537	-	22,999	-	278,536
Executive directors
A Biet	181,510	53,059	35,968	28,031	298,568
C Fuchs	168,182	53,059	81,818	28,031	331,090
Other key management
personnel
D Harrison	337,861	53,059	12,139	39,378	442,437
D Southon	337,861	53,059	12,139	39,378	442,437
M Winnem	210,000	40,000	12,139	-	262,139
Totals	1,490,951	252,236	177,202	134,818	2,055,207

* Roy Woodhouse and Glenn Fraser agreed to waive Director and Committee Fees for a period of 2 years from the date they were appointed as Directors of the Board (6 April 2005)

The remuneration for Charter Hall Limited is identical to that shown above as Charter Hall Limited does not have employees.

C Service agreements (unaudited)

The Managing Directors, David Harrison and David Southon signed 3 year agreements expiring on 18 October 2007 and 1 July 2007, respectively which related to the purchase of 50% of Charter Hall Holdings Pty Limited by Transfield (CHG) Limited on 1 July 2004. Updated agreements have not been pursued because the un-vested component of the Charter Hall Limited Executive Loan Security Plan provides a strong incentive for continuity of employment.

D Employee security scheme (unaudited)

The Charter Hall Limited Loan Security Plan (LSP) is designed to develop a clear line of sight between business objectives and reward. It is an incentive plan aimed at creating a stronger link between executive performance and reward and increasing securityholder value by enabling plan participants to have a greater involvement with, and share in the future growth and profitability of the Group.

Participants are offered limited recourse loans to acquire securities under the plan with interest charged at the distribution yield. If the performance and vesting conditions are satisfied, the securities become available to the plan participants after repayment of any loan obligations outstanding.

Non-executive directors do not participate in the LSP.

2005 Offers: issued 5,900,000 securities on 6 June 2005 at $1.00 per security and issued 300,000 securities on 11 November at $1.0731 per security.

Service conditions: the plan participants must be an employee at 30 September each year which is the time of vesting.

Performance conditions : for the period ended 30 June 2006 at least meet the forecast distribution per security per the PDS/Prospectus dated 11 May 2005 and at least 5% growth in like for like distributions per security for each of the years ended 30 June 2007 and 30 June 2008.

Vesting conditions : securities may vest in three tranches. Subject to the satisfaction of the performance and service conditions above, one-third of the securities provided under the plan may vest after the end of the forecast period and onethird will vest after 30 June 2007 and one-third after 30 June 2008.

Loans totalling $6,200,000 under the 2005 offer were provided by Charter Hall Limited to participants.

Charter Hall Group Directors' report 30 June 2007 (continued)

2006 Offers: issued 6,299,212 securities on 3 July 2006 at $1.27 per security, 352,564 securities on 5 October at $1.56, 807,453 securities on 16 October 2006 at $1.61, 50,000 securities on 15 December 2006 at $2.00 and 202,428 securities on 7 March 2006 at $2.47.

Performance conditions : for the period ended 30 June 2007 at least meet the forecast distribution per security per the PDS/Prospectus dated 19 May 2006 and at least 5% growth in like for like distributions per security for each of the years ended 30 June 2008 and 30 June 2009.

Vesting conditions : securities will vest in three tranches. Subject to the satisfaction of the performance and service conditions above, one-third of the securities provided under the plan will vest after the end of the forecast period and onethird will vest after 30 June 2008 and one-third after 30 June 2009.

Loans totalling $10,449,997 under the offer were provided by Charter Hall Limited to participants.

2007 Offer: issued 10,041,015 securities on 2 July 2007 at $2.76 per security.

Performance conditions : for the period ended 30 June 2008 at least meet the Board approved budgeted DPS and at least 5% growth in like for like distributions per security for each of the years ended 30 June 2009 and 30 June 2010.

Vesting conditions : securities will vest in three tranches. Subject to the satisfaction of the performance and service conditions above, one-third of the securities provided under the plan will vest after the end of the 30 June 2008, one-third will vest after 30 June 2009 and one-third after 30 June 2010.

Loans totalling $27,713,201 under the offer were provided by Charter Hall Limited to participants.

The executive directors of Charter Hall Group and other key management personnel of the Group received the following vested securities during the period from the company’s employee security scheme:

	LSP Securities	LSP Securities	LSP Securities	LSP Securities		LSP Securities
	Issued in	Issued in	Issued in	Forfeited in	Total	Vested
Name	2005	2006	2007	2007	securities	in 2007
*Executive Directors*
A Biet	1,050,000	-	-	(700,000)	350,000	350,000
C Fuchs	1,050,000	393,700	362,319*	-	1,806,019	350,000
D Harrison	1,475,000	1,161,417	2,717,391*	-	5,353,808	491,667
D Southon	1,475,000	1,118,110	2,717,391*	-	5,310,501	491,667
*Key management*
*personnel*
M Winnem	-	236,220	289,855	-	526,075	N/A
R Champion	N/A	N/A	326,087	-	326,087	N/A

* Subject to securityholder approval at the 2007 AGM

Andre Biet’s securities were forfeited when he became a non-executive director as the service criteria could not be met as a non-executive director.

E Additional information (unaudited)

Loans to directors and executives

Information on loans to directors and executives, including amounts, interest rates and repayment terms are set out in note 29 to the financial statements.

Insurance of officers

During the period, Charter Hall Group paid a premium of $163,809 (2006: $65,425) to insure the director and secretaries of the company and its Australian-based controlled entities.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Charter Hall Group Directors' report 30 June 2007 (continued)

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001.

Non-audit services

The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the company and/or the Group are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the period are set out below.

The board of directors has considered the position and, in accordance with the advice received from the audit, risk and compliance committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed by the audit, risk and compliance committee to ensure they do not impact the impartiality and objectivity of the auditor.
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants , including reviewing or auditing the auditor's own work, acting in a management or a decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.

During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

(a) Assurance services Audit services PricewaterhouseCoopers Australian firm Audit and review of financial reports and other audit work under the Corporations Act 2001 Non-PricewaterhouseCoopers audit firms for the audit or review of financial reports of any entity in the Group Total remuneration for audit services Other assurance services PricewaterhouseCoopers Australian firm Investigating Accountants Reports – IPO / equity raising Total remuneration for other assurance services Total remuneration for assurance services (b) Taxation services PricewaterhouseCoopers Australian firm Tax compliance services, including review of company income tax returns Tax advice on IPO / equity raising Total remuneration for taxation services (c) Advisory services PricewaterhouseCoopers Australian firm Long term incentive plan structure Legal advice Total remuneration for advisory services	Consolidated Parent entity 2007 2006 2007 2006 $ $ $ $ 207,887 157,500 - - 33,290 29,000 - -
	241,177 186,500 - -
	- 446,577 - -
	- 446,577 - -
	241,177 633,077 - -
	37,610 52,700 - 10,000 97,123 200,622 - -
	134,733 253,322 - 10,000
	38,500 - - - - 42,123 - -
	38,500 42,123 - -

Charter Hall Group Directors' report 30 June 2007 (continued)

Auditors’ independence declaration

A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 16.

Rounding of amounts

The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the directors' report. Amounts in the directors' report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors.

==> picture [134 x 39] intentionally omitted <==

K Roxburgh Chairman Sydney

20 August 2007

PricewaterhouseCoopers ABN 52 780 433 757

Auditors' Independence Declaration

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

As lead auditor for the audit of Charter Hall Group for the period ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Charter Hall Group comprising Charter Hall Limited, and the entities it controlled during the period, including Charter Hall Property Trust.

==> picture [112 x 60] intentionally omitted <==

B K Hunter Partner

Sydney 20 August 2007

Liability limited by a scheme approved under Professional Standards Legislation

Charter Hall Group Corporate Governance Statement 30 June 2007 (continued)

Corporate governance statement

The Group reviews its corporate governance framework on an ongoing basis. This review takes into account best practice recommendations of the Australian Securities Exchange (ASX) Corporate Governance Council. The appropriate practice recommendations have been adopted so as to reflect the Group’s commitment to the highest standards of corporate governance practice.

This Corporate Governance Statement has been prepared in a manner consistent with the reporting recommendations of the ASX. Additional corporate governance information may be found on the Group’s website www.charterhall.com.au or by contacting the Chief Financial Officer.

Board of Directors

The Board is comprised of 9 members appointed with a view to providing appropriate skills and experience likely to add value to the Group’s activities.

Name	Position	Independent (Yes/No)	First Appointed
KerryRoxburgh	Chairman	Yes	12 April 2005
RoyWoodhouse	Deputy Chairman	No	6April 2005
AndréBiet	Non-ExecutiveDirector	No	6April 2005
Cedric Fuchs	Executive Director	No	6 April 2005
PatriceDerrington	Non-ExecutiveDirector	Yes	6April 2005
Glenn Fraser	Non-ExecutiveDirector	No	6April 2005
Colin McGowan	Non-ExecutiveDirector	Yes	6April 2005
DavidHarrison	JointManagingDirector	No	30August2006
David Southon	JointManagingDirector	No	30August2006

The Board operates in accordance with a formal charter which establishes its duties and responsibilities.

Details of the Directors’ qualifications, experience, other responsibilities, number of meetings attended and holdings of Securities in the Group can be found in the Directors Report.

Directors’ Independence

The Board has adopted specific principles in relation to determining directors’ independence. These principles are subject to specific materiality tests which are determined on both quantitative and qualitative bases. An amount exceeding 5% of annual turnover of the Group or 5% of a director’s net worth, is considered material for this purpose. Furthermore, any transaction and all relationships are deemed material if they impact a security holder’s understanding of a director’s performance.

Independent Advice

The terms of each Director’s letter of appointment permits him or her to seek independent professional advice, including, but not limited to, legal, accounting and financial advice, at the Group’s expense or any matter connected with the discharge of his or her responsibilities. The cost, nature and details of such advice must first be approved by the Chairman.

Security Trading Policy

The Group has in place a formal Security Trading Policy which regulates the manner in which Directors and employees can buy or sell Securities in the Group. It requires that they conduct their personal investment activities in a manner that is lawful and avoids conflicts between their own interests and those of the Group.

The policy specifies trading windows as the periods during which trading Securities can occur. Trading is prohibited despite a window being open if the relevant person is in procession of non-public price sensitive information regarding the Group.

A copy of the Security Trading Policy is available on the Group’s website.

Audit, Risk and Compliance Committee

The Audit Risk and Compliance Committee assists the Board in fulfilling its corporate governance and oversight responsibilities relating to financial accounting practices, risk management and internal control systems, external reporting, compliance and the external audit function.

The Committee is comprised of Patrice Derrington (Chair), Kerry Roxburgh and Glenn Fraser, who are all non executive Directors. The members have comprehensive financial and property industry expertise. The Committee met on five occasions during the year to 30 June 2007. Please refer to the Directors Report for information on attendance by members.

A copy of the Audit, Risk and Compliance Committee Charter is available on the Group’s website.

Charter Hall Group Corporate Governance Statement 30 June 2007

(continued)

Continuous Disclosure Policy

The Group has a Continuous Disclosure Policy consistent with the continuous disclosure obligations of the ASX and Corporations Act. The policy is designed to ensure that all investors have equal and timely access to information concerning the Group, and to ensure that price-sensitive information from any part of the Group is immediately notified to the ASX in a complete, balanced and timely manner.

A copy of the Continuous Disclosure Policy is available on the Group’s website.

Communication with Investors

The Group is committed to communicating with its investors in an effective and timely manner so as to provide them with ready access to information relating to the Group. In addition to the Continuous Disclosure Policy, the Group maintains a website (www.charterhall.com.au) providing access to information likely to be of interest to security holders. The Group encourages security holders to utilise its website as their primary tool to access information and disclosures.

Risk Management

The Board, through the Audit, Risk and Compliance Committee, ensures that strategic, operational, legal, reputation and financial risks are identified, effectively assessed, and efficiently managed and monitored so as to achieve the Group’s objectives.

Considerable importance is placed on maintaining a strong control environment through an organisation structure with clearly drawn lines of accountability and authority. Adherence to the Code of Conduct is required at all times and the Board actively promotes a culture of honesty and integrity.

At this point in time the Directors are of the opinion that the size of the Group does not warrant an internal audit function. This policy is subject to ongoing review.

Performance Evaluation

Board members are subject to an annual self-assessment of their performance. The performance of all levels of management is conducted annually in conjunction with remuneration reviews undertaken by the Remuneration Committee and Joint Managing Directors.

On 21 August 2006 the Board resolved to establish the Nominations Committee which has a Charter to assess the competency of Board members, review the succession plans that are in place and review the performance of the Board. The Committee consists of the Chairman Kerry Roxburgh, Roy Woodhouse and Colin McGowan.

Remuneration

The Board has established a Remuneration Committee to assist it in achieving fairness and transparency in relation to remuneration issues and overseeing the remuneration and human resource policies and practices of the Group. The Remuneration Committee endeavours to ensure that the Group’s remuneration policies and outcomes strike an appropriate balance between the interests of investors and rewarding and motivating the Group’s management.

Fees paid to Non-Executive Directors are set by the Board, within an aggregate limit set by security holders. The total remuneration paid to Non-Executive Directors to 30 June 2007 is set out in the Remuneration Report.

Directors’ fees are reviewed annually and are benchmarked against fees paid to Directors of similar organisations.

Non-Executive Directors are not provided with retirement benefits other than statutory superannuation and do not participate in staff security plans, receive options or bonus payments.

The Remuneration Committee comprises three non-executive directors being Kerry Roxburgh (Chairman), Colin McGowan and Roy Woodhouse (please refer to the Directors Report for information on the number of meetings and the attendance by members). A copy of the Remuneration Committee Charter is available on the Group’s website.

Recognition of the Interest of Stakeholders

The Group recognises the need to observe the highest standards of corporate practice and business conduct. In order to ensure that these standards are met, the Group has established a formal Code of Conduct which forms the basis for ethical behaviour by all Group personnel and is the framework that provides the foundation for maintaining and enhancing the Group’s reputation. The objective of the Code is to ensure that employees, suppliers, clients, competitors and the community in general can be confident that the Group conducts its affairs honestly in accordance with ethical values and practices.

All employees of the Group are required to comply with both the spirit as well as the letter of the relevant laws which govern the operations of the Group.

Charter Hall Group Financial report 30 June 2007

Contents	Page
Financial report
Income statements	20
Balance sheets	21
Statements of changes in equity	22
Cash flow statements	23
Notes to the financial statements	24
Directors' declaration	65
Independent audit report to the members	66

Charter Hall Group Income Statements

For the year ended 30 June 2007

Notes Revenue from continuing operations 5 Other income 6 Investment property expenses Employee benefits expense Depreciation 7 Other expenses Finance costs 7 Share of net profit/(loss) of associates accounted for using the equity method Net gain/(loss) on financial assets held by Charter Hall Limited 12 Net profit/(loss) from fair value adjustments Profit/(loss) before income tax Income tax gain / (expense) 8 Net profit/(loss) after income tax attributable to stapled security holders of Charter Hall Group Attributable to: Equity holders of Charter Hall Limited Equity holders of Charter Hall Property Trust (minority interest) Profit/(loss) attributable to stapled security holders of Charter Hall Group Group earnings per stapled security Basic earnings per security 37 Diluted earnings per security 37	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 60,829 37,812 4,089 4,500 35 8 - - (7,120) (5,065) - - (9,893) (5,553) - - (197) (94) - - (4,084) (3,628) (82) (21) (6,496) (5,929) (14,163) (7,813) 287 (22) - - - - 287 (22)
	33,361 17,529 (9,869) (3,356) 11,493 (5,564) - -
	44,854 11,965 (9,869) (3,356) (1,686) 430 3,540 1,764
	43,168 12,395 (6,329) (1,592) 1,239 868 (6,329) (1,592) 41,929 11,527 - -
	43,168 12,395 (6,329) (1,592)
	Cents Cents 12.00 4.61 11.94 4.65

The above income statements should be read in conjunction with the accompanying notes.

Charter Hall Group Balance sheets As at 30 June 2007

Notes ASSETS Current assets Cash and cash equivalents 9 Trade and other receivables 10 Financial assets available for sale 11 Deferred tax assets 19 Total current assets Non-current assets Trade and other receivables 14 Investments accounted for using the equity method 15 Financial assets at fair value through the profit and loss 12 Other financial assets 16 Property, plant and equipment 17 Investment properties 18 Derivative financial instruments 13 Deferred tax assets 19	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 26,507 168,370 168 1,151 26,564 30,529 - 1 218 5,120 - 5,050 641 642 2,843 -
	53,930 204,661 3,011 6,202
	7,405 4,153 12,424 4,153 760 497 - - 149,945 3,988 760 497 - 3,240 1,600 1,600 1,355 307 - - 430,701 284,788 - - 5,345 2,482 - - 642 642 2,844 1,929 295 300 295 294
Other assets
Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables 20 Provisions 21 Total current liabilities Non-current liabilities Borrowings 22 Deferred tax liabilities 23 Provisions 24 Total non-current liabilities Total liabilities Net assets EQUITY Equity holders of Charter Hall Limited Contributed equity 25 Reserves 26(a) Retained profits / (accumulated losses) 26(b) Parent entity interest Equity holders of Charter Hall Property Trust (minority interest) 27 Total equity	596,448 300,397 17,923 8,473
	650,378 505,058 20,934 14,675
	28,043 84,454 5 9,691 149 48 - -
	28,192 84,502 5 9,691
	158,572 140,119 75,351 55,050 2,562 884 368 155 41 83 - -
	161,175 141,086 75,719 55,205
	189,367 225,588 75,724 64,896
	461,011 279,470 (54,790) (50,221)
	5,131 3,371 5,131 3,371 (50,952) (51,835) (52,000) (52,000) 207 (2,576) (7,921) (1,592)
	(45,614) (51,040) (54,790) (50,221) 506,625 330,510 - -
	461,011 279,470 (54,790) (50,221)

The above balance sheets should be read in conjunction with the accompanying notes.

Charter Hall Group Statements of changes in equity

For the period 1 July 2006 to 30 June 2007

		Consolidated	Consolidated	Parent	entity
		2007	2006	2007	2006
	Notes	$'000	$'000	$'000	$'000
Total equity at the beginning of the period		279,470	-	(50,221)	-
Changes in the fair value of cash flow hedges, net of tax	13,26	(1,340)	2,482	-	-
Net loss recognised directly in equity		(1,340)	2,482	-	-
Profit / (loss) for the period		43,168	12,395	(6,329)	(1,592)
Total recognised income and expense for the period		41,828	14,877	(6,329)	(1,592)
Foreign currency reserve movement	26	22	-	-	-
Business combination reserve movement	26	-	(52,000)	-	(52,000)
Movement in reserves		22	(52,000)	-	(52,000)
Transactions with equity holders in their capacity as equity
holders:
Contributions of equity, net of transaction costs *	25	177,138	336,459	1,760	3,371
Distributions provided for or paid *	28	(38,072)	(20,031)	-	-
Other		(254)	-	-	-
Security based payments reserve	26	883	165	-	-
		139,691	316,593	1,760	3,371
Total equity at the end of the period		461,011	279,470	(54,790)	(50,221)

Total recognised income and expense for the period
Equity holders of Charter Hall Limited		1,238	(2,576)	(6,329)	(1,592)
Equity holders of Charter Hall Property Trust (minority interest)		40,590	17,453	-	-
		41,828	14,877	(6,329)	(1,592)

The equity and distributions for Charter Hall Limited and Charter Hall Property Trust are combined as the two entities are stapled together and have the same investors. As outlined in note 1, for accounting purposes, equity attributable to Charter Hall Property Trust is considered attributable to minority interest. Refer to note 27 for a breakdown of the minority interest in equity.

The above statement of changes in equity should be read in conjunction with the accompanying notes.

Charter Hall Group Cash flow statements

For the year ended 30 June 2007

Consolidated Parent entity 2007 2006 2007 2006 Notes $'000 $’000 $'000 $’000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 78,099 44,995 5,050 1,381 Payments to suppliers and employees (inclusive of goods and services tax) (43,380) (28,534) (77) (608) 34,719 16,461 4,973 773 Interest paid (6,506) (5,054) (14,163) (4,580) Income taxes paid - (10) - - Net cash inflow / (outflow) from operating activities 36 28,213 11,397 (9,190) (3,807) Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired (9,691) (39,129) (9,691) (41,303) Payments for property, plant and equipment (1,244) (108) - - Payments for investment property (248,173) (290,352) - - Payments for other financial assets - (8,320) - (5,050) Loans to key employees (2,936) (3,877) (2,936) (3,877) Investment in associates (134,091) (4,417) (875) (529) Fund establishment costs for CHOF4 & CPOF - (2,614) - - Loans from related parties - - - 48,947 Loans to associates (9,081) (544) - - Loans to subsidiaries - - (5,019) - Dividends received - - 4,222 3,000 Distributions received 2,931 194 - 10 Interest received 5,043 5,615 450 429	Consolidated Parent entity 2007 2006 2007 2006 Notes $'000 $’000 $'000 $’000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 78,099 44,995 5,050 1,381 Payments to suppliers and employees (inclusive of goods and services tax) (43,380) (28,534) (77) (608) 34,719 16,461 4,973 773 Interest paid (6,506) (5,054) (14,163) (4,580) Income taxes paid - (10) - - Net cash inflow / (outflow) from operating activities 36 28,213 11,397 (9,190) (3,807) Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired (9,691) (39,129) (9,691) (41,303) Payments for property, plant and equipment (1,244) (108) - - Payments for investment property (248,173) (290,352) - - Payments for other financial assets - (8,320) - (5,050) Loans to key employees (2,936) (3,877) (2,936) (3,877) Investment in associates (134,091) (4,417) (875) (529) Fund establishment costs for CHOF4 & CPOF - (2,614) - - Loans from related parties - - - 48,947 Loans to associates (9,081) (544) - - Loans to subsidiaries - - (5,019) - Dividends received - - 4,222 3,000 Distributions received 2,931 194 - 10 Interest received 5,043 5,615 450 429	Consolidated Parent entity 2007 2006 2007 2006 Notes $'000 $’000 $'000 $’000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 78,099 44,995 5,050 1,381 Payments to suppliers and employees (inclusive of goods and services tax) (43,380) (28,534) (77) (608) 34,719 16,461 4,973 773 Interest paid (6,506) (5,054) (14,163) (4,580) Income taxes paid - (10) - - Net cash inflow / (outflow) from operating activities 36 28,213 11,397 (9,190) (3,807) Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired (9,691) (39,129) (9,691) (41,303) Payments for property, plant and equipment (1,244) (108) - - Payments for investment property (248,173) (290,352) - - Payments for other financial assets - (8,320) - (5,050) Loans to key employees (2,936) (3,877) (2,936) (3,877) Investment in associates (134,091) (4,417) (875) (529) Fund establishment costs for CHOF4 & CPOF - (2,614) - - Loans from related parties - - - 48,947 Loans to associates (9,081) (544) - - Loans to subsidiaries - - (5,019) - Dividends received - - 4,222 3,000 Distributions received 2,931 194 - 10 Interest received 5,043 5,615 450 429
		34,719 16,461 4,973 773 (6,506) (5,054) (14,163) (4,580) - (10) - -
		28,213 11,397 (9,190) (3,807)
		(9,691) (39,129) (9,691) (41,303) (1,244) (108) - - (248,173) (290,352) - - - (8,320) - (5,050) (2,936) (3,877) (2,936) (3,877) (134,091) (4,417) (875) (529) - (2,614) - - - - - 48,947 (9,081) (544) - - - - (5,019) - - - 4,222 3,000 2,931 194 - 10 5,043 5,615 450 429
Interest received
Net cash (outflow) inflow from investing activities Cash flows from financing activities Proceeds from issues of securities and other equity securities Proceeds from CPOF investors for units to be issued Proceeds from borrowings Security issue and buy-back transaction costs Distributions paid to security holders Net cash inflow (outflow) from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at end of period 9		(397,242) (343,552) (13,849) 1,627
		201,584 319,479 1,755 3,443 (58,318) 58,275 - - 116,357 140,062 20,301 - (4,621) (7,442) - (112) (27,836) (9,849) - -
		227,166 500,525 22,056 3,331
		(141,863) 168,370 (983) 1,151 168,370 - 1,151 -
		26,507 168,370 168 1,151

The above cash flow statements should be read in conjunction with the accompanying notes.

Charter Hall Group Notes to Financial Statements 30 June 2007

Contents of the notes to the financial statements

		Page
1	Summary of significant accounting policies	25
2	Financial risk management	33
3	Critical accounting estimates and judgements	34
4	Segment information	34
5	Revenue	36
6	Other income	36
7	Expenses	36
8	Income tax expense	37
9	Current assets - Cash and cash equivalents	38
10	Current assets - Trade and other receivables	38
11	Current assets - Financial assets	39
12	Current assets - Other financial assets at fair value through profit and loss	39
13	Derivative financial instruments	39
14	Non-current assets - Trade and other receivables	40
15	Non-current assets - Investments accounted for using the equity method	41
16	Non-current assets - Other financial assets	42
17	Non-current assets - Property, plant and equipment	42
18	Non-current assets - Investment properties	42
19	Non-current assets - Deferred tax assets	44
20	Current liabilities - Trade and other payables	44
21	Current liabilities - Provisions	44
22	Non-current liabilities - Borrowings	45
23	Non-current liabilities - Deferred tax liabilities	47
24	Non-current liabilities - Provisions	47
25	Contributed equity	48
26	Reserves and retained profits	50
27	Minority interest	51
28	Distributions	51
29	Key management personnel disclosures	52
30	Remuneration of auditors	55
31	Commitments	55
32	Related party transactions	56
33	Subsidiaries	58
34	Investments in associates	59
35	Events occurring after the balance sheet date	61
36	Reconciliation of profit after income tax to net cash inflow from operating activities	62
37	Earnings per security	62
38	Security-based payments	64

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. The financial report includes separate financial statements for Charter Hall Limited (CHL) as an individual entity and the consolidated entity consisting of CHL and its subsidiaries and controlled entities including Charter Hall Funds Management Limited as Responsible Entity for Charter Hall Property Trust (CHPT). For the purposes of AASB Interpretation 1002 Post date of transition stapling arrangements (AASB I – 1002), CHL has been identified as the parent entity in relation to the stapling that occurred on 6 June 2005 which is the date of the initial public offering (IPO). CHL was incorporated on 24 March 2005 so the comparative period of the parent company in this financial report is from 24 March 2005 to 30 June 2006. In accordance with AASB I - 1002 the results and equity, not directly owned by CHL, of CHPT have been treated and disclosed as minority interest. Whilst the results and equity of CHPT are disclosed as minority interest, the stapled security holders of CHL are the same as the stapled security holders of CHPT.

On 6 June 2005 CHL acquired Charter Hall Holdings Pty Ltd (CHH). Under the terms of AASB 3 Business Combinations CHH was deemed to be the accounting acquirer in this business combination. This transaction has therefore been accounted for as a reverse acquisition under AASB 3. Accordingly the consolidated financial statements of CHG have been prepared as a continuation of the consolidated financial statements of CHH. CHH as the deemed acquirer, has acquisition accounted for CHL as at 6 June 2005.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRSs

Australian Accounting Standards include AIFRSs. Compliance with AIFRSs ensures that the financial report complies with International Financial Reporting Standards (IFRSs) in accordance with AASB 101 Presentation of financial statements .

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment property, financial assets and liabilities (derivative financial instruments) at fair value through the profit and loss.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Charter Hall Limited (''company'' or ''parent entity'') including CHPT, as at 30 June 2007 and the results of all subsidiaries for the period then ended. Charter Hall Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(g)).

Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of identifiable net assets of the subsidiary.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction involves impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Charter Hall Limited.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

(ii) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the parent entity financial statements as financial assets at fair value through the profit and loss and in the consolidated financial statements using the equity method of accounting except as noted below, after initially being recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition (refer to note 34).

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised in the parent entity’s income statement, while in the consolidated financial statements they reduce the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in associates held by CHPT are accounted for as financial assets at fair value through the profit and loss. Investments are initially and in subsequent periods carried at fair value. Gain or losses arising from changes in the fair value of the “financial assets at fair value through the profit or loss” category are presented in the income statement within fair value gains / (losses) in the period in which they arise. Distribution income from financial assets accounted at fair value through the profit and loss is recognised in the income statement as part of revenue.

(c) Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

(d) Foreign currency translation

(i) Functional and presentation currency The financial statements are presented in Australian Dollars which is Charter Hall Limited’s functional and presentation currency.

(ii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
income and expenses for each income statement are translated at average exchange rates; and
all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings are taken to a separate component of equity.

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the major business activities as follows:

(i) Rental income

Rental income from operating leases is recognised on a straight-line basis over the lease term. Rental income relating to straight lining is included as a component of the net gain from fair value adjustments on investment property. An asset is recognised to represent the portion of operating lease income in a reporting period relating to fixed increases in operating lease rentals in future periods. Such assets are recognised as a component of the carrying amount of investment properties in the balance sheet.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

(ii) Management fees Management fees are brought to account on an accruals basis and, if not received at the balance sheet date are reflected in the Balance sheet as a receivable. In the case of performance fees receivable a judgement on the likelihood of receipt is made under a percentage of completion basis method based on the actual service provided as a percentage of the services to be provided.

Where management fees are derived in respect of an acquisition or disposal of property the fees are recognised where it is probable that criteria for entitlement will be met.

(iii) Interest income Interest income is recognised on a time proportion basis using the effective interest method, see note 1(k). When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

(iv) Dividends

Dividends are recognised as revenue when the right to receive payment is established.

(f) Income tax

The period’s income tax expense or revenue is the tax payable on the current period’s taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Tax consolidation legislation

On 22 August 2005 Charter Hall Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation.

The head entity, Charter Hall Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, Charter Hall Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group. Details about the tax funding agreement are disclosed in note 8.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

(g) Business combinations

The purchase method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, securities issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group's share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

(h) Impairment of assets

Assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(j) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 30 days from the date of recognition.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.

(k) Investments and other financial assets

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for long term investment. Their treatment is discussed at Note 1b(ii). Derivatives are also categorised as held for trading unless they are designated as hedges.

(ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet (notes 10 and 14).

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity.

(iv) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

Regular purchases and sales of investments are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category, excluding interest and dividend income, are presented in the income statement within other income or other expenses in the period in which they arise.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.

(l) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either; (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges).

The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative financial instruments used for hedging purposes are disclosed in note 13. Movements in the hedging reserve in securityholders' equity are shown in note 26.

(i) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within other income or other expense.

Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement within ‘finance costs’. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

(ii) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement and are included in fair value adjustment gains / (losses). The fair value previously recognised for hedges which are no longer effective is amortised over the remaining period of the hedge.

(m) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

(n) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

Furniture, fittings and equipment 3-8 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(h)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

(o) Investment property

(i) Investment properties

Investment properties comprise investment interests in land and buildings held for long-term rental yields and not occupied by the Group. Investment property is carried at fair value, which is based on active market prices, adjusted, if necessary, for any differences in the nature, location and condition of the specific asset. The group aims to have properties valued externally on a regular basis.

The carrying amount of investment properties recorded in the balance sheet includes components relating to lease incentives and assets relating to fixed increases in operating lease rentals in future periods. Changes in fair values are recorded in the income statement as part of fair value adjustments.

(ii) Investment properties under development

Investment properties under development are valued at the lower of cost and recoverable amount. An independent valuation is undertaken at practical completion of each investment property in order to assess the completion value.

(p) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of period which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

(q) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(r) Borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

(s) Provisions

Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

(t) Employee benefits

(i) Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave Liabilities for other employee entitlements which are not expected to be paid or settled within 12 months of balance date are accrued in respect of all employees at present values of future amounts expected to be paid, based on a projected weighted average increase in wage and salary rates. Expected future payments are discounted using interest rates on national government securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

(iii) Retirement benefit obligations Contributions to employee defined contribution superannuation funds are recognised as an expense as they become payable.

(iv) Security-based payments

Security-based compensation benefits are provided to employees via the Charter Hall Limited Executive Loan Security Plan. Information relating to these schemes is set out in note 38.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the security price at grant date and expected price volatility of the underlying security, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the securities granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of securities that are expected to vest. At each balance sheet date, the entity revises its estimate of the number of securities that are expected to vest. The employee benefit expense recognised each period takes into account the most recent estimate.

Upon the vesting of securities, the balance of the security-based payments reserve relating to those securities is transferred to equity and the proceeds received, net of any directly attributable transaction costs, are credited to equity.

(v) Bonus plans The Group recognises a liability and an expense. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(u) Contributed equity

Ordinary stapled securities are classified as equity. Incremental costs directly attributable to the issue of new securities or options are shown in equity as a deduction, net of tax, from the proceeds.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

(v) Distributions

Provision is made for the amount of any distribution or dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the period but not distributed at balance date.

(w) Earnings per security

(i) Basic earnings per security Basic earnings per security is calculated by dividing the profit attributable to equity holders of CHG, excluding any costs of servicing equity other than ordinary stapled securities, by the weighted average number of ordinary securities outstanding during the period, adjusted for bonus elements in ordinary stapled securities issued during the year.

(ii) Diluted earnings per security Diluted earnings per security adjusts the figures used in the determination of basic earnings per stapled security to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary securities and the weighted average number of stapled securities assumed to have been issued in relation to dilutive potential stapled securities.

(x) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

(y) Rounding of amounts

The company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(z) New accounting standards and UIG interpretations

Certain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038] AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The Group has not adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Group’s financial instruments.

(ii) Revised AASB 101 Presentation of Financial Statements A revised AASB 101 was issued in October 2006 and is applicable to annual reporting periods beginning on or after 1 January 2007. The Group has not adopted the standard early. Application of the revised standard will not affect any of the amounts recognised in the financial statements.

(iii) AASB-I 11 AASB 2 - Group and Treasury Share Transactions and AASB 2007-1 Amendments to Australian Accounting Standards arising from AASB Interpretation 11 AASB-I 11 and AASB 2007-1 are effective for annual reporting periods commencing on or after 1 March 2007. AASB-I 11 addresses whether certain types of share-based payment transactions should be accounted for as equity-settled or as cash settled transactions and specifies the accounting in a subsidiary’s financial statements for share-based payment arrangements involving equity instruments of the parent. The Group will apply AASB-I 11 from 1 July 2007, but it is not expected to have any impact on the Group's financial statements.

(iv) AASB 8 Operating Segments and AASB 2007-3

Amendments to Australian Accounting Standards arising from AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a "management approach" to reporting on the financial performance. The information being reported will be based on what the key decision-makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. The Group has not yet decided when to adopt AASB 8. Application of AASB 8 may result in different segments, segment results and different type of information being reported in the segment note of the financial report. However, it will not affect any of the amounts recognised in the financial statements.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

1 Summary of significant accounting policies (continued)

(iv) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12] The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the option to expense all borrowing costs and - when adopted - will require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. This is consistent with the Group’s current accounting policy. The Group will apply the revised AASB 123 from 1 July 2009 and capitalise its borrowing costs relating to all qualifying assets for which the commencement date for capitalisation is on or after this date. There is not expected to be an impact on the financial statements in the first year of application.

(aa) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 31). Payments made under operating leases are charged to the income statement on a straight-line basis.

Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

(ab) Going concern

Although the parent entity shows net liabilities there is no reason to believe that it will not be able to pay its liabilities as and when they fall due. The deficiency relates to a debit to a business combination reserve as a result of $52m paid by CHL to acquire Charter Hall Holdings Pty Ltd.

2 Financial risk management

The Group's activities expose it to a variety of financial risks; market risk (fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as interest rate swaps to hedge certain risk exposures.

Risk management is carried out by the Joint Managing Directors in discussion with the Board of Directors. The Managing Directors identify, evaluate and hedge financial risks in close co-operation with the finance department. The Board provides guidance for overall risk management, as well as covering specific areas, such as mitigating interest rate, price and credit risks, use of derivative financial instruments and investing excess liquidity.

(a) Market risk

(i) Price risk

The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the balance sheet as at fair value through the profit or loss.

(ii) Fair value interest rate risk Refer to (d) below.

(b) Credit risk

The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of services are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the amount of credit exposure to any one financial institution.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available.

(d) Cash flow and fair value interest rate risk

As the Group has no significant long term interest-bearing assets, the Group’s income and operating cash flows are not materially exposed to changes in market interest rates.

The Group's interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk. Group policy is to fix the rates for up to 100% of its long term borrowings (when appropriate). At year end 70% of debt had fixed rates.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

2 Financial risk management (continued)

The Group manages its cash flow interest-rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest-rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts.

3 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates or assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Estimated value of investments

Critical judgements are made by the Group in respect of the fair value of investments in associates (Note 12) and investment properties (Note 18). These investments are reviewed regularly for impairment by reference to external independent property valuations and market conditions, using generally accepted market practices.

4 Segment Information

(a) Description of segments Business segments

The consolidated entity is organised into the following divisions:

Property investment

Has interests in investment properties and unlisted funds.

Funds management and corporate

Responsible for funds management, development management, property investment banking and property management.

2007 Revenue Intersegment sales (note (ii)) Total sales revenue Share of net profit of associates (note (iii)) Total segment revenue/income Segment result before interest expense Interest expense Segment result after interest expense Fair value adjustments Profit before income tax Income tax expense Profit for the period Segment assets Segment liabilities (note (ii)) Investments in associates (note (iii)) Acquisitions of plant and equipment and other non-current segment assets Depreciation and amortisation expense Non-cash expenses	Property Investment Funds management and corporate Inter-segment eliminations/ unallocated Consolidated $'000 $'000 $'000 $'000 49,379 25,648 (14,163) 60,864 - 1,997 (1,997) -
	49,379 27,645 (16,160) 60,864 - 287 - 287
	49,379 27,932 (16,160) 61,151
	41,005 14,307 (15,455) 39,857 (6,496) (14,163) 14,163 (6,496)
	34,509 144 (1,292) 33,361 7,363 2,838 1,292 11,493
	41,872 2,982 - 44,854 57 (1,743) - (1,686)
	41,929 1,239 - 43,168
	690,301 36,740 (76,663) 650,378 184,170 81,860 (76,663) 189,367 142,096 760 - 142,856 145,913 1,245 - 147,158 - (197) - (197) - (883) - (883)

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

4 Segment information (continued)

2006 Revenue Intersegment sales (note (ii)) Total sales revenue Share of net loss of associates (note (iii)) Total segment revenue/income Segment result before interest expense Interest expense Segment result after interest expense Fair value adjustments Profit/(loss) before income tax Income tax expense Profit for the period Segment assets Segment liabilities (note (ii)) Investments in associates (note (iii)) Acquisitions of plant and equipment and other non-current segment assets Depreciation and amortisation expense Non-cash expenses	Property Investment Funds management and corporate Inter-segment eliminations/ unallocated Consolidated $'000 $'000 $'000 $'000 31,769 13,864 (7,813) 37,820 - 1,589 (1,589) -
	31,769 15,453 (9,402) 37,820 - (22) - (22)
	31,769 15,431 (9,402) 37,798
	25,978 6,350 (8,870) 23,458 (5,929) (7,813) 7,813 (5,929)
	20,049 (1,463) (1,057) 17,529 (6,621) - 1,057 (5,564)
	13,428 (1,463) - 11,965 - 430 - 430
	13,428 (1,033) - 12,395
	484,458 20,823 (223) 505,058 159,191 66,620 (223) 225,588 3,888 497 - 4,385 288,028 307 - 228,335 - (94) - (94) - (165) - (165)

(b) Notes to and forming part of the segment information

(i) Accounting policies

Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 1 and accounting standard AASB 114 Segment Reporting.

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, investment properties, property, plant and equipment net of related provisions. While most of these assets can be directly attributable to individual segments, the carrying amounts of certain assets used jointly by segments are allocated based on reasonable estimates of usage. Segment liabilities consist primarily of trade and other creditors, employee benefits and provisions. Segment assets and liabilities include income taxes.

(ii) Inter-segment transfers

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an ''arm’s-length'' basis and are eliminated on consolidation.

(iii) Investments in associates

The Group owns approximately 11.7% of Charter Hall Diversified Property Fund, 23.0% of Charter Hall Core Plus Office Fund, 32.1% of Charter Hall Core Plus Industrial Fund and 47.3% of Charter Hall Umbrella Fund which are all accounted for at fair value and are allocated to the property investment segment. Investments of 3.03% in Charter Hall Opportunity Fund No 4 and 20.0% in Charter Hall Opportunity Fund No 5 are equity accounted and allocated to the funds management and corporate segment.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

5 Revenue

Sales revenue Gross rental income Management and performance fees Other revenue Other revenue Interest Distributions	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000 26,726 18,354 - - 24,977 12,637 - 585 - 745 - 210
	51,703 31,736 - 795
	5,043 5,892 766 705 4,083 184 3,323 3,000
	60,829 37,812 4,089 4,500

6 Other income

6 Other income
Other	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000 35 8 - -
	35 8 - -

7 Expenses

Profit before income tax includes the following specific expenses:

Depreciation Plant and equipment Finance costs Interest and finance charges paid/payable Defined contribution superannuation expense Rent expense relating to operating leases Minimum lease payments

Consolidated	Consolidated	Parent	entity
2007	2006	2007	2006
$'000	$'000	$'000	$'000
197	94	-	-
6,496	5,929	14,163	7,813
654	453	-	-
349	329	-	-

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

8 Income tax expense

(a) Income tax expense / (gain) Current tax Deferred tax Under provided in prior years Deferred income tax (revenue) expense included in income tax expense comprises: Decrease (increase) in deferred tax assets (note 19) (Decrease) increase in deferred tax liabilities (note 23) (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax expense Tax at the Australian tax rate of 30% Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Charter Hall Property Trust income Entertainment Interest on LTI securities excluded from accounts Reversal of tax losses previously recognised Non-taxable dividends Adjustments to current tax of prior periods Sundry items (c) Amount recognised directly in equity Net deferred tax debited directly to equity (note 25)	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 (180) (30) - - 1,674 (400) (3,545) (1,774) 192 - 5 10
	1,686 (430) (3,540) (1,764)
	(4) (1,284) (3,758) (1,929) 1,678 884 213 155
	1,674 (400) (3,545) (1,774)
	44,854 11,965 (9,869) (3,356)
	13,456 3,590 (2,961) (1,007) (12,562) (4,028) - - 7 6 - - 341 - 341 156 131 - 131 - - - (997) (900) 192 - 5 10 121 2 (59) (23)
	1,686 (430) (3,540) (1,764)
	5 - - -

(d) Tax consolidation legislation

Charter Hall Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation of 1 July 2003. The accounting policy in relation to this legislation is set out in note 1(f).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, Charter Hall Limited.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Charter Hall Limited for any current tax payable assumed and are compensated by Charter Hall Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Charter Hall Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables (see note 32).

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

9 Current assets - Cash and cash equivalents

9 Current assets - Cash and cash equivalents
Cash at bank and in hand Deposits at call	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 3,808 113,177 168 854 22,699 55,193 - 297
	26,507 168,370 168 1,151

(a) Cash at bank and on hand

These amounts earn between 5.5% and 5.8% (2006: 5.4% and 5.6%).

(b) Deposits at call

The deposits are bearing floating interest rates between 6.0% and 6.3% (2006: 5.5% and 5.9%). These deposits have an average maturity of 25 days.

10 Current assets – Trade and other receivables

10 Current assets – Trade and other receivables
Trade receivables Provision for doubtful debts Loans to associates GST receivable Other receivables Call receivable Prepayments	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 9,715 2,484 - - (290) (100) - -
	9,425 2,384 - - 9,283 536 - - 33 2,259 - 1 4,173 924 - - - 21,682 - - 3,650 2,744 - -
	26,564 30,529 - 1

Further information relating to loans to associates is set out in note 32.

(a) Bad and doubtful trade receivables

The Group has recognised a loss of $190,000 (2006: $116,000) in respect of bad and doubtful trade receivables during the period ended 30 June 2007. The loss has been included in ‘other expenses’ in the income statement.

(b) Effective interest rates and credit risk

Information concerning the effective interest rate and credit risk of both current and non-current receivables is set out in the non-current receivables note (note 14).

(c) Call receivable

The call receivable represented the final instalment of 25c remaining payable on partly paid securities at 30 June 2006. All of this amount outstanding was received by 10 August 2006.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

11 Current assets - Financial assets

11 Current assets - Financial assets
Nunawading performance fee right Other assets	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 - 5,050 - 5,050 218 70 - -
	218 5,120 - 5,050

Charter Hall Limited purchased from Pivot Group Limited the right to a share in the performance fee from the development of 372 Whitehorse Road, Nunawading. The fee was realised in October 2006.

12 Non current assets – Financial assets at fair value through profit and loss

Opening balance Additions Reallocation Revaluation Closing balance Share and units in associates (note 34) Shares in listed securities	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 3,988 - 497 - 134,990 3,988 - - (100) - - - 11,067 - 263 497
	149,945 3,988 760 497
	142,096 3,988 760 497 7,849 - - -
	149,945 3,988 760 497

Changes in fair values of other financial assets at fair value through profit or loss are recorded in fair value gains / (losses) in the income statement.

13 Derivative financial instruments

13 Derivative financial instruments
	Consolidated		Parent entity
	2007	2006	2007	2006
	$'000	$’000	$'000	$’000
Non-current assets
Interest rate swap contracts	5,345	-	-		-
Interestrate swap contracts–cash flow hedges	-	2,482	-		-
Total non-current derivativefinancial instrument assets	5,345	2,482	-		-

(a) Instruments used by the Group

The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest rates in accordance with the Group’s financial risk management policies (refer to note 2).

Interest rate swap contracts

It is policy to protect up to 100% of bank loans from exposure to increasing interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates.

Swaps currently in place cover 70% (2006: 96%) of the loan principal outstanding and are timed to expire as each loan repayment falls due. The fixed interest rates range between 6.02% and 6.70%. Hedging is at 70% to allow for the raising of external equity in the Charter Hall Core Plus Retail Fund which is currently a wholly owned subsidiary.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

13 Derivative financial instruments ( continued)

At 30 June 2007, the notional principal amounts and periods of expiry of the interest rate swap contracts are as follows:

				2007	2006
				$’000	$’000
3	-	4	years	47,000	-
4	-	5	years	-	47,000
5	-	6	years	63,450	-
6	-	7	years	-	87,000
				110,450	134,000

The contracts require settlement of net interest receivable or payable each 90 days for the $47m swap and 30 days for the $63.45m swap. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.

The gain or loss from remeasuring the hedging instruments at fair value was previously deferred in equity in the hedging reserve. With the hedge no longer tested for effectiveness $1,331,000 was recorded in equity at 31 December 2006 and is currently being amortised to fair value adjustments over the period of the hedge remaining. The amount amortised in the year ended 30 June 2007 was $189,000. The amount of the hedge recorded directly in fair value adjustments in the profit and loss statement was $4,014,000.

(b) Credit risk exposures

Credit risk arises from the potential failure of counterparties to meet their obligations under the respective contracts at maturity. This arises with amounts receivable from unrealised gains on derivative financial instruments.

The Group undertakes 100% of its transactions in interest rate contracts with financial institutions.

(c) Interest rate risk exposures

Refer to note 22 (c) for the Group's exposure to interest rate risk on interest rate swaps.

14 Non-current assets – Trade and other receivables

14 Non-current assets – Trade and other receivables
Loans to key management personnel Loans to subsidiaries Other receivables	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 7,062 3,964 7,062 3,964 - - 5,019 - 343 189 343 189
	7,405 4,153 12,424 4,153

Further information relating to loans to key management personnel is set out in note 29.

(a) Fair values

The fair values and carrying values of non-current receivables of the Group are as follows:

Loans to key management personnel Other receivables	2007 2006 Carrying amount Fair value Carrying amount Fair value $'000 $'000 $'000 $'000 7,062 7,062 3,964 3,964 343 343 189 189
	7,405 7,405 4,153 4,153

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

14 Non-current assets – Trade and other receivables (continued)

(b) Interest rate risk

The Group’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in the following tables.

2007 Trade receivables Loans to associates Loans to others Loans to key management personnel Other receivables Weighted average interest rate	Floating interest rate $'000 - - - - -	1 year or less $'000 - 7,901 - - -	Fixed interest maturing in: Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 - - - - - - - - - - - - 343 - - - - 7,062 - - - - - - -	Fixed interest maturing in: Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 - - - - - - - - - - - - 343 - - - - 7,062 - - - - - - -	Fixed interest maturing in: Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 - - - - - - - - - - - - 343 - - - - 7,062 - - - - - - -	Fixed interest maturing in: Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 - - - - - - - - - - - - 343 - - - - 7,062 - - - - - - -	Non- interest bearing $'000 9,425 1,382 - - 7,856 18,663 -	Total $'000 9,425 9,283 343 7,062 7,856 33,969
	- -	7,901 8.75%	- - - -	7,405 10.44%	- -	- -

2006 Trade receivables Loans to associates Loans to others Loans to key management personnel Other receivables Weighted average interest rate	Floating interest rate $'000 - - - - -	Fixed interest maturing in: 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 $'000 - - - - - - 519 - - - - - 150 - - - - - - - - - 3,964 - - - - - 189 - 669 - - - 4,153 8.75% - - - 8.34% -	Fixed interest maturing in: 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 $'000 - - - - - - 519 - - - - - 150 - - - - - - - - - 3,964 - - - - - 189 - 669 - - - 4,153 8.75% - - - 8.34% -	Fixed interest maturing in: 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years $'000 $'000 $'000 $'000 $'000 $'000 - - - - - - 519 - - - - - 150 - - - - - - - - - 3,964 - - - - - 189 - 669 - - - 4,153 8.75% - - - 8.34% -	Non- interest bearing $'000 2,384 17 - - 27,459	Total $'000 2,384 536 150 3,964 27,648 34,682
	- -	669 8.75%	- - -	- - -	- 29,860 -

(c) Credit risk

There is no concentration of credit risk with respect to current and non-current receivables, as the Group has a large number of customers. Refer to note 2 for more information on the risk management policy of the Group.

15 Non-current assets - Investments accounted for using the equity method

Units in associates (note 33)	Consolidated 2007 2006 $'000 760 497
	760 497

(a) Units in associates

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and are carried at fair value by the parent entity.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

16 Non-current assets - Other financial assets

16 Non-current assets - Other financial assets
Shares and units in subsidiaries (note 33) 333 George Street deposit paid Option fee paid on investment property These financial assets are carried at cost.	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 - - 1,600 1,600 - 2,178 - - - 1,062 - -
	- 3,240 1,600 1,600

17 Non-current assets - Property, plant and equipment

	Furniture, fittings
Consolidated	and equipment	Fixtures	Total
	$'000	$'000	$'000
Period ended 30 June 2006
Opening net book amount	293	-	293
Additions	108	-	108
Depreciationcharge	(94)	-	(94)
Closingnet book amount	307	-	307
At 30 June 2006
Cost	659	-	659
Accumulated depreciation	(352)	-	(352)
Net book amount	307	-	307
Period ended 30 June 2007
Opening net book amount	307	-	307
Additions	211	1,034	1,245
Depreciationcharge	(111)	(86)	(197)
Closingnet bookamount	407	948	1,355
At 30 June 2007
Cost	870	1,034	1,904
Accumulated depreciation	(463)	(86)	(549)
Net book amount	407	948	1,355

18 Non-current assets - Investment properties

8 Non-current assets - Investment properties
At Fair value Opening balance Acquisitions Capitalised subsequent expenditure Lease incentives paid Lease incentives amortised Asset removed on deconsolidation Net gain / (loss) from fair value adjustment Closing balance at 30 June (a) Amounts recognised in profit and loss for investment property Rental income Direct operating expenses from property that generated rental income	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000 284,788 - - - 250,144 289,207 - - 5,133 1,145 - - 2,957 - - - (211) - - - (106,780) - - - (5,330) (5,564) - -
	430,701 284,788 - -
	26,726 18,354 - - (7,120) (5,065) - -
	19,606 13,289 - -

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

18 Non-current assets - Investment properties (continued)

Property Type % Owned Date acquired Cost incl additions Independent valuation date Independent valuation amount Valuer $'000 $'000 61 Nepean Hwy, Mentone# Bulky retail 50 15/6/05 25,371 12/4/05 22,500 Savills 570 Bourke St, Melbourne Office 50 20/6/05 66,723 30/6/07 72,000 CBRE 56 Anzac St, Chullora Industrial 100 21/6/05 18,589 30/6/07 19,250 Savills Menai Central, Menai Retail 100 4/7/05 40,860 30/6/07 38,000 CBRE 400 Kent St, Sydney Office 50 28/7/05 25,267 30/9/06 26,650 Savills 60 Union St, Pyrmont ^ Office 100 22/12/05 - 20/12/05 134,000 Savills 372 Whitehorse Rd, Nunawading + Bulky retail 100 31/10/06 71,752 5/10/06 66,300 Colliers 25 Nepean Hwy, Mentone Bulky retail 100 21/7/06 23,341 1/7/06 21,900 Savills CPRF properties Bunnings, Kalgoorlie Bulky retail 100 20/12/06 6,566 13/11/06 6,200 CBRE Bunnings, Bendigo Bulky retail 100 20/12/06 9,208 1/11/06 8,700 CBRE Harvey Norman, Dunedin, NZ Bulky retail 100 2/2/07 16,351 2/2/07 16,343 CBRE Bunnings, Box Hill Bulky retail 100 20/6/07 27,677 1/6/07 26,220 Colliers Bunnings, Nerang Bulky retail 100 20/6/07 20,013 1/6/07 19,100 Colliers Bunnings, Nowra Bulky retail 100 20/6/07 14,543 1/6/07 13,720 Colliers Bunnings, Penrith Bulky retail 100 20/6/07 27,974 1/6/07 26,520 Colliers Bunnings, Stafford Bulky retail 100 20/6/07 21,623 1/6/07 20,640 Colliers Bunnings, Belconnen Bulky retail 100 27/6/07 25,428 1/6/07 23,800 Colliers Foodtown, Auckland, NZ Retail 100 N/A 1,307 N/A N/A N/A Bluewater Square, Redcliffe Retail 100 N/A 95 N/A N/A N/A 442,688	Book value 2007 Book Value 2006 $'000 $'000 23,615 23,464 72,000 65,000 19,250 17,650 36,746 38,222 26,650 23,961 - 106,780 67,931 9,711 21,900 - 6,200 - 8,700 - 16,343 - 26,220 - 19,100 - 13,720 - 26,520 - 20,640 - 23,800 - 1,271 - 95 -
	430,701 284,788

Property
Type
% Owned
Date
acquired
Cost incl
additions
Independent
valuation
date
Independent
valuation
amount
Valuer
$'000
$'000
61 Nepean Hwy, Mentone#
Bulky retail
50
15/6/05
25,371
12/4/05
22,500
Savills
570 Bourke St, Melbourne
Office
50
20/6/05
66,723
30/6/07
72,000
CBRE
56 Anzac St, Chullora
Industrial
100
21/6/05
18,589
30/6/07
19,250
Savills
Menai Central, Menai
Retail
100
4/7/05
40,860
30/6/07
38,000
CBRE
400 Kent St, Sydney
Office
50
28/7/05
25,267
30/9/06
26,650
Savills
60 Union St, Pyrmont ^
Office
100
22/12/05
-
20/12/05
134,000
Savills
372 Whitehorse Rd,
Nunawading +
Bulky retail
100
31/10/06
71,752
5/10/06
66,300
Colliers
25 Nepean Hwy, Mentone
Bulky retail
100
21/7/06
23,341
1/7/06
21,900
Savills
CPRF properties
Bunnings, Kalgoorlie
Bulky retail
100
20/12/06
6,566
13/11/06
6,200
CBRE
Bunnings, Bendigo
Bulky retail
100
20/12/06
9,208
1/11/06
8,700
CBRE
Harvey Norman, Dunedin, NZ Bulky retail
100
2/2/07
16,351
2/2/07
16,343
CBRE
Bunnings, Box Hill
Bulky retail
100
20/6/07
27,677
1/6/07
26,220
Colliers
Bunnings, Nerang
Bulky retail
100
20/6/07
20,013
1/6/07
19,100
Colliers
Bunnings, Nowra
Bulky retail
100
20/6/07
14,543
1/6/07
13,720
Colliers
Bunnings, Penrith
Bulky retail
100
20/6/07
27,974
1/6/07
26,520
Colliers
Bunnings, Stafford
Bulky retail
100
20/6/07
21,623
1/6/07
20,640
Colliers
Bunnings, Belconnen
Bulky retail
100
27/6/07
25,428
1/6/07
23,800
Colliers
Foodtown, Auckland, NZ
Retail
100
N/A
1,307
N/A
N/A
N/A
Bluewater Square, Redcliffe
Retail
100
N/A
95
N/A
N/A
N/A
442,688

Book value
2007
Book
Value
2006
$'000
$'000
23,615
23,464
72,000
65,000
19,250
17,650
36,746
38,222
26,650
23,961
- 106,780
67,931
9,711
21,900
-
6,200
-
8,700
-
16,343
-
26,220
-
19,100
-
13,720
-
26,520
-
20,640
-
23,800
-
1,271
-
95
-

430,701 284,788

# Development assets

^ Owned in CPOF which ceased to be a wholly owned sub-trust on 1 July 2006.
- Valuation is based on a capitalised value of $70.8m less an allowance for incentives required to be paid for the property to be fully leased.
Deposit paid

CPRF properties are properties held in a wholly owned sub trust of CHPT

(a) Valuation basis

The basis of the valuation of investment properties is fair value being based on a discounted cash flow calculation or capitalisation approach. The 2007 revaluations were based on a combination of directors’ valuations and independent valuations.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

19 Non-current assets – Deferred tax assets

The balance comprises temporary differences attributable to: Prepayments Employee benefits Other provisions Fund establishment costs Tax losses Movements: Opening balance Credited to the income statement (note 8) Amounts recognised in equity Closing balance at 30 June Deferred tax assets to be recovered after more than 12 months Deferred tax assets to be recovered within 12 months	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 15 - 210 - 247 90 - - 256 230 - - 214 214 - - 551 750 5,477 1,929
	1,283 1,284 5,687 1,929
	1,284 - 1,929 - 4 1,284 3,758 1,929 (5) - - -
	1,283 1,284 5,687 1,929
	642 642 2,844 1,929 641 642 2,843 -
	1,283 1,284 5,687 1,929

20 Current liabilities – Trade and other payables

20 Current liabilities – Trade and other payables
Trade payables Deposits Accruals Charter Hall Holdings Pty Ltd purchase price payable Development agreement payable Cash received from Core Plus Office Fund investors for units to be issued Underwriting fee payable for initial public offering Distribution payable Other payables	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 2,991 645 5 - 86 154 - - 4,268 2,322 - - - 9,691 - 9,691 - 1,337 - - - 58,275 - - - 1,771 - - 20,677 10,182 - - 21 77 - -
	28,043 84,454 5 9,691

21 Current liabilities – Provisions

Employee benefits – long service leave	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 149 48 - -
	149 48 - -

(a) Movements in provisions

Refer to Note 24 for the movement in provisions and split between current and non-current.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

22 Non-current liabilities – Borrowings

Unsecured Bank loans Loan – Charter Hall Property Trust Total unsecured non-current borrowings	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 158,572 140,119 - - - - 75,351 55,050
	158,572 140,119 75,351 55,050

(a) Total unsecured liabilities

The total unsecured liabilities (current and non-current) are as follows:

Bank loans Loan – Charter Hall Property Trust Total unsecured liabilities	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 158,572 140,119 - - - - 75,351 55,050
	158,572 140,119 75,351 55,050

(b) Financing arrangements

Unrestricted access was available at balance date to the following lines of credit:

Total facilities Used at balance date Unused at balance date	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 160,000 225,500 150,000 75,000 158,572 140,119 75,351 55,050
	1,428 85,381 74,649 19,950

The consolidated entity has access to a National Australia Bank evergreen facility. Subject to the continuance of satisfactory loan covenants and credit ratings, the bank loan facilities may be drawn at any time.

The facility limit was increased to $260m on 5 July 2007.

The Parent entity has a facility given by Charter Hall Property Trust.

The current interest rates are 7.0% on the bill facility and 16.4% on the loan from Charter Hall Property Trust.

(c) Interest rate risk exposures

The following table sets out the Group’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate by maturity periods.

Exposures arise predominantly from liabilities bearing variable interest rates as the Group intends to hold fixed rate liabilities to maturity.

2007 Consolidated Bank and other loans Interest rate swaps* Weighted average interest rate	Fixed interest rate Floating interest rate 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 158,572 - - - - - - 158,572 (110,450) - - - 47,000 - 63,450 -
	48,122 - - - 47,000 - 63,450 158,572
	7.02% 6.02% 6.52%

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

22 Non-current liabilities – Borrowings (continued)

2007 Parent Loan from CHPT Weighted average interest rate * Notional principal amounts	Fixed interest rate Floating interest rate 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 - - - - - - 75,351 75,351
	- - - - - - 75,351 75,351
	16.41%

2006 Consolidated Bank and other loans Interest rate swaps Weighted average interest rate 2006 – Parent Loan from CHPT Weighted average interest rate Notional principal amounts	Fixed interest rate Floating interest rate 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 140,119 - - - - - - 140,119 (134,000) - - - - - 134,000 -
	6,119 - - - - - 134,000 140,119
	6.24% 5.99% Fixed interest rate Floating interest rate 1 year or less Over 1 to 2 years Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5 years Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 - - - - - - 55,050 55,050 -
	- - - - - - 55,050 55,050
	13.17%

(d) Fair value

The carrying amounts and fair values of borrowings at balance date are:

	2007		2007	Parent	Parent
	Carrying	Fair value	Carrying		Fair value
	amount		amount
	$’000	$’000	$’000		$’000
On-balance sheet
Non-traded financial liabilities
Bank loans	158,572	158,572		-	-
Other loans	-	-	75,351		75,351

Fair value is inclusive of costs which would be incurred on settlement of a liability.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

22 Non-current liabilities – Borrowings (continued)

(i) On-balance sheet

The fair value of borrowings is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles.

(ii) Off-balance sheet

There are no off-balance sheet liabilities

23 Non-current liabilities – Deferred tax liabilities

The balance comprises temporary differences attributable to: Financial assets at fair value through profit and loss Prepayments Fund establishment costs Accrued revenue Other Movements: Opening balance Charged/(credited) to the income statement (note 8) Closing balance at 30 June Deferred tax liabilities to be settled after more than 12 months Deferred tax liabilities to be settled within 12 months	Consolidated Parent entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000 832 - - - 16 170 - 155 946 714 - - 367 - 367 - 401 - 1 -
	2,562 884 368 155
	884 - 155 - 1,678 884 213 155
	2,562 884 368 155
	2,562 884 368 155 - - - -
	2,562 884 368 155

24 Non-current liabilities – Provisions

Employee benefits – long service leave

Consolidated	Consolidated	Parent	entity
2007	2006	2007	2006
$’000	$’000	$’000	$’000
41	83	-	-

(a) Movements in provisions

Movements in employee benefits provisions are set out below:

Long service leave Opening balance Additional provisions recognised Carrying amount at end of period Current Non-current Total

Consolidated	Consolidated
2007	2006
$'000	$'000
131	82
59	49
190	131
149	48
41	83
190	131

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

25 Contributed equity

25 Contributed equity
		Parent		Parent
		2007	2006	2007	2006
	Notes	Securities	Securities	$'000	$'000
(a) Security capital*
Ordinary securities	(b),(c)
Fully paid		420,965,611	242,457,179	513,597	257,852
Partly paid		-	92,928,962	-	56,925
Final instalment to be paid		-	-	-	21,682
		420,965,611	335,386,141	513,597	336,459

(b) Movements in ordinary security capital:

Details Notes Initial allotment Initial public offering Dividend reinvestment plan issues (d) Employee security scheme issue (e) Employee security scheme issue (e) Final call of $0.25 on 278,368,890 partly paid securities Entitlement issue (f) Less: Transaction costs on security issues Less: LTI securities reversed Balance at 30 June 2006 Addback LTI securities reversed last year Entitlement issue (f) Employee security scheme issue (e) Employee security scheme issue (e) Employee security scheme issue (e) Employee security scheme issue (e) Employee security scheme issue (e) Securities issued to Wyllie as part of asset purchase (g) Placement (h) Balance at 30 June 2007 Less: Transaction costs on security issues Less: LTI securities reversed Balance per accounts at 30 June 2007 Charter Hall Limited Charter Hall Property Trust	Number of securities Issue price 100 $1.0000 264,078,910 $0.7500 8,089,980 $0.8936 5,900,000 $0.7500 300,000 $0.8231 57,017,151 $1.2700 335,386,141 - (6,200,000) 329,186,141 6,200,000 15,423,367 $1.2700 6,299,213 $1.2700 352,564 $1.5600 807,453 $1.6100 50,000 $2.0000 202,428 $2.4700 18,000,000 $1.4869 44,444,445 $3.0000 420,965,611 - (11,844,991) 409,120,620	$'000 - 198,059 7,229 4,425 247 69,592 72,412
		351,964 (9,283) (6,222)
		336,459
		6,222 19,588 8,000 550 1,300 100 500 26,764 133,333
		532,816 (4,621) (14,598)
		513,597
		5,131 508,466

This includes security capital of Charter Hall Limited and Charter Hall Property Trust which are stapled. Refer to note 1 for details of the accounting for this stapling arrangement.

In 2006 the issued capital of $336,459,000 was divided between Charter Hall Limited ($3,371,000) and Charter Hall Property Trust ($333,088,000)

(c) Ordinary securities

Ordinary securities entitle the holder to participate in distributions/dividends and the proceeds on winding up of the trust/company in proportion to the number of and amounts paid on the securities held. The securities issued under the placement are fully paid with no entitlement to the distribution for 30 June 2007.

On a show of hands every holder of ordinary securities present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each security is entitled to one vote.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

25 Contributed equity (continued)

(d) Distribution reinvestment plan

The company has established a distribution reinvestment plan (DRP) under which holders of ordinary securities may elect to have all or part of their distribution satisfied by the issue of new ordinary securities rather than by being paid in cash. Securities are issued under the plan at a discount to the market price. The DRP was active for the December 2005 distribution however it was deactivated for the 30 June 2006 distribution and remains deactivated.

(e) Employee security scheme

Information on the employee security scheme, including details of securities issued under the scheme, is set out in note 38.

(f) Entitlement, placement and public offer

On 19 May 2006 the company invited its securityholders to subscribe to a entitlement, placement and public offer of 61.8m ordinary securities at an issue price of $1.27 per security on the basis of 2 securities for every 9 fully or partly paid ordinary securities held, such securities to be issued on 15 June 2006 or 3 July 2006 and rank for distributions/dividends after 30 June 2006. Securities not taken up under the entitlement offer were subscribed for under a placement and public offer.

(g) Wyllie issue

On 11 December 2006, 18,000,000 securities were issued to Wyllie Group and $26,764,000 was received as proceeds. This was part of the purchase of 225 St Georges Terrace, Perth by Charter Hall Core Plus Office Fund.

(h) Placement

On 6 June 2007 44,444,445 securities were issued at $3.00 partially used to fund the acquisition of the Bunnings Portfolio and a 50% interest in Commercial and Industrial Property Pty Limited. The securities were not entitled to the distribution for the six months ended 30 June 2007.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

26 Reserves and retained profits

(a) Reserves Hedging reserve - cash flow hedges Business combination reserve Security-based payments reserve Foreign currency reserve Charter Hall Limited Charter Hall Property Trust Movements: Hedging reserve - cash flow hedges Opening balance Hedge novated to Charter Hall Core Plus Fund Revaluation (note 13) Amortisation Closing balance Security-based payments reserve Opening balance Expense relating to LTI scheme Closing balance 30 June Business combination reserve Opening balance Amount paid for Charter Hall Holdings Pty Limited Closing balance Foreign currency reserve Opening balance Translation Closing balance	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 1,142 2,482 - - (52,000)(52,000) (52,000) (52,000) 1,048 165 - - 22 - - -
	(49,788) (49,353) (52,000) (52,000)
	(50,952)(51,835) 1,164 2,482 (49,788) (49,353) 2,482 - - - (1,512) 361 2,482 - - (189) - - -
	1,142 2,482 - -
	165 - - - 883 165 - -
	1,048 165 - -
	(52,000)(52,000) - - - - (52,000) (52,000)
	(52,000) (52,000) (52,000) (52,000)
	- - - - 22 - - -
	22 - - -

(b) Retained profits / (accumulated losses)

Movements in retained profits were as follows:

Opening balance Net profit / (loss) for the period Distributions / dividends Other Balance 30 June Charter Hall Limited Charter Hall Property Trust	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 (7,636) - (1,592) - 43,168 12,395 (6,329) (1,592) (38,074) (20,031) - - (256) - - -
	(2,798) (7,636) (7,921) (1,592)
	207 (2,576) (3,005) (5,060) (2,798) (7,636)

(i) Hedging reserve - cash flow hedges

The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note 1(l).

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

26 Reserves and retained profits (continued)

(ii) Security-based payments reserve

The security-based payments reserve is used to recognise the fair value of securities issued to the Charter Hall Limited Executive Loan Security Plan but not issued to employees.

(iiI) Business combination reserve

This reserve relates to the reverse acquisition at IPO as described in note 1. This is the amount that relates to the investment in CHH that is not eliminated by paid in capital. No goodwill is recognised as this transaction is the result of a reverse acquisition.

27 Minority interest

The financial report includes separate financial statements for Charter Hall Limited (CHL) as an individual entity and the consolidated entity consisting of Charter Hall Limited and its subsidiaries and controlled entities including Charter Hall Property Trust (CHPT). For the purposes of AASB Interpretation 1002 Post date of transition stapling arrangements (AASB I - 1002), Charter Hall Limited has been identified as the Parent Entity in relation to the stapling. In accordance with AASB I - 1002 the results and equity, not directly owned by CHL, of CHPT have been treated and disclosed as minority interest. Whilst the results and equity of CHPT are disclosed as minority interest, the stapled security holders of CHL are the same as the stapled security holders of CHPT.

Notes Interest in: Contributed equity 25 Reserves 26(a) Retained profits 26(b)	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 508,466 333,088 - - 1,164 2,482 - - (3,005) (5,060) - -
	506,625 330,510 - -

28 Distributions

(a) Ordinary securities - Final distribution for the period ended 30 June 2006 of 3.8288 cents per partly paid security paid on 28 August 2006 - Interim distribution for the period ended 31 December 2005 of 3.281 cents per partly paid security paid 28 February 2006 - Interim distribution for the period ended 30 June 2005 of 0.449 cents per partly paid security paid 28 February 2006 - Interim ordinary distribution for the period ended 31 December 2006 of 4.77 cents per security paid on 28 February 2007 - Final ordinary distribution for the period ended 30 June 2007 of 5.67 cents per security payable on 31 August 2007 Total distributions provided for or paid Less: distributions paid to holders of LTI securities Distributions paid in cash or satisfied by the issue of securities under the distribution reinvestment plan during the period ended 30 June were as follows: Paid in cash Satisfied by issue of securities	Consolidated entity 2007 2006 $'000 $’000 - 10,420 - 8,868 - 1,215 17,950 - 21,349 -
	39,299 20,503 (1,227) (472)
	38,072 20,031
	39,299 13,274 - 7,229
	39,299 20,503

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

29 Key Management personnel disclosures

(a) Directors

The following persons were directors of Charter Hall Limited during the period:

(i) Chairman - non-executive

K Roxburgh

(ii) Executive directors

C Fuchs D Harrison (appointed 30/8/06) D Southon (appointed 30/8/06)

(iii) Non-executive directors R Woodhouse (Deputy Chairman) A Biet P Derrington G Fraser C McGowan P McMahon (resigned 30/8/06)

(b) Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the period:

Name Position Employer R Champion Fund Manager and Retail Director Charter Hall Holdings Pty Ltd M Winnem Fund Manager and Development Director Charter Hall Holdings Pty Ltd

(c) Key management personnel compensation

Short-term employee benefits Post-employment benefits Security-based payment	Consolidated Parent entity 2007 2006 2007 2006 $ $ $ $ 2,347,4481,743,187 - - 265,438 177,202 - - 487,493 134,818 - -
	3,100,3792,055,207 - -

The company has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration disclosures to the directors’ report. The relevant information can be found in sections A-C of the remuneration report on pages 9 to 13.

(d) Equity instrument disclosures relating to key management personnel

(i) Security holdings

The numbers of securities in the company held during the period by each director of Charter Hall Limited and other key management personnel of the Group, including their personally related parties, are set out below. There were no securities granted during the reporting period as compensation.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

29 Key Management personnel disclosures (continued)

2007 Name	Opening balance	Purchased / (sold) during the period	LTI securities vesting during theperiod	Balance at the end ofthe period
*Directors of Charter Hall Limited* Ordinary securities A Biet P Derrington G Fraser C Fuchs D Harrison C McGowan K Roxburgh D Southon R Woodhouse	5,729,724 - 156,262 5,656,595 5,899,117 - 50,000 4,608,795 366,666	(520,000) - 68,738 (520,000) 2,276,025 - - 3,654,408 -	350,000 - - 350,000 491,667 - - 491,667 -	5,559,724 - 225,000 5,486,595 8,666,809 - 50,000 8,754,870 366,666
*Other key management personnel of the Group* Ordinary securities M Winnem	1,482,982
		171,566	-	1,654,548
RChampion	-	-	-	-

2006 Name	Openingbalance	Purchased during the period	Balance at the end ofthe period
*Directors of Charter Hall Limited* Ordinary securities A Biet P Derrington G Fraser C Fuchs C McGowan P McMahon K Roxburgh R Woodhouse	5,576,595 - 156,262 5,656,595 - 55,073 50,000 366,666	153,129 - - - - - - -	5,729,724 - 156,262 5,656,595 - 55,073 50,000 366,666
*Other key management personnel of the Group* Ordinary securities D Harrison D Southon M Winnem	5,339,208 4,424,092 1,482,982	559,909 184,703 -	5,899,117 4,608,795 1,482,982

(e) Loans to key management personnel

Details of loans made to directors of Charter Hall Limited and other key management personnel of the Group, including their personally related parties, are set out below.

(i) Aggregates for key management personnel

				Number in
	Balance at the		Balance at the	Group at the
	start of the	Interest paid and	end of the	end of the
Group	period	payable for the period	period	period
	$	$	$
2007	3,964,504	378,946	7,062,280	4
2006	6,758,366	534,647	3,964,504	3

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

29 Key Management personnel disclosures (continued)

(ii) Individuals with loans above $100,000 during the period

2007				Highest
	Balance at the		Balance at the	indebtedness
	start of the	Interest paid and	end of the	during the
Name	period	payable for the period	period	period
	$	$	$	$
D Harrison	1,970,720	312,330	3,161,295	3,161,295
D Southon	1,970,720	312,330	3,161,295	3,161,295
CFuchs	-	36,540	369,845	369,845
A Biet	-	36,540	369,845	369,845

2006				Highest
	Balance at the		Balance at the	indebtedness
	start of the	Interest paid and	end of the	during the
Name	period	payable for the period	period	period
	$	$	$	$
D Harrison	4,004,400	230,365	1,970,720	4,004,400
DSouthon	1,875,000	190,548	1,970,720	1,970,720
M Winnem	370,746	48,660	23,064	370,746

Loans to key management personnel are for periods of 5 years at interest rates equivalent to the distribution, and are secured by mortgages over the securities that have been purchased with the loan.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

30 Remuneration of Auditors

During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

(a) Assurance services Audit services PricewaterhouseCoopers Australian firm Audit and review of financial reports and other audit work under the Corporations Act 2001 Non-PricewaterhouseCoopers audit firms for the audit or review of financial reports of any entity in the Group Total remuneration for audit services Other assurance services PricewaterhouseCoopers Australian firm Investigating Accountants Reports Total remuneration for other assurance services Total remuneration for assurance services (b) Taxation services PricewaterhouseCoopers Australian firm Tax compliance services, including review of company income tax returns Tax advice on IPO / equity raising Total remuneration for taxation services (c) Advisory services PricewaterhouseCoopers Australian firm Long term incentive plan Legal fees Total remuneration for advisory services	Consolidated Parent entity 2007 2006 2007 2006 $ $ $ $ 207,887 157,500 - - 33,290 29,000 - -
	241,177 186,500 - -
	- 446,577 - -
	- 446,577 - -
	241,177 633,077 - -
	37,610 52,700 - 10,000 97,123 200,622 - -
	134,733 253,322 - 10,000
	38,500 - - - - 42,123 - -
	38,500 42,123 - -

The Group’s policy to employ PricewaterhouseCoopers (PwC) on assignments additional to their statutory audit duties where PwC’s expertise and experience with the Group are important. These assignments are principally tax advice and Investigating Accountants Reports reporting on acquisitions, or where PwC is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.

31 Commitments

(a) Capital Commitments

Expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

Investment property Payable: Within one year Later than one year but not later than five years Later than five years	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 - 165,885 - - - - - - - - - -
	- 165,885 - -

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

31 Commitments (continued)

(b) Lease commitments : Group as lessee

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable:

Within one year Later than one year but not later than five years Later than five years	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 - 313 - - 1,506 1,075 - - 1,173 - - -
	2,679 1,388 - -

32 Related Parties

(a) Parent Entity

The parent entity within the Group is Charter Hall Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 33.

(c) Key management personnel

Disclosures relating to key management personnel are set out in note 29.

(d) Transactions with related parties

The following transactions occurred with related parties:

The following transactions occurred with related parties:
	Consolidated		Parent	entity
	2007	2006	2007	2006
	$	$	$	$
Sales of services
Management fees from associates	15,296,464	1,936,226	-	-
Procurement fees from associates	2,008,273	3,050,422	-	-
Commitment fees from associates	173,218	300,000	-	-
Staff loan establishment and spotters fee received from subsidiary	-	-	-	285,400
Tax consolidation legislation
Current tax payable assumed from wholly-owned tax consolidated
entities	-	-	4,901,957	1,158,182
Dividend revenue
Subsidiaries	-	-	3,322,674	3,000,000

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

32 Related Parties (continued)

(e) Loans to/from related parties

Loans to associates Beginning of the period Loans advanced Loan repayments received Interest charged Interest received End of period Loans to subsidiaries Loans advanced Interest charged Loans from subsidiaries Beginning of the period Loans received Loan repayments paid Interest charged Interest paid End of period	Consolidated Parent entity 2007 2006 2007 2006 $ $ $ $
	536,197 - - - 57,492,387 11,401,476 - - (49,051,395) (10,930,697) - - 1,152,920 211,631 - - (846,803) (146,213) - -
	9,283,306 536,197 - -
	- - 5,010,000 - - - 8,510 -
	- - 5,018,510 -
	- - 55,049,981 - - - 20,027,776 55,570,475 - - (2,939,812) (4,333,708) - - 14,162,749 7,393,582 - - (10,950,000) (3,580,368)
	- - 75,350,694 55,049,981

No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

33 Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b):

	Country of
Name of entity	incorporation	Class of securities	Equity holding
			2007	2006
			%	%
Charter Hall Holdings Pty Limited	Australia	Ordinary	100	100
Charter Hall (NZ) Pty Limited (formerly Atrium
Pyrmont Pty Limited)	Australia	Ordinary	100	100
CH Management Australia Pty Limited	Australia	Ordinary	100	N/A
Charter Hall Funds Management Limited	Australia	Ordinary	100	100
Bowvilla Pty Limited	Australia	Ordinary	100	100
Charter Hall Holdings Real Estate Pty Limited	Australia	Ordinary	100	100
Frolish Pty Limited	Australia	Ordinary	100	100
Stelridge Pty Limited	Australia	Ordinary	100	100
Visokoi Pty Limited	Australia	Ordinary	100	100
Bieson Pty Limited	Australia	Ordinary	100	100
Sandkilt (No 2) Pty Limited	Australia	Ordinary	100	100
Charter Hall Holdings Real Estate (Vic) Pty
Limited	Australia	Ordinary	100	100
Charter Hall Core Plus Office Fund	Australia	Ordinary	*	100
Atrium Trust	Australia	Ordinary	*	100
333 George Street Trust	Australia	Ordinary	*	100
Stirling Street Trust	Australia	Ordinary	*	100
Charter Hall Investment Fund No. 15	Australia	Ordinary	100	N/A
Charter Hall Core Plus Retail Fund	Australia	Ordinary	100	N/A
Charter Hall Core Plus Retail Fund (NZ)	Australia	Ordinary	100	N/A
Redcliffe Retail Property Trust	Australia	Ordinary	100	N/A
Belconnen Retail Warehouse Trust	Australia	Ordinary	100	N/A
Box Hill Retail Warehouse Trust	Australia	Ordinary	100	N/A
Nerang Retail Warehouse Trust	Australia	Ordinary	100	N/A
Nowra Warehouse Trust	Australia	Ordinary	100	N/A
Penrith Warehouse Trust	Australia	Ordinary	100	N/A
Stafford Retail Warehouse Trust	Australia	Ordinary	100	N/A

The holding in these Trusts has been reduced to 23% with the raising of external equity resulting in a dilution from 100%.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

34 Investments in associates

(a) Carrying amounts

Information relating to associates is set out below.

Information relating to associates is set out below.
Name of company Principal activity Ownership Interest 2007 2006 % % Unlisted Charter Hall Diversified Property Fund Property Investment 11.7% 19.9% Charter Hall Opportunity Fund No 4 Property Development 3.03% 3.03% Charter Hall Core Plus Office Fund Property Investment 23% 100% Charter Hall Core Plus Industrial Fund Property Investment 32.1% N/A Charter Hall Umbrella Fund Property Investment 47.3% N/A Charter Hall Opportunity Fund No 5 Property Development 20% N/A	Consolidated Parent entity 2007 2006 2007 2006 $'000 $’000 $'000 $’000 5,179 3,888 - -
	662 497 - -
	80,058 - - -
	45,986 - - -
	10,873 - - -
	98 - - -

The above associates are incorporated in Australia. The investments in Charter Hall Opportunity Fund Nos 4 & 5 are held by Charter Hall Limited are equity accounted in the consolidated financial statements and as financial assets at fair value through the profit and loss in the parent financial statements. The investments in Charter Hall Diversified Property Fund, Charter Hall Core Plus Office Fund, Charter Hall Core Plus Industrial Fund and Charter Hall Umbrella Fund are held by Charter Hall Property Trust and as such are accounted for at fair value.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

34 Investments in associates (continued)

(b) Movements in carrying amounts
Charter Hall Diversified Property Fund
Opening balance
Investment
Fair value increase
Closing balance
Distributions on this investment of $399k (2006 $184k) are in the income
statement
Charter Hall Opportunity Fund No 4
Opening balance
Investment
Share of profit/(loss) after income tax
Distributions received/receivable
Carrying amount at the end of the period
Charter Hall Core Plus Office Fund
Opening balance (Eliminated on consolidation last year)
Investment
Fair value increase
Charter Hall Core Plus Industrial Fund
Investment
Fair value increase
Charter Hall Umbrella Fund
Investment and closing balance
Charter Hall Opportunity Fund No 5
Investment and closing balance
(c) Fair value of unlisted investments in associates
Charter Hall Diversified Property Fund
Charter Hall Opportunity Fund No 4
Charter Hall Core Plus Office Fund
Charter Hall Core Plus Industrial Fund
Charter Hall Umbrella Fund
Charter Hall Opportunity Fund No 5
(d) Share of associates’ profits or losses
Profit / (loss) before income tax
Income tax expense
Profit / (loss) after income tax

Consolidated
2007
2006
$'000
$’000
3,888
-
1,096
3,888
195
-
5,179
3,888

497
777
529
287
(22)
(899)
(10)
662
497
10,000
-
63,011
-
7,047
-
80,058
-
45,000
-
986
-
45,986
-
10,873
-
98
-
5,179
3,888
662
497
80,058
-
45,986
-
10,873
-
98
-
287
(31)
-
9
287
(22)

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

34 Investments in associates (continued)

(e) Summarised financial information of associates

(e) Summarised financial information of associates
2007 Charter Hall Diversified Property Fund Charter Hall Opportunity Fund No 4 Charter Hall Core Plus Office Fund Charter Hall Core Plus Industrial Fund Charter Hall Umbrella Fund Charter Hall Opportunity Fund No 5	Assets $'000 8,647	Group's Liabilities $'000 3,697	share of: Revenues $'000 599	Profit/(Loss) $'000 637
	1,245	594	1,034	287
	153,291	78,971	6,379	4,386
	62,926	13,042	1,119	448
	10,873	-	95	95
	98	-	-	-

35 Events occurring after the balance sheet date

(a) Charter Hall Core Plus Retail Fund (CPRF) completed the purchase of Foodtown, Auckland on 4 July 2007 for $25m.

(b) CPRF completed the $8m purchase of the Ipswich Super Centre on 14 August 2007.

(c) The purchase of 50% of Commercial and Industrial Property Pty Ltd initially for $40m on 20 July 2007.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

36 Reconciliation of profit after income tax to net cash flow inflow from operating activities

Profit for the period
Depreciation and amortisation
Non-cash employee benefits expense - security-based payments
Dividend and interest income
Fair value adjustments
Share of profits of associates not received as dividends
Net gain/(loss) on financial assets held by Charter Hall Limited
Change in operating assets and liabilities, net of effects from purchase of
controlled entity
Decrease / (increase) in trade debtors
Decrease / (increase) in accrued revenue
Decrease / (increase) in other operating assets
Increase / (decrease) in trade creditors
Increase / (decrease) in accrued expenses
Increase / (decrease) in other operating liabilities
Increase / (decrease) in provision for income taxes payable
Increase / (decrease) in provision for deferred income tax
Increase in other provisions
Net cash inflow / (outflow) from operating activities

Consolidated
Parent entity
2007
2006
2007
2006
$'000
$’000
$'000
$’000
43,168
12,395
(6,329) (1,592)
197
94
-
-
883
165
-
-
(9,126)
(6,075)
(4,089) (3,705)
(11,493)
5,564
-
-
(287)
22
-
-
-
-
(287)
22
4,721
(3,763)
5,050
-
602
-
-
-
124
-
-
-
(2,347)
-
-
-
(184)
-
-
-
327
3,106
5
3,232
-
1,938
- (1,764)
1,686
(2,379)
(3,540)
-
(58)
330
-
-

28,213
11,397
(9,190) (3,807)

37 Earnings per security

37 Earnings per security
(a) Basic earnings / (loss) per security Profit before fair value adjustments Fair value adjustments Profit attributable to the ordinary equity holders of the Group (b) Diluted earnings / (loss) per security Profit before fair value adjustments Fair value adjustments Profit attributable to the ordinary equity holders of the Group	Consolidated 2007 2006 Cents Cents 8.80 6.67 3.20 (2.06)
	12.00 4.61
	8.84 6.67 3.10 (2.02)
	11.94 4.65

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

37 Earnings per security (continued)

(c) Reconciliations of earnings used in calculating earnings per security

Basic earnings per security Profit / (loss) before fair value adjustments Fair value adjustment (gains) / losses Profit / (loss) attributable to the ordinary equity holders of the consolidated entity used in calculating basic earnings per security Diluted earnings per security Profit / (loss) Interest received from LTI securities Profit / (loss) attributable to the ordinary equity holders of the consolidated entity used in calculating diluted earnings per security Fair value adjustment (gains) / losses Profit / (loss) attributable to the ordinary equity holders of the consolidated entity used in calculating diluted earnings per security before fair value adjustments	Consolidated 2007 2006 $'000 $’000 31,675 17,959 11,493 (5,564)
	43,168 12,395
	43,168 12,395 1,136 404
	44,304 12,799 (11,493) 5,564
	32,811 18,363

(d) Weighted average number of securities used as the denominator

Weighted average number of ordinary securities used as the
denominator in calculating basic earnings per security
Adjustments for calculation of diluted earnings per security:
Securities issued to the Charter Hall Limited Executive Loan
Security Plan
Weighted average number of ordinary securities and potential
ordinary securities used as the denominator in calculating diluted
earnings per security

Consolidated
2007
2006
Number
Number
359,384,110
269,115,828
11,298,942
6,078,462

370,683,052
275,194,290

(e) Information concerning the classification of securities

(i) Securities issued under the Charter Hall Limited Executive Loan Security Plan

Securities issued under the Charter Hall Limited Executive Loan Security Plan have been issued in trust and have a corresponding loan given to the employee. Under AIFRS the loan, securities, interest received on the loan and the distribution paid and payable are derecognised for the preparation of the financial report but recognised for the calculation of diluted earnings per security.

Charter Hall Group Notes to the financial statements 30 June 2007 (continued)

38 Security-based payments

(a) Employee Security Plan

The establishment of the Charter Hall Limited Executive Loan Security Plan was approved by the Board in the process of the initial public offering. Staff who are eligible to participate in the plan are determined by the Joint Managing Directors in discussion with the Board. Please refer to the Remuneration Report for details relating to vesting conditions.

Securities are granted under the plan at market value and are purchased with a loan to the employee. Recourse on the loan is limited to the value of the securities. The securities are intended to vest over a three year period in equal portions. The amount of interest due on the loan is equivalent to the amount of the distribution receivable on the underlying securities.

Set out below are summaries of securities granted under the plan:

Set out below are summaries of securities granted under the plan:
Number of securities issued under the plan to participating employees on 3 July 2006 at $1.27 (6 June 2005 at $1.00) Number of securities issued on 5 October 2006 at $1.56 Number of securities issued on 16 October 2006 at $1.61 Number of securities issued on 15 December 2006 at $2.00 Number of securities issued on 7 March 2007 at $2.47	Consolidated Parent entity 2007 2006 2007 2006 6,318,898 6,200,000 6,318,898 6,200,000 352,564 - 352,564 - 807,453 - 807,453 - 50,000 - 50,000 - 202,428 - 202,428 -
	7,731,343 6,200,000 7,731,343 6,200,000

(b) Expenses arising from security-based payment transactions

Total expenses arising from security-based payment transactions recognised during the period as part of employee benefit expense were as follows:

Securities issued under employee security plan	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000 883 165 - -

Charter Hall Group Directors' declaration 30 June 2007

In the directors’ opinion:

(a) the financial statements and notes set out on pages 20 to 64 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the company’s and consolidated entity's financial position as at 30 June 2007 and of their performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
(c) the audited remuneration disclosures set out on pages 9 to 13 of the directors’ report comply with Accounting Standard AASB 124 Related Party Disclosures and the Corporations Regulations 2001 .
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

==> picture [134 x 40] intentionally omitted <==

K Roxburgh

Chairman

Sydney 20 August 2007

___________

PricewaterhouseCoopers ABN 52 780 433 757

Independent auditor’s report to the stapled security holders of Charter Hall Group

Report on the financial report and the AASB 124 Remuneration disclosures contained in the directors’ report

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

We have audited the accompanying financial report of Charter Hall Limited (the company), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for both Charter Hall Limited and the Charter Hall Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year.

We have also audited the remuneration disclosures contained in the directors’ report. As permitted by the Corporations Regulations 2001 , the company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”), required by Accounting Standard AASB 124 Related Party Disclosures , under the heading “remuneration report” in pages 9 to 12 of the directors’ report and not in the financial report.

Director responsibility for the financial report and the AASB 124 Remuneration disclosures contained in the directors' report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1a, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our responsibility is to also express an opinion on the remuneration disclosures contained in the directors’ report based on our audit.

Liability limited by a scheme approved under Professional Standards Legislation

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

For further explanation of an audit, visit our website

http://www.pwc.com/au/financialstatementaudit.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s opinion on the financial report

In our opinion:

(a) the financial report of Charter Hall Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 ; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1a.

Liability limited by a scheme approved under Professional Standards Legislation

Auditor’s opinion on the AASB 124 Remuneration disclosures contained in the directors’ report

In our opinion, the remuneration disclosures that are contained in pages 9 to 12 of the directors’ report comply with Accounting Standard AASB 124.

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PricewaterhouseCoopers

==> picture [112 x 60] intentionally omitted <==

B K Hunter Partner

Sydney 20 August 2007

Liability limited by a scheme approved under Professional Standards Legislation

Charter Hall Group Shareholder information 30 June 2007

The shareholder information set out below was applicable as at 30 June 2007.

A. Distribution of equity securities

Analysis of numbers of equity security holders by size of holding:

Ordinary Securities

1 - 1000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over	40,329 764,379 2,150,799 21,172,380 396,837,724
	420,965,611

B. Equity security holders

Twenty largest quoted equity security holders

The names of the twenty largest holders of quoted equity securities are listed below:

Name
HSBC Custody Nominees (Australia) Limited
Transfield (CHG) Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
ANZ Nominees Limited
Wyllie Group Pty Ltd
CHL Executive Loan Security Plan Managers Pty Limited
Cogent Nominees Pty Limited
Doverville Holdings Pty Limited
Citicorp Nominees Pty Limited (CFSIL Cwlth Property 1)
Bond Street Custodians Pty Limited
Citicorp Nominees Pty Limited (CFSIL Cwlth Property 2)
Cogent Nominees Limited
Portmist Pty Limited
AMP Life Limited
Southon Family Trust
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
David William Harrison
RBC Dexia Investor Services Australia Nominees Pty Limited (PIPOOLED A/C)

Ordinary securities
Number held
Percentage of issued
securities
70,724,748
16.80
66,235,131
15.73
60,301,070
14.32
34,842,037
8.28
19,424,865
4.61
18,000,000
4.27
13,678,325
3.56
10,894,532
2.59
10,760,040
2.56
7,052,044
1.68
6,448,226
1.53
6,370,876
1.51
6,246,548
1.48
5,562,117
1.32
4,816,552
1.14
4,608,795
1.09
3,352,319
0.80
2,915,330
0.69
2,613,025
0.62
1,999,202
0.47
360,953,782
85.05

C. Substantial holders

Substantial holders in the group are set out below:

Substantial holders in the group are set out below:
	Number held	Percentage
Ordinary securities
Transfield (CHG) Pty Limited	66,235,131	15.73%
UBS Global Asset Management	38,294,509	9.10%
BT Financial Group	20,077,669	5.48%

D. Voting rights

The voting rights attaching to each class of equity securities are set out below:

(a) Ordinary shares

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

AI assistant

CHARTER HALL GROUP — Annual Report 2007

64645_rns_2007-08-20_15f25442-33eb-4ff1-9033-d7d85a1ab6f4.pdf

APPENDIX 4E – PRELIMINARY FINAL REPORT

YEAR ENDING 30 JUNE 2007

1. Results for announcement to the market

Distributions Cents per stapled security

2. Entities over which control has been gained or lost during the period

3. Associates & Joint venture entities

Financial report - 30 June 2007

Contents

Directors' report

Directors

Principal activities

Distributions - Charter Hall Group

Results

Distribution

Financial Performance - 1 July 2006 to 30 June 2007

Distribution Re-investment Plan (DRP)

Review of operations

Environmental regulation

Significant changes in the state of affairs

Matters subsequent to the end of the period

Likely developments and expected results of operations

Information on directors

K Roxburgh Chairman - non-executive. Age 65.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

C McGowan Independent non executive director. Age 61.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

A Biet Non-executive director. Age 58.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

P Derrington Independent non-executive director. Age 51.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

G Fraser Non-executive director. Age 50.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

C Fuchs Executive director. Age 63.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

D Harrison Executive director. Age 41. (appointed 30/8/06)

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Nil

Special responsibilities

Nil

Interests in securities

D Southon Executive director. Age 41. (appointed 30/8/06)

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Nil

Special responsibilities

CHARTER HALL GROUP Annual Report 2007