APPENDIX 4E – PRELIMINARY FINAL REPORT

YEAR ENDING 30 JUNE 2008

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 2008 $000’s	30 June 2007 $000’s
Revenue	Increase 50% to	91,060	60,829
Profit from ordinary activities after tax attributable to members before fair value adjustments	Increase 65% to	52,211	31,675
Profit from ordinary activities after tax attributable to members	Increase 56% to	67,498	43,168

Distributions Cents per stapled security

Final distribution in respect of a CHPT unit	6.30*	5.67
Final dividend in respect of a CHL share	nil	nil
Interim distribution in respect of a CHPT unit	6.30**	4.77
Interim dividend in respect of a CHL share	nil	nil
* Payable 29 August 2008
** Paid 29 February 2008

Record date for determining entitlements to distributions - 30 June 2008

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

Charter Hall MMN Property Trust

Rothwell Retail Property Trust

Ipswich Retail Property Trust Mentone Property Trust CPRF Gepps X Trust CPRF Gepps 109 Trust CPRF MSN Property Trust

3. Associates & Joint venture entities

The Group acquired a 50% interest in Commercial and Industrial Property Pty Ltd during the year. Refer to the attached financial report for details.

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

Financial report - 30 June 2008

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

Charter Hall Group Corporate Directory 30 June 2008

Directors K Roxburgh Chairman R Woodhouse Deputy Chairman A Biet (Resigned 25/10/2007) P Derrington G Fraser C Fuchs Executive Director D Harrison Joint Managing Director C McGowan D Southon Joint Managing Director N Francis Company Secretary The annual general meeting of Charter Hall Group will be held at: Notice of annual general meeting Location Westin Hotel, 1 Martin Place, Sydney. Time 2pm Date Monday 10 November 2008 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 NSW 2000 1300 664 498 Auditor PricewaterhouseCoopers Darling Park Tower 2 201 Sussex Street Sydney NSW 1171 Solicitors Allens Arthur Robinson Level 28, Deutsche Bank Place Cnr of Hunter & Phillip Streets Sydney NSW 2000 Bankers National Australia Bank Level 24, NAB House, 255 George Street Sydney NSW 2000 Stock exchange listings Charter Hall Group stapled securities are listed on the Australian Securities Exchange (code CHC). www.charterhall.com.au Website address

Charter Hall Group Directors’ report 30 June 2008

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 year ended 30 June 2008.

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 the Group during the whole of the year and up to the date of this report, unless noted otherwise:

K Roxburgh - Chairman R Woodhouse - Deputy Chairman

A Biet (Resigned 25/10/2007)

P Derrington

G Fraser
C Fuchs - Executive Director
D Harrison - Joint Managing Director
C McGowan

D Southon - Joint Managing Director

Principal activities

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

(a) Property investment
(b) Funds management
(c) Development management
(d) Property management

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

Distributions - Charter Hall Group

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

		2008	2007
		$'000	$’000
-	Interim ordinary distribution for the 6 months ended 31 December 2007
	of 6.30 cents per security paid on 29 February 2008	26,448	-
-	Final ordinary distribution for the 6 months ended 30 June 2008 of
	6.30 cents per security expected to be paid on 29 August 2008	25,669	-
-	Interim ordinary distribution for the 6 months 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 paid on 31 August 2007	-	20,632
		52,117	38,072

Results

The Group has reported a strong financial result for the year to 30 June 2008. The underlying earnings per security of 12.74 cents for the year ended 30 June 2008 represents an increase of 34% compared to the 9.51 cents for the year ended 30 June 2007.

The profit after tax attributable to securityholders increased 56% to $67.5m.

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).

Charter Hall Group Directors' report 30 June 2008 (continued)

Financial Performance - 1 July 2007 to 30 June 2008

The Group revenue increased from $60.8m to $91.1m, a 50% increase, reflecting increased rental income of $9.8m, increased distributions from investments of $5.5m and increased management fees of $14.6m. The net profit after tax including fair value adjustments, totalling a net gain of $15.3m (2007: $11.5m), for the year is $67.5m (2007: $43.2m). 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), Charter Hall Diversified Property Fund (DPF) and Charter Hall Umbrella Fund (CHUF).

The Group generated additional management fee income as a result of funds under management growth.

The Group also generated strong profits from 50% owned Commercial and Industrial Property Pty Ltd whose results were in line with expectations.

The majority of properties held directly by CHPT and also in the 100% owned Charter Hall Core Plus Retail Fund (CPRF) have been independently valued as at 30 June 2008. In addition, the majority of properties held within CPOF, CPIF and DPF have been independently valued as at 30 June 2008.

During the year, the Group sold down its interest in CPOF from 23% to 20%, its interest in CPIF from 32% to 25% and its interest in CHUF from 47% to less than 1%.

The following movements, including additional equity contributed 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 20% investment in CPOF increased by $63m (11% unit price growth) to $143m
the value of the group’s 25% investment in CPIF increased by $12m (7% unit price growth) to $58m
the value of the group’s 5% investment in Axiom decreased $6m (75% share price decline) to $2m
the value of the group’s 17% investment in DPF increased $10m (17% unit price growth) to $24m
the value of the group’s <1% investment in CHUF decreased $11m with the sell down to retail investors

The 30 June 2008 financial results with comparatives are summarised as follows:

		2008	2007
Gross revenue ($m)		91	61
Net profit after tax ($m)		67	43
Distribution ($m)		52	38
AIFRS earnings per stapled security (EPS) (cents)		16.31	12.00
Underlying EPS (cents)	*(i), (ii)*	12.74	9.51
Distribution per stapled security (cents)	*(ii)*	12.60	10.44
Total assets ($m)		802	650
Total liabilities ($m)		310	189
Net assets ($m)		492	461
NTA per security ($)	*(ii)*	1.19	1.12
Gearing – borrowings to total assets	*(iii)*	31.2%	21.2%
Assets under management ($bn)		3.9	2.8

(i) – Excludes AASB 140 fair value adjustments on investment property and financial assets, gains on sale of investments and non cash AIFRS charges such as share based payments expense, amortisation and tax benefit on unrealised fair value losses.

(ii) – Calculation excludes stapled securities issued under the Executive Loan Security Plan in accordance with AASB2 Share Based Payments . The financial year ended 2007 DPS included a 0.44 cents distribution from unrealised gains on investments.

(iii) – Calculation is net of cash.

Charter Hall Group Directors' report 30 June 2008 (continued)

Distribution Re-investment Plan (DRP)

The DRP has been reactivated for the final distribution for the 6 month period ended 30 June 2008.

Review of operations

During the year the Group successfully completed additional equity raisings for Charter Hall Core Plus Office Fund (CPOF) ($235m) and the initial equity raising for Charter Hall Umbrella Fund (CHUF) ($237m). The Group has expanded its diverse sources of equity, providing institutional, wholesale, retail and high net worth clients with these new products.

The Group issued 5,599,098 securities in July 2007 to complete the purchase of 50% of Commercial and Industrial Property Pty Ltd.

CPOF, in which CHPT now holds a 20% interest, recently acquired its 18[th] asset bringing the total asset value to $1.4bn (on a fully developed basis) having increased from nearly $1bn at 30 June 2007.

CPIF, in which CHPT now holds a 25% interest, recently acquired its 12[th] asset bringing the total fund size to over $400m (on a fully developed basis) up from $270m at 30 June 2007.

CPRF was owned 100% by CHPT as at 30 June 2008, however its beneficial ownership interest was reduced in July 2008 to 62% with the first close raising $95m in equity.

CPRF acquired its 14th asset bringing the total fund size to $309m with Group assets worth $117m purchased by CPRF in July 2008 bringing the seed portfolio to $426m.

DPF, in which CHPT holds a 17% interest, acquired its 10[th] property which are in total valued at approximately $183m an increase on $123m at 30 June 2007.

CHOF4 has 8 projects with 2 completed and 3 commenced during the year. Equity of $124m representing 75% of the total has been called to date. CHOF5 has commenced 5 projects including projects in New Zealand. Equity of $24m representing 8% of the total has been called to date.

Total assets under management as at 30 June 2008 have grown to $3.9bn (2007: $2.8bn).

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.

Recent announcements by the Federal Government as to the introduction of a carbon trading scheme will be monitored to ensure that any potential impacts are understood and addressed.

Significant changes in the state of affairs

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

CHPT sold down 3% of its holding in CPOF and 7% of CPIF to CHUF during the year.
On 24 December 2007 CHPT sold 400 Kent Street, Sydney NSW to DPF for $30.5m.
On 22 February 2008 CHPT granted a leasehold interest in Carter Rd, Menai, NSW to CPRF for $39m.
On 30 June 2008 CHPT sold a 50% freehold interest in 570 Bourke St, Melbourne, Vic to CPOF for $72.5m.

Matters subsequent to the end of the period

Since 30 June 2008 CHPT has completed the following transactions:

The sale of 372 Whitehorse Rd, Nunawading, Vic, 61 Nepean Hwy, Mentone, Vic and 25 Nepean Hwy, Mentone, Vic to CPRF in July 2008.
The Group announced the first close of CPRF with CHPT’s beneficial ownership reduced from 100% at 30 June 2008 to 62%.
With the proceeds from the first close CHPT repaid debt and reduced its debt facility limit to $100m with an expiry of July 2011.
CHPT invested $50m in CHUF in August 2008 equating to an interest of 22%.

Except for the matters discussed above, no other matter or circumstance has arisen since 30 June 2008 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 2008 (continued)

Information on directors

K Roxburgh Chairman – Independent non-executive director.

Experience and expertise

Independent non-executive director and Chairman appointed 12 April 2005. One of the founders of E*TRADE in Australia, Board Member for 11 years to 2007, Chief Executive Officer from 1998 to 2000 then Chairman until its takeover by the ANZ Bank in 2007. For 10 years from 1986 to 1995, he was an Executive Director at the Hong Kong Bank of Australia Group, Chairman of their stockbroker, James Capel Australia and 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

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

Former listed company directorships in last 3 years

E*TRADE Australia (Retired in June 2007)

Everest Babcock and Brown Alternative Investment Trust (Resigned December 2006)

Special responsibilities

Chairman of the Board. Chairman of Nomination Committee Member of Remuneration Committee Member of Audit, Risk and Compliance Committee.

Interests in securities

50,000 securities in Charter Hall Group.

R Woodhouse Deputy Chairman – Independent non-executive director .

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 Nomination Committee Chairman of Remuneration Committee

Interests in securities

66,666 securities in Charter Hall Group.

C McGowan Independent non-executive director.

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 Committee Member of Nomination Committee

Interests in securities

Nil securities in Charter Hall Group.

Charter Hall Group Directors' report 30 June 2008 (continued)

A Biet Non-executive director. (Resigned 25 October 2007).

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. Resigned as non-executive director of the Group in October 2007.

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities Nil

Interests in securities

As at the date of his resignation, Mr Biet held 5,209,724 securities in Charter Hall Group via direct and indirect interests.

P Derrington Independent non-executive director.

Experience and expertise

Independent non-executive director since 6 April 2005. Appointed as Non-Executive Director of A.B.C. Learning Centres Limited from August 2008. Formerly the CEO of Penrith Lakes Development Corporation Limited and Managing Director of the US asset management firm Spears, Benzak, Salomon and Farrell, Patrice was also formerly the 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

Non-executive Director of A.B.C. Learning Centres Limited. Commenced 7 August 2008.

Former listed company directorships in last 3 years

Nil

Special responsibilities

Chair of Audit, Risk and Compliance Committee.

Interests in securities

Nil securities in Charter Hall Group.

G Fraser Independent non-executive director.

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, Project 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

350,000 securities in Charter Hall Group via direct and indirect interests.

Charter Hall Group Directors' report 30 June 2008 (continued)

C Fuchs Executive director.

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

6,862,615 securities in Charter Hall Group via direct and indirect interests including 1,806,020 securities in the Charter Hall Executive Loan Security Plan. Securities in the Plan which will vest upon the satisfaction of performance and service criteria.

D Harrison Managing Director.

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

11,855,755 securities in Charter Hall Group via direct and indirect interests including 5,328,808 securities in the Charter Hall Executive Loan Securities Plan. Securities in the Plan will vest upon the satisfaction of performance and service criteria.

D Southon Managing Director

Experience and expertise

David is a founding member of Charter Hall. As a Joint Managing Director David heads up the Development 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

12,083,704 securities in Charter Hall Group via direct and indirect interests including 5,310,501 securities in the Charter Hall Executive Loan Security Plan. Securities in the Plan will vest upon the satisfaction of performance and service criteria.

Company secretary

The company secretary is Mr N Francis, a member of the Institute of Chartered Accountants in Australia and Chartered Secretaries 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. He also holds a Bachelor of Business degree from the University of Technology, Sydney.

Charter Hall Group Directors' report 30 June 2008 (continued)

Meetings of directors

The numbers of meetings of the Group’s board of directors and of each board committee held during the year ended 30 June 2008, and the numbers of meetings attended by each director were:

	Full meetings	Full meetings	Audit, Risk and Nomination Remuneration	Audit, Risk and Nomination Remuneration	Audit, Risk and Nomination Remuneration	Audit, Risk and Nomination Remuneration	Audit, Risk and Nomination Remuneration	Audit, Risk and Nomination Remuneration
	of the Board of		Compliance Committee Committee
	Directors		Committee
	A	B A		B	A	B	A	B
K Roxburgh	12	12 6		6	3	3	3	3
R Woodhouse	11	12 *		*	3	3	3	3
A Biet (Resigned 25/10/2007)	4	4 *		*	*	*	*	*
P Derrington	12	12 6		6	*	*	*	*
G Fraser	12	12 6		6	*	*	*	*
C Fuchs	10	12 *		*	*	*	*	*
C McGowan	12	12 *		*	3	3	3	3
D Harrison	12	12 *		*	*	*	*	*
D Southon	12	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

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 in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.

A Principles used to determine the nature and amount of remuneration

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 securityholders
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 securityholders’ 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 2008 (continued)

Alignment to program participants’ interests:

rewards capability and experience
reflects competitive reward for contribution to growth in securityholder 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.

The Board has established a Remuneration Committee which provides advice on remuneration and incentive policies and practices and specific recommendations on remuneration packages and other terms of employment. The Corporate Governance Statement provides further information on the role of this committee.

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 are 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 2007. Non-executive directors who are part of a committee receive additional yearly fees. The base remuneration will be reviewed early in the year ending 30 June 2009 determine its appropriateness.

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.

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 Joint 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 year ended 30 June 2008, the KPI’s linked to STI plans were based on group and personal objectives. The KPI’s required performance in achieving specific targets.

The Joint Managing Directors and Remuneration Committee are responsible for assessing whether the KPI’s are met. To help make this assessment, the committee receives 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 Board approved budget distribution. The Remuneration Committee has approved a year ending 30 June 2008 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 2008 exceeds the distribution forecast in the Board approved budget.

Charter Hall Group Directors' report 30 June 2008 (continued)

In order to bring the Joint Managing Directors in line with market levels and to acknowledge the earnings outperformance of the Group the Remuneration Committee approved an additional payment of $275,000 each for David Harrison and David Southon. The financial year ended 30 June 2008 bonus has been approved by the Board subject to the completion of the audit and release of accounts. From 1 July 2008 the Joint Managing Directors bonus will be in the range of 50-100% of salary, subject to individual KPI’s and Group performance.

The Remuneration Committee 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 exceeded the distribution forecast in the Board approved budget. The total bonus of $254,000 was split $51,000 for Cedric Fuchs, $102,000 for David Harrison and $102,000 for David Southon and was paid in the financial year ended 2008.

Charter Hall Limited Executive Loan Security Plan

Information on the Charter Hall Limited Executive Loan Security Plan is set out in note 40 to the financial statements.

B Details of remuneration

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 7 - 9 and the following executive officers, who with the executive directors include the 5 highest paid executives of the Group:

J Bakker – Corporate Development Director
R Champion – Fund Manager and Retail Director
M Winnem – Fund Manager and Development Director

The cash bonuses are dependent on the satisfaction of performance conditions as set out in the section headed Short-term incentives above.

Key management personnel of the Group

2008	Short-term benefits	Short-term benefits	Post-employment	Security-based
			benefits	payment
	Cash
	salary and	Cash
Name	fees	bonus	Superannuation	Securities	Total
	$	$	$	$	$
Non-executive directors
K Roxburgh_Chairman_	125,344	-	11,281	-	136,625
R Woodhouse_Deputy Chairman_	75,102	-	6,759	-	81,861
P Derrington	78,784	-	7,091	-	85,875
G Fraser	73,624	-	6,626	-	80,250
C McGowan	24,861	-	60,000	-	84,861
A Biet (to25/10/07)	23,867	-	2,148	-	26,015
Sub-total non-executive directors	401,582	-	93,905	-	495,487
Executive directors
C Fuchs	181,420	101,000	98,580	136,208	517,208
D Harrison	484,684	477,000	13,129	700,811	1,675,624
D Southon	486,871	477,000	13,129	697,997	1,674,997
Other key management personnel
J Bakker	334,962	100,000	13,129	59,324	507,415
R Champion	386,871	60,000	13,129	89,222	549,222
M Winnem	295,332	80,000	12,886	62,814	451,032
Totals	2,571,722	1,295,000	257,887	1,746,376	5,870,985

The bonus for the year ended 30 June 2007 paid		to the executive directors was not accrued in 2007 and has
consequently been included in this year together with the 30 June 2008 bonus. The amount of the 2007 bonus is
discussed above.

Charter Hall Group Directors' report 30 June 2008 (continued)

Key management personnel of the Group

2007*	Short-term benefits	Short-term benefits	Post-employment	Security-based
			benefits	payment
	Cash	Cash
Name	salary and fees	bonus	Superannuation	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

* Short term benefits to Non-Executive Directors include Director and committee fees. A Biet transitioned from Executive to Non-Executive Director on 1 January 2007 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 Non Executive Director.

** 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 on 6 April 2005.

Charter Hall Limited does not have any employees in its own right as employees are paid by a subsidiary.

C Service agreements

The Joint Managing Directors, David Harrison and David Southon signed 3 year agreements which expired 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

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 strong 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 non recourse loans to acquire securities under the plan with interest charged at the distribution yield. If the performance and service 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.

2006 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.

Charter Hall Group Directors' report 30 June 2008 (continued)

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.

2007 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 year 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 year 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.

2008 Offer: issued 10,041,015 securities on 2 July 2007 at $2.76 per security (includes directors and KMPs). In addition the Group purchased, on market, 70,534 securities on 6 July 2007 at $2.8355, 35,714 securities on 30 August 2007 at $2.80, 17,008 securities on 21 November 2007 at $2.9397 and 73,366 securities on 7 December 2007 at $2.7260.

Performance conditions : for the year 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. The loan is repayable after 5 years

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 year from the company’s employee security scheme:

					LSP		LSP	LSP	LSP
					Securities		Securities	Securities	unvested
	LSP Securities	LSP Securities		LSP Securities	Forfeited in	Total	Vested in	Vested in	securities
	Issued in 2006	Issued in 2007		Issued in 2008	2008	securities	2007#	2008#	30/6/08
*Issue price*	$1.00	$1.27		$2.76
*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)	(481,233)	974,786
D Harrison	1,475,000	1,161,417		2,717,391	-	5,353,808	(491,667)	(878,806)	3,983,335
D Southon	1,475,000	1,118,110		2,717,391	-	5,310,501	(491,667)	(864,370)	3,954,464
*Key management*	*personnel*
J Bakker^	-	621,118		362,319	-	983,437	-	(207,039)	776,398
R Champion	-	551,181		326,087	-	877,268	-	(183,727)	693,541
M Winnem	-	236,220		289,855	-	526,075	-	(52,493)	473,582

A Biet’s securities were forfeited as the service criteria could not be met as a non-executive director.
^ J Bakker’s 2007 securities were issued at a price of $1.61.

Securities that have vested but have not been exercised by repayment of the loan and removal from the LTI plan.

The model inputs for the Black-Scholes method for assessing the fair value at loan date for the LSP securities issued during the year ended 30 June 2008 include the following:

(a) security share price at grant date was $2.76.
(b) loan value per security was $2.76.
(c) grant date 2 July 2007 and expiry of loan 30 September 2012.
(d) expected price volatility 32.62%
(e) expected distribution yield 4.244%
(f) risk-free interest rate 6.465%

E Additional information

Details of the short term incentives and the vesting of the securities are shown above. The table below shows the percentage of securities forfeited for not satisfying the service and performance criteria that make up the vesting conditions. No options will vest if the conditions are not satisfied. The maximum value of the options yet to vest has been determined as the amount of the grant date fair value of the options that is yet to be expensed.

Charter Hall Group Directors' report 30 June 2008

(continued)

				Minimum total	Maximum total
	Year			value of grant	value of grant
Name	granted	Vested %	Forfeited %	yet tovest $	yet tovest $
A Biet	2006	33%	67%	nil	-
C Fuchs	2008	-	-	nil	99,193
	2007	33%	-	nil	11,309
	2006	66%	-	nil	2,302
D Harrison	2008	-	-	nil	743,936
	2007	33%	-	nil	33,360
	2006	66%	-	nil	3,234
D Southon	2008	-	-	nil	743,936
	2007	33%	-	nil	32,116
	2006	66%	-	nil	3,234
J Bakker	2008	-	-	nil	51,891
	2007	33%	-	nil	20,568
R Champion	2008	-	-	nil	46,702
	2007	33%	-	nil	15,832
M Winnem	2008	-	-	nil	41,513
	2007	33%	-	nil	6,785

Further details relating to the LSP are set out below:

	Remuneration	Value at grant	Value at vesting date	Value at 30	Value at
Name	consisting of LSP	date $	(30 September 2007) $	June2008 $	forfeit date $
A Biet	-	-	-		1,225,000
C Fuchs	26.3%	176,291	854,848	17,500	-
D Harrison	41.7%	1,322,164	1,526,123	24,583	-
D Southon	41.8%	1,322,164	1,498,454	24,583	-
J Bakker	16.2%	111,215	256,728	-	-
R Champion	11.7%	100,094	290,289	-	-
M Winnem	13.9%	88,972	82,939	-	-

The value of securities at grant date is nil as the grant value is equivalent to the loan provided. The value at the vesting date of 30 September 2007 reflects a security price of $2.85 however these securities have remained in the plan. The value at the security price at 30 June 2008 is shown above. The value at forfeit date is based on a security price of $2.85 with a loan of $1.00.

Loans to directors and executives

Information on loans to directors and executives, including amounts, interest rates and repayment terms are set out in note 30 to the financial statements.

Insurance of officers

During the year, Charter Hall Group paid a premium of $72,300 (2007: $56,561) 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.

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 year 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:

Charter Hall Group Directors' report 30 June 2008 (continued)

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 .

During the year 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 – 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 equity raising Total remuneration for taxation services (c) Advisory services PricewaterhouseCoopers Australian firm Long term incentive plan structure Total remuneration for advisory services	Consolidated Parent entity 2008 2007 2008 2007 $ $ $ $ 206,901 207,887 - - 56,417 33,290 - -
	263,318 241,177 - -
	219,000 - - -
	219,000 - - -
	452,318 241,177 - -
	21,090 37,610 - - - 97,123 - -
	21,090 134,733 - -
	- 38,500 - -
	- 38,500 - -

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 17.

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 40] intentionally omitted <==

K Roxburgh Chairman Sydney

25 August 2008

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 Limited for the year ended 30 June 2008, 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 Limited and the entities it controlled during the year, including Charter Hall Property Trust.

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

B K Hunter Partner

Sydney 25 August 2008

Liability limited by a scheme approved under Professional Standards Legislation

Charter Hall Group Corporate Governance Statement 30 June 2008 (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.

On 2 August 2007 the ASX released the revised Corporate Governance Principles and Recommendations (the “Revised Principles”). The effective date for the Revised Principles is for financial years beginning on or after 1 January 2008. This means that the Group will be obliged to report on whether it has complied with the Revised Principles in its annual report for the year ending 30 June 2009.

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 Company Secretary.

Principle 1: Lay Solid Foundations for Management and Oversight

Recommendation 1.1: Formalise and disclose the functions reserved to the board and those delegated to management

The Board operates in accordance with a formal charter which establishes its duties and responsibilities and the scope of the authority delegated to senior management.

In summary, the Board’s charter states that the Board has primary responsibility, among other duties, to provide strategic guidance to the Group, monitor the operational and financial position of the Group, identify risk and ensure appropriate risk management systems are in place.

The full charter can be found on the Corporate Governance section of the Group’s website www.charterhall.com.au.

Principle 2: Structure the board to add value

Board of Directors

The Board is comprised of 8 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
Roy Woodhouse	Deputy Chairman	Yes	6 April 2005
CedricFuchs	ExecutiveDirector	No	6April 2005
PatriceDerrington	Non-ExecutiveDirector	Yes	6April 2005
Glenn Fraser	Non-ExecutiveDirector	Yes	6April 2005
Colin McGowan	Non-ExecutiveDirector	Yes	6April 2005
David Harrison	Joint Managing Director	No	30 August 2006
David Southon	JointManagingDirector	No	30August2006

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.

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 on 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.

Recommendation 2.1: A majority of the Board should be independent directors.

As shown in the table above, the Board comprises a majority of independent directors. Five out of the eight members of the Board are considered to be independent directors in accordance with the criteria set by Board in relation to determining directors’ independence. These principles are guided principally by the criteria set by the ASX and 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 securityholder’s understanding of a director’s performance.

Charter Hall Group Corporate Governance Statement 30 June 2008 (continued)

Following Transfield’s sell down of its Charter Hall Group holding to 3% in October 2007 (below the 5% threshold definition of substantial shareholder), Mr Roy Woodhouse and Mr Glenn Fraser were re-classified by Charter Hall Group’s Board as Independent Directors.

Recommendation 2.2: The chairperson should be an independent director.

Recommendation 2.3: The roles of chairperson and chief executive officer should not be exercised by the same individual.

Mr Kerry Roxburgh is the Chair of the Board. Mr Roxburgh is a non-executive, independent member of the Board (in accordance with the criteria described above). The role of CEO – or Managing Director – is carried out jointly by Mr Harrison and Mr Southon, two executive directors of the group.

Recommendation 2.4: The board should establish a nomination committee.

The Board has established a Nomination Committee which consists of the Group’s Chairman Kerry Roxburgh (Committee Chairman), Roy Woodhouse and Colin McGowan, who are all independent, non executive directors. Details of the committee members experience and the number of meetings held and attended can be found in the Directors Report. A copy of the Nomination Committee Charter which sets out the competencies of the Committee is available on the Group’s website.

Principle 3: Promote Ethical and Responsible Decision Making

Recommendation 3.1: Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to:

3.1.1 the practices necessary to maintain confidence in the company’s integrity

3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices

The Group has established a formal Code of Conduct for its Directors as well as a separate Code of Conduct for all its employees, including key executives, which form the basis for ethical behaviour by Directors, key executives and employees in general, and are the framework that provides the foundation for maintaining and enhancing the Group’s reputation. The objective of the Codes is to ensure that Directors can be confident that the Group conducts its affairs honestly in accordance with ethical values and practices.

A full copy of the Directors’ Code of Conduct can be obtained from the Corporate Governance section of the Group’s website.

Recommendation 3.2: Disclose the policy concerning trading in company securities by directors, officers and employees.

The Group has in place a formal Security Trading Policy which regulates the manner in which Directors and employees can deal with 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.

During the year the policy specifies trading blackouts as the periods during which trading Securities cannot occur. Trading is always prohibited if the relevant person is in procession of non-public price sensitive information regarding the Group.

The policy has been formally reviewed and up-dated and approved by the Board in December 2007. A copy of the current Security Trading Policy is available on the Group’s website.

Principle 4: Safeguard integrity in financial reporting

Recommendation 4.1: Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards.

The Joint Managing Directors and Chief Financial Officer provide a certification with the specifications contained in this Recommendation 4.1 to the Board prior to the Board’s review and approval of the accounts.

Recommendation 4.2: The board should establish an audit committee. Recommendation 4.3: Structure the audit committee so that it consists of:

Only non-executive directors
A majority of independent directors
An independent chairperson, who is not chairperson of the board
At least three members.

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.

Charter Hall Group Corporate Governance Statement 30 June 2008

(continued)

The Committee is comprised of Patrice Derrington (Chair), Kerry Roxburgh and Glenn Fraser, who are all non executive Directors and, from October 2007, all independent members (previously Mr Fraser was considered non-independent). The members have comprehensive financial and property industry expertise. The Committee met on six occasions during the year to 30 June 2008. Please refer to the Directors Report for more information on members, including attendance at committee meetings.

Recommendation 4.4: The audit committee should have a formal charter

The Audit, Risk and Compliance Committee reports to the Board and has adopted a formal Charter which sets out the Committee’s role and responsibilities, composition, structure and membership requirements. Responsibilities include the assessment of the internal control and compliance systems, monitoring the integrity of the financial statements, reviewing the financial reporting processes and continuous disclosure, selection and appointment of external auditors, and the rotation of external audit engagement partners, as well as monitoring their performance. A copy of the Charter is available on the Corporate Governance section on the Group’s website.

Principle 5: Make timely and balanced disclosure

Recommendation 5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.

The Group has a Continuous Disclosure Policy consistent with the continuous disclosure obligations of the ASX and Corporations Act. The policy has been formally reviewed and up-dated by the Board in June 2008. The policy is designed to ensure that all investors have equal and timely access to information concerning the Group, and to ensure that pricesensitive information from any part of the Group is immediately notified to the ASX in a complete, balanced and timely manner.

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

Principle 6: Respect the rights of shareholders

Recommendation 6.1: Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.

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. The Group’s communication’s strategy is outlined and disclosed in the Continuous Disclosure Policy, mentioned above.

In addition to this, the Group maintains a website (www.charterhall.com.au) providing access to information likely to be of interest to securityholders, including a Corporate Governance Section, Investor Centre, and News Centre. The Group encourages securityholders to utilise its website, which is regularly updated, as their primary tool to access information and disclosures.

Recommendation 6.2: Request the external auditor to attend the annual general meeting and be available to answer shareholders’ questions about the conduct of the audit and the preparation and content of the auditor’s report.

The Group’s auditor, Mr Brian Hunter of PricewaterhouseCoopers, has attended all Annual General Meeting’s of the Group held to date and has been requested to attend the up-coming Meeting to answer any securityholders’ questions about the conduct of the audit and the preparation and content of the auditor’s report.

Principle 7: Recognise and manage risk

Recommendation 7.1: The board or appropriate board committee should establish policies on risk oversight and 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. Specifically, as per the Audit, Risk and Compliance Committee’s charter, the Committee has responsibility, amongst other things, for internal control and compliance systems, assessment at regular intervals of compliance plans and risk management policies and plans.

The Board Charter, also available on the Group’s website, includes the role of the Board in identifying and monitoring risks. However, the Board has delegated to the Audit, Risk and compliance Committee the function of identifying and managing operational risks and, where those risks could have a material impact on the Group, formulating strategies for managing these risks for consideration by the Board.

Charter Hall Group Corporate Governance Statement 30 June 2008

(continued)

The financial accounts section of the Annual Report also contains a detailed description of the Group’s financial risk management. The Audit, Risk and Compliance Committee’s charter is posted on the Corporate Governance Section of the Group’s website.

Considerable importance is placed on maintaining a strong control environment through an organisation structure with clearly drawn lines of accountability and authority.

Charter Hall has a Risk Management Statement in place which describes the main material risks facing the group, the system for identifying, assessing, monitoring and managing material risk, which is available upon request.

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.

Recommendation 7.2: The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that:

7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board
7.2.2 the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

The Joint Managing Directors and the Chief Financial Officer confirm in writing to the Board that the financial statements present a true and fair view and that the financial statements are based on a sound system of financial risk management and internal compliance and controls and that these are operating efficiently and effectively in all material respects.

Principle 8: Encourage enhanced performance

Recommendation 8.1: Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives.

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 and Nomination Committees and Joint Managing Directors.

During this financial year, the Directors carried out a self-assessment via completion of a questionnaire prepared by the Chair who further reviewed each response to assess any areas requiring attention.

Principle 9: Remunerate fairly and responsibly

Recommendation 9.1: Provide disclosure in relation to the company’s remuneration policies to enable investors to understand (i) the costs and benefits of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance.

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.

The Remuneration Committee obtain the advice of independent experts to ensure the Group’s remuneration policies are appropriate and follow best practice and address the requirements of the Group’s stakeholders.

For further information in regards to the Group’s Remuneration policies and framework please refer to the Remuneration Report.

A copy of the Remuneration Committee Charter is available on the Group’s website.

Recommendation 9.2: The Board should establish a remuneration committee.

The Remuneration Committee comprises three non-executive, independent directors being Roy Woodhouse (Chairman), Colin McGowan and Kerry Roxburgh (please refer to the Directors Report for information in regards to the members and the number of meetings held and attended).

Charter Hall Group Corporate Governance Statement 30 June 2008

(continued)

Recommendation 9.3: Clearly distinguish the structure of non-executive directors’ remuneration from that of executives.

Fees paid to Non-Executive Directors are set by the Board in consultation with remuneration experts, within an aggregate limit approved by securityholders. The total remuneration paid to Non-Executive Directors to 30 June 2008 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.

Executive Directors remuneration packages comprise salary, short term incentives (i.e. bonus) and long term incentives. Further details on Executive Directors’ packages are set out in the Remuneration Report.

Recommendation 9.4: Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by securityholders.

Payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by securityholders. Details of these payments are set out in the Remuneration Report.

Principle 10: Recognise the legitimate interests of stakeholders

Recommendation 10.1: Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate 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 provided with the code of conduct at induction and 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 2008

Contents	Page
Financial report
Income statements	24
Balance sheets	25
Statements of changes in equity	26
Cash flow statements	27
Notes to the financial statements	28
Directors' declaration	72
Independent audit report to the members	73

Charter Hall Group Income Statements

For the year ended 30 June 2008

Notes Revenue 6 Gain on sale of investments Other income Investment property expenses Employee benefits expense Depreciation 8 Other expenses Finance costs 8 Foreign exchange gain Share of net profit of associates accounted for using the equity method Net gain from fair value adjustments 7 Profit/(loss) before income tax Income tax benefit / (expense) 9 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 securityholders of Charter Hall Group Group earnings per stapled security Basic earnings per security 39 Diluted earnings per security 39	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 91,060 60,829 16,398 4,376 838 - - - - 35 - - (8,275) (7,120) - - (17,412) (9,893) (66) - (252) (197) - - (5,052) (4,084) (2) (82) (20,111) (6,496) (27,548) (14,163) 922 - - - 7,534 287 - -
	49,252 33,361 (11,218) (9,869) 15,287 11,493 - -
	64,539 44,854 (11,218) (9,869) 2,959 (1,686) 7,834 3,540
	67,498 43,168 (3,384) (6,329)
	(3,888) 1,239 (3,384) (6,329) 71,386 41,929 - -
	67,498 43,168 (3,384) (6,329)
	Cents Cents 16.31 12.00 16.14 11.94

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

Charter Hall Group Balance sheets As at 30 June 2008

Notes ASSETS Current assets Cash and cash equivalents 10 Trade and other receivables 11 Financial assets available for sale 12 Total current assets Non-current assets Trade and other receivables 15 Investments accounted for using the equity method 16 Financial assets at fair value through the profit and loss 13 Other financial assets 17 Property, plant and equipment 18 Investment properties 19 Derivative financial instruments 14 Deferred tax assets 20	Notes ASSETS Current assets Cash and cash equivalents 10 Trade and other receivables 11 Financial assets available for sale 12 Total current assets Non-current assets Trade and other receivables 15 Investments accounted for using the equity method 16 Financial assets at fair value through the profit and loss 13 Other financial assets 17 Property, plant and equipment 18 Investment properties 19 Derivative financial instruments 14 Deferred tax assets 20	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 16,183 26,507 328 168 32,344 26,564 64 - - 218 - -
		48,527 53,289 392 168
		5,082 7,405 13,763 12,424 50,340 760 - - 227,283 149,945 - - 18,182 - 48,693 2,360 1,577 1,355 - - 439,645 430,701 - - 5,880 5,345 - - 5,110 1,283 10,105 5,687 295 295 295 295
Other assets
Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables 21 Provisions 22 Total current liabilities Non-current liabilities Borrowings 23 Deferred tax liabilities 24 Financial liabilities 19 Provisions 25 Total non-current liabilities Total liabilities Net assets/(liabilities) EQUITY Equity holders of Charter Hall Limited Contributed equity 26 Reserves 27(a) Retained profits / (accumulated losses) 27(b) Parent entity interest Equity holders of Charter Hall Property Trust (minority interest) 28 Total equity		753,394 597,089 72,856 20,766
		801,921 650,378 73,248 20,934
		42,491 28,043 58 5 109 149 - -
		42,600 28,192 58 5
		260,981 158,572 129,008 75,351 3,408 2,562 555 368 2,462 - - - 150 41 - -
		267,001 161,175 129,563 75,719
		309,601 189,367 129,621 75,724
		492,320 461,011 (56,373) (54,790)
		5,272 5,131 5,272 5,131 (46,679) (50,952) (50,340) (52,000) (3,683) 207 (11,305) (7,921)
		(45,090) (45,614) (56,373) (54,790) 537,410 506,625 - -
		492,320 461,011 (56,373) (54,790)

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

Charter Hall Group Statements of changes in equity

For the year ended 30 June 2008

		Consolidated	Consolidated	Parent	entity
		2008	2007	2008	2007
	Notes	$'000	$'000	$'000	$'000
Total equity at the beginning of the year		461,011	279,470	(54,790)	(50,221)
Changes in the fair value of cash flow hedges, net of tax	14,27	(379)	(1,340)	-	-
Foreign currency reserve movement	27	(1,257)	22	(57)	-
Net loss recognised directly in equity		(1,636)	(1,318)	(57)	-
Profit / (loss) for the year		67,498	43,168	(3,384)	(6,329)
Total recognised income and expense for the year		65,862	41,850	(3,441)	(6,329)
Transactions with equity holders in their capacity as equity
holders:
Contributions of equity, net of transaction costs *	26	13,225	177,138	141	1,760
Distributions provided for or paid *	29	(52,117)	(38,072)	-	-
Other		(47)	(258)	-	-
Security based payments reserve	27	4,386	883	1,717	-
		(34,553)	139,691	1,858	1,760
Total equity at the end of the year		492,320	461,011	(56,373)	(54,790)
Total recognised income and expense for the year
Equity holders of Charter Hall Limited		(4,001)	1,238	(3,441)	(6,329)
Equity holders of Charter Hall Property Trust (minority interest)		69,863	40,612	-	-
		65,862	41,850	(3,441)	(6,329)

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 28 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 2008

Consolidated Parent entity 2008 2007 2008 2007 Notes $'000 $'000 $'000 $'000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 80,456 78,099 53 5,050 Payments to suppliers and employees (inclusive of goods and services tax) (37,933) (43,380) (16) (77) 42,523 34,719 37 4,973 Interest paid (17,323) (6,506) (27,498) (14,163) Distributions and dividends from investments 13,990 2,931 15,642 4,222 Interest received 6,092 5,043 1,166 450	Consolidated Parent entity 2008 2007 2008 2007 Notes $'000 $'000 $'000 $'000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 80,456 78,099 53 5,050 Payments to suppliers and employees (inclusive of goods and services tax) (37,933) (43,380) (16) (77) 42,523 34,719 37 4,973 Interest paid (17,323) (6,506) (27,498) (14,163) Distributions and dividends from investments 13,990 2,931 15,642 4,222 Interest received 6,092 5,043 1,166 450	Consolidated Parent entity 2008 2007 2008 2007 Notes $'000 $'000 $'000 $'000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 80,456 78,099 53 5,050 Payments to suppliers and employees (inclusive of goods and services tax) (37,933) (43,380) (16) (77) 42,523 34,719 37 4,973 Interest paid (17,323) (6,506) (27,498) (14,163) Distributions and dividends from investments 13,990 2,931 15,642 4,222 Interest received 6,092 5,043 1,166 450
		42,523 34,719 37 4,973 (17,323) (6,506) (27,498) (14,163) 13,990 2,931 15,642 4,222 6,092 5,043 1,166 450
Interest received
Net cash inflow / (outflow) from operating activities 38 Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired Payments for property, plant and equipment Payments for investment property Proceeds on disposal of investment property Payments for other financial assets Loans to / (repaid by) employees Investment in associates Proceeds on disposal of investments in associates Investment in joint venture Repayments from / (loans to) associates Loans to subsidiaries Net cash (outflow) from investing activities Cash flows from financing activities Proceeds from issues of securities and other equity securities Proceeds from forfeited LTI securities Proceeds from CPOF investors for units to be issued Proceeds from borrowings Repayment of borrowings Security issue and transaction costs Distributions paid to securityholders Net cash inflow from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 10		45,282 36,187 (10,653) (4,518)
		- (9,691) - (9,691) (377) (1,244) - - (102,829) (248,173) - - 98,943 - - - (18,182) - - - (3,894) (2,936) (3,945) (2,936) (113,715) (134,091) (5,944) (875) 41,700 - - - (25,510) - (25,510) - 9,115 (9,081) - - - - - (5,019)
		(114,749) (405,216) (35,399) (18,521)
		4,337 201,584 189 1,755 - - 1,717 - - (58,318) - - 209,187 116,357 44,306 20,301 (106,921) - - - (380) (4,621) - - (47,080) (27,836) - -
		59,143 227,166 46,212 22,056
		(10,324) (141,863) 160 (983) 26,507 168,370 168 1,151
		16,183 26,507 328 168

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

Charter Hall Group Notes to Financial Statements 30 June 2008

Contents of the notes to the financial statements

		Page
1	Summary of significant accounting policies	29
2	Financial risk management	37
3	Critical accounting estimates and judgements	39
4	Reconciliation of underlying earnings	39
5	Segment information	40
6	Revenue	41
7	Fair value adjustments	41
8	Expenses	42
9	Income tax expense	42
10	Current assets - Cash and cash equivalents	43
11	Current assets - Trade and other receivables	43
12	Current assets - Financial assets	44
13	Non-current assets - Other financial assets at fair value through profit and loss	44
14	Derivative financial instruments	45
15	Non-current assets - Trade and other receivables	46
16	Non-current assets - Investments accounted for using the equity method	48
17	Non-current assets - Other financial assets	48
18	Non-current assets - Property, plant and equipment	48
19	Non-current assets - Investment properties	49
20	Non-current assets - Deferred tax assets	50
21	Current liabilities - Trade and other payables	50
22	Current liabilities - Provisions	50
23	Non-current liabilities - Borrowings	51
24	Non-current liabilities - Deferred tax liabilities	53
25	Non-current liabilities - Provisions	54
26	Contributed equity	55
27	Reserves and retained profits	57
28	Minority interest	58
29	Distributions	58
30	Key management personnel disclosures	59
31	Remuneration of auditors	62
32	Commitments	62
33	Related parties	63
34	Subsidiaries	65
35	Investments in associates	66
36	Investment in joint venture	68
37	Events occurring after the balance sheet date	69
38	Reconciliation of profit after income tax to net cash inflow from operating activities	69
39	Earnings per security	70
40	Security-based payments	71

Charter Hall Group Notes to the financial statements 30 June 2008 (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). In accordance with AASB Interpretation 1002 the results and equity, not directly owned by CHL, of CHPT have been treated and disclosed as a minority interest. Whilst the results and equity of CHPT are disclosed as minority interest, the stapled securityholders of CHL are the same as the stapled securityholders 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 2008 and the results of all subsidiaries for the year 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 2008 (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 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 (NZ$1.2641 for A$1.00 for 30 June 2008)
income and expenses for each income statement are translated at average exchange rates (NZ$1.16742 for A$1.00); 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 2008 (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 9.

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.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

1 Summary of significant accounting policies (continued)

(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.

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 11 and 15).

(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 2008 (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 14. Movements in the hedging reserve in securityholders' equity are shown in note 27.

(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 2008 (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

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.

(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 2008 (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 and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual 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 40.

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 and repayment of the loan, 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 2008 (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 98/100, 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 2008 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 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.

(ii) 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.

(iii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101

A revised AASB 101 was issued in September 2007 and is applicable to annual reporting periods beginning on or after 1 January 2009. It ensures the presentation of a statement of comprehensive income and make changes to the statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified items in the financial statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the beginning of the comparative period. The Group intends to apply the revised standard from 1 July 2009.

(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 32). 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.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

1 Summary of significant accounting policies (continued)

(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 $52m 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

(a) Listed equity securities price risk

The Group is exposed to equity securities price risk. This arises from an investment in a publicly listed entity held by the Group and classified on the balance sheet as at fair value through the profit or loss.

Price rate sensitivity analysis

The table below illustrates the potential impact a change in listed share prices by +/-20% would have on the Group’s profit and equity. The movement in the price variable has been determined based on management’s best estimate, having regard to a number of factors, including historical levels of price movement, historical correlation of the Group’s investments with the relevant benchmark and market volatility. However, actual movements in the price may be greater or less than anticipated due to a number of factors. As a result, historic price variations are not a definitive indicator of future price variations.

		-20%		+20%
2008	Carrying
	amount	Profit	Equity	Profit	Equity
	$’000	$000	$000	$000	$000
Assets
Listed shares	2,004	(281)	(281)	281	281
Total increase/(decrease)		(281)	(281)	281	281

(b) Unlisted units price risk

The Group is exposed to unlisted units price risk. This arises from an investment in unlisted property funds managed by the Group. These funds invest in direct property.

Price rate sensitivity analysis

The table below illustrates the potential impact a change in unlisted unit prices by +/-10% would have on the Group’s profit and equity. The movement in the price variable has been determined based on management’s best estimate, having regard to a number of factors, including historical levels of price movement, historical correlation of the Group’s investments with the relevant benchmark and market volatility. However, actual movements in the price may be greater or less than anticipated due to a number of factors. As a result, historic price variations are not a definitive indicator of future price variations.

		-10%		+10%
2008	Carrying
	amount	Profit	Equity	Profit	Equity
	$’000	$000	$000	$000	$000
Assets
Unlisted units	225,279	(22,528)	(22,528)	22,528	22,528
Total increase/(decrease)		(22,528)	(22,528)	22,528	22,528

(ii) 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 receipts are not materially exposed to changes in market interest rates.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

2 Financial risk management (continued)

The Group's interest-rate risk arises from long-term borrowings of $260,982,000 (2007: $158,572,000). 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 75% (2007: 70%) of debt had fixed interest rates through the use of derivatives.

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. Refer to note 15(c) for interest rate sensitivity analysis on assets and note 23(d) for sensitivity analysis for liabilities.

(b) 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 Finance aims at maintaining flexibility in funding by keeping committed credit lines available.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, except for interest rate swaps

Maturities of financial liabilities

2008 Consolidated Non-interest bearing Bank and other loans Interest rate swaps 2007 Consolidated Non-interest bearing Bank and other loans Interest rate swaps 2008 Parent Non-interest bearing Bank and other loans 2007 Parent Non-interest bearing Bank and other loans	Carrying Amount Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total cash flows $’000 $’000 $’000 $’000 $’000 1,002 1,002 - - - 1,002 260,981 22,430 283,411 - - 305,841 (5,880) (2,901) (2,868) - - (5,769)
	256,103 20,531 280,543 - - 301,074
	Carrying Amount Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total cash flows $’000 $’000 $’000 $’000 $’000 1,252 1,252 - - - 1,252 158,572 11,372 169,944 - - 181,316 (5,345) (727) (694) (661) - (2,082)
	154,479 11,897 169,250 (661) - 180,486
	Carrying Amount Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total cash flows $’000 $’000 $’000 $’000 $’000 53 53 - - - 53 129,008 30,014 30,014 90,042 228,299 378,369
	129,061 30,067 30,014 90,042 228,299 378,422
	Carrying Amount Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total cash flows $’000 $’000 $’000 $’000 $’000 5 5 - - - 5 75,351 14,104 14,104 42,311 128,264 161,903
	75,356 14,109 14,104 42,311 128,264 161,908

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

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 35) and investment properties (Note 19). These investments are reviewed regularly for impairment by reference to external independent property valuations and market conditions, using generally accepted market practices.

(ii) Estimated performance fees

Critical judgements are made by the Group in respect of recognising performance fee revenue. Performance fees are only recognised if it is probable a fee will be received. Detailed calculations are completed and the risks associated with the fee are assessed when deciding when it is appropriate to recognise revenue.

4 Underlying earnings per security

The Responsible Entity does not consider it appropriate to use profit under certain Australian Accounting Standards to determine distributions to securityholders. The table below outlines the Responsible Entity’s adjustments to profit under Australian Accounting Standards to determine the amount the Responsible Entity believes should be available for distribution for the current year. The Responsible Entity uses this amount as guidance for determination.

Underlying earnings is a financial measure which is not prescribed by Australian Accounting Standards and represents the profit under Australian Accounting Standards adjusted for certain unrealised and non-cash items. Per the Trust Constitution, the adjustments, and therefore the amount distributed to securityholders are at the discretion of the Responsible Entity. The Responsible Entity will use the underlying earnings calculated as a guide to assessing an appropriate distribution to declare.

The adjustments made to profit under Australian Accounting Standards in order to solely determine underlying earnings may change from time to time depending on future changes to accounting standards and the Responsible Entity’s assessment as to whether non-recurring or infrequent items (such as realised gains on the sale of properties) will be distributed to securityholders.

Earning per security per note 39 (cents) Underlying earning per security (cents) Earnings used in the calculation of underlying earnings per security (‘000s) Weighted average number of ordinary securities used in the calculation of underlying earnings per security (‘000s) (note 39) Net profit attributable to stapled securityholders of the Group Net gain from fair value adjustments Foreign exchange gain Gains on sale of investments Tax expense / (benefit) on unrealised gains or losses Non cash long term incentive plan Amortisation of fees paid for raising of wholesale equity Amortisation of lease incentives Underlying earnings Distribution paid/payable Distribution paid/payable per security (cents)	Consolidated 2008 2007 16.31 12.00 12.74 9.51 52,742 34,223 413,905 359,384 $'000 $'000 67,498 43,168 (15,287) (11,493) (922) - (838) - (1,552) 852 2,669 882 755 480 419 344
	52,742 34,233
	52,117 38,072
	12.60 10.44

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

5 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 property funds.

Funds management and corporate

Property funds management, development management and property management.

2008 Revenue Inter-segment sales (note (ii)) Total sales revenue Gain on sale of Investments 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 benefit 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 Long Term Incentive expenses 2007 Revenue Inter-segment 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 Long term incentive expenses	Property Investment Funds management and corporate Inter-segment eliminations/ unallocated Consolidated $'000 $'000 $'000 $'000 78,394 40,214 (27,548) 91,060 - 745 (745) -
	78,394 40,959 (28,293) 91,060 838 - - 838 - 7,534 - 7,534
	79,232 48,493 (28,293) 99,432
	70,566 26,345 (27,548) 69,363 (20,109) (27,550) 27,548 (20,111)
	50,457 (1,205) - 49,252 21,132 (5,845) - 15,287
	71,589 (7,050) - 64,539 (203) 3,162 - 2,959
	71,386 (3,888) - 67,498
	842,817 93,762 (134,658) 801,921 299,758 144,501 (134,658) 309,601 225,279 52,344 - 277,623 8,944 474 - 9,418 - (252) - (252) - (2,669) - (2,669) 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 8,609 - 142,856 145,913 1,245 - 147,158 - (197) - (197) - (882) - (882)

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

5 Segment information (continued)

(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 17% of Charter Hall Diversified Property Fund, 20% of Charter Hall Core Plus Office Fund, 25% of Charter Hall Core Plus Industrial Fund and <1% of Charter Hall Umbrella Fund which are all accounted for at fair value and are allocated to the property investment segment. Investments of 3% in Charter Hall Opportunity Fund No 4, 15% in Charter Hall Opportunity Fund No 5 and 50% of Commercial and Industrial Property Pty Ltd are equity accounted and allocated to the funds management and corporate segment.

6 Revenue

Sales revenue Gross rental income Management and performance fees Other revenue Interest Distributions / dividends	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 36,548 26,726 - - 39,570 24,977 49 -
	76,118 51,703 49 -
	5,401 5,043 707 766 9,541 4,083 15,642 3,610
	91,060 60,829 16,398 4,376

7 Fair value adjustments

7 Fair value adjustments
Investment properties Investments in financial assets Derivative financial instruments	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 4,156 (3,791) - - 10,218 11,080 - - 913 4,204 - -
	15,287 11,493 - -

Charter Hall Group Notes to the financial statements 30 June 2008

(continued)

8 Expenses

8 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 Doubtful Debts Impairment losses – Financial assets Trade receivables	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 252 197 - -
	20,111 6,496 27,548 14,163
	1,046 654 - -
	444 349 - -
	300 190 - -

9 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: Increase in deferred tax assets (note 20) Increase in deferred tax liabilities (note 24) (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 Share based payments expense 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 26)	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 (165) (180) (3,623) - (2,981) 1,674 (4,231) (3,545) 187 192 20 5
	(2,959) 1,686 (7,834) (3,540)
	(3,827) (4) (4,418) (3,758) 846 1,678 187 213
	(2,981) 1,674 (4,231) (3,545)
	64,539 44,854 (11,218) (9,869)
	19,362 13,456 (3,365) (2,961) (21,321) (12,562) - - 16 7 - - 801 341 - 341 - 131 - 131 (2,167) - (4,599) (997) 187 192 20 5 163 121 110 (59)
	(2,959) 1,686 (7,834) (3,540)
	- 5 - -

(c) Amount recognised directly in equity Net deferred tax debited directly to equity (note 26)

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

9 Income tax expense (continued)

(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 33).

10 Current assets - Cash and cash equivalents

Cash at bank and in hand Deposits at call	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 16,153 3,808 328 168 30 22,699 - -
	16,183 26,507 328 168

(a) Cash at bank and on hand

These amounts earn between 6.8% and 7.2% (2007: 5.5% and 5.8%).

(b) Deposits at call

The deposits are bearing floating interest rates between 7.3% and 7.4% (2007: 6.0% and 6.3%). These deposits have an average maturity of 28 days (2007: 25 days).

11 Current assets – Trade and other receivables

11 Current assets – Trade and other receivables
Trade receivables Provision for doubtful debts Loans to associates GST receivable Other receivables Prepayments	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $’000 19,529 9,715 - - (300) (290) - -
	19,229 9,425 - - - 9,283 - - - 33 - - 9,936 4,173 64 - 3,179 3,650 - -
	32,344 26,564 64 -

Further information relating to loans to associates is set out in note 33.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

11 Current assets – Trade and other receivables (continued)

(a) Bad and doubtful trade receivables

The Group has recognised a loss of $300,000 (2007: $190,000) in respect of bad and doubtful trade receivables during the period ended 30 June 2008. The loss has been included in ‘other expenses’ in the income statement.

Movements in the provision for impairments of receivables are as follows:

Opening balance Provision for impairment recognised during the year Receivables written off during the year	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 (290) - - - (300) (290) - - 290 - - -
	(300) (290) - -

(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 15).

12 Current assets - Financial assets available for sale

12 Current assets - Financial assets available for sale
Other assets	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 - 218 - -
	- 218 - -

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

Opening balance Additions Reallocation Revaluation Disposals Closing balance Share and units in associates (note 35) Shares in listed securities	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 149,945 3,988 - - 102,862 134,990 - - - (100) - - 12,120 11,067 - - (37,644) - - -
	227,283 149,945 - -
	225,279 142,096 - - 2,004 7,849 - -
	227,283 149,945 - -

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.

These investments have been designated at fair value through the profit and loss.

Information about the Group’s and parent entity’s material exposure to security price risk is provided in note 2(a)(i)

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

14 Derivative financial instruments

14 Derivative financial instruments
	Consolidated		Parent entity
	2008	2007	2008	2007
	$'000	$'000	$'000	$’000

Non-current assets
Interestrate swap contracts	5,880	5,345	-	-
Total non-current derivative financial instrument assets	5,880	5,345	-	-

(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 75% (2007: 70%) of the loan principal outstanding and are timed to expire as each loan repayment falls due. The fixed interest rates range between 6.55% and 7.74% for $AUD swaps (including margin and line fees) (2007: 6.02% and 6.70%). There is one $NZ swap which has a rate of 8.56%. Hedging is at 75% to allow for the raising of external equity in the Charter Hall Core Plus Retail Fund which was a wholly owned subsidiary as at 30 June 2008.

At 30 June 2008, the notional principal amounts and periods of expiry of the interest rate swap contracts are as follows:

	2008	2007
	$’000	$’000
1 - 2 years	47,000	-
3 - 4 years	33,000	47,000
4 - 5 years	-	-
5 - 6 years	-	63,450
6 - 7 years	40,000	-
8 – 9 years	-	-
9 - 10 years	40,000	-
10 – 11 years	-	-
11 – 12years	35,598	-
	195,598	110,450

The contracts require settlement of net interest receivable or payable each 90 days. 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 2008 was $378,865 (2007: $189,432). The amount of the hedge recorded directly in fair value adjustments in the profit and loss statement was $534,424 (2007: $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 23(c) for the Group's exposure to interest rate risk on interest rate swaps.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

15 Non-current assets – Trade and other receivables

15 Non-current assets – Trade and other receivables
Loans to key management personnel Loans to subsidiaries Other receivables	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 5,082 7,062 5,082 7,062 - - 8,681 5,019 - 343 - 343
	5,082 7,405 13,763 12,424

Further information relating to loans to key management personnel is set out in note 30.

(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	2008 2007 Carrying amount Fair value Carrying amount Fair value $'000 $'000 $'000 $'000 5,082 5,082 7,062 7,062 - - 343 343
	5,082 5,082 7,405 7,405

(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.

2008 Trade receivables Loans to key management personnel Other receivables Weighted average interest rate 2007 Trade receivables Loans to associates Loans to others Loans to key management personnel Other receivables Weighted average interest rate	Fixed interest maturing in: 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 Non- interest bearing Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 - - - - - - - 19,229 19,229 - - - 5,082 - - - - 5,082 - - - - - - - 13,115 13,115
	- - - 5,082 - - - 32,344 37,426 - - - 12.60% - - - - Fixed interest maturing in: 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 Non- interest bearing Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 - - - - - - - 9,425 9,425 - 7,901 - - - - - 1,382 9,283 - - - - 343 - - - 343 - - - - 7,062 - - - 7,062 - - - - - - - 7,856 7,856
	- 7,901 - - 7,405 - - 18,663 33,969 - 8.75% - - 10.44% - - -

2008
Trade receivables
Loans to key management
personnel
Other receivables
Weighted average interest rate
2007
Trade receivables
Loans to associates
Loans to others
Loans to key management
personnel
Other receivables
Weighted average interest rate

Fixed interest maturing in:
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
Non-
interest
bearing
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
-
-
-
-
-
-
-
19,229
19,229
-
-
-
5,082
-
-
-
-
5,082
-
-
-
-
-
-
-
13,115
13,115

-
-
-
5,082
-
-
-
32,344
37,426
-
-
-
12.60%
-
-
-
-
Fixed interest maturing in:
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
Non-
interest
bearing
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
-
-
-
-
-
-
-
9,425
9,425
-
7,901
-
-
-
-
-
1,382
9,283
-
-
-
-
343
-
-
-
343
-
-
-
-
7,062
-
-
-
7,062
-
-
-
-
-
-
-
7,856
7,856

-
7,901
-
-
7,405
-
-
18,663
33,969
-
8.75%
-
-
10.44%
-
-
-

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

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

(c) Interest rate sensitivity analysis

The following table illustrates the potential impact a change in interest rates by +/-1% would have on the Group’s profit and equity.

		-1%		+1%
	Carrying
Consolidated	amount	Profit	Equity	Profit	Equity
2008	$’000	$’000	$’000	$’000	$’000
Assets
Cash and cash equivalents	16,183	(162)	(162)	162	162
Derivativefinancial instruments	5,880	(9,579)	(9,579)	9,006	9,006
Total increase/(decrease)		(9,741)	(9,741)	9,168	9,168
		-1%		+1%
	Carrying
Consolidated	amount	Profit	Equity	Profit	Equity
2007	$’000	$’000	$’000	$’000	$’000
Assets
Cash and cash equivalents	26,507	(265)	(265)	265	265
Derivativefinancial instruments	5,345	(2,794)	(2,794)	2,693	2,693
Total increase/(decrease)		(3,059)	(3,059)	2,958	2,958
		-1%		+1%
	Carrying
Parent	amount	Profit	Equity	Profit	Equity
2008	$’000	$’000	$’000	$’000	$’000
Assets
Cashand cashequivalents	328	(3)	(3)	3	3
Total increase/(decrease)		(3)	(3)	3	3
		-1%		+1%
	Carrying
Parent	amount	Profit	Equity	Profit	Equity
2007	$’000	$’000	$’000	$’000	$’000
Assets
Cashand cashequivalents	168	(2)	(2)	2	2
Total increase/(decrease)		(2)	(2)	2	2

(d) Credit risk

There is a limited 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.

The ageing of trade receivables at the reporting date was as follows:

The ageing of trade receivables at the reporting date was as follows:
1 to 3 months 3 to 6 months	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 139 - - - 96 201 - -
	235 201 - -

The receivables that are aged 1 to 3 months are considered past due but not impaired while the receivables aged 3 to 6 months are considered to be impaired and have been provided for in addition to other provisions required.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

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

Units in associates (note 35) Shares in joint venture entity (note 36)	Consolidated 2008 2007 $'000 $'000 6,502 760 43,838 -
	50,340 760

(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 cost by the parent entity.

(b) Shares in joint venture entity

The interest in CIP is accounted for in the consolidated financial statements using the equity method of accounting and is carried at cost by the parent entity.

17 Non-current assets - Other financial assets

	Consolidated	Consolidated	Parent	entity
	2008	2007	2008	2007
	$'000	$'000	$'000	$’000
Shares and units in subsidiaries (note 35)	-	-	1,600	1,600
Shares and units in associates (note 35)	-	-	6,584	760
Shares in joint venture (note 36)	-	-	40,509	-
Units to be issued for equity contributed	18,182	-	-	-
	18,182	-	48,693	2,360
These financial assets are carried at cost.
$18,182,000 was invested by CHPT into CPOF on 27 June 2008 with units not being issued until 1 July			2008
Movements in other financial assets
Opening balance	-	-	2,360	2,097
Additions	18,182	-	46,333	-
Revaluation	-	-	-	263
Closing balance	18,182	-	48,693	2,360

18 Non-current assets - Property, plant and equipment

	Furniture, fittings
Consolidated	and equipment	Fixtures	Total
	$'000	$'000	$'000
Year 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
Year ended 30 June 2008
Opening net book amount	407	948	1,355
Additions	472	2	474
Depreciationcharge	(217)	(35)	(252)
Closingnet book amount	662	915	1,577
At 30 June 2008
Cost	1,207	1,073	2,280
Accumulated depreciation	(545)	(158)	(703)
Net book amount	662	915	1,577

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

19 Non-current assets - Investment properties

Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 At Fair value Opening balance 430,701 284,788 - - Acquisitions and additions 103,563 253,738 - - Lease incentives paid 761 2,957 - - Lease incentives amortised (419) (211) - - Asset removed on deconsolidation - (106,780) - - Disposals (99,117) - - - Net gain / (loss) from fair value adjustment 4,156 (3,791) - - Closing balance at 30 June 439,645 430,701 - - (a) Amounts recognised in profit and loss for investment property Rental income 36,548 26,726 - - Direct operating expenses from property that generated rental income (8,275) (7,120) - - 28,273 19,606 - - Property Type % Owned Date acquired Cost incl additions Independent valuation date Independent valuation amount Valuer Book value 2008 Book value 2007 $'000 $'000 $'000 $'000	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 430,701 284,788 - - 103,563 253,738 - - 761 2,957 - - (419) (211) - - - (106,780) - - (99,117) - - - 4,156 (3,791) - -	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 430,701 284,788 - - 103,563 253,738 - - 761 2,957 - - (419) (211) - - - (106,780) - - (99,117) - - - 4,156 (3,791) - -
	439,645 430,701 - -
	36,548 26,726 - - (8,275) (7,120) - -
	28,273 19,606 - -
		Book value 2008 Book value 2007 $'000 $'000
61 Nepean Hwy, Mentone# Bulky retail 50 15/6/05 27,399 31/12/07 27,595 Savills 570 Bourke St, Melbourne Office 0 20/6/05 - 30/6/07 72,000 CBRE 56 Anzac St, Chullora^ Industrial 100 21/6/05 18,589 30/6/07 19,250 Savills 400 Kent St, Sydney Office 0 28/7/05 - 30/9/07 26,650 Savills 372 Whitehorse Rd, Nunawading + Bulky retail 100 31/10/06 72,922 30/6/08 69,000 Savills 25 Nepean Hwy, Mentone Bulky retail 100 21/7/06 23,059 30/6/08 24,600 Savills CPRF properties Bunnings, Kalgoorlie Bulky retail 100 20/12/06 6,571 30/6/08 6,600 CBRE Bunnings, Bendigo Bulky retail 100 20/12/06 9,213 30/6/08 9,100 CBRE Harvey Norman, Dunedin, NZ Bulky retail 100 2/2/07 14,253 30/6/08 14,239 CBRE Bunnings, Box Hill Bulky retail 100 20/6/07 27,722 30/6/08 25,400 Colliers Bunnings, Nerang Bulky retail 100 20/6/07 20,058 30/6/08 18,750 Colliers Bunnings, Nowra Bulky retail 100 20/6/07 14,588 30/6/08 13,800 Colliers Bunnings, Penrith Bulky retail 100 20/6/07 28,020 30/6/08 25,600 Colliers Bunnings, Stafford Bulky retail 100 20/6/07 21,669 30/6/08 21,250 Colliers Bunnings, Belconnen Bulky retail 100 27/6/07 25,475 30/6/08 23,500 Colliers Foodtown, Auckland, NZ (c) Retail 100 N/A 24,643 30/6/08 22,150 Colliers Home HQ, Ipswich# Retail 100 14/8/07 12,547 30/6/08 12,547 Knight Frank Home HQ, Rothwell# Bulky Retail 100 28/9/07 17,923 30/6/08 17,300 Savills Menai Central, Menai @ Retail 100 4/7/05 224 30/6/08 39,000 CBRE Bluewater Square, Redcliffe # Retail 100 N/A 53,217 30/6/08 53,217 CBRE 418,092		27,595 23,615 - 72,000 17,150 19,250 - 26,650 69,000 67,931 24,600 21,900 6,600 6,200 9,100 8,700 14,239 16,343 25,400 26,220 18,750 19,100 13,800 13,720 25,600 26,520 21,250 20,640 23,500 23,800 24,613 1,271 11,047 - 17,300 - 39,000 36,746 51,101 95
		439,645 430,701

Development assets which have been valued by directors from CPRF’s perspective. The valuation includes capitalised interest paid to CHPT which is eliminated on consolidation.

Valuation is based on a capitalised value of $72.3m less an allowance for incentives required to be paid for the property to be fully leased.
400 Kent St, Sydney was sold on 24 December 2007. 570 Bourke St, Melbourne was sold on 27 June 2008.

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

@ Menai Central was purchased by CHPT on 4 July 2005. A lease transferred ownership to Charter Hall MMN Trust a subsidiary of CPRF on 22 February 2008.

^ This property is shown at directors valuation

(b) 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 2008 revaluations were based on a combination of directors’ valuations and independent valuations.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

19 Non-current assets - Investment properties (continued)

(c) Foodtown financial liability

The independent valuation reflects the net property value after deducting the Foodtown ground rent lease value $2,462,000 from the valuation of total income to be received.

Foodtown financial liability	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 2,462 - - -

20 Non-current assets – Deferred tax assets

The balance comprises temporary differences attributable to: Prepayments Employee benefits Other provisions Financial assets at fair value through profit and loss Fund establishment costs Tax losses Movements: Opening balance Credited to the income statement (note 9) 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 2008 2007 2008 2007 $’000 $’000 $’000 $’000 - 15 - 210 256 247 - - 26 256 - - 902 - - - - 214 - - 3,926 551 10,105 5,477
	5,110 1,283 10,105 5,687
	1,283 1,284 5,687 1,929 3,827 4 4,418 3,758 - (5) - -
	5,110 1,283 10,105 5,687
	5,110 1,283 10,105 5,687 - - - -
	5,110 1,283 10,105 5,687

21 Current liabilities – Trade and other payables

21 Current liabilities – Trade and other payables
Trade payables Deposits Accruals Distribution payable GST payables Other payables 22 Current liabilities – Provisions Employee benefits – long service leave	Consolidated Parent entity 2008 2007 2008 2007 $’000 $’000 $’000 $’000 1,002 2,991 53 5 - 86 - - 11,705 4,268 - - 25,670 20,677 - - 2,083 - 5 - 2,031 21 - -
	42,491 28,043 58 5
	Consolidated Parent entity 2008 2007 2008 2007 $’000 $’000 $’000 $’000 109 149 - -
	109 149 - -

(a) Movements in provisions

Refer to Note 25 for the movement in provisions and split between current and non-current.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

23 Non-current liabilities – Borrowings

Unsecured Bank loans Loan – Charter Hall Property Trust Total unsecured non-current borrowings	Consolidated Parent entity 2008 2007 2008 2007 $’000 $’000 $’000 $’000 260,981 158,572 - - - - 129,008 75,351
	260,981 158,572 129,008 75,351

(a) Total unsecured liabilities

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

The total unsecured liabilities (current and non-current) are as follows:
Bank loans Loan – Charter Hall Property Trust Total unsecured liabilities	Consolidated Parent entity 2008 2007 2008 2007 $’000 $’000 $’000 $’000 260,981 158,572 - - - - 129,008 75,351
	260,981 158,572 129,008 75,351

(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 2008 2007 2008 2007 $’000 $’000 $’000 $’000 304,079 160,000 150,000 150,000 260,981 158,572 129,008 75,351
	43,098 1,428 20,992 74,649

The consolidated entity has access to a National Australia Bank $270m 3 year evergreen facility and a $34m year facility. Subject to the continuance of satisfactory loan covenants and credit ratings, the bank loan facilities may be drawn at any time.

In August 2008 CPRF secured a 3 year debt facility of $250m from National Australia Bank and St George Bank and used the facility to repay loans from CHPT. CHPT used the proceeds to repay the $34m year facility and the $270m facility. In August 2008 CHPT obtained a new $100m debt facility that expires in July 2011.

The Parent entity has a facility provided by CHPT.

(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.

2008 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 $’000 260,981 - - - - - - 260,981 (195,598) - 47,000 33,000 - - 115,598 -
	65,383 - 47,000 33,000 - - 115,598 260,981
	8.46% - 6.55% 7.44% - - 7.99%

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

23 Non-current liabilities – Borrowings (continued)

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 - 63,450158,572
	7.02% - - - 6.02% - 6.52%

(d) Interest rate sensitivity analysis

The following table illustrates the potential impact a change in interest rates by +/-1% would have on the Group’s profit and equity.

		-1%			+1%
	Carrying
Consolidated	amount	Profit	Equity	Profit	Equity
2008	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	42,491	-	-	-	-
Financial liabilities	2,462	-	-	-	-
Borrowings	260,981	654	654	(654)	(654)
Total increase/(decrease)		654	654	(654)	(654)
		-1%			+1%
	Carrying
Consolidated	amount	Profit	Equity	Profit	Equity
2007	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	28,043	-	-	-	-
Financial liabilities	-	-	-	-	-
Borrowings	158,572	481	481	(481)	(481)
Total increase/(decrease)		481	481	(481)	(481)
		-1%			+1%
	Carrying
Parent	amount	Profit	Equity	Profit	Equity
2008	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	58	-	-	-	-
Borrowings	129,008	1,178	1,178	(1,178)	(1,178)
Total increase/(decrease)		1,178	1,178	(1,178)	(1,178)
		-1%			+1%
	Carrying
Parent	amount	Profit	Equity	Profit	Equity
2007	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	5	-	-	-	-
Borrowings	75,351	601	601	(601)	(601)
Total increase/(decrease)		601	601	(601)	(601)

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

23 Non-current liabilities – Borrowings (continued)

(f) Fair value

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

	2008		2008	Parent	Parent
	Carrying	Fair value	Carrying		Fair value
	amount		amount
	$’000	$’000	$’000		$’000
On-balance sheet
Non-traded financial liabilities
Bank loans	260,981	261,270		-	-
Other loans	-	-	129,008		129,008

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

(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

Capital risk management

Gearing is a measure used to monitor levels of debt capital used by the business to fund its operations. This ratio is calculated as interest bearing debt divided by tangible assets, net of cash and cash equivalents.

The gearing ratios at 30 June 2008 and 30 June 2007 were 31.0% and 21.2% respectively

24 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 Depreciation on New Zealand assets Other Movements: Opening balance Charged/(credited) to the income statement (note 9) 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 2008 2007 2008 2007 $’000 $’000 $’000 $’000 - 832 - - 11 16 - - 739 946 - - 2,370 367 555 367 288 - - - - 401 - 1
	3,408 2,562 555 368
	2,562 884 368 155 846 1,678 187 213
	3,408 2,562 555 368
	3,408 2,562 555 368 - - - -
	3,408 2,562 555 368

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

25 Non-current liabilities – Provisions

Employee benefits – long service leave	Consolidated Parent entity 2008 2007 2008 2007 $’000 $’000 $’000 $’000 150 41 - -

(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 2008 2007 $'000 $'000 190 131 69 59 259 190 109 149 150 41 259 190

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

26 Contributed equity

(b) Movements in ordinary security capital: Parent Parent 2008 2007 2008 2007 Notes Securities Securities $'000 $'000 (a) Security capital Ordinary securities (b),(c) Fully paid 413,983,609 409,120,620 526,822 513,597 413,983,609 409,120,620 526,822 513,597 Details Notes Number of securities Issue price $'000*	(b) Movements in ordinary security capital: Parent Parent 2008 2007 2008 2007 Notes Securities Securities $'000 $'000 (a) Security capital Ordinary securities (b),(c) Fully paid 413,983,609 409,120,620 526,822 513,597 413,983,609 409,120,620 526,822 513,597 Details Notes Number of securities Issue price $'000*	(b) Movements in ordinary security capital: Parent Parent 2008 2007 2008 2007 Notes Securities Securities $'000 $'000 (a) Security capital Ordinary securities (b),(c) Fully paid 413,983,609 409,120,620 526,822 513,597 413,983,609 409,120,620 526,822 513,597 Details Notes Number of securities Issue price $'000*	(b) Movements in ordinary security capital: Parent Parent 2008 2007 2008 2007 Notes Securities Securities $'000 $'000 (a) Security capital Ordinary securities (b),(c) Fully paid 413,983,609 409,120,620 526,822 513,597 413,983,609 409,120,620 526,822 513,597 Details Notes Number of securities Issue price $'000*
	413,983,609 409,120,620 526,822 513,597
		Number of securities Issue price	$'000
Opening balance 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 Addback LTI securities reversed last year Employee security scheme issue (e) Issue for purchase of CIP (i) Gift to employee issue (j) Security purchase plan (k) Employee security scheme issue (e) Balance at 30 June 2008 Less: Transaction costs on security issues Less: LTI securities reversed Balance per accounts at 30 June 2008 Charter Hall Limited Charter Hall Property Trust		329,186,141 6,200,000 15,423,367 $1.27 6,299,213 $1.27 352,564 $1.56 807,453 $1.61 50,000 $2.00 202,428 $2.47 18,000,000 $1.48 44,444,445 $3.00 420,965,611 - (11,844,991) 409,120,620 11,844,991 10,041,015 $2.76 5,599,098 $2.68 23,320 $2.83 68,976 $3.00 793,701 $1.51 437,491,721 - (23,508,112) 413,983,609	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
			14,598 27,713 15,000 66 207 1,198
			572,379 (246) (45,311)
			526,822
			5,272 521,550

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 2007 the issued capital of $513,597,000 was divided between Charter Hall Limited $5,131,000 and Charter Hall Property Trust $508,466,000.

(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 2008.

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 2008 (continued)

26 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 activated for the 30 June 2008 distribution.

(e) Employee security scheme

Information on the employee security scheme, including details of securities issued under the scheme, is set out in note 40.

(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.

(i) Issue for purchase of CIP

On 20 July 2007 5,599,098 securities were issued at $2.68 as part payment for the purchase of a 50% interest in Commercial and Industrial Property Pty Limited.

(j) Gift to employees

On 23 July 2007 23,320 securities were issued at $2.83 to employees of the Group to mark the market capitalisation of CHG reaching $1bn. 530 securities per employee were granted to 44 employees and are subject to escrow conditions governing the sale of the securities.

(k) Security purchase plan

In line with the placement all securityholders were given the opportunity to purchase securities in the Group at $3.00. As a result on 23 July 2007 68,976 securities were issued at $3.00 per security.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

27 Reserves and retained profits

(a) Reserves Hedging reserve - cash flow hedges Business combination reserve Security-based payments reserve Foreign currency reserve Charter Hall Limited and controlled entities Charter Hall Property Trust Movements: Hedging reserve - cash flow hedges Opening balance Hedge novated to Charter Hall Core Plus Fund Revaluation Amortisation Closing balance Security-based payments reserve Opening balance Expense relating to LTI scheme Closing balance 30 June Business combination reserve Opening and closing balance Foreign currency reserve Opening balance Translation Closing balance	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 763 1,142 - - (52,000) (52,000) (52,000) (52,000) 5,434 1,048 1,717 - (1,235) 22 (57) -
	(47,038) (49,788) (50,340) (52,000)
	(46,679) (50,952) (359) 1,164 (47,038) (49,788) 1,142 2,482 - - - (1,512) - - - 361 - - (379) (189) - -
	763 1,142 - -
	1,048 165 - - 4,386 883 1,717 -
	5,434 1,048 1,717 -

	(52,000) (52,000) (52,000) (52,000)
	22 - - - (1,257) 22 (57) -
	(1,235) 22 (57) -

(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).

(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. 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.

(b) Retained profits / (accumulated losses)

Movements in retained profits were as follows:

Opening balance Net profit / (loss) for the year Distributions / dividends Other Balance 30 June Charter Hall Limited and controlled entities Charter Hall Property Trust	Consolidated Parent entity 2008 2007 2008 2007 $'000 $'000 $'000 $'000 (2,798) (7,636) (7,921) (1,592) 67,498 43,168 (3,384) (6,329) (52,117) (38,074) - - (47) (256) - -
	12,536 (2,798) (11,305) (7,921)
	(3,683) 207 16,219 (3,005) 12,536 (2,798)

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

28 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 1 - 1002), Charter Hall Limited has been identified as the Parent Entity in relation to the stapling. In accordance with AASB 1 - 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 securityholders of CHL are the same as the stapled securityholders of CHPT.

Notes Interest in: Contributed equity 26(b) Reserves 27(a) Retained profits 27(a)	Consolidated Parent entity 2008 2007 2008 2007 $'000 $’000 $'000 $’000 521,550 508,466 - - (359) 1,164 - - 16,219 (3,005) - -
	537,410 506,625 - -

29 Distributions

29 Distributions
(a) Ordinary securities - Interim ordinary distribution for the 6 months ended 31 December 2007 of 6.30 cents per security paid on 29 February 2008 - Final ordinary distribution for the 6 months ended 30 June 2008 of cents per security expected to be paid on 29 August 2008 - Interim ordinary distribution for the 6 months ended 31 December 2007 of 4.77 cents per security paid on 28 February 2007 - Final ordinary distribution for the 6 months ended 30 June 2007 of 5.67 cents per security paid 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 2008 2007 $'000 $'000 27,512 - 27,562 - - 17,950 - 21,349
	55,074 39,299 (2,957) (1,227)
	52,117 38,072
	27,512 39,299 27,562 -
	55,074 39,299

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

30 Key Management Personnel disclosures

(a) Directors

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

(i) Chairman - non-executive

K Roxburgh

(ii) Executive directors

C Fuchs

D Harrison (Joint Managing Director)

D Southon (Joint Managing Director)

(iii) Non-executive directors

R Woodhouse (Deputy Chairman) A Biet (resigned 24/10/07)

P Derrington

G Fraser C McGowan

(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 year:

Name	Position	Employer
J Bakker	Corporate Development Director	Charter Hall Holdings Pty Ltd
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 2008 2007 2008 2007 $ $ $ $ 3,866,722 2,347,448 - - 257,887 265,438 - - 1,746,376 487,493 - -
	5,870,985 3,100,379 - -

Detailed remuneration disclosures are provided in sections A-C of the remuneration report on pages 10 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 2008 (continued)

30 Key Management personnel disclosures (continued)

2008 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 (resigned 24/10/07) P Derrington G Fraser C Fuchs D Harrison C McGowan K Roxburgh D Southon R Woodhouse	5,559,724 - 225,000 5,486,595 8,666,809 - 50,000 8,754,870 366,666	(350,000) - 125,000 (80,000) (1,648,195) - - (1,490,000) (300,000)	- - - 481,233 878,806 - - 864,370 -	5,209,724 - 350,000 5,887,828 7,897,420 - 50,000 8,129,240 66,666
*Other key management personnel of the Group* Ordinary securities J Bakker R Champion M Winnem	14,666 - 1,654,548
		530	207,039	222,235
		530	183,727	184,257
		(1,349,109)	52,493	357,932

The balance for Andre Biet when he resigned as a director was $5,209,724. After this time his holding was not monitored. # This total includes securities that have vested but have not been exercised by repayment of the loan and removal from the LTI plan.

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	-	-	-	-

(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
	$	$	$
2008	7,062,280	1,134,126	9,928,333	6
2007	3,964,504	378,946	7,062,280	4

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

30 Key Management personnel disclosures (continued)

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

2008				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	3,161,295	315,000	2,541,064	2,657,500
D Southon	3,161,295	315,000	2,541,064	2,657,500
C Fuchs	369,845	-	-	-
A Biet (resigned25/10/07)	369,845	-	-	-

2007				Highest
	Balance at the		Balance at the	indebtedness
	start of the	Interest paid and	end of the	during the
Name	period	payableforthe 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
C Fuchs	-	36,540	369,845	369,845
A Biet	-	36,540	369,845	369,845

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.

As predicated in the Product Disclosure Statement dated 11 May 2005, on 6 June 2005 the Joint Managing Directors, David Harrison and David Southon entered into loan agreements, which are full recourse, with CHL. Loans of $2.5m each were provided to acquire Charter Hall Group securities. The interest on the loans is equivalent to the Charter Hall Group distribution paid in respect of the securities purchased using the loan proceeds. The provision of the loans further aligns the Joint Managing Directors interests with those of the Group and Securityholders. The loans, which were for a period of 3 years, have been extended for a further 3 years until 6 June 2011, under the same terms and conditions, by resolution of the Board.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

31 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 equity raising Total remuneration for taxation services (c) Advisory services PricewaterhouseCoopers Australian firm Long term incentive plan Total remuneration for advisory services	Consolidated Parent entity 2008 2007 2008 2007 $ $ $ $ 206,901 207,887 - - 56,417 33,290 - -
	263,318 241,177 - -
	219,000 - - -
	219,000 - - -
	452,318 241,177 -
	21,090 37,610 - - - 97,123 - -
	21,090 134,733 - -
	- 38,500 - -
	- 38,500 - -

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.

32 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 2008 2007 2008 2007 $'000 $'000 $'000 $’000 6,054 - - - - - - - - - - -
	6,054 - - -

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

32 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 2008 2007 2008 2007 $'000 $'000 $'000 $’000 124 - - - 2,210 1,506 - - 153 1,173 - -
	2,487 2,679 - -

33 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 34.

(c) Key management personnel

Disclosures relating to key management personnel are set out in note 30.

(d) Transactions with related parties

The following transactions occurred with related parties:

The following transactions occurred with related parties:
	Consolidated		Parent	entity
	2008	2007	2008	2007
	$	$	$	$
Sales of services
Management and performance fees from associates	29,135,241	15,296,464	-	-
Acquisition fees from associates	6,513,024	2,008,273	-	-
Commitment fees from associates	180,225	173,218	-	-
Tax consolidation legislation
Current tax payable assumed from wholly-owned tax consolidated
entities	-	-	3,612,254	4,901,957
Dividend revenue
Subsidiaries	-	-	11,354,988	3,322,674

Transactions with associates and joint ventures are disclosed in note 35 and note 36 respectively.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

33 Related Parties (continued)

(e) Loans to/from related parties

(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 Beginning of the period 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 2008 2007 2008 2007 $ $ $ $ 9,283,306 536,197 - - - 57,492,387 - - (9,283,306) (49,051,395) - - 144,670 1,152,920 - - (144,670) (846,803) - -
	- 9,283,306 - -
	- - 5,018,510 - - - 3,612,254 5,010,000 - - 50,725 8,510
	- - 8,681,489 5,018,510
	- - 75,350,694 55,049,981 - - 42,297,921 20,027,776 - - - (2,939,812) - - 27,548,475 14,162,749 - - (16,190,052) (10,950,000)
	- - 129,007,038 75,350,694

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 2008 (continued)

34 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
			2008	2007
			%	%
*Controlled entities of Charter Hall Limited*
Charter Hall Holdings Pty Limited	Australia	Ordinary	100	100
Charter Hall CUB Pty Ltd	Australia	Ordinary	100	N/A
Controlled entities of Charter Hall Holdings Pty Ltd
Charter Hall (NZ) Pty Limited	Australia	Ordinary	100	100
CH Management Australia Pty Limited	Australia	Ordinary	100	100
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
Controlled entities of Charter Hall Holdings Real Estate Pty Ltd
Charter Hall Holdings Real Estate (Vic) Pty	Australia	Ordinary	100	100
Limited
*Controlled Entities of Charter Hall Property Trust*
Charter Hall Investment Fund No. 15	Australia	Ordinary	100	100
Charter Hall Core Plus Retail Fund	Australia	Ordinary	100	100
Controlled entities of Charter Hall Core Plus Retail Fund
Core Plus Retail Fund New Zealand	Australia	Ordinary	100	100
Redcliffe Retail Property Trust	Australia	Ordinary	100	100
Belconnen Retail Warehouse Trust	Australia	Ordinary	100	100
Box Hill Retail Warehouse Trust	Australia	Ordinary	100	100
Nerang Retail Warehouse Trust	Australia	Ordinary	100	100
Nowra Retail Warehouse Trust	Australia	Ordinary	100	100
Penrith Retail Warehouse Trust	Australia	Ordinary	100	100
Stafford Retail Warehouse Trust	Australia	Ordinary	100	100
Ipswich Retail Property Trust	Australia	Ordinary	100	N/A
Rothwell Retail Property Trust	Australia	Ordinary	100	N/A
Mentone Property Trust	Australia	Ordinary	100	N/A
Charter Hall MMN Property Trust	Australia	Ordinary	100	N/A
CPRF Gepps X Trust	Australia	Ordinary	100	N/A
CPRF Gepps 109 Trust	Australia	Ordinary	100	N/A
CPRF MSN Property Trust	Australia	Ordinary	100	N/A

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

35 Investment in associates

(a) Carrying amounts

Information relating to associates is set out below.

Name of company	Principal	Ownership	Ownership	Consolidated	Consolidated	Parent	entity
	activity	Interest
		2008	2007	2008	2007	2008	2007
		%	%	$'000	$'000	$'000	$’000
Unlisted
	Property
Charter Hall Diversified Property Fund	Investment	17.0%	11.7%	24,332	5,179	-	-
	Property
Charter Hall Core Plus Office Fund	Investment	20.0%	23.0%	143,178	80,058	-	-
	Property
Charter Hall Core Plus Industrial Fund	Investment	25.0%	32.1%	57,698	45,986	-	-
	Property
Charter Hall Umbrella Fund	Investment	<1.0%	47.3%	71	10,873	-	-
				225,279	142,096
	Property
Charter Hall Opportunity Fund No 4	Development	3.0%	3.0%	3,214	662	3,115	662
	Property
Charter Hall Opportunity Fund No 5	Development	15.0%	20.0%	3,288	98	3,469	98
				6,502	760	6,584	760
The above associates are incorporated in Australia. The		investments in Charter Hall Opportunity Fund No 4 & 5 held by
Charter Hall Limited are equity accounted in the consolidated financial statements				and are other financial assets in			the
parent financial statements (note 17).
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 through the profit and loss (note 13).
The investment in Charter Hall Diversified Property Fund		consists of units which consist of a 17% interest but also an
additional investment in the form of a bridging equity loan provided.
			Consolidated
			2008	2007
			$'000	$'000
(b) Movements in carrying amounts
Charter Hall Diversified Property Fund
Opening balance			5,179	3,888
Investment			18,184	1,096
Fair value increase			969	195
Closing balance			24,332	5,179
Charter Hall Core Plus Office Fund
Opening balance			80,058	10,000
Investment			67,002	63,011
Fair value increase			12,516	7,047
Disposal of units		(16,398)		-
Closing Balance		143,178		80,058
Charter Hall Core Plus Industrial Fund
Opening balance			45,986	-
Investment			18,754	45,000
Fair value increase			3,404	986
Disposal of units		(10,446)		-
Closing Balance			57,698	45,986

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

35 Investment in associates (continued)

Charter Hall Umbrella Fund Opening balance Investment Disposal of units Fair value decrease Closing Balance 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 Opportunity Fund No 5 Opening balance Investment Share of loss after income tax Distributions received/receivable Reserves Fair value increase Closing Balance (c) Fair value of unlisted investments in associates Charter Hall Diversified Property Fund Charter Hall Core Plus Office Fund Charter Hall Core Plus Industrial Fund Charter Hall Umbrella Fund Charter Hall Opportunity Fund No 4 Charter Hall Opportunity Fund No 5 (d) Share of associates’ profits or losses Profit before income tax Income tax expense Profit after income tax	Consolidated 2008 $'000 2007 $'000 10,873 10,873 11,030 - (21,828) - (4) -
	71 10,873
	662 497 2,458 777 454 287 (360) (899)
	3,214 662
	98 - 3,486 98 (142) - (38) - (116) - - -
	3,288 98
	24,332 5,179 143,177 80,058 57,696 45,986 74 10,873 3,214 662 3,289 98 312 287 - -
	312 287

(e) Summarised financial information of associates

		Group's	share of:
	Assets	Liabilities	Revenues	Profit/(Loss)
	$'000	$'000	$'000	$'000
2008
Charter Hall Diversified Property Fund	49,922	25,569	2,899	4,242
Charter Hall Core Plus Office Fund	286,119	139,342	12,833	15,957
Charter Hall Core Plus Industrial Fund	102,472	40,669	5,559	7,690
Charter Hall Umbrella Fund	63	1	3	-
Charter Hall Opportunity Fund No4	5,974	2,749	1,104	466
Charter Hall Opportunity Fund No5	9,376	5,436	47	139

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

36 Interest in joint venture

(a) Carrying amounts

Information relating to joint ventures is set out below.

Name of company	Principal	Ownership	Ownership	Consolidated	Consolidated	Consolidated	Parent	entity
	activity	Interest
		2008	2007	2008		2007	2008	2007
		%	%	$'000		$'000	$'000	$’000
Unlisted
Commercial and Investment Property	Property
Pty Ltd	Development	50%	N/A	43,838		N/A	40,510	N/A
			Consolidated
			2008	2007
			$'000	$'000
(b) Movements in carrying amounts
Commercial and Investment Properties Pty Limited
Opening balance			-		-
Investment			40,510		-
Share of profit after income tax			7,222		-
Dividends received/receivable			(3,894)		-
Closing balance			43,838		-
(c) Fair value of joint venture entity
Commercial and Investment Property Pty Ltd			43,838		-
(d) Share of joint venture’s revenue,	expenses and	results
Revenues			19,129		-
Expenses			(8,829)		-
Profit before income tax			10,300		-
(e) Share of joint venture’s assets and liabilities
Current assets			6,017		-
Non-current assets			4,166		-
Total assets			10,183		-
Current liabilities			1,862		-
Non-current liabilities			2,492		-
Total liabilities			4,354		-

Net assets			5,829		-

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

37 Events occurring after the balance sheet date

Since 30 June 2008 CHPT has completed the following transactions:

The sale of 372 Whitehorse Rd, Nunawading, Vic, 61 Nepean Hwy, Mentone, Vic and 25 Nepean Hwy, Mentone, Vic to CPRF in July 2008.
The Group announced the first close of CPRF with CHPT’s beneficial ownership reduced from 100% at 30 June 2008 to 62% with further equity raising expected.
With the proceeds from the first close CHPT repaid debt and reduced its debt facility to $100m with an expiry of July 2011.
CHPT invested $50m in CHUF in August 2008.

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

Profit / (loss) for the year
Depreciation and amortisation
Non-cash employee benefits expense - security-based payments
Gain on sale of investments
Fair value adjustments
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
2008
2007
2008
2007
$'000
$'000
$'000
$'000
67,498
43,168
(3,384) (6,329)
252
197
-
-
2,669
883
-
-
(838)
-
-
-
(15,287)
(11,493)
-
-
(11,683)
3,282
515
5,050
(5,548)
602
-
-
(142)
124
-
296
1,988
(2,347)
-
-
9,167
(184)
-
-
165
327
50
5
-
-
-
-
(2,959)
1,686
(7,834) (3,540)
-
(58)
-
-

45,282
36,187
(10,653) (4,518)

Dividend and interest income received on investments has been reclassified from cash flow from investing activities in the year ended 30 June 2007 to cash flow from operating activities in the year ended 30 June 2008.

Charter Hall Group Notes to the financial statements 30 June 2008 (continued)

39 Earnings per security

(a) Basic earnings per security Profit before fair value adjustments Fair value adjustments Profit attributable to the ordinary equity holders of the Group (b) Diluted earnings per security Profit before fair value adjustments Fair value adjustments Profit attributable to the ordinary equity holders of the Group	Consolidated 2008 2007 Cents Cents 12.61 8.80 3.70 3.20
	16.31 12.00
	12.64 8.84 3.50 3.10
	16.14 11.94

(c) Underlying earnings per security

Refer to note 4 for further details

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

Basic earnings per security Profit before fair value adjustments Fair value gains Profit attributable to the ordinary equity holders of the consolidated entity used in calculating basic earnings per security Diluted earnings per security Profit Interest received from LTI securities Profit attributable to the ordinary equity holders of the consolidated entity used in calculating diluted earnings per security Fair value gains Profit attributable to the ordinary equity holders of the consolidated entity used in calculating diluted earnings per security before fair value adjustments	Consolidated 2008 2007 $'000 $'000 52,211 31,675 15,287 11,493
	67,498 43,168
	67,498 43,168 2,957 1,136
	70,455 44,304 (15,287) (11,493)
	55,168 32,811

(e) 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
2008
2007
Number
Number
413,905,265
359,384,110
22,711,623
11,298,942

436,616,888
370,683,052

(f) 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 2008 (continued)

40 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:

Opening balance (number of securities)
Number of securities issued on 03/07/06 at $1.27
Number of securities issued on 05/10/06 at $1.56
Number of securities issued on 16/10/06 at $1.61
Number of securities issued on 15/12/06 at $2.00
Number of securities issued on 07/03/07 at $2.47
Number of securities issued on 02/07/07 at $2.76
Number of securities purchased on market on 06/08/07 at $2.84
Number of securities purchased on market on 30/08/07 at $2.80
Number of securities purchased on market on 05/02/08 at $1.67
Number of securities purchased on market on 11/02/08 at $1.49
Number of securities purchased on market on 19/02/08 at $1.53
Number of securities issued on 19/02/08 at $1.51
Number of securities forfeited or transferred out during the year

Consolidated
Parent entity
2008
2007
2008
2007
13,931,343
6,200,000 13,931,343
6,200,000
-
6,318,898
-
6,318,898
-
352,564
-
352,564
-
807,453
-
807,453
-
50,000
-
50,000
-
202,428
-
202,428
10,041,016
- 10,041,016
-
70,534
-
70,534
-
35,714
-
35,714
-
54,970
-
54,970
-
100,376
-
100,376
-
197,180
-
197,180
-
793,701
-
793,701
-
(1,716,722)
- (1,716,722)
-

23,508,112 13,931,343 23,508,112 13,931,343

(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	Consolidated	Parent entity	Parent entity
2008	2007	2008	2007
$'000	$'000	$'000	$'000
2,669	883		-	-

Charter Hall Group Directors’ declaration 30 June 2008 (continued)

In the directors’ opinion:

(a) the financial statements and notes set out on pages 23 to 71 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 2008 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 remuneration disclosures set out on pages 10 to 15 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 joint managing directors 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.

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K Roxburgh

Chairman

Sydney 25 August 2008

___________

PricewaterhouseCoopers ABN 52 780 433 757

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

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

Report on the financial report

We have audited the accompanying financial report of Charter Hall Limited (the company), which comprises the balance sheet as at 30 June 2008, 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.

Directors’ responsibility for the financial 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 controls 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 1, 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.

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.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial 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 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. 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.

Liability limited by a scheme approved under Professional Standards Legislation

Auditor’s opinion

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 2008 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 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 10 to 15 of the directors’ report for the year ended 30 June 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the Remuneration Report of Charter Hall Limited for the year ended 30 June 2008, complies with section 300A of the Corporations Act 2001 .

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PricewaterhouseCoopers

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

B K Hunter Partner

Sydney 25 August 2008

Liability limited by a scheme approved under Professional Standards Legislation

Charter Hall Group Securityholder information 30 June 2008

The shareholder information set out below was applicable as at 30 June 2008.

A. Distribution of equity securities

Analysis of numbers of equity securityholders by size of holding:

Ordinary Securities

1 - 1000 86,353 1,001 - 5,000 982,376 5,001 - 10,000 2,262,924 10,001 - 100,000 17,645,813 100,001 and over 416,514,255

B. Equity securityholders

Twenty largest quoted equity securityholders

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

Name	Ordinary securities	Ordinary securities
		Percentage of issued
	Number held	securities
UBS (Institutional Group)	38,900,284	8.89%
Deutsche (Institutional Group)	29,378,309	6.72%
Commonwealth Bank (Institutional Group)	42,356,388	9.68%
AMP Capital Investors (Institutional Group)	24,543,601	5.61%
CHL Executive Loan Security (Various Private Investors)	23,508,112	5.37%
Wyllie Group	23,172,000	5.30%
Quest Asset Partners Pty. Ltd.	20,702,336	4.73%
BT Funds Mgt (Institutional Group)	18,141,569	4.15%
Vanguard Investments Australia Ltd.	15,898,881	3.63%
Macquarie (Institutional Group)	15,097,084	3.45%
ING (Institutional Group)	13,015,440	2.98%
Transfield (CHG) Pty Ltd	13,000,000	2.97%
Fidelity (Institutional Group)	11,152,774	2.55%
Credit Suisse (Institutional Group)	10,347,066	2.37%
Barclays (Institutional Group)	10,075,755	2.30%
Natixis (Institutional Group)	9,164,512	2.09%
Perpetual Investments Ltd.	7,887,878	1.80%
Resolution Capital	7,227,881	1.65%
David John Southon	6,773,203	1.54%
David William Harrison	6,526,947	1.49%

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
UBS (Institutional Group)	38,900,284	8.89%
Deutsche (Institutional Group)	29,378,309	6.72%
Commonwealth Bank (Institutional Group)	42,356,388	9.68%
AMP Capital Investors (Institutional Group)	24,543,601	5.61%
Wyllie Group	23,172,000	5.30%

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 2008

64645_rns_2008-08-24_81d0c0f9-79e4-492e-a786-48c4f7b748da.pdf

APPENDIX 4E – PRELIMINARY FINAL REPORT

YEAR ENDING 30 JUNE 2008

1. Results for announcement to the market

Distributions Cents per stapled security

3. Associates & Joint venture entities

Charter Hall Group

Financial report - 30 June 2008

Contents

Directors' report

Directors

Principal activities

Distributions - Charter Hall Group

Results

Financial Performance - 1 July 2007 to 30 June 2008

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 – Independent non-executive director.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

R Woodhouse Deputy Chairman – Independent non-executive director .

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.

Experience and expertise

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

A Biet Non-executive director. (Resigned 25 October 2007).

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Interests in securities

P Derrington Independent non-executive director.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

G Fraser Independent non-executive director.

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.

Experience and expertise

Other current listed company directorships

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

D Harrison Managing Director.

Experience and expertise

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Special responsibilities

Interests in securities

D Southon Managing Director

Experience and expertise

Other current listed company directorships

Nil

Former listed company directorships in last 3 years

Nil

Special responsibilities

Interests in securities

Company secretary

CHARTER HALL GROUP Annual Report 2008