CHARTER HALL GROUP — Annual Report 2010

Aug 23, 2010

APPENDIX 4E – PRELIMINARY FINAL REPORT

YEAR ENDED 30 JUNE 2010

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 2010 $’000	30 June 2009 $’000
Revenue	Increase26% to	77,333	61,249
Profit / (loss) after tax attributable to securityholders	Increase 100% to	207	(82,222)
Operating earnings attributable to securityholders	Increase 0% to	34,900	34,828

Operating earnings is the profit under Australian Accounting Standards adjusted for fair value adjustments on investment property and fair value adjustments on financial assets, impairment of assets, gains or losses on sale of investments, acquisition costs and non-cash charges such as share-based payments expense, amortisation and tax benefit.

Distributions	Cents per stapled security	Cents per stapled security
Final distribution in respect of a CHPT unit to be paid 27/8/10 Final dividend in respect of a CHL share Interim distribution in respect of a CHPT unit paid 26/2/10 Interim dividend in respect of a CHL share Total distribution	30 June 2010 1.60 nil 1.60 nil 3.20	30 June 2009 1.00 nil 3.96 nil 4.96

Record date for determining entitlements to distributions - 30 June 2010

The Distribution Re-investment Plan (DRP) is currently activated and in operation for the 30 June 2010 distribution. The last election date for the DRP was 30 June 2010. The price of $0.5946 was calculated as a 2% discount to the average of the daily volume weighted average price of sales of securities from 2 July 2010 to 22 July 2010 (inclusive). The DRP securities rank equally with existing securities.

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

Charter Hall Group announced on 8 December 2009 that based on discussions with ASIC the Group would consolidate its interest in the Charter Hall Core Plus Retail Fund (CPRF) from 1 July 2009 whilst ever Charter Hall Group owns more than 50% of CPRF, provided all other circumstances remain unchanged.

Charter Hall Group’s consolidation of its investment in CPRF due to its 66% ownership interest does not impact the fund’s Investment Committee which continues to make all investment and divestment, financing and capital expenditure decisions for CPRF.

Charter Hall Group acquired the majority of the Macquarie real estate platform and as a result gained control of the following entities and the entities they control, during the year:

• Charter Hall Office Management Limited (formerly Macquarie Office Management Limited)

• Charter Hall Asset Services Limited (formerly Macquarie Asset Services Limited)

• Charter Hall Real Estate Europe Limited (formerly Macquarie Real Estate Europe Limited)

• Charter Hall Direct Property Management Limited (formerly Macquarie Direct Property Management Limited)^

• Charter Hall Retail Management Limited (formerly Macquarie Countrywide Management Limited)^

• Charter Hall Real Estate Management Services Limited (formerly Macquarie Real Estate Management Services Pty Limited)

• Charter Hall Real Estate Inc.

• ^ Refer to note 34 of the attached financial report.

Charter Hall Group lost control of 130 Stirling Street Trust (formerly Charter Hall Investment Fund No. 15) when ownership was transferred to Charter Hall Core Plus Office Fund.

Charter Hall Group

3. Associates and Joint venture entities

Refer to the attached financial report for details regarding interests in associates and joint venture entities.

4. Earnings per security and operating earnings

Earnings per security per note 40 (cents) Operating earnings per security per note 5 (cents) Earnings used in the calculation of operating earnings per security (‘000) Weighted average number of ordinary securities used in the calculation of operating earnings per security (‘000) (note 40) Net profit / (loss) attributable to stapled securityholders of the Group Fair value losses Net gain on remeasurement of equity interest Loss / (gain) on sale of investments, property and derivatives Impairment of goodwill on consolidation of CPRF and investments Business combination acquisition costs Non-operating movements in equity accounted investments LSP and PROP expense Amortisation Tax benefit Foreign exchange loss Performance fee accrual reversal Operating Earnings (excluding non-controlling interest) The adjustments above exclude the non-controlling interest in CPRF.	2010 2009 0.02 (17.98) 4.11 7.61 34,900 34,828 850,161 457,410 $’000 $’000 207 (82,222) 52,847 93,982 (59,725) - 10,529 (1,339) 15,328 17,644 6,636 - 7,838 3,625 1,317 616 734 744 (950) (1,222) 139 - - 3,000
	34,900 34,828

5. Results commentary

The Group recorded a statutory gain attributable to stapled securityholders for the financial year of $0.2 million compared to a loss of $82.2 million in 2009. After adding back fair value adjustments, impairment, gains on sale and other non-cash items such as the mark to market of derivatives, the Group generated Operating Earnings (formerly called Underlying Earnings) of $34.9 million compared to $34.8 million in 2009.

Operating Earnings per Security (OEPS) of 4.11 cents fell from 7.61 cents in 2009 due to the increase in the weighted average number of securities from 457,410,018 to 850,161,196. As a result, the Distribution per Security (DPS) fell from 4.96 cents to 3.20 cents.

Net Tangible Assets per Security (NTA) has reduced from $0.71 at 30 June 2009 to $0.56, largely as a result of additional securities issued as part of capital raisings and due to devaluations of investments.

Funds Under Management (FUM) has increased from $3.4 billion at 30 June 2009 to $10.2 billion as a result of the acquisition of the management rights of the majority of the Macquarie Group Limited’s (Macquarie) core real estate management platform and the co-investments in funds.

Gearing has increased from 2.4% at 30 June 2009 to 6.5% at 30 June 2010 as a result of Charter Hall Core Plus Retail Fund (CPRF) being consolidated.

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Charter Hall Group

5. Results commentary (continued)

The 30 June 2010 financial results with comparatives are summarised as follows:	The 30 June 2010 financial results with comparatives are summarised as follows:	The 30 June 2010 financial results with comparatives are summarised as follows:
		2010	2009
Revenue including non-controlled interests ($m)		77	61
Profit / (loss) after tax attributable to stapled securityholders ($m)		0.2	(82)
Operating earnings attributable to stapled securityholders ($m)		35	35
Distributions to stapled securityholders ($m)		30	25
Statutory earnings per stapled security (EPS) (cents)		0.02	(17.98)
Operating EPS per stapled security (OEPS) (cents)	1,2	4.11	7.61
Distribution per stapled security (cents)	2	3.20	4.96
Total assets ($m)		988	524
Total liabilities ($m)		165	30
Net assets ($m)		823	494
Net assets attributable to stapled securityholders ($m)		772	494
Securities on issue (m)	2	1,162	698
NTA per security ($)	2	0.56	0.71
Gearing – borrowings to total assets	3	6.5%	2.4%
Funds under management ($bn)		10.2	3.4

1 – Excludes AASB 140 fair value adjustments on investment property and fair value adjustments on financial assets, impairment of assets, gains on sale of investments and non-cash charges such as share-based payments expense, amortisation, tax benefit and acquisition costs.

• 2 – Calculation excludes stapled securities issued under the Executive Loan Security Plan in accordance with AASB 2 Share-based Payment .

• 3 – Calculation is net of cash.

6. Review of operations

The Group has maintained its strategy to de-risk its managed funds and the listed balance sheet and ensured emergence from the Global Financial Crisis in a healthy position.

In March 2010, the Group completed the transformational acquisition of the majority of the Macquarie real estate management platform.

The acquisition involved the purchase of management rights for two listed and three unlisted real estate funds for $108 million and co-investment in Charter Hall Office REIT, Charter Hall Retail REIT and Charter Hall Direct Property Fund for $189 million. The purchase has positioned Charter Hall as one of Australia’s largest specialist real estate fund managers with assets under management increased from $3.4 billion at 30 June 2009 to $10.2 billion.

Charter Hall has diversified its equity sources with access to listed equity and increased exposure to core funds.

The funding for the transaction was provided by a $305 million equity raising with an underwritten placements and entitlement offer.

Following is an update of the managed funds in which the Group has a co-investment.

Charter Hall Office REIT (CQO) - $4.1 billion FUM, CHPT interest 7.5%

The CQO portfolio comprises 38 high grade office assets located in major business districts in Australia and the United States, with four office assets in Europe and Japan.

CQO announced its 30 June 2010 asset revaluations of A$3.9 billion with external valuations carried out on 12 assets, representing 53% of assets by value, and internal (directors) valuations were undertaken on the balance. The weighted average age of the external valuations is now five months. The 30 June 2010 valuations indicate a $97.3 million decrease against the 31 December 2009 book values, representing a decrease of 2.42%. The weighted average portfolio capitalisation rate remained unchanged with a 13 basis points movement in discount rates.

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Charter Hall Group

6. Review of operations (continued)

Despite continued weakness and slow demand across the majority of office markets, CQO’s high quality portfolio has remained resilient, with 140,505 square metres, or 13%, of the portfolio leased during the year. Other key results for the period to 30 June 2010 include portfolio occupancy of 91%, a stable like for like property income and a portfolio weighted average lease expiry of 4.5 years.

Charter Hall Retail REIT (CQR) - $2.1 billion FUM, CHPT interest 7.4%

CQR’s investment strategy is to invest in retail properties, with the existing portfolio of 136 properties predominantly focusing on food and mainly anchored by market leading grocery retailers.

The result of its asset revaluations at 30 June 2010 saw the value of its portfolio increase 1.1% over the June 2010 book value to $2.1 billion. The portfolio’s overall weighted average capitalisation rate decreased from 8.15% to 8.07%, resulting in a 0.9% increase in asset value, with the remaining 0.2% movement being driven by growth in the portfolio’s overall net income.

Portfolio occupancy increased to 96.7% at 30 June 2010, from 96.6% at 31 March 2010. Same property income growth increased to 1.2% across the portfolio, indicating improving market conditions across the three regions in which the REIT is invested.

Core Plus Office Fund (CPOF) - $1.1 billion FUM, CHPT interest 17%

CPOF has continued to focus on investment fundamentals and strengthen its balance sheet throughout financial year 2010. With occupancy of 96% and a long lease expiry profile of six years, CPOF is positioned to take advantage of an improving commercial real estate market. Continued tenant demand coupled with an upswing in demand from private, institutional and international investors for quality assets across the Australian market is a positive sign for a sustained recovery across the majority of office markets.

After a review of the entire CPOF portfolio in both the March and June quarters of this financial year CPOF has a current weighted average capitalisation rate of 7.76%. Including the 31 December 2009 valuations, 86% of this portfolio (by value) has now been revalued over the last six months.

Core Plus Industrial Fund (CPIF) - $0.4 billion FUM, CHPT interest 25%

CPIF has also undertaken June quarterly reviews of its entire portfolio, with valuations on 73% of the portfolio (by value). Including the 30 September 2009 valuations, 100% of the portfolio has now been revalued over the last nine months. The current weighted average capitalisation rate of the portfolio is 8.34%. Current CPIF occupancy is 98.9% with a WALE of 9.5 years, underpinned by strong tenant covenants with, for example, 17 and 14 year leases to Coles and Smorgon Steel respectively.

CPIF has demonstrated a solid performance in what has been a challenging market environment. CPIF continues to secure lease renewals and extensions above forecast rental levels.

On 4 August 2010, CPIF purchased a prominent seven hectare industrial site in Chullora which will be developed to provide a 27,000 square metre facility for Volkswagen Group Australia.

Core Plus Retail Fund (CPRF) - $0.3 billion FUM, CHPT interest 66%

The CPRF portfolio consists of eight properties with a current weighted average cap rate of 8.35%. June quarterly reviews of the CPRF portfolio showed that market capitalisation rates have stabilised across the retail market.

A long dated WALE of 7.8 years backs the current occupancy of 96% and provides income stability into the future, with no significant lease expiries until 2014.

CPRF is in the process of being restructured into the unlisted Direct Retail Fund, offering retail investors the chance to invest in an institutional quality portfolio of assets.

Diversified Property Fund (DPF) - $0.2 billion FUM, CHPT interest 32%

After a review of the entire DPF portfolio in both the March and June quarters of this financial year, 67% of the portfolio was independently revalued, resulting in a current weighted average cap rate of 8.17%.

The WALE remains steady at 7.4 years due to new leases and extension of existing leases. The DPF portfolio currently has an occupancy rate of 95%.

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Charter Hall Group

6. Review of operations (continued)

Charter Hall Umbrella Fund (CHUF) - $0.1 billion FUM, CHPT interest 25%

CHUF is a fund with investments predominantly in Charter Hall Group managed funds. CHUF has effectively had 66% of its portfolio revalued over the March and June quarters of this financial year. CHUF provides exposure to high quality assets with a WALE of 7.8 years and a current occupancy of 96%.

Charter Hall Direct Property Fund - $0.5 billion FUM, CHPT interest 4%

Charter Hall Direct Property Fund (CHDPF) is an unlisted open-ended property fund that aims to provide regular, tax effective income payable quarterly from a portfolio of direct property (86% of the portfolio), unlisted wholesale funds (6% of the portfolio) and listed A-REITs (3% of the portfolio). As at 30 June 2010, 83% of the portfolio was invested in the office sector and 94% of the portfolio was invested in Australia.

In the year to 30 June 2010, in line with PDS requirements, all of the direct properties in CHDPF have been independently revalued. The weighted average cap rate was 8.7%, the weighted average lease expiry was 4.8 years and portfolio occupancy was 92% as at 30 June 2010.

Since July 2008, in excess of A$270 million debt has been repaid to maintain gearing at the lower end of the 40-55% target range.

CHDPF is currently closed for applications and redemptions. However, following the successful capital and portfolio management initiatives throughout the recent market downturn, CHDPF is targeted to reopen in the fourth quarter of 2010.

Opportunity funds update

The market remains challenging for development and repositioning projects due to the tight credit markets, reduction in asset values and a decline in demand for space due to the economic downturn.

Charter Hall Opportunity Fund 4 (CHOF4) - $0.1 billion FUM, CHL interest 3%

Charter Hall Opportunity Fund No.4 (CHOF4) announced in June 2010 that it has sold its 50% interest in half of the Gepps X Homemaker Centre in Gepps Cross, Adelaide for $34.8 million.

Home HQ North Shore continues to trade well following the grand opening on 27 March 2010. Agreement for Lease documentation has been executed on approximately 96% of the centre’s area, which equates to 95% of the centre’s estimated income. The centre has achieved the first 4 star Green Star Rating for a bulky goods development in Australia.

Construction of Alluvion, 58 Mounts Bay Road, Perth reached practical completion on 2 June 2010. The project is 100% leased and was pre-sold to Colonial’s Commonwealth Office Property Fund (CPA) for $95 million with settlement occurring on 25 June 2010.

Charter Hall Opportunity Fund 5 (CHOF5) - $0.6 billion FUM, CHL interest 15%

At Home HQ Hastings, contracts have now been exchanged for the sale of a 22,350m² lot to Mitre 10 Mega for the development of a timber and hardware trade store. In addition, commercial terms have also been agreed to lease a new 6,300 square metre facility on the site.

The soft launch of Aquilo, a residential development in Mentone, Victoria has been well received by the market with 46 contracts exchanged and a further 30 townhouses reserved by potential purchasers with the payment of a holding deposit. The on-site sales and marketing suite has now been completed and the final 33 townhouses (Stage 3) are being released progressively.

CHOF5 announced in April 2010 that it has acquired the development rights to develop stage one of the Lacrosse Apartments in the Docklands precinct. The project comprises 312 apartments and includes 1,300m² of retail space. The average apartment price is approximately $500,000 and to date around 98% of apartments have been sold.

7. Additional information

For additional information regarding the results of Charter Hall Group for the year ended 30 June 2010 please refer to the Full Year Results – Media Release and Full Year Results – Presentation lodged with the ASX on 24 August 2010. Attached with this Appendix 4E is a copy of the Financial Statements for the year ended 30 June 2010.

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

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Charter Hall Group

8. Audit

This report is based on accounts to which one of the following applies:

�	The accounts have been audited. (refer attached financial statements)	�	The accounts have been subject to review.
	The accounts are in the process of being audited or subject to review.	�	The accounts have not yet been audited or reviewed.

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Charter Hall Group Financial statements 30 June 2010

Contents	Page
Financial statements
Consolidated income statement	8
Consolidated statement of comprehensive income	9
Consolidated balance sheet	10
Consolidated statement of changes in equity	11
Consolidated cash flow statement	12
Notes to the consolidated financial statements	13

7

Charter Hall Group Consolidated income statement For the year ended 30 June 2010

		2010	2009
	Notes	$’000	$’000
Revenue	6	77,333	61,249
Investment property expenses		(4,703)	(3,168)
Depreciation	8	(672)	(285)
Employee benefits expense		(29,403)	(16,663)
Finance costs	8	(6,471)	(7,403)
Other expenses		(6,341)	(4,733)
Business combination transaction costs	37	(6,636)	-
Foreign exchange loss		(174)	-
Share of net loss of associates accounted for using the equity method		(1,426)	(2,154)
Net gain on remeasurement of equity interests	35(b)	59,725	-
Loss on sale of investments, property and derivatives		(10,880)	1,339
Impairment of investment accounted for using the equity method		-	(17,644)
Impairment of goodwill	8	(15,328)	-
Fair value adjustments	7	(66,196)	(93,982)
Loss before income tax		(11,172)	(83,444)
Income taxbenefit	9	950	1,222
**Loss after income tax **		(10,222)	(82,222)
Profit / (loss) after tax attributable to:
Profit / (loss) attributable to stapled securityholders of Charter Hall Group		207	(82,222)
Net loss attributable to non-controlling interests of CPRF		(10,429)	-
		(10,222)	(82,222)
Profit / (loss) after tax attributable to stapled securityholders of Charter Hall Group
Equity holders of Charter Hall Limited		(25,169)	(32,848)
Equityholders ofCharter Hall PropertyTrust (non-controllinginterest)		25,376	(49,374)
Profit /(loss) after tax attributable to stapled securityholders of Charter Hall Group		207	(82,222)
		Cents	Cents
Group earnings per stapled security
Basic earnings per security	40	0.02	(17.98)
Diluted earnings per security	40	0.20	(15.85)

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

8

Charter Hall Group Consolidated statement of comprehensive income For the year ended 30 June 2010

	2010	2009
	$’000	$’000
Loss after income tax for the year	(10,222)	(82,222)
Other comprehensive income for the year:
Changes in the fair value of derivatives, net of tax	-	(763)
Foreigncurrencyreservemovement	4,650	1,188
Total comprehensive loss for theyear	(5,572)	(81,797)
Attributable to:
Equity holders of Charter Hall Limited	(25,146)	(32,782)
Equityholders of Charter Hall PropertyTrust(non-controllinginterest)	30,004	(49,015)
Comprehensive gain / (loss) attributable to stapled securityholders of Charter Hall
Group	4,858	(81,797)
Net comprehensive loss attributable to other non-controllinginterests	(10,430)	-
Total comprehensive loss for theyear	(5,572)	(81,797)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

9

Charter Hall Group Consolidated balance sheet As at 30 June 2010

Notes ASSETS Current assets Cash and cash equivalents 11 Trade and other receivables 12 Investment properties held for sale 13	2010 2009 $’000 $’000 28,380 1,923 48,361 17,082 45,000 -
Total current assets	121,741 19,005
Non-current assets Trade and other receivables 16 Investments accounted for using the equity method 17 Financial assets at fair value through the profit and loss 14 Property, plant and equipment 19 Investment properties 20 Intangible assets 18 Deferred tax assets 21	3,750 5,307 297,366 43,258 242,157 433,621 3,592 2,304 202,118 15,770 111,831 - 5,721 3,946 - 295
Other assets
Total non-current assets	866,535 504,501
Total assets	988,276 523,506
LIABILITIES Current liabilities Trade and other payables 22 Provisions 23	55,018 14,221 749 222
Total current liabilities	55,767 14,443
Non-current liabilities Trade and other payables 22 Borrowings 24 Deferred tax liabilities 25 Derivative financial instruments 15 Provisions 26	11,270 - 91,228 14,220 1,273 852 4,754 - 879 25
Total non-current liabilities	109,404 15,097
Total liabilities	165,171 29,540
Net assets	823,105 493,966
EQUITY Equity holders of Charter Hall Limited Contributed equity 27 Reserves 28(a) Accumulated losses 28(b) 28 Equity holders of Charter Hall Property Trust (non-controlling interest) 29 Stapled securityholders’ of Charter Hall Group interest Other non-controlling interest of CPRF 29	9,427 6,383 (44,658) (45,997) (61,698) (36,530)
	(96,929) (76,144) 869,405 570,110
	772,476 493,966 50,629 -
Total equity	823,105 493,966

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

10

Charter Hall Group Consolidated statement of changes in equity For the year ended 30 June 2010

Balance at 1 July 2008 Loss for the year Changes in the fair value of derivatives, net of tax Foreigncurrencyreservemovement	Attributable to owners of CHG Contributed equity Reserves Accumulated losses Total Non- controlling interest Total equity $’000 $’000 $’000 $’000 $’000 $’000
	526,822 (47,038) 12,536 492,320 - 492,320 - - (82,222) (82,222) - (82,222) - (763) - (763) - (763) - 1,188 - 1,188 - 1,188
Total comprehensive income / (loss) for **the year **	- 425 (82,222) (81,797) - (81,797)
Transactions with equity holders in their capacity as equity holders: Contributions of equity, net of transaction costs Distribution provided for or paid Security-based payments reserve	107,486 - - 107,486 - 107,486 - - (24,659) (24,659) - (24,659) - 616 - 616 - 616
	107,486 616 (24,659) 83,443 - 83,443
Balance at 1 July 2009 Loss for the year Foreigncurrencyreservemovement	634,308 (45,997) (94,345) 493,966 - 493,966 - - 207 207 (10,429) (10,222) - 4,651 - 4,651 (1) 4,650
Total comprehensive income / (loss) for **the year **	- 4,651 207 4,858 (10,430) (5,572)
Transactions with equity holders in their capacity as equity holders: Non-controlled interest in Charter Hall Core Plus Retail Fund Contributions of equity, net of transaction costs Distribution provided for or paid Security-based paymentsreserve	- - - - 64,825 64,825 302,137 - - 302,137 - 302,137 - - (29,802) (29,802) (3,766) (33,568) - 1,317 - 1,317 - 1,317
	302,137 1,317 (29,802) 273,652 61,059 334,711
Balance at 30 June 2010	936,445 (40,029) (123,940) 772,476 50,629 823,105

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

11

Charter Hall Group Consolidated cash flow statement For the year ended 30 June 2010

		2010	2009
	Notes	$’000	$’000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		60,105	50,455
Payments to suppliers and employees (inclusive ofgoods and services tax)		(34,714)	(30,025)
		25,391	20,430
Interest paid		(6,135)	(12,746)
Distributions and dividends from investments		14,622	28,367
Interest received		4,965	5,089
Net cash inflow from operating activities	39	38,843	41,140
Cash flows from investing activities
Payments for property, plant and equipment		(1,999)	(1,016)
Proceeds on disposal of investment property		97,653	23,270
Payment for business combination		(100,193)	-
Investment in associates		(218,562)	(129,114)
Proceeds on disposal of investments in associates		29,700	-
Cash from CPRF reconsolidated		5,983	-
Loans to associates		(2,000)	(1,985)
Receipts from sale of subsidiary net of cash		-	55,800
Net cash outflow from investing activities		(189,418)	(53,045)
Cash flows from financing activities
Proceeds from issues of securities and other equity securities		304,982	93,085
Proceeds from borrowings		-	181,876
Repayment of borrowings		(91,549)	(246,999)
Payout of hedge derivatives		(9,826)	(3,353)
Security issue and transaction costs		(7,250)	(2,219)
Distributions paid to securityholders		(19,325)	(24,745)
Net cash inflow / (outflow) from financing activities		177,032	(2,355)
Net increase / (decrease) in cash and cash equivalents		26,457	(14,260)
Cash and cash equivalents at the beginning of the year		1,923	16,183
**Cash and cash equivalents at the end of the year **	11	28,380	1,923

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

12

Charter Hall Group Notes to the consolidated financial statements 30 June 2010

Contents of the notes to the consolidated financial statements

		Page
1	Summary of significant accounting policies	14
2	Financial risk management	23
3	Critical accounting estimates and judgements	25
4	Parent entity financial information	26
5	Segment information	27
6	Revenue	30
7	Fair value adjustments	30
8	Expenses	30
9	Income tax expense	31
10	Distributions	32
11	Current assets – Cash and cash equivalents	32
12	Current assets – Trade and other receivables	33
13	Current assets – Investment properties held for sale	33
14	Non-current assets – Financial assets at fair value through profit or loss	34
15	Derivative financial instruments	34
16	Non-current assets – Trade and other receivables	35
17	Non-current assets – Investments accounted for using the equity method	36
18	Non-current assets – Intangible assets	37
19	Non-current assets – Property, plant and equipment	37
20	Non-current assets – Investment properties	38
21	Non-current assets – Deferred tax assets	39
22	Trade and other payables	39
23	Current liabilities – Provisions	39
24	Non-current liabilities – Borrowings	40
25	Non-current liabilities – Deferred tax liabilities	42
26	Non-current liabilities – Provisions	43
27	Contributed equity	44
28	Reserves and retained profits / (accumulated losses)	46
29	Non-controlling interest	47
30	Key management personnel disclosures	47
31	Remuneration of auditors	50
32	Commitments	50
33	Related parties	51
34	Subsidiaries	52
35	Investments in associates	53
36	Investment in joint ventures	57
37	Business combination	58
38	Events occurring after the balance sheet date	60
39	Reconciliation of profit after income tax to net cash inflow from operating activities	60
40	Earnings per security	61
41	Security-based payments	62
42	Deed of cross guarantee	63

13

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The financial statements are for the consolidated entity consisting of Charter Hall Limited (CHL) and its subsidiaries and controlled entities including Charter Hall Funds Management Limited as responsible entity for Charter Hall Property Trust (CHPT). 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). The results and equity, not directly owned by CHL, of CHPT have been treated and disclosed as a non-controlled interest. Whilst the results and equity of CHPT are disclosed as a non-controlled 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 Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRSs

The financial statements of Charter Hall Group also comply with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB).

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 (including derivative financial instruments) at fair value through profit or loss.

Critical accounting estimates

The preparation of financial statements 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.

Financial statement presentation

The Group has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009. The revised standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity. All non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence, the Group had to change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standards.

Change in accounting estimate

Charter Hall announced on 8 December 2009 that based on discussions with ASIC the Group would consolidate its interest in from 1 July 2009 whilst ever CHC owns more than 50% of CPRF, provided all other circumstances remain unchanged.

The Group’s consolidation of its investment in CPRF due to its 66% ownership interest will not impact the fund’s Investment Committee which will continue to make all investment and divestment, financing and capital expenditure decisions of CPRF.

(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 2010 and the results of all subsidiaries for the year then ended. Charter Hall Limited and its subsidiaries together are referred to in the financial statements 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 deconsolidated 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)).

14

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

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.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated balance sheet respectively.

(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 consolidated financial statements using the equity method of accounting after initially being recognised at cost, except as noted below in relation to certain CHPT investments.

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 consolidated financial statements as a reduction in 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 profit or loss, except for the investments in CQO and CQR which are accounted for using the equity method. 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 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 or loss is recognised in the income statement as part of revenue.

(iii) Joint ventures

The interest in a joint venture is accounted for in the consolidated financial statements using the equity method after initially being recognised at cost. Under the equity method, the share of the profits or losses is recognised in the income statement, and the share of movements in reserves is recognised in the reserves in the balance sheet. Details relating to the joint venture are set out in note 36.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board.

The Group has adopted AASB 8 Operating Segments from 1 July 2009. AASB 8 replaces AASB 114 Segment Reporting . The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. There has been no impact on the measurement of the Group’s assets and liabilities. Comparatives for 2009 have been restated.

The change to AASB 8 per AASB2009-5 was early adopted and as a result total assets for each reportable segment have not been disclosed.

(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;

15

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

• income and expenses for each income statement are translated at average exchange rates; and

• all resulting exchange differences are recognised as a separate component of equity.

Functional currencies and the relevant exchange rates are as follows:

NZD $1 USD $1 GBP £1 EUR $1	2010 2009 Closing rate Average rate Closingrate Average rate
	A$0.8089 A$0.7976 A$0.8046 A$0.816 A$1.1721 A$1.1241 N/A N/A A$1.7610 A$1.6797 N/A N/A A$1.4403 A$1.4555 N/A N/A

(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.

(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.

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) Performance fees

Performance fees are only recognised when it is probable that 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. Further information is provided in the critical accounting estimates.

(iv) Interest income

Interest income is recognised on a time proportion basis using the effective interest method. 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.

(v) Dividends / Distributions

Dividends / distributions 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 applicable income tax rate for each jurisdiction 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.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provision where appropriate on the basis of amounts expected to be paid to the tax authorities.

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.

16

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

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 is recognised in profit or loss, except to the extent that it related to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(g) Business combinations

The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

Change in accounting policy

A revised AASB 3 Business Combinations became operative on 1 July 2009. While the revised standard continues to apply the acquisition method to business combinations, there have been some significant changes.

All purchase consideration is now recorded at fair value at the acquisition date. Contingent payments classified as debt are subsequently remeasured through profit or loss. Under the Group's previous policy, contingent payments were only recognised when the payments were probable and could be measured reliably and were accounted for as an adjustment to the cost of acquisition.

Acquisition-related costs are expensed as incurred. Previously, they were recognised as part of the cost of acquisition and therefore included in goodwill.

Non-controlling interests in an acquiree are now recognised either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable assets. This decision is made on an acquisition-by-acquisition basis. Under the previous policy, the non-controlling interest was always recognised at its share of the acquiree's net identifiable assets.

The changes were implemented prospectively from 1 July 2009 and affected the accounting for the acquisition of CPRF and the formerly Macquarie entities disclosed in note 37. Contingent consideration of $11,270,000 was recognised at fair value on 1 March 2010 on the Macquarie transaction. It would not previously have been recorded at the date of acquisition, as the payment to the former owners was not probable. Acquisition related costs of $6,636,000 were recognised in profit or loss. The Group has chosen to recognise the non-controlling interest relating to the CPRF purchase at the proportionate share of the net identifiable assets.

17

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

(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.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable 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

Classification

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 12 and 16).

(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.

Recognition and derecognition

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.

Subsequent measurement

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.

18

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

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. Further details on how the fair value of financial instruments is determined are disclosed in note 2 and note 1(m).

Impairment

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 reclassified 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 fair values of various derivative financial instruments used for hedging purposes are disclosed in note 15.

(i) 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.

19

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

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) Intangibles

(i) Management rights

Management rights are not amortised as they have an indefinite life. Management rights are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.

Management rights are allocated to cash-generating units for the purpose of impairment testing.

(q) 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.

(r) 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.

(s) 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.

(t) 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.

(u) 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.

20

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

(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 and the Charter Hall Performance Rights and Options Plan. Information relating to these schemes is set out in note 41.

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.

(vi) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the reporting date are discounted to present value.

(v) 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.

(w) 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.

(x) 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.

(y) Goods and Services Tax (GST)

Revenues, expenses and assets (with the exception of receivables) 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.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

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 flows.

21

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

1 Summary of significant accounting policies (continued)

(z) 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 statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(aa) New accounting standards and UIG interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for year ended 30 June 2010 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-settled Share-based Payment Transactions [AASB 2] (effective from 1 January 2010)

The amendments made by the AASB to AASB 2 confirm that an entity receiving goods or services in a group share-based payment arrangement must recognise an expense for those goods or services regardless of which entity in the company settles the transaction or whether the transaction is settled in shares or cash. They also clarify how the Group share-based payment arrangement should be measured, that is, whether it is measured as equity – or a cash-settled transaction. The Group will apply these amendments retrospectively for the financial reporting period commencing on 1 July 2010.

(ii) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from 1 January 2013)

AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect the Group’s accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. The Group is yet to assess its full impact. The Group has not yet decided when to adopt AASB 9.

(iii) AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (effective from 1 July 2010/1 January 2011)

In June 2010, the AASB made a number of amendments to Australian Accounting Standards as a result of the IASB’s annual improvements project. The Group will apply the amendments from 1 July 2010. It does not expect that any adjustment will be necessary as a result of applying the revised rules.

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

(ac) Parent entity financial information

The financial information for the parent entity, Charter Hall Limited, disclosed in note 4, has been prepared on the same basis as the consolidated financial statements, except as set out below.

Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Charter Hall Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

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.

22

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

2 Financial risk management

The Group’s activities expose it to a variety of financial risks; market risk (interest rate risk, price risk and foreign exchange risk), credit risk and liquidity 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) 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. Charter Hall manages all the funds that the Group invests in and its staff have an excellent understanding of the underlying property values and trends that give rise to price risk. The carrying value of the financial assets at fair value through the profit and loss is determined with reference to the fund’s unit price which is determined in accordance with the fund’s constitution. The key determinant of the unit price is the underlying property values which are approved by the Board and the Valuation Sub-Committee of the Board.

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.

2010 Assets Unlisted units Total increase / (decrease) 2009 Assets Unlisted units Total increase / (decrease)	Carrying amount $’000	-10% +10% Profit $’000 Equity $’000 Profit $’000 Equity $’000
	242,157	(24,216) (24,216) 24,216 24,216
	Carrying amount $’000	(24,216) (24,216) 24,216 24,216
		-10% +10% Profit $’000 Equity $’000 Profit $’000 Equity $’000
	433,621	(43,362) (43,362) 43,362 43,362
		(43,362) (43,362) 43,362 43,362

(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.

The Group’s interest-rate risk arises from long-term borrowings of $91,228,056 (2009: $14,220,000). 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 44% (2009: 0%) 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 16(c) for interest rate sensitivity analysis on assets and note 24(d) for sensitivity analysis for liabilities.

(iii) Foreign exchange risk

The foreign exchange risk that the Group is exposed to is not material.

23

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

2 Financial risk management (continued)

(b) Credit risk

The Group has policies in place to ensure that sales of services are made to customers with an appropriate credit history.

Over half of the Group’s income is derived from management fees and performance fees from related parties.

Approximately 25% of the Group’s income is derived from rental properties; all tenants are assessed for credit worthiness, taking into account their financial position, past experience and other factors.

Refer to note 16(d) for more information on credit risk.

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, Treasury 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

2010 Non-interest bearing Bank and other loans Interest rate swaps 2009 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 $’000 55,018 55,018 - - - 55,018 91,228 4,992 92,527 - - 97,519 4,754 1,273 1,313 3,801 2,523 8,910
	151,000 61,283 93,840 3,801 2,523 161,447
	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 $’000 14,221 14,221 - - - 14,221 14,220 558 558 14,547 - 15,663
	28,441 14,779 558 14,547 - 29,884

(d) Fair value measurements

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

As of 1 July 2009, Charter Hall Group has adopted the amendment to AASB 7 Financial Instruments: Disclosures which requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

• (i) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

• (ii) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and

• (iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

24

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

2 Financial risk management (continued)

The following table present the group entity’s assets and liabilities measured and recognised at fair value at 30 June 2010. Comparative information has not been provided as permitted by the transitional provisions of the new rules.

2010 Assets Financial assets at fair value through profit or loss Total assets Liabilities Derivatives used for hedging Contingent consideration payable Total liabilities	Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 - - 242,157 242,157
	- - 242,157 242,157
	- 4,754 - 4,754 - - 11,270 11,270
	- 4,754 11,270 16,024

Comparative information has not been provided as permitted by the transitional provisions of the new rules.

Group Opening balance CPRF consolidated (Note 35,37) Sales Purchases Losses recognised in profit and loss Liability recognised during year Closing balance	Financial assets at fair value through profit and loss Contingent consideration $’000 $’000 433,621 - (139,888) - (39,514) - 14,825 - (26,887) - - 11,270
	242,157 11,270

The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their shortterm nature. 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. The fair value of current borrowings approximates the carrying amount, as the impact of discounting is not significant.

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 20). 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 when it is probable that 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. Performance fees recognised for the year ended 30 June 2010 have been received.

(iii) Tax losses

The Group recognises tax losses from previous years which it believes are recoverable but has not recognised any additional tax losses in financial statements for the year ended 30 June 2010.

25

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

3 Critical accounting estimates and judgements (continued)

(iv) Impairment testing

Critical judgements are made by the Group in assessing the value of management rights acquired. The management rights are considered to having an indefinite useful life if there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.

4 Parent entity financial information

(a) Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

Balance sheet Current assets Total assets Current liabilities Total liabilities Shareholders’ equity Issued capital Reserves Security-based payments Foreign currency translation reserve Accumulated losses Loss for the year Total comprehensive loss	2010 $’000 2009 $’000 6,932 2,492 256,790 134,044 - - 282,709 144,598 9,427 6,383 1,717 1,717 18 - (37,081) (18,654)
	(25,919) (10,554)
	(18,428) (7,349)
	(18,410) (7,349)

(b) Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2010 or 30 June 2009.

(c) Contractual commitments

As at June 2010, the parent entity had no contractual commitments (2009: nil).

(d) 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. CHL has a loan facility provided by CHPT which has significant net assets.

(e) Deed of cross guarantee

CHL and Charter Hall Holdings Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the other. A consolidated income statement, statement of comprehensive income and balance sheet are disclosed in note 42.

26

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

5 Segment information

(a) Description of segments

Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions.

The Board has identified two reportable segments, the performance of which it monitors separately.

Property investment

Has interests in investment properties and unlisted property funds. The property investment division has the profit result of the CPRF investment identified separately for management.

Funds management and corporate

Funds management services, development management services and other property services.

(b) Segment information provided to the Board

The operating segments provided to the Board for the reportable segments for the year ended 30 June 2010 is as follows:

2010 Property investment $’000 Funds management and corporate $’000 CPRF (100%) $’000	Adjustments $’000 Combined Group $’000
Total net rental income 422 8 13,420 Total investmentincome 25,385 (402) -	234 14,084 (7,301) 17,682
Total rental and property income 25,807 (394) 13,420 Total corporate income 120 47,360 -	(7,067) 31,766 (5,037) 42,443
Total income 25,927 46,966 13,420 Operating expenses (219) (33,100) (730) Other expenses (3,474) - (1,223)	(12,104) 74,209 106 (33,943) 4,697 -
EBITDA 22,234 13,866 11,467 Depreciation - (672) -	(7,301) 40,266 - (672)
EBIT 22,234 13,194 11,467 Interest income 25,970 438 3,692 Interest expense (731) (25,343) (5,414)	(7,301) 39,594 (25,343) 4,757 25,343 (6,145)
Operating earnings 47,473 (11,711) 9,745 Non-controlling interest - - (3,306)	(7,301) 38,206 - (3,306)
Operating earnings 47,473 (11,711) 6,439	(7,301) 34,900
Number of securities (‘000) Operating EPS	850,161 4.11cps
Number of securities for DPS (‘000) DPS	1,162,380 3.20cps

Geographical segments are immaterial as the vast majority the Group’s income is from Australian sources.

The group does not derive income of more than 10% from any one customer so no disclosure has been required.

27

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

5 Segment information (continued)

The operating segments provided to the Board for the reportable segments for the year ended 30 June 2009 is as follows:

		Funds
	Property	management		Combined
	investment	and corporate	CPRF (100%)	Group
2009	$’000	$’000	$’000	$’000
Total net rental income	2,019	-	-	2,019
Total investmentincome	24,477	1,471	-	25,948
Total rental and property income	26,496	1,471	-	27,967
Total corporate income	-	32,962	(3,525)	29,437
Total income	26,496	34,433	(3,525)	57,404
Operating expenses	(37)	(19,999)	-	(20,036)
Other expenses	(3,525)	-	3,525	-
EBITDA	22,934	14,434	-	37,368
Depreciation	-	(285)	-	(285)
EBIT	22,934	14,149	-	37,083
Interest income	26,356	623	(21,890)	5,089
Interest expense	(7,335)	(21,899)	21,890	(7,344)
Operating earnings	41,955	(7,127)	-	34,828
Non-controlling interest	-	-	-	-
Operating earnings	41,955	(7,127)	-	34,828
Number of securities (‘000)				457,410
Operating EPS				7.61cps
Number of securities for DPS (‘000)				698,040
DPS				4.96cps

28

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

5 Segment information (continued)

The reconciliation of income per the segment notes for 2010 and 2009 to the income statement is below:

	2010	2009
	$’000	$’000
Total income per segment note	74,209	57,404
Add: investment property expenses	4,703	3,168
Less: equity accounted profit in funds management segment	(1,130)	(1,471)
Add: interest income	4,757	5,089
Less: equity accounted profit in property investment segment	(5,280)	-
Less: performance fee accrual reversed	-	(3,000)
Add: other	74	59
Revenue per income statement	77,333	61,249

Operating earnings is used by management to measure the profitability of the Group. It represents the profit under Australian Accounting Standards adjusted for fair value adjustments on investment property and fair value adjustments on financial assets, impairment of assets, gains or losses on sale of investments, acquisition costs and non-cash charges such as share-based payments expense, amortisation, and tax benefit.

The calculation of operating earnings by adjusting for amounts in the income statement excluding the non-controlled interest in CPRF is shown below:

	2010	2010	2009
	($’000)	($’000)	($000)
	Excluding non-	Including non-
	controlled	controlled
	interest	interest
Statutory profit (excluding non-controlling interest)	207	(10,222)	(82,222)
Fair value losses	52,847	66,196	93,982
Net gain on re-measurement of equity interest	(59,725)	(59,725)	-
Loss / (gain) on sale of investments, property and derivatives	10,529	10,880	(1,339)
Impairment of goodwill on consolidation of CPRF and investments	15,328	15,328	17,644
Business combination acquisition costs	6,636	6,636	-
Non-operating movements in equity accounted investments	7,838	7,838	3,625
LSP and PROP expense	1,317	1,317	616
Amortisation	734	734	744
Tax benefit	(950)	(950)	(1,222)
Foreign exchange loss	139	174	-
Performancefee accrual reversal	-	-	3,000
Operating earnings (excluding non-controlling interest)	34,900	38,206	34,828
Basic weighted average number of securities per note 40	850,161,196		457,410,018
Operating earnings per security (excluding non-controlling interest)	4.11 cents		7.61 cents

Assets and liabilities have not been reported on a separate basis as the chief operating decision maker is provided with consolidated information.

29

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

6 Revenue

Sales revenue Gross rental income Management and performance fees Other revenue Interest Distributions / dividends Total revenue 7 Fair value adjustments Notes Investment properties 20 Financial assets at fair value through profit and loss 14 Derivative financial instruments 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	2010 2009 $’000 $’000 18,768 5,187 40,951 26,594
	59,719 31,781
	4,804 5,089 12,810 24,379
	17,614 29,468
	77,333 61,249
	2010 2009 $’000 $’000 (38,592) (2,085) (26,887) (82,663) (717) (9,234)
	(66,196) (93,982)
	2010 2009 $’000 $’000 672 285
	6,471 7,403
	1,218 1,223
Minimum lease payments	771 630
Impairment losses – Financial assets (refer to note 36) Impairment of goodwill (refer to note 37) Doubtful debts Trade receivables	- 17,644
	15,328 -
	- (300)

30

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

9 Income tax expense

(a) Income tax expense / (benefit) Current tax Deferred tax Under provided in prior years Deferred income tax expense / (revenue) included in income tax benefit comprises: Decrease in deferred tax assets (note 21) Increase / (decrease) in deferred tax liabilities (note 25) (b) Numerical reconciliation of income tax benefit to prima facie tax payable Loss 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 / (loss) Entertainment Share-based payments expense Non-taxable dividends Tax on LTI interest Adjustments to current tax of prior periods Impairment loss Loss on sale of financial asset at fair value through profit or loss Losses not recognised Movement in deferred tax benefits due to acquisition Sundry items	2010 2009 $’000 $’000 442 (591) (1,354) (1,392) (38) 761
	(950) (1,222)
	(1,775) 1,164 421 (2,556)
	(1,354) (1,392)
	(11,172) (83,444)
	(3,352) (25,034) (3,040) 14,812 42 11 395 185 172 646 483 749 (38) 761 89 5,293 - 1,303 4,082 - 212 - 5 52
	(950) (1,222)

(c) 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).

(d) Tax losses

(d) Tax losses
	2010	2009
	$’000	$’000
Unused tax losses for which no deferred tax asset has been recognised	13,607	-
Potential tax benefit @ 30%	4,082	-

31

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

10 Distributions
	2010	2009
	$’000	$’000
(a) Ordinary securities
- Interim ordinary distribution for the six months ended 31 December 2009 of 1.60 cents per security
paid on 26 February 2010	12,009	-
- Final ordinary distribution for the six months ended 30 June 2010 of 1.60 cents per security expected
to be paid on 27 August 2010	19,404	-
- Interim ordinary distribution for the six months ended 31 December 2008 of 3.96 cents per security
paid on 27 February 2009	-	19,672
- Final ordinary distribution for the six months ended 30 June 2009 of 1.00 cent per security paid on 28
August 2009	-	7,484
Total distributions provided for or paid	31,413	27,156
Less: distributions paid to holders of LTI securities	(1,611)	(2,497)
	29,802	24,659
Distributions paid in cash or satisfied by the issue of securities under the distribution reinvestment plan
for the year ended 30 June were as follows:
Paid in cash	20,552	19,858
Satisfied by issue of securities	10,861	7,298
	31,413	27,156

Franking credits available in the parent entity for subsequent financial years based on a tax rate of 30% (2009: 30%) are $3,285,368 (2009: $2,765,000).

11 Current assets – Cash and cash equivalents

Cash at bank and on hand Deposits at call	2010 2009 $’000 $’000 23,896 1,923 4,484 -
	28,380 1,923

(a) Cash at bank and on hand

These amounts earn floating interest rates of between 4.0% and 4.4% (2009: 2.5% and 2.9%).

(b) Deposits at call

These amounts earn floating interest rates of between 4.2% and 4.8% (2009: nil).

32

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

12 Current assets – Trade and other receivables

Trade receivables Provision for doubtful debts Loans to joint ventures Loans to associates Loans to key management personnel Distributions receivable Other receivables Prepayments	2010 2009 $’000 $’000 19,970 6,381 - -
	19,970 6,381 - 1,750 - 24 5,145 - 8,955 5,252 13,705 939 586 2,736
	48,361 17,082

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

(a) Bad and doubtful trade receivables

In the prior year, the Group recognised a gain of $300,000 in respect of reversing a provision for bad and doubtful trade receivables. The gain was included in ‘other expenses’ in the income statement.

There is no corresponding amount in the current year.

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

Opening balance Provision for impairment recognised during the year	2010 2009 $’000 $’000 - (300) - 300
	- -

(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 16).

13 Current assets - Investment properties held for sale

Bluewater Square, Redcliffe	2010 2009 $’000 $’000 45,000 -

The sale of this property to the Anthony John Group Pty Ltd settled on 10 August 2010 for $47.8 million.

33

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

14 Non-current assets – Financial assets at fair value through profit or loss

Opening balance Additions Devaluations Disposals CPRF consolidated (note 1(a) change in accounting estimate and note 37) Closing balance Shares and units in associates (note 35)	2010 2009 $’000 $’000 433,621 227,283 14,825 289,686 (26,887) (82,663) (39,514) (685) (139,888) -
	242,157 433,621
	242,157 433,621

Changes in fair values of financial assets at fair value through profit or loss are recorded in fair value adjustments in the income statement.

These investments represent units in unlisted Charter Hall managed funds and have been designated at fair value through profit or loss.

Information about the Group’s material exposure to share and unit price risk is provided in note 2(a)(i).

The Group sold $39.5 million units in CPOF in July 2010.

15 Derivative financial instruments

			2010	2009	2009
			$’000	$’000
Non-current liabilities
Interest rate swap contracts			4,754	-
Total non-current derivativefinancial instrumentliabilities			4,754	-

(a) Instruments used by the Group

The Group was 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 previously entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates. All swaps have been entered into by CPRF, which has been consolidated for 2010.

Swaps currently in place cover 43.6% (2009: 0%) of the loan principal outstanding. The fixed interest rates in 2010 ranged between 6.46% and 7.5% for AUD swaps (including margin and line fees). There is one NZD swap in 2010 which had a rate of 7.5%.

At 30 June 2010, the notional principal amounts and periods of expiry of the interest rate swap contracts are as follows:

	2010 2009
	$’000 $’000
4 – 5 years	20,000 -
7 –8 years	20,223 -
	40,223 -

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.

34

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

15 Derivative financial instruments (continued)

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 was being amortised to fair value adjustments over the period of the hedge remaining. A final amount of $763,000 was amortised in 2009 at the time the hedge was repaid.

The amount of fair value adjustments on hedges recorded directly in the profit and loss statement was a loss of $716,265 (2009: loss of $9,234,000).

(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 24(c) for the Group’s exposure to interest rate risk on interest rate swaps.

Interest rate swaps with a notional principal amount of $138.5 million were terminated during FY10, resulting in a realised gain of $391,064.

16 Non-current assets – Trade and other receivables

Loans to key management personnel Loans to joint ventures	2010 2009 $’000 $’000 - 5,307 3,750 -
	3,750 5,307

Further information relating to loans to key management personnel is set out in note 30. These have moved to current in FY10.

(a) Fair values

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

Loans to key management personnel Loans to joint ventures	2010 2009 Carrying amount Fair value Carrying amount Fair value $’000 $’000 $’000 $’000 - - 5,307 5,307 3,750 3,750 - -
	3,750 3,750 5,307 5,307

(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.

2010 Cash Trade receivables Loans to key management personnel Loans to joint ventures 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 28,380 - - - - - - - 28,380 - - - - - - - 12,831 12,831 - 5,145 - - - - - - 5,145 - - - - 3,750 - - - 3,750 - - - - - - - 29,799 29,799
	28,380 5,145 - - 3,750 - - 42,630 79,905 4.0% 3.2% - - 12.0% - -

35

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

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

2009 Cash Trade receivables Loans to key management personnel Loans to joint ventures Loans to associates 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 1,923 - - - - - - - 1,923 - - - - - - - 6,381 6,381 - - 5,307 - - - - - 5,307 - 1,750 - - - - - - 1,750 - - - - - - - 24 24 - - - - - - - 6,191 6,191
	1,923 1,750 5,307 - - - - 12,596 21,576 2.5% 12.0% 5.0% - - - -

(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 after tax and equity.

2010 Assets Cash and cash equivalents Total increase / (decrease) 2009 Assets Cash and cash equivalents Total increase / (decrease)	Carrying amount $’000	-1% +1% Profit $’000 Equity $’000 Profit $’000 Equity $’000
	28,380	(284) (284) 284 284
	Carrying amount $’000	(284) (284) 284 284
		-1% +1% Profit $’000 Equity $’000 Profit $’000 Equity $’000
	1,923	(19) (19) 19 19
		(19) (19) 19 19

(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 More than 6 months	2010 2009 $’000 $’000 9,719 5,400 1,237 981 1,875 -
	12,831 6,381

The receivables are considered past due but not impaired.

The carrying value approximates fair value.

17 Non-current assets – Investments accounted for using the equity method

Units in associates (note 35) Shares in joint venture entity (note 36)	2010 2009 $’000 $’000 263,399 18,279 33,967 24,979
	297,366 43,258

36

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

17 Non-current assets – Investments accounted for using the equity method (continued)

(a) Units in associates

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.

(b) Shares in joint venture entity

The interest in Commercial and Industrial Property Pty Ltd and overseas joint ventures are accounted for in the consolidated financial statements using the equity method of accounting.

18 Non-current assets – Intangible assets

As detailed in note 37, the Group completed a transaction to acquire the majority of Macquarie Group’s core real estate management platform in March 2010. This transaction was structured to secure the management rights (i.e. future management fee revenue) of Macquarie Office Trust (renamed Charter Hall Office REIT), Macquarie Country Wide Trust (renamed Charter Hall Retail REIT) and Macquarie Direct Property Fund (renamed Charter Hall Direct Property Fund).

The excess of consideration paid over net tangible assets acquired represents the value of these management rights.

Management considers that the management rights have an indefinite life as there are no finite terms in the underlying agreements and the Group has no intention to cease managing these Funds. As a result the management rights are not being amortised.

Management Rights – at cost

2010	2009
$’000	$’000
111,831	-

The carrying value of the Management Rights is supported by value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the fiveyear period are extrapolated using estimated growth rates appropriate for the business. Impairment is tested at the cash generating unit (CGU) level for each CGU. Each individual CGU is considered to be a fund which generates management fee income.

Key assumptions used for value-in-use calculations:

• Discount rate 12.5% is in excess of the Group’s WACC as a result of the management platform carrying more risk than the return on property investment cashflows.

• Growth over next five years of 5% pa which is conservative for this stage of the property cycle.

• Terminal growth rate of 3% which is in line with a long-term estimated inflation range.

19 Non-current assets – Property, plant and equipment

	Furniture, fittings
	and equipment	Fixtures	Software	Total
	$’000	$’000	$’000	$’000
Year ended 30 June 2009
Opening net book amount	662	915	-	1,577
Additions	246	-	766	1,012
Depreciationcharge	(203)	(82)	-	(285)
Closingnet bookamount	705	833	766	2,304
At 30 June 2009
Cost	1,458	1,073	766	3,297
Accumulated depreciation	(753)	(240)	-	(993)
Net bookamount	705	833	766	2,304
Year ended 30 June 2010
Opening net book amount	705	833	766	2,304
Additions	907	-	1,058	1,965
Depreciationcharge	(395)	(65)	(217)	(677)
Closingnet bookamount	1,217	768	1,607	3,592
At 30 June 2010
Cost	2,365	1,073	1,824	5,262
Accumulated depreciation	(1,148)	(305)	(217)	(1,670)
Net book amount	1,217	768	1,607	3,592

37

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

20 Non-current assets – Investment properties

At fair value Opening balance Assets reconsolidated / (deconsolidated) - CPRF Acquisitions and additions Lease incentives paid Lease incentives amortised Disposals Transferred to held for resale Net loss from fair value adjustment Foreign currency exchange Closing balance at 30 June (a) Amounts recognised in profit and loss for investment property Rental income Direct operating expenses from property that generated rental income Property Type % owned Date acquired Cost incl additions Independent valuation date Independent valuation amount Valuer $’000 $’000	2010 2009 $’000 $’000 15,770 439,645 277,516 (301,404) 4,597 39 3,020 - (292) - (15,000) (120,425) (45,000) - (38,592) (2,085) 99 -
	202,118 15,770
	18,768 5,187 (4,703) (3,168)
	14,065 2,019
	Book value 2010 Book value 2009 $’000 $’000
61 Nepean Hwy, Mentone 1 Residential 50 15/06/05 762 - - - 770 770 56 Anzac St, Chullora Industrial 100 21/06/05 18,589 30/04/09 15,000 Savills - 15,000 CPRF properties 2 Home HQ, Nunawading Bulky retail 100 03/07/08 70,481 30/06/10 62,000 M3 Property 62,000 - Mentone Showrooms, Mentone Bulky retail 100 03/07/08 24,600 30/09/09 18,300 Savills 18,300 - Bunnings, Stafford Bulky retail 100 20/06/07 21,669 30/06/10 21,250 Colliers 18,500 - Foodtown, Auckland, NZ Retail 100 06/07/07 24,643 31/12/09 19,617 Savills 19,617 - Home HQ, Ipswich Retail 100 14/08/07 31,309 30/06/10 27,000 JLL 27,000 - Menai Central, Menai Retail 100 22/02/08 37,753 30/06/10 34,700 Cushman & Wakefield 34,700 - Mentone Centre, Mentone Bulky retail 50 06/05/09 26,678 31/12/07 68,300 Savills 21,210 - 33 Windorah St, Stafford 3 21 21 - 256,505 202,118 15,770
	202,118 15,770

1) Property has not had an independent valuation, value determined by Directors valuation.

2) The Group did not consolidate CPRF at 30 June 2009, therefore no comparative book values have been given. Date acquired is the date CPRF acquired the property.

3) On 20 December 2009, contracts were exchanged for the purchase of 33 Windorah St, Stafford. This sale was settled on 20 July 2010 for $11.2 million. The above book value reflects costs relating to the purchase of this property which were incurred prior to 30 June 2010.

(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 2009 valuations were based on directors’ valuations with the key assumptions for Chullora being a capitalisation rate of 9.25%, a vacancy rate of 0% and a weighted average rent review of 3.63%. The 2010 valuations had an average capitalisation rate of 8.35%, a vacancy rate of 4% and a weighted average rent review of 3.64%.

38

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

21 Non-current assets – Deferred tax assets

The balance comprises temporary differences attributable to: Employee benefits Other provisions Tax losses Movements: Opening balance Charged to the income statement (note 9) Closing balance at 30 June Deferred tax assets to be recovered after more than 12 months	2010 2009 $’000 $’000 1,022 232 - 3 4,699 3,711
	5,721 3,946
	3,946 5,110 1,775 (1,164)
	5,721 3,946
	5,721 3,946
	5,721 3,946

22 Trade and other payables

Current liabilities Trade payables Accruals Distribution payable GST payable Annual leave payable Payable for business combination (note 37) Bonus payable Other payables All current liabilities are expected to be settled within 12 months. Non-current liabilities Contingent consideration payable	2010 2009 $’000 $’000 7,508 4,283 542 73 19,535 6,980 1,316 695 2,252 525 11,270 - 5,313 - 7,282 1,665
	55,018 14,221
	2010 2009 $’000 $’000 11,270 -

See note 37(i) for further details of the contingent consideration payable.

23 Current liabilities – Provisions

Employee benefits – long service leave	2010 2009 $’000 $’000 749 222
	749 222

(a) Movements in provisions

Refer to note 26 for the movement in provisions and split between current and non-current.

39

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

24 Non-current liabilities – Borrowings

24 Non-current liabilities – Borrowings
Secured Bank loans Unsecured Bank loans Total non-current borrowings	2010 2009 $’000 $’000 91,228 - - 14,220
	91,228 14,220

The bank loan is secured by a floating charge over all the cash and receivables of CPRF and by a mortgage over the investment properties held by CPRF.

The carrying amounts of assets pledged as security for current and non-current borrowings are:

Current Floating charge Cash and cash equivalents Receivables First mortgage Investment property held for sale Total current assets pledged as security Non-current First mortgage Investment properties Total non-current assets pledged as security Total assets pledged as security	2010 2009 $’000 $’000 1,456 - 4,692 - 45,000 -
	51,148 -
	201,348 -
	201,348 -
	252,496 -

(a) 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	2010 2009 $’000 $’000 300,000 100,000 92,111 14,220
	207,889 85,780

In July 2008, following the selldown of its interest in CPRF from 100% to 62%, CHPT obtained a new $100 million NAB debt facility that expires in July 2011. This facility has subsequently been reduced to $50 million.

CPRF has a facility of $250 million with NAB which expires in July 2011.

40

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

24 Non-current liabilities – Borrowings (continued)

(b) Interest rate risk exposures

The following table sets out the Group’s exposure to interest rate risk, including 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.

to maturity.
				Fixed interest		rate
	Floating	1 year	Over 1 to	Over 2 to	Over 3 to	Over 4 to	Over 5	Non-	Total
2010	interest	or less	2 years	3 years	4 years	5 years	years	interest
	rate							bearing
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trade and other payables	-	-	-	-	-	-	-	55,018	55,018
Contingent consideration payable	-	-	-	-	-	-	-	11,270	11,270
Bank and other loans	91,228	-	-	-	-	-	-	-	91,228
Interest rate swaps	(40,223)	-	-	-	-	20,000	20,223	-	-
	51,005	-	-	-	-	20,000	20,223	66,288	157,516
Weighted average interest rate	3.99%	-	-	-	-	7.04%	7.84%
				Fixed interest		rate
	Floating	1 year	Over 1 to	Over 2 to	Over 3 to	Over 4 to	Over 5	Non-	Total
2009	interest	or less	2 years	3 years	4 years	5 years	years	Interest
	rate							bearing
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trade and other payables	-	-	-	-	-	-	-	14,221	14,221
Bank and other loans	14,220	-	-	-	-	-	-	-	14,220
	14,220	-	-	-	-	-	-	14,221	28,441
Weighted average interest rate	6.04%	-	-	-	-	-	-

(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 after tax and equity.

2010 Liabilities Trade and other payables Contingent consideration payable Borrowings Derivative financial instruments Total increase / (decrease) 2009 Liabilities Trade and other payables Borrowings Total increase / (decrease)	Carrying amount $’000	-1% +1% Profit $’000 Equity $’000 Profit $’000 Equity $’000
	55,018 11,270 91,228 4,754	- - - - - - - - 912 912 (912) (912) (2,617) (2,617) 1,766 1,766
	Carrying amount $’000	(1,705) (1,705) 854 854
		-1% +1% Profit $’000 Equity $’000 Profit $’000 Equity $’000
	14,221 14,220	- - - - 142 142 (142) (142)
		142 142 (142) (142)

41

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

24 Non-current liabilities – Borrowings (continued)

(d) Fair value

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

On-balance sheet Non-traded financial liabilities Bank loans	2010 Carrying amount Fair value $’000 $’000 91,228 92,111

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.

(e) 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 with both net of cash and cash equivalents.

The gearing ratios at 30 June 2010 and 30 June 2009 were 6.5% and 2.4% respectively. Debt covenants are monitored regularly to ensure compliance and reported to the debt provider on a six monthly basis. The Group Treasurer is responsible for negotiating new debt facilities and compliance with covenants.

25 Non-current liabilities – Deferred tax liabilities

The balance comprises temporary differences attributable to: Prepayments Fund establishment costs Accrued revenue Depreciation on New Zealand investment property 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	2010 2009 $’000 $’000 296 - - 516 316 243 661 - - 93
	1,273 852
	852 3,408 421 (2,556)
	1,273 852
	1,273 852 - -
	1,273 852

42

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

26 Non-current liabilities – Provisions

Employee benefits – long service leave (a) Movements in provisions Movements in employee benefits provisions are set out below: Long service leave Opening balance Additional provisions recognised / (utilised) Carrying amount at end of year Current Non-current Total	2010 2009 $’000 $’000 879 25
	2010 2009 $’000 $’000 247 259 1,381 (12)
	1,628 247
	749 222 879 25
	1,628 247

43

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

27 Contributed equity

Notes (a) Security capital* Ordinary securities (b),(c) Fully paid	Group Group 2010 2009 2010 2009 Securities Securities $’000 $’000 1,162,380,237 698,040,044 936,445 634,308
	1,162,380,237 698,040,044 936,445 634,308

(b) Movements in ordinary security capital:

(b) Movements in ordinary security capital:
Details Notes	Number of securities Issue price	$’000
Opening balance Add back LTI securities reversed last year Employee security scheme issue (e) Distribution re-investment plan issue August 2008 (d) Employee security scheme issue (e) Distribution re-investment plan issue February 2009 (d) Placement (g) Entitlement offer (f) Gandel underwriting (h) Balance at 30 June 2009 Less: Transaction costs on security issues Less: LTI securities reversed^ Balance per accounts at 30 June 2009 Add back LTI securities reversed last year Distribution re-investment plan issue August 2009 (d) Distribution re-investment plan issue February 2010 (d) Institutional placement (i) Entitlement offer (j) Macquarie placement (k) Balance at 30 June 2010 Less: Transaction costs on security issues Less: LTI securities reversed^ Balance per accounts at 30 June 2010 Charter Hall Limited Charter Hall Property Trust	413,983,609 23,508,112 15,321,360 $1.04 32,459,346 $0.8489 11,508,812 $1.04 21,723,725 $0.2879 81,735,340 $0.33 138,532,553 $0.33 9,610,782 $0.33 748,383,639 (50,343,595) 698,040,044 50,343,595 2,210,371 $0.4722 4,995,460 $0.6689 35,624,778 $0.70 300,237,026 $0.65 121,272,558 $0.70 1,212,723,832 (50,343,595) 1,162,380,237	526,822 45,311 15,934 27,555 11,969 6,254 26,973 45,716 3,172
		709,706 (2,219) (73,179)
		634,308
		73,179 1,044 3,342 24,937 195,154 84,891
		1,016,855 (7,231) (73,179)
		936,445
		9,427 927,018

• 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.

^ 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 AASB 2: Share-based Payment , the loan, securities, interest received on the loan and the distribution paid and payable are derecognised for the preparation of the financial statements.

In 2009, the issued capital of $634,308,000 was divided between Charter Hall Limited $6,383,000 and Charter Hall Property Trust $627,925,000.

(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.

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.

44

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

27 Contributed equity (continued)

(d) Distribution re-investment plan

The company has established a distribution re-investment plan (DRP) under which holders of ordinary securities may elect to have all or part of their distribution satisfied by the issue of new ordinary securities rather than by being paid in cash. Securities are issued under the plan at a discount to the market price. The DRP was active for the 30 June 2009, 31 December 2009 and 30 June 2010 distributions.

(e) Employee security scheme

Information on the employee security scheme, including details of securities issued under the scheme, is set out in note 41.

(f) Entitlement offer

On 27 May 2009, the company invited securityholders to subscribe to a entitlement offer of 148.1 million ordinary securities at an issue price of $0.33 per security on the basis of 2 securities for every 7 fully paid ordinary securities held, such securities to be issued on 12 June 2009 or 29 June 2009 and be entitled to distributions / dividends from 30 June 2009.

(g) Placement

On 11 June 2009, 72,847,275 securities were issued at $0.33 to Gandel Group. The securities are entitled to the distribution for the six months ended 30 June 2009. An additional 8,888,065 securities were issued to Gandel Group as part of a top up placement also at $0.33.

(h) Gandel underwriting

The retail security offer was underwritten by Gandel Group with 9,610,782 securities not taken up by retail securityholders issued at $0.33.

(i) Institutional placement

On 1 March 2010, 35,624,778 securities were issued at $0.70 as part of an institutional placement.

(j) Entitlement offer

On 1 March 2010, 227,913,824 securities and on 16 March 2010, 72,323,202 securities were issued as part of a 2 for 5 entitlement offer. The price was $0.65 per security.

(k) Placement

On 1 March 2010, 35,624,778 securities were issued at $0.70 as part of an institutional placement.

45

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

28 Reserves and retained profits / (accumulated losses)

(a) Reserves Business combination reserve Security-based payments reserve Foreign currency reserve Charter Hall Limited and controlled entities Charter Hall Property Trust Movements: Security-based payments reserve Opening balance Expense relating to LTI scheme Closing balance Business combination reserve Opening and closing balance Foreign currency reserve Opening balance Translation Closing balance	2010 2009 $’000 $’000 (52,000) (52,000) 7,367 6,050 4,604 (47)
	(40,029) (45,997)
	(44,658) (45,997) 4,629 -
	(40,029) (45,997)
	6,050 5,434 1,317 616
	7,367 6,050
	(52,000) (52,000)
	(47) (1,235) 4,651 1,188
	4,604 (47)

(i) Security-based payments reserve

The security-based payments reserve is used to recognise the fair value of securities issued to the LSP but not to employees and rights issued under the PROP.

(ii) Business combination reserve

This reserve relates to the reverse acquisition at IPO in 2005. 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.

(iii) Foreign currency reserve

Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 1(d) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

(b) Retained profits / (accumulated losses)

Movements in retained profits / (accumulated losses) were as follows:

Opening balance Net profit / (loss) for the year Distributions / dividends Closing balance Charter Hall Limited and controlled entities Charter Hall Property Trust	2010 2009 $’000 $’000 (94,345) 12,536 207 (82,222) (29,802) (24,659)
	(123,940) (94,345)
	(61,698) (36,530) (62,242) (57,815)
	(123,940) (94,345)

46

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

29 Non-controlling interest

The financial statements include the financial statements for the consolidated entity consisting of Charter Hall Limited and its subsidiaries and controlled entities including Charter Hall Property Trust (CHPT). Charter Hall Limited has been identified as the Parent Entity in relation to the stapling. The results and equity, not directly owned by CHL, of CHPT have been treated and disclosed as a non-controlling interest. Whilst the results and equity of CHPT are disclosed as noncontrolling interest, the stapled securityholders of CHL are the same as the stapled securityholders of CHPT.

		2010	2009
	Notes	$’000	$’000
Interest in:
Contributed equity	27(b)	927,018	627,925
Reserves	28(a)	4,629	-
Accumulated losses	28(a)	(62,242)	(57,815)
Equity holders of CHPT (non-controlling interest)		869,405	570,110
The Group has consolidated 100% of the net assets and results of CPRF. However, 33.96% of CPRF is owned by			non-
controlled unitholders. Their non-controlled interest in the	total equity of CPRF is as follows:
Contributed equity		86,995	-
Reserves		(371)	-
Accumulated losses		(35,995)	-
Other non-controlling interest in CPRF		50,629	-

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) P Derrington G Fraser C McGowan P Kahan

(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	Group Chief Financial Officer	Charter Hall Holdings Pty Ltd
A Glass	Head of Wholesale Investment Funds Management	Charter Hall Holdings Pty Ltd
N Kelly	Head of Investor Relations	Charter Hall Holdings Pty Ltd
S Sewell	Chief Executive Officer – Charter Hall Retail REIT	Charter Hall Holdings Pty Ltd
R Stacker	Chief Executive Officer – Charter Hall Direct Property	Charter Hall Holdings Pty Ltd
A Taylor	Chief Executive Officer – Charter Hall Office REIT	Charter Hall Holdings Pty Ltd
M Winnem	Head of Wholesale Opportunistic Funds Management	Charter Hall Holdings Pty Ltd

(c) Key management personnel compensation

Short-term employee benefits Post-employment benefits Security-based payment	2010 2009 $ $ 7,558,708 3,748,642 205,157 263,174 794,115 137,247
	8,557,980 4,149,063

The number of other key management personnel in the year ended 30 June 2009 was three, compared to seven for the year ended 30 June 2010.

47

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

30 Key management personnel disclosures (continued)

(d) Equity instrument disclosures relating to key management personnel

(i) Security holdings

The numbers of securities in the company held during the year by each director of CHL and other key management personnel of the Group, including their personally related parties, are set out below.

2010 Name	Opening balance	Purchased / (sold) during the period	LTI securities vesting/(forfeited) during the period	Closing balance#
Directors of Charter Hall Limited Ordinary securities K Roxburgh R Woodhouse P Derrington G Fraser C Fuchs D Harrison P Kahan C McGowan DSouthon	64,285 85,713 - 823,792 6,867,833 10,973,394 - - 11,319,639	60,715 - - (196,059) - 219,761 - - -	- - - - (1,050,000) (1,475,000) - - (1,475,000)	125,000 85,713 - 627,733 5,817,833 9,718,155 - - 9,844,639
Other key management personnel of the Group Ordinary securities J Bakker A Glass N Kelly S Sewell R Stacker A Taylor M Winnem	547,806 - 221,372 - - - 609,735
		-	-	547,806
		-	-	-
		-	-	221,372
		-	-	-
		-	-	-
		-	-	-
		(54,020)	-	555,715

This total includes securities that have vested but have not been exercised by repayment of the loan and removal from the LTI plan. Unvested securities are excluded from the balance. The vested securities were issued with loans varying from $1.00 to $2.76 per security which are significantly higher than the security price at 30 June 2010 of $0.60.

2009 Name	Opening balance	Purchased / (sold) during the period	LTI securities vesting/(forfeited) during the period	Closing balance
Directors of Charter Hall Limited Ordinary securities K Roxburgh R Woodhouse P Derrington G Fraser C Fuchs D Harrison C McGowan DSouthon	50,000 66,666 - 350,000 5,887,828 7,897,420 - 8,129,240	14,285 19,047 - 473,792 377,999 1,291,371 - 1,420,232	- - - - 602,006 1,784,603 - 1,770,167	64,285 85,713 - 823,792 6,867,833 10,973,394 - 11,319,639
Other key management personnel of the Group Ordinary securities J Bakker R Champion^ N Kelly	222,235 184,259 62,642
		(2,241)	327,812	547,806
		-	(183,729)	530
		-	158,730	221,372
M Winnem	357,932	76,445	175,358	609,735

^ The balance for Richard Champion when he ceased employment was 530 securities. After this time, his holding has not been monitored.

48

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

30 Key management personnel disclosures (continued)

The executive directors of Charter Hall Group and other key management personnel of the Group have received the following rights and options during the year from the company’s PROP:

	Performance rights 2009 Performance rights 2010 Total Options 2010 Executive Directors C Fuchs 50,481 175,000 225,481 625,625 D Harrison 403,846 750,000 1,153,846 2,681,250 D Southon 403,846 750,000 1,153,846 2,681,250 Key management personnel J Bakker 50,480 400,000 450,480 1,430,000 A Glass - 300,000 300,000 1,072,500 N Kelly 50,480 24,000 74,480 858,000 S Sewell - 357,000 357,000 893,000 R Stacker - 214,500 214,500 535,500 A Taylor - 357,000 357,000 893,000 M Winnem - 240,000 240,000 858,000

(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

	Balance at the		Balance at the	Number in Group at
	start of the	Interest paid and	end of the	the end of the
Group	period	payable for the period	period	period
	$	$	$
2010	5,306,500	160,000	5,145,000	2
2009	9,928,333	248,000	5,306,500	2

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

2010	Balance at the		Balance at the	Highest
	start of the	Interest paid and	end of the	indebtedness during
Name	period	payable for the period	period	the period
	$	$	$	$
D Harrison	2,781,500	80,000	2,605,000	2,781,500
**DSouthon **	2,525,000	80,000	2,540,000	2,540,000
2009	Balance at the		Balance at the	Highest
	start of the	Interest paid and	end of the	indebtedness during
Name	period	payableforthe period	period	the period
	$	$	$	$
D Harrison	2,657,500	124,000	2,781,500	2,781,500
DSouthon	2,657,500	124,000	2,525,000	2,756,500

Loans to key management personnel are for periods of five 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 $2.5 million 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 three years, were extended in 2008 for a further three years until 6 June 2011, under the same terms and conditions, by resolution of the Board.

49

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

31 Remuneration of Auditors

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

(a) Assurance services Audit services PricewaterhouseCoopers Australian firm Audit and review of financial statements and other audit work under the Corporations Act 2001 Non-PricewaterhouseCoopers audit firms for the audit or review of financial statements of any entity in the Group W F White & Co Ernst & Young Total remuneration for audit services Other assurance services PricewaterhouseCoopers Australian firm Investigating Accountant’s 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 Non-PricewaterhouseCoopers firms for taxation services (Ernst & Young) Total remuneration for taxation services (c) Advisory services PricewaterhouseCoopers Australian firm Long-term incentive plan structure Due diligence for equity raising and acquisition Non-PricewaterhouseCoopers firms for advisory services Ernst & Young Total remuneration for advisory services	2010 2009 $ $ 257,849 236,092 5,510 4,770 59,035 -
	322,394 240,862
	- 70,000
	- 70,000
	322,394 310,862
	25,920 13,920 130,920 141,075
	156,840 154,995
	9,000 21,538 380,000 - 33,269 69,806
	422,269 91,344

The Group’s policy is to employ PricewaterhouseCoopers (PwC) on assignments additional to statutory audit duties where PwC’s expertise and experience with the Group are important. These assignments are principally tax advice and Investigating Accountant’s 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) 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 Commitment fees from associates	2010 2009 $’000 $’000 1,311 617 8,966 2,815
	10,277 3,432

50

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

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:

	2010	2009
	$	$
Sales of services
Management and performance fees from associates	24,078,267	24,077,334
Transaction fees from associates	4,509,418	359,173
Commitment fees from associates	119,775	180,225
Property management fees from associates	3,037,846	755,674

Transactions with associates and joint ventures are disclosed in note 34 and note 35 respectively.

(e) Loans to / from related parties

Loans to joint ventures Opening balance Loans advanced Interest charged Interest received Closing balance	2010 2009 $ $ 1,750,000 - 2,000,000 1,750,000 221,342 177,205 (221,342) (177,205)
	3,750,000 1,750,000

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.

51

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (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	Class of
Name of entity	incorporation	securities	Equity	holding
			2010	2009
			%	%
Controlled entities of Charter Hall Limited
Charter Hall Holdings Pty Limited	Australia	Ordinary	100	100
Charter Hall CUB Pty Ltd	Australia	Ordinary	100	100
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
Charter Hall Real Estate Inc¹	USA	Ordinary	100	-
Charter Hall Office Management Limited¹	Australia	Ordinary	100	-
Charter Hall Asset Services Limited¹	Australia	Ordinary	100	-
Charter Hall Real Estate Europe Limited¹	UK	Ordinary	100	-
Charter Hall Retail Management Limited²	Australia	-	-	-
Charter Hall Direct Property Management Limited²	Australia	-	-	-
Controlled entities of Charter Hall Holdings Real Estate Pty Ltd
Charter Hall Holdings Real Estate (Vic) Pty Limited	Australia	Ordinary	100	100
Controlled entities of Charter Hall Asset Services Limited
Charter Hall Real Estate Management Services Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (WA) Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (VIC) Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (TAS) Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (SA) Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (ACT) Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (NSW) Pty Limited	Australia	Ordinary	100	-
Charter Hall Real Estate Management Services (QLD) Pty Limited	Australia	Ordinary	100	-
Controlled entities of Charter Hall Real Estate Inc.
CHREI US Office LLC	Australia	Ordinary	100	-
CHREI US Retail LLC	Australia	Ordinary	100	-
¹ Acquired 1/3/10.

² The purchase of all shares of these is expected to complete during the quarter to 30 September 2010. Although Charter Hall does not own the shares of these entities, Charter Hall is deemed to control these entities and hence they are consolidated.

Controlled entities of Charter Hall Property Trust

130 Stirling Street Trust (formerly Charter Hall Investment Fund No.

15)	Australia	Ordinary	-	100
Charter Hall Core Plus Retail Fund*	Australia	Ordinary	66	N/A
Charter Hall Co-Investment Trust	Australia	Ordinary	100	-

*CHPT sold down its interest in CPRF in July 2008 from 100% to 62% (current interest is 66%). At that time it was considered that CHPT did not control the fund and therefore did not consolidate CPRF into its financial statements.

However, as outlined in note 1, Charter Hall announced on 8 December 2009 that based on discussions with ASIC the Group would consolidate its interest in CPRF from 1 July 2009.

Charter Hall Co-Investment Trust is a new entity set up by Charter Hall Property Trust to hold its investments in CQO, CQR and CHDPF.

52

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

34 Subsidiaries (continued)

34 Subsidiaries (continued)
	Country of	Class of
Name of entity	incorporation	securities	Equity	holding
			2010	2009
			%	%
Controlled entities of Charter Hall Core Plus Retail Fund
Core Plus Retail Fund New Zealand	Australia	Ordinary	100	N/A
Redcliffe Retail Property Trust	Australia	Ordinary	100	N/A
Belconnen Retail Warehouse Trust	Australia	Ordinary	100	N/A
Box Hill Retail Warehouse Trust	Australia	Ordinary	100	N/A
Nerang Retail Warehouse Trust	Australia	Ordinary	100	N/A
Nowra Retail Warehouse Trust	Australia	Ordinary	100	N/A
Penrith Retail Warehouse Trust	Australia	Ordinary	100	N/A
Stafford Retail Warehouse Trust	Australia	Ordinary	100	N/A
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

35 Investments in associates

(a) Carrying amounts

Information relating to associates is set out below.

Name of company Principal activity Ownership interest 2010 2009 Unlisted % % Charter Hall Diversified Property Fund Property Investment 31.9% 25.7% Charter Hall Core Plus Office Fund Property Investment 16.8% 23.4% Charter Hall Core Plus Industrial Fund Property Investment 25.0% 25.0% Charter Hall Core Plus Retail Fund Property Investment N/A 65.3% Charter Hall Umbrella Fund Property Investment 24.9% 24.9% Charter Hall Direct Property Fund Property Investment 3.5% - Macquarie Property Income Fund Property Investment 4.6% - Unlisted Charter Hall Opportunity Fund 4 Property Development 3.0% 3.0% Charter Hall Opportunity Fund 5 Property Development 15.0% 15.0% Listed Charter Hall Office REIT Property Investment 7.5% - Charter Hall Retail REIT Property Investment 7.4% -	2010 2009 $’000 $’000 22,068 22,319 112,590 161,376 55,828 61,989 - 139,888 41,578 48,049 9,787 - 306 -
	242,157 433,621
	1,254 2,951 24,670 15,328 155,149 - 82,326 -
	263,399 18,279

The above associates are incorporated in Australia. The investments in Charter Hall Opportunity Fund 4 and 5 held by Charter Hall Limited are equity accounted in the consolidated financial statements (note 17).

The investments in Charter Hall Diversified Property Fund, Charter Hall Core Plus Office Fund, Charter Hall Core Plus Industrial Fund, Charter Hall Umbrella Fund and Charter Hall Direct Property Fund are held by Charter Hall Property Trust and are accounted for at fair value through the profit or loss (note 14).

The investments in Charter Hall Office REIT and Charter Hall Retail REIT are held by Charter Hall Property Trust and are equity accounted (note 17). The carrying value of these investments is supported by value in use calculations.

The investment in Charter Hall Diversified Property Fund consists of units which are 19.6% (2009: 19.7%) interest but also an additional investment in the form of bridging equity of $9 million, which is 12.3% (2009: 6.0%).

The investment in Macquarie Property Income Fund is held by Charter Hall Limited via Charter Hall Direct Property Management Limited.

53

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

35 Investments in associates (continued)

(b) Movements in carrying amounts Charter Hall Diversified Property Fund Opening balance Investment Fair value adjustment Closing balance Charter Hall Core Plus Office Fund Opening balance Investment Fair value adjustment Disposal of units Closing balance Charter Hall Core Plus Industrial Fund Opening balance Investment Fair value adjustment Closing balance Charter Hall Core Plus Retail Fund Opening balance Investment Fair value adjustment Eliminated on consolidation Closing balance Charter Hall Umbrella Fund Opening balance Investment Fair value adjustment Closing balance Charter Hall Direct Property Fund Investment Fair value adjustment Closing balance Macquarie Property Income Fund Investment Fair value adjustment Closing balance Charter Hall Opportunity Fund 4 Opening balance Investment Share of profit / (loss) after income tax Distributions received / receivable Reserves Carrying amount at the end of the period Charter Hall Opportunity Fund 5 Opening balance Investment Share of loss after income tax Distributions received / receivable Reserves Closing balance	2010 2009 $’000 $’000 22,319 24,332 5,989 2,835 (6,240) (4,848)
	22,068 22,319
	161,376 143,178 - 50,000 (9,273) (31,802) (39,513) -
	112,590 161,376
	61,989 57,698 - 12,503 (6,161) (8,212)
	55,828 61,989
	139,888 - - 163,635 - (23,747) (139,888)
	- 139,888
	48,049 71 76 58,563 (6,547) (10,585)
	41,578 48,049
	8,454 - 1,333 -
	9,787 -
	307 - (1) -
	306 -
	2,951 3,214 714 522 150 (538) (2,561) (252) - 5
	1,254 2,951
	15,328 3,288 10,440 16,558 (1,116) (3,733) - (837) 18 52
	24,670 15,328

54

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

35 Investments in associates (continued)

35 Investments in associates (continued)
Charter Hall Office REIT Investment Increase to net tangible assets value – at acquisition date Share of loss after income tax Distributions received / receivable Reserves Closing balance Charter Hall Retail REIT Investment Increase to net tangible assets value – at acquisition date Share of profit after income tax Distributions received / receivable Reserves Closing balance	2010 2009 $’000 $’000 111,459 - 48,353 - (5,613) - (3,106) - 4,056 -
	155,149 -
	69,335 - 11,372 - 3,615 - (2,568) - 572 -
	82,326 -

• The total of these items of $59,725,000 has been recognised as income however is deducted for the calculation of operating earnings.

(c) Fair value of listed investments in associates Charter Hall Office REIT Charter Hall Retail REIT Fair value represents market value of CQO and CQR units as at 30 June 2010. (d) Share of associates’ profits or losses Loss before income tax Income tax benefit Profit after income tax	91,359 - 61,408 - 13,607 87,926 (1,430) (1,540)
	12,176 86,386

(e) Summarised financial information of associates

		Group’s	share of:
	Assets	Liabilities	Revenues	Profit / (loss)
2010	$’000	$’000	$’000	$’000
Charter Hall Diversified Property Fund	49,506	28,909	5,171	(3,884)
Charter Hall Core Plus Office Fund	197,601	93,287	19,238	(1,252)
Charter Hall Core Plus Industrial Fund	101,729	45,668	10,932	(2,473)
Charter Hall Umbrella Fund	37,896	617	2,257	(3,880)
Charter Hall Opportunity Fund 4	3,942	2,653	3,982	150
Charter Hall Opportunity Fund 5	45,402	20,769	211	1,116
Macquarie Property Income Fund	644	284	15	29
Charter Hall Direct Property Fund	15,850	7,279	578	16
Charter Hall Office REIT	272,535	117,420	7,082	(5,613)
Charter Hall Retail REIT	145,068	62,721	4,812	3,615

55

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

35 Investments in associates (continued)

(e) Summarised financial information of associates (continued)

		Group’s	share of:
	Assets	Liabilities	Revenues	Profit / (loss)
	$’000	$’000	$’000	$’000
2009
Charter Hall Diversified Property Fund	35,362	21,194	3,504	(4,788)
Charter Hall Core Plus Office Fund	329,296	182,585	24,591	(33,887)
Charter Hall Core Plus Industrial Fund	106,106	44,674	9,415	(9,550)
Charter Hall Core Plus Retail Fund	248,963	124,308	20,151	(25,951)
Charter Hall Umbrella Fund	44,143	841	3,345	(7,941)
Charter Hall Opportunity Fund 4	9,884	6,898	60	(536)
Charter Hall Opportunity Fund 5	41,535	26,240	573	(3,733)

(f) Charter Hall Core Plus Retail Fund’s revenue, expenses and results

The summary income statement and balance sheet of CPRF for FY09 are shown below. Whilst at 30 June 2009 CHPT still owned a 65% direct interest and a 5% indirect interest in CPRF (CHPT has a 25% investment in CHUF and CHUF holds a 21% investment in CPRF, the financial accounts of CPRF were not consolidated into CHPT’s financial accounts in 2009.

Revenues Expenses Profit before fair value adjustments and tax Income tax expense Fair value adjustments / losses on sale Profit after income tax (g) Charter Hall Core Plus Retail Fund’s assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets	2009 $’000 30,845 (19,064)
	11,781
	(179) (51,249)
	(39,647)
	103,645 277,654
	381,299
	7,614 182,800
	190,414
	190,885

From 1 July 2009, CPRF has been consolidated, the Group accounts so there is no need to show the 2010 numbers for CPRF above. Refer to note 37 for more information on the reconsolidation of CPRF.

56

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

36 Investment in joint ventures

(a) Carrying amounts

Information relating to joint ventures is set out below and at note 17.

Name of company	Principal activity	Ownership	Interest
		2010	2009	2010	2009
		%	%	$’000	$’000
Unlisted
Commercial and Industrial Property Pty Ltd	Property development	50%	50%	26,517	24,979
MOUS 1	Asset management	50%	-	2,000	-
MOUS 2	Asset management	50%	-	1,150	-
MCW (US) 1	Asset management	50%	-	2,000	-
MCW (US) 2	Asset management	50%	-	2,300	-
				2010	2009
				$’000	$’000
(b) Movements in carrying amounts
Commercial and Industrial Property Pty Limited
Opening balance				24,979	43,838
Investment				-	-
Share of profit after income tax				1,538	2,116
Dividends received / receivable				-	(3,331)
Impairment of investment				-	(17,644)
Closing balance				26,517	24,979
MOUS 1
Investment				2,000	-
MOUS 2
Investment				1,150	-
MCW (US) 1
Investment				2,000	-
MCW (US) 2
Investment				2,300	-
(c) Carrying value of joint venture entity				2010 $’000	2009 $’000
Commercial and Industrial Property Pty Ltd				26,517	24,979

KPMG were engaged to provide an indicative estimate of Charter Hall Limited’s 50% equity investment in Commercial and Industrial Property Pty Ltd as at 30 June 2009. The valuation methodology used was Value In Use (VIU) (in accordance with the requirements of AASB 136) and three different scenarios in relation to growth prospects were considered. Management adopted the base case scenario which had a value in use of $24,979,044.

Consideration was given to the fair value less cost to sell (FVLCTS) method but management believe VIU gives the most accurate recoverable amount. In accordance with our accounting policy (note 1(h)) consideration was given to FVLCS, however VIU resulted in a higher recoverable amount which is required to be taken up in accordance with AASB 136.

The base case scenario includes a decrease in gross profit of 47% in FY10 and then subsequently reflecting growth in gross profit to FY13 and maintaining real growth in gross profit of 4% beyond FY13 up to the end of the forecast period in FY19.

A weighted average cost of capital of 11.6% was used to reflect the current market assessments of the time value of money and the risks specific to the investment and the net debt position was calculated as $6,630,000 being the forecast debt of $8,490,000 and forecast cash of $1,960,000 as at 30 June 2009.

There has been no impairment or reversal of impairment in FY10.

(d) Share of joint venture’s revenue, expenses and results

Revenues 43,079 28,871 Expenses (40,873) (25,842) Profit before income tax 2,206 3,029

57

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

36 Investment in joint venture (continued)

(e) Share of joint venture’s assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets	2010 2009 $’000 $’000 11,256 10,507 3,799 2,511
	15,055 13,018
	2,328 5,843 6,605 2,591
	8,933 8,434
	6,122 4,584

37 Business combination

(a) CPRF acquisition

As announced on 8 December 2009, based on discussions with ASIC the Group decided to consolidate its 66% interest in the Core Plus Retail Fund (CPRF) from 1 July 2009 while CHC owns more than 50% of CPRF, and all other circumstances remain unchanged.

The assets and liabilities arising from the consolidation at 1 July 2009 are as follows:

Cash and cash equivalents Trade and other receivables Investment properties held for resale Investment properties Deferred tax asset Trade and other payables Interest bearing liabilities Deferred tax liabilities Derivative financial instruments Net identifiable assets of CPRF Less: Non-controlling interest (34.55%) Add: Goodwill Value of CPRF units held at 30 June 2009	Fair value $’000
	5,983 6,128 91,534 277,516 138 (7,614) (168,092) (453) (14,255)
	190,885
	(65,951) 14,954
	139,888

The fair value of the assets and liabilities is equivalent to CPRF’s carrying value.

All of the acquired receivables are expected to be collectable.

The goodwill arises as the unit price of CPRF is higher than the net assets of CPRF due to adjustments for acquisition costs and fair value of derivative financial instruments in the calculation of the unit price. On consolidation of underlying investment property assets and derivative balances, the goodwill has been determined to be impaired and has been written off to the income statement.

On a 100% basis, CPRF contributed revenues of $20.2 million, net loss of $30.7 million and operating earnings of $9.6 million for the year ended 30 June 2010. Information on the non-controlling interest is included at note 29.

(b) Summary of Macquarie acquisition

On 1 March 2010, the consolidated entity completed a transaction to acquire the majority of Macquarie Group’s core real estate management platform comprising management of two listed and three unlisted real estate funds and co-investments in Macquarie Office Trust (renamed Charter Hall Office REIT), Macquarie Country Wide Trust (renamed Charter Hall Retail REIT) and Macquarie Direct Property Fund (renamed Charter Hall Direct Property Fund).

As part of this transaction, the sale to Charter Hall Group by Macquarie of all of the shares in Macquarie Office Management Limited (renamed Charter Hall Office Management Limited), Macquarie Asset Services Limited (renamed Charter Hall Asset Services Limited) and Macquarie Real Estate Europe Limited (renamed Charter Hall Real Estate Europe Limited) under the terms of the Share Sale Agreement dated 12 February 2010 was completed on 1 March 2010.

58

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

37 Business combination (continued)

The sale to Charter Hall by Macquarie Group of all shares in Macquarie Countrywide Management Limited (renamed Charter Hall Retail Management Limited) and Macquarie Direct Property Management Limited (renamed Charter Hall Direct Property Management Limited) is expected to complete during the quarter to 30 September 2010 once all consents have been received.

During the period in which the shares in these entities are not owned by Charter Hall, transitional arrangements have been put in place such that the management of Charter Hall Retail REIT and three unlisted funds is outsourced to Charter Hall. There is full flow-through of management fees to Charter Hall. Despite not owning the shares in these companies, Charter Hall is deemed to control the entities and hence they are consolidated at 30 June 2010.

Details of the purchase consideration and the net assets and management rights acquired are as follows:

Purchase consideration (refer to (c) below): Cash paid Amounts payable (note 22) Contingent consideration (i) Total purchase consideration	$’000 93,556 14,580 11,270
	119,406

The assets and liabilities recognised as a result of the acquisition are as follows:

The assets and liabilities recognised as a result of the acquisition are as follows:
Cash Prepayments Investment in Joint ventures Investments in associates Plant and equipment Deferred tax asset Trade payables Provision for income tax Provision for employee benefits Deferred tax liability Net identifiable assets acquired Add: Management Rights acquired Net assets acquired	Fair value $’000 3,040 83 7,450 301 17 525 (1,233) (469) (2,136) (3)
	7,575 111,831
	119,406

Net assets acquired

Charter Hall Direct Property Management Limited owns 3.5% of an associate, Macquarie Property Income Fund, which it carries at fair value.

There were no acquisitions in the year ending 30 June 2009.

(i) Contingent consideration In the event that certain cumulative revenue targets are achieved by the offshore platform (being the people, entities and businesses that generate revenue outside of Australia, New Zealand and Japan) between 1 March 2010 and 28 February 2013, additional consideration of up to $15,000,000 may be payable in cash.

The potential undiscounted amount payable under the agreement is between $0 (for cumulative revenues below $21,425,000), and $15,000,000 (for cumulative revenues above $42,850,000).

The fair value of the contingent consideration of $11,269,722 was estimated by applying a 10% discount rate to $15,000,000, as it is assumed that probability-adjusted revenues of the Offshore Platform will result in payments of $5,000,000 per year over three years.

(ii) Revenue and profit contribution

The acquired platform contributed revenues of $16.9 million and net profit of $10.1 million to the Group for the period from 1 March 2010 to 30 June 2010.

If the acquisition had occurred on 1 July 2009, consolidated revenue and consolidated profit for the year ended 30 June 2010 would have been $128.2 million and $19.9 million respectively. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 July 2009, together with the consequential tax effects.

59

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

37 Business combination (continued)

(c) Purchase consideration – cash outflow

(c) Purchase consideration – cash outflow
Outflow of cash to acquire subsidiary, net of cash acquired Cash consideration Direct costs relating to the acquisition Less: Balances acquired Cash Outflow of cash – investing activities	2010 2009 $’000 $’000 93,556,265 - 6,636,295 -
	100,192,560 - (3,039,686) -
	97,152,874 -

Acquisition-related costs

Acquisition-related costs of $6,636,295 are included in other expenses in profit or loss and in operating cash flows in the statement of cash flows.

The acquisition was partly funded by the issue of 121,272,558 Charter Hall Group stapled securities to the Macquarie Group. These securities were issued at $0.70 thus raising $84,890,791 in equity. The issue price is consistent with securities traded on the ASX on the same day and so is considered fair value.

38 Events occurring after the balance sheet date

Since 30 June 2010, CHG has completed the following transactions:

• The settlement of the purchase of 33 Windorah Street, Stafford by CPRF on 20 July 2010 for $11.2 million.

• The completion of the purchase by CPRF of 50% of Lake Macquarie Shopping Centre and Mount Hutton Shopping Centre on 30 July 2010 for $66 million. The purchase is a joint venture with Charter Hall Retail REIT.

• CPRF completed the sale of Bluewater Plaza, located at Redcliffe, to the Anthony John Group Pty Ltd on 10 August 2010 for $47.8m.

• On 27 July 2010, the Group launched the Charter Hall Direct Industrial Fund for investment by retail and self managed superannuation fund investors. The seed asset is a development property at Altona North, Melbourne. The Group will be financing the development while equity is raised.

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

Loss for the year Depreciation and amortisation Non-cash employee benefits expense – security-based payments Loss / (gain) on sale of investments, property and derivatives Net gain on remeasurement of equity interest Fair value adjustments Impairment of investment accounted for using the equity method Impairment of goodwill 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 Decrease in provision for deferred income tax Net cash inflow / (outflow) from operating activities

2010 2009 $’000 $’000 (10,222) (82,222) 1,406 285 1,317 616 10,880 (1,339) (59,725) - 66,196 93,982 - 17,644 15,328 - 1,390 10,569 (9,649) 627 10,948 6,460 8,693 (632) 45 (3,656) 3,186 28 (950) (1,222)

38,843 41,140

Dividend and interest income received on investments has been classified as cash flow from operating activities.

60

Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

40 Earnings per security

40 Earnings per security
	2010	2009
	Cents	Cents
(a) Basic earnings per stapled security
Basic earnings attributable to the stapled securityholders of Charter Hall Group	0.02	(17.98)
(b) Diluted earnings per security
Diluted earnings attributable to the stapled securityholders of Charter Hall Group	0.20	(15.85)
(c) Operating earnings per security
Refer to note 5 for further details.
(d) Reconciliations of earnings used in calculating earnings per security

Profit attributable to the ordinary equity holders of the consolidated entity used in calculating basic earnings per security Interest received from LTI securities Profit attributable to the ordinary equity holders of the consolidated entity used in calculating diluted earnings per security (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: Performance rights Options Securities issued under the Charter Hall Limited Executive Loan Security Plan (LSP) Weighted average number of ordinary securities and potential ordinary securities used as the denominator in calculating diluted earnings per security	2010 2009 $’000 $’000 207 (82,222) 1,611 2,497
	1,818 (79,725)
	2010 2009 Number Number 850,161,196 457,410,018 5,634,167 1,214,696 14,631,305 - 50,343,595 44,265,783
	920,770,263 502,890,497

(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 AASB 2: Share-based Payment, the loan, securities, interest received on the loan and the distribution paid and payable are derecognised for the preparation of the financial statements but recognised for the calculation of diluted earnings per security.

(ii) Performance rights and options issued under the Charter Hall Performance Rights and Options Plan The performance rights and options are unquoted securities and conversion to stapled securities, and vesting to executives, is subject to service and performance conditions.

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Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

41 Security-based payments

(a) Employee Security Plan

The establishment of the Charter Hall Limited Executive Loan Security Plan (LSP) 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.

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 amount of interest due on the loan is equivalent to the amount of the distribution receivable on the underlying securities.

Distributions on the loan securities are paid to Charter Hall Limited as interest receivable on the loan provided to employees.

As LSP members do not hold securities in their own name the plan manager seeks instructions from plan members on their voting intentions. The plan manager distributed a voting instruction form to collate responses and completes the LSP’s proxy form for lodgement with the share registry.

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

Opening balance (number of securities) Number of securities issued on 07/08/08 at $1.04 Number of securities issued on 19/11/08 at $1.04 Other	2010 2009 50,343,595 23,508,112 - 15,321,360 - 11,508,812 - 5,311
	50,343,595 50,343,595

During the year 4,283,332 securities were forfeited by members but have been retained in the plan LSP.

(b) Charter Hall Performance Rights and Options Plan (PROP)

In 2008, the Board engaged external advisers to gain a market perspective on LTI arrangements. The Board, in consultation with the independent remuneration consultants, resolved that LTI for the 2009 year would be delivered through a combination of the existing LSP and the new PROP.

The performance rights and options are unquoted securities and conversion to stapled securities, and vesting to executives, is subject to service and performance conditions.

The Board resolved in the 2010 year to replace the LSP and utilise the PROP as the Group’s LTI.

Performance rights Opening balance Number of rights issued on 22/12/08 at $0.001 Number of rights issued on 13/11/09 at $0.001 Number of rights issued on 18/6/10 at $0.001 Options Number of options issued on 4/11/09 at $0.485 Number of options issued on 13/11/09 at $0.485 Number of options issued on 18/6/10 at $0.70	2010 2009 1,628,789 - - 1,628,789 6,249,000 - 2,578,500 -
	10,456,289 1,628,789
	2010 2009 16,352,050 - 5,988,125 - 6,446,500 -
	28,786,675 -

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Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

41 Security-based payments (continued)

(c) 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:

LSP, options and PROP	2010 2009 $’000 $’000 1,317 616

The model inputs for the Black-Scholes method for assessing the fair value at loan date for the LSP securities, options and PROP rights issued during the year ended 30 June 2010 include the following:

Grant date 7/8/08 10/10/08 19/11/08 22/12/08 13/11/09	18/6/10
Security price at grant date $0.865 $0.66 $0.41 $0.30 $0.60 Loan value per security $1.04 $1.04 $1.04 $1.04 $0.485 Expiry of loan 6/8/13 9/8/13 18/11/13 21/12/13 1/7/14 Expected price volatility 23.68% 22.75% 58.06% 59.49% 40% Expected distribution yield 9.47% 9.47% 9.47% 9.47% 7% Risk-free interest rate 5.85% 4.28% 3.72% 3.19% 5.5%	$0.70 $0.70 18/6/15 40% 7% 5.5%

42 Deed of cross guarantee

Charter Hall Limited and Charter Hall Holdings Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the other. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission.

(a) Consolidated income statement, statement of comprehensive income and summary of movements in consolidated retailed earnings

The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the deed of cross guarantee that are controlled by Charter Hall Limited, they also represent the ‘extended closed group’.

Set out below is a consolidated income statement, a consolidated statement of comprehensive income and a summary of movements in consolidated retained earnings for the year ended 30 June 2010 of the closed group consisting of Charter Hall Limited and Charter Hall Holdings Pty Ltd.

Income statement Revenue from continuing operations Revenue Employee benefits expense Depreciation Other expenses Business combination transaction costs Finance costs Foreign exchange loss Share of net loss of associates accounted for using the equity method Fair value adjustments Loss before income tax Income tax benefit Loss for the year	2010 2009 $’000 $’000 40,250 29,679 (25,949) (16,681) (666) (276) (4,267) (4,160) (6,636) - (26,377) (21,958) 1 - 572 (2,154) (295) (17,644)
	(23,367) (33,194) 2,991 2,120
	(20,376) (31,074)

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Charter Hall Group Notes to the consolidated financial statements 30 June 2010 (continued)

42 Deed of cross guarantee (continued)

2 Deed of cross guarantee (continued)
Statement of comprehensive income Loss for the year Other comprehensive income Foreign currency reserve movement Total comprehensive loss for the year Summary of movements in consolidated accumulated losses Accumulated losses at the beginning of the financial year Loss for the year Dividends provided for or paid Accumulated losses at the beginning of the financial year	2010 2009 $’000 $’000 (20,376) (31,074) 18 -
	(20,358) (31,074)
	(32,345) (1,271) (20,376) (31,074) -
	(52,721) (32,345)

(b) Balance sheet

Set out below is a consolidated balance sheet as at 30 June 2010 of the closed group consisting of Charter Hall Limited and Charter Hall Holdings Pty Ltd.

ASSETS Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Trade and other receivables Investments accounted for using the equity method Investments in controlled entities Property, plant and equipment Investment in joint ventures Intangible assets Deferred tax assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Trade and other payables Loans from associates Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses	11,610 1,088 32,937 20,201
	44,547 21,289
	5,145 5,601 52,442 43,258 47,305 25 3,561 2,280 7,450 - 111,831 - 21,500 18,668
	249,234 69,832
	293,781 91,121
	28,529 2,922 749 247
	29,278 3,169
	11,270 - 324,933 144,355 15,330 15,509 879 -
	352,412 159,864
	381,690 163,033
	(87,909) (71,912)
	9,427 6,383 (44,615) (45,950) (52,721) (32,345)
	(87,909) (71,912)

The closed group has net liabilities but has access to a debt facility provided by Charter Hall Property Trust which is not repayable until 31 July 2018.

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