CHARTER HALL GROUP

Appendix 4E Preliminary Financial Report

APPENDIX 4E

Preliminary Financial Report for the year ended 30 June 2013

Name of Entity:

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)

The Appendix 4E should be read in conjunction with the preliminary financial report of the Charter Hall Group for the year ended 30 June 2013.

Results for announcement to the market

Results for announcement to the market
	Year ended Year ended Variance 30 June 30 June 2013 2012 $m $m (%)
Revenue1	114.8 123.6 (7.1)

Profit after tax attributable to stapled securityholders of Charter Hall Group	54.8 16.7 228.1

Operating earnings before specific items attributable to stapled securityholders 3	71.8 63.6 12.9
Specificitems 2	- (8.8) (100.0)
Operating earnings attributable to stapled securityholders3	71.8 54.8 31.0

(1) The composition of revenue from ordinary activities is detailed in Note 4 of the preliminary financial report.

(2) There are no specific items in 2013. The specific items in 2012 include $16.0m fee revenue related to sale of Charter Hall Office REIT (CQO) US assets net of $4.0m closure costs of the US office, $2.9m costs of retaining the management rights, $3.9m organisational restructure costs, $14.2m provision for Charter Hall Opportunity Fund 4 (CHOF4) performance fee clawback which is then reduced by $0.3m being the group’s 3% equity share of the clawback receivable in CHOF4.

(3) Operating earnings is a financial measure which represents the profit under Australian Accounting Standards adjusted for fair value adjustments, gains or losses on sale of investments, non-operating movements in equity accounted investments, and non-cash items such as security-based benefits expense, amortisation and tax expense. The inclusion of operating earnings as a measure of the Group’s profitability provides investors with the same basis that is used internally for evaluating operating segment performance. Operating earnings is used by the Board to make strategic decisions and as a guide to assessing an appropriate distribution to declare.

A reconciliation of the Group’s statutory profit to operating earnings is provided in Note 3 of the preliminary financial report.

	Year ended Year ended Variance 30 June 30 June 2013 2012 cps cps (%)
Basic earnings per stapled security attributable to stapled securityholders	18.29 5.64 224.3
Diluted earnings per stapled security attributable to stapled securityholders	17.67 5.35 230.3
Operating earnings before specific items attributable to stapled securityholders	23.94 21.51 11.3
Specific items	- (2.96) (100.0)
Operating earnings per security attributable to stapled securityholders	23.94 18.55 29.1

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Appendix 4E Preliminary Financial Report

Results for announcement to the market (continued)

Distributions	30 June 2013	30 June 2012
Final distribution in respect of a: CHPT unit CHL share Interim distribution in respect of a: CHPT unit CHL share Total	10.40¢ - 9.80¢ - 20.20¢	9.10¢ - 9.10¢ - 18.20¢
Record date for determining entitlements to the distribution Payment date
	30 June 2013
	28 August 2013

The Group has a Distribution Reinvestment Plan (DRP) under which unitholders may elect to have all or part of their distribution entitlements satisfied by the issue of new units rather than being paid in cash. The DRP was reinstated for the half year ending 31 December 2012 and continued being in operation for the 30 June 2013 distribution.

The Group recorded a statutory profit after tax attributable to stapled securityholders for the financial year of $54.8 million compared to $16.7 million in 2012.

Operating earnings amounted to $71.8 million for the financial year compared to $54.8 million in 2012. Operating earnings before specific items amounted to $71.8 million compared to $63.6 million in 2012, an increase of 13% over the prior period.

The operating earnings information included in the table below has not been subject to any specific audit procedures by our auditor but has been extracted from Note 3: Segment information of the accompanying financial report.

financial report.
Reconciliation ofope rating earnings to statutory profit	2013	2012
	$’000	$’000
Operatingearningsbefore specific items	71,785	63,586
Specific items1	-	(8,741)
Operating earnings	71,785	54,845
Non-cash security-based benefits expense	(3,035)	(2,338)
Fair value adjustments on derivatives2	1,472	(9,933)
Fair value adjustments on investments and property, including remeasurement gains2	(3,616)	(2,034)
Amortisation of management rights	(7,838)	(1,307)
Transfer from reserves of cumulative FX losses on disposal of foreign investments2	(484)	(12,176)
Loss on disposal of investments, property and derivatives	(953)	(890)
Inventory writedown2	-	(5,814)
Other2	(2,489)	(3,675)
Statutory profit after tax attributable to stapled securityholders	54,842	16,678

(1) There are no specific items in 2013. The specific items in 2012 include $16.0 million fee revenue related to sale of Charter Hall Office REIT (CQO) US assets net of $4.0 million closure costs of the US office, $2.9 million costs of retaining the management rights, $3.9 million organisational restructure costs and $14.2 million provision for Charter Hall Opportunity Fund 4 (CHOF4) performance fee clawback which is then reduced by $0.3 million being the Group’s 3% equity share of the clawback receivable in CHOF4.

(2) These items includes the Group’s share of non-operating movements in equity accounted investments on a look-through basis (including losses on sale of offshore investment properties of $nil (2012 - $2.0 million) and amortisation charges of $0.5 million (2012 - $1.1 million)) and income taxes.

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Appendix 4E Preliminary Financial Report

Results for announcement to the market (continued)

Basic weighted average number of securities per note 9 (‘000s)	299,805	295,625
Basic earnings per stapled security per note 9 (cents)	18.29	5.64
Operating earnings per stapled security before specific items per note 3 (cents)	23.94	21.51
Operating earnings per stapled security (OEPS) per note 3 (cents)	23.94	18.55

Review and results of operations

The 30 June 2013 financial results with comparatives are summarised as follows:

			CharterHall	CharterHall
	Charter Hall	Group	PropertyTrust
			Group
	2013	2012	2013	2012
Revenue including minority interests ($ million)1	114.8	123.6	31.4	53.3
Statutory net profit after tax - stapled securityholders ($ million)	54.8	16.7	48.9	36.1
Statutory earnings per stapled security (EPS) (cents)	18.29	5.64	16.32	12.21
Operating earnings before specific items for stapled securityholders ($m)2	71.8	63.6	N/A	N/A
Operating earnings before specific items per stapled security (cents)2	23.94	21.51	N/A	N/A
Operating earnings for stapled securityholders($ million)2	71.8	54.8	N/A	N/A
Operating earnings per stapled security (cents)2	23.94	18.55	N/A	N/A
Distributions to stapled securityholders ($ million)	60.7	53.8	60.7	53.8
Distribution per stapled security (cents)	20.2	18.2	20.2	18.2
Total assets ($ million)	818.8	875.6	720.1	775.5
Total liabilities ($ million)	78.5	119.2	60.2	84.8
Net assets attributable to stapled securityholders ($ million)3	740.3	728.9	652.8	650.2
Securities on issue (million)4	302.3	296.2	302.3	296.2
Net assets per security	2.45	2.46	2.16	2.2
Net tangible assets (NTA) attributable to stapled securityholders ($ million)	644.2	630.2	652.8	650.2
NTA per stapled security ($)4	2.13	2.13	2.16	2.2
Gearing – borrowings to total assets5	1.88%	1.45%	3.51%	4.27%
Funds under management ($ billion)	10.3	8.9	N/A	N/A
Domestic funds under management ($ billion)	9.9	8.5	N/A	N/A

(1) Gross revenue does not include share of net profits of associates of $42.5 million (2012: profit of $2.9 million).

(2) Excludes fair value adjustments on investment property, financial assets and financial instruments, gains on sale of investments, non-operating movements in equity accounted investments, and non-cash items such as net gain on re-measurement of equity interests, security-based benefits expense, amortisation and income tax expense/(benefit).

(3) Excludes non-controlled interest in DRF in 2012.
(4) Excludes stapled securities issued under the Executive Loan Security Plan in accordance with AASB 2 Share-based Payments.

(5) Gearing is calculated by using debt net of cash divided by total assets net of cash.

Distribution per stapled security (DPS) has increased from 18.2 cents in 2012 to 20.2 cents in 2013.

Net Tangible Assets per stapled security (NTA) remained constant at $2.13 as at 30 June 2013 and 30 June 2012.

Funds Under Management (FUM) increased from $8.9 billion at 30 June 2012 to $10.3 billion at year end due to the establishment of new funds, including Charter Hall Direct Industrial Fund No.2, BP Fund, Core Logistics Partnership and Keperra Square Fund, property acquisitions in Charter Hall Retail Partnership No.2, Charter Hall Core Plus Office Fund, and Brisbane Square Wholesale Fund and changes in Charter Hall Retail REIT’s property portfolio.

Gearing has increased from 1.45% at 30 June 2012 to 1.88% at 30 June 2013.

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Appendix 4E Preliminary Financial Report

Review and results of operations (continued)

The Group delivered $71.8 million of operating earnings before specific items compared to $63.6 million in 2012. There were no specific items in the current year. Operating earnings before specific items comprises property funds investments of $39.6 million (2012: $33.4 million), direct property investments of $4.9 million (2012: $6.1 million) and property funds management of $27.3 million (2012: $24.1 million). The Group delivered $71.8 million of operating earnings after specific items compared to $54.8 million in 2012.

Property funds investments

The Group’s property funds investments are classified into the following categories reflecting different sources of external equity managed across the Group:

Co-investment property interest in a listed fund;
Co-investment property interest in wholesale unlisted funds and partnerships; and
Co-investment property interest in retail investor funds.

A summary of the activities of each of the above categories is provided below.

i) Listed fund

Charter Hall Retail REIT (CQR) - $2.2 billion FUM, CHPT interest 9% with an equity interest carrying value of $103.1 million

CQR’s investment strategy is to invest in neighbourhood and sub-regional shopping centres in Australia anchored by Coles and Woolworths Supermarkets. The REIT’s supermarket-anchored portfolio comprises 74 properties across Australia with a reduced offshore exposure as a result of the REIT’s successful offshore divestment program implemented in recent years. Following the completion of the sale of the REIT’s Polish assets, expected in September 2013, the Australian portfolio will represent 97% of the REIT’s net tangible assets.

At 30 June 2013 CQR was trading at a 14.7% premium to its net tangible assets of $3.32 per unit. The REIT reported operating earnings of 29.77 cpu for the year, representing growth of 3.3% on prior year. CQR contributed $9.1 million in investment earnings to the Group.

For the year ended 30 June 2013, asset revaluations of CQR’s Australian grocery anchored portfolio were up $1.5 million, with Australian FUM being $1.7 billion. The occupancy of CQR’s Australian portfolio at 30 June 2013 was 98.2%, with specialty rental rate growth of 4.0% for the 12 month period, reflecting the nondiscretionary nature of income from the underlying assets.

During the year the REIT completed a $100 million institutional placement of 28,985,600 ordinary units at a price of $3.45 per unit. The REIT used the proceeds of the placement to fund the acquisition of three sub-regional shopping centres located in regional New South Wales for a gross purchase price of $100.7 million. In addition, the REIT raised a further $18.9 million in equity through a Unit Purchase Plan (UPP). Under the UPP the REIT issued 5,484,400 ordinary units at a price of $3.45 per unit. The Charter Hall Group did not participate in the institutional placement nor the UPP, resulting in a dilution of its investment position in CQR.

CQR reinstated its Distribution Reinvestment Plan (DRP) for the 31 December 2012 interim distribution and it remains active for the final FY13 distribution, payable in August 2013. The Charter Hall Group has elected to participate in the DRP.

In July 2013, CQR acquired the Secret Harbour shopping centre in Rockingham, Western Australia, for $33.2 million (representing an initial yield of 7.8%) and sold its 50% interest in Home HQ, Nunawading, Victoria, providing $10 million in net equity proceeds to the REIT. The gross sale price was in line with the independent June 2013 valuation and represented a market equivalent capitalisation rate of 10.7%.

ii) Wholesale unlisted funds and partnerships

Charter Hall Office Trust (CHOT) - $2.0 billion FUM, CHPT interest 15% with an equity interest carrying value of $159.0 million

CHOT’s portfolio comprises eighteen high grade office assets located in major business districts in Australia including the recently completed premium project at 171 Collins Street, Melbourne. The Trust earned $197.0 million in rental income for the year and contributed $11.8 million in investment earnings to the Group. CHOT’s focus on creating value for investors through targeted leasing strategies has resulted in occupancy over 97% (including heads of agreement), with leasing success a significant contributing factor to the independent valuation uplift of $59.9 million recognised on its existing property portfolio during the year. CHOT also recorded a further valuation uplift of $12.3 million on completion of the 171 Collins Street development in June 2013.

Portfolio weighted average lease expiry (WALE) for the Trust is 4.4 years with a majority exposure to core Australian CBD office markets. The current weighted average capitalisation rate for the Trust is 7.73%.

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Appendix 4E Preliminary Financial Report

Review and results of operations (continued)

ii) Wholesale unlisted funds and partnerships (continued)

CHOT (continued)

Subsequent to year end, CHOT acquired the remaining 50% of the units in the No. 1 Martin Place Trust for $220 million and as a result, now owns 100% of the 1 Martin Place office tower in Sydney.

Charter Hall Core Plus Office Fund (CPOF) – $1.8 billion FUM, CHPT interest 11% & CHL interest 1% with a combined equity interest carrying value of $114.7 million CPOF is an Australian unlisted wholesale office fund managed by the Group. The Fund earned $135.1 million in gross income for the year and contributed $7.7 million in investment earnings to the Group.

CPOF has continued to focus on improving portfolio metrics, creating value via enhancements and acquisitions. During the year, CPOF acquired 9 Castlereagh Street in Sydney for $172.5 million, 50% of 100 Skyring Terrace in Queensland for $18.0 million and 33% of Bankwest Place, Perth. Acquisitions have increased CPOF’s gross asset value to $1.8 billion and no significant valuation adjustments arose from the independent valuation of its entire existing portfolio during the last twelve months. CPOF has a current weighted average capitalisation rate of 7.77%, occupancy of 97% and a lease expiry profile of 5.2 years.

Charter Hall Core Plus Industrial Fund (CPIF) - $560 million FUM, CHPT interest 6% & CHL interest 7% with a combined equity interest carrying value of $56.7 million

CPIF is an Australian unlisted wholesale industrial fund managed by the Group. The Fund earned $61.2 million in rental income for the year and contributed $3.9 million in investment earnings to the Group.

CPIF has continued its focus on holding core logistics assets and executing accretive acquisitions. The Fund recently acquired a $16.2 million industrial property at Huntingwood Drive Huntingwood, a prime industrial precinct in Sydney's western suburbs. The transaction is subject to a 10 year lease to Home Timber and Hardware, guaranteed by Woolworths Ltd and reflects a core capitalisation rate of 7.9% with 3.25% p.a. rent increases.

The portfolio’s current weighted average capitalisation rate is 8.28%, with a WALE of 9.6 years underpinned by strong tenant covenants such as Woolworths, Coles, Chevron, Australia Post, Metcash and Volkswagen. CPIF has been actively leasing over the financial year, reaching an occupancy level of 99% with minimal forward looking vacancy until 2017.

In late 2013, CPIF launched an equity raising with a target of $150 million. As at 30 June 2013, $119 million of new equity has been raised and an additional $31 million has been secured subsequent to year end.

Charter Hall Retail Partnership No.2 (RP2) (Bateau Bay Square) - $164 million FUM, CHPT interest 20%, with an equity interest carrying value of $17.7 million

RP2 was established in August 2012 with the acquisition of the Bateau Bay Square shopping centre (formerly Stockland Bay Village) on the Central Coast. RP2 is an unlisted wholesale single-asset vehicle with a 99% occupancy rate, a WALE of 3.9 years and a lease profile underpinned by national non-discretionary tenancies including Woolworths, Kmart and Aldi. The Fund earned $15.3 million in rental income for the year and contributed $1.3 million in investment earnings to the Group.

BP Fund (BPF) (Bunnings partnership) - $235 million FUM, CHL interest 13% with an equity interest carrying value of $14.3 million

BP Fund is an infinite life fund established in November 2012 as a new wholesale investment trust which owns 10 freestanding Bunnings warehouse properties. Partners include a major Australian Superannuation Fund and Charter Hall Group. The Fund earned rental income of $8.5 million for the year and contributed $0.6 million in investment earnings to the Group. BP Fund has accessed modern and newly constructed properties and the portfolio has a strong covenant. Bunnings is Australia and New Zealand’s leading retailer of home and garden improvement products, a major supplier of building materials and a division of Wesfarmers Limited, a leading ASX 100 listed company. The property portfolio is 100% leased, has a WALE in excess of 12 years and a weighted average capitalisation rate of 7.58%. BP Fund is actively seeking to acquire further Bunnings leased assets.

Core Logistics Partnership (CLP) - $232 million FUM. CHL interest 5% with an equity interest carrying value of $10.8 million

CLP is a wholesale core industrial partnership established in December 2012 in partnership with wholesale investors for the acquisition and management of predominantly core Australian logistics properties. The Partnership also has minor investments in manufacturing based properties. CLP’s mandate allows it to invest a proportion of its capital in land which provides a pipeline to additional assets based on pre-leased, design and construct industrial and logistics facilities. Currently the development land comprises approximately 6% of the portfolio by gross asset value.

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Appendix 4E Preliminary Financial Report

Review and results of operations (continued)

ii) Wholesale unlisted funds and partnerships (continued)

CLP (continued)

The Partnership targets institutional grade properties with strong lease covenants and has a target portfolio WALE of greater than 8 years. The Partnership earned rental income of $4.5 million for the year and contributed $0.4 million in investment earnings to the Group. Its current portfolio has a weighted average capitalisation rate of 8.1% and a 14 year WALE from its leased assets with the income predominantly generated from Woolworths, Metcash and Amcor. The property portfolio (excluding development land) is 100% occupied and CLP continues to actively pursue further property acquisitions in order to deploy its debt and equity commitments. Property revaluations since inception have resulted in a total valuation uplift of $6.5 million.

Keperra Square Fund (Keperra Square) - $63 million FUM, CHL interest 10% with contributed equity of $1.1 million

The Keperra Square Fund is an unlisted wholesale trust established by Charter Hall, in partnership with an institutional investor, in June 2013. The Fund acquired the Great Western Super Centre, anchored by Woolworths and Aldi, in Keperra, Brisbane for $62.9 million, reflecting a 7.75% capitalisation rate. Charter Hall has a 10% interest in the Fund and issued $21.3 million in convertible preferred equity notes (PENS) in connection with the transaction. It is likely that an additional wholesale partner will be secured for the partnership, which would see Charter Hall's co-investment either repatriated or remain invested as a minority investor in an enlarged retail partnership. The earnings yield on the Group’s $22 million investment is expected to exceed 8% p.a.

Other wholesale unlisted funds, mandates and partnerships

The Group also originates and manages segregated mandate capital for direct property investments either in joint venture with funds such as CPOF or CQR or as 100% owned assets by our clients. The property portfolio for the segregated mandate business includes 275 George Street and Brisbane Square in Brisbane, Charter Hall Retail Partnership No. 1, Riverside Centre in Adelaide and Bankwest Place in Perth and represents a total portfolio value of $1.0 billion.

iii) Retail investor funds

This business manages equity raised from retail investors via advisers, high net worth individuals and through direct distribution channels.

Charter Hall Direct Property Fund (CHDPF) - $491 million FUM, CHPT interest 4% representing a carrying value of $10.7 million

CHDPF is an unlisted property fund that primarily invests in a diversified portfolio of Australian direct properties anchored by nine office properties located in established markets throughout Sydney, Melbourne, Brisbane and Perth. The Fund earned rental income of $53.7 million during the year and contributed investment earnings of $0.9 million to the Group. The Fund has a weighted average capitalisation rate of 8.33% and benefited from an occupancy rate of 95% and a WALE of 4.3 years with leases to over 100 tenants at 30 June 2013.

The fund remains open for investor applications with the issue of a product disclosure statement in December 2010 and is continuing to provide limited liquidity through six-monthly withdrawal offers.

Charter Hall Diversified Property Fund (DPF) - $51 million FUM, CHPT equity interest of 20% representing a carrying value of $8.1 million

DPF is an unlisted property fund that is invested in two office buildings and three industrial properties located in established markets throughout Sydney and Melbourne which benefited from an occupancy rate of 100% and a WALE of 5.5 years at 30 June 2013.

In accordance with DPF’s Constitution, Charter Hall held a Unitholder Meeting in November 2012 at which a resolution was put to unitholders to terminate the fund. The resolution was not passed due to the total number of votes received not meeting the required threshold. Following the resolution not being passed and as outlined in the Explanatory Memorandum that was attached to the Notice of Meeting, DPF is continuing on the terms set out in its constitution and the Responsible Entity is proceeding with an orderly wind down of the Fund by seeking asset sales where property leasing profiles and market conditions make sales appropriate.

Subsequent to 30 June 2013, the two office properties have been sold, and the external debt facility repaid and capital returned to investors. The Fund no longer holds any external debt on its balance sheet.

Charter Hall Umbrella Fund (CHUF) - $116 million FUM, CHPT interest 24% representing a carrying value of $30.1 million

CHUF is an unlisted fund of funds with investments in funds having portfolios comprising of over 55 office, industrial and retail properties across Australia. The Fund contributed investment earnings of $2.2 million to the Group in the current year.

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Appendix 4E Preliminary Financial Report

Review and results of operations (continued)

iii) Retail investor funds (continued)

CHUF (continued)

CHUF has a weighted average capitalisation rate of 8.0% and benefited from a WALE of 6.3 years and occupancy of 96% at 30 June 2013, calculated by looking through to the underlying properties held by funds in which CHUF has invested.

During the year the fund provided limited liquidity through six-monthly withdrawal offers. The Charter Hall Group participated in the 20 June 2013 liquidity offer, reducing its investment interest to 24%.

Other retail investor funds

The Group also has other minor co-investment interests.

Charter Hall Group has a co-investment in the PFA Diversified Property Trust (PFA) (0.1% interest, $0.1 million) which is an unlisted property fund invested in a diversified portfolio across geographic location, property sector, tenant profile and lease expiry within Australia. Charter Hall took over as the responsible entity of this fund from Australian Property Growth Fund (APGF) in August 2012. The Trust was established in 2003 and currently invests in a portfolio of office and retail properties. As at 30 June 2013, PFA benefitted from 94% occupancy and a WALE of 3.9 years. In November 2012, the fund offered a $5 million withdrawal offer to investors.

Charter Hall Group also has a co-investment in the Direct Industrial Fund (DIF) (0.2% interest, $0.2 million). DIF is an unlisted property fund that invests in seven prime industrial assets across major industrial areas across Australia.

In May 2013, the Charter Hall Property Securities Fund (PSF), an equity securities fund investing in listed REIT’s on the Australian Securities Exchange was wound up. The Group held a 3.1% interest in this fund prior to wind up.

The Group also manages a series of pooled and single asset syndicates totalling $429 million in FUM. This includes the Charter Hall Direct Industrial Fund No.2 (DIF2) which was launched in December 2012 and is currently open to new investment. Charter Hall Group does not have a co-investment in any of these funds.

Direct property investments

The Group’s direct property investment activities are carried out by Charter Hall Direct Retail Fund (DRF) which is 100% owned by the Group.

Charter Hall Direct Retail Fund (DRF) - CHPT interest 84% & CHL interest 16%

DRF is an unlisted property fund that is consolidated in the financial statements of the Charter Hall Group and Charter Hall Property Trust Group. CHPT bought out the non-controlling interest on 19 April 2013, increasing its ownership interest from 66% to 84% and CHL continues to hold the remaining 16% interest in the fund. No gain or loss was recorded in profit or loss in connection with this transaction. DRF contributed a net $4.9 million in operating earnings to the Group in 2013 (2012: $6.1 million) and has a WALE of 4.3 years.

During the year, DRF sold the Bunnings Warehouse at Stafford, Queensland for $19 million, the John Wiley Distribution Centre in Stafford, Queensland for $11.7 million, Home HQ in Ipswich, Queensland for $23.5 million and its 50% interest in the Lake Macquarie Shopping Centre for $18.3 million (net of debt repaid to Westpac). At 30 June 2013, DRF’s property portfolio comprised a 50% interest in Home HQ, Nunawading, Victoria and a direct interest in the Menai Central Shopping Centre at Old Illawara Road, Menai, New South Wales (Menai). Home HQ Nunawading was sold on 15 July 2013, providing $10 million in net equity proceeds to the Group. The gross sale price was in line with the independent June 2013 valuation and represented a market equivalent capitalisation rate of 10.7%. Menai is also under contract and is expected to settle in the September quarter of 2013. The indicative offer price is in line with the asset’s carrying value at 30 June 2013.

Property funds management

The property funds management business provides investment management, asset management, property management, development management, leasing and transaction services to not only funds in which the Group has a co-investment stake, but also to funds established and managed by the Group. The Group also provides services via segregated mandates looking to capitalise on the Group’s expertise. The property funds management business contributed $27.3 million in operating earnings to the Group (2012: $24.1 million).

Funds under management have increased $1.4 billion during the year to $10.3 billion. The Group’s managed funds have acquired approximately $2.1 billion of property in Australia including acquisition of management rights held over underlying assets in PFA ($422 million). The Group’s managed funds have also divested approximately $960 million of assets.

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Appendix 4E Preliminary Financial Report

Review and results of operations (continued)

The integrated property services model provides leasing, investment management, development management, asset management, property management and transactional earnings within the Property Funds Management business, which substantially enhance the returns from the capital invested.

This segment also includes the activities of the Group’s 50% interest in Commercial and Industrial Property Pty Limited (CIP), an industrial development business. CIP contributed $1.8 million (2012: $1.5 million) of operating earnings to the Group (included in the above property funds management earnings of $27.3 million).

Interests in development funds and development properties

The Group’s interests in development funds and development properties include interests in the Charter Hall Opportunity Fund No. 4 (CHOF4), the Charter Hall Opportunity Fund No. 5 (CHOF5) and a 50% interest in an office development at 685 La Trobe Street, Melbourne. Investment in development funds and development properties do not form part of the operating result of the Group.

Charter Hall Opportunity Fund 4 (CHOF4) - $70 million FUM, CHL interest 3% with an equity interest carrying value of $0.8 million

CHOF4 is fully allocated with seven of eight projects completed and capital returned to investors. There is one remaining completed project in CHOF4, being Home HQ North Shore which has been marketed for sale and a prospective purchaser has been granted an exclusive due diligence period expiring on 30 August 2013. The Fund was scheduled to terminate on the earlier of the sale of all assets or 30 June 2013 however the investors have voted to extend the term of the fund until 31 December 2013.

Performance fees raised in prior years were subject to clawback provisions in the event CHOF4 did not achieve a gross equity internal rate of return (IRR) of 13% over the life of the Fund. Based on the expected sale price of Home HQ North Shore, CHOF4 would not achieve the required IRR and accordingly, the Group paid the clawback of $14.2 million in June 2013 to CHOF4. The clawback was fully provided for by the Group in the prior year, therefore this payment has no impact on the Group’s statement of comprehensive income in the current year.

Charter Hall Opportunity Fund 5 (CHOF5) - $278 million FUM, CHL interest 15% with an equity interest carrying value of $14.9 million

CHOF5’s mandate is to identify, acquire and deliver property development and value-add opportunities across various sectors. Progress on the fund’s existing developments is outlined below.

Progress at WorkZone, Perth continues in line with programme. 76% of the office space in the building has been pre-leased to anchor tenant, Leighton Contractors Pty Limited. Completion is scheduled for September 2013, with the intention of selling the property thereafter. In addition to its equity commitment through CHOF5, the Group provided a mezzanine loan in the amount of $9.0 million to this project. A deed of amendment was entered on 20 May 2013 to extend the maturity date of the Group’s $9.0 million loan facility from 30 September 2013 to 31 March 2014. Refer to Note 35: Commitments of the financial statements for further details.

In respect of the Little Bay Cove project, development of the Estate Works to create individual housing and development superlots are progressing, with completion scheduled for November 2013. The Development Alliance (“DA”) partners in the Little Bay Cove project, being CHOF5 and TA Global Development Pty Ltd (TAG), have reserved all rights in relation to the future development and/or divestment of the project. The parties continue commercial negotiations with the intention of resolving this matter to the satisfaction of both parties, however this matter is ongoing and yet to be finalised. The senior debt finance is being extended on a month to month basis subject to compliance with certain conditions. There are no assurances that the financier will continue to extend the term of the finance facility, however they have been working cooperatively with the Development Alliance partners on this basis since January 2013. CHOF5 has impaired the value of its share of the project having regard to the current position. Refer to Note 33: Investments in associates and Note 36: Contingent liabilities of the financial statements for further disclosure.

For the Aquilo residential development in Mentone, Victoria, as at 30 June 2013, 104 of the 119 townhouse development have been sold and settled (87%), with 7 unconditional contracts of sale have been exchanged (6%) and 8 townhouses available for sale. Purchaser settlements have continued during the year, with a total of 71 townhouses settled (65%) in the year ended 30 June 2013.

For the Lacrosse residential development in Melbourne Docklands, Victoria, as at 30 June 2013, 304 of the 312 apartment and 8 of the 15 retail lot development (87%) have been sold and settled, with 3 apartments and 7 retail lots having exchanged unconditional contracts of sale and 6 apartments available for sale. Purchaser settlements have continued during the year, with a total of 175 apartments and 8 retail lots settled (56%) in the year ended 30 June 2013.

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Appendix 4E Preliminary Financial Report

Review and results of operations (continued)

Development works have been completed on the Park Megacentre, Hastings New Zealand. At 30 June 2013, there are three remaining lots being actively marketed for sale and one unconditional contract of sale has been exchanged.

The sale of 40 Creek Street, Brisbane occurred on 27 September 2012.

685 La Trobe Street office development – CHL interest 50%

The development site at 685 La Trobe Street, Melbourne has planning approval for a ~38,000sqm office building and is seeking a satisfactory leasing pre-commitment with a view to on-selling this project to a suitable third party capital partner. This project has not made a contribution to the current period result.

Significant changes in the state of affairs

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

Charter Hall acquired management rights valued at $5.3 million in August 2012 and took over as responsible entity of PFA from Australian Property Growth Fund.
DRF sold four of its six investment properties, recycling net capital of $70.0 million for the Group.
The Group established three new wholesale funds, RP2, BP and CLP, representing combined funds under management of $0.6 billion.
On 28 June 2013, the Group paid $14.2 million in relation to the clawback of Charter Hall Opportunity Fund No. 4 (CHOF4) performance fees received in respect of the 2007, 2008, 2009 and 2010 financial years.
On 28 June 2012 the Keperra Square Fund (Keperra Square) in which the Group has a 10% interest was established to acquire the Keperra Shopping Centre in Queensland for $62.9 million. The Group issued PENS of $21.25 million in connection with this transaction.

Undistributed income

Refer attached preliminary financial report (Note 25: Reserves and accumulated losses).

Net Tangible Assets

Net Tangible Assets
	Current year	Previous corresponding year
Net tangible assets (NTA) per unit1	$2.13	$2.13

(1) Under the listing rules NTA must be determined by deducting from total tangible assets all claims on those assets ranking ahead of the ordinary securities (ie: all liabilities, preference shares, outside equity interest, etc).

The number of securities on issue is 302.3 million (2012: 296.8 million). In 2012, the number of securities used to calculate NTA was reduced to 296.2 million. The difference represented securities issued under the Charter Hall Executive Loan Security Plan (ELSP) which were not recognised for accounting purposes, including the NTA calculation, under AASB2: Share Based Payments. The corresponding loan receivable and interest income are also not recognised. The ELSP was wound up in late July 2012 therefore is no corresponding adjustment in 2013.

Control gained or lost over entities during the year

There were no changes in control within the Group during the year however CHPT acquired the minority interest held by an external party on 19 April 2013, increasing its interest in DRF to 84%. The other 16% interest in DRF continues to be held by CHL. Refer to Note 26: Non-controlling Interests of the attached preliminary report for further details.

Details of Associates and Joint Venture entities

Refer attached preliminary financial report (Note 33: Investments in Associates and Note 34: Investments in Joint Ventures).

Page 9

Appendix 4E Preliminary Financial Report

Other significant information

For additional information regarding the results of Charter Hall Group for the year ended 30 June 2013 please refer to the Full Year Results – ASX Media Announcement and the 2013 Full Year Results Presentation lodged with the ASX. Attached with this Appendix 4E is a copy of the unaudited Preliminary Financial Report for the year ended 30 June 2013.

Accounting standards used by foreign entities

International Financial Reporting Standards

Segment results:

Refer attached preliminary financial report (Note 3: Segment reporting).

Performance trends:

Refer to significant features of operating performance above.

Other Factors:

Refer to Other significant information (above).

Audit

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

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

Page 10

==> picture [231 x 64] intentionally omitted <==

Comprising the stapling of ordinary shares in Charter Hall Limited (ACN 113 531 150) and units in Charter Hall Property Trust (ARSN 113 339 147)

PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2013 (UNAUDITED)

Important notice

This financial report has been prepared and issued by Charter Hall Limited (ABN 57 113 531 150) and Charter Hall Funds Management Limited (ABN 31 082 991 786, AFSL 262861) (CHFML) as Responsible Entity of the Charter Hall Property Trust (together, the Charter Hall Group or Group). The information contained in this report has been compiled to comply with legal and regulatory requirements and to assist the recipient in assessing the performance of the Group independently and does not relate to, and is not relevant for, any other purpose.

This report is not intended to be and does not constitute an offer or a recommendation to acquire any securities in the Charter Hall Group. The receipt of this report by any person and any information contained herein or subsequently communicated to any person in connection with the Charter Hall Group is not to be taken as constituting the giving of investment, legal, or tax advice by the Charter Hall Group, its related bodies corporate, its directors or employees to any such person. Each recipient should consult their own counsel, accountant, and other advisers as to legal, tax, business, financial and other considerations in relation to the Charter Hall Group.

Neither the Charter Hall Group, their related bodies corporate, directors, employees nor any other person who may be taken to have been involved in the preparation of this financial report represents or warrants that the information contained in this report, provided either orally or in writing to a recipient in the course of its evaluation of the Charter Hall Group or the matters contained in this financial report, is accurate or complete.

Historical performance is not a reliable indicator of future performance. Due care and attention have been exercised in the preparation of forecast information; however, forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of the Group. Actual results may vary from any forecasts, and any variation may be materially positive or negative.

CHFML does not receive fees in respect of the general financial product advice it may provide; however, entities within the Charter Hall Group receive fees for operating the Trust in accordance with its constitution. Entities within the Group may also receive fees for managing the assets of, and providing resources to, the Trust. For more detail on fees, see this financial report.

Charter Hall Group and Charter Hall Property Trust Group

Preliminary financial report for the year ended 30 June 2013

Charter Hall Group and Charter Hall Property Trust Group Preliminary financial report for the year ended 30 June 2013	Charter Hall Group and Charter Hall Property Trust Group Preliminary financial report for the year ended 30 June 2013
Contents
Consolidated statements of comprehensive income...............................................................................................................................4
Consolidated balance sheets..................................................................................................................................................................5
Consolidated statement of changes in equity – Charter Hall Group........................................................................................................6
Consolidated statement of changes in equity – Charter Hall Property Trust Group................................................................................7
Consolidated cash flow statements.........................................................................................................................................................8
1	Summary of significant accounting policies....................................................................................................................................9
2	Critical accounting estimates and judgements..............................................................................................................................20
3	Segmentinformation.....................................................................................................................................................................21
4	Revenue.......................................................................................................................................................................................25
5	Expenses......................................................................................................................................................................................25
6	Fair valueadjustments..................................................................................................................................................................26
7	Income taxexpense/(benefit)........................................................................................................................................................26
8	Distributions paid and payable......................................................................................................................................................27
9	Earnings per security....................................................................................................................................................................28
10	Cash and cash equivalents...........................................................................................................................................................29
11	Trade and other receivables.........................................................................................................................................................29
12	Assets classified as held for sale..................................................................................................................................................30
13	Investments in associates at fair value through profit or loss........................................................................................................31
14	Derivative financial instruments....................................................................................................................................................31
15	Inventories....................................................................................................................................................................................32
16	Investments accounted for using the equity method.....................................................................................................................32
17	Intangible assets...........................................................................................................................................................................33
18	Property, plant and equipment......................................................................................................................................................34
19	Deferred tax assets.......................................................................................................................................................................34
20	Trade and other payables.............................................................................................................................................................35
21	Provisions – current......................................................................................................................................................................36
22	Interest-bearing liabilities..............................................................................................................................................................36
23	Provisions – non - current.............................................................................................................................................................38
24	Contributed equity.........................................................................................................................................................................39
25	Reserves and accumulated losses...............................................................................................................................................40
26	Non-controlling interest.................................................................................................................................................................41
27	Key management personnel.........................................................................................................................................................42
28	Remuneration ofauditors..............................................................................................................................................................46
29	Reconciliation of profit after tax to net cash inflow from operating activities.................................................................................47
30	Financial risk management...........................................................................................................................................................47
31	Relatedparties..............................................................................................................................................................................54
32	Controlled entities.........................................................................................................................................................................56
33	Investments in associates.............................................................................................................................................................58
34	Investments in joint ventures........................................................................................................................................................64
35	Commitments................................................................................................................................................................................67
36	Contingent liabilities......................................................................................................................................................................67
37	Security-based benefits................................................................................................................................................................67
38	Parent entity financial information.................................................................................................................................................70
39	Deed of crossguarantee...............................................................................................................................................................70
40	Events occurring after the reporting date......................................................................................................................................72

Charter Hall Group and Charter Hall Property Trust Group

Preliminary financial report for the year ended 30 June 2013

Consolidated statements of comprehensive income

Consolidated statements of comprehensive income	Consolidated statements of comprehensive income
Note Charter Hall Group 2013 2012 $'000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $'000
Income Revenue 4 Share of net profit of associates accounted for using the equity method Net gain on remeasurement of equity interests 33(b) Fair value adjustment on contingent consideration Net unrealised gain from derivative financial instruments Foreign exchange gains	114,841 123,630 42,541 2,949 - 4,645 1,123 1,355 121 - 112 - 31,362 53,287 37,633 5,494 - 4,533 - - 121 - - -
Total income	158,738 132,579 69,116 63,314
Expenses Investment property expenses Depreciation 5 Finance costs 5 Net loss on sale of investment properties and derivatives Net fair value adjustments on investment properties Net unrealised loss from derivative financial instruments Net loss on investment in associates at fair value 33(b) Net loss on remeasurement of equity interests Foreign exchange losses Amortisation of management rights 5,17 Asset management fees Performance fee clawback provision 21 Management,administration and other expenses 5 (2,304) (3,541) (1,186)(725) (3,323) (9,382) (2,285) (1,627) (8,419)(7,692) - (310) (1,596)(1,774) (368) - - (943) (7,838)(1,307) - - - (14,239) (75,290)(77,068) (2,304) (3,478) - - (4,125) (8,875) (2,299) (2,179) (8,419) (7,692) - (310) (1,691) (1,757) (368) - (1) (955) - - (1,836) (3,591) - - (407) (1,313)
Total expenses	(102,609) (118,608) (21,450) (30,150)
Profit before tax Income tax(expense)/benefit 7	56,129 13,971 (1,738) 432 47,666 33,164 - -
Profit for theyear	54,391 14,403 47,666 33,164
Profit/(loss) for the year is attributable to: Equity holders of Charter Hall Limited Equity holders of Charter Hall Property Trust (non-controlling interest)	5,899 (19,409) 48,943 36,087 - - 48,943 36,087
Profit after tax attributable to stapled securityholders of Charter Hall Group Net loss attributable to other non-controllinginterests	54,842 16,678 (451) (2,275) 48,943 36,087 (1,277) (2,923)
Profit for theyear	54,391 14,403 47,666 33,164
Other comprehensive income for the year Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Transfer of cumulative foreign exchange losses 25(a)	1,141 2,021 209 11,749 986 2,334 209 11,749
Other comprehensive income for theyear,net of tax	1,350 13,770 1,195 14,083
Total comprehensive income for theyear	55,741 28,173 48,861 47,247
Total comprehensive income for the year is attributable to: Equity holders of Charter Hall Limited Equity holders of Charter Hall Property Trust (non-controlling interest)	6,054 (19,724) 50,138 49,143 - - 50,138 49,143
Total comprehensive income attributable to stapled securityholders of Charter Hall Group Totalcomprehensiveloss attributable to other non-controllinginterests	56,192 29,419 (451) (1,246) 50,138 49,143 (1,277) (1,896)
Total comprehensive income for theyear	55,741 28,173 48,861 47,247
Basic and diluted earnings per stapled security Basic earnings per stapled security (cents) attributable to securityholders 9(a) Diluted earnings per stapled security (cents) attributable to securityholders 9(a)	18.29 5.64 17.67 5.35 16.32 12.21 15.77 11.49

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

Charter Hall Group and Charter Hall Property Trust Group

Preliminary financial report for the year ended 30 June 2013

Consolidated balance sheets

Consolidated balance sheets	Consolidated balance sheets
Note Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $’000 $'000
Assets Current assets Cash and cash equivalents 10 Trade and other receivables 11 Assets classified as held for sale 12	12,236 39,315 63,550 32,110 55,225 136,390 2,229 21,674 32,432 17,601 55,225 136,390
Total current assets	131,011 207,815 89,886 175,665
Non-current assets Trade and other receivables 11 Investment in associates at fair value through profit or loss 13 Inventories 15 Investments accounted for using the equity method 16 Intangible assets 17 Property, plant and equipment 18 Deferred tax assets 19 Other assets	2,400 12,870 49,229 62,638 10,848 9,518 520,147 472,159 96,066 98,687 2,743 3,026 6,389 8,322 - 564 145,891 163,542 49,229 62,180 - - 435,084 373,578 - - - - - - - 564
Total non-current assets	687,822 667,784 630,204 599,864
Total assets	818,833 875,599 720,090 775,529
Liabilities Current liabilities Trade and other payables 20 Derivative financial instruments 14 Provisions 21 Interest-bearingliabilities 22	48,821 50,788 - 669 1,101 14,895 27,455 51,463 32,740 30,288 - 669 - - 27,455 53,863
Total current liabilities	77,377 117,815 60,195 84,820
Non-current liabilities Provisions 23	1,162 1,428 - -
Total non-current liabilities	1,162 1,428 - -
Total liabilities	78,539 119,243 60,195 84,820
Net assets	740,294 756,356 659,895 690,709
Equity Equity holders of Charter Hall Limited Contributed equity 24(a) Reserves 25(a) Accumulated losses 25(b) 211,335 209,550 (54,147) (49,055) (69,717) (81,738) - - - - - -
Parent entityinterest 87,471 78,757 - -
Equity holders of Charter Hall Property Trust Contributed equity 24(a) Reserves 25(a) Accumulated losses 25(b) 753,610 739,175 (1,410) (1,415) (99,377) (87,609) 753,610 739,175 (1,410) (1,415) (99,377) (87,609)
Equityholders of Charter Hall PropertyTrust(non-controllinginterest)	652,823 650,151 652,823 650,151
Interest attributable to stapled securityholders of Charter Hall Group Non-controllinginterest in DRF 26	740,294 728,908 - 27,448 652,823 650,151 7,072 40,558
Total equity	740,294 756,356 659,895 690,709

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

Charter Hall Group and Charter Hall Property Trust Group

Preliminary financial report for the year ended 30 June 2013

Consolidated statement of changes in equity – Charter Hall Group

Attributable to the owners of Charter Hall Group

	Contributed		Accumulated		Non-
	equity	Reserves	losses	Total	controlling	Total
					interest	equity
	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July 2011	943,961	(57,294)	(136,849)	749,818	32,127	781,945
Profit/(loss) for the year	-	-	16,678	16,678	(2,275)	14,403
Other comprehensive income	-	12,741	-	12,741	1,029	13,770
Total comprehensive income/(loss)	-	12,741	16,678	29,419	(1,246)	28,173
Transactions with equityholders in their capacityas equityholders:
Performance rights and options exercised	4,764	(1,452)	-	3,312	-	3,312
Distribution provided for or paid	-	-	(53,839)	(53,839)	(2,667)	(56,506)
Non-cash security-based benefits expense	-	2,600	-	2,600	-	2,600
Transactions with non-controlling interests	-	(2,402)	-	(2,402)	(766)	(3,168)
Transfer from accumulated losses	-	(4,663)	4,663	-	-	-
	4,764	(5,917)	(49,176)	(50,329)	(3,433)	(53,762)
Balance at 1 July 2012	948,725	(50,470)	(169,347)	728,908	27,448	756,356
Profit/(loss) for the year	-	-	54,842	54,842	(451)	54,391
Other comprehensive income	-	1,350	-	1,350	-	1,350
Total comprehensive income/(loss)	-	1,350	54,842	56,192	(451)	55,741
Transactions with equityholders in their capacityas equityholders:
Contributions of equity, net of issue costs	10,568	-	-	10,568	-	10,568
Performance rights and options exercised	5,652	(2,038)	-	3,614	-	3,614
Distribution provided for or paid	-	-	(60,711)	(60,711)	(10,870)	(71,581)
Non-cash security-based benefits expense	-	3,035	-	3,035	-	3,035
Transactions with non-controlling interests	-	(1,312)	-	(1,312)	(16,127)	(17,439)
Transfer to accumulated losses	-	(6,122)	6,122	-	-	-
	16,220	(6,437)	(54,589)	(44,806)	(26,997)	(71,803)
Balance at 30 June 2013	964,945	(55,557)	(169,094)	740,294	-	740,294

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

Charter Hall Group and Charter Hall Property Trust Group

Preliminary financial report for the year ended 30 June 2013

Consolidated statement of changes in equity – Charter Hall Property Trust Group

Attributable to the owners of Charter Hall Property Trust Group

						Non-
		Contributed		Accumulated		controlling	Total
		equity	Reserves	losses	Total	interest	equity
		$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July2011		934,458	(9,747)	(74,520)	850,191	47,155	897,346
Profit/(loss) for the year		-	-	36,087	36,087	(2,923)	33,164
Other comprehensive income		-	13,056	-	13,056	1,027	14,083
Total comprehensive income/(loss)		-	13,056	36,087	49,143	(1,896)	47,247
T ti ith it h ld i th i Reallocation to Charter Hall Limited	it	it h ld (200,000)	-	-	(200,000)	-	(200,000)
Distribution provided for or paid		-	-	(53,839)	(53,839)	(3,889)	(57,728)
Transactions with non-controlling interests		-	(61)	-	(61)	(812)	(873)
Transfer to accumulated losses		-	(4,663)	4,663	-	-	-
		(195,283)	(4,724)	(49,176)	(249,183)	(4,701)	(253,884)
Balance at 1 July 2012		739,175	(1,415)	(87,609)	650,151	40,558	690,709
Profit/(loss) for the year		-	-	48,943	48,943	(1,277)	47,666
Other comprehensive income		-	1,195	-	1,195	-	1,195
Total comprehensive income/(loss)		-	1,195	48,943	50,138	(1,277)	48,861
Transactions with equityholders in their capacityas equityholders:
Contributions of equity, net of issue costs		9,395	-	-	9,395	-	9,395
Performance rights and options exercised		5,040	-	-	5,040	-	5,040
Distribution provided for or paid		-	-	(60,711)	(60,711)	(16,060)	(76,771)
Transactions with non-controlling interests		-	(1,190)	-	(1,190)	(16,149)	(17,339)
		14,435	(1,190)	(60,711)	(47,466)	(32,209)	(79,675)
Balance at 30 June 2013		753,610	(1,410)	(99,377)	652,823	7,072	659,895

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

Charter Hall Group and Charter Hall Property Trust Group

Preliminary financial report for the year ended 30 June 2013

Consolidated cash flow statements

Consolidated cash flow statements	Consolidated cash flow statements
Note Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Cash flows from operating activities Receipts from customers (inclusive of GST) Clawback of performance fees (inclusive of GST) Payments to suppliers and employees (inclusive of GST)	117,672 146,830 (15,663) - (84,715)(93,503) 12,999 19,026 - - (12,509) (14,150)
Interest received Interest paid Distributions and dividends from investments	17,294 53,327 1,967 2,562 (2,708) (8,654) 36,417 31,773 490 4,876 540 869 (3,681) (8,644) 19,191 27,765
Net cash inflow from operating activities 29	52,970 79,008 16,540 24,866
Cash flows from investing activities Payments for property, plant and equipment Proceeds on disposal of investment property Payments for inventory Payments for investment properties Deferred payments for business combination Investments in associates and joint ventures Proceeds on disposal and return of capital from investments in associates Payments for management rights Loans to associates, joint ventures and related parties Repayments from associates, joint ventures and related parties Repayments from key management personnel Transactions with non-controlling interests	(1,233) (587) 72,668 33,742 (1,329) (1,294) (5,580) (717) (7,685) (15,752) (52,853) (68,522) 35,546 95,129 (5,217) - (22,280) (6,120) 1,650 - 800 800 (16,566) - - - 72,668 17,218 - - (5,580) (717) - - (52,853) (73,769) 34,993 130,086 - - (60,051) (1,650) 73,575 26,527 - - (16,566) -
Net cash (outflow)/inflow from investing activities	(2,079) 36,679 46,186 97,695
Cash flows from financing activities Proceeds from issues of securities and other equity securities Payment on settlement of derivative financial instruments Proceeds from borrowings Repayment of borrowings Distributions paid to securityholders	3,585 4,162 (547) (183) 40,950 76,442 (64,950) (128,728) (57,143) (54,379) 5,013 2,257 (547) (183) 40,950 76,442 (64,950) (128,728) (62,637) (55,524)
Net cash outflow from financing activities	(78,105) (102,686) (82,171) (105,736)
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash and cash equivalents	(27,214) 13,001 39,315 26,266 135 48 (19,445) 16,825 21,674 4,841 - 8
Cash and cash equivalents at the end of the year 10	12,236 39,315 2,229 21,674

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

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies

The significant policies which have been adopted in the preparation of these financial statements for the year ended 30 June 2013 are set out below. These policies have been consistently applied to the years presented, unless otherwise stated.

(a) Basis of preparation

The Charter Hall Group (Group, CHC or Charter Hall) is a ‘stapled’ entity comprising Charter Hall Limited (Company or CHL) and its controlled entities, and Charter Hall Property Trust (Trust or CHPT) and its controlled entities (Charter Hall Property Trust Group). The shares in the Company are stapled to the units in the Trust. The stapled securities cannot be traded or dealt with separately. The stapled securities of the Group are listed on the Australian Securities Exchange. CHL has been identified as the parent entity in relation to the stapling.

The two Charter Hall entities comprising the stapled group remain separate legal entities in accordance with the Corporations Act 2001 , and are each required to comply with the reporting and disclosure requirements of Accounting Standards and the Corporations Act 2001 .

As permitted by Class Order 05/642, issued by the Australian Securities and Investments Commission, this financial report is a combined financial report that presents the financial statements and accompanying notes of both the Charter Hall Group and the Charter Hall Property Trust Group.

The financial report of the Charter Hall Group comprises CHL and its controlled entities including Charter Hall Funds Management Limited (Responsible Entity) as responsible entity for CHPT. 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 a non-controlling interest, the stapled securityholders of CHL are the same as the stapled securityholders of CHPT.

The financial report of the Charter Hall Property Trust Group comprises the Trust and its controlled entities.

The results and equity of the Charter Hall Direct Retail Fund (DRF) and Charter Hall Direct Industrial Fund No. 2 (DIF2) not directly owned by the Group and/or the Trust have been treated and disclosed as non-controlling interests. Effective 20 April 2013, the Charter Hall Group owns 100% of DRF and the non-controlling interest disclosed by Charter Hall Property Trust Group solely represents the 16% interest held by Charter Hall Holdings Pty Ltd (CHH), a subsidiary of CHL. At 30 June 2012, Charter Hall Group and Charter Hall Property Trust Group owned 65.91% and 49.63%, respectively of DRF with the remaining interest owned by non-controlling unitholders. Refer to Note 26 for further details regarding non-controlling interests. The Trust acquired its 82% interest in DIF2 in December 2012 and fully sold down to external investors prior to 30 June 2013.

This general purpose financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. The Charter Hall Group and Charter Hall Property Trust Group are for-profit entities for the purpose of preparing the financial statements.

On 6 June 2005, CHL acquired 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 the Group 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.

Compliance with IFRSs

Compliance with Australian Accounting Standards ensures that the financial statements comply with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). Consequently, these financial statements have been prepared in accordance with and comply with IFRS as issued by the IASB.

New and amended standards adopted

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. However, amendments made to AASB 101 Presentation of Financial Statements effective 1 July 2012 now require the statement of comprehensive income to show the items of comprehensive income grouped into those that are not permitted to be reclassified to profit or loss in a future period and those that may have to be reclassified if certain conditions are met.

Historical cost convention

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

Critical accounting estimates

The preparation of the financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates and 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 2.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(b) Principles of consolidation

(i) Controlled entities

The consolidated financial statements of the Charter Hall Group and the Charter Hall Property Trust Group incorporate the assets and liabilities of all controlled entities as at 30 June 2013 and their results for the year then ended.

Controlled entities are all those entities over which the Company or the Trust 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 Company or the Trust controls another entity.

Controlled entities are fully consolidated from the date on which control is transferred. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for acquisition of controlled entities by the Company or Trust (refer to Note 1(g)).

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

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

(ii) Associates

Associates are entities over which Charter Hall has significant influence but not control, generally accompanying a shareholding of less than 50% of the voting rights or where Charter Hall is the responsible entity. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting after initially being recognised at cost, or as financial assets at fair value through profit or loss.

Where the equity method of accounting is used, Charter Hall’s share of its associates’ post-acquisition profits or losses is recognised in the statement of comprehensive income, 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 Charter Hall’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, Charter Hall does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between Charter Hall and its associates are eliminated to the extent of Charter Hall’s interests 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 Charter Hall.

For investments in associates accounted for as financial assets at fair value through profit or loss, the scope exemption available under AASB 128 Investments in Associates is applied and investments are designated at fair value through profit or loss upon initial recognition in accordance with AASB 139 Financial Instruments: Recognition and Measurement . Subsequent changes in fair value are recognised in the statement of comprehensive income within ‘fair value adjustments’ in the year in which they arise. Distribution income from investments in associates accounted at fair value through profit or loss is recognised in the statement of comprehensive income as part of revenue.

(iii) Joint ventures

Joint venture entities

Investment in joint venture entities over which Charter Hall exercises joint control are accounted for in the consolidated financial statements using the equity method after initially being recognised at cost. Under the equity method, Charter Hall’s share of the profits or losses of each relevant joint venture entity is recognised in profit or loss, and the share of post-acquisition movements in reserves is recognised in other comprehensive income. Details relating to the joint venture entities are set out in Note 34.

Profits and losses on transactions establishing the joint venture entity and transactions with the joint venture are eliminated to the extent of Charter Hall’s ownership interest until such time as they are realised by the joint venture entity on consumption or sale. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of assets, or an impairment loss.

Jointly controlled assets

The Group’s proportionate interest in the assets of the 685 La Trobe property development are set out in Note 15. Given the nature of the joint venture’s development activity, all expenses are capitalised to inventory.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(c) Segment reporting

Segment information is presented on the same basis as that used for internal reporting purposes.

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.

(d) Foreign currency translation

(i) Functional and presentation currencies

Items included in the financial statements are measured using the currency of the primary economic environment in which the Group operates (the functional currency). The financial statements are presented in Australian dollars, which is the Group’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when they are attributable to part of the net investment in a foreign operation and deferred in equity.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

(iii) Foreign operations

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

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates; and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

At the balance date, the spot and average rates used were:

	2013	2012
Spot rate
US Dollar	0.9138	1.0238
NZ Dollar	1.1811	1.2778
Euro	0.7025	0.8084
British Pound	0.6007	0.6518
Average rate
US Dollar	1.0254	1.0312
NZ Dollar	1.2940	1.2823
Euro	0.7933	0.7695
British Pound	0.6541	0.6509

(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:

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(e) Revenue recognition (continued)

(i) Rental income

Rental income from operating leases represents income earned from the rental of properties (inclusive of outgoings recovered from tenants) and 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 properties. The portion of operating lease income in a reporting period relating to fixed increases in operating lease rentals in future years is recognised as a separate component of investment properties.

(ii) Management fees

Management fees are brought to account on an accruals basis and, if not received at the reporting 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 services have been performed and the fee can be reliably estimated.

(iii) Performance and transaction fees

Performance fees are only recognised when the outcome can be reliably estimated. 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 in Note 2.

(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 year’s income tax expense or benefit is the tax payable on the current year’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 controlled entities 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.

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 relates 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.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(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 Charter Hall. 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-byacquisition basis, Charter Hall 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 acquisition-date fair value of any previous equity interest in the acquiree over the fair value of Charter Hall’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.

(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 impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) Cash and cash equivalents

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.

(j) Trade and other receivables

Trade and other 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 uncollectible are written off in the year in which they are identified. A provision for doubtful debts is raised where there is objective evidence that the Group will not collect all amounts due. The amount of the provision is the difference between the carrying amount and estimated future cash flows. Cash flows relating to current receivables are not discounted.

(k) Investments and other financial assets

Classification

Charter Hall 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).

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(k) Investments and other financial assets (continued)

(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 Charter Hall 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 reporting date, which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that 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 reporting date.

Recognition and derecognition

Regular purchases and sales of investments are recognised at trade-date – the date on which Charter Hall 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 Charter Hall 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 or 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 financial assets at fair value through profit or loss, excluding interest and dividend income, are presented in the statement of comprehensive income in the year in which they arise.

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), Charter Hall 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 1(l) and Note 30.

Impairment

Charter Hall assesses at each reporting 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 the statement of comprehensive income – is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments classified as available-for-sale are not reversed through the statement of comprehensive income.

(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 balance date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. From time to time, the Group may designate certain derivatives as either hedges of net investments in foreign operations (net investment hedges) or hedges of exposures to variability in cash flows associated with future interest payments on variable rate debt (cash flow hedges).

The Group does not hold any financial derivative contracts as at 30 June 2013.

(m) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(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 plant and equipment.

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 statement of comprehensive income during the financial year 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
Fixtures
Software

3 to 10 years 5 to 10 years 3 years

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

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

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

(o) Investment properties

Investment properties comprise investment interests in land and buildings (including integral plant and equipment) held for the purpose of letting to produce rental income, including properties that are under construction for future use as investment properties.

Initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition, the investment properties are then stated at fair value. Fair value of investment property is the price at which the property could be exchanged between knowledgeable, willing parties in an arm's length transaction. A "willing seller” is neither a forced seller nor one prepared to sell at a price not considered reasonable in the current market. The best evidence of fair value is given by current prices in an active market for similar property in the same location and condition. Gains and losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

At each balance date, the fair values of the investment properties are assessed by the Group with reference to independent valuation reports or through appropriate valuation techniques adopted by the Group. Fair value is determined using a long term investment period. Specific circumstances of the owner are not taken into account.

The use of independent external valuers is on a progressive basis over a three year period, or earlier, where the Group believes

there may be a material change in the carrying value of the property.

Where an independent valuation is not obtained factors taken into account, where appropriate, by the Directors in determining fair value may include:

Assuming a willing buyer and a willing seller, without duress and an appropriate time to market the property to maximise price;
Information obtained from valuers, sales and leasing agents, market research reports, vendors and potential purchasers;
Capitalisation rates used to value the asset, market rental levels and lease expiries;
Changes in interest rates;
Asset replacement values;
Discounted cash flow models;
Available sales evidence; and
Comparisons to valuation professionals performing valuation assignments across the market.

The carrying amount of investment properties recorded in the balance sheet takes into consideration components relating to lease incentives, leasing costs and assets relating to fixed increases in operating lease rentals in future years. As the fair value method has been adopted for investment properties, the buildings and any component thereof (including plant and equipment) are not depreciated.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(p) Intangibles

(i) Management rights – indefinite life assets

Management rights in relation to entities with no fixed life are not amortised as they have an indefinite life. Management rights with an indefinite life are tested for impairment annually, or more frequently if events or changes in circumstances indicate that they might be impaired, and are carried at cost less accumulated impairment losses. Management rights are allocated to cashgenerating units for the purpose of impairment testing.

(ii) Management rights – finite life assets

Management rights in relation to entities with a fixed life are amortised using the straight-line method over their useful life. Management rights of Charter Hall Office Trust (CHOT) are amortised over six years.

(q) 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 35). Payments made under operating leases are charged to the statement of comprehensive income on a straight-line basis. Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

(r) Lease incentives

Prospective lessees may be offered incentives as an inducement to enter into non-cancellable operating leases. These incentives may take various forms including rent-free periods, upfront cash payments, or a contribution to certain lessee costs such as a fitout contribution. Incentives are capitalised in the consolidated balance sheet as a component of investment properties and amortised over the term of the lease as an adjustment to net rental income.

(s) Assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. For an asset to be classified as held for sale, it must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and its sale must be highly probable. Assets classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.

(t) Trade and other payables

Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Group. The amounts are unsecured and are usually paid within 30 days of recognition.

(u) Interest-bearing liabilities

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

Interest-bearing liabilities are classified as current liabilities unless Charter Hall has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(v) Borrowing costs

Borrowing costs associated with the construction of a qualifying asset, including interest expense, are capitalised as part of the cost of that asset 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.

(w) Provisions

Provisions are recognised when Charter Hall 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.

(x) 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.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(x) Employee benefits (continued)

(ii) Long service leave

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

(iii) Retirement benefit obligations

Contributions to employee defined contribution superannuation funds are recognised as an expense as they become payable.

(iv) Security-based benefits

Security-based compensation benefits are provided to employees via the Charter Hall Performance Rights and Options Plan (PROP) and the General Employees Security Plan (GESP). Information relating to these schemes is set out in Note 37.

For PROP, the fair value at grant date is independently valued using a Monte Carlo simulation pricing model that takes into account the exercise price, the term of the option, impact of dilution, security price at grant date, expected price volatility of the underlying security, expected dividend yield and the risk-free interest rate for the term of the option and 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 reporting date, the entity revises its estimate of the number of securities that are expected to vest. The employee benefits expense recognised each year takes into account the most recent estimate.

Upon the vesting of securities, the balance of the security-based benefits reserve relating to those securities is transferred to equity, net of any directly attributable transaction costs.

For GESP, eligible employees are entitled to receive up to $1,000 in securities based on the unit price on the grant date. The cost of the shares bought on market to settle the award liability is included in employee benefits expense. The shares are held in trust on behalf of eligible employees until the earlier of the completion of three years’ service or termination.

(v) Bonus plans

Charter Hall recognises a liability and an expense for amounts payable to employees. Charter Hall 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. Charter Hall 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.

(y) 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.

(z) Distributions paid or payable

Liability is recognised for the amount of any distribution declared by the Group on or before the end of the reporting period but not distributed at balance date. A liability has been recognised in the financial statements at 30 June 2013 as the final distribution had been declared at the balance date.

(aa) Fair value estimation

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

The nominal value less estimated credit adjustments of trade receivables and payables 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 Charter Hall for similar financial instruments.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(ab) Earnings per security

(i) Basic earnings per security

Basic earnings per security is calculated by dividing the profit attributable to equity holders of the Group, excluding any costs of servicing equity other than ordinary stapled securities, by the weighted average number of ordinary securities outstanding during the year, 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 effect of interest and other financing costs after income tax 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.

(ac) 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.

(ad) Parent entity financial information

The financial information for the parent entity of the Charter Hall Group, Charter Hall Limited, and for the parent entity of the Charter Hall Property Trust Group, Charter Hall Property Trust, is disclosed in Note 38, and has been prepared on the same basis as the consolidated financial statements, except as set out below.

(i) Investments in controlled entities, associates and joint venture entities

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

(ii) 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 standalone 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 7.

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.

(iii) Receivables and payables

Trade amounts receivable from controlled entities in the normal course of business and other amounts advanced on commercial terms and conditions are included in receivables. Similarly, amounts payable to controlled entities are included in payables.

(ae) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for year ended 30 June 2013 reporting periods. The impact of these new standards and interpretations (to the extent relevant to the Charter Hall Group or the Charter Hall Property Trust Group) is set out below.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(ae) New accounting standards and interpretations (continued)

(i) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2015)

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in the statement of comprehensive income. Neither the Charter Hall Group nor the Charter Hall Property Trust Group has yet decided when to adopt AASB 9. However, management does not expect this will have a significant impact on either the Charter Hall Group or the Charter Hall Property Trust Group’s consolidated financial statements as neither Group holds any available-for-sale investments.

There will be no impact on the group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed.

(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 A mendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards and AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments (effective 1 January 2013)

In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated financial statements and associated disclosures.

AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements , and Interpretation 12 Consolidation – Special Purpose Entities . The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns. There is also new guidance on participating and protective rights and on agent/principal relationships.

AASB 11 introduces a principles-based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. Parties to a joint operation will account their share of revenues, expenses, assets and liabilities in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share joint control.

AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by the Charter Hall Group and the Charter Hall Property Trust Group will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Charter Hall Group and the Charter Hall Property Trust Group’s investments.

Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a ‘partial disposal’ concept.

The impact of adopting AASB 10, AASB 11, AASB 12, AASB 128 and related amendments is not expected to be material as Charter Hall Group and the Charter Hall Property Trust Group already apply the equity method of accounting for their joint arrangements except for Charter Hall La Trobe Trust (La Trobe) which is proportionately consolidated. Under AASB 11, La Trobe classifies as a joint operation and the Group is required to account for its share of La Trobe’s assets, liabilities, revenues and expenses which is not materially different than the current accounting treatment. Adoption of the new accounting standards will not have a material impact on the presentation of the statement of comprehensive income.

The Charter Hall Group and the Charter Hall Property Trust Group will adopt the new standards from their operative date. They will therefore be applied in the financial statements for the year ending 30 June 2014.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(ae) New accounting standards and interpretations (continued)

(iv) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)

AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The Group has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the financial statements. However, application of the new standard will impact the type of information disclosed in the notes to the financial statements. The Charter Hall Group and the Charter Hall Property Trust Group will adopt the new standard from its operative date. It will therefore be applied in the financial statements for the year ending 30 June 2014.

(af) Rounding of amounts

The Company and the Trust are of a kind referred to in Class Order 98/100 (as amended), 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 to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.

2 Critical accounting estimates and judgements

The Charter Hall Group and Charter Hall Property Trust Group make estimates and assumptions concerning the future. 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. 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) Classification and carrying value of investments

Critical judgements are made by the Charter Hall Group and Charter Hall Property Trust Group in respect of the classification and carrying value of investments in associates (Notes 13 and 16) and assets classified as held for sale (Note 12). As stated in Note 1(b)(ii), the appropriate classification of each investment is assessed on acquisition and following any subsequent changes in ownership interests. Generally, investments in unlisted retail funds (typically representing less than 5% interests with the exception of two legacy funds, Charter Hall Umbrella Fund and Charter Hall Diversified Property Fund) are designated at fair value through profit or loss on acquisition and investments in listed and wholesale funds/partnerships where Charter Hall has significant influence (typically representing between 5% and 49% interests with the exception of one legacy fund, Charter Hall Opportunity Fund No. 4) are accounted for using the equity method.

Management regularly review equity accounted investments for impairment and re-measure investments carried at fair value through profit or loss by reference to external independent property valuations and market conditions, using generally accepted market practices.

The reported fair values of assets classified as held for sale reflect market conditions at the end of the reporting period. While this represents best estimates as at the reporting date, actual sales prices may be higher or lower than the most recent valuations. This is particularly relevant in periods of market illiquidity or uncertainty.

(ii) Estimated performance fees

Critical judgements are made by the Charter Hall Group in respect of recognising performance fee revenue. Performance fees are only recognised when services have been performed and they can be reliably estimated. Detailed calculations are completed and the risks associated with the fee are assessed when deciding when it is appropriate to recognise revenue.

In 2013, the Group settled the outstanding performance fee clawback previously provided for in relation to Charter Hall Opportunity Fund 4 (CHOF4). No other performance fees received by the Group from other Charter Hall managed funds in prior periods or the current year are subject to clawback arrangements.

(iii) Charter Hall Opportunity Fund 5 (CHOF5) – Little Bay development

Critical judgement has been made in the assessment of commercial negotiations with TA Global Developments Pty Limited (TAG) over the Little Bay development project. Refer to Note 33(e) Investments in associates for further details.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

2 Critical accounting estimates and judgements (continued)

(iv) Tax losses

The Charter Hall Group has not recognised tax losses from previous years as recovery against future taxable income of the tax consolidated group is not expected in the short to medium term. Refer to Note 7(d) Tax expense/(benefit) for further details.

(v) Impairment testing of management rights

Critical judgements are made by the Charter Hall Group in assessing the carrying value of management rights acquired, where the funds to which those management rights relate have an indefinite life. 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. Refer to Note 17 for further details.

3 Segment information

(a) Description of segments

Charter Hall Group

Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. The Board is responsible for allocating resources and assessing performance of the operating segments, and therefore has been identified as the chief operating decision maker.

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

Property funds investments

This segment comprises interests in funds under management.

Property direct investments

This segment comprises direct interests in investment properties.

Property funds management

This segment comprises funds management services, development management services and other property services.

Change in composition of reportable segments

Strategic initiatives implemented in the prior period, including a restructure of responsibilities within the executive committee, the introduction of reporting by business unit and the development of budgets and forecasts aligning responsibility by business unit, has resulted in a change to reporting of operating segments to the Board. Accordingly the information presented in the tables below reflect the new operating segments as described above. Comparatives for the prior period have been restated to reflect the revised reportable operating segments.

Charter Hall Property Trust Group

The Board allocates resources and assesses the performance of operating segments for the entire Charter Hall Group. Results are not separately identified and reported according to the legal structure of the Charter Hall Group.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

3 Segment information (continued)

(b) Segment information provided to the Board

Charter Hall Group

The operating segments provided to the Board for the reportable segments for the year ended 30 June 2013 are as follows:

			Property	Property	Property	Combined
			Funds	Direct	Funds	Group
			Investments	Investments	Management
30 June 2013			$’000	$’000	$’000	$’000
Net property income			-	9,101	-	9,101
Co-investment income			38,468	-	-	38,468
Total rental and property income			38,468	9,101	-	47,569
Total property funds management income			-	-	83,505	83,505
Total income			38,468	9,101	83,505	131,074
Operating expenses			(413)	(262)	(71,585)	(72,260)
Less: recovery of expenses			-	-	16,573	16,573
Net operating expenses			(413)	(262)	(55,012)	(55,687)
Operating earnings before interest, tax, depreciation a amortisation (EBITDA)		nd	38,055	8,839	28,493	75,387
Depreciation			-	-	(1,186)	(1,186)
Operating earnings before interest and tax (EBIT)			38,055	8,839	27,307	74,201
Interest income			2,254	94	-	2,348
Interest expense			(769)	(2,383)	-	(3,152)
Operating earnings (including non-controlling interest		s)	39,540	6,550	27,307	73,397
Non-controlling interest			-	(1,612)	-	(1,612)
Operating earnings attributable to stapled securityhol	ders		39,540	4,938	27,307	71,785
Weighted average number of securities (‘000)						299,805
Operating earnings per security before specific items						23.94cps
Operating earnings per security (EPS)						23.94cps
Number of securities for dividend per security (DPS) (‘000	)					302,262
DPS						20.20cps

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

Assets and liabilities have not been reported on a segmented basis as the Board is provided with consolidated information.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

3 Segment information (continued)

(b) Segment information provided to the Board (continued)

The reportable segments for the year ended 30 June 2012 are as follows:

	Property	Property	Property	Combined
	Funds	Direct	Funds	Group
	Investments	Investments	Management
30 June 2012	$’000		$’000	$’000
Net property income	305	13,946	-	14,251
Co-investment income	34,409	-	-	34,409
Total rental and property income	34,714	13,946	-	48,660
Total property funds management income	-	-	74,900	74,900
Total income	34,714	13,946	74,900	123,560
Operating expenses	(423)	(566)	(62,436)	(63,425)
Less: recovery of expenses	-	-	12,396	12,396
Net operating expenses	(423)	(566)	(50,040)	(51,029)
EBITDA	34,291	13,380	24,860	72,531
Depreciation	-	-	(725)	(725)
EBIT	34,291	13,380	24,135	71,806
Interest income	2,176	-	-	2,176
Interest expense	(3,063)	(4,789)	-	(7,852)
Operating earnings (including non-controlling interests)	33,404	8,591	24,135	66,130
Non-controlling interest	-	(2,544)	-	(2,544)
Operating earnings before specific items	33,404	6,047	24,135	63,586
Specific items1	-	-	(8,741)	(8,741)
Operating earnings attributable to stapled securityholders	33,404	6,047	15,394	54,845
Weighted average number of securities (‘000)				295,625
Operating earnings per security before specific items				21.51 cps
Operating earnings per security (EPS)				18.55 cps
Number of securities for dividend per security (DPS) (‘000)				296,168
DPS				18.20 cps

(1) Specific items include $16.0 million fee revenue related to sale of Charter Hall Office REIT (CQO) US assets net of $4.0 million closure costs of the US office, $2.9 million costs of retaining the management rights, $3.9 million organisational restructure costs and $14.2 million provision for Charter Hall Opportunity Fund 4 (CHOF4) performance fee clawback (subsequently settled in June 2013) which is then reduced by $0.3 million being the Group’s 3% equity share of the clawback receivable in CHOF4.

The reconciliation of total segment income stated above to the statement of comprehensive income is as follows:

	2013	2012
	$’000	$’000
Total income per segment note	131,074	123,560
Add: recovery of expenses	16,573	12,396
Add specific item: fees related to the sale of the Charter Hall Office REIT US assets	-	16,044
Add specific item: 3% equity accounted share of CHOF4 performance fee	-	297
	147,647	152,297
Add: investment property expenses	2,304	3,541
Add: interest income	2,348	2,176
Less: amortisation of lease incentives	(453)	(556)
Less: equity accounted profit in Direct Property Investments segment	(522)	(1,675)
Less: equity accounted profit in Property Funds Investments segment	(34,699)	(30,049)
Less: equity accounted profit in Property Funds Management segment	(1,784)	(2,104)
Revenue per statement of comprehensive income	114,841	123,630

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

3 Segment information (continued)

(b) Segment information provided to the Board (continued)

The reconciliation of net interest expense per the segment notes for 2013 and 2012 to the statement of comprehensive income is below:

below:
	2013	2012
	$’000	$’000
Net operating interest per segment note	(804)	(5,676)
Less: unwind of discount on contingent consideration	(171)	(1,240)
Less: early payout of derivative financial instrument	-	(265)
Add: bridging equity interest reclassified to investment income	113	480
Net interest expense	(862)	(6,701)
Interest income	2,461	2,681
Finance costs	(3,323)	(9,382)
Net interest expense	(862)	(6,701)

Operating earnings is a financial measure which represents the profit/(loss) under Australian Accounting Standards adjusted for fair value adjustments, impairment of assets, gains or losses on sale of investments, acquisition costs, non-operating movements in equity accounted investments, and non-cash items such as security-based benefits expense, amortisation, and tax expense/(benefit). The inclusion of operating earnings as a measure of the Group’s profitability provides investors with the same basis that is used internally for evaluating operating segment performance. Operating earnings is used by the Board to make strategic decisions and as a guide to assessing an appropriate distribution to declare.

The calculation of operating earnings to statutory profit after tax attributable to stapled securityholders is shown below:

	2013	2012
	$’000	$’000
Operating earnings before specific items	71,785	63,586
Specific items1	-	(8,741)
Operating earnings	71,785	54,845
Non-cash security-based benefits expense	(3,035)	(2,338)
Fair value adjustments on derivatives2	1,472	(9,933)
Fair value adjustments on investments and property, including remeasurement gains2	(3,615)	(2,034)
Amortisation of management rights	(7,838)	(1,307)
Transfer from reserves of cumulative FX losses on disposal of foreign investments2	(484)	(12,176)
Loss on disposal of investments, property and derivatives	(953)	(890)
Inventory writedown2	-	(5,814)
Other2	(2,489)	(3,675)
Statutory profit after tax attributable to stapled securityholders	54,842	16,678

(1) There are no specific items in 2013. The specific items in 2012 include $16.0 million fee revenue related to sale of Charter Hall Office REIT (CQO) US assets net of $4.0 million closure costs of the US office, $2.9 million costs of retaining the management rights, $3.9 million organisational restructure costs and $14.2 million provision for Charter Hall Opportunity Fund 4 (CHOF4) performance fee clawback which is then reduced by $0.3 million being the Group’s 3% equity share of the clawback receivable in CHOF4.

(2) These items include the Group’s share of non-operating movements in equity accounted investments on a look-through basis (including losses on sale of offshore investment properties of $nil (2012 - $2.0 million) and amortisation charges of $0.5 million (2012: $1.1 million)) and income taxes.

taxes.
	2013	2012
Basic weighted average number of securities per Note 9	299,804,805	295,624,609
Operating earnings before specific items per stapled security (excl. non-controlling interest)	23.94 cents	21.51 cents
Specific items	-	2.96 cents
Operating earnings per stapled security (OEPS) (excluding non-controlling interest)	23.94 cents	18.55 cents

Refer to Note 9 for statutory earnings per security figures.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

4 Revenue

4 Revenue
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Sales revenue Gross rental income Management, transaction and performance fees	10,443 15,561 98,295 101,863 10,443 15,532 - -
	108,738 117,424 10,443 15,532
Other revenue Interest Distributions/dividends1	2,461 2,681 3,642 3,525 17,277 34,276 3,642 3,479
	6,103 6,206 20,919 37,755
Total revenue	114,841 123,630 31,362 53,287

(1) Represents the distribution of income from investments in associates accounted for at fair value by the Group and Trust Group. Refer to Note 33 for further details.

5 Expenses

5 Expenses
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Profit before income tax includes the following specific expenses: Depreciation Plant and equipment	1,186 725 - -
Amortisation Leasing and other incentives Management rights	453 1,031 7,838 1,307 453 546 - -
Finance costs Interest and finance charges paid/payable Finance costs due to unwinding of discount on contingent consideration	3,152 8,142 171 1,240 4,125 8,875 - -
	3,323 9,382 4,125 8,875
Management, administration and other expenses Employee benefits expense Restructuring costs1 Non-cash security-based benefits expense Superannuation expense Legal and consulting costs Rent expense – minimum lease payments on operating leases Other occupancy costs Communication and IT expenses Other expenses	55,508 53,561 1,192 3,900 3,035 2,338 2,996 3,153 1,613 4,233 1,623 1,541 1,223 1,269 2,271 1,465 5,829 5,608 - - - - - - - - 88 33 - - - - - - 319 1,280
	75,290 77,068 407 1,313

(1) 2012 expense included as a specific item.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

6 Fair value adjustments

6 Fair value adjustments	6 Fair value adjustments
Note Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Included in total income: Contingent consideration payable 20 Derivative financial instruments 14 1,123 1,355 121 - - - 121 -
	1,244 1,355 121 -
Included in total expenses: Investment properties Investments in associates at fair value through profit or loss 13, 33(b) Derivative financial instruments 14 (8,419) (7,692) (1,596) (1,774) - (310) (8,419) (7,692) (1,691) (1,757) - (310)
	(10,015) (9,776) (10,110) (9,759)

7 Income tax expense/(benefit)

7 Income tax expense/(benefit)	7 Income tax expense/(benefit)
Note Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
(a) Income tax expense/(benefit) Current tax expense Deferred income tax expense/(benefit) (Under)/over provided in prior years	- - 1,933 (482) (195) 50 - - - - - -
	1,738 (432) - -
Deferred income tax expense/(benefit) comprises: Decrease/(increase) in deferred tax assets (Decrease)/increase in deferred tax liabilities	1,935 (1,538) (2) 1,056 - - - -
19 1,933 (482) - -
(b) Numerical reconciliation of income tax benefit to prima facie tax payable
Profit before income tax expense/(benefit)	56,129 13,971 47,666 33,164
Prima facie tax expense/(benefit) 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 Non-allowable expenses Share-based payments expense Utilisation of losses not previously recognised Sundry items Tax on LTI interest Non-taxable dividends, net of equity accounted profit Over provided in prior years Difference in overseas tax rates	16,839 4,191 (14,374) (10,442) 2,231 549 (33) 43 (2,856) 4,096 - 348 - 37 (535) 732 480 50 (14) (36) 14,300 9,949 (14,374) (10,442) - - - - - - 74 493 - - - - - - - -
Income tax expense/(benefit)	1,738 (432) - -

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

7 Income tax expense/(benefit) (continued)

(c) Tax consolidation legislation

Charter Hall Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation with effect from 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.

(d) Tax losses – Charter Hall Group	2013	2012
	$’000	$’000
Unused tax losses for which no deferred tax asset has been recognised	7,726	14,018
Potential tax benefit @ 30%	2,318	4,205

Based upon the completion of the June 2012 income tax return, the actual carried forward tax losses (unbooked) was calculated to be $11,768,000. This was a reduction of $2,250,000 on the previously disclosed carried forward losses (unbooked) in the prior year financial statements of $14,018,000.

8 Distributions paid and payable

8 Distributions paid and payable
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
(a) Ordinary securities Final ordinary distribution for the six months ended 30 June 2013 of 10.4 cents per security expected to be paid on 28 August 2013 Interim ordinary distribution for the six months ended 31 December 2012 of 9.80 cents per security paid on 28 February 2013 Final ordinary distribution for the six months ended 30 June 2012 of 9.10 cents per security paid on 28 August 2012 Interim ordinary distribution for the six months ended 31 December 2011 of 9.10 cents per security paid on 23 February 2012	31,435 - 29,276 - - 27,013 - 26,950 31,435 - 29,276 - - 27,013 - 26,950
Total distributions paid and payable Less: distributionspaid to holders of LTI securities	60,711 53,963 - (124) 60,711 53,963 - (124)
	60,711 53,839 60,711 53,839
Paid or payable in cash Satisfied by issue of securities1	35,924 53,839 24,787 - 35,924 53,839 24,787 -

(1) Inclusive of securities expected to be issued on 28 August 2013

Franking credits available in the parent entity (Charter Hall Limited) for subsequent financial years based on a tax rate of 30% (2012: 30%) are $3,336,951 (2012: $3,336,951).

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

9 Earnings per security

9 Earnings per security
	Charter Hall Group 2013 2012 Cents Cents Charter Hall Property Trust Group 2013 2012 Cents Cents
(a) Basic earnings per stapled security Basic earnings attributable to the stapled securityholders (b) Diluted earnings per security Diluted earnings attributable to the stapled securityholders	18.29 5.64 17.67 5.35 16.32 12.21 15.77 11.49
	2013 2012 $’000 $’000 2013 2012 $’000 $’000
(c) Reconciliations of earnings used in calculating earnings per security Profit attributable to the ordinary equity holders of the Group used in calculating basic earnings per security Interest received from LTI securities	54,842 16,678 - 124 48,943 36,087 - -
Profit attributable to the ordinary equity holders of the Group used in calculating diluted earnings per security	54,842 16,802 48,943 36,087

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

	Charter Hall Group 2013 2012 Number Number Charter Hall Property Trust Group 2013 2012 Number Number
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 Service rights Options Securities issued under the Charter Hall Limited Executive Loan Security Plan	299,804,805 295,624,609 5,614,052 4,097,636 460,846 240,139 4,364,646 7,843,591 63,161 6,176,495 299,804,805 295,624,609 5,614,052 4,097,636 460,846 240,139 4,364,646 7,843,591 63,161 6,176,495
Weighted average number of ordinary securities and potential ordinary securities used as the denominator in calculating diluted earnings per security	310,307,510 313,982,470 310,307,510 313,982,470

(e) Information concerning the classification of securities

(i) Performance rights, service rights and options issued under the Charter Hall Performance Rights and Options Plan

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

(ii) Securities issued under the General Employee Share Plan (GESP)

Securities issued under the GESP are purchased on market on behalf of eligible employees but held in trust until the earlier of the completion of three years’ service or termination. No adjustment to diluted earnings per security is required in relation to these securities.

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

Securities issued under the ELSP are issued in trust and corresponding loans are granted to employees. Under AASB 2 Share-based Payment , the loan, interest received on the loan, securities and the distribution paid and payable are not recognised in the preparation of the financial statements but included in the calculation of diluted earnings per security. All securities issued under this plan were cancelled prior to 30 June 2013. Refer to Note 37(a) for further details.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

10 Cash and cash equivalents

10 Cash and cash equivalents
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Cash at bank and on hand	12,236 39,315 2,229 21,674

These amounts earn floating interest rates of between nil and 3.1% (2012: nil and 3.4%).

11 Trade and other receivables

11 Trade and other receivables	11 Trade and other receivables
Note Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Current Trade receivables Loans to key management personnel Loans to joint ventures 31(e) Loans to associates31(e) Distributions receivable Other receivables Prepayments 15,423 9,535 1,122 955 5,000 - 27,294 1,650 12,558 10,441 1,595 8,821 558 708 283 481 - - - - 21,250 1,650 10,557 9,703 117 5,573 225 194
	63,550 32,110 32,432 17,601
Non-current Loans to key management personnel Loans to joint ventures31(e) Loans to associates31(e) Loan receivable from Charter Hall Limited 2,400 3,400 - 5,000 - 4,470 - - - - - - - - 145,891 163,542
	2,400 12,870 145,891 163,542

Further information relating to loans to key management personnel is set out in Note 27.

(a) Bad and doubtful trade receivables

In the year, the Charter Hall Group and Charter Hall Property Trust Group incurred $nil expense (2012: $nil) in respect of provisioning for bad and doubtful trade receivables.

(b) Fair values

The receivables are carried at amounts that approximate their fair value.

(c) Credit risk

There is a limited concentration of credit risk as the majority of current and non-current receivables are due from related parties of Charter Hall Group and Charter Hall Property Trust Group. Refer to Note 30 for more information on the risk management policy of the Charter Hall Group and Charter Hall Property Trust Group.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

11 Trade and other receivables (continued)

(c) Credit risk (continued)

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

	Charter Hall Group Charter Hall Property Trust Group 2013 2012 $’000 $’000 2013 2012 $’000 $’000
Current 1 to 3 months 3 to 6 months More than 6 months	14,120 8,084 258 732 84 - 961 719 283 481 - - - - - -
	15,423 9,535 283 481

As at 30 June 2013, trade receivables of $1,303,000 (2012 – $1,451,000) were past due but not impaired.

12 Assets classified as held for sale

12 Assets classified as held for sale
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Menai Central, Menai Home HQ, Nunawading Bunnings Stafford, Stafford Road, Stafford Home HQ, Ipswich 33 Windorah Street, Stafford Charter Hall Retail Joint Venture Trust	31,500 35,000 23,725 27,500 - 19,000 - 24,500 - 11,704 - 18,686 31,500 35,000 23,725 27,500 - 19,000 - 24,500 - 11,704 - 18,686
	55,225 136,390 55,225 136,390

All assets are investment properties except for the Charter Hall Retail Joint Venture Trust in which the Group held a 50% interest. These assets are classified as held for sale as it was considered highly probable that they would be sold within 12 months of the balance date. The carrying values of Nunawading and Menai as at 30 June 2013 reflect their respective agreed sales price, indicative offer and/or director valuation. Nunawading settled on 15 July 2013 at a market equivalent capitalisation rate of 10.7% and Menai has exchanged and is expected to settle in the September quarter of 2013. All other assets were sold during the current year.

A reconciliation of the movements in assets held for sale during the year is set out below:

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Opening balance Assets reclassified to held for sale Additions Amortisation of lease incentives Foreign exchange movements Fair value adjustments Disposals	136,390 - - 136,390 768 - (319) - - - (8,419) - (73,195) - 136,390 - - 136,390 768 - (319) - - - (8,419) - (73,195) -
Closing balance	55,225 136,390 55,225 136,390

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

12 Assets classified as held for sale (continued)

(a) Amounts recognised in the statement of comprehensive income for investment properties

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Property income Direct operating expenses from property that generated rental income	10,443 15,561 (2,304) (3,541) 10,443 15,532 (2,304) (3,478)
	8,139 12,020 8,139 12,054

This table includes the total income of all investment properties held during the year, regardless of whether they have been sold or reclassified as held for sale. The income is up to the earlier of the date of sale or 30 June of the relevant year.

(b) Valuation basis

Assets held for sale are carried at fair value, representing the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction at the date of valuation, in accordance with Australian Valuation Standards.

13 Investments in associates at fair value through profit or loss

13 Investments in associates at fair value through profit or loss	13 Investments in associates at fair value through profit or loss
Note Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Investments in associates 33(b)(i)	49,229 62,638 49,229 62,180

Changes in fair values of investments in associates at fair value through profit or loss are recorded in fair value adjustments in the statement of comprehensive income.

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

Information about the Charter Hall Group and Charter Hall Property Trust Group’s material exposure to share and unit price risk is provided in Note 30(a)(i).

14 Derivative financial instruments

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Current liabilities Interest rate swap contracts	- 669 - 669
	- 669 - 669
Non-current liabilities Interest rate swap contracts	- - - -
	- - - -

(a) Instruments used by the Group

The Charter Hall Group and Charter Hall Property Trust Group utilise derivative financial instruments to hedge exposure to fluctuations in interest rates in accordance with the Charter Hall Group and Charter Hall Property Trust Group’s financial risk management policies (refer to Note 30).

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

14 Derivative financial instruments (continued)

(a) Instruments used by the Group (continued)

Interest rate swap contracts

All swaps were entered into by DRF, which is consolidated, and settled prior to 30 June 2013. No interest rate swaps were outstanding as at 30 June 2013. In 2012, swaps in place covered 39% of the loan principal outstanding. The fixed interest rates ranged between 5.05% and 5.46% for AUD swaps (including margin and line fees) and a NZD swap was paid out during the year. The interest rate swap was shown as current despite an expiry date of 2 December 2013 as it was expected to be closed out within 12 months of the balance date.

				2013	2012
				$’000	$’000
1	to	2	years	-	20,000
				-	20,000

The contracts required settlement of net interest receivable or payable every 90 days. The settlement dates coincided with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.

The amount of fair value adjustments on hedges recorded directly in the income statement was a gain of $121,000 (2012: loss of $310,069). Interest rate swaps with a notional principal amount of $18.0 million (2012: NZ$23.6 million) were terminated during the year, resulting in $nil accounting gain or loss (2012: gain of $134,000).

(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 Charter Hall Group and Charter Hall Property Trust Group undertake their transactions in interest rate contracts only with investment grade financial institutions.

(c) Interest rate risk exposures

Refer to Note 30(a) for the Charter Hall Group and Charter Hall Property Trust Group’s exposure to interest rate risk on interest rate swaps.

15 Inventories

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Non-current 685 La Trobe property development	10,848 9,518 - -
	10,848 9,518 - -

16 Investments accounted for using the equity method

16 Investments accounted for using the equity method	16 Investments accounted for using the equity method
Note Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Investments in associates 33 Investments in joint venture entities 34	459,908 444,515 60,239 27,644 401,966 373,578 33,118 -
	520,147 472,159 435,084 373,578

Investments in associates represent units in listed and unlisted Charter Hall managed funds which are accounted for using the equity method. Investments in joint venture entities represent joint venture interests in Australian and overseas joint ventures which are accounted for using the equity method. Refer to Note 34(c) for carrying value assessments.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

17 Intangible assets

In March 2010, the Charter Hall Group completed a transaction to acquire the majority of Macquarie Group’s core real estate management platform. 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 CountryWide 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.

With the exception of management rights held over the Charter Hall Office Trust (CHOT), management considers that the management rights have an indefinite life as there are no finite terms in the underlying agreements and the Charter Hall Group has no intention to cease managing these Funds and the Funds do not have a finite life. The carrying value of management rights with an indefinite life (i.e. excluding CHOT) is $58.2 million.

On 1 May 2012, Charter Hall Office REIT (CQO) was privatised and renamed CHOT. With implementation of the privatisation, CQO changed from a listed REIT to a wholesale unit trust with liquidity reviews every five years. It is expected that the net fee revenue that the Group will earn from managing CHOT will be generally consistent with the net revenue earned previously from managing the Australian assets of CQO. As the management rights of CHOT are subject to a liquidity event, the Group will amortise the management rights over a six year period commencing from 1 May 2012 (includes an additional year to source liquidity were the trust to be wound up in five years as a result of the liquidity review). Only the management rights held over the Charter Hall Office Trust are being amortised.

Trust are being amortised.
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Management rights Opening balance Additions1 Amortisation charge	98,687 99,994 5,217 - (7,838) (1,307) - - - - - -
Closing balance	96,066 98,687 - -

(1) On 15 August 2012 a subsidiary of the Group acquired the management rights to PFA at a total cost of $5.2 million. As PFA is an open ended fund with no termination date or review event contemplated in its constitution, management rights held over PFA are considered to have an indefinite useful life.

All management rights recognised on the balance sheet (excluding PFA) were independently valued as at 30 April 2012 by KPMG Corporate Finance. The valuation supports the carrying values and the methodology applied was an assessment of fair value (less costs to sell) based on discounted cash flows. Management’s internal valuations for indefinite-life management rights as at 30 June 2013 have been prepared on a consistent basis in the current year.

Key assumptions used for the indefinite life intangibles valuation calculations are as follows:

Cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five-year period are extrapolated using estimated growth rates appropriate for the business;
Discount rate range of 14% to 17% (2012: 14% to17%) which is in excess of the Charter Hall Group’s weighted average cost of capital as a result of the management platform carrying more risk than the return on property investment cash flows;
Growth over the next five years of 3% (2012: 3%) per annum; and
Terminal value multiple of 4.9 to 7.0 times earnings (2012: 4.9 to 7.0 times).

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.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

18 Property, plant and equipment

18 Property, plant and equipment
	Charter Hall	Group	Charter Hall Property	Trust
			Group
	2013	2012	2013	2012
	$’000	$’000	$’000	$’000
Opening net book amount	3,026	3,167	-	-
Additions Disposals	1,233	584	-	-
Depreciation charge	(330)	-	-	-
	(1,186)	(725)	-	-
Closing net book amount	2,743	3,026	-	-
At 30 June
Cost	4,777	6,950	-	-
Accumulated depreciation	(2,034)	(3,924)	-	-
Net book amount	2,743	3,026	-	-

19 Deferred tax assets

19 Deferred tax assets
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Deferred tax assets comprises temporary differences attributable to: Employee benefits Investments in associates Provisions Other	4,217 2,052 4,308 4,089 - 4,272 47 94 - - - - - - - -
	8,572 10,507 - -
Deferred tax liabilities comprises temporary differences attributable to: Accrued revenue Contingent consideration payable Investment in associates Other	- (84) - (903) (2,042) (1,078) (141) (120) - - - - - - - -
	(2,183) (2,185) - -

Net deferred tax assets	6,389 8,322 - -

Deferred tax liabilities have been set-off against deferred tax assets pursuant to set-off provisions.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

19 Deferred tax assets (continued)

A reconciliation of the carrying amount of deferred tax assets at the beginning and end of the current and previous years is set out below:

A reconciliation of the carrying amount of deferred tax assets at the beginning and end of the current and previous years is set out below:	A reconciliation of the carrying amount of deferred tax assets at the beginning and end of the current and previous years is set out below:
Note Opening balance Charged to income statement 7 Charged to other comprehensive income Charged directly to equity reserves Charter Hall Group 2013 2012 $’000 $’000 8,322 10,126 (1,933) 482 - 9 - (2,295) Charter Hall Property Trust Group 2013 2012 $’000 $’000 - - - - - - - -
Closing balance	6,389 8,322 - -
Net deferred tax assets expected to reverse within 12 months Net deferred tax assets expected to reverse after more than 12 months	3,538 5,311 2,851 3,011 - - - -
	6,389 8,322 - -

20 Trade and other payables

20 Trade and other payables
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Current liabilities Trade payables Accruals Distribution payable GST payable Annual leave payable Contingent consideration payable1 Employee benefits payable Other payables	5 712 2,933 3,424 31,435 27,585 - 1,755 2,129 2,193 1,856 10,539 9,693 3,927 770 653 2 359 1,193 1,814 31,435 27,888 - 219 - - - - - - 110 8
	48,821 50,788 32,740 30,288

(1) Contingent consideration payable: On 1 March 2010, the Charter Hall Group completed a transaction to acquire the majority of Macquarie Group’s core real estate management platform comprising the management of two listed and three unlisted real estate funds and coinvestments in Macquarie Office Trust (renamed Charter Hall Office REIT), Macquarie CountryWide Trust (renamed Charter Hall Retail REIT) and Macquarie Direct Property Fund (renamed Charter Hall Direct Property Fund).

In the event that certain cumulative revenue targets were 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 30 June 2013, additional purchase consideration of up to $15 million may be payable in cash.

Based on the actual cumulative revenue targets achieved during the measurement period, contingent consideration of $11.0 million is due and payable. Of this amount, $1.5 million was paid in March 2012, $7.7 million was paid in December 2012, $1.2 million was paid in August 2013 and $0.7 million remains payable.

All current liabilities are expected to be settled within 12 months.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

21 Provisions – current

21 Provisions – current
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Employee benefits – long service leave Performance fee clawback	1,101 656 - 14,239 - - - -
	1,101 14,895 - -

On 26 June 2013, Charter Hall paid $14.2 million to Charter Hall Opportunity Fund 4 (CHOF4) the clawback of performance fees received in respect of the 2007, 2008, 2009 and 2010 financial years. The amount paid was fully provided for in the prior year.

Refer to Note 23 for the movement in provisions and split between current and non-current.

22 Interest-bearing liabilities

22 Interest-bearing liabilities
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Unsecured Loan from Charter Hall Holdings Pty Ltd Secured Bank loans drawn Charter Hall Property Trust loan DRF loan Unamortised borrowing costs	- - 14,000 - 13,750 51,750 (295) (287) - 2,400 14,000 - 13,750 51,750 (295) (287)
Total current borrowings	27,455 51,463 27,455 53,863

Unamortised borrowing costs as at 30 June 2013 comprise $270,000 in relation to the Charter Hall Property Trust corporate facility and $25,000 in relation to the DRF loan. As no debt was drawn on the CHPT facility as at 30 June 2012, the corresponding unamortised borrowing costs of $564,287 are disclosed on the balance sheet as Other Assets in the comparative period.

Charter Hall Property Trust loan

The Charter Hall Group and Charter Hall Property Trust Group’s $100 million corporate facility was reduced to $75.0 million in April 2012 and expires in May 2014. At 30 June 2013, $14.0 million had been drawn under this facility (2012 - $nil). Subsequent to 30 June 2013, the $75.0 million corporate facility has been extended to August 2015 with reduced pricing.

Amounts drawn under this facility are potentially repayable if the Trust defaults on payments of interest or principal or allows:

The ratio of debt to total tangible assets to exceed 35%;
The ratio of debt to EBITDA to exceed 4.0 times; or
The ratio of ‘net cash inflow’ to gross interest to be a minimum of 4.25 times (2012 - The ratio of EBIT to gross interest to fall below 3.0 times).

DRF loan

The DRF loan represents the Group’s $13.8 million share of the total amount drawn on a $64.0 million joint venture facility entered into by DRF, the Charter Hall Retail Joint Venture Trust (RJVT), Charter Hall Lake Macquarie Trust (LMT), Charter Hall Mount Hutton Trust (MHT) and CQR Nunawading Trust (CQRNT). RJVT is an equity accounted investment which in turn owns 100% of LMT and MHT. CQRNT is a wholly-owned entity of the Charter Hall Retail REIT (CQR) which is also an equity accounted investment. DRF is joint and severally liable alongside RJVT, LMT, MHT and CQRNT for the amount of the facility, which is cross collateralised across three joint venture held mortgaged assets being shopping centres at Lake Macquarie (held by LMT), Mount Hutton (held by MHT) and Nunawading (50% held by CQRNT). The facility is contractually not repayable until November 2013 but was classified as current as at 30 June 2012 due to the underlying assets being held for sale and an expectation that the borrowings would therefore be repaid within 12 months however the settlement date was delayed until 15 July 2013. This facility was fully repaid on settlement.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

22 Interest-bearing liabilities (continued)

Amounts drawn under the DRF JV facility are potentially repayable if the Fund defaults on payments of interest or principal or allows:

The ratio of debt to secured property assets to exceed 60%; or
The ratio of net rental income to interest to fall below 1.6 times.

In 2013, DRF repaid the $36.3 million balance owing on the National Australia Bank facility in connection with current year asset sales (refer to Note 12). In 2012, DRF also borrowed $2.4 million from Charter Hall Holdings Pty Ltd which was fully repaid in November 2012.

Security

The DRF bank loan is secured by a floating charge over all the assets of DRF and by a mortgage over the investment properties held by DRF. The Charter Hall Property Trust loan is secured over the Trust’s investment in listed and unlisted funds, excluding 22,500,000 units of the Trust’s investment in Charter Hall Core Plus Office Fund.

The carrying amounts of assets pledged as security for borrowings are:

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Current Floating charge Cash and cash equivalents Receivables First mortgage Investment property classified as held for sale Investment in jointly controlled entity classified as held for sale	- 1,265 - 1,307 23,725 117,704 - 18,686 - 1,265 - 1,307 23,725 117,704 - 18,686
Total current assets pledged as security	23,725 138,962 23,725 138,962
Non-current First mortgage Investment in associates	462,995 414,777 462,995 414,777
Total non-current assets pledged as security	462,995 414,777 462,995 414,777
Total assets pledged as security	486,720 553,739 486,720 553,739

(a) Financing arrangements

The Charter Hall Group and Charter Hall Property Trust Group had unrestricted access at reporting date to the following lines of credit:

credit:
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Total facilities Used at reporting date	88,750 130,500 27,750 51,750 88,750 132,900 27,750 54,150
Unused at reporting date	61,000 78,750 61,000 78,750

(b) 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 ratio of the Charter Hall Group at 30 June 2013 was 1.88% (2012: 1.45%), and of the Charter Hall Property Trust Group was 3.51% (2012: 4.3%). 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 monitoring compliance with covenants.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

23 Provisions – non - current

					Charter	Hall Group	Charter Hall Property	Charter Hall Property
							Trust Group
					2013	2012	2013	2012
					$’000	$’000	$’000	$’000
Employee	benefits	– long	service	leave	1,162	1,428	-	-

Movements in employee benefits provisions are set out below:

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Long service leave Opening balance Additional provisions recognised	2,084 2,051 179 33 - - - -
Closing balance	2,263 2,084 - -
	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Current Non-current	1,101 656 1,162 1,428 - - - -
Total	2,263 2,084 - -

Movements in performance fee clawback provision is set out below:

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Opening balance Provision (utilised)/recognised during the year	14,239 - (14,239) 14,239 - - - -
Closing balance	- 14,239 - -
Current Non-current	- 14,239 - - - - - -
Total	- 14,239 - -

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

24 Contributed equity

24 Contributed equity
	2013	2012	2013	2012
(a) Security capital	Securities	Securities	$'000	$'000
Charter Hall Limited			211,335	209,550
Charter Hall Property Trust			753,610	739,175
Ordinary securities – stapled units, fully paid	302,262,312	296,168,170	964,945	948,725

(b) Movements in ordinary security capital

(b) Movements in ordinary security capital
		Number of	Issue
Details	Notes	securities1	price	$'000
Opening balance		293,755,894		943,961
Add back LTI securities reversed in prior year2		12,585,920		73,179
Performance rights and options exercised		2,412,255	$1.94	4,764
Cancellation of forfeited LTI securities off market		(11,907,844)		(65,692)
Balance at 30 June 2012		296,846,225		956,212
Less: LTI securities reversed2		(678,055)		(7,487)
Balance per accounts at 30 June 2012		296,168,170		948,725
Add back LTI securities reversed last year2		678,055		7,487
Performance rights and options exercised		2,835,759	$1.943	5,652
Cancellation of forfeited LTI securities off market		(678,055)		(7,487)
Issuance under DRP		3,258,383	$3.25	10,586
Balance at 30 June 2013		302,262,312		964,963
Less: Transaction costs on security issues				(18)
Balance per accounts at 30 June 2013		302,262,312		964,945

(1) This includes shares of Charter Hall Limited and units in Charter Hall Property Trust, which are stapled. Refer to Note 1 for details of the accounting for this stapling arrangement.

(2) Securities issued under the Charter Hall Limited Executive Loan Security Plan (ELSP) have been issued in trust and have a corresponding loan given to the employee. Under AASB 2: Share-based Payment , the loan, interest received on the loan, securities and the distribution paid and payable are derecognised for the preparation of the financial statements.

(3) Includes 1,772,116 options with a strike price of $1.94 and 72,117 options with a strike price of $2.44.

(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.

(d) Distribution Re-investment Plan

The Group 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 reinstated for the half year ended 31 December 2012 and continued to be in effect at 30 June 2013.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

25 Reserves and accumulated losses

25 Reserves and accumulated losses
(a) Reserves	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Business combination reserve Security- based benefits reserve Transactions with non-controlling interests Foreign currency reserve	(52,000) (52,000) 7,480 12,605 (10,014) (8,702) (1,023) (2,373) - - - - (1,199) (9) (211) (1,406)
	(55,557) (50,470) (1,410) (1,415)
Charter Hall Limited Charter Hall Property Trust	(54,147) (49,055) (1,410) (1,415) - - (1,410) (1,415)
	(55,557) (50,470) (1,410) (1,415)
Movements:
Business combination reserve Opening and closing balance	(52,000) (52,000) - -
Security-based benefits reserve Opening balance Non-cash security-based benefits expense Expense relating to deferred STI transferred to security-based payment reserve Transferred to equity on options and performance rights exercised Transferred to accumulated losses for ELSP lapse	12,605 11,457 3,035 2,338 - 262 (2,038) (1,452) (6,122) - - - - - - - - - - -
Closing balance	7,480 12,605 - -
Transactions with non-controlling interests Opening balance DRF acquisition premium Acquisitions above net tangible assets	(8,702) (6,300) (1,312) (2,295) - (107) (9) 52 (1,190) - - (61)
Closing balance	(10,014) (8,702) (1,199) (9)
Foreign currency reserve Opening balance Exchange differences on translation of foreign operations Transfer of cumulative FX losses to profit or loss Transfer to accumulated losses	(2,373) (10,451) 1,141 992 209 11,749 - (4,663) (1,406) (9,799) 986 1,307 209 11,749 - (4,663)
Closing balance	(1,023) (2,373) (211) (1,406)

(i) Business combination reserve

This reserve relates to the reverse acquisition at the initial public offering (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.

(ii) Security-based benefits reserve

The security-based benefits reserve is used to recognise the fair value of rights and options issued under the PROP.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

25 Reserves and accumulated losses (continued)

(a) Reserves (continued)

(iii) Transactions with non-controlling interests

Transactions with non-controlling interests that do not result in loss of control are treated as transactions with equity owners of the Charter Hall Group and Charter Hall Property Trust Group.

A change in ownership interest results in an adjustment between the carrying amounts of controlling and non-controlling interests to reflect their relative interests in the controlled entity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised within this reserve.

(iv) Foreign currency reserve

Exchange differences arising on translation of foreign controlled entities and the Charter Hall Group’s and Charter Hall Property Trust Group’s share of foreign exchange differences arising from the equity accounted investments 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) Accumulated losses

Movements in accumulated losses were as follows:

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Opening balance Profit for the year Distributions Transfer from foreign currency reserve Transfer from security-based benefits reserve	(169,347) (136,849) 54,842 16,678 (60,711) (53,839) - 4,663 6,122 - (87,609) (74,520) 48,943 36,087 (60,711) (53,839) - 4,663 - -
Closing balance	(169,094) (169,347) (99,377) (87,609)
Charter Hall Limited Charter Hall Property Trust	(69,717) (81,738) (99,377) (87,609) - - (99,377) (87,609)
	(169,094) (169,347) (99,377) (87,609)

26 Non-controlling interest

Effective 19 April 2013, the Charter Hall Group owns 100% of DRF and the non-controlling interest (NCI) disclosed by Charter Hall Property Trust Group solely represents the 16% interest held by Charter Hall Holdings Pty Ltd, a subsidiary of Charter Hall Limited. At 30 June 2012, Charter Hall Group and Charter Hall Property Trust Group owned 34.09% and 50.37%, respectively of DRF with the remaining interest owned by non-controlling unitholders.

	Charter Hall Group 2013 2012 $’000 $’000 0% 34.09% NCI NCI Charter Hall Property Trust Group 2013 2012 $’000 $’000 16.00% 50.37% NCI NCI
Interest in: Contributed equity Accumulated losses	- 67,348 - (39,900) 32,145 99,515 (25,073) (58,957)
Other non-controlling interest in DRF	- 27,448 7,072 40,558

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

27 Key management personnel

(a) Directors

The following persons were Directors of Charter Hall Limited and Charter Hall Funds Management Limited during the year:

Kerry Roxburgh - Chairman and Non-Executive Independent Director
Roy Woodhouse - Deputy Chairman and Non-Executive Independent Director (resigned 30 January 2013)
Anne Brennan - Non-Executive Independent Director
David Deverall - Non-Executive Independent Director
Glenn Fraser - Non-Executive Independent Director (resigned 15 August 2012)
Philip Garling - Non-Executive Independent Director (appointed 25 February 2013)
David Harrison - Joint Managing Director
Peter Kahan - Non-Executive Director
Colin McGowan - Non-Executive Independent Director
David Southon - Joint Managing Director

(b) Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Charter Hall Group and Charter Hall Property Trust Group, directly or indirectly, during the year. The number of other key management personnel in the year ended 30 June 2013 was eight (2012: seven).

Name Position P Altschwager Chief Financial Officer N Devlin Head of People S Dundas Fund Manager - Charter Hall Retail REIT A Glass Head of Wholesale Pooled Funds T Jordan Group General Counsel and Company Secretary (appointed 19 November 2012) N Kelly Head of Investor Relations R Stacker Head of Charter Hall Direct Property A Taylor Head of Wholesale Partnerships

(c) Key management personnel compensation (including non-executive Directors)

Key management personnel are employed by Charter Hall Holdings Pty Ltd, a subsidiary of CHL. Payments made by the Charter Hall Trust Group to the Charter Hall Group do not include any amounts directly attributable to the compensation of key management personnel.

management personnel.
	2013	2012
	$	$
Short-term employee benefits	8,306,410	5,594,061
Post-employment benefits	159,267	134,277
Security-based benefits	2,369,843	1,680,857
Long-term employee benefits	104,439	75,182
Non-monetary benefits	68,188	64,082
	11,008,147	7,548,459

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

27 Key management personnel (continued)

(d) Equity instrument disclosures relating to key management personnel

(i) Security holdings

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

		Purchased	LTI securities
2013	Opening	/(sold)	vesting/(forfeited)	Closing
Name	balance	during the year	during the year	balance
Directors of Charter Hall Limited
*Ordinary securities*
K Roxburgh	31,250	-	-	31,250
R Woodhouse1	21,249	(21,249)	-	-
A Brennan	30,000	-	-	30,000
D Deverall	15,287	18,433	-	33,720
G Fraser1	70,000	(70,000)	-	-
P Garling2	-	6,297	-	6,297
D Harrison	2,235,970	(167,748)	(226,449)	1,841,773
P Kahan	-	-	-	-
C McGowan	-	-	-	-
D Southon	2,274,809	(167,748)	(226,449)	1,880,612
Other key management personnel of the Group
*Ordinary securities*
P Altschwager	-	130,027	-	130,027
N Devlin	-	-	-	-
S Dundas	-	-	-	-
A Glass	-	-	-	-
T Jordan3	-	-	-	-
N Kelly	24,155	(24,022)	-	133
R Stacker	-	-	-	-
A Taylor	-	-	-	-

(1) Deemed disposal of all security holdings on date of resignation as no longer a director of the Group.

(2) Appointed on 25 February 2013.

(3) Appointed on 19 November 2012.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

27 Key management personnel (continued)

(d) Equity instrument disclosures relating to key management personnel (continued)

(i) Security holdings (continued)

			LTI securities
2012	Opening	Purchased/(sold)	vesting/(forfeited)	Closing
Name	balance	during the year	during the year	balance
Directors of Charter Hall Limited
Ordinary securities
K Roxburgh	31,250	-	-	31,250
R Woodhouse	21,429	-	-	21,249
A Brennan	30,000	-	-	30,000
D Deverall	-	15,287	-	15,287
G Fraser	156,934	(86,934)	-	70,000
D Harrison	2,429,540	(416,234)	222,664	2,235,970
P Kahan	-	-	-	-
C McGowan	-	-	-	-
D Southon	2,461,161	(90,980)	(95,372)	2,274,809
Other key management personnel of the Group
Ordinary securities
P Altschwager	-	-	-	-
N Devlin	-	-	-	-
S Dundas	-	-	-	-
A Glass	-	(36,392)	36,392	-
N Kelly1	55,343	(81,246)	50,058	24,155
R Stacker	-	-	-	-
A Taylor	-	-	-	-

(1) 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 of $11.04 per security which is significantly higher than the security price at 30 June 2012 of $2.27.

The Executive Directors of Charter Hall Group and other key management personnel of the Charter Hall Group held the following performance rights as at 30 June 2013:

	2010	2011	2012	2013	Total
Executive Directors
D Harrison	-	201,924	564,517	346,847	1,113,288
D Southon	-	201,924	564,517	346,847	1,113,288
Key management personnel
P Altschwager	-	-	-	189,190	189,190
N Devlin	-	10,897	97,581	37,163	145,641
S Dundas	35,752	-	107,527	59,460	202,739
A Glass	-	50,483	141,130	59,460	251,073
T Jordan1	-	-	-	37,838	37,838
N Kelly	-	43,272	120,968	63,244	227,484
R Stacker	53,628	-	157,549	59,460	270,637
A Taylor	89,252	-	223,433	84,325	397,010

(1) Appointed on 19 November 2012.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

27 Key management personnel (continued)

(d) Equity instrument disclosures relating to key management personnel (continued)

(i) Security holdings (continued)

The Executive Directors of Charter Hall Group and other key management personnel of the Charter Hall Group held the following options as at 30 June 2013:

options as at 30 June 2013:
	2010	2011	2012	2013	Total
Executive Directors
D Harrison	345,060	504,808	-	-	849,868
D Southon	670,314	504,808	-	-	1,175,122
Key management personnel
P Altschwager	-	-	-	-	-
N Devlin	-	27,243	-	-	27,243
S Dundas	89,252	-	-	-	89,252
A Glass	-	126,204	-	-	126,204
T Jordan1	-	-	-	-	-
N Kelly	-	108,176	-	-	108,176
R Stacker	133,876	-	-	-	133,876
A Taylor	223,252	-	-	-	223,252

(1) Appointed on 19 November 2012.

The Executive Directors of Charter Hall Group and other key management personnel of the Charter Hall Group held the following service rights as at 30 June 2013:

service rights as at 30 June 2013:
	2012	2013	Total
Key management personnel
P Altschwager	130,027	-	130,027
R Stacker	-	270,000	270,000

(e) Loans to key management personnel

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

(i) Key management personnel with loans outstanding during the period

	Balance at	Interest	Payments	Balance at	Highest
	start of	charged in	made during	end of	indebtness
	the year	the year	the year	the year	during the year
	$	$	$	$	$
2013
D Harrison	2,281,732	146,044	(666,658)	1,761,118	2,333,025
D Southon	2,073,644	140,956	(453,482)	1,761,118	2,120,274
Total	4,355,376	287,000	(1,120,140)	3,522,236
2012
D Harrison	2,553,125	264,540	(535,933)	2,281,732	2,579,666
D Southon	2,553,125	243,144	(722,625)	2,073,644	2,579,666
Total	5,106,250	507,684	(1,258,558)	4,355,376

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

27 Key management personnel (continued)

(e) Loans to key management personnel (continued)

When Charter Hall Group listed in 2005, the Product Disclosure Statement dated 11 May 2005 disclosed that related parties of the Joint Managing Directors, David Harrison and David Southon, had entered into loan agreements with CHL. Loans of $2.5 million each were provided to fund the purchase of 2,500,000 (subsequently 625,000 following the one-for-four security consolidation in October 2010) listed securities in the Charter Hall Group.

At that time, these loans were made to align the Joint Managing Directors’ interests with those of the Group and securityholders. Each loan is to a related party of the Joint Managing Directors, being the Harrison Family Trust and the Southon Family Trust.

The loans, which were initially for a three-year period, were extended in 2008 for three years to 6 June 2011 and again on 7 July 2011 for a further three-year period to 31 July 2014, with repayment, interest, security and LVR conditions that are at arm’s length terms and conditions as follows:

Repayment

Minimum repayments of $300,000 each on or before 31 July 2011, $500,000 each on or before 30 September 2012 and 30 September 2013 respectively, with the remaining principal balance at the end of the term.

Interest

Interest is charged at the base rate (RBA cash rate) plus 7.75% for a loan to value ratio (LVR) greater than 50%, the base rate plus 5.75% for a LVR greater than 40% and less than 50% and the base rate plus 4.25% for a LVR less than or equal to 40%, with interest payable in arrears within five days of the Charter Hall Group’s distribution date.

Security

Security over these loans is by way of a first ranking mortgage over all CHC securities held by the Harrison Family Trust and the Southon Family Trust, with the borrowers having the right to release CHC securities if the LVR is less than 40%. At 30 June 2013, the number of CHC securities held by the Harrison Family Trust was 1,841,773 (2012: 2,009,521) and the number held by the Southon Family Trust was 1,880,612 (2012: 2,048,360).

LVR covenant

Loans are not to exceed an LVR of 60%, at bi-annual testing dates, with the borrowers obligated to provide either additional security or repay such amount of the loan within 30 days, to ensure compliance with the LVR covenant.

28 Remuneration of auditors

During the year, the following fees were paid or payable for services provided by the auditors of the Charter Hall Group and Charter Hall Property Trust Group, their related practices and non-related audit firms:

	Charter Hall Group 2013 2012 $ $ Charter Hall Property Trust Group 2013 2012 $ $
(a) Audit services PricewaterhouseCoopers Australian firm Audit and review of financial reports Independent Review of the Charter Hall anti-money laundering program	383,279 347,597 - 55,000 33,150 32,184 - -
Total remuneration for audit services	383,279 402,597 33,150 32,184
(b) Taxation services PricewaterhouseCoopers Australian firm Tax compliance services, including review of company income tax returns	50,341 60,976 - 10,000
Total remuneration for taxation services	50,341 60,976 - 10,000
(c) Advisory services PricewaterhouseCoopers Australian firm Long-term incentive plan structure Accounting advice	- 10,000 - 25,500 - - - -
Total remuneration for advisory services	- 35,500 - -

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

28 Remuneration of auditors (continued)

Total fees paid to PricewaterhouseCoopers by the wider Charter Hall Group, including its managed funds, for audit and auditrelated services amounted to $1,699,691 (2012: $1,477,617).

The Charter Hall Group and Charter Hall Property Trust Group’s policy is to employ PricewaterhouseCoopers (PwC) on assignments additional to statutory audit duties where PwC’s expertise and experience with the Charter Hall Group and Charter Hall Property Trust Group are important. These assignments are principally tax and accounting advice or where PwC is awarded assignments on a competitive basis. It is the Charter Hall Group and Charter Hall Property Trust Group’s policy to seek competitive tenders for all major consulting projects.

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

Profit after tax for the year
Non-cash items
Amortisation of management rights
Depreciation and amortisation
Non-cash employee benefits expense - security-based benefits
Net loss/(gain) on sale of investments, property and derivatives
Net loss/(gain) on remeasurement of equity interests
Fair value adjustments
Change in assets and liabilities, net of effects from purchase of controlled entity
(Increase)/decrease in trade debtors and other receivables
Increase/(decrease) in trade creditors and accruals
Net income receivable from investment in associates and joint venture entities
(Decrease)/increase in provisions
Decrease/(increase) in provision for deferred income tax

Charter Hall Group
2013
2012
$'000
$'000
Charter Hall Property
Trust Group
2013
2012
$'000
$'000

54,391
14,403
7,838
1,307
2,845
2,544
3,035
2,338
(376)
1,627
368
(4,645)
8,495
8,421
47,666
33,164
-
-
1,020
1,334
-
-
(249)
2,179
368
(4,533)
10,110
9,759
(7,836)
20,189
4,019
(4,985)
(7,503)
24,185
(14,239)
14,239
1,933
(615)
(18,181)
(29,013)
(2,110)
(5,230)
(22,084)
17,206
-
-
-
-
52,970
79,008
16,540
24,866

Net cash inflow from operating activities

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

30 Financial risk management

Both the Charter Hall Group and Charter Hall Property Trust Group activities expose it to a variety of financial risks: market risk (price risk, interest rate 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. From time to time, the Group uses derivative financial instruments such as interest rate swaps and option contracts to hedge certain risk exposures.

Risk management is carried out by the Group Treasurer, the Chief Financial Officer and the Joint Managing Directors in consultation with senior management, the Audit, Risk and Compliance Committee and the Board of Directors. The Group Treasurer identifies, evaluates and hedges financial risks in close co-operation with the Joint Managing Directors and the finance department. The Board provides guidance for overall risk management, as well as covering specific areas, such as mitigating price, interest rate and credit risks, the use of derivative financial instruments and investing excess liquidity.

(a) Market risk

(i) Unlisted units price risk

The Group is exposed to unlisted unit price risk. This arises from investments 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 a sound understanding of the underlying property values and trends that give rise to price risk. The carrying value of investments in associates at fair value through profit or loss is measured with reference to the funds’ unit prices which are determined in accordance with the funds’ respective constitutions. 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.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(a) Market risk (continued)

(i) Unlisted units price risk (continued)

The table below illustrates the potential impact a change in unlisted unit prices by +/-10% would have on the Charter Hall Group and Charter Hall Property Trust 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 either 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.

indicator of future price variations.
		-10%			+10%
2013	Carrying
	amount	Profit	Equity	Profit		Equity
	$’000	$’000	$’000	$’000		$’000
*Assets – Charter Hall Group*
Investment in associates at fair value through profit or loss	49,229	(4,923)	(4,923)	4,923		4,923
*Assets – Charter Hall Property Trust Group*
Investment in associates at fair value through profit or loss	49,229	(4,923)	(4,923)	4,923		4,923
		-10%			+10%
2012	Carrying
	amount	Profit	Equity	Profit		Equity
	$’000	$’000	$’000	$’000		$’000
Assets – Charter Hall Group
Investment in associates at fair value through profit or loss	62,638	(6,264)	(6,264)	6,264		6,264
Assets – Charter Hall Property Trust Group
Investment in associates at fair value through profit or loss	62,180	(6,218)	(6,218)	6,218		6,218

(ii) Cash flow and fair value interest rate risk

As both the Charter Hall Group and Charter Hall Property Trust Group have no significant long-term interest bearing assets, both Groups’ income and operating cash receipts are not materially exposed to changes in market interest rates.

The Charter Hall Group and Charter Hall Property Trust Group’s interest rate risk arises from borrowings of $27,750,000 (2012: $51,462,849). Borrowings drawn at variable rates expose both Groups to cash flow interest rate risk. Borrowings drawn at fixed rates expose both Groups to fair value interest rate risk. The Charter Hall Group and Charter Hall Property Trust Group’s policy is to fix rates between 50-100% of core borrowings for the anticipated debt term. Core borrowings are defined as being the level of borrowings that are expected to be held for a period of more than two years. The Group did not hold any derivatives as at 30 June 2013. In 2012, 54% of total borrowings had fixed interest rates through the use of derivatives and excluding debt in the Charter Hall Retail Joint Venture Trust (RJVT) to which the Group is a party, the ratio was 39% (refer Note 22).

The Charter Hall Group and Charter Hall Property Trust Group both manage their cash flow interest rate risk by using floating-to-fixed interest rate swaps and option contracts that provide a similar hedge under certain interest rate outcomes. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. 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.

Interest rate risk exposure

The following tables set out the Charter Hall Group and Charter Hall Property Trust Group’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate by maturity period for its financial liabilities.

Exposures arise predominantly from liabilities bearing variable interest rates as the Charter Hall Group and Charter Hall Property Trust Group intend to hold fixed rate liabilities to maturity.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(a) Market risk (continued)

Financial liabilities

Financial liabilities	Financial liabilities
Charter Hall Group Fixed interest maturing in: Floating interest 1 year Over 1 to 2 Over Non- interest rate or less years 5 years bearing Total 2013 $'000 $'000 $'000 $'000 $'000 $'000
Trade and other payables - - Contingent consideration payable - - Interest-bearing liabilities 27,750 - Interest rate swaps - -	- - 46,965 46,965 - - 1,856 1,856 - - - 27,750 - - - -
27,750 -	- - 48,821 76,571
Weighted average interest rate 5.7%
Charter Hall Group Fixed interest maturingin: Floating Over Non- interest 1 year 1 to 2 Over interest rate or less years 5 years bearing Total 2012 $'000 $'000 $'000 $'000 $'000 $'000
Trade and other payables - - Contingent consideration payable - - Interest-bearing liabilities 51,750 - Interest rate swaps (20,000) -	- - 40,249 40,249 - - 10,539 10,539 - - - 51,750 20,000 - - -
31,750 -	20,000 - 50,788 102,538
Weighted average interest rate 3.63%	5.46%
Charter Hall Property Trust Group Fixed interest maturing in: Floating Over Non- interest 1 year 1 to 2 Over interest rate or less years 5 years bearing Total 2013 $'000 $'000 $'000 $'000 $'000 $'000
Trade and other payables - - Interest-bearing liabilities 27,750 - Interest rate swaps - -	- - 32,740 32,740 - - - 27,750 - - - -
27,750 -	- - 32,740 60,490
Weighted average interest rate 5.7%
Charter Hall Property Trust Group Fixed interest maturing in: Floating Over Non- Interest 1 year 1 to 2 Over interest Rate or less years 5 years bearing Total 2012 $'000 $'000 $'000 $'000 $'000 $'000
Trade and other payables - - Borrowings 54,150 - Interest rate swaps (20,000) -	- - 30,288 30,288 - - - 54,150 20,000 - - -
34,150 -	20,000 - 30,288 84,438
Weighted average interest rate 3.75%	5.46%

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(a) Market risk (continued)

Interest rate sensitivity analysis

The following tables illustrate the potential impact a change in interest rates of +/-1% would have on the Charter Hall Group and Charter Hall Property Trust Group’s profit after tax and equity.

Charter Hall Group			-1%		+1%
	Fair Value	Carrying amount	Profit	Equity	Profit	Equity
	$’000	$’000	$’000	$’000	$’000	$’000
2013
*Financial assets*
Cash and cash equivalents	12,236	12,236	(122)	(122)	122	122
*Financial liabilities*
Interest-bearing liabilities	27,750	27,455	278	278	(278)	(278)
Total increase/(decrease)			156	156	(156)	(156)
Charter Hall Group			-1%		+1%
	Fair Value	Carrying amount	Profit	Equity	Profit	Equity
	$’000	$’000	$’000	$’000	$’000	$’000
2012
*Financial assets*
Cash and cash equivalents	39,315	39,315	(393)	(393)	393	393
*Financial liabilities*
Interest-bearing liabilities	51,750	51,463	518	518	(518)	(518)
Derivative financial instruments	669	669	(450)	(450)	445	445
Total (decrease)/increase			(325)	(325)	320	320
Charter Hall Property Trust Group			-1%		+1%
	Fair Value	Carrying amount	Profit	Equity	Profit	Equity
	$’000	$’000	$’000	$’000	$’000	$’000
2013
*Financial assets*
Cash and cash equivalents	2,229	2,229	(22)	(22)	22	22
Loan receivable from Charter Hall Ltd	145,891	145,891	(1,459)	(1,459)	1,459	1,459
*Financial liabilities*
Interest-bearingliabilities	27,750	27,455	278	278	(278)	(278)
Total (decrease)/increase			(1,203)	(1,203)	1,203	1,203
Charter Hall Property Trust Group			-1%		+1%
	Fair Value	Carrying amount	Profit	Equity	Profit	Equity
	$’000	$’000	$’000	$’000	$’000	$’000
2012
*Financial assets*
Cash and cash equivalents	21,674	21,674	(217)	(217)	217	217
Loan receivable from Charter Hall Ltd	163,542	163,542	(1,635)	(1,635)	1,635	1,635
*Financial liabilities*
Interest-bearing liabilities	54,150	53,863	542	542	(542)	(542)
Derivative financial instruments	669	669	(450)	(450)	445	445
Total (decrease)/increase			(1,760)	(1,760)	1,755	1,755

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(a) Market risk (continued)

The fair value of interest-bearing liabilities is inclusive of costs which would be incurred on settlement of a liability, and 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.

(iii) Foreign exchange risk

Both the Charter Hall Group and Charter Hall Property Trust Group are exposed to foreign exchange risk arising principally from their equity accounted investment in the Charter Hall Retail REIT (CQR).

CQR’s investments have offshore operations in the US, Europe and New Zealand and manage their foreign exchange exposures principally through the use of offsetting borrowings in related foreign currencies and through the use of derivative financial instruments. Any residual unhedged risk remains in the foreign currency translation reserve of these funds and the Charter Hall Group’s and Charter Hall Property Trust Group’s equity accounted share of movements in these reserves are recognised in the foreign currency translation reserve of the Group.

The tables below illustrate the potential impact a change in foreign exchange rates of +/-10% would have on the Charter Hall Group’s and Charter Hall Property Trust Group’s profit and equity:

Charter Hall Group
	Profit	Equity	Profit	Equity
	$'000	$'000	$'000	$'000
US dollars+ 10.0%	(72)	105	140	(392)
US dollars- 10.0%	81	(127)	(170)	484
Euros+ 10.0%	270	(526)	40	(600)
Euros- 10.0%	(335)	647	(40)	740
NZ dollars+ 10.0%	6	(115)	18	(102)
NZ dollars- 10.0%	(7)	146	(22)	122

Charter Hall Property Trust Group 2013 2012

	Profit	Equity	Profit	Equity
US dollars- 10.0%	(18)	147	(170)	640
Euros+ 10.0%	267	(432)	40	(600)
Euros- 10.0%	(331)	534	(40)	740
NZ dollars+ 10.0%	-	(55)	27	(33)
NZ dollars- 10.0%	-	74	(33)	(2)

(b ) Credit risk

The Charter Hall Group and Charter Hall Property Trust Group have policies in place to ensure that sales of services are made to customers with appropriate credit histories.

Over half of the Charter Hall Group’s and Charter Hall Property Trust Group’s income is derived from management fees, transaction and other fees from related parties. Approximately 7% (2012: 13%) of the Charter Hall Group’s income is derived from rental properties, whilst approximately 15% (2012: 29%) of the Charter Hall Property Trust Group’s income is derived from rental properties; all tenants are assessed for creditworthiness, taking into account their financial position, past experience and other factors. Refer to Note 11(c) for more information on credit risk.

Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Charter Hall Group and Charter Hall Property Trust Group have policies that limit the amount of credit exposure to any one financial institution.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(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, the Charter Hall Group and Charter Hall Property Trust Group aim at maintaining flexibility in funding by keeping committed credit lines available.

Maturities of financial liabilities

The following table provides the contractual maturity of Charter Hall Group’s and Charter Hall Property Trust Group’s financial liabilities and derivatives. The amounts presented represent the future contractual undiscounted principal and interest cash flows and therefore do not equate to the value shown in the balance sheet. Repayments which are subject to notice are treated as if notice were given immediately.

Charter Hall Group	Carrying	Less than	Between	Over	Total
	amount	1 year	1 and 2 years	2 years	cash flows
2013	$’000	$’000	$’000	$’000	$’000
Trade and other payables	46,965	46,965	-	-	46,965
Contingent consideration payable	1,856	1,856	-	-	1,856
Interest-bearing liabilities	27,455	27,815	-	-	27,815
	76,276	76,636	-	-	76,636
Charter Hall Group	Carrying	Less than	Between	Over	Total
	amount	1 year	1 and 2 years	2 years	cash flows
2012	$’000	$’000	$’000	$’000	$’000
Trade and other payables	40,249	40,249	-	-	40,249
Contingent consideration payable	10,539	10,788	-	-	10,788
Interest-bearing liabilities	51,463	1,878	52,820	-	54,698
Derivative financial instruments	669	1,092	461	-	1,553
	102,920	54,007	53,281	-	107,288
Charter Hall Property Trust Group	Carrying	Less than	Between	Over	Total
	amount	1 year	1 and 2 years	2 years	cash flows
2013	$’000	$’000	$’000	$’000	$’000
Trade and other payables	32,740	32,740	-	-	32,740
Interest-bearing liabilites	27,455	27,815	-	-	27,815
	60,195	60,555	-	-	60,555
Charter Hall Property Trust Group	Carrying	Less than	Between	Over	Total
	amount	1 year	1 and 2 years	2 years	cash flows
2012	$’000	$’000	$’000	$’000	$’000
Trade and other payables	30,288	30,288	-	-	30,288
Interest-bearing liabilities	53,863	4,281	52,820	-	57,101
Derivative financial instruments	669	1,092	461	-	1,553
	84,820	35,661	53,281	-	88,942

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(d) Fair value measurements

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

AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

(i) Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
(ii) Level 2 – 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); and
(iii) Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following tables present the Charter Hall Group and Charter Hall Property Trust Group’s financial assets and financial liabilities measured and recognised at fair value.

Charter Hall Group	Level 1	Level 2	Level 3	Total
2013	$’000	$’000	$’000	$’000
Investments in associates at fair value through profit or loss	-	-	49,229	49,229
Total assets	-	-	49,229	49,229
Contingent consideration payable	-	-	1,856	1,856
Total liabilities	-	-	1,856	1,856
2012
Investments in associates at fair value throughprofit or loss	-	-	62,638	62,638
Total assets	-	-	62,638	62,638
Derivative financial instruments	-	669	-	669
Contingent consideration payable	-	-	10,539	10,539
Total liabilities	-	669	10,539	11,208
Charter Hall Property Trust Group	Level 1	Level 2	Level 3	Total
2013	$’000	$’000	$’000	$’000
Investments in associates at fair value through profit or loss	-	-	49,229	49,229
Total assets	-	-	49,229	49,229
Derivative financial instruments	-	-	-	-
Total liabilities	-	-	-	-
2012
Investments in associates at fair value throughprofit or loss	-	-	62,180	62,180
Total assets	-	-	62,180	62,180
Derivative financial instruments	-	669	-	669
Total liabilities	-	669	-	669

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

30 Financial risk management (continued)

(d) Fair value measurements (continued)

The following tables present the changes in Level 3 instruments for the year:

2013	Charter Hall Group Investments in Contingent associates at fair consideration value through payable profit or loss $’000 $’000 Charter Hall Property Trust Group Investments in Contingent associates at fair consideration value through payable profit or loss $’000 $’000
Opening balance Additions Disposals Payments made (Decrease)/increase recognised in profit and loss	62,638 10,539 195 - (12,008) - - (7,685) (1,596) (998) 62,180 - 195 - (11,455) - - - (1,691) -
Closing balance	49,229 1,856 49,229 -
2012	Charter Hall Group Investment in Contingent associates at fair consideration value through payable profit or loss $’000 $’000 Charter Hall Property Trust Group Investment in Contingent associates at fair consideration value through payable profit or loss $’000 $’000
Opening balance Additions Disposals Payments made Decrease recognised in profit and loss	78,445 12,106 273 - (14,306) - - (1,452) (1,774) (115) 78,014 - 229 - (14,306) - - - (1,757) -
Closing balance	62,638 10,539 62,180 -

The carrying amounts of current trade receivables and payables approximate their fair values due to their short-term 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 Charter Hall Group and Charter Hall Property Trust Group for similar financial instruments. The fair value of current borrowings approximates the carrying amount, as the impact of discounting is not significant.

31 Related parties

(a) Parent entity

The parent entity of the Charter Hall Group is Charter Hall Limited. The parent entity of the Charter Hall Property Trust Group is the Charter Hall Property Trust.

(b) Controlled entities

Interests in controlled entities are set out in Note 32.

(c) Key management personnel

Disclosures relating to key management personnel are set out in Note 27.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

31 Related parties (continued)

(d) Transactions with related parties

The following income was earned from related parties during the year:

	Charter Hall Group 2013 2012 $ $ Charter Hall Property Trust Group 2013 2012 $ $
Accounting fees Marketing fees Management and performance fees Transaction and development fees1 Commitment fees Property management fees	6,392,807 5,450,581 1,632,511 895,930 39,651,732 37,756,063 15,675,243 28,622,218 135,000 135,000 32,953,495 27,371,354 - - - - - - - - - - - -

(1) Includes $16.0 million fee revenue related to sale of CQO US assets which was treated as a specific item in 2012.

The following balances arising through the normal course of business were due from/to related parties at balance date:

	Charter Hall Group 2013 2012 $ $ Charter Hall Property Trust Group 2013 2012 $ $
Management fee receivables Other receivables	5,690,632 6,493,320 9,203,342 4,499,986 - - - -

Transactions with associates and joint ventures are disclosed in Notes 33 and 34 respectively.

(e) Loans to/from related parties

(e) Loans to/from related parties
	Charter Hall Group 2013 2012 $ $ Charter Hall Property Trust Group 2013 2012 $ $
Loans to joint ventures and associates Opening balance Loans advanced Loan repayments received Interest charged Interest received	11,120,000 5,000,000 22,280,000 6,120,000 (1,650,000) - 1,184,114 601,644 (640,216) (601,644) 1,650,000 - 21,250,000 1,650,000 (1,650,000) - - - - -
Closing balance	32,293,898 11,120,000 21,250,000 1,650,000
Loans to Charter Hall Limited Opening balance Loans advanced Loan repayments received Capital reallocation Interest charged	- - - - - - - - - - 163,541,643 355,874,328 36,358,156 137,447,221 (70,750,253) (163,127,456) - (200,000,000) 16,741,944 33,347,550
Closing balance	- - 145,891,490 163,541,643

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.

The loans to CHL comprise two unsecured stapled loans maturing in July 2018 and July 2019 respectively. Interest is charged on an arm’s length basis which, at 30 June 2013, amounted to a weighted average rate of 11.26% (June 2012: 9.76%).

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

31 Related parties (continued)

(e) Loans to/from related parties (continued)

CHPT issued $21,250,000 in convertible preference notes to Keperra Square Fund on 28 June 2013. The notes incur interest based on a yield formula and mature on 28 June 2014. On conversion, CHPT is entitled to receive units in a related fund where the number of units is equal to the principal value of the notes divided by the fund’s net tangible assets on the date of conversion.

(f) Fees paid to the Responsible Entity or its associates

Fees paid to the Responsible Entity of the Charter Hall Property Trust, and its associates, by the Charter Hall Property Trust Group amounted to $1,835,855 (2012: $3,591,041). At 30 June 2013, related fees payable amounted to $237,656 (2012: $nil).

32 Controlled entities

The consolidated financial statements of the Charter Hall Group incorporate the assets, liabilities and results of the following controlled entities in accordance with the accounting policy described in Note 1(b):

(a) Details of controlled entities of the Charter Hall Group

(a) Details of controlled entities of the Charter Hall Group
			Equity holding
	Country of	Class of	2013	2012
Name of entity	incorporation	securities	%	%
Controlled entities of Charter Hall Limited
Charter Hall Holdings Pty Limited	Australia	Ordinary	100	100
CHTOM Pty Limited	Australia	Ordinary	100	100
Charter Hall Mordialloc Pty Limited	Australia	Ordinary	100	100
Charter Hall La Trobe Pty Limited	Australia	Ordinary	100	100
CH La Trobe Trust	Australia	Ordinary	100	100
Controlled entities of Charter Hall Holdings Pty Ltd
Bieson Pty Limited	Australia	Ordinary	100	100
Bowvilla Pty Limited	Australia	Ordinary	100	100
CH Nominees Pty Limited	Australia	Ordinary	100	100
Charter Hall Asset Services Pty Limited	Australia	Ordinary	100	100
Charter Hall Asset Services Europe Sp z.o.o	Poland	Ordinary	100	100
Charter Hall Direct Property Management Limited	Australia	Ordinary	100	100
Charter Hall Escrow Agent Pty Limited	Australia	Ordinary	100	100
Charter Hall Funds Management Limited	Australia	Ordinary	100	100
Charter Hall Holdings Investment Trust	Australia	Ordinary	100	100
Charter Hall Holdings Real Estate Pty Limited	Australia	Ordinary	100	100
Charter Hall International Office Pty Limited	Australia	Ordinary	100	100
Charter Hall (NZ) Pty Limited	Australia	Ordinary	100	100
Charter Hall Office Collins Street Pty Limited	Australia	Ordinary	100	100
Charter Hall Office Investments Pty Limited	Australia	Ordinary	100	100
Charter Hall Office Management Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Inc	USA	Ordinary	100	100
CHREI US Office LLC	USA	Ordinary	100	100
CHREI US Retail LLC	USA	Ordinary	100	100
Charter Hall Real Estate Europe Limited	UK	Ordinary	100	100
Charter Hall Real Estate Management Services Pty Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Management Services (ACT) Pty Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Management Services (NSW) Pty Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Management Services (QLD) Pty Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Management Services (SA) Pty Limited	Australia	Ordinary	100	100

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

32 Controlled entities (continued)

(a) Details of controlled entities of the Charter Hall Group (continued)

			Equity	holding
	Country of	Class of	2013	2012
Name of entity	incorporation	securities	%	%
Controlled entities of Charter Hall Holdings Pty Ltd (continued)
Charter Hall Real Estate Management Services (TAS) Pty Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Management Services (VIC) Pty Limited	Australia	Ordinary	100	100
Charter Hall Real Estate Management Services (WA) Pty Limited	Australia	Ordinary	100	100
Charter Hall Retail Management Pty Limited	Australia	Ordinary	100	100
Frolish Pty Limited	Australia	Ordinary	100	100
Real Estate Capital Investments Limited	Australia	Ordinary	100	100
Stelridge Pty Limited	Australia	Ordinary	100	100
Visokoi Pty Limited	Australia	Ordinary	100	100
Charter Hall Development Services Pty Ltd1	Australia	Ordinary	100	-

(1) On 2 May 2013, Charter Hall Development Services Pty Ltd was established to manage development activity in Queensland.

(1) On 2 May 2013, Charter Hall Development Services Pty Ltd wa	s established to manage develop	ment activity in Qu	eensland.
			Equity	holding
	Country of	Class of	2013	2012
Name of entity	incorporation	securities	%	%
Controlled entities of Charter Hall Property Trust
Charter Hall Direct Retail Fund	Australia	Ordinary	84	66
Charter Hall Co-Investment Trust1	Australia	Ordinary	100	100
Charter Hall Special Situations Office Fund2	Australia	Ordinary	100	100
CHPT RP2 Trust3	Australia	Ordinary	100	100

(1) Charter Hall Co-Investment Trust is an entity which was set up by Charter Hall Property Trust to hold its investments in Charter Hall Retail REIT (CQR), Charter Hall Office Trust (CHOT), BP Fund (BP), Core Logistics Partnership (CLP), Keperra Square Fund (Keperra Square) and Charter Hall Direct Property Fund (CHDPF).

(2) Special Situations Office Fund is inactive.

(3) CHPT RP2 Trust was established on 29 May 2012 to acquire a 20% interest in the Retail Partnership No. 2 Trust (RP2T).

			Equity	holding
	Country of	Class of	2013	2012
Name of entity	incorporation	securities	%	%
Controlled entities of Charter Hall Direct Retail Fund
Core Plus Retail Fund New Zealand	Australia	Ordinary	100	100
Stafford Retail Warehouse Trust	Australia	Ordinary	100	100
Stafford Wiley Trust	Australia	Ordinary	100	100
Ipswich Retail Property Trust	Australia	Ordinary	100	100
Mentone Property Trust	Australia	Ordinary	100	100
Charter Hall MMN Property Trust	Australia	Ordinary	100	100
CPRF Gepps X Trust	Australia	Ordinary	100	100
CPRF Gepps 109 Trust	Australia	Ordinary	100	100
CPRF MSN Property Trust	Australia	Ordinary	100	100

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

32 Controlled entities (continued)

(b) Details of controlled entities of the Charter Hall Property Trust Group

					Equity holding	Equity holding
		Country of	Class of		2013	2012
Name of entity		incorporation	securities		%	%
Controlled entities of Charter Hall Property Trust
Charter Hall Direct Retail Fund1		Australia	Ordinary		84	49
Charter Hall Co-Investment Trust2		Australia	Ordinary		100	100
Charter Hall Special Situations Office Fund3		Australia	Ordinary		100	100
CHPT RP2 Trust4		Australia	Ordinary		100	100
(1) Refer to Note 32(a) for the controlled entities of Charter Hall Direct Retail Fund. (2) Charter Hall Co-Investment Trust is an entity which was set up by Charter Hall Property Trust to hold its investments in Charter Hall Retail
REIT (CQR), Charter Hall Office Trust (CHOT), BP Fund (BP), Core Logistics Partnership (CLP), Keperra Square Fund (Keperra Square) and
Charter Hall Direct Property Fund (CHDPF). (3) Special Situations Office Fund is inactive. (4) CHPT RP2 Trust was established on 29 May	2012 to acquire a 20% interest in the Retail Partnership No. 2			Trust (RP2T).
33 Investments in associates
(a) Carrying amounts
Information relating to associates is set out below. All associates are incorporated in Australia.
Charter Hall Group			Ownership interest
			2013	2012	2013	2012
Name of entity	Principal activity		%	%	$'000	$'000
Accounted for at fair value through profit or loss:
Unlisted
Charter Hall Umbrella Fund	Property investment		24.2	26.6	30,080	39,469
Charter Hall Diversified Property Fund	Property investment		19.6	25.2	8,085	11,713
Charter Hall Direct Property Fund	Property investment		4.0	3.8	10,665	10,770
Charter Hall Direct Industrial Fund	Property investment		0.2	0.2	234	228
PFA Diversified Property Trust1	Property investment		0.1	-	165	-
Charter Hall Property Securities Fund2	REIT securities investment		-	2.1	-	458
					49,229	62,638
Equity accounted:
Unlisted
Charter Hall Core Plus Industrial Fund	Property investment		13.2	18.0	56,661	54,885
Charter Hall Opportunity Fund 5	Property development		15.0	15.0	14,891	28,493
Charter Hall Office Trust	Property investment		14.5	15.0	158,971	145,720
Charter Hall Core Plus Office Fund	Property investment		12.3	13.9	114,722	112,951
Charter Hall Opportunity Fund 4	Property development		3.0	3.0	800	1,128
Core Logistics Partnership3	Property investment		5.3	-	10,808	-
Listed
Charter Hall Retail REIT	Property investment		9.2	10.0	103,055	101,338
					459,908	444,515
Total investments in associates					509,137	507,153

(1) Units in the PFA Diversified Property Trust were acquired on 15 August 2012 in conjunction with the acquisition of management rights over the fund.

(2) The Charter Hall Property Securities Fund was wound up in May 2013.

(3) The Core Logistics Partnership was established in December 2012.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

33 Investments in associates (continued)

(a) Carrying amounts (continued)

(a) Carrying amounts (continued)
Charter Hall Property Trust Group		Ownership	interest
		2013	2012	2013	2012
Name of entity	Principal activity	%	%	$'000	$'000
Accounted for at fair value through profit or loss
Unlisted
Charter Hall Umbrella Fund	Property investment	24.2	26.6	30,080	39,469
Charter Hall Diversified Property Fund	Property investment	19.6	25.2	8,085	11,713
Charter Hall Direct Property Fund	Property investment	4.0	3.8	10,665	10,770
Charter Hall Direct Industrial Fund	Property investment	0.2	0.2	234	228
PFA Diversified Property Trust1	Property investment	0.1	-	165	-
				49,229	62,180
Equity accounted:
Unlisted
Charter Hall Core Plus Industrial Fund	Property investment	5.7	7.8	24,845	23,885
Charter Hall Core Plus Office Fund	Property investment	11.2	12.6	104,287	102,635
Charter Hall Office Trust	Property investment	14.5	15.0	158,971	145,720
Core Logistics Partnership2	Property investment	5.3	-	10,808	-
Listed
Charter Hall Retail REIT	Property investment	9.2	10.0	103,055	101,338
				401,966	373,578
Total investments in associates				451,195	435,758

(1) Units in the PFA Diversified Property Trust were acquired on 15 August 2012 in conjunction with the acquisition of management rights over the fund.

(2) The Core Logistics Partnership was established in December 2012.

All investments accounted for at fair value through the profit or loss (Note 13) are held by Charter Hall Property Trust (CHPT) except the Charter Hall Property Securities Fund which is held by a controlled entity of Charter Hall Limited. The investment in Charter Hall Diversified Property Fund (DPF) at 30 June 2012 consisted of units (17.9%) and bridging equity of $7.4 million (7.3%). The bridging equity was fully repaid on 20 December 2012 and the related $18.0 million facility was cancelled in August 2013.

(b) Movements in carrying amounts

(i) Investments at fair value through profit or loss

	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Charter Hall Umbrella Fund Opening balance Redemption of units Fair value adjustment	39,469 40,612 (8,074) - (1,315) (1,143) 39,469 40,612 (8,074) - (1,315) (1,143)
Closingbalance	30,080 39,469 30,080 39,469
Charter Hall Diversified Property Fund Opening balance Redemptions and repayment of bridging equity Fair value adjustment	11,713 26,964 (3,381) (14,306) (247) (945) 11,713 26,964 (3,381) (14,306) (247) (945)
Closingbalance	8,085 11,713 8,085 11,713
Charter Hall Direct Property Fund Opening balance Fair value adjustment	10,770 10,438 (105) 332 10,770 10,438 (105) 332
Closingbalance	10,665 10,770 10,665 10,770

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

33 Investments in associates (continued)

(b) Movements in carrying amounts (continued)

Charter Hall Direct Industrial Fund Opening balance Investment Fair value adjustment	Charter Hall Group 2013 2012 $'000 $'000 228 - - 229 6 (1) Charter Hall Property Trust Group 2013 2012 $'000 $'000 228 - - 229 6 (1)
Closingbalance	234 228 234 228
PFA Diversified Property Trust Opening balance Investment Fair value adjustment	- - 195 - (30) - - - 195 - (30) -
Closingbalance	165 - 165 -
Charter Hall Property Securities Fund Opening balance Investment Redemption of units Fair value adjustment	458 431 - 44 (553) - 95 (17) - - - - - - - -
Closingbalance	- 458 - -
Total investments at fair value through profit or loss Opening balance Investment Redemptions and repayment of bridging equity Fair value adjustment	62,638 78,445 195 273 (12,008) (14,306) (1,596) (1,774) 62,180 78,014 195 229 (11,455) (14,306) (1,691) (1,757)
Closing balance	49,229 62,638 49,229 62,180

(ii) Equity accounted investments

	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Charter Hall Core Plus Industrial Fund Opening balance Share of profit after income tax Distributions received/receivable Disposal of units Gain on remeasurement of equityinterest	54,885 53,281 5,329 4,711 (3,885) (3,324) - - 332 217 23,885 53,281 2,322 2,217 (1,694) (1,724) - (30,094) 332 205
Closingbalance	56,661 54,885 24,845 23,885
Charter Hall Opportunity Fund 5 Opening balance Investment Share of loss after income tax Distributions received/receivable Share of movement in reserves	28,493 31,286 - 4,815 (424) (7,331) (13,199) (259) 21 (18) - - - - - - - - - -
Closingbalance	14,891 28,493 - -
Charter Hall Office Trust Opening balance Investment Share of profit/(loss) after income tax Distributions received/receivable Share of movement in reserves Gain on remeasurement of equityinterest	145,720 185,681 7,114 47,662 22,140 (8,161) (14,852) (93,735) 122 12,961 (1,273) 1,312 145,720 185,681 7,114 47,662 22,140 (8,161) (14,852) (93,735) 122 12,961 (1,273) 1,312
Closingbalance	158,971 145,720 158,971 145,720

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

33 Investments in associates (continued)

(b) Movements in carrying amounts (continued)

Charter Hall Core Plus Office Fund Opening balance Investment Share of profit after income tax Distributions received/receivable Gain on remeasurement of equityinterest	Charter Hall Group 2013 2012 $'000 $'000 112,951 110,428 - - 9,021 8,460 (7,708) (6,992) 458 1,055 Charter Hall Property Trust Group 2013 2012 $'000 $'000 102,635 90,257 - 10,086 8,197 7,690 (7,003) (6,353) 458 955
Closingbalance	114,722 112,951 104,287 102,635
Charter Hall Opportunity Fund 4 Opening balance Share of loss after income tax	1,128 1,218 (328) (90) - - - -
Closingbalance	800 1,128 - -
Core Logistics Partnership Opening balance Investment Share of loss after income tax Distributions received/receivable Gain on remeasurement of equityinterest	- - 11,102 - (609) - (363) - 678 - - - 11,102 - (609) - (363) - 678 -
Closingbalance	10,808 - 10,808 -
Charter Hall Retail REIT Opening balance Investment Share of profit after income tax Distributions received/receivable Share of movement in reserves (Loss)/gain on remeasurement of equityinterest	101,338 88,189 3,985 16,176 5,245 2,587 (8,175) (7,820) 1,074 145 (412) 2,061 101,338 88,189 3,985 16,176 5,245 2,587 (8,175) (7,820) 1,074 145 (412) 2,061
Closingbalance	103,055 101,338 103,055 101,338
Total equity accounted investments Opening balance Investment Share of profit after income tax Distributions received/receivable Share of movement in reserves Disposal of units (Loss)/gain on remeasurement of equityinterests	444,515 470,083 22,201 68,653 40,374 176 (48,182) (112,130) 1,217 13,088 - - (217) 4,645 373,578 417,408 22,201 73,924 37,295 4,333 (32,087) (109,632) 1,196 13,106 - (30,094) (217) 4,533
Closingbalance	459,908 444,515 401,966 373,578
(c) Fair value of listed investments in associates	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Charter Hall Retail REIT	118,241 99,177 118,241 99,177

Fair value represents market value of units as at 30 June 2013 and 2012.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

33 Investments in associates (continued)

(d) Share of equity accounted associates’ profits or losses

33 Investments in associates (continued) (d) Share of equity accounted associates’ profits or losses
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Profit before income tax Income tax expense	40,384 2,674 (10) (2,498) 37,305 4,311 (10) 22
Profit after income tax	40,374 176 37,295 4,333

(e) Contingent liabilities of associates

Commercial negotiations continue between the Development Alliance (DA) partners in the Little Bay Cove project, being CHOF5, CHOF5 Little Bay Pty Limited (CHOF5LB) (a controlled entity of CHOF5) and TA Global Development Pty Limited (TAG) in an attempt to agree on the future direction of the project.

As at the date of signing the financial statements, CHOF5 is not able to determine whether any financial impact will occur as a result of the negotiations currently underway with TAG. The senior debt financier has waived compliance with the LVR covenant and granted an extension of the facility to 6 September 2013. A further extension of the facility until the completion of the Estate Works, currently scheduled for the end of November 2013, is the subject to ongoing discussions with the senior debt financier.

The directors of CHOF5LB continue to closely monitor the solvency of CHOF5LB, given the structure of the DA partners corresponding mezzanine loans and continue to obtain external advice in relation to this issue. A change in circumstances going forward could impact the solvency status of CHOF5LB, however the directors of CHOF5LB remain satisfied this project entity is solvent.

(f) Summarised financial information of associates

Charter Hall Group		Charter Hall Group’s	share of:
	Assets	Liabilities	Revenues	Profit/(loss)
	$’000	$’000	$’000	$’000
2013
Accounted for at fair value through profit or loss:
Charter Hall Umbrella Fund	29,091	455	2,173	1,889
Charter Hall Diversified Property Fund	15,298	7,212	2,193	970
Charter Hall Direct Property Fund	20,919	10,189	2,212	775
Charter Hall Direct Industrial Fund	365	147	30	20
PFA Diversified Property Trust	389	224	47	(2)
Charter Hall Property Securities Fund	-	-	20	96
Equity accounted:
Charter Hall Core Plus Industrial Fund	72,918	15,828	12,065	5,329
Charter Hall Opportunity Fund 5	38,201	23,334	21,249	(424)
Charter Hall Office Trust	304,798	146,252	19,000	22,140
Charter Hall Core Plus Office Fund	203,865	89,068	19,967	9,021
Charter Hall Opportunity Fund 4	2,758	1,958	1,522	(328)
Core Logisitics Partnership	11,222	415	2,166	(609)
Charter Hall Retail REIT	188,747	85,691	19,106	5,245
	888,571	380,773	101,750	44,122

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

33 Investments in associates (continued)

(f) Summarised financial information of associates (continued)

Charter Hall Group		Charter Hall Group’s share of:	Charter Hall Group’s share of:
	Assets	Liabilities	Revenues	Profit/(loss)
	$’000	$’000	$’000	$’000
2012
Charter Hall Umbrella Fund	37,417	586	2,355	1,892
Charter Hall Diversified Property Fund	25,333	5,945	2,855	(475)
Charter Hall Direct Property Fund	19,476	8,586	2,688	1,099
Charter Hall Direct Industrial Fund	317	103	20	7
Charter Hall Property Securities Fund	472	21	63	29
Charter Hall Core Plus Industrial Fund	109,583	54,698	9,793	4,711
Charter Hall Opportunity Fund 5	52,731	24,238	14,393	(7,331)
Charter Hall Office Trust	296,878	151,158	18,092	(8,161)
Charter Hall Core Plus Office Fund	207,275	94,324	18,550	8,460
Charter Hall Opportunity Fund 4	3,556	2,428	818	(90)
Charter Hall Retail REIT	194,458	93,120	18,606	2,587
	947,496	435,207	88,233	2,728
Charter Hall Property Trust Group	Charter	Hall Property Trust Group’s share of:
	Assets	Liabilities	Revenues	Profit/(loss)
	$’000	$’000	$’000	$’000
2013
Accounted for at fair value through profit or loss:
Charter Hall Umbrella Fund	29,091	455	2,173	1,889
Charter Hall Diversified Property Fund	15,298	7,212	2,193	970
Charter Hall Direct Property Fund	20,919	10,189	2,212	775
Charter Hall Direct Industrial Fund	365	147	30	20
PFA Diversified Property Trust	389	224	47	(2)
Equity accounted:
Charter Hall Core Plus Industrial Fund	31,733	6,888	5,257	2,322
Charter Hall Office Trust	304,798	146,252	19,000	22,140
Charter Hall Core Plus Office Fund	185,245	80,933	18,144	8,197
Core Logisitics Partnership	11,222	415	2,166	(609)
Charter Hall Retail REIT	188,747	85,691	19,106	5,245
	787,807	338,406	70,328	40,947
~~Charter Hall Property Trust Group~~	~~Charter~~ Assets	~~Hall Property Trust Group~~’~~s share of:~~ Liabilities Revenues		Profit/(loss)
	$’000	$’000	$’000	$’000
2012
Charter Hall Umbrella Fund	37,417	586	2,355	1,892
Charter Hall Diversified Property Fund	25,333	5,945	2,855	(475)
Charter Hall Direct Property Fund	19,476	8,586	2,688	1,099
Charter Hall Direct Industrial Fund	317	103	20	7
Charter Hall Core Plus Industrial Fund	47,689	23,804	4,610	2,217
Charter Hall Office Trust	296,878	151,158	18,092	(8,161)
Charter Hall Core Plus Office Fund	188,344	85,709	16,862	7,690
Charter Hall Retail REIT	194,458	93,120	18,606	2,587
	809,912	369,011	66,088	6,856

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

34 Investments in joint ventures

(a) Carrying amounts

Information relating to joint ventures is set out below.

Charter Hall Group		Ownership	interest
		2013	2012	2013	2012
Name of company	Principal activity	%	%	$’000	$’000
Unlisted
Commercial and Industrial Property Pty Ltd	Property development	50.0	50.0	27,121	27,598
Retail Partnership No. 2 Trust1	Property investment	20.0	20.0	17,688	-
BP Fund2	Property investment	13.0	-	14,319	-
Keperra Square Fund3	Property investment	10.0	-	1,111	-
Macquarie-Regency Management LLC	Asset management	-	50.0	-	46
Reliance Investment Management Pty Ltd	Investment management	-	-	-	-
Charter Hall Retail JV Trust4	Property investment	-	50.0	-	-
				60,239	27,644

(1) The Retail Partnership No. 2 Trust (RPT2) was established on 29 May 2012 to acquire the Bay Village shoppinge centre in Bateau Bay, New South Wales.

(2) The BP Fund was established in November 2012 and has acquired a portfolio of Bunnings properties.

(3) The Keperra Square Fund was established on 28 June 2013 to acquire an interest in the Keperra shopping centre in Keperra, Queensland.

(4) The investment in the Charter Hall Retail JV Trust was reclassified to held for sale on 30 June 2012 and sold on 31 October 2012.

Charter Hall Property Trust Group		Ownership	interest
		2013	2012	2013	2012
Name of company	Principal activity	%	%	$’000	$’000
Unlisted
Retail Partnership No. 2 Trust1	Property investment	20.0	20.0	17,688	-
BP Fund2	Property investment	13.0	-	14,319	-
Keperra Square Fund3	Property investment	10.0	-	1,111	-
Charter Hall Retail JV Trust4	Property investment	-	50.0	-	-
				33,118	-

(1) The RPT2 Fund was established on 29 May 2012 to acquire the Bay Village shoppinge centre in Bateau Bay, New South Wales.

(2) The BP Fund was established in November 2012 and has acquired a portfolio of Bunnings properties.

(3) The Keperra Square Fund was established on 28 June 2013 to acquire an interest in the Keperra shopping centre in Keperra, Queensland.

(4) The investment in the Charter Hall Retail JV Trust was reclassified to held for sale on 30 June 2012 and sold on 31 October 2012.

(b) Movements in carrying amounts

(b) Movements in carrying amounts
	Charter Hall Group Charter Hall Property Trust Group 2013 2012 $'000 $'000 2013 2012 $'000 $'000
Commercial and Industrial Property Pty Limited Opening balance Share of profit after income tax Dividends received/receivable	27,598 28,843 1,784 1,544 (2,261) (2,789) - - - - - -
Closingbalance	27,121 27,598 - -
Retail Partnership No. 2 Trust Opening balance1 Investment Share of loss after income tax Dividends received/receivable	- - 19,626 - (683) - (1,255) - - - 19,626 - (683) - (1,255) -
Closingbalance	17,688 - 17,688 -

(1) Investment of $2, which is $nil rounded to the nearest $1,000.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

34 Investments in joint ventures (continued)

(b) Movements in carrying amounts (continued)

BP Fund Opening balance Investment Share of profit after income tax Dividends received/receivable Remeasurement loss	Charter Hall Group 2013 2012 $'000 $'000 - - 14,604 - 443 - (582) - (146) - Charter Hall Property Trust Group 2013 2012 $'000 $'000 - - 14,604 - 443 - (582) - (146)
Closing balance	14,319 - 14,319 -
Keperra Square Fund Opening balance Investment	- - 1,111 - - - 1,111 -
Closing balance	1,111 - 1,111 -
Macquarie-Regency Management LLC Opening balance Share of profit after income tax Dividends received/receivable Remeasurement loss Disposal	46 26 45 86 (72) (66) (5) - (14) - - - - - - - - - - -
Closing balance	- 46 - -
Reliance Investment Management Pty Limited Opening balance Investment Share of profit after income tax Disposal	- 55 - 93 - (18) - (130) - - - - - - - -
Closing balance	- - - -
Charter Hall Retail JV Trust Opening balance Share of profit after income tax Distribution received/receivable Reclassified to assets held for sale	- 18,700 - 1,161 - (1,175) - (18,686) - 18,700 - 1,161 - (1,175) - (18,686)
Closing balance	- - - -
Total investments in joint ventures Opening balance Investment Share of profit/(loss) after income tax Distributions/dividends received/receivable Disposal Remeasurement loss Reclassified to assets held for sale	27,644 47,624 35,341 93 1,5892,773 (4,170) (4,030) (14) (130) (151) - - (18,686) - 18,700 35,341 - (240) 1,161 (1,837) (1,175) - - (146) - - (18,686)
Closing balance	60,239 27,644 33,118 -

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

34 Investments in joint ventures (continued)

(c) Carrying value of joint venture entity

The carrying values of investments in joint ventures are assessed for impairment at each reporting date against the higher of the investments value-in-use (VIU) or fair value less cost to sell (FVLCTS). Management believes VIU provides the most accurate recoverable amount.

CIP

The Group’s equity investment in CIP was independently valued as at 30 June 2013 by KPMG Corporate Finance. The valuation supports the carrying value and the methodology applied was an assessment of fair value (less costs to sell).

Retail Partnership No. 2 Trust, BP Fund and Keperra Square Fund

These funds were established during the current year and no indicators of impairment have been identified to date.

There has been no impairment or reversal of impairment in the year ended 30 June 2013 (2012: nil).

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

(d) Share of joint venture’s revenue, expenses and results
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Revenues Expenses	55,620 64,524 (53,809) (61,289) 4,751 4,220 (4,991) (3,059)
Profit before income tax	1,811 3,235 (240) 1,161

(e) Share of joint venture’s assets and liabilities

(e) Share of joint venture’s assets and liabilities
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $'000 $'000
Current assets Non-current assets	36,099 30,622 65,806 1,133 2,199 - 64,820 -
Total assets	101,905 31,755 67,019 -
Current liabilities Non-current liabilities	22,002 19,518 40,252 5,198 1,342 - 32,752 -
Total liabilities	62,254 24,716 34,094 -
Net assets	39,651 7,039 32,925 -

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

35 Commitments

(a) Lease commitments: Group as lessee

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

	Charter Hall Group 2013 2012 $’000 $’000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Within one year Later than one year but not later than five years	2,071 1,549 5,715 5,808 - - - -
	7,786 7,357 - -

(b) Capital commitments

As at 30 June 2013 there were no contractual capital commitments (2012: $nil).

(c) Commitments: Other

Charter Hall Opportunity Fund No. 5 (CHOF5) Workzone (Workzone)

On 21 December 2011, CHL and Charter Hall Funds Management Limited as trustee for CHOF5 entered into a Preferred Equity Deed (deed) committing $9 million to fund development of the Workzone project. A deed of amendment was entered on 20 May 2013 to extend the loan term from 30 September 2013 to 31 March 2014. At 30 June 2013 $5.5 million of this facility had been drawn down and is included in receivables in this financial report. The undrawn commitment at the date of this report is $3.5 million.

36 Contingent liabilities

Commercial negotiations continue between DA partners in the Little Bay Cove project, being CHOF5 and TAG, in an attempt to agree on the future direction of the project. The Group may be impacted by the outcome of these commercial negotiations as:

CHL has a 15% investment in CHOF5;
CHFML (a 100% owned entity of CHL) is the trustee of CHOF5; and
CHH (a 100% owned entity of CHL) is the Manager of CHOF5 and is also a joint development manager with TAG on the Little Bay project under the development alliance agreement.

As at the date of signing the financial statements, neither CHOF5, CHL, CHFML or CHH are able to determine whether any financial impact will occur as a result of the negotiations currently underway with TAG.

Further information on this matter is contained in Note 33.

The Group did not have any other contingent liabilities as at 30 June 2013.

37 Security-based benefits

(a) Charter Hall - Executive Loan Security Plan (ELSP) (legacy plan)

The ELSP was suspended on 1 July 2009. During the year 678,076 (2012: nil) securities were forfeited by ELSP members and the plan was wound up in late July 2012. Securities were granted under the plan at market value and were purchased with a loan to the employee. As ELSP members do not hold securities in their own name, the plan manager seeks instructions from plan members on their voting intentions.

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

Set out below are summaries of securities granted under the plan:
	2013	2012
Charter Hall Group and Charter Hall Property Trust Group	Number	Number
Opening balance	678,076	12,585,920
Cancellation of forfeited LTI securities off market	(678,076)	(11,907,844)
	-	678,076

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

37 Security-based benefits (continued)

(b) Charter Hall - Performance Rights and Options Plan (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 which are discussed in the Remuneration Report.

Charter Hall Group and	2010	2011	2012	2013	Total
Charter Hall Property Trust Group	Number	Number	Number	Number	Number
Performance rights
Rights issued on 13/11/09	1,562,250	-	-	-	1,562,250
Rights issued on 18/6/10	644,625	-	-	-	644,625
Rights issued on 6/9/10	-	863,345	-	-	863,345
Rights issued on 11/11/10	-	465,388	-	-	465,388
Rights issued on 17/1/12	-	-	3,905,231	-	3,905,231
Rights issued on 23/11/12	-	-	-	1,796,076	1,796,076
Performance rights issued	2,206,875	1,328,733	3,905,231	1,796,076	9,236,915
Number rights forfeited/lapsed in prior years	(648,111)	(241,355)	(433,564)	-	(1,323,030)
Number rights forfeited/lapsed in current year	(12,500)	(104,813)	(229,033)	-	(346,346)
Number rights vested in prior years	(704,912)	-	-	-	(704,912)
Number rights vested in current year	(582,340)	(28,848)	-	-	(611,188)
Closing balance	259,012	953,717	3,242,634	1,796,076	6,251,439
Service rights
Rights issued on 6/9/10	-	316,377	-	-	316,377
Rights issued on 22/5/12	-	-	431,516	-	431,516
Rights issued on 23/11/12	-	-	-	270,000	270,000
Service rights issued	-	316,377	431,516	270,000	1,017,893
Number rights forfeited/lapsed in prior years	-	(158,680)	-	-	(158,680)
Number rights forfeited/lapsed in current year	-	(5,860)	-	-	(5,860)
Number rights vested in prior year	-	-	-	-	-
Number rights vested in current year	-	(78,849)	(301,489)	-	(380,338)
Closing balance	-	72,988	130,027	270,000	473,015
Options
Options issued on 4/11/09 at $1.94	4,088,078	-	-	-	4,088,078
Options issued on 13/11/09 at $1.94	1,497,036	-	-	-	1,497,036
Options issued on 18/6/10 at $2.80	1,611,656	-	-	-	1,611,656
Options issued on 6/9/10 at $2.44	-	2,035,649	-	-	2,035,649
Options issued on 11/11/10 at $2.44	-	1,163,464	-	-	1,163,464
Options issued on 19/1/11 at $2.35	-	123,397	-	-	123,397
Options issued	7,196,770	3,322,510	-	-	10,519,280
Number options forfeited/lapsed in prior years	(1,978,733)	(603,369)	-	-	(2,582,102)
Number options forfeited/lapsed in current year	(31,252)	(262,025)	-	-	(293,277)
Number options vested and exercised in prior year	(1,707,343)	-	-	-	(1,707,343)
Number options vested and exercised in current year	(1,772,116)	(72,117)	-	-	(1,844,233)
Closing balance	1,707,326	2,384,999	-	-	4,092,325

(c) Charter Hall General Employee Security Plan (GESP)

During the year, eligible employees received up to $1,000 in securities which vested immediately on issue but are held in trust until the earlier of the completion of three years’ service or termination. An expense of $211,878 was recognised in relation to this plan during the year.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

37 Security-based benefits (continued)

(d) PROP

Total expenses related to the PROP recognised during the year as part of employee benefit expense were as follows:

Total expenses related to the PROP recognised during the year as part of employee	benefit expense were as follows:
	Charter Hall Group 2013 2012 $'000 $'000 Charter Hall Property Trust Group 2013 2012 $’000 $’000
Performance rights and options plan	3,035 2,338 - -

(e) Option inputs

The Black-Scholes or Monte Carlo method, as applicable, is utilised for valuation and accounting purposes. The model inputs for the PROP performance rights and options plan issued during FY10 through FY13 and outstanding as at 30 June 2013 to assess the fair value are as follows:

Options

Options
Grant date	06/09/10	11/11/10	11/01/11
Security price at grant date1	$2.44	$2.44	$2.35
Fair value of option1	$0.51	$0.51	$0.49
Exercise price per security1	$2.44	$2.44	$2.35
Expiry of loan	06/09/15	06/09/15	06/09/16
Expected price volatility	40.0%	40.0%	40.0%
Risk-free interest rate	5.5%	5.5%	5.5%

Performance rights
Grant date	18/06/10	06/09/10	19/11/10	17/01/12	23/11/12
Security price at grant date1	$2.80	$2.44	$2.44	$2.10	$3.11
Fair value of right1	$1.52	$1.33	$1.33	$0.94	$1.91
Expected price volatility	40.0%	40.0%	40.0%	39.0%	26.0%
Risk-free interest rate	5.5%	5.5%	5.5%	3.9%	3.0%
Service rights
Grant date	06/09/10	22/05/12	23/11/12
Security price at grant date1	$2.44	$2.08	$3.11
Fair value of right1	$2.06	$1.87	$2.73
Expected price volatility	40.0%	35.0%	25.0%
Risk-free interest rate	5.5%	4.3%	2.9%

(1) Security prices for prior years have been restated for the unit consolidation during FY11.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

38 Parent entity financial information

(a) Summary financial information

The individual financial statements for the parent entity of the Charter Hall Group, being Charter Hall Limited, and the Charter Hall Property Trust Group, being Charter Hall Property Trust, show the following aggregate amounts:

Balance sheet Current assets Total assets Current liabilities Total liabilities Shareholders' equity Issued capital Security-based benefits reserve Accumulated losses	Charter Hall Limited 2013 2012 $’000 $’000 25,786 1,310 272,283 326,892 17 45 145,908 163,638 211,335 209,550 - 1,717 (84,960) (48,013) Charter Hall Property Trust 2013 2012 $’000 $’000 4,077 31,772 707,696 706,947 46,032 27,320 46,032 27,320 753,610 739,175 - - (91,946) (59,548)
	126,375 163,254 661,664 679,627
Profit/(loss) for the year	(38,664) (5,395) 28,313 103,686
Total comprehensive profit/(loss) for the year	(38,664) (5,395) 28,313 103,686

(b) Contingent liabilities of the parent entity

Charter Hall Limited and Charter Hall Property Trust had no contingent liabilities (2012: $nil).

(c) Contractual commitments

As at 30 June 2013, neither Charter Hall Limited and Charter Hall Property Trust had contractual commitments except as noted below (2012: $nil).

Charter Hall Opportunity Fund 5 (CHOF5) Workzone (Workzone)

39 Deed of cross guarantee

Charter Hall Group

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

(a) Consolidated statement of comprehensive income and summary of movements in consolidated accumulated losses

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’.

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

39 Deed of cross guarantee (continued)

(a) Consolidated statement of comprehensive income and summary of movements in consolidated accumulated losses (continued)

Set out below is a consolidated statement of comprehensive income and a summary of movements in consolidated accumulated losses for the year of the closed group consisting of Charter Hall Limited and Charter Hall Holdings Pty Ltd.

	2013	2012
	$’000	$’000
Statement of comprehensive income
Revenue	93,940	91,176
Fair value adjustment on contingent consideration	1,123	1,355
Depreciation	(1,207)	(720)
Finance costs	(16,916)	(37,506)
Foreign exchange gain/(loss)	349	(90)
Share of net gain/(loss) of associates accounted for using the equity method	1,032	(5,894)
Gain on sale of investments, property and derivatives	-	479
Fair value adjustments	(1,165)	(2,351)
Amortisation of management rights	(7,838)	(1,306)
Performance fee clawback	-	(14,239)
Other expenses	(72,983)	(56,267)
Loss before income tax	(3,665)	(25,363)
Income tax benefit	3,096	13,075
Loss for the year	(569)	(12,288)
Other comprehensive income for the year:
Exchange differences on translation of foreign operations	20	18
Total comprehensive loss for the year	(549)	(12,270)

Summary of movements in consolidated accumulated losses
Accumulated losses at the beginning of the financial year	(93,550)	(81,262)
Transferred to accumulated losses for ELSP lapse	6,122	-
Loss for the year	(729)	(12,288)
Accumulated losses at the end of the financial year	(88,157)	(93,550)

(b) Balance sheet

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

Pty Ltd.
	2013	2012
	$’000	$’000
Assets
Current assets
Cash and cash equivalents	2,180	6,866
Trade and other receivables	40,286	31,141
Total current assets	42,466	38,007
Non-current assets
Trade and other receivables	5,077	5,000
Investments accounted for using the equity method	42,811	57,219
Investment in associates at fair value through profit or loss	7,233	13,110
Investments in controlled entities	85,284	85,465
Property, plant and equipment	2,744	3,026
Intangible assets	96,066	98,687
Deferred tax assets	8,572	11,523
Total non-current assets	247,787	274,030
Total assets	290,253	312,037

Charter Hall Group and Charter Hall Property Trust Group

Notes to the consolidated preliminary financial report for the year ended 30 June 2013

39 Deed of cross guarantee (continued)

(b) Balance sheet (continued)

(b) Balance sheet (continued)
	2013	2012
	$’000	$’000
Liabilities
Current liabilities
Trade and other payables	63,262	45,267
Provisions	1,101	14,847
Total current liabilities	64,363	60,114
Non-current liabilities
Trade and other payables	-	10,540
Loans from Charter Hall Property Trust	145,891	163,542
Provisions	1,162	1,236
Total non-current liabilities	147,053	175,318
Total liabilities	211,416	235,432
Net assets	78,837	76,605
Equity
Contributed equity	211,335	209,550
Reserves	(44,500)	(39,395)
Accumulated losses	(87,998)	(93,550)
Total equity	78,837	76,605

40 Events occurring after the reporting date

The following events have occurred subsequent to 30 June 2013:

The Group acquired $14.7 million of new units in CHOT and the proceeds will be used to partially fund CHOT’s acquisition of the remaining units of the 1 Martin Place Trust. The Group’s ownership percentage in CHOT was unaffected by this transaction.
DRF sold its 50% interest in Home HQ located in Nunawading, Victoria on 15 July 2013, contributing net proceeds of $10 million (after debt repayments) to the Group. Refer to Note 12: Assets classified as held for sale for further details.

Except for the matters discussed above, no other matter or circumstance has arisen since 30 June 2013 that has significantly affected, or may significantly affect:

(a) The Group's operations in future financial years; or

(b) The results of those operations in future financial years; or
(c) The Group's state of affairs in future financial years.

AI assistant

CHARTER HALL GROUP — Annual Report 2013

64645_rns_2013-08-27_5f55a707-e8ec-42bb-9f7c-690b9bf0e8a8.pdf

APPENDIX 4E

Name of Entity:

Results for announcement to the market

Results for announcement to the market (continued)

Results for announcement to the market (continued)

Review and results of operations

Review and results of operations (continued)

Property funds investments

i) Listed fund

Charter Hall Retail REIT (CQR) - $2.2 billion FUM, CHPT interest 9% with an equity interest carrying value of $103.1 million

ii) Wholesale unlisted funds and partnerships

Charter Hall Office Trust (CHOT) - $2.0 billion FUM, CHPT interest 15% with an equity interest carrying value of $159.0 million

Review and results of operations (continued)

ii) Wholesale unlisted funds and partnerships (continued)

CHOT (continued)

Charter Hall Core Plus Industrial Fund (CPIF) - $560 million FUM, CHPT interest 6% & CHL interest 7% with a combined equity interest carrying value of $56.7 million

BP Fund (BPF) (Bunnings partnership) - $235 million FUM, CHL interest 13% with an equity interest carrying value of $14.3 million

Core Logistics Partnership (CLP) - $232 million FUM. CHL interest 5% with an equity interest carrying value of $10.8 million

Review and results of operations (continued)

ii) Wholesale unlisted funds and partnerships (continued)

CLP (continued)

Keperra Square Fund (Keperra Square) - $63 million FUM, CHL interest 10% with contributed equity of $1.1 million

Other wholesale unlisted funds, mandates and partnerships

iii) Retail investor funds

Charter Hall Direct Property Fund (CHDPF) - $491 million FUM, CHPT interest 4% representing a carrying value of $10.7 million

Charter Hall Diversified Property Fund (DPF) - $51 million FUM, CHPT equity interest of 20% representing a carrying value of $8.1 million

Charter Hall Umbrella Fund (CHUF) - $116 million FUM, CHPT interest 24% representing a carrying value of $30.1 million

Review and results of operations (continued)

iii) Retail investor funds (continued)

CHUF (continued)

Other retail investor funds

Direct property investments

Charter Hall Direct Retail Fund (DRF) - CHPT interest 84% & CHL interest 16%

Property funds management

Review and results of operations (continued)

Interests in development funds and development properties

Charter Hall Opportunity Fund 4 (CHOF4) - $70 million FUM, CHL interest 3% with an equity interest carrying value of $0.8 million

Charter Hall Opportunity Fund 5 (CHOF5) - $278 million FUM, CHL interest 15% with an equity interest carrying value of $14.9 million

Review and results of operations (continued)

685 La Trobe Street office development – CHL interest 50%

Significant changes in the state of affairs

Undistributed income

Net Tangible Assets

Control gained or lost over entities during the year

Details of Associates and Joint Venture entities

Other significant information

Accounting standards used by foreign entities

Segment results:

Performance trends:

Other Factors:

Audit

CHARTER HALL GROUP

Important notice

Preliminary financial report for the year ended 30 June 2013

Preliminary financial report for the year ended 30 June 2013

Consolidated statements of comprehensive income

Preliminary financial report for the year ended 30 June 2013

Consolidated balance sheets

Preliminary financial report for the year ended 30 June 2013

Consolidated statement of changes in equity – Charter Hall Group

Attributable to the owners of Charter Hall Group

Consolidated statement of changes in equity – Charter Hall Property Trust Group

Attributable to the owners of Charter Hall Property Trust Group

Consolidated cash flow statements

1 Summary of significant accounting policies

(a) Basis of preparation

Compliance with IFRSs

New and amended standards adopted

Historical cost convention

Critical accounting estimates

1 Summary of significant accounting policies (continued)

(b) Principles of consolidation

(i) Controlled entities

(ii) Associates

(iii) Joint ventures

Joint venture entities

Jointly controlled assets

CHARTER HALL GROUP Annual Report 2013