CROMWELL PROPERTY GROUP - Annual Report 2007

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CROMWELL DIVERSIFIED PROPERTY TRUST ARSN: 102 982 598

ANNUAL FINANCIAL REPORT

30 JUNE 2007

Responsible Entity: Cromwell Property Securities Limited ABN 11 079 147 809, AFSL 238052 Level 19, 200 Mary Street Brisbane Qld 4000

CROMWELL DIVERSIFIED PROPERTY TRUST TABLE OF CONTENTS

CONTENTS	PAGE
Directors’ Report	2
Auditor’s Independence Declaration	8
Income Statements	9
Balance Sheets	10
Statements of Changes in Equity	11
Cash Flow Statements	12
Notes to the Financial Statements	13
Directors’ Declaration	46
Audit Report	47

1. Directors & Officers

Directors

The persons who were Directors of the Responsible Entity at any time during the financial year and up to the date of this report were:

Mr Paul Weightman –Executive Chairman – Appointed August 1998

Mr Weightman practised as a solicitor for more than 20 years, and holds degrees in commerce and law. He has extensive experience in property development and investment, financial structuring, public listings, mergers and acquisitions, revenue matters and joint ventures. Mr Weightman has been Cromwell’s Executive Chairman since 1998, and has acted as a Director of companies in the property, energy and retail sectors.

Mr Robert Pullar – Non-Executive Director – Appointed July 2002

Mr Pullar is a Director of the Brisbane based property development company operating in Australia and Asia, Citimark Properties. He was previously a partner with chartered accounting firm Douglas Heck and Burrell (now known as Pitcher Partners), specialising in property investment, taxation and corporate reorganisation. Mr Pullar is a member of the Institute of Chartered Accountants and a Fellow of the Australian Institute of Company Directors. He is also Chairman of Cromwell’s Remuneration Committee, and a member of Cromwell’s Audit & Risk Committee.

Ms Michelle McKellar – Non-Executive Director – Appointed 1 March 2007 Ms McKellar joins Cromwell Group with a wealth of property business and portfolio management experience, having held a number of senior positions with Intro International Limited (now Jen Retail Properties) and CB Richard Ellis throughout Asia-Pacific. She is a Senior Member of the Property and Land Economy Institute and has recently established her own family property company. Ms McKellar is a member of Cromwell’s Remuneration and Audit & Risk Committees.

Mr David Usasz – Non-Executive Director – Appointed 26 April 2007 Mr Usasz has 20 years experience as partner with PricewaterhouseCoopers and has been involved in merger and acquisition advice, accounting and financial consultancy, specialising in corporate reorganisations. He holds a Bachelor of Commerce and is a Fellow of the Institute of Chartered Accountants. Mr Usasz is Chairman of Cromwell’s Audit & Risk Committee and a member of Cromwell’s Remuneration Committee.

Mr Ross Stiles – Executive Director – Appointed August 1998; Resigned 26 April 2007 Mr Stiles has in excess of 30 years experience in the financial services industry and acted as an executive Director of Cromwell from August 1998 until his resignation in April 2007. During his career he has served in senior executive positions with some of Australia’s most prominent funds management companies, where his duties included the management and supervision of significant client investment accounts and marketing of unit trusts. Mr Stiles is a member of the Financial Planning Association of Australia and the Australian Institute of Company Directors.

Mr Daryl Wilson – Finance Director – Appointed 25 January 2007

Mr Wilson is a member of the Institute of Chartered Accountants, and joined Cromwell in August 1999 in the role of Chief Financial Officer. He has many years experience in senior finance roles. Mr Wilson has led the development of Cromwell’s funds management capabilities, and has primary responsibility for the finance function. He holds a Bachelor of Commerce and a Diploma of Financial Planning.

Mr Richard Foster – Executive Director – Appointed July 2005

Mr Foster is a licensed real estate agent with substantial experience in the real property industry specialising in large-scale property acquisition for most of his professional life. He has also been closely involved with the acquisition and marketing of direct property investments valued in excess of $1.2 billion. He has had substantial input to the growth and development of the business and its investment products.

All directors of the Responsible Entity are also directors of Cromwell Corporation Limited.

No director has been a director of any other listed company in the last 3 years.

CROMWELL DIVERSIFIED PROPERTY TRUST DIRECTORS’ REPORT

1. Directors & Officers (Continued)

Company Secretary

Mr Daryl Wilson – Appointed October 2001; Resigned 25 January 2007

The Company Secretary from the start of the period until his resignation on 25 January 2007.

Mrs Suzanne Morgan – Appointed 25 January 2007

Mrs Morgan is the Company Secretary for the Cromwell Group and is responsible for ensuring the Cromwell Group operates within an appropriate legal and compliance framework with specific focus on the Cromwell Group’s statutory obligations. Mrs Morgan was appointed to the role of Company Secretary after joining Cromwell in 2006 as the Cromwell Group’s Corporate Legal Counsel. She has 10 years experience as an in-house corporate legal lawyer working primarily in the banking and financial services industry. Mrs Morgan has a Bachelor of Laws and an Associate Diploma in Applied Finance and Investment from the Securities Institute of Australia.

2. Principal Activity

The principal activity of the Trust and its subsidiaries (‘the Group’) during the financial year was property investment. The Group operates in Australia. There were no significant changes in the nature of the Group’s principal activity during the financial year.

3. Review of Operations and Results

Highlights

Highlights for the year included:

The stapling of units of the Trust to shares in Cromwell Corporation Limited, the parent of the Responsible Entity in December 2006;
An increase in net property income of 53% to $84.5 million over the corresponding year, primarily as a result of an increase in the size of the Trust;
The acquisition of over $216 million investment property by way of the acquisition of 5 Syndicates as part of the merger and stapling transaction;
A refinance of the Syndicate debt immediately following the merger, which recognised significant interest savings; and
Payment of distributions of 8.7 cents per unit (2006: 9.0 cents).

Financial Performance

In December 2006, the Trust merged with 5 Cromwell-managed Syndicates. The units in the merged Trust were then stapled to shares in Cromwell Corporation Limited, the parent of the Responsible Entity, to create the Cromwell Group.

The financial performance for the year reflects the significant increase in the assets of the Trust over the previous financial year, and the resulting increase in income, which was primarily driven by the merger and stapling transactions.

The financial results have also been impacted by increases in the fair value of investment properties of $139.7 million. This change in fair value includes a positive adjustment of $155.9 million from the revaluation of approximately 96% of the portfolio during the year, less adjustments of $16.2 million relating primarily to the write-off of acquisition costs for Cromwell Property Fund (“CPF”) assets while the CPF was consolidated.

An increase in value of the interest rate derivatives of $6.4 million has occurred primarily through the effect of increases in underlying variable interest rates during the year.

One-off costs of $3.0 million associated with the stapling transaction were also incurred during the year.

CROMWELL DIVERSIFIED PROPERTY TRUST DIRECTORS’ REPORT

3. Review of Operations and Results (Continued)

Operating Profits and Distributions to Unitholders

A reconciliation of profit attributable to unitholders to distributions paid/payable to unitholders is as follows:

Profit attributable to unitholders Adjustments: Net (gain)/loss from fair value adjustments to: • Investment properties • Interest rate derivatives Decrease to recoverable amount - jointly controlled entity Gain on equity dilution in associate Straight-line lease income Lease incentives and lease costs amortised Stapling transaction costs Amortisation of finance costs Profit attributable to unitholders excluding amortisation, fair value adjustments and other items above Cents per unit Distributions paid/payable to unitholders Cents per unit Financial Position Total assets Net assets_(1) Net tangible assets(1) Net debt(2)_ Gearing (%) Units issued NTA per security	Consolidated 2007 2006 $’000 $’000 196,671 24,296 (139,727) 16,021 (6,463) (9,359) - 2,460 (6,341) - (2,525) (4,688) 3,046 433 2,984 197 1,699 2,494
	49,344 31,854
	8.5¢ 9.3¢
	50,109 30,970
	8.7¢ 9.0¢
	Consolidated 2007 2006 $’000 $’000 1,273,330 935,938 658,254 395,245 658,254 395,245 567,746 476,443 45% 51% 699,995 444,447 $0.94 $0.89

(1) Shown in 2006 as a liability attributable to unitholders

(2) Borrowings less cash and cash equivalents

The Trust’s financial position changed during the year as a result of the merger and stapling transactions, the acquisition of additional properties by CPF while it was controlled, and the subsequent deconsolidation of CPF as units in the fund were issued to external investors.

In the prior year the assets, liabilities and financial performance of CPF were fully consolidated into the Trust. During the year, the Trust’s holding in CPF reduced to below 50%. This has resulted in the assets and liabilities of the CPF being deconsolidated. At balance date, the Trust held approximately 22% of the issued units in CPF.

CROMWELL DIVERSIFIED PROPERTY TRUST DIRECTORS’ REPORT

3. Review of Operations and Results (Continued)

The Trust acquired over $530 million investment property during the period, including $216 million Syndicate assets via the merger transaction and $269 million in CPF. The Trust recognised disposals of approximately $351 million as a result of the deconsolidation of CPF, and $27 million as a result of the sale of the Village Cinema complex at Bourke Street, Melbourne. At balance date, approximately $156 million investment property was classified as held-for-sale. This represents the

investment properties at 59 Goulburn Street, Sydney and Corporate Centre One on the Gold Coast. These properties were subject to sales agreements at balance date.

4. Significant Changes in the State of Affairs

Changes in the state of affairs of the Group during the financial year are set out within the financial report. In particular, changes to net assets attributable to unitholders and changes in equity, including units issued, are set out in notes 23 and 24.

Other than as set out in the financial report, there have been no other significant changes in the state of affairs of the Group during the financial year.

5. Subsequent Events

Other than as set out in note 34 of the financial report, no matter or circumstance has arisen since 30 June 2007 that has significantly affected or may significantly affect:

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

6. Likely Developments and Expected Results of Operations

The activities of the Trust are regulated by the Trust constitution. The Trust’s primary objective is to invest directly or indirectly in commercial, industrial and other non-residential property to provide unitholders with a diversified, stable income stream while maximising long-term value.

The Trust aims to achieve this objective by investing in a portfolio of quality investment-grade property with long term leases. The Trust diversifies investment risk by investing in property with a range of:

geographical locations, concentrating on Australian capital cities and major regional centres;
sectors, concentrating predominantly on commercial and industrial properties; and
tenants, with preference given to government and substantial publicly listed companies.

The Responsible Entity, on behalf of the Trust, will continue to pursue opportunities which meet the primary objectives of the Trust.

7. Environmental Regulation

The Directors are not aware of any particular and significant environmental regulation under a law of the Commonwealth, State or Territory relevant to the Group.

8. Distributions Paid or Payable

Distributions paid/payable to unitholders of the Trust for the year ended 30 June 2007 were $50,109,000 (2006: $30,970,000). Distributions payable at the end of the financial year were $10,150,000 (2006: $2,941,000).

CROMWELL DIVERSIFIED PROPERTY TRUST DIRECTORS’ REPORT

9. Directors’ Interests

Particulars of Directors’ relevant interests in the units of the Trust or a related entity as at the date of this report are as follows:

P L Weightman R J Pullar D E Usasz M A McKellar W R Foster D J Wilson	Trust Units 15,364,167 13,545,269 1,490,400 20,000 5,349,598 2,205,982
	37,975,416

10. Options

No options over unissued units in the Trust have been issued since the beginning of the year and none are on issue at the date of this report.

11. Fees to Responsible Entity

Amounts paid/payable to the Responsible Entity or its associates during the year were as follows:

Acquisition co-ordination and capital raising fees Management fees Property management fees Project management fees Finance arranging fees Leasing commissions	$ 3,730,051 6,641,988 2,096,836 373,925 451,290 587,963
	13,882,053

Acquisition co-ordination fees were paid at 1% of the purchase price of syndicate properties acquired during the year and 3% of the purchase price of CPF properties acquired (and charged based on the proportion of capital raised). Capital raising fees are charged at 4% of capital raised.

Management fees are payable at the rate of 0.6% pa of the value of the total assets of the Trust.

Property related fees including property management fees, leasing commissions and project management fees were paid to Cromwell Property Services Pty Ltd, a company associated with the Responsible Entity. These fees form part of outgoings costs and as such are partly recoverable from tenants.

Finance arranging fees were charged by Cromwell Capital Limited, a company associated with the Responsible Entity. The fees were charged at 0.35% of the total value of loans arranged for the Trust.

The Responsible Entity or its associates are also reimbursed for costs incurred on behalf of the Trust.

12. Units held by Responsible Entity

Cromwell Corporation Limited (“CCL”), the parent company of the Responsible Entity, held 275,106 units in the Trust throughout the 2007 financial year. The units were issued pursuant to prospectuses issued by CCL and in exchange for Cromwell Property Preference Shares, which are listed on the ASX. Pursuant to Australian Securities & Investment Commission relief granted during the year, the units are not stapled to shares in CCL.

The Responsible Entity held 1,517,000 units in the Cromwell Mary Street Planned Investment, a subsidiary of the Trust, throughout the 2007 financial year. The holding represents approximately 8% of the issued units in the Cromwell Mary Street Planned Investment.

CROMWELL DIVERSIFIED PROPERTY TRUST DIRECTORS’ REPORT

13. Indemnifying Officers or Auditors

No indemnities have been given during or since the end of the financial year, for any person who is or has been an officer or auditor of the Group. No insurance premiums have been paid for out of the assets of the Trust in regards to insurance provided to the Responsible Entity or the auditors of the Group.

14. Issued Units

Units issued in the Trust during the financial year are set out in note 23 and 24 in the accompanying financial report. There were 699,995,182 (2006: 444,447,476) issued units in the Trust as at the end of the financial year. There were no redemptions of units in the Trust during the financial year.

15. Value of Scheme Assets

The total carrying value of the Trust’s assets as at the end of the financial year was approximately $1,273,330,000 and net assets were $658,254,000, equating to $0.94 per unit.

The Trust’s assets are valued in accordance with policies stated in note 1 of the financial statements.

16. Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 accompanies this report.

17. Rounding of Amounts

Pursuant to class order 98/0100, issued by the Australian Securities & Investments Commission, amounts in this report and the financial report have been rounded off to the nearest one thousand dollars unless otherwise indicated.

Signed in accordance with a resolution of the directors of Cromwell Property Securities Limited.

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P.L. Weightman Director

Dated at Brisbane this 27[th] day of September 2007

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The Directors Cromwell Property Securities Limited

As Responsible Entity for Cromwell Diversified Property Trust Level 19 200 Mary Street BRISBANE QLD 4000

Auditor’s Independence Declaration

As lead engagement partner for the audit of the financial report of Cromwell Diversified Property Trust for the year ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been:

(i) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

JOHNSTON RORKE

Chartered Accountants

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J J EVANS Partner

Brisbane, Queensland 27 September, 2007

CROMWELL DIVERSIFIED PROPERTY TRUST INCOME STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

Note Revenue and other income Rental income and recoverable outgoings Lease surrender Distributions received • Jointly controlled entity and associate • Controlled entities Interest – other persons Interest – controlled entities Other revenue Net gain from fair value adjustment to: • Interest rate derivatives 9 • Investment properties 14 Reversal of decrease to recoverable amount 16 Gain on sale of investment properties Gain on dilution of interest in associate 16 Share of profits of equity accounted entities 16 Total revenue and other income Operating expenses Rates, taxes and investment property outgoings Administration costs Finance costs (excluding unitholders) 5 • Interest - financial institutions • Interest - controlled entity • Amortisation (loan transaction costs) Net loss from fair value adjustment to: • Investment properties 14 Decrease to recoverable amount: • Controlled entities 15 • Jointly controlled entity 16 Stapling transaction costs Operating expenses (before finance costs to unitholders) Profit attributable to unitholders Finance costs attributable to unitholders(1) Distributions : • unitholders of parent 28 • external unitholders of subsidiary 28 Decrease/(increase) in net assets attributable to: • unitholders of parent 23 • external unitholders of subsidiary 23 Net profit 26 Distributions per unit (cents) Basic/diluted earnings per unit (cents) 27	Consolidated 2007 $’000 2006 $’000 107,037 63,931 - 2,348 - - - - 4,453 4,177 - - 470 - 6,463 9,359 139,727 - - - 4,883 - 6,341 - 4,828 3,192	Trust 2007 $’000 2006 $’000 78,618 63,927 - 2,348 2,747 1,964 5,953 618 3,525 4,126 7,368 - 19 - 6,244 9,359 86,847 - 1,393 - 4,883 - - - - -
	274,202 83,007	197,597 82,342
		15,867 11,009 5,851 3,928 5,807 17,232 27,835 4,994 1,341 2,420 - 9,492 - 8,300 - 1,510 2,984 197
	22,494 11,019 7,436 3,929 42,918 22,591 - - 1,699 2,494 - 16,021 - - - 2,460 2,984 197
	77,531 58,711	59,685 59,082
	196,671 24,296	137,912 23,260
	(39,959) (30,970) (550) - (145,520) 6,674 (3,570) -	(39,959) (30,970) - - (93,191) 7,710 - -
	(189,599) (24,296)	(133,150) (23,260)
	7,072 -	4,762 -
	8.7¢ 9.0¢	8.7¢ 9.0¢
	12.1¢ -

(1) For the period 1 July 2004 to 31 May 2007, AIFRS required net assets attributable to unitholders to be treated as a liability and distributions to be treated as a finance cost. On 1 June 2007 the constitution of the Trust was amended, with the effect that net assets attributable to unitholders are treated as equity from that date.

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

CROMWELL DIVERSIFIED PROPERTY TRUST BALANCE SHEETS AS AT 30 JUNE 2007

Note Current assets Cash and cash equivalents 6 Trade and other receivables 7 Other financial assets 8 Derivative financial instruments 9 Other current assets 10 Lease receivable 17 Investment properties classified as held for sale 11 Total current assets Non-current assets Other financial assets 12 Property, plant and equipment 13 Investment properties 14 Investments in controlled entities 15 Investments in jointly controlled entity/associate 16 Lease receivable 17 Deposit and preliminary costs 18 Total non-current assets Total assets Current liabilities Trade and other payables 19 Borrowings 20 Distributions payable 21 Other current liabilities 22 Total current liabilities Non-current liabilities (excluding net assets attributable to unitholders) Borrowings 20 Total liabilities (excluding net assets attributable to unitholders) Net assets attributable to unitholders Unitholders of the Trust 23 External unitholders of subsidiary 23 Net assets Equity Contributed equity 24 Reserves 25 Undistributed income 26 Total equity	Consolidated 2007 $’000 2006 $’000 13,679 43,367 17,245 1,234 121 1,211 13,498 7,254 820 857 8,400 -	Trust 2007 $’000 2006 $’000 10,578 35,795 119,131 21,677 121 1,211 13,498 7,254 608 851 8,400 -
	53,763 53,923 156,452 -	152,336 66,788 64,400 -
	210,215 53,923	216,736 66,788
		61,250 760 8,507 - 733,438 724,434 125,939 25,200 39,942 28,772 - 8,400 - -
	61,250 760 8,507 - 927,113 805,184 - - 66,245 54,975 - 8,400 - 12,696
	1,063,115 882,015	969,076 787,566
	1,273,330 935,938	1,185,812 854,354
	13,148 14,946 153,432 93,366 10,150 2,941 3,859 2,996	12,283 7,766 139,932 19,380 10,150 2,941 3,291 2,783
	180,589 114,249	165,656 32,870
	427,993 426,444	427,993 426,444
	608,582 540,693	593,649 459,314
	- 395,245 6,494 -	- 395,040 - -
	658,254 -	592,163 -
	526,420 - 131,834 - - -	526,420 - 65,743 - - -
	658,254 -	592,163 -

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

CROMWELL DIVERSIFIED PROPERTY TRUST STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007

Note Total equity at the beginning of the year Profit for the year Total recognised income and expense for the year Transfer from net assets attributable to unitholders: • Contributed equity 24 • Reserves 24 Transactions with unit holders in their capacity as unit holders: • Contributions of equity 24 • Distributions paid/payable 26 Total equity at the end of the year	Consolidated Trust 2007 2006 2007 2006 $’000 $’000 $’000 $’000 - - - - 7,072 - 4,762 -
	7,072 - 4,762 -
	526,394 - 526,394 - 134,912 - 71,131 - 26 - 26 - (10,150) - (10,150) -
	658,254 - 592,163 -

Under AIFRS net assets attributable to unitholders were initially classified as a liability rather than equity due to the limited life of the Trust. On 1 June 2007 the Trust’s constitution was amended to effectively remove the limitation of the term of the Trust – refer to note 1(l). As a result, there were no changes in equity during the 2006 and 2007 financial years up to 31 May 2007. All changes in equity listed above occurred in the month of June 2007.

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

CROMWELL DIVERSIFIED PROPERTY TRUST CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

Note Cash flows from operating activities Receipts in course of operations Payments in course of operations Interest received Distributions received Finance costs (excluding distributions to unitholders) Net cash provided by operating activities 29 Cash flows from investing activities Payments for investment properties Proceeds from disposal of investment properties Payments for investments in controlled entities (net of cash acquired) 15 Proceeds from disposal of controlled entity (net of cash disposed) 15 Payments for investments in associate and jointly controlled entity Deconsolidation of subsidiary (net of cash disposed) 15 Payments for property, plant and equipment Payments for convertible financing units Repayments of convertible financing units Payments to restricted deposits Proceeds from restricted deposits Payments for deposits and preliminary costs Payments for finance lease assets Loans to controlled entities Repayments from controlled entities Loans to related entities Repayments from related entities Net cash used in investing activities Cash flows from financing activities Proceeds from issue of units Transaction costs on issue of units Proceeds from issue of units – controlled entity Transaction costs on issue of units – controlled entity Proceeds from borrowings Repayment of borrowings Loan received from related entities Repayments to related entities Loans received from controlled entity Payment for derivative financial instruments Borrowing transaction costs Distributions paid Other receipts Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 116,805 73,809 84,792 73,805 (48,644) (18,704) (37,237) (21,043) 3,528 4,177 9,372 4,126 4,593 2,995 7,978 2,582 (42,817) (20,952) (33,485) (22,409)
	33,465 41,325 31,420 37,061
	(308,376) (414,198) (11,747) (329,334) 32,745 - 32,745 - (763) - (2,614) (33,500) (22) - - - - (30,238) - (16,782) (6,060) - - - (33,004) - (8,507) - - - (73,750) - - - 12,500 - - (1,891) - (1,891) 1,812 - 1,812 - - (12,696) - - - (8,400) - (8,400) - - (116,594) (20,443) - - 23,216 - (765) - (765) - 2,500 - 2,500 -
	(311,933) (467,423) (141,204) (410,350)
	139 199,957 139 199,957 - (10,073) - (10,042) 20,689 - - - (1,272) - - - 501,223 674,390 188,690 184,830 (240,267) (429,000) (77,030) (429,000) 18,801 - 15,301 - (8,929) - (5,497) - - - - 429,000 (3,139) - - - (1,571) (2,851) (678) (2,703) (36,894) (25,798) (36,358) (25,798) - 190 - 190
	248,780 406,815 84,567 346,434
	(29,688) (19,283) (25,217) (26,855) 43,367 62,650 35,795 62,650
	13,679 43,367 10,578 35,795

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

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for the parent entity, Cromwell Diversified Property Trust (‘the Trust’) as an individual entity and the consolidated entity (‘the Group’) consisting of the Trust and its subsidiaries.

(a) Basis of Preparation

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 .

Compliance with IFRS

The financial report of the consolidated entity also complies with the International Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board. The Trust’s financial report does not comply with IFRS as the Trust has elected to apply the relief provided to parent entities by AASB 132 Financial Instruments: Disclosure and Presentation in respect of certain disclosure requirements.

Historical cost convention

The financial report is prepared on the historical cost basis except for the following:

investment properties are measured at fair value
derivative financial instruments are measured at fair value
available-for-sale financial assets are measured at fair value.

The methods used to measure fair values are discussed below.

Functional and presentation currency

The financial report is presented in Australian dollars, which is the Trust’s functional currency and the functional currency of the Group.

Critical accounting estimates

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in note 3.

(b) Principles of Consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of the Group as at 30 June 2007 and the results of the Group for the year then ended.

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity, so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

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

Inter-entity transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised losses are eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies (Continued)

(b) Principles of Consolidation (Continued)

Subsidiaries (Continued)

Investments in subsidiaries are accounted for using the cost method in the separate financial statements of the Trust.

Associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a holding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the Trust financial statements using the cost method and in the Group financial statements using the equity method of accounting, after initially being recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

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

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

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

Joint ventures

The interest in a joint venture entity is accounted for in the Group financial statements using the equity method and is accounted for using the cost method by the Trust. Under the equity method, the share of the profits or losses of the joint venture entity is recognised in the income statement, and the share of movements in reserves is recognised in reserves in the balance sheet.

Profits or losses on transactions establishing the joint venture entity and transactions with the joint venture are eliminated to the extent of the Group’s ownership interest until such time as they are realised by the joint venture entity on consumption or sale, unless they relate to an unrealised loss that provides evidence of the impairment of an asset transferred.

(c) Revenue Recognition

Rental revenue from investment property is recognised on a straight-line basis over the lease term. Rental revenue not received at reporting date is reflected in the balance sheet as a receivable or if paid in advance, as rent in advance. Lease incentives granted are considered an integral part of the total rental revenue and are recognised as a reduction in lease income over the term of the lease, on a straight-line basis.

Contingent rents based on the future amount of a factor that changes other than with the passage of time, including turnover rents and CPI linked rental increases are only recognised when contractually due.

Interest revenue is recognised as it accrues using the effective interest method.

(d) Income Tax

Under current income tax legislation the Trust is not liable to pay tax provided its taxable income and taxable realised capital gains are distributed to unitholders. The liability for capital gains tax that may arise if the properties were sold is not accounted for in this report.

(e) Impairment of Assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies (Continued)

(f) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and 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.

(g) 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 and other receivables are usually due for settlement no more than 90 days from the date of recognition.

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

Finance lease receivables are recognised at the amount equal to the aggregate of the present value of the minimum lease payments and the present value of any unguaranteed residual expected to accrue to the benefit of the Group at the end of the lease term. The asset is reduced by the principal component of lease receipts. The interest component is credited to the income statement.

(h) Property, Plant and Equipment

Property that is being constructed or developed for future use as investment property is accounted for as property, plant and equipment and is stated at cost until construction of the development is complete. At this time it is remeasured to fair value and reclassified as investment property. Any gain or loss arising on remeasurement is recognised in profit or loss.

(i) Investment Properties

This represents the Group’s investment in various commercial, industrial and retail properties. Investment property is property which is held either to earn rental income or for capital appreciation or both. Initially, investment property is measured at cost including transaction costs. The investment property is subsequently measured at fair value, with any change therein recognised in profit or loss. An external, independent valuer, having an appropriate recognised professional qualification and recent experience in the location and category of property being valued, values individual properties at least every two years on a rotation basis or on a more regular basis if considered appropriate and as determined by management in accordance with the valuation policy of the Group. In addition, the Group has utilised internal valuation processes for determining fair value during the period.

These valuations are taken into consideration when determining the fair value of the investment properties. The fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgably, prudently and without compulsion.

The valuations are prepared by considering the aggregate of the net annual rents receivable from the property and, where relevant, associated costs. A yield, which reflects the specific risks inherent in the net cash flows, is then applied to the net annual rentals to arrive at the property valuation. A table showing the range of yields applied for each type of property in the current period is included below.

Property Sector	Yields
Commercial offices	6.3% - 9.0%
Industrial	7.3% - 8.5%
Retail	6.8% - 9.0%

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies (Continued)

(i) Investment Properties (Continued)

Valuations reflect, where appropriate;

the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market’s general perception of their credit-worthiness;
the allocation of maintenance and other operating cost responsibilities between lessor and lessee; and
the remaining economic life of the property. It has been assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and, where appropriate, counter notices have been served validly and within the appropriate time.

Any gain or loss arising from a change in fair value is recognised in the income statement.

Where property is acquired for redevelopment and future use as investment property it is treated as property, plant and equipment until redevelopment is complete.

(j) 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 up front cash payments, rent free periods, or a contribution to certain lessee costs such as fit out costs or relocation costs. They are recognised as an asset in the balance sheet as a component of the carrying amount of investment property and amortised on a straight line basis over the lease period as a reduction of rental income.

(k) Trade and Other Payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost. These amounts generally represent liabilities for goods and services provided to the Group prior to the end of the year which are unpaid. The amounts are usually unsecured and paid within 30-60 days of recognition.

(l) Borrowings and Borrowing Costs

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest rate method. Under this method fees, costs, discounts and premiums directly related to the financial liability are spread over its expected life. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after balance date.

Borrowing costs incurred for construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for intended use or sale. Other borrowing costs are expensed. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset the amount of borrowing costs capitalised is the actual borrowing costs incurred on that borrowing net of any interest earned on those borrowings. Where funds are borrowed generally the capitalisation rate used to determine the amount of borrowing costs to capitalise is the weighted average interest rate applicable to the Group’s outstanding borrowings during the year.

Owing to the fixed life of the Trust, the units on issue were classified as a liability under AASB 132 Financial Instruments: Disclosure and Presentation . Consequently, distributions to Trust members have been recognised as finance costs. The Trust’s constitution was amended on 1 June 2007 to remove the fixed life of the Trust. Accordingly, from that date, units on issue are classified as equity and distributions are no longer expensed as finance costs.

(m) Earnings Per Unit

Basic earnings per unit is calculated as net profit attributable to unitholders divided by the weighted average number of ordinary units outstanding during the financial year.

Diluted earnings per unit is calculated as net profit attributable to unitholders divided by the weighted average number of ordinary units and dilutive potential ordinary units outstanding during the year.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies (Continued)

(n) Fair Value Estimation

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

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market (for example, over-thecounter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quotes from financial institutions are used to determine fair value of certain instruments, including certain derivatives. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The nominal value less estimated credit adjustments of trade and other receivables and payables are assumed to approximate their fair values.

(o) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
for trade and other receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of trade and other receivables or payables.

(p) Business Combinations

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

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

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 Group’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(q) Derivative Financial Instruments

The Group is exposed to changes in interest rates and uses interest rate swaps to hedge these risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value at balance date. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. The Group enters into interest rate swap agreements to convert certain variable interest rate borrowings to fixed interest rates or vice versa. The swaps are entered into with the objective of hedging the risk of adverse interest rate fluctuations. While the Group has determined that these arrangements are economically effective, they have not satisfied the documentation, designation and effectiveness tests required by accounting standards. As a result, they do not qualify for hedge accounting and gains or losses arising from changes in fair value are recognised immediately in the income statement.

(r) Initial Direct Leasing Costs

Initial direct leasing costs incurred by the Group in negotiating and arranging operating leases are recognised as an asset in the balance sheet as a component of the carrying amount of investment property and are amortised as an expense on a straight line basis over the lease term.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies (Continued)

(s) Repairs and Maintenance

Repairs and maintenance costs and minor renewals are charged as expenses when incurred. These repairs and maintenance costs will consist of those that, under the relevant lease agreements, are non-recoverable from tenants.

(t) Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in this financial report.

(u) Rounding of Amounts

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

(v) New Accounting Standards

Australian Accounting Standards that have recently been issued or amended but are not yet effective and have not been adopted for the annual reporting period ended 30 June 2007 are listed below. Application date is for annual reporting periods beginning on or after the date shown in the table below.

	Application	Application
Standard/Interpretation	date of	date for
	standard	the Group
AASB 2007-4_Amendments to Australian Accounting Standards – April 2007_	1 Jul 2007	1 Jul 2007
AASB 2007-7_Amendments to Australian Accounting Standards – June 2007_	1 Jul 2007	1 Jul 2007
AASB 7_Financial Instruments: Disclosures_	1 Jan 2007	1 Jul 2007
AASB 8_Operating Segments_and consequential amendments to other accounting standards resulting from its issue	1 Jan 2009	1 Jul 2009
AASB 101_Presentation of Financial Statements_– revised standard	1 Jan 2007	1 Jul 2007
AASB 123_Borrowing Costs_revised and consequential amendments to other accounting standards resulting from its issue	1 Jan 2009	1 Jul 2009
Interpretation 10_Interim Financial Reporting and Impairment_	1 Nov 2006	1 Jul 2007
Interpretation 11_AASB 2 – Group and Treasury Share Transactions_	1 Mar 2007	1 Jul 2007
Interpretation 12_Service Concession Arrangements_	1 Jan 2008	1 Jul 2008
Interpretation 13_Customer Loyalty Programs_	1 Jul 2008	1 Jul 2008
Interpretation 14_Limit on a Defined Benefit Asset, Minimum Funding_ Requirements and their Interaction	1 Jan 2008	1 Jul 2008

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group but may change the disclosures presently made in relation to the Group’s assets, liabilities, segments and financial instruments.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

2. Financial Risk Management

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

The Group’s management of treasury activities is centralised and governed by policies approved by the board of directors who monitor the operating compliance and performance as required. The board provides principles for overall risk management, as well as policies covering specific areas, such as identifying risk exposure, analysing and deciding upon strategies, performance measurement, the segregation of duties and other controls around the treasury and cash management functions.

(a) Market risk

(i) Currency risk

The Group does not have any direct material currency risk as commercial transactions and recognised financial assets and liabilities are all in Australian currency.

(ii) Price risk

The Group does not have any direct material market or commodity price risk relating to its financial assets or liabilities.

(b) Credit risk

Derivative counterparties and cash transactions, when utilised, are transacted with high credit quality financial institutions.

The Group has no significant concentrations of credit risk relating to debtors except that at balance date the Group has amounts owing from the Cromwell Property Fund and its controlled entities of $73,222,000 (2006: $nil) comprising 93% (2006: nil%) of total receivables and other financial assets (refer notes 7 and 12).

The credit risk on financial assets which have been recognised on the balance sheets is generally the carrying amount, net of any provision.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash reserves and finance facilities to meet the ongoing operational requirements of the business. It is the Group’s policy to maintain sufficient funds in cash and cash equivalents to meet expected near term operational requirements. The Group monitors its cash requirements and raises capital as and when appropriate to meet forecast requirements.

(d) Cash flow and fair value interest rate risk

The Group’s interest-rate risk primarily arises from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk. The Group’s policy is to effectively maintain hedging arrangements on not less than 50% of its borrowings. At balance date, 54% (2006: 57%) of the Group’s borrowings were effectively hedged.

The Group manages its cash flow interest-rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long term borrowings at floating rates and swaps a portion of them into fixed rates. Under the interest-rate swaps, the Group agrees with other parties to exchange, at specified intervals (usually 30 days), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

3. Critical Accounting Estimates and Judgements

Critical accounting estimates and judgements are:

Estimates of fair value of interest rate derivatives

The fair value of interest rate derivatives has been determined by a third party financial institution by assessing the net present value of future cash flows of the interest rate derivatives based on certain assumptions including market expectations of expected interest rates and discount rates.

Assumptions underlying management’s estimates of fair value

The Group has investment properties with a carrying amount of approximately $927 million plus $156 million of investment properties classified as held for sale, representing estimated fair value. In addition, the carrying amount of the Group’s investment in jointly controlled entity/associate of approximately $66 million also reflects investment properties carried at fair value. These carrying amounts reflect certain assumptions about expected future rentals, rent-free periods, operating costs and appropriate discount and capitalisation rates. In forming these assumptions, the independent valuers considered information about current and recent sales activity, current market rents and discount and capitalisation rates, for properties similar to those owned by the Group.

• Critical judgement in applying the Group’s accounting policies The Group did not control the Cromwell Property Fund (“CPF”) at balance date and held 22% of the ordinary units of CPF at that time. The Group holds 61,250,000 convertible financing units (CFUs) issued by CPF. The CFUs are convertible to ordinary units and, as such, give rise to potential voting rights. However, the CFUs are not considered to be currently exercisable or convertible as certain third party approvals are necessary prior to conversion. Therefore, the entity was not considered to be a subsidiary. Refer note 15 for further details.

4. Segment Information

The Group has one business segment and operates in one geographical segment. It holds properties throughout Australia, except Northern Territory. Revenue is derived from rentals and associated recoverable outgoings. The Group’s properties are leased on a commercial basis incorporating varying lease terms and conditions. These include the lease period, renewal options, periodic rent and, where applicable, indexation based on CPI, fixed and/or market reviews.

5. 6.	Finance Costs (excluding unitholders) Total interest Less: interest capitalised to properties under construction Interest expense Amortisation Finance costs (excluding unitholders) Cash and Cash Equivalents Cash at bank and on hand	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 44,119 22,591 33,642 22,226 (1,201) - - -
		42,918 22,591 33,642 22,226 1,699 2,494 1,341 2,420
		44,617 25,085 34,983 24,646
		13,679 43,367 10,578 35,795

Cash at bank bears floating interest rates at a weighted average rate of 5.95% pa at 30 June 2007 (2006: 5.45% pa).

7. Trade and Other Receivables

Trade and other receivables

• Controlled entities • Other Loans – controlled entity (CPF) Loans – other controlled entities Loans – associate (CAF)	- - 5,273 1,234 - - - - 11,972 -	2,774 - 4,385 1,234 - 20,100 100,000 343 11,972 -
	17,245 1,234	119,131 21,677

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

7. Trade and Other Receivables (Continued)

Trade and other receivables mainly comprise amounts owing by tenants of the Group’s investment properties. Trade and other receivables are usually non-interest bearing, unsecured and generally on 30 day terms.

Loans – controlled entity

The Trust provided a loan of $20,100,000 to Cromwell Property Fund (“CPF”) during the 2006 year to assist in funding the acquisition of investment properties. The loan was unsecured and bore variable interest at 7.5% pa. The loan was repaid in full during the 2007 financial year.

Loans – other controlled entities

Subsequent to the merger of the Trust with the Syndicates in December 2006, the Trust refinanced the external debt of the Syndicates by borrowing funds directly, and advancing these funds to the Syndicates to repay existing debt. The Trust has provided loans of $100,000,000 (2006: $nil) to the Syndicates. The loans are unsecured, at call with no fixed repayment terms and bear interest at a floating rate, which was 7.3% at balance date.

Loans – associate

The Trust provided a loan of $13,572,000 to Cromwell Accumulation Fund (now a subsidiary of CPF) during the 2007 year (prior to disposal) to fund the acquisition of investment properties. Subsequently, further advances of $900,000 were made and repayments of $2,500,000 were received prior to 30 June 2007. The loan is unsecured, at call with no fixed repayment terms and bears interest at a floating rate, which was 7.3% at balance date.

The net fair values of trade and other receivables approximate their carrying values.

8.	Other Financial Assets Current Restricted cash	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 121 1,211 121 1,211

Restricted cash included $1,812,000 (of which $760,000 was included in non-current assets – refer note 12) held on bank deposit at 30 June 2006 as security in relation to CMBS borrowings (see note 20). During the 2007 year the Trust provided additional security in relation to CMBS borrowings resulting in release of the $1,812,000.

Restricted cash earns weighted average interest at floating rates which was 5.95% at balance date (2006:5.45%).

The net fair values of other financial assets approximate their carrying values.

9. Derivative Financial Instruments

Interest rate swaps – at fair value 13,498 7,254 13,498 7,254

Loans of the Group bear variable interest rates as disclosed in note 20. It is policy to protect part of the loans from exposure to increasing interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it receives interest at variable rates and pays interest at fixed rates.

Swaps in place at balance date cover approximately 54% (2006: 57%) of the loan principal outstanding. The fixed interest rates range between 4.7% and 5.9% (2006: 4.7% and 5.9%) and the variable rates are between 0.2% and 0.8% above the 30 day bank bill swap bid rate which at balance date was 6.4% (2006: 5.9%).

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

9. Derivative Financial Instruments (Continued)

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

s follows:
Less than 1 year 1-2 years 2-3 years 3-4 years 4-5 years Greater than 5 years	Consolidated 2007 2006 $’000 $’000 5,820 - 99,450 5,820 15,060 99,450 76,745 - - 76,745 118,180 118,180
	315,255 300,195

The contracts require settlement of net interest receivable or payable, generally every 30 days. The contracts are settled on a net basis.

At balance date these contracts were assets with fair value of $13,498,000 (2006: $7,254,000). During the year ended 30 June 2007 there was an increase in fair value of $6,463,000 (2006: $9,359,000).

Credit risk arises from the potential failure of counterparties to meet their obligations under the respective contracts. This arises with amounts receivable from unrealised gains on derivative financial instruments. The Group currently undertakes all its transactions in interest rate contracts with one financial institution.

The Group’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in note 20.

10. 11.	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 Other Current Assets Prepayments 820 857 608 851 Investment Properties Classified as Held for Sale Investment properties – at fair value 156,452 - 64,400 - Movement in assets held for sale Balance at 1 July 2006 - - - - Transfer from investment property 156,452 - 64,400 - Balance at 30 June 2007 156,452 - 64,400 -	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 820 857 608 851
	Investment properties – at fair value Movement in assets held for sale Balance at 1 July 2006 Transfer from investment property Balance at 30 June 2007
		- - - - 156,452 - 64,400 - 156,452 - 64,400 -

At balance date the investment property at 59 Goulburn Street, Sydney was subject to a sale contract which settled on 23 July 2007 (refer to note 34). The Bundall Corporate Centre investment property was subject to put and call options at 30 June 2007 with an expected settlement date of October 2007 (refer note 34).

As the investment properties are carried at fair value no material gain or loss on disposal is expected.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

12.	Other Financial Assets Non-current Convertible financing units (CFUs) Restricted cash (refer note 8)	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 61,250 - 61,250 - - 760 - 760
		61,250 760 61,250 760

The Trust holds 61,250,000 (2006: nil) convertible financing units (CFUs). CFUs are a debt instrument issued by the Cromwell Property Fund (CPF). All CFUs on issue are held by the Trust and were issued at $1 each and are repayable at $1 each. CFUs have been issued by CPF to fund the acquisition of investment properties, and are expected to be repaid by the maturity date of 3 July 2008 from the proceeds of the issue of ordinary units by CPF. CFUs are unsecured and earn interest at a floating rate equal to the bank bill swap rate, plus a margin of 0.70%, which equated to a rate of 7.1% at 30 June 2007.

The net fair values of other financial assets approximate their carrying values.

13. Property, Plant and Equipment

Property, Plant and Equipment
Properties under construction and development Movement in properties under construction Balance at 1 July Additions at cost • Acquisition price • Transaction costs • Construction costs • Holding costs • Capitalised interest Disposals Balance at 30 June	8,507 - 8,507 -
	and development - - - - 29,035 - 7,100 - 1,677 - 364 - 225 - 225 - 866 - 818 - 1,201 - - - (24,497) - - -
	8,507 - 8,507 -

Assets pledged as security

Loans (refer note 20) are secured by a registered floating charge over the assets of the Trust.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

14. Investment Properties

Investment properties – at fair value

Consolidated	Consolidated
2007	2006	2007	2006
$’000	$’000	$’000	$’000
927,113	805,184	733,438	724,434

Movement in investment properties
Reconciliation of the carrying amounts of	investment properties at beginning and end			of the financial
year is set out below:
Balance at 1 July 2006	805,184	401,600	724,434	401,600
Additions at cost
• Acquisition price	291,895	381,055	-	300,555
• Transaction costs	18,036	27,201	-	20,422
• Improvements	4,572	2,451	4,078	2,451
Cost of Syndicate investment properties
acquired (refer note 15)	216,369	-	-	-
Disposals – properties held by parent	(27,283)	-	(27,283)	-
Disposals – properties held by subsidiary
(refer note 15)	(23,968)	-	-	-
Deconsolidation of CPF (refer note 15)	(350,985)	-	-	-
Transfer to assets held for sale	(156,452)	-	(64,400)	-
Straight-lining rentals	2,525	4,688	2,093	4,688
Lease incentives	6,136	4,016	6,369	4,016
Leasing costs	1,357	194	1,300	194
Net gain/(loss) from fair value
adjustments_(1)_	139,727	(16,021)	86,847	(9,492)
Balance at 30 June 2007	927,113	805,184	733,438	724,434
Amounts recognised in profit and loss for investment property
Rent from investment properties	107,037	63,931	78,618	63,927
Lease surrender	-	2,348	-	2,348
Direct operating expense from property
that generated rental income	(22,494)	(11,019)	(15,867)	(11,009)
	84,543	55,260	62,751	55,266

(1) Consolidated net gain from fair value adjustment to investment properties includes a fair value adjustment of $22,042,000 (2006: $nil) on investment properties held for sale.

Non-current assets pledged as security

Loans (refer note 20) are secured by fixed and floating charges over each investment property plus charges over any building document, lease document, performance bond and bank guarantee in addition to a real property mortgage over each property.

Leases as a lessor

The investment properties are generally leased to tenants on long term operating leases with rentals payable monthly. Minimum lease payments under the non-cancellable operating leases of the investment properties not recognised in the financial statements are receivable as follows:

Within one year Later than one year but not later than five years Later than five years	81,020 104,980 68,055 84,545 223,065 296,169 189,185 237,993 114,200 142,884 108,218 127,045
	418,285 544,033 365,458 449,583

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

14. Investment Properties (Continued)


Independent valuation/sale amount	Carrying amount Carrying amount	Fair value adjustment
2007 $’000 2006 $’000 25,000 20,800 38,500 36,500 11,900 10,700 41,000 37,000 10,500 9,750 - 27,200 16,500 16,500 15,450 15,450 3,400 3,400 3,000 2,700 10,600 10,600 12,500 7,700 21,600 11,650 15,800 12,900 161,300 149,300 47,000 47,000 40,750 34,000 64,400 45,285 95,000 89,500 35,000 30,400 125,500 106,099	2007 $’000 2006 $’000 25,052 20,800 38,501 36,500 11,900 10,700 41,144 37,000 10,500 9,750 - 27,200 16,531 16,500 15,476 15,450 3,430 3,400 3,003 2,700 10,922 10,600 12,500 7,700 21,600 11,650 15,800 12,900 161,263 149,300 47,000 47,000 41,198 34,000 64,400 45,285 95,538 89,500 35,000 30,400 127,080 106,099	2007 $’000 2006 $’000 4,195 1,138 1,972 980 1,204 245 3,838 154 750 246 - (5,994) - 192 - (380) - 496 282 286 - - 4,692 522 9,887 976 2,770 1,022 11,901 7,557 - 5,998 6,319 (4,994) 17,084 (1,121) 4,095 (7,293) 4,417 (2,101) 13,441 (7,421)
794,700 724,434	797,838 724,434	86,847 (9,492)
	797,838 724,434 (64,400) -
	733,438 724,434

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

14. Investment Properties (Continued)

Independent valuation/sale amount	Carrying amount Carrying amount	Fair value adjustment
2007 $’000 2006 $’000 100,000 - 92,052 - 36,000 - 33,200 - 9,750 - 14,725 -	2007 $’000 2006 $’000 100,000 - 92,052 - 36,000 - 33,200 - 9,750 - 14,725 -	2007 $’000 2006 $’000 40,554 - 4,958 - 13,839 - 5,114 - 1,384 - 3,245 -
285,727 -	285,727 -	69,094 -
- -	- -	- -
- 59,000 - 21,750 - - - - - - - -	- 59,000 - 21,750 - - - - - - - -	- (4,841) - (1,688) (7,484) - (2,297) - (1,722) - (4,711) -
- 80,750	- 80,750	(16,214) (6,529)
	1,083,565 805,184	139,727 (16,021)
	(156,452) - 927,113 805,184

(1) Investment properties held by Syndicates were acquired by the Group following the merger in December 2006 (refer to note 15).

(2) Investment properties held by CAF are no longer part of the Group following the disposal of CAF in June 2007 (refer to note 15).

(3) Investment properties held by CPF are no longer part of the Group following the loss of control of CPF in February 2007 (refer to note 15).

Acquisition details and valuation basis

Independent valuations of properties were carried out by qualified valuers with relevant experience in the types of property being valued. Independent valuations are carried out at least every two years. The value of investment properties is measured on a fair value basis, being the amounts for which the properties could be exchanged between willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases. In assessing the value of the investment properties, the independent valuers have considered both discounted cash flow, and capitalisation methodologies. In respect of properties held by the Syndicates, the acquisition date and acquisition price and cost shown above represent the purchase details as at the date the properties were acquired by those entities. Investment properties are measured at fair value prior to their classification as held for sale.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

15.	Investments in Controlled Entities Investments in controlled entities	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 - - 125,939 25,200

The Trust owns units/shares in the controlled entities shown below, all of which are domiciled in Australia. The Trust’s investment was subscribed for in cash, except for the acquisition of the Syndicates as described below.

as described below.
Name Equity Holding 2007 % 2006 % Cromwell CMBS Pty Ltd 100% 100% Cromwell Loan Note Pty Ltd 100% 100% Cromwell Holding Trust No 1 100% 100% Cromwell Holding Trust No 2 100% 100% Cromwell Holding Trust No 4 * - - Cromwell Property Fund - 100% Terrace Office Park Property Trust/Planned Investment 100% - Cromwell Mary Street Property Trust/Planned Investment 92% - Cromwell Goulburn Street Property Trust/Planned Investment 100% - Cromwell Northbourne Planned Investment 100% - Cromwell Planned Investment #3 100% -	Carrying value of Trust’s Investment 2007 $’000 2006 $’000 - - - - 6,275 6,275 6,275 6,275 - - - 12,650 12,069 - 33,121 - 44,782 - 13,029 - 10,388 -
	125,939 25,200

as described below.

Name
Equity Holding
2007
%
2006
%
Cromwell CMBS Pty Ltd
100%
100%
Cromwell Loan Note Pty Ltd
100%
100%
Cromwell Holding Trust No 1
100%
100%
Cromwell Holding Trust No 2
100%
100%
Cromwell Holding Trust No 4 *
-
-
Cromwell Property Fund
-
100%
Terrace Office Park Property Trust/Planned
Investment
100%
-
Cromwell Mary Street Property Trust/Planned
Investment
92%
-
Cromwell Goulburn Street Property
Trust/Planned Investment
100%
-
Cromwell Northbourne Planned Investment
100%
-
Cromwell Planned Investment #3
100%
-

Carrying value of Trust’s
Investment
2007
$’000
2006
$’000
-
-
-
-
6,275
6,275
6,275
6,275
-
-
-
12,650
12,069
-
33,121
-
44,782
-
13,029
-
10,388
-

125,939
25,200

Indirect interest – refer below

Investments in controlled entities are initially recognised at cost. The carrying amount is reduced where the fair value of the underlying interest, primarily representing an indirect interest in a share of an investment property, is less than cost.

Cromwell CMBS Pty Ltd (“CMBS”) and Cromwell Loan Note Pty Ltd (“CLN”)

CMBS and CLN were established during the 2006 financial year as special purpose entities in relation to the issue of $429 million commercial mortgage backed securities to various noteholders – refer note 20.

Cromwell Holding Trust No 1/2/4

Cromwell Holding Trust No 1 (“CH1”), and Cromwell Holding Trust No 2 (“CH2”), each own 50% of the issued units in Cromwell Holding Trust No 4 (“CH4”). All entities were established during the 2006 financial year for the purpose of acquiring a one-third interest in the Cromwell TGA Planned Investment (“TGA”). The one-third interest in TGA is held by CH4. In 2006 the Trust adjusted its investment in CH1 and CH2 on the basis of the fair value of CH4’s interest in the underlying fair value in TGA’s net assets (which primarily comprised an investment property in Canberra, ACT). During 2006 a reduction to recoverable amount of $950,000 ($475,000 in CH1 and $475,000 in CH2) recorded by the Trust resulted in the carrying value of its investment in CH1 and CH2 being written down to $6.275 million each. There was no adjustment required in the current year.

Cromwell Property Fund (“CPF”)

CPF was established on 12 April 2006 for the purpose of investing in a range of property related assets. On 29 June 2006, the Trust subscribed for 20,000,000 units in CPF at $1 each to assist in funding the investment properties as shown in note 14. The Trust also provided a short-term loan of $20.1 million – see note 7. CPF acquired two properties on 29 June 2006 as shown in note 14. The investment properties acquired by CPF were initially measured at cost, including transaction costs, and then subsequently carried at fair value. On this basis, the Trust recorded a reduction to recoverable amount of $7.35 million such that the carrying value of its investment in CPF of $12.65 million approximated the underlying fair value of investment properties and other net assets at 30 June 2006.

A Product Disclosure Statement (PDS) dated 13 July 2006 was issued by CPF to raise capital from external investors. These funds were used to purchase additional investment properties and repay short term loans (including the loan referred to above) associated with the purchase of investment properties. External investors have subscribed for units in CPF via the PDS, diluting the Trust’s ownership interest. At 30 June 2007 the Trust’s ownership interest in CPF was 22%.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

15. Investments in Controlled Entities (Continued)

Cromwell Property Fund (“CPF”) (Continued)

As a result of the above the Trust lost control of CPF on 12 February 2007 at which time the following net assets of CPF were deconsolidated from the Group:

Cash and cash equivalents Trade and other receivables Other assets Derivative financial instruments Investment properties Trade and other payables Other current liabilities – unearned revenue Other liabilities - CFUs Borrowings – financial institutions/other lenders Net assets attributable to unitholders - the Trust Net assets attributable to external unitholders Net assets deconsolidated Outflow of cash on deconsolidation Cash received on deconsolidation Less: cash balances deconsolidated Net cash outflow	$’000 6,060 859 607 3,358 350,985 (4,472) (1,236) (61,250) (278,822) (7,921) (8,168)
	-
	- (6,060)
	(6,060)

Since deconsolidation, the Group has accounted for CPF using the equity method of accounting – refer note16.

Cromwell Accumulation Fund (“CAF”)

The CAF was formed on 10 November 2006. The CAF issued 700 units at $1 each. All units were acquired by the Trust. During the year the CAF acquired land at Lenore Lane, Erskine Park, NSW and investment property at Percival Road, Smithfield, NSW. The land at Erskine Park was classified as property under construction and development.

On 14 June 2007 the Trust effectively disposed of the units in CAF to CPF at cost of $700. The net assets disposed of are as follows:

Cash and cash equivalents Trade and other receivables Other assets Investment properties Property, plant and equipment (property under construction and development) Trade and other payables Other current liabilities – unearned revenue Borrowings – financial institutions Borrowings – from the Trust Net assets disposed Outflow of cash on disposal, net of cash disposed Cash consideration received Less: cash balances disposed Net cash outflow	$’000 23 5 304 23,968 24,497 (663) (150) (34,412) (13,572)
	-
	1 (23)
	(22)

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

15. Investments in Controlled Entities (Continued)

Syndicates

On 14 December 2006, pursuant to an Explanatory Memorandum, and as approved by unitholders, the Group acquired all of the issued units in five planned investments / property trusts, collectively referred to as the Syndicates. Consideration for the acquisition was by way of issue of units in the Trust. The acquisition of the Syndicates was transacted in several stages. Prior to acquisition, each of the individual Syndicates owned investment properties via a planned investment. Investors held units either directly in the planned investment, or indirectly via a property trust, which in turn held a proportional interest in the planned investment.

The mechanics of the acquisition resulted in two alternative purchase structures for the Trust. In respect of the Cromwell Goulburn Street (“Goulburn Street”) Syndicate, the property trust initially acquired all the units held in the planned investment, with the Trust then acquiring all the units of the property trust. Therefore, following the acquisition, the Trust held all the units in the property trust, which in turn held all the units in the underlying planned investment. In respect of Cromwell Mary Street (“Mary Street”), the same mechanics as above were followed, except that only a 92% interest was acquired by the Trust. The Responsible Entity holds an 8% interest, which was not acquired by the Trust. In respect of Terrace Office Park (“TOP”), the same mechanics as above were followed, except that only a 75% interest was acquired by the Trust. The Trust already held a 25% interest which it acquired in 2006.

For Cromwell Planned Investment No. 3 (“CPI#3”) and Cromwell Northbourne Planned Investment (“Northbourne”), the Trust acquired all the units in the property trusts. The property trusts then transferred all units held in the planned investments to the Trust, and the Trust acquired all remaining units in the planned investments. Therefore, following the acquisition, the Trust directly holds all the units in the planned investments.

Prior to the acquisition of the Syndicates by the Trust, CPI#3 held 390,000 units of Goulburn Street Planned Investment. Following the acquisition of Goulburn Street by the Trust these units held by CPI#3 became units in the Trust.

On 19 December 2006, Cromwell Corporation Limited (the parent entity of the Responsible Entity), and the Trust entered into a stapling arrangement whereby all units in the Trust became stapled to shares in Cromwell Corporation Limited.

Prior to the stapling arrangement investors in the Syndicates were offered units in the Trust in exchange for their units in the planned investments / property trusts, based on the underlying fair value of the net assets of each Syndicate. The purchase consideration and details of net assets acquired are as follows:

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

15. Investments in Controlled Entities (Continued)

Details relating to the acquisition of the Syndicates are given below:

Syndicate % Acquired Number of Trust Units Issued ’000 Fair Value per Unit $ Mary Street(1) Goulburn Street Northbourne TOP_(2)_ CPI#3 92% 100% 100% 75% 100% 28,404 43,731 12,679 7,661 10,143 1.00 1.00 1.00 1.00 1.00 102,618 Direct costs relating to the acquisitions - Stamp duty - Acquisition fee payable to Responsible Entity - Other direct merger costs Total purchase consideration Add: interest in TOP already held Total carrying amount – at cost	Purchase Consideration $’000 28,404 43,731 12,679 7,661 10,143
	102,618 5,283 2,149 465
	7,897
	110,515 2,874
	113,389

(1) The Responsible Entity held an 8% interest in Mary Street at the time of acquisition. These units were excluded from the transaction.

(2) The Trust already held a 25% interest in TOP (refer note 16).

The above purchase consideration was attributed to the following net assets acquired:

Cash and cash equivalents Trade and other receivables Other assets Investment properties Trade and other payables Other liabilities Borrowings – financial institutions Less: external unitholders’ interest_(1)_ Net identifiable assets acquired Outflow of cash to acquire subsidiaries, net of cash acquired Cash consideration paid/payable Less: amounts not yet paid (included in trade and other payables) Less: cash balances acquired Net cash outflow	Consolidated $’000 7,897 (5,283) (1,851)	$’000 1,851 182 245 216,369 (1,353) (494) (100,487) 116,313 (2,924) 113,389 Trust $’000 7,897 (5,283) -
	763	2,164

(1) Recognised as a liability as required by AASB 132 as the relevant Syndicate has a limited life.

The acquired Syndicates contributed revenue and other income of $90,934,000 and net profit before recognition of finance costs to unitholders of $70,808,404 to the Group for the period from 14 December 2006 to 30 June 2007. If the acquisition had occurred on 1 July 2006, consolidated revenue and other income and consolidated profit before recognition of finance costs to unitholders for the year ended 30 June 2007 would have been $323,178,000 and $228,258,000 respectively.

16. Investments in Jointly Controlled Entity and Associate

The Group has investments in a jointly controlled entity, Cromwell TGA Planned Investment (“TGA”) and an associate, Cromwell Property Fund (“CPF”). The CPF was originally a controlled entity. Control was lost in February 2007 following the issue of units, by the CPF, to external unitholders (refer note 15). In addition, the Group held an investment in an associate, Terrace Office Park Planned Investment (“TOP”) up until the Group gained control of TOP on 14 December 2006 (refer note 15). These entities were formed in Australia and their principal activity is property investment.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

16. Investments in Jointly Controlled Entity and Associate (Continued)

The Group holds a two-thirds interest in TGA of which one-third is held directly by the Trust and onethird by a subsidiary. The remaining one-third interest is held by an external investor. The Group exercises joint control over TGA, but neither the Group nor the other investor has control in its own right, irrespective of their ownership interest, as both the Group and the other investor must consent to the strategic, financial and operating decisions relating to TGA. The investments are accounted for in the consolidated financial statements using the equity method of accounting and in the Trust’s financial statements using the cost basis. Information relating to the investments is detailed below:

Ownership Interest Investments 2007 % 2006 % TGA – jointly controlled entity 33% 33% TOP – associate_(1) - 25% CPF – associate(2)_ 22% -	Trust 2007 $’000 2006 $’000 26,046 26,046 - 2,726 13,896 -
	39,942 28,772

In 2007 the Trust reversed $1,393,000 of the decrease in recoverable amount recognised in 2006 on its interest in CPF on the basis of an increase in the Trust’s share of CPF’s net assets (in 2006 CPF was a controlled entity in respect of which the Trust recorded a reduction to recoverable amount in its investment of $7.35 million – from cost of $20 million to recoverable amount of $12.65 million – refer note 15). Distributions have also reduced the carrying amount. In 2006 the Trust decreased its investment in TGA by $1,510,000 on the basis of its interest in the underlying fair value of TGA’s net assets (which comprises the TGA investment property).

Equity accounting information Ownership Interest Investments accounted for using the equity method: 2007 % 2006 % TGA – jointly controlled entity 67% 67% TOP – associate_(1) - 25% CPF – associate(2)_ 22% -	Consolidated 2007 $’000 2006 $’000 52,349 52,103 - 2,872 13,896 -
	66,245 54,975

Movement in the carrying value of the Group’s interest in its investments accounted for using the equity method during the 2007 and 2006 financial years was as follows:


2007 – Consolidated Balance 1 July Transfer from/(to) controlled entity Gain on dilution_(3) Share of profit Distributions received(4) Balance 30 June 2006 – Consolidated Balance 1 July Acquisitions (at cost) Transaction costs Decrease to recoverable amount(5) Share of profit Distributions received(4)_ Balance 30 June	CPF TGA TOP	Total
	$’000 $’000 $’000	$’000
	- 52,103 2,872	54,975
	7,921 - (3,023)	4,898
	6,341 - -	6,341
	244 4,346 238	4,828
	(610) (4,100) (87)	(4,797)
	13,896 52,349 -	66,245
	- - - - 53,912 2,645 - 600 81 - (2,460) - - 2,922 270 - (2,871) (124)	- 56,557 681 (2,460) 3,192 (2,995)
	- 52,103 2,872	54,975

(1) Controlled entity from 14 December 2006 – refer note 15.

(2) Controlled entity from 29 June 2006 and deconsolidated and became an associate from 12 February 2007- refer note 15.

(3) The gain on dilution of $6.341 million was recognised on the basis of the Group’s interest in the net assets attributable to unitholders of the CPF increasing since deconsolidation following the raising of additional funds from external unitholders.

(4) Includes distributions paid to the Trust and its subsidiaries.

(5) The decrease to recoverable amount of $2.46 million was recognised on the basis of the Group’s interests in the underlying fair value of Cromwell TGA’s net assets (which comprises the TGA investment property).

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

16. Investments in Jointly Controlled Entity and Associate (Continued)

Details of the Group’s share of jointly controlled entity’s/associate’s financial information at balance date are as follows:

CPF	TGA TOP	Total
$’000	$’000 $’000	$’000

84,291	52,068 -	136,359
8,440	406 -	8,846

(76,944)	- -	(76,944)
(1,891)	(125) -	(2,016)
13,896	52,349 -	66,245
6,938	4,734 277
244	4,346 238

	TGA TOP $’000 $’000 52,061 5,354 269 45 - (2,454) (236) (70)	Total $’000 57,415 314 (2,454) (306)
	52,094 2,875	54,969
	4,862 582 2,922 270

(1) Represents share of profit during the period the interest was accounted for using the equity method.

The reporting dates of the jointly controlled entity and associate are the same as for the Group. The proportion of voting power held equates to the proportion of ownership interest held except for TGA for which both the Group and the other investor must consent to the strategic, financial and operating decisions. The jointly controlled entity and associate do not recognise income tax expense or liabilities given their nature.

Investments in equity accounted entities are initially accounted for (recognised) at cost. The carrying amount is reduced where the fair value of the underlying interest, primarily representing an indirect interest in a share of an investment property, is less than cost or the equity accounted carrying amount.

17.	Lease Receivable Current Lease receivable Non-current Lease receivable	Consolidated 2007 $’000 2006 $’000 8,400 -	Trust 2007 $’000 2006 $’000 8,400 -
		- 8,400	- 8,400

In December 2005 the Trust acquired land at Bundall on the Gold Coast at a cost of approximately $8.4 million (including acquisition costs) as part of the overall acquisition of the property known as Bundall Corporate Centre. The land consists of a number of lots of various size. The Trust agreed, as part of the purchase arrangements, to lease the land to an entity which is controlled by Cromwell Corporation Limited (“CCL”) but in which another party has a 50% equity holding.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

17. Lease Receivable (Continued)

The lease between the Trust and the lessee has a term of 10 years during which time the lessee has the right to develop the land in accordance with specified standards. Lease rental payments equivalent to 10% pa of the initial cost ($8.4 million) are payable during the term of the lease on a monthly basis. At the time of entering into the lease the land was independently valued at between $9.5 million and $10.6 million.

On completion of the development of each lot of land under the lease, the Trust has an option to acquire the development at market value (less the initial cost of acquiring the land). Otherwise the Trust can sell the property on the open market, the proceeds being allocated between the Trust (being the initial cost of the land) and the lessee. CCL has agreed to share part of any development profit with the Trust up to a limit to be calculated based on a total internal rate of return received by the Trust of between 11% - 12.5% (including lease rentals) depending on the timeframe of the development. Should the lessee decide not to proceed with developing the land, the lease can be surrendered and a surrender payment paid to the lessee based on the value of the land less the initial cost. The lessee has no obligation to make good any loss to the Trust (ie if the sale proceeds are less than the initial cost).

At balance date, the land was subject to put and call options with a party external to both the Trust and the lessee. If the put and call options are exercised, the land will be sold and the lease will be effectively surrendered. It is expected that the lease receivable will be recovered in the next 12 months and has therefore been classified as current.

Commitments in relation to the finance lease are receivable as follows:(1) Within one year Later than one year but not later than five years Later than 5 years Minimum lease receipts Future finance income Recognised as a receivable Representing lease receivable Current Non-current	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 8,610 840 8,610 840 - 3,360 - 3,360 - 12,110 - 12,110
	8,610 16,310 8,610 16,310 (210) (7,910) (210) (7,910)
	8,400 8,400 8,400 8,400
	8,400 - 8,400 - - 8,400 - 8,400
	8,400 8,400 8,400 8,400

(1) 2007 based on expectation of sale in October 2007.

The net fair value of the lease receivable approximates the carrying value. The Group has a material credit risk exposure relating to the lease receivable at balance date as the lease receivable is due from a single debtor.

18. Deposits and Preliminary Costs

Deposits and preliminary costs - 12,696 - -

Deposits and preliminary costs in the 2006 financial year related to investment properties under contract to be purchased by Cromwell Property Fund. These properties were acquired during the 2007 financial year (refer note 14).

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

19.	Trade and Other Payables Trade payables and accruals Amounts payable to Cromwell Corporation Ltd (CCL) and its subsidiaries Tenant security deposits	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 11,912 10,382 11,077 6,747 846 4,278 846 733 390 286 360 286
		13,148 14,946 12,283 7,766

Trade and other payables are non-interest bearing and normally settled on 30 day terms.

Amounts payable to Cromwell Corporation Limited and its subsidiaries relate to ordinary operating activities of the Group. The amounts are unsecured, non-interest bearing and payable in cash at call.

The net fair values of trade and other payables approximate their carrying values.

20. Borrowings

Current Loans – financial institutions Loan – related entity Non-Current Loans – CMBS note issue Loan – controlled entity	143,654 93,366 9,778 -	130,154 19,380 9,778 -
	153,432 93,366	139,932 19,380
	427,993 426,444 - -	- - 427,993 426,444
	427,993 426,444	427,993 426,444

CMBS Note Issue

In April 2006 the majority of the Trust’s secured debt was refinanced through the issue of $429 million commercial mortgage backed security (“CMBS”) notes, through a wholly owned subsidiary, Cromwell CMBS Pty Ltd. The CMBS facility, repayable in April 2009, is secured by first registered mortgages crosscollateralised over investment properties held by the Trust (see note 14) and a registered floating charge over the assets of the Trust. Interest is payable to the note holders monthly in arrears at variable rates based on a margin over the 30 day BBSW rate which was 6.33% (2006: 5.88%) at balance date.

The CMBS note issue of $429 million (face value) comprises five tranches rated by Standard and Poors, comprising 266 million Class A notes (AAA), 42 million Class B notes (AA), 43 million Class C notes (A), 56 million Class D notes (BBB), and 22 million Class E notes (BBB-). Of the $429 million raised through the CMBS Note Issue, $288 million (2006: $273 million) is effectively at fixed interest rates through interest rate swap arrangements – see note 9.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

20. Borrowings (Continued)

Financial Institution Loans

Details regarding financial institution (bank) loans at balance date are as follows:

Loan on investment in Cromwell TGA Planned Investment (see note 16)

Amount $27 million (consolidated) and $13.5 million (parent entity) in both 2007 and 2006

Security First registered mortgage over the TGA property and a registered floating charge over the assets of the TGA (these assets are reflected in the carrying value of the investment in jointly controlled entity) Maturity date October 2007 (2006 – December 2006) Interest rate 6.89% variable (2006: 5.93% variable) The loan is effectively fixed through interest rate swap arrangements to 10/08/2010

Loan on property subject to finance lease (see note 17)

Amount $5.95 million (consolidated and parent entity) in both 2007 and 2006 Security First registered mortgage over the Bundall land and a registered floating charge over the assets of the parent entity specific to the Bundall land Maturity date October 2007 (2006 – April 2007) Interest rate 6.94% variable (2006: 6.68% variable)

Loans over properties held by Syndicates (acquired during the 2007 year) Amount $111.6 million (consolidated and parent entity) Security First registered mortgages over syndicate properties (excluding Northbourne property which is included as security for the CMBS) and a registered floating charge over the assets of the Trust Maturity date October 2007 Interest rate 6.94% variable

Loans over properties held by CPF (no longer included in borrowings of Group) Amount $60.56 million (consolidated) in 2006 Security First registered mortgages over CPF properties (Homeworks Centre, Prospect and Twin Freeway Service Centre, Princess Freeway, Avalon) and a registered floating charge over the assets of CPF Maturity date June 2007 Interest rate 6.73% variable (in 2006)

The amount of the CMBS note issue and loans shown above comprise the gross value of the respective borrowings. Under accounting standards the amounts recognised in the balance sheet are net of transaction costs which are subsequently amortised using the effective interest method.

Related Entity Loan

During the year a related entity, Cromwell Operations Pty Ltd (“COP”), provided the Trust with loans totalling $15,301,000. The Trust made repayments of $5,523,000 during the year. COP also provided a loan of $3,500,000 to CPF while it was controlled by the Trust. The loans are unsecured, at call with no fixed repayment terms and interest charged at a floating rate, which was 7.3% at balance date.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

20. Borrowings (Continued)

Controlled Entity Loan

The loan owing to controlled entity, Cromwell CMBS Pty Ltd, arose from borrowings raised by the subsidiary being lent to the Trust on similar terms and conditions as the CMBS Note Issue (see above). The loan owing to the controlled entity falls due at maturity date of the CMBS Note Issue and is repayable in cash. Interest paid to the controlled entity is shown in the income statement.

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

2007 Financial institution loans CMBS note issue Related entity loans Interest rate swaps_(1) Weighted average interest rate % 2006 Financial institution loans CMBS note issue Interest rate swaps(1)_ Weighted average interest rate %	Fixed interest rate maturing in Floating interest rate $’000 1 year or less $’000 Over 1 to 2 years $’000 Over 2 to 3 years $’000 Over 3 to 4 years $’000 Over 4 to 5 years $’000 Over 5 years $’000	Total $’000
	143,654 - - - - - - 427,993 - - - - - - 9,778 - - - - - - (315,255) 5,820 99,450 15,060 76,745 - 118,180	143,654 427,993 9,778 -
	266,170 5,820 99,450 15,060 76,745 - 118,180	581,425
	6.28% 4.71% 5.33% 5.59% 5.50% - 5.81%	93,366 426,444 -
	93,366 - - - - - - 426,444 - - - - - - (300,195) - 5,820 99,450 - 76,745 118,180
	219,615 - 5,820 99,450 - 76,745 118,180	519,810
	6.09% - 4.71% 5.33% - 5.52% 5.81%

(1) notional principal amounts

The net fair values of borrowings approximate their carrying values.

21.	Distributions Payable Distributions payable	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 10,150 2,941 10,150 2,941

In 2007, distributions payable relate to the June 2007 quarterly distribution, declared with a record date of 29 June 2007 and paid 31 August 2007. Refer to note 28 for further information relating to distributions.

In 2006, distributions payable relate to the monthly June 2006 distribution paid in July 2006.

22. Other Current Liabilities

Unearned income 3,859 2,996 3,291 2,783

Unearned income comprises rent paid in advance by tenants.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

23. Net Assets Attributable to Unitholders

Movement in net assets attributable to unitholders

Consolidated Balance 1 July Trust units issued: ▪ for cash ▪ on acquisition of subsidiaries (note 15) ▪ on stapling_(1) ▪ payment to advisor Transaction costs Reinvestment of distributions (pre stapling) (2) Bonus units issued (pre stapling) External unitholders interest on acquisition of subsidiary (note 15) Units issued by subsidiary (CPF)(3) Transaction costs (CPF) Deconsolidation of Subsidiary (CPF)(4) DRP issue – 20 Mar 2007(5) DRP issue – 21 May 2007(5) Net transfer from/(to) income statement - unitholders of parent - external unitholders of subsidiary Net assets transferred to reserves Net assets transferred to contributed equity Balance 30 June(6)_	2007	2006
	No. of Units	No. of Units 000 $’000 240,659 209,004 199,957 199,957 - - - - - - - (10,873) 3,831 3,831 - - - - - - - - - - - - - - - (6,674) - - - - - -
	000 $’000
	444,447 395,245

	- -
	102,618 102,618
	139,084 139
	462 491
	- -
	2,413 2,413
	7,767 -
	- 2,924
	- 20,689
	- (1,272)
	- (8,168)
	1,485 1,724
	1,719 1,907

	- 145,520
	- 3,570
	- (134,912)
	(699,995) (526,394)
	- 6,494	444,447 395,245

(1) In accordance with the Explanatory Memorandum dated 30 October 2006, the Trust issued units to shareholders of Cromwell Corporation Limited for $0.001 per unit to effect the stapling.

(2) Refer note 28.

(3) While a controlled entity – refer note 15.

(4) Net effect of deconsolidation.

(5) The Trust has established a distribution reinvestment plan (DRP) under which stapled security holders may elect to have all or part of their distribution entitlements satisfied by the issue of new stapled securities rather than being paid in cash.

(6) The remaining net assets attributable to unitholders as at 30 June 2007 relates to Cromwell Property Securities Limited’s 8% investment in Cromwell Mary Street Property Trust. As the Cromwell Mary Street Property Trust has not amended its constitution it still has a limited life and, accordingly, the 8% external interest is recognised as a liability (in accordance with AASB 132). In 2006 all interests were treated as a liability – refer below.

For the period 1 July 2004 to 31 May 2007, AIFRS required net assets attributable to unitholders to be treated as a liability. On 1 June 2007 the constitution of the Trust was amended and net assets attributable to unitholders were transferred to contributed equity and reserves – refer notes 24 and 25.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

23. Net Assets Attributable to Unitholders (Continued)

Movement in net assets attributable to unitholders (continued)

Trust Balance 1 July Trust units issued: ▪ for cash ▪ acquisition of subsidiaries (note 15) ▪ on stapling ▪ payment to advisor Transaction costs Reinvestment of distributions (pre stapling) Bonus units issued (pre stapling) DRP issue – 20 Mar 2007 DRP issue – 21 May 2007 Net transfer from/(to) income statement Net assets transferred to reserves Net assets transferred to contributed equity Balance 30 June Contributed Equity Movement in contributed equity Consolidated Balance 1 July Transfer from net assets attributable to unitholders Other contributions Balance 30 June Trust Balance 1 July Transfer from net assets attributable to unitholders Other contributions Balance 30 June	2007	2006
	No. of Units	No. of Units 000 $’000 240,659 209,004 199,957 199,957 - - - - - - - (10,042) 3,831 3,831 - - - - - - - (7,710) - - - -
	000 $’000

	444,447 395,040

	- -
	102,618 102,618
	139,084 139
	462 491
	- -
	2,413 2,413
	7,767 -
	1,485 1,724
	1,719 1,909
	- 93,191
	- (71,131)
	(699,995) (526,394)
	- -	444,447 395,040

		- - - - - -
	- -
	699,995 526,394
	- 26
	699,995 526,420	- -
		- - - - - -
	- -
	699,995 526,394
	- 26
	699,995 526,420	- -

24. Contributed Equity

Units in the Trust entitle the unitholder to participate in distributions and proceeds on the winding up of the Trust in proportion to the number of and amounts paid on the units held.

On a show of hands each unitholder present at a meeting in person or by proxy is entitled to one vote, and on a poll each member has one vote for each dollar of the value of the total units they have in the Trust.

Units in the Trust are stapled with shares in Cromwell Corporation Limited and listed on the Australian Securities Exchange (ASX) as the Cromwell Group.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

25.	Reserves Movement in reserves Balance 1 July Transfer from net assets attributable to unitholders Transfer to undistributed income Balance 30 June	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 - - - - 134,912 - 71,131 - (3,078) - (5,388) -
		131,834 - 65,743 -

Following the change in the constitution of the Trust on 1 June 2007 the net assets attributable to unitholders were transferred from liabilities to equity. Amounts not originally relating to the issue of units have been transferred to reserves.

26. Undistributed Income

Movement in undistributed income Balance 1 July Profit for the year Transfer from reserves Distributions Balance 30 June	- - - - 7,072 - 4,762 - 3,078 - 5,388 - (10,150) - (10,150) -
	- - - -

The above distribution was declared with a record date of 29 June 2007 and was paid on 31 August 2007 at 1.45 cents per unit.

Until the change in the Trust’s constitution on 1 June 2007 the Trust recorded no net profit as a result of classification of net assets attributable to unitholders as a liability and the treatment of distributions and changes in net assets as an expense. From 1 June 2007 the Trust no longer expenses distributions and changes in net assets as finance costs attributable to unitholders. Accordingly, the Trust now records a net profit and distributions as a return to equity holders.

27. Earnings per Unit

Basic/diluted earnings per unit Earnings used to calculate basic and diluted earnings per unit – profit for the year Weighted average number of ordinary units used in calculating basic/diluted earnings per unit	Consolidated 2007 2006 12.1¢ -
	$’000 $’000 7,072 -
	Number of Units Number of Units 58,332,932 -

The calculation of earnings per unit relates to the profit and weighted average number of ordinary units on issue for the month of June 2007.

For the period from 1 July 2004 to 31 May 2007 the Trust’s issued units were considered a liability (refer note 23).

No potential ordinary units existed during the year. Accordingly, diluted and basic earnings per unit are the same.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

28. Distributions

Distributions
Finance costs attributable to unitholders Distributions – post-stapling Interim – stapling_(1)_ Interim – 20 Mar 07 Interim – 21 May 07 Distributions – pre-stapling Distributions – unitholders of parent Total – unitholders of parent Distributions – external unitholders of subsidiary	Consolidated 2007 $’000 2007 cents per unit 139 - 10,458 1.50 10,470 1.50	Trust 2007 $’000 2007 cents per unit 139 - 10,458 1.50 10,470 1.50
	21,067 3.00 18,892 4.25	21,067 3.00 18,892 4.25
	39,959 7.25	39,959 7.25
	550 5.00	- -

(1) Applied to subscribe for shares in Cromwell Corporation Limited on behalf of unitholders.

Other

A final distribution of $10,150,000 (1.45 cents per unit) has been classified as an equity transaction (refer note 26) and takes the total distributions for the year to 8.70 cents per unit. All other distributions paid/payable during the year have been expensed as finance costs attributable to unitholders.

2006

Distributions in 2006 amounted to $30,970,000 at 9.00 cents per unit, were paid monthly and were all expensed as finance costs attributable to unitholders.

Distributions paid in cash or satisfied by the issue of units under the distribution reinvestment plan during the year ended 30 June 2007 and 2006 were as follows:

Paid in cash_(1) Satisfied by issue of units(2)_	Consolidated Trust 2007 $’000 2006 $’000 2007 $’000 2006 $’000 36,894 25,798 36,358 25,798 6,046 3,831 6,046 3,831
	42,940 29,629 42,404 29,629

(1) Includes June 2006 distributions paid in July 2006 (prior year includes June 2005 distributions paid in July 2005).

(2) Includes both units issued pre stapling and DRP issues (as noted in note 23).

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

29. Cash Flow Information

Reconciliation of profit to net cash provided by operating activities Net profit Finance costs attributable to unitholders Net loss/(gain) on fair value adjustment to: • Investment properties • Interest rate derivatives (Reversal)/decrease to recoverable amount: • Investment in controlled entity • Investment in jointly controlled entity • Investment in associate Gain on dilution of interest in associate Amortisation (loan transaction costs) Straight-lining rentals Share of profits of associate and jointly controlled entity, net of distributions Gain on sale of investment properties Changes in operating assets and liabilities (Increase)/decrease in: Trade and other debtors Prepayments Other assets Increase/(decrease) in: Trade and other payables Unearned income Net cash provided by operating activities Non-Cash Items Units issued on reinvestment of distributions Acquisition of investment in jointly controlled entity and assignment of vendor debt Units issued as payment to advisor	Consolidated 2007 $’000 2006 $’000 7,072 - 189,599 24,296 (139,727) 16,021 (6,463) (9,359) - - - 2,460 - - (6,341) - 1,699 2,494 (2,525) (4,688) (31) (197) (4,883) - (5,621) 902 (874) 296 38 - (233) 7,680 1,755 1,420	Trust 2007 $’000 2006 $’000 4,762 - 133,150 23,260 (86,847) 9,492 (6,244) (9,359) - 8,300 - 1,510 (1,393) - - - 1,341 2,420 (2,093) (4,688) - - (4,883) - (5,811) 902 243 302 38 - (1,351) 3,715 508 1,207
	33,465 41,325	31,420 37,061
	6,046 3,831 - 27,000 491 -	6,046 3,831 - 13,500 491 -

In addition to the above, notes 15 and 16 detail other non-cash acquisitions and disposals.

Finance Facilities

The Group had no unused finance facilities at balance date.

30. Remuneration of Auditor

Remuneration of Auditor
	Consolidated			Trust
	2007	2006	2007		2006
	$	$	$		$
Audit services
Auditors of the Group (Johnston Rorke)
Auditing or reviewing the financial reports	126,500	63,500	61,500		63,500
Audit of compliance plans	40,000	12,500	15,000		12,500
Other services
Auditors of the Group (Johnston Rorke)
AIFRS accounting services	-	7,500	-		7,500

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

31. Related Parties

Parent entity

The ultimate parent entity of the Group is Cromwell Diversified Property Trust. Cromwell Diversified Property Trust is stapled to Cromwell Corporation Limited. At stapling, Cromwell Corporation Limited was identified as the acquirer as required by the relevant accounting standards.

Controlled entities

The Trust’s interests in controlled entities are disclosed in note 15.

Key management personnel

The following persons were directors and other key management personnel of the Responsible Entity from 1 July 2005 to 30 June 2007, unless otherwise stated:

Executive directors	Date Appointed	Date Resigned
Paul L Weightman (Executive Chairman)
W Richard Foster
Ross L Stiles		26 April 2007
Daryl J Wilson	25 January 2007
Non-executive directors
Robert J Pullar
Michelle A McKellar	1 March 2007
David E Usasz	26 April 2007
Other key management personnel
Daryl J Wilson (Company Secretary)		25 January 2007
Suzanne M Morgan (Company Secretary)	25 January 2007

There were no key management personnel employed by the Trust or its subsidiaries at any time during the past two years.

Remuneration

Key management personnel (KMP) are defined in AASB 124 Related Party Disclosures as those having authority and responsibility for planning, directing and controlling the activities of the entity. The Responsible Entity meets the definition of KMP as it has this authority in relation to the activities of the Trust and its subsidiaries. These powers have not been delegated by the Responsible Entity to any other person. Accordingly, the directors and other employees of the Responsible Entity are not considered to be KMP as they do not have sufficient individual authority and responsibility for planning, directing and controlling the activities of the Trust and its subsidiaries. Details of management fees charged to the Trust and its subsidiaries by the Responsible Entity and its related entities are included below. No payments were made by the Trust and its subsidiaries or by the Responsible Entity on behalf of the Trust and its subsidiaries to any of the directors or other KMP of the Responsible Entity during the financial year.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

31. Related Parties (Continued)

Unit holdings and loans

The directors and other KMP of the Responsible Entity, including their personally related parties, had no loans payable to/receivable from the Trust and its subsidiaries during the 2006 and 2007 financial years. The directors and other KMP of the Responsible Entity, including their personally related parties, held no units in the Trust during the 2006 financial year. Particulars of directors’ relevant interests in the units of the Trust at 30 June 2007 are as follows:

P L Weightman R J Pullar D E Usasz M A McKellar W R Foster D J Wilson S M Morgan	Trust Units Trust Units 2007 2006 15,364,167 - 13,545,269 - 1,490,400 - 20,000 - 5,349,598 - 2,205,982 - - -
	37,975,416 -

Movements in directors’ interest in the units of the Trust are as follows:

P L Weightman R J Pullar D E Usasz M A McKellar W R Foster D J Wilson S M Morgan	Balance 1 July 2005 Net changes – purchases (sales) Balance 1 July 2006 Issued on stapling Net changes – purchases (sales) Balance 30 June 2007 - - - 14,414,167 950,000 15,364,167 - - - 11,810,637 1,734,632 13,545,269 - - - 1,473,914 16,486 1,490,400 - - - - 20,000 20,000 - - - 5,349,598 - 5,349,598 - - - 1,920,820 285,162 2,205,982 - - - - - -
	- - - 34,969,136 3,006,280 37,975,416

P L Weightman
R J Pullar
D E Usasz
M A McKellar
W R Foster
D J Wilson
S M Morgan

Balance
1 July 2005
Net changes
– purchases
(sales)
Balance
1 July 2006
Issued on
stapling
Net changes
– purchases
(sales)
Balance
30 June 2007
-
-
-
14,414,167
950,000
15,364,167
-
-
-
11,810,637
1,734,632
13,545,269
-
-
-
1,473,914
16,486
1,490,400
-
-
-
-
20,000
20,000
-
-
-
5,349,598
-
5,349,598
-
-
-
1,920,820
285,162
2,205,982
-
-
-
-
-
-

-
-
-
34,969,136
3,006,280
37,975,416

No units were granted to any director as compensation in 2007 or 2006.

No units were received by directors on exercise of options in 2007 or 2006.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

31. Related Parties (Continued)

Related Parties (Continued)
	Consolidated		Trust
	2007	2006	2007	2006
	$	$	$	$
*Transactions with Responsible Entity KMP*
Fees for legal services provided by a firm
of which PL Weightman was a partner	-	167,461	-	167,461
*Transactions with Responsible Entity and*
*Associates*
Acquisition co-ordination and capital raising
fees	3,730,051	17,111,204	2,149,000	13,888,704
Managementfees	6,641,988	3,585,661	5,287,915	3,585,661
Property management fees_(1)_	2,096,836	867,223	1,551,728	867,223
Project management fees (investment
property improvements)	373,925	63,055	346,277	63,055
Leasing commissions	587,963	122,511	545,037	122,511
Finance arranging fees	451,290	-	451,290	-
Distributions paid/payable_(2)_	88,258	15,993	22,589	15,993
Interest paid/payable_(3)_	238,070	-	238,070	-
Rental and associated income	162,338	-	-	-
Finance lease interest	840,000	420,000	840,000	420,000
Aggregate amount payable to responsible
entity and associates at balance date
(included in trade and other payables)	846,220	4,277,971	846,220	733,268
Aggregate amount receivable from the
responsible entity and associates at balance
date (included in trade and other
receivables)	316,667	113,344	310,133	113,344
Finance lease receivable	8,400,000	8,400,000	8,400,000	8,400,000

(1) These fees were partly recovered from tenants.
(2) Distributions paid/payable mostly relate to the Responsible Entity’s 8% holding in Cromwell Mary Street Planned Investment.
(3) Interest paid on loan from related entity – refer note 23.

The Responsible Entity holds 1,517,000 units in a subsidiary of the Trust (note 15). The Responsible Entity held these units in 2006, however, the relevant entity only became a subsidiary of the Trust in 2007 following the merger (refer note 15).

Transactions with Subsidiaries

Transactions between the Trust and its subsidiaries also included:

Loans between the Trust and its subsidiaries (refer cash flow statements and notes 7 and 20 for amounts and terms and conditions);
The Trust received distributions of $5,953,000 (2006: $618,000) from subsidiaries during the year;
The Trust received interest of $7,368,000 (2006: $nil) from subsidiaries during the year in respect of loans provided to subsidiaries;
The Trust paid interest of $27,835,000 (2006: $4,994,000) to subsidiaries during the year in respect of loans provided by subsidiaries.

CROMWELL DIVERSIFIED PROPERTY TRUST NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

32. Commitments

The Trust has entered into a development agreement with Citimark Properties Limited ("Citimark"), a company related to Mr. Robert Pullar, who is a director of the Responsible Entity. Under the agreement, Citimark will develop a commercial office building in Kelvin Grove, Brisbane in accordance with specified terms, and to agreed standards. The land was acquired by the Trust for $7.1 million in June 2007, and construction had commenced prior to balance date. Under the development agreement, the Trust will reimburse Citimark for the costs of the project, and pay certain fees contingent upon the outcomes of certain events, primarily total construction costs of the property and leasing outcomes. Citimark has provided a rental guarantee to the Trust over the entire property for 18 months from the date construction is complete. Based on the current expected outcome, commitments for capital expenditure contracted for at the reporting date but not recognised as liabilities are payable as follows:

Capital expenditure commitments Within one year Later than one but not later than five years Commitment not recognised in the financial statements	Consolidated 2007 2006 $’000 $’000 50,805 - 30,625 -
	81,430 -

As at 30 June 2007, Citimark had yet to make a claim and no funds had been paid or were due to it.

33. Contingent Liabilities

The directors of the Responsible Entity are not aware of any material contingent liabilities of the Trust or its subsidiaries.

34. Subsequent Events

Since balance date up to the date of this report the following transactions have occurred:

Sale of investment property

The 59 Goulburn Street, Sydney investment property, classified as held for sale at balance date, was settled on 23 July 2007. Of the $92,050,000 sale proceeds, $51,900,000 was utilised to repay loans to financial institutions, with the balance received in cash.

The 8 St Georges Terrace (Bird Cameron building), Perth investment property was contracted for sale and sold for $27,300,000 on 23 August 2007. The investment property was independently valued at $21,600,000 at 30 June 2007.

The Bundall Corporate Centre investment property, classified as held for sale at balance date, was the subject of put and call options at 30 June 2007. Since that date the call option has been exercised by the buyer with settlement expected in October 2007. The sale proceeds are expected to be $64,400,000.

The financial effects of subsequent events were not recognised as at 30 June 2007.

CROMWELL DIVERSIFIED PROPERTY TRUST DIRECTORS’ DECLARATION

In the opinion of the directors of the Responsible Entity, Cromwell Property Securities Limited:

(a) the attached financial statements and notes are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(ii) giving a true and fair view of the Trust’s and Consolidated Entity’s financial position as at 30 June 2007 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of the directors of Cromwell Property Securities Limited.

==> picture [156 x 34] intentionally omitted <==

P.L. Weightman Director

Dated at Brisbane this 27[th] day of September 2007.

Independent auditor’s report to the members of Cromwell Diversified Property Trust

==> picture [155 x 131] intentionally omitted <==

Report on the financial report

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

Directors' responsibility for the financial report

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

Auditor's responsibility

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

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

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

==> picture [553 x 50] intentionally omitted <==

Independence

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

Auditor's opinion on the financial report

In our opinion:

(a) the financial report of Cromwell Diversified Property Trust is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Trust’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date: and
(ii) complying with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 ; and
(b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

JOHNSTON RORKE

Chartered Accountants

==> picture [73 x 38] intentionally omitted <==

J J EVANS Partner

Brisbane, Queensland 27 September 2007

AI assistant

CROMWELL PROPERTY GROUP — Annual Report 2007

64673_rns_2007-09-27_1dbf0307-bd96-4b21-bd9c-e8e39e90391e.pdf

CROMWELL DIVERSIFIED PROPERTY TRUST ARSN: 102 982 598

ANNUAL FINANCIAL REPORT

30 JUNE 2007

DIRECTORY

1. Directors & Officers

Directors

1. Directors & Officers (Continued)

Company Secretary

2. Principal Activity

3. Review of Operations and Results

Highlights

Financial Performance

3. Review of Operations and Results (Continued)

Operating Profits and Distributions to Unitholders

3. Review of Operations and Results (Continued)

4. Significant Changes in the State of Affairs

5. Subsequent Events

6. Likely Developments and Expected Results of Operations

7. Environmental Regulation

8. Distributions Paid or Payable

9. Directors’ Interests

10. Options

11. Fees to Responsible Entity

12. Units held by Responsible Entity

13. Indemnifying Officers or Auditors

14. Issued Units

15. Value of Scheme Assets

17. Rounding of Amounts

Auditor’s Independence Declaration

JOHNSTON RORKE

CROMWELL DIVERSIFIED PROPERTY TRUST INCOME STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

CROMWELL DIVERSIFIED PROPERTY TRUST BALANCE SHEETS AS AT 30 JUNE 2007

CROMWELL DIVERSIFIED PROPERTY TRUST CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1. Summary of Significant Accounting Policies

(a) Basis of Preparation

Compliance with IFRS

Historical cost convention

Functional and presentation currency

Critical accounting estimates

(b) Principles of Consolidation

Subsidiaries

1. Summary of Significant Accounting Policies (Continued)

(b) Principles of Consolidation (Continued)

Subsidiaries (Continued)

Associates

Joint ventures

(c) Revenue Recognition

(d) Income Tax

(e) Impairment of Assets

1. Summary of Significant Accounting Policies (Continued)

(f) Cash and Cash Equivalents

(g) Trade and Other Receivables

(h) Property, Plant and Equipment

(i) Investment Properties

1. Summary of Significant Accounting Policies (Continued)

(i) Investment Properties (Continued)

(j) Lease Incentives

(k) Trade and Other Payables

(m) Earnings Per Unit

1. Summary of Significant Accounting Policies (Continued)

(n) Fair Value Estimation

(o) Goods and Services Tax

(p) Business Combinations

(q) Derivative Financial Instruments

(r) Initial Direct Leasing Costs

1. Summary of Significant Accounting Policies (Continued)

(s) Repairs and Maintenance

(t) Comparatives

(u) Rounding of Amounts

(v) New Accounting Standards

2. Financial Risk Management

(a) Market risk

(i) Currency risk

(ii) Price risk

(b) Credit risk

(c) Liquidity risk

(d) Cash flow and fair value interest rate risk

CROMWELL PROPERTY GROUP Annual Report 2007