CROMWELL PROPERTY GROUP - Annual Report 2012

Cromwell Property Group (CMW) Cromwell Corporation Limited ABN 44 001 056 980 Cromwell Diversified Property Trust ARSN 102 982 598

Appendix 4E Results for Announcement to the Market Year ended 30 June 2012

Rule 4.3A

Appendix 4E Results for Announcement to the Market CROMWELL PROPERTY GROUP

The Appendix 4E should be read in conjunction with the annual report of Cromwell Property Group for the year ended 30 June 2012.

1. CROMWELL PROPERTY GROUP STRUCTURE

This report is for the Cromwell Property Group (the “Group”), consisting of Cromwell Corporation Limited (ABN 44 001 056 980) (“the Company”), and Cromwell Diversified Property Trust (ABN 30 074 537 051) (“the Trust”).

Cromwell Property Group was formed in December 2006 by the Stapling of shares in the Company to units in the Trust. Each stapled security consists of one share in the Company and one unit in the Trust, which cannot be dealt with or traded separately.

The responsible entity of the Trust is Cromwell Property Securities Limited (ABN 11 079 147 809) a subsidiary of the Company.

2. REPORTING PERIOD

The financial information contained in this Report is for the year ended 30 June 2012. Comparative amounts, unless otherwise indicated, are for the year ended 30 June 2011.

3. HIGHLIGHTS OF RESULTS

	30 Jun 2012	30 Jun 2011	% Change
	$A’000	$A’000
Revenue and other income	186,903	181,976	3%
Profit from operations attributable to stapled security holders as assessed by the directors(1)	80,010	65,297	23%
Basic/Diluted operating earnings per stapled security as assessed by the directors(1) (2)	7.5	7.1	6%
Other items(includingfair value adjustments)	(56,933)	22,805	-
Profit after tax attributable to stapled security holders	23,077	88,102	(74%)
Basic/Diluted earnings per stapled security (2)	2.2 cents	9.6 cents	(77%)
Distributionsper stapled security	7.0 cents	7.0 cents	-%
Total assets	1,837,601	1,539,428	19%
Net assets	788,989	705,160	12%
Net tangible assets(3)	787,422	703,636	12%
Net debt(4)	905,024	737,037	23%
Gearing (%) (5)	51%	49%	4%
Securities issued	1,169,689	964,737	21%
NTA per security	$0.67	$0.73	(8%)
NTAper security (excluding interest rate swaps)	$0.71	$0.73	(3%)

(1) Profit from operations is calculated after adjusting for certain items (including fair value adjustments, realised gains on sale and other items) as set out in the commentary below.

(2) Earnings per stapled security calculated using weighted average number of stapled securities on issue during the relevant period.

(3) Net assets less deferred tax asset and intangible assets.

(4) Borrowings less cash and cash equivalents and restricted cash.

(5) Net debt divided by total assets less cash and cash equivalents.

4. COMMENTARY ON THE RESULTS

Refer to the Directors’ Report of the Cromwell Property Group’s annual financial report for a commentary on the results of the Group.

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Cromwell Property Group (CMW) Cromwell Corporation Limited ABN 44 001 056 980 Cromwell Diversified Property Trust ARSN 102 982 598

Appendix 4E Results for Announcement to the Market Year ended 30 June 2012

5. DIVIDENDS AND DISTRIBUTIONS

	Dividend	Distribution			Franked
	per	per	Total per	Total	amt per	Record	Payment
	Security	Security	Security	$’000	Security	Date	Date

2012
Interim distribution	-	1.75¢	1.75¢	16,920	-	04/10/11	16/11/11
Interim distribution	-	1.75¢	1.75¢	17,602	-	30/12/11	15/02/12
Interim distribution	-	1.75¢	1.75¢	20,027	-	30/03/12	16/05/12
Final distribution	-	1.75¢	1.75¢	20,470	-	29/06/12	16/08/12
	-	7.00¢	7.00¢	75,019	-
2011
Interim distribution	-	1.75¢	1.75¢	15,919	-	14/10/10	17/11/10
Interim distribution	-	1.75¢	1.75¢	15,943	-	23/12/10	16/02/11
Interim distribution	-	1.75¢	1.75¢	16,243	-	25/03/11	18/05/11
Final distribution	-	1.75¢	1.75¢	16,883	-	30/06/11	19/08/11
	-	7.00¢	7.00¢	64,988	-

6. DIVIDEND/DISTRIBUTION REINVESTMENT PLAN

Cromwell Property Group operates a distribution reinvestment plan (“Plan”) which enables security holders to reinvest dividends/distributions and acquire Cromwell Property Group stapled securities. The directors may specify a discount rate to be applied to the issue price of stapled securities for Plan participants, however currently no discount applies. The issue price is generally the average of the daily volume weighted average price of stapled securities sold on ASX for the 10 trading days immediately prior to the Plan Record Date to which the distribution relates. The Plan Record Date is generally 15 business days prior to the distribution payment date.

An election to participate in the Plan in respect of some or all of a holding can be made at any time. To participate in the Plan in respect of a specific distribution, the security holder must have lodged their Plan election notice on or before the record date for that distribution.

7. INVESTMENTS IN JOINTLY CONTROLLED ENTITY AND ASSOCIATE

The Group has investments in two associates, Cromwell Property Fund (“CPF”) and Phoenix Portfolios Pty Ltd (“Phoenix”). These entities were formed in Australia and their principal activities are property investment (CPF) and investment management (Phoenix).

The reporting dates of the associates are the same as for the Group. The proportion of voting power held equates to the proportion of ownership interest.

CPF does not recognise income tax expense or liabilities given its nature.

The Group previously held an Investment in a jointly controlled entity, Cromwell TGA Planned Investment (“TGA”). The remaining units of TGA not owned by the Group were acquired during the prior year.

The investments are accounted for using the equity method of accounting. Information relating to the investments is detailed below:

	Ownership	Interest
	2012	2011	2012	2011
	%	%	$’000	$’000
Investments accounted for using the equity method:
CPF – associate	18	18	4,705	5,436
Phoenix – associate	50	50	47	56
			4,752	5,492

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Cromwell Property Group (CMW) Cromwell Corporation Limited ABN 44 001 056 980 Cromwell Diversified Property Trust ARSN 102 982 598

Appendix 4E Results for Announcement to the Market Year ended 30 June 2012

8. CHANGES IN CONTROL OVER GROUP ENTITIES

There were no material acquisitions or disposals of controlled entities during the 2012 year.

9. COMPLIANCE STATEMENT

This Report has been prepared in accordance with AASB Standards (including Australian Interpretations) and other standards acceptable to ASX. This Report, and the financial reports upon which the report is based, use the same accounting policies.

The information contained in this Report is based on the attached audited financial report for the year ended 30 June 2012.

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Daryl Wilson Finance Director 23 August 2012

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Cromwell Property Group Annual Financial Report 30 June 2012

consisting of the combined Financial Reports of Cromwell Corporation Limited (ABN 44 001 056 980) and its controlled entities and Cromwell Diversified Property Trust (ARSN 102 982 598) and its controlled entities

Cromwell Corporation Limited ABN 44 001 056 980 Level 19, 200 Mary Street Brisbane Qld 4000

Cromwell Diversified Property Trust ARSN 102 982 598

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

CROMWELL PROPERTY GROUP TABLE OF CONTENTS

	PAGE
Directors’ Report	3
Auditor’s Independence Declaration	22
Consolidated Statements of Comprehensive Income	23
Consolidated Statements of Financial Position	24
Consolidated Statements of Changes in Equity	25
Consolidated Statements of Cash Flows	27
Notes to the Consolidated Financial Statements	28
Directors’ Declaration	82
Independent Auditor’s Report	83
Securityholder Information	84

Board of Directors:

Geoffrey Levy (AO) Robert Pullar Michelle McKellar David Usasz Richard Foster Marc Wainer Michael Watters Geoffrey Cannings (Alternate for Michael Watters) Paul Weightman Daryl Wilson

Secretary: Nicole Riethmuller

Registered Office:

Level 19 200 Mary Street BRISBANE QLD 4000 Tel: +61 7 3225 7777 Fax: +61 7 3225 7788 Web: www.cromwell.com.au

Listing:

The company and the trust are stapled and listed on the Australian Securities Exchange (ASX code: CMW).

Share Registry:

Link Market Services Limited Level 15, 324 Queen Street BRISBANE QLD 4000 Tel: 1300 550 841 (+61 2 8280 7124) Fax: +612 9287 0309 Web: www.linkmarketservices.com.au

Auditor:

Johnston Rorke Chartered Accountants Level 30, Central Plaza One 345 Queen Street BRISBANE QLD 4000 Tel: +61 7 3222 8444 Fax: +61 7 3221 7779 Web: www.jr.com.au

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CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

The directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as Responsible Entity for the Cromwell Diversified Property Trust (collectively referred to as “the Directors”) present their report together with the consolidated financial statements for the year ended 30 June 2012 for both:

the Cromwell Property Group (“the Group”) consisting of Cromwell Corporation Limited (“the Company”) and its controlled entities and Cromwell Diversified Property Trust (“the CDPT”) and its controlled entities; and
the CDPT and its controlled entities (“the Trust”).

The shares of the Company and units of the CDPT are combined and issued as stapled securities in the Group. The shares of the Company and units of the Trust cannot be traded separately and can only be traded as stapled securities.

1. Directors & Officers

(a) Directors

The persons who were Directors at any time during the financial year and up to the date of this report (unless otherwise stated) were:

(i) Mr Geoffrey Levy (AO) – Chairman

Mr Levy has extensive public company executive and directorship experience and is the former Chief Executive Officer and current Deputy Chairman of Investec Bank (Australia) Ltd. He is currently Chairman of ASX listed Speciality Fashion Group Limited, and Monash Private Capital. He was appointed an Officer in the Order of Australia in the Queen’s Birthday Honours List in June 2005. He has also been appointed by the NSW State Government to chair its Property Asset Utilisation Taskforce.

(ii) Mr Robert Pullar – Non-Executive Director
Mr Pullar is a Director of the Brisbane based property development company operating in Australia, Citimark Properties. He was previously a partner with chartered accounting firm Douglas Heck and Burrell, 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 Chairman of Cromwell’s Nomination & Remuneration Committee, Chairman of Cromwell’s Investment Committee and a member of Cromwell’s Audit & Risk Committee.
(iii) Ms Michelle McKellar – Non-Executive Director
Ms McKellar has a wealth of property and portfolio management experience having held Chief Executive positions with CB Richard Ellis throughout Asia Pacific and subsequently the Jen Group of Companies overseeing the development and management of a significant commercial and retail portfolio. She is a senior member of the Property and Land Economy Institute, a member of the Australian Institute of Company Directors and operates her private property companies in Australia and NZ. Ms McKellar is a member of Cromwell’s Nomination and Remuneration, Audit and Risk and Investment Committees.
(iv) Mr David Usasz – Non-Executive Director
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 re-organisations. He is Chairman of Queensland Mining Corporation Limited. 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 Nomination & Remuneration Committee.
(v) Mr Richard Foster – Non-Executive Director
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 the Group’s investment products. Mr Foster is a member of Cromwell’s Nomination & Remuneration and Investment Committees.
(vi) Mr Marc Wainer – Non-Executive Director Mr Wainer has more than 35 years experience in the property industry in South Africa, including founding Investec Property Group, Investec Bank's property division. Marc is Chief Executive Officer and an Executive Director of listed South African property group Redefine Properties which he founded, and a director of Redefine International plc, a listed property investment company which is a substantial securityholder of Cromwell Property Group. He also is a non-executive director of Hyprop Investments Limited, a South African listed retail property fund.
(vii) Mr Michael Watters – Non-Executive Director
Mr Watters was appointed in April 2011, is a registered professional engineer with a BSc Eng. (Civil) Degree and an MBA and has over 25 years experience in the investment banking and real estate industries. He has held directorships of some of South Africa’s top rated listed property funds including Sycom Property Fund and Hyprop Investments Limited. He is the CEO of the Redefine International Group.
(viii) Mr Paul Weightman – Managing Director/Chief Executive Officer
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 was Cromwell’s Executive Chairman from 1998 until the appointment of Mr Levy in April 2008, and has acted as Chief Executive Officer since that date. He has been a director of companies in the property, energy and retail sectors. Mr Weightman is a member of Cromwell’s Investment Committee.

Page | 3 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

1. Directors & Officers (continued)

(a) Directors (continued)

(ix) Mr Daryl Wilson – Director – Finance & Funds Management

Mr Wilson joined Cromwell in August 1999 and has primary responsibility for the finance and funds management functions. Mr Wilson has lead the development of Cromwell’s funds management capabilities, and has many years experience as a chartered accountant. He holds a Bachelor of Commerce and a Diploma of Financial Planning. Mr Wilson is a member of Cromwell’s Investment Committee.

(x) Mr Michael Flax – Alternate Director

Mr Flax was an alternate director to Mr Marc Wainer and resigned on 1 August 2011.

(xi) Mr Geoffrey Cannings – Alternate Director

Mr Cannings is an alternate director to Mr Michael Watters and was appointed on 1 August 2011.

All Directors of the Company are also Directors of Cromwell Property Securities Limited, the Responsible Entity of the CDPT.

(b) Directorships of other listed entities in last 3 years

Mr. Levy has been a Director of Specialty Fashion Group since 8 April 2005. Mr. Levy was a director of STW Group Limited from 24 November 1993 until his resignation from the Board on 1 July 2008.

Mr Usasz has been a director of Queensland Mining Corporation Limited since 15 June 2007.

Mr Wainer is a Director of Redefine International plc, a property investment company which is listed on the London Stock Exchange and a Director of Redefine Properties, a property group which is listed on the Johannesburg Stock Exchange.

Mr Watters is a Director of Redefine International plc, a property investment company which is listed on the London Stock Exchange.

No other Director has been a director of any other listed company during the 3 years preceding the end of the financial year, and up to the date of this report.

(c) Company secretary

Ms Nicole Riethmuller

Ms Riethmuller has over 15 years experience as a corporate lawyer having worked primarily in the financial services industry. Prior to joining Cromwell, Nicole was General Counsel at the Queensland Investment Corporation where she headed the in-house legal team. Before that she was a Senior Associate in the Funds Management team at Minter Ellison lawyers in Sydney. Nicole has also been a lawyer and Assistant Company Secretary at Queensland Sugar Corporation. She has a Bachelor of Laws and a Bachelor of Commerce from the University of Queensland.

(d) Directors’ meetings

The number of Directors’ meetings (including meetings of committees of the Board) and number of meetings attended by each of the Directors of the Company during the financial year were:

Director			Nomination &	Nomination &	Audit & Risk	Audit & Risk	Investment	Investment
			Remuneration		Committee		Committee
			Committee
	A	B	A	B	A	B	A	B
Geoffrey Levy	12	15	-	-	-	-	-	-
Robert Pullar	14	15	3	3	4	5	2	4
Michelle McKellar	15	15	3	3	5	5	4	4
David Usasz	15	15	3	3	5	5	-	-
Richard Foster	15	15	3	3	-	-	2	4
Marc Wainer	10	15	-	-	-	-	-	-
Michael Watters(1)	15	15	-	-	-	-	-	-
Paul Weightman	15	15	-	-	-	-	4	4
Daryl Wilson	15	15	-	-	-	-	4	4

A – Number of meetings attended B – Number of meetings eligible to attend

(1) Includes attendance by alternate director Geoffrey Cannings.

Page | 4 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

2. Principal Activities

The principal activities of the Group and Trust during the financial year consisted of property investment. The principal activities of the Group also includes property management, management of property related managed investment schemes and property development.

There were no significant changes in the nature of the Group’s or Trust’s principal activities during the financial year.

3. Dividends/ Distributions

Group	Dividend	Distribution			Franked
	per	per	Total per	Total	amt per	Record	Payment
	Security	Security	Security	$’000	Security	Date	Date

2012
Interim distribution	-	1.75¢	1.75¢	16,920	-	04/10/11	16/11/11
Interim distribution	-	1.75¢	1.75¢	17,602	-	30/12/11	15/02/12
Interim distribution	-	1.75¢	1.75¢	20,027	-	30/03/12	16/05/12
Final distribution	-	1.75¢	1.75¢	20,470	-	29/06/12	16/08/12
	-	7.00¢	7.00¢	75,019	-
2011
Interim distribution	-	1.75¢	1.75¢	15,919	-	14/10/10	17/11/10
Interim distribution	-	1.75¢	1.75¢	15,943	-	23/12/10	16/02/11
Interim distribution	-	1.75¢	1.75¢	16,243	-	25/03/11	18/05/11
Final distribution	-	1.75¢	1.75¢	16,883	-	30/06/11	19/08/11
	-	7.00¢	7.00¢	64,988	-
Trust	Dividend	Distribution			Franked
	per	per	Total per	Total	amt per	Record	Payment
	Security	Security	Security	$’000	Security	Date	Date

2012
Interim distribution	-	1.75¢	1.75¢	16,925	-	04/10/11	16/11/11
Interim distribution	-	1.75¢	1.75¢	17,607	-	30/12/11	15/02/12
Interim distribution	-	1.75¢	1.75¢	20,032	-	30/03/12	16/05/12
Final distribution	-	1.75¢	1.75¢	20,474	-	29/06/12	16/08/12 (1)
	-	7.00¢	7.00¢	75,038	-
2011
Interim distribution	-	1.75¢	1.75¢	15,923	-	14/10/10	17/11/10
Interim distribution	-	1.75¢	1.75¢	15,947	-	23/12/10	16/02/11
Interim distribution	-	1.75¢	1.75¢	16,249	-	25/03/11	18/05/11
Final distribution	-	1.75¢	1.75¢	16,888	-	30/06/11	19/08/11
	-	7.00¢	7.00¢	65,007	-

4. Review of Operations and Results

(a) Financial performance

The Group recorded a profit after tax of $23,077,000 for the year ended 30 June 2012 compared with a profit of $88,102,000 for the previous year. The Trust recorded a profit after tax of $24,359,000 for the year ended 30 June 2012 compared with a profit of $92,361,000 for the previous year.

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CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

4. Review of Operations and Results (continued)

(a) Financial performance (continued)

The statutory profit/(loss) for the year includes a number of items which are non-cash in nature, occur infrequently and/or relate to realised or unrealised changes in the values of assets and liabilities and in the opinion of the Directors, need to be adjusted for in order to allow securityholders to gain a better understanding of the Group and Trust’s underlying profit from operations.

The most significant of these items impacting the profit of the Group for 2012 were:

A decrease in the fair value of investment properties of $12,353,000 (2011: increase of $33,659,000); and
A decrease in the fair value of interest rate derivatives of $38,483,000 (2011: $1,920,000).

Underlying valuations for investment properties increased by $773,000 during the year, net of property improvements, leasing incentives and lease costs. However the effective writing off of costs of acquiring the HQ North and Bundall properties during the year and other adjustments led to an overall decrease in fair value of $12,353,000.

	Group
	2012	2011
	$’000	$’000
Increase in valuations, net of property improvements, lease costs and incentives	773	46,084
Non-cash adjustments for straight-lining of rentals and lease amortisation	813	890
Acquisition transaction costs	(13,939)	(13,315)
Gain/(loss) on fair value of investmentproperties	(12,353)	33,659

The financial result also included a decrease in fair value of the interest rate derivatives (contracts) held by the Trust of $38,483,000. This was as a result of decreases in future expectations for variable interest rates at June 2012, compared to June 2011.

The Group had hedged future interest rates through contracts over 97% of its debt at 30 June 2012 to minimise the risk of changes in interest rates in the future. These contracts expire between July 2012 and September 2017 and can be valued. Although the valuation process is relatively complex, the value is essentially determined by the difference between the actual interest rates which have been agreed under the contract and what the market forward interest rates are at the date of the valuation. Market rates, and hence valuations, change daily, but the value at the end of an interest rate contract will always be nil. Accounting standards require the Group to account for the value of any fixed rate interest hedges in the balance sheet as an asset or liability and to adjust for any difference in the income statements, even though if they are held to maturity the asset or liability will unwind over the term of the contract.

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CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

4. Review of Operations and Results (continued)

(b) Operating profit

Profit from operations is considered by the Directors to reflect the underlying earnings of the Group and is a key metric taken into account in determining distributions for the Group and Trust, but is a measure which is not calculated in accordance with International Financial Reporting Standards (“IFRS”) and has not been audited or reviewed by the Group and Trust’s auditor.

Profit from operations has been calculated consistently since stapling of the Group in 2007.

A reconciliation of profit from operations, as assessed by the Directors, to the reported profit for the year is as follows:

Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000	Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Profit from operations 80,010 Reconciliation to profit for the year Loss on sale of investment properties (331) Loss on sale of other assets (44) Fair value net gains/(write-downs):  Investment properties (12,353)  Interest rate derivatives (38,483)  Investments at fair value through profit or loss (173)  Property development inventories 200 Non-cash property investment income/(expense):  Straight-line lease income 6,892  Lease incentive and lease cost amortisation (7,705) Other non-cash expenses:  Amortisation of finance costs (2,560)  Employee options expense (601)  Amortisation and depreciation (604)  Relating to equity accounted investments(1) (993)  Net tax losses incurred/(utilised)(2) (178) Netprofit/(loss)attributable to non-controllinginterest -	65,297 80,752 66,112 (195) (331) (195) - - - 33,659 (12,353) 33,659 (1,920) (38,483) (1,920) 604 (173) 604 (3,695) - - 4,883 6,892 4,883 (5,773) (7,705) (5,773) (2,042) (2,833) (2,770) (333) - - (542) - - (1,594) (993) (1,594) (247) - - - (414) (645)
Netprofit for theyear 23,077	88,102 24,359 92,361

Group
Trust
2012
2011
2012
2011
$’000
$’000
$’000
$’000

Profit from operations
80,010
Reconciliation to profit for the year
Loss on sale of investment properties
(331)
Loss on sale of other assets
(44)
Fair value net gains/(write-downs):

Investment properties
(12,353)

Interest rate derivatives
(38,483)

Investments at fair value through profit or loss
(173)

Property development inventories
200
Non-cash property investment income/(expense):

Straight-line lease income
6,892

Lease incentive and lease cost amortisation
(7,705)
Other non-cash expenses:

Amortisation of finance costs
(2,560)

Employee options expense
(601)

Amortisation and depreciation
(604)

Relating to equity accounted investments(1)
(993)

Net tax losses incurred/(utilised)(2)
(178)
Netprofit/(loss)attributable to non-controllinginterest
-

65,297
80,752
66,112
(195)
(331)
(195)
-
-
-
33,659
(12,353)
33,659
(1,920)
(38,483)
(1,920)
604
(173)
604
(3,695)
-
-
4,883
6,892
4,883
(5,773)
(7,705)
(5,773)
(2,042)
(2,833)
(2,770)
(333)
-
-
(542)
-
-
(1,594)
(993)
(1,594)
(247)
-
-
-
(414)
(645)

Netprofit for theyear
23,077

88,102
24,359
92,361

(1) Comprises fair value adjustments included in share of profit of equity accounted entities.

(2) Comprises tax expense attributable to changes in deferred tax assets recognised as a result of carried forward tax losses.

Profit from operations for the year was $80,010,000 (2011: $65,297,000). This was derived entirely from property investment.

Net operating earnings from the property portfolio, after property outgoings costs was $150,158,000 for the year, an increase of 28% on the previous year. The majority of this increase was attributable to the HQ North and Bundall Corporate Centre investment properties acquired during the year.

The Group also measures the change in like for like net property earnings, taking into account only properties held in both the current and previous financial years. On this basis, net property earnings increased by 6.8% in 2012. This demonstrates the value of the strong leasing profile of the Group combined with the in house management which enables Cromwell to get the best out of each property.

The other key impact on profit from operations was an increase in interest expense to $61,963,000 (2011: $45,397,000). This increase occurred mostly as a result of the additional borrowings for properties acquired during the year, although the average interest cost fell slightly during the year from 7.05% to 6.93%. This fall in average rate reflected lower variable interest rates as the Reserve Bank reduced the cash rate during the year.

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CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

4. Review of Operations and Results (continued)

(c) Earnings and Distributions per stapled security

Profit from operations on a per security basis is considered by the Directors to be the most important measure of underlying financial performance as it excludes certain volatile and non-cash items but includes the impact of changes in the number of securities on issue.

	2012	2011
	Cents	Cents
Profitper security	2.2	9.6
Profit from operationsper security	7.5	7.1
Distributionsper security	7.0	7.0

Profit from operations attributable to stapled securityholders was 7.5 cents (2011: 7.1 cents) per weighted average stapled security. This represents an increase of approximately 6% which is considered a very satisfactory outcome given the somewhat difficult market environment over the year.

Distributions paid for the year were 7.0 cents (2011: 7.0 cents), including a June 2011 quarter distribution of 1.75 cents per stapled security paid on 16 August 2012. Although there was no growth in distributions per security in 2012, this remains a key priority in the future.

(d) Financial position

Financial position
	Group		Trust
	2012	2011	2012	2011
Total assets ($’000)	1,837,601	1,539,428	1,820,045	1,531,741
Net assets ($’000)	788,989	705,160	774,720	699,643
Net tangible assets(1)($’000)	787,442	703,636	774,720	699,643
Net debt ($’000)(2)	905,024	737,037	913,156	742,532
Gearing (%)(3)	51%	49%	52%	50%
Securities issued (’000)	1,169,689	964,737	1,169,964	965,012
NTA per security	$0.67	$0.73	$0.66	$0.73
NTAper security(excludinginterest rate swaps)	$0.71	$0.73	$0.70	$0.73

(1) Net assets less deferred tax asset and intangible assets.

(2) Borrowings less cash and cash equivalents and restricted cash.

(3) Net debt divided by total assets less cash and cash equivalents.

A total of 8 property assets were externally revalued at June 2012, representing approximately 48% of the property portfolio by value. The balance of the portfolio was the subject of internal valuations (determined by the directors to be fair value) having regard to previous external valuations and comparable sales evidence. The weighted average capitalisation rate (WACR) was 8.28% across the portfolio, compared with 8.18% at June 2011.

Net debt has increased due to the additional borrowings of $181,059,000 primarily relating to the acquisition of the HQ North and Bundall Corporate Centre investment properties. Gearing increased slightly during the year to 51% from 49% at June 2011 but remains within the preferred range of 35-55%.

Stapled securities on issue have increased by 204,951,628 during the year. This occurred through a combination of placements to institutional and other wholesale investors, a rights issue to existing securityholders and the distribution re-investment plan (DRP). The average issue price of all stapled securities during the year was 68 cents.

NTA per security has decreased during the year from $0.73 to $0.67, primarily as a result of the decreases in fair value of the interest rate derivatives. NTA per security excluding the value of interest rate contracts (which will have no value at the end of their term) fell slightly from $0.73 to $0.71 which is mostly attributable to stamp duty costs of acquiring HQ North and Bundall and costs of issuing stapled securities.

Page | 8 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

4. Review of Operations and Results (continued)

(e) Outlook

The outlook remains positive for the Group, despite the continuing sluggish pace of economic growth.

The Groups’ property portfolio is expected to continue to deliver consistent earnings. The performance of the investment property portfolio reflects the benefits of Cromwell’s integrated property management and tenant relationship activities. The portfolio was 96.4% leased at year-end, with a 6.2 year weighted average lease term. Importantly, tenant quality is also exceptional, with 39% of rental income at balance date underpinned by Government or Government owned/funded entities, and a further 45% from listed companies or their subsidiaries.

The Group expects to achieve at least modest growth in both operating earnings and distributions per security in 2013, underpinned by this strong property portfolio and the funds management business, which has the potential to return to a period of significant growth in future years.

The Group also aims to grow net tangible assets per security in 2013 and to maintain gearing below 55%.

5. 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.

There were no significant changes in the state of affairs of the Group during the financial year other than as disclosed in this report and the accompanying financial report.

6. Subsequent Events

Other than as set out in note 40 of the financial report, no matter or circumstance has arisen since 30 June 2012 that has significantly affected or may significantly affect:

the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.

7. Likely Developments

The Group will continue to pursue activities which increase profitability of the Group, and create value for securityholders. Further information in relation to likely developments, and the impact on the operations of the Group, has not been included in this report as the Directors believe it would result in unreasonable prejudice to the Group.

8. 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.

9. Directors’ Interests

The interests of current Directors in stapled securities of the Group at the date of this report are as follows:

	Stapled	Performance	Options over
	Securities	Rights	Securities
Geoffrey Levy	2,576,846	-	-
Robert Pullar	14,000,000	-	-
Michelle McKellar	454,500	-	-
David Usasz	2,320,000	-	-
Richard Foster	4,061,765	-	-
Marc Wainer	-	-	-
Michael Watters	-	-	-
Geoffrey Cannings	58,000	-	-
Paul L Weightman	15,921,167	4,000,000	-
Daryl J Wilson	1,972,200	1,740,000	-
	41,364,478	5,740,000	-

Page | 9 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

10. Options and Performance Rights

(a) Securities under option through the Performance Rights Plan

The Group issues in-substance options over stapled securities through the issue of performance rights under the Performance Rights Plan (“PRP”). At the date of this report, performance rights on issue are as follows:

Dategranted	Exercise date	Exerciseprice	Expiry date	Number
23/08/10	21/08/12 – 21/09/12	$0.00	21/09/12	170,287
23/08/10	21/08/12 – 21/09/12	$0.10	21/09/12	123,459
23/08/10	21/08/13 – 21/09/13	$0.00	21/09/13	101,378
23/08/10	21/08/13 – 21/09/13	$0.10	21/09/13	47,433
23/08/10	21/08/13 – 21/09/13	$0.20	21/09/13	95,894
07/03/10	01/07/13 – 01/08/13	$0.00	01/08/13	97,633
26/05/11	01/07/13 – 01/10/13	$0.50	01/10/13	1,913,333
26/05/11	01/07/14 – 01/10/14	$0.50	01/10/14	1,913,333
26/05/11	01/07/15 – 01/10/15	$0.50	01/10/15	1,913,334
05/09/11	06/09/14 – 05/10/14	$0.20	05/10/14	393,679
05/09/11	06/09/14 – 05/10/14	$0.00	05/10/14	590,622
05/09/11	06/09/14 – 05/10/14	$0.10	05/10/14	52,851
				7,413,236

No holder has any right under the performance rights to participate in any other security or interest of the Company or any other entity, except that performance right holders have a matching in-substance option for units in Cromwell Diversified Property Trust as a result of the Group’s stapling arrangement.

No other form of option is on issue at the date of this report.

(b) Securities issued on the exercise of performance rights through the Performance Rights Plan

The following stapled securities were issued during the year ended 30 June 2012 on the exercise of performance rights granted under the PRP. No further securities have been issued as a result of the exercise of performance rights since that date. No amounts are unpaid on any of the securities.

	Issue Price of	No. of Securities
Dateperformance rightsgranted	Securities	Issued
16 December 2009	$0.20	659,600
8 February2010	$0.00	126,859
		786,459

Page | 10 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report

The remuneration report is presented for the financial year ending 30 June 2012. The report forms part of the Directors Report and has been prepared and audited in accordance with the requirements of the Corporations Act 2001 .

This report outlines the remuneration for Non-Executive Directors, Executive Directors and other Key Management Personnel. The report is set out under the following headings:

(a) Remuneration principles
(b) Details of remuneration
(c) Performance assessment
(d) Equity based compensation
(e) Employment contracts and termination provisions

(a) Remuneration principles

(i) Governance

The Group has appointed a nomination and remuneration committee (“Committee”). The Committee has overall responsibility for the remuneration strategy of the Group. The Committee also advises the Board on remuneration policy and practices. The Committee is chaired by Mr RJ Pullar, a Non-Executive Director. External consultants are appointed to advise the Committee as required.

(ii) Remuneration policy

Cromwell Property Group is committed to a fair and transparent remuneration strategy. It is considered imperative that the remuneration strategy is aligned with the Group’s overall strategy. The Group aims to deliver increases in operating earnings per security, distributions per security and net tangible asset value per security (excluding interest rate swaps) on an annual basis. The Group also aims to outperform the S&P/ASX 300 accumulation index over rolling 3 and 5 year periods. These aims are taken into account and this is reflected in the remuneration strategy and structure.

Key Management Personnel are rewarded with a mixture of fixed remuneration, short term incentives and long term incentives, designed to allow the Group to retain and motivate key employees.

The Board’s policy on the nature and amount of remuneration encompasses the following objectives:

Fixed pay: Key Management Personnel are remunerated at the market median level of their fixed pay adjusted for factors such as the external market environment and the employee’s position, qualifications, period of service and responsibility within the Group. In assessing the level of fixed pay relative to the market, significant weighting is given to the employees period of service and their performance over the total employment period.
Short term incentives: Short term incentives are generally included as part of the remuneration package for those employees that can have a material impact on the key marginal drivers of operating earnings in any given financial year. These include such factors as leasing outcomes and changes in property earnings, interest expense, funds management earnings and changes in the investment property portfolio. The Group does not generally take into account non-financial performance indicators in assessing short term incentives. Short term incentives are available to a number of employees and are generally paid as cash bonuses. For all Key Management Personnel except the Chief Executive Officer and Non-Executive Directors, the Chief Executive Officer is responsible for setting key performance indicator targets and assessing annually whether these targets have been met. The key performance indicator targets for the Chief Executive Officer are set, revised and reviewed annually by the Committee or the Board.
Long term incentives: These are considered to be both a retention tool for employees who are considered key to the longer term succession of the Group and a reward for exceptional performance in a financial year. The maximum value of performance rights issued is generally limited to 25% of the annual fixed remuneration of any employee during the period from grant date to vesting date. Long term incentives are offered by way of the issue of performance rights which, if they vest, allow the employee to obtain stapled securities at a discount to market value. This allows employees to align themselves with securityholders by having a financial interest in the long term value of the Group’s security price. For any given dollar value, a higher discount causes the number of the performance rights offered to decrease. The use of the discount is intended to reduce or avoid the need for employees to obtain significant funding or to sell a substantial number of securities to fund the exercise of performance rights on vesting.

The number of Key Management Personnel participating in the PRP during the year was 8 (2011: 9). The number of performance rights allocated to Key Management Personnel at balance date was 6,663,935 (2011: 6,842,136).

Page | 11 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(a) Remuneration principles (continued)

(iii) External environment

The unemployment rate during the year remained below the 10-year median. This continues to cause labour market constraint which was evident in Brisbane where approximately 80% of the Groups’ employees are based. The Brisbane market continues to remain very competitive, partly as a result of significant competition from the resource sector for employees.

(iv) Non-executive directors remuneration

Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. The Board determines remuneration of Non-Executive Directors within the maximum amount approved by security holders from time to time. This maximum currently stands at $1,000,000 per annum in total for fees, having been increased from $700,000 at the 2011 Annual General Meeting, to be divided among the Non-Executive Directors in such a proportion and manner as they agree.

Non-Executive Directors are paid a fixed remuneration, comprising base fees or salary and superannuation (if applicable). Non-Executive Directors do not receive bonus payments or participate in security-based compensation plans, and are not provided with retirement benefits other than statutory superannuation.

provided with retirement benefits other than statutory superannuation.
	2012	2011
	$	$
Chairman	185,000	150,000
Non-Executive Director	85,000	75,000
Audit & Risk Committee – Chairman	18,000	18,000
Audit & Risk Committee – Member	12,000	12,000
Nomination & Remuneration Committee – Chairman	7,500	7,500
Nomination & Remuneration Committee – Member	5,000	5,000
Investment Committee	-	-

The Non-Executive Directors’ fees were reviewed during the year, and increases applied from 1 November 2011 to reflect the specific responsibility of each Non-Executive Director and market factors. The current and previous rates are shown above. Non-Executive Directors fees had not previously been increased since the 2008 financial year.

Use of remuneration consultant

In August 2011, to assist with the review of Non-Executive Directors’ fees the Board employed the services of AON Hewitt to undertake a market review covering the composition and market competitiveness of Non-Executive Directors’ fees (for the Board and each Committee), meeting frequency and company practices in relation to Non-Executive Director remuneration. Under the terms of the engagement, AON Hewitt provided remuneration recommendations and was paid $7,420 for these services.

The following arrangements were made to ensure the remuneration recommendations were free from undue influence:

AON Hewitt was engaged by and reported directly to the Chairman of the Board;
The report containing the remuneration recommendations was provided by AON Hewitt directly to the Chairman of the Board; and
AON Hewitt was given access to senior management throughout the engagement to understand board processes and meeting frequencies.

Based on the above arrangements the Board is satisfied the recommendations were made free from undue influence.

Page | 12 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(b) Details of remuneration

Remuneration paid, payable, or otherwise made available, directly or indirectly, to key management personnel is set out below.

Key Management Personnel during the year were:

Non-Executive Directors:

Mr GH Levy (AO) Chairman Mr RJ Pullar Director Ms MA McKellar Director Mr DE Usasz Director Mr M Wainer Director Mr WR Foster Director Mr M Flax Director (Alternate to Mr Wainer – resigned 1 August 2011) Mr M Watters Director Mr G Cannings Director (Alternate to Mr Watters – appointed 1 August 2011) Executive Directors: Mr PL Weightman Managing Director/Chief Executive Officer Mr DJ Wilson Director – Finance & Funds Management Other Senior Executives: Mr B Binning National Leasing Manager Mr MJ Blake National Head of Sales Ms JA Clark Transactions Manager, Property Licensee, Director of controlled entity Mr PJ Cowling Associate Director Transactions, Director of controlled entity Mr DA Gippel Group Treasurer, Director of controlled entity Mr PW Howard Chief Operating Officer – resigned 26 October 2011 Ms NE Riethmuller General Counsel/Company Secretary

Page | 13 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(b) Details of remuneration (continued)

Details of remuneration (continued)
	Short-term benefits Cash salary and fees $	Short-term benefits Short-term benefits Short-term benefits Post employment Long-term benefits Share-based payments Total Remuneration % of Remun. that is Accrued leave(1) Cash bonus Non-cash benefits Super- annuation Long service leave(1) Options performance based $ $ $ $ $ $ $
2012 Non-Executive Directors GH Levy RJ Pullar MA McKellar DE Usasz M Wainer WR Foster M Watters(2) G Cannings(3) Executive Directors PL Weightman DJ Wilson Other key management personnel B Binning M Blake JA Clark P Cowling D Gippel P Howard(4) N Riethmuller	159,021 92,813 98,667 96,024 81,667 79,511 43,333 12,232 770,252 434,225 275,000 260,471 202,999 300,000 275,000 96,980 275,000	- - - 14,312 - - 173,333 - - - - 8,353 - - 101,166 - - - - - - - 98,667 - - - - 8,642 - - 104,666 - - - - - - - 81,667 - - - - 7,156 - - 86,667 - - - - - - - 43,333 - - - - 963 - - 13,195 - (29,417) 200,000 163,973 15,775 21,790 180,210 1,322,583 29% (28,008) 120,000 - 15,775 12,127 78,391 632,510 31% 11,232 25,000 - 15,775 7,492 37,485 371,984 17% 11,293 27,520 - 15,775 11,195 23,934 350,188 15% (2,670) - - 15,775 8,080 - 224,184 - (8,705) - - 15,775 11,954 15,110 334,134 5% 5,398 75,000 19,186 15,775 13,105 95,327 498,791 34% (13,161) - - 5,868 (5,071) (10,144) 74,472 - 17,189 - 2,009 15,775 3,759 37,272 351,004 11%
	3,553,195	(36,849) 447,520 185,168 171,494 84,431 457,585 4,862,544

(1) Annual and long service leave are accounted for on an accruals basis. The amounts represent the change in accrued leave during the year.

(2) Mr Watters was appointed on 4 April 2011 and commenced receiving director’s fees on 1 November 2011.

(3) Mr Cannings was appointed as an alternate director for Mr Watters on 1 August 2011 and received a share of Mr Watters directors fees for the year.

(4) Mr Howard resigned on 26 October 2011. Unvested performance rights on issue to Mr Howard were forfeited on his resignation.

Page | 14 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

	Short-term	Short-term	Short-term	Short-term	Post	Long-term	Share-based	Total	% of Remun.
	benefits	benefits	benefits	benefits	employment	benefits	payments	Remuneration	that is
	Cash salary and fees	Accrued leave(1)	Cash bonus	Non-cash benefits	Super- annuation	Long service leave(1)	Options		performance based
	$	$	$	$	$	$	$	$
2011
Non-Executive Directors
GH Levy	137,615	-	-	-	12,385	-	-	150,000	-
RJ Pullar	86,697	-	-	-	7,803	-	-	94,500	-
MA McKellar	91,367	-	-	-	633	-	-	92,000	-
DE Usasz	89,908	-	-	-	8,092	-	-	98,000	-
M Wainer	75,000	-	-	-	-	-	-	75,000	-
WR Foster	73,395	-	-	-	6,605	-	-	80,000	-
M Watters(2)	-	-	-	-	-	-	-	-	-
M Flax(3)	-	-	-	-	-	-	-	-	-
Executive Directors
PL Weightman	776,901	102,385	200,000	157,900	15,199	17,353	38,459	1,308,197	18%
DJ Wilson	434,801	2,485	120,000	-	15,199	18,037	17,372	607,894	23%
Other key management personnel
B Binning	250,000	(2,462)	75,000	-	15,199	5,040	42,103	384,880	21%
M Blake	248,068	(2,226)	37,208	-	15,199	7,585	17,873	323,707	14%
JA Clark	171,180	918	-	5,264	14,495	7,007	1,998	200,862	5%
P Cowling	275,019	3,566	-	-	15,199	7,755	5,240	306,779	2%
D Gippel	250,000	9,383	65,000	20,289	15,199	9,854	142,853	512,578	14%
P Howard	234,801	(7,443)	-	-	15,199	2,461	10,144	255,162	4%
N Riethmuller	257,500	(6,516)	-	-	15,199	2,020	26,710	294,913	9%
	3,452,252	100,090	497,208	183,453	171,605	77,112	302,752	4,784,472

(1) Annual and long service leave are accounted for on an accruals basis. The amounts represent the change in accrued leave during the year .

(2) Mr Watters was appointed on 4 April 2011 and commenced receiving director’s fees on 1 November 2011.

(3) Mr Flax was appointed as an alternate director for Mr Wainer and Mr Watters, and resigned on 1 August 2011. Mr Flax did not receive any remuneration.

Page | 15 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(c) Performance assessment

The Group’s performance conditions are chosen to support the sustainable operation of the Group. Financial performance metrics are chosen with the aim of supporting or enhancing the operating earnings per security in any given financial year in a way that does not unduly increase the risk profile of the Group. Short term cash incentives are focused wholly on financial metrics. The remaining performance criteria are intended to facilitate growth within an appropriate framework such that the Group can outperform its peers in the longer term.

Although the specific performance criteria may be different for each KMP the overriding principles involve assessment of performance according to a traditional balanced scorecard methodology. The balanced scorecard assigns key performance indicators (KPIs) across broad categories. The KPIs are designed to align securityholder interests with Group goals in the short and long term. Individual KPIs are aligned with Group’s long term objectives. The balanced scorecard methodology assigns performance and responsibility criteria for all employees across four broad categories. These categories are:

Financial Measures: Includes both the performance of the Group and the employees’ business unit. The Group focuses on maintaining individual securityholder alignment by using operating earnings per security as the major short term financial metric. Other short term financial metrics include distributions per security and changes in NTA per security (excluding interest rate swaps). The key long term financial metric is Total Securityholder Return (“TSR”) over rolling 3 and 5 year periods relative to the S&P/ASX 300-A-REIT Accumulation Index.

Internal Business Measures: Concentrate on improvement of systems and processes to create efficiency and accuracy to support long term business growth. The processes emphasise adherence to governance requirements.

Customer Measures: The Group surveys securityholders, tenants, fund investors and other stakeholders to ascertain customer relationship trends and set KPIs for employees to meet the needs identified by those trends, and to coincide with longer term corporate objectives.

Innovation & Learning Measures: Focuses on the growth of individuals, departments and corporate culture to innovate and extend current capabilities throughout the Group.

The weightings of these categories for any individual are set and assessed in consideration of their responsibility and role.

In 2012 there were no non-financial performance conditions in the short term (cash) incentive plans. All short term conditions related to financial metrics occurring within the financial year 2012. The key short term financial measures for the last 5 years were:

	2012	2011	2010	2009	2008
Operating profit ($’000) (as assessed by the Directors – see part 4(b) above)	80,010	65,297	64,630	63,761	$0,791
Change over previous year	+ 23%	+ 1%	+ 1%	(10%)	+ 93%
Operating earnings per security (as assessed by the Directors – see part 4(c) above)	7.5 cents	7.1 cents	8.5 cents	9.1 cents	10.1 cents
Change over previous year	6%	(16%)	(12%)	(10%)	91%
Distributions per security	7.0 cents	7.0 cents	8.0 cents	9.0 cents	9.0 cents
Change over previous year	0%	(13%)	(11%)	0%	102%
NTA per security	$0.67	$0.73	$0.71	$0.76	$1.01
Change over previous year	(8%)	3%	(7%)	(25%)	5%
NTA per security (excl. interest rate swaps)	$0.71	$0.73	$0.71	$0.77	$0.98
Change over previous year	(3%)	3%	(8%)	(21%)	4%

The Group has established a Performance Rights Plan. For KMP, the ability to exercise the Performance Rights is generally conditional on the executive meeting internal performance hurdles including remaining employed by the Group for a specified period. The Group believes this allows employees to align themselves with securityholders by having a financial interest in the long term value of the Group’s security price, which acts to maximise TSR.

Page | 16 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(c) Performance assessment (continued)

TSR over 1, 3 and 5 years relative to benchmark indices is shown below: Given the Group’s focus on medium and long term returns, focus is on performance over 3 and 5 year periods. The 1 year TSR analysis has been included for comparison purposes.

Total Securityholder Returns (annualised)	1 Year	3 Year	5 Year
TSR – Group	9.9%	21.5%	0.1%
TSR - S&P/ASX 300 A-REIT accumulation index	11%	12.2%	(12.6%)
Group performance against S&P/ASX 300 A-REIT accumulation index	(1.1%)	9.3%	12.7%
TSR – All Ord’s accumulation index	(7.0%)	5.9%	(4.1%)
Group performance against All Ord’s accumulation index	16.9%	15.6%	4.2%

Details of remuneration: cash bonuses and performance rights

For each cash bonus and grant of performance rights included in the tables in section (b) above, the percentage of the available bonus or grant that was paid, or that vested, in the year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonus is payable in future years. The performance rights are subject to vesting conditions as outlined above. No performance rights will vest if the conditions are not satisfied, hence the minimum value of performance rights yet to vest is $nil. The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the performance rights that is yet to be expensed at balance date. References to options in the table below relate to performance rights.

	Cash	Cash	Financial	Options	Options	Financial
	Bonus	Bonus	Year	Vested in	Forfeited in	Years	Maximum value
	Paid	Forfeited	Options	2012	2012	Options may	of grant to vest
Name	%	%	Granted	%	%	vest	$
PL Weightman	80%	20%	2011	-	-	2014/15/16	308,613
DJ Wilson	80%	20%	2011	-	-	2014/15/16	134,249
B Binning	100%	-	2010/2012	100%(1)	-	2015	38,992
MJ Blake	100%	-	2011/2012	-	-	2014/2015	45,610
JA Clark	-	-	-	-	-	-	-
P Cowling	-	-	2012	-	-	2015	40,141
PW Howard	-	-	2011	-	100%	-	-
DA Gippel	100%	-	2010/2012	100%(1)	-	2015	85,781
NE Riethmuller	-	-	2011/2012	-	-	2013/2015	20,229

(1) relates to performance rights issued in 2010.

(d) Equity based compensation

Details of the PRP are set out in part (a)(ii) of the remuneration report.

All Executive Directors and employees of the Group are considered for participation in the PRP subject to a minimum period of service and level of remuneration, which may be waived by the Committee. Grants to Executive Directors are subject to securityholder approval.

Consideration for granting performance rights, grant periods, vesting and exercise dates, exercise periods and exercise prices are determined by the Board or Committee in each case. Performance rights carry no voting rights. When exercised, each performance right is convertible into one stapled security.

Page | 17 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(d) Equity based compensation (continued)

The terms and conditions of each grant of performance rights under the PRP affecting remuneration for Key Management Personnel in the current or future reporting periods are included in the table below:

Grant Date	Expiry Date	Exercise Price	No of Performance	Assessed Value per
			Rights Granted	Right at Grant Date
16/12/2009	15/01/2012	$0.20	659,600	41.5¢
08/02/2010	07/03/2012	-	126,859	59.1¢
23/08/2010	21/09/2013	$0.20	192,218	37.0¢
23/08/2010	21/09/2013	$0.10	123,459	50.6¢
26/05/2011	01/10/2013	$0.50	1,913,333	13.9¢
26/05/2011	01/10/2014	$0.50	1,913,333	12.6¢
26/05/2011	01/10/2015	$0.50	1,913,334	11.5¢
05/09/2011	05/10/2014	$0.20	393,679	32.3¢
05/09/2011	05/10/2014	$0.10	52,851	41.1¢
05/09/2011	05/10/2014	-	590,622	50.0¢

Details of changes during the 2012 year in performance rights on issue to Key Management Personnel under the PRP are set out below.

	Opening balance	Granted during year	Exercised during the year	Forfeited during the year	Lapsed during year	Closing balance
2012
PL Weightman	4,000,000	-	-	-	-	4,000,000
DJ Wilson	1,740,000	-	-	-	-	1,740,000
DA Gippel	659,600	236,248	(659,600)	-	-	236,248
B Binning	126,859	107,386	(126,859)	-	-	107,386
M J Blake	95,894	136,932	-	-	-	232,826
JA Clark	-	-	-	-	-	-
P Cowling	-	171,165	-	-	-	171,165
P Howard	96,324	-	-	(96,324)	-	-
N Reithmuller	123,459	52,851	-	-	-	176,310
	6,842,136	704,582	(786,459)	(96,324)	-	6,663,935

The assessed fair value at grant date of performance rights granted is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables in part (b) of the remuneration report. Fair value at grant date for performance rights with no market based vesting conditions are determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the performance right, the security price at grant date, expected price volatility of the underlying securities, the expected dividend/distribution yield and the risk-free interest rate for the term of the performance right.

A total of 1,037,152 performance rights were granted during 2012 (2011: 6,583,432) of which 704,582 (2011: 6,055,677) were issued to Key Management Personnel. The model inputs for Performance Rights granted during the 2012 year are disclosed in note 31.

Plan rules contain a restriction on removing the “at risk” aspect of the instruments granted to executives. Plan participants may not enter into any transaction designed to remove the “at risk” aspect of an instrument before it vests without explicit approval from the Board.

At 30 June 2012 no performance rights on issue had vested.

Page | 18 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(d) Equity-based compensation (continued)

Further details relating to performance rights are set out below.

Name	Remuneration consisting of	Value at grant date(2)	Value at exercise date(3)	Value at forfeit date(4)
	performance rights(1)	$	$	$
PL Weightman	14%	-	-	-
DJ Wilson	12%	-	-	-
B Binning	10%	53,669	75,000	-
MJ Blake	7%	44,201	-	-
JA Clark	-	-	-	-
P Cowling	5%	55,251	-	-
DA Gippel	18%	118,070	273,914	-
PW Howard	14%	-	-	35,601
NE Riethmuller	11%	21,716	-	-

(1) The percentage of total remuneration consisting of performance rights, based on the value of performance rights expensed during the year.

(2) The value of performance rights granted during the year as part of remuneration calculated at grant date in accordance with AASB 2 Share-based Payment .

(3) The value at exercise date of performance rights that were granted as part of remuneration and were exercised during the year, being the intrinsic value of the performance rights at that date.

(4) The value at lapse date of performance rights that were granted as part of remuneration and were forfeited during the year because a vesting condition was not satisfied.

(e) Employment contracts and termination provisions

(i) Employment contracts

PL Weightman

Remuneration and other terms of employment for the Chief Executive Officer are formalised in an employment agreement. The Company may terminate the agreement without notice for gross misconduct; otherwise, the Company may terminate the agreement on six months notice, or payment of entitlements for this period in lieu of notice. Mr Weightman may terminate the agreement at any time with six months notice. Other major provisions of the agreement are as follows:

Term of agreement – Commencing 1 July 2006, no fixed termination date.
Base salary, inclusive of superannuation, for the 2012 year of $950,000, to be reviewed annually by the remuneration committee. Since balance date it has been agreed the base salary will remain unchanged for the 2013 year.
Performance cash bonus of up to $250,000 with targets to be reviewed annually by the remuneration committee.

The performance bonus payable to Mr Weightman for the 2012 year depended on performance criteria being met. The criteria were assessed as being met in part during the financial year, with 80% of the performance bonus amount being paid.

DJ Wilson

Remuneration and other terms of employment for the Director – Finance & Funds Management are formalised in an employment agreement. The Company may terminate the agreement without notice for gross misconduct; otherwise, the Company may terminate the agreement on six months notice, or payment of entitlements for this period in lieu of notice. Mr Wilson may terminate the agreement at any time with six months notice. Other major provisions of the agreement are as follows:

Term of agreement – commencing 1 July 2006, no fixed termination date.
Base salary, inclusive of superannuation, for the 2012 year of $450,000, to be reviewed annually by the remuneration committee. Since balance date it has been agreed the base salary will remain unchanged for the 2013 year.
Performance cash bonus of up to $150,000 with targets to be reviewed annually by the remuneration committee.

The performance bonus payable to Mr Wilson for the 2012 year depended on certain criteria being met. The criteria were assessed as being met in part during the financial year, with 80% of the performance bonus amount being paid.

All other executives

Remuneration and other terms of employment for other executives are contained under standard employment contracts. There are no termination payments due under the contracts other than statutory entitlements for accrued leave. Remuneration is reviewed annually.

Page | 19 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

11. Remuneration Report (continued)

(e) Employment contracts and termination provisions (continued)

(ii) Termination provisions

There are no fixed term conditions in executive employment contracts. Minimum termination periods for executives are outlined below and adhered to in all cases except in the case of serious breaches of the employment contract.

	Notice Period Employee Notice Period Group
Managing Director/CEO, Director – Finance & Funds Management, Group Treasurer All other keymanagementpersonnel	6 months 6 months 3 months 6 months 1-2 months 1-2 months

On termination, a portion of short term incentives may also be paid at the discretion of the CEO, or the Board in the case of termination of the CEO. In addition, other statutory entitlements such as accrued leave may be taken as termination benefits.

12. Trust Disclosures

Fees to Responsible Entity

Total amounts paid/payable to the Responsible Entity or its associates during the year were $15,113,342 (2011: $14,107,206).

Units held by Responsible Entity

Cromwell Corporation Limited, the parent company of the Responsible Entity, held 275,106 (2011: 275,106) units in the Trust throughout the year. Pursuant to Australian Securities & Investments Commission relief, the units are not stapled to shares in Cromwell Corporation Limited.

The Responsible Entity held 1,517,000 (2011: 1,517,000) units in the Cromwell Mary Street Planned Investment, a subsidiary of the Trust, throughout the year. The holding represents approximately 8% (2011: 8%) of the issued units in the Cromwell Mary Street Planned Investment.

Issued Units

Units issued in the Trust during the year are set out in note 23 in the accompanying financial report. There were 1,169,964,049 (2011: 965,012,421) issued units in the Trust at balance date.

Value of Scheme Assets

The total carrying value of the Trust’s assets as at balance date was approximately $1,820,045,000 (2011: $1,531,741,000). Net assets attributable to unitholders of the Trust were $769,400,000 (2011: $694,180,000) equating to $0.66 per unit (2011: $0.73 per unit).

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

13. Indemnifying Officers or Auditor

Subject to the following, no indemnity or insurance premium was paid during the financial year for a person who is or has been an officer of the Group.

The constitution of the Company provides that to the extent permitted by law, a person who is or has been an officer of the Company is indemnified against certain liabilities and costs incurred by them in their capacity as an officer of the Company.

Further, the Company has entered into a Deed of access, insurance and indemnity with each of the Directors and the company secretary. Under the deed, the Company agrees to, amongst other things:

indemnify the officer to the extent permitted by law against certain liabilities and legal costs incurred by the officer as an officer of the Company and its subsidiaries;
maintain and pay the premium on an insurance policy in respect of the officer; and
provide the officer with access to board papers and other documents provided or available to the officer as an officer of the Company and its subsidiaries.

The Group has paid premiums for Directors and officers’ liability insurance with respect to the Directors, company secretary and senior management as permitted under the Corporations Act 2001 . The terms of the policy prohibit disclosure of the nature of the liabilities covered and the premiums payable under the policy.

No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an auditor of the Company or any of its controlled entities.

Page | 20 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

14. Rounding of Amounts to Nearest Thousand Dollars

The Company 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 Directors’ report and financial report. Amounts in the Directors’ report and financial report have been rounded off to the nearest thousand dollars, or in certain cases to the nearest dollar, in accordance with that Class Order.

15. Auditor

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

The Company may decide to employ Johnston Rorke on assignments additional to their statutory duties where the auditor’s expertise and experience with the Company and/or the Group are important.

The Directors have considered the position and, in accordance with advice received from the Audit & Risk Committee, are satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 as none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants and all non-audit services have been reviewed by the Audit & Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor.

Details of the amounts paid or payable to the auditor and its related parties for non-audit services provided to the Group are set out below:

set out below:
	2012	2011
	$	$
Non-audit services
Other – review ofpro forma balance sheets and forecasts	70,000	76,000
Total remuneration for non-audit services	70,000	76,000

The auditor receives remuneration for audit and other services relating to other entities for which Cromwell Property Securities Limited and Cromwell Funds Management Limited, both controlled entities, act as responsible entity. The remuneration is disclosed in the relevant entity’s financial reports and totalled $112,500 (2011: $78,000).

Auditor’s independence declaration

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

This report is made in accordance with a resolution of the Directors.

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P.L. Weightman Director Dated this 22[nd] day of August 2012

Page | 21 of 85

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The Directors

Cromwell Corporation Limited and

Cromwell Property Securities Limited as Responsible Entity for Cromwell Diversified Property Trust Level 19

200 Mary Street BRISBANE QLD 4000

Dear Sirs,

Auditor’s Independence Declaration

As lead auditor for the audit of the financial reports of Cromwell Corporation Limited and Cromwell Diversified Property Trust for the year ended 30 June 2012, 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.

This declaration is in respect of both Cromwell Corporation Limited and the entities it controlled during the year and Cromwell Diversified Property Trust and the entities it controlled during the year.

JOHNSTON RORKE

Chartered Accountants

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R.C.N. WALKER Partner

Brisbane, Queensland 22 August 2012

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Page | 22 of 85

CROMWELL PROPERTY GROUP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012


	Notes	2012	2011	2012	2011
		$’000	$’000	$’000	$’000
Revenue and other income
Rental income and recoverable outgoings		177,245	138,494	176,673	138,499
Funds management fees		4,567	3,964	-	-
Distributions		37	255	37	255
Interest		4,713	4,984	4,452	5,192
Other revenue		141	16	18	4
Increase in recoverable amount:
 Property development inventories/provision		200	-	-	-
Fair value net gain from:
 Investment properties	12	-	33,659	-	33,659
 Investments at fair value throughprofit or loss		-	604	-	604
Total revenue and other income		186,903	181,976	181,180	178,213
Expenses
Property expenses and outgoings		27,087	21,198	30,530	24,241
Property development costs		638	819	-	-
Responsible entity fees		-	-	8,497	8,674
Administration and overhead costs		5,496	5,115	1,113	1,268
Funds management costs		487	480	-	-
Employee benefits expense	5	13,347	11,680	-	-
Finance costs	5	64,523	47,439	64,796	48,167
Amortisation and depreciation	5	604	542	-	-
Share of losses of equity accounted entities	14 (d)	140	713	131	742
Loss on sale of investment properties	5	331	195	331	195
Loss on sale of other assets	5	44	-	-	-
Fair value net loss from:
 Interest rate derivatives		38,483	1,920	38,483	1,920
 Investment properties	12	12,353	-	12,353	-
 Investments at fair value through profit or loss		173	-	173	-
Decrease in recoverable amount:
 Propertydevelopment inventories/provision		-	3,695	-	-
Total expenses		163,706	93,796	156,407	85,207
Profit before income tax		23,197	88,180	24,773	93,006
Income tax expense	6	120	78	-	-
Profit		23,077	88,102	24,773	93,006
Other comprehensive income, net of tax		-	-	-	-
Total comprehensive income		23,077	88,102	24,773	93,006
Profit/(loss) is attributable to:
Company shareholders		(1,282)	(4,259)	-	-
Trust unitholders		24,359	92,361	24,359	92,361
Non-controllinginterests		-	-	414	645
Profit		23,077	88,102	24,773	93,006
Total comprehensive income/(loss) is attributable to
Company shareholders		(1,282)	(4,259)	-	-
Trust unitholders		24,359	92,361	24,359	92,361
Non-controllinginterests		-	-	414	645
Total comprehensive income		23,077	88,102	24,773	93,006
Basic earnings/(loss) per companyshare/trust unit(cents)	28	(0.1¢)	(0.5¢)	2.3	10.1¢
Diluted earnings/(loss) per companyshare/trust unit(cents)	28	(0.1¢)	(0.5¢)	2.3	10.0¢
Basic/diluted earnings/(loss) per stapled security (cents)	28	2.2¢	9.6¢

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

Page | 23 of 85

CROMWELL PROPERTY GROUP CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2012

		Group			Trust
	Notes	2012	2011	2012	2011
		$’000	$’000	$’000	$’000
Current Assets
Cash and cash equivalents	7	59,153	46,572	51,021	40,805
Trade and other receivables	8	21,505	9,918	15,618	4,411
Current tax assets		60	240	-	-
Derivative financial instruments	9	-	1,285	-	1,285
Other current assets	11	1,791	1,437	1,047	789
Total current assets		82,509	59,452	67,686	47,290
Non-Current Assets
Trade and other receivables	8	19,800	19,800	22,988	29,988
Inventories	10	3,000	3,000	-	-
Investment properties	12	1,724,400	1,444,850	1,724,400	1,444,850
Investments at fair value through profit or loss	13	266	4,177	266	4,177
Investments in jointly controlled entity and associates	14	4,752	5,492	4,705	5,436
Property, plant and equipment	15	1,327	1,133	-	-
Deferred tax assets	16	914	921	-	-
Intangible assets	17	633	603	-	-
Total non-current assets		1,755,092	1,479,976	1,752,359	1,484,451
Total assets		1,837,601	1,539,428	1,820,045	1,531,741
Current Liabilities
Trade and other payables	18	14,472	21,431	13,311	21,358
Borrowings	19	21,533	3,321	21,533	3,321
Dividends/distributions payable	20	20,470	16,883	20,474	16,888
Derivative financial instruments	9	15,127	3,430	15,127	3,430
Provisions	21	1,368	1,253	-	-
Other current liabilities	22	6,735	7,085	6,735	7,085
Total current liabilities		79,705	53,403	77,180	52,082
Non-Current Liabilities
Borrowings	19	942,644	780,288	942,644	780,016
Derivative financial instruments	9	25,501	-	25,501	-
Provisions	21	762	577	-	-
Total non-current liabilities		968,907	780,865	968,145	780,016
Total liabilities		1,048,612	834,268	1,045,325	832,098
Net assets		788,989	705,160	774,720	699,643
Equity
Contributed equity	23	66,344	57,073	827,989	702,090
Reserves	24	4,529	3,928	-	-
Retained earnings/(accumulated losses)	25	(51,562)	(50,280)	(58,589)	(7,910)
Equity attributable to shareholders/unitholders		19,311	10,721	769,400	694,180
Non-controlling interests
Trust unitholders	26	769,678	694,439	-	-
Non-controlling interests	26	-	-	5,320	5,463
Total equity		788,989	705,160	774,720	699,643

The above consolidated statements of financial position should be read in conjunction with the accompanying notes.

Page | 24 of 85

CROMWELL PROPERTY GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

	Attributable to Equity Holders of the Company	Attributable to Equity Holders of the Company	Attributable to Equity Holders of the Company
Group Notes	Contributed Equity Accumulated Losses Available-for- Sale Reserve Share Based Payments Reserve $’000 $’000 $’000 $’000	Total Non- controlling Interest (Trust) $’000 $’000	Total Equity $’000
Balance at 1 July2011	57,073 (50,280) 2,340 1,588	10,721 694,439	705,160
Total comprehensive income/(loss)	- (1,282) - -	(1,282) 24,359	23,077
Transactions with equity holders in their capacity as equity holders:  Contributions of equity, net of transaction costs 23  Dividends/distributions paid/payable 27  Employee share options 23/24	9,271 - - - - - - - - 601	9,271 125,899 - (75,019) 601 -	135,170 (75,019) 601
Total transactions with equityholders	9,271 - - 601	9,872 50,880	60,752
Balance at 30 June 2012	66,344 (51,562) 2,340 2,189	19,311 769,678	788,989

Balance at 1 July2010	49,197 (46,021) 2,340 1,255	6,771 564,636	571,407
Total comprehensive income/(loss)	- (4,259) - -	(4,259) 92,361	88,102
Transactions with equity holders in their capacity as equity holders:  Contributions of equity, net of transaction costs 23  Dividends/distributions paid/payable 27  Employee share options 23/24	7,876 - - - - - - - - - - 333	7,876 102,430 - (64,988) 333 -	110,306 (64,988) 333
Total transactions with equityholders	7,876 - - 333	8,209 37,442	45,651
Balance at 30 June 2011	57,073 (50,280) 2,340 1,588	10,721 694,439	705,160

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

Page | 25 of 85

CROMWELL PROPERTY GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

	Attributable to Equity Holders of CDPT	Attributable to Equity Holders of CDPT	Attributable to Equity Holders of CDPT
Trust Notes	Contributed Equity $’000	Accumulated Losses $’000	Total (CDPT) Non- controlling Interests Total Equity $’000 $’000 $’000
Balance at 1 July 2011	702,090	(7,910)	694,180 5,463 699,643
Total comprehensive income for the year	-	24,359	24,359 414 24,773
Transactions with equity holders in their capacity as equity holders:  Contributions of equity, net of transaction costs 23  Distributions paid/declared 27	125,899 -	- (75,038)	125,899 - 125,899 (75,038) (557) (75,595)
Total transactions with equityholders	125,899	(75,038)	50,861 (557) 50,304
Balance at 30 June 2012	827,989	(58,589)	769,400 5,320 774,720

Balance at 1 July2010	599,660	(35,264)	564,396 6,068 570,464
Total comprehensive income for the year	-	92,361	92,361 645 93,006
Transactions with equity holders in their capacity as equity holders:  Contributions of equity, net of transaction costs 23  Distributions paid/declared 27  De-recognitionondeconsolidation	102,430 - -	- (65,007) -	102,430 2,520 104,950 (65,007) (519) (65,526) - (3,251) (3,251)
Total transactions with equityholders	102,430	(65,007)	37,423 (1,250) 36,173
Balance at 30 June 2011	702,090	(7,910)	694,180 5,463 699,643

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

Page | 26 of 85

CROMWELL PROPERTY GROUP CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

		Group
	Notes	2012	2011	2012	2011
		$’000	$’000	$’000	$’000
Cash Flows From Operating Activities
Receipts in the course of operations		197,506	160,303	193,533	151,553
Payments in the course of operations		(58,484)	(53,682)	(54,808)	(44,714)
Distributions received		637	989	637	989
Interest received		5,243	4,142	5,219	4,116
Finance costs paid		(61,528)	(43,516)	(61,528)	(43,516)
Income taxpaid		67	(60)	-	-
Net cashprovided by operating activities	29	83,441	68,176	83,053	68,428
Cash Flows From Investing Activities
Payments for investment properties		(339,985)	(298,889)	(339,985)	(298,889)
Proceeds from sale of investment properties		38,998	33,540	38,998	33,540
Payments for property, plant and equipment		(464)	(127)	-	-
Payments for controlled entity, net of cash acquired	37	-	(12,132)	-	(12,132)
Payments of property development provision		-	(6,435)	-	-
Payments for investments at fair value through profit or loss		(577)	(4,593)	(577)	(4,593)
Proceeds from sale of investments at fair value through profit or loss		4,315	1,757	4,315	1,757
Payments for software and other intangible assets		(408)	(393)	-	-
Loans to related entities		(19,786)	(500)	(19,786)	-
Repayment of loans by related entities		7,000	17,724	14,000	18,372
Repayment of loans byotherpersons		-	270	-	-
Net cash used in investing activities		(310,907)	(269,778)	(303,035)	(261,945)
Cash Flows From Financing Activities
Proceeds from borrowings		364,509	142,400	364,509	142,400
Repayment of borrowings		(183,450)	(36,398)	(183,450)	(36,398)
Payment of loan transaction costs		(3,052)	(3,994)	(3,052)	(3,994)
Proceeds from issue of units – controlled entity		-	2,519	-	2,519
Proceeds from issue of stapled securities/units		133,695	110,844	124,615	102,504
Equity issue transaction costs		(3,828)	(4,114)	(3,648)	(3,653)
Payment of dividends/distributions		(66,129)	(60,684)	(67,078)	(61,221)
Payment for derivative financial instruments		(1,698)	(868)	(1,698)	(868)
Net cashprovided by financing activities		240,047	149,705	230,198	141,289
Net (decrease)/increase in cash and cash equivalents		12,581	(51,897)	10,216	(52,228)
Cash and cash equivalents at 1 July		46,572	98,469	40,805	93,033
Cash and cash equivalents at 30 June	7	59,153	46,572	51,021	40,805

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

Page | 27 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies

Cromwell Property Group (“the Group”) was formed by the stapling of Cromwell Corporation Limited (“the Company”) and its controlled entities, and Cromwell Diversified Property Trust (“CDPT”) and its controlled entities (“the Trust”). The Financial Reports of the Group and the Trust have been presented jointly in accordance with ASIC Class Order 05/642 relating to combining accounts under stapling and for the purpose of fulfilling the requirements of the Australian Securities Exchange.

The Group was established for the purpose of facilitating a joint quotation of the Company and the Trust on the Australian Securities Exchange. The constitutions of the Trust and the Company ensure that, for so long as the two entities remain jointly quoted, the number of units in the Trust and the number of shares in the Company shall be equal and the unitholders and shareholders are identical. Both the Responsible Entity of the Trust and the Company must at all times act in the best interests of the Group.

To account for the stapling, Australian Accounting Standards require an acquirer (Cromwell Corporation Limited) to be identified and an acquisition to be recognised. The net assets and net profit of the acquiree (the Trust and its controlled entities) are recognised as minority interest as they are not owned by the acquirer in the stapling arrangement.

The stapling arrangement will cease upon the earliest of either the winding up of the Company or the Trust.

The financial statements relate to the Group and the Trust as defined above. As a result of changes to the Corporations Act 2001 separate financial statements of Cromwell Corporation Limited and Cromwell Diversified Property Trust as individual entities (parent entities) are no longer presented. Limited financial information for Cromwell Corporation Limited and Cromwell Diversified Property Trust, as individual entities, is disclosed in note 33 and has been prepared on the same basis as the consolidated financial statements.

The principal accounting polices 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.

(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 Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 . The Group and Trust are for-profit entities for the purpose of preparing the financial statements.

Compliance with IFRS

The financial report complies with the International Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board.

New and amended standards adopted by the Group and Trust

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2011 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods.

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
investments at fair value through profit or loss are measured at fair value.
The methods used to measure fair values are discussed further below.

Functional and presentation currency

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

(b) Principles of consolidation

Stapling

The stapling of the Company and CDPT was approved at separate meetings of the respective shareholders and unitholders on 6 December 2006. Following approval of the stapling, shares in the Company and units in the Trust were stapled to one another and are quoted as a single security on the Australian Securities Exchange.

Australian Accounting Standards require an acquirer to be identified and an in-substance acquisition to be recognised. In relation to the stapling of the Company and CDPT, the Company is identified as having acquired control over the assets of CDPT. To recognise the in-substance acquisition, the following accounting principles have been applied:

(1) no goodwill is recognised on acquisition of the Trust because no direct ownership interest was acquired by the Company in the Trust;
(2) the equity issued by the Company to unitholders to give effect to the transaction is recognised at the dollar value of the consideration payable by the unitholders. This is because the issue of shares by the Company was administrative in nature rather than for the purposes of the Company acquiring an ownership interest in the Trust; and
(3) the issued units of the Trust are not owned by the Company and are presented as non-controlling interests in the Group notwithstanding that the unitholders are also the shareholders by virtue of the stapling arrangement. Accordingly, the equity in the net assets of the Trust and the profit/(loss) arising from these net assets have been separately identified in the statement of comprehensive income and statement of financial position.

Page | 28 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(b) Principles of consolidation (continued)

The Trust’s contributed equity and retained earnings/accumulated losses are shown as a non-controlling interest in this Financial Report in accordance with AASB Interpretation 1002 Post-Date-of-Transition Stapling Arrangements and AASB 3 Business Combinations . Even though the interests of the equity holders of the identified acquiree (the Trust) are treated as non-controlling interests the equity holders of the acquiree are also equity holders in the acquirer (the Company) by virtue of the stapling arrangement.

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries as at 30 June 2012 and the results of all subsidiaries 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 acquisition method of accounting is used to account for the business combinations by the Group (refer to note 1(n)).

Inter-entity transactions, balances and unrealised gains on transactions between the Group entities are eliminated. Unrealised losses are also 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.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive income and statement of financial position respectively.

Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company. A list of subsidiaries appears in note 34 to the consolidated financial statements.

Associates

Associates are all 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 Group’s 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 profit or loss and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends or distributions receivable from associates are recognised in the Group’s financial statements as a reduction of 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 venture entities

The interest in a joint venture entity is accounted for in the Group’s financial statements using the equity method. Under the equity method, the share of the profits or losses of the joint venture entity is recognised in profit or loss, and the share of movements in reserves is recognised in reserves.

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.

Page | 29 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(c) Revenue recognition

Rental revenue

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 statement of financial position as a receivable or if paid in advance, as rent in advance (unearned income). Lease incentives granted are considered an integral part of the total rental revenue and are recognised as a reduction in rental 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.

Funds management revenue

Acquisition and capital raising fee revenue is recognised at settlement of the relevant property or proportionately as the equity interests are issued/sold to external investors as appropriate. Management fee revenue is recognised on a proportional basis over time as services are performed.

Other

Property development sales revenue is recognised on settlement of the relevant property.

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

Gain or loss on disposal of assets is calculated as the difference between the carrying amount of the asset at the date of disposal and the net proceeds from disposal and is included in the profit or loss in the year of disposal. Where revenue is obtained from the sale of properties, it is recognised when the significant risks and rewards have transferred to the buyer, which is normally when legal title passes to the buyer.

(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.

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

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

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

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

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

Tax consolidation

The Company and its wholly-owned entities (this excludes the Trust and its controlled entities) have formed a tax-consolidated group with effect from 1 July 2003 and are, therefore, taxed as a single entity from that date. The head entity within the taxconsolidated group is Cromwell Corporation Limited.

Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group, using the ‘separate taxpayer within group’ approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.

Any current tax liabilities or assets and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity in the tax-consolidated group and are recognised as amounts payable (receivable) to (from) other entities in the taxconsolidated group in conjunction with any tax funding arrangement amounts referred to in the following section. Any difference between these amounts is recognised by the Company as an equity contribution or distribution.

Page | 30 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(d) Income tax (continued)

The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can be utilised. Any subsequent period adjustment to deferred tax assets arising from unused tax losses, as a result of revised assessments of the probability of recoverability, is recognised by the head entity only.

Nature of tax funding arrangements and tax sharing arrangements

The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement, which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax liability (asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity, resulting in the head entity recognising an inter-entity receivable (payable) equal in amount to the tax liability (asset) assumed. The inter-entity receivable (payable) are at call.

Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities.

The head entity, in conjunction with other members of the tax-consolidated group, has also entered into a tax sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement, as payment of any amounts under the tax sharing agreement is considered remote.

(e) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(f) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment of receivables. Receivables relating to operating leases of investment properties are due on the first day of each month, payable in advance. 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. Debts which are known to be uncollectible are written off. A provision for impairment of 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 trade and other receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term trade and other receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in profit or loss.

(g) Inventories

Development properties held for resale are stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. When development is completed borrowing costs and other holding charges are expensed as incurred.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(h) Investment properties

Investment property is property which is held either to earn income or for capital appreciation or both. Investment property also includes properties that are under construction for future use as investment properties. 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. As part of the process of determining fair value, 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 at balance date.

These valuation processes 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 capitalisation of net income and the discounting of future cash flows to their present value. These methods incorporate assumptions of future rental income and costs, appropriate capitalisation and discount rates and also consider market evidence of transaction prices for similar investment properties.

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.

Further information on assumptions underlying management’s assessment of fair value is contained in note 2.

(i) Investments and other financial assets

The Group classifies its investments as either financial assets at fair value through profit or loss or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading which are acquired principally for the purpose of selling in the short term with the intention of making a profit. Derivatives are also categorised as held for trading unless they are designated as hedges. Financial assets at fair value through profit or loss also includes financial assets which upon initial recognition are designated as such.

Available-for-sale financial assets

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

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

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category, including interest and dividend income, are presented in profit or loss in the period in which they arise. Changes in the fair value of securities classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains or losses from investment securities.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(i) Investments and other financial assets (continued)

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

(j) Property, plant and equipment

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

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

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

Class	Rate
Plant and equipment	10-67%
Furniture and fittings	18%
Leasedplant and equipment	8-37%

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

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

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

(k) Intangible assets

Software assets have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of software over its estimated useful lives of 3 years on average.

(l) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.

At each reporting date, and whenever events or changes in circumstances occur, the Group assesses whether there is any indication that any other 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 an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Assets other than goodwill that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.

Page | 33 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(m) Fair value estimation

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

The fair value of financial instruments traded in active markets (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-the-counter 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. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The carrying value less impairment provision of trade and other receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

(n) Business combinations

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

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

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

(o) Lease incentives

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 statement of financial position as a component of the carrying amount of investment property and amortised over the lease period as a reduction of rental income.

(p) 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 statement of financial position 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.

(q) Repairs and maintenance

Repairs and maintenance costs and minor renewals are charged as expenses when incurred.

Page | 34 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(r) Derivative financial instruments

The Group is exposed to changes in interest rates and uses interest rate derivatives 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 that are used to convert certain variable interest rate borrowings to fixed interest rates. The derivatives 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 profit or loss.

(s) Trade and other payables

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

(t) 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 the balance date.

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

(u) Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less any cumulative amortisation.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

(v) Provisions

Provisions are recognised when:

the Group has a present legal or constructive obligation as a result of past events;
it is probable that an outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated.

Provisions are not recognised for future operating losses.

(w) Employee benefits

Wages and salaries, annual leave and sick leave

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

Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(w) Employee benefits (continued)

The obligations for long service leave and annual leave are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur.

Superannuation

Contributions are made by the Group to defined contribution superannuation funds. Contributions are charged as expenses as they become payable.

Security-based payments

The fair value of options and performance rights granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options or performance rights.

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

The fair value of the options or performance rights granted is adjusted to reflect the probability of market vesting conditions being met, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options or performance rights that are expected to become exercisable. At each balance date, the entity revises its estimate of the number of options or performance rights that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in profit or loss with a corresponding adjustment to equity.

Bonus plans

The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

(x) Leases (as lessee)

Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in liabilities. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The depreciable assets acquired under finance leases are depreciated over the estimated useful life of the asset. Where there is no reasonable certainty that the lessee will obtain ownership, the asset is depreciated over the shorter of the lease term and the asset’s useful life.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

(y) Leasehold improvements

The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the Group, whichever is the shorter. The amortisation rate for leasehold improvements is set out in note 1(j).

(z) Contributed equity

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

Where any group company purchases the company’s equity instruments, for example as the result of a share buy-back or a sharebased payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the securityholders as treasury shares until the securities are cancelled or reissued. Where such ordinary securities are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to securityholders.

(aa) Dividends/distributions

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

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(ab) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing profit/(loss) attributable to equity holders of the Company/CDPT, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(ac) 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 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 receivables or payables.

(ad) Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

(ae) Rounding of amounts

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

(af) New accounting standards and interpretations

Relevant accounting standards and interpretations that have been issued or amended during the current reporting period but are not yet effective and have not been adopted for the year are as follows:

	Application	Application
Standard/Interpretation	date of	date for the
	standard	Group
AASB 119_Employee Benefits – revised and consequential amendments to other_ accounting standards resulting from its issue	1 Jan 2013	1 Jul 2013
AASB 127_Separate Financial Statements – revised_	1 Jan 2013	1 Jul 2013
AASB 128_Investments in Associates and Joint Ventures - revised_	1 Jan 2013	1 Jul 2013
AASB 2011-4 -Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements	1 Jan 2013	1 Jul 2013
AASB 2011-9_Amendments to Australian Accounting Standards - Presentation of Items of_ Other Comprehensive Income	1 Jul 2012	1 Jul 2012
AASB 2012-2_Amendments to Australian Accounting Standards – _Disclosures-Offsetting Financial Assets and Financial Liabilities	1 Jan 2013	1 Jul 2013
AASB 2012-3_Amendments to Australian Accounting Standards - _Offsetting Financial Assets and Financial Liabilities	1 Jan 2014	1 Jul 2014
AASB 2012-5_Amendments to Australian Accounting Standards_ arising from Annual Improvements 2009-2011 Cycle	1 Jan 2013	1 Jul 2013

The Directors anticipate that the adoption of these Standards and Interpretations in future years may have the following impacts:

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Summary of Significant Accounting Policies (continued)

(af) New accounting standards and interpretations (continued)

AASB 119 – The amendments apply to the calculation of provisions for employee benefits, including sick, annual and long service leave and payments upon termination. The amendments are expected to impact most significantly upon the calculation of employee provisions in respect of annual leave, with amounts not expected to be settled wholly within the subsequent 12 months being defined as being ‘long-term employee benefits’ and classified as non-current in nature. Further, these amounts will be discounted allowing for expected salary levels in the future period in which the leave is expected to be taken. The Group intends to adopt the new standard from 1 July 2013.

AASB 127 – This is an amended version of the former AASB 127, which now only deals with the requirements for separate financial statements, which have been carried over largely unamended from the former AASB 127 Consolidated and Separate Financial Statements . Requirements for consolidated financial statements are now contained in AASB 10 Consolidated Financial Statements. The Standard requires that when an entity prepares separate financial statements, investments in subsidiaries, associates, and jointly controlled entities are accounted for either at cost, or in accordance with AASB 9 Financial Instruments . The Standard also deals with the recognition of dividends, certain group reorganisations and includes a number of disclosure requirements. The Directors believe the adoption of this standard from 1 July 2013 will not result in any material changes to the Group’s financial statements.

AASB 128 – This standard supersedes former AASB 128 Investments in Associates and prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. The Standard defines 'significant influence' and provides guidance on how the equity method of accounting is to be applied (including exemptions from applying the equity method in some cases). It also prescribes how investments in associates and joint ventures should be tested for impairment. The Directors believe the adoption of this standard from 1 July 2013 will not result in any material changes to the Group’s financial statements.

AASB 2011-4 – Amends AASB 124 Related Party Disclosures to remove the individual key management personnel (KMP) disclosures required by Australian specific paragraphs and removes a duplication of the requirements with the Corporations Act 2001 . While this will reduce the disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts recognised in the financial statements. The amendments apply from 1 July 2013. Early adoption of this amendment is not permitted. The Corporations Act requirements in relation to remuneration reports remain unchanged at present, however these requirements are currently subject to review and may also be revised in the future. The Group intends to adopt the new standard from 1 July 2013.

AASB 2011-9 – This amendment to AASB 101 Presentation of Financial Statements requires entities to separate items presented in other comprehensive income into two group, based upon whether they might be recycled to profit and loss in the future. The Directors anticipate this will not affect the measurement of any items recognised in the statement of financial position or profit and loss as the Group does not have other comprehensive income. The Group intends to adopt the new standard from 1 July 2012.

AASB 2012-2 and AASB 2012-3 – The amendments to AASB132 clarify when an entity has a legally enforceable right to set-off financial assets and financial liabilities permitting entities to present balances net on the balance sheet. The amendments to AASB 7 increase the disclosure about offset positions, including the gross position and the nature of the arrangements. The Directors have not yet assessed the impact of the amendments, if any.

AASB 2012-5 – These amendments introduce various changes to AASBs. The Directors have not yet assessed the impact of the amendments, if any.

The Group’s assessment of certain other relevant accounting standards and interpretations, published during the previous financial period, but which are not yet effective and have not yet been adopted, remains unchanged from the previous year. These include:

	Application	Application
Standard/Interpretation	date of	date for the
	standard	Group
AASB 9_Financial Instruments – revised_and consequential amendments to other accountingstandards resultingfrom its issue	1 Jan 2013	1 Jul 2013
AASB 2010-8_Amendments to Australian Accounting Standards – Deferred Tax: Recovery_ of Underlying Assets	1 Jan 2012	1 Jul 2012
AASB 10_Consolidated Financial Statements_	1 Jan 2013	1 Jul 2013
AASB 11_Joint Arrangements_	1 Jan 2013	1 Jul 2013
AASB 12_Disclosure of Interests in Other Entities_	1 Jan 2013	1 Jul 2013
AASB 13_Fair Value Measurement_	1 Jan 2013	1 Jul 2013

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2. 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.

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:

Estimates of fair value of investment properties

The Group has investment properties with a carrying amount of approximately $1,724,400,000 (2011: $1,444,850,000) representing estimated fair value at balance date. In addition, the carrying amount of the Group’s investments in jointly controlled entity/associate of approximately $4,705,000 (2011: $5,492,000) and the Trust’s investments in jointly controlled entity/associate of approximately $4,705,000 (2011: $5,436,000) also reflect underlying investment properties of the jointly controlled entity/associate carried at fair value. These investment properties represent a significant proportion of the total assets of the Group and Trust.

Fair value is determined within a range of reasonable estimates utilising both capitalisation of net market income and discounted future cash flow methodologies and comparing the results to market sales evidence.

The best evidence of fair value is considered to be current prices in an active market for similar properties, however global economic and financial turmoil in recent years has had an impact on many classes of real estate, including commercial real estate in Australia. The most significant impact has been a reduction in the availability of capital (debt and equity) for real estate assets. This reduction in available capital has led to falls in asset values and a relatively low level of transactions in most markets, although in recent times there has been more stability in pricing and increases in transactional levels. Where sufficient market information is not available, or to supplement this information, management considers other relevant information including:

Current prices for properties of a different nature, condition or location, adjusted to reflect those differences;
Recent prices of similar properties in a less active market, with adjustments to reflect changes in economic conditions or other factors;
Capitalised income calculations based on an assessment of current net market income for that property or other similar properties, a capitalisation rate taking into account market evidence for similar properties and adjustment for any differences between market rents and contracted rents over the term of existing leases and deductions for short term vacancy or lease expiries, incentive costs and capital expenditure requirements; and
Discounted cash flow forecasts including estimates of future cash flows based on current leases in place for that property, historical operating expenses, reasonable estimates of current and future rents and operating expenses based on external and internal assessments and using discount rates that appropriately reflect the degree of uncertainty and timing inherent in current and future cash flows.

The fair values adopted for investment properties have been supported by a combination of independent external valuations and detailed internal valuations, which are considered to reflect market conditions at balance date.

Key factors which impact assessments of value at each balance date include capitalisation rates, vacancy rates and weighted average lease terms. Details of these factors at each balance date were as follows:

% Value of Portfolio by Sector 2012 2011	Weighted Average Cap Rate 2012 2011	Weighted Average Lease Term 2012 2011	Occupancy 2012 2011
Commercial 94% 90% Industrial 4% 8% Retail/Entertainment 2% 2%	8.22% 8.09% 9.36% 8.97% 9.12% 8.98%	6.4yrs 7.1yrs 3.3yrs 4.9yrs 3.5yrs 4.5yrs	96.2% 99.6% 100.0% 100.0% 98.5% 98.0%
Total 100% 100%	8.28% 8.18%	6.2yrs 6.8yrs	96.4% 99.6%

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2. Critical accounting estimates (continued)

Estimates of fair value take into account factors and market conditions evident at balance date. Uncertainty and changes in global market conditions in the future may impact fair values in the future.

Estimates of fair value of interest rate derivatives

The fair value of interest rate derivatives has been determined using a pricing model based on discounted cash flow analysis and incorporating assumptions supported by market data at balance date including market expectations of future interest rates and discount rates, and taking into account estimates prepared by external counterparties. Whilst certain derivatives may not be quoted on an active market, management have determined a value for those derivatives using market data adjusted for any specific features of the derivatives. All counterparties to interest rate derivatives are Australian financial institutions.

3. Capital Risk Management

The Group’s capital management strategy seeks to maximise securityholder value through optimising the level and use of capital resources and the mix of debt and equity funding.

The Group’s capital management objectives are to:

ensure that Group entities comply with capital and dividend/distribution requirements of their constitutions and/or trust deeds;
ensure sufficient capital resources to support the Group’s operational requirements;
continue to support the Group’s creditworthiness;
comply with capital requirements of relevant regulatory authorities; and
safeguard the Group’s ability to continue as a going concern.

The Group monitors the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity mix) as part of its overall strategic plan. The Group’s capital structure is continuously reviewed to ensure:

sufficient funds and financing facilities are available, on a cost effective basis, to implement the Group’s strategies; and
dividends/distributions to members are made within the stated policy.

The Group is able to alter its capital mix by:

issuing new stapled securities;
activating its dividend/distribution reinvestment plan;
adjusting the amount of dividends/distributions paid to members;
activating its security buyback program; and
selling assets to reduce borrowings.

The Group also protects its equity in assets by taking out insurance cover with creditworthy insurers.

Certain entities within the Group hold Australian Financial Services Licences (AFSL) and act as responsible entities for managed investment schemes managed by the Group. The AFSL require these entities to maintain net tangible assets of approximately $6 million in aggregate. As such these entities are restricted from paying dividends to the parent entity that would breach their licence conditions and hold cash as part of their required minimum net tangible assets (see Note 29(c)). The entities monitor their net tangible assets on an ongoing basis to ensure they continue to meet their licence requirements. The entities complied with their AFSL requirements during 2012 and 2011.

Page | 40 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

3. Capital Risk Management (continued)

One of the key ways the Group monitors capital adequacy is on the basis of the gearing ratio. The ratio is calculated as net debt divided by adjusted assets. Net debt is calculated as total borrowings less cash and cash equivalents and restricted cash. Adjusted assets are calculated as total assets less cash and cash equivalents, restricted cash and intangible assets. The gearing ratios for both the Group and the Trust at each balance date were as follows:

		Group		Trust
	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Total borrowings	964,177	783,609	964,177	783,337
Less: cash and cash equivalents	59,153	46,572	51,021	40,805
Net debt	905,024	737,037	913,156	742,532
Total assets	1,837,601	1,539,428	1,820,045	1,531,741
Less: intangible assets and deferred tax assets	1,547	1,524	-	-
Less: cash and cash equivalents	59,153	46,572	51,021	40,805
Adjusted assets	1,776,901	1,491,332	1,769,024	1,490,936
Gearing ratio	51%	49%	52%	50%

4. Financial Risk Management

The Group’s activities expose it to a variety of financial risks; credit risk, liquidity risk and market risk (interest rate risk and price risk). The 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 derivatives to hedge certain risk exposures. The Group seeks to deal only with creditworthy counterparties. Liquidity risk is monitored through the use of future rolling cash flow forecasts.

The Group’s management of treasury activities is centralised and governed by policies approved by the Directors who monitor the operating compliance and performance as required. The Group has policies 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.

The Group and the Trust hold the following financial instruments:


	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Financial Assets
Cash and cash equivalents(1)	59,153	46,572	51,021	40,805
Trade and other receivables(1)	41,305	29,718	38,606	34,399
Derivative financial instruments(2)	-	1,285	-	1,285
Investments at fair value throughprofit and loss(3)	-	4,177	-	4,177
Total financial assets	100,458	81,752	89,627	80,666
Financial Liabilities
Trade and other payables(4)	14,472	21,431	13,311	21,358
Derivative financial instruments(2)	40,628	3,430	40,628	3,430
Borrowings(4)	964,177	783,609	964,177	783,337
Dividends/distributionspayable(4)	20,470	16,883	20,474	16,888
Total financial liabilities	1,039,747	825,353	1,038,590	825,013

(1) Loans and receivables

(2) At fair value – held for trading

(3) At fair value – designated

(4) At amortised cost

Page | 41 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

4. Financial Risk Management (continued)

(a) Credit Risk

Credit risk is the risk that a counterparty will default on its contractual obligations under a financial instrument and result in a financial loss to the Group. The Group has exposure to credit risk on all financial assets included in the statement of financial position except investments at fair value through profit or loss.

The Group manages this risk by:

establishing credit limits for customers and managing exposure to individual entities;
monitoring the credit quality of all financial assets in order to identify any potential adverse changes in credit quality;
derivative counterparties and cash transactions, when utilised, are transacted with high credit quality financial institutions;
providing loans to associates where the Group is comfortable with the underlying exposure;
regularly monitoring loans and receivables on an ongoing basis; and
regularly monitoring the performance of associates on an ongoing basis.

The maximum exposure to credit risk at balance date is the carrying amount of financial assets recognised in the statement of financial position of the Group. The Group holds no significant collateral as security. There are no significant financial assets that have had renegotiated terms that would otherwise have been past due or impaired.

Cash is held with Australian financial institutions. Interest rate derivative counterparties are all Australian financial institutions.

The ageing analysis of receivables past due at balance date but not impaired is as follows:


	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
1 to 3 months*	767	2,139	505	2,439
3 to 6 months*	452	266	-	266
Over 6 months*	1,369	2,147	1,369	2,147
	2,588	4,552	1,874	4,852

Of the amounts above $2,269,000 (2011: $3,114,000) for the Group and $1,578,000 (2011: $2,133,000) for the Trust relates to the Cromwell Property Fund (refer note 8).

(b) 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 prepares and monitors rolling forecasts of liquidity requirements on the basis of expected cash flow. The Group monitors the maturity profile of borrowings and puts in place strategies designed to ensure that all maturing borrowings are refinanced in the required timeframes.

The current weighted average debt maturity of the Group and Trust is 2.4 years (2011: 2.9 years).

Contractual maturity of financial liabilities (borrowings and payables) of the Group and the Trust, including interest thereon, are as follows:

follows:
	Group			Trust
	2012	2011	2012		2011
	$’000	$’000	$’000		$’000
Due within one year	122,147	97,409	120,954		97,340
Due between one and five years	1,042,481	893,119	1,042,481		892,832
Due after fiveyears	357	1,066	357		1,066
	1,164,985	991,594	1,163,792		991,238

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

4. Financial Risk Management (continued)

(c) Market Ris k

(i) Price risk

The Group and Trust are exposed to equity securities price risk. This arises from investments held by the Group and Trust classified on the balance sheet as investments at fair value through profit and loss. The Group and Trust are not exposed to commodity price risk. The majority of the Group’s and Trust’s equity investments are publicly traded and are included in the ASX All Ordinaries index.

Group and Trust sensitivity

Based on the financial instruments held at balance date, had the ASX All Ordinaries index increased/decreased by 20% (2011: 20%) with all other variables held constant and all the Group’s and Trust’s equity instruments moved in correlation with the index, the impact on the Group’s and Trust’s profit and equity for the year would have been $53,000 (2011: $835,000) higher/lower.

(ii) 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 97% (2011: 97%) of the Group’s borrowings were effectively hedged.

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

The fixed or limited interest rates range between 3.18% and 5.95% (2011: 4.75% and 5.95%) and the variable rates are generally based on the 30 day bank bill swap bid rate which at balance date was 3.63% (2011: 4.96%). At balance date, the notional principal amounts and periods of expiry of the interest rate swap contracts are detailed as follows:

Group and Trust	2012	2011
	$’000	$’000
Less than 1 year	226,600	-
1-2 years	380,000	500,000
2-3 years	216,700	144,200
3-4 years	31,730	-
4-5 years	-	31,730
Greater than 5years	86,450	86,450
	941,480	762,380

Because the Group’s interest rate derivatives do not meet the accounting requirements to qualify for hedge accounting treatment, gains or losses arising from changes in fair value have been reflected in the profit or loss.

Information on borrowings and the maturity profile of borrowings including interest thereon is set out in Note 19.

Group sensitivity

At balance date, if interest rates for all relevant time periods had changed by +/- 100 basis points (1%) from the year end rates with all other variables held constant, profit would have been $25,097,000 higher/lower (2011 – change of 100 bps: $21,096,000 higher/lower), mainly as a result of increase/decrease in the fair value of interest rate derivatives. Equity would have been $25,097,000 higher/lower (2011: $21,096,000 higher/lower) mainly as a result of an increase/decrease in the fair value of interest rate derivates.

Trust sensitivity

At balance date, if interest rates for all relevant time periods had changed by +/- 100 basis points (1%) from the year end rates with all other variables held constant, profit would have been $25,016,000 higher/lower (2011 – change of 100 bps: $21,038,000 higher/lower), mainly as a result of increase/decrease in the fair value of interest rate derivatives. Equity would have been $25,016,000 higher/lower (2011: $21,038,000 higher/lower) mainly as a result of an increase/decrease in the fair value of interest rate derivates.

Page | 43 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

4. Financial Risk Management (continued)

(d) Fair Value Estimation

The table below analyses financial instruments carried at fair value, by the source of measurement inputs. The results are the same for both the Group and the Trust. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Group and Trust 2012 2011 Level 1 $’000 Level 2 $’000 Level 1 $’000 Level 2 $’000	Group and Trust 2012 2011 Level 1 $’000 Level 2 $’000 Level 1 $’000 Level 2 $’000
Financial Assets Derivative financial instruments - Investments at fair value throughprofit or loss 266	- - 1,285 - - 4,177
266	- - 5,462
Financial Liabilities Derivative financial instruments -	40,628 - 3,430
-	40,628 - 3,430

The carrying value of loans and receivables and financial liabilities at amortised cost are assumed to approximate their fair value due to either their short term nature or their terms and conditions including interest receivable/payable at variable rates.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

5. Expenses

Expenses	Expenses
Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Premises rental – minimum leasepayments 367 170 - -
	170 - -
Loss on Sale of Investment Properties: Net proceeds from sale of investment properties 38,998 Carrying value of investment properties sold and other costs of sale (39,329)	33,540 38,998 33,540 (33,735) (39,329) (33,735)
Loss on sale of investmentproperties (331)	(195) (331) (195)
Employee Benefits Expense: Wages and salaries including on costs 11,515 Contributions to defined contribution superannuation plans 731 Equity settled share-based payments 601 Increase/(decrease)in liabilityfor longservice and annual leave 500	10,746 - - 623 - - 333 - - (22) - -
Employee benefits expense 13,347	11,680 - -
Finance Costs: Total interest 62,855 Less: interest capitalised (892)	50,725 62,855 50,725 (5,328) (892) (5,328)
Interest expense 61,963 Amortisation of loan transaction costs 2,560	45,397 61,963 45,397 2,042 2,833 2,770
Finance costs 64,523	47,439 64,796 48,167
Depreciation/Amortisation: Depreciation of plant and equipment 249 Amortisation of intangibles 355	256 - - 286 - -
Depreciation/Amortisation 604	542 - -
Loss on disposal of other assets: Net loss on disposal of property, plant and equipment 21 Net loss on disposal of intangible assets 23	- - - - - -
Loss on disposal of other assets 44	- - -

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

6. Income Tax

6.	Income Tax
(a)	Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
	Income tax expense Current tax 58 - - - Deferred tax (121) (156) - - Prior year tax losses written off 178 247 - - Adjustment in relation topriorperiods 5 (13) - -
	Income tax expense 120 78 - -

(b) Numerical reconciliation of income tax expense to prima facie tax

Profit/(loss)before income tax	23,197	88,180	-	-
Tax at the Australian tax rate of 30% (2011: 30%)	6,959	26,454	-	-
Tax effect of amounts which are not deductible/ (taxable) in
calculating taxable income:
Non-taxable trust income	(7,308)	(27,708)	-	-
Non-deductible expenses	189	117	-	-
Loan write off	-	(932)	-	-
Non-deductible property development costs/impairment	(92)	2,083	-	-
Assessable income for tax	189	(170)	-	-
Losses written off (note 16)	178	247	-	-
Adjustment in relation topriorperiods	5	(13)	-	-
Income tax expense	120	78	-	-

(c) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items:

Tax losses 18,702 18,518 - -

The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of certain tax losses (both revenue and capital) because it is not probable that future taxable profit will be available against which the consolidated entity can utilise the benefits from the deferred tax assets. All unused tax losses were incurred by Australian entities.

(d) Tax consolidation

Refer note 1(d) for details regarding the relevance of the tax consolidation system to the consolidated entity, the tax funding arrangements and other information.

No amounts were recognised during the year (2011: $nil) as tax consolidation contributions by, or distributions to, equity participants.

7. Cash and Cash Equivalents

Cash at bank	59,153	46,572	51,021	40,805
Cash and cash equivalents	59,153	46,572	51,021	40,805

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

8. Trade and Other Receivables

Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000	Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Current Assets Trade debtors 3,093 Provision for impairment of trade debtors (127) Other receivables – associates 1,691 Loans: ▪ Associate – CPF 4,062 ▪ Relatedparty- Cromwell Ipswich CityHeart Trust 12,786	2,396 1,288 2,108 - (127) - 3,460 1,671 2,303 4,062 - - - 12,786 -
Trade and other receivables – current 21,505	9,918 15,618 4,411
Non-Current Assets Loans: ▪ Amounts due from Cromwell Corporation Limited - ▪ Associate – CPF 19,800	- 3,188 10,188 19,800 19,800 19,800
Trade and other receivables – non-current 19,800	19,800 22,988 29,988

Trade debtors mainly comprises of amounts owing by tenants of the Group’s and Trust’s investment properties and recoverable costs owing by external managed investment schemes. These amounts are usually non-interest bearing, unsecured and generally payable on no more than 30 day terms.

Other receivables – associates mainly comprises interest owing by the Cromwell Property Fund (“CPF”) on its loan facilities (refer below).

Refer to note 32(d) for details on the loan to Cromwell Corporation Limited.

(a) Loans – associates and related parties

Cromwell Property Fund

In 2008 the Group and Trust provided CPF with a loan facility which was subsequently reduced to $19,800,000. During the current year the Group and Trust received repayments of $nil (2011: $10,200,000) from CPF under the facility. The loan is unsecured, repayable in cash on 30 September 2012 and earns interest at a floating rate plus margin of 2.40% (2011: 2.30%), which was 6.00% (2011: 7.17%) at balance date.

A subsidiary of the Company also provided loans to CPF during the 2008 year which have subsequently reduced to $4,062,000. During the current year the Group received repayments of $nil (2011: $7,462,000) and made further advances of $nil (2011: $500,000). The loans are unsecured, at call, repayable in cash, with no fixed repayment terms and earn interest at a variable rate (BBSW) plus a margin of 1.50%, which was 5.10% (2011: 6.37%) at balance date.

Loan to Cromwell Ipswich City Heart Trust

On 8 December 2011 the Cromwell Ipswich City Heart Trust ARSN 154 498 923 (“ICH”) an unlisted single property trust, for which Cromwell Funds Management Limited (“CFM”), a subsidiary of the Company, acts as responsible entity, settled the acquisition of land at 117 Brisbane Street, Ipswich, Queensland. A commercial building is currently being constructed on the land for the Queensland Government’s Department of Public Works, who will occupy 91% of the property on completion under a 15 year agreement for lease.

CFM issued a product disclosure document (“PDS”) on 16 December 2011 to raise $49,250,000 from investors for ICH.

The Group and Trust have provided a loan facility of $20,000,000 to ICH, which is unsecured, to enable settlement of the land and funding for initial construction. During the year, ICH received advances of $19,786,000 and made repayments of $7,000,000 under the facility. The loan is repayable by 31 December 2012. Funds raised under the PDS will be used to repay the advance to the extent they are not required to fund construction of the building. The Group and Trust earn interest equivalent to the ICH distribution rate (7.75% at balance date).

The Group and Trust have also entered into a unit subscription agreement with ICH. Under the terms of the loan facility and the subscription agreement any loan principal outstanding at 31 December 2012 will be effectively converted into units in ICH. The terms of the subscription agreement allow for ICH to call on the Group and Trust to subscribe for any remaining unissued units in ICH at 31 December 2012.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

8. Trade and Other Receivables (continued)

(b) Past due but not impaired receivables

At balance date, the Group had $2,588,000 (2011: $4,552,000) and the Trust had $1,874,000 (2011: $4,852,000) of trade and other receivables which were past due but not impaired. These consist of $296,000 (2011: $1,437,000) for the Group and $296,000 (2011: $1,501,000) for the Trust which relate to a number of tenants for whom there is no recent history of default and of $2,269,000 (2011: $3,144,000) for the Group and $1,578,000 (2011: $2,133,000) for the Trust relating to CPF.

(c) Impaired receivables

As at 30 June 2012 trade receivables of the Group and Trust with a nominal value of $127,000 (2011: $nil) were impaired. The amount of the provision was $127,000 (2011: $nil). The individually impaired receivable relates to a tenant which is in a difficult economic situation.

The ageing analysis of this receivable is as follows:

The ageing analysis of this receivable is as follows:
	2012	2011
	$’000	$’000
1 to 3 months	78		-
3 to 6 months	49		-
Over 6 months	-		-
	127		-
Movements in the provision for impairment of receivables are as follows:
Balance at 1 July	-	-
Provision for impairment recognised duringtheyear	127	-
Balance at 30 June	127	-

The creation of the provision has been included in property expenses and outgoings in the statement of comprehensive income.

9. Derivative Financial Instruments

Derivative Financial Instruments
		Group			Trust
	2012		2011	2012		2011
	$’000		$’000	$’000		$’000
Current assets
Interest rate derivatives – at fair value	-		1,285	-		1,285
Current liabilities
Interest rate derivatives – at fair value	15,127		3,430	15,127		3,430
Non-current liabilities
Interest rate derivatives – at fair value	25,501		-	25,501		-
Inventories
Non-current
Land held for development and resale	3,000		3,000	-		-
Inventories	3,000		3,000	-		-
Movement in inventories
Balance at 1 July	3,000		4,925	-		-
Write down to net realisable value	-		(1,925)	-		-
Balance at 30 June	3,000		3,000	-		-

10. Inventories

During the 2010 financial year the Group acquired land located at Maidstone Street, Altona, VIC from CPF and terminated the related development agreement. The Group’s property development obligation in respect of the remaining development agreement with CPF is set out in note 21.

Page | 48 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

11. Other Current Assets

12. (a) (b)	Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
	Prepayments 1,791 1,437 1,047 789
	Investment Properties Investmentproperties at fair value 1,724,400 1,444,850 1,724,400 1,444,850
	Movement in investment properties Balance at 1 July 1,444,850 1,064,100 1,444,850 1,064,100 Additions at cost  Purchase price of investment property 249,483 234,090 249,483 234,090  Acquisition of TGA Complex (refer note 37) - 75,000 - 75,000  Acquisition transaction costs 13,939 13,315 13,939 13,315  Property improvements 52,813 43,432 52,813 43,432 Disposals (39,329) (33,735) (39,329) (33,735) Straight-lining of rental income 6,892 4,883 6,892 4,883 Lease costs and incentives 15,810 15,879 15,810 15,879 Amortisation of lease costs and incentives (7,705) (5,773) (7,705) (5,773) Netgain/(loss)from fair value adjustments (12,353) 33,659 (12,353) 33,659
	Balance at 30 June 1,724,400 1,444,850 1,724,400 1,444,850
	Amounts recognised in profit and loss for investment properties Rental and outgoings from investment properties 177,245 138,494 176,673 138,499 Direct operating expense from properties that generated rental income (27,087) (21,198) (30,530) (24,241)
	150,158 117,296 146,143 114,258

(c) Assets pledged as security

Borrowings (refer Note 19) 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.

(d) 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	157,012	134,100	157,818	137,392
Later than one year but not later than five years	510,596	476,507	510,692	479,799
Later than fiveyears	226,143	257,750	226,143	257,750
	893,751	868,357	894,653	874,941

(e) 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 mostly carried out at least annually but no later than 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 addition, the Group has utilised similar internal valuation processes for determining fair value where independent valuations are not obtained. Further information on assumptions underlying management’s assessment of fair value is contained in note 2.

Page | 49 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

12. Investment Properties (continued)

(f) Details of investment properties

f) Details of investment properties
Title Acquisition Date(1) Acquisition Price(1) Independent Independent valuation $’000 valuation date 2012 $’000 2011 $’000	Carrying amount 2012 $’000 2011 $’000	Fair value adjustment 2012 $’000 2011 $’000
200 Mary St, QLD Freehold Jun 2001 29,250 Jun 2012 87,000 88,000 Terrace Office Park, QLD Freehold Jun 1999 13,600 Dec 2011 26,500 28,000 Oracle Building, ACT Leasehold Nov 2001 23,550 Jun 2012 28,500 33,000 Scrivener Buildings, ACT Leasehold Jun 2000 10,750 SOLD - - NQX Distribution Centre, QLD Freehold Feb 2003 17,778 Jun 2011 26,500 26,000 Henry Waymouth Centre, SA Freehold Apr 2003 30,420 Dec 2011 32,000 34,250 Brooklyn Woolstore, VIC Freehold Jun 2004 34,000 Dec 2011 34,400 36,250 Village Cinemas, VIC Freehold Jun 2004 8,900 Dec 2011 12,100 11,500 Vodafone Call Centre, TAS Freehold Jun 2004 15,900 Dec 2011 15,300 15,850 Regent Cinema Centre, NSW Freehold Jun 2004 9,900 Dec 2011 13,400 13,050 78 Mallard Way, WA Freehold Jun 2004 7,600 SOLD - - Elders Woolstore, SA Freehold Jun 2004 10,900 Dec 2011 15,000 14,100 700 Collins Street, VIC Freehold Dec 2004 133,000 Dec 2011 172,400 168,000 Masters Distribution Centre, VIC Freehold Feb 2005 41,000 SOLD - 38,800 19 National Circuit, ACT Leasehold July 2005 35,530 Jun 2012 32,000 36,000 380 La Trobe St, VIC Freehold Dec 2005 88,000 Jun 2012 107,000 103,000 101 Grenfell St, SA Freehold Jan 2006 30,375 Dec 2011 43,200 41,000 475 Victoria Av, NSW Freehold Mar 2006 102,650 Jun 2012 135,000 126,500 Synergy, QLD Freehold Nov 2008 85,727 Dec 2011 73,000 68,000 Tuggeranong Office Park, ACT Leasehold Jun 2008 166,025 Jun 2012 173,000 172,750 TGA Complex, ACT_(_2) Leasehold Jul 2010 75,000 Jun 2012 70,000 73,750 321 Exhibition Street, Melbourne, VIC Leasehold Jul 2010 90,200 Dec 2011 170,000 137,800 203 Coward Street, Mascot, NSW Leasehold Aug 2010 143,891 Dec 2011 172,400 143,500 HQ North, QLD Freehold Dec 2011 186,000 Jun 2012 194,000 - Bundall Corporate Centre,QLD Freehold Jan 2012 63,483 Dec 2011 65,300 -	87,000 88,000 26,500 28,500 28,500 33,000 - - 26,500 26,000 32,000 34,250 34,400 36,500 12,100 11,700 15,300 16,100 13,400 13,400 - - 15,000 14,300 172,400 172,000 - 38,800 32,000 36,000 107,000 103,000 43,200 41,000 135,000 126,500 73,000 71,500 173,000 172,750 70,000 73,750 170,000 137,800 198,800 170,000 194,000 - 65,300 -	(2,485) 1,190 (1,807) (314) (4,645) (1,860) - (590) 547 42 (2,691) 633 (1,659) (290) 400 677 (858) (564) - 713 - 88 1,243 475 (913) 10,629 230 (2,065) (4,062) (251) 3,977 8,262 2,155 3,425 6,861 (4,961) 589 (9,730) 243 5,217 (3,937) (1,256) 970 7,781 (830) 16,408 (3,484) - (2,197) -
Total investmentproperties 1,453,429 1,698,000 1,409,100	1,724,400 1,444,850	(12,353) 33,659

(1) Comprises original acquisition date and price for CDPT or the relevant Syndicate which was mostly prior to the merger and stapling transactions in December 2006.

(2) TGA was acquired in a business combination transaction, through the acquisition of a subsidiary of Cromwell Property Fund, when the building was valued at $75m. (See note 37).

Page | 50 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

13. Investments at Fair Value Through Profit or Loss

Investments at Fair Value Through Profit or Loss	Investments at Fair Value Through Profit or Loss
Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Unlisted equity securities at fair value - Listed equitysecurities at fair value 266	4,177 - 4,177 - 266 -
Investments at fair value through profit or loss 266	4,177 266 4,177

These investments are designated at fair value through profit or loss. Gains and losses are shown in profit or loss.

14. Investments in Jointly Controlled Entity and Associates

The Group has investments in two associates, Cromwell Property Fund (“CPF”) and Phoenix Portfolios Pty Ltd (“Phoenix”). The Trust only has an investment in CPF. These entities were formed in Australia and their principal activities are property investment (CPF) and investment management (Phoenix).

The reporting dates of the associates are the same as for the Group and Trust. The proportion of voting power held equates to the proportion of ownership interest.

CPF does not recognise income tax expense or liabilities given its nature.

The Group and the Trust previously held an Investment in a jointly controlled entity, Cromwell TGA Planned Investment (“TGA”). The remaining units of TGA not owned by the Group and Trust were acquired during the prior year.

(a) Investments

The investments are accounted for using the equity method of accounting. Information relating to the investments is detailed below:

	Ownership	Interest
	2012	2011	2012	2011
Group	%	%	$’000	$’000
Investments accounted for using the equity method:
CPF – associate	18	18	4,705	5,436
Phoenix – associate	50	50	47	56
			4,752	5,492
Trust
Investments accounted for using the equity method:
CPF – associate	18	18	4,705	5,436

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

14. Investments in Jointly Controlled Entity and Associates (continued)

TGA

The Group and Trust held a 67% interest in TGA at the beginning of the 2011 year. During the 2011 year the Group and Trust acquired the remaining 33% holding in TGA through a unit sale deed approved by security holders. Details of the purchase consideration for the one-third interest in TGA are set out in note 37. As a result of the purchase the results, assets and liabilities of TGA are consolidated in the financial statements of the Group and of the Trust from the date of acquisition of the remaining interest.

CPF

At balance date the Group and Trust held 18% (2011: 18%) of the issued units of CPF. The Group and Trust are considered to have significant influence over CPF due to it being the single largest investor in the CPF, with the next largest investor holding 1.3% (2011: 1.3%) of the issued units of CPF.

(b) Movement in carrying amount of investments in jointly controlled entity and associates

Group Phoenix CPF TGA $’000 $’000 $’000	Total $’000
2012 Balance at 1 July 2011 56 5,436 - Share of profit/(loss) (9) (131) - Distributions received - (600) -	5,492 (140) (600)
Balance at 30 June 2012 47 4,705 -	4,752
2011 Balance at 1 July 2010 27 6,903 49,872 Share of profit/(loss)(1) 29 (967) 225 Distributions received - (500) (206) Carryingvalue derecognised_(2)_ - - (49,891)	56,802 (713) (706) (49,891)
Balance at 30 June 2011 56 5,436 -	5,492

Trust CPF TGA $’000 $’000	Total $’000
2012 Balance at 1 July 2011 5,436 - Share of profit/(loss)(1) (131) - Distributions received (600) -	5,436 (131) (600)
Balance at 30 June 2012 4,705 -	4,705
2011 Balance at 1 July 2010 6,903 49,872 Share of profit/(loss)(1) (967) 225 Distributions received (500) (206) Carryingvalue derecognised_(2)_ - (49,891)	56,775 (742) (706) (49,891)
Balance at 30 June 2011 5,436 -	5,436

(1) Share of profit/(loss) includes fair value gain/(loss) on investment properties and interest rate derivatives where applicable.

(2) The carrying amount of TGA was derecognised following the acquisition of the remaining units of TGA, resulting in TGA being fully consolidated by the Group and Trust.

Page | 52 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

14. Investments in Jointly Controlled Entity and Associates (continued)

(c) Share of assets and liabilities of jointly controlled entity and associates

	2012		2011
	Phoenix CPF $’000 $’000	TGA $’000	Phoenix CPF TGA $’000 $’000 $’000
Assets Current assets Non-current assets Investment properties Other	162 532 - 29,537 4 -	- - -	70 656 - - 29,485 - 3 - -
Total non-current assets	4 29,537	-	3 29,485 -
Total assets	166 30,069	-	73 30,141 -
Liabilities Current liabilities Borrowings Other	- (23,802) (119) (1,562)	- -	- (23,617) - (17) (1,088) -
Total current liabilities	(119) (25,364)	-	(17) (24,705) -
Total liabilities	(119) (25,364)	-	(17) (24,705) -
Net assets	47 4,705	-	56 5,436 -
Share of revenues, expenses and results of jointly controlled entity and associates
Revenue(1) 269 3,560 - Expenses(1) (278) (3,691) -			158 4,156 352 (129) (5,123) (127)
Share of profit/(loss) (9) (131) -			29 (967) 225

(d) Share of revenues, expenses and results of jointly controlled entity and associates

(1) Includes share of fair value adjustment to investment properties and interest rate derivatives where applicable.

(e) Assets pledged as security

Borrowings (refer note 19) are secured by a registered floating charge over the investments.

15. Property, Plant and Equipment

				Trust
	2012	2011	2012		2011
	$’000	$’000	$’000		$’000
Furniture and fittings at cost	1,588	1,453		-		-
Accumulated depreciation	(792)	(714)		-		-
	796	739		-		-
Plant and equipment at cost	1,764	1,509		-		-
Accumulated depreciation	(1,233)	(1,115)		-		-
	531	394		-		-
Property, plant and equipment	1,327	1,133		-		-

Page | 53 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

15. Property, Plant and Equipment (continued)

(a) Movement in property, plant and equipment

Movement in property, plant and equipment	Movement in property, plant and equipment
Reconciliations of the carrying amounts of each class of property, plant and equipment are set out below.
Group Furniture and fittings Plant and Equipment Owned $’000 $’000	Total $’000
Balance at 1 July 2011 739 394 Additions 135 329 Disposals - (21) Depreciation (78) (171)	1,133 464 (21) (249)
Balance at 30 June 2012 796 531	1,327
Balance at 1 July 2010 816 446 Additions 3 124 Depreciation (80) (176)	1,262 127 (256)
Balance at 30 June 2011 739 394	1,133

16. Deferred Tax Assets

Deferred Tax Assets
		Group				Trust
	2012		2011	2012			2011
	$’000		$’000	$’000			$’000
Deferred tax assets	914		921		-			-
Deferred tax assets and liabilities are attributable to the following:
Interests in managed investment schemes	(1,917)		(1,895)		-			-
Payables	84		34		-			-
Employee benefits	540		404		-			-
Provisions	278		196		-			-
Other accruals and sundry items	212		265		-			-
Tax losses recognised	1,717		1,917		-			-
	914		921		-			-
Movements
Balance at 1 July	921		791		-			-
Reduction in current tax liability on use of tax losses previously recognised	(23)		-		-			-
(Debit)/credit to profit or loss	121		156		-			-
Tax losses written off	(178)		(247)		-			-
Adjustments in relation topriorperiods	73		221		-			-
Balance at 30 June	914		921		-			-

The benefit of temporary differences and prior year tax losses recognised as a deferred tax asset was based on projected earnings over a limited period that the Directors considered to be probable. Projected earnings are re-assessed at each reporting date. There remains a significant amount of tax losses that have not been recognised as a deferred tax asset (refer note 6).

Page | 54 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

17. Intangible Assets

Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000	Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Software – at cost 2,405 Accumulated amortisation (1,772)	2,174 - - (1,571) - -
Intangible assets 633	603 - -
Amortisation of software is included in amortisation expense in profit or loss. Reconciliations of the carrying amounts of software are set out below: Balance at 1 July 603 Additions 408 Disposals (23) Amortisation (355)	496 - - 393 - - - - - (286) - -
Balance at 30 June 633	603 - -
Trade and Other Payables Trade payables and accruals 9,575 Lease incentives payable 2,875 Tenant security deposits 106 Amounts payable to Cromwell Corporation Limited and it’s subsidiaries (refer note 32(d)) - Otherpayables 1,916	8,453 8,625 7,478 10,815 2,875 10,815 158 106 158 - 540 1,554 2,005 1,165 1,353
Trade and otherpayables 14,472	21,431 13,311 21,358

18. Trade and Other Payables

Trade and other payables are generally unsecured, non-interest bearing and paid in cash within 30-60 days of recognition.

Lease incentives payable are generally unsecured, non-interest bearing and paid in cash within 6 months of recognition according to the terms of the underlying lease.

19. Borrowings

Current
Secured
Loans – financial institutions	21,533	3,321	21,533	3,321
Borrowings – current	21,533	3,321	21,533	3,321
Non-Current
Secured
Loans – financial institutions	947,018	784,171	947,018	784,171
Unamortised transaction costs	(4,374)	(3,883)	(4,374)	(4,155)
Borrowings – non-current	942,644	780,288	942,644	780,016
Total
Secured
Loans – financial institutions	968,551	787,492	968,551	787,492
Unamortised transaction costs	(4,374)	(3,883)	(4,374)	(4,155)
Total borrowings	964,177	783,609	964,177	783,337

Loans shown above are net of transaction costs which are amortised over the term of the loan.

Page | 55 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

19. Borrowings (continued)

(a) Borrowing details

Borrowings of the Group and Trust are the same and details at balance date are set out below:

Facility
Note
Secured
Maturity
Date

Facility
2012
$’000
Utilised
2012
$’000
Facility
2011
$’000
Utilised
2011
$’000

Syndicated Facility
(i)
Yes
May 2014
Tuggeranong (Tranche 1)
(ii)
Yes
June 2015
Tuggeranong (Tranche 2)
(ii)
Yes
June 2013
Multi Property (Tranche 1)
(iii)
Yes
July 2015
Multi Property (Tranche 2)
(iii)
Yes
July 2015
Multi Property (Tranche 3)
(iii)
Yes
Dec 2012
Mascot (Tranche 1)
(iv)
Yes
Dec 2014
Mascot (Tranche 2)
(iv)
Yes
Dec 2014
Mascot (Tranche 3)
(iv)
Yes
Dec 2014
HQ North (Tranche 1)
(v)
Yes
Dec 2014
HQ North (Tranche 2)
(v)
Yes
June 2013
Bundall Corporate Centre
(vi)
Yes
Jan 2015

376,172
376,172
397,815
397,815
107,917
107,917
107,917
107,917
3,321
3,321
6,641
6,641
132,719
132,719
132,719
132,719
100,000
98,653
80,000
80,000
40,000
13,913
-
-
62,400
62,400
85,000
62,400
83,750
17,840
-
-
47,720
-
-
-
116,400
116,400
-
-
4,300
4,300
-
-
34,916
34,916
-
-

Total facilities

1,109,615
968,551
810,092
787,492

(i) Syndicated Facility

The Syndicate finance facility is secured by first registered mortgages over a pool of the investment properties held by the Group and a registered floating charge over the assets of the Trust. Interest is payable monthly in arrears at variable rates based on the 30 day BBSY rate which was 3.63% at balance date plus a loan margin. Repayments of $21,643,000 (2011: $33,078,000) were made during the year from proceeds of the sale of investment properties.

(ii) Tuggeranong

The loan is secured by a first registered mortgage over Tuggeranong Office Park. The first tranche of the loan matures in June 2015. The second tranche matures in June 2013 with $830,000 repayable each quarter until June 2013. The loan bears interest at a variable rate based on the 30 day BBSY rate plus a loan margin. An amount of $107,917,000 (Tranche 1) was effectively fixed at balance date through interest rate swap arrangements. Repayments of $3,321,000 (2011: $3,321,000) were made during the year.

(iii) Multi Property

The loan is secured by first registered mortgage over the Synergy, Mary Street, TGA and Exhibition Street investment properties. The facility limit is $272,719,000 and has 3 tranches (previously only one).

Tranche 1 relates to the TGA Complex in Canberra and the 200 Mary Street and Synergy properties in Brisbane.

Tranche 2 relates to the Exhibition Street property. The facility is for $100,000,000, and is drawn to $98,653,000 with an additional $1,347,000 to be drawn down to fund further capital commitments.

Tranche 3 was utilised to $30,000,000 in January 2012 to partly fund the acquisition of the Bundall investment property. Repayments of $16,087,000 were made during the year and the facility was fully repaid, prior to its maturity date, post balance date.

All tranches bear interest at a variable rate based on the 30 day BBSY rate plus a loan margin.

Page | 56 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

19. Borrowings (continued)

(a) Borrowing details (continued)

(iv) Mascot

The loan is secured by a first registered mortgage over the 203 Coward Street, Mascot property. The loan was refinanced in December 2011 and consists of 3 tranches.

Tranche 1, $62,400,000, was fully drawn at balance date and replaced a previous facility. Tranche 2, $83,750,000, will provide funding for additional committed capital expenditure. This facility was drawn down to $17,840,000 at balance date.

Tranche 3 will provide funding for additional committed capital expenditure and was undrawn at balance date.

The loan bears interest at a variable rate based on a margin over the 30 day BBSY rate. The interest rate was partially fixed at balance date through interest rate swap arrangements.

(v) HQ North

The loan is secured by a first registered mortgage over the HQ North investment property and bears interest at a variable rate based on the 30 day BBSY rate plus a margin. The interest rate was partially fixed at balance date through interest rate swap arrangements. Assuming the property does not change in value over the next 12 months, $4,300,000 of the facility is effectively repayable in June 2013. The remainder of the facility matures in December 2014.

(vi) Bundall Corporate Centre

The loan is secured by a first registered mortgage over the Bundall Corporate Centre investment property and bears interest at a variable rate based on the 30 day BBSY rate plus a margin. The interest rate was effectively fixed at balance date through interest rate swap arrangements.

(b) Maturity Profile

Maturity profile of the principal amounts of current and non-current borrowings together with estimated interest thereon:


	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Due within one year	75,610	58,244	75,610	58,244
Due between one and five years	1,023,554	888,554	1,023,554	888,266
Due after fiveyears	-	-	-	-
	1,099,164	946,798	1,099,164	946,510

(c) Unused Finance Facilities

At balance date the Group had unused finance facilities totalling $141,064,000 (2011: $22,600,000).

(d) Interest Rate Risk

Interest rate Derivatives

The Group manages its cash flow interest-rate risk by using floating-to-fixed interest rate derivatives. Such interest rate derivatives have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long term borrowings at floating rates and a portion of them into fixed or limited range of rates.

The Group’s exposure to interest rates is provided in note 4.

20. Dividends/Distributions Payable

Dividends/Distributions Payable
		Group			Trust
	2012		2011	2012		2011
	$’000		$’000	$’000		$’000
Dividends/distributionspayable	20,470		16,883	20,474		16,888

Distributions payable relate to June quarter distributions declared in June and payable in August of each year.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

21. Provisions

Provisions
		Group				Trust
	2012		2011	2012			2011
	$’000		$’000	$’000			$’000
Current
Employee benefits	1,140		825		-			-
Propertydevelopment	228		428		-			-
	1,368		1,253		-			-
Non-Current
Employee benefits	662		477		-			-
Makegood	100		100		-			-
Provisions	762		577		-			-

Movement in provisions

	Property	Development	Make	Good
	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Balance at 1 July	428	5,093	100	100
Provision (reversed)/recognised	(200)	1,770	-	-
Payments during year	-	(6,435)	-	-
Balance at 30 June	228	428	100	100

Property development obligations

The Group entered into development agreements with CPF in respect of three properties leased from CPF. Under the development agreements the Group can develop the land on the basis that CPF would fully recover its cost. During the current year the Group reversed $200,000 of the provision based on the property held by CPF increasing in value. During the prior year the Group assessed the recoverable amount of the properties held by CPF at less than CPF’s cost and provided for the difference through an increase in the provision of $1,770,000. Also during the prior year the Group paid $6,435,000 to the CPF following the termination of the development agreement over one of the properties leased from CPF.

Make good

The Group’s operating leases of its premises requires the asset to be returned to the lessor in a lease stipulated condition. The operating lease payments do not include an element for the refurbishment costs. A provision for refurbishment costs (make good obligations) is recognised over the period of the lease, measured at each reporting date as the expected cost of returning the asset to its agreed condition.

22. Other Current Liabilities

Other Current Liabilities
		Group			Trust
	2012		2011	2012		2011
	$’000		$’000	$’000		$’000
Unearned income	6,735		7,085	6,735		7,085

Unearned income primarily comprises rent paid in advance by tenants.

Page | 58 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

23. Contributed Equity

(a) Equity attributable to shareholders/unitholders

	Group		Company
	30 Jun	30 Jun	30 Jun	30 Jun	30 Jun	30 Jun
	2012	2011	2012	2011	2012	2011
	$’000	$’000	$’000	$’000	$’000	$’000
Contributed equity	894,058	758,888	66,344	57,073	827,989	702,090

Movements in ordinary shares/ordinary units

Date Details	Group Number of Securities Issue Price $’000	Company Issue Price $’000	CDPT Issue Price $’000
01 July 10 Opening balance 21 July 10 Placement 21 July 10 Placement 23 Aug 10 Placement 23 Aug 10 Entitlement offer 2 Sept 10 Placement 20 Sept 10 Placement 14 Oct 10 Placement 17 Nov 10 Dividend reinvestment plan 16 Feb 11 Dividend reinvestment plan 04 Mar 11 Placement 04 Mar 11 Placement 08 Mar 11 Placement 14 Mar 11 Exercise of options 18 May 11 Dividend reinvestment plan Transaction costs 30 June 11 Closing balance 19 Aug 11 Dividend reinvestment plan 16 Nov 11 Dividend reinvestment plan 16 Nov 11 Placement 16 Dec 11 Placement 19 Dec 11 Entitlement offer 20 Dec 11 Entitlement offer 21 Dec 11 Exercise of performance rights 9 Feb 12 Entitlement offer 15 Feb 12 Dividend reinvestment plan 23 Feb 12 Exercise of performance rights 9 Mar 12 Entitlement offer 16 May 12 Dividend reinvestment plan Transaction costs	807,834,934 648,582 69,333,333 75¢ 52,000 2,666,667 75¢ 2,000 4,750,000 72¢ 3,420 14,301,708 72¢ 10,297 2,581,836 72¢ 1,859 800,000 72¢ 576 7,357,762 72¢ 5,298 1,359,711 70¢ 949 1,800,054 73¢ 1,314 35,000,000 71¢ 24,748 12,130,000 71¢ 8,578 2,921,000 71¢ 2,065 8,600 - - 1,891,710 70¢ 1,316 - - (4,114)	49,197 5.6¢ 3,884 5.6¢ 149 5.4¢ 256 5.4¢ 769 5.4¢ 139 5.4¢ 43 5.1¢ 376 5.1¢ 67 5.1¢ 92 5.2¢ 1,727 5.2¢ 599 5.2¢ 144 - - 5.3¢ 92 - (461)	599,660 69.4¢ 48,116 69.4¢ 1,851 66.6¢ 3,164 66.6¢ 9,528 66.6¢ 1,720 66.6¢ 533 66.9¢ 4,922 64.9¢ 882 67.9¢ 1,222 65.8¢ 23,021 65.8¢ 7,979 65.8¢ 1,921 - - 64.7¢ 1,224 - (3,653)
	964,737,315 758,888	57,073	702,090
	2,108,544 68¢ 1,424 2,058,172 66¢ 1,357 40,591,780 68¢ 27,602 45,588,235 68¢ 31,000 5,846,802 68¢ 3,976 51,470,588 68¢ 35,000 659,600 20¢ 132 51,449,138 68¢ 34,985 1,978,895 70¢ 1,381 126,859 - - 1,470,588 68¢ 1,000 1,602,427 71¢ 1,141 - - (3,828)	4.9¢ 95 4.3¢ 89 4.5¢ 1,811 4.5¢ 2,033 4.5¢ 261 4.5¢ 2,296 1.3¢ 9 5.0¢ 2,596 5.2¢ 102 - - 5.0¢ 74 5.3¢ 85 - (180)	63.1¢ 1,329 61.7¢ 1,268 63.5¢ 25,791 63.5¢ 28,967 63.5¢ 3,715 63.5¢ 32,704 18.7¢ 123 63.0¢ 32,389 64.8¢ 1,279 - - 63.0¢ 926 65.7¢ 1,056 - (3,648)
	1,169,688,943 894,058	66,344	827,989

The basis of allocation of the issue price of stapled securities issued post stapling is determined by agreement between the Company and the Trust as set out in the Stapling Deed.

The Company/CDPT has established a dividend/distribution reinvestment plan under which holders of ordinary stapled securities may elect to have all of their dividend/distribution entitlement satisfied by the issue of new ordinary stapled securities rather than being paid in cash. Securities are issued under the plan at a discount to the market price as determined by the Directors before each dividend/distribution. During 2012 all securities were issued at no discount (2011: all were issued at a discount of 3%).

Page | 59 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

23. Contributed Equity (continued)

(b) Stapled Securities

The ordinary shares of the Company are stapled with the units of the Trust. These entitle the holder to participate in dividends and distributions as declared from time to time and the proceeds on winding up. On a show of hands every holder of stapled securities present at a meeting in person, or by proxy, is entitled to one vote, and upon a poll each stapled security is entitled to one vote.

A reconciliation of the stapled number of ordinary shares of the Company and ordinary units of the Trust is as follows:

	2012	2012	2011	2011
	Company	CDPT	Company	CDPT
	Number	Number	Number	Number
Ordinary shares / ordinary units	1,169,688,943	1,169,964,049	964,737,315	965,012,421
Unstapled units(held bythe Company)	-	(275,106)	-	(275,106)
	1,169,688,943	1,169,688,943	964,737,315	964,737,315

24. Reserves


	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Share based payments	2,189	1,588	-	-
Available-for-sale financial assets revaluation reserve	2,340	2,340	-	-
Reserves	4,529	3,928	-	-
Movements in reserves
Share based payments
Balance at 1 July	1,588	1,255	-	-
Options expensed	601	333	-	-
Balance at 30 June	2,189	1,588	-	-

The share based payments reserve is used to recognise the	fair value of options	issued for employee	services.
Available-for-sale financial assets revaluation reserve
Balance at 1 July	2,340	2,340	-	-
Balance at 30 June	2,340	2,340		-

Changes in the fair value of investments classified as available-for-sale are taken to the available-for-sale financial assets revaluation reserve. Amounts are recognised in profit or loss when the associated assets are disposed/sold or impaired.

For the Group the balance at year end comprises a reserve of a subsidiary attributable to its pre-stapling interest in a Syndicate which continues to be held. For the Group there was no movement in the available-for-sale financial assets revaluation reserve over the last two financial years.

25. Retained Earnings/(Accumulated Losses)

Retained Earnings/(Accumulated Losses)	(51,562)	(50,280)	(58,589)	(7,910)
Movements in retained earnings/(accumulated losses)
Balance at 1 July	(50,280)	(46,021)	(7,910)	(35,264)
Profit/(loss) for the year	(1,282)	(4,259)	24,359	92,361
Distributions	-	-	(75,038)	(65,007)
Balance at 30 June	(51,562)	(50,280)	(58,589)	(7,910)

Page | 60 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

26. Non-Controlling Interests

	Group
	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Non-controlling interests	769,678	694,439	5,320	5,463
Movements in non-controlling interests
Balance at 1 July	694,439	564,636	5,463	6,068
Units issued by subsidiary	125,899	102,430	-	2,520
Profit for the year	24,359	92,361	414	645
Distributions paid/payable	(75,019)	(64,988)	(557)	(519)
De-recognition on deconsolidation	-	-	-	(3,251)
Balance at 30 June	769,678	694,439	5,320	5,463

Application of AASB Interpretation 1002 Post-Date-of-Transition Stapling Arrangements and AASB 3 Business Combinations requires, for stapling arrangements which do not involve one of the combining entities obtaining an ownership interest in another combining entity, the net assets and profit or loss of the consolidated acquiree to be identified as non-controlling interests. Even though the interests of the equity holders of the identified acquiree (the Trust) are treated as non-controlling interests (as above) the equity holders of the acquiree are also equity holders in the acquirer (the Company) by virtue of the stapling arrangement.

27. Dividends/Distributions

Franking credits

Franking credits
					Group
				2012		2011
				$’000		$’000
Frankingcredits available for subsequentyears based on a tax rate of	30%(2011	–	30%)	1,410		1,599

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

franking credits that will arise/(decrease) from the payment/(receipt) of the amount of the provision/(receivable) for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.

Dividends paid/payable by the Company

There were no dividends paid or payable by the Company in respect of the 2012 and 2011 financial years.

Distributions paid/payable by the Group

2012	2011	2012	2011	2012	2011
Date Paid	Date Paid	Cents(1)	Cents(1)	$’000	$’000
16 November 2011	17 November 2010	1.75¢	1.75¢	16,920	15,919
15 February 2012	16 February 2011	1.75¢	1.75¢	17,602	15,943
16 May 2012	18 May 2011	1.75¢	1.75¢	20,027	16,243
16 August 2012	19 August 2011	1.75¢	1.75¢	20,470	16,883
		7.00¢	7.00¢	75,019	64,988

(1) Cents per stapled security.

Page | 61 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

27. Dividends/Distributions (continued)

Distributions paid/payable by the Trust

Distributions paid/payable by the Trust
2012 2011 Date Paid Date Paid	2012 2011 2012 2011 Cents(1) Cents(1) $’000 $’000
16 November 2011 17 November 2010 15 February 2012 16 February 2011 16 May 2012 18 May 2011 16 August 2012 19 August 2011	1.75¢ 1.75¢ 16,925 15,923 1.75¢ 1.75¢ 17,607 15,947 1.75¢ 1.75¢ 20,032 16,249 1.75¢ 1.75¢ 20,474 16,888
	7.00¢ 7.00¢ 75,038 65,007

(1) Cents per unit.

All distributions from the Group and Trust are unfranked. The determination of the Trust’s distributable income excludes unrealised gains/(losses) including fair value adjustments to investment properties and interest rate derivatives.

Dividends/distributions paid in cash, payable at balance date or satisfied by the issue of securities under the reinvestment plan during past two years were as follows:


	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Paid in cash(1)	66,129	60,684	66,520	60,702
Satisfied by the issue of securities(1) (2)	5,303	3,579	4,932	3,579
Payable at balance date	20,470	16,883	20,474	16,888
	91,902	81,146	91,926	81,169

(1) Includes June distributions from prior year paid in August.

(2) Pursuant to Distribution Reinvestment Plan.

Page | 62 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

28. Earnings/(loss) per Share

Earnings/(loss) per share/unit	Group		Trust
	2012	2011	2012	2011
Basic earnings/(loss)per share/unit	(0.1¢)	(0.5¢)	2.3¢	10.1¢
Diluted earnings/(loss)per share/unit	(0.1¢)	(0.5¢)	2.3¢	10.0¢
	$’000	$’000	$’000	$’000
Earnings used to calculate basic and diluted earnings/(loss) per
share/unit:
Profit for the year	23,077	88,102	24,773	93,006
Loss attributable to non-controllinginterests	24,359	92,361	414	645
Profit/(loss) attributable to ordinary equity holders of the
company/trust used in calculating basic/diluted earnings/(loss)	(1,282)	(4,259)	24,359	92,361
per share/unit
	Number of	Number of	Number of	Number of
	Shares	Shares	Shares	Shares
Weighted average number of ordinary shares/units used in calculating basic earnings/(loss) per share/unit	1,069,526,714	918,318,875	1,069,801,820	918,593,981
Effect of dilutive securities:
- Director and employeeperformance rights	3,467,267	1,271,820	3,467,267	1,271,820
Weighted average number of ordinary shares/units and
potential ordinary shares/units used in calculating diluted	1,072,993,981	919,590,695	1,073,269,087	919,865,801
earnings/(loss)per share/unit

Performance rights granted under the Performance Rights Plan are considered to be potential ordinary shares/units and have been included in the determination of diluted earnings/(loss) per share/unit to the extent to which they are dilutive. The performance rights have not been included in the determination of basic earnings/(loss) per share/unit. Details relating to the performance rights are set out in Note 31.

Earnings/(loss) per stapled security	Group	Group
	2012	2011
Basic earnings/(loss)per stapled security	2.2¢	9.6¢
Diluted earnings/(loss)per stapled security	2.2¢	9.6¢
	$’000	$’000
Earnings used to calculate basic and diluted earnings/(loss) per stapled security:
Loss for the year attributable to company shareholders	(1,282)	(4,259)
Profit for theyear attributable to trust unitholders	24,359	92,361
Profit attributable to stapled security holders of the Group used in calculating basic/diluted earnings/(loss)per stapled security	23,077	88,102
	Number of	Number of
	Securities	Securities
Weighted average number of stapled securities used in calculating basic earnings/(loss) per stapled security	1,069,526,714	918,318,875
Effect of dilutive securities:
- Director and employeeperformance rights	3,467,267	1,271,820
Weighted average number of ordinary stapled securities and potential ordinary stapled securities used in calculating diluted earnings/(loss)per stapled security	1,072,993,981	919,590,695

Performance rights granted under the Performance Rights Plan are considered to be potential ordinary stapled securities and have been included in the determination of diluted earnings/(loss) per stapled security to the extent to which they are dilutive. The performance rights have not been included in the determination of basic earnings/(loss) per stapled security. Details relating to the performance rights are set out in Note 31.

Page | 63 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

29. Cash flow Information

(a)

Group
Trust
2012
2011
2012
2011
$’000
$’000
$’000
$’000
Reconciliation of profit to net cash provided by operating activities
Net profit/(loss)
23,077
88,102
24,773
93,006
Amortisation and depreciation
604
542
-
-
Amortisation (loan transaction costs)
2,560
2,042
2,833
2,770
Amortisation of lease costs and incentives
7,705
5,773
7,705
5,773
Share of profits of associates (net of distributions)
740
1,419
731
1,448
(Gain)/loss on sale of investment properties
331
195
331
195
Share based payments
601
333
-
-
Fair value net (gain)/loss from:

Investment properties
12,353
(33,659)
12,353
(33,659)

Interest rate derivatives
38,483
1,920
38,483
1,920

Investments at fair value through profit or loss
173
(604)
173
(604)
(Increase)/decrease to recoverable amount:

Property development inventories/provisions
(200)
3,695
-
-
Straight-line rentals
(6,892)
(4,883)
(6,892)
(4,883)
Loss on disposal of property, plant and equipment and intangibles
44
-
-
-
Changes in operating assets and liabilities:
(Increase)/decrease:

Trade and other receivables
1,199
776
1,579
(1,903)

Prepayments
(354)
829
(258)
624

Tax assets
187
19
-
-
Increase/(decrease):

Trade payables and accruals
2,680
1,215
1,592
3,274

Provisions (employee benefits/restoration)
500
(5)
-
-

Unearned revenue
(350)
467
(350)
467

Net cashprovided by operating activities
83,441
68,176
83,053
68,428

(b) Finance facilities

Refer to note 19 for details of unused finance facilities.

(c) Cash held as part of minimum net tangible assets

At balance date cash held by controlled entities of the Company of $2,553,000 (2011: $1,014,000) was utilised to meet minimum net tangible asset requirements under their Australian Financial Services Licence (AFSL). As such, the cash is effectively restricted in its use as it cannot readily be used to meet expenses and obligations of other Group entities without consideration of the AFSL requirements.

(d) Non cash items

Shares/units issued on reinvestment of distributions

5,303 3,579 4,932 3,579

Page | 64 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

30. Key Management Personnel Disclosures

(a) Key management personnel compensation

Group and Trust	2012 $	2011 $
Short-term employee benefits	4,149,034	4,233,003
Post-employment benefits	171,494	171,605
Other long-term benefits	84,431	77,112
Share-basedpayments	457,585	302,752
	4,862,544	4,784,472

(b) Equity instrument disclosures relating to key management personnel

(i) Performance rights

The numbers of performance rights over ordinary shares in the Company (and units in the CDPT through the stapling arrangement) held during the financial year by each director of the Company and other key management personnel of the Group, including their personally related parties, are set out below.

Name Balance at 1 July Granted during the year as compensation Exercised during the year Lapsed during the year	Balance at 30 June Vested Balance at 30 June Not Vested
2012 Non-executive Directors: GH Levy - - - - RJ Pullar - - - - MA McKellar - - - - DE Usasz - - - - WR Foster - - - - M Wainer - - - - M Flax(1) - - - - M Watters - - - - G Cannings(2) - - - - Executive Directors: PL Weightman 4,000,000 - - - DJ Wilson 1,740,000 - - - Other key management personnel of the Group: NE Riethmuller 123,459 52,851 - - PW Howard(3) 96,324 - - (96,324) DA Gippel 659,600 236,248 (659,600) - JA Clarke - - - - MJ Blake 95,894 136,932 - - B Binning 126,859 107,386 (126,859) - PJ Cowling - 171,165 - -	- - - - - - - - - - - - - - - - - - - 4,000,000 - 1,740,000 - 176,310 - - - 236,248 - - - 232,826 - 107,386 - 171,165
6,842,136 704,582 (786,459) (96,324)	- 6,663,935

(1) M Flax ceased to be a KMP on 1 August 2011

(2) G Cannings became a KMP on 1 August 2011

(3) PW Howard ceased to be a KMP on 26 October 2011

Page | 65 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

30. Key Management Personnel Disclosures (continued)

Name Balance at 1 July Granted during the year as compensation Exercised during the year Lapsed during the year	Balance at 30 June Vested Balance at 30 June Not Vested
2011 Non-executive Directors: GH Levy - - - - RJ Pullar - - - - MA McKellar - - - - DE Usasz - - - - WR Foster - - - - M Wainer - - - - M Flax - - - - M Watters(1) - - - - Executive Directors: PL Weightman 738,733 4,000,000 - (738,733) DJ Wilson 344,200 1,740,000 - (344,200) Other key management personnel of the Group: NE Riethmuller - 123,459 - - PW Howard - 96,324 - - DA Gippel 915,933 - - (256,333) JA Clarke 92,100 - - (92,100) MJ Blake 338,000 95,894 - (338,000) B Binning 326,992 - - (200,133) PJ Cowling (2) 227,800 - - (227,800)	- - - - - - - - - - - - - - - - - 4,000,000 - 1,740,000 - 123,459 - 96,324 - 659,600 - - - 95,894 - 126,859 - -
2,983,758 6,055,677 - (2,197,299)	- 6,842,136

(1) M Watters became a KMP on 4 April 2011

(2) PJ Cowling became a KMP on 1 July 2010

Page | 66 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

30. Key Management Personnel Disclosures (continued)

(ii) Share holdings/unit holdings

The numbers of shares in the Company and units in the CDPT held during the financial year by each director of Cromwell Corporation Limited and other key management personnel of the Group, including their personally related parties, are set out below.

Name	Balance at	On exercise	Net		Ceased to be	Balance at
	1 July	of options	purchases		KMP	30 June
			(sales)
2012
Non-executive Directors:
GH Levy	1,119,430	-	1,457,416		-	2,576,846
RJ Pullar	14,000,000	-		-	-	14,000,000
MA McKellar	363,000	-	91,500		-	454,500
DE Usasz	2,225,000	-	95,000		-	2,320,000
WR Foster	5,261,765	-	(1,200,000)		-	4,061,765
M Wainer(1)	-	-		-	-	-
M Flax(2)	416,666	-		-	(416,666)	-
M Watters(3)	-	-		-	-	-
G Cannings(4)	-	-	58,000		-	58,000
Executive Directors:
PL Weightman	15,921,167	-		-	-	15,921,167
DJ Wilson	1,970,775	-	1,425		-	1,972,200
Other key management personnel of the Group:
NE Riethmuller	-	-		-	-	-
PW Howard(5)	-	-		-	-	-
DA Gippel	547,264	659,600		-	-	1,206,864
JA Clarke	71,032	-		-	-	71,032
MJ Blake	1,775,612	-		-	-	1,775,612
B Binning	10,760	126,859	4,262		-	141,881
PJ Cowling	1,675,801	-		-	-	1,675,801
	45,358,272	786,459	507,603		(416,666)	46,235,668

(1) M Wainer is a director of Redefine International Plc which indirectly owns Redefine Australia Investments Limited, which at 30 June 2012 owned 270,580,778 (2011: 213,833,333) stapled securities in the Group. M Wainer is also CEO and a director of Redefine Properties which at 30 June 2012 owned 45,588,235 (2011: nil) stapled securities in the Group.

(2) M Flax reigned as an alternate director and ceased to be a KMP on 1 August 2011.

(3) M Watters is a director of Redefine International Plc which indirectly owns Redefine Australia Investments Limited, which owns 310,892,156 (2011: 213,833,333) stapled securities in the Group.

(4) G Cannings became an alternate director for M Watters and a KMP on 1 August 2011.

(5) PW Howard resigned and ceased to be a KMP on 26 October 2011.

No shares or units were received by the above persons as compensation during the 2012 year.

Page | 67 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

30. Key Management Personnel Disclosures (continued)

Name	Balance at	On exercise	Net	Ceased to be	Balance at
	1 July	of options	purchases	KMP	30 June
			(sales)
2011
Non-executive Directors:
GH Levy	370,000	-	749,430	-	1,119,430
RJ Pullar	14,000,000	-	-	-	14,000,000
MA McKellar	330,000	-	33,000	-	363,000
DE Usasz	1,927,580	-	297,420	-	2,225,000
WR Foster	5,261,765	-	-	-	5,261,765
M Wainer	-	-	-	-	-
M Flax	-	-	416,666	-	416,666
M Watters	-	-	-	-	-
Executive Directors:
PL Weightman	15,464,167	-	457,000	-	15,921,167
DJ Wilson	1,955,744	-	15,031	-	1,970,775
Other key management personnel of the Group:
NE Riethmuller	-	-	-	-	-
PW Howard	-	-	-	-	-
DA Gippel	547,264	-	-	-	547,264
JA Clarke	71,032	-	-	-	71,032
MJ Blake	1,775,612	-	-	-	1,775,612
B Binning	10,000	-	760	-	10,760
PJ Cowling	1,675,801	-	-	-	1,675,801
	43,388,965	-	1,969,307	-	45,358,272

No shares or units were received by the above persons as compensation or on the exercise of options or performance rights during the 2011 year.

At balance date the numbers above for the Directors and other key management personnel represent the number of stapled securities of the Group held.

(c) Loans to key management personnel

No loans were made during the 2012 or 2011 year to key management personnel and no loans were outstanding at the reporting date.

(d) Other transactions with key management personnel

The Group rents an apartment, located at 185 Macquarie Street, Sydney, which is owned by Mr. Paul Weightman, a director of the Company. Total rent paid during 2012 was $88,400 (2011: $88,400). The payment of rent is on normal commercial terms and conditions and at market rates.

Page | 68 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

31. Share Based Payments

(a) Performance Rights Plan

A Performance Rights Plan (PRP) was established in September 2007 by the Company. All full-time and part-time employees who meet minimum service, remuneration and performance requirements, including executive Directors of the Company, are eligible to participate in the PRP at the discretion of the Board. Participation in the PRP by executive Directors is subject to securityholder approval. The PRP is designed to provide long-term incentives for employeesto continue employment and deliver long-term securityholder returns.

Under the PRP, eligible employees are allocated performance rights. Each performance right enables the participant to acquire a stapled security in the Group, at a future date and exercise price, subject to conditions. The number of performance rights allocated to each participant is set by the Board or the Remuneration Committee and based on individual circumstances and performance.

The amount of performance rights that will vest under the PRP depends on a combination of factors which may include the Group’s total securityholder returns (including price growth, dividends and capital returns), internal performance measures and the participant’s continued employment. Performance rights allocated under the PRP generally vest in 3 years. Until performance rights have vested, the participant cannot sell or otherwise deal with the performance rights except in certain limited circumstances. It is a condition of the PRP that a participant must remain employed by the Group in order for performance rights to vest. Any performance rights which have not yet vested on a participant leaving employment must be forfeited.

Under AASB 2 “Share based Payment”, the performance rights are treated as options for accounting purposes.

Set out below are summaries of the number of performance rights granted and exercised.

Grant Date	Expiry Date	Exercise	Balance at	Granted	Forfeited	Exercised	Balance at
		price	start of the	during the	during the	during the	year end
			year	year	year	year
2012
16/12/2009	15/01/2012	$0.20	659,600	-	-	(659,600)	-
08/02/2010	07/03/2012	$0.00	126,859	-	-	(126,859)	-
23/08/2010	21/09/2012	$0.00	170,287	-	-	-	170,287
23/08/2010	21/09/2012	$0.10	123,459	-	-	-	123,459
23/08/2010	21/09/2013	$0.00	101,378	-	-	-	101,378
23/08/2010	21/09/2013	$0.10	47,433	-	-	-	47,433
23/08/2010	21/09/2013	$0.20	192,218	-	(96,324)	-	95,894
07/03/2011	01/08/2013	$0.00	97,633	-	-	-	97,633
26/05/2011	01/10/2013	$0.50	1,913,333	-	-	-	1,913,333
26/05/2011	01/10/2014	$0.50	1,913,333	-	-	-	1,913,333
26/05/2011	01/10/2015	$0.50	1,913,334	-	-	-	1,913,334
05/09/2011	05/10/2014	$0.20	-	393,679	-	-	393,679
05/09/2011	05/10/2014	$0.00	-	590,622	-	-	590,622
05/09/2011	05/10/2014	$0.10	-	52,851	-	-	52,851
			7,258,867	1,037,152	(96,324)	(786,459)	7,413,236
Weighted average exercise		price	$0.42	$0.08	$0.20	$0.17	$0.40

Page | 69 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

31. Share Based Payments (continued)

(a) Performance Rights Plan (continued)

Grant Date	Expiry Date	Exercise	Balance at	Granted	Lapsed	Exercised	Balance at
		price	start of the	during the	during the	during the	year end
			year	year	year	year
2011
18/09/2007	19/01/2011	$1.21	2,811,434	-	(2,811,434)	-	-
18/09/2007	19/01/2011	$0.00	8,600	-	-	(8,600)	-
06/12/2007	07/04/2011	$1.21	1,082,933	-	(1,082,933)	-	-
16/12/2009	15/01/2012	$0.20	659,600	-	-	-	659,600
08/02/2010	07/03/2012	$0.00	126,859	-	-	-	126,859
23/08/2010	21/09/2012	$0.00	-	170,287	-	-	170,287
23/08/2010	21/09/2012	$0.10	-	123,459	-	-	123,459
23/08/2010	21/09/2013	$0.00	-	158,283	(56,905)	-	101,378
23/08/2010	21/09/2013	$0.10	-	47,433	-	-	47,433
23/08/2010	21/09/2013	$0.20	-	246,337	(54,119)	-	192,218
07/03/2011	01/08/2013	$0.00	-	97,633	-	-	97,633
26/05/2011	01/10/2013	$0.50	-	1,913,333	-	-	1,913,333
26/05/2011	01/10/2014	$0.50	-	1,913,333	-	-	1,913,333
26/05/2011	01/10/2015	$0.50	-	1,913,334	-	-	1,913,334
			4,689,426	6,583,432	(4,005,391)	(8,600)	7,258,867
Weighted average exercise		price	$1.03	$0.45	$1.18	-	$0.42

At balance date nil Performance Rights (2011: nil) were vested and exercisable. The weighted average remaining contractual life of performance rights outstanding at the end of the year was 2.1 years (2011: 2.6 years).

The assessed fair value of performance rights granted is as follows:

Grant Date
Expiry Date
Exercise
price

Fair value(cents)

Non-market
based
Market
based

18/09/2007
19/01/2011
$1.21
18/09/2007
19/01/2011
$0.00
06/12/2007
07/04/2011
$1.21
16/12/2009
15/01/2012
$0.20
08/02/2010
07/03/2012
$0.00
23/08/2010
21/09/2012
$0.00
23/08/2010
21/09/2012
$0.10
23/08/2010
21/09/2013
$0.00
23/08/2010
21/09/2013
$0.10
23/08/2010
21/09/2013
$0.20
07/03/2011
01/08/2013
$0.00
26/05/2011
01/10/2013
$0.50
26/05/2011
01/10/2014
$0.50
26/05/2011
01/10/2015
$0.50
05/09/2011
05/10/2014
$0.00
05/09/2011
05/10/2014
$0.10
05/09/2011
05/10/2014
$0.20

15.0¢
10.6¢
96.9¢
-
-
8.9¢
41.5¢
-
59.1¢
-
59.8¢
-
50.6¢
-
54.2¢
-
45.5¢
-
37.0¢
-
61.5¢
-
13.9¢
-
12.6¢
-
11.5¢
-
50.0¢
-
41.1¢
-
32.3¢
-

Fair Value of Performance Rights Granted

The fair values at grant date for performance rights with no market based vesting conditions were determined using a BlackScholes option pricing model that takes into account the exercise price, the term of the option, the security price at grant date and expected price volatility of the underlying security, the expected dividend/distribution yield and the risk-free interest rate for the term of the option. The fair values at grant date for performance rights with market based vesting conditions were determined using a Monte Carlo simulation (TSR hurdle) and the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the security price at grant date and expected price volatility of the underlying security, the expected dividend/distribution yield and the risk-free interest rate for the term of the option.

Page | 70 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

31. Share Based Payments (continued)

(a) Performance Rights Plan (continued)

The model inputs for performance rights granted during the year ended 30 June 2012 included:

Exercise price	$0.00	$0.10	$0.20
Grant date	05/09/11	05/09/11	05/09/11
Share price at grant date	$0.69	$0.69	$0.69
Expected price volatility	27%	27%	27%
Expected dividend yield	10.22%	10.22%	10.22%
Risk free interest rate	3.82%	3.82%	3.82%
Expirydate	05/10/14	05/10/14	05/10/14

The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

The model inputs for Performance Rights granted during the year ended 30 June 2011 included:

Exercise price	$0.00	$0.10	$0.00	$0.10	$0.20	$0.00	$0.50	$0.50	$0.50
Grant date	23/08/10	23/08/10	23/08/10	23/08/10	23/08/10	07/03/11	26/05/11	26/05/11	26/05/11
Share price at grant date	$0.73	$0.73	$0.73	$0.73	$0.73	$0.74	$0.69	$0.69	$0.69
Expected price volatility	32%	32%	32%	32%	32%	26%	25%	25%	25%
Expected dividend yield	9.66%	9.66%	9.66%	9.66%	9.66%	9.46%	10.14%	10.14%	10.14%
Risk free interest rate	4.55%	4.55%	4.59%	4.59%	4.59%	5.12%	4.97%	5.09%	5.19%
Expirydate	21/09/12	21/09/12	21/09/13	21/09/13	21/09/13	01/08/13	01/10/13	01/10/14	01/10/15

(b) Tax Exempt Plan

The Tax Exempt Plan enables eligible employees to acquire up to $1,000 of stapled securities on-market in a tax effective manner within a 12 month period. Eligibility for the Tax Exempt Plan is approved by the Board having regard to individual circumstances and performance. No Directors or KMP are eligible for the Tax Exempt Plan.

Expenses relating to the plan are recorded in employee benefits expense and all securities are purchased on-market.

(c) Expenses arising from share based payment transactions

Total expenses arising from share based transactions recognised during the year as part of employee benefits expense were as follows:

were as follows:
	Group			Trust
	2012	2011	2012		2011
	$’000	$’000	$’000		$’000
Performance rights issued under PRP	601	333	-		-
Expenses arising from share basedpayments	601	333	-		-

Page | 71 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

32. Other Related Party Transactions

(a) Parent entity and subsidiaries

Cromwell Corporation Limited is the ultimate parent entity in the Group. Cromwell Diversified Property Trust is the ultimate parent entity in the Trust. Details of subsidiaries for both parent entities are set out in Note 34.

(b) Transactions with jointly controlled entity and associates

Transactions between the Group and its jointly controlled entity and associates also included:

Loans between the Group and its associates (refer note 8). The Group received interest of $1,622,879 (2011: $1,785,335) from Cromwell Property Fund;
The Group received $600,401 (2011: $706,000) in distributions from its jointly controlled entity and associate during the year (refer note 14);
The Group charged Cromwell Property Fund $1,184,581 (2011: $868,824) acquisition, registry services, accounting services, property, facility management and project management fees and leasing commissions during the year; and
The Group charged its jointly controlled entity and associates $241,150 (2011: $221,910) management fees during the year;
During the 2011 year the Group and Trust acquired the remaining units in Cromwell TGA Planned Investment from Cromwell Property Fund (refer notes 14 and 37);
During the 2011 year the Group and Trust acquired the 321 Exhibition Street investment property from Cromwell Property Fund for $90,200,000. The acquisition was partly funded by way of repayment of $10,200,000 of the loan receivable from Cromwell Property Fund (refer note 8).

(c) Transactions with managed investment schemes (managed by the consolidated entity)

Cromwell Property Securities Limited (“CPS”) and Cromwell Fund’s Management Limited (“CFM”) both act as responsible entity for a number of managed investment schemes. The Group derives a range of benefits from schemes managed by CPS and CFM including management and acquisition fees. The Group provided Cromwell Ipswich City Heart Trust (“ICH”), a scheme for which CFM acts as responsible entity, with a loan facility during the current year (refer note 8). The group earned $622,959 in interest from ICH under the loan facility in 2012.

(d) Transactions between the Trust and Cromwell Corporation Limited and its subsidiaries (including the Responsible Entity)

(i)
(ii)

Trust

2012
$
2011
$

Amounts paid/payable
Expense

Funds management fees
8,496,578
8,674,483

Property management fees
4,373,277
3,085,083

Accounting fees
280,980
273,909
Investment properties

Project management fees
369,864
486,986

Leasing commissions
1,592,943
1,586,745
Distributions_(1)
576,835
481,783

_Amounts received/receivable
Revenue

Interest income
460,910
872,163

Rental income and recoverable outgoings
4,249,096
5,158,496
Aggregate amount payable to responsible entity and associates at balance date
(included in trade and other payables)
540,371
1,553,691
Aggregate amount receivable from the responsible entity and associates at balance
date(included in trade and other receivables)
3,203,132
10,789,477

(1) Distributions paid/payable mostly relate to the Responsible Entity’s 8% holding in Cromwell Mary Street Planned Investment.

The Responsible Entity holds 1,517,000 (2011: 1,517,000) units in a subsidiary of CDPT, Cromwell Mary Street Planned Investment.

(iii) Loan to the Company

During the year the Trust advanced $nil (2011: $nil) to the Company under the loan facility between CDPT and the Company and received repayments of $7,000,000 (2011: $8,172,000). The loan is unsecured, repayable on 1 July 2014 and earns interest at variable rates being the 30 day BBSW rate plus a margin of 2.20% (2011: 2.20%).

Page | 72 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

33. Parent Entity Disclosures

As at and throughout the financial year ending 30 June 2012 the parent entity of the Group was Cromwell Corporation Limited and the parent entity of the Trust was Cromwell Diversified Property Trust.

(a) Summary financial information

The individual financial statements for the parent entities show the following aggregations.

	Cromwell Corporation	Cromwell Corporation	Cromwell Diversified	Cromwell Diversified
	Limited		Property Trust
	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Results
Profit/(loss) for theyear	(68)	(5,961)	32,022	59,840
Total comprehensive income/(loss)	(68)	(5,961)	32,022	59,840
Financial position
Current assets	12,495	11,534	61,898	40,015
Total assets	17,160	14,588	1,400,803	1,303,599
Current liabilities	59	290	68,979	44,845
Total liabilities	3,247	10,478	697,482	683,162
Net Assets	13,913	4,110	703,321	620,437
Total equity
Contributed equity	66,344	57,073	827,989	702,090
Share based payments reserve	2,189	1,588	-	-
Retained earnings/(accumulated losses)	(54,620)	(54,551)	(124,668)	(81,653)
Total equity	13,913	4,110	703,321	620,437

(b) Commitments for capital expenditure

As at balance date, Cromwell Corporation Limited had no commitments (2011: no commitments) in relation to capital expenditure contracted for but not recognised as liabilities.

As at balance date, Cromwell Diversified Property Trust had commitments of $116,712,000 (2011: $54,400,000) in relation to capital expenditure contracted for but not recognised as liabilities.

(c) Guarantees provided

During the years ended 2012 and 2011 neither parent had provided any guarantees to entities it controlled.

(d) Contingent liabilities

Neither parent entity had contingent liabilities at year end (2011: $nil).

Page | 73 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

34. Investments in Controlled Entities

The Company’s and CDPT’s investment in controlled entities are shown below, all of which are domiciled in Australia.

	Equity	Holding
Name	2012	2011
	%	%
Cromwell Property Securities Limited	100	100
Cromwell Property Services Pty Ltd	100	100
Marcoola Developments Pty Ltd	100	100
Votraint No. 662 Pty Ltd	100	100
Cromwell Capital Limited	100	100
Cromwell Finance Limited	100	100
Cromwell Operations Pty Ltd	100	100
Cromwell Paclib Nominees Pty Ltd	50	50
Cromwell Funds Management Limited	100	100
Cromwell Seven Hills Pty Ltd	100	100
Cromwell Holding Trust No 1 Pty Ltd	100	100
Cromwell Holding Trust No 2 Pty Ltd	100	100
Cromwell Altona Trust	100	100
Cromwell Real Estate Partners Pty Ltd(3)	100	-
Cromwell Project & Technical Solutions PtyLtd(3)	100	-
Trust and its controlled entities(1)
Name
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	100	100
Terrace Office Park Property Trust/Planned Investment	100	100
Cromwell Mary Street Property Trust/Planned Investment(2)	92	92
Cromwell Goulburn Street Property Trust/Planned Investment	100	100
Cromwell Northbourne Planned Investment	100	100
Tuggeranong Head Trust	100	100
Tuggeranong Trust	100	100
CDPT Finance Pty Ltd	100	100
EXM Head Trust	100	100
EXM Trust	100	100
Mascot Head Trust	100	100
Mascot Trust	100	100
Cromwell Phoenix Opportunities Fund(3)	100	-
Cromwell Property Fund Trust No 2	100	100
Cromwell Property Fund Trust No 3	100	100
Cromwell Diversified Property Trust No 2	100	100
Cromwell Diversified Property Trust No 3	100	100
Cromwell TGA Planned Investment	100	100
Cromwell HQ North Head Trust(3)	100	-
Cromwell HQ North Trust(3)	100	-
Cromwell Bundall Corporate Centre Head Trust(3)	100	-
Cromwell Bundall Corporate Centre Trust(3)	100	-

(1) The Trust and its controlled entities listed above are consolidated as part of the Group as required under accounting standards (refer note 1(b)).

(2) The remaining 8% interest in Cromwell Mary Street Property Trust/Planned investment is held by Cromwell Property Securities Limited.

(3) Incorporated/formed during the 2012 year.

Page | 74 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

35. Segment Information

(a) Description of segments

Reportable Group segments

The Group has identified its operating segments based on its internal reports which are regularly reviewed and used by the chief executive officer in order to make decisions about resource allocation and to assess the performance of the Group. The chief operating decision maker has been identified as the chief executive officer. The segments offer different products and services and are managed separately.

Property Investment

The ownership of properties located throughout Australia.

Funds Management

The establishment and management of external property funds and the Trust.

Property Development

Property development, including development management, development finance and joint venture activities.

Trust

The Trust has one reportable segment. It holds properties in Australia. Revenue is derived from rentals and associated recoverable outgoings. The Trust’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.

(b) Other segment information

(i) Accounting policies

Segment information is prepared in conformity with the accounting policies of the Group as disclosed in note 1 and Accounting Standard AASB 8 Operating Segments .

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

(ii) Inter-segment transactions

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an “armslength” basis and are eliminated on consolidation.

(iii) Equity-accounted investments

The Group had an investment in an Australian jointly controlled entity (Cromwell TGA Planned Investment) and two Australian associates (Cromwell Property Fund and Phoenix Portfolios Pty Ltd). Cromwell TGA Planned Investment and Cromwell Property Fund are accounted for using the equity method and included in the property investment segment. Phoenix Portfolios Pty Ltd is accounted for using the equity method and included in the funds management segment.

(iv) Major customers

Revenue of approximately $54,115,000 (2011: $49,755,000) is derived from a single external customer (Commonwealth of Australia) and is part of the property investment segment.

Page | 75 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

35. Segment Information (continued)

(c) Operating segments

Operating segments
2012 Property Investment Funds Management Property Development Segment results $’000 $’000 $’000	Consolidated $’000
Segment revenue and other income Sales - external customers 176,686 4,567 - Sales – intersegmental 772 13,151 - Profit of equity accounted entity (before adjustments) 863 - - Distributions 37 - Interest 3,991 722 - Other income 18 122 -	181,253 - 863 37 4,713 140
Total segment revenue and other income 182,367 18,562 -	187,006
Segment expenses Property expenses and outgoings 25,715 - - Property development costs - - 638 Intersegmental costs 13,151 772 - Funds management commissions - 487 - Employee benefits expense - 12,746 - Finance costs 61,963 - - Loss of equity accounted entity (before adjustments) - 9 - Administration and overhead costs 1,113 4,383 -	25,715 638 - 487 12,746 61,963 9 5,496
Total segment expenses 101,942 18,397 638	107,054
Income tax expense/(benefit) - (58) -	(58)
Segmentprofit/(loss) (1) 80,425 223 (638)	80,010
Reconciliation to reported profit/(loss) Loss on sale of investment properties (331) - - Loss on sale of other assets - (44) - Fair value adjustments/write downs:  Investment properties (12,353) - -  Interest rate derivatives (38,483) - -  Investments at fair value through profit and loss (173) - -  Property development inventories/provision - - 200  Equity accounted investments (993) - - Other property investment income/(expense):  Straight-line lease income 6,892 - -  Lease incentive and lease cost amortisation (7,705) - - Other expenses:  Amortisation of finance costs (2,560) - -  Employee options expense - (601) -  Amortisation and depreciation - (604) -  Net tax losses utilised - (178) -	(331) (44) (12,353) (38,483) (173) 200 (993) 6,892 (7,705) (2,560) (601) (604) (178)
Total adjustments (55,706) (1,427) 200	56,933
Profit/(loss) 24,719 (1,204) (438)	23,077

(1) Segment profit/(loss) is based on income and expenses excluding adjustments for unrealised fair value adjustments and write downs, gains or losses on sale of investments, non-cash income and expenses. The adjusting items may vary from time to time based on changes to accounting standards and management’s assessment as to the nature of the item.

Page | 76 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

35. Segment Information (continued)

(c) Operating segments (continued)

Operating segments (continued)
2012 Property Investment Funds Management Property Development Segment assets and liabilities $’000 $’000 $’000	Consolidated $’000
Total assets 1,816,591 18,006 3,004	1,837,601
Total liabilities 1,045,322 3,042 249	1,048,613
Other segment information Investments in associates 4,705 47 -	4,752
Acquisitions of non-current segment assets Investment properties 316,235 - - Investments at fair value through profit or loss 266 - - Property, plant and equipment - 464 - Intangibles - 408 -	316,235 266 464 408
316,501 872 -	317,373

Page | 77 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

35. Segment Information (continued)

(c)	Operating segments (continued)	Operating segments (continued)
	2011 Property Investment Funds Management Property Development Segment results $’000 $’000 $’000	Consolidated $’000
	Segment revenue and other income Sales - external customers 138,476 3,964 - Sales – intersegmental 709 12,034 - Profit of equity accounted entities (before adjustments) 852 29 - Distributions 255 - - Interest 4,320 664 - Other income 4 12 -	142,440 - 881 255 4,984 16
	Total segment revenue and other income 144,616 16,703 -	148,576
	Segment expenses Property expenses and outgoings 20,292 - - Property development costs - - 819 Administration and overhead costs 957 4,156 - Intersegmental costs 12,034 709 - Funds management commissions - 480 - Employee benefits expense - 11,347 - Finance costs 45,397 - -	20,292 819 5,113 - 480 11,347 45,397
	Total segment expenses 78,680 16,692 819	83,448
	Income tax expense/(benefit) - (169) -	(169)
	Segmentprofit/(loss) (1) 65,936 180 (819)	65,297
	Reconciliation to reported profit/(loss) Loss on sale of investment properties (195) - - Fair value adjustments/write downs:  Investment properties 33,659 - -  Interest rate derivatives (1,920) - -  Investments at fair value through profit and loss 604 - -  Property development inventories/provision - - (3,695)  Equity accounted investments (1,594) - - Other property investment income/(expense):  Straight-line lease income 4,883 - -  Lease incentive and lease cost amortisation (5,773) - - Other expenses:  Amortisation of finance costs (2,042) - -  Employee options expense - (333) -  Amortisation and depreciation - (542) -  Net tax losses utilised - (247) -	(195) 33,659 (1,920) 604 (3,695) (1,594) 4,883 (5,773) (2,042) (333) (542) (247)
	Total adjustments 27,622 (1,122) (3,695)	22,805
	Profit/(loss) 93,558 (942) (4,514)	88,102

Page | 78 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

35. Segment Information (continued)

(c) Operating segments (continued)

Operating segments (continued)
2011 Property Investment Funds Management Property Development Segment assets and liabilities $’000 $’000 $’000	Consolidated $’000
Total assets 1,521,553 14,860 3,015	1,539,428
Total liabilities 832,364 1,476 428	834,268
Other segment information Investments in associates 5,436 56 -	5,492
Acquisitions of non-current segment assets Investment properties 365,837 - - Investments at fair value through profit or loss 4,593 - - Property, plant and equipment - 127 - Intangibles - 393 -	365,837 4,593 127 393
370,430 520 -	370,950

Segment revenue and other income reconciles to total revenue and other income as follows:

	2012	2011
	$’000	$’000
Total segment revenue and other income	187,006	148,576
Reconciliation to reported revenue and other income
Straight-line lease income	6,892	4,883
Lease incentive amortisation	(6,332)	(4,865)
Fair value net gain from investment properties	-	33,659
Fair value net gain from investments at fair value through profit or loss	-	604
Increase in recoverable amount of loans receivable	200	-
Share of operating profit of equityaccounted entities	(863)	(881)
Total revenue and other income	186,903	181,976

36. Commitments for Expenditure

Commitments for Expenditure
	Group		Trust
	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
Operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases in existence at the reporting date
but not recognised as liabilities are payable as follows:
Within one year	410	51	-	-
Later than oneyear but not later than fiveyears	1,172	101	-	-
	1,582	152	-	-

(a) Operating leases

Commitments for minimum lease payments in relation to non-cancellable operating leases in existence at the reporting date but not recognised as liabilities are payable as follows:

Operating leases primarily comprise the lease of the Group’s premises. The Company has entered into a number of leases with the Trust and its subsidiaries and as such the commitment is not recognised on consolidation. Operating lease commitments of the Company are paid for and recognised as expenses by a controlled entity.

Page | 79 of 85

CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

36. Commitments for Expenditure (continued)

(b) Capital expenditure commitments

Commitments in relation to capital expenditure contracted for at reporting date but not recognised as a liability are payable as follows:

	Group Trust 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Within one year Later than one year but not later than five years	73,848 31,800 73,848 31,800 42,864 22,600 42,864 22,600
	116,712 54,400 116,712 54,400

37. Business Combinations

Acquisition of Cromwell TGA Planned Investment

On 20 July 2010 the Group and Trust acquired the remaining units in Cromwell TGA Planned Investment (“TGA”) from the Cromwell Property Fund (refer to note 14).

Following the acquisition, the Group and Trust fully consolidate the assets and liabilities and performance of TGA, including the TGA Complex which has been valued at $75,000,000 (refer note 12) and additional borrowings of $12,973,000 secured against the TGA Complex (refer note 19). Prior to the acquisition, TGA was a jointly controlled entity (refer note 14).

The Group and the Trust have recognised the fair values of the identifiable assets and liabilities based upon the best available information at the acquisition date. The business combination accounting is as follows:

	Recognised on	Already	Balance on
	Acquisition	Held	Consolidation
	$’000	$’000	$’000
Investment in associate/controlled entity	25,105	49,891	-
Other assets	-	-	22
Investment Property	-	-	75,000
Other liabilities	-	-	(26)
Borrowings	(12,973)	(25,946)	(38,919)
Net assets	12,132	23,945	36,077
Purchase consideration:
Cashpaid	12,132
Totalpurchase consideration	12,132

The carrying amount of assets and liabilities acquired was equivalent to their fair value.

The cash flows on acquisition were as follows:

The cash flows on acquisition were as follows:
Cash acquired from business combination	-
Cashpaid	(12,132)
Payments for controlled entity, net of cash acquired	(12,132)

Had the acquisition occurred at the beginning of the reporting period, the consolidated statements of comprehensive income would not have been significantly impacted.

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CROMWELL PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

38. Contingent Liabilities

The Directors are not aware of any material contingent liabilities of the Group or the Trust (2011: nil).

39. Auditor’s Remuneration

Auditor’s Remuneration
	Group Trust 2012 $ 2011 $ 2012 $ 2011 $
During the year the following fees were paid or payable for services provided by the auditor of the Group (Johnston Rorke) and its related entities: Audit Services Johnston Rorke Auditing or reviewing financial reports Auditing of controlled entities’ AFS licences Auditingof controlled entities’ complianceplans	235,000 248,500 155,000 159,000 6,000 4,500 - - 30,000 32,500 30,000 32,000
	271,000 285,500 185,000 191,000
Other Services Johnston Rorke Other – review ofpro forma balance sheets and forecasts	70,000 76,000 - -
	70,000 76,000 - -

40. Subsequent Events

The Group announced on 8 August 2012 that it was in negotiations for the potential acquisition of all the units in the unlisted Cromwell Property Fund (“CPF”) that it does not already own. CPF has a portfolio of 5 properties valued at $168 million.

Cromwell Property Securities Limited (“CPS”), the responsible entity of CPF and a wholly-owned subsidiary of the Group, has undertaken an extensive review to determine the most appropriate way to provide unitholders in CPF with both liquidity and an investment with stable distributions. While final terms are still to be settled and no decision on the transaction has been made, if Cromwell acquires all of the units in CPF that it does not already own, unitholders in CPF would receive Cromwell stapled securities in return. It is likely that the number of stapled securities that would be issued to unitholders in CPF would be calculated taking into account the value of the underlying net tangible assets (NTA) of the respective entities.

The units in CPF which would be acquired are expected to have a net tangible asset value of approximately $22 million.

The transaction would provide Cromwell with 100% ownership of CPF’s properties, with minimal transaction costs. The transaction would also effectively eliminate Cromwell’s existing $24 million loans to CPF. If the transaction proceeds, it is not expected to have a material impact on the earnings per security, distributions per security, NTA or gearing of the Group for 2013.

If a transaction proceeds, it is likely to be structured as a trust scheme and would require certain regulatory relief and the approval of unitholders in CPF. Details of the transaction, including conditions, would be set out in an explanatory memorandum accompanying the CPF meeting documents.

Page | 81 of 85

CROMWELL PROPERTY GROUP DIRECTORS’ DECLARATION

In the opinion of the Directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as Responsible Entity for the Cromwell Diversified Property Trust (collectively referred to as “the Directors”):

(a) the attached financial statements and notes are in accordance with the Corporations Act 2001 , including:
(i) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Regulations 2001 ; and
(ii) giving a true and fair view of the Group’s and the Trust’ financial position as at 30 June 2012 and of their performance, for the financial year ended on that date; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note (1)(a); and
(c) there are reasonable grounds to believe that the Group and the Trust will be able to pay its debts as and when they become due and payable; and

The Directors have been given the declarations by the chief executive officer and chief financial officer for the financial year ended 30 June 2012 required by section 295A of the Corporations Act 2001 .

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

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P.L. Weightman Director

Dated this 22[nd] day of August 2012

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Independent Auditor’s Report To the Security holders of Cromwell Property Group To the Unit holders of Cromwell Diversified Property Trust

Report on the Financial Report

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Cromwell Property Group (“the Group”) comprises Cromwell Corporation Limited and the entities it controlled at the end of the year or from time to time during the year and Cromwell Diversified Property Trust and the entities it controlled (“the Trust”) at the end of the year or from time to time during the year.

We have audited the accompanying financial reports of the Group and the Trust, which comprises the consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for both Cromwell Corporation Limited and Cromwell Property Securities Limited as responsible entity for the Cromwell Diversified Property Trust.

Directors’ Responsibility for the Financial Report

The directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as responsible entity for the Cromwell Diversified Property Trust (collectively referred to as “the directors”) are responsible for the preparation of the financial reports that give a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial reports that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1(a), the directors also state, in accordance with Accounting Standard AASB101 Presentation of Financial Statements , that the financial statements comply 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. Those 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 of the financial report that gives a true and fair view 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.

Independence

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

Opinion

In our opinion:

(a) the financial reports of the Group and the Trust are in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the Group’s and Trust’s financial position as at 30 June 2012 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
(b) the consolidated financial reports also comply with International Financial Reporting Standards as disclosed in Note 1(a).

Report on the Remuneration Report

We have audited the Remuneration Report included in part 11 of the directors’ report for the year ended 30 June 2012. The directors of Cromwell Corporation Limited are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Cromwell Corporation Limited for the year ended 30 June 2012 complies with Section 300A of the Corporations Act 2001.

JOHNSTON RORKE

Chartered Accountants

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RCN WALKER Partner Brisbane, Queensland 22 August 2012

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Page | 83 of 85

CROMWELL PROPERTY GROUP SECURITYHOLDER INFORMATION

1. Securityholder Information

The securityholder information set out below was applicable as at 14 August 2012.

2. Spread of Stapled Securityholders

Category (size of Holding)	Number of Holders	Number of Securities
1 – 1,000	577	166,489
1,001 – 5,000	721	2,170,956
5,001 – 10,000	911	7,178,239
10,001 – 100,000	7,244	249,003,480
100,001 – 9,999,999,999	1,124	911,169,799
	10,577	1,169,688,943

3. Unmarketable Parcels

The number of stapled securityholdings held in less than marketable parcels was 462.

4. Substantial Securityholders

Holder	Stapled Securities	Date of Notice
Redefine Properties Limited	316,169,013	10 February 2012
Coronation Asset Management (Pty) Ltd	58,737,725	10 February 2012

5. Voting Rights

On a show of hands every member present at a meeting in person or by show of proxy shall have one vote and upon a poll every member shall have effectively one vote for every security held.

6. 20 Largest Securityholders

		Number of	% Held of Issued
Rank	Investor	Stapled	Stapled
		Securities Held	Securities
1	Redefine Australian Investments Limited	177,276,857	15.16%
2	National Nominees Limited	132,336,675	11.31%
3	Redefine Australian Investments Limited	93,303,921	7.98%
4	RBC Investor Services Australia Nominees Pty Limited	52,402,479	4.48%
5	HSBC Custody Nominees (Australia) Limited	39,867,495	3.41%
6	JP Morgan Nominees Australia Ltd	23,580,131	2.02%
7	Stara Investments Pty Ltd	15,921,167	1.36%
8	Aust Executor Trustees SA Ltd	14,434,034	1.23%
9	RJP Family Pty Ltd	14,000,000	1.20%
10	Citicorp Nominees Pty Limited	8,703,146	0.74%
11	Humgoda investments Pty Ltd	7,282,126	0.62%
12	Citicorp Nominees Pty Limited	6,387,343	0.55%
13	JP Morgan Nominees Australia Limited	6,118,057	0.52%
14	Panmax Pty Ltd	5,703,707	0.49%
15	Kovron Pty Ltd	5,570,769	0.48%
16	Mr Philip John Wallace & Mrs Bernadette Mary Wallace <Wallace Super	4,883,450	0.42%
	Fund A/C>
17	Trial Developments Pty Ltd (Creagh family A/C>	4,343,805	0.37%
18	Mr Neal John Ambrose & Mrs Anne Christine Ambrose <NJ & AC Ambrose	3,474,008	0.30%
	S/Fund A/C>
19	Mr Humprey Firkins & Mr Jamie Dorrington	3,377,000	0.29%
20	The Australian National University	3,000,000	0.26%
		621,966,170	53.17%

7. Provision of Information for Securityholders

Cromwell is committed to ensuring its securityholders are fully informed on the financial and operational status of the Group as well as its future prospects, in accordance with the rules and guidelines of the Australian Securitied Exchange (ASX) and other regulatory bodies. The following information can also be found on the Cromwell website at www.cromwell.com.au.

8. ASX Listing

Cromwell Property Group is listed as a Stapled Security on the ASX (Code: CMW).

Page | 84 of 85

CROMWELL PROPERTY GROUP SECURITYHOLDER INFORMATION

9. Securityholding Details

Securityholders can access information on their holdings and update their details through Cromwell’s share registry provider:

Link Market Services Limited Level 15, 324 Queen Street Brisbane Qld 4000 Telephone: 1300 550 841 Outside Australia: +61 2 8280 7124 Fax: (02) 9287 0309 Web: www.linkmarketservices.com.au Email: [email protected]

Securityholders can change of update details relating to their address, bank account and Tax File Number (TFN), Australian Business Number (ABN) or exemption in a number of ways:

Send written authorisation to the registry quoting your SRN / HIN and signing the request;
Log on to www.linkmarketservices.com.au; or
Call the Registry

You will have to verify your identity by providing your personal details. Bank detail changes must be requested in writing or electronically and cannot be made over the phone.

Securityholders are not obliged to quote their TFN, ABN or exemption details. However, if these details are not lodged with the registry, Cromwell is obliged to deduct tax from unfranked portions of dividend payments and distribution payments and up to the highest marginal tax rate, depending on residency.

10. Distributions/Dividends

During the year the following distributions/dividends have been paid:

Quarter Ending	Amountper Security	Ex Date	Record Date	Payment Date
30 June 2012	1.75 cents	25 June 2012	29 June 2012	16 August 2012
31 March 2012	1.75 cents	26 March 2012	30 March 2012	16 May 2012
31 December 2011	1.75 cents	22 December 2011	30 December 2011	125 February 2012
30 September 2011	1.75 cents	27 October 2011	4 October 2011	16 November 2011

11. Further information

The Cromwell website provides a comprehensive range of information on the company, past performance and products. The website address is www.cromwell.com.au. Requests for further information about the Group, its dealings and key securityholder communications should be directed to:

Investor relations Manager Cromwell Property Group GPO Box 1093 Brisbane QLD 4001 Australia Telephone: (07) 3225 7777 Facsimile: (07) 3225 7788 Email: [email protected]

Page | 85 of 85

AI assistant

CROMWELL PROPERTY GROUP — Annual Report 2012

64673_rns_2012-08-22_dad119cb-9d68-43bd-afd5-2be2e697f742.pdf

Appendix 4E Results for Announcement to the Market CROMWELL PROPERTY GROUP

1. CROMWELL PROPERTY GROUP STRUCTURE

2. REPORTING PERIOD

3. HIGHLIGHTS OF RESULTS

4. COMMENTARY ON THE RESULTS

5. DIVIDENDS AND DISTRIBUTIONS

6. DIVIDEND/DISTRIBUTION REINVESTMENT PLAN

7. INVESTMENTS IN JOINTLY CONTROLLED ENTITY AND ASSOCIATE

8. CHANGES IN CONTROL OVER GROUP ENTITIES

9. COMPLIANCE STATEMENT

Cromwell Property Group Annual Financial Report 30 June 2012

DIRECTORY

Board of Directors:

Registered Office:

Listing:

Share Registry:

Auditor:

1. Directors & Officers

(a) Directors

(i) Mr Geoffrey Levy (AO) – Chairman

1. Directors & Officers (continued)

(a) Directors (continued)

(ix) Mr Daryl Wilson – Director – Finance & Funds Management

(x) Mr Michael Flax – Alternate Director

(xi) Mr Geoffrey Cannings – Alternate Director

(b) Directorships of other listed entities in last 3 years

(c) Company secretary

Ms Nicole Riethmuller

(d) Directors’ meetings

2. Principal Activities

3. Dividends/ Distributions

4. Review of Operations and Results

(a) Financial performance

4. Review of Operations and Results (continued)

(a) Financial performance (continued)

4. Review of Operations and Results (continued)

(b) Operating profit

4. Review of Operations and Results (continued)

(c) Earnings and Distributions per stapled security

(d) Financial position

4. Review of Operations and Results (continued)

(e) Outlook

5. Significant Changes in the State of Affairs

6. Subsequent Events

7.

Likely Developments

8. Environmental Regulation

9. Directors’ Interests

10. Options and Performance Rights

(a) Securities under option through the Performance Rights Plan

(b) Securities issued on the exercise of performance rights through the Performance Rights Plan

11. Remuneration Report

(a) Remuneration principles

11. Remuneration Report (continued)

(a) Remuneration principles (continued)

(iii) External environment

Use of remuneration consultant

11. Remuneration Report (continued)

(b) Details of remuneration

Non-Executive Directors:

11. Remuneration Report (continued)

(b) Details of remuneration (continued)

11. Remuneration Report (continued)

(c) Performance assessment

11. Remuneration Report (continued)

(c) Performance assessment (continued)

Details of remuneration: cash bonuses and performance rights

(d) Equity based compensation

11. Remuneration Report (continued)

(d) Equity based compensation (continued)

11. Remuneration Report (continued)

(d) Equity-based compensation (continued)

(e) Employment contracts and termination provisions

(i) Employment contracts

PL Weightman

DJ Wilson

All other executives

CROMWELL PROPERTY GROUP Annual Report 2012