Interim Report for the six months ended 31 December 2005

Interim Report for the six months ended 31 December 2005 Calan Healthcare Properties Limited Level 16, 209 Queen Street, PO Box 6945, Auckland 1035, New Zealand Telephone 09 303 0532 Facsimile 09 303 0178 Website www.calan.co.nz

Contents Highlights 1 Manager s Report 2 Investment Properties 10 Financial Summary 12 Consolidated Statement of Financial Performance 13 Consolidated Statement of Movements in Unit Holders Funds 14 Consolidated Statement of Financial Position 15 Consolidated Statement of Cash Flows 16 Notes to the Financial Statements 18 Directory 24

Highlights Rental income up $2.3 million (34%) to $9.1 million following the completion of Epworth Eastern. A record unaudited net surplus after tax of $5.3 million for the six months to 31 December 2005, up 62%. An 11% increase in the pre tax distribution for the six months to 4.60 cents per unit from 4.15 cents per unit. A $0.10 increase (9%) in the net tangible assets per unit to $1.21. A 5.7% increase in the value of properties valued as at 31 December 2005. The weighted average lease term increased from 9.3 years to 11.14 years following the completion of Epworth Eastern. Completion of the $A1.5 million refurbishment of the Epworth Eastern Medical Centre. Calan Healthcare Properties Trust Interim Report 2006 1

Manager s Report The six months to 31 December 2005 has seen Calan Healthcare Properties Trust deliver an excellent result with our unaudited net surplus after tax increasing by 62% to a record $5.3 million. With the completion of Epworth Eastern Hospital in Melbourne in May 2005, the six months to 31 December saw the first full period contribution from this property, which has been acknowledged by Australian media as the most advanced private hospital in Australia. 2 Calan Healthcare Properties Trust Interim Report 2006

Manager s Report (cont) Financial Performance This first class facility is a tribute to the closely linked partnership between Calan Healthcare and Epworth Foundation, and the expertise of our management team in being able to deliver on sound healthcare property investments. The pre tax income distribution for the six months to 31 December 2005 increased by a solid 11% to 4.6 cents per unit versus 4.15 cents for the previous half year to 31 December 2005. At 31 December 2005 the net tangible asset backing of the units was $1.21 per unit, up from $1.11 in the prior period. Post balance date, independent valuations commissioned as a result of the ING takeover offer resulted in a market value asset This first backing class of facility $1.29 is per a tribute unit, and to the an effective accounting net relationship tangible between asset backing Calan of Healthcare $1.254. and Epworth Foundation, and the expertise of our management team in being able to deliver sound healthcare property investments. The pre tax income distribution for the six months to 31 December 2005 increased by 11% to 4.6 cents per unit from 4.15 cents for the previous half year to 31 December 2004. As at 31 December 2005 the net tangible asset backing of the units in Calan calculated for Net surplus after tax for the six months to 31 December 2005 was our best ever in any six month period. Rental income for the period of $2.2m saw an increase of 34% or $2.3m from that reported for the 6 months to December 2004. Of this increase, $2.2m was attributable to rental streams received from the recently completed Epworth Eastern. The balance of the increase resulted from a small number of market rental reviews. Interest income was up by $197,000 (157%) on the prior half year. This was mainly due to: a full six months of interest being received on the deferred settlement balance from the sale accounting purposes was $1.21 per unit, up from of the Waitemata site, whereas the prior half $1.11 as at 31 December 2004. year only accounted for just in excess of one Post month s balance interest date, independent and property valuations were completed on each of Calan s properties in interest income payable by Epworth Eastern in response to the proposed takeover offer by ING relation to its rent free period. Property Trust Investments Limited. Taking into Operating account these expenses new valuations, for the six-month the market period value remained asset backing at $1m, of units unchanged in Calan from is $1.29 the previous per unit, 6 months with a net ended tangible 31 December asset backing 2004. for accounting purposes of $1.254 per unit. Calan Healthcare Properties Trust Interim Report 2006 3

Financial Performance The net surplus after tax for the six months to 31 December 2005 of $5.3m was a record six month profit for Calan. Rental income for the period was $9.2m. This is an increase of 34% or $2.3m from that reported for the six months to December 2004. Of this increase, $2.2m was attributable to rental streams received from the recently completed Epworth Eastern. The balance of the increase resulted from a small number of market rent reviews. Interest income was up by $197,000 (157%) on the prior half year. This was mainly due to: a full six months of interest being received on the deferred settlement balance from the sale of the Waitemata site, whereas the prior half year only accounted for just in excess of one month s interest and interest income payable by Epworth Eastern in relation to its rent free period. Operating expenses for the six month period remained at $1m, unchanged from the corresponding six month period. Interest expense was $1.7m, up $1.3m on the prior half year due to: The completion of Epworth Eastern in May 2005 resulting in no capitalised interest being accounted for in the six months to 31 December 2005. Capitalised interest for the six months to 31 December 2004 was $1.5m. This was partially offset by, A lower interest expense due to a lower average debt level. With the completion of Epworth Eastern there was no unrealised return on construction brought to account in the half year to 31 December 2005. However this, together with capitalised interest, was replaced by the increase in rental generated by Epworth Eastern. In the six months to 31 December 2004 there was a loss on sale of investment properties of $1.87m, which was not repeated in the half year to 31 December 2005. Income tax increased by $238,000 to $1.1m (up 28%) due to increased revenues partially offset by a lower level of deductions for building depreciation. 4 Calan Healthcare Properties Trust Interim Report 2006

Financial Position Property Portfolio As at 31 December 2005 the Trust had total assets of $219m, an increase of $7.6m (4%) on the six months to 31 December 2004. This mainly relates to the increased valuations of the investment properties. This resulted in the net tangible asset backing of the trust increasing by 10 cents to $1.21 as at 31 December 2005, an increase of 9%. The net tangible asset backing is based on revaluations undertaken as at 31 December 2005 of some 22.2% of the portfolio by value and 30 June 2005 valuations for the remainder of the properties. Debt has decreased to $50.3m, resulting in a debt to total asset ratio of 22.9%. Under the Trust Deed the Trust has a debt to total asset ratio limit of 35%. The Revaluation Reserve increased by $2.6m during the six months to 31 December 2005, an increase of 15%. Property Revaluations Strong appreciation over the portfolio has continued to occur in the first half of the year. The seven properties scheduled to be revalued over the last six months have increased in value by over $2.5m from $45.6m to $48.2m, an increase of 5.7%. At 31 December 2005 the value of the properties was $208.4m. The valuation increases can be attributed to the continuing demand for quality property, with good lease profiles, and the higher rentals being achieved following rent reviews. Of particular note was the valuation increase of Kensington Hospital, Whangarei, which increased in value by $1.57m (a 14.6% increase in value) at the 31 December 2005 valuation date. This is as a result of a lower capitalisation rate and increased rental supported by the solid trading performance of the tenant. Kensington Hospital currently has a net valuation of $12.3m. The other main increases were Hibiscus Coast Community Health Centre up $240,000 (6.9%), Biomed Laboratory up $235,000 (8.8%) and Pitman House up $293,000 (6.8%). Calan Healthcare Properties Trust Interim Report 2006 5

Property Portfolio (cont) Rent Reviews During the six months to 31 December 2005, a small number of scheduled market rental reviews were completed producing an increase in annual rental income of approximately $100,000. This represents an effective annual increase of 2.8% Weighted Average Lease Term Of the 82 leases within the portfolio four expired during the six month period under review. Three of the leases are being renewed on favourable terms while the other lease is under negotiation. With the completion of Epworth Eastern the weighted average lease term to expiry as at 31 December 2005 was 11.14 years, compared to 9.3 years as at 31 December 2004. At 11.14 years, Calan s weighted average lease term remains the longest of any NZX listed property entity by a significant margin. Occupancy During the six months to 31 December 2005 the occupancy rate within the portfolio increased to 99.3% from 99.1% for the corresponding period. This was the result of one of the two small vacant tenancies within the portfolio being let during the period. The portfolio contains just one vacancy at Eastmed, St Heliers with a number of potential parties having expressed interest in the space. Epworth Eastern Epworth Eastern has received strong support from local surgeons and the medical fraternity of Melbourne since completion as it continues to develop into an extensive, multi purpose health campus. The adjoining Epworth Eastern Medical Centre has been significantly refurbished. This ensures that the two facilities deliver a seamless, first class health service to the Eastern corridor of Melbourne. Epworth Eastern and the Trust s New Zealand icon asset, The Ascot Hospital, positions Calan as Australasia s leading investment grade specialist health property owner. 6 Calan Healthcare Properties Trust Interim Report 2006

Post Balance Date Events ING Takeover Offer and Acquisition of Management Companies On 31 January 2006 Calan received a Restricted Transfer Notice from a wholly owned subsidiary of NZX listed ING Property Trust (ING) announcing its intention to make a full takeover offer for Calan. ING s proposed takeover offer was unsolicited. To ensure the Board and Unit Holders had full and current information on which to assess the ING offer, the Board established a Committee of Independent Directors and commissioned updated valuations for all properties not valued as part of the interim accounts as at 31 December 2005. The Committee of Independent Directors also commissioned an independent appraisal report from Ferrier Hodgson as required under the NZX Listing Rules. The strong appreciation in the value of Calan s portfolio was announced to the market on 10 February 2006. A full Independent Directors response dated 17 February 2006 was forwarded to all Unit Holders and this contained a copy of the Ferrier Hodgson s report which valued units in Calan on the basis of a full takeover at between $1.41 and $1.55 and concluded that the proposed ING offer for Calan was unfair. The Committee of Independent Directors recommended that Unit Holders do not accept the proposed ING offer. ING announced to the market on 9th March 2006 that Following the release of the report by Ferrier Hodgson in response to ING Property Trust s offer proposal, ING Property Trust has determined not to proceed with that offer and accordingly the Restricted Transfer Notice issued on 31 January 2006 will be withdrawn. On 9th March 2006 announcements were also made to the market by the shareholders of The Calan Group of companies (including Calan Healthcare Properties Ltd) and ING Property Trust Management Ltd (the manager of ING Property Trust) that a conditional agreement had been entered into for ING Property Trust Management Ltd to acquire all the shares in Calan Healthcare Properties Ltd (which is the Manager of Calan Healthcare Properties Trust) and Calan Healthcare Australian Properties Trust. Calan Healthcare Properties Trust Interim Report 2006 7

Post Balance Date Events (cont) Ascot Clinics Site On 15 February 2006, an announcement to market was made that Calan had entered into a Heads of Agreement with McConnell Property. Under the Heads of Agreement Calan will: Sell the land on which a building and associated carparks will be sited Buy back a strata title floor, which will be leased to health associated tenants Convert its last remaining non yielding land holding into a productive, revenue earning asset Calan will receive an initial sale price of $3.9m, and a further sum, expected to be in excess of $1m, being 50% of the development margin. On a fully leased basis at normal medical lease rates, it is expected that Calan s floor will add some $270,000 income over a 12 month period. Looking Forward As at date of completion of this report the management company ownership is not finally resolved however ING announced to the market on 14 March 2006 that ING looked forward to continuing the strong value growth that the current Calan Manager and Board has delivered. The current Board believes the Trust has excellent continuing prospects and sustained earnings. Bruce Davidson Chairman Miles Wentworth Chief Executive Construction of the new building is expected to commence before the third quarter of the 2006 calendar year. 8 Calan Healthcare Properties Trust Interim Report 2006

Calan Healthcare Properties Trust Interim Report 2006 9

Standing Investments PROPERTIES Surgical & Medical PURCHASE DATE Ascot Hospital & Clinics, Auckland 1 Sep 1997 Ascot Carpark, Auckland 2 Central Hawkes Bay Health Centre, Waipukurau 1 Aug 1999 Epworth Rehabilitation Brighton, Melbourne 1 Feb 1999 Epworth Eastern Campus, Melbourne 1 Apr 1999 Kensington Hospital, Whangarei 1 Jan 2000 Napier Health Centre, Napier 1 Oct 1998 Health Support Services Biomed Laboratory, Auckland Mar 1998 Spare Land Mar 1998 Hibiscus Coast Community Health Centre, Whangaparaoa May 1995 Hospital Laundry and Sterilisation Facility, Auckland Jun 1996 Spare Land Jun 1996 Pitman House, Auckland Mar 1998 Primary Care Facility Eastmed St Heliers, Auckland 3,4 Dec 1999 Total Standing Investments Investment Properties For Construction USE OF PROPERTY Surgical & Medical PURCHASE DATE Ascot Clinics, Auckland Sep 1997 Total Investment Properties For Construction 10 Calan Healthcare Properties Trust Interim Report 2006

LATEST VALUATION (000 S) LATEST VALUATION YIELD ANNUAL CONTRACT RENT $71,775 9.19% $6,660,287 $905 $4,140 10.88% $459,767 $12,421 9.00% $1,144,563 $62,266 8.40% $5,198,490 1 These properties are subject to Annual CPI rental adjustments 2 The Ascot Carpark is subject to a ground lease with the Auckland Racing Club 3 Yield calculated on market rental 4 A leasing programme for part of the centre is currently being undertaken $12,313 8.50% $1,062,850 $13,400 10.12% $1,375,802 $2,205 9.75% $219,473 $715 $3,743 8.33% $316,371 $8,978 9.73% $886,585 $1,083 $20,000 $4,605 9.49% $445,970 $7,090 9.98% 3 $536,495 $205,639 $18,326,653 Valuations are carried out on all properties in the portfolio within 12 months of the date of acquisition and annually thereafter at either June or December Valuations shown represent open market value less estimated costs of disposal Australian property values and rentals are subject to fluctuations in the AUD exchange rate Purchase dates relate to the purchase of the land not the completion date of the building in relation to construction projects All monetary figures on this table are exclusive of GST and in NZ dollars ESTIMATED COST ($000) COST TO DATE ($000) $14,000 $2,797 $2,797 Calan Healthcare Properties Trust Interim Report 2006 11

Financial Summary SIX MONTHS ENDED 31 DECEMBER 2005 2004 Operating Surplus before Income Tax $6.4 m $5.2 m Net Surplus after Income Tax $5.3 m $3.3 m Gross Distribution per Unit (including imputation credits) 4.60 cents 4.15 cents Net Tangible Asset Backing per Unit $1.21 $1.11 Units on Issue 138.3 m 137.8 m Total Assets $219.3 m $211.7 m Total Liabilities $52.6m $59.1 m Unit Holders Funds $166.7 m $152.6 m Ratio of Debt to Gross Value of Trust Fund 22.9% 25.6% The Board of Calan Healthcare Properties Limited, the Manager of Calan Healthcare Properties Trust, are pleased to present the interim report including the Financial Statements of Calan Healthcare Properties Trust for the six months ended 31 December 2005. BC Davidson, Chairman For and on behalf of the Manager Calan Healthcare Properties Limited MP Wentworth, Chief Executive For and on behalf of the Manager Calan Healthcare Properties Limited 15 February 2006 12 Calan Healthcare Properties Trust Interim Report 2006

Consolidated Statement of Financial Performance FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 $000 $000 $000 Operating Revenue Rental 9,150 6,833 14,360 Other income 13 12 1,619 Total Property Revenue 9,163 6,845 15,979 Less: Direct property related expenses 279 254 280 Net Property Revenue 8,884 6,591 15,699 Operating Expenses Audit fees 40 20 33 Fees for other services provided by auditor 7 24 37 Manager s fees 824 806 1,596 Property acquisition and investment evaluation costs 11 3 9 Registry fees 25 25 48 Trustee s fees 74 74 147 Unit Holder communication costs 66 65 124 Other operating expenses 31 32 66 Total Operating Expenses before Interest 1,078 1,049 2,060 Operating Surplus before Interest 7,806 5,542 13,639 Interest received 323 126 403 Less interest expensed (1,710) (451) (2,342) Net Borrowing Costs (1,387) (325) (1,939) Operating Surplus before Tax 6,419 5,217 11,700 Unrealised net change in the value of investments 816 Unrealised return on investment properties under construction 786 1,290 Gain on sale of equity investments 253 Loss on sale of investment properties (7) (1,873) (1,646) Net Surplus before Income Tax 6,412 4,130 12,413 Less income tax expense (1,077) (839) (1,869) Net Surplus after Income Tax 5,335 3,291 10,544 The accompanying notes on pages 18 to 23 form an integral part of these interim financial statements. Calan Healthcare Properties Trust Interim Report 2006 13

Consolidated Statement of Movements in Unit Holders Funds FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 NOTE $000 $000 $000 Total Recognised Revenues and Expenses Surplus and Revaluations Net surplus after income tax 4 5,335 3,291 10,544 Net revaluation of investment properties 3 2,526 3,216 12,169 Foreign currency translation reserve movement (383) (123) 105 7,478 6,384 22,818 Other Movements Units issued to satisfy manager s incentive fee (11) 535 Cash distributions made during the year (5,374) (3,749) (8,762) (5,385) (3,749) (8,227) Movement in Unit Holders Funds for the Period 2,093 2,635 14,591 Unit Holders Funds at the Beginning of the Period 164,623 150,032 150,032 Unit Holders Funds at the End of the Period 166,716 152,667 164,623 14 Calan Healthcare Properties Trust Interim Report 2006 The accompanying notes on pages 18 to 23 form an integral part of these interim financial statements.

Consolidated Statement of Financial Position AS AT 31 DECEMBER 2005 Unaudited Unaudited Audited 31 Dec 05 31 Dec 04 30 Jun 05 NOTE $000 $000 $000 Unit Holders Funds Units subscribed 2 146,112 145,589 146,124 Revaluation reserve 3 19,368 7,889 16,842 Foreign currency translation reserve (1,351) (1,197) (969) Proposed distribution 4 2,629 2,515 2,635 Undistributed (deficit)/surplus 4 (42) (2,129) (9) Total Unit Holders Funds 166,716 152,667 164,623 Represented by: Current Assets Bank 594 1,825 654 Receivables 845 1,981 2,295 Loan advances 11 Income tax receivable 364 1,450 3,806 3,313 Non Current Assets Investments 912 6,961 912 Investment properties 5 205,639 143,655 204,306 Investment properties for construction 5 2,797 50,859 2,775 Property acquisition and investment evaluation costs 577 344 445 Deferred settlements 5,078 5,078 5,078 Receivables 338 1,019 1,027 Loan advances 149 Other receivables 2,360 19 17 217,850 207,935 214,560 Total Assets 219,300 211,741 217,873 Current Liabilities Accounts payable and accrued expenses 2,212 4,697 3,723 Income tax payable 93 129 2,305 4,826 3,723 Non Current Liabilities Borrowings 50,279 54,248 49,527 Net Assets 166,716 152,667 164,623 Net tangible assets per unit $1.21 $1.11 $1.19 The accompanying notes on pages 18 to 23 form an integral part of these interim financial statements. Calan Healthcare Properties Trust Interim Report 2006 15

Consolidated Statement of Cash Flows FOR THE SIX MONTHS 31 DECEMBER 2005 Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 NOTE $000 $000 $000 Cash Flows from Operating Activities Cash was provided from: Receipts from tenants 7,784 6,780 15,850 Interest received 298 164 403 Other income 1,585 12 313 Net goods and services tax received 34 9,701 6,956 16,566 Cash was applied to: Payments to suppliers (1,858) (1,473) (2,427) Net income tax paid (624) (644) (1,969) Interest paid (1,658) (363) (2,286) Net goods and services tax paid 1,651 (4,140) (829) (6,682) Net cash flows from operating activities 7 5,561 6,127 9,884 Cash Flows from Investing Activities Cash was provided from: Sale of investment properties 10,700 11,610 Sale of investments 7,011 Loan advances 229 203 10,929 18,824 Cash was applied to: Purchase of and costs capitalised to investment properties (331) (227) Loan advances (135) Capitalisation of interest (1,494) (1,351) Expenditure on investment properties for construction (1,260) (9,211) (12,032) Property acquisition and investment evaluation costs (118) (5) (143) (1,844) (10,937) (13,526) Net cash flows used in investing activities (1,844) (8) 5,298 16 Calan Healthcare Properties Trust Interim Report 2006 The accompanying notes on pages 18 to 23 form an integral part of these interim financial statements.

Consolidated Statement of Cash Flows continued FOR THE SIX MONTHS 31 DECEMBER 2005 Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 NOTE $000 $000 $000 Cash Flows from Financing Activities Cash was provided from: Net proceeds from borrowings 1,593 1,593 Cash was applied to: Net repayment of borrowings (951) (6,128) Distributions to unit holders (5,370) (3,705) (8,762) (5,370) (4,656) (14,890) Net cash flows used in financing activities (3,777) (4,656) (14,890) Net increase/(decrease) in cash (60) 1,463 292 Add opening cash brought forward 654 362 362 Closing cash carried forward 594 1,825 654 The accompanying notes on pages 18 to 23 form an integral part of these interim financial statements. Calan Healthcare Properties Trust Interim Report 2006 17

Notes to the Financial Statements FOR THE SIX MONTHS 31 DECEMBER 2005 1. Statement of Accounting Policies These interim financial statements have been prepared in accordance with FRS 24 Interim Financial Statements, and should be read in conjunction with the previous annual report. The unaudited financial statements for the six months ended 31 December 2005 have been prepared using the same accounting policies as used at 30 June 2005. Impact of adopting New Zealand Equivalents to International Financial Reporting Standards All New Zealand entities are required to adopt New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) for reporting periods beginning on or after 1 January 2007, with the option to adopt early for periods beginning on or after 1 January 2005. It is the current intention of the group to adopt NZ IFRS from 1 July 2007. The adoption of NZ IFRS will be first reflected in the group s interim report for the six-month period ending 31 December 2007. To comply with NZ IFRS for the first time the group will need to restate the comparative balances applying NZ IFRS. This will affect the Statement of Financial Performance, Financial Position and Cashflow Statements. However, most of the adjustments required on transition to NZ IFRS will be made through opening retained earnings. The group has commenced a NZ IFRS conversion project to assess the key differences in accounting policies between NZ IFRS, and current NZ GAAP with a view to determine the impacts on the financial statements that are expected to arise on transition. The group engaged professional advisors to assist in understanding the significant differences which are likely to arise on transitioning to NZ IFRS. Significant differences in accounting policies identified by the group are outlined below. The group has not yet completed an exercise to quantify the effects of the differences in accounting policies discussed below, and therefore currently are unable to provide reliable estimatable information about the impacts on the financial statements, which arise from transitioning to NZ IFRS. The actual impact of adopting NZ IFRS may vary from the information presented, and the variation may be material. 18 Calan Healthcare Properties Trust Interim Report 2006

Notes to the Financial Statements continued FOR THE SIX MONTHS 31 DECEMBER 2005 Key differences in accounting policies on transitioning to NZ IFRS 1. Investment Properties Treatment of Revaluations The group s current policy is for investment properties to be revalued on an annual basis with the net increments in the value of properties on a portfolio basis to be transferred directly to the revaluation reserve. Net decrements are transferred to the revaluation reserve unless the reserve is insufficient to cover a deficit. In such case the deficit will be taken to the Statement of Financial Performance. Under NZ IFRS, all revaluation increments and decrements will be recorded in the Statement of Financial Performance. Disposal Costs Investment properties are valued at market value less an allowance for disposal costs. Under NZ IFRS, the recognition of disposal costs on the valuation is not allowed. This will increase the carrying value of investment properties. Manager s Incentive Fees The manager s incentive fee is calculated in accordance with the trust deed and is based on the movement in the revaluation reserve plus gains and losses on equity investments. The incentive fee is charged against the revaluation reserve. Under NZ IFRS, this charge will be taken to the Statement of Financial Performance. The terms for calculating the manager s incentive fee will have to be revised by the trustees, as the revaluation reserve will no longer exist. 2. Investment Properties Under Construction The group s current accounting policy for property under construction includes the capitalisation of all development costs incurred to date. An estimated surplus, being the excess of an independent valuation over expected completion costs, is recognised in the Statement of Financial Performance on a percentage of completion basis. Under NZ IFRS, a self-constructed investment property will be accounted for as property, plant and equipment using the cost model, and will only be transferred to investment properties upon completion of construction. The transfer will be made at fair value and any gain or loss on revaluation will be recognised in the Statement of Financial Performance. Calan Healthcare Properties Trust Interim Report 2006 19

Notes to the Financial Statements continued FOR THE SIX MONTHS 31 DECEMBER 2005 3. Deferred Tax Under the group s current accounting policy deferred tax is calculated on an income statement approach and the group recognises deferred taxation on a partial basis. Under NZ IFRS, deferred tax will be calculated on a balance sheet approach and deferred tax assets are recognised when it is probable they will be utilised, rather than virtually certain as under NZ GAAP. It is expected that the change in approach will lead to more deferred tax liabilities being recognised by the group. 4. Financial Instruments The group currently use interest rate swaps to protect against interest rate movements on the debt facility. Under NZ IFRS, the interest rate swaps are expected to qualify for hedge accounting with the interest rate derivatives being recognised on the balance sheet at their fair value. Changes in the fair value will be recognised in a reserve until the interest flows occur. The group believes it will qualify for hedge accounting. 5. Investments The investment in Ascot Radiology will be accounted for as a financial asset held at fair value. As at 30 June 2005 this investment was revalued by way of an independent valuation to fair value in line with the group s current accounting policy. A revaluation will now be performed on an annual basis, changes in fair value will be recognised in the Statement of Financial Performance. 6. Unit Holders Funds The Trust was formed on 11 February 1994 with an expiry date for the Trust of 80 years less one day from the date of the Deed (note 2). Under NZ IFRS, as the Trust has a defined termination date, Units in the Trust are likely to meet the definition of a financial liability. This would have a significant impact as Units would be reclassified from equity to debt. The trust together with others within the industry, is working with the Financial Reporting Standards Board and other advisors to resolve this issue prior to adoption of NZ IFRS. 20 Calan Healthcare Properties Trust Interim Report 2006

Notes to the Financial Statements continued FOR THE SIX MONTHS 31 DECEMBER 2005 2 Units Subscribed Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 No. Issued Value No. Issued Value No. Issued Value 000 s $000 000 s $000 000 s $000 Opening balance 137,823 146,124 136,743 144,659 136,743 144,659 Issue of units to satisfy manager s incentive fee 494 (12) 60 60 535 Issue of units under unit election plan 1,020 930 1,020 930 Closing balance 138,317 146,112 137,823 145,589 137,823 146,124 3 Revaluation Reserve Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 $000 $000 $000 Opening balance 16,842 4,673 4,673 Revaluation of investment properties 2,519 1,560 12,527 Reversal of Artemis revaluation due to sale of property 1,656 Manager s incentive fee 7 (358) Closing balance 19,368 7,889 16,842 4 Undistributed (Deficit)/Surplus Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 $000 $000 $000 Opening balance (9) (548) (548) Net surplus after income tax 5,335 3,291 10,544 Distributions made during the period (2,739) (2,357) (7,370) Proposed distribution at the end of the period (2,629) (2,515) (2,635) Closing balance (42) (2,129) (9) Calan Healthcare Properties Trust Interim Report 2006 21

Notes to the Financial Statements continued FOR THE SIX MONTHS 31 DECEMBER 2005 5 Investment Properties and Investment Properties for Construction Individual properties are valued at June or December each year. A detailed schedule of the properties, valuations and other property information is included on pages 10 and 11 of the interim report. Interest of $Nil (30 June 2005: $1,351,230; 31 December 2004: $1,494,339) has been capitalised to investment properties for construction. 6 Capital Commitments The Group was party to contracts to construct property for the following amounts: Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 $000 $000 $000 Total capital expenditure contracted but not provided for in the accounts AUD Nil (30 June 2005: AUD Nil; 31 December 2004: AUD440,845) 477 This figure represents the Epworth Eastern Hospital project construction contract sums, less tenants contractual obligations for repayment of fitout costs. 22 Calan Healthcare Properties Trust Interim Report 2006

Notes to the Financial Statements continued FOR THE SIX MONTHS 31 DECEMBER 2005 7 Reconciliation of Operating Result for the Period with Net Cash Flows from Operating Unaudited Unaudited Audited 6 Months 6 Months 12 Months 31 Dec 05 31 Dec 04 30 Jun 05 $000 $000 $000 Net surplus after income taxation 5,335 3,291 10,544 Items not involving cash flows Property acquisition and investment evaluation costs written off 9 Unrealised return on construction (786) (1,290) Unrealised gain on investment (816) Loss/(gain) on sale of investment 1,763 (253) Loan interest (1) 56 56 Loss on sale of investment properties 1,646 Foreign currency (losses)/gains (25) 59 219 (26) 1,092 (429) Add/(Deduct): Movements in working capital items relating to operating cash flow Increase in receivables 210 1,790 1,504 Increase in accounts payable and accrued expenses (411) (241) (1,635) Decrease/(increase) in income tax payable 453 195 (100) 252 1,744 (231) Net Cash Flows from Operating Activities 5,561 6,127 9,884 Movements in Working Capital Not Reflected in Operating Cash Flow Movement in receivables 1,450 1,812 1,498 Movement in items not affecting operating cash flow (1,240) (22) 6 Decrease in receivables 210 1,790 1,504 Movement in accounts payable and accrued expenses (1,511) (661) (1,635) Movement in items not affecting operating cash flow 1,100 420 Decrease in accounts payable and accrued expenses (411) (241) (1,635) Calan Healthcare Properties Trust Interim Report 2006 23

Directory Directors of the Manager of the Trust Bruce Charles Davidson Chairman Brian James Freestone Ronald MacGregor Irvine Martin Victor Lyttelton Timothy Ernest Corbett Saunders Miles Peter Wentworth Secretary to the Manager of the Trust Vicki Sherree Harrison Manager of the Trust Calan Healthcare Properties Limited Level 16, 209 Queen Street PO Box 6945, Wellesley Street Auckland 1035 New Zealand Telephone (09) 303 0532 Facsimile (09) 303 0178 Email enquiry@calan.co.nz www.calan.co.nz Trustee Trustees Executors Limited Level 12, 45 Queen Street PO Box 4197 Auckland Auditors KPMG 18 Viaduct Harbour Avenue Auckland Solicitors To the Trust and the Manager: Bell Gully, Auckland To the Trustee: Buddle Findlay, Auckland Valuation Panel New Zealand CB Richard Ellis Limited Colliers International New Zealand Limited DTZ New Zealand Limited R.A. Purdy & Co. Limited Seagar & Partners (Auckland) Limited Australia CB Richard Ellis Pty Limited Colliers International Consultancy and Valuation Pty Limited Knight Frank Unit Registrar Computershare Investor Services Limited Level 2, 159 Hurstmere Road Takapuna Private Bag 92119 Auckland 1020 New Zealand Telephone (09) 488 8777 Facsimile (09) 488 8787 Email enquiry@computershare.co.nz www.computershare.com Bankers ANZ part of ANZ National Bank Limited 24 Calan Healthcare Properties Trust Interim Report 2006