ANNUAL
REPORT
2018/2019
IMPORTANT INFORMATION
ABOUT THIS REPORT
Welcome to National Storage REIT’s 2019 Annual Report which reports our performance
for the financial year 1 July 2018 – 30 June 2019.
The 2019 Reporting Suite includes:
Annual Report – a review of FY19 performance, strategy and governance
Financial Report – FY19 financial accounts and detailed financial performance
All of NSR’s reporting is available online at www.nationalstorageinvest.com.au
ENTITIES
National Storage Holdings Limited ACN 166 572 845 (“NSH” or the “Company”)
National Storage Property Trust ARSN 101 227 712 (“NSPT”)
together form the stapled entity National Storage REIT (“NSR” or the “Consolidated Group”)
RESPONSIBLE ENTITY OF NSPT
National Storage Financial Services Limited (NSFL)
ACN 600 787 246 AFSL 475 228
Level 23, 71 Eagle Street, Brisbane QLD 4000
Sustainability Report – outlines NSR’s approach to sustainability. The 2019 Sustainability Report
will be released prior to National Storage REIT’s AGM and will be available online at
www.nationalstorageinvest.com.au at that time
DISCLAIMER
This is the Annual Report for National Storage REIT which comprises the combined assets and operations of National Storage Holdings Limited (ACN 166 572 845)
(“NSH”) and the National Storage Property Trust (ARSN 101 227 712) (“NSPT”). This report has been prepared by NSH and NSFL (ACN 600 787 246 AFSL 475 228) as
responsible entity for NSPT. National Storage REIT (ASX: NSR) currently has stapled securities on issue on the Australian Securities Exchange (“ASX”) each comprising
one unit in NSPT and one ordinary share in NSH (“Stapled Securities”).
The information contained in this report should not be taken as financial product advice and has been prepared as general information only without consideration
of your particular investment objectives, financial circumstances or particular needs. This report is not an invitation, offer or recommendation (express or implied) to
apply for or purchase or take any other action in respect of Stapled Securities.
This report contains forward‑looking statements and forecasts, including statements regarding future earnings and distributions. These forward‑looking statements
and forecasts are not guarantees of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond
the control of NSH and/or NSFL, and which may cause actual results or performance to differ materially from those expressed or implied by the forward‑looking
statements and forecasts contained in this report.
No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Similarly, no representation is
given that the assumptions upon which forward‑looking statements and forecasts may be based are reasonable. These forward‑looking statements and forecasts
are based on information available to NSH and/or NSFL as of the date of this report. Except as required by law or regulation (including the ASX Listing Rules) each
of NSH and NSFL undertake no obligation to update or revise these forward‑looking statements or forecasts.
Certain financial information in this report is prepared on a different basis to the Financial Report, which is prepared in accordance with Australian Accounting
Standards. Any additional financial information in this report which is not included in the Financial Report was not subject to independent audit or review by
Ernst & Young.
1
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
CONTENTS
04
06
08
10
14
18
20
24
27
29
30
56
126
128
OUR BUSINESS
OUR FY19 PERFORMANCE
OUR STRATEGY
OUR PORTFOLIO
CHAIRMAN & MANAGING DIRECTORS’ REPORT
INVESTMENT PARTNERS
THE YEAR IN REVIEW
BOARD OF DIRECTORS
SENIOR EXECUTIVES
CORPORATE GOVERNANCE
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
INVESTOR RELATIONS
CORPORATE DIRECTORY
2
3
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
OUR BUSINESS
National Storage is one of Australasia’s largest
self‑storage providers, tailoring self‑storage
solutions to over 60,000 residential and
commercial customers at 168 storage
centres across Australia and New Zealand.
National Storage REIT is the only publicly listed
fully integrated owner and operator of
self‑storage centres in Australasia.
The National Storage offering spans self‑storage,
business storage, Wine Ark ‑ Climate‑controlled
wine storage, collection management and
trading, vehicle storage, vehicle and trailer hire,
packaging supplies, and insurance. In addition
to the traditional self‑storage offering, National
Storage provides value‑add services for
businesses including receipt and dispatch,
corporate account management, forklifts
and pallet jacks, and versatile, adaptable
spaces to suit every customer’s needs.
Each National Storage centre reflects our
commitment to quality, convenience and
service. At National Storage, you can expect
secure, clean and modern premises and
a team of professionals trained in the
exacting task of providing efficient storage.
4
OUR BUSINESS
5
NATIONAL STORAGE BUNDALL
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 OUR FY19 PERFORMANCE
FINANCIAL HIGHLIGHTS
$159.2m
$144.8m
$62.4m
Total Revenue
IFRS profit
Underlying Earnings (1)
2 Same centre 30 June 2016
9.6cps
9.6cps
Underlying Earnings (1)
per Stapled Security
Distribution per
Stapled Security
$1.95b
Assets Under
Management (AUM)
FY18: $139.1m
FY18: $145.8m
FY18: $51.4m
FY18: 9.6cps
FY18: 9.6cps
FY18: $1.43b
14%
1%
21%
-
-
36%
OPERATIONAL HIGHLIGHTS
169
887,000
90,000
Number of Centres
(30 June 2019)
Square Metres of
Net Lettable Area
Number of Storage Units
FY18: 135
FY18: 703,000
FY18: 73,000
81.4%
Like-for-like
Occupancy (2)
FY18: 80.3%
$206m
Like-for-like Revenue
per Available Metre
(REVPAM)(2)
85.7%
NZ
Occupancy
FY18: $205m
FY18: 84.7%
34
184,000
23%
1.1%
0.5%
1.0%
CAPITAL STRENGTH
$2.39b
Total Asset Value
33%
Gearing
4.0
Weighted Average
Debt Tenor
FY18: $1.71b
FY18: 38%
FY18: 4.7
$680m
5%
0.7years
6
OUR FY19 PERFORMANCE
$1.63
Net Tangible Assets
per Stapled Security
FY18: $1.51
8%
1 Underlying earnings is a non‑IFRS measure
(unaudited)
2 Same centre 30 June 2018
(104 centres), excluding Wine Ark, New Zealand
and developing centres
7
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
OUR STRATEGY
NSR’s objective is to deliver investors a stable
and growing income stream from a diversified
portfolio of high‑quality self‑storage assets and
to drive income and capital growth through
active asset and portfolio management.
Asset Management
Balance occupancy and
rate to achieve organic
growth and drive revenue
growth
Leverage management
platform and economies
of scale to extract value
driven cost efficiencies
across the portfolio
Acquisitions
Execute high‑quality
acquisitions in a
fragmented industry
Product & Innovation
Explore market
opportunities for revenue
generation, focus on
digital transformation,
drive innovation and
sustainability at a product
and portfolio level
+
+
+
+
=
Multiple
revenue
streams to
maximise
returns
Portfolio,Development
& Centre Management
Focus on development in
markets where acquisition is
challenging, maximise portfolio
potential through expansion of
outperforming assets, align with
investment partners to execute
development opportunities and
undertake portfolio recycling
opportunities to maximise value
Capital
Management
Maintain an efficient
capital structure
8
OUR STRATEGY
9
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 OUR PORTFOLIO
DARWIN
NORTHERN
TERRITORY
3
CENTRES
SOUTH
AUSTRALIA
9
CENTRES
WESTERN
AUSTRALIA
21
CENTRES
PERTH
168
TOTAL
CENTRES
The National Storage portfolio continues to
grow across Australia and New Zealand,
with storage centres well located in capital
cities and regional areas that exhibit drivers
of storage demand.
As at the date of this Report.
*Map not to scale.
NORTH QUEENSLAND
QUEENSLAND
48
CENTRES
NEW SOUTH WALES
25
CENTRES
SUNSHINE COAST
BRISBANE
GOLD COAST
HUNTER & CENTRAL COAST
SYDNEY
WOLLONGONG & ILLAWARRA
ADELAIDE
VICTORIA
30
CENTRES
CANBERRA
4
CENTRES
GEELONG
MELBOURNE
AUCKLAND
HAMILTON
BAY OF PLENTY
NEW ZEALAND
24
CENTRES
WELLINGTON
HOBART
CHRISTCHURCH
TASMANIA
4
CENTRES
DUNEDIN
10
OUR PORTFOLIO
11
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 PORTFOLIO STATISTICS
30 JUNE 2019
PORTFOLIO DIVERSIFICATION BY NLA
PORTFOLIO DIVERSIFICATION BY VALUE
29%
QLD
NSW
ACT
3%
VIC
SA
WA
TAS
1%
2%
NT
NZ
6%
14%
18%
13%
14%
16%
25%
24%
QLD
NSW
ACT
VIC
SA
4%
5%
WA
9%
2%
2%
TAS
NT
NZ
13%
PORTFOLIO BY NLA
North Queensland
Sunshine Coast
Gold Coast
Brisbane
Sydney
Canberra
Melbourne
Geelong
Adelaide
Tasmania
Perth
Darwin
Wollongong
Central Coast NSW
TOTAL
JUNE
2019
45,200
23,100
56,600
132,400
82,500
26,200
139,000
12,400
52,500
12,700
119,600
17,000
19,400
28,400
767,000
PORTFOLIO BY NLA
Auckland
Hamilton
Wellington
Christchurch
Dunedin
Regional
TOTAL
JUNE
2019
16,500
24,700
29,800
18,300
22,100
8,600
120,000
FY19 PORTFOLIO
COMPOSITION
NUMBER OF CENTRES
Freehold
Leasehold
Managed
Licensed
TOTAL
148
15
4
2
169
PORTFOLIO VALUATION
NSR Portfolio Value $1.95 billion
Weighted Average Primary Cap Rate 6.85%
12
PORTFOLIO STATISTICS
13
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
CHAIRMAN AND
MANAGING DIRECTORS’ REPORT
The 2018‑2019 year has heralded a number
of major milestones in the growth and maturity
of National Storage REIT (“NSR”). Today we are
pleased to announce that NSR has reported
an A‑IFRS profit of $144.8 million with underlying
earnings of $62.4 million, up 21% and in line with
forecast. Total underlying earnings per security
for FY19 are 9.6 cents per stapled security.
NSR’s active asset management has seen its
NTA increase by 8% to $1.63 per stapled security.
Combined with our distribution yield, this has
resulted in a total security holder return of 15%
in FY19. The Australian portfolio (same centre ‑
June 2018) occupancy has risen to 81.4% while
REVPAM has increased to $206 per square
metre. NSR’s market capitalisation now exceeds
$1.3 billion with total assets approaching $2.4
billion. With 168 centres currently owned and
under management, NSR has cemented its
position as the largest owner operator of storage
centres in Australia and New Zealand. NSR now
has approximately 880,000m2 of net lettable
area, over 88,000 individual storage units in
various sizes and over 60,000 residential and
commercial customers.
The past year has been our most active
and challenging year to date, with 35
individual centre acquisitions, totaling in excess
of $350 million in value. In addition, we have
acquired 4 new development sites, either on a
standalone basis or through various joint venture
arrangements. These projects are designed to
deliver high‑quality, state‑of‑the‑art new storage
centres in key locations across Australia and
New Zealand.
The NSR business model has continued to
focus on generating multiple revenue streams
across the key focus areas of our business –
organic growth, acquisitions, developments
and harnessing technology and innovation
to maximise our existing revenue streams. The
2018‑2019 year has demonstrated the strength
and resilience of NSR’s business, providing
solid returns to investors, despite challenging
macroeconomic and microeconomic
conditions in some markets, particularly in the
residential housing sector. We will now take
a moment to examine NSR’s achievements in
each of these areas in more detail.
ORGANIC GROWTH
Organic growth in NSR’s business is derived from
a combination of occupancy growth and our
ability to drive an increased rate per square
metre from occupied space, the assessment
of which is based on storage demand on an
individual centre‑by‑centre basis. Residential
storage accounts for approximately 70% of
total occupied space with the remaining
space being filled by small to medium
enterprises, including online retailers or
ecommerce platforms, corporate businesses
and specialty storage offerings such as wine
storage, boat/caravan storage and
climate‑controlled storage.
Despite soft housing market conditions
impacting a number of key markets around
Australia, NSR has maintained an average
occupancy of over 81% across its existing
portfolio (on a same‑centre basis) and a
strong rate per square metre of $260. We are
already seeing early signs of positive growth
in FY20. Pleasingly, earnings from our corporate
storage business have grown by almost 20%
on a year‑on‑year basis and this remains a
strong focus in FY20.
Our target stabilised NSR Group occupancy
remains in the high 80% range on a portfolio
basis and we have already reached a
historically high level of average occupancy
of 86% across our NZ centres in FY19, where
market conditions remain buoyant and
demand continues to be strong in all key
markets in which NSR operates. We are
introducing a number of new initiatives to
target similar outcomes in Australia. These
new initiatives include an Operational
Transformation Plan, which has been
implemented after a 360‑degree review of
the operating business, and is designed to
invest more authority in state and territory
based leadership teams with higher level
state managers already in place and making
a positive impact on our business.
We also have a new strategic marketing plan
in place, designed to increase enquiries at
an individual centre level, as well as online
bookings and enquiries flowing into our
dedicated contact centre. A new webchat
platform and online booking portal are in
the process of finalisation and testing. Our
new‑look website is currently being completely
redesigned and rebuilt from the ground up after
extensive feedback from internal and external
focus groups. The new website is due to be
launched in coming months.
Our sponsorship activity continues to drive
brand awareness and engagement across
a range of new and existing organisations in
Australia and New Zealand. These include
Queensland Performing Arts Centre, men’s
and women’s Brisbane Broncos and Melbourne
Storm in the NRL, men’s and women’s
Richmond AFL teams, 888 Racing in the
V8 Supercars, Wellington Hurricanes in the
Super Rugby Competition, men’s and women’s
Brisbane Heat teams in the Big Bash League,
along with the Perth Glory in the A‑League,
and Perth Wildcats in the NBL.
ACQUISITIONS
Our acquisitions and integrations team
have been working tirelessly throughout the
2018‑2019 year in their efforts to bring a record
number of new centre acquisitions to NSR
across Australia and New Zealand. This has
included 35 individual storage centres plus
4 new development sites, in excess of $400
million. This reflects one new centre acquired
and integrated on average every 10 days,
which is an impressive achievement for a
small but highly efficient team.
These acquisitions have strengthened our
coverage in existing markets and added
a number of important new regions to the
NSR portfolio in Australia and New Zealand.
Importantly, this includes three new Auckland
centre acquisitions and three new Auckland
development sites now under planning or
construction. NSR now has 22 operating
centres, 2 licensed centres and a further
three under development in New Zealand,
making it the largest owner operator in the
country. In addition, NSR has extended its
Australian coverage in New South Wales to
include Wollongong with three new centres,
14
CHAIRMAN AND MANAGING DIRECTORS’ REPORT
15
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 high‑quality, state‑of‑the‑art storage centres
for NSR in key locations and generate income
for NSR from services including development
management, project management and
ongoing asset management of these assets.
TECHNOLOGY AND INNOVATION
NSR continues to enhance its operating
platform through the use of new technology
and other innovations applicable to its
business. This includes automation, enhanced
analytics, improvements to its existing operating
systems, a completely new website and online
booking portal and enhanced search engine
optimisation (SEO) and search engine marketing
(SEM) techniques designed to drive increased
enquiries and convert these into sales. NSR’s
investment in the “Spacer” online booking
platform continues to generate growth in
enquiries each month which are directed
to NSR centres.
SUSTAINABILITY
NSR leads the Australian storage industry with
its proactive approach to sustainability which
ultimately seeks to establish a low emission,
reduced carbon footprint. These initiatives
include plans to plant additional new native
trees and plants indigenous to the location
of each centre across our 168 locations.
Phase two of our solar PV installation strategy
nears completion with 110 centres having
solar installations. These systems will generate
approximately 4,800MWh of electricity annually
and reduce our carbon emissions by over
4,000 t‑Co²‑e per year, making NSR one of
the largest multi-site solar power generators in
Australia. NSR’s packaging recycling program
continues with 211 tonnes of cardboard
recycled over the last 12 months.
CHARITABLE AND COMMUNITY INVOLVEMENT
We continue our strong support for
charitable organisations, providing pro‑bono
storage units, staff time and resources, and
much-needed funds to a wide range of not
for profit organisations, facilitating community
initiatives and supporting a variety of
worthy causes.
In conclusion, the hard work of our team of
storage industry experts continues to place
NSR at the forefront of the storage industry in
both Australia and New Zealand. Our
employees remain the greatest asset of our
organisation and we are indebted to each and
every one of them for their efforts in continuing
to make NSR the number one storage owner
operator in the region. This would not be possible
without the strong guidance and leadership
received from our Board and the tireless work
of our senior executives.
Finally, we remain sincerely grateful for
the ongoing support we receive from our
valued securityholders and we look forward
to delivering beneficial outcomes to all our
stakeholders in FY20 and beyond.
Yours sincerely
Laurence Brindle
Chairman
Andrew Catsoulis
Managing Director
and Newcastle and the Central Coast with
multiple new centres acquired in that region.
In Queensland we have acquired nine new
centres, providing important additional
coverage and opportunities to build further
efficiencies and economies of scale into the
operating platform. In Melbourne and its
surrounds, NSR has acquired two new centres,
bringing the total coverage in Victoria to 30
centres. NSR is the largest owner operator
of centres in Perth with 21 centres, providing
extensive coverage in this important market.
NSR has also grown its coverage in other areas
of Australia including the Gold Coast, Sunshine
Coast, Townsville, Cairns, Darwin and Adelaide.
Our acquisition activity continues in FY20,
and the pipeline of new opportunities remains
strong for the foreseeable future. We continue
to be focused on acquiring high‑quality centres
inkey growth areas with opportunities to
value‑add either by expansion, improvement
to existing levels of occupancy or rate
per square metre, automation, or through
harnessing economies of scale by integrating
individual centres into the existing NSR
operating platform.
DEVELOPMENTS
The NSR development team continues to
identify locations that embody strong demand
demographics for new centre development
opportunities. During the year 4 developments
were completed totalling approximately $30
million and delivering an additional 17,400sqm
of NLA. Currently, 13 new development and
expansion projects are on foot, with a total
on‑completion value exceeding $150 million
and which will deliver an additional 80,000sqm
of NLA. NSR will continue to develop these sites
either in its own right, or by a combination
of joint venture or turnkey arrangements
through a number of existing and new
relationships. These include important
long‑term relationships with the Bryan Family
Group in Queensland and the Australia Prime
Storage Fund, and turnkey construction
arrangements with the Parsons Group in Perth
and Quigg Constructions in Queensland. In
addition, a number of new arrangements are
being actively investigated in other states
of Australia and in New Zealand. These joint
ventures and development arrangements
provide an important pipeline of new
16
CHAIRMAN AND MANAGING DIRECTORS’ REPORT
17
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 INVESTMENT PARTNERS
AUSTRALIA PRIME STORAGE FUND
NSR was a cornerstone investor in the Australia
Prime Storage Fund (APSF) with an equity interest
of 24.9%. APSF was established to facilitate the
development and ownership of premium
self‑storage centres in select major cities around
Australia over the life of the fund. APSF focused
its activity in inner city markets where there has
been demand for a premium storage product,
developing new institutional grade assets with
state‑of‑the‑art facilities and freehold tenure.
National Storage successfully completed the
acquisition of National Storage Albion
and Kelvin Grove from APSF in July 2019.
National Storage also entered into a contract
to acquire, at completion, the final site being
constructed by APSF, in Canterbury Victoria.
The Canterbury centre is currently under
construction and is expected to complete
by the end of September 2019. Following
the acquisition of the Canterbury centre by
National Storage, it is intended that APSF
will be wound up.
BRYAN FAMILY GROUP
(BFG, FORMERLY KNOWN AS LEYSHON)
National Storage acquired the remaining
interest in the Bundall and Milton self‑storage
centres from its long‑term investment partner,
BFG, at the end of FY19. National Storage and
BFG partnered to acquire the high quality sites
at Bundall on the Gold Coast and Milton in
Brisbane’s inner‑west. Construction of these two
multi level state of the art storage centres was
completed in early 2019. In June 2019, National
Storage and BFG extended their partnership to
jointly acquire and develop the site at Biggera
Waters on the Gold Coast. National Storage and
BFG will construct another high‑quality storage
centre at the site in FY20.
SPACER
National Storage has been an investor
in Spacer since 2017. The Spacer platform,
also incorporating the Parkhound brand, is an
online marketplace for storage, parking and
warehousing, leveraging existing infrastructure
and assets. Spacer source demand and offer
solutions to thousands of customers searching
for parking and storage across major cities
in Australia. National Storage strives to be
a leader in industry evolution with its digital
transformation and saw an opportunity in
partnering with Spacer given the rapid growth
of the sharing economy. The investment was a
strategic decision to stay ahead of any impacts
of disruption and technology on the storage
industry. Spacer Marketplaces was awarded
7th place amongst the Rising Stars of the
Deloitte Technology Fast 50 awards in FY19,
in recognition of its outstanding growth across
the Parkhound and Spacer platforms.
National Storage continues to work with
its investment partners and potential new
investment partners to assess options for
future acquisition, development and
redevelopment opportunities.
PERTH DEVELOPMENT PORTFOLIO
The Perth Development Portfolio is a
construction and management arrangement
with one of Perth’s leading self-storage
construction companies, Parsons Group.
This venture continues to reinforce the National
Storage brand as a prominent player in the
Perth market. Various sites in and around
Perth have been identified as part of the
arrangement, whereby Parsons Group
constructs quality self‑storage centres branded
National Storage. The arrangement will see
some centres acquired by National Storage on
completion and others managed by Parsons
Group under the guidelines of the National
Storage operating platform. The partnership
to date has delivered centres at Jandakot,
Butler, Perth Airport, Yanchep, Frances Bay and
Fremantle. National Storage acquired Jandakot
and Butler during FY17, Perth Airport during FY18
and Yanchep and Fremantle during FY19. The
Frances Bay centre is owned by Parsons Group
and managed by National Storage. Additional
centres are under construction at Martin and
Port Kennedy. Other sites are currently in due
diligence and planning stages. National Storage
retains certain rights to purchase the assets
under this arrangement.
18
INVESTMENT PARTNERS
19
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
THE YEAR IN REVIEW
ASSET MANAGEMENT
The past year has seen a continued focus on
the active revenue management platform that
has delivered growth across previous years.
The refinement of our advanced revenue
management modelling system, together with
a storage specific data analytics platform
continues to deliver efficiencies and enhance
scalability across the operating platform. These
results have been delivered in a year that has
seen some of the toughest economic conditions
across Australia, particularly in the Sydney and
Melbourne markets.
Further enhancements were made to
the management structure across storage
operations over the year with a focus on
increasing accountability for the operational
results. As the portfolio continues to grow, the
NSR operating model will continue to evolve
in order to meet the challenges of trading
environments, and to optimise operating
performance. Partnerships with ParcelPoint,
Australia’s largest network of locations for parcel
collection, and U‑Haul, a leading national trailer
rental provider continue to work to drive foot
traffic and generate awareness of centres in
local areas. Ancillary income streams including
packaging sales, insurance and vehicle/trailer
hire continued to increase across the year and
deliver important additional revenue to
the model.
FY19 has been our most active year to date
with 35 individual centre acquisitions which
have been undertaken in conjunction with
13 new development and expansion projects,
either on a standalone basis or through various
joint venture arrangements. These projects
are designed to deliver high‑quality,
state‑of‑the‑art new storage centres in key
locations across Australia and New Zealand
Revenue per Available Square Metre (REVPAM)
is the key operational metric for the NSR
portfolio. The Operations Management Team
maintain a focus on driving REVPAM using a
balanced approach to rate per square metre
and occupancy growth on an individual
centre and unit type basis. At 30 June 2019,
REVPAM across the Australian portfolio on a
like‑for‑like basis (104 owned centres at June
2018, excluding developing centres) was
$206/sqm (June 2018: $205/sqm). Occupancy
across the portfolio on a like‑for‑like basis
increased to 81.4% (June 2018: 80.3%).
ACQUISITIONS
National Storage has successfully transacted
35 acquisitions and 4 development sites in FY19
and continues to pursue high‑quality acquisitions
across Australia and New Zealand. The ability
to acquire and integrate strategic accretive
acquisitions is one of National Storage’s major
competitive advantages and a cornerstone of
its growth strategy. This active growth strategy
also strengthens and scales the National Storage
operating platform which drives efficiencies
across the business.
REGION
NUMBER OF
CENTRES
Brisbane
Gold Coast
Sunshine Coast
Central Coast (NSW)
Wollongong
Melbourne
Adelaide
Perth
Auckland (NZ)
Hamilton (NZ)
Rotorua (NZ)
Tauranga (NZ)
5
4
1
6
3
2
3
2
3
4
1
1
TOTAL
NLA
25,000
6,500
6,500
20,600
12,700
8,600
15,500
10,800
27,000
21,600
5,000
3,200
Total Acquisitions
35
163,000
WINE ARK
Wine Ark, Australia’s largest wine storage
provider is part of the National Storage group
and houses over two million bottles of fine wine
across 15 centres for clients located in over 30
countries. There are few businesses in Australia
with more experience when it comes to storing
and managing premium wine. Throughout
FY19 Wine Ark continued to strengthen its
relationship and involvement in the greater wine
trade supporting the Wine Communicators of
Australia, Sommeliers Association of Australia,
Wine Australia and Commanderie de Bordeaux
(Australian Chapter).
20
THE YEAR IN REVIEW
21
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 NATIONAL STORAGE MITCHELL SOLAR
as we look to expand our network through
affiliated corporate partners and tap into team’s
membership data bases. As a business, we have
also placed high importance on supporting
women in sport, ensuring that we sponsor both
men’s and women’s sides in the majority of
leagues. In the same way, we endeavour to
utilise our sponsorships to give back to local
communities, by hosting regional junior clinics
and supporting local charity initiatives through
our activations.
SUSTAINABILITY
This year will see the release of National
Storage’s third standalone sustainability
report. The report is expected to be released
in November 2019, prior to National Storage’s
AGM and will be published online at
www.nationalstorageinvest.com.au. The report
will detail National Storage’s performance
across environmental, social and governance
aspects of the organisation as well as our overall
vision and strategy to ensure we set realistic and
achievable goals whilst ensuring appropriate
sustainability targets in the short, medium
and long term. These targets are designed to
manage any potentially significant economic,
environmental, and social impacts that
National Storage causes, contributes to, or
that may be directly linked to our service
delivery, products or as a result of
relationships with others, including
our suppliers and communities.
MARKETING AND
CUSTOMER EXPERIENCE
Growing awareness, engagement and
conversion were once again key drivers of the
marketing strategy in FY19. The importance
of delivering an engaging and user‑friendly
online experience has seen the business invest
in ongoing digital improvements, including the
development of a new online booking platform.
Due to launch in early FY20, this new booking
platform will provide an enhanced customer
journey, help drive higher conversion rates and
further improve data security. National Storage
is committed to investing in a new digital
presence in order to create a fresh, clean and
simple customer experience with a focus on
ensuring that our e-ecommerce offering is in
line with best industry practice.
A new social media and public relations strategy
has been implemented to increase online
engagement, better leverage our sponsorships,
promote business developments, and solidify
our media presence. This has already seen our
online following grow by 500% in the 6 months
to June 2019 and will continue to be a priority
going forward.
Year on year, the volume of traffic to the National
Storage website continues to build. A consistent
focus on search engine optimisation initiatives
has resulted in an outstanding volume of traffic
arriving on the website through organic, rather
than paid channels.
Our sponsorship portfolio continues to be an
important focus, driving above the line brand
awareness and differentiation in both Australia
and New Zealand. The breadth of codes
supported by National Storage ensures we are
reaching a broad demographic of people and
building a positive association with the brand.
We have recently moved towards a heavy
business‑to‑business focus in our sponsorships,
22
THE YEAR IN REVIEW
23
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 BOARD OF DIRECTORS
Laurence has extensive experience in funds
management, finance and investment. Until 2009
he was an executive with Queensland Investment
Corporation (QIC). During his twenty one years with
QIC he served in various senior positions including Head
of Global Real Estate where he was responsible for a
portfolio of $9 billion. Laurence was also a long term
member of QIC’s Investment Strategy Committee. He
provides advice to a number of investment institutions
on real estate investment and funds management
matters. Laurence holds a Bachelor of Engineering
(Honours) and a Bachelor of Commerce from the
University of Queensland, and a Master of Business
Administration from Cass Business School, London where
he graduated with distinction. He is a former Chairman
of the Shopping Centre Council of Australia and a former
director of Westfield Retail Trust and Scentre Group,
which owns, operates and develops Westfield shopping
centres in Australia and New Zealand. Laurence is also
currently the Non‑executive Chairman of the listed entity,
Viva Energy REIT. Laurence serves on the Audit and Risk
Committees and is Chairman of the Nomination and
Remuneration Committees.
Anthony is an experienced finance and business
executive with an extensive background in banking
and business management. Prior to accepting his
directorship with National Storage, Anthony held
numerous leadership roles with a major trading bank
principally in business, corporate and institutional
banking. He is actively involved in the business
community through Non Executive Director and Advisory
Board roles, and finance advisory consultancies. He is
a Director of Queensland Symphony Orchestra Pty Ltd,
Chairman of Oncore Group Holdings Pty Ltd, and a
Director of EMvision Medical Devices Ltd. Anthony has
a Bachelor of Science (Mathematics) from University
of Adelaide and a Graduate Diploma in Corporate
Finance from Swinburne. He is a Fellow of the Financial
Services Institute of Australasia, a Graduate of the
Australian Institute of Company Directors and a Fellow of
the CEO Institute. Anthony acts as Chairman of the Audit
and Risk Committees and is a member of the Nomination
and Remuneration Committees.
Howard has over 30 years’ involvement in the
Australian property industry, as an analyst, investor
and fund manager. He is now a professional company
director and consultant to the property funds industry.
Howard co founded Property Investment Research
Pty Ltd (PIR) in 1989, which during the 1990s was
considered a leading researcher of both listed and
unlisted property funds. In 1998 Howard was instrumental
in establishing the funds management business of
APN Property Group Limited. During this period he was
responsible for the establishment and operations of a
number of funds investing both directly and indirectly
in real estate. Howard is currently a non executive
director of the ASX listed APN Property Group Limited
(APD) and is also a non executive director of APN Funds
Management Limited, responsible entity for ASX listed
APN Industria REIT (ADI) and APN Convenience Retail REIT
(AQR). Until July 2017, APN Funds Management Limited
was also responsible entity for Generation Healthcare
REIT (GHC). Howard is a member of the Audit and
Risk Committees.
Steven Leigh has more than 30 years’ experience in the
real estate investment management and development
industry. He joined QIC Global Real Estate in 1991 and
was a key member of the senior executive team that
acquired and created through development a portfolio
of high‑quality retail and commercial assets in Australia,
USA and the UK. Steven has had significant experience
in the wholesale funds management business through
various market cycles and conditions and has a strong
background in retail, commercial and industrial property
with a particular focus on shopping centre acquisitions
and redevelopments. After time as the Managing
Director of Trinity Limited, and later Head of Australia for
LaSalle Investment Management, Steven re‑joined QIC
as Managing Director QIC Global Real Estate in 2012
where he was responsible for the group’s $20bn plus
property portfolio. Steven is a non‑executive director
of ASX‑listed company, Scentre Group Limited and is
a founding member of Male Champions of Change
established by the Property Council of Australia. He
has qualifications in real estate valuation and project
management, and is an associate member of the
Australian Property Institute. Steven is a member of the
Remuneration and Nomination Committees
HOWARD BRENCHLEY
Independent Non-executive Director
BEc
STEVEN LEIGH
Independent Non-executive Director
Grad Dip Proj Mgmt
LAURENCE BRINDLE
Independent Non-executive Chairman
BCom BE (Hons) MBA
ANTHONY KEANE
Independent Non-executive Director
BSc (Maths) GradDipCorpFin
24
BOARD OF DIRECTORS
25
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 SENIOR EXECUTIVES
Andrew is a qualified lawyer who has been admitted
to the Supreme Court of Queensland and the Federal
Court of Australia. He has had extensive experience
in the fields of finance, commercial and property law
during his tenure at major law firms both in Australia and
overseas. He is also a qualified project manager and has
considerable property development experience both
within the storage industry and in broader markets.
A founder of the original National Storage business,
he has over 20 years of specific self‑storage industry
expertise including in the areas of acquisition,
development, integration and operation of ‘greenfield’
and developed self‑storage centres. Andrew was
instrumental in the successful acquisition and integration
of the original portfolio and led the company through
the IPO.
ANDREW CATSOULIS
Managing Director
BA, LLB, Grad Dip Project Mgmt (Hons)
STUART OWEN
Chief Financial Officer
BBus, CPA, GAICD
Claire was appointed an Executive Director in July
2017 and has been the principal company secretary of
National Storage since November 2015 . She holds legal
and international business qualifications and is admitted
as a solicitor of the Supreme Court of Queensland.
Claire has over ten years’ experience in corporate and
commercial law in private practice, having practiced in
the litigation, resources and corporate areas of two large
law firms. Prior to joining National Storage, Claire spent
four and a half years as Corporate Counsel and Company
Secretary at Rio Tinto Coal Australia. During this time,
in addition to providing legal services to the business, she
was responsible for the corporate governance and ASX
compliance of one of Rio Tinto’s listed subsidiaries as well
as managing the corporate secretarial responsibilities
of approximately 60 subsidiaries within the group and
providing joint venture support. Claire has also worked
in corporate compliance with the Australian Securities
and Investments Commission. Claire is a Graduate of the
Australian Institute of Company Directors and a Fellow
of the Governance Institute of Australia and is a
non‑executive director of Spacer Marketplaces
Pty Limited.
CLAIRE FIDLER
Executive Director and Company Secretary
LLB (Honours) B Bus (Intl Bus) GAICD, FGIA
PATRICK ROGERS
General Counsel and Chief Risk Officer
LLB, BBus (Accty), FGIA
Stuart joined National Storage in late 2014, with
extensive experience in the energy sector in coal
and gas fired power generation. He has held wide
ranging finance and commercial management
roles, including as Commercial Manager for Energy
Developments Limited. Prior to this, Stuart was
commercial manager on the delivery of a multi site
gas fired power generation project and micro
LNG plant.
He has significant experience in project financing,
mergers and acquisitions and project development.
Stuart holds a Bachelor of Business, is a Certified
Practising Accountant and is a graduate of the
Australian Institute of Company Directors.
Patrick holds both legal and accounting qualifications
and is admitted as a solicitor of the Supreme Court of
Queensland. He has practiced as a solicitor for over
20 years in both fields. During his time in private practice,
Patrick has had significant experience in corporate,
property, commercial, taxation and transactional
work. In addition to private practice, Patrick held senior
finance roles and was the general counsel and company
secretary of the Super A Mart Group for over eight years
where he was extensively involved in the operations of
the company. Patrick was appointed Chief Risk Officer of
National Storage REIT in June 2016, in addition to his role
as General Counsel and a Company Secretary of NSR.
Patrick is a Fellow of the Governance Institute of Australia.
26
BOARD OF DIRECTORS
27
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 CORPORATE GOVERNANCE
The National Storage Boards are responsible for ensuring that the organisation
has an appropriate corporate governance framework in place to protect and
enhance the entity’s performance and build sustainable value for securityholders.
The corporate governance framework is based on the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations.
More information is provided in NSR’s 2019 Corporate Governance Statement,
which can be found online at www.nationalstorageinvest.com.au. Additional
detail will also be included in National Storage’s Sustainability Report, which is
expected to be released prior to the 2019 AGM.
NATIONAL STORAGE BRENDALE GRAND OPENING
NATIONAL STORAGE DEVELOPMENT TEAM
28
SENIOR EXECUTIVES
29
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 DIRECTORS’
REPORT
KEY HIGHLIGHTS
Group
Total Revenue
IFRS profit after tax
Earnings per stapled security
Underlying earnings(1)
Underlying earnings per stapled security(1)
Net operating cashflow
Distribution per security
Portfolio
Number of Centres owned/managed & licenced (Total)
Like for like occupancy (2)
New Zealand occupancy
Like for like Revenue per available metre (REVPAM)(2)
Weighted Average Primary Cap Rate
Assets Under Management (AUM)(3)
Portfolio Valuation Uplift
Acquisitions / Centres(4,5)
NLA (sqm)
Balance Sheet
Total Assets(5)
Debt drawn(5)
Interest Rate Hedges(5)
Gearing
Weight average cost of debt
Weight average debt tenor (years)
NTA
FY19
FY18
Change
$159.2m
$144.8m
22.13cps
$62.4m
9.6cps
$93.3m
9.6cps
$139.1m
$145.8m
26.82cps
$51.4m
9.6cps
$77.0m
9.6cps
14%
(1%)
(17%)
21%
-
21%
-
-
-
At June
2019
163/6 (169)
81.4%
85.7%
$206
6.85%
$1.95b
$136m
$358m/35
887,000
At June
2018
130/5 (135)
80.3%
84.7%
$205
7.30%
$1.43b
$112m
$155m/17
703,000
At June
2019
$2.39b
$848m
$470m
33%
3.1%
4.0
$1.63
At June
2018
$1.71b
$600m
$319m
38%
3.8%
4.7
$1.51
Change
33/1 (34)
1.1%
1.0%
0.5%
(0.45%)
36%
$24m
$203m/18
26%
Change
40%
$248m
$151m
(5%)
(0.7%)
(0.7)
8%
PRINCIPAL ACTIVITIES
NSR is the first and only internally managed and fully integrated owner and operator of self-storage
centres to be listed on the ASX.
NSR is Australia's and New Zealand’s largest self-storage owner/operator, with 168 self-storage centres
under operation, management or licence, tailoring storage solutions to over 60,000 customers across
Australia and New Zealand. NSR has grown its portfolio of owned, managed and licenced centres
from 62 centres in December 2013 to 168 centres at the date of this Directors’ Report, with a further five
centres expected to settle in the coming months. NSR now manages approximately 90,000 storage
units across approximately 900,000 square metres of net lettable area around Australia and New
Zealand. Assets Under Management (AUM) have increased to $1.95 billion as at 30 June 2019,
increasing 36% during the Reporting Period.
Of the 168 self-storage properties in the NSR portfolio at the date of this report, ownership is as follows:
•
•
•
•
148 self-storage centres owned by NSPT
15 self-storage centres operated as long-term leasehold centres (Leasehold Centres)
3 third party managed centres (Mandarah centre in WA ceased to be managed effective
31 July 2019)
2 licenced branding rights centres in New Zealand
NSR operates a diverse business model with multiple revenue drivers including self-storage which
encompasses private storage, business storage, hard stand/vehicle storage and wine storage at NSR’s
climate controlled storage facilities branded “Wine Ark” developments and project management.
1 Underlying earnings is a non-IFRS measure (unaudited), see table within Operating Results for reconciliation
2 Same centre 30 June 2018 (104 centres), excluding WineArk, New Zealand and developing centres
3 Investment properties (including Assets held for sale) net of finance lease liability
4 Excluding transaction costs
5 NZD/AUD exchange rate of 1.045
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
31
30
DIRECTORS’ REPORT
31
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
BUSINESS STRATEGY
BUSINESS STRATEGY
CASH MANAGEMENT
NSR’s objective is to deliver investors a stable and growing income stream from a diversified portfolio of
NSR’s objective is to deliver investors a stable and growing income stream from a diversified portfolio of
high-quality self-storage assets and to drive income and capital growth through active asset and
high-quality self-storage assets and to drive income and capital growth through active asset and
portfolio management (including the acquisition, development or redevelopment and portfolio
portfolio management (including the acquisition, development or redevelopment and portfolio
recycling of self-storage centres).
recycling of self-storage centres).
The key drivers of the business are:
The key drivers of the business are:
•
• Asset management – driving an appropriate balance between rental rate and occupancy
• Centre Management – effective operation of individual self-storage assets and the expansion
of the National Storage Centre Management platform (revenue from third parties);
growth and actively pursuing other business development initiatives in complementary areas
such as wine storage, document storage and mini-logistics for SMEs;
Portfolio management – acquiring and integrating quality self-storage assets into the NSR
portfolio;
• Asset management – driving an appropriate balance between rental rate and occupancy
growth and actively pursuing other business development initiatives in complementary areas
such as wine storage, document storage and mini-logistics for SMEs;
•
Portfolio management – acquiring and integrating quality self-storage assets into the NSR
portfolio;
• Centre Management – effective operation of individual self-storage assets and the expansion
of the National Storage Centre Management platform (revenue from third parties);
• Development management – development / refurbishment / redevelopment of new and
existing centres and actively managing portfolio recycling opportunities;
• Capital management – maintaining an appropriate and efficient capital structure with a focus
• Capital management – maintaining an appropriate and efficient capital structure with a focus
on risk minimisation and the development of long term sustainable and growing revenue
on risk minimisation and the development of long term sustainable and growing revenue
streams; and
streams; and
•
Product and innovation – exploring opportunities for revenue generation across new sales
Product and innovation – exploring opportunities for revenue generation across new sales
channels, digital strategies and ancillary product ranges.
channels, digital strategies and ancillary product ranges.
• Development management – development / refurbishment / redevelopment of new and
existing centres and actively managing portfolio recycling opportunities;
•
Further details on these key business drivers can be found elsewhere in the NSR 2019 Annual Report.
Further details on these key business drivers can be found elsewhere in the NSR 2019 Annual Report.
REVIEW AND RESULTS OF OPERATIONS
REVIEW AND RESULTS OF OPERATIONS
The Financial Statements of NSR are prepared in compliance with Australian Accounting Standards
and the requirements of the Corporations Act Cth 2001.
The Financial Statements of NSR are prepared in compliance with Australian Accounting Standards
and the requirements of the Corporations Act Cth 2001.
OPERATING RESULTS
OPERATING RESULTS
IFRS Profit after tax for the Reporting Period was $144.8 million with EPS of 22.13 cents. Underlying
IFRS Profit after tax for the Reporting Period was $144.8 million with EPS of 22.13 cents. Underlying
earnings(6), increased by 21% to $62.4 million. Underlying earnings(6) per stapled security was 9.6cps for
earnings(6), increased by 21% to $62.4 million. Underlying earnings(6) per stapled security was 9.6cps for
the 2019 financial year.
the 2019 financial year.
$m
$m
IFRS Profit after tax
IFRS Profit after tax
Plus tax expense/(benefit)
Plus tax expense/(benefit)
Plus business combination, restructure and other non-recurring costs
Plus business combination, restructure and other non-recurring costs
Plus contracted gain in respect of sale of investment property
Plus contracted gain in respect of sale of investment property
Plus amortisation of interest rate swap reset
Plus amortisation of interest rate swap reset
Less fair value adjustment
Less fair value adjustment
Less finance lease diminution
Less finance lease diminution
Underlying Earnings(6)
Underlying Earnings(6)
Weighted average securities on issue (refer Note 19)
Weighted average securities on issue (refer Note 19)
Underlying earnings per stapled security(6)
Underlying earnings per stapled security(6)
FY19
FY19
$144.8
$144.8
$0.3
$0.3
$1.5
$1.5
$3.9
$3.9
$0.1
$0.1
($84.7)
($84.7)
($3.5)
($3.5)
$62.4
$62.4
650,319,184
650,319,184
9.6cps
9.6cps
FY18
FY18
$145.8
$145.8
($2.0)
($2.0)
$1.3
$1.3
$2.7
$2.7
-
-
($92.4)
($92.4)
($4.0)
($4.0)
$51.4
$51.4
536,933,616
536,933,616
9.6cps
9.6cps
Total revenue increased by 14% to $159.2 million. Occupancy across the June 2018 portfolio (excluding
Total revenue increased by 14% to $159.2 million. Occupancy across the June 2018 portfolio (excluding
New Zealand and developing centres) increased to 81.4%, up from 80.3% at 30 June 2018. New
New Zealand and developing centres) increased to 81.4%, up from 80.3% at 30 June 2018. New
Zealand occupancy increased to 85.7%, up from 84.7% at 30 June 2018. These are pleasing results
Zealand occupancy increased to 85.7%, up from 84.7% at 30 June 2018. These are pleasing results
given the challenging economic conditions that have been experienced over the past 12 months and
given the challenging economic conditions that have been experienced over the past 12 months and
demonstrates that the continued focus on driving increased occupancy is delivering results. Same
demonstrates that the continued focus on driving increased occupancy is delivering results. Same
centre revenue per available metre (REVPAM) increased by 0.5% to $206/sqm from $205/sqm at June
centre revenue per available metre (REVPAM) increased by 0.5% to $206/sqm from $205/sqm at June
2019 delivering continued revenue growth.
2019 delivering continued revenue growth.
Cash and cash equivalents as at 30 June 2019 were $178.8 million compared to $21.3 million at 30 June
2018, impacted by the capital raise undertaken on 26 June 2019. Subsequent to balance date the
majority of the cash balance has been used to repay debt and facilitate further acquisitions. Net
operating cashflow for the year increased to $93.3 million (2018: $77.0 million).
During the year NSR successfully completed two capital raisings providing $358 million. These were
undertaken by a combination of a rights issue, two institutional placements and a Security Purchase
Plan. The purpose of the equity raisings was to execute acquisition opportunities and strengthen the
NSR balance sheet.
An interim distribution of 4.5 cents per stapled security ($30.1 million) was paid on 1 March 2019 with an
estimated final distribution of 5.1 cents per stapled security ($34.4 million) declared on 24 June 2019 with
a payment date of 5 September 2019, totalling a full year distribution of 9.6 cents per stapled security.
During the reporting period NSR once again offered a Distribution Reinvestment Plan (DRP) which
enables eligible securityholders to receive part or all of their distribution by way of securities rather than
cash.
For the December 2018 interim distribution approximately 33% of eligible securityholders (by number of
securities) elected to receive their distributions as securities totalling approximately $9.8 million. The DRP
price was set at $1.8180 which resulted in 5,437,677 new securities being issued.
The June 2019 final distribution has seen approximately 33.5% of eligible securityholders (by number of
securities) elect to receive their distributions as securities totalling approximately $11.5 million. The DRP
price was set at $1.6939 which resulted in approximately 6,798,000 new securities being issued.
NSR’s finance facilities are structured on a “Club” arrangement with the four major Australian banks
and a major Australian superannuation fund. During the year NSR introduced the ANZ Banking Group
into the banking group to increase the available banking limits and the diversity of the group. The
Consolidated Group’s borrowing facilities are AUD $680 million and NZD $197million. As at the reporting
date AUD equivalent of approximately $21 million was undrawn and available. Subsequent to
reporting date $137 million raised via the equity raising completed on 26 June 2019 was repaid and has
become available. NSR actively manages its debt facilities and continues to increase when and where
required to ensure adequate capacity for future acquisitions and working capital requirements. The
weighted average debt tenor as at the reporting date is 4.0 years, down from 4.7 years as at 30 June
2018. NSR’s target gearing range remains 25%-40% to provide flexibility and the ability to act on
acquisition opportunities.
NSR maintains interest rate hedges in accordance with NSR’s hedging policy which is reviewed on a
regular basis. Additional interest rate hedges were entered into during the year to continue the
prudent management of NSR’s interest rate risks. In conjunction with the equity raising undertaken in
June 2019 NSR took advantage of the low interest rate environment and reset its Australian swap book.
The cost of the reset was $23.0 million with the average swap rate reduced by approximately 1.1%. As
at the reporting date interest rate hedges totalling A$793 million were in place with expiry dates
ranging from 0.5 years to 7.25 years.
ACQUISITIONS AND INVESTMENTS
NSR considers its ability to acquire and integrate quality assets to be one of the key drivers of its growth
strategy. The dedicated acquisitions team has continued to identify, facilitate and transact on
acquisitions that were considered appropriate for the portfolio.
The year ended 30 June 2019 was the most successful year since listing with the execution of NSR’s
acquisition strategy seeing 35 new centres and 4 development sites acquired totalling approximately
$400 million. Since balance date to the date of this Directors’ Report a further two centres valued at
$43 million have settled with 5 additional centres valued at $73 million expected to settle by the end of
September 2019. The combined process undertaken by both external valuers and the Directors to
revalue the 30 June 2018 NSR owned centres as at 30 June 2019 (based on valuations and
methodologies from independent valuers (m3 Property and Urbis)), yielded an increase in valuation of
$136 million, with the weighted average primary capitalisation rate reducing 45 basis points to 6.85%.
6 Underlying earnings is a non-IFRS measure (unaudited)
6 Underlying earnings is a non-IFRS measure (unaudited)
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
32
32
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
33
32
DIRECTORS’ REPORT
33
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Acquisitions for the Year Ended 30 June 2019
Region
Brisbane
Gold Coast
Sunshine Coast
Central Coast (NSW)
Wollongong
Melbourne
Adelaide
Perth
Auckland (NZ)
Hamilton (NZ)
Rotorua (NZ)
Tauranga (NZ)
Total
Number of
Centres
5
4
1
6
3
2
3
2
3
4
1
1
NLA (Sqm)
25,000
6,500
6,500
20,600
12,700
8,600
15,500
10,800
27,000
21,600
5,000
3,200
35
163,000
INVESTMENT IN JOINT VENTURES AND ASSOCIATES
NSR was a cornerstone investor in the Australia Prime Storage Fund (APSF) with an equity interest of
24.9%. APSF was established to facilitate the development and ownership of premium self-storage
centres in select major cities around Australia over the life of the fund. APSF focused its activity in inner
city markets where there has been demand for a premium storage product, developing new
institutional grade assets with state-of-the-art facilities and freehold tenure.
In July 2019 NSR contracted with APSF to purchase the remaining three assets in the fund (Albion, Kelvin
Grove and Canterbury) for $64 million. The Albion and Kelvin Grove centres settled on 26 July 2019 with
the Canterbury centre to settle once construction has been completed. Following the sale of the
Canterbury centre the fund will be wound up.
NSR has previously entered into arrangements with investment partner Bryan Family Group (“BFG”)
(formerly Leyshon) to acquire high-quality sites on Bundall Road, Bundall on the Gold Coast and Dorsey
Street, Milton in Brisbane’s inner-west through the “BFG JV”. Construction of these two centres was
completed during the Reporting Period and operations commenced. In June 2019 NSR contracted
with the BFG JV to acquire the Bundall and Milton centres for $43.7 million with settlement occurring on
21 June 2019.
In June 2019, NSR with BFG acquired a combined commercial and self-storage development site at
Biggera Waters on the Gold Coast. The BFG JV purchased the site from NSR who had previously
purchased the site in December 2018 for $23 million. Development approval to construct a multi-level,
state-of-the-art self-storage facility has been granted with construction expected to commence late
2019.
NSR has been appointed to manage the Biggera Waters project and will generate income from
providing a range of services including design and development, project management and corporate
administration.
LIKELY DEVELOPMENTS
NSR continues to utilise its position as Australia's first ASX listed, fully integrated, sector specific, self-
storage REIT to continue to bring quality independently owned storage centres across Australia and
New Zealand under NSR's ownership and/or management structure. In accordance with its stated
strategy, NSR continues to seek high-quality acquisition opportunities, evaluate its existing portfolio for
development or re-development, explore portfolio recycling opportunities and further develop and
refine its third party management offerings.
DIVIDENDS AND DISTRIBUTIONS
NSR has paid or declared distributions totalling 9.6 cents per stapled security for the Reporting Period,
comprising:
• An estimated final distribution of 5.1 cents per stapled security for the 6 months to 30 June 2019.
The distribution is expected to be paid on 5 September 2019 and is expected to contain a tax
deferred component.
• An interim distribution of 4.5 cents per stapled security for the period 1 July 2018 to 31
December 2018 which was paid on 1 March 2019 which included a tax deferred component.
OPTIONS OVER STAPLED SECURITIES
No options over issued stapled securities or interests in a Controlled Entity have been granted in NSR
during the Reporting Period. There are no options in stapled securities outstanding as at the date of this
report.
ENVIRONMENTAL REGULATION
NSR’s operations are not regulated by any environmental law of the Commonwealth or a State or
Territory that is enacted specifically for NSR. However, as part of its operations, NSR must comply with
broader environmental laws. NSH management on behalf of NSR has in place procedures to identify
and ensure compliance with such laws including identifying and obtaining of necessary approvals,
consents or licences.
There have been no known material breaches during the Reporting Period of any environmental laws
to which NSR is subject.
ENVIRONMENTAL, ECONOMIC AND OTHER SUSTAINABILITY RISKS
NSR recognises that its operating activities and strategic goal of delivering securityholder growth and
returns expose it to potential risks. NSR management takes a pro-active approach to risk
management/elimination and recognises the importance of a strong risk culture which is instilled and
lead by the Board and the senior executive team so as to form a core tenet of the organisation.
Risk is managed centrally to minimise potential adverse effects on the financial performance of NSR
and protect long-term securityholder value, and its broader Corporate reputation. A copy of NSR’s Risk
Management Policy can be found at www.nationalstorageinvest.com.au/governance.
The Chief Risk Officer is responsible for management of NSR’s risk function and in turn reports to the
Managing Director and the Risk Committee. The Risk Committee is charged with risk oversight and
reports to the full Board. The full Board is then actively involved in the ultimate review of and
determination of risk to within sensible tolerances.
Potential risks faced by NSR include but are not limited to:
RISK
Strategic Risk - Poor development and or execution of business strategy by the executive
management team can lead to the risk of loss and or poor performance. To mitigate this risk,
strategies are developed by the relevant responsible executive or senior officer. These are then
reviewed and discussed, as appropriate, by other executive officers and approved by the
Managing Director. Strategic decisions of a significant nature are further put before the Board and
discussed in detail and require Board approval. The senior executive team meet a number of times
a year to discuss strategy and ensure that it remains current and appropriate. This allows
management to ensure it is employing strategies that are updated for changes in the operating
environment of the business.
Economic Conditions - Fluctuations in economic conditions including consumer confidence may
adversely impact upon demand for storage space. Material macroeconomic events occurring or
any significant trading downturns due to factors beyond the control of management have the
potential to negatively impact on forecast trading performance. The results of NSR’s operating
activities are dependent on the performance of the properties in which it invests and those it
manages on behalf of other parties. This performance in turn depends on economic factors; these
include economic growth rates, inflation rates and taxation levels. There are also industry and
location specific risks to consider, including competitor behaviour. NSR mitigates the potential
impacts of fluctuating economic conditions by seeking to maintain a strong and conservative
balance sheet and financial position.
Operational Risk - Risk of loss due to its overall operations and management of other risks exists as a
function of any operating business. NSR aims to ensure that the necessary processes, training and
supervision is in place and effected to eliminate such loss wherever possible. The risk of loss from
system failures is reduced through system backups and disaster recovery (contingency) procedures,
which aim to ensure the maintenance of NSR’s critical data availability.
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RISK
General commercial property risks - Risks commonly associated with commercial property
investment apply equally to NSR, including levels of occupancy, capital expenditure requirements,
development and refurbishment risk, environmental or compliance issues, changes to government
and planning regulations, including zoning and damage caused by flood or other extreme weather
(to the extent that it is not or could not be insured against). NSR utilises a comprehensive due
diligence process when acquiring centres to mitigate or eliminate risk where possible.
Tenure - Storage agreements are typically month to month and there is no guarantee customers will
renew or that other customers will be found to take their place upon departure. To mitigate this risk,
customer relationships are carefully managed to maximise duration of stay and highly developed
marketing and management systems are in place to maximise conversion of new customer
enquiries.
Competition - Entry by new competing storage centres or discounting by existing storage centres
may adversely impact upon occupancy and rental rates on a centre specific basis. While there are
barriers to entry for new competition, NSR constantly monitors its competitors' activities to ensure
pricing and terms remain competitive.
Valuations - Valuations ascribed to NSR’s assets will be influenced by a number of ongoing factors
including supply and demand for self-storage centres and general property market conditions.
Valuations represent the analysis and opinion of qualified experts at a certain point in time. There is
no guarantee that a property will achieve a capital gain on its sale or that the value of the property
will not fall as a result of the assumptions on which the relevant valuations are based proving to be
incorrect.
Property liquidity - Self storage centres are property based illiquid assets and subject to supply and
demand factors dependent upon prevailing market conditions. As a result it may not be possible for
NSR to dispose of assets in a timely or price accretive fashion should the need to do so arise.
Future acquisitions and expansions - NSR may consider opportunities to make further acquisitions of
self-storage assets. NSR may also develop and expand the lettable area at a number of NSR’s
centres. The rate at which NSR is able to expand will reflect market forces and the availability of
capital at the time. Forecast distributions may be affected by such actions. The risks faced by NSR in
relation to any future development projects will depend on the terms of the transaction at the time.
There can be no assurance that NSR will successfully identify, acquire and integrate further self-
storage assets, or successfully implement acquisitions on time and on budget. Furthermore, there is
no guarantee that any acquisition will perform as expected. Future acquisitions may also expose
NSR to unanticipated business risks and liabilities.
Personnel risk - NSR relies upon the expertise and experience of the senior management team. As a
consequence, if the services of key personnel were no longer available this may have an adverse
impact on the financial performance of NSR. However, NSR’s senior management team are
considered internally to be stable and committed and succession planning is undertaken
periodically by the NSH Board and Managing Director.
Interest rate fluctuations and derivative exposure - Unfavourable movements in interest rates could
lead to increased interest expense to the extent that these rates are not hedged. NSR uses
derivative instruments to hedge a percentage of its exposure to interest rates however the interest
rate movements could still result in an adverse effect on financial performance.
Workplace health and safety - There is a risk that liability arising from occupational health and safety
matters at a property in NSR’s portfolio may be attributable to NSR as the registered proprietor. To
the extent that any liabilities may be incurred by NSR, this may impact upon the financial position
and performance of NSR (to the extent not covered by insurance). In addition, penalties may be
imposed upon NSR which may have an adverse impact on NSR. NSR has a dedicated focus on
Health and Safety including comprehensive reporting to assist in the mitigation or elimination of such
risks and keep our team members, customers and contractors safe.
Insurance risk - There is no certainty that appropriate insurance will be available for all risks on
acceptable commercial terms or that the cost of insurance premiums will not continue to rise. Some
risks are not able to be insured at acceptable premiums. Examples of losses that are generally not
insured against include war or acts of terrorism and natural phenomena. If any of NSR’s assets are
damaged or destroyed by an event for which NSR does not have cover, or a loss occurs which is in
excess of the insured amounts, NSR could incur a capital loss and lost income which could reduce
returns for holders of stapled securities. Any failure by the company or companies providing
insurance (or any reinsurance) may adversely affect NSR’s right of recovery under its insurance.
Funding - NSR’s ability to raise funds from either debt or equity sources in the future depends on a
number of factors, including the state of debt and equity markets, the general economic and
political climate and the performance, reputation and financial strength of NSR. Changes to any of
these underlying factors could lead to an increase in the cost of funding, limit the availability of
funding, and increase the risk that NSR may not be able to refinance its debt and/or interest rate
hedges before expiry or may not be able to refinance them on substantially the same terms as the
existing facility or hedge instruments. If alternative financing is not available, this could adversely
affect NSR’s ability to acquire new properties and to fund capital expenditure, and NSR may need to
realise assets at less than valuation, which may result in financial loss to NSR.
RISK
Leasehold interests - NSR holds lease agreements with certain third parties which allow it to operate
storage centres from these properties. Lease terms for these properties are typically long (greater
than 10 years). However, there is no guarantee that these lease arrangements will be able to be
renewed upon expiry or if so on suitable terms to NSR.
Environmental issues - Unforeseen environmental issues may affect the properties in the property
portfolio owned by NSR. These liabilities may be imposed irrespective of whether or not NSR is
responsible for the circumstances to which they relate. NSR may also be required to remediate sites
affected by environmental liabilities. The cost of remediation of sites could be substantial. If NSR is
not able to remediate the site properly, this may adversely affect its ability to sell the relevant
property or to use it as collateral for future borrowings. Material expenditure may also be required to
comply with new or more stringent environmental laws or regulations introduced in the future.
Data and Cyber Attack Loss – During the course of effecting its operations, NSR is required to handle
data from various sources. As a result, there is the possibility that data could be either damaged or
lost. This creates the risk of potential legal exposure from both commercial third parties and
regulators depending on the nature and the extent of any possible loss or damage to the data.
There is also the risk that NSR could suffer a cyber attack from a third party that could disrupt its
operations and functionality.
Climate Change - Extreme weather events or progressive damage from climate related causes may
cause loss to NSR through either physical impact on storage centres or disrupting operations and
attendant income. NSR has enacted a specific regular review process for its centres to ensure such
impacts or their likelihood is mitigated to the maximum extent possible.
DIRECTORS
NATIONAL STORAGE HOLDINGS LIMITED
The NSH Directors in office during the Reporting Period, or appointed prior to the date of this Directors’
Report, and continuing as at the date of this Directors’ Report are set out below.
NAME
POSITION
Laurence Brindle
Non-Executive Chairman (Appointed 1 November 2013)
Andrew Catsoulis
Managing Director (Appointed 1 November 2013)
Anthony Keane
Non-Executive Director (Appointed 1 November 2013)
Howard Brenchley
Non-Executive Director (Appointed 21 November 2014)
Steven Leigh
Claire Fidler
Non-Executive Director (Appointed 21 November 2014)
Executive Director (Appointed 18 July 2017)
NATIONAL STORAGE FINANCIAL SERVICES LIMITED (NSFL)
NSFL was appointed as responsible entity on 10 November 2015. The Directors of NSFL in office during
the Reporting Period, or appointed prior to the date of this Directors’ Report, and continuing as at the
date of this Directors’ Report are set out below.
NAME
POSITION
Laurence Brindle
Non-Executive Chairman (appointed 18 July 2014)
Andrew Catsoulis
Managing Director (appointed 18 July 2014)
Anthony Keane
Non-Executive Director (appointed 18 July 2014)
Howard Brenchley
Non-Executive Director (appointed 8 September 2015)
Steven Leigh
Claire Fidler
Non-Executive Director (appointed 8 September 2015)
Executive Director (appointed 18 July 2017)
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
DIRECTORS’ QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
Boards of National Storage Holdings Limited and National Storage Financial Services Limited
Laurence Brindle, Independent Non-executive Chairman
BCom, BE (Hons), MBA
Laurence has extensive experience in funds management, finance and investment. Until 2009 he was
an executive with Queensland Investment Corporation (QIC). During his twenty-one years with QIC he
served in various senior positions including Head of Global Real Estate where he was responsible for a
portfolio of $9 billion. Laurence was also a long term member of QIC’s Investment Strategy Committee.
He provides advice to a number of investment institutions on real estate investment and funds
management matters. Laurence holds a Bachelor of Engineering (Honours) and a Bachelor of
Commerce from the University of Queensland, and a Master of Business Administration from Cass
Business School, London where he graduated with distinction. He is a former Chairman of the Shopping
Centre Council of Australia and a former director of Westfield Retail Trust and Scentre Group, which
owns, operates and develops Westfield shopping centres in Australia and New Zealand. Laurence is
also currently the Non-executive Chairman of the listed entity, Viva Energy REIT.
Laurence serves on the Audit and Risk Committees and is Chairman of the Nomination and
Remuneration Committees.
Andrew Catsoulis, Managing Director
BA, LLB, Grad Dip Proj Mgmt (Hons)
A founder of the National Storage business, Andrew has over 20 years of specific self-storage industry
expertise including in the areas of acquisitions, developments, integration and operation of ‘greenfield’
and developed self-storage centres. Andrew is a qualified solicitor who has been admitted to the
Supreme Court of Queensland. He has had extensive experience in the fields of finance, commercial
and property law during his tenure at major law firms both in Australia and overseas. He is also a
qualified project manager and has considerable property development experience both within the
storage industry and in broader markets. Andrew was instrumental in the successful acquisition and
integration of the original pre-existing Group portfolio and led the Company through the IPO and
planned and negotiated the acquisition of the Southern Cross portfolio in 2016.
Anthony Keane, Independent Non-executive Director
BSc (Maths), Grad Dip Corp Fin
Anthony is an experienced finance and business executive with an extensive background in banking
and business management. Prior to accepting his directorship with National Storage, Anthony held
numerous leadership roles with a major trading bank principally in business, corporate and institutional
banking. He is actively involved in the business community through Non-Executive Director and Advisory
Board roles, and finance advisory consultancies. He is a Director of Queensland Symphony Orchestra
Pty Ltd, Chairman of Oncore Group Holdings Pty Ltd, and a Director of ASX-listed EMvision Medical
Devices Ltd. Anthony has a Bachelor of Science (Mathematics) from University of Adelaide and a
Graduate Diploma in Corporate Finance from Swinburne. He is a Fellow of the Financial Services
Institute of Australasia, a Graduate of the Australian Institute of Company Directors and a Fellow of the
CEO Institute.
Anthony acts as Chairman of the Audit and Risk Committees and is a member of the Nomination and
Remuneration Committees.
Howard Brenchley, Independent Non-executive Director
BEc
Howard has over 30 years’ involvement in the Australian property industry, as an analyst, investor and
fund manager. He is now a professional company director and consultant to the property funds
industry. Howard co-founded Property Investment Research Pty Ltd (PIR) in 1989, which during the
1990’s was considered a leading researcher of both listed and unlisted property funds.
In 1998 Howard was instrumental in establishing the funds management business of APN Property Group
Limited. During this period he was responsible for the establishment and operations of a number of
funds investing both directly and indirectly in real estate.
Howard is currently a non-executive director of the ASX-listed APN Property Group Limited (APD) and is
also a non-executive director of APN Funds Management Limited, responsible entity for ASX-listed APN
Industria REIT (ADI) and APN Convenience Retail REIT (AQR). Until July 2017, APN Funds Management
Limited was also responsible entity for Generation Healthcare REIT (GHC).
Howard is a member of the Audit and Risk Committees.
Steven Leigh, Independent Non-executive Director
Grad Dip Proj Mgmt
Steven Leigh has more than 30 years’ experience in the real estate investment management and
development industry. He joined QIC Global Real Estate in 1991 and was a key member of the senior
executive team that acquired and created through development a portfolio of high-quality retail and
commercial assets in Australia, USA and the UK. Steven has had significant experience in the wholesale
funds management business through various market cycles and conditions and has a strong
background in retail, commercial and industrial property with a particular focus on shopping centre
acquisitions and redevelopments.
After time as the Managing Director of Trinity Limited, and later Head of Australia for LaSalle Investment
Management, Steven re-joined QIC as Managing Director of QIC Global Real Estate in 2012 where he
was responsible for the group’s $20bn plus property portfolio. Steven is a non-executive director of ASX-
listed company, Scentre Group Limited, and is a founding member of Male Champions of Change
established by the Property Council of Australia. He has qualifications in real estate valuation and
project management, and is an associate member of the Australian Property Institute.
Steven is a member of the Remuneration and Nomination Committees.
Claire Fidler, Executive Director
LLB (Hons), B Bus (Int), GAICD, FGIA
Claire was appointed an Executive Director in July 2017 and has been the principal company secretary
of National Storage since November 2015. She holds legal and international business qualifications and
is admitted as a solicitor of the Supreme Court of Queensland. Claire has over 10 years’ experience in
corporate and commercial law in private practice, having practiced in the litigation, resources and
corporate areas of two large law firms. Prior to joining National Storage, Claire was Corporate Counsel
and Company Secretary at Rio Tinto Coal Australia. During this time, in addition to providing legal
services to the business, she was responsible for the corporate governance and ASX compliance of one
of Rio Tinto’s listed subsidiaries as well as managing the corporate secretarial responsibilities of over 50
subsidiaries within the group and providing joint venture support. Claire has also worked in corporate
compliance with the Australian Securities and Investments Commission. Claire is a Graduate of the
Australian Institute of Company Directors and a Fellow of the Governance Institute of Australia and is a
non-executive director of Spacer Marketplaces Pty Limited.
DIRECTORSHIPS OF OTHER LISTED COMPANIES
Directorships of other listed companies held by current Directors in the three years immediately before
the end of the financial year are as follows:
NAME
Laurence Brindle
Howard Brenchley
Steven Leigh
Anthony Keane
COMPANY
Viva Energy REIT (ASX:VVR)
APN Property Group (ASX:APD)
APN Funds Management Limited,
responsible entity for:
APN Industria REIT (ASX:ADI)
APN Convenience Retail REIT (ASX:AQR)
And previously Generation Healthcare
REIT (ASX:GHC)
Scentre Group Limited (ASX: SCG)
EMvision Medical Devices Ltd (ASX:EMV)
PERIOD OF DIRECTORSHIP
10/07/2016 - Current
1998 - Current
03/12/2013 - Current
27/12/2017 - Current
12/08/2011 – July 2017
04/04/2019 – Current
11/12/2018 – Current
DIRECTORS’ INTERESTS IN NSR SECURITIES
As at the date of this Directors’ Report, the interests of the Directors (including indirect interests) in the
stapled securities of NSR were:
DIRECTOR
Laurence Brindle
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
DIRECT
-
-
473,935
-
-
-
INDIRECT
1,523,488
179,618
13,545,314
56,757
81,900
10,146
TOTAL
1,523,488
179,618
14,019,249
56,757
81,900
10,146
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
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39
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
DIRECTORS’ MEETINGS
The number of meetings of directors of NSH (including meetings of sub-committees of directors) held
during the Reporting Period and the number of meetings attended by each director were as follows:
DIRECTOR
BOARD
AUDIT
COMMITTEE
RISK
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
Laurence Brindle
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
Notes:
11 (11)
11 (11)
11 (11)
10 (11)
9 (11)
11 (11)
9 (9)
9 (9)
-
9 (9)
-
-
7 (7)
7 (7)
-
7 (7)
-
-
4 (4)
4 (4)
-
-
4 (4)
-
3 (3)
3 (3)
-
-
3 (3)
-
1. Figures in brackets indicate the number of meetings held whilst the director was in office or was
a member of the relevant Committee during the Reporting Period. Figures not in brackets
indicate the number of meetings or Committee meetings that the director attended.
2. Mr. Catsoulis and Ms Fidler attend Nomination, Remuneration, Risk and Audit Committee
3.
meetings by invitation.
The Company has an Investment Committee Charter to govern an Investment Committee.
The Board has determined that at this time, the full Board will act as the Investment Committee
and therefore there are no separate Investment Committee meetings noted.
COMPANY SECRETARY
NATIONAL STORAGE HOLDINGS LIMITED
NAME
APPOINTMENT DATE
Claire Fidler
26 November 2015
Patrick Rogers
1 November 2013
NATIONAL STORAGE FINANCIAL SERVICES LIMITED
NAME
APPOINTMENT DATE
Claire Fidler
26 November 2015
Patrick Rogers
18 July 2014
Claire Fidler
LLB (Hons), B Bus (Int), GAICD, FGIA
Refer to page 26
Patrick Rogers
LLB, B Bus – Accounting, FGIA
Patrick holds both legal and accounting qualifications and is admitted as a solicitor of the Supreme
Court of Queensland. He has practiced as a solicitor for over 20 years. During his time in private
practice, Patrick has had significant experience in corporate, property, commercial, taxation and
transactional work. Patrick also held senior finance roles and was the general counsel and company
secretary of the Super A-Mart Group for over 8 years. Patrick was appointed Chief Risk Officer of NSR in
June 2016 in addition to his role as General Counsel and a Company Secretary. Patrick is a Fellow of
the Governance Institute of Australia.
CORPORATE GOVERNANCE
NSH and The Responsible Entity have their own respective Boards and constitutions. The relationship
between NSH and the Responsible Entity is governed by a Cooperation Deed and Management
Agreement that allows NSH to provide key services to NSFL as Responsible Entity in exchange for a
monthly fee. These services include finance and administrative services, property management,
provision of staff and equipment.
The NSH and Responsible Entity Boards and NSH management are committed to achieving and
demonstrating to securityholders high standards of corporate governance and to ensure NSH acts in
the best interests of its securityholders balanced with its broader community obligations.
An important component of the NSR corporate governance structure is the ASX Corporate
Governance Principles and Recommendations (the “ASX Recommendations”). A statement of the
extent of NSR’s compliance with the ASX Recommendations can be viewed on the NSR website at
www.nationalstorageinvest.com.au. Full copies of all NSR governance policies and Charters can also
be found in the Governance section of the website. Additional information regarding governance at
NSR will be contained in the Sustainability Report, expected to be released in November 2019.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has agreed to indemnify all the Directors and executive officers of the Company and its
group entities to the extent permitted by law, for the amount of any liability, loss, cost, charge,
damage, expense or other liability suffered by the Director or executive officer as an officer of the
Company or group entity or as a result of having been an officer of the Company or any Group entity.
This includes any liability arising out of or in connection with any negligence, breach of duty, or breach
of trust (“Indemnity”).
However, the Indemnity does not extend to a claim in the nature of:
(a)
(b)
a challenge to any rejection of a Director’s claim by the provider of the Company’s insurance
cover; or
a cross-claim or a third-party claim for contribution or indemnity in, and results directly from, any
Proceedings in respect of which the Director has made a claim under the Indemnity.
Deeds of indemnity to effect the above have been formally entered into by the Company and each
of the Directors.
The Deeds of Indemnity require the Company to obtain a back to back indemnity to the Company
from the Responsible Entity out of the assets of the NSPT. This has been procured by the Company and
is in place. The back to back indemnity requires the Responsible Entity to indemnify the Company for
any liability under the Directors/officers indemnity to the extent that the Company is not able to meet
that obligation. The indemnity does not extend to any payment made or due as a result of a breach
by the Company of its obligations under a Director/officer indemnity or to any payment which the
Company makes voluntarily but is not due and payable under the terms of a Director/officer indemnity.
The total amount of insurance contract premiums paid for Directors and Officers insurance for NSR
(including subsidiary entities) during the Reporting Period was $794,392.
No insurance premiums are paid out of the assets of the NSPT in regards to insurance cover provided to
either the Responsible Entity or the auditors of the NSPT. So long as the officers of the Responsible Entity
act in accordance with the constitution and the law, the officers remain indemnified out of the assets
of the NSPT against losses incurred while acting on behalf of the NSPT. The auditors of the NSPT are in no
way indemnified out of the assets of the NSPT.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as
part of the terms of its audit engagement agreement against claims by third parties arising from the
audit (for an unspecified amount). No payment has been made or claim received by NSR to indemnify
Ernst & Young during the Reporting Period or up to the date of this report.
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REMUNERATION REPORT (AUDITED) – NSH GROUP
MESSAGE FROM THE BOARD
The NSH Board is committed to ensuring that its remuneration strategies are structured to support and
reinforce NSR’s overall business strategy, are consistent with the requirements of governance standards
and meet the expectations of investors and the community at large. By linking the Short Term Incentive
(“STI”) and Long Term Incentive (“LTI”) (at risk remuneration) of executive remuneration to the drivers
that support the business strategy including financial, governance, cultural and community measures,
the remuneration of executives is aligned with the creation of long-term value for securityholders. The
Board believes that the remuneration practices of NSR should fairly and responsibly reward Key
Management Personnel (“KMP”) having regard to their individual performance, the performance of
NSH and NSPT and the broader external environment as it relates to KMP reward.
The policy also aims to provide a platform for sustainable value creation for securityholders by
attracting and retaining quality KMP.
COVERAGE OF THIS REPORT
The following remuneration report has been prepared to provide information to NSR securityholders of
the remuneration details of the KMP of NSH involved in the management of NSH and the NSPT.
Directors of the Responsible Entity do not receive any remuneration from the Responsible Entity in
respect to their roles with the Responsible Entity. However, the director fees paid by NSR take into
account the complexity involved and additional duties in the operation of the Responsible Entity as a
subsidiary of NSH and as part of the consolidated governance group. The Responsible Entity receives a
fee for management services rendered.
This information has been audited as required by section 308(3C) of the Act.
KMP are defined as “those persons having authority and responsibility for planning, directing and
controlling the major activities of NSH, the Consolidated Group and the NSPT, directly or indirectly,
including any director (whether executive or otherwise) of NSH.”
Key management personnel covered in this report are as follows:
NON-EXECUTIVE AND EXECUTIVE DIRECTORS
Laurence Brindle - Chairman (non-executive)
Andrew Catsoulis – Managing Director (executive)
Anthony Keane - Director (non-executive)
Howard Brenchley - Director (non-executive)
Steven Leigh - Director (non-executive)
Claire Fidler – Director & Company Secretary (executive)
KEY MANAGEMENT PERSONNEL – SENIOR EXECUTIVES
Stuart Owen – Chief Financial Officer (CFO)
Patrick Rogers – General Counsel and Chief Risk Officer (GC/CRO)
Peter Greer – Chief Operating Officer (COO)*
* The COO role was made redundant effective 31 December 2017 with the responsibilities previously undertaken by the COO
allocated across the balance of the executive team.
REMUNERATION GOVERNANCE
REMUNERATION COMMITTEE AND USE OF REMUNERATION CONSULTANTS
The Remuneration Committees’ activities are governed by its Charter, a copy of which is available at
www.nationalstorageinvest.com.au.
The responsibilities of the Remuneration Committee include:
•
Formulate and recommend remuneration policies to apply to the Company’s Managing
Director, senior executives and non-executive Directors;
Formulate the specific remuneration packages for senior executives (including base salary, STIs,
LTIs and other contractual benefits);
Review contractual rights of termination for senior executives;
Review the appropriateness of the Company’s succession planning policies;
Review management’s recommendation of the total proposed STI and LTI awards;
Administering the STI and LTI awards; and
Review management recommendations regarding the remuneration framework for the
company as a whole.
•
•
•
•
•
•
The deliberations of the Remuneration Committee, including any recommendations made on
remuneration issues, are considered by the NSH Board. In making its recommendations to the Board,
the Remuneration Committee takes into account advice from independent remuneration advisers on
trends in remuneration for KMP. The independent remuneration advisors consider a range of factors
including the specific responsibilities assumed by KMP. An independent consultant, Crichton
Associates, was engaged during the previous Reporting Period to assess the directors and senior
executives’ current remuneration and remuneration structure and to provide a summary on market
practice relating to executive remuneration and remuneration structures. The advice did not constitute
a remuneration recommendation as defined in the Corporations Act Cth 2001. No fees were paid
during this financial year to any remuneration consultant.
The Remuneration Committee comprises three independent non-executive directors and is chaired by
Laurence Brindle. The Remuneration committee met 4 times during the Reporting Period.
PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
The objective of the remuneration policy is to ensure that Group remuneration is competitive, reflects
responsibilities of the officers and ensures that NSR is able to attract and retain executives and directors
with the skills and capabilities required to sustainably deliver NSR’s objectives.
The remuneration of directors and senior executives is reviewed at least annually by the Remuneration
Committee and the full NSH Board. External analysis and advice is sought by the Committee, where
considered appropriate, to ensure that the remuneration for directors and senior executives is
competitive in the market place and appropriate for the organisation.
The policy seeks to align executive reward with the achievement of strategic objectives and the
creation of value for securityholders. The primary tenets of the policy are:
•
•
•
•
•
•
•
Attract and retain high quality executives and to reward the capabilities and experience
brought to NSR by those executives.
Total reward for key executives is to have a significant “at risk” component.
The “at risk” component for key executives is to include both short term incentives (“STI”) and
long term incentives (“LTI”) which have a strong focus on quantitative and non-quantitative
measures.
Provide industry competitive rewards linked to securityholder returns.
Provide recognition for contribution, complexity of role and responsibilities of the officer.
Remuneration policies and structures must be clear and transparent both to the executives and
Board of NSR and to securityholders.
Promote and encourage a strong, responsible and positive culture amongst all NSR employees.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
42
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
43
42
DIRECTORS’ REPORT
43
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
TARGET MARKET POSITIONING
Total Annual Remuneration (TAR) is assessed against a broad comparator group and adjusted to
reflect factors such as the criticality and complexity of the role, experience, length of service and NSR’s
positioning within the group. The individual components of TAR, comprising Total Fixed Remuneration
(TFR), STI and LTI are individually assessed within this framework and structured to provide both short
term and long terms incentives to KMP that align with delivery of short term and long term value to
securityholders.
When selecting the comparator group the data is collected from a combination of sources including
audited Remuneration Reports of the selected companies. It provides an appropriate pool of data
that is statistically relevant. This data is then assessed against NSR’s current size, industry positioning and
other relevant factors to determine the appropriate information against which to assess NSR’s
remuneration framework.
NSR PERFORMANCE
NSR has had an outstanding year in the furthering of our continued growth and delivered in excess of
its growth objectives over the reporting period with the acquisition of 35 storage facilities and 4
development sites totalling in excess of $400 million. The acquisitions have been funded via the
successful completion of two capital raises providing $358 million undertaken by a combination of a
rights issue, institutional placements and a Security Purchase Plan. This continued the significant
development of the company and delivered sustained increases in earnings and assets under
management by the successful implementation of the Company’s strategy. This has been further
enhanced through the identification of development or expansion opportunities, of which NSR
currently has 13 projects in various stages of design and construction and has successfully completed 6
new developments during the Reporting Period.
The Company has established a track record of strong and consistent growth in underlying earnings(7),
net tangible assets (NTA) and total assets under management (AUM). Underlying earnings(1) per
stapled security have remained steady in the 12 months to 30 June 2019 as a result of the dilutionary
impact of the capital raisings and have increased since listing in December 2013 from 7.5cps to 9.6cps
in the year ended 30 June 2019, an increase of 28%. NTA has increased by 8% to $1.63 per stapled
security and AUM by 36% to $1.95 billion over the 12 months to 30 June 2019. These results have been
achieved through the disciplined management of NSR operations and the success of our multiple
revenue streams and acquisition strategy. The consistent and considered approach to driving
increased underlying earnings through a combination of organic growth from existing assets as well as
acquisitions has been instrumental in achieving this result.
Underlying Earnings
74.0
64.0
54.0
m
$
'
44.0
34.0
24.0
14.0
4.0
21%
62.4
12%
57%
45.7
51.4
25%
24.3
20%
29.1
19.5
CY14
FY15
FY16
FY17
FY18
FY19
7 Underlying earnings is a non-IFRS measure (unaudited). See page 32 of Directors’ Report for reconciliation of underlying earnings
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
44
Underlying Earnings Per Security
7.5
8.2
8.7
9.2
9.6
9.6
s
t
n
e
C
10.0
9.0
8.0
7.0
6.0
5.0
4.0
CY 14
FY15
FY16
FY17
FY18
FY19
Earnings per security for the FY19 year were impacted by the dilutionary effect of the $175 million
capital raise undertaken in August 2018.
NSR has maintained a distribution policy which targets distribution of 90% - 100% of underlying earnings8
to securityholders. During financial year 2019 NSR declared distributions totalling 9.6 cents per stapled
security, being at the upper end of the stated policy, delivering DPS yield of 5.5%, some 25% above that
of the ASX A-REIT 200 average of 4.4%.
FY19 Distribution Yield
A-REIT 200
NSR
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Source: Bloomberg. Market Data
NSR has delivered Total Shareholder Return “TSR” (a combination of share price growth and distributions
received by securityholders) over the past three years to 30 June 2019 in excess of 30%.
NSR listed in December 2013 with an issue price of $0.98. From that time to 30 June 2019 the stapled
security price has increased by 79% with the 28 June 2019 closing price of $1.75, with the market
capitalisation of the company increasing 343% to $1.35b as at 28 June 2019.
NSR Stapled Security Price
$
2.20
2.00
1.80
1.60
1.40
1.20
1,600
1,400
1,200
1,000
800
600
400
200
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Mkt Cap
Share Price
Security price performance over the period 1 July 2014 to 30 June 2019 has shown a 40% increase. This
compares to an increase of 50% for the ASX A-REIT 200 index and 23% for the broader ASX 200 Index
over the same period.
8 Underlying earnings is a non-IFRS measure (unaudited). See page 32 of Directors’ Report for reconciliation of underlying earnings
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
45
44
DIRECTORS’ REPORT
45
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
NSR REMUNERATION FRAMEWORK
The terms of employment for the KMP effective from 1 July 2019 period are set out in the table below.
NON-EXECUTIVE DIRECTORS
Fees and payments to non-executive directors reflect the demands which are made on, and the
responsibilities of, the non-executive directors and their contribution towards the performance of NSR as
well as the complexity of the National Storage Property Trust, National Storage Financial Services
Limited and the operating business. The remuneration policy seeks to ensure that NSR attracts and
retains directors with appropriate experience and qualifications to oversee the operations of NSR on
behalf of the securityholders.
The number of meetings of directors is shown on page 40 of this report.
The Constitution of NSH specifies that the amount of the remuneration of the non-executive directors is
a yearly sum not exceeding the sum from time to time determined by the Company in a general
meeting. Under the ASX Listing Rules, the total amount paid to all NSH non-executive directors for their
services must not exceed in aggregate in any financial year the amount fixed by NSH’s annual general
meeting. The amount approved by securityholders at the 2014 Annual General meeting is $900,000.
Annual NSH non-executive directors’ fees and Committee fees currently agreed to be paid by NSH
effective from 1 July 2019 are detailed below. Non-executive directors are not eligible to participate in
NSR’s incentive plan.
NON-EXECUTIVE DIRECTORS
BASE FEE
AUDIT AND RISK
COMMITTEE FEES
Laurence Brindlea.
Anthony Keaneb.
Steven Leigh
Howard Brenchley
$122,500
$122,500
$122,500
$25,000
-
$10,000
REMUNERATION
AND NOMINATION
COMMITTEE
FEES
TOTAL
$6,000
$6,000
-
$295,000
$153,500
$128,500
$132,500
a. Chairman and chair of the Remuneration and Nomination Committees and receives a single fee for all roles
b. Chair of the of Audit and Risk Committees
Where applicable, NSH non-executive directors’ fees include superannuation at the required statutory
rate.
KEY MANAGEMENT PERSONNEL - EXECUTIVE DIRECTOR AND SENIOR EXECUTIVES
All remuneration paid to executive directors and senior executives comprises four components:
• Base pay and benefits (including superannuation)
• Short-term performance incentives
• Long-term performance incentives
• Other remuneration (if applicable)
Base salary and benefits
The Managing Director and senior executives are paid a base salary that includes employer
contributions to superannuation funds. The remuneration of the Managing Director is reviewed annually
by the Remuneration Committee and Board. The remuneration of senior executives is reviewed
annually by the Managing Director who makes a recommendation to the Remuneration Committee.
The Committee then considers, but is not obliged to accept, the recommendation of the Managing
Director and takes whatever additional steps it determines appropriate to assess the senior executive
salaries.
There is no guarantee of base salary increases included in any executive director or senior executive
contracts or through the annual review process. The remuneration of all KMP was reviewed during the
year.
The Managing Director and senior executives can potentially be paid a bonus as part of their
remuneration. Whether such a bonus is paid and the amount of such a bonus is at the discretion of the
Remuneration Committee and the Board. Any bonuses paid would fall into the category of “other
remuneration”.
Service agreements
Remuneration and other terms of employment for the KMP senior executives are formalised in service
agreements. The service agreements specify the components of remuneration, benefits and notice
periods. Termination benefits are designed to fall within the limits relevant to the Corporations Act 2001
(Cth) such that they do not require securityholder approval. However, in addition, all executive
contracts make any such benefits subject to the Corporations Act 2001 (Cth), all other applicable laws
and where necessary securityholder approval. They also contain provisions which allow NSH to reduce
any such payments to ensure compliance with the law.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
46
NAME
TERM OF
AGREEMENT AND
NOTICE PERIOD
BASE SALARY
INCLUDING
SUPERANNUATION*
TERMINATION PAYMENTS
Andrew
Catsoulis
No fixed term
6 months
$1,075,000
• 6 months in lieu of notice if required by NSH.
• 6 months in the event of incapacity or illness.
Stuart Owen
No fixed term
6 months
$550,000
Patrick Rogers
No fixed term
6 months
$410,000
Claire Fidler
No fixed term
6 months
$320,000
• 6 months in lieu of notice if required by NSH.
• 6 months in the event of incapacity or illness.
• 1 months fixed remuneration plus 2 weeks for
each year of service – capped at 2 months
in the event of redundancy
• 6 months in lieu of notice if required by NSH.
• 6 months in the event of incapacity or illness.
• 1 months fixed remuneration plus 2 weeks for
each year of service – capped at 2 months
in the event of redundancy
• 6 months in lieu of notice if required by NSH.
• 6 months in the event of incapacity or illness.
• 1 months fixed remuneration plus 2 weeks for
each year of service – capped at 2 months
in the event of redundancy
* Base salaries are annual salaries for the financial year commencing 1 July 2019. They are reviewed annually by the
Remuneration Committee. Actual salaries paid in the year ended 30 June 2019 are shown on page 50.
The composition of TAR for the year ending 30 June 2020 for KMP is detailed in the table below.
ROLE
MD
CFO
GC/CRO
CoSec
TFR
55.00%
62.50%
71.90%
71.10%
STI
22.50%
18.75%
14.05%
14.45%
LTI
22.50%
18.75%
14.05%
14.45%
Short and long term incentives
KMP senior executives may also be entitled to participate in the STI and LTI programs that are in place
from time to time. The incentive programs are at the discretion of the Board and do not constitute an
entitlement under the executive service agreements of the respective KMP. Total incentive programs
are assessed against a broad comparator group and adjusted to reflect factors such as the criticality
of the role, experience, length of service and NSR’s positioning within the comparator group including
the ASX A-REIT 200 index. The Board continually assesses the structure of the incentive plans and has
determined that at this point in time payments made under these plans will be paid in cash. The Board
considers that there is a sufficient nexus between the cash remuneration and the equity based
payments given the link between security price performance and TSR.
An independent consultant was engaged during the previous Reporting Period to assess the
appropriateness of the remuneration structure currently in place and to provide advice on market
practice relating to executive remuneration structures. The advice did not constitute a remuneration
recommendation as defined in the Corporations Act Cth 2001. After considering all the relevant
information the Board has determined that the existing short and long term incentive program is
appropriate. The following incentive program is effective from 1 July 2019.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
47
46
DIRECTORS’ REPORT
47
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Short and long term incentives in place during reporting period:
The KMP were eligible for payment of STI’s and LTI’s for the financial year ended 30 June 2019 in
accordance with the incentive program outlined in the 2018 Annual Report. The program is the same
as that outlined above.
The STI’s and LTI’s were agreed with the KMP to reward them for performance against both financial
and operational objectives. The minimum payable was zero and maximum payable was $1,325,000 for
FY19 in aggregate for all KMP.
The STI and LTI hurdles included:
1. Underlying earnings(9) equal to or exceeding 9.6 cents per security
2.
TSR over the three year period to 30 June 2019 being greater than the 50th percentile of the
comparator group (ASX A-REIT 200)
3. Rolling three-year compound EPS growth exceeding 5% (June 2019 target 10.7cps)
The Board has assessed the performance of the Company and the KMP against the performance
criteria and have determined that the following STI and LTI’s have been earned and are payable,
inclusive of statutory Superannuation amounts, for the period 1 July 2018 to 30 June 2019.
INCENTIVE OFFICER
STI
LTI
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Patrick Rogers (GC/CRO)
Claire Fidler (CoSec)
Total
AMOUNT
$394,000
$148,875
$74,438
$37,219
$654,532
%
EARNED
99%
99%
99%
99%
99%
AMOUNT
$140,000
$52,500
$26,250
$13,125
$231,875
%
EARNED
35%
35%
35%
35%
35%
TOTAL
$534,000
$201,375
$100,688
$50,344
$886,407
The Board continues to asses both short-term and long-term incentives against a strict set of criteria and
believes that delivering superior results to security holders is required for KMP to achieve full incentive
payments.
Short Term Incentive (STI)
The STI contains four separate elements that will be assessed independently of the other elements. The
STI is an annual incentive and is to be paid in cash annually.
ELEMENT
Financial
Financial – Out
Performance*
Individual KPI’s
Strategic
PERCENTAGE
OF STI
CRITERIA
70%
10%
15%
15%
Achieve Underlying Earnings as determined by the Board
Exceeding Underlying Earnings targets
Individual performance criteria set in conjunction with MD / Board
Assessment in accordance with performance in the following
areas:
•
•
•
•
Implementation of major projects
Staff continuity
Risk Management
Innovation and enhancement of processes and procedures
Total
100% (Max)
* The Financial Out-Performance STI is only payable to the extent that the total STI payable does not exceed 100%.
The minimum STI payable is zero and maximum STI payable is $750,000 for FY20 in aggregate for all KMP.
Long Term Incentive (LTI)
The LTI criteria have been set so as to align the interests of KMP with those of securityholders. The LTI
contains two separate components which are independently tested:
ELEMENT
PERCENTAGE
OF LTI
CRITERIA
Total Shareholder
Return
Earnings Per Share
Growth
70%
30%
Minimum total shareholder return above the 50th percentile in
comparison to the ASX 200 A-REIT index. The LTI becomes payable
in accordance with the sliding scale below once the 50th percentile
hurdle is met.
Earnings per share growth of 5% per annum
For the purposes of determining the LTI attributable to Total Shareholder Return in any given period, the
following scale is applied:
NSR TSR v ASX 200 A-REIT INDEX
LTI PAYABLE
<50th percentile
50th percentile
>50th - <75th percentile
>= 75th percentile
0%
50%
Pro-rata from 50% - 100%
100%
The LTI is assessed over a rolling 3-year period and as such to be eligible for payment of the LTI, KMP
must have been employed by NSR for three years (or shorter period as determined by the Board). Post
three years’ service the LTI will be paid on an annual basis on the previous three years’ performance
against the pre-determined criteria.
The minimum LTI payable is zero and maximum LTI payable is $750,000 for FY20 in aggregate for all KMP.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
48
9 Underlying earnings is a non-IFRS measure (unaudited). See page 32 of Directors’ Report for reconciliation of underlying earnings
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
49
48
DIRECTORS’ REPORT
49
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
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D
SECURITY HOLDINGS OF DIRECTORS AND EXECUTIVES
The movement during the Reporting Period in the number of stapled securities, directly, indirectly or
beneficially held by Directors and KMP senior executives, including parties related to them, is as follows:
BALANCE
30 JUNE 2018
GRANTED AS
REMUNERATION
ON
EXERCISE
OF OPTIONS
ACQUIRED
BALANCE
30 JUNE 2019
Directors of NSH
Laurence Brindle
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
Executives of NSH
Stuart Owen
Patrick Rogers
Total
1,342,120
158,235
13,401,780
50,000
81,900
8,938
-
5,163
15,048,136
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
181,368
21,383
617,469
6,757
-
1,208
-
-
828,185
1,523,488
179,618
14,019,249
56,757
81,900
10,146
-
5,163
15,876,321
RELATED PARTY TRANSACTIONS
There were no other transactions with KMP and their related parties during the reporting period.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
51
0
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50
DIRECTORS’ REPORT
51
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
Acquisitions
On 26 July 2019, the Group purchased two storage centre investment properties from APSF for $42.6
million, and reached an agreement to purchase a third asset from APSF for $21.35 million on
completion of construction.
Capital Raise
On 2 July 2019, the Group issued 99,415,205 new stapled securities as a result of the $170 million equity
raising announced on 25 June 2019. The Group received proceeds for this raising on 28 June 2019.
On 30 July 2019, the Group raised $13.5 million from a non-underwritten security purchase plan. This
resulted in the issue of 7,917,735 new stapled securities.
ROUNDING
The amounts contained in this Directors’ Report and in the Financial Report have been rounded to the
nearest $1,000 (unless otherwise stated) under the option available under ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191. The Consolidated Group and NSPT Group are
entities to which the ASIC Instrument applies.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations
Act Cth 2001 is set out on page 55.
Non-audit services
The following non-audit services were provided by the entity's auditor, Ernst & Young Australia. The
Directors of NSH are satisfied that the provision of non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act Cth 2001. The nature and
scope of each type of non-audit service provided means that auditor independence was not
compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-
audit services conducted during the financial year:
Taxation services
1.
2. Assurance related
$143,250
$36,050
FEES PAID TO AND INTERESTS HELD IN THE NSPT BY THE RESPONSIBLE ENTITY OR ITS ASSOCIATES
Fees paid to the Responsible Entity and its associates out of NSPT property during the year are disclosed
in the Statement of Comprehensive Income and are detailed in Note 17 to the financial statements.
No fees were paid to the Directors of the Responsible Entity during the year out of NSPT.
INTERESTS IN THE NSPT
The movement in units on issue by the NSPT during the year is set out in Note 13 to the financial
statements.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
52
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
53
52
DIRECTORS’ REPORT
53
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
This Directors’ Report is made on 27 August 2019 in accordance with a resolution of the Board of
Directors of National Storage Holdings Limited and is signed for and on behalf of the Directors.
AUDITOR’S INDEPENDENCE DECLARATION
Laurence Brindle
Chairman
National Storage Holdings Limited
Brisbane
Andrew Catsoulis
Managing Director
National Storage Holdings Limited
Brisbane
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
54
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2019
55
54
DIRECTORS’ REPORT
55
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
FINANCIAL
STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2019
Revenue from rental income
Revenue from contracts with customers
Interest income
Total revenue
Employee expenses
Premises costs
Advertising and marketing
Insurance costs
Other operational expenses
Finance costs
Share of profit of joint ventures and associates
Fair value adjustments
Restructuring and other non-recurring costs
Notes
5
7
6
6
7
12
10.4
2019
$'000
2018
$'000
Restated
144,147
13,510
1,531
159,188
126,093
12,250
756
139,099
(28,744)
(19,141)
(4,243)
(2,607)
(11,891)
(33,747)
3,171
84,663
(1,538)
(24,746)
(16,064)
(5,313)
(1,800)
(10,910)
(28,912)
1,342
92,368
(1,310)
Profit before income tax
145,111
143,754
Income tax (expense)/ benefit
8
(271)
2,019
Profit after tax
144,840
145,773
Profit for the year attributable to:
Members of National Storage Holdings Limited
Non-controlling interest (unitholders of NSPT)
5,406
139,434
144,840
1,771
144,002
145,773
Basic and diluted earnings per stapled security (cents)
19
22.13
26.82
56
FINANCIAL STATEMENTS
57
57
NATIONAL STORAGE BUNDALL
The above Consolidated Statement of Profit or Loss should be read in conjunction with the
accompanying notes.
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
For the year ended 30 June 2019
Profit after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Net loss on cash flow hedges
Other comprehensive loss for the year, net of tax
2019
$'000
2018
$'000
144,840
145,773
858
(21,808)
(20,950)
(370)
(2,028)
(2,398)
Total comprehensive income for the year
123,890
143,375
Total comprehensive income for the year attributable to:
Members of National Storage Holdings Limited
Unitholders of National Storage Property Trust
5,391
118,499
123,890
1,748
141,627
143,375
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Notes
2019
$'000
2018
$'000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Investment properties
Investment in joint ventures and associates
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Finance lease liability
Deferred revenue
Income tax payable
Provisions
Distribution payable
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Finance lease liability
Provisions
Deferred tax liability
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
9.1
9.2
10.1
10.2
9.3
9.2
10.3
10.4
12
10.5
8
9.3
9.4
9.7
10.6
10.7
16
9.6
9.5
9.7
10.7
8
9.6
178,842
19,738
682
1,107
7,014
207,383
118
856
2,117,176
16,731
46,500
2,980
569
2,184,930
21,333
15,152
656
5,713
5,424
48,278
601
1,024
1,592,798
18,125
46,005
1,019
2,099
1,661,671
2,392,313
1,709,949
18,993
5,327
12,719
1,264
2,463
34,370
713
75,849
843,927
163,827
1,964
1,097
1,375
1,012,190
12,318
4,446
12,584
1,142
1,930
27,396
3
59,819
596,410
156,942
1,513
606
4,380
759,851
1,088,039
819,670
1,304,274
890,279
EQUITY
Non-controlling interest (unitholders of NSPT)
Contributed equity
Other reserves
Retained earnings
Total equity
13
14
1,188,147
100,143
(27)
16,011
1,304,274
813,558
66,128
(12)
10,605
890,279
The above Consolidated Statement of Other Comprehensive Income should be read in conjunction
with the accompanying notes.
The above Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes.
58
58
FINANCIAL STATEMENTS
59
59
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Attributable to securityholders of National Storage REIT
Contributed
equity
$'000
Notes
Retained
earnings
$'000
Other
reserves
$'000
Non-
controlling
interest
$'000
Total
equity
$'000
Balance at 1 July 2018
66,128
10,605
(12)
813,558
890,279
Profit for the year
Other comprehensive income
Total comprehensive income
14
-
-
-
5,406
-
5,406
-
(15)
(15)
139,434
(20,935)
118,499
144,840
(20,950)
123,890
Issue of stapled securities via
institutional and retail placements
Issue of stapled securities via
distribution reinvestment plans
Contract for future issue of equity
via institutional placement
Costs associated with issue
of stapled securities
Deferred tax on cost of stapled
securities
Distributions provided for or paid
13
16,498
13
1,549
13
16,451
(690)
207
-
34,015
8
16
-
-
-
-
-
-
-
-
-
-
-
-
-
-
158,927
175,425
14,628
16,177
153,549
170,000
(6,562)
(7,252)
-
(64,452)
256,090
207
(64,452)
290,105
Balance at 30 June 2019
100,143
16,011
(27)
1,188,147 1,304,274
Balance at 1 July 2017
59,145
8,834
11
664,627
732,617
Profit for the year
Other comprehensive income
Total comprehensive income
14
-
-
-
1,771
-
1,771
-
(23)
(23)
144,002
(2,375)
141,627
145,773
(2,398)
143,375
Issue of stapled securities via
institutional and retail placements
Issue of stapled securities via
distribution reinvestment plans
Costs associated with issue of stapled
securities
Deferred tax on cost of stapled
securities
Distributions provided for or paid
13
13
8
16
5,983
926
(166)
240
-
6,983
-
-
-
-
-
-
-
-
-
-
-
-
53,553
59,536
8,654
9,580
(1,476)
(1,642)
-
(53,427)
7,304
240
(53,427)
14,287
Notes
2019
$’000
2018
$’000
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Income tax paid
Net cash flows from operating activities
Investing activities
Purchase of investment properties
Proceeds on sale of investment property
Improvements to investment properties
Development of investment property under construction
Purchase of property, plant and equipment
Purchase of intangible assets
Distribution received from joint ventures and associates
Return of capital on sale of units in joint venture
Investments in associate and joint ventures
Net cash flows used in investing activities
Financing activities
Proceeds from issue of stapled securities
Transaction costs on issue of stapled securities
Distributions paid to stapled security holders
Proceeds from borrowings
Repayment of borrowings
Payments associated with resetting interest rate swaps
Financing provided to joint venture
Payment of finance lease liabilities
Interest and other finance costs paid
Net cash flows from financing activities
Net increase / (decrease) in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
9.1
10.3
12
12
12
13
15
9.5
17
9.1
174,782
(82,341)
2,024
(1,153)
93,312
(416,648)
26,961
(10,762)
(13,027)
(233)
(777)
5,064
3,000
(3,499)
(409,921)
345,425
(7,427)
(41,301)
398,876
(155,100)
(22,913)
(4,125)
(12,836)
(26,531)
474,068
157,459
50
21,333
178,842
150,094
(73,282)
265
(85)
76,992
(168,733)
6,820
(7,926)
(3,661)
(154)
(590)
1,016
-
(7,440)
(180,668)
59,536
(1,642)
(40,045)
195,222
(76,820)
-
-
(12,561)
(21,824)
101,866
(1,810)
(23)
23,166
21,333
Balance at 30 June 2018
66,128
10,605
(12)
813,558
890,279
The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
notes.
60
FINANCIAL STATEMENTS
60
61
61
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
1.
CORPORATE INFORMATION
National Storage REIT (“the Group” or “NSR”) is a joint quotation of National Storage Holdings Limited
(“NSH” or “the Company”) and its controlled entities (“NSH Group”) and National Storage Property Trust
(“NSPT” or “the Trust”) and its controlled entities (“NSPT Group”) on the Australian Securities Exchange
(“ASX”).
The Constitutions of NSH and NSPT ensure that, for so long as the two entities remain jointly quoted, the
number of shares in the Company and the number of units in the Trust shall be equal and that the
shareholders and unitholders be identical. Both the Company and the Responsible Entity (National
Storage Financial Services Limited) of the Trust must at all times act in the best interest of NSR. The
stapling arrangement will continue until either the winding up of the Company or the Trust, or termination
by either entity.
The financial report of NSR for the year ended 30 June 2019 was approved on 27 August 2019, in
accordance with a resolution of the Board of Directors of NSH.
The nature of the operations and principal activities of the Group are described in the Directors' Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”)
and the Corporations Act 2001. The financial statements have been prepared on a historical cost basis,
except for selected non-current assets, financial assets and financial liabilities for which the fair value
basis of accounting has been applied. NSH is a for-profit entity for the purpose of preparing the financial
statements.
The financial statements are presented in Australian Dollars (“AUD”) and all values are rounded to the
nearest thousand dollars ($’000) unless otherwise stated (refer to note 2(w)).
The accounting policies applied by NSR in these financial statements are the same as the 30 June 2018
financial statements except for the accounting policies impacted by new or amended accounting
standards detailed in this note.
The Group has elected to present only financial information relating to NSR within these financial
statements. A separate financial report for the NSPT Group has also been prepared for the year ended 30
June 2019, this is available at www.nationalstorageinvest.com.au.
Several other amendments and interpretations apply for the first time in these financial statements, but
do not have an impact on the financial report.
AASB 15 Revenue from Contracts with Customers
AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations
and applies to all revenue arising from contracts with customers, unless those contracts are in the scope
of other standards. The new standard establishes a five-step model to account for revenue arising from
contracts with customers. Under AASB 15, revenue is recognised at an amount that reflects the
consideration to which an entity expects to be entitled to, in exchange for transferring goods or services
to a customer. The standard requires entities to exercise judgement, taking into consideration all of the
relevant facts and circumstances when applying each step of the model to contracts with their
customers.
The Group adopted AASB 15 using the full retrospective method of adoption. The effect of the transition
on the current and comparative periods was not material.
Under the full retrospective method, the comparative period’s revenue classifications have been
restated to present revenue streams under the requirements of AASB 15. The effect of these changes is
limited to the reclassification of balances. There was no impact on the amount of revenue recognised.
The Group did not apply any of the practical expedients available under the full retrospective method.
The timing of revenue recognition in the year ended 30 June 2019 has not been materially impacted
following the adoption of AASB 15.
As required for the financial report information for the year ended 30 June 2019, the Group’s revenue is
disaggregated at the statement of profit or loss with the exception of Revenue from Contracts with
Customers which is disaggregated into categories in note 5 that depict how the nature, amount, timing
and uncertainty of revenue and cash flows are affected by economic factors.
Sale of goods and services
The Group’s contracts with customers for the sale of goods and services consist of one performance
obligation. The Group has concluded that revenue from the sale of goods and services should be
recognised at the point in time when control of the asset is transferred to the customer, generally on
delivery of the goods or service. Therefore, the adoption of AASB 15 has not had an impact on the timing
of the revenue recognition.
Agency fees and commissions
The Group’s contracts with customers for agency fees and commissions consist of one performance
obligation. The Group has concluded that revenue from agency fees and commissions should be
recognised at the point in time when the commission is generated and is receivable. Therefore, the
adoption of AASB 15 has not had an impact on the timing of revenue recognition.
(b) Compliance with IFRS
Design and development fees
The consolidated financial statements of the Group comply with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board.
(c) Changes in accounting policy, disclosures, standards and interpretations
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board that are relevant to its operations and effective for the current year.
The Group has applied, for the first time, AASB 15 Revenue from Contracts with Customers and AASB 9
Financial Instruments.
The Group’s design and development fees to customers consist of one performance obligation. The
Group has concluded that revenue from design and development fees is to be recognised over time
because the Group’s performance creates or enhances an asset that the customer controls. The
adoption of AASB 15 has not had an impact on the timing of revenue recognition.
62
FINANCIAL STATEMENTS
62
63
63
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Management fees
The Group’s contracts with customers for management fees consist of recurring performance obligations
to be recognised over the period of the management agreement. The adoption of AASB 15 has not had
an impact on the timing of revenue recognition.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement for
annual periods beginning on or after 1 January 2018, bringing together all three aspects of the
accounting for financial instruments: classification and measurement; impairment; and hedge
accounting.
With the exception of hedge accounting, which the Group applied prospectively, the Group has applied
AASB 9 retrospectively. The effect of initial application was not material. The classification and
measurement requirements of AASB 9 did not have a material impact on the Group.
The adoption of AASB 9 has changed the Group’s accounting for impairment losses for financial assets by
replacing AASB 139’s incurred loss approach with a forward-looking expected credit loss (“ECL”)
approach. AASB 9 requires the Group to recognise an allowance for ECL’s for all debt instruments not
held at fair value through profit or loss and contract assets. The adoption of the impairment aspect of the
new standard did not have a material impact on the Group.
The Group applied hedge accounting prospectively. At the date of initial application, all of the Group’s
existing hedging relationships were eligible to be treated as continuing hedging relationships. The
hedging requirements of AASB 9 did not have a material impact on the Group.
Other standards, amendments and interpretations
Several other amendments and interpretations apply for the first time in 2019, but do not have an impact
on the consolidated financial report of the Group. The Group has elected to early adopt AASB 2018-6
Amendments to Australian Accounting Standards – Definition of a Business. This Standard amends the
definition of a business in AASB 3 Business Combinations. The amendments clarify the minimum
requirements for a business, remove the assessment of whether market participants are capable of
replacing missing elements, add guidance to help entities assess whether an acquired process is
substantive, narrows the definitions of a business and of outputs, and introduces an optional fair value
concentration test. This amendment has been applied to the Group’s assessment on whether the
acquisition of storage centres should be accounted for under AASB 3 Business Combinations or AASB140
Investment Properties as a purchase of investment property (see note 3).
The Group has not early adopted any other standards.
Accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations relevant to the Group’s operations, that have
recently been issued or amended but are not yet effective or have not been adopted for the annual
reporting year ended 30 June 2019 are outlined in the following table:
Reference
Title
Summary and impact on Group
financial report
AASB 16
Leases
AASB 16 introduces a single lessee
accounting model and requires a lessee to
recognise assets and liabilities for all leases
with a term of more than 12 months with
the exception of low value assets. At the
commencement date of a lease, a lessee
will recognise a liability to make lease
Application
date of
standard
Application
date for
Group
1 January
2019
1 July 2019
Reference
Title
Summary and impact on Group
financial report
Application
date of
standard
Application
date for
Group
payments (i.e. the lease liability) and an
asset representing the right to use the
underlying asset during the lease term (i.e.
the right-of-use asset). The initial
measurement includes payments to be
made in optional periods if the lessee is
reasonably certain to exercise an option to
extend the lease, or not to exercise an
option to terminate the lease.
Lessees will be required to separately
recognise the interest expense on the
lease liability and the depreciation
expense on the right-of-use asset. Lessees
will be required to remeasure the lease
liability upon the occurrence of certain
events (e.g. a change in the lease term).
The lessee will generally recognise the
amount of the remeasurement of the lease
liability as an adjustment to the right-of-use
asset.
Lessors continue to classify leases as
operating or finance, with AASB 16’s
approach to lessor accounting
substantially unchanged from AASB 117.
The Group is conducting an assessment of
the impact of AASB 16 Leases, in relation to
the Group’s current commitments under
operating leases. Due to the relative size of
these commitments to the Group’s total
assets, adoption of AASB 16 is not expected
to have a material impact on the Group’s
financial statements. The Group’s leasehold
investment properties will continue to be
accounted for under AASB140 and will be
unaffected by the application of AASB 16.
The amendments clarify certain
requirements in:
• AASB 3 Business Combinations and
AASB 11 Joint Arrangements -
previously held interest in a joint
operation
• AASB 112 Income Taxes - income tax
consequences of payments on
financial instruments classified as
equity
• AASB 123 Borrowing Costs - borrowing
costs eligible for capitalisation.
The Interpretation clarifies the application
of the recognition and measurement
criteria in AASB 112 Income Taxes when
there is uncertainty over income tax
treatments. The Interpretation specifically
addresses:
1 January
2019
1 July 2019
1 January
2019
1 July 2019
AASB 2018-1
Annual
Improvements to
IFRS Standards
2015-2017 Cycle
Uncertainty over
Income Tax
Treatments
AASB
Interpretation
23, and
relevant
amending
standards
64
FINANCIAL STATEMENTS
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Reference
Title
Summary and impact on Group
financial report
Application
date of
standard
Application
date for
Group
• Whether an entity considers uncertain
•
tax treatments separately
The assumptions an entity makes
about the examination of tax
treatments by taxation authorities
• How an entity determines taxable
profit, tax bases, unused tax losses,
unused tax credits and tax rates
• How an entity considers changes in
facts and circumstances.
This Standard amends AASB 128
Investments in Associates and Joint
Ventures to clarify that an entity is required
to account for long-term interests in an
associate or joint venture, which in
substance form part of the net investment
in the associate or joint venture but to
which the equity method is not applied,
using AASB 9 Financial Instruments before
applying the loss allocation and
impairment requirements in AASB 128.
The revised Conceptual Framework
includes some new concepts, provides
updated definitions and recognition
criteria for assets and liabilities and clarifies
some important concepts including:
•
The objective of financial reporting
• Qualitative characteristics of useful
AASB 2017-7 Amendments to
Australian
Accounting
Standards –
Long-term
Interests in
Associates and
Joint Ventures
Conceptual
Framework for
Financial
Reporting and
relevant
amending
standards
AASB 2019-1
1 January
2019
1 July 2019
1 January
2020
1 July 2020
•
financial information
Financial statements and the reporting
entity
The elements of financial statements
Recognition and derecognition
•
•
• Measurement
•
Presentation and disclosure
• Concepts of capital and capital
maintenance
The changes to the Conceptual
Framework may affect the application of
IFRS in situations where no standard applies
to a particular transaction or event.
AASB 2014-10 amends AASB 10
Consolidated Financial Statements and
AASB 128 to address an inconsistency
between the requirements in AASB 10 and
those in AASB 128, in dealing with the sale
or contribution of assets between an
investor and its associate or joint venture.
AASB 2014-10 Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
1 January
2022
1 July 2022
Basis of consolidation
The Financial Report of NSR as at 30 June 2019
comprises the consolidated financial statements
of the NSH Group and the NSPT Group.
The financial statements for the Group are
prepared on the basis that NSH was the acquirer
of NSPT. The non-controlling interest is
attributable to stapled securityholders presented
separately in the statement of comprehensive
income and within equity in the statement of
financial position, separately from parent
shareholders’ equity.
Subsidiaries
Subsidiaries are all entities over which the Group
has control. The Group controls an entity when it
is exposed to, or has rights to, variable returns
from its involvement with the entity and has the
ability to affect those returns through the power
to direct the activities of the entity.
Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and
ceases when the Group loses control. The
acquisition method of accounting is used to
account for business combinations (see note 2
(g).
Intercompany transactions, balances and
unrealised gains on transactions between group
entities are eliminated. Unrealised losses are also
eliminated unless the transaction provides
evidence of an impairment of the transferred
asset. Accounting policies of all subsidiaries are
consistent with the policies adopted by the
Group.
The Group treats transactions with non-
controlling interests that do not result in a loss of
control as transactions with equity owners of the
Group. A change in ownership interest results in
an adjustment between the carrying amounts of
the controlling and non-controlling interests to
reflect their relative interests in the subsidiary.
Any difference between the amount of the
adjustment to non-controlling interests and any
consideration paid or received is recognised in
a separate reserve within equity attributable to
owners of the parent entity.
Associates
Associates are all entities over which the Group
has significant influence but not control or joint
control. This is generally the case where the
Group holds between 20% and 50% of the
voting rights. Investments in associates are
accounted for using the equity method. The
Group has associate investments that are
accounted for using the equity method.
Joint arrangements
Under AASB 11 Joint Arrangements, investments
in joint arrangements are classified as either joint
operations or joint ventures. The classification
depends on the contractual rights and
obligations of each investor, rather than the
legal structure of the joint arrangement.
During the year ended 30 June 2019 and 30
June 2018, the Group had an arrangement,
where the Group’s equity interest exceeded
50%. This was classified as a joint venture as all
parties are subject to a Securityholders
Agreement that has been contractually
structured such that the parties to the
agreement have equal representation on the
advisory board responsible for the overall
direction, supervision and decision making of
the entity.
Investments in joint ventures are accounted for
using the equity method.
Equity method
Under the equity method, the investment in an
associate or a joint venture is initially recognised
at cost. The carrying amount of the investment is
adjusted to recognise changes in the Group’s
share of net assets since the acquisition date.
Goodwill relating to the associate or joint
venture is included in the carrying amount of the
investment and is neither amortised nor
individually tested for impairment.
The statement of profit or loss reflects the
Group’s share of the results of operations of the
associate or joint venture. Any change in other
comprehensive income of those investees is
presented as part of the Group’s other
comprehensive income. In addition, when there
has been a change recognised directly in the
equity of the associate or joint venture, the
Group recognises its share of any changes,
when applicable, in the statement of changes
in equity. Unrealised gains and losses resulting
from transactions between the Group and the
associate or joint venture are eliminated to the
extent of the interest in the associate or joint
venture.
The aggregate of the Group’s share of profit or
loss from associates and joint ventures is shown
on the face of the consolidated statement of
profit or loss and represents profit or loss after tax
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FINANCIAL STATEMENTS
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
and non-controlling interests in the subsidiaries of
associates or joint ventures.
The financial statements of associates and joint
ventures are prepared for the same reporting
period as the Group. When necessary,
adjustments are made to bring the accounting
policies in line with those of the Group.
After application of the equity method, the
Group determines whether it is necessary to
recognise an impairment loss on its investment in
its associates or joint ventures. At each reporting
date, the Group determines whether there is
objective evidence that the investment in the
associate or joint venture is impaired. If there is
such evidence, the Group calculates the
amount of impairment as the difference
between the recoverable amount of the
associate or joint venture and its carrying value,
then recognises the loss as ‘Share of profit or loss
of joint ventures and associates’ in the
consolidated statement of profit or loss. Upon
loss of significant influence over an associate or
joint control over the joint venture, the Group
measures and recognises any retained
investment at its fair value. Any difference
between the carrying amount of the associate
or joint venture upon loss of significant influence
or joint control and the fair value of the retained
investment and proceeds from disposal is
recognised in profit or loss.
(d) Revenue recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow to
the Group and the revenue can be reliably
measured, regardless of when the payment is
received. Revenue is measured at the fair value
of the consideration received or receivable,
taking into account contractually defined terms
of payment and excluding taxes or duty. The
Group assesses its revenue arrangements
against specific criteria to determine if it is
acting as principal or agent. The specific
recognition criteria described below must also
be met before revenue is recognised.
Revenue from rental income
Revenue from rental income relating to the
provision of storage space and commercial
units is recognised less any amount
contractually refundable to customers over the
term of the general agreement. The value of
discounts offered to customers at the end of an
incentive period is recognised over the
expected rental period.
Revenue from contracts with customers
Sale of goods and services
Revenue from the sale of goods is recognised
on fulfilment of performance obligations. The
Group recognises revenue from sale of goods
and services when control of the asset is
transferred to the customer, generally on
delivery of the goods or service.
Agency fees and commission
The Group acts as an agent in the provision of
insurance services provided by a third party
insurance company to storage rental customers.
The Group recognises revenue at the point in
time when the commission is generated and is
receivable.
Design and development fees
Revenue from the design, planning, and
development management of the construction
of storage facilities is recognised over time, as
the Group’s performance creates or enhances
an asset the customer controls.
Management fees
The Group’s contracts with customers for
management fees are recognised over the
period of the management agreement, in line
with recurring performance obligations.
Interest income
Interest income is recognised using the effective
interest method. When a receivable is impaired,
the Group reduces the carrying amount to its
recoverable amount, being the estimated
future cash flow discounted at the original
effective interest rate of the instrument and
continues unwinding the discount as interest
income. Interest income on impaired loans is
recognised using the original effective interest
rate.
(e)
Taxes
The Group comprises taxable and non-taxable
entities. A liability for current and deferred tax
expense is only recognised in respect of taxable
entities that are subject to income tax.
NSPT is a ‘flow through’ entity for Australian
income tax purposes and has elected into the
Attribution Managed Investment Trust (“AMIT”)
rules from 1 July 2017, such that the determined
tax components of NSPT will be taxable in the
hands of unitholders on an attribution basis.
NSPT’s subsidiary National Storage New Zealand
Property Trust (“NSNZPT”) is an Australian
registered trust which owns investment property
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FINANCIAL STATEMENTS
in New Zealand. For New Zealand tax purposes
NSNZPT is classed as a unit trust and is subject to
New Zealand income tax.
Current income tax
Current income tax assets and liabilities are
measured at the amount expected to be
recovered or paid to the taxation authorities.
The tax rates and laws used to compute the
amount are those that are enacted or
substantively enacted at the reporting date in
the countries where the Group operates and
generates taxable income.
Current income tax relating to items recognised
directly in equity is recognised in equity and not
in the statement of profit or loss.
Management periodically evaluates tax
positions where the interpretation of applicable
tax regulations is subjective and establishes
provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability
method, on temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all
taxable temporary differences, except:
• When the deferred tax liability arises from
the initial recognition of goodwill or an asset
or liability in a transaction that is not a
business combination and, at the time of
the transaction, affects neither the
accounting profit nor taxable profit or loss.
•
In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interest in joint
arrangements, when the timing of the
reversal of temporary differences can be
controlled and it is probable that the
temporary difference will not reverse in the
foreseeable future.
The deferred tax liabilities in relation to freehold
investment property measured at fair value is
determined assuming the property value will be
recovered entirely through a sale.
Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and unused tax
losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will
be available against which the deductible
temporary differences, and the carry forward of
unused tax credits and unused tax losses can be
utilised, except:
• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability
that is not a business combination and, at
the time of the transaction, affects neither
the accounting profit nor taxable profit or
loss.
•
In respect of deductible temporary
differences associated with investments in
subsidiaries, associates and interests in joint
arrangements, deferred tax assets are
recognised only to the extent that it is
probable that the temporary difference will
not reverse in the foreseeable future and
taxable profit will be available against
which the temporary differences can be
utilised.
The carrying amount of deferred tax assets is
reviewed at each reporting date and adjusted
to the extent that it is probable that sufficient
taxable profit will be available to allow all or
part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in
the year when the asset is realised or the liability
is settled, based on the tax rates and laws that
have been enacted or substantially enacted at
the reporting date.
Deferred tax relating to items recognised
outside profit or loss is recognised outside profit
or loss. Deferred tax items are recognised in
correlation to the underlying transaction either
in other comprehensive income or directly in
equity.
Deferred tax assets and liabilities are offset if a
legally enforceable right to offset current tax
assets and liabilities exists and when the
deferred tax balances relate to the same
taxation authority.
Tax consolidation legislation
NSH and its wholly-owned Australian controlled
entities have implemented the tax consolidation
legislation. As a consequence, these entities are
taxed as a single entity and the deferred tax
assets and liabilities of these entities are set off in
the consolidated financial statements.
Accounting for the tax consolidation legislation
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
is only relevant for the individual financial
statements of the parent entity (head entity) in
the tax consolidated group, but not for the
consolidated financial statements.
Goods and services tax (“GST”)
Revenue, expenses, assets, and liabilities are
recognised net of the amount of GST, except:
• When the GST incurred on a sale or
purchase of assets is not payable or
recoverable from the taxation authority, in
which case the GST is recognised as part of
the revenue or expense item or part of the
cost of acquisition of the asset, as
applicable.
• When receivables and payables are stated
with the amount of GST included.
The net amount of GST recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the statement
of financial position. Commitments and
contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the
taxation authority.
Cash flows are included in the statement of
cash flows on a gross basis and the GST
component of cash flows arising from investing
and financing activities, which is recoverable
from, or payable to, the taxation authority is
classed as part of operating cash flows.
(f)
Foreign currencies
The Group’s consolidated financial statements
are presented in Australian dollars. For each
entity, the Group determines the functional
currency and items included in the financial
statements of each entity are measured using
that functional currency.
Transactions and balances
Transactions in foreign currencies are initially
recorded by the Group’s entities at their
respective functional currency spot rates at the
date the transaction first qualifies for
recognition. Monetary assets and liabilities
denominated in foreign currencies are
translated at the functional currency spot rates
of exchange at the reporting date.
Differences arising on settlement or translation of
monetary items are recognised in profit or loss
with the exception of monetary items that are
designated as part of the hedge of the Group’s
net investment of a foreign operation. These are
recognised in other comprehensive income until
the net investment is disposed of, at which time,
the cumulative amount is reclassified to profit or
loss. Tax charges and credits attributable to
exchange differences on those monetary items
are also recorded in other comprehensive
income.
Non-monetary items that are measured in terms
of historical cost in a foreign currency are
translated using the exchange rates at the
dates of the initial transactions. Non-monetary
items measured at fair value in a foreign
currency are translated using the exchange
rates at the date when the fair value is
determined.
The gain or loss arising on translation of non-
monetary items measured at fair value is treated
in line with the recognition of the gain or loss on
the change in fair value of the item (i.e.
translation differences on items whose fair value
gain or loss is recognised in other
comprehensive income or profit or loss are also
recognised in other comprehensive income or
profit or loss, respectively).
Group companies
On consolidation, the assets and liabilities of
foreign operations are translated into Australian
dollars at the rate of exchange prevailing at the
reporting date and their statements of profit or
loss are translated at exchange rates prevailing
at the dates of the transactions. The exchange
differences arising on translation for
consolidation are recognised in other
comprehensive income. On disposal of a
foreign operation, the component of other
comprehensive income relating to that
particular foreign operation is recognised in
profit or loss.
Any goodwill arising on the acquisition of a
foreign operation and any fair value
adjustments to the carrying amounts of assets
and liabilities arising on the acquisition are
treated as assets and liabilities of the foreign
operation and translated at the spot rate of
exchange at the reporting date.
(g) Business combinations and goodwill
The Group accounts for a transaction as a
business combination if it meets the definition
under AASB 3, which requires that the assets and
liabilities acquired constitute a business. A
business is defined as an integrated set of
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FINANCIAL STATEMENTS
activities and assets that is capable of being
conducted and managed for the purpose of
providing goods or services to customers,
generating investment income (such as
dividends or interest) or generating other
income from ordinary activities. In order to
determine an integrated set of activities, an
assessment of minimum business requirements
and what substantive processes have been
acquired, is applied.
As part of this assessment the Group has early
adopted the amendments to the definition of a
business under AASB 2018-6 and has applied the
optional fair value concentration test. If the
concentration test is passed, the set of activities
and assets is determined not to be a business
and therefore, the transaction is not accounted
for as a business combination but rather as an
asset acqusition.
Business combinations are accounted for using
the acquisition method. The cost of an
acquisition is measured as the aggregate of the
consideration transferred, which is measured at
acquisition date fair value, and the amount of
any non-controlling interests in the acquiree. For
each business combination, the Group elects
whether to measure the non-controlling interests
in the acquiree at fair value or at the
proportionate share of the acquiree’s
identifiable net assets. Acquisition related costs
are expensed as incurred and included in
business combination expenses in the statement
of profit or loss.
When the Group acquires a business, it assesses
the financial assets and liabilities assumed for
appropriate classification and designation in
accordance with the contractual terms,
economic circumstances and pertinent
conditions as at the acquisition date. This
includes the separation of embedded
derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred
by the acquirer will be recognised at fair value
at the acquisition date. Contingent
consideration classified as an asset or liability
that is a financial instrument and within the
scope of AASB 9 Financial Instruments, is
measured at fair value with the changes in fair
value recognised in the statement of profit or
loss.
Goodwill is initially measured at cost (being the
excess of the aggregate of the consideration
transferred and the amount recognised for non-
controlling interests and any previous interest
held over the net identifiable assets acquired
and liabilities assumed). If the fair value of the
net assets acquired is in excess of the
aggregate consideration transferred, the Group
re-assesses whether it has correctly identified all
of the assets acquired and all of the liabilities
assumed and reviews the procedures used to
measure the amounts to be recognised at the
acquisition date. If the reassessment still results in
an excess of the fair value of net assets
acquired over the aggregate consideration
transferred, then the gain is recognised in profit
or loss.
After initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the
Group’s cash-generating units that are
expected to benefit from the combination,
irrespective of whether other assets or liabilities
of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-
generating unit (“CGU”) and part of the
operation within that unit is disposed of, the
goodwill associated with the disposed operation
is included in the carrying amount of the
operation when determining the gain or loss on
disposal. Goodwill disposed in these
circumstances is measured based on the
relative values of the disposed operation and
the portion of the CGU retained.
(h)
Leases
The determination of whether an arrangement is
a lease is based on the substance of the
arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment
of the arrangement is dependent on the use of
a specific asset or assets and the arrangement
conveys a right to use the asset or assets, even if
that right is not explicitly specified in an
arrangement.
The Group leases properties which are classified
as investment properties (note 10.4). The Group
also leases office premises and items of plant
and equipment.
Leased investment properties and property,
plant and equipment
Leases of investment property and property,
plant and equipment, where the group as
lessee has substantially all the risks and rewards
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
of ownership, are classified as finance leases.
Leasehold investment property and property,
plant and equipment finance leases are
capitalised at the lease’s inception at the fair
value of the leased property.
The corresponding rental obligations, net of
finance charges, are included in other short-
term and long-term liabilities. Each lease
payment is allocated between the liability and
finance cost. The finance cost is charged to the
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 investment properties acquired
under finance leases are carried at fair value.
Changes in value are presented in profit or loss.
The property, plant and equipment acquired
under finance leases is depreciated over the
asset’s useful life or over the shorter of the asset’s
useful life and the lease term if there is no
reasonable certainty that the Group will obtain
ownership at the end of the lease term.
Operating leases
Leases in which a significant portion of the risks
and rewards of ownership are not transferred to
the Group as lessee are classified as operating
leases (note 18). 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.
Group as lessor
Lease income from operating leases where the
group is a lessor is recognised in revenue less
any amount contractually refundable to
customers over the term of lease.
(i)
Cash and cash equivalents
Cash and cash equivalents in the statement of
financial position comprise cash at bank and on
hand and term deposits that are readily
convertible to known amounts of cash and
which are subject to an insignificant risk of
change in value.
For the purposes of the statement of cash flows,
cash and cash equivalents consist of cash and
term deposits as defined above.
(j)
Inventories
Inventories are valued at the lower of cost and
net realisable value. Costs are assigned on a
first-in first-out basis. Net realisable value is the
estimated selling price in the ordinary course of
business, less the estimated costs necessary to
make the sale.
(k)
Financial assets
Initial recognition and measurement
At initial recognition, Financial assets are
classified as subsequently measured at
amortised cost, fair value through other
comprehensive income, or fair value through
profit or loss.
The classification of financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the
Group’s business model for managing them.
With the exception of trade receivables that do
not contain a significant financing component
or for which the Group has applied the practical
expedient, the Group initially measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit
or loss, transaction costs. Trade receivables that
do not contain a significant financing
component or for which the Group has applied
the practical expedient are measured at the
transaction price determined under AASB 15.
In order for a financial asset to be classified and
measured at amortised cost or fair value
through other comprehensive income, it needs
to give rise to cash flows that are ‘solely
payments of principal and interest (“SPPI”) on
the principal amount outstanding. This
assessment is referred to as the SPPI test and is
performed at an instrument level.
The Group’s business model for managing
financial assets refers to how it manages its
financial assets in order to generate cash flows.
The business model determines whether cash
flows will result from collecting contractual cash
flows, selling the financial assets, or both.
Subsequent measurement
Financial assets at amortised cost
The Group measures financial assets at
amortised cost if the financial asset is held with
the objective to collect contractual cash flows
and the contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest on
the principal amount outstanding.
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FINANCIAL STATEMENTS
Financial assets held at amortised cost are
subsequently measured using the effective
interest method and are subject to impairment.
Gains and losses are recognised in profit or loss
when the asset is derecognised, modified or
impaired. The Group’s financial assets at
amortised cost includes trade receivables, and
deposits.
Financial assets at fair value through other
comprehensive income
The Group measures debt instruments at fair
value through other comprehensive income if
the financial asset is held with the objective of
both holding to collect contractual cash flows
and sale, and the contractual terms of the
financial asset give rise on specified dates to
cash flows that are solely payments of principal
and interest on the principal amount
outstanding.
For debt instruments at fair value through other
comprehensive income, interest income, foreign
exchange revaluation and impairment losses or
reversals are recognised in the statement of
profit or loss and computed in the same manner
as for financial assets measured at amortised
cost. The remaining fair value changes are
recognised in other comprehensive income.
Upon derecognition, the cumulative fair value
change recognised in other comprehensive
income is recycled to profit or loss.
Financial assets at fair value through profit or loss
This category includes financial assets held for
trading and financial assets designated upon
initial recognition at fair value through profit or
loss. Financial assets are classified as held for
trading if they are acquired for the purpose of
selling or repurchasing in the near term.
Derivatives, including separated embedded
derivatives are also classified as held for trading
unless they are designated as effective hedging
instruments. Financial assets at fair value through
profit or loss are carried in the statement of
financial position at fair value with net changes
in fair value recognised in the statement of profit
or loss.
Derecognition
Financial assets are derecognised when the
rights to receive cash flows from the assets have
expired or have been transferred and the Group
has transferred substantially all the risks and
rewards of ownership or control of the asset.
Impairment
The adoption of AASB 9 has changed the
Group’s accounting for impairment losses for
financial assets by replacing AASB 139’s incurred
loss approach with a forward-looking expected
credit loss (“ECL”) approach.
The Group recognises an ECL for all debt
instruments not held at fair value through profit
or loss. ECLs are based on the difference
between the contractual cash flows due in
accordance with the contract and all the cash
flows that the Group expects to receive,
discounted at an approximation of the original
effective interest rate. The expected cash flows
will include cash flows from the sale of collateral
held or other credit enhancements that are
integral to the contractual terms.
ECLs are recognised in two stages. For credit
exposures for which there has not been a
significant increase in credit risk since initial
recognition, ECLs are provided for credit losses
that result from default events that are possible
within the next 12-months (a 12-month ECL). For
those credit exposures for which there has been
a significant increase in credit risk since initial
recognition, a loss allowance is required for
credit losses expected over the remaining life of
the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables and contract assets, the
Group applies a simplified approach in
calculating ECLs. Therefore, the Group does not
track changes in credit risk, but instead
recognises a loss allowance based on lifetime
ECLs at each reporting date. The Group assesses
this allowance based on its historical credit loss
experience, adjusted for forward-looking factors
specific to the debtors.
The Group considers a financial asset to be at
risk of default when contractual payments are
90 days past due. However, in certain cases, the
Group may also consider a financial asset to be
in default when internal or external information
indicates that the Group is unlikely to receive
the outstanding contractual amounts in full
before taking into account any credit
enhancements held by the Group. A financial
asset is written off when there is no reasonable
expectation of recovering the contractual cash
flows.
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(l)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognised initially at
fair value and, in the case of loans and
borrowings and payables, net of directly
attributable transaction costs. The Group’s
financial liabilities include trade and other
payables, loans and borrowings, and derivative
financial instruments.
Subsequent measurement
Financial liabilities at fair value through profit or
loss
This category includes financial liabilities held for
trading and financial liabilities designated upon
initial recognition as at fair value through profit
or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated at the initial date of recognition,
and only if the criteria in AASB 9 are satisfied. The
Group has not designated any financial liability
as at fair value through profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost. Any difference between the
proceeds (net of transaction costs) and the
redemption amount is recognised in profit or loss
over the period of the borrowings using the
effective interest method.
Fees paid on the establishment of loan facilities
are recognised as transaction costs of the loan
to the extent it is probable that some or all of
the facility will be drawn down. In this case, the
fee is deferred until the draw down occurs.
Where there is no evidence that it is probable
that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period
of the facility to which it relates.
Borrowing costs are recognised as an expense
when incurred unless they relate to the
acquisition, construction or production of a
qualifying asset or to upfront borrowing
establishment and arrangement costs, which
are deferred and amortised as an expense over
the life of the facility. Borrowing costs incurred
for the construction of any qualifying asset are
capitalised during the period of time that is
required to complete and prepare the asset for
its intended use or sale.
Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged,
cancelled or expired. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as the derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the statement of profit or loss.
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 reporting period.
(m) Derivative financial instruments and
hedge accounting
Initial recognition and measurement
The Group uses derivative financial instruments,
such as interest rate swaps, forward currency
exchange contracts and a net investment
hedge to hedge its foreign currency and interest
rate risks.
Derivatives are initially recognised at fair value
on the date a derivative contract is entered into
and are subsequently remeasured to their fair
value at the end of each reporting period.
The accounting for subsequent changes in fair
value depends on whether the derivative is
designated as a hedging instrument, and if so,
the nature of the item being hedged. The Group
designates certain derivatives as either:
• Hedges of the fair value of recognised
assets or liabilities or a firm commitment (fair
value hedges);
• Hedges of a particular risk associated with
the cash flows of recognised assets and
liabilities and highly probable forecast
transactions (cash flow hedges); or
• Hedges of a net investment in a foreign
operation (net investment hedges).
At the inception of a hedge relationship, the
Group formally designates and documents the
74
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FINANCIAL STATEMENTS
hedge relationship to which it wishes to apply
hedge accounting and the risk management
objective and strategy for undertaking the
hedge.
Before 1 July 2018, the documentation includes
identification of the hedging instrument, the
hedged item or transaction, the nature of the
risk being hedged and how the Group will assess
the effectiveness of changes in the hedging
instrument’s fair value in offsetting the exposure
to changes in the hedged item’s fair value or
cash attributable to the hedged risk. Such
hedges are expected to be highly effective in
achieving offsetting changes in fair value or
cash flows and are assessed on an ongoing
basis to determine that they actually have been
highly effective throughout the financial
reporting periods for which they were
designated.
From 1 July 2018, the documentation includes
identification of the hedging instrument, the
hedged item, the nature of the risk being
hedged and how the Group will assess whether
the hedging relationship meets the hedge
effectiveness requirements (including the
analysis of sources of hedge ineffectiveness and
how the hedge ratio is determined). A hedging
relationship qualifies for hedge accounting if it
meets all of the following effectiveness
requirements:
•
•
•
There is ‘an economic relationship’ between
the hedged item and the hedging
instrument.
The effect of credit risk does not ‘dominate
the value changes’ that result from that
economic relationship.
The hedge ratio of the hedging relationship
is the same as that resulting from the
quantity of the hedged item that the Group
actually hedges and the quantity of the
hedging instrument that the Group actually
uses to hedge that quantity of hedged item.
The fair values of various derivative financial
instruments used for hedging purposes are
disclosed in note 9.8. Movements in the hedging
reserve in equity are shown in note 14. The full
fair value of a hedging derivative is classified as
a non-current asset or liability when the
remaining maturity of the hedged item is more
than 12 months. It is classified as a current asset
or liability when the remaining maturity of the
hedged item is less than 12 months. Trading
derivatives are classified as a current asset or
liability.
Fair value hedge
Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are
recorded in profit or loss, together with any
changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk.
The gain or loss relating to the effective portion
of interest rate swaps hedging fixed rate
borrowings is recognised in profit or loss within
finance costs, together with changes in the fair
value of the hedged fixed rate borrowings
attributable to interest rate risk. The gain or loss
relating to the ineffective portion is recognised
in profit or loss within other income or other
expenses.
If the hedge no longer meets the criteria for
hedge accounting, the adjustment to the
carrying amount of a hedged item for which the
effective interest method is used is amortised to
profit or loss over the period to maturity using a
recalculated effective interest rate.
Cash flow hedge
The effective portion of changes in the fair value
of derivatives that are designated and qualify as
a cash flow hedge is recognised in other
comprehensive income and accumulated in
reserves in equity. The gain or loss relating to the
ineffective portion is recognised immediately in
profit or loss within finance income or finance
costs.
The Group uses forward currency contracts as
hedges of its exposure to foreign currency risk in
forecast transactions. The ineffective portion
relating to foreign currency contracts is
recognised as other operational expenses.
Before 1 July 2018, the Group designated all of
the forward contracts as hedging instruments.
Any gains or losses arising from changes in the
fair value of derivatives were taken directly to
profit or loss, except for the effective portion of
cash flow hedges, which were recognised in
other comprehensive income and later
reclassified to profit or loss when the hedge item
affects profit or loss.
From 1 July 2018, the Group designates only the
spot element of forward contracts as a hedging
instrument. The forward element is recognised in
other comprehensive income and
accumulated in a separate component of
equity under cost of hedging reserve.
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The amounts accumulated in other
comprehensive income are accounted for
depending on the nature of the underlying
hedged transaction.
The amount accumulated in other
comprehensive income is reclassified to profit or
loss as a reclassification adjustment in the same
period or periods during which the hedged cash
flows affect profit or loss.
If cash flow hedge accounting is discontinued,
the amount that has been accumulated in
other comprehensive income must remain in
accumulated other comprehensive income if
the hedged future cash flows are still expected
to occur. Otherwise, the amount will be
immediately reclassified to profit or loss as a
reclassification adjustment. After
discontinuation, once the hedged cash flow
occurs, any amount remaining in accumulated
other comprehensive income must be
accounted for depending on the nature of the
underlying transaction.
Hedges of a net investment
Hedges of a net investment in a foreign
operation, including a hedge of a monetary
item that is accounted for as part of the net
investment, are accounted for in a way similar
to cash flow hedges. Gains or losses on the
hedging instrument relating to the effective
portion of the hedge are recognised as other
comprehensive income while any gains or losses
relating to the ineffective portion are
recognised in the statement of profit or loss. On
disposal of the foreign operation, the
cumulative value of any such gains or losses
recorded in equity is transferred to the
statement of profit or loss.
(n) Assets held for sale
The Group classifies non-current assets and
disposal groups as held for sale if their carrying
amounts will be recovered principally through a
sale transaction rather than through continuing
use. Non-current assets and disposal groups
classified as held for sale are measured at the
lower of their carrying amount and fair value less
costs to sell. Costs to sell are the incremental
costs directly attributable to the disposal of an
asset (disposal group), excluding finance costs
and income tax expense.
The criteria for held for sale classification is met
only when the sale is highly probable and the
asset or disposal group is available for
immediate sale in its present condition. Actions
required to complete the sale should indicate
that it is unlikely that significant changes to the
sale will be made or that the decision to sell will
be withdrawn. Management must be
committed to the plan to sell the asset and the
sale expected to be completed within one year
from the date of the classification.
Property, plant and equipment and intangible
assets are not depreciated or amortised once
classified as held for sale. Assets and liabilities
classified as held for sale are presented
separately as current items in the statement of
financial position. A disposal group qualifies as a
discontinued operation if it is a component of
an entity that either has been disposed of, or is
classified as held for sale, and:
•
•
•
Represents a separate major line of business
or geographical area of operations;
Is part of a single co-ordinated plan to
dispose of a separate major line of business
or geographical area of operations, or;
Is a subsidiary acquired exclusively with a
view to resale.
Discontinued operations are excluded from the
results of continuing operations and are
presented as a single amount as profit or loss
after tax from discontinued operations in the
statement of profit or loss.
(o)
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. The carrying amount of any
component asset is derecognised when
replaced. All repairs and maintenance are
charged to profit or loss during the reporting
period in which they are incurred.
Depreciation is calculated on a straight-line
basis over the estimated useful life of the assets
as follows:
•
•
Leasehold improvements - remaining length
of lease term
Plant and equipment - 2.5 to 20 years
Each asset’s residual value and useful life is
reviewed, and adjusted if appropriate, at the
end of each reporting period.
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FINANCIAL STATEMENTS
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 2(r)).
Gains and losses on disposals are determined by
comparing proceeds with carrying amount.
These are included in profit or loss.
(p)
Investment properties
Freehold investment properties
Investment properties are measured initially at
cost, including transaction costs. Subsequent to
initial recognition, investment properties are
stated at fair value, which reflects market
conditions at the reporting date. Gains or losses
arising from changes in the fair values of
investment properties are included in profit or
loss in the period in which they arise.
Fair values are determined by a combination of
independent valuations and Director valuations.
The independent valuations are performed by
an accredited independent valuer. Investment
properties are independently valued on a
rotational basis, every three years, unless the
underlying financing requires or the Directors
determine a more frequent valuation cycle. For
properties subject to an independent valuation
report the Directors verify all major inputs to the
valuation and review the results with the
independent valuer. The Director valuations are
completed by the NSH Group Board. The
valuations are determined using the same
techniques and similar estimates to those
applied by the independent valuer.
Investment properties are derecognised either
when they have been disposed of or when they
are permanently withdrawn from use and no
future economic benefit is expected from their
disposal. The difference between the net
disposal proceeds and the carrying amount of
the asset is recognised in the statement of profit
or loss in the period of derecognition.
Transfers are made to or from investment
property only when there is a change in use. For
a transfer from investment property to property,
plant and equipment the deemed cost for
subsequent accounting is the fair value at the
date of change in use. If property, plant and
equipment becomes an investment property,
the Group accounts for such property in
accordance with the policy stated under
property, plant and equipment up to the date
of change in use.
Leasehold investment properties
The NSH Group, as lessee, has properties under
operating leases that, in accordance with AASB
140 Investment Property, qualify for treatment as
investment properties. Under this treatment, for
each property, the present value of the
minimum lease payments is determined and
carried as a lease liability as if it were a finance
lease and the fair value of the lease to the NSH
Group is recorded each period as investment
property under an operating lease.
Gains or losses arising from changes in the fair
values of investment properties are included in
profit or loss in the period in which they arise,
including the corresponding tax effect. Fair
values are determined using the same valuation
process applied to freehold investment
property.
Lease payments are allocated between the
principal component of the lease liability and
interest expense so as to achieve a constant
rate of interest on the remaining balance of the
liability. Interest expense is recognised in finance
costs in the consolidated statements of profit
and loss and within payment of finance lease
liabilities within the consolidated statements of
cash flows.
(q)
Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost. The cost
of intangible assets acquired in a business
combination is their fair value at the date of
acquisition. Following initial recognition,
intangible assets are carried at cost less any
accumulated amortisation and accumulated
impairment losses. Internally generated
intangibles, excluding capitalised development
costs, are not capitalised and the related
expenditure is reflected in profit or loss in the
period in which the expenditure is incurred.
The useful lives of intangible assets are assessed
as either finite or indefinite. Intangible assets with
finite lives are amortised over the useful
economic life and assessed for impairment
whenever there is an indication that the
intangible asset may be impaired. The
amortisation period and the amortisation
method for an intangible asset with a finite
useful life are reviewed at least at the end of
each reporting period.
Changes in the expected useful life or the
expected pattern of consumption of future
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
economic benefits embodied in the asset are
considered to modify the amortisation period or
method, as appropriate, and are treated as
changes in accounting estimates and adjusted
on a prospective basis. The amortisation
expense on intangible assets with finite lives is
recognised in the statement of profit or loss as
the expense category that is consistent with the
function of the intangible assets.
Intangible assets with indefinite useful lives, such
as goodwill, are not amortised but are tested for
impairment at each reporting period, either
individually or at the CGU level. The assessment
of indefinite life is reviewed at each reporting
period to determine whether the indefinite life
continues to be supportable. If not, the change
in useful life from indefinite to finite is made on a
prospective basis. Gains or losses arising from
derecognition of an intangible asset are
measured as the difference between the net
disposal proceeds and the carrying amount of
the asset and are recognised in the statement
of profit or loss when the asset is derecognised.
Research costs are expensed as incurred.
Development expenditure on an individual
project is recognised as an intangible asset
when the Group can demonstrate:
•
The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale;
Its intention to complete and its ability and
intention to use or sell the asset;
• How the asset will generate future
•
•
•
economic benefits;
The availability of resources to complete the
asset; and
The ability to measure reliably the
expenditure during development.
Following initial recognition of the development
expenditure as an asset, the asset is carried at
cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of
the asset begins when development is
complete and the asset is available for use. It is
amortised over the period of expected future
benefit. Amortisation is recorded in other
operational expenses. During the period of
development, the asset is tested for impairment
annually.
(r)
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. Other assets are tested for
impairment whenever events or changes in
circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less
costs of disposal 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 (CGU’s). Non-
financial assets other than goodwill that have
been impaired in previous periods are reviewed
for possible reversal of the impairment at the
end of each reporting period.
(s)
Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a
result of a past event, it is probable that an
outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation. When the Group
expects some or all of a provision to be
reimbursed, the reimbursement is recognised as
a separate asset, but only when the
reimbursement is virtually certain.
Provisions are measured at the present value of
management’s best estimate of the
expenditure required to settle the present
obligation at the end of the reporting period.
The discount rate used to determine the present
value is a pre-tax rate that reflects current
market assessments of the time value of money
and the risks specific to the liability. The increase
in the provision due to the passage of time is
recognised as interest expense.
In accordance with lease agreements, the
Group must restore the leased premises in a
number of leasehold premises to its original
condition at lease expiry. A provision has been
recognised for the obligation to remove
leasehold improvements from the leased
premises (note 10.7).
(t)
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-
monetary benefits, and accumulating annual
leave which are expected to be settled within
12 months of the reporting date are recognised
in respect of employees' services up to the
reporting date. They are measured at the
amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits obligations
The Group does not expect its long service
leave benefits to be settled wholly within 12
months of each reporting date. The Group
recognises a liability for long service leave
measured as the present value of expected
future payments to be made in respect of
services provided by employees up to the
reporting date using the projected unit credit
method. Consideration is given to previous
experience of employee departures, and
periods of service. Expected future payments
are discounted using market yields at the
reporting date on the applicable corporate
bonds with terms to maturity and currencies that
match, as closely as possible, the estimated
future cash outflows.
Retirement benefit obligations
All employees can direct the Group to make
contributions to a defined contribution plan of
their choice. Contributions to defined
contribution superannuation funds are
recognised as an expense as they become
payable. Prepaid contributions are recognised
as an asset to the extent that a cash refund or a
reduction in the future payments is available.
(u) Contributed equity
Issued and paid up capital is recognised at the
fair value of the consideration received by the
Group. Stapled securities are classified as equity.
Incremental costs directly attributable to the
issue of securities are shown in equity as a
deduction, net of tax, from the proceeds.
(v) Dividends and distributions to
securityholders
The Group recognises a liability to make cash or
non-cash distributions to equity holders when
the distribution is authorised and is no longer at
the discretion of the Company or the
Responsible Entity. A corresponding amount is
recognised directly in equity.
Non-cash distributions are measured at the fair
value of the assets to be distributed with fair
value re-measurement recognised directly in
equity. Any difference between the carrying
amount of the liability and the carrying amount
of the assets distributed is recognised in the
statement of profit or loss.
(w) Rounding of amounts
The Group is of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, relating to the
‘rounding off’ of amounts in the financial
statements. Amounts in the financial statements
have been rounded off to the nearest thousand
dollars, or in certain cases, the nearest dollar.
(x)
Parent entity financial information
The financial information for the parent entity,
NSH, disclosed in note 21 has been prepared on
the same basis as the consolidated financial
statements, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at
cost in the financial statements of NSH.
Tax consolidation legislation
NSH and its wholly-owned entities have
implemented the tax consolidation legislation.
The head entity, NSH, and the controlled entities
that are in the tax consolidated group, account
for their own current and deferred tax amounts.
These tax amounts are measured as if each
entity in the tax consolidated group continues to
be a stand-alone tax payer in its own right.
In addition to its own current and deferred tax
amounts, NSH also recognises the current tax
liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from controlled entities in the
tax consolidated group.
The entities have also entered into a tax funding
agreement under which the wholly-owned
entities fully compensate NSH for any current tax
payable assumed and are compensated by
NSH for any current tax receivable and deferred
tax assets relating to unused tax losses or unused
tax credits that are transferred to NSH under the
tax consolidation legislation. The funding
amounts are determined by reference to the
amounts recognised in the wholly-owned
entities' financial statements. The amounts
receivable/payable under the tax funding
agreement are due upon receipt of the funding
78
FINANCIAL STATEMENTS
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
advice from the head entity. The head entity
may also require payment of interim funding
amounts to assist with its obligations to pay tax
instalments.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as current amounts receivable
from or payable to other entities in the Group.
(y)
Fair value measurement
The Group measure financial instruments, such
as derivatives, and non-financial assets such as
investment properties, at fair value at each
balance sheet date.
Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an
orderly transaction between market participants
at the measurement date. The fair value
measurement is based on the presumption that
the transaction to sell the asset or transfer the
liability takes place either:
•
•
In the principal market for the asset or
liability; or
In the absence of a principal market, in the
most advantageous market for the asset or
liability.
The principal or the most advantageous market
must be accessible by the group.
The fair value of an asset or liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest. A fair value
measurement of a non-financial asset takes into
account a market participant's ability to
generate economic benefits by using the asset
in its highest and best use or by selling it to
another market participant.
The Group uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data is available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial
statements are categorised within the fair value
hierarchy, based on the lowest level input that is
significant to the fair value measurement as a
whole:
•
•
•
Level 1 — Quoted (unadjusted) market
prices in active markets for identical assets
or liabilities
Level 2 — Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable
Level 3 — Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is unobservable
For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Group determines whether transfers have
occurred between levels in the hierarchy by re-
assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.
For further details on fair value refer to notes 9.8
and 10.8.
3.
SIGNIFICANT ACCOUNTING
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the Group’s consolidated
financial statements requires management to
make judgements, estimates and assumptions
that affect the reported amounts of revenues,
expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure
of contingent assets and liabilities. Uncertainty
about these assumptions and estimates could
result in outcomes that require a material
adjustment to the carrying amount of the assets
or liabilities affected in future periods.
Judgements
In the process of applying the Group’s
accounting policies, management has made
the following judgements, which have a
significant effect on the amounts recognised in
the consolidated financial statements:
Significant judgements
Acquisition of storage centre assets
For the acquisition of storage centres, the
Group’s policy is to review the nature of the
transaction and assess if the transaction should
be accounted for under AASB 3 Business
Combinations or AASB 140 Investment Properties
as a purchase of investment property. The key
assessment is whether the transaction
constitutes a purchase of a ‘business’, if so it will
80
80
FINANCIAL STATEMENTS
be accounted for under AASB 3. If it is
determined that the transaction does not meet
this definition, the transaction is accounted for
as a purchase of an asset under AASB 140, as an
acquisition of a storage centre(s) held for rental
return and capital appreciation.
As described in note 2c, the Group has elected
to early adopt the amendments to a definition
of a business contained in AASB 2018-6. As well
as providing clarity on what is considered as a
business this amendment adds an operational
concentration test that permits a simplified
assessment of whether an acquired set of
activities and assets is not a business.
For the years ended 30 June 2019 and 30 June
2018, the Group has assessed that all of its
storage centre acquisitions do not meet the
definitions set out in AASB 3 and are therefore
accounted for as purchases of investment
property per AASB 140 as detailed in note 10.4.
Deferred income tax
Deferred tax assets are recognised by the
Group for unused tax losses to the extent that it
is probable that taxable profit will be available
against which the losses can be utilised.
Significant management judgement is required
to determine the amount of deferred tax assets
that can be recognised, based upon the likely
timing and the level of future taxable profits
together with future tax planning strategies.
The Group has tax losses which arose in Australia
and are available for offsetting against future
taxable profits of the NSH Australian tax group.
These losses are subject to the satisfaction of the
same business test and a reduced rate of
utilisation under the 'available fraction' rules. The
Group has assessed the expected utilisation
profile of these tax losses based upon
forecasted levels of future profits within the NSH
Australian tax consolidated group and have
recognised a deferred tax asset where it is
probable that there will be sufficient future
taxable profits in the Group against which this
deferred tax asset will be recovered. The Group
has not recognised a deferred tax asset on a
proportion of these losses where the future
utilisation of these is more uncertain.
Classification of joint arrangements
The NSPT Group holds a 25% interest in the
Bundall Storage Trust, and the NSH Group holds
a 25% interest in the Bundall Commercial Trust.
In each arrangement, investments are classified
as joint ventures as all parties are subject to a
Securityholders Agreement that has been
contractually structured such that the parties to
the agreement have equal representation on
the advisory board responsible for the overall
direction and supervision of each trust and
whereby, decisions about the relevant activities
require the unanimous consent of the parties
sharing control.
Estimates and assumptions
The key assumptions at the reporting date
concerning the future, and other key sources of
estimation uncertainty, that have significant risk
of causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year, are described below.
Assumptions and estimates are based on
parameters available when the consolidated
financial statements were prepared. Existing
circumstances and assumptions about the
future developments may change due to
market changes or circumstances arising
beyond the Group’s control. Such changes are
reflected in the assumptions when they occur.
Revaluation of investment properties
The Group carries its investment properties at fair
value, with changes in fair value being
recognised in the statement of profit or loss
under fair value adjustments. Fair values are
determined by a combination of independent
valuations assessed on a rotational basis and
Director valuations, determined using the same
techniques and similar estimates to those
applied by the independent valuer. The key
assumptions used to determine the fair value of
the properties and the sensitivity analyses are
provided in note 10.8.
Impairment of non-financial assets – intangibles
An impairment exists when the carrying value of
an asset or CGU exceeds its recoverable
amount, which is the higher of its fair value less
costs to sell and its value in use. The fair value
less costs to sell calculation is based on the fair
value of the Group’s stapled securities as listed
on the Australian Securities Exchange which has
been assessed as one CGU for goodwill
impairment assessment purposes, less costs of
disposal.
81
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
4.
SEGMENT INFORMATION
6.
EXPENSES AND OTHER INCOME
During the 2019 and 2018 financial years, the Group operated wholly within one business segment
being the operation and management of storage centres in Australia and New Zealand.
The Managing Director is the Group’s chief operating decision maker and monitors the operating results
on a portfolio wide basis. Monthly management reports are evaluated based upon the overall
performance of NSR consistent with the presentation within the consolidated financial statements. The
Group’s financing (including finance costs and finance income) are managed on a Group basis and
not allocated to operating segments.
The operating results presented in the statement of profit or loss represent the same segment
information as reported in internal management information.
Geographic information
Revenue from external customers
Australia
New Zealand
Total
2019
$'000
2018
$'000
144,621
13,036
157,657
129,431
8,912
138,343
The revenue information above excludes interest income and is based on the location of storage
centres.
Geographic information
Non-current operating assets
Australia
New Zealand
Total
2019
$'000
2018
$'000
1,881,060
239,518
2,120,578
1,503,585
92,288
1,595,873
Non-current assets for this purpose consists of property, plant and equipment, investment properties
and intangible assets (excluding goodwill).
The Group has no individual customer which represents greater than 10% of total revenue.
5.
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from contracts with customers
Sale of goods and services
Agency fees and commissions
Design and development fees
Management fees
Total revenue from contracts with customers
82
FINANCIAL STATEMENTS
2019
$'000
2018
$'000
Restated
5,137
2,330
3,544
2,499
13,510
6,846
2,100
2,465
839
12,250
82
Other operational expenses
Professional fees
Information technology costs
Cost of packaging and other products sold
Communications costs
Bank charges
Motor vehicle expenses
Depreciation of non-current assets
Amortisation of intangible assets
Travel and entertainment
Other
Total other operational expenses
Employee expenses
Wages and salaries
Post-employment benefits
Other employee costs
Total employee expenses
Notes
10.3
10.5
2019
$'000
2,025
1,904
1,839
1,688
965
771
395
584
630
1,090
11,891
22,069
1,955
4,720
28,744
2018
$'000
1,898
1,598
1,863
1,716
840
476
357
395
455
1,312
10,910
19,748
1,706
3,292
24,746
Minimum lease payments recognised as an operating
lease expense
687
609
Fair value adjustments
10.4
84,663
92,368
7.
INTEREST INCOME AND FINANCE COSTS
Interest income
Bank interest
Interest income from related parties
Total interest income
Finance costs
Interest on borrowings
Finance charges on finance leases
Unwinding of discount rates on provisions
Total finance costs
2019
$'000
797
734
1,531
2018
$'000
Restated
250
506
756
25,838
7,815
94
33,747
20,634
8,271
7
28,912
83
83
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
8.
INCOME TAX
NSPT is a ‘flow through’ entity for Australian income tax purposes and has elected into the AMIT rules
from 1 July 2017, such that the determined tax components of NSPT will be taxable in the hands of
unitholders on an attribution basis. NSPT’s subsidiary National Storage New Zealand Property Trust
(“NSNZPT”) is an Australian registered trust which owns investment property in New Zealand. For New
Zealand tax purposes NSNZPT is classed as a unit trust and is subject to New Zealand income tax at a
rate of 28%. Future distributions from NSNZPT to NSPT may have attached Foreign Income Tax Offsets,
which when subsequently distributed by NSPT may be claimed by an Australian tax resident,
depending on their personal circumstances.
The major components of income tax expense / (benefit) for the years ended 30 June 2019 and 30
June 2018 are:
Consolidated statement of profit or loss
Current tax
Deferred tax
Total income tax expense / (benefit)
Notes
2019
$'000
2018
$'000
1,762
(1,491)
271
1,365
(3,384)
(2,019)
Deferred tax relating to items recognised in other comprehensive
income during the year
Net loss on revaluation of cash flow hedges
14
(290)
(84)
Deferred tax relating to items recognised in statement of changes
in equity during the year
Cost of issuing share capital
(207)
(240)
Reconciliation of tax expense and accounting profit multiplied by
Australia’s domestic tax rate for 2019 and 2018:
Profit before tax
Deduct profit before tax from Trusts owning Australian property
Accounting profit before income tax
145,111
(136,002)
9,109
143,754
(141,015)
2,739
Tax at the Australian tax rate of 30% (2018 – 30%)
2,733
822
Non-assessable income
Adjustments in respect of previous years
Other non-deductible expenses
Recognition of previously unrecognised tax losses
Effect of lower tax rates in New Zealand
Income tax expense / (benefit)
(2,594)
59
498
(342)
(83)
271
(1,367)
(810)
66
(679)
(51)
(2,019)
Deferred tax benefit included in income tax benefit comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Movement of deferred tax asset on carry forward losses shown in
current tax expense
Exchange variations
Movement in deferred tax asset recognised in other comprehensive
income
Movement in deferred tax asset recognised in statement of changes
in equity
Total deferred tax benefit
Deferred tax assets and liabilities
Deferred tax assets
The balance comprises temporary differences attributable to:
Lease liability
Employee benefits
Accrued expenses
Carry forward losses
Formation expenses
Make good provisions
Revaluation of cash flow hedges
Revaluation of investment property assets
Other
Total deferred tax assets
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Prepayments
Other receivables
Intangibles
Revaluations of investment properties
Unrealised foreign exchange losses
Total deferred tax liabilities
Net deferred tax asset
Reconciliation to statement of financial position
Deferred tax asset
Deferred tax liability
Net deferred tax asset
2019
$'000
2018
$'000
(85,700)
84,230
(10,556)
7,301
(487)
(31)
(453)
-
290
84
207
(1,491)
240
(3,384)
274,105
669
506
1,509
402
434
425
2,970
20
281,040
190,473
528
349
1,644
200
333
130
1,634
49
195,340
12
520
305
278,276
44
279,157
12
232
-
194,677
6
194,927
1,883
413
2,980
(1,097)
1,883
1,019
(606)
413
The Group offsets tax assets and liabilities if it has a legally enforceable right to set off current tax assets
and current tax liabilities and the deferred tax asset and deferred tax liabilities relate to income taxes
levied by the same tax authority. The deferred tax balances above reflect NSH Group and NSNZPT’s tax
obligations and in some instances are calculated with reference to the tax base of balances that are
eliminated on group consolidation but still have a tax impact on a taxpayer basis.
The Group has total gross tax losses which arose in Australia of $9,323,545 (2018: $10,947,456). These
losses are available for offsetting against future taxable profits of the NSH Australian tax group. These
losses are subject to the satisfaction of the same business test and a reduced rate of utilisation under
the 'available fraction' rules. The Group has assessed the expected utilisation profile of these tax losses
and has recognised a deferred tax asset of $1,499,318 (2018: $1,644,002) on NSH Australian group tax
losses of $4,997,727 (2018: $5,480,006) on the basis it is probable that there will be sufficient future
taxable profits in the Group against which this deferred tax asset will be recovered (see note 3).
84
FINANCIAL STATEMENTS
84
85
85
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
The NSH Australian group also has gross tax losses of $4,325,818 (2018: $5,467,450) for which a deferred
tax asset has not been recognised, as the future utilisation of these losses is more uncertain.
Cash flow reconciliation of net profit after tax to net cash flows from operations
9.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
This note provides information about the Group’s current and non-current financial instruments
including:
•
•
•
An overview of all financial instruments held by the Group;
Specific information about each type of financial instrument; and
Information about determining the fair value of the instruments, including areas of judgement,
estimates and other assumptions.
The Group hold the following financial instruments:
Financial assets
At amortised cost
Cash and cash equivalents
Trade and other receivables
Deposits
Measured at fair value
Derivatives used for hedging – at fair value through other
comprehensive income
Total financial assets
Financial liabilities
At amortised cost
Trade and other payables
Borrowings
Finance leases
Measured at fair value
Derivatives used for hedging
Notes
2019
$'000
2018
$'000
9.1
9.2
9.3
178,842
19,856
1,178
199,876
21,333
15,753
1,074
38,160
9.3
569
2,186
200,445
40,346
9.4
9.5
9.7
18,993
847,838
169,154
1,035,985
12,318
600,348
161,388
774,054
9.6
2,088
4,383
Total financial liabilities
1,038,073
778,437
The Group’s approach to financial risk management is discussed in note 15. The maximum exposure to
credit risk at the end of the reporting period is the carrying amount of each class of financial asset
mentioned above.
All derivatives have been designated as cash flow hedges. They are presented as current assets or
liabilities if they are expected to be settled within 12 months after the end of the reporting period.
The derivatives above relate to interest rate swaps and forward currency exchange contracts held by
the Group, for further details see note 9.5.
9.1.
Cash and cash equivalents
Current assets
Cash on hand
Cash at bank
Total cash and cash equivalents
86
FINANCIAL STATEMENTS
2019
$'000
2018
$'000
50
178,792
178,842
46
21,287
21,333
86
Profit after income tax
Income tax expense / (benefit)
Profit before tax
Adjustments to reconcile profit before tax to net cash flows:
Depreciation
Amortisation of intangible assets
Fair value adjustments
Share of profit of joint ventures and associates
Loss on disposal of property, plant and equipment
Finance income
Finance costs
Changes in operating assets and liabilities:
Decrease / (increase) in receivables
Increase in inventories
Increase in other assets
Increase in payables
Increase in deferred revenue
Increase / (decrease) in provisions
Cash flows from operating activities
Interest received
Income tax paid
2019
$'000
2018
$'000
144,840
271
145,111
145,773
(2,019)
143,754
395
584
(84,663)
(3,171)
8
(1,532)
33,746
357
395
(92,368)
(1,342)
-
(757)
28,912
1,119
(26)
(1,780)
2,128
135
387
92,441
2,024
(1,153)
(3,579)
(56)
(1,472)
2,600
999
(631)
76,812
265
(85)
Net cash flows from operating activities
93,312
76,992
9.2.
Trade and other receivables
Current
Trade receivables
Allowance for expected credit losses
Other receivables
Receivables from related parties
Non-current
Other receivables
Total current and non-current
Notes
17
2019
$'000
3,770
(135)
3,635
4,223
11,880
19,738
2018
$'000
3,054
(23)
3,031
4,082
8,039
15,152
118
601
19,856
15,753
Classification as trade and other receivables
Trade receivables are amounts due from customers for rental income, goods sold or services performed
in the ordinary course of business. Loans and other receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. If collection is expected in
one year or less, they are classified as current assets. If not, they are presented as non-current assets.
87
87
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
The allowance for expected credit losses represents an estimate of receivables that are not considered
to be recoverable. For the year ended 30 June 2019 the Group has recognised an expected loss
provision following the adoption of AASB 9 Financial Instruments. The Group recognises a loss allowance
based on lifetime expected credit losses at each reporting date. The Group assesses this allowance
based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors. At 30 June 2018, the Group recognised a provision for trade receivables relating to receivables
acquired on the purchase of investment properties where there are specific risks around recoverability.
See below for the movements in the allowance for expected credit losses in the Group.
See note 17 for terms and conditions relating to related party receivables.
9.4.
Trade and other payables
Current
Trade payables
Accrued expenses
GST and employment taxes payable
Other payables
Total
2019
$'000
3,486
6,706
2,644
6,157
18,993
2018
$'000
4,184
2,717
1,256
4,161
12,318
At 1 July
Charge for the year
Recognised on acquisition of investment properties
Utilised
At 30 June
The age of trade receivables not impaired was as follows:
0 to 3 months
3 to 6 months
Over 6 months
2019
$'000
23
165
-
(53)
135
2019
$'000
3,534
82
19
3,635
2018
$'000
42
-
79
(98)
23
2018
$'000
2,590
312
129
3,031
The carrying amounts of current receivables are assumed to be the same as their fair values, due to
their short-term nature. The fair value of non-current receivables approximates carrying value.
9.3. Other assets
Current
Deposits
Prepayments
Financial assets (derivatives)
Non-current
Financial assets (derivatives)
Total current and non-current
For details on the classification of financial instruments see note 9.
2019
$'000
1,178
5,836
-
7,014
2018
$'000
1,074
4,263
87
5,424
569
2,099
7,583
7,523
Trade payables are unsecured and are usually paid within 30 days of recognition. Other payables and
accruals are paid when amounts fall due. The carrying amounts of trade and other payables are
assumed to be the same as their fair values, due to their short-term nature.
9.5.
Borrowings
Non-current
Bank finance facility
Non-amortised borrowing costs
Total borrowings
2019
$'000
2018
$'000
847,838
(3,911)
843,927
600,348
(3,938)
596,410
The Group has non-current borrowing facilities denominated in Australian Dollars (“AUD”) and New
Zealand Dollars (“NZD”). All facilities are interest only facilities with any drawn balances payable at
maturity. Drawn amounts and facility limits are as follows:
Bank finance facilities (AUD)
Drawn amount
Facility limit
Bank finance facilities (NZD)
Drawn amount
Facility limit
AUD equivalent of NZD facilities
Drawn amount
Facility limit
2019
$'000
2018
$'000
663,800
680,000
520,300
605,000
192,250
196,750
87,500
121,000
184,038
188,346
80,048
110,696
The major terms of these agreements are as follows:
• Maturity dates on the facilities range from 23 July 2020 to 23 December 2026 (2018: 23 July 2019 to
23 December 2026).
The interest rate applied is the bank bill rate plus a margin depending on the gearing ratio.
Security has been granted over the Group's freehold investment properties.
•
•
The Group has a bank overdraft facility with a limit of $3m that was undrawn at 30 June 2019 and 30
June 2018. During the year ended 30 June 2019, the Group converted an existing AUD facility of $25m
into an NZD facility of $25.75m, refinanced part of the existing debt facilities, and increased its club
banking facilities by AUD $100m and NZD $50m (year ended 30 June 2018 facilities increased by $150m
AUD and $25m NZD).
88
FINANCIAL STATEMENTS
88
89
89
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
The Group have complied with the financial covenants of their borrowing facilities during the 2019 and
2018 reporting periods (see note 16). The fair value of borrowings approximates carrying value. Details
of the exposure to risk arising from current and non-current borrowings are set out in note 15.
Interest rate swaps
The Group has the following interest rate swaps in place as at the end of the reporting period:
9.7.
Finance leases
The Group has finance leases for investment properties. These leases have terms of renewal but no
purchase options. Renewals are at the option of the specific entity that holds the lease. Future
minimum lease payments under finance lease contracts together with the present value of the net
minimum lease payments are as follows:
Interest rate swaps (AUD) at face value
Current interest rate swaps
Future interest rate swaps
Interest rate swaps (NZD) at face value
Current interest rate swaps
Future interest rate swaps
AUD equivalent of NZD interest rate swaps
Current interest rate swaps
Future interest rate swaps
2019
$'000
2018
$'000
400,000
275,000
270,000
400,000
73,500
50,000
53,500
100,000
70,361
47,864
48,944
91,485
Future interest rate swaps in place at the end of the reporting period have maturity dates ranging from
23 September 2019 to 23 September 2026 (2018: 24 September 2018 to 23 September 2026).
On 24 June 2019, the Group reset the interest rates associated with AUD denominated interest rate
swaps. This resulted in a cash outflow of $22.9m which reduced the Group’s financial liability presented
in note 9.8. The cumulative change in fair value of these hedging instruments is carried in a separate
reserve in equity (cash flow hedge reserve of NSPT presented within non-controlling interest in the
Group’s consolidated statement of changes in equity). This balance will be recycled from the hedge
reserve to finance costs in the statement of profit and loss in future reporting periods corresponding to
when the underlying hedged item impacts profit or loss. For the year ended 30 June 2019, $0.1m has
been recognised in finance costs relating to this item.
Hedge of net investments in foreign operations
Included in borrowings at 30 June 2019 was NZD $47.9m (AUD $45.9m) which has been designated as a
hedge of the net investments against the value of the New Zealand tangible assets (2018: NZD $27.2m,
(AUD $24.9m)). This borrowing is being used to hedge the Group’s exposure to the NZD foreign
exchange risk on these investments. Gains or losses on the retranslation of this borrowing are transferred
to other comprehensive income to offset any gains or losses on translation of the net investments in the
subsidiaries. There is no hedge ineffectiveness in the years ended 30 June 2019 or 30 June 2018
recognised in the statement of profit or loss.
9.6. Other liabilities
Current financial liabilities
Interest rate swaps
Forward currency exchange contract
Non-current financial liabilities
Interest rate swaps
Total current and non-current
For details on the classification of financial instruments see note 9.
Notes
2019
$’000
2018
$’000
9.8
9.8
239
474
713
3
-
3
9.8
1,375
4,380
2,088
4,383
90
90
FINANCIAL STATEMENTS
Consolidated Group
Within one year
After one but not more than five years
More than five years
Minimum lease payments
Future finance charges
Total
2019
2018
Minimum
payments
$'000
13,218
53,552
237,618
304,388
(135,234)
169,154
Present
value of
payments
$'000
5,327
25,234
138,593
169,154
-
169,154
Minimum
payments
$'000
12,321
51,716
228,857
292,894
(131,506)
161,388
Present
value of
payments
$'000
4,446
23,321
133,621
161,388
-
161,388
9.8.
Financial instruments fair value measurement
Fair value hierarchy
This note explains the judgements and estimates made in determining the fair values of the financial
instruments recognised in the financial statements, as detailed in notes 9.1 to 9.7. To provide an
indication about the reliability of the inputs used in determining fair value, financial instruments are
classified into the following three levels.
Level 1: 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 end
of the reporting period. The quoted market price used for any financial assets held is the current bid
price. These instruments are included in level 1.
Level 2: 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 which maximise the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
Specific fair valuation techniques used to determine fair values include:
•
•
The fair value of interest rate swaps is calculated as the present value of the estimated future cash
flows based on observable yield curves, adjusted for counterparty or own credit risk.
The fair value of forward currency exchange contracts is based on market observable inputs to
obtain a present value. Incorporated into the calculation are various inputs including the credit
quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective
currencies, currency basis spreads between the respective currencies, interest rate curves and
forward rate curves of the underlying commodity.
The resulting fair value estimates for interest rate swaps are included in level 2.
91
91
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Notes
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
At 30 June 2019
Derivatives used for hedging –
forward currency exchange contract
Current financial liabilities
Derivatives used for hedging - interest
rate swaps
Non-current financial assets
Current financial liabilities
Non-current financial liabilities
At 30 June 2018
Derivatives used for hedging - Interest
rate swaps
Current financial assets
Non-current financial assets
Current financial liabilities
Non-current financial liabilities
9.6
9.3
9.6
9.6
9.3
9.3
9.6
9.6
-
-
-
-
-
-
-
-
-
-
(474)
569
(239)
(1,375)
(1,045)
87
2,099
(3)
(4,380)
(2,197)
-
-
-
-
-
-
-
-
-
-
(474)
569
(239)
(1,375)
(1,045)
87
2,099
(3)
(4,380)
(2,197)
10.2. Assets held for sale
Current assets
Opening balance at 1 July
Item reclassified from freehold investment property
Item reclassified to freehold investment property
Disposals during the year
Total assets held for sale
Notes
10.4
10.4
2019
$'000
2018
$'000
5,713
2,068
(5,713)
(961)
1,107
5,713
4,400
-
(4,400)
5,713
On 21 December 2018, the Group entered into an agreement for the divestment of a component of
freehold investment property in Melbourne, Victoria for $1m. This has been included within fair value
adjustments in the statement of profit or loss. This transaction settled on 15 January 2019.
On 28 June 2019, the Group entered into an agreement for the sale of commercial investment property
in Dunedin, New Zealand for NZD $1.3m less cost of sale of NZD $0.1m (AUD $1.2m less cost of sale of
$0.1m). This has resulted in an unrealised gain of NZD $1.2m (AUD $1.1m) on the asset’s carrying value.
This has been included within fair value adjustments in the statement of profit or loss.
As at 1 July 2018, the Group held a contractual agreement for the sale of the land and buildings of the
Croydon self-storage centre for $5.8m, less cost of sale of $0.1m. This resulted in this asset being
classified as held for sale. Due to unforeseen circumstances outside of the Group’s control this
transaction did not proceed. At 30 June 2019 the asset has been classified as freehold investment
property and is no longer held for sale.
There were no transfers between levels of fair value hierarchy during the years ended 30 June 2019 and
30 June 2018.
10.3. Property, plant and equipment
10.
NON-FINANCIAL ASSETS AND LIABILITIES
This note provides information about the Group’s non-financial assets and liabilities including:
• An overview of all non-financial assets and liabilities held by the Group;
•
•
Specific information about each type of non-financial asset and non-financial liability; and
Information about determining the fair value of the non-financial assets and liabilities, including
areas of judgement, estimates and other assumptions.
10.1.
Inventories
Finished goods - at lower of cost and net realisable value
682
656
2019
$’000
2018
$’000
At cost
Accumulated depreciation
Total property, plant and equipment
2019
$'000
1,911
(1,055)
856
2018
$'000
1,708
(684)
1,024
Reconciliation of the carrying amounts of property, plant and equipment at the beginning and end of
the current financial period is shown below:
Plant and equipment
Carrying amount at beginning of the year
Additions
Disposals
Depreciation
Effect of movement in foreign exchange
Carrying amount at end of the year
Notes
6
2019
$'000
1,024
233
(8)
(395)
2
856
2018
$'000
1,229
154
-
(357)
(2)
1,024
92
FINANCIAL STATEMENTS
92
93
93
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
10.4.
Investment properties
Investment properties at valuation
Leasehold investment properties
Freehold investment properties
Investment property at cost
Freehold investment property under construction
Total investment properties
Notes
2019
$'000
2018
$'000
10.8
10.8
215,279
207,664
1,874,698 1,377,924
27,199
7,210
2,117,176 1,592,798
Leasehold investment properties
Opening balance at 1 July
Property acquisitions
Improvements to investment properties
Items reclassified to freehold investment properties
Disposal of leasehold investment property
Reassessment of lease terms
Finance lease diminution, presented as fair value adjustments
Net loss from other fair value adjustments
Closing balance at 30 June
Freehold investment properties at valuation
Opening balance at 1 July
Property acquisitions
Disposal of freehold investment property
Improvements to investment properties
Items reclassified from leasehold investment properties
Items reclassified from freehold investment property
under construction
Items reclassified to assets held for sale
Items reclassified from assets held for sale
Net gain from fair value adjustments
Effect of movement in foreign exchange
Closing balance at 30 June
Freehold investment property under construction at cost
Opening balance at 1 July
Property acquisitions
Development costs
Items reclassified to freehold investment properties
Closing balance at 30 June
10.2
10.2
207,664
10,911
417
-
-
8,196
(3,548)
(8,361)
215,279
226,955
-
631
(2,000)
(2,140)
(2,476)
(4,020)
(9,286)
207,664
1,377,924 1,101,860
165,726
(280)
7,513
2,000
381,319
(26,000)
9,301
-
26,972
(2,068)
5,713
97,232
4,305
2,301
(4,400)
-
106,229
(3,025)
1,874,698 1,377,924
7,210
33,122
13,839
(26,972)
27,199
2,063
-
7,448
(2,301)
7,210
Notes
2019
$'000
2018
$'000
Gains for the year in profit or loss (recognised in fair value
adjustments)
Realised gains
Realised losses – finance lease diminution of leasehold property
Unrealised gains associated with investment property
Movement in provisions presented in fair value adjustments
10.7
2,737
(3,548)
86,134
(660)
84,663
2,751
(4,020)
94,192
(555)
92,368
Included within net gain from fair value adjustments are realised gains of $2,737,000 and unrealised
gains of $1,107,000 relating to the divestment of freehold investment properties during the year ended
30 June 2019 (30 June 2018: realised gain of $2,040,000 relating to leasehold investment properties and
$711,000 relating to freehold investment properties).
10.5.
Intangible assets
Goodwill
Opening and closing net book value
Other intangible assets
Opening net book value
Additions
Amortisation
Closing net book value
Total intangible assets
Notes
2019
$'000
2018
$'000
43,954
43,954
2,051
1,079
(584)
2,546
1,582
864
(395)
2,051
46,500
46,005
6
Impairment testing of goodwill
Goodwill has been allocated to the listed group (NSR). Management have determined that the listed
group, which is considered one operating segment (see note 4), is the appropriate CGU against which
to allocate these intangible assets owing to the synergies arising from combining the portfolios of the
Group.
The recoverable amount of the listed group has been determined based on the fair value less costs of
disposal method using the fair value quoted on an active market. As at 1 July 2019, NSR had
773,343,956 stapled securities quoted on the Australian Securities Exchange at $1.745 per security
providing a market capitalisation of $1,349.5m. This amount is in excess of the carrying amount of the
Group’s net assets at 30 June 2019 which includes the contract for future issue of equity recognised as
contributed equity within the statement of financial position at this date (see note 13). Had the security
price decreased by 2.5% the market capitalisation would still have been in excess of the carrying
amount.
10.6. Deferred revenue
Deferred revenue from rental income
2019
$'000
2018
$'000
12,719
12,584
Deferred rent revenue from rental income represents funds received in advance from customers.
94
FINANCIAL STATEMENTS
94
95
95
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
10.7. Provisions
Fair value measurements using significant observable inputs (level 2)
Current
Onerous operating lease
Make good provisions
Annual leave
Long service leave
Non-current
Make good provisions
Long service leave
Reconciliation of movement in make good provisions
Opening balance
Arising during the year
Changes in discount rates
Unwinding of discount rates
Utilised
Closing balance
2019
$'000
-
301
1,166
996
2,463
1,888
76
1,964
1,592
318
342
94
(157)
2,189
2018
$'000
85
156
962
727
1,930
1,436
77
1,513
1,030
-
555
7
-
1,592
The Group is required to restore the leased premises in a number of leasehold properties to their original
condition at the end of lease term. A provision has been recognised for the present value of the
estimated expenditure required to remove any leasehold improvements.
10.8. Non-financial assets fair value measurement
The Group has classified its non-financial assets held at fair value into the three levels prescribed in note
9.8 to provide an indication about the reliability of inputs used to determine fair value.
Notes
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
At 30 June 2019
Assets held for sale
Leasehold investment properties
Freehold investment properties
At 30 June 2018
Assets held for sale
Leasehold investment properties
Freehold investment properties
10.2
10.4
10.4
10.2
10.4
10.4
Recognised fair value measurements
-
-
-
-
-
-
-
-
1,107
-
-
1,107
5,713
-
5,713
-
215,279
1,107
215,279
1,874,698 1,874,698
2,089,977 2,091,084
-
207,664
5,713
207,664
1,377,924 1,377,924
1,585,588 1,591,301
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels at the end of the
reporting period. There were no transfers between levels 1 and 2 for recurring fair value measurements
during the year. During the year ended 30 June 2019 the Group transferred $2.1m from level 3 to level 2
following the reclassification of assets from freehold investment properties to assets held for sale, and
$5.7m from level 2 to level 3 following the reclassification of assets from assets held for sale to freehold
investment properties, as detailed in note 10.2.
In the prior year ended 30 June 2018 the Group transferred $4.4m from level 3 to level 2 following the
reclassification of an asset from freehold investment properties to assets held for sale.
The fair value of assets held for sale is determined using valuation techniques which maximise the use of
observable market data. For the years ended 30 June 2019 and 30 June 2018, the Group has valued
assets classified as held for sale at the contractually agreed sales price less estimated cost of sale or
other observable evidence of market value.
Fair value measurements using significant unobservable inputs (level 3)
Valuation techniques used to determine level 3 fair values and valuation process
Investment properties, principally storage buildings, are held for rental to customers requiring self-
storage facilities and are carried at fair value. Changes in fair values are presented in profit or loss as
fair value adjustments.
Fair values are determined by a combination of independent valuations and Director valuations. The
independent valuations are performed by an accredited independent valuer. Investment properties
are independently valued on a rotational basis every three years unless the underlying financing
requires a more frequent valuation cycle. For properties subject to an independent valuation report the
Directors verify all major inputs to the valuation and review the results with the independent valuer. The
Director valuations are completed by the NSH Group Board. The valuations are determined using the
same techniques and similar estimates to those applied by the independent valuer.
The Group obtains the majority of its external independent valuations at each financial year end. The
Group’s policy is to maintain the valuation of the investment property valued in the preceding year at
external valuation, unless there is an indication of a significant change to the property’s valuation
inputs.
The table below details the percentage of the number of investment properties subject to internal and
external valuations during the current and comparable reporting periods
Year ended 30 June 2019
Leasehold
Freehold
Year ended 30 June 2018
Leasehold
Freehold
External valuation %
Internal valuation %
23%
38%
60%
27%
77%
62%
40%
73%
The Group also obtained external valuations on 31 freehold investment properties acquired during the
year ended 30 June 2019 (year ended 30 June 2018: 19 freehold investment properties). These external
valuations provide the basis of the Directors’ valuations applied to these properties at 30 June 2019 and
30 June 2018. Including these valuations, 51% of freehold investment properties were subject to external
valuations during the year (year ended 30 June 2018: 43% of freehold investment properties).
96
FINANCIAL STATEMENTS
96
97
97
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Valuation inputs and relationship to fair value
At 30 June 2018:
Description
Valuation
technique
Significant unobservable
inputs
Range at 30
June 2019
Range at 30
June 2018
Investment
properties -
leasehold
Capitalisation
method
Primary capitalisation rate
Secondary capitalisation rate
Sustainable occupancy
Stabilised average EBITDA
7.5% to 40.5%
8.0% to 41.0%
83% to 93%
$364,642
7.8% to 45.0%
8.8% to 46.0%
80% to 95%
$365,213
Investment
properties -
freehold
Capitalisation
method
Primary capitalisation rate
6.0% to 8.2%
6.5% to 8.3%
Secondary capitalisation rate
Sustainable occupancy
Stabilised average EBITDA
6.5% to 9.3%
74% to 98%
$912,261
7.0% to 9.5%
72% to 95%
$898,767
Under the income capitalisation method, a property’s fair value is estimated based upon a
combination of current earnings before interest, tax, depreciation and amortisation (“EBITDA”)
generated by the property, which is divided by the primary capitalisation rate (the investor's required
rate of return) and additional EBITDA (stabilised EBITDA less current EBITDA) divided by the secondary
capitalisation rate. Stabilised EBITDA reflects the estimated EBITDA generated once a property reaches
a sustainable level of operations. The value attributed to the secondary capitalisation is then
discounted to account for the estimated time and the additional costs required to deliver this
additional value.
The capitalisation rates are derived from recent sales of similar properties. The secondary capitalisation
rate is typically higher than the primary capitalisation rate to reflect the additional risk associated with
these cashflows. Generally, an increase in stabilised average EBITDA will result in an increase in fair
value of an investment property. An increase in the vacancy rate will result in a reduction of the
stabilised average EBITDA. Investment properties are valued on a highest and best use basis. The
current use of all of the investment properties (self-storage) is considered to be the highest and best
use.
The capitalisation rate adopted reflects the inherent risk associated with the property. For example, if
the lease expiry profile of a particular property is short, the capitalisation rate is likely to be higher to
reflect additional risk to income. The higher capitalisation rate then reduces the valuation of the
property.
The following tables present the sensitivity of investment property fair values to changes in input
assumptions.
At 30 June 2019:
Unobservable inputs
Leasehold
Freehold
Increase/
(decrease)
in input
Increase/
(decrease)
In fair value
$’000
Increase/
(decrease)
in input
Increase/ (decrease)
in fair value
$’000
Primary capitalisation rate
Secondary capitalisation
rate
Sustainable occupancy
Stabilised average EBITDA
1% / (1%)
(3,790) / 4,710
1% / (1%)
(188,200) / 254,780
2% / (2%)
(2,830) / 4,370
2% / (2%)
(90,560) / 156,620
5% / (5%)
5% / (5%)
7,370 / (5,740)
2,530 / (2,530)
5% / (5%)
5% / (5%)
114,620 / (81,010)
83,770 / (74,650)
Unobservable inputs
Leasehold
Freehold
Increase/
(decrease)
in input
Increase/
(decrease)
In fair value
$’000
Increase/
(decrease)
in input
Increase/ (decrease)
in fair value
$’000
Primary capitalisation rate
Secondary capitalisation
rate
Sustainable occupancy
Stabilised average EBITDA
1% / (1%)
(5,600) / 7,400
1% / (1%)
(165,546) / 218,802
2% / (2%)
(1,600) / 2,900
2% / (2%)
(37,357) / 62,981
5% / (5%)
5% / (5%)
5,100 / (4,200)
2,400 / (2,200)
5% / (5%)
5% / (5%)
101,181 / (83,464)
61,570 / (55,370)
11.
INFORMATION RELATING TO SUBSIDIARIES
The holding entities
The ultimate holding company of the NSH Group is National Storage Holdings Limited. The holding entity
of the NSPT Group is National Storage Property Trust. These two entities are domiciled in Australia and
through a stapling agreement are jointly quoted on the ASX.
The consolidated financial statements of the Group as at 30 June 2019 include:
Equity interest
Name of controlled entity
National Storage (Operations) Pty Ltd
National Storage Financial Services Limited
Wine Ark Pty Ltd
Southern Cross Storage Operations Pty Ltd
National Storage Investments Pty Ltd
National Storage Limited
National Storage Investment Trust
National Storage Victorian Property Trust
National Storage New Zealand Property Trust*
National Storage Southern Trust
Place of
incorporation
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
* NSNZPT is an Australian registered trust which holds investment property in New Zealand
12.
INTEREST IN JOINT VENTURES AND ASSOCIATES
Interest in joint ventures
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Opening balance at 1 July
Capital contribution / acquisition of shareholding in joint venture
Share of profit from joint ventures
Distributions received from joint venture
Disposal of units in joint venture
Closing balance at 30 June
2019
$'000
7,432
3,499
1,476
(5,064)
(3,000)
4,343
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2018
$'000
1,980
5,392
60
-
-
7,432
98
FINANCIAL STATEMENTS
98
99
99
The NSPT Group holds a 25% (2018: 25%) interest in the Bundall Storage Trust, and the NSH Group holds a
25% interest in the Bundall Commercial Trust.
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
During the year ended 30 June 2019, the Group contributed a further $1.3m into the Bundall Storage
Trust and $2.2m into the Bundall Commercial Trust as part of a capital raise. There was no change in the
total share of the Group’s interest in either Trust following this investment.
As at 30 June 2019, APSF had contractual commitments of $2.8m in place for the construction of one
storage centre in Victoria, Australia. Neither associate had any contingent liabilities or any other capital
commitments at 30 June 2019 or 30 June 2018.
On 21 June 2019, the Group purchased two storage centre investment property assets from the Bundall
Storage Trust for $43.7m.
The Group holds a 24% (30 June 2018: 24.8%) holding in Spacer Marketplaces Pty Ltd (“Spacer”).
Spacer operate online peer-to-peer marketplaces for self-storage and parking.
On 21 June 2019, the Bundall Storage Trust purchased a site for a proposed storage centre
development from the Group for $8.2m and the Bundall Commercial Trust purchased a commercial
property from the Group for $17.8m.
As at 30 June 2019 the Bundall Storage Trust has one storage centre investment property asset under
construction. The Bundall Commercial Trust derives rental property income from the leasing of
commercial units.
During the year ended 30 June 2018, the Group subscribed to 83.3% of the units in FKS Investments No.2
Unit Trust (“FKS”). FKS subsequently purchased a storage centre investment property asset in
Queensland, Australia. On 28 June 2019, the Group sold its units in FKS for $3m.
These investments are classified as joint ventures as all parties are subject to a Securityholders
Agreement that has been contractually structured such that the parties to the agreement have equal
representation on the advisory board responsible for the overall direction and supervision of each trust.
None of the Group’s joint ventures are listed on any public exchange.
None of the Group’s other joint ventures have any capital commitments at 30 June 2019. None of the
Group’s joint ventures had any contingent liabilities at 30 June 2019.
Interest in associates
Opening balance at 1 July
Capital contribution / acquisition of shareholding in associates
Share of profit from associates*
Distributions from associate
Closing balance at 30 June
2019
$'000
10,693
-
1,695
-
12,388
2018
$'000
8,611
2,048
1,282
(1,248)
10,693
*Included within share of profit from associates is $1,917,000 representing NSR’s share of fair value gains related to
investment properties held by joint ventures and associates (30 June 2018: $1,383,000).
The Group owns 24.9% (2018: 24.9%) of the Australia Prime Storage Fund (“APSF”). APSF is a partnership
with Universal Self Storage to facilitate the development and ownership of multiple premium grade self-
storage centres in select cities around Australia.
During the year ended 30 June 2019, National Storage (Operations) Pty Ltd earned fees of $0.8m from
APSF associated with the design, development, financing of the construction process, and ongoing
management of centres (see note 17) (30 June 2018: $0.7m).
As at 30 June 2019, APSF had two operating centres in Queensland, Australia, with a third asset under
construction in Victoria, Australia.
Following the financial year end, on 26 July 2019, the Group purchased two storage centre investment
properties from APSF for $42.6m, and reached an agreement to purchase a third asset for $21.35m on
completion of construction (see note 23). During the year ended 30 June 2018, the Group purchased a
storage centre investment property asset in Queensland, Australia from APSF for $14m.
13.
CONTRIBUTED EQUITY
Issued and paid up capital
Contract for future issue of equity
Total contributed equity
2019
$'000
83,692
16,451
100,143
2018
$'000
66,128
-
66,128
Number of stapled securities on Issue
2019
2018
Opening balance at 1 July
Institutional and retail placement
Distribution reinvestment plan
Closing balance at 30 June
559,107,042 512,913,914
39,712,882
105,677,937
6,480,246
9,143,772
673,928,751 559,107,042
Capital raise
On 4 September 2018, the Group undertook a fully underwritten $175.4m equity raising. This resulted in
the issue of 105,677,937 new stapled securities (2018: $59.5m equity raising resulting in the issue of
39,712,882 stapled securities).
On 25 June 2019, the Group announced a fully underwritten $170m equity raising. On 28 June 2019, the
Group received proceeds for this raising. This has been recognised as a contract for future issue of
equity under AASB 132 and has been recognised as contributed equity within the statement of
financial position. This resulted in the issue of 99,415,205 new stapled securities on 1 July 2019. These
securities are not reflected in the securities on issue above as they were issued subsequent to the year
end.
On 25 June 2019, the Group also announced a non-underwritten security purchase plan. This
completed on 30 July 2019, raising $13.5m and resulted in the issue of 7,917,735 new stapled securities.
Distribution reinvestment plan
During the year, 9,143,772 (2018: 6,480,246) stapled securities were issued to securityholders
participating in the Group’s Distribution Reinvestment Plan for consideration of $16.2m (2018:
$9.6m). The stapled securities were issued at the volume weighted average market price of the
Group's stapled securities over a period of ten trading days, less a 2% discount.
Terms and conditions of contributed equity
Stapled securities
A stapled security represents one share in NSH and one unit in NSPT. Stapled securityholders have the
right to receive declared dividends from NSH and distributions from NSPT and are entitled to one vote
per stapled security at securityholders’ meetings. Holders of stapled securities can vote their shares and
units in accordance with the Corporations Act 2001, either in person or by proxy, at a meeting of either
NSH or NSPT. The stapled securities have no par value.
In the event of the winding up of NSH and NSPT, stapled securityholders have the right to participate in
the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on
stapled securities held. Ordinary stapled securityholders rank after all creditors in repayment of capital.
There is no current on or off market security buy-back.
100
FINANCIAL STATEMENTS
100
101
101
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
14.
OTHER RESERVES
Foreign currency translation reserve
Opening balance at 1 July
Foreign exchange translation differences
Closing balance at 30 June
2019
$'000
(12)
(15)
(27)
2018
$'000
11
(23)
(12)
The financial statements for the Group are prepared on the basis that NSH was the acquirer of NSPT. On
this basis foreign currency translation reserve movements relating to the NSH Group are presented
within other reserves.
The movements below in foreign currency translation reserve and cashflow hedge reserve relating to
the NSPT Group are presented within non-controlling interest in the Group’s consolidated statement of
changes in equity.
Foreign currency translation reserve
Opening balance at 1 July
Net investment hedge
Foreign exchange translation differences
Closing balance at 30 June
Cash flow hedge reserve
Opening balance at 1 July
Revaluation of derivatives
Taxation impact on revaluation
Closing balance at 30 June
NSPT Group
2019
$'000
2018
$'000
(115)
(1,591)
2,464
758
(2,073)
(22,098)
290
(23,881)
232
1,007
(1,354)
(115)
(45)
(2,112)
84
(2,073)
Other reserves
(23,123)
(2,188)
Taxation impact on revaluation applies only to cash flow hedges held in NSNZPT, a sub-trust of NSPT,
which is subject to New Zealand tax legislation. Deferred tax does not apply to any other cash flow
hedges held in the NSPT Group under current Australian tax legislation.
The hedging reserve is used to record gains or losses on derivatives that are designated as cash flow
hedges and recognised in other comprehensive income, as described in note 2(m). Amounts are
reclassified to profit or loss in the period when the associated hedged transaction takes place.
On 24 June 2019, the Group reset the interest rates associated with AUD denominated interest rate
swaps designated as cash flow hedges. This resulted in a cash outflow of $22.9m which reduced the
Group’s financial liability as presented in note 9.8. In accordance with AASB 9 Financial instruments, as
the nature of the underlying hedged instrument is unchanged the fair value of this outflow remains in
the cash flow hedge reserve and will be amortised to the statement of profit or loss in future periods.
The cash flow hedge is included in non-controlling interest in the Consolidated Group and is not
classified within other reserves.
15.
FINANCIAL RISK MANAGEMENT
The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the business. The Group use
derivative financial instruments such as interest rate swaps to hedge certain market risk exposures.
Risk management for the Group is carried out by the NSH Board and key management personnel of
NSH. The NSH Board of Directors analyses, on behalf of the Group, interest rate exposure and evaluates
treasury management strategies in the context of the most recent economic conditions and forecasts.
Derivatives
Derivatives are only used for economic hedging purposes and not as trading or speculative
instruments. The Group has the following derivative financial instruments:
Forward currency exchange contract designated as
cash flow hedges presented in:
Current liabilities
Interest rate swaps designated as cash flow hedges
presented in:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net liability
Notes
2019
$'000
2018
$'000
9.6
(474)
-
9.3
9.3
9.6
9.6
-
569
(239)
(1,375)
(1,045)
87
2,099
(3)
(4,380)
(2,197)
Classification of derivatives
All derivatives have been designated as cash flow hedges. They are presented as current assets or
liabilities if they are expected to be settled within 12 months after the end of the reporting period.
The Group’s accounting policy for cash flow hedges is set out in note 2(m). For hedged forecast
transactions that result in the recognition of a non-financial asset, the Group has elected to include
related hedging gains and losses in the initial measurement of the cost of the asset. The ineffectiveness
recognised in the statement of profit or loss was immaterial.
Fair value measurement
For information about the methods and assumptions used in determining fair values of derivatives refer
to note 10.8.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risk comprises of three types of risk: interest rate risk,
currency risk and other price risk, such as equity price and commodity risk. Financial instruments
affected by market risk include loans and borrowings, deposits, debt and equity investments, and
derivative financial instruments.
The sensitivity analysis in the following sections relate to the position as at 30 June 2019 and 30 June
2018. The sensitivity analysis has been prepared on the basis that the amount of net debt, the ratio of
fixed to floating interest rates of debt and derivatives and the proportion of financial instruments in
foreign currencies are all constant on the basis of hedge designations in place at 30 June 2019.
The analysis excludes the impact of movements in market variables on provisions and the non-financial
assets and liabilities of foreign operations.
This note outlines the Group’s exposure to financial risks and how these risks could affect future financial
performance.
The following assumptions have been made in calculating sensitivity analysis:
102
FINANCIAL STATEMENTS
102
103
103
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
•
•
The sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in
respective market risks. This is based on the financial assets held at 30 June 2019 and 30 June 2018
including the effect of hedge accounting.
The sensitivity of equity is calculated by considering the effect of any associated cash flow hedges
and hedges of a net investment in a foreign subsidiary at 30 June 2019 for the effects of the
assumed changes of the underlying risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s exposure to the risk of changes in market
interest rates relate primarily to their long-term debt obligations with floating interest rates.
The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans
and borrowings. To manage this, the Group enters into interest rate swaps, in which it agrees to
exchange, at specified intervals, the difference between fixed and variable rate interest amounts
calculated by reference to an agreed-upon notional principal amount. At 30 June 2019, after taking
into account the effect of interest rate swaps, 55.8% (2018: 53.9%) of the Group’s borrowings are at a
fixed rate of interest.
Interest rate sensitivity
The following table demonstrates the sensitivity to a possible change in interest rates on the portion of
loans and borrowings affected, after the impact of hedge accounting. With all other variables held
constant, the Group’s profit before tax is affected through the impact on floating rate borrowings, as
follows:
Increase/ decrease
in basis points
Effect on profit
before tax
$'000
2019
Australian dollar dominated debt
New Zealand dollar dominated debt
Australian dollar dominated debt
New Zealand dollar dominated debt
2018
Australian dollar dominated debt
New Zealand dollar dominated debt
Australian dollar dominated debt
New Zealand dollar dominated debt
+50
+50
-50
-50
+50
+50
-50
-50
(718)
(254)
718
254
(921)
(124)
921
124
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently
observable market environment.
Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign
exchange rates relates primarily to the Group’s operating activities (when revenue or expense is
denominated in a foreign currency), and the Group’s net investment in foreign subsidiaries.
The Group hedges its exposure to fluctuations on the translation into Australian dollars of its foreign
operations by holding net borrowings in foreign currencies.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in New Zealand Dollar
exchange rate with all other variables held constant. The impact on Group’s profit before tax from both
continuing and discontinued operations is due to changes in the fair value of monetary assets and
liabilities. The impact on the Group’s pre-tax equity is due to net investment hedges.
2019
2018
Change in
NZD rate
+5%
-5%
+5%
-5%
Effect on profit
before tax
$'000
(165)
183
Effect on pre-
tax equity
$'000
(2,412)
2,649
(82)
90
(659)
527
The movement in the profit before tax is a result of a change in the fair value of the monetary assets
and liabilities denominated in NZD, where the functional currency of the entity is a currency other than
NZD.
The movement in pre-tax equity arises from changes in NZD borrowings (net of cash and cash
equivalents) in the hedge of net investments in New Zealand operations and cash flow hedges. These
movements will offset the translation of New Zealand operations’ net assets into AUD.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating
activities (primarily trade receivables) and from its financing activities, including deposits with banks
and other financial instruments.
Trade receivables
The exposure to credit risk for trade and other receivables is influenced mainly by the individual
characteristics of each customer. The Group’s customer credit risk is managed by requiring customers
to pay monthly rentals in advance. The Directors are of the opinion that customer credit risk is reduced
through a contractual lien over the contents stored in the rented units. The terms of the storage
agreement provide for the auction of the customer’s stored contents to recover any unpaid amounts.
Outstanding customer receivables are regularly monitored and any credit concerns highlighted to
senior management.
The allowance for expected credit losses represents an estimate of trade receivables that are not
considered to be recoverable. For the year ended 30 June 2019, the Group has recognised an
expected loss provision of $135,000 based on lifetime expected credit losses at each reporting date.
The Group assesses this allowance based on its historical credit loss experience, adjusted for forward-
looking factors specific to the debtors. At 30 June 2018, the Group recognised a provision for trade
receivables of $23,000 relating to receivables acquired on the purchase of investment properties where
there are specific risks around recoverability.
Cash and cash equivalents
The Group’s credit risk on cash and cash equivalents is limited because the counterparties are banks
with high credit-ratings assigned by international credit-rating agencies. The maximum exposure to
credit risk for the components of the statement of financial position at 30 June 2019 and 30 June 2018 is
the carrying amounts as indicated in the statement of financial position.
Guarantees
Credit risk also arises in relation to financial guarantees given to certain parties (refer to notes 18, 21,
and 22). Such guarantees are only provided in exceptional circumstances and are subject to specific
Board approval.
104
FINANCIAL STATEMENTS
104
105
105
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due.
The objective of managing liquidity risk is to ensure, as far as possible, the group will always have
sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions.
NSH on behalf of the Group has established a number of policies and processes for managing liquidity
risk. These include:
• Continuously monitoring cash flows on a daily basis as well as forecasting cash flows on a medium
and long-term basis.
• Monitoring the maturity profiles of financial assets and liabilities in order to match cashflows.
• Maintaining adequate reserves and support facilities.
• Monitoring liquidity ratios and all constituent elements of working capital.
• Maintaining adequate borrowing and finance facilities.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Expiring within one year (bank overdraft)
Expiring beyond one year (loans)
2019
$'000
3,000
20,508
23,508
2018
$'000
3,000
115,347
118,347
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without
notice. All other secured bank loans may be drawn at any time and is subject to an annual review.
Further details of the bank loans are detailed in notes 9.5 and 16.
Maturity of financial liabilities
The tables below summarise the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments. As amounts disclosed in the table are the contractual undiscounted cash
flows including future interest payments, these balances will not necessarily agree with the amounts
disclosed on the statement of financial position.
At 30 June 2019
Non-derivatives
Trade and other payables
Borrowings
Finance leases
Distribution payable
Total non-derivatives
Derivatives
Inflows
Outflows
Total derivatives
On
demand
$'000
Less than
3 months
$'000
3 to 12
months
$'000
1 to 5
years
$'000
Over 5
years
$'000
Total
$'000
236
-
-
-
236
18,757
6,272
3,236
34,370
62,635
-
17,527
9,982
-
27,509
-
573,698
53,552
-
627,250
-
355,223
237,618
-
18,993
952,720
304,388
34,370
592,841 1,310,471
-
-
-
(1,365)
1,645
280
(3,459)
5,020
1,561
(14,600)
16,116
1,516
(3,412)
2,643
(769)
(22,836)
25,424
2,588
236
62,915
29,070
628,766
592,072 1,313,059
On
demand
$'000
Less than
3 months
$'000
3 to 12
months
$'000
1 to 5
years
$'000
Over 5
years
$'000
Total
$'000
At 30 June 2018
Non-derivatives
Trade and other payables
Borrowings
Finance leases
Distribution payable
Total non-derivatives
Derivatives
Inflows
Outflows
Total derivatives
268
-
-
-
268
-
-
-
12,050
5,926
3,120
27,396
48,492
-
17,584
9,201
-
26,785
-
403,615
51,716
-
455,331
-
291,094
228,857
-
12,318
718,219
292,894
27,396
519,951 1,050,827
(110)
278
168
(42)
1,193
1,151
(1,057)
2,832
1,775
(1,181)
284
(897)
(2,390)
4,587
2,197
268
48,660
27,936
457,106
519,054 1,053,024
Changes in liabilities arising from financing activities
Derivative used for hedging:
Forward currency exchange
contract
Current financial liabilities
Interest rate swap
Current financial liabilities
Non-current financial liabilities
1 July
2018
$'000
-
3
4,380
Foreign
exchange
movement
$'000
Changes
in fair
value Other
$'000
$'000
Cash
flows
$'000
30 June
2019
$'000
-
-
-
-
-
20
-
474
236
(3,025)
-
-
-
474
239
1,375
- 48,275
34,370
Distributions payable
27,396
(41,301)
Non-current interest-
bearing loans
Finance lease liabilities
Current liabilities
Non-current liabilities
Total liabilities from
financing activities
596,410
242,842
3,714
4,446
156,942
(4,820)
-
-
-
-
-
-
961
843,927
5,701
6,885
5,327
163,827
789,577
196,721
3,734
(2,315)
61,822
1,049,539
106
FINANCIAL STATEMENTS
106
107
107
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Foreign
exchange
movement
$'000
Changes
in fair
value
$'000
Cash
flows
$'000
Other
$'000
30 June
2018
$'000
Loan covenants
Financial covenants under the terms of the Group’s borrowing agreement require the Group to ensure
that the gearing ratio does not exceed 55% and the ratio of operating earnings before interest, tax,
depreciation and amortisation to finance costs must exceed a multiple of two. The Group has
complied with these covenants throughout the reporting period.
Derivative used for hedging:
interest rate swaps
Current financial liabilities
Non-current financial liabilities
1 July
2017
$'000
166
3,259
Distributions payable
Non-current interest-
bearing loans and
borrowings
Finance lease liabilities
Current lease liabilities
Non-current liabilities
Total liabilities from
financing activities
16.
CAPITAL MANAGEMENT
-
-
-
12
-
23,594
(40,045)
481,770
116,652
(2,668)
4,504
163,851
(4,490)
-
-
-
(163)
1,109
-
-
3
4,380
-
-
-
-
43,847
27,396
656
596,410
4,432
4,446
(6,909) 156,942
677,144
72,117
(2,656)
946
42,026
789,577
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns to securityholders and to maintain an optimal
structure to reduce the cost of capital. The primary objective of the Group’s capital management is to
maximise value for the securityholder. The Responsible Entity has outsourced capital management for
the NSPT Group to NSH under a management agreement.
In order to achieve this objective, the Group’s capital management strategy aims to ensure that it
meets financial covenants attached to interest-bearing loans and borrowings. Breaches in meeting a
financial covenant would permit the lender to immediately call loans and borrowings. There have been
no breaches of financial covenants relating to any interest-bearing loans and borrowings in the current
period. The Group manages its capital structure and makes adjustments in light of changes in
economic conditions and the requirements of its financial covenants. To maintain or adjust the capital
structure, the Group may adjust the distribution payment to securityholders, return capital to
securityholders or issue new securities.
The Group monitors capital using a gearing ratio, represented by net debt divided by total assets less
cash and short term deposits and finance lease liabilities. The Group’s target is to keep the gearing
ratio between 25% and 40%. Net debt includes borrowings, less cash and short-term deposits.
Interest bearing loans
Less: cash and short term deposits
Net debt
Total assets
Less cash and short term deposits
Less finance lease liabilities
Gearing ratio
108
FINANCIAL STATEMENTS
Notes
9.5
9.1
9.7
2019
$'000
2018
$'000
847,838
(178,842)
668,996
600,348
(21,333)
579,015
2,392,313 1,709,949
(21,333)
(178,842)
(169,154)
(161,388)
2,044,317 1,527,228
33%
38%
108
Dividends and distributions
Distributions have been made and declared as noted below.
NSPT interim distribution of 4.5 cents per unit paid on
1 March 2019 (2018: 4.7 cents per unit)
NSPT final distribution of 5.1 cents per unit payable
on 5 September 2019 (2018: 4.9 cents per unit)
Balance of distributions paid to pre-stapling unit holders
NSPT Group
2019
$'000
2018
$'000
30,082
25,826
34,370
27,396
-
64,452
205
53,427
There are no proposed distributions not recognised as a liability for the year ended 30 June 2019.
The Directors of NSH have not declared an interim or final dividend for the year ending 30 June 2019.
Franking credit balance
Franking credits available for subsequent financial
years based on a tax rate of 30% (2018: 30%)
2019
$'000
2018
$'000
2,828
1,453
The above amounts are calculated from the balance of the NSH franking account at the end of the
reporting period.
The NSPT Group does not have franking credits as distributions are paid from NSPT which is not liable to
pay income tax provided all taxable income is distributed.
109
109
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
17.
RELATED PARTY TRANSACTIONS
18.
COMMITMENTS AND CONTINGENCIES
The following tables provide the total amount of transactions that have been entered into with related
parties for the relevant financial years.
Capital commitments
Transactions with Related Parties
Revenue
from
related
parties
$
Purchases
from
related
parties
$
Australia Prime Storage Fund
Bundall Commercial Trust
Bundall Storage Trust
2019
2018
2019
2018
808,702
679,568
587,569
339,428
2019 3,260,320
972,006
2018
Bundall Storage Operations Pty Ltd
Spacer Marketplaces Pty Ltd
2019
2018
2019
2018
12,661
-
Amount
owed by
related
parties
$
502,919
307,471
8,976,530
4,173,414
2,232,654
3,558,114
167,407
-
-
-
-
-
-
-
-
-
Amount
owed to
related
parties
$
-
-
-
-
-
-
-
-
-
-
-
-
50,879
18,896
-
-
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in
arm’s length transactions.
As at 30 June 2019, National Storage Investments Pty Ltd, a subsidiary of NSH, had receivables
outstanding of $8,725,000 with the Bundall Commercial Trust (2018: $3,037,500) and $1,025,000 with the
Bundall Storage Trust (2018: $2,587,500) relating to amounts drawn down under facility agreements
between the entities. The terms of the facility agreements range from 2 to 5 years, and are interest
bearing on commercial rates. The receivables have been classed as a current receivable in the
statement of financial position as this receivable is expected to be repaid within 12 months of 30 June
2019.
All other outstanding balances at the year-end are unsecured and interest free. There have been no
guarantees provided or received for any related party receivables or payables. For the years ended 30
June 2019 and 30 June 2018, the Group has not recorded any impairment of receivables relating to
amounts owed by related parties.
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Consolidated Group
2019
$'000
3,431
126
281
-
3,838
2018
$'000
3,176
139
195
400
3,910
The amounts disclosed in the table are the amounts recognised as an expense during the reporting
period relating to key management personnel. Detailed remuneration disclosures are provided in the
remuneration report which is included in the Directors’ Report.
As at 30 June 2019, the Group has contractual commitments in place for the construction of a self-
storage centre in Queensland, Australia (see note 10.4).
The Group also held a commitment with a third party to supply and install solar panels and energy
efficient light-emitting diode (“LED”) lighting on a significant number of NSR storage centres for an
estimated total cost of $8.8m. As at 30 June 2019, the Group had incurred costs of $3.9m related to this
project which have been classified as freehold investment property under construction (see note 10.4).
The Group is committed to additional expenditure of $4.9m, to be paid on agreed milestones subject to
the completion of the project.
There were no other contracted capital expenditure commitments at the end of the reporting period
that are not recognised as liabilities.
Non-cancellable operating leases
The Group leases offices and other equipment with terms expiring under various time periods.
Commitments for minimum lease payments in relation to non-cancellable operating leases are
payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Finance lease commitments
For details of finance lease commitments see note 9.7.
2019
$’000
649
732
1
1,382
2018
$’000
690
1,108
199
1,997
Contingent liabilities
The Group did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.
19.
EARNINGS PER STAPLED SECURITY (“EPS”)
Basic earnings per stapled security is calculated as net profit attributable to stapled security holders,
adjusted to exclude costs of servicing equity (other than distributions) divided by the weighted average
number of stapled securities on issue during the period under review.
Diluted earnings per stapled security adjust the figures used in the determination of basic earnings per
share to take into account:
•
•
The after tax effect of interest and other financing costs associated with dilutive potential stapled
securities; and
The weighted average number of additional stapled securities that would have been outstanding
assuming the conversion of all dilutive potential stapled securities.
110
FINANCIAL STATEMENTS
110
111
111
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
2019
2018
Restated
21.
INFORMATION RELATING TO THE PARENT ENTITY
Summary financial information
Weighted average number of securities on issue during the year
Adjustment under AASB 133 to reflect discount to market price on
issue of new capital
Weighted average number of securities used to calculate basic and
diluted earnings per stapled securities
650,319,184 536,933,616
4,301,624
6,601,060
654,620,808 543,534,676
Reconciliation of earnings used in calculating earnings per stapled
securities
Net profit attributable to members ($’000)
144,840
145,773
Basic and diluted earnings per stapled securities (cents)
22.13
26.82
As detailed in notes 13 and 23, on 1 July 2019 the Group issued 99,415,205 of new securities relating to a
$170m institutional equity raise. On 30 July 2019, the Group issued 7,917,735 of new securities relating to
$13.5m raised from a security purchase plan. The Group received proceeds for the institutional raising
on 28 June 2019 which has been recognised as a contract for future issue of equity. As these securities
were not on issue at 30 June 2019, they have not been included within the weighted average number
of securities during the year shown above.
As required by AASB 133 Earnings per share, for capital raises during the year ended 30 June 2019 and
subsequent to the year end, the weighted average number of securities on issue used to calculate
statutory basic and diluted earnings per stapled securities has been adjusted to reflect the difference
between the issue price and the fair value of securities prior to issue. No actual securities were issued
relating to this adjustment.
The weighted average number of stapled securities for the year ending 30 June 2018 used to calculate
basic and diluted earnings per stapled securities has also been restated on this basis.
20.
AUDITORS’ REMUNERATION
The auditor of the Group is Ernst & Young Australia.
Amounts received or due and receivable by Ernst & Young Australia for:
An audit or review of the financial report of the entity and any other
group entity
Other services in relation to the entity and any other group entity
Taxation services
Assurance related
Other
Total auditors’ remuneration
2019
$
2018
$
540,000
519,900
143,250
36,050
-
719,300
49,725
-
24,695
594,320
The individual financial statements for NSH, the parent entity, show the following aggregate amounts:
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Loss after tax
Total comprehensive income
Guarantees entered into by the parent entity
2019
$’000
2018
$’000
264,270
274,096
102,999
110,556
(194,762)
(196,012)
(62,463)
(63,713)
78,084
46,843
98,397
(20,313)
78,084
64,382
(17,539)
46,843
(3,041)
(3,041)
(1,410)
(1,410)
The Group’s parent entity has provided bank guarantees of $8.9m (2018: $8.9m) to third party lessors.
In addition, there are cross guarantees given by National Storage Holdings Limited, National Storage
(Operations) Pty Ltd and National Storage Pty Ltd as described in note 22. No deficiencies of assets exist
in any of these companies.
Contingent liabilities of the parent entity
The parent entity of Group did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.
22.
DEED OF CROSS GUARANTEE
As at 30 June 2019, National Storage Holdings Limited, National Storage (Operations) Pty Ltd, Southern
Cross Storage Operations Pty Ltd and National Storage Pty Ltd are parties to a deed of cross guarantee
(30 June 2018: National Storage Holdings Limited, National Storage (Operations) Pty Ltd and National
Storage Pty Ltd) under which each company guarantees the debts of the others. By entering into the
deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report
and Directors’ report under ASIC Corporations (wholly-owned companies) instrument 2016/785 issued
by the Australian Securities and Investments Commission.
112
FINANCIAL STATEMENTS
112
113
113
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Set out below is a consolidated statement of comprehensive income and statement of financial
position of the entities that are parties to a deed of cross guarantee.
23.
EVENTS AFTER REPORTING PERIOD
Acquisitions
On 26 July 2019, the Group purchased two storage centre investment properties from APSF for $42.6m,
and reached an agreement to purchase a third asset from APSF for $21.35m on completion of
construction.
Capital raise
On 1 July 2019, the Group issued 99,415,205 new stapled securities as a result of the $170m equity raising
announced on 25 June 2019. The Group received proceeds for this raising on 28 June 2019 (see note
13).
On 30 July 2019, the Group raised $13.5m from a non-underwritten security purchase plan. This resulted
in the issue of 7,917,735 new stapled securities.
Consolidated statement of comprehensive income
Profit / (loss) before income tax
Income tax benefit
Profit after tax
Retained earnings at the beginning of the year
Dividends received
Retained earnings at the end of the year
Consolidated statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Investment properties
Investments
Intangibles
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Finance lease liability
Deferred revenue
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Finance lease liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Retained profits
Total equity
2019
$'000
1,546
1,352
2,898
7,676
650
11,224
2018
$'000
(2,245)
2,929
684
5,627
1,000
7,311
2019
$'000
2018
$'000
172,824
34,327
606
6,804
214,561
118
817
870,575
5,932
30,256
2,831
910,529
17,365
30,065
560
5,197
53,187
118
979
642,299
5,932
29,878
949
680,155
1,125,090
733,342
195,300
4,586
11,569
601
2,072
214,128
63,028
4,446
11,840
1,035
1,617
81,966
1,250
797,826
2,265
801,341
1,250
576,764
1,669
579,683
1,015,469
661,649
109,621
71,693
98,397
11,224
109,621
64,382
7,311
71,693
114
FINANCIAL STATEMENTS
114
115
115
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of National Storage Holdings Limited, the
Directors state that:
1.
In the opinion of the Directors:
(a)
the financial statements and notes of the Group for the year ended 30 June 2019
are in accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the consolidated entity’s financial position as
at 30 June 2019 and of its performance for the year ended on that date;
and
complying with Accounting Standards and the Corporations Regulations
2001;
(b)
the financial statements and notes also comply with International Financial
Reporting Standards as disclosed in note 2(b); and
(c)
there are reasonable grounds to believe that NSR will be able to pay its debts as
and when they become due and payable.
(d) as at the date of this declaration, there are reasonable grounds to believe that
the members of the Closed Group identified in Note 22 will be able to meet any
obligations or liabilities to which they are or may become subject, by virtue of the
Deed of Cross Guarantee.
2.
This declaration has been made after receiving the declarations required to be made
to the Directors by the Chief Executive Officer and Chief Financial Officer in
accordance with section 295A of the Corporations Act 2001 for the financial year
ended 30 June 2019.
On behalf of the Board,
Laurence Brindle
Director
27 August 2019
Brisbane
Andrew Catsoulis
Managing Director
27 August 2019
Brisbane
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FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange and not shown elsewhere in this
report is as follows. The information is current as at 31 July 2019 unless stated below:
(a) Distribution of equity securities
Analysis of numbers of ordinary fully paid stapled security holders by size of holding:
Holding
1
1,001
5,001
10,001
100,001
Total
- 1,000
- 5,000
- 10,000
- 100,000
- And over
Total
holders
1,164
1,669
1,087
2,206
122
6,248
There were 195 holders of less than a marketable parcel of stapled securities, representing 4,692 units.
(b) Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
Stapled Securities
Number
held
Percentage
of issued
securities
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Perpetual Trustee Company Ltd
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
BNP Paribas Noms Pty Ltd (DRP)
Storcat Pty Ltd (Andrew Catsoulis Family A/C)
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
AMP Life Limited
Hooks Enterprises Pty Ltd (Hoeksema Superfund A/C)
HSBC Custody Nominees (Australia) Limited – Comnwlth Super Corp
Alex Queensland Pty Ltd (Catsoulis Development A/C)
Mr Leendert Hoeksema & Mrs Aaltje Hoeksema
HSBC Custody Nominees (Australia) Limited – GSCO ECA
Palomere Pty Ltd (Peter Edward Greer Family A/C)
Warbont Nominees Pty Ltd (Unpaid Entrepot A/C)
Neweconomy.com.au Nominess Pty Limited (900 Account)
CS Fourth Nominees Pty Ltd (HSBC Cust Nom AU Ltd 11 A/C)
Stowaway Self Storage Pty Ltd (Catsoulis Family A/C)
299,277,109
173,754,889
58,026,196
26,874,822
26,844,726
25,391,510
14,927,570
7,812,878
7,243,626
6,269,486
4,640,000
3,151,044
2,932,388
2,740,000
2,573,253
2,543,202
2,286,450
2,272,634
2,018,796
1,811,224
673,391,803
38.31
22.24
7.43
3.44
3.44
3.25
1.91
1.00
0.93
0.80
0.59
0.40
0.38
0.35
0.33
0.33
0.29
0.29
0.26
0.23
86.19
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FINANCIAL STATEMENTS
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
Unquoted equity securities
There are no unquoted securities.
(c) Substantial shareholders
Substantial securityholders, as at 15 July 2019, are set out below:
Name
Vanguard Investments Australia Ltd
MFS Investment Management
Number
held
48,776,391
42,449,137
Percentage
6.31
5.49
(d) Voting rights
The voting rights attached to the ordinary fully paid stapled securities is one vote per stapled security.
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FINANCIAL STATEMENTS
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NATIONAL STORAGE PORT MELBOURNE
NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019
INVESTOR RELATIONS
National Storage REIT is listed on the Australian
Securities Exchange under the code NSR.
NATIONAL STORAGE REIT SECURITIES
A stapled security comprises:
• one share in National Storage Holdings
Limited; and
• one unit in the National Storage
Property Trust,
stapled and traded together as one stapled
security.
CONTACT DETAILS
All changes of name, address, TFN, payment
instructions and document requests should be
directed to the registry.
SECURITIES REGISTRY
Computershare Investor Services Pty Limited
GPO Box 2975 Melbourne VIC 3001 Australia
Telephone: 1300 850 505 (Australia only)
International: +61 3 9415 4500
Facsimile: +61 3 9473 2555
Email: web.queries@computershare.com.au
ELECTRONIC INFORMATION
By becoming an electronic investor and
registering your email address, you can receive
via email notifications and announcements,
distribution statements, taxation statements
and annual reports.
SECURE ACCESS TO YOUR SECURITYHOLDING
You will need to have your securityholder
reference number or holder identification
number (SRN/HIN) available to access your
holding details.
ONLINE
You can access your securityholding information
via link in the Investor Centre section of the
corporate website, www.nationalstorageinvest.
com.au, or via the Investor Centre link on
registry website at www. computershare.com.
au. To view your securityholding, you will need
your SRN/HIN and will be asked to verify your
registered postcode (inside Australia) or your
country of residence (outside Australia).
PHONE
You can confirm your holding balance, request
forms and access distribution and trading
information by phoning: 1300 850 505 (Australia
only) or calling +61 3 9946 4471 (outside
Australia).
DISTRIBUTION DETAILS
Distributions are expected to be paid within
8 to 10 weeks following the end of each semi
annual distribution period, which occur in June
and December each year. To ensure timely
receipt of your distributions, please consider
the following:
Direct Credit
NSR encourages securityholders to receive
distribution payments by direct credit. If you
wish to register for direct credit or update your
payment details, log in to your holding online
or telephone the registry on 1300 850 505 for
assistance.
TAX FILE NUMBER (TFN)
You are not required by law to provide your TFN,
Australian Business Number (ABN) or exemption
status. However, if you do not provide your
TFN, ABN or exemption, withholding tax at the
highest marginal rate for Australian resident
members may be deducted from distributions
paid to you. If you wish to update your TFN, ABN
or exemption status, log in to your holding online
or telephone the registry on 1300 850 505 for
assistance.
UNPRESENTED CHEQUES
If you believe you have unpresented cheques,
please contact the registry and request a search
to assist in recovering your funds. If you wish to
register for direct credit or update your payment
details, log in to your holding online or telephone
the registry on 1300 850 505 for assistance.
ANNUAL TAXATION STATEMENT AND TAX GUIDE
NSR CALENDAR FY20
The Annual Taxation Statement and Tax Guide
are dispatched to securityholders in August
each year. A copy of the Tax Guide is available
at www. nationalstorageinvest.com.au.
INVESTOR FEEDBACK
If you have any fund specific queries or
feedback please telephone NSR Investor
Relations on 1800 683 290. Please direct any
complaints in writing to NSR Company Secretary
at GPO Box 3239, Brisbane QLD 4001, Australia.
AUGUST
Full Year Results and Annual Report released
Distribution paid for the six months ended 30 June
Annual tax statements released
OCTOBER
Notice of Annual General Meeting released
NOVEMBER
Annual General Meeting
FEBRUARY
Half Year Results released
Distribution paid for six months ended 31 December
The dates listed above are indicative only and
subject to change.
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INVESTOR RELATIONS
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NATIONAL STORAGE REIT ANNUAL REPORT 2018/2019 CORPORATE DIRECTORY
National Storage Holdings Limited ACN 166 572 845 (“NSH” or the “Company”)
National Storage Property Trust ARSN 101 227 712 (“NSPT”)
together form the stapled entity National Storage REIT (“NSR” or the “Consolidated Group”)
RESPONSIBLE ENTITY OF NSPT
PRINCIPAL PLACE OF BUSINESS
National Storage Financial Services Limited
(NSFSL)
ACN 600 787 246 AFSL 475 228
Level 23, 71 Eagle Street, Brisbane QLD 4000
Level 23, 71 Eagle Street
Brisbane QLD 4000
SHARE REGISTRY
Computershare Investor Services Pty Limited
452 Johnston Street
Abbotsford VIC 3067
Stapled Securities are quoted on the
Australian Securities Exchange (ASX).
AUDITORS
Ernst & Young
111 Eagle Street
Brisbane QLD 4000
DIRECTORS
Laurence Brindle
Anthony Keane
Howard Brenchley
Steven Leigh
Andrew Catsoulis
Claire Fidler
COMPANY SECRETARY
Claire Fidler
Patrick Rogers
REGISTERED OFFICE
Level 23, 71 Eagle Street
Brisbane QLD 4000
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