ANNUAL REPORT
2 0 2 1
IMPORTANT INFORMATION
ABOUT THIS REPORT
Welcome to National Storage REIT’s 2021 Annual
Report which reports our performance for the
financial year 1 July 2020 – 30 June 2021.
THE 2021 REPORTING SUITE INCLUDES:
Annual Report – a review of FY21 performance,
strategy and governance.
Financial Report – FY21 financial accounts and
detailed financial performance.
All of NSR’s reporting is available online at
nationalstorageinvest.com.au.
Sustainability Report – outlines NSR’s approach to
sustainability. The 2021 Sustainability Report will be
released prior to National Storage REIT’s AGM and
will be available online at
nationalstorageinvest.com.au
at that time.
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 16, 1 Eagle Street, Brisbane QLD 4000
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.
CONTENTS
n OUR BUSINESS
n FY21 PERFORMANCE
n NSR STRATEGY
n NSR PORTFOLIO
4
6
8
10
n CHAIRMAN & MANAGING
DIRECTORS’ REPORT
14
n INVESTMENT PARTNERS
n THE YEAR IN REVIEW
n BOARD OF DIRECTORS
n CORPORATE GOVERNANCE
n DIRECTORS’ REPORT
n FINANCIAL STATEMENTS
n INVESTOR RELATIONS
n CORPORATE DIRECTORY
18
21
24
29
30
58
124
125
NORTH LAKES, QLD
3
Annual Report 2021
OUR BUSINESS
National Storage is Australasia’s largest self-storage
provider, tailoring self-storage solutions to over
85,000 residential and commercial customers at 211
storage centres across Australia and New Zealand.
National Storage REIT is the only publicly listed, pure
play, fully integrated, owner and operator of self-
storage centres in Australasia. The National Storage
offering spans self-storage, business storage,
climate-controlled wine storage 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 customers'
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.
OVER 85,000
RESIDENTIAL AND
COMMERCIAL
CUSTOMERS AT
211 STORAGE
CENTRES ACROSS
AUSTRALIA AND
NEW ZEALAND.
KELVIN GROVE, QLD
5
Annual Report 2021 FY21 PERFORMANCE
FINANCIAL HIGHLIGHTS
$217.7m
Total Revenue
$309.7m
IFRS Profit
FY20: $177.9m
FY20: $121.8m
22%
154%
OPERATIONAL HIGHLIGHTS
211
Number of
Centres
(30 June 2021)
1,100,000
Square Metres
of Net
Lettable Area
FY20: 188
FY20: 947,000
23
153,000
$86.5m
Underlying
Earnings1
8.5cps
Underlying
Earnings per
Stapled Security
8.2cps
Distribution
per
Stapled Security
$2.95b
Investment
Properties
FY20: $67.7m
FY20: 8.3cps
FY20: 8.1cps
FY20: $2.28b
28%
2.4%
1.2%
29%
86.1%
Group
Occupancy2
FY20: 77.6%
8.5%
$227
Group
Revenue per
Available Metre2
FY20: $185
22.8%
$234
Australia
Revenue per
Available Metre3
FY20: $188
24.3%
$183
New Zealand
Revenue per
Available Metre4
FY20: $163
12.0%
CAPITAL STRENGTH
$3.25b
Total Asset
Value
22%
Gearing
FY20: $2.64b
FY20: 25%
23%
3%
2.8
Weighted
Average
Debt Tenor
FY20: 2.8
--
$1.89
Net Tangible
Assets per
Stapled Security
FY20: $1.65
15%
7
1. Underlying earnings is a non-IFRS
measure (unaudited)
2. Group – Australia and New Zealand
(142 centres), as per 3 & 4 below
3. Australia – 121 centres as at
30 June 2019 (excluding Wine Ark
and let-up centres)
4. New Zealand – 21 centres as at
30 June 2021(excluding let-up centres)
Annual Report 2021
NSR STRATEGY
FOUR PILLARS
OF GROWTH
ORGANIC GROWTH
ACQUISITIONS
DEVELOPMENT
AND EXPANSION
TECHNOLOGY
AND INNOVATION
NSR achieves
organic growth
through a
combination of
occupancy and rate
increases assessed
on an individual
centre basis
NSR has executed
over 150 high-quality
acquisitions since
its IPO in 2013
– a growth rate
unmatched in the
Australasian market
NSR has a highly
developed and
proven in-house
expertise which
enables it to identify,
negotiate and
deliver strategic
development and
expansion projects
NSR leads the
Australasian storage
industry with new
technology and
innovation projects
providing an
important competitive
advantage over
its peers
9
Annual Report 20211234 NSR PORTFOLIO
The National Storage portfolio continues
to grow across Australia and New Zealand
with storage centres conveniently located
in capital cities and regional areas that
exhibit drivers of storage demand.
As at 30 June 2021.
*Map not to scale.
11
Annual Report 2021 PORTFOLIO STATISTICS - JUNE 2021
AUST PORTFOLIO BY NLA
NZ PORTFOLIO BY NLA
REGION
CENTRES
NLA
North Queensland
Sunshine Coast
Gold Coast
Brisbane
Sydney
Canberra
Melbourne
Geelong
Adelaide
Tasmania
Perth
Darwin
Wollongong
Central Coast (NSW)
TOTAL
PORTFOLIO VALUATION
8
11
15
25
20
4
39
4
9
6
27
3
3
10
184
45,000
57,800
77,400
143,000
104,700
33,100
202,800
16,100
52,300
22,000
REGION
Auckland
Hamilton
Wellington
Christchurch
Dunedin
Regional NZ
TOTAL
CENTRES
NLA
4
5
8
6
2
2
30,200
19,800
35,100
22,200
17,700
7,300
27
132,300
PORTFOLIO COMPOSITION
140,400
Freehold
17,200
12,900
44,300
969,000
Leasehold
Managed
Licensed
TOTAL
Weighted Average Primary Cap Rate: 5.98%
STATE
QLD
NSW
ACT
VIC
SA
WA
TAS
NT
NZ
VALUATION
CENTRES
NLA
59
33
4
43
9
27
6
3
27
323,200
161,900
33,100
218,800
52,300
140,400
22,000
17,200
132,300
%
28
15
3
20
5
13
2
2
12
$M
776
466
128
738
130
265
73
30
350
192
14
3
2
211
%
27
16
4
25
4
9
2
1
12
ALBION, QLD
TOTAL
211
1,101,200
100%
2,956
100%
Exchange Rate: 1.074
13
Annual Report 2021
CHAIRMAN &
MANAGING
DIRECTORS’ REPORT
THESE TREMENDOUS
RESULTS ARE A
TESTAMENT TO THE
STRENGTH AND
RESILIENCE OF OUR
BUSINESS MODEL
NSR has delivered an exceptionally strong set
of results for the 2020-2021 year, despite facing
considerable economic uncertainty and numerous
logistical challenges arising from the COVID-19 global
pandemic. These results have been underpinned by
the outstanding performance of our individual centre
management teams supported by our regional, state,
and head office management staff across the whole
of NSR. Every state and territory of Australia and New
Zealand has experienced growth throughout FY21
in terms of overall occupancy, rate, and REVPAM.
This has seen Group occupancy increase by 8.5% to
86.1%, rate per square metre increase by 8.3% to $260
and REVPAM increase by 22.8% to $227/m², which is
an exceptional result.
These tremendous results are a testament to the
strength and resilience of our business model which
remains focused on our “Four Pillar” growth strategy.
This strategy focuses primarily on driving organic
growth which we achieve by utilising the twin drivers
of rate and occupancy, while undertaking accretive
acquisitions, continuing to grow our development
and expansion pipeline, along with harnessing new
technology and innovation in order to achieve
ongoing business efficiencies and economies of scale.
Over the past 12 months our total revenue has
exceeded $217 million, an increase of 22% on FY20.
At the same time, our operating profit increased
by 22% to $128.6 million, and our operating margin
has continued to grow to 61%, despite a number of
COVID-19 related expenses having been incurred
throughout the year. For FY21, NSR reported
underlying earnings of $86.5 million, representing
8.5 cents per stapled security. Our company-wide
emphasis on improving our organic earnings,
together with lower finance and borrowing costs
has meant that we are extremely well positioned to
continue this positive growth trajectory throughout
the 2021-2022 year and beyond.
NSR’s revenue has increased at a compound annual
growth rate (CAGR) of 24.1% since IPO, representing
a 300%+ increase in revenue, and underlying
earnings growth of 344% since December 2013.
This phenomenal growth is due to various factors,
including an expansion of the “user universe” for
self-storage in Australia and New Zealand, NSR’s
enhanced brand awareness, increasingly transitory
workforce, ongoing trend towards downsizing, aging
population and the strength of the housing market in
Australia and New Zealand.
NSR’s NTA has increased substantially over the last
12 months to $1.89, representing a 15% increase
over 30 June 2020. This has primarily been driven by
our improved operating performance, tightening
capitalisation rates and value accretion from the
delivery of 10 development and expansion projects.
The primary capitalisation rate for the Australian NSR
portfolio now sits at 5.97%, while its New Zealand
counterpart is at 6.07%. NSR now has total assets
of $3.25 billion, a ten-fold increase since its IPO in
December 2013.
NSR delivered total securityholder return for FY21 of
12.4%, and 22.7% for the three years to 30 June 2021,
one of the best results of any A-REIT 200 company.
Operationally, NSR has added approximately
125,000m2 of occupancy growth to NSR’s portfolio
during FY21, filling the equivalent of approximately
20 new centres in the last 12 months. This is an
extraordinary achievement, and is testament to
our operational team’s united, relentless and strong
team-based approach in the face of numerous
unprecedented challenges.
ALBANY, NZ
Our COVID-19 safe work practices include contact-
free, completely automated move-ins, and the
capacity for all head office and contact centre staff
to work completely remotely when necessary, while
ensuring our collaborative working environment is
maintained. We have the ability to implement state
and location-specific COVID-safe plans to facilitate
continued centre and head office operations quickly
and seamlessly in response to lockdowns which have
unfortunately been ongoing over the past 18 months.
From a storage asset acquisition perspective, the
Australian and New Zealand markets remain highly
fragmented, offering considerable opportunity for
future growth. In FY21, NSR made 25 acquisitions
comprising 22 existing storage centres and three new
development sites at a total cost of $352 million. This
included the strategic acquisition of a nine centre
portfolio in Melbourne on approximately 100,000m2 of
land, offering significant scope for future expansion
and development. Since 1 July 2021, NSR has
completed four more acquisitions totalling $33 million.
NSR was well supported in June 2021 when it
announced a fully underwritten capital raise for $325
million by way of an accelerated, non-renounceable
rights issue to existing security holders. As a result, NSR’s
balance sheet remains strong, with a gearing of 22%
as at 30 June 2021, and approximately $900 million of
headroom available before NSR reaches the upper
end of its stated gearing range of 25% - 40%.
NSR’s development and expansion pipeline has
grown, with 10 projects completed in FY21 adding
over 59,000m2 of new NLA. In addition, NSR has 22
active projects across Australia and New Zealand
ranging from concept design to nearing completion
with seven projects currently under construction.
These projects include new developments in key infill
locations and targeted growth areas, the strategic
expansion of existing centres where unit supply is
insufficient to meet current and anticipated future
demand, and “revive” projects focused on enhancing
the functionality and technology of existing centres in
order to drive revenue optimisation. Our aggregate
NLA pipeline currently exceeds 150,000m2, providing
the opportunity for continued organic growth in both
rate and occupancy, which will underpin strong
organic earnings growth in future years.
NSR’s continuing commitment to business automation
has witnessed improvements in the customer enquiry,
booking and move-in processes promoting greater
efficiency, security and convenience. In addition,
contact centre innovations have seen enquiry
conversion rates improving year-on-year. Our Wine Ark
optimisation project will result in a purpose-built new
state of the art cellar management system. NSR’s IT
and cyber security program has delivered enhanced
security across the entire operating platform and our
in-house IT team is collaborating with our development
15
Annual Report 2021 and operational teams to bring key technologies into
our new builds, expansions and refurbishment projects.
NSR maintains its long-term commitment to quality ESG
outcomes. Three key focus areas for NSR include our
economic performance, our people, and the ongoing
transformation of our business from an ESG perspective.
NSR is in the process of undertaking its first NoCO2 audit,
which is scheduled to be completed in the coming
months. NSR has continued its solar PV system rollout
with 119 centres now featuring solar power generation
capabilities with over 7,000 solar panels now installed
across the NSR portfolio. All NSR new builds feature solar
PV, LED lighting and other energy efficient initiatives.
We have been extremely grateful for the unstinting
support and guidance that NSR has received from
our independent directors and our highly capable
executive and senior management teams for their
tireless work in helping to achieve the outcomes
delivered to securityholders in FY21. We express our
sincere gratitude to NSR’s staff, securityholders and
other stakeholders for their ongoing support
throughout FY21 and look forward to a positive
and successful FY22.
Laurence Brindle
INDEPENDENT NON-EXECUTIVE CHAIRMAN
Andrew Catsoulis
MANAGING DIRECTOR
NSR’S DEVELOPMENT
AND EXPANSION PIPELINE
HAS GROWN, WITH 10
PROJECTS COMPLETED
IN FY21 ADDING OVER
59,000M2 OF NEW NLA.
IPSWICH, QLD
17
Annual Report 2021 INVESTMENT PARTNERS
National Storage continues to work with its current
investment partners, and engage with a number
of 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 as 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 multiple centres with Fremantle, Martin, Port
Kennedy and East Perth added to the NSR portfolio
over recent years. The Frances Bay and Kelmscott
centres are owned by Parsons Group and managed
by National Storage. An additional two centres are
currently under design and construction, with other
sites currently in due diligence and planning stages.
National Storage retains certain rights to purchase the
assets under this arrangement.
service station is currently under construction with
completion due in the first half of FY22.
BRYAN FAMILY GROUP
(BFG, formerly known as Leyshon)
National Storage and BFG have jointly developed
a site at Biggera Waters on the Gold Coast that
commenced operating in the first half of FY21.
National Storage and BFG, through The Bryan
Foundation, extended their partnership in FY20 to
jointly acquire and develop a site at Moorooka in
Brisbane on which a high-quality storage centre and
OTHER PARTNERS
National Storage continues to work with numerous
other development partners which has resulted in the
delivery of two new purpose-built storage centres in
South East Queensland (Ipswich and North Lakes) and
one centre at Glendenning in Sydney during FY21.
Several additional centres in Victoria and Queensland
are currently in various stages of design and planning
and when delivered, will add further to the National
Storage network.
NORTH LAKES, QLD
19
Annual Report 2021 THE YEAR IN REVIEW
ASSET MANAGEMENT
ACQUISITIONS
The implementation of our new revenue
management software in March 2020 has
delivered excellent results. The new system is
predominantly automated and uses artificial
intelligence in a predictive modelling capacity.
The continued 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. The
operations management team maintain a focus
on driving Revenue per Available Square Metre
(REVPAM) using a balanced approach to rate
per square metre and occupancy growth on an
individual centre and unit type basis. The 30 June
2021 REVPAM across the Australian portfolio (121
owned centres at June 2019, excluding let-up
centres) was $234/m2 (June 2020: $188/m2), a
24.3% increase. Occupancy across the Australian
portfolio also increased strongly to 86.2%
(June 2020: 76.5%).
Our operational state-based structure has gone
above and beyond over the last year, weathering
the impacts of COVID-19 lockdowns and the
increased portfolio size as well as the day-to-
day issues that arise from operations. Significant
improvements were made through efficiency
programs and the continued rollout of training
programs to all centre and contact centre staff.
Conversion rates across all channels have again
increased this year due to improved data analysis
and stronger operational leadership. 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 through
automation and efficiency programs. The
introduction of several bulk buys in our packaging
range has seen revenue in this area continue to
grow year-on-year. Other ancillary income streams
including insurance and vehicle hire continued
to increase across the year and deliver important
additional revenue to the model.
National Storage has successfully transacted 22
acquisitions and three development sites in FY21
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.
DEVELOPMENT AND EXPANSION
National Storage continues to target development
and expansion projects to provide additional
built capacity in key markets to deliver long-
term enhanced revenue and NTA outcomes for
securityholders. During the year, 10 projects were
completed adding 59,100m2 of NLA, with 15 active
projects including 7 projects under construction,
expected to deliver approximately 110,000m2 of
additional NLA.
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 FY21 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).
WINE ARK ARTARMON, NSW
21
Annual Report 2021 MARKETING AND CUSTOMER EXPERIENCE
In FY21, the National Storage marketing strategy was
further refined to focus on customer acquisition and
conversion optimisation. The business has continually
invested in our digital presence creating a simplified,
increasingly user-friendly online customer experience. Our
revamped e-commerce offering is industry leading due
to the improved functionality of our simplified booking
and onboarding processes, and automated customer
communications. We have also seen an increased
number of customers visiting our website as a result of our
strategic digital marketing activity.
Our emphasis on digital marketing has allowed our
strategy to remain unimpeded by COVID-19, with all
branding, sponsorship and retail campaigns now being
promoted almost exclusively digitally. This has been
supported by our contact-free move-in processes, now
including a new contact centre payment portal.
The National Storage sponsorship strategy has continued
to evolve with the availability of live data through our
new CRM (Customer Relationship Management) tool
that enables us to track each customer’s journey,
showcasing direct conversions and thereby determining
ROI of our sponsorships. We have also capitalised on
engagement rates surrounding video content and
created a suite of commercials that are then amplified
through our digital channels.
Brand trust and purpose have come to the forefront
of our key messaging with sustainability, staff and
community-focused content featuring heavily in both our
corporate and marketing communications.
SUSTAINABILITY
This year will see the release of National Storage’s
fifth stand-alone Sustainability Report. The report
is expected to be released in October 2021, prior
to National Storage’s AGM and will be published
online at nationalstorageinvest.com.au. The report
will detail National Storage’s progress across its three
sustainability pillars: economic performance, people,
and transformation. Further, the environmental, social
and governance aspects of the organisation will be
considered when our short, medium, and long-term
sustainability targets are discussed.
BIGGERA WATERS, QLD
23
Annual Report 2021 BOARD OF DIRECTORS
Laurence
Brindle
Anthony
Keane
Howard
Brenchley
Steven
Leigh
Independent
Non-Executive Chairman
Independent
Non-Executive Director
Independent Non-Executive
Director
BCom BE (Hons) MBA
BSc (Maths) GradDipCorpFin
BEc
Laurence has extensive experience in funds
management, finance and investment. Until
2009 he was an executive with Queensland
Investment Corporation (QIC). During his 21
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,
Waypoint REIT and a Non-Executive Director
of Stockland.
Laurence serves on the Audit, Risk and
Remuneration Committees and is Chairman of
the Nomination Committee.
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 and ASX listed EMvision Medical Devices
Ltd (EMV). 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 35 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 the1990s 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 was until
recently a Non-Executive Director of the ASX
listed APN Property Group Limited (APD) and
is currently a Non-Executive Director of APN
Funds Management Limited, responsible entity
for ASX listed APN Industria REIT (ADI) and APN
Convenience Retail REIT (AQR). Howard is a
member of the Audit and Risk Committees.
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 QIC Global Real Estate in
2012 where he was responsible for the group’s
$20b plus property portfolio. Steven is a Non-
Executive Director of ASX-listed company,
Scentre Group Limited, is a founding member
of Male Champions of Change established
by the Property Council of Australia and he
has qualifications in real estate valuation and
project management. Steven is the Chairman
of the Remuneration Committee and a
member of the Nomination Committee.
25
Annual Report 2021 BOARD OF DIRECTORS / EXECUTIVES
Andrew
Catsoulis
Claire
Fidler
Stuart
Owen
Managing Director
Executive Director &
Company Secretary
Chief Financial Officer
BA LLB Grad Dip Project Mgmt (Hons)
LLB (Hons) BBus (Intl) GAICD FGIA
BBus CPA GAICD
A founder of the National Storage business,
Andrew has over 25 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. He has led the company in its
growth from a single centre in 1996 to over
200 centres today and has been primarily
responsible for charting its strategy over
that period.
Claire was appointed an Executive Director
in July 2017 and has been the principal
Company Secretary of National Storage since
November 2015. She was appointed Head
of Legal & Governance in June 2020 and
now oversees the legal, governance and
risk functions of the organisation. Claire holds
legal and international business qualifications
and is admitted as a solicitor of the Supreme
Court of Queensland. Claire has twenty years’
experience in corporate and commercial
law, both in private practice and in-house.
She practiced in the litigation, resources, and
corporate areas of two large law firms and as
Corporate Counsel and Company Secretary at
Rio Tinto Coal Australia, prior to joining National
Storage. 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. Claire was also a Non-Executive
Director of Spacer Marketplaces Pty Limited
until May 2021.
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.
27
Annual Report 2021 CORPORATE GOVERNANCE
NORTH LAKES, QLD
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 2021 Corporate
Governance Statement, which can be
found online at
nationalstorageinvest.com.au.
29
Annual Report 2021 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)
Group occupancy(2)
Australian occupancy(3)
New Zealand occupancy(4)
Group Revenue per available metre (REVPAM)(2)
Australian Revenue per available metre (REVPAM)(3)
New Zealand Revenue per available metre (REVPAM)(4)
Weighted Average Primary Cap Rate
Investment Properties(5)
Portfolio Valuation Uplift
Acquisitions / Centres(6,7)
NLA (sqm)
Balance Sheet
Total Assets(7)
Debt drawn(7)
Interest Rate Hedges(7)
Gearing
Weighted average cost of debt
Weighted average debt tenor (years)
NTA
FY21
FY20
Change
$217.7m
$309.7m
30.21cps
$86.5m
8.5cps
$135.2m
8.2cps
At June
2021
206/5 (211)
86.1%
86.2%
85.4%
$228
$234
$183
5.98%
$2.95b
$311m
$320m/22
1,100,000
At June
2021
$3.25b
$761m
$432m
22%
1.8%
2.8
$1.89
$177.9m
$121.8m
14.59cps
$67.7m
8.3cps
$89.5m
8.1cps
At June
2020
184/4 (188)
77.6%
76.5%
84.4%
$185
$188
$163
6.49%
$2.28b
$67m
$204m/20
947,000
At June
2020
$2.64b
$681m
$507m
25%
1.9%
2.8
$1.65
22%
154%
107%
28%
2.4%
51%
1.2%
Change
22/(1) (23)
8.5%
9.7%
1.0%
22.8%
24.3%
12.0%
(0.51%)
29%
$244m
($116m)/(2)
16%
Change
23%
$80m
($75m)
(3%)
(0.1%)
-
15%
-
PRINCIPAL ACTIVITIES
Listed on the ASX in December 2013, NSR is the largest self-storage owner/operator across Australia and
New Zealand, with 213 self-storage centres under operation, management or licence, providing tailored
storage solutions to over 85,000 customers.
NSR continues the expansion of its extensive portfolio of owned, managed and licenced centres, having
grown from 62 centres at IPO in December 2013 to 213 centres at the date of this Directors’ Report, with an
additional centre expected to settle in late August 2021. A total of 10 newly constructed and expanded
storage centres were delivered during the Reporting Period with a further 22 in various stages of design,
construction and delivery. NSR now manages approximately 110,000 storage units across 1.1 million
square metres of net lettable area in Australia and New Zealand. Investment Properties(5) have increased
by 29% during the Reporting Period to $2.95 billion as at 30 June 2021.
Of the 214 self-storage properties in the NSR portfolio at the date of this report, ownership is as follows:
•
•
•
•
195 self-storage centres owned by NSPT (Freehold Centres)
14 self-storage centres operated as long-term leasehold centres (Leasehold Centres)
3 third party managed centres
2 licenced branding rights centres in New Zealand
HEAD OFFICE, QLD
1 Underlying earnings is a non-IFRS measure (unaudited), see table within Operating Results for reconciliation
2 Group – Australia and New Zealand (142 centres), as per 3 & 4 below
3 Australia – 121 centres as at 30 June 2019 (excluding WineArk and let-up centres)
4 New Zealand – 21 centres as at 30 June 2021(excluding let-up centres)
5 Investment properties net of lease liability
6 Excluding transaction costs
7 NZD/AUD exchange rate of 1.074
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
31
31
Annual Report 2021
NSR’s business model encompasses a “Four Pillar” growth strategy, focussing on:
• Organic Growth
• Acquisitions
• Development and Expansion
•
Technology and Innovation.
BUSINESS STRATEGY
NSR’s objective is to deliver investors a stable and growing income stream from a portfolio of
geographically diversified high-quality self-storage assets. NSR strives to drive income and capital growth
through active asset and portfolio management (including the acquisition, development or
redevelopment and portfolio recycling of self-storage centres).
The key drivers of the business are:
• Organic Growth - NSR achieves organic growth through a combination of occupancy and rate
increases assessed on an individual centre basis
• Acquisitions - NSR has executed over 150 high-quality acquisitions since its IPO in December 2013 – a
growth rate unmatched in the Australasian market
• Development and Expansion - NSR has a highly developed and proven inhouse expertise which
enables it to identify, negotiate and deliver strategic development, expansion and refurbishment
projects in an efficient and effective manner
• Technology and Innovation - NSR leads the Australasian storage industry with new technology and
innovation projects designed to improve operational efficiency and enhance the customer and
employee experience, providing an important competitive advantage over its peers
Further details on these key business drivers can be found elsewhere in the NSR 2021 Annual Report.
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 2001 (Cth).
OPERATING RESULTS
IFRS Profit after tax for the Reporting Period was $309.7 million with EPS of 30.21 cents per stapled security.
Underlying earnings(8) for the Reporting Period increased by 28% to $86.5 million. NSR achieved underlying
earnings(8) per stapled security of 8.5cps for the 2021 financial year, an increase of 2.4% over the previous
12 months. This result was impacted by the dilutionary effects of capital raises and a softer first quarter due
to uncertainty surrounding COVID-19. The impact on operations due to COVID-19 was relatively minor and
the operational result for the full year reflects the highly resilient nature of NSR’s business model and growth
strategy as well as the high level of competency demonstrated by the NSR team across all aspects of the
business.
$m
IFRS Profit after tax
Plus tax expense/(benefit)
Plus restructure and other non-recurring costs
Plus contracted gain in respect of sale of investment property
Plus amortisation of interest rate swap reset
Less fair value adjustment
Less lease diminution on leasehold investment properties
Underlying Earnings(8)
Weighted average securities on issue (refer Note 19)
Underlying earnings per stapled security(8)
FY21
$309.7
$0.8
$0.9
-
$10.9
($231.7)
($4.1)
$86.5
1,020,912,858
8.5cps
FY20
$121.8
($2.3)
$3.7
$3.0
$7.8
($63.0)
($3.3)
$67.7
815,973,324
8.3cps
Total revenue increased by 22% to $217.7 million driven by increases in rate and occupancy as well as
contributions from acquisitions and new developments. Occupancy across the Group recovered the early
losses suffered as a result of COVID-19 during the last quarter of FY20 and achieved significant and
consistent growth throughout the whole of FY21, increasing to 86.1%, up 8.5% from 77.6% at 30 June 2020.
Strong growth in REVPAM was experienced across both Australia (+24.3%) and New Zealand (+12.0%),
supported by both increased occupancy and rate. Let-Up centres (those recently built or expanded)
continued to fill strongly with approximately 50,000m2 of new NLA filled during the Reporting Period.
These results continue to demonstrate the highly resilient nature of self-storage as an asset class and are a
testament to the proactive response provided by NSR’s management team, which limited the impact of
losses related to the COVID-19 pandemic.
CASH MANAGEMENT
Cash and cash equivalents as at 30 June 2021 were $95.9 million compared to $90.4 million at 30 June
2020. Subsequent to 30 June 2021, the cash balance has been utilised to facilitate further acquisitions and
incorporates a provision for payment of the distribution on 3 September 2021. Net operating cashflow for
the year was $135.2 million (2020: $89.5 million).
During the year NSR successfully completed an equity raising of $325 million by way of a fully underwritten
non-renounceable rights issue. The purpose of the equity raising was to strengthen the balance sheet,
replenish investment capacity and provide additional funding flexibility.
An interim distribution of 4.0 cents per stapled security ($40.7 million) was paid on 1 March 2021 with an
estimated final distribution of 4.2 cents per stapled security ($49.7 million) declared on 23 June 2021 with a
payment date of 3 September 2021. This totals a full year distribution of 8.2 cents per stapled security,
against underlying earnings(8) per security of 8.5 cents.
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 2020 interim distribution approximately 12% of eligible securityholders (by number of
securities) elected to receive their distributions as securities totalling approximately $4.9 million. The DRP
price was set at $1.8596 which resulted in 2,641,947 new securities being issued.
The June 2021 final distribution has seen approximately 23% of eligible securityholders (by number of
securities) elect to receive their distributions as securities totalling approximately $11.4 million. The DRP
price was set at $2.1925 which resulted in approximately 5,200,000 new securities being issued.
NSR continues to actively manage its debt facilities to ensure it has adequate capacity for future
acquisitions and working capital requirements. NSR’s finance facilities are structured on a “Club”
arrangement involving the four major Australian banks, a major Australian superannuation fund and JP
Morgan, providing a diversified and high-quality funding group. During the Reporting Period all conditions
precedent to the drawdown of the JP Morgan facility were satisfied.
During the Reporting Period the Group refinanced part of its existing debt facilities and increased available
liquidity by a further AUD $100 million and NZD $25 million, to support ongoing developments in Australia
and New Zealand. The Consolidated Group’s borrowing facilities are AUD $930 million and NZD $252
million. As at the Reporting Date AUD equivalent of approximately $403 million was undrawn and
available. NSR’s weighted average debt tenor as at the Reporting Date is 2.8 years, consistent with 30
June 2020. NSR is actively reviewing its debt structure with the aim of increasing diversity of funding sources
and extending NSR’s debt tenor beyond 4 years. NSR’s gearing level as at 30 June 2021 was 22% against a
target gearing range of 25% - 40%, providing flexibility and the ability to act expeditiously on acquisition
and development opportunities as they arise.
NSR maintains interest rate hedges in accordance with NSR’s hedging policy. This hedging policy is
reviewed on a regular basis. As at the Reporting Date interest rate hedges totalling $432 million were in
place with expiry dates ranging from 0.25 years to 5.25 years.
ACQUISITIONS AND INVESTMENTS
NSR considers its ability to acquire and integrate quality self-storage assets to be one of the key drivers of its
growth strategy and success to date. NSR’s dedicated in-house acquisitions team has continued to lead
the market in identifying, facilitating and transacting on acquisitions that are considered to be appropriate
for inclusion in the NSR portfolio. NSR critically assesses each potential acquisition against criteria such as:
location and surrounding demographics of local catchment area;
•
• competition and potential for future competition within the primary (3km) and secondary (5km)
competitive radial areas;
• exposure to passing traffic – typically a minimum of 30,000 cars per day targeted;
• build quality and opportunities for value adding such as expansion potential, surplus land,
occupancy runway or potential for rate per square metre improvement;
• proximity to major drivers of storage demand such as retirement villages, new housing
development and / or medium density apartment or townhouse developments and major
shopping centres; and
• environmental, sustainability and climate change impacts.
Acquisition activity for the year ended 30 June 2021 returned to pre-COVID-19 levels. NSR continued with
the execution of its focused acquisition strategy with 22 new centres and 3 development sites acquired
during the Reporting Period, totalling $352 million. Since the Reporting Date to the date of this Directors’
Report a further three self-storage centres and one development site with a combined value of $33 million
have settled or are under contract.
8 Underlying earnings is a non-IFRS measure (unaudited)
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
32
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
33
33
Annual Report 2021
NSR re-values all assets each Reporting Period through a combined process undertaken by both external
valuers and Directors’ valuations, based on valuations and methodologies from independent valuers (m3
Property and Cushman & Wakefield). After having undertaken this process, the weighted average
primary capitalisation rate of NSR’s portfolio of assets reduced by 51 basis points to 5.98% and the value of
the 30 June 2020 portfolio increased by $311 million. This contributed to the 15% increase in NTA which now
sits at $1.89 per stapled security, up from $1.65 per stapled security in June 2020. The continuation of
improved trading conditions as well as recent non NSR acquisition activity indicates that capitalisation rates
are reasonably likely to continue to tighten further and hence valuations are expected to continue to
increase.
Acquisitions for the Year Ended 30 June 2021
Region
Brisbane
Sunshine Coast
Sydney
Central Coast
Melbourne
Perth
Christchurch (NZ)
Total
Number of
Centres
2
4
2
2
10
1
1
22
NLA
(m2)
13,400
29,100
13,100
15,700
47,500
5,800
3,800
128,400
INVESTMENT IN JOINT VENTURES AND ASSOCIATES
In June 2019, NSR with Bryan Family Group (“BFG”) acquired a combined commercial and self-storage
development site at Biggera Waters on the Gold Coast. Construction of a multi-level, state-of-the-art self-
storage facility was completed during the Reporting Period and the centre commenced trading in January
2021.
In December 2019, NSR with The Bryan Foundation (“TBF”) acquired a development site at Moorooka in
Brisbane for the purpose of developing a combined commercial and self-storage facility. Construction of
the multi-level, state-of-the-art self-storage facility and commercial building is underway and expected to
complete in late 2021.
NSR has been appointed to manage the above projects and will generate income from its provision of a
range of services including design and development, project management, corporate administration and
centre operations.
LIKELY DEVELOPMENTS
NSR continues to utilise its position as Australia's first and only ASX listed, pure play, fully integrated, sector
specific, self-storage REIT in order to execute its stated “Four Pillars” strategy. This embodies:
• organic growth through increases in rate and occupancy at an individual centre level;
• growth by acquisition of quality storage centres across Australia and New Zealand;
• development and expansion activity focused on high-quality new self-storage developments in
key locations and evaluating its existing portfolio for expansion, development or re-development
opportunities, while continuing to explore portfolio recycling opportunities; and
technology and innovation – harnessing new technology and innovation to bring further
efficiencies and economies of scale to NSR’s existing business model.
•
DIVIDENDS AND DISTRIBUTIONS
NSR has paid or declared distributions totalling 8.2 cents per stapled security for the Reporting Period,
comprising:
• An estimated final distribution of 4.2 cents per stapled security for the 6 months to 30 June 2021.
The distribution is expected to be paid on 3 September 2021 and is expected to contain a tax
deferred component.
• An interim distribution of 4.0 cents per stapled security for the period 1 July 2020 to 31 December
2020 which was paid on 1 March 2021 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 https://www.nationalstorageinvest.com.au.
The Head of Legal & Governance 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 meets a number of times each 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 and market conditions - NSR may be adversely impacted by many factors including
fluctuations in general economic conditions including interest rates, inflation, taxation, consumer
confidence levels which may adversely affect the demand for storage space and general market
levels. A number of factors affect the performance of the stock markets, which could affect the
price at which NSR’s securities trade on the ASX. Among other things, geo-political instability,
including international hostilities, acts of terrorism, the response to COVID-19 and travel restrictions,
epidemics and pandemics such as COVID-19, movements of international and domestic stock
markets, interest rates, exchange rates, inflation and inflationary expectations and overall economic
conditions, economic cycles, investor sentiment, political events and levels of economic growth,
both domestically and internationally as well as government taxation and other policy changes or
changes in law may affect the demand for, and price of, Stapled Securities. The share prices for
many listed companies in Australian stock markets and in international stock markets have in recent
times been subject to wide fluctuations and volatility, which in many cases may reflect a diverse
range of non-company specific influences referred to above. In particular, the events relating to
COVID-19 have recently resulted in significant market falls and volatility both in Australia and
overseas, including in the prices of securities trading on the ASX. There is continued uncertainty as to
the further impact of COVID-19 and or any other strains of this virus on the Australian economy and
equity and debt capital markets including in relation to governmental action, work stoppages,
university and school stoppages, lockdowns, quarantines, travel restrictions and the impact on the
Australian economy (and international economies) and share markets globally. Any of these events
and resulting fluctuations may materially adversely impact the market price of Stapled Securities. It is
also possible that new risks may emerge as a result of domestic or foreign markets experiencing
extreme stress, or existing risks (including the impacts of COVID-19) may evolve in ways that are not
currently foreseeable. 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.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
34
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
35
35
Annual Report 2021
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 and 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 generate new customer enquiries and then
maximise conversion of these new customer enquiries and to continue to maintain and build
occupancy at an individual centre level.
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. These
factors may be exacerbated by the impact of COVID-19. A reduction in the value of NSR’s property
assets may adversely affect the value of the Stapled Securities. It may also impact on NSR’s financing
arrangements (refer to Funding below). Property values may fall if the underlying assumptions on
which the property valuations are based, change in the future. As property values fluctuate, so too
may returns from property assets. 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 existing lettable area at a number of
NSR’s centres. The rate at which NSR is able to expand will be impacted by its financial capacity to
do so as well as 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 as well as the prevailing micro and macro-
economic enviroment. 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’s future performance is dependent on the ability to recruit, train, retain and
motivate senior executives and employees. There is a risk that NSR may be unable to attract or retain
key personnel and specialist skills and may lose corporate memory. NSR relies upon the expertise and
experience of the senior management team. Therefore, 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 such as earthquakes or
cyclones. 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.
RISK
Funding and gearing - 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 at the relevant time,
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. As
noted above, COVID-19 may negatively impact on property valuations. In part, NSR’s gearing levels
depend on the valuation of properties within its portfolio. If the value of properties in NSR’s portfolio
decreases, then NSR’s gearing will increase. Without the sufficient capital, a COVID-19 related
impact to property valuations and earnings has the potential to increase NSR’s gearing levels above
its target gearing range.
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 (including in relation to rent payable). The
leases may also be subject to certain termination rights which, if triggered, may result in the lessor
terminating the lease. This may adversely affect NSR’s ability to continue to operate the self-storage
centres at those locations, and the fair value attributed to them.
Environmental issues and climate change - 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 found to be 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. 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. 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 its operations, NSR is required to handle data from
various sources including sensitive customer data. 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 or result in the leaking of sensitive data. NSR employs state of
the art cyber security systems, processes and consultants in order to attempt to minimise this risk.
These systems are regularly reviewed and updated as deemed necessary.
Impact of COVID-19 - The events relating to COVID-19 have resulted in unprecedented restrictions
and lockdowns, including in relation to domestic and international travel and general disruption to
business activities. These restrictions have been imposed by Australian and New Zealand state,
provincial and federal governments and international governments and regulatory authorities,
and/or implemented as a matter of best practice during the ongoing crisis. Whilst all of NSR’s centres
have remained open and operational throughout the COVID-19 pandemic, the events relating to
COVID-19 may have a material adverse effect on, or cause a material adverse change to, NSR’s
business. Given the high degree of uncertainty surrounding the extent and duration of COVID-19, it is
not currently possible to assess the full impact of COVID-19 on the NSR business. There is also
continued uncertainty as to the duration and further impact of COVID-19 including (but not limited
to) in relation to government, regulatory or health authority actions, work stoppages, lockdowns,
quarantines, travel restrictions and the impact on global economies. There is no certainty that
property values or NSR’s business activities will normalise to a level existing prior to the impact of
COVID-19 (or how long such normalisation could take). If the duration of events surrounding COVID-
19 are prolonged, NSR may need to take additional measures in order to respond appropriately (for
example, by raising additional funding).
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
36
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
37
37
Annual Report 2021
DIRECTORS
NATIONAL STORAGE HOLDINGS LIMITED
The NSH Directors in office during the Reporting Period 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 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’ 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 21 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, Waypoint REIT and a Non-Executive director of Stockland.
Laurence serves on the Audit, Risk and Remuneration Committees and is Chair of the Nomination
Committee.
Andrew Catsoulis, Managing Director
BA, LLB, Grad Dip Proj Mgmt (Hons)
As founder of the National Storage business, Andrew has over 25 years of specific self-storage industry
expertise including in the areas of acquisition, development, expansion, 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 and 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. 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. He has led the
company in its growth from a single centre in 1996 to over 210 centres today and has been primarily
responsible for charting its strategy over that period.
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 and ASX listed
EMvision Medical Devices Ltd (EMV). 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 Chair 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 35 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 the1990’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 was until recently a Non-Executive Director of the ASX listed
APN Property Group Limited (APD) and is currently a Non-Executive Director of APN Funds Management
Limited, responsible entity for ASX listed APN Industria REIT (ADI) and APN Convenience Retail REIT (AQR).
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 QIC Global Real Estate in
2012 where he was responsible for the group’s $20b plus property portfolio. Steven is a Non-Executive
Director of ASX-listed company, Scentre Group Limited, is a founding member of Male Champions of
Change established by the Property Council of Australia and he has qualifications in real estate valuation
and project management.
Steven is Chair of the Remuneration Committee and a member of the Nomination Committee.
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 was appointed Head of Legal & Governance in June 2020
and now oversees the legal, governance and risk functions of the organisation. Claire 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 was a non-executive director of Spacer Marketplaces Pty Limited
until May 2021.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
38
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
39
39
Annual Report 2021
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
Waypoint REIT (ASX:WPR)
Stockland (ASX: SGP)
APN Property Group (ASX:APD)
APN Funds Management Limited,
responsible entity for:
APN Industria REIT (ASX:ADI)
APN Convenience Retail REIT (ASX:AQR)
Scentre Group Limited (ASX: SCG)
EMvision Medical Devices Ltd (ASX:EMV)
PERIOD OF DIRECTORSHIP
10/07/2016 - Current
16/11/2020 – Current
1998 – 13/08/2021
03/12/2013 - Current
27/12/2017 - Current
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
-
11,595
500,000
-
-
-
INDIRECT
1,523,488
230,421
13,943,612
122,751
233,068
14,494
TOTAL
1,523,488
242,016
14,443,612
122,751
233,068
14,494
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:
12 (12)
12 (12)
12 (12)
12 (12)
12 (12)
12 (12)
6 (6)
6 (6)
-
6 (6)
-
-
6 (6)
6 (6)
-
6 (6)
-
-
5(5)
5(5)
-
-
5(5)
-
2 (2)
2 (2)
-
-
2 (2)
-
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 meetings
3.
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
NATIONAL STORAGE FINANCIAL SERVICES LIMITED
NAME
APPOINTMENT DATE
Claire Fidler
26 November 2015
Claire Fidler
LLB (Hons), B Bus (Int), GAICD, FGIA
Refer to page 26
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 ensuring 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.
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 $1,547,967.
No insurance premiums are paid out of the assets of the NSPT in regard 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.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
40
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
41
41
Annual Report 2021
REMUNERATION REPORT (AUDITED) – NSH GROUP
MESSAGE FROM THE BOARD
The NSH Board is committed to ensuring that its remuneration arrangements 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 NSR’s 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”) with regard to their individual performance, the performance of NSR, and the broader
external environment as it relates to KMP reward.
FY21 PERFORMANCE AND REMUNERATION OUTCOMES
FY21 was another year of strong performance for NSR. Despite difficult market conditions and capital
raisings, NSR produced EPS growth as well as providing a high level of distributions to shareholders
compared to the ASX 200 A-REIT index. NSR’s TSR also significantly outperformed the ASX 200 A-REIT index
over this same period of time. Further detail on NSR’s performance in FY21 has been set out on page 32.
These strong outcomes for shareholders were reflected in the remuneration outcomes, with 95.4%
combined STI and LTI. This compares to 44% for FY20 and 67% in FY19.
REMUNERATION REVIEW
The remuneration policy also aims to provide a platform for sustainable value creation for securityholders
by attracting, motivating, and retaining quality KMP.
NSR’s remuneration framework has been reviewed in FY21 with the following key objectives as the basis for
the revised structure:
Increase the ‘at-risk’ component of total remuneration across the KMP;
•
• Provide an increased alignment between KMP and securityholders’ interests by introducing an
•
equity-based structure as part of total remuneration arrangements;
Structure remuneration in such a way as to enhance KMP retention, given the small team of key
executives comprising the KMP and the specialised nature of the business; and
• Provide greater transparency on the short-term and long-term performance measures to align with
securityholder expectations.
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 required to be undertaken, in relation to 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 (“MD”) (executive)
Anthony Keane - Director (non-executive)
Howard Brenchley - Director (non-executive)
Steven Leigh - Director (non-executive)
Claire Fidler – Director & Head of Legal and Governance (“HoLG”) (executive)
KEY MANAGEMENT PERSONNEL – SENIOR EXECUTIVES
Stuart Owen – Chief Financial Officer (“CFO”)
REMUNERATION OVERVIEW
REMUNERATION PRINCIPLES
Attraction
and retention
Attract and retain
high quality
executives and to
reward the
capabilities and
experience brought
to NSR by those
executives.
At-risk.
Securityholder
alignment
Transparency
Total reward for key executives
is to have a significant “at risk”
component, including 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
security
holder
returns.
Remuneration
policies and
structures must
be clear and
transparent both to
the executives and
Board of NSR and
to securityholders.
REMUNERATION STRUCTURE (FY22)
Delivery
Details
Fixed reward
TFR
Cash
At-risk reward
STI
Cash
(70%)
Scrip
(30%)
LTI
Performance rights
(70%)
Cash
(30%)
• Comprised of
• Paid in a combination of cash
base salary and
superannuation
and scrip
• Scrip component is deferred for
•
LTI is subject to a 3-year performance
period
• Measures:
12 months
• Measures:
o Financial measures – 70%
Individual and strategic
o
measures – 30%
o Relative Total Shareholder Return
(rTSR)(ASX 200 A-REIT index
comparator group) – 70%
o Earnings per share (EPS) – 30%
Link to
remuneration
principles
Assists attraction
and retention
through
competitive
remuneration
Incentivises group and individual
performance through at-risk
pay against financial and non-
financial targets
Aligns executive remuneration with long-term
securityholder value
PAY MIX
The composition of TAR for the year ending 30 June 2022 for KMP is detailed in the table below.
ROLE
MD
CFO
HoLG
TFR
STI
LTI
STI as %
of TFR
LTI as %
of TFR
36.4%
44.0%
52.8%
31.8%
28.0%
23.6%
31.8%
28.0%
23.6%
87.5%
63.5%
44.7%
87.5%
63.5%
44.7%
This structure reflects and is consistent with NSR’s policy objectives for executive TAR for the year
commencing 1 July 2021 as outline above.
NSR PERFORMANCE
NSR has a well-established track record of consistent growth in underlying earnings(9), net tangible assets
(NTA) and total assets under management (AUM). Despite the significant capital raisings undertaken in the
previous 18 months and the combined impacts of the prolonged takeover activity and COVID-19,
underlying earnings(9) per stapled security (EPS) grew in the 12 months to 30 June 2021. The FY21 Underlying
EPS of 8.5cps exceeded the original EPS guidance of 7.7cps – 8.3cps and reflects the exceptional
occupancy and REVPAM growth that has been achieved over the financial year. Occupancy across the
Australian portfolio has increased by 9.7% to 86.2% at June 2021, with approximately an additional
110,000m2 of NLA added during the year. Australian REVPAM has increased 24.3% to $234 in the 12 months
to 30 June 2021, driven by both increased occupancy across all states and territories of Australia and New
Zealand, as well as improvements in rate per square metre being achieved.
NTA has increased by 15% during the year to $1.89 per stapled security, principally driven by improvements
in operational performance at an individual centre level, as well as the strength of the underlying storage
property portfolio resulting in ongoing weighted average capitalisation rate compression from 6.49% at 30
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
42
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 2021
43
43
Annual Report 2021
June 2020 to 5.98% at 30 June 2021. Investment Properties has increased by 29% to $2.95 billion over the 12
months to 30 June 2021. These results have been achieved through the disciplined management of NSR’s
operations and the continued success of its “Four Pillar” growth strategy. The consistent and considered
approach to driving underlying earnings through a combination of organic growth from existing assets as
well as acquisitions, developments and expansion activity, overlayed by a focus on technology and
innovation, has been instrumental in achieving this result.
y
t
i
r
u
c
e
s
r
e
p
s
t
n
e
C
10.0
9.0
8.0
7.0
6.0
5.0
4.0
Underlying Earnings
9.2
45.7
8.7
29.1
8.2
24.3
7.5
19.5
9.6
51.4
9.6
62.4
67.7
8.3
86.5
8.5
CY 14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Earnings Per Securuty
Underlying Earnings
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
m
$
During FY21, NSR has again continued its successful growth strategy with the acquisition of 22 storage
centres and 3 development sites totalling $352 million. These acquisitions have been funded through debt
facilities which were successfully refinanced during the Reporting Period to extend tenor and increase
available facilities. A successful capital raising was completed in June 2021 raising $325 million and was
undertaken by a pro-rata accelerated non-renounceable rights issue to existing securityholders, reducing
gearing to 22% and providing significant balance sheet capacity for further growth. The continued
implementation of NSR’s “Four Pillar” growth strategy has delivered sustained increases in earnings and
assets under management. NSR continues to execute its development and expansion strategy with 22
projects in various stages of design and construction. In addition, NSR has successfully completed 4 new
developments and 6 expansion projects during the Reporting Period.
m
$
'
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1.89
1.63
1.65
1.51
1.34
1.11
1.14
1.00
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
-
y
t
i
r
u
c
e
s
r
e
p
$
CY14
FY15
FY16
FY17
Total Assets
FY18
FY19
FY20
FY21
NTA
NSR has maintained a distribution policy that targets distribution of 90% - 100% of underlying earnings(8) to
securityholders. During the Reporting Period, NSR declared distributions totalling 8.2 cents per stapled
security an increase of 2.4%, being at the upper end of the stated policy.
NSR continues to deliver strong Total Shareholder Return “TSR” (a combination of share price growth and
distributions received by securityholders) over the past three years to 30 June 2021 of 22.7%, more than five
times the ASX 200 A-REIT TSR of 3.8%. Generally, the self-storage sector has demonstrated its highly resilient
nature as a business during times of uncertainty and fluctuating economic conditions. NSR’s “Four Pillar”
growth strategy facilitates multiple revenue streams as well as a high degree of geographic diversity
providing exposure to multiple different markets across Australia and New Zealand. This facilitates a greater
level of risk mitigation and places NSR in a uniquely advantageous position in the Australian and New
Zealand self-storage market - a highly valued real estate investment asset class.
Total Shareholder Return - 3 Years to 30 June 2021
A-REIT 200
NSR
0%
5%
10%
15%
20%
25%
Source: Bloomberg
Note 1: Assumes Dividends are re-invested in underlying security
Note 2: Excludes securities not listed for the entire year
NSR listed in December 2013 with an issue price of $0.98. From that time to 30 June 2021, the stapled
security price has increased by 102% (closing price as at 30 June 2021 of $1.98), and the market
capitalisation of NSR has increased by 876% to $2.34 billion as at 30 June 2021, up 26% from $1.86 billion as
at 30 June 2020.
NSR Stapled Security Price
$
2.50
2.30
2.10
1.90
1.70
1.50
1.30
1.10
3,000
2,500
2,000
1,500
1,000
500
-
m
$
'
J
u
l
1
4
S
e
p
1
4
D
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1
Mkt Cap
Share Price
Security price performance over the period 1 July 2014 to 30 June 2021 has shown a 61% increase. This
compares to an increase of 46% for the ASX 200 A-REIT index and 36% for the broader ASX 200 Index over
the same period.
Relative Performance
2.00
1.80
1.60
1.40
1.20
1.00
0.80
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1
NSR
S&P/ASX 200 A-REIT
S&P/ASX 200
FY21 REMUNERATION OUTCOMES
Short-term 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 2021 in
accordance with the incentive program outlined in the 2020 Annual Report. The assessment criteria for the
program are consistent with those outlined on pages 49-50 below. Incentives achieved for the year ending
30 June 2021 will be paid through a combination of cash and scrip.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
44
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
45
45
Annual Report 2021
To compensate for performance against financial and operational objectives, the STI’s and LTI’s were
agreed on with the KMP with the minimum payable being zero and maximum payable being $2,225,000 for
FY21 in aggregate for all KMP.
The STI and LTI hurdles included:
1. Underlying earnings(10) equal to or exceeding 8.0 cents per security
2.
TSR over the three-year period to 30 June 2021 being greater than the 50th percentile of the
comparator group (ASX A-REIT 200)
The Board has assessed the performance of the Company and the KMP against the performance criteria
and has determined that the following STI and LTI’s have been earned and are payable, inclusive of
statutory Superannuation amounts, for the period 1 July 2020 to 30 June 2021.
INCENTIVE OFFICER
STI
LTI
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
AMOUNT
$752,500
$240,000
$120,000
$1,112,500
%
EARNED
100.0%
100.0%
100.0%
100.0%
AMOUNT
$682,969
$217,824
$108,912
$1,009,705
%
EARNED
TOTAL
90.8% $1,435,469
$457,824
90.8%
90.8%
$228,912
90.8% $2,122,205
The Board continues to assess both short-term and long-term incentives against a strict set of criteria and
believes that delivering superior results to securityholders supports the above incentive payments.
The STI will be paid in accordance with the payment structure outlined above with 70% being paid as cash
and 30% paid as scrip which will be restricted until 30 June 2022. The LTI will also be paid in accordance
with the payment structure outlined above with 30% paid as cash and 70% paid as equity. The equity
component will be paid as scrip and given the three-year assessment period, will be issued free of
restrictions. The table below outlines the cash and scrip components of the FY21 STI and LTI. The scrip
component will be calculated using the 30-day VWAP to 30 June 2021 of $2.044.
INCENTIVE OFFICER
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
STI
$526,750
$168,000
$84,000
$778,750
CASH
LTI
$204,891
$65,347
$32,674
$302,912
TOTAL
$731,641
$233,347
$116,674
$1,081,662
STI
$225,750
$72,000
$36,000
$333,750
SCRIP
LTI
$478,078
$152,477
$76,238
$706,793
TOTAL
$703,828
$224,477
$112,238
$1,040,543
TOTAL
$1,435,469
$457,824
$228,912
$2,122,205
INCENTIVE OFFICER
SCRIP – AT $2.044
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
STI
110,446
35,226
17,613
163,285
LTI
233,894
74,598
37,299
345,791
TOTAL
344,340
109,824
54,912
509,076
The issue of scrip to directors requires shareholder approval under the ASX Listing Rules and as such
resolutions to approve the issues for the MD and HoLG will be included in the Notice of Meeting for
upcoming Annual General Meeting. Should shareholder approval not be attained the amounts will be
paid as cash.
NSR REMUNERATION FRAMEWORK
KEY MANAGEMENT PERSONNEL - EXECUTIVE DIRECTORS AND SENIOR EXECUTIVES
The primary objective of the remuneration arrangements for executive directors and senior executives is to
motivate, incentivise and retain key employees whilst creating maximum alignment with corporate and
stakeholder best interests. 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. Remuneration is reviewed annually and there is no guarantee of base salary
increases.
The NSR executive management team has continued to successfully navigate numerous significant micro
and macro challenges, to achieve an outcome which is acknowledged to be one of the best
performances in the A-REIT sector from both an operational and security price performance perspective.
The Managing Director’s base remuneration was not adjusted for the year commencing 1 July 2020 and as
such the adjustment for the year commencing 1 July 2021 reflects that no increase had been provided to
the Managing Director for two years.
The FY22 remuneration increases consider the senior executives’ highly demanding roles, their increasing
tenure, high degree of competency in their respective areas as well as the sector specifics of their
individual roles. The team assembled is highly competent, cohesive, collaborative and has the capacity to
continue to successfully manage and drive business growth well into the future. The executive team has
consistently demonstrated its willingness to make decisions in the best long-term strategic, corporate and
securityholder interests of NSR.
Independent remuneration consultant SW Corporate was engaged during the Reporting Period to provide
benchmarking against the ASX200 A-REIT index and ASX101-200, which highlighted that base salary was
below market, particularly in light of NSR’s significantly increased scale, comparative performance from a
TSR perspective and the fact that NSR has consistently outperformed the comparator group.
The aggregate fixed remuneration for the KMP for the year commencing 1 July 2021 will increase by 8.7%,
impacted by the FY22 increase to the Managing Director who elected not to receive an increase in FY21
during the initial period of COVID-19.
Short-term 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 ASX200
A-REIT index and ASX101-200.
During the reporting period, a review of the incentive plan and structure was undertaken by SW Corporate
who provided a summary on market practice relating to executive remuneration frameworks and
structures. The SW Corporate report highlighted that market practice, particularly in relation to LTIs, is to use
equity rather than cash awards. Consistent with NSR’s abovementioned specific objectives for the coming
year, the ’at risk’ component of the Managing Director’s and other executives renumeration has been
adjusted as shown on page 45 of this report to more align the at-risk components with the market peer
group.
The SW Corporate report highlighted that an increase to the at-risk components of the KMP’s total
remuneration packages should be considered to reflect the findings of the review as well as to consider
the feedback received from investors and proxy advisors. In the NSR Board’s opinion, the increased at-risk
components of STI and LTI should be considered to be genuinely at risk as evidenced by the fact that in the
past three financial years, approximately 73% of total potential executive STI and LTI’s has been earned by
the current executive team. The increase of these components of STI and LTI are conditional upon the
delivery of superior outcomes which are intended to closely align the interests of management and
investors and are targeted to enhance KMP retention.
10 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 2021
46
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
47
47
Annual Report 2021
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 will be paid in accordance with the payment structure outlined below.
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 $1,640,000 for FY22 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. The LTI is an annual incentive and will
be paid in accordance with the payment structure outlined below.
ELEMENT
PERCENTAGE
OF LTI
CRITERIA
Total Shareholder Return
70%
Earnings Per Share Growth
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 three-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. For the year commencing 1 July 2021 the Earnings Per Share Growth
target has been set at 9.5 cents per stapled security.
The minimum LTI payable is zero and maximum LTI payable is $1,640,000 for FY22 in aggregate for all KMP.
Future Incentives
During the previous Reporting Period, the Board reviewed the structure of the incentive plans based on
market best practice and feedback received from both investors and proxy advisors and determined that
going forward payments made under these plans will be paid through a combination of cash and scrip,
rather than all cash, to further align executive remuneration with current investor expectations and returns.
In assessing the appropriate remuneration structure going forward, the Board considered several factors,
including, SW Corporate’s report on both NSR’s current KMP remuneration levels and structure, market
practice remuneration structures of comparator companies, and investor and proxy advisor feedback.
Following detailed consideration of these factors, the Board has determined that from 1 July 2021, the
payment of any STI and LTI earned will be as follows:
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
48
STI payment structure
Any STI earned for the Reporting Period, and future reporting periods, will be paid in the form of 70% cash
and 30% scrip. The quantum of scrip will be determined using the 30-day VWAP up to 30 June in the
relevant year. The scrip will be issued at the end of the assessment period, subject to satisfaction of the
performance criteria, Board approval and any shareholder approvals required. The scrip component will
be restricted for a period of 12 months, meaning that the KMP cannot deal in the scrip for 12 months and
that the Board has certain claw back rights over the scrip during the restricted period. The claw back
provisions could be triggered under circumstances such as, but not limited to:
• Dismissal (termination for cause)
•
•
•
•
Fraud
Breach of duties
Serious misconduct
Resignation
The issue of scrip to directors requires shareholder approval under the ASX Listing Rules and as such,
resolutions to approve the issues for the MD and HoLG will need to be drafted and included in the Notice
of Meeting (NOM) for each year that an issue is required to be made. Should shareholder approval not be
attained, the Board may choose to make the award in cash.
LTI payment structure
Any LTI earned for the Reporting Period, and future reporting periods, will be paid in the form of 30% cash
and 70% equity. The cash component is designed to enable KMP to fund any tax liability on the equity
component and mitigate any need to dispose of NSR securities to fund tax liabilities. The quantum of
equity will be determined using the 30-day VWAP up to 30 June in the relevant year. The Board will review
the use of cash as part of the LTI on a regular basis.
The equity component would be structured through the issue of performance rights at the
commencement of the three-year LTI assessment period. The performance rights will vest and convert into
scrip at the end of the assessment period, based on the performance criteria, with any unvested rights
lapsing. The issue of the rights and the conditions associated with them are contained in the NSR Equity
Incentive Plan Rules.
The number of performance rights to be issued for the three-year assessment period commencing on 1 July
2021 and ending 30 June 2024 is based off the approved FY22 LTI using the 30-day VWAP to 30 June 2021
as the issue price. As such, performance rights will be issued based on a calculation price of $2.044 with the
number of rights to be issued (rounded up to the nearest 100) included in the table below.
ROLE
MD
CFO
HoLG
LTI
AVAILABLE
$
EQUITY
COMPONENT
70%
PERFORMANCE
RIGHTS VESTING
30 JUNE 2024
1,050,500
400,000
190,000
735,000
280,000
133,000
359,600
137,000
65,100
The LTI EPS target for year ending 30 June 2024 has been set at 10.5 cents per stapled security, representing
7.3% compound growth over the FY21 EPS of 8.5 cents per stapled security, in excess of the minimum target
of 5.0%.
LTI Transition Payment Structure
The existing LTI payment structure, which is based around cash and scrip payments, did not require the
issue of performance rights at the commencement of the assessment period, rather the payment was
made at the end of the assessment period through the use of cash and scrip. The transition to the structure
outlined above will be undertaken through a transitional award of performance rights covering the
assessment period from 1 July 2020 – 30 June 2023, vesting on 30 June 2023.
Given the short time remaining in the assessment period covering 1 July 2019 - 30 June 2022, an issue of
performance rights is not viewed as appropriate and any LTI payable for this period will be paid as per the
current structure, being 30% cash and 70% scrip. The LTI EPS target for the year ending 30 June 2022 has
been set at 9.5 cents per stapled security, representing 11.8% growth over the FY21 EPS of 8.5 cents per
stapled security and 7.0% compound growth over the FY20 EPS of 8.3 cents per stapled security.
This transitional structure ensures that there are no “gaps” or “double-ups” in the LTI program and that KMP
are eligible for their full remuneration package whilst improving executive retention and alignment with
investors. Participants are not entitled to any additional awards to what they would have received under
the previous LTI plan.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
49
49
Annual Report 2021
The number of rights to be issued for each vesting period will be consistent with those issued for the
assessment period ending 30 June 2024, as calculated above.
ROLE
MD
CFO
HoLG
LTI
AVAILABLE
$
EQUITY
COMPONENT
70%
PERFORMANCE
RIGHTS VESTING
30 JUNE 2023
1,050,500
400,000
190,000
735,000
280,000
133,000
359,600
137,000
65,100
The LTI EPS target for year ending 30 June 2023 has been set at 10.0 cents per stapled security, representing
17.6% growth over the FY21 EPS of 8.5 cents per stapled security and 6.4% compound growth over the FY20
EPS of 8.3 cents per stapled security, in excess of the minimum target of 5.0%.
The issue of scrip, including performance rights, to directors requires shareholder approval under the ASX
Listing Rules and as such resolutions to approve the issues for the MD and HoLG will be included in the
Notice of Meeting (NOM) for the upcoming Annual General Meeting. Should shareholder approval not be
attained, the Board may choose to make the award in cash.
Other Remuneration
The Managing Director and senior executives can potentially be paid a discretionary 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”.
The criteria required to be satisfied for the second tranche of the discretionary bonus as outlined in the
June 2020 Remuneration Report were met and the payment was made on 3 July 2021.
There were no discretionary bonuses awarded in relation to FY21.
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 2019 Annual General meeting was $1,200,000.
Annual NSH non-executive directors’ fees and Committee fees currently agreed to be paid by NSH
effective from 1 July 2021 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 Leighc.
Howard Brenchley
125,000
125,000
125,000
$40,000
-
$20,000
REMUNERATION
AND NOMINATION
COMMITTEE
FEES
TOTAL
$12,500
$22,500
-
$310,000
$177,500
$147,500
$145,000
a. Chairman and Chair of the Nomination Committee and receives a single fee for all roles
b. Chair of the of Audit and Risk Committees
c. Chair of the of Remuneration Committee
Where applicable, NSH non-executive directors’ fees include superannuation at the required statutory rate.
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.
The terms of employment for the KMP effective from 1 July 2021 period are set out in the table below.
NAME
TERM OF
AGREEMENT AND
NOTICE PERIOD
BASE SALARY*
INCLUDING
SUPERANNUATION
TERMINATION PAYMENTS
Andrew Catsoulis No fixed term
$1,200,000
Stuart Owen
6 months
No fixed term
6 months
$630,000
Claire Fidler
No fixed term
6 months
$425,000
• 6 months in lieu of notice if required by NSH.
• 6 months in the event of incapacity or illness.
• 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 2021. They are reviewed annually by the
Remuneration Committee. Actual salaries paid in the year ended 30 June 2021 are shown on page 52.
REMUNERATION GOVERNANCE
REMUNERATION COMMITTEE AND USE OF REMUNERATION CONSULTANTS
The Remuneration Committee’s activities are governed by its Charter, a copy of which is available at
https://www.nationalstorageinvest.com.au/governance.
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, short-
term and long-term incentives 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;
administer 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 full NSH Board. In making its recommendations to the Board,
the Remuneration Committee takes into account advice from independent remuneration advisors on
trends in remuneration for KMP. The independent remuneration advisors consider a range of factors
including the specific responsibilities assumed by KMP. An independent remuneration consultant, SW
Corporate, was engaged during the 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, including the use of equity-based components
within incentive plans. The advice did not constitute a remuneration recommendation as defined in the
Corporations Act Cth 2001.
The Remuneration Committee comprises three independent non-executive directors and is chaired by
Steven Leigh. The Remuneration Committee met five times during the Reporting Period.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
50
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
51
51
Annual Report 2021
PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
The overall 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 marketplace 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”) that 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.
In addition to the above tenets, the specific objectives of the NSR board in making changes to the
remuneration framework, and in particular the at-risk components of the structure, for the year
commencing 1 July 2021 include:
•
•
•
to adjust the TAR of the executive team to reflect the expansion in the scope and scale of their
respective roles and their performance in the roles;
achieve a shift in the components of the executive team’s TAR such that there is a greater weighting
towards “at risk remuneration”; and
to achieve the introduction of partial equity-based remuneration as part of the TAR for the executive
team.
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-term
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 and information provided by SW Corporate as
part of the review of remuneration and remuneration structures. The NSR Board believes this 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.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
52
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53
Annual Report 2021
SECURITYHOLDINGS 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 2020
GRANTED AS
REMUNERATION
ON
EXERCISE
OF OPTIONS
ACQUIRED
BALANCE
30 JUNE 2021
Directors of NSH
Laurence Brindle
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
1,523,488
208,727
14,174,249
105,866
201,009
12,500
Executives of NSH
Stuart Owen
Total
100,000
16,325,839
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,289
269,363
16,885
32,059
1,994
1,523,488
242,016
14,443,612
122,751
233,068
14,494
15,949
369,539
115,949
16,695,378
SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
For the period from 1 July 2021 to the date of this report the Group settled two storage centre investment
properties for a total cost of $21m, and one development site for NZD $3m (AUD $2.8m). An additional
storage centre is under contract for NZD $10.1m (AUD $9.4m) and is due to settle in late August 2021.
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
2001 (Cth) is set out on page 56.
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 2001 (Cth). The nature and
scope of each type of non-audit service provided means that auditor independence was not
compromised.
RELATED PARTY TRANSACTIONS
There were no other transactions with KMP and their related parties during the reporting period.
Ernst & Young Australia received or are due to receive $49,315 for the provision of Category 4 fees for other
services conducted during the financial year. Refer Note 20 of the financial statements.
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.
This Directors’ Report is made on 24 August 2021 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.
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 2021
54
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2021
55
55
Annual Report 2021
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of National
Storage Holdings Limited and its controlled entities
Auditor’s Independence Declaration to the Directors of National
Storage Holdings Limited and its controlled entities
As lead auditor for the audit of the financial report of National Storage Holdings Limited and its
controlled entities for the financial year ended 30 June 2021, I declare to the best of my knowledge
and belief, there have been:
As lead auditor for the audit of the financial report of National Storage Holdings Limited and its
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
controlled entities for the financial year ended 30 June 2021, I declare to the best of my knowledge
and belief, there have been:
relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
This declaration is in respect of National Storage Holdings Limited and the entities it controlled during
the financial year.
b. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of National Storage Holdings Limited and the entities it controlled during
the financial year.
Ernst & Young
Ernst & Young
Ric Roach
Partner
24 August 2021
Ric Roach
Partner
24 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FREMANTLE, WA
57
Annual Report 2021
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2021
Revenue from rental income
Revenue from contracts with customers
Interest income
Total revenue
Employee expenses
Premises costs
Advertising and marketing costs
Insurance costs
Other operational expenses
Finance costs
Share of loss from joint ventures and associates
Gain from fair value adjustments
Restructuring and other non-recurring costs
Notes
5
7
6
6
7
12
10.3
2021
$'000
201,555
15,327
866
217,748
(41,743)
(25,963)
(6,531)
(5,233)
(19,473)
(38,507)
(570)
231,718
(874)
2020
$'000
164,078
12,563
1,272
177,913
(32,085)
(22,481)
(4,277)
(4,084)
(14,895)
(39,401)
(491)
63,019
(3,704)
Profit before income tax
310,572
119,514
Income tax (expense) / benefit
8
(864)
2,265
Profit after tax
309,708
121,779
Profit / (loss) for the year attributable to:
Members of National Storage Holdings Limited
Non-controlling interest (unitholders of NSPT)
3,728
305,980
309,708
(5,981)
127,760
121,779
Basic and diluted earnings per stapled security (cents)
19
30.21
14.59
BIGGERA WATERS, QLD
The above Consolidated Statement of Profit or Loss should be read in conjunction with the
accompanying notes.
59
59
Annual Report 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Profit after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Net gain / (loss) on cash flow hedges
Other comprehensive gain / (loss) for the year, net of tax
2021
$'000
2020
$'000
309,708
121,779
(501)
13,581
13,080
(1,731)
(5,857)
(7,588)
Total comprehensive income for the year
322,788
114,191
Total comprehensive income for the year attributable to:
Members of National Storage Holdings Limited
Unitholders of National Storage Property Trust
3,721
319,067
322,788
(5,944)
120,135
114,191
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Right of use assets
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
Lease liabilities
Deferred revenue
Income tax payable
Provisions
Distribution payable
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Notes
2021
$'000
2020
$'000
9.1
9.2
10.1
9.3
9.2
10.2
9.7
10.3
12
10.4
8
9.3
9.4
9.7
10.5
10.6
16
9.6
9.5
9.7
10.6
8
9.6
95,910
15,056
1,318
29
4,909
117,222
1,893
1,408
5,782
3,055,800
7,881
47,197
8,444
6,246
3,134,651
90,352
15,975
833
331
10,469
117,960
518
1,091
6,540
2,452,085
8,451
46,629
7,041
19
2,522,374
3,251,873
2,640,334
21,468
9,037
16,185
237
3,457
49,689
22
100,095
758,050
101,663
3,213
4,107
103
867,136
14,875
6,011
12,236
418
2,460
34,467
50
70,517
677,702
164,582
2,655
2,697
357
847,993
967,231
918,510
2,284,642
1,721,824
EQUITY
Non-controlling interest (unitholders of NSPT)
Contributed equity
Other reserves
Retained earnings
Total equity
13
14
2,109,561
161,320
3
13,758
2,284,642
1,578,615
133,169
10
10,030
1,721,824
The above Consolidated Statement of 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.
60
61
61
Annual Report 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
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 2020
133,169
10,030
10
1,578,615 1,721,824
Profit for the year
Other comprehensive income /
(loss)
Total comprehensive income
14
-
-
-
3,728
-
3,728
-
305,980
309,708
(7)
(7)
13,087
319,067
13,080
322,788
Issue of stapled securities
Costs associated with issue
of stapled securities
Deferred tax on cost of stapled
securities
Distributions
13
28,574
(607)
184
-
28,151
8
16
-
-
-
-
-
-
-
-
-
-
308,901
337,475
(6,625)
(7,232)
-
(90,397)
211,879
184
(90,397)
240,030
Balance at 30 June 2021
161,320
13,758
3
2,109,561 2,284,642
Balance at 1 July 2019
100,143
16,011
(27)
1,188,147 1,304,274
Profit / (loss) for the year
Other comprehensive income /
(loss)
Total comprehensive income
14
-
-
-
(5,981)
-
127,760
121,779
-
(5,981)
37
37
(7,625)
120,135
(7,588)
114,191
Issue of stapled securities
Costs associated with issue
of stapled securities
Deferred tax on cost of stapled
securities
Distributions
13
33,444
(598)
180
-
33,026
8
16
-
-
-
-
-
-
-
-
-
-
348,091
381,535
(6,252)
(6,850)
-
(71,506)
270,333
180
(71,506)
303,359
Balance at 30 June 2020
133,169
10,030
10
1,578,615 1,721,824
Notes
2021
$’000
2020
$’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 properties under construction
Purchase of property, plant and equipment
Purchase of intangible assets
Distribution received from joint ventures and associates
Investments in associates 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 ventures
Repayment of financing provided to joint ventures
Payment of principal and interest on 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
9.1
9.1
10.2
12
12
13
16
9.5
17
17
9.1
244,084
(109,073)
689
(541)
135,159
(375,809)
-
(6,404)
(45,966)
(763)
(794)
-
-
(429,736)
325,472
(6,921)
(63,172)
391,062
(310,000)
-
(5,875)
4,500
(13,507)
(21,470)
300,089
5,512
46
90,352
95,910
190,954
(101,140)
1,202
(1,538)
89,478
(236,601)
5,091
(8,246)
(37,550)
(633)
(918)
10,319
(2,530)
(271,068)
361,877
(7,025)
(51,751)
267,558
(430,000)
(14,303)
(2,125)
6,950
(13,599)
(24,525)
93,057
(88,533)
43
178,842
90,352
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.
62
63
63
Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
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 2021 was approved on 24 August 2021, 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(x)).
The accounting policies applied by NSR in these financial statements are the same as the 30 June 2020
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 2021. This is available at www.nationalstorageinvest.com.au.
(b) Compliance with IFRS
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 AASB that
are relevant to its operations and effective for the current year.
Other standards, amendments and interpretations
The Group adopted AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a
Business from 1 July 2018 as detailed in note 2(h).
Several other amendments and interpretations apply for the first time in the reporting period, but do not
have a material impact on the consolidated financial report of the Group. 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 2021 are outlined in the following table:
Application
date of
standard
Application
date for
Group
1 January
2021
1 July 2021
Reference
Title
Summary and impact on Group
financial report
AASB 2019-3
Amendments to
Australian
Accounting
Standards (AASs)
– Interest Rate
Benchmark
Reform
Interbank offered rates (IBOR) are
benchmark interest rates referenced in
financial products.
Examples include:
• A loan that incurs interest quarterly
at 3-month LIBOR plus a margin;
• An interest rate swap involving the
exchange of fixed-rate monthly
interest payments for variable
interest payments based on
monthly BBSW plus a margin.
Addressing the financial reporting effects
of IBOR reform comes in two phases.
The first phase deals with issues affecting
financial reporting before the replacement
of existing interest rate benchmarks. It
introduces amendments to AASB 7, AASB 9,
and AASB 139, providing mandatory
temporary relief enabling hedge
accounting to continue during the period
of uncertainty before existing interest rate
benchmarks are replaced with
alternatives.
The second phase focuses on issues that
may affect financial reporting on
replacement of existing interest rate
benchmarks, and amends the
requirements in AASB 9, AASB 139, AASB 7,
AASB 4, and AASB 16. The objective of the
amendments is to minimise financial
reporting consequences of a change in
benchmark interest rates that may
otherwise be required, such as the
derecognition or remeasurement of
financial instruments, and the
discontinuation of hedge accounting.
64
65
65
Annual Report 2021
AASB 2020-3
Amendment to
AASB 9 – Fees in
the ‘10 per cent’
Test for
Derecognition of
Financial
Liabilities (Part of
Annual
Improvements
2018–2020 Cycle)
Under AASB 9, an existing financial liability
that has been modified or exchanged is
considered extinguished when the
contractual terms of the new liability are
substantially different, measured by when
the present value of the cash flows under
the new terms, including any fees paid or
received, is at least 10 per cent different
from the present value of the remaining
cash flows of the original financial liability.
1 January
2022
1 July 2022
AASB 2014-10 Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
AASB 2020-1 Amendments to
AASs –
Classification of
Liabilities as
Current or Non-
current
AASB 2021-2 Amendments to
AASB 108 –
Definition of
Accounting
Estimates
1 January
2022
1 July 2022
1 January
2023
1 July 2023
1 January
2023
1 July 2023
The amendment to AASB 9 clarifies that
fees included in the test are limited to fees
paid or received between the borrower
and the lender, including amounts paid or
received by them on the other’s behalf.
AASB 2014-10 amends AASB 10
Consolidated Financial Statements and
AASB 128 Investments in Associates and
Joint Ventures 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.
A liability is classified as current if the entity
has no right at the end of the reporting
period to defer settlement for at least 12
months after the reporting period. The
AASB recently issued amendments to AASB
101 Presentation of Financial Statements to
clarify the requirements for classifying
liabilities as current or non-current.
The amendments specify that the
conditions which exist at the end of the
reporting period are those which will be
used to determine if a right to defer
settlement of a liability exists.
Management intention or expectation
does not affect classification of liabilities.
An accounting policy may require items in
the financial statements to be measured
using information that is either directly
observable, or estimated. Accounting
estimates use inputs and measurement
techniques that require judgements and
assumptions based on the latest available,
reliable information.
The amendments to AASB 108 clarify the
definition of an accounting estimate,
making it easier to differentiate it from an
accounting policy.
The new definition provides that
‘Accounting estimates are monetary
amounts in financial statements that are
subject to measurement uncertainty.’ The
amendments explain that a change in an
AASB 2021-5 Amendments to
AASs – Deferred
Tax related to
Assets and
Liabilities arising
from a Single
Transaction
1 January
2023
July 2023
input or a measurement technique used to
develop an accounting estimate is
considered a change in an accounting
estimate unless it is correcting a prior
period error.
For example, a change in a valuation
technique used to measure the fair value
of an investment property from market
approach to income approach would be
treated as a change in estimate rather
than a change in accounting policy.
In contrast, a change in an underlying
measurement objective, such as changing
the measurement basis of investment
property from cost to fair value, would be
treated as a change in accounting policy.
AASB 112 Income Taxes requires entities to
account for income tax consequences
when economic transactions take place,
and not at the time when income tax
payments or recoveries are made.
Entities need to consider the differences
between the tax rules and the accounting
standards. These differences could either
be:
Permanent – e.g., when tax rules do not
allow a certain expense to ever be
deducted; or
Temporary – e.g., when tax rules treat an
item of income as taxable in a period later
than when included in the accounting
profit.
Deferred taxes representing amounts of
income tax payable or recoverable in the
future must be recognised on temporary
differences unless prohibited by AASB 112
in certain circumstances.
One of these circumstances, known as the
initial recognition exception, applies when
a transaction affects neither accounting
profit nor taxable profit, and is not a
business combination.
The amendments to AASB 112 have
narrowed the scope of this exception such
that it no longer applies to transactions
that, on initial recognition, give rise to
equal amounts of taxable and deductible
temporary differences.
Entities are required to recognise deferred
tax for all temporary differences related to
leases, restoration and similar liabilities at
the beginning of the earliest comparative
period presented.
66
67
67
Annual Report 2021
(d) Basis of consolidation
The Financial Statements of NSR as at 30 June
2021 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(h).
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. 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.
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.
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. This represents profit or loss after tax
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
68
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.
(e) Revenue recognition
Revenue is recognised under AASB 15 Revenue
from Contracts with Customers and applies to all
revenue from contracts with customers, unless
those contracts are in the scope of other
standards.
The Group follows a five-step model to account
for revenue arising from contracts with
customers. 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
Group exercises judgement, taking into
consideration all of the relevant facts and
circumstances when applying each step of the
model to contracts with their customers.
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.
The Group’s revenue is disaggregated in 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.
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 under
AASB 15
Sale of goods and services
Revenue from the sale of goods is recognised
on fulfilment of performance obligations. The
Group recognises revenue at the point in time
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’s contracts with customers for
agency fees and commissions consist of one
performance obligation. The Group recognises
revenue at the point in time when the
commission is generated and is receivable.
Design and development fees
The Group’s design and development fees to
customers consist of one performance
obligation. The Group recognises revenue from
design and development fees over the relevant
period of the performance obligations as the
Group’s performance creates or enhances an
asset that 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
69
69
Annual Report 2021
recognised using the original effective interest
rate.
•
(f)
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 is an Attribution
Managed Investment Trust, 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.
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 assets and liabilities are recognised
for all deductible or taxable temporary
differences, except:
• When the deferred tax asset or 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 deductible or 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, and in
the case of deferred tax assets taxable
profit will be available against which the
temporary differences can be utilised.
The deferred tax liabilities in relation to
investment property is recognised dependent
upon the taxable impact in the relevant
jurisdiction. The Group assumes that the current
measurement at fair value will be recovered
entirely through a sale.
In New Zealand, as any capital gain on sale will
generally be exempt from tax, the deferred tax
liability in relation to these assets would
generally be calculated based on the amount
of any tax depreciation recovery.
Deferred tax assets are also recognised relating
to the carry forward of unused tax credits and
unused tax losses 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,
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.
70
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
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.
(g)
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 at
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 fair value gain or loss
recognised in other comprehensive income or
profit or loss are also recognised in other
comprehensive income or profit or loss).
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.
71
71
Annual Report 2021
(h)
Business combinations and goodwill
The Group accounts for a transaction as a
business combination if it meets the definition
under AASB 3, which requires the assets and
liabilities acquired to constitute a business. A
business is defined as an integrated set of
activities and assets that are 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 if there is 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 applied
the amendments to the definition of a business
under AASB 2018-6 including 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
acquisition.
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
exceeds the aggregate consideration
transferred, the Group re-assesses whether it has
correctly identified all assets acquired and
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 (“CGUs”) 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 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.
(i)
Leases
The Group leases properties which are classified
as investment properties (note 10.3). The Group
also leases office premises and items of plant
and equipment.
The Group assesses at contract inception
whether a contract is, or contains, a lease. That
is, if the contract conveys the right to control the
use of an identified asset for a period of time in
exchange for consideration.
72
Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except
for short term leases and leases of low value
assets. The Group recognises lease liabilities
associated with lease payments and right of use
assets representing the right to use the
underlying assets.
Right of use assets
The Group recognises right of use assets at the
commencement date of the lease (i.e. the date
the underlying asset is available for use). Right of
use assets (excluding leasehold investment
properties) are measured at cost, less any
accumulated depreciation and impairment
losses, and adjusted for any remeasurement of
lease liabilities. The cost of right of use assets
includes the amount of lease liabilities
recognised, initial direct costs incurred, and
lease payments made at or before the
commencement date less any lease incentives
received. Right of use assets are depreciated on
a straight line basis over the shorter of the lease
term and the estimated useful lives of the assets.
Leasehold investment property assets are
measured at fair value as detailed in note 2(q).
If ownership of the leased asset transfers to the
Group at the end of the lease term or the cost
reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. The right of use assets are
subject to impairment as detailed in note 2(s).
Lease liabilities
At the commencement date of the lease, the
Group recognises lease liabilities measured at
the present value of lease payments to be
made over the lease term. The lease payments
include fixed payments less any lease incentives
receivable, variable lease payments that
depend on an index or a rate, and amounts
expected to be paid under residual value
guarantees. The lease payments also
include the exercise price of a purchase option
reasonably certain to be exercised by the
Group and payments of penalties for
terminating the lease, if the lease term reflects
the Group exercising the option to terminate.
In calculating the present value of lease
payments, the Group uses its incremental
borrowing rate at the lease commencement
date because the interest rate implicit in the
lease is not readily determinable. After the
commencement date, the amount of lease
liabilities are increased to reflect the accretion
of interest and reduced for the lease payments
made. In addition, the carrying amount of lease
liabilities are remeasured if there is a
modification, a change in the lease term, a
change in the lease payments (e.g. changes to
future payments resulting from a change in an
index or rate used to determine such lease
payments) or a change in the assessment of an
option to purchase the underlying asset or to
extend an existing lease term.
Short term leases and leases of low value assets
The Group applies the short term lease
recognition exemption to its short term leases of
equipment (i.e. those leases that have a lease
term of 12 months or less from the
commencement date and do not contain a
purchase option). It also applies the lease of low
value assets recognition exemption to leases of
office equipment that are considered to be low
value. Lease payments on short term leases and
leases of low value assets are recognised on a
straight line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer
substantially all the risks and rewards incidental
to ownership of an asset are classified as
operating leases. Rental income arising is
accounted for on a straight line basis over the
lease terms and is included in revenue in the
statement of profit or loss due to its operating
nature. Initial direct costs incurred in negotiating
and arranging an operating lease are added to
the carrying amount of the leased asset and
recognised over the lease term on the same
basis as rental income. Contingent rents are
recognised as revenue in the period in which
they are earned.
(j) Cash and cash equivalents
Cash and cash equivalents in the statement of
financial position comprise cash at bank, cash
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.
(k)
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
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business, less the estimated costs necessary to
make the sale.
(l)
Financial assets
Initial recognition and measurement
At initial recognition, financial assets are
classified and 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. The
Group initially measures a financial asset at its
fair value plus, in the case of financial assets,
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.
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 and other
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
asfinancial 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 and the Group has transferred
substantially all the risks and rewards of
ownership or control of the asset.
Impairment
The Group uses AASB 9’s incurred loss approach
with a forward-looking expected credit loss
(“ECL”) methodology to recognise an ECL for all
debt instruments not held at fair value through
74
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. 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.
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.
(m) 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.
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 at fair value through profit or
loss.
Financial liabilities at fair value through profit or
loss are designated at the initial date of
recognition only if the criteria in AASB 9 are
satisfied. The Group has not designated any
financial liability 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 capitalised as transaction costs of the loan
and subsequently 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 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, this is treated as the derecognition of
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Annual Report 2021
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.
(n) 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 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
hedge relationship to which it wishes to apply
hedge accounting and the risk management
objective and strategy for undertaking the
hedge.
For hedges that were initially entered into prior
to 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 if they 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
either a current or non-current asset or liability
dependent upon if remaining maturity of the
hedged item is less than or greater than 12
months. Trading derivatives are classified as a
current asset or liability.
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 interest income and 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.
76
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 within the
hedging reserve.
The amounts accumulated in other
comprehensive income are accounted for
depending on the nature of the underlying
hedged transaction. These amounts are
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
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 accumulated
amount remaining in 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 similar way
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.
(o) 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 or 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 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 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.
(p)
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, 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
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Each asset’s residual value and useful life is
reviewed, and adjusted if appropriate, at the
end of each reporting period.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
carrying amount is greater than the estimated
recoverable amount (note 2(s)). Gains and
losses on disposals are determined by
comparing proceeds with carrying amount.
These are included in profit or loss.
(q)
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
required by the underlying financing 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.
In some transactions involving the purchase of a
group of assets the value assessed by NSR,
being the purchase price paid, may exceed the
sum of the independent property valuations
which are undertaken on a stand-alone
property basis. This excess in value represents a
portfolio premium.
Any portfolio premium attributable to the
investment property assets acquired in
transactions accounted for as asset acquisition
is allocated to the individual identifiable assets
acquired within each portfolio on the relative
fair value basis at the date of acquisition
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.
Leasehold investment properties
The Group, as lessee, has properties that in
accordance with AASB 140 Investment Property,
qualify for recognition as investment properties.
Under this treatment, for each property, the
present value of lease payments to be made
over the lease term is determined and carried
as a lease liability and the fair value of the lease
to the NSH Group is recorded each period as
investment property.
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 accounted for under AASB
16, see note 2(i). Lease payments are allocated
between the principal component of the lease
liability and interest expense 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 lease liabilities within the consolidated
statements of cash flows.
(r)
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 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.
78
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 the end of each
reporting period.
Changes in the expected useful life or the
expected pattern of consumption of future
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 in
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
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 annually for impairment.
(s)
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.
(t)
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
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Annual Report 2021
in the provision due to the passage of time is
recognised as interest expense.
(w) Dividends and distributions to
securityholders
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 10.6).
(u)
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.
(v) Contributed equity
Stapled securities are classified as equity. Issued
and paid up capital is recognised at the fair
value of the consideration received by the
Group. Incremental costs directly attributable to
the issue of securities are shown in equity as a
deduction, net of tax, from the proceeds.
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.
(x)
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.
(y)
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
80
payable 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
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.
(z)
Fair value measurement
The Group measures 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 measurement
refer to notes 9.8 and 10.7.
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.
Other disclosures relating to the Group’s
exposure to risks and uncertainties include:
• Capital management (note 16)
•
Financial instruments risk management and
policies (notes 9.8, 15)
Sensitivity analyses disclosures (notes 10.7,
15).
•
81
81
Annual Report 2021
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’, and if so,
it will 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 2(c), the Group has
applied the amendments to a definition of a
business contained in AASB 2018-6. This provides
clarity on what is considered as a business and
adds an optional concentration test that
simplifies the assessment of whether an acquired
set of activities and assets is not a business.
For the years ended 30 June 2021 and 30 June
2020, 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.
Determining the lease term of contracts with
renewal and termination options – Group as
lessee
The Group determines the lease term as the
non-cancellable term of the lease, together with
any periods covered by an option to extend the
lease if it is reasonably certain to be exercised,
or any periods covered by an option to
terminate the lease, if it is reasonably certain not
to be exercised.
The Group has several lease contracts that
include extension and termination options. The
Group applies judgement in evaluating whether
it is reasonably certain to exercise the option to
renew or terminate the lease considering factors
that create an economic incentive to exercise
either the renewal or termination clause.
The Group has included the extension period as
part of the lease term for leases of investment
property where the option is expected to be
exercised at the next renewal period.
As detailed in note 9.7, during the year ended
30 June 2021 the Group has reviewed these
commitments and reassessed lease liabilities
relating to option periods on some leasehold
investment properties based on the Group’s
judgement that the option periods, which the
ability to exercise is under control of the Group,
are not reasonably certain to be exercised at
the end of the initial contractual term.
The renewal periods for leases of with longer
non-cancellable periods (i.e. 3+ years) are not
included as part of the lease term as these are
not reasonably certain to be exercised.
The Group also has the option to extend its lease
of head office premises. The renewal period for
this lease is not included as part of the lease
term as there is no reasonable certainty that this
will be exercised at the end of the initial
contractual term.
Deferred 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.
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.
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
and the TBF & NS 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 each party
has equal representation on the advisory board
responsible for the overall direction and
supervision of each trust. Decisions about the
relevant activities require the unanimous
consent of the parties sharing control.
passive income from current trading and
potential income, and the resultant differing risk
profile which exists between these income
categories.
The key assumptions used to determine the fair
value of the properties and the sensitivity
analyses are provided in note 10.7.
Impairment of non-financial assets – goodwill
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 goodwill on the Group’s balance sheet is
allocated to the full NSR listed group as one
single CGU. This reflects the fact that as a
portfolio of storage centre investment
properties, the whole of NSR is considered to be
one business segment and that goodwill is
beneficial to the entire Group. This aligns with
how NSR’s chief operating decision maker
monitors and structures the performance of the
Group and is consistent with the Group’s
assessment of operating segments under AASB
8.
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, less costs of disposal.
Market capitalisation is used as an appropriate
method under AASB 136 and AASB 13 to assess
fair value when the CGU, to which the goodwill
is attached, is the same group of assets and
liabilities to those represented by the market
capitalisation value, and the equity is traded on
an active market.
The Group also considers other sources of
information, such as the value attributable to
the synergistic benefits from managing the
investment properties as a portfolio, as a cross-
check of the recoverable amount of goodwill.
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 of
individual properties are determined by a
combination of independent valuations
assessed on a rotational basis and annual
Directors’ valuations, determined using the
same techniques and similar estimates to those
applied by the independent valuer.
The capitalisation of net operating income
approach to investment property valuations is
applied by both the external and Directors’
valuations. This is a commonly applied valuation
method for storage facilities within Australia and
New Zealand. This methodology is generally
used in sectors where revenue is earned from
short term rentals or an operating activity as
opposed to a fixed long-term rental lease.
The Group calculates net operating income
before depreciation, amortisation, interest, tax,
and capital expenditure deductions for both
passive income (current trading income) and
potential income (additional income at
sustainable occupancy). Potential income is
subject to a higher degree of risk, reflected in a
higher secondary capitalisation rate. The
approach of disaggregating a property’s net
operating income between current passive
income and future potential income allows
appropriate risk adjusted capitalisation rates to
be applied to each income stream.
The Group disaggregates primary and
secondary capitalisation rates to provide more
transparency to the valuation process. This gives
visibility over the separate rates applied to
82
83
83
Annual Report 2021
4.
SEGMENT INFORMATION
6.
EXPENSES
During the 2021 and 2020 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 interest 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
2021
$'000
2020
$'000
194,596
22,286
216,882
156,188
20,453
176,641
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
2021
$'000
2020
$'000
2,717,530
348,703
3,066,233
2,179,014
283,377
2,462,391
Other operational expenses
Professional fees
Information technology costs
Cost of packaging and other products sold
Communications costs
Bank charges
Motor vehicle expenses
Depreciation
Amortisation of intangible assets
Travel and entertainment costs
Other expenses
Total other operational expenses
Employee expenses
Wages and salaries
Post-employment benefits
Payroll tax
Other employee costs
Total employee expenses
7.
INTEREST INCOME AND FINANCE COSTS
Interest income
Bank interest
Interest income from related parties
Total interest income
Notes
10.4
2021
$'000
2,991
2,754
3,776
2,501
1,456
677
1,600
746
539
2,433
19,473
33,635
2,534
1,546
4,028
41,743
2021
$'000
245
621
866
2020
$'000
2,337
2,448
2,650
1,686
1,270
631
1,108
490
754
1,521
14,895
26,882
2,157
1,314
1,732
32,085
2020
$'000
340
932
1,272
Non-current assets for this purpose consists of property, plant and equipment, investment properties,
right of use assets, 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
Finance costs
Interest on borrowings
Reclassification from cash flow hedge reserve to
statement of profit or loss (see note 14)
Interest on lease liabilities relating to investment property
Interest on other lease liabilities
Total finance costs
20,007
23,599
10,923
7,389
188
38,507
7,764
7,925
113
39,401
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
2021
$'000
7,232
5,724
1,741
630
15,327
2020
$'000
5,465
3,295
2,868
935
12,563
84
85
85
Annual Report 2021
8.
INCOME TAX
NSPT is a ‘flow through’ entity for Australian income tax purposes and is an Attribution Managed
Investment Trust, 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%.
The major components of income tax expense / (benefit) for the years ended 30 June 2021 and 30
June 2020 are:
Consolidated statement of profit or loss
Current tax
Deferred tax
Adjustment in relation to prior periods
Total income tax expense / (benefit)
Notes
2021
$'000
1,422
(134)
(424)
864
2020
$'000
1,453
(2,908)
(810)
(2,265)
Deferred tax relating to items recognised in other comprehensive
income during the year
Net (loss) / gain on revaluation of cash flow hedges
14
(6)
413
Deferred tax relating to items recognised in statement of changes
in equity during the year
Cost of issuing share capital
(184)
(180)
Reconciliation of tax expense and accounting profit multiplied by
Australia’s domestic tax rate for 2021 and 2020:
Profit before tax
Deduct profit before tax from Trusts owning Australian properties
Accounting profit before income tax
310,572
(270,069)
40,503
119,514
(95,034)
24,480
Tax at the Australian tax rate of 30% (2020 – 30%)
12,151
7,344
Non-deductible / assessable amounts
Deductible / non-assessable amounts
Adjustments in respect of previous years
Effect of lower tax rates in New Zealand
Recognition of previously unrecognised tax losses
Income tax expense / (benefit)
1,282
(11,111)
(455)
(747)
(256)
864
1,876
(9,962)
(810)
(688)
(25)
(2,265)
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 liabilities
Employee benefits
Accrued expenses
Carry forward losses
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:
Right of use assets
Trade and other receivables
Intangibles
Revaluations of investment properties
Unrealised foreign exchange losses
Total deferred tax liabilities
Net deferred tax assets
Reconciliation to statement of financial position
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
2021
$'000
2020
$'000
(19,065)
19,072
(30,963)
28,502
(336)
5
(241)
27
6
(413)
184
(134)
180
(2,908)
324,708
1,166
964
1,203
768
-
1,755
504
331,068
306,214
596
451
1,283
649
3
2,419
388
312,003
1,732
16
337
324,641
5
326,731
1,878
125
215
305,438
3
307,659
4,337
4,344
8,444
(4,107)
4,337
7,041
(2,697)
4,344
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 Group has the following gross tax losses which arose in Australia:
Recognised group tax losses
Unrecognised group tax losses
Total
2021
$'000
4,010
3,831
7,841
2020
$'000
4,278
4,244
8,522
These losses are available for offsetting against future taxable profits of the NSH Australian tax group,
subject to the satisfaction of the same business test and a reduced rate of utilisation under the
'available fraction' rules.
86
87
87
Annual Report 2021
9.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Group holds 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
Notes
2021
$'000
2020
$'000
9.1
9.2
9.3
95,910
16,949
3,849
116,708
90,352
16,493
2,293
109,138
9.3
2,408
19
Total financial assets
119,116
109,157
Financial liabilities
At amortised cost
Trade and other payables
Borrowings
Lease liabilities
Measured at fair value
Derivatives used for hedging
Total financial liabilities
9.4
9.5
9.7
9.6
21,468
761,343
110,700
893,511
14,875
681,063
170,593
866,531
125
407
893,636
866,938
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 relate to interest rate swaps held by the Group. These have been designated as cash
flow hedges and are presented as current assets or liabilities if they are expected to be settled within 12
months after the end of the reporting period.
9.1.
Cash and cash equivalents
Current assets
Cash on hand
Cash at bank
Total cash and cash equivalents
2021
$'000
2020
$'000
2
95,908
95,910
2
90,350
90,352
88
Cash flow reconciliation of net profit after tax to net cash flows from operations
Profit after income tax
Income tax expense /(benefit)
Profit before tax
2021
$'000
2020
$'000
309,708
864
310,572
121,779
(2,265)
119,514
Adjustments to reconcile profit before tax to net cash flows:
Depreciation
Amortisation of intangible assets presented within restructuring and
other non-recurring costs
Derecognition of intangible assets
Fair value adjustments
Share of loss from joint ventures and associates
Interest income
Finance costs
1,600
1,108
746
56
(231,718)
570
(866)
38,507
490
651
(63,019)
491
(1,272)
39,401
Changes in operating assets and liabilities:
Decrease / (increase) in receivables
Increase in inventories
Decrease / (increase) in other assets
Increase / (decrease) in payables
Increase / (decrease) in deferred revenue
Increase / (decrease) in provisions
Cash flows from operating activities
Interest received
Income tax paid
Net cash flows from operating activities
9.2.
Trade and other receivables
Current
Trade receivables
GST and employment taxes receivable
Other receivables
Receivables from related parties
Allowance for expected credit losses on trade receivables
Non-current
Receivables from related parties
Other receivables
Notes
17
17
939
(485)
3,278
6,575
3,949
1,288
135,011
689
(541)
135,159
2021
$'000
2,885
722
4,285
7,322
(158)
15,056
1,775
118
1,893
(2,530)
(151)
(2,341)
(1,796)
(483)
(249)
89,814
1,202
(1,538)
89,478
2020
$'000
4,035
-
4,681
7,448
(189)
15,975
-
518
518
Total current and non-current
16,949
16,493
89
89
Annual Report 2021
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. Other receivables are held to collect contractual cash flows of solely
payments of principal and interest. If collection is expected in one year or less, they are classified as
current assets. If not, they are presented as non-current assets.
The allowance for expected credit losses represents an estimate of receivables that are not considered
to be recoverable. The Group recognises an expected loss provision based on lifetime expected credit
losses at each reporting date. The Group applies significant judgement in assessing this allowance
based on its historical credit loss experience, adjusted for forward-looking factors specific to the
receivable, and wider economic factors.
See note 17 for terms and conditions relating to related party receivables.
See below for the movements in the allowance for expected credit losses in the Group.
At 1 July
(Credit) / charge for the year
Reversed in the year
At 30 June
The age of trade receivables not impaired was as follows:
0 to 3 months
3 to 6 months
Over 6 months
2021
$'000
189
(9)
(22)
158
2021
$'000
2,607
79
41
2,727
2020
$'000
135
107
(53)
189
2020
$'000
3,096
589
161
3,846
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
Deposits
Financial assets (derivatives)
2021
$'000
-
4,898
11
4,909
3,849
2,397
6,246
2020
$'000
2,293
8,176
-
10,469
-
19
19
Total current and non-current
11,155
10,488
For details on the classification of financial instruments see note 9.
9.4.
Trade and other payables
Current
Trade payables
Accrued expenses
GST and employment taxes payable
Other payables
Total
2021
$'000
1,364
16,375
2,311
1,418
21,468
2020
$'000
939
11,457
1,067
1,412
14,875
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 facilities
Non-amortised borrowing costs
Total borrowings
2021
$'000
2020
$'000
761,343
(3,293)
758,050
681,063
(3,361)
677,702
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
2021
$'000
2020
$'000
548,000
930,000
485,000
830,000
229,150
251,750
209,750
226,750
213,343
234,384
196,063
211,954
The major terms of these agreements are as follows:
• At 30 June 2021 maturity dates on these facilities range from 23 July 2022 to 23 December 2026. (30
June 2020: maturity dates from 23 July 2021 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 2021 and 30
June 2020. During the year ended 30 June 2021, the Group refinanced part of the existing debt
facilities, and increased its club banking facilities by AUD $100m and NZD $25m. (Year ended 30 June
2020: facilities increased by AUD $150m and NZD $30m).
The Group has complied with the financial covenants of their borrowing facilities during the 2021 and
2020 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.
90
91
91
Annual Report 2021
Interest rate swaps
The Group has the following interest rate swaps in place as at the end of the reporting period:
9.7.
Right of use assets and lease liabilities
a) Right of use assets
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
AUD equivalent of NZD interest rate swaps
Current interest rate swaps
2021
$'000
2020
$'000
385,000
-
460,000
25,000
50,000
50,000
46,551
46,737
Interest rate swaps in place at the end of the reporting period have maturity dates ranging from 23
September 2021 to 23 September 2026 (2020: 23 September 2020 to 23 September 2026).
During the prior year ended 30 June 2020, the Group reset the interest rates associated with AUD and
NZD denominated interest rate swaps. This resulted in a cash outflow of $14.3m 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 is amortised from the hedge reserve to
finance costs in the statement of profit and loss in the current and future reporting periods
corresponding to when the underlying hedged item impacts profit or loss. For the year ended 30 June
2021 $10.9m (30 June 2020: $7.8m) has been recognised in finance costs relating to this item (see note
7).
Hedge of net investments in foreign operations
Included in borrowings at 30 June 2021, amounts totalling NZD $51.9m (AUD $48.3m) have been
designated as a hedge of the net investments against the value of the New Zealand tangible assets
(2020: NZD $51.9m, (AUD $48.5m)). These borrowings are 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 2021 or 30
June 2020 recognised in the statement of profit or loss.
9.6. Other liabilities
Current financial liabilities
Interest rate swaps
Non-current financial liabilities
Interest rate swaps
Total current and non-current
For details on the classification of financial instruments see note 9.
Notes
2021
$’000
2020
$’000
9.8
22
50
9.8
103
125
357
407
92
Premises
leases
$'000
Equipment
leases
$'000
Advertising
leases
$'000
5,742
-
(840)
-
4,902
-
6,165
(423)
5,742
790
250
(301)
6
745
1,072
-
(282)
790
8
144
(13)
(4)
135
14
-
(6)
8
Total
$'000
6,540
394
(1,154)
2
5,782
1,086
6,165
(711)
6,540
Opening balance at 1 July 2020
Additions in the year ended
Depreciation charge
Reassessment of variable lease payments
Closing balance at 30 June 2021
Adjustments on the adoption of AASB 16
Additions in the year ended
Depreciation charge
Closing balance at 30 June 2020
b) Lease liabilities
Current lease liabilities
Lease liabilities relating to right of use assets
Lease liabilities relating to right of use assets presented as leasehold
investment properties
Total current lease liabilities
Non-current lease liabilities
Lease liabilities relating to right of use assets
Lease liabilities relating to right of use assets presented as leasehold
investment properties
Total non-current lease liabilities
Total lease liabilities
2021
$’000
2020
$’000
1,142
980
7,895
9,037
5,031
6,011
4,958
5,722
96,705
101,663
158,860
164,582
110,700
170,593
The Group has several lease contracts that include extension and termination options. The Group has
included the extension period as part of the lease term for leases of investment property where the
option is expected to be exercised at the next renewal period. The Group has options to extend its
leases of other investment properties and its head office premises.
During the year ended 30 June 2021 the Group has reassessed these commitments and decreased
lease liabilities by $53.4m relating to option periods on leasehold investment properties (note 10.3).
These have not been included as part of the lease term as there is no reasonable certainty that the
option will be exercised at the end of the initial contractual term. Had all extension periods been
recognised the Group’s lease liabilities at 30 June 2021 would have increased by $56.2m (2020: $2.7m).
93
93
Annual Report 2021
Amounts recognised in statement of profit or loss:
Depreciation expense of right of use assets
Interest expense on lease liabilities
Expenses relating to short term leases presented within premises costs
Lease diminution on leasehold investment properties presented within
fair value adjustments (note 10.3)
Total
Group as a lessor
2021
$’000
1,154
7,577
21
2020
$’000
711
8,038
416
4,131
12,883
3,326
12,491
Future minimum rentals receivable under non-cancellable operating leases as at are as follows:
Within one year
After one year but not more than five years
More than five years
Total
9.8.
Financial instruments fair value measurement
30 June
2021
$’000
4,415
12,722
16,714
33,851
30 June
2020
$’000
4,385
11,891
10,562
26,838
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.
The resulting fair value estimates for interest rate swaps are included in level 2.
Notes
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
At 30 June 2021
Derivatives used for hedging - interest
rate swaps
Current financial assets
Non-current financial assets
Current financial liabilities
Non-current financial liabilities
At 30 June 2020
Derivatives used for hedging - Interest
rate swaps
Non-current financial assets
Current financial liabilities
Non-current financial liabilities
9.3
9.3
9.6
9.6
9.3
9.6
9.6
-
-
-
-
-
-
-
-
-
11
2,397
(22)
(103)
2,283
19
(50)
(357)
(388)
-
-
-
-
-
-
-
-
-
11
2,397
(22)
(103)
2,283
19
(50)
(357)
(388)
There were no transfers between levels of fair value hierarchy during the years ended 30 June 2021 and
30 June 2020.
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
1,318
833
2021
$’000
2020
$’000
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
10.2. Property, plant and equipment
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.
At cost
Accumulated depreciation
Total property, plant and equipment
2021
$'000
2020
$'000
2,666
(1,258)
1,408
2,538
(1,447)
1,091
94
95
95
Annual Report 2021
Reconciliation of the carrying amounts of property, plant and equipment at the beginning and end of
the financial periods are shown below:
Plant and equipment
Opening balance at 1 July
Additions
Depreciation
Effect of movement in foreign exchange
Closing balance at 30 June
10.3.
Investment properties
Leasehold investment properties
Freehold investment properties in operation
Investment properties under construction
Total investment properties
Notes
10.7
10.7
Leasehold investment properties
Opening balance at 1 July
Improvements to investment properties
Reassessment of lease terms
Items reclassified from investment property under construction
Lease diminution, presented as fair value adjustments
Net loss from other fair value adjustments
Closing balance at 30 June
9.7b
Freehold investment properties in operation
Opening balance at 1 July
Property acquisitions
Disposal of freehold investment property
Improvements to investment properties
Items reclassified to investment property under construction
Items reclassified from investment property under construction
Net gain from fair value adjustments
Effect of movement in foreign exchange
Closing balance at 30 June
Investment property under construction
Opening balance at 1 July
Property acquisitions
Development costs
Items reclassified to freehold investment properties
Items reclassified to leasehold investment properties
Items reclassified from freehold investment properties
Effect of movement in foreign exchange
Closing balance at 30 June
2021
$'000
1,091
763
(446)
-
1,408
2020
$'000
856
633
(397)
(1)
1,091
2021
$'000
2020
$'000
137,498
201,202
2,834,509 2,180,299
70,584
3,055,800 2,452,085
83,793
201,202
311
(53,981)
1,529
(4,131)
(7,432)
137,498
215,279
439
82
-
(3,326)
(11,272)
201,202
2,180,299 1,874,698
216,104
(3,984)
7,661
(4,188)
17,448
78,338
(5,778)
2,834,509 2,180,299
338,048
-
5,966
-
67,894
243,520
(1,218)
70,584
36,184
46,586
(67,894)
(1,529)
-
(138)
83,793
27,199
15,061
42,090
(17,448)
-
4,188
(506)
70,584
96
Gains for the year in profit or loss (recognised in fair value
adjustments)
Realised gains
Realised losses – lease diminution of leasehold property
Unrealised gains associated with investment property
Movement in provisions presented in fair value adjustments
2021
$'000
2020
$'000
-
(4,131)
236,088
(239)
231,718
2,944
(3,326)
64,122
(721)
63,019
Included within net gain from fair value adjustments for the prior year ended 30 June 2020 are realised
gains of $3m relating to the divestment of freehold investment properties.
10.4.
Intangible assets
Notes
2021
$'000
2020
$'000
Goodwill
Opening and closing net book value
Other intangible assets
Opening net book value
Additions
Derecognition losses presented within restructuring and
other non-recurring costs
Amortisation
Closing net book value
6
Total intangible assets
43,954
43,954
2,675
1,370
(56)
(746)
3,243
2,546
1,270
(651)
(490)
2,675
47,197
46,629
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 30 June 2021, NSR had
1,183,070,060 stapled securities quoted on the Australian Securities Exchange at $1.98 per security
providing a market capitalisation of $2,342m. This amount is in excess of the carrying amount of the
Group’s net assets at 30 June 2021.
10.5. Deferred revenue
Deferred rental income revenue
2021
$'000
2020
$'000
16,185
12,236
Deferred rental income revenue represents funds received in advance from customers.
97
97
Annual Report 2021
10.6. Provisions
Current
Make good provisions
Annual leave
Long service leave
Non-current
Make good provisions
Long service leave
Reconciliation of movement in make good provisions
As at 1 July
Arising during the year
Changes in discount rates
Unwinding of discount rates
Utilised
As at 30 June
2021
$'000
-
2,100
1,357
3,457
2,773
440
3,213
3,125
591
(352)
28
(619)
2,773
2020
$'000
619
905
936
2,460
2,506
149
2,655
2,189
660
254
22
-
3,125
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.
10.7. 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 2021
Leasehold investment properties
Freehold investment properties
At 30 June 2020
Leasehold investment properties
Freehold investment properties
10.3
10.3
10.3
10.3
Recognised fair value measurements
-
-
-
-
-
-
-
-
-
-
-
-
137,498
137,498
2,834,509 2,834,509
2,972,007 2,972,007
201,202
201,202
2,180,299 2,180,299
2,381,501 2,381,501
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 or between levels 2 and 3 for recurring
fair value measurements during the current or prior year.
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
98
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. Freehold investment properties acquired in the year ended 30 June 2021 have been held at
acquisition price.
Due to general market and economic uncertainty in relation to COVID-19, there is a heightened
degree of valuation uncertainty which could cause property values to change significantly and
unexpectedly over a short period of time. However, the financial impact of COVID-19 on the Group’s
business has been minimal to date and the Group considers that there continues to be a strong
demand for storage rental as evidenced by NSR’s strong occupancy levels which underpin the
operating results.
At 30 June 2021, the Group held 37% of freehold investment properties and 46% of leasehold investment
properties at external valuation. (30 June 2020: 33% of freehold investment properties and 38% of
leasehold investment properties).
Valuation inputs and relationship to fair value
Description
Significant unobservable inputs
Range at 30
June 2021
Range at 30
June 2020
Investment
properties -
freehold
Investment
properties -
leasehold
Primary capitalisation rate
Secondary capitalisation rate
Weighted average primary cap rate
Weighted average secondary cap rate
Sustainable occupancy
Stabilised average EBITDA
5.0% to 7.0%
6.0% to 8.0%
5.9%
6.4%
75% to 98%
$963,839
5.5% to 8.2%
6.0% to 8.6%
6.4%
7.1%
73% to 95%
$923,427
Primary capitalisation rate
Secondary capitalisation rate
Weighted average primary cap rate
Weighted average secondary cap rate
Sustainable occupancy
Stabilised average EBITDA
5.8% to 30.0% 7.3% to 18.0%
5.8% to 30.0% 7.8% to 19.0%
10.1%
11.6%
83% to 94%
$302,775
10.6%
11.4%
85% to 95%
$331,546
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.
99
99
Annual Report 2021
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 2021:
Unobservable inputs
Primary capitalisation rate
Secondary capitalisation
rate
Sustainable occupancy
Stabilised average EBITDA
At 30 June 2020:
Unobservable inputs
Leasehold
Freehold
Increase/
(decrease)
in input
Increase/
(decrease) in fair
value
$’000
Increase/
(decrease)
in input
Increase/ (decrease)
in fair value
$’000
1% / (1%)
(3,150) / 4,110
1% / (1%)
(352,120) / 500,170
2% / (2%)
(1,900) /3,220
2% / (2%)
(96,400) / 180,310
5% / (5%)
5% / (5%)
7,430 / (2,000)
1,930 / (1,380)
5% / (5%)
5% / (5%)
169,010 / (73,120)
130,030 / (77,740)
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%)
(2,000) / 2,530
1% / (1%)
(226,290) / 311,570
2% / (2%)
(3,300) /5,190
2% / (2%)
(123,160) / 218,030
5% / (5%)
5% / (5%)
5,130 / (4,410)
1,750 / (1,770)
5% / (5%)
5% / (5%)
119,620 / (107,750)
99,000 / (95,190)
11.
INFORMATION RELATING TO SUBSIDIARIES
The ultimate holding company of the Group is National Storage Holdings Limited. This entity is domiciled
in Australia.
The consolidated financial statements of the Group as at 30 June 2021 include:
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
Equity interest
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
In addition, the result of NSPT has been consolidated due to the stapling arrangement between NSPT
and NSH which constitutes NSR. Equity attributable to NSPT is presented as non-controlling interest.
* NSNZPT is an Australian registered trust which holds investment properties in New Zealand
12.
INTEREST IN JOINT VENTURES AND ASSOCIATES
Interest in joint ventures
Opening balance at 1 July
Acquisition of shareholding / capital contribution in joint venture
Share of loss from joint ventures*
Closing balance at 30 June
2021
$'000
6,130
-
(477)
5,653
2020
$'000
4,343
2,030
(243)
6,130
* Included within share of loss from joint ventures in the year ended 30 June 2021 was $0.2m representing NSR’s share
of fair value losses related to investment properties held by joint ventures. For the prior year ended 30 June 2020,
there were no fair value gains or losses included within share of loss from joint ventures.
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 and the TBF & NS Trust.
The Bundall Commercial Trust derives rental property income from the leasing of commercial units and
the Bundall Storage Trust develops investment property. As at 30 June 2021, the Bundall Storage Trust
had one storage centre investment property.
During the prior year ended 30 June 2020, the Group subscribed to 25% of the units in the TBF & NS Trust
for $2m. The TBF & NS Trust subsequently purchased a development site for a storage centre and
commercial property in Queensland, Australia. As at 30 June 2021, this centre remains under
construction.
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.
Interest in associates
Opening balance at 1 July
Capital contribution in associate
Share of loss from associates
Distributions from associate
Closing balance at 30 June
2021
$'000
2,321
-
(93)
-
2,228
2020
$'000
12,388
500
(248)
(10,319)
2,321
The Group holds a 25.9% (30 June 2020: 25.9%) holding in Spacer Marketplaces Pty Ltd (“Spacer”).
Spacer operate online peer-to-peer marketplaces for self-storage and parking. During the prior year
ended 30 June 2020, the Group made a capital contribution of $0.5m into Spacer as part of an equity
raise.
During the prior year ended 30 June 2020, the Group purchased three storage centre investment
properties in Australia from the Australia Prime Storage Fund (“APSF”) for $64m. The Group held a 24.9%
interest in APSF. Following these transactions, the Group received distributions from APSF totalling $10.3m
and the APSF entities were subsequently dissolved.
See note 17 for fees received and purchases from joint ventures and associates. None of the Group’s
joint ventures or associates are listed on any public exchange.
100
101
101
Annual Report 2021
13.
CONTRIBUTED EQUITY
Issued and paid up capital
2021
$'000
2020
$'000
161,320
133,169
Number of stapled securities on Issue
2021
2020
Opening balance at 1 July
Institutional and retail placements
Distribution reinvestment plan
Closing balance at 30 June
1,013,740,898
162,736,215
6,592,947
673,928,751
329,205,527
10,606,620
1,183,070,060 1,013,740,898
Capital raises
On 8 June 2021, the Group announced a fully underwritten $325m equity raising. This resulted in the
issue of 137,037,814 new stapled securities on 23 June 2021 and 25,698,401 new stapled securities on 30
June 2021. The issue price represented a discount of 3.8% on the last closing price of NSR stapled
securities on 7 June 2021.
In the prior year ended 30 June 2020, the Group raised a total of $361.9m of equity resulting in the issue
of 329,205,527 new stapled securities.
Distribution reinvestment plan
During the year, 6,592,947 (2020: 10,606,620) stapled securities were issued to securityholders
participating in the Group’s Distribution Reinvestment Plan for consideration of $12m (2020:
$19.7m). 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.
14.
OTHER RESERVES
Foreign currency translation reserve
Opening balance at 1 July
Foreign exchange translation differences
Closing balance at 30 June
2021
$'000
10
(7)
3
2020
$'000
(27)
37
10
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 cash flow hedges
Reclassification to statement of profit or loss (see note 7)
Taxation impact on revaluation (see note 8)
Closing balance at 30 June
Other reserves
NSPT Group
2021
$'000
2020
$'000
(1,010)
194
(688)
(1,504)
758
1,127
(2,895)
(1,010)
(29,738)
2,652
10,923
6
(16,157)
(23,881)
(13,208)
7,764
(413)
(29,738)
(17,661)
(30,748)
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(n). Amounts are
reclassified to profit or loss in the period when the associated hedged transaction takes place.
In previous years, the Group has reset the interest rates associated with interest rate swaps designated
as cash flow hedges. In the prior year ended 30 June 2020, this resulted in a cash outflow of $14.3m
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
these outflows remain in the cash flow hedge reserve and are amortised to the statement of profit or
loss in both the current and future periods relating to the profile of the original instrument.
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 cash flow hedges held in
the NSPT Group under current Australian tax legislation. The cash flow hedge is included in non-
controlling interest in the Consolidated Group.
15.
FINANCIAL RISK MANAGEMENT
This note outlines the Group’s exposure to financial risks and how these risks could affect future financial
performance.
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
uses 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.
102
103
103
Annual Report 2021
Derivatives
Derivatives are only used for economic hedging purposes and not as trading or speculative instruments.
The Group has the following derivative financial instruments:
Notes
2021
$'000
2020
$'000
Interest rate swaps designated as cash flow hedges
presented in:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net liability
9.3
9.3
9.6
9.6
11
2,397
(22)
(103)
2,283
-
19
(50)
(357)
(388)
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(n). For hedged forecast
transactions that result in the recognition of a non-financial asset, the Group has included 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 9.8.
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 2021 and 30 June
2020. 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 each year end.
The analysis excludes the impact of movements in market variables on provisions and the non-financial
assets and liabilities of foreign operations.
The following assumptions have been made in calculating sensitivity analysis:
•
•
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 2021 and 30 June 2020
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 2021 and 30 June 2020 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 2021, after taking
into account the effect of interest rate swaps, 56.7% (2020: 74.4%) 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.
2021
Australian dollar denominated debt
New Zealand dollar denominated debt
2020
Australian dollar denominated debt
New Zealand dollar denominated debt
Increase/ decrease
in basis points
Effect on profit before
tax
$'000
+50 / -50
+50 / -50
(1,405) / 1,405
(765) / 765
+50 / -50
+50 / -50
(852) / 852
(692) / 692
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 possible change in New Zealand Dollar exchange
rate with all other variables held constant.
2021
2020
Change in
NZD rate
Effect on profit
before tax
$'000
Effect on pre-
tax equity
$'000
+5%
-5%
+5%
-5%
(1,738)
1,921
(1,574)
1,752
(5,415)
6,413
(3,629)
4,509
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. The movement in pre-tax equity arises from changes in NZD
borrowings 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.
104
105
105
Annual Report 2021
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. 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 credit concerns reviewed.
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 2021, the Group has recognised an
expected loss provision of $158,000 (30 June 2020: $189,000) 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 classification groups of receivables.
Cash and cash equivalents
The Group’s credit risk on cash and cash equivalents is limited as 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 2021 and 30 June 2020 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.
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 the Group will 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)
2021
$'000
3,000
403,041
406,041
2020
$'000
3,000
360,891
363,891
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 are 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.
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 2021
Non-derivatives
Trade and other payables
Borrowings
Lease liabilities
Distribution payable
Total non-derivatives
Derivatives
Inflows
Outflows
Total derivatives
628
-
-
-
628
-
-
-
20,332
5,960
6,517
49,689
82,498
508
17,803
10,002
-
28,313
-
758,969
54,544
-
813,513
-
50,597
76,933
-
21,468
833,329
147,996
49,689
127,530 1,052,482
(118)
386
268
(332)
965
633
(5,825)
3,131
(2,694)
(240)
67
(173)
(6,515)
4,549
(1,966)
628
82,766
28,946
810,819
127,357 1,050,516
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 2020
Non-derivatives
Trade and other payables
Borrowings
Lease liabilities
Distribution payable
Total non-derivatives
Derivatives
Inflows
Outflows
Total derivatives
558
-
-
-
558
-
-
-
14,037
4,026
3,576
34,467
56,106
280
12,046
10,876
-
23,202
-
655,188
17,386
-
672,574
-
61,876
267,308
-
14,875
733,136
299,146
34,467
329,184 1,081,624
(480)
688
208
(1,159)
1,651
492
(4,137)
4,195
58
(412)
93
(319)
(6,188)
6,627
439
558
56,314
23,694
672,632
328,865 1,082,063
106
107
107
Annual Report 2021
Changes in liabilities arising from financing activities
Derivatives:
Interest rate swap
Current financial liabilities
Non-current financial
liabilities
1 July
2020
$'000
50
357
-
-
Distributions payable
34,467
(63,172)
Non-current
borrowings
Lease liabilities
Current liabilities
Non-current liabilities
Total liabilities from
financing activities
677,702
81,062
(782)
6,011
164,582
(6,316)**
-
-
-
Cash
flows
$'000
Foreign
exchange
movement
$'000
Change
in fair
value
$'000
New
leases
$’000
Other
$'000
30 June
2021
$'000
-
-
-
(28)
(254)
-
-
-
-
-
-
-
-
-
-
-
22
103
78,394*
49,689
68
758,050
9,342
9,037
(62,919) 101,663
883,169
11,574
(782)
(282)
-
24,885 918,564
Cash
flows
$'000
Foreign
exchange
movement
$'000
Change
in fair
value
$'000
New
leases
$’000
Other
$'000
30 June
2020
$'000
Derivatives:
Forward currency
exchange contract
Current financial liabilities
Interest rate swap
Current financial liabilities
Non-current financial
liabilities
1 July
2019
$'000
474
239
1,375
392
-
-
-
-
(866)
(189)
(36)
(982)
-
-
-
-
-
-
-
-
-
50
357
51,848*
34,467
1,289
677,702
667
5,498
5,420
6,011
(5,558) 164,582
-
-
-
-
Distributions payable
34,370
(51,751)
-
Non-current
borrowings
Lease liabilities
Current liabilities
Non-current liabilities
Total liabilities from
financing activities
843,927
(163,181)
(4,333)
5,598
164,642
(5,674)**
-
-
-
1,050,625
(220,214)
(4,369)
(2,037)
6,165
52,999 883,169
The opening balances at 1 July 2020 above are stated after the adoption of AASB 16 Leases.
* Other balances presented above represent distributions declared in the year: $90.4m (30 June
2020: $71.5m) (see note 16), less units issued under the distribution reinvestment plan which do not
result in a cash outflow: $12m (30 June: 2020; $19.7m), (see note 13).
**Relates to principal portion of lease liability payment. Total lease payments for the year ended 30
June 2021 were $13.5m (30 June 2020: $13.6m) as disclosed in the Consolidated Statement of
Cashflows.
16.
CAPITAL MANAGEMENT
The Group’s objectives when managing capital are two-fold, to safeguard its ability to continue as a
going concern, and to maintain an optimal structure to reduce the cost of capital and maximise long
term value for the securityholder.
In order to achieve these objectives, 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 could permit the lender to immediately call loans and borrowings. There have been
no breaches of financial covenants relating to any loans and borrowings in the current or prior year. The
Group manages its capital structure and makes adjustments to reflect 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 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 lease liabilities
Gearing ratio
Notes
9.5
9.1
9.7
2021
$'000
2020
$'000
761,343
(95,910)
665,433
681,063
(90,352)
590,711
3,251,873 2,640,334
(90,352)
(95,910)
(110,700)
(170,593)
3,045,263 2,379,389
22%
25%
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 adjusted for interest,
tax, depreciation and finance amortisation costs equals or exceeds a multiple of two. The Group has
complied with these covenants throughout the reporting period.
Dividends and distributions
Distributions have been made and declared as noted below.
NSPT interim distribution of 4 cents per unit paid on 1
March 2021 (2020: 4.7 cents per unit)
NSPT final distribution of 4.2 cents per unit payable on 3
September 2021 (2020: 3.4 cents per unit)
NSPT Group
2021
$'000
2020
$'000
40,708
37,039
49,689
90,397
34,467
71,506
There are no proposed distributions not recognised as a liability for the year ended 30 June 2021.
The Directors of NSH have not declared an interim or final dividend for the year ended 30 June 2021.
108
109
109
Annual Report 2021
Franking credit balance
Franking credits available for subsequent financial
years based on a tax rate of 30% (2020: 30%)
2021
$'000
2020
$'000
4,176
4,166
The above amounts are calculated from the balance of the NSH franking account at the end of the
reporting period.
repaid within 12 months of 30 June 2021. All other outstanding balances are unsecured and interest
free.
The remaining amounts owed by these entities relate to contractual management fees and accrued
interest not paid at 30 June 2021 and 30 June 2020.
There have been no guarantees provided or received for any related party receivables or payables.
For the years ended 30 June 2021 and 30 June 2020, the Group has not recorded any impairment of
receivables relating to amounts owed by related parties.
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.
Key management personnel compensation
17.
RELATED PARTY TRANSACTIONS
The following tables provide the total amount of transactions that have been entered into with related
parties for the relevant financial years.
Transactions with Related Parties
Revenue
from
related
parties
$
Purchases
from
related
parties
$
Amount
owed by
related
parties
$
Amount
owed to
related
parties
$
Australia Prime Storage Fund
Bundall Commercial Trust
Bundall Storage Trust
Bundall Storage Operations Pty Ltd
Spacer Marketplaces Pty Ltd
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
-
490,195
224,394
891,365
200,675
510,121
29,373
-
-
-
-
-
-
-
-
-
-
-
2,458,421
2,288,726
3,078,992
4,131,488
29,323
-
-
-
107,511
78,459
-
-
The TBF & NS Trust
2021
831,735
2020 1,027,993
-
-
3,529,934
1,027,993
-
-
-
-
-
-
-
50
-
-
-
-
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 2021, the Group had receivables outstanding of $1,775,000 (30 June 2020: $1,775,000) with
the Bundall Commercial Trust and $2,850,000 (30 June 2020: $2,700,000) with the Bundall Storage Trust,
and $1,675,000 (30 June 2020: $nil) with the TBF & NS Trust relating to amounts drawn down under facility
agreements between the entities. These are included in the table above.
The facility agreements have terms ranging from 1 to 5 years, and are interest bearing on commercial
rates. The receivables with the Bundall Storage Trust and TBF & NS Trust have been classed as current
receivables in the statement of financial position as these receivables are expected to be repaid within
12 months of 30 June 2021. The receivable with the Bundall Commercial Trust have been classed as a
non-current receivable in the statement of financial position as this receivable is not expected to be
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Consolidated Group
2021
$'000
4,612
112
1,057
-
5,781
2020
$'000
3,248
134
522
329
4,233
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.
18.
COMMITMENTS AND CONTINGENCIES
Capital commitments
As at 30 June 2021, the Group held commitments to purchase four freehold investment properties and
three development sites for $53.7m (30 June 2020: three freehold investment properties for $39m).
As at 30 June 2021, the Group has contractual commitments in place for the construction of self-
storage centres of NZD $32.5m (AUD $30.3m) in New Zealand (see note 10.3), (30 June 2020: $10.6m in
Australia and NZD $1.7m (AUD $1.6m) in New Zealand).
As at 30 June 2021, the Group held a commitment with a third party, to supply and install solar panels
on a number of NSR storage centres for $0.5m (30 June 2020: $1.1m). The Group also held commitments
associated with the development of intangible assets for $0.7m.
There is no other capital expenditure contracted for at the end of the reporting period but not
recognised as a liability. There are no other contingent assets or liabilities for the Group.
Lease liability commitments
For details of lease liability commitments see note 9.7.
Guarantees and contingent liabilities
The Group’s parent entity has provided bank guarantees of $8.6m (2020: $8.7m). These are provided to
third party lessors and other related entities.
The Group did not have any contingent liabilities as at 30 June 2021 or 30 June 2020.
110
111
111
Annual Report 2021
19.
EARNINGS PER STAPLED SECURITY (“EPS”)
21.
INFORMATION RELATING TO THE PARENT ENTITY
Basic earnings per stapled security is calculated as net profit attributable to stapled security holders,
adjusted to exclude costs of servicing equity (other than distributions) divided by the weighted average
number of stapled securities on issue during the period under review.
Summary financial information
The individual financial statements for NSH, the parent entity, show the following aggregate amounts:
Diluted earnings per stapled security adjust the figures used in the determination of basic earnings per
share to take into account:
•
The after tax effect of interest and other financing costs associated with dilutive potential stapled
securities; and
The weighted average number of additional stapled securities that would have been outstanding
assuming the conversion of all dilutive potential stapled securities.
•
2021
2020
Restated
Weighted average number of securities on issue during the
year
Adjustment under AASB 133 to reflect discount to market price
on issue of new capital
Weighted average number of securities used to calculate
basic and diluted earnings per stapled securities
1,020,912,858
815,973,324
4,417,359
18,867,209
1,025,330,217
834,840,533
Reconciliation of earnings used in calculating earnings per
stapled securities
Net profit attributable to members ($’000)
309,708
121,779
Basic and diluted earnings per stapled securities (cents)
30.21
14.59
As required by AASB 133 Earnings per share, for capital raises during the year ended 30 June 2021, 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 ended 30 June 2020 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.
2021
$
2020
$
Amounts received or due and receivable by Ernst & Young Australia for:
Category 1 – Fees for auditing the statutory financial report of the group
and any other group entity
Category 2 – Fees for assurance services that are required by legislation
to be provided by the auditor
Category 3 - Fees for other assurance services under other legislation or
contractual arrangements where there is discretion on service provider
Category 4- Fees for other services
Total auditors’ remuneration
602,100
587,802
-
-
27,900
49,315
679,315
27,400
75,815
691,017
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Loss after tax
Total comprehensive income / (loss)
2021
$’000
2020
$’000
142,356 104,527
160,583 118,384
(7,669)
(28,526)
(8,919)
(29,776)
130,807 109,465
159,567 131,421
(28,760)
(21,956)
130,807 109,465
(6,803)
(6,803)
(1,642)
(1,642)
Guarantees entered into by the parent entity
The Group’s parent entity has provided bank guarantees of $8.6m (2020: $8.7m). These are provided to
third party lessors and other related entities. In addition, there are cross guarantees given by National
Storage Holdings Limited, National Storage (Operations) Pty Ltd, Southern Cross 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 2021 or 30 June 2020.
22.
DEED OF CROSS GUARANTEE
As at 30 June 2021 and 30 June 2020, 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 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.
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.
Consolidated statement of comprehensive income
Profit / (loss) before income tax
Income tax benefit
Profit / (loss) after tax
Retained earnings at the beginning of the year
Dividends received
Retained earnings at the end of the year
2021
$'000
2,064
1,331
3,395
3,548
1,000
7,943
2020
$'000
(12,098)
3,902
(8,196)
10,944
800
3,548
112
113
113
Annual Report 2021
Consolidated statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Right of use assets
Investment properties
Investments
Intangibles
Deferred tax asset
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Deferred revenue
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Retained profits
Total equity
2021
$'000
72,038
32,390
1,050
-
4,605
110,083
2020
$'000
12,915
28,956
769
331
9,812
52,783
118
1,320
5,616
1,012,901
5,932
30,582
8,499
3,846
118
1,051
6,540
954,353
5,932
30,356
6,982
-
1,068,814 1,005,332
1,178,897 1,058,115
31,888
8,257
14,498
197
3,312
58,152
7,359
5,251
10,781
-
1,774
25,165
1,250
948,772
3,213
953,235
1,250
893,457
3,274
897,981
1,011,387
923,146
167,510
134,969
159,567
7,943
167,510
131,421
3,548
134,969
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 2021
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 2021 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 2021.
On behalf of the Board,
23.
EVENTS AFTER REPORTING PERIOD
For the period from 1 July 2021 to the date of this report the Group settled two storage centre
investment properties for a total cost of $21m, and one development site for NZD $3m (AUD $2.8m). An
additional storage centre is under contract for NZD $10.1m (AUD $9.4m) and is due to settle in late
August 2021.
Laurence Brindle
Director
24 August 2021
Brisbane
Andrew Catsoulis
Managing Director
24 August 2021
Brisbane
114
115
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Annual Report 2021
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor's Report to the Members of National Storage
REIT
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of National Storage REIT (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2021, the consolidated statement of profit or loss, consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
1. Investment property valuation
Why significant
How our audit addressed the key audit matter
Investment properties represent approximately 94% of
the Group’s total assets. These assets are carried at
fair value, which is assessed by the directors with
reference to either external independent property
valuations or internal valuations and are based on
market conditions existing at reporting date.
This was considered a key audit matter due to the
number of judgments required in determining fair
value. These judgments include assessing the
capitalisation rates, sustainable occupancy and
stabilised average EBITDA (earnings before interest,
tax, depreciation and amortisation).
Disclosure relating to investment properties and the
associated significant judgments are included in Notes
2(q), 3, 10.3, and 10.7 to the financial report.
Our audit procedures included the following:
• With the involvement of our real estate valuation
specialists, we assessed the suitability of the
valuation methodologies, the competence,
qualifications and objectivity of both the Group’s
internal valuers and external valuation experts,
and the assumptions used in the valuations. These
assumptions and inputs included capitalisation
rates, occupancy rates including forecast
occupancy levels, and stabilised average EBITDA;
• Agreed source data used in the valuations to
supporting tenancy schedules and accounting sub-
ledgers;
•
Tested the mathematical accuracy of the internal
valuation model, including assessing key valuation
inputs with reference to those applied by the
external valuation experts and where relevant we
assessed the reasonableness of comparable
transactions used in the valuation process;
• Where relevant, we evaluated the movement in
the capitalisation rates, occupancy rates, and
stabilised average EBITDA across the portfolio
based on our knowledge of the property portfolio,
comparable acquisition transactions in the period,
published industry reports and comparable
external valuations; and
• We considered the adequacy of disclosures in
relation to the valuation methods and principles
disclosed in Note 2(q) Summary of significant
accounting policies - Investment properties, Note
3 Significant accounting judgements, estimates
and assumptions – Revaluation of investment
properties, Note 10.3 Investment properties and
Note 10.7 Non-financial assets fair value
measurement.
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Annual Report 2021
2. Carrying value of goodwill
Why significant
How our audit addressed the key audit matter
The goodwill balance of $43.9 million, relates to the
acquisition of portfolios of investment properties
purchased in previous periods. The goodwill is tested
for impairment annually.
Impairment testing involves the application of
subjective judgment about future business
performance and the application of valuation
methodologies in accordance with Australian
Accounting Standards. Accordingly, this was
considered a key audit matter.
Disclosure relating to goodwill and the associated
significant judgments are included in Notes 2(h), 2(s),
3, 10.4 to the financial report.
Our audit procedures included the following:
• We considered whether the impairment testing
methodology applied by the Group, including the
determination of cash generating units to which
goodwill was allocated, met the requirements of
Australian Accounting Standards;
• We assessed the Group’s appropriateness in
respect of the determination of the CGU to which
the goodwill is allocated;
• We evaluated the suitability of the valuation
methodology and validated the inputs to calculate
the fair value less costs of disposal as disclosed in
Note 10.4 Intangible assets;
• We considered other sources of information, such
as the value attributable to the synergistic
benefits from managing the investment properties
as a portfolio, as a cross-check of the recoverable
amount of goodwill; and
• We considered the adequacy of the disclosures in
Note 2(h) Summary of significant accounting
policies – Business combinations and goodwill,
Note 2(s) Summary of significant accounting
policies – Impairment of assets, Note 3 Significant
accounting judgements, estimates and
assumptions – Impairment of non-financial assets –
goodwill and Note 10.4 Intangible assets of the
financial report.
Information Other than the Financial Report and Auditor’s Report
The directors are responsible for the other information. The other information comprises the information
included in the National Storage REIT 2021 Annual Report, but does not include the financial report and
our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
119
Annual Report 2021
•
•
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 42 to 53 of the directors' report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of National Storage REIT for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Ric Roach
Partner
Brisbane
24 August 2021
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121
Annual Report 2021
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 30 July 2021 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
1,168
1,853
1,497
2,983
178
7,679
There were 330 holders of less than a marketable parcel of stapled securities, representing 7,046 units.
(b) Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities as at 14 July 2021 are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Perpetual Trustee Company Ltd
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
National Nominees Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
Morgan Stanley Australia Securities (Nominee) Pty Ltd
Neweconomy Com Au Nominees Pty Limited
Australian Executor Trustees Limited
HSBC Custody Nominees (Australia) Limited – GSCO ECA
BNP Paribas Noms Pty Ltd - Six Sis Ltd
Hooks Enterprises Pty Ltd
BNP Paribas Nominees Pty Ltd Acf Clearstream
Alex Queensland Pty Ltd (Catsoulis Development A/C)
Leyshon Investments (Australia) Pty Ltd
One Managed Investment Funds Ltd.
BNP Paribas Nominees (NZ) Limited - A/C NZCSD
Leendert & Aaltje Hoeksema
Stow Away Self Storage Pty. Ltd
Stapled Securities
Number
held
470,383,370
182,712,139
117,118,805
111,641,274
54,838,439
29,882,795
14,452,779
7,124,630
6,895,928
5,711,473
5,043,750
5,040,974
3,590,000
2,972,013
2,932,388
2,240,000
2,168,833
2,110,892
2,020,000
1,811,224
1,030,691,706
% of issued
securities
39.76
15.44
9.90
9.44
4.64
2.53
1.22
0.60
0.58
0.48
0.43
0.43
0.30
0.25
0.25
0.19
0.18
0.18
0.17
0.15
87.12
121
Unquoted equity securities
There are no unquoted securities.
(c) Substantial shareholders
Substantial securityholders, as at 14 July 2021, are set out below:
Name
Abacus Storage Funds Management Limited
Vanguard Investments Australia Ltd
Number
held
117,118,805
75,268,523
Percentage
9.9%
6.4%
(d) Voting rights
The voting rights attached to the ordinary fully paid stapled securities is one vote per stapled security.
122
123
Annual Report 2021
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 (0)3 9415 4000
Email using the online form:
computershare.com/Investor/#Contact/Enquiry
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, nationalstorageinvest.com.au,
or via the Investor Centre link on registry website at
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 International:
+61 (0)3 9415 4000 (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
The Annual Taxation Statement and Tax Guide
are dispatched to securityholders in August
each year. A copy of the Tax Guide is available
at 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
or via the investor feedback form available at
nationalstorageinvest.com.au/investor-feedback/.
NSR CALENDAR
AUGUST
Full Year Results and Annual Report released.
SEPTEMBER
Distribution paid for the six months ended 30 June.
Annual tax statements released.
Notice of Annual General Meeting released.
OCTOBER
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.
CORPORATE DIRECTORY
RESPONSIBLE ENTITY OF NSPT
National Storage Financial Services Limited
(NSFL)
ACN 600 787 246 AFSL 475 228
Level 16, 1 Eagle Street, Brisbane QLD 4000
DIRECTORS
Laurence Brindle
Anthony Keane
Howard Brenchley
Steven Leigh
Andrew Catsoulis
Claire Fidler
COMPANY SECRETARY
Claire Fidler
REGISTERED OFFICE
Level 16, 1 Eagle Street
Brisbane QLD 4000
PRINCIPAL PLACE OF BUSINESS
Level 16, 1 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
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”)
125
Annual Report 2021