ANNUAL REPORT
2 0 2 2
IMPORTANT INFORMATION
ABOUT THIS REPORT
Welcome to National Storage REIT’s 2022 Annual
Report which reports our performance for the
financial year 1 July 2021 – 30 June 2022.
THE 2022 REPORTING SUITE INCLUDES:
Annual Report – a review of FY22 performance,
strategy and governance.
Financial Report – FY22 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 2022 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 FY22 PERFORMANCE
n NSR STRATEGY
n NSR PORTFOLIO
5
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
28
30
60
126
127
Annual Report 2022
3
OUR BUSINESS
National Storage is Australasia’s largest self-storage provider,
tailoring self-storage solutions to in excess of 90,000 residential
and commercial customers across more than 225 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.
IN EXCESS OF
90,000 RESIDENTIAL
AND COMMERCIAL
CUSTOMERS AND
OVER 225 STORAGE
CENTRES ACROSS
AUSTRALIA AND
NEW ZEALAND.
5
Annual Report 2022 FY22 PERFORMANCE
FINANCIAL HIGHLIGHTS
$278.9m
Total Revenue
$620.6m
IFRS Profit
FY21: $217.7m
FY21: $309.7m
28%
100%
$126.5m
Underlying
Earnings1
10.6cps
Underlying
Earnings per
Stapled Security
10.0cps
Distribution
per
Stapled Security
$3.73b
Investment
Properties
FY21: $86.5m
FY21: 8.5cps
FY21: 8.2cps
FY21: $2.95b
46%
25%
22%
26%
OPERATIONAL HIGHLIGHTS
226
Number of
Centres
(30 June 2022)
1,180,000
Square Metres
of Net
Lettable Area
88.9%
Group2
Occupancy
$268
Group2
Revenue per
Available Metre
64%
Operating
Margin
616
Employees
FY21: 211
FY21: 1,100,000
FY21: 86.1%
FY21: $227
FY21: 62%
FY21: 555
15
80,000
2.8%
21%
2%
61
CAPITAL STRENGTH
$4.05b
Total Asset
Value
23%
Gearing
3.3yrs
Weighted
Average
Debt Tenor
$2.34
Net Tangible
Assets per
Stapled Security
FY21: $3.25b
FY21: 22%
FY21: 2.8yrs
FY21: $1.89
25%
1%
0.5
24 %
1. Underlying earnings is a
non-IFRS measure (unaudited)
2. Group – Australia and
New Zealand (170 centres),
as per 3 & 4 below
3. Australia – 146 centres as at
30 June 2020 (excluding Wine
Ark and let-up centres)
4. New Zealand – 24 centres as
at 30 June 2021(excluding
let-up centres)
7
Annual Report 2022 NSR STRATEGY
FOUR PILLARS
OF GROWTH
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 160 high-quality
acquisitions since
its IPO in 2013
– a growth rate
unmatched in the
Australasian market
DEVELOPMENT
AND EXPANSION
NSR has a highly
developed and proven
in-house expertise which
enables it to identify,
negotiate and deliver
strategic development
and expansion projects
TECHNOLOGY
AND INNOVATION
NSR leads the Australasian
storage industry with
new technology and
innovation projects
providing an important
competitive advantage
over its peers
9
Annual Report 20221234 NSR PORTFOLIO
DARWIN
WESTERN
AUSTRALIA
27
CENTRES
NORTHERN
TERRITORY
3
CENTRES
SOUTH
AUSTRALIA
10
CENTRES
ADELAIDE
PERTH
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 2022.
*Map not to scale.
NORTH QUEENSLAND
QUEENSLAND
67
CENTRES
NEW SOUTH WALES
34
CENTRES
226
TOTAL
CENTRES
HERVEY BAY
SUNSHINE COAST & NOOSA
BRISBANE
GOLD COAST
HUNTER & CENTRAL COAST
SYDNEY & BLUE MOUNTAINS
WOLLONGONG & ILLAWARRA
VICTORIA
42
CENTRES
CANBERRA
4
CENTRES
GEELONG MELBOURNE
LAUNCESTON
HOBART
6
CENTRES
TASMANIA
AUCKLAND
HAMILTON
NEW ZEALAND
33
CENTRES
BAY OF PLENTY
WELLINGTON
CHRISTCHURCH
DUNEDIN
11
Annual Report 2022 PORTFOLIO STATISTICS - JUNE 2022
AUSTRALIAN PORTFOLIO BY NLA
NEW ZEALAND PORTFOLIO BY NLA
REGION
Brisbane
Gold Coast
Sunshine Coast
North Queensland
Sydney
Central Coast (NSW)
Wollongong
Canberra
Melbourne
Geelong
Adelaide
Perth
Tasmania
Darwin
TOTAL
PORTFOLIO VALUATION
CENTRES
NLA
31
15
11
10
21
10
3
4
38
4
10
27
6
3
179,000
76,200
58,000
52,600
108,300
44,600
12,800
33,000
196,400
16,100
54,400
139,800
22,400
17,000
193
1,010,600
REGION
Auckland
Hamilton
Wellington
Christchurch
Dunedin
Regional
TOTAL
CENTRES
NLA
8
5
8
6
2
4
60,700
19,800
35,300
22,200
17,800
15,900
33
171,700
PORTFOLIO COMPOSITION
Freehold
Leasehold
Managed
Licensed
TOTAL
207
15
2
2
226
TOTAL VALUATION ($BILLION): $3.73b WEIGHTED AVERAGE PRIMARY CAP RATE: 5.86%
STATE
QLD
NSW
ACT
VIC
SA
WA
TAS
NT
NZ
TOTAL
Exchange Rate: 1.10645
VALUATION
CENTRES
NLA
67
34
4
42
10
27
6
3
33
365,700
165,700
33,000
212,600
54,400
139,800
22,400
17,000
171,700
%
30
14
3
18
5
12
2
1
15
$M
1,109
561
154
827
155
367
76
42
441
%
30
15
4
22
4
10
2
1
12
226
1,182,300
100%
3,732
100%
13
MOOROOKA, QLD
Annual Report 2022
CHAIRMAN &
MANAGING DIRECTORS’
REPORT
The year ended 30 June 2022 (FY22) has delivered
Margin also continues to increase - up 2% to 64%,
another extremely strong set of results for National
illustrating our ability to drive synergies and economies
Storage’s securityholders and other stakeholders,
of scale from the self-storage platform, now
building on its robust growth trajectory over the last
approaching 230 centres across Australia and New
two years.
Zealand. The strength of our relative position is illustrated
by the robust outlook for FY23, building off the positive
This has been the result of a combination of factors
momentum gained over the last two years. This is
including consistent application of effort by our
despite increases in debt funding costs which have been
exceptional team, as well as NSR maintaining its highly
mitigated by the conservative nature of NSR balance
disciplined and focused approach to the execution of its
sheet gearing of 23% as at 30 June 2022. These results
core Four Pillars Growth Strategy.
also demonstrate the highly resilient nature of storage
as an operating business model and an asset class,
Our headline results achieved across FY22 are
which has seen the storage sector as one of the best
outstanding and speak for themselves:
n 24.7% increase in underlying earnings to 10.6cps
n 20.9% increase in Group REVPAM to $268/m2
n 18.8% increase in Group rate per square metre
to 302m2
n 2.8% increase in Group occupancy to 88.9%
n increase in overall Investment Properties to $3.7 billion,
with a $532 million valuation uplift driven by improved
performing real estate asset classes globally despite
disruption caused by COVID -19 and recent global
political and economic instability.
The success of NSR’s business model lies in its relative
simplicity and its focused Four Pillars Growth Strategy.
The cornerstone of this strategy is Organic Growth -
operational performance and a largely unchanged
our First Pillar. Organic growth is achieved through a
weighted average portfolio capitalisation rate of 5.86%
n NTA up by 24% to $2.34 reflecting our ability to continue
disciplined approach to growing same centre revenue
through increases in both centre occupancy and rate
to add value to the portfolio through enhancing
per square metre. Our revenue management system
operational performance and creating efficiencies at
has assisted greatly in this process as has our specialist
a centre level
in-house dedicated revenue management team.
Our Group occupancy now sits at a record high of
Total Revenue for the Group increased to $278.9 million
almost 89%, demonstrating the success of our strategy
in FY22, up 28% for the year. Pleasingly our Operating
of creating, then filling, built capacity at both existing
centres (by way of expansion) and new centres (by
further capacity to acquired sites by way of expansion
way of greenfield development). The validation of
– all aimed at improving the revenue achieved from
this strategy is reflected by our record FY22 revenue
these acquisitions. This strategy has proven to be highly
numbers as well as our improving operating margin,
successful and remains core to our positive continued
demonstrating that NSR is a highly synergistic business
growth. Our relatively low gearing (23% as at 30
focused on driving efficiencies
and economies of scale from
our management platform and
ELLERSLIE, NZ
operating systems.
A further key to our organic
growth is our people and
their performance. We have
invested in our team at every
level - providing training, support
and a trajectory for personal
and professional development.
This means that our staff have
the opportunity to grow with
the business, and to align
their personal goals with NSR’s
corporate endeavours. This
June 2022) means we are well
positioned to continue to execute
a disciplined consolidation
strategy in a market which remains
highly fragmented.
Our Third Pillar of growth is our
Development and Expansion
Strategy which focuses on new
development sites in infill locations
as well as in new markets, in which
storage has yet to be established.
Our current development
pipeline has over 155,000m2
of new development projects
and 85,000m2 of expansion
and redevelopment projects in
provides NSR with an important strategic advantage
construction and design phases. Despite COVID-19
when it comes to retaining, incentivising and
related challenges, supply chain shortages, and the
growing the skills of its team - while creating a high
threat of increasing construction costs, NSR completed
performance environment where excellence is
five projects delivering 38,300m2 of new NLA across
appropriately rewarded.
FY22, all within
the time - cost -
Our Second Pillar of growth is Acquisitions and we have
quality triangle
executed this consistently despite numerous COVID-19
predetermined
related challenges. We have acquired 14 new storage
by the board
centres, the freehold of one previously leasehold storage
and senior
centre and eight development sites during the year,
management.
totalling $200 million. We focus our acquisition strategy
predominantly on “off-market” opportunities sourced
Our Fourth (and
from an in-depth knowledge of the Australian and New
final) Pillar of our
Zealand storage markets, gained over 25 years in the
growth strategy
industry. NSR targets value accretive transactions which
is Technology
complement our existing footprint, and where we see
and Innovation.
opportunities to grow rate, occupancy and/or add
This touches
THE SUCCESS OF
NSR’S BUSINESS
MODEL LIES IN ITS
RELATIVE SIMPLICITY
AND ITS FOCUSED
FOUR PILLARS
GROWTH
STRATEGY
15
Annual Report 2022 everything we do, and much of our business success
over recent years has been built upon proactively
embracing new technology that can both add value
and provide efficiencies to our operating structure.
Current initiatives include upgrading our contact
centre technology and continuing to simplify and
improve our online booking and move in process.
Our focus in FY23 includes the implementation of an
upgraded cyber security program, further improving
our customer and employee experience at an
individual centre level, improved analytics and other
process enhancement and innovation initiatives.
Customer centricity is a key focus for NSR and our
team members take a proprietary interest in their
centres and continue to display high levels of
From a human capital and social perspective, we are
the benefit of all stakeholders. Prior to concluding this
excited to have implemented a more targeted people
report, we would like to formally acknowledge the
and culture strategy focusing on the provision of tools
massive contributions of Laurence Brindle, our founding
and frameworks that create and support highly capable
Chairman, and Steven Leigh, one of our non-executive
leaders and a high-performing, thriving workforce. In
directors, to the growth of our business over the last eight
addition, through our new ‘NS Cares’ program, we are
years. Laurence retired from the board effective
committed to supporting charitable organisations that
5 April 2022 and Steven has announced he will step
aim to create healthier communities. We are proud to
down at our forthcoming AGM in October this year.
currently partner with charities across medical research,
We have benefited greatly from their wisdom and
mental health, diversity and safety. More detail on this
guidance; we sincerely thank them for their efforts and
initiative will be included in our Sustainability Report.
wish them well for their future endeavours. We also
welcome to the board Inma Beaumont and Scott Smith,
With regard to capital management, NSR has now
our two newly appointed non-executive directors. They
successfully transitioned its debt from a secured to an
bring to the NSR board a wealth of experience in their
unsecured platform, retaining all key lenders during the
respective fields of expertise and we are appreciative
process. This has enabled NSR to significantly broaden
for their decision to join NSR on its continuing journey.
teamwork, care and excellence when dealing with
its lender base, with the introduction of multiple new
These two appointments will add diversity and
our customers on a daily basis. While our customer
footprint has grown to over 90,000 customers, the
level of overall satisfaction with service standards
remains very strong.
participants to the lender group. This will provide
experience to our board in a range of areas, from
significant additional borrowing capacity as and when
which we will no doubt greatly benefit.
required. NSR’s current gearing of 23% at 30 June 2022
is slightly below the bottom end of our stated gearing
Finally, our sincere thanks goes to all of our stakeholders,
range demonstrating the conservative position taken
you have supported and trusted us through challenging
Our ESG framework continues to evolve with a variety
through uncertain times. This position provides NSR
economic times of great upheaval. We trust that our
of initiatives in place across the environmental,
social and governance areas. A key achievement
in FY22 includes the completion of our first carbon
audit across the NSR group. This audit demonstrates
the low carbon emissions footprint of our centres
with Scope 1 and 2 emissions sitting at an average
of 54 tonnes CO2e per year, which is similar to the
yearly carbon emissions generated by an average
3-4 person Australian home. We are working hard to
minimise our emissions and are developing a strategy
to guide NSR towards carbon neutrality. Initiatives
include further rollout of our solar PV installations
atop our centres with over 124 installations
supplementing the daily power needs at these
centres and our LED installation program is ongoing
further reducing individual power needs on a centre
by centre basis.
with significant capacity to continue to execute the
best of class performance has rewarded your faith in
strategy outlined above in coming years, as well
NSR and its team and we look forward to continuing to
as providing strong contingency to deal with any
work together to achieve mutually beneficial outcomes
unforeseen challenges.
for all of our stakeholders in NSR’s business for many
years to come.
As you will undoubtedly agree, the success of any
business is driven by the employees and NSR is no
different. The strong operational performance and
financial success NSR has achieved during FY22 are the
result of the dedicated, highly skilled, committed and
engaged employees we have at all levels across the
Anthony Keane
organisation. We cannot thank them enough for their
NON-EXECUTIVE CHAIRMAN
efforts, at times during challenging conditions, and NSR is
grateful to all employees for their efforts.
Overall, we are well positioned for growth and look
forward to continuing to expand the NSR business for
Andrew Catsoulis
MANAGING DIRECTOR
17
WE ARE WELL
POSITIONED
FOR GROWTH
AND LOOK
FORWARD TO
CONTINUING TO
EXPAND THE
NSR BUSINESS
Annual Report 2022 INVESTMENT PARTNERS
National Storage continues to work with its current
brand as a prominent player in the Perth market.
investment partners, and engage with a number
Various sites in and around Perth have been identified
of new investment partners, to assess options
as part of the arrangement, whereby Parsons Group
for future acquisition, development and
constructs quality self-storage centres branded as
redevelopment opportunities.
PERTH DEVELOPMENT PORTFOLIO
National Storage. The partnership to date has delivered
multiple centres with Fremantle, Martin, Port Kennedy,
East Perth and South Fremantle added to the NSR
portfolio over recent years. An additional two centres
are currently under design and construction. Other sites
The Perth Development Portfolio is a construction and
are currently in due diligence and planning stages.
management arrangement with one of Perth’s leading
National Storage retains certain rights to purchase
self-storage construction companies, Parsons Group.
the assets under this arrangement.
This venture continues to reinforce the National Storage
BRYAN FAMILY GROUP
(BFG, formerly known as Leyshon)
OTHER PARTNERS
National Storage continues to work with numerous other
National Storage and BFG, through The Bryan
development partners which has resulted in the delivery
Foundation, cemented their partnership in FY22 by
of a new purpose built storage centre in Deception Bay,
jointly developing a site at Moorooka in Brisbane with
South East Queensland during FY22. Several additional
a high-quality storage centre and service station which
centres in Victoria and Queensland are currently in
commenced operation in the second half of FY22.
various stages of design, planning and construction
which when delivered will add further capacity to the
National Storage network.
MOOROOKA, QLD
19
Annual Report 2022 THE YEAR IN REVIEW
WINE ARK ARTARMON, NSW
ASSET MANAGEMENT
DEVELOPMENT AND EXPANSION
National Storage continued to deliver excellent revenue
National Storage continues to expand capacity with
growth in FY22, as supported by the ongoing success of
strategic development of new and existing assets.
our revenue management software. This software utilised
Development continues to provide additional capacity
forecast and sensitivity modelling, supported by AI, to
and a ready construction pipeline in key markets. The
maximise occupied revenue growth, drive key metric
key objective remains to deliver long term enhanced
performance, and achieve stabilised occupancy and
revenue and NTA outcomes for security holders. This
rate per square metre levels on an individual unit basis.
year five projects have been completed adding
The 30 June 2022 REVPAM across the Group was $268/m2,
a 20.9% increase for the year. Group occupancy across
the portfolio on this same basis also increased 2.8%
to 88.9%.
The Operations team across Australia and New Zealand
continued to deliver strong results in FY22, despite the
challenges posed by COVID-19 throughout the period.
A focus on sales training and team development saw
an increase in conversion results when compared to the
previous year, and packaging sales exceeded $5m for
the first time in National Storage history.
Total Other Revenue increased 16% due to streamlined,
aligned operational reporting and leadership initiatives.
Further, changes to the internal sales platform effected
improvements in customer service via automation and
optimisation processes, all the while ensuring we met the
demands of an evolving trading environment.
ACQUISITIONS
38,300m2 of NLA. Looking forward NSR has 34 active
projects in various stages of development including 10
projects currently under construction that will deliver
approximately 70,000m2 of additional NLA in the next
12 months.
WINE ARK
Wine Ark is Australia’s leading wine storage provider and
sits part of the National Storage Group. Housing over
two million bottles of fine wine, Wine Ark operations take
place across 15 centres for clients located in over 30
countries. There are few businesses in Australia with more
experience in the exacting task of storing and managing
premium wine. Wine Ark’s wine storage functions are
complemented by a compelling wine sales offering.
This offering gives clients the opportunity to acquire
new release wines from iconic Australian and overseas
vendors, coupled with the opportunity for existing clients
and the broader wine-buying public to purchase surplus
wine in Wine Ark’s storage. This surplus wine purchasing
National Storage has successfully transacted 14 centres
platform is popular with restaurants, as they can acquire
and eight development sites in FY22. National Storage
aged wines with guaranteed provenance, enabling
continues to pursue high-quality acquisitions across
them to sell with confidence.
Australia and New Zealand. The ability to acquire and
integrate strategic accretive acquisitions is one of
National Storage’s major competitive advantages
and is 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.
Throughout FY22, Wine Ark continued to strengthen
its relationship and involvement in the greater wine
trade industry, supporting the endeavours of The Len
Evans Tutorial, The Wine Communicators of Australia,
Sommeliers Association of Australia, Wine Australia, and
Commanderie de Bordeaux (Australian Chapter).
21
Annual Report 2022 MARKETING AND CUSTOMER EXPERIENCE
National Storage's marketing strategy focuses on
building a brand and product awareness through
the use of digital marketing, sponsorships, and
community. Our digital presence has continued to
be scaled to drive an increase in customers to our
website, subsequently to attract an increase in online
enquiries and bookings. Our vision of an ideal customer
experience has bolstered all digital activities, allowing
us to provide a full digital booking experience, including
for customers who initiate their booking through our
Contact Centre.
Our sponsorship activity in FY22 placed focus on
acquiring customers using our digital channels and
direct interaction with sponsor member and fan
databases, through a range of data capture and
purchase offer campaigns. Through implementation
of these campaigns, we can better measure the
performance of our individual sponsors, extending
beyond the traditional brand awareness and recall
functions of a sponsorship. These sponsorship-associated
audiences are tracked by our internal CRM (Customer
Relationship Management) platform, allowing
for concrete connections to be drawn between
sponsorship involvement and purchase activity.
In efforts to further promote brand trust beyond digital
channels and sponsorships, key messaging in National
Storage FY22 marketing communications have focused
on the community aspect of the business. Supporting
community groups through the Community Units
Program, National Storage seeks to give back to the
communities in which it operates, while continuing
to promote purchase activity through our centres
across Australia and New Zealand.
Enabling a user-friendly customer experience has
continued to be a key factor in the success of the
business for FY22 and remained at the forefront of all
marketing and communications activities. In addition
to the digital functionalities optimised during FY22
to enhance customer experience, a world leading
Contact Centre system has been implemented, to
facilitate a seamless purchase process using AI. This
AI technology allows us to adapt and respond to our
customers quickly and efficiently.
OUR FOCUS ON
CUSTOMER EXPERIENCE
AND ENGAGEMENT HAS
BOLSTERED ALL DIGITAL
ACTIVITIES, ALLOWING
US TO PROVIDE A FULL
DIGITAL BOOKING
EXPERIENCE
Annual Report 2022
23
BOARD OF DIRECTORS
Anthony
Keane
Howard
Brenchley
Steven
Leigh
Inma
Beaumont
Independent
Non-Executive Chairman
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
BSc (Maths), GradDipCorpFin, GAICD
BEc
Grad Dip Proj Mgmt (Hons)
BA Hons (Econ/Com), FCCA, GAICD
Anthony is an experienced finance and business
Howard has over 35 years’ involvement in the
Steven Leigh has more than 30 years’ experience
Inma has spent over 18 years as a senior finance
executive with an extensive background in
Australian property industry, as an analyst, investor
in the real estate investment management and
executive with a broad range of leadership
banking and business management. Prior to
and fund manager. He is now a professional
development industry. He joined QIC Global
roles spanning Financial Control, Internal Audit
accepting his directorship with National Storage,
company director and consultant to the property
Real Estate in 1991 and was a key member of the
and Risk Management within top multinationals
Anthony held numerous leadership roles with
funds industry. Howard cofounded Property
senior executive team that acquired and created
and banking institutions including Procter and
a major trading bank principally in business,
Investment Research Pty Ltd (PIR) in 1989, which
through development a portfolio of high-quality
Gamble and Citibank. Inma has over six years’
corporate and institutional banking. He is actively
during the 1990s was considered a leading
retail and commercial assets in Australia, USA and
experience as Chair of Finance, Audit and
involved in the business community through Non-
researcher of both listed and unlisted property
the UK.
Executive Director and Advisory Board roles, and
funds. In 1998 Howard was instrumental in
Risk Committees and serving on three boards.
In the last eight years, she has also worked in
finance advisory consultancies.
Anthony is a Director of 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 is a member of the Audit, Risk,
Nomination, and Remuneration Committees.
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 formerly ASX listed APN Property
Group Limited (APD) and is currently a
Non-Executive Director of Dexus Asset
Management Limited, responsible entity for
ASX listed Dexus Industria REIT (DXI) and Dexus
Convenience Retail REIT (DXC).
Howard is the Chairman of the Audit and
Risk Committees.
Steven has had significant experience in the
fields related to marketing, public relations,
wholesale funds management business through
stakeholder engagement and fundraising at
various market cycles and conditions and has
different education institutions. Inma is culturally
a strong background in retail, commercial and
and linguistically diverse and brings significant
industrial property with a particular focus on
experience in many areas that will benefit NSR.
shopping centre acquisitions and redevelopments.
After time as the Managing Director of Trinity
Inma is currently a non-executive director of UN
Limited, and later Head of Australia for LaSalle
Women Australia, Speech Pathology Australia
Investment Management, Steven re-joined QIC as
and Guide Dogs Queensland. She holds a BA
Managing Director QIC Global Real Estate in 2012
(Mathematics) and BA Hons (Economics and
where he was responsible for the group’s $20b plus
Commerce) from the University of Valencia,
property portfolio. Steven was until recently a
Spain, is a Fellow of the Association of Chartered
Non-Executive Director of ASX listed company,
Certified Accountants and is a Graduate of the
Scentre Group Limited. Steven is a founding
Australian Institute of Company Directors.
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 the
Nomination Committee.
25
Annual Report 2022
BOARD OF DIRECTORS cont.
EXECUTIVES
Scott
Smith
Andrew
Catsoulis
Claire
Fidler
Stuart
Owen
Independent
Non- Executive Director
Managing Director
Executive Director and
Company Secretary
Chief Financial Officer
BBus
BA LLB Grad Dip Project Mgmt (Hons)
LLB (Hons) BBus – Intl Bus GAICD FGIA
BBus, CPA, GAICD
Scott has over 25 years’ experience in the
A founder of the National Storage business,
Claire was appointed an Executive Director in
Stuart joined National Storage in late 2014, with
Technology and Telecommunications sector
Andrew has over 25 years’ of specific self-
July 2017 and has been the principal Company
extensive experience in the energy sector in coal
across the Asia Pacific region, including a
storage industry expertise including in the areas
Secretary of National Storage since November
and gas fired power generation. He has held wide
breadth of experience gained from working for
of acquisitions, developments, integration and
2015. She was appointed Head of Legal and
ranging finance and commercial management
large global telecommunication organisations
operation of ‘greenfield’ and developed self-
Governance in June 2020 and now oversees
roles, including as Commercial Manager for
before founding his own successful managed
storage centres.
the legal, governance and risk functions of the
Energy Developments Limited.
service provider company. Scott holds a
Bachelor of Business (Marketing) from the
Queensland University of Technology and
Andrew is a qualified solicitor who has been
admitted to the Supreme Court of Queensland.
business qualifications and is admitted as a
Prior to this, Stuart was Commercial Manager
solicitor of the Supreme Court of Queensland.
on the delivery of a multi-site gas fired power
organisation. Claire holds legal and international
has extensive experience in technology and
He has had extensive experience in the fields of
Claire has twenty years’ experience in corporate
generation project and micro-LNG plant. He
marketing businesses. Having successfully co-
finance, commercial and property law during his
and commercial law, both in private practice
has significant experience in project financing,
founded Comlinx (Managed Service Provider)
tenure at major law firms both in Australia and
and in-house.
in 2006, he went on to sell that business to ASX
overseas. He is also a qualified project manager
mergers and acquisitions, and project
development. Stuart holds a Bachelor of
listed Telecommunications provider Over the
and has considerable property development
She practiced in the litigation, resources, and
Business, is a Certified Practising Accountant
Wire (ASX: OTW) in 2018 and continued on in
experience both within the storage industry and
corporate areas of two large law firms and as
and is a graduate of the Australian Institute of
the senior leadership team, taking over the role
in broader markets.
Corporate Counsel and Company Secretary at
Company Directors.
of CEO of OTW in February 2020 until October
2021. OTW has subsequently been sold to Aussie
Andrew was instrumental in the successful
Broadband (ASX: ABB).
acquisition and integration of the original pre-
existing Group portfolio and led the Company
Scott is currently a consultant to the technology
through the IPO and planned and negotiated
industry and sits on the Advisory Board of
Heal Inc, a San Francisco based software
company that is focused on AiOps and
Machine Learning capabilities.
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.
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.
27
Annual Report 2022
SUSTAINABILITY
This year will see the release of National Storage’s sixth
stand-alone sustainability report. The report is expected
to be released in October 2022, 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 being 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.
CORPORATE GOVERNANCE
The National Storage Boards are responsible for ensuring
that the organisation has an appropriate corporate
governance framework in place to protect and
enhance the entities' 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 Corporate Governance Statement, which can be
viewed online at nationalstorageinvest.com.au.
29
Annual Report 2022
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)
Group REVPAM(2) (Revenue per available metre)
Weighted Average Primary Cap Rate
Investment Properties(5)
Portfolio Valuation Uplift
Acquisitions / Centres(6,7)
Net Lettable Area (NLA) (sqm)
Balance Sheet
Total Assets(7)
Debt drawn(7)
Interest Rate Hedges(7)
Gearing
Weighted average cost of debt
Weighted average cost of debt (Inc swaps)
Weighted average debt tenor (years)
Net Tangible Assets (NTA)
FY22
FY21
Change
$278.9m
$620.6m
52.13cps
$126.5m
10.6cps
$165.8m
10.0cps
$217.7m
$309.7m
30.12cps
$86.5m
8.5cps
$135.2m
8.2cps
28%
100%
73%
46%
24.7%
23%
22%
At June
2022
222/4 (226)
88.9%
$268
5.86%
$3.73b
$532m
$171m/15
1,180,000
At June
2021
206/5 (211)
86.1%
$221
5.98%
$2.95b
$311m
$320m/22
1,100,000
At June
2022
$4.05b
$975m
$360m
23%
3.3%
2.7%
3.3
$2.34
At June
2021
$3.25b
$761m
$432m
22%
1.9%
2.1%
2.8
$1.89
Change
16/(-1) (15)
2.8%
20.9%
(0.12%)
26%
$221m
($149m)/(7)
7%
Change
25%
$214m
($72m)
1%
1.4%
0.6%
0.5
24%
PRINCIPAL ACTIVITIES
Listed on the ASX in December 2013, NSR is the largest self-storage owner/operator across Australia and New
Zealand, providing tailored storage solutions to over 90,000 customers. NSR’s extensive portfolio of owned,
managed and licenced centres continues to expand, having grown the network from 62 centres at IPO in
December 2013 to 229 centres at the date of this Directors’ Report.
NLA growth in built capacity is also achieved through development, expansion and redevelopment with 5
newly constructed and expanded storage centres delivered during the Reporting Period adding 38,300m2 of
NLA and a further 34 projects in various stages of design, construction and delivery. NSR now manages
approximately 120,000 storage units across 1.2 million square metres of net lettable area in Australia and New
Zealand.
The value of Investment Properties(5) on NSR’s balance sheet has increased by 26% during the Reporting Period
to $3.73 billion as at 30 June 2022.
Of the 229 self-storage properties in the NSR portfolio at the date of this report, ownership is as follows:
•
•
•
•
210 self-storage centres owned by NSPT group (Freehold Centres)
15 self-storage centres operated as long-term leasehold centres (Leasehold Centres)
2 third party managed centres
2 licenced branding rights centres in New Zealand
1 Underlying earnings is a non-IFRS measure (unaudited), see table within Operating Results for reconciliation
2 Group – Australia and New Zealand (170 centres), as per 3 & 4 below
3 Australia – 146 centres as at 30 June 2020 (excluding Wine Ark and let-up centres)
4 New Zealand – 24 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 1.1065
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
31
31
Annual Report 2022 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 stable and growing income and distribution streams 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 160 high-quality acquisitions since its IPO in December 2013 – a
growth rate unmatched in the Australasian market
• Development and Expansion - NSR has proven in-house 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 2022 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 increased to $620.6 million delivering IFRS EPS of 52.13 cents per
stapled security. The exceptional operating performance of the portfolio for the Reporting Period saw
underlying earnings increase by 46% to $126.5 million.
NSR achieved underlying earnings per stapled security of 10.6cps for the 2022 financial year, an increase of
24.7% over the previous 12 months. This result was driven by a 28% increase in total revenue to $278.9 million as
REVPAM, a combination of rate per square metre and occupancy increased, as well as contributions from
acquisitions and new developments. Occupancy across the Group achieved strong and consistent growth
throughout the whole of FY22, increasing to 88.9%, up 2.8% from 30 June 2021. Strong growth in Group rate of
18.8% to $302m2 combined with the occupancy growth delivered Group REVPAM growth of 20.9% to 268m2.
REVPAM growth was experienced across both Australia (+21.2%) and New Zealand (+19.2%). Let-Up centres
(those recently built or expanded) filled strongly with in excess of 27,000m2 of new NLA filled during the
Reporting Period and an additional 38,300m2 of built NLA added to the portfolio.
The impact on operations due to economic uncertainties following COVID-19 remain to be relatively minor.
The operational result for the full year reflects the highly resilient nature of NSR’s business model and its well
executed growth strategy, as well as the high level of competency and commitment 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 amortisation of interest rate swap reset
Less fair value adjustment and FX movement
Less lease diminution on leasehold investment properties
Underlying Earnings
Weighted average securities on issue (refer Note 19)
Underlying earnings per stapled security
FY22
$620.6
$10.2
$4.4
$7.8
($509.5)
($7.0)
$126.5
1,189,922,871
10.6cps
FY21
$309.7
$0.8
$0.9
$10.9
($231.7)
($4.1)
$86.5
1,020,912,858
8.5cps
CASH MANAGEMENT
Cash and cash equivalents as at 30 June 2022 were $83.7 million compared to $95.9 million at 30 June 2021.
Subsequent to 30 June 2022, the cash balance has been utilised to facilitate further acquisitions and for
payment of the distribution on 2 September 2022. Net operating cashflow for the year increased 23% to $165.8
million (2021: $135.2 million).
An interim distribution of 4.6 cents per stapled security ($54.7 million) was paid on 1 March 2022 with an
estimated final distribution of 5.4 cents per stapled security ($64.6 million) declared on 22 June 2022, to be paid
on 2 September 2022. This totals a full year distribution of 10.0 cents per stapled security, against underlying
earnings per security of 10.6 cents, representing a payout ratio of 94%, within the target payout ratio of 90% -
100% of underlying earnings.
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 2021 interim distribution approximately 29.5% of eligible securityholders (by number of
securities) elected to receive their distributions as securities totalling approximately $16.1 million. The DRP price
was set at $2.4107 which resulted in 6,697,770 new securities being issued.
The June 2022 final distribution has seen approximately 14% of eligible securityholders (by number of securities)
elect to receive their distributions as securities totalling approximately $9.2 million. The DRP price was set at
$2.4219 which will result in approximately 3,800,000 new securities being issued.
NSR actively manages its debt facilities to ensure it has adequate capacity for future acquisitions,
developments and working capital requirements.
During the year ended 30 June 2022, NSR completed a major refinance and restructuring of its debt facilities.
This resulted in the transition from a secured "club" arrangement to an unsecured lending platform under a
revised Common Terms Deed. On conclusion of this process the NSR repaid existing facilities and entered into
a combination of revolver facilities and term loans with major Australian and international banks. This has
assisted to extend the tenor of NSR’s borrowings and also expanded NSR’s lender pool. NSR has an institutional
term loan with a major Australian superannuation fund, along with a facility with JP Morgan.
As at the Reporting Date the Consolidated Group’s borrowing facilities are AUD $1,080 million and NZD $225
million. As at the Reporting Date AUD equivalent of approximately $308 million was undrawn and available.
NSR’s weighted average debt tenor as at the Reporting Date has increased to 3.3 years (30 June 2021: 2.8
years). NSR actively monitors 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 2022 was 23% against a target
gearing range of 25% - 40%, demonstrating a conservative position in the current debt environment and
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 $360 million were in place with
expiry dates ranging from 0.25 years to 4.25 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 leads 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 risk.
NSR has executed on its focused acquisition strategy with 14 new storage centres, the freehold of one
previously leasehold storage centre and eight development sites acquired during the Reporting Period,
totalling $200 million. Since the Reporting Date to the date of this Directors’ Report a further three self-storage
centres and three development sites with a combined value of $33 million have settled.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
32
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
33
33
Annual Report 2022
NSR re-values all assets each Reporting Period through a combined process undertaken by both external
valuers and Directors’ valuations. Director valuations are 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 tightened modestly by 12 basis points
to 5.86% and the value of the 30 June 2021 portfolio increased by $532 million, with the majority of this uplift
driven by improved operating performance. This contributed to the 24% increase in NTA which now sits at
$2.34 per stapled security, up from $1.89 per stapled security in June 2021, however the primary contribution to
NTA uplift was the result of the improved operational performance of the individual assets.
Acquisitions for the Year Ended 30 June 2022
Region
Brisbane
Sydney
Adelaide
Perth
North Queensland
Darwin
Auckland (NZ)
Rotorua (NZ)
Total
Number of
Centres
5
NLA
(m2)
26,300
1
1
1
2
1
1
2
6,300
2,900
4,700
8,900
1,500
3,500
8,000
14
62,100
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 and 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 was completed during the Reporting
Period and commenced trading in January 2022.
NSR has been appointed to manage the above projects and generates income from its provision of a range
of services including design and development, project management, corporate administration and centre
operations.
LIKELY DEVELOPMENTS
NSR utilises 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, expansion and redevelopment 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 exploring 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 10.0 cents per stapled security for the Reporting Period,
representing 94% of underlying earnings per stapled security of 10.6 cents:
• An estimated final distribution of 5.4 cents per stapled security for the 6 months to 30 June 2022. The
distribution is expected to be paid on 2 September 2022 and is expected to contain a tax deferred
component.
• An interim distribution of 4.6 cents per stapled security for the period 1 July 2021 to 31 December 2021
which was paid on 1 March 2021 which included a tax deferred component.
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 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 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/governance.
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.
The table below outlines some of the potential risks faced by NSR. This list is not exhaustive but highlights some
of the factors that may adversely affect the performance of NSR.
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 considered by the Board and discussed
in detail and require Board approval. The senior executive team meets several 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.
Climate change – Extreme weather events or progressive damage from climate related causes may
cause loss to NSR through either physical impact on storage centres or disrupting operations and
attendant income. NSR has enacted a specific regular review process for its centres to ensure such
impacts or their likelihood is mitigated to the maximum extent possible. Further, learnings from prior
climate related events are workshopped and included in any updates deemed necessary to our
disaster recovery and business continuity plans and procedures. In addition, NSR is currently
determining a strategy towards carbon-neutrality and is still working through what the impact of such
strategy will be.
Cyber-attack and data 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 to mitigate this risk. To mitigate this risk
further, NSR has a Cyber Security Steering Committee that monitors, reviews, and implements any
updates deemed necessary.
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, 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
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
34
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
35
35
Annual Report 2022
RISK
influences referred to above. In particular, the events relating to COVID-19 and subsequent
economic impacts such as interest rates, inflation and unemployment resulted in significant market
falls and volatility both in Australia and overseas, including in the prices of securities trading on the
ASX. There remains uncertainty as to the further impact of other COVID-19 strains on the Australian
and global economies and equity and debt capital markets. 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.
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 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 affected by any possible remaining 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 because 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 environment. 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
RISK
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.
Funding and gearing – NSR’s ability to raise funds from either debt or equity sources in the future
depends on several factors, including the state of debt and equity markets at the relevant time, the
general economic and political climate and the performance, reputation and the relative 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. Any ongoing impacts of COVID-19 may have a negative 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,
such impacts 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 - Unforeseen environmental issues may affect the properties in the property
portfolio owned by NSR. These liabilities may be imposed irrespective of whether 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. Material expenditure may also be required to comply with
new or more stringent environmental laws or regulations introduced in the future.
DIRECTORS
NATIONAL STORAGE HOLDINGS LIMITED
The NSH Directors in office during the Reporting Period and at the date of this Directors’ Report:
NAME
APPOINTED
POSITION
Anthony Keane
1 November 2013
Non-Executive Chairman
Andrew Catsoulis
1 November 2013
Managing Director
Howard Brenchley
21 November 2014
Non-Executive Director
Steven Leigh
Scott Smith
21 November 2014
Non-Executive Director
1 July 2022
Non-Executive Director
Inmaculada Beaumont
1 July 2022
Non-Executive Director
Claire Fidler
18 July 2017
Executive Director
Laurence Brindle
1 November 2013
Non-Executive Chairman (Retired 5 April 2022)
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
36
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
37
37
Annual Report 2022
NATIONAL STORAGE FINANCIAL SERVICES LIMITED (NSFL)
The Directors of NSFL in office during the Reporting Period and at the date of this Directors’ Report:
Steven Leigh, Independent Non-executive Director
Grad Dip Proj Mgmt
NAME
Anthony Keane
Andrew Catsoulis
APPOINTED
18 July 2014
18 July 2014
POSITION
Non-Executive Director
Managing Director
Howard Brenchley
8 September 2015
Non-Executive Director
Steven Leigh
Scott Smith
8 September 2015
Non-Executive Director
1 July 2022
Non-Executive Director
Inmaculada Beaumont
1 July 2022
Non-Executive Director
Claire Fidler
Laurence Brindle
18 July 2017
18 July 2014
Executive Director
Non-Executive Chairman (Retired 5 April 2022)
DIRECTORS’ QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
Boards of National Storage Holdings Limited and National Storage Financial Services Limited
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 was 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 the Nomination Committee and a member of
the Audit and Risk Committees.
Anthony Keane, Independent Non-executive Chairman
BSc (Maths), Grad Dip Corp Fin, GAICD
Inmaculada (Inma) Beaumont, Independent Non-Executive Director
BA (Mathematics), BA Hons (Economics and Commerce), FCCA, GAICD
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 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 is a member of the Audit and Risk Committees and the Nomination and Remuneration Committees.
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 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 development, acquisition and consolidation of the original portfolio
of storage centres that formed the genesis of National Storage and led the company through the IPO of NSR.
He also 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 approximately 230 centres today and has been primarily
responsible for charting its strategy over that period.
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
cofounded Property Investment Research Pty Ltd (PIR) in 1989, which during the 1990s was considered a
leading researcher of both listed and unlisted property funds. In 1998 Howard was instrumental in establishing
the funds management business of APN Property Group Limited. During this period, he was responsible for the
establishment and operations of a number of funds investing both directly and indirectly in real estate.
Howard was until recently a Non-Executive Director of the formerly ASX listed APN Property Group Limited
(APD) and is currently a Non-Executive Director of Dexus Asset Management Limited, responsible entity for ASX
listed Dexus Industria REIT (DXI) and Dexus Convenience Retail REIT (DXC).
Howard is the Chairman of the Audit and Risk Committees.
Inma has spent over 18 years as a senior finance executive with a broad range of leadership roles spanning
Financial Control, Internal Audit and Risk Management within top multinationals and banking institutions
including Procter and Gamble and Citibank. Inma has over six years’ experience as Chair of Finance, Audit
and Risk Committees and serving on three boards. In the last eight years, she has also worked in fields related
to marketing, public relations, stakeholder engagement and fundraising at different education institutions.
Inma is culturally and linguistically diverse and brings significant experience in many areas that benefit NSR.
Inma is currently a non-executive director of UN Women Australia, Speech Pathology Australia and Guide
Dogs Queensland. She holds a BA (Mathematics) and BA Hons (Economics and Commerce) from the
University of Valencia, Spain, is a Fellow of the Association of Chartered Certified Accountants and is a
Graduate of the Australian Institute of Company Directors.
Inma is a member of the Audit and Risk Committees.
Scott Smith, Independent Non-Executive Director
BBus
Scott has over 25 years’ experience in the Technology and Telecommunications sector across the Asia Pacific
region, including a breadth of experience gained from working for large global telecommunications
organisations before founding his own successful managed service provider company.
Scott holds a Bachelor of Business (Marketing) from the Queensland University of Technology and has
extensive experience in technology and marketing businesses. Having successfully co-founded Comlinx
(Managed Service Provider) in 2006, he went on to sell that business to ASX listed Telecommunications provider
Over the Wire (ASX: OTW) in 2018 and remained on in the senior leadership team, taking over the role of CEO
of OTW in February 2020 until October 2021. OTW has subsequently been sold to Aussie Broadband (ASX: ABB).
Scott is currently a consultant to the technology industry and sits on the Advisory Board of Heal Inc, a San
Francisco based software company that is focused on AiOps and Machine Learning capabilities.
Scott is a member of the Audit and Risk Committees.
Claire Fidler, Executive Director
LLB (Hons), B Bus (Int), GAICD, FGIA
Claire was appointed an Executive Director in July 2017 and has been the principal Company Secretary of
National Storage since November 2015. She 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
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
38
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
39
39
Annual Report 2022
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.
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
Anthony Keane
Howard Brenchley
Steven Leigh
COMPANY
EMvision Medical Devices Ltd (ASX:EMV)
APN Property Group (ASX:APD)
Dexus Industria REIT (ASX:DXI) previously
known as APN Industria REIT (ASX:ADI)
Dexus Convenience Retail REIT (ASX:DXS)
previously known as APN Convenience
Retail REIT (ASX:AQR)
Scentre Group Limited (ASX: SCG)
PERIOD OF DIRECTORSHIP
11/12/2018 – Current
1998 – 13/08/2021
03/12/2013 - Current
27/12/2017 - Current
04/04/2019 – 07/04/2022
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
DIRECT
INDIRECT
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Scott Smith
Inmaculada Beaumont
Claire Fidler
11,595
500,000
-
-
-
-
54,912
230,421
14,287,952
122,751
233,068
42,509
-
14,494
PERFORMANCE
RIGHTS
-
719,200
-
-
-
-
130,200
TOTAL
242,016
15,507,152
122,751
233,068
42,509
-
199,606
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.
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
(retired 05/04/2022)
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
Notes:
8 (8)
10 (10)
10 (10)
10 (10)
10 (10)
10 (10)
5 (5)
6 (6)
-
6 (6)
1 (1)
-
6 (6)
7 (7)
-
7 (7)
1 (1)
-
5 (5)
7 (7)
-
2 (2)
7 (7)
-
3 (3)
6 (6)
-
3 (3)
6 (6)
-
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 by
3.
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 27
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
https://www.nationalstorageinvest.com.au/governance. 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 give effect to 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 $1,617,602.
No insurance premiums are paid out of the assets of the NSPT regarding 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 2022
40
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
41
41
Annual Report 2022
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 other stakeholders. 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.
FY22 PERFORMANCE AND REMUNERATION OUTCOMES
FY22 was another year of record performance for NSR. Despite challenging market conditions NSR produced
24.7% underlying earnings growth to 10.6cps and declared a distribution of 10.0cps, a high level of distributions
to shareholders compared to the ASX 200 A-REIT index. NSR’s Total Shareholder Return (TSR) also significantly
outperformed the ASX 200 A-REIT index over this same period of time with NSR being ranked number one for
the 3 years to 30 June 2022. Further detail on NSR’s performance in FY22 has been set out on page 32.
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 FY22 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 refining the equity-
based structure introduced in FY21 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, the specialised nature of the business and the increased competitive
landscape for high quality executives;
• Provide greater transparency on the short-term and long-term performance measures to align with
securityholder expectations; and
Increased alignment with the A-REIT direct comparator group
•
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) – Retired 5 April 2022
Anthony Keane - Director (non-executive) – Appointed Chairman 5 April 2022
Andrew Catsoulis – Managing Director (“MD”) (executive)
Howard Brenchley - Director (non-executive)
Steven Leigh - Director (non-executive)
Claire Fidler – Director and Head of Legal & 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
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.
Securityholder
alignment
Provide industry
competitive
rewards linked to
security holder
returns and aligned
with NSR’s
performance in
comparison to it’s
a-REIT comparator
group.
Transparency
Remuneration
policies and
structures must
be clear and
transparent both to
the executives and
Board of NSR and
to securityholders.
REMUNERATION STRUCTURE (FY23)
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
•
LTI is subject to a 3-year performance
period
• Measures:
o Scrip price set as the 30-
day VWAP to 30 June
2022
o escrowed for 12 months
o Relative Total Shareholder Return
(rTSR)(ASX 200 A-REIT index
comparator group) – 70%
o Earnings per share (EPS) – 30%
• Measures:
o Financial measures (EPS) –
70%
o
Individual and strategic
measures – 30%
Incentivises group and individual
performance through at-risk
pay against financial and non-
financial targets
Link to
remuneration
principles
Assists attraction
and retention
through
competitive
remuneration
Aligns executive remuneration with long-term
securityholder value
PAY MIX
The composition of total annual remuneration (TAR) for the year ending 30 June 2023 for KMP is detailed in the
table below.
ROLE
MD
CFO
HoLG
TFR
STI
LTI
STI as %
of TFR
LTI as %
of TFR
34.4%
41.2%
47.8%
32.8%
29.4%
26.1%
32.8%
29.4%
26.1%
95.0%
70.0%
55.0%
95.0%
70.0%
55.0%
This structure reflects and is consistent with NSR’s policy objectives for executive TAR for the year commencing
1 July 2022 as outline above.
NSR PERFORMANCE
NSR has a well-established track record of consistent growth in underlying earnings, net tangible assets (NTA)
and total assets under management (AUM). Underlying earnings per stapled security (“EPS”) increased 25% in
the 12 months to 30 June 2022 to a record high of 10.6cps, with underlying earnings increasing 46% to $126.5m.
The FY22 underlying EPS of 10.6cps significantly exceeded the original EPS guidance of a minimum 10% (or
9.5cps) increase and reflects NSR’s exceptional REVPAM growth, a combination of rate and occupancy
growth, that has been achieved over the financial year. Group REVPAM increased 20.9% to $268m2,
consolidating the FY21 increase of 24.3%, and establishing an opening FY23 REVPAM that provides an
exceptional base from which to deliver FY23 revenue growth. Rate per square metre achieved across the
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
42
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
43
43
Annual Report 2022
Group increased by 18.8% to $302m2 with ongoing occupancy growth resulting in 30 June 2022 Group
occupancy of 88.9%, a 2.9% increase over 30 June 2021. Occupancy across the 18 Let-up centres, being
those centres that have been recently developed or expanded, increased by 17.9% to 74.3%, with total
occupancy across the portfolio now sitting at 84.6%.
Underlying Earnings
8.2
7.5
8.7
9.2
9.6
9.6
45.7
51.4
62.4
19.5
24.3
29.1
y
t
i
r
u
c
e
s
r
e
p
s
t
n
e
C
12.0
10.0
8.0
6.0
4.0
2.0
-
126.5
10.6
8.3
67.7
8.5
86.5
140.0
120.0
100.0
80.0
60.0
40.0
20.0
-
m
$
CY 14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
Earnings Per Securuty
Underlying Earnings
NTA has increased by 24% during the year to $2.34 per stapled security, principally driven by improvements in
operational performance at an individual centre level, with the weighted average capitalisation rate
compressing moderately from 5.98% at 30 June 2021 to 5.86% at 30 June 2022 only providing minor uplift in
valuation and NTA. Capitalisation rates, supported by independent third party valuations remained steady in
the second half of the year, despite the uncertainty in interest rate markets and increasing bond yields,
reflecting the strong position that self-storage assets have within the real estate markets globally.
The value of Investment Properties has increased by $776 million or 26% to $3.73 billion over the 12 months to 30
June 2022, with total assets now exceeding $4b. These results have been achieved through the disciplined
management of NSR’s operations and the 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 exceptional result.
m
$
'
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Total Assets / NTA
2.34
1.63
1.65
1.89
1.51
1.34
1.00
1.11
1.14
2.50
2.00
1.50
1.00
0.50
-
y
t
i
r
u
c
e
s
r
e
p
$
CY14
FY15
FY16
FY17
FY18
Total Assets
FY19
FY20
FY21
FY22
NTA
NSR has executed on its successful growth strategy with the acquisition of 14 storage centres, the freehold of
one previously leasehold storage centre and eight development sites totalling $200 million. These acquisitions
have been funded through debt facilities which were successfully refinanced during the Reporting Period to
extend tenor, add diversity to funding sources and increase available facilities. Delivery on development,
expansion and redevelopment strategy has seen 34 projects in various stages of design and construction. In
addition, NSR has successfully completed 5 new developments and expansion projects during the Reporting
Period adding over 38,000m2 of NLA.
During the Reporting Period NSR obtained an independent credit rating and transitioned to an unsecured
debt platform, providing greater flexibility and access to sources of debt funding. NSR’s gearing ratio at 30
June 2022 remained conservative at 23%, providing significant balance sheet capacity to fund NSR’s further
growth.
NSR has maintained a distribution policy that targets distribution of 90% - 100% of underlying earnings to
securityholders. During the Reporting Period, NSR declared distributions totalling 10.0 cents per stapled security
an increase of 16.3%, representing a payout ratio of 94%.
NSR was ranked number one for Total Shareholder Return “TSR” (a combination of share price growth and
distributions received by securityholders) over the past three years to 30 June 2022, delivering TSR of 38.2%,
more than five times the ASX 200 A-REIT TSR of negative 8.3%. Generally, the self-storage sector has
demonstrated its highly resilient nature as a business during times of uncertainty and fluctuating economic
conditions.
A combination of factors including a broad customer base. Geographic diversity and short term tenancy
arrangements, plus a high demand from a variety of sources has underpinned the successful growth of the
storage industry.
Total Shareholder Return - 3 Years to 30 June 2022
A-REIT 200
NSR
-20%
-10%
0%
10%
20%
30%
40%
50%
Source: Bloomberg
Note 1: Assumes Dividends are re-invested in underlying security
Note 2: Excludes securities not listed for the entire year
NSR share price closed on 30 June 2022 at $2.14, increasing 8.1% from $1.98 at 30 June 2021 with the market
capitalisation of NSR now exceeding $2.54 billion as at 30 June 2022.
NSR Stapled Security Price
$
2.90
2.70
2.50
2.30
2.10
1.90
1.70
1.50
1.30
1.10
3,500
3,000
2,500
2,000
1,500
1,000
500
-
m
$
'
J
u
l
1
9
S
e
p
1
9
D
e
c
1
9
M
a
r
2
0
J
u
n
2
0
S
e
p
2
0
D
e
c
2
0
M
a
r
2
1
J
u
n
2
1
S
e
p
2
1
D
e
c
2
1
M
a
r
2
2
J
u
n
2
2
Mkt Cap
Share Price
Security price performance over the period 1 July 2019 to 30 June 2022 has shown a 22% increase. This
compares to a decrease of 19% for the ASX 200 A-REIT index and 1% for the broader ASX 200 Index over the
same period.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
44
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
45
45
Annual Report 2022
Relative Performance
Element Weighting Metrics
Rationale
1.80
1.60
1.40
1.20
1.00
0.80
0.60
Jul 19
Sep 19
Dec 19 Mar 20
Jun 20
Sep 20
Dec 20 Mar 21
Jun 21
Sep 21
Dec 21 Mar 22
Jun 22
NSR
S&P/ASX 200 A-REIT
S&P/ASX 200
Strategic
15%
FY22 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 2022 in accordance
with the incentive program outlined in the 2021 Annual Report. The assessment criteria for the program and
performance against those criteria are outlined below. Incentives achieved for the year ending 30 June 2022
will be paid through a combination of cash and scrip.
To compensate for performance against financial and operational objectives, the STI’s and LTI’s were agreed
upon with the KMP with the minimum payable being zero and maximum payable being $3,280,000 for FY22 in
aggregate for all KMP.
The STI and LTI hurdles included:
1. Underlying earnings equal to or exceeding 9.5 cents per security
2.
TSR over the three-year period to 30 June 2022 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 2021 to 30 June 2022.
INCENTIVE OFFICER
STI
LTI
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
AMOUNT
$1,050,000
$400,000
$190,000
$1,640,000
%
EARNED
100.0%
100.0%
100.0%
100.0%
AMOUNT
$1,050,000
$400,000
$190,000
$1,640,000
%
EARNED
TOTAL
100.0% $2,100,000
$800,000
100.0%
$380,000
100.0%
100.0% $3,280,000
The Board regularly assesses 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.
Assessment of FY22 Outcomes
The assessment of the FY22 STI outcomes was considered against predetermined set of assessment criteria.
The criteria utilised for assessing the CEO’s FY22 STI were:
Element Weighting Metrics
Rationale
Achievement in FY22
Financial
70%
Underlying
Earnings of
9.5cps (10% out
performance if
Underlying EPS
>9.5cps -
$10.0cps)
Underlying EPS ensures
alignment to the
Consolidated Group’s
financial performance
and securityholders’
experience.
Achievement: 100%
A record high Underlying EPS of
10.6cps was achieved over the
12-month performance period,
representing a year-on-year
growth of 25%.
Individual
15%
Implementation
of major
projects
Risk
management
Innovation &
enhancement
of processes
and procedures
Undertaking all
necessary
investor relations
activities
expected of an
ASX200 listed
entity
Delivery of
timely and
accurate
management
reports
Maintenance
of a suitable
qualified
executive
team
Maintenance
of best practice
health, safety
environmental
practices
Delivering priorities
consistent with the long-
term strategies of the
Consolidated Group
under the “Four Pillars”
strategy. The “Four Pillar”
strategy aims to deliver
securityholders a stable
and growing income
stream from a portfolio
of geographically
diversified high-quality
self-storage assets.
Individual KPIs are
designed to foster and
drive high-performance
amongst the key
executive team
members. The KPIs are
intended to cover duties
and responsibilities
relevant to individual
executives across
several key operational
areas including but not
limited to staff
continuity/development,
risk management and
ESG.
Achievement in FY22
Achievement: 100%
The Board considered the
application of the stated strategy
in the assessment:
1. Organic Growth
•
Exceeded FY22 EPS
targets
2. Acquisitions
•
14 new storage centres,
the freehold of one
previously leasehold
storage centre
• eight development sites
•
totalling $200 million
3. Developments
• Completed five
developments adding
over 38,300m2 of NLA
• Added 17 sites to the
development and
expansion pipeline
Technology and Innovation
• WineArk customer
management system
upgrade
• Cyber security and PCI
compliance program
4.
Achievement: 100%
The Board considered the
following in assessing the CEO’s
individual KPIs for FY22:
• No significant adverse
feedback from investors
on the quality of investor
briefings or presentations
or other major concerns.
• All management reports
delivered in accordance
with agreed timeframe
and of the quality
expected for an ASX200
entity.
• No material errors in
management reporting.
• All key executive team
members retained
during the reporting
period.
LTIFR achievement of
7.45, which was a
significant reduction
from June 2021 of 21.58.
•
• No reportable health,
safety or environmental
incidences during the
reporting period.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
46
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
47
47
Annual Report 2022
The assessment of the FY22 LTI outcomes was considered against predetermined set of assessment criteria.
The criteria utilised were:
Metric
Weighting
Vesting Schedule
Relative Total
Shareholder Return
70%
RTSR when ranked to the
comparator group of ASX 200 A-
REIT Index
Scrip subject to rTSR hurdle that
vest
<50th percentile
50th percentile
>50th - <75th percentile
>=75th percentile
0%
50%
Pro-rata from 50%-100%
100%
Earnings Per Share
Growth
30%
EPS growth achieved over the
performance period
9.5cps
Scrip subject to EPS hurdle that
vest
100%
In assessing performance against the criteria above the Board sourced NSR’s TSR ranking (as outlined above)
and determined that NSR ranked number one (100th percentile) for TSR over the 3 year period to 30 June 2022,
resulting in 100% of the TSR component being payable. The Board also determined that the FY22 Earnings Per
Share (EPS) of 10.6cps satisfied that EPS component of the LTI, resulting in 100% of the EPS component being
payable.
As part of the review of the EPS component the Board acknowledged that the EPS target had been previously
reset following the M&A activity and onset of COVID-19 in FY20 and that the revised target was below the 5%
compound growth target. The Board reviewed its original decision to reset the EPS target which was based on
the initial impacts of COVID-19, but primarily based on the change in strategy that was necessitated by the
FY21 M&A activity. The change in strategy saw NSR no longer actively pursuing larger scale joint ventures,
rather focusing on the core self-storage business, and as such the income, both current and future, that was
being derived from the joint ventures was significantly reduced. Based on this the Board concluded that a
reset of the EPS hurdle for the LTI was appropriate.
The Board believes that the FY22 performance has shown that this revised strategy was appropriate with
compound EPS growth in the 2 years following being 12.5% and that no adjustment to the FY22 LTI payment is
warranted.
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 for a period of 12 month. 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 FY22 STI and LTI. The scrip component will be
calculated using the 30-day VWAP to 30 June 2022 of $2.259.
INCENTIVE OFFICER
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
STI
$735,000
$280,000
$133,000
$1,148,000
CASH
LTI
$315,000
$120,000
$57,000
$492,000
TOTAL
$1,050,000
$400,000
$190,000
$1,640,000
STI
$315,000
$120,000
$57,000
$492,000
SCRIP
LTI
$735,000
$280,000
$133,000
$1,148,000
TOTAL
$1,050,000
$400,000
$190,000
$1,640,000
TOTAL
$2,100,000
$800,000
$380,000
$3,280,000
INCENTIVE OFFICER
SCRIP – AT $2.259
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
STI
139,449
53,124
25,234
217,807
LTI
325,380
123,955
58,879
508,214
TOTAL
464,829
177,079
84,113
726,021
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 the 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 successfully navigated numerous significant micro and macro
challenges, achieving an outcome which is acknowledged to be one of the best performances in the A-REIT
sector from both an operational earnings and security price performance perspective.
The FY23 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 and the significant increase in the size of the company from both an operational and market
capitalisation perspective. The team assembled is highly competent, cohesive, collaborative and has the
capacity 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 previous 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. Independent
reviews are undertaken bi-annually and as such no independent review was undertaken during FY22.
The aggregate fixed remuneration for the KMP for the year commencing 1 July 2022 will increase by 5.8%, with
the MD increasing by 4.2%, the CFO by 4.8% and the HoLG by 11.8%.
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.
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 $1,920,000 for FY23 in aggregate for all KMP.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
48
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
49
49
Annual Report 2022
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.
Target 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 2022 the LTI Earnings Per Share Growth target has been
set at 12.3 cents per stapled security.
The minimum LTI payable is zero and maximum LTI payable is $1,920,000 for FY23 in aggregate for all KMP.
Future Incentives
The Board periodically reviews the structure of the incentive plans based on market best practice and
feedback received from both investors and proxy advisors, and assesses the structure of forward payments to
be made under these plans and the appropriate combination of cash and scrip, to ensure the alignment of
executive remuneration with current investor expectations and returns.
In assessing the appropriate remuneration structure going forward, the Board considered several factors,
including, independent consultants 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 the payment of any STI and
LTI earned will be as follows:
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 at the
commencement of the relevant year. As such the value of the scrip component will reflect the relative share
price performance for 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 equivalent award in cash.
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 will 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
2022 and ending 30 June 2025 is based off the approved FY23 LTI using the 30-day VWAP to 30 June 2022 as
the issue price. As such, performance rights will be issued based on a calculation price of $2.259 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 2025
1,190,000
470,000
260,000
833,000
329,000
182,000
368,000
145,700
80,600
The LTI EPS target for year ending 30 June 2025 has been set at 12.3 cents per stapled security, representing
5.0% compound growth over the FY22 EPS of 10.6 cents per stapled security.
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
There was no other remuneration in relation to FY22.
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 2022 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
Anthony Keanea.
Steven Leighb.
Howard Brenchley c.
lnmaculada Beaumont
Scott Smith
131,300
131,300
131,300
131,300
$21,000
$42,000
$21,000
$21,000
REMUNERATION
AND NOMINATION
COMMITTEE
FEES
TOTAL
$23,600
$13,100
-
-
$325,500
$175,900
$186,400
$152,300
$152,300
a. Chairman and Chair of the Nomination Committee and receives a single fee for all roles
b. Chair of the Remuneration Committees
c. Chair of the Audit and Risk Committees
LTI payment structure
Where applicable, NSH non-executive directors’ fees include superannuation at the required statutory rate.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
50
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
51
51
Annual Report 2022
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 2022 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
$1,250,000
Stuart Owen
6 months
No fixed term
6 months
$660,000
Claire Fidler
No fixed term
6 months
$475,000
• 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 2022. They are reviewed annually by the
Remuneration Committee. Actual salaries paid in the year ended 30 June 2022 are shown on page 55.
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
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.
•
•
•
•
•
•
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 2022 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 in FY21 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.
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 pervious
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 seven times during the Reporting Period.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
52
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
53
53
Annual Report 2022
%
%
0
%
0
%
0
%
0
%
1
6
%
5
4
%
4
5
$
2
6
0
,
3
4
2
3
1
9
,
0
1
2
1
8
1
,
3
5
1
0
5
6
,
2
5
1
0
3
0
,
6
4
8
4
3
0
,
3
2
4
,
3
8
5
0
,
0
8
4
,
1
8
2
9
,
8
0
5
,
6
$
-
-
-
-
-
-
-
-
$
-
-
-
-
$
-
-
-
-
Y
T
I
U
Q
E
(
)
D
E
L
T
T
E
S
$
-
-
-
-
$
-
9
9
3
,
7
1
4
4
8
,
8
1
4
0
9
,
3
1
9
5
6
,
9
3
7
2
,
7
2
0
0
0
,
5
3
7
0
0
0
,
3
3
1
0
0
0
,
7
5
0
0
0
,
5
1
3
8
9
0
,
2
2
6
4
7
,
0
2
8
1
3
,
4
1
0
5
2
,
1
5
0
0
0
,
0
8
2
0
0
0
,
8
4
1
,
1
0
0
0
,
0
2
1
0
0
0
,
2
9
4
9
9
9
,
9
1
0
9
9
,
2
1
1
$
-
-
-
2
7
0
,
8
0
6
5
,
0
1
0
6
5
,
0
1
0
6
5
,
0
1
2
5
7
,
9
3
E
C
N
A
M
R
O
F
R
E
P
L
A
T
O
T
N
O
I
I
T
A
N
M
R
E
T
G
N
O
L
G
N
O
L
D
E
T
S
E
V
M
R
E
T
G
N
O
L
T
N
E
M
Y
O
L
P
M
E
-
T
S
O
P
-
N
O
N
D
E
T
A
L
E
R
S
T
N
E
M
Y
A
P
E
V
A
E
L
I
E
C
V
R
E
S
M
R
E
T
E
V
I
T
N
E
C
N
I
S
T
I
F
E
N
E
B
Y
R
A
T
E
N
O
M
S
E
V
I
T
N
E
C
N
I
)
H
S
A
C
(
N
O
I
T
A
U
N
N
A
R
E
P
U
S
S
T
I
F
E
N
E
B
S
E
V
I
T
N
E
C
N
I
)
H
S
A
C
(
M
R
E
T
T
R
O
H
S
E
V
I
T
N
E
C
N
I
S
E
E
F
M
R
E
T
T
R
O
H
S
&
Y
R
A
L
A
S
$
-
-
-
-
Y
T
I
U
Q
E
(
)
D
E
L
T
T
E
S
$
-
-
-
-
$
1
9
5
,
7
1
2
9
6
0
,
2
9
1
1
8
1
,
3
5
1
6
4
7
,
8
3
1
0
0
0
,
7
5
0
0
0
,
5
1
3
0
0
0
,
5
3
7
0
0
0
,
3
3
1
5
6
0
,
5
2
4
3
0
1
,
3
6
2
,
1
0
0
0
,
0
2
1
0
0
0
,
2
9
4
0
0
0
,
0
8
2
0
0
0
,
8
4
1
,
1
1
8
1
,
5
3
6
6
3
9
,
4
2
0
,
3
M
R
E
T
T
R
O
H
S
E
V
I
T
N
E
C
N
I
S
E
E
F
M
R
E
T
T
R
O
H
S
&
Y
R
A
L
A
S
E
C
N
A
M
R
O
F
R
E
P
L
A
T
O
T
N
O
I
I
T
A
N
M
R
E
T
G
N
O
L
G
N
O
L
D
E
T
S
E
V
M
R
E
T
G
N
O
L
T
N
E
M
Y
O
L
P
M
E
-
T
S
O
P
-
N
O
N
D
E
T
A
L
E
R
S
T
N
E
M
Y
A
P
E
V
A
E
L
I
E
C
V
R
E
S
M
R
E
T
E
V
I
T
N
E
C
N
I
S
T
I
F
E
N
E
B
Y
R
A
T
E
N
O
M
S
E
V
I
T
N
E
C
N
I
)
H
S
A
C
(
N
O
I
T
A
U
N
N
A
R
E
P
U
S
S
T
I
F
E
N
E
B
S
E
V
I
T
N
E
C
N
I
)
H
S
A
C
(
.
d
o
i
r
e
P
g
n
i
t
r
o
p
e
R
e
h
t
r
o
f
P
M
K
s
’
y
n
a
p
m
o
C
e
h
t
y
b
d
e
v
e
c
e
i
r
n
o
i
t
r
a
e
n
u
m
e
r
e
h
t
f
o
s
l
i
a
t
e
d
t
u
o
t
e
s
l
s
e
b
a
t
g
n
w
o
i
l
l
o
f
e
h
T
N
O
I
T
A
R
E
N
U
M
E
R
F
O
S
L
I
A
T
E
D
%
%
0
%
0
%
0
%
0
%
1
6
%
0
4
%
9
4
$
5
9
6
,
6
0
3
1
9
0
,
4
5
1
0
0
5
,
2
3
1
9
1
2
,
2
3
1
1
6
4
,
8
2
7
6
9
8
,
3
5
0
,
3
9
2
8
,
2
7
2
,
1
1
9
6
,
0
8
7
,
5
4
5
$
-
-
-
-
-
-
-
-
$
-
-
-
-
$
-
-
-
-
Y
T
I
U
Q
E
(
)
D
E
L
T
T
E
S
$
-
-
-
-
$
4
9
6
,
1
2
9
6
3
,
3
1
-
1
7
4
,
1
1
2
3
1
,
9
3
4
5
,
4
2
8
3
2
,
6
7
8
7
0
,
8
7
4
4
7
6
,
2
3
1
9
8
,
4
0
2
4
9
6
,
1
2
4
9
6
,
1
2
9
9
6
,
3
1
4
7
3
,
7
4
7
7
4
,
2
5
1
3
9
7
,
6
0
7
7
4
3
,
5
6
2
1
9
,
2
0
3
4
9
6
,
1
2
6
1
6
,
1
1
1
$
-
-
-
0
6
5
,
0
1
0
6
5
,
0
1
0
6
5
,
0
1
0
6
5
,
0
1
0
4
2
,
2
4
$
-
-
-
-
Y
T
I
U
Q
E
(
)
D
E
L
T
T
E
S
$
-
-
-
-
$
1
4
4
,
4
7
2
2
2
7
,
0
4
1
0
0
5
,
2
3
1
8
4
7
,
0
2
1
0
0
0
,
6
3
0
5
7
,
5
2
2
0
5
7
,
6
6
9
0
0
0
,
9
4
1
3
6
1
,
3
9
3
0
3
6
,
1
2
1
,
1
0
0
0
,
2
7
0
5
7
,
3
3
3
0
0
5
,
3
3
3
0
5
2
,
9
4
4
,
1
2
5
5
,
3
0
6
6
5
7
,
6
8
7
,
2
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
T
R
O
P
E
R
’
S
R
O
T
C
E
R
D
I
l
y
e
h
c
n
e
r
B
d
a
w
o
H
r
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
E
s
i
l
u
o
s
t
a
C
w
e
d
n
A
r
i
h
g
e
L
n
e
v
e
t
S
e
n
a
e
K
y
n
o
h
t
n
A
l
e
d
n
i
r
B
e
c
n
e
u
a
L
r
e
v
i
t
u
c
e
x
e
-
n
o
N
s
r
o
t
c
e
r
i
d
2
2
0
2
r
l
e
d
F
e
i
r
i
l
a
C
s
e
v
i
t
u
c
e
x
e
r
i
o
n
e
S
n
e
w
O
t
r
a
u
t
S
l
t
a
o
T
e
v
i
t
u
c
e
x
e
-
n
o
N
s
r
o
t
c
e
r
i
d
1
2
0
2
l
e
d
n
i
r
B
e
c
n
e
u
a
L
r
l
y
e
h
c
n
e
r
B
d
a
w
o
H
r
s
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
E
s
i
l
u
o
s
t
a
C
w
e
d
n
A
r
i
h
g
e
L
n
e
v
e
t
S
e
n
a
e
K
y
n
o
h
t
n
A
r
l
e
d
F
e
i
r
i
l
a
C
s
e
v
i
t
u
c
e
x
e
r
i
o
n
e
S
n
e
w
O
t
r
a
u
t
S
l
t
a
o
T
9
3
3
,
2
4
3
$
4
2
1
,
8
4
2
$
2
2
8
,
9
3
3
$
4
9
4
,
9
3
2
$
5
7
9
,
1
6
$
9
1
9
,
4
4
$
9
1
5
,
1
6
$
7
5
3
,
3
4
$
4
2
4
,
0
3
1
$
0
3
5
,
4
9
$
2
4
2
,
1
9
$
5
6
4
,
9
2
1
$
f
o
e
u
a
V
l
s
t
h
g
i
r
d
e
t
n
a
g
r
e
h
t
g
n
i
r
u
d
*
r
a
e
y
d
e
s
p
a
l
s
t
h
g
R
i
d
e
t
s
e
v
s
t
h
g
R
i
f
o
e
u
a
v
l
r
i
a
F
f
o
r
e
b
m
u
N
n
i
r
a
e
Y
f
o
r
a
e
Y
r
d
a
w
A
e
m
a
N
I
R
A
E
Y
E
H
T
G
N
R
U
D
D
E
S
P
A
L
D
N
A
D
E
T
S
E
V
,
I
D
E
D
R
A
W
A
S
T
H
G
R
E
C
N
A
M
R
O
F
R
E
P
r
a
e
y
r
a
e
y
t
*
e
a
d
e
h
t
g
n
i
r
u
d
e
h
t
g
n
i
r
u
d
t
n
a
g
r
t
a
t
h
g
i
r
s
t
h
g
i
r
d
e
t
n
a
g
r
e
h
t
g
n
i
r
u
d
r
a
e
y
i
h
c
h
w
s
t
h
g
i
r
t
s
e
v
t
n
a
g
r
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
3
.
1
$
0
3
.
2
$
5
3
.
1
$
2
2
.
2
$
6
3
.
1
$
0
3
.
2
$
5
3
.
1
$
2
2
.
2
$
6
3
.
1
$
0
3
.
2
$
5
3
.
1
$
2
2
.
2
$
0
2
7
,
1
5
2
0
8
8
,
7
0
1
0
2
7
,
1
5
2
0
8
8
,
7
0
1
0
7
5
,
5
4
0
3
5
,
9
1
0
7
5
,
5
4
0
3
5
,
9
1
0
0
9
,
5
9
0
0
1
,
1
4
0
0
9
,
5
9
0
0
1
,
1
4
3
2
0
2
3
2
0
2
4
2
0
2
4
2
0
2
3
2
0
2
3
2
0
2
4
2
0
2
4
2
0
2
3
2
0
2
3
2
0
2
4
2
0
2
4
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
R
S
T
-
S
P
E
-
R
S
T
-
S
P
E
-
R
S
T
-
S
P
E
-
R
S
T
-
S
P
E
-
R
S
T
-
S
P
E
-
R
S
T
-
S
P
E
-
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
i
s
t
h
g
R
e
c
n
a
m
o
r
f
r
e
P
3
2
Y
F
e
P
3
2
Y
F
e
P
4
2
Y
F
e
P
4
2
Y
F
e
P
3
2
Y
F
e
P
3
2
Y
F
e
P
4
2
Y
F
e
P
4
2
Y
F
e
P
3
2
Y
F
e
P
3
2
Y
F
e
P
4
2
Y
F
e
P
4
2
Y
F
)
D
M
(
s
i
l
u
o
s
t
a
C
w
e
d
n
A
r
)
G
L
o
H
(
r
l
e
d
F
e
i
r
i
l
a
C
)
O
F
C
(
n
e
w
O
t
r
a
u
t
S
.
0
2
e
t
o
n
o
t
r
e
e
f
r
e
s
a
e
p
l
,
d
e
s
u
s
n
o
i
t
p
m
u
s
s
a
d
n
a
s
l
e
d
o
m
g
n
d
u
c
n
i
l
i
,
s
t
h
g
i
r
e
c
n
a
m
o
r
f
r
e
p
f
o
n
o
i
t
l
a
u
a
v
e
h
t
n
o
s
l
i
a
t
e
d
r
o
F
.
2
B
S
A
A
r
e
p
t
n
a
g
r
f
o
e
m
i
t
e
h
t
t
i
a
d
e
n
m
e
t
e
D
*
r
5
5
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
T
R
O
P
E
R
’
S
R
O
T
C
E
R
D
I
55
.
e
t
a
d
t
n
a
g
r
r
i
e
h
t
e
c
n
i
s
n
o
i
t
r
a
e
n
u
m
e
r
r
s
a
d
e
d
a
w
a
s
t
h
g
i
r
e
c
n
a
m
o
r
f
r
e
p
f
o
s
n
o
i
t
i
d
n
o
c
d
n
a
s
r
m
e
t
e
h
t
o
t
s
n
o
i
t
r
a
e
t
l
r
a
o
n
e
e
w
e
e
h
T
r
Annual Report 2022
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 2021
GRANTED AS
REMUNERATION
ON EXERCISE
OF OPTIONS
ACQUIRED
BALANCE
30 JUNE 2022
Directors of NSH
Laurence Brindle*
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
1,523,488
242,016
14,443,612
122,751
233,068
14,494
-
-
344,340
-
-
54,912
Executives of NSH
Stuart Owen
Total
* Mr Brindle ceased being a Director effective 5 April 2022
115,949
16,695,378
109,824
509,076
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242,016
14,787,952
122,751
233,068
69,406
225,773
15,680,966
The movement during the Reporting Period in the number of performance rights, directly, indirectly or
beneficially held by Directors and KMP senior executives, including parties related to them, is as follows:
BALANCE
30 JUNE 2021
GRANTED AS
REMUNERATION
VESTED
LAPSED
BALANCE
30 JUNE 2022
Directors of NSH
Laurence Brindle*
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Claire Fidler
-
-
-
-
-
-
-
-
719,200
-
-
130,200
Executives of NSH
Stuart Owen
Total
* Mr Brindle ceased being a Director effective 5 April 2022
274,000
1,123,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
719,200
-
-
130,200
274,000
1,123,400
SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
For the period from 1 July 2022 to the date of this report the Group settled three storage centre investment
properties for a total cost of $19m, and three development sites for $12.7m.
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 58.
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.
Ernst & Young Australia received or are due to receive $49,320 for the provision of Category 4 fees for other
services conducted during the financial year. Refer Note 21 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 22 August 2022 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.
RELATED PARTY TRANSACTIONS
There were no other transactions with KMP and their related parties during the reporting period.
Anthony Keene
Non-Executive Chairman
National Storage Holdings Limited
Brisbane
Andrew Catsoulis
Managing Director
National Storage Holdings Limited
Brisbane
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
56
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
57
57
Annual Report 2022
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
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
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
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 2022, I declare to the best of my knowledge
Storage Holdings Limited and its controlled entities
and belief, there have been:
relation to the audit;
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
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 2022, I declare to the best of my knowledge
and belief, there have been:
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit;
relation to the audit.
b. No contraventions of any applicable code of professional conduct 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.
c. No non-audit services provided that contravene 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
Wade Hansen
Partner
Brisbane
22 August 2022
Wade Hansen
Partner
Brisbane
22 August 2022
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
MILTON,QLD
59
Annual Report 2022
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2022
Revenue from rental income
Revenue from contracts with customers
Interest income
Total revenue
Employee expenses
Premises costs
Advertising and marketing costs
Insurance costs
Information technology and communications
Other operational expenses
Finance costs
Share of profit/(loss) from joint ventures and associates
Gain from fair value adjustments
Restructuring and other non-recurring costs
Foreign exchange loss
Notes
5
7
6
6
7
12
10.3
2022
$'000
260,929
17,207
751
278,887
(51,243)
(33,754)
(7,335)
(6,137)
(6,438)
(17,965)
(32,131)
1,741
510,420
(4,357)
(832)
2021
$'000
201,555
15,327
866
217,748
(41,743)
(25,963)
(6,531)
(5,233)
(5,255)
(14,148)
(38,507)
(570)
231,718
(874)
(70)
Profit before income tax
630,856
310,572
Income tax expense
Profit after tax
Profit for the year attributable to:
Members of National Storage Holdings Limited
Non-controlling interest (unitholders of NSPT)
8
(10,238)
(864)
620,618
309,708
27,220
593,398
620,618
3,728
305,980
309,708
Basic earnings per stapled security (cents)
Diluted earnings per stapled security (cents)
19
19
52.13
52.05
30.12
30.12
BIGGERA WATERS, QLD
The above Consolidated Statement of Profit or Loss should be read in conjunction with the
accompanying notes.
59
61
Annual Report 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Profit after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Net gain on cash flow hedges
Other comprehensive gain for the year, net of tax
2022
$'000
2021
$'000
620,618
309,708
(4,830)
26,793
21,963
(501)
13,581
13,080
Total comprehensive income for the year
642,581
322,788
Total comprehensive income for the year attributable to:
Members of National Storage Holdings Limited
Non-controlling interest (unitholders of NSPT)
27,076
615,505
642,581
3,721
319,067
322,788
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
Trade and other payables
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Non-controlling interest (unitholders of NSPT)
Contributed equity
Other reserves
Retained earnings
Total equity
Notes
2022
$'000
2021
$'000
9.1
9.2
10.1
9.3
9.2
10.2
9.6
10.3
12
10.4
8
9.3
9.4
9.6
10.5
10.6
16
9.4
9.5
9.6
10.6
8
83,651
20,153
1,849
-
7,009
112,662
135
1,365
5,165
3,830,234
10,528
46,801
9,537
37,554
3,941,319
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
4,053,981
3,251,873
23,936
10,636
17,600
9,769
3,926
64,557
-
130,424
461
972,017
97,954
9,261
4,972
-
1,084,665
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
1,215,089
967,231
2,838,892
2,284,642
13
14
2,631,973
163,526
2,415
40,978
2,838,892
2,109,561
161,320
3
13,758
2,284,642
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
63
Annual Report 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2022
Attributable to securityholders of National Storage REIT
Contributed
equity
$'000
Notes
Retained
earnings
$'000
Other
reserves
$'000
Balance at 1 July 2021
161,320
13,758
Profit for the year
Other comprehensive income /
(loss)
Total comprehensive income
14
-
-
-
27,220
-
27,220
Issue of stapled securities
Costs associated with issue
of stapled securities
Deferred tax on cost of issue of
stapled securities
Share-based payments
Distributions
13
2,224
8
20
16
(25)
7
-
-
2,206
-
-
-
-
-
-
Non-
controlling
interest
$'000
Total
equity
$'000
2,109,561 2,284,642
593,398
620,618
3
-
(144)
(144)
22,107
615,505
21,963
642,581
-
-
26,412
28,636
(263)
(288)
-
2,556
-
2,556
-
-
(119,242)
(93,093)
7
2,556
(119,242)
(88,331)
Balance at 30 June 2022
163,526
40,978
2,415
2,631,973 2,838,892
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 issue 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
Notes
2022
$’000
2021
$’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
Improvements to investment properties
Development of investment properties under construction
Purchase of property, plant and equipment
Development of intangible assets
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
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 (decrease) / increase in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
305,478
(139,037)
118
(807)
165,752
(230,627)
(5,155)
(42,585)
(840)
(1,132)
(906)
(281,245)
-
(599)
(76,779)
1,230,861
(1,010,517)
(225)
750
(15,621)
(24,512)
103,358
(12,135)
(124)
95,910
83,651
9.1
9.1
9.1
10.2
12
13
16
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
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
65
Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
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 has been prepared on a going concern basis as the Directors believe the Group will
continue to generate operating cash flows to meet all liability obligations in the ordinary course of
business.
(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.
The Group has share-based payments for the first time for the year ended 30 June 2022 and applied
AASB 2 Share-based Payment in relations to these transactions (refer to note 2(t)).
The financial report of NSR for the year ended 30 June 2022 was approved on 22 August 2022, in
accordance with a resolution of the Board of Directors of NSH.
Other standards, amendments and interpretations
The financial statements are presented in Australian Dollars (“AUD”) and all values are rounded to the
nearest thousand dollars ($’000) unless otherwise stated (refer to note 2(w)).
AASB 2020-3
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 accounting policies applied by NSR in these financial statements are the same as the 30 June 2021
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 2022. This is available at www.nationalstorageinvest.com.au.
Deficiency of net current assets
As at 30 June 2022, the Group had an excess of current liabilities over current assets of $17.8m. $17.6m of
this deficit relates to deferred revenue associated with prepaid storage rentals which are not expected
to result in a cash outflow.
Accounting standard AASB 140 Investment Property requires the finance lease liability to be split between
current and non-current while the corresponding asset is classed as non-current. This results in $9.3m of
lease liabilities being classified as current. The Directors believe the excess of the total investment
property value over the finance lease liability reflects a positive position in both the immediate and long-
term and sufficient cash inflows from operations will enable all liabilities to be paid when due.
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 2022 are outlined in the following table:
Reference
Title
Summary and impact on Group
financial report
Application
date of
standard
Application
date for
Group
1 January
2022
1 July 2022
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.
AASB 2020-3 Amendments to
AASB 116 –
Property, Plant
and Equipment:
Proceeds before
Intended Use
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.
Under AASB 116 Property, Plant and
Equipment, net proceeds from selling items
produced while constructing an item of
property, plant and equipment are
deducted from the cost of the asset. The
IASB’s research indicated diversity in
interpreting this requirement. As a result,
AASB 116 was amended to prohibit an
entity from deducting from the cost of an
item of property, plant and equipment, the
1 January
2022
1 July 2022
64
65
67
Annual Report 2022
proceeds from selling items produced
before that asset is available for use.
ASB 2020-1
Amendments to
AASs –
Classification of
Liabilities as
Current or Non-
current
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.
1 January
2023
1 July 2023
AASB 2021-2 Amendments to
AASB 108 –
Definition of
Accounting
Estimates
AASB 2021-5 Amendments to
AASs – Deferred
Tax related to
Assets and
Liabilities arising
from a Single
Transaction
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
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.
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.
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.
1 January
2025
1 July 2025
1 January
2023
1 July 2023
AASB 2014-10 Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
1 January
2023
1 July 2023
(d) Basis of consolidation
The Financial Statements of NSR 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 consolidated
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
66
67
69
Annual Report 2022
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 consolidated 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, at each
reporting date the Group determines whether
there is objective evidence that the investment
in the associate or joint venture is impaired. If
there is such evidence, the Group calculates
the amount of impairment as the difference
between the recoverable amount of the
associate or joint venture and its carrying value,
then recognises the loss as ‘Share of profit or loss
of joint ventures and associates’ in the
consolidated statement of profit or loss.
Upon loss of significant influence over an
associate or joint control over the joint venture,
the Group measures and recognises any
retained investment at its fair value. Any
difference between the carrying amount of the
associate or joint venture upon loss of significant
influence or joint control and the fair value of
the retained investment and proceeds from
disposal is recognised in profit or loss.
(e) Revenue recognition
Revenue is recognised when performance
obligations have been met and is measured at
the fair value of the consideration received or
receivable to the extent it is probable the
economic benefits will flow to the Group and
the revenue can be reliably measured.
The Group’s revenue is disaggregated in the
consolidated 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.
The following specific recognition criteria must
also be met before revenue is recognised:
Revenue from rental income
Revenue from rental income relating to the
provision of storage space and commercial
units is recognised less any amount
contractually refundable to customers over the
term of the general agreement. The value of
discounts offered to customers at the end of an
incentive period is recognised over the
expected rental period.
Interest income
Interest income is recognised using the effective
interest method.
Revenue from Contracts with Customers
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
68
consideration all of the relevant facts and
circumstances when applying each step of the
model to contracts with their customers.
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.
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.
(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 consolidated 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.
69
71
Annual Report 2022
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.
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.
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.
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 net amount of GST recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the
consolidated 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 consolidated
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
70
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.
(h)
Business combinations and goodwill
The Group accounts for a transaction as a
business combination if it meets the definition
under AASB 3 Business Combinations, 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 applies 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 accounted for as an asset
acquisition rather than a business combination.
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
consolidated 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.
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 consolidated 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.
71
73
Annual Report 2022
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.
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(p).
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(r).
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
72
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
consolidated 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 consolidated
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 consolidated 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
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 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 Revenue from
Contracts with Customers.
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 on the
principal amount outstanding. This assessment 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 include 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 consolidated
statement of profit or loss and computed in the
same manner as financial assets measured at
amortised cost. The remaining fair value
changes are recognised in other
comprehensive income. Upon derecognition,
the cumulative fair value change recognised in
73
75
Annual Report 2022
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 consolidated
statement of financial position at fair value with
net changes in fair value recognised in the
consolidated 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 Financial Instruments’
expected loss approach with a forward-looking
expected credit loss (“ECL”) methodology to
recognise an ECL provision for all debt
instruments not held at fair value through profit
or loss. ECLs are based on the difference
between the contractual cash flows due in
accordance with the contract and all the cash
flows that the Group expects to receive,
discounted at an approximation of the original
effective interest rate. The expected cash flows
will include cash flows from the sale of collateral
held or other credit enhancements that are
integral to the contractual terms.
ECLs are recognised in two stages. For credit
exposures for which there has not been a
significant increase in credit risk since initial
recognition, ECLs are provided for credit losses
that result from default events that are possible
within the next 12-months. 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.
74
Loans and borrowings
This is the category most relevant to the Group.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the Effective Interest Rate
(“EIR”) method. Gains and losses are recognised
in profit or loss when the liabilities are
derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance
costs in the consolidated statement of profit or
loss.
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
the original liability and the recognition of a new
liability. The difference in the respective carrying
amounts is recognised in the consolidated
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;
75
77
Annual Report 2022
•
•
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 9.7. 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.
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
consolidated 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
consolidated statement of profit or loss.
(o)
Property, plant and equipment
Property, plant and equipment is stated at
historical cost less depreciation. Historical cost
includes expenditure that is directly attributable
to the acquisition of the items. Subsequent costs
are included in the asset’s carrying amount or
recognised as a separate asset, only when it is
probable that future economic benefits
associated with the item will flow to the Group
and the cost of the item can be measured
reliably. The carrying amount of any component
asset is derecognised when replaced. All repairs
and maintenance are charged to profit or loss
during the reporting period in which they are
incurred.
Depreciation is calculated on a straight-line
basis over the estimated useful life of the assets
as follows:
•
•
Leasehold improvements - remaining length
of lease term
Plant and equipment - 2.5 to 20 years
Each asset’s residual value and useful life is
reviewed, and adjusted if appropriate, at the
end of each reporting period.
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(r)). Gains and
losses on disposals are determined by
76
comparing proceeds with carrying amount.
These are included in profit or loss.
(p)
Investment properties
Freehold investment properties
Investment properties are measured initially at
cost, including transaction costs. Subsequent to
initial recognition, freehold 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.
Investment properties under construction are
held at cumulative cost of construction as a
proxy for fair value. This serves as the most
appropriate basis to estimate fair value
particularly during the early stages of
development and is adjusted once risks
associated with the completion of development
and ultimate operations of the property are
determined to be insignificant.
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 consolidated
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
properties.
Lease payments are accounted for under AASB
16 Leases, 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 or loss and
within payment of lease liabilities within the
consolidated statements of cash flows.
(q)
Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost. The cost
of intangible assets acquired in a business
combination is their fair value at the date of
acquisition. Following initial recognition,
intangible assets are carried at cost less any
accumulated amortisation and 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.
77
79
Annual Report 2022
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. These 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 consolidated statement of
profit or loss in other operational expenses.
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
consolidated 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.
(r)
Impairment of assets
Goodwill and intangible assets that have an
indefinite useful life are not subject to
amortisation and are tested annually for
impairment or more frequently if events or
changes in circumstances indicate that they
might be impaired. Other assets are tested for
impairment whenever events or changes in
circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less
costs of disposal and value in use. For the
purposes of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash inflows which are
largely independent of the cash inflows from
other assets or groups of assets (CGU’s). Non-
financial assets other than goodwill that have
been impaired in previous periods are reviewed
for possible reversal of the impairment at the
end of each reporting period.
(s)
Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a
result of a past event, it is probable that an
outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation. When the Group
expects some or all of a provision to be
reimbursed, the reimbursement is recognised as
a separate asset, but only when the
reimbursement is virtually certain.
Provisions are measured at the present value of
management’s best estimate of the
expenditure required to settle the present
obligation at the end of the reporting period.
The discount rate used to determine the present
value is a pre-tax rate that reflects current
market assessments of the time value of money
and the risks specific to the liability. The increase
in the provision due to the passage of time is
recognised as interest expense.
78
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).
(t)
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-
monetary benefits, and accumulating annual
leave which are expected to be settled within
12 months of the reporting date are recognised
in respect of employees' services up to the
reporting date. They are measured at the
amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits obligations
The Group does not expect its long service
leave benefits to be settled wholly within 12
months of each reporting date. The Group
recognises a liability for long service leave
measured as the present value of expected
future payments to be made in respect of
services provided by employees up to the
reporting date using the projected unit credit
method. Consideration is given to previous
experience of employee departures, and
periods of service. Expected future payments
are discounted using market yields at the
reporting date on the applicable corporate
bonds with terms to maturity and currencies that
match, as closely as possible, the estimated
future cash outflows.
Retirement benefit obligations
All employees can direct the Group to make
contributions to a defined contribution plan of
their choice. Contributions to defined
contribution superannuation funds are
recognised as an expense as they become
payable.
Equity-settled transactions
The cost of equity-settled transactions is
determined by the fair value at the date when
the grant is made using an appropriate
valuation model, further details of which are
provided in note 20.
That cost is recognised in employee expense,
together with a corresponding increase in equity
(share-based payment reserve within other
reserves), over the period in which the service
and, where applicable, the performance
conditions are fulfilled (the vesting period). The
cumulative expense recognised for equity-
settled transactions at each reporting date until
the vesting date reflects the extent to which the
vesting period has expired and the Group’s best
estimate of the number of equity instruments
that will ultimately vest. The expense or credit in
the consolidated statement of profit or loss for a
period represents the movement in cumulative
expense recognised as at the beginning and
end of that period.
Service and non-market performance
conditions are not taken into account when
determining the grant date fair value of awards,
but the likelihood of the conditions being met is
assessed as part of the Group’s best estimate of
the number of equity instruments that will
ultimately vest. Market performance conditions
are reflected within the grant date fair value.
Any other conditions attached to an award, but
without an associated service requirement, are
considered to be non-vesting conditions. Non-
vesting conditions are reflected in the fair value
of an award and lead to an immediate
expensing of an award unless there are also
service and/or performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market
performance and/or service conditions have
not been met. Where awards include a market
or non-vesting condition, the transactions are
treated as vested irrespective of whether the
market or non-vesting condition is satisfied,
provided that all other performance and/or
service conditions are satisfied.
When the terms of an equity-settled award are
modified, the minimum expense recognised is
the grant date fair value of the unmodified
award, provided the original vesting terms of the
award are met. An additional expense,
measured as at the date of modification, is
recognised for any modification that increases
the total fair value of the share-based payment
transaction, or is otherwise beneficial to the
employee.
Where an award is cancelled by the entity or by
the counterparty, any remaining element of the
fair value of the award is expensed immediately
through profit or loss. The dilutive effect of
outstanding performance rights is reflected as
additional share dilution in the computation of
diluted earnings per share (see note 19).
(u) 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
79
81
Annual Report 2022
the issue of securities are shown in equity as a
deduction, net of tax, from the proceeds.
(v) Dividends and distributions to
securityholders
The Group recognises a liability to make cash or
non-cash distributions to equity holders when
the distribution is authorised and is no longer at
the discretion of the Company or the
Responsible Entity. A corresponding amount is
recognised directly in equity.
Non-cash distributions are measured at the fair
value of the assets to be distributed with fair
value re-measurement recognised directly in
equity. Any difference between the carrying
amount of the liability and the carrying amount
of the assets distributed is recognised in the
consolidated statement of profit or loss.
(w) Rounding of amounts
The Group is of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, relating to the
‘rounding off’ of amounts in the financial
statements. Amounts in the financial statements
have been rounded off to the nearest thousand
dollars, or in certain cases, the nearest dollar.
(x)
Parent entity financial information
The financial information for the parent entity,
NSH, disclosed in note 22 has been prepared on
the same basis as the consolidated financial
statements, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at
cost in the financial statements of NSH.
Tax consolidation legislation
NSH and its wholly-owned entities have
implemented the tax consolidation legislation.
The head entity, NSH, and the controlled entities
that are in the tax consolidated group, account
for their own current and deferred tax amounts.
These tax amounts are measured as if each
entity in the tax consolidated group continues to
be a stand-alone tax payer in its own right.
In addition to its own current and deferred tax
amounts, NSH also recognises the current tax
liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from controlled entities in the
tax consolidated group.
The entities have also entered into a tax funding
agreement under which the wholly-owned
entities fully compensate NSH for any current tax
payable 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.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as current amounts receivable
from or payable to other entities in the Group.
(y)
Fair value measurement
The Group 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,
80
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 9.7 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 9.7, 15)
Sensitivity analyses disclosures (notes 10.7,
15).
•
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.
For the years ended 30 June 2022 and 30 June
2021, 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.
81
83
Annual Report 2022
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
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
Operating Segments.
The recoverable amount of the CGU has been
determined based on a fair value less cost of
disposal calculation. The assumptions used in
the estimations of the recoverable amount and
the carrying amount of goodwill are discussed in
note 10.4.
The renewal periods for leases with non-
cancellable periods in excess of three years are
not included as part of the lease term as these
are not 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.
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 consolidated 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
4.
SEGMENT INFORMATION
During the 2022 and 2021 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 consolidated 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
2022
$'000
2021
$'000
251,053
27,083
278,136
194,596
22,286
216,882
The revenue information above excludes interest income and is based on the location of storage
centres.
Non-current operating assets
Australia
New Zealand
Total
2022
$'000
2021
$'000
3,401,320
438,291
3,839,611
2,717,530
348,703
3,066,233
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
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
2022
$'000
7,983
6,646
1,842
736
17,207
2021
$'000
7,232
5,724
1,741
630
15,327
82
83
85
Annual Report 2022
6.
EXPENSES
8.
INCOME TAX
Other operational expenses
Professional fees
Cost of packaging and other products sold
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
Share-based payments
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
2022
$'000
3,525
5,010
2,069
593
1,888
1,290
1,172
2,418
17,965
39,073
3,191
2,556
2,187
4,236
51,243
2022
$'000
222
529
751
2021
$'000
2,991
3,776
1,456
677
1,600
747
539
2,362
14,148
33,635
2,534
-
1,546
4,028
41,743
2021
$'000
245
621
866
Finance costs
Interest on borrowings
Reclassification from cash flow hedge reserve to
consolidated statement of profit or loss (see note 14)
Interest on lease liabilities relating to investment property
Interest on other lease liabilities
Total finance costs
18,900
20,007
7,815
5,265
151
32,131
10,923
7,389
188
38,507
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 for the years ended 30 June 2022 and 30 June 2021 are:
Consolidated statement of profit or loss
Current tax
Deferred tax
Adjustment in relation to prior periods
Total income tax expense
Notes
2022
$'000
11,850
(1,833)
221
10,238
2021
$'000
1,422
(134)
(424)
864
Deferred tax relating to items recognised in other comprehensive
income during the year
Net gain / (loss) on revaluation of cash flow hedges
14
Deferred tax relating to items recognised in statement of changes
in equity during the year
Cost of issuing share capital
3
(6)
(7)
(184)
Reconciliation of tax expense and accounting profit multiplied by
Australia’s domestic tax rate for 2022 and 2021:
Profit before tax
Deduct profit before tax from Trusts owning Australian properties
Accounting profit before income tax
630,856
(559,655)
71,201
310,572
(270,069)
40,503
Tax at the Australian tax rate of 30% (2021 – 30%)
21,360
12,151
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
1,700
(11,110)
131
(729)
(1,114)
10,238
1,282
(11,111)
(455)
(747)
(256)
864
84
85
87
Annual Report 2022
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 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 consolidated statement of financial position
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
2022
$'000
2021
$'000
(88,270)
88,042
(19,065)
19,072
(1,734)
119
(336)
5
3
6
7
(1,833)
184
(134)
410,805
1,528
1,945
618
2,374
1,508
560
419,338
324,708
1,166
964
1,203
768
1,755
504
331,068
1,547
14
191
413,013
8
414,773
1,732
16
337
324,641
5
326,731
4,565
4,337
9,537
(4,972)
4,565
8,444
(4,107)
4,337
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 and New Zealand:
Recognised group tax losses
Unrecognised group tax losses
Total
2022
$’000
2,069
-
2,069
2021
$’000
4,010
3,831
7,841
Australian losses are available for offsetting against future taxable profits of the NSH tax group subject to
the satisfaction of the same business test and a reduced rate of utilisation under the 'available fraction'
rules. New Zealand losses are available for offsetting against future taxable profits of NSNZPT.
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
2022
$'000
2021
$'000
9.1
9.2
9.3
83,651
20,288
16,678
120,617
95,910
16,949
3,849
116,708
9.3
21,263
2,408
Total financial assets
141,880
119,116
Financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Measured at fair value
Derivatives used for hedging
Total financial liabilities
9.4
9.5
9.6
24,397
975,448
108,590
1,108,435
21,468
761,343
110,700
893,511
-
125
1,108,435
893,636
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
2022
$'000
2021
$'000
3
83,648
83,651
2
95,908
95,910
86
87
89
Annual Report 2022
Cash flow reconciliation of net profit after tax to net cash flows from operations
Classification as trade and other receivables
Profit after income tax
Income tax expense
Profit before tax
Adjustments to reconcile profit before tax to net cash flows:
Depreciation
Loss on disposal of property, plant and equipment
Amortisation of intangible assets presented within restructuring and
other non-recurring costs
Derecognition of intangible assets
Fair value adjustments
Derecognition of capitalised borrowing costs
Share-based payments
Share of (profit) / loss from joint ventures and associates
Interest income
Finance costs
Changes in operating assets and liabilities:
Decrease in receivables
Increase in inventories
(Increase) / decrease in other assets
Increase in payables
Increase in deferred revenue
Increase in provisions
Cash flows from operating activities
Interest received
Income tax paid
Net cash flows from operating activities
2022
$'000
620,618
10,238
630,856
2021
$'000
309,708
864
310,572
1,888
235
1,600
-
1,290
238
(510,420)
3,842
2,556
(1,741)
(751)
32,131
746
56
(231,718)
-
-
570
(866)
38,507
(3,443)
(531)
(1,724)
4,134
1,415
6,466
166,441
118
(807)
165,752
939
(485)
3,278
6,575
3,949
1,288
135,011
689
(541)
135,159
Disclosure of non-cash financing activities
Non-cash financing activities include capital raised pursuant to the NSR’s distribution reinvestment plan.
During the year 11.9m stapled securities (2021: 6.6m) were issued with a cash equivalent of $27.6m
(2021: $12.0m).
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
2022
$'000
3,648
-
6,607
10,117
(219)
20,153
-
135
135
2021
$'000
2,885
722
4,285
7,322
(158)
15,056
1,775
118
1,893
Total current and non-current
20,288
16,949
88
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
Charge / (credit) for the year
Reversed in the year
Effect of movement in foreign exchange
At 30 June
The age of trade receivables not impaired was as follows:
0 to 3 months
3 to 6 months
Over 6 months
2022
$'000
158
77
(13)
(3)
219
2022
$'000
3,379
45
5
3,429
2021
$'000
189
(9)
(22)
-
158
2021
$'000
2,607
79
41
2,727
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
Prepayments
Financial assets (derivatives)
Non-current
Deposits
Financial assets (derivatives)
2022
$'000
6,622
387
7,009
16,678
20,876
37,554
2021
$'000
4,898
11
4,909
3,849
2,397
6,246
Total current and non-current
44,563
11,155
Deposits include advances on contracts or options on investment property purchases. Projects for which the Group
has a future commitment to acquire are detailed in note 18.
For details on the classification of financial instruments see note 9.
89
91
Annual Report 2022
9.4.
Trade and other payables
Current
Trade payables
Accrued expenses
GST and other employment taxes payable
Other payables
Non-current
Other payables
2022
$'000
465
19,880
2,324
1,267
23,936
461
461
2021
$'000
1,364
16,375
2,311
1,418
21,468
-
-
Total current and non-current
24,397
21,468
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.
under a revised Common Terms Deed. On conclusion of this process, the Group repaid existing facilities
and entered into a combination of revolver facilities and term loans with major Australian and
international banks. This has extended the tenor of the Group’s borrowings and also expanded the
Group’s lender pool.
The Group continues to hold an institutional term loan with a major Australian superannuation fund, and
an undrawn financing facility with JP Morgan.
Transaction costs of $3.8m relating to extinguished facilities were expensed in the period. These costs
are included within restructuring and other non-recurring costs in the consolidated statement of profit or
loss.
The Group has complied with the financial covenants of their borrowing facilities during the 2022 and
2021 reporting periods (see note 16). The fair value of interest-bearing loans and borrowings
approximates carrying value. Details of the exposure to risk arising from current and non-current
borrowings are set out in note 15.
Interest rate swaps
The Group has the following interest rate swaps in place as at the end of the reporting period:
9.5.
Borrowings
Non-current
Bank finance facilities
Non-amortised borrowing costs
Total borrowings
2022
$'000
2021
$'000
975,448
(3,431)
972,017
761,343
(3,293)
758,050
Interest rate swaps (AUD) at face value
Current 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
2022
$'000
2021
$'000
360,000
385,000
-
-
50,000
46,551
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
2022
$'000
2021
$'000
827,000
1,080,000
548,000
930,000
164,250
225,000
229,150
251,750
148,448
203,354
213,343
234,384
The major terms of these agreements are as follows:
• At 30 June 2022 maturity dates on these facilities range from 23 September 2023 to 23 June 2029 (30
June 2021: maturity dates from 23 July 2022 to 23 December 2026).
• All facilities are interest only with any drawn balances paid upon maturity.
•
The interest rate applied is the bank bill rate plus a margin depending on the gearing ratio.
The Group has a bank overdraft facility with a limit of $3m that was undrawn at 30 June 2022 and 30
June 2021. During the year ended 30 June 2022, the Group completed a refinance of its debt facilities.
This resulted in the transition from a secured "club" arrangement to an unsecured lending platform
90
Interest rate swaps in place at the end of the reporting period have maturity dates ranging from 23
September 2022 to 23 September 2026 (2021: 23 September 2021 to 23 September 2026).
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 or 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 2022, $7.8m (30
June 2021: $10.9m) 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 2022, amounts totalling NZD $51.9m (AUD $47.2m) have been
designated as a hedge of the net investments against the value of the New Zealand tangible assets (30
June 2021: NZD $51.9m, (AUD $48.3m)). 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
2022 or 30 June 2021 recognised in the consolidated statement of profit or loss.
91
93
Annual Report 2022
9.6.
Right of use assets and lease liabilities
a) Right of use assets
Group as a lessor
Future minimum rentals receivable under non-cancellable operating leases are as follows:
Premises
leases
$'000
Equipment
leases
$'000
Advertising
leases
$'000
4,902
587
(935)
102
-
4,656
5,742
-
(840)
-
4,902
745
23
(382)
-
-
386
790
250
(301)
6
745
135
-
(8)
-
(4)
123
8
144
(13)
(4)
135
Total
$'000
5,782
610
(1,325)
102
(4)
5,165
6,540
394
(1,154)
2
5,782
Opening balance at 1 July 2021
Additions in the year ended
Depreciation charge
Reassessment of variable lease payments
Effect of movement in foreign exchange
Closing balance at 30 June 2022
Opening balance at 1 July 2020
Additions in the year ended
Depreciation charge
Reassessment of variable lease payments
Closing balance at 30 June 2021
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
2022
$’000
2021
$’000
1,342
1,142
9,294
10,636
7,895
9,037
4,317
4,958
93,637
97,954
96,705
101,663
108,590
110,700
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.
Amounts recognised in consolidated 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
2022
$’000
1,325
5,416
76
2021
$’000
1,154
7,577
21
6,954
13,771
4,131
12,883
92
Within one year
After one year but not more than five years
More than five years
Total
9.7.
Financial instruments fair value measurement
30 June
2022
$’000
6,359
10,792
906
18,057
30 June
2021
$’000
3,222
6,634
1,294
11,150
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 9.6. To provide an
indication about the reliability of the inputs used in determining fair value, financial instruments are
classified into the following three levels.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end
of the reporting period. The quoted market price used for any financial assets held is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
Specific fair valuation techniques used to determine fair values include:
•
The fair value of interest rate swaps is calculated as the present value of the estimated future cash
flows based on observable yield curves, adjusted for counterparty or own credit risk.
The 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 2022
Derivatives used for hedging - interest
rate swaps
Current financial assets
Non-current financial assets
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
9.3
9.3
9.3
9.3
-
-
-
-
-
-
-
-
387
20,876
21,263
11
2,397
(22)
(103)
2,283
-
-
-
-
-
-
-
-
387
20,876
21,263
11
2,397
(22)
(103)
2,283
93
95
Annual Report 2022
There were no transfers between levels of fair value hierarchy during the years ended 30 June 2022 and
30 June 2021.
10.3.
Investment properties
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
1,849
1,318
10.2. Property, plant and equipment
2022
$’000
2021
$’000
At cost
Accumulated depreciation
Total property, plant and equipment
2022
$'000
2021
$'000
2,717
(1,352)
1,365
2,666
(1,258)
1,408
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
Disposals
Depreciation
Effect of movement in foreign exchange
Closing balance at 30 June
2022
$'000
1,408
840
(318)
(563)
(2)
1,365
2021
$'000
1,091
763
-
(446)
-
1,408
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
Property acquisitions
Improvements to investment properties
Reassessment of lease terms
9.6b
Items reclassified from investment properties under construction
Items reclassified to freehold investment properties
Lease diminution, presented as fair value adjustments
Net gain / (loss) from other fair value adjustments
Closing balance at 30 June
Freehold investment properties in operation
Opening balance at 1 July
Property acquisitions
Improvements to investment properties
Items reclassified from leasehold investment properties
Items reclassified to investment properties under construction
Items reclassified from investment properties under construction
Net gain from fair value adjustments
Effect of movement in foreign exchange
Closing balance at 30 June
Investment properties 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
Gains for the year in profit or loss (recognised in fair value
adjustments)
Realised losses – lease diminution of leasehold property
Unrealised gains associated with investment property
Movement in provisions presented in fair value adjustments
2022
$'000
2021
$'000
140,681
137,498
3,612,082 2,834,509
83,793
3,830,234 3,055,800
77,471
137,498
7,412
249
7,388
-
(11,500)
(6,954)
6,588
140,681
201,202
-
311
(53,981)
1,529
-
(4,131)
(7,432)
137,498
2,834,509 2,180,299
338,048
5,966
-
-
67,894
243,520
(1,218)
3,612,082 2,834,509
185,922
4,989
11,500
(10,261)
83,987
510,786
(9,350)
83,793
23,732
45,208
(83,987)
-
10,261
(1,536)
77,471
70,584
36,184
46,586
(67,894)
(1,529)
-
(138)
83,793
2022
$'000
2021
$'000
(6,763)
522,618
(5,435)
510,420
(4,131)
236,088
(239)
231,718
94
95
97
Annual Report 2022
10.4.
Intangible assets
Notes
2022
$'000
2021
$'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
3,243
1,132
(238)
(1,290)
2,847
2,675
1,370
(56)
(746)
3,243
46,801
47,197
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 and an estimate for the value
attributable to control over the CGU (e.g. control premium) and costs of disposal. The key estimation
input used in the calculation is the control premium. The basis for determining the value assigned to the
control premium is reflective of observed examples of premiums to the pre-announcement share prices
paid for acquisitions of public companies.
The Group also uses a secondary calculation based on the incremental value attributable to
investment properties as a portfolio. This sits above the stand-alone valuation permitted for assessing the
fair value of investment property under AASB 140. The portfolio premium is estimated using the same
capitalisation method used for the valuation of the investment properties detailed in Note 10.7.
The key estimation input of the portfolio premium is the incremental capitalisation rate. This is
determined from independent valuations with regard to observable premiums paid from recent sales of
portfolio transactions, and assessing the level of premium which would be attached to a portfolio of the
Group’s size. Management believes an incremental capitalisation rate of between 50 to 100 basis
points to the portfolio is the minimum level appropriate to be used in this calculation.
10.5. Deferred revenue
Deferred rental income revenue
2022
$'000
2021
$'000
17,600
16,185
Deferred rental income revenue represents funds received in advance from customers.
10.6. Provisions
Current
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 on acquisition of leasehold investment property
Reassessment of existing provisions
Movement in discount rates
Utilised
As at 30 June
2022
$'000
2,615
1,311
3,926
8,079
1,182
9,261
2,773
398
6,836
(1,928)
-
8,079
2021
$'000
2,100
1,357
3,457
2,773
440
3,213
3,125
-
591
(324)
(619)
2,773
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
9.7 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 2022
Leasehold investment properties
Freehold investment properties
At 30 June 2021
Leasehold investment properties
Freehold investment properties
10.3
10.3
10.3
10.3
Recognised fair value measurements
-
-
-
-
-
-
-
-
-
-
-
-
140,681
140,681
3,612,082 3,612,082
3,752,763 3,752,763
137,498
137,498
2,834,509 2,834,509
2,972,007 2,972,007
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
requires a more frequent valuation cycle. For properties subject to an independent valuation report the
96
97
99
Annual Report 2022
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 independent valuations at each financial year end. The Group’s
policy is to maintain the valuation of the investment property at external valuation for all properties
valued in the preceding year, 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 2022 have been
held at acquisition price.
The financial impact of COVID-19 on the Group’s business has been minimal and there continues to be
a strong demand for storage rental as evidenced by the Group‘s strong occupancy levels which
underpin the operating results.
At 30 June 2022, the Group held 41% of freehold investment properties and 23% of leasehold investment
properties at external valuation (30 June 2021: 37% of freehold investment properties and 46% of
leasehold investment properties).
Valuation inputs and relationship to fair value
Description
Significant unobservable inputs
Range at 30
June 2022
Range at 30
June 2021
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
4.7% to 7.3%
5.3% to 8.5%
5.8%
6.3%
70% to 98%
$1,087,144
5.0% to 7.0%
6.0% to 8.0%
5.9%
6.4%
75% to 98%
$963,839
Primary capitalisation rate
Secondary capitalisation rate
Weighted average primary cap rate
Weighted average secondary cap rate
Sustainable occupancy
Stabilised average EBITDA
6.0% to 53.9%
6.5% to 53.9%
11.2%
12.1%
85% to 95%
$368,167
5.8% to 30.0%
5.8% to 30.0%
10.1%
11.6%
83% to 94%
$302,775
Under the income capitalisation method, a property’s fair value is estimated based upon a
combination of current trading income and potential income. Potential income is subject to a higher
degree of risk, reflected in a higher secondary capitalisation rate.
Current earnings before interest, tax, depreciation and amortisation (“EBITDA”) generated by the
property is divided by the primary capitalisation rate (the investor's required rate of return).
Potential income is represented by 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 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 EBITDA.
Investment properties are valued on a highest and best use basis. The current use of all of the
investment properties (self-storage) is considered to be the highest and best use.
The capitalisation rate adopted reflects the inherent risk associated with the property. For example, if
the lease expiry profile of a particular property is short, the capitalisation rate is likely to be higher to
98
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 2022:
Unobservable inputs
Primary capitalisation rate
Secondary capitalisation
rate
Sustainable occupancy
Stabilised EBITDA
At 30 June 2021:
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%)
(4,125) / 5,250
1% / (1%)
(480,713) / 684,897
2% / (2%)
(850) / 1,225
2% / (2%)
(76,979) / 151,904
5% / (5%)
5% / (5%)
6,025 / (1,525)
2,225 / (1,025)
5% / (5%)
5% / (5%)
208,659 / (81,373)
164,884/ (62,541)
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 EBITDA
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)
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 2022 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 Finance Pty Ltd
NS Development Co 1 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
Australia
New Zealand
Australia
Australia
Australia
Australia
Equity interest
2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2021
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
99
101
Annual Report 2022
12.
INTEREST IN JOINT VENTURES AND ASSOCIATES
13.
CONTRIBUTED EQUITY
Interest in joint ventures
Opening balance at 1 July
Share of profit / (loss) from joint ventures*
Closing balance at 30 June
2022
$'000
5,653
1,780
7,433
2021
$'000
6,130
(477)
5,653
* Included within share of profit / ( loss) from joint ventures in the year ended 30 June 2022 was $2.0m representing
NSR’s share of fair value gains related to investment properties held by joint ventures (30 Jun 2021 : $0.2m loss).
The Group held a 25% interest in the Bundall Storage Trust, Bundall Commercial Trust, Bundall Storage
Operations Pty Ltd, the TBF & NS Trust, and Moorooka Storage Operations Pty Ltd at 30 June 2022.
The Bundall Commercial Trust derives rental property income from the leasing of commercial units and
the Bundall Storage Trust develops investment property for the purpose of earning future rental income.
As at 30 June 2022, the Bundall Storage Trust and the TBF & NS Trust each holds one storage centre
investment property. Bundall Storage Operations Pty Ltd, and Moorooka Storage Operations Pty Ltd
operate self-storage businesses at the centres owned by the Bundall Storage Trust and the TBF & NS Trust
respectively.
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
Closing balance at 30 June
2022
$'000
2,228
906
(39)
3,095
2021
$'000
2,321
-
(93)
2,228
The Group holds a 19% (30 June 2021: 25.9%) holding in Spacer Technologies Pty Ltd (“Spacer”). Spacer
operate online peer-to-peer marketplaces for self-storage and parking in Australia and North America.
During the year ended 30 June 2022, the Group made a capital contribution of $0.9m into Spacer as
part of an equity raise.
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.
Issued and paid up capital
2022
$'000
2021
$'000
163,526
161,320
Number of stapled securities on issue
2022
2021
Opening balance at 1 July
Institutional and retail placements
Distribution reinvestment plan
Securities issued under equity incentive plan
Closing balance at 30 June
Distribution reinvestment plan
1,183,070,060 1,013,740,898
162,736,215
6,592,947
-
1,195,498,309 1,183,070,060
-
11,919,173
509,076
During the year, 11,919,173 (2021: 6,592,947) stapled securities were issued to securityholders
participating in the Group’s Distribution Reinvestment Plan for consideration of $27.6m (2021: $12m). 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.
Securities issued under equity incentive plan
During the year 509,076 stapled securities were issued to the NSH senior executive team for FY21 Short
Term Incentive (“STI”) and Long Term Incentive (“LTI”) remuneration under the Equity Incentive Plan
(“the Plan”). These securities were issued following approval at the 2021 AGM on 26 October 2021. No
consideration was paid by the recipients for the issue of the stapled securities, which were issued for a
deemed price of $2.044 per stapled security under the terms of the STI and LTI award. The deemed
price was calculated using the volume weighted average market price of the Group’s stapled
securities over a 30-day trading period to 30 June 2021.
Capital raises
In the prior year ended 30 June 2021, the Group raised a total of $325m of equity resulting in the issue of
162,736,215 new stapled securities.
Terms and conditions of contributed equity
Stapled securities
A stapled security represents one share in NSH and one unit in NSPT. Stapled securityholders have the
right to receive declared dividends from NSH and distributions from NSPT and are entitled to one vote
per stapled security at securityholders’ meetings. Holders of stapled securities can vote their shares and
units in accordance with the Corporations Act 2001, either in person or by proxy, at a meeting of either
NSH or NSPT. The stapled securities have no par value.
In the event of the winding up of NSH and NSPT, stapled securityholders have the right to participate in
the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on
stapled securities held. Ordinary stapled securityholders rank after all creditors in repayment of capital.
There is no current on or off market security buy-back.
100
101
103
Annual Report 2022
14.
OTHER RESERVES
Share-based payment reserve
Opening balance at 1 July
Expense for the year
Closing balance at 30 June
Foreign currency translation reserve
Opening balance at 1 July
Foreign exchange translation differences
Closing balance at 30 June
Other reserves
2022
$'000
-
2,556
2,556
3
(144)
(141)
2,415
2021
$'000
-
-
-
10
(7)
3
3
The share-based payments reserve is used to recognise the value of equity-settled share-based
payments provided to key management personnel as part of their remuneration. Refer to note
20 for further details of these plans.
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 and share-based payment 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 consolidated statement of profit or loss (see
note 7)
Taxation impact on revaluation (see note 8)
Closing balance at 30 June
Other reserves
NSPT Group
2022
$'000
2021
$'000
(1,504)
700
(5,386)
(6,190)
(1,010)
194
(688)
(1,504)
(16,157)
7,815
(29,738)
2,652
18,981
(3)
10,636
10,923
6
(16,157)
4,446
(17,661)
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 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 consolidated statement of profit or loss in both the current and future periods
relating to the profile of the original instrument. During the year ended 30 June 2022, $7.8m (30 June
2021: $10.9m) has been recognised in finance costs relating to this item (see note 7).
102
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.
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
2022
$'000
2021
$'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
387
20,876
-
-
21,263
11
2,397
(22)
(103)
2,283
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 consolidated 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 9.7.
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 2022 and 30 June
2021. 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.
103
105
Annual Report 2022
The analysis excludes the impact of movements in market variables on provisions and the non-financial
assets and liabilities of foreign operations.
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.
The following assumptions have been made in calculating sensitivity analysis:
•
The sensitivity of the relevant consolidated 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
2022 and 30 June 2021 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 2022 and 30 June 2021 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 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 2022, after taking into account the
effect of interest rate swaps, 36.91% (2021: 56.7%) 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.
2022
Australian dollar denominated debt
New Zealand dollar denominated debt
2021
Australian dollar denominated debt
New Zealand dollar denominated debt
Increase/ decrease
in basis points
Effect on profit before tax
$'000
+50 / -50
+50 / -50
+50 / -50
+50 / -50
(1,962) / 1,962
(2,008) / 2,008
(1,405) / 1,405
(765) / 765
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.
2022
2021
Change in
NZD rate
+5%
-5%
+5%
-5%
Effect on profit
before tax
$'000
(1,669)
1,845
(1,738)
1,921
Effect on pre-
tax equity
$'000
(4,678)
7,055
(5,415)
6,413
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.
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 2022, the Group has recognised an
expected loss provision of $219,000 (30 June 2021: $158,000) 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 consolidated statement of financial position at 30 June 2022 and 30 June 2021 is
the carrying amounts as indicated in the consolidated statement of financial position.
Guarantees
Credit risk also arises in relation to financial guarantees given to certain parties (refer to notes 18, 22,
and 23). 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.
104
105
107
Annual Report 2022
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)
2022
$'000
3,000
307,906
310,906
2021
$'000
3,000
403,041
406,041
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without
notice. All other unsecured 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 consolidated 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 2022
Non-derivatives
Trade and other payables
Borrowings
Lease liabilities
Distribution payable
Total non-derivatives
Derivatives
Inflows
Outflows
Total derivatives
963
-
-
-
963
21,876
10,745
3,738
64,557
100,916
1,097
461
37,886 1,057,449
57,366
11,593
-
-
50,576 1,115,276
-
24,397
28,983 1,135,063
145,230
72,533
64,557
-
101,516 1,369,247
-
-
-
(1,967)
336
(1,631)
(6,479)
824
(5,655)
(17,220)
2,053
(15,167)
-
-
-
(25,666)
3,213
(22,453)
963
99,285
44,921 1,100,109
101,516 1,346,794
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
106
Cash
flows
$'000
Foreign
exchange
movement
$'000
Change
in fair
value
$'000
New
leases
$’000
Other
$'000
30 June
2022
$'000
(22)
(103)
-
-
-
-
-
-
-
-
-
-
-
-
91,647*
64,557
(115)
972,017
496
4,101
10,126
(7,810)
10,636
97,954
918,564
134,542
(6,262)
(125)
4,597
93,848 1,145,164
Cash
flows
$'000
Foreign
exchange
movement
$'000
Change
in fair
value
$'000
New
leases
$’000
Other
$'000
30 June
2021
$'000
Changes in liabilities arising from financing activities
Derivatives:
Interest rate swap
Current financial liabilities
Non-current financial
liabilities
1 July
2021
$'000
22
103
Distributions payable
49,689
(76,779)
Non-current
borrowings
Lease liabilities
Current liabilities
Non-current liabilities
Total liabilities from
financing activities
758,050
220,344
(6,262)
9,037
101,663
(9,023)**
-
-
-
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)**
-
-
-
-
-
-
-
-
-
-
-
-
-
(28)
(254)
-
-
-
-
-
-
-
-
-
-
-
-
22
103
78,394*
49,689
68
758,050
9,342
(62,919)
9,037
101,663
883,169
11,574
(782)
(282)
-
24,885
918,564
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: $119.2m (30 June
2021: $90.4m) (see note 16), less units issued under the distribution reinvestment plan which do not
result in a cash outflow: $27.6m (30 June: 2021: $12m), (see note 13).
**Relates to principal portion of lease liability payment. Total lease payments for the year ended 30
June 2022 were $15.6m (30 June 2021: $13.5m) as disclosed in the Consolidated Statement of
Cashflows.
107
109
Annual Report 2022
16.
CAPITAL MANAGEMENT
17.
RELATED PARTY TRANSACTIONS
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, which is consistent with the methodology held within
the Common Terms Deed relating to the Group’s borrowings.
As at 30 June 2022, the Groups gearing ratio was 23% (30 June 2021: 22%). The Group’s target is to keep
the gearing ratio between 25% and 40%.
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 operating earnings adjusted for interest, tax,
depreciation and finance amortisation costs equals or exceeds a multiple of two times interest expense.
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 4.6 cents per unit paid on 1
March 2022 (2021: 4 cents per unit)
NSPT final distribution of 5.4 cents per unit payable on 2
September 2022 (2021: 4.2 cents per unit)
NSPT Group
2022
$'000
2021
$'000
54,685
40,708
64,557
119,242
49,689
90,397
There are no proposed distributions not recognised as a liability for the year ended 30 June 2022.
The Directors of NSH have not declared an interim or final dividend for the year ended 30 June 2022.
Franking credit balance
Franking credits available for subsequent financial
years based on a tax rate of 30% (2021: 30%)
2022
$'000
2021
$'000
4,812
4,176
The above amounts are calculated from the balance of the NSH franking account at the end of the
reporting period.
The NSPT Group does not have franking credits as distributions are paid from NSPT which is not liable to
pay income tax provided all taxable income is distributed.
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
Bundall Commercial Trust
Bundall Storage Trust
Bundall Storage Operations Pty Ltd
Spacer Marketplaces Pty Ltd
The TBF & NS Trust
Moorooka Storage
Operations Pty Ltd
Revenue
from
related
parties
$
Purchases
from
related
parties
$
225,507
224,394
322,257
200,675
132,529
29,373
-
-
-
-
-
-
Amount
owed by
related
parties
$
2,683,928
2,458,421
3,390,434
3,078,992
175,293
29,323
-
-
87,684
107,511
-
-
832,498
831,735
30,000
-
-
-
-
-
3,837,538
3,529,934
29,950
-
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Amount
owed to
related
parties
$
-
-
-
-
-
-
-
-
-
-
-
-
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 2022, the Group had receivables outstanding of $1,775,000 (30 June 2021: $1,775,000) with
the Bundall Commercial Trust and $2,850,000 (30 June 2021: $2,850,000) with the Bundall Storage Trust,
and $1,150,000 (30 June 2021: $1,675,000) 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, Bundall Commercial Trust and TBF & NS Trust have
been classed as current receivables in the consolidated statement of financial position as these
receivables are expected to be repaid within 12 months of 30 June 2022. 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 2022 and 30 June 2021.
There have been no guarantees provided or received for any related party receivables or payables.
For the years ended 30 June 2022 and 30 June 2021, the Group has not recorded any impairment of
receivables relating to amounts owed by related parties.
108
109
111
Annual Report 2022
Key management personnel compensation
19.
EARNINGS PER STAPLED SECURITY (“EPS”)
Short-term employee benefits
Post-employment benefits
Equity settled short-term benefits
Equity settled long-term benefits
Other long-term benefits
Consolidated Group
2022
$'000
4,213
113
492
1,148
543
6,509
2021
$'000
4,278
112
334
707
350
5,781
The amounts disclosed in the table are the amounts recognised as an expense during the reporting
period relating to key management personnel (KMP). Detailed remuneration disclosures are provided in
the Remuneration Report which is included in the Directors’ Report.
Key management personnel’s’ interest in the Equity Incentive Plan
Performance rights held by key management personnel under the Equity Incentive Plan for the year
ended 30 June 2022 and 30 June 2021are listed below:
Date of grant
2022
2022
Assessment period
1-Jul-20 to 30-Jun-23
1-Jul-21 to 30-Jun-24
18.
COMMITMENTS AND CONTINGENCIES
2022
Number
outstanding
561,700
561,700
1,123,400
2021
Number
outstanding
-
-
-
Capital commitments
As at 30 June 2022, the Group held commitments to purchase four freehold investment properties and
six development sites for $78.4m (30 June 2021: four freehold investment properties and three
development sites for $53.7m).
As at 30 June 2022, the Group has contractual commitments in place for the construction of self-
storage centres in Australia for $68.9m (30 June 2021: NZD$32.5m (AUD$30.3m) in New Zealand). (see
note 10.3).
The Group also held commitments associated with the development of intangible assets for $0.1m.
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 9.6.
Guarantees and contingent liabilities
The Group’s parent entity has provided bank guarantees of $9.2m (2021: $8.6m). These are provided to
third party lessors and other related entities.
The Group did not have any contingent liabilities as at 30 June 2022 or 30 June 2021.
Basic earnings per stapled security is calculated as net profit attributable to stapled security holders,
adjusted to exclude costs of servicing equity (other than distributions) divided by the weighted average
number of stapled securities on issue during the period under review.
Diluted earnings per stapled security adjust the figures used in the determination of basic earnings per
share to take into account:
•
The after tax effect of interest and other financing costs associated with dilutive potential stapled
securities; and
The weighted average number of additional stapled securities that would have been outstanding
assuming the conversion of all dilutive potential stapled securities.
•
Basic earnings per stapled security
Diluted earnings per stapled security
2022
cents
52.13
52.05
2021
cents
(restated)
30.12
30.12
Reconciliation of earnings used in calculating earnings per stapled security
Net profit attributable to members
$’000 $’000
309,708
620,618
No. of
securities
No. of
securities
(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
1,189,922,871
1,020,912,858
661,495
7,463,718
1,190,584,366
1,028,376,576
Effects of dilution from issue of performance rights and
restricted securities
Weighted average number of securities for diluted earnings
per stapled security
1,849,417
-
1,192,433,783
1,028,376,576
As required by AASB 133 Earnings per share, for issues of capital raises during the year ended 30 June
2022 and 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 2021 used to calculate
basic and diluted earnings per stapled securities has also been restated on this basis.
Diluted EPS is calculated by dividing the profit attributed to members by the weighted average number
of securities for basic earnings per stapled security plus the weighted average number of securities that
would be issued on conversion of all dilutive potential stapled securities into stapled securities.
110
111
113
Annual Report 2022
20.
SHARE-BASED PAYMENTS
Executive remuneration plan
During the current year, the Group introduced a new Executive Remuneration Plan (“Plan"). Under the
Plan, the Group is able to offer a range of different awards to eligible employees, including restricted
securities, performance rights and/or options. The grant of awards under the Plan allows the Group to
motivate, incentivise and retain key employees, whilst creating maximum alignment with corporate
and stakeholder best interests.
Restricted securities
As part of the FY22 award under the Plan, key management personnel are eligible to receive restricted
securities of the Group following the satisfaction of vesting conditions. The restricted securities vest at
the end of the assessment period if predetermined underlying earnings and total shareholder return
performance targets are met and the executive remains employed on such date. The restricted
security granted will not vest if the performance condition is not met.
The fair value of the award was determined based on share price of the Group at the commencement
of the financial year the award was granted. These awards are classified as equity-settled share-based
payments and have been recognised within share-based payment expense for the year ended 30
June 2022.
Performance rights
Under the Plan performance rights are granted to executives as a component of remuneration under
long term incentive plans. The performance rights vest three years from the date of grant as long as the
executive remains employed on such date. Each performance right is a right to receive one security,
subject to vesting conditions. There is no consideration payable by the participant upon vesting of the
performance rights.
The vesting of these performance rights is contingent upon the meeting of pre-determined criteria,
being total shareholder return (“TSR”) and earnings per share growth targets. If these targets are not
met, then the performance rights will lapse.
The fair value of performance rights with a market vesting condition (TSR) are estimated at the date of
grant using a Monte Carlo simulation and trinomial lattice combination, taking into account the terms
and conditions on which the performance rights were granted. The model, which was prepared by an
independent valuation expert, simulates the TSR and compares it with a group of principal competitors.
It takes into account historical and expected dividends, and share price volatility of the Group relative
to that of its competitors so as to predict the share performance.
The fair value of performance rights with a non-market vesting condition (EPS growth target) is
estimated at the date of grant using a binomial model, taking into account the terms and conditions
on which the performance rights were granted
Expenses arising for employee services received during the year
For the year ended 30 June 2022, the Group has recognised $2.6m of equity-settled share-based
payment expense in the consolidated statement of profit or loss (30 June 2021: $nil). There were no
cancellations or modifications to the awards in 2022 or 2021.
Movements in the year
The following table illustrates the number of, and movements in, performance rights during the year:
Outstanding as at 1 July
Granted during the year
Forfeited during the year
Outstanding at 30 June
Exercisable at 30 June
2022
$'000
-
1,123,400
-
1,123,400
-
2021
$'000
-
-
-
-
-
112
The following tables list the inputs to the models used to determine the fair value at grant date of
performance rights issued under the Plan:
Grant date
Assessment period
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of performance rights (years)
Share price on grant day
Model used
Grant date
Assessment period
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of performance rights (years)
Share price on grant day
Model used
2023
Market condition
(TSR)
22-Nov-21
2023
Non-market
condition (EPS)
22-Nov-21
1Jul-20 to 30-Jun-23 1Jul-20 to 30-Jun-23
3.37
35.04
0.57
1.60
2.43
3.37
35.04
0.57
1.60
2.43
Monte Carlo &
Trinomial Lattice
Binomial
2024
Market condition
(TSR)
22-Nov-21
2024
Non-market
condition (EPS)
22-Nov-21
1Jul-21 to 30-Jun-24 1Jul-21 to 30-Jun-24
3.37
30.22
0.96
2.61
2.43
3.37
30.22
0.96
2.61
2.43
Monte Carlo &
Trinomial Lattice
Binomial
The expected volatility reflects the assumption that the historical volatility over a period similar to the life
of the performance rights is indicative of future trends, which may not necessarily be the actual
outcome.
21.
AUDITORS’ REMUNERATION
The auditor of the Group is Ernst & Young Australia.
2022
$
2021
$
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
647,100
602,100
-
-
35,200
49,320
731,620
27,900
49,315
679,315
113
115
Annual Report 2022
22.
INFORMATION RELATING TO THE PARENT ENTITY
Consolidated statement of financial position
Summary financial information
The individual financial statements for NSH, the parent entity, show the following aggregate amounts:
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Other reserves
Retained earnings / (deficit)
Loss after tax
Total comprehensive income / (loss)
2022
$’000
2021
$’000
116,350 142,356
138,551 160,583
(28,526)
(21,618)
(29,776)
(21,618)
116,933 130,807
161,774 159,567
-
2,556
(47,397)
(28,760)
116,933 130,807
(18,638)
(18,638)
(6,803)
(6,803)
Guarantees entered into by the parent entity
The Group’s parent entity has provided bank guarantees of $9.2m (2021: $8.6m). 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 2022 or 30 June 2021.
23.
DEED OF CROSS GUARANTEE
As at 30 June 2022 and 30 June 2021, 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 consolidated statement of
financial position of the entities that are parties to a deed of cross guarantee.
Consolidated statement of comprehensive income
Profit before income tax
Income tax (expense) / benefit
Profit after tax
Retained earnings at the beginning of the year
Dividends received
Retained earnings at the end of the year
2022
$'000
30,529
(8,222)
22,307
7,943
1,300
31,550
2021
$'000
2,064
1,331
3,395
3,548
1,000
7,943
114
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
2022
$'000
2021
$'000
26,616
84,944
1,405
-
6,237
119,202
72,038
32,390
1,050
-
4,605
110,083
135
1,285
5,002
118
1,320
5,616
1,241,177 1,012,901
5,932
30,582
8,499
3,846
1,309,079 1,068,814
5,932
29,646
9,226
16,676
Total assets
1,428,281 1,178,897
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
Other reserves
Retained profits
Total equity
16,973
9,808
15,720
9,181
3,721
55,403
31,888
8,257
14,498
197
3,312
58,152
-
1,167,737
9,261
1,176,998
1,250
948,772
3,213
953,235
1,232,401 1,011,387
195,880
167,510
161,774
2,556
31,550
195,880
159,567
-
7,943
167,510
24.
EVENTS AFTER REPORTING PERIOD
For the period from 1 July 2022 to the date of this report the Group settled three storage centre
investment properties for a total cost of $19.9m, and three development sites for $12.7m.
115
117
Annual Report 2022
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 2022
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 2022 and of its performance for the year ended on that date;
and
complying with Accounting Standards and the Corporations Regulations
2001;
(b)
(c)
(d)
the financial statements and notes also comply with International Financial
Reporting Standards as disclosed in note 2(b); and
there are reasonable grounds to believe that NSR will be able to pay its debts as
and when they become due and payable.
as at the date of this declaration, there are reasonable grounds to believe that
the members of the Closed Group identified in Note 23 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 2022.
On behalf of the Board,
Anthony Keane
Non-Executive Chairman
22 August 2022
Brisbane
Andrew Catsoulis
Managing Director
22 August 2022
Brisbane
Ernst & Young
111 Eagle Street
Ernst & Young
Brisbane QLD 4000 Australia
111 Eagle Street
GPO Box 7878 Brisbane QLD 4001
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
Tel: +61 7 3011 3333
ey.com/au
Fax: +61 7 3011 3100
ey.com/au
Independent auditor's report to the members of National Storage REIT
Independent auditor's report to the members of National Storage REIT
Report on the audit of the financial report
Report on the audit of the financial report
Opinion
Opinion
We have audited the financial report of National Storage REIT (the Company) and its subsidiaries
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
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2022, the consolidated statement of profit or loss, consolidated statement of comprehensive
June 2022, 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
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
year then ended, notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
Act 2001, including:
a)
a)
Giving a true and fair view of the consolidated financial position of the Group as at 30 June
Giving a true and fair view of the consolidated financial position of the Group as at 30 June
2022 and of its consolidated financial performance for the year ended on that date; and
2022 and of its consolidated financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
b)
Basis for Opinion
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
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
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
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
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
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
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
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
for our opinion.
Key Audit Matters
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
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 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
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
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
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
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
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
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
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
accompanying financial report.
116
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 2022
Investment property valuation
Investment property valuation
Why significant
Why significant
Investment properties represent
approximately 94% of the Group’s total
Investment properties represent
assets. These assets are carried at fair
approximately 94% of the Group’s total
value, which is assessed by the directors
assets. These assets are carried at fair
with reference to either external
value, which is assessed by the directors
independent property valuations or
with reference to either external
internal valuations and are based on
independent property valuations or
market conditions existing at reporting
internal valuations and are based on
date.
market conditions existing at reporting
date.
This was considered a key audit matter
due to the number of judgments required
This was considered a key audit matter
in determining fair value. These
due to the number of judgments required
judgments include assessing the
in determining fair value. These
capitalisation rates, sustainable
judgments include assessing the
occupancy and stabilised EBITDA
capitalisation rates, sustainable
(earnings before interest, tax,
occupancy and stabilised EBITDA
depreciation and amortisation).
(earnings before interest, tax,
depreciation and amortisation).
Disclosure relating to investment
properties and the associated significant
Disclosure relating to investment
judgments are included in Notes 2(p), 3,
properties and the associated significant
10.3, and 10.7 to the financial report.
judgments are included in Notes 2(p), 3,
10.3, and 10.7 to the financial report.
•
•
•
•
•
•
•
•
How our audit addressed the key audit matter
How our audit addressed the key audit matter
Our audit procedures included the following:
Our audit procedures included the following:
•
•
With the involvement of our real estate valuation specialists, we assessed:
▪
With the involvement of our real estate valuation specialists, we assessed:
▪
▪
▪
▪
▪
The suitability of the valuation methodologies used;
The competence, qualifications and objectivity of both the Group’s
The suitability of the valuation methodologies used;
internal valuers and external valuation experts; and
The competence, qualifications and objectivity of both the Group’s
The reasonability of key assumptions and inputs used in the
internal valuers and external valuation experts; and
valuations. These assumptions and inputs included capitalisation
The reasonability of key assumptions and inputs used in the
rates, occupancy rates including forecast occupancy levels, and
valuations. These assumptions and inputs included capitalisation
stabilised EBITDA.
rates, occupancy rates including forecast occupancy levels, and
Agreed source data used in the valuations to support tenancy schedules
stabilised EBITDA.
and accounting sub-ledgers;
Agreed source data used in the valuations to support tenancy schedules
Tested the mathematical accuracy of the internal valuation model,
and accounting sub-ledgers;
including assessing key valuation inputs with reference to those applied by
Tested the mathematical accuracy of the internal valuation model,
the external valuation experts and where relevant we assessed the
including assessing key valuation inputs with reference to those applied by
reasonableness of comparable transactions used in the valuation process;
the external valuation experts and where relevant we assessed the
Where relevant, we evaluated the movement in the capitalisation rates,
reasonableness of comparable transactions used in the valuation process;
occupancy rates, and stabilised EBITDA across the portfolio based on our
Where relevant, we evaluated the movement in the capitalisation rates,
knowledge of the property portfolio, comparable acquisition transactions
occupancy rates, and stabilised EBITDA across the portfolio based on our
in the period, published industry reports and comparable external
knowledge of the property portfolio, comparable acquisition transactions
valuations; and
in the period, published industry reports and comparable external
We considered the adequacy of disclosures in relation to the valuation
valuations; and
methods and principles disclosed in Note 2(p) Summary of significant
We considered the adequacy of disclosures in relation to the valuation
accounting policies - Investment properties, Note 3 Significant accounting
methods and principles disclosed in Note 2(p) Summary of significant
judgements, estimates and assumptions – Revaluation of investment
accounting policies - Investment properties, Note 3 Significant accounting
properties, Note 10.3 Investment properties and Note 10.7 Non-financial
judgements, estimates and assumptions – Revaluation of investment
assets fair value measurement.
properties, Note 10.3 Investment properties and Note 10.7 Non-financial
assets fair value measurement.
Information other than the financial report and auditor’s report
Information other than the financial report and auditor’s report
The directors are responsible for the other information. The other information comprises the
The directors are responsible for the other information. The other information comprises the
information included in the National Storage REIT 2022 Annual Report, but does not include the
information included in the National Storage REIT 2022 Annual Report, but does not include the
financial report and our auditor’s report thereon.
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
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
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
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
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.
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
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.
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
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
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
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
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
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
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
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
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.
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
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
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
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
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
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
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
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.
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
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:
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
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
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
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
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
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
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
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.
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
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
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
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
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
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
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 the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
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
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
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
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 the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
responsible for our audit opinion.
•
•
•
•
•
•
•
•
•
•
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
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
121
Annual Report 2022
We communicate with the directors regarding, among other matters, the planned scope and timing of
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
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
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
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
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
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
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
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
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
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.
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 42 to 57 of the directors' report for the
We have audited the Remuneration Report included in pages 42 to 57 of the directors' report for the
year ended 30 June 2022.
year ended 30 June 2022.
In our opinion, the Remuneration Report of National Storage REIT for the year ended 30 June 2022,
In our opinion, the Remuneration Report of National Storage REIT for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
complies with section 300A of the Corporations Act 2001.
Responsibilities
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
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
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
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
accordance with Australian Auditing Standards.
Ernst & Young
Ernst & Young
Wade Hansen
Wade Hansen
Partner
Partner
Brisbane
Brisbane
22 August 2022
22 August 2022
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
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 27 July 2022 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
1,393
1,986
1,521
2,674
143
7,717
There were 414 holders of less than a marketable parcel of stapled securities, representing 11,370 units.
(b) Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities as at 27 July 2022 are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Perpetual Trustee Company Ltd
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd (DRP)
HSBC Custody Nominees (Australia) Limited – A/C 2
Citicorp Nominees Pty Limited – (Colonial First State Inv A/C)
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
Neweconomy Com Au Nominees Pty Limited
Australian Executor Trustees Limited
Hooks Enterprises Pty Ltd
BNP Paribas Nominees Pty Ltd Acf Clearstream
Leyshon Investments (Australia) Pty Ltd
Leendert & Aaltje Hoeksema
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd (DRP A/C)
Brindle Super Pty Ltd
BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient DRP)
BNP Paribas Noms (NZ) Ltd (DRP)
Buttonwood Nominees Pty Ltd
Stapled Securities
Number
held
507,938,798
205,583,728
112,368,805
110,768,659
40,236,382
39,899,461
15,806,098
10,675,782
6,134,983
4,020,465
3,792,751
3,360,000
2,695,278
2,240,000
1,980,000
1,865,256
1,523,488
1,467,364
1,318,084
1,127,859
1,074,803,241
% of issued
securities
42.49
17.20
9.40
9.27
3.37
3.34
1.32
0.89
0.51
0.34
0.32
0.28
0.23
0.19
0.17
0.16
0.13
0.12
0.11
0.09
89.90
122
123
Annual Report 2022
Unquoted equity securities
Performance rights
Number on
issue
1,123,400
Number of
holders
3
(c) Substantial shareholders
Substantial securityholders, as at 14 July 2022, are set out below:
Name
Abacus Storage Funds Management Limited
Vanguard Investments Australia Ltd
Number
held
112,368,805
62,401,247
Percentage
9.4%
5.2%
(d) Voting rights
The voting rights attached to the ordinary fully paid stapled securities is one vote per stapled security.
123
125
Annual Report 2022
INVESTOR RELATIONS
National Storage REIT is listed on the Australian Securities
DISTRIBUTION DETAILS
Exchange under the code NSR.
NATIONAL STORAGE REIT SECURITIES
A stapled security comprises:
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,
• one share in National Storage Holdings Limited; and
please consider the following:
• one unit in the National Storage Property Trust,
stapled and traded together as one stapled security.
DIRECT CREDIT
CONTACT DETAILS
All changes of name, address, Tax File Number,
payment instructions and document requests should be
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
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 registering your email address, you can then receive
via email notifications and announcements, distribution
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.
statements, taxation statements and annual reports.
UNPRESENTED CHEQUES
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
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
You can confirm your holding balance, request forms
290. Please direct any complaints in writing to NSR
and access distribution and trading information
Company Secretary at GPO Box 3239, Brisbane QLD
by phoning: 1300 850 505 (Australia only) or calling
4001, Australia or via the investor feedback form
International: +61 (0) 3 9415 4000 (outside Australia).
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
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Steven Leigh
Inma Beaumont
Scott Smith
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”)
127
Annual Report 2022