ANNUAL REPORT
2 0 2 3
Important
INFORMATION
Table of
CONTENTS
ABOUT THIS REPORT
Welcome to National Storage REIT’s 2023 Annual Report
which reports our performance for the financial year
1 July 2022 – 30 June 2023.
THE 2023 REPORTING SUITE INCLUDES:
Annual Report – a review of FY23 performance, strategy
and governance.
Financial Report – FY23 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 2023 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.
n OUR BUSINESS
n FY23 PERFORMANCE HIGHLIGHTS
n NSR STRATEGY
n NSR PORTFOLIO
n CHAIRMAN &
MANAGING DIRECTORS’ REPORT
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
5
6
8
10
14
18
20
24
28
30
62
130
131
Annual Report 2023
3
Our
BUSINESS
National Storage is Australasia’s largest self-storage
provider, tailoring self-storage solutions to approximately
90,000 residential and commercial customers at more
than 230 storage centres across Australia and New
Zealand. National Storage REIT is the only publicly listed,
pure play, fully integrated, internally managed, 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.
"APPROXIMATELY
90,000 RESIDENTIAL
AND COMMERCIAL
CUSTOMERS AND
OVER 230 STORAGE
CENTRES ACROSS
AUSTRALIA AND
NEW ZEALAND."
5
Annual Report 2023 FY23
PERFORMANCE
HIGHLIGHTS
FINANCIAL HIGHLIGHTS
$330.0m
Total Revenue
$320.4m
IFRS Profit
$141.8m
Underlying
Earnings1
11.5cps
Underlying
Earnings per
Stapled Security
11.0cps
Distribution
per
Stapled Security
$4.29b
Investment 3
Properties
FY22: $278.9m
FY22: $620.6m
FY22: $126.5m
FY22: 10.6cps
FY22: 10.0cps
FY22: $3.73b
18%
48%
12%
8.5%
10%
15%
OPERATIONAL HIGHLIGHTS
234
Number of
Centres
(30 June 2023)
1,280,000
Square Metres
of Net
Lettable Area
85%
Group2
Occupancy
$270
Group2
Revenue per
Available Metre
66%
Operating
Margin
660
Employees
FY22: 226
FY22: 1,180,000
FY22: 88.5%
FY22: $260
FY22: 64%
FY22: 616
8
8%
3.5%
3.6%
2%
7%
CAPITAL STRENGTH
$4.6b
Total Asset
Value
20%
Gearing
3.5yrs
Weighted
Average
Debt Tenor
$2.48
Net Tangible
Assets per
Stapled Security
FY22: $4.1b
FY22: 23%
FY22: 3.3yrs
FY22: $2.34
1. Underlying earnings is a non-IFRS measure
(unaudited)
2. Group – Australia and New Zealand (195 centres)
n Australia – 169 centres as at 30 June 2021
(excluding Wine Ark, managed centres
and let-up centres)
n New Zealand – 26 centres as at 30 June 2022
(excluding Wine Ark and managed centres)
13%
3%
0.2
6%
3. Net of lease liability
SPRINGFIELD, QLD
Annual Report 2023
7
NSR
VISION & MISSION
OUR VISION: To be a world leader in the provision of innovative
and sustainable self-storage solutions
OUR MISSION: United as one team, we commit to consistently
and responsibly deliver on our four pillars of strategic growth
NSR
FOUR PILLARS
ORGANIC GROWTH
Optimising occupancy and
rate growth on an individual
centre basis, combined
with prudent cost
management
ACQUISITIONS,
DEVELOPMENTS
& EXPANSIONS
Market leading opportunities
in combination with delivery
capabilities to drive
sustained growth
TECHNOLOGY
& AUTOMATION
Leadership in development
and implementation of
innovative technology
and automation
SUSTAINABILITY
Instilling trust and confidence
that we are building a resilient
and sustainable business
for our stakeholders
Annual Report 2023
9
NSR
PORTFOLIO
DARWIN
WESTERN
AUSTRALIA
30
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 2023.
*Map not to scale.
NORTH QUEENSLAND
234
TOTAL
CENTRES
QUEENSLAND
68
CENTRES
NEW SOUTH WALES
37
CENTRES
HERVEY BAY
SUNSHINE COAST & NOOSA
BRISBANE
GOLD COAST
HUNTER & CENTRAL COAST
SYDNEY & BLUE MOUNTAINS
WOLLONGONG & ILLAWARRA
VICTORIA
43
CENTRES
CANBERRA
4
CENTRES
GEELONG MELBOURNE
LAUNCESTON
HOBART
6
CENTRES
TASMANIA
AUCKLAND
HAMILTON
NEW ZEALAND
33
CENTRES
BAY OF PLENTY
WELLINGTON
CHRISTCHURCH
DUNEDIN
Annual Report 2023
11
Portfolio
STATISTICS - JUNE 2023
AUSTRALIAN PORTFOLIO BY NLA
NEW ZEALAND PORTFOLIO BY NLA
CENTRES
NLA
32
15
11
10
21
11
4
4
2
38
4
10
30
6
3
198,500
84,800
60,900
54,100
107,200
53,600
25,300
33,000
10,600
196,800
16,400
54,100
162,200
23,000
17,000
201
1,097,500
REGION
Brisbane
Gold Coast
Sunshine Coast
North Queensland
Sydney
Central Coast (NSW)
Wollongong
Canberra
Albury
Melbourne
Geelong
Adelaide
Perth
Tasmania
Darwin
TOTAL
PORTFOLIO VALUATION
REGION
Auckland
Hamilton
Wellington
Christchurch
Dunedin
Regional
TOTAL
CENTRES
NLA
8
5
8
6
2
4
61,450
19,790
45,110
22,520
17,420
15,920
33
182,200
PORTFOLIO COMPOSITION
Freehold
Leasehold
Managed
TOTAL
221
12
1
234
TOTAL VALUATION (AUS $BILLION): $4.29b WEIGHTED AVERAGE PRIMARY CAP RATE: 5.91%
STATE
QLD
VIC
NSW
NZ
WA
SA
TAS
ACT
NT
TOTAL
MOOROOKA, QLD
Exchange Rate: 1.087
VALUATION
CENTRES
NLA
68
44
36
33
30
10
6
4
3
398,300
223,800
186,100
182,200
162,200
54,100
23,000
33,000
17,000
%
31
17
15
14
13
4
2
3
1
$M
1,293
919
627
475
518
176
80
152
46
%
30
21
15
11
12
4
2
4
1
234
1,279,700
100%
4,285
100%
13
Annual Report 2023
Chair man &
Managing Directors’
REPORT
NSR has delivered pleasing outcomes in FY23 for
n Pleasingly our Operating Margin also increased –
National Storage’s stakeholders, despite marked
up 2% to 66%, illustrating our ability to drive synergies
changes in the economic environment. The
and economies of scale from the self-storage
exceptionally high demand drivers experienced as
platform, now over 230 centres across Australia and
a result of COVID-19-related changes to domestic
New Zealand.
consumer spending, have moderated. In addition,
the increased pressure on the residential sector from
significantly higher interest rates is also having a
noticeable impact on housing related and general
retail demand. Notwithstanding these headwinds,
NSR has maintained its occupancy at very high
levels and grown its revenue across Australia and
New Zealand, building on its robust growth trajectory.
Our high performing teams across all business sectors
have demonstrated their commitment to our business,
and in these increasingly challenging economic
conditions, we remain confident that NSR’s long
established business model will continue to deliver
solid results for our stakeholders.
NSR has successfully navigated the challenges of the
evolving operating environment faced in FY23 through
the execution of a number of important strategies.
These strategies have included further strengthening
of NSR’s balance sheet by way of a highly successful
capital raising undertaken in March 2023. NSR raised
$300 million through an institutional placement, plus
a further $40 million via a security purchase plan to
retail securityholders. The equity raisings were heavily
oversubscribed and undertaken at a modest 4%
discount to NSR’s last closing price immediately prior to
the announcement of the institutional placement. This
raising has significantly bolstered NSR’s balance sheet
and places NSR’s gearing at 20% as at 30 June 2023 -
Our key results achieved across FY23 reflect the
at the lower end of the entire A-REIT sector.
strength and resilience of our business:
n Underlying earnings increased 8.5% to 11.5cps
In conjunction with its equity capital management
activities, NSR has significantly extended and improved
both the headroom, scope and tenor of its debt
n Group REVPAM increased 3.6% to $270/m2
facilities. In June 2023, NSR announced a substantial
n Group rate per square metre increased 8.2%
to $319/m2
new syndicated term debt facility involving 18 new
and existing banks, raising $400 million equally split
between five and seven year maturities. This debt was
n Group occupancy reduced slightly to 85.0%
competitively priced and was heavily oversubscribed,
n Increase in overall investment properties to $4.3
billion, with valuation uplift driven by improved
operational performance and a largely unchanged
weighted average portfolio capitalisation rate
of 5.91%
demonstrating the relative strength of NSR’s position
from a lending perspective. NSR has since increased
its hedge profile, as well as extending and negotiating
a number of new smaller debt facilities. Once
finalised NSR will have $820 million of documented
but available funding capacity, and well over $1
n NTA up by 6% to $2.48 reflecting our ability to
billion of headroom before it reaches the upper end
add value to the portfolio through enhancing
of its targeted gearing range. This further highlights
operational performance and creating
the resilience and conservative positioning of NSR’s
operating efficiencies
operating business model.
n Total Revenue for the Group increased to $330
Our Board members, Executive team, and Heads of
million, up 18% on the prior year
Department have spent considerable time and effort
"NSR HAS MAINTAINED
ITS OCCUPANCY AT
VERY HIGH LEVELS AND
GROWN ITS REVENUE
ACROSS AUSTRALIA
AND NEW ZEALAND,
BUILDING ON ITS
ROBUST GROWTH
TRAJECTORY"
reviewing every aspect of our strategy and current
design efficiency and material selection, improving
business operations in order to evolve our systems and
our customers’ experience, heightening staff
processes in the pursuit of excellence as part of our
engagement and supporting our partners and the
Four Pillars Growth Strategy. As a result of this whole
communities in which we operate.
of business review, our Four Pillars have evolved to
embrace the following:
NSR has executed its highly focused Four Pillars Growth
Strategy throughout FY23. This has evolved into FY24
n Organic Growth - Optimise organic growth through
with the introduction of our new Sustainability pillar,
active revenue management, enquiry optimisation
demonstrating our tangible commitment to ensuring
and conversion, technology and automation,
sustainability overlays all aspects of our business. As
and continued cost efficiency throughout the
NSR’s business matures, it is important to refine and
NSR business;
n Acquisitions, Developments and Expansions -
Centralised acquisition and development team
with a diversified delivery pipeline to expedite and
simplify the project delivery process and maximise
returns. Individual Centre Optimisation program also
underway to maximise individual centre operations
and returns on a centre-by-centre basis;
evolve our strategies in order to ensure that our core
objective of maximising return on securityholders
funds invested is achieved. This objective is primarily
focused on our First Pillar - Organic Growth. Organic
Growth is achieved through our regimented
approach to growing same centre revenue through
the increasing utilisation of automation and revenue
management tools that help make our operations
both more efficient and effective. Our team remains
n Technology and Automation - Utilise data analytics
highly focused on building scale as well as improving
to improve customer acquisition and retention,
operating margin, demonstrating our unified focus of
increasing focus on existing and new centre
driving efficiencies across the business.
automation projects to enhance overall efficiency
and profitability, centralisation of systems and
processes to reduce overheads and improve control
and cyber security;
The Organic Growth Pillar is underpinned by a clear
focus on our people and optimising their overall
performance. We provide ongoing training and
support for our team members, focusing on helping
n Sustainability (ESG) - Improve our solar generation
them realise their “best selves” while driving sustained
capacity to further reduce centres’ energy costs
high-level business outcomes. National Storage has
and carbon footprint, charting a pathway to net
improved collaboration within teams which has
zero emissions. Focus on adaptive reuse, recycling,
delivered sustainable high-performance results, this is
Annual Report 2023
15
further supported by the development of a succession
accretive opportunities sourced from our team’s
operating margin in coming years. Current initiatives
inaugural June 2020 audit. In addition, we have
pipeline for key roles, creating talent pathways as well
long-standing industry insights in an aim to enhance
include wayfinding technology, improved self-
undertaken a climate impact risk assessment of our
as providing business continuity. Through our ‘NS Cares’
our existing footprint. The second limb of this strategic
service and payment options for our customers, and
portfolio to identify those assets that may be vulnerable
program we are committed to providing meaningful
pillar is to provide ongoing built capacity by way of
further development of our internal sales platform to
to hazards caused by extreme weather and climate
support to four charitable organisations. We are proud
our Development and Expansion pipeline, as well as
provide improved sales metrics and analytics for our
change. More details on our ESG initiatives will be
to currently partner with charities across the important
undertaking selected Centre Optimisations to improve
management and frontline teams. Our focus in FY24
included in our Sustainability Report.
areas of medical research, mental health, support and
centre efficiency and add important new built capacity
safety, all housed under the umbrella of “creating
where appropriate opportunity exists.
safe spaces” – a cornerstone of our mission here at
National Storage.
NSR has secured an unrivalled portfolio of over 60 new
development and expansion opportunities which will
"WE ARE PROUD
TO CURRENTLY
PARTNER WITH
CHARITIES ACROSS
THE IMPORTANT
AREAS OF MEDICAL
RESEARCH, MENTAL
HEALTH, SUPPORT
AND SAFETY"
Our Second Pillar of
add new built capacity to the portfolio in ensuing
growth is focused
years. The importance of scale in the Australian and
on creating built
capacity. This is
New Zealand markets cannot be overstated. This
strategy will enable NSR to build an unrivalled network
manifested through
of self-storage centres in key markets. Our current
the combination
development pipeline has increased to approximately
of Acquisitions,
Developments,
Expansions and
360,000m2, with 45 active projects at various stages
of completion, providing NSR with the opportunity to
break ground on new sites in both infill locations and
Centre Optimisations.
new markets.
NSR seeks to acquire
only existing storage
assets which have
the potential to be
yield accretive in the three to five years immediately
post their acquisition. Historically, NSR has demonstrated
an ability to add on average 1% per annum in yield
accretion to storage assets acquired over the last
five years. This means in effect that storage assets
acquired five years ago are on average performing
with an annualised yield which is 5% greater than
their original yield on cost. Our acquisition strategy
remains focused predominantly on off-market, value
The Third Pillar of our growth strategy is Technology
and Innovation. NSR utilises data analytics to improve
customer acquisition and retention, allowing us to
increase focus on existing and new centre automation
projects to enhance overall efficiency and profitability.
The centralisation of our systems and processes will
allow us to reduce overheads and improve control
over our business. NSR has a suite of technology and
innovation projects all designed to optimise enquiry
generation and new customer conversion into sales
and centre efficiency, whilst reducing overheads.
These initiatives will be key to the successful scalability
of our business as well as allowing us to improve our
includes the further evolution of our cyber security
program, new telephony platform for centres aimed
at delivering AI for greater automation, integration
of workforce management tools and our core sales
platform, and the automation of accounts receivable
processes. These initiatives strive to drive efficiency,
reduce costs and enhance customer experience.
Our new Fourth Pillar is Sustainability. This reflects our
determination to be the most attractive investment
in our sector – because we overlay our business with
a sustainable lens, creating trust and confidence
that we are building a business for the benefit of our
securityholders, customers, employees, communities,
and the planet. NSR is working to improve its solar
generation capacity to further reduce our centres’
energy costs and our carbon footprint, while charting
a pathway to net zero emissions. Through the
development and improvement of our centres, NSR
In summary, NSR remains well positioned for growth
during these uncertain and challenging times. The NSR
platform is highly scalable and by far the largest owner
operated, fully internally managed, storage-specific
REIT in Australasia. We will focus on expanding the NSR
business with a view to maximising earnings per security,
for the benefit of all stakeholders.
As a closing remark, we would again offer our sincere
thanks to all stakeholders. You have again provided NSR
with unwavering support during these uncertain times
- support for which we are both humbled and grateful.
We will remain focused on working together to achieve
best in class results for our stakeholders year after year.
focuses on adaptive reuse, recycling, design efficiency
Anthony Keane
and material selection, improving our customers’
experience, and heightening staff engagement. A
key achievement in FY23 included the completion
of our third carbon audit across the NSR group. This
audit again highlighted NSR's relatively low carbon
emissions with it's Scope 1 and 2 emissions sitting at an
average of 38 tonnes of CO2e per centre, a reduction
of approximately 30% per centre compared to the
NON-EXECUTIVE CHAIRMAN
Andrew Catsoulis
MANAGING DIRECTOR
Annual Report 2023
17
Investment
PARTNERS
National Storage continues to work with its
the National Storage brand as a prominent player in
current investment partners, and engage with
the Perth market. Various sites in and around Perth
new investment partners, to assess options
have been identified as part of the arrangement,
for future acquisition, development and
whereby Parsons Group constructs high-quality
redevelopment opportunities.
PERTH DEVELOPMENT PORTFOLIO
The Perth Development Portfolio is a construction
and management arrangement with one of Perth’s
leading self-storage construction companies,
Parsons Group. This venture continues to reinforce
self-storage centres branded as National Storage.
The partnership to date has delivered multiple new
self-storage centres and expansions, with additional
locations currently under design and construction.
Over the last year, multiple new sites have been
reviewed and added to the development pipeline
and are currently in various stages of due diligence
and planning.
BRYAN FAMILY GROUP
OTHER PARTNERS
National Storage and Bryan Family Group cemented
National Storage continues to work with numerous
their partnership in FY22 to jointly develop a site at
other development partners for the construction
Moorooka in Brisbane. This resulted in a high-quality
of quality self-storage centres. These partnerships
storage centre and service station that commenced
have delivered multiple new self-storage centres
operation in the second half of FY22. National Storage
over recent years, with additional centres currently
acquired the storage centre from the partnership
under construction in Queensland and Victoria. In
in FY23.
addition, several centres in Queensland and Victoria
are currently in various stages of design, planning and
construction which, when delivered, will add to the
National Storage network.
BYFORD, WA
Annual Report 2023
19
The year in
REVIEW
"HOUSING
APPROXIMATELY
TWO MILLION BOTTLES
OF FINE WINE,
WINE ARK OPERATIONS
TAKE PLACE ACROSS
15 CENTRES FOR CLIENTS
LOCATED IN OVER
40 COUNTRIES."
ASSET MANAGEMENT
DEVELOPMENTS AND EXPANSIONS
National Storage continued to deliver positive revenue
Our focus on expanding capacity with high-quality
results in FY23, supported by the ongoing success of our
strategic assets continues. This year the development
revenue management software and the operations
pipeline has increased to approximately 360,000m2
team. This software utilised forecast and sensitivity
of expansion potential from a combination of
modelling, supported by AI, to maximise occupied
strategically acquired development sites, and the
revenue growth, drive key metric performance, and
expansion of existing portfolio assets. There are currently
achieve stabilised occupancy and rate per square
45 active projects at various stages, with 20 projects
metre levels on an individual unit basis.
under construction or with DA approval obtained and
the remaining projects undergoing detailed design
and planning. Four projects completed during FY23,
including our newest operational development asset
now trading in greater Springfield.
WINE ARK
Wine Ark is Australia’s largest wine storage provider
and is a part of the National Storage Group. Housing
approximately two million bottles of fine wine, Wine
Ark operates across 15 centres for clients located in
over 40 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 platform is popular with restaurants,
as they can acquire aged wines with guaranteed
provenance, enabling them to sell with confidence.
Throughout FY23, 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 and
Commanderie de Bordeaux (Australian Chapter).
The 30 June 2023 REVPAM across the Group portfolio
(195 centres) was $270/m2, a 3.6% increase from the
June 2022 result of $260/m2.
Occupancy across the portfolio on this same basis
also reduced slightly to 85.0% (June 2022: 88.5%). The
National Storage operations team across Australia
and New Zealand continued to deliver strong results
during the year, despite the various macro and micro
economic challenges posed throughout the period.
A focus on sales training and team development,
as well as improved marketing and technology
saw conversion remain strong. An increased focus
on ancillary review streams such as packaging,
insurance and other “add-on” services delivered
strong revenues. Changes to the internal sales platform
also saw ongoing improvements in customer service
via automation and optimisation processes, while
ensuring we met the demands of an evolving trading
environment. Internal promotion and continued centre
growth has seen the state-based leadership teams
expand, from both internal and external appointments.
ACQUISITIONS
National Storage has successfully transacted eight
acquisitions and development sites in FY23 and
continues to pursue high-quality acquisitions across
Australia and New Zealand. The ability to acquire and
integrate strategic accretive acquisitions is one of
National Storage’s major competitive advantages and
a cornerstone of its growth strategy. This active growth
strategy also strengthens and scales the National
Storage operating platform which drives efficiencies
across the business.
WINE ARK ALEXANDRIA, NSW
Annual Report 2023
21
MARKETING AND
CUSTOMER EXPERIENCE
The National Storage FY23 marketing strategy
concentrated on enhancing our capabilities in digital
marketing, sponsorships, and community engagement.
We prioritised the expansion of our digital presence
to attract more customers to our website, resulting in
increased online enquiries and bookings. By aligning
all our digital activities with our vision of an exceptional
customer experience, we were able to offer a seamless
digital booking process, extending to customers who
initiated their booking through our Contact Centre.
To better support our customers in New Zealand,
we established a new Contact Centre located in
Auckland. This initiative was specifically aimed at
providing a local point of contact for our growing
New Zealand customer base.
Our sponsorship activities in FY23 were geared
towards acquiring customers through various
campaigns targeting our digital channels, as well as
direct engagement with sponsor members and fan
databases. The data capture and retail promotion
campaigns led to an impressive 106% surge in
unique web sessions compared to the previous year,
demonstrating a favourable response from our target
audience to our nationwide sponsorship initiatives.
To strengthen brand trust beyond
digital and sponsorships, our
marketing communications
placed significant emphasis on the
community aspect of our business.
Through the launch of our NS
Cares charitable initiative, and the
continuation of our Community Units
Program, National Storage actively
supported community groups in the
areas in which we operate.
Our approach to customer care
maintained a strong focus on
customer centricity. By being
responsive to customer needs and
ensuring a smooth experience when
"TO STRENGTHEN
BRAND TRUST
BEYOND DIGITAL
AND SPONSORSHIPS,
OUR MARKETING
COMMUNICATIONS
PLACED SIGNIFICANT
EMPHASIS ON THE
COMMUNITY ASPECT
OF OUR BUSINESS"
working with National Storage, we aimed to further
enhance convenience and drive growth to achieve
our targeted occupancy objectives.
INTERNATIONAL WOMEN'S DAY FUN RUN, QLD
Annual Report 2023
23
Board of
DIRECTORS
Anthony
KEANE
Howard
BRENCHLEY
Inma
BEAUMONT
Scott
SMITH
Independent
Non-Executive Chairman
Independent
Non-Executive Director
BSc (Maths), GradDipCorpFin, GAICD
BEc
Independent
Non-Executive Director
BA (Maths) BA Hons (Economics and
Commerce), FCCA, GAICD
Independent
Non- Executive Director
BBus (Marketing)
Anthony is an experienced finance and business
Howard has over 35 years’ involvement in the
Inma brings her commercial acumen and diverse
Scott has over 25 years’ experience in the
executive with an extensive background in
Australian property industry, as an analyst,
range of experience to the NSR board. As a
Technology and Telecommunications sector across
banking and business management. Prior to
investor and fund manager. Howard cofounded
senior finance executive, she has had leadership
the Asia Pacific region, including a breadth of
accepting his directorship with National Storage,
Property Investment Research Pty Ltd (PIR) in
roles spanning Financial Control, Internal Audit
experience gained from working for large global
Anthony held numerous leadership roles with
1989, which during the 1990s was considered a
and Risk Management within top multinationals
telecommunication organisations before founding
a major trading bank principally in business,
leading researcher of both listed and unlisted
in Energy, FMCG and Banking. In addition, she
his own successful managed service provider
corporate and institutional banking. He is actively
property funds. In 1998 Howard was instrumental
has governance experience as Chair of Finance,
company. Scott holds a Bachelor of Business
involved in the business community through Non-
in establishing the funds management business of
Audit and Risk Committees across several boards
(Marketing) from the Queensland University of
Executive Director and Advisory Board roles, and
APN Property Group Limited. During this period,
where she has a record of delivering revenue
Technology and has extensive experience in
finance advisory consultancies.
Anthony is a Director of ASX listed EMvision
Medical Devices Ltd (EMV). Anthony has
he was responsible for the establishment and
operations of a number of funds investing both
directly and indirectly in real estate.
a Bachelor of Science (Mathematics) from
Since 1998, Howard has been a director (or the
University of Adelaide and a Graduate Diploma in
director of the responsible entity) of numerous
Corporate Finance from Swinburne. He is a Fellow
listed and unlisted real estate investment vehicles.
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 Chair of the Nomination Committee
and is a member of the Audit and Risk Committee
and Remuneration Committee.
Howard is Chair of the Audit and Risk Committee
and is a member of the Nomination and
Remuneration Committees.
growth. More recently, she has led marketing,
technology and leadership positions. Having
public relations and stakeholder engagement
successfully co-founded Comlinx (Managed Service
teams. Inma is culturally and linguistically diverse
Provider) in 2006, he went on to sell that business to
and brings a different perspective to the board
ASX listed Telecommunications provider Over the
of NSR.
Inma is currently a non-executive director of UN
Women Australia. She holds a BA (Mathematics)
and BA Hons (Economics and Commerce) from
Wire (ASX: OTW) in 2018 and continued in the senior
leadership team, taking over the role of CEO of
OTW in February 2020. OTW has subsequently been
sold to Aussie Broadband (ASX: ABB).
the University of Valencia, Spain, is a Fellow of the
Presently, Scott serves as a consultant in the
Association of Chartered Certified Accountants
technology industry and is on the Advisory Board of
and is a Graduate of the Australian Institute of
Heal Inc, a San Francisco-based software company
Company Directors.
Inma is a member of the Audit and Risk,
Nomination, and Remuneration Committees.
specialising in AiOps and Machine Learning
capabilities. Additionally, he is actively involved
in various Corporate Advisory engagements and
early-stage technology investments.
Scott is Chair of the Remuneration Committee and
is a member of the Audit and Risk Committee and
Nomination Committee.
Annual Report 2023
25
EXECUTIVES
Andrew
CATSOULIS
Claire
FIDLER
Stuart
OWEN
Manny
LYNCH
Managing Director
Executive Director and
Company Secretary
Chief Financial Officer
Chief People Officer
BA LLB Grad Dip Project Mgmt (Hons)
LLB (Hons) BBus – Intl Bus GAICD FGIA
BBus, CPA, GAICD
Dip Prof Couns, Dip WHS
A founder of the National Storage business,
Claire was appointed an Executive Director in
Stuart joined National Storage in late 2014, with
Manny joined National Storage in late 2015,
Andrew has over 25 years’ of specific
July 2017 and has been the Company Secretary
extensive experience in the energy sector in coal
with experience in leadership, WHS, culture
self-storage industry expertise in areas including
of National Storage since November 2015. She
and gas fired power generation. He has held wide
and wellbeing. Immediately preceding
acquisitions, developments, and the integration
was appointed Head of Legal and Governance
ranging finance and commercial management
his appointment to the Executive Team,
and operation of ‘greenfield’ and developed
in June 2020 and now oversees the legal,
roles, including as Commercial Manager for
Manny held senior leadership positions
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
governance, risk and compliance 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.
Energy Developments Limited.
within National Storage’s corporate and
Prior to this, Stuart was Commercial Manager
operational departments.
on the delivery of a multi-site gas fired power
Prior to joining National Storage, Manny
generation project and micro-LNG plant. He
managed welfare, leadership, and culture at
has significant experience in project financing,
the Brisbane Lions AFC, WHS management
mergers and acquisitions, and project
at Hydro Tasmania, and has several years’
development. Stuart holds a Bachelor of
experience in elite sports performance. He
and has considerable property development
She practiced in the litigation, resources, and
Business, is a Certified Practising Accountant
also served in the Royal Australian Navy for 11
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
years where he saw active service in the Gulf
in broader markets.
Andrew was instrumental in the successful
acquisition and integration of the original
pre-existing Group portfolio, led the Company
through the IPO, and planned and negotiated
the acquisition of the Southern Cross portfolio in
2016. He has led the company in its growth from
a single centre in 1996 to over 200 centres today
and has been primarily responsible for charting
its strategy over that period.
Corporate Counsel and Company Secretary at
Rio Tinto Coal Australia, prior to joining National
Storage. Claire has also worked in corporate
compliance with the Australian Securities and
Investments Commission. Claire is a Graduate of
the Australian Institute of Company Directors and
a Fellow of the Governance Institute of Australia.
Company Directors.
War and was awarded the Meritorious Unit
Citation (issued for outstanding service in warlike
operations), the Australian Active Service Medal,
and the Kuwait Liberation Medal, among others.
Annual Report 2023
27
CORPORATE
GOVERNANCE
SUSTAINABILITY
This year will see the release of National Storage’s
seventh stand-alone sustainability report. The report
is expected to be released in October 2023, 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 four sustainability
pillars being strategy, environment, people and
governance. Further, the environmental, social and
governance aspects of the organisation will be reported
and sustainability targets 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.
PENRITH, NSW
Annual Report 2023
29
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(3)
Portfolio Valuation Uplift
Acquisitions / Centres(3,4)
Net Lettable Area (NLA) (sqm)
Balance Sheet
Total Assets(5)
Debt drawn(5)
Interest Rate Hedges(5)
Gearing
Weighted average cost of debt (Inc swaps)
Weighted average debt tenor (years)
Net Tangible Assets (NTA)
FY23
FY22
Change
$330.0m
$320.4m
25.75cps
$141.8m
11.5cps
$188.3m
11.0cps
$278.9m
$620.6m
51.71cps
$126.5m
10.6cps
$165.8m
10.0cps
At June
2023
233/1 (234)
85.0%
$270
5.91%
$4.29b
$213m
$120m/11
1,280,000
At June
2022
222/4 (226)
88.5%
$260
5.86%
$3.73b
$532m
$171m/15
1,180,000
At June
2023
$4.58b
$947m
$346m
20%
4.94%
3.5
$2.48
At June
2022
$4.05b
$975m
$360m
23%
2.75%
3.3
$2.34
18%
(48%)
(50%)
12%
8.5%
14%
10%
Change
11/(3) (8)
(3.5%)
3.6%
(0.05%)
15%
($319m)
($51m)/(4)
8%
Change
13%
($28m)
($14m)
(3%)
2.19%
0.2
6%
PRINCIPAL ACTIVITIES
Listed on the ASX in December 2013, NSR’s Vision is “To be a world leader in the provision of innovative and
sustainable self-storage solutions”. NSR is the largest self-storage owner/operator across Australia and New
Zealand, providing tailored storage solutions to approximately 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 236 centres at the date of this Directors’ Report.
Net Lettable Area (NLA) growth in built capacity is also achieved through development, expansion and
redevelopment with 4 newly constructed and expanded storage centres delivered during the Reporting
Period adding 20,200m2 of NLA and a further 45 projects in various stages of design, construction and delivery.
NSR now manages approximately 120,000 storage units across approximately 1.3 million square metres of NLA
in Australia and New Zealand. NSR’s storage centres have the largest average NLA per centre of its listed
Australian peers at 5,500m2 per centre, providing greater scope for centre profitability and better economies
of scale.
The value of Investment Properties(5) on NSR’s balance sheet has increased by 15% during the Reporting Period
to $4.29 billion as at 30 June 2023.
Of the 236 self-storage properties in the NSR portfolio at the date of this report, ownership is as follows:
•
•
•
223 self-storage centres owned by NSPT group (Freehold Centres)
12 self-storage centres operated as long-term leasehold centres (Leasehold Centres)
1 third party managed centre
1 Underlying earnings is a non-IFRS measure (unaudited), see table within Operating Results for reconciliation
2 Group – Australia and New Zealand (195 centres)
Australia – 169 centres as at 30 June 2021 (excluding Wine Ark and let-up centres)
New Zealand – 26 centres as at 30 June 2022 (excluding let-up centres)
3 Investment properties net of lease liability
4 Excluding transaction costs
5 NZD/AUD exchange rate of 1.08746
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
31
31
Annual Report 2023
During the Reporting Period, NSR converted one of its Leasehold Centres to a Freehold Centre by acquiring
the underlying freehold property interest from the former owner. The ownership of both the business and the
freehold of this centre now sits with NSR.
NSR has refined its “Four Pillar” growth strategy during the year, combining the “Acquisitions” and
“Development and Expansions” Pillars and adding “Sustainability” as the new Fourth Pillar. The Sustainability
Pillar emphasises NSR’s commitment to sustainability through a comprehensive Environmental, Social and
Governance framework.
BUSINESS STRATEGY
NSR’s objective is to deliver investors consistent 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 NSR’s business are:
• Organic Growth - NSR achieves organic growth through a combination of occupancy and rate
increases assessed on an individual centre basis
• Acquisitions, Development and Expansion - NSR has executed over 165 high-quality acquisitions since its
IPO in December 2013 – a growth rate unmatched in the Australasian market. 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
•
• Sustainability – through NSR’s comprehensive Environmental, Social and Governance framework, NSR
focuses on creating trust and confidence that we are delivering sustainable outcomes for our
stakeholders and the environment.
Further details on these key business drivers can be found elsewhere in the NSR 2023 Annual Report and NSR’s
Sustainability Report.
REVIEW AND RESULTS OF OPERATIONS
The Financial Statements of NSR are prepared in compliance with Australian Accounting Standards and the
requirements of the Corporations Act 2001 (Cth).
OPERATING RESULTS
IFRS Profit after tax for the Reporting Period was $320.4 million delivering IFRS EPS of 25.8 cents per stapled
security. The exceptional operating performance of the portfolio for the Reporting Period saw underlying
earnings increase by 12.1% to $141.8 million.
NSR achieved underlying earnings per stapled security of 11.5cps for the 2023 financial year, an increase of
8.5% over the previous 12 months. This result was driven by an 18% increase in total revenue to $330 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 has remained at high levels, finishing the
year at 85.0%, providing further upside for growth as NSR is well positioned to capitalise on the future growth in
the industry. Strong growth in Group rate of 8.0% to $319/m2 helped deliver Group REVPAM growth of 3.6% to
270/m2. REVPAM growth was strongest across Australia (+4.2%) with New Zealand reducing slightly by 1.1% as
a result of the impact of the tougher New Zealand economic conditions. Let-Up centres (those recently built
or expanded) filled strongly with approximately 20,000m2 of new NLA filled during the Reporting Period and an
additional 20,100m2 of built NLA added to the portfolio.
The impact on operations due to economic uncertainties and higher interest rates remain relatively modest.
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
Plus restructuring 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 20)
Underlying earnings per stapled security
FY23
$320.4
$13.8
-
$5.4
($189.4)
($8.4)
$141.8
1,236,914,113
11.5cps
FY22
$620.6
$10.2
$4.4
$7.8
($509.5)
($7.0)
$126.5
1,189,922,871
10.6cps
CASH MANAGEMENT
Cash and cash equivalents as at 30 June 2023 were $67.3 million compared to $83.7 million at 30 June 2022.
Subsequent to 30 June 2023, the cash balance has been utilised to facilitate further acquisitions and the
upcoming payment of the distribution on 5 September 2023. Net operating cashflow for the year increased
14% to $188.3 million (2022: $165.8 million).
An interim distribution of 5.5 cents per stapled security ($66.0 million) was paid on 1 March 2023 with an
estimated final distribution of 5.5 cents per stapled security ($74.2 million) declared on 21 June 2023, to be paid
on 5 September 2023. This totals a full year distribution of 11.0 cents per stapled security, against underlying
earnings per security of 11.5 cents, representing a payout ratio of 96%, 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 2022 interim distribution approximately 25% of eligible securityholders (by number of
securities) elected to receive their distributions as securities totalling approximately $16.5 million. The DRP price
was set at $2.3099 which resulted in 7,129,077 new securities being issued.
The June 2023 final distribution has seen approximately 35% of eligible securityholders (by number of securities)
elect to receive their distributions as securities totalling approximately $25.7 million. The DRP price was set at
$2.1555 which will result in approximately 11,934,000 new securities being issued.
NSR further strengthened its balance sheet during the year by way of a highly successful capital raising
undertaken in March 2023. NSR raised $300 million through an institutional placement, plus a further $40 million
by way of a security purchase plan (SPP) to retail securityholders. Both the institutional placement and SPP
were heavily oversubscribed and were undertaken at a modest 4% discount to NSR’s last close immediately
prior to the announcement of the institutional placement. This raising has significantly bolstered NSR’s balance
sheet and reduced NSR’s gearing to historically low levels in these uncertain times.
NSR actively manages its debt facilities to ensure it has adequate investment capacity to fund future
acquisitions, developments and working capital requirements. During the year ended 30 June 2023, NSR
extended and improved both the headroom, scope and tenor of its debt facilities. In June 2023, NSR
announced a substantial new syndicated term debt facility involving 18 new and existing banks, raising $400
million equally split between five and seven year maturities. This debt was competitively priced and was
heavily oversubscribed, demonstrating the relative strength and attractiveness of NSR’s position from a lending
perspective. NSR has since improved its hedge profile, and secured and extended additional new debt
facilities, providing it with over $820 million of available funding, and well over $1 billion of headroom before it
reaches the upper end of its targeted gearing range.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
32
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
33
33
Annual Report 2023
As at the Reporting Date the Consolidated Group’s borrowing facilities are AUD $1,410 million and NZD $207
million, with AUD equivalent of approximately $670 million undrawn and available. NSR’s weighted average
debt tenor as at the Reporting Date has increased to 3.5 years (30 June 2022: 3.3 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 2023 was 20% 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 utilises interest rate derivatives 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 $346 million were in place with
expiry dates ranging from 0.25 years to 4.00 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 best-in-sector 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 10 new storage centres, the freehold of one
previously leasehold storage centre and 22 development sites acquired during the Reporting Period, totalling
$234 million. Since the Reporting Date to the date of this Directors’ Report, NSR has settled two storage centre
centres, two development sites, and purchased the freehold of an existing leasehold centre, for total
consideration of $45.3m.
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 eased slightly by 5 basis points to
5.91% and the value of the 30 June 2022 portfolio increased by $213 million, with the majority of this uplift
driven by improved operating performance. This contributed to the 6% increase in NTA which now sits at $2.48
per stapled security, up from $2.34 per stapled security in June 2022.
Acquisitions for the Year Ended 30 June 2023
Region
New South Wales
Queensland
Victoria
Western Australia
New Zealand
Total
Development Sites
Acquisition of Freehold
Total
NLA
(m2)
15,300
6,200
4,000
18,700
3,600
47,800
Number of
Centres
2
1
2
3
2
10
22
1
33
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 and commenced
trading in January 2022. During the Reporting Period NSR acquired the Moorooka self-storage facility.
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, internally managed, 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, overlayed with
prudent cost control;
• 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;
technology and innovation – harnessing new technology, innovation and AI to bring further
efficiencies and economies of scale to NSR’s existing business model: and
Sustainability through NSR’s comprehensive Environmental, Social and Governance framework, NSR
focuses on delivery outcomes that are sustainable, for investors, employees, partners and the
environment, while maximising returns for its stakeholders.
•
•
DIVIDENDS AND DISTRIBUTIONS
NSR has paid or declared distributions totalling 11.0 cents per stapled security for the Reporting Period,
representing 96% of underlying earnings per stapled security of 11.5 cents:
• An estimated final distribution of 5.5 cents per stapled security for the 6 months to 30 June 2023. The
distribution is expected to be paid on 5 September 2023 and is expected to contain a tax deferred
component.
• An interim distribution of 5.5 cents per stapled security for the period 1 July 2022 to 31 December 2022
which was paid on 1 March 2023 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.
RISK MANAGEMENT
NSR is committed to maintaining a robust system of risk oversight, management, and internal controls, fostering
an environment where effective risk management practices are deeply ingrained within our business. We
remain committed to proactively and efficiently managing risks throughout the organisation to instil
confidence in our Board and other stakeholders.
The Board of Directors holds the responsibility for ensuring the efficacy of NSR's risk management framework,
which assesses and addresses risks concerning operational, regulatory, reputation, and financial aspects
impacting the business.
This framework establishes the basis and protocols for designing, implementing, monitoring, reviewing, and
continuously improving risk management throughout the organisation, aligning with the principles outlined in
the ASX Corporate Governance Principles and Recommendations (Fourth Edition) and incorporating
guidelines from the Australian Standard AS/NZS ISO 31000:2018 Risk management – Principles and guidelines.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
34
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
35
35
Annual Report 2023
The Risk Committee (since amalgamated with the Audit Committee to form the Audit and Risk Committee
effective 1 July 2023) supports the Board in overseeing the effectiveness of NSR’s risk management system by
reviewing compliance in areas identified as particularly sensitive to risk. The Committee Charter is available to
view on our investor website: nationalstorageinvest.com.au/governance/.
The Board has entrusted the Managing Director with overall operational responsibility for the risk management
function. The Managing Director receives support from the Executive Management Team, with the Chief
Financial Officer overseeing financial risks and financial reporting matters, and the Head of Legal and
Governance in her capacity as the Group’s Risk Officer handling the administration of the risk management
function.
Each department assumes responsibility for identifying and managing their respective risks. To promote
consistency in capturing and reporting risks, NSR operates an enterprise-wide risk management system across
the Group.
During FY23, NSR was met by variable economic conditions, interest rate volatility, and emerging regulatory
and policy changes. We continued to consider both our operational and responsible entity functions in
applying NSR’s eleven risk management principles when communicating, identifying, analysing, evaluating,
and treating risks and opportunities across the business. For further detail on our principles, please refer to our
Risk Management Policy available on our investor website: nationalstorageinvest.com.au/governance/.
Moving forward, we remain steadfast in our commitment to positioning NSR for enduring success by promptly
addressing risks that could impede the realisation of our strategic objectives.
KEY RISKS AND OPPORTUNITIES
A number of the risks and opportunities faced by NSR and how NSR responds to these risks and opportunities
are set out below. These are not the only risks and opportunities associated with NSR and are not in order of
importance.
Key Risks and Opportunities
How NSR is responding
Strategic and Financial Performance
The performance of our business is
subject to various internal and
external factors, which are addressed
and mitigated through the
establishment and delivery against
effective strategic goals, regular and
systemic monitoring and
measurement of performance, and
appropriate responses to changing
economic conditions
Environmental and Climate Change
NSR’s long-term commitment to
limiting its environmental impacts,
enhancing social sustainability, and
maintaining good governance (ESG)
which is demonstrated by how we
address potential risks and
opportunities through our centre
operations, stakeholder engagement,
and overall management
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Continual strategy oversight and development by the Board,
Managing Director, and Executive Management Team
Diverse centre portfolio located across Australia and New
Zealand, providing a range of storage offerings to different
customer types
An acquisitions and development pipeline aimed at
optimising asset returns and upholding asset quality
Constant monitoring of the market to ensure pricing and
terms remain competitive
A well-structured investment authorisation procedure
Considerate management of customer relationships
Highly developed marketing and management systems in
place to generate new customer enquiries and maximise
conversion and maintain and build occupancy
Active assets life cycle planning, asset management,
refurbishment programs and maintenance activity
Methodical valuation process
Prudent capital management
Continual market analysis and monitoring
Active risk management
Transparency and communication with securityholders and
stakeholders
Sustainable practices and initiatives
Comprehensive insurance coverage
Developing a strategy towards carbon-neutrality
Re-assessment of sustainability materiality matrix, at least
annually
Dedicated ESG Committee implementing environmental and
climate related risk mitigation strategies,
Regular review process for centres to ensure such impacts or
their likelihood is mitigated where possible
Comprehensive Disaster Recovery and Business Continuity
Plan and procedures
Active engagement with stakeholders on ESG matters,
Key Risks and Opportunities
How NSR is responding
Economic and market conditions
Changing rates of economic growth
and market activity can impact
Group performance, as can
changing consumer practices and
trends, including the housing market,
population and migration growth,
unemployment, wage growth, the
rate of inflation, and consumer
sentiment
Capital Management
Maintaining a strong and appropriate
capital structure underpins NSR’s
ability to deliver on its strategy and
meet its objectives. The importance of
appropriate capital management is
reflected in NSR’s capital structure,
which is conservative, well diversified
and has appropriate levels of
headroom and liquidity
Acquisitions
The expansion of our portfolio
footprint within strategic locations
provides economies of scale and
increases our storage offerings to
customers and promotes further
brand awareness
Developments
By considering the risks related to the
terms of the transaction at the time as
well as the prevailing micro and
macro-economic environment, our
development pipeline continues to
provide NSR with new, purpose built,
high quality self-storage assets that
expand our portfolio offerings and
meeting our sustainability criteria
Technology, Cyber and Data Security
Our use of advanced cyber security
systems, industry specific processes,
and experienced consultants enables
us to mitigate the risk of data loss or
damage, legal exposure, and cyber-
attacks, and further enhance the
effectiveness of these mitigation
measures
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Climate related-risks and potential financial impacts assessed
within NSR’s enterprise-wide Risk Management Framework
Alignment with the Task Force on Climate-related Financial
Disclosures' recommendations
Commitment to combat modern slavery
Monitoring changing regulatory environment
Maintaining a nimble and proactive business approach
Disciplined cost management
Proactive monitoring of the economy and industry
Ongoing economic and business research
Standing strategic consideration in all investment decisions
Maintaining an appropriate capital structure commensurate
with an investment grade balance sheet, ensuring the
structure meets the business needs and can withstand
changing economic or financial conditions
Managing liquidity and maintaining a debt structure which is
appropriately diversified by counterparty, tenor, funding
sources, and debt instrument
Managing gearing and monitoring financial covenants
Proactive monitoring and approach to interest rate risk
management, including hedging
Appropriate limits on foreign currency exposure
Active management and limits of counterparty credit risk
exposures related to borrowing/funding, derivatives/hedges,
and surplus cash investments
Strong compliance program
Dedicated experienced Acquisitions Team
Maintenance of long-standing relationships with key service
providers
Thorough acquisition due diligence and assessment process
Dedicated Due Diligence Committee to assess the
appropriateness of assets, with the Board ultimately
responsible for approving any proposal
A disciplined and comprehensive due diligence, feasibility,
sensitivity analysis and legal review approval process
Strategic tender, procurement, and consultant
engagements
Experienced management and sufficiently resourced and
skilled internal team
Thorough systems and processes with regular reviews,
optimisation, and interdepartmental accountability
Implementation of a clearly articulated development risk
tolerance framework
Appropriately skilled and experienced Board, Audit and Risk
Committee, and Cyber Security Steering Committee with
oversight of cyber and data security strategy
Comprehensive Cyber Security Program, including cyber
security risk management and treatments
External Chief Information Security Officer (CISO)
Regular review and development of policies, guidelines, and
procedures addressing new and emerging cyber risks
Disaster Recovery and Business Continuity Plan
Monitoring, penetration testing, phishing exercises, additional
security testing and staff education program
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
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DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
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Annual Report 2023
Key Risks and Opportunities
How NSR is responding
Health, Safety and Wellbeing
Our alignment with health and safety
standards and regulations safeguards
our employees, our customers and
our contractors from potential health
and safety risks, in accordance with
our safety vision of ‘no harm to
anyone at any time’
Compliance and regulatory
Ensuring NSR maintains best practice
governance and compliance
practices
Personnel
Our people are at the heart of our
business hence why we promote a
conducive environment that prioritises
the safety and well-being of our
employees, customers, and
contractors at our centres, while
proactively addressing events that
may pose risks to business continuity
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Regular updates to technology hardware and software
Risk assessments and ongoing alignment with ISO 27001
Internal and external audits
Comprehensive health and safety management systems.
Active monitoring of health and safety best practices and
developing regulations
Ongoing scheduled training of our employees
Continual re-assessment and annual testing of our Disaster
Recovery and Business Continuity Plan
Experienced Executive Management Team, supported by
internal expertise
Active management of comprehensive Compliance Plan, in
accordance with the requirements of the Corporations Act
2001 (Cth)
Continuous monitoring of developments in regulatory
environment
Internal committees to monitor key compliance risks
Scheduled annual review and enforcement of all
compliance policies
Regular compliance reporting, internal audits and annual
external compliance audit program
Ongoing training and continuous professional development
Our core values underpin all aspects of our business, with
new starters trained during the induction process and existing
staff trained on an annual basis
Stable, committed, skilled and experienced Executive
Management Team, with ongoing succession and strategic
workforce planning
Dedicated People and Culture team conducting
benchmarking to ensure competitive remuneration,
supported by external advisors when required
Diversity and inclusion targets
Evolving wellness offerings
Quarterly check-ins for all employees
Annual employee engagement survey
Ongoing monitoring of risk culture and conduct
Annual reporting to the Workplace Gender Equality Agency
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 (Retired 26 October 2022)
1 July 2022
Non-Executive Director
Inmaculada Beaumont
1 July 2022
Non-Executive Director
Claire Fidler
18 July 2017
Executive Director
NATIONAL STORAGE FINANCIAL SERVICES LIMITED (NSFL)
The Directors of NSFL in office during the Reporting Period and at the date of this Directors’ Report:
NAME
Anthony Keane
Andrew Catsoulis
APPOINTED
18 July 2014
18 July 2014
POSITION
Non-Executive Chairman
Managing Director
Howard Brenchley
8 September 2015
Non-Executive Director
Steven Leigh
Scott Smith
8 September 2015
Non-Executive Director (Retired 26 October 2022)
1 July 2022
Non-Executive Director
Inmaculada Beaumont
1 July 2022
Non-Executive Director
Claire Fidler
18 July 2017
Executive Director
DIRECTORS’ QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
Boards of National Storage Holdings Limited and National Storage Financial Services Limited
Anthony Keane, Independent Non-executive Chairman
BSc (Maths), Grad Dip Corp Fin, 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.
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 Chair of the Nomination Committee and is a member of the Audit and Risk Committee and
Remuneration Committee.
Andrew Catsoulis, Managing Director
BA, LLB, Grad Dip Proj Mgmt (Hons)
As founder of the National Storage business, Andrew has over 25 years’ of specific self-storage industry
expertise including in the areas of 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. 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.
Since 1998, Howard has been a director (or the director of the responsible entity) of numerous listed and
unlisted real estate investment vehicles.
Howard is Chair of the Audit and Risk Committee and is a member of the Nomination and Remuneration
Committees.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
38
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
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Annual Report 2023
Inmaculada (Inma) Beaumont, Independent Non-Executive Director
BA (Mathematics), BA Hons (Economics and Commerce), FCCA, GAICD
Inma brings her commercial acumen and diverse range of experience to the NSR board. As a senior finance
executive, she has had leadership roles spanning Financial Control, Internal Audit and Risk Management within
top multinationals in Energy, FMCG and Banking. In addition, she has governance experience as Chair of
Finance, Audit and Risk Committees across several boards where she has a record of delivering revenue
growth. More recently, she has led marketing, public relations and stakeholder engagement teams. Inma is
culturally and linguistically diverse and brings a different perspective to the board of NSR.
Inma is currently a non-executive director of UN Women Australia. 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, Nomination, and Remuneration Committees.
Scott Smith, Independent Non-Executive Director
BBus (Marketing)
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 telecommunication
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 leadership positions. 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 continued in the senior leadership team, taking over the role of CEO of OTW in February 2020. OTW
has subsequently been sold to Aussie Broadband (ASX: ABB).
Presently, Scott serves as a consultant in the technology industry and is on the Advisory Board of Heal Inc, a
San Francisco-based software company specialising in AiOps and Machine Learning capabilities. Additionally,
he is actively involved in various Corporate Advisory engagements and early-stage technology investments.
Scott is Chair of the Remuneration Committee and is a member of the Audit and Risk Committee and
Nomination Committee.
Claire Fidler, Executive Director
LLB (Hons), B Bus (Int), GAICD, FGIA
Claire was appointed an Executive Director in July 2017 and has been the Company Secretary of National
Storage since November 2015. She was appointed Head of Legal & Governance in June 2020 and oversees
the legal, governance and risk functions of the organisation. Claire holds legal and international business
qualifications and is admitted as a solicitor of the Supreme Court of Queensland. Claire has twenty years’
experience in corporate and commercial law, both in private practice and in-house.
She practiced in the litigation, resources, and corporate areas of two large law firms and as Corporate
Counsel and Company Secretary at Rio Tinto Coal Australia, prior to joining National Storage. Claire has also
worked in corporate compliance with the Australian Securities and Investments Commission. Claire is a
Graduate of the Australian Institute of Company Directors and a Fellow of the Governance Institute of
Australia.
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
COMPANY
PERIOD OF DIRECTORSHIP
Howard Brenchley
APN Property Group (ASX:APD)
1998 – 13/08/2021
Dexus Asset Management Limited
previously known as APN Funds
Management Limited, responsible entity
for:
Dexus Industria REIT (ASX:DXI) previously
known as APN Industria REIT (ASX:ADI)
Dexus Convenience Retail REIT (ASX:DXC)
previously known as APN Convenience
Retail REIT (ASX:AQR)
EMvision Medical Devices Ltd (ASX:EMV)
03/12/2013 - 17/10/2022
27/12/2017 - 17/10/2022
11/12/2018 – Current
Anthony Keane
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
40
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
Scott Smith
Inmaculada Beaumont
Claire Fidler
11,595
500,000
-
-
37,449
139,025
242,870
14,765,230
135,200
154,958
-
14,494
PERFORMANCE
RIGHTS
-
728,400
-
-
-
145,700
TOTAL
254,465
15,993,630
135,200
154,958
37,449
299,219
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
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Inma Beaumont
Scott Smith
Steven Leigh (retired
26/10/2022)
Claire Fidler
Notes:
12 (12)
12 (12)
12 (12)
11 (12)
12 (12)
5 (5)
12 (12)
6 (6)
-
6 (6)
6 (6)
6 (6)
2 (2)
-
8 (8)
-
8 (8)
6 (6)
6 (6)
3 (3)
-
5(5)
-
5 (5)
3 (3)
3 (3)
2 (2)
-
3 (3)
-
3 (3)
2 (2)
2 (2)
1 (1)
-
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, and Risk Committee
3.
4.
meetings by invitation.
The Audit Committee and the Risk Committee amalgamated to form the Audit and Risk Committee
effective 1 July 2023.
The Company has an Investment Committee Charter to govern an Investment Committee. The Board
has determined that at this time, the full Board will act as the Investment Committee and therefore
there are no separate Investment Committee meetings noted.
COMPANY SECRETARY
NATIONAL STORAGE HOLDINGS LIMITED
NAME
APPOINTMENT DATE
Claire Fidler
26 November 2015
NATIONAL STORAGE FINANCIAL SERVICES LIMITED
NAME
APPOINTMENT DATE
Claire Fidler
26 November 2015
Claire Fidler
LLB (Hons), B Bus (Int), GAICD, FGIA
Refer to page 26
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
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41
Annual Report 2023
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’s approach and corporate governance structure is the ASX Corporate
Governance Principles and Recommendations (Fourth Edition) (the “ASX Recommendations”). A statement
of the extent of NSR’s compliance with the ASX Recommendations can be viewed on the NSR website at
www.nationalstorageinvest.com.au/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 $1,665,364.
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.
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 good governance standards,
and meet the expectations of investors and other stakeholders. By linking the Short-Term Incentive (“STI”) and
Long-Term Incentive (“LTI”) (both “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 NSR’s 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.
FY23 PERFORMANCE AND REMUNERATION OUTCOMES
The FY23 year was another year of record performance for NSR. Despite challenging economic and market
conditions, NSR produced 8.5% underlying earnings growth to 11.5cps and declared a distribution of 11.0cps, 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 five for the 3 years to 30 June 2023, delivering 42% TSR over the period. Further detail on NSR’s
performance in FY23 has been set out on page 31. NSR’s long term success from both a yield and TSR
perspective is closely linked to the high levels of commitment and overall performance displayed by its
executive team.
REMUNERATION REVIEW AND FY24 CHANGES
The remuneration policy also aims to provide a platform for sustainable value creation for securityholders by
attracting, motivating, and retaining its quality KMP.
NSR’s remuneration framework has evolved over time and in response to stakeholder feedback, and uses the
following key objectives as the basis for the executive remuneration:
•
•
•
Increase the ‘at-risk’ component of total remuneration across the KMP;
Provide an increased alignment between KMP and securityholders’ interests by utilising equity-based
structures 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
•
During the reporting period, the Board engaged external remuneration consultants to conduct benchmarking
on executive KMP remuneration. As a result of this benchmarking exercise, increases to fixed remuneration
and “at-risk” were made for the MD, CFO and HoLG in recognition of their tenure, continued performance,
expansion of roles and duties as well as the significant growth in NSR’s market capitalisation. Commencing 1
July 2023, fixed remuneration will increase by 6.0% for the MD, the CFO by 7.6% and the HoLG by 10.5%.
Additionally, some minor increases in “at-risk” rewards were made to the executives’ total remuneration
packages to align with the market and comparator peers. This includes an increase in the MD’s LTI opportunity
to be a greater emphasis in the overall pay package. The MD’s STI and LTI opportunities were increased to
100% and 105% of fixed remuneration respectively (previously 95% and 95% of fixed remuneration). The CFO’s
STI and LTI opportunities were increased to 80% and 70% respectively (previously 70% and 70% of fixed
remuneration). The HoLG’s STI and LTI opportunities were increased to 65% and 55% respectively (previously
55% and 55% of fixed remuneration).
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.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
42
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
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Annual Report 2023
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
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Inmaculada Beaumont
Scott Smith
Claire Fidler
Steven Leigh
Independent Non-Executive Chairman
Executive Managing Director (“MD”)
Independent Non-Executive Director
Independent Non-Executive Director (Appointed 1 July 2022)
Independent Non-Executive Director (Appointed 1 July 2022)
Executive Director and Head of Legal & Governance (“HoLG”)
Independent Non-Executive Director (Retired 26 October 2022)
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 (FY24)
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
2023
o escrowed for 12 months
• 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
o Relative Total Shareholder Return
(rTSR)(ASX 200 A-REIT index
comparator group) – 70%
o Underlying Earnings per share (EPS) –
30%
Aligns executive remuneration with long-term
securityholder value
Link to
remuneration
principles
Assists attraction
and retention
through
competitive
remuneration
PAY MIX
The composition of total annual remuneration (TAR) for the year ending 30 June 2023 for KMP is detailed in the
table below.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
44
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
TFR
34.4%
41.2%
47.8%
STI
LTI
32.8%
29.4%
26.1%
32.8%
29.4%
26.1%
STI as %
of TFR
95.0%
70.0%
55.0%
LTI as %
of TFR
95.0%
70.0%
55.0%
The structure has been adjusted slightly as a result of the remuneration review, with an increased emphasis on
“at-risk” remuneration. The table below reflects the new structure and is consistent with NSR’s policy objectives
for executive TAR for the year commencing 1 July 2023 as outline above.
KMP
TFR
STI
LTI
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
32.8%
40.0%
45.5%
32.8%
32.0%
29.5%
34.4%
28.0%
25.0%
STI as %
of TFR
100%
80%
65%
LTI as %
of TFR
105%
70%
55%
NSR PERFORMANCE
NSR has a long and established track record of consistent growth in underlying earnings, net tangible assets
(NTA) and Investment Properties. Underlying earnings per stapled security (“EPS”) increased 8.5% in the 12
months to 30 June 2023 to a record high of 11.5cps, with underlying earnings increasing 12.1% to $141.8m. The
FY23 underlying EPS of 11.5cps exceeded the original EPS guidance of a minimum 5% growth (or 11.1cps)
increase and reflects NSR’s ongoing REVPAM growth, that has been achieved over the financial year. This
growth in EPS was achieved despite dilution from the significant capital raising and SPP of $340 million that was
undertaken during the year. Group REVPAM increased 3.6% to $270m2, consolidating the FY21 and FY22
increases, and establishing an opening FY24 REVPAM that provides an exceptional base from which to deliver
FY24 revenue growth. Rate per square metre achieved across the Group increased by 8.2% to $319m2 with 30
June 2023 Group occupancy of 85.0%. Occupancy across the 14 Let-up centres, being those centres that
have been recently developed or expanded and operating at the commencement of the period, increased
by 13.8% to 58.7%, with total occupancy across the portfolio now sitting at 81.8%.
Underlying Earnings
y
t
i
r
u
c
e
s
r
e
p
s
t
n
e
C
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
8.2
8.7
7.5
19.5
24.3
29.1
9.2
45.7
9.6
9.6
62.4
51.4
86.5
8.5
8.3
67.7
141.8
160.0
140.0
11.5
120.0
126.5
10.6
100.0
80.0
m
$
60.0
40.0
20.0
-
CY 14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Earnings Per Securuty
Underlying Earnings
NTA has increased by 6% during the year to $2.48 per stapled security, principally driven by improvements in
operational performance at an individual centre level, with the weighted average capitalisation rate
expanding moderately from 5.86% as at 30 June 2022 to 5.91% at 30 June 2023 with the uplift in valuation and
NTA being derived from improved operational performance of the assets. Capitalisation rates, supported by
independent third party valuations, are holding at similar levels to 30 June 2022 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 $561 million or 15% to $4.3 billion over the 12 months to 30
June 2023, with total assets now approaching $4.6b. These results have been achieved through the
disciplined management of NSR’s operations and the ongoing 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, along with a focus on sustainable business practices has been instrumental in
achieving this exceptional result.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
45
45
Annual Report 2023
5,000
4,000
m
$
'
3,000
2,000
1,000
0
Total Assets / NTA
2.34
2.48
1.63
1.65
1.89
1.51
1.34
1.00
1.11
1.14
CY14
FY15
FY16
FY17
FY18
FY19
Total Assets
FY20
NTA
FY21
FY22
FY23
2.80
2.40
2.00
1.60
1.20
0.80
0.40
-
y
t
i
r
u
c
e
s
r
e
p
$
NSR has executed on its successful growth strategy with a total of 33 acquisitions in FY23, including the
acquisition of 10 storage centres, the freehold of one previously leasehold storage centre and 22
development sites totalling $234 million. These acquisitions have been funded through a combination of the
significant capital raising and security purchase plan (SPP) of $340 million that was undertaken during the year,
as well as additional debt facilities which were successfully expanded and refinanced during the Reporting
Period. Delivery on development, expansion and redevelopment strategy has seen 45 projects in various
stages of design and construction. In addition, NSR has successfully completed 4 new developments and
expansion projects during the Reporting Period adding over 20,200m2 of NLA.
The highly successful $340 million capital raising was undertaken by way of an institutional placement for $300
million and security purchase plan for $40 million at a modest discount to last close immediately prior to the
raising of 4%. In addition, NSR successfully expanded and refinanced its debt facilities during the Reporting
Period to extend tenor, add diversity to funding sources and increase available facilities. This included NSR’s
first Syndicated Term Loan facility involving 16 new and existing banks, raising $400 million equally split between
five and seven year maturities. This debt was competitively priced and was heavily oversubscribed. NSR’s
independent credit rating was affirmed during the Reporting Period, supporting the unsecured debt platform,
providing greater flexibility and access to sources of debt funding. NSR’s gearing ratio at 30 June 2023
remained conservative at 20%, providing significant balance sheet capacity to fund NSR’s further growth. NSR
has a historically low level of gearing, which it believes to be a significant advantage and an important
consideration in these uncertain times.
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 11.0 cents per stapled security
an increase of 10.0%, on FY22, representing a payout ratio of 96%.
NSR was ranked number 5 out of 29 for Total Shareholder Return “TSR” (a combination of share price growth
and distributions received by securityholders) over the past three years to 30 June 2023, delivering TSR of 41.8%,
nearly double that of the ASX 200 A-REIT TSR of 23.7%. 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 an increasingly diverse user universe and high demand from a variety of sources has
underpinned the successful growth of the storage industry.
Total Shareholder Return - 3 Years to 30 June 2023
A-REIT 200
NSR
NSR share price closed on 30 June 2023 at $2.35, increasing 9.8% from $2.14 at 30 June 2022 with the market
capitalisation of NSR now exceeding $3.16 billion as at 30 June 2023.
NSR Stapled Security Price
$
2.90
2.70
2.50
2.30
2.10
1.90
1.70
1.50
1.30
1.10
4,000
3,500
3,000
2,500
2,000
m
$
'
1,500
1,000
500
-
J
u
l
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
S
e
p
2
2
D
e
c
2
2
M
a
r
2
3
J
u
n
2
3
Mkt Cap
Share Price
Security price performance over the period 1 July 2020 to 30 June 2023 has shown a 25% increase. This
compares to a increase of 9% for the ASX 200 A-REIT index and 21% for the broader ASX 200 Index over the
same period.
Relative Performance
1.80
1.60
1.40
1.20
1.00
0.80
0.60
Jul 20 Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 Dec 22 Mar 23 Jun 23
NSR
S&P/ASX 200 A-REIT
S&P/ASX 200
FY23 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 2023 in accordance
with the incentive program outlined in the 2022 Annual Report. The assessment criteria for the program and
performance against those criteria are outlined below. Incentives achieved for the year ended 30 June 2023
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 for FY23 in accordance with
the table below, in aggregate for all KMP.
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
STI as %
of TFR
STI
AMOUNT
95.0% $1,190,000
$470,000
70.0%
$260,000
55.0%
$1,920,000
LTI as %
of TFR
95.0%
70.0%
55.0%
TOTAL
LTI
AMOUNT
$1,050,000 $2,240,000
$870,000
$450,000
$1,640,000 $3,560,000
$400,000
$190,000
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Source: Bloomberg
Note 1: Assumes Dividends are re-invested in underlying security
Note 2: Excludes securities not listed for the entire year
The STI and LTI are payable via a combination of cash, scrip and performance rights. The STI is payable 70% in
cash and 30% in scrip, with the scrip price being set as the 30-day VWAP to 30 June 2022 (the commencement
of the STI period) to further align the with this “at-risk” component with securityholders. The LTI is payable 30% in
cash and 70% via the pervious issued FY23 performance rights. The maximum amounts payable are outlined in
the below.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
46
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
47
47
Annual Report 2023
KMP
STI
CASH ($)
STI
SCRIP ($)
SCRIP @
$2.2589
LTI
CASH ($)
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
$833,000
$329,000
$182,000
$1,344,000
$357,000
$141,000
$78,000
$576,000
158,042
62,420
34,531
254,993
$315,000
$120,000
$57,000
$492,000
LTI
PERFORMAN
CE RIGHTS ($)
$735,000
$280,000
$133,000
$1,148,000
PERFORMAN
CE RIGHTS
359,600
137,000
65,100
561,700
The STI and LTI hurdles included:
1. Underlying earnings equal to or exceeding 11.1 cents per security
2.
TSR over the three-year period to 30 June 2023 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 2022 to 30 June 2023.
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
STI
LTI
AMOUNT
$1,190,000
$470,000
$260,000
$1,920,000
%
EARNED
100.0%
100.0%
100.0%
100.0%
AMOUNT
$1,050,000
$400,000
$190,000
$1,640,000
%
EARNED
TOTAL
100.0% $2,240,000
$870,000
100.0%
100.0%
$450,000
100.0% $3,560,000
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 FY23 Outcomes
The assessment of the FY23 STI outcomes was considered against a predetermined set of assessment criteria.
The criteria utilised for assessing the MD’s FY23 STI were:
Element Weighting Metrics
Rationale
Achievement in FY23
Financial
70%
Underlying
Earnings of
11.1cps (10%
out
performance if
Underlying EPS
>11.1cps -
$11.5cps)
Implementation
of major
projects
Strategic
15%
Risk
management
Innovation &
enhancement
of processes
and procedures
Underlying EPS ensures
alignment to the
Consolidated Group’s
financial performance
and securityholders’
experience
Achievement: 100%
A record high Underlying EPS of
11.5cps was achieved over the
12-month performance period,
representing a year-on-year
growth of 8.5%
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
Achievement: 100%
The Board considered the
application of the stated strategy
in the assessment:
1. Organic Growth
Exceeded FY23 EPS
targets
2. Acquisitions
10 new storage centres,
the freehold of one
previously leasehold
storage centre
22 development sites
totalling $243 million
3. Developments
Completed four
developments adding
over 22,200m2 of NLA
Added 22 sites to the
development and
expansion pipeline
Technology and Innovation
WineArk customer
management system
upgrade completed
4.
Element Weighting Metrics
Rationale
Achievement in FY23
• Cyber security and PCI
compliance program
Individual
15%
Undertaking all
necessary
investor relations
activities
expected of an
ASX:200 listed
entity
Delivery of
timely and
accurate
management
reports
Maintenance
of a suitable
qualified
executive
team
Maintenance
of best practice
health, safety
environmental
practices
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: 100%
The Board considered the
following in assessing individual
KPIs for FY23:
• 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 – maintaining a
LITFR at or below the
industry benchmark was
achieved
•
• No reportable health,
safety or environmental
incidences during the
reporting period
The assessment of the FY23 LTI outcomes was considered against a predetermined set of assessment criteria.
The criteria utilised were:
Metric
Weighting
Vesting Schedule
Relative Total
Shareholder Return
(rTSR)
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
(EPS) Growth
30%
EPS growth achieved over the
performance period
10.0cps
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 five (82nd percentile) for TSR over the 3 year period to 30 June 2023,
resulting in 100% of the TSR component being payable. The Board also determined that the FY23 Earnings Per
Share (EPS) of 11.5cps satisfied that EPS component of the LTI, resulting in 100% of the EPS component being
payable.
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 through the vesting of
performance rights, with any unvested performance rights lapsing. Any performance rights vesting, given the
three-year assessment period, will be issued free of restrictions. The table below outlines the cash, scrip and
performance rights components of the FY23 STI and LTI. The scrip component will be calculated using the 30-
day VWAP to 30 June 2022 of $2.259.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
48
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
49
49
Annual Report 2023
STI Payable
KMP
MAX STI
$
STI EARNED
$
%
CASH $
STI PAYABLE
SCRIP $
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
1,190,000
470,000
260,000
1,920,000
100.0%
100.0%
100.0%
100.0%
1,190,000
470,000
260,000
1,920,000
833,000
329,000
182,000
1,344,000
357,000
141,000
78,000
576,000
SCRIP @
$2.2589
158,042
62,420
34,531
254,993
LTI Payable
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
Total STI and LTI Payable
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
MAX LTI
CASH
($)
315,000
120,000
57,000
492,000
RIGHTS
(No.)
359,600
137,000
65,100
561,700
LTI EARNED
%
CASH $
100.0%
100.0%
100.0%
100.0%
315,000
120,000
57,000
492,000
LTI PAYABLE
RIGHTS
VESTED
359,600
137,000
65,100
561,700
RIGHTS
LAPSED
-
-
-
-
CASH
($)
1,148,000
449,000
239,000
1,836,000
SCRIP @
$2.2589
158,042
62,420
34,531
254,993
RIGHTS
VESTED
359,600
137,000
65,100
561,700
RIGHTS
LAPSED
-
-
-
-
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 FY24 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. This growth involves the
evolution of NSR’s existing strategies as well as NSR embracing new strategies, designed to build on its existing
market and storage sector leadership as well as increasing its competitiveness in all areas of the business
including technological innovation and advancement. The executive team has consistently demonstrated its
willingness to make decisions in the best long-term strategic, corporate and securityholder interests of NSR.
Independent remuneration consultant SW Corporate was engaged during the Reporting Period to provide
benchmarking against the ASX200 A-REIT index and ASX75-125. Previous benchmarking had focused on
comparisons against the ASX200 A-REIT index and ASX100-200, however given NSR is approaching inclusion in
the ASX100 it was determined that the ASX75-125 would be a more representative and appropriate group for
comparison.
The Board has elected to position TFR and TR within the 25th to 50th percentile range of the comparator group.
In general, the review concluded that against the ASX75-125 comparator group, incentive opportunity levels,
particularly the STI, are generally low against comparable roles, reducing the overall competitiveness of the
total package, despite NSR’s overall performance which is at the upper end of its comparator group. As a
result, TR for all roles is below the desired positioning of the median. Against NSR’s REIT peers however, TFR and
TR is more competitive against this group, however low STI opportunity persists.
After considering the SW Corporate report, and all other internal and external factors, the Board determined
that the aggregate fixed remuneration for the KMP for the year commencing 1 July 2023 will increase as per
the table below.
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
FY23 TFR
$1,250,000
$660,000
$475,000
FY24 TFR
$1,325,000
$710,000
$525,000
% CHANGE
6.0%
7.6%
10.5%
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
ASX75-125.
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
PERCENTAGE
OF STI
CRITERIA
Financial
Financial – Out
Performance*
Individual KPI’s
Strategic
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 $2,234,250 for FY24 in aggregate for all KMP.
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
MAX STI
FY23
$
1,190,000
470,000
260,000
1,920,000
MAX STI
FY24
$
1,325,000
568,000
341,250
2,234,250
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 at least 5% per annum.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
50
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
51
51
Annual Report 2023
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%
3 YEAR PERIOD ENDING
REFERENCE YEAR
EPS
TARGET
30 June 2024
30 June 2025
30 June 2026
30 June 2021
30 June 2022
30 June 2023
8.5
10.6
11.5
10.5
12.3
13.3
3 YEAR
GROWTH
24%
16%
16%
The minimum LTI payable is zero and maximum LTI payable is $2,177,000 for FY24 in aggregate for all KMP.
KMP
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
Total
MAX LTI
FY23 ($)
1,187,500
462,000
261,250
1,910,750
MAX LTI
FY24 ($)
1,391,250
497,000
288,750
2,177,000
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.
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.
LTI payment structure
Any LTI earned for the Reporting Period, and future reporting periods, will be paid in the form of 30% cash and
70% equity through the issue of performance rights. 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
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
52
liabilities. The quantum of equity will be determined using the 30-day VWAP up to 30 June in the relevant year
that the performance rights are issued. The Board will review the use of cash as part of the LTI on a regular
basis.
The equity component is 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
2023 and ending 30 June 2026 is based off the approved FY24 LTI using the 30-day VWAP to 30 June 2023 as
the issue price. As such, performance rights will be issued based on a calculation price of $2.4044 with the
number of rights to be issued (rounded up to the nearest 100) included in the table below.
KMP
LTI
AVAILABLE
$
EQUITY
COMPONENT
70%
PERFORMANCE
RIGHTS VESTING
30 JUNE 2026
Andrew Catsoulis (MD)
Stuart Owen (CFO)
Claire Fidler (HoLG)
1,391,250
497,000
288,750
973,875
347,900
202,125
405,100
144,700
84,100
The LTI EPS target for year ending 30 June 2026 has been set at 13.3 cents per stapled security, representing
5.0% compound growth over the FY23 EPS of 11.5 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 FY23.
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 42 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.
NSH non-executive directors’ fees and Committee fees currently agreed to be paid by NSH effective from 1
July 2023 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
REMUNERATION AND
NOMINATION COMMITTEE FEES
Anthony Keanea.
Howard Brenchley b.
lnmaculada Beaumont
Scott Smith c.
145,000
145,000
145,000
$35,000
$15,000
$15,000
$15,000
$15,000
$30,000
TOTAL
$350,000
$195,000
$175,000
$190,000
a. Chairman and Chair of the Nomination Committee and receives a single fee for all roles
b. Chair of the Audit and Risk Committee
c. Chair of the Remuneration Committees
Where applicable, NSH non-executive directors’ fees include superannuation at the required statutory rate.
Service agreements
Remuneration and other terms of employment for the KMP senior executives are formalised in service
agreements. The service agreements specify the components of remuneration, benefits and notice periods.
Termination benefits are designed to fall within the limits relevant to the Corporations Act 2001 (Cth) such that
they do not require securityholder approval. However, in addition, all executive contracts make any such
benefits subject to the Corporations Act 2001 (Cth), all other applicable laws and where necessary
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
53
53
Annual Report 2023
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 2023 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
$1,325,000
Stuart Owen
6 months
No fixed term
6 months
$710,000
Claire Fidler
No fixed term
6 months
$525,000
• 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 2023. They are reviewed annually by the
Remuneration Committee. Actual salaries paid in the year ended 30 June 2023 are shown on page 58.
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.
•
•
•
•
•
•
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; and
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 has made changes to the
remuneration framework, and in particular the at-risk components of the structure, from 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 FY23 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
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 four independent non-executive directors and is chaired by Scott
Smith. The Remuneration Committee met five times during the Reporting Period.
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.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
54
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023
55
55
Annual Report 2023
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57
Annual Report 2023
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
2022
GRANTED AS
REMUNERATIO
N
ON
EXERCISE
OF OPTIONS
ACQUIRED
BALANCE
30 JUNE
2023
Directors of NSH
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Scott Smith(1)
Inmaculada Beaumont(1)
Steven Leigh(2)
Claire Fidler
242,016
14,787,952
122,751
42,509
-
233,068
69,406
-
464,829
-
-
-
-
84,113
Executives of NSH
Stuart Owen
Total
225,773
15,723,475
177,079
726,021
-
-
-
-
-
-
-
-
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12,449
12,449
12,449
112,449
37,449
-
-
254,465
15,265,230
135,200
154,958
37,449
-
153,519
12,449
199,694
415,301
16,416,122
1. Appointed during the year. 30 June 2022 balance reflects balance on appointment.
2. Mr Leigh ceased being a Director effective 26 October 2022
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 2022
GRANTED AS
REMUNERATION
VESTED
LAPSED
BALANCE
30 JUNE 2023
Directors of NSH
Anthony Keane
Andrew Catsoulis
Howard Brenchley
Scott Smith
Inmaculada Beaumont
Steven Leigh*
Claire Fidler
-
719,200
-
-
-
-
130,200
-
368,800
-
-
-
-
80,600
Executives of NSH
Stuart Owen
Total
* Mr Leigh ceased being a Director effective 26 October 2022
274,000
1,123,400
145,700
595,100
-
359,600
-
-
-
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65,100
137,000
561,700
-
-
-
-
-
-
-
-
-
-
728,400
-
-
-
-
145,700
282,700
1,156,800
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 63.
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 $70,716 for the provision of Category 4 fees for other
services conducted during the financial year. Refer Note 22 of the financial statements.
FEES PAID TO AND INTERESTS HELD IN 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 18 to the financial statements.
No fees were paid to the Directors of the Responsible Entity during the year out of NSPT.
INTERESTS IN NSPT
The movement in units on issue by NSPT during the year is set out in Note 14 to the financial statements.
This Directors’ Report is made on 23 August 2023 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.
Anthony Keane
Non-Executive Chairman
National Storage Holdings Limited
Brisbane
Andrew Catsoulis
Managing Director
National Storage Holdings Limited
Brisbane
RELATED PARTY TRANSACTIONS
There were no other transactions with KMP and their related parties during the reporting period.
SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
For the period from 1 July 2023 to the date of this report the Group settled two storage centre investment
properties, two development sites, and purchased the freehold of a leasehold component of an existing
centre for total consideration of $45.3m.
On 22 August 2023, the Group secured $150m of new senior unsecured debt facilities, comprised of a $50m
three-year facility and a $100m five-year facility. In addition, the Group extended $30m of existing undrawn
facilities maturing September 2023 for a period of one year.
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.
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 202
58
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 202
59
59
Annual Report 2023
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
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 2023, I declare to the best of my knowledge
and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
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
Wade Hansen
Partner
Brisbane
23 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
61
Annual Report 2023
Financial
STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2023
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 (loss) / profit from joint ventures and associates
Gain from fair value adjustments
Restructuring and other non-recurring costs
Foreign exchange gains / (losses)
Notes
5
7
6
6
7
13
8
2023
$'000
312,735
14,647
2,654
330,036
(58,163)
(37,840)
(8,908)
(6,585)
(7,911)
(17,835)
(47,960)
(23)
188,011
-
1,395
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)
Profit before income tax
334,217
630,856
Income tax expense
Profit after tax
Profit for the year attributable to:
Members of National Storage Holdings Limited
Non-controlling interest (unitholders of NSPT)
9
(13,817)
(10,238)
320,400
620,618
37,304
283,096
320,400
27,220
593,398
620,618
Basic earnings per stapled security (cents)
Diluted earnings per stapled security (cents)
20
20
25.79
25.75
51.79
51.71
The above Consolidated Statement of Profit or Loss should be read in conjunction with the
accompanying notes.
59
63
Annual Report 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
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
2023
$'000
2022
$'000
320,400
620,618
4,357
579
4,936
(4,830)
26,793
21,963
Total comprehensive income for the year
325,336
642,581
Total comprehensive income for the year attributable to:
Members of National Storage Holdings Limited
Non-controlling interest (unitholders of NSPT)
37,368
287,968
325,336
27,076
615,505
642,581
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
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
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
Notes
2023
$'000
2022
$'000
10.1
10.2
11.1
10.3
10.2
11.2
10.7
11.3
13
11.4
9
10.3
10.4
10.7
11.5
11.6
17
10.4
10.5
10.7
11.6
9
10.6
67,330
17,308
2,107
11,383
98,128
83,651
20,153
1,849
7,009
112,662
181
1,241
4,381
4,384,736
8,986
47,024
9,176
28,183
4,483,908
135
1,365
5,165
3,830,234
10,528
46,801
9,537
37,554
3,941,319
4,582,036
4,053,981
30,117
11,285
17,045
8,606
4,947
74,161
146,161
23,936
10,636
17,600
9,769
3,926
64,557
130,424
1,283
941,133
90,086
9,359
6,208
1,289
1,049,358
461
972,017
97,954
9,261
4,972
-
1,084,665
1,195,519
1,215,089
3,386,517
2,838,892
EQUITY
Non-controlling interest (unitholders of NSPT)
Contributed equity
Other reserves
Retained earnings
Total equity
14
15
3,113,954
191,938
2,343
78,282
3,386,517
2,631,973
163,526
2,415
40,978
2,838,892
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
65
Annual Report 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2023
Attributable to securityholders of National Storage REIT
Contributed
equity
$'000
Notes
Retained
earnings
$'000
Other
reserves
$'000
Non-
controlling
interest
$'000
Total
equity
$'000
Balance at 1 July 2022
163,526
40,978
2,415
2,631,973 2,838,892
Profit for the year
Other comprehensive income
Total comprehensive income
15
-
-
-
37,304
-
37,304
-
64
64
283,096
4,872
287,968
320,400
4,936
325,336
Issue of stapled securities
Costs associated with issue
of stapled securities
Deferred tax on cost of issue of
stapled securities
Share-based payments
Distributions
14
28,702
(414)
124
-
-
28,412
9
21
17
-
-
-
-
-
-
(1,640)
338,968
366,030
-
(4,793)
(5,207)
-
1,504
-
(136)
-
-
(140,162)
194,013
124
1,504
(140,162)
222,289
Balance at 30 June 2023
191,938
78,282
2,343
3,113,954 3,386,517
Balance at 1 July 2021
161,320
13,758
Profit for the year
Other comprehensive income /
(loss)
Total comprehensive income
15
-
-
-
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
14
2,224
9
21
17
(25)
7
-
-
2,206
-
-
-
-
-
-
3
-
2,109,561 2,284,642
593,398
620,618
(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
Notes
2023
$’000
2022
$’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
Development of investment properties under construction
Improvements to investment properties
Purchase of property, plant and equipment
Development of intangible assets
Distributions received from joint venture
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 in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
10.1
10.1
10.1
11.2
13
14
17
18
18
10.1
363,733
(164,427)
2,330
(13,325)
188,311
(131,501)
(206,183)
(6,199)
(573)
(998)
1,619
(100)
(343,935)
340,360
(5,207)
(104,888)
798,403
(829,351)
-
1,150
(14,624)
(46,603)
139,240
(16,384)
63
83,651
67,330
305,478
(139,037)
118
(807)
165,752
(206,895)
(66,317)
(5,155)
(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
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
67
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
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.
due throughout the next financial year. The Group also has undrawn facilities of $639.9m which have a
tenor of over one year. The Group’s gearing levels remain low at 19.8% as at 30 June 2023 (30 June 2022:
23.0%)
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 financial report of NSR for the year ended 30 June 2023 was approved on 23 August 2023, in
accordance with a resolution of the Board of Directors of NSH.
Other standards, amendments and interpretations
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.
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 2023 are outlined in the following table:
Reference
Title
Summary and impact on Group
financial report
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 2021-2 Amendments to
The accounting policies applied by NSR in these financial statements are the same as the 30 June 2022
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 2023. This is available at www.nationalstorageinvest.com.au.
Deficiency of net current assets
As at 30 June 2023, the Group had an excess of current liabilities over current assets of $48.0m (30 June
2022: $17.8m).
Accounting standards require the lease liability to be split between current and non-current while the
corresponding asset is classed as non-current. This results in $10.1m of lease liabilities being classified as
current (30 June 2022: $9.3m). 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. Current
liabilities also include deferred revenue of $17.0m associated with prepaid storage rentals which are not
expected to result in a cash outflow (30 June 2022: $17.6m).
The Group generated operating cash flows of $188.3m for the year ended 30 June 2023 (30 June 2022;
$165.8m). Sufficient cash inflows from operations are expected to enable all liabilities to be paid when
64
AASB 7, AASB
101, AASB 134
Interim Financial
Reporting and
AASB Practice
Statement 2
Making
Materiality
Judgements -
Disclosure of
Accounting
Policies
The amendments to AASB 101 Presentation
of Financial Statements require disclosure
of material accounting policy information,
instead of significant accounting policies.
Unlike ‘material’, ‘significant’ was not
defined in Australian Accounting
Standards.
Leveraging the existing definition of
material with additional guidance is
expected to help preparers make more
effective accounting policy disclosures.
The guidance illustrates circumstances
where an entity is likely to consider
accounting policy information to be
material.
The amendments to AASB Practice
Statement 2 supplement the amendments
to AASB 101 by illustrating how the four-
step materiality process can identify
material accounting policy information.
Application
date of
standard
Application
date for
Group
1 January
2023
1 July 2023
65
69
Annual Report 2023
Application
date of
standard
Application
date for
Group
1 January
2023
1 July 2023
1 January
2023
1 July 2023
Reference
Title
Summary and impact on Group
financial report
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
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.
Reference
Title
Summary and impact on Group
financial report
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.
Application
date of
standard
Application
date for
Group
1 January
2024
1 July 2024
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.
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.
AASB 2014-10 Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
1 January
2025
1 July 2025
(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 consolidated 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.
66
67
71
Annual Report 2023
Joint arrangements
Under AASB 11 Joint Arrangements, investments
in joint arrangements are classified as either joint
operations or joint ventures. The classification
depends on the contractual rights and
obligations of each investor, rather than the
legal structure of the joint arrangement.
Investments in joint ventures are accounted for
using the equity method.
Equity method
Under the equity method, the investment in an
associate or a joint venture is initially recognised
at cost. The carrying amount of the investment is
adjusted to recognise changes in the Group’s
share of net assets since the acquisition date.
Goodwill relating to the associate or joint
venture is included in the carrying amount of the
investment and is neither amortised nor
individually tested for impairment.
The 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 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
68
that reflects the consideration to which an entity
expects to be entitled to, in exchange for
transferring goods or services to a customer. The
Group exercises judgement, taking into
consideration all of the relevant facts and
circumstances when applying each step of the
model to contracts with their customers.
Revenue is measured at the expected
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
69
73
Annual Report 2023
profit will be available against which the
temporary differences can be utilised.
and its wholly owned entities are not eligible to
be part of the NSH tax consolidated group.
The deferred tax liabilities in relation to
investment property is recognised dependent
upon the taxable impact in the relevant
jurisdiction. The Group assumes that the current
measurement at fair value will be recovered
entirely through a sale.
In New Zealand, as any capital gain on sale will
generally be exempt from tax, the deferred tax
liability in relation to these assets would
generally be calculated based on the amount
of any tax depreciation recovery.
Deferred tax assets are also recognised relating
to the carry forward of unused tax credits and
unused tax losses to the extent that it is probable
that taxable profit will be available against
which the deductible temporary differences,
and the carry forward of unused tax credits and
unused tax losses can be utilised.
The carrying amount of deferred tax assets is
reviewed at each reporting date and adjusted
to the extent that it is probable 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 entities are
a tax consolidated group, meaning they are
taxed as a single entity and the deferred tax
assets and liabilities of these entities are set off in
the consolidated financial statements. NSPT
Goods and services tax (“GST”)
Revenue, expenses, assets, and liabilities are
recognised net of the amount of GST.
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
70
translated using the exchange rates at the
dates of the initial transactions. Non-monetary
items measured at fair value in a foreign
currency are translated using the exchange
rates at the date when the fair value is
determined.
The gain or loss arising on translation of non-
monetary items measured at fair value is treated
in line with the recognition of the gain or loss on
the change in fair value of the item (i.e.
translation differences on fair value gain or loss
recognised in other comprehensive income or
profit or loss are also recognised in other
comprehensive income or profit or loss).
Group companies
On consolidation, the assets and liabilities of
foreign operations are translated into Australian
dollars at the rate of exchange prevailing at the
reporting date and their statements of profit or
loss are translated at exchange rates prevailing
at the dates of the transactions. The exchange
differences arising on translation for
consolidation are recognised in other
comprehensive income. On disposal of a
foreign operation, the component of other
comprehensive income relating to that
particular foreign operation is recognised in
profit or loss.
Any goodwill arising on the acquisition of a
foreign operation and any fair value
adjustments to the carrying amounts of assets
and liabilities arising on the acquisition are
treated as assets and liabilities of the foreign
operation and translated at the spot rate of
exchange at the reporting date.
(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.
To determine if there is an integrated set of
activities, the Group conducts an assessment of
minimum business requirements and what
substantive processes have been acquired.
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
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transferred, then the gain is recognised in profit
or loss.
After initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the
Group’s cash-generating units (“CGUs”) that are
expected to benefit from the combination,
irrespective of whether other assets or liabilities
of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU
and part of the operation within that unit is
disposed of, the goodwill associated with the
disposed operation is included in the carrying
amount of the operation when determining the
gain or loss on disposal. Goodwill disposed in
these circumstances is measured based on the
relative values of the disposed operation and
the portion of the CGU retained.
(i)
Leases
The Group leases properties which are classified
as investment properties (note 11.3). 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 when 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
72
purchase option). It also applies the lease of low
value assets recognition exemption to leases of
office equipment that are considered to be low
value. Lease payments on short term leases and
leases of low value assets are recognised on a
straight line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer
substantially all the risks and rewards incidental
to ownership of an asset are classified as
operating leases. Rental income arising is
accounted for on a straight line basis over the
lease terms and is included in revenue in the
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. Financial
assets with cash flows that are not solely
payments of principal and interest (“SPPI”) are
classified and measured at fair value through
profit or loss, irrespective of the business model.
The Group’s business model for managing
financial assets refers to how it manages its
financial assets in order to generate cash flows.
The model determines whether cash flows will
result from collecting contractual cash flows,
selling the financial assets, or both.
Financial assets classified and measured at
amortised cost are held with the objective of
collecting contractual cash flows while financial
assets classified and measured at fair value
through Other Comprehensive Income (“OCI”)
are held with the objective of both holding to
collect contractual cash flows and selling the
asset.
Subsequent measurement
For purposes of subsequent measurement,
financial assets are classified in three categories:
• Financial assets at amortised cost (debt
instruments);
• Financial assets at fair value through OCI with
recycling of cumulative gains and losses; and
• Financial assets at fair value through profit or
loss.
Financial assets at amortised cost
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
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Annual Report 2023
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
For debt instruments at fair value through OCI,
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 other comprehensive
income is recycled to profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
are carried in the statement of financial position
at fair value with net changes in fair value
recognised in the statement of profit or loss.
This category includes derivative instruments
which the Group has not designated as a
hedged instrument.
A derivative embedded in a hybrid contract,
with a financial liability or non-financial host, is
separated from the host and accounted for as
a separate derivative if:
•
The economic characteristics and risks
are not closely related to the host;
• A separate instrument with the same
terms as the embedded derivative
would meet the definition of a
derivative; and
The hybrid contract is not measured at
fair value through profit or loss.
•
Embedded derivatives are measured at fair
value with changes in fair value recognised in
profit or loss.
Reassessment only occurs if there is either a
change in the terms of the contract that
significantly modifies the cash flows that would
otherwise be required or a reclassification of a
financial asset out of the fair value through profit
or loss category.
Derecognition
Financial assets are primarily derecognised
when:
The rights to receive cash flows from the
assets have expired, or
The Group has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the
received cash flows in full without
material delay to a third party under a
‘pass-through’ arrangement; and either;
(a) the Group has transferred
substantially all the risks and rewards of
the asset, or
(b) the Group has neither transferred
nor retained substantially all the risks
and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if,
and to what extent, it has retained the risks and
rewards of ownership.
When it has neither transferred nor retained
substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the
Group continues to recognise the transferred
asset to the extent of its continuing involvement.
In that case, the Group also recognises an
associated liability. The transferred asset and the
associated liability are measured on a basis that
reflects the rights and obligations that the Group
has retained.
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
74
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.
repurchasing in the near term. This category also
includes derivative financial instruments entered
into by the Group that are not designated as
hedging instruments in hedge relationships as
defined by AASB 9. Separated embedded
derivatives are also classified as held for trading
unless they are designated as effective hedging
instruments.
Gains or losses on liabilities held for trading are
recognised in the statement of profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated at the initial date of recognition,
and only if the criteria in AASB 9 are satisfied. The
Group has not designated any financial liability
as at fair value through profit or loss.
Loans and borrowings
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.
Subsequent measurement
Derecognition
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 are classified as held for
trading if they are incurred for the purpose of
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
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Annual Report 2023
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
(cid:3)
The Group uses derivative financial instruments,
such as interest rate swaps, interest rate caps,
interest rate swaptions, 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. Derivatives
are carried as financial assets when the fair
value is positive and as financial liabilities when
the fair value is negative.
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.
For the purpose of hedge accounting, hedges
are classified as:
•
Fair value hedges when hedging the
exposure to changes in the fair value of a
recognised asset or liability or an
unrecognised firm commitment;
• Cash flow hedges when hedging the
exposure to variability in cash flows that is
either attributable to a particular risk
associated with a recognised asset or
liability or a highly probable forecast
transaction or the foreign currency risk in an
unrecognised firm commitment; or
• Hedges of a net investment in a foreign
operation.
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.
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:
(cid:3)
•
There is ‘an economic relationship’ between
the hedged item and the hedging
instrument;
The effect of credit risk does not ‘dominate
the value changes’ that result from that
economic relationship; and
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.
•
•
Hedges that meet all the qualifying criteria for
hedge accounting are accounted for, as
described below:
Cash flow hedge
The effective portion of the gain or loss on the
hedging instrument is recognised in OCI in the
cash flow hedge reserve, while any ineffective
portion is recognised immediately in the
statement of profit or loss. The cash flow hedge
reserve is adjusted to the lower of the
cumulative gain or loss on the hedging
instrument and the cumulative change in fair
value of the hedged item.
The Group uses interest rate swap contracts as
hedges of its exposure to the risk of changes in
market interest rates. The ineffective portion
relating to these is recognised as other
operating income or expenses.
The Group designates only the spot element of
these 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.
76
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
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 an
estimate 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
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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 under 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 to
achieve a constant rate of interest on the
remaining balance of the liability. Interest
expense is recognised in finance costs in the
consolidated statement of profit or loss and in
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.
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;
78
• 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.
In accordance with its lease agreements, the
Group must restore the leased premises in a
number of leasehold premises to their original
condition at lease expiry. A provision has been
recognised for the obligation to remove
leasehold improvements from the leased
premises (note 11.6).
(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
79
83
Annual Report 2023
recognised as an expense as they become
payable.
the share-based payment transaction, or is
otherwise beneficial to the employee.
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 21.
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 fair value of awards at grant
date, 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
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 20).
(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
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 23 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.
80
Tax consolidation legislation
NSH, the head entity, and its wholly-owned
subsidiaries are a tax consolidated group. This
results in them being taxed as a single entity.
NSH recognises the current tax liabilities or assets
and the deferred tax assets and liabilities arising
from all tax consolidated group members. This
includes any unused tax losses and unused tax
credits arising from controlled entities in the tax
consolidated 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,
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 8 and notes 10.8.
3.
SIGNIFICANT ACCOUNTING
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the Group’s consolidated
financial statements requires management to
make judgements, estimates and assumptions
that affect the reported amounts of revenues,
expenses, assets and liabilities, and the
accompanying disclosures. Uncertainty about
these assumptions and estimates could result in
outcomes that require a material adjustment to
the carrying amount of the affected assets or
liabilities in future periods.
Other disclosures relating to the Group’s
exposure to risks and uncertainties include:
• Capital management (note 17)
•
Financial instruments risk management and
policies (notes 10.8, 16)
Sensitivity analyses disclosures (notes 11.7,
16).
•
81
85
Annual Report 2023
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(cid:3)
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 2023 and 30 June
2022, 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. 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
Director’ 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).
82
Potential income is subject to a higher degree
of risk, reflected in a higher secondary
capitalisation rate. The approach of
disaggregating a property’s net operating
income between current passive income and
future potential income allows appropriate risk
adjusted capitalisation rates to be applied to
each income stream.
The Group disaggregates primary and
secondary capitalisation rates to provide more
transparency to the valuation process. This gives
visibility over the separate rates applied to
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 11.7.
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 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 11.4.
83
87
Annual Report 2023
4.
SEGMENT INFORMATION
6.
EXPENSES
During the 2023 and 2022 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) is managed on a Group basis and is
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
2023
$'000
2022
$'000
295,253
32,129
327,382
251,053
27,083
278,136
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
The revenue information above excludes interest income and is based on the location of storage
centres.
7.
INTEREST INCOME AND FINANCE COSTS
Non-current operating assets
Australia
New Zealand
Total
2023
$'000
2022
$'000
3,917,271
476,157
4,393,428
3,401,320
438,291
3,839,611
Interest income
Bank interest
Interest income from related parties
Total interest income
Notes
11.4
21
2023
$'000
3,817
3,877
2,001
540
2,054
775
1,883
2,888
17,835
45,814
3,907
1,504
2,308
4,630
58,163
2023
$'000
2,186
468
2,654
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
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
2023
$'000
7,396
5,951
468
832
14,647
2022
$'000
7,983
6,646
1,842
736
17,207
84
Finance costs
Interest on borrowings
Reclassification from cash flow hedge reserve to
consolidated statement of profit or loss
Interest on lease liabilities relating to investment property
Interest on other lease liabilities
Total finance costs
15
37,617
18,900
5,359
4,875
109
47,960
7,815
5,265
151
32,131
8.
FAIR VALUE ADJUSTMENTS
Gains / (losses) 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
Change in fair value of derivatives recognised at fair value
through the profit and loss.
2023
$'000
2022
$'000
(8,361)
193,949
369
2,054
188,011
(6,763)
522,618
(5,435)
-
510,420
85
89
Annual Report 2023
9.
INCOME TAX
NSPT is a ‘flow through’ entity for Australian income tax purposes and is an Attribution Managed
Investment Trust, such that the determined tax components of NSPT will be taxable in the hands of
unitholders on an attribution basis. NSPT’s subsidiary, National Storage New Zealand Property Trust
(“NSNZPT”), is an Australian registered trust which owns investment property in New Zealand. For New
Zealand tax purposes NSNZPT is classed as a unit trust and is subject to New Zealand income tax at a
rate of 28%.
The major components of income tax expense for the years ended 30 June 2023 and 30 June 2022 are:
Consolidated statement of profit or loss
Current tax
Deferred tax
Adjustment in relation to prior periods
Total income tax expense
Notes
2023
$'000
13,364
1,272
(819)
13,817
2022
$'000
11,850
(1,833)
221
10,238
Deferred tax relating to items recognised in other comprehensive
income
Net gain on revaluation of cash flow hedges
15
-
3
Deferred tax relating to items recognised in statement of changes
in equity
Cost of issuing share capital
(124)
(7)
Reconciliation of tax expense and accounting profit multiplied by
Australia’s domestic tax rate for 2023 and 2022:
Profit before tax
Deduct profit before tax from Trusts owning Australian properties
Accounting profit before income tax
334,217
(269,180)
65,037
630,856
(559,655)
71,201
Tax at the Australian tax rate of 30% (2022 – 30%)
19,511
21,360
Non-deductible / assessable amounts
Deductible / non-assessable amounts
Adjustments in respect of previous years
Effect of lower tax rates in New Zealand
Tax losses not recognised
Recognition of previously unrecognised tax losses
Income tax expense
1,360
(5,796)
(1,227)
(266)
235
-
13,817
1,700
(11,110)
131
(729)
-
(1,114)
10,238
Deferred tax expense / (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
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 expense / (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
2023
$'000
2022
$'000
(50,454)
52,051
(389)
(60)
(88,270)
88,042
(1,734)
119
-
3
124
1,272
7
(1,833)
461,528
1,907
1,908
229
2,391
645
1,184
469,792
410,805
1,528
1,945
618
2,374
1,508
560
419,338
1,301
16
141
465,351
15
466,824
1,547
14
191
413,013
8
414,773
2,968
4,565
9,176
(6,208)
2,968
9,537
(4,972)
4,565
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
(cid:3)
For the year ended 30 June 2023, all recognised tax losses relate to New Zealand entities and are
available for offsetting against future taxable profits of National Storage Limited and NSNZPT.
Unrecognised group tax losses relate to Australian losses incurred by National Storage Finance Pty Ltd.
2023
$’000
818
805
1,623
2022
$’000
2,069
21
2,090
86
87
91
Annual Report 2023
10.
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
Derivatives measured at fair value
Interest rate derivatives designated as hedging
instruments
Interest rate derivatives not designated as hedging
instruments
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivatives measured at fair value
Interest rate derivatives not designated as hedging
instruments
Total financial liabilities
Notes
2023
$'000
2022
$'000
10.1
10.2
10.3
10.3
10.3
10.4
10.5
10.7
67,330
17,489
8,876
93,695
83,651
20,288
16,678
120,617
16,483
21,263
3,343
113,521
-
141,880
31,400
946,958
101,371
1,079,729
24,397
975,448
108,590
1,108,435
10.6
1,289
1,081,018
-
1,108,435
The Group’s approach to financial risk management is discussed in note 16. 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.
Derivatives designated as hedging instruments reflect the change in fair value of interest rate
derivatives, designated as cash flow hedges. Derivatives not designated as hedging instruments reflect
the change in fair value of interest rate swaps, interest rate swaptions, and caps that are not
designated in hedging relationships, but are, nevertheless, intended to manage the risk associated with
interest rate fluctuations.
All derivatives are presented as current assets or liabilities if they are expected to be settled within 12
months after the end of the reporting period.
10.1.(cid:3) Cash and cash equivalents(cid:3)
Current assets
Cash on hand
Cash at bank
Total cash and cash equivalents
2023
$'000
2022
$'000
-
67,330
67,330
3
83,648
83,651
88
Cash flow reconciliation of net profit after tax to net cash flows from operations
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
Derecognition of intangible assets
Fair value adjustments
Derecognition of capitalised borrowing costs
Share-based payments
Share of loss /(profit) from joint ventures and associates
Interest income
Finance costs
Changes in operating assets and liabilities:
Increase / (decrease) in receivables
Increase in inventories
Increase in other assets
Increase in payables
(Decrease) / increase in deferred revenue
Increase in provisions
Cash flows from operating activities
Interest received
Income tax paid
Net cash flows from operating activities
2023
$'000
320,400
13,817
334,217
2022
$'000
620,618
10,238
630,856
2,054
132
775
-
(188,011)
-
1,504
23
(2,654)
47,960
1,888
235
1,290
238
(510,420)
3,842
2,556
(1,741)
(751)
32,131
1,980
(252)
(1,187)
2,060
(555)
1,260
199,306
2,330
(13,325)
188,311
(3,443)
(531)
(1,724)
4,134
1,415
6,466
166,441
118
(807)
165,752
Disclosure of non-cash financing activities
Non-cash financing activities include capital raised pursuant to the NSR’s distribution reinvestment plan.
During the year 10.9m stapled securities (2022: 11.9m) were issued with a cash equivalent of $25.7m
(2022: $27.6m).
10.2.
Trade and other receivables
Current
Trade receivables
Other receivables
Receivables from related parties
Allowance for expected credit losses on trade receivables
18
Notes
Non-current
Other receivables
Total current and non-current
2023
$'000
3,818
6,654
7,117
(281)
17,308
2022
$'000
3,648
6,607
10,117
(219)
20,153
181
135
17,489
20,288
89
93
Annual Report 2023
Classification as trade and other receivables
10.4.
Trade and other payables(cid:3)
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 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 18 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 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
2023
$'000
219
114
(54)
2
281
2023
$'000
3,205
294
38
3,537
2022
$'000
158
77
(13)
(3)
219
2022
$'000
3,379
45
5
3,429
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.
10.3. Other assets
Current
Prepayments
Financial assets (derivatives)
Non-current
Deposits
Financial assets (derivatives)
2023
$'000
10,864
519
11,383
8,876
19,307
28,183
2022
$'000
6,622
387
7,009
16,678
20,876
37,554
Total current and non-current
39,566
44,563
Deposits include advances on contracts or options on investment property purchases. Contracts where the Group
has a future commitment to acquire are detailed in note 19.
For details on the classification of financial instruments see note 10.
90
Current
Trade payables
Accrued expenses
GST and other employment taxes payable
Other payables
Non-current
Other payables
Total current and non-current
2023
$'000
6,144
20,886
1,463
1,624
30,117
2022
$'000
465
19,880
2,324
1,267
23,936
1,283
461
31,400
24,397
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.
10.5(cid:856)(cid:3) Borrowings
Non-current
Bank finance facilities
Non-amortised borrowing costs
Total borrowings
2023
$'000
2022
$'000
946,958
(5,825)
941,133
975,448
(3,431)
972,017
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
2023
$'000
2022
$'000
855,000
827,000
1,410,000 1,080,000
100,000
225,000
164,250
225,000
91,957
206,904
148,448
203,354
The major terms of these agreements are as follows:
• At 30 June 2023 maturity dates on these facilities range from 1 September 2023 to 13 June 2030 (30
June 2022: maturity dates from 1 September 2023 to 23 June 2029).
• All facilities are unsecured and interest only with any drawn balance payable at maturity.
•
The interest rate applied is the bank bill rate plus a margin.
The Group has a bank overdraft facility with a limit of $3m that was undrawn at 30 June 2023 and 30
June 2022. During the year ended 30 June 2023, the Group entered into additional debt facilities
totalling $580m, which has extended the tenor of the Group’s borrowings and also expanded the
Group’s lender pool.
91
95
Annual Report 2023
The Group has complied with the financial covenants of their borrowing facilities during the 2023 and
2022 reporting periods (see note 17). 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 16.
Interest rate derivatives
The Group uses interest rate derivatives as part of its risk management strategy to manage exposure to
interest rate fluctuations. These derivatives include interest rate swaps, interest rate caps, and interest
rate swaptions. The purpose of using a combination of these instruments is to mitigate the impact of
interest rate changes on the Group's future cash flows in accordance with its risk management policies.
Interest rate swaps
Interest rate swaps are financial contracts where the Group agrees to exchange interest rate cash flows
with a counterparty. Typically, the Group exchanges fixed-rate interest payments for floating-rate
interest payments based on a notional principal amount.
The Group has the following interest rate derivatives at the end of the reporting period:
Interest rate swaps (AUD) at face value
Current interest rate swaps
Future interest rate swaps
Interest rate swaps (NZD) at face value
Current interest rate swaps
Future interest rate swaps
AUD equivalent of NZD interest rate swaps
Current interest rate swaps
Future interest rate swaps
2023
$'000
2022
$'000
300,000
50,000
360,000
-
50,000
25,000
45,979
22,989
-
-
Interest rate swaps in place at the end of the reporting period have maturity dates ranging from 23
September 2023 to 23 June 2027 (30 June 2022: 23 September 2022 to 23 September 2026).
Interest rate caps
Interest rate caps are financial instruments that set a maximum interest rate payable on a notional
amount over a specified period. The Group enters into interest rate caps which impacts an interest rate
swap by providing a maximum or minimum limit on the floating interest rate payments that the Group's
counterparty must make to the Group under the swap.
As of 30 June 2023, the Group had sold an interest rate caps with a total notional value of $40.0m (2022:
nil) to lower the blended swap rate when the BBSY rate is below the agreed threshold (set quarterly). If
the BBSY is above this threshold at the quarterly roll date the Group is required to pay additional interest
payments. The fair value of these interest rate caps was recorded on the balance sheet as $0.7m in
other liabilities (2022: nil).
Interest rate swaptions(cid:3)
Interest rate swaptions are options contracts that provide the counterparty with the option but not the
obligation to extend an interest rate swap at a specified future date on predetermined terms.
As of 30 June 2023, the Group had entered into interest rate swaptions with a notional value of AUD
$40.0m and $50m NZD (AUD: $46.0m) (2022: nil). The fair value of these interest rate swaptions was
recorded on the balance sheet as $0.6m in other liabilities (2022: nil).
92
10.6(cid:856)(cid:3) Other liabilities
Non-current financial liabilities
Interest rate derivatives
10.7. Right of use assets and lease liabilities
a) Right of use assets
2023
$'000
1,289
2022
$'000
-
Premises
leases
$'000
Equipment
leases
$'000
Advertising
leases
$'000
Opening balance at 1 July 2022
Additions
Depreciation
Reassessment of variable lease payments
Effect of movement in foreign exchange
Closing balance at 30 June 2023
Opening balance at 1 July 2021
Additions
Depreciation
Reassessment of variable lease payments
Effect of movement in foreign exchange
Closing balance at 30 June 2022
b) Lease liabilities
4,656
585
(1,010)
28
-
4,259
4,902
587
(935)
102
-
4,656
386
101
(469)
(13)
-
5
745
23
(382)
-
-
386
123
-
(8)
-
2
117
135
-
(8)
-
(4)
123
Total
$'000
5,165
686
(1,487)
15
2
4,381
5,782
610
(1,325)
102
(4)
5,165
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
2023
$’000
2022
$’000
1,151
1,342
10,134
11,285
9,294
10,636
3,756
4,317
86,330
90,086
93,637
97,954
101,371
108,590
93
97
Annual Report 2023
Amounts recognised in consolidated statement of profit or loss:
Depreciation 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 8)
Total
2023
$’000
1,487
4,984
36
2022
$’000
1,325
5,416
76
8,361
14,868
6,954
13,771
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.
Set out below are the undiscounted potential future rental payments relating to periods following the
exercise date of extension options that are not included in the lease term:
Extension options expected not to be exercised
At 30 June 2023
At 30 June 2022
Within five
years
$'000
More than
five years
$'000
Total
$'000
5,583
3,485
247,540 253,123
246,947 250,432
10.8.
Financial instruments fair value measurement
Fair value hierarchy
This note explains the judgements and estimates made in determining the fair values of the financial
instruments recognised in the financial statements, as detailed in notes 10.1 to 10.7. To provide an
indication about the reliability of the inputs used in determining fair value, financial instruments are
classified into the following three levels.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end
of the reporting period. The quoted market price used for any financial assets held is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
Specific fair valuation techniques used to determine fair values include:
•
The fair value of interest rate derivatives is calculated as the present value of the estimated future
cash flows based on observable yield curves, adjusted for counterparty or own credit risk.
Group as a lessor
The resulting fair value estimates for interest rate derivatives are included in level 2.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
Within one year
After one year but not more than five years
More than five years
Total
30 June
2023
$’000
5,930
5,026
-
10,956
30 June
2022
$’000
6,359
10,792
906
18,057
At 30 June 2023
Interest rate derivatives
Current financial assets
Non-current financial assets
Non-current financial liabilities
At 30 June 2022
Interest rate derivatives
Current financial assets
Non-current financial assets
Notes
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
10.3
10.3
10.6
10.3
10.3
-
-
-
-
-
-
-
519
19,307
(1,289)
18,537
387
20,876
21,263
-
-
-
-
-
-
-
519
19,307
(1,289)
18,537
387
20,876
21,263
There were no transfers between levels of fair value hierarchy during the years ended 30 June 2023 and
30 June 2022.
94
95
99
Annual Report 2023
11.
NON-FINANCIAL ASSETS AND LIABILITIES
11.3.
Investment properties
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.
11.1.
Inventories
Finished goods - at lower of cost and net realisable value
2,107
1,849
11.2. Property, plant and equipment
2023
$’000
2022
$’000
At cost
Accumulated depreciation
Total property, plant and equipment
2023
$'000
2022
$'000
2,899
(1,658)
1,241
2,717
(1,352)
1,365
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
2023
$'000
1,365
573
(132)
(567)
2
1,241
2022
$'000
1,408
840
(318)
(563)
(2)
1,365
Leasehold investment properties in operation
Freehold investment properties in operation
Investment properties under construction
Total investment properties
Leasehold investment properties in operation
Opening balance at 1 July
Property acquisitions
Improvements to investment properties
Reassessment of lease terms
Items reclassified to freehold investment properties
Lease diminution, presented as fair value adjustments
Net gain from other fair value adjustments
Closing balance at 30 June
Notes
11.7
11.7
10.7b
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 from freehold investment properties
Effect of movement in foreign exchange
Closing balance at 30 June
2023
$'000
2022
$'000
136,775
140,681
3,978,791 3,612,082
77,471
4,384,736 3,830,234
269,170
140,681
2,048
324
1,641
(230)
(8,361)
672
136,775
137,498
7,412
249
7,388
(11,500)
(6,954)
6,588
140,681
3,612,082 2,834,509
185,922
4,989
11,500
(10,261)
83,987
510,786
(9,350)
3,978,791 3,612,082
136,944
5,875
230
(6,109)
28,949
193,277
7,543
77,471
114,014
100,525
(28,949)
6,109
-
269,170
83,793
23,732
45,208
(83,987)
10,261
(1,536)
77,471
96
97
101
Annual Report 2023
11.4.
Intangible assets
Notes
2023
$'000
2022
$'000
Goodwill
Opening and closing net book value
Other intangible assets
Opening net book value
Additions
Derecognition losses presented within restructuring and
other non-recurring costs
Amortisation
Closing net book value
6
Total intangible assets
43,954
43,954
2,847
998
-
(775)
3,070
3,243
1,132
(238)
(1,290)
2,847
47,024
46,801
Impairment testing of goodwill
The Group performed its annual impairment test at 30 June 2023 and 30 June 2022.
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.
(cid:3)
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 11.7.
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.
As a result of the analysis, management did not identify an impairment for this CGU.
11.5. Deferred revenue
Deferred rental income revenue
2023
$'000
2022
$'000
17,045
17,600
Deferred rental income revenue represents funds received in advance from customers.
11.6. Provisions
Current
Make good provisions
Annual leave
Long service leave
Non-current
Make good provisions
Long service leave
Reconciliation of movement in make good provisions
As at 1 July
Arising on acquisition of leasehold investment property
Reassessment of existing provisions
Movement in discount rates
Utilised
As at 30 June
2023
$'000
243
3,304
1,400
4,947
7,695
1,664
9,359
8,079
-
760
(901)
-
7,938
2022
$'000
-
2,615
1,311
3,926
8,079
1,182
9,261
2,773
398
6,836
(1,928)
-
8,079
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.
11.7. 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
10.8 to provide an indication about the reliability of inputs used to determine fair value.
Notes
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
At 30 June 2023
Leasehold investment properties
Freehold investment properties
At 30 June 2022
Leasehold investment properties
Freehold investment properties
11.3
11.3
11.3
11.3
Recognised fair value measurements
-
-
-
-
-
-
-
-
-
-
-
-
136,775
136,775
3,978,791 3,978,791
4,115,566 4,115,566
140,681
140,681
3,612,082 3,612,082
3,752,763 3,752,763
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels at the end of the
reporting period. There were no transfers between levels 1 and 2 or between levels 2 and 3 for recurring
fair value measurements during the current or prior year.
Fair value measurements using significant unobservable inputs (level 3)
Valuation techniques used to determine level 3 fair values and valuation process
Investment properties, principally storage buildings, are held for rental to customers requiring self-
storage facilities and are carried at fair value. Changes in fair values are presented in profit or loss as fair
value adjustments.
Fair values are determined by a combination of independent valuations and Director valuations. The
independent valuations are performed by an accredited independent valuer. Investment properties
are independently valued on a rotational basis every three years unless the underlying financing
98
99
103
Annual Report 2023
requires a more frequent valuation cycle. For properties subject to an independent valuation report the
Directors verify all major inputs to the valuation and review the results with the independent valuer. The
Director valuations are completed by the NSH Group Board. The valuations are determined using the
same techniques and similar estimates to those applied by the independent valuer.
The Group obtains the majority of its 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. Investment properties acquired in the year ended 30 June 2023 have been held at
acquisition price.
At 30 June 2023, the Group held 37% of freehold investment properties and 37% of leasehold investment
properties at external valuation (30 June 2022: 41% of freehold investment properties and 23% of
leasehold investment properties).
Valuation inputs and relationship to fair value
Description
Significant unobservable inputs
Range at 30
June 2023
Range at 30
June 2022
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 7.9%
5.3% to 8.1%
5.8%
6.4%
73% to 95%
$1,134,151
4.7% to 7.3%
5.3% to 8.5%
5.8%
6.3%
70% to 98%
$1,087,144
Primary capitalisation rate
Secondary capitalisation rate
Weighted average primary cap rate
Weighted average secondary cap rate
Sustainable occupancy
Stabilised average EBITDA
6.0% to 55.0%
6.5% to 55.0%
13.4%
13.6%
85% to 92%
$390,860
6.0% to 53.9%
6.5% to 53.9%
11.2%
12.1%
85% to 95%
$368,167
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
reflect additional risk to income. The higher capitalisation rate then reduces the valuation of the
property.
100
The following tables present the sensitivity of investment property fair values to changes in input
assumptions.
At 30 June 2023:
Unobservable inputs
Primary capitalisation rate
Secondary capitalisation
rate
Sustainable occupancy
Stabilised EBITDA
At 30 June 2022:
Unobservable inputs
Leasehold
Freehold
Increase/
(decrease)
in input
Increase/
(decrease) in fair
value
$’000
Increase/
(decrease)
in input
Increase/ (decrease)
in fair value
$’000
1% / (1%)
(3,275) / 4,200
1% / (1%)
(524,915) / 746,138
2% / (2%)
(575) / 950
2% / (2%)
(94,237) / 186,433
5% / (5%)
5% / (5%)
8,125 / (3,475)
2,100 / (1,375)
5% / (5%)
5% / (5%)
256,914 / (136,278)
182,084 / (131,438)
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%)
(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)
12.
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 2023 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
2023
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2022
100%
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
101
105
Annual Report 2023
13.
INTEREST IN JOINT VENTURES AND ASSOCIATES
14.
CONTRIBUTED EQUITY
Interest in joint ventures
Opening balance at 1 July
Share of (loss) / profit from joint ventures*
Distributions received from joint ventures
Closing balance at 30 June
2023
$'000
7,433
(20)
(1,619)
5,794
2022
$'000
5,653
1,780
-
7,433
* Included within share of (loss) / profit from joint ventures in the year ended 30 June 2023 was $0.1m representing
NSR’s share of fair value loss related to investment properties held by joint ventures (30 Jun 2022: $2.0m gains).
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 2023.
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 2023, the Bundall Storage Trust had one storage centre investment property. Bundall
Storage Operations Pty Ltd operates a self-storage business at the centre owned by the Bundall Storage
Trust.
During the year ended 30 June 2023, the Group acquired one storage centre investment property asset
from the TBF & NS Trust for $27.1m. This centre was previously operated by Moorooka Storage
Operations Pty Ltd. There was no change in the share of the Group’s interest following this transaction.
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
2023
$'000
3,095
100
(3)
3,192
2022
$'000
2,228
906
(39)
3,095
The Group holds a 21% (30 June 2022: 19%) holding in Spacer Technologies Pty Ltd (“Spacer”). Spacer
operate online peer-to-peer marketplaces for parking and self-storage in Australia and North America.
During the year ended 30 June 2023, the Group made a capital contribution of $0.1m into Spacer. (30
Jun 2022: $0.9m).
See note 18 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
2023
$'000
2022
$'000
191,938
163,526
Number of stapled securities on issue
2023
2022
Opening balance at 1 July
Institutional and retail capital raises
Distribution reinvestment plan
Securities issued under equity incentive plan
Closing balance at 30 June
1,195,498,309 1,183,070,060
-
11,919,173
509,076
1,348,382,592 1,195,498,309
141,229,611
10,928,651
726,021
Institutional and retail capital raises
On 22 March 2023, the Group announced a fully underwritten $300m institutional placement and a
non-underwritten Security Purchase Plan which raised an additional $40.4m. This resulted in the issue of
124,481,328 new stapled securities on 28 March 2023 and 16,748,283 new stapled securities on 26 April
2023. The issue price represented a discount of 4.0% on the last closing price of NSR stapled securities on
21 March 2023.
Distribution reinvestment plan
During the year, 10,928,651 (2022: 11,919,173) stapled securities were issued to securityholders
participating in the Group’s Distribution Reinvestment Plan for consideration of $25.7m (2022:
$27.6m). The stapled securities were issued at the volume weighted average market price of the
Group's stapled securities over a period of ten trading days, less a 2% discount.
Securities issued under equity incentive plan
During the year 726,021 stapled securities were issued to the NSH senior executive team for FY22 Short-
Term Incentive (“STI”) and Long-Term Incentive (“LTI”) remuneration under the Group’s Equity Incentive
Plan (“the Plan”). These securities were issued following approval at the 2022 AGM on 26 October 2022.
No consideration was paid by the recipients for the issue of the stapled securities, which were issued for
a deemed price of $2.259 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 2022.
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.
102
103
107
Annual Report 2023
15.
OTHER RESERVES
Share-based payment reserve
Opening balance at 1 July
Expense for the year
Issue of securities upon vesting
Closing balance at 30 June
Foreign currency translation reserve
Opening balance at 1 July
Foreign exchange translation differences
Closing balance at 30 June
2023
$'000
2,556
1,504
(1,640)
2,420
(141)
64
(77)
2022
$'000
-
2,556
-
2,556
3
(144)
(141)
Other reserves
2,343
2,415
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
21 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 in the Group’s consolidated statement of changes in
equity.
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 9)
Closing balance at 30 June
Other reserves
NSPT Group
2023
$'000
2022
$'000
(6,190)
1,158
3,135
(1,897)
(1,504)
700
(5,386)
(6,190)
10,636
(4,780)
(16,157)
18,981
5,359
-
11,215
7,815
(3)
10,636
9,318
4,446
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 derivatives
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
104
future periods relating to the profile of the original instrument. During the year ended 30 June 2023,
$5.4m (30 June 2022: $7.8m) has been recognised in finance costs relating to this item (see note 7).
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.
16.
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, caps, and interest rate swaptions 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:
Interest rate derivatives not designated as hedging
instruments presented in:
Non-current assets
Non-current liabilities
Net assets
Interest rate derivatives designated as cash flow
hedges presented in:
Current assets
Non-current assets
Net assets
Notes
10.3
10.6
2023
$'000
2022
$'000
3,343
(1,289)
2,054
-
-
-
10.3
10.3
519
15,964
16,483
387
20,876
21,263
Classification of derivatives
Derivatives entered into prior to 30 June 2022 were designated as cash flow hedges with changes in the
fair value of the instrument recognised in other comprehensive income and accumulated in the Groups
cash flow hedge reserve. The Group continues to hedge account for these derivatives until the expiry
date of the instrument. The Group will discontinue hedge accounting should the instrument fail to meet
the risk management objective, no longer comply with the qualifying criteria or is sold or terminated.
Derivatives entered into for the year ended 30 June 2023 have not been designated as hedging
instruments and are therefore classified as held for trading. Changes in the fair value of the derivatives is
recognised directly in fair value adjustments within the consolidated statement of profit or loss. All
derivatives 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.
105
109
Annual Report 2023
Fair value measurement
For information about the methods and assumptions used in determining fair values of derivatives refer
to note 10.8.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risk comprises of three types of risk: interest rate risk,
currency risk and other price risk, such as equity price and commodity risk. Financial instruments
affected by market risk include loans and borrowings, deposits, debt and equity investments, and
derivative financial instruments.
The sensitivity analysis in the following sections relate to the position as at 30 June 2023 and 30 June
2022. The sensitivity analysis has been prepared on the basis that the amount of net debt, the ratio of
fixed to floating interest rates of debt and derivatives and the proportion of financial instruments in
foreign currencies are all constant on the basis of hedge designations in place at each year end.
The analysis excludes the impact of movements in market variables on provisions and the non-financial
assets and liabilities of foreign operations.
The following assumptions have been made in calculating sensitivity analysis:
•
The sensitivity of the relevant 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
2023 and 30 June 2022 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 in place at 30 June 2023 and 30 June 2022.
•
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 margin risk by having a balanced portfolio of debt from different
providers and markets, with multiple maturities. The Group’s borrowings are principally by way of
variable rate loans and borrowings. Interest rate risk is managed by using financial derivatives, which
include interest rate swaps, forwards, options and caps. At 30 June 2023, after taking into account the
effect of interest rate derivatives, 36.5% (2022: 36.9%) of the Group’s borrowings are at a fixed rate of
interest.
Interest rate sensitivity
The following table demonstrates the sensitivity to a possible change in interest rates on the portion of
loans and borrowings affected, after the impact of hedge accounting.
2023
Australian dollar denominated debt
New Zealand dollar denominated debt
2022
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
(3,067) / 3,067
(775) / 775
(1,962) / 1,962
(2,008) / 2,008
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently
observable market environment.
Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign
exchange rates relates primarily to the Group’s operating activities (when revenue or expense is
denominated in a foreign currency), and the Group’s net investment in foreign subsidiaries.
The Group hedges its exposure to fluctuations on the translation into Australian dollars of its foreign
operations by holding net borrowings in foreign currencies.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a possible change in New Zealand Dollar exchange
rate with all other variables held constant.
2023
2022
Change in
NZD rate
+5%
-5%
+5%
-5%
Effect on profit
before tax
$'000
(628)
694
(1,669)
1,845
Effect on pre-
tax equity
$'000
(9,326)
12,495
(4,678)
7,055
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 2023, the Group has recognised an
expected loss provision of $281,000 (30 June 2022: $219,000) 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 2023 and 30 June 2022 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 19, 23,
and 24). Such guarantees are only provided in exceptional circumstances and are subject to specific
Board approval.
106
107
111
Annual Report 2023
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The objective of managing liquidity risk is to ensure the Group will have sufficient liquidity to meet its
liabilities when they fall due, under both normal and stressed conditions. NSH on behalf of the Group
has established a number of policies and processes for managing liquidity risk. These include:
• Continuously monitoring cash flows on a daily basis as well as forecasting cash flows on a medium
and long-term basis.
• Monitoring the maturity profiles of financial assets and liabilities in order to match cashflows.
• Maintaining adequate reserves and support facilities.
• Monitoring liquidity ratios and all constituent elements of working capital.
• Maintaining adequate borrowing and finance facilities.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
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
-
-
-
On
demand
$'000
Less than 3
months
$'000
3 to 12
months
$'000
1 to 5
years
$'000
21,876
10,745
3,738
64,557
100,916
1,097
37,886
11,593
-
50,576
461
1,057,449
57,366
-
1,115,276
Over 5
years
$'000
-
28,983
72,533
-
101,516
Total
$'000
24,397
1,135,063
145,230
64,557
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)
Expiring within one year (bank overdraft)
Expiring within one year (loans)
Expiring beyond one year (loans)
Total
2023
$'000
3,000
30,000
639,947
672,947
2022
$'000
3,000
-
307,906
310,906
Changes in liabilities arising from financing activities
963
99,285
44,921
1,100,109
101,516
1,346,794
1 July
2022
$'000
Cash
flows
$'000
Foreign
exchange
movement
$'000
Change
in fair
value
$'000
New
leases
$’000
Other
$'000
30 June
2023
$'000
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 10.5 and 17.
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.
At 30 June 2023
Non-derivatives
Trade and other payables
Borrowings
Lease liabilities
Distribution payable
Total non-derivatives
Derivatives
Inflows
Outflows
Total derivatives
On
demand
$'000
Less than
3 months
$'000
3 to 12
months
$'000
1 to 5
years
$'000
Over 5
years
$'000
Total
$'000
1,310
-
-
-
1,310
22,535
17,447
3,798
74,161
117,941
6,272
51,352
11,747
-
69,371
1,283
893,441
50,598
-
945,322
-
31,400
245,713 1,207,953
129,453
74,161
309,023 1,442,967
63,310
-
-
-
-
(3,084)
33
(3,051)
(7,954)
175
(7,779)
(10,573)
925
(9,648)
(231)
-
(231)
(21,842)
1,133
(20,709)
1,310
114,890
61,592
935,674
308,792 1,422,258
Interest rate derivatives:
Non-current financial
liabilities
-
-
Distributions payable
64,557
(104,888)
-
-
Borrowings
Lease liabilities
Current liabilities
972,017
(30,948)
2,426
10,636
(10,677)*
*
-
-
2
Non-current liabilities
97,954
1,289
-
-
-
-
-
-
-
-
1,289
114,492*
74,161
(2,362)
941,133
342
10,984
11,285
1,532
(9,402)
90,086
Total liabilities from
financing activities
1,145,164
(146,513)
2,428
1,289
1,874
113,712 1,117,954
Interest rate derivatives:
Current financial liabilities
Non-current financial
liabilities
1 July
2021
$'000
22
103
-
-
Distributions payable
49,689
(76,779)
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)**
-
-
-
Cash
flows
$'000
Foreign
exchange
movement
$'000
Change
in fair
value
$'000
New
leases
$’000
Other
$'000
-
-
30 June
2022
$'000
-
-
91,647*
64,557
(115)
972,017
-
-
-
-
496
4,101
10,126
(7,810)
10,636
97,954
-
-
-
(22)
(103)
-
-
-
-
918,564
134,542
(6,262)
(125)
4,597
93,848
1,145,164
108
109
113
Annual Report 2023
* Other balances presented above represent distributions declared in the year: $140.2m (30 June
2022: $119.2m) (see note 17), less units issued under the distribution reinvestment plan which do not
result in a cash outflow: $25.7m (30 June: 2022: $27.6m), (see note 14).
** Relates to principal portion of lease liability payment. Total lease payments for the year ended 30
June 2023 were $14.6m (30 June 2022: $15.6m) as disclosed in the Consolidated Statement of
Cashflows.
17.
CAPITAL MANAGEMENT
The Group’s objectives when managing capital are two-fold, to safeguard its ability to continue as a
going concern, and to maintain an optimal structure to reduce the cost of capital and maximise long
term value for its securityholders.
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 2023, the Group’s gearing ratio was 19.8% (30 June 2022: 23.0%), below the targeted
range of 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 5.5 cents per unit paid on 1
March 2023 (2022: 4.6 cents per unit)
NSPT final distribution of 5.5 cents per unit payable on 5
September 2023 (2022: 5.4 cents per unit)
NSPT Group
2023
$'000
2022
$'000
66,001
54,685
74,161
140,162
64,557
119,242
There are no proposed distributions not recognised as a liability for the year ended 30 June 2023.
The Directors of NSH have not declared an interim or final dividend for the year ended 30 June 2023.
Franking credit balance
Franking credits available for subsequent financial
years based on a tax rate of 30% (2022: 30%)
2023
$'000
2022
$'000
17,409
4,812
110
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.
18.
RELATED PARTY TRANSACTIONS
The following tables provide the total amount of transactions that have been entered into with related
parties for the relevant financial years.
Transactions with Related Parties
Bundall Commercial Trust
Bundall Storage Trust
Bundall Storage Operations Pty Ltd
Spacer Technologies Pty Ltd
The TBF & NS Trust
Moorooka Storage
Operations Pty Ltd
Revenue
from
related
parties
$
Purchases
from
related
parties
$
230,036
225,507
327,056
322,257
199,408
132,529
-
-
-
-
-
-
Amount
owed by
related
parties
$
2,915,866
2,683,928
3,717,686
3,390,434
390,732
175,293
-
-
73,148
87,684
-
-
224,026
832,498
38,217
30,000
-
-
-
-
51,346
3,837,538
41,551
29,950
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
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 2023, the Group had receivables outstanding of $1,775,000 (30 June 2022: $1,775,000) with
the Bundall Commercial Trust and $2,850,000 (30 June 2022: $2,850,000) with the Bundall Storage Trust,
and $nil (30 June 2022: $1,150,000) 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 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 2023. All other outstanding balances are unsecured
and interest free.
The remaining amounts owed by these entities relate to management fees and accrued interest not
paid at 30 June 2023 and 30 June 2022.
There have been no guarantees provided or received for any related party receivables or payables.
For the years ended 30 June 2023 and 30 June 2022, the Group has not recorded any impairment of
receivables relating to amounts owed by related parties.
111
115
Annual Report 2023
Key management personnel compensation
20.
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
2023
$'000
4,571
122
576
1,148
546
6,963
2022
$'000
4,213
113
492
1,148
543
6,509
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 2023 and 30 June 2022 are listed below:
Date of grant
2022
2022
2023
Assessment period
1-Jul-20 to 30-Jun-23
1-Jul-21 to 30-Jun-24
1-Jul-22 to 30-Jun-25
19.
COMMITMENTS AND CONTINGENCIES
2023
Number
outstanding
561,700
561,700
595,100
1,718,500
2022
Number
outstanding
561,700
561,700
-
1,123,400
Capital commitments
As at 30 June 2023, the Group held commitments to purchase three freehold investment properties and
six development sites in Australia and New Zealand for $69.4m (30 June 2022: four freehold investment
properties and six development sites for $78.4m).
As at 30 June 2023, the Group has contractual commitments in place for the construction of self-
storage centres in Australia for $161.4m (30 June 2022: $68.9m). (see note 11.3).
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 10.7.
Guarantees and contingent liabilities
The Group has provided bank guarantees of $6.8m (2022: $4.2m). These are provided to third party
lessors and other related entities.
The Group did not have any contingent liabilities as at 30 June 2023 or 30 June 2022.
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
2023
cents
25.79
25.75
2022
cents
(restated)
51.79
51.71
Reconciliation of earnings used in calculating earnings per stapled security
Net profit attributable to members
$’000 $’000
620,618
320,400
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
1,236,914,113
1,189,922,871
5,615,488
8,523,589
1,242,529,601
1,198,446,460
Effects of dilution from issue of performance rights and
restricted securities
Weighted average number of securities for diluted earnings
per stapled security
1,539,970
1,849,417
1,244,069,571
1,200,295,877
As required by AASB 133 Earnings per share, for issues of capital raises during the year ended 30 June
2023 and 30 June 2022, 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 2022 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.
112
113
117
Annual Report 2023
21.
SHARE-BASED PAYMENTS
Executive remuneration plan
Under the Group’s Equity Incentive Plan, key management personnel (“KMP”) receive a component of
their short-term incentive (“STI”) and long-term incentive (“LTI”) remuneration in the form of share-based
payments.
Short-term incentive remuneration
The equity component of STI remuneration is structured through the issuance of restricted securities at
the end of a one-year assessment period, subject to satisfaction of pre-determined vesting conditions.
In the event that these conditions are not met, the restricted securities do not vest.
The maximum value of the STI payable under the FY23 award is set at 30 June 2022, with the number of
instruments to be granted calculated using the 30-day volume weighted average price (“VWAP”) to 30
June 2023.
For the year ended 30 June 2023, the Group has recognised $0.6m of share-based payment expense in
the consolidated statement of profit or loss for restricted securities expected to be issued under the FY23
STI award (30 June 2022: $0.5m).
Long-term incentive remuneration
The equity component of LTI remuneration is structured through the issuance of performance rights at
the commencement of a three-year LTI assessment period. Each performance right is a right to receive
one stapled security of the Group, subject to the satisfaction of pre-determined service and vesting
conditions. The vesting conditions include total shareholder return (“TSR”) and earnings per share
growth targets. In the event these vesting conditions are not met, the performance rights will lapse.
There is no consideration payable by the participant upon vesting of the performance rights.
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
2023
No. of rights
1,123,400
595,100
-
1,718,500
561,700
2022
No. of rights
-
1,123,400
-
1,123,400
-
Fair value of performance rights
Performance rights contain both a market vesting condition (TSR) and a non-market vesting condition
(EPS growth target). The fair value of performance rights containing a market vesting condition 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
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 containing a non-market vesting condition (EPS growth target) are
estimated at the date of grant using a binomial model, taking into account the terms and conditions
on which the performance rights were granted.
Both models were prepared by an independent valuation expert.
The following table lists the model inputs used to determine the fair value at grant date of performance
rights issued under the Plan:
Grant date
Vesting
date
FY23 performance rights
FY24 performance rights
FY25 performance rights
22-Nov-21 30-Jun-23
22-Nov-21 30-Jun-24
11-Nov-22 30-Jun-25
Share
price at
grant date
$
2.43
2.43
2.49
Expected
volatility
%
35.04
30.22
32.20
Dividend
yield
%
3.37
3.37
4.34
Risk-free
interest
rate
%
0.57
0.96
3.16
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.
The weighted average fair value of performance rights granted during the year ended 30 June 2023
was $1.61 (year ended 30 June 2022: $1.63).
Expenses arising from performance rights
For the year ended 30 June 2023, the Group has recognised $0.9m of share-based payment expense in
the consolidated statement of profit or loss for performance rights granted (30 June 2022: $2.1m). There
were no cancellations or modifications to the awards in 2022 or 2023.(cid:3)
22.
AUDITORS’ REMUNERATION
The auditor of the Group is Ernst & Young Australia.
2023
$
2022
$
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
712,094
647,100
-
-
38,200
70,716
821,010
35,200
61,725
744,025
114
115
119
Annual Report 2023
23.
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)
2023
$’000
2022
$’000
122,620 116,350
145,165 138,551
(21,618)
(21,560)
(21,618)
(22,298)
122,867 116,933
190,186 161,774
2,556
2,420
(69,739)
(47,397)
122,867 116,933
(22,437)
(22,437)
(18,638)
(18,638)
Guarantees entered into by the parent entity
The Group’s parent entity has provided bank guarantees of $2.4m (2022: $0.1m). 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 24. No deficiencies of assets exist in any of these
companies.
Contingent liabilities of the parent entity
The Group’s parent entity did not have any contingent liabilities as at 30 June 2023 or 30 June 2022.
24.
DEED OF CROSS GUARANTEE
As at 30 June 2023 and 30 June 2022, 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
Profit after tax
Retained earnings at the beginning of the year
Dividends received
Retained earnings at the end of the year
2023
$'000
48,522
(12,053)
36,469
2022
$'000
30,529
(8,126)
22,403
31,646
1,200
69,315
7,943
1,300
31,646
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Right of use assets
Investment properties
Investments
Intangibles
Deferred tax asset
Other non-current assets
Total non-current assets
2023
$'000
2022
$'000
21,797
161,921
1,528
10,129
195,375
26,616
84,944
1,405
6,237
119,202
135
1,168
3,719
135
1,285
5,002
1,398,267 1,241,177
5,932
29,646
9,226
16,676
1,454,635 1,309,079
5,932
29,310
8,810
7,294
Total assets
1,650,010 1,428,281
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Deferred revenue
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other reserves
Retained profits
Total equity
20,785
10,240
15,404
8,625
4,731
59,785
16,973
9,808
15,720
9,181
3,721
55,403
1,283
-
1,317,662 1,167,737
9,261
1,328,304 1,176,998
9,359
1,388,089 1,232,401
261,921
195,880
190,186
2,420
69,315
261,921
161,774
2,556
31,550
195,880
25.
EVENTS AFTER REPORTING PERIOD
For the period from 1 July 2023 to the date of this report the Group settled two storage centre
investment properties, two development sites, and purchased the freehold of a leasehold component
of an existing centre for total consideration of $45.3m.
On 22 August 2023, the Group secured $150m of new senior unsecured debt facilities, comprised of a
$50m three-year facility and a $100m five-year facility. In addition, the Group extended $30m of existing
undrawn facilities maturing September 2023 for a period of one year.
116
117
121
Annual Report 2023
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 2023
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 2023 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 24 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 2023.
On behalf of the Board,
Anthony Keane
Non-Executive Chairman
23 August 2023
Brisbane
Andrew Catsoulis
Managing Director
23 August 2023
Brisbane
Ernst & Young
Ernst & Young
111 Eagle Street
111 Eagle Street
Brisbane QLD 4000 Australia
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
Fax: +61 7 3011 3100
ey.com/au
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 2023, the consolidated statement of profit or loss, consolidated statement of comprehensive
June 2023, 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. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
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.
118
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
123
Annual Report 2023
Investment property valuation
Investment property valuation
Why significant
Why significant
Investment properties represent
Investment properties represent
approximately 98% of the Group’s
approximately 98% of the Group’s
total assets. These assets are carried
total assets. These assets are carried
at fair value, which is assessed by
at fair value, which is assessed by
the directors with reference to either
the directors with reference to either
external independent property
external independent property
valuations or internal valuations and
valuations or internal valuations and
are based on market conditions
are based on market conditions
existing at reporting date.
existing at reporting date.
This was considered a key audit
This was considered a key audit
matter due to the number of
matter due to the number of
judgments required in determining
judgments required in determining
fair value. These judgments include
fair value. These judgments include
assessing the capitalisation rates,
assessing the capitalisation rates,
sustainable occupancy and stabilised
sustainable occupancy and stabilised
average EBITDA (earnings before
average EBITDA (earnings before
interest, tax, depreciation and
interest, tax, depreciation and
amortisation).
amortisation).
Disclosure relating to investment
Disclosure relating to investment
properties and the associated
properties and the associated
significant judgments are included in
significant judgments are included in
Notes 2(n), 3, 9.1, and 9.2 to the
Notes 2(n), 3, 9.1, and 9.2 to the
financial report.
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
• With the involvement of our real estate valuation specialists, we
assessed:
assessed:
•
•
•
•
•
•
The suitability of the valuation methodologies used;
The suitability of the valuation methodologies used;
The competence, qualifications and objectivity of both the
The competence, qualifications and objectivity of both the
Group’s internal valuers and external valuation experts; and
Group’s internal valuers and external valuation experts; and
The reasonableness of key assumptions and inputs used in
The reasonableness of key assumptions and inputs used in
the valuations. These assumptions and inputs included
the valuations. These assumptions and inputs included
capitalisation rates, occupancy rates including forecast
capitalisation rates, occupancy rates including forecast
occupancy levels, and stabilised average EBITDA.
occupancy levels, and stabilised average EBITDA.
•
•
• Agreed source data used in the valuations to support tenancy
• Agreed source data used in the valuations to support tenancy
schedules and accounting sub-ledgers;
schedules and accounting sub-ledgers;
Tested the mathematical accuracy of the internal valuation model,
Tested the mathematical accuracy of the internal valuation model,
including assessing key valuation inputs with reference to those
including assessing key valuation inputs with reference to those
applied by the external valuation experts and where relevant we
applied by the external valuation experts and where relevant we
assessed the reasonableness of comparable transactions used in
assessed the reasonableness of comparable transactions used in
the valuation process;
the valuation process;
• Where relevant, we evaluated the movement in the capitalisation
• Where relevant, we evaluated the movement in the capitalisation
rates, occupancy rates, and stabilised average EBITDA across the
rates, occupancy rates, and stabilised average EBITDA across the
portfolio based on our knowledge of the property portfolio,
portfolio based on our knowledge of the property portfolio,
comparable acquisition transactions in the period, published
comparable acquisition transactions in the period, published
industry reports and comparable external valuations; and
industry reports and comparable external valuations; and
• We considered the adequacy of disclosures in relation to the
• We considered the adequacy of disclosures in relation to the
valuation methods and principles disclosed in Note 2(n) Summary
valuation methods and principles disclosed in Note 2(n) Summary
of significant accounting policies - Investment properties, Note 3
of significant accounting policies - Investment properties, Note 3
Significant accounting judgements, estimates and assumptions –
Significant accounting judgements, estimates and assumptions –
Revaluation of investment properties, Note 9.1 Investment
Revaluation of investment properties, Note 9.1 Investment
properties and Note 9.2 Non-financial assets fair value
properties and Note 9.2 Non-financial assets fair value
measurement.
measurement.
Information other than the financial report and auditor’s report thereon
Information other than the financial report and auditor’s report thereon
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 Company’s 2023 annual report, but does not include the financial report
information included in the Company’s 2023 annual report, but does not include the financial report
and our auditor’s report thereon.
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
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.
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.
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
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
125
Annual Report 2023
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
► 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
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.
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 43 to 57 of the directors’ report for the
We have audited the Remuneration Report included in pages 43 to 57 of the directors’ report for the
year ended 30 June 2023.
year ended 30 June 2023.
In our opinion, the Remuneration Report of National Storage REIT for the year ended 30 June 2023,
In our opinion, the Remuneration Report of National Storage REIT for the year ended 30 June 2023,
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
23 August 2023
23 August 2023
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
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 28 July 2023 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
1,379
1,988
1,392
2,646
152
7,557
There were 456 holders of less than a marketable parcel of stapled securities, representing 21,474 units.
(b) Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities as at 14 July 2023 are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Perpetual Trustee Company Ltd
BNP Paribas Nominees Pty Ltd
National Nominees Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
IOOF Investment Services Ltd
Hooks Enterprise
BNP Paribas Nominees (NZ) Limited – A/C NZCSD
Leyshon Investments (Australia) Pty Ltd
Leendert Hoeksema
Netwealth Investments Limited
Brindle Super Pty Ltd
Green 9 Pty Ltd
Dorvell Pty Ltd
Corporation of the Trustees of the Order of the Sisters of Mercy in QLD
BNP Paribas Nominees Pty Ltd Acf Clearstream
Navigator Australia Ltd.
Storcat Pty Ltd
Stapled Securities
Number
held
631,305,639
228,683,925
150,959,391
95,381,254
61,423,886
31,693,287
16,157,808
4,200,468
3,380,000
2,436,209
2,252,449
1,980,000
1,908,413
1,523,488
1,020,408
971,835
885,817
866,390
854,899
809,169
1,238,694,735
% of issued
securities
46.82
16.96
11.20
7.07
4.56
2.35
1.20
0.31
0.25
0.18
0.17
0.15
0.14
0.11
0.08
0.07
0.07
0.06
0.06
0.06
91.87
123
Annual Report 2023
127
Unquoted equity securities
Performance rights
Number on
issue
1,718,500
Number of
holders
3
(c) Substantial shareholders
Substantial securityholders, as at 14 July 2023, are set out below:
Name
Abacus Storage Funds Management Limited
Vanguard Investments Australia Ltd
Number
held
95,381,254
71,971,657
Percentage
7.1%
5.3%
(d) Voting rights
The voting rights attached to the ordinary fully paid stapled securities is one vote per stapled security.
124
MONTROSE, TAS
Annual Report 2023
129
Investor
RELATIONS
National Storage REIT is listed on the Australian
DISTRIBUTION DETAILS
Securities Exchange under the code NSR.
Distributions are expected to be paid within 8 to
NATIONAL STORAGE REIT SECURITIES
A stapled security comprises:
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.
CONTACT DETAILS
DIRECT CREDIT
NSR encourages securityholders to receive distribution
payments by direct credit. If you wish to register for
All changes of name, address, Tax File Number,
direct credit or update your payment details, log in
payment instructions and document requests should
to your holding online or telephone the registry on
be directed to the registry.
SECURITIES REGISTRY
Computershare Investor Services Pty Limited
GPO Box 2975 Melbourne VIC 3001 Australia
Telephone: 1300 850 505 (Australia only)
International: +61 (0) 3 9415 4000
Email using the online form:
computershare.com/Investor/#Contact/Enquiry
ELECTRONIC INFORMATION
By registering your email address, you can then receive
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.
via email notifications and announcements, distribution
UNPRESENTED CHEQUES
statements, taxation statements and annual reports.
SECURE ACCESS TO YOUR SECURITYHOLDING
You will need to have your securityholder reference
number or holder identification number (SRN/HIN)
available to access your holding details.
ONLINE
You can access your securityholding information
via link in the Investor Centre section of the
corporate website, nationalstorageinvest.com.au,
or via the Investor Centre link on registry website at
computershare.com.au. To view your securityholding,
you will need your SRN/HIN and will be asked to verify
your registered postcode (inside Australia) or your
country of residence (outside Australia).
PHONE
You can confirm your holding balance, request forms
and access distribution and trading information
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.
AMMA STATEMENT AND TAX GUIDE
The annual attribution managed investment trust
member annual statement (AMMA Statement) and Tax
Guide are dispatched to securityholders in September
each year. A copy of the Tax Guide is available at
nationalstorageinvest.com.au.
INVESTOR FEEDBACK
If you have any fund specific queries or feedback
please telephone NSR Investor Relations on 1800 683 290.
Please direct any complaints in writing to NSR Company
Secretary at GPO Box 3239, Brisbane QLD 4001, Australia
by phoning: 1300 850 505 (Australia only) or calling
or via the investor feedback form available at:
International: +61 (0) 3 9415 4000 (outside Australia).
nationalstorageinvest.com.au/investor-feedback/.
NSR CALENDAR 2023 - 2024
AUGUST
Full Year Results and Annual Report released
SEPTEMBER
Distribution paid for the six months ended 30 June
Annual AMMA Statement 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
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”)
Annual Report 2023
131